----

----

| Minnesota                                                      |   | 41-0908057                                 |
|----------------------------------------------------------------|--------|--------------------------------------------|
| (State or other jurisdiction of incorporation or organization) |   |  (I.R.S. Employer Identification No.) |
|                                                           |   |                                       |
| 14000 Technology DriveEden Prairie, MN                         |   | 55344                                      |
| (Address of Principal Executive Offices)                       |   | (Zip Code)                                 |

| Title of each class                    |   | Name of each exchange on which registered |
|----------------------------------------|--------|-------------------------------------------|
| Common Stock, $.25 par value per share |   | The NASDAQ Stock Market LLC               |
|                                   |   | (NASDAQ Global Select Market)             |

| Large accelerated filer o | Accelerated filer x | Non-accelerated filer  o | Smaller reporting company  o |
|---------------------------|---------------------|------------------------------------|----------------------------------------|

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----

----

MTS 

|     | Forward Looking Statements                                                                                         | 1      |
|----------|--------------------------------------------------------------------------------------------------------------------|--------|
| Item 1.  | Business                                                                                                           | 2      |
|     | Products and Markets by Business Segment                                                                           | 2      |
|     | Sales and Service                                                                                                  | 3      |
|     | Manufacturing and Engineering                                                                                      | 4      |
|     | Sources and Availability of Raw Materials and Components                                                           | 4      |
|     | Patents and Trademarks                                                                                             | 4      |
|     | Seasonality                                                                                                        | 4      |
|     | Working Capital                                                                                                    | 4      |
|     | Customers                                                                                                          | 5      |
|     | Order Backlog                                                                                                      | 5      |
|     | Government Contracts                                                                                               | 5      |
|     | Competition                                                                                                        | 5      |
|     | Research and Development                                                                                           | 5      |
|     | Environmental Matters                                                                                              | 6      |
|     | Executive Officers                                                                                                 | 6      |
|     | Employees                                                                                                          | 6      |
|     | Available Information                                                                                              | 6      |
| Item 1A. | Risk Factors                                                                                                       | 7      |
| Item 1B. | Unresolved Staff Comments                                                                                          | 9      |
| Item 2.  | Properties                                                                                                         | 9      |
| Item 3.  | Legal Proceedings                                                                                                  | 10     |
| Item 4.  | Submission of Matters to Vote of Security Holders                                                                  | 11     |
|     |                                                                                                               |   |
| PART II  |
|     |
| Item 5.  | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 11     |
| Item 6.  | Selected Financial Data                                                                                            | 13     |
| Item 7.  | Management’s Discussion and Analysis of Financial Condition and Results of Operations                        | 15     |
| Item 7A. | Quantitative and Qualitative Disclosures About Market Risk                                                         | 37     |
| Item 8.  | Financial Statements and Supplementary Data                                                                        | 39     |
| Item 9.  | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.                              | 39     |
| Item 9A. | Controls and Procedures                                                                                            | 39     |
| Item 9B. | Other Information                                                                                                  | 39     |
|     |
| PART III |
|     |
| Item 10. | Directors and Executive Officers of Registrant                                                                     | 39     |
| Item 11. | Executive Compensation                                                                                             | 40     |
| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters                     | 40     |
| Item 13. | Certain Relationships and Related Transactions.                                                                    | 40     |
| Item 14. | Principal Accountant Fees and Services                                                                             | 40     |
|     |                                                                                                               |   |
| PART IV  |
|     |
| Item 15. | Exhibits and Financial Statement Schedules.                                                                        | 41     |

----

Table of Contents

PART 

----

Table of Contents

| Item 1. | Business |
|---------|----------|

Products 

|   | · | Infrastructure: This market is the most diverse of the Test segment markets, with customer testing uses ranging from the physical characterization of basic materials, such as ceramics, composites and steel, to high-force and high frequency applications for seismic event or blast simulation, drill bit testing for the petroleum industry and alternative wind energy. Bio-medical applications include systems to test wear and performance of implants, prostheses, and other medical and dental materials and devices. This is the largest Test segment market, representing approximately 50% of Test segment revenue. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Ground Vehicles: This market consists of automobile, truck, motorcycle, motorsports vehicles, construction equipment, agricultural equipment, rail, and off-road vehicle manufacturers and their suppliers. Test segment system and service products are utilized in customer testing of vehicles, subsystems and components. System examples include road and track simulators, tire performance and transmission test systems. This global market represents approximately 35% of segment revenue. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Table of Contents

|   | · | Aerospace: This market consists of manufacturers of commercial, military, and private aircraft and their suppliers as well as alternative wind energy customers. These customers use the Company's products, systems, and software to perform static and fatigue testing of aircraft and space vehicles as well as sub-systems, components and materials for both aircraft and alternative wind energy products. This market represents approximately 15% of Test segment revenue. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Sales 

----

Table of Contents

Manufacturing 

Sources 

Patents 

Seasonality

Working 

----

Table of Contents

Customers

Order 

Government 

Competition

Research 

----

Table of Contents

Environmental 

Executive 

| Officer                                                    |   | Business Experience                                                                                                                                                                                                      |   | Age    |   | Officer Since |
|------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|---------------|
|                                                       |   |                                                                                                                                                                                                                     |   |   |   |          |
| Laura B. Hamilton,Chair and Chief Executive Officer   |   | Chair of the Board since September 2008, and Chief Executive Officer since January 2008. President and Chief Operating Officer from June 2007 to January 2008. Senior Vice President of Test from May 2003 to June 2007. |   | 49     |   | 2000          |
|                                                       |   |                                                                                                                                                                                                                     |   |   |   |          |
| Joachim Hellwig,Vice President                             |   | Vice President of the Sensors business since January 2003.                                                                                                                                                               |   | 61     |   | 2003          |
|                                                       |   |                                                                                                                                                                                                                     |   |   |   |          |
| Susan E. Knight,Vice President and Chief Financial Officer |   | Vice President and Chief Financial Officer since October 2001.                                                                                                                                                           |   | 56     |   | 2001          |
|                                                       |   |                                                                                                                                                                                                                     |   |   |   |          |
| Kathleen M. Staby,Vice President                           |   | Vice President of Human Resources and Strategy since January 2006. Vice President of Human Resources from 2000 to 2006.                                                                                                  |   | 64     |   | 2000          |

Employees

Available 

----

Table of Contents

| Item 1A. | Risk Factors |
|----------|--------------|

|   | · | exposure to the risk of currency value fluctuations, where payment for products is denominated in a currency other than U.S. dollars; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------|

|   | · | variability in the U.S. dollar value of foreign currency-denominated assets, earnings and cash flows; |
|--------|--------|-------------------------------------------------------------------------------------------------------|

|   | · | difficulty of enforcing agreements, including patent and trademarks, and collecting receivables through foreign legal systems; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------|

|   | · | trade protection measures and import or export licensing requirements; |
|--------|--------|------------------------------------------------------------------------|

|   | · | tax rates in certain foreign countries that exceed those in the U.S. and the imposition of withholding requirements on foreign earnings; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | higher danger of terrorist activity, war or civil unrest, relative to domestic operations; |
|--------|--------|--------------------------------------------------------------------------------------------|

|   | · | imposition of tariffs, exchange controls or other restrictions; |
|--------|--------|-----------------------------------------------------------------|

|   | · | difficulty in staffing and managing global operations; |
|--------|--------|--------------------------------------------------------|

|   | · | required compliance with a variety of foreign laws and regulations; and |
|--------|--------|-------------------------------------------------------------------------|

|   | · | changes in general economic and political conditions in countries where the Company operates, particularly in emerging markets. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------|

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Table of Contents

|   | · | difficulties identifying suitable acquisition candidates at acceptable costs; |
|--------|--------|-------------------------------------------------------------------------------|

|   | · | unavailability of capital to conduct acquisitions; |
|--------|--------|----------------------------------------------------|

|   | · | failure to achieve the financial and strategic goals for the acquired and combined businesses; |
|--------|--------|------------------------------------------------------------------------------------------------|

|   | · | difficulty assimilating the operations and personnel of the acquired businesses; |
|--------|--------|----------------------------------------------------------------------------------|

|   | · | disruption of ongoing business and distraction of management from the ongoing business; |
|--------|--------|-----------------------------------------------------------------------------------------|

|   | · | dilution of existing stockholders and earnings per share; |
|--------|--------|-----------------------------------------------------------|

|   | · | unanticipated, undisclosed or inaccurately assessed liabilities, legal risks and costs; and |
|--------|--------|---------------------------------------------------------------------------------------------|

|   | · | difficulties retaining key vendors, customers or employees of the acquired business. |
|--------|--------|--------------------------------------------------------------------------------------|

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Table of Contents

| Item 1B. | Unresolved Staff Comments |
|----------|---------------------------|

| Item 2. | Properties |
|---------|------------|

----

Table of Contents

|                         |                                                                                        |   | Square  |    |
|------------------------------|---------------------------------------------------------------------------------------------|--------|---------|---------|
| Location                     | Use of Facility                                                                             |   | Footage |    |
| Eden Prairie, Minnesota, USA | Corporate headquarters and primary Test segment manufacturing and research                  |   |    | 420,000 |   |
| Cary, North Carolina, USA    | Sensors segment manufacturing, research and North American sales and service administration |   |    | 65,000  |   |
| Berlin, Germany              | Test segment manufacturing and European sales and service administration                    |   |    | 80,000  |   |
| Shenzhen, China              | Test segment manufacturing, research and sales and service administration                   |   |    | 75,000  |   |
| Shanghai, China              | Test segment manufacturing and sales and service administration                             |   |    | 129,000 |   |

|                       |                                                                                                |   | Square  |    |   | Lease   |   |
|----------------------------|-----------------------------------------------------------------------------------------------------|--------|---------|---------|--------|---------|--------|
| Location                   | Use of Facility                                                                                     |   | Footage |    |   | Expires |   |
| Chanhassen, Minnesota, USA | Test segment manufacturing                                                                          |   |    | 97,000  |   |    |   | 2013 |   |
| Ludenscheid, Germany       | Sensors segment headquarters, manufacturing, research and European sales and service administration |   |    | 55,000  |   |    |   | 2012 |   |
| Creteil, France            | Test segment sales and service administration                                                       |   |    | 16,000  |   |    |   | 2015 |   |
| Tokyo, Japan               | Test segment sales and service administration.                                                      |   |    | 8,000   |   |    |   | 2013 |   |
|                       | Sensors segment manufacturing and Asia sales and service administration                             |   |    | 8,000   |   |    |   | 2015 |   |
| Seoul, South Korea         | Test segment sales, service administration and assembly                                             |   |    | 8,000   |   |    |   | 2011 |   |
| Shanghai, China            | Test segment sales, service administration and assembly                                             |   |    | 13,000  |   |    |   | 2011 |   |
| Shenzhen, China            | Test segment manufacturing, research and sales and service administration                           |   |    | 13,000  |   |    |   | 2013 |   |
| Berlin, Germany            | Land under Berlin facility                                                                          |   |    | 30,000  |   |    |   | 2052 |   |
| Shenzhen, China            | Land under Shenzhen facility                                                                        |   |    | 31,000  |   |    |   | 2047 |   |
| Shanghai, China            | Land under Shanghai facility                                                                        |   |    | 161,000 |   |    |   | 2056 |   |

| Item 3. | Legal Proceedings |
|---------|-------------------|

----

Table of Contents

| Item 4. | Submission of Matters to a Vote of Security Holders |
|---------|-----------------------------------------------------|

PART 

| Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
|---------|--------------------------------------------------------------------------------------------------------------------|

| Quarter Ended     |   | Low |   |   | High   |   |   | Close  |   |   | Volume |   |
|-------------------|--------|-----|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| December 27, 2008 |   | $   | 21.12  |   |   | $      | 42.46  |   |   | $      | 25.64  |   |   |   | 9,480,094 |   |
| March 28, 2009    |   | $   | 19.75  |   |   | $      | 28.18  |   |   | $      | 22.71  |   |   |   | 6,075,476 |   |
| June 27, 2009     |   | $   | 20.04  |   |   | $      | 23.32  |   |   | $      | 20.83  |   |   |   | 8,684,079 |   |
| October 3, 2009   |   | $   | 20.40  |   |   | $      | 30.92  |   |   | $      | 28.13  |   |   |   | 5,636,852 |   |
| January 2, 2010   |   | $   | 25.00  |   |   | $      | 30.00  |   |   | $      | 28.74  |   |   |   | 3,610,138 |   |
| April 3, 2010     |   | $   | 24.85  |   |   | $      | 30.89  |   |   | $      | 29.06  |   |   |   | 3,376,889 |   |
| July 3, 2010      |   | $   | 25.50  |   |   | $      | 31.66  |   |   | $      | 29.15  |   |   |   | 4,831,965 |   |
| October 2, 2010   |   | $   | 26.17  |   |   | $      | 31.72  |   |   | $      | 31.50  |   |   |   | 3,295,040 |   |

| Fiscal Period       |   | Total Numberof SharesPurchased |      |   | AveragePricePaid perShare |   |   | Total Numberof SharesPurchased asPart ofPubliclyAnnouncedPlans orPrograms |   |   | MaximumNumber ofSharesthat May Yetbe PurchasedUnder thePlans orPrograms |   |
|---------------------|--------|--------------------------------|-----------|--------|---------------------------|--------|--------|---------------------------------------------------------------------------|--------|--------|-------------------------------------------------------------------------|--------|
| First Quarter       |   |                           |      |   |                      |   |   |                                                                      |   |   |                                                                    |   |
| October 4, 2009 -   |   |                           |      |   |                      |   |   |                                                                      |   |   |                                                                    |   |
| January 2, 2010     |   |                           | 52,677    |   |                      | $      | 27.21  |                                                                      |   |   | 52,677                                                                  |   |   |   | 1,950,861 |   |
| Second Quarter      |   |                           |      |   |                      |   |   |                                                                      |   |   |                                                                    |   |   |   |   |   |
| January 3, 2010 -   |   |                           |      |   |                      |   |   |                                                                      |   |   |                                                                    |   |   |   |   |   |
| April 3, 2010       |   |                           | 158,798   |   |                      | $      | 28.21  |                                                                      |   |   | 158,798                                                                 |   |   |   | 1,792,063 |   |
| Third Quarter       |   |                           |      |   |                      |   |   |                                                                      |   |   |                                                                    |   |   |   |   |   |
| April 4, 2010 -     |   |                           |      |   |                      |   |   |                                                                      |   |   |                                                                    |   |   |   |   |   |
| July 3, 2010        |   |                           | 157,799   |   |                      | $      | 29.64  |                                                                      |   |   | 157,799                                                                 |   |   |   | 1,634,264 |   |
| Fourth Quarter      |   |                           |      |   |                      |   |   |                                                                      |   |   |                                                                    |   |   |   |   |   |
| Fiscal Month        |   |                           |      |   |                      |   |   |                                                                      |   |   |                                                                    |   |   |   |   |   |
| July 4, 2010 -      |   |                           |      |   |                      |   |   |                                                                      |   |   |                                                                    |   |   |   |   |   |
| August 7, 2010      |   |                           | 58,400    |   |                      | $      | 29.18  |                                                                      |   |   | 58,400                                                                  |   |   |   | 1,575,864 |   |
| August 8, 2010 -    |   |                           |      |   |                      |   |   |                                                                      |   |   |                                                                    |   |   |   |   |   |
| September 4, 2010   |   |                           | 934,092   |   |                      | $      | 27.57  |                                                                      |   |   | 934,092                                                                 |   |   |   | 641,772 |   |
| September 5, 2010 - |   |                           |      |   |                      |   |   |                                                                      |   |   |                                                                    |   |   |   |   |   |
| October 2, 2010     |   |                           | -         |   |                      | $      | -      |                                                                      |   |   | -                                                                       |   |   |   | 641,772 |   |
|                |   |                           |      |   |                      |   |   |                                                                      |   |   |                                                                    |   |   |   |   |   |
| Fourth Quarter      |   |                           | 992,492   |   |                      | $      | 27.66  |                                                                      |   |   | 992,492                                                                 |   |   |   | 641,772 |   |
|                |   |                           |      |   |                      |   |   |                                                                      |   |   |                                                                    |   |   |   |   |   |
| Fiscal Year 2010    |   |                           | 1,361,766 |   |                      | $      | 27.94  |                                                                      |   |   | 1,361,766                                                               |   |   |   |   |   |

----

Table of Contents

----

Table of Contents

|                                                                         |   | FISCAL YEAR ENDED |   |
|------------------------------------------------------------------------------|--------|-------------------|--------|
|                                                                         |   | 10/1/05           |   |   | 9/29/06 |   |   | 9/29/07 |   |   | 9/27/08 |   |   | 10/3/09 |   |   | 10/2/10 |   |
| MTS Systems Corporation                                                      |   | $                 | 100.00 |   |   | $ | 86.62 |   |   | $ | 112.77 |   |   | $ | 117.10 |   |   | $ | 79.46 |   |   | $ | 90.87 |   |
| Russell 2000 Index                                                           |   |              | 100.00 |   |   |   | 109.92 |   |   |   | 123.49 |   |   |   | 109.51 |   |   |   | 91.72 |   |   |   | 108.78 |   |
| *SIC Code 3820 Peer Group (Modified to remove non-exchange traded companies) |   |              | 100.00 |   |   |   | 109.46 |   |   |   | 141.52 |   |   |   | 121.98 |   |   |   | 106.35 |   |   |   | 133.11 |   |

| Item 6.  | Selected Financial Data |
|---------------|-------------------------|

