SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2001,
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ____________ TO
________________
Commission File Number 1-13595
Mettler-Toledo International Inc.
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(Exact name of registrant as specified in its charter)
Delaware 13-3668641
- ----------------------------------------- -----------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
Incorporation or organization)
Im Langacher, P.O. Box MT-100
CH 8606 Greifensee, Switzerland
- ----------------------------------------- ----------------------------------
(Address of principal executive offices) (Zip Code)
41-1-944-22-11
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No____
The Registrant had 39,716,936 shares of Common Stock outstanding at March 31,
2001.
METTLER-TOLEDO INTERNATIONAL INC.
INDEX TO QUARTERLY REPORT ON FORM 10-Q
Page No.
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Unaudited Interim Consolidated Financial Statements:
Interim Consolidated Balance Sheets as of March 31, 2001 3
and December 31, 2000
Interim Consolidated Statements of Operations for the three 4
months ended March 31, 2001 and 2000
Interim Consolidated Statements of Shareholders' Equity 5
for the three months ended March 31, 2001 and 2000
Interim Consolidated Statements of Cash Flows for the three 6
months ended March 31, 2001 and 2000
Notes to the Interim Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition 11
and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk 16
Part II. OTHER INFORMATION 16
Item 1. Legal Proceedings 16
Item 2. Changes in Security 16
Item 3. Default upon Senior Securities 16
Item 4. Submission of Matters to a Vote of Security Holders 16
Item 5. Other Information 16
Item 6. Exhibits and Reports on Form 8-K 16
Signature 17
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
METTLER-TOLEDO INTERNATIONAL INC.
INTERIM CONSOLIDATED BALANCE SHEETS
As of March 31, 2001 and December 31, 2000
(In thousands, except per share data)
March 31, December 31,
2001 2000
---- ----
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 22,985 $ 21,725
Trade accounts receivable, net 204,430 212,570
Inventories, net 142,749 141,677
Other current assets and prepaid expenses 41,470 47,367
------- -------
Total current assets 411,634 423,339
Property, plant and equipment, net 188,382 199,388
Excess of cost over net assets acquired, net 222,511 228,035
Other assets 36,421 36,820
-------- --------
Total assets $858,948 $887,582
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 68,022 $ 80,513
Accrued and other liabilities 108,590 97,575
Accrued compensation and related items 35,148 51,968
Taxes payable 58,928 68,537
Short-term borrowings and current maturities of long-term debt 50,078 50,560
------ -------
Total current liabilities 320,766 349,153
Long-term debt 226,816 237,807
Non-current deferred taxes 24,157 25,939
Other non-current liabilities 94,337 95,843
------- -------
Total liabilities 666,076 708,742
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;
issued 39,716,936 and 39,372,873 shares at March 31, 2001 and
December 31, 2000 396 393
Additional paid-in capital 299,462 294,558
Accumulated deficit (53,809) (68,307)
Accumulated other comprehensive loss (53,177) (47,804)
-------- --------
Total shareholders' equity 192,872 178,840
Commitments and contingencies
-------- --------
Total liabilities and shareholders' equity $858,948 $887,582
======== ========
The accompanying notes are an integral part of these interim consolidated financial statements.
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METTLER-TOLEDO INTERNATIONAL INC.
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended March 31, 2001 and 2000
(In thousands, except per share data)
March 31 March 31
2001 2000
---- ----
(unaudited) (unaudited)
Net sales $265,644 $259,116
Cost of sales 147,334 144,875
------- -------
Gross profit 118,310 114,241
Research and development 14,807 13,373
Selling, general and administrative 73,196 73,777
Amortization 3,212 2,865
Interest expense 4,783 5,390
Other charges, net 7 738
------ ------
Earnings before taxes and minority interest 22,305 18,098
Provision for taxes 7,807 6,334
Minority interest - 10
------- -------
Net earnings $14,498 $11,754
======= =======
Basic earnings per common share:
Net earnings $0.37 $0.30
Weighted average number of common shares 39,716,936 38,712,272
Diluted earnings per common share:
Net earnings $0.34 $0.28
Weighted average number of common shares 42,539,345 41,902,580
The accompanying notes are an integral part of these interim consolidated financial statements.
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METTLER-TOLEDO INTERNATIONAL INC.
