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United States
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 30, 1999
MTS SYSTEMS CORPORATION
(Exact name of registrant as specified in its charter)
MINNESOTA 0-2382 41-0908057
(State or other jurisdiction of (Commission file number) (I.R.S. Employer
incorporation or organization) Identification No.)
14000 Technology Drive
Eden Prairie, MN 55344
(Address of principal (Zip Code)
executive offices)
Registrants telephone number, including area code: (612)-937-4000
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<PAGE>
ITEM 5. Other Events.
On May 28, 1999, MTS Systems Corporation (the Company), completed a merger with
DSP Technology, Inc. (DSP), an enterprise that is active in automotive engine
development market segments where MTS did not have a presence. Under the terms
of the agreement, the Company initially issued 2,076,913 shares of common stock
and subsequently issued an additional 792 shares of common stock in exchange for
all of the outstanding shares and vested stock options of DSPs' common stock. In
connection with the acquisition, the Company incurred approximately $1.4 million
of acquisition related costs which were charged to operations in the third
quarter of fiscal year 1999. The acquisition qualified as a tax-free exchange
and was accounted for as a pooling-of-interests. Accordingly, all periods
included in these historical consolidated financial statements have been
restated to give effect to the merger.
This 8-K report includes the unaudited restated consolidated statements of
income of the Company for the first nine-months of fiscal year 1999 and the
fiscal years ended September 30, 1998 and 1997 and the unaudited restated
consolidated balance sheets of the Company for the periods ended June 30, 1999
and September 30, 1998 and 1997.
The consolidated financial information presented was constructed using the
Company's unaudited quarterly consolidated financial information for fiscal
years 1999, 1998 and 1997 and combining it with the unaudited DSP financial
information, which was restated to conform with the Company's fiscal calendar.
The conforming of the accounting practices of the Company and DSP resulted in no
material adjustments to net income or shareholders' investment.
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<PAGE>
MTS SYSTEMS CORPORATION AND SUBSIDIARIES
RESTATED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
FOR THE NINE-MONTHS ENDED JUNE 30, 1999
(expressed in thousands, except per share data)
<TABLE>
<CAPTION>
Nine-months
Quarters Ended Ended
------------------------------------- ---------
December 31, March 31, June 30, June 30,
1998 1999 1999 1999
------------------------------------- ---------
<S> <C> <C> <C> <C>
NET REVENUE $ 96,142 $ 93,262 $ 95,363 $ 284,767
COST OF REVENUE 58,078 56,487 57,545 172,110
------------------------------------- ---------
Gross profit 38,064 36,775 37,818 112,657
OPERATING EXPENSES:
Selling 15,604 15,078 15,324 46,006
General and administrative 5,960 7,281 7,149 20,390
Research and development 6,667 6,910 7,035 20,612
Restructuring expense 2,596 -- -- 2,596
Acquisition expense -- -- 1,391 1,391
------------------------------------- ---------
Total operating expenses 30,827 29,269 30,899 90,995
INCOME FROM OPERATIONS 7,237 7,506 6,919 21,662
Interest expense 1,252 1,145 1,032 3,429
Interest income (51) (121) (74) (246)
Other (income) and expense, net 314 1,816 (2,308) (178)
------------------------------------- ---------
INCOME BEFORE INCOME TAXES 5,722 4,666 8,269 18,657
PROVISION FOR INCOME TAXES 1,996 1,520 2,976 6,492
------------------------------------- ---------
NET INCOME $ 3,726 $ 3,146 $ 5,293 $ 12,165
===================================== =========
BASIC EARNINGS PER SHARE $ 0.18 $ 0.15 $ 0.25 $ 0.59
BASIC SHARES OUTSTANDING 20,672 20,701 20,813 20,728
DILUTED EARNINGS PER SHARE $ 0.18 $ 0.15 $ 0.25 $ 0.57
DILUTED SHARES OUTSTANDING 21,172 21,148 21,209 21,176
</TABLE>
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<PAGE>
MTS SYSTEMS CORPORATION AND SUBSIDIARIES
RESTATED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
FOR FISCAL YEAR ENDED SEPTEMBER 30, 1998
(expressed in thousands, except per share data)
<TABLE>
<CAPTION>
Twelve-months
Quarters Ended Ended
------------------------------------------------------ -------------
December 31, March 31, June 30, September 30, September 30,
1997 1998 1998 1998 1998
------------------------------------------------------ -------------
<S> <C> <C> <C> <C> <C>
NET REVENUE $ 80,338 $ 87,160 $ 91,899 $ 102,766 $ 362,163
COST OF REVENUE 46,585 52,600 56,208 64,543 219,936
--------------------------------------------------- ---------
Gross profit 33,753 34,560 35,691 38,223 142,227
OPERATING EXPENSES:
Selling 13,362 14,018 14,318 14,781 56,479
General and administrative 5,999 6,549 6,300 7,506 26,354
Research and development 5,084 6,043 6,324 6,897 24,348
--------------------------------------------------- ---------
