Annual Report — [x] Reg. S-K Item 405 — Form 10-K
Filing Table of Contents
Document/Exhibit Description Pages Size
1: 10-K405 Annual Report -- [x] Reg. S-K Item 405 19± 82K
2: EX-3.B Articles of Incorporation/Organization or By-Laws 6± 23K
3: EX-10.A Material Contract 4± 14K
4: EX-13 Mts Annual Report 19 125K
5: EX-21 Subsidiaries of the Registrant 1 5K
6: EX-23 Consent of Experts or Counsel 1 5K
7: EX-27 Financial Data Schedule (Pre-XBRL) 1 6K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------------
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1995 COMMISSION FILE NUMBER 0-2382
-----------------------------------
MTS SYSTEMS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MINNESOTA 612-937-4000 41-0908057
(STATE OR OTHER JURISDICTION OF (TELEPHONE NUMBER OF REGISTRANT (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION INCLUDING AREA CODE) IDENTIFICATION NO.)
14000 TECHNOLOGY DRIVE, EDEN PRAIRIE, MINNESOTA 55344-9763
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
-----------------------------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK (PAR VALUE OF 25 CENTS PER SHARE)
INDICATE BY CHECK MARK WHETHER 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 BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO
ITEM 405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED,
TO THE BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION
STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY
AMENDMENT TO THE FORM 10-K. [X]
AS OF DECEMBER 1, 1995, 4,678,644 SHARES OF THE REGISTRANT'S COMMON
STOCK WERE OUTSTANDING AND THE AGGREGATE MARKET VALUE OF SUCH COMMON STOCK
(BASED UPON THE AVERAGE OF THE HIGH AND LOW PRICES) HELD BY NON-AFFILIATES WAS
$140,110,919.
-----------------------------------
DOCUMENTS INCORPORATED BY REFERENCE
ANNUAL REPORT TO SHAREHOLDERS FOR FISCAL YEAR ENDED SEPTEMBER 30, 1995 - PARTS
I, II AND IV.
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS, STATEMENT DATED PRIOR TO
JANUARY 30, 1996 - PART III.
MTS SYSTEMS CORPORATION
ANNUAL REPORT PURSUANT TO
SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
PART I
ITEM 1. BUSINESS
MTS Systems Corporation (hereafter called "MTS" or "the Company" or "the
Registrant") designs, manufactures, markets and services computer-based testing
and simulation systems for determining the mechanical behavior of materials,
products and structures (the Mechanical Testing and Simulation sector), and
measurement and control products for measuring process variables and automating
manufacturing processes (the Measurement and Automation sector). MTS's customers
use these systems and products to improve product quality, accelerate product
development, increase machine and worker productivity and protect the
environment.
The Company's systems and products share common technologies: sensors for
measuring machine and process parameters, control technologies for test and
process automation, hydraulic and electric servodrives for precise actuation,
and application software to tailor the test or automation system to the
customer's needs and to analyze results. These technologies offer the customer
solutions to problems in a variety of markets.
CUSTOMERS AND PRODUCTS BY MARKET SECTOR
The Company's operations are organized into two business sectors: 1) Mechanical
Testing and Simulation, and 2) Measurement and Automation. The operational
alignment of the sectors allows the Company to maintain a strategic focus on
markets with different applications of the Company's technologies and with
different competitors.
Mechanical Testing and Simulation Sector: Customers in this sector use MTS's
systems and software for research, product development and quality control in
the design and manufacture of materials, products and structures. Customer
industries (markets, market niches or niches) in this sector include:
Aircraft and aerospace vehicle manufacturers and their suppliers: These
customers use the Company's systems and software for full scale structural tests
on complete vehicles and principle subsystems such as landing gear.
In the aircraft industry, the Company's customers include manufacturers of
commercial, military and general aviation planes and their suppliers such as
engine manufacturers.
The space vehicle industry also utilizes the Company's systems and software for
such applications as solid fuel development and heat shield studies.
Both aircraft and space vehicle manufacturers and their suppliers use the
Company's systems and software to perform research on new materials and control
quality in the manufacturing of materials.
Biomechanics: This market is comprised of university and government research
laboratories and manufacturers of implants, prostheses and other medical and
dental devices and materials.
These organizations use the Company's systems and software to determine the
durability and performance of such products in use, which frequently requires
the Company's systems to replicate conditions within and forces withstood by the
human body.
Civil Engineering: This market is comprised of university and government
laboratories and construction and mineral/petroleum production companies.