----

Table of Contents

| Five-Year Financial Summary                                                                        |   |
|----------------------------------------------------------------------------------------------------|--------|
| (October 2, 2010; October 3, 2009; September 27, 2008; September 29, 2007; and September 30, 2006) |   |
| (expressed in thousands, except per share data and numbers of shareholders and employees)          |   |
|                                                                                               |   |
|                                                                                               |   | 2010 |   |   |   | 20091 |   |   |   | 2008 |   |   |   | 2007 |   |   |   | 2006 |   |
| Operations                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Revenue                                                                                            |   | $ | 374,053 |   |   | $ | 408,881 |   |   | $ | 460,515 |   |   | $ | 410,091 |   |   | $ | 387,924 |   |
| Gross profit                                                                                       |   |   | 151,794 |   |   |   | 151,616 |   |   |   | 190,253 |   |   |   | 173,638 |   |   |   | 168,235 |   |
| Gross profit as a % of revenue                                                                     |   |   | 40.6 | % |   |   | 37.1 | % |   |   | 41.3 | % |   |   | 42.3 | % |   |   | 43.4 | % |
| Research and development expense                                                                   |   | $ | 14,945 |   |   | $ | 16,322 |   |   | $ | 16,232 |   |   | $ | 19,285 |   |   | $ | 17,969 |   |
| Research and development as a % of revenue                                                         |   |   | 4.0 | % |   |   | 4.0 | % |   |   | 3.5 | % |   |   | 4.7 | % |   |   | 4.6 | % |
| Effective income tax rate                                                                          |   |   | 31.7 | % |   |   | 27.2 | % |   |   | 28.0 | % |   |   | 27.5 | % |   |   | 33.7 | % |
| Income before discontinued operations                                                              |   | $ | 18,576 |   |   | $ | 17,394 |   |   | $ | 47,110 |   |   | $ | 41,041 |   |   | $ | 37,969 |   |
| Net income                                                                                         |   |   | 18,576 |   |   |   | 17,394 |   |   |   | 49,191 |   |   |   | 41,996 |   |   |   | 39,323 |   |
| Net income as a % of revenue                                                                       |   |   | 5.0 | % |   |   | 4.3 | % |   |   | 10.7 | % |   |   | 10.2 | % |   |   | 10.1 | % |
| Diluted earnings per share of common stock before discontinued operations                          |   | $ | 1.14 |   |   | $ | 1.03 |   |   | $ | 2.68 |   |   | $ | 2.24 |   |   | $ | 1.97 |   |
| Diluted earnings per share of common stock                                                         |   |   | 1.14 |   |   |   | 1.03 |   |   |   | 2.80 |   |   |   | 2.29 |   |   |   | 2.04 |   |
| Weighted average dilutive shares outstanding during the year2                                      |   |   | 16,347 |   |   |   | 16,831 |   |   |   | 17,544 |   |   |   | 18,330 |   |   |   | 19,229 |   |
| Net interest (expense) income                                                                      |   | $ | (1,052 | ) |   | $ | (916 | ) |   | $ | 2,950 |   |   | $ | 2,590 |   |   | $ | 1,879 |   |
| Depreciation and amortization                                                                      |   |   | 12,751 |   |   |   | 12,132 |   |   |   | 9,207 |   |   |   | 7,985 |   |   |   | 7,302 |   |
|                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Financial Position                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash, cash equivalents and short-term investments                                                  |   | $ | 76,611 |   |   | $ | 118,885 |   |   | $ | 114,099 |   |   | $ | 121,395 |   |   | $ | 121,537 |   |
| Property and equipment, net                                                                        |   |   | 56,444 |   |   |   | 56,118 |   |   |   | 50,534 |   |   |   | 49,747 |   |   |   | 42,972 |   |
| Total assets                                                                                       |   |   | 346,405 |   |   |   | 386,914 |   |   |   | 399,157 |   |   |   | 352,981 |   |   |   | 324,123 |   |
| Interest-bearing debt3                                                                             |   |   | 40,000 |   |   |   | 40,000 |   |   |   | 26,308 |   |   |   | 8,991 |   |   |   | 15,673 |   |
| Total shareholders’ investment                                                               |   |   | 166,106 |   |   |   | 203,965 |   |   |   | 204,942 |   |   |   | 189,701 |   |   |   | 169,321 |   |
| Interest-bearing debt as a % of shareholders’ investment                                     |   |   | 24.1 | % |   |   | 19.6 | % |   |   | 12.8 | % |   |   | 4.7 | % |   |   | 9.3 | % |
| Return on equity4                                                                                  |   |   | 9.1 | % |   |   | 8.5 | % |   |   | 24.8 | % |   |   | 24.2 | % |   |   | 20.1 | % |
| Return on invested capital5                                                                        |   |   | 8.7 | % |   |   | 7.9 | % |   |   | 22.3 | % |   |   | 21.9 | % |   |   | 19.7 | % |
|                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Statistics                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Number of common shareholders of record at year-end6                                               |   |   | 981 |   |   |   | 1,010 |   |   |   | 1,043 |   |   |   | 1,092 |   |   |   | 1,201 |   |
| Number of employees at year-end                                                                    |   |   | 1,948 |   |   |   | 2,015 |   |   |   | 1,660 |   |   |   | 1,575 |   |   |   | 1,474 |   |
| Orders                                                                                             |   | $ | 423,525 |   |   | $ | 340,839 |   |   | $ | 485,274 |   |   | $ | 421,437 |   |   | $ | 366,626 |   |
| Backlog of orders at year-end                                                                      |   |   | 214,330 |   |   |   | 167,726 |   |   |   | 234,710 |   |   |   | 204,558 |   |   |   | 189,000 |   |
| Cash dividends paid per share                                                                      |   |   | 0.60 |   |   |   | 0.60 |   |   |   | 0.60 |   |   |   | 0.48 |   |   |   | 0.41 |   |

| 1 | The fiscal year ended October 3, 2009 was a 53-week fiscal year, whereas all other fiscal years presented were 52-week periods. |
|---|---------------------------------------------------------------------------------------------------------------------------------|

| 2 | Assumes the conversion of potential common shares using the treasury stock method. |
|---|------------------------------------------------------------------------------------|

| 3 | Consists of short-term borrowings and the current and non-current portion of long-term debt. |
|---|----------------------------------------------------------------------------------------------|

| 4 | Calculated by dividing Income Before Discontinued Operations by beginning Shareholders’ Investment. |
|---|-----------------------------------------------------------------------------------------------------------|

| 5 | Calculated by dividing Income Before Discontinued Operations, excluding after-tax interest expense, by the aggregate of average interest bearing debt and average Shareholders’ Investment. |
|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 6 | Does not include shareholders whose stock is held in the name of broker dealers or other nominees. |
|---|----------------------------------------------------------------------------------------------------|

----

Table of Contents

| Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
|---------|---------------------------------------------------------------------------------------------|

|   | · | Orders increased 24.3% to $423.5 million, compared to orders of $340.8 million for fiscal year 2009. The increase in orders represents worldwide growth of 23.9% and 25.9% in the Test and Sensors segments, respectively, including four large Test segment orders, each in excess of $5.0 million, totaling approximately $33 million. Fiscal year 2009 orders included one large order totaling approximately $7 million. Backlog of undelivered orders at October 2, 2010 was $214.3 million, an increase of 27.8% from backlog of $167.7 million at October 3, 2009. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Revenue decreased 8.5% to $374.1 million, compared to revenue of $408.9 million for fiscal year 2009. This decrease was primarily due to 28.5% lower opening backlog, partially offset by the strong execution of short-cycle orders in the Test segment and higher volume in the Sensors segment. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | During each of the fiscal years 2010 and 2009, the Company initiated workforce reduction actions in order to align the Company’s operating cost structure with changing market conditions. As a result of these actions, the Company incurred severance and benefit costs totaling $1.6 million and $12.1 million during fiscal year 2010 and 2009, respectively. Severance and benefit costs recognized during fiscal year 2010 were associated entirely with the Test segment. For fiscal year 2009, $10.9 million and $1.2 million of severance and benefits costs were reported in the Test and Sensors segments, respectively. Of the $1.6 million severance costs in fiscal year 2010, $1.4 million, $0.1 million, and $0.1 million were reported in Cost of Sales, Selling and Marketing, and General and Administrative, respectively. Of the $12.1 million total severance costs in fiscal year 2009, $6.8 million, $4.0 million, $1.2 million, and $0.1 million were reported in Cost of Sales, Selling and Marketing, General and Administrative, and Research and Development expense, respectively. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The Company settled a legal claim for patent infringement for $7.5 million, of which $6.3 million and $1.2 million was expensed during fiscal year 2010 and 2009, respectively. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Income from operations increased 15.0%, to $28.3 million, compared to $24.6 million for fiscal year 2009, primarily driven by reduced severance charges, lower warranty expense, and lower operating expenses from reduced headcount and discretionary spending. This was partially offset by decreased volume, higher variable compensation expense and the previously mentioned legal settlement costs recognized in fiscal year 2010. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | · | Cash and cash equivalents at October 2, 2010 totaled $76.6 million, compared to $118.9 million at the end of fiscal year 2009. Cash flows from operations generated $33.2 million. During fiscal year 2010, the Company invested $11.2 million in capital expenditures, made $6.3 million of deferred payments associated with the acquisition of SANS, paid $12.1 million in dividends, and purchased approximately 1,362,000 shares of common stock for $38.2 million. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |                    |   |   | Estimated |   |   |        |   |
|--------|--------|-------------------------|--------|--------|-----------|--------|--------|-------------|--------|
|   |   |                    |   |   | Business  |   |   | Currency    |   |   |   |   |
|   |   | 2010                    |   |   | Change    |   |   | Translation |   |   | 2009 |   |
|   |   | (expressed in millions) |   |
| Orders |   | $                       | 423.5  |   |      | $      | 79.3   |        |   | $ | 3.4 |   |   | $ | 340.8 |   |

| Geography    |   | 2010                    |   |   | 2009   |   |   | Variance |   |   | % Variance |   |
|--------------|--------|-------------------------|--------|--------|--------|--------|--------|----------|--------|--------|------------|--------|
|         |   | (expressed in millions) |   |   |   |   |
| Americas     |   | $                       | 143.5  |   |   | $      | 108.3  |     |   | $      | 35.2       |   |   |   | 32.5 | % |
| Europe       |   |                    | 131.8  |   |   |   | 108.7  |     |   |   | 23.1       |   |   |   | 21.3 | % |
| Asia         |   |                    | 148.2  |   |   |   | 123.8  |     |   |   | 24.4       |   |   |   | 19.7 | % |
| Total Orders |   | $                       | 423.5  |   |   | $      | 340.8  |     |   | $      | 82.7       |   |   |   | 24.3 | % |

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|                        |   | 2010   |   |   | 2009   |   |   | Variance |   |   | % Variance |   |
|-----------------------------|--------|--------|--------|--------|--------|--------|--------|----------|--------|--------|------------|--------|
| Revenue                     |   | $      | 374.1  |   |   | $      | 408.9  |     |   | $      | (34.8      | )      |   |   | -8.5 | % |
| Cost of sales               |   |   | 222.3  |   |   |   | 257.3  |     |   |   | (35.0      | )      |   |   | -13.6 | % |
| Gross profit                |   |   | 151.8  |   |   |   | 151.6  |     |   |   | 0.2        |   |   |   | 0.1 | % |
| Gross margin                |   |   | 40.6   | %      |   |   | 37.1   | %        |   |   | 3.5        | %      |   |   |   |   |
|                        |   |   |   |   |   |   |   |     |   |   |       |   |   |   |   |   |
| Operating expenses:         |   |   |   |   |   |   |   |     |   |   |       |   |   |   |   |   |
| Selling and marketing       |   |   | 65.9   |   |   |   | 71.6   |     |   |   | (5.7       | )      |   |   | -8.0 | % |
| General administrative      |   |   | 42.7   |   |   |   | 39.1   |     |   |   | 3.6        |   |   |   | 9.2 | % |
| Research and development    |   |   | 14.9   |   |   |   | 16.3   |     |   |   | (1.4       | )      |   |   | -8.6 | % |
| Total operating expenses    |   |   | 123.5  |   |   |   | 127.0  |     |   |   | (3.5       | )      |   |   | -2.8 | % |
| Income from operations      |   |   | 28.3   |   |   |   | 24.6   |     |   |   | 3.7        |   |   |   | 15.0 | % |
| Interest expense            |   |   | (1.4   | )      |   |   | (2.0   | )        |   |   | 0.6        |   |   |   | -30.0 | % |
| Interest income             |   |   | 0.4    |   |   |   | 1.1    |     |   |   | (0.7       | )      |   |   | -63.6 | % |
| Other (expense) income, net |   |   | (0.1   | )      |   |   | 0.2    |     |   |   | (0.3       | )      |   |   | -150.0 | % |
|                        |   |   |   |   |   |   |   |     |   |   |       |   |   |   |   |   |
| Income before income taxes  |   |   | 27.2   |   |   |   | 23.9   |     |   |   | 3.3        |   |   |   | 13.8 | % |
| Provision for income taxes  |   |   | 8.6    |   |   |   | 6.5    |     |   |   | 2.1        |   |   |   | 32.3 | % |
| Net income                  |   | $      | 18.6   |   |   | $      | 17.4   |     |   | $      | 1.2        |   |   |   | 6.9 | % |
|                        |   |   |   |   |   |   |   |     |   |   |       |   |   |   |   |   |
| Diluted earnings per share  |   | $      | 1.14   |   |   | $      | 1.03   |     |   | $      | 0.11       |   |   |   | 10.7 | % |

|                           |   |                    |   |   | Estimated |   |   |        |   |
|--------------------------------|--------|-------------------------|--------|--------|-----------|--------|--------|-------------|--------|
|                           |   |                    |   |   | Business  |   |   | Currency    |   |   |   |   |
|                           |   | 2010                    |   |   | Change    |   |   | Translation |   |   | 2009 |   |
|                           |   | (expressed in millions) |   |
|  Revenue                  |   | $                       | 374.1  |   |      | $      | (38.1  | )           |   | $ | 3.3 |   |   | $ | 408.9 |   |
|  Cost of sales            |   |                    | 222.3  |   |      |   | (37.4  | )           |   |   | 2.4 |   |   |   | 257.3 |   |
|  Gross profit             |   |                    | 151.8  |   |      |   | (0.7   | )           |   |   | 0.9 |   |   |   | 151.6 |   |
|  Gross margin             |   |                    | 40.6   | %      |      |   |   |        |   |   |   |   |   |   | 37.1 | % |
|                           |   |                    |   |   |      |   |   |        |   |   |   |   |   |   |   |   |
|  Operating expenses:      |   |                    |   |   |      |   |   |        |   |   |   |   |   |   |   |   |
|  Selling and marketing    |   |                    | 65.9   |   |      |   | (6.3   | )           |   |   | 0.6 |   |   |   | 71.6 |   |
|  General administrative   |   |                    | 42.7   |   |      |   | 3.4    |        |   |   | 0.2 |   |   |   | 39.1 |   |
|  Research and development |   |                    | 14.9   |   |      |   | (1.4   | )           |   |   | - |   |   |   | 16.3 |   |
|  Total operating expenses |   |                    | 123.5  |   |      |   | (4.3   | )           |   |   | 0.8 |   |   |   | 127.0 |   |
|  Income from operations   |   | $                       | 28.3   |   |      | $      | 3.6    |        |   | $ | 0.1 |   |   | $ | 24.6 |   |

----

Table of Contents

| Geography           |   | 2010                    |   |   | 2009   |   |   | Variance |   |   | % Variance |   |
|---------------------|--------|-------------------------|--------|--------|--------|--------|--------|----------|--------|--------|------------|--------|
|                |   | (expressed in millions) |   |   |   |   |
|  Americas      |   | $                       | 122.1  |   |   | $      | 141.8  |     |   | $      | (19.7      | )      |   |   | -13.9 | % |
|  Europe        |   |                    | 112.9  |   |   |   | 128.7  |     |   |   | (15.8      | )      |   |   | -12.3 | % |
|  Asia          |   |                    | 139.1  |   |   |   | 138.4  |     |   |   | 0.7        |   |   |   | 0.5 | % |
|  Total Revenue |   | $                       | 374.1  |   |   | $      | 408.9  |     |   | $      | (34.8      | )      |   |   | -8.5 | % |

----

Table of Contents

|   |   |                    |   |   | Estimated |   |   |        |   |
|--------|--------|-------------------------|--------|--------|-----------|--------|--------|-------------|--------|
|   |   |                    |   |   | Business  |   |   | Currency    |   |   |   |   |
|   |   | 2010                    |   |   | Change    |   |   | Translation |   |   | 2009 |   |
|   |   | (expressed in millions) |   |
| Orders |   | $                       | 340.7  |   |      | $      | 62.9   |        |   | $ | 2.8 |   |   | $ | 275.0 |   |

----

Table of Contents

| Geography    |   | 2010                    |   |   | 2009   |   |   | Variance |   |   | % Variance |   |
|--------------|--------|-------------------------|--------|--------|--------|--------|--------|----------|--------|--------|------------|--------|
|         |   | (expressed in millions) |   |   |   |   |
| Americas     |   | $                       | 120.0  |   |   | $      | 87.8   |     |   | $      | 32.2       |   |   |   | 36.7 | % |
| Europe       |   |                    | 93.5   |   |   |   | 78.2   |     |   |   | 15.3       |   |   |   | 19.6 | % |
| Asia         |   |                    | 127.2  |   |   |   | 109.0  |     |   |   | 18.2       |   |   |   | 16.7 | % |
| Total Orders |   | $                       | 340.7  |   |   | $      | 275.0  |     |   | $      | 65.7       |   |   |   | 23.9 | % |

|                          |   |                    |   |   | Estimated |   |   |        |   |
|-------------------------------|--------|-------------------------|--------|--------|-----------|--------|--------|-------------|--------|
|                          |   |                    |   |   | Business  |   |   | Currency    |   |   |   |   |
|                          |   | 2010                    |   |   | Change    |   |   | Translation |   |   | 2009 |   |
|                          |   | (expressed in millions) |   |
| Revenue                       |   | $                       | 296.3  |   |      | $      | (49.2  | )           |   | $ | 2.9 |   |   | $ | 342.6 |   |
| Cost of sales                 |   |                    | 187.8  |   |      |   | (41.8  | )           |   |   | 2.2 |   |   |   | 227.4 |   |
| Gross profit                  |   |                    | 108.5  |   |      |   | (7.4   | )           |   |   | 0.7 |   |   |   | 115.2 |   |
| Gross margin                  |   |                    | 36.6   | %      |      |   |   |        |   |   |   |   |   |   | 33.6 | % |
|                          |   |                    |   |   |      |   |   |        |   |   |   |   |   |   |   |   |
| Operating expenses:           |   |                    |   |   |      |   |   |        |   |   |   |   |   |   |   |   |
| Selling and marketing         |   |                    | 52.0   |   |      |   | (4.5   | )           |   |   | 0.4 |   |   |   | 56.1 |   |
| General administrative        |   |                    | 34.1   |   |      |   | 4.4    |        |   |   | 0.1 |   |   |   | 29.6 |   |
| Research and development      |   |                    | 11.2   |   |      |   | (0.8   | )           |   |   | - |   |   |   | 12.0 |   |
| Total operating expenses      |   |                    | 97.3   |   |      |   | (0.9   | )           |   |   | 0.5 |   |   |   | 97.7 |   |
| Income (loss) from operations |   | $                       | 11.2   |   |      | $      | (6.5   | )           |   | $ | 0.2 |   |   | $ | 17.5 |   |

| Geography     |   | 2010                    |   |   | 2009   |   |   | Variance |   |   | % Variance |   |
|---------------|--------|-------------------------|--------|--------|--------|--------|--------|----------|--------|--------|------------|--------|
|          |   | (expressed in millions) |   |   |   |   |
| Americas      |   | $                       | 98.9   |   |   | $      | 122.8  |     |   | $      | (23.9      | )      |   |   | -19.5 | % |
| Europe        |   |                    | 77.6   |   |   |   | 96.3   |     |   |   | (18.7      | )      |   |   | -19.4 | % |
| Asia          |   |                    | 119.8  |   |   |   | 123.5  |     |   |   | (3.7       | )      |   |   | -3.0 | % |
| Total Revenue |   | $                       | 296.3  |   |   | $      | 342.6  |     |   | $      | (46.3      | )      |   |   | -13.5 | % |

