CTS CORP 10-Q

Item 1. Financial Statements CTS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) EARNINGS - UNAUDITED (In thousands of dollars, except per share amounts) Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, 2021 2020 2021 2020 Net sales $ 122,382 $ 113,777 $ 380,394 $ 301,049 Cost of goods sold 76,720 76,871 244,446 204,677 Gross margin 45,662 36,906 135,948 96,372 Selling, general and administrative expenses 19,922 16,883 59,184 48,310 Research and development expenses 6,454 5,723 18,170 18,653 Restructuring charges 319 1,041 551 1,416 Operating earnings 18,967 13,259 58,043 27,993 Other (expense) income: Interest expense ( 514 ) ( 857 ) ( 1,577 ) ( 2,617 ) Interest income 230 217 689 852 Other (expense) income, net ( 108,502 ) 1,617 ( 132,786 ) ( 109 ) Total other (expense) income, net ( 108,786 ) 977 ( 133,674 ) ( 1,874 ) (Loss) earnings before income taxes ( 89,819 ) 14,236 ( 75,631 ) 26,119 Income tax (benefit) expense ( 25,923 ) 3,163 ( 24,600 ) 6,381 Net (loss) earnings $ ( 63,896 ) $ 11,073 $ ( 51,031 ) $ 19,738 Loss (earnings) per share: Basic $ ( 1.97 ) $ 0.34 $ ( 1.58 ) $ 0.61 Diluted $ ( 1.97 ) $ 0.34 $ ( 1.58 ) $ 0.61 Basic weighted – average common shares outstanding: 32,379 32,268 32,365 32,331 Effect of dilutive securities — 241 — 270 Diluted weighted – average common shares outstanding: 32,379 32,509 32,365 32,601 Cash dividends declared per share $ 0.04 $ 0.04 $ 0.12 $ 0.12 See notes to unaudited condensed consolidated financial statements. 3 CTS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS ‑ UNAUDITED (In thousands of dollars) Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, 2021 2020 2021 2020 Net (loss) earnings $ ( 63,896 ) $ 11,073 $ ( 51,031 ) $ 19,738 Other comprehensive earnings (loss): Changes in fair market value of derivatives, net of tax ( 292 ) 909 100 ( 2,861 ) Changes in unrealized pension cost, net of tax 72,530 1,239 90,976 3,733 Cumulative translation adjustment, net of tax ( 10 ) 99 2 ( 54 ) Other comprehensive earnings $ 72,228 $ 2,247 $ 91,078 $ 818 Comprehensive earnings $ 8,332 $ 13,320 $ 40,047 $ 20,556 See notes to unaudited condensed consolidated financial statements. 4 CTS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands of dollars) (Unaudited) September 30, December 31, 2021 2020 ASSETS Current Assets Cash and cash equivalents $ 128,527 $ 91,773 Accounts receivable, net 78,210 80,981 Inventories, net 50,867 45,870 Other current assets 19,845 14,607 Total current assets 277,449 233,231 Property, plant and equipment, net 92,533 97,437 Operating lease assets, net 22,456 23,281 Other Assets Prepaid pension asset 50,638 56,642 Goodwill 109,798 109,497 Other intangible assets, net 72,236 79,121 Deferred income taxes 24,663 24,250 Other 2,200 2,590 Total other assets 259,535 272,100 Total Assets $ 651,973 $ 626,049 LIABILITIES AND SHAREHOLDERS’ EQUITY Current Liabilities Accounts payable $ 48,976 $ 50,489 Operating lease obligations 3,354 3,294 Accrued payroll and benefits 17,069 12,978 Accrued expenses and other liabilities 35,673 38,171 Total current liabilities 105,072 104,932 Long-term debt 50,000 54,600 Long-term operating lease obligations 22,262 23,163 Long-term pension obligations 7,114 7,466 Deferred income taxes 6,907 7,010 Other long-term obligations 3,244 5,196 Total Liabilities 194,599 202,367 Commitments and Contingencies (Note 11) Shareholders’ Equity Common stock 314,351 311,190 Additional contributed capital 40,958 41,654 Retained earnings 484,368 539,281 Accumulated other comprehensive loss ( 4,842 ) ( 95,921 ) Total shareholders’ equity before treasury stock 834,835 796,204 Treasury stock ( 377,461 ) ( 372,522 ) Total shareholders’ equity 457,374 423,682 Total Liabilities and Shareholders’ Equity $ 651,973 $ 626,049 See notes to unaudited condensed consolidated financial statements. 5 CTS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ‑ UNAUDITED (In thousands of dollars) Nine Months Ended September 30, September 30, 2021 2020 CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) earnings $ ( 51,031 ) $ 19,738 Adjustments to reconcile net (loss) earnings to net cash provided by operating activities: Depreciation and amortization 20,231 19,819 Pension and other post-retirement plan expense 131,290 2,023 Stock-based compensation 4,106 2,164 Asset impairment charges — 1,016 Restructuring non-cash charges — 300 Deferred income taxes ( 34,147 ) ( 627 ) Gain on foreign currency hedges, net of cash ( 27 ) ( 58 ) Changes in assets and liabilities, net of acquisition: Accounts receivable 2,587 2,085 Inventories ( 5,190 ) 960 Operating lease assets 825 917 Other assets ( 5,334 ) 2,446 Accounts payable ( 1,792 ) 1,423 Accrued payroll and benefits 3,810 2,928 Operating lease liabilities ( 841 ) ( 818 ) Accrued expenses and other liabilities ( 4,100 ) ( 4,826 ) Pension and other post-retirement plans ( 270 ) ( 193 ) Net cash provided by operating activities 60,117 49,297 CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ( 8,140 ) ( 10,441 ) Payments for acquisitions, net of cash acquired ( 255 ) — Net cash used in investing activities ( 8,395 ) ( 10,441 ) CASH FLOWS FROM FINANCING ACTIVITIES: Payments of long-term debt ( 597,200 ) ( 3,322,550 ) Proceeds from borrowings of long-term debt 592,600 3,329,150 Purchase of treasury stock ( 4,939 ) ( 8,080 ) Dividends paid ( 3,882 ) ( 3,888 ) Payments of contingent consideration ( 500 ) — Taxes paid on behalf of equity award participants ( 1,490 ) ( 1,911 ) Net cash used in financing activities ( 15,411 ) ( 7,279 ) Effect of exchange rate changes on cash and cash equivalents 443 ( 78 ) Net increase in cash and cash equivalents 36,754 31,499 Cash and cash equivalents at beginning of period 91,773 100,241 Cash and cash equivalents at end of period $ 128,527 $ 131,740 Supplemental cash flow information: Cash paid for interest $ 1,047 $ 2,124 Cash paid for income taxes, net $ 10,246 $ 8,295 Non-cash financing and investing activities: Capital expenditures incurred but not paid $ 1,153 $ 816 See notes to unaudited condensed consolidated financial statements. 