<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000
[_] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE TRANSITION PERIOD FROM __________ TO __________
Commission File Number 333-43390
Weigh-Tronix, LLC
-----------------
(Exact name of registrant as specified in its charter)
Delaware 06-1510936
------------------------------- ---------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
293 South Main Street
Providence, R.I. 02903
----------------------
(Address of principal executive offices)
(401) 272-4402
--------------
(Registrant's telephone number, including area code)
Check whether the registrant: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
(1) Yes ___ No X
----
<PAGE>
<TABLE>
<CAPTION>
PAGE
PART I FINANCIAL INFORMATION NUMBER
<S> <C>
ITEM 1: Unaudited Financial Statements.......................................................
Consolidated Balance Sheets as of March 31, 2000 and September 30, 2000........... 1
Consolidated Statements of Operations for the three and six months ended
September 30, 1999 and 2000..................................................... 2
Consolidated Statements of Cash Flows for the six months ended
September 30, 1999 and 2000...................................................... 3
Notes to Consolidated Financial Statements (unaudited)............................ 4
ITEM 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations.................................................. 24
ITEM 3: Quantitative and Qualitative Disclosures About Market Risk........................... 42
PART II OTHER INFORMATION
ITEM 5: Other Information.................................................................... 42
ITEM 6: Exhibits and Reports on Form 8-K..................................................... 42
SIGNATURES........................................................................... 43
Exhibit 27.1 Financial Data Schedule..............................................................
</TABLE>
<PAGE>
PART I FINANCIAL INFORMATION
Item 1 -- Unaudited Financial Statements
Weigh-Tronix, LLC
Unaudited Consolidated Balance Sheets
(In Thousands)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
March 31, September 30,
2000 2000
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 4,145 $ 9,958
Accounts receivable, net of allowance of $858 and $2,332, respectively 21,677 72,785
Inventories, net 21,008 63,475
Prepaid expenses and other current assets 1,319 9,713
Deferred income taxes 897 3,290
--------------- ----------------
Total current assets 49,046 159,221
Property, plant and equipment, net of accumulated depreciation
of $5,861 and $9,318, respectively 24,625 50,470
Intangibles, net of accumulated amortization of $2,496 and $5,098, respectively 19,840 111,308
Deferred financing costs, net 1,675 11,403
Investments in unconsolidated joint ventures 21 3,782
--------------- ----------------
Total assets $ 95,207 $ 336,184
=============== ================
Liabilities, Mandatorily Redeemable Membership Interests and Members' Equity
Current liabilities:
Current portion of long-term debt $ 2,742 $ 2,235
Accounts payable 10,733 27,951
Accrued expenses 12,998 43,308
Deferred service contract revenue 2,021 16,141
--------------- ----------------
Total current liabilities 28,494 89,635
Long-term debt 53,247 188,734
Other long-term obligations 130 3,248
Deferred income taxes 753 10,301
--------------- ----------------
Total liabilities 82,624 291,918
--------------- ----------------
Commitments and contingencies
Minority interest - 3,106
Mandatorily redeemable membership interests:
Class A membership interests, subject to put option, at cost 1,139 1,139
Class C membership interests, subject to put option, at fair value 1,959 1,769
Preferred member interest, including accrued dividends of $330 - 9,590
--------------- ----------------
Total mandatorily redeemable membership interests 3,098 12,498
Members' equity:
Membership interests 14,100 54,410
Additional paid-in capital 1,012 3,669
Subscription note receivable (75) (450)
Unearned compensation (386) (294)
Accumulated deficit (4,556) (25,569)
Accumulated other comprehensive loss (610) (3,104)
--------------- ----------------
Members' equity 9,485 28,662
--------------- ----------------
Total mandatorily redeemable membership interests and members' equity 12,583 41,160
--------------- ----------------
Total liabilities, mandatorily redeemable membership interests and members'
equity $ 95,207 $ 336,184
=============== ================
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
1
<PAGE>
Weigh-Tronix, LLC
Unaudited Consolidated Statements of Operations
(In Thousands)
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<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30,
1999 2000 1999 2000
<S> <C> <C> <C> <C>
Revenues:
Products $ 24,578 $ 55,064 $ 47,196 $ 86,325
Services 7,067 31,644 13,900 43,905
------------ ---------- ---------- ------------
Total revenues 31,645 86,708 61,096 130,230
Cost of revenues:
Cost of products 16,624 47,073 31,804 69,756
Cost of services 4,687 21,250 9,478 30,670
------------ ---------- ---------- ------------
Total cost of revenues 21,311 68,323 41,282 100,426
------------ ---------- ---------- ------------
Gross profit 10,334 18,385 19,814 29,804
Operating expenses:
Selling, general and administrative 7,609 26,586 14,190 38,618
Depreciation and amortization 812 3,874 1,439 5,102
Restructuring charge - 1,939 - 1,939
------------ ---------- ---------- ------------
Operating income (loss) 1,913 (14,014) 4,185 (15,855)
Interest expense 1,496 6,014 3,131 8,294
Interest income (8) (153) (22) (204)
(Gain) loss on foreign currency 21 (4,694) (79) (4,647)
Other (income) expense, net 161 101 (136) 29
Equity in (income) loss of unconsolidated joint ventures 5 (31) 15 (31)
------------ ---------- ---------- ------------
Income (loss) before provision (benefit) for income taxes,
minority interest in income (loss) of subsidiary and extraordinary
loss 238 (15,251) 1,276 (19,296)
Provision (benefit) for income taxes 345 (1,096) 663 (1,164)
Minority interest in income (loss) of subsidiary - (44) - 2
------------ ---------- ---------- ------------
Income (loss) before extraordinary loss (107) (14,111) 613 (18,134)
Extraordinary loss, net of income tax benefit of $66 - - - (2,549)
------------ ---------- ---------- ------------
Income (loss) before dividends on preferred member interest (107) (14,111) 613 (20,683)
12% dividends accrued on preferred member interest - 276 - 330
------------ ---------- ---------- ------------
Net income (loss) available (attributable) to Members $ (107) $ (14,387) $ 613 $ (21,013)
============ ========== ========== ============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
2
<PAGE>
Weigh-Tronix, LLC
Unaudited Consolidated Statements of Cash Flows
(In Thousands)
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<TABLE>
<CAPTION>
Six Months Ended
September 30,
1999 2000
<S> <C> <C>
Cash flows from operating activities:
Income (loss) before dividends on preferred member interest $ 613 $ (20,683)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Extraordinary loss, net of income tax benefit - 2,549
Depreciation and amortization 2,510 6,691
Amortization of the inventory fair value adjustment - 15,513
Equity in loss (income) of unconsolidated joint ventures 15 (31)
Membership equity interest compensation 90 1,760
Interest expense, deferred financing costs 195 655
Deferred income taxes (159) (3,875)
Gain on disposal of property and equipment (14) (60)
Unrealized gain on foreign currency translation (79) (4,647)
Changes in operating assets and liabilities,
net of effect of acquisitions:
Accounts receivable 1,167 (493)
Inventories 447 1,674
Prepaid expenses and other current assets (937) (777)
Accounts payable 448 (5,152)
Accrued expenses and deferred revenue (1,474) 1,098
------------ -------------
Net cash provided by (used in) operating activities 2,822 (5,778)
Cash flows from investing activities:
Expenditures for property and equipment (1,371) (1,693)
Proceeds from sales of property and equipment 116 176
Acquisition of businesses, net of cash acquired (674) (163,783)
Loan to joint venture (60) -
------------ -------------
Net cash used in investing activities (1,989) (165,300)
Cash flows from financing activities:
Proceeds from former senior debt 7,162 -
Payments made on former senior debt (7,809) (40,487)
Payments made on former senior subordinated notes including prepayment penalty - (16,044)
Proceeds from term loans related to the Senior Credit Agreement - 70,000
Proceeds from the revolving credit portion of the Senior Credit Agreement - 32,979
Proceeds from the Senior Subordinated Notes due June 1, 2010 - 95,891
Payments made on the Senior Credit Agreement - (450)
Proceeds from membership interests - 39,461
Proceeds from preferred member interest - 9,260
Payments made on capital lease obligations (11) (17)
Deferred financing costs - (11,742)
------------ -------------
Net cash provided by (used in) financing activities (658) 178,851
Effect of exchange rates on cash and cash equivalents (785) (1,960)
------------ -------------
Increase (decrease) in cash and cash equivalents (610) 5,813
Cash and cash equivalents, beginning of the period 3,678 4,145
------------ -------------
Cash and cash equivalents, end of the period $ 3,068 $ 9,958
============ =============
Supplemental cash flow information:
Cash paid for interest $ 2,673 $ 5,182
Cash paid for income taxes $ 434 $ 959
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
3
<PAGE>
Weigh-Tronix, LLC
Notes to Unaudited Consolidated Financial Statements
(In Thousands)
--------------------------------------------------------------------------------
1. Basis of Presentation
Weigh-Tronix, LLC (the "Parent") is organized as a holding company and
operates through various subsidiaries (collectively, the "Company" or
"Weigh-Tronix"). The Company's fiscal year-end is March 31. The
accompanying unaudited consolidated financial statements include the
consolidated accounts of Weigh-Tronix, LLC and its subsidiaries and have
been prepared in accordance with accounting principles generally accepted
in the United States for interim financial information. Accordingly, they
do not include all of the information and footnotes required by accounting
principles generally accepted in the United States for complete financial
statements. The consolidated financial statements have not been audited by
independent accountants in accordance with generally accepted auditing
standards, but in the opinion of management, include all adjustments,
consisting only of normal recurring adjustments, necessary to summarize
fairly the Company's consolidated financial position, results of operations
and cash flows.
Results for interim periods are not indicative of the results expected for
the year primarily due to non-recurring charges related to acquisitions.
The unaudited consolidated financial statements should be read in
conjunction with the following notes and the Company's Registration
Statement on Form S-4 dated November 13, 2000, which contain the most
recent audited consolidated financial statements as of and for the year
ended March 31, 2000. The March 31, 2000 balance sheet has been derived
from the Company's audited financial statements but does not include all of
the information and footnotes required by accounting principles generally
accepted in the United States for complete financial statements.
2. Acquisition of Avery Berkel
On June 13, 2000, Weigh-Tronix UK Limited, a subsidiary of the Company, and
Marconi Corporation plc completed the acquisition of all the issued share
capital of GEC Avery International Limited and Maatschappij van Berkel's
Patent BV (collectively, "Avery Berkel"). The purchase price consideration
paid was (pound)105.0 million, including acquisition costs of approximately
(pound)2.7 million (approximately $162.6 million), subject to preliminary
post-closing adjustments, payable in cash, together with warrants valued at
$1.2 million to subscribe for 5% of the fully diluted ownership interests
of Weigh-Tronix, LLC. Avery Berkel is a leading manufacturer, distributor
and servicer of industrial and food retail weighing systems and other food
processing equipment. The Avery Berkel acquisition was financed by the
issuance of (Eurodollars) 100.0 million of 12.5% Senior Subordinated Notes
due June 1, 2010, the issuance of a (Eurodollars) 10.0 million liquidation
preference exchangeable pay-in-kind preferred membership interest
(hereafter referred to as "Preferred Member Interest"), a new Senior Credit
Agreement with maximum borrowings of $120.0 million and the issuance of
additional membership interests of $40.3 million to existing and new
members of the Company.
4
<PAGE>
Weigh-Tronix, LLC
Notes to Unaudited Consolidated Financial Statements
(In Thousands)
--------------------------------------------------------------------------------
The Avery Berkel acquisition is recorded in accordance with the purchase
method of accounting. The preliminary purchase price was approximately
$163.8 million, including costs of acquisition totaling $4.3 million, and
has been allocated to the net assets acquired as of June 13, 2000 based on
their respective fair values based on valuations and other studies that are
not yet complete. The actual allocation of the purchase consideration could
differ from the estimated amounts included herein. A preliminary allocation
of the consideration has been made to major categories of assets and
liabilities acquired as of the date of acquisition in accordance with the
purchase method of accounting:
Cash $ -
Accounts receivable 53,697
Inventories 65,339
Prepaid expenses and other current assets 8,263
Property and equipment 29,551
Goodwill 29,419
Other identifiable intangible assets 67,520
Other assets 3,734
Accounts payable and accrued expenses (70,030)
Deferred income taxes - current (2,318)
Other long-term obligations (7,741)
Deferred income taxes - noncurrent (9,746)
Minority interest (3,905)
-----------
Total purchase price $ 163,783
-----------
The purchase price is comprised of:
Cash (including cash acquisition costs of $4,269) 154,523
Preferred Member Interest 9,260
-----------
Total purchase price $ 163,783
-----------
In association with the financing, the Company incurred and capitalized
debt issuance costs totaling $11.9 million.