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|   |   |                    |   |   | Estimated |   |   |        |   |
|--------|--------|-------------------------|--------|--------|-----------|--------|--------|-------------|--------|
|   |   |                    |   |   | Business  |   |   | Currency    |   |   |   |   |
|   |   | 2010                    |   |   | Change    |   |   | Translation |   |   | 2009 |   |
|   |   | (expressed in millions) |   |
| Orders |   | $                       | 82.8   |   |      | $      | 16.4   |        |   | $ | 0.6 |   |   | $ | 65.8 |   |

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Table of Contents

| Geography    |   | 2010                    |   |   | 2009   |   |   | Variance |   |   | % Variance |   |
|--------------|--------|-------------------------|--------|--------|--------|--------|--------|----------|--------|--------|------------|--------|
|         |   | (expressed in millions) |   |   |   |   |
| Americas     |   | $                       | 23.5   |   |   | $      | 20.5   |     |   | $      | 3.0        |   |   |   | 14.6 | % |
| Europe       |   |                    | 38.3   |   |   |   | 30.5   |     |   |   | 7.8        |   |   |   | 25.6 | % |
| Asia         |   |                    | 21.0   |   |   |   | 14.8   |     |   |   | 6.2        |   |   |   | 41.9 | % |
| Total Orders |   | $                       | 82.8   |   |   | $      | 65.8   |     |   | $      | 17.0       |   |   |   | 25.8 | % |

|                          |   |                    |   |   | Estimated |   |   |        |   |
|-------------------------------|--------|-------------------------|--------|--------|-----------|--------|--------|-------------|--------|
|                          |   |                    |   |   | Business  |   |   | Currency    |   |   |   |   |
|                          |   | 2010                    |   |   | Change    |   |   | Translation |   |   | 2009 |   |
|                          |   | (expressed in millions) |   |
| Revenue                       |   | $                       | 77.8   |   |      | $      | 11.1   |        |   | $ | 0.4 |   |   | $ | 66.3 |   |
| Cost of sales                 |   |                    | 34.5   |   |      |   | 4.4    |        |   |   | 0.2 |   |   |   | 29.9 |   |
| Gross profit                  |   |                    | 43.3   |   |      |   | 6.7    |        |   |   | 0.2 |   |   |   | 36.4 |   |
| Gross margin                  |   |                    | 55.7   | %      |      |   |   |        |   |   |   |   |   |   | 54.9 | % |
|                          |   |                    |   |   |      |   |   |        |   |   |   |   |   |   |   |   |
| Operating expenses:           |   |                    |   |   |      |   |   |        |   |   |   |   |   |   |   |   |
| Selling and marketing         |   |                    | 13.9   |   |      |   | (1.8   | )           |   |   | 0.2 |   |   |   | 15.5 |   |
| General administrative        |   |                    | 8.6    |   |      |   | (1.0   | )           |   |   | 0.1 |   |   |   | 9.5 |   |
| Research and development      |   |                    | 3.7    |   |      |   | (0.6   | )           |   |   | - |   |   |   | 4.3 |   |
| Total operating expenses      |   |                    | 26.2   |   |      |   | (3.4   | )           |   |   | 0.3 |   |   |   | 29.3 |   |
| Income (loss) from operations |   | $                       | 17.1   |   |      | $      | 10.1   |        |   | $ | (0.1 | ) |   | $ | 7.1 |   |

| Geography     |   | 2010                    |   |   | 2009   |   |   | Variance |   |   | % Variance |   |
|---------------|--------|-------------------------|--------|--------|--------|--------|--------|----------|--------|--------|------------|--------|
|          |   | (expressed in millions) |   |   |   |   |
| Americas      |   | $                       | 23.2   |   |   | $      | 19.0   |     |   | $      | 4.2        |   |   |   | 22.1 | % |
| Europe        |   |                    | 35.3   |   |   |   | 32.4   |     |   |   | 2.9        |   |   |   | 9.0 | % |
| Asia          |   |                    | 19.3   |   |   |   | 14.9   |     |   |   | 4.4        |   |   |   | 29.5 | % |
| Total Revenue |   | $                       | 77.8   |   |   | $      | 66.3   |     |   | $      | 11.5       |   |   |   | 17.3 | % |

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|   | · | On September 28, 2008 the Company acquired substantially all of the assets of SANS for $49.4 million. SANS has manufacturing facilities in both Shenzhen and Shanghai, China, and is headquartered in Shenzhen. SANS manufactures material testing systems and offers a variety of products, including electro-mechanical and static-hydraulic testing machines. The results of operations for SANS have been included in the Company’s results of operations since the date of the acquisition, and are reported in the Company’s Test segment. Orders for SANS for fiscal year 2009 were $24.9 million. SANS reported a $3.0 million loss from operations for fiscal year 2009, on $23.6 million of revenue, driven by lower gross profit, which includes a $1.9 million reduction associated with the sale of inventory that was written up to fair value as part of the acquisition, as well as increased operating expenses associated with integration-related items. Total Company headcount in Asia increased by approximately 550 employees during fiscal year 2009 to support the SANS business. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Orders decreased 29.8% to $340.8 million, compared to orders of $485.3 million for fiscal year 2008, as sharply lower demand in worldwide industrial capital spending in the Company’s markets had a negative impact on both the Test and Sensors segments. Backlog of undelivered orders at October 3, 2009 was $167.7 million, including $9.9 million from SANS, a decrease of 28.5% from backlog of $234.7 million at September 27, 2008. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Revenue decreased 11.2% to $408.9 million, compared to revenue of $460.5 million for fiscal year 2008. This decrease was primarily due to a 12.4% decrease in the organic Test business and a 31.3% decline in the Sensors segment. SANS provided a 5.1% benefit for fiscal year 2009. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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Table of Contents

|   | · | The Company initiated workforce reduction actions throughout fiscal year 2009, in order to align the Company’s operating cost structure with changing market conditions. As a result of the workforce reduction actions, the Company incurred severance and benefit costs totaling $12.1 million, of which $10.9 million and $1.2 million was reported in the Test and Sensors segments, respectively. Of the $12.1 million total costs, $6.8 million, $4.0 million, $1.2 million, and $0.1 million were reported in Cost of Sales, Selling and Marketing, General and Administrative, and Research and Development expense, respectively. These actions resulted in approximately an 18% reduction in the organic business workforce. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Income from operations decreased 60.2%, to $24.6 million, compared to $61.8 million for fiscal year 2008, primarily driven by lower volume, higher warranty expense and the previously mentioned severance charges. This was partially offset by reduced operating expenses in the organic Test business, resulting from a smaller workforce and lower discretionary spending, and a $6.7 million reduction in variable compensation expense. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Cash and cash equivalents at October 3, 2009 totaled $118.9 million, compared to $114.1 million at the end of fiscal year 2008. Cash flows from operations generated $43.8 million. During fiscal year 2009, the Company borrowed $16.0 million from its credit facility, paid an additional $25.1 million for the acquisition of SANS, invested $9.8 million in capital expenditures, and purchased 507,500 shares of common stock for $12.8 million. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |                    |   |   | Estimated |   |   |        |   |   | Estimated   |   |   |   |   |
|--------|--------|-------------------------|--------|--------|-----------|--------|--------|-------------|--------|--------|-------------|--------|--------|--------|--------|
|   |   |                    |   |   | Organic   |   |   |        |   |   |        |   |   |   |   |
|   |   |                    |   |   | Business  |   |   | SANS        |   |   | Currency    |   |   |   |   |
|   |   | 2009                    |   |   | Change    |   |   | Acquisition |   |   | Translation |   |   | 2008   |   |
|   |   | (expressed in millions) |   |
| Orders |   | $                       | 340.8  |   |      | $      | (161.3 | )           |   | $      | 24.9        |   |   | $      | (8.1   | ) |   | $ | 485.3 |   |

| Geography    |   | 2009                    |   |   | 2008   |   |   | Variance |   |   | % Variance |   |
|--------------|--------|-------------------------|--------|--------|--------|--------|--------|----------|--------|--------|------------|--------|
|         |   | (expressed in millions) |   |   |   |   |
| Americas     |   | $                       | 108.3  |   |   | $      | 176.2  |     |   | $      | (67.9      | )      |   |   | -38.5 | % |
| Europe       |   |                    | 108.7  |   |   |   | 168.4  |     |   |   | (59.7      | )      |   |   | -35.5 | % |
| Asia         |   |                    | 123.8  |   |   |   | 140.7  |     |   |   | (16.9      | )      |   |   | -12.0 | % |
| Total Orders |   | $                       | 340.8  |   |   | $      | 485.3  |     |   | $      | (144.5     | )      |   |   | -29.8 | % |

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Table of Contents

|                                                   |   | 2009   |   |   | 2008   |   |   | Variance |   |   | % Variance |   |
|--------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|----------|--------|--------|------------|--------|
|                                                   |   |   |   |   |   |   |   |     |   |   |       |   |
| Revenue                                                |   | $      | 408.9  |   |   | $      | 460.5  |     |   | $      | (51.6      | )      |   |   | -11.2 | % |
| Cost of sales                                          |   |   | 257.3  |   |   |   | 270.2  |     |   |   | (12.9      | )      |   |   | -4.8 | % |
| Gross profit                                           |   |   | 151.6  |   |   |   | 190.3  |     |   |   | (38.7      | )      |   |   | -20.3 | % |
| Gross margin                                           |   |   | 37.1   | %      |   |   | 41.3   | %        |   |   | -4.2       | %      |   |   |   |   |
|                                                   |   |   |   |   |   |   |   |     |   |   |       |   |   |   |   |   |
| Operating expenses:                                    |   |   |   |   |   |   |   |     |   |   |       |   |   |   |   |   |
| Selling and marketing                                  |   |   | 71.6   |   |   |   | 76.9   |     |   |   | (5.3       | )      |   |   | -6.9 | % |
| General administrative                                 |   |   | 39.1   |   |   |   | 35.4   |     |   |   | 3.7        |   |   |   | 10.5 | % |
| Research and development                               |   |   | 16.3   |   |   |   | 16.2   |     |   |   | 0.1        |   |   |   | 0.6 | % |
| Total operating expenses                               |   |   | 127.0  |   |   |   | 128.5  |     |   |   | (1.5       | )      |   |   | -1.2 | % |
| Income from operations                                 |   |   | 24.6   |   |   |   | 61.8   |     |   |   | (37.2      | )      |   |   | -60.2 | % |
| Interest expense                                       |   |   | (2.0   | )      |   |   | (1.1   | )        |   |   | (0.9       | )      |   |   | 81.8 | % |
| Interest income                                        |   |   | 1.1    |   |   |   | 4.0    |     |   |   | (2.9       | )      |   |   | -72.5 | % |
| Other income, net                                      |   |   | 0.2    |   |   |   | 0.8    |     |   |   | (0.6       | )      |   |   | -75.0 | % |
| Income before income taxes and discontinued operations |   |   | 23.9   |   |   |   | 65.5   |     |   |   | (41.6      | )      |   |   | -63.5 | % |
| Provision for income taxes                             |   |   | 6.5    |   |   |   | 18.4   |     |   |   | (11.9      | )      |   |   | -64.7 | % |
| Income before discontinued operations                  |   |   | 17.4   |   |   |   | 47.1   |     |   |   | (29.7      | )      |   |   | -63.1 | % |
| Income from discontinued operations, net of tax        |   |   | -      |   |   |   | 2.1    |     |   |   | (2.1       | )      |   |   | -100.0 | % |
| Net income                                             |   | $      | 17.4   |   |   | $      | 49.2   |     |   | $      | (31.8      | )      |   |   | -64.6 | % |
|                                                   |   |   |   |   |   |   |   |     |   |   |       |   |   |   |   |   |
| Diluted earnings per share                             |   | $      | 1.03   |   |   | $      | 2.80   |     |   | $      | (1.77      | )      |   |   | -63.2 | % |

|                          |   |                    |   |   | Estimated |   |   |        |   |   | Estimated   |   |   |   |   |
|-------------------------------|--------|-------------------------|--------|--------|-----------|--------|--------|-------------|--------|--------|-------------|--------|--------|--------|--------|
|                          |   |                    |   |   | Organic   |   |   |        |   |   |        |   |   |   |   |
|                          |   |                    |   |   | Business  |   |   | SANS        |   |   | Currency    |   |   |   |   |
|                          |   | 2009                    |   |   | Change    |   |   | Acquisition |   |   | Translation |   |   | 2008   |   |
|                          |   | (expressed in millions) |   |
| Revenue                       |   | $                       | 408.9  |   |      | $      | (65.3  | )           |   | $      | 23.6        |   |   | $      | (9.9   | ) |   | $ | 460.5 |   |
| Cost of sales                 |   |                    | 257.3  |   |      |   | (21.0  | )           |   |   | 14.6        |   |   |   | (6.5   | ) |   |   | 270.2 |   |
| Gross profit                  |   |                    | 151.6  |   |      |   | (44.3  | )           |   |   | 9.0         |   |   |   | (3.4   | ) |   |   | 190.3 |   |
| Gross margin                  |   |                    | 37.1   | %      |      |   |   |        |   |   | 38.2        | %      |   |   |   |   |   |   | 41.3 | % |
|                          |   |                    |   |   |      |   |   |        |   |   |        |   |   |   |   |   |   |   |   |   |
| Operating expenses:           |   |                    |   |   |      |   |   |        |   |   |        |   |   |   |   |   |   |   |   |   |
| Selling and marketing         |   |                    | 71.6   |   |      |   | (7.6   | )           |   |   | 4.2         |   |   |   | (1.9   | ) |   |   | 76.9 |   |
| General administrative        |   |                    | 39.1   |   |      |   | (3.6   | )           |   |   | 7.8         |   |   |   | (0.5   | ) |   |   | 35.4 |   |
| Research and development      |   |                    | 16.3   |   |      |   | 0.3    |        |   |   | -           |   |   |   | (0.2   | ) |   |   | 16.2 |   |
| Total operating expenses      |   |                    | 127.0  |   |      |   | (10.9  | )           |   |   | 12.0        |   |   |   | (2.6   | ) |   |   | 128.5 |   |
| Income (loss) from operations |   | $                       | 24.6   |   |      | $      | (33.4  | )           |   | $      | (3.0        | )      |   | $      | (0.8   | ) |   | $ | 61.8 |   |

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| Geography     |   | 2009                    |   |   | 2008   |   |   | Variance |   |   | % Variance |   |
|---------------|--------|-------------------------|--------|--------|--------|--------|--------|----------|--------|--------|------------|--------|
|          |   | (expressed in millions) |   |   |   |   |
| Americas      |   | $                       | 141.8  |   |   | $      | 168.6  |     |   | $      | (26.8      | )      |   |   | -15.9 | % |
| Europe        |   |                    | 128.7  |   |   |   | 152.0  |     |   |   | (23.3      | )      |   |   | -15.3 | % |
| Asia          |   |                    | 138.4  |   |   |   | 139.9  |     |   |   | (1.5       | )      |   |   | -1.1 | % |
| Total Revenue |   | $                       | 408.9  |   |   | $      | 460.5  |     |   | $      | (51.6      | )      |   |   | -11.2 | % |

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|         |   |                    |   |   | Estimated |   |   |        |   |   | Estimated   |   |   |   |   |
|--------------|--------|-------------------------|--------|--------|-----------|--------|--------|-------------|--------|--------|-------------|--------|--------|--------|--------|
|         |   |                    |   |   | Organic   |   |   |        |   |   |        |   |   |   |   |
|         |   |                    |   |   | Business  |   |   | SANS        |   |   | Currency    |   |   |   |   |
|         |   | 2009                    |   |   | Change    |   |   | Acquisition |   |   | Translation |   |   | 2008   |   |
|         |   | (expressed in millions) |   |
|  Orders |   | $                       | 275.0  |   |      | $      | (133.7 | )           |   | $      | 24.9        |   |   | $      | (6.0   | ) |   | $ | 389.8 |   |

| Geography    |   | 2009                    |   |   | 2008   |   |   | Variance |   |   | % Variance |   |
|--------------|--------|-------------------------|--------|--------|--------|--------|--------|----------|--------|--------|------------|--------|
|         |   | (expressed in millions) |   |   |   |   |
| Americas     |   | $                       | 87.8   |   |   | $      | 150.6  |     |   | $      | (62.8      | )      |   |   | -41.7 | % |
| Europe       |   |                    | 78.2   |   |   |   | 119.5  |     |   |   | (41.3      | )      |   |   | -34.6 | % |
| Asia         |   |                    | 109.0  |   |   |   | 119.7  |     |   |   | (10.7      | )      |   |   | -8.9 | % |
| Total Orders |   | $                       | 275.0  |   |   | $      | 389.8  |     |   | $      | (114.8     | )      |   |   | -29.5 | % |

