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<SEC-DOCUMENT>0000026058-03-000030.txt : 20030826
<SEC-HEADER>0000026058-03-000030.hdr.sgml : 20030826
<ACCEPTANCE-DATETIME>20030826161639
ACCESSION NUMBER:		0000026058-03-000030
CONFORMED SUBMISSION TYPE:	424B5
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20030826

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			CTS CORP
		CENTRAL INDEX KEY:			0000026058
		STANDARD INDUSTRIAL CLASSIFICATION:	ELECTRONIC COMPONENTS & ACCESSORIES [3670]
		IRS NUMBER:				350225010
		STATE OF INCORPORATION:			IN
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		424B5
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-90697
		FILM NUMBER:		03866782

	BUSINESS ADDRESS:	
		STREET 1:		905 WEST BOULEVARD NORTH
		CITY:			ELKHART
		STATE:			IN
		ZIP:			46514
		BUSINESS PHONE:		5742937511

	MAIL ADDRESS:	
		STREET 1:		905 W BLVD NORTH
		CITY:			ELKHART
		STATE:			IN
		ZIP:			46514
</SEC-HEADER>
<DOCUMENT>
<TYPE>424B5
<SEQUENCE>1
<FILENAME>prossupp4.htm
<DESCRIPTION>PROSPECTUS SUPPLEMENT NO. 4
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     <!-- Control Number: 12                                                               -->
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     <!-- Firm Name:      CTS Corporation                                                  -->
     <TITLE>Prospectus Supplement No. 4</TITLE>
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<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Filed Pursuant to Rule
424(b)(5) <BR>Registration Statement No. 333-90697 </B></FONT></P>

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<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PROSPECTUS SUPPLEMENT
</FONT></H1>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Prospectus Supplement
No. 4 </FONT></H1>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(To Prospectus Dated
December 10, 1999) </FONT></H1>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>CTS CORPORATION </FONT></H1>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1,000,000 Shares </FONT></H1>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Common Stock </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
are offering all of the 1,000,000 shares of our common stock being offered by this
prospectus supplement to an Institutional Investor who has
agreed to purchase these shares of our common stock at an aggregate price of $10,690,500,
or about $10.69 per share. We estimate that our net proceeds of this offering will be
approximately $10,685,500, after deducting our estimated offering expenses. We expect to
deliver the shares against payment on August 27,
2003. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
common stock is quoted on the New York Stock Exchange under the symbol &#147;CTS.&#148; On
August 25, 2003, the last reported sale price of our common stock as reported by the New
York Stock Exchange was $11.69 per share. The common stock sold under this prospectus
supplement and the accompanying prospectus is listed on the New York Stock Exchange. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You
should read this prospectus supplement and the accompanying prospectus carefully before
you invest. Both documents contain information you should consider before making your
investment decision. </FONT></P>

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<P ALIGN=CENTER>_________________ </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Investing
in our common stock involves significant risks. You should carefully consider the risk
factors beginning on page S-2 of this prospectus supplement.</B> </FONT></P>

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<P ALIGN=CENTER>_________________ </P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Neither
the Securities and Exchange Commission nor any state securities commission has approved or
disapproved of these securities or determined if this prospectus supplement or the
accompanying prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.</B> </FONT></P>

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<P ALIGN=CENTER>_________________ </P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>This prospectus
supplement is dated August 26, 2003.  </FONT></P>





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<A NAME="warning"></A>

<A NAME="tableofcontents"></A>

<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>TABLE OF CONTENTS</FONT></H1>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH=600 ALIGN="CENTER">

<TR VALIGN="TOP">
     <TD WIDTH="90%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><A HREF="#warning">A Warning About Forward-Looking Statements</A></FONT></TD>
     <TD ALIGN="RIGHT" WIDTH="10%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">S-1</FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><A HREF="#risk">Risk Factors</A></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">S-2</FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><A HREF="#proceeds">Use Of Proceeds</A></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">S-7</FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><A HREF="#description">Description Of Stock</A></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">S-7</FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><A HREF="#distribution">Plan Of Distribution</A></FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">S-11</FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><A HREF="#general">General</A></FONT></TD>
    <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">S-12</FONT></TD></TR>
</TABLE>


