FOR IMMEDIATE RELEASE

April 21, 2003

For More Information Contact:

Susan Knight, Chief Financial Officer

(952) 937-4000

Thomas Minneman, Treasurer

(952) 937-4647

MTS Reports Second Quarter Results, Raises Full Year Outlook

Eden Prairie, Minn., April 21, 2003 - MTS Systems Corporation (Nasdaq: MTSC) today reported net income from continuing operations of $6.4 million, or $0.30 per diluted share, for its second quarter ended March 29, 2003, compared to the previously communicated estimate range of $0.23-$0.26. Associated with the third quarter sale of its Automation division that was announced on March 31, 2003 and April 11, 2003, the Company recorded a one-time impairment loss on discontinued operations of $2.4 million, net of taxes, or $0.11 per share. After recognition of the impairment charge, the Company reported diluted earnings per share of $0.19 compared to $0.24 in the second quarter of fiscal 2002. (A reconciliation of financial results before and after the impact of discontinued operations is included in this release as Exhibit A.) Cash and short-term investments increased approximately $19 million in the quarter, driven by continued favorable working capital performance.

"We delivered operating profit above expectations for the quarter on strong revenue performance, while further strengthening the balance sheet," said Sidney W. Emery, Jr., Chairman and CEO. "The sale of the Automation division enables the Company to increase its focus on the core businesses where we have a breadth of long-term opportunities for profitable growth. While backlog is down $22 million from the beginning of the year and we have recorded a one-time impairment charge on discontinued operations, our forecast indicates that we will be able to deliver improved earnings per share in the high $0.80's to low $0.90's range for fiscal 2003, as compared to previous guidance in the mid-$0.80's."

Second quarter orders, before the impact of discontinued operations, were $86.8 million, slightly above the estimate range of $80-$85 million. Orders from continuing operations were $78.8 million, a decrease of four percent compared to orders of $81.9 million for second quarter of fiscal 2002. Backlog for continuing operations decreased nine percent, from approximately $162 million to approximately $148 million.

Second quarter revenue, before the impact of discontinued operations, was $100.6 million, exceeding the estimate range of $90-$95 million primarily due to an increase in short-duration projects in the MT&S segment. Revenue from continuing operations was $93.2 million, an increase of ten percent compared to revenue of $84.7 million for second quarter of fiscal 2002.

The Company reported diluted earnings per share of $0.19 in the current year quarter compared to $0.24 for second quarter of fiscal 2002. Year-over-year earnings per share were favorably impacted by $0.10 from increased revenue volume and $0.04 due to proceeds from penalties associated with a canceled contract in the current year quarter, as well as the $0.08 impact of Automation division inventory write-offs recorded in the prior year second quarter. These favorable impacts were more than offset by negative impacts of $0.11 from the impairment charge on discontinued operations and $.08 from margin rate decline due to product mix in the current year quarter, as well as the $0.08 impact of a non-recurring $2.6 million pre-tax gain on the sale of an investment recorded in the prior year second quarter.

Segment Results

Mechanical Testing and Simulation Segment (MT&S):

Orders for the MT&S segment were $65.7 million for the second quarter, down 9 percent compared to orders of $72.5 million for second quarter of fiscal 2002, primarily due to continued weakness in the global automotive and industrial markets. Backlog decreased approximately $14 million, or 9 percent, to approximately $141 million. Second quarter revenue was $80.8 million, an increase of 8 percent compared to $74.7 million for second quarter of fiscal 2002, driven by strong performance in the North American and European automotive and motorsports markets. The MT&S gross margin rate was 34.4 percent, a decrease of 2.6 percentage points compared to 37.0 percent for second quarter of fiscal 2002, primarily due to product mix. The segment reported $7.2 million in operating earnings for the current year quarter compared to $8.9 million for second quarter of fiscal 2002 due to lower margin in the quarter and the timing of operating expenses, partially offset by increased volume.

Factory Automation Segment (FA):

In conjunction with the third quarter sale of its Automation division, the Company recorded a loss on impairment of discontinued operations of $2.4 million, net of taxes, in the second quarter. Excluding the impairment charge, the Company's discontinued operations reported effectively break-even operating results for the current year quarter compared to an operating loss of $2.6 million, net of taxes, for second quarter of fiscal 2002 due to inventory write-offs. The carrying values of the Automation division's net assets and liabilities included in total current assets and liabilities are $11.5 million and $1.9 million, respectively.

