-----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, JnWrc/IVDMEofTad31E9lcjTOInet0s7C3AKKR0So8El+vooWOudpADUgarHCIOd h0jb/HZ4DrYqgLvGHszOxA== 0000895345-02-000565.txt : 20021114 0000895345-02-000565.hdr.sgml : 20021114 20021114113859 ACCESSION NUMBER: 0000895345-02-000565 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20020930 FILED AS OF DATE: 20021114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: METTLER TOLEDO INTERNATIONAL INC/ CENTRAL INDEX KEY: 0001037646 STANDARD INDUSTRIAL CLASSIFICATION: LABORATORY ANALYTICAL INSTRUMENTS [3826] IRS NUMBER: 133668641 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-13595 FILM NUMBER: 02822805 BUSINESS ADDRESS: STREET 1: IM LANGACHER P O BOX MT-100 STREET 2: CH 8606 GREIFENSEE CITY: SWITZERLAND STATE: V8 ZIP: 10022 BUSINESS PHONE: 2126445900 MAIL ADDRESS: STREET 1: IM LANGACHER STREET 2: P O BOX MT 100 CH 8606 GREIFENSEE CITY: SWITZERLAND STATE: V8 ZIP: 10022 FORMER COMPANY: FORMER CONFORMED NAME: MT INVESTORS INC DATE OF NAME CHANGE: 19970411 FORMER COMPANY: FORMER CONFORMED NAME: METTLER TOLEDO INTERNATIONAL INC DATE OF NAME CHANGE: 19971117 10-Q 1 tp10q_mettler.txt FORM 10-Q 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 SEPTEMBER 30, 2002, 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 44,355,475 shares of Common Stock outstanding at September 30, 2002. 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 September 30, 2002 3 and December 31, 2001 Interim Consolidated Statements of Operations for the nine 4 months ended September 30, 2002 and 2001 Interim Consolidated Statements of Operations for the three 5 months ended September 30, 2002 and 2001 Interim Consolidated Statements of Shareholders' Equity 6 for the nine months ended September 30, 2002 and 2001 Interim Consolidated Statements of Cash Flows for the nine 7 months ended September 30, 2002 and 2001 Notes to the Interim Consolidated Financial Statements 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 16 AND RESULTS OF OPERATIONS ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 21 ITEM 4. CONTROLS AND PROCEDURES 21 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS 21 ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS 21 ITEM 3. DEFAULTS UPON SENIOR SECURITIES 21 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 21 ITEM 5. OTHER INFORMATION 21 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 21 Signature 22 Certifications pursuant to Section 302 of the Sarbanes-Oxley 23 Act of 2002 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS METTLER-TOLEDO INTERNATIONAL INC. INTERIM CONSOLIDATED BALANCE SHEETS AS AT SEPTEMBER 30, 2002 AND DECEMBER 31, 2001 (IN THOUSANDS, EXCEPT SHARE DATA)
SEPTEMBER 30, DECEMBER 31, 2002 2001 ---- ---- (UNAUDITED) ASSETS Current assets: Cash and cash equivalents $ 28,282 $ 27,721 Trade accounts receivable, net 221,437 227,295 Inventories, net 150,729 145,621 Other current assets and prepaid expenses 39,051 31,121 ------------- ------------- Total current assets 439,499 431,758 Property, plant and equipment, net 208,036 192,272 Excess of cost over net assets acquired, net 414,182 384,947 Other intangible assets, net 130,287 126,524 Other assets 55,969 53,911 ------------- ------------- Total assets $ 1,247,973 $ 1,189,412 ============= ============= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Trade accounts payable $ 54,370 $ 66,327 Accrued and other liabilities 144,151 111,284 Accrued compensation and related items 41,617 47,702 Taxes payable 47,919 72,035 Short-term borrowings and current maturities of long-term debt 50,627 50,239 ------------- ------------- Total current liabilities 338,684 347,587 Long-term debt 280,571 309,479 Non-current deferred taxes 26,158 25,053 Other non-current liabilities 127,077 119,109 ------------- ------------- Total liabilities 772,490 801,228 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 44,355,475 and 44,145,742 shares at September 30, 2002 and December 31, 2001 443 441 Additional paid-in capital 458,806 455,684 Retained earnings 73,086 3,957 Accumulated other comprehensive loss (56,852) (71,898) ------------- ------------- Total shareholders' equity 475,483 388,184 Commitments and contingencies - - ------------ ------------- Total liabilities and shareholders' equity $ 1,247,973 $ 1,189,412 ============= ============= The accompanying notes are an integral part of these interim consolidated financial statements.
