News Release

FOR IMMEDIATE RELEASE November 21, 2005

For More Information Contact: Susan Knight, Chief Financial Officer (952) 937-4000 Paul Runice, Treasurer (952) 937-4003

MTS Reports Fiscal 2005 EPS of $1.81, up 34% on Revenue Increase of 11%;
Company Exits Non-Strategic Businesses

Eden Prairie, Minn., November 21, 2005 – MTS Systems Corporation (NASDAQ: MTSC) today reported net income of $10.5 million, or $0.51 per diluted share, for its fourth quarter ended October 1, 2005, compared to net income of $8.2 million, or $0.40 per diluted share, for fourth quarter fiscal 2004. Fourth quarter fiscal 2005 earnings were impacted by the following items:

• $3.8 million, net of tax, or $0.18 per diluted share, gain on the sale of the engine test business (reported as a discontinued operation);

• $0.7 million, net of tax, or $0.03 per diluted share, costs related to the closure of the AeroMet subsidiary (reported as a discontinued operation);

• $3.2 million, net of tax, or $0.15 per diluted share, costs related to the exit of the noise and vibration software business (included in income before discontinued operations);

• $2.6 million, or $0.13 per diluted share, benefit to tax expense due to favorable resolution of previously reserved tax matters.

For fiscal 2005, net income was $37.1 million, or $1.81 per diluted share, compared to net income of $29.0 million, or $1.35 per diluted share, for fiscal 2004.

“The results for the quarter reflect three actions taken to focus the Company on our core test and sensors businesses,” said Sidney W. Emery, Jr., Chairman and CEO. “First, we completed the previously announced sale of our engine test business. Second, we closed AeroMet, our laser deposition technology business. Third, we decided to exit the noise and vibration software business, although we will continue to support our existing customers through fiscal 2006. These decisions were made after determining we did not have a viable path to a market leadership position in these three businesses. At the same time, we are increasing expenditures in R&D and marketing in the core Test and Industrial segments.”

Emery continued, “We were pleased with orders of $109.7 million in the quarter, which gives us a strong backlog going into fiscal 2006. Revenue of $90.5 million was weaker than expected, resulting from a volume shortfall in the Test segment due to delayed shipments from a system component supplier. As a result, approximately $5.0 million of revenue was delayed into fiscal 2006. However, the favorable tax benefit of $2.6 million, or $0.13 per diluted share, and solid gross margins more than offset the impact of the volume shortfall. Earnings per share of $0.51 was therefore higher than the previously communicated guidance range of $0.35-$0.40. For fiscal 2006, we are projecting revenue in the $395-$405 million range and earnings in the $1.66-$1.76 range, net of an estimated $0.14 stock option expense impact.”

Fourth quarter orders increased 23 percent to $109.7 million, compared to $88.9 million for fourth quarter fiscal 2004, primarily due to increased worldwide volume in the Test segment and increased volume in the Industrial segment in Europe and Asia. Fiscal 2005 orders were $404.4 million, an increase of 4 percent compared to $387.3 million for fiscal 2004, primarily due to increased volume in the Test segment in Europe and Asia and increased volume in the Industrial segment across all geographies. Backlog increased 10 percent in the quarter, from $200 million to $220 million.

Fourth quarter revenue was lower than expected at $90.5 million, a decrease of 6 percent compared to revenue of $96.0 million for fourth quarter fiscal 2004. This decrease was due to reduced revenue in the Test segment, primarily resulting from the supplier issue noted earlier, partially offset by continued growth in the Industrial segment. There was no significant impact on revenue from currency translation for fourth quarter fiscal 2005. Fiscal 2005 revenue was $374.4 million, an increase of 11 percent compared to $338.2 million for fiscal 2004, due to higher beginning backlog, increased project and short-cycle business in the Test segment, continued growth in the Sensors business, and approximately $7.4 million favorable impact of currency translation.

Fourth quarter income from operations was $9.2 million, a decrease of 39 percent compared to income from operations of $15.2 million for fourth quarter fiscal 2004, primarily driven by $4.5 million in costs associated with the exit of the noise and vibration software business as well as decreased volume in the Test segment. Fourth quarter income before discontinued operations per diluted share was $0.41, a decrease of 2 percent compared to income before discontinued operations of $0.42 per diluted share for fourth quarter fiscal 2004, primarily reflecting the impact of the business exit costs, largely offset by the tax benefit. Fourth quarter net income was $10.5 million, or $0.51 per diluted share, an increase of 28 percent compared to fourth quarter fiscal 2004 net income of $8.2 million, or $0.40 per diluted share, reflecting the gain on the sale of the engine test business and the favorable tax benefit, partially offset by business exit costs.

Fiscal 2005 income from operations was $53.0 million, an increase of 26 percent compared to $42.1 million for fiscal 2004, primarily driven by increased volume in both segments and improved margins in the Test segment, partially offset by the business exit costs of $4.5 million. Fiscal 2005 income before discontinued operations per diluted share was $1.79, an increase of 41 percent compared to income per diluted share before discontinued operations of $1.27 for fiscal 2004, primarily reflecting increased volume, improved Test segment margins, and the favorable fourth quarter tax benefit, partially offset by business exit costs. Fully diluted earnings per share for fiscal 2005 was $1.81, an increase of 34 percent compared to fully diluted earnings per share of $1.35 for fiscal 2004.

Cash, cash equivalents and short-term investments at the end of fourth quarter fiscal 2005 increased to $160 million, compared to $129 million at year-end fiscal 2004. During fiscal 2005 the Company reduced total debt outstanding by $6.8 million and used $33.7 million in cash to repurchase 1,022,000 shares of its common stock.