Total operating expenses 24,445 26,610 26,942 29,184 107,181
INCOME FROM OPERATIONS 9,308 7,950 8,749 9,039 35,046
Interest expense 226 449 570 1,082 2,327
Interest income (108) (69) (75) (127) (379)
Other (income) and expense, net 1,253 (439) (267) (897) (350)
--------------------------------------------------- ---------
INCOME BEFORE INCOME TAXES 7,937 8,009 8,521 8,981 33,448
PROVISION FOR INCOME TAXES 2,745 3,088 2,854 3,222 11,909
--------------------------------------------------- ---------
NET INCOME $ 5,192 $ 4,921 $ 5,667 $ 5,759 $ 21,539
=================================================== =========
BASIC EARNINGS PER SHARE $ 0.25 $ 0.24 $ 0.28 $ 0.28 $ 1.05
BASIC SHARES OUTSTANDING 20,368 20,462 20,597 20,649 20,519
DILUTED EARNINGS PER SHARE $ 0.24 $ 0.23 $ 0.27 $ 0.27 $ 1.01
DILUTED SHARES OUTSTANDING 21,338 21,012 21,412 21,558 21,330
</TABLE>
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<PAGE>
MTS SYSTEMS CORPORATION AND SUBSIDIARIES
RESTATED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
FOR FISCAL YEAR ENDED SEPTEMBER 30, 1997
(expressed in thousands, except per share data)
<TABLE>
<CAPTION>
Twelve-months
Quarters Ended Ended
----------------------------------------------------- -------------
December 31, March 31, June 30, September 30, September 30,
1996 1997 1997 (a) 1997 1997 (a)
----------------------------------------------------- -------------
<S> <C> <C> <C> <C> <C>
NET REVENUE $ 71,755 $ 78,374 $ 79,268 $ 94,027 $ 323,424
COST OF REVENUE 41,753 45,929 46,792 56,877 191,351
--------------------------------------------------- ---------
Gross profit 30,002 32,445 32,476 37,150 132,073
OPERATING EXPENSES:
Selling 13,814 13,382 14,189 15,218 56,603
General and administrative 5,136 5,882 5,689 6,588 23,295
Research and development 4,899 4,998 4,424 5,571 19,892
--------------------------------------------------- ---------
Total operating expenses 23,849 24,262 24,302 27,377 99,790
INCOME FROM OPERATIONS 6,153 8,183 8,174 9,773 32,283
Interest expense 323 447 509 252 1,531
Interest income (105) (13) (176) (112) (406)
Other (income) and expense, net 558 1,201 (4,332) (587) (3,160)
--------------------------------------------------- ---------
INCOME BEFORE INCOME TAXES 5,377 6,548 12,173 10,220 34,318
PROVISION FOR INCOME TAXES 1,602 2,493 4,245 4,087 12,427
--------------------------------------------------- ---------
NET INCOME $ 3,775 $ 4,055 $ 7,928 $ 6,133 $ 21,891
=================================================== =========
BASIC EARNINGS PER SHARE (b) $ 0.19 $ 0.20 $ 0.39 $ 0.30 $ 1.08
BASIC SHARES OUTSTANDING 20,357 20,307 20,201 20,275 20,285
DILUTED EARNINGS PER SHARE (b) $ 0.18 $ 0.19 $ 0.38 $ 0.29 $ 1.05
DILUTED SHARES OUTSTANDING 20,894 20,829 20,854 21,204 20,945
</TABLE>
(a) Includes $4.3 million pretax gain on land sale recorded in other (income)
and expense.
(b) Earnings per share has been restated to reflect the two-for-one stock split
effective February 2, 1998.
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<PAGE>
MTS SYSTEMS CORPORATION AND SUBSIDIARIES
RESTATED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(expressed in thousands, except per share data)
<TABLE>
<CAPTION>
June 30, September 30, September 30,
ASSETS 1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Current Assets:
Cash and cash equivalents $ 17,152 $ 12,589 $ 12,558
Accounts receivable 87,575 93,313 66,267
Unbilled contracts and retainage receivable 32,058 35,891 32,653
Inventories 64,421 57,982 46,724
Prepaid expenses 7,401 4,536 4,612
-------- -------- --------
Total current assets 208,607 204,311 162,814
-------- -------- --------
Property and Equipment:
Total property and equipment, net 73,323 69,942 51,790
-------- -------- --------
Other assets 34,981 38,769 14,471
-------- -------- --------
Total assets $316,911 $313,022 $229,075
======== ======== ========
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current Liabilities:
Notes payable to banks $ 10,387 $ 28,243 $ 4,356
Current maturities of long-term debt 797 1,180 920
Accounts payable 24,337 20,274 18,684
Accrued compensation and benefits 23,039 26,919 25,487
Advance billings to customers 15,861 17,360 21,065
Other accrued liabilities 15,896 16,247 12,901
-------- -------- --------
Total current liabilities 90,317 110,223 83,413
Deferred income taxes 4,437 4,851 4,549
Long-term debt, less current maturities 60,064 45,259 7,589
-------- -------- --------
Shareholders' Investment:
Total shareholders' investment 162,093 152,689 133,524
-------- -------- --------
Total liabilities and shareholders' investment $316,911 $313,022 $229,075
======== ======== ========
</TABLE>
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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 hereunto duly authorized.
MTS SYSTEMS CORPORATION
/s/ David E. Hoffman
----------------------------------------
David E. Hoffman
Vice President
Chief Financial Officer
Dated: October 15, 1999
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