<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 4, 1998
REGISTRATION NO. 333-51925
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
METTLER-TOLEDO INTERNATIONAL INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 3596 13-3668641
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
------------------------
<TABLE>
<S> <C>
WILLIAM P. DONNELLY
METTLER-TOLEDO INTERNATIONAL INC.
IM LANGACHER PARK AVENUE TOWER
P.O. BOX MT-100 65 EAST 55TH STREET, 27TH FLOOR
CH 8606 GREIFENSEE, SWITZERLAND NEW YORK, NY 10022
011-41-944-22-11 (212) 644-5900
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE INCLUDING AREA CODE, OF AGENT FOR SERVICE)
OFFICES)
</TABLE>
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Copies to:
<TABLE>
<S> <C>
TIMOTHY E. PETERSON, ESQ. JAMES C. SCOVILLE, ESQ.
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON DEBEVOISE & PLIMPTON
4 CHISWELL STREET 875 THIRD AVENUE
LONDON, EC1Y 4UP, ENGLAND NEW YORK, NEW YORK 10022
(011-44-171) 972-9600 (212) 909-6000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
- ------------------
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
- ------------------
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. /x/
------------------------
CALCULATION OF REGISTRATION FEE
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<CAPTION>
PROPOSED PROPOSED
MAXIMUM OFFERING MAXIMUM AGGREGATE
TITLE OF SECURITIES AMOUNT TO BE PRICE PER OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED(1) SHARE(2) PRICE(1)(2) REGISTRATION FEE(2)(3)
<S> <C> <C> <C> <C>
Common Stock, $.01 par value...... 11,500,000 $19.78 $227,470,000 $67,104
</TABLE>
(1) Includes shares of Common Stock that may be sold pursuant to the
Underwriters' over-allotment option.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c), using the average of the high and low prices
reported on the New York Stock Exchange on May 4, 1998.
(3) The Company previously paid a filing fee of $98,978.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
EXPLANATORY NOTE
This registration statement contains two forms of Prospectus: one to be
used in connection with a United States and Canadian offering of the
registrant's Common Stock (the 'U.S. Prospectus') and one to be used in
connection with a concurrent international offering of the Common Stock (the
'International Prospectus' and, together with the U.S. Prospectus, the
'Prospectuses'). The International Prospectus will be identical to the U.S.
Prospectus except that it will have a different front cover page, underwriting
section and back cover page. The U.S. Prospectus is included herein and is
followed by the alternate pages to be used in the International Prospectus. The
front cover page, underwriting section and back cover page for the International
Prospectus included herein have all been labeled 'Alternate Page for
International Prospectus.'
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO THE REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH
STATE.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED JUNE 4, 1998
PROSPECTUS [LOGO]
10,000,000 SHARES
METTLER-TOLEDO INTERNATIONAL INC.
COMMON STOCK
------------------------
All of the 10,000,000 shares of Common Stock of Mettler-Toledo
International Inc. ('Mettler-Toledo' or the 'Company') offered hereby are being
sold by certain shareholders (the 'Selling Shareholders') of the Company. See
'Principal and Selling Shareholders.' The Company is not selling shares of
Common Stock in this Offering and will not receive any of the proceeds from the
sale of Common Stock offered hereby.
Of the 10,000,000 shares of Common Stock offered hereby, 8,000,000 shares
are being offered for sale initially in the United States and Canada by the U.S.
Underwriters and 2,000,000 shares are being offered for sale initially in a
concurrent offering outside the United States and Canada by the International
Managers. The initial public offering price and the underwriting discount per
share will be identical for both Offerings. See 'Underwriting.'
The Common Stock is listed on the New York Stock Exchange under the symbol
'MTD.' On June 3, 1998, the last sale price of the Common Stock as reported on
the New York Stock Exchange was $19 3/4 per share. See 'Price Range of Common
Stock.'
SEE 'RISK FACTORS' BEGINNING ON PAGE 11 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) SELLING SHAREHOLDERS(2)
<S> <C> <C> <C>
Per Share... $ $ $
Total(3).... $ $ $
</TABLE>
(1) The Company and the Selling Shareholders have agreed to indemnify the
several Underwriters against certain liabilities, including certain
liabilities under the Securities Act of 1933, as amended. See
'Underwriting.'
(2) The Company has agreed to pay certain expenses of the Selling Shareholders
estimated at $ .
(3) The Selling Stockholders have granted the U.S. Underwriters and the
International Managers options to purchase up to an additional 1,200,000
shares and 300,000 shares of Common Stock, respectively, in each case
exercisable within 30 days after the date hereof, solely to cover
over-allotments, if any. If such options are exercised in full, the total
Price to Public, Underwriting Discount and Proceeds to Selling Shareholders
will be $ , $ and $ , respectively. See
'Underwriting.'
------------------------
The shares of Common Stock are offered by the several Underwriters, subject
to prior sale, when, as and if issued to and accepted by them, subject to
approval of certain legal matters by counsel for the Underwriters and certain
other conditions. The Underwriters reserve the right to withdraw, cancel or
modify such offer and to reject orders in whole or in part. It is expected that
delivery of the shares of Common Stock will be made in New York, New York on or
about , 1998.
------------------------
MERRILL LYNCH & CO.
BT ALEX. BROWN
CREDIT SUISSE FIRST BOSTON
GOLDMAN, SACHS & CO.
SALOMON
SMITH BARNEY
------------------------
The date of this Prospectus is , 1998.
<PAGE>
[PICTURES OF PRODUCTS WITH CAPTIONS:]
This Prospectus contains forward-looking statements. These statements are
subject to a number of risks and uncertainties, certain of which are beyond the
Company's control. See 'Risk Factors--Forward-Looking Statements and Associated
Risks' and 'Management's Discussion and Analysis of Financial Condition and
Results of Operations.'
Certain persons participating in the Offerings may engage in transactions
that stabilize, maintain or otherwise affect the price of the Common Stock. Such
transactions may include stabilizing, the purchase of Common Stock to cover
syndicate short positions and the imposition of penalty bids. For a description
of these activities, see 'Underwriting.'
Mettler-Toledo(Registered), Mettler(Registered), Ingold(Registered),
Garvens(Registered), Ohaus(Registered), DeltaRange(Registered),
DigiTol(Registered), Mentor SC(Registered), PILAR(Registered),
Safeline(Registered), Spider(Registered), TrimWeigh(Registered) and
TRUCKMATE(Registered) are registered trademarks of the Company and
MonoBloc(Trademark), MultiRange(Trademark), Signature(Trademark) and
Powerphase(Trademark) are trademarks of the Company.
2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial statements,
including the related notes, appearing elsewhere in this Prospectus. Unless
otherwise indicated, industry data contained herein is derived from publicly
available industry trade journals, government reports and other publicly
available sources, which the Company has not independently verified but which
the Company believes to be reliable, and where such sources are not available,
from Company estimates, which the Company believes to be reasonable, but which
cannot be independently verified. As used in this Prospectus, '$' refers to U.S.
dollars, 'SFr' refers to Swiss francs, 'pounds ' refers to British pounds
sterling and 'CDN' refers to Canadian dollars. Unless otherwise stated or where
the context otherwise requires, (i) references herein to the 'Company' or
'Mettler-Toledo' refer to Mettler-Toledo International Inc. and its direct and
indirect subsidiaries and (ii) all information herein assumes no exercise of the
Underwriters' over-allotment options.
THE COMPANY
GENERAL
Mettler-Toledo is a leading global supplier of precision instruments. The
Company is the world's largest manufacturer and marketer of weighing instruments
for use in laboratory, industrial and food retailing applications. In addition,
the Company holds one of the top three market positions in several related
analytical instruments such as titrators, thermal analysis systems, pH meters,
automatic lab reactors and electrodes. Through its 1997 acquisition (the
'Safeline Acquisition') of Safeline Limited ('Safeline'), the Company is also
the world's largest manufacturer and marketer of metal detection systems for
companies that produce and package goods in the food processing, pharmaceutical,
cosmetics, chemicals and other industries. The Company focuses on high
value-added segments of its markets by providing innovative instruments, by
integrating these instruments into application-specific solutions for customers,
and by facilitating the processing of data gathered by its instruments and the
transfer of this data to customers' management information systems.
Mettler-Toledo services a worldwide customer base through its own sales and
service organization and has a global manufacturing presence in Europe, the
United States and Asia. The Company generated 1997 net sales of $878.4 million
which were derived 45% in Europe, 42% in North and South America and 13% in Asia
and other markets.
The Company believes that in 1997 the global market for the Company's
products and services was approximately $6.0 billion. Weighing instruments are
among the most broadly used measuring devices, and their results are often used
as the basis of commercial transactions. Analytical instruments are critical to
the research and development and quality control efforts of end-users, while
metal detection systems provide important quality and safety checks in
production and packaging. The Company's products are used in laboratories as an
integral part of research and quality control processes, in industry for various
manufacturing processes such as quality control, materials preparation, filling,
counting and dimensioning, and in food retailing for preparation, portioning and
inventory control. Customers include pharmaceutical, biotechnology, chemicals,
cosmetics, food and beverage, metals, electronics, logistics, transportation and
food retailing businesses, as well as schools, universities and government
standards laboratories.
MARKET LEADERSHIP
The Company believes that it maintains a leading position in each of its
markets. In the weighing instruments market, Mettler-Toledo is the only company
to offer products for laboratory, industrial and food retailing applications
throughout the world and believes that it holds a market share more than two
times greater than that of its nearest competitor. The Company believes that in
1997 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 the number two position 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 also holds one of
the top three global market positions in several
3
<PAGE>
analytical instruments such as titrators, thermal analysis systems, electrodes,
pH meters and automatic lab reactors. The Company recently enhanced its leading
positions in precision instruments through the addition of Safeline's market
leading metal detection products, which can be used in conjunction with the
Company's checkweighing instruments for important quality and safety checks in
the food processing, pharmaceutical, cosmetics, chemicals and other industries.
Mettler-Toledo attributes its worldwide market leadership positions to the
following competitive strengths:
Global Brand and Reputation. The Mettler-Toledo brand name is identified
worldwide with accuracy, reliability and innovation. Customers value these
characteristics because precision instruments, particularly weighing and
analytical instruments, significantly impact customers' product quality,
productivity, costs and regulatory compliance. Furthermore, precision
instruments generally constitute a small percentage of customers' aggregate
expenditures. As a result, the Company believes customers tend to emphasize
accuracy, product reliability, technical innovation, service quality, reputation
and past experience with a manufacturer's products when making their purchasing
decisions for weighing and other precision instruments and experience high
switching costs if they attempt to change vendors. A recent independent survey
concluded that 'Mettler-Toledo' was one of the three most recognized brand names
in the laboratory. The Company's brand name is so well recognized that
laboratory balances are often generically referred to as 'Mettlers.' The
strength of this brand name has allowed the Company to successfully extend its
laboratory product line to include titrators, thermal analysis systems,
electrodes, pH meters and automatic lab reactors.
Technological Innovation. Mettler-Toledo has a long and successful track
record of innovation, as demonstrated by the invention of the single-pan
analytical balance in 1945 and the introduction of the first fully electronic
precision balance in 1973. The Company has continued to be at the forefront of
technology with recent innovations in both weighing and related instrumentation,
including its new digital load cell, its ID 20 terminal (the first personal
computer interface to be certified by weights and measures regulators), its
MonoBloc weighing sensor technology, its GOBI moisture determination instrument,
a new automatic lab reactor, the Zero Metal-Free Zone metal detector and its new
Parallel Infrared Laser Array ('PILAR') dimensioning equipment. As with many of
the Company's recent innovations, the Company's new MonoBloc weighing sensor
technology provides greater accuracy, while also significantly reducing
manufacturing costs and the time and expense of design changes by reducing from
approximately 100 to approximately 50 the number of parts in the sensor. The
Company believes it is the global leader in its industry in providing innovative
instruments, in integrating its instruments into application-specific solutions
for customers, and in facilitating the processing of data gathered by its
instruments and the transfer of this data to customers' management information
systems. Mettler-Toledo's technological innovation efforts benefit from the
Company's manufacturing expertise in sensor technology, precision machining and
electronics, as well as its strength in software development.
Comprehensive, High Quality Product Range. Mettler-Toledo manufactures a
more comprehensive range of weighing instruments than any of its competitors.
The Company's broad product line addresses a wide range of weighing applications
across and within many industries and regions. Furthermore, the Company's
analytical instruments and metal detection systems complement its weighing
products, enabling the Company to offer integrated solutions. The Company
manufactures its products in its modern manufacturing facilities, most of which
are ISO 9001 certified. Mettler-Toledo's broad range of high quality products
and the ability to provide integrated solutions allows the Company to leverage
its sales and service organization, product development activities and
manufacturing and distribution capabilities.
Global Sales and Service. The Company has the only global sales and
service organization among weighing instruments manufacturers. At March 31,
1998, this organization consisted of approximately 3,100 employees organized
into locally-based, customer-focused groups that provide prompt service and
support to the Company's customers and distributors in virtually all major
markets around the world. The local focus of the Company's sales and service
organization enables the Company to provide timely, responsive support to
customers worldwide and provides feedback for manufacturing and product
development. This global infrastructure also allows the Company to capitalize on
growth opportunities in emerging markets.
Largest Installed Base. The Company believes that it has the largest
installed base of weighing instruments in the world. From this installed base,
the Company obtains service contracts which provide a strong, stable source of
recurring service revenue. Service revenue represented approximately 16% of net
sales in 1997,
4
<PAGE>
of which approximately 9% is derived solely from service contracts and repairs
with the remainder derived from the sale of spare parts. The Company believes
that its installed base of weighing instruments represents a competitive
advantage with respect to repeat purchases and purchases of related analytical
instruments and metal detection systems, because customers tend to remain with
an existing supplier that can provide accurate and reliable products and related
services. In addition, switching to a new instrument supplier entails additional
costs to the customer for training, spare parts, service and systems integration
requirements. Close relationships and frequent contact with its broad customer
base also provide the Company with sales leads and new product and application
ideas.
Geographical, Product and Customer Diversification. The Company's revenue
base is diversified by geographic region, product range and customer. The
Company's broad range of product offerings is utilized in many different
industries, including, among others, chemicals, pharmaceuticals, food
processing, food retailing and transportation. The Company supplies customers in
over 100 countries, and no one customer accounted for more than 2.6% of 1997 net
sales. The Company's diverse revenue base reduces its exposure to regional or
industry-specific economic conditions, and its presence in many different
geographic markets, product markets and industries enhances its attractiveness
as a supplier to multinational customers.
GROWTH STRATEGY
Prior to its acquisition on October 15, 1996 (the 'Acquisition') in a
transaction sponsored by management and AEA Investors Inc. ('AEA Investors'),
Mettler-Toledo operated as a division of Ciba-Geigy AG ('Ciba'). In connection
with the Acquisition, Mettler-Toledo began implementing a strategy to enhance
its position as global market leader by accelerating new product introductions,
capitalizing on market opportunities, focusing on expansion in emerging markets,
pursuing selected acquisitions and reengineering its operations in order to
reduce its overall cost structure. These initiatives have contributed to an
improvement in operating income (gross profit less research and development and
selling, general and administrative expenses) before amortization and non-
recurring costs ('Adjusted Operating Income') from $39.5 million (4.6% of net
sales) for 1995 to $81.5 million (9.3% of net sales) for 1997. Adjusted
Operating Income increased from $12.3 million (6.2% of net sales) for the three
months ended March 31, 1997 to $18.7 million (8.7% of net sales) for the three
months ended March 31, 1998, an increase of 52.6%.
New Product Introductions. The Company intends to continue to invest in
product innovation in order to provide technologically advanced products to its
customers for existing and new applications. Over the last three calendar years,
the Company invested more than $150 million in research and development and
customer engineering, which has resulted in a pipeline of innovative and new
products, significant reductions in product costs and reduced time to market for
new products. Examples of recent or upcoming product introductions include:
industrial and retail products that apply open-system architecture, a higher
performance titrator, a higher performance modular thermal analysis system, a
new density and refractometry measurement technology, a fully integrated metal
detector and checkweigher, and the first Chinese-designed and manufactured
laboratory balance. In addition, the Company is also focused on innovations that
reduce manufacturing costs. For example, the Company is extending the
utilization of its high-accuracy, low-cost MonoBloc weighing sensor technology
through much of its weighing instrument product line. The Company attributes a
significant portion of its recent margin improvement to its research and
development efforts.
Capitalize on Market Opportunities. Mettler-Toledo believes it is well
positioned to capitalize on potential market opportunities including: (i) the
integration of precision measurement instruments into data management software
systems to automate processes and/or improve process control; (ii) the
development of integrated solutions that combine measurement instruments and
related technologies directly into manufacturing processes; (iii) the
harmonization of national weighing standards among countries, particularly in
the European Union; and (iv) the standardization of manufacturing and laboratory
practices through programs such as ISO 9001, Good Laboratory Practices and Good
Manufacturing Practices. The Company believes that these trends, together with
the Company's brand name, global presence and the pipeline of planned new
products, will allow it to increase its penetration of developed markets such as
Europe, the United States and Japan.
Further Expansion in Emerging Markets. The Company believes that global
recognition of the Mettler-Toledo brand name and the Company's global sales,
service and manufacturing capabilities position it to take
5
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advantage of continued growth opportunities in emerging markets. These growth
opportunities have been driven by economic development and global manufacturers'
utilization of additional and more sophisticated precision measurement
instruments as they shift production to these markets. The primary focus to date
of the Company's emerging market expansion has been in Asia. In Asia (excluding
Japan), the Company is the market leader in laboratory weighing instruments and
has substantial and rapidly growing industrial and food retailing businesses.
The Company maintains two profitable operations in China: first, a 60% owned
joint venture which manufactures and sells industrial and food retailing
products and, second, a wholly owned facility which manufactures and distributes
laboratory products. Both of these operations serve the domestic and export
markets. The Company has opened direct marketing organizations in Taiwan, Korea,
Hong Kong, Thailand, Malaysia and Eastern Europe. The Company's net sales in
Southeast Asia and Korea collectively represented approximately 3% of the
Company's net sales for 1997. The Company is also expanding its sales and
service presence in Latin America and other emerging markets. The Company
believes Asia and other emerging markets will continue to provide opportunities
for growth in the long term based upon the movement toward international quality
standards, the need to upgrade mechanical scales to electronic versions and the
establishment of local production facilities by the Company's multinational
client base. The Company believes that its brand name, its global marketing and
manufacturing infrastructure and its already substantial sales in Asia, Latin
America and Eastern Europe position it to take advantage of these growth
opportunities.
Pursue Selected Acquisition Opportunities. Mettler-Toledo plans to
actively pursue additional complementary product lines and distribution
channels. In the laboratory market, the Company intends to leverage its existing
laboratory distribution system through the acquisition of complementary product
lines and the development of integrated laboratory solutions. In the industrial
and food retailing markets, the Company plans to pursue the acquisition of
related products and technologies that allow for the integration of weighing
with other customer operations and information systems. The Company began
implementing this strategy through the May 1997 acquisition of Safeline, which
is the world's leading supplier of metal detection systems for companies that
produce and package goods in the food processing, pharmaceutical, cosmetics,
chemicals and other industries. Safeline's metal detection systems enable the
Company to offer integrated solutions for quality control and data management to
these industries. The Company believes that by taking advantage of its brand
name and global sales and service organization it can expand the distribution of
acquired product lines and operate acquired businesses more effectively.
Reengineering and Cost Reductions. The Company's recent increase in
profitability has been achieved in part through: (i) focusing research and
development efforts on product cost reductions; (ii) achieving greater
flexibility in, and a targeted reduction of, the Company's workforce, including
a planned further reduction of approximately 70 personnel in 1998; (iii)
consolidating manufacturing facilities, including the closure of the
Westerville, Ohio facility; and (iv) moving production to lower-cost
manufacturing facilities. The Company has also started implementing a number of
additional operational changes such as the restructuring of its ordering
process, product delivery and parts inventory management in Europe, the
consolidation of worldwide precision balance manufacturing, the realignment of
industrial product manufacturing in Europe and the consolidation of the
Company's North American laboratory, industrial and food retailing businesses
into a single marketing organization. The Company believes that these new
initiatives, as well as its continuing efforts to reduce product costs through
research and development and the move of production to lower-cost manufacturing
facilities, will place the Company in a position to build on its recent
improvement in profitability. Furthermore, the Company believes that it can
leverage its existing infrastructure, particularly the recent investments made
in Asia, to obtain continued sales growth without significant additions to its
overall cost base.
ACQUISITION AND SAFELINE ACQUISITION
Acquisition. On October 15, 1996, the Company acquired the Mettler-Toledo
Group from Ciba in a transaction sponsored by management and AEA Investors. As
of March 31, 1998, approximately 1,000 of the Company's employees, including
executive officers, key management employees and Company sponsored pension
funds, owned at least 2,875,000 shares of Common Stock and held options to
purchase 4,408,740 additional shares of Common Stock, collectively representing
on a fully diluted basis an aggregate ownership interest of approximately 18%.
See 'Management' and 'Principal and Selling Shareholders.'
6
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Safeline Acquisition. On May 30, 1997, the Company acquired Safeline for
pounds 61.0 million (approximately $100.0 million at May 30, 1997) plus up to an
additional pounds 6.0 million (approximately $10.0 million at May 30, 1997) for
a contingent earn-out payment. In October 1997, the Company made an additional
payment, representing a post-closing adjustment, of pounds 1.9 million
(approximately $3.1 million at October 3, 1997). Such amount has been accounted
for as additional purchase price. Safeline, based in Manchester, U.K., is the
world's largest manufacturer and marketer of metal detection systems for
companies that produce and package goods in the food processing, pharmaceutical,
cosmetics, chemicals and other industries. Safeline's metal detectors can also
be used in conjunction with the Company's checkweighing products for important
quality and safety checks in these industries.
INITIAL PUBLIC OFFERING AND REFINANCING
During the fourth quarter of 1997, the Company completed its initial public
offering of 7,666,667 shares of Common Stock, including the underwriters'
over-allotment option (the 'IPO'), at a per share price equal to $14.00. The IPO
raised net proceeds, after underwriters' commission and expenses, of
approximately $97.3 million. In connection with the IPO, the Company effected a
merger by and between it and its direct wholly owned subsidiary, Mettler-Toledo
Holding Inc., whereby Mettler-Toledo Holding Inc. was merged with and into the
Company (the 'Merger'). In connection with the Merger, all classes of the
Company's previous outstanding common stock were converted into 30,669,347
shares of a single class of Common Stock. Concurrently with the IPO, the Company
refinanced its existing credit facility by entering into a new credit facility
(the 'Credit Agreement'), borrowings from which, along with the proceeds from
the IPO, were used to repay substantially all of the Company's then existing
debt, including all of the 9 3/4% Senior Subordinated Notes due 2006 (the
'Notes') of the Company's wholly owned subsidiary, Mettler-Toledo, Inc.
(collectively, the 'Refinancing'). In connection with the Refinancing, the
Company recorded an extraordinary charge of $31.6 million, net of tax,
principally for prepayment premiums on certain debt repaid and for the write-off
of existing deferred financing fees. At March 31, 1998 the Company had
borrowings of $374.2 million. Of these borrowings, $191.4 million are in the
form of a term loan and the remainder are outstanding under a revolving credit
facility and various other arrangements. The Company's revolving credit facility
commitment increased from $170.0 million to $420.0 million under the Credit
Agreement, including a $100.0 million acquisition facility commitment.
7
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THE OFFERINGS
The offering of 8,000,000 shares of the Company's Common Stock, par value
$.01 per share, in the United States and Canada (the 'U.S. Offering') and the
offering of 2,000,000 shares of the Common Stock outside the United States and
Canada (the 'International Offering') are collectively referred to herein as the
'Offerings.'
<TABLE>
<S> <C>
Common Stock Offered by the Selling
Shareholders (1)
U.S. Offering........................ 8,000,000 shares
International Offering............... 2,000,000 shares
Common Stock Outstanding Before and After
the Offerings (2)....................... 38,336,014 shares
Use of Proceeds........................... All of the Common Stock offered hereby is being sold by the Selling
Shareholders. The Company will not receive any proceeds from the sale
of the shares offered hereby.
New York Stock Exchange Symbol............ 'MTD'
</TABLE>
- ------------------
(1) Excludes 1,500,000 shares which are subject to the over-allotment options
granted by the Selling Shareholders to the Underwriters in connection with
the Offerings.
(2) Excludes 4,408,740 shares that may be issued upon the exercise of
outstanding options granted pursuant to the Company's Stock Option Plan (the
'Stock Plan').
RISK FACTORS
Prospective purchasers of the Common Stock should carefully consider all of
the information contained in this Prospectus before making an investment in the
Common Stock. In particular, prospective purchasers should carefully consider
the factors set forth herein under 'Risk Factors.' These risks include: the
effect of the Company's substantial indebtedness on operations and liquidity;
risks associated with currency fluctuations; risks associated with international
operations; risks associated with competition and improvements in technology by
competitors; risks due to significant sales to the pharmaceutical and chemicals
industries; risks relating to future acquisitions; risks associated with
reliance on key management; risks of liability under environmental laws; the
potentially adverse effect on market price due to shares eligible for future
sale; restrictions on payment of dividends; and certain anti-takeover provisions
in the Company's certificate of incorporation.
SUMMARY FINANCIAL INFORMATION
The summary historical financial information set forth below for the years
ended December 31, 1993, 1994 and 1995, for the period from January 1, 1996 to
October 14, 1996, for the period from October 15, 1996 to December 31, 1996 and
for the year ended December 31, 1997 is derived from the Company's financial
statements, which were audited by KPMG Fides Peat, independent auditors. 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 summary historical financial information at March
31, 1998 and for the three months ended March 31, 1997 and 1998 is derived from
the unaudited interim consolidated financial statements of the Company, which,
in the opinion of management, include all adjustments necessary for a fair
presentation of the results for the unaudited periods. Operating results for the
three months ended March 31, 1998 are not necessarily indicative of the results
that may be expected for the year ended December 31, 1998. The combined
historical data of the Predecessor Business and the consolidated historical data
of the Company are not comparable in many respects due to the Acquisition and
the Safeline Acquisition. See 'Management's Discussion and Analysis of Financial
Condition and Results of Operations' and the Consolidated Financial Statements
and accompanying notes included herein. The financial information presented
below was prepared in accordance with U.S. generally accepted accounting
principles ('U.S. GAAP').
8
<PAGE>
<TABLE>
<CAPTION>
METTLER-TOLEDO INTERNATIONAL INC.
---------------------------------------------------------
PREDECESSOR BUSINESS THREE
-------------------------------------------- MONTHS
JANUARY 1, OCTOBER 15, 1996 ENDED
YEAR ENDED DECEMBER 31, TO TO PRO FORMA YEAR ENDED MARCH 31,
------------------------------ OCTOBER 14, DECEMBER 31, (a)(b)(c) DECEMBER 31, ----------
1993 1994 1995 1996 1996 (d)(e) 1997 1997
-------- -------- -------- ----------- ------------ --------- ------------ ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net Sales.................. $728,958 $769,136 $850,415 $ 662,221 $ 186,912 $889,567 $878,415 $197,402
Cost of Sales.............. 443,534 461,629 508,089 395,239 136,820(b) 523,783 493,480(d) 114,120
-------- -------- -------- ----------- ------------ --------- ------------ ----------
Gross profit............... 285,424 307,507 342,326 266,982 50,092 365,784 384,935 83,282
Research and development... 46,438 47,994 54,542 40,244 9,805 50,608 47,551 10,832
Selling, general and
administrative........... 209,692 224,978 248,327 186,898 59,353 252,085 260,397 60,193
Amortization............... 2,917 6,437 2,765 2,151 1,065 6,526 6,222 1,157
Purchased research and
development.............. -- -- -- -- 114,070(c) -- 29,959(e) --
Interest expense........... 15,239 13,307 18,219 13,868 8,738 30,007 35,924 9,446
Other charges (income),
net(f) .................. 14,110 (7,716) (9,331) (1,332) 17,137 14,036 10,834 3,754
-------- -------- -------- ----------- ------------ --------- ------------ ----------
Earnings (loss) before
taxes, minority interest
and extraordinary
items.................... (2,972) 22,507 27,804 25,153 (160,076) 12,522 (5,952) (2,100)
Provision for taxes........ 3,041 8,676 8,782 10,055 (938) 6,956 17,489 (1,087)
Minority interest.......... 1,140 347 768 637 (92) 593 468 109
-------- -------- -------- ----------- ------------ --------- ------------ ----------
Earnings (loss) before
extraordinary items...... (7,153) 13,484 18,254 14,461 (159,046) 4,973 (23,909) (1,122)
Extraordinary items-debt
extinguishments.......... -- -- -- -- -- -- (41,197)(g) --
-------- -------- -------- ----------- ------------ --------- ------------ ----------
Net earnings (loss)........ $ (7,153) $ 13,484 $ 18,254 $ 14,461 $ (159,046) $ 4,973 $(65,106) $ (1,122)
-------- -------- -------- ----------- ------------ --------- ------------ ----------
-------- -------- -------- ----------- ------------ --------- ------------ ----------
Diluted earnings (loss) per
common share(h):
Earnings (loss) per
common share before
extraordinary items.... $ (5.18) $ (0.76) $ (0.04)
Extraordinary items...... -- (1.30) --
------------ ------------ ----------
Earnings (loss) per
common share........... $ (5.18) $ (2.06) $ (0.04)
------------ ------------ ----------
------------ ------------ ----------
Weighted average number
of common shares....... 30,686,065 31,617,071 30,686,065
OTHER DATA:
Local currency net sales
growth(i)................ 7% 6% 3 % 11% 4%
Gross profit before
non-recurring costs as a
percentage of net
sales(j)................. 39.2% 40.0% 40.3% 40.3% 44.0% 41.1 % 44.1% 42.2%
Adjusted Operating
Income(k)................ $ 29,294 $ 34,535 $ 39,457 $ 39,840 $ 17,912 $ 67,875 $ 81,541 $ 12,257
Adjusted Operating Income
as a percentage of net
sales(k)................. 4.0% 4.5% 4.6% 6.0% 9.6% 7.6 % 9.3% 6.2%
Depreciation and
amortization expense..... $ 29,591 $ 34,118 $ 33,363 $ 21,663 $ 8,990 $ 34,393 $ 31,835 $ 6,978
Capital expenditures....... 25,122 24,916 25,858 16,649 11,928 29,417 22,251 3,063
</TABLE>
BALANCE SHEET DATA:
Working capital................................................................
Total assets...................................................................
Long-term debt.................................................................
Other non-current liabilities (l)..............................................
Shareholders' equity...........................................................
<TABLE>
<CAPTION>
1998
----------
<S> <C>
STATEMENT OF OPERATIONS
DATA:
Net Sales.................. $215,655
Cost of Sales.............. 121,048
----------
Gross profit............... 94,607
Research and development... 10,795
Selling, general and
administrative........... 65,112
Amortization............... 1,818
Purchased research and
development.............. --
Interest expense........... 5,879
Other charges (income),
net(f) .................. 454
----------
Earnings (loss) before
taxes, minority interest
and extraordinary
items.................... 10,549
Provision for taxes........ 3,692
Minority interest.......... 19
----------
Earnings (loss) before
extraordinary items...... 6,838
Extraordinary items-debt
extinguishments.......... --
----------
Net earnings (loss)........ $ 6,838
----------
----------
Diluted earnings (loss) per
common share(h):
Earnings (loss) per
common share before
extraordinary items.... $ 0.17
Extraordinary items...... --
----------
Earnings (loss) per
common share........... $ 0.17
----------
----------
Weighted average number
of common shares....... 40,600,109
OTHER DATA:
Local currency net sales
growth(i)................ 14%
Gross profit before
non-recurring costs as a
percentage of net
sales(j)................. 43.9%
Adjusted Operating
Income(k)................ $ 18,700
Adjusted Operating Income
as a percentage of net
sales(k)................. 8.7%
Depreciation and
amortization expense..... $ 7,695
Capital expenditures....... 7,417
<CAPTION>
MARCH 31,
1998
----------
BALANCE SHEET DATA:
Working capital............ $ 77,503
Total assets............... 735,138
Long-term debt............. 319,207
Other non-current liabiliti 91,181
Shareholders' equity....... 33,926
</TABLE>
- ------------------
(a) Represents the unaudited pro forma consolidated statement of operations of
the Company for fiscal year 1996, assuming the Acquisition, the Safeline
Acquisition, the IPO and the Refinancing occurred on January 1, 1996. The
1996 pro forma data includes certain adjustments to historical results to
reflect: (i) an increase in interest expense resulting from
acquisition-related borrowings, which expense has been partially offset by
reduced borrowings following application of IPO proceeds and a lower
effective interest rate following the Refinancing, (ii) an increase in
amortization of goodwill and other intangible assets following the
Acquisition and the Safeline Acquisition, and (iii) changes to the
(Footnotes continued on next page)
9
<PAGE>
(Footnotes continued from previous page)
provision for taxes to reflect the Company's estimated effective income tax
rate at a stated level of pro forma earnings before tax for the year ended
December 31, 1996. Certain other one-time charges incurred during 1996 have
not been excluded from the unaudited pro forma consolidated statement of
operations for the year ended December 31, 1996. See 'Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Results of Operations.'
(b) In connection with the Acquisition, the Company allocated $32,194 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. The charges associated with this revaluation have been excluded
from the 1996 pro forma financial information.
(c) 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. This amount was recorded as an expense
immediately following the Acquisition. This expense has been excluded from
the 1996 pro forma financial information.
(d) In connection with the Safeline Acquisition, the Company allocated $2,054 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 second quarter of
1997. The charges associated with this revaluation have been excluded from
the 1996 pro forma financial information.
(e) In conjunction with the Safeline Acquisition, the Company allocated, based
upon independent valuations, $29,959 of the purchase price to purchased
research and development in process. This amount was recorded as an expense
immediately following the Safeline Acquisition. This expense has been
excluded from the 1996 pro forma financial information.
(f) Other charges (income), net generally includes interest income, foreign
currency transactions (gains) losses, (gains) losses from sales of assets
and other charges (income). In 1993, the amount shown includes costs
associated with the closure of a manufacturing facility in Cologne, Germany,
the restructuring of certain manufacturing operations and an early
retirement program in the United States. For the period January 1, 1996 to
October 14, 1996, the amount shown includes employee severance and other
exit costs associated with the closing of the Company's Westerville, Ohio
facility. For the period October 15, 1996 to December 31, 1996, the amount
shown includes employee severance benefits associated with the Company's
general headcount reduction programs in Europe and North America and the
realignment of the analytical and precision balance business in Switzerland.
For the year ended December 31, 1997, the amount shown includes a
restructuring charge of $6,300 to consolidate three facilities in North
America. See Note 14 to the audited consolidated financial statements (the
'Audited Consolidated Financial Statements') included herein.
(g) Represents charges for the write-off of capitalized debt issuance fees and
related expenses associated with the Company's previous credit facilities as
well as the prepayment premium on the Notes and the write-off of the related
capitalized debt issuance fees.
(h) Effective December 31, 1997, the Company adopted Statement of Financial
Accounting Standards No. 128, 'Earnings per Share' ('SFAS 128').
Accordingly, basic and diluted loss per common share data for each period
presented have been determined in accordance with the provisions of SFAS
128.
(i) Local currency net sales growth is adjusted for the exit from certain
systems businesses. Pro forma 1996 local currency net sales growth assumes
that the Safeline Acquisition occurred on January 1, 1995. For 1997, local
currency net sales increased 7% absent the Safeline Acquisition. For the
three months ended March 31, 1998, local currency net sales increased 7%
absent the Safeline Acquisition.
(j) Non-recurring costs represent costs associated with selling inventories
revalued to fair value in connection with the Acquisition and the Safeline
Acquisition. See Notes (b) and (d) above.
(k) Adjusted Operating Income is defined as operating income (gross profit less
research and development and selling, general and administrative expenses)
before amortization and non-recurring costs. Non-recurring costs which have
been excluded are the costs set forth in Note (j) above and for the period
from October 15, 1996 to December 31, 1996, and in pro forma 1996, advisory
fees associated with the reorganization of the Company's structure of
approximately $4,800. Non-recurring costs in 1997 includes a charge of
$2,500 in connection with the termination of the Company's management
services agreement with AEA Investors.
(l) Consists primarily of obligations under various pension plans and plans that
provide post-retirement medical benefits. See Note 12 to the Audited
Consolidated Financial Statements included herein.
10
<PAGE>
RISK FACTORS
In addition to the other information contained in this Prospectus,
prospective investors should consider carefully the following risk factors
before purchasing the Common Stock offered hereby. This Prospectus contains
forward-looking statements. These statements are subject to a number of risks
and uncertainties, certain of which are beyond the Company's control. See
'--Forward-Looking Statements and Associated Risks' and 'Management's Discussion
and Analysis of Financial Condition and Results of Operations.'
EFFECT OF SUBSTANTIAL INDEBTEDNESS ON OPERATIONS AND LIQUIDITY
In connection with the Acquisition and the Safeline Acquisition, the
Company incurred a significant amount of indebtedness. At March 31, 1998, the
Company's consolidated indebtedness (excluding unused commitments) was $374.2
million. As of March 31, 1998, the Company had additional borrowing capacity of
approximately $240.0 million on a revolving credit basis under the Credit
Agreement and under local working capital facilities for acquisitions and other
purposes. The Company is required to make scheduled principal payments on the
term loans under the Credit Agreement. The Company's ability to comply with the
terms of the Credit Agreement and its other debt obligations to make cash
payments with respect to such obligations 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.
See 'Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources.'
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 borrowings under the Credit Agreement and
the Company's 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.
The Credit Agreement and the Company's other debt obligations contain a
number of covenants that, among other things, restrict the ability of the
Company to incur additional indebtedness, dispose of certain assets, make
capital expenditures and otherwise restrict corporate activities. The Company's
ability to comply with such covenants may be affected by events beyond its
control, including prevailing economic, financial and industry conditions. A
failure to comply with the covenants and restrictions contained in the Credit
Agreement, the Company's other debt obligations or any agreements with respect
to any additional financing could result in an event of default under its debt
agreements.
RISKS ASSOCIATED WITH CURRENCY FLUCTUATIONS
Swiss franc-denominated expenses represent a much greater percentage of the
Company's operating expenses than Swiss franc-denominated sales represent of
total net sales. Some of the Company's manufacturing costs in Switzerland relate
to products that are sold outside of Switzerland, including many technologically
sophisticated products requiring highly skilled personnel. Moreover, a
substantial percentage of the Company's research and development expenses and
general and administrative expenses are incurred in Switzerland. Appreciation of
the Swiss franc against the Company's major trading currencies (i.e., the U.S.
dollar, certain major European currencies and the Japanese yen) has a negative
impact on the Company's income from operations, whereas depreciation of the
Swiss franc has a positive impact.
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 currency exchange rate for inclusion
in the Company's consolidated financial statements. As exchange rates between
these foreign currencies and the U.S. dollar fluctuate, the translation effect
of such fluctuations may have a material adverse effect on the Company's results
11
<PAGE>
of operations or financial position as reported in U.S. dollars. However, the
effect of these changes on income from operations generally offsets in part the
effect on income from operations of changes in the exchange rate between the
Swiss franc and other currencies described in the preceding paragraph.
RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS
The Company does business in numerous countries, including emerging markets
in Asia, Latin America and Eastern Europe. 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 is
increasing its presence in China, Latin America and Eastern Europe. As a result,
inflationary conditions in these countries could have an increasingly
significant effect on the Company's operating results. Recently, growth in net
sales in Southeast Asia and Korea (which collectively represented approximately
3% of the Company's total net sales in 1997) has slowed and the Company
anticipates this trend to continue for the near term.
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
instruments 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 respective 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 the continued productive 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 CHEMICALS INDUSTRIES
The Company's products are used extensively in the pharmaceutical and
chemicals industries. Consolidation in these industries has had an adverse
impact on the Company's sales in prior years. A prolonged downturn or any
additional consolidation in these industries could adversely affect the
Company's operating results.
RISKS RELATING TO FUTURE ACQUISITIONS
The Company may in the future pursue acquisitions of complementary product
lines, technologies or businesses. Future acquisitions by the Company may result
in potentially dilutive issuances of equity securities, the incurrence of debt
and contingent liabilities and amortization expenses related to goodwill and
other intangible assets, which could materially adversely affect the Company's
profitability. In addition, acquisitions involve numerous risks, including
difficulties in the assimilation of the operations, technologies and products of
the acquired companies, the diversion of management's attention from other
business concerns and the potential loss of key employees of the acquired
company. There are currently no understandings or agreements with respect to any
material acquisition, nor can there be any assurances that the Company will be
able to identify and
12
<PAGE>
successfully complete and integrate potential acquisitions in the future. In the
event that any such acquisition does occur, however, there can be no assurance
as to the effect thereof on the Company's business or operating results.
RELIANCE ON KEY MANAGEMENT
Robert F. Spoerry, the Company's Chief Executive Officer, and each of the
other key management employees of the Company have employment contracts with the
Company. In addition, various members of management own a portion of the shares
of Common Stock of the Company and have options to purchase additional shares of
such Common Stock. See 'Principal and Selling Shareholders.' 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
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, 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, 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 results of operations or financial
condition. See 'Business--Environmental Matters.'
POTENTIAL ADVERSE EFFECT ON MARKET PRICE DUE TO SHARES ELIGIBLE FOR FUTURE SALE
Sales of a substantial number of shares of Common Stock in the public
market or the perception that such sales could occur could adversely affect
prevailing market prices for the Common Stock. As of March 31, 1998, the Company
had outstanding 38,336,014 shares of Common Stock. All shares of Common Stock
are freely tradeable without restriction under the Securities Act of 1933, as
amended (the 'Securities Act'), except to the extent such shares are subject to
the agreement with the Underwriters described below and for any such shares
which are held by an 'affiliate' of the Company. In connection with the
Offerings, the Company, the Company's executive officers and directors and the
Selling Shareholders, who will collectively hold, after the Offerings,
14,262,548 shares of Common Stock (assuming no exercise of the Underwriters'
over-allotment option) will agree, subject to certain exceptions, not to dispose
of any shares of Common Stock for a period of 90 days from the date of this
Prospectus without the consent of Merrill Lynch, Pierce, Fenner & Smith
Incorporated ('Merrill Lynch') on behalf of the Underwriters. Upon expiration of
the lockup period, all shares will be eligible for sale in the public market,
with shares held by 'affiliates' (as such term is defined under the Securities
Act) of the Company subject to compliance with the volume limitations and other
restrictions of Rules 144 and 145 under the Securities Act. In addition, the
Company will be filing a registration statement under the Securities Act
covering the sale of shares of Common Stock reserved for issuance or sale under
the Company's Stock Plan. As of March 31, 1998, there were outstanding options
to purchase a total of 4,408,740 shares of Common Stock. The sale of such shares
could have an adverse effect on the Company's ability to raise equity capital in
the public markets. See 'Shares Eligible for Future Sale.'
13
<PAGE>
RESTRICTIONS ON PAYMENT OF DIVIDENDS; ABSENCE OF DIVIDENDS
The Credit Agreement restricts, among other things, the ability of the
Company to pay dividends. The Company does not anticipate paying any cash
dividends on the Common Stock in the foreseeable future. See 'Dividend Policy.'
CERTAIN ANTI-TAKEOVER PROVISIONS
The Company's amended and restated certificate of incorporation (the
'Amended and Restated Certificate of Incorporation') and amended by-laws (the
'Amended By-laws') contain certain provisions that could make more difficult the
acquisition of the Company by means of a tender offer, proxy contest or
otherwise. The Amended and Restated Certificate of Incorporation authorizes the
issuance of preferred stock without shareholder approval and upon such terms as
the Board of Directors may determine. The rights of the holders of Common Stock
are subject to, and may be adversely affected by, the rights of holders of
preferred stock that may be issued in the future. In addition, the Amended
By-laws contain advance notice procedures for shareholders to nominate
candidates for election as directors and for shareholders to submit proposals
for consideration at shareholder meetings. Under certain circumstances, Section
203 of the Delaware General Corporation Law makes it more difficult for an
'interested stockholder' (generally a 15% stockholder) to effect various
business combinations with a corporation for a three-year period.
FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS
This Prospectus includes forward-looking statements that reflect the
Company's current views with respect to future events and financial performance,
including capital expenditures, planned product introductions, research and
development expenditures, potential future growth, including potential
penetration of developed markets and potential growth opportunities in emerging
markets, potential future acquisitions, potential cost savings from planned
employee reductions and restructuring programs, estimated proceeds from and
timing of asset sales, planned operational changes and research and development
efforts, strategic plans and future cash sources and requirements. These
forward-looking statements are subject to certain risks and uncertainties,
including those identified in 'Risk Factors,' 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 new information, future
events or otherwise.
14
<PAGE>
THE COMPANY
GENERAL
Mettler-Toledo is a leading global supplier of precision instruments. The
Company is the world's largest manufacturer and marketer of weighing instruments
for use in laboratory, industrial and food retailing applications. In addition,
the Company holds one of the top three market positions in several related
analytical instruments such as titrators, thermal analysis systems, pH meters,
automatic lab reactors and electrodes. Through its 1997 acquisition of Safeline,
the Company is also the world's largest manufacturer and marketer of metal
detection systems for companies that produce and package goods in the food
processing, pharmaceutical, cosmetics, chemicals and other industries. The
Company focuses on high value-added segments of its markets by providing
innovative instruments, by integrating these instruments into
application-specific solutions for customers, and by facilitating the processing
of data gathered by its instruments and the transfer of this data to customers'
management information systems. Mettler-Toledo services a worldwide customer
base through its own sales and service organization and has a global
manufacturing presence in Europe, the United States and Asia. The Company
generated 1997 net sales of $878.4 million which were derived 45% in Europe, 42%
in North and South America and 13% in Asia and other markets.
The mailing address of the Company's principal executive offices is Im
Langacher, P.O. Box MT-100, CH-8606, Greifensee, Switzerland. Its telephone
number is 41-1-944-22-11.
ACQUISITION AND SAFELINE ACQUISITION
Acquisition. The Company was incorporated in December 1991. It was
recapitalized in connection with the October 15, 1996 acquisition of the
Mettler-Toledo Group from Ciba in a transaction sponsored by management and AEA
Investors. The Company paid cash consideration of approximately SFr 505.0
million (approximately $402.0 million at October 15, 1996), including dividends
of approximately SFr 109.4 million (approximately $87.1 million at October 15,
1996), paid approximately $185.0 million to settle amounts due to Ciba and its
affiliates and incurred expenses in connection with the Acquisition and related
financing of approximately $29.0 million. The Company primarily financed the
Acquisition with (i) borrowings under a credit agreement in the amount of $307.0
million, (ii) the issuance of $135.0 million of the Notes and (iii) an equity
contribution of $190.0 million primarily from AEA Investors, its
shareholder-investors and executive officers and other employees of the Company.
Safeline Acquisition. On May 30, 1997, the Company acquired Safeline for
pounds 61.0 million (approximately $100.0 million at May 30, 1997) plus up to an
additional pounds 6.0 million (approximately $10.0 million at May 30, 1997) for
a contingent earn-out payment. In October 1997, the Company made an additional
payment, representing a post-closing adjustment, of pounds 1.9 million
(approximately $3.1 million at October 3, 1997). Such amount has been accounted
for as additional purchase price. Safeline, based in Manchester, U.K., is the
world's largest manufacturer and marketer of metal detection systems for
companies that produce and package goods in the food processing, pharmaceutical,
cosmetics, chemicals and other industries. Safeline's metal detectors can also
be used in conjunction with the Company's checkweighing products for important
quality and safety checks in these industries.
INITIAL PUBLIC OFFERING AND REFINANCING
During the fourth quarter of 1997, the Company completed its IPO of
7,666,667 shares of Common Stock, including the underwriters' over-allotment
option, at a per share price equal to $14.00. The IPO raised net proceeds, after
underwriters' commission and expenses, of approximately $97.3 million.
Concurrently with the IPO, the Company effected the Merger and the Refinancing.
In connection with the Refinancing, the Company recorded an extraordinary charge
of $31.6 million, net of tax, principally for prepayment premiums on certain
debt repaid and for the write-off of existing deferred financing fees. At March
31, 1998 the Company had borrowings of $374.2 million. Of these borrowings,
$191.4 million are in the form of a term loan and the remainder are outstanding
under a revolving credit facility and various other arrangements. The Company's
revolving credit facility commitment increased from $170.0 million to $420.0
million under the Credit Agreement, including a $100.0 million acquisition
facility commitment.
15
<PAGE>
USE OF PROCEEDS
All of the Common Stock offered hereby is being sold by the Selling
Shareholders. The Company will not receive any proceeds from the sale of the
Common Stock offered hereby. See 'Principal and Selling Shareholders.'
DIVIDEND POLICY
The Company has never paid any dividends on its common stock and does not
anticipate paying any cash dividends on the Common Stock in the foreseeable
future. The current policy of the Company's Board of Directors is to retain
earnings to finance the operations and expansion of the Company's business. In
addition, the Company's Credit Agreement restricts the Company's ability to pay
dividends to its shareholders. Any future determination to pay dividends will
depend on the Company's results of operations, financial condition, capital
requirements, contractual restrictions and other factors deemed relevant by the
Board of Directors. See 'Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources.'
16
<PAGE>
PRICE RANGE OF COMMON STOCK
The Company's Common Stock began trading on the New York Stock Exchange on
November 14, 1997 under the symbol 'MTD.' The following table sets forth on a
per share basis the high and low sales prices for consolidated trading in the
Common Stock as reported on the New York Stock Exchange Composite Tape for the
quarters indicated.
<TABLE>
<CAPTION>
COMMON STOCK
PRICE RANGE
-------------------------
HIGH LOW
---------- -----------
<S> <C> <C>
1997
Fourth Quarter (beginning November 14, 1997)........................................ $ 18 3/4 $ 14 1/16
1998
First Quarter....................................................................... 22 3/8 16 9/16
Second Quarter (through June 3, 1998)............................................... 22 1/4 18
</TABLE>
For a recent reported last sale price for the Common Stock, see the cover
page of this Prospectus.
As of May 31, 1998, there were 872 holders of record of the Company's
Common Stock, which excludes beneficial owners of Common Stock held in 'street
name.'
CAPITALIZATION
The following table sets forth the short-term debt and capitalization of
the Company at March 31, 1998. The information presented below should be read in
conjunction with the Consolidated Financial Statements and the related notes
thereto and 'Management's Discussion and Analysis of Financial Condition and
Results of Operations' included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
MARCH 31, 1998
(DOLLARS IN THOUSANDS,
EXCEPT PER SHARE DATA)
-----------------------
<S> <C>
Short-term debt, including current maturities of long-term debt(a):
Short-term portion of term loans under credit agreements................................. $ 15,866
Revolving credit facility under credit agreements(b)..................................... 29,156
Other short-term borrowings.............................................................. 9,930
-----------
Total short-term debt................................................................. $ 54,952
-----------
-----------
Long-term debt(a):
Term loans under credit agreements....................................................... $ 175,514
Revolving credit facility under credit agreements(b)..................................... 127,732
Other long-term debt..................................................................... 15,961
-----------
Total long-term debt.................................................................. 319,207
Shareholders' equity:
Common stock, par value $0.01, authorized 125,000,000 shares; issued
38,336,014 (excluding 64,467 shares held in treasury)(c).............................. 383
Additional paid-in capital............................................................... 284,630
Accumulated deficit...................................................................... (217,314)
Accumulated other comprehensive loss..................................................... (33,773)
-----------
Total shareholders' equity............................................................ 33,926
-----------
Total capitalization................................................................ $ 353,133
-----------
-----------
</TABLE>
- ------------------------
(a) At March 31, 1998, the Company and its subsidiaries had total availability
of approximately $240,000 (including a $100,000 acquisition facility) under
the revolving credit facility of the Credit Agreement and local working
capital facilities.
(b) The Company has the ability to refinance its short-term borrowings under its
revolving facility for an uninterrupted period extending beyond one year.
Accordingly, $127,732 of the Company's short-term borrowings at March 31,
1998 have been reclassified to long-term.
(c) Does not include shares of Common Stock that may be issued upon exercise of
options granted pursuant to the Stock Plan.
17
<PAGE>
SELECTED HISTORICAL FINANCIAL INFORMATION
The selected historical financial information set forth below at December
31, 1994, 1995, 1996 and 1997, for the years ended December 31, 1993, 1994 and
1995, for the period from January 1, 1996 to October 14, 1996, for the period
from October 15, 1996 to December 31, 1996, and for the year ended December 31,
1997 is derived from the Company's financial statements, which were audited by
KPMG Fides Peat, independent auditors. 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
selected historical financial information at March 31, 1997 and 1998 and for the
three months then ended is derived from the unaudited interim consolidated
financial statements of the Company, which, in the opinion of management,
include all adjustments necessary for a fair presentation of the results for the
unaudited periods. Operating results for the three months ended March 31, 1998
are not necessarily indicative of the results that may be expected for the year
ended December 31, 1998. The combined historical data of the Predecessor
Business and the consolidated historical data of the Company are not comparable
in many respects due to the Acquisition and the Safeline Acquisition. See
'Management's Discussion and Analysis of Financial Condition and Results of
Operations' and the Consolidated Financial Statements and accompanying notes
included elsewhere in this Prospectus. The financial information presented below
was prepared in accordance with U.S. GAAP.
18
<PAGE>
<TABLE>
<CAPTION>
METTLER-TOLEDO INTERNATIONAL INC.
------------------------------------------
THREE
PREDECESSOR BUSINESS MONTHS
-------------------------------------------------- ENDED
JANUARY 1 OCTOBER 15 MARCH
YEAR ENDED DECEMBER 31, TO TO YEAR ENDED 31,
--------------------------------- OCTOBER 14, DECEMBER 31, DECEMBER 31, --------
1993 1994 1995 1996 1996 1997 1997
-------- -------- -------- ----------- ------------ ------------ --------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net Sales................... $728,958 $769,136 $850,415 $ 662,221 $ 186,912 $878,415 $197,402
Cost of sales............... 443,534 461,629 508,089 395,239 136,820(a) 493,480(c) 114,120
-------- -------- -------- ----------- ------------ ------------ --------
Gross profit................ 285,424 307,507 342,326 266,982 50,092 384,935 83,282
Research and development ... 46,438 47,994 54,542 40,244 9,805 47,551 10,832
Selling, general and
administrative............. 209,692 224,978 248,327 186,898 59,353 260,397 60,193
Amortization................ 2,917 6,437 2,765 2,151 1,065 6,222 1,157
Purchased research and
development................ -- -- -- -- 114,070(b) 29,959(d) --
Interest expense............ 15,239 13,307 18,219 13,868 8,738 35,924 9,446
Other charges (income),
net(e)..................... 14,110 (7,716) (9,331) (1,332) 17,137 10,834 3,754
-------- -------- -------- ----------- ------------ ------------ --------
Earnings (loss) before
taxes, minority interest
and extraordinary items.... (2,972) 22,507 27,804 25,153 (160,076) (5,952) (2,100)
Provision for taxes......... 3,041 8,676 8,782 10,055 (938) 17,489 (1,087)
Minority interest........... 1,140 347 768 637 (92) 468 109
-------- -------- -------- ----------- ------------ ------------ --------
Earnings (loss) before
extraordinary items........ (7,153) 13,484 18,254 14,461 (159,046) (23,909) (1,122)
Extraordinary items-debt
extinguishments............ -- -- -- -- -- (41,197)(f) --
-------- -------- -------- ----------- ------------ ------------ --------
Net earnings (loss)......... $ (7,153) $ 13,484 $ 18,254 $ 14,461 $ (159,046) $(65,106) $ (1,122)
-------- -------- -------- ----------- ------------ ------------ --------
-------- -------- -------- ----------- ------------ ------------ --------
Basic earnings (loss) per
common share(g):
Earnings (loss) per common
share before
extraordinary items...... $ (5.18) $ (0.76) $ (0.04)
Extraordinary items........ -- (1.30) --
------------ ------------ --------
Earnings (loss) per common
share.................... $ (5.18) $ (2.06) $ (0.04)
------------ ------------ --------
------------ ------------ --------
Weighted average number of
common shares............ 30,686,065 31,617,071 30,686,065
Diluted earnings (loss) per
common share(g):
Earnings (loss) per common
share before
extraordinary items...... $ (5.18) $ (0.76) $ (0.04)
Extraordinary items........ -- (1.30) --
------------ ------------ --------
Earnings (loss) per common
share.................... $ (5.18) $ (2.06) $ (0.04)
------------ ------------ --------
------------ ------------ --------
Weighted average number of
common shares............ 30,686,065 31,617,071 30,686,065
BALANCE SHEET DATA (AT END
OF PERIOD)(H):
Cash and cash
equivalents ............... $ 63,802 $ 41,402 $ 60,696 $ 23,566 $ 40,599
Working capital............. 132,586 136,911 103,697 79,163 100,734
Total assets................ 683,198 724,094 771,888 749,313 728,891
Long-term debt.............. 862 3,621 373,758 340,334 365,369
Net borrowing from Ciba and
affiliates(i) ............. 177,651 203,157 -- -- --
Other non-current
liabilities(j)............. 83,964 84,303 96,810 91,011 92,177
Shareholders' equity(k)..... 228,194 193,254 12,426 25,399 2,982
<CAPTION>
1998
--------
<S> <C>
STATEMENT OF OPERATIONS
DATA:
Net Sales................... $215,655
Cost of sales............... 121,048
--------
Gross profit................ 94,607
Research and development ... 10,795
Selling, general and
administrative............. 65,112
Amortization................ 1,818
Purchased research and
development................ --
Interest expense............ 5,879
Other charges (income),
net(e)..................... 454
--------
Earnings (loss) before
taxes, minority interest
and extraordinary items.... 10,549
Provision for taxes......... 3,692
Minority interest........... 19
--------
Earnings (loss) before
extraordinary items........ 6,838
Extraordinary items-debt
extinguishments............ --
--------
Net earnings (loss)......... $ 6,838
--------
--------
Basic earnings (loss) per
common share(g):
Earnings (loss) per common
share before
extraordinary items...... $ 0.18
Extraordinary items........ --
--------
Earnings (loss) per common
share.................... $ 0.18
--------
--------
Weighted average number of
common shares............ 38,336,014
Diluted earnings (loss) per
common share(g):
Earnings (loss) per common
share before
extraordinary items...... $ 0.17
Extraordinary items........ --
--------
Earnings (loss) per common
share.................... $ 0.17
--------
--------
Weighted average number of
common shares............ 40,600,109
BALANCE SHEET DATA (AT END
OF PERIOD)(h):
Cash and cash
equivalents ............... $ 21,303
Working capital............. 77,503
Total assets................ 735,138
Long-term debt.............. 319,207
Net borrowing from Ciba and
affiliates(i) ............. --
Other non-current
liabilities(j)............. 91,181
Shareholders' equity(k)..... 33,926
</TABLE>
(a) In connection with the Acquisition, the Company allocated $32,194 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.
