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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): July 26, 2006
MTS SYSTEMS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MINNESOTA 0-2382 41-0908057
(STATE OR OTHER (COMMISSION FILE (I.R.S. EMPLOYER
JURISDICTION OF NUMBER) IDENTIFICATION NO.)
INCORPORATION)
14000 TECHNOLOGY DRIVE, EDEN PRAIRIE, MN 55344
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(952) 937-4000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Check the appropriate box below if the Form 8-K is intended to simultaneously
satisfy the filing obligations of the registrant under any of the following
provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4c))
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ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On July 26, 2006, the registrant issued a press release regarding the
registrant's results of operations for the third quarter of fiscal
2006. The full text of the press release is furnished as Exhibit 99.1
to this Form 8-K.
The furnished press release contains financial measures that are not
presented in accordance with generally accepted accounting principles
(GAAP), including "earnings per share before stock compensation
expense" as well as amounts included in Exhibit A to the release,
which contains a reconciliation of financial results before and after
the impact of stock compensation expense. These non-GAAP financial
measures and management's rationale for their use are discussed
further below.
The measures "gross profit before stock compensation expense,"
"selling expense before stock compensation expense," "general and
administrative expense before stock compensation expense," "research
and development expense before stock compensation expense," "total
operating expenses before stock compensation expense," "income from
operations before stock compensation expense," "net income before
stock compensation expense," and "earnings per share - diluted before
stock compensation expense" are not measures of financial performance
presented in accordance with GAAP. The third quarter fiscal year 2006
amounts for these measures exclude the impact of the adoption of
Statement of Financial Accounting Standard (SFAS) No. 123(R),
"Accounting for Share-Based Payment," which resulted in the income
statement recognition of non-cash, equity-based stock compensation
expense. Because the Company adopted SFAS 123(R) prospectively in the
first quarter of fiscal year 2006, management uses each of these
non-GAAP measures to measure the results of the Company's operations
before the effects of the newly required expensing of stock
compensation.
Management views all of these non-GAAP financial measures as valuable
performance indicators because they allow management to meaningfully
compare financial results (gross profit, selling expense, general and
administrative expense, research and development expense, total
operating expenses, income from operations, net income, and earnings
per share) for the third quarter of fiscal 2006 to the respective
financial results for the third quarter of fiscal 2005, in which the
Company was not required to and did not record stock-based
compensation expense in the income statement. While these non-GAAP
financial measures are not used to compute incentive compensation or
for any other substantive economic purpose, this comparison does
provide management with a meaningful and consistent comparison of
ongoing business performance between fiscal years 2006 and 2005.
Management believes these measures may be useful to an investor in
evaluating the Company's operating performance because they help
investors more meaningfully evaluate and compare the current period
financial results (gross profit, selling expense, general and
administrative expense, research and development expense, total
operating expenses, income from operations, net income, and earnings
per share) to the respective financial results for the prior fiscal
year, since the Company adopted SFAS 123(R) prospectively and did not
restate prior periods. Management also believes these measures may
provide useful information to enable investors to better compare the
Company's operating performance with the operating performance of its
peer companies that have not yet adopted SFAS 123(R).
Management does not believe there are any material limitations to the
use of any of the above non-GAAP financial measures when used to
compare current fiscal period financial results to those of the prior
year fiscal period and therefore does not believe it is necessary to
compensate for their use in any way. Further, management will
continue to assess the Company's performance and review its financial
results in relation to budgeted or planned results from multiple
perspectives, including before and after the effects of stock
compensation expense.
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These non-GAAP measures should be considered in addition to, not as a
substitute for, other measures of the Company's results of operations
prepared in accordance with GAAP. These non-GAAP measures may be
calculated differently from, and therefore may not be comparable to,
similarly titled measures used by other companies. A reconciliation
of gross profit before stock compensation expense, selling expense
before stock compensation expense, general and administrative expense
before stock compensation expense, research and development expense
before stock compensation expense, total operating expenses before
stock compensation expense, income from operations before stock
compensation expense, net income before stock compensation expense,
and earnings per share before stock compensation expense to gross
profit, selling expense, general and administrative expense, research
and development expense, total operating expenses, income from
operations, net income, and earnings per share, respectively, which
are the nearest GAAP measures, is included in Exhibit A to the press
release furnished in this Form 8-K.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
Exhibit 99.1 - Press Release issued on July 26, 2006 regarding
the registrant's results of operations for the third quarter
of fiscal 2006 furnished pursuant to Item 2.02 of this Form
8-K.
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SIGNATURES
Pursuant to the requirements 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
(Registrant)
Date: July 26, 2006 By: /s/ Susan E. Knight
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Susan E. Knight
Vice President and Chief Financial Officer
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MTS SYSTEMS CORPORATION
FORM 8-K REPORT
INDEX TO EXHIBITS
Exhibit No. Description
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99.1 Press Release issued on July 26, 2006 regarding the registrant's
results of operations for the third quarter of fiscal 2006
furnished pursuant to Item 2.02 of this Form 8-K.
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