SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of
the Securities Exchange Act of 1934
Date of Report: December 21, 2001
Mettler-Toledo International Inc.
--------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-13595 13-3668641
(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification Number)
incorporation)
Im Langacher, P.O. Box MT-100
CH 8606 Greifensee, Switzerland
---------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: 41-1-944-2211
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
This Current Report on Form 8-K/A (Amendment No.2) amends the Current
Report on Form 8-K previously filed with the Securities and Exchange
Commission on October 15, 2001, as amended by the Current Report on Form
8-K/A filed on November 28, 2001, relating to the acquisition by
Mettler-Toledo International Inc., a Delaware corporation
("Mettler-Toledo"), through its subsidiary Mettler-Toledo, Inc., of Rainin
Instrument, LLC, a Delaware limited liability company. This Amendment No.2
is being submitted to include the consolidated financial statements of
Rainin Instrument Company, Inc. (the predecessor to Rainin Instrument, LLC)
required by Item 7(a) of the Form 8-K, and to update the Pro Forma Combined
Financial Statements required by Item 7(b) of the Form 8-K, for the latest
financial period. The following documents are included as part of this
report:
A. FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
The unaudited consolidated financial statements of Rainin Instrument
Company, Inc. (the predecessor to Rainin Instrument, LLC) as of and for the
nine months ended September 30, 2000 and 2001 and the audited consolidated
financial statements as of and for the year ended December 31, 2000 with
the report of the independent auditors, are included on pages 3 through 22
of this Form 8-K/A.
B. UNAUDITED PRO FORMA FINANCIAL INFORMATION
The Unaudited Pro Forma Combined Financial Statements required by this
item are included on pages 23 through 28 of this Form 8-K/A.
C. EXHIBITS
The following exhibits are filed herewith.
Exhibit No. Description
----------- -----------
99.1 Independent Auditors' Consent.
RAININ INSTRUMENT COMPANY, INC.
CONSOLIDATED FINANCIAL STATEMENTS
Index to the Consolidated Financial Statements
- ----------------------------------------------
Page No.
--------
Balance Sheets as of September 30, 2001 (unaudited)
and December 31, 2000 4
Unaudited Interim Statements of Operations for the nine
months ended September 30, 2001 and 2000 5
Unaudited Interim Statements of Shareholder's Equity
for the nine months ended September 30, 2001 and 2000 6
Unaudited Interim Statements of Cash Flows for the nine
months ended September 30, 2001 and 2000 7
Notes to the Interim Consolidated Financial Statements 8
Independent Auditors' Report 12
Balance Sheet as of December 31, 2000 13
Statement of Operations for the year ended
December 31, 2000 14
Statement of Shareholder's Equity for the year ended
December 31, 2000 15
Statement of Cash Flows for the year ended
December 31, 2000 16
Notes to the Consolidated Financial Statements 17
RAININ INSTRUMENT COMPANY, INC.
BALANCE SHEETS
AS OF SEPTEMBER 30, 2001 AND DECEMBER 30, 2000
(IN THOUSANDS, EXCEPT SHARE DATA)
SEPTEMBER 30, DECEMBER 31,
2001 2000
---- ----
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents $ 5,656 $ 6,200
Trade accounts receivable, less
allowances of $ 80 in 2001 and $ 74 in 2000 10,013 7,527
Inventories, net 11,779 9,776
Other current assets and prepaid expenses 522 255
------------- -----------
Total current assets 27,970 23,758
Property, plant and equipment, net 8,581 9,795
Other assets 3,151 1,480
------------- -----------
Total assets $39,702 $ 35,033
============= ===========
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Trade accounts payable $ 1,194 $ 1,250
Accrued and other liabilities 3,254 1,154
Accrued compensation and related items 1,652 863
------------- -----------
Total current liabilities 6,100 3,267
Shareholder's equity:
Common stock, without par value; authorized 1,100,000 shares;
issued 1,000,000 shares 1,008 1,008
Accumulated earnings 32,843 30,827
Accumulated other comprehensive loss (249) (69)
------------- -----------
Total shareholder's equity 33,602 31,766
Commitments and contingencies
------------- -----------
Total liabilities and shareholder's equity $39,702 $ 35,033
============= ===========
The accompanying notes are an integral part of these consolidated financial statements.
RAININ INSTRUMENT COMPANY, INC.
INTERIM STATEMENTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
(IN THOUSANDS, EXCEPT SHARE DATA)
SEPTEMBER 30 SEPTEMBER 30
2001 2000
---- ----
(UNAUDITED) (UNAUDITED)
Net sales $ 59,479 $ 49,044
Cost of sales 24,027 20,004
---------- -----------
Gross profit 35,452 29,040
Research and development 2,483 1,971
Selling, general and administrative 13,947 11,244
Other charges, net 2,671 1,022
---------- -----------
Earnings before taxes 16,351 14,803
Provision for taxes 835 693
---------- -----------
Net earnings $ 15,516 $ 14,110
========== ===========
Basic earnings per common share:
Net earnings $15.52 $ 14.11
Weighted average number of common shares 1,000,000 1,000,000
Diluted earnings per common share:
Net earnings $15.52 $14.11
Weighted average number of common shares 1,000,000 1,000,000
The accompanying notes are an integral part of these consolidated financial statements.