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|                          |   |                    |   |   | Estimated |   |   |        |   |   | Estimated   |   |   |   |   |
|-------------------------------|--------|-------------------------|--------|--------|-----------|--------|--------|-------------|--------|--------|-------------|--------|--------|--------|--------|
|                          |   |                    |   |   | Organic   |   |   |        |   |   |        |   |   |   |   |
|                          |   |                    |   |   | Business  |   |   | SANS        |   |   | Currency    |   |   |   |   |
|                          |   | 2009                    |   |   | Change    |   |   | Acquisition |   |   | Translation |   |   | 2008   |   |
|                          |   | (expressed in millions) |   |
| Revenue                       |   | $                       | 342.6  |   |      | $      | (37.5  | )           |   | $      | 23.6        |   |   | $      | (7.6   | ) |   | $ | 364.1 |   |
| Cost of sales                 |   |                    | 227.4  |   |      |   | (10.0  | )           |   |   | 14.6        |   |   |   | (5.6   | ) |   |   | 228.4 |   |
| Gross profit                  |   |                    | 115.2  |   |      |   | (27.5  | )           |   |   | 9.0         |   |   |   | (2.0   | ) |   |   | 135.7 |   |
| Gross margin                  |   |                    | 33.6   | %      |      |   |   |        |   |   | 38.2        | %      |   |   |   |   |   |   | 37.3 | % |
|                          |   |                    |   |   |      |   |   |        |   |   |        |   |   |   |   |   |   |   |   |   |
| Operating expenses:           |   |                    |   |   |      |   |   |        |   |   |        |   |   |   |   |   |   |   |   |   |
| Selling and marketing         |   |                    | 56.1   |   |      |   | (5.8   | )           |   |   | 4.2         |   |   |   | (1.5   | ) |   |   | 59.2 |   |
| General administrative        |   |                    | 29.6   |   |      |   | (2.2   | )           |   |   | 7.8         |   |   |   | (0.3   | ) |   |   | 24.3 |   |
| Research and development      |   |                    | 12.0   |   |      |   | 0.9    |        |   |   | -           |   |   |   | -      |   |   |   | 11.1 |   |
| Total operating expenses      |   |                    | 97.7   |   |      |   | (7.1   | )           |   |   | 12.0        |   |   |   | (1.8   | ) |   |   | 94.6 |   |
| Income (loss) from operations |   | $                       | 17.5   |   |      | $      | (20.4  | )           |   | $      | (3.0        | )      |   | $      | (0.2   | ) |   | $ | 41.1 |   |

| Geography     |   | 2009                    |   |   | 2008   |   |   | Variance |   |   | % Variance |   |
|---------------|--------|-------------------------|--------|--------|--------|--------|--------|----------|--------|--------|------------|--------|
|          |   | (expressed in millions) |   |   |   |   |
| Americas      |   | $                       | 122.8  |   |   | $      | 142.7  |     |   | $      | (19.9      | )      |   |   | -13.9 | % |
| Europe        |   |                    | 96.3   |   |   |   | 104.1  |     |   |   | (7.8       | )      |   |   | -7.5 | % |
| Asia          |   |                    | 123.5  |   |   |   | 117.3  |     |   |   | 6.2        |   |   |   | 5.3 | % |
| Total Revenue |   | $                       | 342.6  |   |   | $      | 364.1  |     |   | $      | (21.5      | )      |   |   | -5.9 | % |

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|   |   |                    |   |   | Estimated |   |   |        |   |
|--------|--------|-------------------------|--------|--------|-----------|--------|--------|-------------|--------|
|   |   |                    |   |   | Business  |   |   | Currency    |   |   |   |   |
|   |   | 2009                    |   |   | Change    |   |   | Translation |   |   | 2008 |   |
|   |   | (expressed in millions) |   |
| Orders |   | $                       | 65.8   |   |      | $      | (27.6  | )           |   | $ | (2.1 | ) |   | $ | 95.5 |   |

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| Geography    |   | 2009                    |   |   | 2008   |   |   | Variance |   |   | % Variance |   |
|--------------|--------|-------------------------|--------|--------|--------|--------|--------|----------|--------|--------|------------|--------|
|         |   | (expressed in millions) |   |   |   |   |
| Americas     |   | $                       | 20.5   |   |   | $      | 25.6   |     |   | $      | (5.1       | )      |   |   | -19.9 | % |
| Europe       |   |                    | 30.5   |   |   |   | 48.9   |     |   |   | (18.4      | )      |   |   | -37.6 | % |
| Asia         |   |                    | 14.8   |   |   |   | 21.0   |     |   |   | (6.2       | )      |   |   | -29.5 | % |
| Total Orders |   | $                       | 65.8   |   |   | $      | 95.5   |     |   | $      | (29.7      | )      |   |   | -31.1 | % |

|                          |   |                    |   |   | Estimated |   |   |        |   |
|-------------------------------|--------|-------------------------|--------|--------|-----------|--------|--------|-------------|--------|
|                          |   |                    |   |   | Business  |   |   | Currency    |   |   |   |   |
|                          |   | 2009                    |   |   | Change    |   |   | Translation |   |   | 2008 |   |
|                          |   | (expressed in millions) |   |
| Revenue                       |   | $                       | 66.3   |   |      | $      | (27.8  | )           |   | $ | (2.3 | ) |   | $ | 96.4 |   |
| Cost of sales                 |   |                    | 29.9   |   |      |   | (11.0  | )           |   |   | (0.9 | ) |   |   | 41.8 |   |
| Gross profit                  |   |                    | 36.4   |   |      |   | (16.8  | )           |   |   | (1.4 | ) |   |   | 54.6 |   |
| Gross margin                  |   |                    | 54.9   | %      |      |   |   |        |   |   |   |   |   |   | 56.6 | % |
|                          |   |                    |   |   |      |   |   |        |   |   |   |   |   |   |   |   |
| Operating expenses:           |   |                    |   |   |      |   |   |        |   |   |   |   |   |   |   |   |
| Selling and marketing         |   |                    | 15.5   |   |      |   | (1.8   | )           |   |   | (0.4 | ) |   |   | 17.7 |   |
| General administrative        |   |                    | 9.5    |   |      |   | (1.4   | )           |   |   | (0.2 | ) |   |   | 11.1 |   |
| Research and development      |   |                    | 4.3    |   |      |   | (0.6   | )           |   |   | (0.2 | ) |   |   | 5.1 |   |
| Total operating expenses      |   |                    | 29.3   |   |      |   | (3.8   | )           |   |   | (0.8 | ) |   |   | 33.9 |   |
| Income (loss) from operations |   | $                       | 7.1    |   |      | $      | (13.0  | )           |   | $ | (0.6 | ) |   | $ | 20.7 |   |

| Geography     |   | 2009                    |   |   | 2008   |   |   | Variance |   |   | % Variance |   |
|---------------|--------|-------------------------|--------|--------|--------|--------|--------|----------|--------|--------|------------|--------|
|          |   | (expressed in millions) |   |   |   |   |
| Americas      |   | $                       | 19.0   |   |   | $      | 25.9   |     |   | $      | (6.9       | )      |   |   | -26.6 | % |
| Europe        |   |                    | 32.4   |   |   |   | 47.9   |     |   |   | (15.5      | )      |   |   | -32.4 | % |
| Asia          |   |                    | 14.9   |   |   |   | 22.6   |     |   |   | (7.7       | )      |   |   | -34.1 | % |
| Total Revenue |   | $                       | 66.3   |   |   | $      | 96.4   |     |   | $      | (30.1      | )      |   |   | -31.2 | % |

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|                           |   |   |   |   | Payments Due by Period   |   |
|--------------------------------|--------|--------|--------|--------|--------------------------|--------|
|                           |   |   |   |   | (expressed in thousands) |   |
| Contractual Obligations(1)     |   | Total  |   |   | Less than 1 year         |   |   | 1 - 3 years |   |   | 3 - 5 years |   |   | More than 5 years |   |
| Operating Lease Obligations    |   | $      | 13,065 |   |                     | $      | 4,563 |   |   | $ | 5,165 |   |   | $ | 1,491 |   |   | $ | 1,846 |   |
| Other Long-Term Obligations(2) |   |   | 9,662  |   |                     |   | 2,142 |   |   |   | 2,701 |   |   |   | 2,337 |   |   |   | 2,482 |   |
| Total                          |   | $      | 22,727 |   |                     | $      | 6,705 |   |   | $ | 7,866 |   |   | $ | 3,828 |   |   | $ | 4,328 |   |

|   | (1) | Long-term income tax liabilities for uncertain tax positions have been excluded from the contractual obligations table as the Company is not able to make a reasonably reliable estimate of the amount and period of related future payments. At October 2, 2010, the Company’s long-term liability for uncertain tax positions was $4.2 million. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | Other long-term obligations include liabilities under pension and other retirement plans. |
|--------|-----|-------------------------------------------------------------------------------------------|

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|                              |   | First                                           |    |   | Second  |   |    | Third   |   |   | Fourth  |   |   | Total  |    |
|-----------------------------------|--------|-------------------------------------------------|---------|--------|---------|--------|---------|---------|--------|--------|---------|--------|--------|--------|---------|
|                              |   | Quarter                                         |    |   | Quarter |   |    | Quarter |   |   | Quarter |   |   | Year   |    |
|                              |   | (expressed in thousands, except per share data) |    |
|                              |   |                                            |    |   |    |   |    |    |   |   |    |   |   |   |    |
| 2010                              |   |                                            |    |   |    |   |    |    |   |   |    |   |   |   |    |
| Revenue                           |   | $                                               | 88,960  |   |    | $      | 94,270  |    |   | $      | 84,944  |   |   | $      | 105,879 |   |   | $ | 374,053 |   |
| Gross profit                      |   |                                            | 35,182  |   |    |   | 38,528  |    |   |   | 33,249  |   |   |   | 44,835  |   |   |   | 151,794 |   |
| Income (loss) before income taxes |   |                                            | 5,701   |   |    |   | 9,660   |    |   |   | (1,563  | )      |   |   | 13,414  |   |   |   | 27,212 |   |
| Net income                        |   | $                                               | 3,837   |   |    | $      | 6,174   |    |   | $      | 5       |   |   | $      | 8,560   |   |   | $ | 18,576 |   |
| Earnings per share:               |   |                                            |    |   |    |   |    |    |   |   |    |   |   |   |    |   |   |   |   |   |
| Basic                             |   | $                                               | 0.23    |   |    | $      | 0.37    |    |   | $      | 0.00    |   |   | $      | 0.54    |   |   | $ | 1.14 |   |
| Diluted                           |   | $                                               | 0.23    |   |    | $      | 0.37    |    |   | $      | 0.00    |   |   | $      | 0.54    |   |   | $ | 1.14 |   |
|                              |   |                                            |    |   |    |   |    |    |   |   |    |   |   |   |    |   |   |   |   |   |
| 2009                              |   |                                            |    |   |    |   |    |    |   |   |    |   |   |   |    |   |   |   |   |   |
| Revenue                           |   | $                                               | 116,609 |   |    | $      | 107,652 |    |   | $      | 90,779  |   |   | $      | 93,841  |   |   | $ | 408,881 |   |
| Gross profit                      |   |                                            | 44,221  |   |    |   | 41,513  |    |   |   | 34,604  |   |   |   | 31,278  |   |   |   | 151,616 |   |
| Income (loss) before income taxes |   |                                            | 12,842  |   |    |   | 10,359  |    |   |   | 4,495   |   |   |   | (3,793  | ) |   |   | 23,903 |   |
| Net income (loss)                 |   | $                                               | 9,751   |   |    | $      | 7,473   |    |   | $      | 3,149   |   |   | $      | (2,979  | ) |   | $ | 17,394 |   |
| Earnings (loss) per share:        |   |                                            |    |   |    |   |    |    |   |   |    |   |   |   |    |   |   |   |   |   |
| Basic                             |   | $                                               | 0.58    |   |    | $      | 0.45    |    |   | $      | 0.19    |   |   | $      | (0.18   | ) |   | $ | 1.04 |   |
| Diluted                           |   | $                                               | 0.57    |   |    | $      | 0.45    |    |   | $      | 0.19    |   |   | $      | (0.18   | ) |   | $ | 1.03 |   |

| Item 7A. | Quantitative and Qualitative Disclosures about Market Risk |
|----------|------------------------------------------------------------|

|                                              |   | 2010                     |   |   | 2009   |   |   | 2008 |   |
|---------------------------------------------------|--------|--------------------------|--------|--------|--------|--------|--------|------|--------|
|                                              |   | (expressed in thousands) |   |
| Increase (decrease) from currency translation on: |   |                     |   |   |   |   |   |
| Orders                                            |   | $                        | 3,430  |   |   | $      | (8,077 | )    |   | $ | 21,090 |   |
| Revenue                                           |   |                     | 3,333  |   |   |   | (9,921 | )    |   |   | 22,128 |   |
| Net Income                                        |   | $                        | 105    |   |   | $      | (581   | )    |   | $ | 2,243 |   |

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| Item 8. | Financial Statements and Supplementary Data |
|---------|---------------------------------------------|

| Item 9. | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure |
|---------|--------------------------------------------------------------------------------------|

| Item 9A. | Controls and Procedures |
|----------|-------------------------|

| Item 9B. | Other Information |
|----------|-------------------|

PART 

| Item 10. | Directors and Executive Officers of Registrant |
|----------|------------------------------------------------|

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| Item 11. | Executive Compensation |
|----------|------------------------|

| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
|----------|------------------------------------------------------------------------------------------------|

| Plan Category                                              |   | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (in thousands)(a) |   |   | Weighted- Average Exercise Price of Outstanding Warrants and Rights(b) |   |   | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a))(1) (in thousands)(c) |   |
|------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------|--------|--------|------------------------------------------------------------------------|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Equity compensation plans approved by security holders     |   |                                                                                                          | 1,418  |   |                                                                   | $      | 32.37  |                                                                                                                                                             |   |   | 1,216 |   |
|                                                       |   |                                                                                                          |   |   |                                                                   |   |   |                                                                                                                                                             |   |   |   |   |
| Equity compensation plans not approved by security holders |   |                                                                                                          | -      |   |                                                                   |   | -      |                                                                                                                                                             |   |   | - |   |
|                                                       |   |                                                                                                          |   |   |                                                                   |   |   |                                                                                                                                                             |   |   |   |   |
| Total                                                      |   |                                                                                                          | 1,418  |   |                                                                   | $      | 32.37  |                                                                                                                                                             |   |   | 1,216 |   |

| (1) | Includes 445 thousand shares available for issuance under the 2002 Employee Stock Purchase Plan as of October 2, 2010. |
|-----|------------------------------------------------------------------------------------------------------------------------|

| Item 13. | Certain Relationships and Related Transactions, and Directors Independence |
|----------|----------------------------------------------------------------------------|

| Item 14. | Principal Accountant Fees and Services |
|----------|----------------------------------------|

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PART 

| Item 15. | Exhibits and Financial Statement Schedules |
|----------|--------------------------------------------|

|   | (1) | Consolidated Financial Statements: |
|--------|-----|------------------------------------|

|   | (2) | Financial Statement Schedules: |
|--------|-----|--------------------------------|

|   | (3) | Exhibits: |
|--------|-----|-----------|

| Exhibit Number |   | Description                                                                                                                                                                                                                |
|----------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|           |   |                                                                                                                                                                                                                       |
| 3.a            |   | Restated and Amended Articles of Incorporation, incorporated herein by reference from Exhibit 3.a of the Company’s Form 10-K for the fiscal year ended September 30, 1996.                                           |
|           |   |                                                                                                                                                                                                                       |
| 3.b            |   | Amended and Restated Bylaws, incorporated herein by reference to Exhibit 3.1 of the Company’s Form 8-K Current Report filed on December 1, 2009.                                                                     |
|           |   |                                                                                                                                                                                                                       |
| 10.a           |   | Executive Variable Compensation Plan, incorporated herein by reference to Exhibit 5.02 of the Company’s Form 8-K Current Report filed on February 12, 2010.                                                          |
|           |   |                                                                                                                                                                                                                       |
| 10.b           |   | 2002 Employee Stock Purchase Plan, as amended, incorporated herein by reference to Exhibit 10.d of the Company’s Form 10-K filed for the fiscal year ended October 1, 2005.                                          |
|           |   |                                                                                                                                                                                                                       |
| 10.c           |   | 2006 Stock Incentive Plan, incorporated herein by reference to Exhibit 99.1 of the Company’s Form 8-K Current Report filed on February 7, 2006.                                                                      |
|           |   |                                                                                                                                                                                                                       |
| 10.d           |   | Form of Notice of Grant of Restricted Stock (Director) under 2006 Stock Incentive Plan, incorporated herein by reference to Exhibit 99.2 of the Company’s Form 8-K Current Report filed on February 7, 2006.         |
|           |   |                                                                                                                                                                                                                       |
| 10.e           |   | Uniform Terms and Conditions to Restricted Stock Awards (Director) under 2006 Stock Incentive Plan, incorporated herein by reference to Exhibit 99.3 of Company’s Form 8-K Current Report filed on February 7, 2006. |

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| 10.f   |   | Description of the terms of employment of Susan E. Knight, pursuant to an offer letter, incorporated by reference to Exhibit 10.r of the Company’s Form 10-Q/A for the fiscal quarter ended December 31, 2001.                                                                                                                                                                                                                                       |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.g   |   | Letter dated February 6, 1987 from MTS Sensor Technologie GmbH and Co. KG (formerly, Hellwig GmbH) regarding its pension commitment to Joachim Hellwig, incorporated by reference to Exhibit 10.p of the Company’s Form 10-K filed for fiscal year ended October 2, 2004.                                                                                                                                                                            |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.h   |   | Employment Contract dated January 1, 1991 between MTS Sensor Technologie GmbH and Co. KG and Joachim Hellwig, incorporated by reference to Exhibit 10.q of the Company’s Form 10-K filed for fiscal year ended October 2, 2004.                                                                                                                                                                                                                      |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.i   |   | Change in Control Agreement, dated December 31, 2008, between the Company and Laura B. Hamilton, incorporated herein by reference to Exhibit 10.k of the Company’s Form 10-K filed for the fiscal year ended October 3, 2009.                                                                                                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.j   |   | Form of Indemnification Agreement between the Company and each of its directors and executive officers, incorporated herein by reference to Exhibit 10.1 of the Company’s Form 8-K Current Report filed on September 1, 2006.                                                                                                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.k   |   | First Amendment to the Company’s 2006 Stock Incentive Plan, First Amendment to the Company’s Executive Variable Compensation Plan, amendments to the Company’s Executive Deferred Compensation Plan (2005), and amendments to the Company’s form of change in control agreements, incorporated herein by reference to Exhibits 10.1, 10.2, 10.3 and 10.4 of the Company’s Form 8-K Current Report filed on October 27, 2008. |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.l   |   | Master Asset Purchase Agreement dated April 28, 2008, between the Company and the SANS Group, incorporated herein by reference to Exhibit 2.1 of the Company’s Form 8-K Current Report filed October 2, 2008.                                                                                                                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.m   |   | Credit Agreement dated December 18, 2007, among the Company, Wells Fargo Bank, National Association, Fifth Third Bank, The Bank of Tokyo Mitsubishi UFJ, Ltd., U.S. Bank National Association, JPMorgan Chase Bank, N.A. and J.P. Morgan Securities Inc., incorporated herein by reference to Exhibit 10.1 of the Company’s Form 8-K Current Report filed December 21, 2007.                                                                         |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.n   |   | Change in Control Agreement, dated December 31, 2008, between the Company and Susan E. Knight incorporated herein by reference to Exhibit 10.p of the Company’s Form 10-K filed for the fiscal year ended October 3, 2009.                                                                                                                                                                                                                           |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 10.o   |   | Change in Control Agreement, dated December 31, 2008, between the Company and Kathleen M. Staby, incorporated herein by reference to Exhibit 10.q of the Company’s Form 10-K filed for the fiscal year ended October 3, 2009.                                                                                                                                                                                                                        |

