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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of October ~~23, 2020: 32,267,951.~~21, 2021: 32,224,552.

	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	September 30,			September 30,			September 30,			September 30,			September 30,			September 30,			September 30,			September 30,
	2020			2019			2020			2019			2021			2020			2021			2020
Net sales	$	113,777		$	115,651		$	301,049		$	353,959		$	122,382		$	113,777		$	380,394		$	301,049
Cost of goods sold		76,871			78,594			204,677			235,084			76,720			76,871			244,446			204,677
Gross Margin		36,906			37,057			96,372			118,875
Gross margin														45,662			36,906			135,948			96,372
Selling, general and administrative expenses		16,883			17,774			48,310			52,371			19,922			16,883			59,184			48,310
Research and development expenses		5,723			6,806			18,653			19,854			6,454			5,723			18,170			18,653
Restructuring charges		1,041			2,342			1,416			5,337			319			1,041			551			1,416
Loss (gain) on sale of assets		0			11			0			(111	)
Operating earnings		13,259			10,124			27,993			41,424			18,967			13,259			58,043			27,993
Other (expense) income:
Interest expense		(857	)		(812	)		(2,617	)		(1,745	)		(514	)		(857	)		(1,577	)		(2,617	)
Interest income		217			524			852			1,396			230			217			689			852
Other income (expense), net		1,617			(2,636	)		(109	)		(3,646	)
Total other income (expense), net		977			(2,924	)		(1,874	)		(3,995	)
Earnings before income taxes		14,236			7,200			26,119			37,429
Income tax expense		3,163			4,478			6,381			11,345
Net earnings	$	11,073		$	2,722		$	19,738		$	26,084
Earnings per share:
Other (expense) income, net														(108,502	)		1,617			(132,786	)		(109	)
Total other (expense) income, net														(108,786	)		977			(133,674	)		(1,874	)
(Loss) earnings before income taxes														(89,819	)		14,236			(75,631	)		26,119
Income tax (benefit) expense														(25,923	)		3,163			(24,600	)		6,381
Net (loss) earnings													$	(63,896	)	$	11,073		$	(51,031	)	$	19,738
Loss (earnings) per share:
Basic	$	0.34		$	0.08		$	0.61		$	0.80		$	(1.97	)	$	0.34		$	(1.58	)	$	0.61
Diluted	$	0.34		$	0.08		$	0.61		$	0.79		$	(1.97	)	$	0.34		$	(1.58	)	$	0.61
Basic weighted – average common shares outstanding:		32,268			32,642			32,331			32,748			32,379			32,268			32,365			32,331
Effect of dilutive securities		241			425			270			417			—			241			—			270
Diluted weighted – average common shares outstanding:		32,509			33,067			32,601			33,165			32,379			32,509			32,365			32,601
Cash dividends declared per share	$	0.04		$	0.04		$	0.12		$	0.12		$	0.04		$	0.04		$	0.12		$	0.12

	Three Months Ended					Nine Months Ended						Three Months Ended					Nine Months Ended
	September 30,		September 30,			September 30,			September 30,			September 30,			September 30,		September 30,			September 30,
	2020		2019			2020			2019			2021			2020		2021			2020
Net earnings	$	11,073	$	2,722		$	19,738		$	26,084
Other comprehensive earnings:
Net (loss) earnings												$	(63,896	)	$	11,073	$	(51,031	)	$	19,738
Other comprehensive earnings (loss):
Changes in fair market value of derivatives, net of tax		909		(740	)		(2,861	)		(956	)		(292	)		909		100			(2,861	)
Changes in unrealized pension cost, net of tax		1,239		1,017			3,733			3,065			72,530			1,239		90,976			3,733
Cumulative translation adjustment, net of tax		99		(92	)		(54	)		(88	)		(10	)		99		2			(54	)
Other comprehensive earnings	$	2,247	$	185		$	818		$	2,021		$	72,228		$	2,247	$	91,078		$	818
Comprehensive earnings	$	13,320	$	2,907		$	20,556		$	28,105		$	8,332		$	13,320	$	40,047		$	20,556

	(Unaudited)						(Unaudited)
	September 30,			December 31,			September 30,			December 31,
	2020			2019			2021			2020
ASSETS
Current Assets
Cash and cash equivalents	$	131,740		$	100,241		$	128,527		$	91,773
Accounts receivable, net		76,431			78,008			78,210			80,981
Inventories, net		41,492			42,237			50,867			45,870
Other current assets		14,020			16,992			19,845			14,607
Total current assets		263,683			237,478			277,449			233,231
Property, plant and equipment, net		97,777			105,038			92,533			97,437
Operating lease assets, net		23,727			24,644			22,456			23,281
Other Assets
Prepaid pension asset		65,115			62,082			50,638			56,642
Goodwill		106,056			106,056			109,798			109,497
Other intangible assets, net		76,126			85,215			72,236			79,121
Deferred income taxes		20,595			19,795			24,663			24,250
Other		2,774			3,046			2,200			2,590
Total other assets		270,666			276,194			259,535			272,100
Total Assets	$	655,853		$	643,354		$	651,973		$	626,049
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable	$	46,739		$	48,219		$	48,976		$	50,489
Operating lease obligations		3,149			2,787			3,354			3,294
Accrued payroll and benefits		12,437			9,564			17,069			12,978
Accrued expenses and other liabilities		32,794			36,378			35,673			38,171
Total current liabilities		95,119			96,948			105,072			104,932
Long-term debt		106,300			99,700			50,000			54,600
Long-term operating lease obligations		23,747			24,926			22,262			23,163
Long-term pension obligations		6,446			6,632			7,114			7,466
Deferred income taxes		6,223			5,637			6,907			7,010
Other long-term obligations		4,052			4,292			3,244			5,196
Total Liabilities		241,887			238,135			194,599			202,367
Commitments and Contingencies (Note 10)
Commitments and Contingencies (Note 11)
Shareholders’ Equity
Common stock		310,976			307,932			314,351			311,190
Additional contributed capital		40,796			43,689			40,958			41,654
Retained earnings		525,624			509,766			484,368			539,281
Accumulated other comprehensive loss		(90,908	)		(91,726	)		(4,842	)		(95,921	)
Total shareholders’ equity before treasury stock		786,488			769,661			834,835			796,204
Treasury stock		(372,522	)		(364,442	)		(377,461	)		(372,522	)
Total shareholders’ equity		413,966			405,219			457,374			423,682
Total Liabilities and Shareholders’ Equity	$	655,853		$	643,354		$	651,973		$	626,049

	Nine Months Ended						Nine Months Ended
	September 30,			September 30,			September 30,			September 30,
	2020			2019			2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	$	19,738		$	26,084
Adjustments to reconcile net earnings to net cash provided by operating activities:
Net (loss) earnings							$	(51,031	)	$	19,738
Adjustments to reconcile net (loss) earnings to net cash provided by operating activities:
Depreciation and amortization		19,819			18,038			20,231			19,819
Pension and other post-retirement plan expense		2,023			752			131,290			2,023
Stock-based compensation		2,164			3,950			4,106			2,164
Asset impairment charges		1,016			0			—			1,016
Restructuring non-cash charges		300			1,100			—			300
Deferred income taxes		(627	)		466			(34,147	)		(627	)
Gain on sales of fixed assets		0			(111	)
(Gain) loss on foreign currency hedges, net of cash		(58	)		79
Gain on foreign currency hedges, net of cash								(27	)		(58	)
Changes in assets and liabilities, net of acquisition:
Accounts receivable		2,085			385			2,587			2,085
Inventories		960			1,925			(5,190	)		960
Operating lease assets		917			(2,454	)		825			917
Other assets		2,446			(3,153	)		(5,334	)		2,446
Accounts payable		1,423			(3,534	)		(1,792	)		1,423
Accrued payroll and benefits		2,928			(3,921	)		3,810			2,928
Income taxes payable		(2,454	)		2,540
Operating lease liabilities		(818	)		2,764			(841	)		(818	)
Accrued expenses and other liabilities		(2,372	)		(3,962	)		(4,100	)		(4,826	)
Pension and other post-retirement plans		(193	)		(213	)		(270	)		(193	)
Net cash provided by operating activities		49,297			40,735			60,117			49,297
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(10,441	)		(15,299	)		(8,140	)		(10,441	)
Proceeds from sale of assets		0			137
Payments for acquisitions, net of cash acquired		0			(73,588	)		(255	)		—
Net cash used in investing activities		(10,441	)		(88,750	)		(8,395	)		(10,441	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of long-term debt		(3,322,550	)		(995,500	)		(597,200	)		(3,322,550	)
Proceeds from borrowings of long-term debt		3,329,150			1,058,200			592,600			3,329,150
Purchase of treasury stock		(8,080	)		(8,045	)		(4,939	)		(8,080	)
Dividends paid		(3,888	)		(3,934	)		(3,882	)		(3,888	)
Payments of contingent consideration								(500	)		—
Taxes paid on behalf of equity award participants		(1,911	)		(2,653	)		(1,490	)		(1,911	)
Net cash (used) in provided by financing activities		(7,279	)		48,068
Net cash used in financing activities								(15,411	)		(7,279	)
Effect of exchange rate changes on cash and cash equivalents		(78	)		213			443			(78	)
Net increase in cash and cash equivalents		31,499			266			36,754			31,499
Cash and cash equivalents at beginning of period		100,241			100,933			91,773			100,241
Cash and cash equivalents at end of period	$	131,740		$	101,199		$	128,527		$	131,740
Supplemental cash flow information:
Cash paid for interest	$	2,124		$	1,208		$	1,047		$	2,124
Cash paid for income taxes, net	$	8,295		$	7,622		$	10,246		$	8,295
Non-cash financing and investing activities:
Capital expenditures incurred but not paid	$	816		$	3,711		$	1,153		$	816

The following summarizes the changes in total equity for the three and nine months ended September 30, 2021:

	Common Stock		Additional Contributed Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Stock			Total
Balances at December 31, 2020	$	311,190	$	41,654		$	539,281		$	(95,921	)	$	(372,522	)	$	423,682
Net earnings		—		—			11,990			—			—			11,990
Changes in fair market value of derivatives, net of tax		—		—			—			124			—			124
Changes in unrealized pension cost, net of tax		—		—			—			1,422			—			1,422
Cumulative translation adjustment, net of tax		—		—			—			12			—			12
Cash dividends of $0.04 per share		—		—			(1,294	)		—			—			(1,294	)
Issued shares on vesting of restricted stock units		1,818		(3,218	)		—			—			—			(1,400	)
Stock compensation		—		1,180			—			—			—			1,180
Balances at March 31, 2021	$	313,008	$	39,616		$	549,977		$	(94,363	)	$	(372,522	)	$	435,716
Net earnings		—		—			875			—			—			875
Changes in fair market value of derivatives, net of tax		—		—			—			268			—			268
Changes in unrealized pension cost, net of tax		—		—			—			17,024			—			17,024
Cumulative translation adjustment, net of tax		—		—			—			1			—			1
Cash dividends of $0.04 per share		—		—			(1,299	)		—			—			(1,299	)
Issued shares on vesting of restricted stock units		1,333		(1,413	)		—			—			—			(80	)
Stock compensation		—		1,804			—			—			—			1,804
Balances at June 30, 2021	$	314,341	$	40,007		$	549,553		$	(77,070	)	$	(372,522	)	$	454,309
Net loss		—		—			(63,896	)		—			—			(63,896	)
Changes in fair market value of derivatives, net of tax		—		—			—			(292	)		—			(292	)
Changes in unrealized pension cost, net of tax		—		—			—			72,530			—			72,530
Cumulative translation adjustment, net of tax		—		—			—			(10	)		—			(10	)
Cash dividends of $0.04 per share		—		—			(1,289	)		—			—			(1,289	)
Acquired 148,035 shares of treasury stock		—		—			—			—			(4,939	)		(4,939	)
Issued shares on vesting of restricted stock units		10		(20	)		—			—			��			(10	)
Stock compensation		—		971			—			—			—			971
Balances at September 30, 2021	$	314,351	$	40,958		$	484,368		$	(4,842	)	$	(377,461	)	$	457,374

The following summarizes the changes in total equity for the three and nine months ended September 30, 2020:

Common
Stock

Additional
Contributed
Capital

Retained
Earnings

Accumulated
Other
Comprehensive
Earnings/(Loss)

Treasury
Stock

Total

Balances at December 31, 2019

$
307,932

$
43,689

$
509,766

$
(91,726
)

$
(364,442
)

$
405,219

Net earnings

—

—

3,808

—

—

3,808

Changes in fair market value of derivatives, net of tax

—

—

—

(4,414
)

—

(4,414
)
Changes in unrealized pension cost, net of tax

—

—

—

1,285

—

1,285

Cumulative translation adjustment, net of tax

—

—

—

(139
)

—

(139
)
Cash dividends of $0.04 per share

—

—

(1,298
)

—

—

(1,298
)
Acquired 220,731 shares of treasury stock

—

—

—

—

(5,304
)

(5,304
)
Issued shares on vesting of restricted stock units

2,166

(4,069
)

—

—

—

(1,903
)
Stock compensation

—

212

—

—

—

212

Balances at March 31, 2020

$
310,098

$
39,832

$
512,276

$
(94,994
)

$
(369,746
)

$
397,466

Net earnings

—

—

4,857

—

—

4,857

Changes in fair market value of derivatives, net of tax

—

—

—

644

—

644

Changes in unrealized pension cost, net of tax

—

—

—

1,209

—

1,209

Cumulative translation adjustment, net of tax

—

—

—

(14
)

—

(14
)
Cash dividends of $0.04 per share

—

—

(1,292
)

—

—

(1,292
)
Acquired 122,000 shares of treasury stock

—

—

—

—

(2,776
)

(2,776
)
Issued shares on vesting of restricted stock units

855

(855
)

—

—

—

—

Stock compensation

—

798

—

—

—

798

Balances at June 30, 2020

$
310,953

$
39,775

$
515,841

$
(93,155
)

$
(372,522
)

$
400,892

Net earnings

—

—

11,073

—

—

11,073

Changes in fair market value of derivatives, net of tax

—

—

—

909

—

909

Changes in unrealized pension cost, net of tax

—

—

—

1,239

—

1,239

Cumulative translation adjustment, net of tax

—

—

—

99

—

99

Cash dividends of $0.04 per share

—

—

(1,290
)

—

—

(1,290
)
Issued shares on vesting of restricted stock units

23

(31
)

—

—

—

(8
)
Stock compensation

—

1,052

—

—

—

1,052

Balances at September 30, 2020

$
310,976

$
40,796

$
525,624

$
(90,908
)

$
(372,522
)

$
413,966

~~The following summarizes the changes in total equity for the three and nine months ended September 30, 2019:~~