Systems sold in this market include seismic (earthquake) simulators, civil
construction component (e.g., beam) testing systems, pavement material testing
systems, and specialized systems for rock and soil studies in construction and
mineral/petroleum production.
Consumer Products/Material Producers: These organizations are grouped together
because they primarily purchase the Company's electromechanical and
servohydraulic material testing systems which are used in research, product
development and extensively for quality control during production.
Typical consumer products are made of textiles, paper products and plastic films
of many types. Material producers include metal, ceramic, composite, paper and
plastic manufacturers.
Ground Vehicle Industry: This market consists of automobile, truck, and off-road
vehicle manufacturers and their suppliers. This market niche is the largest
within the Mechanical Testing and Simulation sector.
Applications of the Company's systems and software include the design and
production testing of engines and drivetrains, suspension and steering
components, body and chassis, tires and wheels, and fuel storage and exhaust
components. Vehicle manufacturers strive to improve performance and durability,
accelerate design development work and decrease the cost to manufacture their
products and components.
Occupant safety is another reason customers use the Company's systems and
software to test vehicle designs and prototypes.
Advanced Systems: Although not an industry niche itself, the Company offers
highly customized systems for simulation and testing through its Advanced
Systems Division. These systems are designed "starting with a clean sheet of
paper" specifically for the given application and frequently embody technology
which is new to the application. Customers of the Advanced Systems Division come
from all industries served by the Mechanical Testing and Simulation sector -
aerospace and defense, biomechanics, civil engineering, material suppliers, and
ground vehicles.
The Advanced Systems Division also works with these customers in the development
of new manufacturing technologies and systems such as welding and material
processing.
Mechanical Testing and Simulation accounted for 81.3% of revenue in 1995, 81.5%
of revenue in 1994 and 84.5% of revenue in 1993. It represents the oldest and is
the principal market for the Company's technology. This sector is responsible
for the Company's traditional corporate image: "a leading supplier of test
equipment to laboratories."
Measurement and Automation Products: Measurement and Automation customers use
MTS products in discrete part and fluid process manufacturing. Product niches in
this sector include:
Displacement Position and liquid-level sensors based on magnetostrictive
technology. Displacement sensors accurately measure position from 3 inches to 50
feet. They are used in discrete (piece part) manufacturing where accurate
positioning is critical. Major applications include injection molding and die
casting machines, printing and packaging machines and presses of all types.
Liquid level sensors accurately measure levels of liquids in containers. These
sensors are sold in three markets: the underground storage tank market (UST),
the process storage tank market (PST) and the large, above-ground inventory
storage tank market (AST).
The UST market consists primarily of retail gas stations. It is served by
original equipment manufacturers (OEMs) who purchase MTS sensing probes and
incorporate them with their proprietary electronic unit to monitor fuel
inventory and detect leaks.
The PST market includes a wide variety of applications in the chemical,
petroleum refining, pharmaceutical, and food industries. This market generally
requires sensors less than 25 feet in length.
The AST market of above ground liquid storage tanks and tank farms is the newest
application for these sensors. This market requires sensors up to 100 feet in
length. MTS also sells controlling and indicating instruments to this market for
use on installations of up to several hundred tanks.
Servo motors and controllers. Customers use high-performance, permanent magnet
brushless servo motors and amplifiers to automate discrete-part manufacturing
machines and systems such as machine tools and converting and packaging
machines. Customers also use the Company's control products for accurate control
of complex, multi-axis, rotary and linear machine motions. These motors,
amplifiers and motion control products create systems that are applied to a wide
variety of automation tasks by both end-users and original equipment
manufacturers.
The MTS Measurement and Automation Sector accounted for 18.7% of revenue in
1995, 18.5% of revenue in 1994 and 15.5% of revenue in 1993.
COMMON TECHNOLOGIES
MTS' systems and products in both sectors are constructed using employees'
application engineering know-how with common technology building block
components generally composed of measuring and actuation devices, electronic
controls and application software. Many of these components are proprietary and
are developed and manufactured within the Company.
MTS employees engineer or configure the components into products and systems to
match the application called for in the customer's order. Frequently,
special-purpose software is developed to meet a customer's unique requirements.
Such software often represents a significant part of the value added by the
Company. Services offered to system customers include on-site installation,
training of customer personnel, technical manuals and continuing maintenance.
Such services are often included in the contract amount charged for completed
systems, but these services may be purchased separately, during and after the
system warranty period.
