Exhibit 99.1
The following unaudited pro forma statements represent the December 28, 2002
balance sheet adjusted to reflect the sale of the assets and liabilities of the
Automation division to Parker-Hannifin Corporation, Performance Controls, Inc.
and Hitachi Medical Corporation as if such sales had taken place on December 28,
2002:
MTS SYSTEMS CORPORATION
Consolidated Balance Sheets
(unaudited - in thousands of dollars)
As of December 28, 2002
------------------------------------------
As Pro Forma
Reported Adjustments Pro Forma
------------------------------------------
ASSETS
Current Assets:
Cash and cash equivalents $ 53,293 $ 14,295 a $ 67,588
Short-term investments 42,394 -- 42,394
Accounts receivable, net of allowances for doubtful accounts 65,593 (4,281) b 61,312
Unbilled contracts and retainage receivable 35,218 -- 35,218
Inventories 39,771 (6,325) b 33,446
Prepaid expense 6,664 (113) b 6,551
Current deferred tax asset 9,068 -- 9,068
--------- --------- ---------
Total current assets 252,001 3,576 255,577
--------- --------- ---------
Property and Equipment:
Land 3,247 -- 3,247
Buildings and improvements 46,952 (1,553) b 45,399
Machinery and equipment 88,467 (7,159) b 81,308
Accumulated depreciation (79,598) 6,153 b (73,445)
--------- --------- ---------
Total property and equipment, net 59,068 (2,559) 56,509
--------- --------- ---------
Goodwill 4,304 -- 4,304
Other assets 3,943 (678) b 3,265
Non-current deferred tax asset 1,611 -- 1,611
--------- --------- ---------
Total Assets $ 320,927 $ 339 $ 321,266
========= ========= =========
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:
Notes payable to banks $ 618 $ -- $ 618
Current maturities of long-term debt 6,052 -- 6,052
Accounts payable 11,738 (1,281) b 10,457
Accrued payroll-related costs 29,621 (498) b 29,123
Advance payments from customers 35,953 -- 35,953
Accrued warranty costs 5,718 (522) b 5,196
Accrued income taxes 8,744 839 b,c 9,583
Other accrued liabilities 9,835 3,000 b,d,e 12,835
--------- --------- ---------
Total current liabilities 108,279 1,538 109,817
--------- --------- ---------
Deferred income taxes 1,714 (114) b 1,600
Long-term debt, less current maturities 42,996 -- 42,996
Other long-term liabilities 576 -- 576
--------- --------- ---------
Total Liabilities 153,565 1,424 154,989
--------- --------- ---------
Shareholders' Investment:
Common stock 5,283 -- 5,283
Additional paid-in capital 9,073 -- 9,073
Retained earnings 150,957 (1,297) c,f 149,660
Accumulated other comprehensive income 2,049 212 g 2,261
--------- --------- ---------
Total shareholders' investment 167,362 (1,085) 166,277
--------- --------- ---------
Total Liabilities and Shareholders' Investment $ 320,927 $ 339 $ 321,266
========= ========= =========
Exhibit 99.1
Pro forma adjustments to reflect the sale of the Automation division to
Parker-Hannifin Corporation, Performance Controls, Inc. and Hitachi Medical
Corporation. Amounts referenced include the following:
a. Cash proceeds from sale of Automation division including
$11.75 million from the Parker-Hannifin Corporation
transaction and $3.36 million from the Performance Controls,
Inc. and Hitachi Medical Corporation transactions, net of
aggregate purchase price adjustments of $0.81 million at
December 28, 2002.
b. Assets sold to and liabilities assumed by Parker-Hannifin
Corporation, Performance Controls, Inc. and Hitachi Medical
Corporation under the purchase agreements.
c. The Company will realize a $0.9 million tax benefit on the
loss of the sale of Automation division.
d. Accrual for $0.6 million for future rent obligations at the
Montgomeryville, PA leased facility, net of estimated sublease
payments.
e. Transaction related expenses aggregated $2.4 million including
fees for investment bankers, professional service providers,
and other one-time incremental transaction costs.
f. Loss on sale of Automation division assuming the transactions
occurred on December 28, 2002.
g. Charge-off of cumulative translation adjustment related to
sale of foreign Automation division operations to
Parker-Hannifin Corporation.
