-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DFZCkNGmwbh4AqBkf2pyt1H5lBNQvKIvZSfpUgZCaRpniDpTJvGoh5bVjZaKee5b setdz3zAQ68HyyMe05ZvDw== 0000897101-00-000113.txt : 20000215 0000897101-00-000113.hdr.sgml : 20000215 ACCESSION NUMBER: 0000897101-00-000113 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000214 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MTS SYSTEMS CORP CENTRAL INDEX KEY: 0000068709 STANDARD INDUSTRIAL CLASSIFICATION: MEASURING & CONTROLLING DEVICES, NEC [3829] IRS NUMBER: 410908057 STATE OF INCORPORATION: MN FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-02382 FILM NUMBER: 538881 BUSINESS ADDRESS: STREET 1: 14000 TECHNOLOGY DR CITY: EDEN PRAIRIE STATE: MN ZIP: 55344-2290 BUSINESS PHONE: 6129374000 MAIL ADDRESS: STREET 1: 14000 TECHNOLOGY DR CITY: EDEN PRAIRIE STATE: MN ZIP: 55344 FORMER COMPANY: FORMER CONFORMED NAME: RESEARCH INC DATE OF NAME CHANGE: 19670216 10-Q 1 - -------------------------------------------------------------------------------- United States SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 for the Period ended December 31, 1999 or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from ______ to ______ -------------------- Commission File Number 0-2382 MTS SYSTEMS CORPORATION (Exact name of registrant as specified in its charter) MINNESOTA 41-0908057 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 14000 Technology Drive, Eden Prairie, Minnesota 55344 (Address of principal executive offices) (Zip Code) Registrants telephone number: (612)-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. __X__ Yes _____ No The number of shares outstanding of the Registrant's common stock as of January 31, 2000 was 20,877,287 shares. - -------------------------------------------------------------------------------- MTS SYSTEMS CORPORATION AND SUBSIDIARIES FIRST QUARTER REPORT ON FORM 10-Q FOR THE THREE MONTHS ENDED DECEMBER 31, 1999 TABLE OF CONTENTS Page No. -------- PART I - FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets December 31, 1999 and September 30, 1999 2 Consolidated Statements of Income Three months ended December 31, 1999 and 1998 3 Consolidated Statements of Cash Flows Three months ended December 31, 1999 and 1998 4 Notes to Consolidated Financial Statements 5-7 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition 8-10 Item 3. Qualitative and Quantitative Disclosures About Market Risks 10 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 11 Signatures 12 1 MTS SYSTEMS CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) (expressed in thousands, except share data)
DECEMBER 31 SEPTEMBER 30 ASSETS 1999 1999 ------------ ------------ Current Assets: Cash and cash equivalents $ 22,669 $ 18,083 Accounts receivable 109,326 102,011 Unbilled contracts and retainage receivable 31,135 38,628 Inventories- Customer jobs-in-process 3,977 3,625 Components, assemblies and parts 53,190 53,323 Prepaid expenses 8,543 7,981 ------------ ------------ Total current assets 228,840 223,651 ------------ ------------ Property and Equipment: Land 3,247 3,247 Buildings and improvements 44,077 42,332 Machinery and equipment 102,998 101,140 Accumulated depreciation (75,569) (73,086) ------------ ------------ Total property and equipment, net 74,753 73,633 ------------ ------------ Other assets 34,506 36,063 ------------ ------------ Total assets $ 338,099 $ 333,347 ============ ============ LIABILITIES AND SHAREHOLDERS' INVESTMENT Current Liabilities: Notes payable to banks $ 30,453 $ 10,071 Current maturities of long-term debt 1,002 1,308 Accounts payable 15,646 21,062 Accrued compensation and benefits 26,286 28,662 Advance billings to customers 25,871 25,943 Other accrued liabilities 16,597 17,667 ------------ ------------ Total current liabilities 115,855 104,713 Deferred income taxes 5,380 5,517 Long-term debt, less current maturities 62,052 60,258 ------------ ------------ Commitments and contingencies Shareholders' Investment: Common stock, $.25 par; 64,000,000 shares authorized: 20,887,048 and 20,883,639 shares issued and outstanding 5,222 5,221 Additional paid-in capital 8,130 8,122 Retained earnings 140,322 147,615 Accumulated other comprehensive income 1,138 1,901 ------------ ------------ Total shareholders' investment 154,812 162,859 ------------ ------------ Total liabilites and shareholders' investment $ 338,099 $ 333,347 ============ ============
The accompanying notes to consolidated financial statements are an integral part of these statements 2 MTS SYSTEMS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (expressed in thousands, except per share data)
