01—Abstract
Summary
Summary of the 10-K/A filed December 23, 1998. Cited figures are marked; the original filing is the authoritative source.
Mettler-Toledo International Inc. filed this Form 10-K amendment on December 23, 1998, to add Exhibit 99.1, "Factors Affecting Future Operating Results," to its annual report for the year ended December 31, 1997.
The amendment changes only that exhibit. Its financial statements are incorporated by reference from the 1997 Form 10-K, filed March 13, 1998. The exhibit states that the company had consolidated indebtedness of $396.8 milliona at December 31, 1997, with approximately $220.0 million of additional borrowing capacity.
Term loans under its credit agreement made up $196.8 millionb of that debt, and the company must make scheduled quarterly principal payments on them. The filing identifies high leverage, variable-rate borrowings, and credit agreement covenants as significant risks to operations and liquidity. The exhibit also cites currency exposure, with Swiss franc expenses weighing heavily on operating income, and risks in emerging markets in Asia, Latin America and Eastern Europe, where economic conditions had deteriorated.
Other stated risks include competition in fragmented weighing instrument markets, dependence on pharmaceutical and chemical industry demand, acquisition integration, key employee retention, environmental liabilities, Year 2000 readiness, and the European Monetary Union's introduction of the Euro. The company does not intend to pay cash dividends in the foreseeable future, and its credit agreement restricts dividends.
02—Key points
Key Highlights
- Consolidated indebtedness was $396.8 million at December 31, 1997, with about $220.0 million of additional borrowing capacity.
- Term loans under the credit agreement totaled $196.8 million and require scheduled quarterly principal payments.
- Swiss franc-denominated expenses are a much greater share of operating expenses than Swiss franc sales are of net sales, so a stronger franc reduces operating profit.
- Emerging market economies in Asia, Latin America and Eastern Europe had deteriorated significantly, and the company expects this to affect its results for the foreseeable future.
- The company does not intend to pay cash dividends on its common stock in the foreseeable future, and its credit agreement restricts dividend payments.
- Consolidation in the pharmaceutical and chemicals industries hurt sales in prior years, and a prolonged downturn could adversely affect operating results.
- Year 2000 and Euro conversion issues are identified as risks that could cause miscalculations, system failures, or lost revenues.
03—Questions
Frequently Asked Questions
How much debt did the company carry at the end of 1997, and how much more could it borrow?
At December 31, 1997, consolidated indebtedness, excluding unused commitments, was $396.8 million. The company had additional borrowing capacity of approximately $220.0 million. Term loans made up $196.8 million of the indebtedness.
How does currency movement affect the company's operating profit?
Swiss franc expenses represent a much greater percentage of operating expenses than Swiss franc sales represent of net sales, so a stronger Swiss franc against major trading currencies reduces operating profit. Weaker European currencies against the U.S. dollar and the Swiss franc also reduce operating profit, since the company has more sales in those currencies than expenses. The filing notes that these effects have offset each other in recent years, so operating profits were not materially affected by dollar movements against European currencies.
Does the company pay dividends?
No. The company does not intend to pay cash dividends on its common stock in the foreseeable future. Its credit agreement also restricts its ability to pay dividends.
What are the main risks from international operations?
Risks include tariffs and trade barriers, difficulties staffing and managing local operations, customer and distributor credit risk, intellectual property protection, nationalization, foreign ownership restrictions, adverse tax consequences, and uncertain local economic and political conditions, including hyper-inflation. Converting and repatriating earnings from China requires government approval.
04—Continue