Exhibit 99.1

MTS Systems Corporation
14000 Technology Drive
Eden Prairie, MN  55344-2290
Telephone 952-937-4000
Fax 952-937-4515News Release




FOR IMMEDIATE RELEASEJuly 25, 2007
        For More Information Contact:
Susan Knight, Chief Financial Officer(952) 937-4000
Paul Runice, Treasurer(952) 937-4003


MTS Reports Third Quarter EPS of $0.55, up 22% on 13% Revenue Growth

Eden Prairie, Minn., July 25, 2007  MTS Systems Corporation (NASDAQ: MTSC) today reported third quarter earnings of $0.55 per diluted share on net income of $10.0 million, an increase of 22 percent compared to earnings of $0.45 per diluted share on net income of $8.5 million for third quarter fiscal 2006.

Both orders and revenue were up significantly in the quarter with double digit growth in both the Test and Sensors segments, said Sidney W. Emery, Jr., Chairman and CEO. While unplanned custom project costs depressed Test segment margins, excellent Sensors segment performance along with tax benefits contributed to strong earnings in the quarter. Based on third quarter results and our outlook for the fourth quarter, we expect our full year EPS to be in the top half of the previously issued $2.15-$2.25 guidance range and revenue to be at the upper end of the $405-$415 range.

Third quarter orders totaled $111.9 million, an increase of 15 percent compared to orders of $97.7 million for third quarter fiscal 2006, primarily driven by two large Test segment orders in North America and Europe, and Sensors growth across all geographies, as well as an estimated $0.7 million favorable impact of currency translation. Backlog increased 1 percent sequentially in the quarter, from $204 million to $206 million. This compares to backlog of $198 million at the end of third quarter fiscal 2006.

Revenue for the third quarter totaled $108.6 million, a 13 percent increase compared to revenue of $95.9 million for third quarter fiscal 2006. This increase was driven by a higher proportion of standard product and service business in Test, continued growth in Sensors, and an estimated $1.4 million favorable impact of currency translation.

Gross profit for third quarter was $42.8 million, an increase of 4 percent compared to gross profit of $41.0 million for third quarter fiscal 2006, primarily due to increased volume, partially offset by unplanned custom project costs and increased warranty expense in the Test segment. Gross margin rate for the third quarter was 39.4 percent, a decrease of 3.4 percentage points compared to 42.8 percent for third quarter fiscal 2006. The decrease in margin rate was primarily due to higher project and warranty expenses in the Test segment. Third quarter income from operations totaled $11.7 million, flat compared to income from operations of $11.8 million for third quarter fiscal 2006, as planned increases in sales, marketing, and R&D spending to support strategic initiatives equaled the increase in gross profit.

Third quarter net income was $10.0 million, up 18 percent compared to net income of $8.5 million for third quarter fiscal 2006. This increase primarily resulted from decreased income tax expense of $1.6 million, primarily due to increased tax benefits resulting from research and development tax credits and export transactions. Reduced shares outstanding positively impacted earnings per diluted share by $0.02 for the quarter.

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MTS News Release
Page 2

Cash, cash equivalents and short-term investments at the end of the third quarter totaled $104 million, compared to $117 million at the end of second quarter of fiscal year 2007. The Company used $10.0 million of cash in the quarter, primarily due to increased short term working capital requirements. Approximately 108,000 shares were purchased in the quarter.

Segment Results

Test Segment:

Third quarter orders for the Test segment were $90.8 million, an increase of 13 percent compared to orders of $80.7 million for third quarter fiscal 2006, reflecting an increase in North America and Europe, and an estimated $0.4 million favorable impact of currency translation. Orders included two large custom orders which aggregated to approximately $17 million. Backlog increased 1 percent sequentially in the quarter, from $195 million to $196 million. Third quarter revenue was $89.1 million, an increase of 12 percent compared to $79.3 million for third quarter fiscal 2006, reflecting an increase in the proportion of standard product and service business and an estimated $1.0 million favorable impact due to currency translation. Third quarter gross profit was $32.2 million, an increase of 1 percent compared to $31.9 million for third quarter fiscal 2006, primarily due to increased volume, which was offset by
unplanned project costs and higher warranty expense. The impact of currency translation was an estimated $0.2 million favorable. Third quarter gross margin rate was 36.1 percent, a decrease of 4.1 percentage points compared to 40.2 percent for third quarter fiscal 2006. The decrease in margin rate was primarily due to higher custom project and warranty expense. Income from operations for the quarter was $8.2 million, a decrease of 8 percent compared to income from operations of $8.9 million for third quarter fiscal 2006, primarily due to planned increases in sales, marketing, and R&D spending to support strategic initiatives, partially offset by higher gross profit.

