-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, K6wBBk5RASvSAHIk1jVPDcOqnXVJ9Rcjp0OfO5cmN9o41JXw1zBIiSgrwPiu1pUG ER3/nOZx+eKEjrDpzr5h4w== 0000895345-98-000273.txt : 19980507 0000895345-98-000273.hdr.sgml : 19980507 ACCESSION NUMBER: 0000895345-98-000273 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980506 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: METTLER TOLEDO INTERNATIONAL INC/ CENTRAL INDEX KEY: 0001037646 STANDARD INDUSTRIAL CLASSIFICATION: MISC INDUSTRIAL & COMMERCIAL MACHINERY & EQUIPMENT [3590] IRS NUMBER: 133668641 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-13595 FILM NUMBER: 98611271 BUSINESS ADDRESS: STREET 1: IM LANGACHER STREET 2: 65 E 55TH STP O BOX MT 100 CH 8606 CITY: SWITZERLAND STATE: V8 BUSINESS PHONE: 2126445900 MAIL ADDRESS: STREET 1: IM LANGACHER STREET 2: P O BOX MT 100 CH 8606 GREIFENSEE CITY: SWITZERLAND STATE: V8 FORMER COMPANY: FORMER CONFORMED NAME: METTLER TOLEDO INTERNATIONAL INC DATE OF NAME CHANGE: 19971117 FORMER COMPANY: FORMER CONFORMED NAME: MT INVESTORS INC DATE OF NAME CHANGE: 19970411 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (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, 1998, 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 8608 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 has 38,336,014 shares of Common Stock outstanding at March 31, 1998. 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 December 31, 1997 3 and March 31, 1998 Interim Consolidated Statements of Operations for the three 4 months ended March 31, 1997 and 1998 Interim Consolidated Statements of Shareholders' Equity 5 for the three months ended March 31, 1997 and 1998 Interim Consolidated Statements of Cash Flows for the three 6 months ended March 31, 1997 and 1998 Notes to the Interim Consolidated Financial Statements 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 9 ITEM 3. QUANTITIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 13 PART II. OTHER INFORMATION 13 ITEM 1. LEGAL PROCEEDINGS 13 ITEM 2. CHANGES IN SECURITY 13 ITEM 3. DEFAULT UPON SENIOR SECURITIES 13 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 13 ITEM 5. OTHER INFORMATION 13 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 13 Signature 14 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS METTLER-TOLEDO INTERNATIONAL INC. INTERIM CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 1997 AND MARCH 31, 1998 (IN THOUSANDS, EXCEPT PER SHARE DATA)
DECEMBER 31, MARCH 31, 1997 1998 ---- ---- (UNAUDITED) ASSETS Current assets: Cash and cash equivalents $23,566 $21,303 Trade accounts receivable, net 153,619 152,396 Inventories 101,047 101,020 Deferred taxes 7,584 7,628 Other current assets and prepaid expenses 24,066 24,602 ------------- -------------- Total current assets 309,882 306,949 Property, plant and equipment, net 235,262 224,230 Excess of cost over net assets acquired, net 183,318 182,323 Non-current deferred taxes 5,045 5,228 Other assets 15,806 16,408 ------------- -------------- Total assets $749,313 $735,138 ============= ============== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Trade accounts payable $39,342 $32,166 Accrued and other liabilities 80,844 94,389 Accrued compensation and related items 43,214 38,938 Taxes payable 33,267 32,557 Deferred taxes 10,486 10,093 Short-term borrowings and current maturities of long-term debt 56,430 54,952 ------------- -------------- Total current liabilities 263,583 263,095 Long-term debt 340,334 319,207 Non-current deferred taxes 25,437 24,142 Other non-current liabilities 91,011 91,181 ------------- -------------- Total liabilities 720,365 697,625 Minority interest 3,549 3,587 Shareholders' equity: Preferred stock, $0.01 par value per share; authorized 10,000,000 shares - - Common stock, $0.01 par value per share; authorized 125,000,000 shares: issued 38,336,014 shares (excluding 64,467 shares held in treasury) 383 383 Additional paid-in capital 284,630 284,630 Accumulated deficit (224,152) (217,314) Accumulated other comprehensive income (35,462) (33,773) ------------- -------------- Total shareholders' equity 25,399 33,926 Commitments and contingencies ------------- -------------- Total liabilities and shareholders' equity $749,313 $735,138 ============= ============== See the accompanying notes to the interim consolidated financial statements
METTLER-TOLEDO INTERNATIONAL INC. INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS THREE MONTHS ENDED MARCH 31, 1997 AND 1998 (IN THOUSANDS, EXCEPT PER SHARE DATA)
MARCH 31, MARCH 31, 1997 1998 ---- ---- (UNAUDITED) (UNAUDITED) Net sales $197,402 $215,655 Cost of sales 114,120 121,048 ------------- --------------- Gross profit 83,282 94,607 Research and development 10,832 10,795 Selling, general and administrative 60,193 65,112 Amortization 1,157 1,818 Interest expense 9,446 5,879 Other charges, net 3,754 454 ------------- --------------- Earnings (loss) before taxes and minority interest (2,100) 10,549 Provision (benefit) for taxes (1,087) 3,692 Minority interest 109 19 ------------- --------------- Net earnings (loss) $(1,122) $6,838 ============= =============== Basic earnings (loss) per common share: Net earnings (loss) $(0.04) $0.18 Weighted average number of common shares 30,686,065 38,336,014 Diluted earnings (loss) per common share: Net earnings (loss) $(0.04) $0.17 Weighted average number of common shares 30,686,065 40,600,109 See the accompanying notes to the interim consolidated financial statements
METTLER-TOLEDO INTERNATIONAL INC. INTERIM CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY THREE MONTHS ENDED MARCH 31, 1997 AND 1998 (IN THOUSANDS, EXCEPT PER SHARE DATA)
COMMON STOCK ACCUMULATED ALL CLASSES ADDITIONAL OTHER ------------------- PAID-IN ACCUMULATED COMPREHENSIVE SHARES AMOUNT CAPITAL DEFICIT INCOME TOTAL ------ ------ ------- ------- ------ ----- Balance at December 31, 1996 2,438,514 $25 $188,084 $(159,046) $(16,637) $12,426 Comprehensive income Net loss - - - (1,122) - (1,122) Change in currency translation adjustment - - - - (8,322) (8,322) ------------- Comprehensive income (9,444) ------------ ------------ --------- ----------- ------------ ------------- Balance at March 31, 1997 2,438,514 $25 $188,084 $(160,168) $(24,959) $2,982 ============ ============ ========= =========== ============ ============= Balance at December 31, 1997 38,336,014 $383 $284,630 $(224,152) $(35,462) $25,399 Comprehensive income Net earnings - - - 6,838 - 6,838 Change in currency translation adjustment - - - - 1,689 1,689 ------------- Comprehensive income 8,527 ------------ ------------ --------- ----------- ------------ ------------- Balance at March 31, 1998 38,336,014 $383 $284,630 $(217,314) $(33,773) $33,926 ============ ============ ========= =========== ============ ============= See the accompanying notes to the interim consolidated financial statements
METTLER-TOLEDO INTERNATIONAL INC. INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 1997 AND 1998 (IN THOUSANDS)
