UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
(AMENDMENT #2)
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2004, 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)
not applicable
-----------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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 44,280,211 shares of Common Stock outstanding at March
31, 2004.
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12 b-2 of the Exchange Act). Yes X No
--- ---
METTLER-TOLEDO INTERNATIONAL INC.
INDEX TO QUARTERLY REPORT ON FORM 10-Q/A
PAGE
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS.................................... 3
PART II. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K........................ 17
SIGNATURE........................................................... 18
EXPLANATORY NOTE
The Company is filing this Report on Form 10-Q/A to amend its Report
on Form 10-Q for the quarterly period ended March 31, 2004, as previously
amended by the Report on Form 10-Q/A filed on May 12, 2004. The amendment
consists of the financial statements included in Item 1 of Part I (which
are unchanged from those filed on May 10, 2004) and the disclosure in Item
1 of Part I presented below. No other changes have been made to the
original Form 10-Q filed on May 10, 2004.
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
EXPLANATORY NOTE
The Company's independent auditors, PricewaterhouseCoopers AG have
informed the Company that they have completed their review of the Company's
interim financial statements for the quarterly period ended March 31, 2004,
which are included in this Form 10-Q/A. These financial statements are
unchanged from those filed on May 10, 2004.
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
METTLER-TOLEDO INTERNATIONAL INC.
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2004 AND 2003
(IN THOUSANDS, EXCEPT SHARE DATA)
MARCH 31, MARCH 31,
2004 2003
----------- -----------
(UNAUDITED) (UNAUDITED)
Net sales
Products $ 243,236 $ 224,157
Service 75,473 67,651
---------- ----------
Total net sales 318,709 291,808
Cost of sales
Products 118,281 113,755
Service 50,152 44,395
---------- ----------
Gross profit 150,276 133,658
Research and development 20,655 18,470
Selling, general and administrative 96,809 84,805
Amortization 2,808 2,827
Interest expense 3,466 3,905
Other charges (income), net (see Note 7) (64) 5,175
---------- ----------
Earnings before taxes 26,602 18,476
Provision for taxes 7,980 5,541
---------- ----------
Net earnings $ 18,622 $ 12,935
========== ==========
Basic earnings per common share:
Net earnings $ 0.42 $ 0.29
Weighted average number of common shares 44,557,443 44,393,312
Diluted earnings per common share:
Net earnings $ 0.41 $ 0.29
Weighted average number of common shares 45,836,934 45,288,823
The accompanying notes are an integral part of these interim
consolidated financial statements.
METTLER-TOLEDO INTERNATIONAL INC.
INTERIM CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2004 AND DECEMBER 31, 2003
(IN THOUSANDS, EXCEPT SHARE DATA)
MARCH 31, DECEMBER 31,
2004 2003
----------- --------------
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents $ 44,768 $ 45,116
Trade accounts receivable, net 239,321 249,353
Inventories, net 153,924 151,764
Current deferred tax assets, net 27,273 27,644
Other current assets and prepaid expenses 36,785 31,660
----------- -----------
Total current assets 502,071 505,537
Property, plant and equipment, net 223,685 231,512
Goodwill, net 422,652 421,940
Other intangible assets, net 126,005 126,874
Non-current deferred tax assets, net 39,869 40,683
Other non-current assets 59,967 60,730
----------- -----------
Total assets $ 1,374,249 $ 1,387,276
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 64,472 $ 68,243
Accrued and other liabilities 99,704 97,966
Accrued compensation and related items 46,584 56,575
Deferred service revenue 38,666 20,759
Taxes payable 48,317 51,347
Current deferred tax liabilities 14,503 14,742
Short-term borrowings and current
maturities of long-term debt 18,873 18,277
----------- -----------
Total current liabilities 331,119 327,909
Long-term debt 211,425 223,239
Non-current deferred taxes 45,592 46,519
Other non-current liabilities 133,608 135,613
----------- -----------
Total liabilities 721,744 733,280
Shareholders' equity:
Preferred stock, $0.01 par value per share;
authorized 10,000,000 shares; issued 0 - -
Common stock, $0.01 par value per share;
authorized 125,000,000 shares;
issued 44,668,511 and 44,582,017 shares,
outstanding 44,277,211 and 44,582,017 shares
at March 31, 2004 and December 31, 2003,
respectively) 447 446
Additional paid-in capital 473,385 471,628
Treasury stock at cost (391,300 and 0 shares
at March 31, 2004 and December 31, 2003,
respectively) (16,591) -
Retained earnings 218,838 200,216
Accumulated other comprehensive loss (23,574) (18,294)
----------- -----------
Total shareholders' equity 652,505 653,996
Commitments and contingencies - -
----------- -----------
Total liabilities and shareholders' equity $ 1,374,249 $ 1,387,276
=========== ===========
The accompanying notes are an integral part of these
interim consolidated financial statements.