In accordance with EITF 95-3, "Recognition of Liabilities in Connection
with a Purchase Business Combination", the Company recorded approximately
$7.9 million of purchase accounting liabilities pertaining to the Avery
Berkel acquisition. A description of the liabilities recorded and amounts
paid to date are outlined in the table below:
5
<PAGE>
Weigh-Tronix, LLC
Notes to Unaudited Consolidated Financial Statements
(In Thousands)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Liability
Liability Amounts accrued as of
recorded paid September 30, 2000
<S> <C> <C> <C>
Costs to exit businesses $ 1,155 $ - $ 1,155
Involuntary termination costs 6,722 (1,329) 5,393
------------ ------------ -----------------
$ 7,877 $ (1,329) $ 6,548
============ ============ =================
</TABLE>
The costs to exit businesses pertain mainly to onerous lease obligations
that will be paid over the next 10 years. The accrued involuntary
termination costs as of September 30, 2000 are expected to be paid in the
third quarter of fiscal 2001. Two facilities have been closed and
approximately 128 former Avery Berkel employees have been terminated as of
September 30, 2000. The Company is still finalizing its business
integration plans as a result of the Avery Berkel acquisition and,
accordingly, the purchase accounting liabilities and valuations of certain
assets will be finalized once these plans are complete. The goodwill
associated with the Avery Berkel acquisition and the related amortization
and its effect on operating income will be impacted by the finalization of
these purchase accounting adjustments. The number of operating facilities
to be closed and the final number of employees to be terminated were not
finalized at September 30, 2000.
3. Restructuring Charge
In the quarter ended September 30, 2000, the Company approved a plan to
restructure certain of the historic Weigh-Tronix business operations, which
resulted in the Company recording a restructuring charge of $1,939 in the
quarter ended September 30, 2000. The charge consisted of personnel-related
costs ($1,096), facility closure, property and software lease termination
costs ($764), and outplacement fees ($79). Personnel-related costs of
approximately $781 were paid as of September 30, 2000. The Company's exit
plan incorporates the planned closing of one manufacturing facility,
sixteen service centers, one redundant corporate office and the elimination
of duplicative engineering and research and development costs.
Approximately 120 employees will be terminated as a result of the exit
plan, and 96 of these employees were terminated as of September 30, 2000.
4. Financing Related to the Avery Berkel Acquisition
Issuance of the (Eurodollars) 100.0 million of 12.5% Senior Subordinated
Notes due June 1, 2010.
On June 13, 2000, SWT Finance B.V. (the "Issuer"), a subsidiary of the
Company, issued (Eurodollars) 100.0 million of 12.5% Senior Subordinated
Notes due June 1, 2010 (the "Notes") in a private transaction pursuant to a
note indenture (the "Notes Indenture"). The Company registered the Notes on
Form S-4 with the Securities and Exchange Commission on November 13, 2000.
Interest is calculated on the basis of a 360-day year comprising twelve 30-
day months. Interest is payable semi-annually in arrears on each June 1 and
December 1, commencing on December 1, 2000.
6
<PAGE>
Weigh-Tronix, LLC
Notes to Unaudited Consolidated Financial Statements
(In Thousands)
--------------------------------------------------------------------------------
The Notes are subordinated in right of payment to all current and future
senior debt, which includes the Senior Credit Agreement discussed below.
The Notes will rank pari passu in right of payment with all other Senior
Subordinated Debt of the Issuer issued in the future, if any, and senior in
right of payment to all subordinated indebtedness of the Issuer issued in
the future, if any. The Notes are fully and unconditionally guaranteed,
jointly and severally, on an unsecured senior subordinated basis by the
guarantor subsidiaries. See Note 10 - Guarantors of Debt which presents
summarized combined financial information for the parent, guarantor
subsidiaries and non-guarantor subsidiaries under the Notes.
The holders of the Notes have the right to require the Issuer to repurchase
all or any part of the Notes upon a change of control, as defined in the
Notes Indenture. Also, if the Company has "excess proceeds" of more than
$5.0 million, as defined in the Notes Indenture, the Company is required to
make an offer to all holders of the Notes to purchase the maximum principal
amount of Notes that may be purchased with the excess proceeds at an offer
price in cash of an amount equal to 100% of the principal amount thereof
plus accrued and unpaid interest.
The Notes Indenture contains a number of covenants that limit, among other
things, dividend payments, certain types of investments, incurrence of
indebtedness and issuance of preferred stock, issuance and sale of capital
stock of restricted subsidiaries, liens, merger, consolidation or sale of
assets, transactions with affiliates, sale and leaseback transactions,
additional guarantees and certain business activities.
Senior Credit Agreement
In connection with the Avery Berkel acquisition, certain subsidiaries of
the Company entered into a Senior Credit Agreement with certain lenders.
The Senior Credit Agreement comprised $120.0 million of Term Loan and
Revolving Credit Facilities, including a $30.0 million Tranche A Term Loan
Facility, a $40.0 million Tranche B Term Loan Facility and a $50.0 million
Revolving Credit Facility. The Tranche A Term Loan Facility is payable over
5 years, with the final repayment on June 30, 2005. The Tranche B Term Loan
Facility is payable over 7 years, with the final payment on June 30, 2007.
The commitment on the Revolving Credit Facility terminates on June 30, 2005
and amounts drawn down under the Revolving Credit Facility must be fully
repaid by that date. The Revolving Credit Facility is subject to a
borrowing base as defined in the Senior Credit Agreement based on specified
percentages of eligible inventory and accounts receivable. The proceeds of
the Senior Credit Agreement were used to pay back certain indebtedness of
the Company and to finance a portion of the Avery Berkel acquisition,
including related fees and expenses.
The Tranche A Term Loan Facility and the Revolving Credit Facility bear
interest at a rate equal to, in the case of loans denominated in U.S.
dollars, LIBOR plus 3.25% or a base rate plus 2.25%. For loans denominated
in sterling and euro, the Tranche A Term Loan Facility and the Revolving
Credit Facility bear interest at LIBOR plus 3.25%. The Tranche B Term Loan
Facility bears interest at a rate equal to, in the case of loans
denominated in U.S. dollars, LIBOR plus 3.75% or a base rate plus 2.75%.
For loans denominated in sterling, the Tranche B Term Loan Facility bears
interest at LIBOR plus 3.75%. The margins over LIBOR and the base rate will
be subject to adjustment on December 13, 2000 based on the achievement of
certain financial ratios.
7
<PAGE>
Weigh-Tronix, LLC
Notes to Unaudited Consolidated Financial Statements
(In Thousands)
--------------------------------------------------------------------------------
A commitment fee is calculated at a rate equal to 0.50% of the daily
average undrawn amount of the Revolving Credit Facility and is payable
quarterly in arrears. The commitment fee is also subject to adjustment on
December 13, 2000 based on the achievement of certain financial ratios.
The Senior Credit Agreement provides for mandatory prepayments including:
1) 100% of the net proceeds of certain asset sales and insurance claims; 2)
100% of the net proceeds of any sale or issuance of equity (other than
equity provided by existing members of the Company) or incurrence of
certain indebtedness by the Company or any of its subsidiaries; and 3) an
amount equal to 75% of available "excess cash flows", as defined in the
Senior Credit Agreement, in any fiscal year. Such prepayments will be
applied to the Tranche A Term Loan Facility and the Tranche B Term Loan
Facility ratably.
The Senior Credit Agreement contains a number of operating and financial
covenants that limit, among other things, amalgamations and changes in
business, assets sales and disposals, indebtedness and other liabilities,
liens, guarantees and other contingent liabilities, investments, loans and
advances, dividends and other distributions and payments with respect to
capital stock, optional payments and modifications with respect to the
Notes and other debt instruments, transactions with affiliates, sale and
leasebacks, changes in the passive holding structure of the Parent, changes
in lines of business, permitted hedging activities, changes in fiscal
periods, negative pledge causes, restrictions on subsidiary distributions
and amendments to Avery Berkel acquisition documents. Also, the Senior
Credit Agreement contains a number of operating and financial covenants,
including, without limitation, requirements to maintain minimum ratios of
earnings before interest, income taxes, depreciation and amortization
("EBITDA") to interest expense and EBITDA to fixed charges; maximum ratios
of total indebtedness to EBITDA; minimum tangible net worth; and
limitations on capital expenditures.
Long-term debt at September 30, 2000 is as follows:
12.5% Senior Subordinated Notes due June 1, 2010 $ 88,370
Tranche A Term Loan 29,625
Tranche B Term Loan 39,925
Revolving Credit Facility 32,979
Capital Leases 70
-----------
Total debt 190,969
Less current portion (2,235)
-----------
Long-term debt $ 188,734
-----------
Redemption of the senior debt and the 12% Senior Subordinated Notes due
May 1, 2005 and 2006
On June 13, 2000, a portion of the proceeds from the Senior Credit
Agreement and the Notes was used to fund the redemption of all outstanding
senior debt under the credit agreement that was in place at March 31, 2000
and the 12% Senior Subordinated Notes. The Company recorded a pre-tax
extraordinary loss of approximately $1.0 million relating to the early
redemption of the 12% Senior Subordinated Notes. Also, the Company recorded
a pre-tax extraordinary loss of approximately $1.6 million, which
represents the unamortized deferred financing costs of the
8
<PAGE>
Weigh-Tronix, LLC
Notes to Unaudited Consolidated Financial Statements
(In Thousands)
--------------------------------------------------------------------------------
retired senior debt and the 12% Senior Subordinated Notes. Both amounts are
reflected as extraordinary items, net of the income tax benefit, in the
accompanying consolidated statements of operations.
Preferred Member Interest
In connection with the Avery Berkel acquisition on June 13, 2000, the
Company issued (Eurodollars)10.0 million of Preferred Member Interest
pursuant to a subscription agreement (the "Subscription Agreement") between
the Company, the Issuer of the Notes and Marconi Corporation plc. The
Subscription Agreement was a private transaction not subject to the
requirements of the Securities Act of 1933 or 1934. The holder of the
Preferred Member Interest is entitled to dividends at a rate per annum
equal to 12.0% through and including June 1, 2005, 15.0% from June 2, 2005
through and including December 1, 2005, and thereafter increasing by fifty
basis points at the beginning of each subsequent six month period up to a
maximum rate of 18.0%, in each case calculated on liquidation preference
per Preferred Member Interest. Dividends are cumulative and payable
annually on each June 1, commencing on June 1, 2001.
At any time subsequent to the first anniversary of the issuance of the
Preferred Member Interest, subject to the Company's achieving a certain
fixed charge coverage ratio for the most recently ended four fiscal
quarters, the holder of the Preferred Member Interest, at its option, may
exchange its Preferred Member Interest for an aggregate principal amount of
exchange notes. The right to exchange the Preferred Member Interest is
exercisable only once. The exchange notes will be issued under the Notes
Indenture and will be substantially identical to the Notes except that the
date of issue and the first interest period will be different.
With respect to distributions upon the liquidation, winding-up and
dissolution of Weigh-Tronix, the Preferred Member Interest ranks junior and
is subordinated in right of payment to the prior payment in full of the
Notes, the Senior Debt and all other debt liabilities and obligations of
Weigh-Tronix. The exchange notes issuable upon exchange of the Preferred
Member Interest will rank pari passu with the Notes.
In the event of bankruptcy, liquidation or reorganization of the Company,
the assets of Weigh-Tronix will be available to pay obligations on the
Preferred Member Interest only after all holders of the Notes, the Senior
Credit Agreement and all other debt liabilities and obligations have been
paid.
