10-Q

UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION 

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

For the quarterly period ended March 30, 2019

or  

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

For the transition period from __________ to __________  

Commission File Number: 000-02382 

MTS SYSTEMS CORPORATION

(Exact name of Registrant as specified in its charter) 

Minnesota	41-0908057
(State or other jurisdiction  of incorporation or organization)	(I.R.S. Employer Identification No.)
14000 Technology Drive Eden Prairie, Minnesota	55344
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code: (952) 937-4000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒  Yes  ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☒  Yes  ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒	Accelerated filer ☐	Emerging growth company ☐
Non-accelerated filer ☐	Smaller reporting company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes  ☒  No

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.25 par value	MTSC	The Nasdaq Stock Market LLC

As of May 2, 2019, there were 17,954,477 shares of common stock outstanding.

MTS Systems Corporation 

Quarterly Report on Form 10-Q 

For the Three Months Ended March 30, 2019

Table of Contents

PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets as of March 30, 2019 (unaudited) and September 29, 2018	2
	Consolidated Statements of Income for the Three and Six Months Ended March 30, 2019 and March 31, 2018 (unaudited)	3
	Consolidated Statements of Comprehensive Income for the Three and Six Months Ended March 30, 2019 and March 31, 2018 (unaudited)	4
	Consolidated Statements of Shareholders' Equity for the Three and Six Months Ended March 30, 2019 and March 31, 2018 (unaudited)	5
	Consolidated Statements of Cash Flows for the Six Months Ended March 30, 2019 and March 31, 2018 (unaudited)	7
	Notes to Consolidated Financial Statements (unaudited)	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	34
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	47
Item 4.	Controls and Procedures	48
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	48
Item 1A.	Risk Factors	48
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	48
Item 6.	Exhibits	49
SIGNATURES		50

1

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

MTS SYSTEMS CORPORATION

Consolidated Balance Sheets

(in thousands, except per share data)

	March 30, 2019			September 29, 2018
	(Unaudited)			(Note)
Assets
Current assets
Cash and cash equivalents	$	74,122		$	71,804
Accounts receivable, net of allowance for doubtful accounts of $5,277 and $5,004, respectively	117,349			122,243
Unbilled accounts receivable, net	71,175			70,474
Inventories, net	179,071			139,109
Prepaid expenses and other current assets	32,307			24,572
Total current assets	474,024			428,202
Property and equipment, net	88,126			90,269
Goodwill	403,425			369,275
Intangible assets, net	287,101			246,138
Other long-term assets	3,900			2,263
Deferred income taxes	4,058			3,249
Total assets	$	1,260,634		$	1,139,396
Liabilities and Shareholders' Equity
Current liabilities
Current maturities of long-term debt, net	$	28,076		$	32,738
Accounts payable	39,941			47,886
Accrued payroll and related costs	39,181			43,554
Advance payments from customers	102,033			80,131
Accrued warranty costs	4,741			5,418
Accrued income taxes	5,709			4,928
Accrued dividends	5,328			5,312
Other accrued liabilities	34,494			19,146
Total current liabilities	259,503			239,113
Long-term debt, less current maturities, net	436,344			355,640
Deferred income taxes	50,659			46,482
Non-current accrued income taxes	6,985			6,158
Defined benefit pension plan obligation	9,581			9,177
Other long-term liabilities	12,508			4,894
Total liabilities	775,580			661,464
Shareholders' Equity
Common stock, $0.25 par value; 64,000 shares authorized: 17,900 and 17,856 shares issued and outstanding as of March 30, 2019 and September 29, 2018, respectively	4,475			4,464
Additional paid-in capital	176,918			171,407
Retained earnings	308,279			300,585
Accumulated other comprehensive income (loss)	(4,618		)	1,476
Total shareholders' equity	485,054			477,932
Total liabilities and shareholders' equity	$	1,260,634		$	1,139,396

Note: The Consolidated Balance Sheet as of September 29, 2018 has been derived from the audited consolidated financial statements at that date.

The accompanying Notes to Consolidated Financial Statements (Unaudited) are an integral part of these consolidated financial statements.

2

MTS SYSTEMS CORPORATION

Consolidated Statements of Income (Unaudited)

(in thousands, except per share data)

	Three Months Ended						Six Months Ended
	March 30, 2019			March 31, 2018			March 30, 2019			March 31, 2018
Revenue
Product	$	206,690		$	165,453		$	381,769		$	334,694
Service	26,356			25,870			54,458			50,791
Total revenue	233,046			191,323			436,227			385,485
Cost of Sales
Product	129,579			101,133			237,746			201,627
Service	16,117			15,365			32,826			31,105
Total cost of sales	145,696			116,498			270,572			232,732
Gross profit	87,350			74,825			165,655			152,753
Operating expenses
Selling and marketing	33,395			30,597			65,484			62,625
General and administrative	22,105			18,992			43,183			39,554
Research and development	7,676			8,626			14,848			17,467
Total operating expenses	63,176			58,215			123,515			119,646
Income from operations	24,174			16,610			42,140			33,107
Interest expense, net	(7,368		)	(6,708		)	(14,186		)	(13,512		)
Other income (expense), net	270			274			319			51
Income before income taxes	17,076			10,176			28,273			19,646
Income tax provision (benefit)	2,916			1,738			3,612			(21,943		)
Net income	$	14,160		$	8,438		$	24,661		$	41,589
Earnings per share
Basic
Earnings per share	$	0.74		$	0.44		$	1.28		$	2.17
Weighted average common shares outstanding	19,251			19,150			19,234			19,137
Diluted
Earnings per share	$	0.73		$	0.44		$	1.27		$	2.16
Weighted average common shares outstanding	19,441			19,273			19,393			19,258
Dividends declared per share	$	0.30		$	0.30		$	0.60		$	0.60

The accompanying Notes to Consolidated Financial Statements (Unaudited) are an integral part of these consolidated financial statements.

3

MTS SYSTEMS CORPORATION

Consolidated Statements of Comprehensive Income (Unaudited)

(in thousands)

	Three Months Ended						Six Months Ended
	March 30, 2019			March 31, 2018			March 30, 2019			March 31, 2018
Net income	$	14,160		$	8,438		$	24,661		$	41,589
Other comprehensive income (loss), net of tax
Foreign currency translation gain (loss) adjustments	(1,168		)	5,172			(2,671		)	7,671
Derivative instruments
Unrealized net gain (loss)	(392		)	240			(1,808		)	1,270
Net (gain) loss reclassified to earnings	(567		)	687			(1,481		)	790
Defined benefit pension plan
Unrealized net gain (loss)	959			(641		)	(586		)	(271		)
Net (gain) loss reclassified to earnings	95			95			191			186
Currency exchange rate gain (loss)	146			(181		)	261			(268		)
Other comprehensive income (loss)	(927		)	5,372			(6,094		)	9,378
Comprehensive income (loss)	$	13,233		$	13,810		$	18,567		$	50,967

The accompanying Notes to Consolidated Financial Statements (Unaudited) are an integral part of these consolidated financial statements.

4

MTS SYSTEMS CORPORATION

Consolidated Statements of Shareholders' Equity (Unaudited)

(in thousands)

	Three Months Ended March 30, 2019
	Common Stock					Additional Paid-In Capital						Accumulated Other Comprehensive Income (Loss)			Total Shareholders' Equity
	Shares Issued		Amount						Retained Earnings
Balance, December 29, 2018	17,872		$	4,468		$	173,065		$	299,493		$	(3,691	)	$	473,335
Total comprehensive income	—		—			—			14,160			(927		)	13,233
Exercise of stock options	3		1			105			—			—			106
Stock-based compensation	10		2			3,237			—			—			3,239
Issuance for employee stock purchase plan	16		4			553			—			—			557
Common stock purchased and retired	(1	)	—			(42		)	—			—			(42		)
Dividends, $0.30 per share	—		—			—			(5,374		)	—			(5,374		)
Balance, March 30, 2019	17,900		$	4,475		$	176,918		$	308,279		$	(4,618	)	$	485,054
	Six Months Ended March 30, 2019
	Common Stock					Additional Paid-In Capital						Accumulated Other Comprehensive Income (Loss)			Total Shareholders' Equity
	Shares Issued		Amount						Retained Earnings
Balance, September 29, 2018	17,856		$	4,464		$	171,407		$	300,585		$	1,476		$	477,932
Total comprehensive income	—		—			—			24,661			(6,094		)	18,567
Cumulative effect of accounting change	—		—			—			(6,227		)	—			(6,227		)
Exercise of stock options	3		1			143			—			—			144
Stock-based compensation	33		8			5,211			—			—			5,219
Issuance for employee stock purchase plan	16		4			553			—			—			557
Common stock purchased and retired	(8	)	(2		)	(396		)	—			—			(398		)
Dividends, $0.60 per share	—		—			—			(10,740		)	—			(10,740		)
Balance, March 30, 2019	17,900		$	4,475		$	176,918		$	308,279		$	(4,618	)	$	485,054

5

	Three Months Ended March 31, 2018
	Common Stock					Additional Paid-In Capital						Accumulated Other Comprehensive Income (Loss)			Total Shareholders' Equity
	Shares Issued		Amount						Retained Earnings
Balance, December 30, 2017	17,780		$	4,445		$	164,577		$	289,105		$	3,453		$	461,580
Total comprehensive income	—		—			—			8,438			5,372			13,810
Stock-based compensation	—		—			1,663			—			—			1,663
Issuance for employee stock purchase plan	12		3			530			—			—			533
Common stock purchased and retired	—		—			(13		)	—			—			(13		)
Dividends, $0.30 per share	—		—			—			(5,343		)	—			(5,343		)
Balance, March 31, 2018	17,792		$	4,448		$	166,757		$	292,200		$	8,825		$	472,230
	Six Months Ended March 31, 2018
	Common Stock					Additional Paid-In Capital						Accumulated Other Comprehensive Income (Loss)			Total Shareholders' Equity
	Shares Issued		Amount						Retained Earnings
Balance, September 30, 2017	17,760		$	4,440		$	163,632		$	261,258		$	(553	)	$	428,777
Total comprehensive income	—		—			—			41,589			9,378			50,967
Cumulative effect of accounting change	—		—			(33		)	33			—			—
Exercise of stock options	4		1			211			—			—			212
Stock-based compensation	30		7			3,171			—			—			3,178
Issuance for employee stock purchase plan	12		3			530			—			—			533
Common stock purchased and retired	(14	)	(3		)	(754		)	—			—			(757		)
Dividends, $0.60 per share	—		—			—			(10,680		)	—			(10,680		)
Balance, March 31, 2018	17,792		$	4,448		$	166,757		$	292,200		$	8,825		$	472,230

The accompanying Notes to Consolidated Financial Statements (Unaudited) are an integral part of these consolidated financial statements.

6

MTS SYSTEMS CORPORATION

Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

	Six Months Ended
	March 30, 2019			March 31, 2018
Cash Flows from Operating Activities
Net income	$	24,661		$	41,589
Adjustments to reconcile net income to net cash provided by (used in) operating activities
Stock-based compensation	4,689			3,290
Fair value adjustment to acquired inventory	984			—
Net periodic pension benefit cost	584			597
Depreciation and amortization	18,468			17,348
(Gain) loss on sale or disposal of property and equipment	510			159
Amortization of debt issuance costs	2,099			2,626
Deferred income taxes	(1,243		)	(30,654		)
Bad debt provision (recovery), net	503			1,201
Other	—			(111		)
Changes in operating assets and liabilities
Accounts receivable and unbilled accounts receivable	(3,763		)	24,174
Inventories, net	(12,942		)	(14,441		)
Prepaid expenses	(4,106		)	(2,374		)
Accounts payable	(10,378		)	(901		)
Accrued payroll and related costs	(5,629		)	(11,921		)
Advance payments from customers	4,653			5,891
Accrued warranty costs	(671		)	157
Other assets and liabilities	12,250			628
Net Cash Provided by (Used in) Operating Activities	30,669			37,258
Cash Flows from Investing Activities
Purchases of property and equipment	(9,349		)	(5,368		)
Proceeds from sale of property and equipment	10			69
Purchases of business, net of acquired cash	(81,826		)	—
Other	(285		)	823
Net Cash Provided by (Used in) Investing Activities	(91,450		)	(4,476		)
Cash Flows from Financing Activities
Proceeds from issuance of long-term debt	80,391			—
Payment of long-term debt	(1,423		)	(45,949		)
Payment of debt component of tangible equity units	(4,818		)	(4,498		)
Payment of debt issuance costs for revolving credit facility	(542		)	—
Receipts under short-term borrowings	30,000			7,750
Payments under short-term borrowings	(30,000		)	(7,750		)
Cash dividends	(10,724		)	(10,667		)
Proceeds from exercise of stock options and employee stock purchase plan	701			745
Payments to purchase and retire common stock	(398		)	(757		)
Net Cash Provided by (Used in) Financing Activities	63,187			(61,126		)
Effect of Exchange Rate Changes on Cash and Cash Equivalents	(88		)	3,989
Cash and Cash Equivalents
Increase (decrease) during the period	2,318			(24,355		)
Balance, beginning of period	71,804			108,733
Balance, end of period	$	74,122		$	84,378
Supplemental Disclosures
Cash paid during the period for
Interest	$	12,065		$	11,314
Income taxes	6,280			4,954
Non-cash investing and financing activities
Dividends declared not yet paid	5,328			5,291

The accompanying Notes to Consolidated Financial Statements (Unaudited) are an integral part of these consolidated financial statements.

7

MTS SYSTEMS CORPORATION

Notes to Consolidated Financial Statements (Unaudited)

(Dollars and shares in thousands, unless otherwise noted)

NOTE 1          BASIS OF PRESENTATION

The consolidated financial statements include the accounts of MTS Systems Corporation and its wholly owned subsidiaries. Significant intercompany account balances and transactions have been eliminated.

The terms "MTS," "we," "us," "the Company" or "our" in this Quarterly Report on Form 10-Q, unless the context otherwise requires, refer to MTS Systems Corporation and its wholly owned subsidiaries. 

We have prepared the interim unaudited consolidated financial statements included herein pursuant to the rules and regulations of the United States (U.S.) Securities and Exchange Commission (SEC). The information furnished in these consolidated financial statements includes normal recurring adjustments and reflects all adjustments that are, in our opinion, necessary for a fair presentation of such financial statements. The consolidated financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP). GAAP requires us to make estimates and assumptions that affect amounts reported. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to SEC rules and regulations. The accompanying consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended September 29, 2018 filed with the SEC. Interim results of operations for the second fiscal quarter ended March 30, 2019 are not necessarily indicative of the results to be expected for the full fiscal year. 

We have a 5-4-4 week, quarterly accounting cycle with our fiscal year ending on the Saturday closest to September 30. Fiscal year 2019 ending on September 28, 2019 will consist of 52 weeks. Fiscal year 2018 ended on September 29, 2018 and consisted of 52 weeks. 

Changes to Significant Accounting Policies

The following accounting policies have been updated since our fiscal year 2018 Annual Report on Form 10-K.

Revenue Recognition

As described in Note 2, we adopted Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606), followed by related amendments on September 30, 2018 under the modified retrospective transition method. Our new revenue recognition accounting policy and disclosures relative to this guidance are included in Note 3.

NOTE 2          RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Leases

In February 2016, the Financial Accounting Standards Board (FASB) issued ASU No. 2016-02, Leases (Topic 842), followed by related amendments (collectively, "the new lease standard"), which requires lessees to recognize most leases on the balance sheet for the rights and obligations created by those leases. Under the new lease standard, a company recognizes a right-of-use asset, representing the right to use the underlying asset for the lease term, and a corresponding lease liability for all leases with terms greater than 12 months. The new guidance requires enhanced disclosures regarding the amount, timing and uncertainty of cash flows arising from a company's leases. Adoption of the new lease standard is required for annual periods beginning after December 15, 2018, including interim periods within that annual period, which is our fiscal year 2020. The new guidance is required to be adopted using a modified retrospective transition method, and an optional transition method may be elected to use the effective date as the date of initial application on transition.

We intend to adopt the new lease standard for our fiscal year 2020 under the optional transition method with an effective date of September 29, 2019. As a result, we will not adjust our comparative period financial information or make the new required lease disclosures for periods before the effective date, and we will record the impact from adoption as a cumulative-effect reduction to retained earnings as of the effective date. We are currently planning to elect the package of practical expedients to not reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs, and we are currently evaluating the other practical expedients available under the new guidance. We continue to make progress with preparation for the adoption and implementation of the new lease standard, including assessing the completeness of our lease arrangements, evaluating practical expedients and accounting policy elections, revising our lease-related accounting policies, assessing impacts to controls, and implementing a lease software solution. We anticipate the adoption of the new lease standard will result in an increase in assets and liabilities on our Consolidated Balance Sheet. The impact on our Consolidated Statement

8

of Income and Consolidated Statement of Cash Flows is being evaluated. We continue to evaluate the impact that these changes in methodology will have on our financial condition, results of operations and disclosures.

Other

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which changes the accounting for credit losses on instruments measured at amortized cost by adding an impairment model that is based on expected losses rather than incurred losses. An entity will recognize as an allowance its estimate of expected credit losses, which is believed to result in more timely recognition of such losses as the standard eliminates the probable initial recognition threshold. In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments–Credit Losses, which clarifies that a receivable arising from an operating lease that is accounted for by a lessor in accordance with Topic 842 is not within the scope of Subtopic 326. These standards are required to be adopted for annual periods beginning after December 15, 2019, including interim periods within that annual period, which is our fiscal year 2021. The amendments are to be applied using a modified retrospective approach as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which adopted. Early adoption is permitted for annual periods beginning after December 15, 2018, including interim periods within that annual period, which is our fiscal year 2020. We have not yet evaluated the impact the adoption of this guidance may have on our financial condition, results of operations or disclosures.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurements (Topic 820): Disclosure Framework–Changes to the Disclosure Requirements for Fair Value Measurement, which eliminates, amends and adds disclosure requirements for fair value measurements. The standard is required to be adopted for annual periods beginning after December 15, 2019, including interim periods within that annual period, which is our fiscal year 2021. Certain disclosures in the amendment are to be applied using a retrospective approach while other disclosures are to be applied using a prospective approach. Early adoption is permitted. We have not yet evaluated the impact the adoption of this guidance may have on our financial condition, results of operations or disclosures.

In August 2018, the FASB issued ASU No. 2018-14, Compensation–Retirement Benefits–Defined Benefit Plans–General (Subtopic 715-20): Disclosure Framework–Changes to the Disclosure Requirements for Defined Benefit Plans, which eliminates, amends and adds disclosure requirements for defined benefit pension and other postretirement plans. The standard is required to be adopted for annual periods ending after December 15, 2020, which is our fiscal year 2021. The amendment is to be applied using a retrospective approach with early adoption permitted. We have not yet evaluated the impact the adoption of this guidance may have on our financial condition, results of operations or disclosures.

Adopted

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), followed by related amendments (collectively, "the new revenue standard" or "ASC 606") to provide a single, comprehensive revenue recognition model for all contracts with customers. Under the new revenue standard, a company recognizes revenue to depict the transfer of promised goods or services to a customer in an amount that reflects the consideration a company expects to receive in exchange for those goods or services. Determination of when and how revenue is recognized is based on a five-step analysis. Enhanced disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from a company's contracts with customers are required.

We adopted the new revenue standard on September 30, 2018 for our fiscal year 2019 under the modified retrospective transition method. As of September 30, 2018, we recorded a cumulative-effect reduction to the opening balance of our fiscal year 2019 retained earnings of $6,227, net of tax, for the net deferral of previously recognized revenue and related cost of sales, partially offset by the capitalization and deferral of pre-contract costs. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. See Note 3 for our new revenue recognition accounting policy and disclosures relative to this guidance.

In March 2016, the FASB issued ASU No. 2016-04, Liabilities—Extinguishments of Liabilities (Subtopic 405-20): Recognition of Breakage for Certain Prepaid Stored-Value Products, which amends existing guidance on extinguishing financial liabilities for certain prepaid stored-value products. The new standard requires recognition of the expected breakage amount or the value that is ultimately not redeemed either proportionally in earnings as redemption occurs or when redemption is remote, if issuers are not entitled to breakage. We adopted the new standard on a modified retrospective basis for the annual period ending September 28, 2019, including interim periods within that annual period. The adoption of this guidance had no impact on our financial condition, results of operations or disclosures.

In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740), Intra-Entity Transfers of Assets Other Than Inventory, which requires companies to account for the income tax effects of intercompany sales and transfers of assets other than inventory when the transfer occurs. Current guidance requires companies to defer the income tax effects of intercompany

9

transfers of assets until the asset has been sold to an outside party or otherwise recognized. We adopted the new standard on a modified retrospective basis for the annual period ending September 28, 2019, including interim periods within that annual period. The adoption of this guidance had no impact on our financial condition, results of operations or disclosures.

In March 2017, the FASB issued ASU No. 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, which changes how employers that sponsor defined benefit pension or other postretirement benefit plans present the net periodic benefit cost in the income statement. The new guidance requires the service cost component of net periodic benefit cost to be presented in the same income statement line items as other employee compensation costs arising from services rendered during the period, with only the service cost component eligible for capitalization in assets. Other components of the net periodic benefit cost are to be stated separately from the line items that include the service cost and outside of operating income. These components are not eligible for capitalization in assets. We adopted the new standard for the annual period ending September 28, 2019, including interim periods within that annual period, retrospectively for the presentation in the income statement of the service cost component and the other components of net periodic pension cost and prospectively for the capitalization in assets of the service cost component of net periodic pension cost. The adoption of this guidance did not have a material impact on our current or prior year financial condition, results of operations or disclosures. Therefore, the comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods.

In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, which amends the hedge accounting model in Accounting Standards Codification (ASC) 815 to enable entities to better portray the economics of their risk management activities in the financial statements and enhance the transparency and understandability of hedge results. We early adopted the new standard on a modified retrospective basis for the annual period ending September 28, 2019, including interim periods within that annual period. The adoption of this guidance had no impact on our current or prior year financial condition, results of operations or disclosures.

NOTE 3          REVENUE

Adoption

We adopted the new revenue standard on September 30, 2018 for our fiscal year 2019 under the modified retrospective transition method. We applied the new revenue standard to all contracts which were not completed as of the effective date and elected not to apply contract modification guidance retrospectively. As a result of adoption, we recorded a cumulative-effect reduction to the opening balance of our fiscal year 2019 retained earnings of $6,227, net of tax, for the net deferral of previously recognized revenue and related cost of sales, partially offset by the capitalization and deferral of pre-contract costs.

The timing of revenue recognition for the majority of our products and contracts remains substantially unchanged under the new revenue standard, with the exception of certain contracts in our Test & Simulation segment (Test & Simulation). Dependent on contract-specific terms that evidence customer control of the work in process or an enforceable right to payment with no alternative use, certain contracts have a delay in revenue recognition until the customer takes control of the product, while certain contracts accelerate the recognition of revenue over the life of the contract. Under the new revenue standard, certain costs to obtain contracts (i.e., pre-contract costs) are capitalized at contract inception and recognized as revenue is earned. While we do not expect the adoption of the new revenue standard to have a significant impact on annual revenue recognized, our financial condition or results of operations, we do expect that it will have an impact on the timing of revenue recognition in interim periods.

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The impact of adopting the new revenue standard on our Consolidated Statements of Income and Consolidated Balance Sheets is as follows:

Consolidated Statements of Income	Three Months Ended March 30, 2019
	As Reported			Balances without Adoption of ASC 606			Effect of Change
Revenue	$	233,046		$	224,665		$	8,381
Cost of sales	145,696			140,312			5,384
Gross profit	87,350			84,353			2,997
Selling and marketing	33,395			33,239			156
Income tax provision (benefit)	2,916			2,422			494
Net income	14,160			11,813			2,347
	Six Months Ended March 30, 2019
	As Reported			Balances without Adoption of ASC 606			Effect of Change
Revenue	$	436,227		$	423,103		$	13,124
Cost of sales	270,572			260,732			9,840
Gross profit	165,655			162,371			3,284
Selling and marketing	65,484			65,491			(7		)
Income tax provision (benefit)	3,612			3,037			575
Net income	24,661			21,945			2,716
Consolidated Balance Sheets	March 30, 2019
	As Reported			Balances without Adoption of ASC 606			Effect of Change
Assets
Accounts receivable, net	$	117,349		$	121,678		$	(4,329	)
Unbilled accounts receivable, net	71,175			79,819			(8,644		)
Inventories, net	179,071			160,914			18,157
Prepaid expenses and other current assets	32,307			28,216			4,091
Other long-term assets	3,900			2,794			1,106
Deferred income taxes	4,058			3,417			641
Liabilities and Shareholders' Equity
Advance payments from customers	102,033			100,589			1,444
Accrued income taxes	5,709			5,861			(152		)
Other accrued liabilities	34,494			20,855			13,639
Deferred income taxes	50,659			51,886			(1,227		)
Other long-term liabilities	12,508			11,748			760
Accumulated other comprehensive income (loss)	(4,618		)	(4,687		)	69
Retained earnings	308,279			311,790			(3,511		)

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The cumulative effect of the changes made to our September 29, 2018 Consolidated Balance Sheet from the modified retrospective adoption of the new revenue standard is as follows:

Consolidated Balance Sheets
	Balance at September 29, 2018		Adjustments due to ASC 606 Adoption			Balance at September 30, 2018
Assets
Accounts receivable, net	$	122,243	$	(4,481	)	$	117,762
Unbilled accounts receivable, net	70,474		(8,002		)	62,472
Inventories, net	139,109		16,727			155,836
Prepaid expenses and other current assets	24,572		4,651			29,223
Other long-term assets	2,263		1,060			3,323
Deferred income taxes	3,249		643			3,892
Liabilities and Shareholders' Equity
Advance payments from customers	80,131		13,568			93,699
Other accrued liabilities	19,146		(2,504		)	16,642
Deferred income taxes	46,482		(1,228		)	45,254
Other long-term liabilities	4,894		6,989			11,883
Retained earnings	300,585		(6,227		)	294,358

Revenue Recognition

Revenue is recognized when control of the promised goods or services is transferred to our customers in an amount that reflects the consideration we expect to be entitled to in exchange for transferring those goods or providing those services. We account for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are known, the contract has commercial substance and collectability of consideration is probable.

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account under the new revenue standard. A contract's transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Many of our contracts have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts and, therefore, not distinct. In situations when our contract includes distinct goods or services that are substantially the same and have the same pattern of transfer to the customer over time, they are recognized as a series of distinct goods or services. For contracts with multiple performance obligations, we allocate the contract's transaction price to each performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract.

We do not adjust the promised amount of consideration for the effects of a significant financing component if we expect, at contract inception, that the period between when we transfer a promised good or service to a customer and when the customer pays for that good or service will be one year or less.

Revenue is recorded net of taxes collected from customers, and taxes collected are recorded as current liabilities until remitted to the relevant government authority. Shipping and handling costs associated with outbound freight after control of a product has transferred are accounted for as a fulfillment cost and are included in cost of sales in the Consolidated Statements of Income.

The following is a description of the product offerings, end markets, typical revenue transactions and payment terms for each of our two reportable segments. See Note 16 for further information on reportable segments.

Test & Simulation

Test & Simulation manufactures and sells equipment and related software and services which are used by customers to characterize a product's mechanical properties or performance. Our solutions simulate forces and motions that customers expect their products to encounter in use or are necessary to properly characterize the product's performance. Primary Test & Simulation markets include transportation, infrastructure, energy, aerospace, materials science, medical, flight training and amusement parks. A typical system is a comprehensive solution which includes a reaction frame to hold the prototype specimen; a hydraulic or electro-mechanical power source; actuators to create the force or motion; and a computer controller with specialized software to coordinate the actuator movement and to measure, record and manipulate results. Our portfolio of Test & Simulation solutions includes standard, configurable testing products; engineered products which combine standard product configurations with a moderate degree of customization per customer specifications; and highly customized, highly

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engineered testing solutions built to address the customer's unique business need, which can include development of first-of-a-kind technology. To complement our Test & Simulation products, we provide our customers with a spectrum of services to maximize product performance including installation, product life cycle management, professional training, calibration and metrology, technical consulting and onsite and factory repair and maintenance. In addition, we sell a variety of accessories and spare parts. The manufacturing cycle for a typical system ranges from weeks to 12 months, depending on the complexity of the system and the availability of components, and can be up to three years for larger, more complex systems. For certain contracts, the order to revenue cycle may extend beyond the manufacturing cycle, such as when the manufacturing start date is driven by the customer's project timeline or when the contract terms require equipment installation and commissioning and customer acceptance prior to point-in-time revenue recognition.

Test & Simulation contracts often have multiple performance obligations, most commonly due to the contract covering multiple phases of the product life cycle (i.e., equipment design and production, installation and commissioning, extended warranty and software maintenance). The primary method used to estimate standalone selling price is the expected cost plus a margin approach under which we forecast our expected costs of satisfying a performance obligation and then add an appropriate margin for that distinct good or service.

Test & Simulation revenue is recognized either over time as work progresses or point-in-time, depending on contract-specific terms and the pattern of transfer of control of the product or service to the customer. Revenue from services is recognized in the period the service is performed or ratably over the period of the related service contract. Equipment revenue is recognized over time when: (i) control is transferred to the customer over time as work progresses; or (ii) contract terms evidence customer control of the work in process or an enforceable right to payment with no alternative use. Equipment revenue is recognized over time using costs incurred to date relative to total estimated costs at completion to measure progress toward satisfying the performance obligation. Incurred cost represents work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer. Equipment contract costs include materials, component parts, labor and overhead costs.

Equipment revenue is recognized point-in-time when either: (i) control is transferred to the customer at a point-in-time when obligations under the terms of the contract are satisfied; or (ii) contract terms do not evidence customer control of the work in process or an enforceable right to payment with no alternative use, and consequently revenue is deferred as work progresses. Satisfaction of performance obligations under the terms of the contract occurs either upon product shipment (as evidenced by delivery or shipment terms), completion of equipment installation and commissioning, or customer acceptance.

For our Test & Simulation contracts with customers, payment terms vary and are subject to negotiation. Typical payment terms include progress payments based on specified events or milestones. For some contracts, we are entitled to receive an advance payment.

Sensors

Our Sensors segment (Sensors) manufactures and sells high-performance sensors which provide measurements of vibration, pressure, position, force and sound in a variety of applications. Our Sensors products are used to enable automation, enhance precision and safety, and lower our customers' production costs by improving performance and reducing downtime. Primary Sensors markets include automotive, aerospace and defense, industrial, and research and development. Our Sensors products are sold as configurable, standard units; utilize piezoelectric or magnetostriction technology; and are ideal for use in harsh operating environments to provide accurate and reliable sensor information. To complement our Sensors products, we also provide spare parts and services. The cycle from contract inception to shipment of equipment is typically one to three months, with the exception of certain high-volume contracts which are fulfilled in a series of shipments over an extended period.

Our Sensors contracts generally have a single performance obligation which is satisfied at a point in time. The performance obligation is a stand-alone sensor product, accessory, service or software license. Sensors contracts are generally fixed-price purchase order fulfillment contracts, and the transaction price is equal to the observable consideration in the contract. Revenue is recognized when obligations under the terms of the contract with our customer are satisfied; generally this occurs with the transfer of control upon product shipment (as evidenced by shipment or delivery terms) or with the performance of the service.

For our Sensors contracts with customers, payment terms are generally within 90 days. The timing of satisfying our Sensors performance obligations does not vary significantly from the typical timing of payment. For certain high-volume contracts, we are entitled to receive an advance payment.

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Disaggregation of Revenue

We disaggregate our revenue by reportable segment, sales type (product or service), the timing of recognition of revenue for transfer of goods or services to customers (point-in-time or over time), and geographic market based on the billing location of the customer. See Note 16 for further information on our reportable segments and intersegment revenue.

	Three Months Ended March 30, 2019
	Test & Simulation		Sensors		Intersegment			Total
Sales type
Product	$	126,511	$	80,540	$	(361	)	$	206,690
Service	24,521		1,835		—			26,356
Total revenue	$	151,032	$	82,375	$	(361	)	$	233,046
Timing of recognition
Point-in-time	$	98,360	$	82,375	$	(361	)	$	180,374
Over time	52,672		—		—			52,672
Total revenue	$	151,032	$	82,375	$	(361	)	$	233,046
Geographic market
Americas	$	51,399	$	38,975	$	(361	)	$	90,013
Europe	29,536		27,653		—			57,189
Asia	70,097		15,747		—			85,844
Total revenue	$	151,032	$	82,375	$	(361	)	$	233,046
	Six Months Ended March 30, 2019
	Test & Simulation		Sensors		Intersegment			Total
Sales type
Product	$	225,419	$	157,040	$	(690	)	$	381,769
Service	51,173		3,285		—			54,458
Total revenue	$	276,592	$	160,325	$	(690	)	$	436,227
Timing of recognition
Point-in-time	$	177,979	$	160,325	$	(690	)	$	337,614
Over time	98,613		—		—			98,613
Total revenue	$	276,592	$	160,325	$	(690	)	$	436,227
Geographic market
Americas	$	90,888	$	76,704	$	(690	)	$	166,902
Europe	58,163		53,001		—			111,164
Asia	127,541		30,620		—			158,161
Total revenue	$	276,592	$	160,325	$	(690	)	$	436,227

Contract Assets and Liabilities

Contract assets and contract liabilities are as follows:

	March 30, 2019		September 29, 2018
Contract assets	$	71,175	$	70,474
Contract liabilities	109,763		80,131

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The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled accounts receivable (contract assets) and advance payments from customers (contract liabilities). Contract balances are classified as assets or liabilities on a contract-by-contract basis at the end of each reporting period. Contract liabilities represent payments received from customers at contract inception and at milestones per contract provisions. These payments are recorded in advance payments from customers and other long-term liabilities in our Consolidated Balance Sheets (current and non-current portions, respectively) and are liquidated as revenue is recognized. Conversely, when billing occurs subsequent to revenue recognition for contracts recognized over time, balances are recorded in unbilled accounts receivable, net in our Consolidated Balance Sheets. As customers are billed, unbilled accounts receivable balances are transferred to accounts receivable, net in the Consolidated Balance Sheets.

Significant changes in contract assets and contract liabilities are as follows:

	Contract Assets
Balance, September 29, 2018	$	70,474
Cumulative transition adjustment upon adoption	(8,002		)
Changes in estimated stage of completion	69,857
Transfers to accounts receivable, net	(62,265		)
Acquisitions1	1,518
Other	(407		)
Balance, March 30, 2019	$	71,175
	Contract Liabilities
Balance, September 29, 2018	$	80,131
Cumulative transition adjustment upon adoption	20,557
Revenue recognized included in balance at beginning of period	(58,947		)
Increases due to payments received, excluding amounts recognized as revenue during period	64,121
Acquisitions1	4,777
Other	(876		)
Balance, March 30, 2019	$	109,763

¹    See Note 18 for additional information regarding acquisitions.

Remaining Performance Obligations

As of March 30, 2019, we had approximately $224,000 of remaining performance obligations on contracts with an original expected duration of one year or more which are primarily related to Test & Simulation. As of March 30, 2019, we expect to recognize approximately 74% of these remaining performance obligations as revenue within one year, an additional 24% within two years and the balance thereafter. We do not disclose the value of remaining performance obligations for contracts with an original expected duration of one year or less.

Contract Estimates

For contracts recognized over time, we estimate the profit on a contract as the difference between the total estimated revenue and expected costs to complete a contract and recognize that profit over the life of the contract. Contract estimates are based on various assumptions to project the outcome of future events that may span several years. These assumptions include labor productivity and availability, the complexity of the work to be performed, the cost and availability of materials, and internal and subcontractor performance.

Pricing is established at or prior to the time of sale with our customers, and we record sales at the agreed-upon selling price. The terms of a contract or the historical business practice can give rise to variable consideration due to but not limited to volume discounts, penalties and early payment discounts. We estimate variable consideration at the most likely amount we will receive from customers. We include estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized for such transaction will not occur, or when the uncertainty associated with the variable consideration is resolved. In general, variable consideration in our contracts relates to the entire contract. As a result, the variable consideration is allocated proportionately to all performance obligations. Our estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of our anticipated performance and all information (historical, current and forecasted) that is reasonably available to us at contract

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inception. There are no significant instances where variable consideration is constrained and not recorded at the initial time of sale.

As a significant change in one or more of these estimates could affect the profitability of our contracts, we review and update our contract-related estimates regularly. We recognize adjustments in estimated profit on contracts under the cumulative catch-up method. Under this method, the impact of the adjustment on profit recorded to date is recognized in the period the adjustment is identified. Revenue and profit in future periods of contract performance is recognized using the adjusted estimate. If at any time the estimate of contract profitability indicates an anticipated loss on the contract, we recognize the total loss in the period it is identified. Our review of contract-related estimates has not resulted in adjustments that are significant to our results of operations.

Contract Modifications

When contracts are modified to account for changes in contract specifications and requirements, we consider whether the modification either creates new, or changes existing, enforceable rights and obligations. Contract modifications that are for goods or services that are not distinct from the existing contract, due to the significant integration with the original product or service provided, are accounted for as if they were part of that existing contract. The effect of a contract modification on the transaction price, and our measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis. When the modifications include additional performance obligations that are distinct and at a relative stand-alone selling price, they are accounted for as a new contract and performance obligation and recognized prospectively.

Warranties and Returns

For both Test & Simulation and Sensors, we provide a manufacturer's warranty on our products and systems which is included in customer contracts. At the time a sale is recognized, we record estimated future warranty costs. See Note 5 for further discussion of our product warranty liabilities. We also offer separately-priced extended warranties or service-type contracts on certain products for which revenue is recognized over the contractual period or as services are rendered.

Our sales terms generally do not allow for a right of return except for situations where the product fails. When the right of return exists, we recognize revenue for the transferred products at the expected amount of consideration for which we will be entitled.

Pre-contract Costs

We recognize an asset for the incremental costs of obtaining a contract with a customer (i.e., pre-contract costs) when costs are considered recoverable. Capitalized pre-contract costs, consisting primarily of Test & Simulation sales commissions, are amortized as the related revenue is recognized. We recognized total capitalized pre-contract costs of $5,936 in prepaid expenses and other current assets and other long-term assets in the Consolidated Balance Sheets as of March 30, 2019 and related expense of $1,249 and $3,869 in the Consolidated Statements of Income during the three and six months endedMarch 30, 2019, respectively.

NOTE 4          INVENTORIES

Inventories consist of material, labor and overhead costs and are stated at the lower of cost or net realizable value determined under the first-in, first-out accounting method. Certain inventories are measured using the weighted average cost method. Inventories, net are as follows: 

	March 30, 2019		September 29, 2018
Components, assemblies and parts	$	105,669	$	93,020
Customer projects in various stages of completion	62,922		35,675
Finished goods	10,480		10,414
Total inventories, net	$	179,071	$	139,109

We adopted the new revenue standard effective September 30, 2018 under the modified retrospective transition method which impacted inventories, net. See Note 3 for the impact of this adoption on our Consolidated Balance Sheets.

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NOTE 5          WARRANTY OBLIGATIONS

Sales of our products and systems are subject to limited warranty obligations that are included in customer contracts. For sales that include installation services, warranty obligations generally extend for a period of 12 to 24 months from the date of either shipment or acceptance based on the contract terms. Product obligations generally extend for a period of 12 to 24 months from the date of purchase. Certain products offered in our Sensors segment include a lifetime warranty.

Under the terms of these warranties, we are obligated to repair or replace any components or assemblies deemed defective due to workmanship or materials. We reserve the right to reject warranty claims where it is determined that failure is due to normal wear, customer modifications, improper maintenance or misuse. We record general warranty provisions based on an estimated warranty expense percentage applied to current period revenue. The percentage applied reflects our historical warranty claims experience over the preceding 12-month period. Both the experience percentage and the warranty liability are evaluated on an ongoing basis for adequacy. Warranty provisions are also recognized for certain unanticipated product claims that are individually significant.

