EXHIBIT 99.1
[LOGO] MTS
MTS SYSTEMS CORPORATION
14000 Technology Drive
Eden Prairie, MN 55344-2290
Telephone 952-937-4000
FAX 952-937-4515
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NEWS RELEASE
FOR IMMEDIATE RELEASE For More Information Contact:
NOVEMBER 19, 2003 Susan Knight, Chief Financial Officer
(952) 937-4000 Paul
Runice, Treasurer
(952) 937-4003
MTS FISCAL 2003 RESULTS EXCEED EARNINGS GUIDANCE ON 4% REVENUE INCREASE
Eden Prairie, Minn., November 19, 2003 - MTS Systems Corporation (NASDAQ: MTSC)
today reported net income of $5.1 million, or $0.24 per diluted share, for its
fourth quarter ended September 27, 2003, compared to net income of $5.9 million,
or $0.27 per diluted share, for the fourth quarter of fiscal 2002, on flat
revenue. Net income for fiscal 2003 was $20.3 million, or $0.95 per diluted
share, compared to fiscal 2002 net income of $4.3 million, or $0.20 per diluted
share, on higher revenue.
"MTS delivered revenue and earnings for the quarter slightly above our guidance.
Orders were below expectations due to continued customer restrictions on capital
spending, particularly in North America. We saw a positive orders trend develop
in the Sensors business, which experienced 15 percent orders growth in the
quarter. However, we still do not see any significant capital spending increases
in the Test segment markets," said Sidney W. Emery, Jr., Chairman and CEO.
"Fiscal 2003 demonstrates the strength of our strategy and the resolve of our
employees to deliver strong results despite weak market conditions."
Fourth quarter orders were less than expected at $72.1 million, a decrease of 15
percent compared to orders of $84.9 million for fourth quarter of fiscal 2002.
Fiscal 2003 orders were $324.2 million, a decrease of 8 percent from orders of
$351.6 million for fiscal 2002, with weakness in North American and Asian
markets more than offsetting strength in Europe. Backlog decreased 6 percent in
the quarter, from approximately $169 million to approximately $159 million.
Revenue exceeded the Company's expectations for fourth quarter at $83.1 million,
flat with revenue of $83.2 million for fourth quarter of fiscal 2002. Fiscal
2003 revenue was $340.1 million, an increase of 4 percent compared to $327.2
million for fiscal 2002, reflecting stronger volume in both the Test and
Industrial segments.
Fourth quarter income from operations was $8.7 million, compared to income from
operations of $8.2 million for fourth quarter of fiscal 2002, which included
$0.8 million of non-recurring audit and related fees associated with the
Company's fiscal 2002 and prior year restatement activity. Fourth quarter fully
diluted earnings per share were $0.24 compared to fully diluted earnings per
share of $0.27 for fourth quarter of fiscal 2002, primarily resulting from
higher tax expense in the current year quarter.
Fiscal 2003 income from operations was $33.1 million, compared to $31.3 million
for fiscal 2002, primarily due to higher year-over-year revenues. Fiscal 2003
fully diluted earnings per share before the impact of discontinued operations
and the cumulative effect of accounting changes was $1.00, compared to $1.04 for
fiscal 2002, reflecting the non-recurring favorable impact of the sale of an
investment in fiscal 2002. Fiscal 2003 fully diluted earnings per share were
$0.95, compared to fully diluted earnings per share of $0.20 for fiscal 2002,
reflecting the unfavorable results of discontinued operations and the cumulative
effect of accounting changes in fiscal 2002.
MTS News Release
Page 2 of 5
Cash and short-term investments at year-end fiscal 2003 were $132.7 million,
compared to $97.6 million at year-end fiscal 2002. The Company reduced total
debt outstanding by $14.3 million during the year, to $37.7 million at year-end
fiscal 2003 compared to $52.0 million at year-end fiscal 2002, and spent $16.0
million in stock repurchases.
SEGMENT RESULTS
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TEST SEGMENT:
Test segment orders for fourth quarter were $57.9 million, down 19 percent
compared to orders of $71.3 million for fourth quarter of fiscal 2002, primarily
due to the timing of large custom project orders. Backlog decreased 7 percent
from the third quarter, to approximately $150 million from approximately $162
million. Fourth quarter revenue was $70.6 million, a decrease of 3 percent
compared to $72.7 million for fourth quarter of fiscal 2002, primarily due to
project mix in backlog. Fourth quarter gross margin as a percentage of revenue
was 36.6 percent, a decrease of 0.9 percentage points compared to 37.5 percent
for fourth quarter of fiscal 2002, due to unfavorable capacity variances and
product mix. The segment reported $7.3 million in income from operations, a
decrease of 3 percent compared to $7.5 million for fourth quarter of fiscal
2002.