Certain proprietary products, such as sensors, process controls, motors,
actuators, and process software and firmware are sold as products to end users
and to other companies for incorporation into their systems, machines, or
processes. All products and most systems are sold on fixed-price contracts.
Complex systems and applied research in the Mechanical Testing and Simulation
sector are in some cases undertaken on "cost-plus-fixed-fee" contract basis.
1995 PRODUCT DEVELOPMENT HIGHLIGHTS
The Company funds new application and product development within its market
sectors. Highlights of product development undertaken or completed in 1995 are:
Mechanical Testing and Simulation Sector
* The Company introduced the Flextest(TM) II control/software product line -
which is being used across most of the application niches in the Mechanical
Testing and Simulation sector - featuring improved user programmability.
* The Company completed the first installation of its new kinematic and
compliance test system used by auto/truck manufacturers to design and
evaluate suspension and steering components and systems.
* The Company introduced a new control/software product for engine and
driveline dynamometry applications using the VXI "plug and play"
architecture which is being widely adopted in the field due to its ability
to perform high speed data acquisition and provide customer configuration
flexibility.
Measurement and Automation Sector
* The Company introduced digital signal processor (DSP) based "smart"
amplifiers for its MaxPlus(TM) servo motor products providing an
economically attractive package for applications where the size of the
amplifier/controller package needs to be minimized.
* The Company introduced a new flexible liquid level sensor design for
storage tanks up to 100 feet. The flexible design enables the sensor to be
shipped, handled and installed much more easily - reducing cost and
potential damage.
CHARACTERISTICS OF SALES
The Company's systems are sold and delivered throughout the world and its
customer orders cover a broad spectrum of industries, government agencies,
institutions, applications, and geographic locations. As such, MTS is not
heavily dependent upon any single customer for its business.
Mechanical Testing and Simulation systems range in price from less than $20,000
to as much as $10 million. Large, individual, fixed-price orders, although
important to the Company's image and technical advancement, tend to produce
volatility in both backlog and quarterly operating results. The majority of the
orders received in any one year are based on fixed-price quotations and require
extensive technical communication with potential customers prior to receipt of
an order. The current typical delivery time for a system ranges from one to
twelve months, depending upon the complexity of the system and the availability
of components in the Company's or suppliers' inventories. Larger system
contracts can run as long as three years and cost-plus-fixed-fee contracts have
run longer.
Measurement and Automation products are sold in quantity at unit prices ranging
from $500 to $10,000. Delivery varies from several days to several months.
Approximately 53.7% of revenue in fiscal 1995, 50.7% of revenue in 1994, and
48.6% of revenue in 1993 was from domestic customers. The balance of the
revenue, some of which was sold in currencies other than the U.S. dollar, was to
customers located outside the United States--mainly in Europe, Asia-Pacific,
Latin America, and Canada. The Company's foreign operations and foreign revenues
may be affected by local political conditions, export licensing problems, and/or
currency restrictions.
Sales Channels: MTS approaches its market sectors through a number of sales
channels. The Company sells its Mechanical Testing and Simulation equipment
through an employee sales network, independent sales representatives, and a
direct mail (catalog) operation. Sales personnel are generally graduate
engineers or highly skilled technicians and are specially trained to sell MTS
products and services. Employee salespersons are compensated with salary and
sales incentives, and independent representatives are paid commissions only.
A list of domestic and international offices for the Company's Mechanical
Testing and Simulation Sector follows:
Domestic offices:
Akron Dayton Philadelphia
Austin Denver Raleigh
Baltimore Detroit Pittsburgh
Boston Huntsville San Diego
Chicago Los Angeles San Jose
Dallas Minneapolis Seattle
Washington, D.C.
International offices:
Beijing and other cities, Paris, France
Peoples Republic of China Sao Paulo, Brazil
Berlin and other cities, Seoul, Korea
Germany Torino, Italy
Gothenburg, Sweden Stroud, United Kingdom
Hong Kong Nagoya and Tokyo, Japan
In addition, MTS works with sales and service representative organizations in
nearly all industrialized countries of the world and in the developing countries
of Latin America, Asia, Africa and the Mid-East.
The Company offers a comprehensive mail-order catalog of MTS components,
accessories, and products. The catalog includes products of complementary
vendors and aims to reach a broad range of customers involved in Mechanical
Testing and Simulation.
The Measurement and Automation sector sells its products through sales channels
separate from the Mechanical Testing and Simulation sector. A network of
employees, direct sales, external domestic distributors, representatives, and
system houses market the products of these divisions. International revenue
currently accounts for 28% of this sector's volume. Efforts to expand sales
channels in international markets continue.