Sensors Segment:

Third quarter orders for the Sensors segment were
$21.1 million, an increase of 24 percent compared to orders of $17.0 million for third quarter fiscal 2006, reflecting business
growth in all geographies, and an estimated $0.3 million favorable impact of currency translation. One large order accounted for 8
percentage points of growth. Backlog increased 11 percent sequentially in the quarter, from $9 million to $10 million. Third
quarter revenue was $19.5 million, an increase of 17 percent compared to revenue of $16.6 million for third quarter fiscal 2006,
driven by increased worldwide volume and an estimated $0.4 million favorable impact of currency translation. Third quarter gross
profit was $10.6 million, an increase of 16 percent compared to $9.1 million for third quarter fiscal 2006, reflecting increased
volume, and an estimated $0.2 million favorable impact of currency translation. Third quarter gross margin rate was 54.4 percent,
down slightly compared to 54.8 percent for third quarter fiscal 2006. Income from operations for the quarter was $3.5 million, an
increase of 21 percent compared to income from operations of $2.9 million for third quarter fiscal 2006, primarily due to
increased volume.

Third Quarter Conference Call

A conference call will be held on Thursday, July 26, 2007, at 10:00 a.m. EDT (9:00 a.m. CDT). Call +1-706-634-9986; and state the Conference ID 5633349. Telephone re-play will be available through 11:59 p.m. EDT, August 1, 2007. Call +1-706-645-9291.

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 event notice. The webcast will be archived through 11:59 p.m. EDT, November 7, 2007.

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MTS News Release
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About MTS Systems Corporation

MTS Systems Corporation is a leading global supplier of test systems and industrial position sensors. The Companys testing hardware, software and service 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 enhance control to improve the productivity and safety of fixed and mobile industrial equipment. MTS had 1,510 employees and revenue of $397 million for the fiscal year ended September 30, 2006. Additional information on MTS can be found on the worldwide web athttp://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 most recent SEC Form 10-Q and 10-K filings.

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MTS SYSTEMS CORPORATION

Consolidated Statements of Income

(unaudited - in thousands, except per share data)



Three Months Ended
        
        Nine Months EndedJune 30,2007
        
        July 1,2006
        
        June 30,2007
        
        July 1,2006Revenue:Product
        
        $
        93,409
        
        $
        83,335
        
        $
        265,930
        
        $
        251,859Service
        
        
        15,146
        
        
        12,552
        
        
        43,511
        
        
        38,739Total revenue
        
        
        108,555
        
        
        95,887
        
        
        309,441
        
        
        290,598Cost of sales:Product
        
        
        57,919
        
        
        48,245
        
        
        156,525
        
        
        144,143Service
        
        
        7,845
        
        
        6,675
        
        
        22,148
        
        
        19,138Total cost of sales
        
        
        65,764
        
        
        54,920
        
        
        178,673
        
        
        163,281Gross profit
        
        
        42,791
        
        
        40,967
        
        
        130,768
        
        
        127,317Operating expenses:Selling and marketing
        
        
        17,843
        
        
        16,142
        
        
        52,075
        
        
        48,079General and administrative
        
        
        8,195
        
        
        8,300
        
        
        24,018
        
        
        25,300Research and development
        
        
        5,069
        
        
        4,787
        
        
        14,450
        
        
        13,628Total operating expenses
        
        
        31,107
        
        
        29,229
        
        
        90,543
        
        
        87,007(Loss) gain on sale of assets
        
        
        (16
        )
        
        12
        
        
        747
        
        
        872Income from operations
        
        
        11,668
        
        
        11,750
        
        
        40,972
        
        
        41,182Interest expense
        
        
        (415
        )
        
        (426
        )
        
        (1,084
        )
        
        (1,295
        )Interest income
        
        
        874
        
        
        734
        
        
        2,757
        
        
        2,198Other income (expense), net
        
        
        553
        
        
        717
        
        
        (257
        )
        
