e10vq
Table of Contents

 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
     
þ   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2009,
OR
     
o   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
incorporation or organization)
  (I.R.S Employer Identification No.)
Im Langacher, P.O. Box MT-100
CH 8606 Greifensee, Switzerland
and
1900 Polaris Parkway
Columbus, Ohio 43240
(Address of principal executive offices)
(Zip Code)
+41-44-944-22-11 and 1-614-438-4511
(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 þ No o
Indicate by checkmark whether the registrant has submitted electronically and posted on its corporate Web-site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o
Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
             
Large accelerated filer þ   Accelerated filer o   Non-accelerated filer o (Do not check if a smaller reporting company)   Smaller reporting company o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ
The Registrant had 33,751,048 shares of Common Stock outstanding at September 30, 2009.
 
 

 


 

METTLER-TOLEDO INTERNATIONAL INC.
INDEX TO QUARTERLY REPORT ON FORM 10-Q
         
    PAGE  
       
 
       
       
 
       
Unaudited Interim Consolidated Financial Statements:
       
 
       
    3  
 
       
    4  
 
       
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    6  
 
       
    7  
 
       
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 EX-31.1
 EX-31.2
 EX-32

 


Table of Contents

PART I. FINANCIAL INFORMATION
Item 1.   Financial Statements
METTLER-TOLEDO INTERNATIONAL INC.
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended September 30, 2009 and 2008
(In thousands, except share data)
(unaudited)
                 
    September 30,     September 30,  
    2009     2008  
Net sales
               
Products
  $ 328,055     $ 396,876  
Service
    107,595       112,221  
 
           
Total net sales
    435,650       509,097  
Cost of sales
               
Products
    145,719       187,632  
Service
    64,738       72,785  
 
           
Gross profit
    225,193       248,680  
Research and development
    22,309       26,553  
Selling, general and administrative
    129,686       145,612  
Amortization
    3,237       2,728  
Interest expense
    6,974       6,846  
Other charges (income), net
    6,077       445  
 
           
Earnings before taxes
    56,910       66,496  
Provision for taxes
    15,365       13,772  
 
           
Net earnings
  $ 41,545     $ 52,724  
 
           
 
               
Basic earnings per common share:
               
Net earnings
  $ 1.23     $ 1.56  
Weighted average number of common shares
    33,728,931       33,856,574  
 
               
Diluted earnings per common share:
               
Net earnings
  $ 1.21     $ 1.52  
Weighted average number of common and common equivalent shares
    34,413,656       34,727,806  
The accompanying notes are an integral part of these interim consolidated financial statements.

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METTLER-TOLEDO INTERNATIONAL INC.
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
Nine months ended September 30, 2009 and 2008
(In thousands, except share data)
(unaudited)
                 
    September 30,     September 30,  
    2009     2008  
Net sales
               
Products
  $ 910,343     $ 1,133,623  
Service
    306,828       330,034  
 
           
Total net sales
    1,217,171       1,463,657  
Cost of sales
               
Products
    411,112       522,422  
Service
    186,710       212,392  
 
           
Gross profit
    619,349       728,843  
Research and development
    65,954       77,511  
Selling, general and administrative
    366,209       441,311  
Amortization
    8,734       7,800  
Interest expense
    18,975       18,723  
Other charges (income), net
    29,547       2,620  
 
           
Earnings before taxes
    129,930       180,878  
Provision for taxes
    26,775       41,024  
 
           
Net earnings
  $ 103,155     $ 139,854  
 
           
 
               
Basic earnings per common share:
               
Net earnings
  $ 3.06     $ 4.06  
Weighted average number of common shares
    33,683,443       34,482,431  
 
               
Diluted earnings per common share:
               
Net earnings
  $ 3.02     $ 3.96  
Weighted average number of common and common equivalent shares
    34,200,834       35,347,440  
The accompanying notes are an integral part of these interim consolidated financial statements.

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METTLER-TOLEDO INTERNATIONAL INC.
INTERIM CONSOLIDATED BALANCE SHEETS
As of September 30, 2009 and December 31, 2008
(In thousands, except share data)
(unaudited)
                 
    September 30,     December 31,  
    2009     2008  
ASSETS
               
Current assets:
               
Cash and cash equivalents
  $ 113,948     $ 78,073  
Trade accounts receivable, less allowances of $12,586 at September 30, 2009 and $11,965 at December 31, 2008
    284,965       348,614  
Inventories
    164,761       170,613  
Current deferred tax assets, net
    39,068       35,756  
Other current assets and prepaid expenses
    45,774       37,809  
 
           
Total current assets
    648,516       670,865  
Property, plant and equipment, net
    303,219       285,008  
Goodwill
    431,590       424,426  
Other intangible assets, net
    94,413       96,295  
Non-current deferred tax assets, net
    93,014       92,958  
Other non-current assets
    109,943       94,504  
 
           
Total assets
  $ 1,680,695     $ 1,664,056  
 
           
 
               
LIABILITIES AND SHAREHOLDERS’ EQUITY
               
 
               
Current liabilities:
               
Trade accounts payable
  $ 92,010     $ 111,442  
Accrued and other liabilities
    98,656       81,118  
Accrued compensation and related items
    93,049       115,430  
Deferred revenue and customer prepayments
    70,071       51,665  
Taxes payable
    53,498       44,507  
Current deferred tax liabilities
    6,486       8,218  
Short-term borrowings
    10,652       12,492  
 
           
Total current liabilities
    424,422       424,872  
Long-term debt
    318,785       441,588  
Non-current deferred tax liabilities
    110,819       111,048  
Other non-current liabilities
    175,285       183,301  
 
           
Total liabilities
    1,029,311       1,160,809  
 
               
Commitments and contingencies (Note 12)
               
 
               
Shareholders’ equity:
               
Preferred stock, $0.01 par value per share; authorized 10,000,000 shares; issued 0
           
Common stock, $0.01 par value per share; authorized 125,000,000 shares; issued 44,786,011 and 44,786,011 shares; outstanding 33,751,048 and 33,595,303 shares at September 30, 2009 and December 31, 2008, respectively
    448       448  
Additional paid-in capital
    569,206       559,772  
Treasury stock at cost (11,034,963 shares at September 30, 2009 and 11,190,708 shares at
December 31, 2008)
    (862,500 )     (873,601 )
Retained earnings
    946,920       848,489  
Accumulated other comprehensive (loss) income
    (2,690 )     (31,861 )
 
           
Total shareholders’ equity
    651,384       503,247  
 
           
Total liabilities and shareholders’ equity
  $ 1,680,695     $ 1,664,056  
 
           
The accompanying notes are an integral part of these interim consolidated financial statements.

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METTLER-TOLEDO INTERNATIONAL INC.
INTERIM CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY AND
COMPREHENSIVE INCOME
Nine months ended September 30, 2009 and twelve months ended December 31, 2008
(In thousands, except share data)
(unaudited)
                                                         
                    Additional                     Accumulated Other        
    Common Stock     Paid-in     Treasury     Retained     Comprehensive        
    Shares     Amount     Capital     Stock     Earnings     (Loss) Income     Total  
Balance at December 31, 2007
    35,638,483     $ 448     $ 548,378     $ (662,393 )   $ 652,236     $ 42,617     $ 581,286  
Exercise of stock options and restricted stock units
    172,248                   12,138       (6,910 )           5,228  
Other treasury stock issuances
    16,760                   1,149       352             1,501  
Repurchases of common stock
    (2,232,188 )                 (224,495 )                 (224,495 )
Tax benefit resulting from exercise of certain employee stock options
                2,696                         2,696  
Share-based compensation
                8,698                         8,698  
Adoption of year-end pension measurement date provision, net of tax
                            33       (107 )     (74 )
Comprehensive income:
                                                       
Net earnings
                            202,778             202,778  
Unrealized gain (loss) on cash flow hedging arrangements, net of tax
                                  (2,593 )     (2,593 )
Change in currency translation adjustment
                                  (23,242 )     (23,242 )
Pension adjustment, net of tax
                                  (48,536 )     (48,536 )
 
                                                     
Comprehensive income
                                        128,407  
 
                                         
Balance at December 31, 2008
    33,595,303     $ 448     $ 559,772     $ (873,601 )   $ 848,489     $ (31,861 )   $ 503,247  
Exercise of stock options and restricted stock units
    149,278                   10,640       (4,567 )           6,073  
Other treasury stock issuances
    6,467                   461       (157 )           304  
Tax benefit resulting from exercise of certain employee stock options
                1,167                         1,167  
Share-based compensation
                8,267                         8,267  
Comprehensive income:
                                                       
Net earnings
                            103,155             103,155  
Unrealized gain (loss) on cash flow hedging arrangements, net of tax
                                  3,313       3,313  
Change in currency translation adjustment
                                  20,764       20,764  
Pension adjustment, net of tax
                                  5,094       5,094  
 
                                                     
Comprehensive income (a)
                                        132,326  
 
                                                     
 
                                         
Balance at September 30, 2009
    33,751,048     $ 448     $ 569,206     $ (862,500 )   $ 946,920     $ (2,690 )   $ 651,384  
 
                                         
 
(a)   Total comprehensive income for the three months ended September 30, 2009 and 2008 was $55,419 and $27,264, respectively and $138,729 for the nine months ended September 30, 2008.
The accompanying notes are an integral part of these interim consolidated financial statements.