Changes to accrued warranty costs are as follows: 

	Three Months Ended						Six Months Ended
	March 30, 2019			March 31, 2018			March 30, 2019			March 31, 2018
Beginning accrued warranty costs	$	5,229		$	5,832		$	5,418		$	6,018
Warranty claims	(1,167		)	(1,410		)	(2,446		)	(2,585		)
Warranty provisions	697			1,742			1,791			2,727
Adjustments to preexisting warranties	(15		)	14			(15		)	14
Currency translation	(3		)	13			(7		)	17
Ending accrued warranty costs	$	4,741		$	6,191		$	4,741		$	6,191

NOTE 6          CAPITAL ASSETS

Property and Equipment

Property and equipment, net are as follows: 

	March 30, 2019			September 29, 2018
Land and improvements	$	2,881		$	2,881
Buildings and improvements	58,692			58,880
Machinery and equipment	210,065			203,647
Assets held under capital leases	2,796			2,815
Total property and equipment	274,434			268,223
Less: Accumulated depreciation	(186,308		)	(177,954		)
Total property and equipment, net	$	88,126		$	90,269

Goodwill

Changes to the carrying amount of goodwill are as follows:  

	Test & Simulation			Sensors			Total
Balance, September 29, 2018	$	24,631		$	344,644		$	369,275
Acquisitions 1	34,387			—			34,387
Currency translation	(208		)	(29		)	(237		)
Balance, March 30, 2019	$	58,810		$	344,615		$	403,425

¹    See Note 18 for additional information regarding acquisitions.

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Intangible Assets

Intangible assets are as follows: 

	March 30, 2019
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Value		Weighted Average Useful Life (in Years)
Software development costs 2	$	35,297	$	(15,859	)	$	19,438	6.3
Technology and patents	59,055		(14,110		)	44,945		14.9
Trademarks and trade names	12,697		(3,442		)	9,255		20.7
Customer lists	179,919		(28,831		)	151,088		15.7
Land-use rights	2,360		(858		)	1,502		26.2
Other	3,705		(332		)	3,373		4.0
Trade names	57,500		—			57,500		Indefinite
Total intangible assets	$	350,533	$	(63,432	)	$	287,101	14.5

	September 29, 2018
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Value		Weighted Average Useful Life (in Years)
Software development costs 2	$	31,251	$	(15,860	)	$	15,391	6.5
Technology and patents	46,405		(12,188		)	34,217		14.9
Trademarks and trade names	6,754		(2,987		)	3,767		25.4
Customer lists	156,971		(23,314		)	133,657		15.8
Land-use rights	2,336		(730		)	1,606		26.0
Trade names	57,500		—			57,500		Indefinite
Total intangible assets	$	301,217	$	(55,079	)	$	246,138	14.8

²  The gross carrying amount of software development costs as of March 30, 2019 and September 29, 2018 includes $19,438 and $15,391, respectively, of intangible assets not yet placed in service.

Amortization expense recognized related to finite-lived intangible assets is as follows:

	Three Months Ended				Six Months Ended
	March 30, 2019		March 31, 2018		March 30, 2019		March 31, 2018
Amortization expense	$	4,403	$	3,456	$	8,219	$	6,935

Estimated future amortization expense related to finite-lived intangible assets is as follows: 

	Amortization Expense
Remainder of 2019	$	8,695
2020	17,108
2021	18,164
2022	19,036
2023	18,139
2024	17,770
Thereafter	130,689

Future amortization amounts presented above are estimates. Actual future amortization expense may be different due to fluctuations in foreign currency exchange rates, future acquisitions, impairments, changes in amortization periods or other factors.

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NOTE 7          FAIR VALUE MEASUREMENTS

In determining the fair value of financial assets and liabilities, we currently utilize market data or other assumptions that we believe market participants would use in pricing the asset or liability in the principal or most advantageous market and adjust for non-performance and/or other risk associated with the Company as well as counterparties, as appropriate. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:

• Level 1: Unadjusted quoted prices that are available in active markets for identical assets or liabilities accessible to us at the measurement date.

• Level 2: Inputs other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.

• Level 3: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date.

The hierarchy gives the highest priority to Level 1, as this level provides the most reliable measure of fair value, while giving the lowest priority to Level 3. 

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Financial assets and liabilities subject to fair value measurements on a recurring basis are as follows:

	March 30, 2019
	Level 1		Level 2		Level 3		Total
Assets
Currency contracts 1	$	—	$	411	$	—	$	411
Interest rate swaps 2	—		3,684		—		3,684
Total assets	—		4,095		—		4,095
Liabilities
Currency contracts 1	—		78		—		78
Total liabilities	$	—	$	78	$	—	$	78

	September 29, 2018
	Level 1		Level 2		Level 3		Total
Assets
Currency contracts 1	$	—	$	1,080	$	—	$	1,080
Interest rate swaps 2	—		7,411		—		7,411
Total assets	—		8,491		—		8,491
Liabilities
Currency contracts 1	—		173		—		173
Total liabilities	$	—	$	173	$	—	$	173

¹  Based on observable market transactions of spot currency rates and forward currency rates on equivalently-termed instruments. Carrying amounts of the financial assets and liabilities are equal to the fair value. See Note 8 for additional information on derivative financial instruments.

²  Based on London Interbank Offered Rate (LIBOR) and spot rates. Carrying amount of the financial asset is equal to the fair value. See Note 8 for additional information on derivative financial instruments.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

We measure certain financial instruments at fair value on a nonrecurring basis. These assets primarily include goodwill, intangible assets and other long-lived assets acquired either as part of a business acquisition, individually or with a group of other assets, as well as property and equipment. These assets were initially measured and recognized at amounts equal to the fair value determined as of the date of acquisition or purchase subject to changes in value only for foreign currency translation.

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Periodically, these assets are tested for impairment by comparing their respective carrying values to the estimated fair value of the reporting unit or asset group in which they reside. In the event any of these assets were to become impaired, we would recognize an impairment loss equal to the amount by which the carrying value of the reporting unit, impaired asset or asset group exceeds its estimated fair value. Fair value measurements of reporting units are estimated using an income approach involving discounted or undiscounted cash flow models that contain certain Level 3 inputs requiring management judgment, including projections of economic conditions and customer demand, revenue and margins, changes in competition, operating costs, working capital requirements and new product introductions. Fair value measurements of the reporting units associated with our goodwill balances and our indefinite-lived intangible assets are estimated at least annually in the fourth quarter of each fiscal year for purposes of impairment testing if a quantitative analysis is performed. Fair value measurements associated with our intangible assets, other long-lived assets and property and equipment are estimated when events or changes in circumstances such as market value, asset utilization, physical change, legal factors or other matters indicate that the carrying value may not be recoverable. See Note 6 for additional information on goodwill, indefinite-lived intangible assets, other long-lived assets and property and equipment.

Assets and Liabilities Not Measured at Fair Value

Certain financial instruments are not measured at fair value but are recorded at carrying amounts approximating fair value based on their short-term nature or variable interest rate. These financial instruments include cash and cash equivalents, accounts receivable, unbilled accounts receivable, accounts payable and short-term borrowings.

Other Financial Instruments

Other financial instruments subject to fair value measurements include debt, which is recorded at carrying value in the Consolidated Balance Sheets. The carrying amount and estimated fair values of our debt are as follows:

	March 30, 2019
	Carrying Value		Fair Value		Level 1		Level 2		Level 3
Debt component of tangible equity units 1	$	2,472	$	2,939	$	—	$	2,939	$	—
Tranche B term loan 2	390,266		390,266		—		390,266		—
Total debt	$	392,738	$	393,205	$	—	$	393,205	$	—

	September 29, 2018
	Carrying Value		Fair Value		Level 1		Level 2		Level 3
Debt component of tangible equity units 1	$	7,290	$	8,626	$	—	$	8,626	$	—
Tranche B term loan 2	391,416		395,330		—		395,330		—
Total debt	$	398,706	$	403,956	$	—	$	403,956	$	—

¹  The fair value of the 8.75% tangible equity units (TEUs) is based on the most recently quoted price for the outstanding securities, adjusted for any known significant deviations in value. The estimated fair value of these long-term obligations is not necessarily indicative of the amount that would be realized in a current market exchange. See Note 13 for additional information on the TEUs.

²  The fair value of the tranche B term loan is based on the most recently quoted market price for the outstanding debt instrument, adjusted for any known significant deviations in value. The estimated fair value of the debt obligation is not necessarily indicative of the amount that would be realized in a current market exchange. See Note 9 for additional information on debt instruments.

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NOTE 8          DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Our currency exchange contracts and interest rate swaps are designated as cash flow hedges and qualify as hedging instruments. We also have derivatives that are not designated as cash flow hedges and, therefore, are accounted for and reported under foreign currency guidance. Regardless of designation for accounting purposes, we believe all of our derivative instruments are hedges of transactional risk exposures. The fair value of our outstanding designated and undesignated derivative assets and liabilities are reported in the Consolidated Balance Sheets as follows: 

	March 30, 2019
	Prepaid Expenses and Other Current Assets		Other Accrued Liabilities
Designated hedge derivatives
Cash flow derivatives	$	314	$	78
Interest rate swaps	3,684		—
Total designated hedge derivatives	3,998		78
Undesignated hedge derivatives
Balance sheet derivatives	97		—
Total hedge derivatives	$	4,095	$	78

	September 29, 2018
	Prepaid Expenses and Other Current Assets		Other Accrued Liabilities
Designated hedge derivatives
Cash flow derivatives	$	989	$	173
Interest rate swaps	7,411		—
Total designated hedge derivatives	8,400		173
Undesignated hedge derivatives
Balance sheet derivatives	91		—
Total hedge derivatives	$	8,491	$	173

A reconciliation of the net fair value of designated hedge derivatives subject to master netting arrangements that are recorded in the Consolidated Balance Sheets to the net fair value that could have been reported in the Consolidated Balance Sheets are as follows: 

	Gross Recognized Amount		Gross Offset Amount		Net Amount Presented		Derivatives Subject to Offset			Cash Collateral Received		Net Amount
March 30, 2019
Assets	$	3,998	$	—	$	3,998	$	(78	)	$	—	$	3,920
Liabilities	78		—		78		(78		)	—		—
September 29, 2018
Assets	$	8,400	$	—	$	8,400	$	(173	)	$	—	$	8,227
Liabilities	173		—		173		(173		)	—		—

Cash Flow Hedging – Currency Risks

Currency exchange contracts utilized to maintain the functional currency value of expected financial transactions denominated in foreign currencies are designated as cash flow hedges. Gains and losses related to changes in the market value of these contracts are reported as a component of accumulated other comprehensive income (AOCI) within shareholders' equity in the Consolidated Balance Sheets and reclassified to earnings in the same line item in the Consolidated Statements of Income and in the same period as the recognition of the underlying hedged transaction. We periodically assess whether our currency exchange contracts are effective and, when a contract is determined to be no longer effective as a hedge, we discontinue hedge accounting prospectively. 

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As of March 30, 2019 and September 29, 2018, we had outstanding cash flow hedge currency exchange contracts with gross notional U.S. dollar equivalent amounts of $26,576 and $39,856, respectively. Upon netting offsetting contracts to sell foreign currencies against contracts to purchase foreign currencies, irrespective of contract maturity dates, the net notional U.S. dollar equivalent amount of contracts outstanding was $24,840 and $29,315 as of March 30, 2019 and September 29, 2018, respectively. As of March 30, 2019, the net market value of the foreign currency exchange contracts was a net asset of $236, consisting of $314 in assets and $78 in liabilities. As of September 29, 2018, the net market value of the foreign currency exchange contracts was a net asset of $816, consisting of $989 in assets and $173 in liabilities.

The pretax amounts recognized in AOCI on currency exchange contracts, including (gains) losses reclassified into earnings in the Consolidated Statements of Income and gains (losses) recognized in other comprehensive income (loss) (OCI), are as follows:

	Three Months Ended						Six Months Ended
	March 30, 2019			March 31, 2018			March 30, 2019			March 31, 2018
Beginning unrealized net gain (loss) in AOCI	$	214		$	(444	)	$	672		$	(443	)
Net (gain) loss reclassified into revenue	(16		)	1,146			(601		)	1,304
Net gain (loss) recognized in OCI	(6		)	(1,794		)	121			(1,953		)
Ending unrealized net gain (loss) in AOCI	$	192		$	(1,092	)	$	192		$	(1,092	)

As of March 30, 2019, the amount projected to be reclassified from AOCI into earnings in the next 12 months was a net gain of $193. The maximum remaining maturity of any forward or optional contract as of March 30, 2019 was 1.6 years.

Interest Rate Swaps

On October 20, 2016, we entered into a floating to fixed interest rate swap agreement to mitigate our exposure to interest rate increases related to a portion of our tranche B term loan facility. The total notional amount of the interest rate swap was $225,000 as of March 30, 2019. The swap agreement expires April 3, 2021. As a result of this agreement, every month we pay fixed interest at 1.256% in exchange for interest received at one month U.S. LIBOR. The market value of the interest rate swap as of March 30, 2019 was an asset of $3,684. The interest rate swap has been designated as a cash flow hedge. As a result, changes in the fair value of the interest rate swap are recorded in AOCI within shareholders' equity in the Consolidated Balance Sheets.

The pretax amounts recognized in AOCI on interest rate swaps, including (gains) losses reclassified into earnings in the Consolidated Statements of Income and gains (losses) recognized in OCI, are as follows:

	Three Months Ended						Six Months Ended
	March 30, 2019			March 31, 2018			March 30, 2019			March 31, 2018
Beginning unrealized net gain (loss) in AOCI	$	4,889		$	5,027		$	7,411		$	3,499
Net (gain) loss reclassified into interest expense	(709		)	(220		)	(1,293		)	(239		)
Net gain (loss) recognized in OCI	(496		)	2,118			(2,434		)	3,665
Ending unrealized net gain (loss) in AOCI	$	3,684		$	6,925		$	3,684		$	6,925

As of March 30, 2019, the amount projected to be reclassified from AOCI into earnings in the next 12 months was a net gain of $2,378.

Foreign Currency Balance Sheet Derivatives

We also use foreign currency derivative contracts to maintain the functional currency value of monetary assets and liabilities denominated in non-functional foreign currencies. The gains and losses related to the changes in the market value of these derivative contracts are included in other income (expense), net in the Consolidated Statements of Income. 

As of March 30, 2019 and September 29, 2018, we had outstanding foreign currency balance sheet derivative contracts with gross notional U.S. dollar equivalent amounts of $108,957 and $90,816, respectively. Upon netting offsetting contracts by counterparty banks to sell foreign currencies against contracts to purchase foreign currencies, irrespective of contract maturity dates, the net notional U.S. dollar equivalent amount of contracts outstanding as of March 30, 2019 and September 29, 2018 was $34,789 and $28,271, respectively. As of March 30, 2019 and September 29, 2018, the net market value of the foreign exchange balance sheet derivative contracts was a net asset of $97 and $91, respectively.

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The net gain (loss) recognized in the Consolidated Statements of Income on foreign exchange balance sheet derivative contracts is as follows:

	Three Months Ended						Six Months Ended
	March 30, 2019			March 31, 2018			March 30, 2019			March 31, 2018
Net gain (loss) recognized in other income (expense), net	$	(395	)	$	(848	)	$	(388	)	$	(1,027	)

NOTE 9          FINANCING

Long-term debt consists of the following:

	March 30, 2019			September 29, 2018
Long-term debt
Tranche B term loan, 1.00% amortizing per year, maturing July 5, 2023	$	390,266		$	391,416
Revolving credit facility, non-current portion, expiring July 5, 2022	80,391			—
Tangible equity units, 8.75% coupon, maturing July 1, 2019 1	2,472			7,290
Capital lease obligations	1,709			2,000
Total long-term debt	474,838			400,706
Less: Unamortized underwriting discounts, commissions and other expenses	(6,862		)	(8,623		)
Less: Current maturities of tranche B term loan debt 2, 3	(28,600		)	(28,600		)
Less: Current maturities of TEU debt 2	(2,472		)	(7,290		)
Less: Current maturities of capital lease obligations 2	(560		)	(553		)
Total long-term debt, less current maturities, net	$	436,344		$	355,640

¹  See Note 13 for additional information on our TEUs issued in the third quarter of fiscal year 2016.

²  In addition to the current maturities above, current maturities of long-term debt, net in the Consolidated Balance Sheets includes the current portion of unamortized underwriting discounts, commissions and other expenses of $3,556 and $3,705 as of March 30, 2019 and September 29, 2018, respectively.

³  As of March 30, 2019 and September 29, 2018, current maturities of tranche B term loan consist of the 1% annual payment and the calculated or estimated required annual Excess Cash Flow payment as defined below, as well as planned prepayments.

Tranche B Term Loan and Revolving Credit Facility

We have a credit agreement with U.S. Bank National Association and HSBC Bank USA, National Association as Co-Documentation Agents, Wells Fargo Bank, National Association as Syndication Agent, JPMorgan Chase Bank, N.A. as Administrative Agent and JP Morgan Chase Bank, N.A. and Wells Fargo Securities, LLC as Joint Bookrunners and Joint Lead Arrangers (the Credit Agreement). The Credit Agreement as amended provides for senior secured credit facilities consisting of a $150,000 revolving credit facility (the Revolving Credit Facility), which expires on July 5, 2022, and a $460,000 tranche B term loan facility (the Term Facility) which expires on July 5, 2023. The proceeds of the Revolving Credit Facility can be drawn upon to refinance existing indebtedness, for working capital and for other general corporate purposes, up to a maximum of $150,000. The Term Facility amortizes in equal quarterly installments equal to 1% of the original principal amount. The proceeds of the Term Facility were used for financing the acquisition of PCB Group, Inc. (PCB) in fiscal year 2016. Borrowings on the Revolving Credit Facility were used for financing the acquisition of E2M Technologies B.V. (E2M) in the first quarter of fiscal year 2019.

In the first quarter of fiscal year 2019, in conjunction with the E2M acquisition, we entered into a third amendment to the Credit Agreement to increase the borrowing capacity on the Revolving Credit Facility from $120,000 to $150,000 and extend the expiration date of the Revolving Credit Facility from July 5, 2021 to July 5, 2022. Additionally, the required performance levels under certain financial covenants were modified. During the six months ended March 30, 2019, we incurred debt financing costs of $541 as a result of this amendment which were capitalized in current maturities of long-term debt, net and long-term debt, less current maturities, net in the Consolidated Balance Sheets.

The primary categories of borrowing include Alternate Base Rate (ABR) Borrowings (ABR Term Loans and ABR Revolving Loans), Swingline Loans and Eurocurrency Borrowings (Eurocurrency Term Loans and Eurocurrency Revolving Loans), each

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as defined in the Credit Agreement. ABR Borrowings and Swingline Loans made in U.S. dollars under the Credit Agreement bear interest at a rate per annum equal to the ABR plus the Applicable Rate (as defined in the Credit Agreement). The ABR is defined as the greater of (a) the Prime Rate (as defined in the Credit Agreement) in effect on such day, (b) the New York Federal Reserve Bank (NYFRB) rate (as defined in the Credit Agreement) in effect on such day plus ½ of 1.00%, or (c) the Adjusted LIBOR (as defined in the Credit Agreement) for a one-month interest period in dollars on such day plus 1.00%. The ABR for ABR Term Loans shall not be less than 1.75% per annum. The Applicable Rate for any ABR Revolving Loans will be based upon the leverage ratio applicable on such date. As of March 30, 2019, the Applicable Rate for ABR Term Loans was 2.25% per annum.

Eurocurrency Borrowings made under the Credit Agreement bear interest at a rate per annum equal to the Adjusted LIBOR Rate plus the Applicable Rate. The Adjusted LIBOR Rate is defined as an interest rate per annum equal to (a) the LIBOR Rate for such interest period multiplied by (b) the Statutory Reserve Rate (as defined in the Credit Agreement). The Applicable Rate for any Eurocurrency Revolving Loan is based upon the leverage ratio applicable on such date. The Adjusted LIBOR Rate for Eurocurrency Term Loans shall not be less than 0.75% per annum. Based on our leverage ratio as of March 30, 2019, the Applicable Rate for Eurocurrency Revolving Loans was 3.00%. As of March 30, 2019, the Applicable Rate for Eurocurrency Term Loans was 3.25% per annum, plus the applicable Adjusted LIBOR Rate of 2.49%. The weighted average interest rate on Term Facility debt during the six months ended March 30, 2019 was 5.65%.

As of March 30, 2019, there was $80,391 of outstanding borrowings under the Revolving Credit Facility which is included in long-term debt, less current maturities, net in the Consolidated Balance Sheets. As of September 29, 2018, there were no outstanding borrowings under the Revolving Credit Facility. We had outstanding letters of credit drawn from the Revolving Credit Facility totaling $19,976 and $20,448 as of March 30, 2019 and September 29, 2018, respectively, leaving approximately $49,633 and $99,552, respectively, of unused borrowing capacity. Commitment fees are payable on the unused portion of the Revolving Credit Facility at rates between 0.25% and 0.40% based on our leverage ratio. During the three and six months ended March 30, 2019, commitment fees incurred totaled $52 and $124, respectively. During the three and six months ended March 31, 2018, commitment fees incurred totaled $77 and $156, respectively.

The Credit Agreement governing the Term Facility requires us to prepay outstanding term loans, subject to certain exceptions, depending on the leverage ratio with (a) up to 50% of the our annual Excess Cash Flow (as defined in the Credit Agreement) and (b) 100% of the net cash proceeds of (i) certain asset sales and casualty and condemnation events, subject to reinvestment rights and certain other exceptions; and (ii) any incurrence or issuance of certain debt, other than debt permitted under the Credit Agreement. We may voluntarily prepay outstanding loans under the Term Facility at any time without premium or penalty. All obligations under the Credit Agreement are unconditionally guaranteed by certain of our existing wholly-owned domestic subsidiaries, and are secured, subject to certain exceptions, by substantially all of our assets and the assets of our subsidiary guarantors.

Under the Credit Agreement, we are subject to customary affirmative and negative covenants, including, among others, restrictions on our ability to incur debt, create liens, dispose of assets, make investments, loans, advances, guarantees, and acquisitions, enter into transactions with affiliates, and enter into any restrictive agreements and customary events of default (including payment defaults, covenant defaults, change of control defaults and bankruptcy defaults). The Credit Agreement also contains financial covenants, including the ratio of consolidated total indebtedness to adjusted consolidated earnings before income, taxes, depreciation and amortization (Adjusted EBITDA), as defined in the Credit Agreement, as well as the ratio of Adjusted EBITDA to consolidated interest expense. These covenants restrict our ability to purchase outstanding shares of our common stock. As of March 30, 2019 and September 29, 2018, we were in compliance with these financial covenants.

See Note 7 for additional information on the fair value of the tranche B term loan and the TEU debt.

Interest Rate Swaps

On October 20, 2016, in order to mitigate our exposure to interest rate increases on our variable rate debt, we entered into a variable to fixed amortizing interest rate swap. See Note 8 for additional information on derivative financial instruments.

The interest rate swap will be reduced to the following notional amounts over the next three years:

	Notional Amount
October 3, 2019	$	180,000
October 3, 2020	125,000
April 3, 2021	—

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NOTE 10          STOCK-BASED COMPENSATION

We compensate our officers, directors and employees with stock-based compensation under the 2017 Stock Incentive Plan (the 2017 Plan) approved by our shareholders and administered under the supervision of our Board of Directors. As of March 30, 2019, a total of 958 shares were available for issuance under the 2017 Plan.

We make an annual stock grant under the 2017 Plan of stock options, restricted stock units and performance restricted stock units, as well as stock grants throughout the fiscal year. For fiscal years 2019, 2018 and 2017, the annual stock grant occurred in December 2018, April 2018 and April 2017, respectively.

Stock Options

During the six months ended March 30, 2019, 231 stock options were granted at a weighted average fair value of $9.91. During the six months ended March 30, 2018, no stock options were granted.

Restricted Stock Units and Performance Restricted Stock Units

We award restricted stock units to directors and key employees and performance restricted stock units to key employees. During the six months ended March 30, 2019, we granted 124 restricted stock units and 40 performance restricted stock units to directors, officers and employees. During the six months ended March 30, 2018, we granted 24 restricted stock units and no performance restricted stock units. The fair value of the restricted stock units and performance restricted stock units granted during the six months endedMarch 30, 2019 and March 31, 2018 was $46.45 and $48.61, respectively, representing the market value of our shares as of the date of grant less the present value of estimated foregone dividends over the vesting period.

Employee Stock Purchase Plan

Our U.S. employees are eligible to participate in the 2012 Employee Stock Purchase Plan (2012 ESPP) approved by our shareholders. As of March 30, 2019, 599 shares were available for issuance under the 2012 ESPP. During the six months ended March 30, 2019 and March 31, 2018, we issued 16 and 12 shares, respectively, under the 2012 ESPP at a weighted average price per share of $34.11 and $44.03, respectively.

NOTE 11          EMPLOYEE BENEFIT PLANS

We sponsor a non-contributory, defined benefit pension plan for eligible employees of one of our German subsidiaries. Net periodic benefit cost for our defined benefit pension plan includes the following components:

	Three Months Ended						Six Months Ended
	March 30, 2019			March 31, 2018			March 30, 2019			March 31, 2018
Service cost	$	321		$	331		$	643		$	649
Interest cost	155			165			310			324
Expected return on plan assets	(321		)	(328		)	(643		)	(643		)
Net amortization and deferral	137			137			274			267
Net periodic benefit cost	$	292		$	305		$	584		$	597

The weighted average expected long-term rate of return on plan assets used to determine the net periodic benefit cost for each of the three and six months ended March 30, 2019 and March 31, 2018 was 5.5%.

NOTE 12          INCOME TAXES

The Tax Cuts and Jobs Act (the Tax Act) was enacted into law on December 22, 2017 and made significant changes to U.S. federal corporate tax law. Effective January 1, 2018, the Tax Act lowered the U.S. corporate tax rate from 35% to 21% and prompted various other changes to U.S. federal corporate tax law, including the establishment of a territorial-style system for taxing foreign-source income of domestic multinational corporations and a one-time deemed repatriation tax on untaxed foreign earnings. The Tax Act resulted in a U.S. federal blended statutory rate of 24.5% for fiscal year 2018 and a rate of 21.0% for fiscal year 2019.

Generally, the impacts of new tax legislation would be required to be recorded in the period of enactment, which was our first quarter of fiscal year 2018. However, in March 2018, the FASB issued ASU No. 2018-05, Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118, which incorporates various SEC paragraphs from Staff Accounting Bulletin No. 118 into income tax accounting guidance effective immediately, allowing registrants to record provisional amounts during a one-year measurement period.

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As of December 29, 2018, we completed our accounting for the tax effects of the Tax Act at the conclusion of the one-year measurement period. As a result, the income tax provision for the six months ended March 30, 2019 includes certain discrete benefits of $1,293 for Tax Act measurement period adjustments. The discrete benefits relate to $1,297 of additional dividends received deduction for certain foreign tax credits included in the mandatory deemed repatriation tax calculation, partially offset by $4 of expense for other Tax Act measurement period adjustments. The additional dividends received deduction is based on our assessment of the treatment under the applicable provisions of the Tax Act as currently written and enacted. If, in the future, Congress or the Department of the Treasury provides legislative or regulatory updates, this could change our assessment of the benefit associated with the dividends received deduction, and we may be required to recognize additional tax expense up to the full amount of the $1,297 in the period such updates are issued.

Excluding the impact of certain discrete benefits in the current and prior year, the effective tax rate for the six months ended March 30, 2019 and March 31, 2018 was essentially flat compared to the same prior year period. Factors that affected the effective tax rate for the six months ended March 30, 2019 included impacts of the Tax Act, such as elimination of the domestic manufacturing deduction and the implementation of the global intangible low-taxed income (GILTI) provision. These increases were offset by favorable aspects of the Tax Act, such as the decrease in the U.S. income tax rate and provisions for incentivizing foreign-derived intangible income (FDII). In the first quarter of fiscal year 2019, we made an accounting policy election to treat the future tax impacts of the GILTI provisions of the Tax Actas a period cost to the extent applicable.

The income tax benefit for the six months ended March 31, 2018 included certain discrete benefits of $25,378 for the estimated impact of the Tax Act. The discrete benefits related to $32,264 of estimated benefit from the remeasurement of our estimated net deferred tax liabilities, partially offset by $6,886 of estimated expense associated with the mandatory deemed repatriation tax. The income tax benefit for fiscal year 2018 included certain discrete benefits of $25,008 for the estimated impact of the Tax Act. The discrete benefits primarily related to $31,647 of estimated benefit from the remeasurement of our estimated net deferred tax liabilities, partially offset by $6,639 of estimated expense associated with the mandatory deemed repatriation tax.

As of March 30, 2019, the liability for unrecognized tax benefits was $6,985, of which $4,510 would favorably affect our effective tax rate, if recognized. As of September 29, 2018, the liability for unrecognized tax benefits was $6,158, of which $3,740 would favorably affect our effective tax rate, if recognized. As of March 30, 2019, we do not expect significant changes in the amount of unrecognized tax benefits during the next twelve months.

NOTE 13          SHAREHOLDERS' EQUITY

Tangible Equity Units

During the third quarter of fiscal year 2016, we issued 1,150 TEUs in a registered public offering primarily to finance the acquisition of PCB, to repay amounts outstanding under our existing revolving credit facility and to pay related costs, fees and expenses. Total proceeds, net of underwriting discounts, commissions and other expenses were $110,926. Each TEU has a stated amount of $100 per TEU and is comprised of a prepaid stock purchase contract and a senior amortizing note having a final installment payment date of July 1, 2019. We allocated the proceeds from the issuance of the TEUs between equity and debt based on the relative fair values of the respective components of each TEU. The fair value of the prepaid stock purchase contracts, net of underwriting discounts, commissions and other expenses, was recorded in additional paid-in capital in the Consolidated Balance Sheets. The fair value of the senior amortizing note, net of underwriting discounts, commissions and other expenses, was split between current maturities of long-term debt, net and long-term debt, less current maturities, net in the Consolidated Balance Sheets. Underwriting discounts, commissions and other costs directly associated with the TEU-related debt will be amortized using the effective interest rate method over the three-year term of the instrument.

The aggregate values assigned upon issuance to each component of the TEUs, based on the relative fair value of the respective components, were as follows:

	Equity Component			Debt Component			Total
Fair value price per TEU 1	$	76.19		$	23.81		$	100.00
Gross proceeds	$	87,614		$	27,386		$	115,000
Less: Underwriting discounts and commissions	(2,628		)	(822		)	(3,450		)
Less: Other expenses 2	(475		)	(149		)	(624		)
Issuance of TEUs, net	$	84,511		$	26,415		$	110,926

¹  The fair value price allocation between equity and debt for each TEU was determined using a discounted cash flow model.

²  Other expenses include direct and incremental costs related to the issuance of the TEUs.

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Equity Component

Unless converted earlier at the option of the holder, each prepaid stock purchase contract will automatically settle on July 1, 2019. If converted prior to the automatic settlement date at the option of the holder, the minimum of 1.9841 shares of our common stock are delivered to the holder of each prepaid stock purchase contract. On the automatic settlement date, a minimum of 1.9841 shares and a maximum of 2.3810 shares of our common stock, subject to adjustment based upon the applicable market value discussed below, will be delivered to the holder of each prepaid stock purchase contract at the settlement date.

The number of shares of our common stock issuable upon settlement of each purchase contract on July 1, 2019 will be determined as follows:

• if the applicable market value is equal to or greater than the threshold appreciation price of $50.40 per share, holders will receive 1.9841 shares of common stock per purchase contract, or the minimum settlement rate;

• if the applicable market value is greater than the reference price of $42.00 per share, but less than the threshold appreciation price of $50.40 per share, holders will receive a number of shares of common stock equal to $100 per TEU divided by the applicable market value; or

• if the applicable market value is less than or equal to the reference price of $42.00 per share, holders will receive 2.3810 shares of common stock per purchase contract, or the maximum settlement rate.

The "applicable market value" is defined as the average of the daily volume-weighted average price of the common stock on each of the 20 consecutive trading days beginning on, and including, the 23rd scheduled trading day immediately preceding July 1, 2019.

During the fourth quarter of fiscal year 2017, certain holders of our TEUs elected to early convert the equity component on 473 of our outstanding TEUs at the minimum conversion rate of 1.9841 which resulted in the issuance of 939 shares of our common stock. During fiscal years 2019 and 2018, no holders of our TEUs elected to early convert the equity component of our outstanding TEUs. There were 677 units of the equity component of TEUs outstanding as of both March 30, 2019 and September 29, 2018.

Debt Component

The amortizing senior note was issued with an initial principal amount of $27,386, or $23.8136 per TEU. Equal quarterly cash installments of $2.1875 per amortizing note are paid, which in the aggregate are equivalent to a 8.75% cash distribution per year with respect to each $100 stated amount per TEU. Each installment constitutes a payment of interest and partial repayment of principal. The final installment will be paid in the fourth quarter of fiscal year 2019.

Earnings Per Common Share

The TEUs have a dilutive effect on our earnings per share. The 1.9841 minimum shares to be issued are included in the calculation of basic weighted average shares outstanding. The 0.3969 difference between the minimum shares and the 2.3810 maximum shares are potentially dilutive, and accordingly, are included in our diluted earnings per share on a pro rata basis to the extent the applicable market value is higher than the reference price but less than the threshold appreciation price. See Note 14 for additional information regarding the calculation of earnings per share.

Capped Calls

In connection with the pricing of the TEUs sold in our public offering in fiscal year 2016, we purchased capped calls from third party banking institutions (Capped Calls) for $7,935. The initial Capped Calls were for 2,282 equivalent shares of our common stock with a strike price of $50.40, a cap price of $58.80 and an expiration date of July 1, 2019. The value of the Capped Calls is settled with shares of our common stock, based on the approximate market value of our common stock at such time, and could be settled as the TEUs were early converted or settled upon expiration on July 1, 2019 (Capped Call Expiration). During the fourth quarter of fiscal year 2017, we settled approximately 10% of the Capped Calls, which resulted in us receiving and retiring 12 shares of our common stock. No Capped Calls were settled during fiscal years 2019 and 2018.

On June 13, 2018, we amended the agreements with third party banking institutions for the outstanding Capped Calls (Capped Call Agreements) to modify the timing of settlement to be only upon expiration for all outstanding Capped Calls. Per the Capped Call Agreements, the outstanding Capped Calls are for 2,054 equivalent shares of our common stock with a strike price of $50.40 and a cap price of $57.97. The Capped Calls will be automatically settled upon Capped Call Expiration with shares of our common stock based on the average market value of our common stock as defined in the Capped Call Agreements.

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As of March 30, 2019, the range of shares of our common stock to be received for the outstanding Capped Calls was a minimum of 0 shares to a maximum of 268 shares, which will be realized if the average market value of our common stock as defined in the Capped Call Agreements is at or below $50.40 or at $57.97, respectively, upon Capped Call Expiration.

NOTE 14          EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income by the daily weighted average number of common shares outstanding during the applicable period. The TEUs are assumed to be settled at the minimum settlement amount of 1.9841 shares per TEU when calculating weighted-average common shares outstanding for purposes of basic earnings per share.

Using the treasury stock method, diluted earnings per share includes the potentially dilutive effect of common shares issued in connection with outstanding stock-based compensation options and grants. The potentially dilutive effect of common shares issued in connection with outstanding stock options is determined based on the average market price for the period. For diluted earnings per share, the TEUs are assumed to be settled at a conversion factor based on our daily volume-weighted average price per share of our common stock for the 20 consecutive trading days preceding the end of the current fiscal quarter not to exceed 2.3810 shares of common stock per TEU.

Under the treasury stock method, shares associated with certain stock options have been excluded from the diluted weighted average shares outstanding calculation because the exercise of those options would lead to a net reduction in common shares outstanding or anti-dilution. As a result, stock options to acquire 865 and 482 weighted common shares have been excluded from the diluted weighted average common shares outstanding calculation for the three months ended March 30, 2019 and March 31, 2018, respectively. Stock options to acquire 791 and 489 weighted common shares have been excluded from the diluted weighted average common shares outstanding calculation for the six months ended March 30, 2019 and March 31, 2018, respectively.

In connection with the pricing of the TEUs, we purchased capped calls. The capped calls will not be reflected in the calculation of diluted earnings per share until settled as they will lead to a net reduction in common shares outstanding or anti-dilution. See Note 13 for additional information on our equity instruments.

Basic and diluted earnings per share are calculated as follows:

	Three Months Ended				Six Months Ended
	March 30, 2019		March 31, 2018		March 30, 2019		March 31, 2018
Net income	$	14,160	$	8,438	$	24,661	$	41,589
Weighted average common shares outstanding	19,251		19,150		19,234		19,137
Effect of dilutive securities
Stock-based compensation	190		123		159		121
Weighted average dilutive common shares outstanding	19,441		19,273		19,393		19,258
Earnings per share
Basic	$	0.74	$	0.44	$	1.28	$	2.17
Diluted	0.73		0.44		1.27		2.16

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NOTE 15          OTHER COMPREHENSIVE INCOME (LOSS)

Other comprehensive income (loss), a component of shareholders' equity, consists of foreign currency translation adjustments, gains or losses on derivative instruments and defined benefit pension plan adjustments. 

Income tax expense or benefit allocated to each component of other comprehensive income (loss) is as follows:

	Three Months Ended									Six Months Ended
	March 30, 2019
	Pre-tax			Tax			Net			Pretax			Tax			Net
Foreign currency translation gain (loss) adjustments	$	(1,168	)	$	—		$	(1,168	)	$	(2,671	)	$	—		$	(2,671	)
Derivative instruments
Unrealized net gain (loss)	(502		)	110			(392		)	(2,313		)	505			(1,808		)
Net (gain) loss reclassified to earnings	(725		)	158			(567		)	(1,894		)	413			(1,481		)
Defined benefit pension plan
Unrealized net gain (loss)	1,374			(415		)	959			(839		)	253			(586		)
Net (gain) loss reclassified to earnings	137			(42		)	95			274			(83		)	191
Currency exchange rate gain (loss)	146			—			146			261			—			261
Other comprehensive income (loss)	$	(738	)	$	(189	)	$	(927	)	$	(7,182	)	$	1,088		$	(6,094	)

	Three Months Ended									Six Months Ended
	March 31, 2018
	Pre-tax			Tax			Net			Pretax			Tax			Net
Foreign currency translation gain (loss) adjustments	$	5,172		$	—		$	5,172		$	7,671		$	—		$	7,671
Derivative instruments
Unrealized net gain (loss)	324			(84		)	240			1,713			(443		)	1,270
Net (gain) loss reclassified to earnings	926			(239		)	687			1,065			(275		)	790
Defined benefit pension plan
Unrealized net gain (loss)	(918		)	277			(641		)	(388		)	117			(271		)
Net (gain) loss reclassified to earnings	137			(42		)	95			267			(81		)	186
Currency exchange rate gain (loss)	(181		)	—			(181		)	(268		)	—			(268		)
Other comprehensive income (loss)	$	5,460		$	(88	)	$	5,372		$	10,060		$	(682	)	$	9,378

The changes in the net-of-tax balances of each component of AOCI are as follows:

	Three Months Ended												Six Months Ended
	March 30, 2019
	Adjustments												Adjustments
	Foreign Currency Translation			Unrealized Derivative Instrument			Defined Benefit Pension Plan			Total			Foreign Currency Translation			Unrealized Derivative Instrument			Defined Benefit Pension Plan			Total
Beginning balance	$	269		$	3,990		$	(7,950	)	$	(3,691	)	$	1,772		$	6,320		$	(6,616	)	$	1,476
Other comprehensive net gain (loss) reclassifications	(1,168		)	(392		)	1,105			(455		)	(2,671		)	(1,808		)	(325		)	(4,804		)
Net (gain) loss reclassified to earnings	—			(567		)	95			(472		)	—			(1,481		)	191			(1,290		)
Other comprehensive income (loss)	(1,168		)	(959		)	1,200			(927		)	(2,671		)	(3,289		)	(134		)	(6,094		)
Ending balance	$	(899	)	$	3,031		$	(6,750	)	$	(4,618	)	$	(899	)	$	3,031		$	(6,750	)	$	(4,618	)

29

	Three Months Ended									Six Months Ended
	March 31, 2018
	Adjustments									Adjustments
	Foreign Currency Translation		Unrealized Derivative Instrument		Defined Benefit Pension Plan			Total		Foreign Currency Translation		Unrealized Derivative Instrument		Defined Benefit Pension Plan			Total
Beginning balance	$	6,445	$	3,086	$	(6,078	)	$	3,453	$	3,946	$	1,953	$	(6,452	)	$	(553	)
Other comprehensive net gain (loss) reclassifications	5,172		240		(822		)	4,590		7,671		1,270		(539		)	8,402
Net (gain) loss reclassified to earnings	—		687		95			782		—		790		186			976
Other comprehensive income (loss)	5,172		927		(727		)	5,372		7,671		2,060		(353		)	9,378
Ending balance	$	11,617	$	4,013	$	(6,805	)	$	8,825	$	11,617	$	4,013	$	(6,805	)	$	8,825

The effect on certain line items in the Consolidated Statements of Income of amounts reclassified out of AOCI are as follows:

	Three Months Ended						Six Months Ended						Affected Line Item in the Consolidated Statements of Income
	March 30, 2019			March 31, 2018			March 30, 2019			March 31, 2018
Derivative instruments
Currency exchange contracts gain (loss)	$	16		$	(1,146	)	$	601		$	(1,304	)	Revenue
Interest rate swap contracts gain (loss)	709			220			1,293			239			Interest expense, net
Income tax benefit (expense)	(158		)	239			(413		)	275			Income tax provision (benefit)
Total net gain (loss) on derivative instruments	567			(687		)	1,481			(790		)	Net income
Defined benefit pension plan 1
Actuarial loss	—			(75		)	—			(146		)	Cost of sales
Actuarial loss	—			(38		)	—			(75		)	Selling and marketing
Actuarial loss	—			(24		)	—			(46		)	General and administrative
Actuarial loss	(137		)	—			(274		)	—			Other income (expense), net
Total actuarial loss	(137		)	(137		)	(274		)	(267		)	Income before income taxes
Income tax benefit	42			42			83			81			Income tax provision (benefit)
Total net loss on pension plan	(95		)	(95		)	(191		)	(186		)	Net income
Total net of tax reclassifications out of AOCI included in net income	$	472		$	(782	)	$	1,290		$	(976	)

¹  Change in classification of actuarial loss on defined benefit pension plan related to the adoption of ASU No. 2017-07 in fiscal year 2019. See Note 2 for additional information on the impact of adoption.