METTLER-TOLEDO INTERNATIONAL INC. INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001 (IN THOUSANDS, EXCEPT SHARE DATA) SEPTEMBER 30, SEPTEMBER 30, 2002 2001 ---- ---- (UNAUDITED) (UNAUDITED) Net sales $ 876,401 $ 829,741 Cost of sales 467,259 453,558 ------------- ------------ Gross profit 409,142 376,183 Research and development 51,930 46,480 Selling, general and administrative 243,442 220,097 Amortization 6,480 9,706 Interest expense 13,175 13,402 Other charges, net (see Note 4) 28,408 15,294 ------------- ------------ Earnings before taxes 65,707 71,204 Provision (benefit) for taxes (see Note 5) (3,422) 29,640 ------------- ------------ Net earnings $ 69,129 $ 41,564 ============= ============ Basic earnings per common share: Net earnings $1.56 $1.04 Weighted average number of common shares 44,245,866 39,995,729 Diluted earnings per common share: Net earnings $1.52 $0.98 Weighted average number of common shares 45,387,431 42,491,493 The accompanying notes are an integral part of these interim consolidated financial statements.
METTLER-TOLEDO INTERNATIONAL INC. INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS THREE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001 (IN THOUSANDS, EXCEPT SHARE DATA)
SEPTEMBER 30, SEPTEMBER 30, 2002 2001 ---- ---- (UNAUDITED) (UNAUDITED) Net sales $ 306,990 $ 285,064 Cost of sales 164,067 154,040 ------------- ------------ Gross profit 142,923 131,024 Research and development 17,469 16,170 Selling, general and administrative 85,263 75,973 Amortization 2,805 3,469 Interest expense 4,429 4,056 Other charges (income), net 139 (4) ------------- ------------ Earnings before taxes 32,818 31,360 Provision for taxes 9,841 10,976 ------------- ------------ Net earnings $ 22,977 $ 20,384 ============= ============ Basic earnings per common share: Net earnings $0.52 $0.51 Weighted average number of common shares 44,355,475 40,157,813 Diluted earnings per common share: Net earnings $0.51 $0.48 Weighted average number of common shares 45,235,544 42,463,944 The accompanying notes are an integral part of these interim consolidated financial statements.
METTLER-TOLEDO INTERNATIONAL INC. INTERIM CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001 (IN THOUSANDS, EXCEPT SHARE DATA) (UNAUDITED)
RETAINED ACCUMULATED COMMON STOCK ADDITIONAL EARNINGS / OTHER ------------------------ PAID-IN (ACCUMULATED COMPREHENSIVE SHARES AMOUNT CAPITAL DEFICIT) LOSS TOTAL ------ ------ ------- -------- ---- ----- Balance at December 31, 2001 44,145,742 $ 441 $ 455,684 $ 3,957 $ (71,898) $ 388,184 Exercise of stock options 209,733 2 3,122 - - 3,124 Comprehensive income: Net earnings - - - 69,129 - 69,129 Unrealized loss on cash-flow hedging instruments - - - - (3,478) (3,478) Change in currency translation adjustment - - - - 18,524 18,524 ----------- Comprehensive income 84,175 ------------- --------- ----------- ------------- ----------- ----------- Balance at September 30, 2002 44,355,475 $ 443 $ 458,806 $ 73,086 $ (56,852) $ 475,483 ============= ========= =========== ============= =========== =========== Balance at December 31, 2000 39,372,873 $ 393 $ 294,558 $ (68,307) $ (47,804) $ 178,840 Exercise of stock options 784,940 8 9,743 - - 9,751 Comprehensive income: Net earnings - - - 41,564 - 41,564 Unrealized loss on cash-flow hedging instruments - - - - (3,094) (3,094) Change in currency translation adjustment - - - - 5,081 5,081 ----------- Comprehensive income 43,551 ------------- --------- ----------- ------------- ----------- ----------- Balance at September 30, 2001 40,157,813 $ 401 $ 304,301 $ (26,743) $ (45,817) $ 232,142 ============= ========= =========== ============= =========== =========== The accompanying notes are an integral part of these interim consolidated financial statements.