(Footnotes continued on next page)
19
<PAGE>
(Footnotes from previous page)
- ------------------
(b) 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. This amount was recorded as an expense
immediately following the Acquisition.
(c) In connection with the Safeline Acquisition, the Company allocated $2,054 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 second quarter of
1997.
(d) In connection with the Safeline Acquisition, the Company allocated, based
upon independent valuations, $29,959 of the purchase price to purchased
research and development in process. This amount was recorded as an expense
immediately following the Safeline Acquisition.
(e) Other charges (income), net generally includes interest income, foreign
currency transactions (gains) losses, (gains) losses from sales of assets
and other charges (income). In 1993, the amount shown includes costs
associated with the closure of a manufacturing facility in Cologne, Germany,
the restructuring of certain manufacturing operations and an early
retirement program in the United States. For the period January 1, 1996 to
October 14, 1996, the amount shown includes employee severance and other
exit costs associated with the closing of the Company's Westerville, Ohio
facility. For the period October 15, 1996 to December 31, 1996, the amount
shown includes employee severance benefits associated with the Company's
general headcount reduction programs, in Europe and North America and the
realignment of the analytical and precision balance business in Switzerland.
For the year ended December 31, 1997, the amount shown includes a
restructuring charge of $6,300 to consolidate three facilities in North
America. See Note 14 to the Audited Consolidated Financial Statements
included herein.
(f) Represents charges for the write-off of capitalized debt issuance fees and
related expenses associated with the Company's previous credit facilities as
well as the prepayment premium on the Notes and the write-off of the related
capitalized debt issuance fees.
(g) Effective December 31, 1997, the Company adopted Statement of Financial
Accounting Standards No. 128, 'Earnings per Share' ('SFAS 128').
Accordingly, basic and diluted loss per common share data for each period
presented have been determined in accordance with the provisions of SFAS
128.
(h) Balance sheet information at December 31, 1993 is not available.
(i) Includes notes payable and long-term debt payable to Ciba and affiliates
less amounts due from Ciba and affiliates.
(j) Consists primarily of obligations under various pension plans and plans that
provide post-retirement medical benefits. See Note 12 to the Audited
Consolidated Financial Statements included herein.
(k) Shareholders' equity for the Predecessor Business consists of the combined
net assets of the Mettler-Toledo Group.
20
<PAGE>
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 Audited
Consolidated Financial Statements and the unaudited interim consolidated
financial statements (the 'Interim Consolidated Financial Statements') included
herein.
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 Company after accounting for the Acquisition using the
purchase method of accounting. See Note 1 to the Audited Consolidated Financial
Statements. Operating results subsequent to the Acquisition and the Safeline
Acquisition are not comparable in many respects to the operating results prior
to the Acquisition and the Safeline Acquisition. Financial information is
presented in accordance with generally accepted accounting principles in the
United States of America.
The Company operates a global business, with net sales that are diversified
by geographic region, product range and customer. The Company believes that it
has achieved its market leadership positions through its continued investment in
product development, the maintenance and, in some instances, expansion, of its
existing position in established markets and its pursuit of new markets. Net
sales in local currency (adjusted for the exit in 1996 and 1995 from certain
systems businesses) have increased in both the laboratory and industrial and
food retailing product lines, increasing by 11% in 1997 and by 3% and 6% in 1996
and 1995, respectively. More recently, during the period ended March 31, 1998,
net sales in local currency increased by 14% compared to the corresponding
period in 1997. Similarly net sales in U.S. dollars increased 9% for the first
three months of 1998 compared to the first three months of 1997. For the full
year in 1997, net sales in U.S. dollars increased by 3%, as the strengthening of
the U.S. dollar versus the Company's major trading currencies reduced U.S.
dollar reported sales. Net sales in U.S. dollars were unchanged in 1996 and
increased by 11% in 1995. The Company's growth in 1997 and 1998 reflects
favorable sales trends in Europe, which began in the second half of 1997. In
addition, the Company has also benefited from recent investments to establish
distribution and manufacturing infrastructure in certain emerging markets,
particularly in Asia. For 1997, net sales in Asia and other emerging markets
increased by 30% over the prior year, despite the weakening economic conditions
in Asia. As a result of these weakening economic conditions, net sales in Asia
and other emerging markets in local currency decreased by 3% for the first three
months of 1998 compared to the first three months of 1997 primarily as a result
of a decline in net sales in Southeast Asia and Korea (which collectively
represented approximately 3% of the Company's total net sales for 1997).
However, the Company believes Asia and other emerging markets will continue to
provide opportunities for growth in the long term. The Company believes that its
growth over the next several years will come primarily from (i) the needs of
customers in developed markets to continue to automate their research and
development and manufacturing processes, (ii) the needs of customers in emerging
markets to continue modernizing these same processes through the use of
increasingly sophisticated instruments, and (iii) the pursuit of the Company's
acquisition strategy.
The Company increased its gross profit margin before non-recurring
acquisition costs from 40.3% in 1995 to 44.1% in 1997 and increased its Adjusted
Operating Income (gross profit less research and development and selling,
general and administrative expenses before amortization and non-recurring costs)
as a percentage of net sales from 4.6% in 1995 to 9.3% in 1997. During the first
three months of 1998, the Company increased its gross profit margin to 43.9%
compared to 42.2% for the first three months of 1997. Similarly, Adjusted
Operating Income as a percentage of net sales improved from 6.2% during the
first three months of 1997 to 8.7% for the first three months of 1998. These
increases were achieved despite the Company's continued investments in product
development and in its distribution and manufacturing infrastructure. The
Company believes that a significant portion of these increases can be attributed
to its strategy to reduce costs and reengineer its operations. This strategy has
a number of key elements, such as ongoing efforts to direct more of its research
and development activities to the reduction of product costs, to reengineer
manufacturing, distribution, sales and administrative processes, and to
consolidate operations and re-deploy resources to lower cost facilities.
Examples of recent efforts to implement the different elements of this strategy
include the introduction of several products in 1997 with significantly reduced
manufacturing costs compared to their predecessors, the closure of the
21
<PAGE>
Westerville, Ohio manufacturing facility in 1996, completion of a targeted
workforce reduction of approximately 170 personnel, the consolidation of three
North American facilities as described below and the opening of a new laboratory
manufacturing facility in Shanghai, China in 1997 with significant production
and research and development capabilities. The Company is currently implementing
several additional reengineering and cost reduction projects, including the
consolidation of worldwide precision balance manufacturing, the restructuring of
its ordering process, product delivery and parts inventory management in Europe,
the realignment of industrial product manufacturing in Europe and the
consolidation of the Company's North American laboratory, industrial and food
retailing businesses into a single marketing organization.
On May 30, 1997, the Company acquired Safeline for pounds 61.0 million
(approximately $100.0 million at May 30, 1997) plus up to an additional
pounds 6.0 million (approximately $10.0 million at May 30, 1997) for a
contingent earn-out payment. In October 1997, the Company made an additional
payment, representing a post-closing adjustment, of pounds 1.9 million
(approximately $3.1 million at October 3, 1997). Such amount has been accounted
for as additional purchase price. Safeline, based in Manchester, U.K., is the
world's largest manufacturer and marketer of metal detection systems for
companies that produce and package goods in the food processing, pharmaceutical,
cosmetics, chemicals and other industries. Safeline's metal detectors can also
be used in conjunction with the Company's checkweighing products for important
quality and safety checks in these industries. From 1992 to 1996, Safeline's
sales increased at a compounded annual growth rate of approximately 30%, in part
due to the introduction of new products such as the first digital electronic and
Zero Metal-Free Zone metal detectors. Safeline had net sales and Adjusted
Operating Income of $40.4 million and $9.9 million, respectively, for the year
ended December 31, 1996. The Safeline Acquisition was financed by borrowings
under the Company's then-existing credit facility together with the issuance of
pounds 13.7 million (approximately $22.4 million at May 30, 1997) of seller loan
notes which mature May 30, 1999. At March 31, 1998, pounds 4.5 million
(approximately $7.5 million at March 31, 1998) remained outstanding under the
seller loan notes.
In 1997, the Company recorded restructuring charges totaling approximately
$6.3 million in connection with the consolidation of three facilities in North
America. Such charges were comprised primarily of severance and other related
benefits and costs of exiting facilities, including lease termination costs and
write-down of existing assets to their expected net realizable value. The
Company expects these actions will be substantially completed during 1998 and
that the two owned facilities will be sold thereafter. In connection with the
closure of these facilities, the Company expects to terminate approximately 70
employees. The Company is undertaking these actions as part of its efforts to
reduce costs through reengineering. When complete, these actions will enable the
Company to close certain operations and realize cost savings estimated at
approximately $2.5 million on an annual basis. The Company also estimates that
it will receive, after 1998, upon the sale of the two facilities which the
Company owns proceeds in excess of $5.0 million. The Company believes that the
fair market value of these facilities approximates their respective book values.
During the fourth quarter of 1997, the Company completed its IPO of
7,666,667 shares of Common Stock, including the underwriters' over-allotment
option, at a per share price equal to $14.00. The IPO raised net proceeds, after
underwriters' commission and expenses, of approximately $97.3 million. In
connection with the IPO, the Company effected the Merger and the Refinancing. In
connection with the Refinancing, the Company recorded an extraordinary charge of
$31.6 million, net of tax, principally for prepayment premiums on certain debt
repaid and for the write-off of existing deferred financing fees. The Company
also incurred a non-recurring termination fee of $2.5 million in connection with
the termination of its management consulting agreement with AEA Investors (the
'Termination Fee').
RESULTS OF OPERATIONS
The following table sets forth certain items from the consolidated
statements of operations for the year ended December 31, 1995, for the period
from January 1, 1996 to October 14, 1996, for the period from October 15, 1996
to December 31, 1996, pro forma for the year 1996, actual for the year ended
December 31, 1997 and actual for the three months ended March 31, 1997 and 1998.
The pro forma 1996 information gives effect to the Acquisition, the Safeline
Acquisition, the IPO and the Refinancing as if such transactions had occurred on
January 1, 1996, and does not purport to represent the Company's actual results
if such transactions had occurred on such date. The pro forma 1996 information
reflects the historical results of operations of the Predecessor Business for
the period from January 1, 1996 to October 14, 1996 and the historical results
of
22
<PAGE>
operations of the Company for the period from October 15, 1996 to December 31,
1996, together with certain pro forma adjustments as described below. The
consolidated statement of operations data for the year ended December 31, 1997
include Safeline results from May 31, 1997. The pro forma 1996 information
includes Safeline's historical results of operations for all of 1996. The pro
forma information is presented in order to facilitate management's discussion
and analysis.
<TABLE>
<CAPTION>
METTLER-TOLEDO INTERNATIONAL INC.
-------------------------------------------------------------
THREE
MONTHS
ENDED
PREDECESSOR BUSINESS MARCH
-------------------------------- OCT. 15, 1996 TO 1996 YEAR ENDED 31,
YEAR ENDED JAN. 1, 1996 TO DEC. 31, PRO FORMA DEC. 31, --------
DEC. 31, 1995 OCT. 14, 1996 1996(b)(c) (a)(b)(c)(d)(E) 1997(b)(c) 1997
------------- --------------- ---------------- --------------- ---------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Net sales............. $ 850,415 $ 662,221 $ 186,912 $ 889,567 $878,415 $197,402
Cost of sales......... 508,089 395,239 136,820 523,783 493,480 114,120
------------- --------------- ---------------- --------------- ---------- --------
Gross profit.......... 342,326 266,982 50,092 365,784 384,935 83,282
Research and
development......... 54,542 40,244 9,805 50,608 47,551 10,832
Selling, general and
administrative...... 248,327 186,898 59,353 252,085 260,397 60,193
Amortization.......... 2,765 2,151 1,065 6,526 6,222 1,157
Purchased research and
development......... -- -- 114,070 -- 29,959 --
Interest expense...... 18,219 13,868 8,738 30,007 35,924 9,446
Other charges
(income), net(f).... (9,331) (1,332) 17,137 14,036 10,834 3,754
------------- --------------- ---------------- --------------- ---------- --------
Earnings (loss) before
taxes, minority
interest and
extraordinary
items .............. $ 27,804 $ 25,153 $ (160,076) $ 12,522 $ (5,952) $ (2,100)
------------- --------------- ---------------- --------------- ---------- --------
------------- --------------- ---------------- --------------- ---------- --------
Adjusted Operating
Income(g)........... $ 39,457 $ 39,840 $ 17,912 $ 67,875 $ 81,541 $ 12,257
------------- --------------- ---------------- --------------- ---------- --------
------------- --------------- ---------------- --------------- ---------- --------
<CAPTION>
1998
--------
<S> <C>
Net sales............. $215,655
Cost of sales......... 121,048
--------
Gross profit.......... 94,607
Research and
development......... 10,795
Selling, general and
administrative...... 65,112
Amortization.......... 1,818
Purchased research and
development......... --
Interest expense...... 5,879
Other charges
(income), net(f).... 454
--------
Earnings (loss) before
taxes, minority
interest and
extraordinary
items .............. $ 10,549
--------
--------
Adjusted Operating
Income(g)........... $ 18,700
--------
--------
</TABLE>
- ------------------
(a) In giving effect to the Acquisition, the Safeline Acquisition, the IPO and
the Refinancing, the 1996 pro forma data includes certain adjustments to
historical results to reflect: (i) an increase in interest expense resulting
from acquisition-related borrowings, which expense has been partially offset
by reduced borrowings following application of IPO proceeds and a lower
effective interest rate following the Refinancing, (ii) an increase in
amortization of goodwill and other intangible assets following the
Acquisition and the Safeline Acquisition, and (iii) changes to the provision
for taxes to reflect the Company's estimated effective income tax rate at a
stated level of pro forma earnings before tax for the year ended December
31, 1996.
(b) In connection with the Acquisition and the Safeline Acquisition, the Company
allocated $32,194 and $2,054, respectively, of the purchase prices to
revalue certain inventories (principally work-in-progress and finished
goods) to fair value (net realizable value). Substantially all such
inventories revalued in connection with the Acquisition were sold during the
period October 15, 1996 to December 31, 1996, and substantially all such
inventories revalued in connection with the Safeline Acquisition were sold
in the second quarter of 1997. The expense related to inventory revalued in
connection with the Acquisition has been excluded from the 1996 pro forma
information.
(c) In conjunction with the Acquisition and the Safeline Acquisition, the
Company allocated, based upon independent valuations, $114,070 and $29,959,
respectively, of the purchase prices to purchased research and development
in process. These amounts were expensed immediately following the
Acquisition and the Safeline Acquisition, respectively. The amounts related
to the Acquisition have been excluded from the 1996 pro forma information.
(d) Certain one-time charges incurred during 1996 have not been excluded from
the 1996 pro forma information. These charges consist of certain
non-recurring items for (i) advisory fees associated with the reorganization
of the Company's structure of approximately $4,800 and (ii) restructuring
charges of approximately $12,600.
(e) Selling, general and administrative expense has been adjusted to eliminate
the AEA Investors annual management fee of $1,000, payment of which was
discontinued upon consummation of the IPO.
(f) Other charges (income), net generally includes interest income, foreign
currency transactions (gains) losses, (gains) losses from sales of assets
and other charges (income). For the period January 1, 1996 to October 14,
1996 the amount shown includes employee severance and other exit costs
associated with the closing of its Westerville, Ohio facility. For the
period October 15, 1996 to December 31, 1996 the amount shown includes
employee severance benefits associated with the Company's general headcount
reduction programs in Europe and North America, and the realignment of the
analytical
(Footnotes continued on next page)
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(Footnotes continued from previous page)
and precision balance business in Switzerland. For the year ended December
31, 1997 the amount shown includes a restructuring charge of $6,300 to
consolidate three facilities in North America. See Note 14 to the Audited
Consolidated Financial Statements included herein.
(g) Adjusted Operating Income is operating income (gross profit less research
and development and selling, general and administrative expenses) before
amortization and non-recurring costs. Non-recurring costs which have been
excluded are those costs associated with selling inventories revalued to
fair value in connection with the Acquisition and the Safeline Acquisition,
fees associated with the termination of the Company's management consulting
agreement with AEA Investors at the time of the IPO of $2,500 in 1997 and
advisory fees associated with the reorganization of the Company's structure
of approximately $4,800 in 1996.
THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE MONTHS ENDED MARCH 31, 1997
Net sales were $215.7 million for the three months ended March 31, 1998
compared to $197.4 million for the corresponding period in the prior year. This
reflected an increase of 14% in local currency (7% absent the Safeline
Acquisition). Results were negatively impacted by the strengthening of the U.S.
dollar against other currencies. Net sales in U.S. dollars during the three
month period increased 9%.
Net sales in Europe increased 17% in local currencies during the three
months ended March 31, 1998 versus the corresponding period in the prior year.
The Company has continued to experience favorable sales trends in Europe, which
began in the second half of 1997, as a result of the strengthening of the
European economy. Net sales in local currencies during the three-month period in
the Americas increased 16% principally due to improved market conditions for
sales to industrial and food retailing customers. Net sales in local currencies
in the three month period in Asia and other markets decreased 3%. The Company's
business in Asia has deteriorated in the three months ending March 31, 1998
primarily as a result of a decline in net sales in Southeast Asia and Korea
(which collectively represented approximately 3% of the Company's total net
sales for 1997). The Company anticipates that market conditions in Asia will
adversely affect sales in 1998 and that margins in that region will be reduced.
The Company believes Asia and other emerging markets will continue to provide
opportunities for growth in the long term based upon the movement toward
international quality standards, the need to upgrade mechanical scales to
electronic versions and the establishment of local production facilities by the
Company's multinational client base.
The operating results for Safeline (which were included in the Company's
results from May 31, 1997) would have had the effect of increasing the Company's
net sales by $11.0 million for the three months ended March 31, 1997.
Additionally, Safeline's operating results during the same period would have
increased the Company's Adjusted Operating Income (gross profit less research
and development and selling, general and administrative expenses before
amortization and non-recurring costs) by $2.4 million.
Gross profit as a percentage of net sales increased to 43.9% for the three
months ended March 31, 1998, compared to 42.2% for the corresponding period in
the prior year. The improved gross profit percentage reflects the benefits of
reduced product costs arising from the Company's research and development
efforts and ongoing productivity improvements.
Research and development expenses as a percentage of net sales decreased to
5.0% for the three months ended March 31, 1998, compared to 5.5% for the
corresponding period in the prior year; however, the local currency spending
level remained relatively constant period to period.
Selling, general and administrative expenses as a percentage of net sales
decreased to 30.2% for the three months ended March 31, 1998, compared to 30.5%
for the corresponding period in the prior year. This decrease primarily reflects
the benefits of ongoing cost efficiency programs.
Adjusted Operating Income was $18.7 million, or 8.7% of sales, for the
three months ended March 31, 1998 compared to $12.3 million, or 6.2% of sales,
for the three months ended March 31, 1997, an increase of 52.6%.
Interest expense decreased to $5.9 million for the three months ended March
31, 1998, compared to $9.4 million for the corresponding period in the prior
year. The decrease was principally due to benefits received from the IPO, the
Refinancing and cash flow provided by operations.
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Other charges, net of $0.5 million for the three months ended March 31,
1998 compared to other charges, net of $3.8 million for the corresponding period
in the prior year. The 1998 amount includes gains on asset sales and interest
income, offset by other charges. The 1997 period includes $4.8 million ($4.0
million after tax) relating to (i) certain derivative financial instruments
acquired in 1996 and closed in 1997 and (ii) foreign currency exchange losses
resulting from certain unhedged bank debt denominated in foreign currencies
(such derivative financial instruments and such unhedged bank debt are no longer
held pursuant to current Company policy).
The provision for taxes is based upon the Company's projected annual
effective tax rate for the related period. The decrease in the projected annual
effective tax rate from 1997 to 1998 includes a benefit of approximately 5
percentage points based upon a change in Swiss tax law which will only benefit
the 1998 period.
Net earnings of $6.8 million for the three months ended March 31, 1998
compared to net loss of $1.1 million for the corresponding period of the prior
year.
YEAR ENDED DECEMBER 31, 1997 COMPARED TO PRO FORMA YEAR ENDED DECEMBER 31, 1996
Net sales were $878.4 million for 1997, compared to pro forma 1996 net
sales of $889.6 million. As previously described, pro forma 1996 includes a full
year of Safeline's operating results, while 1997 only includes the operating
results of Safeline from May 31, 1997. Net sales in local currencies during the
year increased 11% (excluding Safeline results from pro forma 1996) and 7%
(excluding Safeline results from both pro forma 1996 and actual 1997).
Net sales in local currencies in 1997 in Europe increased 6% as compared to
net sales in local currencies in pro forma 1996 (excluding Safeline results from
pro forma 1996). Net sales in local currencies during 1997 in the Americas
increased 11%, principally due to improved market conditions for sales to
industrial and food retailing customers. Net sales in local currencies in 1997
in Asia and other markets increased 30%, primarily as a result of the
establishment of additional direct marketing and distribution in the region.
During the six months ended December 31, 1997, sales trends in Europe were more
favorable compared to sales trends in the first two quarters of 1997. Overall,
the Company's business in Asia and other markets has remained solid. However,
growth in net sales in Southeast Asia and Korea (which collectively represent
approximately 3% of the Company's total net sales for 1997) slowed.
The operating results for Safeline (which as previously noted were included
in the Company's results from May 31, 1997) had the effect of increasing the
Company's net sales by $28.5 million for 1997. Additionally, Safeline's
operating results had the effect of increasing the Company's Adjusted Operating
Income by $7.1 million for the same period. The Company recorded non-cash
purchase accounting adjustments for purchased research and development ($30.0
million) and the sale of inventories revalued to fair value ($2.1 million)
during such period.
Gross profit before non-recurring acquisition costs as a percentage of net
sales increased to 44.1% for 1997, compared to 41.1% for pro forma 1996. Gross
profit in 1997 includes the previously noted $2.1 million non-cash charge
associated with the excess of the fair value over the historic value of
inventory acquired in the Safeline Acquisition. The improved gross profit
percentage reflects the benefits of reduced product costs arising from the
Company's research and development efforts, ongoing productivity improvements
and the depreciation of the Swiss franc against the Company's other principal
trading currencies.
Research and development expenses as a percentage of net sales decreased to
5.4% for 1997, compared to 5.7% for pro forma 1996; however, the local currency
spending level remained relatively constant period to period.
Selling, general and administrative expenses as a percentage of net sales
increased to 29.6% for 1997, compared to 28.3% for pro forma 1996. This increase
is primarily a result of establishing additional direct marketing and
distribution in Asia.
Adjusted Operating Income was $81.5 million, or 9.3% of net sales in 1997
compared to $67.9 million, or 7.6% of net sales in pro forma 1996, an increase
of 20.1% (28.4% excluding Safeline results from both pro forma
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1996 and actual 1997). The 1997 period excludes non-recurring costs of $2.1
million for the revaluation of inventories to fair value in connection with the
Safeline Acquisition and $2.5 million for the Termination Fee.
As previously noted, in connection with the Safeline Acquisition, $30.0
million of the purchase price was attributed to purchased research and
development in process. Such amount was expensed immediately following the
Safeline Acquisition. The technological feasibility of the products being
developed had not been established as of the date of the Safeline Acquisition.
The Company expects that the projects underlying these research and development
efforts will be substantially complete over the next two years.
Interest expense was $35.9 million for 1997, compared to $30.0 million for
pro forma 1996. The difference is principally due to the fact that the pro forma
1996 information reflects a full year of the benefits of reduced borrowing costs
in connection with the Company's IPO and Refinancing which occurred in November
1997.
Other charges, net of $10.8 million for 1997 includes restructuring related
charges of approximately $6.3 million and other charges of approximately $3.5
million relating to (i) certain financial derivative financial instruments
acquired in 1996 and closed in 1997 and (ii) foreign currency exchange losses
resulting from certain unhedged bank debt denominated in foreign currencies
(such derivative financial instruments and such unhedged bank debt are no longer
held pursuant to current Company policy). The decrease compared to other
charges, net of $14.0 million for pro forma 1996 is principally a result of
lower restructuring related charges in 1997 compared to pro forma 1996 ($6.3
million versus $12.6 million).
The significant increase in the Company's effective tax rate in 1997 was
primarily attributable to the nondeductibility of goodwill and purchased
research and development charges incurred in connection with the Safeline
Acquisition.
Net earnings before non-recurring items were $19.1 million in 1997. Such
non-recurring items in 1997 include the previously mentioned charges for
purchased research and development, the revaluation of inventories to fair
value, the Termination Fee, the restructuring of North American operations and
losses relating to derivative financial instruments and unhedged bank debt
denominated in foreign currencies. Including these charges of $43.0 million
after taxes, the net loss before extraordinary items was $23.9 million for 1997
compared to net earnings of $5.0 million for pro forma 1996.
The extraordinary loss of $41.2 million in 1997 represents charges for the
early repayment premium on the senior subordinated notes and the write-off of
capitalized debt issuance fees associated with the senior subordinated notes and
previous credit facilities. See '--Liquidity and Capital Resources.'
FOR THE PERIOD FROM JANUARY 1, 1996 TO OCTOBER 14, 1996, THE PERIOD FROM
OCTOBER 15, 1996 TO DECEMBER 31, 1996 AND PRO FORMA 1996 COMPARED TO YEAR ENDED
DECEMBER 31, 1995
Net sales for the period from January 1, 1996 to October 14, 1996 and for
the period from October 15, 1996 to December 31, 1996 were $662.2 million and
$186.9 million, respectively. Pro forma 1996 net sales were $889.6 million, or
$849.1 million excluding Safeline results, compared to actual net sales of
$850.4 million in 1995. Net sales (pro forma excluding Safeline) in local
currency increased 3%, excluding the impact of reductions 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 (pro forma excluding Safeline) in 1996 compared to
actual 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 (excluding Safeline) 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 where the Company has been able to retain its market share.
This market weakness has persisted in early 1997.
Net sales (pro forma excluding Safeline) in Europe in local currency
decreased 2% in 1996 compared to actual 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 (pro forma excluding Safeline)
in the Americas in local currency increased by 5% over actual 1995 due to growth
in the United States and Latin America and
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double digit expansion in laboratory measurement instruments other than balances
and in related service. Net sales (pro forma excluding Safeline) in Asia and
other markets in local currency increased by 8% over actual 1995, primarily as a
result of significantly increased sales in the Shanghai operation and strong
sales in Japan and Australia.
Gross profit for the period from January 1, 1996 to October 14, 1996 and
for the period from October 15, 1996 to December 31, 1996 was $267.0 million and
$50.1 million, respectively. Pro forma 1996 gross profit was $365.8 million or
$349.3 million (excluding Safeline results). This compares to $342.3 million in
actual 1995. Pro forma gross profit as a percentage of sales increased to 41.1%
in 1996 from 40.3% in actual 1995. 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 for the period from January 1, 1996 to October 14, 1996 and for the
period from October 15, 1996 to December 31, 1996 were $227.1 million and $69.2
million, respectively. Pro forma 1996 selling, general and administrative and
research and development expenses totaled $302.7 million or $296.1 million
excluding Safeline. This compares to $302.9 million in actual 1995. Pro forma
selling, general and administrative expenses and research and development
expenses as a percentage of net sales decreased to an aggregate of 34.0% in 1996
from 35.6% in actual 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. These
cost decreases were partially offset by non-recurring legal and advisory fees of
$4.8 million.
In connection with the Acquisition, the Company allocated, based upon
independent valuations, $114.1 million of the purchase price to purchased
research and development in process. Such amount was expensed immediately
following the Acquisition.
Interest expense for the period from January 1, 1996 to October 14, 1996
and for the period from October 15, 1996 to December 31, 1996 was $13.9 million
and $8.7 million, respectively. Pro forma interest expense increased to $30.0
million in 1996 from $18.2 million in actual 1995, principally due to a higher
debt level as a result of the Acquisition and the Safeline Acquisition. Interest
expense since the Acquisition and the Safeline Acquisition is materially
different. See '--Liquidity and Capital Resources.'
Other income, net for the period January 1, 1996 to October 14, 1996 of
$1.3 million includes interest income of $3.4 million and severance and other
exit costs of $1.9 million associated with the closing of its Westerville, Ohio
facility. Other charges, net for the period October 15, 1996 to December 31,
1996 of $17.1 million principally represent (i) losses on foreign currency
transactions of $8.3 million of which $5.7 million were incurred in connection
with the Acquisition, (ii) employee severance benefits associated with the
Company's general headcount reduction programs in Europe and North America of
$4.6 million which were announced during such period, and (iii) the realignment
of the analytical and precision balance business in Switzerland of $6.2 million
which was internally announced in December 1996. In connection with such
programs the Company reduced its workforce by approximately 170 employees in
1996 and intends to further reduce its workforce by approximately 70 employees
in 1997. The Company anticipates that as a result of the foregoing it will
achieve cost savings consisting primarily of lower employee salary and benefit
costs and fixed manufacturing costs. In addition, at the time of the
Acquisition, the Company estimated it would incur additional selling, general
and administrative expenses of $1.3 million annually as a result of the
Acquisition.
Earnings before taxes and minority interest for the period from January 1,
1996 to October 14, 1996 was $25.2 million. Loss before taxes and minority
interest for the period from October 15, 1996 to December 31, 1996 was $160.1
million. This loss includes non-recurring costs of $114.1 million for the
allocation of purchase price to in-process research and development projects,
$32.2 million for the revaluation of inventories to fair value, $9.9 million of
other charges (an additional $1.9 million of other charges was incurred by the
Predecessor Business in 1996) and $4.8 million for non-recurring legal and
advisory fees. Pro forma earnings before taxes and minority interest would have
been $12.5 million in 1996. Pro Forma Adjusted Operating Income would have been
$67.9 million in 1996, or $58.0 million (excluding Safeline), compared to $39.5
million in actual 1995.
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Net earnings for the period from January 1, 1996 to October 14, 1996 were
$14.5 million. The net loss for the period from October 15, 1996 to December 31,
1996 was $159.0 million. Pro forma net earnings of $5.0 million in 1996 compared
to net earnings of $18.3 million in actual 1995.
LIQUIDITY AND CAPITAL RESOURCES
In November 1997, the Company refinanced its previous credit agreement and
purchased all of its 9 3/4% Senior Subordinated Notes due 2006 (the 'Notes')
pursuant to a tender offer with proceeds from the IPO and additional borrowings
under the Credit Agreement. The Notes were originally issued in October 1996 at
the time of the Acquisition.
The Credit Agreement provides for term loan borrowings in aggregate
principal amounts of $99.7 million, SFr 83.9 million (approximately $55.9
million at March 31, 1998) and pounds 21.3 million (approximately $35.8 million
at March 31, 1998) that are scheduled to mature in 2004, a Canadian revolver
with availability of CDN $26.3 million (approximately CDN $19.5 million of which
was drawn as of March 31, 1998) which is scheduled to mature in 2004, and a
multi-currency revolving credit facility with availability of $400.0 million
(approximately $240.0 million of which was available at March 31, 1998) which is
also scheduled to mature in 2004. The Company had borrowings of $348.3 million
under the Credit Agreement and $25.9 million under various other arrangements as
of March 31, 1998. Under the Credit Agreement, amounts outstanding under the
term loans amortize in quarterly installments. In addition, the Credit Agreement
obligates the Company to make mandatory prepayments in certain circumstances
with the proceeds of asset sales or issuance of capital stock or indebtedness
and with certain excess cash flow. The Credit Agreement imposes certain
restrictions on 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 is secured by certain assets
of the Company. The Credit Agreement imposes certain restrictions on the
Company's ability to pay dividends to its shareholders.
In connection with the Refinancing, the Company recorded an extraordinary
charge amounting to $31.6 million, principally for prepayment premiums on its
Notes and the write-off of capitalized debt issuance fees. In addition, with the
May 29, 1997 refinancing of its previous credit facility, the Company recorded
an extraordinary charge of $9.6 million, representing a charge for the write-off
of capitalized debt issuance fees and related expenses associated with the
previous credit facility.
At March 31, 1998, approximately $106.7 million of the borrowings under the
Credit Agreement were denominated in U.S. dollars. The balance of the borrowings
under the Credit Agreement and under local working capital facilities were also
denominated in certain of the Company's other principal trading currencies
amounting to approximately $267.5 million at March 31, 1998. 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. In addition, because the Company borrows in a variety of currencies,
its debt balances will fluctuate due to changes in exchange rates. See '--Effect
of Currency on Results of Operations.'
The Acquisition was financed principally through capital contributions of
$190.0 million before related expenses from the Company, borrowings under a
previous credit agreement of $307.0 million and $135.0 million from the issuance
of the Notes. The Safeline Acquisition was financed by borrowings under the
Company's then-existing credit facility together with the issuance of
pounds 13.7 million ($22.4 million at May 30, 1997) of seller loan notes which
mature May 30, 1999.
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 and the Safeline
Acquisition, the annual interest expense associated with increased borrowings,
as well as scheduled principal payments of term loans under the Credit
Agreement, have significantly increased the Company's liquidity requirements.
The Company's capital expenditures totaled $25.9 million in 1995, $29.4
million in pro forma 1996 and $22.3 million in actual 1997. 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
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manufacturing facility. Capital expenditures for 1998 are expected to increase
over 1997 levels, but should remain consistent with earlier periods.
The Company's cash provided by operating activities increased from $8.1
million in the three months ended March 31, 1997 to $12.2 million in the three
months ended March 31, 1998. The increase resulted principally from improved
Adjusted Operating Income and lower interest costs resulting from the IPO and
Refinancing. For the year ended December 31, 1997, cash provided by operating
activities was $55.6 million as compared to $62.5 million for the period January
1, 1996 to October 14, 1996 and $9.6 million for the period October 15, 1996 to
December 31, 1996. The 1997 results include higher interest costs resulting from
the Acquisition and the Safeline Acquisition.
At March 31, 1998, consolidated debt, net of cash, was $352.9 million.
The Company continues to explore potential acquisitions to expand its
product portfolio and improve its distribution capabilities. In connection with
any acquisition, the Company may incur additional indebtedness.
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 are 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 as a result
of changes in currency exchange rates. Specifically, a strengthening of the U.S.
dollar versus other currencies reduces net sales and earnings as translated into
U.S. dollars, whereas a weakening of the U.S. dollar has the opposite effect.
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 versus the Company's other
major trading currencies, especially the principal European currencies, has a
negative impact on the Company's results of operations and a depreciation of the
Swiss franc versus the Company's other major trading currencies, especially the
principal European currencies has a positive impact on the Company's results of
operations. The effect of these changes generally offsets in part the
translation effect on earnings before interest and taxes of changes in exchange
rates between the U.S. dollar and other currencies described in the preceding
paragraph.
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/combined basis or (ii) on a consolidated/combined basis only
with other eligible entities subject to tax in the same jurisdiction, in either
case without regard to the taxable losses of non-consolidated/combined
affiliated entities. As a result, the Company may pay income taxes to 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
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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.
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 China, Latin America and Eastern
Europe, 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 China, Latin America and Eastern Europe
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
Prior to 1997, the Company entered 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. At December 31, 1997,
all remaining derivative instruments met the requirements of hedge accounting.
During 1997, the Company entered into certain interest rate swap and cap
agreements. See Note 5 to the Audited Consolidated Financial Statements included
herein. The Company has not entered any such agreements during 1998.
NEW ACCOUNTING STANDARDS
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131 ('SFAS 131'), 'Disclosures about Segments
of an Enterprise and Related Information.' This Statement will change the way
public companies report information about segments of their business in annual
financial statements and requires them to report selected financial information
in their quarterly reports issued to shareholders. It also requires entity-wide
disclosures about products and services an entity provides, the material
countries in which it holds assets and reports revenues, and its major
customers. The Statement is effective for fiscal years beginning after December
15, 1997. Management has not determined the effect of the adoption of SFAS 131.
In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position ('SOP') 98-1, 'Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use.' SOP 98-1 provides guidance on
accounting for the costs of computer software developed or obtained for internal
use. This SOP requires entities to capitalize certain internal-use software
costs once certain criteria are met, and is effective for financial statements
for fiscal years beginning after December 15, 1998. Management has not
determined the effect of the adoption of SOP 98-1.
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FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS
This Prospectus includes forward-looking statements that reflect the
Company's current views with respect to future events and financial performance,
including capital expenditures, planned product introductions, research and
development expenditures, potential future growth, including potential
penetration of developed markets and potential growth opportunities in emerging
markets, potential future acquisitions, potential cost savings from planned
employee reductions and restructuring programs, estimated proceeds from and
timing of asset sales, planned operational changes and research and development
efforts, strategic plans and future cash sources and requirements. These
forward-looking statements are subject to a number of risks and uncertainties,
including those identified in 'Risk Factors,' 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 new information, future
events or otherwise.
INDUSTRY
GENERAL
The Company believes that in 1997 the global market for the Company's
products and services was approximately $6.0 billion. Weighing instruments are
among the most broadly used measuring devices, and their results are often used
as the basis of commercial transactions. Analytical instruments are critical to
the research and development and quality control efforts of end-users, while
metal detection systems provide important quality and safety checks in
production and packaging. The Company's products are used in laboratories as an
integral part of research and quality control processes, in industry for various
manufacturing processes such as quality control, materials preparation, filling,
counting and dimensioning, and in food retailing for preparation, portioning and
inventory control. Customers include pharmaceutical, biotechnology, chemicals,
cosmetics, food and beverage, metals, electronics, logistics, transportation and
food retailing businesses, as well as schools, universities and government
standards laboratories. The Company does not manufacture or sell household
weighing products, bulkweigh fillers or continuous weighing products, and those
markets are not discussed herein.
Weighing instruments often comprise a relatively small component of a
customer's aggregate expenditures but perform important functions in quality
control, process control and research and can improve productivity. As a result,
the Company believes customers tend to emphasize accuracy, product reliability,
technical innovation, service quality, reputation and past experience with a
manufacturer's products when making their purchasing decisions for weighing and
other precision instruments. Weighing equipment manufacturers also provide a
significant amount of service and support to their customers, including repair,
calibration, certification and preventive maintenance, which generate recurring
revenues. The Company believes that customers often continue to purchase from
their existing vendor due to the additional costs for training, spare parts,
service and systems integration associated with switching to or adding other
brands of weighing equipment to their operations. The market for weighing
instruments, particularly those used in industrial and food retailing
applications, has traditionally been fragmented both geographically and by type
of application. Many manufacturers have a strong market position in their home
countries but a much smaller presence in other markets. Similarly, manufacturers
have tended to be focused on a particular application or group of applications.
The Company believes that the developed markets (Europe, North America and
Japan) that it serves have recently experienced modest growth rates in demand
for weighing instruments. Laboratory market growth has been influenced by demand
in the principal end-user industries and customer replacement of older products
with new products designed to be integrated into an automated laboratory
environment. In the industrial and food retailing market, growth has been driven
by the increasing use of weighing applications in the control and regulation of
manufacturing and logistics processes, customers' needs to upgrade to
network-ready weighing equipment, and general growth in end-user industries.
Emerging markets, such as Asia (excluding Japan), have experienced higher growth
rates than the overall market. Growth in these markets has come from the
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establishment and growth of industries requiring additional and more
sophisticated weighing instruments and systems.
End-users of laboratory analytical instruments require exceptionally high
levels of performance and reliability due to the application of these
instruments in critical steps of research and development and quality control.
In addition, analytical instruments in most cases constitute a small percentage
of customers' aggregate expenditures, are material to customers' development
efforts and can have a significant impact on users' overall productivity. As a
result, the Company believes reputation, technical leadership, service and
proven results are critical to end-user decisions to choose an equipment
supplier. In many cases, once a manufacturer's equipment is adopted in the
laboratory and test methods are established using a particular instrument, the
costs and/or risks of switching to a different manufacturer of instruments can
be high. Customers are therefore reluctant to switch suppliers and are more
likely to buy replacement products from the manufacturer of the initial system,
which leads to stable customer relationships and a potential recurring revenue
stream for the vendor. The Company believes that there are significant potential
growth opportunities in its analytical instruments markets, including: growth in
end-use markets such as pharmaceuticals, food and beverage, consumer products,
environmental testing and chemicals; increased research and development spending
in major customer segments such as the pharmaceutical and biotech industries;
and increased customer emphasis on productivity and automation.
The end-users of metal detection equipment are typically companies in the
food processing, pharmaceutical, cosmetics, chemicals and other industries that
must ensure that their products are free from contamination by metal particles.
Selling product that is contaminated by metal can have severe consequences for
these companies, resulting in potential litigation and product recalls.
Consequently, the Company believes that purchasers of metal detectors value
accuracy and stability of their detectors. The Company believes that there is
also a high degree of brand loyalty from customers, as switching brands requires
retraining line operators in the use of new equipment and altering quality
assurance and calibration routines. The Company believes these characteristics
lead to a high level of recurring and follow-on revenues from existing
customers. The Company believes that in developed markets, demand for metal
detectors is experiencing substantial growth as a result of both increasing
consumer and regulatory focus on product safety. Furthermore, the Company
believes exports of food products to industrialized nations from lesser
developed countries will contribute to growth in demand for metal detectors in
emerging markets.
INDUSTRY TRENDS
Over the last five years, the markets for the Company's precision
instruments have experienced increasing customer demand for products with
sophisticated data handling and storage capabilities that can be integrated into
management information systems. In the laboratory market, weighing and
analytical instruments are now capable of storing a large number of results,
performing statistical analyses and transmitting results to computers and
laboratory information management systems. Laboratory customers have also
demanded instruments that improve research productivity by adding automation.
For example, titrators have been increasingly paired with auto-samplers, which
allow a technician to set up dozens of samples for testing automatically. The
industrial and food retailing market has experienced a similar trend, as small
groceries are replaced by supermarkets and hypermarkets. Retail counter-top
scales (for the weighing of perishable goods) now include database and network
functions. This enables the scale to download price information from the store's
master price database and provide information on sales by article, which can be
integrated into the store's inventory control system. The store's master
ordering system is then able to calculate shrinkage and store inventory levels
based on the weight of goods processed and automatically reorder perishable
goods via electronic data interchange when inventory levels reach a pre-set
reorder point. In manufacturing, weighing instruments also have become
integrated into manufacturing plants' information systems as the primary means
for the tracking and control of inventory. As they have become more integrated
into the manufacturing process, weighing instruments also have been combined
with dimensioning equipment as well as with multiple input/output devices:
bar-code readers, printers and data-storage devices. Similarly, metal detection
systems can be integrated with checkweighers to provide important safety and
quality checks of consumer products and are linked to customers' management
information systems to provide key process control data.
Another trend in the weighing instruments market is regional and global
harmonization of weighing and measurement standards. Weights and measures were
historically regulated at the national level. As a result,
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products had to meet numerous different national regulatory requirements. More
recently, certain European national requirements have been harmonized by the
European Union, and many other national requirements have been harmonized by the
Organisation Internationale de Metrologie Legale, which sets international
weights and measures standards. Harmonization has facilitated the ability of
multinational weighing instrument manufacturers to manufacture products that
meet all relevant regulatory requirements and the development of broader-based
markets for their product lines. In recent years, some governments have begun to
privatize the inspection of weighing instruments used in commercial
transactions. ISO-certified manufacturers of weighing instruments, such as
Mettler-Toledo, whose after-sales service technicians already perform similar
services for customers, are well situated to take over the inspection process
from governments wishing to privatize this function.
As laboratory and manufacturing requirements and standards become more
widely adopted, the accuracy of weighing instruments, analytical instruments and
metal detection systems and the ability to certify the accuracy of results
become increasingly important to purchasers. For example, ISO 9001 standards and
Good Laboratory Practices and Good Manufacturing Practices, which are
voluntarily adopted by participating companies, require the development of
compliance procedures that must be adhered to throughout the relevant laboratory
or production process. These procedures include periodic calibration and
certification of measurement instruments. Certified instruments must be utilized
throughout the process, and each step in the process must be accurately recorded
in accordance with specified procedures so that results can be accurately traced
and reproduced. An example of this trend is the increasing adoption of ISO 9001
quality guidelines by food processors, which require all production processes to
be properly monitored for contamination by metal and other foreign substances.
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BUSINESS
GENERAL
Mettler-Toledo is a leading global supplier of precision instruments. The
Company is the world's largest manufacturer and marketer of weighing instruments
for use in laboratory, industrial and food retailing applications. In addition,
the Company holds one of the top three market positions in several related
analytical instruments such as titrators, thermal analysis systems, pH meters,
automatic lab reactors and electrodes. Through its 1997 acquisition of Safeline,
the Company is also the world's largest manufacturer and marketer of metal
detection systems for companies that produce and package goods in the food
processing, pharmaceutical, cosmetics, chemicals and other industries. The
Company focuses on high value-added segments of its markets by providing
innovative instruments, by integrating these instruments into
application-specific solutions for customers, and by facilitating the processing
of data gathered by its instruments and the transfer of this data to customers'
management information systems. Mettler-Toledo services a worldwide customer
base through its own sales and service organization and has a global
manufacturing presence in Europe, the United States and Asia. The Company
generated 1997 net sales of $878.4 million which were derived 45% in Europe, 42%
in North and South America and 13% in Asia and other markets. For additional
financial information by geographic segment, see Note 16 to the Audited
Consolidated Financial Statements included elsewhere in this Prospectus.
HISTORY
The Company traces its roots to the invention of the single-pan analytical
balance by Dr. Erhard Mettler and the formation of Mettler Instruments 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. 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 the Company's existing geographic markets and products. 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., in 1981. In 1990, the Company acquired Ohaus
Corporation, a manufacturer of laboratory balances.
The Company was incorporated in December 1991, and was recapitalized in
connection with the October 15, 1996 acquisition of the Mettler-Toledo Group
from Ciba in a transaction sponsored by management and AEA Investors. See Note 1
to the Audited Consolidated Financial Statements included herein for further
information with respect to the Acquisition. On May 30, 1997, the Company
acquired Safeline, the world's leading supplier of metal detection systems for
companies that produce and package goods in the food processing, pharmaceutical,
cosmetics, chemicals and other industries.
In November 1997, the Company completed its IPO at a price per share equal
to $14.00. The IPO, in which 7,666,667 shares (including the underwriters'
over-allotment option) were sold, raised net proceeds, after underwriters'
commission and expenses, of approximately $97.3 million. The net proceeds from
the IPO, together with additional borrowings under the Company's Credit
Agreement, were used to repurchase the Notes and to pay related premiums and
fees and expenses.
MARKET LEADERSHIP
The Company believes that it maintains a leading position in each of its
markets. In the weighing instruments market, Mettler-Toledo is the only company
to offer products for laboratory, industrial and food retailing applications
throughout the world and believes that it holds a market share more than two
times greater than that of its nearest competitor. The Company believes that in
1997 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 the number two position in Japan. In the
industrial and food retailing markets, the Company believes it has the largest
market share in Europe and the United States. In Asia, the
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Company has a substantial, rapidly growing industrial and food retailing
business supported by its established manufacturing presence in China. The
Company also holds one of the top three global market positions in several
analytical instruments such as titrators, thermal analysis systems, electrodes,
pH meters and automatic lab reactors. The Company recently enhanced its leading
positions in precision instruments through the addition of Safeline's market
leading metal detection products, which can be used in conjunction with the
Company's checkweighing instruments for important quality and safety checks in
the food processing, pharmaceutical, cosmetics, chemicals and other industries.
Mettler-Toledo attributes its worldwide market leadership positions to the
following competitive strengths:
Global Brand and Reputation. The Mettler-Toledo brand name is identified
worldwide with accuracy, reliability and innovation. Customers value these
characteristics because precision instruments, particularly weighing and
analytical instruments, significantly impact customers' product quality,
productivity, costs and regulatory compliance. Furthermore, precision
instruments generally constitute a small percentage of customers' aggregate
expenditures. As a result, the Company believes customers tend to emphasize
accuracy, product reliability, technical innovation, service quality, reputation
and past experience with a manufacturer's products when making their purchasing
decisions for weighing and other precision instruments and experience high
switching costs if they attempt to change vendors. A recent independent survey
concluded that 'Mettler-Toledo' was one of the three most recognized brand names
in the laboratory. The Company's brand name is so well recognized that
laboratory balances are often generically referred to as 'Mettlers.' The
strength of this brand name has allowed the Company to successfully extend its
laboratory product line to include titrators, thermal analysis systems,
electrodes, pH meters and automatic lab reactors.
Technological Innovation. Mettler-Toledo has a long and successful track
record of innovation, as demonstrated by the invention of the single-pan
analytical balance in 1945 and the introduction of the first fully electronic
precision balance in 1973. The Company has continued to be at the forefront of
technology with recent innovations in both weighing and related instrumentation,
including its new digital load cell, its ID 20 terminal (the first personal
computer interface to be certified by weights and measures regulators), its
MonoBloc weighing sensor technology, its GOBI moisture determination instrument,
a new automatic lab reactor, the Zero Metal-Free Zone metal detector and its new
PILAR dimensioning equipment. As with many of the Company's recent innovations,
the Company's new MonoBloc weighing sensor technology provides greater accuracy
while also significantly reducing manufacturing costs and the time and expense
of design changes by reducing from approximately 100 to approximately 50 the
number of parts in the sensor. The Company believes it is the global leader in
its industry in providing innovative instruments, in integrating its instruments
into application-specific solutions for customers, and in facilitating the
processing of data gathered by its instruments and the transfer of this data to
customers' management information systems. Mettler-Toledo's technological
innovation efforts benefit from the Company's manufacturing expertise in sensor
technology, precision machining and electronics, as well as its strength in
software development.
Comprehensive, High Quality Product Range. Mettler-Toledo manufactures a
more comprehensive range of weighing instruments than any of its competitors.
The Company's broad product line addresses a wide range of weighing applications
across and within many industries and regions. Furthermore, the Company's
analytical instruments and metal detection systems complement its weighing
products, enabling the Company to offer integrated solutions. The Company
manufactures its products in its modern manufacturing facilities, most of which
are ISO 9001 certified. Mettler-Toledo's broad range of high quality products
and the ability to provide integrated solutions allows the Company to leverage
its sales and service organization, product development activities and
manufacturing and distribution capabilities.
Global Sales and Service. The Company has the only global sales and
service organization among weighing instruments manufacturers. At March 31,
1998, this organization consisted of approximately 3,100 employees organized
into locally-based, customer-focused groups that provide prompt service and
support to the Company's customers and distributors in virtually all major
markets around the world. The local focus of the Company's sales and service
organization enables the Company to provide timely, responsive support to
customers worldwide and provides feedback for manufacturing and product
development. This global infrastructure also allows the Company to capitalize on
growth opportunities in emerging markets.
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Largest Installed Base. The Company believes that it has the largest
installed base of weighing instruments in the world. From this installed base,
the Company obtains service contracts which provide a strong, stable source of
recurring service revenue. Service revenue represented approximately 16% of net
sales in 1997, of which approximately 9% is derived solely from service
contracts and repairs with the remainder derived from the sale of spare parts.
The Company believes that its installed base of weighing instruments represents
a competitive advantage with respect to repeat purchases and purchases of
related analytical instruments and metal detection systems, because customers
tend to remain with an existing supplier that can provide accurate and reliable
products and related services. In addition, switching to a new instrument
supplier entails additional costs to the customer for training, spare parts,
service and systems integration requirements. Close relationships and frequent
contact with its broad customer base also provide the Company with sales leads
and new product and application ideas.
Geographical, Product and Customer Diversification. The Company's revenue
base is diversified by geographic region, product range and customer. The
Company's broad range of product offerings is utilized in many different
industries, including, among others, chemicals, pharmaceuticals, food
processing, food retailing and transportation. The Company supplies customers in
over 100 countries, and no one customer accounted for more than 2.6% of 1997 net
sales. The Company's diverse revenue base reduces its exposure to regional or
industry-specific economic conditions, and its presence in many different
geographic markets, product markets and industries enhances its attractiveness
as a supplier to multinational customers.
GROWTH STRATEGY
Prior to its acquisition on October 15, 1996 in a transaction sponsored by
management and AEA Investors, Mettler-Toledo operated as a division of Ciba. In
connection with the Acquisition, Mettler-Toledo began implementing a strategy to
enhance its position as global market leader by accelerating new product
introductions, capitalizing on market opportunities, focusing on expansion in
emerging markets, pursuing selected acquisitions and reengineering its
operations in order to reduce its overall cost structure. These initiatives have
contributed to an improvement in Adjusted Operating Income from $39.5 million
(4.6% of net sales) for 1995 to $81.5 million (9.3% of net sales) for 1997.
Adjusted Operating Income increased from $12.3 million (6.2% of net sales) for
the three months ended March 31, 1997 to $18.7 million (8.7% of net sales) for
the three months ended March 31, 1998, an increase of 52.6%.
New Product Introductions. The Company intends to continue to invest in
product innovation in order to provide technologically advanced products to its
customers for existing and new applications. Over the last three calendar years,
the Company invested more than $150 million in research and development and
customer engineering, which has resulted in a pipeline of innovative and new
products, significant reductions in product costs and reduced time to market for
new products. Examples of recent or upcoming product introductions include:
industrial and retail products that apply open-system architecture, a higher
performance titrator, a higher performance modular thermal analysis system, a
new density and refractometry measurement technology, a fully integrated metal
detector and checkweigher and the first Chinese-designed and manufactured
laboratory balance. In addition, the Company is also focused on innovations that
reduce manufacturing costs. For example, the Company is extending the
utilization of its high-accuracy, low-cost MonoBloc weighing sensor technology
through much of its weighing instrument product line. The Company attributes a
significant portion of its recent margin improvement to its research and
development efforts.
Capitalize on Market Opportunities. Mettler-Toledo believes it is well
positioned to capitalize on potential market opportunities including: (i) the
integration of precision measurement instruments into data management software
systems to automate processes and/or improve process control; (ii) the
development of integrated solutions that combine measurement instruments and
related technologies directly into manufacturing processes; (iii) the
harmonization of national weighing standards among countries, particularly in
the European Union; and (iv) the standardization of manufacturing and laboratory
practices through programs such as ISO 9001, Good Laboratory Practices and Good
Manufacturing Practices. The Company believes that these trends, together with
the Company's brand name, global presence and the pipeline of planned new
products, will allow it to increase its penetration of developed markets such as
Europe, the United States and Japan.
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Further Expansion in Emerging Markets. The Company believes that global
recognition of the Mettler-Toledo brand name and the Company's global sales,
service and manufacturing capabilities position it to take advantage of
continued growth opportunities in emerging markets. These growth opportunities
have been driven by economic development and global manufacturers' utilization
of additional and more sophisticated precision measurement instruments as they
shift production to these markets. The primary focus to date of the Company's
emerging market expansion has been in Asia. In Asia (excluding Japan), the
Company is the market leader in laboratory weighing instruments and has
substantial and rapidly growing industrial and food retailing businesses. The
Company maintains two profitable operations in China: first, a 60% owned joint
venture which manufactures and sells industrial and food retailing products and,
second, a wholly owned facility which manufactures and distributes laboratory
products. Both of these operations serve the domestic and export markets. The
Company has opened direct marketing organizations in Taiwan, Korea, Hong Kong,
Thailand, Malaysia and Eastern Europe. The Company's net sales in Southeast Asia
and Korea collectively represented approximately 3% of the Company's net sales
for 1997. The Company is also expanding its sales and service presence in Latin
America and other emerging markets. The Company believes Asia and other emerging
markets will continue to provide opportunities for growth in the long term based
upon the movement toward international quality standards, the need to upgrade
mechanical sales to electronic versions and the establishment of local
production facilities by the Company's multinational client base. The Company
believes that its brand name, its global marketing and manufacturing
infrastructure and its already substantial sales in Asia, Latin America and
Eastern Europe position it to take advantage of these growth opportunities.
Pursue Selected Acquisition Opportunities. Mettler-Toledo plans to
actively pursue additional complementary product lines and distribution
channels. In the laboratory market, the Company intends to leverage its existing
laboratory distribution system through the acquisition of complementary product
lines and the development of integrated laboratory solutions. In the industrial
and food retailing markets, the Company plans to pursue the acquisition of
related products and technologies that allow for the integration of weighing
with other customer operations and information systems. The Company began
implementing this strategy through the May 1997 acquisition of Safeline, which
is the world's leading supplier of metal detection systems for companies that
produce and package goods in the food processing, pharmaceutical, cosmetics,
chemicals and other industries. Safeline's metal detection systems enable the
Company to offer integrated solutions for quality control and data management to
these industries. The Company believes that by taking advantage of its brand
name and global sales and service organization it can expand the distribution of
acquired product lines and operate acquired businesses more effectively.
Reengineering and Cost Reductions. The Company's recent increase in
profitability has been achieved in part through: (i) focusing research and
development efforts on product cost reductions; (ii) achieving greater
flexibility in, and a targeted reduction of, the Company's workforce, including
a planned further reduction of approximately 70 personnel in 1998; (iii)
consolidating manufacturing facilities, including the closure of the
Westerville, Ohio facility; and (iv) moving production to lower-cost
manufacturing facilities. The Company has also started implementing a number of
additional operational changes such as the restructuring of its ordering
process, product delivery and parts inventory management in Europe, the
consolidation of worldwide precision balance manufacturing, the realignment of
industrial product manufacturing in Europe and the consolidation of the
Company's North American laboratory, industrial and food retailing businesses
into a single marketing organization. The Company believes that these new
initiatives, as well as its continuing efforts to reduce product costs through
research and development and the move of production to lower-cost manufacturing
facilities, will place the Company in a position to build on its recent
improvement in profitability. Furthermore, the Company believes that it can
leverage its existing infrastructure, particularly the recent investments made
in Asia, to obtain continued sales growth without significant additions to its
overall cost base.