FOR THE THREE MONTHS ENDED DECEMBER 31 1999 1998 ----------- ----------- NET REVENUE $ 87,214 $ 96,142 COST OF REVENUE 64,428 58,428 ----------- ----------- Gross profit 22,786 37,714 OPERATING EXPENSES: Selling 15,123 15,604 General and administrative 6,944 6,749 Research and development 6,679 6,715 Restructuring -- 2,596 ----------- ----------- Total operating expenses 28,746 31,664 INCOME (LOSS) FROM OPERATIONS (5,960) 6,050 Interest expense 1,356 1,252 Interest income (118) (51) Other (income) and expense, net 2,023 (873) ----------- ----------- INCOME (LOSS) BEFORE INCOME TAXES (9,221) 5,722 PROVISION (BENEFIT) FOR INCOME TAXES (3,181) 1,996 ----------- ----------- NET INCOME (LOSS) $ (6,040) $ 3,726 =========== =========== BASIC INCOME (LOSS) PER SHARE $ (0.29) $ 0.18 DILUTED INCOME (LOSS) PER SHARE $ (0.29) $ 0.18
The accompanying notes to consolidated financial statements are an integral part of these statements 3 MTS SYSTEMS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (expressed in thousands)
FOR THE THREE MONTHS ENDED DECEMBER 31 1999 1998 ----------- ----------- OPERATING ACTIVITIES Net income(loss) $ (6,040) $ 3,726 Adjustments to reconcile net income(loss) to net cash provided by (used in) operating activities: Depreciation and amortization 3,785 3,196 Deferred income taxes 8 37 Changes in operating assets and liabilities: Receivables, including accounts, unbilled contracts and retainages (1,863) 2,283 Inventories (744) 1,394 Prepaid expenses (747) (4,112) Advance billings to customers 429 10,945 Accounts payable and accrued liabilities (7,585) (4,717) ----------- ----------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (12,757) 12,752 ----------- ----------- INVESTING ACTIVITIES Property and equipment, net (4,952) (4,858) Other assets 494 273 ----------- ----------- NET CASH USED IN INVESTING ACTIVITIES (4,458) (4,585) ----------- ----------- FINANCING ACTIVITIES Net borrowings (payments) on notes payable 20,351 (4,111) Proceeds from issuance of long-term debt 2,123 -- Payments on long-term borrowings (179) (249) Cash dividends (1,253) (1,116) Proceeds from exercise of stock options 9 200 ----------- ----------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 21,051 (5,276) ----------- ----------- EFFECT OF EXCHANGE RATE CHANGES ON CASH 750 (288) ----------- ----------- NET INCREASE IN CASH AND CASH EQUIVALENTS 4,586 2,603 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 18,083 12,589 ----------- ----------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 22,669 $ 15,192 =========== ===========
The accompanying notes to consolidated financial statements are an integral part of these statements 4 MTS SYSTEMS CORPORATION AND SUBSIDIARIES (UNAUDITED) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION Consolidation The consolidated financial statements include the accounts of MTS SYSTEMS CORPORATION and its wholly owned subsidiaries (the Company). All significant intercompany balances and transactions have been eliminated. The interim consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, all adjustments necessary for the fair presentation of such consolidated financial statements have been reflected in the interim periods presented. The significant accounting policies and certain financial information which are normally included in financial statements prepared in accordance with generally accepted accounting principles, but which are not required for interim reporting purposes, have been condensed or omitted. The accompanying consolidated financial statements of the Company should be read in conjunction with the consolidated financial statements and related notes included in the Company's Annual Report on Form 10-K. Reclassifications Certain amounts included in the consolidated financial statements have been reclassified in prior years to conform with the first quarter of fiscal 2000 financial statement presentation. These amounts had no effect on the previously reported shareholders' investment or net income. Future Accounting Pronouncements In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." The statement establishes accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded in the balance sheet as either an asset or liability measured at its fair value. The statement requires that changes in the derivative's fair value be recognized currently in earnings unless specific hedge accounting criteria are met. Special accounting for qualifying hedges allows a derivative's gains and losses to offset related results on the hedged item in the income statement and requires that a company must formally document, designate and assess the effectiveness of transactions that receive hedge accounting. SFAS No. 133 is effective for fiscal years beginning after June 15, 2000. The Company anticipates that the effect of adopting SFAS No. 133 will not have a material impact on the Company's financial statements. 