6 CTS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - UNAUDITED (in thousands of dollars) The following summarizes the changes in total equity for the three and nine months ended September 30, 2021: Common Stock Additional Contributed Capital Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Total Balances at December 31, 2020 $ 311,190 $ 41,654 $ 539,281 $ ( 95,921 ) $ ( 372,522 ) $ 423,682 Net earnings — — 11,990 — — 11,990 Changes in fair market value of derivatives, net of tax — — — 124 — 124 Changes in unrealized pension cost, net of tax — — — 1,422 — 1,422 Cumulative translation adjustment, net of tax — — — 12 — 12 Cash dividends of $ 0.04 per share — — ( 1,294 ) — — ( 1,294 ) Issued shares on vesting of restricted stock units 1,818 ( 3,218 ) — — — ( 1,400 ) Stock compensation — 1,180 — — — 1,180 Balances at March 31, 2021 $ 313,008 $ 39,616 $ 549,977 $ ( 94,363 ) $ ( 372,522 ) $ 435,716 Net earnings — — 875 — — 875 Changes in fair market value of derivatives, net of tax — — — 268 — 268 Changes in unrealized pension cost, net of tax — — — 17,024 — 17,024 Cumulative translation adjustment, net of tax — — — 1 — 1 Cash dividends of $ 0.04 per share — — ( 1,299 ) — — ( 1,299 ) Issued shares on vesting of restricted stock units 1,333 ( 1,413 ) — — — ( 80 ) Stock compensation — 1,804 — — — 1,804 Balances at June 30, 2021 $ 314,341 $ 40,007 $ 549,553 $ ( 77,070 ) $ ( 372,522 ) $ 454,309 Net loss — — ( 63,896 ) — — ( 63,896 ) Changes in fair market value of derivatives, net of tax — — — ( 292 ) — ( 292 ) Changes in unrealized pension cost, net of tax — — — 72,530 — 72,530 Cumulative translation adjustment, net of tax — — — ( 10 ) — ( 10 ) Cash dividends of $ 0.04 per share — — ( 1,289 ) — — ( 1,289 ) Acquired 148,035 shares of treasury stock — — — — ( 4,939 ) ( 4,939 ) Issued shares on vesting of restricted stock units 10 ( 20 ) — — — ( 10 ) Stock compensation — 971 — — — 971 Balances at September 30, 2021 $ 314,351 $ 40,958 $ 484,368 $ ( 4,842 ) $ ( 377,461 ) $ 457,374 See notes to unaudited condensed consolidated financial statements. 7 CTS CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - UNAUDITED (in thousands of dollars) The following summarizes the changes in total equity for the three and nine months ended September 30, 2020: Common Stock Additional Contributed Capital Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Total Balances at December 31, 2019 $ 307,932 $ 43,689 $ 509,766 $ ( 91,726 ) $ ( 364,442 ) $ 405,219 Net earnings — — 3,808 — — 3,808 Changes in fair market value of derivatives, net of tax — — — ( 4,414 ) — ( 4,414 ) Changes in unrealized pension cost, net of tax — — — 1,285 — 1,285 Cumulative translation adjustment, net of tax — — — ( 139 ) — ( 139 ) Cash dividends of $ 0.04 per share — — ( 1,298 ) — — ( 1,298 ) Acquired 220,731 shares of treasury stock — — — — ( 5,304 ) ( 5,304 ) Issued shares on vesting of restricted stock units 2,166 ( 4,069 ) — — — ( 1,903 ) Stock compensation — 212 — — — 212 Balances at March 31, 2020 $ 310,098 $ 39,832 $ 512,276 $ ( 94,994 ) $ ( 369,746 ) $ 397,466 Net earnings — — 4,857 — — 4,857 Changes in fair market value of derivatives, net of tax — — — 644 — 644 Changes in unrealized pension cost, net of tax — — — 1,209 — 1,209 Cumulative translation adjustment, net of tax — — — ( 14 ) — ( 14 ) Cash dividends of $ 0.04 per share — — ( 1,292 ) — — ( 1,292 ) Acquired 122,000 shares of treasury stock — — — — ( 2,776 ) ( 2,776 ) Issued shares on vesting of restricted stock units 855 ( 855 ) — — — — Stock compensation — 798 — — — 798 Balances at June 30, 2020 $ 310,953 $ 39,775 $ 515,841 $ ( 93,155 ) $ ( 372,522 ) $ 400,892 Net earnings — — 11,073 — — 11,073 Changes in fair market value of derivatives, net of tax — — — 909 — 909 Changes in unrealized pension cost, net of tax — — — 1,239 — 1,239 Cumulative translation adjustment, net of tax — — — 99 — 99 Cash dividends of $ 0.04 per share — — ( 1,290 ) — — ( 1,290 ) Issued shares on vesting of restricted stock units 23 ( 31 ) — — — ( 8 ) Stock compensation — 1,052 — — — 1,052 Balances at September 30, 2020 $ 310,976 $ 40,796 $ 525,624 $ ( 90,908 ) $ ( 372,522 ) $ 413,966 See notes to unaudited condensed consolidated financial statements. 8 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED (in thousands except for share and per share data) September 30, 2021 NOTE 1 — Basis of Presentation and Summary of Significant Accounting Policies The accompanying condensed consolidated financial statements have been prepared by CTS Corporation (“CTS”, "we", "our", "us" or the "Company”), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations. The unaudited condensed consolidated financial statements should be read in conjunction with the financial statements, notes thereto, and other information included in the Company’s Annual Report on Form 10‑K for the year ended December 31, 2020. The accompanying unaudited condensed consolidated financial statements reflect, in the opinion of management, all adjustments (consisting of normal recurring items) necessary for a fair statement, in all material respects, of the financial position and results of operations for the periods presented. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ materially from those estimates. The results of operations for the interim periods are not necessarily indicative of the results for the entire year. Certain reclassifications have been made to prior year amounts to conform to the current year presentation. The reclassifications had no impact on previously reported net earnings. There have been no material changes in the Company’s significant accounting policies as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. Accounting Pronouncements Recently Adopted In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Simplifying the Accounting for Income Taxes , as part of its simplification initiative to reduce the cost and complexity in accounting for income taxes. ASU 2019-12 removes certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences. ASU 2019-12 also amends other aspects of the guidance to help simplify and promote consistent application of U.S. GAAP. The guidance is effective for interim and annual periods beginning after December 15, 2020, with early adoption permitted. We adopted this ASU on January 1, 2021 and it did not have a material impact on our financial statements. Recently Issued Accounting Pronouncements In March 2020, the FASB issued ASU 2020-04, “ Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting ”, which provides temporary optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting as it relates to our LIBOR indexed instruments. ASU 2020-04 provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. ASU 2020-04 is effective for all entities as of March 12, 2020 through December 31, 2022, and an entity may elect to apply ASU 2020-04 for contract modifications by Topic or Industry Subtopic as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. As a result of the reference rate reform, we have determined that we will modify our credit agreement and associated hedging relationships in order to effectively transition to an alternative reference rate prior to June 30, 2022. We continue evaluating the impact of the transition from LIBOR to an alternative reference interest rate in our financial instruments including the potential election of certain practical expedients. 