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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>A WARNING ABOUT
FORWARD-LOOKING STATEMENTS </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
prospectus supplement and the accompanying prospectus contain &#147;forward-looking
statements&#148; within the meaning of the securities laws. These forward-looking
statements are subject to a number of risks and uncertainties, many of which are beyond
our control. All statements other than statements of historical facts included or
incorporated by reference in this prospectus supplement and the accompanying prospectus
regarding our strategy, future operations, financial position, estimated revenues,
projected costs, prospects, plans and objectives of management are forward-looking
statements. When used or incorporated by reference in this prospectus supplement and the
accompanying prospectus, the words &#147;will,&#148; &#147;believe,&#148;
&#147;anticipate,&#148; &#147;plan,&#148; &#147;intend,&#148; &#147;estimate,&#148;
&#147;expect,&#148; &#147;project&#148; and similar expressions are intended to identify
forward-looking statements, although not all forward-looking statements contain these
identifying words. Although we believe that our plans, intentions and expectations
reflected in or suggested by any forward-looking statements are reasonable, we can give no
assurance that these plans, intentions or expectations will be achieved. Actual results
may differ materially from those stated in these forward-looking statements due to a
variety of factors, including those described under &#147;Risk Factors.&#148; </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
cannot guarantee that the results and events contemplated by forward-looking information
will in fact occur, and you should not rely unduly on these forward-looking statements. We
do not undertake any obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise. </FONT></P>

<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2> S-1</FONT></P>

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<A NAME="risk"></A>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><A HREF="#tableofcontents">Table of Contents </A></FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>RISK FACTORS </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Investing
in our common stock involves significant risks. Before making an investment, you should
read and carefully consider the risks and uncertainties described below, as well as the
other information included in this prospectus supplement and the accompanying prospectus.
The risks and uncertainties we have described are not the only ones we face. Additional
risks and uncertainties not currently known to us or that we currently consider immaterial
may also affect our business operations. If any of the following risks actually occur, our
business, results of operations and financial conditions could be materially adversely
affected, and you could lose all or part of your investment.</I> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>We may be unable to keep up with
rapid technological changes which could make some of our products or processes obsolete
before we realize a return on our investment.</B> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
technologies relating to our research and development activities have undergone rapid and
significant technological development. Specifically, the market for products in the
communications industry is characterized by technological change, frequent new product
introductions and enhancements, changes in customer requirements and emerging industry
standards. The introduction of products embodying new technologies and the emergence of
new industry standards could render our existing products obsolete and unmarketable before
we can recover any or all of our research, development and commercialization expenses or
the capital invested. The life cycles of our products vary and are difficult to estimate. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
future success will depend upon our ability to develop and introduce new products and
product enhancements on a timely basis that keep pace with technological developments and
emerging industry standards and address increasingly sophisticated requirements of our
customers. We may be unsuccessful in developing and marketing new products or product
enhancements that respond to technological changes or evolving industry standards. We also
cannot assure you that we will not experience difficulties that could delay or prevent the
successful development, introduction and marketing of these new products or product
enhancements, or that our new products or product enhancements will adequately meet the
requirements of the marketplace and achieve market acceptance. If we are unable, for
technological or other reasons, to develop and market new products or product enhancements
in a timely and cost-effective manner, our business, results of operations and financial
condition could be materially adversely affected. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Because a substantial portion of
our sales comes from customers in the automotive, communications and computer industries,
we are susceptible to trends and factors affecting those industries.</B> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net
sales to the automotive, communications and computer industries represent a substantial
portion of our revenues. Factors negatively affecting these industries and the demand for
their products, including the current economic slowdown, also negatively affect our
business, results of operations, financial condition and stock price. Any adverse
occurrence, including industry slowdown, recession, political instability, armed
hostilities, terrorism, excessive inflation, prolonged disruptions in one or more of our
customers&#146; production, or labor disturbances, that results in significant decline in
the volume of sales in these industries, or in an overall downturn in the business and
operations of our customers in these industries, could have a material adverse effect on
our business, results of operations and financial condition. For example, the trend toward
consolidation in the communications and computer industries could result in a lower level
of acceptance of our products, reduced product requirements, purchasing delays by the
combined entity or the loss of a customer. Also, the automotive industry is generally
highly unionized and some of our customers have, in the past, experienced labor
disruptions. Furthermore, the automotive industry is highly cyclical in nature and
sensitive to changes in general economic conditions. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Because a significant portion of
our sales currently comes from a small number of customers, any decrease in orders from
these customers could adversely affect our operating results.</B> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
depend on a small number of customers for a large portion of our business, and changes in
the level of our customers&#146; orders have, in the past, had a significant impact on our
operating results. If a major customer reduces the amount of business it does with us,
there would be an adverse impact on our operating results. Our 15 largest customers
represent a substantial portion of our sales. Our two largest customers in recent periods
were Hewlett Packard Company (Compaq Computer Corporation prior to acquisition by Hewlett
Packard in May 2002) and Motorola, Inc. </FONT></P>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2> S-2</FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
expect to continue to depend on sales to our major customers. Some of our customers are
increasingly outsourcing their production and other activities, resulting in a greater
emphasis being placed on cost while maintaining an emphasis on quality. Since it is
difficult to replace lost business on a timely basis, it is likely that our operating
results would be adversely affected if one or more of our major customers were to cancel,
delay or reduce a large amount of business with us in the future. If one or more of our
customers were to become insolvent or otherwise unable to pay for our products and/or
services, our operating results, financial condition and cash flows could be adversely
affected. </FONT></P>