5. Pro Forma Information (Unaudited)
The results of operations of Avery Berkel and other purchased businesses
have been included in the consolidated results of the Company from their
respective acquisition dates. The following unaudited pro forma summary
presents net sales, loss before extraordinary loss, loss before dividends
on preferred member interest and net loss attributable to members for the
six months ended September 30, 1999 and September 30, 2000 as if the
acquisitions had occurred as of April 1, 1999. The pro forma summary gives
effect to actual operating results prior to the acquisition, and is
adjusted to include the pro forma effect of interest expense on the debt
used to finance the acquisitions, depreciation related to the revaluation
of property, plant and equipment, amortization of the related goodwill and
other identifiable intangible assets and income taxes. The pro forma
results for the six months ended September 30, 1999 include an amortization
9
<PAGE>
Weigh-Tronix, LLC
Notes to Unaudited Consolidated Financial Statements
(In Thousands)
--------------------------------------------------------------------------------
charge of $16,278 related to the one time adjustment to record the acquired
Avery Berkel inventory at its estimated fair value. Also, the pro forma
results for the six months ended September 30, 2000 include a restructuring
charge of $1,939 and integration related consulting fees of $1,875. No
effect has been given to cost reductions or operating synergies in this
presentation.
Additionally, the pro forma information does not necessarily reflect the
actual results that would have occurred nor is it necessarily indicative of
future results of operations of the combined companies.
<TABLE>
<CAPTION>
Six Months Ended
September 30,
1999 2000
<S> <C> <C>
Net sales $ 185,673 $ 168,680
------------- -------------
Loss before extraordinary loss $ (20,392) $ (12,210)
------------- -------------
Loss before dividends on preferred member interest $ (22,941) $ (14,759)
------------- -------------
Net loss attributable to Members $ (23,493) $ (15,311)
============= =============
</TABLE>
6. Inventories
<TABLE>
<CAPTION>
March 31, September 30,
2000 2000
<S> <C> <C>
Inventories, net consist of the following:
Raw materials $ 6,345 $ 12,580
Work in process 3,708 10,926
Finished goods 10,955 39,969
------------- -------------
$ 21,008 $ 63,475
============= =============
</TABLE>
In connection with the acquisition of Avery Berkel, the Company recorded a
non-recurring inventory fair value adjustment of $16,278 to reflect the
purchase of the Avery Berkel inventory at its estimated fair value.
Approximately $15,513 of the total fair value adjustment was amortized
through cost of revenues for the six months ended September 30, 2000. The
unamortized portion of the fair value adjustment of $765 is included in the
net consolidated inventory balance at September 30, 2000 and will be
recognized in costs of revenues during the Company's third quarter of
fiscal 2001 as the remaining applicable inventory is sold.
10
<PAGE>
Weigh-Tronix, LLC
Notes to Unaudited Consolidated Financial Statements
(In Thousands)
--------------------------------------------------------------------------------
7. Income Taxes
The Company has recorded a tax benefit of $2,677 and $2,745 for the three
and six months ended September 30, 2000, respectively. The Parent is a
limited liability company and is thus not directly subject to U.S. federal
or state income taxes. For its subsidiaries in the United Kingdom, the
Company recorded a net income tax benefit of $3,255 for the six months
ended September 30, 2000, primarily due to the benefit associated with the
amortization of the inventory fair value adjustment. A tax provision of
$213 and $1,568 was recorded for the six months ended September 30, 2000
with respect to the Company's subsidiaries in Canada and the Netherlands,
respectively. No tax benefit has been recorded with respect to U.S.
consolidated tax losses for the six months ended September 30, 2000. During
the three months and six months ended September 30, 1999, the income tax
expense of $345 and $663, respectively, was primarily attributable to the
Company's United Kingdom and Canadian subsidiaries. For all periods, the
Company has provided a valuation allowance against all net operating loss
carryforwards and deductible temporary differences as the Company's
operating results do not presently support an assertion that ultimate
realization is more likely than not.
8. Comprehensive Income (Loss)
Comprehensive income (loss) and its components are as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30,
1999 2000 1999 2000
<S> <C> <C> <C> <C>
Income (loss) before dividends on
Preferred Member Interest $ (107) $ (14,111) $ 613 $ (20,683)
Other comprehensive income (loss):
Foreign currency translation adjustment 470 (1,696) (84) (2,494)
----------- ----------- ----------- -----------
Comprehensive income (loss) $ 363 $ (15,807) $ 529 $ (23,177)
----------- ----------- ----------- -----------
</TABLE>
9. Segment Information
Prior to the acquisition of Avery Berkel on June 13, 2000, the Company was
organized for management purposes into three reportable business segments:
the North American Industrial division, the European Industrial division
and the Consumer division. The Company continued to evaluate the historical
Weigh-Tronix operations within those reportable business segments during
the six months ended September 30, 2000, however, the name of the European
Industrial division was changed to Rest of the World Industrial. The
operations of Avery Berkel were evaluated as five separate reportable
business segments prior to the acquisition. During the fiscal quarter ended
September 30, 2000, the Company incorporated the operations of the
historical Avery Berkel business into the Rest of the World Industrial
division for management purposes.
11
<PAGE>
Weight-Tronix, LLC
Notes to Unaudited Consolidated Financial Statements
(In Thousands)
--------------------------------------------------------------------------------
9. Segment Information (Continued)
The Company evaluates performance and allocates resources based on
operating income. The reporting segments follow the same accounting
policies as Weigh-Tronix's consolidated financial statements as described
in the annual audited consolidated financial statements. Following is a
tabulation of the business segment information for each of the periods
presented.
<TABLE>
<CAPTION>
Three months ended September 30,
North Rest of Corporate
American World and Consolidated
Industrial Industrial Consumer Other Total
---------- ----------- ----------- --------- ------------
1999
<S> <C> <C> <C> <C> <C>
External product revenues $ 15,054 $ 4,853 $ 4,671 $ - $ 24,578
External service revenues 3,963 3,104 - - 7,067
----------- ----------- --------- --------- -----------
Total external revenues 19,017 7,957 4,671 - 31,645
Intersegment revenues 790 20 - - 810
Gross profit 6,296 2,597 1,441 - 10,334
Operating income (loss) 1,805 245 335 (472) 1,913
2000
External product revenues $ 14,633 $ 34,142 $ 6,289 $ - $ 55,064
External service revenues 4,204 27,440 - - 31,644
---------- ---------- --------- --------- -----------
Total external revenues 18,837 61,582 6,289 - 86,708
Intersegment revenues 1,042 (613) - - 429
Gross profit 6,915 9,243 2,227 - 18,385
Operating income (loss) 2,473 (13,605) $ 1,017 (3,899) (14,014)
</TABLE>
12
<PAGE>
Weight-Tronix, LLC
Notes to Unaudited Consolidated Financial Statements
(In Thousands)
--------------------------------------------------------------------------------
9. Segment Information (Continued)
<TABLE>
<CAPTION>
Six months ended September 30,
North Rest of Corporate
American World and Inter- Consolidated
Industrial Industrial Consumer Other Segment Total
---------- ----------- --------- ----------- ----------- -------------
1999
<S> <C> <C> <C> <C> <C> <C>
External product revenues $ 29,834 $ 8,543 $ 8,819 $ - $ 47,196
External service revenues 7,527 6,373 - - 13,900
----------- --------- ---------- ---------- ------------
Total external revenues 37,361 14,916 8,819 - 61,096
=========== ========= ========== ========== ============
Intersegment revenues 1,660 20 - - 1,680
Gross profit 12,403 4,770 2,641 - 19,814
Operating income (loss) 3,661 844 416 (736) 4,185
2000
External product revenues $ 28,066 $ 47,312 $ 10,947 $ - $ 86,325
External service revenues 7,875 36,030 - - 43,905
----------- --------- ---------- ---------- ------------
Total external revenues 35,941 83,342 10,947 - 130,230
=========== ========= ========== ========== ============
Intersegment revenues 1,969 36 - - 2,005
Gross profit 12,359 13,856 3,589 - 29,804
Operating income (loss) 3,378 (13,537) 1,003 (6,699) (15,855)
March 31, 2000
Long-lived assets 27,093 12,271 3,411 3,386 - 46,161
Total assets 65,934 26,363 14,048 87,117 (98,255) 95,207
September 30, 2000
Long-lived assets 27,950 129,401 3,113 16,499 - 176,963
Total assets 98,820 252,767 13,803 491,807 (521,013) 336,184
September 30, 1999
Capital expenditures 853 408 110 - 1,371
September 30, 2000
Capital expenditures 768 701 224 - 1,693
</TABLE>
13
<PAGE>
Weigh-Tronix, LLC
Notes to Unaudited Consolidated Financial Statements
(In Thousands)
--------------------------------------------------------------------------------
9. Segment Information (Continued)
Net sales by customer location for the three and six months ended September
30, 1999 and 2000 were as follows:
<TABLE>
<CAPTION>
Three months ended Six months ended
September 30, September 30,
1999 2000 1999 2000
<S> <C> <C> <C> <C>
Net revenues:
United States $ 15,590 $ 22,522 $ 30,791 $ 38,604
United Kingdom 7,237 31,975 17,857 47,981
Other 8,818 32,211 12,448 43,645
--------- --------- --------- ---------
$ 31,645 $ 86,708 $ 61,096 $ 130,230
========= ========= ========= =========
</TABLE>
Long-lived assets by location as of March 31, 2000 and September 30, 2000
were as follows:
March 31, September 30,
2000 2000
Long-lived assets:
United States $ 27,736 $ 29,959
United Kingdom 17,192 142,298
Other 1,233 6,694
-------- ---------
$ 46,161 $ 178,951
======== =========
10. Guarantors of Debt
The following summarized combined financial information presents guarantor
and non-guarantor financial position, results of operations and cash flows
of the Company under the Notes. The Notes are fully and unconditionally
guaranteed, jointly and severally, on an unsecured senior subordinated
basis by the Parent and the guarantor subsidiaries.
Investments in subsidiaries are accounted for using the equity method;
accordingly, entries necessary to consolidate the Parent, guarantor
subsidiaries and non-guarantor subsidiaries are reflected in the
eliminations column. The summarized consolidated financial information was
prepared using the same consolidation policies as presented in Note 1 -
Basis of Presentation. The provision (benefit) for income taxes for both
guarantor and non-guarantor subsidiaries has been allocated on the basis of
actual income before taxes earned or loss before taxes incurred by these
subsidiaries. Management asserts that separate complete financial
statements of the issuer and subsidiary guarantors of the Notes would not
provide additional material information that
14
<PAGE>
Weigh-Tronix, LLC
Notes to Unaudited Consolidated Financial Statements
(In Thousands)
--------------------------------------------------------------------------------
would be useful in assessing the financial composition of the guarantors or
the sufficiency of the guarantees.
