Test company MTS Systems is looking into whether some of its employees in China violated the company’s code of conduct in regards to associating with a competitor – and the rank of the employees involved is delaying the company’s financial reporting.
The audit committee of MTS’ board of directors hired an independent external lawyer, and the committee “will assess the impact on the company’s financial inputs from China and review for potential violations of law,” the firm said in a statement. “MTS has already begun taking certain remedial measures in response to this situation.”
As a result of the investigation, MTS said full results for fiscal 2016, and its annual report will be delayed. The company did release preliminary results that reflected full-year revenues estimated at $630 to $640 million.
“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,” explained MTS President and CEO Jeffrey Graves, in a statement. “Given the level of the MTS personnel in China who appear to have violated our code of conduct, the filing of our annual report on Form 10-K and our earnings release will be delayed until the internal investigation has been completed and its findings evaluated.”
Graves said the company’s finished out the year on a strong note despite the investigation, and added its integration of PCB Group for “internet of things” sensor offerings is “progressing well.” However, acquisition-related costs were higher than expected at about $23 million for the year. MTS bought sensor production company PCB Group earlier this year for $580 million.
