SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2001, OR |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ____________ TO ________________ Commission File Number 1-13595 Mettler-Toledo International Inc. - ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 13-3668641 - ----------------------------------------- ----------------------------------- (State or other jurisdiction of (IRS Employer Identification No.) Incorporation or organization) Im Langacher, P.O. Box MT-100 CH 8606 Greifensee, Switzerland - ----------------------------------------- ---------------------------------- (Address of principal executive offices) (Zip Code) 41-1-944-22-11 - ------------------------------------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No____ The Registrant had 39,716,936 shares of Common Stock outstanding at March 31, 2001.
METTLER-TOLEDO INTERNATIONAL INC. INDEX TO QUARTERLY REPORT ON FORM 10-Q Page No. Part I. FINANCIAL INFORMATION Item 1. Financial Statements Unaudited Interim Consolidated Financial Statements: Interim Consolidated Balance Sheets as of March 31, 2001 3 and December 31, 2000 Interim Consolidated Statements of Operations for the three 4 months ended March 31, 2001 and 2000 Interim Consolidated Statements of Shareholders' Equity 5 for the three months ended March 31, 2001 and 2000 Interim Consolidated Statements of Cash Flows for the three 6 months ended March 31, 2001 and 2000 Notes to the Interim Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition 11 and Results of Operations Item 3. Quantitative and Qualitative Disclosures About Market Risk 16 Part II. OTHER INFORMATION 16 Item 1. Legal Proceedings 16 Item 2. Changes in Security 16 Item 3. Default upon Senior Securities 16 Item 4. Submission of Matters to a Vote of Security Holders 16 Item 5. Other Information 16 Item 6. Exhibits and Reports on Form 8-K 16 Signature 17
Part I. FINANCIAL INFORMATION Item 1. Financial Statements <TABLE> <CAPTION> METTLER-TOLEDO INTERNATIONAL INC. INTERIM CONSOLIDATED BALANCE SHEETS As of March 31, 2001 and December 31, 2000 (In thousands, except per share data) March 31, December 31, 2001 2000 ---- ---- (unaudited) <S> <C> <C> ASSETS Current assets: Cash and cash equivalents $ 22,985 $ 21,725 Trade accounts receivable, net 204,430 212,570 Inventories, net 142,749 141,677 Other current assets and prepaid expenses 41,470 47,367 ------- ------- Total current assets 411,634 423,339 Property, plant and equipment, net 188,382 199,388 Excess of cost over net assets acquired, net 222,511 228,035 Other assets 36,421 36,820 -------- -------- Total assets $858,948 $887,582 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Trade accounts payable $ 68,022 $ 80,513 Accrued and other liabilities 108,590 97,575 Accrued compensation and related items 35,148 51,968 Taxes payable 58,928 68,537 Short-term borrowings and current maturities of long-term debt 50,078 50,560 ------ ------- Total current liabilities 320,766 349,153 Long-term debt 226,816 237,807 Non-current deferred taxes 24,157 25,939 Other non-current liabilities 94,337 95,843 ------- ------- Total liabilities 666,076 708,742 Shareholders' equity: Preferred stock, $0.01 par value per share; authorized 10,000,000 shares - - Common stock, $0.01 par value per share; authorized 125,000,000 shares; issued 39,716,936 and 39,372,873 shares at March 31, 2001 and December 31, 2000 396 393 Additional paid-in capital 299,462 294,558 Accumulated deficit (53,809) (68,307) Accumulated other comprehensive loss (53,177) (47,804) -------- -------- Total shareholders' equity 192,872 178,840 Commitments and contingencies -------- -------- Total liabilities and shareholders' equity $858,948 $887,582 ======== ======== The accompanying notes are an integral part of these interim consolidated financial statements. </TABLE> - 3 -
<TABLE> <CAPTION> METTLER-TOLEDO INTERNATIONAL INC. INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS Three months ended March 31, 2001 and 2000 (In thousands, except per share data) March 31 March 31 2001 2000 ---- ---- (unaudited) (unaudited) <S> <C> <C> Net sales $265,644 $259,116 Cost of sales 147,334 144,875 ------- ------- Gross profit 118,310 114,241 Research and development 14,807 13,373 Selling, general and administrative 73,196 73,777 Amortization 3,212 2,865 Interest expense 4,783 5,390 Other charges, net 7 738 ------ ------ Earnings before taxes and minority interest 22,305 18,098 Provision for taxes 7,807 6,334 Minority interest - 10 ------- ------- Net earnings $14,498 $11,754 ======= ======= Basic earnings per common share: Net earnings $0.37 $0.30 Weighted average number of common shares 39,716,936 38,712,272 Diluted earnings per common share: Net earnings $0.34 $0.28 Weighted average number of common shares 42,539,345 41,902,580 The accompanying notes are an integral part of these interim consolidated financial statements. </TABLE> - 4 -