15
<PAGE>
Weigh-Tronix, LLC
Notes to Unaudited Consolidated Statements
(In thousands)
--------------------------------------------------------------------------------
10. Guarantors of Debt (Continued)
Unaudited Consolidated Balance Sheets as of March 31, 2000
<TABLE>
<CAPTION>
Guarantor Non-Guarantor
Parent Subsidiaries Subsidiaries Eliminations Total
<S> <C> <C> <C> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ - $ 3,384 $ 761 $ - $ 4,145
Accounts receivable, net 750 33,644 931 (13,648) 21,677
Inventories, net - 20,134 962 (88) 21,008
Prepaid expenses and other current assets - 1,292 27 - 1,319
Deferred income taxes - 897 - - 897
--------- ---------- -------- --------- ---------
Total current assets 750 59,351 2,681 (13,736) 49,046
Property, plant and equipment, net - 24,299 326 - 24,625
Intangibles, net - 19,541 299 - 19,840
Deferred financing costs, net 992 673 10 - 1,675
Investments in unconsolidated joint venture - 21 - - 21
Investment in subsidiaries 10,916 14,367 - (25,283) -
Intercompany receivables - 55,557 - (55,557) -
--------- ---------- -------- --------- ---------
Total assets $ 12,658 $ 173,809 $ 3,316 $ (94,576) $ 95,207
========= ========== ======== ========= =========
Liabilities, Mandatorily Redeemable
Membership Interests and Members' Equity
Current liabilities:
Current portion of long-term debt $ - $ 3,300 $ 50 $ (608) $ 2,742
Accounts payable 75 22,840 1,361 (13,543) 10,733
Accrued expenses - 12,909 89 - 12,998
Deferred service contract revenue - 2,021 - - 2,021
--------- ---------- -------- --------- ---------
Total current liabilities 75 41,070 1,500 (14,151) 28,494
Long-term debt - 54,672 44 (1,469) 53,247
Other long-term obligations - 130 - - 130
Deferred income taxes - 753 - - 753
Intercompany loans 52,158 1,323 (53,481) -
--------- ---------- -------- --------- ---------
Total liabilities 75 148,783 2,867 (69,101) 82,624
Commitments and contingencies
Mandatorily redeemable membership interests:
Class A membership interests, subject
to put option, at cost 1,139 - - - 1,139
Class C membership interests, subject
to put option, at fair value 1,959 - - - 1,959
--------- ---------- -------- --------- ---------
Total mandatorily redeemable membership interests 3,098 - - - 3,098
Members' equity:
Membership interests 14,100 28,513 372 (28,885) 14,100
Additional paid-in capital 1,012 - - - 1,012
Subscription note receivable (75) - - - (75)
Unearned compensation (386) - - - (386)
Retained earnings (accumulated deficit) (4,556) (2,953) 80 2,873 (4,556)
Accumulated other comprehensive loss (610) (534) (3) 537 (610)
--------- ---------- -------- --------- ---------
Members' equity 9,485 25,026 449 (25,475) 9,485
--------- ---------- -------- --------- ---------
Total mandatorily redeemable membership
interest and members' equity 12,583 25,026 449 (25,475) 12,583
--------- ---------- -------- --------- ---------
Total liabilities, mandatorily redeemable
membership interests and members' equity $ 12,658 $ 173,809 $ 3,316 $ (94,576) $ 95,207
========= ========== ======== ========= =========
</TABLE>
16
<PAGE>
Weigh-Tronix, LLC
Notes to Unaudited Consolidated Financial Statements
(In Thousands)
--------------------------------------------------------------------------------
10. Guarantors of Debt (Continued)
Unaudited Consolidated Statements of Operations
for the Quarter Ended September 30, 1999
<TABLE>
<CAPTION>
Guarantor Non-Guarantor
Parent Subsidiaries Subsidiaries Eliminations Total
<S> <C> <C> <C> <C> <C>
Revenues:
Products $ - $ 25,402 $ 356 $ (1,180) $ 24,578
Services - 6,986 81 - 7,067
------- ---------- --------- ---------- -----------
Total revenues - 32,388 437 (1,180) 31,645
Cost of revenues:
Cost of products - 17,503 232 (1,111) 16,624
Cost of services - 4,616 71 - 4,687
------- ---------- --------- ---------- -----------
Total cost of revenues - 22,119 303 (1,111) 21,311
------- ---------- --------- ---------- -----------
Gross profit - 10,269 134 (69) 10,334
Operating expenses:
Selling, general and administrative 45 7,352 212 - 7,609
Depreciation and amortization - 795 17 - 812
------- ---------- --------- ---------- -----------
Operating income (loss) (45) 2,122 (95) (69) 1,913
Interest expense 40 1,442 14 - 1,496
Interest income - (8) - - (8)
(Gain) loss on foreign currency - 3 18 - 21
Other expense, net - 161 - - 161
Equity in loss of unconsolidated joint venture - 5 - - 5
Equity in income of consolidated subsidiaries 22 - - (22) -
------- ---------- --------- ---------- -----------
Income (loss) before provision for income taxes (107) 519 (127) (47) 238
Provision for income taxes - 345 - - 345
------- ---------- --------- ---------- -----------
Net income (loss) available (attributable)
to Members $ (107) $ 174 $ (127) $ (47) $ (107)
======= ========== ========= ========== ===========
</TABLE>
17
<PAGE>
Weigh-Tronix, LLC
Notes to Unaudited Consolidated Financial Statements
(In thousands)
--------------------------------------------------------------------------------
10. Guarantors of Debt (Continued)
Unaudited Consolidated Statements of Operations for the Six
Months Ended September 30, 1999
<TABLE>
<CAPTION>
Guarantor Non-Guarantor
Parent Subsidiaries Subsidiaries Eliminations Total
<S> <C> <C> <C> <C> <C>
Revenues:
Products $ - $ 49,413 $ 715 $ (2,932) $ 47,196
Services - 13,723 177 - 13,900
-------- ----------- ---------- ------------ ---------
Total revenues - 63,136 892 (2,932) 61,096
Cost of revenues:
Cost of products - 34,185 463 (2,844) 31,804
Cost of services - 9,325 153 - 9,478
-------- ----------- ---------- ------------ ---------
Total cost of revenues - 43,510 616 (2,844) 41,282
-------- ----------- ---------- ------------ ---------
Gross profit - 19,626 276 (88) 19,814
Operating expenses:
Selling, general and administrative 90 13,721 379 - 14,190
Depreciation and amortization - 1,402 37 - 1,439
-------- ----------- ---------- ------------ ---------
Operating income (loss) (90) 4,503 (140) (88) 4,185
Interest expense 80 3,020 31 - 3,131
Interest income - (22) - - (22)
Gain on foreign currency - (58) (21) - (79)
Other income, net - (136) - - (136)
Equity in loss of unconsolidated joint venture - 15 - - 15
Equity in income of consolidated subsidiaries (783) - - 783 -
-------- ----------- ---------- ------------ ---------
Income (loss) before provision for income taxes 613 1,684 (150) (871) 1,276
Provision for income taxes - 663 - - 663
-------- ----------- ---------- ------------ ---------
Net income (loss) available (attributable)
to Members $ 613 $ 1,021 $ (150) $ (871) $ 613
======== =========== ========== ============ =========
</TABLE>
18
<PAGE>
Weigh-Tronix, LLC
Notes to Unaudited Consolidated Financial Statements
(In Thousands)
--------------------------------------------------------------------------------
10. Guarantors of Debt (Continued)
Unaudited Consolidated Condensed Statements of Cash Flows for the Six
Months Ended September 30, 1999
<TABLE>
<CAPTION>
Guarantor Non-Guarantor
Parent Subsidiaries Subsidiaries Eliminations Total
<S> <C> <C> <C> <C> <C>
Net cash provided by operating activities $ - $ 2,789 $ 29 $ 4 $ 2,822
Cash flows from investing activities:
Expenditures for property and equipment - (1,345) (26) - (1,371)
Proceeds from sales of property and
equipment - 116 - - 116
Acquisition of businesses, net of cash
acquired - (556) (118) - (674)
Loan to joint venture - (60) - - (60)
---------- --------------- ------------- ---------- ---------
Net cash used in investing activities - (1,845) (144) - (1,989)
Cash flows from financing activities:
Proceeds from former senior debt - 7,162 - - 7,162
Payments made on former senior debt - (7,809) - - (7,809)
Payments made on capital lease obligations - - (11) - (11)
---------- --------------- ------------- ---------- ---------
Net cash used in financing activities - (647) (11) - (658)
Effect of exchange rates on cash and cash
equivalents - (789) 8 (4) (785)
---------- --------------- ------------- ----------- ---------
Net decrease in cash and cash equivalents - (492) (118) - (610)
Cash and cash equivalents, beginning of the
period - 3,422 256 - 3,678
----------- --------------- -------------- ----------- ---------
Cash and cash equivalents, end of the period $ - $ 2,930 $ 138 $ - $ 3,068
=========== =============== ============== =========== =========
</TABLE>
19
<PAGE>
Weigh-Tronix, LLC
Notes to Unaudited Consolidated Financial Statements
(In Thousands)
--------------------------------------------------------------------------------
10. Guarantors of Debt (Continued)
Unaudited Consolidated Balance Sheets as of September 30, 2000
<TABLE>
<CAPTION>
Guarantor Non-Guarantor
Parent Subsidiaries Subsidiaries Elimination Total
<S> <C> <C> <C> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ - $ 5,156 $ 4,802 $ - $ 9,958
Accounts receivable, net 744 85,513 21,819 (35,291) 72,785
Inventories, net - 50,387 13,176 (88) 63,475
Prepaid expenses and other current assets 6 4,895 4,812 - 9,713
Deferred income taxes - 3,290 - - 3,290
------------ ------------ ---------- ----------- ----------
Total current assets 750 149,241 44,609 (35,379) 159,221
Property, plant and equipment, net - 46,374 4,096 - 50,470
Intangibles, net 1,182 109,876 250 - 111,308
Deferred financing costs, net - 11,403 - - 11,403
Investments in unconsolidated joint ventures - 670 3,112 - 3,782
Investment in subsidiaries 40,368 215,442 - (255,810) -
Intercompany receivables - 196,526 - (196,526) -
------------ ------------ ---------- ----------- ----------
Total assets $ 42,300 $ 729,532 $ 52,067 $ (487,715) $ 336,184
============ ============ ========== =========== ==========
Liabilities, Mandatorily Redeemable
Membership Interests and Members' Equity
Current liabilities:
Current portion of long-term debt $ - $ 2,200 $ 35 $ - $ 2,235
Accounts payable 70 51,789 11,226 (35,134) 27,951
Accrued expenses - 35,131 8,177 - 43,308
Deferred service contract revenue - 11,776 4,365 - 16,141
------------ ------------ ---------- ----------- ----------
Total current liabilities 70 100,896 23,803 (35,134) 89,635
Long-term debt - 188,699 35 - 188,734
Other long-term obligations - 178 3,070 - 3,248
Deferred income taxes - 12,763 (2,462) - 10,301
Intercompany loans 780 220,175 (24,129) (196,826) -
------------ ------------ ---------- ----------- ----------
Total liabilities 850 522,711 317 (231,960) 291,918
Commitments and contingencies
Minority interest - 3,106 - - 3,106
Mandatorily redeemable membership interests:
Class A membership interests, subject to put
option, at cost 1,139 - - - 1,139
Class C membership interests, subject to put
option, at fair value 1,769 - - - 1,769
Preferred member interest, including accrued
dividends of $330 9,590 - - - 9,590
------------ ------------ ---------- ----------- ----------
Total mandatorily redeemable membership
interests 12,498 - - - 12,498
Members' equity:
Share capital - 207,972 55,363 (263,335) -
Membership interests 54,410 18,354 372 (18,726) 54,410
Additional paid-in capital 3,669 - - - 3,669
Subscription note receivable (450) - - - (450)
Unearned compensation (294) - - - (294)
Accumulated deficit (25,279) (16,697) (4,089) 20,496 (25,569)
Accumulated other comprehensive income (loss) (3,104) (5,914) 104 5,810 (3,104)
------------ ------------ ---------- ----------- ----------
Members' equity 28,952 203,715 51,750 (255,755) 28,662
------------ ------------ ---------- ----------- ----------
Total mandatorily redeemable membership
interests and members' equity 41,450 203,715 51,750 (255,755) 41,160
------------ ------------ ---------- ----------- ----------
Total liabilities, mandatorily redeemable
membership interests and members' equity $ 42,300 $ 729,532 $ 52,067 $ (487,715) $ 336,184
============ ============ ========== =========== ==========
</TABLE>
20
<PAGE>
Weigh - Tronix, LLC
Notes to Unaudited Consolidated Financial Statements
(In Thousands)
--------------------------------------------------------------------------------
10. Guarantors of Debt (Continued)
Unaudited Consolidated Statements of Operations
for the Quarter Ended September 30, 2000
<TABLE>
<CAPTION>
Guarantor Non-Guarantor
Parent Subsidiaries Subsidiaries Eliminations Total
<S> <C> <C> <C> <C> <C>
Revenues:
Products $ - $ 48,879 $ 11,729 $ (5,544) $ 55,064
Services - 24,995 7,523 (874) 31,644
--------- ------------ ------------- ----------- -------------
Total revenues - 73,874 19,252 (6,418) 86,708
Cost of revenues:
Cost of products - 41,379 11,238 (5,544) 47,073
Cost of services - 16,734 5,390 (874) 21,250
--------- ------------ ------------- ----------- -------------
Total cost of revenues - 58,113 16,628 (6,418) 68,323
--------- ------------ ------------- ----------- -------------
Gross profit - 15,761 2,624 - 18,385
Operating expenses:
Selling, general and administrative 46 20,000 6,540 - 26,586
Depreciation and amortization 18 3,619 237 - 3,874
Restructuring charge - 1,939 - - 1,939
--------- ------------ ------------- ----------- -------------
Operating loss (64) (9,797) (4,153) - (14,014)
Interest expense (951) 6,973 97 (105) 6,014
Interest income - (68) (190) 105 (153)
(Gain) loss on foreign currency - (4,812) 118 - (4,694)
Other expense, net - 101 - - 101
Equity in (income) of unconsolidated joint ventures - (31) - - (31)
Equity in loss of consolidated subsidiaries 14,998 - - (14,998) -
--------- ------------ ------------- ----------- -------------
Loss before provision (benefit) for income
taxes and minority interests in loss of
subsidiary (14,111) (11,960) (4,178) 14,998 (15,251)
Provision (benefit) for income taxes - (1,546) 450 - (1,096)
Minority interest in loss of subsidiary - - (44) - (44)
