CTS CORPORATION


                          UNITED STATES

                SECURITIES AND EXCHANGE COMMISSION

                               1996

                            FORM 10-K

                          ANNUAL REPORT





                               CTS 



 UNITED STATES                   
                SECURITIES AND EXCHANGE COMMISSION
                      WASHINGTON, DC  20549

                            Form 10-K
(Mark One)

 X   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
          For Fiscal Year Ended December 31, 1996

                                OR

____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

          Commission File Number:  1-4639

                          CTS CORPORATION                   
      (Exact name of registrant as specified in its charter)

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

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

Registrant's telephone number, including area code:  219-293-7511
     Web site address: http://www.ctscorp.com

Securities registered pursuant to Section 12(b) of the Act:      

                                        Name of Each Exchange 
     Title of Each Class                 on Which Registered     

Common stock, without par value         New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:  None

Indicate by check mark whether the registrant has:  (1) filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days.                        
                     Yes    X          No        

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K.    
                                                       X
There were 5,226,496 shares of Common Stock, without par value,
outstanding on March 7, 1997.

The aggregate market value of the voting stock held by non-affiliates
of CTS Corporation was approximately $132.5 million on March 7, 1997.

               DOCUMENTS INCORPORATED BY REFERENCE


     (1)  Portions of the CTS Corporation 1996 Annual Report for the fiscal
          year ended December 31, 1996, incorporated by reference in Part I and
          Part II.

     (2)  Portions of the 1997 Proxy Statement for annual meeting of share-
          holders to be held on April 25, 1997, incorporated by reference in
          Part III.

     (3)  Certain portions of the CTS Corporation Form 10-K for the
          1987 fiscal year ended January 3, 1988, incorporated by
          reference in Part IV.

     (4)  Certain portions of Registration Statement No. 33-27749, effective
          March 23, 1989, incorporated by reference in Part IV.

     (5)  Certain portions of the 1989 Proxy Statement for annual meeting of
          shareholders held April 28, 1989, incorporated by reference in Part
          IV.

     (6)  Certain portions of the CTS Corporation Form 10-K for the
          1989 fiscal year ended December 31, 1989, incorporated by
          reference in Part IV.

     (7)  Certain portions of the CTS Corporation Form 10-K for the
          1991 fiscal year ended December 31, 1991, incorporated by
          reference in Part IV.

     (8)  Certain portions of the CTS Corporation Form 10-K for the
          1992 fiscal year ended December 31, 1992, incorporated by
          reference in Part IV.

     (9)  Certain portions of the CTS Corporation Form 10-K for the
          1994 fiscal year ended December 31, 1994, incorporated by
          reference in Part IV.


                 EXHIBIT INDEX -- PAGES 17 AND 18


<PAGE>


                              Part I


Item 1.   Business

         INTRODUCTION AND GENERAL DEVELOPMENT OF BUSINESS

The registrant, CTS Corporation (CTS or Company), is an Indiana
corporation incorporated in 1929 as a successor to a company
started in 1896.  CTS' principal executive offices are located at
905 West Boulevard North, Elkhart, Indiana, 46514, telephone number
(219) 293-7511.

CTS designs, manufactures and sells electronic components.  The
engineering and manufacturing of CTS products is performed at 16
facilities worldwide.  CTS products are sold through sales
engineers, sales representatives, agents and distributors.

In March 1987, a settlement was announced between CTS and Dynamics
Corporation of America (DCA), terminating the sale process of the
Company and resolving all disputes between CTS and DCA. 
Subsequently, the United States Supreme Court held that the Control
Share Acquisition Chapter of the Indiana Business Corporation Law
was constitutional.  As a result of the Court's decision, the issue
of voting rights of 1,020,000 shares of CTS common stock acquired
by DCA in 1986 was submitted to a vote of CTS shareholders at the
1987 annual meeting.  The affirmative vote of the majority of all
shares eligible to vote was necessary to grant voting rights.  DCA
was not eligible to vote on the issue.  The shareholders voted not
to grant voting rights to DCA on these shares.  The Court's
decision did not have an impact on the voting rights in additional
shares of CTS common stock previously or subsequently  acquired by
DCA.  In May 1988, the settlement agreement expired pursuant to its
terms.  At the end of 1996, DCA owned 2,303,100 shares (44.1%) of
CTS common stock, including the 1,020,000 shares which were not
granted voting authority.

In January 1990, the Company formally announced the closing of its
Switch Division located in Paso Robles, California. The Paso Robles
manufacturing operations were relocated to the Company's facilities
in Taiwan and Bentonville, Arkansas.  During 1992, the Company
completed the sale of the Paso Robles manufacturing plant and most
of the associated real estate for $1.9 million.  A pretax gain
of $0.9 million was realized from the sale.  The manufacturing
operations for certain variable resistor and selector switch
products, which formerly were performed in Elkhart, Indiana, were
also transferred to Bentonville in 1990, to take advantage of any
efficiencies to be gained in consolidating such operations in
Bentonville.  The buildings located in Elkhart which housed the
plastics molding and element production were vacated, with these
manufacturing operations being consolidated into the main Elkhart
plant.  

CTS announced in July 1990 that its facility near Glasgow,
Scotland, would be expanded in order to manufacture and sell
additional electronic component products in Europe.  The total
capital investment has been approximately $13 million as of
December 31, 1996.  Automotive throttle position sensors and
precision and clock oscillators were added to the product lines
already manufactured in Scotland.  The decision to expand the
Scottish facility was based on several factors, including the
excellent business climate and skills base in Scotland and the
anticipated full participation of the United Kingdom in the
European Economic Community.  The expansion of the Scotland
facility represents a major effort by CTS to serve the large and
rapidly growing European market on a direct basis.

In November 1991, construction was completed on a 53,000 square
foot manufacturing facility in Bangkok, Thailand.  During 1992, the
Company idled operations at this facility.  During 1994, a three-year
lease was finalized with an international computer peripheral
manufacturer for this property.  In early 1997, this lease was
extended to March 31, 1999.  The annual rental amount is
approximately U.S. $355,000.

Also during 1991, the Company significantly reduced the operating
activities at its Brownsville, Texas, facility and plans to sell
this property.  A portion of the Brownsville facility is currently
under a leasing arrangement which expires in 1999, at an annual
rental amount of approximately $60,000.

The manufacturing space owned by CTS in Hong Kong, which consisted
of two floors in a multi-story building, was sold in March 1991. 
One floor was leased back by CTS for the continuation of its
manufacturing operations in Hong Kong.  During 1992, the Company
terminated this lease and discontinued its manufacturing operations
in Hong Kong.  However, the Company maintains a sales office in
Hong Kong.

During 1994, the Company purchased the assets of AT&T
Microelectronics' light emitting diode based optic data link
products business.  The transaction also included sales contracts,
backlog, intellectual property, trademarks, and the design and
manufacturing technology.  These products are manufactured in the
Microelectronics West Lafayette, Indiana, facility.

The manufacturing space owned by CTS in Singapore consists of four
floors in a multi-story building.  The current manufacturing
requirements require three of the four floors, leaving one level
available for lease.  During 1995, a lease for an initial term of
two years with a two-year renewal option was finalized with an
international semiconductor manufacturer for one floor of the
Singapore facility.  The annual rental amount is approximately U.S.
$800,000.

During 1996, the Company sold property in New Hope, Minnesota, for $550,000
in cash and a promissory note.  The Company recognized a pretax gain of 
$35,000.
 
            FINANCIAL INFORMATION ON INDUSTRY SEGMENTS

All of the Company's products are considered one industry segment. 
Sales to unaffiliated customers, operating earnings and
identifiable assets, by geographic area, are contained in "Note G -
Business Segment and Non-U.S. Operations," page 22, of the CTS
Corporation 1996 Annual Report, and is incorporated herein by
reference.  


              PRINCIPAL BUSINESS AND PRODUCTS OF CTS

CTS is primarily in the business of designing, manufacturing and
selling a broad line of electronic components principally serving
the electronic needs of original equipment manufacturers (OEMs).

The Company sells classes of similar products consisting of the
following:

     Automotive control devices    Insulated metal circuits
     Fiber-optic transceivers      Interconnect products
     Flex cable assemblies         Loudspeakers
     Frequency control devices     Resistor networks
     Hybrid microcircuits          Switches
     Industrial electronics        Variable resistors

Most products within these product classes are manufactured by CTS
from purchased raw materials or subassemblies.  Some products sold
by CTS are purchased and resold under the Company's name.

During the past three years, six classes of similar product lines
accounted for 10% or more of consolidated revenue during one or
more years, as follows:

                                 Percent of Consolidated Revenue
Class of Similar Products          1996      1995     1994        

Automotive control devices          30        29       30   
Interconnect products               20        14       17
Frequency control devices           13        16       15   
Resistor networks                   12        12       11   
Hybrid microcircuits                 5         8       10   
Other                               20        21       17

Total                              100%      100%    100%





                             MARKETS

CTS estimates that its products have been sold in the following
electronics OEM and distribution markets and in the following
percentages during the preceding three fiscal years:

                                 Percent of Consolidated Revenue
Markets                            1996      1995      1994     

Automotive                          34        36        38  
Computer Equipment                  21        19        17  
Communications Equipment            20        18        17  
Instruments and Controls            11        10         9  
Defense and Aerospace                7         8        11  
Distribution                         6         6         5
Consumer Electronics                 1         3         3  

   Total                           100%      100%      100%

Products for the automotive market include throttle position
sensors, exhaust gas recirculation sensors, other automotive
application sensors, resistor networks, variable resistors, and
loudspeakers for automotive entertainment systems.

Products for the computer equipment market include flex cable
assemblies, backpanels, resistor networks, switches, frequency
control devices, fiber-optic transceivers and insulated metal
circuits.  Products for this market are principally used in
computers and computer peripheral equipment.

In the communications equipment market, CTS products include
backpanels, frequency control devices, hybrid microcircuits, fiber-optic
transceivers, switches, resistor networks and insulated metal
circuits.  Products for this market are principally used in
telephone equipment and in telephone switching systems.

Products for the instruments and controls market include resistor
networks, hybrid microcircuits, variable resistors and switches. 
Principal end uses are medical electronic devices and electronic
testing, measuring and servicing instruments.

CTS products for the defense and aerospace market, usually procured
through government contractors or subcontractors, are electronic
connectors, hybrid microcircuits, frequency control devices, 
programmable key storage devices and backpanels.

In the distribution market, CTS' primary products include switches,
resistor networks and frequency control devices.  In this market,
standard CTS products are sold for a wide variety of applications.

Products for the consumer electronics market, primarily variable
resistors and switches, are principally used in home entertainment
equipment and appliances.


                    MARKETING AND DISTRIBUTION

Sales of CTS electronic components to original equipment
manufacturers are principally by CTS sales engineers and
manufacturers' representatives.  CTS maintains sales offices in
Elkhart, Indiana; Detroit, Michigan; and in the United Kingdom,
Hong Kong, Taiwan and Japan.  Various regions of the United States
are serviced by sales engineers working out of their homes.  The
sale of electronic components is relatively integrated such that
most of the product lines of CTS are sold through the same field
sales force.  Approximately 40% of net sales in 1996 were
attributable to coverage by CTS sales engineers.

Generally, CTS sales engineers service the Company's largest
customers with application specific products.  CTS sales engineers
work closely with major customers in determining customer require-
ments and in designing CTS products to be provided to such
customers.

CTS uses the services of independent sales representatives and
distributors in the United States and other countries for customers
not serviced by CTS sales engineers.  Sales representatives receive
commissions from CTS.  During 1996, about 54% of net sales were at-
tributable to coverage by sales representatives.  Independent
distributors purchase products from CTS for resale to customers. 
In 1996, independent distributors accounted for about 6% of net
sales.