MARCH 31, MARCH 31, 1997 1998 ---- ---- (UNAUDITED) (UNAUDITED) Cash flow from operating activities: Net earnings (loss) $(1,122) $6,838 Adjustments to reconcile net earnings (loss) to net cash provided by operating activities: Depreciation 5,821 5,877 Amortization 1,157 1,818 Net gain on disposal of long-term assets (53) (2,142) Deferred taxes (1,446) (611) Minority interest 109 19 Increase (decrease) in cash resulting from changes in: Trade accounts receivable, net (8,557) (164) Inventories (7,819) (1,121) Other current assets (2,405) (2,247) Trade accounts payable (1,436) (6,729) Accruals and other liabilities, net 23,832 10,623 --------------- --------------- Net cash provided by operating activities 8,081 12,161 --------------- --------------- Cash flows from investing activities: Proceeds from sale of property, plant and equipment 431 12,183 Purchase of property, plant and equipment (3,063) (7,417) Acquisitions - (2,573) Other investing activities (98) - --------------- --------------- Net cash provided by (used in) investing activities (2,730) 2,193 --------------- --------------- Cash flows from financing activities: Proceeds from borrowings 1,055 3,447 Repayments of borrowings (23,160) (19,922) --------------- --------------- Net cash used in financing activities (22,105) (16,475) --------------- --------------- Effect of exchange rate changes on cash and cash equivalents (3,343) (142) --------------- --------------- Net decrease in cash and cash equivalents (20,097) (2,263) Cash and cash equivalents: Beginning of period $60,696 $23,566 --------------- --------------- End of period $40,599 $21,303 =============== =============== See the accompanying notes to the interim consolidated financial statements
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"), formerly MT Investors Inc., is a global supplier of precision instruments and is a manufacturer and marketer of weighing instruments for use in laboratory, industrial and food retailing applications. The Company also manufactures and sells certain related analytical and measurement technologies. The Company's manufacturing facilities are located in Switzerland, the United States, Germany, the U.K. and China. The Company's principal executive offices are located in Greifensee, Switzerland. The Company was incorporated by AEA Investors Inc. ("AEA") and recapitalized to effect the acquisition (the "Acquistion") of the Mettler-Toledo Group from Ciba-Geigy AG ("Ciba") and its wholly owned subsidiary, AG fur Prazisionsinstrumente ("AGP") on October 15, 1996. The Company has accounted for the Acquisition using the purchase method of accounting. Accordingly, the costs of the Acquisition were allocated to the assets acquired and liabilities assumed based upon their respective fair values. The accompanying interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America on a basis which reflects the interim consolidated financial statements of the Company. The interim consolidated financial statements have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The interim consolidated financial statements as of March 31, 1998 and for the three month periods ended March 31, 1997 and 1998 should be read in conjunction with the December 31, 1996 and 1997 consolidated financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1997. The accompanying interim consolidated financial statements reflect all adjustments (consisting of only normal recurring adjustments) which, in the opinion of management, are necessary for a fair statement of the results of the interim periods presented. Operating results for the three months ended March 31, 1998 are not necessarily indicative of the results to be expected for the full year ending December 31, 1998. The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates. METTLER-TOLEDO INTERNATIONAL INC. NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) (In thousands unless otherwise stated) 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. Inventories consisted of the following at December 31, 1997 and March 31, 1998: December 31, March 31, 1997 1998 ---------------- ---------------- Raw materials and parts $42,435 $39,760 Work in progress 29,746 32,602 Finished goods 28,968 28,763 ---------------- ---------------- 101,149 101,125 LIFO reserve (102) (105) ---------------- $101,047 $101,020 ================ ================ EARNINGS (LOSS) PER COMMON SHARE Effective December 31, 1997, the Company adopted the Statement of Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS 128"). Accordingly, basic and diluted earnings (loss) per common share data for each period presented have been determined in accordance with the provisions of SFAS 128. In accordance with the treasury stock method, the Company has included 2,264,095 equivalent shares related to 4,408,740 outstanding options to purchase shares of common stock, as described in Note 11 in the Company's Annual Report on Form 10-K for the year ended December 31, 1997, in the calculation of diluted weighted average number of common shares for the period ended March 31, 1998. Such common stock equivalents were not included in the computation of diluted loss per common share for the period ended March 31, 1997, as the effect is antidilutive. The Company retroactively adjusted its weighted average common shares for the purpose of the basic and diluted loss per common share computations for the 1997 period pursuant to SFAS 128 and Securities and Exchange Commission Staff Accounting Bulletin No. 98 issued in February 1998. REPORTING COMPREHENSIVE INCOME Effective January 1, 1998, the Company adopted Statement of Financial Accounting Standards No. 130 ("SFAS 130"), "Reporting Comprehensive Income." SFAS 130 requires that changes in the amounts of certain items, including foreign currency translation adjustments, be shown in the financial statements. The Company has displayed comprehensive income and its components in the Interim Consolidated Statements of Shareholders' Equity. Prior year financial statements have been restated to reflect the application of SFAS 130 as required by the standard. The adoption of SFAS 130 did not have a material effect on the Company's consolidated financial statements. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with the Unaudited Interim Consolidated Financial Statements included herein. GENERAL The accompanying interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America on a basis which reflects the interim consolidated financial statements of Mettler-Toledo International Inc. ("the Company"). Operating results for the three months ended March 31, 1998 are not necessarily indicative of the results to be expected for the full year ending December 31, 1998. On May 30, 1997, the Company acquired Safeline for (pound)61.0 million (approximately $100 million at May 30, 1997) plus up to an additional (pound)6.0 million (approximately $10.0 million at May 30, 1997) for a contingent earn-out payment. In October 1997, the Company made an additional payment, representing a post-closing adjustment, of (pound)1.9 million (approximately $3.1 million at October 3, 1997). Such amount has been accounted for as additional purchase price. Safeline, based in Manchester, U.K., is the world's largest manufacturer and marketer of metal detection systems for companies that produce and package goods in the food processing, pharmaceutical, cosmetics, chemicals and other industries. Safeline's metal detectors