--------- ------------ ------------- ----------- -------------
Loss before dividends on preferred
member interest (14,111) (10,414) (4,584) 14,998 (14,111)
12% dividends accrued on preferred member
interest 276 - - - 276
--------- ------------ ------------- ----------- -------------
Net loss attributable to Members $ (14,387) $ (10,414) $ (4,584) $ 14,998 $ (14,387)
========= ============ ============= =========== =============
</TABLE>
21
<PAGE>
Weigh-Tronix, LLC
Notes to Unaudited Consolidated Financial Statements
(In Thousands)
--------------------------------------------------------------------------------
10. Guarantors of Debt (Continued)
Unaudited Consolidated Statements of Operations
for the Six Months Ended September 30, 2000
<TABLE>
<CAPTION>
Guarantor Non-Guarantor
Parent Subsidiaries Subsidiaries Eliminations Total
<S> <C> <C> <C> <C> <C>
Revenues:
Products $ - $ 78,834 $ 15,381 $ (7,890) $ 86,325
Services - 35,224 9,729 (1,048) 43,905
--------- ------------ ---------- --------- ---------
Total revenues - 114,058 25,110 (8,938) 130,230
Cost of revenues:
Cost of products - 63,633 14,013 (7,890) 69,756
Cost of services - 24,827 6,891 (1,048) 30,670
--------- ------------ ---------- --------- ---------
Total cost of revenues - 88,460 20,904 (8,938) 100,426
--------- ------------ ---------- --------- ---------
Gross profit - 25,598 4,206 - 29,804
Operating expenses:
Selling, general and administrative 1,760 29,247 7,611 - 38,618
Depreciation and amortization 18 4,789 295 - 5,102
Restructuring charge - 1,939 - - 1,939
--------- ------------ ---------- --------- ---------
Operating loss (1,778) (10,377) (3,700) - (15,855)
Interest expense 41 8,258 158 (163) 8,294
Interest income - (101) (266) 163 (204)
(Gain) loss on foreign currency - (4,765) 118 - (4,647)
Other expense, net - 29 - - 29
Equity in (income) of unconsolidated joint
ventures - (31) - - (31)
Equity in loss of consolidated subsidiaries 17,913 - - (17,913) -
--------- ------------ ---------- ---------- ---------
Loss before provision (benefit) for income
taxes, minority interest in income of
subsidiary and extraordinary loss (19,732) (13,767) (3,710) 17,913 (19,296)
Provision (benefit) for income taxes - (1,611) 447 - (1,164)
Minority interest in income of subsidiary - - 2 - 2
--------- ------------ ---------- --------- ---------
Loss before extraordinary loss (19,732) (12,156) (4,159) 17,913 (18,134)
Extraordinary loss, net of income tax benefit
of $66 (951) (1,588) (10) - (2,549)
--------- ------------ ---------- --------- ---------
Loss before dividends on preferred
member interest (20,683) (13,744) (4,169) 17,913 (20,683)
12% dividends accrued on preferred member
interest 330 - - - 330
--------- ------------ ---------- ---------- ---------
Net loss attributable to Members $ (21,013) $ (13,744) $ (4,169) $ 17,913 $ (21,013)
========= ============ ========== ========== =========
</TABLE>
22
<PAGE>
Weigh-Tronix, LLC
Notes to Unaudited Consolidated Financial Statements
(In Thousands)
--------------------------------------------------------------------------------
10. Guarantors of Debt (Continued)
Unaudited Consolidated Condensed Statements of Cash Flows for the Six
Months Ended September 30, 2000
<TABLE>
<CAPTION>
Guarantor Non-Guarantor
Parent Subsidiaries Subsidiaries Eliminations Total
<S> <C> <C> <C> <C> <C>
Net cash used in operating activities $ - $ (5,101) $ (1,010) $ 333 $ (5,778)
Cash flows from investing activities:
Expenditures for property and equipment - (1,578) (115) - (1,693)
Proceeds from sales of property and equipment - 88 88 - 176
Acquisition of businesses, net of cash acquired - (163,783) - - (163,783)
----------- ----------- ------------ ------------ -----------
Net cash used in investing activities - (165,273) (27) - (165,300)
Cash flows from financing activities:
Payments made on former senior debt - (40,487) - - (40,487)
Payments made on former senior subordinated notes - (16,044) - - (16,044)
Proceeds from term loans related to the Senior
Credit Agreement - 70,000 - - 70,000
Proceeds from the revolving credit portion of the
Senior Credit Agreement - 32,979 - - 32,979
Proceeds from the Senior Subordinated Notes
due June 1, 2010 - 95,891 - - 95,891
Payments made on the Senior Credit Agreement - (450) - - (450)
Proceeds from membership interests 39,461 - - - 39,461
Proceeds from preferred member interest 9,260 - - - 9,260
Payments made on capital lease obligations - - (17) - (17)
Deferred financing costs - (11,742) - - (11,742)
Intercompany loans (48,721) 43,800 4,921 - -
----------- ----------- ------------ ------------ -----------
Net cash provided by financing activities - 173,947 4,904 - 178,851
Effect of exchange rates on cash and cash equivalents - (1,801) 174 (333) (1,960)
----------- ----------- ------------ ------------ ----------
Net increase in cash and cash equivalents - 1,772 4,041 - 5,813
Cash and cash equivalents, beginning of the period - 3,384 761 - 4,145
----------- ----------- ------------ ------------ -----------
Cash and cash equivalents, end of the period $ - $ 5,156 $ 4,802 $ - $ 9,958
=========== =========== ============ ============ ===========
</TABLE>
23
<PAGE>
Item 2 -- Management's Discussion and Analysis of
Financial Condition and Results Of Operations
Overview
The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with the Unaudited Interim Consolidated
Financial Statements included herein and Weigh-Tronix, LLC's Registration
Statement on Form S-4 dated November 13, 2000, that contains the most recent
audited consolidated financial statements and management's discussion and
analysis of financial condition and results of operations for the year ended
March 31, 2000.
Our interim consolidated financial statements have been prepared in accordance
with generally accepted accounting principles in the United States of America.
Operating results for the six months and the three months ended September 30,
2000 are not necessarily indicative of the results to be expected for the full
year ending March 31, 2001.
Forward Looking Information
This report on Form 10-Q contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
23E of the Securities Act of 1934, as amended. These statements relate to future
events or future financial performance. Any statements contained in this report
that are not statements of historical fact may be deemed to be forwarded-looking
statements. In some cases, forward-looking statements can be identified by
terminology such as "may," "will," "should," "expect," "plan," "anticipate,"
"intend," "believe," "estimate," "predict," "potential," or "continue," or the
negative of such terms or other comparable terminology. These statements are
only predictions. Actual events or results may differ materially.
Although the Company believes that the expectations reflected in the
forward-looking statements are reasonable, the Company cannot guarantee future
results, levels of activity, performance or achievements. Moreover, neither the
Company, nor any other entity, assumes responsibility for the accuracy and
completeness of the forward-looking statements. The Company is under no
obligation to update any of the forward-looking statements after the filing of
this Form 10-Q to conform such statements to actual results or to changes in the
Company's expectations.
Strategic Acquisitions and Investments
On June 13, 2000, Weigh-Tronix, LLC acquired from Marconi plc 100% of the
share capital of each of GEC Avery International Limited ("Avery") and
Maatschappij van Berkel's Patent BV ("Berkel"), (together "Avery Berkel") for
(pound)70.0 million and (pound) 35.0 million, respectively, less customary
purchase price adjustments based on the closing net assets of Avery Berkel, and
a purchase price reduction based on unfunded pension liabilities of the Avery
Berkel Group as of completion of the transaction, plus the direct costs of the
acquisition.
The acquisition has been accounted for as a purchase. Under the purchase
method of accounting, the acquisition consideration has been allocated to the
assets and liabilities of Avery Berkel based on their respective fair values as
of June 13, 2000 based on valuations and other studies that have not been
completed. A preliminary allocation of the merger consideration has been made at
September 30, 2000 to major categories of assets and liabilities. In accordance
with EITF 95-3 -"Recognition of Liabilities in Connection with a Purchase
Business Combination", the Company has also recorded
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<PAGE>
approximately $7.9 million of purchase accounting liabilities. The Company has
not yet finalized its business integration plans for the Avery Berkel
acquisition and accordingly, purchase accounting adjustments are subject to
revision in future quarters. The goodwill associated with the Avery Berkel
acquisition and the related amortization and its effect on operating income will
be impacted by the finalization of these purchase accounting adjustments.
The Company recorded a non-recurring inventory fair value adjustment of
$16.3 million to reflect the purchase of the Avery Berkel inventory at its
estimated fair value. Approximately $15.5 million of this adjustment was
amortized through cost of revenues in the six months ended September 30, 2000.
In the quarter ended September 30, 2000, the Company recorded a
restructuring charge of $1.9 million. The charge consisted of personnel-related
costs ($1.1 million), facility closure, property and software lease termination
costs ($0.8 million), and outplacement fees ($79). Personnel-related costs of
approximately $0.8 million were paid as of September 30, 2000. The Company's
exit plan incorporates the planned closing of one manufacturing facility,
sixteen service centers, one redundant corporate office and the elimination of
duplicative engineering and research and development costs. Approximately 120
employees will be terminated as a result of the exit plan, and 96 of these
employees were terminated as of September 30, 2000. In addition, the Company
recorded approximately $1.9 million of consulting fees pertaining to its
business integration project during the quarter ended September 30, 2000.
The Company's consolidated results from operations for the six months ended
September 30, 2000 include the post-acquisition results of operations of Avery
Berkel. The results from operations for the six months ended September 30, 2000
have also been affected by the amortization of goodwill and other intangibles
associated with the Avery Berkel acquisition, as well as the non-recurring
adjustments discussed above. Simultaneous with the completion of the
acquisition, the Company re-financed its existing indebtedness. The acquisition
and re-financing were funded by: cash totaling $99.0 million under a $120.0
million Senior Credit Agreement; $95.9 million of proceeds from the issuance of
(Eurodollars)100 million of 12 1/2 % senior subordinated notes due September 1,
2010 (the "Notes"), $39.5 million in cash from the subscription of Berkshire
Partners, management and other investors for ownership interests issued in a
private placement by Weigh-Tronix, LLC; and $9.3 million in cash from the
subscription by Marconi plc for pay-in-kind preferred member interests which
were issued in a private placement by Weigh-Tronix, LLC.
Results of Operations
The following discussion compares the results of operations for the six
months and the three months ended September 30, 2000 with the six months and the
three months ended September 30, 1999, respectively.
Prior to the acquisition of Avery Berkel on June 13, 2000, Weigh-Tronix was
organized for management purposes into three reportable business segments: the
North
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American Industrial division; the European Industrial division; and the Consumer
division. The Company continued to manage and monitor the historical Weigh-
Tronix operations within those reportable business segments during the six
months ended September 30, 2000. However, the name of the European Industrial
Division was changed to the Rest of the World Industrial Division. The
operations of Avery Berkel have been incorporated into the results of the Rest
of the World Industrial Division for management purposes.
The North American Industrial division manufactures and markets industrial,
agricultural and postal weighing systems as well as force measurement products
throughout the U.S. and Canada. The industrial products manufactured by the
division are primarily electronics-based in nature and sales are made indirectly
through a series of distributors who maintain their own service centers.
The Rest of the World Industrial division manufactures and distributes
electronic and railweight scales primarily in the U.K. In addition, the division
also sells mechanical scales primarily to countries in emerging markets. In the
U.K., sales are mainly through a dedicated sales force while sales in other
countries are through both direct sales forces in subsidiary companies, and
through distributors. The division also has a large service revenue base in the
U.K. Outside of the U.K. this division has substantive operations in India,
South Africa and continental Europe.
The Consumer division distributes residential scales and other home
products to the consumer sector primarily in the U.K., the U.S. and Canada. The
Company believes that the division has the leading market share position in the
U.K.
26
<PAGE>
Six months ended September 2000 versus six months ended September 1999.
