----

----

| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|-----------------------------------------------------------------------------------------|

| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|------------------------------------------------------------------------------------------|

|   | Indiana                                                        |   | 35-0225010                           |   |
|--------|----------------------------------------------------------------|--------|--------------------------------------|--------|
|   | (State or other jurisdiction of incorporation or organization) |   | (IRS Employer Identification Number) |   |

|   | 905 West Boulevard North, Elkhart, IN    |   | 46514      |   |
|--------|------------------------------------------|--------|------------|--------|
|   | (Address of principal executive offices) |   | (Zip Code) |   |

----

----

CTS CORPORATION AND SUBSIDIARIES 

|       |                                                                                                                                                                                     |                                                                                        | Page   |
|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------|--------|
|       |                                                                                                                                                                                     |                                                                                        |   |
| PART I.    | FINANCIAL INFORMATION                                                                                                                                                                    |                                                                                        |
|       |                                                                                                                                                                                     |                                                                                        |   |
|       | Item 1.                                                                                                                                                                                  | Financial Statements                                                                        | 3      |
|       |                                                                                                                                                                                     |                                                                                        |   |
|       |                  Unaudited Condensed Consolidated Statements of Earnings (Loss)                     | 3                                                                                           |
|       |               - For the Three and Six Months Ended June 28, 2009 and June 29, 2008                                 |                                                                                        |
|       |                                                                                                                                                                                     |                                                                                        |   |
|       |                   Unaudited Condensed Consolidated Balance Sheets                              | 4                                                                                           |
|       |                   - As of June 28, 2009 and December 31, 2008                                  |                                                                                        |
|       |                                                                                                                                                                                     |                                                                                        |   |
|       |                   Unaudited Condensed Consolidated Statements of Cash Flows                    | 5                                                                                           |
|       |                   - For the Six Months Ended June 28, 2009 and June 29, 2008                   |                                                                                        |
|       |                                                                                                                                                                                     |                                                                                        |   |
|       |                   Unaudited Condensed Consolidated Statements of Comprehensive (Loss) Earnings | 6                                                                                           |
|       |               - For the Three and Six Months Ended June 28, 2009 and  June 29, 2008                      |                                                                                        |
|       |                                                                                                                                                                                     |                                                                                        |   |
|       |                   Notes to Unaudited Condensed Consolidated Financial Statements               | 7                                                                                           |
|       |                                                                                                                                                                                     |                                                                                        |   |
|       | Item 2.                                                                                                                                                                                  | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 20     |
|       |                                                                                                                                                                                     |                                                                                        |   |
|       | Item 3.                                                                                                                                                                                  | Quantitative and Qualitative Disclosures about Market Risk                                  | 29     |
|       |                                                                                                                                                                                     |                                                                                        |   |
|       | Item 4.                                                                                                                                                                                  | Controls and Procedures                                                                     | 29     |
|       |                                                                                                                                                                                     |                                                                                        |   |
| PART II.   | OTHER INFORMATION                                                                                                                                                                        |                                                                                        |
|       |                                                                                                                                                                                     |                                                                                        |   |
|       | Item 1.                                                                                                                                                                                  | Legal Proceedings                                                                           | 29     |
|       |                                                                                                                                                                                     |                                                                                        |   |
|       | Item 1A.                                                                                                                                                                                 | Risk Factors                                                                                | 29     |
|       |                                                                                                                                                                                     |                                                                                        |   |
|       | Item 4.                                                                                                                                                                                  | Submission of Matters to a Vote of Security Holders                                         | 30     |
|       |                                                                                                                                                                                     |                                                                                        |   |
|       | Item 6.                                                                                                                                                                                  | Exhibits                                                                                    | 30     |
|       |                                                                                                                                                                                     |                                                                                        |   |
| SIGNATURES |                                                                                                                                                                                     | 31                                                                                          |

----

Table of Contents

PART I

FINANCIAL INFORMATION

| Item 1.    Financial Statements |
|------------------------------------------------|

CTS CORPORATION AND SUBSIDIARIES 

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) - UNAUDITED

|                                         |   | Three Months Ended |    |   | Six Months Ended |   |
|----------------------------------------------|--------|--------------------|---------|--------|------------------|--------|
|                                         |   | June 28, 2009      |    |   | June 29, 2008*   |   |   | June 28, 2009 |   |   | June 29, 2008* |   |
|                                         |   |               |    |   |             |   |   |   |   |   |   |   |
| Net sales                                    |   | $                  | 120,398 |   |             | $      | 186,091 |   |   | $ | 238,529 |   |   | $ | 358,846 |   |
| Costs and expenses:                          |   |               |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Cost of goods sold                           |   |               | 98,520  |   |             |   | 145,938 |   |   |   | 196,822 |   |   |   | 284,869 |   |
| Selling, general and administrative expenses |   |               | 15,243  |   |             |   | 21,506 |   |   |   | 31,863 |   |   |   | 42,482 |   |
| Research and development expenses            |   |               | 3,466   |   |             |   | 4,750 |   |   |   | 6,819 |   |   |   | 9,067 |   |
| Restructuring charge – Note I          |   |               | — |   |             |   | 113 |   |   |   | 2,243 |   |   |   | 263 |   |
| Goodwill impairment                          |   |               | — |   |             |   | — |   |   |   | 33,153 |   |   |   | — |   |
| Operating earnings/(loss)                    |   |               | 3,169   |   |             |   | 13,784 |   |   |   | (32,371 | ) |   |   | 22,165 |   |
| Other (expense)/income:                      |   |               |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Interest expense                             |   |               | (471    | )      |             |   | (1,707 | ) |   |   | (1,359 | ) |   |   | (3,385 | ) |
| Interest income                              |   |               | 31      |   |             |   | 380 |   |   |   | 101 |   |   |   | 858 |   |
| Other                                        |   |               | (25     | )      |             |   | (342 | ) |   |   | (346 | ) |   |   | 405 |   |
| Total other expense                          |   |               | (465    | )      |             |   | (1,669 | ) |   |   | (1,604 | ) |   |   | (2,122 | ) |
|                                         |   |               |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Earnings/(loss) before income taxes     |   |               | 2,704   |   |             |   | 12,115 |   |   |   | (33,975 | ) |   |   | 20,043 |   |
| Income tax expense                      |   |               | 9,729   |   |             |   | 2,547 |   |   |   | 8,699 |   |   |   | 4,178 |   |
| Net (loss)/earnings                          |   | $                  | (7,025  | )      |             | $      | 9,568 |   |   | $ | (42,674 | ) |   | $ | 15,865 |   |
| Net (loss)/ earnings per share - Note K |   |               |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                        |   | $                  | (0.21   | )      |             | $      | 0.28 |   |   | $ | (1.26 | ) |   | $ | 0.47 |   |
|                                         |   |               |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Diluted                                      |   | $                  | (0.21   | )      |             | $      | 0.27 |   |   | $ | (1.26 | ) |   | $ | 0.45 |   |
|                                         |   |               |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Cash dividends declared per share            |   | $                  | 0.03    |   |             | $      | 0.03 |   |   | $ | 0.06 |   |   | $ | 0.06 |   |
| Average common shares outstanding:           |   |               |    |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                        |   |               | 33,779  |   |             |   | 33,652 |   |   |   | 33,762 |   |   |   | 33,748 |   |
| Diluted                                      |   |               | 33,779  |   |             |   | 38,090 |   |   |   | 33,762 |   |   |   | 38,209 |   |