NOTE 16          BUSINESS SEGMENT INFORMATION

Our Chief Executive Officer (the Chief Operating Decision Maker) regularly reviews financial information for our two reportable segments, Test & Simulation and Sensors. Test & Simulation manufactures and sells equipment and related software and services which are used by customers to characterize a product's mechanical properties or performance. Sensors manufactures and sells high-performance sensors which provide measurements of vibration, pressure, position, force and sound in a variety of applications. 

In evaluating each segment's performance, our Chief Executive Officer focuses on income from operations. This measure excludes interest income and expense, income taxes and other non-operating items. Corporate expenses, including costs associated with various support functions such as human resources, information technology, legal, finance and accounting, and general and administrative costs are allocated to the reportable segments on the basis of revenue. The accounting policies of the

30

reportable segments are the same as those described in Note 1 to the Consolidated Financial Statements found in our Annual Report on Form 10-K for the fiscal year ended September 29, 2018 and in Note 3 of this Quarterly Report on Form 10-Q.

Intersegment revenue is based on standard costs with reasonable mark-ups established between the reportable segments. All significant intersegment amounts are eliminated to arrive at consolidated financial results.

Financial information by reportable segment is as follows:

	Three Months Ended						Six Months Ended
	March 30, 2019			March 31, 2018			March 30, 2019			March 31, 2018
Revenue
Test & Simulation	$	151,032		$	110,238		$	276,592		$	228,441
Sensors	82,375			81,542			160,325			157,501
Intersegment eliminations	(361		)	(457		)	(690		)	(457		)
Total revenue	$	233,046		$	191,323		$	436,227		$	385,485
Income from operations
Test & Simulation	$	12,684		$	3,295		$	20,015		$	8,904
Sensors	11,504			13,337			22,138			24,225
Intersegment eliminations	(14		)	(22		)	(13		)	(22		)
Total income from operations	$	24,174		$	16,610		$	42,140		$	33,107

NOTE 17          RESTRUCTURING AND RELATED COSTS

Fiscal Year 2018 Restructuring

During the fourth quarter of fiscal year 2018, we initiated a Test & Simulation workforce reduction intended to simplify the organization and reduce the overall cost structure. No restructuring expenses were recognized in the three or six months ended March 30, 2019 or March 31, 2018 related to this restructuring action. As of March 30, 2019, we have incurred a total of $880 of pre-tax severance and related expense.

Fiscal Year 2017 Restructuring

During the fourth quarter of fiscal year 2017, we initiated a series of Test & Simulation workforce reductions and facility closures intended to increase organizational effectiveness, gain manufacturing efficiencies and provide cost savings that can be reinvested in our growth initiatives. These actions include the transfer of certain production operations in China to a contract manufacturing partner throughout fiscal years 2018 and 2019. As a result, during the three and six months ended March 30, 2019, we recorded $0 and $130 of pre-tax severance and related expense, respectively. During the three and six months ended March 31, 2018, we recorded $321 and $414 of pre-tax severance and related expense, respectively, and $25 and $187 of pre-tax facility closure costs, respectively. As of March 30, 2019, we have incurred a total of $4,871 of pre-tax expense, including $4,579 and $292 of pre-tax expense related to severance and facility closure costs, respectively.

Restructuring expenses included in our Consolidated Statements of Income for the above restructuring actions are as follows:

	Three Months Ended				Six Months Ended
	March 30, 2019		March 31, 2018		March 30, 2019		March 31, 2018
	Test & Simulation		Test & Simulation		Test & Simulation		Test & Simulation
Cost of sales	$	—	$	304	$	117	$	424
Selling and marketing	—		—		—		—
General and administrative	—		42		13		177
Total restructuring expense	$	—	$	346	$	130	$	601

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Restructuring expense accruals included in payroll and related costs in the Consolidated Balance Sheets for the above restructuring actions are as follows:

	2018			2017
	Test & Simulation			Test & Simulation
Balance, September 29, 2018	$	1,051		$	2,933
Restructuring expense	—			130
Payments	(1,012		)	(3,058		)
Other adjustments	(39		)	(5		)
Currency translation	—			—
Balance, March 30, 2019	$	—		$	—

NOTE 18          BUSINESS ACQUISITIONS

On November 21, 2018, we acquired all ownership interests of E2M for a cash purchase price of $80,287. Based in Amsterdam, Netherlands, E2M is a leading manufacturer of high force, electrically driven actuation systems, serving primarily the human-rated entertainment and training simulation markets. The acquisition of E2M expands our technology and product offerings for human-rated simulation systems and brings key regulatory approvals and customers in the flight simulation and entertainment markets. The transaction was accounted for under the acquisition method of accounting. The acquired assets, liabilities and operating results have been included in our financial statements within Test & Simulation from the date of acquisition. During the three and six months ended March 30, 2019, we included $10,138 and $13,659, respectively, of revenue from E2M in our Consolidated Statements of Income. We funded the acquisition of E2M primarily with borrowings on our Revolving Credit Facility. Costs of $1,035 associated with the acquisition of E2M were expensed as incurred. Pro forma information related to the acquisition of E2M has not been included as the impact on our consolidated results of operations was not considered material.

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The following table summarizes the preliminary fair value measurement of the assets acquired and liabilities assumed, net of cash acquired, as of the date of acquisition:

	Fair Value			Finite-Lived Intangible Asset Lives (Years)
Asset (Liability)
Accounts receivable	$	4,651
Unbilled accounts receivable	1,518
Inventories	11,063
Prepaid expenses and other current assets	123
Property and equipment	672
Intangible assets
Customer lists	21,595			15
Trademarks and trade names	5,926			15
Technology	12,650			15
Other intangible assets	3,761			4
Other long-term assets	60
Purchased goodwill	32,523
Accounts payable	(3,657		)
Accrued payroll and related costs	(1,328		)
Advance payments from customers	(4,315		)
Accrued income taxes	(290		)
Other accrued liabilities	(127		)
Deferred income taxes	(6,278		)
Net assets acquired	$	78,547
Supplemental information
Consideration paid at closing	$	79,772
Post-closing purchase price adjustment	515
Less: Cash acquired	(1,740		)
Purchase price, net of cash acquired	$	78,547

The allocation of purchase price consideration is considered preliminary as of March 30, 2019 with provisional amounts primarily related to inventory, intangible assets, advanced payments to customers and certain tax related items included as our allocation process has not been finalized. We expect to finalize the allocation of purchase price as soon as possible, but no later than one year from the acquisition date.

Goodwill was calculated as the difference between the acquisition date fair value of the total purchase price consideration and the fair value of the net assets acquired and represents the future economic benefits that we expect to achieve as a result of the acquisition. This resulted in a purchase price in excess of the fair value of identifiable net assets acquired. The purchase price also included the fair value of other assets that were not identifiable, not separately recognizable under accounting rules (e.g., assembled workforce) or of immaterial value. All of the goodwill was assigned to Test & Simulation. None of the goodwill is deductible for income tax purposes.

The preliminary fair value of the acquired intangible assets was $43,932. The acquired intangible assets are being amortized on a straight-line basis over the useful lives identified in the table above.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is designed to provide a reader of our financial statements with a narrative from the perspective of management on our financial condition, results of operations, liquidity and certain other factors that may affect our future results. Our MD&A is presented in nine sections:

• Overview

• Financial Results

• Cash Flow Comparison

• Liquidity and Capital Resources

• Off-balance Sheet Arrangements

• Critical Accounting Policies

• Recently Issued Accounting Pronouncements

• Other Matters

• Forward-looking Statements

Our MD&A should be read in conjunction with the Consolidated Financial Statements and related Notes included in Item 1 of Part I of this Quarterly Report on Form 10-Q. All dollar and share amounts are in thousands, unless otherwise noted.

Overview

MTS Systems Corporation's testing and simulation hardware, software and service solutions help customers accelerate and improve their design, development and manufacturing processes and are used for determining the mechanical behavior of materials, products and structures. Our high-performance sensors provide measurements of vibration, pressure, position, force and sound in a variety of applications. As of September 29, 2018, we had 3,400 employees and revenue of $778,032 for fiscal year 2018.

Further globalization and expansion of many industries along with growth in emerging markets, such as China and India, provide a strong and vibrant market base from which we can grow revenue. We have aligned our organizational structure to be more flexible to the demands of globalized and volatile markets by adjusting our structure to be more cost effective and nimble in responding to our customers' needs. We are looking ahead to delivering distinctive business performance through our commitment to sustain the differentiated competitive advantage that comes from offering an innovative portfolio of Test & Simulation and Sensors solutions that create value for customers and are delivered with total customer satisfaction. 

Acquisition

On November 21, 2018, weacquired E2M Technologies B.V. (E2M) for a cash purchase price of$80,287. We funded the acquisition of E2M through borrowings on our Revolving Credit Facility. See Note 18 to the Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q for further discussion of the acquisition of E2M.

Financing

On November 21, 2018, we amended the Credit Agreement to increase the size of our Revolving Credit Facility from $120,000 to $150,000 and to extend the expiration date to July 5, 2022. The size of the Revolving Credit Facility was increased to finance the purchase of E2M. See Note 9 to the Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q for further discussion of the amendment to the Credit Agreement.

Foreign Currency

Approximately 70% of our revenue has historically been derived from customers outside of the U.S. Our financial results are principally exposed to changes in exchange rates between the U.S. dollar and the Euro, the Japanese yen and the Chinese yuan. A change in foreign exchange rates could positively or negatively affect our reported financial results. The discussion below quantifies the impact of foreign currency translation on our financial results for the periods discussed.

Adoption of New Revenue Recognition Standard

In fiscal year 2019, we adopted Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606), followed by related amendments (collectively, "the new revenue standard" or "ASC 606"). See Note 2 and Note 3 to the Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q for the impact of this adoption on our Consolidated Income Statements and Consolidated Balance Sheets.

Terms

The terms "MTS," "we," "us," "the Company" or "our" in this Quarterly Report on Form 10-Q, unless the context otherwise requires, refer to MTS Systems Corporation and its wholly owned subsidiaries.

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Financial Results

Total Company

Results of Operations

The following tables compare results of operations, separately identifying the estimated impact of currency translation, the acquisition of E2M in the first quarter of fiscal year 2019 and restructuring costs incurred in the first quarter of fiscal year 2019.

	Three Months Ended1
				Estimated
	March 30, 2019			Business Change			Acquisition2		Currency Translation			March 31, 2018
Revenue	$	233,046		$	37,302		$	10,138	$	(5,717	)	$	191,323
Cost of sales	145,696			25,891			7,260		(3,953		)	116,498
Gross profit	87,350			11,411			2,878		(1,764		)	74,825
Gross margin	37.5		%									39.1		%
Operating expenses
Selling and marketing	33,395			3,229			319		(750		)	30,597
General and administrative	22,105			1,535			1,875		(297		)	18,992
Research and development	7,676			(1,229		)	348		(69		)	8,626
Total operating expenses	63,176			3,535			2,542		(1,116		)	58,215
Income from operations	$	24,174		$	7,876		$	336	$	(648	)	$	16,610

	Six Months Ended1
				Estimated
	March 30, 2019			Business Change			Acquisition / Restructuring3			Currency Translation			March 31, 2018
Revenue	$	436,227		$	45,243		$	13,659		$	(8,160	)	$	385,485
Cost of sales	270,572			33,553			10,193			(5,906		)	232,732
Gross profit	165,655			11,690			3,466			(2,254		)	152,753
Gross margin	38.0		%										39.6		%
Operating expenses
Selling and marketing	65,484			3,453			410			(1,004		)	62,625
General and administrative	43,183			972			3,208			(551		)	39,554
Research and development	14,848			(3,085		)	558			(92		)	17,467
Total operating expenses	123,515			1,340			4,176			(1,647		)	119,646
Income from operations	$	42,140		$	10,350		$	(710	)	$	(607	)	$	33,107

¹  Financial results for fiscal year 2019 are presented in accordance with the new revenue standard adopted in the first quarter of fiscal year 2019. Prior period results have not been restated to reflect this change. The three and six months ended March 30, 2019 include a favorable impact on income from operations related to the ASC 606 adoption of $2,841 and $3,291, respectively. While we do not expect the adoption of the new revenue standard to have a significant impact on annual operating results, we do expect that it will have an impact on the timing of revenue recognition in interim periods.

²  The Acquisition column includes revenues and costs from the acquisition of E2M and costs incurred as part of the acquisition of E2M.

³  The Acquisition / Restructuring column includes revenues and costs from the acquisition of E2M, costs incurred as part of the acquisition of E2M and restructuring costs.

See Notes 3, 17 and 18 to the Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q for additional information on the new revenue standard, restructuring and related costs, and the E2M acquisition, respectively.

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Revenue
	Three Months Ended								Six Months Ended
	March 30, 2019		March 31, 2018		Increased / (Decreased)				March 30, 2019		March 31, 2018		Increased / (Decreased)
					$		%						$		%
Revenue	$	233,046	$	191,323	$	41,723	21.8	%	$	436,227	$	385,485	$	50,742	13.2	%

Revenue for the three and six months ended March 30, 2019increased21.8% and 13.2%, respectively, primarily driven by growth in both the Test & Simulation and Sensors businesses, partially offset by the unfavorable impact of currency translation. Test & Simulation revenue for the three and six months ended March 30, 2019increased$40,794 and $48,151, respectively, primarily driven by growth in equipment volume from conversion of robust beginning-of-year backlog across all sectors and strong current-year order volume and the acquisition of E2M in the first quarter of fiscal year 2019. The increase was partially offset by the unfavorable impact of currency translation. Sensors revenue for the three and six months ended March 30, 2019increased$833 and $2,824, respectively, primarily driven by continued growth in the Sensors position sector from ongoing strength in industrial and mobile hydraulics markets and growth in the Sensors test sector from a multi-year contract with the U.S. Department of Defense, partially offset by the unfavorable impact of currency translation. Excluding the impact of currency translation and the E2M acquisition, revenue increased19.5% and 11.7%, respectively.

Gross Profit
	Three Months Ended											Six Months Ended
	March 30, 2019			March 31, 2018			Increased / (Decreased)					March 30, 2019			March 31, 2018			Increased / (Decreased)
							$			%								$			%
Gross profit	$	87,350		$	74,825		$	12,525		16.7	%	$	165,655		$	152,753		$	12,902		8.4	%
Gross margin	37.5		%	39.1		%	(1.6		)	ppts		38.0		%	39.6		%	(1.6		)	ppts

Gross profit for the three and six months ended March 30, 2019increased16.7% and 8.4%, respectively, primarily driven by revenue growth in Test & Simulation and the gross profit contribution from the E2M acquisition. This increase was partially offset by increased compensation expense, revenue mix between Test & Simulation and Sensors, the E2M inventory acquisition adjustment of $539 and $984, respectively, and the unfavorable impact of currency translation. Gross margin rate declined1.6 percentage points in both periods primarily due to increased compensation expense, revenue mix between Test & Simulation and Sensors, and the E2M inventory acquisition adjustment. This decrease was partially offset by favorable leverage on higher revenue volume and strong project execution. Excluding the impact of currency translation, the E2M acquisition, and restructuring costs incurred in both fiscal years, gross profit increased14.8% and 7.4% and the gross margin rate declined1.6 and 1.5 percentage points, respectively.

Selling and Marketing Expense
	Three Months Ended										Six Months Ended
	March 30, 2019			March 31, 2018			Increased / (Decreased)				March 30, 2019			March 31, 2018			Increased / (Decreased)
							$		%								$		%
Selling and marketing	$	33,395		$	30,597		$	2,798	9.1	%	$	65,484		$	62,625		$	2,859	4.6	%
% of revenue	14.3		%	16.0		%					15.0		%	16.2		%

Selling and marketing expense for the three and six months ended March 30, 2019increased9.1% and 4.6%, respectively, primarily due to increased compensation and commissions expense to support sales growth and the addition of E2M expenses, partially offset by the favorable impact of currency translation. Excluding the impact of currency translation and E2M expenses, selling and marketing expense increased10.6% and 5.5%, respectively.

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General and Administrative Expense
	Three Months Ended										Six Months Ended
	March 30, 2019			March 31, 2018			Increased / (Decreased)				March 30, 2019			March 31, 2018			Increased / (Decreased)
							$		%								$		%
General and administrative	$	22,105		$	18,992		$	3,113	16.4	%	$	43,183		$	39,554		$	3,629	9.2	%
% of revenue	9.5		%	9.9		%					9.9		%	10.3		%

General and administrative expense for the three and six months ended March 30, 2019increased16.4% and 9.2%, respectively, primarily due to the addition of E2M expenses, acquisition-related expenses, higher compensation expense in Sensors and increased professional fees, partially offset by lower compensation expense in Test & Simulation. Excluding the impact of currency translation, E2M expenses, and restructuring costs incurred in both fiscal years, general and administrative expense increased8.3% and 2.9%, respectively.

Research and Development Expense
	Three Months Ended											Six Months Ended
	March 30, 2019			March 31, 2018			Increased / (Decreased)					March 30, 2019			March 31, 2018			Increased / (Decreased)
							$			%								$			%
Research and development	$	7,676		$	8,626		$	(950	)	(11.0	)%	$	14,848		$	17,467		$	(2,619	)	(15.0	)%
% of revenue	3.3		%	4.5		%						3.4		%	4.5		%

Research and development (R&D) expense for the three months ended March 30, 2019declined11.0% primarily due to lower compensation expense in Test & Simulation, partially offset by the addition of E2M expenses. Excluding the impact of currency translation and E2M expenses, R&D expense decreased14.2%.

R&D expense for the six months ended March 30, 2019declined15.0% primarily due to lower compensation expense in Test & Simulation due in part to the shift of internal resources to capital projects, partially offset by the addition of E2M expenses and continued investment in new product development in Sensors. Excluding the impact of currency translation and E2M expenses, R&D expense decreased17.7%.

Income from Operations
	Three Months Ended										Six Months Ended
	March 30, 2019			March 31, 2018			Increased / (Decreased)				March 30, 2019			March 31, 2018			Increased / (Decreased)
							$		%								$		%
Income from operations	$	24,174		$	16,610		$	7,564	45.5	%	$	42,140		$	33,107		$	9,033	27.3	%
% of revenue	10.4		%	8.7		%					9.7		%	8.6		%

Income from operations for the three and six months ended March 30, 2019increased45.5% and 27.3%, respectively, primarily due to increased gross profit on higher revenue volume and the impact of the E2M acquisition, partially offset by higher compensation expense and acquisition-related expenses. Excluding the impact of currency translation, the E2M acquisition, and restructuring costs incurred in both fiscal years, income from operations increased44.4% and 28.9%, respectively.

Interest Expense, Net
	Three Months Ended								Six Months Ended
	March 30, 2019		March 31, 2018		Increased / (Decreased)				March 30, 2019		March 31, 2018		Increased / (Decreased)
					$		%						$		%
Interest expense, net	$	7,368	$	6,708	$	660	9.8	%	$	14,186	$	13,512	$	674	5.0	%

Interest expense, net for the three and six months ended March 30, 2019 increased primarily due to an increase in interest expense on the revolving credit facility, which was partially offset by a reduction in interest expense related to lower balances on the tranche B term loan, as well as current year gains on interest rate swaps.

37

Other Income (Expense), Net
	Three Months Ended									Six Months Ended
	March 30, 2019		March 31, 2018		Increased / (Decreased)					March 30, 2019		March 31, 2018		Increased / (Decreased)
					$			%						$		%
Other income (expense), net	$	270	$	274	$	(4	)	(1.5	)%	$	319	$	51	$	268	525.5	%

Other income (expense), net remained flat for the three months ended March 30, 2019.

The increase in other income (expense), net for the six months ended March 30, 2019 was primarily driven by a relative decrease in losses on foreign currency transactions.

Income Tax Provision (Benefit)
	Three Months Ended										Six Months Ended
	March 30, 2019			March 31, 2018			Increased / (Decreased)				March 30, 2019			March 31, 2018			Increased / (Decreased)
							$		%								$		%
Income tax provision (benefit)	$	2,916		$	1,738		$	1,178	67.8	%	$	3,612		$	(21,943	)	$	25,555	116.5	%
Effective tax rate	17.1		%	17.1		%					12.8		%	(111.7		)%

The effective tax rate for the three months ended March 30, 2019 was flat.

The effective tax rate for the six months ended March 30, 2019 increased primarily due to certain discrete benefits of $25,378 in the prior year for the estimated impact of the Tax Cuts and Jobs Act (the Tax Act). The current year also includes a certain discrete tax benefit of $1,293 related to the Tax Act. Excluding the impact of these discrete benefits, the effective tax rate for the six months ended March 30, 2019 and March 31, 2018 would have been 17.3% and 17.5%, respectively.

Net Income
	Three Months Ended								Six Months Ended
	March 30, 2019		March 31, 2018		Increased / (Decreased)				March 30, 2019		March 31, 2018		Increased / (Decreased)
					$		%						$			%
Net income	$	14,160	$	8,438	$	5,722	67.8	%	$	24,661	$	41,589	$	(16,928	)	(40.7	)%
Diluted earnings per share	$	0.73	$	0.44	$	0.29	65.9	%	$	1.27	$	2.16	$	(0.89	)	(41.2	)%

Net income and diluted earnings per share for the three months ended March 30, 2019increased primarily due to higher income from operations.

Net income and diluted earnings per share for the six months ended March 30, 2019decreased primarily due to an increase in the effective tax rate, partially offset by higher income from operations.

38

Segment Results

Test & Simulation Segment 

Results of Operations 

The following tables compare results of operations for Test & Simulation, separately identifying the estimated impact of currency translation, the acquisition of E2M in the first quarter of fiscal year 2019 and restructuring costs incurred in the first quarter of fiscal year 2019. See Note 16 to the Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q for additional information on our reportable segments.

	Three Months Ended1
				Estimated
	March 30, 2019			Business Change			Acquisition2		Currency Translation			March 31, 2018
Revenue	$	151,032		$	34,007		$	10,138	$	(3,351	)	$	110,238
Cost of sales	103,742			23,110			7,260		(2,639		)	76,011
Gross profit	47,290			10,897			2,878		(712		)	34,227
Gross margin	31.3		%									31.0		%
Operating expenses
Selling and marketing	18,515			2,626			319		(389		)	15,959
General and administrative	12,816			410			1,875		(211		)	10,742
Research and development	3,275			(1,299		)	348		(5		)	4,231
Total operating expenses	34,606			1,737			2,542		(605		)	30,932
Income from operations	$	12,684		$	9,160		$	336	$	(107	)	$	3,295

	Six Months Ended1
				Estimated
	March 30, 2019			Business Change			Acquisition / Restructuring3			Currency Translation			March 31, 2018
Revenue	$	276,592		$	39,352		$	13,659		$	(4,860	)	$	228,441
Cost of sales	189,757			28,528			10,193			(4,039		)	155,075
Gross profit	86,835			10,824			3,466			(821		)	73,366
Gross margin	31.4		%										32.1		%
Operating expenses
Selling and marketing	35,863			2,227			410			(495		)	33,721
General and administrative	24,887			274			3,208			(428		)	21,833
Research and development	6,070			(3,390		)	558			(6		)	8,908
Total operating expenses	66,820			(889		)	4,176			(929		)	64,462
Income from operations	$	20,015		$	11,713		$	(710	)	$	108		$	8,904

¹  Financial results for fiscal year 2019 are presented in accordance with the new revenue standard adopted in the first quarter of fiscal year 2019. Prior period results have not been restated to reflect this change. The three and six months ended March 30, 2019 include a favorable impact on income from operations related to the ASC 606 adoption of $2,841 and $3,291, respectively. While we do not expect the adoption of the new revenue standard to have a significant impact on annual operating results, we do expect that it will have an impact on the timing of revenue recognition in interim periods.

²  The Acquisition column includes revenues and costs from the acquisition of E2M and costs incurred as part of the acquisition of E2M.

³  The Acquisition / Restructuring column includes revenues and costs from the acquisition of E2M, costs incurred as part of the acquisition of E2M and restructuring costs.

39

See Notes 3, 17 and 18 to the Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q for additional information on the new revenue standard, restructuring and related costs, and the E2M acquisition, respectively.

Revenue
	Three Months Ended								Six Months Ended
	March 30, 2019		March 31, 2018		Increased / (Decreased)				March 30, 2019		March 31, 2018		Increased / (Decreased)
					$		%						$		%
Revenue	$	151,032	$	110,238	$	40,794	37.0	%	$	276,592	$	228,441	$	48,151	21.1	%

Revenue for the three and six months ended March 30, 2019increased37.0% and 21.1%, respectively, primarily driven by growth in equipment volume across all sectors from conversion of robust beginning-of-year backlog and strong current-year order volume and the acquisition of E2M in the first quarter of fiscal year 2019. The increase was partially offset by the unfavorable impact of currency translation. Excluding the impact of currency translation and the E2M acquisition, revenue increased30.8% and 17.2%, respectively. 

Gross Profit
	Three Months Ended										Six Months Ended
	March 30, 2019			March 31, 2018			Increased / (Decreased)				March 30, 2019			March 31, 2018			Increased / (Decreased)
							$		%								$			%
Gross profit	$	47,290		$	34,227		$	13,063	38.2	%	$	86,835		$	73,366		$	13,469		18.4	%
Gross margin	31.3		%	31.0		%	0.3		ppts		31.4		%	32.1		%	(0.7		)	ppts

Gross profit for the three months ended March 30, 2019increased38.2% primarily due to higher revenue volume and the gross profit contribution from the E2M acquisition, partially offset by increased compensation expense. Gross margin rate increased0.3 percentage points primarily driven by higher revenue volume, strong project execution and the favorable impact of currency translation, partially offset by increased compensation expense and the $539 E2M acquisition inventory adjustment. Excluding the impact of currency translation, the E2M acquisition, and prior year restructuring costs, gross profit increased30.7% and gross margin rate remained flat.

Gross profit for the six months ended March 30, 2019increased18.4% primarily due to higher revenue volume and the gross profit contribution from the E2M acquisition, partially offset by increased compensation expense. Gross margin rate declined0.7 percentage points primarily driven by increased compensation expense and the $984 E2M acquisition inventory adjustment, partially offset by higher revenue volume, strong project execution and the favorable impact of currency translation. Excluding the impact of currency translation, the E2M acquisition, and restructuring costs incurred in both fiscal years, gross profit increased14.1% and gross margin rate declined0.9 percentage points.

Selling and Marketing Expense
	Three Months Ended										Six Months Ended
	March 30, 2019			March 31, 2018			Increased / (Decreased)				March 30, 2019			March 31, 2018			Increased / (Decreased)
							$		%								$		%
Selling and marketing	$	18,515		$	15,959		$	2,556	16.0	%	$	35,863		$	33,721		$	2,142	6.4	%
% of revenue	12.3		%	14.5		%					13.0		%	14.8		%

Selling and marketing expense for the three and six months ended March 30, 2019increased16.0% and 6.4%, respectively, primarily due higher commissions and compensation expense, as well as the addition of E2M expenses, partially offset by the favorable impact of currency translation. Excluding the impact of currency translation and E2M expenses, selling and marketing expense increased16.5% and 6.6%, respectively.

40

General and Administrative Expense
	Three Months Ended										Six Months Ended
	March 30, 2019			March 31, 2018			Increased / (Decreased)				March 30, 2019			March 31, 2018			Increased / (Decreased)
							$		%								$		%
General and administrative	$	12,816		$	10,742		$	2,074	19.3	%	$	24,887		$	21,833		$	3,054	14.0	%
% of revenue	8.5		%	9.7		%					9.0		%	9.6		%

General and administrative expense for the three and six months ended March 30, 2019increased19.3% and 14.0%, respectively, primarily driven by the addition of E2M expenses and acquisition-related expenses, partially offset by lower compensation expense. Excluding the impact of currency translation, E2M expenses, and restructuring costs incurred in both fiscal years, general and administrative expense increased4.2% and 2.1%, respectively.

Research and Development Expense
	Three Months Ended											Six Months Ended
	March 30, 2019			March 31, 2018			Increased / (Decreased)					March 30, 2019			March 31, 2018			Increased / (Decreased)
							$			%								$			%
Research and development	$	3,275		$	4,231		$	(956	)	(22.6	)%	$	6,070		$	8,908		$	(2,838	)	(31.9	)%
% of revenue	2.2		%	3.8		%						2.2		%	3.9		%

R&D expense for the three months ended March 30, 2019declined22.6% primarily due to lower compensation expense, partially offset by the addition of E2M expenses. Excluding the impact of currency translation and E2M expenses, R&D expense decreased30.7%.

R&D expense for the six months ended March 30, 2019declined31.9% primarily due to the shift of internal resources to capital projects and lower compensation expense, partially offset by the addition of E2M expenses. Excluding the impact of currency translation and E2M expenses, R&D expense decreased38.1%.

Income from Operations
	Three Months Ended										Six Months Ended
	March 30, 2019			March 31, 2018			Increased / (Decreased)				March 30, 2019			March 31, 2018			Increased / (Decreased)
							$		%								$		%
Income from operations	$	12,684		$	3,295		$	9,389	284.9	%	$	20,015		$	8,904		$	11,111	124.8	%
% of revenue	8.4		%	3.0		%					7.2		%	3.9		%

Income from operations for the three and six months ended March 30, 2019increased284.9% and 124.8%, respectively, primarily due to increased gross profit on higher revenue volume and operational productivity, partially offset by higher compensation expense. Excluding the impact of currency translation, the E2M acquisition, and restructuring costs incurred in both fiscal years, income from operations increased242.1% and 116.9%, respectively.

41

Sensors Segment

Results of Operations

The following tables compare results of operations for Sensors, separately identifying the estimated impact of currency translation. See Note 16 to the Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q for additional information on our reportable segments.

	Three Months Ended
				Estimated
	March 30, 2019			Business Change			Currency Translation			March 31, 2018
Revenue	$	82,375		$	3,199		$	(2,366	)	$	81,542
Cost of sales	42,301			2,693			(1,314		)	40,922
Gross profit	40,074			506			(1,052		)	40,620
Gross margin	48.6		%							49.8		%
Operating expenses
Selling and marketing	14,880			603			(361		)	14,638
General and administrative	9,289			1,125			(86		)	8,250
Research and development	4,401			70			(64		)	4,395
Total operating expenses	28,570			1,798			(511		)	27,283
Income (loss) from operations	$	11,504		$	(1,292	)	$	(541	)	$	13,337

	Six Months Ended
				Estimated
	March 30, 2019			Business Change			Currency Translation			March 31, 2018
Revenue	$	160,325		$	6,124		$	(3,300	)	$	157,501
Cost of sales	81,492			5,267			(1,867		)	78,092
Gross profit	78,833			857			(1,433		)	79,409
Gross margin	49.2		%							50.4		%
Operating expenses
Selling and marketing	29,621			1,226			(509		)	28,904
General and administrative	18,296			698			(123		)	17,721
Research and development	8,778			305			(86		)	8,559
Total operating expenses	56,695			2,229			(718		)	55,184
Income (loss) from operations	$	22,138		$	(1,372	)	$	(715	)	$	24,225

Revenue
	Three Months Ended								Six Months Ended
	March 30, 2019		March 31, 2018		Increased /(Decreased)				March 30, 2019		March 31, 2018		Increased / (Decreased)
					$		%						$		%
Revenue	$	82,375	$	81,542	$	833	1.0	%	$	160,325	$	157,501	$	2,824	1.8	%

Revenue for the three and six months ended March 30, 2019increased1.0% and 1.8%, respectively, primarily driven by continued growth in the Sensors position sector from continued strength in industrial and mobile hydraulics markets and growth in the Sensors test sector from a multi-year contract with the U.S. Department of Defense, partially offset by the unfavorable impact of currency translation. Excluding the impact of currency translation, revenue increased3.9% in both periods.

42

Gross Profit
	Three Months Ended											Six Months Ended
	March 30, 2019			March 31, 2018			Increased / (Decreased)					March 30, 2019			March 31, 2018			Increased / (Decreased)
							$			%								$			%
Gross profit	$	40,074		$	40,620		$	(546	)	(1.3	)%	$	78,833		$	79,409		$	(576	)	(0.7	)%
Gross margin	48.6		%	49.8		%	(1.2		)	ppts		49.2		%	50.4		%	(1.2		)	ppts

Gross profit for the three and six months ended March 30, 2019declined1.3% and 0.7%, respectively, primarily due to the unfavorable impact of currency translation and increased compensation expense, partially offset by increased revenue volume. Gross margin rate declined1.2 percentage points in both periods primarily driven by increased compensation expense during the ramp-up of manufacturing capacity to support both new products and growth in order volume in a tight labor market. Excluding the impact of currency translation, gross profit increased1.2% and 1.1%, respectively, and the gross margin rate declined1.3 percentage points in both periods.

Selling and Marketing Expense
	Three Months Ended										Six Months Ended
	March 30, 2019			March 31, 2018			Increased / (Decreased)				March 30, 2019			March 31, 2018			Increased / (Decreased)
							$		%								$		%
Selling and marketing	$	14,880		$	14,638		$	242	1.7	%	$	29,621		$	28,904		$	717	2.5	%
% of revenue	18.1		%	18.0		%					18.5		%	18.4		%

Selling and marketing expense for the three and six months ended March 30, 2019increased1.7% and 2.5%, respectively, primarily driven by increased compensation from headcount additions to support sales growth, partially offset by the favorable impact of currency translation. Excluding the impact of currency translation, selling and marketing expense increased4.1% and 4.2%, respectively.

General and Administrative Expense
	Three Months Ended										Six Months Ended
	March 30, 2019			March 31, 2018			Increased / (Decreased)				March 30, 2019			March 31, 2018			Increased / (Decreased)
							$		%								$		%
General and administrative	$	9,289		$	8,250		$	1,039	12.6	%	$	18,296		$	17,721		$	575	3.2	%
% of revenue	11.3		%	10.1		%					11.4		%	11.3		%

General and administrative expense for the three months ended March 30, 2019increased12.6% primarily driven by higher compensation expense. Excluding the impact of currency translation, general and administrative expense increased13.6%.

General and administrative expense for the six months ended March 30, 2019increased3.2% primarily driven by higher professional fees and compensation expense. Excluding the impact of currency translation, general and administrative expense increased3.9%.

Research and Development Expense
	Three Months Ended										Six Months Ended
	March 30, 2019			March 31, 2018			Increased / (Decreased)				March 30, 2019			March 31, 2018			Increased / (Decreased)
							$		%								$		%
Research and development	$	4,401		$	4,395		$	6	0.1	%	$	8,778		$	8,559		$	219	2.6	%
% of revenue	5.3		%	5.4		%					5.5		%	5.4		%

R&D expense for the three months ended March 30, 2019 was flat. R&D expense for the six months ended March 30, 2019increased2.6% primarily driven by continued investment in new product development. Excluding the impact of currency translation, R&D expense increased1.6% and 3.6%, respectively.

43

Income from Operations
	Three Months Ended											Six Months Ended
	March 30, 2019			March 31, 2018			Increased / (Decreased)					March 30, 2019			March 31, 2018			Increased / (Decreased)
							$			%								$			%
Income from operations	$	11,504		$	13,337		$	(1,833	)	(13.7	)%	$	22,138		$	24,225		$	(2,087	)	(8.6	)%
% of revenue	14.0		%	16.4		%						13.8		%	15.4		%

Income from operations for the three and six months ended March 30, 2019declined13.7% and 8.6%, respectively, primarily due to increased compensation expense and the unfavorable impact of currency translation. Excluding the impact of currency translation, income from operations decreased9.7% and 5.7%, respectively.

Cash Flow Comparison

The following table summarizes our cash flows from total operations:

	Six Months Ended
	March 30, 2019			March 31, 2018
Total cash provided by (used in):
Operating activities	$	30,669		$	37,258
Investing activities	(91,450		)	(4,476		)
Financing activities	63,187			(61,126		)
Effect of exchange rate changes on cash	(88		)	3,989
Increase (decrease) during the period	2,318			(24,355		)
Cash and cash equivalents balance, beginning of period	71,804			108,733
Cash and cash equivalents balance, end of period	$	74,122		$	84,378

Operating Activities

The decrease in cash provided by operating activities was primarily due to an increase in cash used by working capital associated with timing fluctuations from accounts receivable payments received and unbilled accounts receivable accruals, accounts payable payments, inventory purchases, and advanced payments received from customers, as well as a decrease in net income due to the remeasurement of our estimated deferred tax liabilities as a result of the Tax Act in fiscal year 2018. This decrease was partially offset by a decrease in cash used by deferred income taxes, an increase in cash provided by other assets and liabilities related to accrued project costs, and a decrease in cash used by payroll-related accruals.

Investing Activities

The increase in cash used in investing activities was primarily due to the acquisition of E2M in the first quarter of fiscal year 2019.

Financing Activities

The increase in cash provided by financing activities was primarily due to borrowings under the Revolving Credit Facility used to fund the acquisition of E2M and a decrease in cash used for long-term debt payments.

Liquidity and Capital Resources

We had cash and cash equivalents of $74,122 as of March 30, 2019. Of this amount, $10,597 was located in North America, $28,847 in Europe and $34,678 in Asia. Repatriation of certain foreign earnings is restricted by local law. The North American cash balance was primarily invested in bank deposits. The cash balances in Europe and Asia were primarily invested in money market funds and bank deposits. In accordance with our investment policy, we place cash equivalent investments with issuers who have high-quality investment credit ratings. In addition, we limit the amount of investment exposure we have with any particular issuer. Our investment objectives are to preserve principal, maintain liquidity and achieve the best available return consistent with our primary objectives of safety and liquidity. As of March 30, 2019, we held no short-term investments. 

As a result of the transition tax related to the enactment of the Tax Act, we are able to repatriate cash held in our foreign subsidiaries without such funds being subject to additional federal income tax liability. We plan to continue to repatriate certain amounts of our existing offshore cash and future earnings back to the U.S.

