July 30, 2007

FOR RELEASE:  Immediately

CTS Reports Second Quarter 2007 Results
Maintains Full Year Earnings Guidance
 

Elkhart, IN…CTS Corporation (NYSE: CTS) today announced second quarter 2007 revenues of $169.6 million and net earnings of $5.9 million, or $0.15 per diluted share.

Second quarter 2007 revenue increased 2% over the second quarter of 2006 driven by the EMS segment, where sales improved 5%. Components and Sensors segment sales decreased 1%, primarily from weakness in electronic component demand.  Automotive component sales, however, were up 6%.

Second quarter 2007 earnings of $5.9 million, or $0.15 per diluted share, improved over net earnings of $5.3 million, or $0.14 per diluted share, in the second quarter of 2006. Second quarter 2007 net earnings were adversely impacted by $1.2 million, or approximately $0.03 per diluted share, of costs associated with the internal investigation and account reconciliations at CTS’ California EMS locations. Second quarter 2006 diluted earnings per share included restructuring and related costs of $0.03 per diluted share for consolidation of the Berne, Indiana operation. 

Commenting on second quarter results, Vinod M. Khilnani, CTS President and Chief Executive Officer, stated, “Despite a challenging environment, new products and new customers helped CTS achieve continued growth in automotive products and targeted EMS markets.  Earnings per share improved notwithstanding CTS’ California EMS investigation costs and new plant start-up in Czech Republic.  Based on current expectations, we are maintaining our full-year 2007 earnings per share guidance of $0.71 to $0.75 and expect our 2007 sales growth to be around 5% to 6%.”

The Company repurchased 350,000 shares of its stock in the second quarter for approximately $4.3 million, at an average price of $12.41 per share.

SEGMENT INFORMATION
(Dollars in millions)

Components & Sensors: Components and sensors sales decreased $0.9 million, or 1%, from the second quarter of 2006 primarily due to declines in electronic component sales, partially offset by higher automotive component demand. Segment operating earnings decreased $2.9 million from second quarter 2006 earnings primarily due to less favorable product mix, operational inefficiencies due to the start-up of the Czech Republic facility, and higher operating expenses including incremental legal and accounting fees and severance costs. Second quarter 2006 included a $0.3 million gain on sale of assets.

Components and sensors sales increased $1.2 million, or 2%, from the first quarter of 2007 reflecting increased demand primarily for electronic component infrastructure applications. Segment operating earnings increased $0.6 million from the first quarter primarily from increased volume and lower compensation costs, partially offset by incremental legal and accounting fees.

EMS: EMS sales increased $4.6 million, or 5%, from the second quarter of 2006 driven primarily by higher sales into the defense and aerospace and industrial markets, partially offset by lower demand in the computer market. Segment operating earnings increased $1.8 million from the second quarter of 2006 primarily due to higher volumes and more favorable product mix, partially offset by incremental legal and accounting fees.

Compared to the first quarter of 2007, EMS segment sales increased $5.1 million, or 5%. Total segment operating earnings increased $2.4 million primarily from the impact of higher volumes and more favorable product mix, partially reduced by incremental legal and accounting fees.

Conference Call
As previously announced, the Company has scheduled a conference call on Tuesday, July 31, 2007 at 11:00 a.m. Eastern Daylight Time. Those interested in participating may dial 888-639-6205 (703-925-2608, if calling from outside the U.S.). No access code is needed. There will be a replay of the conference call available from 4:15 p.m. EDT on July 31, 2007, through 11:59 p.m. EDT on August 7, 2007. The telephone number for the replay is 800-475-6701 (320-365-3844, if calling from outside the U.S.). The access code is 880822.

There will also be a live audio webcast of the conference call which can be accessed directly from the Web sites of CTS Corporation (http://www.ctscorp.com), StreetEvents (http://www.streetevents.com), Netscape (http://www.netscape.com), Compuserve (www.compuserve.com) and others. AOL subscribers will have access through the Personal Finance section of AOL.

About CTS
CTS is a leading designer and manufacturer of electronic components and sensors and a provider of electronics manufacturing services (EMS) to OEMs in the automotive, computer, communications, medical, defense and aerospace and industrial markets. CTS manufactures products in North America, Europe and Asia. CTS' stock is traded on the NYSE under the ticker symbol "CTS.” 
 

Safe Harbor Statement
This press release contains statements that are, or may be deemed to be, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  These forward-looking statements include, but are not limited to, any financial or other guidance, statements that reflect our current expectations concerning future results and events, and any other statements that are not based solely on historical fact.  Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.  These forward-looking statements are made subject to certain risks, uncertainties and other factors, which could cause our actual results, performance or achievements to differ materially from those presented in the forward-looking statements, including, without limitation, rapid technological change and general market conditions in the automotive, communications and computer industries; reliance on key customers; CTS’ ability to protect its intellectual property; pricing pressures and demand for CTS’ products; risks associated with CTS’ international operations, including trade and tariff barriers, exchange rates and political and geopolitical risks; and the impact of the accounting misstatements at its Moorpark and Santa Clara, California locations, including the results or the impact of the SEC’s informal inquiry into these misstatements.  For more detailed information on the risks and uncertainties associated with CTS’ business, see the reports CTS files with the SEC.  CTS undertakes no obligation to publicly update its forward-looking statements to reflect new information or events or circumstances that arise after the date hereof, including market or industry changes.
 

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