METTLER-TOLEDO INTERNATIONAL INC.
INTERIM CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND
COMPREHENSIVE INCOME (LOSS)
THREE MONTHS ENDED MARCH 31, 2004 AND 2003
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
ACCUMULATED
COMMON STOCK ADDITIONAL OTHER
-------------------- PAID-IN TREASURY RETAINED COMPREHENSIVE
SHARES AMOUNT CAPITAL STOCK EARNINGS INCOME (LOSS) TOTAL
---------- --------- ------------- ------------ ------------- ---------------- ------------
Balance at December 31, 2003 44,582,017 $ 446 $471,628 $ - $200,216 $(18,294) $653,996
Exercise of stock options 86,494 1 1,757 - - - 1,758
Repurchases of common stock (391,300) - - (16,591) - - (16,591)
Comprehensive income:
Net earnings - - - - 18,622 - 18,622
Change in currency
translation adjustment - - - - - (5,280) (5,280)
--------
Comprehensive income 13,342
---------- ----- -------- -------- -------- -------- --------
Balance at March 31, 2004 44,277,211 $ 447 $473,385 $(16,591) $218,838 $(23,574) $652,505
========== ===== ======== ======== ======== ======== ========
Balance at December 31, 2002 44,384,820 $ 444 $459,213 $ - $104,378 $(61,649) $502,386
Exercise of stock options 8,492 - 159 - - - 159
Comprehensive income:
Net earnings - - - - 12,935 - 12,935
Unrealized gain on
cash-flow hedging instruments - - - - - 879 879
Change in currency
translation adjustment - - - - - (426) (426)
Comprehensive income 13,388
---------- ----- -------- -------- -------- -------- --------
Balance at March 31, 2003 44,393,312 $ 444 $459,372 $ - $117,313 $(61,196) $515,933
========== ===== ======== ======== ======== ======== ========
The accompanying notes are an integral part of these interim
consolidated financial statements.
METTLER-TOLEDO INTERNATIONAL INC.
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2004 AND 2003
(IN THOUSANDS)
MARCH 31, MARCH 31,
2004 2003
-------------- -------------
(UNAUDITED) (UNAUDITED)
Cash flows from operating activities:
Net earnings $ 18,622 $ 12,935
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation 6,473 6,302
Amortization 2,808 2,827
Other 333 196
Increase (decrease) in cash resulting from
changes in:
Trade accounts receivable, net 5,441 12,333
Inventories (3,839) (5,641)
Other current assets (5,055) (8,105)
Trade accounts payable (3,081) (10,521)
Taxes payable (2,377) (9,937)
Accruals and other liabilities (a) 10,098 8,282
--------- ---------
Net cash provided by operating activities 29,423 8,671
--------- ---------
Cash flows from investing activities:
Proceeds from sale of property, plant and equipment 363 95
Purchase of property, plant and equipment (5,869) (4,737)
Acquisitions - (197)
--------- ---------
Net cash used in investing activities (5,506) (4,839)
--------- ---------
Cash flows from financing activities:
Proceeds from borrowings 31,980 21,024
Repayments of borrowings (41,494) (24,426)
Proceeds from options exercised 1,758 159
Repurchases of common stock (16,591) -
--------- ---------
Net cash used in financing activities (24,347) (3,243)
--------- ---------
Effect of exchange rate changes on cash and cash
equivalents 82 5
--------- ---------
Net increase (decrease) in cash and cash equivalents (348) 594
Cash and cash equivalents:
Beginning of period 45,116 31,427
--------- ---------
End of period $ 44,768 $ 32,021
========= =========
(a) Changes in accruals and other liabilities include payments for
restructuring activities of $2.0 million in 2004 and $2.3 million in
2003.
