-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, AKokSerQ8YmSGr66Tx6VOtZOk+8Gd54tdnSsPzUeAnkVVZKUpxrj5xkSAQ2ZL861 soCadkp7aeYdoTQFrwgmcQ== 0000897101-95-000137.txt : 19950516 0000897101-95-000137.hdr.sgml : 19950516 ACCESSION NUMBER: 0000897101-95-000137 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950515 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MTS SYSTEMS CORP CENTRAL INDEX KEY: 0000068709 STANDARD INDUSTRIAL CLASSIFICATION: LABORATORY ANALYTICAL INSTRUMENTS [3826] IRS NUMBER: 410908057 STATE OF INCORPORATION: MN FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-02382 FILM NUMBER: 95538784 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 Quarterly Report Pursuant to Section 13 or 15 (d) or the Securities Exchange Act of 1934 For quarterly period ended March 31, 1995 Commission File Number 0-2382 MTS SYSTEMS CORPORATION (Exact name of registrant as specified in its charter) MINNESOTA 612-937-4000 (State or other jurisdiction of (Telephone number of registrant incorporation or organization) including area code) 41-0908057 (I.R.S. Employer Identification No.) 14000 Technology Drive, Eden Prairie, Minnesota 55344 (Address/Zip Code of principal executive offices) 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 Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock, $.25 par value; 4,423,203 shares outstanding. PART I. FINANCIAL INFORMATION MTS SYSTEMS CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS MARCH 31, 1995 AND SEPTEMBER 30, 1994
MAR 31 SEPT 30 1995 1994 ASSETS UNAUDITED AUDITED ---------- --------- (expressed in $ 000's) Cash and cash equivalents $10,677 $4,919 Accounts receivable 49,918 44,534 Unbilled contracts and retainage receivable 33,014 35,584 Inventories- Customer jobs-in-process 16,440 14,336 Components, assemblies and parts 21,028 20,816 Prepaid expenses 4,189 3,017 ---------- --------- Total current assets 135,266 123,206 ---------- --------- Land 3,703 3,703 Buildings and improvements 38,026 36,452 Machinery and equipment 53,066 50,803 Accumulated depreciation (46,556) (43,590) ---------- --------- Total property and equipment 48,239 47,368 ---------- --------- Other assets 9,059 5,134 ---------- --------- $192,564 $175,708 ========== ========= LIABILITIES AND SHAREHOLDERS' INVESTMENT Notes payable to banks $26,686 $17,007 Current maturities of long-term debt 1,016 1,516 Accounts payable 9,507 10,969 Accrued compensation and benefits 16,815 18,058 Accrued income taxes (1,281) 981 Other accrued liabilities 10,238 8,170 Advance billings to customers 13,021 9,660 ---------- --------- Total current liabilities 76,002 66,361 ---------- --------- Deferred income taxes 4,141 3,973 Long-term debt, less current maturities 12,716 5,328 ---------- --------- Common stock, $.25 par; 16,000,000 shares authorized: 4,423,203 and 4,568,374 shares issued and outstanding 1,106 1,142 Additional paid-in capital - 2,928 Retained earnings 92,885 91,762 Cumulative translation adjustment 5,714 4,214 ---------- --------- Total shareholders' investment 99,705 100,046 ---------- --------- $192,564 $175,708 ========== =========
MTS SYSTEMS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994 (UNAUDITED)
FOR THE 3 MONTHS ENDED MARCH 31 1995 1994 -------- -------- (expressed in 000's) for per share NET REVENUES $58,949 $46,357 COST OF REVENUES 37,888 28,978 -------- -------- Gross profit 21,061 17,379 -------- -------- OPERATING EXPENSES: Selling 11,163 9,669 General and administrative 4,282 3,275 Research and development 3,367 3,357 Interest expense 831 554 Interest income (6) (43) Other (income) and expense, net (including $3.7 million gain from real estate transaction in 1994) (598) (4,448) -------- -------- Total operating expense 19,039 12,364 -------- -------- INCOME BEFORE INCOME TAXES 2,022 5,015 PROVISION FOR INCOME TAXES 511 1,834 -------- -------- NET INCOME $1,511 $3,181 ======== ======== EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE $0.34 $0.68 ======== ======== DIVIDENDS PER SHARE $0.14 $0.14 ======== ======== BACKLOG $95,738 $86,848 ======== ======== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 4,463 4,684 ======== ========
MTS SYSTEMS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME FOR THE SIX MONTHS ENDED MARCH 31, 1995 AND 1994 (UNAUDITED)