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METTLER-TOLEDO INTERNATIONAL INC.
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine months ended September 30, 2009 and 2008
(In thousands)
(unaudited)
                 
    September 30,     September 30,  
    2009     2008  
Cash flows from operating activities:
               
Net earnings
  $ 103,155     $ 139,854  
Adjustments to reconcile net earnings to net cash provided by operating activities:
               
Depreciation
    21,926       22,194  
Amortization
    8,734       7,800  
Deferred taxes
    (15,773 )     (7,957 )
Excess tax benefits from share-based payment arrangements
    (609 )     (999 )
Gain from sale of property, plant and equipment
    (25 )     (3,271 )
Share-based compensation
    8,267       7,378  
Other
    243        
Increase (decrease) in cash resulting from changes in:
               
Trade accounts receivable, net
    65,707       14,463  
Inventories
    10,318       (19,523 )
Other current assets
    (6,796 )     (7,710 )
Trade accounts payable
    (19,856 )     (21,975 )
Taxes payable
    8,092       28,456  
Accruals and other
    5,092       1,915  
 
           
Net cash provided by operating activities
    188,475       160,625  
 
           
 
               
Cash flows from investing activities:
               
Proceeds from sale of property, plant and equipment
    1,979       13,184  
Purchase of property, plant and equipment
    (36,646 )     (37,460 )
Acquisitions
    (170 )     (607 )
 
           
Net cash used in investing activities
    (34,837 )     (24,883 )
 
           
 
               
Cash flows from financing activities:
               
Proceeds from borrowings
    198,072       235,710  
Repayments of borrowings
    (323,948 )     (121,123 )
Debt issuance costs
    (620 )     (3,085 )
Debt extinguishment costs
    (1,316 )      
Proceeds from stock option exercises
    6,073       3,319  
Repurchases of common stock
          (225,296 )
Excess tax benefits from share-based payment arrangements
    609       999  
Other financing activities
    (984 )     243  
 
           
Net cash used in financing activities
    (122,114 )     (109,233 )
 
           
 
               
Effect of exchange rate changes on cash and cash equivalents
    4,351       3,308  
 
               
Net increase in cash and cash equivalents
    35,875       29,817  
 
               
Cash and cash equivalents:
               
Beginning of period
    78,073       81,222  
 
           
End of period
  $ 113,948     $ 111,039  
 
           
The accompanying notes are an integral part of these interim consolidated financial statements.

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METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
At September 30, 2009 — Unaudited

(In thousands, except share data, unless otherwise stated)
1. BASIS OF PRESENTATION
     Mettler-Toledo International Inc. (“Mettler-Toledo” or the “Company”) is a leading global supplier of precision instruments and services. The Company manufactures weighing instruments for use in laboratory, industrial, packaging, logistics and food retailing applications. The Company also manufactures several related analytical instruments and provides automated chemistry solutions used in drug and chemical compound discovery and development. In addition, the Company manufactures metal detection and other end-of-line inspection systems used in production and packaging and provides solutions for use in certain process analytics applications. The Company’s primary manufacturing facilities are located in China, Germany, Switzerland, the United Kingdom and the United States. The Company’s principal executive offices are located in Greifensee, Switzerland and Columbus, Ohio.
     The accompanying interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include all entities in which the Company has control, which are its wholly owned subsidiaries. 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 U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. The interim consolidated financial statements as of September 30, 2009 and for the three and nine month periods ended September 30, 2009 and 2008 should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008.
     The accompanying interim consolidated financial statements reflect all adjustments which, in the opinion of management, are necessary for a fair statement of the results of the interim periods presented. Operating results for the three and nine months ended September 30, 2009 are not necessarily indicative of the results to be expected for the full year ending December 31, 2009.
     The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results may differ from those estimates. A discussion of the Company’s critical accounting policies is included in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008.
     All intercompany transactions and balances have been eliminated.
     Certain reclassifications have been made to prior year amounts to conform to the current year presentation.

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METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
At September 30, 2009 — Unaudited (Continued)

(In thousands, except share data, unless otherwise stated)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Trade Accounts Receivable
     Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts represents the Company’s best estimate of probable credit losses in its existing trade accounts receivable. The Company determines the allowance based upon a review of both specific accounts for collection and the age of the accounts receivable portfolio.
Inventories
     Inventories are valued at the lower of cost or net realizable value. Cost, which includes direct materials, labor and overhead, is generally determined using the first in, first out (FIFO) method. The estimated net realizable value is based on assumptions for future demand and related pricing. Adjustments to the cost basis of inventory are made for excess and obsolete items based on usage, orders and technological obsolescence. If actual market conditions are less favorable than those projected by management, reductions in the value of inventory may be required.
     Inventory consisted of the following:
                 
    September 30,     December 31,  
    2009     2008  
Raw materials and parts
  $ 75,899     $ 77,282  
Work-in-progress
    30,296       32,403  
Finished goods
    58,566       60,928  
 
           
 
  $ 164,761     $ 170,613  
 
           
Other Intangible Assets
     Other intangible assets include indefinite-lived assets and assets subject to amortization. Where applicable, amortization is charged on a straight-line basis over the expected period to be benefited. The straight-line method of amortization reflects an appropriate allocation of the cost of the intangible assets to earnings in proportion to the amount of economic benefits obtained by the Company in each reporting period. The Company assesses the initial acquisition of intangible assets in accordance with the provisions of ASC 805 “Business Combinations” and the continued accounting for previously recognized intangible assets and goodwill in accordance with the provisions of ASC 350 “Intangibles — Goodwill and Other” and ASC 360 “Property, Plant and Equipment.”

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METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
At September 30, 2009 — Unaudited (Continued)

(In thousands, except share data, unless otherwise stated)
     Other intangible assets consisted of the following:
                                 
    September 30, 2009     December 31, 2008  
    Gross     Accumulated     Gross     Accumulated  
    Amount     Amortization     Amount     Amortization  
Customer relationships
  $ 74,006     $ (15,103 )   $ 73,772     $ (13,476 )
Proven technology and patents
    34,408       (22,422 )     32,989       (20,452 )
Tradename (finite life)
    1,964       (874 )     1,803       (775 )
Tradename (indefinite life)
    22,434             22,434        
 
                       
 
  $ 132,812     $ (38,399 )   $ 130,998     $ (34,703 )
 
                       
     The annual aggregate amortization expense based on the current balance of other intangible assets is estimated at $4.8 million for 2009 and 2010, $4.6 million for 2011, $4.3 million for 2012 and $2.9 million for 2013. The Company recognized amortization expense associated with the above intangible assets of $3.6 million and $3.5 million for the nine months ended September 30, 2009 and 2008, respectively.
     In addition to the above amortization, the Company recorded amortization expense associated with capitalized software of $5.1 million and $4.3 million for the nine months ended September 30, 2009 and 2008, respectively.
Revenue Recognition
     Revenue is recognized when title to a product has transferred and any significant customer obligations have been fulfilled. Standard shipping terms are generally FOB shipping point in most countries and, accordingly, title transfers upon shipment. In countries where title cannot legally transfer before delivery, the Company defers revenue recognition until delivery has occurred. Other than a few small software applications, the Company does not sell software products without the related hardware instrument as the software is embedded in the instrument. The Company’s products typically require no significant production, modification or customization of the hardware or software that is essential to the functionality of the products. To the extent the Company’s solutions have a post-shipment obligation, such as customer acceptance, revenue is deferred until the obligation has been completed. In addition, the Company defers revenue where installation is required, unless such installation is deemed perfunctory. The Company generally maintains the right to accept or reject a product return in its terms and conditions and also maintains appropriate accruals for outstanding credits. Further, certain products are also sold through indirect distribution channels whereby the distributor assumes any further obligations to the customer upon title transfer. Revenue is recognized on these products upon title transfer and risk of loss to our distributors. Distributor discounts are offset against revenue at the time such revenue is recognized. Shipping and handling costs charged to customers are included in total net sales and the associated expense is recorded in cost of sales for all periods presented.
     Service revenue not under contract is recognized upon the completion of the service performed. Spare parts sold on a stand-alone basis are recognized upon title transfer which is generally at the time of shipment. Revenues from service contracts are recognized ratably over the contract period. These contracts represent an obligation to perform repair and other services

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METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
At September 30, 2009 — Unaudited (Continued)

(In thousands, except share data, unless otherwise stated)
including regulatory compliance qualification, calibration, certification and preventative maintenance on a customer’s pre-defined equipment over the contract period. Service contracts are separately priced and payment is typically received from the customer at the beginning of the contract period.
Warranty
     The Company generally offers one-year warranties on most of its products. Product warranties are recorded at the time revenue is recognized. While the Company engages in extensive product quality programs and processes, its warranty obligation is affected by product failure rates, material usage and service costs incurred in correcting a product failure.
     The Company’s accrual for product warranties is included in accrued and other liabilities in the consolidated balance sheets. Changes to the Company’s accrual for product warranties are as follows:
                 
    September 30,     September 30,  
    2009     2008  
Balance at beginning of period
  $ 12,822     $ 12,949  
Accruals for warranties
    13,492       13,405  
Foreign currency translation
    392       990  
Payments / utilizations
    (12,164 )     (14,221 )
 
           
Balance at end of period
  $ 14,542     $ 13,123  
 
           
Employee Termination Benefits
     In situations where contractual termination benefits exist, the Company records accruals for employee termination benefits when it is probable that a liability has been incurred and the amount of the liability is reasonably estimable. All other employee termination arrangements are recognized and measured at their fair value at the communication date unless the employee is required to render additional service beyond the legal notification period, in which case the liability is recognized ratably over the future service period.
Share-Based Compensation
     The Company recognizes share-based compensation expense within selling, general and administrative in the consolidated statement of operations with a corresponding offset to additional paid-in capital in the consolidated balance sheet. The Company recorded $2.8 million and $8.3 million of share-based compensation expense for the three and nine months ended September 30, 2009, respectively, compared to $2.3 million and $7.4 million for the corresponding periods in 2008.