RAININ INSTRUMENT COMPANY, INC.
INTERIM STATEMENTS OF SHAREHOLDER'S EQUITY
NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
ACCUMULATED
COMMON STOCK OTHER
-------------------------------- RETAINED COMPREHENSIVE
SHARES AMOUNT EARNINGS INCOME (LOSS) TOTAL
------ ------ -------- ------------- -----
Balance at December 31, 2000 1,000,000 $1,008 $ 30,827 $ (69) $31,766
Distributions to shareholder (13,500) (13,500)
Comprehensive income:
Net earnings 15,516 15,516
Change in currency
translation adjustment (180) (180)
----------
Comprehensive income 15,336
------------ ---------- ----------- ----------- ----------
Balance at September 30, 2001 1,000,000 $1,008 $ 32,843 $ (249) $ 33,602
============ ========== =========== =========== ==========
Balance at December 31, 1999 1,000,000 $1,008 $ 28,822 $ 36 $ 29,866
Distributions to shareholder (11,500) (11,500)
Comprehensive income:
Net earnings 14,110 14,110
Change in currency
translation adjustment (3) (3)
----------
Comprehensive income 14,107
------------ ---------- ----------- ----------- ----------
Balance at September 30, 2000 1,000,000 $1,008 $ 31,432 $ 33 $ 32,473
============ ========== =========== =========== ==========
The accompanying notes are an integral part of these consolidated financial statements.
RAININ INSTRUMENT COMPANY, INC.
INTERIM STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
(IN THOUSANDS)
SEPTEMBER 30, SEPTEMBER 30,
2001 2000
---- ----
UNAUDITED) (UNAUDITED)
Cash flow from operating activities:
Net earnings $ 15,516 $ 14,110
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 3,327 3,078
Other (201) (72)
Increase (decrease) in cash resulting from changes in:
Trade accounts receivable, net (2,486) (1,468)
Inventories (2,003) (85)
Other current assets (267) 2
Trade accounts payable (56) (1,551)
Accruals and other liabilities, net 2,889 1,231
---------- ------------
Net cash provided by operating activities 16,719 15,245
---------- ------------
Cash flows from investing activities:
Proceeds from sale of property, plant and equipment 66 68
Purchase of property, plant and equipment (2,933) (2,170)
Acquisitions (898) (133)
---------- ------------
Net cash used in investing activities (3,765) (2,235)
---------- ------------
Cash flows from financing activities:
Dividends paid to shareholder (13,500) (11,500)
---------- ------------
Net cash used in financing activities (13,500) (11,500)
---------- ------------
Effect of exchange rate changes on cash and cash equivalents 2 3
---------- ------------
Net increase (decrease) in cash and cash equivalents (544) 1,513
Cash and cash equivalents:
Beginning of period $ 6,200 $ 4,876
---------- ------------
End of period $ 5,656 $ 6,389
========== ============
The accompanying notes are an integral part of these consolidated financial statements.
RAININ INSTRUMENT COMPANY, INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(In thousands unless otherwise stated)
1. BASIS OF PRESENTATION
Rainin Instrument Company, Inc. (the Company) is a developer and
manufacturer of pipetting solutions used in pharmaceutical, biotechnology
and medical research applications. The Company's principal operations are
located in Emeryville, California and Woburn, Massachusetts.
The accompanying interim consolidated financial statements and related
notes have been prepared without audit. The unaudited interim consolidated
financial statements have been prepared on the same basis as the annual
consolidated financial statements and, in the opinion of management,
reflect all adjustments (consisting only of normal recurring adjustments)
necessary to present fairly the consolidated financial statements for the
nine-month periods ended September 30, 2001 and 2000. Operating results for
the nine-month period ended September 30, 2001 are not necessarily
indicative of the results to be expected for the full year ending December
31, 2001.
The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, as well as disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues
and expenses during the reporting periods. Actual results may differ from
those estimates.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVENTORY
Inventories are stated at the lower of cost or market. Cost is
determined by the first-in, first-out (FIFO) method for all inventories.
Inventories consisted of the following at September 30, 2001, and
December 31, 2000:
SEPTEMBER 30, DECEMBER 31,
2001 2000
------------- ------------
Raw materials $ 4,779 $ 3,022
Work-in-process 148 330
Finished goods 6,852 6,424
------------- ------------
$ 11,779 $ 9,776
============= ============
RAININ INSTRUMENT COMPANY, INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(In thousands unless otherwise stated)
3. BUSINESS COMBINATIONS
On April 25, 2001, the Company acquired High Tech Service, SA, for
approximately $1,051 in cash. The transaction was accounted for as a
purchase, whereby the purchase price was allocated to the underlying assets
at their fair market value. As a result of the acquisition, approximately
$839 of goodwill, which is being amortized on a straight-line basis over a
period of 15 years, is included in other assets, net of accumulated
amortization.