can also be used in conjunction with the Company's checkweighing products for important quality and safety checks in these industries. The Safeline Acquisition was financed by borrowings under the Company's then-existing credit facility together with the issuance of (pound)13.7 million (approximately $22.4 million at May 30, 1997) of seller loan notes which mature May 30, 1999. At March 31, 1998 (pound)4.5 million (approximately $7.5 million at March 31, 1998) remained outstanding under the seller loan notes. During the fourth quarter of 1997, the Company completed its initial public offering of 7,666,667 shares of Common Stock, including the underwriters' over-allotment option, (the "Offering") at a per share price equal to $14.00. The Offering raised net proceeds, after underwriters' commission and expenses, of approximately $97.3 million. In connection with the Offering, the Company effected a merger by and between it and its direct wholly owned subsidiary, Mettler-Toledo Holding Inc., whereby Mettler-Toledo Holding Inc. was merged with and into the Company (the "Merger"). In connection with the Merger, all classes of the Company's previous outstanding common stock were converted into 30,669,347 shares of a single class of Common Stock. Concurrently with the Offering, the Company entered into a bank credit agreement (the "Credit Agreement") borrowings from which, along with the proceeds from the Offering, were used to repay substantially all of the Company's then existing debt (collectively, the "Refinancing"). The Company also terminated its management consulting agreement with AEA Investors Inc. RESULTS OF OPERATIONS Net sales were $215.7 million for the three months ended March 31, 1998 compared to $197.4 million for the corresponding period in the prior year. This reflected an increase of 14% in local currency (7% absent the Safeline Acquisition). Results were negatively impacted by the strengthening of the U.S. dollar against other currencies. Net sales in U.S. dollars during the three month period increased 9%. Net sales in Europe increased 17% in local currencies during the three months ended March 31, 1998 versus the corresponding period in the prior year. The Company has continued to experience favorable sales trends in Europe, which began in the second half of 1997, as a result of the strengthening of the European economy. Net sales in local currencies during the three-month period in the Americas increased 16% principally due to improved market conditions for sales to industrial and food retailing customers. Net sales in local currencies in the three month period in Asia and other markets decreased 3%. The Company's business in Asia has deteriorated in the three months ending March 31, 1998 primarily as a result of a decline in net sales in Southeast Asia and Korea (which collectively represented approximately 3% of the Company's total net sales for 1997). The Company anticipates that market conditions in Asia will adversely affect sales in 1998 and that margins in that region will be reduced. The Company believes Asia and other emerging markets will continue to provide opportunities for growth in the long term based upon the movement toward international quality standards, the need to upgrade mechanical scales to electronic versions and the establishment of local production facilities by the Company's multinational client base. The operating results for Safeline (which were included in the Company's results from May 31, 1997) would have had the effect of increasing the Company's net sales by $11.0 million for the three months ended March 31, 1997. Additionally, Safeline's operating results during the same period would have increased the Company's Adjusted Operating Income (gross profit less research and development and selling, general and administrative expenses before amortization and non-recurring costs) by $2.4 million. Gross profit as a percentage of net sales increased to 43.9% for the three months ended March 31, 1998, compared to 42.2% for the corresponding period in the prior year. The improved gross profit percentage reflects the benefits of reduced product costs arising from the Company's research and development efforts and ongoing productivity improvements. Research and development expenses as a percentage of net sales decreased to 5.0% for the three months ended March 31, 1998, compared to 5.5% for the corresponding period in the prior year; however, the local currency spending level remained relatively constant period to period. Selling, general and administrative expenses as a percentage of net sales decreased to 30.2% for the three months ended March 31, 1998, compared to 30.5% for the corresponding period in the prior year. This decrease primarily reflects the benefits of ongoing cost efficiency programs. Adjusted Operating Income was $18.7 million, or 8.7% of sales, for the three months ended March 31, 1998 compared to $12.3 million, or 6.2% of sales, for the three months ended March 31, 1997, an increase of 52.6%. Interest expense decreased to $5.9 million for the three months ended March 31, 1998, compared to $9.4 million for the corresponding period in the prior year. The decrease was principally due to benefits received from the Offering, the Refinancing and cash flow provided by operations. Other charges, net of $0.5 million for the three months ended March 31, 1998 compared to other charges, net of $3.8 million for the corresponding period in the prior year. The 1998 amount includes gains on asset sales and interest income, offset by other charges. The 1997 period includes $4.8 million ($4.0 million after tax) relating to (i) certain derivative financial instruments acquired in 1996 and closed in 1997 and (ii) foreign currency exchange losses resulting from certain unhedged bank debt denominated in foreign currencies (such derivative financial instruments and such unhedged bank debt are no longer held pursuant to current Company policy). The provision for taxes is based upon the Company's projected annual effective tax rate for the related period. The decrease in the projected annual effective tax rate from 1997 to 1998 includes a benefit of approximately 5 percentage points based upon a change in Swiss tax law which will only benefit the 1998 period. The net earnings of $6.8 million for the three months ended March 31, 1998 compared to net loss of $1.1 million for the corresponding period of the prior year. LIQUIDITY AND CAPITAL RESOURCES In November 1997, the Company refinanced its previous credit agreement and purchased all of its 9 3/4% Senior Subordinated Notes due 2006 (the "Notes") pursuant to a tender offer with proceeds from the Offering and additional borrowings under the Credit Agreement. The Notes were originally issued in October 1996 at the time of the Acquisition. The Credit Agreement provides for term loan borrowings in aggregate principal amounts of $99.7 million, SFr 83.9 million (approximately $55.9 million at March 31, 1998) and (pound)21.3 million (approximately $35.8 million at March 31, 1998) that are scheduled to mature in 2004, a Canadian revolver with availability of CDN $26.3 million (approximately CDN $19.5 million of which was drawn as of March 