International Operations and Export Sales: The sections entitled Geographic
Analysis of New Orders and Geographic Segment Information on pages 12 and 23 of
the Company's 1995 Annual Report to Shareholders, which sections are
incorporated by reference herein, contain information regarding the Company's
operations by geographic area.
Export Licensing: The Company's foreign shipments in fiscal 1995, 1994 and 1993
included sales to Asia-Pacific, European, and other regions that require the
Company to obtain export licenses from the U.S. Department of Commerce, the
granting of which are subject to governmental approval. The Company does not
undertake manufacturing on custom systems or projects until it is assured that a
license will be granted. However, due to the extended time to process and
receive a license, design work is performed on some systems during the licensing
period. Changes in political relations between the U.S. and countries requiring
import licenses, as well as other factors, can adversely affect the Company's
ability to complete a sale should a previously issued license be withdrawn.
While political reform occurring internationally may relax export controls, U.S.
government initiatives on weapons proliferation and foreign policy in other
parts of the world may cause delays for certain shipments or the rejection of
orders by the Company.
BACKLOG
The Company's backlog, which it defines as firm orders remaining unfilled,
totaled $98,757,000 at September 30, 1995; $84,591,000 at September 30, 1994;
and $88,731,000 at September 30, 1993. The Company believes that all of the
backlog at September 30, 1995 will become revenue during fiscal 1996. Delays may
occur due to technical difficulties, export licensing approval or the customer's
preparation of the installation site. Any such delay can affect the period when
backlog is recognized as revenue.
COMPETITION
In the Mechanical Testing and Simulation Sector, customers may choose to buy
equipment from the Company or from major competitors: Instron (U.S. based),
Interlachen (U.S.), SATEC (U.S.), AVL (Austria), Carl Schenck (Germany), Zwick
(Germany), Saganomiya and Shimadzu (Japan). There are also smaller local
competitors in most major countries.
In lieu of buying equipment from the Company or its competitors, customers may
contract with testing laboratories such as EG&G, Peabody, Wyle, or with
universities. Government laboratories also market testing services to the
public.
Finally, customers may choose to construct their own testing equipment from
commercially available components. Customers in the aerospace and automotive
industries and universities sometimes choose this approach, purchasing equipment
from companies such as Parker Hannifin, Moog, and Mannesman (Germany).
In the Measurement and Automation Sector, the Company competes directly with
small to medium-sized specialty suppliers and also with divisions of the large
control system companies such as Rockwell, Emerson Electric, Siemens (Germany)
and Fanuc (Japan).
MANUFACTURING AND ENGINEERING
The Company conducted a significant portion of its fiscal 1995 Mechanical
Testing and Simulation manufacturing and engineering activities in Minneapolis.
Certain engineering, project management, final system assembly and quality
testing may be done in Berlin, Germany and Tokyo, Japan. Electromechanical
material testing systems are assembled in the Raleigh, NC, facility and in the
Paris, France (Adamel Lhomargy) facility. The Company's MTS-PowerTek subsidiary
engineers and assembles dynamometer control systems and provides related
services from Detroit. Manufacturing and engineering activities for the
Automation and Measurement sector occur in Raleigh, NC, in Ludenscheid, Germany,
in New Ulm, MN, and at the Company's majority-owned subsidiary in Nagoya, Japan.
Worldwide expenditures for manufacturing equipment were approximately $6,351,000
in 1995, $5,427,000 in 1994, and $2,723,000 in 1993.
PATENTS AND TRADEMARKS
The Company holds a number of patents, patent applications, licenses,
trademarks, and copyrights which it considers, in the aggregate, to constitute a
valuable asset. The Company's system business is not dependent upon any single
patent, license, trademark, or copyright.
RESEARCH AND DEVELOPMENT
The Company does not do basic research, but does fund significant product,
system and application developments. Costs of these development programs are
expensed as incurred, and amounted to $13,733,000, $12,645,000 and $13,697,000
for fiscal years 1995, 1994 and 1993, respectively. Additionally, the Company
also undertakes "first of their kind" high-technology, customer-funded contracts
which contain considerable technical pioneering. The combination of internally
sponsored product development and system or application innovation on customer
contracts approximates 10% of annual sales volume.