                          RAW MATERIALS

Generally, CTS' major raw materials are steel, copper, brass,
certain precious metals, resistive and conductive inks, passive
components and semiconductors, used in several CTS products;
ceramic materials used particularly in resistor networks and hybrid
microcircuits; synthetic quartz used in frequency control devices;
and laminate material used in printed circuit boards.  These raw
materials are purchased from several vendors, and except for
certain semiconductors, CTS does not believe that it is dependent
on one or on a very few vendors.  In 1996, all of these materials
were available in adequate quantities to meet CTS' production
demands.                                               

The Company does not presently anticipate any raw material short-
ages which would significantly affect production.  However, the
lead times between the placement of orders for certain raw mater-
ials and actual delivery to CTS may vary significantly, and the
Company may from time to time be required to order raw materials in
quantities and at prices less than optimal to compensate for the
variability of lead times for delivery.

Precious metals prices have a significant effect on the manufactur-
ing cost and selling prices of many CTS products, particularly some
switches, interconnect products, resistor networks and hybrid
microcircuits.  CTS has continuing programs to reduce the precious
metals content of several products, when consistent with customer
specifications.


                         WORKING CAPITAL

CTS does not usually buy inventories or manufacture products
without actual or reasonably anticipated customer orders, except
for some standard, off-the-shelf distributor products.  The Company
is not generally required to carry significant amounts of inven-
tories to meet rapid delivery requirements because most customer
orders are for custom products.  CTS has entered into "just-in-time"
arrangements with certain major customers in order to meet
customers' just-in-time delivery needs.  

CTS carries raw materials, including certain semiconductors, and
certain work-in-process and finished goods inventories which are
unique to a particular customer or to a small number of customers,
and in the event of reductions in or cancellations of orders, some
inventories are not useable or cannot be returned to vendors for
credit.  CTS generally imposes charges for the reduction or
cancellation of orders by customers, and these charges are usually
sufficient to cover the financial exposure of CTS to inventories
which are unique to a customer.  CTS does not customarily grant
special return privileges or payment privileges to customers,
although CTS' distributor program permits certain returns.  CTS'
working capital requirements are generally cyclical but not
seasonal.

Working capital requirements are generally dependent on the overall
business level.  During 1996, working capital increased
significantly to $86.8 million, primarily because cash increased
and notes payable were paid off.  During 1996, cash increased
primarily as a result of the higher level of earnings.  Cash
represents a significant part of the Company's working capital. 
Cash of various non-U.S. subsidiaries was held in U.S.-denominated
cash equivalents at December 31, 1996.  The cash, other than
approximately $4.8 million, is generally available to the parent
Company.  During 1996, the other changes in working capital were
primarily a result of the higher business activity level.


                 PATENTS, TRADEMARKS AND LICENSES

CTS maintains a program of obtaining and protecting U.S. and non-U.S.
patents and trademarks.  CTS believes that the success of its
business is not materially dependent on the existence or duration
of any patent, group of patents or trademarks.

CTS licenses the manufacture of several electronic products to
companies in the United States and non-U.S. countries.  In 1996,
license and royalty income was less than 1% of net sales.  CTS
believes that the success of its business is not materially
dependent upon any licensing arrangement where CTS is either the
licensor or licensee.


                         MAJOR CUSTOMERS

CTS' 15 largest customers represented about 62%, 61% and 62% of net
sales in 1996, 1995 and 1994, respectively.

Of the net sales to unaffiliated customers, approximately $49.1
million, $54.9 million and $49.4 million were derived from sales to
a major manufacturer of automobiles in 1996, 1995 and 1994,
respectively.  CTS is dependent upon this and other customers for
a significant percentage of its sales and profits, and the loss of
one or more of these customers or reduction of orders by one or
more of these customers could have a materially adverse effect upon
the Company.


                        BACKLOG OF ORDERS

Backlog of orders does not necessarily provide an accurate indica-
tion of present or future business levels for CTS.  For many
electronic components, the period between receipt of orders and
delivery is relatively short.  For large orders from major
customers that may constitute backlog over an extended period of
time, production scheduling and delivery are subject to change or
cancellation by the customers on relatively short notice.  At the
end of 1996, the Company's backlog of orders was $85.5 million,
compared with $85.3 million at the end of 1995.

The backlog of orders at the end of 1996 will generally be filled
during the 1997 fiscal year.


                       GOVERNMENT CONTRACTS

CTS believes that about 7% of its net sales are associated with
purchases by the U.S. Government or non-U.S. governments,
principally for defense and aerospace applications.  Because most
CTS products procured through government contractors and
subcontractors are for military end uses, the level of defense and
aerospace market sales by CTS is dependent upon government
budgeting and funding of programs utilizing electronic systems.   
                                 
Almost all CTS sales involving government purchases are to primary
government contractors or subcontractors.  CTS is usually subject
to contract provisions permitting termination of the contract,
usually with penalties payable by the government; maintenance of
specified accounting procedures; limitations on and renegotiations
of profits; priority production scheduling; and possible penalties
or fines against CTS for late delivery or substandard quality. Such
contract provisions have not previously resulted in material
uncertainties or disruptions for CTS.


                           COMPETITION

CTS competes with many domestic and non-U.S. manufacturers prin-
cipally on the basis of product features, price, technology,
quality, reliability, delivery and service.  Most product lines of
CTS encounter significant competition.  The number of significant
competitors varies from product line to product line.  No single
competitor competes with CTS in every product line, but many com-
petitors are larger and more diversified than CTS.  Some com-
petitors are divisions or affiliates of customers.  CTS is subject
to competitive risks inherent to the electronics industry such as
shorter product life cycles and technical obsolescence. 

Some customers have reduced or plan to reduce the number of
suppliers while increasing the volume of purchases from independent
suppliers.  Most customers are demanding higher quality,
reliability and delivery standards from CTS as well as competitors. 
These trends may create opportunities for CTS while also increasing
the risk of loss of business to competitors.

The Company believes that it competes most successfully in custom
products manufactured to meet specific applications of major
original equipment manufacturers.

CTS believes that it has some advantages over certain competitors
because of its ability to apply a broad range of technologies and
materials capabilities to develop products for the special require-
ments of customers.  CTS also believes that it has an advantage
over some competitors in its capability to sell a broad range of
products manufactured to relatively consistent standards of quality
and delivery.  CTS believes that the relative breadth of its
product lines and relative consistency in quality and delivery
across product lines is an advantage to CTS in selling products to
customers.

CTS believes that it is one of the largest manufacturers of
automotive throttle position sensors.


        FINANCIAL INFORMATION ABOUT NON-U.S. AND DOMESTIC
                   OPERATIONS AND EXPORT SALES

Information about revenue from sales to unaffiliated customers,
operating earnings and identifiable assets, by geographic area, is
contained in "Note G - Business Segment and Non-U.S. Operations,"
page 22, of the CTS Corporation 1996 Annual Report, and is
incorporated herein by reference.

In 1996, approximately 40% of net sales to unaffiliated customers,
after eliminations, were attributable to non-U.S. operations.  This
represents an increase from 35% of net sales attributable to non-U.S.
operations in 1995.  About 33% of total CTS assets, after
eliminations, are non-U.S.  Except for cash and equivalents, a
substantial portion of these assets cannot readily be liquidated. 
CTS believes that the business risks attendant to its present non-U.S.
operations, though substantial, are normal risks for non-U.S.
businesses, including expropriation, currency controls and changes
in currency exchange rates and government regulations.


               RESEARCH AND DEVELOPMENT ACTIVITIES

In 1996, 1995 and 1994, CTS expended $10.7, $8.0 and $6.2 million,
respectively, for research and development.  Most CTS research and
development activities relate to new product and process develop-
ments or the improvement of product materials.  Many such research
and development activities are for the benefit of one or a limited
number of customers or potential customers.

During 1996, the Company did not enter into any new, significant
product lines, but continued to introduce additional versions of
existing products in response to present and future customer
requirements. 


                  ENVIRONMENTAL PROTECTION LAWS

In complying with federal, state and local environmental protection
laws, CTS has modified certain manufacturing processes and expects
to continue to make additional modifications.  Such modifications
that have been performed have not materially affected the capital
expenditures, earnings or competitive position of CTS.

Certain processes in the manufacture of the Company's current and
past products create hazardous waste by-products as currently
defined by federal and state laws and regulations.  The Company has
been notified by the U.S. Environmental Protection Agency, state
environmental agencies and, in some cases, generator groups, that
it is or may be a Potentially Responsible Party (PRP) regarding
hazardous waste remediation at several non-CTS sites.  The factual
circumstances of each site are different; the Company has
determined that its role as a PRP with respect to these sites, even
in the aggregate, will not have a material adverse effect on the
Company's business or financial condition, based on the following: 
1) the Company's status as a de minimis party; 2) the large number
of other PRPs identified; 3) the identification and participation
of many larger PRPs who are financially viable; 4) defenses
concerning the nature and limited quantities of materials sent by
the Company to certain of the sites; and 5) the Company's
experience to-date in relation to the determination of its
allocable share.  In addition to these non-CTS sites, the Company
has an ongoing practice of providing reserves for probable
remediation activities at certain of its manufacturing locations
and for claims and proceedings against the Company with respect to
other environmental matters.  In the opinion of management, based
upon presently available information, either adequate provision for
probable costs has been made, or the ultimate costs resulting will
not materially affect the consolidated financial position or
results of operations of the Company. 

There are claims against the Company with respect to environmental
matters which the Company contests.  In the opinion of management,
based upon presently available information, either adequate
provision for potential costs has been made, or the costs which
ultimately might result will not materially affect the consolidated
financial position or results of operations of the Company.


                            EMPLOYEES

CTS employed an average of 3,815 persons during 1996.  About 39% of
these persons were employed outside the United States at the end of
1996.  Approximately 390 employees in the United States were
covered by collective bargaining agreements as of December 31,
1996.  One of the two collective bargaining agreements covering
these employees will expire in 1999. The other agreement will
expire in 2000.


Item 2.   Properties

CTS operations or facilities are at the following locations.  The
owned properties are not subject to material liens or encumbrances.

Location                                            Expires

Elkhart, IN                        521,813   Owned     -
Berne, IN                          248,726   Owned     -
Singapore                          158,926   Owned*    -
Kaohsiung, Taiwan                  132,887   Owned*    -
Streetsville,
Ontario, Canada                    111,740   Owned     -
West Lafayette, IN                 105,983   Owned     -
Sandwich, IL                        94,173   Owned     -
Brownsville, TX                     84,679   Owned     -
Bentonville, AR                     72,000   Owned     -
Glasgow, Scotland                   75,000   Owned     -
New Hope, MN                        55,000   Leased    December
(Science Center Dr.)                                   1998
Bangkok, Thailand                   53,000   Owned     -
Matamoros, Mexico                   50,590   Owned*    -
Baldwin, WI                         39,050   Owned     -
Cokato, MN                          36,000   Owned     -
Burlington, WI                       5,000   Leased    April
                                                       1997

   TOTAL                         1,844,567             

 * Buildings are located on land leased under renewable leases.

The Company is currently seeking to sell some, or all, of the
Brownsville, Texas, manufacturing building.  A portion of the
Brownsville facility is currently under a leasing arrangement which
expires in 1999.  The annual rental income is approximately
$60,000.  Also, a portion of the New Hope, Minnesota, facility is
currently under a sublease arrangement, which expires in 1998.  The
annual rental income is approximately $90,000.

In 1994, the Company entered into a three-year lease of the
Bangkok, Thailand, property.  In early 1997, this lease was
extended to March 31, 1999.  The annual rental amount is
approximately U.S. $355,000.

During 1995, a lease for an initial term of two years with a two-year
renewal option was finalized with an international
semiconductor manufacturer for one floor of the Singapore facility. 
The annual rental amount is approximately U.S. $800,000.

The Company regularly assesses the adequacy of its manufacturing
facilities for manufacturing capacity, available labor and location
to the markets and major customers for the Company's products.  CTS
also reviews the operating costs of its facilities and may from
time to time relocate facilities or certain manufacturing
activities in order to achieve operating cost reductions and
improved asset utilization and cash flow. 


