July 26, 2006

FOR RELEASE:  Immediately

CTS ANNOUNCES SECOND QUARTER 2006 RESULTS
YEAR-OVER-YEAR EARNINGS PER SHARE IMPROVEMENT CONTINUES
 

Elkhart, IN…CTS Corporation (NYSE: CTS) today announced second quarter 2006 revenues of $165.9 million, a 5% increase from the second quarter of 2005.  Diluted earnings per share were $0.16, which included a charge of $0.03 per share for the previously announced consolidation of the Berne, Indiana operation.  In the comparable period last year, second quarter 2005 diluted earnings per share were $0.10, which included a net negative $0.07 per share from repatriation-related tax expense and the reversal of certain reserves. 

“We were very pleased with financial results in the quarter, as well as the pace of new business development.  We had a record number of design wins for electronic components in infrastructure applications, secured our first production award from Honda and added several new EMS customers,” stated Donald Schwanz, CTS Chairman and Chief Executive Officer.

Based on the first half results and outlook for the remainder of the year, we are maintaining our prior full-year 2006 guidance of 6% - 8% in sales growth over 2005 and maintaining our earnings per share guidance in a range of $0.75 to $0.80, excluding $0.08 per share for full-year Berne restructuring and related charges.

Capital expenditures of $3.4 million were 2.0% of sales in the second quarter of 2006. The full-year 2006 capital expenditures are expected to be in the range of $18 - $20 million.  Free cash flow of $11.4 million was generated in the second quarter of 2006 compared to $0.2 million in the first quarter, and $10.8 million in the second quarter last year.

The Berne consolidation is proceeding smoothly and should be completed in the third quarter.  The new Czech Republic facility of CTS began operations during the second quarter.  Production will be increased gradually throughout the year to meet business growth and better serve automotive OEMs in that region. 

SEGMENT INFORMATION
(Dollars in millions)

 
Components & Sensors: Components and sensors sales increased $5.2 million, or 8%, over the second quarter of 2005 primarily on the strength of automotive products and electronic component sales for infrastructure applications, partially offset by declines in component sales for mobile handset applications, a business the Company is exiting.  Segment operating earnings increased $0.5 million on higher sales, partially reduced by stock option expenses and lower pension income.

Components and sensors sales increased $4.1 million or 6% from the first quarter of 2006 primarily reflecting strong automotive product demand. Despite the favorable impact of higher sales, segment operating earnings decreased $2.4 million from the first quarter from timing-related royalty income and the $1.5 million favorable insurance claim settlement recorded in the first quarter.

EMS: EMS sales increased $2.4 million or 3% from the second quarter of 2005 driven primarily by increased sales in the communication, defense and medical markets, partially reduced by lower sales in the computer market. Segment operating earnings decreased $0.3 million primarily due to increased operating expenses partially offset by the impact of higher volume and improved product mix. 

Compared to the first quarter of 2006, EMS segment sales increased $11.3 million or 14% primarily from improved sales in the communication, defense, medical and industrial markets.  Total segment operating earnings increased $1.5 million primarily on higher volumes and more favorable product mix.

CTS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS - UNAUDITED
CTS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED
CTS CORPORATION AND SUBSIDIARIES OTHER SUPPLEMENTAL INFORMATION

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Conference Call
As previously announced, the Company has scheduled a conference call on Thursday, July 27, 2006 at 11:00 a.m. Eastern Daylight Time. Those interested in participating may dial 800-762-4758 (480-629-9035, if calling from outside the U.S.). No access code is needed. There will be a replay of the conference call available from 4:15 p.m. EDT on July 27, 2006, through 11:59 p.m. EDT on August 3, 2006. The telephone number for the replay is 800-475-6701 (320-365-3844, if calling from outside the U.S.). The access code is 836003. There will also be a live audio webcast of the conference call, which can be accessed directly from the Web sites of CTS Corporation (www.ctscorp.com), StreetEvents (www.StreetEvents.com), Netscape (www.netscape.com), Compuserve  (www.compuserve.com)and others. AOL subscribers will have access through the Personal Finance section of AOL.

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

Safe Harbor Statement
This press release contains certain statements that are, or may be deemed to be, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  These forward-looking statements include, but are not limited to, any financial or other guidance, and all statements that are not based on historical fact, but rather reflect our current expectations concerning future results and events.  We make certain assumptions when making forward-looking statements, any of which could prove inaccurate, including, but not limited to, statements about our future operating results and business plans.  The ultimate correctness of these forward-looking statements is dependent upon a number of known and unknown risks and events, and is subject to various uncertainties and other factors that may cause our actual results, performance or achievements to be different from any future results, performance or achievements expressed or implied by these statements.

For more detailed information on the risks and uncertainties associated with CTS' business activities, see our reports filed with the SEC.  CTS undertakes no obligation to publicly update its forward-looking statements, whether as a result of market or industry changes, new information or future events.