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Table of Contents

METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
At September 30, 2009 — Unaudited (Continued)

(In thousands, except share data, unless otherwise stated)
Research and Development
     Research and development costs primarily consist of salaries, consulting and other costs. The Company expenses these costs as incurred.
Subsequent Events
     The Company evaluated subsequent events for recognition and disclosure through October 29, 2009.
3. FINANCIAL INSTRUMENTS
     On January 1, 2009, the Company adopted ASC 815-10-65-1, “Transition and Effective Date Related to FASB Statement No. 161, Disclosures about Derivative Instruments and Hedging Activities — an amendment of FASB Statement No. 133”, which requires enhanced disclosure of a Company’s objectives and strategies for using derivative instruments and the impact of those derivative instruments on a Company’s operations, financial position and cash flows. The Company has limited involvement with derivative financial instruments and does not use them for trading purposes. As more fully described below, the Company enters into certain interest rate swap agreements in order to manage its exposure to changes in interest rates. At September 30, 2009, approximately 75% of the interest payments associated with the Company’s debt is a fixed obligation. The amount of the Company’s fixed obligation interest payments may change based upon the expiration dates of its interest rate swap agreements and the level and composition of its debt. The Company also enters into certain foreign currency forward contracts to limit the Company’s exposure to currency fluctuations on the respective hedged items. For a discussion on the fair value of financial instruments, see Note 4 to the interim consolidated financial statements.
     Cash Flow Hedges
     The Company has two interest rate swap agreements, designated as cash flow hedges. The first agreement changes the floating rate interest payments associated with $85 million outstanding under the Company’s credit facility to a fixed obligation. During September 2009, $65 million of the original $150 million agreement was terminated and settled. This coincided with the repayment on the Company’s credit facility of the same amount, the interest payments of which were hedged under the agreement. As a result of this transaction, a loss of $1.6 million was reclassified from other comprehensive income to interest expense.
     The second agreement, entered into in April 2009, is a forward-starting swap which changes the floating rate interest payments associated with $200 million in forecasted borrowings under the Company’s credit facility to a fixed obligation beginning October 2010. The forward period ends in October 2010. Additionally, in March 2009, the Company entered into a foreign currency forward contract (with a notional amount of $25.3 million), designated as a cash flow hedge, to hedge forecasted intercompany sales denominated in U.S. dollars with its foreign businesses. The Company records the effective portion of the cash flow derivative hedging gains and losses in accumulated other comprehensive (loss) income, net of tax and reclassifies these amounts into

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Table of Contents

METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
At September 30, 2009 — Unaudited (Continued)

(In thousands, except share data, unless otherwise stated)
earnings in the period in which the transaction affects earnings. Gains or losses on the derivatives representing hedge ineffectiveness, if any, are recognized in current earnings. Through September 30, 2009, no hedge ineffectiveness has occurred in relation to these cash flow hedges.
     The fair value of these derivative instruments as of September 30, 2009 is as follows:
                 
    Balance Sheet    
    Location   Fair Value
Derivatives designated as hedging instruments:
               
Cash flow hedges:
               
Interest rate swap agreement
  Other non-current liabilities   $ 1,934  
Interest rate forward-starting swap agreement
  Other non-current assets   $ 1,080  
Foreign currency forward contract
  Other non-current assets   $ 2,033  
 
           
     The effects of these derivative instruments on the consolidated statements of operations before taxes for the three and nine month periods ending September 30, 2009 are as follows:
                                         
    Location of        
    Derivative   Three-month period ended September 30, 2009   Nine-month period ended September 30, 2009
    Gain/(Loss)   Derivative   Gain/(Loss) Reclassified   Derivative   Gain/(Loss) Reclassified
    Recognized in   Gain/(Loss)   from AOCI into Earnings   Gain/(Loss)   from AOCI into Earnings
    Earnings   Recognized in OCI   (Effective Portion)   Recognized in OCI   (Effective Portion)
Derivatives designated as hedging instruments:
                                       
Cash flow hedges:
                                       
 
                                       
Interest rate swaps
  Interest expense   $(2,755 )   $(2,036 )   $3,399     $(3,700 )
 
                                       
Foreign currency forward contract
  Net sales   $(1,404 )   $714     $2,033     $1,041  
     A net after tax derivative charge of $0.1 million based upon interest rates and foreign currency exchange rates at September 30, 2009 is expected to be recognized in earnings in the next twelve months.
     Fair Value Hedges and Other Derivatives
     The Company has a $30 million interest rate swap agreement, designated as a fair value hedge, in connection with its 4.85% $75 million seven-year Senior Notes. Under the swap the Company will receive a fixed rate of 4.85% (i.e. the same rate as the 4.85% Senior Notes) and will pay interest at a rate of LIBOR plus 0.22%. The Company records the gain or loss on the derivative as well as the offsetting gain or loss on the hedged item in earnings under interest expense.
     The Company enters into foreign currency forward contracts in order to economically hedge short-term intercompany balances largely denominated in Swiss franc and other major European currencies with its foreign businesses. In accordance with the provisions of ASC 815, “Derivatives and Hedging”, these contracts are considered “derivatives not designated as hedging instruments” and are categorized as “other derivatives” in the table below. Gains or losses on these instruments

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Table of Contents

METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
At September 30, 2009 — Unaudited (Continued)

(In thousands, except share data, unless otherwise stated)
are reported in current earnings. At September 30, 2009, these contracts had a notional value of $87.9 million.
     The fair value of these derivative instruments and their effects on the consolidated balance sheet and consolidated statements of operations before taxes as of and for the three and nine month periods ending September 30, 2009 are as follows:
                                         
                            Derivative Gain/(Loss)   Derivative Gain/(Loss)
                    Location of Derivative   Recognized in Earnings   Recognized in Earnings
    Balance Sheet           Gain/(Loss) Recognized   for the three-months   for the nine-months
    Location   Fair Value   in Earnings   ended September 30   ended September 30
Derivatives designated as hedging instruments:
                                       
Fair value hedges:
                                       
Interest rate swap agreement
  Other non- current assets   $1,061     Interest expense   $(55 )   $(466 )
Derivatives not designated as hedging instruments:
                                       
Other derivatives:
                                       
Foreign currency forward contracts — liabilities
  Accrued and other liabilities   $284                          
 
                                       
Foreign currency forward contracts — assets
  Other current assets   $243     Other charges (income), net   $736     $304  
4. FAIR VALUE MEASUREMENTS
     On January 1, 2008, the Company adopted guidance which clarified how companies are required to use a fair value measure for recognition and disclosure by establishing a common definition of fair value, provided a framework for measuring fair value and expanded disclosures about fair value measurements. The guidance was applied to all financial assets and liabilities reported at fair value on the consolidated balance sheet. On January 1, 2009, this guidance was adopted for all nonfinancial assets reported at fair value on the consolidated balance sheet on a non-recurring basis, including goodwill, other intangible assets, long-lived assets (for purposes of impairment analysis) and asset retirement obligations. During the second quarter 2009, the Company adopted the provisions of ASC 825-10-65-1 “Transition Related to FSP FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments”, which requires interim period disclosures of the fair value of all financial instruments for which it is practicable to estimate that value, whether or not recognized in the balance sheet. The adoption of this guidance did not have a material impact on the Company’s consolidated results of operations or financial position.
     At September 30, 2009 and December 31, 2008, the Company had derivative assets totaling $4.4 million and $3.4 million, respectively, and derivative liabilities totaling $2.2 million and $6.2 million, respectively. The fair values of the interest rate swap agreements and foreign currency forward contracts that economically hedge short-term intercompany balances are estimated based upon inputs from current valuation information obtained from dealer quotes and priced with observable market assumptions and appropriate valuation adjustments for credit risk. The Company has evaluated the valuation methodologies used to develop the fair values by dealers in order to

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Table of Contents

METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
At September 30, 2009 — Unaudited (Continued)

(In thousands, except share data, unless otherwise stated)
determine whether such valuations are representative of an exit price in the Company’s principal market. In addition, the Company uses an internally developed model to perform testing on the valuations received from brokers. The fair value of the foreign currency forward contract hedging forecasted intercompany sales is priced with observable market assumptions with appropriate valuations for credit risk. The Company has also considered both its own credit risk and counterparty credit risk in determining fair value and determined these adjustments were insignificant for the three and nine month periods ended September 30, 2009 and the twelve month period ended December 31, 2008.
     At September 30, 2009 and December 31, 2008, the Company had $7.9 million and $12.3 million of cash equivalents, respectively, the fair value of which is determined through corroborated prices in active markets. The fair value of cash equivalents approximates cost.
     The difference between the fair value and carrying value of the Company’s long-term debt is not material.
     Under U.S. GAAP, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value measurement consists of observable and unobservable inputs that reflect the assumptions that a market participant would use in pricing an asset or liability.
     A fair value hierarchy has been established that categorizes these inputs into three levels:
     
Level 1:
  Quoted prices in active markets for identical assets and liabilities
 
   
Level 2:
  Observable inputs other than quoted prices in active markets for identical assets and liabilities
 
   
Level 3:
  Unobservable inputs
     The following table presents for each of these hierarchy levels, the Company’s assets and liabilities that are measured at fair value on a recurring basis at September 30, 2009 and December 31, 2008:
                                                                 
    September 30, 2009     December 31, 2008  
    Total     Level 1     Level 2     Level 3     Total     Level 1     Level 2     Level 3  
Assets:
                                                               
Foreign currency forward contracts
  $ 2,276     $     $ 2,276     $     $ 1,922     $     $ 1,922     $  
Interest rate swap agreements
    2,141             2,141             1,527             1,527        
Cash equivalents
    7,915             7,915             12,251             12,251        
 
                                               
Total
  $ 12,332     $     $ 12,332     $     $ 15,700     $     $ 15,700     $  
 
                                               
 
                                                               
Liabilities:
                                                               