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Table of Contents

CTS CORPORATION AND SUBSIDIARIES 

CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED

|                                                                                                 |   | June 28,2009 |    |   | December 31, 2008* |   |
|------------------------------------------------------------------------------------------------------|--------|--------------|---------|--------|--------------------|--------|
| ASSETS                                                                                               |   |         |    |   |               |   |
| Current Assets                                                                                       |   |         |    |   |               |   |
|  Cash and cash equivalents                                                                      |   | $            | 26,835  |   |               | $      | 44,628 |   |
|  Accounts receivable, less allowances (2009 – $2,219; 2008- $2,165)                       |   |         | 73,602  |   |               |   | 94,175 |   |
|  Inventories, net - Note D                                                                      |   |         | 61,745  |   |               |   | 70,867 |   |
|  Other current assets                                                                           |   |         | 15,606  |   |               |   | 16,172 |   |
|      Total current assets                                                   |   |         | 177,788 |   |               |   | 225,842 |   |
| Property, plant and equipment, less accumulated depreciation (2009 - $265,718; 2008 - $257,850) |   |         | 85,505  |   |               |   | 90,756 |   |
| Other Assets                                                                                         |   |         |    |   |               |   |   |   |
|  Prepaid pension asset                                                                          |   |         | 22,658  |   |               |   | 18,756 |   |
|  Goodwill – Note J                                                                        |   |         | — |   |               |   | 33,150 |   |
| Other intangible assets – Note J                                                               |   |         | 35,216  |   |               |   | 36,927 |   |
| Deferred income taxes                                                                                |   |         | 72,394  |   |               |   | 82,101 |   |
| Other                                                                                                |   |         | 794     |   |               |   | 910 |   |
|  Total other assets                                                                             |   |         | 131,062 |   |               |   | 171,844 |   |
| Total Assets                                                                                         |   | $            | 394,355 |   |               | $      | 488,442 |   |

| LIABILITIES AND SHAREHOLDERS’ EQUITY                                                                                                                                   |   |    |     |   |   |    |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------|----------|--------|--------|---------|
| Current Liabilities                                                                                                                                                          |   |    |     |   |   |    |
| Accounts payable                                                                                                                                                             |   |  $ | 52,960   |   |   | $  | 71,285 |   |
| Accrued liabilities                                                                                                                                                          |   |    | 36,167   |   |   |    | 41,956 |   |
|  Total current liabilities                                                                                                                                              |   |    | 89,127   |   |   |    | 113,241 |   |
| Long-term debt  - Note E                                                                                                                                           |   |    | 51,000   |   |   |    | 79,988 |   |
| Other long-term obligations                                                                                                                                                  |   |    | 17,101   |   |   |    | 17,740 |   |
| Shareholders’ Equity                                                                                                                                                   |   |    |     |   |   |    |   |   |
| Preferred stock - authorized 25,000,000 shares without par value; none issued                                                                                                |   |    | —  |   |   |    | — |   |
| Common stock - authorized 75,000,000 shares without par value; 54,190,434 shares issued at June 28, 2009    and 54,031,844 shares issued at December 31, 2008 |   |    | 282,153  |   |   |    | 280,266 |   |
| Additional contributed capital                                                                                                                                               |   |    | 35,868   |   |   |    | 37,148 |   |
| Retained earnings                                                                                                                                                            |   |    | 310,990  |   |   |    | 355,694 |   |
| Accumulated other comprehensive loss                                                                                                                                         |   |    | (94,875  | )      |   |    | (98,626 | ) |
|                                                                                                                                                                         |   |    | 534,136  |   |   |    | 574,482 |   |
| Cost of common stock held in treasury (2009 and 2008 – 20,320,759 shares)                                                                                              |   |    | (297,009 | )      |   |    | (297,009 | ) |
| Total shareholders’ equity                                                                                                                                             |   |    | 237,127  |   |   |    | 277,473 |   |
| Total Liabilities and Shareholders’ Equity                                                                                                                             |   | $       | 394,355  |   |   | $       | 488,442 |   |

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Table of Contents

CTS CORPORATION AND SUBSIDIARIES 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED

|                                                                                       |   | Six Months Ended |       |
|--------------------------------------------------------------------------------------------|--------|------------------|------------|
|                                                                                       |   | June 28,2009     |       |   | June 29,2008* |   |
| Cash flows from operating activities:                                                      |   |             |       |   |   |   |
| Net (loss)/earnings                                                                        |   | $                | (42,674    | ) |   | $ | 15,865 |   |
| Adjustments to reconcile net (loss)/earnings to net cash provided by operating activities: |   |             |       |   |   |   |   |   |
| Depreciation and amortization                                                              |   |             | 10,494     |   |   |   | 12,806 |   |
| Prepaid pension asset – Note F                                                       |   |             | (3,902     | ) |   |   | (4,999 | ) |
| Equity-based compensation – Note B                                                   |   |             | 1,802      |   |   |   | 1,729 |   |
| Restructuring and impairment charges – Note I                                        |   |             | 2,243      |   |   |   | 263 |   |
| Goodwill impairment – Note J                                                         |   |             | 33,153     |   |   |   | — |   |
| Gain on sales of assets                                                                    |   |             | (1,158     | ) |   |   | (18 | ) |
| Amortization of retirement benefit adjustments – Note F                              |   |             | 2,644      |   |   |   | 1,128 |   |
| Changes in assets and liabilities, net of acquisitions                                     |   |             |       |   |   |   |   |   |
| Accounts receivable                                                                        |   |             | 21,852     |   |   |   | (5,900 | ) |
| Inventories                                                                                |   |             | 9,530      |   |   |   | (3,744 | ) |
| Other current assets                                                                       |   |             | 772        |   |   |   | (165 | ) |
| Accounts payable and accrued liabilities                                                   |   |             | (27,612    | ) |   |   | (4,700 | ) |
| Other                                                                                      |   |             | 8,553      |   |   |   | 38 |   |
| Total adjustments                                                                          |   |             | 58,371     |   |   |   | (3,562 | ) |
| Net cash provided by operating activities                                                  |   |             | 15,697     |   |   |   | 12,303 |   |
|                                                                                       |   |             |       |   |   |   |   |   |
| Cash flows from investing activities:                                                      |   |             |       |   |   |   |   |   |
| Payments for acquisitions, net of cash received – Note C                             |   |             | —    |   |   |   | (20,738 | ) |
| Capital expenditures                                                                       |   |             | (2,850     | ) |   |   | (9,660 | ) |
| Proceeds from sales of assets                                                              |   |             | 1,309      |   |   |   | 46 |   |
| Net cash used in investing activities                                                      |   |             | (1,541     | ) |   |   | (30,352 | ) |
|                                                                                       |   |             |       |   |   |   |   |   |
| Cash flows from financing activities:                                                      |   |             |       |   |   |   |   |   |
| Payment of 2.125% Debentures – Note E                                                |   |             | (32,500    | ) |   |   | — |   |
| Payments of long-term debt – Note E                                                  |   |             | (1,433,650 | ) |   |   | (554,000 | ) |
| Proceeds from borrowings of long-term debt – Note E                                  |   |             | 1,436,650  |   |   |   | 574,300 |   |
| Payments of short-term notes payable                                                       |   |             | (6,510     | ) |   |   | (4,974 | ) |
| Proceeds from borrowings of short-term notes payable                                       |   |             | 6,510      |   |   |   | 3,974 |   |
| Dividends paid                                                                             |   |             | (2,024     | ) |   |   | (2,039 | ) |
| Purchase of treasury stock – Note L                                                  |   |             | —    |   |   |   | (6,809 | ) |
| Other                                                                                      |   |             | (914       | ) |   |   | 53 |   |
| Net cash (used in)/provided by financing activities                                        |   |             | (32,438    | ) |   |   | 10,505 |   |
|                                                                                       |   |             |       |   |   |   |   |   |
| Effect of exchange rate on cash and cash equivalents                                       |   |             | 489        |   |   |   | 46 |   |
| Net decrease in cash and cash equivalents                                                  |   |             | (17,793    | ) |   |   | (7,498 | ) |
|                                                                                       |   |             |       |   |   |   |   |   |
| Cash and cash equivalents at beginning of year                                             |   |             | 44,628     |   |   |   | 52,868 |   |
| Cash and cash equivalents at end of period                                                 |   | $                | 26,835     |   |   | $ | 45,370 |   |
|                                                                                       |   |             |       |   |   |   |   |   |
| Supplemental cash flow information                                                         |   |             |       |   |   |   |   |   |
| Cash paid during the period for:                                                           |   |             |       |   |   |   |   |   |
| Interest                                                                                   |   | $                | 533        |   |   | $ | 1,823 |   |
| Income taxes—net                                                                     |   | $                | 4,198      |   |   | $ | 1,781 |   |
|                                                                                       |   |             |       |   |   |   |   |   |