As of March 30, 2019, our capital structure was comprised of $31,632 in short-term debt, $443,206 in long-term debt and $485,054 in shareholders' equity. Long-term debt included $80,391 on our Revolving Credit Facility used to finance the acquisition of E2M. The Consolidated Balance Sheets also included $10,418 of unamortized debt issuance costs as of

44

March 30, 2019. Total interest-bearing debt as of March 30, 2019 was $474,838. We have a credit agreement with a consortium of financial institutions (the Credit Agreement) that provides for senior secured credit facilities consisting of a Revolving Credit Facility and a Term Facility. The maturity date of the Revolving Credit Facility is July 5, 2022 and the maturity date of the loans under the Term Facility is July 5, 2023, unless a term loan lender agrees to extend the maturity date pursuant to a loan modification agreement made in accordance with the terms of the Credit Agreement. The Credit Agreement also requires mandatory prepayments on our Term Facility in certain circumstances, including the potential for an annual required prepayment of a certain percentage of our excess cash flow.

Under the Credit Agreement, we are subject to customary affirmative and negative covenants, including, among others, restrictions on our ability to incur debt, create liens, dispose of assets, make investments, loans, advances, guarantees and acquisitions, enter into transactions with affiliates and enter into any restrictive agreements and customary events of default (including payment defaults, covenant defaults, change of control defaults and bankruptcy defaults). The Credit Agreement also contains financial covenants, including the ratio of consolidated total indebtedness to adjusted consolidated earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA), as defined in the Credit Agreement, as well as the ratio of Adjusted EBITDA to consolidated interest expense. These covenants restrict our ability to pay dividends and purchase outstanding shares of common stock. As of March 30, 2019, we were in compliance with these financial covenants. See Note 9 to the Consolidated Financial Statements included in Item I of Part I of this Quarterly Report on Form 10-Q for additional information on our financing arrangements.

Shareholders' equity increased by $7,122 during the six months ended March 30, 2019 primarily due to $24,661 net income and $5,219 stock-based compensation. The increase was partially offset by $10,740 dividends declared and $6,094 other comprehensive loss.Also contributing to the decrease was a cumulative effect of accounting change reduction to our opening retained earnings balance of $6,227 related to the adoption of the new revenue recognition standard, ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606).

As of March 30, 2019, we believe our current capital resources will be sufficient to fund working capital requirements, capital expenditures and operations for the foreseeable future, including at least the next twelve months.

Off-balance Sheet Arrangements

As of March 30, 2019, we did not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. 

Critical Accounting Policies

The Consolidated Financial Statements have been prepared in accordance with GAAP, which requires us to make estimates and assumptions in certain circumstances that affect amounts reported, giving due consideration to materiality, that affect the reported amounts of assets and liabilities, revenues and expenses and related disclosures of any contingent assets and liabilities at the date of the financial statements. We regularly review our estimates and assumptions, which are based on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. For further information, see "Summary of Significant Accounting Policies" under Note 1 to the Consolidated Financial Statements included in Item 8 of our Annual Report on Form 10-K for the fiscal year ended September 29, 2018. For a discussion of our critical accounting policies, see "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in Item 7 of Part II of our Annual Report on Form 10-K for the fiscal year ended September 29, 2018.

The following critical accounting policy has been updated since our Annual Report on Form 10-K for the fiscal year ended September 29, 2018.

Revenue Recognition (Over Time)

Revenue is recognized either over time as work progresses or at a point-in-time, dependent upon contract-specific terms and the pattern of transfer of control of the product or service to the customer. Contracts with equipment revenue recognized over time use costs incurred to date relative to total estimated costs at completion to measure progress toward satisfying the performance obligation. Incurred cost represents work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer. Equipment contract costs include materials, component parts, labor and overhead costs. For contracts recognized over time, we estimate the profit on a contract as the difference between the total estimated revenue and expected costs to complete a contract and recognize that profit over the life of the contract. Contract estimates are based on various assumptions to determine the outcome of future events that may span several years. These assumptions include labor productivity and availability, the complexity of the work to be performed, the cost and availability of materials, and internal and subcontractor performance.

45

As a significant change in one or more of these estimates could affect the profitability of our contracts, we review and update our contract-related estimates regularly. We recognize adjustments in estimated profit on contracts under the cumulative catch-up method. Under this method, the impact of the adjustment on profit recorded to date is recognized in the period the adjustment is identified. Revenue and profit in future periods of contract performance is recognized using the adjusted estimate. If at any time the estimate of contract profitability indicates an anticipated loss on the contract, we recognize the total loss in the period it is identified. Our review of contract-related estimates has not resulted in adjustments that are significant to our results of operations.

Recently Issued Accounting Pronouncements

Information regarding new accounting pronouncements is included in Note 2 and Note 3 to the Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q. 

Other Matters

Dividends

Our dividend policy is to maintain a payout ratio that allows dividends to increase in conjunction with the long-term growth of earnings per share, while sustaining dividends through economic cycles. Our dividend practice is to target, over time, a payout ratio of approximately 25% of net earnings per share. We have historically paid dividends to holders of our common stock on a quarterly basis. The declaration and payment of future dividends will depend on many factors, including, but not limited to, our earnings, financial condition, debt repayment obligations, business development needs and regulatory considerations and are at the discretion of our Board of Directors. 

Forward-looking Statements

Statements contained in this Quarterly Report on Form 10-Q including, but not limited to, the discussion under Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations, that are not statements of historical fact are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the Act). In addition, certain statements in our future filings with the SEC, in press releases, and in oral and written statements made by us or with our approval that are not statements of historical fact constitute forward-looking statements within the meaning of the Act. Examples of forward-looking statements include, but are not limited to: (i) projections of revenue, ROIC, Adjusted EBITDA, net income or loss, earnings or loss per share, the payment or nonpayment of dividends, our capital structure, the adequacy of our liquidity and reserves, the anticipated level of expenditures required and other statements concerning future financial performance; (ii) statements of our plans and objectives by our management or Board of Directors, including those relating to products or services, our restructuring initiatives, merger or acquisition activity and the potential impact of newly acquired businesses; (iii) statements of assumptions underlying such statements; (iv) statements regarding business relationships with vendors, customers or collaborators or statements relating to our order cancellation history, our ability to convert our backlog of undelivered orders into revenue, the timing of purchases, competitive advantages and growth in end markets; and (v) statements regarding our products and their characteristics, fluctuations in the costs of raw materials for products, our geographic footprint, performance, sales potential or effect in the hands of customers. Words such as "believes," "anticipates," "expects," "intends," "targeted," "should," "potential," "goals," "strategy," and similar expressions are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements. 

Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those in such statements. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to, those described in Item 1A of Part I of our Annual Report on Form 10-K for the fiscal year ended September 29, 2018 and in Item 1A of Part II of this Quarterly Report on Form 10-Q. The performance of our business and our securities may be adversely affected by these factors and by other factors common to other businesses and investments, or to the general economy. Forward-looking statements are qualified by some or all of these risk factors. Therefore, you should consider these forward-looking statements with caution and form your own critical and independent conclusions about the likely effect of these risk factors on our future performance. Forward-looking statements speak only as of the date on which such statements are made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made to reflect the occurrence of unanticipated events or circumstances. You should carefully review the disclosures and the risk factors described in our Annual Report on Form 10-K for the fiscal year ended September 29, 2018 and in other documents we file from time to time with the SEC, including our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. 

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Foreign Currency Exchange Risk

Approximately 70% of our revenue has historically been derived from customers outside of the U.S. Our international subsidiaries have functional currencies other than our U.S. dollar reporting currency and, occasionally, transact business in currencies other than their functional currencies. These non-functional currency transactions expose us to market risk on assets, liabilities and cash flows recognized on these transactions. 

The strengthening of the U.S. dollar relative to foreign currencies decreases the value of foreign currency-denominated revenue and earnings when translated into U.S. dollars resulting in an unfavorable currency translation impact on revenue and earnings. Conversely, a weakening of the U.S. dollar increases the value of foreign currency-denominated revenue and earnings resulting in a favorable currency translation impact on revenue and earnings. 

A hypothetical 10% appreciation or depreciation in foreign currencies against the U.S. dollar, assuming all other variables are held constant, would result in an increase or decrease in revenue of approximately $16,581 for the six months ended March 30, 2019. 

We have operational procedures to mitigate these non-functional currency exposures. We also utilize foreign currency exchange contracts to exchange currencies at set exchange rates on future dates to offset expected gains or losses on specifically identified exposures. 

Mark-to-market gains and losses on derivatives designated as cash flow hedges in our currency hedging program are recorded within accumulated other comprehensive income (loss) (AOCI) in the Consolidated Balance Sheets. Mark-to-market gains and losses are reclassified from AOCI to earnings in the same line item in the Consolidated Statements of Income and in the same period as the recognition of the underlying hedged transaction. Net gains and losses on foreign currency transactions included in the accompanying Consolidated Statements of Income were net losses of $309 and $642 during the six months ended March 30, 2019 and March 31, 2018, respectively. See Note 8 to the Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q for additional information on our cash flow hedge currency exchange contracts. 

Interest Rates

We are directly exposed to changes in market interest rates on cash, cash equivalents, short-term investments and long-term debt, and are indirectly exposed to the impact of market interest rates on overall business activity. 

On floating-rate investments, increases or decreases in market interest rates will increase or decrease future interest income, respectively. On floating-rate debt, increases or decreases in market interest rates will increase or decrease future interest expense, respectively. On fixed-rate investments, increases or decreases in market interest rates do not impact future interest income but may decrease or increase the fair market value of the investments, respectively. On fixed-rate debt, increases or decreases in market interest rates do not impact future interest expense but may decrease or increase the fair market value of the debt, respectively.

As of March 30, 2019, we had cash and cash equivalents of $74,122, some of which was invested in interest-bearing bank deposits or money market funds. The interest-bearing bank deposits and money market funds have interest rates that reset every 1 to 89 days and generate interest income that will vary based on changes in short-term interest rates. A hypothetical decrease of 100 basis points in market interest rates, assuming all other variables were held constant, would decrease interest income by approximately $59 for the six months ended March 30, 2019.

Secured floating rate credit facilities require interest payments to be calculated at a floating rate and are therefore impacted by increases or decreases in market interest rates. We have swapped a portion of our floating-rate debt to a fixed-rate such that the interest expense on this debt will not vary with changes in short-term interest rates. See Note 9 to the Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q for additional information on our interest rate swaps. A hypothetical increase of 100 basis points in floating interest rates, assuming all other variables were held constant, would result in an approximately $2,426 increase in future annual interest expense.

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Item 4. Controls and Procedures

Our management, including our Chief Executive Officer and Chief Financial Officer, has conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)), as of March 30, 2019. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 30, 2019, our disclosure controls and procedures were effective.

There were no changes in our internal control over financial reporting during the second quarter of fiscal year 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

We are subject to various claims, legal actions and complaints arising in the ordinary course of business. We are not presently a party to any litigation the outcome of which we believe, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, cash flows or financial condition.

Item 1A. Risk Factors

A discussion of our risk factors can be found in Item 1A of Part I of our Annual Report on Form 10-K for the fiscal year ended September 29, 2018. The risks described in our Annual Report on Form 10-K are not the only risks we face. Additional risks not currently known to us, or that we currently deem to be immaterial, may also adversely affect our business, financial condition or results of operations in future periods.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

The following table presents repurchases of our equity securities we made during the fiscal quarter ended March 30, 2019: 

	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased As Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet be Purchased As Part of Publicly Announced Plans or Programs
December 30, 2018 – February 2, 2019	—	$	—	—	438
February 3, 2019 – March 2, 2019	—	$	—	—	438
March 3, 2019 – March 30, 2019	—	$	—	—	438

We purchase common stock from time to time to mitigate dilution related to new shares issued as equity for employee compensation such as stock options, restricted stock units, performance restricted stock units and employee stock purchase plan activity, as well as to return to shareholders capital not immediately required to fund ongoing operations. 

Share Purchase Plan

Our Board of Directors approved, and on February 11, 2011 announced, a purchase authorization of 2,000 shares. Authority over pricing and timing under the authorization has been delegated to management. The share purchase authorization has no expiration date. We made no share purchases during the second quarter of fiscal year 2019. As of March 30, 2019, there were 438 shares available for purchase under the existing authorization.

Capped Calls

In connection with the pricing of the tangible equity units (TEUs) sold in our public offering in fiscal year 2016, we purchased capped calls from third party banking institutions (Capped Calls) for $7,935. On June 13, 2018, we amended the agreements with third party banking institutions for the outstanding Capped Calls (Capped Call Agreements) to modify the timing of settlement to be only upon expiration for all outstanding Capped Calls. Per the Capped Call Agreements, the outstanding Capped Calls will automatically settle upon expiration on July 1, 2019. As of March 30, 2019 the range of shares of our common stock to be received for the outstanding Capped Calls was a minimum of 0 shares to a maximum of 268 shares, subject to market conditions. See Note 13 to the Consolidated Financial Statements included in Part I of this Quarterly Report on Form 10-Q for additional information on our equity instruments.

48

Item 6.Exhibits

Exhibit Number	Description
31.1	Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
31.2	Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
32.1	Certification of the Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
32.2	Certification of the Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
101.INS	XBRL Instance Document (filed herewith).
101.SCH	XBRL Taxonomy Extension Schema Document (filed herewith).
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith).
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document (filed herewith).
101.LAB	XBRL Taxonomy Extension Label Linkbase Document (filed herewith).
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith).

49

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		MTS SYSTEMS CORPORATION
Date:	May 6, 2019	/s/ JEFFREY A. GRAVES
		Jeffrey A. Graves
		President and Chief Executive Officer
		(Principal Executive Officer)
Date:	May 6, 2019	/s/ BRIAN T. ROSS
		Brian T. Ross
		Senior Vice President and Chief Financial Officer
		(Principal Financial Officer and Principal Accounting Officer)

50

EX-31.1

Exhibit 31.1

SARBANES-OXLEY SECTION 302 CERTIFICATION

I, Jeffrey A. Graves, certify that:

1. I have reviewed this quarterly report on Form 10-Q of MTS Systems Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	May 6, 2019	/s/ JEFFREY A. GRAVES
		Jeffrey A. Graves
		President and Chief Executive Officer

EX-31.2

Exhibit 31.2

SARBANES-OXLEY SECTION 302 CERTIFICATION

I, Brian T. Ross, certify that:

1. I have reviewed this quarterly report on Form 10-Q of MTS Systems Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	May 6, 2019	/s/ BRIAN T. ROSS
		Brian T. Ross
		Senior Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

MTS SYSTEMS CORPORATION

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. 1350)

The undersigned, Jeffrey A. Graves, the Chief Executive Officer of MTS Systems Corporation (the "Company"), has executed this Certification in connection with the filing with the Securities and Exchange Commission of the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 30, 2019 (the "Report").

The undersigned hereby certifies that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	May 6, 2019	/s/ JEFFREY A. GRAVES
		Jeffrey A. Graves
		President and Chief Executive Officer

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed "filed" by the Company for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended.

EX-32.2

Exhibit 32.2

MTS SYSTEMS CORPORATION 

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO 

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. 1350)

The undersigned, Brian T. Ross, the Chief Financial Officer of MTS Systems Corporation (the "Company"), has executed this Certification in connection with the filing with the Securities and Exchange Commission of the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 30, 2019 (the "Report"). 

The undersigned hereby certifies that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	May 6, 2019	/s/ BRIAN T. ROSS
		Brian T. Ross
		Senior Vice President and Chief Financial Officer

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed "filed" by the Company for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended.

XML

Document and Entity Information - shares	6 Months Ended
	Mar. 30, 2019	May 02, 2019
Document and Entity Information [Abstract]
Entity Registrant Name	MTS SYSTEMS CORP
Entity Central Index Key	0000068709
Current Fiscal Year End Date	--09-28
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Mar. 30, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding (in shares)		17,954,477

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 30, 2019	Sep. 29, 2018
Current assets
Cash and cash equivalents	$ 74,122	$ 71,804
Accounts receivable, net of allowance for doubtful accounts of $5,277 and $5,004, respectively	117,349	122,243
Unbilled accounts receivable, net	71,175	70,474
Inventories, net	179,071	139,109
Prepaid expenses and other current assets	32,307	24,572
Total current assets	474,024	428,202
Property and equipment, net	88,126	90,269
Goodwill	403,425	369,275
Intangible assets, net	287,101	246,138
Other long-term assets	3,900	2,263
Deferred income taxes	4,058	3,249
Total assets	1,260,634	1,139,396
Current liabilities
Current maturities of long-term debt, net	28,076	32,738
Accounts payable	39,941	47,886
Accrued payroll and related costs	39,181	43,554
Advance payments from customers	102,033	80,131
Accrued warranty costs	4,741	5,418
Accrued income taxes	5,709	4,928
Accrued dividends	5,328	5,312
Other accrued liabilities	34,494	19,146
Total current liabilities	259,503	239,113
Long-term debt, less current maturities, net	436,344	355,640
Deferred income taxes	50,659	46,482
Non-current accrued income taxes	6,985	6,158
Defined benefit pension plan obligation	9,581	9,177
Other long-term liabilities	12,508	4,894
Total liabilities	775,580	661,464
Shareholders' Equity
Common stock, $0.25 par value; 64,000 shares authorized: 17,900 and 17,856 shares issued and outstanding as of March 30, 2019 and September 29, 2018, respectively	4,475	4,464
Additional paid-in capital	176,918	171,407
Retained earnings	308,279	300,585
Accumulated other comprehensive income (loss)	(4,618)	1,476
Total shareholders' equity	485,054	477,932
Total liabilities and shareholders' equity	$ 1,260,634	$ 1,139,396

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Mar. 30, 2019	Sep. 29, 2018
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 5,277	$ 5,004
Common stock, par value (in dollars per share)	$ 0.25	$ 0.25
Common stock, shares authorized (in shares)	64,000,000	64,000,000
Common stock, shares issued (in shares)	17,900,000	17,856,000
Common stock, shares outstanding (in shares)	17,900,000	17,856,000

XML

Consolidated Statements of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 30, 2019	Mar. 31, 2018	Mar. 30, 2019	Mar. 31, 2018
Revenue
Revenue	$ 233,046	$ 191,323	$ 436,227	$ 385,485
Cost of Sales
Total cost of sales	145,696	116,498	270,572	232,732
Gross profit	87,350	74,825	165,655	152,753
Operating expenses
Selling and marketing	33,395	30,597	65,484	62,625
General and administrative	22,105	18,992	43,183	39,554
Research and development	7,676	8,626	14,848	17,467
Total operating expenses	63,176	58,215	123,515	119,646
Income from operations	24,174	16,610	42,140	33,107
Interest expense, net	(7,368)	(6,708)	(14,186)	(13,512)
Other income (expense), net	270	274	319	51
Income before income taxes	17,076	10,176	28,273	19,646
Income tax provision (benefit)	2,916	1,738	3,612	(21,943)
Net income	$ 14,160	$ 8,438	$ 24,661	$ 41,589
Basic
Earnings per share (in dollars per share)	$ 0.74	$ 0.44	$ 1.28	$ 2.17
Weighted average common shares outstanding (in shares)	19,251	19,150	19,234	19,137
Diluted
Earnings per share (in dollars per share)	$ 0.73	$ 0.44	$ 1.27	$ 2.16
Weighted average common shares outstanding (in shares)	19,441	19,273	19,393	19,258
Dividends declared per share (in dollars per share)	$ 0.30	$ 0.30	$ 0.60	$ 0.60
Product
Revenue
Revenue	$ 206,690	$ 165,453	$ 381,769	$ 334,694
Cost of Sales
Cost of goods and services sold	129,579	101,133	237,746	201,627
Service
Revenue
Revenue	26,356	25,870	54,458	50,791
Cost of Sales
Cost of goods and services sold	$ 16,117	$ 15,365	$ 32,826	$ 31,105

XML

Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 30, 2019	Mar. 31, 2018	Mar. 30, 2019	Mar. 31, 2018
Statement of Comprehensive Income [Abstract]
Net income	$ 14,160	$ 8,438	$ 24,661	$ 41,589
Other comprehensive income (loss), net of tax
Foreign currency translation gain (loss) adjustments	(1,168)	5,172	(2,671)	7,671
Derivative instruments
Unrealized net gain (loss)	(392)	240	(1,808)	1,270
Net (gain) loss reclassified to earnings	(567)	687	(1,481)	790
Defined benefit pension plan
Unrealized net gain (loss)	959	(641)	(586)	(271)
Net (gain) loss reclassified to earnings	95	95	191	186
Currency exchange rate gain (loss)	146	(181)	261	(268)
Other comprehensive income (loss)	(927)	5,372	(6,094)	9,378
Comprehensive income (loss)	$ 13,233	$ 13,810	$ 18,567	$ 50,967

XML

Consolidated Statements of Shareholders' Equity (Unaudited) - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)
Balance at the beginning of the year at Sep. 30, 2017	$ 428,777	$ 4,440	$ 163,632	$ 261,258	$ (553)
Balance at the beginning of the year (in shares) at Sep. 30, 2017		17,760
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Total comprehensive income	50,967			41,589	9,378
Exercise of stock options	212	$ 1	211
Exercise of stock options (in shares)		4
Stock-based compensation	3,178	$ 7	3,171
Stock-based compensation (in shares)		30
Issuance for employee stock purchase plan	533	$ 3	530
Issuance for employee stock purchase plan (in shares)		12
Common stock purchased and retired	(757)	$ (3)	(754)
Common stock purchased and retired (in shares)		(14)
Dividends	(10,680)			(10,680)
Balance at the end of the year at Mar. 31, 2018	472,230	$ 4,448	166,757	292,200	8,825
Balance at the end of the year (in shares) at Mar. 31, 2018		17,792
Balance at the beginning of the year at Dec. 30, 2017	461,580	$ 4,445	164,577	289,105	3,453
Balance at the beginning of the year (in shares) at Dec. 30, 2017		17,780
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Total comprehensive income	13,810			8,438	5,372
Stock-based compensation	1,663		1,663
Issuance for employee stock purchase plan	533	$ 3	530
Issuance for employee stock purchase plan (in shares)		12
Common stock purchased and retired	(13)		(13)
Dividends	(5,343)			(5,343)
Balance at the end of the year at Mar. 31, 2018	472,230	$ 4,448	166,757	292,200	8,825
Balance at the end of the year (in shares) at Mar. 31, 2018		17,792
Balance at the beginning of the year at Sep. 29, 2018	477,932	$ 4,464	171,407	300,585	1,476
Balance at the beginning of the year (in shares) at Sep. 29, 2018		17,856
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Total comprehensive income	18,567			24,661	(6,094)
Exercise of stock options	144	$ 1	143
Exercise of stock options (in shares)		3
Stock-based compensation	5,219	$ 8	5,211
Stock-based compensation (in shares)		33
Issuance for employee stock purchase plan	557	$ 4	553
Issuance for employee stock purchase plan (in shares)		16
Common stock purchased and retired	(398)	$ (2)	(396)
Common stock purchased and retired (in shares)		(8)
Dividends	(10,740)			(10,740)
Balance at the end of the year at Mar. 30, 2019	485,054	$ 4,475	176,918	308,279	(4,618)
Balance at the end of the year (in shares) at Mar. 30, 2019		17,900
Balance at the beginning of the year at Dec. 29, 2018	473,335	$ 4,468	173,065	299,493	(3,691)
Balance at the beginning of the year (in shares) at Dec. 29, 2018		17,872
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Total comprehensive income	13,233			14,160	(927)
Exercise of stock options	106	$ 1	105
Exercise of stock options (in shares)		3
Stock-based compensation	3,239	$ 2	3,237
Stock-based compensation (in shares)		10
Issuance for employee stock purchase plan	557	$ 4	553
Issuance for employee stock purchase plan (in shares)		16
Common stock purchased and retired	(42)		(42)
Common stock purchased and retired (in shares)		(1)
Dividends	(5,374)			(5,374)
Balance at the end of the year at Mar. 30, 2019	$ 485,054	$ 4,475	$ 176,918	$ 308,279	$ (4,618)
Balance at the end of the year (in shares) at Mar. 30, 2019		17,900

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(Parenthetical) - $ / shares	3 Months Ended		6 Months Ended
	Mar. 30, 2019	Mar. 31, 2018	Mar. 30, 2019	Mar. 31, 2018
Statement of Stockholders' Equity [Abstract]
Dividends per share (in dollars per share)	$ 0.30	$ 0.30	$ 0.60	$ 0.60

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Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Mar. 30, 2019	Mar. 31, 2018
Cash Flows from Operating Activities
Net income	$ 24,661	$ 41,589
Adjustments to reconcile net income to net cash provided by (used in) operating activities
Stock-based compensation	4,689	3,290
Fair value adjustment to acquired inventory	984	0
Net periodic pension benefit cost	584	597
Depreciation and amortization	18,468	17,348
(Gain) loss on sale or disposal of property and equipment	510	159
Amortization of debt issuance costs	2,099	2,626
Deferred income taxes	(1,243)	(30,654)
Bad debt provision (recovery), net	503	1,201
Other	0	(111)
Changes in operating assets and liabilities
Accounts receivable and unbilled accounts receivable	(3,763)	24,174
Inventories, net	(12,942)	(14,441)
Prepaid expenses	(4,106)	(2,374)
Accounts payable	(10,378)	(901)
Accrued payroll and related costs	(5,629)	(11,921)
Advance payments from customers	4,653	5,891
Accrued warranty costs	(671)	157
Other assets and liabilities	12,250	628
Net Cash Provided by (Used in) Operating Activities	30,669	37,258
Cash Flows from Investing Activities
Purchases of property and equipment	(9,349)	(5,368)
Proceeds from sale of property and equipment	10	69
Purchases of business, net of acquired cash	(81,826)	0
Other	(285)	823
Net Cash Provided by (Used in) Investing Activities	(91,450)	(4,476)
Cash Flows from Financing Activities
Proceeds from issuance of long-term debt	80,391	0
Payment of long-term debt	(1,423)	(45,949)
Payment of debt component of tangible equity units	(4,818)	(4,498)
Payment of debt issuance costs for revolving credit facility	(542)	0
Receipts under short-term borrowings	30,000	7,750
Payments under short-term borrowings	(30,000)	(7,750)
Cash dividends	(10,724)	(10,667)
Proceeds from exercise of stock options and employee stock purchase plan	701	745
Payments to purchase and retire common stock	(398)	(757)
Net Cash Provided by (Used in) Financing Activities	63,187	(61,126)
Effect of Exchange Rate Changes on Cash and Cash Equivalents	(88)	3,989
Cash and Cash Equivalents
Increase (decrease) during the period	2,318	(24,355)
Balance, beginning of period	71,804	108,733
Balance, end of period	74,122	84,378
Cash paid during the period for
Interest	12,065	11,314
Income taxes	6,280	4,954
Non-cash investing and financing activities
Dividends declared not yet paid	$ 5,328	$ 5,291

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Basis of Presentation

6 Months Ended

Mar. 30, 2019

Accounting Policies [Abstract]

Basis of Presentation

BASIS OF PRESENTATION

The consolidated financial statements include the accounts of MTS Systems Corporation and its wholly owned subsidiaries. Significant intercompany account balances and transactions have been eliminated.

The terms "MTS," "we," "us," "the Company" or "our" in this Quarterly Report on Form 10-Q, unless the context otherwise requires, refer to MTS Systems Corporation and its wholly owned subsidiaries. 

We have prepared the interim unaudited consolidated financial statements included herein pursuant to the rules and regulations of the United States (U.S.) Securities and Exchange Commission (SEC). The information furnished in these consolidated financial statements includes normal recurring adjustments and reflects all adjustments that are, in our opinion, necessary for a fair presentation of such financial statements. The consolidated financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP). GAAP requires us to make estimates and assumptions that affect amounts reported. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to SEC rules and regulations. The accompanying consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended September 29, 2018 filed with the SEC. Interim results of operations for the second fiscal quarter ended March 30, 2019 are not necessarily indicative of the results to be expected for the full fiscal year. 

We have a 5-4-4 week, quarterly accounting cycle with our fiscal year ending on the Saturday closest to September 30. Fiscal year 2019 ending on September 28, 2019 will consist of 52 weeks. Fiscal year 2018 ended on September 29, 2018 and consisted of 52 weeks. 

Changes to Significant Accounting Policies

The following accounting policies have been updated since our fiscal year 2018 Annual Report on Form 10-K.

Revenue Recognition

As described in Note 2, we adopted Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606), followed by related amendments on September 30, 2018 under the modified retrospective transition method. Our new revenue recognition accounting policy and disclosures relative to this guidance are included in Note 3.

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Recently Issued Accounting Pronouncements

6 Months Ended

Mar. 30, 2019

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

Recently Issued Accounting Pronouncements

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Leases

In February 2016, the Financial Accounting Standards Board (FASB) issued ASU No. 2016-02, Leases (Topic 842), followed by related amendments (collectively, "the new lease standard"), which requires lessees to recognize most leases on the balance sheet for the rights and obligations created by those leases. Under the new lease standard, a company recognizes a right-of-use asset, representing the right to use the underlying asset for the lease term, and a corresponding lease liability for all leases with terms greater than 12 months. The new guidance requires enhanced disclosures regarding the amount, timing and uncertainty of cash flows arising from a company's leases. Adoption of the new lease standard is required for annual periods beginning after December 15, 2018, including interim periods within that annual period, which is our fiscal year 2020. The new guidance is required to be adopted using a modified retrospective transition method, and an optional transition method may be elected to use the effective date as the date of initial application on transition.

We intend to adopt the new lease standard for our fiscal year 2020 under the optional transition method with an effective date of September 29, 2019. As a result, we will not adjust our comparative period financial information or make the new required lease disclosures for periods before the effective date, and we will record the impact from adoption as a cumulative-effect reduction to retained earnings as of the effective date. We are currently planning to elect the package of practical expedients to not reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs, and we are currently evaluating the other practical expedients available under the new guidance. We continue to make progress with preparation for the adoption and implementation of the new lease standard, including assessing the completeness of our lease arrangements, evaluating practical expedients and accounting policy elections, revising our lease-related accounting policies, assessing impacts to controls, and implementing a lease software solution. We anticipate the adoption of the new lease standard will result in an increase in assets and liabilities on our Consolidated Balance Sheet. The impact on our Consolidated Statement of Income and Consolidated Statement of Cash Flows is being evaluated. We continue to evaluate the impact that these changes in methodology will have on our financial condition, results of operations and disclosures.

Other

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which changes the accounting for credit losses on instruments measured at amortized cost by adding an impairment model that is based on expected losses rather than incurred losses. An entity will recognize as an allowance its estimate of expected credit losses, which is believed to result in more timely recognition of such losses as the standard eliminates the probable initial recognition threshold. In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments–Credit Losses, which clarifies that a receivable arising from an operating lease that is accounted for by a lessor in accordance with Topic 842 is not within the scope of Subtopic 326. These standards are required to be adopted for annual periods beginning after December 15, 2019, including interim periods within that annual period, which is our fiscal year 2021. The amendments are to be applied using a modified retrospective approach as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which adopted. Early adoption is permitted for annual periods beginning after December 15, 2018, including interim periods within that annual period, which is our fiscal year 2020. We have not yet evaluated the impact the adoption of this guidance may have on our financial condition, results of operations or disclosures.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurements (Topic 820): Disclosure Framework–Changes to the Disclosure Requirements for Fair Value Measurement, which eliminates, amends and adds disclosure requirements for fair value measurements. The standard is required to be adopted for annual periods beginning after December 15, 2019, including interim periods within that annual period, which is our fiscal year 2021. Certain disclosures in the amendment are to be applied using a retrospective approach while other disclosures are to be applied using a prospective approach. Early adoption is permitted. We have not yet evaluated the impact the adoption of this guidance may have on our financial condition, results of operations or disclosures.

In August 2018, the FASB issued ASU No. 2018-14, Compensation–Retirement Benefits–Defined Benefit Plans–General (Subtopic 715-20): Disclosure Framework–Changes to the Disclosure Requirements for Defined Benefit Plans, which eliminates, amends and adds disclosure requirements for defined benefit pension and other postretirement plans. The standard is required to be adopted for annual periods ending after December 15, 2020, which is our fiscal year 2021. The amendment is to be applied using a retrospective approach with early adoption permitted. We have not yet evaluated the impact the adoption of this guidance may have on our financial condition, results of operations or disclosures.

Adopted

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), followed by related amendments (collectively, "the new revenue standard" or "ASC 606") to provide a single, comprehensive revenue recognition model for all contracts with customers. Under the new revenue standard, a company recognizes revenue to depict the transfer of promised goods or services to a customer in an amount that reflects the consideration a company expects to receive in exchange for those goods or services. Determination of when and how revenue is recognized is based on a five-step analysis. Enhanced disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from a company's contracts with customers are required.

We adopted the new revenue standard on September 30, 2018 for our fiscal year 2019 under the modified retrospective transition method. As of September 30, 2018, we recorded a cumulative-effect reduction to the opening balance of our fiscal year 2019 retained earnings of $6,227, net of tax, for the net deferral of previously recognized revenue and related cost of sales, partially offset by the capitalization and deferral of pre-contract costs. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. See Note 3 for our new revenue recognition accounting policy and disclosures relative to this guidance.

In March 2016, the FASB issued ASU No. 2016-04, Liabilities—Extinguishments of Liabilities (Subtopic 405-20): Recognition of Breakage for Certain Prepaid Stored-Value Products, which amends existing guidance on extinguishing financial liabilities for certain prepaid stored-value products. The new standard requires recognition of the expected breakage amount or the value that is ultimately not redeemed either proportionally in earnings as redemption occurs or when redemption is remote, if issuers are not entitled to breakage. We adopted the new standard on a modified retrospective basis for the annual period ending September 28, 2019, including interim periods within that annual period. The adoption of this guidance had no impact on our financial condition, results of operations or disclosures.

In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740), Intra-Entity Transfers of Assets Other Than Inventory, which requires companies to account for the income tax effects of intercompany sales and transfers of assets other than inventory when the transfer occurs. Current guidance requires companies to defer the income tax effects of intercompany transfers of assets until the asset has been sold to an outside party or otherwise recognized. We adopted the new standard on a modified retrospective basis for the annual period ending September 28, 2019, including interim periods within that annual period. The adoption of this guidance had no impact on our financial condition, results of operations or disclosures.

In March 2017, the FASB issued ASU No. 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, which changes how employers that sponsor defined benefit pension or other postretirement benefit plans present the net periodic benefit cost in the income statement. The new guidance requires the service cost component of net periodic benefit cost to be presented in the same income statement line items as other employee compensation costs arising from services rendered during the period, with only the service cost component eligible for capitalization in assets. Other components of the net periodic benefit cost are to be stated separately from the line items that include the service cost and outside of operating income. These components are not eligible for capitalization in assets. We adopted the new standard for the annual period ending September 28, 2019, including interim periods within that annual period, retrospectively for the presentation in the income statement of the service cost component and the other components of net periodic pension cost and prospectively for the capitalization in assets of the service cost component of net periodic pension cost. The adoption of this guidance did not have a material impact on our current or prior year financial condition, results of operations or disclosures. Therefore, the comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods.

In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, which amends the hedge accounting model in Accounting Standards Codification (ASC) 815 to enable entities to better portray the economics of their risk management activities in the financial statements and enhance the transparency and understandability of hedge results. We early adopted the new standard on a modified retrospective basis for the annual period ending September 28, 2019, including interim periods within that annual period. The adoption of this guidance had no impact on our current or prior year financial condition, results of operations or disclosures.

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Revenue

6 Months Ended

Mar. 30, 2019

Revenue from Contract with Customer [Abstract]

Revenue

 REVENUE

Adoption

We adopted the new revenue standard on September 30, 2018 for our fiscal year 2019 under the modified retrospective transition method. We applied the new revenue standard to all contracts which were not completed as of the effective date and elected not to apply contract modification guidance retrospectively. As a result of adoption, we recorded a cumulative-effect reduction to the opening balance of our fiscal year 2019 retained earnings of $6,227, net of tax, for the net deferral of previously recognized revenue and related cost of sales, partially offset by the capitalization and deferral of pre-contract costs.

The timing of revenue recognition for the majority of our products and contracts remains substantially unchanged under the new revenue standard, with the exception of certain contracts in our Test & Simulation segment (Test & Simulation). Dependent on contract-specific terms that evidence customer control of the work in process or an enforceable right to payment with no alternative use, certain contracts have a delay in revenue recognition until the customer takes control of the product, while certain contracts accelerate the recognition of revenue over the life of the contract. Under the new revenue standard, certain costs to obtain contracts (i.e., pre-contract costs) are capitalized at contract inception and recognized as revenue is earned. While we do not expect the adoption of the new revenue standard to have a significant impact on annual revenue recognized, our financial condition or results of operations, we do expect that it will have an impact on the timing of revenue recognition in interim periods.

The impact of adopting the new revenue standard on our Consolidated Statements of Income and Consolidated Balance Sheets is as follows:

Consolidated Statements of Income	Three Months Ended March 30, 2019
	As Reported			Balances without Adoption of ASC 606			Effect of Change
Revenue	$	233,046		$	224,665		$	8,381
Cost of sales	145,696			140,312			5,384
Gross profit	87,350			84,353			2,997
Selling and marketing	33,395			33,239			156
Income tax provision (benefit)	2,916			2,422			494
Net income	14,160			11,813			2,347
	Six Months Ended March 30, 2019
	As Reported			Balances without Adoption of ASC 606			Effect of Change
Revenue	$	436,227		$	423,103		$	13,124
Cost of sales	270,572			260,732			9,840
Gross profit	165,655			162,371			3,284
Selling and marketing	65,484			65,491			(7		)
Income tax provision (benefit)	3,612			3,037			575
Net income	24,661			21,945			2,716
Consolidated Balance Sheets	March 30, 2019
	As Reported			Balances without Adoption of ASC 606			Effect of Change
Assets
Accounts receivable, net	$	117,349		$	121,678		$	(4,329	)
Unbilled accounts receivable, net	71,175			79,819			(8,644		)
Inventories, net	179,071			160,914			18,157
Prepaid expenses and other current assets	32,307			28,216			4,091
Other long-term assets	3,900			2,794			1,106
Deferred income taxes	4,058			3,417			641
Liabilities and Shareholders' Equity
Advance payments from customers	102,033			100,589			1,444
Accrued income taxes	5,709			5,861			(152		)
Other accrued liabilities	34,494			20,855			13,639
Deferred income taxes	50,659			51,886			(1,227		)
Other long-term liabilities	12,508			11,748			760
Accumulated other comprehensive income (loss)	(4,618		)	(4,687		)	69
Retained earnings	308,279			311,790			(3,511		)

The cumulative effect of the changes made to our September 29, 2018 Consolidated Balance Sheet from the modified retrospective adoption of the new revenue standard is as follows:

Consolidated Balance Sheets
	Balance at September 29, 2018		Adjustments due to ASC 606 Adoption			Balance at September 30, 2018
Assets
Accounts receivable, net	$	122,243	$	(4,481	)	$	117,762
Unbilled accounts receivable, net	70,474		(8,002		)	62,472
Inventories, net	139,109		16,727			155,836
Prepaid expenses and other current assets	24,572		4,651			29,223
Other long-term assets	2,263		1,060			3,323
Deferred income taxes	3,249		643			3,892
Liabilities and Shareholders' Equity
Advance payments from customers	80,131		13,568			93,699
Other accrued liabilities	19,146		(2,504		)	16,642
Deferred income taxes	46,482		(1,228		)	45,254
Other long-term liabilities	4,894		6,989			11,883
Retained earnings	300,585		(6,227		)	294,358

Revenue Recognition

Revenue is recognized when control of the promised goods or services is transferred to our customers in an amount that reflects the consideration we expect to be entitled to in exchange for transferring those goods or providing those services. We account for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are known, the contract has commercial substance and collectability of consideration is probable.

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account under the new revenue standard. A contract's transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Many of our contracts have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts and, therefore, not distinct. In situations when our contract includes distinct goods or services that are substantially the same and have the same pattern of transfer to the customer over time, they are recognized as a series of distinct goods or services. For contracts with multiple performance obligations, we allocate the contract's transaction price to each performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract.

We do not adjust the promised amount of consideration for the effects of a significant financing component if we expect, at contract inception, that the period between when we transfer a promised good or service to a customer and when the customer pays for that good or service will be one year or less.