Item 3.   Legal Proceedings

Contested claims involving various matters, including environmental
claims brought by government agencies, are being litigated by CTS,
both in legal and administrative forums.  In the opinion of
management, based upon currently available information, adequate
provision for potential costs has been made, or the costs which
might ultimately result from such litigation or administrative
proceedings will not materially affect the consolidated financial
position of the Company or the results of operations.


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

During the fourth quarter of 1996, no issue was submitted to a vote
of CTS shareholders.


<PAGE>

                             PART II


Item 5.   Market for the Registrant's Common Equity and Related   
          Shareholder Matters

The principal market for CTS common stock is the New York Stock
Exchange.  Information relative to the high and low trading prices
for CTS Common Stock for each quarter of the past two years and the
frequency and amount of dividends declared during the previous two
years can be located in "Shareholder Information," page 10, of the
CTS Corporation 1996 Annual Report, incorporated herein by
reference.  On March 7, 1997, there were approximately 977 holders
of record of CTS common stock.

The Company intends to continue a policy of considering dividends
on a quarterly basis.  The declaration of a dividend and the amount
of any such dividend is subject to earnings, anticipated working
capital, capital expenditure and other investment requirements, the
financial condition of CTS and such other factors as the Board of
Directors deems relevant.


Item 6.   Selected Financial Data

A summary of selected financial data for CTS, for each of the
previous five fiscal years, is contained in the "Five-Year
Summary," page 11, of the CTS Corporation 1996 Annual Report,
incorporated herein by reference.

Certain divestitures and closures of businesses and certain
accounting changes affect the comparability of information con-
tained in the "Five-Year Summary."                 


Item 7.   Management's Discussion and Analysis of Financial
          Condition and Results of Operations

Information about liquidity, capital resources and results of
operations, for the three previous fiscal years, is contained in
"Management's Discussion and Analysis of Financial Condition and
Results of Operations (1994-1996)," pages 25-27, of the CTS
Corporation 1996 Annual Report, incorporated herein by reference.


Item 8.   Financial Statements and Supplementary Data

Consolidated financial statements, meeting the requirements of
Regulation S-X, and the Report of Independent Accountants, are
contained in pages 12-24 of the CTS Corporation 1996 Annual Report,
incorporated herein by reference.  Quarterly per share financial
data is provided in "Shareholder Information," under the
subheadings, "Quarterly Results of Operations" and "Per Share
Data," on page 10 of the CTS Corporation 1996 Annual Report, and is
incorporated herein by reference.


Item 9.  Changes in and Disagreements With Accountants on         
         Accounting and Financial Disclosure

There were no disagreements. 


<PAGE>

                             PART III


Item 10.   Directors and Executive Officers of the Registrant

Information responsive to Items 401(a) and 401(e) of Regulation S-K
pertaining to directors of CTS is contained in the 1997 Proxy
Statement under the caption "Election of Directors," pages 5-6,
filed with the Securities and Exchange Commission, and is
incorporated herein by reference. 

Information responsive to Item 405 of Regulation S-K pertaining to
compliance with Section 16(a) of the Securities Exchange Act of
1934 is contained in the 1997 Proxy Statement under the caption
"Section 16(a) Beneficial Ownership Reporting Compliance," page 7,
filed with the Securities and Exchange Commission, and is
incorporated herein by reference.  

The individuals listed were elected as executive officers of CTS at
the annual meeting of the Board of Directors on April 26, 1996, and
are expected to serve as executive officers until the next annual
meeting of the Board of Directors, scheduled on April 25, 1997, at
which time the election of officers will be considered again by the
Board of Directors.

Name                     Age       Position and Offices

Joseph P. Walker         58        Director, Chairman,
                                   President and Chief
                                   Executive Officer
Philip T. Christ         65        Group Vice President 
Stanley J. Aris          56        Vice President Finance and
                                   Chief Financial Officer
Jeannine M. Davis        48        Vice President, Secretary
                                   and General Counsel
James L. Cummins         41        Vice President Human Resources
James N. Hufford         57        Vice President Research,
                                   Development and Engineering
Donald R. Schroeder      48        Vice President Sales and
                                   Marketing
George T. Newhart        54        Corporate Controller
Gary N. Hoipkemier       42        Treasurer

Joseph P. Walker has served as Chairman of the Board, President and
Chief Executive Officer of CTS since 1988.  Mr. Walker is a
Director of NBD Bank, N.A. 

Philip T. Christ has served as Group Vice President since 1990.  

Stanley J. Aris has served as Vice President Finance and Chief
Financial Officer since 1992.  Prior to joining CTS, Mr. Aris
worked for two years as a business consultant.  

Jeannine M. Davis has served as Vice President, Secretary and General 
Counsel since 1988.  

James L. Cummins was elected Vice President Human Resources on
February 25, 1994.  Prior to this appointment, he served as
Director, Human Resources, CTS Corporation from 1991-1994.  

James N. Hufford was elected Vice President Research, Development
and Engineering on February 17, 1995.  During the four years prior
to this appointment, Mr. Hufford served as Manager and then
Director of Corporate Research, Development and Engineering for the 
Corporation.  

Donald R. Schroeder was elected Vice President Sales and Marketing
on February 17, 1995.  During the six years prior to this
appointment, Mr. Schroeder served as Business Development Manager
for innovative and new technology for the CTS Microelectronics
business unit in West Lafayette, Indiana.  

George T. Newhart has served as Corporate Controller since 1989.  

Gary N. Hoipkemier has served as Treasurer since 1989.  


Item 11.   Executive Compensation

Information responsive to Item 402 of Regulation S-K pertaining to
management remuneration is contained in the 1997 Proxy Statement in
the captions "Executive Compensation," pages 8-9 and "Director
Compensation," pages 13-14, filed with the Securities and Exchange
Commission, and is incorporated herein by reference.


Item 12.   Security Ownership of Certain Beneficial Owners and    
           Management

Information responsive to Item 403 of Regulation S-K pertaining to
security ownership of certain beneficial owners and management is
contained in the 1997 Proxy Statement in the caption "Securities
Beneficially Owned by Principal Shareholders and Management," pages 
3-5, filed with the Securities and Exchange Commission, and is
incorporated herein by reference.


Item 13.   Certain Relationships and Related Transactions

Dynamics Corporation of America (DCA) owned 2,303,100 (44.1%) of
the Company's outstanding common stock as of December 31, 1996. 
CTS purchased products from DCA totaling $157,000 in 1996, $143,000
in 1995 and $233,000 in 1994, principally consisting of certain
component parts used by CTS in the manufacture of frequency control
devices.   CTS had no sales to DCA in 1996, and minimal sales in
1995 and 1994.


<PAGE>

                             PART IV


Item 14.  Exhibits, Financial Statement Schedules and Reports on  
          Form 8-K


(a) (1) and (2)

The list of financial statements and financial statement schedules
required by Item 14(a)(1) and (2) is contained on page S-1 herein.


(a) (3)   Exhibits

     (3)(a)    Articles of Incorporation, as amended April 16,
               1973, previously filed as exhibit (3)(a) to the
               Company's Form 10-K for 1987, and incorporated
               herein by reference.

     (3)(b)    Bylaws, as amended and effective June 25, 1992,
               previously filed as exhibit (3)(b) to the Company's
               Form 10-K for 1992, and incorporated herein by
               reference.
     
     (10)(a)   Employment agreement dated June 24, 1994, between
               CTS and Joseph P. Walker, previously filed as
               exhibit (10)(a) to the Company's Form 10-K for
               1994, and incorporated herein by reference.

     (10)(b)   Prototype indemnification agreement, with
               Lawrence J. Ciancia, Patrick J. Dorme, Gerald H.
               Frieling, Jr., Andrew Lozyniak, Joseph P. Walker,
               Philip T. Christ, Jeannine M. Davis, George T.
               Newhart and Gary N. Hoipkemier, filed as exhibit
               (10)(b) to the Company's Form 10-K for 1991, and
               incorporated herein by reference.

     (10)(c)   CTS Corporation 1982 Stock Option Plan, as amended
               February 24, 1989, was previously filed as exhibit
               (10)(d) to the Company's Form 10-K for 1989, and is
               incorporated herein by reference.

     (10)(d)   CTS Corporation 1986 Stock Option Plan, approved by
               the shareholders at the reconvened annual meeting
               on May 30, 1986.  The CTS Corporation 1986 Stock
               Option Plan is contained in Exhibit 4 to
               Registration Statement No. 33-27749, effective
               March 23, 1989, and is incorporated herein by
               reference.

     (10)(e)   CTS Corporation 1988 Restricted Stock and Cash
               Bonus Plan, as adopted by the CTS Board of
               Directors on December 16, 1988, and approved by
               shareholders at the 1989 annual meeting of
               shareholders on April 28, 1989.  The CTS
               Corporation 1988 Restricted Stock and Cash Bonus
               Plan is contained in Appendix A, pages 11-15, of
               the 1989 Proxy Statement for the annual meeting of
               shareholders held April 28, 1989, under the caption
               "CTS Corporation 1988 Restricted Stock and Cash
               Bonus Plan," previously filed with the Securities
               and Exchange Commission, and is incorporated herein
               by reference.

     (10)(f)   CTS Corporation 1996 Stock Option Plan, approved by
               the shareholders at the annual meeting on April 26,
               1996.  The CTS Corporation 1996 Stock Option Plan
               is contained in Exhibit 4 to Registration Statement
               No. 333-5730, effective October 3, 1996, and is
               incorporated herein by reference.

     (10)(g)   Prototype indemnification agreement, with Stanley
               J. Aris, James L. Cummins, James N. Hufford and
               Donald R. Schroeder, filed as exhibit (10)(g) to
               the Company's Form 10-K for 1995.

     (13)      CTS Corporation 1996 Annual Report.

     (21)      Subsidiaries of CTS Corporation.

     (23)      Consent of Price Waterhouse to incorporation by
               reference of this Annual Report on Form 10-K for
               the fiscal year 1996 to Registration Statement 33-27749
               on Form S-8 and Registration Statement 333-5730.


     Indemnification Undertaking

     For the purposes of complying with the amendments to the rules
     governing Form S-8 (effective July 13, 1990) under the
     Securities Act  of 1933, the undersigned registrant hereby
     undertakes as follows, which undertaking shall be incorporated
     by reference into registrant's Registration Statements on Form
     S-8 Nos. 33-27749 (filed March 23, 1989)and 333-5730 (filed
     October 3, 1996):

          Insofar as indemnification for liabilities arising
          under the Securities Act of 1933 may be permitted
          to directors, officers and controlling persons of
          the registrant pursuant to the foregoing provision,
          or otherwise, the registrant has been advised that
          in the opinion of the Securities and Exchange
          Commission such indemnification is against public
          policy as expressed in the Securities Act of 1933
          and is, therefore, unenforceable.  In the event
          that a claim for indemnification against such
          liabilities (other than the payment by the
          registrant of expenses incurred or paid by a
          director, officer or controlling person of the
          registrant in the successful defense of any action,
          suit or proceeding) is asserted by such director,
          officer or controlling person in connection with
          the securities being registered, the registrant
          will, unless in the opinion of its counsel the
          matter has been settled by controlling precedent,
          submit to a court of appropriate jurisdiction the
          question whether such indemnification by it is
          against public policy as expressed in the Act and
          will be governed by the final adjudication of such
          issue.


<PAGE>

                            SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

Date  March 20, 1997                            By  /S/ Stanley J. Aris       
                                                   Stanley J. Aris, 
                                                   Vice President Finance
                                                   and Chief Financial Officer


Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.


