MTS Systems Corporation Exhibit 99.1 to Form 8-K

Eden Prairie, Minn., January 24, 2007 – MTS Systems Corporation (NASDAQ: MTSC) today reported first quarter earnings of $0.54 per diluted share on net income of $10.1 million, an increase of 35 percent compared to earnings of $0.40 per diluted share for first quarter fiscal 2006.

“MTS delivered solid first quarter results on all fronts,” said Sidney W. Emery, Jr., Chairman and CEO. “Orders growth of 15% included two large Test orders totaling $22 million, which significantly improved our backlog position. We delivered strong top-line growth, in line with expectations. The first quarter EPS reflects tax benefits of $1.7 million, reduced share count, and increased volume, net of planned spending on global market-share initiatives.”

First quarter orders totaled $111.5 million, an increase of 15 percent compared to orders of $96.9 million for first quarter fiscal 2006, primarily driven by large custom Test orders in Asia and Sensors growth across all geographies, as well as an estimated $2.8 million favorable impact of currency translation. Backlog increased 8 percent in the quarter, from $192 million to $208 million, with approximately $4 million of this increase due to the favorable impact of currency translation.

Revenue for the first quarter totaled $99.1 million, an increase of 8 percent compared to $91.8 million for first quarter fiscal 2006. This increase was primarily attributable to increased short-cycle and service business in Test, continued growth in Sensors, and an estimated $3.5 million favorable impact of currency translation.

Gross profit for first quarter was $42.1 million, an increase of 4 percent compared to $40.6 million for first quarter fiscal 2006. This increase was primarily due to increased volume in both segments and an estimated $1.2 million favorable impact of currency translation, partially offset by unfavorable product mix and increased manufacturing and support costs in the Test segment. First quarter income from operations totaled $12.6 million, an increase of 2 percent compared to income from operations of $12.3 million for first quarter fiscal 2006. This increase was due to higher gross profit and an estimated $0.5 million favorable impact of currency translation, partially offset by planned increases in sales, marketing, and R&D spending.

First quarter net income was $10.1 million, or $0.54 per diluted share, an increase of 26 percent compared to net income of $8.0 million, or $0.40 per diluted share, for first quarter fiscal 2006. This increase was driven by higher income from operations and decreased income tax expense of $1.4 million, or $0.08 per diluted share, primarily due to increased tax benefits associated with the enactment of favorable tax legislation in the quarter. Additionally, reduced shares outstanding positively impacted earnings per share by $0.03 for the quarter.

Cash, cash equivalents and short-term investments at the end of the first quarter totaled $115 million, compared to $122 million at the end of fiscal year 2006, due to increased working capital requirements to support revenue growth.

First quarter orders for the Test segment were $93.7 million, an increase of 15 percent compared to orders of $81.7 million for first quarter fiscal 2006, reflecting large custom order bookings in Asia and an estimated $2.0 million favorable impact of currency translation, partially offset by decreased volume in North America. Backlog increased 9 percent in the quarter, from $184 million to $200 million, with approximately $4 million of this increase due to the favorable impact of currency translation. First quarter revenue was $81.3 million, an increase of 6 percent compared to $76.8 million for first quarter fiscal 2006, reflecting an increase in short-cycle and service business and an estimated $2.6 million favorable impact of currency translation. First quarter gross profit was $32.3 million, a decrease of 1 percent compared to $32.7 million for first quarter fiscal 2006, due to unfavorable product mix and increased manufacturing and support costs, largely offset by higher volume and an estimated $0.7 million favorable impact of currency translation. Income from operations for first quarter fiscal 2007 was $9.4 million, a decrease of 5 percent compared to income from operations of $9.9 million for first quarter fiscal 2006. The decrease was primarily attributable to planned increases in operating expenses, partially offset by an estimated $0.3 million favorable impact of currency translation.

Effective this quarter, the former “Industrial” segment has been re-named to the “Sensors” segment.

First quarter orders for the Sensors segment were $17.8 million, an increase of 17 percent compared to orders of $15.2 million for first quarter fiscal 2006, reflecting business growth in all geographies and an estimated $0.8 million favorable impact of currency translation. Backlog was flat in the quarter at $8 million. First quarter revenue was $17.8 million, an increase of 19 percent compared to revenue of $15.0 million for first quarter fiscal 2006, driven by increased volume in Europe and Asia and an estimated $0.8 million favorable impact of currency translation. First quarter gross profit was $9.8 million, an increase of 24 percent compared to $7.9 million for first quarter fiscal 2006, reflecting increased volume and improved capacity utilization. Income from operations for first quarter fiscal 2007 was $3.2 million, an increase of 33 percent compared to income from operations of $2.4 million for first quarter fiscal 2006, primarily due to increased gross profit and an estimated $0.2 million favorable impact of currency translation, partially offset by planned increases in operating expenses.