INTERIM CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Three months ended March 31, 2001 and 2000
(In thousands, except per share data)
(unaudited)
Accumulated
Common Stock Additional Other
--------------------- Paid-in Accum. Comprehensive
Shares Amount Capital Deficit Loss Total
------ ------ ------- ------- ---- -----
Balance at December 31, 2000 39,372,873 $393 $294,558 $(68,307) $(47,804) $178,840
Exercise of stock options 344,063 3 4,904 - - 4,907
Comprehensive income:
Net earnings - - - 14,498 - 14,498
Fair value of cash-flow
hedging instruments - - - - (2,268) (2,268)
Change in currency
translation adjustment - - - - (3,105) (3,105)
-------
Comprehensive income 9,125
---------- ---- -------- --------- --------- --------
Balance at March 31, 2001 39,716,936 $396 $299,462 $(53,809) $(53,177) $192,872
========== ==== ======== ========= ========= ========
Balance at December 31, 1999 38,674,768 $386 $288,092 $(138,426) $(38,037) $112,015
Exercise of stock options 37,504 1 351 - - 352
Comprehensive income:
Net earnings - - - 11,754 - 11,754
Change in currency
translation adjustment - - - - (7,343) (7,343)
-------
Comprehensive income 4,411
---------- ---- -------- ---------- --------- --------
Balance at March 31, 2000 38,712,272 $387 $288,443 $(126,672) $(45,380) $116,778
========== ==== ======== ========== ========= ========
The accompanying notes are an integral part of these interim consolidated financial statements.
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METTLER-TOLEDO INTERNATIONAL INC.
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended March 31, 2001 and 2000
(In thousands)
March 31, March 31,
2001 2000
---- ----
(unaudited) (unaudited)
Cash flow from operating activities:
Net earnings $ 14,498 $ 11,754
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation 5,646 5,731
Amortization 3,212 2,865
Other (826) 13
Increase (decrease) in cash resulting from changes in:
Trade accounts receivable, net 343 7,295
Inventories (6,557) (6,652)
Other current assets (3,978) (1,157)
Trade accounts payable (12,351) (23,808)
Accruals and other liabilities, net 2,197 7,733
----- -----
Net cash provided by operating activities 2,184 3,774
----- -----
Cash flows from investing activities:
Proceeds from sale of property, plant and equipment 1,711 34
Purchase of property, plant and equipment (6,086) (4,520)
Acquisitions (934) (9,419)
------- --------
Net cash used in investing activities (5,309) (13,905)
------- --------
Cash flows from financing activities:
Proceeds from borrowings 29,618 12,939
Repayments of borrowings (29,500) (1,648)
Proceeds from issuance of common stock 4,907 352
----- ------
Net cash provided by financing activities 5,025 11,643
----- ------
Effect of exchange rate changes on cash and cash equivalents (640) (313)
----- -----
Net increase in cash and cash equivalents 1,260 1,199
Cash and cash equivalents:
Beginning of period $21,725 $17,179
------- -------
End of period $22,985 $18,378
======= =======
The accompanying notes are an integral part of these interim consolidated financial statements.
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METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(In thousands unless otherwise stated)
1. BASIS OF PRESENTATION
Mettler-Toledo International Inc. ("Mettler Toledo" or the "Company")
is a global manufacturer and marketer of precision instruments, including
weighing and certain analytical and measurement technologies, for use in
laboratory, industrial and food retailing applications. The Company is also a
leading provider of automated chemistry solutions used in drug and chemical
compound discovery and development. The Company's primary manufacturing
facilities are located in Switzerland, the United States, Germany, the United
Kingdom, France and China. The Company's principal executive offices are located
in Greifensee, Switzerland.
The accompanying interim consolidated financial statements have been
prepared in accordance with generally accepted accounting principles in the
United States of America ("U.S. GAAP"). The interim consolidated financial
statements have been prepared without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations. The interim consolidated
financial statements as of March 31, 2001 and for the three month periods ended
March 31, 2001 and 2000 should be read in conjunction with the December 31, 2000
and 1999 consolidated financial statements and the notes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31, 2000.
The accompanying interim consolidated financial statements reflect all
adjustments (consisting of only normal recurring adjustments) which, in the
opinion of management, are necessary for a fair statement of the results of the
interim periods presented. Operating results for the three months ended March
31, 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
Inventories
Inventories are valued at the lower of cost or market. Cost, which
includes direct materials, labor and overhead plus indirect overhead, is
determined using either the first in, first out (FIFO) or weighted average cost
methods and to a lesser extent the last in, first out (LIFO) method.