Revenue is recorded net of taxes collected from customers, and taxes collected are recorded as current liabilities until remitted to the relevant government authority. Shipping and handling costs associated with outbound freight after control of a product has transferred are accounted for as a fulfillment cost and are included in cost of sales in the Consolidated Statements of Income.

The following is a description of the product offerings, end markets, typical revenue transactions and payment terms for each of our two reportable segments. See Note 16 for further information on reportable segments.

Test & Simulation

Test & Simulation manufactures and sells equipment and related software and services which are used by customers to characterize a product's mechanical properties or performance. Our solutions simulate forces and motions that customers expect their products to encounter in use or are necessary to properly characterize the product's performance. Primary Test & Simulation markets include transportation, infrastructure, energy, aerospace, materials science, medical, flight training and amusement parks. A typical system is a comprehensive solution which includes a reaction frame to hold the prototype specimen; a hydraulic or electro-mechanical power source; actuators to create the force or motion; and a computer controller with specialized software to coordinate the actuator movement and to measure, record and manipulate results. Our portfolio of Test & Simulation solutions includes standard, configurable testing products; engineered products which combine standard product configurations with a moderate degree of customization per customer specifications; and highly customized, highly engineered testing solutions built to address the customer's unique business need, which can include development of first-of-a-kind technology. To complement our Test & Simulation products, we provide our customers with a spectrum of services to maximize product performance including installation, product life cycle management, professional training, calibration and metrology, technical consulting and onsite and factory repair and maintenance. In addition, we sell a variety of accessories and spare parts. The manufacturing cycle for a typical system ranges from weeks to 12 months, depending on the complexity of the system and the availability of components, and can be up to three years for larger, more complex systems. For certain contracts, the order to revenue cycle may extend beyond the manufacturing cycle, such as when the manufacturing start date is driven by the customer's project timeline or when the contract terms require equipment installation and commissioning and customer acceptance prior to point-in-time revenue recognition.

Test & Simulation contracts often have multiple performance obligations, most commonly due to the contract covering multiple phases of the product life cycle (i.e., equipment design and production, installation and commissioning, extended warranty and software maintenance). The primary method used to estimate standalone selling price is the expected cost plus a margin approach under which we forecast our expected costs of satisfying a performance obligation and then add an appropriate margin for that distinct good or service.

Test & Simulation revenue is recognized either over time as work progresses or point-in-time, depending on contract-specific terms and the pattern of transfer of control of the product or service to the customer. Revenue from services is recognized in the period the service is performed or ratably over the period of the related service contract. Equipment revenue is recognized over time when: (i) control is transferred to the customer over time as work progresses; or (ii) contract terms evidence customer control of the work in process or an enforceable right to payment with no alternative use. Equipment revenue is recognized over time using costs incurred to date relative to total estimated costs at completion to measure progress toward satisfying the performance obligation. Incurred cost represents work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer. Equipment contract costs include materials, component parts, labor and overhead costs.

Equipment revenue is recognized point-in-time when either: (i) control is transferred to the customer at a point-in-time when obligations under the terms of the contract are satisfied; or (ii) contract terms do not evidence customer control of the work in process or an enforceable right to payment with no alternative use, and consequently revenue is deferred as work progresses. Satisfaction of performance obligations under the terms of the contract occurs either upon product shipment (as evidenced by delivery or shipment terms), completion of equipment installation and commissioning, or customer acceptance.

For our Test & Simulation contracts with customers, payment terms vary and are subject to negotiation. Typical payment terms include progress payments based on specified events or milestones. For some contracts, we are entitled to receive an advance payment.

Sensors

Our Sensors segment (Sensors) manufactures and sells high-performance sensors which provide measurements of vibration, pressure, position, force and sound in a variety of applications. Our Sensors products are used to enable automation, enhance precision and safety, and lower our customers' production costs by improving performance and reducing downtime. Primary Sensors markets include automotive, aerospace and defense, industrial, and research and development. Our Sensors products are sold as configurable, standard units; utilize piezoelectric or magnetostriction technology; and are ideal for use in harsh operating environments to provide accurate and reliable sensor information. To complement our Sensors products, we also provide spare parts and services. The cycle from contract inception to shipment of equipment is typically one to three months, with the exception of certain high-volume contracts which are fulfilled in a series of shipments over an extended period.

Our Sensors contracts generally have a single performance obligation which is satisfied at a point in time. The performance obligation is a stand-alone sensor product, accessory, service or software license. Sensors contracts are generally fixed-price purchase order fulfillment contracts, and the transaction price is equal to the observable consideration in the contract. Revenue is recognized when obligations under the terms of the contract with our customer are satisfied; generally this occurs with the transfer of control upon product shipment (as evidenced by shipment or delivery terms) or with the performance of the service.

For our Sensors contracts with customers, payment terms are generally within 90 days. The timing of satisfying our Sensors performance obligations does not vary significantly from the typical timing of payment. For certain high-volume contracts, we are entitled to receive an advance payment.

Disaggregation of Revenue

We disaggregate our revenue by reportable segment, sales type (product or service), the timing of recognition of revenue for transfer of goods or services to customers (point-in-time or over time), and geographic market based on the billing location of the customer. See Note 16 for further information on our reportable segments and intersegment revenue.

	Three Months Ended March 30, 2019
	Test & Simulation		Sensors		Intersegment			Total
Sales type
Product	$	126,511	$	80,540	$	(361	)	$	206,690
Service	24,521		1,835		—			26,356
Total revenue	$	151,032	$	82,375	$	(361	)	$	233,046
Timing of recognition
Point-in-time	$	98,360	$	82,375	$	(361	)	$	180,374
Over time	52,672		—		—			52,672
Total revenue	$	151,032	$	82,375	$	(361	)	$	233,046
Geographic market
Americas	$	51,399	$	38,975	$	(361	)	$	90,013
Europe	29,536		27,653		—			57,189
Asia	70,097		15,747		—			85,844
Total revenue	$	151,032	$	82,375	$	(361	)	$	233,046
	Six Months Ended March 30, 2019
	Test & Simulation		Sensors		Intersegment			Total
Sales type
Product	$	225,419	$	157,040	$	(690	)	$	381,769
Service	51,173		3,285		—			54,458
Total revenue	$	276,592	$	160,325	$	(690	)	$	436,227
Timing of recognition
Point-in-time	$	177,979	$	160,325	$	(690	)	$	337,614
Over time	98,613		—		—			98,613
Total revenue	$	276,592	$	160,325	$	(690	)	$	436,227
Geographic market
Americas	$	90,888	$	76,704	$	(690	)	$	166,902
Europe	58,163		53,001		—			111,164
Asia	127,541		30,620		—			158,161
Total revenue	$	276,592	$	160,325	$	(690	)	$	436,227

Contract Assets and Liabilities

Contract assets and contract liabilities are as follows:

	March 30, 2019		September 29, 2018
Contract assets	$	71,175	$	70,474
Contract liabilities	109,763		80,131

The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled accounts receivable (contract assets) and advance payments from customers (contract liabilities). Contract balances are classified as assets or liabilities on a contract-by-contract basis at the end of each reporting period. Contract liabilities represent payments received from customers at contract inception and at milestones per contract provisions. These payments are recorded in advance payments from customers and other long-term liabilities in our Consolidated Balance Sheets (current and non-current portions, respectively) and are liquidated as revenue is recognized. Conversely, when billing occurs subsequent to revenue recognition for contracts recognized over time, balances are recorded in unbilled accounts receivable, net in our Consolidated Balance Sheets. As customers are billed, unbilled accounts receivable balances are transferred to accounts receivable, net in the Consolidated Balance Sheets.

Significant changes in contract assets and contract liabilities are as follows:

	Contract Assets
Balance, September 29, 2018	$	70,474
Cumulative transition adjustment upon adoption	(8,002		)
Changes in estimated stage of completion	69,857
Transfers to accounts receivable, net	(62,265		)
Acquisitions1	1,518
Other	(407		)
Balance, March 30, 2019	$	71,175
	Contract Liabilities
Balance, September 29, 2018	$	80,131
Cumulative transition adjustment upon adoption	20,557
Revenue recognized included in balance at beginning of period	(58,947		)
Increases due to payments received, excluding amounts recognized as revenue during period	64,121
Acquisitions1	4,777
Other	(876		)
Balance, March 30, 2019	$	109,763

¹    See Note 18 for additional information regarding acquisitions.

Remaining Performance Obligations

As of March 30, 2019, we had approximately $224,000 of remaining performance obligations on contracts with an original expected duration of one year or more which are primarily related to Test & Simulation. As of March 30, 2019, we expect to recognize approximately 74% of these remaining performance obligations as revenue within one year, an additional 24% within two years and the balance thereafter. We do not disclose the value of remaining performance obligations for contracts with an original expected duration of one year or less.

Contract Estimates

For contracts recognized over time, we estimate the profit on a contract as the difference between the total estimated revenue and expected costs to complete a contract and recognize that profit over the life of the contract. Contract estimates are based on various assumptions to project the outcome of future events that may span several years. These assumptions include labor productivity and availability, the complexity of the work to be performed, the cost and availability of materials, and internal and subcontractor performance.

Pricing is established at or prior to the time of sale with our customers, and we record sales at the agreed-upon selling price. The terms of a contract or the historical business practice can give rise to variable consideration due to but not limited to volume discounts, penalties and early payment discounts. We estimate variable consideration at the most likely amount we will receive from customers. We include estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized for such transaction will not occur, or when the uncertainty associated with the variable consideration is resolved. In general, variable consideration in our contracts relates to the entire contract. As a result, the variable consideration is allocated proportionately to all performance obligations. Our estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of our anticipated performance and all information (historical, current and forecasted) that is reasonably available to us at contract inception. There are no significant instances where variable consideration is constrained and not recorded at the initial time of sale.

As a significant change in one or more of these estimates could affect the profitability of our contracts, we review and update our contract-related estimates regularly. We recognize adjustments in estimated profit on contracts under the cumulative catch-up method. Under this method, the impact of the adjustment on profit recorded to date is recognized in the period the adjustment is identified. Revenue and profit in future periods of contract performance is recognized using the adjusted estimate. If at any time the estimate of contract profitability indicates an anticipated loss on the contract, we recognize the total loss in the period it is identified. Our review of contract-related estimates has not resulted in adjustments that are significant to our results of operations.

Contract Modifications

When contracts are modified to account for changes in contract specifications and requirements, we consider whether the modification either creates new, or changes existing, enforceable rights and obligations. Contract modifications that are for goods or services that are not distinct from the existing contract, due to the significant integration with the original product or service provided, are accounted for as if they were part of that existing contract. The effect of a contract modification on the transaction price, and our measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis. When the modifications include additional performance obligations that are distinct and at a relative stand-alone selling price, they are accounted for as a new contract and performance obligation and recognized prospectively.

Warranties and Returns

For both Test & Simulation and Sensors, we provide a manufacturer's warranty on our products and systems which is included in customer contracts. At the time a sale is recognized, we record estimated future warranty costs. See Note 5 for further discussion of our product warranty liabilities. We also offer separately-priced extended warranties or service-type contracts on certain products for which revenue is recognized over the contractual period or as services are rendered.

Our sales terms generally do not allow for a right of return except for situations where the product fails. When the right of return exists, we recognize revenue for the transferred products at the expected amount of consideration for which we will be entitled.

Pre-contract Costs

We recognize an asset for the incremental costs of obtaining a contract with a customer (i.e., pre-contract costs) when costs are considered recoverable. Capitalized pre-contract costs, consisting primarily of Test & Simulation sales commissions, are amortized as the related revenue is recognized. We recognized total capitalized pre-contract costs of $5,936 in prepaid expenses and other current assets and other long-term assets in the Consolidated Balance Sheets as of March 30, 2019 and related expense of $1,249 and $3,869 in the Consolidated Statements of Income during the three and six months endedMarch 30, 2019, respectively.

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Inventories

6 Months Ended

Mar. 30, 2019

Inventory Disclosure [Abstract]

Inventories

INVENTORIES

Inventories consist of material, labor and overhead costs and are stated at the lower of cost or net realizable value determined under the first-in, first-out accounting method. Certain inventories are measured using the weighted average cost method. Inventories, net are as follows: 

	March 30, 2019		September 29, 2018
Components, assemblies and parts	$	105,669	$	93,020
Customer projects in various stages of completion	62,922		35,675
Finished goods	10,480		10,414
Total inventories, net	$	179,071	$	139,109

We adopted the new revenue standard effective September 30, 2018 under the modified retrospective transition method which impacted inventories, net. See Note 3 for the impact of this adoption on our Consolidated Balance Sheets.

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Warranty Obligations

6 Months Ended

Mar. 30, 2019

Product Warranties Disclosures [Abstract]

Warranty Obligations

WARRANTY OBLIGATIONS

Sales of our products and systems are subject to limited warranty obligations that are included in customer contracts. For sales that include installation services, warranty obligations generally extend for a period of 12 to 24 months from the date of either shipment or acceptance based on the contract terms. Product obligations generally extend for a period of 12 to 24 months from the date of purchase. Certain products offered in our Sensors segment include a lifetime warranty.

Under the terms of these warranties, we are obligated to repair or replace any components or assemblies deemed defective due to workmanship or materials. We reserve the right to reject warranty claims where it is determined that failure is due to normal wear, customer modifications, improper maintenance or misuse. We record general warranty provisions based on an estimated warranty expense percentage applied to current period revenue. The percentage applied reflects our historical warranty claims experience over the preceding 12-month period. Both the experience percentage and the warranty liability are evaluated on an ongoing basis for adequacy. Warranty provisions are also recognized for certain unanticipated product claims that are individually significant.

Changes to accrued warranty costs are as follows: 

	Three Months Ended						Six Months Ended
	March 30, 2019			March 31, 2018			March 30, 2019			March 31, 2018
Beginning accrued warranty costs	$	5,229		$	5,832		$	5,418		$	6,018
Warranty claims	(1,167		)	(1,410		)	(2,446		)	(2,585		)
Warranty provisions	697			1,742			1,791			2,727
Adjustments to preexisting warranties	(15		)	14			(15		)	14
Currency translation	(3		)	13			(7		)	17
Ending accrued warranty costs	$	4,741		$	6,191		$	4,741		$	6,191

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Capital Assets

6 Months Ended

Mar. 30, 2019

Capital Assets [Abstract]

Capital Assets

CAPITAL ASSETS

Property and Equipment

Property and equipment, net are as follows: 

	March 30, 2019			September 29, 2018
Land and improvements	$	2,881		$	2,881
Buildings and improvements	58,692			58,880
Machinery and equipment	210,065			203,647
Assets held under capital leases	2,796			2,815
Total property and equipment	274,434			268,223
Less: Accumulated depreciation	(186,308		)	(177,954		)
Total property and equipment, net	$	88,126		$	90,269

Goodwill

Changes to the carrying amount of goodwill are as follows:  

	Test & Simulation			Sensors			Total
Balance, September 29, 2018	$	24,631		$	344,644		$	369,275
Acquisitions 1	34,387			—			34,387
Currency translation	(208		)	(29		)	(237		)
Balance, March 30, 2019	$	58,810		$	344,615		$	403,425

¹    See Note 18 for additional information regarding acquisitions.

Intangible Assets

Intangible assets are as follows: 

	March 30, 2019
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Value		Weighted Average Useful Life (in Years)
Software development costs 2	$	35,297	$	(15,859	)	$	19,438	6.3
Technology and patents	59,055		(14,110		)	44,945		14.9
Trademarks and trade names	12,697		(3,442		)	9,255		20.7
Customer lists	179,919		(28,831		)	151,088		15.7
Land-use rights	2,360		(858		)	1,502		26.2
Other	3,705		(332		)	3,373		4.0
Trade names	57,500		—			57,500		Indefinite
Total intangible assets	$	350,533	$	(63,432	)	$	287,101	14.5

	September 29, 2018
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Value		Weighted Average Useful Life (in Years)
Software development costs 2	$	31,251	$	(15,860	)	$	15,391	6.5
Technology and patents	46,405		(12,188		)	34,217		14.9
Trademarks and trade names	6,754		(2,987		)	3,767		25.4
Customer lists	156,971		(23,314		)	133,657		15.8
Land-use rights	2,336		(730		)	1,606		26.0
Trade names	57,500		—			57,500		Indefinite
Total intangible assets	$	301,217	$	(55,079	)	$	246,138	14.8

²  The gross carrying amount of software development costs as of March 30, 2019 and September 29, 2018 includes $19,438 and $15,391, respectively, of intangible assets not yet placed in service.

Amortization expense recognized related to finite-lived intangible assets is as follows:

	Three Months Ended				Six Months Ended
	March 30, 2019		March 31, 2018		March 30, 2019		March 31, 2018
Amortization expense	$	4,403	$	3,456	$	8,219	$	6,935

Estimated future amortization expense related to finite-lived intangible assets is as follows: 

	Amortization Expense
Remainder of 2019	$	8,695
2020	17,108
2021	18,164
2022	19,036
2023	18,139
2024	17,770
Thereafter	130,689

Future amortization amounts presented above are estimates. Actual future amortization expense may be different due to fluctuations in foreign currency exchange rates, future acquisitions, impairments, changes in amortization periods or other factors.

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Fair Value Measurements

6 Months Ended

Mar. 30, 2019

Fair Value Disclosures [Abstract]

Fair Value Measurements

FAIR VALUE MEASUREMENTS

In determining the fair value of financial assets and liabilities, we currently utilize market data or other assumptions that we believe market participants would use in pricing the asset or liability in the principal or most advantageous market and adjust for non-performance and/or other risk associated with the Company as well as counterparties, as appropriate. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:

• Level 1: Unadjusted quoted prices that are available in active markets for identical assets or liabilities accessible to us at the measurement date.

• Level 2: Inputs other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.

• Level 3: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date.

The hierarchy gives the highest priority to Level 1, as this level provides the most reliable measure of fair value, while giving the lowest priority to Level 3. 

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Financial assets and liabilities subject to fair value measurements on a recurring basis are as follows:

	March 30, 2019
	Level 1		Level 2		Level 3		Total
Assets
Currency contracts 1	$	—	$	411	$	—	$	411
Interest rate swaps 2	—		3,684		—		3,684
Total assets	—		4,095		—		4,095
Liabilities
Currency contracts 1	—		78		—		78
Total liabilities	$	—	$	78	$	—	$	78

	September 29, 2018
	Level 1		Level 2		Level 3		Total
Assets
Currency contracts 1	$	—	$	1,080	$	—	$	1,080
Interest rate swaps 2	—		7,411		—		7,411
Total assets	—		8,491		—		8,491
Liabilities
Currency contracts 1	—		173		—		173
Total liabilities	$	—	$	173	$	—	$	173

¹  Based on observable market transactions of spot currency rates and forward currency rates on equivalently-termed instruments. Carrying amounts of the financial assets and liabilities are equal to the fair value. See Note 8 for additional information on derivative financial instruments.

²  Based on London Interbank Offered Rate (LIBOR) and spot rates. Carrying amount of the financial asset is equal to the fair value. See Note 8 for additional information on derivative financial instruments.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

We measure certain financial instruments at fair value on a nonrecurring basis. These assets primarily include goodwill, intangible assets and other long-lived assets acquired either as part of a business acquisition, individually or with a group of other assets, as well as property and equipment. These assets were initially measured and recognized at amounts equal to the fair value determined as of the date of acquisition or purchase subject to changes in value only for foreign currency translation. Periodically, these assets are tested for impairment by comparing their respective carrying values to the estimated fair value of the reporting unit or asset group in which they reside. In the event any of these assets were to become impaired, we would recognize an impairment loss equal to the amount by which the carrying value of the reporting unit, impaired asset or asset group exceeds its estimated fair value. Fair value measurements of reporting units are estimated using an income approach involving discounted or undiscounted cash flow models that contain certain Level 3 inputs requiring management judgment, including projections of economic conditions and customer demand, revenue and margins, changes in competition, operating costs, working capital requirements and new product introductions. Fair value measurements of the reporting units associated with our goodwill balances and our indefinite-lived intangible assets are estimated at least annually in the fourth quarter of each fiscal year for purposes of impairment testing if a quantitative analysis is performed. Fair value measurements associated with our intangible assets, other long-lived assets and property and equipment are estimated when events or changes in circumstances such as market value, asset utilization, physical change, legal factors or other matters indicate that the carrying value may not be recoverable. See Note 6 for additional information on goodwill, indefinite-lived intangible assets, other long-lived assets and property and equipment.

Assets and Liabilities Not Measured at Fair Value

Certain financial instruments are not measured at fair value but are recorded at carrying amounts approximating fair value based on their short-term nature or variable interest rate. These financial instruments include cash and cash equivalents, accounts receivable, unbilled accounts receivable, accounts payable and short-term borrowings.

Other Financial Instruments

Other financial instruments subject to fair value measurements include debt, which is recorded at carrying value in the Consolidated Balance Sheets. The carrying amount and estimated fair values of our debt are as follows:

	March 30, 2019
	Carrying Value		Fair Value		Level 1		Level 2		Level 3
Debt component of tangible equity units 1	$	2,472	$	2,939	$	—	$	2,939	$	—
Tranche B term loan 2	390,266		390,266		—		390,266		—
Total debt	$	392,738	$	393,205	$	—	$	393,205	$	—

	September 29, 2018
	Carrying Value		Fair Value		Level 1		Level 2		Level 3
Debt component of tangible equity units 1	$	7,290	$	8,626	$	—	$	8,626	$	—
Tranche B term loan 2	391,416		395,330		—		395,330		—
Total debt	$	398,706	$	403,956	$	—	$	403,956	$	—

¹  The fair value of the 8.75% tangible equity units (TEUs) is based on the most recently quoted price for the outstanding securities, adjusted for any known significant deviations in value. The estimated fair value of these long-term obligations is not necessarily indicative of the amount that would be realized in a current market exchange. See Note 13 for additional information on the TEUs.

²  The fair value of the tranche B term loan is based on the most recently quoted market price for the outstanding debt instrument, adjusted for any known significant deviations in value. The estimated fair value of the debt obligation is not necessarily indicative of the amount that would be realized in a current market exchange. See Note 9 for additional information on debt instruments.

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Derivative Instruments and Hedging Activities

6 Months Ended

Mar. 30, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Our currency exchange contracts and interest rate swaps are designated as cash flow hedges and qualify as hedging instruments. We also have derivatives that are not designated as cash flow hedges and, therefore, are accounted for and reported under foreign currency guidance. Regardless of designation for accounting purposes, we believe all of our derivative instruments are hedges of transactional risk exposures. The fair value of our outstanding designated and undesignated derivative assets and liabilities are reported in the Consolidated Balance Sheets as follows: 

	March 30, 2019
	Prepaid Expenses and Other Current Assets		Other Accrued Liabilities
Designated hedge derivatives
Cash flow derivatives	$	314	$	78
Interest rate swaps	3,684		—
Total designated hedge derivatives	3,998		78
Undesignated hedge derivatives
Balance sheet derivatives	97		—
Total hedge derivatives	$	4,095	$	78

	September 29, 2018
	Prepaid Expenses and Other Current Assets		Other Accrued Liabilities
Designated hedge derivatives
Cash flow derivatives	$	989	$	173
Interest rate swaps	7,411		—
Total designated hedge derivatives	8,400		173
Undesignated hedge derivatives
Balance sheet derivatives	91		—
Total hedge derivatives	$	8,491	$	173

A reconciliation of the net fair value of designated hedge derivatives subject to master netting arrangements that are recorded in the Consolidated Balance Sheets to the net fair value that could have been reported in the Consolidated Balance Sheets are as follows: 

	Gross Recognized Amount		Gross Offset Amount		Net Amount Presented		Derivatives Subject to Offset			Cash Collateral Received		Net Amount
March 30, 2019
Assets	$	3,998	$	—	$	3,998	$	(78	)	$	—	$	3,920
Liabilities	78		—		78		(78		)	—		—
September 29, 2018
Assets	$	8,400	$	—	$	8,400	$	(173	)	$	—	$	8,227
Liabilities	173		—		173		(173		)	—		—

Cash Flow Hedging – Currency Risks

Currency exchange contracts utilized to maintain the functional currency value of expected financial transactions denominated in foreign currencies are designated as cash flow hedges. Gains and losses related to changes in the market value of these contracts are reported as a component of accumulated other comprehensive income (AOCI) within shareholders' equity in the Consolidated Balance Sheets and reclassified to earnings in the same line item in the Consolidated Statements of Income and in the same period as the recognition of the underlying hedged transaction. We periodically assess whether our currency exchange contracts are effective and, when a contract is determined to be no longer effective as a hedge, we discontinue hedge accounting prospectively. 

As of March 30, 2019 and September 29, 2018, we had outstanding cash flow hedge currency exchange contracts with gross notional U.S. dollar equivalent amounts of $26,576 and $39,856, respectively. Upon netting offsetting contracts to sell foreign currencies against contracts to purchase foreign currencies, irrespective of contract maturity dates, the net notional U.S. dollar equivalent amount of contracts outstanding was $24,840 and $29,315 as of March 30, 2019 and September 29, 2018, respectively. As of March 30, 2019, the net market value of the foreign currency exchange contracts was a net asset of $236, consisting of $314 in assets and $78 in liabilities. As of September 29, 2018, the net market value of the foreign currency exchange contracts was a net asset of $816, consisting of $989 in assets and $173 in liabilities.

The pretax amounts recognized in AOCI on currency exchange contracts, including (gains) losses reclassified into earnings in the Consolidated Statements of Income and gains (losses) recognized in other comprehensive income (loss) (OCI), are as follows:

	Three Months Ended						Six Months Ended
	March 30, 2019			March 31, 2018			March 30, 2019			March 31, 2018
Beginning unrealized net gain (loss) in AOCI	$	214		$	(444	)	$	672		$	(443	)
Net (gain) loss reclassified into revenue	(16		)	1,146			(601		)	1,304
Net gain (loss) recognized in OCI	(6		)	(1,794		)	121			(1,953		)
Ending unrealized net gain (loss) in AOCI	$	192		$	(1,092	)	$	192		$	(1,092	)

As of March 30, 2019, the amount projected to be reclassified from AOCI into earnings in the next 12 months was a net gain of $193. The maximum remaining maturity of any forward or optional contract as of March 30, 2019 was 1.6 years.

Interest Rate Swaps

On October 20, 2016, we entered into a floating to fixed interest rate swap agreement to mitigate our exposure to interest rate increases related to a portion of our tranche B term loan facility. The total notional amount of the interest rate swap was $225,000 as of March 30, 2019. The swap agreement expires April 3, 2021. As a result of this agreement, every month we pay fixed interest at 1.256% in exchange for interest received at one month U.S. LIBOR. The market value of the interest rate swap as of March 30, 2019 was an asset of $3,684. The interest rate swap has been designated as a cash flow hedge. As a result, changes in the fair value of the interest rate swap are recorded in AOCI within shareholders' equity in the Consolidated Balance Sheets.

The pretax amounts recognized in AOCI on interest rate swaps, including (gains) losses reclassified into earnings in the Consolidated Statements of Income and gains (losses) recognized in OCI, are as follows:

	Three Months Ended						Six Months Ended
	March 30, 2019			March 31, 2018			March 30, 2019			March 31, 2018
Beginning unrealized net gain (loss) in AOCI	$	4,889		$	5,027		$	7,411		$	3,499
Net (gain) loss reclassified into interest expense	(709		)	(220		)	(1,293		)	(239		)
Net gain (loss) recognized in OCI	(496		)	2,118			(2,434		)	3,665
Ending unrealized net gain (loss) in AOCI	$	3,684		$	6,925		$	3,684		$	6,925

As of March 30, 2019, the amount projected to be reclassified from AOCI into earnings in the next 12 months was a net gain of $2,378.

Foreign Currency Balance Sheet Derivatives

We also use foreign currency derivative contracts to maintain the functional currency value of monetary assets and liabilities denominated in non-functional foreign currencies. The gains and losses related to the changes in the market value of these derivative contracts are included in other income (expense), net in the Consolidated Statements of Income. 

As of March 30, 2019 and September 29, 2018, we had outstanding foreign currency balance sheet derivative contracts with gross notional U.S. dollar equivalent amounts of $108,957 and $90,816, respectively. Upon netting offsetting contracts by counterparty banks to sell foreign currencies against contracts to purchase foreign currencies, irrespective of contract maturity dates, the net notional U.S. dollar equivalent amount of contracts outstanding as of March 30, 2019 and September 29, 2018 was $34,789 and $28,271, respectively. As of March 30, 2019 and September 29, 2018, the net market value of the foreign exchange balance sheet derivative contracts was a net asset of $97 and $91, respectively.

The net gain (loss) recognized in the Consolidated Statements of Income on foreign exchange balance sheet derivative contracts is as follows:

	Three Months Ended						Six Months Ended
	March 30, 2019			March 31, 2018			March 30, 2019			March 31, 2018
Net gain (loss) recognized in other income (expense), net	$	(395	)	$	(848	)	$	(388	)	$	(1,027	)

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Financing

6 Months Ended

Mar. 30, 2019

Debt Disclosure [Abstract]

Financing

FINANCING

Long-term debt consists of the following:

	March 30, 2019			September 29, 2018
Long-term debt
Tranche B term loan, 1.00% amortizing per year, maturing July 5, 2023	$	390,266		$	391,416
Revolving credit facility, non-current portion, expiring July 5, 2022	80,391			—
Tangible equity units, 8.75% coupon, maturing July 1, 2019 1	2,472			7,290
Capital lease obligations	1,709			2,000
Total long-term debt	474,838			400,706
Less: Unamortized underwriting discounts, commissions and other expenses	(6,862		)	(8,623		)
Less: Current maturities of tranche B term loan debt 2, 3	(28,600		)	(28,600		)
Less: Current maturities of TEU debt 2	(2,472		)	(7,290		)
Less: Current maturities of capital lease obligations 2	(560		)	(553		)
Total long-term debt, less current maturities, net	$	436,344		$	355,640

¹  See Note 13 for additional information on our TEUs issued in the third quarter of fiscal year 2016.

²  In addition to the current maturities above, current maturities of long-term debt, net in the Consolidated Balance Sheets includes the current portion of unamortized underwriting discounts, commissions and other expenses of $3,556 and $3,705 as of March 30, 2019 and September 29, 2018, respectively.

³  As of March 30, 2019 and September 29, 2018, current maturities of tranche B term loan consist of the 1% annual payment and the calculated or estimated required annual Excess Cash Flow payment as defined below, as well as planned prepayments.

Tranche B Term Loan and Revolving Credit Facility

We have a credit agreement with U.S. Bank National Association and HSBC Bank USA, National Association as Co-Documentation Agents, Wells Fargo Bank, National Association as Syndication Agent, JPMorgan Chase Bank, N.A. as Administrative Agent and JP Morgan Chase Bank, N.A. and Wells Fargo Securities, LLC as Joint Bookrunners and Joint Lead Arrangers (the Credit Agreement). The Credit Agreement as amended provides for senior secured credit facilities consisting of a $150,000 revolving credit facility (the Revolving Credit Facility), which expires on July 5, 2022, and a $460,000 tranche B term loan facility (the Term Facility) which expires on July 5, 2023. The proceeds of the Revolving Credit Facility can be drawn upon to refinance existing indebtedness, for working capital and for other general corporate purposes, up to a maximum of $150,000. The Term Facility amortizes in equal quarterly installments equal to 1% of the original principal amount. The proceeds of the Term Facility were used for financing the acquisition of PCB Group, Inc. (PCB) in fiscal year 2016. Borrowings on the Revolving Credit Facility were used for financing the acquisition of E2M Technologies B.V. (E2M) in the first quarter of fiscal year 2019.

In the first quarter of fiscal year 2019, in conjunction with the E2M acquisition, we entered into a third amendment to the Credit Agreement to increase the borrowing capacity on the Revolving Credit Facility from $120,000 to $150,000 and extend the expiration date of the Revolving Credit Facility from July 5, 2021 to July 5, 2022. Additionally, the required performance levels under certain financial covenants were modified. During the six months ended March 30, 2019, we incurred debt financing costs of $541 as a result of this amendment which were capitalized in current maturities of long-term debt, net and long-term debt, less current maturities, net in the Consolidated Balance Sheets.

The primary categories of borrowing include Alternate Base Rate (ABR) Borrowings (ABR Term Loans and ABR Revolving Loans), Swingline Loans and Eurocurrency Borrowings (Eurocurrency Term Loans and Eurocurrency Revolving Loans), each as defined in the Credit Agreement. ABR Borrowings and Swingline Loans made in U.S. dollars under the Credit Agreement bear interest at a rate per annum equal to the ABR plus the Applicable Rate (as defined in the Credit Agreement). The ABR is defined as the greater of (a) the Prime Rate (as defined in the Credit Agreement) in effect on such day, (b) the New York Federal Reserve Bank (NYFRB) rate (as defined in the Credit Agreement) in effect on such day plus ½ of 1.00%, or (c) the Adjusted LIBOR (as defined in the Credit Agreement) for a one-month interest period in dollars on such day plus 1.00%. The ABR for ABR Term Loans shall not be less than 1.75% per annum. The Applicable Rate for any ABR Revolving Loans will be based upon the leverage ratio applicable on such date. As of March 30, 2019, the Applicable Rate for ABR Term Loans was 2.25% per annum.

Eurocurrency Borrowings made under the Credit Agreement bear interest at a rate per annum equal to the Adjusted LIBOR Rate plus the Applicable Rate. The Adjusted LIBOR Rate is defined as an interest rate per annum equal to (a) the LIBOR Rate for such interest period multiplied by (b) the Statutory Reserve Rate (as defined in the Credit Agreement). The Applicable Rate for any Eurocurrency Revolving Loan is based upon the leverage ratio applicable on such date. The Adjusted LIBOR Rate for Eurocurrency Term Loans shall not be less than 0.75% per annum. Based on our leverage ratio as of March 30, 2019, the Applicable Rate for Eurocurrency Revolving Loans was 3.00%. As of March 30, 2019, the Applicable Rate for Eurocurrency Term Loans was 3.25% per annum, plus the applicable Adjusted LIBOR Rate of 2.49%. The weighted average interest rate on Term Facility debt during the six months ended March 30, 2019 was 5.65%.

As of March 30, 2019, there was $80,391 of outstanding borrowings under the Revolving Credit Facility which is included in long-term debt, less current maturities, net in the Consolidated Balance Sheets. As of September 29, 2018, there were no outstanding borrowings under the Revolving Credit Facility. We had outstanding letters of credit drawn from the Revolving Credit Facility totaling $19,976 and $20,448 as of March 30, 2019 and September 29, 2018, respectively, leaving approximately $49,633 and $99,552, respectively, of unused borrowing capacity. Commitment fees are payable on the unused portion of the Revolving Credit Facility at rates between 0.25% and 0.40% based on our leverage ratio. During the three and six months ended March 30, 2019, commitment fees incurred totaled $52 and $124, respectively. During the three and six months ended March 31, 2018, commitment fees incurred totaled $77 and $156, respectively.

The Credit Agreement governing the Term Facility requires us to prepay outstanding term loans, subject to certain exceptions, depending on the leverage ratio with (a) up to 50% of the our annual Excess Cash Flow (as defined in the Credit Agreement) and (b) 100% of the net cash proceeds of (i) certain asset sales and casualty and condemnation events, subject to reinvestment rights and certain other exceptions; and (ii) any incurrence or issuance of certain debt, other than debt permitted under the Credit Agreement. We may voluntarily prepay outstanding loans under the Term Facility at any time without premium or penalty. All obligations under the Credit Agreement are unconditionally guaranteed by certain of our existing wholly-owned domestic subsidiaries, and are secured, subject to certain exceptions, by substantially all of our assets and the assets of our subsidiary guarantors.

Under the Credit Agreement, we are subject to customary affirmative and negative covenants, including, among others, restrictions on our ability to incur debt, create liens, dispose of assets, make investments, loans, advances, guarantees, and acquisitions, enter into transactions with affiliates, and enter into any restrictive agreements and customary events of default (including payment defaults, covenant defaults, change of control defaults and bankruptcy defaults). The Credit Agreement also contains financial covenants, including the ratio of consolidated total indebtedness to adjusted consolidated earnings before income, taxes, depreciation and amortization (Adjusted EBITDA), as defined in the Credit Agreement, as well as the ratio of Adjusted EBITDA to consolidated interest expense. These covenants restrict our ability to purchase outstanding shares of our common stock. As of March 30, 2019 and September 29, 2018, we were in compliance with these financial covenants.

See Note 7 for additional information on the fair value of the tranche B term loan and the TEU debt.

Interest Rate Swaps

On October 20, 2016, in order to mitigate our exposure to interest rate increases on our variable rate debt, we entered into a variable to fixed amortizing interest rate swap. See Note 8 for additional information on derivative financial instruments.

The interest rate swap will be reduced to the following notional amounts over the next three years:

	Notional Amount
October 3, 2019	$	180,000
October 3, 2020	125,000
April 3, 2021	—

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Stock-Based Compensation

6 Months Ended

Mar. 30, 2019

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

STOCK-BASED COMPENSATION

We compensate our officers, directors and employees with stock-based compensation under the 2017 Stock Incentive Plan (the 2017 Plan) approved by our shareholders and administered under the supervision of our Board of Directors. As of March 30, 2019, a total of 958 shares were available for issuance under the 2017 Plan.

We make an annual stock grant under the 2017 Plan of stock options, restricted stock units and performance restricted stock units, as well as stock grants throughout the fiscal year. For fiscal years 2019, 2018 and 2017, the annual stock grant occurred in December 2018, April 2018 and April 2017, respectively.

Stock Options

During the six months ended March 30, 2019, 231 stock options were granted at a weighted average fair value of $9.91. During the six months ended March 30, 2018, no stock options were granted.

Restricted Stock Units and Performance Restricted Stock Units

We award restricted stock units to directors and key employees and performance restricted stock units to key employees. During the six months ended March 30, 2019, we granted 124 restricted stock units and 40 performance restricted stock units to directors, officers and employees. During the six months ended March 30, 2018, we granted 24 restricted stock units and no performance restricted stock units. The fair value of the restricted stock units and performance restricted stock units granted during the six months endedMarch 30, 2019 and March 31, 2018 was $46.45 and $48.61, respectively, representing the market value of our shares as of the date of grant less the present value of estimated foregone dividends over the vesting period.

Employee Stock Purchase Plan

Our U.S. employees are eligible to participate in the 2012 Employee Stock Purchase Plan (2012 ESPP) approved by our shareholders. As of March 30, 2019, 599 shares were available for issuance under the 2012 ESPP. During the six months ended March 30, 2019 and March 31, 2018, we issued 16 and 12 shares, respectively, under the 2012 ESPP at a weighted average price per share of $34.11 and $44.03, respectively.

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Employee Benefit Plans

6 Months Ended

Mar. 30, 2019

Retirement Benefits [Abstract]

Employee Benefit Plans

EMPLOYEE BENEFIT PLANS

We sponsor a non-contributory, defined benefit pension plan for eligible employees of one of our German subsidiaries. Net periodic benefit cost for our defined benefit pension plan includes the following components:

	Three Months Ended						Six Months Ended
	March 30, 2019			March 31, 2018			March 30, 2019			March 31, 2018
Service cost	$	321		$	331		$	643		$	649
Interest cost	155			165			310			324
Expected return on plan assets	(321		)	(328		)	(643		)	(643		)
Net amortization and deferral	137			137			274			267
Net periodic benefit cost	$	292		$	305		$	584		$	597

The weighted average expected long-term rate of return on plan assets used to determine the net periodic benefit cost for each of the three and six months ended March 30, 2019 and March 31, 2018 was 5.5%.

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Income Taxes

6 Months Ended

Mar. 30, 2019

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

The Tax Cuts and Jobs Act (the Tax Act) was enacted into law on December 22, 2017 and made significant changes to U.S. federal corporate tax law. Effective January 1, 2018, the Tax Act lowered the U.S. corporate tax rate from 35% to 21% and prompted various other changes to U.S. federal corporate tax law, including the establishment of a territorial-style system for taxing foreign-source income of domestic multinational corporations and a one-time deemed repatriation tax on untaxed foreign earnings. The Tax Act resulted in a U.S. federal blended statutory rate of 24.5% for fiscal year 2018 and a rate of 21.0% for fiscal year 2019.

