EXHIBIT 99.1
[LOGO] MTS SYSTEMS CORPORATION
- ----- 14000 Technology Drive
MTS Eden Prairie, MN 55344-2290
- -----(R) Telephone 952-937-4000
FAX 952-937-4515
- --------------------------------------------------------------------------------
NEWS RELEASE
FOR IMMEDIATE RELEASE For More Information Contact:
JULY 22, 2003 Susan Knight, Chief Financial Officer
(952) 937-4000 Paul
Runice, Treasurer
(952) 937-4003
MTS REPORTS THIRD QUARTER RESULTS AND CONFIRMS 2003 EPS GUIDANCE
Eden Prairie, Minn., July 22, 2003 - MTS Systems Corporation (Nasdaq: MTSC)
today reported net income of $5.7 million, or $0.27 per diluted share, for its
third quarter ended June 28, 2003, compared to net income of $3.3 million, or
$0.15 per diluted share, for the third quarter of fiscal 2002, on flat
revenue. Cash and short-term investments increased $32.5 million in the
quarter, driven by continued favorable working capital performance in addition
to proceeds from the sale of discontinued operations.
"We delivered operating profit for the quarter in line with our expectations
for the second half of the year, while further strengthening the balance
sheet," said Sidney W. Emery, Jr., Chairman and CEO. "While orders were
greater than anticipated, we see no significant near-term improvement in
capital spending in our markets. We remain confident that MTS will deliver
earnings per share in the high $0.80's to low $0.90's range for fiscal 2003."
Third quarter orders were slightly more than expected at $97.8 million, an
increase of 5 percent compared to orders of $93.2 million for third quarter of
fiscal 2002, with strength in Europe and Asia more than offsetting continued
weakness in North America. Backlog increased approximately 14 percent in the
quarter, from $148 million to $169 million.
Third quarter revenue was in line with expectations at $79.3 million, roughly
flat with revenue of $79.7 million for third quarter of fiscal 2002.
Income before discontinued operations was $4.1 million, or $0.19 per diluted
share, compared to income before discontinued operations of $3.4 million, or
$0.16 per diluted share, for the third quarter of fiscal 2002. Associated with
the third quarter sale of its Automation division, the Company recorded a gain
on discontinued operations of $1.2 million, net of taxes, or $0.06 per share,
in addition to $0.02 per share from operations of the discontinued businesses
during the quarter.
SEGMENT RESULTS
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TEST SEGMENT (FORMERLY "MECHANICAL TESTING & SIMULATION" SEGMENT):
Orders for the Test segment were $85.7 million for the third quarter, up 4
percent compared to orders of $82.8 million for third quarter of fiscal 2002,
primarily due to strength in the international motorsports and aerospace
markets. The automotive and infrastructure markets continue to experience weak
demand. Backlog increased 15 percent, from $141 million to approximately $162
million. Third quarter revenue was $66.7 million, a decrease of 4 percent
compared to $69.3 million for third
MTS News Release
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quarter of fiscal 2002, primarily due to lower backlog at the beginning of the
quarter and the timing of new bookings during the quarter. The gross margin rate
for the Test segment was 36.6 percent, a decrease of 0.5 percentage points
compared to 37.1 percent for third quarter of fiscal 2002, due to product mix.
The segment reported $6.1 million in income from operations, unchanged compared
to the third quarter of fiscal 2002, on a 4 percent decline in revenue.
INDUSTRIAL SEGMENT (FORMERLY "FACTORY AUTOMATION" SEGMENT):
Orders for the Industrial segment were $12.1 million for the third quarter, an
increase of 16 percent compared to orders of $10.4 million for third quarter
of fiscal 2002. Orders for the Sensors business increased in both North
America and Europe due to customer inventory replenishment and sales into new
markets. Backlog remained flat in the quarter at approximately $7 million.
Revenue was $12.6 million for the quarter, an increase of 21 percent compared
to revenue of $10.4 million for third quarter of fiscal 2002, driven by
European sales in the Sensors business and stronger development revenues
associated with the AeroMet business. The Industrial gross margin rate was
50.1 percent, unchanged from third quarter of fiscal 2002. Income from
operations was $1.1 million compared to $0.6 million for third quarter of
fiscal year 2002, driven by improved volume and reduced operating expenses.