Date     March 20, 1997                         By /S/ Lawrence J. Ciancia    
                                                   Lawrence J. Ciancia,
                                                   Director

Date     March 20, 1997                         By /S/ Patrick J. Dorme       
                                                   Patrick J. Dorme,
                                                   Director

Date     March 20, 1997                         By /S/ Gerald H. Frieling, Jr.
                                                   Gerald H. Frieling, Jr.,
                                                   Director

Date     March 20, 1997                         By /S/ Andrew Lozyniak        
                                                   Andrew Lozyniak,
                                                   Director

Date     March 20, 1997                         By /S/ Joseph P. Walker       
                                                   Joseph P. Walker,
                                                   Director

Date     March 20, 1997                         By /S/ George T. Newhart      
                                                   George T. Newhart,
                                                   Corporate Controller
                                                   and principal accounting
                                                   officer                     
                  
Date     March 20, 1997                         By /S/ Jeannine M. Davis      
                                                   Jeannine M. Davis,
                                                   Vice President, Secretary
                                                   and General Counsel


<PAGE>



                    ANNUAL REPORT ON FORM 10-K

              ITEM 14(a) (1) AND (2) AND ITEM 14(d)


  LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

                  FINANCIAL STATEMENT SCHEDULES

                   YEAR ENDED DECEMBER 31, 1996


                 CTS CORPORATION AND SUBSIDIARIES

                         ELKHART, INDIANA


<PAGE>



        FORM 10-K - ITEM 14(a) (1) AND (2) AND ITEM 14 (d)

                 CTS CORPORATION AND SUBSIDIARIES

  LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES


The following consolidated financial statements of CTS Corporation
and subsidiaries included in the annual report of the registrant to
its shareholders for the year ended December 31, 1996, are incorpo-
rated by reference in Item 8:

         Consolidated balance sheets - December 31, 1996, and
         December 31, 1995

         Consolidated statements of earnings - Years ended
         December 31, 1996, December 31, 1995, and December 31, 1994

         Consolidated statements of shareholders' equity - Years
         ended December 31, 1996, December 31, 1995, and December 31, 1994

         Consolidated statements of cash flows - Years ended
         December 31, 1996, December 31, 1995, and December 31, 1994

         Notes to consolidated financial statements

The following consolidated financial statement schedules of CTS
Corporation and subsidiaries, are included in item 14(d):

                                                            Page

         Schedule II - Valuation and qualifying accounts     S-3
         
All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission
have been omitted because they are inapplicable, not required or
the information is included in the consolidated financial state-
ments or notes thereto.



                                S-1

<PAGE>



REPORT OF INDEPENDENT ACCOUNTANTS

ON FINANCIAL STATEMENT SCHEDULE



To the Board of Directors
of CTS Corporation


Our audits of the consolidated financial statements referred to
in our report dated January 27, 1997, appearing on page 24 of the
CTS Corporation 1996 Annual Report (which report and consolidated
financial statements are incorporated by reference in the Annual
Report on Form 10-K) also included an audit of the Financial
Statement Schedule listed in item 14(a) of this Form 10-K.  In
our opinion, this Financial Statement Schedule presents fairly,
in all material respects, the information set forth therein when
read in conjunction with the related consolidated financial
statements.



PRICE WATERHOUSE LLP



South Bend, Indiana
January 27, 1997



                               S-2

<PAGE>


<TABLE>

                                          CTS CORPORATION
                          SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
                                     (In thousands of dollars)

<CAPTION>
                                                  Additions                     
                               Balance at   Charged to   Charged to
                              Beginning of   Costs and      Other                     Balance at
     Classification              Period      Expenses      Accounts    Deductions(1)  End of Period
<S>                                 <C>          <C>        <C>           <C>               <C>
Year ended December 31, 1996:

  Allowance for
   doubtful receivables             $774          $239       $ 0           $391              $622


Year ended December 31, 1995:

  Allowance for
   doubtful receivables             $869          $  1       $ 0           $ 96              $774

Year ended December 31, 1994:

  Allowance for
   doubtful receivables             $709          $277       $ 0           $117              $869



(1) Uncollectible accounts written off.

</TABLE>



                                                S-3

<PAGE>


                                EXHIBIT 21

                     CTS CORPORATION AND SUBSIDIARIES

CTS Corporation (Registrant), an Indiana corporation

Subsidiaries

CTS Corporation (Delaware), a Delaware corporation

   CTS of Panama, Inc., a Republic of Panama corporation

        CTS Components Taiwan, Ltd.,(1) a Taiwan, Republic of
        China corporation

             CTS Singapore Pte., Ltd., a Republic of Singapore
             corporation

        CTS Electro de Matamoros, S.A.,(1) a Republic of Mexico
        corporation
 
   CTS Export Corporation, a Virgin Islands corporation

   CTS Japan, Inc., a Japan corporation

   CTS of Canada, Ltd., a Province of Ontario (Canada) corporation

   CTS Manufacturing (Thailand) Ltd.,(1) a Thailand corporation

   CTS Electronics Hong Kong Ltd.,(1) a Hong Kong corporation

   CTS Corporation U.K. Ltd., a United Kingdom corporation

   CTS Printex, Inc., a California corporation

   CTS Micro Peripherals, Inc., a California corporation

   Micro Peripherals Singapore (Private) Limited, a Republic of
   Singapore corporation



Corporations whose names are indented are subsidiaries of the preceding
non-indented corporations.  Except as indicated, each of the above
subsidiaries is 100% owned by its parent company.  Operations of all
subsidiaries and divisions are consolidated in the financial statements
filed.



                  
  (1)   Less than 1% of the outstanding shares of stock is owned of
        record by nominee shareholders pursuant to national laws
        regarding resident or nominee ownership.

<PAGE>

                                                               EXHIBIT 23

                   CONSENT OF INDEPENDENT ACCOUNTANTS


We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (No. 33-27749 and No. 333-5730) of CTS Corporation
of our report dated January 27, 1997, appearing on page 24 of the CTS
Corporation 1996 Annual Report which is incorporated in the Annual Report
on Form 10-K.  We also consent to the incorporation by reference of our
report on the Financial Statement Schedule, which appears on page S-2 of
this Form 10-K.





PRICE WATERHOUSE LLP



South Bend, Indiana
March 20, 1997




<PAGE>

SHAREHOLDER INFORMATION
(In thousands of dollars except per share data)                                
                 Quarterly Results of Operations
                           (Unaudited)
                                                                              
                           Net       Gross    Operating         Net
                         Sales    Earnings     Earnings    Earnings
                                                                             
1996
1st quarter          $  80,186     $19,799     $  6,587    $  4,414
2nd quarter             83,820      21,874        8,218       5,340
3rd quarter             76,457      20,726        7,847       5,060
4th quarter             80,834      25,097       10,768       6,356

                      $321,297     $87,496      $33,420     $21,170

1995
1st quarter          $  75,978     $17,273     $  4,877    $  3,256
2nd quarter             76,413      19,148        7,023       4,642
3rd quarter             73,890      18,345        6,416       4,218
4th quarter             73,876      20,038        9,172       5,048

                      $300,157     $74,804      $27,488     $17,164

                          Per Share Data
                           (Unaudited)

                                              Dividends         Net
                        High(a)      Low(a)    Declared    Earnings

1996
1st quarter             $38.63       $36.00        $.15        $.83
2nd quarter              47.00        37.38         .18        1.03
3rd quarter              47.00        40.50         .18         .96
4th quarter              43.00        38.13         .18        1.21

                                                   $.69       $4.03   

1995
1st quarter             $32.00        $27.38       $.15      $  .63
2nd quarter              33.50         29.25        .15         .89
3rd quarter              34.50         29.94        .15         .81
4th quarter              37.75         29.63        .15         .97

                                                   $.60       $3.30


(a)    The market price range of CTS Corporation common stock on the New York 
       Stock Exchange for each of the quarters during the last two years.

<PAGE>


<TABLE>
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands of dollars except per share amounts)
<CAPTION>
                                                          Year Ended      

                                      December 31    December 31    December 31
                                             1996           1995           1994
<S>                                      <C>            <C>            <C>
Net sales                                $321,297       $300,157       $268,707
Costs and expenses:
  Cost of goods sold                      233,801        225,353        205,640
  Selling, general and administrative
    expenses                               43,333         39,312         36,175
  Research and development expenses        10,743          8,004          6,208

     Operating earnings                    33,420         27,488         20,684

Other (expenses) income:
  Interest expense                         (1,449)        (1,790)          (714)
  Interest income                           1,881          1,421            657
  Other                                      (250)           565            860

     Total other income (expenses)            182            196            803

     Earnings before income taxes          33,602         27,684         21,487
Income taxes--Note F                       12,432         10,520          7,520

     Net earnings                        $ 21,170       $ 17,164     $   13,967
 
     Net earnings per share                 $4.03         $3.30          $2.70


The accompanying notes are an integral part of the consolidated financial statements.

</TABLE>



<PAGE>

<TABLE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY                             
(In thousands of dollars)                                         
<CAPTION>

                                                                      Cumulative  Deferred
                                                  Common   Retained   Translation Compen-   Treasury
                                                   Stock   Earnings   Adjustment  sation    Stock       Total

<S>                                              <C>       <C>         <C>         <C>      <C>         <C>
  Balances at December 31, 1993                  $34,222   $100,868    $(1,049)    $(92)    $(14,746)   $119,203
Net earnings                                                 13,967                                       13,967
Cash dividends of $.45 per share                             (2,329)                                      (2,329)
Nonemployee Directors' stock retirement plan          (4)                             3           12          11
Cumulative translation adjustment                                          695                               695
Issued 15,500 shares on restricted stock and                                                            
  cash bonus plan                                     51                          (358)         307             
Issued 8,650 shares on exercise of stock options     (72)                                        248         176
Stock compensation                                     1                                          12          13
Deferred compensation recognized                                                    119                      119
                                                                                                        
  Balances at December 31, 1994                   34,198    112,506       (354)    (328)     (14,167)    131,855
Net earnings                                                 17,164                                       17,164
Cash dividends of $.60 per share                             (3,124)                                      (3,124)
Nonemployee Directors' stock retirement plan                                         15                       15
Cumulative translation adjustment                                         (291)                             (291)
Issued 18,500 shares on restricted stock and                                                            
   cash bonus plan                                    76                          (632)         556             
Issued 17,325 shares on exercise of stock options   (163)                                        522         359
Acquired 200 shares traded on options--net             7                                          (7)   
Stock compensation                                     3                                          93          96
Deferred compensation recognized                      17                            162                      179
                                                                                                        
  Balances at December 31, 1995                   34,138    126,546       (645)    (783)     (13,003)    146,253
Net earnings                                                 21,170                                       21,170
Cash dividends of $.69 per share                             (3,604)                                      (3,604)
Nonemployee Directors' stock retirement plan                                         17                       17
Cumulative translation adjustment                                        2,018                             2,018
Issued 1,500 shares on restricted stock and                                                             
   cash bonus plan                                    23                             (70)         47             
Issued 6,300 shares on exercise of stock options     (51)                                        197         146
Acquired 73 shares traded on options--net              3                                          (3)   
Stock compensation                                    27                                         100         127
Deferred compensation recognized                                                    236                      236
Acquired 3,200 shares for treasury stock                                                        (131)       (131)
                                                                                                        
  Balances at December 31, 1996                  $34,140   $144,112     $1,373    $(600)    $(12,793)   $166,232
                                                                                                       
The accompanying notes are an integral part of the consolidated financial statements.