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, electrodes, pH meters and automatic lab
reactors, for laboratory applications in research and development, quality
assurance, production and
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education. Laboratory products accounted for approximately 38% of the Company's
net sales in 1997 (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 producers worldwide of titrators,
thermal analysis systems, electrodes, pH meters and automatic lab reactors. The
Company believes it has the leading market share for laboratory balances in each
of Europe, the United States and Asia (excluding Japan) and the number two
position 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 generically
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, 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 branded products, the Company also
manufactures and sells balances under the brand name 'Ohaus.' Ohaus branded
products include mechanical 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 support and 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.
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Automatic Lab Reactors and Reaction Calorimeters. Automatic 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. Automatic 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 $160.
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 instruments are among the most broadly used measurement devices 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),
metal detectors, dimensioning equipment and scales for use in food retailing
establishments and specialized software systems for industrial and perishable
goods management 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 62% of
the Company's net sales in 1997 (including revenues from related after-sale
service). The Company believes that it has the largest market share in the
industrial and food retailing market in each of Europe and in the United States.
In Asia, the Company has a substantial, rapidly growing industrial and food
retailing business supported by an established manufacturing presence 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
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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 scale prices
generally range from $20,000 to $50,000.
Dynamic Checkweighing. The Company offers solutions to checkweighing
requirements in the food processing, pharmaceutical, chemicals 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.
Metal Detection Systems. Metal detection systems control the removal of
product that is identified as contaminated by metal during the manufacturing
process in the food processing, pharmaceutical, cosmetics, chemicals and other
industries. Metal detectors therefore provide manufacturers with vital
protection against metal contamination arising from their own production
processes or from use of contaminated raw materials. Metal detectors are most
commonly utilized in conjunction with checkweighers as components of integrated
packaging lines in the food processing, pharmaceutical and other industries.
Prices for metal detection systems generally range from $5,000 to $20,000.
Dimensioning Equipment. The Company recently introduced automated
dimensioning equipment that is utilized in the shipping industry to measure
package volumes. These products employ the patented PILAR technology and are
integrated with industrial scales to combine volume-based and weight-based
tariff calculations. Prices for integrated dimensioning/weighing systems range
from $5,000 to $20,000.
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
delicatessen counter or at the checkout 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 1997 net sales
derived 45% in Europe, 42% in North and South America and 13% 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 2.6% of 1997 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.
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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. In addition, the Company began to distribute
laboratory products directly in certain other Asian countries.
Ohaus branded products are generally positioned in alternative distribution
channels to those of Mettler-Toledo branded 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
branded 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), pharmaceutical companies
(e.g., formulating and filling 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 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 the Company's modules
into larger process control applications, or comprehensive packaging lines. OEM
applications often include software content and technical support, as the
Company's modules 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 metal detection systems are typically food processing,
pharmaceutical, cosmetics and chemicals manufacturers that must ensure that
their products are free from contamination by metal particles. Selling product
that is contaminated by metal can have severe consequences for these companies,
resulting in potential litigation and product recalls. Metal detection systems
are most commonly utilized in conjunction with checkweighers as components of
integrated packaging lines as important safety checks before food and other
products are delivered to customers. Other applications of metal detection
systems include pipeline detectors for dairy and other liquids, gravity fall
systems for grains and sugar and throat detection systems for raw material
monitoring.
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
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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, direct sales slightly exceed
distribution sales. Distributors are highly fragmented in the U.S. 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 the Company's 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 March 31, 1998, this organization
consisted of approximately 3,100 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 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 16% of the Company's total net sales in 1997 (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 generating repeat sales. Moreover, the
Company believes that it has the largest installed base of weighing instruments
in the world. The close relationships and frequent contact with its large
customer base provide the Company with sales opportunities and innovative
product and application ideas. A global service network also 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 represent 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 the Company's 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.
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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 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 March 31, 1998, POs included approximately 3,800 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, analytical
instruments and metal detectors. 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 MonoBloc weighing
sensor 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 MonoBloc sensor permits more accurate weighing,
lower manufacturing costs and cheaper and faster design changes. MonoBloc
technology has been incorporated into certain of the Company's products, and the
Company is extending the utilization of its MonoBloc technology through much of
its weighing instrument product lines.
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 has spent more than $150 million on research and development
during the last three fiscal years (excluding research and development purchased
in connection with the Acquisition and the Safeline Acquisition). Including
costs associated with customer-specific engineering projects, which are included
in cost of sales for financial reporting purposes, the Company spent
approximately 5.7% of net sales on research and development in 1997.
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
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supplier for all of 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 seven manufacturing plants in the United States, four in
Switzerland, two in Germany, one in the United Kingdom and two in China, of
which one is a joint venture in which the Company owns a 60% interest and the
other, the Shanghai facility, was completed and commenced production of
laboratory products at the end of 1996. Laboratory products are produced mainly
in Switzerland and to a lesser extent in the United States and China, while
industrial and food retailing products are produced in all five countries. The
Company's metal detectors are produced in the United Kingdom. The Company has
manufacturing expertise in sensor technology, precision machining and
electronics, as well as strength in software development. Furthermore, most of
the Company's manufacturing facilities have achieved ISO 9001 certification. 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 March 31, 1998, the Company had approximately 6,900 employees
throughout the world, including more than 3,500 in Europe, more than 2,600 in
North and South America, and approximately 800 in Asia and other countries.
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 1,100 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
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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, implementation of a final remedy
has not yet been completed, 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; Seaboard Chemical
Company Site, Jamestown, North Carolina; and the Stickney and Tyler Landfills in
Toledo, Ohio. 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 or taken steps to undertake the defense and indemnification of Toledo
Scale. Based on
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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 fragmented nature of certain of the Company's weighing instruments
markets, particularly the industrial and food retailing weighing instruments
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 in its markets 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.
YEAR 2000 COMPLIANCE
Where necessary, the Company is in the process of modifying, upgrading, or
replacing its computer software applications and internal information systems to
accommodate the 'year 2000' dating changes necessary to permit correct recording
of year dates for 2000 and later years. The Company does not expect that the
cost of its year 2000 compliance program will be material to its business,
financial condition or results of operations. The Company believes that it will
be able to achieve compliance by the end of 1999, and does not currently
anticipate any material disruption in its operations as the result of any
failure by the Company to be in compliance. If any of the Company's significant
suppliers or customers do not successfully and timely achieve year 2000
compliance, the Company's business or operations could be adversely affected.
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PROPERTIES
The following table lists the Company's principal operating facilities,
indicating the location, primary use and whether the facility is owned or
leased.
<TABLE>
<CAPTION>
LOCATION PRINCIPAL USE(1) OWNED/LEASED
- ---------------------------------------- ---------------------------------------- ----------------
<S> <C> <C>
Europe:
Greifensee/Nanikon, Switzerland.... Production, Corporate Headquarters Owned
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
Manchester, England................ Production, 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
Tampa, Florida..................... Production, Sales and Service 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
</TABLE>
- ------------------
(1) The Company also conducts research and development activities at certain of
the listed facilities in Switzerland, Germany, the United States and, to a
lesser extent, China.
(2) Held by a joint venture in which the Company owns a 60% interest.
The Company believes its facilities are adequate for its current and reasonably
anticipated future needs.
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' for information concerning legal
proceedings relating to certain environmental claims.
The Company has received a Notice of Proposed Adjustment from the Internal
Revenue Service disallowing $20.4 million of intercompany interest deductions
taken by the Company in its 1994 and 1995 tax returns when the Company was a
subsidiary of Ciba. The Company is indemnified under the acquisition agreement
with Ciba against any loss that may arise from the proposed adjustment. However,
the Company believes that such deductions were properly made and intends to
assist Ciba in contesting the proposed adjustment.
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company are set forth below.
All directors hold office until the annual meeting of shareholders 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.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------------ --- ---------------------------------------------------------------
<S> <C> <C>
Robert F. Spoerry......................... 42 President, Chief Executive Officer and
Chairman of the Board of Directors
William P. Donnelly....................... 36 Vice President, Chief Financial Officer and Assistant Secretary
Karl M. Lang.............................. 51 Head, Laboratory Division
Lukas Braunschweiler...................... 42 Head, Industrial and Retail (Europe)
John D. Robechek.......................... 49 Head, Industrial and Retail (Americas)
Peter Burker.............................. 52 Head, Human Resources
Thomas Rubbe.............................. 44 Head, Logistics and Information Systems
Philip Caldwell........................... 78 Director
Reginald H. Jones......................... 80 Director
John D. Macomber.......................... 70 Director
John M. Manser............................ 50 Director
Laurence Z. Y. Moh........................ 72 Director
Thomas P. Salice.......................... 37 Director
</TABLE>
Robert F. Spoerry has been President and Chief Executive Officer of the
Company since 1993. He served as Head, Industrial and Retail (Europe) of the
Company from 1987 to 1993. Mr. Spoerry has been a Director since October 1996.
Effective May 18, 1998, Mr. Spoerry assumed the additional office of Chairman of
the Board of Directors.
William P. Donnelly has been Vice President, Chief Financial Officer and
Assistant Secretary of the Company since April 1, 1997. From 1993 until joining
the Company, he held various senior financial and management positions,
including most recently Group Vice President and Chief Financial Officer, with
Elsag Bailey Process Automation, a global manufacturer of instrumentation and
analytical products, and developer of distributed control systems. Prior to
1993, Mr. Donnelly was associated with the international accounting firm of
Price Waterhouse.
Karl M. Lang has been Head, Laboratory Division of the Company since 1994.
From 1991 to 1994 he was based in Japan as a representative of senior management
with responsibility for expansion of the Asian operations.
Lukas Braunschweiler has been Head, Industrial and Retail (Europe) of the
Company 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) of the
Company 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 of the Company 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 of the
Company since 1995. From 1990 to 1995 he was head of Controlling, Finance and
Administration with the Company's German marketing organization.
48
<PAGE>
Philip Caldwell has been a Director since October 1996. Prior to May 18,
1998, Mr. Caldwell served as Chairman of the Board of Directors. Mr. Caldwell
spent 32 years at Ford Motor Company, where he served as Chairman of the Board
of Directors and Chief Executive Officer from 1980 to 1985 and a Director from
1973 to 1990. He served as a Director and Senior Managing Director of Lehman
Brothers Inc. and its predecessor, Shearson Lehman Brothers Holdings, Inc. from
1985 to February 1998. Mr. Caldwell is also a Director of Waters Corporation,
Zurich Holding Company of America, Inc., American Guarantee & Liability
Insurance Company, The Mexico Fund, and Russell Reynolds Associates, Inc. He has
served as a Director of the Chase Manhattan Corporation, the Chase Manhattan
Bank, N.A., Digital Equipment Corporation, Federated Department Stores Inc., the
Kellogg Company, Shearson Lehman Brothers Holdings Inc., CasTech Aluminum Group
Inc., Specialty Coatings International Inc., and Zurich Reinsurance Centre
Holdings, Inc.
Reginald H. Jones has been a Director since October 1996. Mr. Jones retired
as Chairman of the Board of Directors of General Electric Company ('General
Electric') in April 1981. At General Electric, he served as Chairman of the
Board of Directors and Chief Executive Officer from December 1972 through April
1981, President from June 1972 to December 1972 and a Director from August 1971
to April 1981. Mr. Jones is also a Director of ASA Limited and Birmingham Steel
Corporation.
John D. Macomber has been a Director since October 1996. He has been a
principal of JDM Investment Group since 1992. He was Chairman and President of
the Export-Import Bank of the United States (an agency of the U.S. Government)
from 1989 to 1992. From 1973 to 1986 Mr. Macomber was Chairman and Chief
Executive Officer of Celanese Corporation. Prior to that, Mr. Macomber was a
Senior Partner of McKinsey & Company. Mr. Macomber is also a Director of Textron
Inc., Bristol-Myers Squibb Company, Xerox Corporation, Lehman Brothers Holdings
Inc., Pilkington plc and Brown Group, Inc.
John M. Manser has been a Director since August 1997. He is the Treasurer
of the Worldwide Life Science Group of Novartis, which has its headquarters in
Switzerland. He has been with Novartis (and its predecessor Ciba-Geigy) since
1981.
Laurence Z. Y. Moh has been a Director since October 1996. At present, he
is Chairman and CEO of Plantation Timber Products Limited (CHINA), which he
founded in 1996. He is Chairman Emeritus of Universal Furniture Limited, which
he founded in 1959.
Thomas P. Salice has been a Director since October 1996. Mr. Salice 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.
EXECUTIVE COMPENSATION
The following table sets forth for the years ended December 31, 1997, 1996
and 1995 the compensation paid to or accrued for services performed by the Chief
Executive Officer, each of the four other most highly compensated executive
officers of the Company who were serving as executive officers at December 31,
1997 and one other highly compensated employee who is no longer an executive
officer (collectively, the 'Named Executive Officers').
49
<PAGE>
SUMMARY COMPENSATION TABLE(1)
<TABLE>
<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 ......................... 1997 $386,074 $427,113 $ 36,212(3) 125,839 $112,816(5)
President and Chief Executive 1996 435,135 276,521 8,857(3) 1,047,976 124,431(5)
Officer 1995 289,343 85,871 -- 300(4) 54,346(5)
William P. Donnelly(6) .................... 1997 124,095 208,464 18,614(7) 195,050 36,768(5)
Chief Financial Officer 1996 -- -- -- -- --
1995 -- -- -- -- --
Karl M. Lang .............................. 1997 170,424 134,209 -- 37,751 55,319(5)
Head, Laboratory 1996 212,997 88,375 -- 209,597 61,901(5)
1995 228,427 38,071 -- -- 60,321(5)
Lukas Braunschweiler ...................... 1997 168,218 201,676 -- 37,751 49,145(5)
Head, Industrial and 1996 210,893 66,162 -- 209,597 62,482(5)
Retail (Europe) 1995 228,427 25,381 -- -- 50,460(5)
John D. Robechek .......................... 1997 220,000 193,886 -- 37,751 7,754(8)
Head, Industrial and Retail 1996 233,754 88,137 -- 209,597 6,215(8)
(Americas) 1995 225,000 40,563 -- -- 6,168(8)
Fred Ort .................................. 1997 164,633 177,061 -- -- 55,452(5)
Corporate Controller 1996 207,221 99,325 -- 78,599 52,745(5)
1995 227,284 69,701 -- -- 70,804(5)
</TABLE>
- ------------------
(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 $1.00 for 1995, SFr
1.2355 to $1.00 for 1996 and SFr 1.4505 to $1.00 for 1997, in each case the
average exchange rate during such year.
(2) Does not include Ciba bonuses to Messrs. Spoerry, Braunschweiler, Lang,
Robechek and Ort 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 GmbH, a subsidiary of the
Company. See 'Certain Relationships and Related Transactions.'
(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 Executive
Officers, and the other 50% is a required matching employer contribution.
(6) Mr. Donnelly's employment commenced on April 1, 1997.
(7) Represents allowances associated with Mr. Donnelly's status as an expatriate
in Switzerland.
(8) Includes: (i) the value of group life insurance over $50,000 of $1,024 for
1995, $1,071 for 1996 and $1,036 in 1997; (ii) the Company's contribution to
Mr. Robechek's 401(k) plan account of $4,500 in 1995 and 1996 and $4,750 in
1997; and (iii) Mr. Robechek's profit sharing payout under the Company's
Performance Dividend Plan of $644 in 1995 and 1996 and $1,968 in 1997.
50
<PAGE>
STOCK OPTIONS
The following table sets forth information concerning the grant of stock
options under the Company's Stock Plan to the individuals named in the Summary
Compensation Table.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE
AT ASSUMED ANNUAL
RATES
NUMBER OF % OF TOTAL OF STOCK PRICE
SECURITIES OPTIONS/SARS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE/BASE OPTION/SAR TERM(1)
OPTIONS/SARS EMPLOYEES IN PRICE EXPIRATION ----------------------
NAME GRANTED FISCAL YEAR ($/SH) DATE 5%($) 10%($)
- ------------------------------- ------------ ------------ ------------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Robert F. Spoerry.............. 125,839 12.23 15.89 2007 1,257,526 3,186,818
William P. Donnelly............ 37,751 3.67 15.89 2007 377,251 956,028
157,299 15.29 7.95 2007 786,450 1,993,018
Karl M. Lang................... 37,751 3.67 15.89 2007 377,251 956,028
Lukas Braunschweiler........... 37,751 3.67 15.89 2007 377,251 956,028
John D. Robechek............... 37,751 3.67 15.89 2007 377,251 956,028
Fred Ort....................... -- -- -- -- -- --
</TABLE>
- ------------------
(1) 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
price appreciation.
OPTION EXERCISE TABLE
No options to purchase Common Stock were exercised by the Named Executive
Officers in 1997. The following table sets forth information with respect to the
aggregate number of unexercised options to purchase Common Stock granted to the
Named Executive Officers and held by them as of December 31, 1997, and the value
of unexercised in-the-money options (i.e., options that had a positive spread
between the exercise price and the fair market value of the Common Stock) as of
December 31, 1997.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND OPTION/SAR VALUES AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS/SARS AT FISCAL IN-THE-MONEY OPTIONS/SARS
ACQUIRED ON VALUE YEAR-END(#) AT FISCAL YEAR-END($)(1)
EXERCISE REALIZED ---------------------------- ----------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------------- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert F. Spoerry................ 0 0 209,595 964,220 $ 1,949,234 $ 7,968,084
William P. Donnelly.............. 0 0 0 195,050 0 1,514,222
Karl M. Lang..................... 0 0 41,919 205,429 389,847 1,610,747
Lukas Braunschweiler............. 0 0 41,919 205,429 389,847 1,610,747
John D. Robechek................. 0 0 41,919 205,429 389,847 1,610,747
Fred Ort......................... 0 0 15,719 62,880 146,187 584,784
</TABLE>
- ------------------
(1) Sets forth values for 'in the money' options that represent the positive
spread between the respective exercise/base prices of outstanding stock
options and the closing price of $17.25 per share at December 31, 1997, as
reported on the New York Stock Exchange.
51
<PAGE>
EMPLOYMENT AGREEMENTS
Mettler-Toledo GmbH, 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 (approximately $386,074 at December 31, 1997), 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 '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 24 months after
termination of employment. The Agreement may be terminated without cause, on 36
months notice during which period the Executive is entitled to full compensation
under the Agreement.
Mettler-Toledo GmbH also has entered into employment agreements with Lukas
Braunschweiler, William P. Donnelly and Karl Lang, and Mettler-Toledo, Inc., a
subsidiary of the Company, entered into an employment agreement with John D.
Robechek. The employment agreements provide for a base salary subject to
adjustment and participation in the Company's bonus plan and participation in
the Company's other employee benefit plans. Each agreement prohibits the
executive from competing with the Company for a period of twelve months after
termination of employment. Each agreement may be terminated without cause, on
twelve months notice during which period the executive is entitled to full
compensation under the agreement.
DIRECTORS' COMPENSATION
Members of the Board of Directors of the Company who are officers of the
Company or employees of AEA Investors have not received additional compensation
for being on the Board or its committees. The non-executive directors were given
a one-time opportunity to purchase stock in the Company upon their election to
the Board. Mr. Caldwell purchased 35,940 shares of common stock and each of
Messrs. Jones, Macomber and Moh purchased 23,972 shares of common stock. Members
of the Board of Directors of the Company have received reimbursement for
traveling costs and other out-of-pocket expenses incurred in attending board and
committee meetings. Effective May 18, 1998, members of the Board of Directors
who are not employees of the Company will receive an annual fee of $17,500
(payable quarterly in advance), $1,000 for each Board meeting attended and $500
for each meeting of a committee of the Board attended, plus reimbursement for
traveling costs and other out-of-pocket expenses incurred in attending such
meetings. In addition, each member of the Board of Directors who is not an
employee of the Company will receive a stock option grant of 1,000 shares of the
Company's Common Stock per year.
RETIREMENT PLANS
Mr. Robechek is covered under two pension 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
($160,000 per year in 1997), 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
$48,717 and the accrued annual benefit under the Mettler-Toledo Supplemental
Plan is $14,292, for a total annual retirement benefit of $63,009.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The following directors served on the Company's Compensation Committee
during the fiscal year ended December 31, 1997: Reginald H. Jones, Laurence Z.
Y. Moh and Thomas P. Salice. Mr. Salice also served as an officer of the Company
and certain of its subsidiaries during such fiscal year. Mr. Salice is an
officer of AEA Investors, a shareholder of the Company. AEA Investors provided
certain management, consulting and financial
52
<PAGE>
services to the Company for professional service fees and was reimbursed for
out-of-pocket expenses. In the fiscal year ended December 31, 1997, payments for
such management fee and reimbursement for expenses totaled approximately $1
million. Such services included, but were not necessarily limited to, advice and
assistance concerning the strategy, planning and financing of the Company, as
needed from time to time. Such arrangement with AEA Investors was terminated in
November 1997 and AEA Investors was paid a termination fee of $2.5 million in
connection therewith. The Company receives the benefit of volume discounts for
certain office services and supplies made available to various companies
associated with AEA Investors pursuant to arrangements managed by a subsidiary
of AEA Investors. Mr. Salice currently is a director of Mettler-Toledo and a
Managing Director of AEA Investors.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
At the time of the Acquisition, AEA Investors and the Company entered into
a management agreement (the 'Management Agreement') pursuant to which AEA
Investors provided management, consulting and financial services to the Company.
Such services included 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. The services were
provided by the executive staff of AEA Investors. In consideration of such
services, AEA Investors received an annual fee of $1.0 million, plus
reimbursement for certain expenses and indemnification against certain
liabilities. The Company believes that the terms of these management
arrangements were as favorable as could be obtained from an unaffiliated third
party. The Management Agreement was terminated upon consummation of the IPO. In
consideration of services by AEA Investors in arranging, structuring and
negotiating the terms of the Acquisition, the Company paid AEA Investors
transaction fees of $5.5 million and reimbursed AEA Investors for certain
related expenses. In connection with the termination of the Management
Agreement, the Company paid AEA Investors $2.5 million and reimbursed AEA
Investors for certain related expenses.
Management and other employees of the Company have contributed
approximately $20 million of the equity of the Company. For information
regarding the number of shares owned each Named Executive Officer, see
'Principal and Selling Shareholders.'
On October 7, 1996, in order to fund a portion of the purchase price for
the shares purchased by Mr. Spoerry, Mettler-Toledo GmbH entered into a loan
agreement with Mr. Spoerry, in the amount of SFr 1.0 million (approximately
$689,417 at December 31, 1997). 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.
53
<PAGE>
PRINCIPAL AND SELLING SHAREHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock immediately prior to the Offerings and
as adjusted to reflect the sale of the shares of Common Stock pursuant to the
Offerings, by (a) each person who is known to the Company to be the beneficial
owner of more than five percent of the Company's Common Stock, (b) each director
of the Company, (c) each of the Named Executive Officers, (d) all directors and
executive officers of the Company as a group and (e) each other Selling
Shareholder participating in the Offerings. Except as otherwise indicated, the
persons or entities listed below have sole voting and investment power with
respect to all shares of Common Stock owned by them, except to the extent such
power may be shared with a spouse.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO OWNED AFTER
THE OFFERINGS NUMBER OF THE OFFERINGS(1)
----------------------- SHARES -----------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT(2) OFFERED NUMBER PERCENT(2)
- ---------------------------------------------------- --------- ---------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
5% SHAREHOLDERS:
Finlayson Fund Investments PTE LTD
Temasek Holdings (Private) Limited
8 Shenton Way
#38-03 Treasury Building
Singapore 0106................................. 2,900,919 7.57% 1,722,163 1,178,756 3.07%
National Union Fire Insurance
Company of Pittsburgh, PA
c/o AIG Global Investment Corp.
175 Water Street-24th Floor
New York, NY 10038............................. 2,239,609 5.84% 731,262 1,508,347 3.93%
DIRECTORS:
Robert F. Spoerry(3).............................. 704,717 1.84% -- 704,717 1.84%
Philip Caldwell(4)................................ 98,901 * -- 98,901 *
Reginald H. Jones................................. 46,596 * -- 46,596 *
John D. Macomber.................................. 43,740 * -- 43,740 *
John M. Manser.................................... -- * -- -- *
Laurence Z. Y. Moh................................ 356,778 * -- 356,778 *
Thomas P. Salice(4)............................... 618,550 1.61% -- 618,550 1.61%
NAMED EXECUTIVE OFFICERS:
William P. Donnelly(4)(5)......................... 92,994 * -- 92,994 *
Karl M. Lang(6)................................... 121,378 * -- 121,378 *
Lukas Braunschweiler(7)........................... 118,378 * -- 118,378 *
John D. Robechek(4)(8)............................ 107,529 * -- 107,529 *
All directors and executive officers as a group
(14 persons)(9)................................ 2,617,905 6.76% -- 2,617,905 6.76%
OTHER SELLING STOCKHOLDERS:
Nassau Capital Funds L.P.......................... 1,586,202 4.14% 941,666 644,536 1.68%
Novartis AG....................................... 1,537,037 4.01% 912,479 624,558 1.63%
Investor International (U.S.), Inc................ 1,158,034 3.02% 687,479 470,555 1.23%
Howard Hughes Medical Institute................... 792,799 2.07% 470,653 322,146 0.84%
Storebrand Skadeforsikring AS..................... 682,161 1.78% 404,973 277,188 0.72%
Yale University................................... 634,707 1.66% 376,801 257,906 0.67%
Carnegie Corporation of New York.................. 634,719 1.66% 282,606 352,113 0.92%
The Andrew W. Mellon Foundation................... 475,445 1.24% 282,253 193,192 0.50%
The Rockefeller Foundation........................ 475,445 1.24% 282,253 193,192 0.50%
Massachusetts Institute of Technology............. 475,445 1.24% 282,253 193,192 0.50%
Duke University................................... 396,103 1.03% 235,151 160,952 0.42%
FORMA Investments Limited......................... 1,705,385 4.45% 160,289 1,545,096 4.03%
74 other Selling Stockholders, each of whom is
selling less than 150,000 shares in the Offerings
or beneficially owns less than 1% of the
outstanding Common Stock prior to the Offerings... 6,042,307 15.76% 2,227,719 3,814,588 9.95%
</TABLE>
(Footnotes on next page)
54
<PAGE>
(Footnotes from previous page)
- ------------------
* The percentage of shares of Common Stock beneficially owned does not exceed
one percent of the outstanding shares of Common Stock.
(1) Assumes no exercise of the Underwriters' over-allotment options.
(2) Calculations of percentage of beneficial ownership are based on 38,336,014
shares of Common Stock outstanding prior to the Offerings. Calculations
assume the exercise by only the named shareholder of all options for the
purchase of Common Stock held by such shareholder which are exercisable
within 60 days of the date hereof.
(3) Mr. Spoerry is also a Named Executive Officer. Includes 209,595 shares of
Common Stock issuable upon exercise of options that are exercisable within
60 days from the date hereof.
(4) Includes shares held by, or in trust for, members of such individual's
family for which Messrs. Caldwell, Donnelly, Salice and Robechek disclaim
beneficial ownership. Does not include shares held by certain members of Mr.
Caldwell's family who are selling a total of 3,474 shares in the Offerings
or shares held by AEA Investors, of which Mr. Salice is an officer.
(5) Includes 31,459 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days from the date hereof.
(6) Includes 41,919 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days from the date hereof.
(7) Includes 41,919 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days from the date hereof.
(8) Includes 41,919 shares of Common Stock issuable upon exercise of options
that are exercisable within 60 days from the date hereof.
(9) Includes Fred Ort, who ceased to be an executive officer on April 1, 1997.
55
<PAGE>
DESCRIPTION OF CREDIT AGREEMENT
The following statements are brief summaries of certain provisions of the
Credit Agreement. A copy of the Credit Agreement is incorporated by reference as
exhibits to the Registration Statement of which this Prospectus is a part. The
following description does not purport to be complete and is subject in all
respects to applicable Delaware law and to the provisions of the Credit
Agreement.
General
The Credit Agreement provides for a variety of floating rate loans with
interest based on LIBOR. The Company's wholly owned subsidiaries Mettler-Toledo,
Inc. ('M-T, Inc.'), Mettler-Toledo Holding AG, Mettler-Toledo (Canada) Inc. and
Safeline Holding Company are borrowers under the Credit Agreement, and the
Company is a guarantor under the Credit Agreement. As of March 31, 1998, the
Company had borrowings under the Credit Agreement of $348.3 million and
borrowings of $25.9 million under various other credit arrangements. Of the
borrowings under the Credit Agreement, $191.4 million are in the form of a term
loan and the remainder are outstanding under a revolving credit facility. The
Company's revolving credit facility commitment increased from $170.0 million to
$420.0 million under the Credit Agreement, including a $100.0 million
acquisition facility commitment. Merrill Lynch served as the Arranger and
Documentation Agent and an affiliate of Credit Suisse First Boston Corporation
served as co-agent in connection with the Company's previous credit facility in
November 1996 and May 1997 and acted in similar roles in connection with the
Credit Agreement. See 'Underwriting.'
Maturity, Amortization and Mandatory Prepayments
The term loans and the revolving credit facility will mature in May 2004.
Beginning in 1998, amounts outstanding under the term loan will amortize on a
quarterly basis in annual amounts ranging from $15.0 million to a maximum of
$40.0 million.
The term loans will be subject to mandatory prepayments in an amount equal
to, subject to certain exceptions, (i) 75% of annual Excess Cash Flow (as
defined in the Credit Agreement), (ii) the net proceeds received from certain
sales of assets, (iii) the net proceeds from the issuance of debt, and (iv) 50%
of the net proceeds from the issuance of equity.
Security and Guarantees
The obligations of the Mettler-Toledo Holding AG under the New Credit
Agreement are (i) secured by a first priority security interest in all of the
material assets of the Mettler-Toledo Holding AG, (ii) guaranteed, to the extent
permitted by applicable law by all of the direct and indirect subsidiaries of
the Mettler-Toledo Holding AG, with certain exceptions, and each such guarantee
is, to the extent permitted by applicable law and with certain exceptions,
secured by a first priority security interest in all of the material assets of
each such guarantor, and (iii) guaranteed by the Company and its direct and
indirect U.S. subsidiaries, and each such guarantee is secured by a first
priority security interest in all of the material assets of each such guarantor,
except that each such guarantor has pledged only 65% of the stock of any
non-U.S. subsidiary held by it. The obligations of M-T, Inc. under the Credit
Agreement are (i) secured by a first priority security interest in all of the
material assets of M-T, Inc., except that M-T, Inc. has pledged only 65% of the
stock of each non-U.S. subsidiary held by it, (ii) guaranteed by each direct and
indirect U.S. subsidiary of M-T, Inc., and each such guarantee is secured by a
first priority security interest in all of the material assets of each such
guarantor, and (iii) guaranteed by the Company, and such guarantee is secured by
a first priority security interest in all of the stock of M-T, Inc. held by the
Company. The obligations of Safeline Holding Company are also secured by limited
guarantees and pledges.
Covenants and Events of Default
The Credit Agreement contains covenants that, among other things, limit the
Company's and its subsidiaries' 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; or make capital expenditures. The Credit
Agreement also requires the Company to
56
<PAGE>
maintain a minimum net worth and a minimum fixed charge coverage ratio, and to
maintain a ratio of total debt to EBITDA (as defined in the Credit Agreement)
below a specified maximum.
The Credit Agreement contains customary events of default, including,
without limitation, nonpayment of principal, interest, fees or other amounts
when due; violation of covenants; breach of any representation or warranty;
cross-default and cross-acceleration; Change in Control (as defined in the
Credit Agreement); bankruptcy events; material judgments; certain ERISA matters;
and invalidity of loan documents or security interests.
DESCRIPTION OF CAPITAL STOCK
The following statements are brief summaries of certain provisions with
respect to the Company's capital stock which are contained in the Amended and
Restated Certificate of Incorporation and Amended By-laws, copies of which are
incorporated by reference as exhibits to the Registration Statement of which
this Prospectus is a part. The following description does not purport to be
complete and is subject in all respects to applicable Delaware law and to the
provisions of the Amended and Restated Certificate of Incorporation and Amended
By-laws.
The authorized capital stock of the Company consists of 125,000,000 shares
of Common Stock, par value $.01 per share, and 10,000,000 shares of preferred
stock, par value $.01 per share (the 'Preferred Stock'). As of March 31, 1998,
there were 38,336,014 shares of Common Stock outstanding, 4,408,740 shares of
Common Stock issuable upon exercise of outstanding options and no shares of
Preferred Stock outstanding. As of May 31, 1998, there were 872 holders of
record of the Company's Common Stock.
COMMON STOCK
Holders of Common Stock are entitled to one vote for each share held of
record on all matters to be submitted to a vote of the shareholders (including
the election of directors) and have no preemptive, subscription or redemption
rights. Holders of Common Stock do not have cumulative voting rights, and
therefore holders of a majority of the shares voting for the election of
directors can elect all of the directors. In such event, the holders of the
remaining shares will not be able to elect any directors.
Subject to preferences that may be applicable to any outstanding shares of
Preferred Stock, holders of Common Stock are entitled to receive ratably such
dividends, if any, as may be declared from time to time by the Board of
Directors of the Company out of funds legally available therefor. All
outstanding shares of Common Stock are, fully paid and nonassessable. In the
event of any liquidation, dissolution or winding-up of the affairs of the
Company, holders of Common Stock will be entitled to share ratably in the assets
of the Company remaining after payment or provision for payment of all of the
Company's debts and obligations and liquidation payments to holders of
outstanding shares of Preferred Stock.
PREFERRED STOCK
The Board of Directors, without further shareholder authorization, is
authorized to issue shares of Preferred Stock in one or more series and to
determine and fix the rights, preferences and privileges of each series,
including dividend rights and preferences over dividends on the Common Stock and
one or more series of the Preferred Stock, conversion rights, voting rights (in
addition to those provided by law), redemption rights and the terms of any
sinking fund therefor, and rights upon liquidation, dissolution or winding up,
including preferences over the Common Stock and one or more series of the
Preferred Stock. Although the Company has no present plans to issue any shares
of Preferred Stock, the issuance of shares of Preferred Stock, or the issuance
of rights to purchase such shares, may have the effect of delaying, deferring or
preventing a change in control of the Company or an unsolicited acquisition
proposal.
CERTAIN PROVISIONS OF THE COMPANY'S AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION, AMENDED BY-LAWS AND DELAWARE LAW
The Amended and Restated Certificate of Incorporation, Amended By-laws and
Delaware law contain provisions that could make more difficult the acquisition
of the Company by means of a tender offer, a proxy contest or otherwise. Such
provisions could have the effect of discouraging open market purchases of the
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Common Stock because they may be considered disadvantageous by a shareholder who
desires to participate in a business combination or elect a new director.
Section 203 of Delaware Law. The Company is a Delaware corporation and is
subject to Section 203 ('Section 203') of the Delaware General Corporation Law
(the 'DGCL'). In general, Section 203 prevents an 'interested stockholder'
(defined as a person who, together with affiliates and associates, beneficially
owns, or if an affiliate or associate of the corporation did beneficially own
within the last three years, 15% or more of a corporation's outstanding voting
stock) from engaging in a 'business combination' (as defined) with a Delaware
corporation for three years following the time such person became an interested
stockholder unless (i) before such person became an interested stockholder, the
board of directors of the corporation approved the transaction in which the
interested stockholder became an interested stockholder or approved the business
combination; (ii) upon consummation of the transaction that resulted in the
interested stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced (excluding shares owned by
persons who are both officers and directors of the corporation, and shares held
by certain employee stock ownership plans in which employee participants do not
have the right to determine confidentially whether shares held subject to the
plan will be tendered in a tender or exchange offer); or (iii) following the
transaction in which such person became an interested stockholder, the business
combination is approved by the board of directors of the corporation and
authorized at a meeting of stockholders by the affirmative vote of the holders
of at least two-thirds of the outstanding voting stock of the corporation not
owned by the 'interested stockholder.' A 'business combination' generally
includes mergers, stock or asset sales involving 10% or more of the market value
of the corporation's assets or stock, certain stock transactions and certain
other transactions resulting in a financial benefit to the interested
stockholder or an increase in their proportionate share of any class or series
of a corporation. The existence of Section 203 of the DGCL could have the effect
of discouraging an acquisition of the Company or stock purchasers in furtherance
of an acquisition.
Limitation on Directors' Liabilities and Indemnification. The Amended and
Restated Certificate of Incorporation provides that to the fullest extent
permitted by the DGCL as it currently exists, a director of the Company shall
not be liable to the Company or its shareholders for monetary damages for breach
of fiduciary duty as a director. Under the current DGCL, liability of a director
may not be limited (i) for any breach of the director's duty of loyalty to the
Company or its shareholders, (ii) for acts or omissions not in good faith or
that involve intentional misconduct or a knowing violation of law, (iii) in
respect of certain unlawful dividend payments or stock redemptions or
repurchases and (iv) for any transaction from which the director derives an
improper personal benefit. The effect of this provision of the Company's Amended
and Restated Certificate of Incorporation is to eliminate the rights of the
Company and its shareholders (through shareholders' derivative suits on behalf
of the Company) to recover monetary damages against a director for breach of the
fiduciary duty of care as director (including breaches resulting from negligent
or grossly negligent behavior) except in the situations described in clauses (i)
through (iv) above. The provision does not exonerate the directors from
liability under federal securities laws or limit or eliminate the rights of the
Company or any stockholder to seek non-monetary relief such as an injunction or
rescission in the event of a breach of a director's duty of care. In addition,
the Amended By-laws provide that the Company shall indemnify its directors,
officers, employees and agents to the fullest extent permitted by DGCL.
Advance Notice for Shareholder Nomination of Directors and Shareholder
Proposals. The Amended By-laws establish an advance notice procedure with
regard to the nomination, other than by or at the direction of the Board of
Directors or a committee thereof, of candidates for election as directors (the
'Nomination Procedure') and with regard to other matters to be brought by
shareholders before an annual meeting of shareholders of the Company (the
'Business Procedure').
The Nomination Procedure requires that a shareholder give prior written
notice, in proper form, of a planned nomination for the Board of Directors to
the Secretary of the Company. The requirements as to the form and timing of that
notice are specified in the Amended By-laws. If the Chairman of the Board of
Directors determines that a person was not nominated in accordance with the
Nomination Procedure, such person will not be eligible for election as a
director.
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Under the Business Procedure, a shareholder seeking to have any business
conducted at an annual meeting must give prior written notice, in proper form,
to the Secretary of the Company. The requirements as to the form and timing of
that notice are specified in the Amended By-laws. If the Chairman of the Board
of Directors determines that the other business was not properly brought before
such meeting in accordance with the Business Procedure, such business will not
be conducted at such meeting.
Although the Amended By-laws do not give the Board of Directors any power
to approve or disapprove shareholder nominations for the election of directors
or of any business desired by shareholders to be conducted at an annual meeting,
the Amended By-laws (i) may have the effect of precluding a nomination for the
election of directors or precluding the conduct of business at a particular
annual meeting if the proper procedures are not followed or (ii) may discourage
or deter a third party from conducting a solicitation of proxies to elect its
own slate of directors or otherwise attempting to obtain control of the Company,
even if the conduct of such solicitation or such attempt might be beneficial to
the Company and its shareholders.
REGISTRATION RIGHTS
Holders of the Company's Common Stock that purchased shares prior to the
IPO have rights to require the Company to register such shares of Common Stock
for resale pursuant to subscription agreements pursuant to which they acquired
their shares. Upon the request of persons owning at least 25% of the sum of all
outstanding shares of Common Stock which are then 'restricted securities' (as
defined by Rule 144 under the Securities Act) and which have a value of at least
$5,000,000, the Company is required to register the sale of such securities,
subject to certain limitations and requirements. The Company is not required to
file any registration statement within six months of the effective date of any
earlier registration statement and is not required to file more than three
registration statements pursuant to such requests. In addition, under certain
circumstances, should the Company file a registration statement with the
Securities and Exchange Commission registering shares of the Common Stock of the
Company, the owners of restricted securities would be entitled to include their
restricted securities in such registration.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock is ChaseMellon
Shareholder Services L.L.C.
SHARES ELIGIBLE FOR FUTURE SALE
As of March 31, 1998, the Company has 38,336,014 shares of Common Stock
outstanding. Except to the extent such shares are subject to the agreement with
the Underwriters described below, shares of Common Stock are freely tradable
without restriction or further registration under the Securities Act, unless
held by an 'affiliate' of the Company as that term is defined in the Securities
Act, which shares will be subject to the resale limitations of Rules 144 and 145
under the Securities Act.
In general, under Rules 144 and 145 as currently in effect, a shareholder
(or shareholders whose shares are aggregated) who is an 'affiliate' of the
Company is entitled to sell within any three-month period a number of shares
that does not exceed the greater of one percent of the outstanding Common Stock
or the average weekly trading volume in the Common Stock during the four
calendar weeks preceding the date on which notice of such sale is filed pursuant
to Rule 144. The holder may only sell such shares through unsolicited brokers'
transactions. Sales under Rules 144 and 145 are also subject to certain
provisions regarding the manner of sale, notice requirements and the
availability of current public information about the Company. A shareholder (or
shareholders whose shares are aggregated) who is not an affiliate of the Company
for at least 90 days prior to a proposed transaction is entitled to sell such
shares under Rule 144 without regard to the limitations described above. Holders
which were affiliates of the Company at the time of the Merger may sell free of
restrictions one year from the date of the Merger.
Notwithstanding the foregoing, in connection with the Offerings, the
Company, the Company's executive officers and directors and the Selling
Shareholders, who will collectively hold, after the Offerings, 14,262,548 shares
of Common Stock (assuming no exercise of the Underwriters' over-allotment
option) will agree, subject to certain exceptions, not to directly or indirectly
(i) offer, pledge, sell, contract to sell, sell any option or contract to
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purchase any option or contract to sell, grant any option, right or warrant for
the sale of, or otherwise dispose of or transfer any shares of Common Stock or
any securities convertible into or exchangeable or exercisable for Common Stock,
or file any registration statement under the Securities Act with respect to any
of the foregoing or (ii) enter into any swap or other agreement or any
transaction that transfers, in whole or in part, directly or indirectly, the
economic consequence of ownership of the Common Stock whether any such swap or
transaction is to be settled by delivery of Common Stock or other securities, in
cash or otherwise, without the prior written consent of Merrill Lynch on behalf
of the Underwriters for a period of 90 days after the date of this Prospectus,
other than (i) the sale to the Underwriters of the shares of Common Stock in
connection with the Offerings, (ii) upon the exercise of outstanding stock
options, (iii) the issuance of options pursuant to the Stock Plan, or (iv) the
filing of a registration statement on Form S-8 under the Securities Act relating
to Common Stock of the Company issued pursuant to the Company's Stock Plan.
The Company has filed a registration statement on Form S-8 (Reg. No.
333-52661) under the Securities Act to register 6,368,445 shares of Common Stock
which are reserved for issuance under the Company's Stock Plan. The Form S-8
includes, in some cases, shares for which an exemption under Rule 144 or Rule
701 under the Securities Act would also be available, thus permitting the resale
of shares issued under the Stock Plan by non-affiliates in the public market,
without restriction under the Securities Act. Such registration statement became
effective immediately upon filing whereupon shares registered thereunder became
eligible for sale in the public market, subject to vesting and, in certain
cases, subject to the lock-up agreements described above. At the date of this
Prospectus, options to purchase 4,408,740 shares of Common Stock are outstanding
under the Stock Plan.
CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS
FOR NON-UNITED STATES HOLDERS
The following is a general discussion of certain U.S. federal income and
estate tax consequences of the ownership and disposition of Common Stock
applicable to Non-U.S. Holders of such Common Stock. A 'Non-U.S. Holder' is a
person other than (i) and individual who is a citizen or resident of the United
States, (ii) a corporation, partnership or other entity created or organized in
the United States or under the laws of the United States or of any state (other
than any partnership treated as foreign under U.S. Treasury regulations), (iii)
an estate whose income is includable in gross income for United States federal
income tax purposes regardless of source, or (iv) a trust subject to the primary
supervision of a court within the United States and the control one or more U.S.
persons.
An individual may, subject to certain exceptions, be deemed to be a
resident alien (as opposed to a non-resident alien) by virtue of being present
in the United States for at least 31 days in the calendar year and for an
aggregate of at least 183 days during a three-year period ending in the current
calendar year (counting for such purposes all of the days present in the current
year, one-third of the days present in the immediately preceding year, and
one-sixth of the days present in the second preceding year). Resident aliens are
subject to tax as if they were U.S. citizens.
This discussion does not consider specific facts and circumstances that may
be relevant to a particular Non-U.S. Holder's tax position (including the fact
that in the case of a Non-U.S. Holder that is a partnership, the U.S. tax
consequences of holding and disposing of shares of Common Stock may be affected
by certain determinations made at the partner level) and does not consider U.S.
state and local or non-U.S. tax consequences. This discussion also does not
consider the tax consequences for any person who is a shareholder, partner or
beneficiary of a holder of the Common Stock. Further, it does not consider
Non-U.S. Holders subject to special tax treatment under the federal tax laws
(including but not limited to banks and insurance companies, dealers in
securities and holders of securities held as part of a 'straddle,' 'hedge,' or
'conversion transaction'). The following discussion is based on provisions of
the U.S. Internal Revenue Code of 1986, as amended (the 'Code'), the applicable
Treasury regulations promulgated and proposed thereunder, and administrative and
judicial interpretations as of the date hereof, all of which are subject to
change either retroactively or prospectively. The following summary is included
herein for general information. ACCORDINGLY, EACH PROSPECTIVE NON-U.S. HOLDER IS
URGED TO CONSULT A TAX ADVISOR WITH RESPECT TO THE U.S. FEDERAL TAX CONSEQUENCES
OF HOLDING AND DISPOSING OF
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COMMON STOCK, AS WELL AS ANY TAX CONSEQUENCES THAT MAY ARISE UNDER THE LAWS OF
ANY U.S. STATE, LOCAL OR OTHER U.S. OR NON-U.S. TAXING JURISDICTION.
DIVIDENDS
In general, dividends paid to a Non-U.S. Holder of Common Stock will be
subject to withholding of U.S. federal income tax at a 30% rate or such lower
rate as may be specified by an applicable income tax treaty. Non-U.S. Holders
should consult their tax advisors regarding their entitlement to benefits under
a relevant income tax treaty.
Dividends that are effectively connected with a Non-U.S. Holder's conduct
of a trade or business in the United States or, if an income tax treaty applies,
attributable to a permanent establishment, or, in the case of an individual, a
'fixed base,' in the United States ('U.S. trade or business income') are
generally subject to U.S. federal income tax on a net income basis at regular
graduated rates, but are not generally subject to the 30% withholding tax if the
Non-U.S. Holder files the appropriate U.S. Internal Revenue Service ('IRS') form
with the payor (which form, under U.S. Treasury regulations generally effective
for payments made after December 31, 1999 (the 'Final Regulations'), will
require the Non-U.S. Holder to provide a U.S. taxpayer identification number).
Any U.S. trade or business income received by a Non-U.S. Holder that is a
corporation may also, under certain circumstances, be subject to an additional
'branch profits tax' at a 30% rate or such lower rate as may be specified by an
applicable income tax treaty.
Under currently applicable U.S. Treasury regulations, dividends paid to an
address in a foreign country are presumed (absent actual knowledge to the
contrary) to be paid to a resident of such country for purposes of the
withholding discussed above and for purposes of determining the applicability of
a tax treaty rate. Under the Final Regulations, however, a Non-U.S. Holder of
Common Stock who wishes to claim the benefit of an applicable treaty rate
generally will be required to satisfy applicable certification and other
requirements. In addition, under the Final Regulations, in the case of Common
Stock held by a foreign partnership, (x) the certification requirement will
generally be applied to the partners of the partnership and (y) the partnership
will be required to provide certain information, including a United States
taxpayer identification number. The Final Regulations also provide look-through
rules for tiered partnerships.
A Non-U.S. Holder of Common Stock that is eligible for a reduced rate of
U.S. withholding tax pursuant to an income tax treaty may obtain a refund of any
excess amounts withheld by filing an appropriate claim for a refund with the
IRS.
DISPOSITION OF COMMON STOCK
A Non-U.S. Holder generally will not be subject to U.S. federal income tax
in respect of gain recognized on a disposition of Common Stock unless: (i) the
gain is U.S. trade or business income (in which case, the branch profits tax
described above may also apply to a corporate Non-U.S. Holder), (ii) the
Non-U.S. Holder is an individual who holds the Common Stock as a capital asset
within the meaning of Section 1221 of the Code, is present in the United States
for 183 or more days in the taxable year of the disposition and meets certain
other requirements, (iii) the Non-U.S. Holder is subject to tax pursuant to the
provision of the U.S. tax law applicable to certain United States expatriates or
(iv) the Company is or has been a 'U.S. real property holding corporation' for
federal income tax purposes at any time during the shorter of the five-year
period ending on the date of disposition and such period that the Common Stock
was held. The tax with respect to stock in a 'U.S. real property holding
corporation' does not apply to a Non-U.S. Holder whose holdings, direct and
indirect, at all times during the applicable period, constitute 5% or less of
the Common Stock, provided that the Common Stock is regularly traded on an
established securities market. Generally, a corporation is a 'U.S. real property
holding corporation' if the fair market value of its 'U.S. real property
interests' equals or exceeds 50% of the sum of the fair market value of its
worldwide real property interests plus its other assets used or held for use in
a trade or business. The Company is not, and does not anticipate becoming, a
'U.S. real property holding corporation' for U.S. federal income tax purposes.
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FEDERAL ESTATE TAXES
Common Stock owned or treated as owned by an individual who is a Non-U.S.
Holder at the time of death will be included in the individual's gross estate
for U.S. federal estate tax purposes, unless an applicable estate tax treaty
provides otherwise. Such individual's estate may be subject to U.S. federal
estate tax on the property includable in the gross estate for U.S. federal
estate tax purposes.
U.S. INFORMATION REPORTING REQUIREMENTS AND BACKUP WITHHOLDING TAX
Under U.S. Treasury Regulations, the Company may be required to report
annually to the IRS and to each Non-U.S. Holder the amount of dividends paid to
such holder and any tax withheld with respect to such dividends. The information
reporting requirements apply regardless of whether withholding is required.
Copies of the information returns reporting such dividends and withholding may
also be made available to the tax authorities in the country in which the Non
U.S.-Holder is a resident under the provisions of an applicable income tax
treaty or agreement.
Under certain circumstances, the IRS requires 'information reporting' and
'backup withholding' at a rate of 31% with respect to certain payments on Common
Stock. Under currently applicable law, Non-U.S. Holders of Common Stock
generally will be exempt from IRS reporting requirements and U.S. backup
withholding with respect to dividends payable on Common Stock. Under the Final
Regulations, however, a Non-U.S Holder of Common Stock that fails to certify its
Non-U.S. Holder status in accordance with the requirements of the Final
Regulations may be subject to U.S. backup withholding at a rate of 31% on
payments of dividends.
The payment of the proceeds of the disposition of Common Stock by a holder
to or through the U.S. office of a broker or through a non-U.S. branch of a U.S.
broker generally will be subject to information reporting and backup withholding
at a rate of 31% unless the holder either certifies its status as a Non-U.S.
Holder under penalties of perjury or otherwise establishes an exemption. The
payment of the proceeds of the disposition by a Non-U.S. Holder of Common Stock
to or through a non-U.S. office of a non-U.S. broker will not be subject to
backup withholding or information reporting unless the non-U.S. broker has
certain U.S. relationships. In the case of the payment of proceeds from the
disposition of Common Stock effected by a foreign office of a broker that is a
U.S. person or a 'U.S. related person,' existing regulations require information
reporting on the payment unless the broker receives a statement from the owner,
signed under penalty of perjury, certifying its non-U.S. status or the broker
has documentary evidence in its files as to the Non-U.S. Holder's foreign status
and the broker has no actual knowledge to the contrary. For this purpose, a
'U.S. related person' is (i) a 'controlled foreign corporation' for U.S. federal
income tax purposes or (ii) a foreign person 50% or more of whose gross income
from all sources for the three-year period ending with the close of its taxable
year preceding the payment (or for such part of the period that the broker has
been in existence) is derived from activities that are effectively connected
with the conduct of a U.S. trade or business.
Any amounts withheld under the backup withholding rules from a payment to a
Non-U.S. Holder will be refunded (or credited against the holder's U.S. federal
income tax liability, if any) provided that the required information is
furnished to the IRS.
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UNDERWRITING
Merrill Lynch, Pierce, Fenner & Smith Incorporated ('Merrill Lynch'), BT
Alex. Brown Incorporated, Credit Suisse First Boston Corporation, Goldman, Sachs
& Co. and Smith Barney Inc. are acting as Underwriters (the 'U.S. Underwriters')
for the U.S. Offering. Subject to the terms and conditions set forth in a U.S.
purchase agreement (the 'U.S. Purchase Agreement') among the Company, the
Selling Shareholders and the U.S. Underwriters, and concurrently with the sale
of 2,000,000 shares of Common Stock to the International Managers (as defined
below), the Selling Shareholders have agreed to sell to the U.S. Underwriters,
and each of the U.S. Underwriters severally and not jointly has agreed to
purchase from the Selling Shareholders the number of shares of Common Stock set
forth opposite its name below.
<TABLE>
<CAPTION>
NUMBER
U.S. UNDERWRITER OF SHARES
- ------------------------------------------------------------------------------------------ ----------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.................................................................
BT Alex. Brown Incorporated...............................................................
Credit Suisse First Boston Corporation....................................................
Goldman, Sachs & Co.......................................................................
Smith Barney Inc..........................................................................
----------
Total........................................................................ 8,000,000
----------
----------
</TABLE>
The Company and the Selling Shareholders have also entered into an
international purchase agreement (the 'International Purchase Agreement') with
certain underwriters outside the United States and Canada (the 'International
Managers' and, together with the U.S. Underwriters, the 'Underwriters') for whom
Merrill Lynch International, BT Alex. Brown International, a Division of Bankers
Trust International PLC, Credit Suisse First Boston (Europe) Limited, Goldman
Sachs International and Smith Barney Inc. are acting as lead managers (the 'Lead
Managers'). Subject to the terms and conditions set forth in the International
Purchase Agreement, and concurrently with the sale of 8,000,000 shares of Common
Stock to the U.S. Underwriters pursuant to the U.S. Purchase Agreement, the
Selling Shareholders have agreed to sell to the International Managers, and the
International Managers severally have agreed to purchase from the Selling
Shareholders, an aggregate of 2,000,000 shares of Common Stock. The initial
public offering price per share and the total underwriting discount per share of
Common Stock are identical under the U.S. Purchase Agreement and the
International Purchase Agreement.
In the U.S. Purchase Agreement and the International Purchase Agreement,
the several U.S. Underwriters and the several International Managers,
respectively, have agreed, subject to the terms and conditions set forth
therein, to purchase all of the shares of Common Stock being sold pursuant to
each such agreement if any of the shares of Common Stock being sold pursuant to
such agreement are purchased. Under certain circumstances, under the U.S.
Agreement and the International Purchase Agreement, the commitments of
non-defaulting Underwriters may be increased. The closings with respect to the
sale of shares of Common Stock to be purchased by the U.S. Underwriters and the
International Managers are conditioned upon one another.
The U.S. Underwriters have advised the Company and the Selling Shareholders
that the U.S. Underwriters propose initially to offer the shares of Common Stock
to the public at the initial public offering price set forth on the cover page
of this Prospectus, and to certain dealers at such price less a concession not
in excess of $ per share of Common Stock. The U.S. Underwriters may allow,
and such dealers may reallow, a discount not in excess of $ per share of
Common Stock on sales to certain other dealers. After the initial public
offering, the public offering price, concession and discount may be changed.
The Selling Shareholders have granted options to the U.S. Underwriters,
exercisable for 30 days after the date of this Prospectus, to purchase up to an
aggregate of 1,200,000 additional shares of Common Stock at the initial public
offering price set forth on the cover page of this Prospectus, less the
underwriting discount. The U.S. Underwriters may exercise these options solely
to cover over-allotments, if any, made on the sale of the Common Stock offered
hereby. To the extent that the U.S. Underwriters exercise these options, each
U.S. Underwriter will be obligated, subject to certain conditions, to purchase a
number of additional shares of Common Stock proportionate to such U.S.
Underwriter's initial amount reflected in the foregoing table. The
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Selling Shareholders also have granted options to the International Managers,
exercisable for 30 days after the date of this Prospectus, to purchase up to an
aggregate of 300,000 additional shares of Common Stock to cover over-allotments,
if any, on terms similar to those granted to the U.S. Underwriters.
The Company, the Company's executive officers and directors and the Selling
Shareholders, who will collectively hold, after the Offerings, 14,262,548 shares
of Common Stock (assuming no exercise of the Underwriters' over-allotment
option) will agree, subject to certain exceptions, not to directly or indirectly
(i) offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant for the sale of or otherwise dispose of or transfer any shares of Common
Stock or securities convertible into or exchangeable or exercisable for Common
Stock, whether now owned or thereafter acquired by the person executing the
agreement or with respect to which the person executing the agreement thereafter
acquires the power of disposition, or file a registration statement under the
Securities Act with respect to the foregoing or (ii) enter into any swap or
other agreement that transfers, in whole or in part, the economic consequence of
ownership of the Common Stock whether any such swap or transaction is to be
settled by delivery of Common Stock or other securities, in cash or otherwise,
without the prior written consent of Merrill Lynch on behalf of the Underwriters
for a period of 90 days after the date of this Prospectus. See 'Shares Eligible
for Future Sale.'
The U.S. Underwriters and the International Managers have entered into an
intersyndicate agreement (the 'Intersyndicate Agreement') that provides for the
coordination of their activities. Pursuant to the Intersyndicate Agreement, the
U.S. Underwriters and the International Managers are permitted to sell shares of
Common Stock to each other for purposes of resale at the initial public offering
price, less an amount not greater than the selling concession. Under the terms
of the Intersyndicate Agreement, the U.S. Underwriters and any dealer to whom
they sell shares of Common Stock will not offer to sell or sell shares of Common
Stock to persons who are non-U.S. or non-Canadian persons or to persons they
believe intend to resell to persons who are non-U.S. or non-Canadian persons,
and the International Managers and any dealer to whom they sell shares of Common
Stock will not offer to sell or sell shares of Common Stock to U.S. persons or
to Canadian persons or to persons they believe intend to resell to U.S. or
Canadian persons, except in the case of transactions pursuant to the
Intersyndicate Agreement.
The Company and the Selling Shareholders have agreed to indemnify the U.S.