Exhibit 99.1
The following pro forma and unaudited statement of operations for the twelve
months ended September 28, 2002; represent the results of operations as if the
sales to Parker-Hannifin Corporation, Performance Controls, Inc. and Hitachi
Medical Corporation occurred on September 30, 2001:
MTS SYSTEMS CORPORATION
Consolidated Statements of Income
(unaudited - in thousands of dollars, except per share data)
Twelve Months Ended September 28, 2002
-----------------------------------------
As Pro Forma
Reported Adjustments Pro Forma
-----------------------------------------
Revenue $ 355,871 (28,686) a $ 327,185
Cost of sales 226,856 (25,494) a 201,362
--------- --------- ---------
Gross profit 129,015 (3,192) 125,823
--------- --------- ---------
Operating expenses:
Selling 53,096 (2,627) a 50,469
General and administrative 32,098 (3,523) a 28,575
Research and development 18,990 (3,499) a 15,491
--------- --------- ---------
Total operating expenses 104,184 (9,649) 94,535
--------- --------- ---------
Income from operations 24,831 6,457 31,288
--------- --------- ---------
Interest expense 4,343 (140) 4,203
Interest income (1,145) (56) (1,201)
Gain on sale of investment (2,630) -- (2,630)
Other expense (income), net (1,659) (308) (1,967)
--------- --------- ---------
Income before income taxes and cumulative effect of accounting change 25,922 6,961 32,883
Provision for income taxes 7,919 2,694 b 10,613
--------- --------- ---------
Income before cumulative effect of accounting change 18,003 4,267 22,270
Cumulative effect of accounting change, net of taxes (13,721) 9,198 c (4,523)
--------- --------- ---------
Net income $ 4,282 $ 13,465 $ 17,747
========= ========= =========
Earnings per share before cummulative effect of accounting change:
Basic $ 0.85 $ 0.20 $ 1.05
========= ========= =========
Diluted $ 0.84 $ 0.20 $ 1.04
========= ========= =========
Weighted average number of common shares outstanding - basic 21,100 21,100 21,100
========= ========= =========
Weighted average number of common shares outstanding - diluted 21,433 21,433 21,433
========= ========= =========
Exhibit 99.1
Pro forma adjustments to reflect the sale of the Automation division to
Parker-Hannifin Corporation, Performance Controls, Inc. and Hitachi Medical
Corporation:
a. Elimination of operating results of the Automation division,
net of inter-company management fee charges of $1.1 million
included in general and administrative expenses. Interest
expense does not include the allocation of interest on
corporate debt.
b. Tax benefit on loss of Automation division.
c. Write-off of goodwill of the Automation division, upon the
adoption of SFAS No. 142, "Goodwill and Other Intangible
Assets."
Exhibit 99.1
The following unaudited pro forma statement of operations for the three months
ended December 28, 2002, represents the results as if the sales to
Parker-Hannifin Corporation, Performance Controls, Inc. and Hitachi Medical
Corporation occurred on September 30, 2001:
MTS SYSTEMS CORPORATION
Consolidated Statements of Income
(unaudited - in thousands of dollars, except per share data)
Three Months Ended December 28, 2002
-----------------------------------------
As Pro Forma
Reported Adjustments Pro Forma
-----------------------------------------
Revenue $ 91,261 $ (6,822) a $ 84,439
Cost of sales 58,095 (4,961) a 53,134
--------- --------- ---------
Gross profit 33,166 (1,861) 31,305
--------- --------- ---------
Operating expenses:
Selling 13,168 (634) a 12,534
General and administrative 6,920 (770) a 6,150
Research and development 4,286 (706) a 3,580
--------- --------- ---------
Total operating expenses 24,374 (2,110) 22,264
--------- --------- ---------
Income from operations 8,792 249 9,041
--------- --------- ---------
Interest expense 1,127 (83) 1,044
Interest income (491) 5 (486)
Other expense (income), net 18 (2) 16
--------- --------- ---------
Income before income taxes 8,138 329 8,467
Provision for income taxes 2,767 126 b 2,893
--------- --------- ---------
Net income $ 5,371 $ 203 $ 5,574
========= ========= =========
Earnings per share:
Basic $ 0.25 $ 0.01 $ 0.26
========= ========= =========
Diluted $ 0.25 $ 0.01 $ 0.26
========= ========= =========
Weighted average number of common shares outstanding - basic 21,132 21,132 21,132
========= ========= =========
Weighted average number of common shares outstanding - diluted 21,355 21,355 21,355
========= ========= =========
Exhibit 99.1
Pro forma adjustments to reflect the sale of the Automation division to
Parker-Hannifin Corporation, Performance Controls, Inc. and Hitachi Medical
Corporation:
a. Elimination of operating results of the Automation division,
net of inter-company management fee charges of $0.3 million
included in general and administrative expenses. Interest
expense does not include the allocation of interest on
corporate debt.
b. Tax benefit on loss of Automation division.