</TABLE>

<PAGE>


CONSOLIDATED BALANCE SHEETS                          December 31 December 31
(In thousands of dollars)                                   1996        1995

ASSETS                                                                          
Current Assets
  Cash and equivalents                                  $ 44,957    $ 37,271
  Accounts receivable, less allowances
    (1996--$622; 1995--$774)                              43,984      41,737
  Inventories
    Finished goods                                         8,504       7,445
    Work-in-process                                       17,138      14,789
    Raw materials                                         13,119      16,651

     Total inventories                                    38,761      38,885
  Other current assets                                     3,787       2,544
  Deferred income taxes--Note F                            6,712       5,676

     Total current assets                                138,201     126,113
Property, Plant and Equipment 
  Buildings and land                                      42,800      42,547
  Machinery and equipment                                146,589     139,594

     Total property, plant and equipment                 189,389     182,141
  Less accumulated depreciation                          133,286     131,445

     Net property, plant and equipment                    56,103      50,696
Other Assets
  Goodwill, less accumulated amortization
     (1996--$8,361; 1995--$7,687)                          4,039       4,603
  Prepaid pension expense--Note E                         50,152      44,739
  Other                                                      877         976

     Total other assets                                   55,068      50,318

Total Assets                                            $249,372    $227,127

LIABILITIES AND SHAREHOLDERS' EQUITY                                        
Current Liabilities     
  Notes payable--Note B                                             $  6,685
  Current maturities of long-term obligations--Note C   $  2,427       2,211
  Accounts payable                                        17,146      15,605
  Accrued salaries,  wages and vacation                    6,836       6,695
  Accrued taxes other than income                          2,070       1,740
  Income taxes payable                                     5,946       3,991
  Other accrued liabilities--Note H                       16,966      14,035

     Total current liabilities                            51,391      50,962
Long-term Obligations--Note C                             11,220      13,714
Deferred Income Taxes--Note F                             16,146      11,909
Postretirement Benefits--Note E                            4,383       4,289
Contingencies--Note H
Shareholders' Equity
  Common stock-authorized 8,000,000 shares without
    par value; issued 5,807,031 shares                    33,540      33,355
  Retained earnings                                      144,112     126,546
  Cumulative translation adjustment                        1,373        (645)

                                                         179,025     159,256
     Less cost of common stock held in treasury
       (1996-- 582,075 shares; 1995--589,702 shares)      12,793      13,003

     Total shareholders' equity                          166,232     146,253

Total Liabilities and Shareholders' Equity              $249,372    $227,127

The accompanying notes are an integral part of the consolidated financial 
statements.


<PAGE>

<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of dollars)
<CAPTION>
                                                                 Year Ended  
                                            December 31         December 31      December 31
                                                   1996                1995              1994  
<S>                                             <C>                 <C>           <C>
Cash flows from operating activities:
   Net earnings                                 $21,170             $17,164       $13,967
   Adjustments to reconcile net earnings
   to net cash provided by operating activities:
      Depreciation and amortization              12,491              11,683        11,236
      Deferred income taxes                       3,201               3,239         2,519
      Other                                        (160)                (52)         (421)
      Changes in assets and liabilities: 
         Accounts receivable                     (2,247)             (6,708)       (4,402)
         Inventories                                124               2,571        (3,297)
         Prepaid pension asset                   (5,413)             (5,331)       (6,563)
         Accounts payable and accrued
           liabilities                            4,943               4,280           (38)
         Income taxes payable                     1,955               1,703           882
         Other                                     (961)             (1,688)       (1,328)

         Total adjustments                       13,933               9,697        (1,412)

            Net cash provided by operating
               activities                        35,103              26,861        12,555
Cash flows from investing activities:
   Proceeds from sale of property, plant 
      and equipment                                 822                 236           411
   Capital expenditures                         (17,210)            (11,181)      (10,000)
   Payment for purchase of business acquisitions                                   (5,501)

            Net cash used in investing
               activities                       (16,388)            (10,945)      (15,090)
Cash flows from financing activities:
   Proceeds from issuance of long-term obligations                                 15,000
   Payments of long-term obligations             (2,208)               (286)       (4,479)
   Decrease in notes payable                     (6,685)               (751)       (6,050)
   Proceeds from stock options exercised            146                 359           176
   Dividends paid                                (3,446)             (3,118)       (2,067)
   Purchases of treasury stock                     (131)

            Net cash (used in) provided by
               financing activities             (12,324)             (3,796)        2,580
Effect of exchange rate changes on cash           1,295                 229         1,343

Net increase in cash                              7,686              12,349         1,388
Cash and equivalents at beginning of year        37,271              24,922        23,534

Cash and equivalents at end of year             $44,957             $37,271       $24,922

Supplemental cash flow information
   Cash paid during the year for:
      Interest                                   $1,467            $  1,791       $   658
      Income taxes - net                          7,276               5,590         4,009

The accompanying notes are an integral part of the consolidated financial statements.

</TABLE>


<PAGE>


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A - Summary of Significant Accounting Policies

Principles of Consolidation:  The consolidated financial
statements include the accounts of the Company and its wholly-owned
subsidiaries.  All intercompany accounts and transactions
have been eliminated.

Inventories:  Inventories are stated at the lower of cost or
market.  Cost is principally determined using the first-in, first-out method.

Property, Plant and Equipment:  Property, plant and equipment are
stated at cost.  Depreciation is computed over the estimated
useful lives of the assets principally on the straight-line
method.  Useful lives for buildings and improvements range from 10
to 45 years, and machinery and equipment from 3 to 8 years. 

Goodwill:  The excess of cost over the fair value of net assets of
businesses acquired is amortized on the straight-line method over
the periods expected to be benefited.

Retirement Plans:  The Company has various defined benefit and
defined contribution retirement plans covering a majority of its
employees.  The Company's policy is to annually fund the defined
benefit pension plans at or above the minimum required under the 
Employee Retirement Income Security Act of 1974 (ERISA).     

Research and Development:  Research and development costs consist
of expenditures incurred during the course of planned search and
investigation aimed at discovery of new knowledge which will be
useful in developing new products or processes, or significantly
enhancing existing products or production processes, and the
implementation of such through design, testing of product
alternatives or construction of prototypes.  The Company expenses
all research and development costs as incurred.

Income Taxes:  The Company provides deferred income taxes for
transactions reported in different periods for financial reporting
and income tax return purposes pursuant to the requirements of
Financial Accounting Standards Board (FASB) Statement No. 109,
"Accounting for Income Taxes."  The underlying differences relate
primarily to depreciation differences, pension income,
postemployment benefits, certain nondeductible accruals and
inventory reserves.  

Translation of Foreign Currencies:  The financial statements of
all of the Company's non-U.S. subsidiaries, except the United
Kingdom subsidiary, are remeasured into U.S. dollars using the
U.S. dollar as the functional currency with all remeasurement
adjustments included in the determination of net earnings.  The
assets and liabilities of the Company's United Kingdom subsidiary
are translated into U.S. dollars principally at the current 
exchange rate at period end, with resulting translation adjust-
ments made directly to the "Cumulative translation adjustment"
component of shareholders' equity.  Statements of earnings
accounts are translated at the average rates during the period.

Financial Instruments:  The Company's financial instruments
consist primarily of cash, cash equivalents, trade receivables and
payables, and obligations under notes payable and long-term debt. 
In accordance with the requirements of FASB Statement No. 107,
"Disclosures about Fair Value of Financial Instruments," the
Company is providing the following fair value estimates and
information regarding valuation methodologies.  The carrying value
for cash and cash equivalents, and trade receivables and payables
approximates fair value based on the short-term maturities of
these instruments.  The carrying value for all long-term debt
outstanding at December 31, 1996, and 1995 approximates fair value
where fair value is based on market prices for the same or similar
debt and maturities.

The Company occasionally uses forward exchange currency contracts
to minimize the impact of foreign currency fluctuations on the
Company's costs and expenses.  At December 31, 1996, the Company's
forward foreign exchange currency contracts were not material. 
These contracts are accounted for as hedges and have minimal
credit risk because the counterparties are well-established
financial institutions.  

Cash Equivalents:  The Company considers all highly liquid
investments with a maturity of three months or less from the
purchase date to be cash equivalents.

Concentration of Credit Risk:  The Company sells its products to
customers primarily in the automotive, computer equipment,
communications equipment and instruments and controls industries,
primarily in North America, Europe and the Pacific Rim.  The
Company performs ongoing credit evaluations of its customers to
minimize credit risk.  The Company generally does not require
collateral.

Stock-Based Compensation: FASB Statement No. 123, "Accounting for
Stock-Based Compensation" encourages, but does not require,
companies to record compensation cost for stock-based compensation
at fair value.  The Company has chosen to continue to account for
stock-based compensation using the intrinsic value method
prescribed in Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" and its related
Interpretation.  See Note D for the required pro forma net income
and earnings per share disclosures required by FASB Statement No.
123. 

Earnings Per Share:  Earnings per common share are based on the
weighted average number of common and common equivalent shares
outstanding.  

Use of Estimates:  The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and
expenses during the reporting period.  Actual results could differ
from those estimates. 


NOTE B - Short-term Borrowings

The Company has no outstanding short-term borrowings at December
31, 1996.  At December 31, 1995, short-term borrowings consisted
of demand notes payable to various banks, with an average
interest rate of 6.6%.  The Company has unsecured lines of credit
arrangements which totaled $15,855,000 at December 31, 1996. 
These arrangements are generally subject to annual renewal and
renegotiation, and may be withdrawn at the banks' option.

Average daily short-term borrowings over the year, including
borrowings denominated in non-U.S. currencies, during 1996, 1995
and 1994 were $2,308,000, $6,781,000 and $11,776,000,
respectively.  The weighted average interest rates, computed by
relating interest expense to average daily short-term borrowings,
were 6.1% in 1996, 6.5% in 1995 and 5.5% in 1994. 

The maximum amount of short-term borrowings at the end of any
month during 1996, 1995 and 1994 was $8,055,000, $8,440,000 and
$12,977,000, respectively.  The short-term borrowings outstanding
at December 31, 1994, were $7,436,000. 


NOTE C - Long-term Obligations

Long-term obligations were comprised of the following:
                                                                   
                                                          (In thousands)
                                                        1996         1995
                                                                   
Long-term debt:
 Term loan at 8.4%, due in annual
    installments through 1999.                       $13,000      $15,000
  Other                                                  647          608
                                                                   
                                                      13,647       15,608
  Less current maturities                              2,427        2,211
                                                                   
     Total long-term debt                             11,220       13,397
Other                                                                 317
                                                                   
 Total long-term obligations                         $11,220      $13,714
                                                                   

The Company has a $13,000,000 term loan with four banks, of which
$2,000,000 expires in 1997, $2,000,000 expires in 1998 and
$9,000,000 expires in 1999.

The Company has unsecured revolving credit agreements totaling
$45,000,000 with four banks, which expire in 2001.  Interest rates
on these borrowings fluctuate based upon market rates.  The
Company pays a commitment fee that varies based on performance
under certain financial covenants applicable to the revolving
credit agreements.  Currently, that fee is .15 percent per annum. 
The credit agreements and term loan require, among other things,
that the Company maintain certain tangible net worth, interest
coverage requirements and a specified total liabilities to
tangible net worth ratio.

Annual maturities of long-term obligations during the three years
subsequent to 1997 are as follows:  1998--$2,220,000; 1999--$9,000,000; 
2000--$0.


NOTE D - Stock Plans

At December 31, 1996, the Company has four stock-based
compensation plans, which are described below.  The Company
applies Accounting Principles Board Opinion No. 25 and related
Interpretations in accounting for its plans.  Accordingly, no
compensation cost has been recognized for its fixed stock option
plans while compensation expense has been recognized for its
compensatory plans.  Had compensation cost for the Company's two
fixed stock-based compensation plans been determined based on the
fair value based method, as defined in FASB Statement No. 123, the
Company's net earnings and earnings per share would have been
reduced to the pro forma amounts indicated below:

                                (In thousands, except per share amounts)
                                                      1996          1995       
Net earnings                 As reported           $21,170       $17,164        
                             Pro forma             $20,936       $17,141        
                                                                      
Net earnings per share       As reported             $4.03         $3.30       
                             Pro forma               $3.99         $3.30

The effects of applying FASB Statement No. 123 in the above pro
forma disclosures are not indicative of future amounts as they do
not include the effects of awards granted prior to 1995, some of
which would have had income statement effects in 1995 and 1996 due
to the five-year vesting period associated with the fixed stock
option awards.