	Common Stock		Additional Contributed Capital			Retained Earnings			Accumulated Other Comprehensive Earnings/(Loss)			Treasury Stock			Total			Common Stock		Additional Contributed Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Treasury Stock			Total
Balances at December 31, 2018	$	306,697	$	42,820		$	478,847		$	(97,739	)	$	(352,696	)	$	377,929
Balances at December 31, 2019																		$	307,932	$	43,689		$	509,766		$	(91,726	)	$	(364,442	)	$	405,219
Net earnings		—		—			11,419			—			—			11,419			—		—			3,808			—			—			3,808
Changes in fair market value of derivatives, net of tax		—		—			—			78			—			78			—		—			—			(4,414	)		—			(4,414	)
Changes in unrealized pension cost, net of tax		—		—			—			1,022			—			1,022			—		—			—			1,285			—			1,285
Cumulative translation adjustment, net of tax		—		—			—			91			—			91			—		—			—			(139	)		—			(139	)
Cash dividends of $0.04 per share		—		—			(1,315	)		—			—			(1,315	)		—		—			(1,298	)		—			—			(1,298	)
Acquired 31,500 shares of treasury stock		—		—			—			—			(849	)		(849	)
Acquired 220,731 shares of treasury stock																			—		—			—			—			(5,304	)		(5,304	)
Issued shares on vesting of restricted stock units		967		(3,603	)		—			—			—			(2,636	)		2,166		(4,069	)		—			—			—			(1,903	)
Stock compensation		—		1,154			—			—			—			1,154			—		212			—			—			—			212
Balances at March 31, 2019	$	307,664	$	40,371		$	488,951		$	(96,548	)	$	(353,545	)	$	386,893
Balances at March 31, 2020																		$	310,098	$	39,832		$	512,276		$	(94,994	)	$	(369,746	)	$	397,466
Net earnings		—		—			11,943			—			—			11,943			—		—			4,857			—			—			4,857
Changes in fair market value of derivatives, net of tax		—		—			—			(294	)		—			(294	)		—		—			—			644			—			644
Changes in unrealized pension cost, net of tax		—		—			—			1,026			—			1,026			—		—			—			1,209			—			1,209
Cumulative translation adjustment, net of tax		—		—			—			(87	)		—			(87	)		—		—			—			(14	)		—			(14	)
Cash dividends of $0.04 per share		—		—			(1,309	)		—			—			(1,309	)		—		—			(1,292	)		—			—			(1,292	)
Acquired 148,466 shares of treasury stock		—		—			—			—			(4,153	)		(4,153	)
Acquired 122,000 shares of treasury stock																			—		—			—			—			(2,776	)		(2,776	)
Issued shares on vesting of restricted stock units		111		(111	)		—			—			—			—			855		(855	)		—			—			—			—
Stock compensation		—		1,526			—			—			—			1,526			—		798			—			—			—			798
Balances at June 30, 2019	$	307,775	$	41,786		$	499,585		$	(95,903	)	$	(357,698	)	$	395,545
Balances at June 30, 2020																		$	310,953	$	39,775		$	515,841		$	(93,155	)	$	(372,522	)	$	400,892
Net earnings		—		—			2,722			—			—			2,722			—		—			11,073			—			—			11,073
Changes in fair market value of derivatives, net of tax		—		—			—			(740	)		—			(740	)		—		—			—			909			—			909
Changes in unrealized pension cost, net of tax		—		—			—			1,017			—			1,017			—		—			—			1,239			—			1,239
Cumulative translation adjustment, net of tax		—		—			—			(92	)		—			(92	)		—		—			—			99			—			99
Cash dividends of $0.04 per share		—		—			(1,304	)		—			—			(1,304	)		—		—			(1,290	)		—			—			(1,290	)
Acquired 106,760 shares of treasury stock		—		—			—			—			(3,043	)		(3,043	)
Issued shares on vesting of restricted stock units		26		(41	)		—			—			—			(15	)		23		(31	)		—			—			—			(8	)
Stock compensation		—		1,104			—			—			—			1,104			—		1,052			—			—			—			1,052
Balances at September 30, 2019	$	307,801	$	42,849		$	501,003		$	(95,718	)	$	(360,741	)	$	395,194
Balances at September 30, 2020																		$	310,976	$	40,796		$	525,624		$	(90,908	)	$	(372,522	)	$	413,966

The accompanying condensed consolidated financial statements have been prepared by CTS Corporation (“CTS”, "we", "our", "us" 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 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, ~~2019.~~2020.

The accompanying unaudited condensed consolidated 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 to prior year amounts to conform to the current year presentation. The reclassifications had no impact on previously reported net earnings.

There have been no material changes in the Company’s significant accounting policies as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Simplifying the Accounting for Income Taxes, as part of its simplification initiative to reduce the cost and complexity in accounting for income taxes. ASU 2019-12 removes certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences. ASU 2019-12 also amends other aspects of the guidance to help simplify and promote consistent application of U.S. GAAP. The guidance is effective for interim and annual periods beginning after December 15, 2020, with early adoption permitted. We adopted this ASU on January 1, 2021 and it did not have a material impact on our financial statements.

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting”, which provides temporary optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting as it relates to our LIBOR indexed instruments. ASU 2020-04 provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. ASU 2020-04 is effective for all entities as of March 12, 2020 through December 31, 2022, and an entity may elect to apply ASU 2020-04 for contract modifications by Topic or Industry Subtopic as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. As a result of the reference rate reform, we have determined that we will modify our credit agreement and associated hedging relationships in order to effectively transition to an alternative reference rate prior to June 30, 2022. We continue evaluating the impact of the transition from LIBOR to an alternative reference interest rate in our financial instruments including the potential election of certain practical expedients.

The core principle of ~~Topic~~Accounting Standard Codification (“ASC”) 606Revenue from Contracts with Customers is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance provides a five-step process to achieve that core principle:

We recognize revenue when the performance obligations specified in our contracts have been satisfied, after considering the impact of variable consideration and other factors that may affect the transaction price. Our contracts normally contain a single performance obligation that is fulfilled on the date of delivery or shipment based on shipping terms stipulated in the contract. We usually expect payment within 30 to 90 days from the shipping date, depending on our terms with the customer. ~~None of our contracts as of September 30, 2020 contained a significant financing component.~~ Differences between the amount of revenue recognized and the amount invoiced, collected from, or paid to our customers are recognized as contract assets or liabilities. Contract assets will be reviewed for impairment when events or circumstances indicate that they may not be recoverable.

To the extent the transaction price includes variable consideration, we estimate the amount of variable consideration that should be included in the transaction price utilizing the most likely amount method based on an analysis of historical experience and current facts and circumstances, which requires significant judgment. Variable consideration is included in the transaction price if, in our judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur.

The following table presents revenues disaggregated by the major markets we serve:

	Three months ended				Nine months ended				Three Months Ended				Nine Months Ended
	September 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019		September 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020
Transportation	$	65,277	$	71,559	$	164,940	$	230,743	$	62,342	$	65,277	$	209,750	$	164,940
Industrial		24,204		19,750		65,260		57,406		31,879		24,204		87,764		65,260
Medical		10,201		10,537		32,609		29,176		12,409		10,201		36,487		32,609
Aerospace & Defense		11,038		9,025		29,416		23,536		11,275		11,038		35,724		29,416
Telecom & IT		3,057		4,780		8,824		13,098		4,477		3,057		10,669		8,824
Total	$	113,777	$	115,651	$	301,049	$	353,959	$	122,382	$	113,777	$	380,394	$	301,049

On December 30, 2020, we acquired 100% of the outstanding shares of Sensor Scientific, Inc. (“SSI”). SSI is a manufacturer of high-quality thermistors and temperature sensor assemblies serving original equipment manufacturers (“OEMs”) for applications that require precision and reliability in the medical, industrial and defense markets. SSI has complementary capabilities with our existing temperature sensing platform and the acquisition expands our presence in the medical and industrial end markets. It also provides high quality ceramic processing capabilities and valuable customer partnerships that expand our temperature sensing product portfolio and build on our strategy to focus on innovative products that sense, connect and move.

The final purchase price, which includes changes in working capital, of $10,221 has been allocated to the fair values of assets and liabilities acquired as of December 30, 2020.

The following table summarizes the consideration paid and the fair values of the assets acquired, and the liabilities assumed as of the date of acquisition of SSI:

Goodwill represents value the Company expects to be created by combining the operations of the acquired business with the Company's operations, including the expansion of customer relationships, access to new customers, and potential cost savings and synergies. Goodwill related to the acquisition is expected to be deductible for tax purposes.

All contingent consideration is payable in cash and is based on success factors related to the integration process as well as upon the achievement of a revenue performance target through the year ending December 31, 2022, with the possibility of prorated interim payments. The Company recorded $2,000 as the acquisition date fair value of the contingent consideration based on an estimate of the probability of achieving the performance targets. This represents the maximum amount of contingent consideration payable by the Company. This amount is also reflected as an addition to the purchase price and will be evaluated quarterly. Refer to Note 17 for further information on contingent consideration.

The following table summarizes the carrying amounts and weighted average lives of the acquired intangible assets:

	As of						As of
	September 30,			December 31,			September 30,			December 31,
	2020			2019			2021			2020
Accounts receivable, gross	$	77,250		$	78,269		$	79,628		$	81,745
Less: Allowance for credit losses		(819	)		(261	)		(1,418	)		(764	)
Accounts receivable, net	$	76,431		$	78,008		$	78,210		$	80,981

	As of						As of
	September 30,			December 31,			September 30,			December 31,
	2020			2019			2021			2020
Finished goods	$	9,046		$	9,447		$	11,194		$	10,647
Work-in-process		15,237			14,954			18,725			16,927
Raw materials		23,607			23,363			30,637			24,893
Less: Inventory reserves		(6,398	)		(5,527	)		(9,689	)		(6,597	)
Inventories, net	$	41,492		$	42,237		$	50,867		$	45,870

	As of						As of
	September 30,			December 31,			September 30,			December 31,
	2020			2019			2021			2020
Land and land improvements	$	1,095		$	1,095		$	1,095		$	1,095
Buildings and improvements		69,007			68,350			69,463			69,360
Machinery and equipment		228,584			224,312			239,329			233,743
Less: Accumulated depreciation		(200,909	)		(188,719	)		(217,354	)		(206,761	)
Property, plant and equipment, net	$	97,777		$	105,038		$	92,533		$	97,437
Depreciation expense for the nine months ended September 30, 2020				$	13,003
Depreciation expense for the nine months ended September 30, 2019				$	12,657

~~Net pension~~Depreciation expense for ~~our domestic~~the nine months ended September 30, 2021 and ~~foreign plans included in other income (expense) in the Condensed Consolidated Statement of Earnings is as follows:~~

~~The components of net pension expense for our domestic and foreign plans include the following:~~

In February 2020, the CTS Board of Directors authorized management to explore termination of our U.S. based pension plan ("Plan") at management's discretion, subject to certain conditions. On June 1, 2020, we entered the Fifth Amendment to the Plan whereby we set an effective termination date of July 31, 2020. The Plan termination process is expected to take twelve to eighteen months and requires certain approvals from both the Internal Revenue Service and Pension Benefit Guaranty Corporation. Once we receive such approvals, an insurance company will be selected to purchase annuities and fulfill the obligations of the Plan including administering payments to participants. Upon settlement of the pension liabilities, we will reclassify the related pension losses currently recorded in accumulated other comprehensive loss into earnings. We do not expect any cash contributions from the Company to the Plan as a result of this termination because plan assets exceed estimated liabilities.

~~Net post-retirement expense for our other post-retirement plan includes the following components:~~

In the third quarter of 2020, due to the restructuring actions further outlined in Note 8, we performed an interim impairment assessment. This resulted in the recognition of $2,200 of impairment charges related to in process research and development, and a revaluation of associated contingent liabilities totaling $1,900. The net impact of $300 was recorded as restructuring expense in the Condensed Consolidated Statements of Earnings.

~~Remaining amortization expense for other intangible assets as of~~ September 30, 2020 ~~is as follows:~~was $13,166 and $13,003, respectively.

Net pension expense for our domestic and foreign plans included in other (expense) income, net in the Condensed Consolidated Statements of (Loss) Earnings is as follows:

The components of net pension expense for our domestic and foreign plans include the following:

In February 2020, the CTS Board of Directors authorized management to explore termination of the U.S.-based pension plan ("Plan"), subject to certain conditions. On June 1, 2020, we entered into the Fifth Amendment to the Plan whereby we set an effective termination date for the Plan of July 31, 2020. In February 2021, we received a determination letter from the Internal Revenue Service that allowed us to proceed with the termination process for the Plan. During the second quarter of 2021, the Company offered the option of receiving a lump sum payment to eligible participants with vested qualified Plan benefits in lieu of receiving monthly annuity payments. Approximately 365 participants elected to receive the settlement, and lump sum payments of approximately $35,594 were made from Plan assets to these participants in June 2021.

As required under U.S. GAAP, the Company recognizes a settlement gain or loss when the aggregate amount of lump-sum distributions to participants equals or exceeds the sum of the service and interest cost components of the net periodic pension cost. The amount of settlement gain or loss recognized is the pro rata amount of the existing unrealized gain or loss immediately prior to the settlement. In general, both the projected benefit obligation and fair value of plan assets are required to be remeasured in order to determine the settlement gain or loss.

Upon the partial settlement of the pension liability due to the lump sum offering in the second quarter of 2021, the Company recognized a non-cash and non-operating settlement charge of $20,063 related to pension losses, reclassified from accumulated other comprehensive loss to other (income) expense in the Company's Condensed Consolidated Statements of (Loss) Earnings.

On July 29, 2021, the Plan purchased a group annuity contract that transferred our benefit obligations for approximately 2,700 CTS participants and beneficiaries in the United States (“Transferred Participants”). As part of the purchase of the group annuity contract, Plan benefit obligations and related annuity administration services for Transferred Participants were irrevocably assumed and guaranteed by the insurance company effective as of August 3, 2021. There will be no change to pension benefits for Transferred Participants. The purchase of the group annuity contract was fully funded directly by Plan assets.

As a result of the final settlement of the pension liability with the purchase of annuities, we reclassified the remaining related unrecognized pension losses of $106,206 that were previously recorded in accumulated other comprehensive loss to the Condensed Consolidated Statements of (Loss) Earnings.

The Plan assets of $50,638 as of September 30, 2021, will remain in the Plan until final administrative tasks are completed. This process is expected to be completed in the first quarter of 2022, whereby the Plan assets will liquidate and revert to CTS. At that time, the funds will be subject to income and excise taxes. We continue to evaluate potential plans to optimize tax implications as well as the use of the surplus cash.

Net post-retirement expense for our other post-retirement plan includes the following components:

Remaining amortization expense for other intangible assets as of September 30, 2021 is as follows:

In addition to the purchase accounting adjustments from the SSI transaction, goodwill increased due to an acquisition completed during the second quarter. The purchase price was approximately $510, with $255 paid in the second quarter of 2021 and an additional $255 to be paid in the second quarter of 2022.

Restructuring charges are reported as a separate line within operating earnings in the Condensed Consolidated ~~Statement~~Statements of (Loss) Earnings.

