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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)
 X   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
        For the Quarterly Period Ended June 27, 2004
       OR
      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
        For the Transition Period from _______________ to _______________

Commission File Number: 1-4639

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

Registrant’s telephone number, including area code: 574-293-7511

Indicate by check mark whether the registrant (1) has 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 whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
Yes  X     No     

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of July 20, 2004:  36,099,702

CTS CORPORATION AND SUBSIDIARIES

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PART I  -  FINANCIAL INFORMATION

   Item 1.   Financial Statements

CTS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS - UNAUDITED
(In thousands, except per share amounts)

				Three Months Ended								Six Months Ended
				June 27, 2004				June 29, 2003				June 27, 2004				June 29, 2003
Net sales				$	137,624			$	116,697			$	259,771			$	222,466
Costs and expenses:
	Cost of goods sold				108,707				92,177				206,245				176,863
	Selling, general and administrative expenses				16,622				14,623				31,499				27,471
	Research and development expenses				4,673				5,390				9,557				11,031
	Gain on sales of assets  — Note D				(3,006	)			—				(3,067	)			—
		Operating earnings			10,628				4,507				15,537				7,101
Other (expense) income:
	Interest expense				(1,590	)			(1,899	)			(3,123	)			(3,871	)
	Interest income				233				101				335				150
	Other				(401	)			(65	)			(519	)			25
		Total other expense			(1,758	)			(1,863	)			(3,307	)			(3,696	)
		Earnings before income taxes			8,870				2,644				12,230				3,405
		Income tax expense — Note J			1,973				661				2,813				851
		Net earnings		$	6,897			$	1,983			$	9,417			$	2,554
Net earnings per share — Note K
	Basic			$	0.19			$	0.06			$	0.26			$	0.07
	Diluted			$	0.19			$	0.06			$	0.26			$	0.07
	Cash dividends declared per share			$	0.03			$	0.03			$	0.06			$	0.06
Average common shares outstanding:
	Basic				35,986				34,227				35,971				34,125
	Diluted				36,253				34,569				36,248				34,415

See notes to condensed consolidated financial statements.

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CTS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of dollars)

					June 27, 2004				December 31, 2003*
					(UNAUDITED)
ASSETS
Current Assets
	Cash and cash equivalents				$	48,199			$	25,346
	Accounts receivable, less allowances (2004 — $1,523; 2003 — $1,585)					82,549				72,290
	Inventories — Note C					44,471				31,925
	Other current assets					8,297				6,697
	Deferred income taxes					28,523				28,508
			Total current assets			212,039				164,766
Property, plant and equipment, less accumulated depreciation (2004 — $280,826; 2003 — $261,838)						116,914				122,481
Other Assets
	Prepaid pension asset — Note G					137,885				132,960
	Intangible assets, net					36,303				37,456
	Other assets — Note D					8,939				24,587
			Total other assets			183,127				195,003
Total Assets					$	512,080			$	482,250
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
	Accounts payable				$	64,352			$	52,252
	Accrued liabilities					43,584				43,437
			Total current liabilities			107,936				95,689
Long-term debt — Note F						85,000				75,880
Other long-term obligations						11,026				11,133
Deferred income taxes						5,414				5,357
Shareholders’ Equity
	Preferred stock — authorized 25,000,000 shares without par value; none issued					—				—
	Common stock — authorized 75,000,000 shares without par value; 52,640,014 shares issued at June 27, 2004 and 52,632,088 shares issued at December 31, 2003					263,040				262,748
	Additional contributed capital					21,812				21,520
	Retained earnings					270,677				263,430
	Accumulated other comprehensive earnings					846				151
						556,375				547,849
Cost of common stock held in treasury (2004 — 16,568,326 shares; 2003 — 16,565,558 shares)						(253,671	)			(253,658	)
			Total shareholders’ equity			302,704				294,191
Total Liabilities and Shareholders’ Equity					$	512,080			$	482,250
*The balance sheet at December 31, 2003, has been derived from the audited financial statements at that date. See notes to condensed consolidated financial statements.

