SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q/A-2
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
SEPTEMBER 30, 1996, 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 333-09621-01
Mettler-Toledo Holding Inc.
----------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3900409
-------------------------------- -----------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
Im Langacher, P.O. Box MT-100
CH 8608 Greifensee, Switzerland
-------------------------------- ----------------
(Address of principal executive (Zip Code)
offices)
41-1-944-22-11
----------------------------------------------------
(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 No X
----------- -------
The Registrant has 1,000 shares of Common Stock outstanding as of
September 30, 1996.
METTLER-TOLEDO HOLDING INC.
INDEX TO QUARTERLY REPORT ON FORM 10-Q/A-2
Page No.
---------
Part I. FINANCIAL INFORMATION 3
Item 1. Financial Statements 3
- -----------------------------
METTLER-TOLEDO HOLDING INC.
Consolidated Balance Sheet as of September 30, 1996 3
Notes to the Consolidated Balance Sheet as of
September 30, 1996 4
METTLER-TOLEDO GROUP
Unaudited Interim Combined Financial Statements:
Interim Combined Statements of Net Assets as of
December 31, 1995 and September 30, 1996 5
Interim Combined Statements of Operations for
the nine months ended September 30, 1995 and 1996 7
Interim Combined Statements of Operations for
the three months ended September 30, 1995 and 1996 8
Interim Combined Statements of Changes in Net
Assets for the nine months ended September 30, 1995
and 1996 9
Interim Combined Statements of Cash Flows for the
nine months ended September 30, 1995 and 1996 10
Notes to the Interim Combined Financial Statements 12
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 14
- ---------------------------------------------
Part II. OTHER INFORMATION 17
Item 5. Other Information 17
- --------------------------
Unaudited Pro Forma Financial Information for the
nine months ended September 30, 1995 and 1996 17
Item 6. Exhibits and Reports on Form 8-K 18
- -----------------------------------------
Signature 19
Exhibit Index 20
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
- -----------------------------
METTLER-TOLEDO HOLDING INC.
CONSOLIDATED BALANCE SHEET
September 30, 1996
Assets
Cash........................................... $1,000
--------
Total assets................................. $1,000
========
Stockholder's Equity
Common Stock, $1.00 par value; 1,000 shares $1,000
authorized, issued and outstanding...........
--------
Total stockholder's equity................... $1,000
========
See accompanying notes to the Consolidated Balance Sheet
METTLER-TOLEDO HOLDING INC.
NOTES TO THE CONSOLIDATED BALANCE SHEET
September 30, 1996
Basis of Presentation
The accompanying interim financial statement has been prepared in
accordance with United States generally accepted accounting principles
on a basis which reflects the interim financial statement of
Mettler-Toledo Holding Inc. ("Holding"), which was incorporated under
the laws of the State of Delaware on July 16, 1996 for the purpose of
effecting the acquisition of the Mettler-Toledo Group from Ciba-Geigy
AG ("Ciba"). Holding is a wholly owned subsidiary of MT Investors Inc.
The consolidated balance sheet includes the accounts of Holding and its
wholly owned subsidiary, MT Acquisition Corp. All intercompany
balances and transactions have been eliminated.
Between July 16, 1996 and September 30, 1996, Holding and MT
Acquisition Corp. did not conduct any operations.
Acquisition
On April 2, 1996, MT Investors Inc. entered into a Stock Purchase
Agreement, as amended, to acquire
the business of the Mettler-Toledo Group from Ciba and its wholly owned
subsidiary, AG fur Prazisionsinstrumente. The acquisition of the
Mettler-Toledo Group was consummated on October 15, 1996 through the
purchase of all of the outstanding capital stock of Mettler-Toledo,
Inc. and Mettler-Toledo Holding AG, which, together with their
respective subsidiaries, constituted the entire Mettler-Toledo Group.
Management Representation
The accompanying unaudited interim financial statement has been
prepared by management pursuant to the rules and regulations of the
Securities and Exchange Commission, and reflects all adjustments
(consisting of only normal recurring adjustments) which, in the opinion
of management, are necessary for a fair presentation of the financial
statement.