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<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We face risks resulting
from the global economic slowdown. </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
global economic downturn has slowed demand in the CTS-served automotive, communications
and computer markets. These served markets for our electronic components and sensors and
electronics manufacturing services products have softened and may continue to soften. As a
result, our revenues and earnings have been negatively affected and this softening demand
may create additional pricing pressures which could further affect our revenues and
earnings. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Further
deterioration of revenues and earnings, beyond current levels, could have a negative
effect on our business, results of operations, financial condition and cash flows. This
could also have a negative effect on the price of our common stock and could also make it
difficult for us to service our debt and to comply with the covenants in our credit
facility. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Because
we have significant non-U.S. operations, our results of operation and financial condition
could be adversely affected by economic, political, regulatory and other factors existing
in non-U.S. countries in which we operate. These international operations are subject to
adverse, inherent risks including: </FONT></P>


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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>political
and economic instability in countries in which we have manufacturing facilities; </FONT></TD>
</TR>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>expropriation; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>changes
in government regulation; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>exposure
to different legal standards; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>less
favorable intellectual property laws; </FONT></TD>
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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>currency
controls; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>fluctuations
in exchange rates. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>increases
in the duties and taxes we pay; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>high
levels of inflation or deflation; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>greater
difficulty in collecting our accounts receivable and longer payment cycles; and </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>changes
in labor conditions and difficulties in staffing and managing our non-U.S. operations. </FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition, these same factors may also place us at a competitive disadvantage to some of
our non-U.S. competitors. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>We face risks relating to the
protection of our intellectual property. </B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
success of our business depends, in part, upon our ability to protect trade secrets,
copyrights, and patents, obtain or license patents and operate without infringing on the
rights of others. We rely on a </FONT></P>



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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2> S-3</FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>combination of trade secrets,
copyrights, patents, nondisclosure agreements and technical measures to protect our
proprietary rights in our products and technology. The steps taken by us in this regard
may not be adequate to prevent misappropriation of our technology, and our competitors may
independently develop technologies that are substantially equivalent or superior to our
technology. In addition, the laws of some non-U.S. countries do not protect our
proprietary rights to the same extent as do the laws of the United States. Although we
continue to evaluate and implement protective measures, we cannot assure you that these
efforts will be successful. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
believe that patents will play an increasingly important role in our commercial business.
However, we cannot assure you that any issued patent will provide us with any competitive
advantages nor can we assure you that the patents will not be challenged by third parties
or that the patents of others will not adversely affect our ability to do business. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There
is also a risk that infringement claims may be brought against us or our customers in the
future. If an infringement claim is successfully asserted, we may be required to spend
significant time and money to develop a product or process that does not infringe upon the
rights of that other person or to obtain licenses for the technology, process or
information from the owner. We may not be successful in the development, or licenses may
not be available on commercially acceptable terms, if at all. </FONT></P>