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| 10.p   |   | Severance Agreement, dated March 30, 2009, between the Company and Alfred Richter, incorporated herein by reference to Exhibit 10.k of the Company’s Form 10-K filed for the fiscal year ended October 3, 2009.                                                                                                                                           |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                            |
| 10.q   |   | Change in Control Agreement, dated March 30, 2009, between the Company and Alfred Richter, incorporated herein by reference to Exhibit 10.k of the Company’s Form 10-K filed for the fiscal year ended October 3, 2009.                                                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                                            |
| 10.r   |   | Form of Notice of Grant of Restricted Stock Units under 2006 Stock Incentive Plan, incorporated herein by reference to Exhibit 10.1 of the Company’s Form 8-K Current Report filed on June 29, 2009.                                                                                                                                                      |
|   |   |                                                                                                                                                                                                                                                                                                                                                            |
| 10.s   |   | Uniform Terms and Conditions to Restricted Stock Units under 2006 Stock Incentive Plan, incorporated herein by reference to Exhibit 10.2 of Company’s Form 8-K Current Report filed on June 29, 2009.                                                                                                                                                     |
|   |   |                                                                                                                                                                                                                                                                                                                                                            |
| 10.t   |   | Letter Agreement Regarding Accelerated Share Repurchase Program by and between MTS Systems Corporation and J.P. Morgan Securities Inc., as agent for JPMorgan Chase Bank, National Association, London Branch, dated August 18, 2010, incorporated by reference into Exhibit  10.1 of the Company's Form 8-K Current Report filed on August 19, 2010. |
|   |   |                                                                                                                                                                                                                                                                                                                                                            |
| 21.    |   | Subsidiaries of the Company (Filed herewith).                                                                                                                                                                                                                                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                                            |
| 23.    |   | Consent of Independent Registered Public Accounting Firm (Filed herewith).                                                                                                                                                                                                                                                                                      |
|   |   |                                                                                                                                                                                                                                                                                                                                                            |
| 31.1   |   | Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Filed herewith).                                                                                                                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                                                                            |
| 31.2   |   | Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Filed herewith).                                                                                                                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                                                                            |
| 32.1   |   | Certification of the Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Filed herewith).                                                                                                                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                                                                            |
| 32.2   |   | Certification of the Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Filed herewith).                                                                                                                                                                                                                                        |

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|   | MTS SYSTEMS CORPORATION |
|--------|-------------------------|
|   |                    |   |
|   | By:                     |  /s/ LAURA B. HAMILTON |   |
|   |                    | Laura B. Hamilton |
|   |                    | Chair and Chief Executive Officer |

| Signatures             |   | Title                   |   | Date              |
|------------------------|--------|-------------------------|--------|-------------------|
|                   |   |                    |   |              |
| /s/ LAURA B. HAMILTON  |   | Chair and Chief         |   | November 30, 2010 |
| Laura B. Hamilton      |   | Executive Officer       |   |              |
|                   |   |                    |   |              |
| /s/ SUSAN E. KNIGHT    |   | Chief Financial Officer |   | November 30, 2010 |
| Susan E. Knight        |   | and Vice President      |   |              |
|                   |   |                    |   |              |
| /s/ DAVID J. ANDERSON  |   | Director                |   | November 30, 2010 |
| David J. Anderson      |   |                    |   |              |
|                   |   |                    |   |              |
| /s/ JEAN-LOU CHAMEAU   |   | Director                |   | November 30, 2010 |
| Jean-Lou Chameau       |   |                    |   |              |
|                   |   |                    |   |              |
| /s/ BRENDAN C. HEGARTY |   | Director                |   | November 30, 2010 |
| Brendan C. Hegarty     |   |                    |   |              |
|                   |   |                    |   |              |
| /s/ EMILY M. LIGGETT   |   | Director                |   | November 30, 2010 |
| Emily M. Liggett       |   |                    |   |              |
|                   |   |                    |   |              |
| /s/ WILLIAM V. MURRAY  |   | Director                |   | November 30, 2010 |
| William V. Murray      |   |                    |   |              |
|                   |   |                    |   |              |
| /s/ BARB J. SAMARDZICH |   | Director                |   | November 30, 2010 |
| Barb J. Samardzich     |   |                    |   |              |
|                   |   |                    |   |              |
| /s/ GAIL P. STEINEL    |   | Director                |   | November 30, 2010 |
| Gail P. Steinel        |   |                    |   |              |

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| CONSOLIDATED FINANCIAL STATEMENTS                                                                                                                                            | Page             |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------|
|                                                                                                                                                                         |             |
| Report of Independent Registered Public Accounting Firm                                                                                                                      | F-2              |
|                                                                                                                                                                         |             |
| Consolidated Balance Sheets – October 2, 2010 and October 3, 2009                                                                                                      | F-3              |
|                                                                                                                                                                         |             |
| Consolidated Statements of Income for the Fiscal Years Ended October 2, 2010, October 3, 2009, and September 27, 2008                                                        | F-4              |
|                                                                                                                                                                         |             |
| Consolidated Statements of Shareholders’ Investment and Comprehensive Income (Loss) for the Fiscal Years Ended October 2, 2010, October 3, 2009 and September 27, 2008 | F-5              |
|                                                                                                                                                                         |             |
| Consolidated Statements of Cash Flows for the Fiscal Years Ended October 2, 2010, October 3, 2009 and September 27, 2008                                                     | F-6              |
|                                                                                                                                                                         |             |
| Notes to Consolidated Financial Statements                                                                                                                                   | F-7 through F-32 |
|                                                                                                                                                                         |             |
| Financial Statement Schedule                                                                                                                                                 |             |

| Schedule | Description                                              |   |
|----------|----------------------------------------------------------|--------|
|     |                                                     |   |
| II       | Summary of Consolidated Allowances For Doubtful Accounts | F-33   |

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|   | /s/ KPMG LLP |
|--------|--------------|

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| Assets                                                                                        |   | 2010                     |    |   | 2009   |   |
|-----------------------------------------------------------------------------------------------|--------|--------------------------|---------|--------|--------|--------|
|                                                                                          |   | (expressed in thousands) |    |
| Current Assets:                                                                               |   |                     |    |   |   |   |
| Cash and cash equivalents                                                                     |   | $                        | 76,611  |   |   | $      | 118,885 |   |
| Accounts receivable, net of allowance for doubtful accounts of $1,358 and $1,410 respectively |   |                     | 66,369  |   |   |   | 72,553 |   |
| Unbilled accounts receivable                                                                  |   |                     | 26,389  |   |   |   | 27,246 |   |
| Inventories                                                                                   |   |                     | 51,792  |   |   |   | 47,969 |   |
| Prepaid expenses and other current assets                                                     |   |                     | 10,799  |   |   |   | 6,583 |   |
| Deferred tax assets                                                                           |   |                     | 12,742  |   |   |   | 12,322 |   |
| Total current assets                                                                          |   |                     | 244,702 |   |   |   | 285,558 |   |
| Property and equipment, net                                                                   |   |                     | 56,444  |   |   |   | 56,118 |   |
| Goodwill                                                                                      |   |                     | 15,429  |   |   |   | 15,206 |   |
| Other intangibles, net                                                                        |   |                     | 24,753  |   |   |   | 23,826 |   |
| Other assets                                                                                  |   |                     | 3,368   |   |   |   | 4,181 |   |
| Deferred tax assets                                                                           |   |                     | 1,709   |   |   |   | 2,025 |   |
| Total assets                                                                                  |   | $                        | 346,405 |   |   | $      | 386,914 |   |
|                                                                                          |   |                     |    |   |   |   |   |   |
|                                                                                          |   |                     |    |   |   |   |   |   |
| Liabilities and Shareholders’ Investment                                                |   |                     |    |   |   |   |   |   |
|                                                                                          |   |                     |    |   |   |   |   |   |
| Current Liabilities:                                                                          |   |                     |    |   |   |   |   |   |
| Short-term borrowings                                                                         |   | $                        | 40,229  |   |   | $      | 40,182 |   |
| Accounts payable                                                                              |   |                     | 21,818  |   |   |   | 18,630 |   |
| Accrued payroll and related costs                                                             |   |                     | 32,725  |   |   |   | 25,376 |   |
| Advance payments from customers                                                               |   |                     | 44,000  |   |   |   | 46,739 |   |
| Accrued warranty costs                                                                        |   |                     | 7,505   |   |   |   | 9,774 |   |
| Accrued income taxes                                                                          |   |                     | 2,642   |   |   |   | 1,182 |   |
| Deferred tax liabilities                                                                      |   |                     | 996     |   |   |   | 960 |   |
| Other accrued liabilities                                                                     |   |                     | 11,925  |   |   |   | 25,149 |   |
| Total current liabilities                                                                     |   |                     | 161,840 |   |   |   | 167,992 |   |
| Deferred tax liabilities                                                                      |   |                     | 6,057   |   |   |   | 3,843 |   |
| Non-current accrued income taxes                                                              |   |                     | 4,181   |   |   |   | 3,591 |   |
| Pension benefit plan                                                                          |   |                     | 3,080   |   |   |   | 1,917 |   |
| Other long-term liabilities                                                                   |   |                     | 5,141   |   |   |   | 5,606 |   |
| Total liabilities                                                                             |   |                     | 180,299 |   |   |   | 182,949 |   |
|                                                                                          |   |                     |    |   |   |   |   |   |
| Shareholders’ Investment:                                                               |   |                     |    |   |   |   |   |   |
| Common stock, 25¢ par value; 64,000 shares authorized:                                   |   |                     |    |   |   |   |   |   |
| 15,264 and 16,564 shares issued and outstanding                                               |   |                     | 3,816   |   |   |   | 4,141 |   |
| Retained earnings                                                                             |   |                     | 147,609 |   |   |   | 174,301 |   |
| Accumulated other comprehensive income                                                        |   |                     | 14,681  |   |   |   | 25,523 |   |
| Total shareholders’ investment                                                          |   |                     | 166,106 |   |   |   | 203,965 |   |
| Total liabilities and shareholders’ investment                                          |   | $                        | 346,405 |   |   | $      | 386,914 |   |

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| (For the Fiscal Years Ended October 2, October 3 and September 27, respectively) |   |
|----------------------------------------------------------------------------------|--------|
|                                                                             |   |   |   |   |   |   |   |   |   |
|                                                                             |   | 2010 |   |   | 2009 |   |   | 2008 |   |
|                                                                             |   |   |   |   |   |   |
|                                                                             |   |   |   |   |   |   |   |   |   |
| Revenue:                                                                         |   |   |   |   |   |   |   |   |   |
| Product                                                                          |   | $ | 315,691 |   |   | $ | 349,502 |   |   | $ | 395,173 |   |
| Service                                                                          |   |   | 58,362 |   |   |   | 59,379 |   |   |   | 65,342 |   |
| Total Revenue                                                                    |   |   | 374,053 |   |   |   | 408,881 |   |   |   | 460,515 |   |
| Cost of Sales:                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |
| Product                                                                          |   |   | 192,454 |   |   |   | 224,279 |   |   |   | 235,861 |   |
| Service                                                                          |   |   | 29,805 |   |   |   | 32,986 |   |   |   | 34,401 |   |
| Total Cost of Sales                                                              |   |   | 222,259 |   |   |   | 257,265 |   |   |   | 270,262 |   |
| Gross Profit                                                                     |   |   | 151,794 |   |   |   | 151,616 |   |   |   | 190,253 |   |
| Operating Expenses:                                                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling and marketing                                                            |   |   | 65,841 |   |   |   | 71,571 |   |   |   | 76,867 |   |
| General and administrative                                                       |   |   | 42,663 |   |   |   | 39,129 |   |   |   | 35,393 |   |
| Research and development                                                         |   |   | 14,945 |   |   |   | 16,322 |   |   |   | 16,232 |   |
| Total Operating Expenses                                                         |   |   | 123,449 |   |   |   | 127,022 |   |   |   | 128,492 |   |
| Income From Operations                                                           |   |   | 28,345 |   |   |   | 24,594 |   |   |   | 61,761 |   |
| Interest expense                                                                 |   |   | (1,418 | ) |   |   | (2,024 | ) |   |   | (1,083 | ) |
| Interest income                                                                  |   |   | 366 |   |   |   | 1,108 |   |   |   | 4,033 |   |
| Other (expense) income, net                                                      |   |   | (81 | ) |   |   | 225 |   |   |   | 749 |   |
| Income Before Income Taxes and Discontinued Operations                           |   |   | 27,212 |   |   |   | 23,903 |   |   |   | 65,460 |   |
| Provision for Income Taxes                                                       |   |   | 8,636 |   |   |   | 6,509 |   |   |   | 18,350 |   |
| Income Before Discontinued Operations                                            |   |   | 18,576 |   |   |   | 17,394 |   |   |   | 47,110 |   |
| Discontinued Operations:                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss from discontinued operations, net of tax                                    |   |   | - |   |   |   | - |   |   |   | (368 | ) |
| Net gain on disposal of discontinued businesses, net of tax                      |   |   | - |   |   |   | - |   |   |   | 2,449 |   |
| Income from Discontinued Operations, net of tax                                  |   |   | - |   |   |   | - |   |   |   | 2,081 |   |
| Net Income                                                                       |   | $ | 18,576 |   |   | $ | 17,394 |   |   | $ | 49,191 |   |
| Earnings Per Share                                                               |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic:                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |
| Income Before Discontinued Operations                                            |   | $ | 1.14 |   |   | $ | 1.04 |   |   | $ | 2.72 |   |
| Discontinued Operations:                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss from discontinued operations, net of tax                                    |   |   | - |   |   |   | - |   |   |   | (0.02 | ) |
| Net gain on disposal of discontinued businesses, net of tax                      |   |   | - |   |   |   | - |   |   |   | 0.14 |   |
| Income from Discontinued Operations, net of tax                                  |   |   | - |   |   |   | - |   |   |   | 0.12 |   |
| Earnings Per Share - Basic                                                       |   | $ | 1.14 |   |   | $ | 1.04 |   |   | $ | 2.84 |   |
| Diluted:                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| Income Before Discontinued Operations                                            |   | $ | 1.14 |   |   | $ | 1.03 |   |   | $ | 2.68 |   |
| Discontinued Operations:                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss from discontinued operations, net of tax                                    |   |   | - |   |   |   | - |   |   |   | (0.02 | ) |
| Net gain on disposal of discontinued businesses, net of tax                      |   |   | - |   |   |   | - |   |   |   | 0.14 |   |
| Income from Discontinued Operations, net of tax                                  |   |   | - |   |   |   | - |   |   |   | 0.12 |   |
| Earnings Per Share - Diluted                                                     |   | $ | 1.14 |   |   | $ | 1.03 |   |   | $ | 2.80 |   |