<TABLE> <CAPTION> METTLER-TOLEDO INTERNATIONAL INC. INTERIM CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY Three months ended March 31, 2001 and 2000 (In thousands, except per share data) (unaudited) Accumulated Common Stock Additional Other --------------------- Paid-in Accum. Comprehensive Shares Amount Capital Deficit Loss Total ------ ------ ------- ------- ---- ----- <S> <C> <C> <C> <C> <C> <C> Balance at December 31, 2000 39,372,873 $393 $294,558 $(68,307) $(47,804) $178,840 Exercise of stock options 344,063 3 4,904 - - 4,907 Comprehensive income: Net earnings - - - 14,498 - 14,498 Fair value of cash-flow hedging instruments - - - - (2,268) (2,268) Change in currency translation adjustment - - - - (3,105) (3,105) ------- Comprehensive income 9,125 ---------- ---- -------- --------- --------- -------- Balance at March 31, 2001 39,716,936 $396 $299,462 $(53,809) $(53,177) $192,872 ========== ==== ======== ========= ========= ======== Balance at December 31, 1999 38,674,768 $386 $288,092 $(138,426) $(38,037) $112,015 Exercise of stock options 37,504 1 351 - - 352 Comprehensive income: Net earnings - - - 11,754 - 11,754 Change in currency translation adjustment - - - - (7,343) (7,343) ------- Comprehensive income 4,411 ---------- ---- -------- ---------- --------- -------- Balance at March 31, 2000 38,712,272 $387 $288,443 $(126,672) $(45,380) $116,778 ========== ==== ======== ========== ========= ======== The accompanying notes are an integral part of these interim consolidated financial statements. </TABLE> - 5 -
<TABLE> <CAPTION> METTLER-TOLEDO INTERNATIONAL INC. INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS Three months ended March 31, 2001 and 2000 (In thousands) March 31, March 31, 2001 2000 ---- ---- (unaudited) (unaudited) <S> <C> <C> Cash flow from operating activities: Net earnings $ 14,498 $ 11,754 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation 5,646 5,731 Amortization 3,212 2,865 Other (826) 13 Increase (decrease) in cash resulting from changes in: Trade accounts receivable, net 343 7,295 Inventories (6,557) (6,652) Other current assets (3,978) (1,157) Trade accounts payable (12,351) (23,808) Accruals and other liabilities, net 2,197 7,733 ----- ----- Net cash provided by operating activities 2,184 3,774 ----- ----- Cash flows from investing activities: Proceeds from sale of property, plant and equipment 1,711 34 Purchase of property, plant and equipment (6,086) (4,520) Acquisitions (934) (9,419) ------- -------- Net cash used in investing activities (5,309) (13,905) ------- -------- Cash flows from financing activities: Proceeds from borrowings 29,618 12,939 Repayments of borrowings (29,500) (1,648) Proceeds from issuance of common stock 4,907 352 ----- ------ Net cash provided by financing activities 5,025 11,643 ----- ------ Effect of exchange rate changes on cash and cash equivalents (640) (313) ----- ----- Net increase in cash and cash equivalents 1,260 1,199 Cash and cash equivalents: Beginning of period $21,725 $17,179 ------- ------- End of period $22,985 $18,378 ======= ======= The accompanying notes are an integral part of these interim consolidated financial statements. </TABLE> - 6 -
METTLER-TOLEDO INTERNATIONAL INC. NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (In thousands unless otherwise stated) 1. BASIS OF PRESENTATION Mettler-Toledo International Inc. ("Mettler Toledo" or the "Company") is a global manufacturer and marketer of precision instruments, including weighing and certain analytical and measurement technologies, for use in laboratory, industrial and food retailing applications. The Company is also a leading provider of automated chemistry solutions used in drug and chemical compound discovery and development. The Company's primary manufacturing facilities are located in Switzerland, the United States, Germany, the United Kingdom, France and China. The Company's principal executive offices are located in Greifensee, Switzerland. The accompanying interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP"). The interim consolidated financial statements have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The interim consolidated financial statements as of March 31, 2001 and for the three month periods ended March 31, 2001 and 2000 should be read in conjunction with the December 31, 2000 and 1999 consolidated financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2000. The accompanying interim consolidated financial statements reflect all adjustments (consisting of only normal recurring adjustments) which, in the opinion of management, are necessary for a fair statement of the results of the interim periods presented. Operating results for the three months ended March 31, 2001 are not necessarily indicative of the results to be expected for the full year ending December 31, 2001. The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results may differ from those estimates. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Inventories Inventories are valued at the lower of cost or market. Cost, which includes direct materials, labor and overhead plus indirect overhead, is determined using either the first in, first out (FIFO) or weighted average cost methods and to a lesser extent the last in, first out (LIFO) method. - 7 -