METTLER-TOLEDO INTERNATIONAL INC. INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001 (IN THOUSANDS)
SEPTEMBER 30, SEPTEMBER 30, 2002 2001 ---- ---- (UNAUDITED) (UNAUDITED) Cash flow from operating activities: Net earnings $ 69,129 $ 41,564 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation 18,887 16,898 Amortization 6,480 9,706 Other (113) (575) Increase (decrease) in cash resulting from changes in: Trade accounts receivable, net 16,154 (8,393) Inventories 1,776 (3,876) Other current assets (1,754) (4,762) Trade accounts payable (15,974) (21,680) Accruals and other liabilities, net(a) (15,368) 28,096 ----------- ----------- Net cash provided by operating activities 79,217 56,978 ----------- ----------- Cash flows from investing activities: Proceeds from sale of property, plant and equipment 418 2,856 Purchase of property, plant and equipment (25,270) (21,761) Acquisitions (b) (20,974) (7,856) ----------- ----------- Net cash used in investing activities (45,826) (26,761) ----------- ----------- Cash flows from financing activities: Proceeds from borrowings 57,871 53,072 Repayments of borrowings (92,647) (89,173) Proceeds from issuance of common stock 3,124 9,751 ----------- ----------- Net cash used in financing activities (31,652) (26,350) ----------- ----------- Effect of exchange rate changes on cash and cash equivalents (1,178) (884) ----------- ----------- Net increase in cash and cash equivalents 561 2,983 Cash and cash equivalents: Beginning of period $ 27,721 $ 21,725 ----------- ----------- End of period $ 28,282 $ 24,708 =========== =========== (a) Accruals and other liabilities include payments for restructuring and certain acquisition integration activities of $7.0 million in 2002 and $8.4 million in 2001. (b) The amounts paid for acquisitions including seller financing and assumed debt retained by sellers were $21.0 million in 2002 and $15.4 million in 2001. The accompanying notes are an integral part of these 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") is a global manufacturer and marketer of precision instruments, including weighing and certain analytical and measurement technologies, for use in laboratory, industrial and food retailing applications. The Company is also a leading provider of automated chemistry solutions used in drug and chemical compound discovery and development. The Company's primary manufacturing facilities are located in Switzerland, the United States, Germany, the United Kingdom, France and China. The Company's principal executive offices are located in Greifensee, Switzerland. The accompanying interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP"). The interim consolidated financial statements have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. The interim consolidated financial statements as of September 30, 2002 and for the nine and three month periods ended September 30, 2002 and 2001 should be read in conjunction with the December 31, 2001 and 2000 consolidated financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2001. 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 nine and three months ended September 30, 2002 are not necessarily indicative of the results to be expected for the full year ending December 31, 2002. The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results may differ from those estimates. 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 the first in, first out (FIFO) method. Inventories consisted of the following at September 30, 2002 and December 31, 2001: September 30, December 31, 2002 2001 --------------- -------------- Raw materials and parts $ 76,805 $ 70,392 Work in progress 32,465 28,433 Finished goods 41,459 46,796 --------------- -------------- $ 150,729 $ 145,621 =============== ============== INTANGIBLE ASSETS As of January 1, 2002 the Company has adopted Statement of Financial Accounting Standards No. 142 ("SFAS 142"), "Goodwill and Other Intangible Assets", effective for fiscal years beginning after December 15, 2001. This Statement requires that goodwill no longer be amortized to earnings, but instead be reviewed for impairment upon initial adoption of SFAS 142 and on an annual basis going forward. In addition, any goodwill arising from acquisitions completed after June 30, 2001 is not amortized. Other intangible assets will continue to be amortized over their useful lives. Application of the non-amortization provisions of SFAS 142 will increase our net earnings by $6.5 million and our diluted earnings per share by $0.15 on an annual basis, or $0.14 adjusting for additional shares issued in connection with our acquisition of Rainin Instrument LLC. The reconciliations of reported net earnings to adjusted net earnings before amortization of goodwill for the three and nine month periods ended September 30 are as follows:
Three months ended Nine months ended 2002 2001 2002 2001 ---- ---- ---- ---- Net earnings: Reported..................... $22,977 $20,384 $69,129 $41,564 Goodwill amortization........ - 1,668 - 4,877 ------- ------- ------- ------- Adjusted..................... $22,977 $22,052 $69,129 $46,441 ======= ======= ======= ======= Diluted earnings per share: Reported..................... $0.51 $0.48 $1.52 $0.98 Goodwill amortization........ - 0.04 - 0.11 ----- ----- ----- ----- Adjusted..................... $0.51 $0.52 $1.52 $1.09 ===== ===== ===== =====
METTLER-TOLEDO INTERNATIONAL INC. NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) (IN THOUSANDS UNLESS OTHERWISE STATED) 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) INTANGIBLE ASSETS (CONTINUED) SFAS 142 requires that goodwill be subject to annual impairment tests using a two-step process. The first step is to determine if an impairment exists, and if so the second step measures the amount of impairment. The Company has completed its impairment review under SFAS 142 and has determined that there is no impact on the Company's financial position and results of operations. The components of other intangible assets are as follows:
September 30, December 31, 2002 2001 --------------- -------------- Customer relationships $ 70,955 $ 67,383 Tradename 23,327 22,434 Intellectual property license 19,905 19,905 Proven technology and patents 19,138 17,352 --------------- -------------- 133,325 127,074 Less accumulated amortization (3,038) (550) --------------- -------------- Total other intangible assets, net $ 130,287 $ 126,524 =============== ==============