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|                                      |   | Common Stock |   |   | Additional |   |   |    |   |   | Accumulated Other |   |   | Total         |    |
|-------------------------------------------|--------|--------------|--------|--------|------------|--------|--------|---------|--------|--------|-------------------|--------|--------|---------------|---------|
|                                      |   | Shares       |   |   |       |   |   | Paid-In |   |   | Retained          |   |   | Comprehensive |    |   | Shareholders' |   |
|                                      |   | Issued       |   |   | Amount     |   |   | Capital |   |   | Earnings          |   |   | Income (Loss) |    |   | Investment |   |
| Balance, September 29, 2007               |   |         | 17,704 |   |       | $      | 4,426  |    |   | $      | -                 |   |   | $             | 164,862 |   |   | $ | 20,413 |   |   | $ | 189,701 |   |
| Net income                                |   |         | -      |   |       |   | -      |    |   |   | -                 |   |   |          | 49,191  |   |   |   | - |   |   |   | 49,191 |   |
| Foreign currency translation              |   |         | -      |   |       |   | -      |    |   |   | -                 |   |   |          | -       |   |   |   | 3,859 |   |   |   | 3,859 |   |
| Minimum pension liability adjustment      |   |         | -      |   |       |   | -      |    |   |   | -                 |   |   |          | -       |   |   |   | 890 |   |   |   | 890 |   |
| Derivative instruments                    |   |         | -      |   |       |   | -      |    |   |   | -                 |   |   |          | -       |   |   |   | 320 |   |   |   | 320 |   |
| Total comprehensive income                |   |         | -      |   |       |   | -      |    |   |   | -                 |   |   |          | 49,191  |   |   |   | 5,069 |   |   |   | 54,260 |   |
| Exercise of stock options                 |   |         | 332    |   |       |   | 83     |    |   |   | 7,096             |   |   |          | -       |   |   |   | - |   |   |   | 7,179 |   |
| Stock-based compensation                  |   |         | 11     |   |       |   | 3      |    |   |   | 4,190             |   |   |          | -       |   |   |   | - |   |   |   | 4,193 |   |
| Tax benefit from equity compensation      |   |         | -      |   |       |   | -      |    |   |   | 1,302             |   |   |          | -       |   |   |   | - |   |   |   | 1,302 |   |
| Issuance for employee stock purchase plan |   |         | 21     |   |       |   | 5      |    |   |   | 682               |   |   |          | -       |   |   |   | - |   |   |   | 687 |   |
| Common stock purchased and retired        |   |         | (1,092 | )      |       |   | (273   | )       |   |   | (13,270           | )      |   |          | (28,499 | ) |   |   | - |   |   |   | (42,042 | ) |
| Dividends, $0.48 per share                |   |         | -      |   |       |   | -      |    |   |   | -                 |   |   |          | (10,338 | ) |   |   | - |   |   |   | (10,338 | ) |
| Balance, September 27, 2008               |   |         | 16,976 |   |       |   | 4,244  |    |   |   | -                 |   |   |          | 175,216 |   |   |   | 25,482 |   |   |   | 204,942 |   |
| Net income                                |   |         | -      |   |       |   | -      |    |   |   | -                 |   |   |          | 17,394  |   |   |   | - |   |   |   | 17,394 |   |
| Foreign currency translation              |   |         | -      |   |       |   | -      |    |   |   | -                 |   |   |          | -       |   |   |   | 2,459 |   |   |   | 2,459 |   |
| Pension benefit plan adjustments          |   |         | -      |   |       |   | -      |    |   |   | -                 |   |   |          | -       |   |   |   | (982 | ) |   |   | (982 | ) |
| Derivative instruments                    |   |         | -      |   |       |   | -      |    |   |   | -                 |   |   |          | -       |   |   |   | (1,436 | ) |   |   | (1,436 | ) |
| Total comprehensive income                |   |         | -      |   |       |   | -      |    |   |   | -                 |   |   |          | 17,394  |   |   |   | 41 |   |   |   | 17,435 |   |
| Exercise of stock options                 |   |         | 40     |   |       |   | 10     |    |   |   | 899               |   |   |          | -       |   |   |   | - |   |   |   | 909 |   |
| Stock-based compensation                  |   |         | 17     |   |       |   | 4      |    |   |   | 3,327             |   |   |          | -       |   |   |   | - |   |   |   | 3,331 |   |
| Tax shortfall from equity compensation    |   |         | -      |   |       |   | -      |    |   |   | (491              | )      |   |          | -       |   |   |   | - |   |   |   | (491 | ) |
| Issuance for employee stock purchase plan |   |         | 36     |   |       |   | 9      |    |   |   | 709               |   |   |          | -       |   |   |   | - |   |   |   | 718 |   |
| Common stock purchased and retired        |   |         | (505   | )      |       |   | (126   | )       |   |   | (4,444            | )      |   |          | (8,253  | ) |   |   | - |   |   |   | (12,823 | ) |
| Dividends, $0.60 per share                |   |         | -      |   |       |   | -      |    |   |   | -                 |   |   |          | (10,056 | ) |   |   | - |   |   |   | (10,056 | ) |
| Balance, October 3, 2009                  |   |         | 16,564 |   |       |   | 4,141  |    |   |   | -                 |   |   |          | 174,301 |   |   |   | 25,523 |   |   |   | 203,965 |   |
| Net income                                |   |         | -      |   |       |   | -      |    |   |   | -                 |   |   |          | 18,576  |   |   |   | - |   |   |   | 18,576 |   |
| Foreign currency translation              |   |         | -      |   |       |   | -      |    |   |   | -                 |   |   |          | -       |   |   |   | (10,100 | ) |   |   | (10,100 | ) |
| Pension benefit plan adjustments          |   |         | -      |   |       |   | -      |    |   |   | -                 |   |   |          | -       |   |   |   | (1,130 | ) |   |   | (1,130 | ) |
| Derivative instruments                    |   |         | -      |   |       |   | -      |    |   |   | -                 |   |   |          | -       |   |   |   | 388 |   |   |   | 388 |   |
| Total comprehensive income                |   |         | -      |   |       |   | -      |    |   |   | -                 |   |   |          | 18,576  |   |   |   | (10,842 | ) |   |   | 7,734 |   |
| Exercise of stock options                 |   |         | 16     |   |       |   | 4      |    |   |   | 319               |   |   |          | -       |   |   |   | - |   |   |   | 323 |   |
| Stock-based compensation                  |   |         | 19     |   |       |   | 5      |    |   |   | 2,378             |   |   |          | -       |   |   |   | - |   |   |   | 2,383 |   |
| Tax shortfall from equity compensation    |   |         | -      |   |       |   | -      |    |   |   | (1,151            | )      |   |          | -       |   |   |   | - |   |   |   | (1,151 | ) |
| Issuance for employee stock purchase plan |   |         | 33     |   |       |   | 8      |    |   |   | 684               |   |   |          | -       |   |   |   | - |   |   |   | 692 |   |
| Common stock purchased and retired        |   |         | (1,368 | )      |       |   | (342   | )       |   |   | (2,230            | )      |   |          | (35,584 | ) |   |   | - |   |   |   | (38,156 | ) |
| Dividends, $0.60 per share                |   |         | -      |   |       |   | -      |    |   |   | -                 |   |   |          | (9,684  | ) |   |   | - |   |   |   | (9,684 | ) |
| Balance, October 2, 2010                  |   |         | 15,264 |   |       | $      | 3,816  |    |   | $      | -                 |   |   | $             | 147,609 |   |   | $ | 14,681 |   |   | $ | 166,106 |   |

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|                                                                                  |   | 2010                     |    |   | 2009   |   |    | 2008   |   |
|---------------------------------------------------------------------------------------|--------|--------------------------|---------|--------|--------|--------|---------|--------|--------|
|                                                                                  |   | (expressed in thousands) |    |
| Cash Flows from Operating Activities:                                                 |   |                     |    |   |   |   |    |   |   |
| Net income                                                                            |   | $                        | 18,576  |   |   | $      | 17,394  |   |   | $ | 49,191 |   |
| Adjustments to reconcile net income to net cash provided by operating activities:     |   |                     |    |   |   |   |    |   |   |   |   |   |
| Loss from discontinued operations                                                     |   |                     | -       |   |   |   | -       |   |   |   | 368 |   |
| Net gain on disposal of discontinued operations                                       |   |                     | -       |   |   |   | -       |   |   |   | (2,449 | ) |
| Stock-based compensation                                                              |   |                     | 2,448   |   |   |   | 3,384   |   |   |   | 4,199 |   |
| Excess tax benefits from stock-based compensation                                     |   |                     | (65     | )      |   |   | (4      | )      |   |   | (925 | ) |
| Charge for fair value mark-up of acquired inventory                                   |   |                     | -       |   |   |   | 1,859   |   |   |   | - |   |
| Net periodic pension benefit cost                                                     |   |                     | 401     |   |   |   | 738     |   |   |   | 1,282 |   |
| Depreciation and amortization                                                         |   |                     | 12,751  |   |   |   | 12,132  |   |   |   | 9,207 |   |
| Deferred income taxes                                                                 |   |                     | 2,121   |   |   |   | (364    | )      |   |   | (5,726 | ) |
| Bad debt provision                                                                    |   |                     | 159     |   |   |   | 755     |   |   |   | (111 | ) |
| Changes in operating assets and liabilities, excluding the effect of the acquisition: |   |                     |    |   |   |   |    |   |   |   |   |   |
| Accounts and unbilled contracts receivable                                            |   |                     | 5,599   |   |   |   | 52,129  |   |   |   | (27,462 | ) |
| Inventories                                                                           |   |                     | (5,408  | )      |   |   | 5,980   |   |   |   | (3,191 | ) |
| Prepaid expenses and other assets                                                     |   |                     | (6,426  | )      |   |   | (6,657  | )      |   |   | (5,911 | ) |
| Accounts payable                                                                      |   |                     | 3,152   |   |   |   | (14,582 | )      |   |   | 6,138 |   |
| Accrued payroll and related costs                                                     |   |                     | 7,441   |   |   |   | (8,571  | )      |   |   | 4,441 |   |
| Advance payments from customers                                                       |   |                     | (2,415  | )      |   |   | (20,654 | )      |   |   | 13,398 |   |
| Accrued warranty costs                                                                |   |                     | (2,093  | )      |   |   | 3,614   |   |   |   | (138 | ) |
| Other liabilities                                                                     |   |                     | (2,708  | )      |   |   | (3,031  | )      |   |   | 5,613 |   |
| Contributions to pension benefit plan                                                 |   |                     | (343    | )      |   |   | (488    | )      |   |   | (13,198 | ) |
| Operating activities of discontinued operations                                       |   |                     | -       |   |   |   | 204     |   |   |   | (4,552 | ) |
| Net Cash Provided by Operating Activities                                             |   |                     | 33,190  |   |   |   | 43,838  |   |   |   | 30,174 |   |
| Cash Flows from Investing Activities:                                                 |   |                     |    |   |   |   |    |   |   |   |   |   |
| Additions to property and equipment                                                   |   |                     | (11,214 | )      |   |   | (9,757  | )      |   |   | (9,752 | ) |
| Payments for acquisition                                                              |   |                     | (6,314  | )      |   |   | (25,143 | )      |   |   | (13,737 | ) |
| Net proceeds from sale of businesses                                                  |   |                     | -       |   |   |   | 1,330   |   |   |   | 10,293 |   |
| Proceeds from maturity of short-term investments                                      |   |                     | -       |   |   |   | -       |   |   |   | 19,050 |   |
| Purchases of short-term investments                                                   |   |                     | -       |   |   |   | -       |   |   |   | (2,000 | ) |
| Investing activities of discontinued operations                                       |   |                     | -       |   |   |   | -       |   |   |   | (287 | ) |
| Net Cash (Used in) Provided by Investing Activities                                   |   |                     | (17,528 | )      |   |   | (33,570 | )      |   |   | 3,567 |   |
| Cash Flows from Financing Activities:                                                 |   |                     |    |   |   |   |    |   |   |   |   |   |
| Net receipts under short-term borrowings                                              |   |                     | 29      |   |   |   | 15,796  |   |   |   | 23,866 |   |
| Repayments of long-term debt                                                          |   |                     | -       |   |   |   | (2,308  | )      |   |   | (6,683 | ) |
| Excess tax benefits from stock-based compensation                                     |   |                     | 65      |   |   |   | 4       |   |   |   | 925 |   |
| Cash dividends                                                                        |   |                     | (12,107 | )      |   |   | (10,112 | )      |   |   | (10,478 | ) |
| Proceeds from exercise of stock options and employee stock purchase plan              |   |                     | 1,015   |   |   |   | 1,627   |   |   |   | 7,866 |   |
| Payments to purchase and retire common stock                                          |   |                     | (38,156 | )      |   |   | (12,823 | )      |   |   | (42,042 | ) |
| Net Cash Used in Financing Activities                                                 |   |                     | (49,154 | )      |   |   | (7,816  | )      |   |   | (26,546 | ) |
| Effect of Exchange Rate Changes on Cash and Cash Equivalents                          |   |                     | (8,782  | )      |   |   | 2,334   |   |   |   | 2,559 |   |
| Cash and Cash Equivalents:                                                            |   |                     |    |   |   |   |    |   |   |   |   |   |
| (Decrease) increase during the year                                                   |   |                     | (42,274 | )      |   |   | 4,786   |   |   |   | 9,754 |   |
| Balance, beginning of year                                                            |   |                     | 118,885 |   |   |   | 114,099 |   |   |   | 104,345 |   |
| Balance, end of year                                                                  |   | $                        | 76,611  |   |   | $      | 118,885 |   |   | $ | 114,099 |   |
| Supplemental Disclosures of Cash Flows:                                               |   |                     |    |   |   |   |    |   |   |   |   |   |
| Cash paid during the year for:                                                        |   |                     |    |   |   |   |    |   |   |   |   |   |
| Interest                                                                              |   | $                        | 1,549   |   |   | $      | 1,596   |   |   | $ | 726 |   |
| Income taxes                                                                          |   |                     | 9,669   |   |   |   | 13,250  |   |   |   | 22,157 |   |

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|                                              |   | 2010                     |   |   | 2009   |   |
|---------------------------------------------------|--------|--------------------------|--------|--------|--------|--------|
|                                              |   | (expressed in thousands) |   |
| Customer projects in various stages of completion |   | $                        | 16,126 |   |   | $      | 15,075 |   |
|                                              |   |                     |   |   |   |   |   |   |
| Components, assemblies and parts                  |   |                     | 35,666 |   |   |   | 32,894 |   |
| Total                                             |   | $                        | 51,792 |   |   | $      | 47,969 |   |

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|                                  |   | 2010                     |   |   | 2009   |   |
|---------------------------------------|--------|--------------------------|--------|--------|--------|--------|
|                                  |   | (expressed in thousands) |   |
| Beginning balance                     |   | $                        | 9,774  |   |   | $      | 6,107 |   |
| Warranty claims                       |   |                     | (7,036 | )      |   |   | (9,122 | ) |
| Warranty provisions                   |   |                     | 5,439  |   |   |   | 11,251 |   |
| Adjustments to preexisting warranties |   |                     | (496   | )      |   |   | 1,485 |   |
| Acquisition of SANS                   |   |                     | -      |   |   |   | 73 |   |
| Translation adjustment                |   |                     | (176   | )      |   |   | (20 | ) |
| Ending balance                        |   | $                        | 7,505  |   |   | $      | 9,774 |   |

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|                                       |   | October 2, 2010                         |   |
|--------------------------------------------|--------|-----------------------------------------|--------|
|                                       |   | Prepaid Expensesand OtherCurrent Assets |   |   | Other AccruedLiabilities |   |
| Designated hedge derivatives:              |   | (expressed in thousands)                |   |
| Foreign exchange cash flow hedges          |   | $                                       | 126    |   |   | $ | 547 |   |
| Interest rate swaps                        |   |                                    | -      |   |   |   | 1,406 |   |
| Total designated hedge derivatives         |   |                                    | 126    |   |   |   | 1,953 |   |
|                                       |   |                                    |   |   |   |   |   |   |
| Derivatives not designated as hedges:      |   |                                    |   |   |   |   |   |   |
| Foreign exchange balance sheet derivatives |   |                                    | -      |   |   |   | 1,023 |   |
| Total hedge and other derivatives          |   | $                                       | 126    |   |   | $ | 2,976 |   |

|                                       |   | October 3, 2009                         |   |
|--------------------------------------------|--------|-----------------------------------------|--------|
|                                       |   | Prepaid Expensesand OtherCurrent Assets |   |   | Other AccruedLiabilities |   |
| Designated hedge derivatives:              |   | (expressed in thousands)                |   |
| Foreign exchange cash flow hedges          |   | $                                       | 234    |   |   | $ | 470 |   |
| Interest rate swaps                        |   |                                    | -      |   |   |   | 1,894 |   |
| Total designated hedge derivatives         |   |                                    | 234    |   |   |   | 2,364 |   |
|                                       |   |                                    |   |   |   |   |   |   |
| Derivatives not designated as hedges:      |   |                                    |   |   |   |   |   |   |
| Foreign exchange balance sheet derivatives |   |                                    | -      |   |   |   | 729 |   |
| Total hedge and other derivatives          |   | $                                       | 234    |   |   | $ | 3,093 |   |

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|                                                                                                                                      |   | 2010                     |   |   | 2009   |   |
|-------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|--------|--------|--------|--------|
|                                                                                                                                      |   | (expressed in thousands) |   |
| Beginning unrealized net (loss) gain in AOCI                                                                                              |   | $                        | (519   | )      |   | $      | 108 |   |
| Net loss reclassified into Revenue (effective portion)                                                                                    |   |                     | 148    |   |   |   | 1,969 |   |
| Net loss reclassified into Revenue upon the removal of hedge designations on underlying foreign currency transactions that were cancelled |   |                     | -      |   |   |   | 46 |   |
| Net loss recognized in OCI (effective portion)                                                                                            |   |                     | (13    | )      |   |   | (2,642 | ) |
| Ending unrealized net loss in AOCI                                                                                                        |   | $                        | (384   | )      |   | $      | (519 | ) |

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|                                                            |   | 2010                     |   |   | 2009   |   |
|-----------------------------------------------------------------|--------|--------------------------|--------|--------|--------|--------|
|                                                            |   | (expressed in thousands) |   |
| Beginning unrealized net loss in AOCI                           |   | $                        | (1,894 | )      |   | $      | (199 | ) |
| Net loss reclassified into interest expense (effective portion) |   |                     | 1,223  |   |   |   | 970 |   |
| Net loss recognized in OCI (effective portion)                  |   |                     | (735   | )      |   |   | (2,665 | ) |
| Ending unrealized net loss in AOCI                              |   | $                        | (1,406 | )      |   | $      | (1,894 | ) |

|                                               |   | 2010                     |   |   | 2009   |   |
|----------------------------------------------------|--------|--------------------------|--------|--------|--------|--------|
|                                               |   | (expressed in thousands) |   |
| Net loss recognized in Other (expense) income, net |   | $                        | (834   | )      |   | $      | (1,863 | ) |

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|                                            |   | 2010                                            |   |   | 2009   |   |   | 2008   |   |
|-------------------------------------------------|--------|-------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
|                                            |   | (expressed in thousands, except per share data) |   |
|                                            |   |                                            |   |   |   |   |   |   |   |
| Income before discontinued operations           |   | $                                               | 18,576 |   |   | $      | 17,394 |   |   | $ | 47,110 |   |
| Income from discontinued operations, net of tax |   |                                            | -      |   |   |   | -      |   |   |   | 2,081 |   |
| Net income                                      |   | $                                               | 18,576 |   |   | $      | 17,394 |   |   | $ | 49,191 |   |
| Weighted average common shares outstanding      |   |                                            | 16,281 |   |   |   | 16,793 |   |   |   | 17,351 |   |
| Dilutive potential common shares                |   |                                            | 66     |   |   |   | 38     |   |   |   | 193 |   |
| Total dilutive common shares                    |   |                                            | 16,347 |   |   |   | 16,831 |   |   |   | 17,544 |   |
| Earnings per share:                             |   |                                            |   |   |   |   |   |   |   |   |   |   |
| Basic:                                          |   |                                            |   |   |   |   |   |   |   |   |   |   |
| Income before discontinued operations           |   | $                                               | 1.14   |   |   | $      | 1.04   |   |   | $ | 2.72 |   |
| Income from discontinued operations, net of tax |   |                                            | -      |   |   |   | -      |   |   |   | 0.12 |   |
| Earnings per share                              |   | $                                               | 1.14   |   |   | $      | 1.04   |   |   | $ | 2.84 |   |
| Diluted:                                        |   |                                            |   |   |   |   |   |   |   |   |   |   |
| Income before discontinued operations           |   | $                                               | 1.14   |   |   | $      | 1.03   |   |   | $ | 2.68 |   |
| Income from discontinued operations, net of tax |   |                                            | -      |   |   |   | -      |   |   |   | 0.12 |   |
| Earnings per share                              |   | $                                               | 1.14   |   |   | $      | 1.03   |   |   | $ | 2.80 |   |