The Company's two fixed stock option plans, approved by the
shareholders, provide for grants of incentive stock options or
nonqualified stock options to officers and key employees.  Under
the 1986 Stock Option Plan which expired in 1995, the Company
could grant options to its officers and key employees for up to
300,000 shares of common stock.  Of the 300,000 shares,
approximately 100,000 shares were granted.  Under the 1996 Stock
Option Plan, the Company may grant options to its officers and key
employees for up to 200,000 shares of common stock.

Under the 1996 Stock Option Plan, options are granted at the fair
market value on the grant date and are exercisable generally in
cumulative annual installments over a maximum ten-year period,
commencing at least one year from the date of grant.  Upon the
exercise of stock options, payment may be made using cash, shares
of the Company's common stock or any combination thereof.

The fair value of each option grant is estimated on the date of
grant using the Black-Scholes option pricing model with the
following weighted-average assumptions used for grants in 1995:
dividend yield of 1.63%; expected volatility of 19.93%, risk-free
interest rate of 5.62%; and expected life of 4.3 years.  There
were no grants in 1996.    

A summary of the status of the Company's two fixed stock option
plans as of December 31, 1996, 1995 and 1994, and changes during
the years ending on those dates, is presented below:
<TABLE>
<CAPTION>
                                  1996                  1995                  1994     
                                    Weighted              Weighted              Weighted
                                    -Average              -Average              -Average
                           Shares   Exercise      Shares  Exercise      Shares  Exercise
                            (000)      Price      (000)      Price      (000)      Price

<S>                       <C>         <C>         <C>       <C>        <C>        <C>
Outstanding at begin-
  ning of year            152,925     $31.82       86,000   $23.15      44,650    $20.13
Granted                                            94,050    36.89      57,000     24.75
Exercised                  (6,300)     23.56      (17,325)   21.05      (8,650)    20.44
Expired or canceled        (9,100)     33.47       (9,800)   23.39      (7,000)    20.30

Outstanding at end
  of year                 137,525     $32.09      152,925   $31.82      86,000    $23.15


Options exercisable
  at year-end              51,425                  19,225               22,150

Weighted-average fair
  value of options
  granted during the 
  year                                                     $ 8.26           
                                                                               
</TABLE>

The following table summarizes information about fixed stock
options outstanding at December 31, 1996:
<TABLE>
<CAPTION>
                    Options Outstanding                  Options Exercisable  
                              Weighted-
                                Average   Weighted-                  Weighted-
Range of           Number     Remaining     Average         Number     Average
Exercise      Outstanding   Contractual    Exercise    Exercisable    Exercise
  Prices      at 12/31/96   Life (Years)      Price    at 12/31/96       Price

<S>                <C>             <C>       <C>            <C>         <C>
$19.125--
 24.750            53,475          2.37      $24.07         29,925      $23.81

$31.250--
 37.375            84,050          3.94      $37.19         21,500      $37.18
                                                                          
</TABLE>

Under the 1986 Stock Option Plan, options to purchase a total of
55,975 shares were outstanding as of December 31, 1996.  At
December 31, 1996, 30,625 of these shares were exercisable.

During 1996, the shareholders of the Company approved the 1996
Stock Option Plan, under which a maximum of 200,000 shares of
common stock were reserved for issuance to certain officers and
key employees.  Under the 1996 Stock Option Plan, options to 
purchase a total of 81,550 shares were outstanding as of December 
31, 1996.  At December 31, 1996, 20,800 of these shares were
exercisable.

The Company has a discretionary Restricted Stock and Cash Bonus
Plan (Plan) which reserves 400,000 shares of the Company's common
stock for sale, at market price or below, or award to key
employees.  Shares sold or awarded are subject to restrictions
against transfer and repurchase rights of the Company.  In
general, restrictions lapse at the rate of 20% per year beginning 
one year from the award or sale.  In addition, the Plan provides
for a cash bonus to the participant equal to the fair market value
of the shares on the dates restrictions lapse, in the case of an 
award, or the excess of the fair market value over the original
purchase price if the shares were purchased.  The total bonus paid
to any participant during the restricted period is limited to
twice the fair market value of the shares on the date of award or
sale.  

Under the Plan, during 1996, 1,500 shares were awarded leaving    
343,900 shares available for award or sale at December 31, 1996. 
Under the Plan, in 1995 and 1994, 18,500 and 15,500 shares were
awarded, respectively.  In addition to the shares issued and the
amortization of deferred compensation included in the Consolidated
Statements of Shareholders' Equity, the Company accrued $408,000,
$306,000, and $212,000 for additional compensation payable under
the provisions of the Plan in 1996, 1995 and 1994, respectively.

The Company has a Stock Retirement Plan for Nonemployee Directors. 
This retirement plan provides for a portion of the total
compensation payable to Nonemployee Directors to be deferred and
paid in Company stock. Under this plan, the amount of the actual
dollar compensation was $17,100, $15,100 and $11,100 in 1996, 1995
and 1994, respectively.


NOTE E - Employee Retirement Plans

Defined benefit plans

The Company has a number of noncontributory defined benefit
pension plans (Plans) covering approximately 46% of its employees. 
Plans covering salaried employees provide pension benefits that
are based on the employees' compensation prior to retirement. 
Plans covering hourly employees generally provide benefits of
stated amounts for each year of service.

Net pension income for the Plans in 1996, 1995 and 1994 includes
the following components:
<TABLE>
<CAPTION>                                                                   
                                                     (In thousands)
                                             1996         1995        1994
                                                                   
<S>                                       <C>          <C>         <C>
Service cost--benefits earned 
  during the year                         $ 2,787      $ 2,216     $ 2,374
Interest cost on projected
  benefit obligation                        5,430        5,330       4,769
Actual (return) loss on plan 
  assets                                  (20,982)     (23,252)      2,565
Net amortization and deferral               7,352       10,375     (16,271)
                                                                   
Net pension income                        $(5,413)     $(5,331)    $(6,563)
</TABLE>
                                                                   

The following table details the funded status of the Plans at
December 31, 1996, and December 31, 1995:

                                                          (In thousands)
                                                          1996      1995
                                                                   
Actuarial present value of benefit obligations: 
   Vested benefits                                    $ 68,570   $ 66,736
   Nonvested benefits                                    2,598      2,960
                                                                   
   Accumulated benefit obligation                     $ 71,168   $ 69,696
                                                                   
Plan assets at fair value                             $151,841   $134,595
Projected benefit obligation                            78,046     77,138
                                                                   
Plan assets in excess of the projected
 benefit obligation                                     73,795     57,457
Unrecognized prior year service cost                       397        154
Unrecognized net (gain) loss                           (15,146)    (1,935)
Unrecognized net asset                                  (8,894)   (10,937)
                                                                   
Prepaid pension expense                                $50,152   $ 44,739
                                                                   

Assumptions used in determining net pension income and the funded
status of U.S. defined benefit pension plans were as follows:

                                                1996        1995       1994
                                                                   
Discount rates (funded status)                  7.75%       7.25%      8.25%
Rates of increase in compensation levels
 (salaried plan only)                           5%-7%       5%-7%      5%-7%
Expected long-term rate of return on assets     9.75%       9.00%      9.00%
                                                                   

Net pension income is determined using assumptions as of the
beginning of each year.  Funded status is determined using
assumptions as of the end of each year.  Effective with the
December 31, 1996, measurement date, the discount rate was
increased to 7.75% to reflect current market conditions.  This
change had no impact on 1996 pension income, but will increase
1997 pension income by $562,000.  Effective with the December 31,
1995, measurement date, the discount rate was reduced to 7.25% to
reflect market conditions.  This change had no impact on 1995
pension income, but reduced 1996 pension income by $310,000. 
Effective with the December 31, 1994, measurement date, the
discount rate, expected long-term rate of return on assets and
mortality assumptions were revised to reflect current market and
demographic conditions.  As a result of these changes, the
December 31, 1994, projected benefit obligation decreased by $2.4
million.  These changes had no effect on 1994 pension income, but
reduced 1995 pension income by $1.2 million.

The majority of U.S. defined benefit pension plan assets are
invested in common stock, including approximately $8.5 million in
CTS common stock.  The balance is invested in corporate bonds,
U.S. government backed mortgage securities and bonds, asset
backed securities, a private equity fund, non-U.S. corporate
bonds and convertible issues.
                                                              
Because the domestic plans are fully funded, the Company made no
contributions during 1996, 1995 or 1994.  Benefits paid by all
Plans during 1996, 1995 and 1994 were $4,240,000, $4,085,000 and
$4,175,000, respectively.

Pension coverage for employees of certain non-U.S. subsidiaries
is provided through separate plans.   Contributions of $167,000,
$237,000 and $172,000 were made to the non-U.S. Plans in 1996,
1995 and 1994, respectively.

Defined contribution plans

The Company sponsors a 401(k) Plan and several other defined
contribution plans which cover some of its non-U.S. employees and
its domestic hourly employees not covered by a defined benefit
pension plan.  Contributions and costs are generally determined 
as a percentage of the covered employee's annual salary.  Amounts
expensed for the 401(k) Plan and the other plans totaled
$2,382,000 in 1996, $2,294,000 in 1995 and $2,506,000 in 1994. 

Postretirement life insurance plans

In addition to providing pension benefits, the Company provides
certain life insurance programs for retired employees. 
Substantially all of the Company's domestic employees are
eligible for life insurance benefits.  

Summary information on the Company's plans as of December 31,
1996, and December 31, 1995, is as follows:
                                                          (In thousands)
                                                          1996       1995 
                                                                
Accumulated postretirement benefit obligation:                
  Active employees                                     $(1,298)   $(1,282)
  Retirees and dependents                               (2,698)    (2,912)
                                                        (3,996)    (4,194)
Unrecognized net gain                                     (574)      (345)
Postretirement benefit obligation                      $(4,570)   $(4,539)


The components of net periodic postretirement benefit expense for
1996, 1995 and 1994 are as follows:
                                                  (In thousands)
                                            1996       1995       1994
Service cost--benefits earned 
  during the year                           $ 34    $    28       $ 43
Interest cost on accumulated 
  benefit obligation                         295        330        511
Net amortization and deferral                        (1,008)            
Net expense (income)                        $329    $  (650)      $554

The accumulated postretirement benefit obligation was determined
using relevant actuarial assumptions and the terms of the
Company's life insurance plans.  For measurement purposes, a
7.75%, 7.25% and 8.25% annual discount rate was used to determine
the remaining life obligation for 1996, 1995 and 1994,
respectively.

The Company funds life insurance benefits through term life
insurance policies.  The Company plans to continue funding
premiums on a pay-as-you-go basis.  


NOTE F - Income Taxes

The components of earnings before income taxes are as follows:

                                                    (In thousands)
                                          1996           1995           1994

Domestic                               $16,381        $17,563        $15,391
Non-U.S.                                17,221         10,121          6,096
                                                                 
   Total                               $33,602        $27,684        $21,487
                                                                 


The provision for income taxes consists of the following:

                                                    (In thousands)
                                          1996           1995           1994
                                                                 
Current:
   Federal                              $3,105         $1,935         $1,998
   State                                 1,012            963            604
   Non-U.S.                              5,114          4,383          2,367
                                                                 
      Total current                      9,231          7,281          4,969
                                                                 
Deferred:
   Federal                               2,761          2,534          1,268
   State                                   313            578            400
   Non-U.S.                                127            127            883
                                                                 
      Total deferred                     3,201          3,239          2,551
                                                                 
      Total provision for income taxes $12,432        $10,520         $7,520
  

Significant components of the Company's deferred tax liabilities
and assets at December 31, 1996, and 1995, are:
                                                          (In thousands)
                                                        1996         1995
                                                                 
Depreciation                                          $ 1,460     $ 1,063
Pensions                                               17,683      15,767
Other                                                   3,185       2,282
                                                                 
Gross deferred tax liabilities                         22,328      19,112
                                                                 
Postemployment benefits                                 1,622       1,611
Inventory reserves                                      2,721       2,613
Loss carryforwards                                      5,778       5,847
Credit carryforwards                                    4,355       5,537
Nondeductible accruals                                  4,365       3,200
Other                                                     818         710
                                                                 
Gross deferred tax assets                              19,659      19,518
                                                                 
Net deferred tax (liabilities) assets                  (2,669)        406
Deferred tax asset valuation allowance                 (6,765)     (6,639)
                                                                 
   Total                                              $(9,434)    $(6,233)
                                                                 

During 1996, the valuation allowance was increased as a result of
an increase in unutilized net operating loss carryforwards in
some taxing jurisdictions, and decreased by the utilization of
net operating losses and scheduled tax credits in other
jurisdictions.  The net increase in the valuation allowance was
$126,000.