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Table of Contents

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) EARNINGS - UNAUDITED

|                                                        |   | Three Months Ended |   |   | Six Months Ended |
|-------------------------------------------------------------|--------|--------------------|--------|--------|------------------|
|                                                        |   | June 28, 2009      |   |   | June 29, 2008*   |   |   | June 28, 2009 |   |   | June 29, 2008* |   |
| Net (loss)/earnings                                         |   | $                  | (7,025 | )      |             | $ | 9,568 |   |   | $ | (42,674 | ) |   | $ | 15,865 |   |
| Other comprehensive earnings/(loss):                        |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Cumulative translation adjustment                           |   |               | 2,249  |   |             |   | (276 | ) |   |   | 2,277 |   |   |   | (103 | )  |
| Amortization of retirement benefit adjustments (net of tax) |   |               | 660    |   |             |   | 342 |   |   |   | 1,474 |   |   |   | 586 |   |
| Comprehensive (loss)/earnings                               |   | $                  | (4,116 | )      |             | $ | 9,634 |   |   | $ | (38,923 | ) |   | $ | 16,348 |   |

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Table of Contents

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

|                   |   | Three Months Ended |    |   | Six Months Ended |   |
|------------------------|--------|--------------------|---------|--------|------------------|--------|
|  ($ in thousands) |   | June 28, 2009      |    |   | June 29, 2008    |   |   | June 28, 2009 |   |   | June 29, 2008 |   |
| Stock options          |   | $                  | 13      |   |             | $      | 42 |   |   | $ | 32 |   |   | $ | 91 |   |
| Restricted stock units |   |               | 846     |   |             |   | 802 |   |   |   | 1,770 |   |   |   | 1,606 |   |
| Restricted stock       |   |               | — |   |             |   | 12 |   |   |   | — |   |   |   | 32 |   |
| Total                  |   | $                  | 859     |   |             | $      | 856 |   |   | $ | 1,802 |   |   | $ | 1,729 |   |

|                               |   | 2009 Plan |      |   | 2004 Plan |   |      | 2001 Plan |   |   | 1996 Plan |   |
|------------------------------------|--------|-----------|-----------|--------|-----------|--------|-----------|-----------|--------|--------|-----------|--------|
| Awards originally available        |   |      | 3,400,000 |   |      |   | 6,500,000 |      |   |   | 2,000,000 |   |   |   | 1,200,000 |   |
| Stock options outstanding          |   |      | —   |   |      |   | 276,850   |      |   |   | 738,388   |   |   |   | 182,100 |   |
| Restricted stock units outstanding |   |      | 384,850   |   |      |   | 487,987   |      |   |   | —   |   |   |   | — |   |
| Awards exercisable                 |   |      | —   |   |      |   | 256,100   |      |   |   | 738,388   |   |   |   | 182,100 |   |
| Awards available for grant         |   |      | 3,015,150 |   |      |   | 472,000   |      |   |   | —   |   |   |   | — |   |

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Table of Contents

|                             |   | June 28, 2009 |      |   | June 29, 2008                  |   |
|----------------------------------|--------|---------------|-----------|--------|--------------------------------|--------|
|                             |   | Options       |      |   | Weighted-AverageExercise Price |   |   | Options |   |   | Weighted-AverageExercise Price |   |
| Outstanding at beginning of year |   |          | 1,294,263 |   |                           | $      | 14.53 |   |   |   | 1,426,638 |   |   | $ | 16.06  |   |
| Granted                          |   |          | —   |   |                           | $      | — |   |   |   | — |   |   | $ | — |   |
| Exercised                        |   |          | —   |   |                           | $      | — |   |   |   | (6,500 | ) |   | $ | 8.32 |   |
| Expired                          |   |          | (96,925   | )      |                           | $      | 21.37 |   |   |   | (111,125 | ) |   | $ | 33.11 |   |
| Forfeited                        |   |          | —   |   |                           | $      | — |   |   |   | — |   |   | $ | — |   |
| Outstanding at end of period     |   |          | 1,197,338 |   |                           | $      | 13.98 |   |   |   | 1,309,013 |   |   | $ | 14.65 |   |
|                             |   |          |      |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Exercisable at end of period     |   |          | 1,176,588 |   |                           | $      | 13.98 |   |   |   | 1,234,488 |   |   | $ | 14.77 |   |

|                           |   | June 28, 2009 |    |   | June 29, 2008                        |   |
|--------------------------------|--------|---------------|---------|--------|--------------------------------------|--------|
|                           |   | Options       |    |   | Weighted-averageGrant-DateFair Value |   |   | Options |   |   | Weighted-averageGrant-DateFair Value |   |
| Nonvested at beginning of year |   |          | 74,525  |   |                                 | $      | 6.36 |   |   |   | 158,587 |   |   | $ | 6.41 |   |
| Granted                        |   |          | — |   |                                 | $      | — |   |   |   | — |   |   | $ | — |   |
| Vested                         |   |          | (53,775 | )      |                                 | $      | 6.41 |   |   |   | (84,062 | ) |   | $ | 6.46 |   |
| Forfeited                      |   |          | — |   |                                 | $      | — |   |   |   | — |   |   | $ | — |   |
| Nonvested at end of period     |   |          | 20,750  | (1)    |                                 | $      | 6.24 |   |   |   | 74,525 | (1) |   | $ | 6.36 |   |