Other intangible assets substantially relate to the acquisition of Rainin Instrument, LLC. The annual aggregate amortization expense based on the current balance of other intangible assets for the next five years is estimated at $3.4 million. EARNINGS PER COMMON SHARE As described in Note 10 in the Company's Annual Report on Form 10-K for the year ended December 31, 2001, in accordance with the treasury stock method, the Company has included the following equivalent shares relating to 4,135,471 outstanding options to purchase shares of common stock in the calculation of diluted weighted average number of common shares for the three and nine month periods ended September 30, 2002 and 2001, respectively. September 30, September 30, 2002 2001 -------------------- ------------------- Nine months ended 1,141,565 2,495,764 Three months ended 880,069 2,306,131 METTLER-TOLEDO INTERNATIONAL INC. NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) (IN THOUSANDS UNLESS OTHERWISE STATED) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) EARNINGS PER COMMON SHARE (CONTINUED) Equivalent shares relating to 1,634,850 outstanding options in the three month period and 1,051,600 outstanding options in the nine month period ended September 30, 2002 have been excluded from the calculation of diluted weighted average number of common shares on the grounds that based on the average market price for the Company's common stock during these respective periods, such shares would be anti-dilutive. 3. BUSINESS COMBINATIONS During the nine months ended September 30, 2002, the Company spent approximately $21.0 million on acquisitions, including the acquisition of SofTechnics Inc. and additional consideration related to earn-out periods associated with acquisitions consummated in prior years. SofTechnics is a leading provider of in-store retail item management software solutions. Goodwill recognized in connection with these acquisition payments totaled $19.4 million, which is primarily included in the Company's Principal U.S. Operations segment as depicted in Note 6 to these interim consolidated financial statements and is expected to be fully deductible for tax purposes. The Company may be required to make additional earn-out payments based upon the achievement of certain financial performance levels relating to certain of these acquisitions in the future. The fair value of any earn-out payments will be recorded as additional consideration of the acquired enterprise and recorded as goodwill and evaluated for impairment, when such payments are deemed issuable to the sellers. As discussed more fully in Note 3 of the Company's Annual Report on Form 10-K for the year ended December 31, 2001, the Company acquired Rainin Instrument, LLC in November 2001 for approximately $294.2 million. The following summarized unaudited pro forma information assumes the acquisition of Rainin occurred on January 1, 2001. The pro forma data reflects adjustments directly related to the acquisition, and does not include adjustments that may arise as a consequence of the acquisition. Accordingly, the unaudited pro forma information does not purport to be indicative of what the Company's combined results of operations would actually have been had the acquisition occurred on January 1, 2001 or to project the Company's combined results of operations for any future periods. METTLER-TOLEDO INTERNATIONAL INC. NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) (IN THOUSANDS UNLESS OTHERWISE STATED) 3. BUSINESS COMBINATIONS (CONTINUED)
Nine months Three months ----------- ------------ Period ended September 30: 2002 2001 2002 2001 ------ ------ ------ ------ Net sales: As reported.............................. $876,401 $829,741 $306,990 $285,064 Pro forma................................ $876,401 $888,353 $306,990 $306,012 Net earnings: As reported.............................. $69,129 $41,564 $22,977 $20,384 Pro forma................................ $69,129 $45,386 $22,977 $20,895 Basic earnings per common share: As reported.............................. $1.56 $1.04 $0.52 $0.51 Pro forma................................ $1.56 $1.05 $0.52 $0.48 Diluted earnings per common share*: As reported.............................. $1.52 $0.98 $0.51 $0.48 Pro forma................................ $1.52 $0.99 $0.51 $0.46 * Net earnings for the nine month period ended September 30, excluding restructuring charges in 2002 and 2001 and the one time tax credit in 2002, would have been $1.46 per share on a diluted basis in 2002 compared to $1.32 per share on a diluted basis in 2001 and, on a pro forma basis, $1.31 per share on a diluted basis for 2001.
4. OTHER CHARGES, NET Other charges, net consists primarily of foreign currency transactions, interest income, and charges related to the Company's cost-reduction programs. In June 2002, the Company's management approved restructuring plans to exit and consolidate manufacturing facilities and reduce the Company's expense structure. As part of these efforts to reduce costs, the Company recorded a charge of $28.7 million ($20.1 million after tax) during the three months ended June 30, 2002. This charge was comprised of restructuring liabilities of $24.3 million and related asset impairments of $4.4 million. In total, the Company expects this restructuring plan to result in cash outlays of approximately $20.2 million and non-cash items of $8.5 million. The charge comprised involuntary employee separation benefits, write-downs of impaired assets to be disposed and other exit costs. The Company expects to involuntarily terminate approximately 300 employees in targeted manufacturing and administrative areas and to substantially complete the manufacturing consolidation by the end of 2003. The asset impairments of $4.4 million primarily relate to plant and equipment disposals resulting from the exit of certain manufacturing facilities. Fair value of these assets was determined on the basis of their net realizable value on disposal. Substantially all of the impaired assets will be physically disposed by the end of 2003. METTLER-TOLEDO INTERNATIONAL INC. NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) (IN THOUSANDS UNLESS OTHERWISE STATED) 4. OTHER CHARGES, NET (CONTINUED) As part of the current restructuring program, the Company revised its U.S. defined benefit pension plan to freeze the benefits for current participants and to discontinue the plan for all future employees, resulting in an expense of $1.1 million. In addition, the Company's U.S. retiree medical program was also discontinued for certain current and all future active employees resulting in a curtailment gain of $1.3 million. During the three months ended June 30, 2001 the Company recorded a restructuring charge of $15.2 million ($14.6 million after tax) associated with headcount reductions and manufacturing transfers. The activities associated with this charge are substantially complete. A roll-forward of the Company's accrual for restructuring activities follows:
For the nine months ended Employee Lease September 30, 2002 related termination Other Total - ------------------ ------- ----------- ----- ----- (a) (b) (c) Beginning of period................. $ 2,001 $ 279 $324 $ 2,604 Restructuring expenses.............. 21,967 2,051 283 24,301 Cash payments....................... (5,831) (321) (63) (6,215) Increases in retirement benefit obligation.......................... (3,850) - - (3,850) Impact of foreign currency.......... 491 27 5 523 ------- ------ ---- ------- Balance at September 30, 2002....... $14,778 $2,036 $549 $17,363 ======= ====== ==== ======= (a) Employee related costs comprise mainly severance, medical and other benefit costs in connection with headcount reductions announced during 2002. As at September 30, 2002, 126 employees had been terminated under this restructuring plan. The employee terminations and related cash outflows will be substantially complete by the end of 2003. (b) Lease termination costs primarily relate to the early termination of leases on vacated property. (c) Other costs include expenses associated with equipment dismantling and disposal and other exit costs.