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<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>We may be unable to
compete effectively against larger competitors. </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
operate in highly competitive industries. We compete against many domestic and non-U.S.
companies, some of which have substantially greater research and development, marketing,
manufacturing and financial resources than we do. Although no single competitor competes
with us across all product lines, we compete with a variety of suppliers with respect to
different subsets of our products. Additionally, many of our customers are seeking to
consolidate their business among one or more preferred or qualified suppliers. If any
customer becomes dissatisfied with our prices, quality or timeliness of delivery, among
other things, it could award future business or, in an extreme case, move existing
business to our competitors. Moreover, some of our customers could choose to manufacture
and develop particular components themselves rather than purchase them from us. Increased
competition could result in price reductions, reduced profit margins and loss of market
share, each of which could adversely affect our results of operations and financial
condition. In addition, certain of our competitors have also been engaged in merger and
acquisition transactions. Consolidations by competitors are likely to create entities with
increased market share, customer bases, proprietary technology and marketing expertise and
expanded sales force size. These developments may adversely affect our ability to compete
against these competitors, many of which are significantly larger and have greater
financial and other resources. We cannot assure you that our products will continue to
compete successfully with our competitors&#146; products. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Customer pressure to reduce prices
may cause reductions in sales or profit margins.</B> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Many
of our customers are under pressure to reduce the price of their products or services,
and, therefore, we expect to continue to experience pressure from our customers to reduce
the prices of our products and services. In many of our markets, average sales prices of
established products have declined in the past. We anticipate that prices will continue to
decline over time, consistent with pricing patterns in the electronics industry, which
could negatively impact our sales and/or gross profit margins. Accordingly, to remain
competitive, we believe that we must continue to develop new technologies and product
enhancements and improve manufacturing and operating efficiencies, that will offset the
impact of price declines for our products or reduce the cost of producing and delivering
our products. If we fail to do so, our results of operations and financial condition would
be adversely affected. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>We are subject to a variety of
environmental laws that expose us to potential financial liability.</B> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
operations are regulated under a number of federal, state and non-U.S. environmental and
safety laws and regulations that govern, among other things, the discharge of hazardous
materials into the air and water as well as the handling, storage and disposal of these
materials. These laws and regulations include the Clean Air Act, the Clean Water Act, the
Resource, Conservation and Recovery Act, and the Comprehensive Environmental Response,
Compensation and Liability Act, as well as analogous state and foreign laws. Compliance
with these environmental laws is a major consideration for us because we use hazardous
materials </FONT></P>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2> S-4</FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
in our manufacturing processes. In addition, because we are a generator of
hazardous wastes, we, along with any other party who arranges for the disposal of our
wastes, may be subject to financial exposure for costs associated with an investigation
and any remediation of our former and existing manufacturing sites, as well as sites at
which we have arranged for the disposal of hazardous wastes, even if we fully comply with
applicable environmental laws. If we violate environmental laws, we could be liable for
fines, damages and costs of remedial actions and could also be subject to revocation of
our environmental permits. Any revocation could require us to cease or limit production at
one or more of our facilities, thereby negatively impacting our revenues and potentially
causing our common stock price to decline. Environmental laws, including environmental
laws in the European Union and other non-U.S. countries, could also become more stringent
over time, imposing greater compliance costs and increasing risks and penalties associated
with any violation, which also could negatively impact our operating results. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>The price of our common stock has
been volatile and may continue to fluctuate significantly.</B> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
market price for our common stock has been and may continue to be volatile. From January
1, 2003 to August 25, 2003, the last sale price of our common stock ranged from a low of
$12.10. We expect our stock to continue to
be subject to fluctuations as a result of a variety of factors, including factors beyond
our control. These include: </FONT></P>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> </FONT></TD>
</TR>
</TABLE>
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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>general
U.S. and worldwide economic conditions; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>general
conditions in equity markets; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>conditions
in our industries such as competition, demand for services and technological advances; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>changes
in our customer base, including any loss of a major customer or a significant decrease in
business from a major               customer, and changes in our contracts with customers; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>introduction
and market acceptance of our customers' new products and changes in demand for our
customers' existing products; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>announcements
by us or our competitors of new products or technical innovations or of significant
acquisitions, strategic               partnerships or joint ventures; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>changes
in financial estimates by securities analysts; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>any
deviations in net revenues or in losses from levels expected by securities analysts; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>changes
in market valuations of related companies; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>future
sales of common stock; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>changes
in our revenues and earnings; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>adverse
or unfavorable publicity regarding us or our products and services; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>effectiveness
in managing our manufacturing processes and related assets, including our inventory and
fixed assets; and </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>additions
or departures of key personnel. </FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
may fail to meet the expectations of our shareholders or of security analysts at some time
in the future, and our stock price could decline as a result. </FONT></P>



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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2> S-5</FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition, sales of a substantial number of shares of our common stock in the public
market, or the appearance that such shares are available for sale, could adversely affect
the market price for our common stock. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Our credit facility contains
provisions that could materially restrict our business.</B> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Our credit facility contains a
number of significant covenants that, among other things, restrict our ability to: </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> </FONT></TD>
</TR>
</TABLE>
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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>dispose
of assets; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>incur
additional debt; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>guarantee
third-party obligations; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>repay
other debt or amend other debt instruments; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>create
liens on assets; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>enter
into capital leases; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>make
investments, loans or advances; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>make
acquisitions or engage in mergers or consolidations; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>make
capital expenditures; and </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>engage
in certain transactions with our subsidiaries and affiliates. </FONT></TD>
</TR>
</TABLE>
<BR>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition, under our credit facility, we are required to meet a number of financial ratios
and tests. Our ability to comply with these covenants may be affected by events beyond our
control. If we breach any of these covenants or restrictions, it could result in an event
of default under our credit facility. Any breach might permit our lenders to declare all
amounts owing thereunder to be due and payable, and our senior lenders could terminate
their commitments to make further extensions of credit under our credit facility.
Additionally, if we were unable to repay debt to our secured lenders, they could proceed
against the collateral securing the debt. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Anti-takeover provisions could
delay, deter or prevent a change in control.</B> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
are an Indiana corporation subject to Indiana state law. Some of these state laws could
interfere with or restrict takeover bids or other change-in-control events affecting us.
One statutory provision prohibits us, except under specified circumstances, from engaging
in certain business combinations, including any mergers, sale of assets and
recapitalizations with any shareholder who owns 10% or more of our common stock or any
affiliate of the shareholder. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have opted out of Indiana&#146;s &#147;control share acquisition&#148; provisions, which
restrict the voting rights of shares acquired in transactions which cause the beneficial
owner of the shares to exceed specified ownership thresholds. We could, however, by action
of the board of directors, elect to have those provisions apply. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition, our articles of incorporation allow us to issue up to an additional 21.9 million
shares of common stock and 25 million shares of preferred stock without shareholder
approval. The board of directors has the authority to determine the price and terms under
which the additional common or preferred stock may be issued. Issuance of this common and
preferred stock could make it more difficult for a third party to acquire control of CTS. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Also,
provisions in our articles of incorporation, bylaws, and other agreements to which we are
a party, could delay, deter or prevent a change in control of CTS. These provisions, alone
or in combination with each other and with the rights agreement described below, may
discourage transactions involving actual or potential  </FONT></P>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2> S-6</FONT></P>