The following table presents the statement of operations line items through
operating income as a percentage of revenues for the periods indicated on the
basis presented in the unaudited financial statements attached hereto.
Six Months Six Months
Ended Ended
September 30, September 30,
Income Statement Data:
---------------------
1999 2000
Revenues................................... 100.0% 100.0%
Cost of revenues........................... 67.6 77.1
------- -------
Gross profit........................... 32.4 22.9
Operating expenses:
Selling, general and administrative........ 23.2 31.1
Depreciation and amortization.............. 2.4 3.9
------- -------
Operating income (loss)................ 6.8% (12.1)%
======= =======
Supplemental: (1)
Cost of revenues........................... 67.6 65.2
------- -------
Gross profit........................... 32.4 34.8
Operating expenses:
Selling, general and administrative........ 23.2 31.1
Depreciation and amortization.............. 2.4 3.9
------- -------
Operating income ...................... 6.8% (0.2)%
======= =======
(1) Gross profit for the six months ended September 30, 2000 reflects higher
cost of sales due to the amortization charge of $15.5 million relating to the
$16.3 million inventory fair value adjustment recorded in connection with the
acquisition of Avery Berkel on June 13, 2000 (the "inventory fair value
adjustment"). The amortization charge recorded represents the portion of the
inventory fair value adjustment relating to the Avery Berkel inventory that was
sold subsequent to June 13, 2000 but before September 30, 2000. The unamortized
portion of the inventory fair value adjustment of $765 will be amortized through
cost of revenues during the Company's third quarter of fiscal 2001 as the
remaining applicable inventory is sold. The supplemental presentation of cost of
revenue excludes the impact of the amortization of the inventory fair value
adjustment and is presented because management believes its historic gross
margins without the amortization of the inventory fair value adjustment are more
representative of its future gross margins.
______________
Revenues
Revenues increased by $69.1 million, or 113.2%, from $61.1 million for the
six months ended September 30, 1999 to $130.2 million for the six months ended
September 30, 2000. The increase comprised: (1) the impact of the operations of
Avery Berkel, included in the Rest of the World Industrial segment, of $68.0
million; (2) a decrease in net sales in the North American Industrial business
of $1.4 million or 3.8% to $35.9 million from $37.3 million for the six months
ended September 30, 1999; (3) an increase in the net sales of the Rest of the
World Industrial business, excluding the impact of the operations of Avery
Berkel, of $0.3 million or 2.0%, to $15.4 million from $15.1 million for the six
months ended September 30, 1999; and (4) an increase in the net sales of the
Consumer business of $2.1 million or 24.1%, to $10.9 million in the six months
ended September 30, 2000 from $8.8 million for the six months ended September
30, 1999.
27
<PAGE>
The revenues generated by Avery Berkel in the 109 day period since it was
acquired by the Company ("the post acquisition period") were $68.0 million which
consisted of: (1) $33.3 million of sales in the U.K.; (2) $12.4 million in sales
in other European countries; (3) $10.3 million of sales to North America; (4)
$7.4 million of sales to Asia-Pacific countries, and (5) $4.5 million of sales
in African countries.
The decrease in revenues in the North American Industrial business was
largely attributable to: (1) an increase in medium industrial and truck scales
of $0.4 million, offset by (2) reduced revenues from postal scales of
approximately $1.5 million.
The increase in revenues in the Rest of the World Industrial business,
excluding the impact of the acquisition of Avery Berkel, was primarily
attributable to increased light commercial sales of approximately $1.1 million
offset partly by unfavorable foreign exchange rates and lower sales of
electronic industrial product.
The increase in revenues in the Consumer business was primarily
attributable to: (1) increased revenues from North America, with the consumer
business gaining several large customers in the U.S. and Canada; and (2)
increased demand from key accounts in continental Europe leading to increased
local currency sales, partially offset by unfavorable foreign exchange rates.
Gross profit
Gross profit increased $10.0 million, or 50.4%, from $19.8 million in the
six months ended September 30, 1999 to $29.8 million in the six months ended
September 30, 2000. The primary reason for the increase in gross profit in the
six months ended September 30, 2000 was the impact of the Avery Berkel
acquisition that contributed $9.1 million in gross profit to the Company's
consolidated results of operations, after amortizing $15.5 million of the
inventory fair value adjustment that was recorded in cost of revenues as part of
purchase accounting. As a percentage of revenues, gross profit was 22.9% in the
six months ended September 30, 2000 compared to 32.4% in the six months ended
September 30, 1999, including the acquisition of Avery Berkel. Without the
impact of the Avery Berkel operations, the Company's gross profit margin was
33.4%.
Avery Berkel's gross profit for the post-acquisition period was $9.1
million, or 13.4% of Avery Berkel's sales. An inventory fair value adjustment of
$16.3 million was recorded on the acquisition of Avery Berkel. This fair value
adjustment is being amortized through cost of revenues as the related inventory
is sold. A total of $15.5 million was amortized through cost of revenues in the
six months ended September 30, 2000. Excluding the amortization of the inventory
fair value adjustment, Avery Berkel's gross profit for the post acquisition
period was $24.6 million, or 36.2% of Avery Berkel sales.
28
<PAGE>
Gross profit in the North American Industrial business decreased $44 from
$12.4 million in the six months ended September 30, 1999 to approximately $12.4
million in the six months ended September 30, 2000. As a percentage of revenues,
gross profit was 34.4% in the six months ended September 30, 2000 compared to
33.2% in the six months ended September 30, 1999. The increase in the gross
profit percentage was primarily attributable to improved sales mix in the six
months ended September 30, 2000.
Gross profit in the Rest of the World Industrial business, excluding Avery
Berkel, remained unchanged at $4.8 million for the six months ended September
30, 1999 and the six months ended September 30, 2000. As a percentage of
revenues, gross profit was 31.2% in the six months ended September 30, 2000
compared to 32.2% in the six months ended September 30, 1999. The decrease in
the gross profit percentage was attributable to an unfavorable sales mix,
including an increase in lower margin export sales and lower margins on product
purchased from overseas due to unfavorable exchange rates.
Gross profit in the Consumer business increased $0.9 million, or 35.9%,
from $2.6 million in the six months ended September 30, 1999 to $3.6 million in
the six months ended September 30, 2000. As a percentage of revenues, gross
profit for the Consumer business was 32.8% in the six months ended September 30,
2000 compared to 29.5% in the six months ended September 30, 1999. The increase
in gross profit was primarily attributable to a change in the sales mix
geographically, with a fall in lower-margin European sales offset by a larger
increase in higher-margin North American sales, offset partially by unfavorable
exchange rates.
Selling, general and administrative expenses
Selling, general and administrative expenses for the six months ended
September 30, 2000 increased by $24.4 million, or 172.1%, from $14.2 million to
$38.6 million. As a percentage of revenues, selling, general and administrative
expenses were 29.7% for the six months ended September 30, 2000 compared to
23.2% in the six months ended September 30, 1999. The increase in selling,
general and administrative costs during the six months ended September 30, 2000
was primarily due to the impact of: (1) the post-acquisition operations of Avery
Berkel that resulted in additional costs of $21.4 million; (2) consulting
integration fees of $1.9 million related to its business integration project and
(3) severance costs of $0.3 million. In addition, unfavorable exchange rates
resulted in higher reported selling, general and administrative expenses in the
six months ended September 30, 2000 than in the six months ended September 30,
1999.
Depreciation and amortization
Depreciation and amortization expense increased $3.7 million, or 254.6%,
from $1.4 million for the six months ended September 30, 1999 to $5.1 million
for the six months ended September 30, 2000. The increase was primarily
attributable to the impact of additional depreciation and amortization relating
to Avery Berkel in the post-acquisition period of $3.8 million.
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<PAGE>
Restructuring charge
A restructuring charge of $1.9 million was recorded in the six months ended
September 30, 2000 in accordance with EITF 94-3, "Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)." This charge relates to
the restructuring of Weigh-Tronix's UK operations following the acquisition of
Avery Berkel.
Operating income (loss)
As a result of the factors discussed above, operating income decreased by
$20.0 million from operating income of $4.2 million for the six months ended
September 30, 1999 to an operating loss of $15.9 million for the six months
ended September 30, 2000. Excluding the operating loss at Avery Berkel, the
operating loss for the six months ended September 30, 2000 was $2.0 million,
representing a decrease over the six months ended September 30, 1999 of $2.2
million, due to the factors discussed above.
Interest expense
Interest expense for the six months ended September 30, 2000 increased by
$5.2 million or 164.9% from $3.1 million for the six months ended September 30,
1999 to $8.3 million for the six months ended September 30, 2000. The increase
was primarily attributable to the impact of higher debt levels during the six
months ended September 30, 2000 following the re-financing of the Company's debt
and the acquisition of Avery Berkel.
Gain on foreign currency
Gain on foreign currency for six months ended September 30, 2000 increased
$4.6 million for the six months ended September 30, 2000 as compared to the
comparable period last year. The increase was primarily attributable to a
foreign exchange gain on the book value of the senior subordinated notes.
Extraordinary item, net of tax
This amount represents a prepayment penalty fee related to the early
repayment of the subordinated notes due May 1, 2005 and 2006 as a result of the
acquisition of Avery Berkel and the related re-financing of indebtedness; and
the write-off of deferred financing costs relating to the debt extinguished.
30
<PAGE>
Provision (benefit) for income taxes
Weigh-Tronix, LLC made provisions for income taxes of $0.7 million in the
six months ended September 30, 1999 as compared to a benefit of $1.2 million in
the six months ended September 30, 2000. The provision for the six months ended
September 30, 1999 reflects an effective tax rate of 52.0% based on pretax
income of $1.3 million. The difference between the U.S. federal statutory rate
of 34.0% and the effective rate of 52.0% is mostly attributable to losses
generated in the UK against which valuation allowances were recorded, offsetting
profits in the US subsidiaries. The benefit recorded for the six months ended
September 30, 2000 reflects an effective tax rate of 6.0% based on the pretax
loss of $19.3 million. The difference between the U.S. federal statutory benefit
rate of 34.0% and the effective benefit rate of 6.0% is primarily attributable
to the establishment of a valuation allowance against the deductible temporary
differences and net operating losses generated during the period due to the
concern of the recoverability of the tax benefits of those assets.
Three months ended September 30, 2000 compared with the three months ended
September 30, 1999
The following table presents the statement of operations line items through
operating income as a percentage of revenues for the periods indicated on the
basis presented in the unaudited financial statements attached hereto.
Three Months Three Months
Ended Ended
September 30, September 30,
Income Statement Data:
---------------------
1999 2000
Revenues................................... 100.0% 100.0%
Cost of revenues........................... 67.3 78.8
------- -------
Gross profit........................... 32.7 21.2
Operating expenses:
Selling, general and administrative........ 24.0 32.9
Depreciation and amortization.............. 2.6 4.5
------- -------
Operating income (loss)................ 6.1 (16.2)
======= =======
Supplemental: (1)
Cost of revenues........................... 67.3 63.7
------- -------
Gross profit........................... 32.7 36.3
Operating expenses:
Selling, general and administrative........ 24.0 32.9
Depreciation and amortization.............. 2.6 4.5
------- -------
Operating income (loss)................ 6.1% (1.1)%
======= =======
(1) Gross profit for the three months ended September 30, 2000 reflects higher
cost of sales due to the amortization charge of $13.1 million relating to the
$16.3 million inventory fair value adjustment recorded in connection with the
acquisition of Avery Berkel on September 13, 2000 (the "inventory fair value
adjustment"). The amortization charge recorded represents the portion of the
inventory fair value adjustment relating to the Avery Berkel inventory that was
sold during the Company's second quarter of fiscal 2001. The unamortized portion
of the inventory fair value adjustment of $765 will be amortized through cost of
revenues during the Company's third quarter of fiscal 2001 as the remaining
applicable
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<PAGE>
inventory is sold. The supplemental presentation of cost of revenue excludes the
impact of the inventory fair value adjustment amortization and is presented
because management believes its historic gross margins without the amortization
of the inventory fair value adjustment are more representative of its future
gross margins.