THIRD QUARTER CONFERENCE CALL
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A conference call will be held on Wednesday, July 23, at 9:00 a.m. CDT (10:00
a.m. EDT). Call +1-773-756-4703; state the Passcode "Third Quarter" and
conference leader "Chip Emery". Telephone re-play will be available through
5:00 p.m. CDT, August 22, 2003. Call +1-402-530-8077 and state the Passcode
"4006."
If you prefer to listen live over the Internet - please log on to the web at
http://www.mts.com/news/financial_news.htm and click on the Vcall webcast image.
The call will be archived through 5:00 p.m. CDT, August 22, 2003.
ABOUT MTS SYSTEMS CORPORATION
- -----------------------------
MTS Systems Corporation is a global supplier of integrated simulation
solutions that help customers accelerate and improve their design,
development, and manufacturing processes. MTS supplies products for
determining the mechanical behavior of materials, products and structures -
including computer-based testing and simulation systems, modeling and testing
software, and consulting services - as well as products for automating
manufacturing processes. MTS had 1,900 employees and revenue from continuing
operations of $327 million for the fiscal year ended September 28, 2002.
Additional information on MTS can be found on the worldwide web at
http://www.mts.com.
THIS RELEASE CONTAINS "FORWARD-LOOKING STATEMENTS" MADE PURSUANT TO THE SAFE
HARBOR PROVISION OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 THAT
ARE SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES, AS WELL AS ASSUMPTIONS, THAT
COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM HISTORICAL RESULTS AND
THOSE PRESENTLY ANTICIPATED OR PROJECTED. IN ADDITION TO THE FACTORS DISCUSSED
ABOVE, OTHER IMPORTANT RISK FACTORS ARE DELINEATED IN THE COMPANY'S SEC
REPORTS, INCLUDING FORM 10-K FOR THE YEAR ENDED SEPTEMBER 28, 2002.
(more)
MTS News Release
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MTS SYSTEMS CORPORATION
Consolidated Balance Sheets
(unaudited - in thousands of dollars, except per share data)
JUNE 28, September 28,
2003 2002
--------- ---------
ASSETS
Current Assets:
Cash and cash equivalents $ 99,034 $ 62,456
Short-term investments 46,696 35,094
Accounts receivable, net of allowances for doubtful accounts 50,613 59,943
Unbilled contracts and retainage receivable 27,215 32,276
Inventories 31,503 34,773
Prepaid expense 4,658 5,380
Current deferred tax asset 8,739 8,739
Other current assets 940 19
Assets of discontinued operations -- 15,311
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Total current assets 269,398 253,991
--------- ---------
Property and Equipment:
Land 3,247 3,247
Buildings and improvements 47,276 44,723
Machinery and equipment 84,219 79,679
Accumulated depreciation (77,773) (70,765)
--------- ---------
Total property and equipment, net 56,969 56,884
--------- ---------
Goodwill 4,388 4,268
Other assets 2,477 3,363
Non-current deferred tax asset 1,593 1,593
--------- ---------
Total Assets $ 334,825 $ 320,099
========= =========
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:
Notes payable $ 400 $ 598
Current maturities of long-term debt 6,831 8,605
Accounts payable 13,562 13,137
Accrued payroll-related costs 31,365 26,112
Advance payments from customers 43,962 37,209
Accrued warranty costs 5,036 4,482
Accrued income taxes 5,807 11,120
Other accrued liabilities 10,299 9,917
Liabilities of discontinued operations -- 1,795
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Total current liabilities 117,262 112,975
--------- ---------
Deferred income taxes 1,881 1,519
Long-term debt, less current maturities 36,044 42,790
Other long-term liabilities 926 550
--------- ---------
Total Liabilities 156,113 157,834
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Shareholders' Investment:
Common stock, $.25 par; 64,000,000 shares authorized:
21,172,000 and 21,208,000 shares issued and outstanding 5,293 5,302
Additional paid-in capital 8,589 9,770
Retained earnings 158,245 146,857
Accumulated other comprehensive income 6,585 336
--------- ---------
Total shareholders' investment 178,712 162,265
--------- ---------
Total Liabilities and Shareholders' Investment $ 334,825 $ 320,099