Generally, the impacts of new tax legislation would be required to be recorded in the period of enactment, which was our first quarter of fiscal year 2018. However, in March 2018, the FASB issued ASU No. 2018-05, Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118, which incorporates various SEC paragraphs from Staff Accounting Bulletin No. 118 into income tax accounting guidance effective immediately, allowing registrants to record provisional amounts during a one-year measurement period.

As of December 29, 2018, we completed our accounting for the tax effects of the Tax Act at the conclusion of the one-year measurement period. As a result, the income tax provision for the six months ended March 30, 2019 includes certain discrete benefits of $1,293 for Tax Act measurement period adjustments. The discrete benefits relate to $1,297 of additional dividends received deduction for certain foreign tax credits included in the mandatory deemed repatriation tax calculation, partially offset by $4 of expense for other Tax Act measurement period adjustments. The additional dividends received deduction is based on our assessment of the treatment under the applicable provisions of the Tax Act as currently written and enacted. If, in the future, Congress or the Department of the Treasury provides legislative or regulatory updates, this could change our assessment of the benefit associated with the dividends received deduction, and we may be required to recognize additional tax expense up to the full amount of the $1,297 in the period such updates are issued.

Excluding the impact of certain discrete benefits in the current and prior year, the effective tax rate for the six months ended March 30, 2019 and March 31, 2018 was essentially flat compared to the same prior year period. Factors that affected the effective tax rate for the six months ended March 30, 2019 included impacts of the Tax Act, such as elimination of the domestic manufacturing deduction and the implementation of the global intangible low-taxed income (GILTI) provision. These increases were offset by favorable aspects of the Tax Act, such as the decrease in the U.S. income tax rate and provisions for incentivizing foreign-derived intangible income (FDII). In the first quarter of fiscal year 2019, we made an accounting policy election to treat the future tax impacts of the GILTI provisions of the Tax Actas a period cost to the extent applicable.

The income tax benefit for the six months ended March 31, 2018 included certain discrete benefits of $25,378 for the estimated impact of the Tax Act. The discrete benefits related to $32,264 of estimated benefit from the remeasurement of our estimated net deferred tax liabilities, partially offset by $6,886 of estimated expense associated with the mandatory deemed repatriation tax. The income tax benefit for fiscal year 2018 included certain discrete benefits of $25,008 for the estimated impact of the Tax Act. The discrete benefits primarily related to $31,647 of estimated benefit from the remeasurement of our estimated net deferred tax liabilities, partially offset by $6,639 of estimated expense associated with the mandatory deemed repatriation tax.

As of March 30, 2019, the liability for unrecognized tax benefits was $6,985, of which $4,510 would favorably affect our effective tax rate, if recognized. As of September 29, 2018, the liability for unrecognized tax benefits was $6,158, of which $3,740 would favorably affect our effective tax rate, if recognized. As of March 30, 2019, we do not expect significant changes in the amount of unrecognized tax benefits during the next twelve months.

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Shareholders' Equity

6 Months Ended

Mar. 30, 2019

Equity [Abstract]

Shareholders' Equity

SHAREHOLDERS' EQUITY

Tangible Equity Units

During the third quarter of fiscal year 2016, we issued 1,150 TEUs in a registered public offering primarily to finance the acquisition of PCB, to repay amounts outstanding under our existing revolving credit facility and to pay related costs, fees and expenses. Total proceeds, net of underwriting discounts, commissions and other expenses were $110,926. Each TEU has a stated amount of $100 per TEU and is comprised of a prepaid stock purchase contract and a senior amortizing note having a final installment payment date of July 1, 2019. We allocated the proceeds from the issuance of the TEUs between equity and debt based on the relative fair values of the respective components of each TEU. The fair value of the prepaid stock purchase contracts, net of underwriting discounts, commissions and other expenses, was recorded in additional paid-in capital in the Consolidated Balance Sheets. The fair value of the senior amortizing note, net of underwriting discounts, commissions and other expenses, was split between current maturities of long-term debt, net and long-term debt, less current maturities, net in the Consolidated Balance Sheets. Underwriting discounts, commissions and other costs directly associated with the TEU-related debt will be amortized using the effective interest rate method over the three-year term of the instrument.

The aggregate values assigned upon issuance to each component of the TEUs, based on the relative fair value of the respective components, were as follows:

	Equity Component			Debt Component			Total
Fair value price per TEU 1	$	76.19		$	23.81		$	100.00
Gross proceeds	$	87,614		$	27,386		$	115,000
Less: Underwriting discounts and commissions	(2,628		)	(822		)	(3,450		)
Less: Other expenses 2	(475		)	(149		)	(624		)
Issuance of TEUs, net	$	84,511		$	26,415		$	110,926

¹  The fair value price allocation between equity and debt for each TEU was determined using a discounted cash flow model.

²  Other expenses include direct and incremental costs related to the issuance of the TEUs.

Equity Component

Unless converted earlier at the option of the holder, each prepaid stock purchase contract will automatically settle on July 1, 2019. If converted prior to the automatic settlement date at the option of the holder, the minimum of 1.9841 shares of our common stock are delivered to the holder of each prepaid stock purchase contract. On the automatic settlement date, a minimum of 1.9841 shares and a maximum of 2.3810 shares of our common stock, subject to adjustment based upon the applicable market value discussed below, will be delivered to the holder of each prepaid stock purchase contract at the settlement date.

The number of shares of our common stock issuable upon settlement of each purchase contract on July 1, 2019 will be determined as follows:

• if the applicable market value is equal to or greater than the threshold appreciation price of $50.40 per share, holders will receive 1.9841 shares of common stock per purchase contract, or the minimum settlement rate;

• if the applicable market value is greater than the reference price of $42.00 per share, but less than the threshold appreciation price of $50.40 per share, holders will receive a number of shares of common stock equal to $100 per TEU divided by the applicable market value; or

• if the applicable market value is less than or equal to the reference price of $42.00 per share, holders will receive 2.3810 shares of common stock per purchase contract, or the maximum settlement rate.

The "applicable market value" is defined as the average of the daily volume-weighted average price of the common stock on each of the 20 consecutive trading days beginning on, and including, the 23rd scheduled trading day immediately preceding July 1, 2019.

During the fourth quarter of fiscal year 2017, certain holders of our TEUs elected to early convert the equity component on 473 of our outstanding TEUs at the minimum conversion rate of 1.9841 which resulted in the issuance of 939 shares of our common stock. During fiscal years 2019 and 2018, no holders of our TEUs elected to early convert the equity component of our outstanding TEUs. There were 677 units of the equity component of TEUs outstanding as of both March 30, 2019 and September 29, 2018.

Debt Component

The amortizing senior note was issued with an initial principal amount of $27,386, or $23.8136 per TEU. Equal quarterly cash installments of $2.1875 per amortizing note are paid, which in the aggregate are equivalent to a 8.75% cash distribution per year with respect to each $100 stated amount per TEU. Each installment constitutes a payment of interest and partial repayment of principal. The final installment will be paid in the fourth quarter of fiscal year 2019.

Earnings Per Common Share

The TEUs have a dilutive effect on our earnings per share. The 1.9841 minimum shares to be issued are included in the calculation of basic weighted average shares outstanding. The 0.3969 difference between the minimum shares and the 2.3810 maximum shares are potentially dilutive, and accordingly, are included in our diluted earnings per share on a pro rata basis to the extent the applicable market value is higher than the reference price but less than the threshold appreciation price. See Note 14 for additional information regarding the calculation of earnings per share.

Capped Calls

In connection with the pricing of the TEUs sold in our public offering in fiscal year 2016, we purchased capped calls from third party banking institutions (Capped Calls) for $7,935. The initial Capped Calls were for 2,282 equivalent shares of our common stock with a strike price of $50.40, a cap price of $58.80 and an expiration date of July 1, 2019. The value of the Capped Calls is settled with shares of our common stock, based on the approximate market value of our common stock at such time, and could be settled as the TEUs were early converted or settled upon expiration on July 1, 2019 (Capped Call Expiration). During the fourth quarter of fiscal year 2017, we settled approximately 10% of the Capped Calls, which resulted in us receiving and retiring 12 shares of our common stock. No Capped Calls were settled during fiscal years 2019 and 2018.

On June 13, 2018, we amended the agreements with third party banking institutions for the outstanding Capped Calls (Capped Call Agreements) to modify the timing of settlement to be only upon expiration for all outstanding Capped Calls. Per the Capped Call Agreements, the outstanding Capped Calls are for 2,054 equivalent shares of our common stock with a strike price of $50.40 and a cap price of $57.97. The Capped Calls will be automatically settled upon Capped Call Expiration with shares of our common stock based on the average market value of our common stock as defined in the Capped Call Agreements.

As of March 30, 2019, the range of shares of our common stock to be received for the outstanding Capped Calls was a minimum of 0 shares to a maximum of 268 shares, which will be realized if the average market value of our common stock as defined in the Capped Call Agreements is at or below $50.40 or at $57.97, respectively, upon Capped Call Expiration.

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Earnings Per Share

6 Months Ended

Mar. 30, 2019

Earnings Per Share [Abstract]

Earnings Per Share

EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income by the daily weighted average number of common shares outstanding during the applicable period. The TEUs are assumed to be settled at the minimum settlement amount of 1.9841 shares per TEU when calculating weighted-average common shares outstanding for purposes of basic earnings per share.

Using the treasury stock method, diluted earnings per share includes the potentially dilutive effect of common shares issued in connection with outstanding stock-based compensation options and grants. The potentially dilutive effect of common shares issued in connection with outstanding stock options is determined based on the average market price for the period. For diluted earnings per share, the TEUs are assumed to be settled at a conversion factor based on our daily volume-weighted average price per share of our common stock for the 20 consecutive trading days preceding the end of the current fiscal quarter not to exceed 2.3810 shares of common stock per TEU.

Under the treasury stock method, shares associated with certain stock options have been excluded from the diluted weighted average shares outstanding calculation because the exercise of those options would lead to a net reduction in common shares outstanding or anti-dilution. As a result, stock options to acquire 865 and 482 weighted common shares have been excluded from the diluted weighted average common shares outstanding calculation for the three months ended March 30, 2019 and March 31, 2018, respectively. Stock options to acquire 791 and 489 weighted common shares have been excluded from the diluted weighted average common shares outstanding calculation for the six months ended March 30, 2019 and March 31, 2018, respectively.

In connection with the pricing of the TEUs, we purchased capped calls. The capped calls will not be reflected in the calculation of diluted earnings per share until settled as they will lead to a net reduction in common shares outstanding or anti-dilution. See Note 13 for additional information on our equity instruments.

Basic and diluted earnings per share are calculated as follows:

	Three Months Ended				Six Months Ended
	March 30, 2019		March 31, 2018		March 30, 2019		March 31, 2018
Net income	$	14,160	$	8,438	$	24,661	$	41,589
Weighted average common shares outstanding	19,251		19,150		19,234		19,137
Effect of dilutive securities
Stock-based compensation	190		123		159		121
Weighted average dilutive common shares outstanding	19,441		19,273		19,393		19,258
Earnings per share
Basic	$	0.74	$	0.44	$	1.28	$	2.17
Diluted	0.73		0.44		1.27		2.16

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Other Comprehensive Income (Loss)

6 Months Ended

Mar. 30, 2019

Equity [Abstract]

Other Comprehensive Income (Loss)

OTHER COMPREHENSIVE INCOME (LOSS)

Other comprehensive income (loss), a component of shareholders' equity, consists of foreign currency translation adjustments, gains or losses on derivative instruments and defined benefit pension plan adjustments. 

Income tax expense or benefit allocated to each component of other comprehensive income (loss) is as follows:

	Three Months Ended									Six Months Ended
	March 30, 2019
	Pre-tax			Tax			Net			Pretax			Tax			Net
Foreign currency translation gain (loss) adjustments	$	(1,168	)	$	—		$	(1,168	)	$	(2,671	)	$	—		$	(2,671	)
Derivative instruments
Unrealized net gain (loss)	(502		)	110			(392		)	(2,313		)	505			(1,808		)
Net (gain) loss reclassified to earnings	(725		)	158			(567		)	(1,894		)	413			(1,481		)
Defined benefit pension plan
Unrealized net gain (loss)	1,374			(415		)	959			(839		)	253			(586		)
Net (gain) loss reclassified to earnings	137			(42		)	95			274			(83		)	191
Currency exchange rate gain (loss)	146			—			146			261			—			261
Other comprehensive income (loss)	$	(738	)	$	(189	)	$	(927	)	$	(7,182	)	$	1,088		$	(6,094	)

	Three Months Ended									Six Months Ended
	March 31, 2018
	Pre-tax			Tax			Net			Pretax			Tax			Net
Foreign currency translation gain (loss) adjustments	$	5,172		$	—		$	5,172		$	7,671		$	—		$	7,671
Derivative instruments
Unrealized net gain (loss)	324			(84		)	240			1,713			(443		)	1,270
Net (gain) loss reclassified to earnings	926			(239		)	687			1,065			(275		)	790
Defined benefit pension plan
Unrealized net gain (loss)	(918		)	277			(641		)	(388		)	117			(271		)
Net (gain) loss reclassified to earnings	137			(42		)	95			267			(81		)	186
Currency exchange rate gain (loss)	(181		)	—			(181		)	(268		)	—			(268		)
Other comprehensive income (loss)	$	5,460		$	(88	)	$	5,372		$	10,060		$	(682	)	$	9,378

The changes in the net-of-tax balances of each component of AOCI are as follows:

	Three Months Ended												Six Months Ended
	March 30, 2019
	Adjustments												Adjustments
	Foreign Currency Translation			Unrealized Derivative Instrument			Defined Benefit Pension Plan			Total			Foreign Currency Translation			Unrealized Derivative Instrument			Defined Benefit Pension Plan			Total
Beginning balance	$	269		$	3,990		$	(7,950	)	$	(3,691	)	$	1,772		$	6,320		$	(6,616	)	$	1,476
Other comprehensive net gain (loss) reclassifications	(1,168		)	(392		)	1,105			(455		)	(2,671		)	(1,808		)	(325		)	(4,804		)
Net (gain) loss reclassified to earnings	—			(567		)	95			(472		)	—			(1,481		)	191			(1,290		)
Other comprehensive income (loss)	(1,168		)	(959		)	1,200			(927		)	(2,671		)	(3,289		)	(134		)	(6,094		)
Ending balance	$	(899	)	$	3,031		$	(6,750	)	$	(4,618	)	$	(899	)	$	3,031		$	(6,750	)	$	(4,618	)

	Three Months Ended									Six Months Ended
	March 31, 2018
	Adjustments									Adjustments
	Foreign Currency Translation		Unrealized Derivative Instrument		Defined Benefit Pension Plan			Total		Foreign Currency Translation		Unrealized Derivative Instrument		Defined Benefit Pension Plan			Total
Beginning balance	$	6,445	$	3,086	$	(6,078	)	$	3,453	$	3,946	$	1,953	$	(6,452	)	$	(553	)
Other comprehensive net gain (loss) reclassifications	5,172		240		(822		)	4,590		7,671		1,270		(539		)	8,402
Net (gain) loss reclassified to earnings	—		687		95			782		—		790		186			976
Other comprehensive income (loss)	5,172		927		(727		)	5,372		7,671		2,060		(353		)	9,378
Ending balance	$	11,617	$	4,013	$	(6,805	)	$	8,825	$	11,617	$	4,013	$	(6,805	)	$	8,825

The effect on certain line items in the Consolidated Statements of Income of amounts reclassified out of AOCI are as follows:

	Three Months Ended						Six Months Ended						Affected Line Item in the Consolidated Statements of Income
	March 30, 2019			March 31, 2018			March 30, 2019			March 31, 2018
Derivative instruments
Currency exchange contracts gain (loss)	$	16		$	(1,146	)	$	601		$	(1,304	)	Revenue
Interest rate swap contracts gain (loss)	709			220			1,293			239			Interest expense, net
Income tax benefit (expense)	(158		)	239			(413		)	275			Income tax provision (benefit)
Total net gain (loss) on derivative instruments	567			(687		)	1,481			(790		)	Net income
Defined benefit pension plan 1
Actuarial loss	—			(75		)	—			(146		)	Cost of sales
Actuarial loss	—			(38		)	—			(75		)	Selling and marketing
Actuarial loss	—			(24		)	—			(46		)	General and administrative
Actuarial loss	(137		)	—			(274		)	—			Other income (expense), net
Total actuarial loss	(137		)	(137		)	(274		)	(267		)	Income before income taxes
Income tax benefit	42			42			83			81			Income tax provision (benefit)
Total net loss on pension plan	(95		)	(95		)	(191		)	(186		)	Net income
Total net of tax reclassifications out of AOCI included in net income	$	472		$	(782	)	$	1,290		$	(976	)

¹  Change in classification of actuarial loss on defined benefit pension plan related to the adoption of ASU No. 2017-07 in fiscal year 2019. See Note 2 for additional information on the impact of adoption.

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Business Segment Information

6 Months Ended

Mar. 30, 2019

Segment Reporting [Abstract]

Business Segment Information

BUSINESS SEGMENT INFORMATION

Our Chief Executive Officer (the Chief Operating Decision Maker) regularly reviews financial information for our two reportable segments, Test & Simulation and Sensors. Test & Simulation manufactures and sells equipment and related software and services which are used by customers to characterize a product's mechanical properties or performance. Sensors manufactures and sells high-performance sensors which provide measurements of vibration, pressure, position, force and sound in a variety of applications. 

In evaluating each segment's performance, our Chief Executive Officer focuses on income from operations. This measure excludes interest income and expense, income taxes and other non-operating items. Corporate expenses, including costs associated with various support functions such as human resources, information technology, legal, finance and accounting, and general and administrative costs are allocated to the reportable segments on the basis of revenue. The accounting policies of the reportable segments are the same as those described in Note 1 to the Consolidated Financial Statements found in our Annual Report on Form 10-K for the fiscal year ended September 29, 2018 and in Note 3 of this Quarterly Report on Form 10-Q.

Intersegment revenue is based on standard costs with reasonable mark-ups established between the reportable segments. All significant intersegment amounts are eliminated to arrive at consolidated financial results.

Financial information by reportable segment is as follows:

	Three Months Ended						Six Months Ended
	March 30, 2019			March 31, 2018			March 30, 2019			March 31, 2018
Revenue
Test & Simulation	$	151,032		$	110,238		$	276,592		$	228,441
Sensors	82,375			81,542			160,325			157,501
Intersegment eliminations	(361		)	(457		)	(690		)	(457		)
Total revenue	$	233,046		$	191,323		$	436,227		$	385,485
Income from operations
Test & Simulation	$	12,684		$	3,295		$	20,015		$	8,904
Sensors	11,504			13,337			22,138			24,225
Intersegment eliminations	(14		)	(22		)	(13		)	(22		)
Total income from operations	$	24,174		$	16,610		$	42,140		$	33,107

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Restructuring and Related Costs

6 Months Ended

Mar. 30, 2019

Restructuring and Related Activities [Abstract]

Restructuring and Related Costs

RESTRUCTURING AND RELATED COSTS

Fiscal Year 2018 Restructuring

During the fourth quarter of fiscal year 2018, we initiated a Test & Simulation workforce reduction intended to simplify the organization and reduce the overall cost structure. No restructuring expenses were recognized in the three or six months ended March 30, 2019 or March 31, 2018 related to this restructuring action. As of March 30, 2019, we have incurred a total of $880 of pre-tax severance and related expense.

Fiscal Year 2017 Restructuring

During the fourth quarter of fiscal year 2017, we initiated a series of Test & Simulation workforce reductions and facility closures intended to increase organizational effectiveness, gain manufacturing efficiencies and provide cost savings that can be reinvested in our growth initiatives. These actions include the transfer of certain production operations in China to a contract manufacturing partner throughout fiscal years 2018 and 2019. As a result, during the three and six months ended March 30, 2019, we recorded $0 and $130 of pre-tax severance and related expense, respectively. During the three and six months ended March 31, 2018, we recorded $321 and $414 of pre-tax severance and related expense, respectively, and $25 and $187 of pre-tax facility closure costs, respectively. As of March 30, 2019, we have incurred a total of $4,871 of pre-tax expense, including $4,579 and $292 of pre-tax expense related to severance and facility closure costs, respectively.

Restructuring expenses included in our Consolidated Statements of Income for the above restructuring actions are as follows:

	Three Months Ended				Six Months Ended
	March 30, 2019		March 31, 2018		March 30, 2019		March 31, 2018
	Test & Simulation		Test & Simulation		Test & Simulation		Test & Simulation
Cost of sales	$	—	$	304	$	117	$	424
Selling and marketing	—		—		—		—
General and administrative	—		42		13		177
Total restructuring expense	$	—	$	346	$	130	$	601

Restructuring expense accruals included in payroll and related costs in the Consolidated Balance Sheets for the above restructuring actions are as follows:

	2018			2017
	Test & Simulation			Test & Simulation
Balance, September 29, 2018	$	1,051		$	2,933
Restructuring expense	—			130
Payments	(1,012		)	(3,058		)
Other adjustments	(39		)	(5		)
Currency translation	—			—
Balance, March 30, 2019	$	—		$	—

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Business Acquisitions

6 Months Ended

Mar. 30, 2019

Business Combinations [Abstract]

Business Acquisitions

 BUSINESS ACQUISITIONS

On November 21, 2018, we acquired all ownership interests of E2M for a cash purchase price of $80,287. Based in Amsterdam, Netherlands, E2M is a leading manufacturer of high force, electrically driven actuation systems, serving primarily the human-rated entertainment and training simulation markets. The acquisition of E2M expands our technology and product offerings for human-rated simulation systems and brings key regulatory approvals and customers in the flight simulation and entertainment markets. The transaction was accounted for under the acquisition method of accounting. The acquired assets, liabilities and operating results have been included in our financial statements within Test & Simulation from the date of acquisition. During the three and six months ended March 30, 2019, we included $10,138 and $13,659, respectively, of revenue from E2M in our Consolidated Statements of Income. We funded the acquisition of E2M primarily with borrowings on our Revolving Credit Facility. Costs of $1,035 associated with the acquisition of E2M were expensed as incurred. Pro forma information related to the acquisition of E2M has not been included as the impact on our consolidated results of operations was not considered material.

The following table summarizes the preliminary fair value measurement of the assets acquired and liabilities assumed, net of cash acquired, as of the date of acquisition:

	Fair Value			Finite-Lived Intangible Asset Lives (Years)
Asset (Liability)
Accounts receivable	$	4,651
Unbilled accounts receivable	1,518
Inventories	11,063
Prepaid expenses and other current assets	123
Property and equipment	672
Intangible assets
Customer lists	21,595			15
Trademarks and trade names	5,926			15
Technology	12,650			15
Other intangible assets	3,761			4
Other long-term assets	60
Purchased goodwill	32,523
Accounts payable	(3,657		)
Accrued payroll and related costs	(1,328		)
Advance payments from customers	(4,315		)
Accrued income taxes	(290		)
Other accrued liabilities	(127		)
Deferred income taxes	(6,278		)
Net assets acquired	$	78,547
Supplemental information
Consideration paid at closing	$	79,772
Post-closing purchase price adjustment	515
Less: Cash acquired	(1,740		)
Purchase price, net of cash acquired	$	78,547

The allocation of purchase price consideration is considered preliminary as of March 30, 2019 with provisional amounts primarily related to inventory, intangible assets, advanced payments to customers and certain tax related items included as our allocation process has not been finalized. We expect to finalize the allocation of purchase price as soon as possible, but no later than one year from the acquisition date.

Goodwill was calculated as the difference between the acquisition date fair value of the total purchase price consideration and the fair value of the net assets acquired and represents the future economic benefits that we expect to achieve as a result of the acquisition. This resulted in a purchase price in excess of the fair value of identifiable net assets acquired. The purchase price also included the fair value of other assets that were not identifiable, not separately recognizable under accounting rules (e.g., assembled workforce) or of immaterial value. All of the goodwill was assigned to Test & Simulation. None of the goodwill is deductible for income tax purposes.

The preliminary fair value of the acquired intangible assets was $43,932. The acquired intangible assets are being amortized on a straight-line basis over the useful lives identified in the table above.

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Basis of Presentation (Policies)

6 Months Ended

Mar. 30, 2019

Accounting Policies [Abstract]

Basis of Presentation

The consolidated financial statements include the accounts of MTS Systems Corporation and its wholly owned subsidiaries. Significant intercompany account balances and transactions have been eliminated.

The terms "MTS," "we," "us," "the Company" or "our" in this Quarterly Report on Form 10-Q, unless the context otherwise requires, refer to MTS Systems Corporation and its wholly owned subsidiaries. 

We have prepared the interim unaudited consolidated financial statements included herein pursuant to the rules and regulations of the United States (U.S.) Securities and Exchange Commission (SEC). The information furnished in these consolidated financial statements includes normal recurring adjustments and reflects all adjustments that are, in our opinion, necessary for a fair presentation of such financial statements. The consolidated financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP). GAAP requires us to make estimates and assumptions that affect amounts reported. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to SEC rules and regulations. The accompanying consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended September 29, 2018 filed with the SEC. Interim results of operations for the second fiscal quarter ended March 30, 2019 are not necessarily indicative of the results to be expected for the full fiscal year.

Fiscal Period

We have a 5-4-4 week, quarterly accounting cycle with our fiscal year ending on the Saturday closest to September 30. Fiscal year 2019 ending on September 28, 2019 will consist of 52 weeks. Fiscal year 2018 ended on September 29, 2018 and consisted of 52 weeks.

Recently Issued Accounting Pronouncements

Leases

In February 2016, the Financial Accounting Standards Board (FASB) issued ASU No. 2016-02, Leases (Topic 842), followed by related amendments (collectively, "the new lease standard"), which requires lessees to recognize most leases on the balance sheet for the rights and obligations created by those leases. Under the new lease standard, a company recognizes a right-of-use asset, representing the right to use the underlying asset for the lease term, and a corresponding lease liability for all leases with terms greater than 12 months. The new guidance requires enhanced disclosures regarding the amount, timing and uncertainty of cash flows arising from a company's leases. Adoption of the new lease standard is required for annual periods beginning after December 15, 2018, including interim periods within that annual period, which is our fiscal year 2020. The new guidance is required to be adopted using a modified retrospective transition method, and an optional transition method may be elected to use the effective date as the date of initial application on transition.

We intend to adopt the new lease standard for our fiscal year 2020 under the optional transition method with an effective date of September 29, 2019. As a result, we will not adjust our comparative period financial information or make the new required lease disclosures for periods before the effective date, and we will record the impact from adoption as a cumulative-effect reduction to retained earnings as of the effective date. We are currently planning to elect the package of practical expedients to not reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs, and we are currently evaluating the other practical expedients available under the new guidance. We continue to make progress with preparation for the adoption and implementation of the new lease standard, including assessing the completeness of our lease arrangements, evaluating practical expedients and accounting policy elections, revising our lease-related accounting policies, assessing impacts to controls, and implementing a lease software solution. We anticipate the adoption of the new lease standard will result in an increase in assets and liabilities on our Consolidated Balance Sheet. The impact on our Consolidated Statement of Income and Consolidated Statement of Cash Flows is being evaluated. We continue to evaluate the impact that these changes in methodology will have on our financial condition, results of operations and disclosures.

Other

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which changes the accounting for credit losses on instruments measured at amortized cost by adding an impairment model that is based on expected losses rather than incurred losses. An entity will recognize as an allowance its estimate of expected credit losses, which is believed to result in more timely recognition of such losses as the standard eliminates the probable initial recognition threshold. In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Financial Instruments–Credit Losses, which clarifies that a receivable arising from an operating lease that is accounted for by a lessor in accordance with Topic 842 is not within the scope of Subtopic 326. These standards are required to be adopted for annual periods beginning after December 15, 2019, including interim periods within that annual period, which is our fiscal year 2021. The amendments are to be applied using a modified retrospective approach as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which adopted. Early adoption is permitted for annual periods beginning after December 15, 2018, including interim periods within that annual period, which is our fiscal year 2020. We have not yet evaluated the impact the adoption of this guidance may have on our financial condition, results of operations or disclosures.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurements (Topic 820): Disclosure Framework–Changes to the Disclosure Requirements for Fair Value Measurement, which eliminates, amends and adds disclosure requirements for fair value measurements. The standard is required to be adopted for annual periods beginning after December 15, 2019, including interim periods within that annual period, which is our fiscal year 2021. Certain disclosures in the amendment are to be applied using a retrospective approach while other disclosures are to be applied using a prospective approach. Early adoption is permitted. We have not yet evaluated the impact the adoption of this guidance may have on our financial condition, results of operations or disclosures.

In August 2018, the FASB issued ASU No. 2018-14, Compensation–Retirement Benefits–Defined Benefit Plans–General (Subtopic 715-20): Disclosure Framework–Changes to the Disclosure Requirements for Defined Benefit Plans, which eliminates, amends and adds disclosure requirements for defined benefit pension and other postretirement plans. The standard is required to be adopted for annual periods ending after December 15, 2020, which is our fiscal year 2021. The amendment is to be applied using a retrospective approach with early adoption permitted. We have not yet evaluated the impact the adoption of this guidance may have on our financial condition, results of operations or disclosures.

Adopted

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), followed by related amendments (collectively, "the new revenue standard" or "ASC 606") to provide a single, comprehensive revenue recognition model for all contracts with customers. Under the new revenue standard, a company recognizes revenue to depict the transfer of promised goods or services to a customer in an amount that reflects the consideration a company expects to receive in exchange for those goods or services. Determination of when and how revenue is recognized is based on a five-step analysis. Enhanced disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from a company's contracts with customers are required.

We adopted the new revenue standard on September 30, 2018 for our fiscal year 2019 under the modified retrospective transition method. As of September 30, 2018, we recorded a cumulative-effect reduction to the opening balance of our fiscal year 2019 retained earnings of $6,227, net of tax, for the net deferral of previously recognized revenue and related cost of sales, partially offset by the capitalization and deferral of pre-contract costs. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. See Note 3 for our new revenue recognition accounting policy and disclosures relative to this guidance.

In March 2016, the FASB issued ASU No. 2016-04, Liabilities—Extinguishments of Liabilities (Subtopic 405-20): Recognition of Breakage for Certain Prepaid Stored-Value Products, which amends existing guidance on extinguishing financial liabilities for certain prepaid stored-value products. The new standard requires recognition of the expected breakage amount or the value that is ultimately not redeemed either proportionally in earnings as redemption occurs or when redemption is remote, if issuers are not entitled to breakage. We adopted the new standard on a modified retrospective basis for the annual period ending September 28, 2019, including interim periods within that annual period. The adoption of this guidance had no impact on our financial condition, results of operations or disclosures.

In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740), Intra-Entity Transfers of Assets Other Than Inventory, which requires companies to account for the income tax effects of intercompany sales and transfers of assets other than inventory when the transfer occurs. Current guidance requires companies to defer the income tax effects of intercompany transfers of assets until the asset has been sold to an outside party or otherwise recognized. We adopted the new standard on a modified retrospective basis for the annual period ending September 28, 2019, including interim periods within that annual period. The adoption of this guidance had no impact on our financial condition, results of operations or disclosures.

In March 2017, the FASB issued ASU No. 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, which changes how employers that sponsor defined benefit pension or other postretirement benefit plans present the net periodic benefit cost in the income statement. The new guidance requires the service cost component of net periodic benefit cost to be presented in the same income statement line items as other employee compensation costs arising from services rendered during the period, with only the service cost component eligible for capitalization in assets. Other components of the net periodic benefit cost are to be stated separately from the line items that include the service cost and outside of operating income. These components are not eligible for capitalization in assets. We adopted the new standard for the annual period ending September 28, 2019, including interim periods within that annual period, retrospectively for the presentation in the income statement of the service cost component and the other components of net periodic pension cost and prospectively for the capitalization in assets of the service cost component of net periodic pension cost. The adoption of this guidance did not have a material impact on our current or prior year financial condition, results of operations or disclosures. Therefore, the comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods.

In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, which amends the hedge accounting model in Accounting Standards Codification (ASC) 815 to enable entities to better portray the economics of their risk management activities in the financial statements and enhance the transparency and understandability of hedge results. We early adopted the new standard on a modified retrospective basis for the annual period ending September 28, 2019, including interim periods within that annual period. The adoption of this guidance had no impact on our current or prior year financial condition, results of operations or disclosures.

Revenue

Revenue Recognition

Revenue is recognized when control of the promised goods or services is transferred to our customers in an amount that reflects the consideration we expect to be entitled to in exchange for transferring those goods or providing those services. We account for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are known, the contract has commercial substance and collectability of consideration is probable.

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account under the new revenue standard. A contract's transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Many of our contracts have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts and, therefore, not distinct. In situations when our contract includes distinct goods or services that are substantially the same and have the same pattern of transfer to the customer over time, they are recognized as a series of distinct goods or services. For contracts with multiple performance obligations, we allocate the contract's transaction price to each performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract.

We do not adjust the promised amount of consideration for the effects of a significant financing component if we expect, at contract inception, that the period between when we transfer a promised good or service to a customer and when the customer pays for that good or service will be one year or less.

Revenue is recorded net of taxes collected from customers, and taxes collected are recorded as current liabilities until remitted to the relevant government authority. Shipping and handling costs associated with outbound freight after control of a product has transferred are accounted for as a fulfillment cost and are included in cost of sales in the Consolidated Statements of Income.

The following is a description of the product offerings, end markets, typical revenue transactions and payment terms for each of our two reportable segments. See Note 16 for further information on reportable segments.

Test & Simulation

Test & Simulation manufactures and sells equipment and related software and services which are used by customers to characterize a product's mechanical properties or performance. Our solutions simulate forces and motions that customers expect their products to encounter in use or are necessary to properly characterize the product's performance. Primary Test & Simulation markets include transportation, infrastructure, energy, aerospace, materials science, medical, flight training and amusement parks. A typical system is a comprehensive solution which includes a reaction frame to hold the prototype specimen; a hydraulic or electro-mechanical power source; actuators to create the force or motion; and a computer controller with specialized software to coordinate the actuator movement and to measure, record and manipulate results. Our portfolio of Test & Simulation solutions includes standard, configurable testing products; engineered products which combine standard product configurations with a moderate degree of customization per customer specifications; and highly customized, highly engineered testing solutions built to address the customer's unique business need, which can include development of first-of-a-kind technology. To complement our Test & Simulation products, we provide our customers with a spectrum of services to maximize product performance including installation, product life cycle management, professional training, calibration and metrology, technical consulting and onsite and factory repair and maintenance. In addition, we sell a variety of accessories and spare parts. The manufacturing cycle for a typical system ranges from weeks to 12 months, depending on the complexity of the system and the availability of components, and can be up to three years for larger, more complex systems. For certain contracts, the order to revenue cycle may extend beyond the manufacturing cycle, such as when the manufacturing start date is driven by the customer's project timeline or when the contract terms require equipment installation and commissioning and customer acceptance prior to point-in-time revenue recognition.

Test & Simulation contracts often have multiple performance obligations, most commonly due to the contract covering multiple phases of the product life cycle (i.e., equipment design and production, installation and commissioning, extended warranty and software maintenance). The primary method used to estimate standalone selling price is the expected cost plus a margin approach under which we forecast our expected costs of satisfying a performance obligation and then add an appropriate margin for that distinct good or service.

Test & Simulation revenue is recognized either over time as work progresses or point-in-time, depending on contract-specific terms and the pattern of transfer of control of the product or service to the customer. Revenue from services is recognized in the period the service is performed or ratably over the period of the related service contract. Equipment revenue is recognized over time when: (i) control is transferred to the customer over time as work progresses; or (ii) contract terms evidence customer control of the work in process or an enforceable right to payment with no alternative use. Equipment revenue is recognized over time using costs incurred to date relative to total estimated costs at completion to measure progress toward satisfying the performance obligation. Incurred cost represents work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer. Equipment contract costs include materials, component parts, labor and overhead costs.

Equipment revenue is recognized point-in-time when either: (i) control is transferred to the customer at a point-in-time when obligations under the terms of the contract are satisfied; or (ii) contract terms do not evidence customer control of the work in process or an enforceable right to payment with no alternative use, and consequently revenue is deferred as work progresses. Satisfaction of performance obligations under the terms of the contract occurs either upon product shipment (as evidenced by delivery or shipment terms), completion of equipment installation and commissioning, or customer acceptance.

For our Test & Simulation contracts with customers, payment terms vary and are subject to negotiation. Typical payment terms include progress payments based on specified events or milestones. For some contracts, we are entitled to receive an advance payment.

Sensors

Our Sensors segment (Sensors) manufactures and sells high-performance sensors which provide measurements of vibration, pressure, position, force and sound in a variety of applications. Our Sensors products are used to enable automation, enhance precision and safety, and lower our customers' production costs by improving performance and reducing downtime. Primary Sensors markets include automotive, aerospace and defense, industrial, and research and development. Our Sensors products are sold as configurable, standard units; utilize piezoelectric or magnetostriction technology; and are ideal for use in harsh operating environments to provide accurate and reliable sensor information. To complement our Sensors products, we also provide spare parts and services. The cycle from contract inception to shipment of equipment is typically one to three months, with the exception of certain high-volume contracts which are fulfilled in a series of shipments over an extended period.

Our Sensors contracts generally have a single performance obligation which is satisfied at a point in time. The performance obligation is a stand-alone sensor product, accessory, service or software license. Sensors contracts are generally fixed-price purchase order fulfillment contracts, and the transaction price is equal to the observable consideration in the contract. Revenue is recognized when obligations under the terms of the contract with our customer are satisfied; generally this occurs with the transfer of control upon product shipment (as evidenced by shipment or delivery terms) or with the performance of the service.

For our Sensors contracts with customers, payment terms are generally within 90 days. The timing of satisfying our Sensors performance obligations does not vary significantly from the typical timing of payment. For certain high-volume contracts, we are entitled to receive an advance payment.

Contract Estimates

For contracts recognized over time, we estimate the profit on a contract as the difference between the total estimated revenue and expected costs to complete a contract and recognize that profit over the life of the contract. Contract estimates are based on various assumptions to project the outcome of future events that may span several years. These assumptions include labor productivity and availability, the complexity of the work to be performed, the cost and availability of materials, and internal and subcontractor performance.

Pricing is established at or prior to the time of sale with our customers, and we record sales at the agreed-upon selling price. The terms of a contract or the historical business practice can give rise to variable consideration due to but not limited to volume discounts, penalties and early payment discounts. We estimate variable consideration at the most likely amount we will receive from customers. We include estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized for such transaction will not occur, or when the uncertainty associated with the variable consideration is resolved. In general, variable consideration in our contracts relates to the entire contract. As a result, the variable consideration is allocated proportionately to all performance obligations. Our estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of our anticipated performance and all information (historical, current and forecasted) that is reasonably available to us at contract inception. There are no significant instances where variable consideration is constrained and not recorded at the initial time of sale.

As a significant change in one or more of these estimates could affect the profitability of our contracts, we review and update our contract-related estimates regularly. We recognize adjustments in estimated profit on contracts under the cumulative catch-up method. Under this method, the impact of the adjustment on profit recorded to date is recognized in the period the adjustment is identified. Revenue and profit in future periods of contract performance is recognized using the adjusted estimate. If at any time the estimate of contract profitability indicates an anticipated loss on the contract, we recognize the total loss in the period it is identified. Our review of contract-related estimates has not resulted in adjustments that are significant to our results of operations.

Contract Modifications

When contracts are modified to account for changes in contract specifications and requirements, we consider whether the modification either creates new, or changes existing, enforceable rights and obligations. Contract modifications that are for goods or services that are not distinct from the existing contract, due to the significant integration with the original product or service provided, are accounted for as if they were part of that existing contract. The effect of a contract modification on the transaction price, and our measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis. When the modifications include additional performance obligations that are distinct and at a relative stand-alone selling price, they are accounted for as a new contract and performance obligation and recognized prospectively.

Warranties and Returns

For both Test & Simulation and Sensors, we provide a manufacturer's warranty on our products and systems which is included in customer contracts. At the time a sale is recognized, we record estimated future warranty costs. See Note 5 for further discussion of our product warranty liabilities. We also offer separately-priced extended warranties or service-type contracts on certain products for which revenue is recognized over the contractual period or as services are rendered.