In September 2020, we initiated a restructuring plan focused on optimizing our manufacturing footprint and improving operational efficiency by better utilizing our systems ~~capabilities.~~capabilities (the "September 2020 Plan"). This plan includes transitioning certain administrative functions to a shared service center, realignment of manufacturing locations, and certain other efficiency improvement ~~actions ("September 2020 Plan").~~actions. The restructuring cost of the ~~plan~~September 2020 Plan is now estimated to be in the range ~~between $5,000 and $6,000,~~of $3,500 to $4,500, including workforce reduction charges, building and equipment relocation charges and other contract and ~~asset related~~asset-related costs. ~~In addition~~We have incurred $1,397 program to ~~these charges, we expect an additional $5,000 to $6,000 of other costs to be incurred related to the initiatives that would not qualify as~~date. There were 0 substantial restructuring ~~charges. These costs would include certain related employee resource overlap and training costs as well as additional capital expenditures. Restructuring~~ charges under ~~this plan were $1,008~~the September 2020 Plan during the three and nine months ended September 30, ~~2020. The total~~2021. There was 0 restructuring liability related to the September 2020 Plan ~~was $583 at~~as of September 30, ~~2020.~~2021. As of December 31, 2020 the liability related to the September 2020 Plan was $512.

In June 2016, we announced plans to restructure operations by phasing out production at our Elkhart, INIndiana facility and transitioning it into a research and development center supporting our global operations ~~("June~~(the "June 2016 Plan"). Additional organizational changes were also implemented in various other locations. In 2017, we revised ~~this plan~~the June 2016 Plan to include an additional $1,100 in planned costs related to the relocation of our corporate headquarters in Lisle, ILIllinois and our plant in Bolingbrook, ~~IL,~~Illinois, both of which have now been consolidated into a single facility. ~~Restructuring charges under this plan, which is substantially complete,~~These restructuring actions were $0 and $671 during the three months ended September 30, 2020 and 2019, respectively. Restructuring charges under this plan were $(32) and $3,914 during the nine months ended September 30, 2020 and 2019, respectively. The total restructuring liability related to the June 2016 Plan was $23 at September 30, 2020 and $233 at Decembercompleted as of March 31, ~~2019. Additional costs related to production line movements, equipment charges, and other costs will be expensed as incurred.~~2021.

~~The following table displays the planned restructuring charges associated with the June 2016 Plan as well as a summary of the actual costs incurred through September 30, 2020:~~

In April 2014, we announced plans to restructure our operations and consolidate our Canadian operations into other existing facilities as part of our overall plan to simplify our business model and rationalize our global footprint ~~(“April~~(the “April 2014 Plan”). These restructuring actions were substantially completed during 2015 and the remaining liability was settled in ~~2015. Restructuring charges associated with this plan were $(248) for~~ the three and nine months ended September 30, 2019. There were 0 restructuring charges incurred under this plan during the three and nine months ended September 30, 2020. The total restructuring liability related to the April 2014 Plan was $874 at September 30, 2020, and $703 at December 31, 2019.second quarter of 2021.

From time to time we undertake other restructuring activities that are not part of a formal plan. Charges associated with these restructuring activities primarily relate to workforce reduction costs. During the three and nine months ended September 30, 2021, we incurred restructuring charges of $319 and $582, respectively. During the three and nine months ended September 30, 2020, we incurred restructuring charges of $33 and $440, respectively, primarily relating to workforce reduction actions. During the three and nine months ended September 30, 2019, we incurred restructuring charges of $1,671 for exit and disposal activities at 3 facilities, of which $800 was related to a lease termination charge resulting from our acquisition of Quality Thermistor, Inc. (see Note 19, “Business Acquisitions”) and $871 was related to workforce and building relocation costs at 2 foreign facilities.respectively. The total ~~remaining~~ restructuring liability associated with these actions was ~~$14~~$263 at September 30, ~~2020~~2021 and ~~$1,057~~$9 at December 31, ~~2019.~~2020.

The following table displays the restructuring liability activity included in ~~Accrued~~accrued expenses and other liabilities for all plans for the nine months ended September 30, ~~2020:~~2021:

Restructuring liability at January 1, 2020	$	1,993
Restructuring liability at January 1, 2021				$	1,363
Restructuring charges		1,416			551
Cost paid		(1,382	)		(1,466	)
Other activity⁽¹⁾		(533	)		(185	)
Restructuring liability at September 30, 2020	$	1,494
Restructuring liability at September 30, 2021				$	263

The components of ~~Accrued~~accrued expenses and other liabilities are as follows:

	As of				As of
	September 30,		December 31,		September 30,		December 31,
	2020		2019		2021		2020
Accrued product related costs	$	3,661	$	2,950	$	3,430	$	4,470
Accrued income taxes		5,564		7,903		6,213		7,320
Accrued property and other taxes		1,914		1,574		1,892		2,478
Accrued professional fees		1,242		1,599		1,594		1,663
Accrued customer related liabilities		4,144		4,391		4,459		3,815
Dividends payable		1,291		1,299		1,292		1,291
Remediation reserves		9,337		11,444		9,994		10,642
Derivative liabilities		1,287		—		684		671
Other accrued liabilities		4,354		5,218		6,115		5,821
Total accrued expenses and other liabilities	$	32,794	$	36,378	$	35,673	$	38,171

Certain processes in the manufacture of our current and past products create by-products classified as hazardous waste. We have been notified by the U.S. Environmental Protection Agency, state environmental agencies, and in some cases, groups of potentially responsible parties, that we may be potentially liable for environmental contamination at several sites currently and formerly owned or operated by us. Two of those sites, Asheville, North Carolina and Mountain View, California, are designated National Priorities List sites under the U.S. Environmental Protection Agency’s Superfund program. We accrue a liability for probable remediation activities, claims and proceedings against us with respect to environmental matters if the amount can be reasonably estimated, and provide disclosures including the nature of a loss whenever it is probable or reasonably possible that a potentially material loss may have occurred but cannot be estimated. We record contingent loss accruals on an undiscounted basis.

~~A roll-forward of remediation reserves included in Accrued expenses and other liabilities on the Condensed Consolidated Balance Sheets is comprised of the following:~~

~~Unrelated to the environmental claims described above, certain other legal claims are pending against us with respect to matters arising out of the ordinary conduct of our business.~~

We provide product warranties when we sell our products and accrue for estimated liabilities at the time of sale. Warranty estimates are forecasts based on the best available information and historical claims experience. We accrue for specific warranty claims if we believe that the facts of a specific claim make it probable that a liability in excess of our historical experience has been incurred, and provide disclosures for specific claims whenever it is reasonably possible that a material loss may be incurred which cannot be estimated.

We cannot provide assurance that the ultimate disposition of environmental, legal, and product warranty claims will not materially exceed the amount of our accrued losses and adversely impact our consolidated financial position, results of operations, or cash flows. Our accrued liabilities and disclosures will be adjusted accordingly if additional information becomes available in the future.

~~On February 12, 2019, we entered an amended and restated~~ ~~five-year~~ Credit Agreement with a group of banks (the "Credit Agreement") to extend the term of the facility. The Credit Agreement provides for a revolving credit facility of $300,000, which may be increased by $150,000 at the request of the Company, subject to the administrative agent's approval. This unsecured credit facility replaces the prior $300,000 unsecured credit facility, which would have expired August 10, 2020. Borrowings of $50,000 under the prior credit agreement were refinanced into the Credit Agreement.

The revolving credit facility includes a swing line sublimit of $15,000 and a letter of credit sublimit of $10,000. Borrowings under the revolving credit facility bear interest at the base rate defined in the Credit Agreement. We also pay a quarterly commitment fee on the unused portion of the revolving credit facility. The commitment fee ranges from 0.20% to 0.30% based on our total leverage ratio.

The Credit Agreement requires, among other things, that we comply with a maximum total leverage ratio and a minimum fixed charge coverage ratio. Failure to comply with these covenants could reduce the borrowing availability under the credit facility. We were compliant with all debt covenants at September 30, 2020. The Credit Agreement requires that we deliver quarterly financial statements, annual financial statements, auditor certifications, and compliance certificates within a specified number of days after the end of a quarter and year. Additionally, it contains restrictions limiting our ability to: dispose of assets; incur certain additional debt; repay other debt or amend subordinated debt instruments; create liens on assets; make investments, loans or advances; make acquisitions or engage in mergers or consolidations; engage in certain transactions with our subsidiaries and affiliates; and make stock repurchases and dividend payments. Interest rates on the credit facility fluctuate based upon the LIBOR and the Company’s quarterly total leverage ratio.

We have debt issuance costs related to our long-term debt that are being amortized using the straight-line method over the life of the debt. Amortization expense for three and nine months ended September 30, 2020 and 2019 was approximately $42 and $126 and $42 and $121, respectively. These costs are included in interest expense in our Condensed Consolidated Statement of Earnings.

We use interest rate swaps to convert the revolving credit facility's variable rate of interest into a fixed rate on a portion of the debt as described more fully in Note 12 "Derivative Financial Instruments". These swaps are treated as cash flow hedges and consequently, the changes in fair value were recorded in other comprehensive earnings.

Certain processes in the manufacture of our current and past products create by-products classified as hazardous waste. We have been notified by the U.S. Environmental Protection Agency, state environmental agencies and, in some cases, groups of potentially responsible parties, that we may be potentially liable for environmental contamination at several sites currently and formerly owned or operated by us. NaN of those sites, Asheville, North Carolina and Mountain View, California, are designated National Priorities List sites under the U.S. Environmental Protection Agency’s Superfund program. We accrue a liability for probable remediation activities, claims and proceedings against us with respect to environmental matters if the amount can be reasonably estimated, and provide disclosures including the nature of a loss whenever it is probable or reasonably possible that a potentially material loss may have occurred but cannot be estimated. We record contingent loss accruals on an undiscounted basis.

A roll-forward of remediation reserves included in accrued expenses and other liabilities on the Condensed Consolidated Balance Sheets is comprised of the following:

Unrelated to the environmental claims described above, certain other legal claims are pending against us with respect to matters arising out of the ordinary conduct of our business.

We provide product warranties when we sell our products and accrue for estimated liabilities at the time of sale. Warranty estimates are forecasts based on the best available information and historical claims experience. We accrue for specific warranty claims if we believe that the facts of a specific claim make it probable that a liability in excess of our historical experience has been or will be incurred, and provide disclosures for specific claims whenever it is reasonably possible that a material loss may be incurred which cannot be estimated.

On February 12, 2019, we entered into an amended and restated five-year Credit Agreement with a group of banks (the "Credit Agreement") to extend the term of the facility. The Credit Agreement provides for a revolving credit facility of $300,000, which may be increased by $150,000 at the request of the Company, subject to the administrative agent's approval.

The Credit Agreement requires, among other things, that we comply with a maximum total leverage ratio and a minimum fixed charge coverage ratio. Failure to comply with these covenants could reduce the borrowing availability under the revolving credit facility. We were compliant with all debt covenants at September 30, 2021. The Credit Agreement requires that we deliver quarterly financial statements, annual financial statements, auditor certifications, and compliance certificates within a specified number of days after the end of a quarter and year. Additionally, it contains restrictions limiting our ability to: dispose of assets; incur certain additional debt; repay other debt or amend subordinated debt instruments; create liens on assets; make investments, loans or advances; make acquisitions or engage in mergers or consolidations; engage in certain transactions with our subsidiaries and affiliates; and make stock repurchases and dividend payments. Interest rates on the credit facility fluctuate based upon LIBOR and the Company’s quarterly total leverage ratio.

We have debt issuance costs related to our long-term debt that are being amortized using the straight-line method over the life of the debt. Amortization expense for the three and nine months ended September 30, 2021 and 2020 was approximately $42 and $42 and $126 and $126, respectively. These costs are included in interest expense in our Condensed Consolidated Statements of (Loss) Earnings.

We use interest rate swaps to convert the revolving credit facility's variable rate of interest into a fixed rate on a portion of the debt as described more fully in Note 13 "Derivative Financial Instruments". These swaps are treated as cash flow hedges and consequently, the changes in fair value were recorded in other comprehensive earnings.

Our earnings and cash flows are subject to fluctuations due to changes in foreign currency exchange rates and interest rates. We selectively use derivative financial instruments including foreign currency forward contracts and interest rate swaps to manage our exposure to these risks.

The use of derivative financial instruments exposes the Company to credit risk, which relates to the risk of nonperformance by a counterparty to the derivative contracts. We manage our credit risk by entering into derivative contracts with only highly rated financial institutions and by using netting agreements.

The effective portion of derivative gains and losses are recorded in accumulated other comprehensive (loss) income until the hedged transaction affects earnings upon settlement, at which time they are reclassified to cost of goods sold or net sales. If it is probable that

an anticipated hedged transaction will not occur by the end of the originally specified time period, we reclassify the gains or losses related to that hedge from accumulated other comprehensive (loss) income to other ~~income (expense).~~expense, net.

We assess hedge effectiveness qualitatively by verifying that the critical terms of the hedging instrument and the forecasted transaction continue to match, and that there have been no adverse developments that have increased the risk that the counterparty will default. NaN recognition of ineffectiveness was recorded in our Condensed Consolidated Statements of (Loss) Earnings for the three and nine months ended September 30, 2021.

We use forward contracts to mitigate currency risk related to a portion of our forecasted foreign currency revenues and costs. The currency forward contracts are designed as cash flow hedges and are recorded in the Condensed Consolidated Balance Sheets at fair value.

We continue to monitor the Company’s overall currency exposure and may elect to add cash flow hedges in the future. At September 30, ~~2020,~~2021, we had a net unrealized ~~loss~~gain of ~~$458~~$388 in accumulated other comprehensive (loss) income, of which ~~$425~~$385 is expected to be reclassified to earnings within the next 12 months. At September 30, ~~2019~~2020, we had a net unrealized ~~gain~~loss of ~~$507~~$458 in accumulated other comprehensive (loss) income. The notional amount of foreign currency forward contracts outstanding was ~~$17,015~~$6,282 at September 30, ~~2020.~~2021.

We use interest rate swaps to convert a portion of our revolving credit facility’s outstanding balance from a variable rate of interest to a fixed rate. As of September 30, ~~2020,~~2021, we have agreements to fix interest rates on $50,000 of long-term debt through February 2024. The difference to be paid or received under the terms of the swap agreements will be recognized as an adjustment to interest expense when settled.

These swaps are treated as cash flow hedges and consequently, the changes in fair value are recorded in other comprehensive (loss) income. The estimated net amount of the existing losses that are reported in accumulated other comprehensive (loss) income that are expected to be reclassified into earnings within the next twelve months is approximately ~~$517.~~$527.

The location and fair values of derivative instruments designated as hedging instruments in the Condensed Consolidated Balance Sheets as of September 30, ~~2020,~~2021, are shown in the following table:

The Company has elected to net its foreign currency derivative assets and liabilities in the balance sheet in accordance with ASC 210-20, (Balance Sheet, Offsetting). On a gross basis, there were foreign currency derivative assets of $0$474 and foreign currency derivative liabilities of ~~$615~~$0 at September 30, ~~2020.~~2021.