9 NOTE 2 – Revenue Recognition The core principle of Accounting Standard Codification (“ASC”) 606 Revenue from Contracts with Customers is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance provides a five-step process to achieve that core principle: • Identify the contract(s) with a customer • Identify the performance obligations • Determine the transaction price • Allocate the transaction price • Recognize revenue when the performance obligations are met We recognize revenue when the performance obligations specified in our contracts have been satisfied, after considering the impact of variable consideration and other factors that may affect the transaction price. Our contracts normally contain a single performance obligation that is fulfilled on the date of delivery or shipment based on shipping terms stipulated in the contract. We usually expect payment within 30 to 90 days from the shipping date, depending on our terms with the customer. Differences between the amount of revenue recognized and the amount invoiced, collected from, or paid to our customers are recognized as contract assets or liabilities. Contract assets will be reviewed for impairment when events or circumstances indicate that they may not be recoverable. To the extent the transaction price includes variable consideration, we estimate the amount of variable consideration that should be included in the transaction price utilizing the most likely amount method based on an analysis of historical experience and current facts and circumstances, which requires significant judgment. Variable consideration is included in the transaction price if, in our judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Disaggregated Revenue The following table presents revenues disaggregated by the major markets we serve: Three Months Ended Nine Months Ended September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020 Transportation $ 62,342 $ 65,277 $ 209,750 $ 164,940 Industrial 31,879 24,204 87,764 65,260 Medical 12,409 10,201 36,487 32,609 Aerospace & Defense 11,275 11,038 35,724 29,416 Telecom & IT 4,477 3,057 10,669 8,824 Total $ 122,382 $ 113,777 $ 380,394 $ 301,049 NOTE 3 – Business Acquisitions On December 30, 2020, we acquired 100 % of the outstanding shares of Sensor Scientific, Inc. (“SSI”). SSI is a manufacturer of high-quality thermistors and temperature sensor assemblies serving original equipment manufacturers (“OEMs”) for applications that require precision and reliability in the medical, industrial and defense markets. SSI has complementary capabilities with our existing temperature sensing platform and the acquisition expands our presence in the medical and industrial end markets. It also provides high quality ceramic processing capabilities and valuable customer partnerships that expand our temperature sensing product portfolio and build on our strategy to focus on innovative products that sense, connect and move. The final purchase price, which includes changes in working capital, of $ 10,221 has been allocated to the fair values of assets and liabilities acquired as of December 30, 2020. 10 The following table summarizes the consideration paid and the fair values of the assets acquired, and the liabilities assumed as of the date of acquisition of SSI: Consideration Paid Cash paid, net of cash acquired of $ 470 $ 8,221 Contingent consideration 2,000 Purchase price $ 10,221 Fair Values at December 30, 2020 Current assets $ 2,551 Property, plant and equipment 67 Other assets 14 Goodwill 3,321 Intangible assets 5,340 Fair value of assets acquired 11,293 Less fair value of liabilities acquired ( 1,072 ) Purchase price $ 10,221 Goodwill represents value the Company expects to be created by combining the operations of the acquired business with the Company's operations, including the expansion of customer relationships, access to new customers, and potential cost savings and synergies. Goodwill related to the acquisition is expected to be deductible for tax purposes. All contingent consideration is payable in cash and is based on success factors related to the integration process as well as upon the achievement of a revenue performance target through the year ending December 31, 2022, with the possibility of prorated interim payments. The Company recorded $ 2,000 as the acquisition date fair value of the contingent consideration based on an estimate of the probability of achieving the performance targets. This represents the maximum amount of contingent consideration payable by the Company. This amount is also reflected as an addition to the purchase price and will be evaluated quarterly. Refer to Note 17 for further information on contingent consideration. The following table summarizes the carrying amounts and weighted average lives of the acquired intangible assets: Carrying Value Weighted Average Amortization Period Customer lists/relationships $ 5,200 11.0 Technology and other intangibles 140 3.0 Total $ 5,340 NOTE 4 – Accounts Receivable, net The components of accounts receivable, net are as follows: As of September 30, December 31, 2021 2020 Accounts receivable, gross $ 79,628 $ 81,745 Less: Allowance for credit losses ( 1,418 ) ( 764 ) Accounts receivable, net $ 78,210 $ 80,981 11 NOTE 5 – Inventories, net Inventories, net consists of the following: As of September 30, December 31, 2021 2020 Finished goods $ 11,194 $ 10,647 Work-in-process 18,725 16,927 Raw materials 30,637 24,893 Less: Inventory reserves ( 9,689 ) ( 6,597 ) Inventories, net $ 50,867 $ 45,870 NOTE 6 – Property, Plant and Equipment, net Property, plant and equipment, net is comprised of the following: As of September 30, December 31, 2021 2020 Land and land improvements $ 1,095 $ 1,095 Buildings and improvements 69,463 69,360 Machinery and equipment 239,329 233,743 Less: Accumulated depreciation ( 217,354 ) ( 206,761 ) Property, plant and equipment, net $ 92,533 $ 97,437 Depreciation expense for the nine months ended September 30, 2021 and September 30, 2020 was $ 13,166 and $ 13,003 , respectively. NOTE 7 – Retirement Plans Pension Plans Net pension expense for our domestic and foreign plans included in other (expense) income, net in the Condensed Consolidated Statements of (Loss) Earnings is as follows: Three months ended Nine months ended September 30, September 30, September 30, September 30, 2021 2020 2021 2020 Net pension expense $ 107,447 $ 666 $ 131,227 $ 1,996 The components of net pension expense for our domestic and foreign plans include the following: Domestic Pension Plans Foreign Pension Plans Three Months Ended Three Months Ended September 30, September 30, September 30, September 30, 2021 2020 2021 2020 Service cost $ — $ — $ 6 $ 8 Interest cost 385 1,443 4 6 Expected return on plan assets (1) 429 ( 2,454 ) ( 3 ) ( 3 ) Amortization of loss 377 1,622 43 44 Settlement charges 106,206 — — — Total expense, net $ 107,397 $ 611 $ 50 $ 55 (1) Expected return on plan assets is net of expected investment expenses and certain administrative expenses. 12 Domestic Pension Plans Foreign Pension Plans Nine Months Ended Nine Months Ended September 30, September 30, September 30, September 30, 2021 2020 2021 2020 Service cost $ — $ — $ 18 $ 23 Interest cost 2,856 4,329 12 19 Expected return on plan assets (1) ( 1,742 ) ( 7,362 ) ( 9 ) ( 10 ) Amortization of loss 3,694 4,866 129 131 Settlement charges 126,269 — — — Total expense, net $ 131,077 $ 1,833 $ 150 $ 163 (1) Expected return on plan assets is net of expected investment expenses and certain administrative expenses. In February 2020, the CTS Board of Directors authorized management to explore termination of the U.S.