EXECUTIVE OFFICERS OF THE COMPANY
The Corporate Executive Officers of the Registrant on September 30, 1995 were:
[Download Table]
Name and Age Position Officer Since
------------ -------- -------------
D. M. Sullivan (60) Chairman, President and 1976
Chief Executive Officer
K. D. Zell (53) Executive Vice President 1979
W. G. Beduhn (54) Vice President 1983
M. L. Carpenter (58) Vice President 1973
and Chief Financial Officer
R. W. Clarke (65) Vice President 1973
K. E. Floren (59) Vice President 1990
W. Ongyert (57) Vice President 1985
J. H. Owens (55) Vice President 1984
M. G. Togneri (58) Vice President 1991
Officers serve at the discretion of the board, are elected annually by the
directors, and serve until their successors are elected.
EMPLOYEES
MTS employed 1,612 persons as of September 30, 1995, including 293 employees
located in Europe, 47 in Japan, 15 in China, 3 in Canada, 12 in Korea and 4 in
Hong Kong.
None of the Company's U.S. employees are covered by a collective bargaining
agreement, and MTS has experienced no work stoppages at any location.
SOURCES AND AVAILABILITY OF RAW MATERIALS AND COMPONENTS
A major portion of products and systems delivered to a customer may consist of
equipment purchased from vendors. The relationship which the Company promotes
with its vendors is one of close cooperation. The Company is dependent upon
certain computing hardware and software devices and certain raw materials which
have limited sources. However, the Company has not experienced significant
problems in procurement or delivery of any essential materials, parts, or
components in the last several years.
Due to the manner in which the Company sells the majority of its products, on a
fixed-price contract agreed upon at the time the order is obtained, wide
fluctuations up or down in cost of materials and components from order date to
delivery date, if not accurately forecast by the Company at the earlier date,
can change the profitability of any sale. The Company believes that such
fluctuations have not had a material effect on reported earnings, except as
affected by changes in foreign currency rates, which have been reported.
ENVIRONMENTAL MATTERS
Management believes the Company's operations are in compliance with federal,
state, and local provisions relating to the protection of the environment.
ITEM 2. PROPERTIES
Domestic Facilities:
The Company's main plant and corporate headquarters, occupying 380,000 square
feet, is located in Eden Prairie, Minnesota, a suburb of Minneapolis. The
original plant was completed in 1967. Five additions, the most recent of which
was in 1990, have expanded the plant to its present size. Approximately 45% of
the Minneapolis facility is used for manufacturing while the balance of the
facility is used for office space. The plant site is located on 54 acres of land
on Minnesota State Highway 5, approximately one mile west of Interstate Highway
494.
Custom Servo Motors, Inc. occupies a 30,000 square foot plant in New Ulm,
Minnesota (65 miles southwest of Minneapolis). The plant provides light assembly
operations and office space. The facility was constructed in 1993 by the New Ulm
Economic Development Corporation and added onto in 1995. MTS has a five year
operating lease for the facility with provisions to extend the lease, purchase
the property, or terminate the lease. The terms of the lease agreement do not
require capitalization of the asset and the related obligation.
Sensors Division is located near the Research Triangle Park in Cary, North
Carolina, a suburb of Raleigh. A 40,000 square foot plant, constructed in 1988,
provides manufacturing and office space. In 1992, 25,000 square feet was added
to the plant.
SINTECH Division is located adjacent to the Sensors Division site in Cary, North
Carolina. A 25,000 square foot plant, constructed in 1991, provides
manufacturing and office space.
MTS-PowerTek, Inc. occupies 20,000 square feet in Farmington Hills, Michigan, a
suburb of Detroit. Plant and office space in two buildings is rented under
conventional operating lease terms. Capitalization of the asset and the related
obligation is not required.
The Company leases space in other U.S. cities for sales and service offices.
Neither the space nor the rental obligations is significant.
International Facilities:
MTS Systems GmbH (Berlin) is located in a 80,000 square foot facility.
As of September 30, 1995 3,000 square feet has been leased to another company.
The building is situated on land leased by MTS from the city government. The
lease expires in 2069.
Adamel Lhomargy S.A., operates a leased facility in Paris, France, of
approximately 38,000 square feet in size. Approximately 40% of this space is
used for manufacturing with the remainder used as offices. The current lease
expires at the end of the 1998 fiscal year.
MTS Sensors Technologie operates a leased facility in Ludenscheid, Germany on
approximately six acres of land. The manufacturing and office facilities occupy
18,000 square feet at this location.
