MTS Systems Delays Fourth-Quarter Report on Potential Violations in China
November 29 2016 - 11:50AM
Dow Jones News
MTS Systems Corp. said it is investigating possible corporate
violations by its leadership in China, and will delay releasing its
full quarterly and annual reports.
The test-sensor company's stock dropped 8.1% to $50.10 in early
trading Tuesday, pushing the year's slide to more than 20%.
"We are deeply disappointed to report that we recently
discovered that certain individuals in our leadership in China
appear to have violated MTS's code of conduct, including
association with an independent business that may compete with MTS
in certain markets," said Chief Executive Jeffrey Graves.
MTS, which said it has already taken "certain remedial measures"
in response to the issue, said the board's audit committee has
sought independent external counsel and will review for potential
law violations.
China was among the Asia-Pacific regions MTS was already
investigating for potential Foreign Corrupt Practices Act
violations.
"We took certain initial remedial actions, including changes to
internal-control procedures and removing certain persons formerly
employed in our China business," the company said in August's
third-quarter report filing to the Securities and Exchange
Commission.
Still, the company said results for its latest quarter topped
internal estimates and raised its guidance for the year. MTS said
full-year revenue is expected to range between $645 million and
$650 million, up from previous guidance for $630 million to $640
million. The company now expects earnings of $1.65 to $1.70 a
share, up from previous guidance for $1.35 to $1.50.
Mr. Graves said the company ended the fiscal year on a "strong
note" and pointed to continued improvements in business
performance.
Acquisition-related and restructuring costs for the year of
about $23 million were much higher than previously guided for, hurt
by the timing of a $16 million fair value adjustment to acquired
inventory—denting the final quarter fiscal 2016 and the first
quarter of fiscal 2017 each by $8 million.
Write to Anne Steele at Anne.Steele@wsj.com
(END) Dow Jones Newswires
November 29, 2016 11:35 ET (16:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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