-based pension plan ("Plan"), subject to certain conditions. On June 1, 2020, we entered into the Fifth Amendment to the Plan whereby we set an effective termination date for the Plan of July 31, 2020. In February 2021, we received a determination letter from the Internal Revenue Service that allowed us to proceed with the termination process for the Plan. During the second quarter of 2021, the Company offered the option of receiving a lump sum payment to eligible participants with vested qualified Plan benefits in lieu of receiving monthly annuity payments. Approximately 365 participants elected to receive the settlement, and lump sum payments of approximately $ 35,594 were made from Plan assets to these participants in June 2021. As required under U.S. GAAP, the Company recognizes a settlement gain or loss when the aggregate amount of lump-sum distributions to participants equals or exceeds the sum of the service and interest cost components of the net periodic pension cost. The amount of settlement gain or loss recognized is the pro rata amount of the existing unrealized gain or loss immediately prior to the settlement. In general, both the projected benefit obligation and fair value of plan assets are required to be remeasured in order to determine the settlement gain or loss. Upon the partial settlement of the pension liability due to the lump sum offering in the second quarter of 2021, the Company recognized a non-cash and non-operating settlement charge of $ 20,063 related to pension losses, reclassified from accumulated other comprehensive loss to other (income) expense in the Company's Condensed Consolidated Statements of (Loss) Earnings. On July 29, 2021, the Plan purchased a group annuity contract that transferred our benefit obligations for approximately 2,700 CTS participants and beneficiaries in the United States (“Transferred Participants”). As part of the purchase of the group annuity contract, Plan benefit obligations and related annuity administration services for Transferred Participants were irrevocably assumed and guaranteed by the insurance company effective as of August 3, 2021. There will be no change to pension benefits for Transferred Participants. The purchase of the group annuity contract was fully funded directly by Plan assets. As a result of the final settlement of the pension liability with the purchase of annuities, we reclassified the remaining related unrecognized pension losses of $ 106,206 that were previously recorded in accumulated other comprehensive loss to the Condensed Consolidated Statements of (Loss) Earnings. The Plan assets of $ 50,638 as of September 30, 2021, will remain in the Plan until final administrative tasks are completed. This process is expected to be completed in the first quarter of 2022, whereby the Plan assets will liquidate and revert to CTS. At that time, the funds will be subject to income and excise taxes. We continue to evaluate potential plans to optimize tax implications as well as the use of the surplus cash. 13 Other Post-retirement Benefit Plan Net post-retirement expense for our other post-retirement plan includes the following components: Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, 2021 2020 2021 2020 Service cost $ — $ 1 $ — $ 1 Interest cost 20 30 63 90 Amortization of gain — ( 20 ) — ( 64 ) Total expense, net $ 20 $ 11 $ 63 $ 27 NOTE 8 – Goodwill and Other Intangible Assets Other Intangible Assets Other intangible assets, net consist of the following components: As of September 30, 2021 Gross Carrying Amount Accumulated Amortization Net Amount Customer lists/relationships $ 96,889 $ ( 47,790 ) $ 49,099 Technology and other intangibles 47,441 ( 24,304 ) 23,137 Other intangible assets, net $ 144,330 $ ( 72,094 ) $ 72,236 Amortization expense for the three months ended September 30, 2021 $ 2,348 Amortization expense for the nine months ended September 30, 2021 $ 7,065 As of December 31, 2020 Gross Carrying Amount Accumulated Amortization Net Amount Customer lists/relationships $ 97,355 $ ( 44,002 ) $ 53,353 Technology and other intangibles 47,301 ( 21,533 ) 25,768 Other intangible assets, net $ 144,656 $ ( 65,535 ) $ 79,121 Amortization expense for the three months ended September 30, 2020 $ 2,253 Amortization expense for the nine months ended September 30, 2020 $ 6,816 Remaining amortization expense for other intangible assets as of September 30, 2021 is as follows: Amortization expense 2021 $ 2,348 2022 9,176 2023 7,170 2024 7,008 2025 6,787 Thereafter 39,747 Total amortization expense $ 72,236 Goodwill Changes in the net carrying amount of goodwill were as follows: 14 Total Goodwill as of December 31, 2020 $ 109,497 Decrease from purchase accounting adjustments ( 129 ) Increase due to acquisition 430 Goodwill as of September 30, 2021 $ 109,798 In addition to the purchase accounting adjustments from the SSI transaction, goodwill increased due to an acquisition completed during the second quarter. The purchase price was approximately $ 510 , with $ 255 paid in the second quarter of 2021 and an additional $ 255 to be paid in the second quarter of 2022. NOTE 9 – Costs Associated with Exit and Restructuring Activities Restructuring charges are reported as a separate line within operating earnings in the Condensed Consolidated Statements of (Loss) Earnings. Total restructuring charges are as follows: Three Months Ended September 30, 2021 September 30, 2020 Restructuring charges $ 319 $ 1,041 Nine Months Ended September 30, 2021 September 30, 2020 Restructuring charges $ 551 $ 1,416 September 2020 Plan In September 2020, we initiated a restructuring plan focused on optimizing our manufacturing footprint and improving operational efficiency by better utilizing our systems capabilities (the "September 2020 Plan"). This plan includes transitioning certain administrative functions to a shared service center, realignment of manufacturing locations, and certain other efficiency improvement actions. The restructuring cost of the September 2020 Plan is now estimated to be in the range of $ 3,500 to $ 4,500 , including workforce reduction charges, building and equipment relocation charges and other contract and asset-related costs. We have incurred $ 1,397 program to date. There were no substantial restructuring charges under the September 2020 Plan during the three and nine months ended September 30, 2021. There was no restructuring liability related to the September 2020 Plan as of September 30, 2021. As of December 31, 2020 the liability related to the September 2020 Plan was $ 512 . June 2016 Plan In June 2016, we announced plans to restructure operations by phasing out production at our Elkhart, Indiana facility and transitioning it into a research and development center supporting our global operations (the "June 2016 Plan"). Additional organizational changes were also implemented in various other locations. In 2017, we revised the June 2016 Plan to include an additional $ 1,100 in planned costs related to the relocation of our corporate headquarters in Lisle, Illinois and our plant in Bolingbrook, Illinois, both of which have now been consolidated into a single facility. These restructuring actions were completed as of March 31, 2021. April 2014 Plan In April 2014, we announced plans to restructure our operations and consolidate our Canadian operations into other existing facilities as part of our overall plan to simplify our business model and rationalize our global footprint (the “April 2014 Plan”). These restructuring actions were substantially completed during 2015 and the remaining liability was settled in the second quarter of 2021. 