4. FINANCIAL INSTRUMENTS
The Company adopted Statement of Financial Accounting Standards No.
133 "Accounting for Derivative Instruments and Hedging Activities", as
amended, on January 1, 2001. This Statement establishes accounting and
reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts (collectively referred
to as derivatives), and for hedging activities. It requires that an entity
recognizes all derivatives as either assets or liabilities in the statement
of financial position and measures those instruments at fair value.
The Company has limited involvement with derivative financial
instruments, as a small portion of its business is transacted in foreign
currencies. However, it is the Company's policy to minimize its risk to
fluctuations in foreign currencies (primarily the euro) by hedging actual
and estimated foreign currency exposures with foreign exchange contracts.
The Company's forward foreign exchange contracts are primarily denominated
in euros and are for periods consistent with the terms of underlying
transactions, generally one year or less. At September 30, 2001, the
Company had eight foreign exchange contracts to purchase a total of 4,800
euros for approximately $4,223. These amounts are payable on dates ranging
from October 19, 2001 to May 24, 2002.
In accordance with SFAS 133, hedges related to anticipated
transactions are designated and documented at the inception of the
respective hedge as cash flow hedges and evaluated for effectiveness
monthly. As the terms of the forward contract and the underlying
transaction are matched at inception, forward contract effectiveness is
calculated by comparing the fair value of the contract to the change in the
forward value of the anticipated transaction, with the effective portion of
the gain or loss in the derivative instrument reported as a component of
Other Comprehensive Income in the Statement of Shareholder's Equity and
reclassified into earnings in the same period during which the hedged
transaction affects earnings. Any residual change in fair value of the
instruments, or ineffectiveness, is recognized immediately in cost of
sales. The Company had no ineffective hedges during the nine months ended
September 30, 2001. The cumulative effect of adopting SFAS 133 as of
January 1, 2001 was not material to the Company's consolidated financial
statements.
RAININ INSTRUMENT COMPANY, INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(In thousands unless otherwise stated)
5. OTHER CHARGES, NET
Other charges, net consists primarily of the net expenses of the
Company's aircraft, charges related to the relocation of the Company's West
Coast facilities, and interest and dividend income.
The Company operates a jet-powered aircraft for business travel and as
a charter service. The net expenses related to these activities of
approximately $1,463 and $463 have been included in other charges, net in
the results of operations for the nine months ended September 30, 2001 and
2000 respectively.
The Company plans to move out of the existing facility in California
by the end of 2001. Accordingly, the Company has adjusted the expected
remaining useful life of leasehold improvements and recognized additional
depreciation of $583 and $804 during the nine months ended September 30,
2001 and 2000 respectively.
6. NEW ACCOUNTING STANDARDS
In June 2001, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 141, Business
Combinations and SFAS No. 142, Goodwill and Other Intangible Assets. SFAS
No. 141 applies to all business combinations completed after June 30, 2001
and requires the use of the purchase method of accounting. SFAS No. 141
also establishes new criteria for determining whether intangible assets
should be recognized separately from goodwill. SFAS No. 142 is effective
for fiscal years beginning after December 15, 2001; however, companies with
fiscal years beginning after March 15, 2001 may elect to adopt the
statement early. SFAS No. 142 provides that goodwill and intangible assets
with indefinite lives will not be amortized, but rather will be tested for
impairment on an annual basis. SFAS No. 141 is not expected to have a
significant impact on the results of operations or financial position of
the Company. While the Company has not fully evaluated the impact of
adopting SFAS No. 142, adoption of this Statement is expected to eliminate
the amortization of approximately $983 of goodwill.
RAININ INSTRUMENT COMPANY, INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(In thousands unless otherwise stated)
6. NEW ACCOUNTING STANDARDS (CONTINUED)
In October 2001, the FASB issued Statement of Financial Accounting
Standards No. 144, "Accounting for Impairment or Disposal of Long-Lived
Assets" ("SFAS 144"). SFAS 144 supersedes Statement of Financial Accounting
Standards No. 121, "Accounting for Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of" ("SFAS 121") and amends Accounting
Principles Bulletin Opinion No. 30, "Reporting Results of Operations -
Reporting the Effects of Disposal of a Segment of a Business". SFAS 144
develops one accounting model for long-lived assets that are disposed of by
sales, based on the model previously developed in SFAS 121. This Statement
also makes changes to the manner in which amounts from discontinued
operations are measured and expands the scope of the components of an
entity that qualify for discontinued operations treatment. This Statement
is effective for fiscal years beginning after December 31, 2001. The
Company will implement this Statement as required in 2002, and does not
expect this Statement to have any material impact on the Company's
consolidated financial statements.