Our sales terms generally do not allow for a right of return except for situations where the product fails. When the right of return exists, we recognize revenue for the transferred products at the expected amount of consideration for which we will be entitled.

Pre-contract Costs

We recognize an asset for the incremental costs of obtaining a contract with a customer (i.e., pre-contract costs) when costs are considered recoverable. Capitalized pre-contract costs, consisting primarily of Test & Simulation sales commissions, are amortized as the related revenue is recognized.

The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled accounts receivable (contract assets) and advance payments from customers (contract liabilities). Contract balances are classified as assets or liabilities on a contract-by-contract basis at the end of each reporting period. Contract liabilities represent payments received from customers at contract inception and at milestones per contract provisions. These payments are recorded in advance payments from customers and other long-term liabilities in our Consolidated Balance Sheets (current and non-current portions, respectively) and are liquidated as revenue is recognized. Conversely, when billing occurs subsequent to revenue recognition for contracts recognized over time, balances are recorded in unbilled accounts receivable, net in our Consolidated Balance Sheets. As customers are billed, unbilled accounts receivable balances are transferred to accounts receivable, net in the Consolidated Balance Sheets.

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Revenue (Tables)

6 Months Ended

Mar. 30, 2019

Revenue from Contract with Customer [Abstract]

Impact of 606 Adoption

The impact of adopting the new revenue standard on our Consolidated Statements of Income and Consolidated Balance Sheets is as follows:

Consolidated Statements of Income	Three Months Ended March 30, 2019
	As Reported			Balances without Adoption of ASC 606			Effect of Change
Revenue	$	233,046		$	224,665		$	8,381
Cost of sales	145,696			140,312			5,384
Gross profit	87,350			84,353			2,997
Selling and marketing	33,395			33,239			156
Income tax provision (benefit)	2,916			2,422			494
Net income	14,160			11,813			2,347
	Six Months Ended March 30, 2019
	As Reported			Balances without Adoption of ASC 606			Effect of Change
Revenue	$	436,227		$	423,103		$	13,124
Cost of sales	270,572			260,732			9,840
Gross profit	165,655			162,371			3,284
Selling and marketing	65,484			65,491			(7		)
Income tax provision (benefit)	3,612			3,037			575
Net income	24,661			21,945			2,716
Consolidated Balance Sheets	March 30, 2019
	As Reported			Balances without Adoption of ASC 606			Effect of Change
Assets
Accounts receivable, net	$	117,349		$	121,678		$	(4,329	)
Unbilled accounts receivable, net	71,175			79,819			(8,644		)
Inventories, net	179,071			160,914			18,157
Prepaid expenses and other current assets	32,307			28,216			4,091
Other long-term assets	3,900			2,794			1,106
Deferred income taxes	4,058			3,417			641
Liabilities and Shareholders' Equity
Advance payments from customers	102,033			100,589			1,444
Accrued income taxes	5,709			5,861			(152		)
Other accrued liabilities	34,494			20,855			13,639
Deferred income taxes	50,659			51,886			(1,227		)
Other long-term liabilities	12,508			11,748			760
Accumulated other comprehensive income (loss)	(4,618		)	(4,687		)	69
Retained earnings	308,279			311,790			(3,511		)

The cumulative effect of the changes made to our September 29, 2018 Consolidated Balance Sheet from the modified retrospective adoption of the new revenue standard is as follows:

Consolidated Balance Sheets
	Balance at September 29, 2018		Adjustments due to ASC 606 Adoption			Balance at September 30, 2018
Assets
Accounts receivable, net	$	122,243	$	(4,481	)	$	117,762
Unbilled accounts receivable, net	70,474		(8,002		)	62,472
Inventories, net	139,109		16,727			155,836
Prepaid expenses and other current assets	24,572		4,651			29,223
Other long-term assets	2,263		1,060			3,323
Deferred income taxes	3,249		643			3,892
Liabilities and Shareholders' Equity
Advance payments from customers	80,131		13,568			93,699
Other accrued liabilities	19,146		(2,504		)	16,642
Deferred income taxes	46,482		(1,228		)	45,254
Other long-term liabilities	4,894		6,989			11,883
Retained earnings	300,585		(6,227		)	294,358

Disaggregation of Revenue

	Three Months Ended March 30, 2019
	Test & Simulation		Sensors		Intersegment			Total
Sales type
Product	$	126,511	$	80,540	$	(361	)	$	206,690
Service	24,521		1,835		—			26,356
Total revenue	$	151,032	$	82,375	$	(361	)	$	233,046
Timing of recognition
Point-in-time	$	98,360	$	82,375	$	(361	)	$	180,374
Over time	52,672		—		—			52,672
Total revenue	$	151,032	$	82,375	$	(361	)	$	233,046
Geographic market
Americas	$	51,399	$	38,975	$	(361	)	$	90,013
Europe	29,536		27,653		—			57,189
Asia	70,097		15,747		—			85,844
Total revenue	$	151,032	$	82,375	$	(361	)	$	233,046
	Six Months Ended March 30, 2019
	Test & Simulation		Sensors		Intersegment			Total
Sales type
Product	$	225,419	$	157,040	$	(690	)	$	381,769
Service	51,173		3,285		—			54,458
Total revenue	$	276,592	$	160,325	$	(690	)	$	436,227
Timing of recognition
Point-in-time	$	177,979	$	160,325	$	(690	)	$	337,614
Over time	98,613		—		—			98,613
Total revenue	$	276,592	$	160,325	$	(690	)	$	436,227
Geographic market
Americas	$	90,888	$	76,704	$	(690	)	$	166,902
Europe	58,163		53,001		—			111,164
Asia	127,541		30,620		—			158,161
Total revenue	$	276,592	$	160,325	$	(690	)	$	436,227

Contract Assets and Contract Liabilities

Contract assets and contract liabilities are as follows:

	March 30, 2019		September 29, 2018
Contract assets	$	71,175	$	70,474
Contract liabilities	109,763		80,131

Significant changes in contract assets and contract liabilities are as follows:

	Contract Assets
Balance, September 29, 2018	$	70,474
Cumulative transition adjustment upon adoption	(8,002		)
Changes in estimated stage of completion	69,857
Transfers to accounts receivable, net	(62,265		)
Acquisitions1	1,518
Other	(407		)
Balance, March 30, 2019	$	71,175
	Contract Liabilities
Balance, September 29, 2018	$	80,131
Cumulative transition adjustment upon adoption	20,557
Revenue recognized included in balance at beginning of period	(58,947		)
Increases due to payments received, excluding amounts recognized as revenue during period	64,121
Acquisitions1	4,777
Other	(876		)
Balance, March 30, 2019	$	109,763

¹    See Note 18 for additional information regarding acquisitions.

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Inventories (Tables)

6 Months Ended

Mar. 30, 2019

Inventory Disclosure [Abstract]

Summary of Inventories

Inventories, net are as follows: 

	March 30, 2019		September 29, 2018
Components, assemblies and parts	$	105,669	$	93,020
Customer projects in various stages of completion	62,922		35,675
Finished goods	10,480		10,414
Total inventories, net	$	179,071	$	139,109

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Warranty Obligations (Tables)

6 Months Ended

Mar. 30, 2019

Product Warranties Disclosures [Abstract]

Warranty Provisions and Claims

Changes to accrued warranty costs are as follows: 

	Three Months Ended						Six Months Ended
	March 30, 2019			March 31, 2018			March 30, 2019			March 31, 2018
Beginning accrued warranty costs	$	5,229		$	5,832		$	5,418		$	6,018
Warranty claims	(1,167		)	(1,410		)	(2,446		)	(2,585		)
Warranty provisions	697			1,742			1,791			2,727
Adjustments to preexisting warranties	(15		)	14			(15		)	14
Currency translation	(3		)	13			(7		)	17
Ending accrued warranty costs	$	4,741		$	6,191		$	4,741		$	6,191

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Capital Assets (Tables)

6 Months Ended

Mar. 30, 2019

Capital Assets [Abstract]

Property and Equipment

Property and equipment, net are as follows: 

	March 30, 2019			September 29, 2018
Land and improvements	$	2,881		$	2,881
Buildings and improvements	58,692			58,880
Machinery and equipment	210,065			203,647
Assets held under capital leases	2,796			2,815
Total property and equipment	274,434			268,223
Less: Accumulated depreciation	(186,308		)	(177,954		)
Total property and equipment, net	$	88,126		$	90,269

Goodwill

Changes to the carrying amount of goodwill are as follows:  

	Test & Simulation			Sensors			Total
Balance, September 29, 2018	$	24,631		$	344,644		$	369,275
Acquisitions 1	34,387			—			34,387
Currency translation	(208		)	(29		)	(237		)
Balance, March 30, 2019	$	58,810		$	344,615		$	403,425

¹    See Note 18 for additional information regarding acquisitions.

Intangible Assets

Intangible assets are as follows: 

	March 30, 2019
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Value		Weighted Average Useful Life (in Years)
Software development costs 2	$	35,297	$	(15,859	)	$	19,438	6.3
Technology and patents	59,055		(14,110		)	44,945		14.9
Trademarks and trade names	12,697		(3,442		)	9,255		20.7
Customer lists	179,919		(28,831		)	151,088		15.7
Land-use rights	2,360		(858		)	1,502		26.2
Other	3,705		(332		)	3,373		4.0
Trade names	57,500		—			57,500		Indefinite
Total intangible assets	$	350,533	$	(63,432	)	$	287,101	14.5

	September 29, 2018
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Value		Weighted Average Useful Life (in Years)
Software development costs 2	$	31,251	$	(15,860	)	$	15,391	6.5
Technology and patents	46,405		(12,188		)	34,217		14.9
Trademarks and trade names	6,754		(2,987		)	3,767		25.4
Customer lists	156,971		(23,314		)	133,657		15.8
Land-use rights	2,336		(730		)	1,606		26.0
Trade names	57,500		—			57,500		Indefinite
Total intangible assets	$	301,217	$	(55,079	)	$	246,138	14.8

²  The gross carrying amount of software development costs as of March 30, 2019 and September 29, 2018 includes $19,438 and $15,391, respectively, of intangible assets not yet placed in service.

Amortization Expense

Amortization expense recognized related to finite-lived intangible assets is as follows:

	Three Months Ended				Six Months Ended
	March 30, 2019		March 31, 2018		March 30, 2019		March 31, 2018
Amortization expense	$	4,403	$	3,456	$	8,219	$	6,935

Estimated Future Amortization Expense on Finite-Lived Intangible Assets

Estimated future amortization expense related to finite-lived intangible assets is as follows: 

	Amortization Expense
Remainder of 2019	$	8,695
2020	17,108
2021	18,164
2022	19,036
2023	18,139
2024	17,770
Thereafter	130,689

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Fair Value Measurements (Tables)

6 Months Ended

Mar. 30, 2019

Fair Value Disclosures [Abstract]

Financial Assets and Liabilities Subject to Fair Value Measurements on a Recurring Basis

Financial assets and liabilities subject to fair value measurements on a recurring basis are as follows:

	March 30, 2019
	Level 1		Level 2		Level 3		Total
Assets
Currency contracts 1	$	—	$	411	$	—	$	411
Interest rate swaps 2	—		3,684		—		3,684
Total assets	—		4,095		—		4,095
Liabilities
Currency contracts 1	—		78		—		78
Total liabilities	$	—	$	78	$	—	$	78

	September 29, 2018
	Level 1		Level 2		Level 3		Total
Assets
Currency contracts 1	$	—	$	1,080	$	—	$	1,080
Interest rate swaps 2	—		7,411		—		7,411
Total assets	—		8,491		—		8,491
Liabilities
Currency contracts 1	—		173		—		173
Total liabilities	$	—	$	173	$	—	$	173

¹  Based on observable market transactions of spot currency rates and forward currency rates on equivalently-termed instruments. Carrying amounts of the financial assets and liabilities are equal to the fair value. See Note 8 for additional information on derivative financial instruments.

²  Based on London Interbank Offered Rate (LIBOR) and spot rates. Carrying amount of the financial asset is equal to the fair value. See Note 8 for additional information on derivative financial instruments.

Schedule of Estimated Fair Values of Debt Instruments

The carrying amount and estimated fair values of our debt are as follows:

	March 30, 2019
	Carrying Value		Fair Value		Level 1		Level 2		Level 3
Debt component of tangible equity units 1	$	2,472	$	2,939	$	—	$	2,939	$	—
Tranche B term loan 2	390,266		390,266		—		390,266		—
Total debt	$	392,738	$	393,205	$	—	$	393,205	$	—

	September 29, 2018
	Carrying Value		Fair Value		Level 1		Level 2		Level 3
Debt component of tangible equity units 1	$	7,290	$	8,626	$	—	$	8,626	$	—
Tranche B term loan 2	391,416		395,330		—		395,330		—
Total debt	$	398,706	$	403,956	$	—	$	403,956	$	—

¹  The fair value of the 8.75% tangible equity units (TEUs) is based on the most recently quoted price for the outstanding securities, adjusted for any known significant deviations in value. The estimated fair value of these long-term obligations is not necessarily indicative of the amount that would be realized in a current market exchange. See Note 13 for additional information on the TEUs.

²  The fair value of the tranche B term loan is based on the most recently quoted market price for the outstanding debt instrument, adjusted for any known significant deviations in value. The estimated fair value of the debt obligation is not necessarily indicative of the amount that would be realized in a current market exchange. See Note 9 for additional information on debt instruments.

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Derivative Instruments and Hedging Activities (Tables)

6 Months Ended

Mar. 30, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Fair Value of Outstanding Designated and Undesignated Derivative Assets and Liabilities

The fair value of our outstanding designated and undesignated derivative assets and liabilities are reported in the Consolidated Balance Sheets as follows: 

	March 30, 2019
	Prepaid Expenses and Other Current Assets		Other Accrued Liabilities
Designated hedge derivatives
Cash flow derivatives	$	314	$	78
Interest rate swaps	3,684		—
Total designated hedge derivatives	3,998		78
Undesignated hedge derivatives
Balance sheet derivatives	97		—
Total hedge derivatives	$	4,095	$	78

	September 29, 2018
	Prepaid Expenses and Other Current Assets		Other Accrued Liabilities
Designated hedge derivatives
Cash flow derivatives	$	989	$	173
Interest rate swaps	7,411		—
Total designated hedge derivatives	8,400		173
Undesignated hedge derivatives
Balance sheet derivatives	91		—
Total hedge derivatives	$	8,491	$	173

Reconciliation of the Net Fair Value of Designated Hedge Derivatives

A reconciliation of the net fair value of designated hedge derivatives subject to master netting arrangements that are recorded in the Consolidated Balance Sheets to the net fair value that could have been reported in the Consolidated Balance Sheets are as follows: 

	Gross Recognized Amount		Gross Offset Amount		Net Amount Presented		Derivatives Subject to Offset			Cash Collateral Received		Net Amount
March 30, 2019
Assets	$	3,998	$	—	$	3,998	$	(78	)	$	—	$	3,920
Liabilities	78		—		78		(78		)	—		—
September 29, 2018
Assets	$	8,400	$	—	$	8,400	$	(173	)	$	—	$	8,227
Liabilities	173		—		173		(173		)	—		—

Pretax Amounts Recognized in Accumulated Other Comprehensive Income on Currency Contracts

The pretax amounts recognized in AOCI on currency exchange contracts, including (gains) losses reclassified into earnings in the Consolidated Statements of Income and gains (losses) recognized in other comprehensive income (loss) (OCI), are as follows:

	Three Months Ended						Six Months Ended
	March 30, 2019			March 31, 2018			March 30, 2019			March 31, 2018
Beginning unrealized net gain (loss) in AOCI	$	214		$	(444	)	$	672		$	(443	)
Net (gain) loss reclassified into revenue	(16		)	1,146			(601		)	1,304
Net gain (loss) recognized in OCI	(6		)	(1,794		)	121			(1,953		)
Ending unrealized net gain (loss) in AOCI	$	192		$	(1,092	)	$	192		$	(1,092	)

Pretax Amounts Recognized in AOCI on Interest Rate Swaps

The pretax amounts recognized in AOCI on interest rate swaps, including (gains) losses reclassified into earnings in the Consolidated Statements of Income and gains (losses) recognized in OCI, are as follows:

	Three Months Ended						Six Months Ended
	March 30, 2019			March 31, 2018			March 30, 2019			March 31, 2018
Beginning unrealized net gain (loss) in AOCI	$	4,889		$	5,027		$	7,411		$	3,499
Net (gain) loss reclassified into interest expense	(709		)	(220		)	(1,293		)	(239		)
Net gain (loss) recognized in OCI	(496		)	2,118			(2,434		)	3,665
Ending unrealized net gain (loss) in AOCI	$	3,684		$	6,925		$	3,684		$	6,925

Net Gains (Losses) Recognized in Income for Foreign Exchange Balance Sheet Derivative Contracts

The net gain (loss) recognized in the Consolidated Statements of Income on foreign exchange balance sheet derivative contracts is as follows:

	Three Months Ended						Six Months Ended
	March 30, 2019			March 31, 2018			March 30, 2019			March 31, 2018
Net gain (loss) recognized in other income (expense), net	$	(395	)	$	(848	)	$	(388	)	$	(1,027	)

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Financing (Tables)

6 Months Ended

Mar. 30, 2019

Debt Disclosure [Abstract]

Schedule of Long-term Debt Instruments

Long-term debt consists of the following:

	March 30, 2019			September 29, 2018
Long-term debt
Tranche B term loan, 1.00% amortizing per year, maturing July 5, 2023	$	390,266		$	391,416
Revolving credit facility, non-current portion, expiring July 5, 2022	80,391			—
Tangible equity units, 8.75% coupon, maturing July 1, 2019 1	2,472			7,290
Capital lease obligations	1,709			2,000
Total long-term debt	474,838			400,706
Less: Unamortized underwriting discounts, commissions and other expenses	(6,862		)	(8,623		)
Less: Current maturities of tranche B term loan debt 2, 3	(28,600		)	(28,600		)
Less: Current maturities of TEU debt 2	(2,472		)	(7,290		)
Less: Current maturities of capital lease obligations 2	(560		)	(553		)
Total long-term debt, less current maturities, net	$	436,344		$	355,640

¹  See Note 13 for additional information on our TEUs issued in the third quarter of fiscal year 2016.

²  In addition to the current maturities above, current maturities of long-term debt, net in the Consolidated Balance Sheets includes the current portion of unamortized underwriting discounts, commissions and other expenses of $3,556 and $3,705 as of March 30, 2019 and September 29, 2018, respectively.

³  As of March 30, 2019 and September 29, 2018, current maturities of tranche B term loan consist of the 1% annual payment and the calculated or estimated required annual Excess Cash Flow payment as defined below, as well as planned prepayments.

Schedule of Derivative Instruments

The interest rate swap will be reduced to the following notional amounts over the next three years:

	Notional Amount
October 3, 2019	$	180,000
October 3, 2020	125,000
April 3, 2021	—

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Employee Benefit Plans (Tables)

6 Months Ended

Mar. 30, 2019

Retirement Benefits [Abstract]

Schedule of Costs for the Retirement Benefit Plan

Net periodic benefit cost for our defined benefit pension plan includes the following components:

	Three Months Ended						Six Months Ended
	March 30, 2019			March 31, 2018			March 30, 2019			March 31, 2018
Service cost	$	321		$	331		$	643		$	649
Interest cost	155			165			310			324
Expected return on plan assets	(321		)	(328		)	(643		)	(643		)
Net amortization and deferral	137			137			274			267
Net periodic benefit cost	$	292		$	305		$	584		$	597

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Shareholders' Equity (Tables)

6 Months Ended

Mar. 30, 2019

Equity [Abstract]

Schedule of Tangible Equity Units

The aggregate values assigned upon issuance to each component of the TEUs, based on the relative fair value of the respective components, were as follows:

	Equity Component			Debt Component			Total
Fair value price per TEU 1	$	76.19		$	23.81		$	100.00
Gross proceeds	$	87,614		$	27,386		$	115,000
Less: Underwriting discounts and commissions	(2,628		)	(822		)	(3,450		)
Less: Other expenses 2	(475		)	(149		)	(624		)
Issuance of TEUs, net	$	84,511		$	26,415		$	110,926

¹  The fair value price allocation between equity and debt for each TEU was determined using a discounted cash flow model.

²  Other expenses include direct and incremental costs related to the issuance of the TEUs.

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Earnings Per Share (Tables)

6 Months Ended

Mar. 30, 2019

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

Basic and diluted earnings per share are calculated as follows:

	Three Months Ended				Six Months Ended
	March 30, 2019		March 31, 2018		March 30, 2019		March 31, 2018
Net income	$	14,160	$	8,438	$	24,661	$	41,589
Weighted average common shares outstanding	19,251		19,150		19,234		19,137
Effect of dilutive securities
Stock-based compensation	190		123		159		121
Weighted average dilutive common shares outstanding	19,441		19,273		19,393		19,258
Earnings per share
Basic	$	0.74	$	0.44	$	1.28	$	2.17
Diluted	0.73		0.44		1.27		2.16

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Other Comprehensive Income (Loss) (Tables)

6 Months Ended

Mar. 30, 2019

Equity [Abstract]

Schedule of Changes in Each Component of Accumulated Other Comprehensive Income

Income tax expense or benefit allocated to each component of other comprehensive income (loss) is as follows:

	Three Months Ended									Six Months Ended
	March 30, 2019
	Pre-tax			Tax			Net			Pretax			Tax			Net
Foreign currency translation gain (loss) adjustments	$	(1,168	)	$	—		$	(1,168	)	$	(2,671	)	$	—		$	(2,671	)
Derivative instruments
Unrealized net gain (loss)	(502		)	110			(392		)	(2,313		)	505			(1,808		)
Net (gain) loss reclassified to earnings	(725		)	158			(567		)	(1,894		)	413			(1,481		)
Defined benefit pension plan
Unrealized net gain (loss)	1,374			(415		)	959			(839		)	253			(586		)
Net (gain) loss reclassified to earnings	137			(42		)	95			274			(83		)	191
Currency exchange rate gain (loss)	146			—			146			261			—			261
Other comprehensive income (loss)	$	(738	)	$	(189	)	$	(927	)	$	(7,182	)	$	1,088		$	(6,094	)

	Three Months Ended									Six Months Ended
	March 31, 2018
	Pre-tax			Tax			Net			Pretax			Tax			Net
Foreign currency translation gain (loss) adjustments	$	5,172		$	—		$	5,172		$	7,671		$	—		$	7,671
Derivative instruments
Unrealized net gain (loss)	324			(84		)	240			1,713			(443		)	1,270
Net (gain) loss reclassified to earnings	926			(239		)	687			1,065			(275		)	790
Defined benefit pension plan
Unrealized net gain (loss)	(918		)	277			(641		)	(388		)	117			(271		)
Net (gain) loss reclassified to earnings	137			(42		)	95			267			(81		)	186
Currency exchange rate gain (loss)	(181		)	—			(181		)	(268		)	—			(268		)
Other comprehensive income (loss)	$	5,460		$	(88	)	$	5,372		$	10,060		$	(682	)	$	9,378

The changes in the net-of-tax balances of each component of AOCI are as follows:

	Three Months Ended												Six Months Ended
	March 30, 2019
	Adjustments												Adjustments
	Foreign Currency Translation			Unrealized Derivative Instrument			Defined Benefit Pension Plan			Total			Foreign Currency Translation			Unrealized Derivative Instrument			Defined Benefit Pension Plan			Total
Beginning balance	$	269		$	3,990		$	(7,950	)	$	(3,691	)	$	1,772		$	6,320		$	(6,616	)	$	1,476
Other comprehensive net gain (loss) reclassifications	(1,168		)	(392		)	1,105			(455		)	(2,671		)	(1,808		)	(325		)	(4,804		)
Net (gain) loss reclassified to earnings	—			(567		)	95			(472		)	—			(1,481		)	191			(1,290		)
Other comprehensive income (loss)	(1,168		)	(959		)	1,200			(927		)	(2,671		)	(3,289		)	(134		)	(6,094		)
Ending balance	$	(899	)	$	3,031		$	(6,750	)	$	(4,618	)	$	(899	)	$	3,031		$	(6,750	)	$	(4,618	)

	Three Months Ended									Six Months Ended
	March 31, 2018
	Adjustments									Adjustments
	Foreign Currency Translation		Unrealized Derivative Instrument		Defined Benefit Pension Plan			Total		Foreign Currency Translation		Unrealized Derivative Instrument		Defined Benefit Pension Plan			Total
Beginning balance	$	6,445	$	3,086	$	(6,078	)	$	3,453	$	3,946	$	1,953	$	(6,452	)	$	(553	)
Other comprehensive net gain (loss) reclassifications	5,172		240		(822		)	4,590		7,671		1,270		(539		)	8,402
Net (gain) loss reclassified to earnings	—		687		95			782		—		790		186			976
Other comprehensive income (loss)	5,172		927		(727		)	5,372		7,671		2,060		(353		)	9,378
Ending balance	$	11,617	$	4,013	$	(6,805	)	$	8,825	$	11,617	$	4,013	$	(6,805	)	$	8,825

Schedule of Amounts Reclassified Out of Accumulated Other Comprehensive Income

The effect on certain line items in the Consolidated Statements of Income of amounts reclassified out of AOCI are as follows:

	Three Months Ended						Six Months Ended						Affected Line Item in the Consolidated Statements of Income
	March 30, 2019			March 31, 2018			March 30, 2019			March 31, 2018
Derivative instruments
Currency exchange contracts gain (loss)	$	16		$	(1,146	)	$	601		$	(1,304	)	Revenue
Interest rate swap contracts gain (loss)	709			220			1,293			239			Interest expense, net
Income tax benefit (expense)	(158		)	239			(413		)	275			Income tax provision (benefit)
Total net gain (loss) on derivative instruments	567			(687		)	1,481			(790		)	Net income
Defined benefit pension plan 1
Actuarial loss	—			(75		)	—			(146		)	Cost of sales
Actuarial loss	—			(38		)	—			(75		)	Selling and marketing
Actuarial loss	—			(24		)	—			(46		)	General and administrative
Actuarial loss	(137		)	—			(274		)	—			Other income (expense), net
Total actuarial loss	(137		)	(137		)	(274		)	(267		)	Income before income taxes
Income tax benefit	42			42			83			81			Income tax provision (benefit)
Total net loss on pension plan	(95		)	(95		)	(191		)	(186		)	Net income
Total net of tax reclassifications out of AOCI included in net income	$	472		$	(782	)	$	1,290		$	(976	)

¹  Change in classification of actuarial loss on defined benefit pension plan related to the adoption of ASU No. 2017-07 in fiscal year 2019. See Note 2 for additional information on the impact of adoption.

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Business Segment Information (Tables)

6 Months Ended

Mar. 30, 2019

Segment Reporting [Abstract]

Financial Information by Reportable Segment

Financial information by reportable segment is as follows:

	Three Months Ended						Six Months Ended
	March 30, 2019			March 31, 2018			March 30, 2019			March 31, 2018
Revenue
Test & Simulation	$	151,032		$	110,238		$	276,592		$	228,441
Sensors	82,375			81,542			160,325			157,501
Intersegment eliminations	(361		)	(457		)	(690		)	(457		)
Total revenue	$	233,046		$	191,323		$	436,227		$	385,485
Income from operations
Test & Simulation	$	12,684		$	3,295		$	20,015		$	8,904
Sensors	11,504			13,337			22,138			24,225
Intersegment eliminations	(14		)	(22		)	(13		)	(22		)
Total income from operations	$	24,174		$	16,610		$	42,140		$	33,107

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Restructuring and Related Costs (Tables)

6 Months Ended

Mar. 30, 2019

Restructuring and Related Activities [Abstract]

Restructuring and Related Costs

Restructuring expense accruals included in payroll and related costs in the Consolidated Balance Sheets for the above restructuring actions are as follows:

	2018			2017
	Test & Simulation			Test & Simulation
Balance, September 29, 2018	$	1,051		$	2,933
Restructuring expense	—			130
Payments	(1,012		)	(3,058		)
Other adjustments	(39		)	(5		)
Currency translation	—			—
Balance, March 30, 2019	$	—		$	—

Restructuring expenses included in our Consolidated Statements of Income for the above restructuring actions are as follows:

	Three Months Ended				Six Months Ended
	March 30, 2019		March 31, 2018		March 30, 2019		March 31, 2018
	Test & Simulation		Test & Simulation		Test & Simulation		Test & Simulation
Cost of sales	$	—	$	304	$	117	$	424
Selling and marketing	—		—		—		—
General and administrative	—		42		13		177
Total restructuring expense	$	—	$	346	$	130	$	601

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Business Acquisitions (Tables)

6 Months Ended

Mar. 30, 2019

Business Combinations [Abstract]

Fair Values Assigned to the Assets and Liabilities Assumed

The following table summarizes the preliminary fair value measurement of the assets acquired and liabilities assumed, net of cash acquired, as of the date of acquisition:

	Fair Value			Finite-Lived Intangible Asset Lives (Years)
Asset (Liability)
Accounts receivable	$	4,651
Unbilled accounts receivable	1,518
Inventories	11,063
Prepaid expenses and other current assets	123
Property and equipment	672
Intangible assets
Customer lists	21,595			15
Trademarks and trade names	5,926			15
Technology	12,650			15
Other intangible assets	3,761			4
Other long-term assets	60
Purchased goodwill	32,523
Accounts payable	(3,657		)
Accrued payroll and related costs	(1,328		)
Advance payments from customers	(4,315		)
Accrued income taxes	(290		)
Other accrued liabilities	(127		)
Deferred income taxes	(6,278		)
Net assets acquired	$	78,547
Supplemental information
Consideration paid at closing	$	79,772
Post-closing purchase price adjustment	515
Less: Cash acquired	(1,740		)
Purchase price, net of cash acquired	$	78,547

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Recently Issued Accounting Pronouncements Recently Issued Accounting Pronouncements (Narrative) (Details) $ in Thousands	Sep. 30, 2018 USD ($)
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cumulative effect of new accounting principle in period of adoption	$ 6,227
Accounting Standards Update 2014-09
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cumulative effect of new accounting principle in period of adoption	$ 6,227

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Revenue (Narrative) (Details) $ in Thousands	6 Months Ended
	Mar. 30, 2019 reporting_unit	Sep. 30, 2018 USD ($)
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Cumulative effect of new accounting principle in period of adoption		$ (6,227)
Number of reportable segments | reporting_unit	2
Accounting Standards Update 2014-09
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Cumulative effect of new accounting principle in period of adoption		$ (6,227)
Minimum | Sensors
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Operating cycle	1 month
Maximum | Test & Simulation
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Operating cycle	12 months
Maximum | Sensors
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Operating cycle	3 months

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Revenue (Impact of ASC 606 Adoption) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 30, 2019	Mar. 31, 2018	Mar. 30, 2019	Mar. 31, 2018	Sep. 30, 2018	Sep. 29, 2018
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Revenue	$ 233,046	$ 191,323	$ 436,227	$ 385,485
Cost of sales	145,696	116,498	270,572	232,732
Gross profit	87,350	74,825	165,655	152,753
Selling and marketing	33,395	30,597	65,484	62,625
Income tax provision (benefit)	2,916	1,738	3,612	(21,943)
Net income	14,160	$ 8,438	24,661	$ 41,589
Assets
Accounts receivable, net	117,349		117,349		$ 117,762	$ 122,243
Unbilled accounts receivable, net	71,175		71,175		62,472	70,474
Inventories, net	179,071		179,071		155,836	139,109
Prepaid expenses and other current assets	32,307		32,307		29,223	24,572
Other long-term assets	3,900		3,900		3,323	2,263
Deferred income taxes	4,058		4,058		3,892	3,249
Liabilities and Shareholders' Equity
Advance payments from customers	102,033		102,033		93,699	80,131
Accrued income taxes	5,709		5,709			4,928
Other accrued liabilities	34,494		34,494		16,642	19,146
Deferred income taxes	50,659		50,659		45,254	46,482
Other long-term liabilities	12,508		12,508		11,883	4,894
Accumulated other comprehensive income (loss)	(4,618)		(4,618)			1,476
Retained earnings	308,279		308,279		$ 294,358	300,585
Calculated under Revenue Guidance in Effect before Topic 606
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Revenue	224,665		423,103
Cost of sales	140,312		260,732
Gross profit	84,353		162,371
Selling and marketing	33,239		65,491
Income tax provision (benefit)	2,422		3,037
Net income	11,813		21,945
Assets
Accounts receivable, net	121,678		121,678
Unbilled accounts receivable, net	79,819		79,819
Inventories, net	160,914		160,914
Prepaid expenses and other current assets	28,216		28,216
Other long-term assets	2,794		2,794
Deferred income taxes	3,417		3,417
Liabilities and Shareholders' Equity
Advance payments from customers	100,589		100,589
Accrued income taxes	5,861		5,861
Other accrued liabilities	20,855		20,855
Deferred income taxes	51,886		51,886
Other long-term liabilities	11,748		11,748
Accumulated other comprehensive income (loss)	(4,687)		(4,687)
Retained earnings	311,790		311,790
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Revenue	8,381		13,124
Cost of sales	5,384		9,840
Gross profit	2,997		3,284
Selling and marketing	156		(7)
Income tax provision (benefit)	494		575
Net income	2,347		2,716
Assets
Accounts receivable, net	(4,329)		(4,329)			(4,481)
Unbilled accounts receivable, net	(8,644)		(8,644)			(8,002)
Inventories, net	18,157		18,157			16,727
Prepaid expenses and other current assets	4,091		4,091			4,651
Other long-term assets	1,106		1,106			1,060
Deferred income taxes	641		641			643
Liabilities and Shareholders' Equity
Advance payments from customers	1,444		1,444			13,568
Accrued income taxes	(152)		(152)
Other accrued liabilities	13,639		13,639			(2,504)
Deferred income taxes	(1,227)		(1,227)			(1,228)
Other long-term liabilities	760		760			6,989
Accumulated other comprehensive income (loss)	69		69
Retained earnings	$ (3,511)		$ (3,511)			$ (6,227)

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Revenue (Disaggregation) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 30, 2019	Mar. 31, 2018	Mar. 30, 2019	Mar. 31, 2018
Disaggregation of Revenue [Line Items]
Revenue	$ 233,046	$ 191,323	$ 436,227	$ 385,485
Americas
Disaggregation of Revenue [Line Items]
Revenue	90,013		166,902
Europe
Disaggregation of Revenue [Line Items]
Revenue	57,189		111,164
Asia
Disaggregation of Revenue [Line Items]
Revenue	85,844		158,161
Point-in-time
Disaggregation of Revenue [Line Items]
Revenue	180,374		337,614
Over time
Disaggregation of Revenue [Line Items]
Revenue	52,672		98,613
Product
Disaggregation of Revenue [Line Items]
Revenue	206,690	165,453	381,769	334,694
Service
Disaggregation of Revenue [Line Items]
Revenue	26,356	25,870	54,458	50,791
Intersegment Eliminations
Disaggregation of Revenue [Line Items]
Revenue	(361)	(457)	(690)	(457)
Intersegment Eliminations | Americas
Disaggregation of Revenue [Line Items]
Revenue	(361)		(690)
Intersegment Eliminations | Europe
Disaggregation of Revenue [Line Items]
Revenue	0		0
Intersegment Eliminations | Asia
Disaggregation of Revenue [Line Items]
Revenue	0		0
Intersegment Eliminations | Point-in-time
Disaggregation of Revenue [Line Items]
Revenue	(361)		(690)
Intersegment Eliminations | Over time
Disaggregation of Revenue [Line Items]
Revenue	0		0
Intersegment Eliminations | Product
Disaggregation of Revenue [Line Items]
Revenue	(361)		(690)
Intersegment Eliminations | Service
Disaggregation of Revenue [Line Items]
Revenue	0		0
Operating Segments | Test & Simulation
Disaggregation of Revenue [Line Items]
Revenue	151,032	110,238	276,592	228,441
Operating Segments | Test & Simulation | Americas
Disaggregation of Revenue [Line Items]
Revenue	51,399		90,888
Operating Segments | Test & Simulation | Europe
Disaggregation of Revenue [Line Items]
Revenue	29,536		58,163
Operating Segments | Test & Simulation | Asia
Disaggregation of Revenue [Line Items]
Revenue	70,097		127,541
Operating Segments | Test & Simulation | Point-in-time
Disaggregation of Revenue [Line Items]
Revenue	98,360		177,979
Operating Segments | Test & Simulation | Over time
Disaggregation of Revenue [Line Items]
Revenue	52,672		98,613
Operating Segments | Test & Simulation | Product
Disaggregation of Revenue [Line Items]
Revenue	126,511		225,419
Operating Segments | Test & Simulation | Service
Disaggregation of Revenue [Line Items]
Revenue	24,521		51,173
Operating Segments | Sensors
Disaggregation of Revenue [Line Items]
Revenue	82,375	$ 81,542	160,325	$ 157,501
Operating Segments | Sensors | Americas
Disaggregation of Revenue [Line Items]
Revenue	38,975		76,704
Operating Segments | Sensors | Europe
Disaggregation of Revenue [Line Items]
Revenue	27,653		53,001
Operating Segments | Sensors | Asia
Disaggregation of Revenue [Line Items]
Revenue	15,747		30,620
Operating Segments | Sensors | Point-in-time
Disaggregation of Revenue [Line Items]
Revenue	82,375		160,325
Operating Segments | Sensors | Over time
Disaggregation of Revenue [Line Items]
Revenue	0		0
Operating Segments | Sensors | Product
Disaggregation of Revenue [Line Items]
Revenue	80,540		157,040
Operating Segments | Sensors | Service
Disaggregation of Revenue [Line Items]
Revenue	$ 1,835		$ 3,285

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Revenue (Contract Assets and Liabilities) (Details) - USD ($) $ in Thousands	Mar. 30, 2019	Sep. 30, 2018	Sep. 29, 2018
Revenue from Contract with Customer [Abstract]
Contract assets	$ 71,175	$ 62,472	$ 70,474
Contract liabilities	$ 109,763		$ 80,131

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Revenue (Significant Changes in Contact Assets and Liabilities) (Details) $ in Thousands	6 Months Ended
	Mar. 30, 2019 USD ($)
Change in Contract with Customer, Asset [Abstract]
Balance, September 29, 2018	$ 70,474
Cumulative transition adjustment upon adoption	(8,002)
Changes in estimated stage of completion	69,857
Transfers to accounts receivable, net	(62,265)
Acquisitions	1,518
Other	(407)
Balance, March 30, 2019	71,175
Change in Contract with Customer, Liability [Abstract]
Balance, September 29, 2018	80,131
Cumulative transition adjustment upon adoption	20,557
Revenue recognized included in balance at beginning of period	(58,947)
Increases due to payments received, excluding amounts recognized as revenue during period	64,121
Acquisitions	4,777
Other	(876)
Balance, March 30, 2019	$ 109,763

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Revenue (Remaining Performance Obligations) (Details) $ in Thousands	6 Months Ended
	Mar. 30, 2019 USD ($)
Revenue from Contract with Customer [Abstract]
Revenue, remaining performance obligation, amount	$ 224,000
Revenue, remaining performance obligation, optional exemption, nature	We do not disclose the value of remaining performance obligations for contracts with an original expected duration of one year or less.
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-03-31
Revenue from Contract with Customer [Abstract]
Revenue, remaining performance obligation, percentage	74.00%
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, expected timing of satisfaction, period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-03-31
Revenue from Contract with Customer [Abstract]
Revenue, remaining performance obligation, percentage	24.00%
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue, remaining performance obligation, expected timing of satisfaction, period	1 year

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Revenue (Pre-contract Costs) (Details) $ in Thousands	3 Months Ended	6 Months Ended
	Mar. 30, 2019 USD ($)	Mar. 30, 2019 USD ($)
Revenue from Contract with Customer [Abstract]
Capitalized pre-contract costs	$ 5,936	$ 5,936
Capitalized pre-contract costs, related expense	$ 1,249	$ 3,869

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Inventories (Details) - USD ($) $ in Thousands	Mar. 30, 2019	Sep. 30, 2018	Sep. 29, 2018
Inventory Disclosure [Abstract]
Components, assemblies and parts	$ 105,669		$ 93,020
Customer projects in various stages of completion	62,922		35,675
Finished goods	10,480		10,414
Total inventories, net	$ 179,071	$ 155,836	$ 139,109