The effect of derivative instruments on the Condensed Consolidated Statements of (Loss) Earnings is as follows:

	Three Months Ended					Nine Months Ended					Three Months Ended						Nine Months Ended
	September 30,			September 30,		September 30,			September 30,		September 30,			September 30,			September 30,			September 30,
	2020			2019		2020			2019		2021			2020			2021			2020
Foreign Exchange Contracts:
Amounts reclassified from AOCI to earnings:
Net sales	$	(78	)	$	0	$	(5	)	$	0	$	0		$	(78	)	$	0		$	(5	)
Cost of goods sold		(407	)		286		(678	)		562		442			(407	)		992			(678	)
Selling, general and administrative expense		0			23		(5	)		62		0			0			0			(5	)
Total (loss) gain reclassified from AOCI to earnings		(485	)		309		(688	)		624
Total gain (loss) reclassified from AOCI to earnings												442			(485	)		992			(688	)
Gain recognized in other expense for hedge ineffectiveness		0			0		3			0		0			0			0			3
Total derivative (loss) gain on foreign exchange contracts recognized in earnings	$	(485	)	$	309	$	(685	)	$	624
Total derivative gain (loss) on foreign exchange contracts recognized in earnings											$	442		$	(485	)	$	992		$	(685	)

Interest Rate Swaps:
(Expense) benefit recorded in Interest expense	$	(171	)	$	117	$	(242	)	$	430
Total (losses) gains on derivatives	$	(656	)	$	426	$	(927	)	$	1,054
(Expense) recorded in Interest expense											$	(191	)	$	(171	)	$	(554	)	$	(242	)
Total gains (losses) on derivatives											$	251		$	(656	)	$	438		$	(927	)

Shareholders’ equity includes certain items classified as accumulated other comprehensive (loss) income (“AOCI”) in the Condensed Consolidated Balance Sheets, including:

Changes in exchange rates between the functional currency and the currency in which a transaction is denominated are foreign exchange transaction gains or losses. Transaction losses for the three and nine months ended September 30, 2021 were $(1,011) and $(1,412), respectively, and transaction gains for the three and nine months ended September 30, 2020 were $2,326 and $1,947, respectively, ~~and transaction losses for the three and nine months ended September 30, 2019 were $2,473 and $2,828, respectively,~~ which have been included in other (expense) income ~~(expense)~~ in the Condensed Consolidated ~~Statement~~Statements of (Loss) Earnings.

18The components of accumulated other comprehensive (loss) income for the three months ended September 30, 2021 are as follows:

The components of accumulated other comprehensive (loss) income for the three months ended September 30, 2020, are as follows:

							Loss												Loss
	As of			Gain (Loss)			Reclassified			As of			As of			Gain (Loss)			Reclassified			As of
	June 30,			Recognized			from AOCI			September 30,			June 30,			Recognized			from AOCI			September 30,
	2020			in OCI			to Earnings			2020			2020			in OCI			to Earnings			2020
Changes in fair market value of hedges:
Changes in fair market value of derivatives:
Gross	$	(4,239	)	$	525		$	656		$	(3,058	)	$	(4,239	)	$	525		$	656		$	(3,058	)
Income tax benefit (expense)		978			(122	)		(150	)		706			978			(122	)		(150	)		706
Net		(3,261	)		403			506			(2,352	)		(3,261	)		403			506			(2,352	)
Changes in unrealized pension cost:
Gross		(120,906	)		0			1,606			(119,300	)		(120,906	)		0			1,606			(119,300	)
Income tax benefit (expense)		33,278			0			(367	)		32,911			33,278			0			(367	)		32,911
Net		(87,628	)		0			1,239			(86,389	)		(87,628	)		0			1,239			(86,389	)
Cumulative translation adjustment:
Gross		(2,266	)		99			0			(2,167	)		(2,266	)		99			0			(2,167	)
Income tax benefit		0			0			0			0
Net		(2,266	)		99			0			(2,167	)
Total accumulated other comprehensive (loss) income	$	(93,155	)	$	502		$	1,745		$	(90,908	)	$	(93,155	)	$	502		$	1,745		$	(90,908	)

The components of accumulated other comprehensive (loss) income for the ~~three~~nine months ended September 30, ~~2019,~~2021, are as follows:

							(Gain) Loss												(Gain) Loss
	As of			Gain (Loss)			Reclassified			As of			As of			Gain (Loss)			Reclassified			As of
	June 30,			Recognized			from AOCI			September 30,			December 31,			Recognized			from AOCI			September 30,
	2019			in OCI			to Earnings			2019			2020			in OCI			to Earnings			2021
Changes in fair market value of hedges:
Changes in fair market value of derivatives:
Gross	$	1,036		$	(529	)	$	(426	)	$	81		$	(1,038	)	$	568			(438	)	$	(908	)
Income tax (expense) benefit		(234	)		119			96			(19	)
Income tax benefit (expense)														240			(131	)		101			210
Net		802			(410	)		(330	)		62			(798	)		437			(337	)		(698	)
Changes in unrealized pension cost:
Gross		(129,810	)		0			1,313			(128,497	)		(128,004	)		(4,951	)		130,075			(2,880	)
Income tax benefit (expense)		35,297			0			(296	)		35,001			34,917			1,139			(35,287	)		769
Net		(94,513	)		0			1,017			(93,496	)		(93,087	)		(3,812	)		94,788			(2,111	)
Cumulative translation adjustment:
Gross		(2,287	)		(89	)		0			(2,376	)		(2,036	)		3			0			(2,033	)
Income tax benefit (expense)		95			(3	)		0			92
Net		(2,192	)		(92	)		0			(2,284	)
Total accumulated other comprehensive (loss) income	$	(95,903	)	$	(502	)	$	687		$	(95,718	)	$	(95,921	)	$	(3,372	)	$	94,451		$	(4,842	)

The components of accumulated other comprehensive (loss) income for the nine months ended September 30, 2020, are as follows:

							Loss												Loss
	As of			Loss			Reclassified			As of			As of			Gain			Reclassified			As of
	December 31,			Recognized			from AOCI			September 30,			December 31,			Recognized			from AOCI			September 30,
	2019			in OCI			to Earnings			2020			2019			in OCI			to Earnings			2020
Changes in fair market value of hedges:
Changes in fair market value of derivatives:
Gross	$	659		$	(4,647	)		930		$	(3,058	)	$	659		$	(4,647	)	$	930		$	(3,058	)
Income tax (expense) benefit		(150	)		1,059			(203	)		706
Income tax benefit (expense)														(150	)		1,059			(203	)		706
Net		509			(3,588	)		727			(2,352	)		509			(3,588	)		727			(2,352	)
Changes in unrealized pension cost:
Gross		(124,140	)		0			4,840			(119,300	)		(124,140	)		0			4,840			(119,300	)
Income tax benefit (expense)		34,018			0			(1,107	)		32,911			34,018			0			(1,107	)		32,911
Net		(90,122	)		0			3,733			(86,389	)		(90,122	)		0			3,733			(86,389	)
Cumulative translation adjustment:
Gross		(2,211	)		44			0			(2,167	)		(2,211	)		44			0			(2,167	)
Income tax benefit (expense)		98			(98	)		0			0			98			(98	)		0			0
Net		(2,113	)		(54	)		0			(2,167	)		(2,113	)		(54	)		0			(2,167	)
Total accumulated other comprehensive (loss) income	$	(91,726	)	$	(3,642	)	$	4,460		$	(90,908	)	$	(91,726	)	$	(3,642	)	$	4,460		$	(90,908	)

~~The components of accumulated other comprehensive (loss) income for the nine months ended September 30, 2019, are as follows:~~

Loss

As of

Gain

Reclassified

As of

December 31,

Recognized

from AOCI

September 30,

2018

in OCI

to Earnings

2019

Changes in fair market value of hedges:

Gross

$
1,316

$
(181
)

$
(1,054
)

$
81

Income tax (expense) benefit

(298
)

41

238

(19
)
Net

1,018

(140
)

(816
)

62

Changes in unrealized pension cost:

Gross

(132,454
)

0

3,957

(128,497
)
Income tax benefit (expense)

35,893

0

(892
)

35,001

Net

(96,561
)

0

3,065

(93,496
)
Cumulative translation adjustment:

Gross

(2,291
)

(85
)

0

(2,376
)
Income tax benefit

95

(3
)

0

92

Net

(2,196
)

(88
)

0

(2,284
)
Total accumulated other comprehensive (loss) income

$
(97,739
)

$
(228
)

$
2,249

$
(95,718
)

~~Share count and par value data related to shareholders’ equity are as follows:~~

On February 7, 2019, the Board of Directors authorized a new stock repurchase program with a maximum dollar limit of $25,000 in stock repurchases, which replaced the previous program. During the nine months ended September 30, 2020 and 2019, 342,731 and 286,726 shares of common stock were repurchased for $8,080 and $8,045, respectively. Approximately $5,740 is available for future purchases.

Certain potentially dilutive restricted stock units are excluded from diluted earnings per share because they are anti-dilutive. The number of outstanding awards that were anti-dilutive for the nine months ended September 30, 2020 and 2019 were 68,198 and 20,273, respectively. There were 0 anti-dilutive awards outstanding for the three months ended September 30, 2020 and the three months ended September 30, 2019.

Share count and par value data related to shareholders’ equity are as follows:

On May 13, 2021, the Board of Directors approved a new share repurchase program that authorizes the Company to repurchase up to $50,000 of the Company’s common stock. The repurchase program has no set expiration date and replaces the repurchase program approved by the Board of Directors on February 7, 2019. During the nine months ended September 30, 2021, 148,035 shares of common stock were repurchased for $4,939. During the nine months ended September 30, 2020, 342,731 shares of common stock were repurchased for $8,080. Approximately $45,061 is available for future purchases.

Certain potentially dilutive restricted stock units are excluded from diluted (loss) earnings per share because they are anti-dilutive. The number of outstanding awards that were anti-dilutive for the nine months ended September 30, 2021 and 2020 were 1,029 and 68,198, respectively. There were 462 anti-dilutive awards outstanding for the three months ended September 30, 2021 and 0 anti-dilutive awards outstanding the three months ended September 30, 2020.

At September 30, ~~2020,~~2021, we had 5 active stock-based compensation plans: the Non-Employee Directors’ Stock Retirement Plan (“Directors’ Plan”), the 2004 Omnibus Long-Term Incentive Plan (“2004 Plan”), the 2009 Omnibus Equity and Performance Incentive Plan (“2009 Plan”), the 2014 Performance &and Incentive Compensation Plan (“2014 Plan”), and the 2018 Equity and Incentive Compensation Plan ("2018 Plan"). Future grants can only be made under the 2018 Plan.

These plans allow for grants of stock options, stock appreciation rights, restricted stock, restricted stock units ("RSUs"), performance shares, performance units, and other stock awards subject to the terms of the specific plans under which the awards are granted.

The following table summarizes the compensation expense included in selling, general and administrative expenses in the Condensed Consolidated Statements of (Loss) Earnings related to stock-based compensation plans:

	Three months ended				Nine months ended				Three months ended				Nine months ended
	September 30,		September 30,		September 30,		September 30,		September 30,		September 30,		September 30,		September 30,
	2020		2019		2020		2019		2021		2020		2021		2020
Service-based RSUs	$	580	$	618	$	1,939	$	1,712	$	588	$	580	$	2,013	$	1,939
Performance-based RSUs		472		486		123		2,072		383		472		1,942		123
Cash-settled RSUs		67		53		102		166		16		67		151		102
Total	$	1,119	$	1,157	$	2,164	$	3,950	$	987	$	1,119	$	4,106	$	2,164
Income tax benefit		257		262		497		893		227		257		945		497
Net expense	$	862	$	895	$	1,667	$	3,057	$	760	$	862	$	3,161	$	1,667

The following table summarizes the unrecognized compensation expense related to non-vested RSUs by type and the weighted-average period in which the expense is to be recognized:

	Unrecognized				Unrecognized
	Compensation		Weighted-		Compensation		Weighted-
	Expense at		Average		Expense at		Average
	September 30, 2020		Period		September 30, 2021		Period (years)
Service-based RSUs	$	1,989		1.43	$	1,818		1.38
Performance-based RSUs		2,311		1.90		2,988		1.80
Total	$	4,300		1.68	$	4,806		1.64

We recognize expense on a straight-line basis over the requisite service period for each separately vesting portion of the award as if the award was, in substance, multiple awards.

The following table summarizes the status of these plans as of September 30, ~~2020:~~2021:

	2018 Plan		2014 Plan		2009 Plan		2004 Plan		Directors' Plan		2018 Plan		2014 Plan		2009 Plan		2004 Plan		Directors' Plan
Awards originally available		2,500,000		1,500,000		3,400,000		6,500,000	N/A			2,500,000		1,500,000		3,400,000		6,500,000	N/A
Performance-based options outstanding		—		—		—		—		—
Maximum potential RSU and cash settled awards outstanding		495,246		179,528		75,200		35,952		5,522		611,278		35,100		45,200		14,545		4,722
Maximum potential awards outstanding		495,246		179,528		75,200		35,952		5,522		611,278		35,100		45,200		14,545		4,722
RSUs and cash settled awards vested and released		36,471		—		—		—		—		117,633		—		—		—		—
Awards available for grant		1,968,283		—		—		—		—		1,771,089		—		—		—		—

The following table summarizes the service-based RSU activity for the nine months ended September 30, ~~2020:~~2021:

	Units			Weighted Average Grant Date Fair Value		Units			Weighted Average Grant Date Fair Value
Outstanding at December 31, 2019		364,396		$	19.87
Outstanding at December 31, 2020							367,428		$	21.28
Granted		92,996			27.73		68,065			32.93
Vested and released		(91,762	)		22.76		(151,946	)		20.91
Forfeited		(13,997	)		28.70		(15,506	)		29.17
Outstanding at September 30, 2020		351,633		$	20.84
Releasable at September 30, 2020		185,974		$	14.63
Outstanding at September 30, 2021							268,041		$	24.00
Releasable at September 30, 2021							116,933		$	15.86

The following table summarizes the performance and market-based RSU activity for the nine months ended September 30, ~~2020:~~2021:

	Units			Weighted Average Grant Date Fair Value		Units			Weighted Average Grant Date Fair Value
Outstanding at December 31, 2019		217,229		$	27.73
Outstanding at December 31, 2020							225,559		$	28.97
Granted		126,521			28.37		83,237			34.44
Attained by performance		38,820			23.84		18,107			28.33
Released		(111,838	)		23.74		(53,137	)		28.33
Forfeited		(40,673	)		29.34		(43,099	)		27.71
Outstanding at September 30, 2020		230,059		$	28.94
Releasable at September 30, 2020		—		$	—
Outstanding at September 30, 2021							230,667		$	31.28
Releasable at September 30, 2021							196,748		$	32.62

~~The following table summarizes each grant of performance awards outstanding at September 30, 2020.~~

Cash-Settled RSUs entitle the holder to receive the cash equivalent of one share of common stock for each unit when the unit vests. These RSUs are issued to key employees residing in foreign locations as direct compensation. Generally, these RSUs vest over a three-year period. Cash-Settled RSUs are classified as liabilities and are remeasured at each reporting date until settled. At September 30, ~~2020~~2021 and December 31, ~~2019~~2020 we had ~~33,697~~32,085 and ~~17,271~~30,009 cash-settled RSUs outstanding, respectively. At September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, liabilities of ~~$221~~$276 and ~~$353,~~$396, respectively, were included in ~~Accrued~~accrued expenses and other liabilities on our Condensed Consolidated Balance Sheets.

