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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 April 3, 2005
       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 April 26, 2005:  36,756,379

    TABLE OF CONTENTS

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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
				April 3, 2005				March 28, 2004
Net sales				$	155,330			$	122,147
Costs and expenses:
	Cost of goods sold				127,115				97,538
	Selling, general and administrative expenses				17,757				14,816
	Research and development expenses				4,787				4,884
		Operating earnings			5,671				4,909
Other (expense) income:
	Interest expense				(1,717	)			(1,533	)
	Interest income				419				102
	Other				26				(118	)
		Total other expense			(1,272	)			(1,549	)
		Earnings before income taxes			4,399				3,360
Income tax expense					1,012				840
		Net earnings		$	3,387			$	2,520
Net earnings per share — Note L
	Basic			$	0.09			$	0.07
	Diluted			$	0.09			$	0.07
Cash dividends declared per share				$	0.03			$	0.03
Average common shares outstanding:
	Basic				36,398				35,957
	Diluted				40,979				36,243

See notes to condensed consolidated financial statements.

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

					April 3, 2005				December 31, 2004*
ASSETS
Current Assets
	Cash and cash equivalents				$	58,237			$	61,005
	Accounts receivable, less allowances (2005 — $2,141; 2004 — $1,450)					97,535				84,112
	Inventories — Note E					57,124				42,734
	Other current assets					10,843				7,728
	Deferred income taxes					8,576				8,567
			Total current assets			232,315				204,146
Property, plant and equipment, less accumulated depreciation (2005 — $275,249; 2004 — $272,480)						115,675				112,495
Other Assets
	Prepaid pension asset — Note I					145,805				143,918
	Goodwill — Notes C and F					29,759				513
	Other intangible assets — Notes C and F					44,861				34,632
	Deferred income taxes					23,261				23,221
	Other					2,965				3,252
			Total other assets			246,651				205,536
Total Assets					$	594,641			$	522,177
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
	Notes payable — Note G				$	3,499			$	3,311
	Current portion of long-term debt — Note H					455				—
	Accounts payable					72,731				55,614
	Accrued liabilities					44,494				44,036
			Total current liabilities			121,179				102,961
Long-term debt — Note H						133,861				94,150
Other long-term obligations						15,255				14,362
Shareholders’ Equity
	Preferred stock — authorized 25,000,000 shares without par value; none issued					—				—
	Common stock — authorized 75,000,000 shares without par value; 53,513,486 shares issued at April 3, 2005 and 52,666,798 shares issued at December 31, 2004					274,520				263,297
	Additional contributed capital					23,289				22,761
	Retained earnings					281,350				279,064
	Accumulated other comprehensive earnings					953				1,348
						580,112				566,470
Cost of common stock held in treasury (16,757,907 shares)						(255,766	)			(255,766	)
			Total shareholders’ equity			324,346				310,704
Total Liabilities and Shareholders’ Equity					$	594,641			$	522,177
*The balance sheet at December 31, 2004, 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)

				Three Months Ended
				April 3, 2005				March 28, 2004
Cash flows from operating activities:
	Net earnings			$	3,387			$	2,520
	Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
		Depreciation and amortization			6,848				7,260
		Changes in assets and liabilities, net of effects from purchase of SMTEK
		Accounts receivable			2,078				(11,373	)
		Inventories			(139	)			(6,751	)
		Other current assets			(2,226	)			(369	)
		Prepaid pension asset			(1,887	)			(2,427	)
		Accounts payable and accrued liabilities			1,688				3,778
		Other			1,125				622
		Total adjustments			7,487				(9,260	)
		Net cash provided by (used in) operating activities			10,874				(6,740	)
Cash flows from investing activities:
	Payment for purchase of SMTEK, net of cash acquired				(35,561	)			—
	Capital expenditures				(3,004	)			(1,980	)
	Proceeds and deposits on asset sales				499				11,869
		Net cash provided by (used in) investing activities			(38,066	)			9,889
Cash flows from financing activities:
	Repayment of debt assumed in connection with purchase of SMTEK				(13,013	)			—
	Payments of long-term debt				(33,982	)			(25,935	)
	Proceeds from borrowings of long-term debt				72,715				31,255
	Increase in short-term notes payable				188				—
	Dividends paid				(1,078	)			(1,169	)
	Other				63				(49	)
		Net cash provided by financing activities			24,893				4,102
Effect of exchange rate on cash and cash equivalents					(469	)			264
Net increase (decrease) in cash and cash equivalents					(2,768	)			7,515
Cash and cash equivalents at beginning of year					61,005				25,346
Cash and cash equivalents at end of period				$	58,237			$	32,861
Supplemental cash flow information
Cash paid during the period for:
	Interest			$	1,503			$	234
	Income taxes—net			$	819			$	2,312
Supplemental schedule of noncash investing and financing activities:
Refer to Note D, “Supplemental Schedule of Noncash Investing and Financing Activities”