The accompanying notes are an integral part of these interim
consolidated financial statements.
METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AT MARCH 31, 2004 - UNAUDITED
(IN THOUSANDS EXCEPT SHARE DATA, UNLESS OTHERWISE STATED)
1. BASIS OF PRESENTATION
Mettler-Toledo International Inc. ("Mettler-Toledo" or the "Company") is a
global supplier of precision instruments and services. The Company
manufactures weighing instruments for use in laboratory, industrial,
packaging, logistics and food retailing applications. The Company also
manufactures several related analytical instruments, and provides automated
chemistry solutions used in drug and chemical compound discovery and
development. In addition, the Company manufactures metal detection and
other end-of-line inspection systems used in production and packaging, and
provides solutions for use in certain process analytics applications. The
Company's primary manufacturing facilities are located in Switzerland, the
United States, Germany, the United Kingdom and China. The Company's
principal executive offices are located in Greifensee, Switzerland.
The 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, 2004 and for the three
month periods ended March 31, 2004 and 2003 should be read in conjunction
with the December 31, 2003 and 2002 consolidated financial statements and
the notes thereto included in the Company's Annual Report on Form 10-K for
the year ended December 31, 2003.
The accompanying interim consolidated financial statements reflect all
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, 2004 are not necessarily
indicative of the results to be expected for the full year ending December
31, 2004.
The preparation of financial statements in conformity with generally
accepted accounting principles 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. A discussion of the Company's critical accounting policies is
included in Management's Discussion and Analysis of Financial Condition and
Results of Operations included in the Company's Annual Report on Form 10-K
for the year ended December 31, 2003.
Certain reclassifications have been made to prior year amounts to conform
to the current year presentation.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Inventories, net
Inventories are valued at the lower of cost or net realizable value. Cost,
which includes direct materials, labor and overhead, is generally
determined using the first in, first out (FIFO) method. The estimated
market value is based on assumptions for future demand and related pricing.
Reserves for excess and obsolete inventories are established based on
forecast usage, orders and technological obsolescence.
Inventories, net consisted of the following at March 31, 2004 and December
31, 2003:
March 31, 2004 December 31,2003
---------------- ------------------
Raw materials and parts $ 70,502 $ 71,950
Work in progress 31,563 32,432
Finished goods 51,859 47,382
-------- --------
$153,924 $151,764
======== ========
Other Intangible Assets
Other intangible assets consisted of the following at March 31, 2004 and
December 31, 2003.
March 31, 2004 December 31, 2003
------------------------- -------------------------
Accumulated Accumulated
Gross Amount amortization Gross Amount amortization
------------ ------------ ------------ ------------
Customer relationships $ 70,955 $(3,821) $ 70,955 $(3,424)
Proven technology and patents 19,999 (4,270) 19,999 (3,809)
Tradename (finite life) 893 (90) 893 (79)
Tradename (indefinite life) 22,434 - 22,434 -
Intellectual property
license (indefinite life) 19,905 - 19,905 -
-------- ------- -------- -------
$134,186 $(8,181) $134,186 $(7,312)
======== ======= ======== =======
Other intangible assets substantially relate to the acquisition of Rainin.
The annual aggregate amortization expense based on the current balance of
other intangible assets is estimated at $3.5 million for each of the next
five years.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Stock Based Compensation
The Company applies the intrinsic valuation methodology under Accounting
Principles Board Opinion No. 25 and related interpretations in accounting
for its stock option plan. Had compensation cost for the Company's stock
option plan been determined based upon the fair value of such awards at the
grant date, consistent with the methods of Statement of Financial
Accounting Standards No. 123, "Accounting for Stock Based Compensation,"
the Company's net earnings and basic and diluted net earnings per common
share for the three months ended March 31 would have been as follows:
2004 2003
---------------- ------------------
Net earnings:
As reported $18,622 $ 12,935
Compensation expense (1,861) (1,496)
---------------- ------------------
Pro forma $16,761 $ 11,439
================ ==================
Basic earnings per common share:
As reported $ 0.42 $ 0.29
Compensation expense (0.04) (0.03)
---------------- ------------------
Pro forma $ 0.38 $ 0.26
================ ==================
Diluted earnings per common share:
As reported $ 0.41 $ 0.29
Compensation expense (0.04) (0.04)
---------------- ------------------
Pro forma $ 0.37 $ 0.25
================ ==================
Warranty
The Company generally offers one-year warranties on most of its products.