A reconciliation from the statutory federal income tax to the
Company's effective income tax follows:
<TABLE>
<CAPTION>
                                                               (In thousands)
                                                   1996              1995           1994
                                                                 
<S>                                             <C>               <C>             <C>
Taxes at the U.S. statutory rate                $11,761           $ 9,689         $7,306
State income taxes, net of federal 
   income tax benefit                               861             1,002            663
Non-U.S. income taxed at rates 
   different than the U.S. statutory rate          (728)            1,159          1,639
Utilization of net operating loss 
   carryforwards and benefit of scheduled 
   tax credits                                     (279)           (2,024)        (2,544)
Foreign distributions, net of foreign 
   tax credits                                      297               372               
Other                                               520               322            456
                                                                 
      Provision for income taxes                $12,432           $10,520         $7,520
                                                                 
</TABLE>

Undistributed earnings of certain non-U.S. subsidiaries amount to
$52,892,000 at December 31, 1996. These earnings are intended to
be permanently invested and, accordingly, no provision has been
made for non-U.S. withholding taxes.  In the event all
undistributed earnings were remitted, approximately $4,795,000 of
withholding tax would be imposed, which would be substantially
offset by foreign tax credits.

The Company has U.S. tax basis business tax credits and foreign
tax credits of approximately $1,624,000 at December 31, 1996. 
The U.S. business credit carryforwards expire between the years
2001 and 2010.  In addition, the Company has various non-U.S. tax
basis net operating losses and business credit carryforwards of
$20,937,000 and $70,000, respectively.  The non-U.S. net
operating losses have an unlimited carryforward period.  The non-U.S.
credit carryforwards expire in 1997.  In addition, the
Company has alternative minimum tax credit carryforwards of
approximately $2,661,000, which have no expiration dates.


NOTE G - Business Segment and Non-U.S. Operations

The Company's operations comprise one business segment, the
manufacturing of electronic components.  Electronic components
include production and sale of automotive control devices, fiber-optic
transceivers, flex cable assemblies, frequency control
devices, hybrid microcircuits, industrial electronics, insulated
metal circuits, interconnect products, loudspeakers, resistor
networks, switches and variable resistors.

Sales to a major automotive manufacturer were $49,100,000 in
1996, $54,900,000 in 1995 and $49,400,000 in 1994. 

The non-U.S. operations or facilities are located in Canada, Hong
Kong, Japan, Mexico, Singapore, Taiwan, Thailand and the United
Kingdom.  Net sales to unaffiliated customers from the United
Kingdom equaled 24%, 17% and 16% of the consolidated total for
1996, 1995 and 1994, respectively.  Net sales to unaffiliated
customers from Other non-U.S. operations in the aggregate equaled
16%, 19% and 18% of the consolidated total for each of the years
1996, 1995 and 1994, respectively. 

Net sales by geographic area include both sales to unaffiliated
customers and transfers between geographic areas.  Such transfers
are accounted for primarily on the basis of a uniform
intercompany pricing policy.  Operating earnings are total net
sales less operating expenses.  In computing operating earnings,
none of the following items have been added or deducted: general
corporate expenses, interest income, interest expense, other
income and expenses and income taxes.  Identifiable assets by
geographic area are those assets that are used in the Company's
operations in each such area.  The Corporate Office assets are
principally cash and equivalents and the prepaid pension asset.

Summarized financial information concerning the geographic areas
of operation for 1996, 1995 and 1994 is shown in the following
table.  The caption "Eliminations" includes intercompany sales
and other transactions which are eliminated or adjusted in
arriving at consolidated data.  


Geographic Area                                        (In thousands)
                                                 1996       1995      1994
                                                                 
Net Sales
  United States:
    Sales to unaffiliated customers           $193,474   $194,016   $178,032
    Transfers to non-U.S. area                   8,181      5,439      4,179
                                                                 
                                               201,655    199,455    182,211
  United Kingdom: 
    Sales to unaffiliated customers             76,204     49,571     42,779
    Transfers to other areas                       730        732        514
                                                                 
                                                76,934     50,303     43,293
  Other non-U.S.: 
    Sales to unaffiliated customers             51,619     56,570     47,896
    Transfers to other areas                     7,400      6,092      7,692
                                                                 
                                                59,019     62,662     55,588
  Eliminations                                 (16,311)   (12,263)   (12,385)
                                                                 
      Total net sales                         $321,297   $300,157   $268,707
                                                                 
Operating Earnings 
  United States                                $23,226   $ 22,204   $ 18,109
  United Kingdom                                10,192      6,483      4,569
  Other non-U.S.                                 9,141      6,345      3,708
                                                                 
                                                42,559     35,032     26,386
  Eliminations                                     (72)       140          1
                                                                 
                                                42,487     35,172     26,387
  General corporate expenses                     9,067      7,684      5,703
                                                                 
  Operating earnings                            33,420     27,488     20,684
  Other income--net                                182        196        803
                                                                 
    Earnings before income taxes               $33,602   $ 27,684   $ 21,487
                                                                 
Assets Apportioned by Area
  United States                                $88,189   $ 87,862   $ 86,605
  United Kingdom                                36,037     24,718     23,419
  Other non-U.S.                                47,689     49,848     43,272
                                                                 
                                               171,915    162,428    153,296
  Eliminations                                  (4,672)    (3,783)    (3,305)
                                                                 
                                               167,243    158,645    149,991
  Corporate assets                              82,129     68,482     56,835
                                                                 
      Total assets                            $249,372   $227,127   $206,826

                                                                  
NOTE H - Contingencies

Certain processes in the manufacture of the Company's current and
past products create hazardous waste by-products as currently
defined by federal and state laws and regulations.  The Company
has been notified by the U.S. Environmental Protection Agency,
state environmental agencies and, in some cases, generator
groups, that it is or may be a Potentially Responsible Party
(PRP) regarding hazardous waste remediation at several non-CTS
sites.  The factual circumstances of each site are different; the
Company has determined that its role as a PRP with respect to
these sites, even in the aggregate, will not have a material
adverse effect on the Company's business or financial condition,
based on the following:  1) the Company's status as a de minimis
party; 2) the large number of other PRPs identified; 3) the
identification and participation of many larger PRPs who are
financially viable; 4) defenses concerning the nature and limited
quantities of materials sent by the Company to certain of the
sites; and/or 5) the Company's experience to-date in relation to
the determination of its allocable share.  In addition to these
non-CTS sites, the Company has an ongoing practice of providing
reserves for probable remediation activities at certain of its
manufacturing locations and for claims and proceedings against
the Company with respect to other environmental matters.  Accrued
environmental costs as of December 31, 1996, totaled $4.8
million, compared with $4.5 million at December 31, 1995.  In the
opinion of management, based upon presently available
information, either adequate provision for probable costs has
been made, or the ultimate costs resulting will not materially
affect the consolidated financial position or results of
operations of the Company. 

Certain claims are pending against the Company with respect to
matters arising out of the ordinary conduct of its business.  In
the opinion of management, based upon presently available
information, either adequate provision for anticipated costs has
been made by insurance, accruals or otherwise, or the ultimate
anticipated costs resulting will not materially affect the
Company's consolidated financial position or results of
operations.


NOTE I - Related Party Transactions

Dynamics Corporation of America (DCA) owned 2,303,100 shares
(44.1%) of the Company's outstanding common stock at December 31,
1996.  Of these shares, 1,020,000 were not granted voting
authority by CTS shareholders in 1987.  In addition to stock
ownership, as of December 31, 1996, two representatives of DCA
serve on the Company's Board of Directors.  The normal business
transactions between the Company and DCA are insignificant.


<PAGE>


                REPORT OF INDEPENDENT ACCOUNTANTS



To the Shareholders and 
Board of Directors of CTS Corporation


In our opinion, the accompanying consolidated balance sheets and
the related consolidated statements of earnings, shareholders'
equity and of cash flows present fairly, in all material
respects, the financial position of CTS Corporation and its
subsidiaries at December 31, 1996, and 1995, and the results of
their operations and their cash flows for each of the three years
in the period ended December 31, 1996, in conformity with
generally accepted accounting principles.  These financial
statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial
statements based on our audits.  We conducted our audits of these
statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation.  We
believe that our audits provide a reasonable basis for the
opinion expressed above.



/S/PRICE WATERHOUSE LLP

South Bend, Indiana
January 27, 1997



<PAGE>


    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

              AND RESULTS OF OPERATIONS (1994 - 1996)


Liquidity and Capital Resources

The table below highlights significant comparisons and ratios
related to liquidity and capital resources of CTS Corporation (CTS
or Company) for each of the last three years.
                                                     (In thousands)      
                                       December 31   December 31   December 31
                                              1996          1995          1994
                                                                     
Net cash provided by (used in):
    Operating activities                  $ 35,103      $ 26,861      $ 12,555
    Investing activities                   (16,388)      (10,945)      (15,090)
    Financing activities                   (12,324)       (3,796)        2,580
                                                                     
Cash and equivalents                      $ 44,957      $ 37,271      $ 24,922
Accounts receivable, net                    43,984        41,737        35,029
Inventories, net                            38,761        38,885        41,456
Current assets                             138,201       126,113       110,667
Notes payable                                              6,685         7,436
Accounts payable                            17,146        15,605        12,768
Accrued liabilities                         31,818        26,461        24,284
Current liabilities                         51,391        50,962        44,792
Working capital                             86,810        75,151        65,875
Current ratio                                 2.69          2.47          2.47
Interest-bearing debt                     $ 13,428      $ 22,267      $ 23,318
Net tangible worth                         162,193       141,650       126,634
Ratio of interest-bearing debt
  to net tangible worth                        .08           .16           .18
                                                                     

During 1996, $35.1 million of positive cash flow was generated from
operating activities.  This amount, which exceeded 1995 by 31%, or
$8.2 million, was primarily a result of the higher level of
earnings and improved management of working capital, particularly
accounts receivable.

The 1995 cash flow from operating activities of $26.9 million
improved by $14.3 million from 1994, primarily as a result of
higher net earnings and reduction in inventories, partially offset
by an increase in accounts receivable.

During 1994, cash flow of $12.6 million was positive from operating
activities, primarily as a result of the significant improvement in
operating earnings when compared to 1993. However, offsetting the
favorable impact of the higher earnings was the higher working 
capital requirements to support the increased sales levels, which
reduced operating cash flow by $5.0 million from 1993.

Cash expenditures for investing activities totaled $16.4 million in
1996, exceeding the prior year's amount by $5.4 million, or 50%. 
The major change in financing activities was cash payments of $8.9
million for short and long-term debt.  As of year-end, the Company
had no short-term debt.

Spending of cash for investing activities in 1995 was $10.9 million
and comparable to 1994 after the impact of the 1994 expenditures
for the light emitting diode (LED)-based fiber-optic data link
(ODL ) product line of $3.4 million.  In terms of financing
activities, the impact of the notes payable reduction during 1995
was $5.3 million from the increased cash flow.