Orders for fiscal 2003 were $274.7 million, a decrease of 11 percent from fiscal
2002 orders of $308.2 million. Revenue for fiscal 2003 increased 2 percent to
$292.0 million, compared to $287.0 million for fiscal 2002. The gross margin
rate decreased 1.5 percentage points to 35.7 percent for fiscal 2003, compared
to 37.2 percent for fiscal 2002, primarily due to unfavorable product mix. The
segment reported $29.1 million in income from operations for fiscal 2003, flat
with fiscal 2002, as lower gross margins were mitigated by reduced general and
administrative expenses.
INDUSTRIAL SEGMENT:
Industrial segment orders increased 4 percent to $14.2 million for fourth
quarter, compared to orders of $13.6 million for fourth quarter of fiscal 2002,
reflecting increased Sensors business volume in Europe from new markets and
customer inventory replenishment. Backlog increased 29 percent from the third
quarter, to approximately $9 million from approximately $7 million. Revenue
increased 18 percent for the quarter, to $12.5 million compared to revenue of
$10.6 million for fourth quarter of fiscal 2002, reflecting European sales in
the Sensors business and increased development revenues in the AeroMet business.
Gross margin as a percentage of revenue was 48.8 percent, an increase of 4.6
percentage points compared to 44.2 percent for fourth quarter of fiscal 2002,
due to favorable capacity variances. Income from operations was $1.4 million for
the fourth quarter, compared to $0.7 million for fourth quarter of fiscal 2002,
driven by improved volume.
Orders for fiscal 2003 were $49.5 million, an increase of 14 percent from fiscal
2002 orders of $43.4 million. Fiscal 2003 revenue increased 20 percent, to $48.1
million compared to $40.2 million for fiscal 2002. The gross margin rate
increased 0.3 percentage points in fiscal 2003 to 48.0 percent, compared to 47.7
percent for fiscal 2002. Income from operations increased 82 percent to $4.0
million on stronger revenue, compared to $2.2 million for fiscal 2002.
FOURTH QUARTER CONFERENCE CALL
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A conference call will be held on Thursday, November 20th, at 9:00 a.m. CST
(10:00 a.m. EST). Call +1-773-756-4702; state the Passcode "Fourth Quarter" and
conference leader "Chip Emery". Telephone re-play will be available through 6:00
p.m. CDT, December 2, 2003. Call +1-402-530-7632 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 6:00 p.m. CDT, February 20, 2004.
MTS News Release
Page 3 of 5
ABOUT MTS SYSTEMS CORPORATION
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MTS Systems Corporation is a global supplier of testing products that help
customers accelerate and improve their design, development, and manufacturing
processes. MTS products are used for determining the mechanical behavior of
materials, products, and structures and include computer-based testing and
simulation systems, modeling and testing software, and consulting services. The
Company is also a leading manufacturer of industrial position sensors. MTS had
1,630 employees and revenue of $340 million for the fiscal year ended September
27, 2003. Additional information about MTS can be found on the worldwide web at
http://www.mts.com.