Underwriters and the International Managers against certain liabilities,
including certain liabilities under the Securities Act, or to contribute to
payments the U.S. Underwriters and the International Managers may be required to
make in respect thereof.
Until the distribution of the Common Stock is completed, rules of the
Securities and Exchange Commission may limit the ability of the Underwriters and
certain selling group members to bid for and purchase the Common Stock. As an
exception to these rules, the U.S. Underwriters are permitted to engage in
certain transactions that stabilize the price of the Common Stock. Such
transactions consist of bids or purchases for the purpose of pegging, fixing or
maintaining the price of the Common Stock.
If the Underwriters create a short position in the Common Stock in
connection with the Offerings, i.e., if they sell more shares of Common Stock
than are set forth on the cover page of this Prospectus, the U.S. Underwriters
may reduce that short position by purchasing Common Stock in the open market.
The U.S. Underwriters may also elect to reduce any short position by exercising
all or part of the over-allotment option described above.
The U.S. Underwriters may also impose a penalty bid on certain Underwriters
and selling group members. This means that if the U.S. Underwriters purchase
shares of Common Stock in the open market to reduce the Underwriters' short
position or to stabilize the price of the Common Stock, they may reclaim the
amount of the selling concession from the Underwriters and selling group members
who sold those shares as part of the Offerings.
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases. The imposition of a penalty bid
might also have an effect on the price of the Common Stock to the extent that it
discourages resales of the Common Stock.
64
<PAGE>
None of the Company, the Selling Shareholders nor any of the Underwriters
makes any representation or prediction as to the direction or magnitude of any
effect that the transactions described above may have on the price of the Common
Stock. In addition, none of the Company, the Selling Shareholders nor any of the
Underwriters makes any representation that the U.S. Underwriters will engage in
such transactions or that such transactions, once commenced, will not be
discontinued without notice.
The Underwriters have from time to time provided investment banking
financial advisory services to the Company and AEA Investors and its affiliates,
for which they have received customary compensation, and may continue to do so
in the future. Merrill Lynch served as lead manager and Credit Suisse First
Boston Corporation served as a co-manager of the offering of the Notes in
October 1996, Merrill Lynch served as the Arranger and Documentation Agent and
an affiliate of Credit Suisse First Boston Corporation served as co-agent in
connection with the Company's previous credit facility and the Credit Agreement
for which they received customary compensation. An affiliate of Credit Suisse
First Boston Corporation and Merrill Lynch and its affiliates were lenders under
the Company's previous credit facility and are lenders under the Credit
Agreement. Merrill Lynch, BT Alex. Brown Incorporated, Credit Suisse First
Boston Corporation and Goldman, Sachs & Co. and certain of their affiliates
acted as underwriters in connection with the IPO.
LEGAL MATTERS
Certain legal matters with respect to the validity of the Common Stock
offered hereby will be passed upon for the Company by Fried, Frank, Harris,
Shriver & Jacobson (a partnership including professional corporations), London,
England. Certain legal matters relating to the Offerings will be passed upon for
the Underwriters by Debevoise & Plimpton, New York, New York. A partnership in
which partners of Fried, Frank, Harris, Shriver & Jacobson are partners is a
shareholder of the Company.
INDEPENDENT AUDITORS
The consolidated financial statements of Mettler-Toledo International Inc.
and subsidiaries (as defined in Note 1 to the Audited Consolidated Financial
Statements) as of December 31, 1996 and 1997 and for the year ended December 31,
1995, for the period January 1, 1996 to October 14, 1996, for the period October
15, 1996 to December 31, 1996 and for the year ended December 31, 1997, included
herein and incorporated in this Prospectus by reference to the Company's Annual
Report on Form 10-K for the year ended December 31, 1997, have been audited by
KPMG Fides Peat, independent auditors, as set forth in their reports appearing
elsewhere and have been so included and incorporated in reliance upon such
reports given upon the authority of such firm as experts in accounting and
auditing.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
'Commission') a Registration Statement on Form S-3 with respect to the Common
Stock offered hereby under the Securities Act. This Prospectus, which
constitutes part of the Registration Statement, does not contain all of the
information set forth in the Registration Statement, certain items of which are
omitted as permitted by the rules and regulations of the Commission. For further
information pertaining to the Company and the Common Stock offered hereby,
reference is made to the Registration Statement, including the exhibits thereto
and the financial statements, notes and schedules filed as a part thereof.
Statements contained in this Prospectus regarding the contents of any contract
or other document referred to herein or therein are not necessarily complete,
and in each instance reference is made to the copy of such contract or other
document filed as an exhibit to the Registration Statement or such other
document, each such statement being qualified in all respects by such reference.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the 'Exchange Act'), and, in accordance
therewith, files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information, as well as the
Registration Statement and the exhibits and schedules thereto, may be inspected,
without charge, at the public reference facility maintained by the Commission at
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and
at the Commission's regional offices located at Seven World Trade Center, New
65
<PAGE>
York, New York 10048 and Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511. Copies of such material may also be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. Such materials can
also be inspected at the offices of the New York Stock Exchange, Inc., 20 Broad
Street, New York, New York 10005 or on the Commission's site on the Internet at
http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission pursuant
to the Exchange Act (File No. 0-22493) are incorporated herein by reference:
(1) The Company's Annual Report on Form 10-K for the year ended
December 31, 1997;
(2) The Company's Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 1998; and
(3) The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A, as amended, filed with the Commisson on
December 16, 1997, which incorporates by reference the description of the
Company's Common Stock contained in its Registration Statement, as amended,
on Form S-1 (Reg. No. 333-35597) filed with the Commission on November 10,
1997.
All other documents filed by the Company with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
this Prospectus and prior to the termination of this offering shall be deemed to
be incorporated by reference herein and to be a part hereof from the respective
dates of the filing of such reports and documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extend that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to any person, including any
beneficial owner, to whom this Prospectus is delivered, upon the written or oral
request of such person, a copy of any and all information incorporated by
reference in this Prospectus, other than exhibits to such information (unless
such exhibits are specifically incorporated by reference in such documents).
Such requests should be directed to William P. Donnelly, Mettler-Toledo
International Inc., Im Langacher, P.O. Box MT-100, CH 8606 Greifensee,
Switzerland (telephone 011-41-1-944-22-11).
66
<PAGE>
METTLER-TOLEDO INTERNATIONAL INC.
(FORMERLY 'MT INVESTORS INC.')
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AUDITED CONSOLIDATED FINANCIAL STATEMENTS
Independent Auditors' Report............................................................................... F-2
Consolidated Balance Sheets as of December 31, 1996 and 1997............................................... F-3
Consolidated Statements of Operations for the year ended December 31, 1995 and for the period January 1,
1996 to October 14, 1996 and for the period October 15, 1996 to December 31, 1996 and for the year ended
December 31, 1997........................................................................................ F-4
Consolidated Statements of Changes in Net Assets / Shareholders' Equity for the year ended December 31,
1995 and for the period January 1, 1996 to October 14, 1996 and for the period October 15, 1996 to
December 31, 1996 and for the year ended December 31, 1997............................................... F-5
Consolidated Statements of Cash Flows for the year ended December 31, 1995 and for the period January 1,
1996 to October 14, 1996 and for the period October 15, 1996 to December 31, 1996 and for the year ended
December 31, 1997........................................................................................ F-6
Notes to Consolidated Financial Statements................................................................. F-7
UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS:
Interim Consolidated Balance Sheets as of December 31, 1997 and March 31, 1998............................. F-27
Interim Consolidated Statements of Operations for the three months ended March 31, 1997 and 1998........... F-28
Interim Consolidated Statements of Shareholders' Equity for the three months ended March 31, 1997 and
1998..................................................................................................... F-29
Interim Consolidated Statements of Cash Flows for the three months ended March 31, 1997 and 1998........... F-30
Notes to the Interim Consolidated Financial Statements..................................................... F-31
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Mettler-Toledo International Inc.
We have audited the accompanying consolidated balance sheets of Mettler-Toledo
International Inc. (formerly 'MT Investors Inc.') and subsidiaries (as defined
in Note 1 to the consolidated financial statements) as of December 31, 1996 and
1997, and the related consolidated statements of operations, net assets /
shareholders' equity and cash flows for the year ended December 31, 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, and for the year ended
December 31, 1997, the Successor periods. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our 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 International Inc. and subsidiaries as of December 31, 1996 and
1997, and the consolidated results of their operations and their cash flows for
the year ended December 31, 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, and for the year ended December 31, 1997, the Successor
periods, in conformity with generally accepted accounting principles in the
United States of America.
As more fully described in Note 1 to the consolidated financial statements,
Mettler-Toledo International Inc. acquired the Mettler-Toledo Group 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 periods 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
February 6, 1998
F-2
<PAGE>
METTLER-TOLEDO INTERNATIONAL INC.
(FORMERLY 'MT INVESTORS INC.')
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SUCCESSOR SUCCESSOR
------------ ------------
DECEMBER 31, DECEMBER 31,
1996 1997
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.......................................................... $ 60,696 $ 23,566
Trade accounts receivable, less allowances of $8,388 in 1996
and $7,669 in 1997.............................................................. 151,161 153,619
Inventories........................................................................ 102,526 101,047
Deferred taxes..................................................................... 7,565 7,584
Other current assets and prepaid expenses.......................................... 17,268 24,066
------------ ------------
Total current assets............................................................ 339,216 309,882
Property, plant and equipment, net................................................... 255,292 235,262
Excess of cost over net assets acquired, net of accumulated amortization of
$982 in 1996 and $6,427 in 1997.................................................... 135,490 183,318
Non-current deferred taxes........................................................... 3,916 5,045
Other assets......................................................................... 37,974 15,806
------------ ------------
Total assets.................................................................... $ 771,888 $ 749,313
------------ ------------
------------ ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Trade accounts payable............................................................. $ 32,797 $ 39,342
Accrued and other liabilities...................................................... 79,857 80,844
Accrued compensation and related items............................................. 35,457 43,214
Taxes payable...................................................................... 17,580 33,267
Deferred taxes..................................................................... 9,132 10,486
Short-term borrowings and current maturities of long-term debt..................... 80,446 56,430
------------ ------------
Total current liabilities....................................................... 255,269 263,583
Long-term debt....................................................................... 373,758 340,334
Non-current deferred taxes........................................................... 30,467 25,437
Other non-current liabilities........................................................ 96,810 91,011
------------ ------------
Total liabilities............................................................... 756,304 720,365
Minority interest.................................................................... 3,158 3,549
Shareholders' equity:
Preferred stock, $0.01 par value per share; authorized 10,000,000 shares........... -- --
Common stock, $0.01 par value per share; authorized 125,000,000 shares; issued
38,336,014 (excluding 64,467 shares held in treasury) at December 31, 1997...... -- 383
Class A, B and C common stock, $0.01 par value per share; authorized 2,775,976
shares; issued 2,438,514 at December 31, 1996................................... 25 --
Additional paid-in capital......................................................... 188,084 284,630
Accumulated deficit................................................................ (159,046) (224,152)
Currency translation adjustment.................................................... (16,637) (35,462)
------------ ------------
Total shareholders' equity...................................................... 12,426 25,399
Commitments and contingencies........................................................
------------ ------------
Total liabilities and shareholders' equity........................................... $ 771,888 $ 749,313
------------ ------------
------------ ------------
</TABLE>
See the accompanying notes to the consolidated financial statements
F-3
<PAGE>
METTLER-TOLEDO INTERNATIONAL INC.
(FORMERLY 'MT INVESTORS INC.')
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
------------------------------- ---------------------------------
FOR THE PERIOD FOR THE PERIOD
YEAR ENDED JANUARY 1, 1996 OCTOBER 15, 1996 YEAR ENDED
DECEMBER 31, TO OCTOBER 14, TO DECEMBER 31, DECEMBER 31,
1995 1996 1996 1997
------------ --------------- ---------------- ------------
<S> <C> <C> <C> <C>
Net sales..................................... $850,415 $ 662,221 $ 186,912 $878,415
Cost of sales................................. 508,089 395,239 136,820 493,480
------------ --------------- ---------------- ------------
Gross profit................................ 342,326 266,982 50,092 384,935
Research and development...................... 54,542 40,244 9,805 47,551
Selling, general and administrative........... 248,327 186,898 59,353 260,397
Amortization.................................. 2,765 2,151 1,065 6,222
Purchased research and development............ -- -- 114,070 29,959
Interest expense.............................. 18,219 13,868 8,738 35,924
Other charges (income), net................... (9,331) (1,332) 17,137 10,834
------------ --------------- ---------------- ------------
Earnings (loss) before taxes, minority
interest and extraordinary items......... 27,804 25,153 (160,076) (5,952)
Provision for taxes........................... 8,782 10,055 (938) 17,489
Minority interest............................. 768 637 (92) 468
------------ --------------- ---------------- ------------
Net earnings (loss) before extraordinary
items.................................... 18,254 14,461 (159,046) (23,909)
Extraordinary items-debt extinguishments, net
of tax...................................... -- -- -- (41,197)
------------ --------------- ---------------- ------------
Net earnings (loss)......................... $ 18,254 $ 14,461 $ (159,046) $(65,106)
------------ --------------- ---------------- ------------
------------ --------------- ---------------- ------------
Basic and diluted loss per common share:
Loss before extraordinary items............. $ (5.18) $ (0.76)
Extraordinary items......................... -- (1.30)
---------------- ------------
Net loss.................................... $ (5.18) $ (2.06)
---------------- ------------
---------------- ------------
Weighted average number of common shares.... 30,686,065 31,617,071
</TABLE>
See the accompanying notes to the consolidated financial statements
F-4
<PAGE>
METTLER-TOLEDO INTERNATIONAL INC.
(FORMERLY 'MT INVESTORS INC.')
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS / SHAREHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PREDECESSOR
----------------------------------
YEAR ENDED DECEMBER 31, 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, 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
AND FOR THE YEAR ENDED DECEMBER 31, 1997
---------------------------------------------------------------------------
COMMON STOCK
ALL CLASSES ADDITIONAL CURRENCY
-------------------- PAID-IN ACCUMULATED TRANSLATION
SHARES AMOUNT CAPITAL DEFICIT ADJUSTMENT TOTAL
---------- ------ ---------- ----------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Balance at October 15, 1996........... 1,000 $ 1 $ -- $ -- $ -- $ 1
New issuance of Class A and C
shares.............................. 2,437,514 24 188,084 -- -- 188,108
Net loss.............................. -- -- -- (159,046) -- (159,046)
Change in currency translation
adjustment.......................... -- -- -- -- (16,637) (16,637)
---------- ------ ---------- ----------- ---------- --------
Balance at December 31, 1996.......... 2,438,514 25 188,084 (159,046) (16,637) 12,426
New issuance of Class A and C
shares.............................. 3,857 -- 300 -- -- 300
Purchase of Class A and C treasury
stock............................... (5,123) (1) (668) -- -- (669)
Common stock conversion............... 28,232,099 282 (282) -- -- --
Proceeds from stock offering.......... 7,666,667 77 97,196 -- -- 97,273
Net loss.............................. -- -- -- (65,106) -- (65,106)
Change in currency translation
adjustment.......................... -- -- -- -- (18,825) (18,825)
---------- ------ ---------- ----------- ---------- --------
Balance at December 31, 1997.......... 38,336,014 $383 $ 284,630 $(224,152) $(35,462) $ 25,399
---------- ------ ---------- ----------- ---------- --------
---------- ------ ---------- ----------- ---------- --------
</TABLE>
See the accompanying notes to the consolidated financial statements
F-5
<PAGE>
METTLER-TOLEDO INTERNATIONAL INC.
(FORMERLY 'MT INVESTORS INC.')
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
------------------------------ -------------------------------
FOR THE PERIOD FOR THE PERIOD
YEAR ENDED JANUARY 1, 1996 OCTOBER 15, 1996 YEAR ENDED
DECEMBER 31, TO OCTOBER 14, TO DECEMBER 31, DECEMBER 31,
1995 1996 1996 1997
------------ --------------- ---------------- ------------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss)................................ $ 18,254 $14,461 $ (159,046) $(65,106)
Adjustments to reconcile net earnings (loss) to net
cash provided by operating activities:
Depreciation..................................... 30,598 19,512 7,925 25,613
Amortization..................................... 2,765 2,151 1,065 6,222
Write-off of purchased research and development
and cost of sales associated with revaluation
of inventories................................. -- -- 146,264 32,013
Extraordinary items.............................. -- -- -- 41,197
Net loss (gain) on disposal of long-term
assets......................................... (1,053) (768) -- 33
Deferred taxes and adjustments to goodwill....... (551) (1,934) (4,563) (4,244)
Minority interest................................ 768 637 (92) 468
Increase (decrease) in cash resulting from changes
in:
Trade accounts receivable, net................... (9,979) 9,569 (10,159) (8,113)
Inventories...................................... (607) 1,276 3,350 (2,740)
Other current assets............................. (3,058) 14,748 (10,605) (7,177)
Trade accounts payable........................... 1,437 (3,065) 3,415 4,936
Accruals and other liabilities, net.............. 13,095 5,948 32,030 32,547
------------ --------------- ---------------- ------------
Net cash provided by operating activities...... 51,669 62,535 9,584 55,649
------------ --------------- ---------------- ------------
Cash flows from investing activities:
Proceeds from sale of property, plant and
equipment........................................ 4,000 1,606 736 15,913
Purchase of property, plant and equipment.......... (25,858) (16,649) (11,928) (22,251)
Acquisition of Mettler-Toledo from Ciba............ -- -- (314,962) --
Acquisition, net of seller financing............... -- -- -- (80,469)
Other investing activities......................... (7,484) (1,632) 4,857 (9,184)
------------ --------------- ---------------- ------------
Net cash used in investing activities.......... (29,342) (16,675) (321,297) (95,991)
------------ --------------- ---------------- ------------
Cash flows from financing activities:
Proceeds from borrowings........................... 3,983 -- 414,170 614,245
Repayments of borrowings........................... -- (13,464) -- (703,201)
Proceeds from issuance of common stock............. -- -- 188,108 97,573
Purchase of treasury stock......................... -- -- -- (669)
Ciba and affiliates borrowings (repayments)........ (15,693) (26,589) (184,666) --
Capital transactions with Ciba and affiliates...... (37,361) (7,716) (80,687) --
------------ --------------- ---------------- ------------
Net cash provided by (used in) financing
activities.................................. (49,071) (47,769) 336,925 7,948
------------ --------------- ---------------- ------------
Effect of exchange rate changes on cash and cash
equivalents........................................ 4,344 (3,394) (615) (4,736)
------------ --------------- ---------------- ------------
Net increase (decrease) in cash and cash
equivalents........................................ (22,400) (5,303) 24,597 (37,130)
Cash and cash equivalents:
Beginning of period................................ 63,802 41,402 36,099 60,696
------------ --------------- ---------------- ------------
End of period...................................... $ 41,402 $36,099 $ 60,696 $ 23,566
------------ --------------- ---------------- ------------
------------ --------------- ---------------- ------------
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest......................................... $ 18,927 $ 6,524 $ 17,874 $ 38,345
Taxes............................................ 9,970 9,385 2,470 6,140
Non-cash financing and investing activities:
Due to Ciba for capital transactions............... 36,418 -- -- --
Seller financing on acquisition.................... -- -- -- 22,514
</TABLE>
See the accompanying notes to the consolidated financial statements
F-6
<PAGE>
METTLER-TOLEDO INTERNATIONAL INC.
(FORMERLY 'MT INVESTORS INC.')
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS UNLESS OTHERWISE STATED)
1. BUSINESS DESCRIPTION AND BASIS OF PRESENTATION
Mettler-Toledo International Inc. ('Mettler Toledo,' the 'Company' or
'Successor'), formerly MT Investors Inc., is a global supplier of precision
instruments and is a manufacturer and marketer of weighing instruments for use
in laboratory, industrial and food retailing applications. The Company also
manufactures and sells certain related analytical and measurement technologies.
The Company's manufacturing facilities are located in Switzerland, the United
States, Germany, the United Kingdom and China. The Company's principal executive
offices are located in Greifensee, Switzerland.
The Company was incorporated by AEA Investors Inc. ('AEA') and
recapitalized to effect the acquisition (the 'Acquisition') of the
Mettler-Toledo Group ('Predecessor') from Ciba-Geigy AG ('Ciba') and its wholly
owned subsidiary, AG fur Prazisionsinstrumente ('AGP') on October 15, 1996. The
Company acquired the Mettler-Toledo Group 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 Investors, 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.
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 recorded as an expense in the period
from October 15, 1996 to December 31, 1996. Additionally, 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. 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 the Successor are not directly comparable
to those of the Predecessor.
The consolidated financial statements have been prepared in accordance with
generally accepted accounting principles in the United States of America and
include all entities in which the Company has control, including its majority
owned subsidiaries. All intercompany transactions and balances have been
eliminated. Investments in which the Company has voting rights between 20% to
50% are generally accounted for using the equity method of accounting. Certain
amounts in the prior period financial statements have been reclassified to
conform with current year presentation.
The combined financial statements of the Predecessor include the combined
historical assets and liabilities and combined results of operations of the
Mettler-Toledo Group. All intergroup transactions have been eliminated as part
of the combination process.
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.
F-7
<PAGE>
METTLER-TOLEDO INTERNATIONAL INC.
(FORMERLY 'MT INVESTORS INC.')
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS UNLESS OTHERWISE STATED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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:
<TABLE>
<S> <C>
Buildings and improvements............... 15 to 50 years
Machinery and equipment.................. 3 to 12 years
Computer software........................ 3 to 5 years
Leasehold improvements................... Shorter of useful life or lease term
</TABLE>
Beginning January 1, 1996 the Company adopted 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 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 are deferred and amortized over the life of the
underlying indebtedness using the interest method.
Taxation
The Company files 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.
F-8
<PAGE>
METTLER-TOLEDO INTERNATIONAL INC.
(FORMERLY 'MT INVESTORS INC.')
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS UNLESS OTHERWISE STATED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
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. 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.
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 and such determination is not practicable.
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 $62,400, $45,100, $11,100 and $50,200 for the
year ended December 31, 1995, for the period from January 1, 1996 to October 14,
1996, for the period from October 15, 1996 to December 31, 1996 and for the year
ended December 31, 1997, respectively.
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.
The Company has designated certain of its Swiss franc debt as a hedge of
its net investments. Any gains and losses due to changes on the debt are
recorded to currency translation adjustment and offset the net investments which
they hedge.
Derivative Financial Instruments
The Company has only limited involvement with derivative financial
instruments and does not use them for trading purposes. The Company enters into
foreign currency forward contracts to hedge short-term intercompany transactions
with its foreign businesses. 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 other charges (income), net.
The Company enters into certain interest rate cap and swap agreements in
order to reduce its exposure to changes in interest rates. The differential paid
or received on interest rate swap agreements is recognized over the life of the
agreements. Realized and unrealized gains on interest rate cap agreements are
recognized as adjustments to interest expense as incurred.
F-9
<PAGE>
METTLER-TOLEDO INTERNATIONAL INC.
(FORMERLY 'MT INVESTORS INC.')
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS UNLESS OTHERWISE STATED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
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.
Loss per Common Share
Effective December 31, 1997, the Company adopted the Statement of Financial
Accounting Standards No. 128, 'Earnings per Share' ('SFAS 128'). Accordingly,
basic and diluted loss per common share data for each period presented have been
determined in accordance with the provisions of SFAS 128. Outstanding options to
purchase shares of common stock, as described in Note 11, were not included in
the computation of diluted loss per common share for the periods ended December
31, 1996 and 1997, as the effect is antidilutive. The Company retroactively
adjusted its weighted average common shares for the purpose of the basic and
diluted loss per common share computations for the 1996 and 1997 periods
pursuant to SFAS 128 and Securities and Exchange Commission Staff Accounting
Bulletin No. 98 issued in February 1998.
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.
3. BUSINESS COMBINATIONS
On May 30, 1997, the Company purchased the entire issued share capital of
Safeline Limited ('Safeline'), a manufacturer of metal detection systems based
in Manchester in the United Kingdom, for approximately pounds 61,000
(approximately $100,000), plus up to an additional pounds 6,000 (approximately
$10,000) for a contingent earn-out payment. In October 1997, the Company made an
additional payment, representing a post-closing adjustment, of pounds 1,900
(approximately $3,100). Such amount has been accounted for as additional
purchase price. Under the terms of the agreement the Company paid approximately
pounds 47,300 (approximately $77,400) of the purchase price in cash, provided by
amounts loaned under its Credit Agreement, with the remaining balance of
approximately pounds 13,700 (approximately $22,400) paid in the form of seller
loan notes which mature May 30, 1999. In connection with the acquisition the
Company incurred expenses of approximately $2,200 which have been accounted for
as part of the purchase price.
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.
Approximately $30,000 of the purchase price was attributed to purchased research
and development in process. Such amount was expensed immediately in the second
quarter of 1997. The technological feasibility of the products being developed
had not been established as of the date of the acquisition. The Company expects
that the projects underlying these research and development efforts will be
substantially complete over the next two years. In addition, the Company
allocated approximately $2,100 of the purchase price to revalue certain finished
goods inventories to fair value. Substantially all of such inventories were sold
in the second quarter of 1997. The excess of the cost of the acquisition over
the fair value of the net assets acquired of approximately
F-10
<PAGE>
METTLER-TOLEDO INTERNATIONAL INC.
(FORMERLY 'MT INVESTORS INC.')
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS UNLESS OTHERWISE STATED)
3. BUSINESS COMBINATIONS--(CONTINUED)
$65,000 is being amortized over 30 years. The results of operations and cash
flows of Safeline have been consolidated with those of the Company from the date
of the acquisition.
The following unaudited pro forma summary presents the consolidated results
of operations of the Company as if the Acquisition (see Note 1) and Safeline
acquisition had been completed as of the beginning of each of the periods
presented, after giving effect to certain adjustments, including Safeline's
historical results of operations prior to the acquisition date, depreciation and
amortization of the assets acquired based upon their fair values, increased
interest expense from the financing of the acquisitions and income tax effects.
The Company allocated a portion of the purchase prices to (i) in-process
research and development projects, that have economic value and (ii) the
revaluation of inventories. 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 acquisitions 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>
PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
----------------------------------------------------------
PREDECESSOR SUCCESSOR
------------------ ------------------------------------
FOR THE PERIOD FOR THE PERIOD YEAR ENDED
JANUARY 1, 1996 TO OCTOBER 15, 1996 TO DECEMBER 31,
OCTOBER 14, 1996 DECEMBER 31, 1996 1997
------------------ -------------------- ------------
<S> <C> <C> <C>
Net sales................................................... $694,231 $195,336 $897,448
Earnings (loss) before extraordinary items.................. 826 (2,128) 9,565
Net earnings (loss)......................................... $ 826 $ (2,128) $(31,632)
------------------ ----------- ------------
------------------ ----------- ------------
Basic and diluted loss per common share..................... $ (0.07) $ (1.00)
----------- ------------
----------- ------------
</TABLE>
4. INVENTORIES
Inventories consisted of the following:
<TABLE>
<CAPTION>
SUCCESSOR
----------------------------
DECEMBER 31, DECEMBER 31,
1996 1997
------------ ------------
<S> <C> <C>
Raw materials and parts.............................................................. $ 41,015 $ 42,435
Work-in-progress..................................................................... 31,534 29,746
Finished goods....................................................................... 29,982 28,968
------------ ------------
102,531 101,149
LIFO reserve......................................................................... (5) (102)
------------ ------------
$102,526 $101,047
------------ ------------
------------ ------------
</TABLE>
At December 31, 1996 and 1997, 13.2% and 12.7%, 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.
5. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISKS
At December 31, 1996, the Company had forward 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.
In July 1997, the Company entered into three year interest rate cap
agreements to limit the impact of increases in interest rates on its U.S. dollar
based debt. These agreements 'cap' the effects of an increase in three month
LIBOR above 8.5%. In addition, the Company has entered into three year interest
rate swap
F-11
<PAGE>
METTLER-TOLEDO INTERNATIONAL INC.
(FORMERLY 'MT INVESTORS INC.')
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS UNLESS OTHERWISE STATED)
5. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISKS--(CONTINUED)
agreements which swap the interest obligation associated with $100,000 of U.S.
dollar based debt from variable to fixed. The fixed rate associated with the
swap is 6.09% plus the Company's normal interest margin. The swap is effective
at three month LIBOR rates up to 7.00%.
In August 1997, the Company entered into certain three year interest rate
swap agreements that fix the interest obligation associated with SFr. 112,500 of
Swiss franc based debt at rates varying between 2.17% and 2.49% plus the
Company's normal interest margin. The swaps are effective at one month LIBOR
rates up to 3.5%.
The Company may be exposed to credit losses in the event of nonperformance
by the counterparties to its derivative financial instrument contracts.
Counterparties are established banks and financial institutions with high credit
ratings. The Company has no reason to believe that such counterparties will not
be able to fully satisfy their obligations under these contracts.
At December 31, 1996 and 1997, the fair value of such financial instruments
was approximately $(5,100) and $(1,064), respectively. The fair values of all
derivative financial instruments are estimated based on current settlement
prices of comparable contracts obtained from dealer quotes. The values represent
the estimated amount the Company would pay to terminate the agreements at the
reporting date, taking into account current creditworthiness of the
counterparties.
6. PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment, net, consisted of the following:
<TABLE>
<CAPTION>
SUCCESSOR
----------------------------
DECEMBER 31, DECEMBER 31,
1996 1997
------------ ------------
<S> <C> <C>
Land....................................................................... $ 63,514 $ 58,226
Buildings and leasehold improvements....................................... 120,173 111,065
Machinery and equipment.................................................... 75,675 93,418
Computer software.......................................................... 3,067 3,948
------------ ------------
262,429 266,657
Less accumulated depreciation and amortization............................. (7,137) (31,395)
------------ ------------
$255,292 $235,262
------------ ------------
------------ ------------
</TABLE>
7. OTHER ASSETS
Other assets include deferred financing fees of $22,015 and $4,101, net of
accumulated amortization of $820 and $76 at December 31, 1996 and 1997,
respectively. During 1997, the Company wrote off deferred financing costs
associated with its previous credit facilities and its Senior Subordinated Notes
as further discussed in Note 9. Also included in other assets are restricted
bank deposits of $5,960 and $1,756 at December 31, 1996 and 1997, respectively.
Other assets at December 31, 1996 and 1997 also included a loan due from the
Company's Chief Executive Officer of approximately $740 and $690, respectively.
Such loan bears an interest rate of 5% and is payable upon demand, which may not
be made until 2003.
F-12
<PAGE>
METTLER-TOLEDO INTERNATIONAL INC.
(FORMERLY 'MT INVESTORS INC.')
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS UNLESS OTHERWISE STATED)
8. SHORT-TERM BORROWINGS AND CURRENT MATURITIES OF LONG-TERM DEBT
Short-term borrowings and current maturities of long-term debt consisted of
the following:
<TABLE>
<CAPTION>
SUCCESSOR
----------------------------
DECEMBER 31, DECEMBER 31,
1996 1997
------------ ------------
<S> <C> <C>
Current maturities of long-term debt....................................... $ 8,968 $ 14,915
Borrowings under revolving credit facility................................. 51,928 33,320
Other short-term borrowings................................................ 19,550 8,195
------------ ------------
$ 80,446 $ 56,430
------------ ------------
------------ ------------
</TABLE>
9. LONG-TERM DEBT
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
SUCCESSOR
----------------------------
DECEMBER 31, DECEMBER 31,
1996 1997
------------ ------------
<S> <C> <C>
9.75% Senior Subordinated Notes due October 1, 2006........................ $135,000 $ --
Credit Agreement:
Term A USD Loans, interest at LIBOR plus 1.125% (7.03% at December 31,
1997) payable in quarterly installments beginning March 31, 1998 due
May 19, 2004.......................................................... -- 101,573
Term A SFr. Loans, interest at LIBOR plus 1.125% (2.57% at December 31,
1997) payable in quarterly installments beginning March 31, 1998 due
May 19, 2004.......................................................... -- 58,991
Term A GBP Loans, interest at LIBOR plus 1.125% (8.71% at December 31,
1997) payable in quarterly installments beginning March 31, 1998 due
May 19, 2004.......................................................... -- 36,198
Seller Notes, interest at LIBOR plus 0.26% (7.84% at December 31, 1997)
due in full May 30, 1999.............................................. -- 22,946
Term A SFr. 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 USD 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 USD 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 facilities.............................................. 51,928 160,862
Other...................................................................... 27,546 16,194
------------ ------------
454,204 396,764
Less current maturities.................................................... 80,446 56,430
------------ ------------
$373,758 $340,334
------------ ------------
------------ ------------
</TABLE>
F-13
<PAGE>
METTLER-TOLEDO INTERNATIONAL INC.
(FORMERLY 'MT INVESTORS INC.')
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS UNLESS OTHERWISE STATED)
9. LONG-TERM DEBT--(CONTINUED)
To provide a portion of the financing required for the Acquisition and for
working capital and for general corporate purposes thereafter, in October 1996
Mettler-Toledo Holding Inc., a wholly owned subsidiary of the Company, entered
into a credit agreement with various banks.
At December 31, 1996, loans under the credit agreement consisted 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 loans in an aggregate principal amount of $72,000 and (iv)
a multi-currency revolving credit facility in an aggregate principal amount of
$140,000, which included letter of credit and swingline subfacilities available
to certain subsidiaries.
On May 29, 1997, the Company refinanced its previous credit facility and
entered into a new credit facility. This credit facility provided for term loan
borrowings in an aggregate principal amount of approximately $133,800, SFr.
171,500 and pounds 26,700, that were scheduled to mature between 2002 and 2004,
a Canadian revolving credit facility with availability of CDN $26,300 and a
multi-currency revolving credit facility with availability of $151,000. The
revolving credit facilities were scheduled to mature in 2002. The Company
recorded an extraordinary loss of approximately $9,600 representing a charge for
the write-off of capitalized debt issuance fees and related expenses associated
with the Company's previous credit facility.
On November 19, 1997, in connection with the initial public offering, the
Company refinanced its existing credit facility by entering into a new credit
facility (the 'Credit Agreement') with certain financial institutions. At
December 31, 1997, loans under the Credit Agreement consisted of: (i) Term A
Loans in aggregate principal amount of $101,573, SFr. 85,467 ($58,991 at
December 31, 1997) and pounds 21,661 ($36,198 at December 31, 1997); (ii) a
Canadian revolving credit facility with availability of CDN $26,300 and (iii) a
multi-currency revolving credit facility in an aggregate principal amount of
$400,000 including a $100,000 acquisition facility.
Concurrent with the initial public offering and refinancing, the Company
consummated a tender offer to repurchase the Senior Subordinated Notes. The
aggregate purchase price in connection with the tender offer was approximately
$152,500. In connection with the refinancing and the note repurchase, the
Company recorded an extraordinary loss of $31,600 representing primarily the
premium paid in connection with the early extinguishment of the notes of $17,900
and the write-off of capitalized debt issuance fees associated with the Senior
Subordinated Notes and the Company's previous credit facility.
The Company's weighted average interest rate at December 31, 1997 was
approximately 6.3%.
Loans under the Credit Agreement may be repaid and reborrowed and are due
in full on May 19, 2004. The Company is required to pay a facility fee based
upon certain financial ratios 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. The facility fee at December 31, 1997 was equal to
0.3%. At December 31, 1997, the Company had available approximately $220,000 of
additional borrowing capacity under its Credit Agreement. The Company has the
ability to refinance its short-term borrowings through its revolving facility
for an uninterrupted period extending beyond one year. Accordingly,
approximately $128,000 of the Company's short-term borrowings at December 31,
1997 have been reclassified to long-term. At December 31, 1997, borrowings under
the Company's revolving facility carried an interest rate of LIBOR plus 0.825%.
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; or make certain capital expenditures. The Credit Agreement also
requires the Company to maintain a minimum net worth
F-14
<PAGE>
METTLER-TOLEDO INTERNATIONAL INC.
(FORMERLY 'MT INVESTORS INC.')
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS UNLESS OTHERWISE STATED)
9. LONG-TERM DEBT--(CONTINUED)
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
1999 through 2002 are approximately $42,748, $32,691, $34,531 and $34,531,
respectively.
The estimated fair value of the Company's obligations under the Credit
Agreement approximate fair value due to the variable rate nature of the
obligations.
10. SHAREHOLDERS' EQUITY
Common Stock
At December 31, 1996, the authorized capital stock of the Company consisted
of 2,775,976 shares of common stock, $.01 par value of which 2,233,117 shares
were designated as Class A common stock, 1,000 shares were designated as Class B
common stock and 541,859 shares were designated as Class C common stock. All
general voting power was vested in the holders of the Class B common stock. At
December 31, 1996, the Company had outstanding 1,899,779 shares of Class A
common stock, 1,000 shares of Class B common stock and 537,735 shares of Class C
common stock.
In November 1997, pursuant to a merger with its wholly owned subsidiary
Mettler-Toledo Holding Inc., each share of the Company's existing Class A, Class
B and Class C common stock converted into 12.58392 shares of common stock and
increased the number of authorized shares to 125,000,000 shares with a par value
of $0.01 per share. Concurrent therewith, the Company completed an underwritten
initial public offering of 7,666,667 shares at a public offering price of $14.00
per share. The net proceeds from the offerings of approximately $97,300 were
used to repay a portion of the Company's 9.75% Senior Subordinated Notes (see
Note 9). As part of the offering the Company sold approximately 287,000 shares
of its common stock to Company sponsored benefit plans at the public offering
price. Holders of the Company's common stock are entitled to one vote per share.
At December 31, 1997, 6,368,445 shares of the Company's common stock were
reserved for the Company's stock option plan.
Preferred Stock
The Board of Directors, without further shareholder authorization, is
authorized to issue up to 10,000,000 shares of preferred stock, par value $0.01
per share in one or more series and to determine and fix the rights, preferences
and privileges of each series, including dividend rights and preferences over
dividends on the common stock and one or more series of the preferred stock,
conversion rights, voting rights (in addition to those provided by law),
redemption rights and the terms of any sinking fund therefor, and rights upon
liquidation, dissolution or winding up, including preferences over the common
stock and one or more series of the preferred stock. The issuance of shares of
preferred stock, or the issuance of rights to purchase such shares, may have the
effect of delaying, deferring or preventing a change in control of the Company
or an unsolicited acquisition proposal.
F-15
<PAGE>
METTLER-TOLEDO INTERNATIONAL INC.
(FORMERLY 'MT INVESTORS INC.')
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS UNLESS OTHERWISE STATED)
11. STOCK OPTION PLAN
Effective October 15, 1996, the Company 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.
Under the terms of the plan, options granted shall be nonqualified and the
exercise price shall not be less than 100% of the fair market value of the
common stock on the date of grant. Options vest equally over a five year period
from the date of grant.
Stock option activity is shown below:
<TABLE>
<CAPTION>
WEIGHTED-AVERAGE
NUMBER OF SHARES EXERCISE PRICE
---------------- ----------------
<S> <C> <C>
Granted during the period October 15, 1996 to December
31, 1996............................................... 3,510,747 $ 7.95
Exercised................................................ -- --
Forfeited................................................ -- --
---------------- -------
Outstanding at December 31, 1996......................... 3,510,747 7.95
Granted.................................................. 1,028,992 14.68
Exercised................................................ -- --
Forfeited................................................ (130,999) (7.95)
---------------- -------
Outstanding at December 31, 1997......................... 4,408,740 $ 9.75
---------------- -------
---------------- -------
Shares exercisable at December 31, 1997.................. 675,950 $ 7.95
---------------- -------
---------------- -------
</TABLE>
At December 31, 1997, there were 3,537,047 and 871,693 options outstanding
to purchase shares of common stock with exercise prices of $7.95 and $15.89,
respectively. The weighted-average remaining contractual life of such options
was 8.7 and 9.7 years, respectively.
As of the date granted, the weighted-average grant-date fair value of the
options granted during the period from October 15, 1996 to December 31, 1996 and
for the year ended December 31, 1997 was approximately $1.99 and $3.37 per
share, respectively. Such weighted-average grant-date fair value was determined
using an option pricing model which incorporated the following assumptions:
<TABLE>
<CAPTION>
SUCCESSOR
-----------------------------------------
FOR THE PERIOD
OCTOBER 15, 1996 YEAR ENDED
TO DECEMBER 31, 1996 DECEMBER 31, 1997
-------------------- -----------------
<S> <C> <C>
Risk-free interest rate.............................. 4.0% 5.4%
Expected life, in years.............................. 7 4
Expected volatility.................................. -- 26%
Expected dividend yield.............................. -- --
</TABLE>
The Company applies Accounting Standards Board Opinion No. 25 and related
interpretations in accounting for its plans. Had compensation cost for the
Company stock option plan been determined based upon the fair value of such
awards at the grant date, consistent with the methods of Statement of Financial
Accounting Standards No. 123 'Accounting for Stock Based Compensation' ('SFAS
123'), the Company's net loss and
F-16
<PAGE>
METTLER-TOLEDO INTERNATIONAL INC.
(FORMERLY 'MT INVESTORS INC.')
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS UNLESS OTHERWISE STATED)
11. STOCK OPTION PLAN--(CONTINUED)
basic and diluted net loss per common share for the twelve months ended December
31, 1997 would have been as follows:
<TABLE>
<S> <C>
Net loss:
As reported.................................................. $(65,106)
Pro forma.................................................... (66,417)
--------
--------
Basic and diluted loss per common share:
As reported.................................................. $ (2.06)
Pro forma.................................................... (2.10)
--------
--------
</TABLE>
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 SFAS 123.
12. 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 $9,413, $9,484, $2,496 and $8,925 in 1995, for the
period January 1, 1996 to October 14, 1996, for the period October 15, 1996 to
December 31, 1996 and for the year ended December 31, 1997, respectively.
Certain companies sponsor defined benefit plans. Benefits are provided to
employees 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,
1996 and 1997:
<TABLE>
<CAPTION>
SUCCESSOR
----------------------------------------------------------------
DECEMBER 31, DECEMBER 31,
1996 1997
------------------------------ ------------------------------
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........................... $10,211 $97,639 $11,712 $ 98,974
Non-vested benefits....................... 16 2,280 20 3,574
------------- ------------- ------------- -------------
10,227 99,919 11,732 102,548
------------- ------------- ------------- -------------
Projected benefit obligations............... 12,458 108,504 13,350 111,608
Plan assets at fair value................... 13,336 50,609 14,899 58,176
------------- ------------- ------------- -------------
Projected benefit obligations in excess of
(less than) plan assets................... (878) 57,895 (1,549) 53,432
Unrecognized net (losses) gains............. 22 1,479 544 561
------------- ------------- ------------- -------------
(Prepaid) accrued pension costs............. $ (856) $59,374 $(1,005) $ 53,993
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</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.
F-17
<PAGE>
METTLER-TOLEDO INTERNATIONAL INC.
(FORMERLY 'MT INVESTORS INC.')
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS UNLESS OTHERWISE STATED)
12. BENEFIT PLANS--(CONTINUED)
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>
1996 1997
------------ ------------
<S> <C> <C>
Discount rate............................................... 6.0% to 8.5% 6.0% to 8.5%
Compensation increase rate.................................. 2.0% to 6.5% 2.0% to 6.5%
</TABLE>
The expected long term rates of return on plan assets ranged between 9.5%
and 10.0% for 1995, 7.0% and 10.0% for 1996, and 6.0% and 9.5% in 1997. 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
------------------------------- -------------------------------
FOR THE PERIOD FOR THE PERIOD
YEAR ENDED JANUARY 1, 1996 OCTOBER 15 YEAR ENDED
DECEMBER 31, TO OCTOBER 14, TO DECEMBER 31, DECEMBER 31,
1995 1996 1996 1997
------------ --------------- --------------- ------------
<S> <C> <C> <C> <C>
Service cost (benefits earned during the
period)................................ $3,668 $ 3,850 $ 1,013 $5,655
Interest cost on projected benefit
obligations............................ 7,561 6,540 1,721 8,020
Actual gain on plan assets............... (8,653) (6,079) (1,600) (8,543)
Net amortization and deferral............ 5,137 2,485 -- 2,516
------------ ------- ------- ------------
Net periodic pension expense............. $7,713 $ 6,796 $ 1,134 $7,648
------------ ------- ------- ------------
------------ ------- ------- ------------
</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:
<TABLE>
<CAPTION>
SUCCESSOR
----------------------------
DECEMBER 31, DECEMBER 31,
1996 1997
------------ ------------
<S> <C> <C>
Accumulated postretirement benefit obligations:
Retired........................................................ $ 25,894 $ 26,702
Fully eligible................................................. 3,033 4,154
Other.......................................................... 3,098 5,256
------------ ------------
32,025 36,112
Unrecognized net loss............................................ (540) (4,465)
------------ ------------
Accrued postretirement benefit cost.............................. $ 31,485 $ 31,647
------------ ------------
------------ ------------
</TABLE>
F-18
<PAGE>
METTLER-TOLEDO INTERNATIONAL INC.
(FORMERLY 'MT INVESTORS INC.')
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS UNLESS OTHERWISE STATED)
12. BENEFIT PLANS--(CONTINUED)
Net periodic postretirement benefit cost for the above plans includes the
following components:
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
------------------------------- -----------------------------------
FOR THE PERIOD FOR THE PERIOD
YEAR ENDED JANUARY 1, 1996 OCTOBER 15, 1996 TO YEAR ENDED
DECEMBER 31, TO OCTOBER 14, DECEMBER 31, DECEMBER 31,
1995 1996 1996 1997
------------ --------------- ------------------- ------------
<S> <C> <C> <C> <C>
Service cost (benefits earned during
the period)......................... $ 285 $ 431 $ 114 $ 440
Interest cost on projected benefit
obligations......................... 2,371 1,795 472 2,296
Net amortization and deferral......... 99 343 -- 33
------------ ------- ------ ------------
Net periodic postretirement benefit
cost................................ $2,755 $ 2,569 $ 586 $2,769
------------ ------- ------ ------------
------------ ------- ------ ------------
</TABLE>
The accumulated postretirement benefit obligation and net periodic
postretirement benefit cost were principally determined using discount rates of
7.3% in 1995, 7.6% in 1996 and 7.0% in 1997 and health care cost trend rates
ranging from 9.5% to 12.25% in 1995, 1996 and 1997 decreasing to 5.0% in 2006.
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 1997 the effect of a one-percentage-point increase
in the assumed health care cost trend rate would be an increase of $3,611 on the
accumulated postretirement benefit obligations and an increase of $464 on the
aggregate of the service and interest cost components of the net periodic
benefit cost.
13. TAXES
The sources of the Company's earnings (loss) before taxes, minority
interest and extraordinary items were as follows:
<TABLE>
<CAPTION>
PREDECESSOR
----------------------------------
YEAR ENDED FOR THE PERIOD
DECEMBER 31, JANUARY 1, 1996 TO
1995 OCTOBER 14, 1996
------------ ------------------
<S> <C> <C>
Switzerland................................................. $ 11,431 $ 21,241
Non-Switzerland............................................. 16,373 3,912
------------ ----------
Earnings before taxes, minority interest and extraordinary
items..................................................... $ 27,804 $ 25,153
------------ ----------
------------ ----------
</TABLE>
<TABLE>
<CAPTION>
SUCCESSOR
-----------------------------------
FOR THE PERIOD YEAR ENDED
OCTOBER 15, 1996 TO DECEMBER 31,
DECEMBER 31, 1996 1997
------------------- ------------
<S> <C> <C>
United States.............................................. $ (37,293) $(14,178)
Non-United States.......................................... (122,783) 8,226
------------------- ------------
Loss before taxes, minority interest and extraordinary
items.................................................... $(160,076) $ (5,952)
------------------- ------------
------------------- ------------
</TABLE>
F-19
<PAGE>
METTLER-TOLEDO INTERNATIONAL INC.
(FORMERLY 'MT INVESTORS INC.')
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS UNLESS OTHERWISE STATED)
13. TAXES--(CONTINUED)
The provision (benefit) for taxes consists of:
<TABLE>
<CAPTION>
ADJUSTMENTS
TO
CURRENT DEFERRED GOODWILL TOTAL
------- -------- ----------- -------
<S> <C> <C> <C> <C>
Predecessor:
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)
------- -------- ----------- -------
------- -------- ----------- -------
Year ended December 31, 1997:
United States Federal................................ $ -- $ (351) $ -- $ (351)
State and Local...................................... 466 (41) 107 532
Non-United States.................................... 12,779 2,600 1,929 17,308
------- -------- ----------- -------
$13,245 $ 2,208 $ 2,036 $17,489
------- -------- ----------- -------
------- -------- ----------- -------
</TABLE>
The adjustments to goodwill during the year ending December 31, 1997 relate
to tax benefits received on amounts which were included in the purchase price
allocation pertaining to the Acquisition of the Company described in Note 1.
The provision for tax expense for the year ended December 31, 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
F-20
<PAGE>
METTLER-TOLEDO INTERNATIONAL INC.
(FORMERLY 'MT INVESTORS INC.')
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS UNLESS OTHERWISE STATED)
13. TAXES--(CONTINUED)
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
----------------------------------
YEAR ENDED FOR THE PERIOD
DECEMBER 31, JANUARY 1, 1996 TO
1995 OCTOBER 14, 1996
------------ ------------------
<S> <C> <C>
Expected tax................................................ $2,725 $ 2,465
Switzerland Canton (state) and local income taxes, net of
federal income tax benefit................................ (21) 3,573
Non-deductible intangible amortization...................... 248 205
Change in valuation allowance............................... 1,603 1,235
Non-Switzerland income taxes in excess of 9.8%.............. 4,968 2,291
Other, net.................................................. (741) 286
------------ ----------
Total provision for taxes................................... $8,782 $ 10,055
------------ ----------
------------ ----------
</TABLE>
The provision for tax expense (benefit) for the period October 15, 1996 to
December 31, 1996 and for the year ended December 31, 1997, subsequent to 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,
minority interest and extraordinary items as a result of the following:
<TABLE>
<CAPTION>
SUCCESSOR
-----------------------------------
FOR THE PERIOD YEAR ENDED
OCTOBER 15, 1996 TO DECEMBER 31,
DECEMBER 31, 1996 1997
------------------- ------------
<S> <C> <C>
Expected tax............................................... $ (56,027) $ (2,083)
United States state and local income taxes, net of federal
income tax benefit....................................... 333 276
Non-deductible purchased research and development.......... 39,925 10,486
Non-deductible intangible amortization..................... 336 2,073
Change in valuation allowance.............................. 4,662 263
Non-United States income taxes at other than a 35% rate.... 10,037 5,545
Other, net................................................. (204) 929
---------- ------------
Total provision for taxes.................................. $ (938) $ 17,489
---------- ------------
---------- ------------
</TABLE>
F-21
<PAGE>
METTLER-TOLEDO INTERNATIONAL INC.
(FORMERLY 'MT INVESTORS INC.')
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS UNLESS OTHERWISE STATED)
13. TAXES--(CONTINUED)
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>
SUCCESSOR
----------------------------
DECEMBER 31, DECEMBER 31,
1996 1997
------------ ------------
<S> <C> <C>
Deferred tax assets:
Inventory........................................................ $ 7,974 $ 7,552
Accrued and other liabilities.................................. 7,046 9,278
Deferred loss on sale of subsidiaries.......................... 7,907 7,907
Accrued postretirement benefit and pension costs............... 19,043 19,161
Net operating loss carryforwards............................... 15,817 27,345
Other.......................................................... 408 678
------------ ------------
Total deferred tax assets........................................ 58,195 71,921
Less valuation allowance......................................... (46,714) (59,292)
------------ ------------
Total deferred tax assets less valuation allowance............... 11,481 12,629
------------ ------------
Deferred tax liabilities:
Inventory...................................................... 5,618 6,177
Property, plant and equipment.................................. 31,123 24,081
Other.......................................................... 2,858 5,665
------------ ------------
Total deferred tax liabilities................................... 39,599 35,923
------------ ------------
Net deferred tax liability....................................... $ 28,118 $ 23,294
------------ ------------
------------ ------------
</TABLE>
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>
SUCCESSOR
----------------------------
DECEMBER 31, DECEMBER 31,
1996 1997
------------ ------------
<S> <C> <C>
Summary of valuation allowances:
Cumulative net operating losses................................ $ 15,817 $ 27,345
Deferred loss on sale of subsidiaries.......................... 7,907 7,907
Accrued postretirement and pension benefit costs............... 18,122 17,104
Other.......................................................... 4,868 6,936
------------ ------------
Total valuation allowance........................................ $ 46,714 $ 59,292
------------ ------------
------------ ------------
</TABLE>
The total valuation allowances relating to acquired businesses amount to
$38,785 and $35,524 at December 31, 1996 and 1997, respectively. Future
reductions of these valuation allowances will be credited to goodwill.
At December 31, 1997, the Company had net operating loss carryforwards for
income tax purposes of (i) $45,939 related to U.S. Federal net operating losses
of which $4,376 expires in 2011 and $41,563 expires in 2012, (ii) $51,832
related to U.S. State net operating losses which expire in varying amounts
through 2012, (iii) $15,595 related to foreign net operating losses with no
expiration date and (iv) $14,205 related to foreign net operating losses which
expire in varying amounts through 2003.
F-22
<PAGE>
METTLER-TOLEDO INTERNATIONAL INC.
(FORMERLY 'MT INVESTORS INC.')
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS UNLESS OTHERWISE STATED)
14. OTHER CHARGES (INCOME), NET
Other charges (income), net consists primarily of foreign currency
transactions, interest income and charges related to the Company's restructuring
programs. Foreign currency transactions, net for the year ended December 31,
1995, for the period January 1, 1996 to October 14, 1996, for the period October
15, 1996 to December 31, 1996 and for the year ended December 31, 1997 were
$(3,242), $(220), $8,324 and $4,235, respectively. Interest income for the year
ended December 31, 1995, for the period January 1, 1996 to October 14, 1996, for
the period October 15, 1996 to December 31, 1996 and for the year ended December
31, 1997 was $(5,388), $(3,424), $(1,079) and $(1,832), respectively.
Severance and other exit costs 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. Severance
costs 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 announced in December 1996.
In connection with such programs the Company reduced its workforce by 168
employees in 1996.
The Company recorded further restructuring charges of $6,300 during 1997.
Such charges are in connection with the closure of three facilities in North
America and are comprised primarily of severance and other related benefits and
costs of exiting facilities, including lease termination costs and write-down of
existing assets to their expected net realizable value. In connection with the
closure of these facilities, the Company expects to involuntarily terminate
approximately 70 employees. The Company is undertaking these actions as part of
its efforts to reduce costs through reengineering.
A rollforward of the components of the Company's accrual for restructuring
activities is as follows:
<TABLE>
<S> <C>
Balance at December 31, 1996................................... $10,762
1997 Activities:
Restructuring accrual for North American operations.......... 6,300
Reductions in workforce and other cash outflows.............. (7,182)
Non-cash write-downs of property, plant and equipment........ (540)
Impact of foreign currency................................... (582)
-------
Balance at December 31, 1997................................... $ 8,758
-------
-------
</TABLE>
The Company's accrual for restructuring activities of $8,758 at December
31, 1997 primarily consisted of $6,544 for severance and other related benefits
with the remaining balance for lease termination and other costs of exiting
facilities. Such programs are expected to be substantially complete in 1998.
F-23
<PAGE>
METTLER-TOLEDO INTERNATIONAL INC.
(FORMERLY 'MT INVESTORS INC.')
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS UNLESS OTHERWISE STATED)
15. 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, 1997:
<TABLE>
<S> <C>
1998........................................................... $12,006
1999........................................................... 8,565
2000........................................................... 5,771
2001........................................................... 4,023
2002........................................................... 3,296
Thereafter..................................................... 1,856
-------
Total........................................................ $35,517
-------
-------
</TABLE>
Rent expense for operating leases amounted to $13,034, $3,430 and $16,420
for the period January 1, 1996 to October 14, 1996, for the period October 15,
1996 to December 31, 1996 and for the year ended December 31, 1997,
respectively.
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.
16. GEOGRAPHIC SEGMENT INFORMATION
The tables below show 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
BETWEEN EARNINGS (LOSS)
TWELVE MONTHS ENDED NET SALES BY NET SALES GEOGRAPHIC TOTAL NET SALES BEFORE
DECEMBER 31, 1995 DESTINATION BY ORIGIN AREAS BY ORIGIN TAXES
- -------------------------------------- ------------ --------- ---------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Switzerland(1)........................ $ 41,820 $ 102,712 $159,453 $ 262,165 $ 11,431
Germany............................... 151,974 158,393 47,379 205,772 9,626
Other Europe.......................... 247,802 228,939 799 229,738 1,780
------------ --------- ---------- --------------- ---------------
Total Europe.......................... 441,596 490,044 207,631 697,675 22,837
United States......................... 263,945 298,053 29,578 327,631 (1,353)
Other Americas........................ 52,966 32,732 131 32,863 905
------------ --------- ---------- --------------- ---------------
Total Americas........................ 316,911 330,785 29,709 360,494 (448)
Asia and other........................ 91,908 29,586 97 29,683 1,861
Eliminations.......................... -- -- (237,437) (237,437) 3,554
------------ --------- ---------- --------------- ---------------
Totals................................ $850,415 $ 850,415 $ -- $ 850,415 $ 27,804
------------ --------- ---------- --------------- ---------------
------------ --------- ---------- --------------- ---------------
</TABLE>
F-24
<PAGE>
METTLER-TOLEDO INTERNATIONAL INC.
(FORMERLY 'MT INVESTORS INC.')