Product warranties are recorded at the time revenue is recognized for
certain product shipments. While the Company engages in extensive product
quality programs and processes, our warranty obligation is affected by
product failure rates, material usage and service costs incurred in
correcting a product failure.
Changes to the Company's accrual for product warranties for the three
months ended March 31 are as follows:
2004 2003
---------------- ------------------
Balance at beginning of
period $10,121 $8,850
Accruals for warranties 2,491 3,012
Payments / utilizations (2,636) (3,263)
---------------- ------------------
Balance at end of period $9,976 $8,599
3. TREASURY STOCK
On February 5, 2004, the Company announced a share repurchase program,
commencing with an initial buyback of up to $100 million over the two-year
period ending December 31, 2005. This program was approved by the Company's
Audit Committee.
During the three months ended March 31, 2004 the Company spent $16.6
million on the repurchase of 391,300 shares at an average price of $42.37.
4. EARNINGS PER COMMON SHARE
In accordance with the treasury stock method, the Company has included the
following equivalent shares in the calculation of diluted weighted average
number of common shares for the three months ended March 31, relating to
outstanding stock options.
2004 2003
------------ ------------
Three months ended 1,279,491 895,511
Outstanding options to purchase 1,255,950 and 2,278,100 shares of common
stock for the three month periods ended March 31, 2004 and 2003,
respectively, have been excluded from the calculation of diluted weighted
average number of common shares on the grounds that such options would be
anti-dilutive.
5. OTHER COMPREHENSIVE INCOME
A reconciliation of changes in Other Comprehensive Income for the three
months ended March 31 follows:
2004 2003
---------------- ------------------
Balance at beginning of period $(18,294) $(61,649)
Change in currency translation
adjustment (5,280) (426)
Unrealized gain on cash flow hedging
arrangements - 879
---------------- ------------------
Balance at end of period $(23,574) $(61,196)
6. NET PERIODIC BENEFIT COST
Net periodic pension cost for the Company's defined benefit pension plans
includes the following components for the three months ended March 31:
U.S. Pension Non-U.S. Pension
Benefits Benefits
-------------------------------------
2004 2003 2004 2003
------- ------- ------- -------
Service cost, net $ 127 $ 134 $3,548 $3,561
Interest cost on projected
benefit obligations 1,516 1,899 4,261 4,589
Expected return on plan
assets (1,598) (1,558) (5,282) (5,465)
Recognition of actuarial
losses (gains) 569 531 (408) 141
------- ------- ------- -------
Net periodic pension cost $ 614 $1,006 $2,119 $2,826
Net periodic post-retirement benefit cost for the Company's U.S.
post-retirement medical plan includes the following components for the
three months ended March 31:
2004 2003
----------------- ------------------
Service cost $ 76 $ 5
Interest cost on projected
benefit obligations 522 68
Curtailment gain on plan freeze - (1,330)
Net amortization and deferral (213) (21)
------- --------
Net periodic post-retirement
benefit cost $ 385 $(1,278)
======= ========
As previously disclosed in the Company's annual report on Form 10-K for the
year ended December 31, 2003, the Company expects to make normal employer
pension contributions of approximately $11.4 million to its non-U.S.
defined benefit pension plans and $2.4 million to its U.S. post-retirement
medical plan during the year ended December 31, 2004.
7. OTHER CHARGES (INCOME), NET
Other charges (income), net consists primarily of charges related to the
Company's restructuring programs, interest income, (gains) losses from
foreign currency transactions, (gains) losses from sales of assets and
other items.