THIS RELEASE MAY CONTAIN "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 ANY 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
Page 4 of 5
MTS SYSTEMS CORPORATION
Consolidated Balance Sheets
(in thousands of dollars, except per share data)
SEPTEMBER 27, September 28,
2003 2002
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ASSETS
Current Assets:
Cash and cash equivalents $ 74,183 $ 62,456
Short-term investments 58,560 35,094
Accounts receivable, net of allowances for doubtful accounts 59,637 59,943
Unbilled contracts and retainage receivable 21,939 32,276
Inventories 34,709 40,245
Prepaid expense 3,928 5,018
Current deferred tax asset 9,682 8,739
Other current assets 2,075 19
Assets of discontinued operations -- 15,311
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Total current assets 264,713 259,101
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Property and Equipment:
Land 3,247 3,247
Buildings and improvements 47,031 44,723
Machinery and equipment 84,834 79,679
Accumulated depreciation (78,908) (70,765)
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Total property and equipment, net 56,204 56,884
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Goodwill 4,383 4,268
Other assets 2,562 3,725
Non-current deferred tax asset 2,516 1,593
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Total Assets $ 330,378 $ 325,571
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LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:
Notes payable $ 383 $ 598
Current maturities of long-term debt 6,839 8,605
Accounts payable 10,483 12,688
Accrued payroll-related costs 24,742 20,421
Advance payments from customers 40,456 37,650
Accrued warranty costs 4,862 4,482
Accrued income taxes 5,571 11,120
Other accrued liabilities 15,838 15,399
Liabilities of discontinued operations -- 1,793
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Total current liabilities 109,174 112,756
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Deferred income taxes 6,265 1,519
Long-term debt, less current maturities 30,487 42,789
Other long-term liabilities 8,346 6,242
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Total Liabilities 154,272 163,306
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Shareholders' Investment:
Common stock, $.25 par; 64,000 shares authorized:
20,719 and 21,208 shares issued and outstanding 5,180 5,302
Additional paid-in capital 1,534 9,770
Retained earnings 162,076 146,857
Accumulated other comprehensive income 7,316 336
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Total shareholders' investment 176,106 162,265
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Total Liabilities and Shareholders' Investment $ 330,378 $ 325,571
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MTS News Release
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MTS SYSTEMS CORPORATION
Consolidated Statements of Income
(in thousands of dollars, except per share data)
Three Months Ended Year Ended
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SEPTEMBER 27, September 28, SEPTEMBER 27, September 28,
2003 2002 2003 2002
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Revenue $ 83,100 $ 83,227 $ 340,087 $ 327,185
Cost of sales 51,169 51,293 212,790 201,362
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Gross profit 31,931 31,934 127,297 125,823
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Operating expenses:
Selling 12,908 12,341 52,210 51,120
General and administrative 6,309 8,029 26,388 27,924
Research and development 3,973 3,378 15,583 15,491
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Total operating expenses 23,190 23,748 94,181 94,535
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Income from operations 8,741 8,186 33,116 31,288
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Interest expense 817 1,132 3,621 4,203
Interest income (405) (672) (2,169) (1,201)
Gain on sale of investments -- -- -- (2,630)
Other expense (income), net (57) (1,167) (852) (1,967)
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Income before income taxes, discontinued operations,
and cumulative effect of accounting change 8,386 8,893 32,516 32,883
Provision for income tax 3,262 2,744 11,225 10,613
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Income before discontinued operations and
cumulative effect of accounting change 5,124 6,149 21,291 22,270
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Discontinued operations:
(Loss) income from discontinued operations, net of tax -- (281) 199 (4,267)
Loss on sale of discontinued businesses, net of tax -- -- (1,177) --
Cumulative effect of accounting change, net of tax -- -- -- (9,198)
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Loss from discontinued operations, net of tax -- (281) (978) (13,465)
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Income before cumulative effect of accounting change
on continuing operations 5,124 5,868 20,313 8,805
Cumulative effect of accounting change on continuing
operations, net of tax -- -- -- (4,523)
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Net income $ 5,124 $ 5,868 $ 20,313 $ 4,282
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Earnings per share:
Basic-
Income before discontinued operations and cumulative
effect of accounting change $ 0.24 $ 0.29 $ 1.01 $ 1.06
Discontinued operations:
(Loss) income from discontinued operations, net of tax 0.00 (0.01) 0.01 (0.20)
Loss on sale of discontinued businesses, net of tax 0.00 0.00 (0.06) 0.00
Cumulative effect of accounting change, net of tax 0.00 0.00 0.00 (0.44)
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Loss from discontinued operations, net of tax 0.00 (0.01) (0.05) (0.64)
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Income before cumulative effect of accounting change
on continuing operations 0.24 0.28 0.96 0.42
Cumulative effect of accounting change, net of tax 0.00 0.00 0.00 (0.22)
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Earnings per share $ 0.24 $ 0.28 $ 0.96 $ 0.20
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Weighted average number of common shares outstanding - basic 21,183 21,205 21,119 21,100
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Diluted-
Income before discontinued operations and cumulative
effect of accounting change $ 0.24 $ 0.28 $ 1.00 $ 1.04
Discontinued operations:
(Loss) income from discontinued operations, net of tax 0.00 (0.01) 0.01 (0.20)
Loss on sale of discontinued businesses, net of tax 0.00 0.00 (0.06) 0.00
Cumulative effect of accounting change, net of taxes 0.00 0.00 0.00 (0.43)
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Loss from discontinued operations, net of tax 0.00 (0.01) (0.05) (0.63)
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Income before cumulative effect of accounting change
on continuing operations 0.24 0.27 0.95 0.41
Cumulative effect of accounting change, net of tax 0.00 0.00 0.00 (0.21)
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Earnings per share $ 0.24 $ 0.27 $ 0.95 $ 0.20
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Weighted average number of common shares outstanding - diluted 21,703 21,601 21,474 21,433
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