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METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(In thousands unless otherwise stated)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Inventories consisted of the following at March 31, 2001 and
December 31, 2000:
March 31, December 31,
2001 2000
-------- --------
Raw materials and parts $ 62,379 $ 67,379
Work in progress 37,225 37,289
Finished goods 44,359 38,148
------- -------
143,963 142,816
LIFO reserve (1,214) (1,139)
--------- ---------
$142,749 $141,677
======== ========
Earnings per Common Share
As described in Note 10 in the Company's Annual Report on Form 10-K for
the year ended December 31, 2000, in accordance with the treasury stock method,
the Company has included the following equivalent shares relating to 4,723,287
outstanding options to purchase shares of common stock in the calculation of
diluted weighted average number of common shares for the three month periods
ended March 31, 2001 and 2000, respectively.
March 31, March 31,
2001 2000
---------- -----------
Three months ended 2,822,409 3,190,308
3. 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 measure those
instruments at fair value.
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METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(In thousands unless otherwise stated)
3. FINANCIAL INSTRUMENTS (Continued)
As discussed more fully in Note 5 of the Company's Annual Report on
Form 10-K for the year ended December 31, 2000, the Company reduces its exposure
to changes in interest rates through the use of interest rate swap and cap
agreements. The fair value of outstanding interest rate swap and cap agreements
that are effective cash flow hedges at March 31, 2001 is included in the
Company's Consolidated Statement of Shareholders' Equity. The cumulative effect
of adopting SFAS 133 as of January 1, 2001 was not material to the Company's
consolidated financial statements.
4. SEGMENT REPORTING
The Company has five reportable segments: Principal U.S. Operations,
Principal Central European Operations, Swiss R&D and Manufacturing Operations,
Other Western European Operations and Other. The following tables show the
operations of the Company's operating segments:
Principal Other Eliminations
For the period Principal Central Swiss R&D Western and
January 1, 2001 to U.S. European and Mfg. European Corporate
March 31, 2001 Operations Operations Operations Operations Other (a) (b) Total
- ------------------------------ ---------- ---------- ---------- ---------- --------- ------------ ---------
Net sales to external
customers................. $ 83,730 $ 46,138 $ 6,890 $ 65,408 $ 63,478 $ - $ 265,644
Net sales to other segments. 6,609 13,738 35,062 10,061 35,797 (101,267) -
--------- --------- --------- --------- -------- ----------- ---------
Total net sales............. $ 90,339 $ 59,876 $ 41,952 $ 75,469 $ 99,275 $ (101,267) $ 265,644
========= ========= ========= ========= ======== =========== =========
Adjusted operating income... $ 2,663 $ 6,617 $ 9,156 $ 4,651 $ 7,614 $ (394) $ 30,307
Principal Other Eliminations
For the period Principal Central Swiss R&D Western and
January 1, 2000 to U.S. European and Mfg. European Corporate
March 31, 2000 Operations Operations Operations Operations Other (a) (b) Total
- ------------------------------ ---------- ---------- ---------- ---------- --------- ------------ ---------
Net sales to external
customers................. $ 85,406 $ 43,657 $ 7,143 $ 67,151 $ 55,759 $ - $ 259,116
Net sales to other segments. 8,849 11,933 34,580 10,283 25,818 (91,463) -
--------- --------- --------- --------- -------- ----------- ---------
Total net sales............. $ 94,255 $ 55,590 $ 41,723 $ 77,434 $ 81,577 $ (91,463) $ 259,116
========= ========= ========= ========= ======== ========== =========
Adjusted operating income... $ 9,111 $ 3,468 $ 9,547 $ 4,809 $ 4,760 $ (4,604) $ 27,091
(a) Other includes reporting units in Asia, Eastern Europe, Latin America
and segments from other countries that do not meet the aggregation
criteria of SFAS 131.
(b) Eliminations and Corporate includes the elimination of intersegment
transactions as well as certain corporate expenses, intercompany
investments and certain goodwill, which are not included in the Company's
operating segments.
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METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
(In thousands unless otherwise stated)
4. SEGMENT REPORTING (Continued)
A reconciliation of adjusted operating income to earnings before taxes
and minority interest follows:
For the period For the period
January 1, 2001 January 1, 2000
to to
March 31, 2001 March 31, 2000
-------------- --------------
Adjusted operating income..................... $30,307 $27,091
Amortization.................................. 3,212 2,865
Interest expense.............................. 4,783 5,390
Other charges, net............................ 7 738
------- -------
Earnings before taxes and minority interest... $22,305 $18,098
======= =======
- 10 -
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion and analysis of our financial condition and
results of operations should be read in conjunction with the Unaudited Interim
Consolidated Financial Statements included herein.