METTLER-TOLEDO INTERNATIONAL INC. NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS - (Continued) (In thousands unless otherwise stated) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Inventories consisted of the following at March 31, 2001 and December 31, 2000: March 31, December 31, 2001 2000 -------- -------- Raw materials and parts $ 62,379 $ 67,379 Work in progress 37,225 37,289 Finished goods 44,359 38,148 ------- ------- 143,963 142,816 LIFO reserve (1,214) (1,139) --------- --------- $142,749 $141,677 ======== ======== Earnings per Common Share As described in Note 10 in the Company's Annual Report on Form 10-K for the year ended December 31, 2000, in accordance with the treasury stock method, the Company has included the following equivalent shares relating to 4,723,287 outstanding options to purchase shares of common stock in the calculation of diluted weighted average number of common shares for the three month periods ended March 31, 2001 and 2000, respectively. March 31, March 31, 2001 2000 ---------- ----------- Three months ended 2,822,409 3,190,308 3. FINANCIAL INSTRUMENTS The Company adopted Statement of Financial Accounting Standards No. 133 "Accounting for Derivative Instruments and Hedging Activities", as amended, on January 1, 2001. This Statement establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives), and for hedging activities. It requires that an entity recognizes all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. - 8 -
METTLER-TOLEDO INTERNATIONAL INC. NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS - (Continued) (In thousands unless otherwise stated) 3. FINANCIAL INSTRUMENTS (Continued) As discussed more fully in Note 5 of the Company's Annual Report on Form 10-K for the year ended December 31, 2000, the Company reduces its exposure to changes in interest rates through the use of interest rate swap and cap agreements. The fair value of outstanding interest rate swap and cap agreements that are effective cash flow hedges at March 31, 2001 is included in the Company's Consolidated Statement of Shareholders' Equity. The cumulative effect of adopting SFAS 133 as of January 1, 2001 was not material to the Company's consolidated financial statements. 4. SEGMENT REPORTING The Company has five reportable segments: Principal U.S. Operations, Principal Central European Operations, Swiss R&D and Manufacturing Operations, Other Western European Operations and Other. The following tables show the operations of the Company's operating segments: <TABLE> <CAPTION> Principal Other Eliminations For the period Principal Central Swiss R&D Western and January 1, 2001 to U.S. European and Mfg. European Corporate March 31, 2001 Operations Operations Operations Operations Other (a) (b) Total - ------------------------------ ---------- ---------- ---------- ---------- --------- ------------ --------- <S> <C> <C> <C> <C> <C> <C> <C> Net sales to external customers................. $ 83,730 $ 46,138 $ 6,890 $ 65,408 $ 63,478 $ - $ 265,644 Net sales to other segments. 6,609 13,738 35,062 10,061 35,797 (101,267) - --------- --------- --------- --------- -------- ----------- --------- Total net sales............. $ 90,339 $ 59,876 $ 41,952 $ 75,469 $ 99,275 $ (101,267) $ 265,644 ========= ========= ========= ========= ======== =========== ========= Adjusted operating income... $ 2,663 $ 6,617 $ 9,156 $ 4,651 $ 7,614 $ (394) $ 30,307 Principal Other Eliminations For the period Principal Central Swiss R&D Western and January 1, 2000 to U.S. European and Mfg. European Corporate March 31, 2000 Operations Operations Operations Operations Other (a) (b) Total - ------------------------------ ---------- ---------- ---------- ---------- --------- ------------ --------- <S> <C> <C> <C> <C> <C> <C> <C> Net sales to external customers................. $ 85,406 $ 43,657 $ 7,143 $ 67,151 $ 55,759 $ - $ 259,116 Net sales to other segments. 8,849 11,933 34,580 10,283 25,818 (91,463) - --------- --------- --------- --------- -------- ----------- --------- Total net sales............. $ 94,255 $ 55,590 $ 41,723 $ 77,434 $ 81,577 $ (91,463) $ 259,116 ========= ========= ========= ========= ======== ========== ========= Adjusted operating income... $ 9,111 $ 3,468 $ 9,547 $ 4,809 $ 4,760 $ (4,604) $ 27,091 </TABLE> (a) Other includes reporting units in Asia, Eastern Europe, Latin America and segments from other countries that do not meet the aggregation criteria of SFAS 131. (b) Eliminations and Corporate includes the elimination of intersegment transactions as well as certain corporate expenses, intercompany investments and certain goodwill, which are not included in the Company's operating segments. - 9 -
METTLER-TOLEDO INTERNATIONAL INC. NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS - (Continued) (In thousands unless otherwise stated) 4. SEGMENT REPORTING (Continued) A reconciliation of adjusted operating income to earnings before taxes and minority interest follows: <TABLE> <CAPTION> For the period For the period January 1, 2001 January 1, 2000 to to March 31, 2001 March 31, 2000 -------------- -------------- <S> <C> <C> Adjusted operating income..................... $30,307 $27,091 Amortization.................................. 3,212 2,865 Interest expense.............................. 4,783 5,390 Other charges, net............................ 7 738 ------- ------- Earnings before taxes and minority interest... $22,305 $18,098 ======= ======= </TABLE> - 10 -