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS UNLESS OTHERWISE STATED)
16. GEOGRAPHIC SEGMENT INFORMATION--(CONTINUED)
<TABLE>
<CAPTION>
TRANSFERS
FOR THE PERIOD BETWEEN EARNINGS (LOSS)
JANUARY 1, 1996 TO NET SALES BY NET SALES GEOGRAPHIC TOTAL NET SALES BEFORE
OCTOBER 14, 1996 DESTINATION BY ORIGIN AREAS BY ORIGIN TAXES
- -------------------------------------- ------------ --------- ---------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Switzerland(1)........................ $ 32,282 $ 74,303 $126,423 $ 200,726 $ 21,241
Germany............................... 104,961 114,015 35,583 149,598 8,292
Other Europe.......................... 186,823 171,061 840 171,901 591
------------ --------- ---------- --------------- ---------------
Total Europe.......................... 324,066 359,379 162,846 522,225 30,124
United States......................... 217,636 246,180 22,753 268,933 (1,577)
Other Americas........................ 47,473 25,925 3 25,928 1,078
------------ --------- ---------- --------------- ---------------
Total Americas........................ 265,109 272,105 22,756 294,861 (499)
Asia and other........................ 73,046 30,737 265 31,002 686
Eliminations.......................... -- -- (185,867) (185,867) (5,158)
------------ --------- ---------- --------------- ---------------
Totals................................ $662,221 $ 662,221 $ -- $ 662,221 $ 25,153
------------ --------- ---------- --------------- ---------------
------------ --------- ---------- --------------- ---------------
</TABLE>
<TABLE>
<CAPTION>
TRANSFERS
FOR THE PERIOD BETWEEN EARNINGS (LOSS)
OCTOBER 15, 1996 TO NET SALES BY NET SALES GEOGRAPHIC TOTAL NET SALES BEFORE
DECEMBER 31, 1996 DESTINATION BY ORIGIN AREAS BY ORIGIN TAXES(2) TOTAL ASSETS
- -------------------------------------- ------------ --------- ---------- --------------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Switzerland(1)........................ $ 8,415 $ 15,892 $ 39,570 $ 55,462 $(108,865) $432,387
Germany............................... 29,688 29,117 10,965 40,082 (6,041) 170,845
Other Europe.......................... 58,598 59,688 485 60,173 (5,809) 126,063
------------ --------- ---------- --------------- --------------- ------------
Total Europe.......................... 96,701 104,697 51,020 155,717 (120,715) 729,295
United States......................... 56,405 64,109 6,731 70,840 (37,293) 477,762
Other Americas........................ 13,436 7,371 3 7,374 (446) 17,730
------------ --------- ---------- --------------- --------------- ------------
Total Americas........................ 69,841 71,480 6,734 78,214 (37,739) 495,492
Asia and other........................ 20,370 10,735 28 10,763 (2,267) 48,245
Eliminations.......................... -- -- (57,782) (57,782) 645 (501,144)
------------ --------- ---------- --------------- --------------- ------------
Totals................................ $186,912 $ 186,912 $ -- $ 186,912 $(160,076) $771,888
------------ --------- ---------- --------------- --------------- ------------
------------ --------- ---------- --------------- --------------- ------------
</TABLE>
<TABLE>
<CAPTION>
TRANSFERS
BETWEEN EARNINGS (LOSS)
TWELVE MONTHS ENDED NET SALES BY NET SALES GEOGRAPHIC TOTAL NET SALES BEFORE
DECEMBER 31, 1997 DESTINATION BY ORIGIN AREAS BY ORIGIN TAXES TOTAL ASSETS
- -------------------------------------- ------------ --------- ---------- --------------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Switzerland(1)........................ $ 34,555 $ 69,700 $186,292 $ 255,992 $ 31,621 $430,436
Germany............................... 115,665 123,382 51,502 174,884 5,519 144,660
Other Europe.......................... 245,945 232,105 10,857 242,962 (16,441) 337,720
------------ --------- ---------- --------------- --------------- ------------
Total Europe.......................... 396,165 425,187 248,651 673,838 20,699 912,816
United States......................... 297,688 335,630 32,009 367,639 (14,176) 589,775
Other Americas........................ 71,403 37,330 165 37,495 (3,245) 32,941
------------ --------- ---------- --------------- --------------- ------------
Total Americas........................ 369,091 372,960 32,174 405,134 (17,421) 622,716
Asia and other........................ 113,159 80,268 1,834 82,102 1,413 63,453
Eliminations.......................... -- -- (282,659) (282,659) (10,643) (849,672)
------------ --------- ---------- --------------- --------------- ------------
Totals................................ $878,415 $ 878,415 $ -- $ 878,415 $ (5,952) $749,313
------------ --------- ---------- --------------- --------------- ------------
------------ --------- ---------- --------------- --------------- ------------
</TABLE>
(Footnotes on next page)
F-25
<PAGE>
METTLER-TOLEDO INTERNATIONAL INC.
(FORMERLY 'MT INVESTORS INC.')
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS UNLESS OTHERWISE STATED)
16. GEOGRAPHIC SEGMENT INFORMATION--(CONTINUED)
- ------------------
(1) Includes Corporate.
(2) The effect of non-recurring Acquisition charges arising from in-process
research and development projects ($114,100) and the revaluation of
inventories to fair value ($32,200) by region are as follows:
<TABLE>
<S> <C>
Europe.................................................... $108,100
Americas.................................................. 36,000
Asia/Rest of World........................................ 2,200
</TABLE>
17. QUARTERLY FINANCIAL DATA (UNAUDITED)
Quarterly financial data for the years 1996 and 1997 are as follows:
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER(1) QUARTER QUARTER(2)
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
1996
Net sales.............................................. $201,373 $ 222,429 $200,391 $ 224,940
Gross profit........................................... 80,394 91,204 79,013 66,463
Net income (loss)...................................... 929 9,078 3,129 (157,721)
-------- ---------- -------- ----------
-------- ---------- -------- ----------
1997
Net sales.............................................. $197,402 $ 220,412 $215,929 $ 244,672
Gross profit........................................... 83,282 97,016 94,365 110,272
Net income (loss) before extraordinary items........... (1,122) (25,613) (284) 3,110
Extraordinary items.................................... -- (9,552) -- (31,645)
-------- ---------- -------- ----------
Net income (loss)...................................... $ (1,122) $ (35,165) $ (284) $ (28,535)
-------- ---------- -------- ----------
-------- ---------- -------- ----------
Basic earnings (loss) per common share:
Earnings (loss) before extraordinary items........... $ (0.04) $ (0.84) $ (0.01) $ 0.09
Extraordinary items.................................. -- (0.31) -- (0.92)
-------- ---------- -------- ----------
Net loss............................................. $ (0.04) $ (1.15) $ (0.01) $ (0.83)
-------- ---------- -------- ----------
-------- ---------- -------- ----------
Diluted earnings (loss) per common share:
Earnings (loss) before extraordinary items........... $ (0.04) $ (0.84) $ (0.01) $ 0.09
Extraordinary items.................................. -- (0.31) -- (0.88)
-------- ---------- -------- ----------
Net loss............................................. $ (0.04) $ (1.15) $ (0.01) $ (0.79)
-------- ---------- -------- ----------
-------- ---------- -------- ----------
Market price per share(3):
High................................................. -- -- -- $ 18 3/4
Low.................................................. -- -- -- $ 14 1/16
</TABLE>
- ------------------
(1) The financial data for the second quarter of 1997 includes charges in
connection with the Safeline Acquisition, as discussed in Note 3, for the
sale of inventories revalued to fair value of $2,054 and in-process research
and development of $29,959. The second quarter also includes extraordinary
charges for the write-off of capitalized debt issuance fees of $9,552 as
discussed in Note 9.
(2) The financial data for the fourth quarter of 1996 represents the Company's
combined results of operations for the period from October 1, 1996 to
October 14, 1996 and for the period from October 15, 1996 to December 31,
1996. The period from October 15, 1996 to December 31, 1996 includes charges
in connection with the Acquisition, as discussed in Note 1, for the sale of
inventories revalued to fair value of $32,194 and in-process research and
development of $114,070. The fourth quarter 1997 data includes charges for
the early extinguishment of debt and the write-off of capitalized debt
issuance fees totaling $31,645 as further discussed in Note 9.
(3) The Company's shares began trading on the New York Stock Exchange on
November 14, 1997.
F-26
<PAGE>
METTLER-TOLEDO INTERNATIONAL INC.
(FORMERLY 'MT INVESTORS INC.')
INTERIM CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1997 AND MARCH 31, 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1997 1998
------------ ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........................................................... $ 23,566 $ 21,303
Trade accounts receivable, net...................................................... 153,619 152,396
Inventories......................................................................... 101,047 101,020
Deferred taxes...................................................................... 7,584 7,628
Other current assets and prepaid expenses........................................... 24,066 24,602
------------ ------------
Total current assets............................................................. 309,882 306,949
Property, plant and equipment, net.................................................... 235,262 224,230
Excess of cost over net assets acquired, net.......................................... 183,318 182,323
Non-current deferred taxes............................................................ 5,045 5,228
Other assets.......................................................................... 15,806 16,408
------------ ------------
Total assets..................................................................... $749,313 $735,138
------------ ------------
------------ ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Trade accounts payable.............................................................. $ 39,342 $ 32,166
Accrued and other liabilities....................................................... 80,844 94,389
Accrued compensation and related items.............................................. 43,214 38,938
Taxes payable....................................................................... 33,267 32,557
Deferred taxes...................................................................... 10,486 10,093
Short-term borrowings and current maturities of long-term debt...................... 56,430 54,952
------------ ------------
Total current liabilities........................................................ 263,583 263,095
Long-term debt........................................................................ 340,334 319,207
Non-current deferred taxes............................................................ 25,437 24,142
Other non-current liabilities......................................................... 91,011 91,181
------------ ------------
Total liabilities................................................................ 720,365 697,625
Minority interest..................................................................... 3,549 3,587
Shareholders' equity:
Preferred stock, $0.01 par value per share; authorized 10,000,000 shares............ -- --
Common stock, $0.01 par value per share; authorized 125,000,000 shares; issued
38,336,014 shares (excluding 64,467 shares held in treasury)..................... 383 383
Additional paid-in capital.......................................................... 284,630 284,630
Accumulated deficit................................................................. (224,152) (217,314)
Accumulated other comprehensive income.............................................. (35,462) (33,773)
------------ ------------
Total shareholders' equity....................................................... 25,399 33,926
Commitments and contingencies
------------ ------------
Total liabilities and shareholders' equity....................................... $749,313 $735,138
------------ ------------
------------ ------------
</TABLE>
See the accompanying notes to the interim consolidated financial statements
F-27
<PAGE>
METTLER-TOLEDO INTERNATIONAL INC.
(FORMERLY 'MT INVESTORS INC.')
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 AND 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
MARCH 31, MARCH 31,
1997 1998
----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Net sales......................................................................... $ 197,402 $ 215,655
Cost of sales..................................................................... 114,120 121,048
----------- -----------
Gross profit................................................................. 83,282 94,607
Research and development.......................................................... 10,832 10,795
Selling, general and administrative............................................... 60,193 65,112
Amortization...................................................................... 1,157 1,818
Interest expense.................................................................. 9,446 5,879
Other charges, net................................................................ 3,754 454
----------- -----------
Earnings (loss) before taxes and minority interest........................... (2,100) 10,549
Provision (benefit) for taxes..................................................... (1,087) 3,692
Minority interest................................................................. 109 19
----------- -----------
Net earnings (loss).......................................................... $ (1,122) $ 6,838
----------- -----------
----------- -----------
Basic earnings (loss) per common share:
Net earnings (loss).......................................................... $ (0.04) $ 0.18
Weighted average number of common shares..................................... 30,686,065 38,336,014
Diluted earnings (loss) per common share:
Net earnings (loss).......................................................... $ (0.04) $ 0.17
Weighted average number of common shares..................................... 30,686,065 40,600,109
</TABLE>
See the accompanying notes to the interim consolidated financial statements
F-28
<PAGE>
METTLER-TOLEDO INTERNATIONAL INC.
(FORMERLY 'MT INVESTORS INC.')
INTERIM CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
THREE MONTHS ENDED MARCH 31, 1997 AND 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
COMMON STOCK ACCUMULATED
ALL CLASSES ADDITIONAL OTHER
------------------- PAID-IN ACCUMULATED COMPREHENSIVE
SHARES AMOUNT CAPITAL DEFICIT INCOME TOTAL
---------- ------ ---------- ----------- ------------- -------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1996.............. 2,438,514 $ 25 $ 188,084 $(159,046) $ (16,637) $12,426
Comprehensive income:
Net loss................................ -- -- -- (1,122) -- (1,122)
Change in currency translation
adjustment........................... -- -- -- -- (8,322) (8,322)
-------
Comprehensive income...................... (9,444)
---------- ------ ---------- ----------- ------------- -------
Balance at March 31, 1997................. 2,438,514 $ 25 $ 188,084 $(160,168) $ (24,959) $ 2,982
---------- ------ ---------- ----------- ------------- -------
---------- ------ ---------- ----------- ------------- -------
Balance at December 31, 1997.............. 38,336,014 $383 $ 284,630 $(224,152) $ (35,462) $25,399
Comprehensive income:
Net earnings............................ -- -- -- 6,838 -- 6,838
Change in currency translation
adjustment........................... -- -- -- -- 1,689 1,689
-------
Comprehensive income...................... 8,527
---------- ------ ---------- ----------- ------------- -------
Balance at March 31, 1998................. 38,336,014 $383 $ 284,630 $(217,314) $ (33,773) $33,926
---------- ------ ---------- ----------- ------------- -------
---------- ------ ---------- ----------- ------------- -------
</TABLE>
See the accompanying notes to the interim consolidated financial statements
F-29
<PAGE>
METTLER-TOLEDO INTERNATIONAL INC.
(FORMERLY 'MT INVESTORS INC.')
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1997 AND 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31, MARCH 31,
1997 1998
----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss)................................................................... $(1,122) $ 6,838
Adjustments to reconcile net earnings (loss) to net cash
provided by operating activities:
Depreciation....................................................................... 5,821 5,877
Amortization....................................................................... 1,157 1,818
Net gain on disposal of long-term assets........................................... (53) (2,142)
Deferred taxes..................................................................... (1,446) (611)
Minority interest.................................................................. 109 19
Increase (decrease) in cash resulting from changes in:
Trade accounts receivable, net..................................................... (8,557) (164)
Inventories........................................................................ (7,819) (1,121)
Other current assets............................................................... (2,405) (2,247)
Trade accounts payable............................................................. (1,436) (6,729)
Accruals and other liabilities, net................................................ 23,832 10,623
----------- -----------
Net cash provided by operating activities..................................... 8,081 12,161
----------- -----------
Cash flows from investing activities:
Proceeds from sale of property, plant and equipment................................... 431 12,183
Purchase of property, plant and equipment............................................. (3,063) (7,417)
Acquisitions.......................................................................... -- (2,573)
Other investing activities............................................................ (98) --
----------- -----------
Net cash provided by (used in) investing activities........................... (2,730) 2,193
----------- -----------
Cash flows from financing activities:
Proceeds from borrowings.............................................................. 1,055 3,447
Repayments of borrowings.............................................................. (23,160) (19,922)
----------- -----------
Net cash used in financing activities......................................... (22,105) (16,475)
----------- -----------
Effect of exchange rate changes on cash and cash equivalents............................ (3,343) (142)
----------- -----------
Net decrease in cash and cash equivalents............................................... (20,097) (2,263)
Cash and cash equivalents:
Beginning of period................................................................... 60,696 23,566
----------- -----------
End of period......................................................................... $40,599 $21,303
----------- -----------
----------- -----------
</TABLE>
See the accompanying notes to the interim consolidated financial statements
F-30
<PAGE>
METTLER-TOLEDO INTERNATIONAL INC.
(FORMERLY 'MT INVESTORS INC.')
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS UNLESS OTHERWISE STATED)
1. BASIS OF PRESENTATION
Mettler-Toledo International Inc. ('Mettler Toledo' or the 'Company'),
formerly MT Investors Inc., is a global supplier of precision instruments and is
a manufacturer and marketer of weighing instruments for use in laboratory,
industrial and food retailing applications. The Company also manufactures and
sells certain related analytical and measurement technologies. The Company's
manufacturing facilities are located in Switzerland, the United States, Germany,
the U.K. and China. The Company's principal executive offices are located in
Greifensee, Switzerland.
The Company was incorporated by AEA Investors Inc. ('AEA') and
recapitalized to effect the acquisition (the 'Acquisition') of the
Mettler-Toledo Group from Ciba-Geigy AG ('Ciba') and its wholly owned
subsidiary, AG fur Prazisionsinstrumente ('AGP') on October 15, 1996. 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 accompanying interim consolidated financial statements have been
prepared in accordance with generally accepted accounting principles in the
United States of America on a basis which reflects the interim consolidated
financial statements of the Company. The interim consolidated financial
statements have been prepared without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations. The interim consolidated
financial statements as of March 31, 1998 and for the three month periods ended
March 31, 1997 and 1998 should be read in conjunction with the December 31, 1996
and 1997 consolidated financial statements and the notes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1997.
The accompanying interim consolidated financial statements reflect all
adjustments (consisting of only normal recurring adjustments) which, in the
opinion of management, are necessary for a fair statement of the results of the
interim periods presented. Operating results for the three months ended March
31, 1998 are not necessarily indicative of the results to be expected for the
full year ending December 31, 1998.
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.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Inventories
Inventories are valued at the lower of cost or market. Cost, which includes
direct materials, labor and overhead plus indirect overhead, is determined using
either the first in, first out (FIFO) or weighted average cost methods and to a
lesser extent the last in, first out (LIFO) method.
F-31
<PAGE>
METTLER-TOLEDO INTERNATIONAL INC.
(FORMERLY 'MT INVESTORS INC.')
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS UNLESS OTHERWISE STATED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Inventories consisted of the following at December 31, 1997 and March 31,
1998:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1997 1998
------------ ---------
<S> <C> <C>
Raw materials and parts............................................ $ 42,435 $ 39,760
Work in progress................................................... 29,746 32,602
Finished goods..................................................... 28,968 28,763
------------ ---------
101,149 101,125
LIFO reserve....................................................... (102) (105)
------------ ---------
$101,047 $ 101,020
------------ ---------
------------ ---------
</TABLE>
Earnings (Loss) Per Common Share
Effective December 31, 1997, the Company adopted the Statement of Financial
Accounting Standards No. 128, 'Earnings per Share' ('SFAS 128'). Accordingly,
basic and diluted earnings (loss) per common share data for each period
presented have been determined in accordance with the provisions of SFAS 128. In
accordance with the treasury stock method, the Company has included 2,264,095
equivalent shares related to 4,408,740 outstanding options to purchase shares of
common stock, as described in Note 11 in the Company's Annual Report on Form
10-K for the year ended December 31, 1997, in the calculation of diluted
weighted average number of common shares for the period ended March 31, 1998.
Such common stock equivalents were not included in the computation of diluted
loss per common share for the period ended March 31, 1997, as the effect is
antidilutive. The Company retroactively adjusted its weighted average common
shares for the purpose of the basic and diluted loss per common share
computations for the 1997 period pursuant to SFAS 128 and Securities and
Exchange Commission Staff Accounting Bulletin No. 98 issued in February 1998.
Reporting Comprehensive Income
Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130 ('SFAS 130'), 'Reporting Comprehensive Income.'
SFAS 130 requires that changes in the amounts of certain items, including
foreign currency translation adjustments, be shown in the financial statements.
The Company has displayed comprehensive income and its components in the Interim
Consolidated Statements of Shareholders' Equity. Prior year financial statements
have been restated to reflect the application of SFAS 130 as required by the
standard. The adoption of SFAS 130 did not have a material effect on the
Company's consolidated financial statements.
F-32
<PAGE>
------------------------------------------------------
------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY, THE SELLING SHAREHOLDERS OR THE UNDERWRITERS. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE
COMMON STOCK IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION
THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR
IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.......................................... 3
Risk Factors................................................ 11
The Company................................................. 15
Use of Proceeds............................................. 16
Dividend Policy............................................. 16
Price Range of Common Stock................................. 17
Capitalization.............................................. 17
Selected Historical Financial Information................... 18
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 21
Industry.................................................... 31
Business.................................................... 34
Management.................................................. 48
Certain Relationships and Related Transactions.............. 53
Principal and Selling Shareholders.......................... 54
Description of Credit Agreement............................. 56
Description of Capital Stock................................ 57
Shares Eligible for Future Sale............................. 59
Certain United States Federal Tax Considerations for
Non-United States Holders................................. 60
Underwriting................................................ 63
Legal Matters............................................... 65
Independent Auditors........................................ 65
Available Information....................................... 65
Incorporation of Certain Documents by Reference............. 66
Index to Consolidated Financial Statements.................. F-1
</TABLE>
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
10,000,000 SHARES
[LOGO]
METTLER-TOLEDO
INTERNATIONAL INC.
COMMON STOCK
---------------------------
P R O S P E C T U S
---------------------------
MERRILL LYNCH & CO.
BT ALEX. BROWN
CREDIT SUISSE FIRST BOSTON
GOLDMAN, SACHS & CO.
SALOMON SMITH BARNEY
, 1998
------------------------------------------------------
------------------------------------------------------
<PAGE>
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO THE REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED JUNE 4, 1998
PROSPECTUS [LOGO]
10,000,000 SHARES
METTLER-TOLEDO INTERNATIONAL INC.
COMMON STOCK
------------------------
All of the 10,000,000 shares of Common Stock of Mettler-Toledo
International Inc. ('Mettler-Toledo' or the 'Company') offered hereby are being
sold by certain shareholders (the 'Selling Shareholders') of the Company. See
'Principal and Selling Shareholders.' The Company is not selling shares of
Common Stock in this Offering and will not receive any of the proceeds from the
sale of Common Stock offered hereby.
Of the 10,000,000 shares of Common Stock offered hereby, 2,000,000 shares
are being offered for sale initially outside the United States and Canada by the
International Managers and 8,000,000 shares are being offered for sale initially
in a concurrent offering in the United States and Canada by the U.S.
Underwriters. The initial public offering price and the underwriting discount
per share will be identical for both Offerings. See 'Underwriting.'
The Common Stock is listed on the New York Stock Exchange under the symbol
'MTD.' On June 3, 1998, the last sale price of the Common Stock as reported on
the New York Stock Exchange was $19 3/4 per share. See 'Price Range of Common
Stock.'
SEE 'RISK FACTORS' BEGINNING ON PAGE 11 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) SELLING SHAREHOLDERS(2)
<S> <C> <C> <C>
Per Share... $ $ $
Total(3).... $ $ $
</TABLE>
(1) The Company and the Selling Shareholders have agreed to indemnify the
several Underwriters against certain liabilities, including certain
liabilities under the Securities Act of 1933, as amended. See
'Underwriting.'
(2) The Company has agreed to pay certain expenses of the Selling Shareholders
estimated at $ .
(3) The Selling Stockholders have granted the International Managers and the
U.S. Underwriters options to purchase up to an additional 300,000 shares and
1,200,000 shares of Common Stock, respectively, in each case exercisable
within 30 days after the date hereof, solely to cover over-allotments, if
any. If such options are exercised in full, the total Price to Public,
Underwriting Discount and Proceeds to Company will be $ , $
and $ , respectively. See 'Underwriting.'
------------------------
The shares of Common Stock are offered by the several Underwriters, subject
to prior sale, when, as and if issued to and accepted by them, subject to
approval of certain legal matters by counsel for the Underwriters and certain
other conditions. The Underwriters reserve the right to withdraw, cancel or
modify such offer and to reject orders in whole or in part. It is expected that
delivery of the shares of Common Stock will be made in New York, New York on or
about , 1998.
------------------------
MERRILL LYNCH INTERNATIONAL
BT ALEX. BROWN INTERNATIONAL
CREDIT SUISSE FIRST BOSTON
GOLDMAN SACHS INTERNATIONAL
SALOMON SMITH BARNEY
INTERNATIONAL
------------------------
The date of this Prospectus is , 1998.
<PAGE>
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
UNDERWRITING
Merrill Lynch International, BT Alex. Brown International, a Division of
Bankers Trust International PLC, Credit Suisse First Boston (Europe) Limited,
Goldman Sachs International and Smith Barney Inc. are acting as the
International Managers (the 'International Managers') for the International
Offering. Subject to the terms and conditions set forth in an international
purchase agreement (the 'International Purchase Agreement') among the Company,
the Selling Shareholders and the International Managers, and concurrently with
the sale of 8,000,000 shares of Common Stock to the U.S. Underwriters (as
defined below), the Selling Shareholders have agreed to sell to the
International Managers, and each of the International Managers severally and not
jointly has agreed to purchase from the Selling Shareholders the number of
shares of Common Stock set forth opposite its name below.
<TABLE>
<CAPTION>
NUMBER OF
INTERNATIONAL MANAGER SHARES
- ------------------------------------------------------------------------------------------- ---------
<S> <C>
Merrill Lynch International................................................................
BT Alex. Brown International,
a Division of Bankers Trust International PLC............................................
Credit Suisse First Boston (Europe) Limited................................................
Goldman Sachs International................................................................
Smith Barney Inc. .........................................................................
---------
Total......................................................................... 2,000,000
---------
---------
</TABLE>
The Company and the Selling Shareholders have also entered into a U.S.
purchase agreement (the 'U.S. Purchase Agreement') with Merrill Lynch, Pierce,
Fenner & Smith Incorporated ('Merrill Lynch'), BT Alex. Brown Incorporated,
Credit Suisse First Boston Corporation, Goldman, Sachs & Co. and Smith Barney
Inc. in the United States and Canada (the 'U.S. Underwriters' and, together with
the International Managers, the 'Underwriters'). Subject to the terms and
conditions set forth in the U.S. Purchase Agreement, and concurrently with the
sale of 2,000,000 shares of Common Stock to the International Managers pursuant
to the International Purchase Agreement, the Selling Shareholders have agreed to
sell to the U.S. Underwriters, and the U.S. Underwriters severally have agreed
to purchase from the Selling Shareholders, an aggregate of 8,000,000 shares of
Common Stock. The initial public offering price per share and the total
underwriting discount per share of Common Stock are identical under the
International Purchase Agreement and the U.S. Purchase Agreement.
In the International Purchase Agreement and the U.S. Purchase Agreement,
the several International Managers and the several U.S. Underwriters,
respectively, have agreed, subject to the terms and conditions set forth
therein, to purchase all of the shares of Common Stock being sold pursuant to
each such agreement if any of the shares of Common Stock being sold pursuant to
such agreement are purchased. Under certain circumstances, under the
International Purchase Agreement and the U.S. Purchase Agreement, the
commitments of non-defaulting Underwriters may be increased. The closings with
respect to the sale of shares of Common Stock to be purchased by the
International Managers and the U.S. Underwriters are conditioned upon one
another.
The Lead Managers have advised the Company and the Selling Shareholders
that the International Managers propose initially to offer the shares of Common
Stock to the public at the initial public offering price set forth on the cover
page of this Prospectus, and to certain dealers at such price less a concession
not in excess of $ per share of Common Stock. The International
Managers may allow, and such dealers may reallow, a discount not in excess of
$ per share of Common Stock on sales to certain other dealers. After
the initial public offering, the public offering price, concession and discount
may be changed.
The Selling Shareholders also have granted options to the International
Managers, exercisable for 30 days after the date of this Prospectus, to purchase
up to an aggregate of 300,000 additional shares of Common Stock at the initial
public offering price set forth on the cover page of this Prospectus, less the
underwriting discount. The International Managers may exercise these options
solely to cover over-allotments, if any, made on the sale of the Common Stock
offered hereby. To the extent that the International Managers exercise these
options, each International Manager will be obligated, subject to certain
conditions, to purchase a number of additional shares of Common Stock
proportionate to such International Manager's initial amount reflected in the
foregoing table. The Selling Shareholders also have granted options to the U.S.
Underwriters, exercisable for 30 days after the
63
<PAGE>
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
date of this Prospectus, to purchase up to an aggregate of 1,200,000 additional
shares of Common Stock to cover over-allotments, if any, on terms similar to
those granted to the International Managers.
The Company, the Company's executive officers and directors and the Selling
Shareholders, who will collectively hold, after the Offerings, 14,262,548 shares
of Common Stock (assuming no exercise of the Underwriters' over-allotment
option) will agree, subject to certain exceptions, not to directly or indirectly
(i) offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant for the sale of or otherwise dispose of or transfer any shares of Common
Stock or securities convertible into or exchangeable or exercisable for Common
Stock, whether now owned or thereafter acquired by the person executing the
agreement or with respect to which the person executing the agreement thereafter
acquires the power of disposition, or file a registration statement under the
Securities Act with respect to the foregoing or (ii) enter into any swap or
other agreement that transfers, in whole or in part, the economic consequence of
ownership of the Common Stock whether any such swap or transaction is to be
settled by delivery of Common Stock or other securities, in cash or otherwise,
without the prior written consent of Merrill Lynch on behalf of the Underwriters
for a period of 90 days after the date of this Prospectus. See 'Shares Eligible
for Future Sale.'
The International Managers and the U.S. Underwriters have entered into an
intersyndicate agreement (the 'Intersyndicate Agreement') that provides for the
coordination of their activities. Pursuant to the Intersyndicate Agreement, the
International Managers and the U.S. Underwriters are permitted to sell shares of
Common Stock to each other for purposes of resale at the initial public offering
price, less an amount not greater than the selling concession. Under the terms
of the Intersyndicate Agreement, the U.S. Underwriters and any dealer to whom
they sell shares of Common Stock will not offer to sell or sell shares of Common
Stock to persons who are non-U.S. or non-Canadian persons or to persons they
believe intend to resell to persons who are non-U.S. or non-Canadian persons,
and the International Managers and any dealer to whom they sell shares of Common
Stock will not offer to sell or sell shares of Common Stock to U.S. persons or
to Canadian persons or to persons they believe intend to resell to U.S. or
Canadian persons, except in the case of transactions pursuant to the
Intersyndicate Agreement.
The Company and the Selling Shareholders have agreed to indemnify the
International Managers and the U.S. Underwriters against certain liabilities,
including certain liabilities under the Securities Act, or to contribute to
payments the U.S. Underwriters and the International Managers may be required to
make in respect thereof.
Until the distribution of the Common Stock is completed, rules of the
Securities and Exchange Commission may limit the ability of the Underwriters and
certain selling group members to bid for and purchase the Common Stock. As an
exception to these rules, the U.S. Underwriters are permitted to engage in
certain transactions that stabilize the price of the Common Stock. Such
transactions consist of bids or purchases for the purpose of pegging, fixing or
maintaining the price of the Common Stock.
If the Underwriters create a short position in the Common Stock in
connection with the Offerings, i.e., if they sell more shares of Common Stock
than are set forth on the cover page of this Prospectus, the U.S. Underwriters
may reduce that short position by purchasing Common Stock in the open market.
The U.S. Underwriters may also elect to reduce any short position by exercising
all or part of the over-allotment option described above.
The U.S. Underwriters may also impose a penalty bid on certain Underwriters
and selling group members. This means that if the U.S. Underwriters purchase
shares of Common Stock in the open market to reduce the Underwriters' short
position or to stabilize the price of the Common Stock, they may reclaim the
amount of the selling concession from the Underwriters and selling group members
who sold those shares as part of the Offerings.
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases. The imposition of a penalty bid
might also have an effect on the price of the Common Stock to the extent that it
discourages resales of the Common Stock.
Neither the Company nor any of the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the Common Stock. In addition, neither
the Company nor any of the Underwriters makes any representation that the U.S.
Underwriters
64
<PAGE>
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
will engage in such transactions or that such transactions, once commenced, will
not be discontinued without notice.
Each International Manager has agreed that (i) it has not offered or sold
and, prior to the expiration of the period of six months from the Closing Date,
will not offer or sell any shares of Common Stock to persons in the United
Kingdom, except to persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which do not
constitute an offer to the public in the United Kingdom within the meaning of
the Public Offers of Securities Regulations 1995; (ii) it has complied and will
comply with all applicable provisions of the Financial Services Act 1986 with
respect to anything done by it in relation to the Common Stock in, from or
otherwise involving the United Kingdom; and (iii) it has only issued or passed
on and will only issue or pass on in the United Kingdom any document received by
it in connection with the issuance of Common Stock to a person who is of a kind
described in Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1996 or is a person to whom such document may
otherwise lawfully be issued or passed on.
No action has been or will be taken in any jurisdiction (except in the
United States) that would permit a public offering of the shares of Common
Stock, or the possession, circulation or distribution of this Prospectus or any
other material relating to the Company, the Selling Shareholders or shares of
Common Stock in any jurisdiction where action for that purpose is required.
Accordingly, the shares of Common Stock may not be offered or sold, directly or
indirectly, and neither this Prospectus nor any other offering material or
advertisements in connection with the shares of Common Stock may be distributed
or published, in or from any country or jurisdiction except in compliance with
any applicable rules and regulations of any such country or jurisdiction.
Purchasers of the shares offered hereby may be required to pay stamp taxes
and other charges in accordance with the laws and practices of the country of
purchase in addition to the offering price set forth on the cover page hereof.
The Underwriters have from time to time provided investment banking
financial advisory services to the Company and AEA Investors and its affiliates,
for which they have received customary compensation, and may continue to do so
in the future. Merrill Lynch served as lead manager and Credit Suisse First
Boston Corporation served as a co-manager of the offering of the Notes in
October 1996, Merrill Lynch served as the Arranger and Documentation Agent and
an affiliate of Credit Suisse First Boston Corporation served as co-agent in
connection with the Company's previous credit facility and the Credit Agreement
for which they received customary compensation. An affiliate of Credit Suisse
First Boston Corporation and Merrill Lynch and its affiliates were lenders under
the Company's previous credit facility and are lenders under the Credit
Agreement. Merrill Lynch, BT Alex. Brown Incorporated, Credit Suisse First
Boston Corporation and Goldman, Sachs & Co and certain of their affiliates acted
as underwriters in connection with the IPO.
LEGAL MATTERS
Certain legal matters with respect to the validity of the Common Stock
offered hereby will be passed upon for the Company by Fried, Frank, Harris,
Shriver & Jacobson (a partnership including professional corporations), London,
England. Certain legal matters relating to the Offerings will be passed upon for
the Underwriters by Debevoise & Plimpton, New York, New York. A partnership in
which partners of Fried, Frank, Harris, Shriver & Jacobson are partners is a
shareholder of the Company.
INDEPENDENT AUDITORS
The consolidated financial statements of Mettler-Toledo International Inc.
and subsidiaries (as defined in Note 1 to the Audited Consolidated Financial
Statements) as of December 31, 1996 and 1997 and for the year ended December 31,
1995, for the period January 1, 1996 to October 14, 1996, for the period October
15, 1996 to December 31, 1996 and for the year ended December 31, 1997, included
herein and incorporated in this Prospectus by reference to the Company's Annual
Report on Form 10-K for the year ended December 31, 1997, have been audited by
KPMG Fides Peat, independent auditors, as set forth in their reports appearing
elsewhere and have been so included and incorporated in reliance upon such
reports given upon the authority of such firm as experts in accounting and
auditing.
65
<PAGE>
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
'Commission') a Registration Statement on Form S-3 with respect to the Common
Stock offered hereby under the Securities Act. This Prospectus, which
constitutes part of the Registration Statement, does not contain all of the
information set forth in the Registration Statement, certain items of which are
omitted as permitted by the rules and regulations of the Commission. For further
information pertaining to the Company and the Common Stock offered hereby,
reference is made to the Registration Statement, including the exhibits thereto
and the financial statements, notes and schedules filed as a part thereof.
Statements contained in this Prospectus regarding the contents of any contract
or other document referred to herein or therein are not necessarily complete,
and in each instance reference is made to the copy of such contract or other
document filed as an exhibit to the Registration Statement or such other
document, each such statement being qualified in all respects by such reference.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the 'Exchange Act'), and, in accordance
therewith, files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information, as well as the
Registration Statement and the exhibits and schedules thereto, may be inspected,
without charge, at the public reference facility maintained by the Commission at
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and
at the Commission's regional offices located at Seven World Trade Center, New
York, New York 10048 and Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511. Copies of such material may also be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. Such materials can
also be inspected at the offices of the New York Stock Exchange, Inc., 20 Broad
Street, New York, New York 10005 or on the Commission's site on the Internet at
http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission pursuant
to the Exchange Act (File No. 0-22493) are incorporated herein by reference:
(1) The Company's Annual Report on Form 10-K for the year ended
December 31, 1997;
(2) The Company's Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 1998; and
(3) The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A, as amended, filed with the Commisson on
December 16, 1997, which incorporates by reference the description of the
Company's Common Stock contained in its Registration Statement, as amended,
on Form S-1 (Reg. No. 333-35597) filed with the Commission on November 10,
1997.
All other documents filed by the Company with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
this Prospectus and prior to the termination of this offering shall be deemed to
be incorporated by reference herein and to be a part hereof from the respective
dates of the filing of such reports and documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extend that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to any person, including any
beneficial owner, to whom this Prospectus is delivered, upon the written or oral
request of such person, a copy of any and all information incorporated by
reference in this Prospectus, other than exhibits to such information (unless
such exhibits are specifically incorporated by reference in such documents).
Such requests should be directed to William P. Donnelly, Mettler-Toledo
International Inc., Im Langacher, P.O. Box MT-100, CH 8606 Greifensee,
Switzerland (telephone 011-41-1-944-22-11).
66
<PAGE>
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
------------------------------------------------------
------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY, THE SELLING SHAREHOLDERS OR THE UNDERWRITERS. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE
COMMON STOCK IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION
THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR
IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.......................................... 3
Risk Factors................................................ 11
The Company................................................. 15
Use of Proceeds............................................. 16
Dividend Policy............................................. 16
Price Range of Common Stock................................. 17
Capitalization.............................................. 17
Selected Historical Financial Information................... 18
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 21
Industry.................................................... 31
Business.................................................... 34
Management.................................................. 48
Certain Relationships and Related Transactions.............. 53
Principal and Selling Shareholders.......................... 54
Description of Credit Agreement............................. 56
Description of Capital Stock................................ 57
Shares Eligible for Future Sale............................. 59
Certain United States Federal Tax Considerations for
Non-United States Holders................................. 60
Underwriting................................................ 63
Legal Matters............................................... 65
Independent Auditors........................................ 65
Available Information....................................... 66
Incorporation of Certain Documents by Reference............. 66
Index to Consolidated Financial Statements.................. F-1
</TABLE>
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
10,000,000 SHARES
[LOGO]
METTLER-TOLEDO
INTERNATIONAL INC.
COMMON STOCK
---------------------------
P R O S P E C T U S
---------------------------
MERRILL LYNCH INTERNATIONAL
BT ALEX. BROWN INTERNATIONAL
CREDIT SUISSE FIRST BOSTON
GOLDMAN SACHS INTERNATIONAL
SALOMON SMITH BARNEY
INTERNATIONAL
, 1998
------------------------------------------------------
------------------------------------------------------
<PAGE>
METTLER-TOLEDO INTERNATIONAL INC.
PRIVATE PLACEMENT IN CANADA OF SHARES OF COMMON STOCK
THE OFFERING
The shares of Common Stock (the 'Common Stock') of Mettler-Toledo
International Inc. (the 'Company'), a Delaware corporation, being offered hereby
are part of an offering by certain shareholders of the Company (the 'Selling
Shareholders') of 10,000,000 shares of Common Stock (11,500,000 shares of Common
Stock if the over-allotment options granted to the U.S. Underwriters and the
International Managers by the Selling Shareholders are exercised in full). Of
the 10,000,000 shares of Common Stock offered hereby, 8,000,000 shares of Common
Stock are being offered initially in the United States and Canada by the U.S.
Underwriters and 2,000,000 shares of Common Stock are being offered initially in
a concurrent offering outside the United States and Canada by the International
Managers.
Attached hereto is a copy of the prospectus (the 'U.S. Prospectus') filed
with the Securities and Exchange Commission in the United States regarding the
offering being made in the United States. The offering in Canada is being made
solely in the province of Ontario.
RESALE RESTRICTIONS
The distribution of the shares of Common Stock in Canada is being made on a
private placement basis. Accordingly, any resale of such shares of Common Stock
must be made in accordance with an exemption from the registration and
prospectus requirements of applicable securities laws, which vary depending on
the province. Purchasers of the shares of Common Stock are advised to seek legal
advice prior to any resale of the shares of Common Stock.
REPRESENTATION BY PURCHASERS
Confirmations of the acceptance of offers to purchase the shares of Common
Stock will be sent to purchasers in Canada who have not withdrawn their offers
to purchase prior to the issuance of such confirmations. Each purchaser who
receives a purchase confirmation will, by the purchaser's receipt thereof, be
deemed to represent to the Company, the Selling Shareholders and the dealer from
whom such purchase confirmation is received that such purchaser is a person or
company to which shares of Common Stock may be sold without the benefit of a
prospectus qualified under applicable provincial securities laws.
ENFORCEMENT OF LEGAL RIGHTS
The shares of Common Stock being offered are those of a foreign issuer and
Ontario purchasers will not receive the contractual right of action prescribed
by section 32 of the Regulation under the Securities Act (Ontario). As a result,
Ontario purchasers must rely on other remedies that may be available, including
common law rights of action for damages or rescission or rights of action under
the civil liability provisions of the U.S. federal securities laws.
All of the Company's directors and officers, the Selling Shareholders and
the experts named herein may be located outside of Canada and, as a result, it
may not be possible for Canadian purchasers to effect service of process within
Canada upon the Company or such persons. All or a substantial portion of the
assets of the Company and such persons may be located outside of Canada and, as
a result, it may not be possible to satisfy a judgment against the Company or
such persons in Canada or to enforce a judgment obtained in Canadian courts
against the Company or such persons outside of Canada.
RELATIONSHIP BETWEEN THE COMPANY AND CERTAIN U.S. UNDERWRITERS
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED ('MERRILL LYNCH') AND
ITS AFFILIATES AND AN AFFILIATE OF CREDIT SUISSE FIRST BOSTON CORPORATION
('CREDIT SUISSE') ARE LENDERS UNDER THE CREDIT AGREEMENT (AS DEFINED IN THE
ATTACHED U.S. PROSPECTUS). SEE 'UNDERWRITING' AND 'DESCRIPTION OF CREDIT
AGREEMENT' IN THE ATTACHED U.S. PROSPECTUS.
AS A RESULT OF THE FOREGOING RELATIONSHIPS, THE COMPANY MAY BE VIEWED AS A
'RELATED ISSUER' AND/OR 'CONNECTED ISSUER' OF MERRILL LYNCH AND/OR CREDIT
SUISSE.
The offering of shares of Common Stock under the attached U.S. Prospectus
and the terms of this offering were determined without the involvement of
Merrill Lynch and Credit Suisse other than in their capacity as U.S.
Underwriters, and none of the proceeds of this offering, apart from a portion of
the customary underwriting discounts and commissions, will be applied for the
benefit of Merrill Lynch or Credit Suisse.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION*
The following table shows the expenses, other than underwriting discounts
and commissions, to be incurred by the Company in connection with the sale and
distribution of securities being registered by the Company.
<TABLE>
<S> <C>
SEC Registration Fee.............................................................. $ 98,978
NASD Filing Fee................................................................... 30,500
Blue Sky Fees and Expenses........................................................ 5,000
Legal Fees and Expenses........................................................... 225,000
Accounting Fees and Expenses...................................................... 50,000
Printing Expenses................................................................. 200,000
Miscellaneous Expenses............................................................ 40,522
--------
Total........................................................................... $650,000
--------
--------
</TABLE>
- ------------------
* Except for the SEC registration fee and the NASD filing fee, all of the
foregoing expenses have been estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company, as a Delaware corporation, is empowered by Section 145 of the
DGCL, subject to the procedures and limitations stated therein, to indemnify any
person against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with any threatened, pending or completed action, suit or proceeding in which
such person is made or threatened to be made a party by reason of his being or
having been a director, officer, employee or agent of the Company or his serving
at the request of the Company as a director, officer, employee or agent of
another company or other entity. The statute provides that indemnification
pursuant to its provisions is not exclusive of other rights of indemnification
to which a person may be entitled under any by-law, agreement, vote of
stockholders or disinterested directors, or otherwise. The Amended By-laws
provide for indemnification by the Company of its directors and officers to the
full extent authorized by the DGCL. Pursuant to Section 145 of the DGCL, the
Company has purchased insurance on behalf of its present and former directors
and officers against liabilities asserted against and incurred by them in such
capacity or arising out of their status as such.
Pursuant to specific authority granted by Section 102 of the DGCL, the
Amended and Restated Certificate of Incorporation contains the following
provision regarding indemnification of directors:
'To the fullest extent permitted by the Delaware General Corporation
Law as the same exists or may hereafter be amended, a Director of the
Corporation shall not be liable to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a Director.'
The Amended By-laws contain the following provision regarding
indemnification of directors and officers:
'The Corporation shall indemnify to the full extent authorized by law
any person made or threatened to be made a party to an action, suit or
proceeding, whether criminal, civil administrative or investigative, by
reason of the fact that he, his testator or intestate is or was a director,
officer, employee or agent of the Corporation or is or was serving, at the
request of the Corporation, as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise.'
The Company has entered into agreements to provide indemnification for
their directors and certain officers in addition to the indemnification provided
for in the Amended and Restated Certificate of Incorporation and Amended
By-laws. These agreements, among other things, indemnify the directors, to the
fullest extent provided by Delaware law, for certain expenses (including
attorneys' fees), losses, claims, liabilities, judgments, fines and settlement
amounts incurred by such indemnitee in any action or proceeding, including any
action by or in the right of the Company, on account of services as a director
or officer of any affiliate of the Company, or as a
II-1
<PAGE>
director or officer of any other company or enterprise that the indemnitee
provides services to at the request of the Company.
The Management Agreement between Mettler-Toledo, Inc. and AEA Investors
provides for indemnification of employees of AEA Investors who serve as
directors of the Company.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ---------- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
1.1 -- Form of U.S. Purchase Agreement.
1.2 -- Form of International Purchase Agreement.
2.1 -- Stock Purchase Agreement between AEA-MT Inc., AG fur Prazisionsinstrumente and Ciba-Geigy AG, as
amended (Filed as Exhibit 2.1 to the Registration Statement, as amended, on Form S-1, of the
Company (Reg. No. 33-09621) and incorporated herein by reference).
2.2 -- Share Sale and Purchase Agreement relating to the acquisition of the entire issued share capital
of Safeline Limited (Filed as Exhibit 2 to the Current Report on Form 8-K of Mettler-Toledo
Holding Inc. dated June 3, 1997 and incorporated herein by reference).
4.3 -- Specimen Form of the Company's Common Stock Certificate Filed as Exhibit 4.3 to the Registration
Statement, as amended, on Form S-1 of the Company (Reg. No. 333-35597) and incorporated herein by
reference).
5.1* -- Opinion of Fried, Frank, Harris, Shriver & Jacobson, counsel to the Company, as to the legality of
the securities being registered.
23.1* -- Consent of Fried, Frank, Harris, Shriver & Jacobson (included in Exhibit 5.1).
23.2 -- Consent of KPMG Fides Peat, independent auditors.
24.1** -- Powers of Attorney.
</TABLE>
- ------------------
* To be filed by amendment
** Previously filed
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of Prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
Prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of Prospectus shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-2
<PAGE>
(3) The undersigned registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
(4) The registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (3) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(5) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus within one
business day of receipt of such request, and to send the incorporated documents
by first class mail or other equally prompt means. This includes information
contained in documents filed subsequent to the effective date of the
registration statement through the date of responding to the request.
(6) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED IN THE CITY OF NEW YORK, STATE OF NEW YORK, ON THE 4TH OF JUNE, 1998.
METTLER-TOLEDO INTERNATIONAL INC.
By: /s/ WILLIAM P. DONNELLY
----------------------------------
William P. Donnelly
Chief Financial Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ -------------------------------------------------- ------------
<S> <C> <C>
/s/ ROBERT F. SPOERRY President and Chief Executive Officer June 4, 1998
- ------------------------------------------ (Principal Executive Officer), Chairman of the
Robert F. Spoerry Board of Directors
/s/ WILLIAM P. DONNELLY Chief Financial Officer June 4, 1998
- ------------------------------------------
William P. Donnelly
/s/ PHILIP CALDWELL Director June 4, 1998
- ------------------------------------------
Philip Caldwell
/s/ REGINALD H. JONES Director June 4, 1998
- ------------------------------------------
Reginald H. Jones
/s/ JOHN D. MACOMBER Director June 4, 1998
- ------------------------------------------
John D. Macomber
/s/ JOHN M. MANSER Director June 4, 1998
- ------------------------------------------
John M. Manser
/s/ LAURENCE Z. Y. MOH Director June 4, 1998
- ------------------------------------------
Laurence Z. Y. Moh
/s/ THOMAS P. SALICE Director June 4, 1998
- ------------------------------------------
Thomas P. Salice
</TABLE>
II-4
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NO.
- ---------- -------------------------------------------------------------------------------------------- -----------
<S> <C> <C> <C>
1.1 -- Form of U.S. Purchase Agreement.
1.2 -- Form of International Purchase Agreement.
2.1 -- Stock Purchase Agreement between AEA-MT Inc., AG fur Prazisionsinstrumente and
Ciba-Geigy AG, as amended (Filed as Exhibit 2.1 to the Registration Statement, as
amended, on Form S-1, of the Company (Reg. No. 33-09621) and incorporated herein by
reference).
2.2 -- Share Sale and Purchase Agreement relating to the acquisition of the entire issued
share capital of Safeline Limited (Filed as Exhibit 2 to the Current Report on Form
8-K of Mettler-Toledo Holding Inc. dated June 3, 1997 and incorporated herein by
reference).
4.3 -- Specimen Form of the Company's Common Stock Certificate Filed as Exhibit 4.3 to the
Registration Statement, as amended, on Form S-1 of the Company (Reg. No. 333-35597)
and incorporated herein by reference).
5.1* -- Opinion of Fried, Frank, Harris, Shriver & Jacobson, counsel to the Company, as to the
legality of the securities being registered.
23.1* -- Consent of Fried, Frank, Harris, Shriver & Jacobson (included in Exhibit 5.1).
23.2 -- Consent of KPMG Fides Peat, independent auditors.
24.1** -- Powers of Attorney.
</TABLE>
- ------------------
* To be filed by amendment
** Previously filed
<PAGE>
Exhibit 1.1
METTLER-TOLEDO INTERNATIONAL INC.
(a Delaware corporation)
[ ] Shares of Common Stock
FORM OF U.S. PURCHASE AGREEMENT
-------------------------------
Dated: [ ], 1998
<PAGE>
Table of Contents
<TABLE>
<S> <C>
U.S. PURCHASE AGREEMENT..........................................................................1
SECTION 1. Representations and Warranties.............................................4
(a) Representations and Warranties by the Company and Mettler..................4
(i) Compliance with Registration Requirements........................4
(ii) Independent Accountants..........................................5
(iii) Financial Statements.............................................5
(iv) No Material Adverse Change in Business...........................5
(v) Good Standing....................................................6
(vi) Good Standing of Subsidiaries....................................6
(vii) Capitalization...................................................7
(viii) Authorization of Agreement.......................................7
(ix) Description of Securities........................................7
(x) Absence of Defaults and Conflicts................................7
(xi) Absence of Labor Dispute.........................................8
(xii) Absence of Proceedings...........................................8
(xiii) Accuracy of Exhibits.............................................9
(xiv) Possession of Intellectual Property..............................9
(xv) Absence of Further Requirements..................................9
(xvi) Possession of Licenses and Permits...............................9
(xvii) Title to Property...............................................10
(xviii) Investment Company Act..........................................10
(xix) Environmental Laws..............................................10
(xx) Registration Rights.............................................11
(xxi) Taxes...........................................................11
(xxii) Accounting Controls.............................................11
(xxiii) Insurance.......................................................12
(xxiv) Stabilization or Manipulation...................................12
(xxv) Certain Relationships...........................................12
(xxvi) No Offering Material............................................12
(xxvii) Suppliers.......................................................12
(b) Representations and Warranties by the Selling Shareholders................12
(c) Officer's Certificates....................................................15
SECTION 2. Sale and Delivery to U.S. Underwriters; Closing...........................15
(a) Initial Securities........................................................15
(b) Option Securities.........................................................15
(c) Payment...................................................................16
(d) Denominations; Registration...............................................17
</TABLE>
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<TABLE>
<S> <C>
SECTION 3. Covenants of the Company..................................................17
(a) Compliance with Securities Regulations and
Commission Requests.......................................................17
(b) Filing of Amendments......................................................17
(c) Delivery of Registration Statements.......................................18
(d) Delivery of Prospectuses..................................................18
(e) Continued Compliance with Securities Laws.................................18
(f) Blue Sky Qualifications...................................................19
(g) Rule 158..................................................................19
(h) Restriction on Sale of Securities.........................................19
(i) Reporting Requirements....................................................19
SECTION 4. Payment of Expenses.......................................................20
(a) Expenses..................................................................20
(b) Expenses of the Selling Shareholders......................................20
(c) Termination of Agreement..................................................20
SECTION 5. Conditions of U.S. Underwriters' Obligations..............................21
(a) Effectiveness of Registration Statement...................................21
(b) Opinion of Counsel for Company............................................21
(c) Opinion of German Counsel for the Company.................................21
(d) Opinion of Swiss Counsel for the Company..................................21
(e) Opinion of Christine J. Smith, Esq........................................22
(f) Opinion of Counsel for the Selling Shareholders...........................22
(g) Opinion of Counsel for U.S. Underwriters..................................22
(h) Officers' Certificate.....................................................22
(i) Certificate of Selling Shareholders.......................................23
(j) Litigation Certificate....................................................23
(k) Accountant's Comfort Letter...............................................23
(l) Bring-down Comfort Letter.................................................23
(m) Approval of Listing.......................................................23
(n) No Objection..............................................................23
(o) Lock-up Agreements; Registration Rights...................................24
(p) Purchase of Initial International Securities..............................24
(q) Conditions to Purchase of U.S. Option Securities..........................24
(i) Officers' Certificate...........................................24
(ii) Certificate of Selling Shareholder..............................24
(iii) Opinion of Counsel for Company..................................24
(iv) Opinion of Christine J. Smith, Esq..............................25
(v) Opinion of Counsel for Selling Shareholders.....................25
(vi) Opinion of Counsel for U.S. Underwriters........................25
(vii) Opinion of German Counsel for Company...........................25
(viii) Opinion of Swiss Counsel for Company............................25
(ix) Bring-down Comfort Letter.......................................25
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</TABLE>
<TABLE>
<S> <C>
(r) Additional Documents......................................................25
(s) Termination of Agreement..................................................26
SECTION 6. Indemnification...........................................................26
(a) Indemnification of U.S. Underwriters......................................26
(b) Indemnification of Selling Shareholders by the
Company and Mettler.....................................................27
(c) Indemnification of Company, Directors and
Officers and Selling Shareholders.......................................28
(d) Actions against Parties; Notification.....................................28
(e) Settlement without Consent if Failure to Reimburse........................29
(f) Other Agreements with Respect to Indemnification..........................29
SECTION 7. Contribution..............................................................29
SECTION 8. Representations, Warranties and Agreements to
Survive Delivery..........................................................31
SECTION 9. Termination of Agreement..................................................31
(a) Termination; General......................................................31
(b) Liabilities...............................................................31
SECTION 10. Default by One or More of the U.S. Underwriters...........................32
SECTION 11. Default by one or more of the Selling Shareholders........................32
SECTION 12. Notices...................................................................33
SECTION 13. Parties...................................................................33
SECTION 14. GOVERNING LAW AND TIME....................................................34
SECTION 15. Effect of Headings........................................................34
SCHEDULES
Schedule A - List of Underwriters..............................................Sch A-1
Schedule B - List of Selling Shareholders......................................Sch B-1
Schedule C - Shares of Common Stock............................................Sch C-1
Schedule D - List of persons and entities subject to lock-up...................Sch D-1
EXHIBITS
Exhibit A - Form of Opinion of Company's Counsel...................................A-1
Exhibit B - Form of Local Counsel Opinion..........................................B-1
Exhibit C - Form of Opinion of Christine J. Smith, Esq.............................C-1
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Exhibit D - Form of Opinion of Selling Stockholders' Counsel...................... D-1
Exhibit E - Form of Litigation Certificate of the
Chief Financial Officer of the Company..........................................E-1
Exhibit F - Form of Lock-up Letter................................................ F-1
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METTLER-TOLEDO INTERNATIONAL INC.
(a Delaware corporation)
[ ] Shares of Common Stock
(Par Value $.01 Per Share)
U.S. PURCHASE AGREEMENT
-----------------------
[ ], 1998
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
BT ALEX. BROWN
CREDIT SUISSE FIRST BOSTON
GOLDMAN, SACHS & CO.
SALOMON SMITH BARNEY
as U.S. Representatives of the several U.S. Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
Mettler-Toledo International Inc., a Delaware corporation (the
"Company"), Mettler- Toledo, Inc. ("Mettler") and the persons listed on
Schedule B hereto (the "Selling Shareholders"), confirm their agreement with
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch") and each of the other U.S. Underwriters named in Schedule A
hereto (collectively, the "U.S. Underwriters", which term shall also include
any underwriter substituted as hereinafter provided in Section 10 hereof), for
whom Merrill Lynch and BT Alex. Brown, Credit Suisse First Boston Corporation,
Goldman, Sachs & Co. and Smith Barney Inc. are acting as representatives (in
such capacity, the "U.S. Representatives"), with respect to (i) the sale by
the Selling Shareholders, and the purchase by the U.S. Underwriters, acting
severally and not jointly, of the respective numbers of shares of Common
Stock, par value $.01 per share, of the Company ("Common Stock") set forth in
Schedules A and B hereto, and (ii) the grant by the Selling Shareholders to
the U.S. Underwriters, acting severally and not jointly, of the option
described in Section 2(b) hereof to purchase all or any part of [ ]
<PAGE>
additional shares of Common Stock to cover over-allotments, if any. The
aforesaid [ ] shares of Common Stock (the "Initial U.S. Securities") to be
purchased by the U.S. Underwriters and all or any part of the [ ] shares of
Common Stock subject to the option described in Section 2(b) hereof (the "U.S.
Option Securities") are hereinafter called, collectively, the "U.S.
Securities".
It is understood that the Company and the Selling Shareholders are
concurrently entering into an agreement dated the date hereof (the
"International Purchase Agreement") providing for the offering by the Selling
Shareholders of an aggregate of [ ] shares of Common Stock (the "Initial
International Securities") through arrangements with certain underwriters
outside the United States and Canada (the "International Managers") for which
Merrill Lynch International and BT Alex. Brown International, a Division of
Bankers Trust International PLC, Credit Suisse First Boston (Europe) Limited,
Goldman Sachs International and Smith Barney Inc. are acting as lead managers
(the "Lead Managers"), and the grant by the Selling Shareholders to the
International Managers, acting severally and not jointly, of an option to
purchase all or any part of the International Managers' pro rata portion of up
to [ ] additional shares of Common Stock solely to cover overallotments, if
any (the "International Option Securities" and, together with the U.S. Option
Securities, the "Option Securities"). The Initial International Securities and
the International Option Securities are hereinafter called the "International
Securities". It is understood that the Selling Shareholders are not obligated
to sell and the U.S. Underwriters are not obligated to purchase any Initial
U.S. Securities unless all of the Initial International Securities are
contemporaneously purchased by the International Managers.