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|                                                   |   | Derivative Financial Instrument Unrealized Loss |   |   | Pension Benefit Plan Adjustments |   |   | Foreign Currency Translation Adjustment |   |   | Total Accumulated Other Comprehensive Income |   |
|--------------------------------------------------------|--------|-------------------------------------------------|--------|--------|----------------------------------|--------|--------|-----------------------------------------|--------|--------|----------------------------------------------|--------|
|                                                   |   | (expressed in thousands)                        |   |
| Balances at September 29, 2007                         |   | $                                               | (392   | )      |                             | $      | (1,101 | )                                       |   | $      | 21,906                                       |   |   |   | 20,413 |   |
| Foreign exchange translation adjustments               |   |                                            | -      |   |                             |   | (29    | )                                       |   |   | 3,888                                        |   |   |   | 3,859 |   |
| Pension benefit plan adjustments, net of tax of $374   |   |                                            | -      |   |                             |   | 866    |                                    |   |   | -                                            |   |   |   | 866 |   |
| Change in unrealized loss, net of tax of ($523)        |   |                                            | (973   | )      |                             |   | -      |                                    |   |   | -                                            |   |   |   | (973 | ) |
| Realized loss, net of tax of $892                      |   |                                            | 1,293  |   |                             |   | 24     |                                    |   |   | -                                            |   |   |   | 1,317 |   |
| Balances at September 27, 2008                         |   |                                            | (72    | )      |                             |   | (240   | )                                       |   |   | 25,794                                       |   |   |   | 25,482 |   |
| Foreign exchange translation adjustments               |   |                                            | -      |   |                             |   | -      |                                    |   |   | 2,459                                        |   |   |   | 2,459 |   |
| Pension benefit plan adjustments, net of tax of ($429) |   |                                            | -      |   |                             |   | (992   | )                                       |   |   | -                                            |   |   |   | (992 | ) |
| Change in unrealized loss, net of tax of ($1,910)      |   |                                            | (3,397 | )      |                             |   | -      |                                    |   |   | -                                            |   |   |   | (3,397 | ) |
| Realized loss, net of tax of $1,028                    |   |                                            | 1,961  |   |                             |   | 10     |                                    |   |   | -                                            |   |   |   | 1,971 |   |
| Balances at October 3, 2009                            |   |                                            | (1,508 | )      |                             |   | (1,222 | )                                       |   |   | 28,253                                       |   |   |   | 25,523 |   |
| Foreign exchange translation adjustments               |   |                                            | -      |   |                             |   | 23     |                                    |   |   | (10,123                                      | )      |   |   | (10,100 | ) |
| Pension benefit plan adjustments, net of tax of ($493) |   |                                            | -      |   |                             |   | (1,141 | )                                       |   |   | -                                            |   |   |   | (1,141 | ) |
| Change in unrealized loss, net of tax of ($277)        |   |                                            | (470   | )      |                             |   | -      |                                    |   |   | -                                            |   |   |   | (470 | ) |
| Realized loss, net of tax of $517                      |   |                                            | 858    |   |                             |   | 11     |                                    |   |   | -                                            |   |   |   | 869 |   |
| Balances at October 2, 2010                            |   | $                                               | (1,120 | )      |                             | $      | (2,329 | )                                       |   | $      | 18,130                                       |   |   | $ | 14,681 |   |

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|                                                                         |   | 2010   |   |   | 2009   |   |   | 2008   |   |
|------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                                         |   |   |   |   |   |   |   |   |   |
| Stock-based compensation expense by type of award:                           |   |   |   |   |   |   |   |   |   |
| Employee stock options                                                       |   | $      | 1,519  |   |   | $      | 2,478  |   |   | $ | 3,591 |   |
| Employee stock purchase plan (ESPP)                                          |   |   | 175    |   |   |   | 242    |   |   |   | 191 |   |
| Restricted stock grants and units                                            |   |   | 691    |   |   |   | 612    |   |   |   | 441 |   |
| Amounts capitalized as inventory                                             |   |   | (639   | )      |   |   | (775   | )      |   |   | (938 | ) |
| Amounts recognized in income for amounts previously capitalized as inventory |   |   | 702    |   |   |   | 827    |   |   |   | 914 |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| Total stock-based compensation included in income from operations            |   |   | 2,448  |   |   |   | 3,384  |   |   |   | 4,199 |   |
| Income tax benefit on stock-based compensation                               |   |   | (828   | )      |   |   | (1,091 | )      |   |   | (1,421 | ) |
| Net compensation expense included in net income                              |   | $      | 1,620  |   |   | $      | 2,293  |   |   | $ | 2,778 |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings per share:                                                          |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                                        |   | $      | 0.10   |   |   | $      | 0.14   |   |   | $ | 0.16 |   |
| Diluted                                                                      |   | $      | 0.10   |   |   | $      | 0.14   |   |   | $ | 0.16 |   |

|                     |   | 2010   |   |   | 2009   |   |   | 2008   |   |
|--------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Expected life (in years) |   |   | 2.9    |   |   |   | 2.7    |   |   |   | 2.6 |   |
| Risk-free interest rate  |   |   | 1.0    | %      |   |   | 1.4    | %      |   |   | 2.8 | % |
| Expected volatility      |   |   | 40.0   | %      |   |   | 41.4   | %      |   |   | 33.3 | % |
| Dividend yield           |   |   | 2.1    | %      |   |   | 2.9    | %      |   |   | 1.7 | % |

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|                                      |   | 2010   |   |   | 2009   |   |   | 2008   |   |
|-------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                      |   | Shares |   |   | WAEP*  |   |   | Shares |   |   | WAEP* |   |   | Shares |   |   | WAEP* |   |
| Options outstanding at beginning of year  |   |   | 1,492  |   |   | $      | 35.56  |   |   |   | 1,572 |   |   | $ | 37.59 |   |   |   | 1,588 |   |   | $ | 34.60 |   |
| Granted                                   |   |   | 252    |   |   | $      | 28.62  |   |   |   | 273 |   |   | $ | 20.60 |   |   |   | 377 |   |   | $ | 35.87 |   |
| Exercised                                 |   |   | (16    | )      |   | $      | 20.55  |   |   |   | (40 | ) |   | $ | 22.44 |   |   |   | (332 | ) |   | $ | 21.62 |   |
| Forfeited or expired                      |   |   | (399   | )      |   | $      | 35.20  |   |   |   | (313 | ) |   | $ | 34.36 |   |   |   | (61 | ) |   | $ | 35.87 |   |
| Options outstanding at end of year        |   |   | 1,329  |   |   | $      | 34.53  |   |   |   | 1,492 |   |   | $ | 35.56 |   |   |   | 1,572 |   |   | $ | 37.59 |   |
| Options eligible for exercise at year-end |   |   | 811    |   |   | $      | 38.93  |   |   |   | 892 |   |   | $ | 38.90 |   |   |   | 821 |   |   | $ | 35.68 |   |

|                                 |   | 2010   |   |   | 2009    |   |   | 2008   |   |
|--------------------------------------|--------|--------|--------|--------|---------|--------|--------|--------|--------|
|                                 |   | Shares |   |   | WAGDFV* |   |   | Shares |   |   | WAGDFV* |   |   | Shares |   |   | WAGDFV* |   |
| Unvested shares at beginning of year |   |   | 36     |   |    | $      | 28.72  |   |   |   | 20 |   |   | $ | 39.29 |   |   |   | 22 |   |   | $ | 38.64 |   |
| Granted                              |   |   | 20     |   |    | $      | 26.47  |   |   |   | 29 |   |   | $ | 24.76 |   |   |   | 12 |   |   | $ | 38.30 |   |
| Vested                               |   |   | (10    | )      |    | $      | 33.71  |   |   |   | (10 | ) |   | $ | 38.99 |   |   |   | (11 | ) |   | $ | 36.62 |   |
| Forfeited                            |   |   | (17    | )      |    | $      | 25.85  |   |   |   | (3 | ) |   | $ | 26.91 |   |   |   | (3 | ) |   | $ | 39.87 |   |
| Unvested shares at end of year       |   |   | 29     |   |    | $      | 27.18  |   |   |   | 36 |   |   | $ | 28.72 |   |   |   | 20 |   |   | $ | 39.29 |   |

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Table of Contents

|                             |   | 2010   |   |   | 2009    |   |
|----------------------------------|--------|--------|--------|--------|---------|--------|
|                             |   | Shares |   |   | WAGDFV* |   |   | Shares |   |   | WAGDFV* |   |
| Outstanding at beginning of year |   |   | 38     |   |    | $      | 20.55 |   |   |   | - |   |   | $ | - |   |
| Granted                          |   |   | 37     |   |    | $      | 28.62 |   |   |   | 39 |   |   | $ | 20.55 |   |
| Vested                           |   |   | (12    | )      |    | $      | 20.55 |   |   |   | - |   |   | $ | - |   |
| Forfeited                        |   |   | (4     | )      |    | $      | 21.61 |   |   |   | (1 | ) |   | $ | 20.55 |   |
| Outstanding at end of year       |   |   | 59     |   |    | $      | 25.51 |   |   |   | 38 |   |   | $ | 20.55 |   |

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Table of Contents

|                                                          |   | 2008                     |   |
|---------------------------------------------------------------|--------|--------------------------|--------|
|                                                          |   | (expressed in thousands) |   |
| Revenue                                                       |   | $                        | 6,106  |   |
| Loss on discontinued operations before taxes and gain on sale |   |                     | (628   | ) |
| Benefit for income taxes                                      |   |                     | (260   | ) |
| Loss from discontinued operations, net of tax                 |   | $                        | (368   | ) |

|                          |   | 2010                     |     |   | 2009   |   |
|-------------------------------|--------|--------------------------|----------|--------|--------|--------|
|                          |   | (expressed in thousands) |     |
| Land and improvements         |   | $                        | 1,714    |   |   | $      | 1,716 |   |
| Buildings and improvements    |   |                     | 52,535   |   |   |   | 52,921 |   |
| Machinery and equipment       |   |                     | 104,405  |   |   |   | 96,156 |   |
| Total                         |   |                     | 158,654  |   |   |   | 150,793 |   |
| Less accumulated depreciation |   |                     | (102,210 | )      |   |   | (94,675 | ) |
| Property and equipment, net   |   | $                        | 56,444   |   |   | $      | 56,118 |   |

|                 |   | 2010                     |   |   | 2009   |   |
|----------------------|--------|--------------------------|--------|--------|--------|--------|
|                 |   | (expressed in thousands) |   |
| Beginning balance    |   | $                        | 15,206 |   |   | $      | 1,668 |   |
| Acquisition of SANS  |   |                     | -      |   |   |   | 13,604 |   |
| Currency translation |   |                     | 223    |   |   |   | (66 | ) |
| Ending balance       |   | $                        | 15,429 |   |   | $      | 15,206 |   |

|                       |   | October 2, 2010          |   |
|----------------------------|--------|--------------------------|--------|
|                       |   | Gross CarryingAmount     |   |   | AccumulatedAmortization |   |   | Net CarryingValue |   |   | WeightedAverageUseful Life(in Years) |   |
|                       |   | (expressed in thousands) |   |   |   |   |
| Software development costs |   | $                        | 11,640 |   |   | $ | (2,062 | ) |   | $ | 9,578 |   |   |   | 6.0 |   |
| Patents                    |   |                     | 9,484  |   |   |   | (1,347 | ) |   |   | 8,137 |   |   |   | 15.3 |   |
| Trademarks and trade names |   |                     | 5,689  |   |   |   | (603 | ) |   |   | 5,086 |   |   |   | 30.2 |   |
| Non-compete agreements     |   |                     | 2,485  |   |   |   | (1,657 | ) |   |   | 828 |   |   |   | 3.0 |   |
| Land-use rights            |   |                     | 1,167  |   |   |   | (43 | ) |   |   | 1,124 |   |   |   | 47.8 |   |
| Total                      |   | $                        | 30,465 |   |   | $ | (5,711 | ) |   | $ | 24,753 |   |   |   | 14.7 |   |

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|                       |   | October 3, 2009          |   |
|----------------------------|--------|--------------------------|--------|
|                       |   | Gross CarryingAmount     |   |   | AccumulatedAmortization |   |   | Net CarryingValue |   |   | WeightedAverageUseful Life(in Years) |   |
|                       |   | (expressed in thousands) |   |   |   |   |
| Software development costs |   | $                        | 8,062  |   |   | $ | (729 | ) |   | $ | 7,333 |   |   |   | 5.0 |   |
| Patents                    |   |                     | 9,225  |   |   |   | (652 | ) |   |   | 8,573 |   |   |   | 15.4 |   |
| Trademarks and trade names |   |                     | 5,583  |   |   |   | (412 | ) |   |   | 5,171 |   |   |   | 30.2 |   |
| Non-compete agreements     |   |                     | 2,435  |   |   |   | (812 | ) |   |   | 1,623 |   |   |   | 3.0 |   |
| Land-use rights            |   |                     | 1,144  |   |   |   | (18 | ) |   |   | 1,126 |   |   |   | 47.8 |   |
| Total                      |   | $                        | 26,449 |   |   | $ | (2,623 | ) |   | $ | 23,826 |   |   |   | 15.6 |   |

| Fiscal Year |   | Amortization Expense     |   |
|-------------|--------|--------------------------|--------|
|        |   | (expressed in thousands) |   |
|        |   |                     |   |
| 2011        |   | $                        | 3,383  |   |
| 2012        |   | $                        | 3,182  |   |
| 2013        |   | $                        | 3,182  |   |
| 2014        |   | $                        | 3,181  |   |
| 2015        |   | $                        | 3,168  |   |

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Table of Contents

|                          |   | 2010                     |    |   | 2009   |   |    | 2008   |   |
|-------------------------------|--------|--------------------------|---------|--------|--------|--------|---------|--------|--------|
|                          |   | (expressed in thousands) |    |
| Revenue                       |   |                     |    |   |   |   |    |   |   |
| Test                          |   | $                        | 296,230 |   |   | $      | 342,595 |   |   | $ | 364,068 |   |
| Sensors                       |   |                     | 77,823  |   |   |   | 66,286  |   |   |   | 96,447 |   |
| Total Revenue                 |   | $                        | 374,053 |   |   | $      | 408,881 |   |   | $ | 460,515 |   |
|                          |   |                     |    |   |   |   |    |   |   |   |   |   |
| Income from Operations        |   |                     |    |   |   |   |    |   |   |   |   |   |
| Test                          |   | $                        | 11,204  |   |   | $      | 17,494  |   |   | $ | 41,108 |   |
| Sensors                       |   |                     | 17,141  |   |   |   | 7,100   |   |   |   | 20,653 |   |
| Total Income from Operations  |   | $                        | 28,345  |   |   | $      | 24,594  |   |   | $ | 61,761 |   |
|                          |   |                     |    |   |   |   |    |   |   |   |   |   |
| Assets                        |   |                     |    |   |   |   |    |   |   |   |   |   |
| Test                          |   | $                        | 261,109 |   |   | $      | 289,700 |   |   | $ | 301,346 |   |
| Sensors                       |   |                     | 85,296  |   |   |   | 97,214  |   |   |   | 97,431 |   |
| Discontinued Operations       |   |                     | -       |   |   |   | -       |   |   |   | 380 |   |
| Total Assets                  |   | $                        | 346,405 |   |   | $      | 386,914 |   |   | $ | 399,157 |   |
|                          |   |                     |    |   |   |   |    |   |   |   |   |   |
| Other Segment Data            |   |                     |    |   |   |   |    |   |   |   |   |   |
| Test:                         |   |                     |    |   |   |   |    |   |   |   |   |   |
| Goodwill                      |   | $                        | 13,817  |   |   | $      | 13,538  |   |   | $ | - |   |
| Capital expenditures          |   |                     | 8,702   |   |   |   | 8,134   |   |   |   | 7,643 |   |
| Depreciation and amortization |   | $                        | 10,686  |   |   | $      | 10,090  |   |   | $ | 7,317 |   |
| Sensors:                      |   |                     |    |   |   |   |    |   |   |   |   |   |
| Goodwill                      |   | $                        | 1,612   |   |   | $      | 1,668   |   |   | $ | 1,668 |   |
| Capital expenditures          |   |                     | 2,512   |   |   |   | 1,623   |   |   |   | 2,109 |   |
| Depreciation and amortization |   | $                        | 2,065   |   |   | $      | 2,042   |   |   | $ | 1,890 |   |

| Geographic information was as follows: |   |                     |    |   |   |   |    |   |   |
|----------------------------------------|--------|--------------------------|---------|--------|--------|--------|---------|--------|--------|
|                                   |   | 2010                     |    |   | 2009   |   |    | 2008   |   |
|                                   |   | (expressed in thousands) |    |
| Revenue                                |   |                     |    |   |   |   |    |   |   |
| United States                          |   | $                        | 109,638 |   |   | $      | 123,336 |   |   | $ | 147,766 |   |
| Europe, excluding Germany              |   |                     | 71,155  |   |   |   | 95,368  |   |   |   | 92,995 |   |
| China                                  |   |                     | 77,600  |   |   |   | 61,209  |   |   |   | 35,325 |   |
| Japan                                  |   |                     | 27,540  |   |   |   | 47,500  |   |   |   | 48,802 |   |
| Germany                                |   |                     | 41,710  |   |   |   | 33,341  |   |   |   | 58,962 |   |
| Asia, excluding Japan & China      |   |                     | 33,673  |   |   |   | 29,439  |   |   |   | 55,396 |   |
| Other                                  |   |                     | 12,737  |   |   |   | 18,688  |   |   |   | 21,269 |   |
| Total Revenue                          |   | $                        | 374,053 |   |   | $      | 408,881 |   |   | $ | 460,515 |   |
|                                   |   |                     |    |   |   |   |    |   |   |   |   |   |
| Property and Equipment, Net            |   |                     |    |   |   |   |    |   |   |   |   |   |
| United States                          |   | $                        | 36,216  |   |   | $      | 34,613  |   |   | $ | 35,842 |   |
| Germany                                |   |                     | 10,748  |   |   |   | 12,092  |   |   |   | 11,860 |   |
| China                                  |   |                     | 6,915   |   |   |   | 7,043   |   |   |   | - |   |
| Asia, excluding China                  |   |                     | 2,028   |   |   |   | 1,794   |   |   |   | 2,255 |   |
| Europe, excluding Germany              |   |                     | 537     |   |   |   | 576     |   |   |   | 577 |   |
| Total Property and Equipment, Net      |   | $                        | 56,444  |   |   | $      | 56,118  |   |   | $ | 50,534 |   |