5 2. NET INCOME (LOSS) PER SHARE Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the year. Diluted net income (loss) per share includes the dilutive effect of potential common shares. All stock options outstanding during the three months ended December 31, 1999 were antidilutive due to the net loss. A reconciliation of the weighted average common shares used in the computation of basic and dilutive net income (loss) per share is as follows: Three Months Ended DECEMBER 31 December 31 1999 1998 - -------------------------------------------------------------------------------- (expressed in thousands, except per share data) Weighted average common shares outstanding 20,880 20,672 Dilutive potential common shares -- 500 - -------------------------------------------------------------------------------- Total dilutive common shares 20,880 21,172 - -------------------------------------------------------------------------------- Basic net income (loss) per share $ (0.29) $ 0.18 Diluted net income (loss) per share $ (0.29) $ 0.18 ================================================================================ 3. RESTRUCTURING CHARGES In the first quarter of fiscal 1999, the Company took a series of actions to better align its organizational structure with market elements, improve operational performance and reduce costs. These actions resulted in a restructuring charge during the first quarter of fiscal year 1999 of $2.1 million ($1.5 million after tax, or $.07 per share). This charge relates principally to a workforce reduction and $0.3 million for other costs. Also in the first quarter of fiscal 1999, DSP Technology, Inc. announced its strategic decision to relocate its corporate headquarters and consolidate its Transportation Group operations in Ann Arbor, Michigan from Freemont, California. This decision resulted in a restructuring charge of $0.5 million ($0.3 million after tax or $.01 cents per share). This charge relates to employee severance cost of $0.3 million and $0.2 million in idle facility and winding down costs. Of the total restructuring charges taken in the first quarter of fiscal 1999, $0.1 million remains to be paid for severance related costs. In the fourth quarter of fiscal 1999, the Company identified actions necessary to rationalize certain of its business capacity. These actions resulted in a restructuring charge during the fourth quarter of fiscal 1999 of $3.1 million ($2.1 million after tax, or $.10 per share). This charge relates to employee severance costs of $2.8 million and $0.3 million of other costs. Of the total restructuring charges taken in the fourth quarter of fiscal 1999, $0.1 million has been paid for severance related costs. 4. COMPREHENSIVE INCOME Effective January 1, 1998, the Company adopted SFAS No. 130, "Reporting Comprehensive Income." This statement established standards for reporting and display of comprehensive income and its components. Comprehensive income reflects the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. For the Company, comprehensive income represents net income adjusted for foreign currency translation adjustments and unrealized loss on investment. Comprehensive income (loss) was ($6.8) million and $5.0 million for the three months ended December 31, 1999 and 1998, respectively. 6 5. BUSINESS SEGMENT INFORMATION The Company evaluated its business activities that are regularly reviewed by the Chief Executive Officer for which discrete financial information is available. As a result of this evaluation, the Company has determined that it has five operating segments: Vehicle Testing Systems, Material Testing Systems, Advanced Systems, Automation and Sensors. The Vehicle Testing Systems business manufactures and markets systems for vehicle and component manufacturers to aid in the acceleration of design development work and decrease the cost to manufacture their products. The Material Testing Systems business manufacturers and markets systems to aid their customers in product development and quality control to improve the design and manufacture of materials and products. The Advanced Systems business offers highly customized systems