15 Other Restructuring Activities From time to time we undertake other restructuring activities that are not part of a formal plan. Charges associated with these restructuring activities primarily relate to workforce reduction costs. During the three and nine months ended September 30, 2021, we incurred restructuring charges of $ 319 and $ 582 , respectively. During the three and nine months ended September 30, 2020, we incurred restructuring charges of $ 33 and $ 440 , respectively. The total restructuring liability associated with these actions was $ 263 at September 30, 2021 and $ 9 at December 31, 2020. The following table displays the restructuring liability activity included in accrued expenses and other liabilities for all plans for the nine months ended September 30, 2021: Restructuring liability at January 1, 2021 $ 1,363 Restructuring charges 551 Cost paid ( 1,466 ) Other activity (1) ( 185 ) Restructuring liability at September 30, 2021 $ 263 (1) Other activity includes the effects of currency translation, non-cash asset write-downs and other charges that do not flow through restructuring expense. NOTE 10 – Accrued Expenses and Other Liabilities The components of accrued expenses and other liabilities are as follows: As of September 30, December 31, 2021 2020 Accrued product related costs $ 3,430 $ 4,470 Accrued income taxes 6,213 7,320 Accrued property and other taxes 1,892 2,478 Accrued professional fees 1,594 1,663 Accrued customer related liabilities 4,459 3,815 Dividends payable 1,292 1,291 Remediation reserves 9,994 10,642 Derivative liabilities 684 671 Other accrued liabilities 6,115 5,821 Total accrued expenses and other liabilities $ 35,673 $ 38,171 NOTE 11 – Commitments and Contingencies Certain processes in the manufacture of our current and past products create by-products classified as hazardous waste. We have been notified by the U.S. Environmental Protection Agency, state environmental agencies and, in some cases, groups of potentially responsible parties, that we may be potentially liable for environmental contamination at several sites currently and formerly owned or operated by us. Two of those sites, Asheville, North Carolina and Mountain View, California, are designated National Priorities List sites under the U.S. Environmental Protection Agency’s Superfund program. We accrue a liability for probable remediation activities, claims and proceedings against us with respect to environmental matters if the amount can be reasonably estimated, and provide disclosures including the nature of a loss whenever it is probable or reasonably possible that a potentially material loss may have occurred but cannot be estimated. We record contingent loss accruals on an undiscounted basis. 16 A roll-forward of remediation reserves included in accrued expenses and other liabilities on the Condensed Consolidated Balance Sheets is comprised of the following: As of September 30, December 31, 2021 2020 Balance at beginning of period $ 10,642 $ 11,444 Remediation expense 848 2,769 Net remediation payments ( 1,508 ) ( 3,639 ) Other activity (1) 12 68 Balance at end of the period $ 9,994 $ 10,642 (1) Other activity includes currency translation adjustments not recorded through remediation expense. Unrelated to the environmental claims described above, certain other legal claims are pending against us with respect to matters arising out of the ordinary conduct of our business. We provide product warranties when we sell our products and accrue for estimated liabilities at the time of sale. Warranty estimates are forecasts based on the best available information and historical claims experience. We accrue for specific warranty claims if we believe that the facts of a specific claim make it probable that a liability in excess of our historical experience has been or will be incurred, and provide disclosures for specific claims whenever it is reasonably possible that a material loss may be incurred which cannot be estimated. We cannot provide assurance that the ultimate disposition of environmental, legal, and product warranty claims will not materially exceed the amount of our accrued losses and adversely impact our consolidated financial position, results of operations, or cash flows. Our accrued liabilities and disclosures will be adjusted accordingly if additional information becomes available in the future. 17 NOTE 12 - Debt Long-term debt was comprised of the following: As of September 30, December 31, 2021 2020 Total credit facility $ 300,000 $ 300,000 Balance outstanding 50,000 54,600 Standby letters of credit 1,740 1,740 Amount available, subject to covenant restrictions $ 248,260 $ 243,660 Weighted-average interest rate 1.18 % 1.92 % Commitment fee percentage per annum 0.20 % 0.23 % On February 12, 2019, we entered into an amended and restated five-year Credit Agreement with a group of banks (the "Credit Agreement") to extend the term of the facility. The Credit Agreement provides for a revolving credit facility of $ 300,000 , which may be increased by $ 150,000 at the request of the Company, subject to the administrative agent's approval. The revolving credit facility includes a swing line sublimit of $ 15,000 and a letter of credit sublimit of $ 10,000 . Borrowings under the revolving credit facility bear interest at the base rate defined in the Credit Agreement. We also pay a quarterly commitment fee on the unused portion of the revolving credit facility. The commitment fee ranges from 0.20 % to 0.30 % based on our total leverage ratio. The Credit Agreement requires, among other things, that we comply with a maximum total leverage ratio and a minimum fixed charge coverage ratio. Failure to comply with these covenants could reduce the borrowing availability under the revolving credit facility. We were compliant with all debt covenants at September 30, 2021. The Credit Agreement requires that we deliver quarterly financial statements, annual financial statements, auditor certifications, and compliance certificates within a specified number of days after the end of a quarter and year. Additionally, it contains restrictions limiting our ability to: dispose of assets; incur certain additional debt; repay other debt or amend subordinated debt instruments; create liens on assets; make investments, loans or advances; make acquisitions or engage in mergers or consolidations; engage in certain transactions with our subsidiaries and affiliates; and make stock repurchases and dividend payments. Interest rates on the credit facility fluctuate based upon LIBOR and the Company’s quarterly total leverage ratio. We have debt issuance costs related to our long-term debt that are being amortized using the straight-line method over the life of the