MTS SYSTEMS AND DSP TECHNOLOGY ANNOUNCE MERGER AGREEMENT

Combination Would Boost Firms' Growth Potential and Benefit Design

Productivity for Engine and Powertrain Manufacturers Worldwide

EDEN PRAIRIE, Minn., March 23 /PRNewswire/ -- MTS Systems Corporation (Nasdaq: MTSC) today announced it has entered into a definitive merger agreement with DSP Technology Inc. (Nasdaq: DSPT). The combined company, operating as MTS Systems Corporation and headquartered in Eden Prairie, Minn., would have annual revenues of more than $375 million based on revenues for the past 12 months. The combination would boost the firms' growth potential and benefit design productivity for engine and powertrain manufacturers worldwide.

The transaction will be accounted for as a pooling of interests and provides for the tax-free exchange of 2,077,000 shares of MTS common stock for all DSPT outstanding common stock and net share equivalents of outstanding DSPT stock options.

The exchange ratio will be determined at closing by dividing the 2,077, 000 MTS common shares by the sum of the total number of DSPT common shares outstanding plus the common share equivalent of outstanding DSPT stock options. By way of illustration, based on an assumed price of $11.00 for MTS common shares at the closing of the merger and assuming all outstanding DSPT stock options remain unexercised at the time of closing, each of DSPT's common shares and each of the share equivalent outstanding DSPT stock options would receive approximately 0.82 of a share of MTS common stock. The actual exchange ratio will be determined at closing.

"By uniting MTS's world class computer-based mechanical design and system integration skills with DSPT's state-of-the-art software, data acquisition and control systems, the merged company would offer customers integrated solutions for engine and powertrain design processes, as well as for aerospace and advanced research applications," said MTS chairman and CEO Dr. Sidney W. Emery, Jr. He explained that:

-- Our customers, particularly those in vehicle engine, transmission and powertrain component design, will benefit through a broader, more integrated analysis, simulation, and testing process that will lower development costs and move products to market faster.

-- DSPT has unique expertise and technologies in the higher-growth software market for test, analysis and validation of engine designs -- a market driven by increasing government regulation to produce more fuel- efficient, environmentally friendly engines

-- The merged firm would be a stronger force in the global powertrain testing market. The two companies complement each other in technology, customer base and geographic presence.

"DSPT is a thriving enterprise active in growth-oriented engine development market segments where MTS currently has little or no presence. MTS is a recognized world leader in the vehicle development test and simulation market," Emery added. "Culturally, the two firms are very compatible. Both are highly innovative and customer-centric."

Simultaneous with the merger agreement, MTS announced signing of a reciprocal distribution and technology exchange agreement with DSPT's strategic alliance partner FEV Motorentechnik GmbH, a world leading engine designer and developer, based in Aachen, Germany and Detroit, Mich. This agreement will take effect upon the closing of the merger of the companies. Emery stated that "this alliance with FEV will provide tremendous opportunity to speed up customer design process and will link together MTS's mechanical and systems skills with DSPT's data acquisition and analysis strengths and FEV's world renowned engine design competence."

MTS' Detroit-based Powertrain unit and DSPT's Transportation Group will be combined in DSPT's Ann Arbor, Mich. facility. DSPT's Fremont, Calif.-based Lab Group will continue to supply signal analysis products and advanced data acquisition systems for aerospace and vehicle safety test applications. Both groups will report to F. Gil Troutman, DSPT's current President & CEO.

Together, MTS and DSPT employ more than 2,400 employees in Minnesota, Michigan, California and other locations.

"The merger transaction would produce a one-time charge in MTS's fiscal year 1999 and is expected to be accretive to annual earnings in fiscal year 2000," Emery said. The transaction is expected to close in the second calendar quarter of this year, subject to approval of the merger agreement by stockholders of DSPT and customary closing conditions, including regulatory approvals.

This release contains forward-looking statements based on management's best judgment and current expectations. Actual results could differ based on many factors, including fulfillment of conditions to complete the merger, actual costs incurred to complete the merger, the combined company's competitive performance, changes in market and economic conditions, the mix of products sold, timing of receipt of orders, and successful integration of the businesses. Further information concerning factors which may affect MTS's performance is provided in its reports filed with the Securities and Exchange Commission.

MTS Systems Corporation (Eden Prairie, Minn.), with annual revenues of
approximately $350 million and 2,300 employees worldwide, manufactures
computer-based testing and simulation systems for determining the
mechanical and acoustic behavior and performance of materials, products
and structures. MTS also develops and markets measurement and control
instrumentation products for automating manufacturing processes. MTS
customers include the world's industrial companies, as well as
government and university laboratories. Additional information on MTS
can be found on the World Wide Web at http://www.mts.com . Additional
information on DSPT can be found on the World Wide Web at
http://www.dspt.com
SOURCE MTS Systems Corporation

-0-                             3/23/99 /CONTACT:  Thomas Minneman, 
Treasurer, 612-937-4647, or Sidney W. Emery, Jr., President & CEO, 
612-937-4990, both of MTS/ 

/Web site: http://www.dspt.com/ /Web site: http://www.mts.com/ (MTSC
DSPT)
CO: MTS Systems Corporation; DSP Technology Inc.; FEV Motorentechnik
GmbH ST: Minnesota, Germany, Michigan, California IN: CPR MAC SU: TNM