The table below summarizes our financial liabilities that were measured at fair value on a recurring basis at September 30, 2021:

The table below summarizes the financial assets that were measured at fair value on a recurring basis as of December 31, 2020:

We use interest rate swaps to convert a portion of our ~~Revolving Credit Facility’s~~revolving credit facility’s outstanding balance from a variable rate of interest into a fixed rate and foreign currency forward contracts to hedge the effect of foreign currency changes on certain revenues and costs denominated in foreign currencies. These derivative financial instruments are measured at fair value on a recurring basis. Due to changes in interest rates and foreign exchange rates, these fair values fluctuated significantly during the second and third quarters and may continue to fluctuate based on market conditions and other factors.

~~The table below summarizes our financial liabilities that were measured at fair value on a recurring basis at September 30, 2020:~~

~~The table below summarizes the financial assets that were measured at fair value on a recurring basis as of December 31, 2019:~~

The fair value of our interest rate swaps, and foreign currency hedges were measured using standard valuation models using market-based observable inputs over the contractual terms, including forward yield curves, among others. There is a readily determinable market for these derivative instruments, but that market is not active and therefore they are classified within Level 2 of the fair value hierarchy.

The fair value of the contingent consideration requires significant judgment. The Company's fair value estimates used in the contingent consideration valuation are considered Level 3 fair value measurements. The fair value estimates were based on assumptions management believes to be reasonable, but that are inherently uncertain, including estimates of future revenues and timing of events and activities that are expected to take place. Refer to Note 3 for further discussion on contingent consideration.

Our long-term debt consists of debt outstanding under the ~~Revolving Credit Facility~~revolving credit facility which is recorded at its carrying value. There is a readily determinable market for our long-term debt, and it is classified within Level 2 of the fair value hierarchy as the market is not deemed to be active. The fair value of long-term debt approximates carrying value and was determined by valuing a similar hypothetical coupon bond and attributing that value to our long-term debt under the revolving credit facility.

The effective tax rates for the three and nine months ended September 30, ~~2020~~2021 and ~~2019~~2020 are as follows:

Our effective income tax rate was ~~22.2%~~28.9% and ~~62.2%~~22.2% in the third quarters of ~~2020~~2021 and ~~2019,~~2020, respectively. This ~~decrease~~increase is primarily attributed to a one-time settlement expense related to the ~~change in~~final annuity purchase made for the ~~mix of earnings by jurisdiction and~~CTS Corporation U.S. pension plan. The third quarter 2021 tax rate was higher than the ~~2019 increase to reserves~~U.S. statutory federal tax rate for ~~uncertain tax position associated with~~ the ~~company’s operations in China.~~same reason noted above. The third quarter 2020 tax rate was higher than the U.S. statutory federal tax rate ~~primarily~~ due to foreign withholding taxes, state taxes, and foreign earnings that are taxed at higher rates.

Our effective income tax rate was ~~24.4%%~~32.5% and ~~30.3%~~24.4% in the nine months ended September 30, 2021 and 2020, respectively. This increase is primarily attributed to the settlement expenses related to lump sum payments made for the CTS Corporation U.S. Pension Plan termination process in the second and third quarters of 2021. The tax rate in the first nine months of ~~2020 and 2019, respectively. This decrease is primarily attributed to~~2021 was higher than the ~~change in~~U.S. statutory federal tax rate for the mix of earnings by jurisdiction, decreases in uncertain tax position offset by the establishment of valuation allowance on certain U.S. tax credits and the Company’s decision to no longer permanently reinvest the earnings of its Taiwan subsidiary.same reason noted above. The tax rate in the first nine months of 2020 was higher than the ~~U.S~~U.S. statutory federal tax rate primarily due to the establishment of valuation allowances on certain U.S. tax credits and the Company’s decision to no longer ~~permanently~~ reinvest the earnings of its Taiwan subsidiary. The tax rate in the first nine months of 2019 was higher than the U.S. statutory federal tax rate primarily due to an increase to reserves for uncertain tax positions associated with the Company’s operations in China and foreign earnings that are taxed at higher rates.

We lease certain land, buildings and equipment under non-cancellable operating leases used in our operations. Operating lease assets represent our right to use an underlying asset for the lease term. Operating lease liabilities represent the present value of lease payments over the lease term, discounted using an estimate of our secured incremental borrowing rate because none of our leases contain a rate implicit in the lease arrangement.

In accordance with FASB Staff Q&A - Topic 842 and Topic 840: Accounting for Lease Concessions Related to the Effects of the COVID-19 Pandemic ("FASB Staff Q&A") issued in April 2020, we have elected to account for any lease concessions resulting directly from COVID-19 as if the enforceable rights and obligations for the concessions existed in the respective contracts at lease inception and as such we will not account for any concession as a lease modification. Guidance from the FASB Staff Q&A provided methods to account for rent deferrals which include the option to treat the lease as if no changes to the lease contract were made or to treat deferred payments as variable lease payments. The FASB Staff Q&A allows entities to select the most practical approach and does not require the same approach be applied consistently to all leases. As a result, we have accounted for lease deferrals as if no changes to the lease contract were made and will continue to recognize lease expense, on a straight-line basis, during the deferral periods. During the three and nine months ended September 30, 2020, these rent concessions related to COVID-19 were not material.

~~Components of lease expense for the three and nine months ended September 30, 2020 were as follows:~~

~~Remaining maturity of our existing lease liabilities as of September 30, 2020 is as follows:~~

On July 31, 2019, we acquired 100% of the outstanding shares of Quality Thermistor, Inc. ("QTI") for $75 million plus a contingent earn out of up to $5 million based on sales performance objectives. The purchase price included adjustments for debt assumed and changes in working capital. QTI, doing business as QTI Sensing Solutions, is a leading designer and manufacturer of high-quality temperature sensors serving original equipment manufacturers with mission-critical applications in the industrial, aerospace, defense and medical markets. This acquisition provided us with a new core temperature sensing technology that expands our sensing product portfolio, while increasing our presence in the industrial and medical markets.

~~The final purchase price of $73,906 was allocated to the fair values of assets and liabilities acquired as of July 31, 2019.~~

~~The following table summarizes the consideration paid and the fair values of the assets acquired and the liabilities assumed as of the date of acquisition:~~

Goodwill represents value the Company expects to be created by combining the operations of the acquired business with the Company's operations, including the expansion of customer relationships within our existing business, access to new customers, and potential cost savings and synergies. Goodwill related to the acquisition is expected to be deductible for tax purposes.

The contingent earn out was payable in cash upon the achievement of a revenue performance target for the year ending December 31, 2019. The Company recorded contingent consideration for the earn out of $1,056 based on the achievement performance target for the full year 2019 results. This amount is reflected as an addition to the purchase price.

~~The following table summarizes the carrying amounts and weighted average lives of the acquired intangible assets:~~

~~ASU No. 2018-13~~ ~~"Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement"~~

~~In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") No. 2018-13 "Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement~~". This ASU modified the disclosures related to recurring and nonrecurring fair value measurements. Disclosures related to the transfer of assets between Level 1 and Level 2 hierarchies have been eliminated and various additional disclosures related to Level 3 fair value measurements have been added, modified or removed. This ASU is effective for annual periods beginning after December 15, 2019, and interim periods within those fiscal years. We adopted this ASU on January 1, 2020 and it did not have a material impact on our financial statements.

~~ASU No. 2016-16~~ ~~"Income Taxes (Topic 740) Intra-Entity Transfers of Assets Other Than Inventory"~~

~~In October 2016, the FASB issued ASU No. 2016-16, "Intra-Entity Transfers of Assets Other Than Inventory~~". This ASU is meant to improve the accounting for the income tax effect of intra-entity transfers of assets other than inventory. Currently, U.S. GAAP prohibits the recognition of current and deferred income taxes for intra-entity asset transfers until the asset is sold to a third party. This ASU will now require companies to recognize the income tax effect of an intra-entity asset transfer (other than inventory) when the transaction occurs. This ASU is effective for public companies for fiscal years beginning after December 15, 2019 and interim periods within those annual reporting periods and is to be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. We adopted this ASU on January 1, 2020 and it did not have a material impact on our financial statements.

~~ASU 2016-13 "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments~~"

~~In June 2016, the FASB issued ASU 2016-13,~~ ~~Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments~~, which amends the current accounting guidance and requires the measurement of all expected losses based on historical experience, current conditions and reasonable and supportable forecasts. For trade receivables, loans, and other financial instruments, we will be required to use a forward-looking expected loss model that reflects losses that are probable rather than the incurred loss model for recognizing credit losses. The standard became effective for interim and annual periods beginning after December 15, 2019. Application of the amendments is through a cumulative-effect adjustment to retained earnings as of the effective date. We adopted this ASU on January 1, 2020 and it did not have a material impact on our financial statements.

~~ASU No. 2020-04~~ ~~"Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting"~~

~~In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting~~”, which provides temporary optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting as it relates to our LIBOR indexed instruments. ASU 2020-04 provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. ASU 2020-04 is effective for all entities as of March

12, 2020 through December 31, 2022, and an entity may elect to apply ASU 2020-04 for contract modifications by Topic or Industry Subtopic as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. We are currently evaluating the potential impact of adopting this guidance on our consolidated financial statements.

~~In December 2019, the FASB issued ASU 2019-12,~~ ~~Simplifying the Accounting for Income Taxes~~, as part of its simplification initiative to reduce the cost and complexity in accounting for income taxes. ASU 2019-12 removes certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences. ASU 2019-12 also amends other aspects of the guidance to help simplify and promote consistent application of GAAP. The guidance is effective for interim and annual periods beginning after December 15, 2020, with early adoption permitted. We are currently evaluating the impact of this ASU on our financial statements.

~~ASU No. 2018-14~~ ~~"Compensation - Retirement Benefits - Defined Benefit Plans - General"~~

~~In August 2018, the FASB issued ASU No. 2018-14, "Compensation - Retirement Benefits - Defined Benefit Plans - General~~." This ASU modifies the disclosure requirements for defined benefit and other postretirement plans. This ASU eliminates certain disclosures associated with accumulated other comprehensive income, plan assets, related parties, and the effects of interest rate basis point changes on assumed health care costs; while other disclosures have been added to address significant gains and losses related to changes in benefit obligations. This ASU also clarifies disclosure requirements for projected benefit and accumulated benefit obligations. The amendments in this ASU are effective for fiscal years ending after December 15, 2020 and for interim periods therein with early adoption permitted. Adoption on a retrospective basis for all periods presented is required. This ASU will impact our annual financial statement disclosures but will not impact our interim financial statements and does not have an impact on our consolidated financial position, results of operations, or cash flows.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”)

The following discussion should be read in conjunction with our unaudited Condensed Consolidated Financial Statements and notes included under Item 1, as well as our Consolidated Financial Statements and notes and related Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

CTS Corporation ("CTS", "we", "our" or "us") is a leading designer and manufacturer of products that Sense, Connect and Move. Our vision is to be a leading provider of sensing and motion devices as well as connectivity components, enabling an intelligent and seamless world. These devices are categorized by their ability to Sense, Connect or Move. Sense products provide vital inputs to electronic systems. Connect products allow systems to function in synchronization with other systems. Move products ensure required movements are effectively and accurately executed. We are committed to achieving our vision by continuing to invest in the development of products and technologies, and talent within these categories.

We manufacture sensors, actuators, and ~~electronic~~connectivity components in North America, Europe, and Asia. CTS provides engineered products to OEMs and tier one suppliers in the aerospace and defense, industrial, information technology, medical, telecommunications, and transportation markets.

There is an increasing proliferation of sensing and motion applications within various markets we serve. In addition, the increasing connectivity of various devices to the internet results in greater demand for communication bandwidth and data storage, increasing the need for our connectivity products. Our success is dependent on the ability to execute our strategy to support these trends. We are subject to challenges including periodic market softness, competition from other suppliers, changes in technology, and the ability to add new customers, launch new products or penetrate new markets.

The COVID-19 pandemic ~~has resulted in~~and subsequent supply chain uncertainties have had a significant ~~disruption to~~negative impact on the global economy ~~that~~in 2020 and 2021. This has disrupted the financial markets, negatively impacted the global supply chain and ~~is likely~~increased the cost of materials and operations, particularly within the global automotive industry. Key semiconductor chip and other critical part shortages continue to ~~have continued adverse~~force original equipment manufacturers (“OEMs”) to shut down production, often on short notice. With customers changing orders on short notice, we run the risk of carrying excess inventory in these situations. These developments are outside of our control, remain highly uncertain, and cannot be predicted. We continue to actively monitor the ongoing impacts of the COVID-19 pandemic and supply chain issues and will seek to mitigate and minimize their impact on our business. We ~~have experienced reductions in customer demand in several of our end markets. We expect that social distancing measures, high employee absenteeism, and reductions in production due~~anticipate these challenges to ~~mandated labor capacity restrictions at some of our plants in Europe and North America, as well as the reduced operational capacity of our customers and suppliers, could~~continue to impact our ~~business~~results in ~~the fourth quarter~~2021 and into ~~2021. As a result of these economic headwinds, we have implemented cost savings measures, some of which are temporary in nature. We continue to evaluate market conditions to determine the extent~~2022 and duration of the temporary measures. The pandemic could lead to an extended disruption of economic activity and the impact on our consolidated results of operations, financial position and cash flows could be material. In the third quarter of 2020, we saw a significant recovery in revenue from the levels in the second quarter of 2020. However, we remain cautious about the ~~revenue~~financial impact ~~in the next several quarters.~~of these potential disruptions on our business.