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MTS News Release
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MTS SYSTEMS CORPORATION
Consolidated Statements of Income
(unaudited - in thousands of dollars, except per share data)
Three Months Ended Nine Months Ended
----------------------- -----------------------
JUNE 28, June 30, JUNE 28, June 30,
2003 2002 2003 2002
--------- --------- --------- ---------
Revenue $ 79,312 $ 79,695 256,987 $ 243,958
Cost of sales 48,573 48,872 161,622 150,069
--------- --------- --------- ---------
Gross profit 30,739 30,823 95,365 93,889
--------- --------- --------- ---------
Operating expenses:
Selling 12,951 12,611 39,303 38,779
General and administrative 6,637 7,988 20,078 19,895
Research and development 3,986 3,540 11,609 12,113
--------- --------- --------- ---------
Total operating expenses 23,574 24,139 70,990 70,787
--------- --------- --------- ---------
Income from operations 7,165 6,684 24,375 23,102
--------- --------- --------- ---------
Interest expense 811 969 2,804 3,071
Interest income (660) (224) (1,764) (529)
Gain on sale of investments -- -- -- (2,630)
Other expense (income), net 917 898 (795) (800)
--------- --------- --------- ---------
Income before income taxes, discontinued operations,
and cumulative effect of accounting change 6,097 5,041 24,130 23,990
Provision for income tax 2,012 1,620 7,963 7,912
--------- --------- --------- ---------
Income before discontinued operations and
cumulative effect of accounting change 4,085 3,421 16,167 16,078
--------- --------- --------- ---------
Discontinued operations:
Income (loss) from discontinued operations, net of tax 419 (162) 199 (3,943)
Gain (loss) on sale of discontinued businesses, net of tax 1,225 -- (1,177) --
Cumulative effect of accounting change, net of tax -- -- -- (9,198)
--------- --------- --------- ---------
Income (loss) from discontinued operations, net of tax 1,644 (162) (978) (13,141)
--------- --------- --------- ---------
Income before cumulative effect of accounting change
on continuing operations 5,729 3,259 15,189 2,937
Cumulative effect of accounting change on continuing
operations, net of tax -- -- -- (4,523)
--------- --------- --------- ---------
Net income (loss) $ 5,729 $ 3,259 $ 15,189 $ (1,586)
========= ========= ========= =========
Earnings (loss) per share:
Basic-
Income before discontinued operations and cumulative
effect of accounting change $ 0.19 $ 0.16 $ 0.77 $ 0.76
Discontinued operations:
Income (loss) from discontinued operations, net of tax 0.02 (0.01) 0.01 (0.19)
Gain (loss) on sale of discontinued businesses, net of tax 0.06 0.00 (0.06) 0.00
Cumulative effect of accounting change, net of tax 0.00 0.00 0.00 (0.44)
--------- --------- --------- ---------
Income (loss) from discontinued operations, net of tax 0.08 (0.01) (0.05) (0.63)
--------- --------- --------- ---------
Income before cumulative effect of accounting change
on continuing operations 0.27 0.15 0.72 0.13
Cumulative effect of accounting change, net of tax 0.00 0.00 0.00 (0.21)
--------- --------- --------- ---------
Earnings (loss) per share $ 0.27 $ 0.15 $ 0.72 $ (0.08)
========= ========= ========= =========
Weighted average number of common shares outstanding - basic 21,049 21,123 21,098 21,069
========= ========= ========= =========
Diluted-
Income before discontinued operations and cumulative
effect of accounting change $ 0.19 $ 0.16 $ 0.76 $ 0.75
Discontinued operations:
Income (loss) from discontinued operations, net of tax 0.02 (0.01) 0.01 (0.18)
Gain (loss) on sale of discontinued businesses, net of tax 0.06 0.00 (0.06) 0.00
Cumulative effect of accounting change, net of taxes 0.00 0.00 0.00 (0.43)
--------- --------- --------- ---------
Income (loss) from discontinued operations, net of tax 0.08 (0.01) (0.05) (0.61)
--------- --------- --------- ---------
Income before cumulative effect of accounting change
on continuing operations 0.27 0.15 0.71 0.14
Cumulative effect of accounting change, net of tax 0.00 0.00 0.00 (0.21)
--------- --------- --------- ---------
Earnings (loss) per share $ 0.27 $ 0.15 $ 0.71 $ (0.07)
========= ========= ========= =========
Weighted average number of common shares outstanding - diluted 21,433 21,411 21,397 21,381
========= ========= ========= =========