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Table of Contents

|                     |                |   | Options Outstanding           |   |    | Options Exercisable                                 |   |
|--------------------------|---------------------|--------|-------------------------------|--------|---------|-----------------------------------------------------|--------|
| Range of Exercise Prices |                |   | Number Outstanding at 6/28/09 |   |    | Weighted Average Remaining Contractual Life (Years) |   |   | Weighted Average Exercise Price |   |   | Number Exercisable at 6/28/09 |   |   | Weighted Average Exercise Price |   |
| $                        | 7.70 – 11.11  |   |                          |   | 732,163 |                                                |   |   | 4.13 |   |   | $ | 9.37 |   |   |   | 732,163 |   |   | $ | 9.37 |   |
|                     | 13.68 – 16.24 |   |                          |   | 227,800 |                                                |   |   | 4.24 |   |   |   | 14.12 |   |   |   | 207,050 |   |   |   | 14.16 |   |
|                     | 23.00 – 33.63 |   |                          |   | 193,125 |                                                |   |   | 1.81 |   |   |   | 23.22 |   |   |   | 193,125 |   |   |   | 23.22 |   |
|                     | 35.97 – 79.25 |   |                          |   | 44,250  |                                                |   |   | 0.87 |   |   |   | 49.16 |   |   |   | 44,250 |   |   |   | 49.16 |   |

|                                        |   | June 28, 2009 |     |   | June 29, 2008                        |   |
|---------------------------------------------|--------|---------------|----------|--------|--------------------------------------|--------|
|                                        |   | RSUs          |     |   | Weighted-averageGrant-DateFair Value |   |   | RSUs |   |   | Weighted-averageGrant-DateFair Value |   |
| Outstanding at beginning of year            |   |          | 700,358  |   |                                 | $      | 10.76 |   |   |   | 595,148 |   |   | $ | 11.59 |   |
| Granted                                     |   |          | 390,850  |   |                                 | $      | 6.09 |   |   |   | 240,950 |   |   | $ | 10.80 |   |
| Converted                                   |   |          | (205,591 | )      |                                 | $      | 10.56 |   |   |   | (135,180 | ) |   | $ | 11.79 |   |
| Forfeited                                   |   |          | (12,780  | )      |                                 | $      | 11.87 |   |   |   | (18,610 | ) |   | $ | 12.32 |   |
| Outstanding at end of period                |   |          | 872,837  |   |                                 | $      | 8.70 |   |   |   | 682,308 |   |   | $ | 10.35 |   |
|                                        |   |          |     |   |                                 |   |   |   |   |   |   |   |   |   |   |   |
| Weighted-average remaining contractual life |   | 4.9 years     |     |   |                                 |   |   |   | 4.7 years |   |   |   |   |   |

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| ·   | Tusonix, Inc. (“Tusonix”), based in Tucson, Arizona, a leader in the design and manufacture of ceramic electromagnetic interference and radio frequency interference (“EMI/RFI”) filters; and |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Orion Manufacturing, Inc. (“Orion”), based in San Jose, California, a contract electronics manufacturer. |
|--------------------|----------------------------------------------------------------------------------------------------------------------|

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| ($ in thousands)       |   | June 28,2009 |   |   | December 31,2008 |   |
|------------------------|--------|--------------|--------|--------|------------------|--------|
| Finished goods         |   | $            | 7,234  |   |             | $      | 7,813 |   |
| Work-in-process        |   |         | 17,680 |   |             |   | 16,246 |   |
| Raw materials          |   |         | 36,831 |   |             |   | 46,808 |   |
| Total inventories, net |   | $            | 61,745 |   |             | $      | 70,867 |   |

| ($ in thousands)                                                                                                                                               |   | June 28,2009 |    |   | December 31,2008 |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------|---------|--------|------------------|--------|
| Revolving credit agreement, weighted-average interest rate of 1.2%, and 4.2% due in 2011                                                                       |   | $            | 51,000  |   |             | $      | 48,000 |   |
| Convertible, senior subordinated debentures at an effective interest rate of 7.0% and a coupon rate of 2.1%,    due in 2024, net of discount of $512 |   |         | — |   |             |   | 31,988 |   |
|                                                                                                                                                           |   |         |    |   |             |   |   |   |
| Total long-term debt                                                                                                                                           |   | $            | 51,000  |   |             | $      | 79,988 |   |

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|                             |   | Three months endedJune 29, 2008 |   |   |        |   |   | Six months endedJune 29, 2008            |   |   |                   |   |
|----------------------------------|--------|---------------------------------|--------|--------|-------------|--------|--------|------------------------------------------|--------|--------|------------------------|--------|
| ($ in thousands)                 |   | As originally reported          |   |   | As adjusted |   |   | Effect of change in accounting principle |   |   | As originally reported |   |   | As adjusted |   |   | Effect of change in accounting principle |   |
| Interest expense                 |   | $                               | 1,058  |   |        | $      | 1,707  |                                     |   | $      | 649                    |   |   | $ | 2,117 |   |   | $ | 3,385 |   |   | $ | 1,268 |   |
| Tax expense                      |   | $                               | 2,807  |   |        | $      | 2,547  |                                     |   | $      | (260                   | )      |   | $ | 4,688 |   |   | $ | 4,178 |   |   | $ | (510 | ) |
| Net Earnings                     |   | $                               | 9,957  |   |        | $      | 9,568  |                                     |   | $      | (389                   | )      |   | $ | 16,623 |   |   | $ | 15,865 |   |   | $ | (758 | ) |
| Earnings per share-basic         |   | $                               | 0.30   |   |        | $      | 0.28   |                                     |   | $      | (0.02                  | )      |   | $ | 0.49 |   |   | $ | 0.47 |   |   | $ | (0.02 | ) |
| Earnings per share-fully diluted |   | $                               | 0.27   |   |        | $      | 0.27   |                                     |   | $      | —                |   |   | $ | 0.45 |   |   | $ | 0.45 |   |   | $ | — |   |

|                                     |   | Three Months Ended |   |   | Six Months Ended |   |
|------------------------------------------|--------|--------------------|--------|--------|------------------|--------|
| ($ in thousands)                         |   | June 28, 2009      |   |   | June 29, 2008    |   |   | June 28, 2009 |   |   | June 29, 2008 |   |
| PENSION PLANS                            |   |               |   |   |             |   |   |   |   |   |   |   |
| Service cost                             |   | $                  | 779    |   |             | $      | 887 |   |   | $ | 1,558 |   |   | $ | 1,774 |   |
| Interest cost                            |   |               | 3,440  |   |             |   | 3,298 |   |   |   | 6,872 |   |   |   | 6,595 |   |
| Expected return on plan assets (1)  |   |               | (6,101 | )      |             |   | (6,596 | ) |   |   | (12,197 | ) |   |   | (13,193 | ) |
| Amortization of prior service cost       |   |               | 126    |   |             |   | 134 |   |   |   | 252 |   |   |   | 269 |   |
| Amortization of loss                     |   |               | 1,221  |   |             |   | 430 |   |   |   | 2,442 |   |   |   | 859 |   |
| Net pension income                       |   | $                  | (535   | )      |             | $      | (1,847 | ) |   | $ | (1,073 | ) |   | $ | (3,696 | ) |