for simulation and testing. The Automation business manufactures and markets high performance products for challenging factory automation applications in a wide range of industries. The Sensor business manufactures and markets displacement and liquid level sensors used in various applications to monitor and automate industrial processes. The economic characteristics, nature of products and services, production processes, type or class of customer, method of distribution and regulatory environments are similar for the Vehicle Testing Systems, Material Testing Systems and Advanced Systems business segments. As a result of these similarities, these segments have been aggregated into one reportable segment called Mechanical Testing and Simulation (MT&S) for financial statement purposes. Also, the economic characteristics, nature of products and services, production processes, type or class of customer, method of distribution and regulatory environments are similar for the Automation and Sensor business segments. As a result, these segments have been aggregated into one reportable segment called Factory Automation (FA). The accounting policies of the business segments are the same as those described in Note 1. In evaluating the segment performance, management focuses on income (loss) from operations. This measurement excludes special charges (e.g. restructuring charges, acquisition expenses, etc.), interest expense, interest income, income tax expense and other non-operating income or expense. Corporate expenses are allocated to segments primarily on the basis of revenue. This allocation includes expenses for various support functions such as human resources, information technology and finance. Financial information by reportable segment follows: Three Months Ended December 31 1999 1998 ----------- ----------- (expressed in thousands) NET REVENUE BY SEGMENT: Mechanical Testing and Simulation $ 69,110 $ 76,844 Factory Automation 18,104 19,298 ----------- ----------- Total Net Revenue 87,214 96,142 INCOME (LOSS) FROM OPERATIONS BY SEGMENT: Mechanical Testing and Simulation: Before Restructuring (7,506) 6,766 Restructuring -- (2,395) ----------- ----------- Total Mechanical Testing and Simulation (7,506) 4,371 Factory Automation: Before Restructuring 1,546 1,880 Restructuring -- (201) ----------- ----------- Total Factory Automation 1,546 1,679 Total Income(Loss) from Operations $ (5,960) $ 6,050 =========== =========== 7 MTS SYSTEMS CORPORATION AND SUBSUBSIDIARIES (UNAUDITED) MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION NEW ORDERS AND BACKLOG New orders for the first quarter of fiscal 2000 increased to a record $103.3 million compared to $91.1 million, a 13.4% increase, when compared to the same period one year ago. The increase in total orders was seen in essentially all business units except the custom project area. Although orders increased significantly, much of the increase was in larger jobs, which require a longer revenue conversion cycle. Orders for the Mechanical Testing and Simulation (MT&S) segment increased 6.0% to $78.0 million from $73.6 million for the prior year. The increase in the MT&S segment came primarily from the Vehicles Testing Systems segment. The MT&S segment accounted for 75.5% of total orders compared to 80.8% one year ago. Orders for the Factory Automation segment (FA) increased 44.6% to $25.3 million from $17.5 million for the prior year. The FA sector accounted for 24.5% of total orders compared to 19.2% one year ago. The backlog of undelivered orders at December 31, 1999 was $163.0 million, an increase of 11.0% from September 30, 1999, but a decrease of 6.9% from December 31, 1998. RESULTS OF OPERATIONS NET REVENUE for the first quarter of fiscal 2000 was $87.2 million, a decrease of $8.9 million or 9.3% over the same three months of fiscal 1999. International content of revenue was 42.4% of total revenues compared to 42.9% for the first quarter ended December 31, 1999 and 1998 respectively. As expected, revenue levels were down in the first quarter due to slower order inflow in the last half of fiscal 1999. GROSS PROFIT for the first quarter of fiscal 2000 decreased 39.5% to $22.8 million compared to $37.7 million for the same period one year ago. Gross profit as a percentage of net revenue decreased to 26.1% from 39.2% for the three-month periods ended December 31, 1999 and 1998 respectively. The significant decrease in margins was a result of technical and scheduling issues related to two large fixed-fee custom projects, which caused the cost to complete