Foreign currency forward contracts
  $ 284     $     $ 284     $     $ 1,926     $     $ 1,926     $  
Interest rate swap agreement
    1,934             1,934             4,253             4,253        
 
                                               
Total
  $ 2,218     $     $ 2,218     $     $ 6,179     $     $ 6,179     $  
 
                                               

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Table of Contents

METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
At September 30, 2009 — Unaudited (Continued)

(In thousands, except share data, unless otherwise stated)
5. INCOME TAXES
     The provision for taxes is based upon the Company’s projected annual effective rate of 27% for the three and nine month periods ended September 30, 2009.
     During the first quarter of 2009, the Company recorded a discrete tax benefit of $8.3 million, primarily related to the favorable resolution of certain prior year tax matters. The impact of this item decreased the effective tax rate to 21% for the nine month period ended September 30, 2009.
     During the first quarter of 2008, the Company recorded a discrete tax benefit of $2.5 million related to favorable withholding tax law changes in China. During the third quarter of 2008, the Company recorded discrete tax items resulting in a net tax benefit of $3.5 million primarily related to the closure of certain tax matters. The net impact of the items described above decreased the effective tax rate to 21% and 23% for the three and nine month periods ended September 30, 2008, respectively.
6. DEBT
     The Company’s short-term borrowings and long-term debt consisted of the following at September 30, 2009:
                         
    September 30, 2009  
            Other principal        
            trading        
    U.S. dollar     currencies     Total  
4.85% $75m senior notes (net of unamortized discount)
  $ 76,243     $     $ 76,243  
6.30% $100m senior notes
    100,000             100,000  
Credit facility
    100,475       29,473       129,948  
Other local arrangements (long-term)
          12,594       12,594  
 
                 
Total long-term debt
    276,718       42,067       318,785  
Other local arrangements (short-term)
          10,652       10,652  
 
                 
Total debt
  $ 276,718     $ 52,719     $ 329,437  
 
                 
     As of September 30, 2009, approximately $814.1 million was available under the credit facility.
     Tender Offer
     On May 6, 2009, the Company commenced a cash tender offer to purchase any and all of its outstanding 4.85% Senior Notes (“4.85% Senior Notes”) due November 15, 2010. The tender offer, which expired May 12, 2009, resulted in the repurchase of $75 million of the principal balance of the 4.85% Senior Notes. In connection with the tender, the Company recorded a charge of $1.5 million, during the second quarter, which included a premium of $0.9 million, unamortized discount and debt issuance fees of $0.2 million and certain third party costs of $0.4 million. The loss was recorded in interest expense in the consolidated statement of operations.

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Table of Contents

METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
At September 30, 2009 — Unaudited (Continued)

(In thousands, except share data, unless otherwise stated)
     Issuance of 6.30% Senior Notes
     On June 25, 2009, the Company issued and sold, in a private placement, $100 million aggregate principal amount of its 6.30% Series 2009-A Senior Notes due June 25, 2015 (“6.30% Senior Notes”) under a Note Purchase Agreement among the Company and the accredited institutional investors named therein (the “Agreement”). The 6.30% Senior Notes are senior unsecured obligations of the Company.
     The 6.30% Senior Notes bear interest at a fixed rate of 6.30% and mature on June 25, 2015. Interest is payable semi-annually in June and December. The Company may at any time prepay the 6.30% Senior Notes, in whole or in part, at a price equal to 100% of the principal amount thereof plus accrued and unpaid interest, plus a “make-whole” prepayment premium. In the event of a change in control (as defined in the Agreement) of the Company, the Company may be required to offer to prepay the 6.30% Senior Notes at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest.
     The agreement contains customary affirmative and negative covenants for agreements of this type including, among others, limitations on the Company and its subsidiaries with respect to incurrence of liens and priority indebtedness, disposition of assets, mergers, and transactions with affiliates. The agreement also requires the Company to maintain a consolidated interest coverage ratio of more than 3.5 to 1.0 and a consolidated leverage ratio of less than 3.5 to 1.0. The agreement contains customary events of default with customary grace periods, as applicable.
     Under the terms of the offering, the Company may sell additional Senior Notes at its discretion in an aggregate amount not to exceed $600 million. Such additional Senior Notes would rank equally with the Company’s unsecured indebtedness.
     Issuance costs approximating $0.6 million will be amortized to interest expense over the six-year term of the 6.30% Senior Notes.
7. SHARE REPURCHASE PROGRAM AND TREASURY STOCK
     The Company has a share repurchase program. Under the program, the Company has been authorized to buy back up to $1.5 billion of equity shares. As of September 30, 2009, there were $416.6 million of remaining equity shares authorized to be repurchased under the plan by December 31, 2010. The share repurchases are expected to be funded from cash balances, borrowings and cash generated from operating activities. Repurchases will be made through open market transactions, and the timing will depend on the level of acquisition activity, business and market conditions, the stock price, trading restrictions and other factors. The Company has purchased 15.2 million shares since the inception of the program through September 30, 2009.
     During the fourth quarter 2008, the Company suspended the share repurchase program and as a result, the Company did not repurchase any shares during the nine month period ended September 30, 2009. During the nine months ended September 30, 2008, the Company spent $223.4 million (of which $3.3 million was unsettled at September 30, 2008) on the repurchase of 2,221,188 shares at an average price of $100.57. In addition, $5.2 million was cash settled during the nine month period ended September 30, 2008 related to the settlement of a liability for shares

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Table of Contents

METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
At September 30, 2009 — Unaudited (Continued)

(In thousands, except share data, unless otherwise stated)
repurchased as of December 31, 2007. The Company reissued 149,278 shares and 88,310 shares held in treasury for the exercise of stock options and restricted stock units during the nine months ended September 30, 2009 and 2008, respectively.
     The Company also reissued 6,467 shares and 16,760 shares held in treasury during the nine months ended September 30, 2009 and 2008, respectively, pursuant to its 2007 Share Plan which extends certain eligible employees the option to receive a percentage of their annual bonus in shares of the Company’s stock.
8. EARNINGS PER COMMON SHARE
     In accordance with the treasury stock method, the Company has included the following common equivalent shares in the calculation of diluted weighted average number of common shares outstanding for the three and nine month periods ended September 30, solely relating to outstanding stock options and restricted stock units:
                 
    2009   2008
Three months ended
    684,725       871,232  
Nine months ended
    517,391       865,009  
     Outstanding options and restricted stock units to purchase 884,128 and 450,150 shares of common stock for the three month periods ended September 30, 2009 and 2008, respectively, and options and restricted stock units to purchase 1,141,013 and 450,797 shares of common stock for the nine month periods ended September 30, 2009 and 2008, respectively, have been excluded from the calculation of diluted weighted average number of common and common equivalent shares as such options and restricted stock units would be anti-dilutive.

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Table of Contents

METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
At September 30, 2009 — Unaudited (Continued)

(In thousands, except share data, unless otherwise stated)
9. NET PERIODIC BENEFIT COST
     Net periodic pension cost for the Company’s defined benefit pension plans and U.S. post-retirement medical plan includes the following components for the three months ended September 30:
                                                 
                                    Other U.S.  
    U.S. Pension Benefits     Non-U.S. Pension Benefits     Post-retirement Benefits  
    2009     2008     2009     2008     2009     2008  
Service cost, net
  $ 45     $ 182     $ 3,988     $ 4,223     $ 96     $ 109  
Interest cost on projected benefit obligations
    1,695       1,633       5,477       5,966       280       322  
Expected return on plan assets
    (1,711 )     (2,232 )     (6,825 )     (7,866 )            
Net amortization and deferral
                (258 )           (240 )     (240 )
Recognition of actuarial losses (gains)
    1,165       197       147       221       (83 )      
Recognition of settlement/curtailment gains
                (239 )                  
 
                                   
Net periodic pension cost (benefit)
  $ 1,194     $ (220 )   $ 2,290     $ 2,544     $ 53     $ 191  
 
                                   
     Net periodic pension cost for the Company’s defined benefit pension plans and U.S. post-retirement medical plan includes the following components for the nine months ended September 30:
                                                 
                                    Other U.S.  
    U.S. Pension Benefits     Non-U.S. Pension Benefits     Post-retirement Benefits  
    2009     2008     2009     2008     2009     2008  
Service cost, net
  $ 137     $ 548     $ 11,825     $ 12,932     $ 286     $ 327  
Interest cost on projected benefit obligations
    5,087       4,901       15,896       18,232       840       968  
Expected return on plan assets
    (5,131 )     (6,698 )     (19,782 )     (24,454 )            
Net amortization and deferral
                (737 )           (718 )     (718 )
Recognition of actuarial losses (gains)
    3,495       593       507       382       (247 )      
Recognition of settlement/curtailment gains, net
                (138 )                  
 
                                   
Net periodic pension cost (benefit)
  $ 3,588     $ (656 )   $ 7,571     $ 7,092     $ 161     $ 577  
 
                                   
     As previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008, the Company expects to make employer contributions of approximately $18.0 million to its non-U.S. pension plans and $2.0 million to its U.S. post-retirement medical plan during the year ended December 31, 2009. These estimates may change based upon several factors, including fluctuations in currency exchange rates, actual returns on plan assets and changes in legal requirements.