______________
Revenues
Revenues increased by $55.1 million, or 174.0%, from $31.6 million for the
three months ended September 30, 1999 to $86.7 million for the three months
ended September 30, 2000. The increase comprised: (1) the impact of three months
of operations of Avery Berkel of $54.2 million, included in the Rest of the
World Industrial operating results; (2) an decrease in net sales in the North
American Industrial business of $0.2 million or 0.9% to $18.8 million from $19.0
million for the three months ended September 30, 1999; (3) a decrease in the net
sales of the Rest of the World Industrial business, excluding Avery Berkel, of
$0.8 million or 9.8%, to $7.1 million from $7.9 million for the three months
ended September 30, 1999; and (4) an increase in the net sales of the Consumer
business of $1.6 million or 34.6%, to $6.3 million in the three months ended
September 30, 2000 from $4.7 million for the three months ended September 30,
1999.
The revenues generated by Avery Berkel in the three months ended September
30, 2000 were $54.2 million which consisted of: (1) $26.4 million of sales in
the U.K.; (2) $9.9 million in sales to other European countries; (3) $8.4
million of sales to North America; (4) $6.1 million of sales to Asia-Pacific
countries, and (5) $3.4 million of sales to African countries.
The decrease in revenues in the North American Industrial business was
largely attributable to: (1) increased service sales of $0.2 million, offset by
reduced revenues for medium industrial scales of approximately $0.4 million.
The decrease in revenues in the Rest of the World Industrial business
excluding Avery Berkel was primarily attributable to decreased sales recognized
on installed rail weighing scales of $0.5 million and unfavorable foreign
exchange translation.
The increase in revenues in the Consumer business was primarily
attributable to: (1) increased revenues from North America, with the consumer
business gaining several large customers in the U.S. and Canada; and (2)
increased demand from key accounts in continental Europe leading to increased
local currency sales, partially offset by unfavorable foreign exchange rates.
32
<PAGE>
Gross profit
Gross profit increased $8.1 million, or 77.9%, from $10.3 million in the
three months ended September 30, 1999 to $18.4 million in the three months ended
September 30, 2000. The primary reason for the increase in gross profit in the
three months ended September 30, 2000 was the impact of the Avery Berkel
acquisition that contributed $6.0 million in gross profit after amortization of
the inventory fair value adjustment of $13.1 million to the Company's
consolidated results of operations. As a percentage of revenues, gross profit
was 21.2% in the three months ended September 30, 2000 compared to 32.7% in the
three months ended September 30, 1999, including the impact of three months of
operations of Avery Berkel. Without the impact of the Avery Berkel operations,
the Company's gross profit margin was 34.8%.
Avery Berkel's gross profit for the three months ended September 30, 2000
was $6.0 million, or 11.0% of Avery Berkel's sales. An inventory fair value
adjustment of $16.3 million was recorded on the acquisition of Avery Berkel..
This fair value adjustment is being amortized through cost of revenues as the
related inventory is sold. A total of $13.1 million was amortized through cost
of revenues in the three months ended September 30, 2000. Excluding the
amortization of the inventory fair value adjustment, Avery Berkel's gross profit
for the three months ended September 30, 2000 was $19.1 million, or 35.2% of
Avery Berkel sales.
Gross profit in the North American Industrial business increased $0.6
million, or 9.8%, from $6.3 million in the three months ended September 30, 1999
to $6.9 million in the three months ended September 30, 2000. As a percentage of
revenues, gross profit was 36.7% in the three months ended September 30, 2000
compared to 33.1% in the three months ended September 30, 1999. The increase in
the gross profit percentage was primarily attributable to improved operating
costs following a restructuring of the North American operations in the three
months ended September 30, 2000, as well as a change in sales mix towards
higher-margin medium industrial scales from lower-margin truck scales.
Gross profit in the Rest of the World Industrial business, excluding the
impact of Avery Berkel, decreased $0.6 million or 25.7% from $2.6 million in the
three months ended September 30, 1999, to $1.9 million in the three months ended
September 30, 2000. The primary reason for the decrease in gross profit was the
impact of the impending consolidation of the UK operations with those of Avery
Berkel that impacted overhead absorption as production was reduced in the
quarter, and from the reduction of inventory levels. As a percentage of
revenues, gross profit was 26.8% in the three months ended September 30, 2000,
compared to 33.0% in the three months ended September 30, 1999, excluding the
impact of the operations of Avery Berkel.
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<PAGE>
Gross profit in the Consumer business increased $0.8 million, or 54.5%,
from $1.4 million in the three months ended September 30, 1999 to $2.2 million
in the three months ended September 30, 2000. As a percentage of revenues, gross
profit for the Consumer business was 35.4% in the three months ended September
30, 2000 compared to 30.8% in the three months ended September 30, 1999. The
increase in gross profit was offset partially by unfavorable exchange rates.
Selling, general and administrative expenses
Selling, general and administrative expenses for the three months ended
September 30, 2000 increased by $19.0 million, or 249.4%, from $7.6 million to
$26.6 million. As a percentage of revenues, selling, general and administrative
expenses were 30.7% for the three months ended September 30, 2000 compared to
24.0% in the three months ended September 30, 1999. The increase in selling,
general and administrative costs during the three months ended September 30,
2000 was primarily due to the impact of: (1) selling, general and administrative
expenses of Avery Berkel that resulted in additional costs of $16.7 million; (2)
consulting integration fees of $1.9 million related to its business integration
project; (3) severance costs of $0.3 million and (4) unfavorable exchange rate
movements.
Depreciation and amortization
Depreciation and amortization expense increased $3.1 million, or 377.1%,
from $0.8 million for the three months ended September 30, 1999 to $3.9 million
for the three months ended September 30, 2000. The increase was primarily
attributable to the impact of additional depreciation and amortization of $3.4
million related to Avery Berkel.
Restructuring charge
A restructuring charge of $1.9 million was recorded in the three months
ended September 30, 2000 in accordance with EITF 94-3, "Liability Recognition
for Certain Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)." This charge relates to
the restructuring of Weigh-Tronix's UK operations following the acquisition of
Avery Berkel.
Operating income (loss)
As a result of the factors discussed above, operating income decreased by
$15.9 million from operating income of $1.9 million for the three months ended
September 30, 1999 to an operating loss of $14.0 million for the three months
ended September 30, 2000. Excluding the operating loss at Avery Berkel, the
operating loss for the three months ended September 30, 2000 was $0.4 million,
representing a decrease over the three months ended September 30, 1999 of $2.3
million, due to the factors discussed above.
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<PAGE>
Interest expense
Interest expense for the three months ended September 30, 2000 increased by
$4.5 million or 302.0% from interest expense of $1.5 million for the three
months ended September 30, 1999 to interest expense of $6.0 million for the
three months ended September 30, 2000. The increase was primarily attributable
to the impact of higher debt levels during the three months ended September 30,
2000 following the re-financing of the Company's debt and the acquisition of
Avery Berkel.
(Gain) loss on foreign currency
The gain on foreign currency increased approximately $4.7 million for the
three months ended September 30, 2000 as compared to the loss on foreign
currency for the three months ended September 30, 1999. The increase was
primarily attributable to a foreign exchange gain on the book value of the
senior subordinated notes.
Provision (benefit) for income taxes
Weigh-Tronix, LLC made provisions for income taxes of $0.3 million in the
three months ended September 30, 1999 as compared to a benefit of $1.1 million
in the three months ended September 30, 2000. The provision for the three months
ended September 30, 1999 reflects an effective tax rate of 145.0% based on
pretax income of $0.2 million. The difference between the U.S. federal statutory
rate of 34.0% and the effective rate of 30.6% is mostly attributable to losses
generated in the UK against which valuation allowances were recorded, offsetting
profits in the US subsidiaries. The benefit recorded for the three months ended
September 30, 2000 reflects an effective tax rate of 7.2% based on the pretax
loss of $15.3 million. The difference between the U.S. federal statutory benefit
rate of 34.0% and the effective benefit rate of 7.2% is primarily attributable
to the establishment of a valuation allowance against the deductible temporary
differences and net operating losses generated during the period due to the
concern of the recoverability of the tax benefits of those assets.
External Factors Affecting the Company's Results of Operations
The Company is subject to currency translation risk and, to a lesser
extent, currency transaction risk. Currency translation risk exists because the
Company measures and records the financial condition and results of operations
of each of its subsidiaries in their local currency, but must translate the
local currency amounts into U.S. dollars for U.S. GAAP financial reporting
purposes.
The Company also incurs currency transaction risk whenever one of its
subsidiaries enters into a transaction that is denominated in a currency other
than its functional currency. The majority of the Company's revenue, operating
expenses and cash flows are denominated in sterling and U.S. dollars.
Consequently, the Company will be subject to currency transaction risk relating
to the Notes, if sterling or the U.S. dollar were to weaken relative to the
euro.
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Fluctuations in Interest Rates
The Company uses interest rate swap agreements to partially manage interest
rate risk on its variable rate debt portfolio. Interest rate swap agreements are
entered into at the time the related variable rate debt is issued to convert the
variable rate debt to fixed debt. The interest differential to be paid or
received under the related interest rate swap agreements is recognized over the
life of the related debt and is included in interest expense or interest income.
Liquidity and Capital Resources
Short-term: As a result of the acquisition of Avery Berkel and related financing
and offering on June 13, 2000, the Company has significant amounts of debt that
require interest payments. As of September 30, 2000, the company's outstanding
debt was $191.0 million and consists of: (i) $102.5 million related to the
senior credit facility; (ii) $88.4 million related to the euro notes; and (iii)
$0.1 million related to capital leases. As of September 30, 2000, an additional
$14.5 million of debt under the senior credit facility was available for
borrowing.
On June 13, 2000, the Company issued (Eurodollars)10.0 million of preferred
member interest to Marconi. Dividends on the preferred member interest accrue at
an annual rate of 12% and are payable annually. These interests are exchangeable
for exchange notes at the option of the company or the holders of the preferred
member interests. If the company or holders of the preferred member interest opt
to exchange their interests on June 13, 2001, (Eurodollars)11.2 million of
exchange notes will be issued. If the holders do not opt to exchange their
interests on June 13, 2001, the Company will be required to pay dividends of
(Eurodollars)1.2 million on June 13, 2001.
Besides servicing the debt and paying dividends, the company's other liquidity
needs on a short-term basis will relate to working capital, capital expenditures
and one-time acquisition related costs which are necessary to affect the cost
reductions and operating improvements. The company's primary source of liquidity
in the short-term is expected to be cash provided by operations. Specifically,
the company expects to reduce their inventory of raw materials, component parts
and finished goods. Such reductions are not anticipated to adversely impact
revenues as the company expects to reduce manufacturing lead times.
The Company believes that, following a transition period for the integration of
the Weigh-Tronix and Avery Berkel operations, it will be able to achieve a
substantial annual cost savings as compared with the stand alone operations of
the two companies. Management has specifically identified approximately $12.0
million in savings, including: (1) elimination of redundant corporate offices;
(2) consolidation of manufacturing facilities and outsourcing of industrial and
low end retail and mechanical scales from Asia; (3) service center and sales
force rationalizations; and (4) elimination
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of duplicative research and development. Savings are net of approximately $1.0
million of incremental corporate expenses to accommodate our enlarged operations
after the merger. To achieve these savings, the Company will incur non-recurring
cash integration and restructuring costs of approximately $9.0 million in the 12
months following the merger. Included in this estimate is the restructuring
charge of $1.9 million which is discussed above.
The Company's cash requirements related to capital expenditures are expected to
be in line with historical requirements.
Long-term: The Company's primary long-term liquidity needs are to: (i) service
the senior credit facility, which includes making interest payments; (ii) make
interest payments related to the notes; and (iii) pay annual dividends related
to the preferred member interests. Further detail is as follows:
. The company's principal debt service requirements for the senior credit
facility based on amounts outstanding at September 30, 2000 are as follows:
$1.9 million for fiscal 2001; $3.0 million for fiscal 2002; $4.5 million
for fiscal 2003; $6.0 million for fiscal 2004; $13.2 million for fiscal
2005; $46.4 million for fiscal 2006; $19.5 million for fiscal 2007 and $5.0
million for fiscal 2008.
. The company's annual interest expense related to the notes is
(Eurodollars)12.5 million. Interest payments are due semi-annually starting
on December 1, 2000.
. Annual dividends for the preferred member interest are (Eurodollars)1.2
million. If the holders do not opt to exchange their interests on June 13,
2001, the company will be required to make the annual dividend payment. If
the company or holders do opt to exchange their interests on June 13, 2001,
the company will be required to make interest payments instead of dividend
payments.