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<A NAME="proceeds"></A>
<A NAME="description"></A>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><A HREF="#tableofcontents">Table of Contents </A></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
changes in control, including
transactions that otherwise could involve payment of a premium over the prevailing market
price to shareholders for their common stock. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
August 28, 1998, our board of directors adopted a shareholder rights agreement, pursuant
to which uncertificated stock purchase rights were distributed to our shareholders at a
rate of one right for each share of common stock held of record as of September 10, 1998.
The rights agreement is designed to enhance the board&#146;s ability to prevent an
acquirer from depriving shareholders of the long-term value of their investment and to
protect shareholders against attempts to acquire CTS by means of unfair or abusive
takeover tactics. However, the existence of the rights agreement may impede a takeover of
CTS not supported by the board, including a takeover that may be desired by a majority of
our shareholders or involving a premium over the prevailing stock price. </FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>USE OF PROCEEDS </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
proceeds from the sale of the common stock in this offering are estimated to be
approximately $10,685,500 after deducting our estimated offering expenses. We will apply
the net proceeds we receive from this offering to repay a portion of our revolving loans
under our new credit facility which became effective July 14, 2003. The new credit
facility will expire in July 2006 and bears interest at LIBOR plus a margin not to exceed
2.25% based on a leverage ratio schedule. </FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>DESCRIPTION OF STOCK </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
authorized capital stock is comprised of 100 million shares, consisting of 75 million
shares of common stock, without par value, and 25 million shares of preferred stock,
without par value, including 750,000 shares of Series A Junior Participating Preferred
Stock designated for potential issuance as described below. </FONT></P>

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<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Common Stock </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CTS
common stock is traded on the New York Stock Exchange under the symbol &#147;CTS.&#148;
The registrar and transfer agent is EquiServe Trust Company N.A. The holders of our common
stock are entitled to one vote for each share of common stock held of record on all
matters submitted to a vote of our shareholders. Common shareholders have no conversion,
preemptive, subscription or redemption rights. All outstanding shares of our common stock
are duly authorized, validly issued, fully paid and nonassessable. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon
satisfaction of our obligations to preferred shareholders, the common shareholders may
receive dividends when declared by the board of directors. If we liquidate, dissolve or
wind-up our business, holders of our common stock will share equally in the assets
remaining after we pay all of our creditors and satisfy all our obligations to preferred
shareholders. </FONT></P>

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<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Preferred Stock </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
are authorized to issue up to 25 million shares of preferred stock. Our board of directors
can, without approval of shareholders, issue these shares in one or more series and
determine the number of shares of each series and the rights, preferences and limitations
of each series, including dividend rights, voting rights, conversion rights, redemption
rights and any liquidation preferences, and the terms and conditions of issue. In some
cases, the issuance of preferred stock could delay, defer or prevent a change in control
of CTS and make it more difficult to remove present management, without further action by
our shareholders. Under some circumstances, preferred stock could also decrease the amount
of earnings and assets available for distribution to holders of our common stock if we
liquidate or dissolve and could also restrict or limit dividend payments to holders of our
common stock. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
board of directors has designated 750,000 shares of Series A Junior Participating
Preferred Stock for potential issuance in connection with our rights agreement described
below. We have not issued any shares of preferred stock to date, and we do not plan to
issue any shares of preferred stock other than pursuant to the rights agreement described
below.  </FONT></P>



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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2> S-7</FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><A HREF="#tableofcontents">Table of Contents </A></FONT></P>