debt. Amortization expense for the three and nine months ended September 30, 2021 and 2020 was approximately $ 42 and $ 42 and $ 126 and $ 126 , respectively. These costs are included in interest expense in our Condensed Consolidated Statements of (Loss) Earnings. We use interest rate swaps to convert the revolving credit facility's variable rate of interest into a fixed rate on a portion of the debt as described more fully in Note 13 "Derivative Financial Instruments". These swaps are treated as cash flow hedges and consequently, the changes in fair value were recorded in other comprehensive earnings. Note 13 - Derivative Financial Instruments Our earnings and cash flows are subject to fluctuations due to changes in foreign currency exchange rates and interest rates. We selectively use derivative financial instruments including foreign currency forward contracts and interest rate swaps to manage our exposure to these risks. The use of derivative financial instruments exposes the Company to credit risk, which relates to the risk of nonperformance by a counterparty to the derivative contracts. We manage our credit risk by entering into derivative contracts with only highly rated financial institutions and by using netting agreements. The effective portion of derivative gains and losses are recorded in accumulated other comprehensive (loss) income until the hedged transaction affects earnings upon settlement, at which time they are reclassified to cost of goods sold or net sales. If it is probable that 18 an anticipated hedged transaction will not occur by the end of the originally specified time period, we reclassify the gains or losses related to that hedge from accumulated other comprehensive (loss) income to o ther expense , net . We assess hedge effectiveness qualitatively by verifying that the critical terms of the hedging instrument and the forecasted transaction continue to match, and that there have been no adverse developments that have increased the risk that the counterparty will default. No recognition of ineffectiveness was recorded in our Condensed Consolidated Statements of (Loss) Earnings for the three and nine months ended September 30, 2021. Foreign Currency Hedges We use forward contracts to mitigate currency risk related to a portion of our forecasted foreign currency revenues and costs. The currency forward contracts are designed as cash flow hedges and are recorded in the Condensed Consolidated Balance Sheets at fair value. We continue to monitor the Company’s overall currency exposure and may elect to add cash flow hedges in the future. At September 30, 2021, we had a net unrealized gain of $ 388 in accumulated other comprehensive (loss) income, of which $ 385 is expected to be reclassified to earnings within the next 12 months. At September 30, 2020, we had a net unrealized loss of $ 458 in accumulated other comprehensive (loss) income. The notional amount of foreign currency forward contracts outstanding was $ 6,282 at September 30, 2021. Interest Rate Swaps We use interest rate swaps to convert a portion of our revolving credit facility’s outstanding balance from a variable rate of interest to a fixed rate. As of September 30, 2021, we have agreements to fix interest rates on $ 50,000 of long-term debt through February 2024. The difference to be paid or received under the terms of the swap agreements will be recognized as an adjustment to interest expense when settled. These swaps are treated as cash flow hedges and consequently, the changes in fair value are recorded in other comprehensive (loss) income. The estimated net amount of the existing losses that are reported in accumulated other comprehensive (loss) income that are expected to be reclassified into earnings within the next twelve months is approximately $ 527 . The location and fair values of derivative instruments designated as hedging instruments in the Condensed Consolidated Balance Sheets as of September 30, 2021, are shown in the following table: As of September 30, December 31, 2021 2020 Interest rate swaps reported in accrued expenses and other liabilities $ ( 684 ) $ ( 671 ) Interest rate swaps reported in other long-term obligations $ ( 726 ) $ ( 1,546 ) Foreign currency hedges reported in other current assets $ 474 $ 1,125 The Company has elected to net its foreign currency derivative assets and liabilities in the balance sheet in accordance with ASC 210-20, Balance Sheet, Offsetting . On a gross basis, there were foreign currency derivative assets of $ 474 and foreign currency derivative liabilities of $ 0 at September 30, 2021. 19 The effect of derivative instruments on the Condensed Consolidated Statements of (Loss) Earnings is as follows: Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, 2021 2020 2021 2020 Foreign Exchange Contracts: Amounts reclassified from AOCI to earnings: Net sales $ — $ ( 78 ) $ — $ ( 5 ) Cost of goods sold 442 ( 407 ) 992 ( 678 ) Selling, general and administrative expense — — — ( 5 ) Total gain (loss) reclassified from AOCI to earnings 442 ( 485 ) 992 ( 688 ) Gain recognized in other expense for hedge ineffectiveness — — — 3 Total derivative gain (loss) on foreign exchange contracts recognized in earnings $ 442 $ ( 485 ) $ 992 $ ( 685 ) Interest Rate Swaps: (Expense) recorded in Interest expense $ ( 191 ) $ ( 171 ) $ ( 554 ) $ ( 242 ) Total gains (losses) on derivatives $ 251 $ ( 656 ) $ 438 $ ( 927 ) NOTE 14 – Accumulated Other Comprehensive (Loss) Income Shareholders’ equity includes certain items classified as accumulated other comprehensive (loss) income (“AOCI”) in the Condensed Consolidated Balance Sheets, including: • Unrealized gains (losses) on hedges relate to interest rate swaps to convert a portion of our revolving credit facility's outstanding balance from a variable rate of interest into a fixed rate and foreign currency forward contracts used to hedge our exposure to changes in exchange rates affecting certain revenues and costs denominated in foreign currencies. These hedges are designated as cash flow hedges, and we have deferred income statement recognition of gains and losses until the hedged transactions occur, at which time amounts are reclassified into earnings. Further information related to our derivative financial instruments is included in Note 13 - Derivative Financial Instruments and Note 17 – Fair Value Measurements. • Unrealized gains (losses) on pension obligations are deferred from income statement recognition until the gains or losses are realized. Amounts reclassified to income from AOCI are included in net periodic pension income (expense). Further information related to our pension obligations is included in Note 7 – Retirement Plans. • Cumulative translation adjustments relate to our non-U.S. subsidiary companies that have designated a functional currency other than the U.S. dollar. We are required to translate the subsidiary functional currency financial statements to dollars using a combination of historical, period-end, and average foreign exchange rates. This combination of rates creates the foreign currency translation adjustment component of other comprehensive income. Changes in exchange rates between the functional currency and the currency in which a transaction is denominated are foreign exchange transaction gains or losses. Transaction losses for the three and nine months ended September 30, 2021 were $( 1,011 ) and $( 1,412 ), respectively, and transaction gains for the three and nine months ended September 30, 2020 were $ 2,326 and $ 1,947 , respectively, which have been included in other (expense) income in the Condensed Consolidated Statements of (Loss) Earnings. 