Results of Operations: Third Quarter ~~2020~~2021 versus Third Quarter ~~2019~~2020

The following table highlights changes in significant components of the Unaudited Condensed Consolidated Statements of (Loss) Earnings for the quarters ended September 30, ~~2020,~~2021, and September 30, ~~2019:~~2020:

	Three Months Ended								Percent of			Percent of			Three Months Ended								Percent of			Percent of
	September 30,		September 30,			Percent			Net Sales –			Net Sales –			September 30,			September 30,		Percent			Net Sales –			Net Sales –
	2020		2019			Change			2020			2019			2021			2020		Change			2021			2020
Net sales	$	113,777	$	115,651			(2.0	)%		100.0	%		100.0	%	$	122,382		$	113,777		7.6	%		100.0	%		100.0	%
Cost of goods sold		76,871		78,594			(0.0	)		67.6			68.0			76,720			76,871		(0.2	)		62.7			67.6
Gross margin		36,906		37,057			0.0			32.4			32.0			45,662			36,906		23.7			37.3			32.4
Selling, general and administrative expenses		16,883		17,774			(0.1	)		14.8			15.4			19,922			16,883		18.0			16.3			14.8
Research and development expenses		5,723		6,806			(0.2	)		5.0			5.9			6,454			5,723		12.8			5.3			5.0
Restructuring charges		1,041		2,342			(0.6	)		0.9			2.0			319			1,041		(69.4	)		0.3			0.9
Loss on sale of assets		—		11			(1.0	)		—			—
Total operating expenses		23,647		26,933			(0.1	)		20.8			23.3			26,695			23,647		12.9			21.9			20.7
Operating earnings		13,259		10,124			0.3			11.7			8.8			18,967			13,259		43.1			15.5			11.7
Total other income (expense), net		977		(2,924	)		(1.3	)		0.9			(2.5	)
Earnings before income taxes		14,236		7,200			1.0			12.5			6.2
Income tax expense		3,163		4,478			(0.3	)		2.8			3.9
Net earnings	$	11,073	$	2,722			307.0	%		9.7	%		2.4	%
Earnings per share:
Diluted net earnings per share	$	0.34	$	0.08
Total other (expense) income, net																(108,786	)		977		(11,234.7	)		(88.9	)		0.9
(Loss) earnings before income taxes																(89,819	)		14,236		(730.9	)		(73.4	)		12.5
Income tax (benefit) expense																(25,923	)		3,163		(919.6	)		(21.2	)		2.8
Net (loss) earnings															$	(63,896	)	$	11,073		(677.0	)%		(52.2	)%		9.7	%
(Loss) earnings per share:
Diluted net (loss) earnings per share															$	(1.97	)	$	0.34

~~Sales~~Net sales were ~~$113,777~~$122,382 in the third quarter of ~~2020, a decrease~~2021, an increase of ~~$1,874~~$8,605 or ~~2.0%~~7.6% from the third quarter of ~~2019. Sales were negatively impacted as a result~~2020. Net sales growth was driven by the overall improvement in the economy.

Net sales to transportation markets decreased $2,936 or 4.5%. The impact of the ~~COVID-19 pandemic and government activities to control its spread. In the third quarter of 2020 we continued to see negative impacts from labor restrictions, as well as challenges from~~ supply chain ~~disruptions~~shortages and ~~weaker demand from certain customers,~~OEM shutdowns are expected to continue to have an adverse effect on our operations, primarily in the transportation end market. ~~These economic impacts are ongoing and continue to have an effect on our operations, which we are currently unable to quantify.~~

~~Sales to transportation markets decreased $6,282 or 8.8%. Sales~~Net sales to other markets increased ~~$4,408~~$11,541 or ~~10.0%~~23.8%. The ~~QTI~~Sensor Scientific, Inc. (“SSI”) acquisition, which was completed in ~~July 2019,~~December 2020, added ~~$6,560~~$1,780 in net sales for the ~~quarter compared to $3,670 in the third quarter of 2019.~~quarter. Changes in foreign exchange rates increased net sales by ~~$718~~$1,279 year-over-year due to the U.S. Dollar depreciating compared to the Chinese Renminbi and Euro.

Gross margin as a percent of net sales was 37.3% in the third quarter of 2021 compared to 32.4% in the third quarter of ~~2020 compared to 32.0% in the third quarter of 2019.~~2020. The increase in gross margin was driven primarily by ~~various cost reduction measures.~~sales volume and mix. The third quarter of 2020 was impacted by the COVID-19 pandemic.

Selling, general and administrative ("SG&A") expenses were $19,922 or 16.3% of net sales in the third quarter of 2021 versus $16,883 or 14.8% of net sales in the third quarter of 2020. The 2020 SG&A expenses included savings from cost reduction measures we had implemented while 2021 saw those measures fully restored as well as higher costs from incentive compensation.

Research and development (“R&D”) expenses were $6,454 or 5.3% of net sales in the third quarter of 2021 compared to $5,723 or 5.0% of net sales in the comparable quarter of 2020. The increase in overall R&D expenses is primarily due to changes in timing and mix of certain projects as well as cost actions implemented in Q2 2020.

Restructuring charges were $319 or 0.3% of net sales in the third quarter of 2021 compared to $1,041 or 0.9% of net sales in the third quarter of 2020. Expenses were higher in the prior year due to the initiation of a restructuring plan in the third quarter of 2020.

Operating earnings were $18,967 or 15.5% of net sales in the third quarter of 2021 compared to operating earnings of $13,259 or 11.7% of net sales in the third quarter of 2020 ~~versus $17,774 or 15.4% of~~driven by sales ~~in the third quarter of 2019. The 2020 SG&A costs include savings from cost reduction measures we implemented during the third quarter, partially offset by amortization of intangibles~~volume and ~~other operating costs associated with the QTI acquisition.~~mix.

~~Research~~Other expense and ~~development expenses were $5,723 or 5.0% of sales in the third quarter of 2020 compared to $6,806 or 5.9% of sales in the comparable quarter of 2019.~~

Restructuring charges were $1,041 or 0.9% of sales in the third quarter of 2020 and were as a result of certain initiatives initiated in the third quarter of 2020 to better align our cost structure with lower end-market demand. The restructuring actions are focused on optimizing our manufacturing footprint and improving operational efficiency by better utilizing our systems capabilities. Restructuring charges were $2,342 or 2.0% of sales in the third quarter of 2019.

~~Operating earnings were $13,259 or 11.7% of sales in the third quarter of 2020 compared to operating earnings of $10,124 or 8.8% of sales in the third quarter of 2019.~~

	Three Months Ended						Three Months Ended
	September 30,			September 30,			September 30,			September 30,
	2020			2019			2021			2020
Interest expense	$	(857	)	$	(812	)	$	(514	)	$	(857	)
Interest income		217			524			230			217
Other income (expense), net		1,617			(2,636	)
Total income other (expense), net	$	977		$	(2,924	)
Other (expense) income, net								(108,502	)		1,617
Total other (expense) income, net							$	(108,786	)	$	977

~~Interest~~Other (expense) income, ~~declined as a result of lower interest rates and foreign cash balances. Other income~~net in the third quarter of ~~2020~~2021 was ~~principally~~primarily driven by ~~foreign currency translation gains, mainly due to the depreciation of the~~increased pension expense including $106,206 in settlement charge from our U.S. ~~Dollar compared to the Chinese Renminbi and Euro during the quarter, which were partially offset by~~ pension ~~expense.~~plan termination process.

Our effective income tax rate was ~~22.2%~~28.9% and ~~62.2%~~22.2% in the third quarters of ~~2020~~2021 and ~~2019,~~2020, respectively. This ~~decrease~~increase is primarily ~~attributed~~attributable to the ~~change~~impact of the U.S. pension plan settlement charge taken in the ~~mix~~third quarter of ~~earnings by jurisdiction and the 2019 increase to reserves for uncertain tax position associated with the company’s operations in China.~~2021.

Results of Operations: Nine Months ended September 30, ~~2020~~2021 versus Nine Months Ended September 30, ~~2019~~2020

The following table highlights changes in significant components of the Unaudited Condensed Consolidated Statements of (Loss) Earnings for the nine months ended September 30, ~~2020~~2021, and ~~2019:~~

	Nine Months Ended									Percent of			Percent of			Nine Months Ended									Percent of			Percent of
	September 30,			September 30,			Percent			Net Sales –			Net Sales –			September 30,			September 30,			Percent			Net Sales –			Net Sales –
	2020			2019			Change			2020			2019			2021			2020			Change			2021			2020
Net sales	$	301,049		$	353,959			(15.0	)%		100.0	%		100.0	%	$	380,394		$	301,049			26.4	%		100.0	%		100.0	%
Cost of goods sold		204,677			235,084			(0.1	)		68.0			66.4			244,446			204,677			19.4			64.3			68.0
Gross margin		96,372			118,875			(0.2	)		32.0			33.6			135,948			96,372			41.1			35.7			32.0
Selling, general and administrative expenses		48,310			52,371			(0.1	)		16.0			14.8			59,184			48,310			22.5			15.6			16.0
Research and development expenses		18,653			19,854			(0.1	)		6.2			5.6			18,170			18,653			(2.6	)		4.8			6.2
Restructuring charges		1,416			5,337			(0.7	)		0.5			1.5			551			1,416			(61.1	)		0.1			0.5
Gain on sale of assets		—			(111	)		(1.0	)		—			—
Total operating expenses		68,379			77,451			(0.1	)		22.7			21.9			77,905			68,379			13.9			20.5			22.7
Operating earnings		27,993			41,424			(0.3	)		9.3			11.7			58,043			27,993			107.3			15.3			9.3
Total other (expense), net		(1,874	)		(3,995	)		(0.5	)		(0.6	)		(1.1	)
Earnings before income taxes		26,119			37,429			(0.3	)		8.7			10.6
Income tax expense		6,381			11,345			(0.4	)		2.1			3.2
Net earnings	$	19,738		$	26,084			(24.0	)%		6.6	%		7.4	%
Earnings per share:
Diluted net earnings per share	$	0.61		$	0.79
Total other expense, net																	(133,674	)		(1,874	)		7033.1			(35.1	)		(0.6	)
(Loss) earnings before income taxes																	(75,631	)		26,119			(389.6	)		(19.8	)		8.7
Income tax (benefit) expense																	(24,600	)		6,381			(485.5	)		(6.5	)		2.1
Net (loss) earnings																$	(51,031	)	$	19,738			(358.5	)%		(13.4	)%		6.6	%
(Loss) earnings per share:
Diluted net (loss) earnings per share																$	(1.58	)	$	0.61

~~Sales~~Net sales were ~~$301,049~~$380,394 in the nine months ended September 30, ~~2020, a decrease~~2021, an increase of ~~$52,910~~$79,345 or ~~15.0%~~26.4% from the nine months ended September 30, ~~2019. Sales were negatively impacted as a result of~~2020. Net sales growth was driven by the COVID-19 pandemic and government activities to control its spread. In the first three quarters of the year, we were impacted by: (1) successively mandated closures of or labor restrictions at our plants in China, Europe and North America, (2) supply chain disruptions resulting from the closure of a number of our suppliers in China and in North America, and (3) weak demand from certain customers as a result of their mandated or elective plant closures. We remain cautious about the impact of these disruptions on our operationsoverall improvement in the ~~next several quarters, which we are currently unable to quantify.~~economy.

~~Sales~~Net sales to transportation markets ~~decreased $65,803~~increased $44,812 or ~~28.5%~~27.2%. ~~Sales~~Net sales to other markets increased ~~$12,893~~$34,533 or ~~10.5%~~25.4%. The ~~QTI~~SSI acquisition, which was completed in ~~July 2019,~~December 2020, added ~~$17,555~~$5,226 in net sales for the nine months ended September 30, ~~2020~~2021. Changes in foreign exchange rates increased net sales by $6,456 year-over-year due to the U.S. Dollar depreciating compared to ~~$3,670~~the Chinese Renminbi and Euro.

Gross margin as a percent of net sales was 35.7% for the nine months ended September 30, ~~2019. Changes in foreign exchange rates decreased sales by $599 year-over-year due to the U.S. Dollar appreciating~~2021 compared to ~~the Chinese Renminbi.~~

~~Gross margin as a percent of sales was~~ 32.0% for the nine months ended September 30, ~~2020 compared to 33.6% for nine months ended September 30, 2019.~~2020. The ~~decrease~~increase in gross margin was driven primarily by ~~lower~~ sales ~~volumes, which was partially offset~~volume and mix. The first nine months of 2020 were also impacted significantly by ~~various cost reduction measures.~~the COVID-19 pandemic, particularly in the second quarter of 2020. We continue to experience significant inflation in material and freight costs as well as interruptions in the supply chain particularly due to the global

semiconductor chip and resin shortages impacting the operations of our business. The impact of the supply chain shortages and OEM shutdowns are expected to continue to have an adverse effect on our operations.

~~Selling, general and administrative ("~~SG~~&A")~~&A expenses were ~~$48,310~~$59,184 or ~~16.0%~~15.6% of net sales for the nine months ended September 30, ~~2020~~2021 versus ~~$52,371~~$48,310 or ~~14.8%~~16.0% of net sales for the nine months ended September 30, ~~2019.~~ 2020. The 2020 year to date SG&A ~~costs~~expenses include savings from cost reduction measures we had implemented ~~during the second and third quarters, partially offset by amortization of intangibles and other operating~~while 2021 saw those measures fully restored as well as higher costs ~~associated with the QTI acquisition.~~from incentive compensation.

~~Research and development~~R&D expenses were ~~$18,653~~$18,170 or ~~6.2%~~4.8% of net sales for the nine months ended September 30, ~~2020~~2021 compared to ~~$19,854~~$18,653 or ~~5.6%~~6.2% of net sales in the comparable period of 2020. The decrease in overall R&D expenses is primarily due to changes in timing and mix of certain projects.

Restructuring charges were $551 or 0.1% of net sales for the nine months ended September 30, ~~2019.~~

~~Restructuring charges were~~2021 compared to $1,416 or 0.5% of net sales for the nine months ended September 30, ~~2020 and~~2020. Expenses were ~~primarily as~~higher in the prior year due to the initiation of a ~~result of certain initiatives initiated~~restructuring plan in the third quarter of 2020 to better align our cost structure with lower end-market demand. The restructuring actions are focused on optimizing our manufacturing footprint and improving operational efficiency by better utilizing our systems capabilities. Restructuring charges were $5,337 or 1.5% of sales for nine months ended September 30, 2019.2020.

Operating earnings were ~~$27,993~~$58,043 or ~~9.3%~~15.3% of net sales for the nine months ended September 30, ~~2020~~2021 compared to operating earnings of ~~$41,424~~$27,993 or ~~11.7%~~9.3% of net sales for the nine months ended September 30, ~~2019.~~2020. The change in operating earnings were driven by the items discussed above.

Other ~~income~~expense and ~~expense~~income items are summarized in the following table:

	Nine Months Ended						Nine Months Ended
	September 30,			September 30,			September 30,			September 30,
	2020			2019			2021			2020
Interest expense	$	(2,617	)	$	(1,745	)	$	(1,577	)	$	(2,617	)
Interest income		852			1,396			689			852
Other (expense), net		(109	)		(3,646	)
Total other (expense), net	$	(1,874	)	$	(3,995	)
Other expense, net								(132,786	)		(109	)
Total other expense, net							$	(133,674	)	$	(1,874	)

Other expense, ~~increased mainly as a result of an increase~~net in ~~debt related to the QTI acquisition and additional borrowings at the end of~~ the first ~~quarter to ensure adequate liquidity for the next several quarters. Interest income declined as a result of lower interest rates and foreign cash balances. The Other (expense) income, net for the~~ nine months ~~ended September 30, 2020~~of 2021 was ~~principally~~primarily driven by ~~foreign currency translation gains, mainly due to~~increased pension expense including $126,269 in settlement charges from our U.S. pension plan termination process in the ~~depreciation~~second and third quarters of ~~the U.S. Dollar compared to the Chinese Renminbi and Euro, which were partially offset by pension expense.~~2021.

Our effective income tax rate was ~~24.4%~~32.5% and ~~30.3%~~24.4% in the nine months ended September 30, 2021 and 2020, ~~and 2019,~~ respectively. This ~~decrease~~increase is primarily ~~attributed~~attributable to the change in the mix of earnings by jurisdiction ~~decreases~~as well as $126,269 in ~~uncertain tax position offset by~~settlement charges from our U.S. pension plan termination process in the ~~establishment~~second and third quarters of ~~valuation allowances on certain U.S. tax credits and the company's decision to no longer permanently reinvest the earnings of its Taiwan subsidiary.~~2021.