METTLER-TOLEDO GROUP
INTERIM COMBINED STATEMENTS OF NET ASSETS
December 31, 1995 and September 30, 1996
(In thousands)
December 31, September 30,
1995 1996
(unaudited)
- -----------------------------------------------------------------------
ASSETS
Current assets
Cash and cash equivalents $ 41,402 33,078
Due from Ciba-Geigy and affiliates 33,072 34,145
Trade accounts receivable, net 159,218 139,959
Inventories 110,986 109,492
Deferred taxes 6,180 6,847
Other current assets 21,469 55,195
- -----------------------------------------------------------------------
Total current assets 372,327 378,716
- -----------------------------------------------------------------------
Property, plant and equipment, net 241,018 224,741
Goodwill, net 84,425 84,268
Long-term deferred taxes 14,312 15,856
Other assets 12,012 21,524
- -----------------------------------------------------------------------
Total assets $ 724,094 725,105
- -----------------------------------------------------------------------
See accompanying notes to the Interim Combined Financial Statements
METTLER-TOLEDO GROUP
INTERIM COMBINED STATEMENTS OF NET ASSETS (CONTINUED)
December 31, 1995 and September 30, 1996
(In thousands)
December 31, September 30,
1995 1996
(unaudited)
- -----------------------------------------------------------------------
LIABILITIES AND NET ASSETS
Current liabilities
Trade accounts payable $ 34,389 30,271
Accrued and other liabilities 107,118 124,560
Taxes payable 11,737 21,511
Deferred taxes 7,698 8,183
Bank and other loans 29,513 35,371
Notes and dividends payable to Ciba-Geigy
and affiliates 91,132 136,097
- -----------------------------------------------------------------------
Total current liabilities 281,587 355,993
- -----------------------------------------------------------------------
Long-term debt payable to
Ciba-Geigy and affiliates 145,097 142,000
Long-term debt due to third parties 3,621 8,042
Long-term deferred taxes 13,502 14,354
Other long-term liabilities 84,303 90,063
- -----------------------------------------------------------------------
Total liabilities 528,110 610,452
- -----------------------------------------------------------------------
Minority interest 2,730 2,968
- -----------------------------------------------------------------------
Net assets
Capital employed 162,604 87,336
Currency translation adjustment 30,650 24,349
- -----------------------------------------------------------------------
Total net assets 193,254 111,685
- -----------------------------------------------------------------------
Total liabilities and net assets $ 724,094 725,105
- -----------------------------------------------------------------------
See accompanying notes to the Interim Combined Financial Statements
METTLER-TOLEDO GROUP
INTERIM COMBINED STATEMENTS OF OPERATIONS
Nine Months Ended September 30, 1995 and 1996
(In thousands)
September 30,
- -----------------------------------------------------------------------
1995 1996
(unaudited) (unaudited)
- -----------------------------------------------------------------------
Net sales $ 615,444 624,733
Cost of sales 371,480 374,121
- -----------------------------------------------------------------------
Gross profit 243,964 250,612
- -----------------------------------------------------------------------
Research and development expenses 40,366 37,930
Marketing and selling expenses 121,539 119,240
General and administrative expenses 53,516 56,405
-------- --------
Total research and development, marketing
and selling, and general and administrative
expenses 215,421 213,575
Amortization of goodwill 1,937 2,038
Other charges - 1,505
- -----------------------------------------------------------------------
Income from operations 26,606 33,494
- -----------------------------------------------------------------------
Interest expense 13,479 12,579
Financial income, net 5,128 1,731
- -----------------------------------------------------------------------
Income before taxes and minority interest 18,255 22,646
Provision for taxes 5,767 8,901
Minority interest 846 609
- -----------------------------------------------------------------------
Net income $ 11,642 13,136
- -----------------------------------------------------------------------
See accompanying notes to the Interim Combined Financial Statements
METTLER-TOLEDO GROUP
INTERIM COMBINED STATEMENTS OF OPERATIONS
Three Months Ended September 30, 1995 and 1996
(In thousands)
September 30,
- -----------------------------------------------------------------------
1995 1996
(unaudited) (unaudited)
- -----------------------------------------------------------------------
Net sales $ 208,451 200,931
Cost of sales 127,836 121,918
- -----------------------------------------------------------------------
Gross profit 80,615 79,013
- -----------------------------------------------------------------------
Research and development expenses 13,361 12,876
Marketing and selling expenses 40,574 37,862
General and administrative expenses 15,607 17,251
------ -------
Total research and development, marketing
and selling, and general and administrative
expenses 69,542 67,989
Amortization of goodwill 649 768
Other charges - 1,505
Income from operations 10,424 8,751
- -----------------------------------------------------------------------
Interest expense 4,762 4,233
Financial income, net 2,726 764