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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<B>Indiana Business Corporation Law, Rights Agreement and the Articles of
Incorporation and Bylaws.</B> </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>General</I></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
general, our articles of incorporation and bylaws provide that: </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>the
board of directors fixes the number of directors within a specified range; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>the
existing directors will fill any vacancy or newly created directorship with any new
director; and </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>only
the chairman of the board, the board of directors or the president may call a board of
directors meeting. </FONT></TD>
</TR>
</TABLE>
<BR>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are
an Indiana corporation, and we are subject to the Indiana Business Corporation Law. Under
the laws of Indiana, the articles of incorporation generally can be amended only with the
approval of our board of directors and our shareholders. Our bylaws provide that the
articles of incorporation cannot be amended without the approval of a majority of our
board of directors. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provisions
of the Indiana Business Corporation Law, our articles of incorporation, bylaws and the
Rights Agreement described below may discourage or make more difficult the acquisition of
control of CTS through a tender offer, open market purchase, proxy contest or otherwise.
These provisions are intended to discourage or may have the effect of discouraging certain
types of coercive takeover practices and inadequate takeover bids and to encourage persons
seeking to acquire control of CTS first to negotiate with us. Our management believes that
the foregoing measures, many of which are substantially similar to the takeover-related
measures in effect for many other publicly-held companies, provide benefits by enhancing
our ability to negotiate with a person making an unfriendly or unsolicited proposal to
take over or restructure CTS. We believe that these benefits outweigh the disadvantages of
discouraging these proposals because, among other things, negotiation of these proposals
could result in an improvement of their terms. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provisions
of the Indiana Business Corporation Law, in addition to provisions of our articles of
incorporation, bylaws and Rights Agreement, address corporate governance issues, including
the rights of shareholders. Some of these provisions could hinder management changes while
others could have an anti-takeover effect. We have summarized the key provisions below. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Rights Agreement</I></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
August 28, 1998, our board of directors adopted a Rights Agreement and declared a dividend
distribution of one &#147;Right&#148; for each share of our common stock outstanding on
September 10, 1998. Each Right entitles the registered holder to purchase from us one
one-hundredth of a share of our Series A Junior Participating Preferred Stock at a
purchase price of $125.00 per Right, subject to adjustment in certain circumstances (the
&#147;Purchase Price&#148;). The description and terms of the Rights are set forth in the
Rights Agreement. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Rights are non-exercisable, non-transferable and non-separable from our common stock until
the &#147;Distribution Date,&#148; which occurs on the earlier of: </FONT></P>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>the
public announcement that a person or group of affiliated or associated persons, referred
to as an "Acquiring Person,"               has acquired, or obtained the right to
acquire, beneficial ownership of 15% or more of our then-outstanding common stock
              (the date of such public announcement being the "Share Acquisition Date") or </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ten
business days following the commencement of a tender offer or exchange offer by a person
or group of associated or               affiliated persons which would result in
beneficial ownership by such person or group of 15% or more of our
              then-outstanding common stock. </FONT></TD>
</TR>
</TABLE>
<BR>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2> S-8</FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each
share of Series A Junior Participating Preferred Stock, when issued, will be
non-redeemable and entitled to cumulative dividends and will rank junior to any series of
preferred stock senior to it. In connection with the declaration of a dividend on our
common stock, a preferential dividend will be payable on the Series A Junior
Participating Preferred Stock in an amount equal to the greater of:  </FONT></P>


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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$1.00
per share; and </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>an
amount equal to 100 times the dividend declared on the common stock, subject to
adjustment in certain circumstances. </FONT></TD>
</TR>
</TABLE>
<BR>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject
to customary anti-dilution provisions, in the event of liquidation, the holders of the
Series A Junior Participating Preferred Stock will be entitled to a preferential
liquidation payment equal to the greater of (a) 100 times the then applicable Purchase
Price for the Rights plus accrued and unpaid dividends thereon and (b) an amount equal to
100 times the liquidation payment made on the common stock, if any. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In the event, such an event is
defined in the Rights Agreement as a &#147;Flip-In Event,&#148; that </FONT></P>


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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>any
person or group becomes an Acquiring Person, </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>any
Acquiring Person or its affiliate or associate, directly or indirectly, </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>-</FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>merges
into or combines with us and we are the continuing or surviving corporation, </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>-</FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>merges
into or combines with any of our subsidiaries, </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>-</FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>in
one or more transactions, transfers cash, securities or other property to us in exchange
for, or the right to acquire,                   our capital stock or that of any of our
subsidiaries, </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>-</FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>engages
in certain transactions with us which are not at arm's length, </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>-</FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>receives
any compensation from us other than as a director or full-time employee, or </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>-</FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>receives
any financial assistance or tax credits or advantages from us or any of our subsidiaries,
or </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>-</FONT></TD>
<TD WIDTH=80%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>during
such time as there is an Acquiring Person, there is a reclassification of our securities
or we consummate a                   recapitalization or any other transaction, which in
each case has the effect of increasing by more than 1% the
                  proportionate share of any Acquiring Person or any affiliate or
associate thereof with respect to any class of our                   outstanding
securities, </FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>then each holder of a Right will have
the right to receive, upon exercise, that number of shares of our common stock as equals
the result obtained by: </FONT></P>