FOR THE 6 MONTHS ENDED MARCH 31 1995 1994 -------- -------- (expressed in 000's) for per share NET REVENUES $108,416 $93,597 COST OF REVENUES 69,160 56,774 -------- -------- Gross profit 39,256 36,823 -------- -------- OPERATING EXPENSES: Selling 21,309 18,923 General and administrative 7,427 6,023 Research and development 6,346 6,029 Interest expense 1248 952 Interest income (31) (95) Other (income) and expense, net (including $3.7 million gain from real estate transaction in 1994) (717) (3,550) -------- -------- Total operating expense 35,582 28,282 -------- -------- INCOME BEFORE INCOME TAXES 3,674 8,541 PROVISION FOR INCOME TAXES 924 3,000 -------- -------- NET INCOME $2,750 $5,541 ======== ======== EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE $0.61 $1.19 ======== ======== DIVIDENDS PER SHARE $0.28 $0.28 ======== ======== BACKLOG $95,738 $86,848 ======== ======== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 4,507 4,675 ======== ========
MTS SYSTEMS CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED MARCH 31, 1995 AND 1994 (UNAUDITED)
FOR THE 6 MONTHS ENDED MAR 31 MAR 31 1995 1994 -------- -------- (expressed in $000) OPERATING ACTIVITIES Net income $2,750 $5,541 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization 3,540 2,957 Deferred income taxes 168 (607) Foreign currency translation adjustment 1,500 34 Changes in operating assets and liabilities: Receivables, including accounts, unbilled contracts and retainages (2,814) 1,198 Inventories (2,316) (3,966) Prepaid expenses (1,172) (1,496) Accrued income taxes (2,262) 720 Advance billings to customers 3,361 (2,276) Other, net (637) 4,803 -------- -------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 2,118 6,908 -------- -------- INVESTING ACTIVITIES Property and equipment, net (4,086) (11,740) Excess purchase cost for MTS Power Tek, Inc. (3,683) -- Excess purchase cost for Adamel Lhomargy (38) (40) Other assets (529) (309) -------- -------- NET CASH USED IN INVESTING ACTIVITIES (8,336) (12,089) -------- -------- FINANCING ACTIVITIES Net borrowings (payments) on notes payable 9,679 (556) Proceeds from issuance of long-term debt 8,510 9,690 Payments on long-term borrowings (1,622) (1,023) Cash dividends (1,250) (1,277) Proceeds from employee stock option and stock purchase plans 113 601 Payments to purchase and retire common stock (3,454) -- -------- -------- NET CASH PROVIDED BY FINANCING ACTIVITIES 11,976 7,435 -------- -------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 5,758 2,254 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 4,919 7,597 -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $10,677 $9,851 ======= =======
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONSOLIDATION AND TRANSLATION. The consolidated financial statements include the accounts of MTS SYSTEMS CORPORATION (the Company) and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated. All balance sheet accounts of foreign subsidiaries are translated at the current exchange rate as of the end of the accounting period. Income statement items are translated at average currency exchange rates. The resulting translation adjustment is recorded as a separate component of shareholders' investment. Gains and losses resulting from foreign currency transactions are included in "Other (income) and expense, net" in the consolidated Statements of Income. REVENUE RECOGNITION. Revenue is recognized upon shipment of equipment when the customer's order can be manufactured, delivered and installed in less than nine months. Revenue on contracts requiring longer delivery periods (long-term contracts) and other customized orders which permit progress billings is recognized using the percentage-of-completion method based on the cost incurred to date relative to estimated total cost of the contract (cost-to-cost method). The cumulative effects of revisions of estimated total contract costs and revenues are recorded in the period in which the facts become known. When a loss is anticipated on a contract, the amount thereof is provided currently. LONG-TERM CONTRACTS. The Company enters into long-term contracts for customized equipment sold to its customers. Under terms of certain contracts, revenue recognized using the percent-of-completion method may not be invoiced until completion of contractual milestones, upon shipment of the equipment, or upon installation and acceptance by the customer. Unbilled amounts for such contracts appear in the consolidated balance sheets as unbilled contracts and