- -----------------------------------------------------------------------
Income before taxes and minority interest 8,388 5,282
Provision for taxes 2,650 2,071
Minority interest 576 82
- -----------------------------------------------------------------------
Net income $ 5,162 3,129
- -----------------------------------------------------------------------
See accompanying notes to the Interim Combined Financial Statements
METTLER-TOLEDO GROUP
INTERIM COMBINED STATEMENTS OF CHANGES IN NET ASSETS
Nine Months Ended September 30, 1995 and 1996
(In thousands)
Currency
Capital Translation
Employed Adjustment Total
- -----------------------------------------------------------------------
Net assets at January 1, 1995 $ 218,129 10,065 228,194
Capital transactions with
Ciba-Geigy and affiliates (18,542) - (18,542)
Net income 11,642 - 11,642
Change in currency translation
adjustment - 23,715 23,715
- -----------------------------------------------------------------------
Net assets at September 30, 1995 211,229 33,780 245,009
- -----------------------------------------------------------------------
Net assets at January 1, 1996 162,604 30,650 193,254
Capital transactions with
Ciba-Geigy and affiliates (88,404) - (88,404)
Net income 13,136 - 13,136
Change in currency translation
adjustment - (6,301) (6,301)
- -----------------------------------------------------------------------
Net assets at September 30,
1996 $ 87,336 24,349 111,685
- -----------------------------------------------------------------------
See accompanying notes to the Interim Combined Financial Statements
METTLER-TOLEDO GROUP
INTERIM COMBINED STATEMENTS OF CASH FLOWS
Nine Months Ended September 30, 1995 and 1996
(In thousands)
September 30,
- -----------------------------------------------------------------------
1995 1996
(unaudited) (unaudited)
- -----------------------------------------------------------------------
Cash flows from operating activities:
Net income $ 11,642 13,136
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 20,708 18,630
Amortization of goodwill 1,865 1,972
Amortization and write-down of
other intangibles 72 66
Net (gain) loss on disposal of
long-term assets 271 (768)
Deferred taxes (3,038) (1,211)
Minority interest 620 272
Increase (decrease) in cash resulting from changes in:
Trade accounts receivable, net 1,502 9,707
Inventories (7,567) (502)
Other current assets (4,202) (29,261)
Trade accounts payable (970) (3,525)
Accruals and other liabilities, net 16,230 49,408
- -----------------------------------------------------------------------
Net cash provided by operating activities 37,133 57,924
- -----------------------------------------------------------------------
Cash flows from investing activities:
Proceeds from sale of property, plant
and equipment 1,340 1,254
Purchase of property, plant and equipment (11,723) (14,985)
Investments in other long term assets, net (562) (2,869)
- -----------------------------------------------------------------------
Net cash used in investing activities (10,945) (16,600)
- -----------------------------------------------------------------------
Cash flows from financing activities:
Repayment of third party debt (2,653) (13,464)
Ciba-Geigy debt (139) (26,589)
Capital transactions with Ciba-Geigy (11,830) (7,716)
- -----------------------------------------------------------------------
Net cash used in financing activities $ (14,622) (47,769)
- -----------------------------------------------------------------------
See accompanying notes to the Interim Combined Financial Statements
METTLER-TOLEDO GROUP
INTERIM COMBINED STATEMENTS OF CASH FLOWS (CONTINUED)
Nine Months Ended September 30, 1995 and 1996
(In thousands)
September 30,
- -----------------------------------------------------------------------
1995 1996
(unaudited) (unaudited)
- -----------------------------------------------------------------------
Effect of exchange rate changes on cash
and cash equivalents $ 4,913 (1,879)
- -----------------------------------------------------------------------
Net increase (decrease) in cash and cash
equivalents 16,479 (8,324)
Cash and cash equivalents:
Beginning of period 63,802 41,402
- -----------------------------------------------------------------------
End of period $ 80,281 33,078
- -----------------------------------------------------------------------
See accompanying notes to the Interim Combined Financial Statements
METTLER-TOLEDO GROUP
NOTES TO THE INTERIM COMBINED FINANCIAL STATEMENTS
(In thousands unless otherwise stated)
BASIS OF PRESENTATION
The accompanying interim combined financial statements have been
prepared in accordance with United States generally accepted
accounting principles on a basis which reflects the interim
combined financial statements of the companies constituting the
Mettler-Toledo Group ("Mettler-Toledo" or the "Group") assuming
that the Group, which at September 30, 1996 was a business unit of
Ciba-Geigy AG ("Ciba-Geigy"), was organized for all periods
presented as a separate legal entity. Pursuant to the terms of
the Stock Purchase Agreement dated April 2, 1996 between MT
Investors Inc., AG fur Prazisionsinstrumente, and Ciba-Geigy, on
October 15, 1996 Ciba-Geigy sold to MT Acquisition Corp. all of
the capital stock and other equity instruments in the entities
representing the Group.