5. INCOME TAXES During the three months ended June 30, 2002, the Company completed a tax restructuring program and related tax audits, and recorded a tax benefit of $23.1 million. METTLER-TOLEDO INTERNATIONAL INC. NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) (IN THOUSANDS UNLESS OTHERWISE STATED) 6. SEGMENT REPORTING The Company has five reportable segments: Principal U.S. Operations, Principal Central European Operations, Swiss R&D and Manufacturing Operations, Other Western European Operations and Other. The following tables show the operations of the Company's operating segments:
Principal Other For the period Principal Central Swiss R&D Western Eliminations January 1, 2002 to U.S. European and Mfg. European and September 30, 2002 Operations Operations Operations Operations Other(a) Corporate(b) Total -------------------------- -------------- ------------- ----------- ------------- ---------- -------------- ------- Net sales to external customers.................... $323,013 $112,211 $ 16,220 $186,993 $237,964 $ - $876,401 Net sales to other segments..................... 23,912 39,208 94,134 27,455 100,033 (284,742) - -------- -------- ------- -------- -------- ---------- -------- Total net sales............. $346,925 $151,419 $110,354 $214,448 $337,997 $(284,742) $876,401 ======== ======== ======== ======== ======== ========== ======== Adjusted operating income... $ 50,539 $ 10,319 $ 20,909 $ 8,352 $ 32,239 $ (8,588) $113,770 Goodwill, net............... $238,428 $ 15,203 $ 14,904 $ 58,488 $ 87,159 $ - $414,182 Principal Other For the period Principal Central Swiss R&D Western Eliminations January 1, 2001 to U.S. European and Mfg. European and September 30, 2001 Operations Operations Operations Operations Other(a) Corporate(b) Total -------------------------- -------------- ------------- ----------- ------------- ---------- -------------- ------- Net sales to external customers................... $266,446 $137,292 $ 19,126 $191,424 $215,453 $ - $829,741 Net sales to other segments. 23,008 42,487 106,837 32,501 108,994 (313,827) - -------- -------- -------- -------- -------- ---------- -------- Total net sales............. $289,454 $179,779 $125,963 $223,925 $324,447 $(313,827) $829,741 ======== ======== ======== ======== ======== ========== ======== Adjusted operating income... $ 17,490 $ 20,742 $ 26,763 $ 16,285 $ 31,312 $ (2,986) $109,606 (a) Other includes reporting units in Asia, Eastern Europe, Latin America and segments from other countries that do not meet the quantitative threshold criteria of SFAS 131. (b) Eliminations and Corporate includes the elimination of intersegment transactions as well as certain corporate expenses, intercompany investments and certain goodwill, which are not included in the Company's operating segments.
METTLER-TOLEDO INTERNATIONAL INC. NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) (IN THOUSANDS UNLESS OTHERWISE STATED) 6. SEGMENT REPORTING (CONTINUED) A reconciliation of adjusted operating income to earnings before taxes follows: For the period For the period January 1, 2002 January 1, 2001 to to September 30, 2002 September 30, 2001 ------------------ ------------------ Adjusted operating income......... $113,770 $109,606 Amortization...................... 6,480 9,706 Interest expense.................. 13,175 13,402 Other charges, net................ 28,408 (a) 15,294 (b) -------- -------- Earnings before taxes............. $ 65,707 $ 71,204 ======== ======== (a) Includes a charge of $28.7 million, which comprises severance, asset write-downs and other costs, primarily related to headcount reductions and manufacturing transfers. (b) Includes a charge of $15.2 million, which comprises severance, asset write-downs and other costs, primarily related to headcount reductions and manufacturing transfers. -------------------------------------------------------- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the Unaudited Interim Consolidated Financial Statements included herein. GENERAL Our interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America on a basis which reflects the interim consolidated financial statements of Mettler-Toledo International Inc. Operating results for the nine and three months ended September 30, 2002 are not necessarily indicative of the results to be expected for the full year ending December 31, 2002. RESULTS OF OPERATIONS Net sales were $876.4 million and $307.0 million for the nine and three months ended September 30, 2002 compared to $829.7 million and $285.1 million for the corresponding periods in the prior year. This represents a local currency increase of 4% in both periods. Net sales were positively impacted by the weakening of the U.S. dollar against other currencies. Net sales in U.S. dollars during the nine and three month periods increased 6% and 8%, respectively. We experienced a sharp decline in sales of our European retail products after the introduction of the euro currency. Excluding the impact of European retail products in both 2001 and 2002, consolidated local currency sales growth would be 9% and 10% for the nine and three month periods ended September 30, 2002, respectively. Net sales by geographic customer location were as follows: Net sales in Europe decreased 10% and 14% in local currencies during the nine and three month periods ended September 30, 2002 versus the corresponding periods in the prior year, reflecting weak sales performance across several product lines, particularly in Germany. Excluding the impact of European retail products in both 2001 and 2002, European local currency sales decreased 3% and 2% for the nine and three month periods ended September 30, 2002, respectively. The Company expects that sales of European retail products will decline over 50% for the fourth quarter of 2002 versus 2001. Net sales in local currencies during the nine and three month periods in the Americas increased 18% and 19% respectively, as compared to the corresponding period in 2001, principally due to the acquisition of Rainin Instrument in 2001. Approximately 86% of Rainin's operations are based in the Americas, with 7% each in Asia and Europe. Net sales in local currencies during the nine and three month periods in Asia and other markets increased 8% compared to the same periods in the prior year. The results of our business in Asia and other markets