The U.S. Underwriters and the International Managers are hereinafter
collectively called the "Underwriters", the Initial U.S. Securities and the
Initial International Securities are hereinafter collectively called the
"Initial Securities", and the U.S. Securities and the International Securities
are hereinafter collectively called the "Securities".
The Underwriters will concurrently enter into an Intersyndicate
Agreement of even date herewith (the "Intersyndicate Agreement") providing for
the coordination of certain transactions among the Underwriters under the
direction of Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated (in such capacity, the "Global Coordinator").
The Company and the Selling Shareholders understand that the U.S.
Underwriters propose to make a public offering of the U.S. Securities as soon
as the U.S. Representatives deem advisable after this Agreement has been
executed and delivered.
The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-3 (No. 333- ) covering
the registration of the Securities under the Securities Act of 1933, as
amended (the "1933 Act"), including the related preliminary prospectus or
prospectuses. Promptly after execution and
2
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delivery of this Agreement, the Company will either (i) prepare and file a
prospectus in accordance with the provisions of Rule 430A ("Rule 430A") of the
rules and regulations of the Commission under the 1933 Act (the "1933 Act
Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of the 1933 Act
Regulations or (ii) if the Company has elected to rely upon Rule 434 ("Rule
434") of the 1933 Act Regulations, prepare and file a term sheet (a "Term
Sheet") in accordance with the provisions of Rule 434 and Rule 424(b). Two
forms of prospectus are to be used in connection with the offering and sale of
the Securities: one relating to the U.S. Securities (the "Form of U.S.
Prospectus") and one relating to the International Securities (the "Form of
International Prospectus"). The Form of International Prospectus is identical
to the Form of U.S. Prospectus, except for the front cover and back cover
pages and the information under the caption "Underwriting." The information
included in any such prospectus or in any such Term Sheet, as the case may be,
that was omitted from such registration statement at the time it became
effective but that is deemed to be part of such registration statement at the
time it became effective (a) pursuant to paragraph (b) of Rule 430A is
referred to as "Rule 430A Information" or (b) pursuant to paragraph (d) of
Rule 434 is referred to as "Rule 434 Information". Each Form of U.S.
Prospectus and Form of International Prospectus used before such registration
statement became effective, and any prospectus that omitted, as applicable,
the Rule 430A Information or the Rule 434 Information, that was used after
such effectiveness and prior to the execution and delivery of this Agreement,
is herein called a "preliminary prospectus". Such registration statement,
including the exhibits thereto and schedules thereto at the time it became
effective and including the Rule 430A Information and the Rule 434
Information, as applicable, is herein called the "Registration Statement". Any
registration statement filed pursuant to Rule 462(b) of the 1933 Act
Regulations is herein referred to as the "Rule 462(b) Registration Statement,"
and after such filing the term "Registration Statement" shall include the Rule
462(b) Registration Statement. The final Form of U.S. Prospectus and the final
Form of International Prospectus in the forms first furnished to the
Underwriters for use in connection with the offering of the Securities are
herein called the "U.S. Prospectus" and the "International Prospectus",
respectively, and collectively, the "Prospectuses". If Rule 434 is relied on,
the terms "U.S. Prospectus" and "International Prospectus" shall refer to the
preliminary U.S. Prospectus, dated [ ], 1998 and preliminary International
Prospectus, dated [ ], 1998, respectively, each together with the applicable
Term Sheet and all references in this Agreement to the date of such
Prospectuses shall mean the date of the applicable Term Sheet. For purposes of
this Agreement, all references to the Registration Statement, any preliminary
prospectus, the U.S. Prospectus, the International Prospectus or any Term
Sheet or any amendment or supplement to any of the foregoing shall be deemed
to include the copy filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval system ("EDGAR").
3
<PAGE>
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company and Mettler. The
Company and Mettler, jointly and severally, represent and warrant to each U.S.
Underwriter as of the date hereof, as of the Closing Time referred to in
Section 2(c) hereof and as of each Date of Delivery (if any) referred to in
Section 2(b) hereof, and agree with each U.S. Underwriter, as follows:
(i) Compliance with Registration Requirements. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or are pending or,
to the knowledge of the Company, are contemplated by the Commission,
and any request on the part of the Commission for additional
information has been complied with.
At the respective times the Registration Statement, any Rule
462(b) Registration Statement and any post-effective amendments
thereto became effective and at the Closing Time (and, if any U.S.
Option Securities are purchased, at the Date of Delivery), the
Registration Statement, the Rule 462(b) Registration Statement and
any amendments and supplements thereto complied and will comply in
all material respects with the requirements of the 1933 Act and the
1933 Act Regulations and did not and will not contain an untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading. Neither of the Prospectuses nor any
amendments or supplements thereto (including any prospectus wrapper),
at the time the Prospectuses or any amendments or supplements thereto
were issued and at the Closing Time (and, if any U.S. Option
Securities are purchased, at the Date of Delivery), included or will
include an untrue statement of a material fact or omitted or will
omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading. If Rule 434 is used, the Company will
comply with the requirements of Rule 434 and the Prospectuses shall
not be "materially different", as such term is used in Rule 434, from
the prospectuses included in the Registration Statement at the time
it became effective. The representations and warranties in this
subsection shall not apply to statements in or omissions from the
Registration Statement or the U.S. Prospectus made in reliance upon
and in conformity with information furnished to the Company in
writing by any Underwriter through Merrill Lynch expressly for use in
the Registration Statement or the U.S. Prospectus.
Each preliminary prospectus and the prospectuses filed as
part of the Registration Statement as originally filed or as part of
any amendment thereto, or filed pursuant to Rule 424 under the 1933
Act, complied when so filed in all material
4
<PAGE>
respects with the 1933 Act Regulations and each preliminary
prospectus and the Prospectuses delivered to the Underwriters for use
in connection with this offering was identical to the electronically
transmitted copies thereof filed with the Commission pursuant to
EDGAR, except to the extent permitted by Regulation S-T of the 1933
Act Regulations.
(ii) Independent Accountants. The accountants who certified
the financial statements and supporting schedules included in the
Registration Statement are independent public accountants as required
by the 1933 Act and the 1933 Act Regulations.
(iii) Financial Statements. The financial statements
included in the Registration Statement and the Prospectuses, together
with the related schedules and notes, present fairly the consolidated
financial position of the Company and its subsidiaries and, in
respect of the Predecessor Business (as defined in the Registration
Statement under "Selected Historical Financial Information"), of the
Company and its combined affiliated entities, as the case may be, at
the dates indicated and the statement of operations, changes in net
assets, stockholders' equity and cash flows of the Company and its
consolidated subsidiaries and, in respect of the Predecessor
Business, of the Company and its combined affiliated entities, as the
case may be, for the periods specified; said financial statements
have been prepared in conformity with U.S. generally accepted
accounting principles ("GAAP") applied on a consistent basis
throughout the periods involved. The supporting schedules included in
the Registration Statement present fairly in accordance with GAAP the
information required to be stated therein. The selected financial
data and the summary financial information included in the
Prospectuses present fairly the information shown therein and have
been compiled on a basis consistent with that of the audited
financial statements included in the Registration Statement. The pro
forma information and the related notes thereto included in the
Registration Statement and the Prospectuses present fairly the
information shown therein, have been properly compiled on the bases
described therein, and the assumptions used in the preparation
thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions and circumstances
referred to therein.
(iv) No Material Adverse Change in Business. Since the
respective dates as of which information is given in the Registration
Statement and the Prospectuses, except as otherwise stated therein,
(A) there has been no material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of
business, and no material adverse effect on the ability of the
Company or Mettler to enter into this Agreement or the International
Purchase Agreement or to consummate the transactions contemplated in
this Agreement
5
<PAGE>
or the International Purchase Agreement (any such material adverse
change or effect, a "Material Adverse Effect"), (B) there have been
no transactions entered into by the Company or any of its
subsidiaries, other than those in the ordinary course of business,
which are material with respect to the Company and its subsidiaries
considered as one enterprise, and (C) there has been no dividend or
distribution of any kind declared, paid or made by the Company on any
class of its capital stock.
(v) Good Standing. The Company and Mettler have been duly
organized and are validly existing as corporations in good standing
under the laws of the State of Delaware and have corporate power and
authority to own, lease and operate their properties and to conduct
their business as described in the Prospectuses and to enter into and
perform their obligations under this Agreement; and the Company and
Mettler are duly qualified as foreign corporations to transact
business and are in good standing in each other jurisdiction in which
such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the
failure so to qualify or to be in good standing would not result in a
Material Adverse Effect.
(vi) Good Standing of Subsidiaries. Each "significant
subsidiary" of the Company (as such term is defined in Rule 1-02 of
Regulation S-X) (each a "Subsidiary" and, collectively, the
"Subsidiaries") has been duly organized and is validly existing as a
corporation in good standing under the laws of the jurisdiction of
its incorporation, has corporate power and authority to own, lease
and operate its properties and to conduct its business as described
in the Prospectuses and is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in
which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except
where the failure so to qualify or to be in good standing would not
result in a Material Adverse Effect; except for directors' qualifying
shares or as otherwise disclosed in the Registration Statement, all
of the issued and outstanding capital stock of each such Subsidiary
has been duly authorized and validly issued, is fully paid and
non-assessable and is owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity, except for any security
interest, mortgage, pledge, lien, encumbrance, claim or equity
created pursuant to the Credit Agreement (as defined in the
Registration Statement) or under any local working capital facilities
or interest protection agreements secured under the Credit Agreement
(the "Other Secured Agreements"); and none of the outstanding shares
of capital stock of any Subsidiary was issued in violation of the
preemptive or similar rights of any securityholder of such
Subsidiary. The only subsidiaries of the Company are (a) the
subsidiaries listed on Exhibit 21 to the Company's registration
statement on Form S-1 (Registration No. 333-35597) and (b) certain
other subsidiaries which, considered in
6
<PAGE>
the aggregate as a single Subsidiary, do not constitute a
"significant subsidiary" as defined in Rule 1-02 of Regulation S-X.
(vii) Capitalization. The authorized, issued and outstanding
capital stock of the Company shall be as set forth in the
Prospectuses under the caption "Capitalization" (except for
subsequent issuances, if any, pursuant to this Agreement, pursuant to
reservations, agreements or employee benefit plans referred to in the
Prospectuses or pursuant to the exercise of convertible securities or
options referred to in the Prospectuses). The shares of issued and
outstanding capital stock of the Company, including the Securities to
be purchased by the Underwriters from the Selling Shareholders, have
been duly authorized and validly issued and are fully paid and
non-assessable; none of the outstanding shares of capital stock of
the Company, including the Securities to be purchased by the
Underwriters from the Selling Shareholders, was issued in violation
of the preemptive or other similar rights of any securityholder of
the Company.
(viii) Authorization of Agreement. This Agreement and the
International Purchase Agreement have been duly authorized, executed
and delivered by the Company and Mettler.
(ix) Description of Securities. The Common Stock conforms in
all material respects to all statements relating thereto contained in
the Prospectuses and such description conforms to the rights set
forth in the instruments defining the same; no holder of the
Securities will be subject to personal liability by reason of being
such a holder.
(x) Absence of Defaults and Conflicts. Neither the Company
nor any of its subsidiaries is in violation of its charter or by-laws
or in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note,
lease or other agreement or instrument to which the Company or any of
its subsidiaries is a party or by which it or any of them may be
bound, or to which any of the property or assets of the Company or
any subsidiary is subject (collectively, "Agreements and
Instruments"), except for (a) with respect to the Company's
subsidiaries other than the Subsidiaries, such violations that would
not result in a Material Adverse Effect, and (b) such defaults that
would not result in a Material Adverse Effect; and the execution,
delivery and performance of this Agreement and the International
Purchase Agreement by the Company or Mettler, the consummation by the
Company or Mettler of the transactions contemplated in this Agreement
and the International Purchase Agreement and the transactions
contemplated herein and in the Registration Statement (including the
sale of the Securities), and compliance by the Company and Mettler
with their obligations under this Agreement and the International
Purchase Agreement have been
7
<PAGE>
duly authorized by all necessary corporate action by the Company or
Mettler, as the case may be, and do not and will not, whether with or
without the giving of notice or passage of time or both, conflict
with or constitute a breach of, or default or Repayment Event (as
defined below) under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the
Company or any subsidiary pursuant to, the Agreements and Instruments
(except for (A) such conflicts, breaches or defaults or liens,
charges or encumbrances that would not result in a Material Adverse
Effect or (B) such liens, charges, or encumbrances as are created in
connection with the execution, delivery and performance of the Credit
Agreement or the Other Secured Agreements), nor will such action
result in any violation of the provisions of the charter or by-laws
of the Company or any subsidiary or any applicable law, statute,
rule, regulation, judgment, order, writ or decree of any government,
government instrumentality or court, domestic or foreign, having
jurisdiction over the Company or any subsidiary or any of their
assets, properties or operations. As used herein, a "Repayment Event"
means any event or condition which gives the holder of any note,
debenture or other evidence of indebtedness (or any person acting on
such holder's behalf) the right to require the repurchase, redemption
or repayment of all or a portion of such indebtedness by the Company
or any subsidiary.
(xi) Absence of Labor Dispute. No labor dispute with the
employees of the Company or any subsidiary exists or, to the
knowledge of the Company or Mettler, is imminent, and neither the
Company nor Mettler is aware of any existing or imminent labor
disturbance by the employees of any of its or any subsidiary's
principal suppliers, manufacturers, customers or contractors, which,
in either case, might reasonably be expected to result in a Material
Adverse Effect.
(xii) Absence of Proceedings. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court
or governmental agency or body, domestic or foreign, now pending, or,
to the knowledge of the Company or Mettler, threatened, against or
affecting the Company or any subsidiary, which is required to be
disclosed in the Registration Statement (other than as disclosed
therein), or which might reasonably be expected to result in a
Material Adverse Effect or which might reasonably be expected to
materially and adversely affect the properties or assets thereof or
the consummation of the transactions contemplated in this Agreement
or the International Purchase Agreement or the performance by the
Company and Mettler of their obligations hereunder or under the
International Purchase Agreement, and the aggregate of all pending
legal or governmental proceedings to which the Company or any
subsidiary is a party or of which any of their respective property or
assets is the subject which are not described in the Registration
Statement, including ordinary routine litigation incidental to the
business, could not reasonably be expected to result in a Material
Adverse Effect.
8
<PAGE>
(xiii) Accuracy of Exhibits. There are no contracts or
documents which are required to be described in the Registration
Statement or the Prospectuses or to be filed as exhibits thereto
which have not been so described and filed as required.
(xiv) Possession of Intellectual Property. The Company and
its subsidiaries own or possess, or can acquire on reasonable terms,
adequate patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks, trade names or other
intellectual property (collectively, "Intellectual Property")
necessary to carry on the business now operated by them except where
the failure to so own, possess or acquire, singly and in the
aggregate, would not result in a Material Adverse Effect, and neither
the Company nor any of its subsidiaries has received any notice or is
otherwise aware of any infringement of or conflict with asserted
rights of others with respect to any Intellectual Property or of any
facts or circumstances which would render any Intellectual Property
invalid or inadequate to protect the interest of the Company or any
of its subsidiaries therein, and which infringement or conflict (if
the subject of any unfavorable decision, ruling or finding) or
invalidity or inadequacy, singly or in the aggregate, would result in
a Material Adverse Effect.
(xv) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency is necessary or required for the performance by the Company or
Mettler of their obligations hereunder, in connection with the
offering or sale of the Securities under this Agreement and the
International Purchase Agreement or the consummation of the
transactions contemplated by this Agreement or the International
Purchase Agreement, except such as have been already obtained or as
may be required under the 1933 Act or the 1933 Act Regulations and
foreign or state securities or blue sky laws.
(xvi) Possession of Licenses and Permits. The Company and
its subsidiaries possess such permits, licenses, approvals, consents
and other authorizations (collectively, "Governmental Licenses")
issued by the appropriate federal, state, local or foreign regulatory
agencies or bodies necessary to conduct the business now operated by
them except for such Governmental Licenses the failure of which to
possess would not have a Material Adverse Effect; the Company and its
subsidiaries are in compliance with the terms and conditions of all
such Governmental Licenses, except where the failure so to comply
would not, singly or in the aggregate, have a Material Adverse
Effect; all of the Governmental Licenses are valid and in full force
and effect, except when the invalidity of such Governmental Licenses
or the failure of such Governmental Licenses to be in full force and
effect would not have a Material Adverse Effect; and neither the
Company nor any of its subsidiaries has received any written notice
of any
9
<PAGE>
judicial or administrative proceedings relating to the revocation or
modification of any such Governmental Licenses which, singly or in
the aggregate, if the subject of an unfavorable decision, ruling or
finding, would result in a Material Adverse Effect.
(xvii) Title to Property. The Company and its subsidiaries
have good and marketable title to all real property owned by the
Company and its subsidiaries and good title to all other properties
owned by them, in each case, free and clear of all mortgages,
pledges, liens, security interests, claims, restrictions or
encumbrances of any kind except such as (a) are described in the
Prospectuses or as set forth in the Credit Agreement or the Other
Secured Agreements, (b) do not, singly or in the aggregate,
materially affect the value of such property and do not interfere
with the use made and proposed to be made of such property by the
Company or any of its subsidiaries or (c) would not have a Material
Adverse Effect; all of the leases and subleases material to the
business of the Company and its subsidiaries, considered as one
enterprise, and under which the Company or any of its subsidiaries
holds properties described in the Prospectuses, are in full force and
effect; and neither the Company nor any subsidiary has any notice of
any claim of any sort that has been asserted by anyone adverse to the
rights of the Company or any subsidiary under any of the leases or
subleases mentioned above, or affecting or questioning the rights of
the Company or such subsidiary to the continued possession of the
leased or subleased premises under any such lease or sublease except
for such claims as would not singly or in the aggregate result in a
Material Adverse Effect.
(xviii) Investment Company Act. Neither the Company nor
Mettler is or upon (a) the sale of the Securities as herein
contemplated or (b) the consummation of the transactions contemplated
by this Agreement or the International Purchase Agreement will be, an
"investment company" as such term is defined in the Investment
Company Act of 1940, as amended (the "1940 Act").
(xix) Environmental Laws. Except as described in the
Registration Statement and except as would not, singly or in the
aggregate, result in a Material Adverse Effect, (A) neither the
Company nor any of its subsidiaries is in violation of any federal,
state, local or foreign statute, law, regulation, ordinance, code,
common law or any judicial or administrative interpretation thereof
enforceable at law or in equity, including any applicable judicial or
administrative order, consent, decree or judgment, relating to
pollution or protection of human health or the environment
(including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata), including, without
limitation, laws and regulations relating to the release or
threatened release of chemicals, pollutants, contaminants, wastes,
toxic substances, hazardous substances, petroleum or petroleum
products subject to regulation under any environmental law
(collectively, "Hazardous Materials") or to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport or handling of
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Hazardous Materials subject to regulation under any environmental law
(collectively, "Environmental Laws"), (B) the Company and its
subsidiaries have all permits, authorizations and approvals required
under any applicable Environmental Laws and are each in compliance
with their requirements, (C) there are no pending or, to the
knowledge of the Company or Mettler, threatened administrative,
regulatory or judicial actions, suits, demand letters, claims, liens,
notices of noncompliance or violation, investigation or proceedings
relating to any Environmental Law against the Company or any of its
subsidiaries and (D) to the knowledge of the Company or Mettler,
there are no events or circumstances that could reasonably be
expected to form the basis of an order for clean-up or remediation,
or an action, suit or proceeding by any private party or governmental
body or agency, against the Company or any of its subsidiaries
relating to Hazardous Materials or any Environmental Laws.
(xx) Registration Rights. Except as described in the
Registration Statement and the Prospectuses, no person has
registration rights or other similar rights to have any securities of
the Company registered by the Company under the 1933 Act. Except for
persons whose shares have been included in the Registration Statement
no persons who have registration rights or other similar rights
relating to the Common Stock of the Company have any such rights to
have Common Stock registered pursuant to the Registration Statement
which have not been waived. There are no persons with registration
rights or other similar rights to have any securities registered by
the Company's subsidiaries under the 1933 Act.
(xxi) Taxes. The Company and its subsidiaries have filed all
tax returns that are required to have been filed by them pursuant to
applicable law except insofar as the failure to file such returns
would not result in a Material Adverse Effect, and have paid all
taxes due pursuant to such returns or pursuant to any assessment
received by the Company and its subsidiaries, except for such taxes,
if any, as are being contested in good faith by appropriate
proceedings and as to which adequate reserves have been provided in
accordance with GAAP, and except for the failure to pay such taxes
which, individually and in the aggregate, would not have a Material
Adverse Effect. The charges, accruals and reserves on the books of
the Company and its subsidiaries in respect of any tax liability for
any years not finally determined are adequate in accordance with GAAP
to meet any assessments or reassessments for additional tax for any
years not finally determined, except to the extent of any inadequacy
that would not result in a Material Adverse Effect.
(xxii) Accounting Controls. The Company and its subsidiaries
maintain a system of internal accounting controls sufficient to
provide reasonable assurances that (A) transactions are executed in
accordance with management's general or specific authorization, (B)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to
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maintain accountability for assets, (C) access to assets is permitted
only in accordance with management's general or specific
authorization and (D) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(xxiii) Insurance. The Company and its subsidiaries carry or
are entitled to the benefits of insurance, with financially sound and
reputable insurers, in such amounts and covering such risks as is
generally maintained by companies of established repute engaged in
the same or similar business, and all policies with respect to such
insurance are in full force and effect.
(xxiv) Stabilization or Manipulation. Neither the Company
nor any of its sub sidiaries has taken, directly or indirectly, any
action designed to cause or to result in, or that has constituted or
which might reasonably be expected to constitute, the stabilization
or manipulation of the price of any security of any such entity to
facilitate the sale or resale of the Securities.
(xxv) Certain Relationships. No relationship, direct or
indirect, exists between or among any of the Company and any of its
subsidiaries or any affiliate of any such entity, on the one hand,
and any director, officer, stockholder, customer or supplier of any
of them, on the other hand, which is required by the 1933 Act or by
the 1933 Act Regulations to be described in the Registration
Statement or the Prospectuses which is not so described or is not
described as required.
(xxvi) No Offering Material. The Company and its
subsidiaries have not distributed and, prior to the later to occur of
(i) the Closing Time and (ii) completion of the distribution of the
Securities, will not distribute any offering material in connection
with the offering and sale of the Securities other than the
Registration Statement, any preliminary prospectus, the Prospectus or
other materials, if any, permitted by the 1933 Act and approved by
the U.S. Representatives.
(xxvii) Suppliers. No supplier of merchandise to the Company
or any of its subsidiaries has ceased shipments of merchandise
thereto, which cessation would result in a Material Adverse Effect.
(b) Representations and Warranties by the Selling Shareholders. Each
Selling Shareholder severally and not jointly represents and warrants to each
Underwriter as of the date hereof, as of the Closing Time, and, if the Selling
Shareholder is selling Option Securities on a Date of Delivery, as of each
such Date of Delivery, and agrees with each Underwriter, as follows:
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(i) Such Selling Shareholder has reviewed and is familiar
with the Registration Statement and the Prospectuses and the
Prospectuses do not contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading, provided that the representations and
warranties made in this paragraph (i) shall be only with respect to
the information furnished in writing by or on behalf of Such
Shareholder expressly for use in the Registration Statement (or any
amendment thereto).
(ii) Such Selling Shareholder has full right, power and
authority to execute, deliver and perform its obligations under this
Agreement, the International Purchase Agreement and the Power of
Attorney and Custody Agreement, and to sell, transfer and deliver the
Securities pursuant to this Agreement; and this Agreement, the
International Purchase Agreement and the Power of Attorney and
Custody Agreement have been duly authorized, executed and delivered
by or on behalf of such Selling Shareholder and constitutes a valid
and binding agreement of such Selling Shareholder, enforceable
against such Selling Shareholder in accordance with its terms, except
as enforcement thereof may be limited by bankruptcy, insolvency,
reorganization or other similar laws relating to or affecting
enforcement of creditors' rights generally or by general principles
of equity.
(iii) There is no action, suit or proceeding before or by
any government, governmental instrumentality or court, domestic or
foreign, now pending or, to the knowledge of such Selling
Shareholder, threatened, to which such Selling Shareholder is or
would be a party or of which the property of such Selling Shareholder
is or may be subject, that (i) seeks to restrain, enjoin, prevent the
consummation of or otherwise challenge the sale of Securities by such
Selling Shareholder or any of the other transactions contemplated
hereby or (ii) questions the legality or validity of any such
transactions or seeks to recover damages or obtain other relief in
connection with any such transactions.
(iv) No filing, authorization, approval, consent, license,
order, registration or qualification of or with any government,
governmental instrumentality or court (other than under the 1933 Act
and the 1933 Act Regulations and the securities or blue sky laws of
the various states in connection with the sale of the Securities),
domestic or foreign, is required by reason of facts specifically
pertaining to such Selling shareholder or its legal or regulatory
status in connection with the due authorization, execution and
delivery by such Selling Shareholder of this Agreement, the
International Purchase Agreement or the Power of Attorney and Custody
Agreement and the valid sale and delivery of the Securities to be
sold by such Selling Shareholder hereunder and thereunder.
(v) The execution, delivery and performance of this
Agreement, the International Purchase Agreement and the Power of
Attorney and Custody Agreement by such Selling
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Shareholder, the sale of the Securities by such Selling Shareholder
hereunder and thereunder, the consummation by such Selling
Shareholder of the transactions herein and therein contemplated and
the compliance by such Selling Shareholder with all the provisions of
this Agreement, the International Purchase Agreement and the Power of
Attorney and Custody Agreement will not result in a violation of the
charter or bylaws of such Selling Shareholders which are corporations
or the partnership agreement or certificate of limited partnership,
if applicable, of such Selling Shareholders which are partnerships
and will not conflict with or result in a breach or violation of any
of the terms or provisions of, or constitute a default under, any
material agreement or instrument to which such Selling Shareholder is
a party or by which such Selling Shareholder is bound, nor will such
action result in any violation of the provisions of any statute
relating to such Selling Shareholders or its legal or regulatory
status or any judgment, order, rule or regulation of any court or
governmental agency or body having jurisdiction over such Selling
Shareholder.
(vi) Such Selling Shareholder has, and will at the Closing
Time have, and, if such Selling Shareholder is selling Option Shares
on a Date of Delivery, will on the Date of Delivery have, valid and
marketable title to the Securities to be sold by the Selling
Shareholder pursuant to this Agreement and the International Purchase
Agreement, free and clear of any pledge, lien, security interest,
charge, claim, equity or encumbrance of any kind; and, at the Closing
Time and, if such Selling Shareholder is selling Option Shares on a
Date of Delivery, at the Date of Delivery, upon delivery of the
Securities to be sold by such Selling Shareholder and payment of the
purchase price therefor as contemplated in this Agreement and the
International Purchase Agreement, each of the Underwriters will
receive good and marketable title to the Securities purchased by it
from such Selling Shareholder, free and clear of any security
interest, mortgage, pledge, lien, charge, claim, equity or
encumbrance of any kind.
(vii) Certificates for all of the Securities to be sold by
such Selling Shareholder pursuant to this Agreement and the
International Purchase Agreement, in suitable form for transfer by
delivery or accompanied by duly executed instruments of transfer or
assignment in blank with signatures guaranteed, have been placed in
custody with the Custodian for delivery to the U.S. Underwriters
pursuant to this Agreement and the International Managers pursuant to
the International Purchase Agreement.
(viii) Such Selling Shareholder has not taken and will not
take, directly or indirectly, any action designed to, or that might
reasonably be expected to, cause or result in stabilization or
manipulation of the price of the Common Stock; and such Selling
Shareholder has not distributed and will not distribute any
prospectus (as such term is defined in the 1933 Act and the 1933 Act
Regulations) in connection with the offering and sale of the
Securities other than any preliminary prospectus filed with the
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Commission or the Prospectuses or other material permitted by the
1933 Act or the 1933 Act Regulations.
(ix) Except as described in the Registration Statement and
the Prospectuses, neither such Selling Stockholder nor any of its
affiliates directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common
control with, or has any other association with (within the meaning
of Article I, Section 1(m) of the By-laws of the National Association
of Securities Dealers, Inc.), any member firm of the National
Association of Securities Dealers, Inc.
(c) Officer's Certificates. Any certificate signed by any officer of
the Company, Mettler or any of the Company's subsidiaries delivered to the
Global Coordinator, the U.S. Representatives or to counsel for the U.S.
Underwriters shall be deemed a joint and several representation and warranty
by the Company and Mettler to each U.S. Underwriter as to the matters covered
thereby; and any Certificate signed by or on behalf of the Selling
Shareholders as such and delivered to the representatives or to counsel for
Underwriters pursuant to the terms of this Agreement shall be deemed a
representation and warranty by such Selling Shareholder to the Underwriters as
to the matters covered thereby.
SECTION 2. Sale and Delivery to U.S. Underwriters; Closing.
(a) Initial Securities. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, each Selling Shareholder, severally and not jointly, agrees to sell to
each U.S. Underwriter, severally and not jointly, and each U.S. Underwriter,
severally and not jointly, agrees to purchase from each Selling Shareholder,
at the price per share set forth in Schedule C, that proportion of Initial
U.S. Securities set forth in Schedule B opposite the name of such Selling
Shareholder which the number of Initial U.S. Securities set forth in Schedule
A opposite the name of such U.S. Underwriter, plus any additional number of
Initial U.S. Securities which such Underwriter may become obligated to
purchase pursuant to the provisions of Section 10 hereof bears to the total
number of Initial U.S. Securities, subject, in each case, to such adjustments
among the U.S. Underwriters as the U.S. Representatives in their sole
discretion shall make to eliminate any sales or purchases of fractional
shares.
(b) Option Securities. In addition, on the basis of the
representations and warranties herein contained and subject to the terms and
conditions herein set forth, the Selling Shareholders, acting severally and
not jointly, hereby grant an option to the U.S. Underwriters, severally and
not jointly, to purchase up to an additional [ ] shares of Common Stock, as
set forth in Schedule B, at the price per share set forth in Schedule C, less
an amount per share equal to any dividends or distributions declared by the
Company and payable on the Initial U.S. Securities but not payable on the U.S.
Option Securities. The option hereby granted will expire 30 days after the
date hereof and may be exercised in whole or in part from time to time only
for
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the purpose of covering over-allotments which may be made in connection with
the offering and distribution of the Initial U.S. Securities upon notice by
the Global Coordinator to the Selling Shareholders setting forth the number of
U.S. Option Securities as to which the several U.S. Underwriters are then
exercising the option and the time and date of payment and delivery for such
U.S. Option Securities. Any such time and date of delivery for the U.S. Option
Securities (a "Date of Delivery") shall be determined by the Global
Coordinator, but shall not be later than seven full business days after the
exercise of said option, nor in any event prior to the Closing Time, as
hereinafter defined. If the option is exercised as to all or any portion of
the U.S. Option Securities, each of the U.S. Underwriters, acting severally
and not jointly, will purchase that proportion of the total number of U.S.
Option Securities then being purchased which the number of Initial U.S.
Securities set forth in Schedule A opposite the name of such U.S. Underwriter
bears to the total number of Initial U.S. Securities, subject in each case to
such adjustments as the Global Coordinator in its discretion shall make to
eliminate any sales or purchases of fractional shares.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of
Debevoise & Plimpton, New York, New York 10022, or at such other place as
shall be agreed upon by the Global Coordinator, the Company and the Selling
Shareholders, at 9:00 A.M. (Eastern time) on the third (fourth, if the pricing
occurs after 4:30 P.M. (Eastern time) on any given day) business day after the
date hereof (unless postponed in accordance with the provisions of Section
10), or such other time not later than ten business days after such date as
shall be agreed upon by the Global Coordinator and the Selling Shareholders
(such time and date of payment and delivery being herein called "Closing
Time").
In addition, in the event that any or all of the U.S. Option
Securities are purchased by the U.S. Underwriters, payment of the purchase
price for, and delivery of certificates for, such U.S. Option Securities shall
be made at the above-mentioned offices, or at such other place as shall be
agreed upon by the Global Coordinator, the Company and the Selling
Shareholders, on each Date of Delivery as specified in the notice from the
Global Coordinator to the Selling Shareholders.
Payment shall be made to the Selling Shareholders by wire transfer of
immediately available funds to bank accounts designated by the Custodian
pursuant to each Selling Shareholders' Power of Attorney and Custody
Agreement, as the case may be, against delivery to the U.S. Representatives
for the respective accounts of the U.S. Underwriters of certificates for the
U.S. Securities to be purchased by them. It is understood that each U.S.
Underwriter has authorized the U.S. Representatives, for its account, to
accept delivery of, receipt for, and make payment of the purchase price for,
the Initial U.S. Securities and the U.S. Option Securities, if any, which it
has agreed to purchase. Merrill Lynch, individually and not as representative
of the U.S. Underwriters, may (but shall not be obligated to) make payment of
the purchase price for the Initial U.S. Securities or the U.S. Option
Securities, if any, to be purchased by any U.S.
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Underwriter whose funds have not been received by the Closing Time or the
relevant Date of Delivery, as the case may be, but such payment shall not
relieve such U.S. Underwriter from its obligations hereunder.
(d) Denominations; Registration. Certificates for the Initial U.S.
Securities and the U.S. Option Securities, if any, shall be in such
denominations and registered in such names as the U.S. Representatives may
request in writing at least one full business day before the Closing Time or
the relevant Date of Delivery, as the case may be. The certificates for the
Initial U.S. Securities and the U.S. Option Securities, if any, will be made
available for examination and packaging by the U.S. Representatives in the
City of New York not later than 10:00 A.M. (Eastern time) on the business day
prior to the Closing Time or the relevant Date of Delivery, as the case may
be.
SECTION 3. Covenants of the Company. The Company covenants with each
U.S. Underwriter as follows:
(a) Compliance with Securities Regulations and Commission Requests.
The Company, subject to Section 3(b), will comply with the requirements of
Rule 430A or Rule 434, as applicable, and will notify the Global Coordinator
immediately, and confirm the notice in writing, (i) when any post-effective
amendment to the Registration Statement shall become effective, or any
supplement to the Prospectuses or any amended Prospectuses shall have been
filed, (ii) of the receipt of any comments from the Commission, (iii) of any
request by the Commission for any amendment to the Registration Statement or
any amendment or supplement to the Prospectuses or for additional information,
and (iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus, or of the suspension of the
qualification of the Securities for offering or sale in any jurisdiction, or
of the initiation or threatening of any proceedings for any of such purposes.
The Company will promptly effect the filings necessary pursuant to Rule 424(b)
and will take such steps as it deems necessary to ascertain promptly whether
the form of prospectus transmitted for filing under Rule 424(b) was received
for filing by the Commission and, in the event that it was not, it will
promptly file such prospectus. The Company will make every reasonable effort
to prevent the issuance of any stop order and, if any stop order is issued, to
obtain the lifting thereof at the earliest possible moment.
(b) Filing of Amendments. The Company will give the Global
Coordinator notice of its intention to file or prepare any amendment to the
Registration Statement (including any filing under Rule 462(b)), any Term
Sheet or any amendment, supplement or revision to either the prospectus
included in the Registration Statement at the time it became effective or to
the Prospectuses, will furnish the Global Coordinator with copies of any such
documents a reasonable amount of time prior to such proposed filing or use, as
the case may be, and will not file or use any such document to which the
Global Coordinator or counsel for the U.S. Underwriters shall object.
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(c) Delivery of Registration Statements. The Company has furnished or
will deliver to the U.S. Representatives and counsel for the U.S.
Underwriters, without charge, signed copies of the Registration Statement as
originally filed and of each amendment thereto (including exhibits filed
therewith or incorporated by reference therein) and signed copies of all
consents and certificates of experts, and will also deliver to the U.S.
Representatives, without charge, a conformed copy of the Registration
Statement as originally filed and of each amendment thereto (without exhibits)
for each of the U.S. Underwriters. The copies of the Registration Statement
and each amendment thereto furnished to the U.S. Underwriters will be
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to EDGAR, except to the extent permitted by Regulation
S-T.
(d) Delivery of Prospectuses. The Company has delivered to each U.S.
Underwriter, without charge, as many copies of each preliminary prospectus as
such U.S. Underwriter reasonably requested, and the Company hereby consents to
the use of such copies for purposes permitted by the 1933 Act. The Company
will furnish to each U.S. Underwriter, without charge, during the period when
the U.S. Prospectus is required to be delivered under the 1933 Act or the
Securities Exchange Act of 1934 (the "1934 Act"), such number of copies of the
U.S. Prospectus (as amended or supplemented) as such U.S. Underwriter may
reasonably request. The U.S. Prospectus and any amendments or supplements
thereto furnished to the U.S. Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission pursuant
to EDGAR, except to the extent permitted by Regulation S-T.
(e) Continued Compliance with Securities Laws. The Company will
comply with the 1933 Act and the 1933 Act Regulations so as to permit the
completion of the distribution of the Securities as contemplated in this
Agreement, the International Purchase Agreement and the Prospectuses. If at
any time when a prospectus is required by the 1933 Act to be delivered in
connection with sales of the Securities, any event shall occur or condition
shall exist as a result of which it is necessary, in the opinion of counsel
for the U.S. Underwriters or for the Company, to amend the Registration
Statement or amend or supplement any Prospectus in order that the Prospectuses
will not include any untrue statements of a material fact or omit to state a
material fact necessary in order to make the statements therein not misleading
in the light of the circumstances existing at the time it is delivered to a
purchaser, or if it shall be necessary, in the opinion of such counsel, at any
such time to amend the Registration Statement or amend or supplement any
Prospectus in order to comply with the requirements of the 1933 Act or the
1933 Act Regulations, the Company will promptly prepare and file with the
Commission, subject to Section 3(b), such amendment or supplement as may be
necessary to correct such statement or omission or to make the Registration
Statement or the Prospectuses comply with such requirements, and the Company
will furnish to the U.S. Underwriters such number of copies of such amendment
or supplement as the U.S. Underwriters may reasonably request; provided,
however, that if the date of any such amendment or supplement is more than 270
days after the date hereof, the preparation, filing and furnishing of such
amendment or supplement shall be at the expense of the Underwriters.
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(f) Blue Sky Qualifications. The Company will use its best efforts,
in cooperation with the U.S. Underwriters, to qualify the Securities for
offering and sale under the applicable securities laws of such states and
other jurisdictions (domestic or foreign) as the Global Coordinator may
designate and to maintain such qualifications in effect for a period of not
less than one year from the later of the effective date of the Registration
Statement and any Rule 462(b) Registration Statement; provided, however, that
the Company shall not be obligated to file any general consent to service of
process or to qualify as a foreign corporation or as a dealer in securities in
any jurisdiction in which it is not so qualified or to subject itself to
taxation in respect of doing business in any jurisdiction in which it is not
otherwise so subject. In each jurisdiction in which the Securities have been
so qualified, the Company will file such statements and reports as may be
required by the laws of such jurisdiction to continue such qualification in
effect for a period of not less than one year from the effective date of the
Registration Statement and any Rule 462(b) Registration Statement.
(g) Rule 158. The Company will timely file such reports pursuant to
the 1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the purposes
of, and to provide the benefits contemplated by, the last paragraph of Section
11(a) of the 1933 Act.
(h) Restriction on Sale of Securities. During a period of 90 days
from the date of the Prospectuses, the Company will not, without the prior
written consent of the Global Coordinator, (i) offer, pledge, sell, contract
to sell, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant for the sale of or
otherwise dispose or transfer any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock or file any
registration statement under the 1933 Act with respect to any of the foregoing
or (ii) enter into any swap or any other agreement or any transaction that
transfers, in whole or in part, directly or indirectly, the economic
consequence of ownership of the Common Stock, whether any such swap or
transaction described in clause (i) or (ii) above is to be settled by delivery
of Common Stock or other securities, in cash or otherwise. The foregoing
sentence shall not apply to (A) the Securities to be sold hereunder or under
the International Purchase Agreement, (B) any shares of Common Stock issued by
the Company upon the exercise of an option or warrant or the conversion of a
security outstanding on the date hereof and referred to in the Prospectuses,
(C) any shares of Common Stock issued or options to purchase Common Stock
granted pursuant to existing employee benefit plans of the Company referred to
in the Prospectuses, (D) any shares of Common Stock issued pursuant to any
non-employee director stock plan or dividend reinvestment plan, (E) the
issuance of options under the Company's stock option plan and the exercise by
the Company's employees of their rights relating thereto or (F) the filing of
a registration statement on Form S-8 under the 1933 Act relating to Common
Stock pursuant to the Company's stock option plan.
(i) Reporting Requirements. The Company, during the period when the
Prospectuses are required to be delivered under the 1933 Act or the 1934 Act,
will file all documents required
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to be filed with the Commission pursuant to the 1934 Act within the time
periods required by the 1934 Act and the rules and regulations of the
Commission thereunder.
SECTION 4. Payment of Expenses.
(a) Expenses. The Company and Mettler, jointly and severally, will
pay all expenses incident to the performance of their obligations under this
Agreement, including (i) the preparation, printing and filing of the
Registration Statement (including financial statements and exhibits) as
originally filed and of each amendment thereto, (ii) the preparation, printing
and delivery to the Underwriters of this Agreement, any Agreement among
Underwriters and such other documents as may be required in connection with
the offering, purchase, sale, issuance or delivery of the Securities, (iii)
the preparation, issuance and delivery of the certificates for the Securities
to the Underwriters, including any stock or other transfer taxes and any stamp
or other duties payable upon the sale, issuance or delivery of the Securities
to the Underwriters and the transfer of the Securities between the U.S.
Underwriters and the International Managers, (iv) the fees and disbursements
of the Company's and the Selling Shareholder's counsel, accountants and other
advisors, (v) the qualification of the Securities under securities laws in
accordance with the provisions of Section 3(f) hereof, including filing fees
and the reasonable fees and disbursements of counsel for the Underwriters in
connection therewith and in connection with the preparation of the Blue Sky
Survey and any supplement thereto (such fees and expenses of counsel not to
exceed $5,000.00), (vi) the printing and delivery to the Underwriters of
copies of each preliminary prospectus, any Term Sheets and of the Prospectuses
and any amendments or supplements thereto, (vii) the preparation, printing and
delivery to the Underwriters of copies of the Blue Sky Survey and any
supplement thereto, (viii) the fees and expenses of any transfer agent or
registrar for the Securities, (ix) the filing fees incident to, and the
reasonable fees and disbursements of counsel to the Underwriters in connection
with, the review by the National Association of Securities Dealers, Inc. (the
"NASD") of the terms of the sale of the Securities and (x) the fees and
expenses incurred in connection with the listing of the Securities on the
NYSE.
(b) Expenses of the Selling Shareholders. Except as provided in
Section 4(a) above, the Selling Shareholders, severally and not jointly, will
pay all expenses incident to the performance of their respective obligations
under, and the consummation of the transactions contemplated by this
Agreement, including any stamp duties, capital duties and stock transfer
taxes, if any, payable upon the sale of the Securities to the U.S.
Underwriters, and their transfer between the Underwriters pursuant to an
agreement between such Underwriters.
(c) Termination of Agreement. If this Agreement is terminated by the
U.S. Representatives in accordance with the provisions of Section 5(s) or
Section 9(a)(i) or Section 11 hereof, the Company and Mettler shall reimburse
the U.S. Underwriters for all of their reasonable out-of-pocket expenses,
including the reasonable fees and disbursements of counsel for the U.S.
Underwriters.
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SECTION 5. Conditions of U.S. Underwriters' Obligations. The
obligations of the several U.S. Underwriters hereunder are subject to the
accuracy in all material respects of the representations and warranties of the
Company, Mettler and the Selling Shareholders contained in Section 1 hereof or
in certificates of any officer of the Company, Mettler or any subsidiary of
the Company or on behalf of any Selling Shareholder delivered pursuant to the
provisions hereof, to the performance by the Company and Mettler of their
respective covenants and other obligations hereunder, and to the following
further conditions:
(a) Effectiveness of Registration Statement. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective and at Closing Time no stop order suspending the effectiveness of
the Registration Statement shall have been issued under the 1933 Act or
proceedings therefor initiated or threatened by the Commission, and any
request on the part of the Commission for additional information shall have
been complied with to the reasonable satisfaction of counsel to the U.S.
Underwriters. A prospectus containing the Rule 430A Information shall have
been filed with the Commission in accordance with Rule 424(b) (or a
post-effective amendment providing such information shall have been filed and
declared effective in accordance with the requirements of Rule 430A) or, if
the Company has elected to rely upon Rule 434, a Term Sheet shall have been
filed with the Commission in accordance with Rule 424(b).
(b) Opinion of Counsel for Company. At Closing Time, the U.S.
Representatives shall have received the favorable opinion, dated as of Closing
Time, of Fried, Frank, Harris, Shriver & Jacobson, special counsel for the
Company and the Selling Shareholders, in form and substance satisfactory to
counsel for the U.S. Underwriters, together with signed or reproduced copies
of such letter for each of the other U.S. Underwriters to the effect set forth
in Exhibit A hereto and to such further effect as counsel to the U.S.
Underwriters may reasonably request.
(c) Opinion of German Counsel for the Company. At Closing Time, the
U.S. Representatives shall have received the favorable opinion, dated as of
Closing Time, of Bruckhaus Westrick Stegemann, special German counsel for the
Company, in form and substance satisfactory to counsel for the U.S.
Underwriters, together with signed or reproduced copies of such letter for
each of the other U.S. Underwriters to the effect set forth in Exhibit B
hereto and to such further effect as counsel to the U.S. Underwriters may
reasonably request, with respect to each direct or indirect subsidiary of the
Company or Mettler organized under the laws of Germany.
(d) Opinion of Swiss Counsel for the Company. At Closing Time, the
U.S. Representatives shall have received the favorable opinion, dated as of
Closing Time, of Pestalozzi Gmuer & Patry, special Swiss counsel for the
Company, in form and substance satisfactory to counsel for the U.S.
Underwriters, together with signed or reproduced copies of such letter for
each of the other U.S. Underwriters to the effect set forth in Exhibit B
hereto
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and to such further effect as counsel to the U.S. Underwriters may reasonably
request, with respect to each direct or indirect subsidiary of the Company or
Mettler organized under the laws of Switzerland.
(e) Opinion of Christine J. Smith, Esq. At the Closing Time, the U.S.
Representatives shall have received the favorable opinion, dated as of the
Closing Time, of Christine J. Smith, Esq., in form and substance satisfactory
to counsel for the U.S. Underwriters, together with signed or reproduced
copies of such letter for each of the other U.S. Underwriters to the effect
set forth in Exhibit C hereto and to such further effect as counsel to the
U.S. Underwriters may reasonably request.
(f) Opinion of Counsel for the Selling Shareholders. At Closing Time,
the U.S. Representatives shall have received the favorable opinion, dated as
of Closing Time, of counsel for each of the Selling Shareholders listed on
Schedule E hereto, in form and substance satisfactory to counsel for the
Underwriters, together with signed or reproduced copies of such letter for
each of the other Underwriters to the effect set forth in Exhibit D hereto and
to such further effect as counsel to the Underwriters may reasonably request
(g) Opinion of Counsel for U.S. Underwriters. At Closing Time, the
U.S. Representatives shall have received the favorable opinion, dated as of
Closing Time, of Debevoise & Plimpton, counsel for the U.S. Underwriters,
together with signed or reproduced copies of such letter for each of the other
U.S. Underwriters with respect to the matters set forth in clauses (1), (2),
(5) (but with respect to preemptive or other similar rights, solely as to
preemptive or other similar rights arising by operation of law or under the
charter or by-laws of the Company), (7) through (10), inclusive, (11) (solely
as to the information in the Prospectus under "Description of Capital
Stock--Common Stock") and the first full paragraph of text following clause 16
of Exhibit A hereto. In giving such opinion such counsel may rely, as to all
matters governed by the laws of jurisdictions other than the law of the State
of New York, the federal law of the United States and the General Corporation
Law of the State of Delaware, upon the opinions of counsel satisfactory to the
U.S. Representatives. Such counsel may also state that, insofar as such
opinion involves factual matters, they have relied, to the extent they deem
proper, upon certificates of officers of the Company and its subsidiaries and
certificates of public officials.
(h) Officers' Certificate. At Closing Time, there shall not have
been, since the date hereof or since the respective dates as of which
information is given in the Prospectuses, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, and the
U.S. Representatives shall have received a certificate of the President or a
Vice President of the Company and of the chief financial or chief accounting
officer of each of the Company and Mettler, in each case dated as of Closing
Time, to the effect that (i) there has been no such Material Adverse Effect,
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(ii) the representations and warranties in Section 1(a) hereof are true and
correct in all material respects with the same force and effect as though
expressly made at and as of Closing Time, (iii) each of the Company and
Mettler has complied with all agreements and satisfied all conditions
contained in this Agreement and the International Purchase Agreement on its
part to be performed or satisfied at or prior to Closing Time, and (iv) no
stop order suspending the effectiveness of the Registration Statement has been
issued and, to the knowledge of such officer no proceedings for that purpose
have been instituted or are pending or are contemplated by the Commission.
(i) Certificate of Selling Shareholders. At Closing Time, the U.S.
Representatives shall have received a certificate of an Attorney-in-Fact on
behalf of each Selling Shareholder, dated as of Closing Time, to the effect
that (i) the representations and warranties of each Selling Shareholder
contained in Section 1(b) hereof are true and correct in all respects with the
same force and effect as though expressly made at and as of Closing Time and
(ii) each Selling Shareholder has complied in all material respects with all
agreements and all conditions on its part to be performed under this Agreement
at or prior to Closing Time.
(j) Litigation Certificate. At Closing Time, the U.S. Representatives
shall have received a certificate of the chief financial officer of the
Company, dated as of Closing Time, in form and substance satisfactory to
counsel for the U.S. Underwriters to the effect set forth in Exhibit E.
(k) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the U.S. Representatives shall have received from KPMG Fides Peat a
letter dated such date, in form and substance satisfactory to the U.S.
Representatives, together with signed or reproduced copies of such letter for
each of the other U.S. Underwriters containing statements and information of
the type ordinarily included in accountants' "comfort letters" to underwriters
with respect to the financial statements and certain financial information
contained in the Registration Statement and the Prospectuses.
(l) Bring-down Comfort Letter. At Closing Time, the U.S.
Representatives shall have received from KPMG Fides Peat a letter, dated as of
Closing Time, to the effect that they reaffirm the statements made in the
letter furnished pursuant to subsection (k) of this Section, except that the
specified date referred to shall be a date not more than three business days
prior to Closing Time.
(m) Approval of Listing. At Closing Time, the Securities shall have
been approved for listing on the NYSE.
(n) No Objection. The NASD has confirmed that it has not raised any
objection with respect to the fairness and reasonableness of the underwriting
terms and arrangements.
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(o) Lock-up Agreements; Registration Rights. At the date of this
Agreement, the U.S. Representatives shall have received an agreement
substantially in the form of Exhibit F hereto signed by the persons listed on
Schedule D hereto. The Company has shall have taken all required action so
that no person (other than persons whose shares are included in the
Registration Statement) who has registration rights or other similar rights
relating to Common Stock of the Company to have Common Stock registered
pursuant to the Registration Statement shall be permitted to exercise such
rights; and no such person who has registration rights or other similar rights
relating to the Common Stock of the Company to have Common Stock registered
pursuant to the Registration Statement shall have exercised such rights (other
than persons whose shares are included in the Registration Statement).
(p) Purchase of Initial International Securities. Contemporaneously
with the purchase by the U.S. Underwriters of the Initial U.S. Securities
under this Agreement, the International Managers shall have purchased the
Initial International Securities under the International Purchase Agreement.
(q) Conditions to Purchase of U.S. Option Securities. In the event
that the U.S. Underwriters exercise their option provided in Section 2(b)
hereof to purchase all or any portion of the U.S. Option Securities, the
representations and warranties of the Company and the Selling Shareholders
contained herein and the statements in any certificates furnished by the
Company, any subsidiary of the Company or the Selling Shareholders hereunder
shall be true and correct as of each Date of Delivery and, at the relevant
Date of Delivery, the U.S. Representatives shall have received:
(i) Officers' Certificate. A certificate, dated such Date of
Delivery, of the President or a Vice President of each of the
Company, Mettler and of the chief financial or chief accounting
officer of each of the Company and Mettler confirming that the
certificate delivered at the Closing Time pursuant to Section 5(h)
hereof remains true and correct as of such Date of Delivery.
(ii) Certificate of Selling Shareholder. A certificate,
dated such Date of Delivery, of an Attorney-in-Fact on behalf of each
Selling Shareholder confirming that the certificate delivered at
Closing Time pursuant to Section 5(i) remains true and correct as of
such Date of Delivery.
(iii) Opinion of Counsel for Company. The favorable opinion
of Fried, Frank, Harris, Shriver & Jacobson, special counsel for the
Company and the Selling Shareholders, in form and substance
reasonably satisfactory to counsel for the U.S. Underwriters, dated
such Date of Delivery, relating to the U.S. Option Securities to be
purchased on such Date of Delivery and otherwise to the same effect
as the opinion required by Section 5(b) hereof.
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(iv) Opinion of Christine J. Smith, Esq. The favorable
opinion of Christine J. Smith, Esq., dated such Date of Delivery, in
form and substance reasonably satisfactory to counsel for the U.S.
Underwriters and otherwise to the same effect as the opinion required
by Section 5(e) hereof.
(v) Opinion of Counsel for Selling Shareholders. The
favorable opinion of counsel for each of Selling Shareholders listed
on Schedule E hereto, in form and substance reasonably satisfactory
to counsel for the U.S. Underwriters, dated such Date of Delivery,
relating to the U.S. Option Securities to be purchased on such Date
of Delivery, and otherwise to the same effect as the opinion required
by Section 5(d) hereof.
(vi) Opinion of Counsel for U.S. Underwriters. The favorable
opinion of Debevoise & Plimpton, counsel for the U.S. Underwriters,
dated such Date of Delivery, relating to the U.S. Option Securities
to be purchased on such Date of Delivery and otherwise to the same
effect as the opinion required by Section 5(f) hereof.
(vii) Opinion of German Counsel for Company. The favorable
opinion of Bruckhaus Westrick Stegemann, special German counsel for
the Company, in form and substance reasonably satisfactory to counsel
for the U.S. Underwriters, dated such Date of Delivery, relating to
the U.S. Option Securities to be purchased on such Date of Delivery
and otherwise to the same effect as the opinion required by Section
5(c) hereof.
(viii) Opinion of Swiss Counsel for Company. The favorable
opinion of Pestalozzi Gmuer & Patry, special Swiss counsel for the
Company, in form and substance reasonably satisfactory to counsel for
the U.S. Underwriters, dated such Date of Delivery, relating to the
U.S. Option Securities to be purchased on such Date of Delivery and
otherwise to the same effect as the opinion required by Section 5(d)
hereof.
(ix) Bring-down Comfort Letter. A letter from KPMG Fides
Peat, in form and substance satisfactory to the U.S. Representatives
and dated such Date of Delivery, and substantially in the same form
and substance as the letter furnished to the U.S. Representatives
pursuant to Section 5(l) hereof, except that the "specified date" in
the letter furnished pursuant to this paragraph shall be a date not
more than five days prior to such Date of Delivery.
(r) Additional Documents. At Closing Time and at each Date of
Delivery, counsel for the U.S. Underwriters shall have been furnished with
such documents and opinions as they may reasonably request for the purpose of
enabling them to pass upon the issuance and sale of the Securities as herein
contemplated, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the conditions,
herein contained; and all proceedings taken by the Company and the Selling
Shareholders in connection with the sale
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of the Securities as herein contemplated shall be satisfactory in form and
substance to the U.S. Representatives and counsel for the U.S. Underwriters.
(s) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled,
this Agreement, or, in the case of any condition to the purchase of U.S.
Option Securities on a Date of Delivery which is after the Closing Time, the
obligations of the several U.S. Underwriters to purchase the relevant Option
Securities, may be terminated by the U.S. Representatives by notice to the
Company at any time at or prior to Closing Time or such Date of Delivery, as
the case may be, and such termination shall be without liability of any party
to any other party except as provided in Section 4 and except that Sections 1,
6, 7 and 8 shall survive any such termination and remain in full force and
effect.
SECTION 6. Indemnification.
(a) Indemnification of U.S. Underwriters. Each of the Company, and
Mettler, jointly and severally, agrees to indemnify and hold harmless each
U.S. Underwriter and each person, if any, who controls any U.S. Underwriter
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement
or alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including the Rule
430A Information and the Rule 434 Information, if applicable, or the
omission or alleged omission therefrom of a material fact required to
be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus
or the Prospectuses (or any amendment or supplement thereto), or the
omission or alleged omission therefrom of a material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission; provided that (subject to Section 6(e) below) any such
settlement is effected with the written consent of the Company;
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by Merrill
Lynch), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
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governmental agency or body, commenced or threatened, to the extent
that any such expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense (a) to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information furnished to the
Company by any Underwriter through Merrill Lynch expressly for use in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any preliminary
prospectus or the U.S. Prospectus (or any amendment or supplement thereto) and
(b) with respect to any preliminary prospectus to the extent that any such
loss, liability, claim, damage or expense of such U.S. Underwriter results
solely from the fact that such U.S. Underwriter sold Securities to a person as
to whom the Company shall establish that there was not sent by commercially
reasonable means, at or prior to the written confirmation of such sale, a copy
of the U.S. Prospectus in any case where such delivery is required by the 1933
Act, if the Company has previously furnished copies thereof in sufficient
quantity to such U.S. Underwriter and the loss, liability, claim, damage or
expense of such U.S. Underwriter results from an untrue statement or omission
of a material fact contained in the preliminary prospectus that was corrected
in the U.S. Prospectus.