Investing requirements increased during 1994, primarily due to the
$13.4 million of capital expenditures, including $3.4 million for
the acquisition of ODL fixed assets.   Additionally, financing
activities increased during 1994 and were generated by the higher
sales levels and the acquisition of the ODL product line for which
$2.1 million of additional expenditures were made for inventory.  

A significant noncash component and a decreasing component of
operating earnings during the 1994 to 1996 period was pension
income of $5.4 million, $5.3 million and $6.6 million in 1996, 1995
and 1994, respectively.  The 1996 pension income amount was
approximately the same as 1995, but decreased from 1994 as a result
of actuarial changes.  As a result of the Company's overfunded
pension position, no overall cash contributions are anticipated to
be required in the immediate future to meet the Company's pension
obligations.

The major investment activity during the last three years has been
capital expenditures, which totaled $17.2 million in 1996, $11.2
million in 1995 and $13.4 million in 1994.  The major capital
expenditures in 1996 were for new products and product line
enhancements.  Also during 1996, as in 1995, capacity increases
were required in our automotive and European interconnect product
lines.  The Company expects to increase its capital expenditures in
1997 over 1996 levels.  These capital expenditures will be
primarily for new products and cost reduction programs, as well as
selected manufacturing equipment capacity expansion.

The most recent major long-term financing activity outside the CTS
revolving credit agreements occurred during 1994, when the Company
negotiated a five-year, $15.0 million long-term loan which expires
in 1999.  As of December 31, 1996, $13.0 million remains 
outstanding on this loan.

Dividends paid were $3.4 million in 1996, $3.1 million in 1995 and
$2.1 million in 1994. During 1996, as a result of continuing
improved earnings performance and positive cash flow, the Company
increased its quarterly dividend to $.18 per share, effective with
the August payment.  In December 1994, the Board of Directors,
principally as a result of the Company's improving performance and
cash position, increased the quarterly dividend to $.15 per share,
effective with the February 1995 payment.

At the end of each of the last three years, cash of various non-U.S.
subsidiaries was invested in U.S.-denominated cash
equivalents.  Such cash is generally available to the parent
Company and the Company's intention is not to repatriate non-U.S.
earnings.  If all non-U.S. earnings were repatriated, approximately
$4.8 million of withholding taxes would accrue, but would be
substantially offset by foreign tax credits.

In 1996, CTS renegotiated its long-term revolving credit agreement
and at the end of 1996, CTS had $45.0 million of borrowing capacity
available under long-term revolving credit agreements with four
banks.  These revolving agreements, which expire in 2001, are the
Company's primary credit vehicles and, together with cash from
operations, should adequately fund the Company's anticipated cash
needs.

Results of Operations

The following table highlights significant information with regard
to the Company's twelve months results of operations during the
past three fiscal years.
                                                 (In thousands)
                                      December 31  December 31  December 31
                                             1996         1995         1994
                                                                   
Net sales                                $321,297     $300,157     $268,707
Gross earnings                             87,496       74,804       63,067
Gross earnings as a percent 
  of sales                                  27.2%        24.9%        23.5%
Selling, general and 
  administrative expenses                $ 43,333     $ 39,312     $ 36,175
Selling, general and 
  administrative expenses
  as a percent of sales                     13.5%        13.1%        13.5%
Research and development
  expenses                               $ 10,743     $  8,004     $  6,208
Research and development
  expenses as a percent of 
  sales                                      3.3%         2.7%         2.3%
Operating earnings                       $ 33,420     $ 27,488     $ 20,684
Operating earnings as a 
  percent of sales                          10.4%         9.1%         7.7%
Interest (income) expense, net            $  (432)    $    369      $    57
Earnings before income taxes               33,602       27,684       21,487
Income taxes                               12,432       10,520        7,520
Income tax rate                             37.0%        38.0%        35.0%
                                                                   

Net sales for 1996 increased by $21.1 million, or 7.0% over 1995,
principally due to the increased demand in the domestic and
European automotive, computer equipment and communications
equipment markets.

The 1995 net sales increased $31.5 million, or 11.7% over 1994,
primarily due to broad increases in demand for electronic component
products into our automotive, computer equipment and communications
equipment markets.  

From 1993 to 1994, total sales increased by 13.4%, primarily as a
result of substantial increases in our automotive and European
interconnect product lines.

During the three-year period 1994-1996, the percentage of overall
sales to the automotive market decreased from 38% to 34%.   During
this same period, our sales into the computer equipment market
increased from 19% to 24%, as a percent of total sales.  Sales into
other markets have generally remained constant.

The Company's 15 largest customers represented 62% of net sales in
1996, 61% in 1995 and 62% in 1994.  One customer, a major
manufacturer of automobiles, comprised 15% of net sales in 1996 as
compared to 18% in 1995 and 1994. 

Because most of CTS' revenues are derived from the sale of custom
products, the relative contribution to revenues of changes in unit
volume cannot be meaningfully determined.  The Company's products
are usually priced with reference to expected or required profit
margins, customer expectations and market competition.  Pricing for
most of the Company's electronic component products frequently
decreases over time and also fluctuates in accordance with total
industry utilization of manufacturing capacity.  

In 1996, 1995 and 1994, improvements in gross earnings were
realized over each of the preceding years in absolute terms and as
a percent of sales, principally due to higher sales volume,
production efficiencies and higher absorption of fixed
manufacturing overhead expenses.  

Selling, general and administrative expenses as a percent of sales
have remained constant over the last three years, ranging from
13.1% to 13.5%.  In 1996, as in previous years, the Company
continued to control these expenses while increasing sales.  Also
during 1994, the Company successfully resolved approximately $1
million of outstanding legal and customer claims, the provision for
most of which had been established in 1993.  

During 1996, research and development expenses increased by $2.7
million, or 34% over 1995, as the Company continued investment
efforts in new product development and product improvements,
particularly in automotive, frequency control and hybrid
microcircuit products.  Research and development expenses increased
by $1.8 million, or 29%, in 1995 over 1994, with much of the
additional effort devoted to the "hall effect" non-contacting
sensor development for our automotive products, as well as other
new product development programs in the automotive and the resistor
network product areas.  

The net of interest expense and interest income is reflective of
the levels of debt during the 1994-1996 period.  The lower amount
of expense in 1994 relates to the timing of the $15.0 million loan
secured in late 1994, while the 1996 income amount is a result of
lower levels of short-term debt compared to 1995.

During 1996 and 1995, the primary reasons for the substantial
operating earnings improvement include the higher overall sales and
related productivity in our automotive, resistor network and
interconnect products, and the reduction of losses from our
frequency control products.  These improvements substantially
offset losses from our defense and aerospace products, caused
primarily by the declining market conditions.  In 1994, the level
of operating earnings was a result of the higher automotive and
interconnect product sales, and improved performance within our
resistor network and electromechanical products, which more than
offset losses from our frequency control and hybrid microcircuit
products during that year.  

The 1996 effective tax rate of 37% approximated the 1995 tax rate
of 38%.  The Company has net operating loss carryforwards of
approximately $21 million in certain non-U.S. subsidiaries, and has
established a 100% valuation reserve on these amounts based upon
historical pretax losses.

With respect to the recently issued FASB Statement No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of," and FASB Statement No. 123,
"Accounting for Stock-Based Compensation," the Company has realized
no impact on financial position or results of operations upon
adoption in 1996.  

In terms of environmental issues, the Company has been notified by
the U.S. Environmental Protection Agency, as well as state agencies
and generator groups, that it is or may be a Potentially
Responsible Party regarding hazardous waste remediation at non-CTS
sites.  Additionally, the Company provides reserves for probable
remediation activities at certain of its manufacturing locations. 
These issues are discussed in Note H - Contingencies.



<TABLE>

                                FIVE-YEAR SUMMARY
                 (In thousands of dollars except per share data)

<CAPTION>
                                        % of            % of            % of            % of            % of
                                  1996 Sales      1995 Sales      1994 Sales      1993 Sales      1992 Sales
Summary of Operations
<S>                           <C>      <C>    <C>      <C>    <C>      <C>    <C>      <C>    <C>      <C>
Net sales                     $321,297 100.0  $300,157 100.0  $268,707 100.0  $236,979 100.0  $227,391 100.0
Cost of goods sold             233,801  72.8   225,353  75.1   205,640  76.5   183,927  77.6   180,198  79.2
   Selling, general and admin-
     istrative expenses         43,333  13.5    39,312  13.1    36,175  13.5    36,323  15.3    37,855  16.6
   Research and development
     expenses                   10,743   3.3     8,004   2.7     6,208   2.3     5,708   2.4     6,092   2.7
   (Gain) on sale of property 
     and other related provisions                                                                 (852) (0.3)
     Operating earnings         33,420  10.4    27,488   9.1    20,684   7.7    11,021   4.7     4,098   1.8
Other income (expenses)--net       182   0.1       196   0.1       803   0.3      (761) (0.4)     (277) (0.1) 
     Earnings before income taxes 
       and cumulative effect of
       changes in accounting 
       principles               33,602  10.5    27,684   9.2    21,487   8.0    10,260   4.3     3,821   1.7
Income taxes                    12,432   3.9    10,520   3.5     7,520   2.8     3,690   1.6     1,920   0.9
     Net earnings--before 
       accounting changes       21,170   6.6    17,164   5.7    13,967   5.2     6,570   2.7     1,901   0.8
Cumulative effect on prior
  years of accounting 
  changes (a)                                                                   (4,614) (1.9)
     Net earnings               21,170   6.6    17,164   5.7    13,967   5.2     1,956   0.8     1,901   0.8
Retained earnings--beginning
  of year                      126,546         112,506         100,868         100,973         102,482        
Dividends declared              (3,604)         (3,124)         (2,329)         (2,061)         (3,410)
Retained earnings--end of     
  year                        $144,112        $126,546        $112,506        $100,868        $100,973   
Average common and common 
  equivalent shares 
  outstanding                5,259,284       5,200,818       5,170,406       5,152,556       5,141,936      
Net earnings per share:
   Before accounting changes     $4.03           $3.30           $2.70           $1.27           $0.37
   Cumulative effect on prior
     years of accounting 
     changes (a)                                                                 (0.89)
     Net earnings                $4.03           $3.30           $2.70           $0.38           $0.37
Cash dividends per share         $0.69           $0.60           $0.45           $0.40         $0.6625
Capital expenditures            17,210          11,181          13,401          11,696           8,831
Depreciation and amortization   12,491          11,683          11,236          12,143          11,665
Financial Position at Year-End
Current assets                $138,201        $126,113        $110,667         $97,266         $87,376
Current liabilities             51,391          50,962          44,792          49,888          37,262
Current ratio                 2.7 to 1        2.5 to 1        2.5 to 1        1.9 to 1        2.3 to 1
Working capital                $86,810         $75,151         $65,875         $47,378         $50,114
Inventories                     38,761          38,885          41,456          36,059          37,222
Property, plant and equipment--
  net                           56,103          50,696          50,777          47,842          48,529
Total assets                   249,372         227,127         206,826         185,064         170,773
Short-term notes payable                         6,685           7,436          12,822           5,827
Long-term obligations           11,220          13,714          15,595           4,995          10,826
Shareholders' equity           166,232         146,253         131,855         119,203         119,372
Common shares outstanding    5,224,956       5,217,329       5,178,604       5,153,424       5,150,824
Equity (book value) per share   $31.82          $28.03          $25.46          $23.13          $23.18
Other Data
Stock price range (dollars 
  per share to the
  nearest 1/8)           $47.00-$36.00   $37.75-$27.38   $31.00-$19.50   $22.38-$17.00   $24.50-$17.13
Average number of employees      3,815           4,007           4,056           3,975           4,335
Number of shareholders at     
  year-end                         986           1,062           1,136           1,198           1,278


(a)  The Company adopted FASB 106, "Employers' Accounting for Postretirement Benefits Other Than
     Pensions" and FASB 109, "Accounting for Income Taxes," as of January 1, 1993.

</TABLE>