7. SUBSEQUENT EVENT
In October 2001, the Company agreed to sell the issued and outstanding
membership units of Rainin Instrument, LLC, a Delaware limited liability
company to Mettler-Toledo Inc., a subsidiary of Mettler-Toledo
International Inc. Rainin Instrument, LLC owns substantially all of the
business assets and liabilities of Rainin Instrument Company, Inc.,
excluding the Company aircraft, certain real estate and certain other
assets. The accompanying consolidated financial statements do not reflect
any adjustments which may arise as a result of this transaction.
RAININ INSTRUMENT COMPANY, INC.
YEAR ENDED DECEMBER 31, 2000
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Rainin Instrument Company, Inc.
We have audited the accompanying balance sheet of Rainin Instrument
Company, Inc. (the Company) as of December 31, 2000, and the related
statements of income, shareholder's equity, and cash flows for the year
then ended. These consolidated financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the consolidated financial statements. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Rainin
Instrument Company, Inc. at December 31, 2000, and the results of its
operations and its cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States.
Ernst & Young LLP
Boston, Massachusetts
February 2, 2001
RAININ INSTRUMENT COMPANY, INC.
BALANCE SHEET
AS OF DECEMBER 31, 2000
(IN THOUSANDS, EXCEPT SHARE DATA)
DECEMBER 31,
2000
----
ASSETS
Current assets:
Cash and cash equivalents $ 6,200
Trade accounts receivable, less allowance of $74 7,527
Inventories, net 9,776
Other current assets and prepaid expenses 255
---------------
Total current assets 23,758
Property, plant and equipment, net 9,795
Other assets 1,480
---------------
Total assets $ 35,033
===============
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Trade accounts payable $ 1,250
Accrued and other liabilities 1,154
Accrued compensation and related items 863
---------------
Total current liabilities 3,267
Shareholder's equity:
Common stock, without par value; authorized 1,100,000 shares;
issued 1,000,000 shares 1,008
Accumulated earnings 30,827
Accumulated other comprehensive loss (69)
---------------
Total shareholder's equity 31,766
Commitments and contingencies
---------------
Total liabilities and shareholder's equity $ 35,033
===============
The accompanying notes are an integral part of these consolidated financial statements.
RAININ INSTRUMENT COMPANY, INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2000
(IN THOUSANDS, EXCEPT SHARE DATA)
DECEMBER 31
2000
----
Net sales $66,033
Cost of sales 27,439
------------
Gross profit 38,594
Research and development 2,769
Selling, general and administrative 15,189
Other charges, net 1,764
------------
Earnings before taxes 18,872
Provision for taxes 839
------------
Net earnings $18,033
============
Basic earnings per common share:
Net earnings $18.03
Weighted average number of common shares 1,000,000
Diluted earnings per common share:
Net earnings $18.03
Weighted average number of common shares 1,000,000
The accompanying notes are an integral part of these consolidated financial statements.
RAININ INSTRUMENT COMPANY, INC.
STATEMENT OF SHAREHOLDER'S EQUITY
YEAR ENDED DECEMBER 31, 2000
(IN THOUSANDS, EXCEPT SHARE DATA)
ACCUMULATED
COMMON STOCK OTHER
-------------------------------- RETAINED COMPREHENSIVE
SHARES AMOUNT EARNINGS INCOME (LOSS) TOTAL
------ ------ -------- ------------- -----
Balance at December 31, 1999 1,000,000 $ 1,008 $28,822 $ 37 $ 29,867
Distributions to shareholder (16,028) (16,028)
Comprehensive income:
Net earnings 18,033 18,033
Change in currency
translation adjustment (106) (106)
---------
Comprehensive income 17,927
------------ ---------- ----------- ----------- ---------
Balance at December 31, 2000 1,000,000 $ 1,008 $30,827 $ (69) $ 31,766
============ ========== =========== =========== =========
The accompanying notes are an integral part of these consolidated financial statements.
RAININ INSTRUMENT COMPANY INC.
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 2000
(IN THOUSANDS)
DECEMBER 31,
2000
----
Cash flow from operating activities:
Net earnings $18,033
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 3,171
Abandonment of leasehold improvements 1,072
Increase (decrease) in cash resulting from changes in:
Trade accounts receivable, net (1,091)
Inventories (70)
Other current assets (99)
Trade accounts payable (1,204)
Accruals and other liabilities, net 381
---------------
Net cash provided by operating activities 20,193
---------------
Cash flows from investing activities:
Proceeds from sale of property, plant and equipment 68
Purchase of property, plant and equipment (2,689)
Acquisitions (225)
---------------
Net cash used in investing activities (2,846)
---------------
Cash flows from financing activities:
Dividends paid to shareholder (16,028)
---------------
Net cash used in financing activities (16,028)
---------------
Effect of exchange rate changes on cash and cash equivalents 5
---------------
Net increase in cash and cash equivalents 1,324
Cash and cash equivalents:
Beginning of period $ 4,876
---------------
End of period $ 6,200
===============
The accompanying notes are an integral part of these consolidated financial statements.
RAININ INSTRUMENT COMPANY, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In thousands unless otherwise stated)
1. BASIS OF PRESENTATION
Rainin Instrument Company, Inc. (the Company) is a developer and
manufacturer of pipetting solutions used in pharmaceutical, biotechnology
and medical research applications. The Company's principal operations are
located in Emeryville, California and Woburn, Massachusetts.
The consolidated financial statements have been prepared in accordance
with generally accepted accounting principles in the United States of
America ("U.S. GAAP").
The consolidated financial statements include all entities in which
the Company has control. All intercompany transactions and balances have
been eliminated.
The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, as well as disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues
and expenses during the reporting periods. Actual results may differ from
those estimates.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH EQUIVALENTS
The Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents.
CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject the Company to credit
risk consist primarily of cash equivalents and accounts receivable. The
risk with respect to cash equivalents is minimized by the Company's
policies in which investments are only placed with highly rated issuers
with relatively short maturities. The risk with respect to accounts
receivable is minimized by the creditworthiness of the Company's customers,
the variety of industries in which the customers operate, and the Company's
credit and collection policies. The Company performs ongoing credit
evaluations of its customers, generally does not require collateral and
maintains allowances for potential credit losses which, when experienced,
have been within the range of management's expectations.
INVENTORY
Inventories are stated at the lower of cost or market. Cost is
determined by the first-in, first-out (FIFO) method for all inventories.
RAININ INSTRUMENT COMPANY, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(In thousands unless otherwise stated)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is stated at historical cost less
accumulated depreciation. Depreciation is charged on a straight-line or
accelerated basis over the estimated useful lives of the assets as follows:
DESCRIPTION PERIOD
----------- ------
Buildings and leasehold improvements 3 to 39 1/2 years
Machinery and equipment 3 to 12 years
Aircraft 7 years
Leasehold improvements are depreciated over the shorter of the useful
life or the lease term.
The Company operates a jet-powered aircraft for business travel and as
a charter service. The net expenses related to these activities of
approximately $1,100 have been included in other charges, net in the
results of operations.
The Company reviews its property, plant and equipment for impairment
whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. An impairment loss would be
recognized when estimated future cash flows expected to result from the use
of the asset and its eventual disposition are less than its carrying
amount.
FOREIGN CURRENCY TRANSLATION
The financial statements of the Company's foreign operations are
measured in their local currency and then translated into U.S. dollars. All
balance sheet accounts have been translated using the current exchange rate
at the balance sheet date. Results of operations have been translated using
average rates prevailing throughout the year. Translation gains or losses
resulting from the changes in the exchange rates from year-to-year are
accumulated in Other Comprehensive Income (Loss) in the Statement of
Shareholder's Equity.
REVENUE RECOGNITION
Sales are recognized upon the shipment of products to customers.
Revenue is deferred on service contracts and recognized ratably over the
life of the contract.
RAININ INSTRUMENT COMPANY, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(In thousands unless otherwise stated)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
RESEARCH AND DEVELOPMENT
Research and development costs are expensed as incurred.
INCOME TAXES
The shareholder of the Company has elected, under the provisions of
Subchapter S of the Internal Revenue Code, to include the Company's income
in his federal and certain state income tax returns. Accordingly, the
Company has made no provision for federal income taxes. The Company has
provided for state income taxes for states in which a corporate-level tax
is imposed or where no Subchapter S election has been made.
The Company provides for income taxes under the liability method
prescribed by Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes. Under this method, deferred tax liabilities
and assets are determined based on the difference between the financial
statement and tax basis of assets and liabilities using enacted tax rates
in effect for the year in which the differences are expected to reverse.
Income tax expense is the tax payable for the period and the change during
the period in deferred tax assets and liabilities. Deferred taxes consist
primarily of nondeductible allowances and reserves, and are immaterial in
nature.
The Company made state income tax payments of $649 in the year ended
December 31, 2000.
RAININ INSTRUMENT COMPANY, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(In thousands unless otherwise stated)
3. FINANCIAL INSTRUMENTS
The Company has limited involvement with derivative financial
instruments, as a small portion of its business is transacted in foreign
currencies. However, it is the Company's policy to minimize its risk to
fluctuations in foreign currencies (primarily the euro) by hedging actual
and estimated foreign currency exposures with foreign exchange contracts.
Gains and losses on such transactions are deferred and are recorded in the
Statement of Operations offsetting the related hedged item. At December 31,
2000, the Company had five foreign exchange contracts to purchase a total
of 3,000 euros for approximately $2,681. These amounts were payable on
dates ranging from January 19, 2001 to May 18, 2001.
The Company may be exposed to credit losses in the event of
nonperformance by the counterparties to its derivative financial instrument
contracts. Counterparties are established banks and financial institutions
with high credit ratings. The Company has no reason to believe that such
counterparties will not be able to fully satisfy their obligations under
these contracts.
The fair values of all derivative financial instruments are estimated
based on current settlement price of comparable contracts obtained from
dealer quotes. The values represent the estimated amount the Company would
pay or receive to terminate the agreements at the reporting date, taking
into account current creditworthiness of the counterparties.
In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133 "Accounting for
Derivative Instruments and Hedging Activities", as amended, which is to be
adopted for years beginning on or after January 1, 2001. This Statement
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives), and for hedging activities. It
requires that an entity recognizes all derivatives as either assets or
liabilities in the statement of financial position and measure those
instruments at fair value. Because of the Company's minimal use of
derivatives, management of the Company does not anticipate the adoption of
the new standard will have a significant effect on the earnings or
financial position of the Company.
4. INVENTORIES
Inventories consisted of the following at December 31:
2000
--------------
Raw materials $3,022
Work-in-process 330
Finished goods 6,424
--------------
$9,776
==============
RAININ INSTRUMENT COMPANY, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(In thousands unless otherwise stated)
5. PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment, net consisted of the following at
December 31:
2000
-------------
Land $ 193
Buildings and leasehold improvements 6,353
Machines and equipment 11,801
Aircraft 6,601
-------------
24,948
Less accumulated depreciation (15,153)
-------------
$ 9,795
=============
6. BUSINESS COMBINATIONS
In August 2000, the Company acquired the assets of High Caliber for
$225 in cash. The transaction was accounted for as a purchase, whereby the
purchase price was allocated to the underlying assets at their fair market
value.
7. LEASE COMMITMENTS
The Company leases a research and manufacturing facility from a
Subchapter S corporation controlled by the Company's sole shareholder,
warehouse facilities in Emeryville, California, two branch sales offices
from unrelated parties and an aircraft hangar. The leases expire at various
times through 2003. Total rent expense for the year ended December 31, 2000
amounted to approximately $ 621, of which approximately $269, was paid to
the shareholder-controlled Subchapter S corporation.
Minimum rental payments required under noncancelable operating leases
with terms in excess of one year were as follows as of December 31, 2000:
Year ending December 31, 2001 $152
2002 113
2003 52
2004 21
2005 and thereafter 36
-----------
$374
===========
RAININ INSTRUMENT COMPANY, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(In thousands unless otherwise stated)
8. OTHER CHARGES, NET
Other charges, net for the year ended December 31, 2000 consists
primarily of the net expenses of the Company's aircraft, charges related to
the relocation of the Company's West Coast facilities, and interest and
dividend income.
The Company plans to move out of its existing leased facility in
California by the end of 2001. Accordingly, the Company has adjusted the
expected remaining useful life of leasehold improvements and recognized
additional depreciation of $1,072 during the year ended December 31, 2000.
9. EMPLOYEE BENEFITS
The Company maintains a profit-sharing-based retirement plan covering
substantially all employees. Plan contributions are at the discretion of
the Board of Directors. Contributions under the plan included in other
expenses were $691 for the year ended December 31, 2000.
10. RELATED PARTY TRANSACTION
The Company purchased products totaling $1,215 during the year ended
December 31, 2000 from a Subchapter S corporation controlled by the
Company's shareholder.
METTLER-TOLEDO INTERNATIONAL INC.
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The Unaudited Pro Forma Combined Financial Statements have been
prepared to give effect to the acquisition of Rainin Instrument, LLC
("Rainin") by Mettler-Toledo International Inc. ("Mettler-Toledo" or the
"Company") as of September 30, 2001 for the balance sheet, and for the
beginning of the periods ended September 30, 2001 and December 31, 2000 for
the respective statements of operations. The historical financial
information of Rainin Instrument Company, Inc. (the predecessor to Rainin
Instrument, LLC) was derived from the audited and unaudited financial
information provided by the seller.
The pro forma data reflects adjustments directly related to the
acquisition, and does not include adjustments that may arise as a
consequence of the acquisition. Accordingly, the Unaudited Pro Forma
Combined Financial Statements do not purport to be indicative of what the
Company's combined financial position or combined results of operations
would actually have been had the acquisition been completed on such date or
the beginning of the periods indicated or to project the Company's combined
results of operations for any future periods.
The acquisition has been accounted for under the purchase method of
accounting. Under the purchase method of accounting, tangible and
intangible assets acquired and liabilities assumed are recorded at their
estimated fair values and related useful lives at the acquisition date. The
excess of the total acquisition purchase price over the net assets acquired
is classified as goodwill and is not subject to amortization in accordance
with current generally accepted accounting principles.
METTLER-TOLEDO INTERNATIONAL INC.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF SEPTEMBER 30, 2001
(IN THOUSANDS, EXCEPT SHARE DATA)
ASSETS NOT
ACQUIRED
HISTORICAL HISTORICAL FROM PRO FORMA PRO FORMA
METTLER-TOLEDO RAININ RAININ (A) ADJUSTMENTS COMBINED
-------------- ------ ---------- ----------- --------
ASSETS
Current assets:
Cash and cash equivalents $ 24,708 $ 5,656 $ - $ - $ 30,364
Trade accounts receivable, less allowances 218,550 10,013 - - 228,563
Inventories, net 144,799 11,779 - - 156,578
Other current assets and prepaid expenses 43,753 522 - - 44,275
--------------- ------------- ------------ ------------- ------------
Total current assets 431,810 27,970 - - 459,780
Property, plant and equipment, net 193,270 8,581 (4,099) - 197,752
Excess of cost over net assets acquired, net 235,255 983 - 148,624 (b) 383,879
(983) (d)
Identified intangible assets - 127,074 (b) 127,074
Other assets 43,575 2,168 (784) - 44,959
--------------- ------------- ------------ ------------- ------------
Total assets $ 903,910 $ 39,702 $ (4,883) $ 274,715 $ 1,213,444
=============== ============= ============ ============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 59,142 $ 1,194 $ - $ - $ 60,336
Accrued and other liabilities 112,021 3,254 - 9,200 (e) 124,475
Accrued compensation and related items 46,744 1,580 - - 48,324
Taxes payable 77,569 72 - - 77,641
Short-term borrowings and current maturities of
long-term debt 49,974 - - - 49,974
--------------- ------------- ------------ ------------- ------------
Total current liabilities 345,450 6,100 - 9,200 360,750
Long term debt 201,094 - - 149,900 (c) 350,994
Non-current deferred taxes 24,750 - - - 24,750
Other non-current liabilities 100,474 - - - 100,474
--------------- ------------- ------------ ------------- ------------
Total liabilities 671,768 6,100 - 159,100 836,968
Shareholders' equity:
Preferred stock, $0.01 par value per share;
authorized 10,000,000 shares - - - - -
Common stock, $0.01 par value per share;
authorized 125,000,000 shares 401 - - 34 (c) 435
Additional paid-in capital 304,301 - - 144,300 (c) 448,601
Accumulated deficit (26,743) - - - (26,743)
Accumulated other comprehensive loss (45,817) - - - (45,817)
Historical Rainin equity 33,602 (4,883) (28,719) (d) -
--------------- ------------- ------------ ------------- ------------
Total shareholders' equity 232,142 33,602 (4,883) 115,615 376,476
Commitments and contingencies
Total liabilities and shareholders' equity $ 903,910 $ 39,702 $ (4,883) $ 274,715 $ 1,213,444
=============== ============= ============ ============= ============
The accompanying notes are an integral part of these pro forma combined financial statements.
METTLER-TOLEDO INTERNATIONAL INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2001
(IN THOUSANDS, EXCEPT SHARE DATA)
HISTORICAL HISTORICAL PRO FORMA PRO FORMA
METTLER-TOLEDO RAININ ADJUSTMENTS COMBINED
--------------- ------ ----------- --------
Net sales $ 829,741 $ 59,479 $ (1,872) (f) $ 888,353
1,005 (e)
Cost of sales 453,558 24,027 (776) (f) 477,784
975 (g)
----------------- ---------------- --------------- ---------------
Gross profit 376,183 35,452 (1,066) 410,569
Research and development 46,480 2,483 - 48,963
Selling, general and administrative 220,097 13,947 (188) (f) 234,431
200 (i)
375 (g)
Amortization 9,706 - 2,306 (h) 12,012
Interest expense 13,402 - 6,746 (c) 20,148
Other charges, net 15,294 2,671 (200) (i) 17,441
(324) (j)
----------------- ---------------- --------------- ---------------
Earnings before taxes and minority interest 71,204 16,351 (9,981) 77,574
Provision for taxes 29,640 835 1,713 (k) 32,188
Minority interest - -
----------------- ---------------- --------------- ---------------
Net earnings $ 41,564 $ 15,516 $ (11,694) $ 45,386
================= ================ =============== ===============
Basic earnings per common share:
Net earnings $ 1.04 $ 1.05
Weighted average number of common shares 39,995,729 3,388,132 (c) 43,383,861
Diluted earnings per common share:
Net earnings $ 0.98 $ 0.99
Weighted average number of common shares 42,491,493 3,388,132 (c) 45,879,625
The accompanying notes are an integral part of these pro forma combined financial statements.
METTLER-TOLEDO INTERNATIONAL INC.
UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 2000
(IN THOUSANDS, EXCEPT SHARE DATA)
HISTORICAL HISTORICAL PRO FORMA PRO FORMA
METTLER-TOLEDO RAININ ADJUSTMENTS COMBINED
-------------- ------ ----------- --------
Net sales $1,095,547 $ 66,033 $ (2,417) (f) $1,159,129
(34) (e)
Cost of sales 600,185 27,439 (1,020) (f) 627,904
1,300 (g)
----------------- ---------------- ---------------- ---------------
Gross profit 495,362 38,594 (2,731) 531,225
Research and development 56,334 2,769 - 59,103
Selling, general and administrative 296,187 15,189 (242) (f) 312,671
37 (e)
1,200 (g)
300 (i)
Amortization 11,564 - 3,075 (h) 14,639
Interest expense 20,034 - 8,970 (c) 29,004
Other charges, net 2,638 1,764 (300) (i) 4,102
----------------- ---------------- ---------------- ---------------
Earnings before taxes and minority interest 108,605 18,872 (15,771) 111,706
Provision for taxes 38,510 839 401 (k) 39,750
Minority interest (24) - - (24)
----------------- ---------------- ---------------- ---------------
Net earnings $ 70,119 $ 18,033 $ (16,172) $ 71,980
================= ================ ================ ===============
Basic earnings per common share:
Net earnings $ 1.80 $ 1.70
Weighted average number of common shares 38,897,879 3,388,132 (c) 42,286,011
Diluted earnings per common share:
Net earnings $ 1.66 $ 1.58
Weighted average number of common shares 42,141,548 3,388,132 (c) 45,529,680
The accompanying notes are an integral part of these pro forma combined financial statements.
METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE PRO FORMA COMBINED FINANCIAL STATEMENTS
(In thousands unless otherwise stated)
(a) Represents the elimination of certain historical non-current assets
that have not been acquired by the Company.
(b) Represents the allocation of the excess of the purchase price over the
estimated assets and liabilities acquired. The allocation is as
follows:
TOTAL PURCHASE PRICE:
Shares of Mettler-Toledo common stock to be issued 3,388,132
Price per share* $ 42.60
---------------
Value of Mettler-Toledo common stock to be issued $144,334
Cash paid to seller 147,900
Estimated Mettler-Toledo transaction costs 2,000
---------------
Total purchase price 294,234
APPLICATION OF CONSIDERATION TO ACQUIRED ASSETS:
Historical Rainin net assets acquired, adjusted for the elimination
of existing goodwill of $983 (27,736)
Fair value adjustments relating to:
Accrual for trade-in liability 9,200
Customer relationships (67,383)
Technology - patents (17,352)
Intellectual property license (19,905)
Tradename (22,434)
---------------
Preliminary goodwill $148,624
===============
* Based on the average 5 days closing price before the announcement of the
acquisition.
(c) Adjustments pertaining to financing the total acquisition purchase
price of $294,234 include additional borrowings of $149,900 and
related interest expense under the Company's existing credit
facilities at an assumed interest rate of 6% per year, and the
issuance of approximately 3.4 million shares of Mettler-Toledo common
stock at a fair market value of $144,334. We estimate that a change of
one eighth of one per cent in the interest rate payable would result
in a change in earnings before tax of approximately $200 on an annual
basis.
Pursuant to the acquisition agreement, the Company may be required to
make additional earn-out payments of up to $60,000. Up to half of any
additional contingent payment may be paid at the Company's option in
shares of the Company's common stock and the remainder will be paid in
cash.
METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE PRO FORMA COMBINED FINANCIAL STATEMENTS -
(CONTINUED)
(In thousands unless otherwise stated)
(d) Represents the elimination of Rainin's historical equity and net
goodwill of $983.
(e) Reflects an adjustment to account for Rainin's trade-in program on an
accrual basis to conform with the Company's accounting principles.
(f) Represents an adjustment to eliminate sales, cost of sales and
selling, general and administrative expense associated with sales of
pipettes that are purchased from a direct competitor of Rainin that
will be terminated as a result of the transaction.
(g) Represents the incremental rent and other related costs for certain of
Rainin's facilities on the post-transaction negotiated "arms length"
contractual basis.
(h) Reflects the adjustment to amortize identifiable intangible assets on
a straight-line basis over periods ranging from 11-45 years.
(i) Reflects a reclassification to conform with the Company's financial
statement presentation.
(j) Represents the elimination of certain non-recurring transactional
expenses.
(k) Reflects the tax effect on Rainin's historical financial results and
pro forma adjustments at the combined U.S. federal and state statutory
tax rate of 40%, as if the transaction had occurred at the beginning
of each period presented. Since Rainin was organized as a Subchapter S
Corporation under the Internal Revenue Code, the Company's historical
statements make no provisions for federal income taxes and for certain
state income taxes where a Subchapter S election has been made.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
METTLER-TOLEDO INTERNATIONAL INC.
(Registrant)
Dated: December 21, 2001 By: /S/ WILLIAM P. DONNELLY
-----------------------------
William P. Donnelly
Group Vice President and
Chief Financial Officer