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Table of Contents

METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
At September 30, 2009 — Unaudited (Continued)

(In thousands, except share data, unless otherwise stated)
10. OTHER CHARGES (INCOME), NET
     Other charges (income), net consists primarily of restructuring charges, interest income, (gains) losses from foreign currency transactions and other items.
     During the fourth quarter of 2008, the Company initiated a global cost reduction program. During the first quarter of 2009, the Company revised the program to include further cost reductions. Charges under the program primarily comprise severance costs and are expected to be approximately $40 million. Through September 30, 2009 total charges recognized were $34.8 million, of which $6.1 million and $28.4 million were recognized during the three and nine month periods ended September 30, 2009, respectively. Under the program, the Company’s workforce (including employees and temporary personnel) will be reduced by approximately 1,000. As a result of the reduction in workforce, the Company anticipates personnel costs will be reduced by approximately $65 million on an annual basis.
     A rollforward for the Company’s accrual for restructuring activities for the nine months ended September 30, 2009 is as follows:
                                 
    Employee     Lease              
    Related     Termination     Other     Total  
Balance at December 31, 2008
  $ 5,991     $     $     $ 5,991  
Restructuring charges
    25,039       2,643       716       28,398  
Non-cash restructuring charges
                (52 )     (52 )
Cash payments
    (16,110 )     (1,892 )     (536 )     (18,538 )
Impact of foreign currency
    966                   966  
 
                       
Balance at September 30, 2009
  $ 15,886     $ 751     $ 128     $ 16,765  
 
                       
11. SEGMENT REPORTING
     As disclosed in Note 16 to the Company’s consolidated financial statements for the year ending December 31, 2008, the Company has determined there are five reportable segments: U.S. Operations, Swiss Operations, Western European Operations, Chinese Operations and Other.
     The Company evaluates segment performance based on Segment Profit (gross profit less research and development, selling, general and administrative expenses, before amortization, interest expense and other charges (income), net and taxes).

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Table of Contents

METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
At September 30, 2009 — Unaudited (Continued)

(In thousands, except share data, unless otherwise stated)
     The following tables show the operations of the Company’s operating segments:
                                         
    Net Sales to     Net Sales to                    
For the three months ended   External     Other     Total Net     Segment        
September 30, 2009   Customers     Segments     Sales     Profit     Goodwill  
U.S. Operations
  $ 140,665     $ 11,689     $ 152,354     $ 28,167     $ 309,201  
Swiss Operations
    27,606       72,341       99,947       20,321       18,754  
Western European Operations
    138,377       20,255       158,632       17,900       90,154  
Chinese Operations
    62,589       18,990       81,579       19,629       649  
Other (a)
    66,413       1,246       67,659       6,461       12,832  
Eliminations and Corporate (b)
          (124,521 )     (124,521 )     (19,280 )      
 
                             
Total
  $ 435,650     $     $ 435,650     $ 73,198     $ 431,590  
 
                             
 
    Net Sales to     Net Sales to              
For the nine months ended   External     Other     Total Net     Segment  
September 30, 2009   Customers     Segments     Sales     Profit  
U.S. Operations
  $ 399,851     $ 32,754     $ 432,605     $ 73,365  
Swiss Operations
    74,295       198,076       272,371       51,900  
Western European Operations
    398,868       53,362       452,230       43,791  
Chinese Operations
    162,418       49,589       212,007       45,073  
Other (a)
    181,739       2,379       184,118       13,398  
Eliminations and Corporate (b)
          (336,160 )     (336,160 )     (40,341 )
 
                       
Total
  $ 1,217,171     $     $ 1,217,171     $ 187,186  
 
                       
 
    Net Sales to     Net Sales to                    
For the three months ended   External     Other     Total Net     Segment        
September 30, 2008   Customers     Segments     Sales     Profit     Goodwill  
U.S. Operations
  $ 161,844     $ 14,904     $ 176,748     $ 30,723     $ 309,196  
Swiss Operations
    30,830       75,896       106,726       18,201       17,799  
Western European Operations
    168,497       20,414       188,911       15,179       97,822  
Chinese Operations
    66,458       23,371       89,829       15,619       647  
Other (a)
    81,468       1,401       82,869       6,198       12,094  
Eliminations and Corporate (b)
          (135,986 )     (135,986 )     (9,405 )      
 
                             
Total
  $ 509,097     $     $ 509,097     $ 76,515     $ 437,558  
 
                             
 
    Net Sales to     Net Sales to              
For the nine months ended   External     Other     Total Net     Segment  
September 30, 2008   Customers     Segments     Sales     Profit  
U.S. Operations
  $ 464,225     $ 42,815     $ 507,040     $ 82,093  
Swiss Operations
    93,850       238,713       332,563       58,963  
Western European Operations
    509,464       63,191       572,655       45,530  
Chinese Operations
    166,179       70,504       236,683       44,098  
Other (a)
    229,939       3,408       233,347       17,436  
Eliminations and Corporate (b)
          (418,631 )     (418,631 )     (38,099 )
 
                       
Total
  $ 1,463,657     $     $ 1,463,657     $ 210,021  
 
                       

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METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
At September 30, 2009 — Unaudited (Continued)

(In thousands, except share data, unless otherwise stated)
 
(a)   Other includes reporting units in Eastern Europe, Latin America, Southeast Asia and other countries.
 
(b)   Eliminations and Corporate includes the elimination of inter-segment transactions and certain corporate expenses and intercompany investments, which are not included in the Company’s operating segments.
     A reconciliation of earnings before taxes to segment profit for the three and nine month periods ended September 30 follows:
                                 
    Three Months Ended     Nine months ended  
    2009     2008     2009     2008  
Earnings before taxes
  $ 56,910     $ 66,496     $ 129,930     $ 180,878  
Amortization
    3,237       2,728       8,734       7,800  
Interest expense
    6,974       6,846       18,975       18,723  
Other charges (income), net
    6,077       445       29,547       2,620  
 
                       
Segment profit
  $ 73,198     $ 76,515     $ 187,186     $ 210,021  
 
                       
     Included in other charges (income), net during the three months ended September 30, 2009, are $6.1 million of restructuring charges, of which $0.5 million, $0.3 million, $5.0 million and $0.3 million relate to the Company’s U.S., Swiss, Western European and Other operations, respectively. Other charges (income), net for the nine month period ended September 30, 2009, included $28.4 million of restructuring charges, of which $6.4 million, $2.2 million, $16.0 million, $0.6 million, $2.6 million and $0.6 million relate to the Company’s U.S., Swiss, Western European, Chinese, Other and Corporate operations, respectively. The cumulative amount of restructuring charges recognized in other charges (income), net under the program totaled $34.8 through September 30, 2009, of which $7.7 million, $2.5 million, $20.1 million, $0.7 million, $3.1 million and $0.7 million relate to the Company’s U.S., Swiss, Western European, Chinese, Other and Corporate operations, respectively.
12. CONTINGENCIES
     The Company is party to various legal proceedings, including certain environmental matters, incidental to the normal course of business. Management does not expect that any of such proceedings will have a material adverse effect on the Company’s financial condition, results of operations or cash flows.

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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 accounting principles generally accepted 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 three and nine months ended September 30, 2009 are not necessarily indicative of the results to be expected for the full year ending December 31, 2009.
Results of Operations — Consolidated
     The following tables set forth certain items from our interim consolidated statements of operations for the three and nine month periods ended September 30, 2009 and 2008 (amounts in thousands).
                                                                 
    Three months ended September 30,     Nine months ended September 30,  
    2009     2008     2009     2008  
    (unaudited)     %     (unaudited)     %     (unaudited)     %     (unaudited)     %  
Net sales
  $ 435,650       100.0     $ 509,097       100.0     $ 1,217,171       100.0     $ 1,463,657       100.0  
Cost of sales
    210,457       48.3       260,417       51.2       597,822       49.1       734,814       50.2  
 
                                               
Gross profit
    225,193       51.7       248,680       48.8       619,349       50.9       728,843       49.8  
Research and development
    22,309       5.1       26,553       5.2       65,954       5.4       77,511       5.3  
Selling, general and administrative
    129,686       29.8       145,612       28.6       366,209       30.1       441,311       30.1  
Amortization
    3,237       0.7       2,728       0.5       8,734       0.7       7,800       0.5  
Interest expense
    6,974       1.6       6,846       1.3       18,975       1.6       18,723       1.3  
Other charges (income), net (a)
    6,077       1.4       445       0.1       29,547       2.4       2,620       0.2  
 
                                               
Earnings before taxes
    56,910       13.1       66,496       13.1       129,930       10.7       180,878       12.4  
Provision for taxes (b)
    15,365       3.6       13,772       2.7       26,775       2.2       41,024       2.8  
 
                                               
Net earnings
  $ 41,545       9.5     $ 52,724       10.4     $ 103,155       8.5     $ 139,854       9.6  
 
                                               
 
(a)   The three and nine months ended September 30, 2009 include $6.1 million and $28.4 million of restructuring charges, respectively, primarily related to severance.
 