Segment Results

Test Segment:

The results of operations of the Company’s engine test business, which was sold during fourth quarter fiscal 2005, are excluded from results of operations of the Test segment for current and prior years.

Test segment orders were $94.1 million for fourth quarter fiscal 2005, an increase of 27 percent compared to orders of $74.2 million for fourth quarter fiscal 2004, due to increased volume across all geographies. Backlog increased 10 percent in the quarter, from $194 million to $214 million. Fourth quarter revenue was $74.7 million, a decrease of 9 percent compared to $81.7 million for fourth quarter fiscal 2004, primarily due to decreased project and short-cycle business, primarily resulting from the previously discussed supplier issue. Fourth quarter gross profit as a percent of revenue was 42.0 percent, a decrease of 0.8 percentage points compared to 42.8 percent for fourth quarter fiscal 2004, primarily due to $3.6 million unfavorable impact of costs associated with the exit of the noise and vibration software business, partially offset by productivity gains and reduced warranty expense resulting from quality initiatives. Excluding the noise and vibration business exit costs, gross profit as a percent of revenue was 46.8%. Income from operations for fourth quarter fiscal 2005 was $7.4 million, a decrease of 43 percent compared to income from operations of $13.0 million for fourth quarter fiscal 2004, reflecting the previously mentioned fourth quarter business exit costs in the current year.

Test segment orders for fiscal 2005 were $342.9 million, an increase of 3 percent compared to orders of $333.4 million for fiscal 2004, primarily due to increased volume in Europe and Asia. North America orders were flat with fiscal 2004. Backlog increased to $214 million from $181 million at the end of fiscal 2004. Fiscal 2005 revenue was $313.5 million, an increase of 10 percent compared to $285.9 million for fiscal 2004, primarily due to higher beginning backlog, increased project and short-cycle business and approximately $5.8 million favorable impact from currency translation. Fiscal 2005 gross profit as a percent of revenue was 42.8 percent, an increase of 3.4 percentage points compared to 39.4 percent for fiscal 2004, primarily due to improved project execution and other productivity gains, partially offset by $3.6 million of costs associated with the exit of the noise and vibration software business. Excluding these costs, gross profit as a percent of revenue was 43.9%. Income from operations for fiscal 2005 was $44.6 million, an increase of 26 percent compared to income from operations of $35.4 million for fiscal 2004.

Industrial Segment:

The results of operations of the Company’s AeroMet subsidiary, which was closed in fourth quarter fiscal 2005, are excluded from results of operations of the Industrial segment for current and prior years.

Orders for the Industrial segment were $15.6 million for fourth quarter fiscal 2005, an increase of 6 percent compared to orders of $14.7 million for fourth quarter fiscal 2004, due to continued growth in the Sensors business in Europe and Asia. Backlog remained flat in the quarter at $6 million. Fourth quarter revenue was $15.8 million, an increase of 10 percent compared to revenue of $14.3 million for fourth quarter fiscal 2004, driven by increased Sensors business volume across Europe and Asia. Fourth quarter gross profit as a percent of revenue was 49.6 percent, a decrease of 0.6 percentage points compared to 50.2 percent for fourth quarter fiscal 2004, primarily due to product mix. Income from operations for fourth quarter fiscal 2005 was $1.8 million, a decrease of 18 percent compared to income from operations of $2.2 million for fourth quarter fiscal 2004.

Orders for fiscal 2005 were $61.5 million, an increase of 14 percent compared to orders of $53.9 million for fiscal 2004, primarily due to increased volume in the Sensors business across all geographies. Backlog of $6 million remained flat compared to the end of fiscal 2004. Fiscal 2005 revenue was $60.9 million, an increase of 16 percent compared to $52.3 million for fiscal 2004, primarily due to higher order volume and approximately $1.6 million favorable impact from currency translation. Fiscal 2005 gross profit as a percent of revenue was 48.5 percent, a decrease of 0.9 percentage points compared to 49.4 percent for fiscal 2004, primarily due to charges associated with obsolete inventory. Income from operations for fiscal 2005 was $8.4 million, an increase of 25 percent compared to income from operations of $6.7 million for fiscal 2004, primarily due to higher volume.

A reconciliation of financial results before and after the impact of discontinued operations and business exit costs is included as Exhibit A. This reconciliation includes financial measures that do not reflect generally accepted accounting principles (GAAP). These non-GAAP financial measures are provided for additional clarification of the Company’s financial performance. Investors should consider these non-GAAP financial measures in addition to, not as a substitute for or better than, financial reporting measures prepared in accordance with GAAP.

Fourth Quarter Conference Call

A conference call will be held on Tuesday, November 22, at 10:00 a.m. ET (9:00 a.m. CT). Call +1-785-424-1065; state the Conference ID “MTS2005” or Program Title “MTS Fiscal Year.” Telephone re-play will be available through 11:59 p.m. ET, December 13, 2005. Call +1-402-530-0423.

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 image. The call will be archived through 6:00 p.m. ET, January 24, 2006.

About MTS Systems Corporation

MTS Systems Corporation is a leading global supplier of test systems and industrial position sensors. The Company’s testing hardware and software 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 provide controls for a variety of industrial and vehicular applications. MTS had 1,549 employees and revenue of $374 million for the fiscal year ended October 1, 2005. Additional information on MTS can be found on the worldwide web at http://www.mts.com.

This release contains “forward-looking statements” made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995 that are subject to certain risks and uncertainties, as well as assumptions, that could cause actual results to differ materially from historical results and those presently anticipated or projected. The Company does not undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. In addition to the factors discussed above, other important risk factors are delineated in the Company’s SEC reports, including Form 10-K for the year ended October 2, 2004.