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|                              |   | Three Months Ended |   |   | Six Months Ended |   |
|-----------------------------------|--------|--------------------|--------|--------|------------------|--------|
| ($ in thousands)                  |   | June 28, 2009      |   |   | June 29, 2008    |   |   | June 28, 2009 |   |   | June 29, 2008 |   |
| OTHER POSTRETIREMENT BENEFIT PLAN |   |               |   |   |             |   |   |   |   |   |   |   |
| Service cost                      |   | $                  | 2      |   |             | $      | 5 |   |   | $ | 5 |   |   | $ | 10 |   |
| Interest cost                     |   |               | 79     |   |             |   | 92 |   |   |   | 157 |   |   |   | 184 |   |
| Amortization of gain              |   |               | (25    | )      |             |   | — |   |   |   | (50 | ) |   |   | — |   |
| Net postretirement expense        |   | $                  | 56     |   |             | $      | 97 |   |   | $ | 112 |   |   | $ | 194 |   |

| ($ in thousands)                  |   | EMS     |    |   | Components and Sensors |    |    | Total   |   |
|-----------------------------------|--------|---------|---------|--------|------------------------|---------|---------|---------|--------|
| Second Quarter of 2009            |   |    |    |   |                   |    |    |    |   |
| Net sales to external customers   |   | $       | 70,807  |   |                   | $       | 49,591  |    |   | $ | 120,398 |   |
| Segment operating earnings        |   |  $ | 1,081   |   |                   |  $ | 2,088   |    |   |  $ | 3,169 |   |
| Total assets                      |   |  $ | 125,491 |   |                   |  $ | 268,864 |    |   |  $ | 394,355 |   |
|                              |   |    |    |   |                   |    |    |    |   |   |   |   |
| Second Quarter of 2008            |   |    |    |   |                   |    |    |    |   |   |   |   |
| Net sales to external customers   |   | $       | 101,996 |   |                   | $       | 84,095  |    |   | $ | 186,091 |   |
| Segment operating earnings        |   |  $ | 3,684   |   |                   |  $ | 10,212  |    |   | $ | 13,896 |   |
| Total assets                      |   |  $ | 191,847 |   |                   |  $ | 383,834 |    |   |  $ | 575,681 |   |
|                              |   |    |    |   |                   |    |    |    |   |   |   |   |
| First Six Months of 2009          |   |    |    |   |                   |    |    |    |   |   |   |   |
| Net sales to external customers   |   | $       | 146,629 |   |                   | $       | 91,900  |    |   | $ | 238,529 |   |
| Segment operating earnings/(loss) |   |  $ | 4,345   |   |                   |  $ | (1,320  | )  |   |  $ | 3,025 |   |
| Total assets                      |   |  $ | 125,491 |   |                   |  $ | 268,864 |    |   |  $ | 394,355 |   |
|                              |   |    |    |   |                   |    |    |    |   |   |   |   |
| First Six Months of 2008          |   |    |    |   |                   |    |    |    |   |   |   |   |
| Net sales to external customers   |   | $       | 196,964 |   |                   | $       | 161,882 |    |   | $ | 358,846 |   |
| Segment operating earnings        |   |  $ | 5,714   |   |                   |  $ | 16,987  |    |   |  $ | 22,701 |   |
| Total assets                      |   |  $ | 191,847 |   |                   |  $ | 383,834 |    |   |  $ | 575,681 |   |

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|                                |   | Three Months Ended |    |   | Six Months Ended |   |
|-------------------------------------|--------|--------------------|---------|--------|------------------|--------|
| ($ in thousands)                    |   | June 28, 2009      |    |   | June 29, 2008    |   |   | June 28, 2009 |   |   | June 29, 2008 |   |
| Total segment operating earnings    |   | $                  | 3,169   |   |             | $      | 13,896 |   |   | $ | 3,025 |   |   | $ | 22,701 |   |
| Restructuring and related charges   |   |               | — |   |             |   | (112 | ) |   |   | (2,243 | ) |   |   | (536 | ) |
| Goodwill impairment                 |   |               | — |   |             |   | — |   |   |   | (33,153 | ) |   |   | — |   |
| Interest expense                    |   |               | (471    | )      |             |   | (1,707 | ) |   |   | (1,359 | ) |   |   | (3,385 | ) |
| Interest income                     |   |               | 31      |   |             |   | 380 |   |   |   | 101 |   |   |   | 858 |   |
| Other (expense)/income              |   |               | (25     | )      |             |   | (342 | ) |   |   | (346 | ) |   |   | 405 |   |
| Earnings/(loss) before income taxes |   | $                  | 2,704   |   |             | $      | 12,115 |   |   | $ | (33,975 | ) |   | $ | 20,043 |   |

| ($ in millions)                                                                         November2007 Plan |   | Planned Costs |   |   | Actual incurred throughDecember 31, 2008 |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|--------|--------|------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |          |   |   |                                     |   |
| Workforce reduction                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | $             | 1.7    |   |                                     | $      | 1.5 |   |
| Asset impairments                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |          | 0.9    |   |                                     |   | 1.2 |   |
| Restructuring charge                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |          | 2.6    |   |                                     |   | 2.7 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |          |   |   |                                     |   |   |   |
| Equipment relocation                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |          | 0.2    |   |                                     |   | 0.1 |   |
| Other costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |          | 0.2    |   |                                     |   | 0.4 |   |
| Restructuring-related costs                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |          | 0.4    |   |                                     |   | 0.5 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |          |   |   |                                     |   |   |   |
| Total restructuring and restructuring-related costs                                                                                                                                                                                                                                                                                                                                                                                                                               |   | $             | 3.0    |   |                                     | $      | 3.2 |   |