Footnote disclosure which would substantially duplicate the
disclosure contained in the December 31, 1995 Mettler-Toledo Group
combined financial statements has not been included herein. The
accompanying interim combined financial statements as of September
30, 1996 and for the nine month and three month periods ended
September 30, 1995 and 1996 should be read in conjunction with the
December 31, 1994 and 1995 combined financial statements and the
notes thereto filed by Mettler-Toledo Holding Inc. and Mettler-
Toledo, Inc. under the cover of a Form 8-K dated October 30, 1996.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business
The Mettler-Toledo Group is a manufacturer and marketer of
weighing instruments for use in laboratory, industrial and food
retailing applications. The Group also manufactures and sells
certain related laboratory measurement instruments. The Group's
manufacturing facilities are located in Switzerland, the United
States, Germany and China.
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 method. Two Companies in the U.S.
use the last in, first out (LIFO) cost method.
Inventories consisted of the following at December 31, 1995 and
September 30, 1996:
December 31, September 30,
1995 1996
------------------------------------------------------------------
Raw materials and parts $ 45,523 44,563
Work in progress 38,191 37,102
Finished goods 30,149 30,278
------------------------------------------------------------------
113,863 111,943
LIFO reserve (2,877) (2,451)
------------------------------------------------------------------
$ 110,986 109,492
------------------------------------------------------------------
METTLER-TOLEDO GROUP
NOTES TO THE INTERIM COMBINED FINANCIAL STATEMENTS (CONTINUED)
Reclassifications
Certain reclassifications have been made to the prior year amounts
to conform with the 1996 presentation.
Management representation
The accompanying unaudited interim combined financial statements
have been prepared by management, pursuant to the rules and
regulations of the Securities and Exchange Commission, and 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 nine month and three month periods
ending September 30, 1996 are not necessarily indicative of the
results to be expected for the full year ending December 31, 1996.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
- --------------------------
The following discussion and analysis of the Company's financial
condition and results of operations should be read in conjunction with
the Unaudited Interim Combined Financial Statements included herein.
The "Company" as used herein means Mettler-Toledo, Inc. and its
subsidiaries, after giving effect on a pro forma basis to the
acquisition of the Mettler-Toledo Group (the "Acquisition"), which was
consummated on October 15, 1996.
General
On October 15, 1996, MT Investors Inc. ("MT Investors") through its
indirect wholly owned subsidiary, MT Acquisition Corp., acquired the
Mettler-Toledo Group from Ciba-Geigy AG ("Ciba") and its wholly owned
subsidiary, AG fur Prazisionsinstrumente. The Acquisition of the
Mettler-Toledo Group was accomplished through the purchase of all of
the outstanding capital stock of Mettler-Toledo, Inc. and Mettler-
Toledo Holding AG, which, together with their respective subsidiaries,
constituted the entire Mettler-Toledo Group. See "Effect of
Acquisition on Results of Operations." MT Acquisition Corp. merged
into Mettler-Toledo, Inc. on October 15, 1996 and Mettler-Toledo, Inc.
thereby became a wholly owned subsidiary of Mettler-Toledo Holding Inc.
Mettler-Toledo Holding Inc. has no material assets, liabilities or
operations other than those that result from its ownership of 100% of the
outstanding common stock of Mettler-Toledo, Inc.
The Company's results of operations reflect the combined operations of
the Mettler-Toledo Group of companies owned by Ciba which have been
acquired by MT Investors. Financial information is presented in
accordance with United States generally accepted accounting principles
("U.S. GAAP").