during the nine month period ending September 30, 2002 reflects particularly strong sales performance in China. We acquired Rainin Instrument in November 2001. Assuming we had acquired Rainin at the beginning of 2001, the acquisition would have added approximately $58.6 million and $20.9 million or 7% of sales to each of the nine and three month periods ending September 30, 2001 respectively, and added $17.6 million and $6.2 million of Adjusted Operating Income (gross profit less research and development and selling, general and administrative expenses before amortization and other charges, net) on a pro forma basis. Our sales decline in Europe was primarily due to a decrease in sales of our European retail products after the introduction of the euro currency, as well as a deterioration in economic conditions, particularly in Germany and in those markets sensitive to manufacturing output. In the Americas, there has been no sign to date of a significant economic recovery benefiting the markets for most of our products, although we have begun to experience modest improvement in sales of our retail products. To the extent that economic conditions significantly deteriorate in these or other parts of the world, our sales growth and profitability may be adversely affected. Gross profit as a percentage of net sales increased to 46.7% and 46.6% for the nine and three month periods ended September 30, 2002, compared to 45.3% and 46.0% for the corresponding periods in the prior year. This increase is primarily related to changes in our sales mix, as well as benefits from implementing various cost savings initiatives. Research and development expenses as a percentage of net sales represented 5.9% and 5.7% for the nine and three months ended September 30, 2002, compared to 5.6% and 5.7% for the corresponding periods in the prior year. We continue to make significant investments in research and development, which increased 8% and 1% in local currencies for the nine and three month periods ended September 30, 2002. Selling, general and administrative expenses as a percentage of net sales increased to 27.8% for the nine and three month periods ended September 30, 2002, compared to 26.5% and 26.7% for the corresponding periods in the prior year, primarily due to changes in our sales mix and our reduced sales volume in Europe. After adjusting for acquisitions and unfavorable foreign currency effects, selling, general and administrative expenses increased 3% in the nine month period and were flat in the three month period ended September 30, 2002. Adjusted Operating Income increased 4% to $113.8 million, or 13.0% of net sales, for the nine months ended September 30, 2002, compared to $109.6 million, or 13.2% of net sales, for the corresponding period in the prior year. Adjusted Operating Income increased 3% to $40.2 million, or 13.1% of net sales, for the three months ended September 30, 2002, compared to $38.9 million, or 13.6% of net sales, for the corresponding period in the prior year. The reduced operating margin percentage is due to the combination of the currency translation impact resulting in higher reported U.S. dollar sales and an unfavorable impact on pre-tax earnings of $0.7 million, due primarily to the strengthening of the Swiss franc. Adjusting for these items on a constant currency basis would result in Adjusted Operating Income of 13.8% of net sales for the three months ended September 30, 2002. We believe that Adjusted Operating Income provides important financial information in measuring and comparing our operating performance. 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 our performance. Other charges net, were $28.4 million and $0.1 million for the nine and three month periods ended September 30, 2002 compared to $15.3 million and $0.0 million for the same periods in 2001. The nine months ended September 30, 2002 includes a pre-tax restructuring charge of $28.7 million. The charge primarily comprises severance payments related to work force reductions and other costs associated with consolidating manufacturing. The nine months ended September 30, 2001 includes a restructuring charge of $15.2 million. Activities associated with our 2001 restructuring charge are substantially complete. Interest expense was $13.2 million and $4.4 million for the nine and three months ended September 30, 2002, compared to $13.4 million and $4.1 million for the corresponding periods in the prior year. The increase in the three month period ended September 30, 2002 was principally due to higher average borrowings during 2002 to fund the Rainin acquisition as well as the effect of unfavorable foreign currency exchange rates, partially offset by reduced borrowing rates. The provision for taxes is based upon our projected annual effective tax rate for the related period. Our effective tax rate before non-recurring items for the nine and three month periods ended September 30, 2002 was approximately 30% compared with 35% in 2001. This reduction reflects the effect of several recently implemented tax initiatives. In addition, we recorded a one-time benefit of $23.1 million during the three months ended June 30, 2002 related to the completion of our tax restructuring program and related tax audits. Net earnings were $69.1 million and $23.0 million for the nine and three months ended September 30, 2002. This compares to net earnings of $41.6 million and $20.4 million for the corresponding periods in the prior year. Excluding the effect of the previously mentioned charge associated with headcount reductions and manufacturing transfers and the one-time tax benefit, net earnings were $66.1 million and $23.0 million for the nine and three months ended September 30, 2002. This compares to net earnings of $56.2 million and $20.4 million, for the corresponding periods in the prior year before the prior year restructuring charge. Adjusting for the adoption of SFAS 142, net earnings before restructuring charges and the one-time tax benefit for the nine and three month periods ended September 30, 2002 increased 8% and 4%, respectively. LIQUIDITY AND CAPITAL RESOURCES Cash provided by operating activities totaled $79.2 million for the nine months ended September 30, 2002, compared to $57.0 million for the same period in 2001. The increase in 2002 resulted principally from increased Adjusted Operating