20 The components of accumulated other comprehensive (loss) income for the three months ended September 30, 2021 are as follows: (Gain) Loss As of Gain (Loss) Reclassified As of June 30, Recognized from AOCI September 30, 2021 in OCI to Earnings 2021 Changes in fair market value of derivatives: Gross $ ( 529 ) $ ( 128 ) $ ( 251 ) $ ( 908 ) Income tax benefit (expense) 123 29 58 210 Net ( 406 ) ( 99 ) ( 193 ) ( 698 ) Changes in unrealized pension cost: Gross ( 104,052 ) ( 5,450 ) 106,622 ( 2,880 ) Income tax benefit (expense) 29,411 1,254 ( 29,896 ) 769 Net ( 74,641 ) ( 4,196 ) 76,726 ( 2,111 ) Cumulative translation adjustment: Gross ( 2,023 ) ( 10 ) — ( 2,033 ) Total accumulated other comprehensive (loss) income $ ( 77,070 ) $ ( 4,305 ) $ 76,533 $ ( 4,842 ) The components of accumulated other comprehensive (loss) income for the three months ended September 30, 2020, are as follows: Loss As of Gain (Loss) Reclassified As of June 30, Recognized from AOCI September 30, 2020 in OCI to Earnings 2020 Changes in fair market value of derivatives: Gross $ ( 4,239 ) $ 525 $ 656 $ ( 3,058 ) Income tax benefit (expense) 978 ( 122 ) ( 150 ) 706 Net ( 3,261 ) 403 506 ( 2,352 ) Changes in unrealized pension cost: Gross ( 120,906 ) — 1,606 ( 119,300 ) Income tax benefit (expense) 33,278 — ( 367 ) 32,911 Net ( 87,628 ) — 1,239 ( 86,389 ) Cumulative translation adjustment: Gross ( 2,266 ) 99 — ( 2,167 ) Total accumulated other comprehensive (loss) income $ ( 93,155 ) $ 502 $ 1,745 $ ( 90,908 ) The components of accumulated other comprehensive (loss) income for the nine months ended September 30, 2021, are as follows: (Gain) Loss As of Gain (Loss) Reclassified As of December 31, Recognized from AOCI September 30, 2020 in OCI to Earnings 2021 Changes in fair market value of derivatives: Gross $ ( 1,038 ) $ 568 ( 438 ) $ ( 908 ) Income tax benefit (expense) 240 ( 131 ) 101 210 Net ( 798 ) 437 ( 337 ) ( 698 ) Changes in unrealized pension cost: Gross ( 128,004 ) ( 4,951 ) 130,075 ( 2,880 ) Income tax benefit (expense) 34,917 1,139 ( 35,287 ) 769 Net ( 93,087 ) ( 3,812 ) 94,788 ( 2,111 ) Cumulative translation adjustment: Gross ( 2,036 ) 3 — ( 2,033 ) Total accumulated other comprehensive (loss) income $ ( 95,921 ) $ ( 3,372 ) $ 94,451 $ ( 4,842 ) 21 The components of accumulated other comprehensive (loss) income for the nine months ended September 30, 2020, are as follows: Loss As of Gain Reclassified As of December 31, Recognized from AOCI September 30, 2019 in OCI to Earnings 2020 Changes in fair market value of derivatives: Gross $ 659 $ ( 4,647 ) $ 930 $ ( 3,058 ) Income tax benefit (expense) ( 150 ) 1,059 ( 203 ) 706 Net 509 ( 3,588 ) 727 ( 2,352 ) Changes in unrealized pension cost: Gross ( 124,140 ) — 4,840 ( 119,300 ) Income tax benefit (expense) 34,018 — ( 1,107 ) 32,911 Net ( 90,122 ) — 3,733 ( 86,389 ) Cumulative translation adjustment: Gross ( 2,211 ) 44 — ( 2,167 ) Income tax benefit (expense) 98 ( 98 ) — 0 Net ( 2,113 ) ( 54 ) — ( 2,167 ) Total accumulated other comprehensive (loss) income $ ( 91,726 ) $ ( 3,642 ) $ 4,460 $ ( 90,908 ) NOTE 15 – Shareholders’ Equity Share count and par value data related to shareholders’ equity are as follows: As of September 30, December 31, 2021 2020 Preferred Stock Par value per share No par value No par value Shares authorized 25,000,000 25,000,000 Shares outstanding — — Common Stock Par value per share No par value No par value Shares authorized 75,000,000 75,000,000 Shares issued 57,235,807 57,076,410 Shares outstanding 32,288,149 32,276,787 Treasury stock Shares held 24,947,658 24,799,623 On May 13, 2021, the Board of Directors approved a new share repurchase program that authorizes the Company to repurchase up to $ 50,000 of the Company’s common stock. The repurchase program has no set expiration date and replaces the repurchase program approved by the Board of Directors on February 7, 2019. During the nine months ended September 30, 2021, 148,035 shares of common stock were repurchased for $ 4,939 . During the nine months ended September 30, 2020, 342,731 shares of common stock were repurchased for $ 8,080 . Approximately $ 45,061 is available for future purchases. A roll-forward of common shares outstanding is as follows: Nine months ended September 30, September 30, 2021 2020 Balance at the beginning of the year 32,276,787 32,472,406 Repurchases ( 148,035 ) ( 342,731 ) Restricted share issuances 159,397 138,276 Balance at the end of the period 32,288,149 32,267,951 22 Certain potentially dilutive restricted stock units are excluded from diluted (loss) earnings per share because they are anti-dilutive. The number of outstanding awards that were anti-dilutive for the nine months ended September 30, 2021 and 2020 were 1,029 and 68,198 , respectively. There were 462 anti-dilutive awards outstanding for the three months ended September 30, 2021 and no anti-dilutive awards outstanding the three months ended September 30, 2020. NOTE 16 - Stock-Based Compensation At September 30, 2021, we had five active stock-based compensation plans: the Non-Employee Directors’ Stock Retirement Plan (“Directors’ Plan”), the 2004 Omnibus Long-Term Incentive Plan (“2004 Plan”), the 2009 Omnibus Equity and Performance Incentive Plan (“2009 Plan”), the 2014 Performance and Incentive Compensation Plan (“2014 Plan”), and the 2018 Equity and Incentive Compensation Plan ("2018 Plan"). Future grants can only be made under the 2018 Plan. These plans allow for grants of stock options, stock appreciation rights, restricted stock, restricted stock units ("RSUs"), performance shares, performance units, and other stock awards subject to the terms of the specific plans under which the awards are granted. The following table summarizes the compensation expense included in selling, general and administrative expenses in the Condensed Consolidated Statements of (Loss) Earnings related to stock-based compensation plans: Three months ended Nine months ended September 30, September 30, September 30, September 30, 2021 2020 2021 2020 Service-based RSUs $ 588 $ 580 $ 2,013 $ 1,939 Performance-based RSUs 383 472 1,942 123 Cash-settled RSUs 16 67 151 102 Total $ 987 $ 1,119 $ 4,106 $ 2,164 Income tax benefit 227 257 945 497 Net expense $ 760 $ 862 $ 3,161 $ 1,667 The following table summarizes the unrecognized compensation expense related to non-vested RSUs by type and the weighted-average period in which the expense is to be recognized: Unrecognized Compensation Weighted- Expense at Average September 30, 2021 Period (years) Service-based RSUs $ 1,818 1.38 