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| ($ in millions)                                                                                    September2008 Plan |   | Planned Costs |   |   | Actual incurredthroughDecember 31, 2008 |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|--------|--------|-----------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |          |   |   |                                    |   |
| Workforce reduction                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | $             | 2.4    |   |                                    | $      | 3.9 |   |
| Asset impairments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |          | 1.1    |   |                                    |   | 1.2 |   |
| Other charges                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |          | 0.2    |   |                                    |   | 0.1 |   |
| Restructuring charge                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |          | 3.7    |   |                                    |   | 5.2 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |          |   |   |                                    |   |   |   |
| Equipment and employee relocation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |          | 0.2    |   |                                    |   | 0.1 |   |
| Other costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |          | 0.5    |   |                                    |   | 0.2 |   |
| Restructuring-related costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |          | 0.7    |   |                                    |   | 0.3 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |          |   |   |                                    |   |   |   |
| Total restructuring and restructuring-related costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   | $             | 4.4    |   |                                    | $      | 5.5 |   |

|  ($ in millions)                                                                                 September2008 Plan |   |   |    |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|
| Restructuring liability at January 1, 2009                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | $      | 1.7     |   |
| Restructuring and restructuring-related charges, excluding asset impairments and write-offs                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   | — |   |
| Cost paid                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   | (1.7    | ) |
| Restructuring liability at June 28, 2009                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | $      | — |   |

| ($ in millions)                                                                                      March 2009 Plan |   | Planned Costs |    |   | Actual incurred throughJune 28, 2009 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|---------|--------|--------------------------------------|--------|
| Workforce reduction                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | $             | 1.9     |   |                                 | $      | 2.1 |   |
| Asset impairments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |          | — |   |                                 |   | 0.1 |   |
| Total restructuring and impairment charge                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | $             | 1.9     |   |                                 | $      | 2.2 |   |

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| ($ in millions)                                                                                    March 2009 Plan |   |   |    |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------|
| Restructuring liability at January 1, 2009                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | $      | — |   |
| Restructuring and restructuring-related charges, excluding asset impairments and write-offs                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   | 2.1     |   |
| Cost paid                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   | (1.9    | ) |
| Restructuring liability at June 28, 2009                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | $      | 0.2     |   |

|                           |   | EMS    |    |   | Components & Sensors |   |    | Total CTS |   |
|--------------------------------|--------|--------|---------|--------|--------------------------|--------|---------|-----------|--------|
| Balance at January 1, 2008     |   | $      | 24,144  |   |                     | $      | 513     |      |   | $ | 24,657 |   |
|                           |   |   |    |   |                     |   |    |      |   |   |   |   |
| Tusonix acquisition            |   |   | — |   |                     |   | 1,857   |      |   |   | 1,857 |   |
| Orion acquisition              |   |   | 6,636   |   |                     |   | — |      |   |   | 6,636 |   |
|                           |   |   |    |   |                     |   |    |      |   |   |   |   |
| Balance at December 31, 2008   |   |   | 30,780  |   |                     |   | 2,370   |      |   |   | 33,150 |   |
|                           |   |   |    |   |                     |   |    |      |   |   |   |   |
| Purchase accounting adjustment |   |   | — |   |                     |   | 3       |      |   |   | 3 |   |
| Impairment loss                |   |   | (30,780 | )      |                     |   | (2,373  | )         |   |   | (33,153 | ) |
|                           |   |   |    |   |                     |   |    |      |   |   |   |   |
| Balance at June 28, 2009       |   | $      | — |   |                     | $      | — |      |   | $ | — |   |

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|                                       |   | June 28, 2009         |    |   | December 31, 2008        |   |
|--------------------------------------------|--------|-----------------------|---------|--------|--------------------------|--------|
| ($ in thousands)                           |   | Gross Carrying Amount |    |   | Accumulated Amortization |   |   | Gross Carrying Amount |   |   | Accumulated Amortization |   |
| Amortized intangible assets:               |   |                  |    |   |                     |   |   |   |   |   |   |   |
| Customer lists/relationships               |   | $                     | 51,084  |   |                     | $      | (16,290 | ) |   | $ | 51,084 |   |   | $ | (15,038 | ) |
| Patents                                    |   |                  | 10,319  |   |                     |   | (10,319 | ) |   |   | 10,319 |   |   |   | (9,886 | ) |
| Other intangibles                          |   |                  | 500     |   |                     |   | (78 | ) |   |   | 500 |   |   |   | (52 | ) |
| Total                                      |   |                  | 61,903  |   |                     |   | (26,687 | ) |   |   | 61,903 |   |   |   | (24,976 | ) |
| Goodwill                                   |   |                  | — |   |                     |   | — |   |   |   | 33,150 |   |   |   | — |   |
| Total other intangible assets and goodwill |   | $                     | 61,903  |   |                     | $      | (26,687 | ) |   | $ | 95,053 |   |   | $ | (24,976 | ) |

| ($ in thousands, except per share amounts)  |   | Net Earnings(Numerator) |    |    | Shares(in thousands) (Denominator) |   |    | Per Share Amount |   |
|---------------------------------------------|--------|-------------------------|---------|---------|------------------------------------|--------|---------|------------------|--------|
| Second Quarter 2009                         |   |                    |    |    |                               |   |    |             |   |
| Basic EPS                                   |   | $                       | (7,025  | )  |                               |   | 33,779  |             |   | $ | (0.21 | )  |
| Effect of dilutive securities:              |   |                    |    |    |                               |   |    |             |   |   |   |   |
|   Convertible debt                |   |                    | — |    |                               |   | — |             |   |   |   |   |
|   Equity-based compensation plans |   |                    | — |    |                               |   | — |             |   |   |   |   |
| Diluted EPS                                 |   |  $                 | (7,025  | )  |                               |   | 33,779  |             |   | $ | (0.21 | )  |
|                                        |   |                    |    |    |                               |   |    |             |   |   |   |   |
| Second Quarter 2008                         |   |                    |    |    |                               |   |    |             |   |   |   |   |
| Basic EPS                                   |   | $                       | 9,568   |    |                               |   | 33,652  |             |   | $ | 0.28 |   |
| Effect of dilutive securities:              |   |                    |    |    |                               |   |    |             |   |   |   |   |
|   Convertible debt                |   |                    | 652     |    |                               |   | 4,000   |             |   |   |   |   |
|   Equity-based compensation plans |   |                    | — |    |                               |   | 438     |             |   |   |   |   |
| Diluted EPS                                 |   | $                       | 10,220  |    |                               |   | 38,090  |             |   | $ | 0.27 |   |
|                                        |   |                    |    |    |                               |   |    |             |   |   |   |   |
| First Six Months of 2009                    |   |                    |    |    |                               |   |    |             |   |   |   |   |
| Basic EPS                                   |   | $                       | (42,674 | )  |                               |   | 33,762  |             |   | $ | (1.26 | )  |
| Effect of dilutive securities:              |   |                    |    |    |                               |   |    |             |   |   |   |   |
|   Convertible debt                |   |                    | — |    |                               |   | — |             |   |   |   |   |
|   Equity-based compensation plans |   |                    | — |    |                               |   | — |             |   |   |   |   |
| Diluted EPS                                 |   |  $                 | (42,674 | )  |                               |   | 33,762  |             |   | $ | (1.26 | )  |
|                                        |   |                    |    |    |                               |   |    |             |   |   |   |   |
| First Six Months of 2008                    |   |                    |    |    |                               |   |    |             |   |   |   |   |
| Basic EPS                                   |   | $                       | 15,865  |    |                               |   | 33,748  |             |   | $ | 0.47 |   |
| Effect of dilutive securities:              |   |                    |    |    |                               |   |    |             |   |   |   |   |
|   Convertible debt                |   |                    | 1,283   |    |                               |   | 4,000   |             |   |   |   |   |
|   Equity-based compensation plans |   |                    | — |    |                               |   | 461     |             |   |   |   |   |
| Diluted EPS                                 |   | $                       | 17,148  |    |                               |   | 38,209  |             |   | $ | 0.45 |   |