retainage receivable. Amounts unbilled or retained at March 31, 1995 are expected to be invoiced as follows: $28,813,000 in 1995 and $4,201,000 in 1996. INCOME TAXES -- CHANGE IN ACCOUNTING METHOD. The Company adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes effective October 1, 1993. The effect of such adoption was not significant on the Company's financial position or results of operations for the quarters ended fiscal 1994 or the year ended September 30, 1994. OTHER FINANCIAL STATEMENT DISCLOSURE. The Notes to Consolidated Financial Statements appearing in the Company's September 30, 1994 Annual Report to Shareholders on pages 20 through 25 are incorporated herein by reference. MANAGEMENT'S INTERIM FINANCIAL STATEMENT REPRESENTATION. The unaudited interim financial statements furnished herein reflect all adjustments which are, in the opinion of management, necessary to fairly state the results of the interim periods presented. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS New Orders and Backlog New orders for the second quarter of fiscal 1995, ended March 31, 1995, were $65,136,000, a 27% increase over the comparable quarter in fiscal 1994. Orders were strong in all of the Company's business sectors. The strengthening of the German Mark and Japanese Yen against the U.S. Dollar account for some of the increase. Recent acquisitions, MTS Power-Tek (in fiscal 1995) and Adamel Lhomargy S.A. (in fiscal 1994), contributed 7% of the increase. International orders represented 45% of the quarter's orders compared to 55% in the same period for the previous year. New orders for the six months ended March 31, 1995 were $117,186,000 compared to $90,270,000 for the same period one year ago, a 30% increase. Orders in all sectors recorded increases over levels reported for the previous year. Orders in the Mechanical Testing and Simulation sector increased 17% while the Measurement and Automation sector increased 26% over the order volumes reported for the same period one year ago. Recent acquisitions accounted for 13% of the increase. International orders were 45% of the 1995 total compared to 52% for 1994. This change reflects the slow recovery of European and Japanese economies. Orders for 1995 are expected to exceed the fiscal 1994 total of $195 million. Backlog of undelivered orders at March 31, 1995 was $95,739,000 compared to $86,848,000 at March 31, 1994 and $84,591,000 at September 30, 1994. Results of Operations Revenues for the second quarter were $58,949,000 a 27% increase from the same quarter one year ago. International content of revenue was 53% and 51% for the quarters ended March 31, 1995 and 1994, respectively. Revenues from all sectors increased over levels reported in 1994 for the quarter ended in March. Income before income taxes was $2,022,000 compared to $5,015,000 for the second quarter ended a year ago. Pretax earnings for second quarter 1994 included a $3.7 million gain (included in "Other income and expense, net") on the sale of the Company's old Berlin plant. Thus, second quarter 1995 income from operations increased 54% over the same period in 1994 (after excluding the gain from the building sale). Gross margin increased on the strength of increased revenue volume for the March, 1995 quarter as compared to the same quarter in 1994. The margin increase was partially offset by increased operating expenses in selling and administrative areas, after excluding the gain on the building sold in 1994. Operating expenses as a percent of revenues were 32% for the quarter ended March 31, 1995 compared to 35% for the same quarter in 1994. Net income for the quarter was $1,511,000 compared to $3,181,000 for the same quarter one year ago. Net income for the 1994 quarter includes $1.9 million gain from the building sale discussed above. The effective tax rate for the quarter ended March 31, 1995 was 25% compared to 37% for the quarter ended in March, 1994. Revenues for the six months ended in March, 1995 were $108,416,000, a 16% increase over the same period a year ago. Recent acquisitions accounted for 8% of the increase. Less than 5% of the increase was due to translation of revenues denominated in international currencies which experienced volatility during the first six months of 1995. International revenues were 48% of total revenues as compared to 49% for the six month periods ended in March, 1995 and 1994, respectively. Revenues