        1,044Income before income taxes
        
        
        12,680
        
        
        12,775
        
        
        42,388
        
        
        43,129Provision for income taxes
        
        
        2,675
        
        
        4,286
        
        
        11,935
        
        
        15,385Net income
        
        $
        10,005
        
        $
        8,489
        
        $
        30,453
        
        $
        27,744Earnings per share:BasicEarnings per share
        
        $
        0.56
        
        $
        0.46
        
        $
        1.69
        
        $
        1.47Weighted average number of common shares outstanding - basic
        
        
        17,739
        
        
        18,258
        
        
        18,046
        
        
        18,928DilutedEarnings per share
        
        $
        0.55
        
        $
        0.45
        
        $
        1.65
        
        $
        1.43Weighted average number of common shares outstanding - diluted
        
        
        18,089
        
        
        18,747
        
        
        18,409
        
        
        19,444




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MTS SYSTEMS CORPORATION

Consolidated Balance Sheets

(unaudited - in thousands, except per share data)

June 30,2007
        
        September 30,2006ASSETSCurrent Assets:Cash and cash equivalents
        
        $
        98,149
        
        $
        97,962Short-term investments
        
        
        5,750
        
        
        23,575Accounts receivable, net of allowances for doubtful accounts
        
        
        79,014
        
        
        72,997Unbilled accounts receivable
        
        
        39,482
        
        
        27,132Inventories
        
        
        43,042
        
        
        40,480Prepaid expenses
        
        
        3,385
        
        
        3,180Current deferred tax assets
        
        
        5,545
        
        
        5,134Other current assets
        
        
        1,215
        
        
        1,065Assets of discontinued operations
        
        
        183
        
        
        803Total current assets
        
        
        275,765
        
        
        272,328Property and Equipment:Land
        
        
        1,668
        
        
        1,668Buildings and improvements
        
        
        43,783
        
        
        42,072Machinery and equipment
        
        
        88,398
        
        
        78,651Accumulated depreciation
        
        
        (84,650
        )
        
        (78,777
        )Total property and equipment, net
        
        
        49,199
        
        
        43,614Goodwill
        
        
        4,523
        
        
        4,466Other assets
        
        
        3,401
        
        
        2,102Non-current deferred tax assets
        
        
        1,811
        
        
        1,613Total Assets
        
        $
        334,699
        
        $
        324,123LIABILITIES AND SHAREHOLDERS' INVESTMENTCurrent Liabilities:Notes payable
        
        $
        269
        
        $
        222Current maturities of long-term debt
        
        
        6,683
        
        
        6,683Accounts payable
        
        
        16,556
        
        
        17,090Accrued payroll and related costs
        
        
        27,131
        
        
        29,273Advance payments from customers
        
        
        51,575
        
        
        51,356Accrued warranty costs
        
        
        6,660
        
        
        5,894Accrued income taxes
        
        
        2,137
        
        
        512Current deferred income taxes
        
        
        5,152
        
        
        4,643Other accrued liabilities
        
        
        14,897
        
        
        15,125Total current liabilities
        
        
        131,060
        
        
        130,798Deferred income taxes
        
        
        2,556
        
        
        2,487Long-term debt, less current maturities
        
        
        7,837
        
        
        8,990Other long-term liabilities
        
        
        14,150
        
        
        12,527Total Liabilities
        
        
        155,603
        
        
        154,802Shareholders' Investment:Common stock, $.25 par; 64,000 shares authorized:17,772 and 18,216 shares issued and outstanding
        
        
        4,443
        
        
        4,554Retained earnings
        
        
        158,934
        
        
        152,657Accumulated other comprehensive income
        
        
        15,719
        
        
        12,110Total shareholders' investment
        
        
        179,096
        
        
        169,321Total Liabilities and Shareholders' Investment
        
        $
        334,699
        
        $
        324,123


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MTS SYSTEMS CORPORATION

Consolidated Statements of Cash Flows

(unaudited - in thousands)



Three Months Ended
        
        Nine Months EndedJune 30,2007
        
        July 1,2006
        
        June 30,2007
        
        July 1,2006Cash flows from operating activities:Net income
        
        $
        10,005
        
        $
        8,489
        
        $
        30,453
        
        $
        27,744Adjustments to reconcile net income to net cash (used in)provided by operating activities:Depreciation and amortization
        