As noted in previous filings, in accordance with U.S. GAAP, the
restructuring charge taken in the second quarter of 2002 related to the
exit of our French manufacturing facility was limited to the minimum
contractual payment required by French law. During the three months ended
March 31, 2003, the Company recorded a restructuring charge of $5.4 million
($3.8 million after tax). This charge comprised the additional
employee-related costs resulting from final settlement of the social plan
negotiated with the French workers' council during the first quarter of
2003.
The Company's significant restructuring programs were substantially
completed at December 31, 2003.
7. OTHER CHARGES (INCOME), NET (CONTINUED)
A roll-forward of the Company's accrual for restructuring activities for
the three months ended March 31, 2003 follows:
Employee Lease
related termination Other Total
--------- ----------- ------- --------
(a) (b) (c)
Balance at December 31, 2002 $11,803 $2,032 $ 420 $14,255
Restructuring expense 5,444 - - 5,444
Cash payments (2,112) (202) - (2,314)
Impact of foreign currency 213 17 6 236
--------- ----------- ------- --------
Balance at March 31, 2003 $15,348 $1,847 $ 426 $17,621
========= =========== ======= ========
(a)Employee related costs include severance, medical and early retirement
costs for approximately net 300 employees, of which 230 employees had
been terminated as of March 31, 2003. These employees include positions
primarily in manufacturing, as well as administrative and other
personnel, primarily at the Company's Principal U.S. and Other Western
European Operations.
(b)Lease termination costs primarily relate to the early termination of
leases on vacated property, primarily at the Company's Principal U.S.
and Other Western European Operations.
(c)Other costs include expenses associated with equipment dismantling and
disposal and other exit costs.
8. SEGMENT REPORTING
The Company has six reportable segments: Principal U.S. Operations, Other
Western European Operations, Principal Central European Operations, Swiss
R&D and Manufacturing Operations, Asia and Other. In previous reporting
periods, results from Asia were included within the Other operating
segment. During the three months ended December 31, 2003, the Company's
reporting units in Asia exceeded the quantitative threshold for disclosure
as a separate operating segment. Segment disclosures for all periods in
2003 have been reclassified accordingly.
The Company evaluates segment performance based on Segment Profit (gross
profit less research and development, selling, general and administrative
expenses and restructuring charges, before amortization, interest expense
and other charges).
8. SEGMENT REPORTING (CONTINUED)
The following tables show the operations of the Company's operating segments:
Net Net
For the three months ended sales to sales to
March 31, 2004 external other Total Segment Goodwill,
customers segments net sales Profit net
--------------------------------------- --------- ---------- ----------- --------- ----------
Principal U.S. Operations $101,005 $8,385 $109,390 $13,575 $ 201,295
Other Western European Operations 79,151 5,216 84,367 2,399 84,788
Principal Central European
Operations 47,621 14,878 62,499 5,217 26,291
Swiss R&D and Mfg. Operations 12,320 45,772 58,092 9,660 22,575
Asia 38,729 12,439 51,168 8,987 10,251
Other (a) 39,883 10,322 50,205 858 77,452
Eliminations and Corporate (b) - (97,012) (97,012) (7,884) -
--------- ---------- ----------- --------- ----------
Total $318,709 $ - $318,709 $32,812 $ 422,652
========= ========== =========== ========= ==========
Net Net
For the three months ended sales to sales to
March 31, 2003 external other Total Segment Goodwill,
customers segments net sales Profit(c) net
--------------------------------------- --------- ---------- ----------- --------- ----------
Principal U.S. Operations $100,485 $8,847 $109,332 $14,446 $201,663
Other Western European Operations 69,207 5,098 74,305 (3,290) 73,515
Principal Central European
Operations 41,144 13,173 54,317 4,682 23,960
Swiss R&D and Mfg. Operations 12,218 39,898 52,116 7,777 21,557
Asia 30,495 7,197 37,692 5,194 8,736
Other (a) 38,259 8,684 46,943 (126) 77,009
Eliminations and Corporate (b) - (82,897) (82,897) (3,744) -
--------- ---------- ----------- --------- ----------
Total $291,808 $ - $291,808 $24,939 $406,440
(a) Other includes reporting units in Eastern Europe, Latin America and
segments from other countries that do not meet the quantitative
thresholds, but meet the mojority of the aggregation criteria of SFAS
131.
(b) Eliminations and Corporate includes the elimination of intersegment
transactions and certain corporate expenses, which are not included in
the Company's operating segments.
(c) The results for the three months ended March 31, 2003 include a
restructuring charge of $5.4 million recorded in the Other Western
European Operations segment.
8. SEGMENT REPORTING (CONTINUED)
Non-GAAP Financial Measures
The Company supplements U.S. GAAP results with non-GAAP financial measures.
The principal non-GAAP financial measure used is Adjusted Operating Income.
Adjusted Operating Income is defined as gross profit less research and
development, selling, general and administrative expenses and restructuring
charges, before amortization, interest, other charges and taxes. The most
directly comparable U.S. GAAP financial measure is net earnings.
The Company believes that Adjusted Operating Income is important
supplemental information for investors. Adjusted Operating Income, or
Segment Profit, is used internally as the principal profit measurement by
our segments in their reporting to management. The Company uses this
measure because it excludes amortization, interest, other charges and
taxes, which are not allocated to the segments.
On a consolidated basis, the Company also believes Adjusted Operating
Income is an important supplemental method of measuring profitability. It
is used internally by senior management for measuring profitability and
setting performance targets for managers and has historically been used as
one of the means of publicly providing guidance on possible future results.
The Company also believes that Adjusted Operating Income is an important
performance measure because it provides a measure of comparability to other
companies with different capital or legal structures, which accordingly may
be subject to disparate interest rates and effective tax rates, and to
companies which may incur different amortization expenses or impairment
charges related to intangible assets.
Adjusted Operating Income is used in addition to and in conjunction with
results presented in accordance with U.S. GAAP. Adjusted Operating Income
is not intended to represent operating income under U.S. GAAP and should
not be considered as an alternative to net earnings as an indicator of the
Company's performance because of the following limitations.
8. SEGMENT REPORTING (CONTINUED)
Limitations of the non-GAAP measure, Adjusted Operating Income
The non-GAAP measure, Adjusted Operating Income, has certain material
limitations as follows:
o It does not include interest expense. Because the Company has
borrowed money to finance some of its operations, interest is a
necessary and ongoing part of the Company's costs and has
assisted the Company in generating revenue. Therefore any measure
that excludes interest expense has material limitations;
o It does not include taxes. Because payment of taxes is a
necessary and ongoing part of the Company's operations, any
measure that excludes taxes has material limitations;
o It excludes amortization expense and other charges. Because these
items are recurring, any measure that excludes them has material
limitations.
Adjusted Operating Income should not be relied upon to the exclusion of
U.S. GAAP financial measures, but reflects an additional measure of
comparability and means of viewing aspects of the Company's operations
that, when viewed together with U.S. GAAP results and the accompanying
reconciliation to net earnings, provides a more complete understanding of
factors and trends affecting the business.
Because Adjusted Operating Income is not standardized, it may not be
possible to compare with other companies' non-GAAP financial measures
having the same or a similar name. The Company strongly encourages
investors to review these financial statements and publicly-filed reports
in their entirety and not to rely on any single financial measure.
A reconciliation of Adjusted Operating Income, or Segment Profit, to net
earnings for the three months ended March 31 follows:
2004 2003
------------- -------------
Adjusted operating income after restructuring charge (a) $32,812 $24,939
Amortization 2,808 2,827
Interest expense 3,466 3,905
Other charges, net (excluding restructuring charge) (64) (269)
Provision for taxes 7,980 5,541
------------- -------------
Net earnings $18,622 $12,935
============= =============
(a) Adjusted Operating Income for 2003 includes a restructuring charge of
$5,444 primarily related to headcount reductions and manufacturing
transfers. See Note 7 to the interim consolidated financial
statements.
PART II. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
31.1 Certification of the Chief Executive Officer Pursuant
to Section 302 of the Sarbanes - Oxley Act of 2002
31.2 Certification of the Chief Financial Officer Pursuant
to Section 302 of the Sarbanes - Oxley Act of 2002
32 Certification Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
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: August 9, 2004 By: /s/ William P. Donnelly
-------------------------------
William P. Donnelly
Chief Financial Officer