from all sectors increased over levels reported in 1994 for the six months ended in March. Income before income taxes for the first six months of 1995, decreased to $3,674,000 from $8,541,000 reported in 1994. The 1994 pretax income includes the non-operating gain from the sale of the Berlin plant, as discussed above. Excluding the gain, the decrease in pretax income was 24%. Gross margin increased from 1994 to 1995 due increased revenue volume for the six months ended in 1995. However, gross margins as a percent of sales were 36% in 1995 compared to 39% in 1994. The decline in the margin percentage reflects significant technical challenges on large custom projects which were taken under competitive price pressures. The decline in pretax income is due in part, to the reduced leverage from lower gross margin percentages and in part, to increased operating expenses. Investments in selling, general and administrative expenses for recent acquisitions and the translation of operating expenses denominated in Yen and DMark currencies account for most of the increase. Operating expenses (exclusive of the gain) as a percent of sales were 33% compared to 34% for the six months ended in March, 1995 and 1994, respectively. Net income for the first six months of 1995 was $2,750,000 compared to $5,541,000 reported one year ago. Excluding the 1994 gain from the plant sale, the decrease in net income was 25%. The income tax rates were 25% and 35% for the six months ended in 1995 and 1994, respectively. The cumulative effect of the Company's change in accounting to adopt SFAS No. 109 was not significant. The impact of the change on the results of operations for the quarter and six month periods ended in fiscal 1994 was not significant. Financial Condition and Liquidity The ratio of current assets to current liabilities at March 31, 1995 was 1.8 compared to 1.9 at September 30, 1994. Cash and cash equivalents were $10,677,000 at March 31, 1995 compared to $4,919,000 at September 30, 1994. The Company's borrowing under its $70 million lines of credit was $27 million at March 31, 1995 compared to $28 million at March 31, 1994 and $17 million at September 30, 1994. Capital expenditures, net of retirements for the second quarter totalled $4,086,000. The Company's total debt to equity ratio increased to 42% at March 31, 1995 from 24% at September 30, 1994 reflecting the use of short-term notes to finance increases in operating assets, repurchase of the Company's common stock, the acquisition of MTS Power Tek and the mortgage placement for the Berlin plant purchased in 1994. The Company's past financial performance, the availability of credit under its borrowing facilities, available cash and cash equivalents provide sufficient resources for growth, expansion and diversification. PART II-------OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders. (a) The Company's Annual Meeting of Shareholders was held January 31, 1995. Outstanding shares eligible to vote were 4,540,997. The shares voted totaled 4,278,208, representing 94% of the outstanding shares. (b) The following persons were nominated and elected to continue as directors of the Company until the next Annual Meeting of Shareholders. Votes For Votes Against E. Thomas Binger 4,255,957 22,051 Charles A. Brickman 4,255,945 22,063 Bobby I. Griffin 4,255,315 22,693 Thomas E. Holloran 4,256,015 21,993 Thomas E. Stelson 4,253,799 24,209 Donald M. Sullivan 4,253,948 24,060 No voters abstained or were broker/bank non-votes for any of the directors. (c) Arthur Andersen & Co. was ratified as the Company's independent auditor by 4,266,830 votes for; 6,452 votes against; 4,726 votes abstained; and zero non-votes by broker/banks. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits: Exhibit 27 - Financial Data Schedule for SEC use. (b) Reports on 8-K: No reports on Form 8-K were filed during the quarter ended March 31, 1995. 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/ D.M. Sullivan D.M. Sullivan Chairman, President and Chief Executive Officer /s/ M.L. Carpenter M.L. Carpenter Vice President Chief Financial Officer Dated: May 15, 1995 EX-27 2
5 1,000 6-MOS SEP-30-1995 MAR-31-1995 10,677 0 82,932 1,654 37,468 135,266 94,795 46,556 192,564 76,002 12,716 1,106 0 0 0 192,564 108,416 108,416 69,160 35,582 0 50 1,248 3,674 924 3,674 0 0 0 2,750 .61 .61
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