Each Selling Shareholder agrees, severally and not jointly,
to indemnify and hold harmless each U.S. Underwriter and each person, if any,
who controls any U.S. Underwriter within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act, the Company, its directors, its officers
who sign the Registration Statement, and any person who controls the Company
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
to the same extent as the foregoing indemnity from the Company and Mettler to
each U.S. Underwriter; provided however, that with respect to each Selling
Shareholder, the indemnification provision in the paragraph shall be only with
respect to the information furnished in writing by or on behalf of such
Selling Shareholder expressly for use in the Registration Statement (or any
amendment thereto), including Rule 430A Information and the Rule 434
Information, if applicable, or any preliminary U.S. prospectus or U.S.
Prospectus (or any amendment or supplement thereto); and provided, further,
that the aggregate liability of any Selling Shareholder pursuant to this
paragraph shall be limited to the net proceeds recovered by such Selling
Shareholder from the Securities purchased by the Underwriters from such
Selling Shareholder pursuant to this Agreement and the International Purchase
Agreement; and provided further, that no Selling Shareholder shall be liable
for any untrue statement, omission or alleged omission of any other Selling
Shareholder.
(b) Indemnification of Selling Shareholders by the Company and
Mettler. The Company and Mettler, jointly and severally, agree to indemnify
and hold harmless each of the Selling Shareholders and each person, if any,
who controls any Selling Shareholder within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act to the same extent that the Company and
Mettler have agreed to indemnify and hold harmless each U.S. Underwriter
27
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pursuant to the preceding paragraph; provided, however, the Company and
Mettler shall not be liable under this paragraph to the extent any loss,
liability, claim, damage or expense described in the preceding paragraph
arises out of or is based upon an untrue statement, alleged untrue statement,
omission or alleged omission based upon information relating to such Selling
Shareholder expressly for use in the Registration Statement (or any amendment
thereto) or such preliminary prospectus or the U.S. Prospectus (or any
amendment or supplement thereto).
(c) Indemnification of Company, Directors and Officers and Selling
Shareholders. Each U.S. Underwriter severally agrees to indemnify and hold
harmless the Company, its directors, each of its officers who signed the
Registration Statement, and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934
Act, and each Selling Shareholder and each person, if any, who controls any
Selling Shareholder within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act against any and all loss, liability, claim, damage
and expense described in the indemnity contained in subsection (a) of this
Section, as incurred, but only with respect to untrue statements or omissions,
or alleged untrue statements or omissions, made in the Registration Statement
(or any amendment thereto), including the Rule 430A Information and the Rule
434 Information, if applicable, or any preliminary U.S. prospectus or the U.S.
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by such U.S.
Underwriter through Merrill Lynch expressly for use in the Registration
Statement (or any amendment thereto) or such preliminary prospectus or the
U.S. Prospectus (or any amendment or supplement thereto).
(d) Actions against Parties; Notification. Each indemnified party
shall give notice as promptly as reasonably practicable to each indemnifying
party of any action commenced against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve such indemnifying party from any liability hereunder to the extent it
is not materially prejudiced as a result thereof and in any event shall not
relieve it from any liability which it may have otherwise than on account of
this indemnity agreement. In the case of parties indemnified pursuant to
Section 6(a) above, counsel to the indemnified parties shall be selected by
Merrill Lynch, and, in the case of parties indemnified pursuant to Sections
6(b) and 6(c) above, counsel to the indemnified parties shall be selected by
the Company. An indemnifying party may participate at its own expense in the
defense of any such action; provided, however, that counsel to the
indemnifying party shall not (except with the consent of the indemnified
party) also be counsel to the indemnified party. In no event shall the
indemnifying parties be liable for fees and expenses of more than one counsel
(in addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar
or related actions in the same jurisdiction arising out of the same general
allegations or circumstances. No indemnifying party shall, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any litigation, or any investigation
or proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever in respect of which
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indemnification or contribution could be sought under this Section 6 or
Section 7 hereof (whether or not the indemnified parties are actual or
potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim and (ii)
does not include a statement as to or an admission of fault, culpability or a
failure to act by or on behalf of any indemnified party.
(e) Settlement without Consent if Failure to Reimburse. If at any
time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 6(a)(iii) effected without its written consent
if (i) such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party
shall have received notice of the terms of such settlement at least 30 days
prior to such settlement being entered into and (iii) such indemnifying party
shall not have reimbursed such indemnified party in accordance with such
request prior to the date of such settlement.
(f) Other Agreements with Respect to Indemnification. The provisions
of this Section shall not affect any agreement among the Company, Mettler and
the Selling Shareholders with respect to indemnification.
SECTION 7. Contribution. If the indemnification provided for in
Section 6 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims,
damages and expenses incurred by such indemnified party, as incurred, (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Company, Mettler and the Selling Shareholders on the one hand and the U.S.
Underwriters on the other hand from the offering of the Securities pursuant to
this Agreement or (ii) if the allocation provided by clause (i) is not
permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company, Mettler and the Selling Shareholders on the one
hand and of the U.S. Underwriters on the other hand in connection with the
statements or omissions, which resulted in such losses, liabilities, claims,
damages or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company, Mettler and the
Selling Shareholders on the one hand and the U.S. Underwriters on the other
hand in connection with the offering of the U.S. Securities pursuant to this
Agreement shall be deemed to be in the same respective proportions as the
total net proceeds from the offering of the U.S. Securities pursuant to this
Agreement (before deducting expenses) received by the Company and the Selling
Shareholders and the total underwriting discount received by the U.S.
Underwriters, in each case as set forth on the cover of the U.S. Prospectus,
or, if Rule 434 is used, the corresponding location on the
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Term Sheet, bear to the aggregate initial public offering price of the U.S.
Securities as set forth on such cover.
The relative fault of the Company, Mettler and the Selling
Shareholders on the one hand and the U.S. Underwriters on the other hand shall
be determined by reference to, among other things, whether any such untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company, Mettler
and the Selling Shareholders on the one hand or by the U.S. Underwriters on
the other hand and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, Mettler, the Selling Shareholders and the U.S.
Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 7 were determined by pro rata allocation (even if the
U.S. Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable
considerations referred to above in this Section 7. The aggregate amount of
losses, liabilities, claims, damages and expenses incurred by an indemnified
party and referred to above in this Section 7 shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged
untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, (i) no Selling
Stockholder shall be required to contribute any amount in excess of the amount
of the total net proceeds received by such Selling Stockholder from the U.S.
Securities purchased from such Selling Stockholder and (ii) no U.S.
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the U.S. Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such U.S. Underwriter has otherwise been required to pay by
reason of any such untrue or alleged untrue statement or omission or alleged
omission.
No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the 1933 Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls a
U.S. Underwriter within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act shall have the same rights to contribution as such U.S.
Underwriter, and each director of the Company, each officer of the Company who
signed the Registration Statement, and each person, if any, who controls the
Company or any Selling Shareholder within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as the Company or such Selling Shareholder, as the case may be.
The U.S. Underwriters' respective obligations to
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contribute pursuant to this Section 7 are several in proportion to the number
of Initial U.S. Securities set forth opposite their respective names in
Schedule A hereto and not joint.
The provisions of this Section shall not affect any agreement among
the Company, Mettler and the Selling Shareholders with respect to
contribution.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company, Mettler, any
subsidiaries of the Company or the Selling Shareholders submitted pursuant
hereto, shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of any U.S. Underwriter or controlling
person, or by or on behalf of the Company, Mettler or the Selling
Shareholders, and shall survive delivery of the Securities to the U.S.
Underwriters.
SECTION 9. Termination of Agreement.
(a) Termination; General. The U.S. Representatives may terminate this
Agreement, by notice to the Company and the Selling Shareholders, at any time
at or prior to Closing Time (i) if there has been, since the time of execution
of this Agreement or since the respective dates as of which information is
given in the U.S. Prospectus, any material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business, or (ii) if there
has occurred any material adverse change in the financial markets in the
United States or the international financial markets, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which
is such as to make it, in the judgment of Merrill Lynch, impracticable to
market the Securities or to enforce contracts for the sale of the Securities,
or (iii) if trading in any securities of the Company has been suspended or
materially limited by the Commission or the NYSE, or if trading generally on
the American Stock Exchange, the NYSE or in the Nasdaq National Market has
been suspended or materially limited, or minimum or maximum prices for trading
have been fixed, or maximum ranges for prices have been required, by any of
said exchanges or by such system or by order of the Commission, the National
Association of Securities Dealers, Inc. or any other governmental authority,
or (iv) if a banking moratorium has been declared by either Federal, New York
or Swiss authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that
Sections 1, 6 and 7 shall survive such termination and remain in full force
and effect.
31
<PAGE>
SECTION 10. Default by One or More of the U.S. Underwriters. If one
or more of the U.S. Underwriters shall fail at Closing Time or a Date of
Delivery to purchase the Securities which it or they are obligated to purchase
under this Agreement (the "Defaulted Securities"), Merrill Lynch shall have
the right, within 24 hours thereafter, to make arrangements for one or more of
the non-defaulting U.S. Underwriters, or any other underwriters, to purchase
all, but not less than all, of the Defaulted Securities in such amounts as may
be agreed upon and upon the terms herein set forth; if, however, Merrill Lynch
shall not have completed such arrangements within such 24-hour period, then:
(a) if the number of Defaulted Securities does not exceed
10% of the number of U.S. Securities to be purchased on such date,
each of the non-defaulting U.S. Underwriters shall be obligated,
severally and not jointly, to purchase the full amount thereof in the
proportions that their respective underwriting obligations hereunder
bear to the underwriting obligations of all non-defaulting U.S.
Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the
number of U.S. Securities to be purchased on such date, this
Agreement or, with respect to any Date of Delivery which occurs after
the Closing Time, the obligation of the U.S. Underwriters to purchase
and of the Company to sell the Option Securities to be purchased and
sold on such Date of Delivery shall terminate without liability on
the part of any non-defaulting U.S. Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
U.S. Underwriter from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement or, in the case of a Date of Delivery which is
after the Closing Time, which does not result in a termination of the
obligation of the U.S. Underwriters to purchase and the Company to sell the
relevant U.S. Option Securities, as the case may be, either (i) the U.S.
Representatives or (ii) any Selling Shareholder shall have the right to
postpone Closing Time or the relevant Date of Delivery, as the case may be,
for a period not exceeding seven days in order to effect any required changes
in the Registration Statement or Prospectus or in any other documents or
arrangements. As used herein, the term "U.S. Underwriter" includes any person
substituted for a U.S. Underwriter under this Section 10.
SECTION 11. Default by one or more of the Selling Shareholders. (a)
If a Selling Shareholder shall fail at Closing Time or at a Date of Delivery
to sell and deliver the number of Securities which such Selling Shareholders
are obligated to sell hereunder, and the remaining Selling Shareholders do not
exercise the right hereby granted to increase, pro rata or otherwise, the
number of Securities to be sold by them hereunder to the total number to be
sold by all Selling Shareholders as set forth in Schedule B hereto, then the
U.S. Underwriters may, at option of the U.S. Representatives, by notice from
the U.S. Representatives to the Company and the
32
<PAGE>
non-defaulting Selling Shareholders, either (i) terminate this Agreement
without any liability on the fault of any non-defaulting party except that the
provisions of Sections 1, 4, 6, 7 and 8 shall remain in full force and effect
or (b) elect to purchase the Securities which the non-defaulting Selling
Shareholders have agreed to sell hereunder. No action taken pursuant to this
Section 11 shall relieve any Selling Shareholder so defaulting from liability,
if any, in respect of such default.
In the event of a default by any Selling Shareholder as referred to
in this Section 11, each of the U.S. Representatives. the Company and the
non-defaulting Selling Shareholders shall have the right to postpone Closing
Time or Date of Delivery for a period not exceeding seven days in order to
effect any required change in the Registration Statement or Prospectus or in
any other documents or arrangements.
SECTION 12. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the U.S.
Underwriters shall be directed to the U.S. Representatives c/o Merrill Lynch
at North Tower, World Financial Center, New York, New York 10281-1201,
attention of Syndicate Operations, with a copy to Debevoise & Plimpton, 875
Third Avenue, New York, New York 10022, Attention: James C. Scoville; notices
to the Company and Mettler shall be directed to the Company at Mettler-Toledo
International Inc., Im Langacher, P.O. Box MT-100, CH 8606 Greifensee,
Switzerland, Attention: William P. Donnelly, with a copy to Fried, Frank,
Harris, Shriver & Jacobson, 4 Chiswell Street, London, EC1Y 4UP, Attention:
Timothy E. Peterson; and notices to the Selling Shareholders shall be
delivered to AEA Investors Inc., 65 East 55th Street, New York, New York
10022, attention of Christine J. Smith, Esq.
SECTION 13. Parties. This Agreement shall inure to the benefit of and
be binding upon the U.S. Underwriters, the Company, Mettler and the Selling
Shareholders and their respective successors. Nothing expressed or mentioned
in this Agreement is intended or shall be construed to give any person, firm
or corporation, other than the U.S. Underwriters, the Company, Mettler and the
Selling Shareholders and their respective successors and the controlling
persons and officers and directors referred to in Sections 6 and 7 and their
heirs and legal representatives, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision herein contained. This
Agreement and all conditions and provisions hereof are intended to be for the
sole and exclusive benefit of the U.S. Underwriters, the Company, Mettler and
the Selling Shareholders and their respective successors, and said controlling
persons and officers and directors and their heirs and legal representatives,
and for the benefit of no other person, firm or corporation. No purchaser of
Securities from any U.S. Underwriter shall be deemed to be a successor by
reason merely of such purchase.
33
<PAGE>
SECTION 14. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 15. Effect of Headings. The Article and Section headings
herein and the Table of Contents are for convenience only and shall not affect
the construction hereof.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company and the Attorney-in-Fact for
the Selling Shareholders a counterpart hereof, whereupon this instrument,
along with all counterparts, will become a binding agreement among the U.S.
Underwriters, the Company, Mettler and the Selling Shareholders in accordance
with its terms.
Very truly yours,
METTLER-TOLEDO INTERNATIONAL
INC.
By:
Name:
Title:
METTLER-TOLEDO, INC.
By:______________________________
Name:
Title:
EACH OF THE SELLING
SHAREHOLDERS LISTED ON
SCHEDULE B HERETO
By:______________________________
As Attorney-in-Fact acting on behalf of the
Selling Shareholders named in Schedule B
hereto
34
<PAGE>
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
BT ALEX. BROWN
CREDIT SUISSE FIRST BOSTON
GOLDMAN, SACHS & CO.
SALOMON SMITH BARNEY
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By ______________________________
Authorized Signatory
For themselves and as U.S. Representatives of the
other U.S. Underwriters named in Schedule A hereto.
35
<PAGE>
SCHEDULE A
</TABLE>
<TABLE>
<CAPTION>
Number of
Initial U.S.
Name of U.S. Underwriter Securities
----------------------- -----------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.........................................................
BT Alex. Brown
Credit Suisse First Boston
Goldman, Sachs & Co.
Salomon Smith Barney
Total..................................................................................
</TABLE>
Sch A-1
<PAGE>
SCHEDULE B
<TABLE>
<CAPTION>
Number of Initial Maximum Number of Option
Securities to be Sold Securities to be Sold
--------------------- ------------------------
<S> <C> <C>
</TABLE>
Sch B-1
<PAGE>
SCHEDULE C
Shares of Common Stock
(Par Value $.01 Per Share)
1. The initial public offering price per share for the
Securities, determined as provided in said Section 2, shall be $ [ ].
2. The purchase price per share for the U.S. Securities to
be paid by the several U.S. Underwriters shall be $ [ ], being an
amount equal to the initial public offering price set forth above
less $ [ ] per share; provided that the purchase price per share for
any U.S. Option Securities purchased upon the exercise of the
over-allotment option described in Section 2(b) shall be reduced by
an amount per share equal to any dividends or distributions declared
by the Company and payable on the Initial U.S. Securities but not
payable on the U.S. Option Securities.
Sch B-2
<PAGE>
SCHEDULE D
List of persons and entities
subject to lock-up
Sch D-1
<PAGE>
SCHEDULE E
List of Selling Stockholders
delivering opinions pursuant
to Sections 5(f) and 5(q)(v)
Sch E-1
<PAGE>
Exhibit A
FORM OF OPINION OF FRIED, FRANK,
HARRIS, SHRIVER & JACOBSON TO BE
DELIVERED PURSUANT TO SECTION 5(b)
[TO COME]
A-1
<PAGE>
Exhibit B
FORM OF LOCAL COUNSEL OPINION TO BE DELIVERED PURSUANT
TO SECTIONS 5(c) AND (d)
i Each of [names of local subsidiaries] (collectively, the
"Subsidiaries") has been duly incorporated and is validly existing as a
corporation [in good standing]1 under laws of |X|, and has corporate power and
authority to own, lease and operate its properties and to conduct its business
as described in the Prospectuses; all of the issued and outstanding capital
stock of each Subsidiary has been duly authorized and validly issued, is fully
paid and non-assessable and, to our knowledge, is owned by |X|; to our
knowledge, none of the outstanding shares of capital stock of any Subsidiary
was issued in violation of the preemptive or similar rights of any
securityholder of such Subsidiary arising under the laws of |X| for the
charter or by-laws of such Subsidiary.
ii To our knowledge, there is not pending or threatened any action,
suit, proceeding, inquiry or investigation, to which the Company or any of the
Subsidiaries is a party, or to which the property of the Company or any of the
Subsidiaries is subject, before or brought by any court, governmental agency
or body in |X|, which might reasonably be expected to result in a Material
Adverse Effect, or which might reasonably be expected to materially and
adversely affect the consummation of the transactions contemplated in the U.S.
Purchase Agreement and the International Purchase Agreement or the performance
by the Company or Mettler of its obligations thereunder.
iii The execution, delivery and performance of the U.S. Purchase
Agreement and the International Purchase Agreement and the consummation of the
transactions contemplated in the U.S. Purchase Agreement, the International
Purchase Agreement and in the Registration Statement (including the issuance
and sale of the Securities and the use of the proceeds from the sale of the
Securities as described in the Prospectuses under the caption "Use Of
Proceeds"), and the compliance by the Company, Holdings, and Mettler with
their respective obligations under the U.S. Purchase Agreement and the
International Purchase Agreement, do not and will not, whether with or without
the giving of notice or lapse of time or both, conflict with or constitute a
breach of, or default or Repayment Event (as defined in Section 1(a)(x) of the
Purchase Agreements) under, or result in the creation or imposition of any
Liens upon any property or assets of any Subsidiary pursuant to any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note, lease or
any other agreement or instrument, known to us, to which a Subsidiary is a
party or by which any of them may be bound, or to which any of the property or
assets of the Subsidiaries is subject (except for Liens under the Credit
Agreement and the Working Capital Facilities and such conflicts, breaches or
defaults or liens, charges or encumbrances
- --------
1 If concept is recognized in local jurisdiction.
B-1
<PAGE>
that would not have a Material Adverse Effect), nor will such action result in
any violation of the provisions of the charter or by-laws of the Subsidiaries,
or any applicable law, statute, rule, regulation, judgment, order, writ or
decree, known to us, of any government, government instrumentality or court of
|X| having jurisdiction over the Subsidiaries or any of their respective
properties, assets or operations.
B-2
<PAGE>
Exhibit C
FORM OF OPINION OF CHRISTINE J. SMITH, ESQ. TO BE
DELIVERED PURSUANT TO SECTION 5(E)
(i) To my knowledge, the Company is not in violation of its Amended
and Restated Certificate of Incorporation or amended By-laws.
(ii) To my knowledge, there are no persons with registration rights
or other similar rights arising under the Amended and Restated Certificate of
Incorporation or amended By-laws of the Company or the corporation laws of the
State of New York, Delaware General Corporation Law or United States federal
securities laws to have any securities registered pursuant to the Registration
Statement or otherwise registered by the Company under the 1933 Act, except
for persons who have waived such rights or whose shares are included in the
Registration Statement.
C-1
<PAGE>
Exhibit D
FORM OF OPINION OF COUNSEL FOR THE SELLING SHAREHOLDER(S)
TO BE DELIVERED PURSUANT TO SECTION 5(f)
[TO COME]
D-1
<PAGE>
Exhibit E
[Letterhead of Mettler-Toledo International Inc.]
Litigation Certificate
The undersigned, William P. Donnelly, hereby certifies that
he is the Chief Financial Officer of Mettler-Toledo International Inc., a
Delaware corporation (the "Company"), and that, as such, he is authorized to
execute and deliver this Certificate on behalf of the Company and, with
reference to the Section 5(j) of the U.S. Purchase Agreement (the "U.S.
Purchase Agreement"), dated o, among the Company, Mettler-Toledo, Inc.
("Mettler-Toledo"), a Delaware corporation, the Selling Shareholders listed in
Schedule B thereto, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, [ ], as representatives of the underwriters listed in Schedule A
to the U.S. Purchase Agreement, and Section 5[(h)] of the International
Purchase Agreement (the "International Purchase Agreement" and together with
the U.S. Purchase Agreement, the "Purchase Agreements"), dated o, 1998, among
the Company, Mettler-Toledo, the Selling Shareholders listed in Schedule [ ]
thereto, Merrill Lynch International, [
], as lead managers to the underwriters listed in Schedule A to the
International Purchase Agreement, further certifies, represents and warrants
on behalf of the Company as follows (each capitalized term used herein without
definition having the same meaning specified in the Purchase Agreements):
(a) to the best of his knowledge, based upon certifications made by
officers of the Company and its subsidiaries in the form attached
hereto as Exhibit A, the undersigned has set forth in Exhibit B
attached hereto all actions, suits, proceedings, inquiries or
investigations before or brought by any court or governmental agency
or body, domestic or foreign, pending or threatened against or
affecting the Company or any of its subsidiaries, at the Closing
Time, where the maximum level of liability is equal to or greater
than $250,000; and
(b) further certifies, represents and warrants on behalf of the
Company that none of such actions, suits, proceedings, inquiries or
investigations set forth in Exhibit B would reasonably be expected to
have a Material Adverse Effect or would reasonably be expected to
materially or adversely affect the property or assets of the Company
or its subsidiaries or the consummation of the transactions
contemplated in the Purchase Agreements or the performance by the
Company or Mettler-Toledo of its obligations hereunder or thereunder.
E-1
<PAGE>
WITNESS the signature of the undersigned this day of [ ],1998.
------------------------------
By: William P. Donnelly
Title: Chief Financial Officer
E-2
<PAGE>
Exhibit F
[FORM OF LOCK-UP PURSUANT TO SECTION 5(o)]
, 1998
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
BT ALEX. BROWN
CREDIT SUISSE FIRST BOSTON
GOLDMAN, SACHS & CO.
SALOMON SMITH BARNEY
as Representatives of the several U.S. Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
MERRILL LYNCH INTERNATIONAL
BT ALEX. BROWN INTERNATIONAL,
A DIVISION OF BANKERS TRUST INTERNATIONAL PLC
CREDIT SUISSE FIRST BOSTON (EUROPE) LIMITED
GOLDMAN SACHS INTERNATIONAL
SMITH BARNEY INC.
as Representatives of the several International Underwriters
c/o Merrill Lynch International
Ropemaker Place
25 Ropemaker Street
London, England, EC2Y 9LY
Mettler-Toledo International Inc.
Im Langacher
P.O. Box MT-100
CH 8606, Greifensee, Switzerland
Re: Proposed Public Offering Mettler-Toledo International Inc.
Dear Sirs:
The undersigned, a [stockholder] [and an officer and/or director] of
Mettler-Toledo International Inc., a Delaware corporation (the "Company"),
understands that Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch"), [ ] propose to enter into a U.S.
Purchase Agreement (the "U.S. Purchase Agreement") with the Company and the
Selling Shareholders, and Merrill Lynch International, [ ]
propose to enter into an International
F-1
<PAGE>
Purchase Agreement (the "International Purchase Agreement") with the Company
and the Selling Shareholders, each providing for the public offering (the
"Offerings") of shares (the "Securities") of the Company's common stock, par
value $.01 per share (the "Common Stock"). In recognition of the benefit that
such an offering will confer upon the undersigned as a stockholder [and an
officer and/or director] of the Company, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the undersigned agrees with each underwriter to be named in the U.S. Purchase
Agreement or the International Purchase Agreement that, during a period of 90
days from the date of the U.S. Purchase Agreement, the undersigned will not,
without the prior written consent of Merrill Lynch, directly or indirectly,
(i) offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant for the sale of, or otherwise dispose of or transfer any shares of the
Company's Common Stock or any securities convertible into or exchangeable or
exercisable for Common Stock (except through gifts to persons, trusts or other
entities who agree in writing to be bound by the restrictions of this letter),
or file any registration statement under the Securities Act of 1933, as
amended, with respect to any of the foregoing, or (ii) enter into any swap or
any other agreement or any transaction that transfers, in whole or in part,
directly or indirectly, the economic consequence of ownership of the Common
Stock, whether any such swap or transaction is to be settled by delivery of
Common Stock or other securities, in cash or otherwise; provided, however,
that (i) the Company may file a registration statement on Form S-8 under the
Securities Act of 1933 relating to Common Stock of the Company issued pursuant
to the Company's stock option plan (the "Stock Plan"), and (ii) employees of
the Company may exercise rights to acquire Common Stock pursuant to the Stock
Plan.
Sincerely,
If Individual:
Print Name
Signature
If Corporation, Partnership or Trust:
[print or type name of entity]
By:
Name:
Title:
F-2
<PAGE>
EXHIBIT 1.2
METTLER-TOLEDO INTERNATIONAL INC.
(a Delaware corporation)
[ ] Shares of Common Stock
FORM OF INTERNATIONAL PURCHASE AGREEMENT
Dated: [ ], 1998
20579732.02
<PAGE>
Table of Contents
<TABLE>
<S> <C>
INTERNATIONAL PURCHASE AGREEMENT..................................................................................1
SECTION 1. Representations and Warranties........................................................3
(a) Representations and Warranties by the Company and Mettler.............................3
(i) Compliance with Registration Requirements...................................4
(ii) Independent Accountants.....................................................5
(iii) Financial Statements........................................................5
(iv) No Material Adverse Change in Business......................................5
(v) Good Standing...............................................................6
(vi) Good Standing of Subsidiaries...............................................6
(vii) Capitalization..............................................................6
(viii) Authorization of Agreement..................................................7
(ix) Authorization and Description of Securities.................................7
(x) Absence of Defaults and Conflicts...........................................7
(xi) Absence of Labor Dispute....................................................8
(xii) Absence of Proceedings......................................................8
(xiii) Accuracy of Exhibits........................................................8
(xiv) Possession of Intellectual Property.........................................8
(xv) Absence of Further Requirements.............................................9
(xvi) Possession of Licenses and Permits..........................................9
(xvii) Title to Property...........................................................9
(xviii) Investment Company Act.....................................................10
(xix) Environmental Laws.........................................................10
(xx) Registration Rights........................................................10
(xxi) Taxes......................................................................11
(xxii) Accounting Controls........................................................11
(xxiii) Insurance..................................................................11
(xxiv) Stabilization or Manipulation..............................................11
(xxv) Certain Relationships......................................................12
(xxvi) No Offering Material.......................................................12
(xxvii) Suppliers..................................................................12
(b) Representations and Warranties by the Selling Shareholders...........................12
(c) Officer's Certificates...............................................................14
SECTION 2. Sale and Delivery to International Managers; Closing.................................15
(a) Initial Securities...................................................................15
(b) Option Securities....................................................................15
(c) Payment..............................................................................16
(d) Denominations; Registration..........................................................16
SECTION 3. Covenants of the Company.............................................................16
(a) Compliance with Securities Regulations and Commission Requests.......................17
(b) Filing of Amendments.................................................................17
(c) Delivery of Registration Statements..................................................17
(d) Delivery of Prospectuses.............................................................17
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
(e) Continued Compliance with Securities Laws............................................18
(f) Blue Sky Qualifications..............................................................18
(g) Rule 158.............................................................................19
(h) Restriction on Sale of Securities....................................................19
(i) Reporting Requirements...............................................................19
SECTION 4. Payment of Expenses..................................................................19
(a) Expenses.............................................................................19
(b) Expenses of the Selling Shareholders.................................................20
(c) Termination of Agreement.............................................................20
SECTION 5. Conditions of International Managers' Obligations....................................20
(a) Effectiveness of Registration Statement..............................................20
(b) Opinion of Counsel for Company.......................................................21
(c) Opinion of German Counsel for the Company............................................21
(d) Opinion of Swiss Counsel for the Company.............................................21
(e) Opinion of Christine J. Smith, Esq...................................................21
(f) Opinion of Counsel for the Selling Shareholders......................................21
(g) Opinion of Counsel for International Managers........................................22
(h) Officers' Certificate................................................................22
(i) Certificate of Selling Shareholders..................................................22
(j) Litigation Certificate...............................................................23
(k) Accountant's Comfort Letter..........................................................23
(l) Bring-down Comfort Letter............................................................23
(m) Approval of Listing..................................................................23
(n) No Objection.........................................................................23
(o) Lock-up Agreements; Registration Rights..............................................23
(p) Purchase of Initial U.S. Securities..................................................23
(q) Conditions to Purchase of International Option Securities............................24
(i) Officers' Certificate......................................................24
(ii) Certificate of Selling Shareholder.........................................24
(iii) Opinion of Counsel for Company.............................................24
(iv) Opinion of Christine J. Smith, Esq.........................................24
(v) Opinion of Counsel for Selling Shareholders................................24
(vi) Opinion of Counsel for International Managers..............................25
(vii) Opinion of German Counsel for Company......................................25
(viii) Opinion of Swiss Counsel for Company.......................................25
(ix) Bring-down Comfort Letter..................................................25
(r) Additional Documents.................................................................25
(s) Termination of Agreement.............................................................25
SECTION 6. Indemnification......................................................................26
(a) Indemnification of International Managers............................................26
(b) Indemnification of Selling Shareholders by the Company and Mettler
....................................................................................27
(c) Indemnification of Company, Directors and Officers and Selling
Shareholders.........................................................................28
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
(d) Actions against Parties; Notification................................................28
(e) Settlement without Consent if Failure to Reimburse...................................29
(f) Other Agreements with Respect to Indemnification.....................................29
SECTION 7. Contribution.........................................................................29
SECTION 8. Representations, Warranties and Agreements to Survive Delivery.......................31
SECTION 9. Termination of Agreement.............................................................31
(a) Termination; General.................................................................31
(b) Liabilities..........................................................................31
SECTION 10. Default by One or More of the International Managers.................................31
SECTION 11. Default by one or more of the Selling Shareholders...................................32
SECTION 12. Notices..............................................................................33
SECTION 13. Parties..............................................................................33
SECTION 14. GOVERNING LAW AND TIME...............................................................33
SECTION 15. Effect of Headings...................................................................34
SCHEDULES
Schedule A - List of Underwriters.........................................................Sch A-1
Schedule B - List of Selling Shareholders.................................................Sch B-1
Schedule C - Shares of Common Stock.......................................................Sch C-1
Schedule D - List of persons and entities subject to lock-up..............................Sch D-1
EXHIBITS
Exhibit A - Form of Opinion of Company's Counsel..............................................A-1
Exhibit B - Form of Local Counsel Opinion.....................................................B-1
Exhibit C - Form of Opinion of Christine J. Smith, Esq........................................C-1
Exhibit D - Form of Opinion of Selling Stockholders' Counsel................................. D-1
Exhibit E - Form of Litigation Certificate of the
Chief Financial Officer of the Company......................................E-1
Exhibit F - Form of Lock-up Letter........................................................... F-1
</TABLE>
iii
<PAGE>
METTLER-TOLEDO INTERNATIONAL INC.
(a Delaware corporation)
[ ] Shares of Common Stock
(Par Value $.01 Per Share)
INTERNATIONAL PURCHASE AGREEMENT
--------------------------------
[ ], 1998
MERRILL LYNCH INTERNATIONAL
BT ALEX. BROWN INTERNATIONAL,
A DIVISION OF BANKERS TRUST INTERNATIONAL PLC
CREDIT SUISSE FIRST BOSTON (EUROPE) LIMITED
GOLDMAN SACHS INTERNATIONAL
SMITH BARNEY INC.
as Lead Managers of the several International Managers
c/o Merrill Lynch International
Ropemaker Place
25 Ropemaker Street
London EC2Y 9LY
England
Ladies and Gentlemen:
Mettler-Toledo International Inc., a Delaware corporation (the
"Company"), Mettler-Toledo, Inc. ("Mettler") and the persons listed on
Schedule B hereto (the "Selling Shareholders"), confirm their agreement with
Merrill Lynch International ("Merrill Lynch") and each of the other
International Managers named in Schedule A hereto (collectively, the
"International Managers", which term shall also include any underwriter
substituted as hereinafter provided in Section 10 hereof), for whom Merrill
Lynch International and BT Alex. Brown International, a Division of Bankers
Trust International PLC, Credit Suisse First Boston (Europe) Limited, Goldman
Sachs International and Smith Barney Inc. are acting as representatives (in
such capacity, the "Lead Managers"), with respect to (i) the sale by the
Selling Shareholders, and the purchase by the International Managers, acting
severally and not jointly, of the respective numbers of shares of Common
Stock, par value $.01 per share, of the Company ("Common Stock") set forth in
Schedules A and B hereto, and (ii) the grant by the Selling Shareholders to
the International Managers, acting severally and not jointly, of the option
described in Section 2(b) hereof to purchase all or any part of [ ] additional
shares of Common Stock to cover over-allotments, if any. The aforesaid [ ]
shares of Common
<PAGE>
Stock (the "Initial International Securities") to be purchased by the
International Managers and all or any part of the [ ] shares of Common Stock
subject to the option described in Section 2(b) hereof (the "International
Option Securities") are hereinafter called, collectively, the "International
Securities".
It is understood that the Company and the Selling Shareholders are
concurrently entering into an agreement dated the date hereof (the "U.S.
Purchase Agreement") providing for the offering by the Selling Shareholders of
an aggregate of [ ] shares of Common Stock (the "Initial U.S. Securities")
through arrangements with certain underwriters in the United States and Canada
(the "U.S. Underwriters") for which Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated and BT Alex. Brown, Credit Suisse First
Boston Corporation, Goldman, Sachs & Co. and Smith Barney Inc. are acting as
representatives (the "U.S. Representatives"), and the grant by the Selling
Shareholders to the U.S. Underwriters, acting severally and not jointly, of an
option to purchase all or any part of the U.S. Underwriters' pro rata portion
of up to [ ] additional shares of Common Stock solely to cover overallotments,
if any (the "U.S. Option Securities" and, together with the International
Option Securities, the "Option Securities"). The Initial U.S. Securities and
the U.S. Option Securities are hereinafter called the "U.S. Securities". It is
understood that the Selling Shareholders are not obligated to sell and the
International Managers are not obligated to purchase any Initial International
Securities unless all of the Initial U.S. Securities are contemporaneously
purchased by the International Managers.
The International Managers and the U.S. Underwriters are hereinafter
collectively called the "Underwriters", the Initial U.S. Securities and the
Initial International Securities are hereinafter collectively called the
"Initial Securities", and the U.S. Securities and the International Securities
are hereinafter collectively called the "Securities".
The Underwriters will concurrently enter into an Intersyndicate
Agreement of even date herewith (the "Intersyndicate Agreement") providing for
the coordination of certain transactions among the Underwriters under the
direction of Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated (in such capacity, the "Global Coordinator").
The Company and the Selling Shareholders understand that the
International Managers propose to make a public offering of the International
Securities as soon as the Lead Managers deem advisable after this Agreement
has been executed and delivered.
The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-3 (No. 333- ) covering
the registration of the Securities under the Securities Act of 1933, as
amended (the "1933 Act"), including the related preliminary prospectus or
prospectuses. Promptly after execution and delivery of this Agreement, the
Company will either (i) prepare and file a prospectus in accordance with the
provisions of Rule 430A ("Rule 430A") of the rules and regulations of the
Commission under
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the 1933 Act (the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule
424(b)") of the 1933 Act Regulations or (ii) if the Company has elected to
rely upon Rule 434 ("Rule 434") of the 1933 Act Regulations, prepare and file
a term sheet (a "Term Sheet") in accordance with the provisions of Rule 434
and Rule 424(b). Two forms of prospectus are to be used in connection with the
offering and sale of the Securities: one relating to the International
Securities (the "Form of International Prospectus") and one relating to the
U.S. Securities (the "Form of U.S. Prospectus"). The Form of International
Prospectus is identical to the Form of U.S. Prospectus, except for the front
cover and back cover pages and the information under the caption
"Underwriting." The information included in any such prospectus or in any such
Term Sheet, as the case may be, that was omitted from such registration
statement at the time it became effective but that is deemed to be part of
such registration statement at the time it became effective (a) pursuant to
paragraph (b) of Rule 430A is referred to as "Rule 430A Information" or (b)
pursuant to paragraph (d) of Rule 434 is referred to as "Rule 434
Information". Each Form of International Prospectus and Form of U.S.
Prospectus used before such registration statement became effective, and any
prospectus that omitted, as applicable, the Rule 430A Information or the Rule
434 Information, that was used after such effectiveness and prior to the
execution and delivery of this Agreement, is herein called a "preliminary
prospectus". Such registration statement, including the exhibits thereto and
schedules thereto at the time it became effective and including the Rule 430A
Information and the Rule 434 Information, as applicable, is herein called the
"Registration Statement". Any registration statement filed pursuant to Rule
462(b) of the 1933 Act Regulations is herein referred to as the "Rule 462(b)
Registration Statement," and after such filing the term "Registration
Statement" shall include the Rule 462(b) Registration Statement. The final
Form of International Prospectus and the final Form of U.S. Prospectus in the
forms first furnished to the Underwriters for use in connection with the
offering of the Securities are herein called the "International Prospectus"
and the "U.S. Prospectus", respectively, and collectively, the "Prospectuses".
If Rule 434 is relied on, the terms "International Prospectus" and "U.S.
Prospectus" shall refer to the preliminary International Prospectus, dated
[ ], 1998 and preliminary U.S. Prospectus, dated [ ], 1998, respectively, each
together with the applicable Term Sheet and all references in this Agreement
to the date of such Prospectuses shall mean the date of the applicable Term
Sheet. For purposes of this Agreement, all references to the Registration
Statement, any preliminary prospectus, the International Prospectus, the U.S.
Prospectus or any Term Sheet or any amendment or supplement to any of the
foregoing shall be deemed to include the copy filed with the Commission
pursuant to its Electronic Data Gathering, Analysis and Retrieval system
("EDGAR").
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company and Mettler. The
Company and Mettler, jointly and severally, represent and warrant to each
International Manager as of the date hereof, as of the Closing Time referred
to in Section 2(c) hereof and as of each Date of Delivery
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(if any) referred to in Section 2(b) hereof, and agree with each International
Manager, as follows:
(i) Compliance with Registration Requirements. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or are pending or,
to the knowledge of the Company, are contemplated by the Commission,
and any request on the part of the Commission for additional
information has been complied with.
At the respective times the Registration Statement, any Rule
462(b) Registration Statement and any post-effective amendments
thereto became effective and at the Closing Time (and, if any
International Option Securities are purchased, at the Date of
Delivery), the Registration Statement, the Rule 462(b) Registration
Statement and any amendments and supplements thereto complied and
will comply in all material respects with the requirements of the
1933 Act and the 1933 Act Regulations and did not and will not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading. Neither of the Prospectuses nor
any amendments or supplements thereto (including any prospectus
wrapper), at the time the Prospectuses or any amendments or
supplements thereto were issued and at the Closing Time (and, if any
International Option Securities are purchased, at the Date of
Delivery), included or will include an untrue statement of a material
fact or omitted or will omit to state a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. If Rule 434
is used, the Company will comply with the requirements of Rule 434
and the Prospectuses shall not be "materially different", as such
term is used in Rule 434, from the prospectuses included in the
Registration Statement at the time it became effective. The
representations and warranties in this subsection shall not apply to
statements in or omissions from the Registration Statement or the
International Prospectus made in reliance upon and in conformity with
information furnished to the Company in writing by any International
Manager through Merrill Lynch expressly for use in the Registration
Statement or the International Prospectus.
Each preliminary prospectus and the prospectuses filed as
part of the Registration Statement as originally filed or as part of
any amendment thereto, or filed pursuant to Rule 424 under the 1933
Act, complied when so filed in all material respects with the 1933
Act Regulations and each preliminary prospectus and the Prospectuses
delivered to the Underwriters for use in connection with this
offering was identical to the electronically transmitted copies
thereof filed with the Commission pursuant to EDGAR, except to the
extent permitted by Regulation S-T of the 1933 Act Regulations.
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<PAGE>
(ii) Independent Accountants. The accountants who certified
the financial statements and supporting schedules included in the
Registration Statement are independent public accountants as required
by the 1933 Act and the 1933 Act Regulations.
(iii) Financial Statements. The financial statements
included in the Registration Statement and the Prospectuses, together
with the related schedules and notes, present fairly the consolidated
financial position of the Company and its subsidiaries and, in
respect of the Predecessor Business (as defined in the Registration
Statement under "Selected Historical Financial Information"), of the
Company and its combined affiliated entities, as the case may be, at
the dates indicated and the statement of operations, changes in net
assets, stockholders' equity and cash flows of the Company and its
consolidated subsidiaries and, in respect of the Predecessor
Business, of the Company and its combined affiliated entities, as the
case may be, for the periods specified; said financial statements
have been prepared in conformity with U.S. generally accepted
accounting principles ("GAAP") applied on a consistent basis
throughout the periods involved. The supporting schedules included in
the Registration Statement present fairly in accordance with GAAP the
information required to be stated therein. The selected financial
data and the summary financial information included in the
Prospectuses present fairly the information shown therein and have
been compiled on a basis consistent with that of the audited
financial statements included in the Registration Statement. The pro
forma information and the related notes thereto included in the
Registration Statement and the Prospectuses present fairly the
information shown therein, have been properly compiled on the bases
described therein, and the assumptions used in the preparation
thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions and circumstances
referred to therein.
(iv) No Material Adverse Change in Business. Since the
respective dates as of which information is given in the Registration
Statement and the Prospectuses, except as otherwise stated therein,
(A) there has been no material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of
business, and no material adverse effect on the ability of the
Company or Mettler to enter into this Agreement or the U.S. Purchase
Agreement or to consummate the transactions contemplated in this
Agreement or the U.S. Purchase Agreement (any such material adverse
change or effect, a "Material Adverse Effect"), (B) there have been
no transactions entered into by the Company or any of its
subsidiaries, other than those in the ordinary course of business,
which are material with respect to the Company and its subsidiaries
considered as one enterprise, and (C) there has been no dividend or
distribution of any kind declared, paid or made by the Company on any
class of its capital stock.
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<PAGE>
(v) Good Standing. The Company and Mettler have been duly
organized and are validly existing as corporations in good standing
under the laws of the State of Delaware and have corporate power and
authority to own, lease and operate their properties and to conduct
their business as described in the Prospectuses and to enter into and
perform their obligations under this Agreement; and the Company and
Mettler are duly qualified as foreign corporations to transact
business and are in good standing in each other jurisdiction in which
such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the
failure so to qualify or to be in good standing would not result in a
Material Adverse Effect.
(vi) Good Standing of Subsidiaries. Each "significant
subsidiary" of the Company (as such term is defined in Rule 1-02 of
Regulation S-X) (each a "Subsidiary" and, collectively, the
"Subsidiaries") has been duly organized and is validly existing as a
corporation in good standing under the laws of the jurisdiction of
its incorporation, has corporate power and authority to own, lease
and operate its properties and to conduct its business as described
in the Prospectuses and is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in
which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except
where the failure so to qualify or to be in good standing would not
result in a Material Adverse Effect; except for directors' qualifying
shares or as otherwise disclosed in the Registration Statement, all
of the issued and outstanding capital stock of each such Subsidiary
has been duly authorized and validly issued, is fully paid and
non-assessable and is owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity, except for any security
interest, mortgage, pledge, lien, encumbrance, claim or equity
created pursuant to the Credit Agreement (as defined in the
Registration Statement) or under any local working capital facilities
or interest protection agreements secured under the Credit Agreement
(the "Other Secured Agreements"); and none of the outstanding shares
of capital stock of any Subsidiary was issued in violation of the
preemptive or similar rights of any securityholder of such
Subsidiary. The only subsidiaries of the Company are (a) the
subsidiaries listed on Exhibit 21 to the Company's registration
statement on Form S-1 (Registration No. 333-35597) and (b) certain
other subsidiaries which, considered in the aggregate as a single
Subsidiary, do not constitute a "significant subsidiary" as defined
in Rule 1-02 of Regulation S-X.
(vii) Capitalization. The authorized, issued and outstanding
capital stock of the Company shall be as set forth in the
Prospectuses in the column entitled "Actual" under the caption
"Capitalization" (except for subsequent issuances, if any, pursuant
to this Agreement, pursuant to reservations, agreements or employee
benefit plans referred to in the Prospectuses or pursuant to the
exercise of convertible securities or options referred to in the
Prospectuses). The shares of issued and outstanding capital stock of
the Company, including the Securities to be purchased by the
Underwriters from the Selling
6
<PAGE>
Shareholders, have been duly authorized and validly issued and are
fully paid and non-assessable; none of the outstanding shares of
capital stock of the Company, including the Securities to be
purchased by the Underwriters from the Selling Shareholders, was
issued in violation of the preemptive or other similar rights of any
securityholder of the Company.
(viii) Authorization of Agreement. This Agreement and the
U.S. Purchase Agreement have been duly authorized, executed and
delivered by the Company and Mettler.
(ix) Authorization and Description of Securities. The Common
Stock conforms in all material respects to all statements relating
thereto contained in the Prospectuses and such description conforms
to the rights set forth in the instruments defining the same; no
holder of the Securities will be subject to personal liability by
reason of being such a holder.
(x) Absence of Defaults and Conflicts. Neither the Company
nor any of its subsidiaries is in violation of its charter or by-laws
or in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note,
lease or other agreement or instrument to which the Company or any of
its subsidiaries is a party or by which it or any of them may be
bound, or to which any of the property or assets of the Company or
any subsidiary is subject (collectively, "Agreements and
Instruments"), except for (a) with respect to the Company's
subsidiaries other than the Subsidiaries, such violations that would
not result in a Material Adverse Effect, and (b) such defaults that
would not result in a Material Adverse Effect; and the execution,
delivery and performance of this Agreement and the U.S. Purchase
Agreement by the Company or Mettler, the consummation by the Company
or Mettler of the transactions contemplated in this Agreement and the
U.S. Purchase Agreement and the transactions contemplated herein and
in the Registration Statement (including the sale of the Securities),
and compliance by the Company and Mettler with their obligations
under this Agreement and the U.S. Purchase Agreement have been duly
authorized by all necessary corporate action by the Company or
Mettler, as the case may be, and do not and will not, whether with or
without the giving of notice or passage of time or both, conflict
with or constitute a breach of, or default or Repayment Event (as
defined below) under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the
Company or any subsidiary pursuant to, the Agreements and Instruments
(except for (A) such conflicts, breaches or defaults or liens,
charges or encumbrances that would not result in a Material Adverse
Effect or (B) such liens, charges, or encumbrances as are created in
connection with the execution, delivery and performance of the Credit
Agreement or the Other Secured Agreements, nor will such action
result in any violation of the provisions of the charter or by-laws
of the Company or any subsidiary or any
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<PAGE>
applicable law, statute, rule, regulation, judgment, order, writ or
decree of any government, government instrumentality or court,
domestic or foreign, having jurisdiction over the Company or any
subsidiary or any of their assets, properties or operations. As used
herein, a "Repayment Event" means any event or condition which gives
the holder of any note, debenture or other evidence of indebtedness
(or any person acting on such holder's behalf) the right to require
the repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company or any subsidiary.
(xi) Absence of Labor Dispute. No labor dispute with the
employees of the Company or any subsidiary exists or, to the
knowledge of the Company or Mettler, is imminent, and neither the
Company nor Mettler is aware of any existing or imminent labor
disturbance by the employees of any of its or any subsidiary's
principal suppliers, manufacturers, customers or contractors, which,
in either case, might reasonably be expected to result in a Material
Adverse Effect.
(xii) Absence of Proceedings. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court
or governmental agency or body, domestic or foreign, now pending, or,
to the knowledge of the Company or Mettler, threatened, against or
affecting the Company or any subsidiary, which is required to be
disclosed in the Registration Statement (other than as disclosed
therein), or which might reasonably be expected to result in a
Material Adverse Effect or which might reasonably be expected to
materially and adversely affect the properties or assets thereof or
the consummation of the transactions contemplated in this Agreement
or the U.S. Purchase Agreement or the performance by the Company and
Mettler of their obligations hereunder or under the U.S. Purchase
Agreement, and the aggregate of all pending legal or governmental
proceedings to which the Company or any subsidiary is a party or of
which any of their respective property or assets is the subject which
are not described in the Registration Statement, including ordinary
routine litigation incidental to the business, could not reasonably
be expected to result in a Material Adverse Effect.
(xiii) Accuracy of Exhibits. There are no contracts or
documents which are required to be described in the Registration
Statement or the Prospectuses or to be filed as exhibits thereto
which have not been so described and filed as required.
(xiv) Possession of Intellectual Property. The Company and
its subsidiaries own or possess, or can acquire on reasonable terms,
adequate patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks, trade names or other
intellectual property (collectively, "Intellectual Property")
necessary to carry on the business now operated by them except where
the failure to so own, possess or acquire, singly and in the
aggregate, would not result in a Material Adverse Effect, and neither
the Company nor any of its subsidiaries has
8
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received any notice or is otherwise aware of any infringement of or
conflict with asserted rights of others with respect to any
Intellectual Property or of any facts or circumstances which would
render any Intellectual Property invalid or inadequate to protect the
interest of the Company or any of its subsidiaries therein, and which
infringement or conflict (if the subject of any unfavorable decision,
ruling or finding) or invalidity or inadequacy, singly or in the
aggregate, would result in a Material Adverse Effect.
(xv) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency is necessary or required for the performance by the Company or
Mettler of their obligations hereunder, in connection with the
offering or sale of the Securities under this Agreement and the U.S.
Purchase Agreement or the consummation of the transactions
contemplated by this Agreement or the U.S. Purchase Agreement, except
such as have been already obtained or as may be required under the
1933 Act or the 1933 Act Regulations and foreign or state securities
or blue sky laws.
(xvi) Possession of Licenses and Permits. The Company and
its subsidiaries possess such permits, licenses, approvals, consents
and other authorizations (collectively, "Governmental Licenses")
issued by the appropriate federal, state, local or foreign regulatory
agencies or bodies necessary to conduct the business now operated by
them except for such Governmental Licenses the failure of which to
possess would not have a Material Adverse Effect; the Company and its
subsidiaries are in compliance with the terms and conditions of all
such Governmental Licenses, except where the failure so to comply
would not, singly or in the aggregate, have a Material Adverse
Effect; all of the Governmental Licenses are valid and in full force
and effect, except when the invalidity of such Governmental Licenses
or the failure of such Governmental Licenses to be in full force and
effect would not have a Material Adverse Effect; and neither the
Company nor any of its subsidiaries has received any written notice
of any judicial or administrative proceedings relating to the
revocation or modification of any such Governmental Licenses which,
singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would result in a Material Adverse
Effect.
(xvii) Title to Property. The Company and its subsidiaries
have good and marketable title to all real property owned by the
Company and its subsidiaries and good title to all other properties
owned by them, in each case, free and clear of all mortgages,
pledges, liens, security interests, claims, restrictions or
encumbrances of any kind except such as (a) are described in the
Prospectuses or as set forth in the Credit Agreement or the Other
Secured Agreements, (b) do not, singly or in the aggregate,
materially affect the value of such property and do not interfere
with the use made and proposed to be made of such property by the
Company or any of its subsidiaries or (c) would not have a Material
Adverse Effect; all of the leases and subleases material to the
business of the Company and its subsidiaries, considered as one
enterprise, and under which the
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Company or any of its subsidiaries holds properties described in the
Prospectuses, are in full force and effect; and neither the Company
nor any subsidiary has any notice of any claim of any sort that has
been asserted by anyone adverse to the rights of the Company or any
subsidiary under any of the leases or subleases mentioned above, or
affecting or questioning the rights of the Company or such subsidiary
to the continued possession of the leased or subleased premises under
any such lease or sublease except for such claims as would not singly
or in the aggregate result in a Material Adverse Effect.
(xviii) Investment Company Act. Neither the Company nor
Mettler is or upon (a) the sale of the Securities as herein
contemplated or (b) the consummation of the transactions contemplated
by this Agreement or the U.S. Purchase Agreement will be, an
"investment company" as such term is defined in the Investment
Company Act of 1940, as amended (the "1940 Act").
(xix) Environmental Laws. Except as described in the
Registration Statement and except as would not, singly or in the
aggregate, result in a Material Adverse Effect, (A) neither the
Company nor any of its subsidiaries is in violation of any federal,
state, local or foreign statute, law, regulation, ordinance, code,
common law or any judicial or administrative interpretation thereof
enforceable at law or in equity, including any applicable judicial or
administrative order, consent, decree or judgment, relating to
pollution or protection of human health or the environment
(including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata), including, without
limitation, laws and regulations relating to the release or
threatened release of chemicals, pollutants, contaminants, wastes,
toxic substances, hazardous substances, petroleum or petroleum
products subject to regulation under any environmental law
(collectively, "Hazardous Materials") or to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials subject to regulation
under any environmental law (collectively, "Environmental Laws"), (B)
the Company and its subsidiaries have all permits, authorizations and
approvals required under any applicable Environmental Laws and are
each in compliance with their requirements, (C) there are no pending
or, to the knowledge of the Company or Mettler, threatened
administrative, regulatory or judicial actions, suits, demand
letters, claims, liens, notices of noncompliance or violation,
investigation or proceedings relating to any Environmental Law
against the Company or any of its subsidiaries and (D) to the
knowledge of the Company or Mettler, there are no events or
circumstances that could reasonably be expected to form the basis of
an order for clean-up or remediation, or an action, suit or
proceeding by any private party or governmental body or agency,
against the Company or any of its subsidiaries relating to Hazardous
Materials or any Environmental Laws.
(xx) Registration Rights. Except as described in the
Registration Statement and the Prospectuses, no person has
registration rights or other similar rights to have any
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securities of the Company registered by the Company under the 1933
Act. Except for persons whose shares have been included in the
Registration Statement, no persons who have registration rights or
other similar rights relating to the Common Stock of the Company have
any such rights to have Common Stock registered pursuant to the
Registration Statement which have not been waived. There are no
persons with registration rights or other similar rights to have any
securities registered by the Company's subsidiaries under the 1933
Act.
(xxi) Taxes. The Company and its subsidiaries have filed all
tax returns that are required to have been filed by them pursuant to
applicable law except insofar as the failure to file such returns
would not result in a Material Adverse Effect, and have paid all
taxes due pursuant to such returns or pursuant to any assessment
received by the Company and its subsidiaries, except for such taxes,
if any, as are being contested in good faith by appropriate
proceedings and as to which adequate reserves have been provided in
accordance with GAAP, and except for the failure to pay such taxes
which, individually and in the aggregate, would not have a Material
Adverse Effect. The charges, accruals and reserves on the books of
the Company and its subsidiaries in respect of any tax liability for
any years not finally determined are adequate in accordance with GAAP
to meet any assessments or reassessments for additional tax for any
years not finally determined, except to the extent of any inadequacy
that would not result in a Material Adverse Effect.
(xxii) Accounting Controls. The Company and its subsidiaries
maintain a system of internal accounting controls sufficient to
provide reasonable assurances that (A) transactions are executed in
accordance with management's general or specific authorization, (B)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets, (C) access to
assets is permitted only in accordance with management's general or
specific authorization and (D) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(xxiii) Insurance. The Company and its subsidiaries carry or
are entitled to the benefits of insurance, with financially sound and
reputable insurers, in such amounts and covering such risks as is
generally maintained by companies of established repute engaged in
the same or similar business, and all policies with respect to such
insurance are in full force and effect.
(xxiv) Stabilization or Manipulation. Neither the Company
nor any of its subsidiaries has taken, directly or indirectly, any
action designed to cause or to result in, or that has constituted or
which might reasonably be expected to constitute, the stabilization
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or manipulation of the price of any security of any such entity to
facilitate the sale or resale of the Securities.
(xxv) Certain Relationships. No relationship, direct or
indirect, exists between or among any of the Company and any of its
subsidiaries or any affiliate of any such entity, on the one hand,
and any director, officer, stockholder, customer or supplier of any
of them, on the other hand, which is required by the 1933 Act or by
the 1933 Act Regulations to be described in the Registration
Statement or the Prospectuses which is not so described or is not
described as required.
(xxvi) No Offering Material. The Company and its
subsidiaries have not distributed and, prior to the later to occur of
(i) the Closing Time and (ii) completion of the distribution of the
Securities, will not distribute any offering material in connection
with the offering and sale of the Securities other than the
Registration Statement, any preliminary prospectus, the Prospectus or
other materials, if any, permitted by the 1933 Act and approved by
the U.S. Representatives.
(xxvii) Suppliers. No supplier of merchandise to the Company
or any of its subsidiaries has ceased shipments of merchandise
thereto, which cessation would result in a Material Adverse Effect.
(b) Representations and Warranties by the Selling Shareholders. Each
Selling Shareholder severally and not jointly represents and warrants to each
Underwriter as of the date hereof, as of the Closing Time, and, if the Selling
Shareholder is selling Option Securities on a Date of Delivery, as of each
such Date of Delivery, and agrees with each Underwriter, as follows:
(i) Such Selling Shareholder has reviewed and is familiar
with the Registration Statement and the Prospectuses and the
Prospectuses do not contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading, provided that the representations and
warranties made in this paragraph (i) shall be only with respect to
the information furnished in writing by or on behalf of Such
Shareholder expressly for use in the Registration Statement (or any
amendment thereto).
(ii) Such Selling Shareholder has full right, power and
authority to execute, deliver and perform its obligations under this
Agreement, the U.S. Purchase Agreement and the Power of Attorney and
Custody Agreement, and to sell, transfer and deliver the Securities
pursuant to this Agreement; and this Agreement, the U.S. Purchase
Agreement and the Power of Attorney and Custody Agreement have been
duly authorized, executed and delivered by or on behalf of such
Selling Shareholder and constitutes a valid and binding agreement of
such Selling Shareholder, enforceable against such Selling
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Shareholder in accordance with its terms, except as enforcement
thereof may be limited by bankruptcy, insolvency, reorganization or
other similar laws relating to or affecting enforcement of creditors'
rights generally or by general principles of equity.