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the Unaudited Interim Consolidated Financial Statements included herein. General Our interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America on a basis which reflects the interim consolidated financial statements of Mettler-Toledo International Inc. Operating results for the three months ended March 31, 2001 are not necessarily indicative of the results to be expected for the full year ending December 31, 2001. Results of Operations Net sales were $265.6 million for the three months ended March 31, 2001 compared to $259.1 million for the corresponding period in the prior year. This represents an increase of 7% in local currencies. Results were negatively impacted by the strengthening of the U.S. dollar against other currencies. Net sales in U.S. dollars increased 3%. Net sales by geographic customer location were as follows: Net sales in Europe increased 9% in local currencies during the three months ended March 31, 2001 versus the corresponding period in the prior year reflecting strong sales performance across most product lines, particularly non-weighing instruments. Net sales in local currencies during the three month period in the Americas increased 3% as compared to the corresponding period in 2000, principally due to the effect of businesses acquired in 2000. Net sales in local currencies during the three month period in Asia and other markets increased 13% compared to the same period in the prior year. The results of our business in Asia and other markets during the three months ending March 31, 2001 primarily reflect strong sales performance throughout the region, particularly China and Japan. Net sales growth in the Americas was lower than Europe and Asia and other markets primarily due to a deterioration in economic conditions. To the extent that economic conditions significantly deteriorate in the Americas or other parts of the world, our sales growth and profitability may be adversely affected. Gross profit as a percentage of net sales increased to 44.5% for the three months ended March 31, 2001, compared to 44.1% for the corresponding period in the prior year. This increase is primarily related to changes in our sales mix, as well as benefits from various cost savings initiatives. Research and development expenses as a percentage of net sales increased to 5.6% for the three months ended March 31, 2001, compared to 5.2% for the corresponding period in the prior year. - 11 -
Selling, general and administrative expenses as a percentage of net sales decreased to 27.6% for the three months ended March 31, 2001, compared to 28.5% for the corresponding period in the prior year primarily due to exchange rate movements. Adjusted Operating Income (gross profit less research and development and selling, general and administrative expenses before amortization and other charges, net) increased 12% to $30.3 million, or 11.4% of net sales, for the three months ended March 31, 2001, compared to $27.1 million, or 10.5% of net sales, for the corresponding period in the prior year. The increased operating margin reflects the benefits of higher sales levels and our continuous efforts to improve productivity. Interest expense decreased to $4.8 million for the three months ended March 31, 2001, compared to $5.4 million for the corresponding period in the prior year. The decrease was principally due to reduced debt levels. The provision for taxes is based upon our projected annual effective tax rate for the related period. Our effective tax rate for the three months ended March 31, 2001 was approximately 35%. Net earnings increased 23% to $14.5 million for the three months ended March 31, 2001, compared to net earnings of $11.8 million, for the corresponding period in the prior years. Liquidity and Capital Resources At March 31, 2001, our consolidated debt, net of cash, was $253.9 million. We had borrowings of $256.2 million under our credit agreement and $20.7 million under various other arrangements as of March 31, 2001. Of our credit agreement borrowings, approximately $116.7 million was borrowed as term loans scheduled to mature in 2004 and $139.5 million was borrowed under our multi-currency revolving credit facility. At March 31, 2001, we had $270.6 million of availability remaining under our revolving credit facility. At March 31, 2001, approximately $81.9 million of the borrowings under the credit agreement and local working capital facilities were denominated in U.S. dollars. The balance of the borrowings under the credit agreement and local working capital facilities were denominated in certain of our other principal trading currencies amounting to approximately $195.0 million at March 31, 2001. Changes in exchange rates between the currencies in which