Cash and cash equivalents were ~~$131,740~~$128,527 at September 30, ~~2020,~~2021, and ~~$100,241~~$91,773 at December 31, ~~2019,~~2020, of which ~~$89,621~~$123,430 and ~~$98,309,~~$90,051, respectively, were held outside the United States. The increase in cash and cash equivalents of ~~$31,499~~$36,754 was primarily driven by cash generated from operating activities of ~~$49,297 and~~$60,117, which was partially offset by net ~~proceeds from an increase in borrowings of~~payments on long-term debt of ~~$6,600, which were partially offset by treasury stock purchases of $8,080,~~$4,600, capital expenditures of ~~$10,441,~~$8,140, dividends paid of ~~$3,888, and~~$3,882, taxes paid on behalf of equity award participants of ~~$1,911.~~$1,490, payments of contingent consideration of $500, and payments for acquisitions of $255. Total long-term debt was ~~$106,300~~$50,000 as of September 30, ~~2020~~2021 and ~~$99,700~~$54,600 as of December 31, ~~2019.~~2020. Total debt as a percentage of total capitalization, defined as long-term debt as a percentage of total debt and shareholders' equity, was ~~20.4%~~9.9% at September 30, ~~2020,~~2021, compared to ~~19.7%~~11.4% at December 31, ~~2019.~~

We increased our cash position during the first quarter to improve liquidity given the current economic environment. Our net debt, defined as long-term debt less cash and cash equivalents, was $(25,440) at September 30, 2020. ~~We currently have $191,960available for additional borrowings under our credit facility.~~

Working capital increased by ~~$28,034~~$44,078 during the nine months ended September 30, ~~2020,~~2021, primarily due to the increase in cash and cash equivalents from ~~borrowings under our credit facility.~~strong operating cash flows.

Net cash provided by operating activities was ~~$49,297~~$60,117 during the nine months ended September 30, ~~2020.~~2021. Components of net cash provided by operating activities included net ~~earnings~~loss of ~~$19,738,~~($51,031), depreciation and amortization expense of ~~$19,819,~~ $20,231, non-cash pension and other post-retirement plan expenses of $131,290, and other net non-cash items of ~~$4,818,~~($30,068), and a net cash ~~inflow~~outflow from changes in assets and liabilities of ~~$4,922.~~$10,305.

Net cash used in investing activities for the nine months ended September 30, ~~2020~~2021 was ~~$10,441,~~$8,395, driven ~~entirely~~primarily by capital expenditures.

Net cash used in financing activities for the nine months ended September 30, ~~2020~~2021 was ~~$7,279.~~ $15,411. The net cash outflow was the result of ~~treasury stock purchases~~a decrease in borrowings of ~~$8,080,~~ long-term debt of $4,600, dividends paid of ~~$3,888, and~~$3,882, taxes paid on behalf of equity award participants in the amount of ~~$1,911, which was partially offset by net proceeds from an increase in borrowings~~$1,490, repurchase of ~~long-term debt~~treasury stock of ~~$6,600.~~$4,939, and payments of contingent consideration of $500.

	As of						As of
	September 30,			December 31,			September 30,			December 31,
	2020			2019			2021			2020
Total credit facility	$	300,000		$	300,000		$	300,000		$	300,000
Balance outstanding		106,300			99,700			50,000			54,600
Standby letters of credit		1,740			1,800			1,740			1,740
Amount available, subject to covenant restrictions	$	191,960		$	198,500		$	248,260		$	243,660
Weighted-average interest rate		2.00	%		3.25	%		1.18	%		1.92	%
Commitment fee percentage per annum		0.25	%		0.23	%		0.20	%		0.23	%

Our Credit Agreement provides for a revolving credit facility of $300,000, which may be increased by $150,000 at the request of the Company, subject to the administrative agent's approval.

We have entered into interest rate swap agreements to fix interest rates on $50,000 of long-term debt through February 2024. The difference to be paid or received under the terms of the swap agreements is recognized as an adjustment to interest expense when settled.

We have historically funded our capital and operating needs primarily through cash flows from operating activities, supported by available credit under our revolving credit facility. We believe that cash flows from operating activities and available borrowings under our revolving credit facility will be adequate to fund our working capital needs, capital expenditures, ~~and~~ debt service and dividend requirements for at least the next twelve months. However, we may choose to pursue additional equity and debt financing to provide additional liquidity or to fund acquisitions.

Management prepared the ~~condensed consolidated financial statements~~Condensed Consolidated Financial Statements under accounting principles generally accepted in the United States of America. These principles require the use of estimates, judgments, and assumptions. We believe that the estimates, judgments, and assumptions we used are reasonable, based upon the information available.

Our estimates and assumptions affect the reported amounts in our financial statements. The following accounting policies comprise those that we believe are the most critical in understanding and evaluating our reported financial results.

Product revenue is recognized when the transfer of promised goods to a customer occurs in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods. We follow the ~~five step~~five-step model to determine when this transfer has occurred: 1) identify the contract(s) with the customer; 2) identify the performance obligations in the contract; 3) determine the transaction price; 4) allocate the transaction price to the performance obligations in the contract; and 5) recognize revenue when (or as) the entity satisfies a performance obligation.

Provisions for estimated warranty expenses primarily related to our automotive products are made at the time products are sold. These estimates are established using a quoted industry rate. We adjust our warranty reserve for any known or anticipated warranty claims as new information becomes available. We evaluate our warranty obligations at least quarterly and adjust our accruals if it is

probable that future costs will be different than our current reserve. Over the last three years, product warranty reserves have ranged from ~~2.0%~~0.5% to ~~3.2%~~2.7% of total sales. We believe our reserve level is appropriate considering all facts and circumstances surrounding any outstanding quality claims and our historical experience selling our products to our customers.

We have standardized credit granting and review policies and procedures for all customer accounts, including:

We reserve for estimated credit losses based on historical experience, specific customer collection issues, current conditions and reasonable and supportable forecasts that affect the collectability of the remaining cash flows over the contractual terms of our receivables and other financial ~~assets.~~assets. Over the last three years, accounts receivable reserves have been approximately 0.1% to ~~1.1%~~1.8% of total accounts receivable. We believe our reserve level is appropriate considering the quality of the portfolio. While credit losses have historically been within expectations of the reserves established, we cannot guarantee that our credit loss experience will continue to be consistent with historical experience or our current forecasts.

We value our inventories at the lower of the actual cost to purchase or manufacture using the first-in, first-out ("FIFO") method, or net realizable value. We review inventory quantities on hand and record a provision for excess and obsolete inventory based on historical usage, forecasts of product demand and related production requirements.

Over the last three years, our reserves for excess and obsolete inventories have ranged from 10.2% to ~~13.9%~~16.0% of gross inventory. We believe our reserve level is appropriate considering the quantities and quality of the inventories.

Actuarial assumptions are used in determining pension income and expense and our ~~pension~~defined benefit ~~obligation.~~obligations. We utilize actuaries from consulting companies in each applicable country to develop our discount rates, ~~that match~~matching high-quality bonds currently available and expected to be available during the period to maturity of the pension benefit in order to provide the necessary future cash flows to pay the accumulated benefits when due. After considering the recommendations of our actuaries, we have assumed a discount rate, expected rate of return on plan assets, and a rate of compensation increase in determining our annual pension income and expense and

the projected benefit obligation. During the fourth quarter of each year, we review our actuarial assumptions in light of current economic factors to determine if the assumptions need to be adjusted. Changes in the actuarial assumptions could have a material effect on our results of operations.

In February 2020, the CTS Board of Directors authorized management to explore termination of ~~our U.S. based~~the U.S.-based pension plan ("Plan") ~~at management's discretion,~~, subject to certain conditions. On June 1, 2020, we entered into the Fifth Amendment to the Plan whereby we set an effective termination date for the Plan of July 31, 2020. ~~The Plan termination process is expected to take twelve to eighteen months and requires certain approvals~~In February 2021, we received a determination letter from ~~both~~ the Internal Revenue Service that allowed us to proceed with the termination process for the Plan. During the second quarter of 2021, the Company offered the option of receiving a lump sum payment to eligible participants with vested qualified Plan benefits in lieu of receiving monthly annuity payments. Approximately 365 participants elected to receive the settlement, and ~~Pension Benefit Guaranty Corporation. Once we receive such approvals, an insurance company will be selected~~lump sum payments of approximately $35,594 were made from Plan assets to ~~purchase annuities and fulfill~~these participants in June 2021.

As required under U.S. GAAP, the Company recognizes a settlement gain or loss when the ~~obligations~~aggregate amount of lump-sum distributions to participants equals or exceeds the sum of the ~~Plan including administering payments~~service and interest cost components of the net periodic pension cost. The amount of settlement gain or loss recognized is the pro rata amount of the existing unrealized gain or loss immediately prior to ~~participants.~~ the settlement. In general, both the projected benefit obligation and fair value of plan assets are required to be remeasured in order to determine the settlement gain or loss.

Upon the partial settlement of the pension ~~liabilities, we will reclassify~~liability due to the lump sum offering in the second quarter of 2021, the Company recognized a non-cash and non-operating settlement charge of $20,063 related to pension losses, ~~currently~~reclassified from accumulated other comprehensive loss to other (income) expense in the Company's Condensed Consolidated Statements of (Loss) Earnings.

As a result of the final settlement of the pension liability with the purchase of annuities, we reclassified the remaining related unrecognized pension losses of $106,206 that were previously recorded in accumulated other comprehensive loss ~~into earnings. We do not expect any cash contributions from the Company~~ to the Condensed Consolidated Statements of (Loss) Earnings.

The Plan assets of $50,638 as ~~a result~~ of ~~this termination because plan~~September 30, 2021, will remain in the Plan until final administrative tasks are completed. This process is expected to be completed in the first quarter of 2022, whereby the Plan assets ~~exceed estimated liabilities.~~will liquidate and revert to CTS. At that time the funds will be subject to income and excise taxes. We continue to evaluate potential plans to optimize tax implications as well as the use of the surplus cash.

Goodwill of a reporting unit is tested for impairment annually, or more frequently if an event occurs or circumstances change that would more-likely-than-not reduce the fair value of a reporting unit below its carrying amount. Examples of such events or circumstances include, but are not limited to, the following:

If we believe that one or more of the above indicators of impairment have occurred, we perform an impairment test. We have the option to perform a qualitative assessment (commonly referred to as "step zero" test) to determine whether further quantitative analysis for impairment of goodwill and indefinite-lived intangible assets is necessary. The qualitative assessment includes a review of macroeconomic conditions, industry and market considerations, internal cost factors, and our own overall financial and share price performance, among other factors. If, after assessing the totality of events or circumstances we determine that it is not more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, we do not need to perform a quantitative analysis.

If a quantitative assessment is required, we estimate the fair value of each reporting unit using a combination of discounted cash flow analysis and market-based valuation methodologies. Determining fair value using a quantitative approach requires significant judgment, including judgments about projected revenues, ~~operating expenses, working capital investment, capital expenditures, and~~ cash flows over a multi-year ~~period.~~period, discount rates and estimated valuation multiples. The discount rate applied to our forecasts of future cash flows is based on our estimated weighted average cost of capital. In assessing the reasonableness of our determined fair values, we evaluate our results against our market capitalization. Changes in these estimates and assumptions could materially affect the determination of fair value and impact the goodwill impairment assessment.

Our latest assessment was performed using a ~~qualitative~~quantitative approach as of October 1, ~~2019,~~2020, and we determined that it was likely that the fair values of our reporting units were more than their carrying amounts, and therefore no impairment charges were recorded. We will monitor future results and will perform a test if indicators trigger an impairment review. ~~At this time, we have not deemed the impact that the current economic environment has or is expected to have on our business to be a triggering event for impairment purposes.~~

We evaluate the impairment of identifiable intangibles and other long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors considered that may trigger an impairment review consist of, but are not limited to, the following:

If we believe that one or more indicators of impairment have occurred, we perform a recoverability test by comparing the carrying amount of an asset or asset group to the sum of the undiscounted cash flows expected to result from the use and the eventual disposition of the asset or asset group. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value. ~~We recorded a charge~~No indicators of ~~$2,200~~impairment were identified during the ~~third~~ quarter ~~due to the impairment of a specific asset group as a result of the restructuring actions being taken.~~ ended September 30, 2021.

U.S. GAAP requires a liability to be recorded for contingencies when it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated. Significant judgment is required to determine the existence and amounts of our environmental, legal and other contingent liabilities. We regularly consult with attorneys and consultants to determine the relevant facts and circumstances before we record a liability. Changes in laws, regulatory orders, cost estimates, participation of other parties, timing of payments, input of attorneys and consultants, or other circumstances may have a material impact on the recorded liability.

Our income tax expense, deferred tax assets and liabilities, and liabilities for unrecognized tax benefits reflect management’s best estimate of current and future taxes to be paid. We are subject to income taxes in the United States and numerous foreign jurisdictions. Significant judgments and estimates are required in the determination of consolidated income tax expense.

Deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements, which will result in taxable or deductible amounts in the future. In evaluating our ability to recover our deferred tax assets in the jurisdiction from which they arise, we consider all available positive and negative evidence, including

scheduled reversals of deferred tax liabilities, projected future taxable income, tax-planning strategies, and results of recent operations. The assumptions about future taxable income require the use of significant judgment and are consistent with the plans and estimates we are using to manage our underlying businesses.

The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in a multitude of jurisdictions across our global operations. Accounting Standards Codification ~~(ASC)~~(“ASC”) No. 740 states that a tax benefit from an uncertain tax position may be recognized when it is more-likely-than-not that the position will be sustained upon examination, including resolution of any related appeals or litigation processes, on the basis of its technical merits. We record unrecognized tax benefits as liabilities in accordance with ASC 740 and adjust these liabilities when our judgment changes as a result of the evaluation of new information not previously available. Because of the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from our current estimate of the unrecognized tax benefit liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which new information is available.

Our practice is to recognize interest and penalties related to income tax matters as part of income tax expense.

Following the enactment of the 2017 Tax Cut and Jobs Act and the associated one-time transition tax, in general, repatriation of foreign earnings to the U.S. can be completed with no incremental U.S. ~~Tax.~~tax. However, there are limited other taxes that continue to apply such as foreign withholding and certain state taxes. The ~~company~~Company records a deferred ~~tax~~ liability for the estimated foreign earnings and state tax cost associated with the undistributed foreign earnings that are not permanently reinvested.