31, 1998) which is scheduled to mature in 2004, and a multi-currency revolving credit facility with availability of $400.0 million (approximately $240.0 million of which was available at March 31, 1998) which is also scheduled to mature in 2004. The Company had borrowings of $348.3 million under the Credit Agreement and $25.9 million under various other arrangements as of March 31, 1998. Under the Credit Agreement, amounts outstanding under the term loans amortize in quarterly installments. In addition, the Credit Agreement obligates the Company to make mandatory prepayments in certain circumstances with the proceeds of asset sales or issuance of capital stock or indebtedness and with certain excess cash flow. The Credit Agreement imposes certain restrictions on the Company and its subsidiaries, including restrictions on the ability to incur indebtedness, make investments, grant liens, sell financial assets and engage in certain other activities. The Company must also comply with certain financial covenants. The Credit Agreement is secured by certain assets of the Company. The Credit Agreement imposes certain restrictions on the Company's ability to pay dividends to its shareholders. At March 31, 1998, approximately $106.7 million of the borrowings under the Credit Agreement were denominated in U.S. dollars. The balance of the borrowings under the Credit Agreement and under local working capital facilities were also denominated in certain of the Company's other principal trading currencies amounting to approximately $267.5 million at March 31, 1998. Changes in exchange rates between the currencies in which the Company generates cash flow and the currencies in which its borrowings are denominated will affect the Company's liquidity. In addition, because the Company borrows in a variety of currencies, its debt balances will fluctuate due to changes in exchange rates. See "Effect of Currency on Results of Operations" below. The Company's cash provided by operating activities increased from $8.1 million in the three months ended March 31, 1997 to $12.2 million in the three months ended March 31, 1998. The increase resulted principally from improved Adjusted Operating Income and lower interest costs resulting from the Offering and Refinancing. At March 31, 1998, consolidated debt, net of cash, was $352.9 million. The Company continues to explore potential acquisitions to expand its product portfolio and improve its distribution capabilities. In connection with any acquisition, the Company may incur additional indebtedness. The Company currently believes that cash flow from operating activities, together with borrowings available under the Credit Agreement and local working capital facilities, will be sufficient to fund currently anticipated working capital needs and capital spending requirements as well as debt service requirements for at least several years, but there can be no assurance that this will be the case. EFFECT OF CURRENCY ON RESULTS OF OPERATIONS The Company's operations are conducted by subsidiaries in many countries, and the results of operations and the financial position of each of those subsidiaries are reported in the relevant foreign currency and then translated into U.S. dollars at the applicable foreign exchange rate for inclusion in the Company's consolidated financial statements. Accordingly, the results of operations of such subsidiaries as reported in U.S. dollars can vary as a result of changes in currency exchange rates. Specifically, a strengthening of the U.S. dollar versus other currencies reduces net sales and earnings as translated into U.S. dollars, whereas a weakening of the U.S. dollar has the opposite effect. Swiss franc-denominated costs represent a much greater percentage of the Company's total expenses than Swiss franc-denominated sales represent of total sales. In general, an appreciation of the Swiss franc versus the Company's other major trading currencies, especially the principal European currencies, has a negative impact on the Company's results of operations and a depreciation of the Swiss franc versus the Company's other major trading currencies, especially the principal European currencies, has a positive impact on the Company's results of operations. The effect of these changes generally offsets in part the translation effect on earnings before interest and taxes of changes in exchange rates between the U.S. dollar and other currencies described in the preceding paragraph. CAUTIONARY STATEMENT This Quarterly Report on Form 10-Q includes forward-looking statements that reflect the Company's current views with respect to future events and financial performance, including capital expenditures, planned product introductions, research and development expenditures, potential future growth, including potential penetration of developed markets and potential growth opportunities in emerging markets, potential future acquisitions, potential cost savings from planned employee reductions and restructuring programs, estimated proceeds from and timing of asset sales, planned operational changes and research and development efforts, strategic plans and future cash sources and requirements. The words "believe", "expect", "anticipate" and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events of otherwise. These forward-looking statements are subject to a number of risks and uncertainties, including the risk of substantial indebtedness on operations and liquidity, risks associated with currency fluctuations, risks associated with international operations, highly competitive markets and technological developments, risks relating to downturns or consolidation affecting the Company's customers, risks relating to future acquisitions, risks associated with reliance on key management, uncertainties associated with environmental matters, risks relating to restrictions on payment of dividends and risks relating to certain anti-takeover provisions, which could cause actual results to differ materially from historical results or those anticipated. For a more detailed discussion of these factors, see the Mettler-Toledo International Inc. Annual Report on Form 10-K for the year ended December 31, 1997. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK NOT APPLICABLE PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS NOT APPLICABLE ITEM 2. CHANGES IN SECURITIES NOT APPLICABLE ITEM 3. DEFAULTS UPON SENIOR SECURITIES NOT APPLICABLE ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Company's Annual Meeting will be held on May 18, 1998. ITEM 5. OTHER INFORMATION NOT APPLICABLE ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 10.1 Mettler-Toledo International Inc. 1997 Amended and Restated Stock Option Plan 27. Financial Data Schedule - attached (b) Reports on Form 8-K - None 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 6, 1998 By:/s/ William P. Donnelly ------------------------------ William P. Donnelly Vice President, Chief Financial Officer and Treasurer EX-10.1 2 METTLER-TOLEDO INTERNATIONAL INC. 1997 AMENDED AND RESTATED STOCK OPTION PLAN ARTICLE 1 GENERAL 1.1 Purpose. The purpose of this Mettler-Toledo International Inc. Stock Option Plan (the "Plan") is to provide for certain key employees and/or directors of Mettler-Toledo International Inc., a Delaware corporation ("MTI"), its successors and assigns and its subsidiaries and affiliates (MTI and such other entities, collectively, the "Company"), an incentive (i) to join and/or remain in the service of the Company, (ii) to maintain and enhance the long-term performance and profitability of the Company and (iii) to acquire a proprietary interest in the success of the Company. The grant and exercise of options under the Plan is intended to meet the requirements of Rule 16b-3 of the 1934 Act (as hereinafter defined) at all times during which the Company and its Insiders (as hereinafter defined) are subject to the requirements of Section 16 of the 1934 Act. The Options are intended to be "performance-based" compensation under Section 162(m)(4)(C) of the Code at all times during which the deductibility of compensation attributable to Options could be subject to the deduction limitation of Section 162(m) of the Code. 1.2 Definition of Certain Terms. (a) "Agreement" means an agreement issued pursuant to Section 2.1. (b) "Board" means the Board of Directors of MTI. (c) "Code" means the Internal Revenue Code of 1986, as amended. (d) "Committee" means the Committee appointed to administer the Plan in accordance with Section 1.3. (e) "Company" means MTI, a Delaware corporation, its successors and assigns and its subsidiaries and affiliates. (f) "Common Stock" means the shares of Common Stock, par value $.Ol per share, of MTI and, subject to Section 2.5, any other shares into which such common stock shall thereafter be exchanged by reason of a recapitalization, merger, consolidation, split-up, combination, exchange of shares or the like. All shares of Class A common stock of MTI underlying previous grants of options will be deemed to be an equivalent number of shares OF Common Stock pursuant to this Plan. (g) "Date of Grant" means the date as of which an Option is granted by the Committee under an Agreement. (h) "Fair Market Value" per share as of a particular date means (i) the closing sales price per share of Common Stock on the national securities exchange on which the Common Stock is principally traded for the last date (including the Date of Grant) on which there was a sale of such Common Stock on such exchange, or (ii) if the shares of Common Stock are not then traded on a national securities exchange, the average of the closing bid and asked prices for the shares of Common Stock in the over-the-counter market on which the Common Stock is principally traded for the last date (including the Date of Grant) on which there was a sale of such Common Stock in such market, or (iii) if the shares of Common Stock are not then listed on a national securities exchange or traded in an over-the-counter market, such value as the Committee, in its sole discretion, shall determine. (i) "Insider" means an insider as so defined for purposes of Section 16 of the 1934 Act. (j) "Option" means a "nonqualified" stock option, as described in Section 1.5, granted under the Plan. (k) "Optionee" means an employee or director of the Company who has been awarded any Option under this Plan. (1) The terms "parent corporation" and "subsidiary corporation" as used herein shall have the meaning given those terms in Code Section 424(e) and (f), respectively. A corporation shall be deemed a parent or a subsidiary only for such periods during which the requisite ownership relationship is maintained. (m) "Plan" means this Mettler-Toledo International Inc. 1997 Amended and Restated Stock Option Plan and any predecessor plan. (n) "Termination With Cause," with respect to any Optionee, means termination by the Company of such Optionee's employment or directorship for: (i) misappropriation of corporate funds, (ii) conviction of a felony or a crime involving moral turpitude, (iii) failure to comply with directions of the Chief Executive Officer of the Company or other superiors of the Optionee or the Board of Directors of the Company, or (iv) gross negligence or willful misconduct. (o) "1934 Act" means the Securities Exchange Act of 1934, as amended. 1.3 Administration. (a) Subject to Section 1.3(e), the Plan shall be administered by a committee of the Board which shall consist of at least two members of the Board and which shall have the power of the Board to authorize awards under the Plan. At all times during which MTI and its Insiders are subject to the requirements of Section 16 of the 1934 Act, all members of the Committee shall be "Non-Employee Directors" as described in Rule 16b-3 of the 1934 Act. All members of the Committee or a subcommittee thereof shall be "outside directors" for purposes of Section 162(m) of the Code with respect to Optionees whose compensation may be subject to the deductibility limitation of Section 162(m) of the Code. The members of the Committee shall be appointed by, and may be changed from time to time in the discretion of, the Board. (b) The Committee shall have the authority (i) to exercise all of the powers granted to it under the Plan, (ii) to construe, interpret and implement the Plan and any Agreement executed pursuant to Section 2.1, (iii) to prescribe, amend and rescind rules and regulations relating to the Plan, (iv) to make all determinations necessary or advisable in administering the Plan, (v) to correct any defect, supply any omission and reconcile any inconsistency in the Plan and (vi) to grant Options on such terms, not inconsistent with the Plan, as it shall determine. (c) The determination of the Committee on all matters relating to the Plan or any Agreement shall be conclusive. (d) No member of the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any award thereunder. (e) Notwithstanding anything to the contrary contained herein, the Board may, in its sole discretion, at any time and from time to time, resolve to administer the Plan. In such event, the term "Committee" as used herein shall be deemed to mean the Board. 1.4 Persons Eligible for Awards. Awards under the Plan may be made from time to time to such key employees and directors of the Company as the Committee shall in its sole discretion select, provided, however, that subject to Section 3.4, the Committee may not award Options to any such employee with respect to more than 2,110,323 shares of Common Stock in any fiscal year during the term of the Plan. The Committee may condition the grant of Options on the prospective Optionee owning shares of Common Stock. 1.5 Types of Awards Under the Plan. Awards may be made under the Plan in the form of stock options which shall be "nonqualified" stock options, all as more fully set forth in Article 2. 