The Company also leases office and general purpose space for its sales and
service subsidiaries in Stroud, United Kingdom; Paris, France; Torino, Italy;
Seoul, South Korea; Tokyo and Nagoya, Japan; Toronto, Canada; Sao Paulo, Brazil;
Gothenburg, Sweden; Beijing and Shanghai, Peoples Republic of China; and Hong
Kong. No manufacturing is done at these locations.
Expansion Opportunities:
The Company owns approximately 85 acres of land adjacent to its Minneapolis
facility. This site could house expanded manufacturing operations. Also, the
site in Raleigh allows for expansion. Other suitable commercial real property is
available for purchase or lease in metropolitan areas where the Company is
presently located. The Company considers its current facilities adequate to
support anticipated revenues in 1996.
ITEM 3. LEGAL PROCEEDINGS
No material legal proceedings were pending or threatened against the Company or
its subsidiaries as of September 30, 1995.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted during the fourth quarter of the year ended September
30, 1995, for a vote by the shareholders.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The Company's stock is traded on The Nasdaq Stock Market's National Market
under the symbol MTSC. The following table shows the Company's low and high
closing sale transactions as reported by The Nasdaq.
[Download Table]
Quarter Ended Low * High*
December 31, 1993 $27.75 $32.00
March 31, 1994 $28.50 $32.50
June 30, 1994 $25.00 $29.50
September 30, 1994 $22.00 $28.50
December 31, 1994 $20.25 $24.75
March 31, 1995 $22.00 $25.75
June 30, 1995 $23.50 $27.75
September 30, 1995 $26.75 $29.00
*Source: The Nasdaq Stock Market, Inc. Summary of Activity Report
As of December 1, 1995 there were 1,395 holders of record of the Company's $.25
par value common stock. The Company estimates another 1,500 shareholders, whose
stock is held by nominees or broker dealers, are included in the holders of
record.
The Company has a history of paying quarterly dividends and expects to continue
such payments in the future. During 1995, 1994, and 1993, the Company paid
dividends totaling $.56, $.56, and $.48 per share, per year, respectively, to
holders of its common stock.
Under the terms of the Company's credit agreements, certain covenants require
that tangible net worth, as defined, must exceed a defined minimum amount and
limit repurchases of its common stock to a defined maximum amount. As of
September 30, 1995, tangible net worth exceeded the minimum by $17,772,000 and
the Company had $7,404,000 available for repurchases of its common stock. Thus,
the Company may declare and pay future dividends similar to recent dividends
without restriction.
ITEM 6. SELECTED FINANCIAL DATA
A comprehensive summary of selected financial information is presented in the
"Six Year Financial Summary" on page 1 of the Company's 1995 Annual Report to
Shareholders. Data included in the summary is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results of
Operations on pages 12 through 16 of the Company's 1995 Annual Report to
Shareholders is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements, Report of Independent Public Accountants,
Quarterly Financial Information (unaudited), and Six Year Financial Summary
(unaudited) included in the Company's 1995 Annual Report to Shareholders are
incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
(a) Information concerning the Company's directors may be found in the
Company's Proxy Statement, a definitive copy of which will be filed with
the Securities and Exchange Commission prior to January 30, 1996, and is
incorporated herein by reference.
(b) See Item 1. Business, on page 9 for information on the Company's Executive
Officers.
(c) The Company has no other significant employees requiring disclosure in this
Form 10-K.
(d) There are no family relationships between and among directors or officers.
(e) Business experience of Directors may be found in the Company's Proxy
Statement, a definitive copy of which will be filed with the Securities and
Exchange Commission prior to January 30, 1996, and is incorporated herein
by reference. Business experience of the Executive Officers for at least
the last 5 years (consisting of positions with the Company unless otherwise
indicated) is as follows:
Officer Business Experience
D. M. Sullivan Chairman in 1994. Chief Executive
Officer since 1987. President and Chief
Operating Officer since 1982. Vice
President from 1976 to 1982. Has
extensive prior experience in the
management of technology intensive
businesses.
K. D. Zell Executive Vice President of Mechanical
Testing and Simulation sector in 1993.
Vice President of Materials Testing
Division from 1988 to 1993. Vice
President, Sales and Service from 1984
to 1988. Vice President, Product Group
from 1979 to 1984. Division manager,
Hydro-mechanical Products from 1978 to
1979.
W. G. Beduhn Vice President of Advanced Systems
Division since 1991. Vice President of
Technology Development from 1983 to
1991. Division manager of various
marketing and operating divisions from
1977 to 1983.
M. L. Carpenter Vice President and Chief Financial
Officer since 1991. Vice President and
Treasurer since 1973.