Performance-based RSUs 2,988 1.80 Total $ 4,806 1.64 We recognize expense on a straight-line basis over the requisite service period for each separately vesting portion of the award as if the award was, in substance, multiple awards. The following table summarizes the status of these plans as of September 30, 2021: 2018 Plan 2014 Plan 2009 Plan 2004 Plan Directors' Plan Awards originally available 2,500,000 1,500,000 3,400,000 6,500,000 N/A Maximum potential RSU and cash settled awards outstanding 611,278 35,100 45,200 14,545 4,722 Maximum potential awards outstanding 611,278 35,100 45,200 14,545 4,722 RSUs and cash settled awards vested and released 117,633 — — — — Awards available for grant 1,771,089 — — — — 23 Service-Based Restricted Stock Units The following table summarizes the service-based RSU activity for the nine months ended September 30, 2021: Units Weighted Average Grant Date Fair Value Outstanding at December 31, 2020 367,428 $ 21.28 Granted 68,065 32.93 Vested and released ( 151,946 ) 20.91 Forfeited ( 15,506 ) 29.17 Outstanding at September 30, 2021 268,041 $ 24.00 Releasable at September 30, 2021 116,933 $ 15.86 Performance and Market-Based Restricted Stock Units The following table summarizes the performance and market-based RSU activity for the nine months ended September 30, 2021: Units Weighted Average Grant Date Fair Value Outstanding at December 31, 2020 225,559 $ 28.97 Granted 83,237 34.44 Attained by performance 18,107 28.33 Released ( 53,137 ) 28.33 Forfeited ( 43,099 ) 27.71 Outstanding at September 30, 2021 230,667 $ 31.28 Releasable at September 30, 2021 196,748 $ 32.62 Cash-Settled Restricted Stock Units Cash-Settled RSUs entitle the holder to receive the cash equivalent of one share of common stock for each unit when the unit vests. These RSUs are issued to key employees residing in foreign locations as direct compensation. Generally, these RSUs vest over a three-year period. Cash-Settled RSUs are classified as liabilities and are remeasured at each reporting date until settled. At September 30, 2021 and December 31, 2020 we had 32,085 and 30,009 cash-settled RSUs outstanding, respectively. At September 30, 2021 and December 31, 2020, liabilities of $ 276 and $ 396 , respectively, were included in accrued expenses and other liabilities on our Condensed Consolidated Balance Sheets. NOTE 17 — Fair Value Measurements The table below summarizes our financial liabilities that were measured at fair value on a recurring basis at September 30, 2021: Quoted Prices (Liability) Asset in Active Significant Carrying Markets for Other Significant Value at Identical Observable Unobservable September 30, Instruments Inputs Inputs 2021 (Level 1) (Level 2) (Level 3) Interest rate swaps $ ( 1,410 ) $ — $ ( 1,410 ) $ — Foreign currency hedges $ 474 $ — $ 474 $ — Contingent consideration $ ( 1,350 ) $ — $ — $ ( 1,350 ) 24 The table below summarizes the financial assets that were measured at fair value on a recurring basis as of December 31, 2020: Quoted Prices (Liability) Asset in Active Significant Carrying Markets for Other Significant Value at Identical Observable Unobservable December 31, Instruments Inputs Inputs 2020 (Level 1) (Level 2) (Level 3) Interest rate swaps $ ( 2,217 ) $ — $ ( 2,217 ) $ — Foreign currency hedges $ 1,125 $ — $ 1,125 $ — Contingent consideration $ ( 2,000 ) $ — $ — $ ( 2,000 ) We use interest rate swaps to convert a portion of our revolving credit facility’s outstanding balance from a variable rate of interest into a fixed rate and foreign currency forward contracts to hedge the effect of foreign currency changes on certain revenues and costs denominated in foreign currencies. These derivative financial instruments are measured at fair value on a recurring basis. The fair value of our interest rate swaps, and foreign currency hedges were measured using standard valuation models using market-based observable inputs over the contractual terms, including forward yield curves, among others. There is a readily determinable market for these derivative instruments, but that market is not active and therefore they are classified within Level 2 of the fair value hierarchy. The fair value of the contingent consideration requires significant judgment. The Company's fair value estimates used in the contingent consideration valuation are considered Level 3 fair value measurements. The fair value estimates were based on assumptions management believes to be reasonable, but that are inherently uncertain, including estimates of future revenues and timing of events and activities that are expected to take place. Refer to Note 3 for further discussion on contingent consideration. A roll-forward of the contingent consideration is as follows: Contingent Consideration Balance at December 31, 2020 $ 2,000 Settled in cash ( 500 ) Reclassified to payable in accrued expenses and other liabilities ( 150 ) Balance at September 30, 2021 $ 1,350 Less current portion in accrued expenses and other liabilities ( 1,200 ) Total long-term portion in other long-term obligations $ 150 Our long-term debt consists of debt outstanding under the revolving credit facility which is recorded at its carrying value. There is a readily determinable market for our long-term debt, and it is classified within Level 2 of the fair value hierarchy as the market is not deemed to be active. The fair value of long-term debt approximates carrying value and was determined by valuing a similar hypothetical coupon bond and attributing that value to our long-term debt under the revolving credit facility. NOTE 18 — Income Taxes The effective tax rates for the three and nine months ended September 30, 2021 and 2020 are as follows: Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, 2021 2020 2021 2020 Effective tax rate 28.9 % 22.2 % 32.5 % 24.4 % Our effective income tax rate was 28.9 % and 22.2 % in the third quarters of 2021 and 2020, respectively. This increase is primarily attributed to a one-time settlement expense related to the final annuity purchase made for the CTS Corporation U.S. pension plan. The third quarter 2021 tax rate was higher than the U.S. statutory federal tax rate for the same reason noted above. The third quarter 2020 tax rate was higher than the U.S. statutory federal tax rate due to foreign withholding taxes, state taxes, and foreign earnings that are taxed at higher rates. 25 Our effective income tax rate was 32.5 % and 24.4 % in the nine months ended September 30, 2021 and 2020, respectively. This increase is primarily attributed to the settlement expenses related to lump sum payments made for the CTS Corporation U.S. Pension Plan termination process in the second and third quarters of 2021. The tax rate in the first nine months of 2021 was higher than the U.S. statutory federal tax rate for the same reason noted above. The tax rate in the first nine months of 2020 was higher than the U.S. statutory federal tax rate primarily due to the establishment of valuation allowances on certain U.S. tax credits and the Company’s decision to no longer reinvest the earnings of its Taiwan subsidiary. 26