A conference call will be held on Thursday, January 25, 2007, at 10:00 a.m. EST (9:00 a.m. CST). Call +1-706-634-9986; and state the Conference ID “6310361”. Telephone re-play will be available through 11:59 p.m. EST, February 8, 2007. Call +1-706-645-9291.

If you prefer to listen live over the Internet, please log on to the web at <http://www.mts.com/news/financial_news.htm> and click on the webcast event notice. The webcast will be archived through 11:59 p.m. EST, April 24, 2007.

MTS Systems Corporation is a leading global supplier of test systems and industrial position sensors. The Company’s testing 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. MTS’ high-performance position sensors enhance control to improve the productivity and safety of fixed and mobile industrial equipment. MTS had 1,510 employees and revenue of $397 million for the fiscal year ended September 30, 2006. Additional information on MTS can be found on the worldwide web at http://www.mts.com.

	Three Months Ended
	December 30, 2006			December 31, 2005

Revenue:
Product	$	85,156		$	79,489
Service		13,900			12,354
Total revenue		99,056			91,843
Cost of sales:
Product		49,851			45,015
Service		7,097			6,259
Total cost of sales		56,948			51,274
Gross profit		42,108			40,569

Operating expenses:
Selling		16,939			16,004
General and administrative		8,013			8,104
Research and development		4,534			4,147
Total operating expenses		29,486			28,255

Income from operations		12,622			12,314

Interest expense		(338	)		(454	)
Interest income		925			682
Other income, net		75			25

Income before income taxes		13,284			12,567
Provision for income taxes		3,167			4,611
Net income	$	10,117		$	7,956

Earnings per share:
Basic-
Earnings per share	$	0.55		$	0.41
Weighted average number of common shares outstanding - basic		18,240			19,454

Diluted-
Earnings per share	$	0.54		$	0.40
Weighted average number of common shares outstanding - diluted		18,601			20,004

	December 30, 2006			September 30, 2006
ASSETS

Current Assets:
Cash and cash equivalents	$	91,887		$	97,962
Short-term investments		23,125			23,575
Accounts receivable, net of allowances for doubtful accounts		70,153			72,997
Unbilled accounts receivable		33,909			27,132
Inventories		41,400			40,480
Prepaid expenses		4,585			3,180
Current deferred tax assets		5,325			5,134
Other current assets		1,709			1,065
Assets of discontinued operations		249			803
Total current assets		272,342			272,328

Property and Equipment:
Land		1,668			1,668
Buildings and improvements		43,093			42,072
Machinery and equipment		82,103			78,651
Accumulated depreciation		(81,865	)		(78,777	)
Total property and equipment, net		44,999			43,614

Goodwill		4,501			4,466
Other assets		3,337			2,102
Non-current deferred tax assets		1,670			1,613
Total Assets	$	326,849		$	324,123

LIABILITIES AND SHAREHOLDERS’ INVESTMENT

Current Liabilities:
Notes payable	$	232		$	222
Current maturities of long-term debt		6,683			6,683
Accounts payable		16,534			17,090
Accrued payroll and related costs		20,023			29,273
Advance payments from customers		49,882			51,356
Accrued warranty costs		5,741			5,894
Accrued income taxes		3,703			512
Current deferred income taxes		4,831			4,643
Other accrued liabilities		14,754			15,125
Total current liabilities		122,383			130,798

Deferred income taxes		2,530			2,487
Long-term debt, less current maturities		8,990			8,990
Other long-term liabilities		13,285			12,527
Total Liabilities		147,188			154,802

Shareholders’ Investment:
Common stock, $.25 par; 64,000 shares authorized:
18,200 and 18,216 shares issued and outstanding		4,550			4,554
Retained earnings		160,773			152,657
Accumulated other comprehensive income		14,338			12,110
Total shareholders’ investment		179,661			169,321
Total Liabilities and Shareholders’ Investment	$	326,849		$	324,123

	MTS Systems Corporation 14000 Technology Drive Eden Prairie, MN 55344-2290 Telephone 952-937-4000 Fax 952-937-4515


	*News Release*