        
        2,062
        
        
        1,898
        
        
        6,011
        
        
        5,767Gain on sale of assets
        
        
        16
        
        
        (12
        )
        
        (747
        )
        
        (872
        )Deferred income taxes
        
        
        (108
        )
        
        (1,408
        )
        
        (300
        )
        
        (1,408
        )Bad debt provision
        
        
        168
        
        
        151
        
        
        238
        
        
        264Stock-based compensation
        
        
        1,251
        
        
        1,064
        
        
        3,875
        
        
        3,206Equity compensation income tax benefits
        
        
        (1,396
        )
        
        (100
        )
        
        (1,935
        )
        
        (1,071
        )Changes in operating assets and liabilities:Accounts and unbilled contracts receivable
        
        
        (16,940
        )
        
        3,445
        
        
        (16,512
        )
        
        (11,314
        )Inventories
        
        
        376
        
        
        (2,553
        )
        
        (2,221
        )
        
        (4,814
        )Prepaid expenses
        
        
        1,224
        
        
        512
        
        
        (301
        )
        
        (3,010
        )Other assets
        
        
        (891
        )
        
        246
        
        
        (3,079
        )
        
        652Accounts payable
        
        
        (2,353
        )
        
        (618
        )
        
        (719
        )
        
        829Accrued payroll and related costs
        
        
        1,449
        
        
        289
        
        
        (2,099
        )
        
        (5,575
        )Advance payments from customers
        
        
        (6,722
        )
        
        (748
        )
        
        (161
        )
        
        8,423Accrued warranty costs
        
        
        1,052
        
        
        447
        
        
        640
        
        
        (378
        )Other current liabilities
        
        
        756
        
        
        1,857
        
        
        3,731
        
        
        7,231Operating activities of discontinued operations
        
        
        58
        
        
        51
        
        
        604
        
        
        (412
        )Net cash (used in) provided by operating activities
        
        
        (9,993
        )
        
        13,010
        
        
        17,478
        
        
        25,262Cash flows from investing activities:Additions to property and equipment
        
        
        (3,947
        )
        
        (2,106
        )
        
        (9,787
        )
        
        (6,045
        )Proceeds from maturity of short-term investments
        
        
        22,200
        
        
        15,700
        
        
        51,585
        
        
        106,332Purchases of short-term investments
        
        
        (10,460
        )
        
        (16,575
        )
        
        (33,760
        )
        
        (53,582
        )Net proceeds from sale of assets
        
        
        
        
        
        12
        
        
        1,000
        
        
        (78
        )Net cash provided by (used in) investing activities
        
        
        7,793
        
        
        (2,969
        )
        
        9,038
        
        
        46,627Cash flows from financing activities:Net proceeds under short-term borrowings
        
        
        45
        
        
        164
        
        
        60
        
        
        217Payments of notes payable to banks
        
        
        
        
        
        (1,477
        )
        
        
        
        
        (1,477
        )Payments of long-term debt
        
        
        
        
        
        
        
        
        (1,154
        )
        
        (1,178
        )Equity compensation income tax benefits
        
        
        1,396
        
        
        100
        
        
        1,935
        
        
        1,071Cash dividends
        
        
        31
        
        
        (1,911
        )
        
        (6,031
        )
        
        (5,767
        )Proceeds from exercise of stock options and employeestock purchase plan
        
        
        3,425
        
        
        1,816
        
        
        5,783
        
        
        4,416Payments to purchase and retire common stock
        
        
        (4,524
        )
        
        (5,019
        )
        
        (30,393
        )
        
        (64,527
        )Net cash provided by (used in) financing activities
        
        
        373
        
        
        (6,327
        )
        
        (29,800
        )
        
        (67,245
        )Check
        
        
        
        
        
        
        
        
        
        
        
        Effect of exchange rate on changes in cash
        
        
        71
        
        
        3,572
        
        
        3,471
        
        
        3,658Net (decrease) increase in cash and cash equivalents
        
        
        (1,756
        )
        
        7,286
        
        
        187
        
        
        8,302Cash and cash equivalents, at beginning of period
        
        
        99,905
        
        
        84,159
        
        
        97,962
        
        
        83,143Cash and cash equivalents, at end of period
        
        $
        98,149
        
        $
        91,445
        
        $
        98,149
        
        $
        91,445




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