(iii) There is no action, suit or proceeding before or by
any government, governmental instrumentality or court, domestic or
foreign, now pending or, to the knowledge of such Selling
Shareholder, threatened, to which such Selling Shareholder is or
would be a party or of which the property of such Selling Shareholder
is or may be subject, that (i) seeks to restrain, enjoin, prevent the
consummation of or otherwise challenge the sale of Securities by such
Selling Shareholder or any of the other transactions contemplated
hereby or (ii) questions the legality or validity of any such
transactions or seeks to recover damages or obtain other relief in
connection with any such transactions.
(iv) No filing, authorization, approval, consent, license,
order, registration or qualification of or with any government,
governmental instrumentality or court (other than under the 1933 Act
and the 1933 Act Regulations and the securities or blue sky laws of
the various states in connection with the sale of the Securities),
domestic or foreign, is required by reason of facts specifically
pertaining to such Selling shareholder or its legal or regulatory
status in connection with the due authorization, execution and
delivery by such Selling Shareholder of this Agreement, the U.S.
Purchase Agreement or the Power of Attorney and Custody Agreement and
the valid sale and delivery of the Securities to be sold by such
Selling Shareholder hereunder and thereunder.
(v) The execution, delivery and performance of this
Agreement, the U.S. Purchase Agreement and the Power of Attorney and
Custody Agreement by such Selling Shareholder, the sale of the
Securities by such Selling Shareholder hereunder and thereunder, the
consummation by such Selling Shareholder of the transactions herein
and therein contemplated and the compliance by such Selling
Shareholder with all the provisions of this Agreement, the U.S.
Purchase Agreement and the Power of Attorney and Custody Agreement
will not result in a violation of the charter or bylaws of such
Selling Shareholders which are corporations or the partnership
agreement or certificate of limited partnership, if applicable, of
such Selling Shareholders which are partnerships and will not
conflict with or result in a breach or violation of any of the terms
or provisions of, or constitute a default under, any material
agreement or instrument to which such Selling Shareholder is a party
or by which such Selling Shareholder is bound, nor will such action
result in any violation of the provisions of any statute relating to
such Selling Shareholders or its legal or regulatory status or any
judgment, order, rule or regulation of any court or governmental
agency or body having jurisdiction over such Selling Shareholder.
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(vi) Such Selling Shareholder has, and will at the Closing
Time have, and, if such Selling Shareholder is selling Option Shares
on a Date of Delivery, will on the Date of Delivery have, valid and
marketable title to the Securities to be sold by the Selling
Shareholder pursuant to this Agreement and the U.S. Purchase
Agreement, free and clear of any pledge, lien, security interest,
charge, claim, equity or encumbrance of any kind; and, at the Closing
Time and, if such Selling Shareholder is selling Option Shares on a
Date of Delivery, at the Date of Delivery, upon delivery of the
Securities to be sold by such Selling Shareholder and payment of the
purchase price therefor as contemplated in this Agreement and the
U.S. Purchase Agreement, each of the Underwriters will receive good
and marketable title to the Securities purchased by it from such
Selling Shareholder, free and clear of any security interest,
mortgage, pledge, lien, charge, claim, equity or encumbrance of any
kind.
(vii) Certificates for all of the Securities to be sold by
such Selling Shareholder pursuant to this Agreement and the U.S.
Purchase Agreement, in suitable form for transfer by delivery or
accompanied by duly executed instruments of transfer or assignment in
blank with signatures guaranteed, have been placed in custody with
the Custodian for delivery to the International Managers pursuant to
this Agreement and the U.S. Underwriters pursuant to the U.S.
Purchase Agreement.
(viii) Such Selling Shareholder has not taken and will not
take, directly or indirectly, any action designed to, or that might
reasonably be expected to, cause or result in stabilization or
manipulation of the price of the Common Stock; and such Selling
Shareholder has not distributed and will not distribute any
prospectus (as such term is defined in the 1933 Act and the 1933 Act
Regulations) in connection with the offering and sale of the
Securities other than any preliminary prospectus filed with the
Commission or the Prospectuses or other material permitted by the
1933 Act or the 1933 Act Regulations.
(ix) Except as described in the Registration Statement and
the Prospectuses, neither such Selling Stockholder nor any of its
affiliates directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common
control with, or has any other association with (within the meaning
of Article I, Section 1(m) of the By-laws of the National Association
of Securities Dealers, Inc.), any member firm of the National
Association of Securities Dealers, Inc.
(c) Officer's Certificates. Any certificate signed by any officer of
the Company, Mettler or any of the Company's subsidiaries delivered to the
Global Coordinator, the Lead Managers or to counsel for the International
Managers shall be deemed a joint and several representation and warranty by
the Company and Mettler to each International Manager as to the matters
covered thereby; and any Certificate signed by or on behalf of the Selling
Shareholders as such and delivered to the representatives or to counsel for
the International Managers pursuant
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to the terms of this Agreement shall be deemed a representation and warranty
by such Selling Shareholder to the International Managers as to the matters
covered thereby.
SECTION 2. Sale and Delivery to International Managers; Closing.
(a) Initial Securities. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, each Selling Shareholder, severally and not jointly, agrees to sell to
each International Manager, severally and not jointly, and each International
Manager, severally and not jointly, agrees to purchase from each Selling
Shareholder, at the price per share set forth in Schedule C, that proportion
of Initial International Securities set forth in Schedule B opposite the name
of such Selling Shareholder, as the case may be, which the number of Initial
International Securities set forth in Schedule A opposite the name of such
International Manager, plus any additional number of Initial International
Securities which such International Manager may become obligated to purchase
pursuant to the provisions of Section 10 hereof bears to the total number of
Initial International Securities, subject, in each case, to such adjustments
among the International Managers as the Lead Managers in their sole discretion
shall make to eliminate any sales or purchases of fractional shares.
(b) Option Securities. In addition, on the basis of the
representations and warranties herein contained and subject to the terms and
conditions herein set forth, the Selling Shareholders, acting severally and
not jointly, hereby grant an option to the International Managers, severally
and not jointly, to purchase up to an additional [ ] shares of Common Stock,
as set forth in Schedule B, at the price per share set forth in Schedule C,
less an amount per share equal to any dividends or distributions declared by
the Company and payable on the Initial International Securities but not
payable on the International Option Securities. The option hereby granted will
expire 30 days after the date hereof and may be exercised in whole or in part
from time to time only for the purpose of covering over-allotments which may
be made in connection with the offering and distribution of the Initial
International Securities upon notice by the Global Coordinator to the Selling
Shareholders setting forth the number of International Option Securities as to
which the several International Managers are then exercising the option and
the time and date of payment and delivery for such International Option
Securities. Any such time and date of delivery for the International Option
Securities (a "Date of Delivery") shall be determined by the Global
Coordinator, but shall not be later than seven full business days after the
exercise of said option, nor in any event prior to the Closing Time, as
hereinafter defined. If the option is exercised as to all or any portion of
the International Option Securities, each of the International Managers,
acting severally and not jointly, will purchase that proportion of the total
number of International Option Securities then being purchased which the
number of Initial International Securities set forth in Schedule A opposite
the name of such International Manager bears to the total number of Initial
International Securities, subject in each case to such adjustments as the
Global Coordinator in its discretion shall make to eliminate any sales or
purchases of fractional shares.
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(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of
Debevoise & Plimpton, New York, New York 10022, or at such other place as
shall be agreed upon by the Global Coordinator, the Company and the Selling
Shareholders, at 9:00 A.M. (Eastern time) on the third (fourth, if the pricing
occurs after 4:30 P.M. (Eastern time) on any given day) business day after the
date hereof (unless postponed in accordance with the provisions of Section
10), or such other time not later than ten business days after such date as
shall be agreed upon by the Global Coordinator and the Selling Shareholders
(such time and date of payment and delivery being herein called "Closing
Time").
In addition, in the event that any or all of the International Option
Securities are purchased by the International Managers, payment of the
purchase price for, and delivery of certificates for, such International
Option Securities shall be made at the above-mentioned offices, or at such
other place as shall be agreed upon by the Global Coordinator, the Company and
the Selling Shareholders, on each Date of Delivery as specified in the notice
from the Global Coordinator to the Selling Shareholders.
Payment shall be made to the Selling Shareholders by wire transfer of
immediately available funds to bank accounts designated by the Custodian
pursuant to each Selling Shareholders' Power of Attorney and Custody
Agreement, as the case may be, against delivery to the Lead Managers for the
respective accounts of the International Managers of certificates for the
International Securities to be purchased by them. It is understood that each
International Manager has authorized the Lead Managers for its account, to
accept delivery of, receipt for, and make payment of the purchase price for,
the Initial International Securities and the International Option Securities,
if any, which it has agreed to purchase. Merrill Lynch, individually and not
as representative of the International Managers, may (but shall not be
obligated to) make payment of the purchase price for the Initial International
Securities or the International Option Securities, if any, to be purchased by
any International Manager whose funds have not been received by the Closing
Time or the relevant Date of Delivery, as the case may be, but such payment
shall not relieve such International Manager from its obligations hereunder.
(d) Denominations; Registration. Certificates for the Initial
International Securities and the International Option Securities, if any,
shall be in such denominations and registered in such names as the Lead
Managers may request in writing at least one full business day before the
Closing Time or the relevant Date of Delivery, as the case may be. The
certificates for the Initial International Securities and the International
Option Securities, if any, will be made available for examination and
packaging by the Lead Managers in the City of New York not later than 10:00
A.M. (Eastern time) on the business day prior to the Closing Time or the
relevant Date of Delivery, as the case may be.
SECTION 3. Covenants of the Company. The Company covenants with each
International Manager as follows:
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(a) Compliance with Securities Regulations and Commission Requests.
The Company, subject to Section 3(b), will comply with the requirements of
Rule 430A or Rule 434, as applicable, and will notify the Global Coordinator
immediately, and confirm the notice in writing, (i) when any post-effective
amendment to the Registration Statement shall become effective, or any
supplement to the Prospectuses or any amended Prospectuses shall have been
filed, (ii) of the receipt of any comments from the Commission, (iii) of any
request by the Commission for any amendment to the Registration Statement or
any amendment or supplement to the Prospectuses or for additional information,
and (iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus, or of the suspension of the
qualification of the Securities for offering or sale in any jurisdiction, or
of the initiation or threatening of any proceedings for any of such purposes.
The Company will promptly effect the filings necessary pursuant to Rule 424(b)
and will take such steps as it deems necessary to ascertain promptly whether
the form of prospectus transmitted for filing under Rule 424(b) was received
for filing by the Commission and, in the event that it was not, it will
promptly file such prospectus. The Company will make every reasonable effort
to prevent the issuance of any stop order and, if any stop order is issued, to
obtain the lifting thereof at the earliest possible moment.
(b) Filing of Amendments. The Company will give the Global
Coordinator notice of its intention to file or prepare any amendment to the
Registration Statement (including any filing under Rule 462(b)), any Term
Sheet or any amendment, supplement or revision to either the prospectus
included in the Registration Statement at the time it became effective or to
the Prospectuses, will furnish the Global Coordinator with copies of any such
documents a reasonable amount of time prior to such proposed filing or use, as
the case may be, and will not file or use any such document to which the
Global Coordinator or counsel for the International Managers shall object.
(c) Delivery of Registration Statements. The Company has furnished or
will deliver to the Lead Managers and counsel for the International Managers
without charge, signed copies of the Registration Statement as originally
filed and of each amendment thereto (including exhibits filed therewith or
incorporated by reference therein) and signed copies of all consents and
certificates of experts, and will also deliver to the Lead Managers without
charge, a conformed copy of the Registration Statement as originally filed and
of each amendment thereto (without exhibits) for each of the International
Managers The copies of the Registration Statement and each amendment thereto
furnished to the International Managers will be identical to the
electronically transmitted copies thereof filed with the Commission pursuant
to EDGAR, except to the extent permitted by Regulation S-T.
(d) Delivery of Prospectuses. The Company has delivered to each
International Manager, without charge, as many copies of each preliminary
prospectus as such International Manager reasonably requested, and the Company
hereby consents to the use of such copies for purposes permitted by the 1933
Act. The Company will furnish to each International Manager,
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without charge, during the period when the International Prospectus is
required to be delivered under the 1933 Act or the Securities Exchange Act of
1934 (the "1934 Act"), such number of copies of the International Prospectus
(as amended or supplemented) as such International Manager may reasonably
request. The International Prospectus and any amendments or supplements
thereto furnished to the International Managers will be identical to the
electronically transmitted copies thereof filed with the Commission pursuant
to EDGAR, except to the extent permitted by Regulation S-T.
(e) Continued Compliance with Securities Laws. The Company will
comply with the 1933 Act and the 1933 Act Regulations so as to permit the
completion of the distribution of the Securities as contemplated in this
Agreement, the U.S. Purchase Agreement and the Prospectuses. If at any time
when a prospectus is required by the 1933 Act to be delivered in connection
with sales of the Securities, any event shall occur or condition shall exist
as a result of which it is necessary, in the opinion of counsel for the
International Managers or for the Company, to amend the Registration Statement
or amend or supplement any Prospectus in order that the Prospectuses will not
include any untrue statements of a material fact or omit to state a material
fact necessary in order to make the statements therein not misleading in the
light of the circumstances existing at the time it is delivered to a
purchaser, or if it shall be necessary, in the opinion of such counsel, at any
such time to amend the Registration Statement or amend or supplement any
Prospectus in order to comply with the requirements of the 1933 Act or the
1933 Act Regulations, the Company will promptly prepare and file with the
Commission, subject to Section 3(b), such amendment or supplement as may be
necessary to correct such statement or omission or to make the Registration
Statement or the Prospectuses comply with such requirements, and the Company
will furnish to the International Managers such number of copies of such
amendment or supplement as the International Managers may reasonably request;
provided, however, that if the date of any such amendment or supplement is
more than 270 days after the date hereof, the preparation, filing and
furnishing of such amendment or supplement shall be at the expense of the
Underwriters.
(f) Blue Sky Qualifications. The Company will use its best efforts,
in cooperation with the International Managers, to qualify the Securities for
offering and sale under the applicable securities laws of such states and
other jurisdictions (domestic or foreign) as the Global Coordinator may
designate and to maintain such qualifications in effect for a period of not
less than one year from the later of the effective date of the Registration
Statement and any Rule 462(b) Registration Statement; provided, however, that
the Company shall not be obligated to file any general consent to service of
process or to qualify as a foreign corporation or as a dealer in securities in
any jurisdiction in which it is not so qualified or to subject itself to
taxation in respect of doing business in any jurisdiction in which it is not
otherwise so subject. In each jurisdiction in which the Securities have been
so qualified, the Company will file such statements and reports as may be
required by the laws of such jurisdiction to continue such qualification in
effect for a period of not less than one year from the effective date of the
Registration Statement and any Rule 462(b) Registration Statement.
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(g) Rule 158. The Company will timely file such reports pursuant to
the 1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the purposes
of, and to provide the benefits contemplated by, the last paragraph of Section
11(a) of the 1933 Act.
(h) Restriction on Sale of Securities. During a period of 90 days
from the date of the Prospectuses, the Company will not, without the prior
written consent of the Global Coordinator, (i) offer, pledge, sell, contract
to sell, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant for the sale of or
otherwise dispose or transfer any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock or file any
registration statement under the 1933 Act with respect to any of the foregoing
or (ii) enter into any swap or any other agreement or any transaction that
transfers, in whole or in part, directly or indirectly, the economic
consequence of ownership of the Common Stock, whether any such swap or
transaction described in clause (i) or (ii) above is to be settled by delivery
of Common Stock or other securities, in cash or otherwise. The foregoing
sentence shall not apply to (A) the Securities to be sold hereunder or under
the U.S. Purchase Agreement, (B) any shares of Common Stock issued by the
Company upon the exercise of an option or warrant or the conversion of a
security outstanding on the date hereof and referred to in the Prospectuses,
(C) any shares of Common Stock issued or options to purchase Common Stock
granted pursuant to existing employee benefit plans of the Company referred to
in the Prospectuses, (D) any shares of Common Stock issued pursuant to any
non-employee director stock plan or dividend reinvestment plan, (E) the
issuance of options under the Company's stock option plan and the exercise by
the Company's employees of their rights relating thereto or (F) the filing of
a registration statement on Form S-8 under the 1933 Act relating to Common
Stock pursuant to the Company's stock option plan.
(i) Reporting Requirements. The Company, during the period when the
Prospectuses are required to be delivered under the 1933 Act or the 1934 Act,
will file all documents required to be filed with the Commission pursuant to
the 1934 Act within the time periods required by the 1934 Act and the rules
and regulations of the Commission thereunder.
SECTION 4. Payment of Expenses.
(a) Expenses. The Company and Mettler, jointly and severally, will
pay all expenses incident to the performance of their obligations under this
Agreement, including (i) the preparation, printing and filing of the
Registration Statement (including financial statements and exhibits) as
originally filed and of each amendment thereto, (ii) the preparation, printing
and delivery to the Underwriters of this Agreement, any Agreement among
Underwriters and such other documents as may be required in connection with
the offering, purchase, sale, issuance or delivery of the Securities, (iii)
the preparation, issuance and delivery of the certificates for the Securities
to the Underwriters, including any stock or other transfer taxes and any stamp
or other duties payable upon the sale, issuance or delivery of the Securities
to the Underwriters and the
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transfer of the Securities between the U.S. Underwriters and the International
Managers, (iv) the fees and disbursements of the Company's and the Selling
Shareholder's counsel, accountants and other advisors, (v) the qualification
of the Securities under securities laws in accordance with the provisions of
Section 3(f) hereof, including filing fees and the reasonable fees and
disbursements of counsel for the Underwriters in connection therewith and in
connection with the preparation of the Blue Sky Survey and any supplement
thereto (such fees and expenses of counsel not to exceed $5,000.00), (vi) the
printing and delivery to the Underwriters of copies of each preliminary
prospectus, any Term Sheets and of the Prospectuses and any amendments or
supplements thereto, (vii) the preparation, printing and delivery to the
Underwriters of copies of the Blue Sky Survey and any supplement thereto,
(viii) the fees and expenses of any transfer agent or registrar for the
Securities, (ix) the filing fees incident to, and the reasonable fees and
disbursements of counsel to the Underwriters in connection with, the review by
the National Association of Securities Dealers, Inc. (the "NASD") of the terms
of the sale of the Securities and (x) the fees and expenses incurred in
connection with the listing of the Securities on the NYSE.
(b) Expenses of the Selling Shareholders. Except as provided in
section 4 above, the Selling Shareholders, severally and not jointly, will pay
all expenses incident to the performance of their respective obligations
under, and the consummation of the transactions contemplated by this
Agreement, including any stamp duties, capital duties and stock transfer
taxes, if any, payable upon the sale of the Securities to the International
Managers, and their transfer between the Underwriters pursuant to an agreement
between such Underwriters.
(c) Termination of Agreement. If this Agreement is terminated by the
U.S. Representatives in accordance with the provisions of Section 5(s) or
Section 9(a)(i) or Section 11 hereof, the Company and Mettler shall reimburse
the International Managers for all of their reasonable out-of-pocket expenses,
including the reasonable fees and disbursements of counsel for the
International Managers.
SECTION 5. Conditions of International Managers' Obligations. The
obligations of the several International Managers hereunder are subject to the
accuracy in all material respects of the representations and warranties of the
Company, Mettler and the Selling Shareholders contained in Section 1 hereof or
in certificates of any officer of the Company, Mettler or any subsidiary of
the Company or on behalf of any Selling Shareholder delivered pursuant to the
provisions hereof, to the performance by the Company and Mettler of their
respective covenants and other obligations hereunder, and to the following
further conditions:
(a) Effectiveness of Registration Statement. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective and at Closing Time no stop order suspending the effectiveness of
the Registration Statement shall have been issued under the 1933 Act or
proceedings therefor initiated or threatened by the Commission, and any
request on the part of the Commission for additional information shall have
been complied with to the
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reasonable satisfaction of counsel to the International Managers A prospectus
containing the Rule 430A Information shall have been filed with the Commission
in accordance with Rule 424(b) (or a post-effective amendment providing such
information shall have been filed and declared effective in accordance with
the requirements of Rule 430A) or, if the Company has elected to rely upon
Rule 434, a Term Sheet shall have been filed with the Commission in accordance
with Rule 424(b).
(b) Opinion of Counsel for Company. At Closing Time, the Lead
Managers shall have received the favorable opinion, dated as of Closing Time,
of Fried, Frank, Harris, Shriver & Jacobson, special counsel for the Company
and the Selling Shareholders, in form and substance satisfactory to counsel
for the International Managers together with signed or reproduced copies of
such letter for each of the other International Managers to the effect set
forth in Exhibit A hereto and to such further effect as counsel to the
International Managers may reasonably request.
(c) Opinion of German Counsel for the Company. At Closing Time, the
Lead Managers shall have received the favorable opinion, dated as of Closing
Time, of Bruckhaus Westrick Stegemann, special German counsel for the Company,
in form and substance satisfactory to counsel for the International Managers,
together with signed or reproduced copies of such letter for each of the other
International Managers to the effect set forth in Exhibit B hereto and to such
further effect as counsel to the International Managers may reasonably
request, with respect to each direct or indirect subsidiary of the Company or
Mettler organized under the laws of Germany.
(d) Opinion of Swiss Counsel for the Company. At Closing Time, the
Lead Managers shall have received the favorable opinion, dated as of Closing
Time, of Pestalozzi Gmuer & Patry, special Swiss counsel for the Company, in
form and substance satisfactory to counsel for the International Managers,
together with signed or reproduced copies of such letter for each of the other
International Managers to the effect set forth in Exhibit B hereto and to such
further effect as counsel to the International Managers may reasonably
request, with respect to each direct or indirect subsidiary of the Company or
Mettler organized under the laws of Switzerland.
(e) Opinion of Christine J. Smith, Esq. At the Closing Time, the Lead
Managers shall have received the favorable opinion, dated as of the Closing
Time, of Christine J. Smith, Esq., in form and substance reasonably
satisfactory to counsel for the International Managers, together with signed
or reproduced copies of such letter for each of the other International
Managers to the effect set forth in Exhibit C hereto and to such further
effect as counsel to the International Managers may reasonably request.
(f) Opinion of Counsel for the Selling Shareholders. At Closing Time,
the Lead Managers shall have received the favorable opinion, dated as of
Closing Time, of counsel for each of the Selling Shareholders listed on
Schedule E hereto, in form and substance satisfactory
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<PAGE>
to counsel for the International Managers, together with signed or reproduced
copies of such letter for each of the other International Managers to the
effect set forth in Exhibit D hereto and to such further effect as counsel to
the International Managers may reasonably request
(g) Opinion of Counsel for International Managers. At Closing Time,
the Lead Managers shall have received the favorable opinion, dated as of
Closing Time, of Debevoise & Plimpton, counsel for the International Managers,
together with signed or reproduced copies of such letter for each of the other
International Managers with respect to the matters set forth in clauses (1),
(2), (5) (but with respect to preemptive or other similar rights, solely as to
preemptive or other similar rights arising by operation of law or under the
charter or by-laws of the Company), (7) through (10), inclusive, (11) (solely
as to the information in the Prospectus under "Description of Capital
Stock--Common Stock") and the first full paragraph of text following clause 16
of Exhibit A hereto. In giving such opinion such counsel may rely, as to all
matters governed by the laws of jurisdictions other than the law of the State
of New York, the federal law of the United States and the General Corporation
Law of the State of Delaware, upon the opinions of counsel satisfactory to the
Lead Managers. Such counsel may also state that, insofar as such opinion
involves factual matters, they have relied, to the extent they deem proper,
upon certificates of officers of the Company and its subsidiaries and
certificates of public officials.
(h) Officers' Certificate. At Closing Time, there shall not have
been, since the date hereof or since the respective dates as of which
information is given in the Prospectuses, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, and the
Lead Managers shall have received a certificate of the President or a Vice
President of the Company and of the chief financial or chief accounting
officer of each of the Company and Mettler, in each case dated as of Closing
Time, to the effect that (i) there has been no such Material Adverse Effect,
(ii) the representations and warranties in Section 1(a) hereof are true and
correct in all material respects with the same force and effect as though
expressly made at and as of Closing Time, (iii) each of the Company and
Mettler has complied with all agreements and satisfied all conditions
contained in this Agreement and the U.S. Purchase Agreement on its part to be
performed or satisfied at or prior to Closing Time, and (iv) no stop order
suspending the effectiveness of the Registration Statement has been issued
and, to the knowledge of such officer no proceedings for that purpose have
been instituted or are pending or are contemplated by the Commission.
(i) Certificate of Selling Shareholders. At Closing Time, the Lead
Managers shall have received a certificate of an Attorney-in-Fact on behalf of
each Selling Shareholder, dated as of Closing Time, to the effect that (i) the
representations and warranties of each Selling Shareholder contained in
Section 1(b) hereof are true and correct in all respects with the same force
and effect as though expressly made at and as of Closing Time and (ii) each
Selling
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Shareholder has complied in all material respects with all agreements and all
conditions on its part to be performed under this Agreement at or prior to
Closing Time.
(j) Litigation Certificate. At Closing Time, the Lead Managers shall
have received a certificate of the chief financial officer of the Company,
dated as of Closing Time, in form and substance satisfactory to counsel for
the International Managers to the effect set forth in Exhibit E.
(k) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the Lead Managers shall have received from KPMG Fides Peat a letter
dated such date, in form and substance satisfactory to the Lead Managers,
together with signed or reproduced copies of such letter for each of the other
International Managers containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information
contained in the Registration Statement and the Prospectuses.
(l) Bring-down Comfort Letter. At Closing Time, the Lead Managers
shall have received from KPMG Fides Peat a letter, dated as of Closing Time,
to the effect that they reaffirm the statements made in the letter furnished
pursuant to subsection (k) of this Section, except that the specified date
referred to shall be a date not more than three business days prior to Closing
Time.
(m) Approval of Listing. At Closing Time, the Securities shall have
been approved for listing on the NYSE.
(n) No Objection. The NASD has confirmed that it has not raised any
objection with respect to the fairness and reasonableness of the underwriting
terms and arrangements.
(o) Lock-up Agreements; Registration Rights. At the date of this
Agreement, the Lead Managers shall have received an agreement substantially in
the form of Exhibit F hereto signed by the persons listed on Schedule D
hereto. The Company has shall have taken all required action so that no person
(other than persons whose shares are included in the Registration Statement)
who has registration rights or other similar rights relating to Common Stock
of the Company to have Common Stock registered pursuant to the Registration
Statement shall be permitted to exercise such rights; and no such person who
has registration rights or other similar rights relating to the Common Stock
of the Company to have Common Stock registered pursuant to the Registration
Statement shall have exercised such rights (other than persons whose shares
are included in the Registration Statement).
(p) Purchase of Initial U.S. Securities. Contemporaneously with the
purchase by the International Managers of the Initial International Securities
under this Agreement, the U.S.
23
<PAGE>
Underwriters shall have purchased the Initial U.S. Securities under the U.S.
Purchase Agreement.
(q) Conditions to Purchase of International Option Securities. In the
event that the International Managers exercise their option provided in
Section 2(b) hereof to purchase all or any portion of the International Option
Securities, the representations and warranties of the Company and the Selling
Shareholders contained herein and the statements in any certificates furnished
by the Company, any subsidiary of the Company or the Selling Shareholders
hereunder shall be true and correct as of each Date of Delivery and, at the
relevant Date of Delivery, the Lead Managers shall have received:
(i) Officers' Certificate. A certificate, dated such Date of
Delivery, of the President or a Vice President of each of the
Company, Mettler and of the chief financial or chief accounting
officer of each of the Company and Mettler confirming that the
certificate delivered at the Closing Time pursuant to Section 5(h)
hereof remains true and correct as of such Date of Delivery.
(ii) Certificate of Selling Shareholder. A certificate,
dated such Date of Delivery, of an Attorney-in-Fact on behalf of each
Selling Shareholder confirming that the certificate delivered at
Closing Time pursuant to Section 5(i) remains true and correct as of
such Date of Delivery.
(iii) Opinion of Counsel for Company. The favorable opinion
of Fried, Frank, Harris, Shriver & Jacobson, special counsel for the
Company and the Selling Shareholders, in form and substance
reasonably satisfactory to counsel for the International Managers,
dated such Date of Delivery, relating to the International Option
Securities to be purchased on such Date of Delivery and otherwise to
the same effect as the opinion required by Section 5(b) hereof.
(iv) Opinion of Christine J. Smith, Esq. The favorable
opinion of Christine J. Smith, Esq., dated such Date of Delivery, in
form and substance reasonably satisfactory to counsel for the
International Managers and otherwise to the same effect as the
opinion required by Section 5(e) hereof.
(v) Opinion of Counsel for Selling Shareholders. The
favorable opinion of counsel for each of the Selling Shareholders
listed on Schedule E hereto, in form and substance reasonably
satisfactory to counsel for the International Managers, dated such
Date of Delivery, relating to the International Option Securities to
be purchased on such Date of Delivery, and otherwise to the same
effect as the opinion required by Section 5(d) hereof.
24
<PAGE>
(vi) Opinion of Counsel for International Managers. The
favorable opinion of Debevoise & Plimpton, counsel for the
International Managers, dated such Date of Delivery, relating to the
International Option Securities to be purchased on such Date of
Delivery and otherwise to the same effect as the opinion required by
Section 5(f) hereof.
(vii) Opinion of German Counsel for Company. The favorable
opinion of Bruckhaus Westrick Stegemann, special German counsel for
the Company, in form and substance reasonably satisfactory to counsel
for the International Managers, dated such Date of Delivery, relating
to the International Option Securities to be purchased on such Date
of Delivery and otherwise to the same effect as the opinion required
by Section 5(c) hereof.
(viii) Opinion of Swiss Counsel for Company. The favorable
opinion of Pestalozzi Gmuer & Patry, special Swiss counsel for the
Company, in form and substance reasonably satisfactory to counsel for
the International Managers, dated such Date of Delivery, relating to
the International Option Securities to be purchased on such Date of
Delivery and otherwise to the same effect as the opinion required by
Section 5(d) hereof.
(ix) Bring-down Comfort Letter. A letter from KPMG Fides
Peat, in form and substance satisfactory to the Lead Managers and
dated such Date of Delivery, and substantially in the same form and
substance as the letter furnished to the Lead Managers pursuant to
Section 5(l) hereof, except that the "specified date" in the letter
furnished pursuant to this paragraph shall be a date not more than
five days prior to such Date of Delivery.
(r) Additional Documents. At Closing Time and at each Date of
Delivery, counsel for the International Managers shall have been furnished
with such documents and opinions as they may reasonably request for the
purpose of enabling them to pass upon the issuance and sale of the Securities
as herein contemplated, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the conditions,
herein contained; and all proceedings taken by the Company and the Selling
Shareholders in connection with the sale of the Securities as herein
contemplated shall be satisfactory in form and substance to the Lead Managers
and counsel for the International Managers.
(s) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled,
this Agreement, or, in the case of any condition to the purchase of
International Option Securities on a Date of Delivery which is after the
Closing Time, the obligations of the several International Managers to
purchase the relevant Option Securities, may be terminated by the Lead
Managers by notice to the Company at any time at or prior to Closing Time or
such Date of Delivery, as the case may be, and such termination shall be
without liability of any party to any other party except as provided in
25
<PAGE>
Section 4 and except that Sections 1, 6, 7 and 8 shall survive any such
termination and remain in full force and effect.
SECTION 6. Indemnification.
(a) Indemnification of International Managers. Each of the Company,
and Mettler, jointly and severally, agrees to indemnify and hold harmless each
International Manager and each person, if any, who controls any International
Manager within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement
or alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including the Rule
430A Information and the Rule 434 Information, if applicable, or the
omission or alleged omission therefrom of a material fact required to
be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus
or the Prospectuses (or any amendment or supplement thereto), or the
omission or alleged omission therefrom of a material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission; provided that (subject to Section 6(e) below) any such
settlement is effected with the written consent of the Company;
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by Merrill
Lynch), reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, to the extent
that any such expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense (a) to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information furnished to the
Company by any Underwriter through Merrill Lynch expressly for use in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any preliminary
prospectus or the International Prospectus (or any amendment or supplement
thereto) and (b) with respect to any preliminary
26
<PAGE>
prospectus to the extent that any such loss, liability, claim, damage or
expense of such International Manager results solely from the fact that such
International Manager sold Securities to a person as to whom the Company shall
establish that there was not sent by commercially reasonable means, at or
prior to the written confirmation of such sale, a copy of the International
Prospectus in any case where such delivery is required by the 1933 Act, if the
Company has previously furnished copies thereof in sufficient quantity to such
International Manager and the loss, liability, claim, damage or expense of
such International Manager results from an untrue statement or omission of a
material fact contained in the preliminary prospectus that was corrected in
the International Prospectus.
Each Selling Shareholder agrees, severally and not jointly,
to indemnify and hold harmless each International Manager and each person, if
any, who controls any International Manager within the meaning of Section 15
of the 1933 Act or Section 20 of the 1934 Act, the Company, its directors, its
officers who sign the Registration Statement, and any person who controls the
Company within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act to the same extent as the foregoing indemnity from the Company and
Mettler to each International Manager; provided however, that with respect to
each Selling Shareholder, the indemnification provision in the paragraph shall
be only with respect to the information furnished in writing by or on behalf
of such Selling Shareholder expressly for use in the Registration Statement
(or any amendment thereto), including Rule 430A Information and the Rule 434
Information, if applicable, or any preliminary International prospectus or
International Prospectus (or any amendment or supplement thereto); and
provided, further, that the aggregate liability of any Selling Shareholder
pursuant to this paragraph shall be limited to the net proceeds recovered by
such Selling Shareholder from the Securities purchased by the Underwriters
from such Selling Shareholder pursuant to this Agreement and the U.S. Purchase
Agreement; and provided further, that no Selling Shareholder shall be liable
for any untrue statement, omission or alleged omission of any other Selling
Shareholder.
(b) Indemnification of Selling Shareholders by the Company and
Mettler. The Company and Mettler, jointly and severally, agree to indemnify
and hold harmless each of the Selling Shareholders and each person, if any,
who controls any Selling Shareholder within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act to the same extent that the Company and
Mettler have agreed to indemnify and hold harmless each International Manager
pursuant to the preceding paragraph; provided, however, the Company and
Mettler shall not be liable under this paragraph to the extent any loss,
liability, claim, damage or expense described in the preceding paragraph
arises out of or is based upon an untrue statement, alleged untrue statement,
omission or alleged omission based upon information relating to such Selling
Shareholder expressly for use in the Registration Statement (or any amendment
thereto) or such preliminary prospectus or the International Prospectus (or
any amendment or supplement thereto).
27
<PAGE>
(c) Indemnification of Company, Directors and Officers and Selling
Shareholders. Each International Manager severally agrees to indemnify and
hold harmless the Company, its directors, each of its officers who signed the
Registration Statement, and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934
Act, and each Selling Shareholder and each person, if any, who controls any
Selling Shareholder within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act against any and all loss, liability, claim, damage
and expense described in the indemnity contained in subsection (a) of this
Section, as incurred, but only with respect to untrue statements or omissions,
or alleged untrue statements or omissions, made in the Registration Statement
(or any amendment thereto), including the Rule 430A Information and the Rule
434 Information, if applicable, or any preliminary International Prospectus or
the International Prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with written information furnished to the
Company by such International Manager through Merrill Lynch expressly for use
in the Registration Statement (or any amendment thereto) or such preliminary
prospectus or the International Prospectus (or any amendment or supplement
thereto).
(d) Actions against Parties; Notification. Each indemnified party
shall give notice as promptly as reasonably practicable to each indemnifying
party of any action commenced against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve such indemnifying party from any liability hereunder to the extent it
is not materially prejudiced as a result thereof and in any event shall not
relieve it from any liability which it may have otherwise than on account of
this indemnity agreement. In the case of parties indemnified pursuant to
Section 6(a) above, counsel to the indemnified parties shall be selected by
Merrill Lynch, and, in the case of parties indemnified pursuant to Sections
6(b) and 6(c) above, counsel to the indemnified parties shall be selected by
the Company. An indemnifying party may participate at its own expense in the
defense of any such action; provided, however, that counsel to the
indemnifying party shall not (except with the consent of the indemnified
party) also be counsel to the indemnified party. In no event shall the
indemnifying parties be liable for fees and expenses of more than one counsel
(in addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar
or related actions in the same jurisdiction arising out of the same general
allegations or circumstances. No indemnifying party shall, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any litigation, or any investigation
or proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever in respect of which indemnification or contribution could
be sought under this Section 6 or Section 7 hereof (whether or not the
indemnified parties are actual or potential parties thereto), unless such
settlement, compromise or consent (i) includes an unconditional release of
each indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act by or on behalf of
any indemnified party.
28
<PAGE>
(e) Settlement without Consent if Failure to Reimburse. If at any
time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 6(a)(iii) effected without its written consent
if (i) such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party
shall have received notice of the terms of such settlement at least 30 days
prior to such settlement being entered into and (iii) such indemnifying party
shall not have reimbursed such indemnified party in accordance with such
request prior to the date of such settlement.
(f) Other Agreements with Respect to Indemnification. The provisions
of this Section shall not affect any agreement among the Company, Mettler and
the Selling Shareholders with respect to indemnification.
SECTION 7. Contribution. If the indemnification provided for in
Section 6 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims,
damages and expenses incurred by such indemnified party, as incurred, (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Company, Mettler and the Selling Shareholders on the one hand and the
International Managers on the other hand from the offering of the Securities
pursuant to this Agreement or (ii) if the allocation provided by clause (i) is
not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company, Mettler and the Selling Shareholders
on the one hand and of the International Managers on the other hand in
connection with the statements or omissions, which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by the Company, Mettler and the
Selling Shareholders on the one hand and the International Managers on the
other hand in connection with the offering of the International Securities
pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the International
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the Selling Shareholders and the total underwriting discount
received by the International Managers, in each case as set forth on the cover
of the International Prospectus, or, if Rule 434 is used, the corresponding
location on the Term Sheet, bear to the aggregate initial public offering
price of the International Securities as set forth on such cover.
The relative fault of the Company, Mettler and the Selling
Shareholders on the one hand and the International Managers on the other hand
shall be determined by reference to, among other things, whether any such
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by the
Company,
29
<PAGE>
Mettler and the Selling Shareholders on the one hand or by the International
Managers on the other hand and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or
omission.
The Company, Mettler, the Selling Shareholders and the International
Managers agree that it would not be just and equitable if contribution
pursuant to this Section 7 were determined by pro rata allocation (even if the
International Managers were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the equitable
considerations referred to above in this Section 7. The aggregate amount of
losses, liabilities, claims, damages and expenses incurred by an indemnified
party and referred to above in this Section 7 shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged
untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, (i) no Selling
Stockholder shall be required to contribute any amount in excess of the amount
of the total net proceeds received by such Selling Stockholder from the U.S.
Securities purchased from such Selling Stockholder and (ii) no International
Manager shall be required to contribute any amount in excess of the amount by
which the total price at which the International Securities underwritten by it
and distributed to the public were offered to the public exceeds the amount of
any damages which such International Manager has otherwise been required to
pay by reason of any such untrue or alleged untrue statement or omission or
alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the 1933 Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls a
International Manager within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as such
International Manager, and each director of the Company, each officer of the
Company who signed the Registration Statement, and each person, if any, who
controls the Company or any Selling Shareholder within the meaning of Section
15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as the Company or such Selling Shareholder, as the case may be.
The International Managers' respective obligations to contribute pursuant to
this Section 7 are several in proportion to the number of Initial
International Securities set forth opposite their respective names in Schedule
A hereto and not joint.
The provisions of this Section shall not affect any agreement among
the Company, Mettler and the Selling Shareholders with respect to
contribution.
30
<PAGE>
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company, Mettler, any
subsidiaries of the Company or the Selling Shareholders submitted pursuant
hereto, shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of any International Manager or controlling
person, or by or on behalf of the Company, Mettler or the Selling
Shareholders, and shall survive delivery of the Securities to the
International Managers.
SECTION 9. Termination of Agreement.
(a) Termination; General. The Lead Managers may terminate this
Agreement, by notice to the Company and the Selling Shareholders, at any time
at or prior to Closing Time (i) if there has been, since the time of execution
of this Agreement or since the respective dates as of which information is
given in the International Prospectus, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, or (ii)
if there has occurred any material adverse change in the financial markets in
the United States or the international financial markets, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which
is such as to make it, in the judgment of Merrill Lynch, impracticable to
market the Securities or to enforce contracts for the sale of the Securities,
or (iii) if trading in any securities of the Company has been suspended or
materially limited by the Commission or the NYSE, or if trading generally on
the American Stock Exchange, the NYSE or in the Nasdaq National Market has
been suspended or materially limited, or minimum or maximum prices for trading
have been fixed, or maximum ranges for prices have been required, by any of
said exchanges or by such system or by order of the Commission, the National
Association of Securities Dealers, Inc. or any other governmental authority,
or (iv) if a banking moratorium has been declared by either Federal, New York
or Swiss authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that
Sections 1, 6 and 7 shall survive such termination and remain in full force
and effect.
SECTION 10. Default by One or More of the International Managers. If
one or more of the International Managers shall fail at Closing Time or a Date
of Delivery to purchase the Securities which it or they are obligated to
purchase under this Agreement (the "Defaulted Securities"), Merrill Lynch
shall have the right, within 24 hours thereafter, to make arrangements for one
or more of the non-defaulting International Managers, or any other
underwriters, to purchase all, but not less than all, of the Defaulted
Securities in such amounts as
31
<PAGE>
may be agreed upon and upon the terms herein set forth; if, however, Merrill
Lynch shall not have completed such arrangements within such 24-hour period,
then:
(a) if the number of Defaulted Securities does not exceed
10% of the number of International Securities to be purchased on such
date, each of the non-defaulting International Managers shall be
obligated, severally and not jointly, to purchase the full amount
thereof in the proportions that their respective underwriting
obligations hereunder bear to the underwriting obligations of all
non-defaulting International Managers, or
(b) if the number of Defaulted Securities exceeds 10% of the
number of International Securities to be purchased on such date, this
Agreement or, with respect to any Date of Delivery which occurs after
the Closing Time, the obligation of the International Managers to
purchase and of the Company to sell the Option Securities to be
purchased and sold on such Date of Delivery shall terminate without
liability on the part of any non-defaulting International Manager.
No action taken pursuant to this Section shall relieve any defaulting
International Manager from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement or, in the case of a Date of Delivery which is
after the Closing Time, which does not result in a termination of the
obligation of the International Managers to purchase and the Company to sell
the relevant International Option Securities, as the case may be, either (i)
the Lead Managers or (ii) any Selling Shareholder shall have the right to
postpone Closing Time or the relevant Date of Delivery, as the case may be,
for a period not exceeding seven days in order to effect any required changes
in the Registration Statement or Prospectus or in any other documents or
arrangements. As used herein, the term "International Manager" includes any
person substituted for a International Manager under this Section 10.
SECTION 11. Default by one or more of the Selling Shareholders. (a)
If a Selling Shareholder shall fail at Closing Time or at a Date of Delivery
to sell and deliver the number of Securities which such Selling Shareholders
are obligated to sell hereunder, and the remaining Selling Shareholders do not
exercise the right hereby granted to increase, pro rata or otherwise, the
number of Securities to be sold by them hereunder to the total number to be
sold by all Selling Shareholders as set forth in Schedule B hereto, then the
International Managers may, at option of the Lead Managers, by notice from the
Lead Managers to the Company and the non-defaulting Selling Shareholders,
either (i) terminate this Agreement without any liability on the fault of any
non-defaulting party except that the provisions of Sections 1, 4, 6, 7 and 8
shall remain in full force and effect or (b) elect to purchase the Securities
which the non-defaulting Selling Shareholders have agreed to sell hereunder.
No action taken pursuant to this Section 11
32
<PAGE>
shall relieve any Selling Shareholder so defaulting from liability, if any, in
respect of such default.
In the event of a default by any Selling Shareholder as referred to
in this Section 11, each of the Lead Managers. the Company and the
non-defaulting Selling Shareholders shall have the right to postpone Closing
Time or Date of Delivery for a period not exceeding seven days in order to
effect any required change in the Registration Statement or Prospectus or in
any other documents or arrangements.
SECTION 12. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
International Managers shall be directed to the Lead Managers c/o Merrill
Lynch at North Tower, World Financial Center, New York, New York 10281-1201,
attention of Syndicate Operations, with a copy to Debevoise & Plimpton, 875
Third Avenue, New York, New York 10022, Attention: James C. Scoville; notices
to the Company and Mettler shall be directed to the Company at Mettler-Toledo
International Inc., Im Langacher, P.O. Box MT-100, CH 8606 Greifensee,
Switzerland, Attention: William P. Donnelly, with a copy to Fried, Frank,
Harris, Shriver & Jacobson, 4 Chiswell Street, London, EC1Y 4UP, Attention:
Timothy E. Peterson; and notices to the Selling Shareholders shall be
delivered to AEA Investors Inc., 65 East 55th Street, New York, New York
10022, attention of Christine J. Smith, Esq.
SECTION 13. Parties. This Agreement shall inure to the benefit of and
be binding upon the International Managers, the Company, Mettler and the
Selling Shareholders and their respective successors. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any
person, firm or corporation, other than the International Managers, the
Company, Mettler and the Selling Shareholders and their respective successors
and the controlling persons and officers and directors referred to in Sections
6 and 7 and their heirs and legal representatives, any legal or equitable
right, remedy or claim under or in respect of this Agreement or any provision
herein contained. This Agreement and all conditions and provisions hereof are
intended to be for the sole and exclusive benefit of the International
Managers, the Company, Mettler and the Selling Shareholders and their
respective successors, and said controlling persons and officers and directors
and their heirs and legal representatives, and for the benefit of no other
person, firm or corporation. No purchaser of Securities from any International
Manager shall be deemed to be a successor by reason merely of such purchase.
SECTION 14. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
33
<PAGE>
SECTION 15. Effect of Headings. The Article and Section headings
herein and the Table of Contents are for convenience only and shall not affect
the construction hereof.
34
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company and the Attorney-in-Fact for
the Selling Shareholders a counterpart hereof, whereupon this instrument,
along with all counterparts, will become a binding agreement among the
International Managers, the Company, Mettler and the Selling Shareholders in
accordance with its terms.
Very truly yours,
METTLER-TOLEDO INTERNATIONAL
INC.
By:
Name:
Title:
METTLER-TOLEDO, INC.
By:
-------------------------------
Name:
Title:
EACH OF THE SELLING
SHAREHOLDERS LISTED ON
SCHEDULE B HERETO
By:
-------------------------------
As Attorney-in-Fact acting on behalf of
the Selling Shareholders named in
Schedule B hereto
35
<PAGE>
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH INTERNATIONAL
BT ALEX. BROWN INTERNATIONAL,
A DIVISION OF BANKERS TRUST INTERNATIONAL PLC
CREDIT SUISSE FIRST BOSTON (EUROPE) LIMITED
GOLDMAN SACHS INTERNATIONAL
SMITH BARNEY INC.
By: MERRILL LYNCH INTERNATIONAL
By -------------------------------------
Authorized Signatory
For themselves and as Lead Managers of the
other International Managers named in Schedule A hereto.
36
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
Number of
Initial
International
Name of International Manager Securities
----------------------------- ----------
<S> <C>
Merrill Lynch International ...........................................................
BT Alex. Brown International,
A Division of Bankers Trust International Plc .....................................
Credit Suisse First Boston (Europe) Limited ...........................................
Goldman Sachs International ...........................................................
Smith Barney Inc. .....................................................................
Total..................................................................................
</TABLE>
Sch A-1
<PAGE>
SCHEDULE B
Number of Initial Maximum Number of Option
Securities to be Sold Securities to be Sold
--------------------- ---------------------
Sch B-1
<PAGE>
SCHEDULE C
Shares of Common Stock
(Par Value $.01 Per Share)
1. The initial public offering price per share for the
Securities, determined as provided in said Section 2, shall be $[ ].
2. The purchase price per share for the International
Securities to be paid by the several International Managers shall be
$[ ], being an amount equal to the initial public offering price set
forth above less $[ ] per share; provided that the purchase price
per share for any International Option Securities purchased upon the
exercise of the over-allotment option described in Section 2(b) shall
be reduced by an amount per share equal to any dividends or
distributions declared by the Company and payable on the Initial
International Securities but not payable on the International Option
Securities.
Sch C-1
<PAGE>
SCHEDULE D
List of persons and entities
subject to lock-up
Sch D-1
<PAGE>
SCHEDULE E
List of Selling Stockholders
delivering opinions pursuant
to Sections 5(f) and 5(q)(v)
Sch E-1
<PAGE>
Exhibit A
FORM OF OPINION OF FRIED, FRANK,
HARRIS, SHRIVER & JACOBSON TO BE
DELIVERED PURSUANT TO SECTION 5(b)
[TO COME]
<PAGE>
Exhibit B
FORM OF LOCAL COUNSEL OPINION TO BE DELIVERED PURSUANT TO
SECTIONS 5(c) AND (d)
i Each of [names of local subsidiaries] (collectively, the
"Subsidiaries") has been duly incorporated and is validly existing as a
corporation [in good standing]1 under laws of |X|, and has corporate power and
authority to own, lease and operate its properties and to conduct its business
as described in the Prospectuses; all of the issued and outstanding capital
stock of each Subsidiary has been duly authorized and validly issued, is fully
paid and non-assessable and, to our knowledge, is owned by |X|; to our
knowledge, none of the outstanding shares of capital stock of any Subsidiary
was issued in violation of the preemptive or similar rights of any
securityholder of such Subsidiary arising under the laws of |X| for the
charter or by-laws of such Subsidiary.
ii To our knowledge, there is not pending or threatened any action,
suit, proceeding, inquiry or investigation, to which the Company or any of the
Subsidiaries is a party, or to which the property of the Company or any of the
Subsidiaries is subject, before or brought by any court, governmental agency
or body in |X|, which might reasonably be expected to result in a Material
Adverse Effect, or which might reasonably be expected to materially and
adversely affect the consummation of the transactions contemplated in the U.S.
Purchase Agreement and the International Purchase Agreement or the performance
by the Company or Mettler of its obligations thereunder.
iii The execution, delivery and performance of the U.S. Purchase
Agreement and the International Purchase Agreement and the consummation of the
transactions contemplated in the U.S. Purchase Agreement, the International
Purchase Agreement and in the Registration Statement (including the issuance
and sale of the Securities and the use of the proceeds from the sale of the
Securities as described in the Prospectuses under the caption "Use Of
Proceeds"), and the compliance by the Company, Holdings, and Mettler with
their respective obligations under the U.S. Purchase Agreement and the
International Purchase Agreement, do not and will not, whether with or without
the giving of notice or lapse of time or both, conflict with or constitute a
breach of, or default or Repayment Event (as defined in Section 1(a)(x) of the
Purchase Agreements) under, or result in the creation or imposition of any
Liens upon any property or assets of any Subsidiary pursuant to any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note, lease or
any other agreement or instrument, known to us, to which a Subsidiary is a
party or by which any of them may be bound, or to which any of the property or
assets of the Subsidiaries is subject (except for Liens under the Credit
Agreement and the Working Capital Facilities and such conflicts, breaches or
defaults or liens, charges or encumbrances that would not have a
- --------
1 If concept is recognized in local jurisdiction.
B-1
<PAGE>
Material Adverse Effect), nor will such action result in any violation of the
provisions of the charter or by-laws of the Subsidiaries, or any applicable
law, statute, rule, regulation, judgment, order, writ or decree, known to us,
of any government, government instrumentality or court of |X| having
jurisdiction over the Subsidiaries or any of their respective properties,
assets or operations.
B-2
<PAGE>
Exhibit C
FORM OF OPINION OF CHRISTINE J. SMITH, ESQ. TO BE
DELIVERED PURSUANT TO SECTION 5(E)
(i) To my knowledge, the Company is not in violation of its Amended
and Restated Certificate of Incorporation or amended By-laws.
(ii) To my knowledge, there are no persons with registration rights
or other similar rights arising under the Amended and Restated Certificate of
Incorporation or amended By-laws of the Company or the corporation laws of the
State of New York, Delaware General Corporation Law or United States federal
securities laws to have any securities registered pursuant to the Registration
Statement or otherwise registered by the Company under the 1933 Act, except
for persons who have waived such rights or whose shares are included in the
Registration Statement.
C-1
<PAGE>
Exhibit D
FORM OF OPINION OF COUNSEL FOR THE SELLING SHAREHOLDER(S)
TO BE DELIVERED PURSUANT TO SECTION 5(f)
[TO COME]
<PAGE>
Exhibit E
[Letterhead of Mettler-Toledo International Inc.]
Litigation Certificate
----------------------
The undersigned, William P. Donnelly, hereby certifies that
he is the Chief Financial Officer of Mettler-Toledo International Inc., a
Delaware corporation (the "Company"), and that, as such, he is authorized to
execute and deliver this Certificate on behalf of the Company and, with
reference to the Section 5(j) of the U.S. Purchase Agreement (the "U.S.
Purchase Agreement"), dated /x/, among the Company, Mettler-Toledo, Inc.
("Mettler-Toledo"), a Delaware corporation, the Selling Shareholders listed in
Schedule B thereto, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, [ ], as representatives of the underwriters listed in
Schedule A to the U.S. Purchase Agreement, and Section 5[(h)] of the
International Purchase Agreement (the "International Purchase Agreement" and
together with the U.S. Purchase Agreement, the "Purchase Agreements"), dated
/x/, 1998, among the Company, Mettler-Toledo, the Selling Shareholders listed in
Schedule [ ] thereto, Merrill Lynch International, [ ],
as lead managers to the underwriters listed in Schedule A to the International
Purchase Agreement, further certifies, represents and warrants on behalf of
the Company as follows (each capitalized term used herein without definition
having the same meaning specified in the Purchase Agreements):
(a) to the best of his knowledge, based upon certifications made by
officers of the Company and its subsidiaries in the form attached
hereto as Exhibit A, the undersigned has set forth in Exhibit B
attached hereto all actions, suits, proceedings, inquiries or
investigations before or brought by any court or governmental agency
or body, domestic or foreign, pending or threatened against or
affecting the Company or any of its subsidiaries, at the Closing
Time, where the maximum level of liability is equal to or greater
than $250,000; and
(b) further certifies, represents and warrants on behalf of the
Company that none of such actions, suits, proceedings, inquiries or
investigations set forth in Exhibit B would reasonably be expected to
have a Material Adverse Effect or would reasonably be expected to
materially or adversely affect the property or assets of the Company
or its subsidiaries or the consummation of the transactions
contemplated in the Purchase Agreements or the performance by the
Company or Mettler-Toledo of its obligations hereunder or thereunder.
E-1
<PAGE>
WITNESS the signature of the undersigned this ____ day of [ ],1998.
-----------------------------
By: William P. Donnelly
Title: Chief Financial Officer
E-2
<PAGE>
Exhibit F
[FORM OF LOCK-UP PURSUANT TO SECTION 5(o)]
, 1998
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
BT ALEX. BROWN
CREDIT SUISSE FIRST BOSTON
GOLDMAN, SACHS & CO.
SALOMON SMITH BARNEY
as Representatives of the several U.S. Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
MERRILL LYNCH INTERNATIONAL
BT ALEX. BROWN INTERNATIONAL,
A DIVISION OF BANKERS TRUST INTERNATIONAL PLC
CREDIT SUISSE FIRST BOSTON (EUROPE) LIMITED
GOLDMAN SACHS INTERNATIONAL
SMITH BARNEY INC.
as Representatives of the several International Underwriters
c/o Merrill Lynch International
Ropemaker Place
25 Ropemaker Street
London, England, EC2Y 9LY
Mettler-Toledo International Inc.
Im Langacher
P.O. Box MT-100
CH 8606, Greifensee, Switzerland
Re: Proposed Public Offering Mettler-Toledo International Inc.
Dear Sirs:
The undersigned, a [stockholder] [and an officer and/or director] of
Mettler-Toledo International Inc., a Delaware corporation (the "Company"),
understands that Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch"), [ ] propose to enter into a U.S. Purchase
Agreement (the "U.S. Purchase Agreement") with the Company and the Selling
Shareholders, and Merrill Lynch International, [ ] propose to enter
into an International
F-1
<PAGE>
Purchase Agreement (the "International Purchase Agreement") with the Company
and the Selling Shareholders, each providing for the public offering (the
"Offerings") of shares (the "Securities") of the Company's common stock, par
value $.01 per share (the "Common Stock"). In recognition of the benefit that
such an offering will confer upon the undersigned as a stockholder [and an
officer and/or director] of the Company, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the undersigned agrees with each underwriter to be named in the U.S. Purchase
Agreement or the International Purchase Agreement that, during a period of 90
days from the date of the U.S. Purchase Agreement, the undersigned will not,
without the prior written consent of Merrill Lynch, directly or indirectly,
(i) offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant for the sale of, or otherwise dispose of or transfer any shares of the
Company's Common Stock or any securities convertible into or exchangeable or
exercisable for Common Stock (except through gifts to persons, trusts or other
entities who agree in writing to be bound by the restrictions of this letter),
or file any registration statement under the Securities Act of 1933, as
amended, with respect to any of the foregoing, or (ii) enter into any swap or
any other agreement or any transaction that transfers, in whole or in part,
directly or indirectly, the economic consequence of ownership of the Common
Stock, whether any such swap or transaction is to be settled by delivery of
Common Stock or other securities, in cash or otherwise; provided, however,
that (i) the Company may file a registration statement on Form S-8 under the
Securities Act of 1933 relating to Common Stock of the Company issued pursuant
to the Company's stock option plan (the "Stock Plan"), and (ii) employees of
the Company may exercise rights to acquire Common Stock pursuant to the Stock
Plan.
Sincerely,
If Individual:
Print Name
Signature
If Corporation, Partnership or Trust:
[print or type name of entity]
By:
Name:
Title:
F-2
<PAGE>
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Mettler-Toledo International, Inc.:
We consent to the use of our reports included and incorporated by reference
herein and to the reference to our firm under the headings 'Summary Financial
Information,' 'Selected Historical Financial Information' and 'Independent
Auditors' in the prospectus.
KPMG Fides Peat
Zurich, Switzerland
June 4, 1998