estimates to be increased. SELLING EXPENSES decreased by 3.2% to $15.1 million compared to $15.6 million for the three months ended December 31, 1999 and 1998 respectively. Selling expense as a percentage of net revenue increased to 17.3% compared to 16.2% from the same period one year ago due to lower revenue levels. GENERAL AND ADMINISTRATIVE EXPENSES increased by 3.0% to $6.9 million compared to $6.7 million for the three months ended December 31, 1999 and 1998 respectively. General and administrative expense as a percentage of net revenue increased to 7.9% compared to 7.0% from the same period one year ago. RESEARCH AND DEVELOPMENT EXPENSES remained flat with a total expense level of $6.7 million for both the three months ended December 31, 1999 and 1998. Research and development expense as a percentage of net revenue increased to 7.7% compared to 7.0% from the same period one year ago due to lower revenue levels. INTEREST (INCOME) AND EXPENSE of $1.2 million for the first quarter of fiscal 2000 remained consistent with the three months ended December 31, 1998. Net interest expense as a percentage of revenue increased to 1.4% from 1.2% for the same period one year ago. 8 OTHER (INCOME) AND EXPENSE was $2.0 million compared to ($0.9) million for the three months ended December 31, 1999 and 1998 respectively. Other income and expense increased primarily due to currency losses of $1.5 million in the first quarter of 2000 as compared to a currency gain of ($0.8) in the first quarter of fiscal 1999. NET INCOME (LOSS) was ($6.0) million compared to $3.7 million for the three months ended December 31, 1999 and 1998 respectively. Net income as a percentage of revenue decreased to (6.9%) from 3.9% for the same period one year ago. The effective tax rate for the first quarter of fiscal 2000 decreased slightly to 34.5% as compared to 34.9% for the same period one year ago. See also Note 3 of Notes to Consolidated Financial Statements regarding discussion on restructuring charges. CAPITAL RESOURCES AND LIQUIDITY CASH FLOWS FROM OPERATING ACTIVITIES used $12.8 million during the first three months of fiscal 2000 and provided $12.8 million for the same period in fiscal 1999. The decrease in cash from operating activities was a direct result of the loss of $6.0 million and the reduction of $7.6 million in accounts payable and accrued liabilities. CASH FLOWS FROM INVESTING ACTIVITIES required cash totaling $4.5 million in the first three months of fiscal 2000 compared to $4.6 million in fiscal 1999. The majority of the cash outflows during the first three months of 2000 and 1999 related to net additions to property, plant and equipment. The Company expects future expenditures for property, plant and equipment to be funded with internally generated funds. Capital expenditures budgeted for fiscal 2000 are approximately $18.0 million. CASH FLOWS FROM FINANCING ACTIVITIES provided $21.1 million during the first quarter of fiscal 2000 compared to cash used of $5.3 million in the same period one year ago. Cash flows from financing activities primarily related to increases in short-term borrowings of $20.3 million and an increase in long-term debt of $2.1 million. These increases were offset by the payment of dividends of $1.3 million in the first quarter of fiscal 2000. The increase in short-term debt levels was used to fund working capital needs generated during the first quarter of fiscal 2000. Under the terms of its credit agreements, the Company has agreed to certain financial covenants. At December 31, 1999, the Company was in compliance with or has received waivers on the terms and covenants of its credit agreements. The Company believes that the combination of present capital resources, internally generated funds, and unused financing sources will be adequate to finance on-going operations, allow for reinvestment in the business and strategic acquisitions. YEAR 2000 The following is a Year 2000 Readiness Disclosure pursuant to the Year 2000 Information and Readiness Disclosure Act. This disclosure should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in the Company's Annual Report on Form 10-K. The Company evaluated the potential impact of what is commonly referred to as the Year 2000 issue, concerning the inability of certain computer-based products and systems to operate correctly during the year 2000. The Company completed testing and where necessary remediation of any issues by June 30, 1999. The Company has not experienced any major issues related to the Year 2000 issue since completion of its testing. The Company will continue to monitor events and information relevant to Year 2000 issues so that additional action can be taken where necessary. The Company estimates that the costs directly related to its Year 2000 project were $400,000 in fiscal 1999 and $300,000 in fiscal 1998. The Company does not expect to incur any material costs in the future related to the Year 2000 issue. Such costs are expensed as incurred. 