1.6 Shares Available for Awards. (a) Subject to Section 3.4 (relating to adjustments upon changes in capitalization), as of any date the total number of shares of Common Stock with respect to which Options may be granted under the Plan shall be equal to the excess (if any) of (i) 6,368,445 shares over (ii) the sum of (A) the number of shares subject to outstanding Options granted under the Plan and (B) the number of shares previously issued pursuant to the exercise of Options granted under the Plan. In accordance with (and without limitation upon) the preceding sentence, but subject to the requirements of Rule 16b-3 of the 1934 Act, if applicable, shares of Common Stock covered by Options granted under the Plan which expire or terminate for any reason shall again become available for award under the Plan. (b) Shares that are issued upon the exercise of Options awarded under the Plan shall be authorized and unissued or treasury shares of Common Stock. (c) Without limiting the generality of the preceding provisions of this Section 1.6, the Committee may, but solely with the Optionee's consent, agree to cancel any award of Options under the Plan and issue new options in substitution therefor, provided that the Options as so substituted shall satisfy all of the requirements of the Plan as of the date such new Options are awarded. 1.7 Option Price. Except as the Committee may otherwise provide, the exercise price of each share of Common Stock subject to an Option shall not be less than 100% of the Fair Market Value of a share of Common Stock as of the Date of Grant. ARTICLE 2 STOCK OPTIONS 2.1 Agreements Evidencing Stock Options. (a) options awarded under the Plan shall be evidenced by Agreements which shall not be inconsistent with the terms and provisions of the Plan, and which shall contain such provisions as the Committee may in its sole discretion deem necessary or desirable. Without limiting the generality of the foregoing, the Committee may in any Agreement impose such restrictions or conditions upon the exercise of such Option or upon the sale or other disposition of the shares of Common Stock issuable upon exercise of such Option as the Committee may in its sole discretion determine. By accepting an award pursuant to the Plan each Optionee shall thereby agree that each such award shall be subject to all of the terms and provisions of the Plan, including, but not limited to, the provisions of Section 1.3(d). (b) Each Agreement shall set forth the number of shares of Common Stock subject to the Option granted thereby. (c) Each Agreement relating to Options shall set forth the amount payable by the Optionee to MTI upon exercise of the option evidenced thereby, subject to adjustment by the Committee to reflect changes in capitalization as contemplated by Section 3.4. 2.2 Term of Options. (a) Each Agreement shall set forth the period during which the Option evidenced thereby shall be exercisable, whether in whole or in part, and any vesting provisions applicable to the Option, such terms to be determined by the Committee in its discretion. (b) Each Agreement shall set forth such other terms and conditions, not inconsistent with the terms of the Plan, as the Committee shall deem appropriate. 2.3 Exercise of Options. Subject to the provisions of this Article 2, each Option granted under the Plan shall be exercisable as follows: (a) An Option shall become exercisable at such times and subject to such conditions as the applicable Agreement or the Committee may provide. (b) Unless the applicable Agreement otherwise provides, an Option granted under the Plan may be exercised from time to time as to all or part of the shares as to which such Option shall then be exercisable. (c) An Option shall be exercised by the filing of a written notice of exercise with MTI, on such form and in such manner as the Committee shall in its sole discretion prescribe. (d) Any written notice of exercise of an Option shall be accompanied by payment of the exercise price for the shares being purchased. Except as the Committee may otherwise provide, such payment shall be made by certified or official bank check payable to MTI (or the equivalent thereof, including shares of Common Stock, as may be acceptable to the Committee). As soon as practicable after receipt of such payment, MTI shall deliver to the Optionee a certificate or certificates for the shares of Common Stock so purchased. 2.4 Termination of Options. (a) Notwithstanding anything to the contrary in this Plan, except as the Agreement or the Committee may otherwise provide and as set forth in Section 2.4(b) and Section 2.4(d), Options granted to an Optionee (and already vested but not yet exercised) shall terminate on the date which is 45 days after termination of his employment with the Company for any reason (other than death or disability, in which case the Options shall terminate on the date which is 180 days after the date of such termination), which termination shall be deemed to occur on the last day of Optionee's employment with the Company. (b) Notwithstanding anything to the contrary in this Plan, all Options granted to an Optionee shall immediately expire and cease to be exercisable and all rights granted to an Optionee under this Plan and such Optionee's Agreement shall immediately expire in the event of a Termination With Cause of the Optionee by the Company at any time. (c) Unless the applicable Agreement or the Committee expressly provides otherwise, Options awarded to Optionees under the terms of the Plan will be exercisable only in accordance with the following vesting schedule: Cumulative Percentage of Applicable Date Total Shares --------------- ------------ On the first anniversary of the Date of Grant 20% on the second anniversary of the Date of Grant 40% on the third anniversary of the Date of Grant 60% on the fourth anniversary of the Date of Grant 80% on the fifth anniversary of the Date of Grant 100% The Committee may modify this vesting schedule in any manner that it deems appropriate in any Agreement or otherwise, and may provide different vesting schedules in different Agreements in its sole discretion. Except as set forth in an Agreement or as the Committee in its sole discretion may determine, in the event that an Optionee's employment with the Company is terminated for any reason prior to the date on which the Optionee's right to exercise the Options has fully vested pursuant to this Section 2.4(c), the Options will immediately cease to be exercisable with respect to any and all shares which have not vested as of the date of such termination. 2.5 IN THE EVENT of a Non-Control Transaction (as hereinafter defined), (A) all outstanding Options shall remain outstanding and subject to the terms and conditions of the Plan, including the vesting schedule contained in Section 2.4(c), and (B) each Optionee shall be entitled to receive in respect of each share of Common Stock subject to the option, upon exercise of such Option after the vesting thereof, the same amount and kind of stock, securities, cash, property or other consideration that each holder of a share of Common Stock was entitled to receive in the Non-Control Transaction in respect of a share. Unless otherwise determined by the Committee coincident with the grant of an Option or subsequently, in the event of a Transaction (as hereinafter defined), each outstanding Option shall vest, and, as of the date of the occurrence of the Transaction (the "Transaction Date"), the Company shall have the right to cancel any or all Options which have not been exercised as of the Transaction Date, subject to the payment of the purchase price described below. The purchase price payable by the Company to the Optionee upon the cancellation