Income and improved working capital management. Cash provided by operating activities is net of payments for restructuring, and certain acquisition integration activities. These amounts totaled $7.0 million, and $8.4 million for the nine months ended September 30, 2002 and 2001 respectively. During the nine months ended September 30, 2002, we spent approximately $21.0 million on acquisitions, including additional consideration related to earn-out periods associated with acquisitions consummated in prior years. These purchases were funded from cash generated from operations and additional borrowings. We continue to explore potential acquisitions to expand our product portfolio and improve our distribution capabilities. In connection with any acquisition, we may incur additional indebtedness. In addition, we may make additional earn-out payments relating to certain of these and previous year acquisitions in the future. Capital expenditures are a significant use of funds and are made primarily for machinery, equipment, information technology equipment and the purchase and expansion of facilities. Our capital expenditures totaled $25.3 million and $21.8 million during the first nine months of 2002 and 2001 respectively. The increase in 2002 is principally due to spending associated with Rainin's new facility in California. We expect capital expenditures to increase as our business grows, and to fluctuate as currency exchange rates change. At September 30, 2002, our consolidated debt, net of cash, was $302.9 million. We had borrowings of $309.9 million under our credit agreement and $21.3 million under various other arrangements as of September 30, 2002. Of our credit agreement borrowings, approximately $73.9 million was borrowed as term loans scheduled to mature in 2004 and $236.0 million was borrowed under a multi-currency revolving credit facility. At September 30, 2002, we had $166.3 million of availability remaining under the revolving credit facility. At September 30, 2002, approximately $228.0 million of the borrowings under the credit agreement and local working capital facilities were denominated in U.S. dollars. The balance of the borrowings under the credit agreement and local working capital facilities were denominated in certain of our other principal trading currencies amounting to approximately $103.2 million at September 30, 2002. Changes in exchange rates between the currencies in which we generate cash flow and the currencies in which our borrowings are denominated affect our liquidity. In addition, because we borrow in a variety of currencies, our debt balances fluctuate due to changes in exchange rates. Under the credit agreement, amounts outstanding under the term loans are payable in quarterly installments. In addition, the credit agreement obligates us to make mandatory prepayments in certain circumstances with the proceeds of asset sales or issuance of capital stock or indebtedness and with certain excess cash flow. The credit agreement imposes certain restrictions on us and our subsidiaries, including restrictions and limitations on the ability to pay dividends to our shareholders, incur indebtedness, make investments, grant liens, sell financial assets and engage in certain other activities. We must also comply with several financial and other covenants. We currently believe that cash flow from operating activities, together with borrowings available under the credit agreement and local working capital facilities, will be sufficient to fund currently anticipated working capital needs and capital spending requirements as well as debt service requirements for at least several years, but there can be no assurance that this will be the case. EFFECT OF CURRENCY ON RESULTS OF OPERATIONS Because we conduct operations in many countries, our operating income can be significantly affected by fluctuations in currency exchange rates. Swiss franc-denominated expenses represent a much greater percentage of our operating expenses than Swiss franc-denominated sales represent of our net sales. In part, this is because most of our manufacturing costs in Switzerland relate to products that are sold outside of Switzerland. Moreover, a substantial percentage of our research and development expenses and general and administrative expenses are incurred in Switzerland. Therefore, if the Swiss franc strengthens against all or most of our major trading currencies (e.g., the U.S. dollar, the euro, other major European currencies and the Japanese yen), our operating profit is reduced. We also have significantly more sales in European currencies (other than the Swiss franc) than we have expenses in those currencies. Therefore, when European currencies weaken against the U.S. dollar and the Swiss franc, it also decreases our operating profits. In recent years, the Swiss franc and other European currencies have generally moved in a consistent manner versus the U.S. dollar. Therefore, because the two effects previously described have offset each other, historically our operating profits have not been materially affected by movements in the U.S. dollar exchange rate versus European currencies. However, there can be no assurance that these currencies will continue to move in a consistent manner in the future. In 2002, we estimate that the unfavorable impact due primarily to the strengthening of the Swiss franc was approximately $0.7 million and $3.6 million for the three and nine month periods ended September 30, 2002. We estimate that a further one percent strengthening of the Swiss franc against the euro would result in a decrease in our earnings before tax of between $0.8 million and $1.2 million on an annual basis. In addition to the effects of exchange rate movements on operating profits, our debt levels can fluctuate due to changes in exchange rates, particularly between the U.S. dollar and the Swiss franc. FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS This Quarterly Report on Form 10-Q includes forward-looking statements based on our current expectations and projections about future events, including: strategic plans; potential growth, including penetration of developed markets and opportunities in emerging markets; planned product introductions; planned operational changes and research and development efforts; future financial performance, including expected