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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>multiplying
the Purchase Price by the number of one-hundredths of a share of Series A Junior
Participating Preferred Stock               for which a Right was exercisable prior to
the Flip-In Event, and </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>dividing
that product by 50% of the market price per share of our common stock on the date the
Flip-In Event occurs. </FONT></TD>
</TR>
</TABLE>
<BR>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
the event, such an event is defined in the Rights Agreement as a &#147;Flip-Over
Event,&#148; that at any time after any person or group becomes an Acquiring Person, </FONT></P>


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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>we
consolidate with or merge with or into any person and we are not the continuing or
surviving corporation, </FONT></TD>
</TR>
</TABLE>
<BR>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2> S-9</FONT></P>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;
</FONT></TD></TR>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>any
person consolidates with or merges with or into us and we are the continuing or surviving
corporation, but all or part               of our common stock is changed or exchanged
for stock or securities of any other person or cash or any other property, or </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>we
sell or transfer, in one or more transactions, 50% or more of our assets or earning power
to any person, </FONT></TD>
</TR>
</TABLE>
<BR>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>then each holder of a Right will have
the right to receive, upon exercise, that number of shares of common stock of such other
person as equals the result obtained by: </FONT></P>


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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>multiplying
the Purchase Price by the number of one-hundredths of a share of Series A Junior
Participating Preferred Stock               for which a Right was exercisable prior to
the Share Acquisition Date, and </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>dividing
that product by 50% of the market price per share of the common stock of such other
person on the date the               Flip-Over Event occurs. </FONT></TD>
</TR>
</TABLE>
<BR>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon
the occurrence of a Flip-In Event or a Flip-Over Event, all Rights held by any Acquiring
Person or any of its affiliates or associates, or any transferee of any of them, will
become null and void. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
general, at any time prior to the Share Acquisition Date, our board of directors may, in
its discretion, redeem the Rights in whole, but not in part, at a price of $.01 per Right.
In addition, at any time after the Distribution Date but prior to the acquisition by any
person or group of affiliated or associated persons of 50% or more of our then outstanding
shares of common stock, we may exchange all or a portion of the Rights other than any
Rights that have become void at an exchange ratio of one share of common stock per Right.
We may also amend the Rights Agreement without the approval of any holders of Rights,
except that no amendment may be made that decreases the redemption price to an amount less
than $0.01 per Right. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Rights will expire on the earliest of (a) August 27, 2008, (b) the time at which the
Rights are redeemed as provided in the Rights Agreement and (c) the time at which all
exercisable Rights are exchanged as provided in the Rights Agreement. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Rights may have certain anti-takeover effects, including deterring someone from acquiring
control of CTS in a manner or on terms not approved by our board of directors. The Rights
would not interfere with any merger or other business combination approved by our board of
directors, because the Rights may generally be redeemed by us as described above or the
Rights Agreement may be amended. </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Bylaw Provisions</I></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Indiana Business Corporation Law permits the board of directors to issue rights, options
or warrants for the purchase of shares or other securities of the corporation or any
successor in interest. Article XXI of our bylaws provides that our board of directors may
include provisions in the terms of those rights, options or warrants that, in any
transaction or proposed transaction that would result in a change in control if
consummated, require the approval of the &#147;continuing directors&#148; of the
corporation for the redemption or exchange of the rights, options or warrants or the
amendment of the corresponding contracts, warrants or instruments. The period requiring
this approval may not exceed three years after the later of: </FONT></P>


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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>the
time that the "continuing directors" no longer constitute the majority of the directors
of the corporation; or </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>there
is an "interested shareholder." </FONT></TD>
</TR>
</TABLE>
<BR>


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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Under our bylaws, a "continuing director" is defined as a director who:</FONT></P>


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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>is
not an "interested shareholder" or any affiliate, associate, representative or nominee of
an "interested shareholder" or               any affiliate of an "interested
shareholder;" and </FONT></TD>
</TR>
</TABLE>
<BR>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2> S-10</FONT></P>

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<A NAME="distribution"></A>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=2%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;  </FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD WIDTH=2%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>is
either a member of our board of directors as of the date of issuance of the rights,
options or warrants or subsequently               becomes a member of our board of
directors if his or her election or nomination was approved or recommended by a
              majority of our board of directors (including a majority of continuing
directors then on our board and excluding any               member whose election
resulted from any actual or threatened proxy or other election contest). </FONT></TD>
</TR>