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Table of Contents

|                   |   | October 2, 2010          |   |
|------------------------|--------|--------------------------|--------|
|                   |   | Level 1                  |   |   | Level 2 |   |   | Level 3 |   |   | Total |   |
| Assets:                |   | (expressed in thousands) |   |
| Currency contracts(1)  |   | $                        | -      |   |   | $ | 126 |   |   | $ | - |   |   | $ | 126 |   |
| Total assets           |   | $                        | -      |   |   | $ | 126 |   |   | $ | - |   |   | $ | 126 |   |
|                   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities:           |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Currency contracts(1)  |   | $                        | -      |   |   | $ | 1,570 |   |   | $ | - |   |   | $ | 1,570 |   |
| Interest rate swaps(2) |   |                     |   |   |   |   | 1,406 |   |   |   | - |   |   |   | 1,406 |   |
| Total liabilities      |   | $                        | -      |   |   | $ | 2,976 |   |   | $ | - |   |   | $ | 2,976 |   |

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|                   |   | October 3, 2009          |   |
|------------------------|--------|--------------------------|--------|
|                   |   | Level 1                  |   |   | Level 2 |   |   | Level 3 |   |   | Total |   |
| Assets:                |   | (expressed in thousands) |   |
| Currency contracts(1)  |   | $                        | -      |   |   | $ | 234 |   |   | $ | - |   |   | $ | 234 |   |
| Total assets           |   | $                        | -      |   |   | $ | 234 |   |   | $ | - |   |   | $ | 234 |   |
|                   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities:           |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Currency contracts(1)  |   | $                        | -      |   |   | $ | 1,199 |   |   | $ | - |   |   | $ | 1,199 |   |
| Interest rate swaps(2) |   |                     |   |   |   |   | 1,894 |   |   |   | - |   |   |   | 1,894 |   |
| Total liabilities      |   | $                        | -      |   |   | $ | 3,093 |   |   | $ | - |   |   | $ | 3,093 |   |

|   | (1) | Based on observable market transactions of spot currency rates and forward currency rates on equivalently-termed instruments. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | Based on LIBOR and swap rates. |
|--------|-----|--------------------------------|

|                                                                                                                                                                                                            |   | 2010                     |   |   | 2009   |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|--------|--------|--------|--------|
|                                                                                                                                                                                                            |   | (expressed in thousands) |   |
| Bank line of credit, monthly U.S. LIBOR plus 63 basis points (0.94% rate in effect at October 2, 2010), maturing October 2010, with optional month-to-month term renewal and loan repricing until December 2012 |   | $                        | 40,000 |   |   | $      | 40,000 |   |
| Notes payable, non-interest bearing                                                                                                                                                                             |   |                     | 229    |   |   |   | 182 |   |
| Total Short-Term Borrowings                                                                                                                                                                                     |   | $                        | 40,229 |   |   | $      | 40,182 |   |

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|                                                    |   | 2010                     |   |   | 2009   |   |   | 2008   |   |
|---------------------------------------------------------|--------|--------------------------|--------|--------|--------|--------|--------|--------|--------|
|                                                    |   | (expressed in thousands) |   |
| Income before income taxes and discontinued operations: |   |                     |   |   |   |   |   |   |   |
| Domestic                                                |   | $                        | 10,659 |   |   | $      | 15,965 |   |   | $ | 29,745 |   |
| Foreign                                                 |   |                     | 16,553 |   |   |   | 7,938  |   |   |   | 35,715 |   |
| Total                                                   |   | $                        | 27,212 |   |   | $      | 23,903 |   |   | $ | 65,460 |   |

|                         |   | 2010                     |   |   | 2009   |   |   | 2008   |   |
|------------------------------|--------|--------------------------|--------|--------|--------|--------|--------|--------|--------|
|                         |   | (expressed in thousands) |   |
| Current provision (benefit): |   |                     |   |   |   |   |   |   |   |
| Federal                      |   | $                        | 357    |   |   | $      | (601   | )      |   | $ | 9,016 |   |
| State                        |   |                     | 65     |   |   |   | 5      |   |   |   | 1,080 |   |
| Foreign                      |   |                     | 6,046  |   |   |   | 7,435  |   |   |   | 11,943 |   |
| Deferred                     |   |                     | 2,168  |   |   |   | (330   | )      |   |   | (3,689 | ) |
| Total provision              |   | $                        | 8,636  |   |   | $      | 6,509  |   |   | $ | 18,350 |   |

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|                                                              |   | 2010   |   |   | 2009   |   |   | 2008   |   |
|-------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                              |   |   |   |   |   |   |   |   |   |
| United States federal statutory income tax rate                   |   |   | 35     | %      |   |   | 35     | %      |   |   | 35 | % |
| Foreign provision (less than) greater than U.S. tax rate          |   |   | (1     | )      |   |   | 1      |   |   |   | (1 | ) |
| Settlement of audits, favorable resolution of accrued tax matters |   |   | (2     | )      |   |   | -      |   |   |   | (2 | ) |
| State income taxes, net of federal benefit                        |   |   | 1      |   |   |   | 1      |   |   |   | 1 |   |
| Research and development tax credits                              |   |   | (1     | )      |   |   | (13    | )      |   |   | - |   |
| Domestic production activities deduction                          |   |   | -      |   |   |   | (1     | )      |   |   | (1 | ) |
| Foreign tax credits                                               |   |   | (3     | )      |   |   | -      |   |   |   | (5 | ) |
| Valuation allowances against deferred tax assets                  |   |   | -      |   |   |   | 1      |   |   |   | - |   |
| Nondeductible stock option expense and other permanent items      |   |   | 3      |   |   |   | 3      |   |   |   | 1 |   |
| Effective income tax rate                                         |   |   | 32     | %      |   |   | 27     | %      |   |   | 28 | % |

|                                                |   | 2010                     |   |   | 2009   |   |   | 2008   |   |
|-----------------------------------------------------|--------|--------------------------|--------|--------|--------|--------|--------|--------|--------|
|                                                |   | (expressed in thousands) |   |
| Deferred Tax Asset:                                 |   |                     |   |   |   |   |   |   |   |
| Accrued compensation and benefits                   |   | $                        | 8,509  |   |   | $      | 9,212  |   |   | $ | 7,887 |   |
| Inventory reserves                                  |   |                     | 3,246  |   |   |   | 3,621  |   |   |   | 1,679 |   |
| Allowance for doubtful accounts                     |   |                     | 175    |   |   |   | 132    |   |   |   | 163 |   |
| Intangible and other assets                         |   |                     | 4,473  |   |   |   | 3,100  |   |   |   | 3,323 |   |
| Net operating loss carryovers                       |   |                     | 2,080  |   |   |   | 2,093  |   |   |   | 2,555 |   |
| Unrealized derivative instrument losses             |   |                     | 634    |   |   |   | 804    |   |   |   | 82 |   |
| Capital loss carryovers                             |   |                     | -      |   |   |   | -      |   |   |   | - |   |
| Research and development and foreign tax credits    |   |                     | 2,050  |   |   |   | 1,187  |   |   |   | 2,713 |   |
| Total deferred tax asset before valuation allowance |   |                     | 21,167 |   |   |   | 20,149 |   |   |   | 18,402 |   |
| Less valuation allowance                            |   |                     | (986   | )      |   |   | (987   | )      |   |   | (809 | ) |
| Total Deferred Tax Asset                            |   | $                        | 20,181 |   |   | $      | 19,162 |   |   | $ | 17,593 |   |
|                                                |   |                     |   |   |   |   |   |   |   |   |   |   |
| Deferred Tax Liability:                             |   |                     |   |   |   |   |   |   |   |   |   |   |
| Property and equipment                              |   | $                        | 10,026 |   |   | $      | 7,485  |   |   | $ | 4,193 |   |
| Intangible Assets                                   |   |                     | -      |   |   |   | -      |   |   |   | 40 |   |
| Foreign deferred revenue and other                  |   |                     | 2,757  |   |   |   | 2,133  |   |   |   | 4,300 |   |
| Total Deferred Tax Liability                        |   | $                        | 12,783 |   |   | $      | 9,618  |   |   | $ | 8,533 |   |
| Net Deferred Tax Asset                              |   | $                        | 7,398  |   |   | $      | 9,544  |   |   | $ | 9,060 |   |

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Table of Contents

|                                                                 |   | 2010                     |   |   | 2009   |   |
|----------------------------------------------------------------------|--------|--------------------------|--------|--------|--------|--------|
|                                                                 |   | (expressed in thousands) |   |
| Beginning balance                                                    |   | $                        | 3,591  |   |   | $      | 4,009 |   |
| Increase (decrease) due to tax positions related to the current year |   |                     | 1,274  |   |   |   | (151 | ) |
| Decrease due to lapse of statute of limitations                      |   |                     | (657   | )      |   |   | (267 | ) |
| Exchange rate change                                                 |   |                     | (27    | )      |   |   | - |   |
| Ending balance                                                       |   | $                        | 4,181  |   |   | $      | 3,591 |   |

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|               |   | 2010                     |   |   | 2009   |   |
|--------------------|--------|--------------------------|--------|--------|--------|--------|
|               |   | (expressed in thousands) |   |
| Actuarial net loss |   | $                        | 3,337  |   |   | $      | 1,750 |   |

|                                            |   | 2010                     |   |   | 2009   |   |
|-------------------------------------------------|--------|--------------------------|--------|--------|--------|--------|
|                                            |   | (expressed in thousands) |   |
| Change in benefit obligation:                   |   |                     |   |   |   |   |
| Projected benefit obligation, beginning of year |   | $                        | 15,593 |   |   | $      | 13,020 |   |
| Service cost                                    |   |                     | 349    |   |   |   | 400 |   |
| Interest cost                                   |   |                     | 784    |   |   |   | 764 |   |
| Actuarial loss                                  |   |                     | 1,331  |   |   |   | 1,283 |   |
| Exchange rate change                            |   |                     | (829   | )      |   |   | 167 |   |
| Benefits paid                                   |   |                     | (343   | )      |   |   | (303 | ) |
| Special termination benefits                    |   |                     | -      |   |   |   | 262 |   |
| Projected benefit obligation, end of year       |   | $                        | 16,885 |   |   | $      | 15,593 |   |
|                                            |   |                     |   |   |   |   |   |   |
| Change in plan assets:                          |   |                     |   |   |   |   |   |   |
| Fair value of plan assets, beginning of year    |   | $                        | 13,676 |   |   | $      | 12,775 |   |
| Actual return on plan assets                    |   |                     | 444    |   |   |   | 695 |   |
| Employer contributions                          |   |                     | 343    |   |   |   | 488 |   |
| Exchange rate change                            |   |                     | (786   | )      |   |   | 21 |   |
| Benefits paid                                   |   |                     | (343   | )      |   |   | (303 | ) |
| Fair value of plan assets, end of year          |   | $                        | 13,334 |   |   | $      | 13,676 |   |

|                                               |   | 2010                     |   |   | 2009   |   |
|----------------------------------------------------|--------|--------------------------|--------|--------|--------|--------|
|                                               |   | (expressed in thousands) |   |
| Funded status:                                     |   |                     |   |   |   |   |
| Funded status, end of year                         |   | $                        | (3,551 | )      |   | $      | (1,917 | ) |
| Accumulated other comprehensive loss               |   |                     | 3,337  |   |   |   | 1,750 |   |
| Net amount recognized                              |   | $                        | (214   | )      |   | $      | (167 | ) |
|                                               |   |                     |   |   |   |   |   |   |
| Amounts recognized in consolidated balance sheets: |   |                     |   |   |   |   |   |   |
| Accrued payroll and related costs                  |   | $                        | (471   | )      |   | $      | - |   |
| Pension benefit plan                               |   |                     | (3,080 | )      |   |   | (1,917 | ) |
| Deferred income taxes                              |   |                     | 1,007  |   |   |   | 528 |   |
| Accumulated other comprehensive income, net of tax |   |                     | 2,330  |   |   |   | 1,222 |   |
| Net amount recognized                              |   | $                        | (214   | )      |   | $      | (167 | ) |

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|                                                    |   | 2010   |   |   | 2009   |   |
|---------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Discount rate                                           |   |   | 4.7    | %      |   |   | 5.5 | % |
| Expected rate of return on plan assets                  |   |   | 5.2    | %      |   |   | 5.9 | % |
| Expected rate of increase in future compensation levels |   |   | 2.7    | %      |   |   | 3.0 | % |

|                       |   | Percentage of Plan Assets |   |
|----------------------------|--------|---------------------------|--------|
|                       |   | 2010                      |   |   | 2009 |   |
| Fixed income securities(1) |   |                      | 76.5   | % |   |   | 71.0 | % |
| Equity securities(2)       |   |                      | 17.5   | % |   |   | 19.3 | % |
| Cash and cash equivalents  |   |                      | 1.8    | % |   |   | 2.3 | % |
| Other(3)                   |   |                      | 4.2    | % |   |   | 7.4 | % |
|                       |   |                      | 100.0  | % |   |   | 100.0 | % |

|   | (1) | Fixed income securities are comprised primarily of international government agency and international corporate bonds with investment grade ratings. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | Equity securities consist of an international mutual fund that invests solely in international stocks that are actively traded on international exchanges. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | Other asset holdings are comprised primarily of international bond futures and a derivatives-based mutual fund that invests in various assets. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------|

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|           |   | Level 1                  |   |   | Level 2 |   |   | Level 3 |   |   | Total |   |
|----------------|--------|--------------------------|--------|--------|---------|--------|--------|---------|--------|--------|-------|--------|
|           |   | (expressed in thousands) |   |
| Mutual fund(1) |   | $                        | -      |   |    | $      | 13,334 |    |   | $      | -     |   |   | $ | 13,334 |   |

|   | (1) | The fair value of the mutual fund is generally valued based on closing prices from national exchanges, if the underlying securities are traded on an active market, or fixed income pricing models that use observable market inputs. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                           |   | 2010                     |   |   | 2009   |   |   | 2008   |   |
|--------------------------------|--------|--------------------------|--------|--------|--------|--------|--------|--------|--------|
|                           |   | (expressed in thousands) |   |   |   |   |
| Service cost                   |   | $                        | 349    |   |   | $      | 400    |   |   | $ | 551 |   |
| Interest cost                  |   |                     | 784    |   |   |   | 764    |   |   |   | 740 |   |
| Expected return on plan assets |   |                     | (748   | )      |   |   | (702   | )      |   |   | (44 | ) |
| Net amortization and deferral  |   |                     | 16     |   |   |   | 14     |   |   |   | 35 |   |
| Special termination benefits   |   |                     | -      |   |   |   | 262    |   |   |   | - |   |
| Net periodic benefit cost      |   | $                        | 401    |   |   | $      | 738    |   |   | $ | 1,282 |   |

| Future Benefit payments: |   |                     |   |
|--------------------------|--------|--------------------------|--------|
|                     |   | Pension                  |   |
| Fiscal Year              |   | Benefits                 |   |
|                     |   | (expressed in thousands) |   |
| 2011                     |   | $                        | 471    |   |
| 2012                     |   |                     | 588    |   |
| 2013                     |   |                     | 654    |   |
| 2014                     |   |                     | 708    |   |
| 2015                     |   |                     | 758    |   |
| 2016 through 2020        |   |                     | 4,676  |   |
|                     |   | $                        | 7,855  |   |

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|                       |   | 2010                     |   |   | 2009   |   |
|----------------------------|--------|--------------------------|--------|--------|--------|--------|
|                       |   | (expressed in thousands) |   |
| Cost of sales              |   | $                        | 1,391  |   |   | $      | 6,770 |   |
| Selling and marketing      |   |                     | 100    |   |   |   | 3,989 |   |
| General and administrative |   |                     | 133    |   |   |   | 1,171 |   |
| Research and development   |   |                     | -      |   |   |   | 155 |   |
| Total severance costs      |   | $                        | 1,624  |   |   | $      | 12,085 |   |

| Year       |   | Payments                 |   |
|------------|--------|--------------------------|--------|
|       |   | (expressed in thousands) |   |
| 2011       |   | $                        | 4,563  |   |
| 2012       |   |                     | 3,224  |   |
| 2013       |   |                     | 1,941  |   |
| 2014       |   |                     | 855    |   |
| 2015       |   |                     | 636    |   |
| Thereafter |   |                     | 1,846  |   |
|       |   | $                        | 13,065 |   |

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Table of Contents

|                             |   | Balance Beginning of Year |   |   | Provisions/ (Recoveries) |   |   | Amounts Written-Off/ Payments |   |   | Balance End of Year |   |
|----------------------------------|--------|---------------------------|--------|--------|--------------------------|--------|--------|-------------------------------|--------|--------|---------------------|--------|
|                             |   |                      |   |   |                     |   |   |                          |   |   |                |   |
| Allowance for Doubtful Accounts: |   |
|                             |   |                      |   |   |                     |   |   |                          |   |   |                |   |
| 2010                             |   | $                         | 1,410  |   |                     | $      | 159    |                          |   | $      | (211                | )      |   | $ | 1,358 |   |
|                             |   |                      |   |   |                     |   |   |                          |   |   |                |   |   |   |   |   |
| 2009                             |   |                      | 1,008  |   |                     |   | 755    |                          |   |   | (353                | )      |   |   | 1,410 |   |
|                             |   |                      |   |   |                     |   |   |                          |   |   |                |   |   |   |   |   |
| 2008                             |   |                      | 1,518  |   |                     |   | (111   | )                             |   |   | (399                | )      |   |   | 1,008 |   |

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