Results of Operations
Net sales were $624.7 million and $200.9 million for the nine and three
month periods ended September 30, 1996, respectively, compared to
$615.4 million and $208.5 million for the corresponding periods in the
prior year, an increase of 2% for the nine month period and a decrease
of 4% for the three month period. Results were negatively impacted in
part by the strengthening of the U.S. dollar against other currencies.
Net sales during the nine month period in local currencies increased
3%, primarily due to increased sales of laboratory products, while
sales of industrial and food retailing products were consistent with
prior year levels. Net sales in local currencies for the three month
period decreased 2%, due to weak sales in Europe.
Net sales during the nine month period in Europe in local currencies
decreased 1%. The weighing instrument market in Europe in 1996 was
depressed, especially during the third quarter. The Company believes,
however, based upon market information available to it, that it gained
market share in a competitive market, especially in the industrial and
food retailing markets. Net sales during the nine month period in the
Americas in local currencies increased 2%. Net sales in the nine month
period in Asia and other markets in local currencies increased 11%,
primarily as a result of the growing market economy in Asia. Sales in
Japan, China and Singapore were above average.
Gross profit as a percentage of net sales increased to 40.1% for the
nine months ended September 30, 1996, compared to 39.6% for the
corresponding period in the prior year. Gross profit as a percentage
of net sales increased to 39.3% for the three months ended September
30, 1996, compared to 38.7% for the corresponding period in the prior
year. These results reflect the Company's ongoing productivity
improvements.
In total, research and development expenses, marketing and selling
expenses and general and administrative expenses as a percentage of net
sales decreased to 34.2% for the nine months ended September 30, 1996,
compared to 35.0% for the corresponding period in the prior year, as a
result of the Company's continuing efforts to control costs. In total,
research and development expenses, marketing and selling expenses and
general and administrative expenses increased to 33.8% for the three
month period ended September 30, 1996, compared to 33.4% for the
corresponding period in the prior year, as a result of lower sales.
Income from operations was $33.5 million for the nine months ended
September 30, 1996, compared to $26.6 million for the corresponding
period in the prior year. Income from operations was $8.8 million for
the three months ended September 30, 1996, compared to $10.4 million
for the corresponding period in the prior year. In the third quarter
of 1996, the Company recorded a charge of approximately $1.5 million to
reflect the costs associated with the closing of its Westerville, Ohio
facility.
Interest expense decreased to $12.6 million for the nine months ended
September 30, 1996, compared to $13.5 million for the corresponding
period in the prior year. Interest expense decreased to $4.2 million
for the three months ended September 30, 1996, compared to $4.8 million
for the corresponding period in the prior year. Interest expense
following the Acquisition will be materially different. See "Effect of
Acquisition on Results of Operations." Net financial income decreased
to $1.7 million for the nine months ended September 30, 1996, compared
to $5.1 million for the corresponding period in the prior year
principally as a result of foreign currency transactions. Net
financial income decreased to $0.8 million for the three months ended
September 30, 1996, compared to $2.7 million for the corresponding
period in the prior year as a result of lower interest income.
Net income increased to $13.1 million for the nine months ended
September 30, 1996, compared to $11.6 million for the corresponding
period in the prior year. Net income decreased to $3.1 million for the
three months ended September 30, 1996, compared to $5.2 million for the
corresponding period in the prior year. The 1996 figure reflects the
$1.5 million charge associated with the closing of the Westerville,
Ohio facility.
Liquidity and Capital Resources
The Company's cash and other liquidity has historically been used to
fund capital expenditures, working capital requirements, debt service
and dividends to Ciba. Following the Acquisition, annual interest
expense of approximately $38.0 million associated with borrowings of
approximately $315.0 million under the Credit Agreement (as defined
below) and $135.0 million under the Company's 9 3/4% Senior Subordinated
Notes due 2006 (the "Notes"), as well as scheduled principal payments
of term loans under the Credit Agreement, will significantly increase
liquidity requirements. See "Effect of Acquisition on Results of
Operations."
The Credit Agreement entered into in connection with the Acquisition
(the "Credit Agreement") provides for term loan borrowings in an
aggregate principal amount of approximately $147.0 million and SFr
125.0 million ($99.6 million at September 30, 1996) that will mature in
2002, 2003 and 2004 and a revolving credit facility with availability
of $140.0 million of which approximately $60.0 million was drawn down
in connection with the Acquisition. An additional $90.0 million is
available to the Company thereafter under the revolving credit facility
and local working capital facilities. The revolving credit facility
matures in 2002 and includes letter of credit and swingline
subfacilities. Mandatory prepayments are required to be made in
certain circumstances with the proceeds of assets sales or issuances of
capital stock or indebtedness and with certain excess cash flow. The
Credit Agreement imposes certain restrictions on the Company and its
subsidiaries, including restrictions on the ability to incur
indebtedness, make investments, grant liens, sell financial assets and
engage in certain other activities. The Company must also comply with
certain financial covenants.
The Notes will mature in 2006. The Notes may be required to be
purchased by the Company upon a Change of Control (as defined) and in
certain circumstances with the proceeds of asset sales. The Notes are
subordinated to the indebtedness under the Credit Agreement. The
indenture governing the Notes (the "Indenture") imposes certain
restrictions on the Company and its subsidiaries, including
restrictions on the ability to incur indebtedness, make investments,
grant liens and engage in certain other activities.
Under the Credit Agreement and the Indenture, Mettler-Toledo, Inc. is
prohibited from paying dividends to Mettler-Toledo Holding Inc.,
subject to certain limited exceptions.
The Company currently believes 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 several
years, but there can be no assurance that this will be the case.
Effect of Currency on Results of Operations
The Company's operations are conducted by subsidiaries in many
countries, and the results of operations and the financial position of
each of those subsidiaries is reported in the relevant foreign currency
and then translated into U.S. dollars at the applicable foreign
exchange rate for inclusion in the Company's consolidated financial
statements. Accordingly, the results of operations of such
subsidiaries as reported in U.S. dollars can vary significantly as a
result of changes in currency exchange rates.
Swiss franc-denominated costs represent a much greater percentage of
the Company's total expenses than Swiss franc-denominated sales
represent of total sales. In general, an appreciation of the Swiss
franc has a negative impact on the Company's results of operations and
a depreciation of the Swiss franc has a positive impact on the
Company's results of operations. The effect of these changes generally
offsets in part the effect on income from operations of changes in
exchange rates between the U.S. dollar and other currencies described
in the preceding paragraph. If the prior periods' currency exchange
rates had remained in effect, income from operations would have been
$0.6 million lower in the first nine months of 1996 and $0.8 million
lower in the three month period ended September 30, 1996.
Effect of Acquisition on Results of Operations
As a result of the Acquisition, the Company has, in accordance with
U.S. GAAP relating to purchase accounting rules, adjusted to fair value
the Company`s assets and liabilities which, on a pro forma basis, would
have resulted in increased amortization estimated to be $2.4 million
for the first nine months of 1996. In addition, as part of the
Acquisition, the Company has incurred additional debt, which would have
resulted in a net increase in interest expense, including amortization
of debt issuance costs and other fees, in the amount of $15.0 million
for the first nine months of 1996, on a pro forma basis. The Company
estimates that it will incur approximately $2.3 million annually in
additional general and administrative expenses as a result of being an
independent company, including an annual management fee of $1.0 million
to be paid to AEA Investors Inc. The Acquisition would have resulted
in a decrease in the Company's provision for income taxes of $4.6
million for the first nine months of 1996, on a pro forma basis. As a
result of the above adjustments, on a pro forma basis, the Company
would have reported net income of $1.1 million for the first nine
months of 1996, as compared to its historical net income of $13.1
million. See Part II, Item 5 for an unaudited pro forma statement of
operations.
Cautionary Statement
Statements in this discussion which are not historical facts may be
considered forward looking statements within the meaning of Section 21E
of the Securities Exchange Act of 1934, as amended. The words
"believe," "expect," "anticipate" and similar expressions identify
forward looking statements. Any forward looking statements involve
risks and uncertainties that could cause actual events or results to
differ, perhaps materially, from the events or results described in the
forward looking statements. Readers are cautioned not to place undue
reliance on these forward looking statements, which speak only as of
their dates. The Company undertakes no obligation to publicly update
or revise any forward looking statements, whether as a result of new
information, future events or otherwise. Risks associated with the
Company's forward looking statements include, but are not limited to,
risks associated with the Company's international operations, such as
currency fluctuations, the risk of new and different legal and
regulatory requirements, governmental approvals, tariffs and trade
barriers; risks associated with competition and technological
innovation by competitors; general economic conditions and conditions
in industries that use the Company's products, especially the
pharmaceutical and chemical industries, and risks associated with the
Company's growth strategy, including investments in emerging markets.