of each vested and non-vested but unexercised Option will be the Fair Market Value of the Common Stock underlying each such Option determined as of the Transaction Date less the aggregate exercise price of each such Option. A "Transaction" shall mean the occurrence during the term of the Plan of: (a) An acquisition (other than directly from MTI) of any voting securities of MTI (the "Voting Securities") by any "Person" (as the term person is used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), immediately after which such Person has "Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of twenty percent (20%) or more of the then outstanding shares of Common Stock or the combined voting power of MTI's then outstanding Voting Securities; provided, however, in determining whether a Transaction has occurred, shares of Common Stock or Voting Securities which are acquired in a "Non-Control Acquisition" (as hereinafter defined) shall not constitute an acquisition which would cause a Transaction. A "Non-Control Acquisition" shall mean an acquisition by (i) an employee benefit plan (or a trust forming a part thereof) maintained by (A) MTI or (B) any corporation or other Person of which a majority of its voting power or its voting equity securities or equity interest is owned, directly or indirectly, by MTI (for purposes of this definition, a "Subsidiary"), (ii) MTI or its Subsidiaries, (iii) any Person in connection with a "Non-Control Transaction" (as hereinafter defined), or (iv) AEA Investors Inc. alone or in concert with any other Person; (b) The individuals who, as of the effective date of the Plan, are members of the Board of Directors of MTI (the "Incumbent Board"), ceasing for any reason to constitute at least two-thirds of the members of the Board of Directors; provided, however, that if the election, or nomination for election by MTI's common stockholders, of any new director was approved by a vote of at least two-thirds of the Incumbent Board, such new director shall, for purposes of this Plan, be considered as a member of the Incumbent Board; provided further, however, that no individual shall be considered a member of the Incumbent Board if such individual initially assumed office as a result of either an actual or threatened "Election Contest" (as described in Rule 14a-11 promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board of Directors (a "Proxy Contest") including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest; or (c) The consummation of: (i) A merger, consolidation or reorganization with or into MTI or in which securities of MTI are issued, unless such merger, consolidation or reorganization is a "Non-Control Transaction." A "Non-Control Transaction" shall mean a merger, consolidation or reorganization with or into MTI or in which securities of MTI are issued where: (A) the stockholders of MTI, immediately before such merger, consolidation or reorganization, own directly or indirectly immediately following such merger, consolidation or reorganization, at least fifty and one-tenth percent (50.1%) of the combined voting power of the outstanding voting securities of the corporation resulting from such merger or consolidation or reorganization (the "Surviving Corporation") in substantially the same proportion as their ownership of the Voting Securities immediately before such merger, consolidation or reorganization, (B) the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such merger, consolidation or reorganization constitute at least two-thirds of the members of the board of directors of the Surviving Corporation, or a corporation beneficially directly or indirectly owning a majority of the Voting Securities of the Surviving Corporation, and (C) no Person other than (i) MTI, (ii) any Subsidiary, (iii) any employee benefit plan (or any trust forming a part thereof) that, immediately prior to such merger, consolidation or reorganization, was maintained by MTI or any Subsidiary, or (iv) AEA Investors Inc. alone or in concert with any other person, has Beneficial Ownership of twenty percent (20%) or more of the combined voting power of the Surviving Corporation's then outstanding voting securities or its common stock. (ii) A complete liquidation or dissolution of MTI; or (iii) The sale or other disposition of all or substantially all of the assets of MTI to any Person (other than a transfer to a Subsidiary). Notwithstanding the foregoing, a Transaction shall not be deemed to occur solely because any Person (the "Subject Person") acquired Beneficial Ownership of more than the permitted amount of the then outstanding shares of Common Stock or Voting Securities as a result of the acquisition of shares of Common Stock or Voting Securities by MTI which, by reducing the number of shares of Common Stock or Voting Securities then outstanding, increases the proportional number of shares Beneficially Owned by the Subject Persons, provided that if a Transaction would occur (but for the operation of this sentence) as a result of the acquisition of shares of Common Stock or Voting Securities by MTI, and after such share acquisition by MTI, the Subject Person becomes the Beneficial Owner of any additional shares of Common Stock or Voting Securities which increases the percentage of the then outstanding shares of Common Stock or Voting Securities Beneficially Owned by the Subject Person, then a Transaction shall occur. 2.6 Rule 16b-3. Notwithstanding anything in the Plan to the contrary, the Plan shall be administered, and Options shall be granted and exercised, in accordance with the 1934 Act and, specifically, Rule 16b-3 thereof. ARTICLE 3 MISCELLANEOUS 3.1 Amendment of the Plan; Modification of Awards. (a) The Board may, without stockholder approval, from time to time suspend or discontinue the Plan or revise or amend it in any respect whatsoever, provided that no such amendment shall adversely alter or impair any rights or obligations under any award theretofore made under the Plan without the consent of the person to whom such award was made, provided, further, that an amendment (i) that increases the total number of shares of Common Stock with respect to which Options may be granted under the Plan pursuant to Section 1.6(a) hereof (other than an increase pursuant to Section 3.4 hereof) or (ii) which requires holder approval in order for the Plan to continue to comply with any law, regulation or stock exchange requirement, shall not be effective unless approved by the requisite vote of stockholders. (b) With the consent of the Optionee and subject to the terms and conditions of the Plan (including Section 3.1(a)), the Committee may amend outstanding Agreements with such Optionee, for example, to (i) accelerate the time or times at which an Option may be exercised or (ii) extend the scheduled expiration date of the Option. (c) The Plan amends and restates the existing MT Investors Inc. Stock Option Plan. (d) The validity and enforceability of any Options granted under the Plan prior to any amendment thereof shall not be affected by any such amendment. 