January 30, 2008

FOR RELEASE:  Immediately

Elkhart, IN…CTS Corporation (NYSE: CTS) today announced fourth quarter 2007 net earnings of $7.7 million and diluted earnings per share of $0.20, which includes $0.05 per share of restructuring and related costs.  Adjusted diluted earnings per share of $0.25, which excludes the restructuring and related costs, increased 25% over the same period last year and also exceeded analyst consensus of $0.20 per diluted share by $0.05, as a result of improved operating margins and efficiencies.  Sales for the fourth quarter increased to $178.3 million, a 3% increase year-over-year.

The fourth quarter revenue increase from 2006 was driven by an 8% increase in Components and Sensors segment sales as automotive new product demand grew 6% and electronic components sales for infrastructure applications grew 27%. EMS segment sales were essentially flat compared to a strong fourth quarter 2006. 

Full-year 2007 revenue of $685.9 million increased 5% over 2006. Components and Sensors segment sales increased 4% year-over-year driven primarily by higher automotive sensor product demand, partially offset by reduced sales of legacy resistor products.  EMS segment sales increased 5% year-over-year due to strong growth in industrial and defense and aerospace markets, partially offset by lower sales in the computer market.

Full-year net earnings in 2007 were $25.4 million, or $0.66 per diluted share, compared to $24.2 million, or $0.63 per diluted share, in the prior year, an increase of 5%. Included in 2007 results was a $0.05 negative per share impact from restructuring and related costs in the fourth quarter, while 2006 included a $0.08 negative per share impact from restructuring and related costs. Full-year earnings per share, adjusted to exclude these items, were $0.71 in both 2006 and 2007. In addition, 2007 was unfavorably impacted by a $0.05 negative per share charge for Moorpark investigation costs.

During 2007, the Company generated an operating cash flow of $48.6 million, up 3% from a strong cash flow in 2006.  Capital expenditures were essentially unchanged, $16.1 million in 2007 and $15.8 million in 2006.  The resulting 2007 free cash flow, which is net cash provided by operations less capital expenditures, was $32.5 million, the highest reported since 1997.

Commenting on fourth quarter results, Vinod M. Khilnani, CTS President and Chief Executive Officer, stated, “We were pleased with our strong earnings and improved operating cash flow generation. We are building positive momentum for the future, not only from our financial performance and strong financial position, but also from initiatives begun in the fourth quarter in the areas of operational realignment and acquisition of piezoceramic components technology and assets for aerospace and defense applications.  In addition, the Tusonix acquisition, just announced last week, is expected to expand our electronic component technology and customer base, adding $15 million of annual sales.”   

“The news surrounding the U.S. economy suggests near-term caution.  However, we believe our recent initiatives, combined with new business development efforts, will support healthy top and bottom line growth in 2008,” continued Mr. Khilnani. 

The Company currently expects full-year 2008 sales to increase 5% to 8% over 2007 and diluted earnings per share to be in the range of $0.78 to $0.83.  Approximately a $0.03 - $0.05 per share investment to support new growth initiatives, including the launch of sensor and actuator products for diesel and commercial market applications, is included in the 2008 estimate.

SEGMENT INFORMATION
(Dollars in millions)                                                                                                                                                                

Components & Sensors: Components and sensors fourth quarter 2007 sales increased by $5.4 million, or 8% from the fourth quarter of 2006, reflecting continued growth in new product demand in automotive markets and increased electronic component sales for infrastructure applications. Segment operating earnings of $8.2 million, or 11.6% of sales, improved $1.8 million over the fourth quarter of 2006 primarily from higher volume. Operating earnings, as a percent of sales, increased to 11.6% in the fourth quarter of 2007 from 9.7% in the same period last year.

Segment sales increased by $2.3 million, or 3% over the third quarter of 2007, primarily from stronger automotive product demand. Segment operating earnings of $8.2 million increased $2.2 million over the third quarter of 2007 from higher volume, increased royalty income and cost control initiatives.
 

EMS: EMS fourth quarter 2007 sales were essentially flat compared to a strong fourth quarter 2006.  Segment operating earnings of $3.9 million were $1.2 million higher than the fourth quarter of 2006 as a result of improved product mix and operating efficiencies. Operating earnings, as a percent of sales, increased to 3.6% in the fourth quarter of 2007 from 2.6% in the same period last year.

Fourth quarter 2007 EMS sales, compared to the third quarter 2007, were slightly higher by $1.2 million with essentially flat operating earnings.

Conference Call
As previously announced, the Company has scheduled a conference call on Thursday, January 31, 2008 at 11:00 a.m. EST. Those interested in participating may dial 800-288-9626 (612-332-0819, if calling from outside the U.S.). No access code is needed. There will be a replay of the conference call available from 1:00 p.m. EST on Thursday, January 31, 2008, through 11:59 p.m. EST on Thursday, February 7, 2008. The telephone number for the replay is 800-475-6701 (320-365-3844, if calling from outside the U.S.). The access code is 906728. There will also be a live audio webcast of the conference call which can be accessed directly from the Web sites of CTS Corporation (www.ctscorp.com), StreetEvents (www.StreetEvents.com), Netscape (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, potential changes in the economy generally and in respect to the businesses in which CTS operates; rapid technological change 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; and risks associated with CTS’ international operations, including trade and tariff barriers, exchange rates and political and geopolitical risks.  For more detailed information on the risks and uncertainties associated with CTS’ business, see the reports CTS files with the SEC, available at http://www.ctscorp.com/investor_relations/investor.htm.  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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