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
				April 3, 2005				March 28, 2004
Net earnings				$	3,387			$	2,520
Other comprehensive earnings (loss):
	Cumulative translation adjustment				(395	)			347
	Deferred gain on forward contracts				—				31
Comprehensive earnings				$	2,992			$	2,898

See notes to condensed consolidated financial statements.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
April 3, 2005

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, 2004.

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.

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. 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
($ in thousands, except per share amounts)				April 3, 2005				March 28, 2004
Net earnings, as reported				$	3,387			$	2,520
Deduct:    Stock-based employee compensation cost, net of tax, if fair value based method were used					(130	)			(288	)
Proforma net earnings				$	3,257			$	2,232
Net earnings per share-basic, as reported				$	0.09			$	0.07
Proforma net earnings per share-basic					0.09				0.06
Net earnings per share-diluted, as reported					0.09				0.07
Proforma net earnings per share-diluted				$	0.09			$	0.06

NOTE C—Acquisition

Effective January 31, 2005, CTS acquired 100% of SMTEK International Inc., (SMTEK). The results of SMTEK’s operations have been included in the consolidated financial statements since that date. SMTEK is an EMS provider serving original equipment manufacturers in the medical, industrial, instrumentation, telecommunications, security, financial services, automation, aerospace, and defense industries. SMTEK has four facilities located in Moorpark and Santa Clara, California; Marlborough, Massachusetts; and Bangkok, Thailand. As a result of the acquisition, CTS expects to expand into new EMS markets, reduce customer concentrations, and increase its global footprint.

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The net assets acquired were $48.1 million, consisting of $34.7 million of cash consideration, CTS common stock valued at $10.9 million, and $2.5 million of estimated transaction cost. In addition, CTS assumed $13.0 million of SMTEK debt which was immediately repaid. CTS issued approximately 812,000 shares of common stock in connection with the acquisition. Under generally accepted accounting principles, the value assigned to the common stock was determined based on the average market price of CTS’ common shares over the two-day period before and after the terms of the acquisition were agreed to and announced.

The following table summarizes the estimated fair values of the assets acquired and the liabilities assumed at the date of acquisition.

Of the $11.2 million of amortizable intangible assets, $10.7 million was assigned to customer relationships (13 year useful life), $0.4 million to customer order backlog (90 days useful life), and $0.1 million to employment agreements (2 year useful life). The $29.2 million of goodwill was assigned to the EMS business segment. None of these amounts are deductible for tax purposes.

CTS is in the process of obtaining third-party valuations of certain intangible assets. In addition, the Company is also analyzing SMTEK’s historical net operating losses available for carryforward, limitations on those earnings in various taxing jurisdictions, and other facts and circumstances that will impact the final allocation of the purchase price to deferred income taxes. Accordingly, the allocation of the purchase price is subject to refinement.

The following table presents CTS’ unaudited proforma consolidated results of operations for the quarters ended April 3, 2005 and March 28, 2004 as if the acquisition had been completed at the beginning of each period. The pro forma information is presented for comparative purposes only and does not purport to be indicative of what would have occurred had the acquisition actually been made at such date, nor is it necessarily indicative of future operating results:

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NOTE D—Supplemental Schedule of Noncash Investing and Financing Activities

In 2005, the Company purchased all of the capital stock of SMTEK for $61.1 million. In conjunction with the acquisition, CTS issued common stock and assumed liabilities as follows (refer also to Note C, “Acquisition”):