R. W. Clarke Vice President of Simulation Group since
1984. Previous responsibilities include
Vice President of Sales and Service and
various market divisions from 1973 to
1984. Retired on September 30, 1995.
K. E. Floren Vice President of Aerospace and
Engineering Mechanics Division, North
American Sales and Service since 1993.
Vice President of Vehicle Dynamics
Division from 1990 to 1993. Manager of
various marketing and sales units from
1975 to 1990.
W. Ongyert Vice President of European Sales and
Service since 1985. General manager of
European operations from 1977 to 1985.
J. H. Owens Vice President, Minneapolis Operations
since 1988. Vice President, Product
Group from 1986 to 1988. Vice President
of Manufacturing Operations Division
from 1984 to 1986. Division manager of
various product manufacturing units from
1976 to 1984.
M.G. Togneri Vice President of Measurement and
Automation sector since 1991. Prior to
his employment at MTS was V.P. at
Square D Corporation and General
Manager of Crisp Automation. Has
extensive experience in the industrial
instrumentation and control business in
the U.S. and internationally.
(f) Information regarding compliance with Section 16(a) of the Securities
Exchange Act of 1934 is incorporated herein by reference from the
Company's Proxy Statement, a definitive copy of which will be filed
with the Securities and Exchange Commission prior to January 30, 1996,
pursuant to Regulation 14A under the Securities Exchange Act of 1934.
ITEM 11. EXECUTIVE COMPENSATION
See Item 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by Items 11 and 12 is incorporated herein by reference
from the Company's Proxy Statement, a definitive copy of which will be filed
with the Securities and Exchange Commission prior to January 30, 1996, pursuant
to Regulation 14A under the Securities Exchange Act of 1934.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
The following documents are filed as part of this report:
(a) Financial Statements:
See accompanying Index to Financial Statements on Page F-1.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the fourth quarter of
fiscal 1995.
(c) Exhibits:
3.a Restated Articles of Incorporation, adopted January 31,
1994, incorporated by reference from exhibit 3.a to
Form 10-Q for the quarter ended March 31, 1994.
3.b Restated Bylaws, reflecting amendments through
May 15, 1995.
10.a Management Variable Compensation Plan-Fiscal 1995,
dated November 29, 1994.
10.b 1985 Employee Stock Option Incentive Plan, incorporated
by reference to exhibit 4(a) from Form S-8, File No.
2-99389.
10.c 1987 Stock Option Plan incorporated by reference to
exhibit A from Form S-8, File No. 33-21699.
10.d 1990 Stock Option Plan, incorporated by reference to
exhibit A from Form S-8, File No. 33-35288.
10.e 1994 Stock Plan incorporated by reference to exhibit
4(a) from Form S-8, File No. 33-73880.
10.f Severance Agreement, dated May 1, 1990 between the
registrant and William G. Beduhn, incorporated by
reference to exhibit 10.g of Form 10-K for the fiscal
year ended September 30, 1990.
10.g Severance Agreement, dated May 1, 1990 between the
registrant and Marshall L. Carpenter, incorporated by
reference to exhibit 10.i of Form 10-K for the fiscal
year ended September 30, 1990.
10.h Severance Agreement, dated May 1, 1990 between the
registrant and Richard W. Clarke, incorporated by
reference to exhibit 10.j of Form 10-K for the fiscal
year ended September 30, 1990.
10.i Severance Agreement, dated December 3, 1990 between the
registrant and Kenneth E. Floren, incorporated by
reference to exhibit 10.k of Form 10-K for the fiscal
year ended September 30, 1990.
10.j Severance Agreement, dated May 1, 1990 between the
registrant and Werner Ongyert, incorporated by
reference to exhibit 10.m of Form 10-K for the fiscal
year ended September 30, 1990.
10.k Severance Agreement, dated May 1, 1990 between the
registrant and J. Howell Owens, incorporated by
reference to exhibit 10.n of Form 10-K for the fiscal
year ended September 30, 1990.
10.l Severance Agreement, dated May 1, 1990 between the
registrant and Donald M. Sullivan, incorporated by
reference to exhibit 10.p of Form 10-K for the fiscal
year ended September 30, 1990.
10.m Severance Agreement, dated May 1, 1990 between the
registrant and Richard S. White, incorporated by
reference to exhibit 10.q of Form 10-K for the fiscal
year ended September 30, 1990.
10.n Severance Agreement, dated May 1, 1990 between the
registrant and Keith D. Zell, incorporated by reference
to exhibit 10.r of Form 10-K for the fiscal year ended
September 30, 1990.