Before the impact of discontinued operations, orders for the FA segment were $21.1 million for the second quarter, an increase of 41 percent compared to $15.0 million for second quarter of fiscal 2002. Orders from continuing operations were $13.1 million, an increase of 39 percent compared to orders of $9.4 million for second quarter of fiscal 2002. The Company's AeroMet business was awarded a $1.5 million development contract from the U.S. government, and orders in the Sensors business increased due to strong demand in Europe and Japan. Backlog from continuing operations was flat at approximately $7 million. Before the impact of discontinued operations, revenue was $19.8 million, an increase of 13.8 percent compared to revenue of $17.4 million for second quarter of fiscal 2002. Revenue from continuing operations was $12.4 million, an increase of 24 percent compared to revenue of $10.0 million for second quarter of fiscal 2002. The FA gross margin rate from continuing operations was 44.3 percent, a decrease of 3.4 percentage points compared to gross margin of 47.7 percent for second quarter of fiscal 2002 due to product mix and one-time costs associated with a canceled contract. Operating earnings from continuing operations were $0.9 million compared to $0.5 million for second quarter of fiscal year 2002, driven by favorable volume partially offset by the decline in gross margin rate in the quarter.

Second Quarter Conference Call

A conference call will be held on Tuesday, April 22, at 11:00 a.m. CDT (Noon EDT). Call +1-712-257-2476; state the Passcode "Second Quarter" and conference leader "Chip Emery". Telephone re-play will be available through 6:00 p.m. CDT, May 22, 2003. Call +1-402-220-4147 and state the Passcode "4006."

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 Vcall webcast image. The webcast will be archived through 6:00 p.m. (CDT), May 22, 2003.

About MTS Systems Corporation

MTS Systems Corporation is a global supplier of integrated simulation solutions that help customers accelerate and improve their design, development, and manufacturing processes. MTS supplies products for determining the mechanical behavior of materials, products and structures - including computer-based testing and simulation systems, modeling and testing software, and consulting services - as well as products for automating manufacturing processes. MTS had 1,900 employees and revenue from continuing operations of $327 million for the fiscal year ended September 28, 2002. 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. 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 September 28, 2002.

MTS SYSTEMS CORPORATION

Consolidated Balance Sheets

(unaudited - in thousands of dollars, except per share data)

March 29, 2003

 September 28, 2002

ASSETS

Current Assets:

Cash and cash equivalents

 $        59,228

 $               62,456

Short-term investments

           53,997 

                  35,094

Accounts receivable, net of allowances for doubtful accounts

           55,844 

                  59,943

Unbilled contracts and retainage receivable

           29,813

                  32,276

Inventories

           29,978

                  34,773

Prepaid expense

             5,280

                    5,380

Current deferred tax asset

             8,739

                    8,739

Other current assets

             1,147

                         19

Assets of discontinued operations

           11,548

                  15,311

Total current assets

         255,574

                253,991

Property and Equipment:

Land

              3,247

                    3,247

Buildings and improvements

            46,009

                  44,723

Machinery and equipment

            83,298

                  79,679

Accumulated depreciation

          (75,657)

                (70,765)

Total property and equipment, net

            56,897

                  56,884

Goodwill

              4,329

                    4,268

Other assets

              2,729

                    3,363

Non-current deferred tax asset

              1,593

                    1,593

Total Assets

 $       321,122

 $             320,099

LIABILITIES AND SHAREHOLDERS' INVESTMENT

Current Liabilities:

Notes payable to banks

 $              198

 $                    598

Current maturities of long-term debt

              6,828

                    8,605

Accounts payable

            12,051

                  13,137

Accrued payroll-related costs

            27,445

                  26,112

Advance payments from customers

            43,376

                  37,209

Accrued warranty costs

              5,035

                    4,482

Accrued income taxes

              6,135

                  11,453

Other accrued liabilities

            10,029

                    9,917

Liabilities of discontinued operations

              1,879

                    1,462

Total current liabilities

          112,976

                112,975

Deferred income taxes

              1,740

                    1,519

Long-term debt, less current maturities

            36,325

                  42,790

Other long-term liabilities

                 584

                       550

Total Liabilities

           151,625

                157,834

Shareholders' Investment:

Common stock, $.25 par; 64,000,000 shares authorized:

 21,075,076 and 21,208,000 shares issued and outstanding

              5,268

                    5,302

Additional paid-in capital

              8,101

                    9,770

Retained earnings

          153,780

                146,857

Accumulated other comprehensive income

              2,348

                       336

Total shareholders' investment

          169,497

                162,265

Total Liabilities and Shareholders' Investment

 $       321,122

 $             320,099

MTS SYSTEMS CORPORATION

Consolidated Statements of Income

(unaudited - in thousands of dollars, except per share data)

Three Months Ended

Six Months Ended

March 29,

      March 31,

     March 29,

       March 31,

2003

      2002

      2003

        2002

Revenue

 $         93,236

 $         84,665

 $       177,675

 $       164,263

Cost of sales

            59,916

            52,215

          113,049

          101,197

Gross profit

            33,320

            32,450

            64,626

            63,066

Operating expenses:

Selling

            13,817

            12,694

            26,352

            25,873

General and administrative

              7,290

              5,874

            13,441

            12,202

Research and development

              4,044

              4,435

              7,623

              8,573

Total operating expenses

            25,151

            23,003

            47,416

            46,648

Income from continuing operations

              8,169

              9,447

            17,210

            16,418

Interest expense

                 949

                 995

              1,993

              2,102

Interest income

                (617)

