{ "docId": "019dd923-622c-750b-8b98-ad29603ddb10", "docSlug": "954987ce0454", "documentTitle": "Mettler-Toledo International, Inc. (MTD)", "authorId": "54_Spruce_Point_Capital", "authorName": "Ben Axler", "documentKindSlug": "activist-deck", "documentKindLabel": "Activist deck", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2019-07-24 00:00:00", "orientation": "landscape", "aspectRatio": 1.3333334, "pageNumber": 103, "pageCount": 136, "prevPage": 102, "nextPage": 104, "slideType": "expose_contradiction", "function": "expose_contradiction", "density": "overcrowded", "nDataPoints": 18, "notes": "The slide uses a callout box to summarize the investigative findings and a table to quantify the specific variances in cash, fixed assets, and total assets.", "elementsJson": [ "headline_text", "callout_box", "bullet_list", "data_table", "footnote" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b98-ad29603ddb10/103", "deckHref": "/decks/019dd923-622c-750b-8b98-ad29603ddb10", "deckJsonHref": "/decks/019dd923-622c-750b-8b98-ad29603ddb10.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b98-ad29603ddb10#slide-103", "components": [ { "bbox": { "h": 0.04, "w": 0.93, "x": 0.035, "y": 0.0017 }, "kind": "callout", "text": "Here's our theory on what is happening:", "attrs": null, "subkind": "primary", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "1beeb9e7-c610-4c1f-82fe-5fc98e40da4f", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.45, "w": 0.93, "x": 0.035, "y": 0.0023 }, "kind": "list", "text": "Through a Chinese attorney our investigators obtained the recent tax filings for Mettler's 10 China subsidiaries\nTotal cash is $19m (13%) less in China than in SEC filings\nFixed assets is $35m (40%) less in China than in SEC filings\nTotal assets are $672m (54%) less in China than in SEC filings\nWe cannot entirely reconcile sales and find evidence to suggest potential margin overstatement of $50m.\nWe observe that Mettler's China business came under severe stress in 2015, thus there is the potential for cumulative profit overstatement in the range of $200m (2015-18)\nThe amount of capital transferred to the shell entity Mettler-Toledo (Hong Kong) Ltd is also in the same range at $242m\nBy Mettler moving money into Hong Kong, it could potentially enable Mettler to pass an Audit by showing the cash\nIt would appear the flow of funds between Switzerland and Hong Kong is temporary, and not permanent, as we estimate it would have had to raise more external capital\nNote: Mettler does not disclose interest income in its consolidated results, making it difficult to sanity check returns on cash. The last time it disclosed interest income was in 1998, right before current auditor PwC took control(1)", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "52c307da-84d9-4b1f-b844-ac5dcc59fb51", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "metric", "text": "Total Assets: $672m", "attrs": null, "subkind": "primary", "toolName": "Quantification", "toolSlug": "quantification", "confidence": null, "componentId": "019dd953-1ac6-76d9-8630-3f46ff4b4cff", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "Note: Mettler does not disclose interest income in its consolidated results, making it difficult to sanity check returns on cash. The last time it disclosed interest income was in 1998, right before current auditor PwC took control(1)", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd953-1ac6-76d9-8630-3a8c86a65e7e", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.04, "w": 0.93, "x": 0.035, "y": 0.0095 }, "kind": "source-note", "text": "1. 1998 10-K, p. Note 14: \"Interest income for the year ended December 31, 1995, for the period January 1, 1996 to October 14, 1996, for the period October 15, 1996 to December 31, 1996 and for the year ended December 31, 1997 was $(5,388), $(3,424), $(1,079) and $(1,832), respectively\"", "attrs": { "numbered": true }, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "62c0aa4b-da32-4143-93ae-0a6cb35bd75b", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.02, "w": 0.2, "x": 0.15, "y": 0.0088 }, "kind": "source-note", "text": "Source: SEC and China Tax Filings", "attrs": null, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "77f05474-f771-45af-9aba-1a6e0bbd4fc4", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.25, "w": 0.7, "x": 0.15, "y": 0.0060999999999999995 }, "kind": "table", "text": "Cash Reported, Fixed Assets, Total Assets, 2017, 2018, China Tax Filings, US SEC Filings, Variance", "attrs": null, "subkind": "data", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "0847efa9-7190-4546-8613-ed63a7ee122f", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.65, "x": 0.305, "y": 0.02 }, "kind": "title", "text": "Connection Between Hong Kong Capital And China Profits", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "435d3dd8-0cf3-4137-9ef3-21ffdb651a69", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [ { "name": "Table data", "slug": "table-data", "agent": null, "layer": "slide", "matchId": "7ca924bd-e777-422d-b275-7f62bce146b8", "evidence": "Table comparing Cash Reported, Fixed Assets, Total Assets", "confidence": 0.7 } ], "frameworks": [ { "name": "fraud-exposure", "slug": null, "matchId": "15849480-a112-4a39-bd6a-bb1c58c26a23", "evidence": "The slide explicitly outlines a theory of financial manipulation and profit overstatement.", "confidence": 0.9 } ], "arcBeats": [], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }