UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
FOR THE TRANSITION PERIOD FROM ______ TO ______
COMMISSION FILE NUMBER 333-09621-01
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METTLER-TOLEDO HOLDING INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3900409
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) No.)
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)
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Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: NONE
--------------------------------
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 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
--- ---
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K ([SECTION] 229.405 of
this chapter) is not contained herein, and will not be
contained, to the best of Registrant's knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to
this Form 10-K.[X]
There are outstanding 1,000 shares of Common Stock, $1.00
par value, which is the only class of common stock of the
Registrant. There is no market for the registrant's Common
Stock, all of which is held by MT Investors Inc.
DOCUMENTS INCORPORATED BY REFERENCE
NONE
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METTLER-TOLEDO HOLDING INC.
ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
PAGE
PART I
ITEM 1. BUSINESS....................................... 2
ITEM 2. PROPERTIES..................................... 11
ITEM 3. LEGAL PROCEEDINGS.............................. 12
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS............................... 12
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON
EQUITY AND RELATED STOCKHOLDER
MATTERS........................................ 12
ITEM 6. SELECTED FINANCIAL DATA........................ 13
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS..................................... 15
ITEM 8. FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA............................. 23
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE........................... 23
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF
THE REGISTRANT................................. 24
ITEM 11. EXECUTIVE COMPENSATION......................... 25
ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT............... 28
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS................................... 29
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT
SCHEDULES AND REPORTS ON FORM 8-K.............. 30
SIGNATURES............................................... 31
The "Company" or "Mettler-Toledo" as used herein
means the Registrant's wholly owned subsidiary Mettler-Toledo,
Inc. and its subsidiaries, after giving effect to the
acquisition of the Mettler-Toledo Group on October 15, 1996.
The Registrant 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.
Mettler-Toledo[REGISTERED], Mettler[REGISTERED],
Ingold[REGISTERED], Garvens[REGISTERED], Ohaus[REGISTERED],
and DigiTol[REGISTERED] are registered trademarks of the
Company and Brickstone[TRADEMARK], Spider[TRADEMARK], Mentor
SC[TRADEMARK], MultiRange[TRADEMARK] and TRUCKMATE[TRADEMARK]
are trademarks of the Company.
PART I
ITEM 1. BUSINESS
GENERAL
Mettler-Toledo is the world's largest manufacturer
and marketer of weighing instruments for use in laboratory,
industrial and food retailing applications. The Company
focuses on the high value-added segments of the weighing
instruments market by providing solutions for specific
applications. The Company also manufactures and sells certain
related laboratory measurement instruments, with one of the
top three market positions worldwide in titrators, thermal
analysis systems, pH meters, and lab reactors. Mettler-Toledo
services a worldwide customer base, with 1996 net sales of
$849 million, which were derived 50% in Europe, 39% in North
and South America and 11% in Asia and other markets. For
additional financial information by geographic segment, see
Note 20 to the Consolidated Financial Statements included
elsewhere in this Form 10-K (the "Consolidated Financial
Statements"). The Company has a global manufacturing presence,
with manufacturing facilities in Europe, the United States and
Asia.
Mettler-Toledo is the only company to offer weighing
products for laboratory, industrial and food retailing
applications throughout the world. The Company believes that
in 1996, the global market for weighing instruments for
laboratory, industrial and food retailing applications was
approximately $4.5 billion and that the Company held a market
share more than two times greater than its nearest competitor.
The Company believes that, in 1996, it had an approximate 40%
market share of the global market for laboratory balances,
including the largest market share in each of Europe, the
United States and Asia (excluding Japan), and one of the three
leading positions in Japan. In the industrial and food
retailing market, the Company believes it has the largest
market share in Europe and in the United States. In Asia, the
Company has a substantial, rapidly growing industrial and food
retailing business supported by its established manufacturing
presence in China. The Company attributes its worldwide
market leadership position to its brand recognition, its
leadership in technological innovation, its comprehensive
product range, its global sales and service organization, its
large installed base of weighing instruments and the diversity
of its revenue base.
HISTORY
The Company traces its roots to the invention of the
single-pan analytical balance by Dr. Erhard Mettler and the
formation of Mettler Instrumente AG ("Mettler") in 1945.
During the 1970s and 1980s, Mettler expanded from laboratory
balances into industrial and food retailing products, and it
introduced the first fully electronic precision balance in
1973. The Toledo Scale Company ("Toledo Scale") was founded
in 1901 and developed a leading market position in the
industrial weighing market in the United States. During the
1970s, Toledo Scale expanded into the food retailing market.
In 1981, Toledo Scale set up a joint venture in Changzhou,
China, which gave it early access to the large potential
Chinese weighing market. Following the 1989 acquisition of
Toledo Scale by Mettler, the name of the Company was changed
to Mettler-Toledo to reflect the combined strengths of the two
companies and to capitalize on their historic reputations for
quality and innovation. During the past 15 years, the Company
has grown through other acquisitions that complemented
existing geographic markets and product lines. In 1986,
Mettler acquired the Ingold Group of companies, manufacturers
of electrodes, and Garvens Kontrollwaagen AG, a maker of
dynamic checkweighers. Toledo Scale acquired Hi-Speed
Checkweigher Co., Inc. in 1981. In 1990, the Company acquired
Ohaus Corporation, a manufacturer of laboratory balances.
Mettler-Toledo Holding Inc. was formed in connection
with the October 15, 1996 acquisition (the "Acquisition") of
the Mettler-Toledo Group from Ciba-Geigy AG ("Ciba"). See
Note 1 to the Consolidated Financial Statements for further
information with respect to the Acquisition. The Company is a
wholly owned subsidiary of Mettler-Toledo Holding Inc.
PRODUCTS
Laboratory
The Company manufactures and markets a complete
range of laboratory balances, as well as other selected
laboratory measurement instruments, such as titrators, thermal
analysis systems, pH meters and lab reactors, for laboratory
applications in research and development, quality assurance,
production and education. Laboratory products accounted for
approximately 40% of the Company's net sales in 1996
(including revenues from related after-sale service). The
Company believes that it has an approximate 40% share of the
global market for laboratory balances and is among the top
three worldwide producers of titrators, thermal analysis
systems, pH meters and lab reactors. The Company believes it
has the leading market share for laboratory balances in
Europe, the United States and Asia (excluding Japan) and one
of the three leading positions in Japan.
Balances. The balance is the most common piece of
equipment in the laboratory. The Company believes that it
sells the highest performance laboratory balances available on
the market, with weighing ranges up to 32 kilograms and down
to one ten-millionth of a gram. The Mettler-Toledo name is
identified worldwide with accuracy, reliability and
innovation. The Company's brand name is so well recognized
that laboratory balances are often referred to as "Mettlers."
This reputation, in management's judgment, constitutes one of
the Company's principal competitive strengths.
In order to cover a wide range of customer needs and
price points, Mettler-Toledo markets precision balances,
analytical and semimicrobalances, microbalances and
ultramicrobalances in three principal product tiers offering
different levels of functionality. High-end balances provide
maximum automation of calibration, application support and
additional functions. Mid-level balances provide a more
limited but still extensive set of automated features and
software applications, while basic level balances provide
simple operations and a limited feature set. The Company also
manufactures mass comparators, which are used by weights and
measures regulators as well as laboratories to ensure the
accuracy of reference weights. Due to the wide range of
functions and features offered by the Company's products,
prices vary significantly. A typical mid-range precision
balance is priced at approximately $2,500 and a typical
microbalance is priced at approximately $14,000.
The Company regularly introduces new features and
updated models in its lines of balances. For example, the
Company's DeltaRange models permit weighing of light and heavy
samples on the same balance without the need for difficult
adjustments, a function particularly useful in dispensing and
formula weighing. High-end balances are equipped with fully
automatic calibration technology. These balances are
carefully calibrated many times in controlled environments,
with the results of the calibrations incorporated into built-
in software, so that adjustments to ambient temperature and
humidity can automatically be made at any time. The Company
also offers universal interfaces that offer simultaneous
connection of up to five peripheral devices. The customer can
then interface one balance with, for example, a computer for
further processing of weighing data, a printer for
automatically printing results and a bar-code reader for
sample identification.
In addition to Mettler-Toledo brand products, the
Company also manufactures and sells balances under the brand
name "Ohaus." Ohaus brand products include triple-beam
balances, strain gauge balances and electronic balances for
the educational market and other markets in which customers
are interested in lower cost, a more limited set of features
and less comprehensive service.
Titrators. Titrators measure the chemical
composition of samples. The Company's high-end titrators are
multi-tasking models, which can perform two determinations
simultaneously. They permit high sample throughputs and have
extensive expansion capability and flexibility in
calculations, functions and parameters. Lower-range models
permit common determinations to be stored in a database for
frequent use. Titrators are used heavily in the food and
beverage industry. A typical titrator is priced at
approximately $12,000.
Thermal Analysis Systems. Thermal analysis systems
measure different properties, such as weight, dimension and
energy flow, at varying temperatures. The Company's thermal
analysis products include full computer integration and a
significant amount of proprietary software. Thermal analysis
systems are used primarily in the plastics and polymer
industries. A typical thermal analysis system is priced at
approximately $50,000.
pH Meters. A pH meter measures acidity in a
laboratory sample and is the second most widely used
measurement instrument in the laboratory, after the balance.
The Company manufactures desktop models and portable models.
Desktop models are microprocessor-based instruments, offering
a wide range of features and self-diagnostic functions.
Portable models are waterproof, ultrasonically welded and
ergonomically designed, and permit later downloading of data
to a computer or printer using an interface kit and custom
software. pH meters are used in a wide range of industries.
A typical pH meter is priced at approximately $1,200.
Lab Reactors and Reaction Calorimeters. Lab
reactors and reaction calorimeters are used to simulate an
entire chemical manufacturing process in the laboratory before
proceeding to production, in order to ensure the safety and
feasibility of the process. The Company's products are fully
computer-integrated, with a significant software component,
and offer wide flexibility in the structuring of experimental
processes. Lab reactors and reaction calorimeters are
typically used in the chemical and pharmaceutical industries.
A typical lab reactor is priced at approximately $140,000.
Electrodes. The Company manufactures electrodes for
use in a variety of laboratory instruments and in-line process
applications. Laboratory electrodes are consumable goods used
in pH meters and titrators, which may be replaced many times
during the life of the instrument. In-line process electrodes
are used to monitor production processes, for example, in the
beverage industry. A typical in-line process electrode is
priced at approximately $1,600.
Other Instruments. The Company sells density and
refractometry instruments, which measure chemical
concentrations in solutions. These instruments are sourced
through a marketing joint venture with a third-party
manufacturer, but are sold under the Mettler-Toledo brand
name. In addition, the Company manufactures and sells
moisture analyzers, which precisely determine the moisture
content of a sample by utilizing an infrared dryer to
evaporate moisture.
Industrial and Food Retailing
Weighing is one of the most broadly used measurement
techniques in industry and food retailing. The Company's
industrial and food retailing weighing and related products
include bench and floor scales for standard industrial
applications, truck and railcar scales for heavy industrial
applications, checkweighers (which determine the weight of
goods in motion), scales for use in food retailing
establishments and specialized software systems for industrial
processes. Increasingly, many of the Company's industrial and
food retailing products can integrate weighing data into
process controls and information systems. The Company's
industrial and food retailing products are also sold to
original equipment manufacturers ("OEMs"), which incorporate
the Company's products into larger process solutions and
comprehensive food retailing checkout systems. At the same
time, the Company's products themselves include significant
software content and additional functions including
networking, printing and labeling capabilities, and the
incorporation of other measuring technologies such as
dimensioning. The Company works with customer segments to
create specific solutions to their weighing needs. The
Company has also recently worked closely with the leading
manufacturer of postal meters to develop a new generation of
postal metering systems.
Industrial and food retailing products accounted for
approximately 60% of the Company's net sales in 1996
(including revenues from related after-sale service). The
Company believes that it has the leading position in
industrial and food retailing sales in Europe and in the
United States. In Asia, the Company has a substantial,
rapidly growing industrial and food retailing business
supported by established manufacturing capabilities in China.
The Company believes that it is the only company with a true
global presence across industrial and food retailing weighing
applications.
Standard Industrial Products. The Company offers a
complete line of standard industrial scales, such as bench
scales and floor scales, for weighing loads from a few grams
to loads of several thousand kilograms in applications ranging
from measuring materials in chemical production to weighing
mail and packages. Product lines include the "Spider" range
of scales, often used in receiving and shipping departments in
counting applications; "TrimWeigh" scales, which determine
whether an item falls within a specified weight range, and are
used primarily in the food industry; "Mentor SC" scales, for
counting parts; and precision scales for formulating and
mixing ingredients. The Company's "MultiRange" products
include standardized software which uses the weight data
obtained to calculate other parameters, such as price or
number of pieces. The modular design of these products
facilitates the integration of the Company's weighing
equipment into a computer system performing other functions,
like inventory control or batch management. Prices vary
significantly with the size and functions of the scale,
generally ranging from $1,000 to $20,000.
Heavy Industrial Products. The Company's primary
heavy industrial products are scales for weighing trucks or
railcars (i.e., weighing bulk goods as they enter a factory or
at a toll station). The Company's truck scales, such as the
"DIGITOL TRUCKMATE," generally have digital load cells, which
offer significant advantages in serviceability over analog
load cells. Heavy industrial scales are capable of measuring
weights up to 500 tons and permit accurate weighing under
extreme environmental conditions. The Company also offers
advanced computer software that can be used with its heavy
industrial scales to permit a broad range of applications.
Truck sales prices generally range from $25,000 to $50,000.
Dynamic Checkweighing. The Company offers solutions
to checkweighing requirements in the food, pharmaceutical,
chemical and cosmetic industries, where accurate filling of
packages is required, and in the transportation and package
delivery industries, where tariffs are levied based on weight.
Customizable software applications utilize the information
generated by checkweighing hardware to find production flaws,
packaging and labeling errors and nonuniform products, as well
as to sort rejects and record the results. Mettler-Toledo
checkweighing equipment can accurately determine weight in
dynamic applications at speeds of up to several hundred units
per minute. Checkweighers generally range in price from
$8,000 to $40,000.
Food Retailing Products. Supermarkets, hypermarkets
and other food retail establishments make use of multiple
weighing applications for the handling of perishable goods
from backroom to checkout counter. For example, perishable
goods are weighed on arrival to determine payment to suppliers
and some of these goods are repackaged, priced and labeled for
sale to customers. Other goods are kept loose and selected by
customers and either weighed at the produce or deli counter or
at the check-out counter.
The Company offers stand-alone scales for basic
counter weighing and pricing, price finding, and printing. In
addition, the Company offers network scales and software,
which can integrate backroom, counter, self-service and
checkout functions, and can incorporate weighing data into a
supermarket's overall perishable goods management system.
Backroom products include dynamic weighing products, labeling
and wrapping machines, perishable goods management and data
processing systems. In some countries in Europe, the Company
also sells slicing and mincing equipment. Prices for food
retailing scales generally range from $800 to $5,000, but are
often sold as part of comprehensive weighing solutions.
Systems. The Company's systems business consists of
software applications for drum filling in the food and
chemical industries and batching systems in the glass
industry. The software systems control or modify the
manufacturing process.
CUSTOMERS AND DISTRIBUTION
The Company's business is geographically
diversified, with 1996 net sales derived 50% in Europe, 39% in
North and South America and 11% in Asia and other markets. The
Company's customer base is also diversified by industry and by
individual customer. The Company's largest single customer
accounted for no more than 2% of 1996 net sales.
Laboratory
Principal customers for laboratory products include
chemical, pharmaceutical and cosmetics manufacturers; food and
beverage makers; the metals, electronics, plastics,
transportation, packaging, logistics and rubber industries;
the jewelry and precious metals trade; educational
institutions; and government standards labs. Balances and pH
meters are the most widely used laboratory measurement
instruments and are found in virtually every laboratory across
a wide range of industries. Other products have more
specialized uses.
The Company's laboratory products are sold in more
than 100 countries through a worldwide distribution network.
The Company's extensive direct distribution network and its
dealer support activities enable the Company to maintain a
significant degree of control over the distribution of its
products. In markets where there are strong laboratory
distributors, such as the United States, the Company uses them
as the primary marketing channel for lower- and mid-price
point products. This strategy allows the Company to leverage
the strength of both the Mettler-Toledo brand and the
laboratory distributors' market position into sales of other
laboratory measurement instruments. The Company provides its
distributors with a significant amount of technical and sales
support. High-end products are handled by the Company's own
sales force. There has been recent consolidation among
distributors in the United States market. While this
consolidation could adversely affect the Company's U.S.
distribution, the Company believes its leadership position in
the market gives it a competitive advantage when dealing with
its U.S. distributors. Asian distribution is primarily
through distributors, while European distribution is primarily
through direct sales. European and Asian distributors are
generally fragmented on a country-by-country basis. The
Company negotiated a transfer of the laboratory business in
Japan from its former agent to a subsidiary of the Company
effective January 1, 1997. For this transfer a total sum of
approximately SFr. 8.0 million (approximately US$6.4 million)
was partially paid in 1996 with the remaining to be paid in
1997. In addition the Company began to distribute laboratory
products directly in certain other Asian countries.
Ohaus brand products are generally positioned in
alternative distribution channels to those of Mettler-Toledo
brand products. In this way, the Company is able to fill a
greater number of distribution channels and increase
penetration of its existing markets. Since the acquisition of
Ohaus in 1990, the Company has expanded the Ohaus brand beyond
its historical U.S. focus. Ohaus brand products are sold
exclusively through distributors.
Industrial and Food Retailing
Customers for Mettler-Toledo industrial products
include chemical companies (e.g., formulating, filling and
bagging applications), food companies (e.g., packaging and
filling applications), electronics and metal processing
companies (e.g., piece counting and logistical applications),
transportation companies (e.g., sorting, dimensioning and
vehicle weighing applications) and auto body paint shops,
which mix paint colors based on weight. The Company's
products for these industries share similar weighing
technology, and often minor modifications of existing products
can make them useful for applications in a variety of
industrial processes. The Company also sells to OEMs which
integrate weighing modules into larger process control
applications, or comprehensive packaging lines. OEM
applications often include software content and technical
support, as the Company's weighing module must communicate
with a wide variety of other process modules and data
management functions. The Company's products are also
purchased by engineering firms, systems integrators and
vertical application software companies.
Customers for food retailing products include
supermarkets, hypermarkets and smaller food retailing
establishments. The North American and European markets
include many large supermarket chains. In most of the
Company's markets, food retailing continues to shift to
supermarkets and hypermarkets from "mom and pop" grocery
stores. While supermarkets and hypermarkets generally buy
less equipment per customer, they tend to buy more advanced
products that require more electronic and software content.
In emerging markets, however, the highest growth is in basic
scales. As with industrial products, the Company also sells
food retailing products to OEMs for inclusion in more
comprehensive checkout systems. For example, the Company's
checkout scales are incorporated into scanner-scales, which
can both weigh perishable goods and also read bar codes on
other items. Scanner-scales are in turn integrated with cash
registers to form a comprehensive checkout system.
The Company's industrial products are sold in more
than 100 countries and its food retailing products in 20
countries. In the industrial and food retailing market, the
Company distributes directly to customers (including OEMs) and
through distributors. In the United States, distributor sales
slightly exceed direct sales. Distributors are highly
fragmented in the U.S., with many small "scale houses" selling
the Company's products. In Europe, direct sales predominate,
with distributors used in certain cases. As in its laboratory
distribution, the Company provides significant support to its
distributors.
SALES AND SERVICE
Market Organizations
The Company has over 30 geographically-focused
market organizations ("MOs") around the world that are
responsible for all aspects of sales and service. The MOs are
local marketing and service organizations designed to maintain
close relationships with the Company's customer base. Each MO
has the flexibility to adapt its marketing and service efforts
to account for different cultural and economic conditions.
MOs also work closely with the Company's producing
organizations (described below) by providing feedback on
manufacturing and product development initiatives and relaying
innovative product and application ideas.
The Company has the only global sales and service
organization among weighing instruments manufacturers. At
December 31, 1996, this organization consisted of
approximately 2,800 employees in sales, marketing and customer
service (including related administration) and after-sales
technical service. This field organization has the capability
to provide service and support to the Company's customers and
distributors in virtually all major markets across the globe.
Sales managers and representatives interact across product
lines and markets in order to serve customers that have a wide
range of weighing needs, such as pharmaceutical companies that
purchase both laboratory and industrial products. The Company
classifies customers according to their potential for sales
and the appropriate distribution channel is selected to
service the customer as efficiently as possible. Larger
accounts tend to have dedicated sales representatives. Other
representatives are specialized by product line. Sales
representatives call directly on end-users either alone or, in
regions where sales are made through distributors, jointly
with distributors. The Company utilizes a variety of
advertising media, including trade journals, catalogs,
exhibitions and trade shows. The Company also sponsors
seminars, product demonstrations and customer training
programs. An extensive database on markets helps the Company
to gauge growth opportunities, target its message to
appropriate customer groups and monitor competitive
developments.
After-Sales Service
The Company believes that it has the largest
installed base of weighing instruments in the world. To
support its installed base, the Company employs service
technicians who provide contract and repair services in all
countries in which the Company's products are sold. Service
(representing service contracts, repairs and replacement
parts) accounted for approximately 17% of the Company's total
net sales in 1996. (Service revenue is included in the
laboratory and industrial and food retailing sales percentages
given above.) Management believes that service is a key part
of its product offering and helps significantly in repeat
sales. The close relationships and frequent contact with its
large customer base provide the Company with sales
opportunities and innovative product and application ideas.
Moreover, a global service network is an important factor in
the ability to expand in emerging markets. Widespread
adoption of quality laboratory and manufacturing standards and
the privatization of weights and measures certification are
both favorable trends for the Company's service business, as
they tend to increase demand for on-site calibration services.
The Company's service contracts provide for repair
services within various guaranteed response times, depending
on the level of service selected. Many contracts also include
periodic calibration and testing. Contracts are generally one
year in length, but may be longer. The Company's own
employees directly provide all service on Mettler-Toledo
products. If the service contract also includes products of
other manufacturers, the Company will generally perform
calibration, testing and basic repairs directly, and contract
out more significant repair work. As application software
becomes more complex, the Company's service efforts
increasingly include installation and customer training
programs as well as product service.
Warranties on Mettler-Toledo products are generally
one year. Based on past experience, the Company believes its
reserves for warranty claims are adequate.
RESEARCH AND PRODUCT DEVELOPMENT; MANUFACTURING
Producing Organizations
The Company is organized into a number of producing
organizations ("POs"), which are specialized centers
responsible for product development, research and
manufacturing. At December 31, 1996, POs included
approximately 3,900 employees worldwide, and consisted of
product development teams whose members are from marketing,
development, research, manufacturing, engineering and
purchasing. POs also often seek customer input to ensure that
the products developed are tailored to market needs. The
Company has organized POs in order to reduce product
development time, improve its customer focus, reduce costs and
maintain technological leadership. The POs work together to
share ideas and best practices. Some employees are in both
MOs and POs. The Company is currently implementing a number
of projects that it believes will result in increased
productivity and lower costs. For example, the Company is
restructuring the order and product delivery process in Europe
to enable the Company to deliver many of its products to its
customers directly from the manufacturing facility within
several days, which minimizes the need to store products in
decentralized warehouses. In addition, the Company is
centralizing its European spare parts inventory management
system.
Research and Product Development
The Company closely integrates research and
development with marketing, manufacturing and product
engineering. The Company has nearly 600 professionals in
research and development and product engineering. The
Company's principal product development activities involve
applications improvements to provide enhanced customer
solutions, systems integration and product cost reduction.
However, the Company also actively conducts research in basic
weighing technologies. As part of its research and
development activities, the Company has frequent contact with
university experts, industry professionals and the
governmental agencies responsible for weights and measures.
In addition, the Company's in-house development is
complemented by technology and product development alliances
with customers and OEMs.
A recent example of innovation at the Company is the
"Brickstone" technology, which eliminates many of the complex
mechanical linkages in a weighing sensor and reduces the
number of parts in the sensor from approximately 100 to
approximately 50. The Brickstone sensor permits more accurate
weighing, lower manufacturing costs and cheaper and faster
design changes. Brickstone technology has been incorporated
into certain of the Company's products, and the Company
expects to expand its use to additional product lines in the
future.
The Company has been spending an increasing
proportion of its research and development budget on software
development. Software development for weighing applications
includes application-specific software, as well as software
utilized in sensor mechanisms, displays, and other common
components, which can be leveraged across the Company's broad
product lines.
The Company spent $50.0 million on research and
development in 1996 (excluding research and development
purchased in connection with the Acquisition), $54.5 million
in 1995 and $48.0 million in 1994, which the Company believes
was more than any of its competitors. Including costs
associated with customer-specific engineering projects, which
are included in cost of sales for financial reporting
purposes, the Company spent approximately 6.6% of net sales on
research and development in 1996.
Manufacturing
The Company's manufacturing strategy is to produce
directly those components that require its specific technical
competence, or for which dependable, high-quality suppliers
cannot be found. The Company contracts out the manufacture of
its other component requirements. Consequently, much of the
Company's manufacturing capability consists of assembly of
components sourced from others. The Company utilizes a wide
range of suppliers and it believes its supply arrangements to
be adequate. From time to time the Company relies on one
supplier for all its requirements of a particular component,
but in such cases the Company believes adequate alternative
sources would be available if necessary. Supply arrangements
for electronics are generally made globally. For mechanical
components, the Company generally uses local sources to
optimize materials flow.
The Company's manufacturing operations emphasize
product quality. Most of its products require very strict
tolerances and exact specifications. The Company utilizes an
extensive quality control system that is integrated into each
step of the manufacturing process. This integration permits
field service technicians to trace important information about
the manufacture of a particular unit, which facilitates repair
efforts and permits fine-tuning of the manufacturing process.
Many of the Company's measuring instruments are subjected to
an extensive calibration process that allows the software in
the unit to automatically adjust for the impact of temperature
and humidity.
The Company has six manufacturing plants in the U.S.
(after giving effect to the closure of the Westerville, Ohio
facility in 1996), four in Switzerland, two in Germany and two
in China, of which one is a 60% owned joint venture and the
other, the Shanghai facility, was completed and began to
produce laboratory products by the end of 1996. Laboratory
products are produced mainly in Switzerland and to a lesser
extent in the United States, while industrial and food
retailing products are produced in all four countries. The
Company believes its manufacturing capacity is sufficient to
meet its present and currently anticipated needs.
Backlog
Manufacturing turnaround time is generally
sufficiently short so as to permit the Company to manufacture
to fill orders for most of its products, which helps to limit
inventory costs. Backlog is therefore generally a function of
requested customer delivery dates and is typically no longer
than one to two months.
EMPLOYEES
As of December 31, 1996, the Company had
approximately 6,400 employees throughout the world, including
more than 3,200 in Europe and more than 2,400 in North and
South America. Management believes that its relations with
employees are good. The Company has not suffered any material
employee work stoppage or strike in its worldwide operations
during the last five years. Labor unions do not represent a
meaningful number of the Company's employees
In certain of its facilities, the Company has
instituted a flexible workforce environment, in which hours
vary depending on the quantity of workload. The Company
believes that this flexible working environment enhances
employees' involvement, thus increasing productivity, and
improves efficient payroll management by permitting the
Company to adjust staffing to match workload to a greater
degree without changing the size of the overall workforce.
INTELLECTUAL PROPERTY
The Company holds more than 1,150 patents and
trademarks, primarily in the United States, Switzerland,
Germany and Japan and, to a lesser extent, in China. The
Company's products generally incorporate a wide variety of
technological innovations, many of which are protected by
patents and many of which are not. Moreover, products are
generally not protected as a whole by individual patents.
Accordingly, no one patent or group of related patents is
material to the Company's business. The Company also has
numerous trademarks and considers the Mettler-Toledo name and
logo to be material to its business. The Company regularly
protects against infringement of its intellectual property.
REGULATION
The Company's products are subject to regulatory
standards and approvals by weights and measures regulatory
authorities in the countries in which it sells its products.
Weights and measures regulation has been harmonized across the
European Union. The Company's food processing and food
retailing products are subject to regulation and approvals by
relevant governmental agencies, such as the United States Food
and Drug Administration. Products used in hazardous
environments may also be subject to special requirements. All
of the Company's electrical components are subject to
electrical safety standards. The Company believes that it is
in compliance in all material respects with applicable
regulations.
ENVIRONMENTAL MATTERS
The Company is subject to various environmental laws
and regulations in the jurisdictions in which it operates,
including those relating to air emissions, wastewater
discharges, the handling and disposal of solid and hazardous
wastes and the remediation of contamination associated with
the use and disposal of hazardous substances. The Company
wholly or partly owns, leases or holds a direct or indirect
equity interest in a number of properties and manufacturing
facilities around the world, including the United States,
Europe, Canada, Mexico, Brazil, Australia and China. The
Company, like many of its competitors, has incurred, and will
continue to incur, capital and operating expenditures and
other costs in complying with such laws and regulations in
both the United States and abroad.
The Company is currently involved in, or has
potential liability with respect to, the remediation of past
contamination in certain of its presently and formerly owned
and leased facilities in both the United States and abroad.
In addition, certain of the Company's present and former
facilities have or had been in operation for many decades and,
over such time, some of these facilities may have used
substances or generated and disposed of wastes which are or
may be considered hazardous. It is possible that such sites,
as well as disposal sites owned by third parties to which the
Company has sent wastes, may in the future be identified and
become the subject of remediation. Accordingly, although the
Company believes that it is in substantial compliance with
applicable environmental requirements and the Company to date
has not incurred material expenditures in connection with
environmental matters, it is possible that the Company could
become subject to additional environmental liabilities in the
future that could result in a material adverse effect on the
Company's financial condition or results of operations.
The Company is involved in litigation concerning
remediation of hazardous substances at its operating facility
in Landing, New Jersey. On or about July 1988, an affiliate
of Ciba ("AGP") purchased 100% of the outstanding stock of
Metramatic Corporation ("Metramatic"), a manufacturer of
checkweighing equipment located in Landing, from GEI
International Corporation ("GEI"). GEI agreed to indemnify
and hold harmless AGP for certain pre-closing environmental
conditions, including those resulting in cleanup
responsibilities required by the New Jersey Department of
Environmental Protection ("NJDEP") pursuant to the New Jersey
Environmental Cleanup Responsibility Act ("ECRA"). ECRA is
now the Industrial Site Recovery Act. Pursuant to a 1988
NJDEP administrative consent order naming GEI and Metramatic
as respondents, GEI has spent approximately $2 million in the
performance of certain investigatory and remedial work
addressing groundwater contamination at the site. However, a
final remedy has not yet been selected by NJDEP, and,
therefore, future remedial costs are currently unknown. In
1992, GEI filed a suit against various parties including Hi-
Speed Checkweigher Co., Inc., a wholly-owned subsidiary of the
Company that currently owns the facility, to recover certain
costs incurred by GEI in connection with the site. Based on
currently available information and the Company's rights of
indemnification from GEI, the Company believes that its
ultimate allocation of costs associated with the past and
future investigation and remediation of this site will not
have a material adverse effect on the Company's financial
condition or results of operations.
In addition, the Company is aware that Toledo Scale,
the former owner of Toledo Scale or the Company has been named
a potentially responsible party under CERCLA or analogous
state statutes at the following third-party owned sites with
respect to the alleged disposal at the sites by Toledo Scale
during the period it was owned by such former owner: Granville
Solvents Site, Granville, Ohio; Aqua-Tech Environmental, Inc.
Site, Greer, South Carolina; and Seaboard Chemical Company
Site, Jamestown, North Carolina. The former owner has also
been named in a lawsuit seeking contribution pursuant to
CERCLA with respect to the Caldwell Trucking Site, New Jersey
based on the alleged disposal at the site by Toledo Scale
during the former owner's period of ownership. Pursuant to
the terms of the stock purchase agreement between Mettler and
the former owner of Toledo Scale, the former owner is
obligated to indemnify Mettler for various environmental
liabilities. To date, with respect to each of the foregoing
sites, the former owner has undertaken the defense and
indemnification of Toledo Scale. Based on currently available
information and the Company's contractual rights of
indemnification, the Company believes that the costs
associated with the investigation and remediation of these
sites will not have a material adverse effect on the Company's
financial condition or results of operations.
COMPETITION
The markets in which the Company operates are highly
competitive. Because of the fragmentation of weighing
instruments markets, particularly the industrial and food
retailing market, both geographically and by application, the
Company competes with numerous regional or specialized
competitors, many of which are well-established in their
markets. Some competitors are less leveraged than the Company
and/or are divisions of larger companies with potentially
greater financial and other resources than the Company.
Although the Company believes that it has certain competitive
advantages over its competitors, realizing and maintaining
these advantages will require continued investment by the
Company in research and development, sales and marketing and
customer service and support. The Company has, from time to
time, experienced price pressures from competitors in certain
product lines and geographic markets.
In the United States, the Company believes that the
principal competitive factors on which purchasing decisions
are made are accuracy and durability, while in Europe accuracy
and service are the most important factors. In emerging
markets, where there is greater demand for less sophisticated
products, price is a more important factor than in developed
markets. Competition in the United States laboratory market
is also influenced by the presence of large distributors
through which the Company and its competitors sell many of
their products.
ITEM 2. PROPERTIES
The following table lists the Company's principal
operating facilities, indicating the location, primary use and
whether the facility is owned or leased.
LOCATION PRINCIPAL USE (1) OWNED/LEASED
--------------------- ----------------------- -------------
Europe:
Greifensee/Nanikon,
Switzerland Production, Corporate Owned
Headquarters
Uznach, Switzerland Production Owned
Urdorf, Switzerland Production Owned
Schwerzenbach,
Switzerland Production Leased
Albstadt, Germany Production Owned
Giesen, Germany Production Owned
Giessen, Germany Sales and Service Owned
Steinbach, Germany Sales and Service Owned
Viroflay, France Sales and Service Owned
Beersel, Belgium Sales and Service Owned
Tiel, Netherlands Sales and Service Owned
Leicester, England Sales and Service Leased
Americas:
Worthington, Ohio Production Owned
Spartanburg,
South Carolina Production Owned
Franksville, Wisconsin Production Owned
Ithaca, New York Production Owned
Wilmington,
Massachusetts Production Leased
Florham Park, New Jersey Production Leased
Hightstown, New Jersey Sales and Service Owned
Burlington, Canada Sales and Service Owned
Mexico City, Mexico Sales and Service Leased
Other:
Shanghai, China Production Building
Owned;
Land Leased
Changzhou, China (2) Production Building
Owned; Land
Leased
Melbourne, Australia Sales and Service Leased
[FN]
- --------------------
(1) The Company also conducts research and development
activities at certain of the above facilities in
Switzerland, Germany, the United States and, to a lesser
extent, China.
(2) Held by a 60%-owned joint venture.
The Company believes its facilities are adequate for
its current and reasonably anticipated future needs.
ITEM 3. LEGAL PROCEEDINGS
The Company is subject to routine litigation
incidental to its business. The Company is currently not
involved in any legal proceeding that it believes could have a
material adverse effect upon its financial condition or
results of operations. See "Environmental Matters" under Part
I, Item 1 for information concerning legal proceedings
relating to certain environmental claims.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the
Registrant's security holders during the quarter ended
December 31, 1996.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
There is no established public trading market for
the Common Stock of the Registrant (the "Common Stock"). All
of the Registrant's Common Stock is held by MT Investors Inc.,
a Delaware corporation ("MT Investors").
The Registrant has never paid any dividend on its
Common Stock. Mettler-Toledo, Inc. is prohibited from paying
dividends to the Registrant, subject to certain limited
exceptions. See Part II, Item 7 "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
ITEM 6. SELECTED FINANCIAL DATA
The selected historical financial information set
forth below at December 31, 1994, 1995, 1996, for the years
ended December 31, 1993, 1994, 1995, and for the period from
January 1, 1996 to October 14, 1996, and for the period from
October 15, 1996 to December 31, 1996 is derived from the
Mettler-Toledo financial statements, which were audited by
KPMG Fides Peat, independent auditors, whose report appears
therewith. The financial information for all periods prior to
October 15, 1996, the date of the Acquisition, is combined
financial information of the Mettler-Toledo Group, the
Predecessor Business. The combined historical data of the
Mettler-Toledo Group and the consolidated historical data of
the Registrant are not comparable in many respects due to the
Acquisition. See Part II, Item 7, "Management's Discussion
and Analysis of Financial Condition and Results of Operation"
and the Consolidated Financial Statements and accompanying
notes. The consolidated financial statements were prepared in
accordance with U.S. generally accepted accounting principles.
<TABLE>
<CAPTION>
Predecessor Business
------------------------------------------------
For The Years Ended December 31,
------------------------------------
January 1
to October
1993 1994 1995 14, 1996
----------- ----------- ----------- -----------
(Dollars In thousands)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA (2):
Net sales................. $728,958 $769,136 $850,415 $662,221
Cost of sales (3)......... 443,534 461,629 508,089 395,239
---------- ---------- ---------- ----------
Gross profit.............. 285,424 307,507 342,326 266,982
Research and development
expenses................. 46,438 47,994 54,542 40,244
Selling, general and
administrative expenses.. 209,692 224,978 248,327 186,898
Amortization ............. 2,917 6,437 2,765 2,151
Purchased research and
development (4).......... - - - -
Other charges (income),
net (5).................. 18,284 (2,852) (701) 1,872
---------- ---------- ---------- ----------
Earnings (loss) before
interest and taxes....... 8,093 30,950 37,393 35,817
Interest expense.......... 15,239 13,307 18,219 13,868
Financial expense
(income), net............ (4,174) (4,864) (8,630) (3,204)
Provision for taxes....... 3,041 8,676 8,782 10,055
Minority interest......... 1,140 347 768 637
---------- ---------- ---------- ----------
Net earnings (loss)....... $ (7,153) $13,484 $18,254 $14,461
========== ========== ========== ==========
BALANCE SHEET DATA (2):
Cash and cash equivalents. $ 63,802 $ 41,402
Net working capital....... 126,065 90,740
Total assets.............. 683,198 724,094
Long-term third party debt 862 3,621
Net borrowing from Ciba
and affiliates (6)....... 177,651 203,157
Other long-term
liabilities (7).......... 83,964 84,303
Shareholder's equity (8).. 228,194 193,254
OTHER DATA:
Depreciation and
amortization expense..... $29,591 $34,118 $33,363 $21,663
Capital expenditures...... 25,122 24,916 25,858 16,649
Mettler-Toledo
Holding Inc.
-----------------------
October 15
to December Combined
31, 1996 1996 (1)
----------- -----------
(Dollars In thousands)
<S> <C> <C>
STATEMENT OF OPERATIONS
DATA (2):
Net sales................. $186,912 $849,133
Cost of sales (3)......... 136,820 532,059
---------- ----------
Gross profit.............. 50,092 317,074
Research and development
expenses................. 9,805 50,049
Selling, general and
administrative expenses.. 59,353 246,251
Amortization ............. 1,065 3,216
Purchased research and
development (4).......... 114,070 114,070
Other charges (income),
net (5).................. 9,892 11,764
---------- ----------
Earnings (loss) before
interest and taxes....... (144,093) (108,276)
Interest expense.......... 8,738 22,606
Financial expense
(income), net............ 7,245 4,041
Provision for taxes....... (938) 9,117
Minority interest......... (92) 545
---------- ----------
Net earnings (loss)....... $(159,046) $(144,585)
========== ==========
BALANCE SHEET DATA (2):
Cash and cash equivalents. $60,696
Net working capital....... 83,947
Total assets.............. 771,888
Long-term third party debt 373,758
Net borrowing from Ciba
and affiliates (6)....... _
Other long-term
liabilities (7).......... 96,810
Shareholder's equity (8).. 12,426
OTHER DATA:
Depreciation and
amortization expense..... $8,990 $30,653
Capital expenditures...... 11,928 28,577
<FN>
(Footnotes on next page)
- --------------------
(1) Combined 1996 data represents the combined data of the
Predecessor Business for the period January 1, 1996 to October
14, 1996 and of Mettler-Toledo Holding Inc. for the period
October 15, 1996 to December 31, 1996.
(2) Balance sheet information at December 31, 1992 and 1993
is not available. Income statement information for the year
ended December 31, 1992 is not available, except that net
sales were $769,000.
(3) In connection with the Acquisition, the Company
allocated approximately $32,200 of the purchase price to
revalue certain inventories (principally work-in-progress and
finished goods) to fair value (net realizable value).
Substantially all such inventories were sold during the period
October 15, 1996 to December 31, 1996.
(4) In conjunction with the Acquisition, the Company
allocated, based upon independent valuations, $114,070 of the
purchase price to purchased research and development in
process. Such amount was recorded as an expense in the period
from October 15, 1996 to December 31, 1996.
(5) For 1993, consists primarily of costs associated with the
closure of a manufacturing facility in Cologne, Germany, and
also includes the restructuring of certain manufacturing
operations and an early retirement program in the United
States. Other income for 1993, 1994 and 1995 relates
primarily to gains from the sale of real property and, in
1994, to a gain on the sale of an investment. Other charges
for the period January 1, 1996 to October 14, 1996 of $1,872
represent employee severance of $1,545 and other exit costs of
$327 associated with the closing of its Westerville, Ohio
facility. Other charges for the period October 15, 1996 to
December 31, 1996 principally represent employee severance
benefits associated with (i) the Company's general headcount
reduction programs, in Europe and North America, of $4,557
which were announced during such period, and (ii) the
realignment of the analytical and precision balance business
in Switzerland of $6,205 which was internally announced in
December, 1996. In connection with such programs the Company
reduced its workforce by 168 employees in 1996 and intends to
further reduce its workforce by approximately 70 employees.
See Note 16 to the Consolidated Financial Statements.
(6) Includes notes payable and long-term debt payable to
Ciba and affiliates less amounts due from Ciba and
affiliates.. See Notes 3 and 11 to the Consolidated Financial
Statements.
(7) Consists primarily of obligations under various pension
plans and plans that provide post-retirement medical benefits.
See Note 14 to the Consolidated Financial Statements.
(8) Shareholder's equity for the Predecessor Business
consists of the combined net assets of the Mettler-Toledo
Group.
</TABLE>
ITEM 7. 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 Consolidated Financial
Statements.
GENERAL
The financial statements for periods ended prior to
October 15, 1996 reflect the combined operations of the
Mettler-Toledo Group, while the financial statements for
periods after October 15, 1996 reflect the consolidated
operations of the Registrant after accounting for the
Acquisition using the purchase method of accounting. See Note
1 to the Consolidated Financial Statements. Operating results
subsequent to the Acquisition are not comparable in many
respects to the operating results prior to the Acquisition.
See "Effect of Acquisition on Results of Operations."
References to results of operations for the year ended
December 31, 1996 are references to the combined results of
operations for the period beginning January 1, 1996 and ended
October 14, 1996 for the Mettler-Toledo Group plus the
consolidated results of operations for the Registrant for the
period beginning October 15, 1996 and ended December 31, 1996.
Financial information is presented in accordance with U.S.
generally accepted accounting principles.
In 1996, the Company undertook several efforts to
increase productivity and lower costs. In July 1996, the
Company announced the closure of its Westerville, Ohio
facility. In the fourth quarter of 1996, the Company recorded
charges for a general headcount reduction program in Europe
and North America and the realignment of the analytical and
precision balance business in Switzerland. In connection with
such programs, the Company reduced its workforce by 168
employees in 1996 and intends to further reduce its workforce
by approximately 70 employees. The Company recorded costs of
$11.8 million in 1996, primarily relating to severance, in
connection with these efforts.
RESULTS OF OPERATIONS
The following table sets forth certain items in the
statements of operations as a percentage of net sales for the
years 1994, 1995 and, on a combined basis, 1996.
<TABLE>
<CAPTION>
PERCENTAGE OF NET SALES
--------------------------------------
YEARS ENDED DECEMBER 31,
--------------------------------------
1994 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
Net sales................... 100.0% 100.0% 100.0%
Cost of sales............... 60.0 59.7 62.7
----------- ----------- -----------
Gross profit................ 40.0 40.3 37.3
Research and development
expenses (1).............. 6.3 6.4 5.9
Selling, general and
administrative expenses... 29.3 29.3 29.0
Amortization................ 0.8 0.3 0.4
Purchased research and
development............... _ _ 13.4
Other charges (income), net. (0.4) (0.1) 1.4
----------- ----------- -----------
Earnings (loss) before
interest and taxes........ 4.0% 4.4% (12.8)%
======= ======= =======
<FN>
- --------------------
(1) Total research and development expenses were 7.2% in
1994, 7.3% in 1995 and 6.6% in 1996, including costs
associated with customer-specific engineering projects, which
are included in cost of sales for financial reporting
purposes.
</TABLE>
Year Ended December 31, 1996 Compared To Year Ended
December 31, 1995
Net sales were virtually unchanged at $849.1 million
in 1996 compared to $850.4 million in 1995. Net sales in local
currency increased 2.6%, excluding the impact of the reduction
of the systems business, but were offset by a strengthening of
the U.S. dollar, the Company's reporting currency, relative to
the local currencies of the Company's operations. The flat
sales in 1996 compared to 1995 resulted from slightly lower
sales from products in the industrial and food retailing
markets, offset by strong performance by the product lines in
the laboratory market. The growth in the laboratory market was
across substantially all product lines and geographical
regions as sales in local currency increased 7% compared to
the previous year. In particular, new product introductions in
titration, thermal and reaction calorimetry as well as new
Ohaus products for the education, laboratory and light
industrial market helped to increase laboratory market sales.
The slight decline in industrial and food retailing sales
resulted from overall weakness in the European market while
the Company has been able to retain its market share. This
market weakness has persisted in early 1997.
Net sales in Europe in local currency decreased 2%
in 1996 compared to 1995 due to a weaker second half of the
year in 1996 in all major markets, and especially in key
countries such as Germany, France and the United Kingdom. Net
sales in the Americas in local currency increased by 5% over
1995 due to growth in the United States and Latin America and
double digit expansion in laboratory measurement instruments
other than balances and in related service. Net sales in Asia
and other markets in local currency increased by 8% over 1995,
primarily as a result of significantly increased sales in the
Shanghai operation and strong sales in Japan and Australia.
Gross profit as a percentage of net sales decreased
to 37.3% in 1996 from 40.3% in 1995, principally as a result
of the sale of inventories revalued (to fair value) in
connection with the Acquisition. Excluding the impact of the
revaluation of inventories, gross profit as a percentage of
sales would have increased to 41.1% in 1996. The increased
gross profit margin resulted principally from operational
improvements and the depreciation of the Swiss franc against
the Company's other principal trading currencies. See "Effect
of Currency on Results of Operations."
Selling, general and administrative expenses and
research and development expenses as a percentage of net sales
decreased to an aggregate of 34.9% in 1996 from 35.7% in 1995.
The cost decreases resulted primarily from the currency effect
of the depreciation of the Swiss franc against the Company's
other major trading currencies and the Company's cost control
efforts.
In connection with the Acquisition, the Company
allocated, based upon independent valuations, $114,070 of the
purchase price to purchased research and development in
process. Such amount was expensed immediately following the
Acquisition.
Other charges in 1996 of $11.8 million represent
principally severance costs for the general headcount
reduction programs in Europe and North America, the closure
of the Company's Westerville, Ohio manufacturing facility,
and the realignment of the analytical and precision balances
business in Switzerland. See Note 16 to the Consolidated
Financial Statements.
Loss before interest and taxes was $108.3 million in
1996 compared to earnings before interest and taxes of $37.4
million in 1995. This loss includes an expense of $114.1
million for the allocation of purchase price to in-process
research and development projects in connection with the
Acquisition and $11.8 million of other charges. Excluding
these expenses, as well as the revaluation of inventories
discussed above, earnings before interest and taxes would have
been $49.8 million in 1996. If 1995 currency exchange rates
had remained in effect throughout 1996, earnings before
interest and taxes in 1996 excluding the expense for in-
process research and development, the revaluation of
inventories and other charges would have been approximately
$46.0 million.
Interest expense increased to $22.6 million in 1996
from $18.2 million in 1995, an increase of 24.2%, principally
due to a higher debt level as a result of the Acquisition and
higher interest rates on amounts due to Ciba. Interest
expense since the Acquisition is materially different. See
"Effect of Acquisition on Results of Operations" and
"Liquidity and Capital Resources." Financial expense
(income), net decreased to an expense of $4.0 million in 1996
from income of $8.6 million in 1995. The reduction resulted
principally from losses on foreign currency transactions due
to the appreciation of the dollar.
The net loss of $144.6 million in 1996 compared to
net earnings of $18.3 million in 1995. Excluding the expense
for in-process research and development, the revaluation of
inventories and other charges, net earnings would have been
approximately $1.0 million in 1996.
Year Ended December 31, 1995 Compared To Year Ended
December 31, 1994
Net sales were $850.4 million in 1995 compared to
$769.1 million in 1994, an increase of 11%. Net sales in
local currency increased 5%; the remaining 6% of the increase
resulted from changes in currency exchange rates. In 1994 the
Company discontinued certain items in its systems and
laboratory measurement instruments product lines. Excluding
the effect of these discontinued items, net sales in local
currency would have increased 6%. Sales growth in local
currency reflected steady growth across all major product
lines in laboratory, industrial and food retailing markets as
result of favorable economic conditions and market share gains
in selected geographic markets. Sales were helped by the
expansion of the Company's line of titrators and the
introduction of a family of standard industrial programmable
terminals for weighing instruments.
Net sales in Europe in local currency increased 7%
in 1995 over 1994, consistent with the continuing recovery
from the 1993 recession and market share gains in selected
regions and product lines. Southern Europe contributed
significantly to the increase. Net sales in the Americas in
local currency decreased 1% in 1995 from 1994. Results in the
Americas reflect reduced demand in the United States for
laboratory instruments in the wake of consolidation in the
pharmaceutical and chemical industries and unusually high
demand for retail equipment in 1994 as a result of a new
labeling law that caused food retailers to buy additional
retail weighing and labeling equipment. Net sales in Asia and
other markets in local currency increased 20% in 1995 over
1994, primarily as a result of continued economic growth and
the Company's increased market share in selected markets.
Sales were also helped by the recovery in China from the poor
market conditions of 1994.
Gross profit as a percentage of net sales increased
slightly to 40.3% in 1995 from 40.0% in 1994. These results
were achieved despite the appreciation of the Swiss franc
against the Company's other principal trading currencies,
which has the effect of increasing overall manufacturing costs
due to the Company's significant manufacturing operations in
Switzerland. Improved manufacturing productivity contributed
to the increase, including the favorable effects of the
Company's mid-1994 closure of its Cologne, Germany plant,
partially offset by higher raw materials costs.
Selling, general and administrative expenses and
research and development expenses were relatively constant as
a percentage of net sales. Cost increases resulting from the
currency effect of the significant appreciation of the Swiss
franc against the Company's other major trading currencies
were offset by the Company's cost control efforts. Earnings
before interest and taxes were $37.4 million in 1995 compared
to $30.9 million in 1994. If 1994 currency exchange rates had
remained in effect throughout 1995 earnings before interest
and taxes in 1995 would have been $47.4 million.
Interest expense rose to $18.2 million in 1995 from
$13.3 million in 1994, an increase of 37%, principally due to
higher interest rates from the conversion of a loan from Ciba
from short term to long term. Interest expense since the
Acquisition is materially different. See "Effect of
Acquisition on Results of Operations," and "Liquidity and
Capital Resources." Net financial income increased to $8.6
million in 1995 from $4.9 million in 1994. The higher level
of financial income resulted principally from increased gain
on foreign currency transactions.
Net earnings increased to $18.3 million in 1995 from
$13.5 million in 1994.
LIQUIDITY AND CAPITAL RESOURCES
The Acquisition was financed principally through
capital contributions of $190 million before related expenses
from MT Investors, borrowings under a Credit Agreement
("Credit Agreement") of $307 million and 9 3/4% Senior
Subordinated Notes due 2006 (the "Notes") of $135 million.
Prior to the Acquisition, the Company's cash and
other liquidity was used principally to fund capital
expenditures, working capital requirements, debt service and
dividends to Ciba. Following the Acquisition, annual interest
expense of approximately $39.0 million associated with the
borrowings under the Credit Agreement and the Notes, as well
as scheduled principal payments of term loans under the Credit
Agreement, have significantly increased the Company's
liquidity requirements. See "Effect of Acquisition on Results
of Operations."
The Company's capital expenditures totaled $28.6
million in 1996, $25.9 million in 1995 and $24.9 million in
1994. Capital expenditures are primarily for machinery,
equipment and the purchase and expansion of facilities,
including the purchase of land for, and construction of, the
Company's Shanghai manufacturing facility. Capital
expenditures for 1997, as a percentage of sales, are expected
to remain relatively constant with historical expenditures.
In connection with the transfer of the Japanese laboratory
business from a former agent to a subsidiary of the Company,
the Company will make payments of approximately SFr 8.0
million of which SFr.1.0 million had been paid during 1996.
See Part I, Item 1, "Business--Customers and Distribution."
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 ($239.7
million at December 31, 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. At December 31, 1996,
approximately $75.0 million was available to the Company 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 asset sales or issuance 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 Credit Agreement requires quarterly
principal amortization payments which increase overtime. The
aggregate of such payments for 1997, 1998 and 1999 will be
approximately $9,000, $12,800 and $15,600, respectively. The
Credit Agreement is secured by certain assets of the Company.
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's obligations under the Credit
Agreement and Notes is guaranteed by the Registrant.
At December 31, 1996, approximately $147 million of
the borrowings under the Credit Agreement and all of the
borrowings under the Notes were denominated in U.S. dollars.
The balance of the borrowings under the Credit Agreement and
under local working capital facilities were denominated in
certain of the Company's other principal trading currencies.
At December 31, 1996, the Company had $27.5 million of other
long-term debt incurred by its various operating subsidiaries
primarily denominated in various currencies. Changes in
exchange rates between the currencies in which the Company
generates cash flow and the currencies in which its borrowings
are denominated will affect the Company's liquidity. See
"Effect of Currency on Results of Operations".
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 rate between the U.S. dollar and other currencies
described in the preceding paragraph. If the 1995 currency
exchange rates had remained in effect, the loss before
interest and taxes in 1996 would have been approximately $10.0
million greater.
EFFECT OF ACQUISITION ON RESULTS OF OPERATIONS
In connection with 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 of approximately $1.5 million for
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 $16.1
million for 1996, on a pro forma basis. The Company estimates
that it will incur approximately $2.3 million annually in
additional selling, 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. ("AEA Investors"). The Acquisition would have resulted
in a decrease in the Company's provision for income taxes of
$9.9 million for 1996, on a pro forma basis. As a result of
the above adjustments, on a pro forma basis, the Company would
have reported a net loss of $6.4 million in 1996, as compared
to its net loss of $5.4 million in 1995 (before giving effect
to the non-recurring charges referred to below).
The following table represents the unaudited pro
forma statements of operations of the Company after the
predecessor business for the fiscal year 1995 and 1996,
assuming the Acquisition occurred on January 1, 1995. These
pro forma statements do not reflect the anticipated benefits
to be derived in the future from the Company's 1996 employee
reduction programs.
The pro forma financial data reflects other charges
in 1996 of $11.8 million representing principally severance
costs for the general headcount reduction, in Europe and North
America, the closure of the Company's Westerville, Ohio
manufacturing facility, and the realignment of the analytical
and precision balance business in Switzerland.
<TABLE>
<CAPTION>
PRO FORMA
YEARS ENDED DECEMBER 31,
(In thousands)
1995 1996
------------- -------------
<S> <C> <C>
Net sales.................... $850,415 $849,133
Cost of sales................ 508,089 499,865
------------- -------------
Gross profit............... 342,326 349,268
------------- -------------
Research and development..... 54,542 50,049
Selling, general and
administrative............. 250,627 248,337
Amortization................. 4,687 4,687
Other charges (income), net.. (701) 11,764
------------- -------------
Earnings before interest
and taxes................. 33,171 34,431
Interest expense............. 38,715 38,715
Financial expense (income)
net........................ (3,742) 2,272
------------- -------------
Loss before taxes and
minority interest......... (1,802) (6,556)
Provision for taxes.......... 2,826 (738)
Minority interest............ 768 545
------------- -------------
Net loss..................... $(5,396) $(6,363)
============= =============
</TABLE>
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 the revaluation of inventories to fair values.
Approximately $114.1 million has been allocated to in-process
research and development and has been charged to expense in
the fourth quarter of 1996. Approximately $32.2 million has
been allocated to the revaluation of inventories to fair
value. Substantially all of such inventories were sold during
the period from October 15, 1996 to December 31, 1996. These
charges are not reflected in the above table due to their
unusual, non-recurring nature.
TAXES
The Company is subject to taxation in many
jurisdictions throughout the world. The Company's effective
tax rate and tax liability will be affected by a number of
factors, such as the amount of taxable income in particular
jurisdictions, the tax rates in such jurisdictions, tax
treaties between jurisdictions, the extent to which the
Company transfers funds between jurisdictions and income is
repatriated, and future changes in law. Generally, the tax
liability for each legal entity is determined either (i) on a
non-consolidated basis or (ii) on a consolidated basis only
with other entities incorporated in the same jurisdiction, in
either case without regard to the taxable losses of non-
consolidated affiliated entities. As a result, the Company
may pay income taxes in certain jurisdictions even though the
Company on an overall basis incurs a net loss for the period.
ENVIRONMENTAL MATTERS
The Company is subject to various environmental laws
and regulations in the jurisdictions in which it operates.
The Company, like many of its competitors, has incurred, and
will continue to incur, capital and operating expenditures and
other costs in complying with such laws and regulations in
both the United States and abroad. The Company does not
currently anticipate any material capital expenditures for
environmental control technology. Some risk of environmental
liability is inherent in the Company's business, and there can
be no assurance that material environmental costs will not
arise in the future. However, the Company does not anticipate
any material adverse effect on its results of operations or
financial condition as a result of future costs of
environmental compliance. See Part 1, Item 1 "Business--
Environmental Matters."
INFLATION
Inflation can affect the costs of goods and services
used by the Company. The competitive environment in which the
Company operates limits somewhat the Company's ability to
recover higher costs through increased selling prices.
Moreover, there may be differences in inflation rates between
countries in which the Company incurs the major portion of its
costs and other countries in which the Company sells its
products, which may limit the Company's ability to recover
increased costs, if not offset by future increase of selling
prices. The Company's growth strategy includes expansion in
Latin America and China, which have experienced inflationary
conditions. To date, inflationary conditions have not had a
material effect on the Company's operating results. However,
as the Company's presence in Latin America and China
increases, these inflationary conditions could have a greater
impact on the Company's operating results.
SEASONALITY
The Company's business has historically experienced
a slight amount of seasonal variation, with sales in the first
fiscal quarter slightly lower than, and sales in the fourth
fiscal quarter slightly higher than, sales in the second and
third fiscal quarters. This trend has a somewhat greater
effect on income from operations than on net sales due to the
effect of fixed costs.
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISKS
The Company enters into currency forward and option
contracts primarily as a hedge against anticipated foreign
currency exposures and not for speculative purposes. Such
contracts, which are types of financial derivatives, limit the
Company's exposure to both favorable and unfavorable currency
fluctuations. These contracts are adjusted to reflect market
values as of each balance sheet date, with the resulting
unrealized gains and losses being recognized in financial
income or expense, as appropriate.
The Company may be exposed to credit losses in the
event of nonperformance by the counterparties to its foreign
currency forward and option contracts. The Company has no
reason to believe, however, that such counterparties will not
be able to fully satisfy their obligations under these
contracts. At December 31, 1996, the Company had contracts
maturing during 1997 to sell the equivalent of approximately
$135.0 million in various currencies in exchange for Swiss
francs. These contracts were used to limit its exposure to
foreign currency fluctuations on anticipated future cash
flows, primarily for the delivery of United States dollars,
German marks, French francs, British pounds and Japanese yen
in exchange for Swiss francs. At December 31, 1996, the fair
value of such financial instruments, which the Company
recognized as net unrealized losses, was approximately $5.1
million.
NEW ACCOUNTING STANDARDS
Beginning January 1, 1996 the Company adopted
Financial Accounting Standards Board's Statement of Financial
Accounting Standards No. 121 (SFAS 121), "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of". SFAS 121 requires that long-lived assets and
certain identifiable intangibles to be held and used by an
entity be reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset
may not be recoverable. In addition, SFAS 121 requires that
long-lived assets and certain identifiable intangibles to be
disposed of be reported at the lower of carrying amount or
fair value less cost to sell. Adoption of SFAS 121 had no
effect on the consolidated financial statements.
FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS
This Form 10-K includes forward-looking statements
that reflect the Company's current views with respect to
future events and financial performance, including capital
expenditures, potential cost savings from planned employee
reductions and the realignment of the analytical and precision
balance business in Switzerland, strategic plans and future
cash sources and requirements. These forward-looking
statements are subject to certain risks and uncertainties,
including those identified below, which could cause actual
results to differ materially from historical results or those
anticipated. The words, "believe," "expect," "anticipate"
and similar expressions identify 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
newinformation, future events or otherwise. The following risks
could cause actual results to differ materially from
historical results or those anticipated:
Effect Of Substantial Indebtedness On Operations And
Liquidity
The Credit Agreement and the Indenture contain a
number of covenants that restrict the Companies operations.
See "Liquidity and Capital Resources". The Company's ability
to comply with the covenants and restrictions contained in the
Credit Agreement and the Indenture may be affected by events
beyond its control, including prevailing economic, financial
and industry conditions.
The Company's high degree of leverage could have
important consequences including but not limited to the
following: (i) the Company's ability to obtain additional
financing for acquisitions, capital expenditures, working
capital or general corporate purposes may be impaired in the
future; (ii) a substantial portion of the Company's cash flow
from operations must be dedicated to the payment of principal
and interest on the Notes and borrowings under the Credit
Agreement and other indebtedness, thereby reducing the funds
available to the Company for its operations and other
purposes, including investments in research and development
and capital spending; (iii) certain of the Company's
borrowings are and will continue to be at variable rates of
interest, which exposes the Company to the risk of increased
interest rates; and (iv) the Company may be substantially more
leveraged than certain of its competitors, which may place the
Company at a relative competitive disadvantage and may make
the Company more vulnerable to a downturn in general economic
conditions or its business or changing market conditions and
regulations.
Restrictions On Operations Under Credit Agreement And
Indenture
In connection with the Acquisition, the Company
incurred a significant amount of indebtedness. At December
31, 1996, the Company's consolidated indebtedness (excluding
unused commitments) was approximately $454.2 million and its
shareholder's equity was approximately $12.4 million. On a
pro forma basis giving the effect to the Acquisition, the
Company's ratio of earnings to fixed charges for the year
ended December 31, 1996 would have been 1.5x. The Company has
additional borrowing capacity on a revolving credit basis
under the Credit Agreement and under local working capital
facilities. The Company will be required to make semiannual
scheduled principal payments on the term loans under the
Credit Agreement commencing in March 1997. The Company's
ability to comply with the terms of the Indenture and the
Credit Agreement, to make cash payments with respect to the
Notes and under the Credit Agreement and to satisfy its other
debt or to refinance any of such obligations will depend on
the future performance of the Company, which, in turn, is
subject to prevailing economic and competitive conditions and
certain financial, business and other factors beyond its
control.
Risk Of Currency Fluctuations
The Company is subject to risks and uncertainties
resulting from changes in currency exchange rates. For a
discussion of these risks, see "Effect of Currency or Results
of Operations."
Risks Associated With International Operations
The Company does business in numerous countries,
including emerging markets in Asia and Latin America. In
addition to currency risks discussed above, the Company's
international operations are subject to the risk of new and
different legal and regulatory requirements in local
jurisdictions, tariffs and trade barriers, potential
difficulties in staffing and managing local operations, credit
risk of local customers and distributors, potential
difficulties in protecting intellectual property, risk of
nationalization of private enterprises, potential imposition
of restrictions on investments, potentially adverse tax
consequences, including imposition or increase of withholding
and other taxes on remittances and other payments by
subsidiaries, and local economic, political and social
conditions, including the possibility of hyper-inflationary
conditions, in certain countries. The Company plans to
increase its presence in Latin American countries and China.
As a result, inflationary conditions in these countries could
have an increasingly significant effect on the Company's
operating results.
The conversion into foreign currency of funds earned
in local currency through the Company's operations in the
People's Republic of China and the repatriation of such funds
require certain governmental approvals. Failure to obtain
such approvals could result in the Company being unable to
convert or repatriate earnings from its Chinese operations,
which may become an increasingly important part of the
Company's international operations.
Competition; Improvements In Technology
The markets in which the Company operates are highly
competitive. Weighing markets are fragmented both
geographically and by application, particularly the industrial
and food retailing market. As a result, the Company competes
with numerous regional or specialized competitors, many of
which are well-established in their markets. Some competitors
are divisions of larger companies with potentially greater
financial and other resources than the Company. The Company
has, from time to time, experienced price pressures from
competitors in certain product lines and geographic markets.
The Company's competitors can be expected to
continue to improve the design and performance of their
products and to introduce new products with competitive price
and performance characteristics. Although the Company
believes that it has certain technological and other
advantages over its competitors, realizing and maintaining
these advantages will require continued investment by the
Company in research and development, sales and marketing and
customer service and support. There can be no assurance that
the Company will have sufficient resources to continue to make
such investments or that the Company will be successful in
maintaining such advantages.
Significant Sales To Pharmaceutical And Chemical
Industries
The Company's products are used extensively in the
pharmaceutical and chemical industries. Consolidation in
these industries has had an adverse impact on the Company's
sales in recent years. A prolonged downturn or any additional
consolidation in these industries could adversely affect the
Company's operating results.
Reliance On Key Management
Robert F. Spoerry has an employment contract with
the Company and it is anticipated that all of the key
management employees will have employment contracts with the
Company. In addition, various members of management own a
portion of the shares of nonvoting capital stock of MT
Investors and will have options to purchase additional shares
of such nonvoting capital stock. Nonetheless, there is no
assurance that such individuals will remain with the Company.
If, for any reason, such key personnel do not continue to be
active in the Company's management, operations could be
adversely affected. The Company has no key man life insurance
policies with respect to any of its senior executives.
Environmental Matters
The Company is subject to various environmental laws
and regulations in the jurisdiction in which it operates. For
a discussion of risks relating to environmental matters, see
"Environmental Matters" above Part I, Item 1,
"Business-Environmental Matters."
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements required by this item are
set forth on pages F-1 through F-30 and the related financial
schedule is set forth on page S-1.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
Not Applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The directors and executive officers of the Company
are set forth below. All Directors hold office until the
annual meeting of Stockholders following their election or
until their successors are duly elected and qualified.
Officers are appointed by the Board of Directors and serve at
the discretion thereof. As of April 1, 1997, William Donnelly
will serve as Chief Financial Officer of the Company.
NAME AGE POSITION
- -------------------- --- ---------------------------------
Robert F. Spoerry 41 President and Chief Executive Officer
and Director
Fred Ort 54 Head, Finance and Control
Karl M. Lang 50 Head, Laboratory Division
Lukas Braunschweiler 40 Head, Industrial and Retail (Europe)
John D. Robechek 48 Head, Industrial and Retail
(Americas)
Peter Burker 51 Head, Human Resources
Thomas Rubbe 42 Head, Logistics and Information
Systems
Thomas P. Salice 36 Director
Alan W. Wilkinson 41 Director
Robert F. Spoerry has been President and Chief
Executive Officer since 1993. He served as Head, Industrial
and Retail (Europe) from 1987 to 1993. Mr. Spoerry has been a
Director since the formation of MT Acquisition Corp. in July
1996.
Fred Ort has been Head, Finance and Control since
1973.
Karl M. Lang has been Head, Laboratory Division
since 1994. From 1991 to 1994 he was based in Japan as a
representative of senior management with responsibility for
expansion of the Company's Asian operations.
Lukas Braunschweiler has been Head, Industrial and
Retail (Europe) since 1995. From 1992 until 1995, he held
various senior management positions with the Landis & Gyr
Group, a manufacturer of electrical meters. Prior to August
1992 he was a Vice President in the Technology Group of Saurer
Group, a manufacturer of textile machinery.
John D. Robechek has been Head, Industrial and
Retail (Americas) and President of Mettler-Toledo, Inc., a
U.S.-based subsidiary of the Company, since 1995. From 1990
through 1994 he served as Senior Vice President and managed
all of the Company's U.S. subsidiaries.
Peter Burker has been Head, Human Resources since
1994. From 1992 to 1994 he was Mettler-Toledo's General
Manager in Spain, and from 1989 to 1991 he headed the
Company's operations in Italy.
Thomas Rubbe has been Head, Logistics and
Information Systems since 1995. From 1990 to 1995, he was
head of Controlling, Finance and Administration with the
Company's German marketing organization.
Thomas P. Salice has been a Director since the
formation of MT Acquisition Corp. in July 1996. He is a
Managing Director of AEA Investors and has been associated
with AEA Investors since June 1989. Mr. Salice is also a
Director of Waters Corporation.
Alan W. Wilkinson has been a Director since the
formation of MT Acquisition Corp. in July 1996. He has been a
Managing Director of AEA Investors since September 1989.
Prior to his association with AEA Investors, Mr. Wilkinson was
a Vice President in the Merchant Banking and Mergers and
Acquisitions divisions of Lehman Brothers Inc., an investment
banking firm.
Messrs. Spoerry, Salice and Wilkinson are directors
of the Registrant. Mr. Spoerry is President and Chief
Executive Officer of the Registrant and Mr. Ort is Head,
Finance and Control.
ITEM 11. EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid
to or accrued for services performed by the Company's Chief
Executive Officer and the four other most highly compensated
executives (collectively, the "Named Executives") for the
years ended December 31, 1995 and 1996.
<TABLE>
SUMMARY COMPENSATION TABLE (1)
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION -----------
------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(2) COMPENSATION OPTIONS (#) COMPENSATION
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Robert F. Spoerry President and 1996 $435,135 $276,521 $8,857(3) 83,279 $ 124,431
Chief Executive Officer........ 1995 289,343 85,871 - 300(4) 54,346(5)
Fred Ort Head, Finance and 1996 207,221 99,325 - 6,246 52,745
Control........................ 1995 227,284 69,701 - - 70,804(5)
Karl M. Lang Head, Laboratory.... 1996 212,997 88,375 - 16,656 61,901
1995 228,427 38,071 - - 60,321(5)
Lukas Braunschweiler Head, 1996 210,893 66,162 - 16,656 62,482
Industrial and Retail (Europe)... 1995 228,427 25,381 - - 50,460(5)
John D. Robechek Head, Industrial 1996 233,754 88,137 - 16,656 6,215
and Retail (Americas).......... 1995 225,000 40,563 - - 6,168(6)
<FN>
- ------------------
(1) Amounts paid in Swiss francs (all amounts except those
paid to Mr. Robechek) converted to U.S. dollars at a rate of
SFr 1.182 to U.S. $1.00 for 1995 and SFr 1.2355 to U.S. $1.00
for 1996, in each case the average exchange rate during such
year.
(2) Does not include Ciba bonuses to the Named Executives
for services rendered to Ciba in connection with its efforts
to sell the Company.
(3) Represents additional compensation paid to fully
offset, after payment of all taxes and social security
contributions, interest charged to Mr. Spoerry on a loan to
Mr. Spoerry from Mettler-Toledo AG, a subsidiary of the
Company. See Item 13.
(4) Option to purchase the specified number of shares of
Ciba common stock at an exercise price of SFr 750 ($665 at the
date of grant) per share. The fair market value at the date
of grant was SFr 764 ($678) per share.
(5) Represents Company contributions to the Mettler-Toledo
Fonds (a Swiss pension plan similar to a defined contribution
plan under U.S. law). Fifty percent of the amount shown is a
required employee contribution under the plan which the
Company has contributed on behalf of the Named Executives, and
the other 50% is a required matching employer contribution.
(6) Includes $1,024 for the value of group life insurance
over $50,000, $4,500 for the Company's contribution to Mr.
Robechek's 401(k) plan account and $644 for Mr. Robechek's
profit sharing payout under the Company's Performance Dividend
Plan.
</TABLE>
<TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
-----------------
<CAPTION>
NUMBER OF % OF TOTAL POTENTIAL REALIZABLE VALUE
SECURITIES OPTIONS/SARS EXERCISE/ AT ASSUMED ANNUAL RATES OF
UNDERLYING GRANTED TO BASE STOCK PRICE APPRECIATION FOR
OPTIONS/SARS EMPLOYEES IN PRICE EXPIRATION OPTION/SAR TERM (2)
----------------------------
NAME GRANTED(#)(1) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
- --------------------- ------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert F. Spoerry 83,279 29.85 100 2006 5,237,372 13,272,528
Fred Ort 6,246 2.24 100 2006 392,808 995,452
Karl M. Lang 16,656 5.97 100 2006 1,046,858 2,652,944
Lukas Braunschweiler 16,656 5.97 100 2006 1,046,858 2,652,944
John D. Robechek 16,656 5.97 100 2006 1,046,858 2,652,944
<FN>
(1) All Options are to purchase shares of Class A Common
Stock of MT Investors, which owns 100% of the capital stock of
the Registrant.
(2) The assumed annual rates of appreciation over the term
of the option are set forth in accordance with rules and
regulations adopted by the Securities and Exchange Commission
and do not represent the Company's estimate of stock
appreciation price.
</TABLE>
<TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND OPTION/SAR VALUES AS OF DECEMBER 31, 1996
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT FISCAL IN-THE-MONEY OPTIONS/SARS
SHARES YEAR-END AT FISCAL YEAR-END
ACQUIRED ON VALUE (#) ($)(1)
EXERCISE REALIZED ---------------------------- ----------------------------
NAME (#) (#) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------- ------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Robert F. Spoerry 0 0 0 83,279 0 0
Fred Ort 0 0 0 6,246 0 0
Karl M. Lang 0 0 0 16,656 0 0
Lukas Braunschweiler 0 0 0 16,656 0 0
John D. Robechek 0 0 0 16,656 0 0
<FN>
- -----------------
(1) There is no market value for the Class A Common Stock
of MT Investors. Estimated value, as determined by the
management of MT Investors, at December 31, 1996 does
not exceed the exercise price.
</TABLE>
EMPLOYMENT AGREEMENTS; STOCK OPTIONS; MANAGEMENT EQUITY
Mettler-Toledo AG, a subsidiary of the Company,
entered into an employment agreement (the "Agreement") with
Robert F. Spoerry (the "Executive") dated as of October 30,
1996. The Agreement provides for annual base salary of SFr
560,000 ($435,135 at December 31, 1996), which may be
increased from time to time in accordance with the Company's
normal business practices, and for participation in the
Company's bonus plan. In addition, the Agreement provides for
payment of the amount necessary, after payment of all taxes
and social security contributions, to fully offset the
interest charged to the Executive on a certain loan to the
Executive. See Part III, Item 13 "Certain Relationships and
Related Transactions" for a description of the loan. The
Agreement prohibits the Executive from competing with the
Company for a period of twenty-four months after termination
of employment. The Agreement may be terminated without cause,
on thirty-six months notice during which period the Executive
is entitled to full compensation under the Agreement.
The Company expects to negotiate new employment
agreements with the other Named Executives. Base salary of
executive officers under these agreements in the aggregate
will not be materially different from historical practice.
The agreements will also include bonuses contingent on meeting
performance objectives in amounts to be determined.
COMPENSATION OF DIRECTORS
All members of the Board of Directors of the Company
are officers of the Company or employees of AEA Investors and
will not receive additional compensation for being on the
Board or its committees.
RETIREMENT PLANS
Mr. Robechek is covered under two pensions plans,
the Mettler-Toledo Retirement Plan and the Mettler-Toledo
Supplemental Retirement Income Plan. Benefits under these
plans are determined by career average compensation rather
than final compensation. The annual accrual for each year
under both plans is the difference of 2% of annual
compensation in a plan year and 0.6% of the lesser of annual
compensation or covered compensation (defined under the plans
as the average of the Social Security Taxable Wage Bases in
effect for each calendar year during the 35-year period ending
on the last day of a given plan year). The Mettler-Toledo
Retirement Plan includes all compensation up to the qualified
plan limitations under the Internal Revenue Code of 1986, as
amended ($150,000 per year in 1996) and the Mettler-Toledo
Supplemental Retirement Income Plan pays for benefits in
excess of these limits. The accrued annual benefit payable to
Mr. Robechek under the Mettler-Toledo Retirement Plan is
$45,693 and the accrued annual benefit under the Mettler-
Toledo Supplemental Plan is $11,329, for a total annual
retirement benefit of $57,022.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
All of the capital stock of the Registrant is
directly owned by MT Investors. All of the voting capital
stock of MT Investors is owned by AEA Investors, certain of
its investor-shareholders and Ciba. The following table sets
forth information with respect to the beneficial ownership of
the capital stock of MT Investors by (i) each director of the
Company, (ii) the Named Executives and (iii) all directors and
executive officers of the Company as a group:
<TABLE>
<CAPTION>
CLASS A NON-VOTING CLASS C NON-VOTING
COMMON STOCK (1) COMMON STOCK (1)
------------------ ------------------
NUMBER OF % OF NUMBER OF % OF
NAME AND ADDRESS SHARES CLASS SHARES CLASS
- ------------------------------- -------- ------ ------ ------
<S> <C> <C> <C> <C>
DIRECTORS AND EXECUTIVE OFFICERS:
Robert F. Spoerry................. 26,873 1.4% 7,678 1.4%
Fred Ort.......................... 4,726 * 1,350 *
Karl M. Lang...................... 4,726 * 1,350 *
Lukas Braunschweiler.............. 4,726 * 1,350 *
John D. Robechek................. 4,055 * 1,159 *
Thomas P. Salice (2)............. 3,701 * 36,007 6.7
Alan W. Wilkinson (2)............ 3,701 * 36,007 6.7
All directors and executive
officers as a group (9 persons).. 60,891 3.2% 87,296 16.2%
<FN>
- -----------------
* Less than 1%
(1) No director or executive officer owns any of the Class
B voting common stock of MT Investors. AEA Investors owns
49.0% of the Class B voting common stock of MT Investors.
(2) Includes shares held by, or in trust for, members of
such individual's family for which Messrs. Salice and
Wilkinson disclaim beneficial ownership. Does not include
shares held by AEA Investors, of which Messrs. Salice and
Wilkinson are officers.
</TABLE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
AEA Investors and the Company have entered into a
Management Agreement pursuant to which AEA Investors provides
management, consulting and financial services to the Company.
Services are expected to be provided in such areas as the
preparation and evaluation of strategic, operating, financial
and capital plans and the development and implementation of
compensation and other incentive programs. Such services will
be provided by the managing directors and professional staff
of AEA Investors. In consideration of such services, AEA
Investors is entitled to an annual fee of $1.0 million, plus
reimbursement for certain expenses and indemnification against
certain liabilities. The agreement further provides that in
the event the Company employs any employee of AEA Investors as
an officer of the Company or otherwise, and such employment
includes a substantial amount of such employee's time, the
Company will compensate such employee at a reasonable rate.
The Company believes that the terms of these management
arrangements are as favorable as could be obtained from an
unaffiliated third party. In connection with the Acquisition
and in consideration of services by AEA Investors in
arranging, structuring and negotiating the terms of the
Acquisition and the related financing transactions, the
Company paid AEA Investors a transaction fee of $5.5 million
and reimbursed AEA Investors for certain related expenses.
Management and other employees of the Company have
contributed approximately $12 million of the equity of MT
Investors. For information regarding the number of shares
purchased by each Named Executive, see Item 12 "Security
Ownership of Certain beneficial Owners and Management." Each
share of Class A Common Stock was purchased for $100 per share
and each share of Class C Common Stock was purchased for
nominal consideration.
On October 7, 1996, in order to fund a portion of
the purchase price for the shares purchased by Mr. Spoerry,
Mettler-Toledo AG entered into a Loan Agreement with Mr.
Spoerry, in the amount of SFr 1.0 million ($742,000 at
December 31, 1996). The loan bears interest at a rate of 5%
and is payable upon demand, which may not be made until seven
years after the date of the loan.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON
FORM 8-K
(a) Documents Filed as Part of this Report:
1. Financial Statements. See Index to
Consolidated Financial Statements and Financial Statement
Schedules included on page F-1.
2. Financial Statement Schedule. See Schedule I -
included on page S-1.
3. List of Exhibits. See Index of Exhibits
included on page E-1.
(b) Reports on Form 8-K:
The Registrant 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 constituting 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".
SIGNATURES
Pursuant to the requirements of Section 13 or
Section 15(d) of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly
authorized.
Mettler-Toledo Holding Inc.
(Registrant)
Date: March 21, 1997 By: /s/ Robert F. Spoerry
-----------------------------
Robert F. Spoerry
President and
Chief Executive Officer
Pursuant to the requirements of the Securities
Exchange Act of 1934, as amended, this Annual Report on
Form 10-K has been signed below by the following persons on
behalf of the registrant and in the capacities and on the
dates indicated.
Signature Title Date
--------- ----- ----
/s/ Robert F. Spoerry President and Chief March 21, 1997
- --------------------- Executive Officer and
Robert F. Spoerry Director
/s/ Fred Ort Head, Finance and March 21, 1997
- --------------------- Control (Principal
Fred Ort financial and
accounting officer)
/s/ Thomas P. Salice Director March 21, 1997
- ---------------------
Thomas P. Salice
/s/ Alan W. Wilkinson Director March 21, 1997
- ---------------------
Alan W. Wilkinson
INDEX OF EXHIBITS
PAGE NUMBER OR
EXHIBIT NO. DESCRIPTION INCORPORATION BY REFERENCE
- ----------- ------------ --------------------------
2.1 Stock Purchase Agreement Filed as Exhibit 2.1 to the
between AEA-MT Inc., AG fur Registration Statement, as
prazisionsinstrumente and Ciba- amended, on Form S-1, of
Geigy AG, as amended the Company (Reg. No. 33-
09621) and incorporated
herein by reference
3.1 Certificate of Incorporation Filed as Exhibit 3.3 to the
of Mettler-Toledo Holding Inc. Registration Statement, as
amended, on Form S-1 (Reg.
No. 33-09621) and
incorporated herein by
reference
3.2 By-laws of Mettler-Toledo Filed as Exhibit 3.4 to the
Holding Inc. Registration Statement, as
amended, on Form S-1 (Reg.
No. 33-09621) and
incorporated herein by
reference
4.1 Indenture dated as of October Filed as Exhibit 4.1 to the
15, 1996, among MT Acquisition Current Report on Form 8-K
Corp., as Issuer, Mettler- of the Registrant dated
Toledo Holding Inc., as Note October 30, 1996 and
Guarantor, and United States incorporated herein by
Trust Company of New York, as reference
Trustee
4.2 First Supplemental Indenture Filed as Exhibit 4.2 to the
dated as of October 15, 1996, Current Report on Form 8-K
among Mettler-Toledo, Inc., of the Registrant dated
Mettler-Toledo Holding Inc., October 30, 1996 and
as Note Guarantor, and United incorporated herein by
States Trust Company of New reference
York, as Trustee
10.1 Credit Agreement, dated as of Filed as Exhibit 99.1 to
October 15, 1996, between MT the Current Report on Form
Acquisition Corp. and Mettler- 8-K of the Registrant dated
Toledo Holding AG, as October 30, 1996 and
borrowers, and Merrill Lynch incorporated herein by
Capital Corporation, as reference
document agent and the lenders
party thereto
10.2 Credit Agreement Amendment No.
1 dated as of January 14, 1997
between MT Acquisition,
Mettler-Toledo Holding Inc.
and Mettler-Toledo Holding,
AG, as borrowers, and Merrill
Lynch & Co., Merrill Lynch,
Pierce Fenner & Smith Inc., as
document agent and the lenders
party thereto
10.3 Management Consulting
Agreement dated as of October
15, 1996 between Mettler-
Toledo, Inc. and AEA
Investors Inc.
10.4 Employment Agreement between
Robert F. Spoerry and Mettler-
Toledo AG, dated as of
October 30, 1996
10.5 Loan Agreement between Robert
F. Spoerry and Mettler-Toledo
AG, dated as of October 7,
1996
10.6 MT Investors Inc. Stock
Option Plan
10.7 Mettler Toledo Performance -
Oriented Bonus System (POBS),
effective as of 1993
10.8 Mettler Toledo POBS Plus --
Incentive Scheme for Senior
Management of Mettler Toledo,
dated as of November 4, 1996
21.1 Subsidiaries of the Company
27.1 Financial Data Schedule
METTLER-TOLEDO HOLDING INC.
INDEX TO FINANCIAL STATEMENTS
PAGE
----
Independent Auditors' Report F-2
Consolidated Balance Sheets as of December 31,
1995 and 1996 F-3
Consolidated Statements of Operations for the
years ended December 31, 1994 and 1995 and for the
period January 1, 1996 to October 14, 1996 and for
the period October 15, 1996 to December 31, 1996 F-4
Consolidated Statements of Changes in Net
Assets/Shareholders' Equity for the years
ended December 31, 1994 and 1995 and for the
period January 1, 1996 to October 14, 1996 and
for the period October 15, 1996 to December 31,
1996 F-5
Consolidated Statements of Cash Flows for the
years ended December 31, 1994 and 1995 and
for the period January 1, 1996 to October 14,
1996 and for the period October 15, 1996 to
December 31, 1996 F-6
Notes to Consolidated Financial Statements F-8
Financial Statement Schedule S-1
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Mettler-Toledo Holding Inc.
We have audited the accompanying consolidated balance sheets of
Mettler-Toledo Holding Inc. and subsidiaries (as defined in Note
1 to the consolidated financial statements) as of December 31,
1995 and 1996 and the related consolidated statements of
operations, net assets/shareholders' equity and cash flows for
each of the years ended December 31, 1994 and 1995 and for the
period January 1, 1996 to October 14, 1996, the Predecessor
periods, and for the period October 15, 1996 to December 31,
1996, the Successor period. In connection with our audits of the
consolidated financial statements, we also have audited the
financial statement schedule as listed in the accompanying index.
These consolidated financial statements and financial statement
schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated
financial statements and financial statement schedule based on
our audits.
We conducted our audits in accordance with generally accepted
auditing standards in the United States of America. Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the 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 audits provide a reasonable
basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the consolidated
financial position of Mettler-Toledo Holding Inc. and
subsidiaries as of December 31, 1995 and 1996, and the
consolidated results of their operations and their cash flows for
each of the years ended December 31, 1994 and 1995 and for the
period January 1, 1996 to October 14, 1996, the Predecessor
periods, and for the period October 15, 1996 to December 31,
1996, the Successor period, in conformity with generally accepted
accounting principles in the United States of America. Also in
our opinion, the related financial statement schedule, when
considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.
As more fully described in Note 1 to the consolidated financial
statements, Mettler-Toledo Holding Inc. and subsidiaries were
acquired as of October 15, 1996 in a business combination
accounted for as a purchase. As a result of the acquisition, the
consolidated financial statements for the Successor period are
presented on a different basis of accounting than that of the
Predecessor periods, and therefore are not directly comparable.
KPMG Fides Peat
Zurich, Switzerland
March 11, 1997
<TABLE>
METTLER-TOLEDO HOLDING INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
<CAPTION>
Predecessor Successor
----------- ---------
December 31, December 31,
1995 1996
---- -----
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 41,402 $ 60,696
Due from Ciba and affiliates 33,072 --
Trade accounts receivable,
less allowances of $9,292
in 1995 and $8,388 in 1996 159,218 151,161
Inventories 110,986 102,526
Deferred taxes 6,180 7,565
Other current assets 21,469 17,268
--------- ---------
Total current assets 372,327 339,216
Property, plant and equipment,
net 241,018 255,292
Excess of cost over net assets
acquired, net of accumulated
amortization of $17,268 in
1995 and $982 in 1996 84,425 135,490
Long-term deferred taxes 14,312 3,916
Other assets 12,012 37,974
--------- ---------
Total assets $ 724,094 $ 771,888
========= =========
LIABILITIES AND NET ASSETS/SHAREHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 34,389 $ 32,797
Accrued and other
liabilities 107,118 115,314
Taxes payable 11,737 17,580
Deferred taxes 7,698 9,132
Bank and other loans 29,513 80,446
Notes payable to Ciba and
affiliates 91,132 --
--------- ---------
Total current liabilities 281,587 255,269
Long-term debt payable to Ciba
and affiliates 145,097 --
Long-term debt due to third
parties 3,621 373,758
Long-term deferred taxes 13,502 30,467
Other long-term liabilities 84,303 96,810
--------- ---------
Total liabilities 528,110 756,304
Minority interest 2,730 3,158
Net assets/shareholders'
equity:
Common stock, $1.00 par
value, authorized 1,000
shares; issued 1,000 in
1996 -- 1
Additional paid-in capital -- 188,108
Accumulated deficit -- (159,046)
Capital employed 162,604 --
Currency translation
adjustment 30,650 (16,637)
---------- ---------
Total net assets/
shareholders' equity 193,254 12,426
---------- ---------
Commitments and contingencies
Total liabilities and net
assets/shareholders' equity $ 724,094 $ 771,888
========== =========
</TABLE>
See the accompanying notes to the consolidated financial statements
<TABLE>
METTLER-TOLEDO HOLDING INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
<CAPTION>
Predecessor Successor
------------------------------------ -----------
For the For the
Twelve Twelve period period
months months January 1, October 15,
ended ended 1996 to 1996 to
December December October 14, December
31, 1994 31, 1995 1996 31, 1996
------------------------------------ -----------
<S> <C> <C> <C> <C>
Net sales $ 769,136 $ 850,415 $ 662,221 $ 186,912
Cost of sales 461,629 508,089 395,239 136,820
---------- ---------- ---------- -----------
Gross profit 307,507 342,326 266,982 50,092
Research and development 47,994 54,542 40,244 9,805
Selling, general and
administrative 224,978 248,327 186,898 59,353
Amortization 6,437 2,765 2,151 1,065
Purchased research and
development -- -- -- 114,070
Other charges (income),
net (2,852) (701) 1,872 9,892
---------- ---------- ---------- -----------
Earnings (loss) before
interest and taxes 30,950 37,393 35,817 (144,093)
Interest expense 13,307 18,219 13,868 8,738
Financial expense
(income), net (4,864) (8,630) (3,204) 7,245
---------- ---------- ---------- -----------
Earnings (loss) before
taxes and minority
interest 22,507 27,804 25,153 (160,076)
Provision for taxes 8,676 8,782 10,055 (938)
Minority interest 347 768 637 (92)
---------- ---------- ---------- -----------
Net earnings (loss) $ 13,484 $ 18,254 $ 14,461 $ (159,046)
========== ========== ========== ===========
See the accompanying notes to the consolidated financial statements
</TABLE>
<TABLE>
METTLER-TOLEDO HOLDING INC.
CONSOLIDATED STATEMENTS OF CHANGES IN NET
ASSETS/SHAREHOLDERS' EQUITY
(in thousands)
<CAPTION>
Predecessor
----------------------------------
For the twelve month periods ended
December 31, 1994 and 1995 and for
the period January 1, 1996 to
October 14, 1996
----------------------------------
Currency
Capital Translation
Employed Adjustment Total
-------- ---------- -----
<S> <C> <C> <C>
Net assets at December
31, 1993 $ 202,643 $ (9,122) $ 193,521
Capital transactions with
Ciba and affiliates 2,002 -- 2,002
Net earnings 13,484 -- 13,484
Change in currency
translation adjustment -- 19,187 19,187
--------- --------- ----------
Net assets at December
31, 1994 218,129 10,065 228,194
Capital transactions with
Ciba and affiliates (73,779) -- (73,779)
Net earnings 18,254 -- 18,254
Change in currency
translation adjustment -- 20,585 20,585
--------- --------- ----------
Net assets at December
31, 1995 162,604 30,650 193,254
Capital transactions with
Ciba and affiliates (88,404) -- (88,404)
Net earnings 14,461 -- 14,461
Change in currency
translation adjustment -- (6,538) (6,538)
--------- --------- ----------
Net assets at October 14,
1996 $ 88,661 $ 24,112 $ 112,773
========= ========= ==========
</TABLE>
<TABLE>
<CAPTION>
Successor
--------------------------------------------------------------------------
For the period from October 15, 1996 to December 31, 1996
--------------------------------------------------------------------------
Additional Currency
Common Paid-in Accumulated Translation
Stock Capital Deficit Adjustment Total
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Balance at October 14, 1996 $1 $ -- $ -- $ -- $ 1
Capital contribution -- 188,108 -- -- 188,108
Net loss -- -- (159,046) -- (159,046)
Change in currency
translation adjustment -- -- -- (16,637) (16,637)
----------- ------------ ---------- ---------- ----------
Balance at December 31, 1996 $1 $188,108 $ (159,046) $(16,637) $ 12,426
=========== ============ ========== ========== ==========
</TABLE>
See the accompanying notes to the consolidated financial statements
<TABLE>
METTLER-TOLEDO HOLDING INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<CAPTION>
Predecessor Successor
Twelve months Twelve months For the period For the period
ended ended January 1, 1996 October 15,
December 31, December 31, to October 14, 1996 to
1994 1995 1996 December 31,
1996
<S> <C> <C> <C> <C>
Cash flows from operating
activities:
Net earnings (loss) $ 13,484 $ 18,254 $ 14,461 $ (159,046)
Adjustments to reconcile net
earnings (loss) to net cash
provided by operating
activities:
Depreciation 27,681 30,598 19,512 7,925
Amortization 6,437 2,765 2,151 1,065
Write-off of purchased
research and development
and cost of sales
associated with
revaluation of inventories -- -- -- 146,264
Net gain on disposal of
long-term assets (1,396) (1,053) (768) --
Deferred taxes 740 (551) (1,934) (4,563)
Minority interest 347 768 637 (92)
Increase (decrease) in cash
resulting from changes in:
Trade accounts receivable,
net (7,410) (9,979) 9,569 (10,159)
Inventories (574) (607) 1,276 3,350
Other current assets 1,636 (3,058) 14,748 (10,605)
Trade accounts payable (1,123) 1,437 (3,065) 3,415
Accruals and other
liabilities, net (5,728) 13,095 5,948 32,030
--------- --------- --------- ---------
Net cash provided by
operating activities 34,094 51,669 62,535 9,584
--------- --------- --------- ---------
Cash flows from investing
activities:
Proceeds from sale of
property, plant and
equipment 12,454 4,000 1,606 736
Purchase of property, plant
and equipment (24,916) (25,858) (16,649) (11,928)
Acquisition of Mettler-
Toledo from Ciba -- -- -- (314,962)
Investments in other long
term assets, net 162 (7,484) (1,632) 4,857
-------- -------- -------- --------
Net cash used in
investing activities (12,300) (29,342) (16,675) (321,297)
--------- --------- --------- ---------
Cash flows from financing
activities:
Borrowings of third party
debt -- 3,983 -- 414,170
Repayments of third party
debt (311) -- (13,464) --
Capital contribution from MT
Investors -- -- -- 188,108
Ciba and affiliates
borrowings (repayments) (9,187) (15,693) (26,589) (184,666)
Capital transactions with
Ciba and affiliates 2,002 (37,361) (7,716) (80,687)
--------- --------- --------- ---------
Net cash provided by
(used in) financing
activities (7,496) (49,071) (47,769) 336,925
--------- --------- --------- ---------
Effect of exchange rate
changes on cash and cash
equivalents 10,040 4,344 (3,394) (615)
--------- --------- --------- ---------
Net increase (decrease) in
cash and cash equivalents 24,338 (22,400) (5,303) 24,597
Cash and cash equivalents:
Beginning of period 39,464 63,802 41,402 36,099
--------- --------- --------- ---------
End of period $ 63,802 $ 41,402 $ 36,099 $ 60,696
========= ========= ========= =========
Supplemental disclosures of
cash flow information:
Cash paid during the year
for:
Interest $ 13,225 $ 18,927 $ 6,524 $ 17,874
Taxes 9,370 9,970 9,385 2,470
Non-cash financing and
investing activities:
Due to Ciba for capital
transactions -- 36,418 -- --
</TABLE>
See the accompanying notes to the consolidated financial statements
METTLER-TOLEDO HOLDING INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in thousands unless otherwise stated)
1. BASIS OF PRESENTATION AND ACQUISITION
Mettler-Toledo Holding Inc. ("Mettler-Toledo Holding") was
formed in July, 1996 by AEA Investors Inc. ("AEA") to effect the
acquisition of the Mettler-Toledo Group from Ciba-Geigy AG
("Ciba") and its wholly-owned subsidiary, AG fur
Prazisionsinstrumente ("AGP"). Mettler-Toledo Holding is a wholly-
owned subsidiary of MT Investors Inc. ("MT Investors"). Pursuant
to the terms of a stock purchase agreement dated April 2, 1996
between MT Investors, AGP and Ciba, on October 15, 1996 MT
Investors acquired the Mettler-Toledo Group in a transaction more
fully described below.
In the accompanying consolidated financial statements the
terms "Mettler-Toledo" or the "Company" when used in situations
pertaining to periods prior to October 15, 1996 refer to the
combined group of businesses sold by Ciba and when used in
situations pertaining to periods subsequent to October 15, 1996
refer to Mettler-Toledo Holding Inc. and its consolidated
subsidiaries. The combined historical financial information of
the business acquired from Ciba prior to the acquisition on
October 15, 1996 are referred to as "Predecessor" while the
consolidated financial information of the Company subsequent to
the date of acquisition are to as "Successor."
The accompanying consolidated financial statements have been
prepared in accordance with United Sates generally accepted
accounting principles.
MT Investors acquired the Company on October 15, 1996 from a
subsidiary of Ciba for cash consideration of SFr. 504,996
(approximately $402,000) including dividends of SFr. 109,406
(approximately $87,100) which were paid to Ciba by the Company in
conjunction with the acquisition. In addition, the Company
incurred expenses in connection with the acquisition and related
financing of approximately $29,000, including approximately
$5,500 paid to AEA, and paid approximately $185,000 to settle
amounts due to Ciba and affiliates. The Company has accounted
for the acquisition using the purchase method of accounting.
Accordingly, the costs of the acquisition were allocated to the
assets acquired and liabilities assumed based upon their
respective fair values. The excess of the cost of the
acquisition over the fair value of the net assets acquired of
approximately $137,500 is being amortized over 32 years. Because
of this purchase price allocation, the accompanying financial
statements of Successor are not directly comparable to those of
the Predecessor.
The following unaudited pro forma summary presents the
consolidated results of operations of the Company as if the
acquisition had been completed as of the beginning of each of the
periods presented, after giving effect to certain adjustments,
including the depreciation and amortization of the assets
acquired based upon their fair values, increased interest expense
from the financing of the acquisition and income tax effects. The
Company allocated a portion of the purchase price to (i) in-
process research and development projects, that have economic
value (see Note 2) and (ii) the revaluation of inventories (see
Note 4). These adjustments have not been reflected in the
following pro-forma summary due to their unusual and non-
recurring nature. This pro forma summary does not necessarily
reflect the results of operations as they would have been if the
acquisition had been completed as of the beginning of such
periods and is not necessarily indicative of the results which
may be obtained in the future.
<TABLE>
<CAPTION>
Year Ended December 31
----------------------
1995 1996
---- ----
<S> <C> <C>
Net sales $ 850,415 $ 849,133
Net loss $ (5,396) $ (6,363)
</TABLE>
The foregoing proforma financial information does not reflect the
anticipated benefits to be derived in the future from the
Company's 1996 employee reduction programs.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business
Mettler-Toledo is a manufacturer and marketer of weighing
instruments for use in laboratory, industrial and food retailing
applications. The Company also manufacturers and sells certain
related laboratory measurement instruments. The Company's
manufacturing facilities are located in Switzerland, the United
States, Germany and China. The Company's principal executive
offices are located in Greifensee, Switzerland.
Principles of Consolidation
The consolidated financial statements include all of the
entities of the Company. All intercompany transactions and
balances have been eliminated.
Cash and Cash Equivalents
Cash and cash equivalents include highly liquid investments
with original maturity dates of three months or less.
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 the first in, first out (FIFO) or
weighted average cost methods and to a lesser extent the last in,
first out (LIFO) method.
Property, Plant and Equipment
Property, plant and equipment are stated at cost less
accumulated depreciation. Depreciation is charged on a straight
line basis over the estimated useful lives of the assets as
follows:
Buildings and improvements 15 to 50 years
Machinery and equipment 3 to 12 years
Computer software 3 years
Leasehold improvements Shorter of useful life or lease term
Beginning January 1, 1996 the Company adopted Financial
Accounting Standards Board's Statement of Financial Accounting
Standards No. 121 (SFAS 121), "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of".
SFAS 121 requires that long-lived assets and certain identifiable
intangibles to be held and used by an entity be reviewed for
impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. In
addition, SFAS 121 requires that long-lived assets and certain
identifiable intangibles to be disposed of be reported at the
lower of carrying amount or fair value less cost to sell.
Adoption of SFAS 121 had no material effect on the consolidated
financial statements.
Excess of cost over net assets acquired
The excess of purchase price over the fair value of net
assets acquired, is amortized on a straight-line basis over 32
years being the expected period to be benefited. The Company
assesses the recoverability of such amount by determining whether
the amortization of the balance over its remaining life can be
recovered from the undiscounted future operating cash flows of
the acquired operation. The amount of impairment, if any, is
measured based on projected discounted future operating cash
flows using a discount rate reflecting the Company's average cost
of funds. The assessment of the recoverability of the excess of
cost over net assets acquired will be impacted if estimated
future operating cash flows are not achieved.
Deferred Financing Costs
Debt financing costs, which were incurred by the Company in
connection with borrowings incurred in connection with the
acquisition discussed at Note 1, are deferred and amortized, over
the life of the underlying indebtedness using the interest
method.
Taxation
The Company files its own tax returns in each jurisdiction
in which it operates. Prior to the acquisition discussed in Note
1, in certain jurisdictions the Company filed its tax returns
jointly with other Ciba subsidiaries. The Company had a tax
sharing arrangement with Ciba in these countries to share the tax
burden or benefits. Such arrangement resulted in each company's
tax burden or benefit equating to that which it would have
incurred or received if it had been filing a separate tax return.
Taxes are accounted for under the asset and liability
method. Deferred tax assets and liabilities are recognized for
the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases and operating loss and
tax credit carryforwards. Deferred tax assets and liabilities are
measured using enacted tax rates in the respective jurisdictions
in which the Company operates that are expected to apply to
taxable income in the years in which those temporary differences
are expected to be recovered or settled. The effect on deferred
income tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment
date.
Generally, deferred taxes are not provided on the unremitted
earnings of subsidiaries outside of the United States because it
is expected that these earnings are permanently reinvested. Such
earnings may become taxable upon the sale or liquidation of these
subsidiaries or upon the remittance of dividends. Deferred taxes
are provided in situations where the Company's subsidiaries plan
to make future dividend distributions.
Research and Development
Research and development costs are expensed as incurred.
Research and development costs, including customer engineering
(which represents research and development charged to customers
and, accordingly, is included in cost of sales), amounted to
approximately $55,600, $62,400, $45,100 and $11,100 for the years
ended 1994 and 1995 and for the period from January 1, 1996 to
October 14, 1996 and for the period from October 15 1996 to
December 31, 1996, respectively. In connection with the
acquisition discussed in Note 1 the Company allocated, based upon
independent valuations, $114,070 of the purchase price to
purchased research and development in process. Such amount was
recorded as an expense in the period from October 15, 1996 to
December 31, 1996.
Currency Translation and Transactions
The reporting currency for the consolidated financial
statements of the Company is the United States dollar (USD). The
functional currency for the Company's operations is generally the
applicable local currency. Accordingly, the assets and
liabilities of companies whose functional currency is other than
the USD are included in the consolidation by translating the
assets and liabilities into the reporting currency at the
exchange rates applicable at the end of the reporting year. The
statements of operations and cash flows of such non-USD
functional currency operations are translated at the monthly
average exchange rates during the year. Translation gains or
losses are accumulated as a separate component of net assets /
shareholders' equity. Currency transaction gains or losses
arising from transactions of Mettler-Toledo companies in
currencies other than the functional currency are included in
operations at each reporting period.
Derivative Financial Instruments
The Company has only limited involvement with derivative
financial instruments and does not use them for trading purposes.
Derivative financial instruments in the form of currency forward
and option contracts are entered into by the Company primarily as
a hedge against anticipated currency exposures. Such contracts
limit the Company's exposure to both favorable and unfavorable
currency fluctuations. These contracts are adjusted to reflect
market values as of each balance sheet date, with the resulting
unrealized gains and losses being recognized in financial income
or expense, as appropriate.
Fair Value of Financial Instruments
The carrying amount of cash and cash equivalents, accounts
receivable, other current assets and current liabilities
approximates fair market value because of the short term maturity
of these financial instruments. It is not practical to determine
the fair value of balances with Ciba due to the related party
nature of these financial instruments. See Note 5 and Note 12 for
the fair values of the Company's derivative financial instruments
and third party debt, respectively. Other financial instruments
are not significant to the consolidated financial statements.
Stock Based compensation
The Company applies Accounting Principles Board Opinion No.
25 "Accounting for Stock Issued to Employees" and related
interpretations in accounting for its stock option plan.
Concentration of Credit Risk
The Company's revenue base is widely diversified by
geographic region and by individual customer. The Company's
products are utilized in many different industries, although
extensively in the pharmaceutical and chemical industries. The
Company performs ongoing credit evaluations of its customers'
financial condition and, generally, requires no collateral from
its customers.
Revenue Recognition
Revenue is recognized when title to a product has
transferred or services have been rendered. Revenues from service
contracts are recognized over the contract period.
Use of Estimates
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 period. Actual results may differ from those
estimates.
Reclassifications
Certain reclassifications have been made to the prior year
amounts to conform with the current period's presentation.
3. DUE FROM CIBA AND AFFILIATES, NET
The amount due from Ciba, net was comprised of the
following:
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
----------- ---------
DECEMBER 31, DECEMBER 31,
1995 1996
---- ----
<S> <C> <C>
Cash pool deposits $ 22,239 $ --
Due from AGP, 6.5%,
revolving repayment
terms 10,833 --
--------- ---------
$ 33,072 $ --
========= =========
</TABLE>
Prior to the acquisition discussed in Note 1, certain
Mettler-Toledo companies participated in an arrangement with Ciba
whereby excess cash was pooled into an account maintained by
Ciba. The net deposit with Ciba in connection with this
arrangement bore interest at the short-term money market rates
available to Ciba.
Prior to the acquisition Ciba also performed certain limited
administrative services on behalf of the Company. The cost of
such services, which was not charged to the Company nor included
in the consolidated financial statements, was not significant.
4. INVENTORIES
Inventories consisted of the following:
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
------------- -------------
DECEMBER 31, DECEMBER 31,
1995 1996
------------- -------------
<S> <C> <C>
Raw materials and parts $ 45,523 $ 41,015
Work-in-progress 38,191 31,534
Finished goods 30,149 29,982
--------- ---------
113,863 102,531
LIFO reserve (2,877) (5)
--------- ---------
$ 110,986 $ 102,526
========= =========
</TABLE>
At December 31, 1995 and 1996, 8.8% and 13.2% respectively,
of the Company's inventories (certain U.S. companies only) were
valued using the LIFO method of accounting. There were no
material liquidations of LIFO inventories during the periods
presented.
In connection with the acquisition discussed in Note 1, the
Company allocated approximately $32,200 of the purchase price to
revalue certain inventories (principally work-in-process and
finished goods) to fair value (net realizable value).
Substantially all of such inventories were sold during the period
from October 15, 1996 to December 31, 1996.
5. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISKS
The Company may be exposed to credit losses in the event of
nonperformance by the counterparties to its currency forward and
option contracts. The Company has no reason to believe, however,
that such counterparties will not be able to fully satisfy their
obligations under these contracts.
At December 31, 1995, the Company had contracts maturing
during 1996 to purchase the equivalent of approximately $23,300
and to sell the equivalent of approximately $27,900 in various
currencies. At December 31, 1996, the Company had contracts
maturing during 1997 to sell the equivalent of approximately
$135,000 in various currencies in exchange for Swiss francs.
These contracts were used to limit its exposure to currency
fluctuations on anticipated future cash flows, primarily for the
delivery of United States dollars, German marks, French francs,
British pounds and Japanese yen in exchange for Swiss francs.
At December 31, 1995 and 1996, the fair value of such
financial instruments, which the Company recognized as net
unrealized gains (losses), was approximately $2,400 and $(5,100)
respectively.
6. OTHER CURRENT ASSETS
Other current assets consisted of the following:
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
----------- ---------
DECEMBER 31, DECEMBER 31,
1995 1996
---- ----
<S> <C> <C>
Prepaid expenses $ 4,703 $ 5,302
Other (including in 1995 net
gains on derivative
financial instruments) 16,766 11,966
--------- ---------
$ 21,469 $ 17,268
========= =========
</TABLE>
7. PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment, net, consisted of the
following:
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
----------- ---------
DECEMBER 31, DECEMBER 31,
1995 1996
---- ----
<S> <C> <C>
Land $ 31,535 $ 63,514
Buildings and leasehold
improvements 186,608 120,173
Machinery and equipment 237,457 75,675
Computer software 5,373 3,067
--------- ---------
460,973 262,429
Less accumulated depreciation
and amortization (219,955) (7,137)
--------- ---------
$ 241,018 $ 255,292
========= =========
</TABLE>
8. OTHER ASSETS
Other assets consisted of the following:
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
----------- ---------
DECEMBER 31, DECEMBER 31,
1995 1996
---- ----
<S> <C> <C>
Deferred financing fees, net
of accumulated amortization
of $820 in 1996 $ -- $ 22,015
Bank deposits-restricted cash 4,697 5,960
Secured loans 2,911 2,805
Other 4,404 7,194
--------- ---------
$ 12,012 $ 37,974
========= =========
</TABLE>
Bank deposits-restricted cash at December 31, 1995 and 1996
principally represented deposits collateralizing a letter of
credit given by a financial institution in connection with one of
the Company's subsidiaries in the Peoples Republic of China.
9. BANK AND OTHER LOANS
Bank and other loans consisted of the following:
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
----------- ---------
DECEMBER 31, DECEMBER 31,
1995 1996
---- ----
<S> <C> <C>
Current maturities of long-
term debt $ -- $ 8,968
Borrowings under revolving
credit facility -- 51,928
Other short-term borrowings 19,408 19,550
Borrowings under line of
credit 10,105 --
--------- ---------
$ 29,513 $ 80,446
========= =========
</TABLE>
The weighted average interest rate at December 31, 1995 on
the borrowings under the line of credit was approximately 8.0%.
The weighted average interest rate at December 31, 1996 on the
borrowings under the revolving credit facility was approximately
4.1%. The Company had available revolving lines of credit and
swingline facilities for short-term financing of approximately
$75,000 at December 31, 1996 (See Note 12).
10. ACCRUED AND OTHER LIABILITIES
Accrued and other liabilities consisted of the following:
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
----------- ---------
DECEMBER 31, DECEMBER 31,
1995 1996
---- ----
<S> <C> <C>
Accrued payroll and vacation $ 26,400 $ 26,239
Social benefits and payroll
taxes 9,563 9,218
Severance and other cost
provisions 1,890 12,783
Interest 4,731 6,858
Losses on derivative financial
instruments -- 5,137
Other taxes payable 8,190 5,402
Warranty 6,420 6,803
Other liabilities 49,924 42,874
---------- ----------
$ 107,118 $ 115,314
========== ==========
</TABLE>
Warranties on Mettler-Toledo products are generally for one
year. The Company provides for warranty costs, which have not
been significant, based on historical experience.
11. DEBT PAYABLE TO CIBA AND AFFILIATES
The Company's debt obligations to Ciba and affiliates
consisted of the following:
Short-term borrowings are summarized as follows:
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
----------- ---------
DECEMBER 31, DECEMBER 31,
1995 1996
---- ----
<S> <C> <C>
Unsecured notes payable:
AGP, 4.25%, due February
29,1996 $ 26,517 $ --
Due to Ciba for capital
transactions 36,418 --
Other unsecured short-term
debt to Ciba, varying
interest rates and
maturities 28,197 --
--------- ---------
$ 91,132 $ --
========= =========
</TABLE>
Long-term obligations are summarized as follows:
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
----------- ---------
DECEMBER 31, DECEMBER 31,
1995 1996
---- ----
<S> <C> <C>
Unsecured notes payable
to Ciba and affiliates:
AGP, 8.4%, due October 14,
1996 $ 122,000 $ --
AGP, 6%, due October 14,
1996 20,000 --
Other unsecured long-term
debt to Ciba, varying
interest rates and
maturities 3,097 --
--------- ---------
$ 145,097 $ --
========= =========
</TABLE>
Interest expense on debt payable to Ciba and affiliates for
the years ended December 31, 1994 and 1995 and for the period
January 1, 1996 to October 14, 1996 was $10,506, $15,693, and
$10,955, respectively.
12. DEBT PAYABLE TO THIRD PARTIES
Long-term debt payable to third parties consist of the
following:
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
----------- ---------
DECEMBER 31, DECEMBER 31,
1995 1996
---- ----
<S> <C> <C>
9.75% Senior Subordinated
Notes due October 1, 2006 $ -- $ 135,000
Credit Agreement:
Term A Loans, interest at
LIBOR plus 2.5% (4.38% at
December 31, 1996) payable
in quarterly installments
beginning March 31, 1997 due
December 31, 2002 -- 92,730
Term B Loans, interest at
LIBOR plus 3.00% (8.53% at
December 31, 1996) payable
in quarterly installments
beginning March 31, 1997 due
December 31, 2003 -- 75,000
Term C(CH) and C(US) Loans,
interest at LIBOR plus 3.25%
(8.78% at December 31, 1996)
payable in quarterly
installments beginning March
31, 1997 due December 31,
2004 -- 72,000
Revolving credit facility -- 51,928
Other 3,621 27,546
--------- ---------
3,621 454,204
Less current maturities -- 80,446
--------- ---------
$ 3,621 $ 373,758
========= =========
</TABLE>
To provide a portion of the financing required for the
acquisition and for working capital and for general corporate
purposes thereafter, in October, 1996 the Company entered into a
credit agreement with various banks.
Loans under the credit agreement consist of: (i) Term A
Loans in an aggregate principal amount of SFr. 125,000 ($92,730
at December 31, 1996), (ii) Term B Loans in an aggregate
principal amount of $75,000 (iii) Term C(CH) loans in an
aggregate principal amount of $32,000, and (iv) Term C(US) Loans
in an aggregate principal amount of $40,000 (the Term A Loans,
the Term B Loans the Term C(CH) Loans and Term C(US) Loans are
referred to collectively as the "term loans"), and (v) a multi-
currency revolving credit facility that may be borrowed in an
aggregate principal amount of $140,000, and includes letter of
credit and swingline subfacilities available to certain
subsidiaries (the "revolving facility" and together with the term
loans, the "credit facilities").
Loans under the revolving facility may be repaid and
reborrowed and are due in full on February 18, 1997. The Company
is required to pay a facility fee equal to 0.05% per annum on the
amount of the revolving facility and letter of credit fees on the
aggregate face amount of letters of credit under the revolving
facility. At December 31, 1996 the Company had available
approximately $75,000 of additional borrowing capacity.
The credit agreement contains covenants that, among other
things, limit the Company's ability to incur liens; merge,
consolidate or dispose of assets; make loans and investments;
incur indebtedness; engage in certain transactions with
affiliates; incur certain contingent obligations; pay dividends
and other distributions; prepay the Notes; or make capital
expenditures. The credit agreement also requires the Company to
maintain a minimum net worth and a minimum fixed charge coverage
ratio, and to maintain a ratio of total debt to EBITDA below a
specified maximum.
The aggregate maturities of long-term obligations during
each of the years 1998 through 2001 are approximately $12,800,
$15,600, $19,300 and $23,000, respectively.
The estimated fair value of the Company's Senior
Subordinated Notes at December 31, 1996 was approximately
$142,000. The estimated fair value of the obligations under the
credit agreement approximate fair value due to the variable rate
nature of the obligations. Fair value estimates are made at a
specific point in time, based on relevant market information and
information about the financial instrument. Fair value estimates
were based on the amount of future cash flows discounted using
the Company's current borrowing rate for loans of comparable
maturity. These estimates are subjective in nature and involve
uncertainties and matters of significant judgment and, therefore,
cannot be determined with precision. Changes in assumptions could
significantly affect the estimates.
13. STOCK OPTION PLAN
Effective October 15, 1996, MT Investors adopted a stock
option plan to provide certain key employees and/or directors of
the Company additional incentive to join and/or remain in the
service of the Company as well as to maintain and enhance the
long-term performance and profitability of the Company. The plan
reserves 333,117 shares of Class A non-voting common stock of MT
Investors.
Under the terms of the plan, options granted shall be
nonqualified and the exercise price, as determined by the
committee, shall not be less than 100% of the fair market value
of the share of such common stock on the date of grant. Options
may not be exercised until the fifth anniversary of the date of
grant, subject to certain acceleration clauses.
Stock option activity is shown below (per share average
option price amounts in whole dollars):
<TABLE>
<CAPTION>
Option Price
-----------------
Number Per Share Total
of Shares Average Price
--------- ------- -----
<S> <C> <C> <C>
Granted during the
period October 15,
1996 to December 31,
1996 278,988 $100.00 $ 27,899
Exercised - - -
Forfeited - - -
-------- ------- --------
Outstanding at
December 31, 1996 278,988 $100.00 $ 27,899
======== ======= ========
Shares exerciseable at
December 31, 1996 - $ - $ -
======== ======= ========
</TABLE>
The Company applies Accounting Standards Board Opinion No.
25 and related interpretations in accounting for its plans.
Accordingly, no compensation cost has been recognized for its
stock option plan as all options have been issued at fair market
value. The Company's net loss for the period October 15, 1996 to
December 31, 1996 would not have been materially different had
compensation cost been determined consistent with Financial
Accounting Standards Board's Statement of Financial Accounting
Standards No. 123 "Accounting for Stock Based Compensation".
14. BENEFIT PLANS
Mettler-Toledo maintains a number of retirement plans for
the benefit of its employees.
Certain companies sponsor defined contribution plans.
Benefits are determined and funded annually based upon the terms
of the plans. Contributions under these plans amounted to $9,042,
$9,413, $9,484 and $2,496 in 1994, 1995, for the period January
1, 1996 to October 14, 1996 and for the period October 15, 1996
to December 31, 1996, respectively.
Certain companies sponsor defined benefit plans. Benefits
are also provided to employees under defined benefit plans
primarily based upon years of service and employees' compensation
for certain periods during the last years of employment.
The following table sets forth the funded status and amounts
recognized in the consolidated financial statements for the
Company's principal defined benefit plans at December 31, 1995
and 1996:
<TABLE>
<CAPTION>
Predecessor Successor
---------------------------- ----------------------------
December 31, December 31,
1995 1996
---------------------------- ----------------------------
Assets exceed Accumulated Assets exceed Accumulated
accumulated benefits accumulated benefits
benefits exceed assets benefits exceed assets
----------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Actuarial present value of
accumulated benefit obligations:
Vested benefits $ 8,582 $90,698 $10,211 $97,639
Non-vested benefits 90 3,122 16 2,280
------- ------- ------- -------
8,672 93,820 10,227 99,919
------- ------- ------- -------
Projected benefit obligations 10,737 100,820 12,458 108,504
Plan assets at fair value 10,546 40,091 13,336 50,609
------- ------- ------- -------
Projected benefit obligations in
excess of (less than) plan assets 191 60,729 (878) 57,895
Unrecognized prior service (cost)
benefit (183) 252 - -
Unrecognized net (losses) gains (188) (247) 22 1,479
Unrecognized transition obligations - (3,851) - -
------- ------- ------- -------
(Prepaid) accrued pension costs $ (180) $56,883 $ (856) $59,374
======= ======= ======= =======
</TABLE>
The (prepaid) accrued pension costs are recognized in the
accompanying consolidated financial statements as other long-term
assets and other long term liabilities, respectively.
The assumed discount rates and rates of increase in future
compensation level used in calculating the projected benefit
obligations vary according to the economic conditions of the
country in which the retirement plans are situated. The range of
rates used for the purposes of the above calculations are as
follows:
<TABLE>
<CAPTION>
1995 1996
<S> <C> <C>
Discount rates 6.5% to 8.0% 6.0% - 8.5%
Compensation increase rates 2.5% to 6.0% 2.0% - 6.5%
</TABLE>
The expected long term rates of return on plan assets ranged
between 9.5% and 11.0% in 1994, 9.5% and 10.0% for 1995, and 7.0%
and 10.0% for 1996.
The assumptions used above have a significant effect on the
reported amounts of projected benefit obligations and net
periodic pension cost. For example, increasing the assumed
discount rate would have the effect of decreasing the projected
benefit obligation and increasing unrecognized net gains.
Increasing the assumed compensation increase rate would
increase the projected benefit obligation and decrease
unrecognized net gains. Increasing the expected long-term rate of
return on investments would decrease unrecognized net gains.
Plan assets relate principally to the Company's U.S.
companies and consist of equity investments, obligations of the
U.S. Treasury or other governmental agencies, and other interest-
bearing investments.
Net periodic pension cost for all of the plans above
includes the following components:
<TABLE>
<CAPTION>
Predecessor Successor
----------------------------------------------- ----------------
Twelve months Twelve months For the period For the period
ended ended January 1, 1996 October 15, 1996
December 31, December 31, to October 14, to December 31,
1994 1995 1996 1996
------------ ------------- -------------- ----------------
<S> <C> <C> <C> <C>
Service cost (benefits
earned during the period) $ 3,833 $ 3,668 $ 3,850 $ 1,013
Interest cost on projected
benefit obligations 6,426 7,561 6,540 1,721
Actual return on plan assets (2,725) (8,653) (6,079) (1,600)
Net amortization and
deferral (170) 5,137 2,485 -
---------- ---------- ----------- -----------
Net periodic pension expense $ 7,364 $ 7,713 $ 6,796 $ 1,134
========== ========== =========== ===========
</TABLE>
The Company's U.S. operations provide postretirement medical
benefits to their employees. Employee contributions for medical
benefits are related to employee years of service.
The following table sets forth the status of the U.S.
postretirement plans and amounts recognized in the Company's
consolidated financial statements at December 31, 1995 and 1996:
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
----------- ---------
DECEMBER 31, DECEMBER 31,
1995 1996
---- ----
<S> <C> <C>
Accumulated postretirement
benefit obligations:
Retired $ 27,682 $ 25,894
Fully eligible 1,196 3,033
Other 2,361 3,098
--------- ---------
31,239 32,025
Unrecognized net loss (6,261) (540)
Unrecognized prior service
benefit 692 --
Unrecognized transition
obligation (1,389) --
--------- ---------
Accrued postretirement benefit
cost $ 24,281 $ 31,485
========= =========
</TABLE>
Net periodic postretirement benefit cost for the above plans
includes the following components:
<TABLE>
<CAPTION>
Predecessor Successor
----------------------------------------------- ----------------
Twelve months Twelve months For the period For the period
ended ended January 1, 1996 October 15, 1996
December 31, December 31, to October 14, to December 31,
1994 1995 1996 1996
------------ ------------- -------------- ----------------
<S> <C> <C> <C> <C>
Service cost (benefits
earned during the period) $ 333 $ 285 $ 431 $114
Interest cost on projected
benefit obligations 2,193 2,371 1,795 472
Net amortization and
deferral 82 99 343 -
---------- ---------- ----------- -----------
Net periodic postretirement
benefit cost $ 2,608 $2,755 $ 2,569 $586
========== ========== =========== ===========
</TABLE>
The accumulated postretirement benefit obligation and net
periodic postretirement benefit cost were principally determined
using discount rates of 7.3% in 1994 and 1995, and 7.6% in 1996,
and health care cost trend rates ranging from 9.5% to 12.25% in
1994, 1995, and 1996 decreasing to 5.0% in 2005.
The health care cost trend rate assumption has a significant
effect on the accumulated postretirement benefit obligation and
net periodic postretirement benefit cost. For example, in 1996
the effect of a one-percentage-point increase in the assumed
health care cost trend rate would be an increase of $3,064 on the
accumulated postretirement benefit obligations and an increase of
$71 on the aggregate of the service and interest cost components
of the net periodic benefit cost.
15. TAXES
The sources of the Company's earnings (loss) before taxes
and minority interest were as follows:
<TABLE>
<CAPTION>
Predecessor
-----------------------------------------------
Twelve months Twelve months For the period
ended ended January 1, 1996
December 31, December 31, to October 14,
1994 1995 1996
----------- ----------- ---------------
<S> <C> <C> <C>
Switzerland $ 9,855 $11,431 $21,241
Non-Switzerland 12,652 16,373 3,912
-------- ------- -------
Earnings before taxes and
minority interest $ 22,507 $27,804 $25,153
======== ======= =======
</TABLE>
<TABLE>
<CAPTION>
Successor
-----------------
For the period
October 15, 1996
to December 31,
1996
-----------------
<S> <C>
United States $ (37,293)
Non-United States (122,783)
----------
Earnings before taxes and
minority interest $ (160,076)
==========
</TABLE>
The provision (benefit) for taxes consists of:
<TABLE>
<CAPTION>
Current Deferred Total
------ -------- -----
<S> <C> <C> <C>
Predecessor:
Year ended December 31, 1994:
Switzerland Federal $1,182 $ (32) $1,150
Switzerland Canton (State) and
Local 1,215 (53) 1,162
Non-Switzerland 5,538 826 6,364
------- ------- -------
$7,935 $741 $8,676
======= ======= =======
Year ended December 31, 1995:
Switzerland Federal $ 513 $ (92) $ 421
Switzerland Canton (State) and
Local 481 (505) (24)
Non-Switzerland 8,339 46 8,385
------- ------- -------
$9,333 $ (551) $8,782
======= ======= =======
For the period January 1, 1996 to
October 14, 1996:
Switzerland Federal $2,152 $ (172) $ 1,980
Switzerland Canton (State) and
Local 4,305 (344) 3,961
Non-Switzerland 5,532 (1,418) 4,114
------- ------- -------
$11,989 $(1,934) $10,055
======= ======= =======
Successor:
For the period October 15, 1996
to December 31, 1996:
United States Federal $ 475 $(1,556) $(1,081)
United States State and Local 696 (183) 513
Non-United States 2,454 (2,824) (370)
------- ------- -------
$ 3,625 $(4,563) $ (938)
======= ======= =======
</TABLE>
The provision for tax expense (benefit) for the years ended
December 31, 1994 and 1995 and for the period January 1, 1996 to
October 14, 1996 where the Company operated as a group of
businesses owned by Ciba differed from the amounts computed by
applying the Switzerland federal income tax rate of 9.8% to
earnings before taxes and minority interest as a result of the
following:
<TABLE>
<CAPTION>
Predecessor
-----------------------------------------------
Twelve months Twelve months For the period
ended ended January 1, 1996
December 31, December 31, to October 14,
1994 1995 1996
----------- ----------- ---------------
<S> <C> <C> <C>
Expected tax $2,206 $ 2,725 $ 2,465
Switzerland Canton (state) and
local income taxes, net of
federal income tax benefit 1,048 (21) 3,573
Non-deductible intangible
amortization 249 248 205
Change in valuation allowance (716) 1,603 1,235
Non-Switzerland income taxes
in excess of 9.8% 5,591 4,968 2,291
Other, net 298 (741) 286
------ --------- ------------
Total provision for taxes $8,676 $ 8,782 $ 10,055
====== ========= ============
</TABLE>
The provision for tax expense (benefit) for the period
October 15, 1996 to December 31, 1996, subsequent to the
reorganization of the Company under Mettler-Toledo Holding Inc.
and the acquisition described in Note 1, differed from the
amounts computed by applying the United States federal income tax
rate of 35% to the loss before taxes and minority interest.
<TABLE>
<CAPTION>
Successor
-----------------
For the period
October 15, 1996
to December 31,
1996
-----------------
<S> <C>
Expected tax $ (56,027)
United States state and local
income taxes, net of federal
income tax benefit 333
Non-deductible purchased
research and development 39,925
Non-deductible intangible
amortization 336
Change in valuation allowance 4,662
Benefits of Non-United States
income taxes less than
35% 10,037
Other, net (204)
----------
Total provision for taxes $ (938)
==========
</TABLE>
The tax effects of temporary differences that give rise to
significant portions of the deferred tax assets and deferred tax
liabilities are presented below:
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
----------- ---------
DECEMBER 31, DECEMBER 31,
1995 1996
---- ----
<S> <C> <C>
Deferred tax assets:
Inventory $ 9,706 $ 7,974
Accrued and other liabilities 6,129 7,046
Deferred loss on sale of
subsidiaries 7,807 7,907
Accrued postretirement benefit
costs 9,227 11,334
Accrued pension costs 6,276 7,709
Net operating loss
carryforwards 10,140 15,817
Other 3,000 408
--------- ----------
Total deferred tax assets 52,285 58,195
Less valuation allowance (21,166) (46,714)
--------- ----------
Total deferred tax assets less
valuation allowance 31,119 11,481
--------- ----------
Deferred tax liabilities:
Inventory 5,952 5,618
Property, plant and equipment 21,675 31,123
Other 4,200 2,858
--------- ----------
Total deferred tax liabilities 31,827 39,599
--------- ----------
Net deferred tax liability $ 708 $ 28,118
========= ==========
</TABLE>
The net change in the total valuation allowance, including
changes resulting from translation of such amounts from the local
functional currencies to the reporting currency and the effect of
the acquisition discussed in Note 1, for the years ended December
31, 1994 and 1995 and for the period January 1, 1996 to October
14, 1996 and for the period October 15, 1996 to December 31, 1996
was a decrease of $716 for the year ended December 31, 1994, an
increase of $1,603 for the year ended December 31, 1995, an
increase of $1,111 for the period January 1, 1996 to October 14,
1996 and an increase of $24,437 for the period October 15, 1996
to December 31, 1996. Of the increase in the valuation allowance
of $24,437 during the period October 15, 1996 to December 31,
1996, $19,882 was recognized as an increase in goodwill resulting
from the acquisition discussed in Note 1. Should a reduction of
such valuation allowance be justified in the future, the amount
of any reduction would accordingly reduce goodwill.
The Company has established valuation allowances primarily
for net operating losses, deferred losses on the sale of
subsidiaries as well as postretirement and pension costs as
follows:
<TABLE>
<CAPTION>
Predecessor Successor
----------- ---------
December 31, December 31,
1995 1996
---- ----
<S> <C> <C>
Summary of valuation allowances:
Cumulative net operating losses $ 10,140 $15,817
Deferred losses on sale of subsidiaries 7,807 7,907
Accrued postretirement benefit costs -- 10,786
Accrued pension costs -- 7,336
Other 3,219 4,868
------- -------
Total valuation allowance $ 21,166 $46,714
========= =======
</TABLE>
At December 31, 1996, the Company had net operating loss
carryforwards in various countries for income tax purposes of
$59,076. Of this amount, $25,131 had no expiration date, relating
to subsidiaries in Sweden, Belgium, Australia, United Kingdom,
Austria, Brazil and France. Additionally, there were operating
losses at that date in various other countries in the amount of
$33,945 which expire in varying amounts through 2011.
In assessing the realizability of deferred tax assets,
management considers whether it is more likely than not that some
portion or all of the deferred tax assets will not be realized.
The ultimate realization of deferred tax assets is dependent upon
the generation of future taxable income during the periods in
which those temporary differences become deductible. Management
considers the scheduled reversal of deferred tax liabilities,
projected future taxable income, and tax planning strategies in
making this assessment.
16. OTHER CHARGES (INCOME), NET
Other income in 1994 and 1995 primarily relates to gains
from sales of property, and in 1994 to a gain on sale of a cost
basis investment.
Other charges for the period January 1, 1996 to October 14,
1996 of $1,872 represent employee severance of $1,545 and other
exit costs of $327 associated with the closing of its
Westerville, Ohio facility. Other charges for the period October
15, 1996 to December 31, 1996 principally represent employee
severance benefits associated with (i) the Company's general
headcount reduction programs, in Europe and North America, of
$4,557 which were announced during such period, and (ii) the
realignment of the analytical and precision balance business in
Switzerland of $6,205 which was internally announced in December,
1996. In connection with such programs the Company reduced its
workforce by 168 employees in 1996 and intends to further reduce
its workforce by approximately 70 employees.
17. FINANCIAL INCOME, NET
Financial income (expense) consists of the following for the
years ended December 31:
<TABLE>
<CAPTION>
Predecessor Successor
------------------------------------------------- ----------------
Twelve months Twelve months For the period For the period
ended ended ended October 15, 1996
December 31, December 31, October 14, to December 31,
1994 1995 1996 1996
------------------------------------------------ ----------------
<S> <C> <C> <C> <C>
Interest income $4,386 $5,388 $3,424 $ 1,079
Foreign currency
transactions, net 478 3,242 (220) (8,324)
------- ------- ------- ---------
$4,864 $8,630 $3,204 $ (7,245)
======= ======= ======= =========
</TABLE>
18. COMMITMENTS AND CONTINGENCIES
OPERATING LEASES
The Company leases certain of its facilities and equipment
under operating leases. The future minimum lease payments under
non-cancelable operating leases are as follows at December 31,
1996:
<TABLE>
<CAPTION>
<S> <C>
1997 $11,582
1998 8,521
1999 5,494
2000 2,236
2001 1,298
Thereafter 1,447
--------
Total $30,578
========
</TABLE>
Rent expense for operating leases amounted to $16,493,
$13,034 and $3,430 in 1995 and for the period January 1, 1996 to
October 14, 1996 and for the period October 15, 1996 to December
31, 1996, respectively.
19. COMMITMENTS AND CONTINGENCIES-(Continued)
Legal
The Company is party to various legal proceedings, including
certain environmental matters, incidental to the normal course of
business. Management does not expect that any of such proceedings
will have a material adverse effect on the Company's financial
condition or results of operations.
20. GEOGRAPHIC SEGMENT INFORMATION
The tables below shows the Company's operations by
geographic region. Transfers between geographic regions are
priced to reflect consideration of market conditions and the
regulations of the countries in which the transferring entities
are located.
<TABLE>
<CAPTION>
Transfers Earnings
Twelve months between Total net before
ended December 31, Net sales by Net sales by geographic sales by interest
1994 destination origin areas origin and taxes
- ---- ----------- ------ ----- ------ ---------
<S> <C> <C> <C> <C> <C>
Switzerland (1) $ 31,992 $ 89,495 $133,583 $223,078 $ 10,516
Germany 126,527 133,772 37,056 170,828 10,034
Other Europe 215,230 192,557 776 193,333 1,665
--------- ---------- --------- -------- ---------
Total Europe 373,749 415,824 171,415 587,239 22,215
United States 269,034 300,244 29,877 330,121 10,111
Other Americas 56,628 33,204 64 33,268 939
--------- ---------- --------- -------- ---------
Total Americas 325,662 333,448 29,941 363,389 11,050
Asia and other 69,725 19,864 75 19,939 238
Eliminations - - (201,431) (201,431) (2,553)
--------- ---------- --------- -------- ---------
Totals $769,136 $769,136 $ - $769,136 $ 30,950
========= ========== ========= ======== =========
</TABLE>
<TABLE>
<CAPTION>
Transfers Earnings
Twelve months between Total net before
ended December 31, Net sales by Net sales by geographic sales by interest
1994 destination origin areas origin and taxes Total assets
- ---- ----------- ------ ----- ------ --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Switzerland (1) $ 41,820 $102,712 $ 159,453 $262,165 $ 6,316 $593,955
Germany 151,974 158,393 47,379 205,772 14,799 196,460
Other Europe 247,802 228,939 799 229,738 2,080 123,431
---------- --------- --------- -------- ---------- --------
Total Europe 441,596 490,044 207,631 697,675 23,195 913,846
United States 263,945 298,053 29,578 327,631 7,363 257,956
Other Americas 52,966 32,732 131 32,863 950 14,474
---------- --------- --------- -------- ---------- --------
Total Americas 316,911 330,785 29,709 360,494 8,313 272,430
Asia and other 91,908 29,586 97 29,683 2,331 31,777
Eliminations - - (237,437) (237,437) 3,554 (493,959)
---------- --------- --------- -------- ---------- --------
Totals $ 850,415 $850,415 $ - $850,415 $ 37,393 $724,094
========== ========= ========= ======== ========== ========
</TABLE>
<TABLE>
<CAPTION>
For the period Transfers Earnings
January 1, 199l between Total net before
to October 14, Net sales by Net sales by geographic sales by interest
1996 destination origin areas origin and taxes
- ---- ----------- ------ ----- ------ ---------
<S> <C> <C> <C> <C> <C>
Switzerland (1) $ 32,282 $ 74,303 $126,423 $200,726 $ 17,299
Germany 104,961 114,015 35,583 149,598 9,631
Other Europe 186,823 171,061 840 171,901 1,928
---------- ---------- --------- --------- ---------
Total Europe 324,066 359,379 162,846 522,225 28,858
United States 217,636 246,180 22,753 268,933 8,508
Other Americas 47,473 25,925 3 25,928 618
---------- ---------- --------- --------- ---------
Total Americas 265,109 272,105 22,756 294,861 9,126
Asia and other 73,046 30,737 265 31,002 1,241
Eliminations - - (185,867) (185,867) (3,408)
---------- ---------- --------- --------- ---------
Totals $662,221 $ 662,221 $ - $662,221 $ 35,817
========== ========== ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
Earnings
For the period Transfers (loss)
October 15, 1996 Net sales between Total net before
to December 31, by Net sales geographic sales by interest Total
1996 destination by origin areas origin and taxes assets
- ---- ----------- --------- ----- ------ --------- ------
<S> <C> <C> <C> <C> <C> <C>
Switzerland (1) $ 8,415 $ 15,892 $ 39,570 $ 55,462 $(99,233) $432,387
Germany 29,688 29,117 10,965 40,082 (5,209) 170,845
Other Europe 58,598 59,688 485 60,173 (4,971) 126,063
--------- -------- -------- -------- --------- --------
Total Europe 96,701 104,697 51,020 155,717 (109,413) 729,295
United States 56,405 64,109 6,731 70,840 (32,519) 477,762
Other Americas 13,436 7,371 3 7,374 (753) 17,730
--------- -------- -------- -------- --------- --------
Total Americas 69,841 71,480 6,734 78,214 (33,272) 495,492
Asia and other 20,370 10,735 28 10,763 (1,919) 48,245
Eliminations - - (57,782) (57,782) 511 (501,144)
--------- -------- -------- -------- --------- --------
Totals $ 186,912 $186,912 $ - $186,912 $(144,093) $771,888
========= ======== ======== ======== ========= ========
<FN>
(1) Includes Corporate.
</TABLE>
21. SUMMARIZED FINANCIAL INFORMATION - METTLER-TOLEDO, INC.
In connection with the acquisition discussed in Note 1,
Mettler-Toledo, Inc., a wholly-owned subsidiary of the Company,
issued senior subordinated notes (the "Notes") which were fully
and unconditionally guaranteed on a senior subordinated basis by
the Company. Set forth below is summarized financial information
for Mettler-Toledo, Inc. Separate financial statements of Mettler-
Toledo, Inc. are not presented because management has determined
that they would not be material to investors.
During the Predecessors periods Mettler-Toledo, Inc.
operated as a subsidiary of Ciba. In connection with the
acquisition described in Note 1, Mettler-Toledo was reorganized
such that Mettler-Toledo, Inc. directly or indirectly owns each
of the entities comprising Mettler-Toledo. Summarized financial
information for Mettler-Toledo, Inc. for the Predecessor periods
assumes that the reorganization had been effected for all periods
presented.
<TABLE>
<CAPTION>
Predecessor Successor
------------------------------------------------- ---------------
Twelve months Twelve months For the period For the period
ended ended January 1, 1996 October 15,
December 31, December 31, to October 14 1996
1994 1995 1996 to December 31,
1996
------------------------------------------------ ---------------
<S> <C> <C> <C> <C>
Mettler-Toledo, Inc.:
Current assets $ - $372,327 $ - $339,216
Non-current assets - 351,767 - 432,672
Current liabilities - 281,587 - 255,269
Non-current liabilities - 246,523 - 501,035
Minority interest - 2,730 - 3,158
Net assets /
shareholders' equity - 193,254 - 12,426
Net sales 769,136 850,415 662,221 186,912
Gross profit 307,507 342,326 266,982 50,092
Net earnings (loss) 13,484 18,254 14,461 (159,046)
</TABLE>
Under the Credit Agreement of Mettler-Toledo, Inc. and the
indenture relating to the Notes, Mettler-Toledo, Inc. is
prohibited from paying dividends to Mettler-Toledo Holding Inc.
and Mettler-Toledo, Inc. and its subsidiaries are prohibited from
making loans and other advances to Mettler-Toledo Holding Inc.,
in each case, subject to certain limited exceptions.
Schedule I
Schedule I- Valuation and Qualifying Accounts
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
Additions
(1) (2)
Balance Charged Charged to
at the to costs other Balance at
beginning and accounts -Deductions- end of
Description of period expenses descibe describe period
Note (A)
<S> <C> <C> <C> <C> <C>
Accounts
Receivable-
allowance for
doubtful
accounts:
For the period
October 15, 1996
to December 31,
1996
$9,429 $97 - $1,138 $8,388
For the period
January 1, 1996 to
October 14, 1996
9,292 370 - 233 9,429
Year ended
December 31,
1995 7,411 3,287 - 1,406 9,292
1994 5,926 2,342 - 857 7,411
</TABLE>
Note A
Represents excess of uncollectable balances written off over
recoveries of accounts previously written off. Additionally,
amounts are net of foreign currency translation effect of
$(462), $(409), $(375) and $(159) for the years ended 1994 and
1995 and for the period from January 1, 1996 to October 14,
1996 and for the period from October 15, 1996 to December 31,
1996, respectively.
Exhibit 10.2
------------
AMENDMENT NO. 1
---------------
AMENDMENT NO. 1 (the "AMENDMENT"), dated as of January
14, 1997, to that certain Credit Agreement, dated as of October
15, 1996 (the "CREDIT AGREEMENT"), among METTLER-TOLEDO HOLDING,
INC., a Delaware corporation (together with its successors,
"HOLDING"), MT ACQUISITION CORP. (which has since been merged
into Mettler-Toledo, Inc.), a Delaware corporation (together with
its successors, "US BORROWER") and METTLER-TOLEDO HOLDING AG, a
corporation organized under the laws of Switzerland and after
giving effect to the MT Acquisition, a Wholly-Owned Subsidiary of
US Borrower (together with its successors, "CH BORROWER" and,
together with US Borrower, the "BORROWERS") the several financial
institutions from time to time party thereto (the "LENDERS"), the
Subsidiary Swing Line Borrowers named therein, MERRILL LYNCH &
CO., MERRILL LYNCH, PIERCE FENNER & SMITH INCORPORATED, as
documentation agent and arranger, THE BANK OF NOVA SCOTIA, as
Administrative Agent, CREDIT SUISSE, as a co-agent, and LEHMAN
COMMERCIAL PAPER, INC., as a co-agent. Capitalized terms used
and not otherwise defined herein shall have the meanings assigned
to those terms in the Credit Agreement.
W I T N E S S E T H :
---------------------
WHEREAS, Holding, the Borrowers, the Subsidiary Swing
Line Borrowers and the Lenders wish to amend the Credit Agreement
as herein provided; and
WHEREAS, pursuant to Section 11.1 of the Credit
Agreement, Holding, the Borrowers and the Lenders hereby agree to
amend Section 7.16 of the Credit Agreement as set forth herein;
NOW, THEREFORE, in consideration of the foregoing, and
for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
SECTION ONE - AMENDMENTS.
----------- - -----------
1.1. Section 7.16 of the Credit Agreement is hereby
amended by deleting the words "90 days" in the first line thereof
and by inserting in its place "180 days".
SECTION TWO - CONDITIONS TO EFFECTIVENESS OF THIS AMENDMENT.
----------- - ---------------------------------------------
2.1. This Amendment shall become effective on the date
on which the Administrative Agent shall have received duly
executed counterparts hereof from Holding, the Borrowers, the
Subsidiary Swing Line Borrowers and the Lenders.
SECTION THREE - REPRESENTATIONS AND WARRANTIES.
------------- - -------------------------------
3.1. In order to induce the Lenders to enter into this
Amendment, the Borrowers represent and warrant to the
Administrative Agent and each of the Lenders that after giving
effect to this Amendment, (i) no Unmatured Event of Default or
Event of Default has occurred and is continuing; and (ii) all of
the representations and warranties in the Credit Agreement,
giving effect to this Amendment, are true, correct and accurate
in all material respects on and as of the date hereof as if made
on the date hereof, except to the extent that changes in the
facts and conditions on which such representations and warranties
are based are required or permitted under the Credit Agreement.
The Borrowers further represent and warrant (which
representations and warranties shall survive the execution and
delivery hereof) to the Administrative Agent and each Lender
that:
(i) Each Loan Party has the corporate power,
authority and legal right to execute, deliver and perform
its obligations under this Amendment and has taken all
actions necessary to authorize the execution, delivery and
performance of its obligations under this Amendment;
(ii) No consent of any person other than the
Lenders, and no consent, permit, approval or authorization
of, exemption by, notice or report to, or registration,
filing or declaration with, any governmental authority is
required in connection with the execution, delivery,
performance of any Loan Party's obligations, validity or
enforceability of this Amendment;
(iii) This Amendment has been duly executed
and delivered on behalf of each Loan Party by a duly
authorized officer of the respective Loan Party and
constitutes a legal, valid and binding obligation of each
Loan Party enforceable in accordance with its terms, except
as the enforceability thereof may be limited by applicable
bankruptcy, reorganization, insolvency, moratorium or other
laws affecting creditors' rights generally; and
(iv) The execution, delivery and performance of
this Amendment will not violate any requirement of law or
Contractual Obligation of any Loan Party.
SECTION FOUR - MISCELLANEOUS
------------ - -------------
4.1. Except as herein expressly amended, the Credit
Agreement and all other agreements, documents, instruments and
certificates executed in connection therewith are ratified and
confirmed in all respects and shall remain in full force and
effect in accordance with their respective terms.
4.2. All references to the Credit Agreement contained
in any of the Loan Documents shall mean the Credit Agreement as
amended hereby, and as the same may at any time be amended,
amended and restated, supplemented or otherwise modified from
time to time and as in effect.
4.3. This Amendment may be executed by the parties
hereto in one or more counterparts, each of which shall be an
original and all of which shall constitute one and the same
agreement.
4.4. Each of the Borrowers agree to reimburse the
Administrative Agent and the Arranger and Documentation Agent for
their out-of-pocket expenses in connection with this Amendment,
including the reasonable fees, charges and disbursements of
Cahill Gordon & Reindel, counsel for the Administrative Agent and
the Arranger and Documentation Agent.
4.5. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of the date first above written.
METTLER-TOLEDO, INC. (the survivor
of the merger of MT Acquisition
Corp. and Mettler-Toledo, Inc.),
as a Borrower
By:/s/ Fred Ort
-------------------------------
Name: Fred Ort
Title: Head, Finance & Control
METTLER-TOLEDO HOLDING AG,
as a Borrower
By:/s/ Fred Ort
-------------------------------
Name: Fred Ort
Title: Head, Finance & Control
METTLER-TOLEDO HOLDING INC.,
as Guarantor
By:/s/ Fred Ort
-------------------------------
Name: Fred Ort
Title: Head, Finance & Control
GARVENS AUTOMATION GmbH,
GIESEN, as a Subsidiary Swing
Line
Borrower
By:/s/ Jurgen Samtleben
-------------------------------
Name: Jurgen Samtleben
Title: General Manager
METTLER-TOLEDO GmbH, GIESSEN, as a
Subsidiary Swing Line Borrower
By:/s/ Jochen Wienbeck
-------------------------------
Name: Jochen Wienbeck
Title: General Manager
By:/s/ Joachim Ruhl
-------------------------------
Name: Joachim Ruhl
Title: Head, Fin. & Contr.
METTLER-TOLEDO S.A., VIROFLAY,
as a Subsidiary Swing Line
Borrower
By:/s/ Z.J. Voorendt
-------------------------------
Name: Z.J. Voorendt
Title: General Manager
METTLER-TOLEDO K.K., TAKARAZUKA, as
a Subsidiary Swing Line Borrower
BY:/S/ IWAO KOISHI
-------------------------------
Name: Iwao Koishi
Title: Manager, Finance,
Administration
and Logistics
METTLER-TOLEDO (ALBSTADT) GmbH,
ALBSTADT, as a Subsidiary Swing
Line Borrower
By:/s/ Johann Tikart
-------------------------------
Name: Johann Tikart
Title: General Manager
By:/s/ Manfred Wochner
-------------------------------
Name: Manfred Wochner
Title: Head, Finance Group
METTLER-TOLEDO AG, GRIEFENSEE, as a
Subsidiary Swing Line Borrower
By:/s/ Hans-Rudoff Brutsch
-------------------------------
Name: Hans-Rudolf Brutsch
Title: Head, Finance Group
METTLER-TOLEDO LTD., LEICESTER,
as a Subsidiary Swing Line
Borrower
By:/s/ Graham Anthony Eley
-------------------------------
Name: Graham Anthony Eley
Title: Financial Controller &
Company Secretary
MERRILL LYNCH & CO., MERRILL LYNCH,
PIERCE, FENNER & SMITH
INCORPORATED, as Arranger and
Documentation Agent
By:/s/ Christopher K. Stout
-------------------------------
Name: Christopher K. Stout
Title: Vice President
THE BANK OF NOVA SCOTIA,
as Administrative Agent
By:/s/ Todd Meller
-------------------------------
Name: Todd Meller
Title: Authorized Signatory
CREDIT SUISSE,
as Co-Agent
By:/s/ Martin P. Lasance
-------------------------------
Name: Martin P. Lasance
Title: Associate
By:/s/ Karl M. Studer
-------------------------------
Name: Karl M. Studer
Title: Member of Senior
Management
LEHMAN COMMERCIAL PAPER INC.,
as Co-Agent
By:/s/ Michelle Swanson
-------------------------------
Name: Michelle Swanson
Title: Authorized Signatory
MERRILL LYNCH CAPITAL CORPORATION,
as a Lender
By:/s/ Christopher K. Stout
-------------------------------
Name: Christopher K. Stout
Title: Vice President
ING CAPITAL ADVISORS, INC., as Agent
for Bank Syndication Account,
as a Lender
By:/s/ Michael D. Hatley
-------------------------------
Name: Michael D. Hatley
Title: Vice President & Portfolio
Manager
CREDITANSTALT CORPORATE
FINANCE, INC.,
as a Lender
By:/s/ Alan B. Offenberg
-------------------------------
Name: Alan B. Offenberg
Title: Senior Associate
By:/s/ Gregory F. Mathis
-------------------------------
Name: Gregory F. Mathis
Title: Vice President
UNION BANK OF SWITZERLAND,
as a Lender
By:/s/ T. Frei
-------------------------------
Name: T. Frei
Title: Vice President, Structured
Finance
By:/s/ Y. Stillhart
-------------------------------
Name: Y. Stillhart
Title: Assistant Vice President
TCW ASSET MANAGEMENT COMPANY, on
behalf of its managed accounts,
as a Lender
By:/s/ Justin Driscoll
-------------------------------
Name: Justin Driscoll
Title: Vice President
LEHMAN COMMERCIAL PAPER INC.,
as a Lender
By:/s/ Michelle Swanson
-------------------------------
Name: Michelle Swanson
Title: Authorized Signatory
THE BANK OF NOVA SCOTIA,
as a Lender
By:/s/ Todd Meller
-------------------------------
Name: Todd Meller
Title: Authorized Signatory
CRESTAR BANK,
as a Lender
By:/s/ Linda L. Bergmann
-------------------------------
Name: Linda L. Bergmann
Title: Vice President
SOCIETE GENERALE,
as a Lender
By:/s/ John J. Wagner
-------------------------------
Name: John J. Wagner
Title: Vice President
BANQUE FRANCAISE DU COMMERCE
EXTERIEUR,
as a Lender
By:/s/ Frederick K. Kammler
-------------------------------
Name: Frederick K. Kammler
Title: Vice President
By:/s/ Kevin Dorsay
-------------------------------
Name: Kevin Dorsay
Title: Vice President
PRIME INCOME TRUST,
as a Lender
By:/s/ Rafael Boolan
-------------------------------
Name: Rafael Boolan
Title: V.P. Portfolio Manager
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENE,
as a Lender
By:/s/ Sean Mounier
-------------------------------
Name: Sean Mounier
Title: First Vice President
By:/s/ Brian O'Leary
-------------------------------
Name: Brian O'Leary
Title: Vice President
PNC BANK, NATIONAL ASSOCIATION,
as a Lender
By:/s/ Tom Colwell
-------------------------------
Name: Tom Colwell
Title: Vice President
THE FIRST NATIONAL BANK OF BOSTON,
as a Lender
By:/s/ Diane J. Exter
-------------------------------
Name: Diane J. Exter
Title: Managing Director
OCTAGON CREDIT INVESTORS LOAN
PORTFOLIO (a unit of The Chase
Manhattan Bank),
as a Lender
By:/s/ Joyce C. DeLucca
-------------------------------
Name: Joyce C. DeLucca
Title: Vice President
PILGRIM AMERICA PRIME RATE,
as a Lender
By:/s/ Michael J. Bacevich
-------------------------------
Name: Michael J. Bacevich
Title: Vice President
INDOSUEZ CAPITAL FUNDING II LIMITED
by Indosuez Capital as Portfolio
Advisor,
as a Lender
By:/s/ Francoise Berthelot
-------------------------------
Name: Francoise Berthelot
Title: Vice President
THE INDUSTRIAL BANK OF JAPAN, LTD.,
as a Lender
By:/s/ Jeffrey Cole
-------------------------------
Name: Jeffrey Cole
Title: Senior Vice President
DG BANK DEUTSCHE GENOSSENSCHAFTSBANK,
as a Lender
By:/s/ Norah McCann
-------------------------------
Name: Norah McCann
Title: Senior Vice President
By:/s/ Pamela D. Inglehi
-------------------------------
Name: Pamela D. Inglehi
Title: Assistant Vice President
PROTECTIVE ASSET MANAGEMENT, L.L.C.,
as a Lender
By:/s/ Mark K. Okada
-------------------------------
Name: Mark K. Okada, CFA
Title: Executive Vice President
OAK HILL SECURITIES FUND, L.P.,
as a Lender
By: Oak Hill Securities GenPar,
L.P.,
its General Partner
By: Oak Hill Securities MGP, Inc.,
its General Partner
By:/s/ Scott Krase
-------------------------------
Name: Scott Krase
Title: Vice President
SENIOR DEBT PORTFOLIO
By:Boston Management and Research as
Investment Advisor,
as a Lender
By:/s/ Payson F. Swaffield
-------------------------------
Name: Payson F. Swaffield
Title: Vice President
CREDIT AGRICOLE,
as a Lender
By:/s/ David Bouhl
-------------------------------
Name: David Bouhl, F.V.P.
Title: Head of Corporate Banking
Chicago
NEW YORK LIFE INSURANCE COMPANY,
as a Lender
By:/s/ Steven M. Benevento
-------------------------------
Name: Steven M. Benevento
Title: Assistant Vice President
THE FUJI BANK, LIMITED,
as a Lender
By:/s/ Peter L. Chinnici
-------------------------------
Name: Peter L. Chinnici
Title: Joint General Manager
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, New York Branch,
as a Lender
By:/s/ Shuichi Tajima
-------------------------------
Name: Shuichi Tajima
Title: Deputy General Manager
UNITED OF OMAHA LIFE INSURANCE,
as a Lender
By:/s/ Rodney P. Walker
-------------------------------
Name: Rodney P. Walker
Title: Vice President
VAN KAMPEN AMERICAN CAPITAL PRIME
RATE INCOME TRUST,
as a Lender
By:/s/ Kathleen A. Zarn
-------------------------------
Name: Kathleen A. Zarn
Title: Vice President
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY,
as a Lender
By:/s/ John E. Schlitske
-------------------------------
Name: John E. Schlitske
Title: Vice President
Exhibit 10.3
------------
MANAGEMENT AGREEMENT
--------------------
AGREEMENT made as of October 15, 1996 by and between METTLER-
TOLEDO, INC., a Delaware corporation, METTLER-TOLEDO AG
Greifensee, a Swiss corporation, and on behalf of itself and its
subsidiaries, METTLER-TOLEDO HOLDING DEUTSCHLAND GmbH Albstadt, a
German GmbH (each a "Corporation," and together the
"Corporations"), and AEA INVESTORS INC., a Delaware corporation
("AEA").
WHEREAS, AEA rendered certain investment banking services to
the Corporations since the date of the acquisition of the stock
or other equity interests and certain indebtedness of the
entities comprising the Mettler-Toledo Group of AG Fur
Prazisionsinstrumente Greifensee, Switzerland and the financing
related thereto;
WHEREAS, AEA also renders advisory services to selected
client companies, and the Corporations desire to retain AEA to
render advisory and consulting services to them and AEA is
willing to provide such services on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, it is mutually agreed as follows:
1. The Corporations hereby retain AEA to render advisory
and consulting services to the Corporations and AEA hereby agrees
to render such services, for the period commencing on the date
hereof and continuing so long as AEA owns any securities of MT
Investors Inc., a Delaware corporation. AEA shall render such
advisory and consulting services to the Corporations in
connection with such financial, treasury, manufacturing,
marketing, management and other matters relating to the business
and operations of the Corporations, or affiliated companies, as
the Corporations' Boards of Directors may from time to time
request.
2. As compensation for AEA's advisory and consulting
services rendered pursuant to Section 1 hereof, the Corporations
agree to pay (in the amounts specified on Exhibit A), and AEA
will accept, so long as this Agreement continues in effect, an
aggregate fee at the rate of $1,000,000 per year (payable in US
dollars), which shall include AEA's out-of-pocket costs and
expenses for travel, entertainment and similar items incurred in
the normal course of the performance of its advisory and
consulting services hereunder, such fee to be payable quarterly
in advance, on the first day of each calendar quarter, commencing
as of November 1, 1996. In addition, Mettler-Toledo, Inc. shall
reimburse AEA for any out-of-pocket expenses (other than normal
course travel, entertainment and similar items). Such
reimbursable expenses shall include, without limitation (i)
expenses incurred in connection with printing, duplicating and
delivering communications to stockholders of MT Investors Inc.
(or any of the Corporations or affiliated companies), to lenders
of any of the Corporations or any subsidiary of any Corporation,
and to holders of other securities of any of the Corporations or
any subsidiary of any Corporation; and (ii) fees and expenses of
outside consultants hired by AEA in connection with the
performance of its services hereunder; PROVIDED, that fees and
expenses of outside consultants in excess of $50,000 for any one
project or $100,000 in the aggregate for all projects in any one
year shall be reimbursed only if the Chief Executive Officer of
Mettler-Toledo, Inc. has consented to the retention of the
outside consultants the fees and expenses of which exceed $50,000
for any one project or $100,000 in the aggregate for all projects
in any one year. The parties hereto will also enter into an
Indemnification Agreement substantially in the form of Exhibit B
hereto (the "Indemnification Agreement").
(a) It is the understanding of the parties that AEA
may be involved with potential acquisitions, mergers, financing
or other major transactions involving any of the Corporations.
In any such transaction in which AEA contributes capital directly
or indirectly to any of the Corporations or arranges for third
parties to contribute capital directly or indirectly to any of
the Corporations, or which involves the refinancing of any
outstanding indebtedness of any of the Corporations, AEA shall be
entitled to such compensation, in addition to the annual fee
provided above, as such Corporations and AEA shall mutually agree
based upon customary fees and expenses for such transactions.
(b) In the event that any of the Corporations or any
of their subsidiaries employ any employee of AEA as an officer of
such Corporation or such subsidiary or otherwise, and such
employment involves a substantial amount of such employee's time,
such Corporation or such subsidiary shall compensate such
employee at a reasonable rate to be agreed upon among such
employee, such Corporation or such subsidiary, and AEA, and the
compensation payable to such employee by such Corporation or such
subsidiary shall not reduce or affect in any way the fees payable
to AEA hereunder.
3. Any notice required to be given hereunder shall be in
writing and shall be deemed sufficient if delivered in person or
mailed by certified mail as follows: if to the Corporations, to
the office of Mettler-Toledo, Inc. at Mettler-Toledo AG, Im
Langacher, CH-8606 Greifensee, Switzerland or such other address
as the Corporations may hereafter jointly designate for that
purpose; and if to AEA, to it at its office at Park Avenue Tower,
65 East 55th Street, New York, New York 10022, or such other
address as AEA may hereafter designate for that purpose.
4. This Agreement, together with the Indemnification
Agreement, constitutes the entire agreement between the parties
and supersedes all prior agreements and understandings, both
written and oral, with respect to the subject matter hereof.
This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns,
including any entity into which any of the Corporations shall
consolidate or merge or to which any of the Corporations shall
transfer substantially all of its assets. This Agreement shall
be governed by and construed in accordance with the laws of the
State of New York applicable to contracts made and to be
performed entirely within such state.
IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement as of the date and year first above written.
METTLER-TOLEDO, INC.
By: /s/ Robert F. Spoerry
-------------------------
Name: ------------------------
Title: -----------------------
METTLER-TOLEDO AG
By: /s/ Robert F. Spoerry
-------------------------
Name: ------------------------
Title: -----------------------
METTLER-TOLEDO HOLDING
DEUTSCHLAND GmbH
BY: /S/ ROBERT F. SPOERRY
-------------------------
Name: ------------------------
Title: -----------------------
AEA INVESTORS INC.
By: /s/ Thomas P. Salice
-------------------------
Name: Thomas P. Salice
-------------------------
Title: Managing Director/VP
-------------------------
Exhibit A
AEA Management Agreement
Allocation Among Mettler-Toledo Companies
Mettler-Toledo, Inc.
Holding Company/Stewardship Function $300,000
Operations* 273,000
Total Mettler-Toledo, Inc. 573,000
Mettler-Toledo AG
Operations* 308,000
Mettler-Toledo Holding Deutschland GmbH
Operations* 119,000
Total Fee $1,000,000
___________________
* Operations fee has been split based upon ratio of respective
1996 sales: 39% for Mettler-Toledo, Inc., 44% for Mettler-Toledo
AG and 17% for Mettler-Toledo Holding Deutschland GmbH. Split
will be recalculated with respect to each fiscal year beginning
with 1998 based on respective sales for the prior fiscal year.
Mettler-Toledo, Inc. will pay all out-of-pocket expenses that are
payable in addition to the fee under the Management Agreement.
Exhibit 10.4
------------
EMPLOYMENT AGREEMENT
AGREEMENT made this 30th day of October, 1996, by and
between Mettler-Toledo AG (the "Company"), and Robert F. Spoerry
(the "Executive").
The Executive is presently employed as President of the
Group Management Committee and as Chief Executive Officer and
President of the Company.
The Board of Directors of the Company (the "Board")
recognizes that the Executive's contribution to the growth and
success of the Company has been substantial. The Board desires to
provide for the continued employment of the Executive and to make
certain changes in the Executive's employment arrangements with
the Company which the Board has determined will reinforce and
encourage the continued attention and dedication to the Company
of the Executive as a member of the Company's management, in the
best interest of the Company and its shareholders. The Executive
is willing to commit himself to continue to serve the Company, on
the terms and conditions herein provided.
In order to effect the foregoing, the Company and the
Executive wish to enter into an employment agreement on the terms
and conditions set forth below. Accordingly, in consideration of
the premises and the respective covenants and agreements of the
parties herein contained, and intending to be legally bound
hereby, the parties hereto agree as follows:
SECTION 1. EMPLOYMENT.
The Company hereby agrees to continue to employ the
Executive, and the Executive hereby agrees to continue to serve
the Company, on the terms and conditions set forth herein.
SECTION 2. TERM.
This Agreement enters into force as of October 15,
1996. It is of unlimited duration.
SECTION 3. POSITION AND DUTIES.
During the Term, the Executive shall (i) serve as
President of the Company and shall have such responsibilities,
duties and authority as he may have as of the date hereof (or any
position to which he may be promoted after the date hereof) and
as may from time to time be assigned to the Executive by the
Board that are consistent with such responsibilities, duties and
authority and (ii) be appointed to serve as a member of the board
of directors of MT Investors Inc., of which the Company is an
indirect wholly owned subsidiary.
SECTION 4. PLACE OF PERFORMANCE.
In connection with the Executive's employment by the
Company, the Executive shall be based at the principal executive
offices of the Company in Greifensee, Switzerland, except for
required travel on the Company's business to an extent
substantially consistent with present business travel
obligations.
SECTION 5. COMPENSATION AND RELATED MATTERS.
(a) SALARY.
During the Term, the Company shall pay to the Executive
an annual base salary at a rate of CHF 560'000.-- or such higher
rate as may from time to time be determined by the Board, such
salary to be paid in substantially equal installments in
accordance with the Company's payroll practices for its senior
executives. This salary may be increased from time to time in
accordance with normal business practices of the Company.
Compensation of the Executive by salary payments shall not be
deemed exclusive and shall not prevent the Executive from
participating in any other compensation or benefit plan of the
Company. The salary payments (including any increased salary
payments) hereunder shall not in any way limit or reduce any
other obligation of the Company hereunder, and no other
compensation, benefit or payment hereunder shall in any way limit
or reduce the obligation of the Company to pay the Executive's
salary hereunder. While a loan (as evidenced by a Loan Agreement
between the Company and the Executive entered into on the date
hereof) from the Company to the Executive is outstanding, the
Executive shall be entitled to additional annual compensation
(which is currently estimated at CHF 52'525.--) such additional
compensation to be paid in substantially equal monthly
installments and representing the amount necessary, after payment
of all taxes and social security contributions thereon, to fully
offset the interest charged to the Executive on such loan.
(b) BONUS.
During the Term, the Executive shall be entitled to
earn annual incentive compensation in accordance with the POBS
Plus Plan for Senior Management, as attached hereto as Exhibit
A1; provided, however, that for calendar year 1996, the Executive
shall be entitled to earn transition incentive compensation based
one-half upon the POBS Plan and one-half upon the POBS Plus plan.
(c) EXPENSES.
(i) Expenses shall be reimbursed according to the
Company expense regulations as amended from time to time.
(ii)In addition the Executive is entitled to flat
compensation for minor expenses according to the Group Management
Committee Supplement to the expense regulations, as amended from
time to time.
(d) OTHER BENEFITS.
(i) The Company shall maintain in full force and
effect, and the Executive shall be entitled to continue to
participate in, all of the Company's insurance benefit plans and
arrangements in effect on the date hereof in which the Executive
participates or plans or arrangements providing the Executive
with at least equivalent benefits thereunder (including, without
limitation, the Mettler-Toledo Fonds pension scheme for senior
management, and the Company's accident plan and disability plan),
provided that the Company shall not make any changes in such
plans or arrangements that would adversely affect the Executive's
rights or benefits thereunder; provided, however, that, such a
change may be made, including termination of such plans or
arrangements if it occurs pursuant to a program applicable to all
executives of the Company and does not result in a
proportionately greater reduction in the rights of or benefits to
the Executive as compared with any other executive of the
Company. The Executive shall be entitled to participate in or
receive benefits under any employee benefit plan or arrangement
made available by the Company in the future to its executives and
key management employees, subject to and on a basis consistent
with the terms, conditions and overall administration of such
plans and arrangements. Nothing paid to the Executive under any
plan or arrangement presently in effect or made available in the
future shall be deemed to be in lieu of the salary payable to the
Executive pursuant to paragraph (a) of this Section.
(ii)The Executive shall be entitled to
participation in the (x) Mettler-Toledo Group Management
Committee Stock Purchase Plan, and (y) the Mettler-Toledo
Management Share Option Plan of 1996, each as may be amended from
time to time.
(iii) Any payments or benefits payable to the
Executive under this Agreement in respect of any calendar year
during which the Executive is employed by the Company for less
than the entire such year shall, unless otherwise provided in the
applicable plan or arrangement, be prorated in accordance with
the number of full and partial months in such calendar year
during which he is so employed.
(e) VACATIONS.
The Executive shall be entitled to no less than 30 paid
vacation days in each calendar year. The Executive shall also be
entitled to all paid holidays and personal days given by the
Company to its executives.
(f) SERVICES FURNISHED.
The Company shall furnish the Executive with office
space, stenographic assistance and such other facilities and
services, including communications and other equipment for home
office use, as shall be suitable to the Executive's position and
adequate for the performance of his duties as set forth in
Section 3 hereof.
(g) COMPANY CAR.
The Executive shall be provided with the company car
that he has been provided with by the Company as of the date
hereof (or a similar car as a replacement therefor) and the
Company shall promptly pay, or reimburse the Executive, for all
expenses associated therewith, in accordance with rules in effect
for the Company's senior management.
SECTION 6. OFFICES.
Subject to Sections 3 and 4, the Executive agrees to
serve without additional compensation, if elected or appointed
thereto, as a director of the Company and any of its subsidiaries
and / or parent companies, and in one or more executive offices
of any of the Company's subsidiaries and / or parent companies,
provided that the Executive is indemnified for serving in any and
all such capacities on a basis no less favorable than is
currently provided by the Company to any other director of the
Company or any of its subsidiaries and / or parent companies.
SECTION 7. TERMINATION.
(a) This Agreement may be terminated by either party
with or without cause giving thirty-six (36) months notice to the
end of a calendar month, subject, however, to the provisions
allowing for immediate termination according to Article 337 of
the Swiss Code of Obligations ("Article 337").
(b) The Executive may terminate his employment under
Article 337 in case of failure by the Company to comply with any
material provision of this Agreement, including (but not limited
to) the Executive's relocation without his consent to a location
other than Greifensee, Switzerland or the Company failing to
appoint (or reappoint) the Executive to the board of directors of
MT Investors Inc.
SECTION 8. COMPENSATION UPON TERMINATION.
During the notice period, the Executive is entitled to
full compensation as defined in Section 5 of this Agreement and
in the annexes / exhibits therein referred to.
SECTION 9. NO MITIGATION OR OFFSET / NONCOMPETITION.
During notice periods, the Company may waive the
services of the Executive. If the Company so decides, the
Executive shall have no duty to mitigate damages by seeking
another employment or otherwise, nor shall the amount of any
payment or benefit due under Section 5 be reduced by any
compensation earned by the Executive as the result of an
employment by another employer, by retirement benefits (other
than as paid by the Company or under Company benefits schemes) or
by offset against any amount claimed to be owed by the Executive
to the Company. The Company shall have no right at any time to
offset any unpaid portion of the loan referenced in Section 5(a)
of this Agreement against any amount owing by the Company to the
Executive hereunder. While the Executive is employed by the
Company hereunder and for a period of twenty-four (24) months
after the termination of the Executive's employment, the
Executive shall not knowingly engage in or be employed by any
business anywhere in the world which competes with the principal
businesses of the Company or its affiliates as conducted at the
date of such employment termination.
SECTION 10. SUCCESSORS; BINDING AGREEMENT.
(a) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and / or
assets of the Company, by agreement in form and substance
satisfactory to the Executive, to expressly assume and agree to
perform this Agreement in same manner and to the same extent that
the Company would be required to perform it if no such succession
had taken place. Failure of the Company to obtain such assumption
and agreement prior to the effectiveness of any such succession
shall be a breach of this Agreement and shall entitle the
Executive to compensation from the Company in the same amount and
on the same terms as he would be entitled to under Sections 7 and
8 hereof if the Company had terminated his employment under
Section 7(a) hereof. As used in this Agreement, "Company" shall
mean the Company as herein before defined and any successor to
its business and/or assets as aforesaid which executes and
delivers the agreement provided for in this Section 11 or which
otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law.
(b) If the Executive should die after the giving of
notice pursuant to Section 7 but while any amounts would still be
payable to him hereunder if he had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to the Executive's
devisee, legatee, or other designee or, if there be no such
designee, to the Executive's estate. If the Executive should die
before the giving of such notice under Section 7 and while he is
employed pursuant to this Agreement, the Company shall continue
to pay to the Executive's estate his salary for the period of six
months from the date of such death and a pro rata portion of the
bonus, if any, payable for the year in which the Executive died.
SECTION 11. NOTICE.
For the purposes of this Agreement, notices, demands
and all other communications provided for in this Agreement shall
be in writing and shall be deemed to have been duly given when
delivered or (unless otherwise specified) mailed by US or Swiss
certified or registered mail, return receipt requested, postage
prepaid, addressed as follows:
If to the Executive:
Wengirain 43
8704 Herrliberg
Switzerland
If to the Company:
Im Langacher
8606 Greifensee
Switzerland
Attn.: Corporate Secretary
with Copy to
Thomas P. Salice
c/o AEA Investors Inc.
65 East 55th Street
New York, NY 10022
or to such other address as any party may have furnished to the
others in writing in accordance herewith, except that notices of
change of address shall be effective only upon receipt.
SECTION 12. MISCELLANEOUS.
No provisions of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Executive and such officer of
the Company as may be specifically designated by the Board. No
waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No
agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made
by either party which are not set forth expressly in this
Agreement. Insofar as this Agreement does not stipulate anything
else to the contrary, the General Rules of Employment
("Allgemeine Arbeitsvertragliche Bestimmungen / AVB") of the
Company shall be applicable. The validity, interpretation,
construction and performance of this Agreement shall be governed
by the laws of Switzerland.
SECTION 13. VALIDITY.
The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which
shall remain in full force and effect.
SECTION 14. COUNTERPARTS.
This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but
all of which together will constitute one and the same
instrument.
SECTION 15. DISPUTES.
All disputes between the Executive and the Company
concerning the terms and conditions of this Agreement shall be
brought before the ordinary courts in the Canton of Zurich,
Switzerland.
SECTION 16. ENTIRE AGREEMENT.
This Agreement sets forth the entire agreement of the
parties hereto in respect of the subject matter contained herein
and supersedes all prior agreements, promises, covenants,
arrangements, communications, representations or warranties,
whether oral or written, by any officer, employee or
representative of any party hereto; and any prior agreement of
the parties hereto in respect of the subject matter contained
herein is hereby terminated and canceled.
IN WITNESS WHEREOF, the parties have executed this
Agreement on the date and year first above written.
Mettler-Toledo AG,
By:/s/ Peter Burker
--------------------------------
Peter Burker
Human Resources
By:/s/ Friedrich Ort
--------------------------------
Friedrich Ort
Finance and Control
By:/s/ Robert F. Spoerry
--------------------------------
Robert F. Spoerry
Attest:
By:/s/ Heini Rudisuhli
---------------------
Heini Rudisuhli
Exhibit 10.5
------------
Loan Agreement
between
Mettler-Toledo AG, Im Langacher, CH-8606 Greifensee
(hereinafter referred to as "MT")
and
Robert F. Spoerry, Wengirain 42, CH-8702 Herrliberg
(hereinafter referred to as "R. Spoerry")
ART. I
1.1 MT grants a loan to R. Spoerry in the amount of CHF
1,000,000 (one million Swiss Francs) for the purchase of
equity of MT Investors Inc. (the "Loan").
1.2 The Loan will be made available by MT to R. Spoerry
immediately upon his written request.
ART. 2
2.1 MT shall be entitled to request the repayment of the Loan at
any time after the expiration of 7 calendar years after the
date of this agreement ("Lifetime"). Such request shall be
made in writing not less than 90 days before the date of
repayment.
2.2 R. Spoerry shall have the right to fully or partly repay the
Loan at any time.
ART. 3
3.1 The Loan shall be interest bearing at a rate of 5% p.a.
("Interest Rate").
3.2 Interest shall be payable semi-annually (per June 30 and
December 31 of each calendar year) on the pro rata amount of
the outstanding Loan.
3.3 The first interest period shall be not earlier than the date
of the "Closing" as defined in the purchase agreement
between AEA and Ciba-Geigy and shall end at December 31,
1996.
ART. 4
4.1 This Loan Agreement shall be an appendix to and an integral
part of the Employment Agreement between R. Spoerry and MT.
ART. 5
5.1 This Loan Agreement shall be governed and interpreted
exclusively by and according to Swiss law.
5.2 Place of jurisdiction for any dispute arising from this Loan
Agreement shall be Greifensee, Zurich.
Greifensee, October 7, 1996
Robert F. Spoerry Mettler-Toledo AG
/s/ Robert F. Spoerry /s/ Fred Ort /s/ Peter Burker
- --------------------- ------------ ----------------
Exhibit 10.6
------------
MT INVESTORS INC.
STOCK OPTION PLAN
ARTICLE 1
GENERAL
1.1 PURPOSE. The purpose of this MT Investors Inc. Stock
Option Plan (the "Plan") is to provide for certain key employees
and/or directors of MT Investors Inc., a Delaware corporation
("MT"), its successors and assigns and its subsidiaries and
affiliates (MT and such other entities, collectively, the
"Company"), an incentive (i) to join and/or remain in the service
of the Company, (ii) to maintain and enhance the long-term
performance and profitability of the Company and (iii) to acquire
a proprietary interest in the success of the Company. The grant
and exercise of Options under the Plan is intended to meet the
requirements of Rule 16b-3 of the 1934 Act (as hereinafter
defined) at all times during which the Company and its Insiders
(as hereinafter defined) are subject to the requirements of
Section 16 of the 1934 Act. The Options are intended to be
"performance-based" compensation under Section 162(m)(4)(C) of
the Code (as hereinafter defined) at all times during which the
deductibility of compensation attributable to Options could be
subject to the deduction limitation of Section 162(m) of the
Code.
1.2 DEFINITION OF CERTAIN TERMS.
(a) "Agreement" means an agreement issued pursuant to
Section 2.1.
(b) "Board" means the Board of Directors of MT.
(c) "Code" means the Internal Revenue Code of 1986, as
amended.
(d) "Committee" means the Committee appointed to
administer the Plan in accordance with Section 1.3.
(e) "Company" means MT, a Delaware corporation, its
successors and assigns and its subsidiaries and affiliates.
(f) "Common Stock" means the shares of Class A common
stock, par value $.01 per share, of MT and, subject to Section
2.5, any other shares into which such common stock shall
thereafter be exchanged by reason of a recapitalization, merger,
consolidation, split-up, combination, exchange of shares or the
like.
(g) "Date of Grant" means the date as of which an
Option is granted by the Committee under an Agreement.
(h) "Fair Market Value" per share as of a particular
date means (i) the closing sales price per share of Common Stock
on the national securities exchange on which the Common Stock is
principally traded for the last date (including the Date of
Grant) on which there was a sale of such Common Stock on such
exchange, or (ii) if the shares of Common Stock are not then
traded on a national securities exchange, the average of the
closing bid and asked prices for the shares of Common Stock in
the over-the-counter market on which the Common Stock is
principally traded for the last date (including the Date of
Grant) on which there was a sale of such Common Stock in such
market, or (iii) if the shares of Common Stock are not then
listed on a national securities exchange or traded in an over-the-
counter market, such value as the Committee, in its sole
discretion, shall determine.
(i) "Insider" means an insider as so defined for
purposes of Section 16 of the 1934 Act.
(j) "1934 Act" means the Securities Exchange Act of
1934, as amended.
(k) "Option" means a "nonqualified" stock option, as
described in Section 1.5, granted under the Plan.
(l) "Optionee" means an employee or director of the
Company who has been awarded any Option under this Plan.
(m) The terms "parent corporation" and "subsidiary
corporation" as used herein shall have the meaning given those
terms in Sections 424(e) and (f) of the Code, respectively. A
corporation shall be deemed a parent or a subsidiary only for
such periods during which the requisite ownership relationship is
maintained.
(n) "Plan" means this MT Investors Inc. Stock Option
Plan.
(o) "Termination With Cause," with respect to any
Optionee, means termination by the Company of such Optionee's
employment or directorship for: (i) misappropriation of corporate
funds, (ii) conviction of a felony or a crime involving moral
turpitude, (iii) failure to comply with directions of the Chief
Executive Officer of the Company or other superiors of the
Optionee or the Board of Directors of the Company, or (iv) gross
negligence or willful misconduct.
1.3 ADMINISTRATION.
(a) Subject to Section 1.3(e), the Plan shall be
administered by a Committee of the Board which shall consist of
at least two members of the Board and which shall have the power
of the Board to authorize awards under the Plan. At all times
during which MT and its Insiders are subject to the requirements
of Section 16 of the 1934 Act, all members of the Committee shall
be "Non-Employee Directors" as described in Rule 16b-3 of the
1934 Act. From and after MT's first stockholder meeting at
which directors are elected in the year 1998, all members of the
Committee shall be "outside directors" for purposes of Section
162(m) of the Code. The members of the Committee shall be
appointed by, and may be changed from time to time in the
discretion of, the Board.
(b) The Committee shall have the authority to (i)
exercise all of the powers granted to it under the Plan, (ii)
construe, interpret and implement the Plan and any Agreement
executed pursuant to Section 2.1, (iii) prescribe, amend and
rescind rules and regulations relating to the Plan, (iv) make all
determinations necessary or advisable in administering the Plan,
(v) correct any defect, supply any omission and reconcile any
inconsistency in the Plan and (vi) grant Options on such terms,
not inconsistent with the Plan, as it shall determine.
(c) The determination of the Committee on all matters
relating to the Plan or any Agreement shall be conclusive.
(d) No member of the Committee shall be liable for any
action or determination made in good faith with respect to the
Plan or any award thereunder.
(e) Notwithstanding anything to the contrary contained
herein: (i) until the Board shall appoint the members of the
Committee, the Plan shall be administered by the Board; and (ii)
the Board may, in its sole discretion, at any time and from time
to time, resolve to administer the Plan. In either of the
foregoing events, the term "Committee" as used herein shall be
deemed to mean the Board.
1.4 PERSONS ELIGIBLE FOR AWARDS. Awards under the Plan may
be made from time to time to such key employees and directors of
the Company as the Committee shall in its sole discretion select;
provided, however, that subject to Section 3.4, the Committee may
not award Options to any such employee with respect to more than
150,000 shares of Common Stock in any fiscal year during the term
of the Plan. The Committee may condition the grant of Options on
the prospective Optionee owning shares of Common Stock.
1.5 TYPES OF AWARDS UNDER THE PLAN. Awards may be made
under the Plan in the form of stock options which shall be
"nonqualified" stock options, all as more fully set forth in
Article 2.
1.6 SHARES AVAILABLE FOR AWARDS.
(a) Subject to Section 3.4 (relating to adjustments
upon changes in capitalization), as of any date the total number
of shares of Common Stock with respect to which Options may be
outstanding under the Plan shall be equal to the excess (if any)
of (i) 333,117 shares over (ii) the sum of (A) the number of
shares subject to outstanding Options granted under the Plan and
(B) the number of shares previously issued pursuant to the
exercise of Options granted under the Plan. In accordance with
(and without limitation upon) the preceding sentence, but subject
to the requirements of Rule 16b-3 of the 1934 Act, if applicable,
shares of Common Stock covered by Options granted under the Plan
which expire or terminate for any reason shall again become
available for award under the Plan.
(b) Shares that are issued upon the exercise of
Options awarded under the Plan shall be authorized and unissued
or treasury shares of Common Stock.
(c) Without limiting the generality of the preceding
provisions of this Section 1.6, the Committee may, but solely
with the Optionee's consent, agree to cancel any award of Options
under the Plan and issue new Options in substitution therefor,
provided that the Options as so substituted shall satisfy all of
the requirements of the Plan as of the date such new Options are
awarded.
1.7 OPTION PRICE. The exercise price of each share of
Common Stock subject to an Option shall not be less than 100% of
the Fair Market Value of a share of Common Stock as of the Date
of Grant.
ARTICLE 2
STOCK OPTIONS
2.1 AGREEMENTS EVIDENCING STOCK OPTIONS.
(a) Options awarded under the Plan shall be evidenced
by Agreements which shall not be inconsistent with the terms and
provisions of the Plan, and which shall contain such provisions
as the Committee may in its sole discretion deem necessary or
desirable. Without limiting the generality of the foregoing, the
Committee may in any Agreement impose such restrictions or
conditions upon the exercise of such Options or upon the sale or
other disposition of the shares of Common Stock issuable upon
exercise of such Options as the Committee may in its sole
discretion determine. By accepting an award pursuant to the Plan
each Optionee shall thereby agree that each such award shall be
subject to all of the terms and provisions of the Plan,
including, but not limited to, the provisions of Section 1.3(d).
(b) Each Agreement shall set forth the number of
shares of Common Stock subject to the Option granted thereby.
(c) Each Agreement relating to Options shall set forth
the amount payable by the Optionee to MT upon exercise of the
Option evidenced thereby, subject to adjustment by the Committee
to reflect changes in capitalization as contemplated by Section
3.4.
2.2 TERM OF OPTIONS.
(a) Each Agreement shall set forth the period during
which the Option evidenced thereby shall be exercisable, whether
in whole or in part, and any vesting provisions applicable to the
Option, such terms to be determined by the Committee in its
discretion.
(b) Each Agreement shall set forth such other terms
and conditions, not inconsistent with the terms of the Plan, as
the Committee shall deem appropriate.
2.3 EXERCISE OF OPTIONS. Subject to the provisions of this
Article 2, each Option granted under the Plan shall be
exercisable as follows:
(a) An Option shall become exercisable at such times
and subject to such conditions as the applicable Agreement may
provide;
(b) Unless the applicable Agreement otherwise
provides, an Option granted under the Plan may be exercised from
time to time as to all or part of the shares as to which such
Option shall then be exercisable;
(c) An Option shall be exercised by the filing of a
written notice of exercise with MT, on such form and in such
manner as the Committee shall in its sole discretion prescribe;
and
(d) Any written notice of exercise of an Option shall
be accompanied by payment of the exercise price for the shares
being purchased. Such payment shall be made by certified or
official bank check payable to MT (or the equivalent thereof,
including shares of Common Stock, as may be acceptable to the
Committee). As soon as practicable after receipt of such
payment, MT shall deliver to the Optionee a certificate or
certificates for the shares of Common Stock so purchased.
2.4 TERMINATION OF OPTIONS.
(a) Notwithstanding anything to the contrary in this
Plan, except as the Agreement may otherwise provide and as set
forth in Section 2.4(b) and Section 2.4(d), Options granted to an
Optionee (and already vested but not yet exercised) shall
terminate on the date which is 45 days after termination of his
employment with the Company for any reason (other than death or
disability, in which case the Options shall terminate on the date
which is 180 days after the date of such termination).
(b) Notwithstanding anything to the contrary in this
Plan, all Options granted to an Optionee shall immediately expire
and cease to be exercisable and all rights granted to an Optionee
under this Plan and such Optionee's Agreement shall immediately
expire in the event of a Termination With Cause of the Optionee
by the Company at any time.
(c) Unless the applicable Agreement expressly provides
otherwise, Options awarded to Optionees under the terms of the
Plan will be exercisable only in accordance with the following:
(i) Options shall not be exercisable until the
fifth anniversary of the Date of Grant; provided, however, that
Options shall be fully vested in the event of a Transaction (as
defined herein) which does not also constitute a Non-Control
Transaction (as defined herein); and provided further, that from
and after the effective date of an underwritten initial public
offering of a class of common stock of the Company pursuant to an
effective registration statement, Options will be exercisable in
accordance with the following vesting schedule:
PERCENTAGE OF TOTAL
SHARES SUBJECT TO OTION
VESTING ON EFFECTIVE
IF PUBLIC OFFERING DATE OCCURS DATE OF PUBLIC OFFERING
On or after the first but before
the second anniversary of the
Date of Grant 20%
On or after the second but before
the third anniversary of the Date
of Grant 40%
On or after the third but before
the fourth anniversary of the Date
of Grant 60%
On or after the fourth but
before the fifth anniversary of
the Date of Grant 80%
On the fifth anniversary of
the Date of Grant 100%
Thereafter, twenty percent of the total number of shares subject
to the Options shall vest on each anniversary of the Date of
Grant. The Committee may modify this vesting schedule in any
manner that it deems appropriate in any Agreement, and may
provide different vesting schedules in different Agreements in
its sole discretion. Except as set forth in an Agreement or as
the Committee in its sole discretion may determine, in the event
that an Optionee's employment with the Company is terminated for
any reason prior to the date on which the Optionee's right to
exercise the Options has fully vested pursuant to this Section
2.4(c), the Options will immediately cease to be exercisable with
respect to any and all shares which have not vested as of the
date of such termination.
(d) If at the time an Optionee's employment with the
Company is terminated for any reason (including, but not limited
to, death or disability), the Common Stock is not publicly traded
on a national securities exchange or over-the-counter market, the
Company at its election, on giving ten days' written notice to
the Optionee, may (i) repurchase any and all shares of Common
Stock then owned by the Optionee which were previously acquired
by the Optionee through exercise of Options granted under this
Plan and (ii) cancel any Options which have vested under the
terms of this Plan but have not been exercised subject to payment
of the purchase price described below. The purchase price
payable by the Company to the Optionee on exercise of its right
to repurchase under (d)(i) above will be the Fair Market Value of
the Common Stock held by the Optionee which is being repurchased,
determined as of the date of the repurchase. The purchase price
payable by the Company to Optionee on exercise of the right to
cancel vested but unexercised Options under (d)(ii) above will be
the excess of the Fair Market Value of the shares of Common Stock
subject to the Options in question determined as of the date of
the cancellations over the aggregate exercise price of such
shares.
2.5 In the event of a Non-Control Transaction (as
hereinafter defined), (A) all outstanding Options shall remain
outstanding and subject to the terms and conditions of the Plan,
including the vesting schedule contained in Section 2.4(c), and
(B) each Optionee shall be entitled to receive in respect of each
share of Common Stock subject to the Option, upon exercise of
such Option after the vesting thereof, the same amount and kind
of stock, securities, cash, property or other consideration that
each holder of a share of Common Stock was entitled to receive in
the Non-Control Transaction in respect of a share. In the event
of a Transaction (as hereinafter defined), each outstanding
Option shall vest, and, as of the date of the occurrence of the
Transaction (the "Transaction Date"), the Company shall have the
right to cancel any or all Options which have not been exercised
as of the Transaction Date, subject to the payment of the
purchase price described below. The purchase price payable by
the Company to the Optionee upon the cancellation of each vested
and non-vested but unexercised Option will be the Fair Market
Value of the Common Stock underlying each such Option determined
as of the Transaction Date less the aggregate exercise price of
each such Option. The Fair Market Value will be determined in
good faith by the Board based on the value being paid to or
received by the holders of Common Stock in such Transaction for
their shares of Common Stock.
"Transaction" means (i) the approval by stockholders of the
liquidation or dissolution of MT, (ii) a sale or other
disposition of 51% or more of the outstanding voting stock of MT,
(iii) the merger or consolidation of MT with or into any entity,
or (iv) a sale or other disposition of substantially all of the
assets of MT; provided, however, that the term "Transaction"
shall exclude each transaction which is a "Non-Control
Transaction."
"Non-Control Transaction" means (i) any Transaction which
AEA Investors Inc. and/or its affiliates own, directly or
indirectly, a majority of the outstanding shares of voting stock
of the purchasing or surviving entity, as applicable, (ii) a
merger or consolidation of MT following which those persons who
owned directly or indirectly a majority of the outstanding shares
of voting stock immediately prior to such merger or consolidation
will own directly or indirectly a majority of the outstanding
shares of voting stock of the surviving corporation, (iii) a sale
or other disposition of capital stock of MT which those persons
who owned directly or indirectly a majority of the outstanding
shares of voting stock immediately prior to such sale will own
directly or indirectly a majority of the outstanding shares of
voting stock of the purchasing entity, (iv) a sale or other
disposition of substantially all of the assets of MT to an
affiliate, or (v) an initial public offering of MT or the
Company, including any related mergers, consolidation, asset
transfer or similar transactions.
2.6 RULE 16b-3. Notwithstanding anything in the Plan to
the contrary, the Plan shall be administered, and Options shall
be granted and exercised, in accordance with the 1934 Act and,
specifically, Rule 16b-3 thereof.
ARTICLE 3
MISCELLANEOUS
3.1 AMENDMENT OF THE PLAN; MODIFICATION OF AWARDS.
(a) The Board may, without stockholder approval,
suspend or discontinue the Plan or revise or amend it in any
respect whatsoever, except that no such amendment shall impair
any rights or obligations under any award theretofore made under
the Plan without the consent of the person to whom such award was
made, provided, further, that an amendment which requires
stockholder approval in order for the Plan to continue to comply
with any law, regulation or stock exchange requirement shall not
be effective unless approved by the requisite vote of
stockholders.
(b) With the consent of the Optionee and subject to
the terms and conditions of the Plan (including Section 3.1(a)),
the Committee may amend outstanding Agreements with such
Optionee, for example, to (i) accelerate the time or times at
which an Option may be exercised or (ii) extend the scheduled
expiration date of the Option.
3.2 NONASSIGNABILITY. No right granted to any Optionee
under the Plan or under any Agreement shall be assignable or
transferable other than by will or by the laws of descent and
distribution. During the life of the Optionee, all rights
granted to the Optionee under the Plan or under any Agreement
shall be exercisable only by him.
3.3 WITHHOLDING OF TAXES. (a) The Company shall be
entitled to withhold from any payments to an Optionee an amount
sufficient to satisfy any federal, state and other governmental
tax required to be withheld in connection with an Option.
Whenever under the Plan an Option is granted or shares of Common
Stock are to be delivered upon exercise of an Option, the Company
shall be entitled to require as a condition of grant or delivery
that the Optionee remit an amount sufficient to satisfy all
federal, state and other governmental tax withholding
requirements related thereto.
3.4 ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. If and to
the extent specified by the Committee, the number of shares of
Common Stock or other stock or securities which may be issued
pursuant to the exercise of Options granted under the Plan and
the exercise price of Options may be appropriately adjusted for
any increase or decrease in the number of issued shares of Common
Stock resulting from the subdivision or combination of shares of
Common Stock or other capital adjustments, or the payment of a
stock dividend after the effective date of this Plan, or other
increase or decrease in the number of such shares of Common Stock
effected without receipt of consideration by MT; provided,
however, that any Options to purchase fractional shares of Common
Stock resulting from any such adjustment shall be eliminated.
Adjustments under this Section 3.4 shall be made by the
Committee, whose determination as to what adjustments shall be
made, and the extent thereof, shall be final, binding and
conclusive.
3.5 RIGHT OF DISCHARGE RESERVED. Nothing in this Plan or
in any Agreement shall confer upon any employee or other person
the right to continue in the employment or service of the Company
or affect any right which the Company may have to terminate the
employment or service of such employee or other person.
3.6 NO RIGHTS AS A STOCKHOLDER. No Optionee or other
person holding an Option shall have any of the rights of a
stockholder of MT with respect to shares subject to an Option
until the issuance of a stock certificate to him for such shares.
Except as otherwise provided in Section 3.4, no adjustment shall
be made for dividends, distributions or other rights (whether
ordinary or extraordinary, and whether in cash, securities or
other property) for which the record date is prior to the date
such stock certificate is issued.
3.7 NATURE OF PAYMENTS.
(a) Any and all payments of shares of Common Stock or
cash hereunder shall be granted, transferred or paid in
consideration of services performed by the Optionee for the
Company.
(b) All such grants, issuances and payments shall
constitute a special incentive payment to the Optionee and shall
not, unless otherwise determined by the Committee, be taken into
account in computing the amount of salary or compensation of the
Optionee for the purposes of determining any pension, retirement,
death or other benefits under (i) any pension, retirement, life
insurance or other benefit plan of the Company or (ii) any
agreement between the Company and the Optionee.
3.8 NON-UNIFORM DETERMINATIONS. The Committee's
determinations under the Plan need not be uniform and may be made
by it selectively among persons who receive, or are eligible to
receive, awards under the Plan (whether or not such persons are
similarly situated). Without limiting the generality of the
foregoing, the Committee shall be entitled, among other things,
to make non-uniform and selective determinations, and to enter
into non-uniform and selective Agreements, as to (i) the persons
to receive awards under the Plan and (ii) the terms and
provisions of awards under the Plan.
3.9 OTHER PAYMENTS OR AWARDS. Nothing contained in the
Plan shall be deemed in any way to limit or restrict the Company
or the Committee from making any award or payment to any person
under any other plan, arrangement or understanding, whether now
existing or hereafter in effect.
3.10 RESTRICTIONS.
(a) If the Committee shall at any time determine that
any Consent (as hereinafter defined) is necessary or desirable as
a condition of, or in connection with, the granting of any award
under the Plan, the issuance or purchase of shares or other
rights thereunder or the taking of any other action thereunder
(each such action being hereinafter referred to as a "Plan
Action"), then such Plan Action shall not be taken, in whole or
in part, unless and until such Consent shall have been effected
or obtained to the full satisfaction of the Committee. Without
limiting the generality of the foregoing, if (i) the Committee is
entitled under the Plan to make any payment in cash, Common Stock
or both and (ii) the Committee determines that a Consent is
necessary or desirable as a condition of, or in connection with,
payment in any one or more of such forms, the Committee shall be
entitled to determine not to make any payment whatsoever until
such Consent shall have been obtained in the manner aforesaid.
(b) The term "Consent" as used herein with respect to
any Plan Action means (i) any and all listings, registrations or
qualifications in respect thereof upon any securities exchange or
under any federal, state or local law, rule or regulation, (ii)
any and all written agreements and representations by the grantee
with respect to the disposition of shares, or with respect to any
other matter, which the Committee shall deem necessary or
desirable to comply with the terms of any such listing,
registration or qualification or to obtain an exemption from the
requirement that any such listing, qualification or registration
be made and (iii) any and all consents, clearances and approvals
in respect of a Plan Action by any governmental or other
regulatory bodies.
3.11 SECTION HEADINGS. The section headings contained
herein are for the purposes of convenience only and are not
intended to define or limit the contents of said sections.
3.12 INTERPRETATION. Unless expressly stated in the
relevant Agreement, each Option is intended to be performance-
based compensation within the meaning of Section 162(m)(4)(c) and
the Committee shall interpret the Plan accordingly.
3.13 EFFECTIVE DATE AND TERM OF PLAN.
(a) This Plan shall be adopted and become effective
upon its adoption by the Board.
(b) The Plan shall terminate 10 years after its
adoption by the Board, and no awards shall thereafter be made
under the Plan. Notwithstanding the foregoing, all awards made
under the Plan prior to the date on which the Plan terminates
shall remain in effect until such awards have been satisfied or
terminated in accordance with the terms and provisions of the
Plan.
Exhibit 10.7
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Greifensee, July 15, 1993
Performance-Oriented Bonus System (POBS)
Regulations for the METTLER TOLEDO Management
1. OBJECTIVES AND PARTICIPANTS
With this incentive plan our aim is to pursue two main
objectives:
o To emphasize the responsibility of each manager for the TOP-
RANKING INTEREST of the Group and to promote the attainment
of the OVERALL CORPORATE GOALS; orientation to overall
success of the corporation.
o To orient the remuneration of each manager directly to his /
her PERFORMANCE by setting clearly defined targets that can
be met by the manager, and subsequent measurement of target
achievement.
Participation in the POBS must be agreed in writing.
Participation must be commensurate with the function, appropriate
goals must be definable and assessable in a realistic manner.
2. MECHANICS
2.1 Participants are assigned to one of two categories in
agreement with POBS.
Category Minimum Maximum
Annual Salary Annual Salary
Category 1 90% 120 % (of actual Target Salary)
Category 2 95% 110 %
2.2 For each manager, targets are agreed for each calendar year
with his / her supervisor. Each individual target is given
a weighting (min. 5%). The sum of the weightings must equal
l00%.
2.3 Criteria for the assessment of the attainment of each
individual target are specified:
TARGET
ACHIEVEMENT
90% target NOT REACHED - result unsatisfactory
100% target REACHED, corresponding to the
requirements - good result
110 % CLEARLY MORE than target achieved,
requirements CLEARLY exceeded, in terms of
value, time limits, quality, additional
related success - very good result
120% target achievement OUTSTANDING, additional
major benefits/success for the company
reached - excellent result
2.4 The ANNUAL TARGET SALARY is determined for the period
JANUARY 1 TO DECEMBER 31 (Switzerland: April 1st to March
31) OF THE UPCOMING YEAR. It should be commensurate with
the requirements of the function and hence conform to the
market. It is reached when each of the set targets has been
achieved WELL AND COMPLETELY.
2.5 At the end of the calendar year, TARGET ACHIEVEMENT IS
ASSESSED by the superior manager. The degree of achievement
of each individual target (90 to 120%), see above) is
multiplied by the weighting of the individual target to give
a points award for each individual target. The total score
for all targets lies between 90 and 120 points. The
EFFECTIVE ANNUAL SALARY (IN % OF FORGET SALARY) is the
result of target salary multiplied by the total score and
divided by 100 (CATEGORY 1). For CATEGORY 2 the conversion
has to be made to the total number of points:
ANNUAL SALARY IN % OF ANNUAL TARGET SALARY
WITH DIFFERENT DEGREE OF TARGET
ACHIEVEMENT
TOTAL POINTS
ACHIEVED CATEGORY I CATEGORY 2
90 points 90% minimum 95%
100 points 100% 100%
110 points 110% 105%
120 points 120% maximum 110%
The intermediate steps are linear:
- - 1 point counts 1% of target salary in Category 1
- - 1 point counts 0.5% of target salary in Category 2
3. TARGET SETTING
3.1 The requirements for complete and proper target achievement
(100 %) should be challenging and ambitious, on the other
hand they have to be realistic and attainable. For each
participant they should be set in such a way that they can
be fulfilled clearly and to the full extent, so that payment
of the target salary can be realized on the yearly average.
3.2 Each POBS sheet includes the following target categories:
A Group targets - as a rule 1 - 2 targets
B Targets of operative unit- as a rule 1 - 4 targets
C Personal targets - as a rule 3 - 6 targets
The GMC establishes the basic weighing of the targets
annually. Not more than 10 Individual targets should be
defined.
In case of the change of important conditions by internal
reasons (e.g. changes in the mission, the assignment, the
scope, the available means), the TARGETS WILL BE ADJUSTED in
a fair way by dialogue with the superior manager.
4. YARDSTICKS FOR TARGET ACHIEVEMENT
A correct DETERMINATION OF TARGET ACHIEVEMENT is of prime
importance. It is decisive that the activities of the
participants are really ORIENTED TO THE DESIRED TARGETS.
Specification of the correct yardsticks helps visualize the
intended direction. In particular, it must be ensured that
quantitative targets are set in the right context and do not lead
to wrong decision processes and behavior, e.g. local optimization
regardless of negative effects in other units. It is advisable
to specify RELATIVE NUMBERS and not absolute values (e.g. % of
budget). Targets should not overlap with nor be in contradiction
to each other.
A GROUP TARGETS
As a basis target, values referring to the profit and / or
liquidity of the METTLER TOLEDO group are determined annually
by the GMC together with the weighting. They have to be
approved by our Board of Directors.
B TARGETS OF OPERATIVE UNIT
Emphasis is placed on the operative performance of the
business unit. The targets must be agreed between the
employee and his superior manager in a target dialogue and
authorized by their responsible supervisor. As a rule, they
result from the budget, in proportion to the task.
POSSIBLE TARGET PARAMETERS:.
General Managers MOs Sales, operational cash flow
(OCF), return on assets (ROA),
country contribution, costs,
ratios of assets
General Managers POs OCF, OPBIT. ROA, contribution
Business Unit Managers and Soles, OCF, OPBFT, cost,
Managers Administration contribution, assets
Division and SBU Managers Consolidated OPBIT, etc.
C PERSONAL TARGETS
The personal targets are established in an intensive dialogue
between the employee and his / her superior manager within
the set framework and must be authorized by their responsible
supervisor.
They can be quantitative and/or qualitative, job-oriented
objectives which must be agreed individually in the target
dialogue. An intermediate assessment should be recorded In
brief by the participant every quarter.
POSSIBLE YARDSTICKS:
Progress of project and action programs; leadership behavior,
trainee promotion, orientation to our Corporate Mission
Statement, TQM progress, broadening of competence.
5. PAYMENT
During the year 90% of the target salary (minimum annual salary)
will be paid. The distribution of this amount over the
individual months from January to December can vary from country
to country.
As soon as the results of the previous year and the assessment of
the target achievement are available, the DIFFERENCE BETWEEN THE
MINIMUM ANNUAL SALARY ALREADY PAID AND THE ANNUAL SALARY
EFFECTIVELY ATTAINED will be paid, usually in April.
6. TERMINATION OF EMPLOY DURING THE CALENDAR YEAR
In case of termination in the first half-year of the calendar
year, the target salary is paid (100%) pro rata. In case of
termination of employ in the second half-year, target achievement
is measured at the end of the year (usual procedure) and the
remaining balance will be paid pro rata.
7. EFFECTIVE DATE
These regulations are valid as of 1993 and replace all previous
regulations.
GROUP MANAGEMENT COMMITTEE:
/S/ H. VODICKA
- --------------
H. Vodicka
EXAMPLE OF POBS SETTLEMENT
The calculation is performed for both POBS categories
(category 1=90/120%, category 2=95/110%).
1. Fundamentals
Target with weighting specified (see under point 3).
POBS CATEGORY CATEGORY 1 CATEGORY 2
(90/120%) (95/110%)
Annual target salary
(local currency) 110.000.00 or 110.000.00
Maximum income/year 132.000.00 or 121.000.00
Minimum income/year 99.000.00 or 104.500.00
2. ASSESSMENT OF THE TARGET ACHIEVEMENT AND CALCULATIONS
GROUP TARGET Specified Assessment Result
WEIGHTING TARGET POINTS
(Agreement) ACHIEVEMENT on
Completion
(A) (B) (A) X (B)
AGroup Target
A1 Target 1 10% 120% 12.00
A2 Target 2 20% 105% 21.00
BB1 Target 1 30% 110% 33.00
B2 Target 2 10% 95% 9.50
CC1 Target 1 5% 90% 4.50
C2 Target 2 15% 115% 17.25
C3 Target 3 10% 120% 12.00
TOTAL 100% 109.25
ASSESSMENT
3. SETTLEMENT
CATEGORY 1 CATEGORY 2
(90/120%) (95/110%)
----------- -----------
Annual target salary 110.000 110.000
Annual salary attained with 109.25
points in % of annual target
salary 109.25% 104.63%
IN LOCAL CURRENCY 120.175 115.093
Already paid during year (minimum) -99.000 -104.500
------- --------
BALANCE OF PAYMENT IN APRIL OF
FOLLOWING YEAR 21.175 10.593
Exhibit 10.8
------------
Greifensee, November 4, 1996
POBS PLUS
INCENTIVE SCHEME FOR SENIOR MANAGEMENT OF METTLER TOLEDO
REGULATIONS
1. OBJECTIVES AND PARTICIPANTS
With this incentive plan our aim is to pursue two main
objectives:
(bullet) To orient the remuneration of senior managers
directly to the ACHIEVEMENT OF ANNUAL OPERATING
PLAN TARGETS and to give a special reward for
reaching and exceeding the plan.
(bullet) To emphasize the responsibility of each
participant for the TOP-RANKING interest of the
Group and to promote the attainment of the OVERALL
CORPORATE GOALS and success of the corporation.
Participation in the POBS Plus incentive scheme is determined
by the Group Management Committee and must be agreed in
writing.
Criteria for participation are:
(bullet) Key management function which by virtue of its
tasks and the performance of its jobholder can
significantly influence and contribute to the
overall success of the entire Group.
(bullet) Managers with leadership skills and high
professional competence.
2. GENERAL PRINCIPLES
2.1 In addition to the yearly base salary, participants are
eligible for a BONUS which is based and calculated on the
GRADE OF TARGET ACHIEVEMENT.
This bonus is a PERCENTAGE MULTIPLE of the base salary
ranging from 0 - 150%.
2.2 BONUS SCALE
(bullet) The bonus starts AFTER 90% target achievement and
can go up to a MAXIMUM of 130% target
achievement.
(bullet) Within this span, for EACH POINT of target
achievement, 3.75% of the base salary are
calculated as bonus.
2.3 TARGETS
All targets in POBS Plus are closely related to the yearly
BUDGETS and BUSINESS PLANS.
As a general rule, POBS Plus includes the following target
CATEGORIES and WEIGHTING:
A Group targets 50%
B Operative unit targets 40%
C Personal targets 10%
Target parameters and respective weighting within a category
for typical functions in POBS Plus are established for each
business year in the RESPECTIVE POBS PLUS SCHEME.
Typical PARAMETERS within A and B category and their
relative weighting are:
OPBIT 70%
OCF 1 30%
With B category, also sales, inventory turnover, tax
savings, interest payments (for finance / control functions)
can be defined.
Each individual target is given a weighting of minimum 5%.
The total number of targets defined should not exceed 10 and
the sum of the weightings must equal 100%.
Based on the approved budget of the Group and Operative
Units, the POBS PLUS RULES which quantify the actual VALUES
and LEVELS of target achievement per category and parameter
are established.
Both, POBS Plus Scheme and Rules are proposed per business
year by the Group Management Committee and they have to be
approved by the Compensation Committee.
3. TARGET SETTING
3.1 The requirements for complete and proper target achievement
(100%) should be challenging and ambitious, on the other
hand they have to be realistic and attainable. For each
participant they should be set in such a way that they CAN
BE fulfilled clearly and to the full extent.
3.2 Personal targets (category C) are agreed at the beginning of
each business year for each participant with his / her
supervisor. They need to be clearly measurable.
3.3 For each participant, a POBS PLUS TARGET ACHIEVEMENT SHEET
lists per business year all targets set incl. their
weighting and the corresponding values / levels in line with
the corresponding POBS Plus Rules.
4. TARGET ASSESSMENT
4.1 At the end of the business year, TARGET ACHIEVEMENT IS
ASSESSED by the superior manager for each participant.
The degree of achievement of each individual target (range
90% to max. 130%) is multiplied by the weighting of the
individual target to give a points award for each individual
target. The total score for all targets lies between 90 and
130 points which number also corresponds to the overall
percentage of target achievement.
4.2 PERSONAL TARGETS (C category) are EVALUATED as follows:
TARGET ACHIEVEMENT
90% Target NOT REACHED - result unsatisfactory
100% Target REACHED, corresponding to the requirements
- good result
110% CLEARLY MORE than target achieved, requirements
CLEARLY exceeded, in terms of value, time limits,
quality, additional related success - very good
result
120% Target achievement OUTSTANDING, additional major
benefits/success for the company reached,
excellent result
130% Target achievement exceptional, extraordinary
additional value to the company - unique result.
5. BONUS CALCULATION
The bonus is calculated in a percentage of the yearly base
salary and can vary from 0 to 150% of this base salary
depending on the total sum of points reached in the target
assessment.
Each full point above 90 and up to a maximum of 130
corresponds to a bonus amount of 3.75% of the base salary.
"BONUS FORMULA":
(Target Points - 90 Points) x 3.75 = Bonus in % of base
salary
EXAMPLE
- Base Salary: 120'000
- Target Achievement 109.55% or Points
(109.55 - 90) x 3.75 = 73.3125% of base salary
- BONUS: 87'975
6. PAYMENT
During the salary year (Jan. 1 - Dec. 31 of the calendar
year OR April 1 - March 31 of the following year) the annual
base salary will be paid, normally divided in 12 equal
monthly installments. The distribution of this basic amount,
however, can vary in certain countries.
As soon as the results of the business year and the
assessment of the target achievement are available, the
BONUS is calculated on the set base salary and will usually
be paid in April following the end of the business year.
7. TERMINATION OF EMPLOYMENT DURING THE BUSINESS YEAR
In case of termination in the first half-year of the
business year, the bonus is paid pro rata on a set 95%
target achievement. In case of termination of employment in
the second half-year, target achievement is measured at the
end of the year (usual procedure) and the bonus calculated
accordingly will be paid pro rata.
8. ACCOUNTING RULES FOR BONUS PAYMENTS
Bonus payments are accounted for in the business year to
which the bonus belongs. APPROPRIATE ACCRUALS have to be
made for this purpose in the year end closing. Carry over
into accounts of the payout year are not allowed.
For the Group Management Committee:
Peter Burker
Human Resources
Exhibit 21.1
------------
Subsidiaries of the Company
---------------------------
Austria
- -------
Mettler-Toledo Ges.m.b.H.
Australia
- ---------
Mettler-Toledo Limited
Belgium
- -------
N.V. Mettler-Toledo S.A.
Bermuda
- -------
Mettler-Toledo Finance Ltd.
Brazil
- ------
Mettler-Toledo Industria e Commercio Ltda.
Canada
- ------
Mettler-Toledo Inc.
China
- -----
Changzhou Toledo Electronic Scale Ltd.
Mettler-Toledo Instruments (Shanghai) Ltd.
Mettler-Toledo Int. Trading (Shanghai) Corp.
Panzhihua Toledo Electronic Scale Ltd.
Xinjiang Toledo Electronic Scale Ltd.
Croatia
- -------
Mettler-Toledo d.o.o.
Czech Republic
- --------------
Mettler-Toledo spol. s.r.o.
Denmark
- -------
Mettler-Toledo A/S
France
- ------
Mettler-Toledo SA
Mettler-Toledo Analyse Industrielle S.a.r.l.
Ohaus S.a.r.l.
Germany
- -------
Mettler-Toledo (Albstadt) GmbH
Garvens Automation GmbH
Mettler-Toledo GmbH
Getmore Gesell fur Marketing & Media Service GmbH
Ohaus Waagen Vertriebsgesellschaft GmbH
Mettler-Toledo Management Holding Deutschland GmbH
Hong Kong
- ---------
Mettler-Toledo (HK) Ltd.
Hungary
- -------
Mettler-Toledo Kereskedelml Kft.
Italy
- -----
Mettler-Toldeo grandi impianti S.r.l.
Mettler-Toledo S.p.A.
Japan
- -----
Mettler-Toledo K.K.
Korea
- -----
Mettler-Toledo (Korea) Ltd.
Malaysia
- --------
Mettler-Toledo (M) Sdn. Bhd.
Mexico
- ------
Mettler-Toledo S.A. de C.V.
Ohaus de Mexico S.A. de C.V.
Netherlands
- -----------
Mettler-Toledo B.V.
Mettler-Toledo Holding B.V.
Norway
- ------
Mettler-Toledo A/S
Cargoscan A/S
Cargoscan Holding A/S
Poland
- ------
Mettler-Toledo Sp.z.o.o.
Russia
- ------
3A0 Mettler-Toledo Vostok
Singapore
- ---------
Mettler-Toledo (S) Pte Ltd.
Slovak Republic
- ---------------
Mettler-Toledo Service s.r.o.
Mettler-Toledo spol. s.r.o.
Slovenia
- --------
Mettler-Toledo d.o.o.
Spain
- -----
Mettler-Toledo S.A.E.
Sweden
- ------
Mettler-Toledo AB
Switzerland
- -----------
Mettler-Toledo Holding AG
Mettler-Toledo GmbH
Mettler-Toledo Logistik AG
Mettler-Toledo Pac Rim AG
Mettler-Toledo (Schweiz) AG
Microwa Prazisionswaagen AG
Pivott Instrumente AG
Taiwan
- ------
Mettler-Toledo Pac Rim AG-Taiwan Branch
Thailand
- --------
Mettler-Toledo (Thailand) Ltd.
United Kingdom
- --------------
Mettler-Toledo Ltd.
Ohaus Europe Ltd.
United States of America
- ------------------------
ACME Scale & Supply Inc. (PA)
Hi-Speed Checkweigher Co., Inc. (NY)
Mettler-Toledo Process Analytical, Inc. (MA)
Ohaus Corp. (NJ)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1996
<PERIOD-END> DEC-31-1995 DEC-31-1996
<CASH> 41,402 60,696
<SECURITIES> 0 0
<RECEIVABLES> 168,510 159,549
<ALLOWANCES> (9,292) (8,388)
<INVENTORY> 110,986 102,526
<CURRENT-ASSETS> 372,327 339,216
<PP&E> 460,973 262,429
<DEPRECIATION> (219,955) (7,137)
<TOTAL-ASSETS> 724,094 771,888
<CURRENT-LIABILITIES> 281,587 255,269
<BONDS> 0 0
0 0
0 0
<COMMON> 0 0
<OTHER-SE> 193,254 12,426
<TOTAL-LIABILITY-AND-EQUITY> 724,094 771,888
<SALES> 850,415 849,133
<TOTAL-REVENUES> 850,415 849,133
<CGS> 508,089 532,059
<TOTAL-COSTS> 508,089 532,059
<OTHER-EXPENSES> 304,933 425,350
<LOSS-PROVISION> 3,287 467
<INTEREST-EXPENSE> 18,219 22,606
<INCOME-PRETAX> 27,804 (134,923)
<INCOME-TAX> 8,782 9,117
<INCOME-CONTINUING> 18,254 (144,585)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 18,254 (144,585)
<EPS-PRIMARY> 0.000 0.000
<EPS-DILUTED> 0.000 0.000
</TABLE>