(b)   Discrete tax items for the nine months ended September 30, 2009 include a net tax benefit of $8.3 million, primarily related to the favorable resolution of certain prior year tax matters. Discrete tax items for the three months ended September 30, 2008 include a $3.5 million benefit primarily from the closure of certain tax matters. The nine months ended September 30, 2008 include an additional discrete tax benefit of $2.5 million related to favorable withholding tax law changes in China.
     Net sales
     Net sales were $435.7 million and $1,217.2 million for the three and nine months ended September 30, 2009, respectively, compared to $509.1 million and $1,463.7 million for the corresponding periods in 2008. This represents a decrease in U.S. dollars of 14% and 17% for the three and nine months ended September 30, 2009, respectively. Excluding the effect of currency

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exchange rate fluctuations, or in local currencies, net sales decreased 12% for both the three and nine months ended September 30, 2009.
     During the three and nine months ended September 30, 2009, global economic conditions were difficult and resulted in a decline in local currency sales in most geographies versus prior year comparable periods. Our net sales by geographic destination in local currencies decreased during the three and nine months ended September 30, 2009 by 12% and 13% in the Americas, by 16% and 15% in Europe and by 6% and 4% in Asia/Rest of World. A discussion of sales by operating segment is included below. Our future sales in local currencies will continue to be adversely affected by the weak global economic conditions. It remains difficult to predict the extent to which our future results will be adversely affected in this uncertain environment.
     As described in Note 16 to our consolidated financial statements for the year ending December 31, 2008, our net sales comprise product sales of precision instruments and related services. Service revenues are primarily derived from repair and other services, including regulatory compliance qualification, calibration, certification, preventative maintenance and spare parts.
     Net sales of products decreased in U.S. dollars by 17% and 20% during the three and nine months ended September 30, 2009, respectively, and in local currencies by 15% for both periods, compared to the corresponding prior periods. Service revenue (including spare parts) decreased in U.S. dollars by 4% and 7% during the three and nine months ended September 30, 2009, respectively, and in local currencies decreased 1% and was flat for the three and nine months ended September 30, 2009, respectively, compared to corresponding prior periods.
     Net sales for our laboratory-related products decreased 8% and 9% in local currencies during the three and nine months ended September 30, 2009, respectively, principally driven by a sales decline in laboratory balances, analytical instruments and process analytics in Europe and the Americas.
     Net sales of our industrial-related products decreased 16% and 14% in local currencies for the three and nine months ended September 30, 2009, respectively. We experienced a significant decline in sales of our core-industrial products across most geographies. We also experienced a significant decline in transportation and logistic sales for the three months ended September 30, 2009 which is partly related to strong project activity in the prior year comparable periods.
     In our food retailing markets, net sales decreased 14% and 16% in local currencies during the three and nine months ended September 30, 2009, respectively, primarily due to decreased sales in the U.S. and Europe. The decline in Europe was partly related to strong project activity in the prior year comparable period.
     Gross profit
     Gross profit as a percentage of net sales was 51.7% and 50.9% for the three and nine months ended September 30, 2009, respectively, compared to 48.8% and 49.8% for the corresponding periods in 2008.
     Gross profit as a percentage of net sales for products was 55.6% and 54.8% for the three and nine months ended September 30, 2009, respectively, compared to 52.7% and 53.9% for the corresponding periods in 2008.

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     Gross profit as a percentage of net sales for services (including spare parts) was 39.8% and 39.1% for the three and nine months ended September 30, 2009, respectively, compared to 35.1% and 35.7% for the corresponding periods in 2008.
     The increase in gross profit as a percentage of net sales for the three and nine month periods ended September 30, 2009 reflects benefits from reduced material costs, increased pricing and favorable product mix. These benefits were partially offset by the negative impact of decreased sales volume in excess of our reduced production costs.
     Research and development and selling, general and administrative expenses
     Research and development expenses as a percentage of net sales were 5.1% and 5.4% for the three and nine months ended September 30, 2009, respectively, compared to 5.2% and 5.3% for the corresponding periods during 2008. Research and development expenses decreased 15% and 11%, in local currencies, during the three and nine months ended September 30, 2009, respectively, compared to the corresponding periods in 2008 relating to reduced project activity and the impact of our cost reduction program.
     Selling, general and administrative expenses as a percentage of net sales were 29.8% and 30.1% for the three and nine months ended September 30, 2009, respectively, compared to 28.6% and 30.1% in the corresponding periods during 2008. Selling, general and administrative expenses decreased 9% and 12%, in local currencies, during the three and nine months ended September 30, 2009, respectively, compared to the corresponding periods in 2008. The decrease is primarily due to benefits from our cost reduction activities and reduced performance-related compensation (bonus and commission) costs. These items were partially offset by expenses incurred in connection with Blue Ocean, our multi-year information technology investment. Selling, general and administrative expenses, during the nine months ended September 30, 2008, included costs associated with product launches and severance expense, partially offset by a gain associated with an asset sale.
     Interest expense, other charges (income), net and taxes
     Interest expense was $7.0 million and $19.0 million for the three and nine months ended September 30, 2009, respectively, and $6.8 million and $18.7 million for the corresponding periods in 2008. Interest expense for the three and nine month periods ended September 30, 2009 includes the benefit of lower average debt balances offset by costs associated from a partial termination of one of our interest rate swap agreements. Interest expense for the nine month period ended September 30, 2009 also reflects the impact of charges incurred in connection with the tender offer of our 4.85% Senior Notes (See Note 6 for further discussion) and other financing costs totaling $1.8 million, offset in part by lower borrowing rates.
     Other charges (income), net consists primarily of restructuring charges, interest income, (gains) losses from foreign currency transactions and other items. The increase in other charges (income), net of $5.6 million and $26.9 million for the three and nine months ended September 30, 2009, respectively, compared to the prior year periods is primarily due to restructuring charges of $6.1 million and $28.4 million, respectively, related to our global cost reduction program (as further described below).
     During the fourth quarter of 2008, we initiated a global cost reduction program. During the first quarter of 2009, we revised the program to include further cost reductions. Charges under the program primarily comprise severance costs and are expected to be approximately $40 million.

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Through September 30, 2009 total charges recognized were $34.8 million, of which $6.1 million and $28.4 million were recognized during the three and nine month periods ended September 30, 2009, respectively. Under the program, our workforce (including employees and temporary personnel) will be reduced by approximately 1,000. As a result of the reduction in workforce, we anticipate personnel costs will be reduced by approximately $65 million on an annual basis. We expect total cost savings from our global cost reduction program to be approximately $100 million on an annual basis.
     See Note 10 to the interim consolidated financial statements for a summary of restructuring activity for the nine months ended September 30, 2009.
     The provision for taxes is based upon our projected annual effective tax rate of 27% for the three and nine months ended September 30, 2009 and 26% for the three and nine months ended September 30, 2008, respectively. During the first quarter of 2009, we recorded a discrete net tax benefit of $8.3 million primarily related to the favorable resolution of certain prior year tax matters. The impact of this item decreased the effective tax rate to 21% for the nine months ended September 30, 2009.
     We recorded a discrete tax benefit of $2.5 million related to a favorable withholding tax law change in China during the first quarter of 2008. During the third quarter of 2008, we recorded discrete tax items resulting in a net tax benefit of $3.5 million primarily related to the closure of certain tax matters. The net impact of the items described above decreased the effective tax rate to 21% and 23% for the three and nine months ended September 30, 2008, respectively.
Results of Operations — by Operating Segment
     The following is a discussion of the financial results of our operating segments. We currently have five reportable segments: U.S. Operations, Swiss Operations, Western European Operations, Chinese Operations and Other. A more detailed description of these segments is outlined in Note 16 to our consolidated financial statements for the year ending December 31, 2008.
     U.S. Operations (amounts in thousands)
                                                 
    Three months ended September 30   Nine months ended September 30
    2009   2008   %1)   2009   2008   %1)
Total net sales
  $ 152,354     $ 176,748       -14 %   $ 432,605     $ 507,040       -15 %
Net sales to external customers
  $ 140,665     $ 161,844       -13 %   $ 399,851     $ 464,225       -14 %
Segment profit
  $ 28,167     $ 30,723       -8 %   $ 73,365     $ 82,093       -11 %
 
1)   Represents U.S. dollar growth (decline) for net sales and segment profit.
     Total net sales decreased 14% and 15% for the three and nine months ended September 30, 2009, respectively, and net sales to external customers decreased 13% and 14% for the three and nine months ended September 30, 2009, respectively, compared with the corresponding period in 2008. The decrease reflects declines across most product categories related to the global economic slowdown, particularly core-industrial products. We expect our net sales will continue to be adversely affected by weak global economic conditions during the remainder of 2009.
     Segment profit decreased $2.6 million and $8.7 million for the three and nine month periods ended September 30, 2009, respectively, compared to the corresponding periods in 2008. The decrease in segment profit was primarily due to decreases in sales volume offset in part by benefits

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from our cost reduction efforts. We also recorded a $1.8 million gain from the receipt of a previously reserved note receivable during the nine months ended September 30, 2009.
     Swiss Operations (amounts in thousands)
                                                 
    Three months ended September 30   Nine months ended September 30
    2009   2008   %1)   2009   2008   %1)
Total net sales
  $ 99,947     $ 106,726       -6 %   $ 272,371     $ 332,563       -18 %
Net sales to external customers
  $ 27,606     $ 30,830       -10 %   $ 74,295     $ 93,850       -21 %
Segment profit
  $ 20,321     $ 18,201       12 %   $ 51,900     $ 58,963       -12 %
 
1)   Represents U.S. dollar growth (decline) for net sales and segment profit.
     Total net sales in local currency decreased by 7% and 14% for the three and nine months ended September 30, 2009, respectively, compared to the corresponding periods in 2008. Net sales to external customers in local currency decreased 11% and 17% for the same periods versus the prior year comparable periods. The decrease in sales to external customers reflects declines across most product categories related to the global economic slowdown, especially analytical instruments, core-industrial and food retailing products. We expect our net sales in local currency will continue to be adversely affected by weak global economic conditions during the remainder of 2009.
     Segment profit increased $2.1 million and decreased $7.1 million for the three and nine month periods ended September 30, 2009, respectively, compared to the corresponding periods in 2008. The increase in segment profit during the three month period ended September 30, 2009 reflects benefits from our cost reduction efforts in excess of the sales decline and unfavorable currency translation fluctuations. The decrease in segment profit for the nine month period ended September 30, 2009 is primarily due to the significant decline in sales and unfavorable currency translation fluctuations, which was offset in part by benefits from our cost reduction efforts.
     Western European Operations (amounts in thousands)
                                                 
    Three months ended September 30   Nine months ended September 30
    2009   2008   %1)   2009   2008   %1)
Total net sales
  $ 158,632     $ 188,911       -16 %   $ 452,230     $ 572,655       -21 %
Net sales to external customers
  $ 138,377     $ 168,497       -18 %   $ 398,868     $ 509,464       -22 %
Segment profit
  $ 17,900     $ 15,179       18 %   $ 43,791     $ 45,530       -4 %
 