General
Our interim consolidated financial statements have been prepared in
accordance with generally accepted accounting principles in the United States of
America on a basis which reflects the interim consolidated financial statements
of Mettler-Toledo International Inc. Operating results for the three months
ended March 31, 2001 are not necessarily indicative of the results to be
expected for the full year ending December 31, 2001.
Results of Operations
Net sales were $265.6 million for the three months ended March 31, 2001
compared to $259.1 million for the corresponding period in the prior year. This
represents an increase of 7% in local currencies. Results were negatively
impacted by the strengthening of the U.S. dollar against other currencies. Net
sales in U.S. dollars increased 3%.
Net sales by geographic customer location were as follows: Net sales in
Europe increased 9% in local currencies during the three months ended March 31,
2001 versus the corresponding period in the prior year reflecting strong sales
performance across most product lines, particularly non-weighing instruments.
Net sales in local currencies during the three month period in the Americas
increased 3% as compared to the corresponding period in 2000, principally due to
the effect of businesses acquired in 2000. Net sales in local currencies during
the three month period in Asia and other markets increased 13% compared to the
same period in the prior year. The results of our business in Asia and other
markets during the three months ending March 31, 2001 primarily reflect strong
sales performance throughout the region, particularly China and Japan.
Net sales growth in the Americas was lower than Europe and Asia and
other markets primarily due to a deterioration in economic conditions. To the
extent that economic conditions significantly deteriorate in the Americas or
other parts of the world, our sales growth and profitability may be adversely
affected.
Gross profit as a percentage of net sales increased to 44.5% for the
three months ended March 31, 2001, compared to 44.1% for the corresponding
period in the prior year. This increase is primarily related to changes in our
sales mix, as well as benefits from various cost savings initiatives.
Research and development expenses as a percentage of net sales
increased to 5.6% for the three months ended March 31, 2001, compared to 5.2%
for the corresponding period in the prior year.
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Selling, general and administrative expenses as a percentage of net
sales decreased to 27.6% for the three months ended March 31, 2001, compared to
28.5% for the corresponding period in the prior year primarily due to exchange
rate movements.
Adjusted Operating Income (gross profit less research and development
and selling, general and administrative expenses before amortization and other
charges, net) increased 12% to $30.3 million, or 11.4% of net sales, for the
three months ended March 31, 2001, compared to $27.1 million, or 10.5% of net
sales, for the corresponding period in the prior year. The increased operating
margin reflects the benefits of higher sales levels and our continuous efforts
to improve productivity.
Interest expense decreased to $4.8 million for the three months ended
March 31, 2001, compared to $5.4 million for the corresponding period in the
prior year. The decrease was principally due to reduced debt levels.
The provision for taxes is based upon our projected annual effective
tax rate for the related period. Our effective tax rate for the three months
ended March 31, 2001 was approximately 35%.
Net earnings increased 23% to $14.5 million for the three months ended
March 31, 2001, compared to net earnings of $11.8 million, for the corresponding
period in the prior years.
Liquidity and Capital Resources
At March 31, 2001, our consolidated debt, net of cash, was $253.9
million. We had borrowings of $256.2 million under our credit agreement and
$20.7 million under various other arrangements as of March 31, 2001. Of our
credit agreement borrowings, approximately $116.7 million was borrowed as term
loans scheduled to mature in 2004 and $139.5 million was borrowed under our
multi-currency revolving credit facility. At March 31, 2001, we had $270.6
million of availability remaining under our revolving credit facility.
At March 31, 2001, approximately $81.9 million of the borrowings under
the credit agreement and local working capital facilities were denominated in
U.S. dollars. The balance of the borrowings under the credit agreement and local
working capital facilities were denominated in certain of our other principal
trading currencies amounting to approximately $195.0 million at March 31, 2001.
Changes in exchange rates between the currencies in which we generate cash flow
and the currencies in which our borrowings are denominated affect our liquidity.
In addition, because we borrow in a variety of currencies, our debt balances
fluctuate due to changes in exchange rates.
Under the credit agreement, amounts outstanding under the term loans
are payable in quarterly installments. In addition, the credit agreement
obligates us to make mandatory prepayments in certain circumstances with the
proceeds of asset sales or issuance of capital stock or indebtedness and with
certain excess cash flow. The credit agreement imposes certain restrictions on
us and our subsidiaries, including restrictions and limitations on the ability
to pay dividends to our shareholders, incur indebtedness, make investments,
grant liens, sell financial assets and engage
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in certain other activities. We must also comply with certain financial
covenants. The credit agreement is secured by certain of our assets.