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|                                                                     |   | Three Months Ended |   | Six Months Ended |   |
|--------------------------------------------------------------------------|--------|--------------------|--------|------------------|--------|
| (Number of Shares in Thousands)                                          |   | June 28, 2009      |   | June 29, 2008    |   | June 28, 2009 |   | June 29, 2008 |   |
| Stock options where the assumed proceeds exceeds theaverage market price |   |               | 1,197  |             |   | 756 |   |   | 1,241 |   |   | 711 |   |
| Restricted stock units                                                   |   |               | 637    |             |   | — |   |   | 566 |   |   | — |   |
| Securities related to the subordinated convertible debt                  |   |               | 786    |             |   | — |   |   | 1,476 |   |   | — |   |

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Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”)

| ·   | Total sales in the second quarter 2009 of $120.4 million were reported through two segments, EMS and Components and Sensors.  Sales decreased by $65.7 million, or 35.3%, in the second quarter of 2009 from the second quarter of 2008.  Sales in the Components and Sensors segment decreased by 41.0% versus the second quarter of 2008, whilesales in the EMS segment decreased by 30.6% compared to the second quarter of 2008. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Gross margins, as a percent of sales, were 18.2% and 21.6% in the second quarters of 2009 and 2008, respectively.  Sales in the Components and Sensors segment, which inherently generates a higher gross margin, decreased to 41.2% of total company sales in the second quarter of 2009 compared to 45.2% of total sales in the same period of 2008. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Selling, general and administrative (“SG&A”) and research and development (“R&D”) expenses were $18.7 million in the second quarter of 2009 compared to $26.3 million in the second quarter of 2008.  This significant reduction reflects our proactive management of costs, including the benefits of previously announcedrestructuring actions and aggressive cost-cutting measures companywide. SG&A expenses in the second quarter of 2009 also include a $1.1 million pre-tax gain on the sale of an idle facility. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Interest and other expense in 2009 was $0.5 million versus $1.7 million in the same quarter 2008, primarily due to lower outstanding debt. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The effective tax rate for the second quarter of 2009 was 360%.  Income tax expense in the amount of $9.7 million was recorded during the second quarter of 2009.  This included a discrete period tax expense of $9.1 million related to cash repatriation.  Of this $9.1 million amount, approximately $8.6 million is a non-cashexpense. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Net loss was $7.0 million, or $0.21 per diluted share, in the second quarter of 2009, including $9.1 million, or $0.27 per diluted share, for a discrete period tax expense related to cash repatriation in the quarter.  This compares with net income of $9.6 million, or $0.27 per diluted share, in the second quarter of 2008. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| ·   | Inventory valuation, the allowance for doubtful accounts, and other accrued liabilities |
|--------------------|-----------------------------------------------------------------------------------------|

| ·   | Long-lived and intangible assets valuation, and depreciation/amortization periods |
|--------------------|-----------------------------------------------------------------------------------|

| ·   | Income taxes |
|--------------------|--------------|

| ·   | Retirement plans |
|--------------------|------------------|

| ·   | Equity-based compensation |
|--------------------|---------------------------|

| ($ in thousands)           |   | Components & Sensors |   |    | EMS    |    |    | ConsolidatedTotal |   |
|----------------------------|--------|--------------------------|--------|---------|--------|---------|---------|-------------------|--------|
| Second Quarter 2009        |   |                     |   |    |   |    |    |              |   |
| Sales                      |   | $                        | 49,591 |    |   | $       | 70,807  |              |   | $ | 120,398 |   |
| Segment operating earnings |   | $                   | 2,088  |    |   | $  | 1,081   |              |   | $  | 3,169 |   |
| % of sales                 |   |                     | 4.2    | %  |   |    | 1.5     | %            |   |   | 2.6 | %  |
|                       |   |                     |   |    |   |    |    |              |   |   |   |   |
| Second Quarter 2008        |   |                     |   |    |   |    |    |              |   |   |   |   |
| Sales                      |   | $                        | 84,095 |    |   | $       | 101,996 |              |   | $ | 186,091 |   |
| Segment operating earnings |   | $                   | 10,212 |    |   | $  | 3,684   |              |   | $  | 13,896 |   |
| % of sales                 |   |                     | 12.1   | %       |   |    | 3.6     | %            |   |   | 7.5 | %  |

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|                                                  |   | Three months ended |    |    |          |    |
|-------------------------------------------------------|--------|--------------------|---------|---------|---------------|---------|
|  ($ in thousands, except net earnings per share) |   | June 28, 2009      |    |    | June 29, 2008 |    |   | Increase(Decrease) |   |
| Net sales                                             |   | $                  | 120,398 |    |          | $       | 186,091 |   |   | $ | (65,693 | )  |
|                                                  |   |               |    |    |          |    |   |   |   |   |   |   |
| Gross margin                                          |   | $             | 21,878  |    |          | $  | 40,153 |   |   | $  | (18,275 | ) |
| % of net sales                                        |   |               | 18.2    | %       |          |    | 21.6 | % |   |   | (3.4 | )% |
|                                                  |   |               |    |    |          |    |   |   |   |   |   |   |
| Selling, general and administrative expenses          |   | $             | 15,243  |    |          | $  | 21,506 |   |   | $  | (6,263 | )  |
| % of net sales                                        |   |               | 12.7    | %       |          |    | 11.6 | % |   |   | 1.1 | % |
|                                                  |   |               |    |    |          |    |   |   |   |   |   |   |
| Research and development expenses                     |   | $                  | 3,466   |    |          | $  | 4,750 |   |   | $  | (1,284 | ) |
| % of net sales                                        |   |               | 2.9     | %       |          |    | 2.6 | % |   |   | 0.3 | % |
|                                                  |   |               |    |    |          |    |   |   |   |   |   |   |
| Operating earnings                                    |   | $                  | 3,169   |    |          | $  | 13,784 |   |   | $  | (10,615 | ) |
| % of net sales                                        |   |               | 2.6     | %       |          |    | 7.4 | % |   |   | (4.8 | )% |
|                                                  |   |               |    |    |          |    |   |   |   |   |   |   |
| Income tax expense                                    |   | $             | 9,729   |    |          | $  | 2,547 |   |   | $  | 7,182 |   |
|                                                  |   |               |    |    |          |    |   |   |   |   |   |   |
| Net (loss)/earnings                                   |   | $                  | (7,025  | )  |          | $  | 9,568 |   |   | $  | (16,593 | ) |
| % of net sales                                        |   |               | (5.8    | )%      |          |    | 5.1 | % |   |   | (10.9 | )% |
|                                                  |   |               |    |    |          |    |   |   |   |   |   |   |
| Net (loss)/earnings per diluted share                 |   | $                  | (0.21   | )  |          |  $ | 0.27 |   |   | $ | (0.48 | )  |