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CTS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
(In thousands of dollars)

				Six Months Ended
				June 27, 2004				June 29, 2003
Cash flows from operating activities:
	Net earnings			$	9,417			$	2,554
	Adjustments to reconcile net earnings
	to net cash provided by operating activities:
	Depreciation and amortization				14,009				17,321
	(Gain) loss on sale of assets				(3,067	)			—
	Changes in assets and liabilities:
	Accounts receivable				(10,259	)			(1,942	)
	Inventories				(12,546	)			1,205
	Other current assets				(1,181	)			(3,159	)
	Prepaid pension asset				(4,925	)			(6,143	)
	Accounts payable and accrued liabilities				12,554				(3,700	)
	Other				706				753
	Total adjustments				(4,709	)			4,335
	Net cash provided by operations				4,708				6,889
Cash flows from investing activities:
	Capital expenditures				(6,213	)			(4,485	)
	Proceeds from sales of assets				19,036				3,974
	Other				—				(123	)
	Net cash provided by (used in) investing activities				12,823				(634	)
Cash flows from financing activities:
	Payments of long-term debt				(112,540	)			(62,125	)
	Proceeds from issuance of long-term debt				121,660				52,025
	Debt issue costs				(2,175	)			—
	Issuance of common stock				—				3,043
	Dividends paid				(2,229	)			(2,047	)
	Other				(48	)			(52	)
	Net cash provided by (used in) financing activities				4,668				(9,156	)
Effect of exchange rate on cash and cash equivalents					654				341
Net increase (decrease) in cash and cash equivalents					22,853				(2,560	)
Cash and cash equivalents at beginning of year					25,346				9,225
Cash and cash equivalents at end of period				$	48,199			$	6,665
Supplemental cash flow information
Cash paid during the period for:
	Interest			$	2,905			$	3,161
	Income taxes--net			$	3,800			$	4,021

See notes to condensed consolidated financial statements.

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CTS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS - UNAUDITED
(In thousands of dollars)

				Three Months Ended								Six Months Ended
				June 27, 2004				June 29, 2003				June 27, 2004				June 29, 2003
Net earnings				$	6,897			$	1,983			$	9,417			$	2,554
Other comprehensive earnings (loss):
	Cumulative translation adjustment				310				770				657				266
	Deferred gain (loss) on forward contracts				7				(37	)			38				(37	)
Comprehensive earnings				$	7,214			$	2,716			$	10,112			$	2,783

See notes to condensed consolidated financial statements.

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NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS - UNAUDITED
June 27, 2004

NOTE A—Basis of Presentation

The accompanying condensed consolidated interim financial statements have been prepared by CTS Corporation (CTS or the Company), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission.  Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations. The unaudited condensed consolidated interim financial statements should be read in conjunction with the financial statements, notes thereto and other information included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2003.

The accompanying unaudited condensed consolidated interim financial statements reflect, in the opinion of management, all adjustments (consisting of normal recurring items) necessary for a fair statement, in all material respects, of the financial position and results of operations for the periods presented.  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, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period.  Actual results could differ materially from those estimates.  The results of operations for the interim periods are not necessarily indicative of the results for the entire year.

Certain reclassifications have been made for the periods presented in the financial statements to conform to the classifications adopted in 2004.

NOTE B—Stock-Based Employee Compensation

CTS accounts for stock-based employee compensation using the intrinsic value method prescribed in Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued to Employees” and its related interpretations.  CTS has adopted the disclosure requirements of the Financial Accounting Standards Board’s (FASB) Financial Accounting Standard (FAS) No. 148, “Accounting for Stock-Based Compensation - Transition and Disclosure.”  Had employee compensation cost for CTS’ fixed, stock-based compensation plans been determined based on the fair value method, as defined by FAS No. 123, “Accounting for Stock-Based Compensation,” CTS’ net earnings and net earnings per share would have been adjusted to the pro forma amounts indicated below:

			Three Months Ended								Six Months Ended
			June 27, 2004				June 29, 2003				June 27, 2004				June 29, 2003
			($ in thousands, except per share amounts)
Net earnings, as reported			$	6,897			$	1,983			$	9,417			$	2,554
Deduct:    Stock-based employee compensation cost,                   net of tax, if fair value based method were used				(297	)			(416	)			(585	)			(797	)
Proforma net earnings			$	6,600			$	1,567			$	8,832			$	1,757
Net earnings per share-basic, as reported			$	0.19			$	0.06			$	0.26			$	0.07
Proforma net earnings per share-basic				0.18				0.05				0.25				0.05