For a more detailed discussion of these factors, see the Company's
Prospectus dated October 4, 1996.
Part II. OTHER INFORMATION
Item 5. Other Information
- --------------------------
The following table presents the unaudited pro forma combined
statement of operations of the Mettler-Toledo Group for the nine
months ended September 30, 1995 and 1996, assuming the Acquisition
occurred on January 1, 1995.
Pro Forma
Nine Months Ended
September 30
(In thousands)
1995 1996
----------- -----------
Net sales.................... $ 615,444 624,733
Cost of sales................ 369,530 372,171
----------- -----------
Gross profit............. 245,914 252,562
----------- -----------
Research and development expenses... 39,466 37,030
Marketing and selling expenses...... 119,664 117,365
General and administrative
expenses.......................... 53,741 56,630
----------- -----------
Total research and
development, marketing and
selling, and general and
administrative expenses.......... 212,871 211,025
Amortization of goodwill............ 4,436 4,436
Other charges....................... - 1,505
----------- -----------
Income from operations........... 28,607 35,596
Interest expense.................... 28,469 28,469
Financial income (expense), net..... 1,316 (1,082)
----------- -----------
Income before taxes and
minority interest................ 1,454 6,045
Provision for taxes................. 2,419 4,336
Minority interest................... 846 609
----------- -----------
Net income (loss)................ $ (1,811) 1,100
=========== ===========
In addition, in accordance with U.S. GAAP, the Company has allocated a
portion of the purchase price to in-process research and development
projects that have economic value and to inventories. Approximately
$120.0 million has been allocated to in-process research and
development and has been charged to expense in the fourth quarter of
1996. Approximately $21.0 million has been allocated to the
revaluation of inventories and will be charged to cost of sales over
the period in which the inventories are sold, which is expected to be
in the fourth quarter of 1996. These charges are not reflected in the
above table due to their unusual, non-recurring nature.
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits
27. Financial Data Schedule
(b) Reports on Form 8-K
The Company filed a report on Form 8-K on October 30, 1996 to
report the consummation of the acquisition of the Mettler-Toledo
Group on October 15, 1996. The Form 8-K attached and
incorporated by reference to the Company's final prospectus
filed pursuant to Rule 424(b) and consistituting part of the
Registration Statement, as amended on Form S-1 (Commission File
No. 333-09621), the financial statements and pro forma financial
information required by Item 7(a) -- "Financial Statements" and
Item 7(b) -- "Pro Forma Financial Information."
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 Holding Inc.
Date: November 21, 1996 By: /s/ Robert F. Spoerry
--------------------------
Robert F. Spoerry
President and Chief
Executive Officer
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION OF EXHIBIT SEQUENTIAL PAGE NO.
- ----------- ---------------------- -------------------
Item 27. Financial Data Schedule
----
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> YEAR 9-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1996
<PERIOD-END> DEC-31-1995 SEP-30-1996
<CASH> 41,402 33,078
<SECURITIES> 0 0
<RECEIVABLES> 168,510 168,776
<ALLOWANCES> (9,292) (9,558)
<INVENTORY> 110,986 109,492
<CURRENT-ASSETS> 373,327 378,716
<PP&E> 460,970 434,318
<DEPRECIATION> (219,955) (209,577)
<TOTAL-ASSETS> 724,094 725,105
<CURRENT-LIABILITIES> 282,587 355,993
<BONDS> 0 0
0 0
0 0
<COMMON> 0 0
<OTHER-SE> 193,254 111,685
<TOTAL-LIABILITY-AND-EQUITY> 724,094 725,105
<SALES> 850,415 624,733
<TOTAL-REVENUES> 850,415 624,733
<CGS> 508,089 374,121
<TOTAL-COSTS> 508,089 374,121
<OTHER-EXPENSES> 304,933 217,118
<LOSS-PROVISION> 3,287 1,643
<INTEREST-EXPENSE> 18,219 12,579
<INCOME-PRETAX> 27,804 22,646
<INCOME-TAX> 8,782 8,901
<INCOME-CONTINUING> 18,254 13,136
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 18,254 13,136
<EPS-PRIMARY> 0.000 0.000
<EPS-DILUTED> 0.000 0.000
</TABLE>