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| ($ in thousands)                  |   | Components & Sensors |    |     | EMS    |    |    | ConsolidatedTotal |   |
|-----------------------------------|--------|--------------------------|---------|----------|--------|---------|---------|-------------------|--------|
| First Six Months 2009             |   |                     |    |     |   |    |    |              |   |
| Sales                             |   | $                        | 91,900  |     |   | $       | 146,629 |              |   | $ | 238,529 |   |
| Segment operating (loss)/earnings |   | $                   | (1,320  | )   |   | $  | 4,345   |              |   | $  | 3,025 |   |
| % of sales                        |   |                     | (1.4    | )%  |   |    | 3.0     | %            |   |   | 1.3 | %  |
|                              |   |                     |    |     |   |    |    |              |   |   |   |   |
| First Six Months 2008             |   |                     |    |     |   |    |    |              |   |   |   |   |
| Sales                             |   | $                        | 161,882 |     |   | $       | 196,964 |              |   | $ | 358,846 |   |
| Segment operating earnings        |   | $                   | 16,987  |     |   | $  | 5,714   |              |   | $  | 22,701 |   |
| % of sales                        |   |                     | 10.5    | %        |   |    | 2.9     | %            |   |   | 6.3 | %  |

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|                                                  |   | Six months ended |    |    |          |    |
|-------------------------------------------------------|--------|------------------|---------|---------|---------------|---------|
|  ($ in thousands, except net earnings per share) |   | June 28, 2009    |    |    | June 29, 2008 |    |   | Increase(Decrease) |   |
| Net sales                                             |   | $                | 238,529 |    |          | $       | 358,846 |   |   | $ | (120,317 | )  |
|                                                  |   |             |    |    |          |    |   |   |   |   |   |   |
| Gross margin                                          |   | $           | 41,707  |    |          | $  | 73,977 |   |   | $  | (32,270 | ) |
| % of net sales                                        |   |             | 17.5    | %       |          |    | 20.6 | % |   |   | (3.1 | )% |
|                                                  |   |             |    |    |          |    |   |   |   |   |   |   |
| Selling, general and administrative expenses          |   | $           | 31,863  |    |          | $  | 42,482 |   |   | $  | (10,619 | )  |
| % of net sales                                        |   |             | 13.4    | %       |          |    | 11.8 | % |   |   | 1.6 | % |
|                                                  |   |             |    |    |          |    |   |   |   |   |   |   |
| Research and development expenses                     |   | $           | 6,819   |    |          | $  | 9,067 |   |   | $  | (2,248 | ) |
| % of net sales                                        |   |             | 2.9     | %       |          |    | 2.5 | % |   |   | 0.4 | % |
|                                                  |   |             |    |    |          |    |   |   |   |   |   |   |
| Restructuring charge                                  |   | $           | 2,243   |    |          | $  | 263 |   |   | $  | 1,980 |   |
| % of net sales                                        |   |             | 0.9     | %       |          |    | 0.1 | % |   |   | 0.8 | % |
|                                                  |   |             |    |    |          |    |   |   |   |   |   |   |
| Goodwill impairment                                   |   | $           | 33,153  |    |          | $  | — |   |   | $  | 33,153 |   |
| % of net sales                                        |   |             | 13.9    | %       |          |    | — | % |   |   | 13.9 | % |
|                                                  |   |             |    |    |          |    |   |   |   |   |   |   |
| Operating (loss)/earnings                             |   | $           | (32,371 | )  |          | $  | 22,165 |   |   | $  | (54,536 | ) |
| % of net sales                                        |   |             | (13.6   | )%      |          |    | 6.2 | % |   |   | (19.8 | )% |
|                                                  |   |             |    |    |          |    |   |   |   |   |   |   |
| Income tax expense                                    |   | $           | 8,699   |    |          | $  | 4,178 |   |   | $  | 4,521 |   |
|                                                  |   |             |    |    |          |    |   |   |   |   |   |   |
| Net (loss)/earnings                                   |   | $           | (42,674 | )  |          | $  | 15,865 |   |   | $  | (58,539 | ) |
| % of net sales                                        |   |             | (17.9   | )%      |          |    | 4.4 | % |   |   | (22.3 | )% |
|                                                  |   |             |    |    |          |    |   |   |   |   |   |   |
| Net (loss)/earnings per diluted share                 |   | $                | (1.26   | )  |          |  $ | 0.45 |   |   | $ | (1.71 | )  |
|                                                  |   |             |    |    |          |    |   |   |   |   |   |   |

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Item 3.   Quantitative and Qualitative Disclosures About Market Risk 

| Item 4.   Controls and Procedures |
|--------------------------------------------------|

PART II - OTHER INFORMATION 

| Item 1.   Legal Proceedings |
|--------------------------------------------|

Item 1A

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Item 4.    Submission of Matters to a Vote of Security Holders

|   | Director             |   | For        |   | Withheld  |   |
|--------|----------------------|--------|------------|--------|-----------|--------|
|   | Walter S. Catlow     |   | 29,923,078 |   | 780,140   |   |
|   | Lawrence J. Ciancia  |   | 30,114,344 |   | 588,874   |   |
|   | Thomas G. Cody       |   | 27,695,959 |   | 3,007,259 |   |
|   | Patricia K. Collawn  |   | 30,015,704 |   | 687,514   |   |
|   | Roger R. Hemminghaus |   | 30,178,539 |   | 524,679   |   |
|   | Michael A. Henning   |   | 30,006,986 |   | 696,232   |   |
|   | Vinod M. Khilnani    |   | 29,901,293 |   | 801,925   |   |
|   | Robert A. Profusek   |   | 29,898,407 |   | 804,811   |   |

|   | For        |   | Against   |   | Abstain   |   |
|--------|------------|--------|-----------|--------|-----------|--------|
|   | 24,492,162 |   | 2,488,761 |   | 1,422,907 |   |

|   | For        |   | Against |   | Abstain |   |
|--------|------------|--------|---------|--------|---------|--------|
|   | 30,598,435 |   | 62,781  |   | 42,001  |   |

Item 6

| (31)(a) | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                      |
|---------|-------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                          |
| (31)(b) | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                      |
|    |                                                                                                                          |
| (32)(a) | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.       |
|    |                                                                                                                          |
| (32)(b) | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.  |

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SIGNATURES

| CTS Corporation                                                    |   | CTS Corporation                                                   |   |
|--------------------------------------------------------------------|--------|-------------------------------------------------------------------|--------|
|                                                               |   |                                                              |   |
| /s/ Richard G. Cutter III                                          |   | /s/ Donna L. Belusar                                              |   |
| Richard G. Cutter IIIVice President, Secretary and General Counsel |   | Donna L. BelusarSenior Vice President and Chief Financial Officer |   |
|                                                               |   |                                                              |   |
| Dated: July 28, 2009                                               |   |  Dated: July 28, 2009                                        |   |

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