               (168)

           (1,104)

               (305)

(Gain) on sale of investments

                      -

            (2,630)

                      -

            (2,630)

Other expense (income), net

             (1,729)

               (435)

            (1,712)

            (1,698)

Income before income taxes, discontinued operations,

and cumulative effect of accounting change

              9,566

            11,685

            18,033

            18,949

Provision for income tax

              3,184

              3,914

              5,951

              6,292

Income before discontinued operation and

cumulative effect of accounting change

              6,382

              7,771

            12,082

            12,657

Discontinued operations:

Loss from discontinued operations, net of tax

                  (17)

            (2,608)

              (220)

            (3,781)

Impairment on discontinued operations, net of tax

             (2,402)

                      -

           (2,402)

                      -

Cumulative effect of accounting change, net of tax

                      -

                      -

                      -

            (9,198)

Loss from discontinued operations, net of tax

             (2,419)

            (2,608)

            (2,622)

          (12,979)

Income (loss) before cumulative effect of accounting change

on continuing operations

              3,963

              5,163

              9,460

               (322)

Cumulative effect of accounting change on continuing

operations, net of tax

                      -

                      -

                      -

            (4,523)

Net income (loss)

 $           3,963

 $           5,163

 $           9,460

 $         (4,845)

Check

Earnings (loss) per share:

Basic-

Income before income taxes, discontinued operations,

and cumulative effect of accounting change

 $             0.30

 $             0.37

 $           0.57

 $             0.60

Discontinued operations:

Loss from discontinued operations, net of tax

                0.00

              (0.12)

             (0.01)

              (0.18)

Impairment on discontinued operations, net of tax

               (0.11)

                0.00

             (0.11)

                0.00

Cumulative effect of accounting change, net of tax

                0.00

                0.00

              0.00

              (0.44)

Loss from discontinued operations, net of tax

               (0.11)

              (0.12)

            (0.12)

              (0.62)

Income (loss) before cumulative effect of accounting change

on continuing operations

                0.19

               0.25

              0.45

              (0.02)

Cumulative effect of accounting change, net of tax

                0.00

               0.00

              0.00

              (0.21)

Earnings (loss) per share

 $             0.19

 $            0.25

 $           0.45

 $           (0.23)

Weighted average number of common shares outstanding - basic

            21,112

            21,057

          21,122

            21,042

Diluted-

Income before income taxes, discontinued operations,

and cumulative effect of accounting change

 $            0.30

 $             0.36

 $             0.56

 $             0.59

Discontinued operations:

Loss from discontinued operations, net of tax

               0.00

              (0.12)

              (0.01)

             (0.18)

Impairment on discontinued operations, net of tax

              (0.11)

                0.00

              (0.11)

                0.00

Cumulative effect of accounting change, net of taxes

               0.00

                0.00

                0.00

              (0.43)

Loss from discontinued operations, net of tax

              (0.11)

             (0.12)

              (0.12)

              (0.61)

Income (loss) before cumulative effect of accounting change

on continuing operations

               0.19

                 0.24

                0.44

              (0.02)

Cumulative effect of accounting change, net of tax

               0.00

                 0.00

                0.00

              (0.21)

Earnings (loss) per share

 $            0.19

 $              0.24

 $             0.44

 $           (0.23)

Weighted average number of common shares outstanding - diluted

           21,404

             21,336

            21,379

            21,367

EXHIBIT A

MTS SYSTEMS CORPORATION

Discontinued Operations Reconciliation

(unaudited - in thousands of dollars)

Three Months Ended

Six Months Ended

March 29,

March 31,

March 29,

March 31,

2003

2002

2003

2002

Orders:

Before discontinued operations

 $         86,782

 $         87,545

 $       168,541

 $       184,231

Discontinued operations

              7,989

              5,603

            14,223

            10,724

Continuing operations

            78,793

            81,942

          154,318

          173,507

Backlog:

Before discontinued operations

 $       154,898

 $       161,038

 $       154,898

 $       161,038

Discontinued operations

              6,721

 $           7,656

              6,721

 $           7,656

Continuing operations

          148,177

          153,382

          148,177

          153,382

Revenue:

Before discontinued operations

 $       100,589

 $         92,075

 $       191,850

 $       179,239

Discontinued operations

              7,353

              7,410

            14,175

            14,976

Continuing operations

            93,236

            84,665

          177,675

          164,263

Income before income taxes and cumulative

   effect of accounting change:

Before discontinued operations

 $           9,544

 $           7,434

 $         14,537

 $         12,780

Discontinued operations

                  (22)

             (4,251)

             (3,496)

             (6,169)

Continuing operations

              9,566

            11,685

            18,033

            18,949

Income before cumulative effect of account change:

Before discontinued operations

 $           3,963

 $           5,163

 $           9,460

 $           8,876

Discontinued operations

             (2,419)

             (2,608)

             (2,622)

             (3,781)

Continuing operations

              6,382

              7,771

            12,082

            12,657