1)   Represents U.S. dollar growth (decline) for net sales and segment profit.
     Total net sales in local currency decreased 10% for both the three and nine month periods ended September 30, 2009, compared to the corresponding periods in 2008. Net sales to external customers in local currency decreased 12% and 11% for the same periods versus the prior year comparable periods, respectively. The decrease reflects declines across most product categories related to the global economic slowdown, particularly core-industrial products. We expect our net sales in local currency will continue to be adversely affected by weak global economic conditions during the remainder of 2009.
     Segment profit increased $2.7 million and decreased $1.7 million for the three and nine month periods ended September 30, 2009, respectively, compared to the corresponding periods in 2008. The increase in segment profit for the three months ended September 30, 2009 was primarily

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a result of benefits from our cost reduction efforts and $2.7 million in severance charges recorded by our Western European operations during the three months ended September 30, 2008, partially offset by declines in sales volume. The decrease in segment profit for the nine months ended September 30, 2009 reflects decreased sales volume, partially offset by benefits from our cost reduction efforts. In addition, our Western European operations incurred severance expense of $5.1 million during the nine months ended 2008.
     Chinese Operations (amounts in thousands)
                                                 
    Three months ended September 30   Nine months ended September 30
    2009   2008   %1)   2009   2008   %1)
Total net sales
  $ 81,579     $ 89,829       -9 %   $ 212,007     $ 236,683       -10 %
Net sales to external customers
  $ 62,589     $ 66,458       -6 %   $ 162,418     $ 166,179       -2 %
Segment profit
  $ 19,629     $ 15,619       26 %   $ 45,073     $ 44,098       2 %
 
1)   Represents U.S. dollar growth (decline) for net sales and segment profit.
     Total net sales in local currency decreased 9% and 12% and net sales to external customers decreased 6% and 4% for the three and nine months ended September 30, 2009, respectively, as compared to the corresponding periods in 2008. These fluctuations were due primarily to a decrease in core-industrial products, partially offset by sales growth in our laboratory and product inspection products. We expect our net sales in local currency will continue to be adversely affected by weak global economic conditions during the remainder of 2009.
     Segment profit increased $4.0 million and $1.0 million for the three and nine month periods ended September 30, 2009, respectively, compared to the corresponding periods in 2008. The increase in segment profit is due primarily to benefits from our cost reduction efforts, partially offset by decreased sales. Segment profit during the three month period ended September 30, 2009 also benefited from decreased inter-segment royalty expenses with our U.S. Operations.
     Other (amounts in thousands)
                                                 
    Three months ended September 30   Nine months ended September 30
    2009   2008   %1)   2009   2008   %1)
Total net sales
  $ 67,659     $ 82,869       -18 %   $ 184,118     $ 233,347       -21 %
Net sales to external customers
  $ 66,413     $ 81,468       -18 %   $ 181,739     $ 229,939       -21 %
Segment profit
  $ 6,461     $ 6,198       4 %   $ 13,398     $ 17,436       -23 %
 
1)   Represents U.S. dollar growth (decline) for net sales and segment profit.
     Total net sales and net sales to external customers in local currency decreased 15% and 13% for the three and nine month periods ended September 30, 2009, respectively, compared to the corresponding periods in 2008. This performance primarily reflects decreased sales in our Eastern European markets, Mexico and Canada. We expect our net sales in local currency will continue to be adversely affected by weak global economic conditions during the remainder of 2009.
     Segment profit increased $0.3 million and decreased $4.0 million for the three and nine months ended September 30, 2009, respectively, compared to the corresponding periods in 2008. The increase in segment profit during the three month period ended September 30, 2009 relates to benefits from our cost reduction program, partially offset by declines in net sales. The decline in

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the nine month period ended September 30, 2009 relates primarily to declines in net sales, especially in our Eastern European operations.
Liquidity and Capital Resources
     Liquidity is our ability to generate sufficient cash flows from operating activities to meet our obligations and commitments. In addition, liquidity includes the ability to obtain appropriate financing. Currently, our liquidity needs arise primarily from working capital requirements, capital expenditures and acquisitions. Our ability to generate cash flows may be reduced due to the global economic slowdown. In light of the economic downturn and instability in the financial markets, we have taken a more conservative posture towards the utilization of our cash flow and capital structure. This includes suspending our share repurchase program during the fourth quarter of 2008. We presently cannot estimate what purchases may be made in 2009, if any.
     Cash provided by operating activities totaled $188.5 million during the nine months ended September 30, 2009, compared to $160.6 million in the corresponding period in 2008. The increase in 2009 resulted principally from decreased incentive payments of $15.4 million related to 2008 performance-related compensation incentives (bonus payments) and reduced accounts receivable and inventory balances, offset in part by lower net earnings and cash payments of $18.5 million related to our restructuring program.
     Cash flows used in investing activities during the nine months ended September 30, 2008 included $12.5 million of proceeds from the sale of a Swiss property.
     Capital expenditures are made primarily for investments in information systems and technology, machinery, equipment and the purchase and expansion of facilities. Our capital expenditures totaled $36.6 million for the nine months ended September 30, 2009 compared to $37.5 million in the corresponding period in 2008. We expect capital expenditures to increase as our business grows, and to fluctuate as currency exchange rates change. Our capital expenditures during the nine months ended September 30, 2009 included approximately $22.0 million of investments related to our Blue Ocean multi-year program of information technology investment. We expect that our annual capital expenditures will remain in the range of $50 to $60 million until Blue Ocean is completed. These amounts may change based upon fluctuations in currency exchange rates.
     Cash flows used in financing activities during the nine months ended September 30, 2009 included proceeds of $100 million from the issuance of our 6.30% Senior Notes and payments of $0.6 million of debt issuance costs. We also made payments to repurchase $75 million of our 4.85% Senior Notes and paid $1.6 million in debt extinguishment costs and other financing charges in connection with our tender offer.

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     Senior Notes and Credit Facility Agreement
     Our short-term borrowings and long-term debt consisted of the following at September 30, 2009:
                         
    September 30, 2009  
            Other principal        
            trading        
    U.S. dollar     currencies     Total  
4.85% $75m senior notes (net of unamortized discount)
  $ 76,243     $     $ 76,243  
6.30% $100m senior notes
    100,000             100,000  
Credit facility
    100,475       29,473       129,948  
Other local arrangements (long-term)
          12,594       12,594  
 
                 
Total long-term debt
    276,718       42,067       318,785  
Other local arrangements (short-term)
          10,652       10,652  
 
                 
Total debt
  $ 276,718     $ 52,719     $ 329,437  
 
                 
     As of September 30, 2009, approximately $814.1 million was available under the credit facility. Changes in exchange rates between the currencies in which we generate cash flows 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. As of September 30, 2009, we were in compliance with our debt covenants.
     Tender Offer
     On May 6, 2009, we commenced a cash tender offer to purchase any and all of our outstanding 4.85% Senior Notes (“4.85% Senior Notes”) due November 15, 2010. The tender offer, which expired May 12, 2009, resulted in the repurchase of $75 million of the principal balance of the 4.85% Senior Notes. In connection with the tender, we recorded a charge of $1.5 million, during the second quarter, which included a premium of $0.9 million, unamortized discount and debt issuance fees of $0.2 million and certain third party costs of $0.4 million. The loss was recorded in interest expense in the consolidated statement of operations.
     Issuance of 6.30% Senior Notes
     On June 25, 2009, we issued and sold, in a private placement, $100 million aggregate principal amount of our 6.30% Series 2009-A Senior Notes due June 25, 2015 (“6.30% Senior Notes”) under a Note Purchase Agreement among the Company and the accredited institutional investors named therein (the “Agreement”). The 6.30% Senior Notes are senior unsecured obligations of the Company.
     The 6.30% Senior Notes bear interest at a fixed rate of 6.30% and mature on June 25, 2015. Interest is payable semi-annually in June and December. We may at any time prepay the 6.30% Senior Notes, in whole or in part, at a price equal to 100% of the principal amount thereof plus accrued and unpaid interest plus a “make-whole” prepayment premium. In the event of a change in control (as defined in the Agreement) of the Company, we may be required to offer to prepay the 6.30% Senior Notes at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest.

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     The agreement contains customary affirmative and negative covenants for agreements of this type including, among others, limitations on the Company and its subsidiaries with respect to incurrence of liens and priority indebtedness, disposition of assets, mergers, and transactions with affiliates. The agreement also requires us to maintain a consolidated interest coverage ratio of more than 3.5 to 1.0 and a consolidated leverage ratio of less than 3.5 to 1.0. The agreement contains customary events of default with customary grace periods, as applicable.
     Under the terms of the offering, we may sell additional Senior Notes at our discretion in an aggregate amount not to exceed $600 million. Such additional Senior Notes would rank equally with our unsecured indebtedness.
     Issuance costs approximating $0.6 million will be amortized to interest expense over the six-year term of the 6.30% Senior Notes.
     We currently believe that cash flows from operating activities, together with liquidity available under our credit facility and local working capital facilities, will be sufficient to fund currently anticipated working capital needs and capital spending requirements for at least the foreseeable future.
     Share Repurchase Program
     We have a share repurchase program. Under the program, we are authorized to buy back up to $1.5 billion of equity shares. As of September 30, 2009, there were $416.6 million of remaining equity shares authorized to be repurchased under the plan by December 31, 2010. The share repurchases are expected to be funded from cash balances, borrowings and cash generated from operating activities. Repurchases will be made through open market transactions, and the timing will depend on the level of acquisition activity, business and market conditions, the stock price, trading restrictions and other factors. We have purchased 15.2 million shares since the inception of the program through September 30, 2009.
     We suspended our share repurchase program during the fourth quarter of 2008 and as a result, we did not repurchase any shares during the nine month period ended September 30, 2009. During the nine months ended September 30, 2008, we spent $223.4 million (of which $3.3 million was unsettled at September 30, 2008) on the repurchase of 2,221,188 shares at an average price of $100.57. In addition, $5.2 million was cash settled during the nine month period ended September 30, 2008 related to the settlement of a liability for shares repurchased as of December 31, 2007. We reissued 149,278 shares and 88,310 shares held in treasury for the exercise of stock options and restricted stock units during the nine months ended September 30, 2009 and 2008, respectively. We also reissued 6,467 shares and 16,760 shares held in treasury during the nine months ended September 30, 2009 and 2008, respectively, pursuant to our 2007 Share Plan which extends certain eligible employees the option to receive a percentage of their annual bonus in shares of the Company’s stock.
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 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,

