EXHIBIT 99.1
FACTORS AFFECTING OUR FUTURE OPERATING RESULTS
Certain statements contained in our public filings, press releases and
other documents and materials as well as certain statements in written or
oral statements made by us or on our behalf are forward-looking statements
based on our current expectations and projections about future events,
including:
o strategic plans
o potential growth, including penetration of developed markets, use
of e-commerce capabilities and opportunities in emerging markets
o planned research and development efforts, product introductions
and innovation
o meeting customer expectations
o planned operational changes, including productivity improvements
o euro conversion issues
o future financial performance, including expected capital
expenditures
o research and development expenditures
o potential acquisitions
o impact of completed acquisitions
o future cash sources and requirements
o liquidity
o impact of environmental costs
o potential cost savings, including from our procurement initiative
These forward-looking statements are subject to a number of risks and
uncertainties, including those discussed below, which could cause our
actual results to differ materially from historical results or those
anticipated and certain of which are beyond our control. The words
"believe," "expect," "anticipate" and similar expressions identify
forward-looking statements. We undertake no obligation to publicly update
or revise any forward-looking statements, whether as a result of new
information, future events or otherwise. The risks included here are not
exhaustive. Other sections of this report may describe additional factors
that could adversely impact our business and financial performance.
Moreover, we operate in a very competitive and rapidly changing
environment. New risk factors emerge from time to time and it is not
possible for us to predict all such risk factors, nor can we assess the
impact of all such risk factors on our business or the extent to which any
factor, or combination of factors, may cause actual results to differ
materially from those contained in any forward-looking statements. Given
these risks and uncertainties, investors should not place undue reliance on
forward-looking statements as a prediction of actual results.
Investors should also be aware that while we do, from time to time,
communicate with securities analysts, it is against our policy to disclose
to them any material non-public information or other confidential
commercial information. Accordingly, investors should not assume that we
agree with any statement or report issued by any analyst irrespective of
the content of the statement or report. Furthermore, we have a policy
against issuing or confirming financial forecasts or projections issued by
others. Thus, to the extent that reports issued by securities analysts
contain any projections, forecasts or opinions, such reports are not our
responsibility.
The following factors could cause actual results to differ materially
from historical results or anticipated results:
CURRENCY FLUCTUATIONS MAY AFFECT OUR OPERATING PROFITS
Because we conduct operations in many countries, our operating income
can be significantly affected by fluctuations in currency exchange rates.
Swiss franc-denominated expenses represent a much greater percentage of our
operating expenses than Swiss franc-denominated sales represent of our net
sales. In part, this is because most of our manufacturing costs in
Switzerland relate to products that are sold outside of Switzerland.
Moreover, a substantial percentage of our research and development expenses
and general and administrative expenses are incurred in Switzerland.
Therefore, if the Swiss franc strengthens against all or most of our major
trading currencies (e.g., the U.S. dollar, the euro, other major European
currencies and the Japanese yen) our operating profit is reduced. We also
have significantly more sales in European currencies (other than the Swiss
franc) than we have expenses in those currencies. Therefore, when European
currencies weaken against the U.S. dollar and the Swiss franc, it also
decreases our operating profits. In recent years, the Swiss franc and other
European currencies have generally moved in a consistent manner versus the
U.S. dollar. Therefore, because the two effects previously described have
offset each other, our operating profits have not been materially affected
by movements in the U.S. dollar exchange rate versus European currencies.
However, there can be no assurance that these currencies will continue to
move in a consistent manner in the future. In addition to the effects of
exchange rate movements on operating profits, our debt levels can fluctuate
due to changes in exchange rates, particularly between the U.S. dollar and
the Swiss franc.
WE ARE SUBJECT TO CERTAIN RISKS ASSOCIATED WITH OUR INTERNATIONAL
OPERATIONS AND FLUCTUATING CONDITIONS IN EMERGING MARKETS
We do business in many countries, including emerging markets in Asia,
Latin America and Eastern Europe. In addition to the currency risks
discussed above, international operations pose substantial other risks and
problems for us. For instance, various local jurisdictions in which we
operate may revise or alter their respective legal and regulatory
requirements. In addition, we may encounter one or more of the following
obstacles or risks:
o tariffs and trade barriers
o difficulties in staffing and managing local operations
o credit risks arising from financial difficulties facing local
customers and distributors
o difficulties in protecting intellectual property
o nationalization of private enterprises
o restrictions on investments and/or limitations regarding foreign
ownership
o adverse tax consequences, including imposition or increase of
withholding and other taxes on remittances and other payments by
subsidiaries
o uncertain local economic, political and social conditions,
including hyper-inflationary conditions
We must also comply with a variety of regulations regarding the
conversion and repatriation of funds earned in local currencies. For
example, converting earnings from our operations in China into other
currencies and repatriating such funds require governmental approvals. If
we cannot comply with these or other applicable regulations, we may face
increased difficulties in utilizing cash flow generated by these operations
outside of China.
Economic conditions in emerging markets have from time to time
deteriorated significantly and some emerging markets are experiencing
recessionary trends, severe currency devaluations and inflationary prices.
Moreover, economic problems in individual markets can spread to other
economies, adding to the adverse conditions we face in emerging markets. We
remain committed to emerging markets, particularly those in Asia, Latin
America and Eastern Europe. However, we expect the fluctuating economic
conditions will affect our financial results in these markets for the
foreseeable future.
WE OPERATE IN HIGHLY COMPETITIVE MARKETS AND IT MAY BE DIFFICULT TO
PRESERVE OPERATING MARGINS, GAIN MARKET SHARE AND MAINTAIN A TECHNOLOGICAL
ADVANTAGE
Our markets are highly competitive. Weighing instruments markets are
also fragmented both geographically and by application, particularly the
industrial and food retailing market. As a result, we face numerous
regional or specialized competitors, many of which are well established in
their markets. In addition, some of our competitors are divisions of larger
companies with potentially greater financial and other resources than our
own. Taken together, the competitive forces present in our markets can
impair our operating margins in certain product lines and geographic
markets.
We expect our competitors to continue to improve the design and
performance of their products and to introduce new products with
competitive prices. Although we believe that we have certain technological
and other advantages over our competitors, we may not be able to realize
and maintain these advantages. In any event, to remain competitive we must
continue to invest in research and development, sales and marketing and
customer service and support. We cannot be sure that we will have
sufficient resources to continue to make these investments or that we will
be successful in identifying, developing and maintaining any competitive
advantages.
A PROLONGED DOWNTURN OR ADDITIONAL CONSOLIDATION IN THE PHARMACEUTICAL,
FOOD, FOOD RETAILING AND CHEMICALS INDUSTRIES COULD ADVERSELY AFFECT OUR
OPERATING RESULTS
Our products are used extensively in the pharmaceutical, chemicals and
food and beverage industries. Consolidation in the pharmaceutical and
chemicals industries hurt our sales in prior years. A prolonged downturn or
additional consolidation in any of these industries could adversely affect
our operating results.
WE MAY FACE RISKS ASSOCIATED WITH FUTURE ACQUISITIONS
We plan to pursue acquisitions of complementary product lines,
technologies or businesses. Acquisitions involve numerous risks, including:
o difficulties in the assimilation of the acquired operations,
technologies and products
o diversion of management's attention from other business concerns
o potential departures of key employees of the acquired company
If we successfully identify acquisitions in the future, completing
such acquisitions may result in:
o new issuances of our stock that may be dilutive to current owners
o increases in our debt and contingent liabilities
o additional amortization expenses related to goodwill and other
intangible assets
Any of these risks could materially adversely affect our
profitability. We continue to explore potential acquisitions. We may not be
able to identify, successfully complete or integrate potential acquisitions
in the future. However, even if we can, we cannot be sure that such
acquisitions will have a positive impact on our business or operating
results.
OUR CREDIT AGREEMENT RESTRICTS OUR ABILITY TO TAKE CERTAIN ACTIONS
Covenants in our debt obligations restrict our ability to incur
additional indebtedness, dispose of certain assets and make capital
expenditures. The covenants also restrict our other corporate activities.
Our ability to comply with these covenants may be affected by events beyond
our control, including economic, financial and industry conditions. A
failure to comply with the covenants and restrictions contained in our debt
obligations or any other agreements with respect to any additional
financing could result in an acceleration of the amount we owe under our
debt agreements.
DEPARTURES OF KEY EMPLOYEES COULD IMPAIR OUR OPERATIONS
We have employment contracts with each of our key employees. In
addition, our key employees own shares of our common stock and have options
to purchase additional shares. Nonetheless, such individuals could leave
the Company. If any key employees stopped working for us, our operations
could be harmed. We have no key man life insurance policies with respect to
any of our senior executives.
WE MAY BE ADVERSELY AFFECTED BY THE ENVIRONMENTAL LAWS AND REGULATIONS TO
WHICH WE ARE SUBJECT
We are subject to various environmental laws and regulations,
including those relating to:
o air emissions
o wastewater discharges
o the handling and disposal of solid and hazardous wastes
o the remediation of contamination associated with the use and
disposal of hazardous substances
We incur capital and operating expenditures in complying with
environmental laws and regulations both in the United States and abroad. We
are currently involved in, or have potential liability with respect to, the
remediation of past contamination in facilities both in the United States
and abroad. In addition, some of these facilities have or had been in
operation for many decades and may have used substances or generated and
disposed of wastes that are hazardous or may be considered hazardous in the
future. Such sites and disposal sites owned by others to which we sent
waste may in the future be identified as contaminated and require
remediation. Accordingly, it is possible that we could become subject to
additional environmental liabilities in the future that may harm our
results of operations or financial condition.
RECENT CHANGES TO FINANCIAL ACCOUNTING STANDARDS BOARD GUIDELINES RELATING
TO ACCOUNTING FOR GOODWILL COULD MAKE OUR ACQUISITION-RELATED CHARGES LESS
PREDICTABLE IN ANY GIVEN REPORTING PERIOD.
The Financial Accounting Standards Board recently adopted a new
standard for accounting for goodwill acquired in a business combination,
which is effective for fiscal years beginning after December 31, 2001. It
continues to require recognition of goodwill as an asset but does not
permit amortization of goodwill as previously required. Under the new
statement, goodwill is separately tested for impairment using a
fair-value-based approach when an event occurs indicating the potential for
impairment. The shift from an amortization approach to an impairment
approach applies to previously recorded goodwill as well as goodwill
arising from acquisitions completed after adoption of the new standard. As
the new standard is implemented, our goodwill amortization charges will
cease. However, it is possible that in the future, we would incur less
frequent, but larger, impairment charges related to the goodwill already
recorded as well as goodwill arising out of future acquisitions as we
continue to expand our business.
WE DO NOT EXPECT TO PAY DIVIDENDS IN THE FORESEEABLE FUTURE
Our credit agreement restricts our ability to pay dividends. In any
event, we do not intend to pay cash dividends on our common stock in the
foreseeable future.
ANTI-TAKEOVER PROVISIONS IN OUR CERTIFICATE AND BY-LAWS AND UNDER DELAWARE
LAW COULD INHIBIT A CHANGE OF CONTROL OF OUR COMPANY
Our certificate of incorporation and by-laws contain provisions that
could make it more difficult for a third party to acquire the Company. Our
certificate of incorporation authorizes the Board of Directors to issue
preferred stock without shareholder approval and upon such terms as it may
determine. The rights of the holders of our common stock are subject to,
and may be adversely affected by, the rights of future holders of preferred
stock. In addition, our by-laws require shareholders to provide advance
notice to nominate candidates for election as directors and to submit
proposals for consideration at shareholder meetings. Section 203 of the
Delaware General Corporation Law makes it more difficult for an "interested
stockholder" (generally a 15% stockholder) to effect various business
combinations with a corporation for a three-year period after he becomes an
"interested stockholder." In general, these provisions may discourage a
third party from attempting to acquire the Company and therefore may
inhibit a change of control of our company under circumstances that could
give shareholders an opportunity to realize a premium over then-prevailing
market prices.
WE COULD BE ADVERSELY AFFECTED BY THE INTRODUCTION OF THE EUROPEAN MONETARY
UNION
We have recognized the introduction of the euro as a significant event
with potential implications for existing operations. Currently, we operate
in all of the participating countries in the European Monetary Union (the
"EMU"). We expect nonparticipating European Union countries, where we also
have operations, may eventually join the EMU.
We have committed resources to ensure we are prepared for the
introduction of the euro. We were euro compliant within our accounting and
business systems by the end of 1999 and expect to be compliant within our
other business assets prior to the introduction of the euro bills and
coins. Compliance in participating and nonparticipating countries will be
achieved primarily through upgraded systems, which were previously planned
to be upgraded. We do not currently expect to experience any significant
operational disruptions or to incur any significant costs, including any
currency risk, which could materially affect our liquidity or capital
resources.
We are reviewing our pricing strategy throughout Europe due to the
increased price transparency created by the euro. We do not believe that
the effect of these adjustments will be material.
The statements set forth herein concerning the introduction of the
euro which are not historical facts are forward-looking statements that
involve risks and uncertainties that could cause actual results to differ
materially from those in the forward-looking statements. In particular, the
costs associated with our euro programs and the timeframe in which we plan
to complete euro modifications are based upon management's best estimates.
These estimates were derived from internal assessments and assumptions of
future events. There can be no guarantee that any estimates or other
forward-looking statements will be achieved, and actual results could
differ significantly from those contemplated.