</TABLE>
<BR>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Under Chapter 43 of the Indiana
Business Corporation Law, an &#147;interested shareholder&#148; is defined as any person
that is: </FONT></P>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>the
beneficial owner of 10% or more of the voting power of the corporation; or </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>&#149;</B></FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>an
affiliate or associate of the corporation who at any time within the five years preceding
the date in question was the               beneficial owner of 10% or more of the voting
power of the corporation at that time. </FONT></TD>
</TR>
</TABLE>
<BR>


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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Business Combinations</I></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Chapter
43 of the Indiana Business Corporation Law restricts certain &#147;business
combinations,&#148; including mergers, sale of assets, recapitalizations and reverse stock
splits, with interested shareholders. Under Chapter 43, a corporation cannot engage in any
business combination with an interested shareholder within five years of the date the
person became an interested shareholder unless the corporation&#146;s board of directors
approves, in advance of the person becoming an interested shareholder, either (i) the
business combination or (ii) the purchase of shares that made the person an interested
shareholder. In the absence of the board&#146;s approval, a corporation may engage in a
business combination with an interested shareholder after the date that is five years
after the date the person became an interested shareholder if either (x) the disinterested
shareholders approve the business combination (but they cannot do so until five years
after the date the person became an interested shareholder) or (y) among other things, the
consideration to be received by the disinterested shareholders in the business
combination, which must be in cash or the same form as the interested shareholder used to
acquire the largest number of his, her or its shares, is at least equal to the higher of
the highest price paid for shares by the interested shareholder or the highest market
value per share on either the date of the business combination or the date the person
became an interested shareholder. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Chapter
42 of the Indiana Business Corporation Law also contains provisions regulating
&#147;control share acquisitions,&#148; which are transactions causing the voting strength
of any person acquiring beneficial ownership of shares of a public corporation in Indiana
to meet or exceed certain threshold voting percentages (20%, 33% or 50%). Shares acquired
in a control share acquisition have no voting rights unless the voting rights are granted
by a majority vote of all outstanding shares other than those held by the acquiring person
or any officers or employee-directors of the corporation. As permitted under the Indiana
Business Corporation Law, our bylaws opt out of Chapter 42 for all control share
acquisitions after March 3, 1987. A majority of our board of directors may amend the
bylaws so that Chapter 42 would apply. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Indiana Business Corporation Law specifically authorizes directors, in considering whether
an action is for the best interest of a corporation, to consider the effects of any
corporate action on shareholders, employees, suppliers and customers of the corporation,
communities in which offices or other facilities of the corporation are located and any
other factors the directors consider pertinent. Under the Indiana Business Corporation
Law, directors may be held liable for breaches of their duties as directors only if their
actions constitute willful misconduct or if they recklessly disregard their duties. </FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PLAN OF DISTRIBUTION </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
are offering 1,000,000 shares of our common stock to an Institutional Investor pursuant
to this prospectus supplement and accompanying prospectus and
pursuant to the terms of a purchase agreement that we entered into with the Instutional Investor
on the date of this prospectus supplement. The common stock will be purchased at an
aggregate negotiated purchase price of $10,690,500, or about $10.69 per share. </FONT></P>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2> S-11</FONT></P>

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<A NAME="general"></A>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><A HREF="#tableofcontents">Table of Contents </A></FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
the purchase agreement with the Institutional Investor, we have agreed to indemnify and hold
harmless the Institutional Investor and each person who controls the Institutional Investor
against certain liabilities, including liabilities under the Securities Act of 1933,
which may be based on, among other things, any untrue statement or alleged untrue
statement of a material fact or any omission or alleged omission of a material fact,
unless made or omitted in reliance upon written information provided to us by the
Institutional Investor. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have agreed to pay certain legal fees associated with this transaction. We will not pay
any other compensation in connection with this sale of our common stock. </FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>GENERAL </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
information relating to CTS in this prospectus supplement should be read together with the
accompanying prospectus and the information in the documents incorporated by reference.
You should rely only on the information provided or incorporated by reference in this
prospectus supplement and the accompanying prospectus. We have not authorized anyone else
to provide you with different information. You should not assume that the information in
this prospectus supplement is accurate as of any date other than the date on the front of
this prospectus supplement. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any
statements made in this prospectus supplement or in a document incorporated or deemed to
be incorporated by reference in this prospectus supplement or the accompanying prospectus
will be deemed to be modified or superceded for purposes of this prospectus supplement and
the accompanying prospectus to the extent that a statement contained in this prospectus
supplement or in any other subsequently filed document which is also incorporated or
deemed to be incorporated by reference in this prospectus supplement modifies or
supercedes the statement. Any statement so modified or superceded will not be deemed,
except as so modified or superceded, to constitute a part of this prospectus supplement. </FONT></P>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2> S-12</FONT></P>

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