capital expenditures; research and development expenditures; estimated proceeds from and the timing of asset sales; potential acquisitions; future cash sources and requirements; and potential cost savings from restructuring programs. These forward-looking statements are subject to a number of risks and uncertainties, certain of which are beyond our control, which could cause our actual results to differ materially from historical results or those anticipated. Certain of these risks and uncertainties have been identified in Exhibit 99.1 to our Annual Report on Form 10-K for the year ended December 31, 2001. The words "believe," "expect," "anticipate" and similar expressions identify forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. New risk factors emerge from time to time and it is not possible for us to predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As of September 30, 2002, there was no material change in the information provided under Item 7A in the Company's Annual Report on Form 10-K for the year ended December 31, 2001. ITEM 4. CONTROLS AND PROCEDURES Within 90 days prior to the filing of this report, we carried out an evaluation of the effectiveness of our disclosure controls and procedures under the supervision and with the participation of our disclosure committee, the CFO and CEO. The CFO and CEO concluded that our disclosure controls and procedures are effective in permitting us to comply with our disclosure obligations. Since the date of our evaluation, we have not made significant changes to our internal controls or other factors that could significantly affect these controls, nor have we taken any corrective actions with regard to significant deficiencies and material weaknesses. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. NONE ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS. NONE ITEM 3. DEFAULTS UPON SENIOR SECURITIES. NONE ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. NONE ITEM 5. OTHER INFORMATION. NONE ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 99.1 Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (b) Reports on Form 8-K Date Filed Item Reported ---------- ------------- August 27, 2002 Adoption of a Shareholder Rights Plan by the Board of Directors of the Company on August 26, 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: November 14, 2002 By: /s/ Dennis Braun ----------------- Dennis Braun Chief Financial Officer CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Robert F. Spoerry, certify that: (1) I have reviewed this quarterly report on Form 10-Q of Mettler-Toledo International Inc. (the "Company"); (2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; (3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report; (4) The Company's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the Company and we have: (a) designed such disclosure controls and procedures to ensure that material information relating to the Company and its consolidated subsidiaries is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) evaluated the effectiveness of the Company's disclosure controls and procedures as of a date within 90 days prior to the filing date of this report (the "Evaluation Date"); and (c) presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; (5) The Company's other certifying officers and I have disclosed, based on our most recent evaluation, to the Company's auditors and the Audit Committee of the Company's Board of Directors: (a) all significant deficiencies in the design or operation of internal controls which could adversely affect the Company's ability to record, process, summarize and report financial data, and have identified for the Company's auditors any material weaknesses in internal controls; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal controls; and (6) The Company's other certifying officers and I have indicated in this report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Dated: November 14, 2002 /s/ Robert F. Spoerry - --------------------- Robert F. Spoerry Chief Executive Officer CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Dennis W. Braun, certify that: (1) I have reviewed this quarterly report on Form 10-Q of Mettler-Toledo International Inc. (the "Company"); (2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; (3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report; (4) The Company's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the Company and we have: (a) designed such disclosure controls and procedures to ensure that material information relating to the Company and its consolidated subsidiaries is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) evaluated the effectiveness of the Company's disclosure controls and procedures as of a date within 90 days prior to the filing date of this report (the "Evaluation Date"); and (c) presented in this report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; (5) The Company's other certifying officers and I have disclosed, based on our most recent evaluation, to the Company's auditors and the Audit Committee of the Company's Board of Directors: (a) all significant deficiencies in the design or operation of internal controls which could adversely affect the Company's ability to record, process, summarize and report financial data, and have identified for the Company's auditors any material weaknesses in internal controls; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal controls; and (6) The Company's other certifying officers and I have indicated in this report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Dated: November 14, 2002 /s/ Dennis W. Braun - -------------------- Dennis W. Braun Chief Financial Officer EX-99.1 3 tp99_1.txt CERTIFICATION EXHIBIT 99.1 CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), each of the undersigned officers of Mettler-Toledo International Inc. (the "Company") does hereby certify, to such officer's knowledge, that: This quarterly report on Form 10-Q for the period ending September 30, 2002 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and the information contained in this report fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: November 14, 2002 /s/ Robert F. Spoerry Robert F. Spoerry Chief Executive Officer /s/ Dennis W. Braun Dennis W. Braun Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----