we generate cash flow and the currencies in which our borrowings are denominated affect our liquidity. In addition, because we borrow in a variety of currencies, our debt balances fluctuate due to changes in exchange rates. Under the credit agreement, amounts outstanding under the term loans are payable in quarterly installments. In addition, the credit agreement obligates us to make mandatory prepayments in certain circumstances with the proceeds of asset sales or issuance of capital stock or indebtedness and with certain excess cash flow. The credit agreement imposes certain restrictions on us and our subsidiaries, including restrictions and limitations on the ability to pay dividends to our shareholders, incur indebtedness, make investments, grant liens, sell financial assets and engage - 12 -
in certain other activities. We must also comply with certain financial covenants. The credit agreement is secured by certain of our assets. Cash provided by operating activities totaled $2.2 million for the three months ended March 31, 2001. In the three months ended March 31, 2000, cash provided by operating activities totaled $3.8 million. The decrease resulted primarily from the timing of tax payments / refunds versus the previous year. In connection with our cost rationalization programs, we will incur pre-tax cash charges of $7 to $8 million for severance and related costs during the remainder of 2001, and non-cash charges in a similar range. We continue to explore potential acquisitions to expand our product portfolio and improve our distribution capabilities. In connection with any acquisition, we may incur additional indebtedness. We currently believe that cash flow from operating activities, together with borrowings available under the credit agreement and local working capital facilities, will be sufficient to fund currently anticipated working capital needs and capital spending requirements as well as debt service requirements for at least the next several years, but there can be no assurance that this will be the case. Effect of Currency on Results of Operations Because we conduct operations in many countries, our operating income can be significantly affected by fluctuations in currency exchange rates. Swiss franc-denominated expenses represent a much greater percentage of our operating expenses than Swiss franc-denominated sales represent of our net sales. In part, this is because most of our manufacturing costs in Switzerland relate to products that are sold outside of Switzerland. Moreover, a substantial percentage of our research and development expenses and general and administrative expenses are incurred in Switzerland. Therefore, if the Swiss franc strengthens against all or most of our major trading currencies (e.g., the U.S. dollar, the euro, other major European currencies and the Japanese yen), our operating profit is reduced. We also have significantly more sales in European currencies (other than the Swiss franc) than we have expenses in those currencies. Therefore, when European currencies weaken against the U.S. dollar and the Swiss franc, it also decreases our operating profits. In recent years, the Swiss franc and other European currencies have generally moved in a consistent manner versus the U.S. dollar. Therefore, because the two effects previously described have offset each other, our operating profits have not been materially affected by movements in the U.S. dollar exchange rate versus European currencies. However, there can be no assurance that these currencies will continue to move in a consistent manner in the future. In addition to the effects of exchange rate movements on operating profits, our debt levels can fluctuate due to changes in exchange rates, particularly between the U.S. dollar and the Swiss franc. - 13 -
European Economic and Monetary Union Within Europe, the European Economic and Monetary Union (the "EMU") introduced a new currency, the euro, on January 1, 1999. Switzerland is not part of the EMU. On January 1, 1999, the participating countries adopted the euro as their local currency, initially available for currency trading on currency exchanges and non-cash (banking) transactions. The existing local currencies, or legacy currencies, will remain legal tender through January 1, 2002. Beginning on January 1, 2002, euro-denominated bills and coins will be issued for cash transactions. For a period of six months from this date, both legacy currencies and the euro will be legal tender. On or before July 1, 2002, the participating countries will withdraw all legacy currency and use exclusively the euro. We have recognized the introduction of the euro as a significant event with potential implications for existing operations. Currently, we operate in all of the participating countries in the EMU. We expect nonparticipating European Union countries, where we also have operations, may eventually join the EMU. We have committed resources to conduct risk assessments and to take corrective actions, where required, to ensure we are prepared for the introduction of the euro. We have undertaken a