The company's ability to make scheduled payments on its debt obligations will
depend on its future financial condition and operating performance, which will
be affected by general economic, financial, competitive, legislative, regulatory
and other factors that are partly beyond our control. There can be no assurance
that the company's operating results, cash flow and capital resources will be
sufficient for payment of its indebtedness in the future. In the absence of
operating results and resources, the company could face substantial liquidity
problems and might be required to dispose of material assets or operations to
meet its debt service and other obligations. In addition, because a portion of
the company's borrowings bear interest at variable rates, an increase in
interest rates could adversely affect, among other things, the company's ability
to meet its debt service obligations.
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Cash flows from operations
Net cash used in operations totaled $5.8 million for the six months ended
September 30, 2000. Net cash provided by operations in the six months ended
September 30, 1999 amounted to $2.8 million. The decrease in cash flows from
operations for the six months ended September 30, 2000 was primarily due to a
reduction in net income from $0.7 million in the six months ended September 30,
1999 to a net loss of $19.1 million in the six months ended September 30, 2000.
The decrease in the six months ended September 30, 2000 was somewhat mitigated
by significant non-cash charges that were added back to net income as compared
to the prior period. Non-cash charges in the six months ended September 30, 2000
were $16.1 million, compared with $2.6 million in the six months ended September
30, 1999. The non-cash charges in the six months ended September 30, 2000
included: (1) $1.5 million relating to the write-off of deferred financing fees
relating to the Company's former debt that was repaid on June 13, 2000; (2)
depreciation and amortization of $6.7 million; (3) amortization of the inventory
fair value adjustment of $15.5 million; (4) equity compensation expense of $1.7
million; and (5) amortization of deferred financing costs; and was offset by:
(1) deferred tax charge of $5.1 million; and (2) unrealized gain on foreign
exchange of $4.7 million.
Cash flows from investing activities
Cash used in investing activities for the six months ended September 30,
2000 was $165.3 million. Cash used in investing activities during the six months
ended September 30, 1999 was $2.0 million. Cash used for the six months ended
September 30, 2000 primarily resulted from the acquisition of Avery Berkel for
$163.8 million. Weigh-Tronix, LLC incurred capital expenditures of $1.7 million
for the six months ended September 30, 2000 versus $1.4 million for the six
months ended September 30, 1999. The major capital expenditures in both six-
month periods ended September 30, 1999 and 2000 were for tooling and equipment
relating to manufacturing.
Generally, management believes that its manufacturing facilities are in
good condition and does not anticipate that major capital expenditures will be
needed to replace existing facilities in the near future. Accordingly, capital
expenditures will generally run at levels similar to or slightly in excess of
depreciation.
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Cash flows from financing activities
Cash generated from financing activities for the six months ended September
30, 2000 related primarily to the debt incurred in connection with the
acquisition of Avery Berkel and the re-financing of the Company's former
indebtedness. Net cash generated from the financing activities for the six
months ended September 30, 2000 was $178.9 million, consisting primarily of
proceeds from the issuance of the Notes of $95.9 million; proceeds from the term
loans and revolver relating to the Senior Credit Agreement of $103.0 million;
proceeds relating to the issuance of membership interests of $39.5 million; and
proceeds from the issuance of Preferred Member Interests of $9.3 million. These
proceeds were primarily used to fund the acquisition of Avery Berkel, to repay
the former senior debt of $40.5 million, and to repay former senior subordinated
notes of $15.0 million. Cash used in financing activities for the six months
ended September 30, 1999 was $1.3 million, consisting primarily of payments made
on former senior debt of $7.8 million, net of proceeds of $7.2 million. In
addition, the Company paid $0.7 million with respect of its former senior
subordinated notes.
As a result of the Avery Berkel acquisition and the re-financing of debt,
the Company has $190.9 million of debt outstanding at September 30, 2000, which
excludes $0.1 million of capital leases. The Notes require interest payments and
the Senior Credit Agreement requires interest and principal payments. The
Company's other liquidity needs relate to working capital, capital expenditures
and one-time costs relating to the realization of cost reductions and operating
improvements.
The Company intends to fund its working capital, capital expenditures, and
debt service requirements through cash flow generated from operations and
borrowings under the Senior Credit Agreement.
The Senior Credit Agreement consists of a $120.0 million of Term Loan and
Revolving Credit Facilities comprising: (1) a $30.0 million Tranche A Term Loan
Facility; (2) a $40.0 million Tranche B Term Loan Facility; and (3) a $50.0
million Revolving Credit Facility (subject to a borrowing base). Of the $50.0
million Revolving Credit Facility, $29.0 million was borrowed at the closing of
the merger. As of September 30, 2000, $33.0 million was still outstanding.
The final scheduled maturities of the Tranche A and Tranche B Term Loan
Facilities are in September 2005 and 2007, respectively. The Tranche A Term Loan
Facility requires the repayment of 5% of the principal in the year following the
closing of the Senior Credit Agreement and 10% of the principal in the second
year following the closing of the Senior Credit Agreement. The Tranche B Term
Loan Facility requires repayment of approximately 1% of the principal in each of
the two years following the closing of the Senior Credit Agreement.
Certain mandatory prepayments to the Senior Credit Agreement are required,
including: proceeds from certain asset sales or insurance recoveries; proceeds
from the sale of equity or the issuance or incurrence of certain indebtedness;
and annual "excess cash flow" as defined in the Senior Credit Agreement.
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Borrowings under the Senior Credit Agreement will bear interest at floating
rates that may be based on either LIBOR rates or on the applicable alternate
base rates plus the applicable margin.
The Senior Credit Agreement and the indenture governing the Notes contain
certain covenants that will limit, among other things, our ability to: incur
additional debt and issue preferred stock, pay dividends and make other
distributions, prepay subordinated debt, make investments and other restricted
payments, enter into sale and leaseback transactions, create liens, sell assets
and enter into certain transactions with affiliates.
In addition, the Senior Credit Agreement requires that the Company
maintains specified financial covenants, including: a maximum ratio of
consolidated indebtedness to EBITDA; minimum ratio of EBITDA to interest
expense; minimum EBITDA to fixed charges, minimum tangible net worth and capital
expenditure limits. These covenants are in effect starting July 1, 2000.
Following the third anniversary of the issue date (June 13, 2000) of the
preferred member interests, the Company may also elect to pay cash dividends on
the Preferred Member Interest and may be required to service cash interest
payments on the Notes.
We believe that cash from operating activities, together with available
borrowings under the Revolving Credit Facility under the Senior Credit
Agreement, will be sufficient to permit us to meet our financial obligations and
fund our operations for the foreseeable future.
New Accounting Pronouncements
Accounting for Derivative Instruments and Hedging Activities
In September 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"). SFAS 133 requires that all
derivative instruments be recognized as either assets or liabilities on the
balance sheet at fair value. Changes in the fair value of derivatives (gains or
losses) are recorded each period in current earnings or other comprehensive
income, depending on whether a derivative is designated as part of a hedge
transaction and, if it is, the type of hedge transaction. In September 1999, the
FASB issued Statement of Financial Accounting Standards No. 137, `Accounting for
Derivative Instruments and Hedging Activities-Deferral of the Effective Date of
SFAS 133" ("SFAS 137"). SFAS 137 changed the effective date of SFAS 133 to all
fiscal quarters for all fiscal years beginning after June 15, 2000. As a result,
SFAS 133 will be effective for Weigh-Tronix on April 1, 2001. The Company is
currently assessing the impact of this standard.
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Revenue Recognition
In December 1999, the staff of the Securities and Exchange Commission issued
Staff Accounting Bulletin 101, "Revenue Recognition in Financial Statements"
("SAB 101"). SAB 101 summarizes the staff's interpretations of the application
of generally accepted accounting principles to revenue recognition. Management
has reviewed SAB 101 and has determined that the Company is in compliance with
the requirements of revenue recognition as prescribed by SAB 101.
Stock Compensation
In March 2000, the Financial Accounting Standards Board issued Interpretation
No. 44, "Accounting for Certain Transactions Involving Stock Compensation an
interpretation of APB Opinion No. 25" ("FIN 44"). FIN 44 clarifies the
application of APB Opinion No. 25 and among other issues clarifies the
following: the definition of an employee for purposes of applying APB Opinion
No. 25; the criteria for determining whether a plan qualifies as a non-
compensatory plan; the accounting consequence of various modifications to the
terms of previously fixed stock options or awards; and the accounting for an
exchange of stock compensation awards in a business combination. FIN 44 is
effective July 1, 2000, but certain conclusions in FIN 44 cover specific events
that occurred after either December 15, 1998 or January 12, 2000. The Company
does not expect the application of FIN 44 to have a material impact on the
Company's consolidated financial position or results of operations.
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ITEM 3: Quantitative and Qualitative Disclosures About Market Risk
The Company had $33.0 million outstanding under its $50.0 million revolving
portion of the Senior Credit Agreement as of September 30, 2000. Interest rates
for amounts outstanding under the revolving credit portion of the Senior Credit
Agreement are currently: (1) in the case of loans denominated in U.S. dollars,
the Company may choose between a rate of LIBOR plus 3.25% and a base rate plus
2.25% or (2) in the case of loans denominated in sterling and euro, LIBOR plus
3.25%. In addition, an annual commitment fee payable on the daily average unused
portion of the revolving credit portion of the Senior Credit Agreement is
currently 0.50%. The effective interest rate on the outstanding variable rate
borrowings at September 30, 2000 was 9.87%.
To mitigate the risks associated with increases in interest rates, the Company
historically had entered into and plans to continue to enter into interest-rate
protection agreements with members of the Company's banking group. The cash
differentials paid or received under interest rate swap agreements are
recognized as adjustments to interest expense at the contract settlement date.
The fair values of interest rate swap agreements are not recognized in the
Company's consolidated financial statements, as these agreements modify the
interest rate basis (i.e., fixed or floating rate) of debt instruments of
similar face amounts and term. Management is currently renegotiating the
interest-rate protection agreements that related to the former senior debt for
the new Senior Credit Agreement.
A sensitivity analysis indicates that, with respect to interest rate swap
agreements and variable rate debt in place at September 30, 2000, an increase in
the applicable market interest rates of 100-basis points would have a negative
impact of approximately $694 on the Company's consolidated results of operations
for the six months ended September 30, 2000.
The Company enters into foreign exchange forward contracts to manage exposure to
fluctuations in foreign currency exchange rates. The Company does not bold or
issue derivative financial instruments for trading purposes. Exchange
differences arising during the contract term are marked to market and are
included in other (income) expense in the accompanying consolidated statements
of operations. The Company regularly monitors its foreign currency exposures and
ensures that hedge contract amounts do not exceed the amounts of the underlying
exposures.
A sensitivity analysis indicates that, with respect to foreign exchange forward
contracts in place at September 30, 2000, a 10% adverse change in foreign
currency rates would have a $313 negative impact on the Company's consolidated
results of operations and financial position. With respect to the Euro
denominated notes at September 30, 2000, a 10% change in the foreign currency
exchange rates would result in a $8.8 million change to the recorded balance of
the notes.
PART II OTHER INFORMATION
ITEM 5: Other Information.
The Parent and the guarantor subsidiaries have guaranteed (Eurodollars)
100.0 million in aggregate principal amount of 12 1/2% Senior Subordinated Notes
due 2010 of the Parent's indirect subsidiary, SWT Finance B.V., that have been
registered with the Securities and Exchange Commission on November 13, 2000 (the
"Exchange Notes") pursuant to a Registration Statement (the "Registration
Statement") on Form S-4 (File No. 333-43390). Pursuant to the Registration
Statement, the offer to exchange the Exchange Notes for outstanding 12 1/2%
Senior Subordinated Notes due 2010 of SWT Finance B.V. of a like principal
amount is intended to commence on or about November 21, 2000 and to expire on or
about December 21, 2000.
ITEM 6: Exhibits and Reports on Form 8-K
(a) Exhibits.
27.1 Financial Data Schedule:
(c) Current Reports on Form 8-K.
None. The Company was not subject to reporting requirements under the
Exchange Act during the quarter ended September 30, 2000.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WEIGH-TRONIX, LLC
Date: November 15, 2000
By: /s/ John J. McCann III
----------------------
John J. McCann III
Chairman, Chief Executive Officer, and
Director
Date: November 15, 2000
By: /s/ Donald J. MacKenzie
-----------------------
Donald J. MacKenzie
Vice President and
Chief Financial Officer
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