3.2 Nonassignability. Except as the Committee may otherwise provide, no right granted to any Optionee under the Plan or under any Agreement shall be assignable or transferable other than by will or by the laws of descent and distribution. Except as the Committee may otherwise provide, during the life of the Optionee, all rights granted to the Optionee under the Plan or under any Agreement shall be exercisable only by him. 3.3 Withholding of Taxes. (a) The Company shall be entitled to withhold from any payments to an Optionee an amount sufficient to satisfy any federal, state and other governmental tax required to be withheld in connection with an Option. Whenever under the Plan an Option is granted or shares of Common Stock are to be delivered upon exercise of an Option, the Company shall be entitled to require as a condition of grant or delivery that the Optionee remit an amount sufficient to satisfy all federal, state and other governmental tax withholding requirements related thereto. 3.4 Adjustments Upon Changes in Capitalization. If and to the extent specified by the Committee, the number of shares of Common Stock or other stock or securities which may be issued pursuant to the exercise of Options granted under the Plan and the exercise price of Options may be appropriately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from the subdivision or combination of shares of Common Stock or other capital adjustments, or the payment of a stock dividend after the effective date of this Plan, or other increase or decrease in the number of such shares of Common Stock effected without receipt of consideration by MTI; provided, however, that any Options to purchase fractional shares of Common Stock resulting from any such adjustment shall be eliminated. Adjustments under this Section 3.4 shall be made by the Committee, whose determination as to what adjustments shall be made, and the extent thereof, shall be final, binding and conclusive. 3.5 Right of Discharge Reserved. Nothing in this Plan or in any Agreement shall confer upon any employee or other person the right to continue in the employment or service of the Company or affect any right which the Company may have to terminate the employment or service of such employee or other person. 3.6 No Rights as a Stockholder. No Optionee or other person holding an Option shall have any of the rights of a stockholder of MTI with respect to shares subject to an Option until the issuance of a stock certificate to him for such shares. Except as otherwise provided in Section 3.4 no adjustment shall be made for dividends, distributions or other rights (whether ordinary or extraordinary, and whether in cash, securities or other property) for which the record date is prior to the date such stock certificate is issued. 3.7 Nature of Payments. (a) any and all payments of shares of Common Stock or cash hereunder shall be granted, transferred or paid in consideration of services performed by the Optionee for the Company. (b) All such grants, issuances and payments shall constitute a special incentive payment to the Optionee and shall not, unless otherwise determined by the Committee or by local law, be taken into account in computing the amount of salary or compensation of the Optionee for the purposes of determining any pension, retirement, death or other benefits under (i) any pension, retirement, life insurance or other benefit plan of the Company or (ii) any agreement between the Company and the Optionee. 3.8 Non-Uniform Determinations. The Committee's determinations under the Plan need not be uniform and may be made by it selectively among persons who receive, or are eligible to receive, awards under the Plan (whether or not such persons are similarly situated). Without limiting the generality of the foregoing, the Committee shall be entitled, among other things, to make non-uniform and selective determinations, and to enter into non-uniform and selective Agreements, as to (i) the persons to receive awards under the Plan, and (ii) the terms and provisions of awards under the Plan. 3.9 Other Payments or Awards. Nothing contained in the Plan shall be deemed in any way to limit or restrict the Company or the Committee from making any award or payment to any person under any other plan, arrangement or understanding, whether now existing or hereafter in effect. 3.10 Restrictions. (a) If the Committee shall at any time determine that any Consent (as hereinafter defined) is necessary or desirable as a condition of, or in connection with, the granting of any award under the Plan, the issuance or purchase of shares or other rights thereunder or the taking of any other action thereunder (each such action being hereinafter referred to as a "Plan Action"), then such Plan Action shall not be taken, in whole or in part, unless and until such Consent shall have been effected or obtained to the full satisfaction of the Committee. Without limiting the generality of the foregoing, if (i) the Committee is entitled under the Plan to make any payment in cash, Common Stock or both, and (ii) the Committee determines that a Consent is necessary or desirable as a condition of, or in connection with, payment in any one or more of such forms, the Committee shall be entitled to determine not to make any payment whatsoever until such Consent shall have been obtained in the manner aforesaid. (b) The term "Consent" as used herein with respect to any Plan Action means (i) any and all listings, registrations or qualifications in respect thereof upon any securities exchange or under any federal, state or local law, rule or regulation, (ii) any and all written agreements and representations by the grantee with respect to the disposition of shares, or with respect to any other matter, which the Committee shall deem necessary or desirable to comply with the terms of any such listing, registration or qualification or to obtain an exemption from the requirement that any such listing, qualification or registration be made and (iii) any and all consents, clearances and approvals in respect of a Plan Action by any governmental or other regulatory bodies. 3.11 Section Headings. The section headings contained herein are for the purposes of convenience only and are not intended to define or limit the contents of said sections. 3.12 Interpretation. Unless expressly stated in the relevant Agreement, each Option is intended to be performance-based compensation within the meaning of Section 162(m)(4)(C) and the Committee shall interpret the Plan accordingly. 3.13 Effective Date and Term of Plan. (a) This Plan shall be adopted and become effective on November 19, 1997, subject to approval of the Plan by a majority of the voting stockholders of MTI. (b) The Plan shall terminate 10 years after its adoption by the Board, and no awards shall thereafter be made under the Plan. Notwithstanding the foregoing, all awards made under the Plan prior to the date on which the Plan terminates shall remain in effect until such awards have been satisfied or terminated in accordance with the terms and provisions of the Plan. EX-27 3
5 3-MOS Dec-31-1998 Mar-31-1998 21,303 0 161,322 8,926 101,020 306,949 263,402 39,172 735,138 263,095 0 0 0 383 33,543 735,138 215,655 215,655 121,048 121,048 78,003 176 5,879 10,549 3,692 6,838 0 0 0 6,838 0.18 0.17
-----END PRIVACY-ENHANCED MESSAGE-----