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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. Accordingly, the Swiss franc exchange rate to the euro is an important cross-rate that we monitor. In recent months, we have seen substantially higher volatility in exchange rates generally than in the past, and the Swiss franc has strengthened significantly against the euro. We estimate that a 1% strengthening of the Swiss franc against the euro would result in a decrease in our earnings before tax of approximately $1.0 million to $1.4 million on an annual basis. In addition to the Swiss franc and major European currencies, we also conduct business in many geographies throughout the world, including Asia Pacific, Eastern Europe, Latin America and Canada. Fluctuations in these currency exchange rates against the U.S. dollar can also affect our operating results. 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. Based on our outstanding debt at September 30, 2009, we estimate that a 10% weakening of the U.S. dollar against the currencies in which our debt is denominated would result in an increase of approximately $5.9 million in the reported U.S. dollar value of our debt.
New Accounting Pronouncements
     The Company adopted the FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles during the third quarter of 2009. The Codification becomes the source of authoritative, nongovernmental, generally accepted accounting principles (“GAAP”) recognized by the FASB, except for rules and interpretive releases of the SEC which are also sources of authoritative GAAP for SEC registrants. All other non-grandfathered, non-SEC accounting literature not included in the Codification will become non-authoritative. The Codification prescribes a new numbering system when referring to GAAP and identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of U.S. GAAP-based, nongovernmental financial statements. The adoption of the Codification did not impact the Company’s consolidated results of operation or financial position.
     The Company adopted the provisions of ASC 855-10, “Subsequent Events”, during the second quarter 2009. The guidance establishes general standards of accounting for, and disclosure of, events that occur after the balance sheet date but before financial statements are issued. The guidance also includes a requirement to disclose the date through which subsequent events were evaluated. See Note 2 to the interim consolidated financial statements.
     The Company adopted the provisions of ASC 825-10-65-1, “Transition Related to FSP FAS 107-1 and ABP 28-1, Interim Disclosures about Fair Value of Financial Instruments”, during the second quarter 2009. The guidance requires certain interim period disclosures of the fair value of all financial instruments for which it is practicable to estimate that value, whether or not recognized in the balance sheet. See Note 3 to the interim consolidated financial statements.
     The Company adopted the provisions of ASC 815-10-65-1, “Transition and Effective Date Related to FASB Statement No. 161, Disclosures about Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133”, on January 1, 2009. See Note 3 to the interim consolidated financial statements.
     The Company adopted the provisions of ASC 820-10, “Fair Value Measurements and Disclosures”, relative to nonfinancial assets recorded at fair value on a non-recurring basis, on January 1, 2009. See Note 4 to the interim consolidated financial statements.

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Forward-Looking Statements Disclaimer
     Some of the statements in this quarterly report and in documents incorporated by reference constitute “forward-looking statements” within the meaning of Section 27A of the U.S. Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of 1934. These statements relate to future events or our future financial performance, including, but not limited to, the following: projected earnings and sales growth in US dollars and local currencies, projected earnings per share, strategic plans and contingency plans, potential growth opportunities or economic downturns in both developed markets and emerging markets, including China, factors influencing growth in our laboratory, industrial and food retail markets, our expectations in respect of the impact of general economic conditions on our business, our projections for growth in certain markets or industries, our capability to respond to future changes in market conditions, impact of inflation, currency and interest rate fluctuations, our ability to maintain a leading position in our key markets, our expected market share, our ability to leverage our market-leading position and diverse product offering to weather an economic downturn, the effectiveness of our “Spinnaker” initiatives relating to sales and marketing, planned research and development efforts, product introductions and innovation, manufacturing capacity, adequacy of facilities, access to and the costs of raw materials, shipping and supplier costs, expanding our operating margins, anticipated gross margins, anticipated customer spending patterns and levels, expected customer demand, meeting customer expectations, warranty claim levels, anticipated growth in service revenues, anticipated pricing, our ability to realize planned price increases, planned operational changes and productivity improvements, effect of changes in internal control over financial reporting, research and development expenditures, competitors’ product development, levels of competitive pressure, our future position vis-à-vis competitors, expected capital expenditures, the timing, impact, cost, benefits from and effectiveness of our cost reduction programs, future cash sources and requirements, cash flow targets, liquidity, value of inventories, impact of long-term incentive plans, continuation of our stock repurchase program and the related impact on cash flow, expected pension and other benefits contributions and payments, expected tax treatment and assessment, impact of taxes and changes in tax benefits, the need to take additional restructuring charges, expected compliance with laws, changes in laws and regulations, impact of environmental costs, expected trading volume and value of stocks and options, impact of issuance of preferred stock, expected cost savings, impact of legal proceedings, satisfaction of contractual obligations by counterparties, timeliness of payments by our customers, the adequacy of reserves for bad debts against our accounts receivable, benefits and other effects of completed or future acquisitions.
     These statements involve known and unknown risks, uncertainties and other factors that may cause our or our businesses’ actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by any forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of those terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially because of market conditions in our industries or other factors. Moreover, we do not, nor does any other person, assume responsibility for the accuracy and completeness of those statements. Unless otherwise required by applicable laws, we disclaim any intention or obligation to publicly update or revise any of the forward-looking statements after the date of this quarterly report to conform them to actual results, whether as a result of new information, future events or otherwise. All of the forward-looking statements are qualified in their entirety by reference to the factors discussed under the captions “Factors affecting our future operating results” in the “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part I, Item 1A of our annual report on Form 10-K for the fiscal year ended December 31, 2008, which describe risks and factors that could cause results to differ materially from those projected in those forward-looking statements.
     We caution the reader that the above list of risks and factors that may affect results addressed in the forward-looking statements may not be exhaustive. Other sections of this quarterly report on Form 10-Q for the period ended September 30, 2009 and other documents incorporated by reference may describe additional risks or factors that could adversely impact our business and financial performance. We operate in a continually changing business environment, and new risk factors emerge from time to time. Management

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cannot predict these new risk factors, nor can it assess the impact, if any, of these new risk factors on our businesses or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those projected in any forward-looking statements. Accordingly, forward-looking statements should not be relied upon as a prediction of actual results.
Item 3.   Quantitative and Qualitative Disclosures About Market Risk
     As of September 30, 2009, 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, 2008.
Item 4.   Controls and Procedures
     Under the supervision and with the participation of our management, including the Chief Executive Officer and the Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that these disclosure controls and procedures are effective. There were no changes in our internal control over financial reporting during the quarter ended September 30, 2009 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION
Item 1.   Legal Proceedings. None
Item 1A.   Risk Factors.
     For the nine months ended September 30, 2009 there were no material changes from risk factors disclosed in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2008.
Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds.
     Issuer Purchases of Equity Securities
                                 
    (a)   (b)   (c)   (d)
                    Total Number of   Approximate Dollar
                    Shares   Value (in
                    Purchased as   Thousands) of
                    Part of Publicly   Shares that May Yet
    Total Number   Average   Announced   Be Purchased Under
    of Shares   Price Paid per   Plans or   the Plans or
    Purchased   Share   Programs   Programs
July 1 to July 31, 2009
        $           $ 416,591  
August 1 to August 31, 2009
        $           $ 416,591  
September 1 to September 30, 2009
        $           $ 416,591  
Total
        $           $ 416,591  
     We have a share repurchase program. Under the program, we have been authorized to buy back up to $1.5 billion of equity shares. As of September 30, 2009, there were $416.6 million of remaining equity shares authorized to be repurchased under the plan by December 31, 2010. We have purchased 15.2 million shares since the inception of the program, announced February 2004, through September 30, 2009.
     During the fourth quarter 2008, we suspended the share repurchase program and as a result, we did not repurchase any shares during the nine month period ended September 30, 2009. During the nine months ended September 30, 2008, we spent $223.4 million (of which $3.3 million was unsettled at September 30, 2008) on the repurchase of 2,221,188 shares at an average price of $100.57. In addition, $5.2 million was cash settled during the nine month period ended September 30, 2008, related to the settlement of a liability for shares repurchased as of December 31, 2007. We reissued 149,278 shares and 88,310 shares held in treasury for the exercise of stock options and restricted stock units for the nine months ended September 30, 2009 and 2008, respectively. We also reissued 6,467 shares and 16,760 shares held in treasury during the nine months ended September 30, 2009 and 2008, respectively, pursuant to our 2007 Share Plan which extends certain

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eligible employees the option to receive a percentage of their annual bonus in shares of the Company’s stock.
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. See Exhibit Index below.

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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 thereunto duly authorized.
         
  Mettler-Toledo International Inc.
 
 
Date: October 30, 2009  By:   /s/ William P. Donnelly    
    William P. Donnelly   
    Group Vice President and Chief Financial Officer   

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EXHIBIT INDEX
     
Exhibit No.   Description
 
   
31.1*
  Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes — Oxley Act of 2002
 
   
31.2*
  Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes — Oxley Act of 2002
 
   
32*
  Certification Pursuant to Section 906 of the Sarbanes — Oxley Act of 2002
 
*   Filed herewith

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