Our net sales to customers representing at least 10% of total net sales is as follows:

	Three months ended						Nine months ended						Three months ended						Nine months ended
	September 30,			September 30,			September 30,			September 30,			September 30,			September 30,			September 30,			September 30,
	2020			2019			2020			2019			2021			2020			2021			2020
Cummins Inc.		11.8	%		14.9	%		12.8	%		17.2	%		14.3	%		11.8	%		14.8	%		12.8	%
Toyota Motor Corporation		14.4	%		11.3	%		12.7	%		11.2	%		10.0	%		14.4	%		12.3	%		12.7	%

This document contains statements that are, or may be deemed to be, ~~forward‑looking~~forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These ~~forward‑looking~~forward-looking statements include, but are not limited to, any financial or other guidance, statements that reflect our current expectations concerning future results and events, and any other statements that are not based solely on historical fact. ~~Forward‑looking~~Forward-looking statements are based on ~~management’s~~management's expectations, certain assumptions and currently available information. Readers are cautioned not to place undue reliance on these ~~forward‑looking~~forward-looking statements, which speak only as of the date hereof and are based on various assumptions as to future events, the occurrence of which necessarily are subject to uncertainties. These ~~forward‑looking~~forward-looking statements are made subject to certain risks, uncertainties and other factors, which could cause our actual results, performance or achievements to differ materially from those presented in the ~~forward‑looking~~forward-looking statements. Examples of factors that may affect future operating results and financial condition include, but are not limited to: the ultimate impact of the COVID-19 pandemic on our business, results of operations or financial condition, including, without limitation, supply chain disruptions; changes in the economy generally and in respect to the business in which CTS operates; unanticipated issues in integrating acquisitions; the results of actions to reposition our business; rapid technological change; general market conditions in the ~~automotive, communications,~~transportation, telecommunications, and ~~computer~~information technology industries, as well as conditions in the industrial, ~~defense~~aerospace and ~~aerospace,~~defense, and medical markets; reliance on key customers; unanticipated public health crises, natural disasters or other events; environmental compliance and remediation expenses; the ability to protect our intellectual property; pricing pressures and demand for our products; ~~unanticipated developments that could occur with respect to contingencies such as litigation and environmental matters as well as any product liability claims;~~ and risks associated with our international operations, including trade and tariff barriers, exchange rates and political and geopolitical risks. Many of these, and other risks and uncertainties, are discussed in further detail in Item 1A. of ~~CTS'~~our Annual Report on Form ~~10‑K for the fiscal year ended December 31, 2019.~~10-K. We undertake no obligation to publicly update our ~~forward‑looking~~forward-looking statements to reflect new information or events or circumstances that arise after the date hereof, including market or industry changes.

For a discussion of current market conditions resulting from the COVID-19 pandemic, refer to Part I, Item 2, "Management's Discussion and Analysis of Financial ~~Condition and Results of Operations” and to Part II, Item 1A, "Risk Factors”.~~Condition” hereof.

There have been no other material changes in our market risk ~~since~~from the disclosure contained in our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q were effective in providing reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within CTS ~~Corporation~~ have been detected.

There were no changes in our internal control over financial reporting for the quarter ended September 30, ~~2020~~2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

From time to time we are involved in litigation with respect to matters arising from the ordinary conduct of our business, and currently certain claims are pending against us. In the opinion of management, we believe we have established adequate accruals pursuant to U.S. generally accepted accounting principles for our expected future liability with respect to pending lawsuits, claims and proceedings, where the nature and extent of any such liability can be reasonably estimated based on presently available information. However, there can be no assurance that the final resolution of any existing or future lawsuits, claims or proceedings will not have a material adverse effect on our business, results of operations, financial condition, or cash flows.

See Note ~~10 "Contingencies"~~11 "Commitments and Contingencies" in the Notes to the Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

~~The COVID-19 pandemic is adversely affecting, and is expected~~There have been no significant changes to ~~continue to adversely affect,~~ our ~~operations, supply chains and distribution systems, and results of operations. We have experienced disruptions~~risk factors from those contained in ~~production and supply due to mandated facility closures, labor capacity restrictions, and unpredictable fluctuations in demand~~our Annual Report on Form 10-K for ~~our products. We remain cautious about~~ the potential impact on our operations in the next several quarters. The pandemic could lead to a continued disruption of economic activity and the impact on our consolidated results of operations, financial position and cash flows could be material.year ended December 31, 2020.

On ~~February 7, 2019~~May 13, 2021, the Board of Directors authorized a stock repurchase program with a maximum dollar limit of ~~$25~~$50 million. This program authorizes us to make repurchases of our common stock from time to time on the open market, but does not obligate us to make repurchases, and it has no expiration date.

The authorization of the stock repurchase program replaced the stock repurchase program authorized by the Board of Directors on February 7, 2019.

Total Number

Maximum Dollar

of Shares

Value of Shares

Purchased as

That May Yet By

Total Number

Part of Publicly

Purchased Under

of Shares

Average Price

Announced

Publicly Announced

Purchased

Paid per Share

Programs

Plans or Programs

July 1, 2020 through July 31, 2020

—

$
—

—

$
5,740

August 1, 2020 through August 31, 2020

—

$
—

—

$
5,740

September 1, 2020 through September 30, 2020

—

$
—

—

$
5,740

Total

—

$
—

—

					Total Number		Maximum Dollar
					of Shares		Value of Shares
					Purchased as		That May Yet By
	Total Number				Part of Publicly		Purchased Under
	of Shares		Average Price		Announced		Publicly Announced
	Purchased		Paid per Share		Programs		Plans or Programs
July 1, 2021 through July 31, 2021		37,400	$	34.23		37,400	$	48,720
August 1, 2021 through August 31, 2021		34,669	$	34.81		34,669	$	47,513
September 1, 2021 through September 30, 2021		75,966	$	32.28		75,966	$	45,061
Total		148,035	$	33.36		148,035

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.

4925 Indiana Avenue
Lisle IL		60532
(Address of principal executive offices)		(Zip Code)

Title of Each Class		Trading Symbol(s)		Name of Each Exchange on Which Registered
Common stock, without par value		CTS		New York Stock Exchange

			Page

PART I. FINANCIAL INFORMATION

	Item 1.	Financial Statements	3

		Condensed Consolidated Statements of (Loss) Earnings (Unaudited) For the Three and Nine Months Ended September 30, ~~2020~~2021 and September 30, ~~2019~~2020	3

		Condensed Consolidated Statements of Comprehensive Earnings (Unaudited) For the Three and Nine Months Ended September 30, ~~2020~~2021 and September 30, ~~2019~~2020	4

		Condensed Consolidated Balance Sheets As of September 30, ~~2020~~2021 (Unaudited) and December 31, ~~2019~~2020	5

		Condensed Consolidated Statements of Cash Flows (Unaudited) For the Nine Months Ended September 30, ~~2020~~2021 and September 30, ~~2019~~2020	6

		Condensed Consolidated Statements of Shareholder's Equity (Unaudited) For the Three and Nine Months Ended September 30, ~~2020~~2021 and September 30, ~~2019~~2020	7

		Notes to Condensed Consolidated Financial Statements ‑ (Unaudited)	9

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2927

	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	3836

	Item 4.	Controls and Procedures	3836

PART II. OTHER INFORMATION

	Item 1.	Legal Proceedings	4037

	Item 1A.	Risk Factors	4037

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4037

	Item 6.	Exhibits	4138

SIGNATURES			4239

	Consideration Paid
Cash paid, net of cash acquired of $470	$	8,221
Contingent consideration		2,000
Purchase price	$	10,221

	Fair Values at December 30, 2020
Current assets	$	2,551
Property, plant and equipment		67
Other assets		14
Goodwill		3,321
Intangible assets		5,340
Fair value of assets acquired		11,293
Less fair value of liabilities acquired		(1,072	)
Purchase price	$	10,221

	Carrying Value		Weighted Average Amortization Period
Customer lists/relationships	$	5,200		11.0
Technology and other intangibles		140		3.0
Total	$	5,340

	Domestic Pension Plans						Foreign Pension Plans
	Three Months Ended						Three Months Ended
	September 30,			September 30,			September 30,			September 30,
	2020			2019			2020			2019
Service cost	$	0		$	0		$	8		$	9
Interest cost		1,443			1,931			6			8
Expected return on plan assets⁽¹⁾		(2,454	)		(3,046	)		(3	)		(4	)
Amortization of loss		1,622			1,311			44			41
Total expense, net	$	611		$	196		$	55		$	54

	As of
	September 30, 2020
	Gross Carrying Amount		Accumulated Amortization			Net Amount
Customer lists/relationships	$	92,194	$	(42,753	)	$	49,441
Technology and other intangibles		47,925		(21,240	)		26,685
In process research and development		2,200		(2,200	)		—
Other intangible assets, net	$	142,319	$	(66,193	)	$	76,126
Amortization expense for the three months ended September 30, 2020			$	2,253
Amortization expense for the nine months ended September 30, 2020			$	6,816

	As of
	December 31, 2019
	Gross Carrying Amount		Accumulated Amortization			Net Amount
Customer lists/relationships	$	92,194	$	(38,682	)	$	53,512
Technology and other intangibles		47,925		(18,422	)		29,503
In process research and development		2,200		—			2,200
Other intangible assets, net	$	142,319	$	(57,104	)	$	85,215
Amortization expense for the three months ended September 30, 2019			$	1,999
Amortization expense for the nine months ended September 30, 2019			$	5,381

	Amortization expense
2020	$	2,243
2021		8,893
2022		8,657
2023		6,651
2024		6,489
Thereafter		43,193
Total amortization expense	$	76,126

	As of
	December 31, 2020
	Gross Carrying Amount		Accumulated Amortization			Net Amount
Customer lists/relationships	$	97,355	$	(44,002	)	$	53,353
Technology and other intangibles		47,301		(21,533	)		25,768
Other intangible assets, net	$	144,656	$	(65,535	)	$	79,121
Amortization expense for the three months ended September 30, 2020			$	2,253
Amortization expense for the nine months ended September 30, 2020			$	6,816

	Amortization expense
2021	$	2,348
2022		9,176
2023		7,170
2024		7,008
2025		6,787
Thereafter		39,747
Total amortization expense	$	72,236

	Total
Goodwill as of December 31, 2020	$	109,497
Decrease from purchase accounting adjustments		(129	)
Increase due to acquisition		430
Goodwill as of September 30, 2021	$	109,798

			Actual costs
	Planned		incurred through
June 2016 Plan	Costs		September 30, 2020
Workforce reduction	$	3,075	$	3,312
Building and equipment relocation		9,025		10,530
Other charges⁽¹⁾		1,300		2,156
Total restructuring charges	$	13,400	$	15,998

Description	Grant Date	Vesting Year	Vesting Dependency	Target Units Outstanding		Maximum Number of Units to be Granted
2018 - 2020 Performance RSUs	February 8, 2018	2020	35% RTSR, 35% sales growth, 30% operating cash flow		22,082		44,164
2018 - 2020 Performance RSUs	February 16, 2018	2020	35% RTSR, 35% sales growth, 30% operating cash flow		31,820		63,640
2019 - 2021 Performance RSUs	February 7, 2019	2021	35% RTSR, 35% sales growth, 30% operating cash flow		50,456		100,912
2019 Supplemental Performance RSUs	February 7, 2019	2021	Succession Planning Targets		6,945		13,890
2020 - 2022 QTI Performance RSUs	September 24, 2019	2022	50% EBITDA growth, 50% Sales growth		1,750		3,500
2020 - 2022 Performance RSUs	February 6, 2020	2022	25% RTSR, 40% sales growth, 35% operating cash flow		63,006		126,012
Focus 2025 Performance RSUs	April 23, 2020	2024	Cumulative revenues of $750 million over a trailing four-quarter period		54,000		54,000
Total					230,059		406,118

				Quoted
				Prices
	(Liability) Asset			in Active		Significant
	Carrying			Markets for		Other			Significant
	Value at			Identical		Observable			Unobservable
	September 30,			Instruments		Inputs			Inputs
	2021			(Level 1)		(Level 2)			(Level 3)
Interest rate swaps	$	(1,410	)	$	—	$	(1,410	)	$	—
Foreign currency hedges	$	474		$	—	$	474		$	—
Contingent consideration	$	(1,350	)	$	—	$	—		$	(1,350	)

				Quoted
				Prices
	Liability			in Active		Significant
	Carrying			Markets for		Other			Significant
	Value at			Identical		Observable			Unobservable
	September 30,			Instruments		Inputs			Inputs
	2020			(Level 1)		(Level 2)			(Level 3)
Interest rate swaps	$	(2,460	)	$	—	$	(2,460	)	$	—
Foreign currency hedges	$	(615	)	$	—	$	(615	)	$	—

			Quoted
			Prices
	Asset		in Active		Significant
	Carrying		Markets for		Other		Significant
	Value at		Identical		Observable		Unobservable
	December 31,		Instruments		Inputs		Inputs
	2019		(Level 1)		(Level 2)		(Level 3)
Interest rate swaps	$	4	$	—	$	4	$	—
Foreign currency hedges	$	580	$	—	$	580	$	—

	Contingent
	Consideration
Balance at December 31, 2020	$	2,000
Settled in cash		(500	)
Reclassified to payable in accrued expenses and other liabilities		(150	)
Balance at September 30, 2021	$	1,350
Less current portion in accrued expenses and other liabilities		(1,200	)
Total long-term portion in other long-term obligations	$	150

	Operating Leases⁽¹⁾
2020	$	1,183
2021		4,728
2022		4,589
2023		4,213
2024		4,075
Thereafter		16,950
Total	$	35,738
Less: interest		(8,842	)
Present value of lease liabilities	$	26,896

	Consideration Paid
Cash paid, net of cash acquired of $567	$	72,850
Contingent consideration		1,056
Purchase price	$	73,906

	Fair Values at July 31, 2019
Current assets	$	6,221
Property, plant and equipment		2,567
Other assets		29
Goodwill		34,999
Intangible assets		32,800
Fair value of assets acquired		76,616
Less fair value of liabilities acquired		(2,710	)
Purchase price	$	73,906



(31)(a)	Certification pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002.

(31)(b)	Certification pursuant to Section 302 of the Sarbanes‑Oxley Act of 2002.

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

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

101.1	The following information from CTS Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, ~~2020~~2021 formatted in Inline XBRL: (i) Condensed Consolidated Statements of (Loss) Earnings for the three and nine months ended September 30, ~~2020~~2021 and ~~2019;~~2020; (ii) Condensed Consolidated Statements of Comprehensive Earnings for the three and nine months ended September 30, ~~2020~~2021 and ~~2019;~~2020; (iii) Condensed Consolidated Balance Sheets at September 30, ~~2020~~2021 and December 31, ~~2019;~~2020; (iv) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, ~~2020~~2021 and ~~2019;~~2020; (v) Condensed Consolidated Statements of Shareholders’ Equity for the three and nine months ended September 30, ~~2020~~2021 and ~~2019;~~2020; (vi) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text and including detailed tags.

104	The cover page from this Current Report on Form 10-Q formatted as inline XBRL

CTS Corporation		CTS Corporation

/s/ ~~William~~Thomas M. ~~Cahill~~White		/s/ Ashish Agrawal
~~William~~Thomas M. ~~Cahill~~White		Ashish Agrawal
~~Chief~~Corporate Controller (Principal Accounting ~~Officer~~Officer)		Vice President and Chief Financial Officer (Principal Financial Officer)
~~(Principal Accounting Officer)~~		~~(Principal Financial Officer)~~

Dated: October ~~29, 2020~~27, 2021		Dated: October ~~29, 2020~~27, 2021

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company