9 This Readiness Disclosure is a forward looking statement as defined by the Securities and Exchange Commission and the Company recognizes that, although not expected, there are risks of project delays, costs incurred, vendor compliance, and loss of business related to the Year 2000 issue which are outside the direct control of the Company and/or could prove to be material. PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 SAFE HARBOR CAUTIONARY LANGUAGE Statements included or incorporated by reference in this Management's Discussion and Analysis of Financial Condition and Results of Operations which are not historical or current facts are "forward-looking" statements, as defined in the Private Securities Litigation Reform Act of 1995, and are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results and those presently anticipated or projected. The following important facts, among others, could affect the Company's actual results in the future and could cause the Company's actual financial performance to differ materially from that expressed in any forward-looking statements: (I) With regard to the Company's new product developments, there maybe uncertainties currently known to the Company concerning the expected results. (II) Possible significant volatility in both backlog and quarterly operating results may result from large, individual, fixed price orders in connection with sales of MT&S systems. (III) Export controls based on U.S. initiatives and foreign policy, as well as import controls imposed by foreign governments, may cause delays for certain shipments or the rejection of orders by the Company. Such delays could create material fluctuations in quarterly results and could have a material adverse effect on results of operations. Local political conditions and/or currency restrictions may also affect foreign revenues. (IV) Delays in realization of backlog orders may occur due to technical difficulties, export licensing approval or the customer's preparation of the installation site, any of which can affect the quarterly or annual period when backlog is recognized as revenue and could materially affect the results of any such period. (V) The Company experiences competition on a worldwide basis. Customers may choose to purchase equipment from the Company or from its competitors. (VI) The Company is exposed to market risk from changes in foreign currency exchange rates, which can affect its results from operations and financial condition. (VII) Risks in connection with the Year 2000 issue, including risks of anticipated Year 2000 compliance, greater-than-anticipated costs, or risks of business interruptions due to inability of the Company's vendors to comply. The forgoing list is not exhaustive, and the Company disclaims any obligation to or revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The required disclosures are included in Management's Discussion and Analysis of Financial Condition and Results of Operations and in Note 1 to the Consolidated Financial Statements included in the Company's 1999 Annual Report to Shareholders. This information remains current and is incorporated herein by reference. 10 PART II-------OTHER INFORMATION ITEM 6. Exhibits and Reports on Form 8-K. The following are submitted as part of this report. (a) Exhibit 27 Financial Data Schedule (b) Reports on Form 8-K. No reports on Form 8-K were filed during the quarter ended December 31, 1999. 11 SIGNATURES Pursuant to the requirements of the Securities and 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 /s/ Sidney W. Emery, Jr. ------------------------------------- Sidney W. Emery, Jr. President Chief Executive Officer /s/ David E. Hoffman ------------------------------------- David E. Hoffman Vice President Chief Financial Officer Dated: February 14, 2000 12 EX-27 2 FINANCIAL DATA SCHEDULE
5 3-MOS SEP-30-2000 OCT-01-1999 DEC-31-1999 22,669 0 142,618 2,157 57,167 228,840 150,322 75,569 338,099 115,855 62,052 0 0 5,222 149,590 338,099 87,214 87,214 64,428 28,746 3,261 0 0 (9,221) (3,181) (6,040) 0 0 0 (6,040) (.29) (.29)
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