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Warranty Obligations (Warranty Provisions and Claims) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 30, 2019	Mar. 31, 2018	Mar. 30, 2019	Mar. 31, 2018
Product Warranty Liability [Line Items]
Number of previous months historical warranty claims used to calculate warranty expense percentage			12 months
Movement in Standard Product Warranty Accrual [Roll Forward]
Beginning accrued warranty costs	$ 5,229	$ 5,832	$ 5,418	$ 6,018
Warranty claims	(1,167)	(1,410)	(2,446)	(2,585)
Warranty provisions	697	1,742	1,791	2,727
Adjustments to preexisting warranties	(15)	14	(15)	14
Currency translation	(3)	13	(7)	17
Ending accrued warranty costs	$ 4,741	$ 6,191	$ 4,741	$ 6,191
Minimum
Product Warranty Liability [Line Items]
Life of warranty obligations for sales that include installation services in months			12 months
Product obligation period from date of purchase in months			12 months
Maximum
Product Warranty Liability [Line Items]
Life of warranty obligations for sales that include installation services in months			24 months
Product obligation period from date of purchase in months			24 months

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Capital Assets (Property and Equipment) (Details) - USD ($) $ in Thousands	Mar. 30, 2019	Sep. 29, 2018
Property, Plant and Equipment [Line Items]
Total property and equipment	$ 274,434	$ 268,223
Less: Accumulated depreciation	(186,308)	(177,954)
Total property and equipment, net	88,126	90,269
Land and improvements
Property, Plant and Equipment [Line Items]
Total property and equipment	2,881	2,881
Buildings and improvements
Property, Plant and Equipment [Line Items]
Total property and equipment	58,692	58,880
Machinery and equipment
Property, Plant and Equipment [Line Items]
Total property and equipment	210,065	203,647
Assets held under capital leases
Property, Plant and Equipment [Line Items]
Total property and equipment	$ 2,796	$ 2,815

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Capital Assets (Goodwill) (Details) $ in Thousands	6 Months Ended
	Mar. 30, 2019 USD ($)
Goodwill [Roll Forward]
Balance, September 29, 2018	$ 369,275
Acquisitions	34,387
Currency translation	(237)
Balance, March 30, 2019	403,425
Test & Simulation
Goodwill [Roll Forward]
Balance, September 29, 2018	24,631
Acquisitions	34,387
Currency translation	(208)
Balance, March 30, 2019	58,810
Sensors
Goodwill [Roll Forward]
Balance, September 29, 2018	344,644
Acquisitions	0
Currency translation	(29)
Balance, March 30, 2019	$ 344,615

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Capital Assets (Intangible Assets) (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Mar. 30, 2019	Sep. 29, 2018
Finite-Lived Intangible Assets [Line Items]
Total intangible assets	$ 350,533	$ 301,217
Accumulated Amortization	(63,432)	(55,079)
Intangible assets, net	$ 287,101	$ 246,138
Weighted Average Useful Life (in Years)	14 years 6 months	14 years 10 months
Software development costs
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 35,297	$ 31,251
Accumulated Amortization	(15,859)	(15,860)
Net Carrying Value	$ 19,438	$ 15,391
Weighted Average Useful Life (in Years)	6 years 4 months	6 years 5 months 15 days
Technology and patents
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 59,055	$ 46,405
Accumulated Amortization	(14,110)	(12,188)
Net Carrying Value	$ 44,945	$ 34,217
Weighted Average Useful Life (in Years)	14 years 10 months 24 days	14 years 10 months 24 days
Trademarks and trade names
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 12,697	$ 6,754
Accumulated Amortization	(3,442)	(2,987)
Net Carrying Value	$ 9,255	$ 3,767
Weighted Average Useful Life (in Years)	20 years 7 months 25 days	25 years 5 months
Customer lists
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 179,919	$ 156,971
Accumulated Amortization	(28,831)	(23,314)
Net Carrying Value	$ 151,088	$ 133,657
Weighted Average Useful Life (in Years)	15 years 8 months	15 years 9 months 18 days
Land-use rights
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 2,360	$ 2,336
Accumulated Amortization	(858)	(730)
Net Carrying Value	$ 1,502	$ 1,606
Weighted Average Useful Life (in Years)	26 years 2 months	26 years
Other
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 3,705
Accumulated Amortization	(332)
Net Carrying Value	$ 3,373
Weighted Average Useful Life (in Years)	4 years
Software Development Not Yet Placed In Service
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 19,438	$ 15,391
Trade names
Finite-Lived Intangible Assets [Line Items]
Indefinite-lived intangible assets	$ 57,500	$ 57,500

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Capital Assets (Amortization Expense) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 30, 2019	Mar. 31, 2018	Mar. 30, 2019	Mar. 31, 2018
Capital Assets [Abstract]
Amortization expense	$ 4,403	$ 3,456	$ 8,219	$ 6,935

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Capital Assets (Estimated Future Amortization Expense on Intangible Assets) (Details) $ in Thousands	Mar. 30, 2019 USD ($)
Capital Assets [Abstract]
Remainder of 2019	$ 8,695
2020	17,108
2021	18,164
2022	19,036
2023	18,139
2024	17,770
Thereafter	$ 130,689

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Fair Value Measurements (Details) - USD ($) $ in Thousands	Mar. 30, 2019	Sep. 29, 2018
Assets
Currency contracts	$ 411	$ 1,080
Total assets	4,095	8,491
Liabilities
Currency contracts	78	173
Total liabilities	78	173
Level 1
Assets
Currency contracts	0	0
Total assets	0	0
Liabilities
Currency contracts	0	0
Total liabilities	0	0
Level 2
Assets
Currency contracts	411	1,080
Total assets	4,095	8,491
Liabilities
Currency contracts	78	173
Total liabilities	78	173
Level 3
Assets
Currency contracts	0	0
Total assets	0	0
Liabilities
Currency contracts	0	0
Total liabilities	0	0
Interest rate swaps
Assets
Interest rate swaps	3,684	7,411
Interest rate swaps | Level 1
Assets
Interest rate swaps	0	0
Interest rate swaps | Level 2
Assets
Interest rate swaps	3,684	7,411
Interest rate swaps | Level 3
Assets
Interest rate swaps	$ 0	$ 0

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Fair Value Measurements (Schedule of Fair Value Debt Instruments) (Details) - USD ($) $ in Thousands	Mar. 30, 2019	Sep. 29, 2018	Jul. 02, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term debt, fair value	$ 393,205	$ 403,956
Debt component of tangible equity units
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term debt, fair value	$ 2,939	8,626
Interest rate, percentage	8.75%		8.75%
Tranche B term loan
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term debt, fair value	$ 390,266	395,330
Carrying Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term debt, fair value	392,738	398,706
Carrying Value | Debt component of tangible equity units
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term debt, fair value	2,472	7,290
Carrying Value | Tranche B term loan
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term debt, fair value	390,266	391,416
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term debt, fair value	0	0
Level 1 | Debt component of tangible equity units
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term debt, fair value	0	0
Level 1 | Tranche B term loan
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term debt, fair value	0	0
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term debt, fair value	393,205	403,956
Level 2 | Debt component of tangible equity units
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term debt, fair value	2,939	8,626
Level 2 | Tranche B term loan
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term debt, fair value	390,266	395,330
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term debt, fair value	0	0
Level 3 | Debt component of tangible equity units
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term debt, fair value	0	0
Level 3 | Tranche B term loan
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Long-term debt, fair value	$ 0	$ 0

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Derivative Instruments and Hedging Activities (Fair Value of Outstanding Designated and Undesignated Derivative Assets and Liabilities) (Details) - USD ($) $ in Thousands	Mar. 30, 2019	Sep. 29, 2018
Prepaid Expenses and Other Current Assets
Derivatives, Fair Value [Line Items]
Derivative assets	$ 4,095	$ 8,491
Other Accrued Liabilities
Derivatives, Fair Value [Line Items]
Derivative liabilities	78	173
Cash flow derivatives
Derivatives, Fair Value [Line Items]
Derivative assets	314	989
Designated hedge derivatives | Prepaid Expenses and Other Current Assets
Derivatives, Fair Value [Line Items]
Derivative assets	3,998	8,400
Designated hedge derivatives | Other Accrued Liabilities
Derivatives, Fair Value [Line Items]
Derivative liabilities	78	173
Designated hedge derivatives | Cash flow derivatives | Prepaid Expenses and Other Current Assets
Derivatives, Fair Value [Line Items]
Derivative assets	314	989
Designated hedge derivatives | Cash flow derivatives | Other Accrued Liabilities
Derivatives, Fair Value [Line Items]
Derivative liabilities	78	173
Designated hedge derivatives | Interest rate swaps | Prepaid Expenses and Other Current Assets
Derivatives, Fair Value [Line Items]
Derivative assets	3,684	7,411
Designated hedge derivatives | Interest rate swaps | Other Accrued Liabilities
Derivatives, Fair Value [Line Items]
Derivative liabilities	0	0
Hedge derivatives not designated | Prepaid Expenses and Other Current Assets
Derivatives, Fair Value [Line Items]
Derivative assets	97	91
Hedge derivatives not designated | Other Accrued Liabilities
Derivatives, Fair Value [Line Items]
Derivative liabilities	$ 0	$ 0

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Derivative Instruments and Hedging Activities (Reconciliation of the Net Fair Value of Designated Hedge Derivatives) (Details) - Currency exchange contracts gain (loss) - USD ($) $ in Thousands	Mar. 30, 2019	Sep. 29, 2018
Assets
Gross Recognized Amount	$ 3,998	$ 8,400
Gross Offset Amount	0	0
Net Amount Presented	3,998	8,400
Derivatives Subject to Offset	(78)	(173)
Cash Collateral Received	0	0
Net Amount	3,920	8,227
Liabilities
Gross Recognized Amount	78	173
Gross Offset Amount	0	0
Net Amount Presented	78	173
Derivatives Subject to Offset	(78)	(173)
Cash Collateral Received	0	0
Net Amount	$ 0	$ 0

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Derivative Instruments and Hedging Activities (Narrative) (Details) - USD ($)	6 Months Ended
	Mar. 30, 2019	Sep. 29, 2018
Derivative [Line Items]
Gross notional amount of foreign exchange derivatives outstanding	$ 26,576,000	$ 39,856,000
Net notional amount of foreign exchange derivatives	24,840,000	29,315,000
Gain (loss) projected to be reclassified from Accumulated Other Comprehensive Income into earnings, within twelve months	$ 193,000
Maximum remaining maturity of any forward or optional contract derivatives (in years)	1 year 7 months 15 days
Cash flow derivatives
Derivative [Line Items]
Foreign currency exchange contract asset (liability), net value	$ 236,000	816,000
Foreign currency exchange contract, net asset market value	314,000	989,000
Foreign currency exchange contract, net liability market value	78,000	173,000
Interest rate swaps
Derivative [Line Items]
Gain (loss) projected to be reclassified from Accumulated Other Comprehensive Income into earnings, within twelve months	2,378,000
Notional amount	$ 225,000,000
Fixed interest rate	1.256%
Interest rate swaps	$ 3,684,000	7,411,000
Foreign exchange balance sheet derivative contracts
Derivative [Line Items]
Gross notional amount of foreign exchange derivatives outstanding	108,957,000	90,816,000
Net notional amount of foreign exchange derivatives	34,789,000	28,271,000
Foreign currency exchange contract asset (liability), net value	$ 97,000	$ 91,000

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Derivative Instruments and Hedging Activities (Pretax Amounts Recognized in Accumulated Other Comprehensive Income on Currency Contracts) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 30, 2019	Mar. 31, 2018	Mar. 30, 2019	Mar. 31, 2018
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Net (gain) loss reclassified into revenue	$ (567)	$ 687	$ (1,481)	$ 790
Net gain (loss) recognized in OCI	(392)	240	(1,808)	1,270
Currency exchange contracts gain (loss)
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning unrealized net gain (loss) in AOCI	214	(444)	672	(443)
Net (gain) loss reclassified into revenue	(16)	1,146	(601)	1,304
Net gain (loss) recognized in OCI	(6)	(1,794)	121	(1,953)
Ending unrealized net gain (loss) in AOCI	192	(1,092)	192	(1,092)
Interest rate swaps
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Beginning unrealized net gain (loss) in AOCI	4,889	5,027	7,411	3,499
Net (gain) loss reclassified into revenue	(709)	(220)	(1,293)	(239)
Net gain (loss) recognized in OCI	(496)	2,118	(2,434)	3,665
Ending unrealized net gain (loss) in AOCI	$ 3,684	$ 6,925	$ 3,684	$ 6,925

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Derivative Instruments and Hedging Activities (Net Gains (Losses) Recognized in Income for Derivative Contracts) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 30, 2019	Mar. 31, 2018	Mar. 30, 2019	Mar. 31, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Net gain (loss) recognized in other income (expense), net	$ (395)	$ (848)	$ (388)	$ (1,027)

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Financing (Schedule of Long term Debt) (Details) - USD ($) $ in Thousands	Mar. 30, 2019	Sep. 29, 2018	Jul. 02, 2016
Debt Instrument [Line Items]
Total long-term debt	$ 474,838	$ 400,706
Less: Unamortized underwriting discounts, commissions and other expenses	(6,862)	(8,623)
Total long-term debt, less current maturities, net	436,344	355,640
Current portion of unamortized underwriting discounts, commissions and other expenses	3,556	3,705
Term loan B facility
Debt Instrument [Line Items]
Total long-term debt	390,266	391,416
Current maturities	$ (28,600)	(28,600)
Principal amount, amortization percentage	1.00%
Revolving credit facility
Debt Instrument [Line Items]
Total long-term debt	$ 80,391	0
Tangible equity units senior amortizing note
Debt Instrument [Line Items]
Total long-term debt	2,472	7,290
Current maturities	$ (2,472)	(7,290)
Interest rate, percentage	8.75%		8.75%
Capital lease obligations
Debt Instrument [Line Items]
Capital lease obligations	$ 1,709	2,000
Less: Current maturities of capital lease obligations	$ (560)	$ (553)

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Financing (Narrative) (Details) - USD ($)	3 Months Ended		6 Months Ended
	Mar. 30, 2019	Mar. 31, 2018	Mar. 30, 2019	Mar. 31, 2018	Dec. 29, 2018	Sep. 29, 2018
Line of Credit Facility [Line Items]
Percent added to Adjusted LIBOR rate for one month interest period			1.00%
Commitment fees incurred on credit facility	$ 52,000	$ 77,000	$ 124,000	$ 156,000
Annual excess cash flow percentage per credit agreement			50.00%
Net cash proceed percentage per credit agreement			100.00%
Alternate base rate
Line of Credit Facility [Line Items]
Effective interest rate applicable to outstanding credit facility (in hundredths)	2.25%		2.25%
Minimum
Line of Credit Facility [Line Items]
Line of credit facility, commitment fees payable, percent			0.25%
Minimum | Alternate base rate
Line of Credit Facility [Line Items]
Effective interest rate applicable to outstanding credit facility (in hundredths)	1.75%		1.75%
Maximum
Line of Credit Facility [Line Items]
Line of credit facility, commitment fees payable, percent			0.40%
Revolving credit facility
Line of Credit Facility [Line Items]
Line of credit facility, borrowing capacity	$ 150,000,000		$ 150,000,000
Maximum borrowing capacity	150,000,000		150,000,000		$ 150,000,000	$ 120,000,000
Debt issuance costs	541,000		541,000
Short-term borrowings	80,391,000		80,391,000			0
Letters of credit outstanding, amount	19,976,000		19,976,000			20,448,000
Line of credit facility, remaining borrowing capacity	49,633,000		$ 49,633,000			$ 99,552,000
Revolving credit facility | London interbank offered rate (LIBOR)
Line of Credit Facility [Line Items]
Basis spread on variable rate			0.50%
Term loan B facility
Line of Credit Facility [Line Items]
Line of credit facility, borrowing capacity	$ 460,000,000		$ 460,000,000
Principal amount, amortization percentage	1.00%		1.00%
Weighted average interest rate	5.65%		5.65%
Eurocurrency term loans
Line of Credit Facility [Line Items]
Effective interest rate applicable to outstanding credit facility (in hundredths)	3.25%		3.25%
Eurocurrency term loans | London interbank offered rate (LIBOR)
Line of Credit Facility [Line Items]
Effective interest rate applicable to outstanding credit facility (in hundredths)	2.49%		2.49%
Eurocurrency term loans | Minimum | London interbank offered rate (LIBOR)
Line of Credit Facility [Line Items]
Effective interest rate applicable to outstanding credit facility (in hundredths)	0.75%		0.75%
Eurocurrency borrowing | London interbank offered rate (LIBOR)
Line of Credit Facility [Line Items]
Effective interest rate applicable to outstanding credit facility (in hundredths)	3.00%		3.00%

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Financing (Schedule of Interest Rate Swap) (Details)	Oct. 20, 2016 USD ($)
Debt Disclosure [Abstract]
October 3, 2019	$ 180,000,000
October 3, 2020	125,000,000
April 3, 2021	$ 0

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Stock-Based Compensation (Narrative) (Details) - $ / shares	6 Months Ended
	Mar. 30, 2019	Mar. 31, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares available for grant (in shares)	958,000
Options granted (in shares)	231,000	0
Weighted average grant date fair value (in dollars per share)	$ 9.91
Restricted stock units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average grant date fair value (in dollars per share)	46.45	$ 48.61
Performance shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average grant date fair value (in dollars per share)	$ 46.45	48.61
2012 ESPP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares available for grant (in shares)	599,000
Weighted average grant date fair value (in dollars per share)	$ 34.11	$ 44.03
Stock issued during period (in shares)	16,000	12,000
Directors, Officers and Employees | Restricted stock units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted issued (in shares)	124,000	24,000
Directors, Officers and Employees | Performance shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted issued (in shares)	40,000	0

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Employee Benefit Plans (Schedule of Costs for the Retirement Benefit Plan) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 30, 2019	Mar. 31, 2018	Mar. 30, 2019	Mar. 31, 2018
Retirement Benefits [Abstract]
Service cost	$ 321	$ 331	$ 643	$ 649
Interest cost	155	165	310	324
Expected return on plan assets	(321)	(328)	(643)	(643)
Net amortization and deferral	137	137	274	267
Net periodic benefit cost	$ 292	$ 305	$ 584	$ 597

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Employee Benefit Plans (Narrative) (Details)	3 Months Ended		6 Months Ended
	Mar. 30, 2019	Mar. 31, 2018	Mar. 30, 2019	Mar. 31, 2018
Retirement Benefits [Abstract]
Expected rate of return on plan assets	5.50%	5.50%	5.50%	5.50%

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Income Taxes (Details) - USD ($) $ in Thousands	6 Months Ended		12 Months Ended
	Mar. 30, 2019	Mar. 31, 2018	Sep. 29, 2018
Income Tax Disclosure [Abstract]
Federal statutory income tax rate, percent			24.50%
Income tax discrete benefits	$ 1,293	$ 25,378	$ 25,008
Change in enacted tax rate	(1,297)	32,264	31,647
Tax Cuts and Jobs Act of 2017, other measurement period adjustment, income tax expense	4
Tax Cuts And Jobs Act Of 2017, potential future income tax expense (benefit)	1,297
Tax Cuts and Jobs Act of 2017, income tax expense, accounting complete, mandatory deemed repatriation tax		$ 6,886	6,639
Unrecognized tax benefits	6,985		6,158
Unrecognized tax benefits that would favorably impact the effective tax rate on continuing operations	$ 4,510		$ 3,740

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Shareholders' Equity (Tangible Equity Units Narrative) (Details) Tangible_Equity_Unit in Thousands, $ in Thousands	3 Months Ended
	Jul. 02, 2016 USD ($) Tangible_Equity_Unit $ / per_TEU
Debt Instrument [Line Items]
Issued tangible equity units (in tangible equity units) | Tangible_Equity_Unit	1,150
Tangible equity units, issued, net | $	$ 110,926
Fair value price per TEU (in dollars per tangible equity unit)	100
Tangible equity units senior amortizing note
Debt Instrument [Line Items]
Fair value price per TEU (in dollars per tangible equity unit)	100
Amortization period of costs	3 years

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Shareholders' Equity (Schedule of TEU Components) (Details) $ in Thousands	3 Months Ended
	Jul. 02, 2016 USD ($) $ / per_TEU
Debt Instrument [Line Items]
Fair value price per TEU (in dollars per tangible equity unit) | $ / per_TEU	100
Gross proceeds	$ 115,000
Less: Underwriting discounts and commissions	(3,450)
Less: Other expenses	(624)
Issuance of TEUs, net	$ 110,926
Equity Component
Debt Instrument [Line Items]
Fair value price per TEU (in dollars per tangible equity unit) | $ / per_TEU	76.19
Gross proceeds	$ 87,614
Less: Underwriting discounts and commissions	(2,628)
Less: Other expenses	(475)
Issuance of TEUs, net	$ 84,511
Debt Component
Debt Instrument [Line Items]
Fair value price per TEU (in dollars per tangible equity unit) | $ / per_TEU	23.81
Gross proceeds	$ 27,386
Less: Underwriting discounts and commissions	(822)
Less: Other expenses	(149)
Issuance of TEUs, net	$ 26,415

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Shareholders' Equity (Equity Component) (Details) Tangible_Equity_Unit in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2017 Tangible_Equity_Unit shares	Jul. 02, 2016 trade_day $ / shares $ / per_TEU shares	Mar. 30, 2019 trade_day Tangible_Equity_Unit shares	Sep. 29, 2018 Tangible_Equity_Unit
Debt Instrument [Line Items]
Fair value price per TEU (in dollars per tangible equity unit) | $ / per_TEU		100
Equity Component
Debt Instrument [Line Items]
Fair value price per TEU (in dollars per tangible equity unit) | $ / per_TEU		76.19
Threshold consecutive trading days | trade_day		20	20
Threshold trading days | trade_day		23
Tangible equity units amount of units settled | Tangible_Equity_Unit	473
Shares of common stock issued (in shares)	939,000
Tangible equity units prepaid stock purchase contracts, outstanding units | Tangible_Equity_Unit			677	677
Equity Component | Common Class A
Debt Instrument [Line Items]
Threshold stock price (in dollars per share) | $ / shares		$ 50.40
Debt instrument convertible reference price (in dollars per share) | $ / shares		$ 42.00
Equity Component | Minimum | Common Class A
Debt Instrument [Line Items]
Convertible, number of equity instruments per contract (in shares)	1.9841	1.9841	1.9841
Equity Component | Maximum | Common Class A
Debt Instrument [Line Items]
Convertible, number of equity instruments per contract (in shares)		2.3810	2.3810

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Shareholders' Equity (Debt Component) (Details)	3 Months Ended
	Jul. 02, 2016 USD ($) $ / per_TEU	Mar. 30, 2019
Debt Instrument [Line Items]
Fair value price per TEU (in dollars per tangible equity unit)	100
Tangible equity units senior amortizing note
Debt Instrument [Line Items]
Principal amount | $	$ 27,386,000
Principal amount per note (in dollars per TEU)	23.8136
Periodic payment per note, after initial payment | $	$ 2.1875
Interest rate, percentage	8.75%	8.75%
Fair value price per TEU (in dollars per tangible equity unit)	100

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Shareholders' Equity (Earnings per Common Share) (Details) - Common Class A - shares	3 Months Ended		6 Months Ended
	Sep. 30, 2017	Jul. 02, 2016	Mar. 30, 2019
Tangible equity units senior amortizing note
Class of Stock [Line Items]
Incremental common shares attributable to dilutive effect of conversion of debt securities (in shares)		0.3969
Equity Component | Minimum
Class of Stock [Line Items]
Convertible, number of equity instruments per contract (in shares)	1.9841	1.9841	1.9841
Equity Component | Maximum
Class of Stock [Line Items]
Convertible, number of equity instruments per contract (in shares)		2.3810	2.3810

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Shareholders' Equity (Capped Call Transaction) (Details) $ / shares in Units, $ in Thousands		3 Months Ended	6 Months Ended		12 Months Ended
	Jun. 13, 2018 shares $ / shares	Sep. 30, 2017 shares	Mar. 30, 2019 $ / shares shares	Mar. 31, 2018 shares	Oct. 01, 2016 USD ($) shares $ / shares
Class of Stock [Line Items]
Capped calls settled, percentage		10.00%
Settlement of capped calls (in shares)		12,000	0	0
Capped Calls
Class of Stock [Line Items]
Additional paid in capital, capped calls | $					$ 7,935
Capped calls initial equivalent shares (in shares)					2,282,000
Capped Calls | Minimum
Class of Stock [Line Items]
Option indexed to issuer's equity, strike price (in dollars per share) | $ / shares					$ 50.40
Capped Calls | Maximum
Class of Stock [Line Items]
Option indexed to issuer's equity, strike price (in dollars per share) | $ / shares					$ 58.80
Capped Call Agreements
Class of Stock [Line Items]
Capped calls outstanding equivalent shares (in shares)	2,054,000
Capped Call Agreements | Minimum
Class of Stock [Line Items]
Option indexed to issuer's equity, strike price (in dollars per share) | $ / shares	$ 50.40		$ 50.40
Capped Call Agreements | Maximum
Class of Stock [Line Items]
Option indexed to issuer's equity, strike price (in dollars per share) | $ / shares	$ 57.97		$ 57.97
Capped Call Agreements | Common Stock | Minimum
Class of Stock [Line Items]
Common stock to be received and retired under capped calls (in shares)			0
Capped Call Agreements | Common Stock | Maximum
Class of Stock [Line Items]
Common stock to be received and retired under capped calls (in shares)			268,000

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Earnings Per Share (Narrative) (Details)	3 Months Ended				6 Months Ended
	Mar. 30, 2019 shares	Mar. 31, 2018 shares	Sep. 30, 2017 shares	Jul. 02, 2016 trade_day shares	Mar. 30, 2019 trade_day shares	Mar. 31, 2018 shares
Class of Stock [Line Items]
Antidilutive securities excluded from computation of earnings per share, amount (in shares)	865,000	482,000			791,000	489,000
Equity Component
Class of Stock [Line Items]
Threshold consecutive trading days | trade_day				20	20
Equity Component | Minimum | Common Class A
Class of Stock [Line Items]
Convertible, number of equity instruments per contract (in shares)			1.9841	1.9841	1.9841
Equity Component | Maximum | Common Class A
Class of Stock [Line Items]
Convertible, number of equity instruments per contract (in shares)				2.3810	2.3810

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Earnings Per Share (Schedule of Earnings per Share, Basic and Diluted) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 30, 2019	Mar. 31, 2018	Mar. 30, 2019	Mar. 31, 2018
Earnings Per Share [Abstract]
Net income	$ 14,160	$ 8,438	$ 24,661	$ 41,589
Weighted average common shares outstanding (in shares)	19,251	19,150	19,234	19,137
Effect of dilutive securities
Stock-based compensation (in shares)	190	123	159	121
Weighted average dilutive common shares outstanding (in shares)	19,441	19,273	19,393	19,258
Earnings per share
Basic (in dollars per share)	$ 0.74	$ 0.44	$ 1.28	$ 2.17
Diluted (in dollars per share)	$ 0.73	$ 0.44	$ 1.27	$ 2.16

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Other Comprehensive Income (Loss) (Schedule of Other Comprehensive Income (Loss)) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 30, 2019	Mar. 31, 2018	Mar. 30, 2019	Mar. 31, 2018
Other comprehensive income (loss)
Pre-tax
Other comprehensive income (loss), before tax	$ (738)	$ 5,460	$ (7,182)	$ 10,060
Tax
Other comprehensive income (loss), tax	(189)	(88)	1,088	(682)
Net
Other comprehensive income (loss), net of tax	(927)	5,372	(6,094)	9,378
Foreign Currency Translation
Pre-tax
Other comprehensive income (loss), before reclassifications, pretax	(1,168)	5,172	(2,671)	7,671
Net
Other comprehensive income (loss), before reclassifications, net of tax	(1,168)	5,172	(2,671)	7,671
Unrealized Derivative Instrument
Pre-tax
Other comprehensive income (loss), before reclassifications, pretax	(502)	324	(2,313)	1,713
Net (gain) loss reclassified to earnings	(725)	926	(1,894)	1,065
Tax
Other comprehensive income (loss) before reclassifications, tax	110	(84)	505	(443)
Net (gain) loss reclassified to earnings, tax	158	(239)	413	(275)
Net
Other comprehensive income (loss), before reclassifications, net of tax	(392)	240	(1,808)	1,270
Net (gain) loss reclassified to earnings, net of tax	(567)	687	(1,481)	790
Defined Benefit Pension Plan
Pre-tax
Other comprehensive income (loss), before reclassifications, pretax	1,374	(918)	(839)	(388)
Net (gain) loss reclassified to earnings	137	137	274	267
Tax
Other comprehensive income (loss) before reclassifications, tax	(415)	277	253	117
Net (gain) loss reclassified to earnings, tax	(42)	(42)	(83)	(81)
Net
Other comprehensive income (loss), before reclassifications, net of tax	959	(641)	(586)	(271)
Net (gain) loss reclassified to earnings, net of tax	95	95	191	186
Currency exchange rate gain (loss)
Pre-tax
Other comprehensive income (loss), before reclassifications, pretax	146	(181)	261	(268)
Net
Other comprehensive income (loss), before reclassifications, net of tax	$ 146	$ (181)	$ 261	$ (268)

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Other Comprehensive Income (Loss) (Schedule of Changes in each Component of AOCI) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 30, 2019	Mar. 31, 2018	Mar. 30, 2019	Mar. 31, 2018
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at the beginning of the year	$ 473,335	$ 461,580	$ 477,932	$ 428,777
Other comprehensive net gain (loss) reclassifications	(455)	4,590	(4,804)	8,402
Net (gain) loss reclassified to earnings	(472)	782	(1,290)	976
Other comprehensive income (loss)	(927)	5,372	(6,094)	9,378
Balance at the end of the year	485,054	472,230	485,054	472,230
Other comprehensive income (loss)
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at the beginning of the year	(3,691)	3,453	1,476	(553)
Balance at the end of the year	(4,618)	8,825	(4,618)	8,825
Foreign Currency Translation
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at the beginning of the year	269	6,445	1,772	3,946
Other comprehensive net gain (loss) reclassifications	(1,168)	5,172	(2,671)	7,671
Net (gain) loss reclassified to earnings	0	0	0	0
Other comprehensive income (loss)	(1,168)	5,172	(2,671)	7,671
Balance at the end of the year	(899)	11,617	(899)	11,617
Unrealized Derivative Instrument
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at the beginning of the year	3,990	3,086	6,320	1,953
Other comprehensive net gain (loss) reclassifications	(392)	240	(1,808)	1,270
Net (gain) loss reclassified to earnings	(567)	687	(1,481)	790
Other comprehensive income (loss)	(959)	927	(3,289)	2,060
Balance at the end of the year	3,031	4,013	3,031	4,013
Defined Benefit Pension Plan
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at the beginning of the year	(7,950)	(6,078)	(6,616)	(6,452)
Other comprehensive net gain (loss) reclassifications	1,105	(822)	(325)	(539)
Net (gain) loss reclassified to earnings	95	95	191	186
Other comprehensive income (loss)	1,200	(727)	(134)	(353)
Balance at the end of the year	$ (6,750)	$ (6,805)	$ (6,750)	$ (6,805)

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Other Comprehensive Income (Loss) (Schedule of Amounts Reclassified out of AOCI) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 30, 2019	Mar. 31, 2018	Mar. 30, 2019	Mar. 31, 2018
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Revenue	$ 233,046	$ 191,323	$ 436,227	$ 385,485
Interest expense, net	(7,368)	(6,708)	(14,186)	(13,512)
Provision for income taxes	(2,916)	(1,738)	(3,612)	21,943
Cost of sales	(145,696)	(116,498)	(270,572)	(232,732)
Selling and marketing	(33,395)	(30,597)	(65,484)	(62,625)
General and administrative	(22,105)	(18,992)	(43,183)	(39,554)
Other income (expense), net	270	274	319	51
Income before income taxes	17,076	10,176	28,273	19,646
Net income	14,160	8,438	24,661	41,589
Reclassification Out Of Accumulated Other Comprehensive Income
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net income	472	(782)	1,290	(976)
Reclassification Out Of Accumulated Other Comprehensive Income | Unrealized Derivative Instrument
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Provision for income taxes	(158)	239	(413)	275
Net income	567	(687)	1,481	(790)
Reclassification Out Of Accumulated Other Comprehensive Income | Defined Benefit Pension Plan
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Provision for income taxes	42	42	83	81
Cost of sales	0	(75)	0	(146)
Selling and marketing	0	(38)	0	(75)
General and administrative	0	(24)	0	(46)
Other income (expense), net	(137)	0	(274)	0
Income before income taxes	(137)	(137)	(274)	(267)
Net income	(95)	(95)	(191)	(186)
Reclassification Out Of Accumulated Other Comprehensive Income | Currency exchange contracts gain (loss) | Unrealized Derivative Instrument
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Revenue	16	(1,146)	601	(1,304)
Reclassification Out Of Accumulated Other Comprehensive Income | Interest rate swaps | Unrealized Derivative Instrument
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Interest expense, net	$ 709	$ 220	$ 1,293	$ 239

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Business Segment Information (Financial Information by Reportable Segment) (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 30, 2019 USD ($)	Mar. 31, 2018 USD ($)	Mar. 30, 2019 USD ($) segment	Mar. 31, 2018 USD ($)
Segment Reporting Information [Line Items]
Number of operating segments | segment			2
Total revenue	$ 233,046	$ 191,323	$ 436,227	$ 385,485
Total income from operations	24,174	16,610	42,140	33,107
Intersegment Eliminations
Segment Reporting Information [Line Items]
Total revenue	(361)	(457)	(690)	(457)
Total income from operations	(14)	(22)	(13)	(22)
Operating Segments | Test & Simulation
Segment Reporting Information [Line Items]
Total revenue	151,032	110,238	276,592	228,441
Total income from operations	12,684	3,295	20,015	8,904
Operating Segments | Sensors
Segment Reporting Information [Line Items]
Total revenue	82,375	81,542	160,325	157,501
Total income from operations	$ 11,504	$ 13,337	$ 22,138	$ 24,225

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Restructuring and Related Costs (Narrative) (Details) - USD ($)	3 Months Ended		6 Months Ended
	Mar. 30, 2019	Mar. 31, 2018	Mar. 30, 2019	Mar. 31, 2018
2018 Restructuring Plan
Restructuring Cost and Reserve [Line Items]
Restructuring charges	$ 0	$ 0	$ 0	$ 0
2017 Restructuring Plan
Restructuring Cost and Reserve [Line Items]
Cost incurred to date	4,871,000		4,871,000
Employee Severance | 2018 Restructuring Plan
Restructuring Cost and Reserve [Line Items]
Cost incurred to date	880,000		880,000
Employee Severance | 2017 Restructuring Plan
Restructuring Cost and Reserve [Line Items]
Restructuring charges	0	321,000	130,000	414,000
Cost incurred to date	4,579,000		4,579,000
Facility Closing | 2017 Restructuring Plan
Restructuring Cost and Reserve [Line Items]
Restructuring charges		$ 25,000		$ 187,000
Cost incurred to date	$ 292,000		$ 292,000

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Restructuring and Related Costs (Summary of Restructuring Costs) (Details) - Test & Simulation - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 30, 2019	Mar. 31, 2018	Mar. 30, 2019	Mar. 31, 2018
Restructuring Cost and Reserve [Line Items]
Restructuring charges	$ 0	$ 346	$ 130	$ 601
Cost of sales
Restructuring Cost and Reserve [Line Items]
Restructuring charges	0	304	117	424
Selling and marketing
Restructuring Cost and Reserve [Line Items]
Restructuring charges	0	0	0	0
General and administrative
Restructuring Cost and Reserve [Line Items]
Restructuring charges	$ 0	$ 42	$ 13	$ 177

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Restructuring and Related Costs Restructuring and Related Costs (Restructuring Reserve Rollforward) (Details) - USD ($)	3 Months Ended		6 Months Ended
	Mar. 30, 2019	Mar. 31, 2018	Mar. 30, 2019	Mar. 31, 2018
2018 Restructuring Plan
Restructuring Reserve [Roll Forward]
Restructuring expense	$ 0	$ 0	$ 0	$ 0
Test & Simulation
Restructuring Reserve [Roll Forward]
Restructuring expense	0	$ 346,000	130,000	$ 601,000
Test & Simulation | 2018 Restructuring Plan
Restructuring Reserve [Roll Forward]
Balance, September 29, 2018			1,051,000
Restructuring expense			0
Payments			(1,012,000)
Other adjustments			(39,000)
Currency translation			0
Balance, March 30, 2019	0		0
Test & Simulation | 2017 Restructuring Plan
Restructuring Reserve [Roll Forward]
Balance, September 29, 2018			2,933,000
Restructuring expense			130,000
Payments			(3,058,000)
Other adjustments			(5,000)
Currency translation			0
Balance, March 30, 2019	$ 0		$ 0

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Business Acquisitions (Narrative) (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
	Nov. 21, 2018	Mar. 30, 2019	Mar. 31, 2018	Mar. 30, 2019	Mar. 31, 2018
Business Acquisition [Line Items]
Revenue		$ 233,046	$ 191,323	$ 436,227	$ 385,485
E2M Technologies B.V.
Business Acquisition [Line Items]
Cash paid at closing	$ 80,287
Revenue		$ 10,138		13,659
Acquisition costs				$ 1,035
Intangible assets	$ 43,932

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Business Acquisitions (Fair Values Assigned to the Assets and Liabilities Assumed) (Details) - USD ($) $ in Thousands		6 Months Ended		12 Months Ended
	Nov. 21, 2018	Mar. 30, 2019	Mar. 31, 2018	Sep. 29, 2018
Asset (Liability)
Goodwill		$ 403,425		$ 369,275
Supplemental information
Total estimated purchase price, net of cash acquired		$ 81,826	$ 0
Finite-Lived Intangible Asset Lives (Years)		14 years 6 months		14 years 10 months
E2M Technologies B.V.
Asset (Liability)
Accounts receivable	$ 4,651
Unbilled accounts receivable	1,518
Inventories	11,063
Prepaid expenses and other current assets	123
Property and equipment	672
Intangible assets	43,932
Other long-term assets	60
Goodwill	32,523
Accounts payable	(3,657)
Accrued payroll and related costs	(1,328)
Advance payments from customers	(4,315)
Accrued income taxes	(290)
Other accrued liabilities	(127)
Deferred income taxes	(6,278)
Net assets acquired	78,547
Supplemental information
Cash paid at closing	79,772
Business Combination, Post-closing Purchase Price Adjustment	515
Less: Cash acquired	(1,740)
Total estimated purchase price, net of cash acquired	78,547
Customer lists
Supplemental information
Finite-Lived Intangible Asset Lives (Years)		15 years 8 months		15 years 9 months 18 days
Customer lists | E2M Technologies B.V.
Asset (Liability)
Intangible assets	21,595
Supplemental information
Finite-Lived Intangible Asset Lives (Years)		15 years
Trademarks and trade names
Supplemental information
Finite-Lived Intangible Asset Lives (Years)		20 years 7 months 25 days		25 years 5 months
Trademarks and trade names | E2M Technologies B.V.
Asset (Liability)
Intangible assets	5,926
Supplemental information
Finite-Lived Intangible Asset Lives (Years)		15 years
Technology | E2M Technologies B.V.
Asset (Liability)
Intangible assets	12,650
Supplemental information
Finite-Lived Intangible Asset Lives (Years)		15 years
Other Intangible Assets
Supplemental information
Finite-Lived Intangible Asset Lives (Years)		4 years
Other Intangible Assets | E2M Technologies B.V.
Asset (Liability)
Intangible assets	$ 3,761
Supplemental information
Finite-Lived Intangible Asset Lives (Years)		4 years

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Label	Element	Value
Additional Paid-in Capital [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	$ (33,000)
Retained Earnings [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	33,000
Cumulative Effect of New Accounting Principle in Period of Adoption	us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption	$ (6,227,000)