review of the euro implementation and have concentrated on areas such as operations, finance, treasury, legal, information management, procurement and others, both in participating and nonparticipating European Union countries where we operate. Also, existing legacy accounting and business systems and other business assets have been reviewed for euro compliance, including assessing any risks from third parties. Progress regarding euro implementation is reported periodically to management. Because of the staggered introduction of the euro regarding non-cash and cash transactions, we have developed our plans to address our accounting and business systems first and our business assets second. We were euro compliant within our accounting and business systems by the end of 1999 and expect to be compliant within our other business assets prior to the introduction of the euro bills and coins. Compliance in participating and nonparticipating countries will be achieved primarily through upgraded systems, which were previously planned to be upgraded. Remaining systems will be modified to achieve compliance. We do not currently expect to experience any significant operational disruptions or to incur any significant costs, including any currency risk, which could materially affect our liquidity or capital resources. We are preparing plans to address issues within the transitional period when both legacy and euro currencies may be used. We are reviewing our pricing strategy throughout Europe due to the increased price transparency created by the euro and are attempting to adjust prices in some of our markets. We are also encouraging our suppliers, even in Switzerland, to commence transacting in the euro. We do not believe that the effect of these adjustments will be material. We have a disproportionate amount of our costs in Swiss francs relative to sales. Historically, the potential currency impact has been muted because currency fluctuations between the Swiss franc and other major European currencies have been minimal and there is greater - 14 -
balance between total European (including Swiss) sales and costs. However, if the introduction of the euro results in a significant weakening of the euro against the Swiss franc, our financial performance could be harmed. The statements set forth herein concerning the introduction of the euro which are not historical facts are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. In particular, the costs associated with our euro programs and the time-frame in which we plan to complete euro modifications are based upon management's best estimates. These estimates were derived from internal assessments and assumptions of future events. There can be no guarantee that any estimates or other forward-looking statements will be achieved, and actual results could differ significantly from those contemplated. Forward-Looking Statements and Associated Risks This Quarterly Report on Form 10-Q includes forward-looking statements based on our current expectations and projections about future events, including: strategic plans; potential growth, including penetration of developed markets and opportunities in emerging markets; planned product introductions; planned operational changes and research and development efforts; euro conversion issues; future financial performance, including expected capital expenditures; research and development expenditures; estimated proceeds from and the timing of asset sales; potential acquisitions; future cash sources and requirements; and potential cost savings from restructuring programs. These forward-looking statements are subject to a number of risks and uncertainties, certain of which are beyond our control, which could cause our actual results to differ materially from historical results or those anticipated. Certain of these risks and uncertainties have been identified in Exhibit 99.1 to our Annual Report on Form 10-K for the year ended December 31, 2000. The words "believe," "expect," "anticipate" and similar expressions identify forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. New risk factors emerge from time to time and it is not possible for us to predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. - 15 -
Item 3. Quantitative and Qualitative Disclosures About Market Risk As of March 31, 2001, there was no material change in the information provided under Item 7A in the Company's Annual Report on Form 10-K for the year ended December 31, 2000. Part II. OTHER INFORMATION Item 1. Legal Proceedings. Not applicable Item 2. Changes in Security. Not applicable Item 3. Defaults Upon Senior Securities. Not applicable Item 4. Submission of Matters to a Vote of Security Holders. Not applicable Item 5. Other information. Not applicable Item 6. Exhibits and Reports on Form 8-K (a) Exhibits - None (b) Reports on Form 8-K - None - 16 -
SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereto duly authorized. Mettler-Toledo International Inc. Date: May 14, 2001 By: /s/ William P. Donnelly ------------------------ William P. Donnelly Vice President and Chief Financial Officer