10.o Severance Agreement, dated April 1, 1991 between the
registrant and Mauro G. Togneri, incorporated by
reference to exhibit 10.s of Form 10-K for the fiscal
year ended September 30, 1991.
10.p 1992 Employee Stock Purchase Plan, incorporated by
reference to exhibit 4(a) from Form S-8,
File No. 33-45386.
13. Annual Report to Shareholders for the fiscal year ended
September 30, 1995.
21. Subsidiaries of the Company.
23. Consent of Independent Public Accountants.
27. Financial Data Schedule.
(d) Financial Statement Schedules:
See accompanying Index to Financial Statements on page F-1.
SIGNATURES
Pursuant to the requirement of Section 13 or 15(d) 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
By: /s/ Donald M. Sullivan
Donald M. Sullivan
Chairman, Chief Executive Officer,
President and Director
By: /s/ Marshall L. Carpenter
Marshall L. Carpenter
Vice President and Chief
Financial Officer
By: /s/ Marvin R. Eckerle
Marvin R. Eckerle
Controller
Date: December 21, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated:
By: /s/ E. T. Binger
E. T. Binger, December 21, 1995
Director
By: /s/ Charles A. Brickman
Charles A. Brickman, December 21, 1995
Director
By: /s/ Bobby I. Griffin
Bobby I. Griffin, December 21, 1995
Director
By: /s/ Russell A. Gullotti
Russell A. Gullotti, December 21, 1995
Director
By: /s/ Thomas E. Holloran
Thomas E. Holloran, December 21, 1995
Director
By: /s/ Thomas E. Stelson
Thomas E. Stelson, December 21, 1995
Director
By: /s/ Linda Hall Whitman
Linda Hall Whitman, December 21, 1995
Director
MTS SYSTEMS CORPORATION AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
A. CONSOLIDATED FINANCIAL STATEMENTS
Reference is made to the consolidated financial statements in the
Company's 1995 Annual Report to Shareholders which are incorporated by
reference in accordance with Rule 12b-23 under the Securities Exchange
Act of 1934 and attached hereto.
Annual
Report 10-K
Page Page
Quarterly Financial Information (Unaudited) 16 --
Consolidated Balance Sheets - September 30, 1995 17 --
and 1994
Consolidated Statements of Income and Shareholders'
Investment for the Years Ended September 30, 1995,
1994 and 1993 18 --
Consolidated Statements of Cash Flows for the
Years Ended September 30, 1995, 1994 and 1993 19 --
Notes to Consolidated Financial Statements 20 --
Report of Independent Public Accountants 28 --
B. REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON SCHEDULE --- F-3
C. CONSOLIDATED SCHEDULE
Schedule Description
II Summary of Consolidated Allowances for
Doubtful Accounts --- F-4
All schedules except the one listed above have been omitted as
not required, not applicable, or the information required
therein is contained in the financial statements or the
footnotes thereto.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE
To MTS Systems Corporation:
We have audited in accordance with generally accepted auditing standards, the
consolidated financial statements included in MTS Systems Corporation's annual
report to shareholders incorporated by reference in this Form 10-K, and have
issued our report thereon dated November 21, 1995. Our audit was made for the
purpose of forming an opinion on those statements taken as a whole. The schedule
listed as a part of Item 14 (page F-4) in this Form 10-K is the responsibility
of the Company's management and is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not part of the basic
financial statements. This schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.
ARTHUR ANDERSEN LLP
Minneapolis, Minnesota,
November 21, 1995
MTS SYSTEMS CORPORATION AND SUBSIDIARIES
SCHEDULE II - SUMMARY OF CONSOLIDATED ALLOWANCES
FOR DOUBTFUL ACCOUNTS
FOR THE YEARS ENDED SEPTEMBER 30, 1995, 1994 AND 1993
[Download Table]
Balance Provision Amounts Balance
Beginning Charged to Written End of
of Year Operations Off Year
(expressed in thousands)
1995 $1,439 $620 $(235) $1,824
1994 1,461 110 (132) 1,439
1993 608 981 (128) 1,461
EXHIBIT INDEX
Exhibit
No. Description
3.b Restated Bylaws
10.a Management Variable Compensation Plan-Fiscal 1995
13. Annual Report to Shareholders for the fiscal year
ended September 30, 1995
21. Subsidiaries of the Company
23. Consent of Independent Public Accountants
27. Financial Data Schedule
Dates Referenced Herein and Documents Incorporated by Reference
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