Cash provided by operating activities totaled $2.2 million for the
three months ended March 31, 2001. In the three months ended March 31, 2000,
cash provided by operating activities totaled $3.8 million. The decrease
resulted primarily from the timing of tax payments / refunds versus the previous
year.
In connection with our cost rationalization programs, we will incur
pre-tax cash charges of $7 to $8 million for severance and related costs during
the remainder of 2001, and non-cash charges in a similar range.
We continue to explore potential acquisitions to expand our product
portfolio and improve our distribution capabilities. In connection with any
acquisition, we may incur additional indebtedness.
We currently believe that cash flow from operating activities, together
with borrowings available under the credit agreement and local working capital
facilities, will be sufficient to fund currently anticipated working capital
needs and capital spending requirements as well as debt service requirements for
at least the next several years, but there can be no assurance that this will be
the case.
Effect of Currency on Results of Operations
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.
- 13 -
European Economic and Monetary Union
Within Europe, the European Economic and Monetary Union (the "EMU")
introduced a new currency, the euro, on January 1, 1999. Switzerland is not part
of the EMU.
On January 1, 1999, the participating countries adopted the euro as
their local currency, initially available for currency trading on currency
exchanges and non-cash (banking) transactions. The existing local currencies, or
legacy currencies, will remain legal tender through January 1, 2002. Beginning
on January 1, 2002, euro-denominated bills and coins will be issued for cash
transactions. For a period of six months from this date, both legacy currencies
and the euro will be legal tender. On or before July 1, 2002, the participating
countries will withdraw all legacy currency and use exclusively the euro.
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 EMU. We expect nonparticipating
European Union countries, where we also have operations, may eventually join the
EMU.
We have committed resources to conduct risk assessments and to take
corrective actions, where required, to ensure we are prepared for the
introduction of the euro. We have undertaken a review of the euro implementation
and have concentrated on areas such as operations, finance, treasury, legal,
information management, procurement and others, both in participating and
nonparticipating European Union countries where we operate. Also, existing
legacy accounting and business systems and other business assets have been
reviewed for euro compliance, including assessing any risks from third parties.
Progress regarding euro implementation is reported periodically to management.
Because of the staggered introduction of the euro regarding non-cash
and cash transactions, we have developed our plans to address our accounting and
business systems first and our business assets second. 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. Remaining systems will be modified to achieve compliance. 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 preparing plans to address
issues within the transitional period when both legacy and euro currencies may
be used.
We are reviewing our pricing strategy throughout Europe due to the
increased price transparency created by the euro and are attempting to adjust
prices in some of our markets. We are also encouraging our suppliers, even in
Switzerland, to commence transacting in the euro. We do not believe that the
effect of these adjustments will be material.
We have a disproportionate amount of our costs in Swiss francs relative
to sales. Historically, the potential currency impact has been muted because
currency fluctuations between the Swiss franc and other major European
currencies have been minimal and there is greater
- 14 -
balance between total European (including Swiss) sales and costs. However, if
the introduction of the euro results in a significant weakening of the euro
against the Swiss franc, our financial performance could be harmed.
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 time-frame 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.
Forward-Looking Statements and Associated Risks
This Quarterly Report on Form 10-Q includes forward-looking statements
based on our current expectations and projections about future events,
including: strategic plans; potential growth, including penetration of developed
markets and opportunities in emerging markets; planned product introductions;
planned operational changes and research and development efforts; euro
conversion issues; future financial performance, including expected capital
expenditures; research and development expenditures; estimated proceeds from and
the timing of asset sales; potential acquisitions; future cash sources and
requirements; and potential cost savings from restructuring programs.
These forward-looking statements are subject to a number of risks and
uncertainties, certain of which are beyond our control, which could cause our
actual results to differ materially from historical results or those
anticipated. Certain of these risks and uncertainties have been identified in
Exhibit 99.1 to our Annual Report on Form 10-K for the year ended December 31,
2000. 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. 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.
- 15 -
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As of March 31, 2001, there was no material change in the information
provided under Item 7A in the Company's Annual Report on Form 10-K for the year
ended December 31, 2000.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings. Not applicable
Item 2. Changes in Security. Not applicable
Item 3. Defaults Upon Senior Securities. Not applicable
Item 4. Submission of Matters to a Vote of Security Holders. Not applicable
Item 5. Other information. Not applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - None
(b) Reports on Form 8-K - None
- 16 -
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 thereto duly authorized.
Mettler-Toledo International Inc.
Date: May 14, 2001 By: /s/ William P. Donnelly
------------------------
William P. Donnelly
Vice President and
Chief Financial Officer