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 JUNE 30, 2010, OR

For the quarterly period ended June 30, 2010

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM                      TO

Mettler-Toledo International Inc.

(Exact name of registrant as specified in its charter)

Delaware		13-3668641
(State or other jurisdiction of		(I.R.S Employer Identification No.)
incorporation or organization)

1900 Polaris Parkway
Columbus, Ohio 43240
and
Im Langacher, P.O. Box MT-100
CH 8606 Greifensee, Switzerland
(Zip Code)

1-614-438-4511 and +41-44-944-22-11

not applicable

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 þ 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		Smaller reporting company o
				(Do not check if a smaller reporting company)

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 33,406,944 shares of Common Stock outstanding at June 30, 2010.

 

 

METTLER-TOLEDO INTERNATIONAL INC.
INDEX TO QUARTERLY REPORT ON FORM 10-Q

		PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Unaudited Interim Consolidated Financial Statements:
Interim Consolidated Statements of Operations for the three months ended June 30, 2010 and 2009			3
Interim Consolidated Statements of Operations for the six months ended June 30, 2010 and 2009			4
Interim Consolidated Balance Sheets as of June 30, 2010 and December 31, 2009			5
Interim Consolidated Statements of Shareholders’ Equity and Comprehensive Income for the six months ended June 30, 2010 and twelve months ended December 31, 2009			6
Interim Consolidated Statements of Cash Flows for the six months ended June 30, 2010 and 2009			7
Notes to the Interim Consolidated Financial Statements at June 30, 2010			8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			24
Item 3. Quantitative and Qualitative Disclosures About Market Risk			35
Item 4. Controls and Procedures			35
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			36
Item 1A. Risk Factors			36
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			36
Item 3. Defaults upon Senior Securities			36
Item 5. Other Information			37
Item 6. Exhibits			37
SIGNATURE
EX-31.1
EX-31.2
EX-32
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

METTLER-TOLEDO INTERNATIONAL INC.

INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended June 30, 2010 and 2009
(In thousands, except share data)
(unaudited)

		June 30,				June 30,
		2010				2009
Net sales
Products		$	358,829			$	304,378
Service			109,720				103,064
Total net sales			468,549				407,442
Cost of sales
Products			154,770				138,368
Service			67,154				62,840
Gross profit			246,625				206,234
Research and development			23,105				22,075
Selling, general and administrative			143,602				122,488
Amortization			3,565				2,814
Interest expense			4,711				6,760
Restructuring charges			1,526				13,979
Other charges (income), net			730				131
Earnings before taxes			69,386				37,987
Provision for taxes			18,039				10,256
Net earnings		$	51,347			$	27,731
Basic earnings per common share:
Net earnings		$	1.53			$	0.82
Weighted average number of common shares			33,536,105				33,690,179
Diluted earnings per common share:
Net earnings		$	1.49			$	0.81
Weighted average number of common and common equivalent shares			34,395,487				34,192,595

The accompanying notes are an integral part of these interim consolidated financial statements.

METTLER-TOLEDO INTERNATIONAL INC.

INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
Six months ended June 30, 2010 and 2009
(In thousands, except share data)
(unaudited)

		June 30,				June 30,
		2010				2009
Net sales
Products		$	672,233			$	582,288
Service			212,967				199,233
Total net sales			885,200				781,521
Cost of sales
Products			289,101				265,393
Service			131,548				121,972
Gross profit			464,551				394,156
Research and development			45,570				43,645
Selling, general and administrative			278,616				236,523
Amortization			6,946				5,497
Interest expense			9,965				12,001
Restructuring charges			1,910				22,334
Other charges (income), net			984				1,136
Earnings before taxes			120,560				73,020
Provision for taxes			31,345				11,410
Net earnings		$	89,215			$	61,610
Basic earnings per common share:
Net earnings		$	2.65			$	1.83
Weighted average number of common shares			33,646,640				33,660,699
Diluted earnings per common share:
Net earnings		$	2.59			$	1.81
Weighted average number of common and common equivalent shares			34,464,277				34,094,423

The accompanying notes are an integral part of these interim consolidated financial statements.

METTLER-TOLEDO INTERNATIONAL INC.

INTERIM CONSOLIDATED BALANCE SHEETS
As of June 30, 2010 and December 31, 2009
(In thousands, except share data)
(unaudited)

		June 30,				December 31,
		2010				2009
ASSETS
Current assets:
Cash and cash equivalents		$	111,591			$	85,031
Trade accounts receivable, less allowances of $12,428 at June 30, 2010 and $12,399 at December 31, 2009			310,071				312,998
Inventories			185,173				168,042
Current deferred tax assets, net			36,028				34,225
Other current assets and prepaid expenses			48,000				45,811
Total current assets			690,863				646,107
Property, plant and equipment, net			302,606				316,334
Goodwill			439,270				440,950
Other intangible assets, net			106,825				105,284
Non-current deferred tax assets, net			92,306				95,688
Other non-current assets			113,924				114,424
Total assets		$	1,745,794			$	1,718,787
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Trade accounts payable		$	110,971			$	103,160
Accrued and other liabilities			87,259				91,907
Accrued compensation and related items			95,651				96,359
Deferred revenue and customer prepayments			86,473				63,292
Taxes payable			46,555				38,686
Current deferred tax liabilities			11,227				11,303
Short-term borrowings and current maturities of long-term debt			90,837				89,968
Total current liabilities			528,973				494,675
Long-term debt			204,247				203,590
Non-current deferred tax liabilities			115,581				119,791
Other non-current liabilities			179,801				189,593
Total liabilities			1,028,602				1,007,649
Commitments and contingencies (Note 14)
Shareholders’ equity:
Preferred stock, $0.01 par value per share; authorized 10,000,000 shares			—				—
Common stock, $0.01 par value per share; authorized 125,000,000 shares; issued 44,786,011 and 44,786,011 shares; outstanding 33,406,944 and 33,851,124 shares at June 30, 2010 and December 31, 2009, respectively			448				448
Additional paid-in capital			583,577				574,034
Treasury stock at cost (11,379,067 shares at June 30, 2010 and 10,934,887 shares at December 31, 2009)			(914,037	)			(857,130	)
Retained earnings			1,092,977				1,009,995
Accumulated other comprehensive (loss) income			(45,773	)			(16,209	)
Total shareholders’ equity			717,192				711,138
Total liabilities and shareholders’ equity		$	1,745,794			$	1,718,787

The accompanying notes are an integral part of these interim consolidated financial statements.

METTLER-TOLEDO INTERNATIONAL INC.

INTERIM CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY AND
COMPREHENSIVE INCOME
Six months ended June 30, 2010 and twelve months ended December 31, 2009
(In thousands, except share data)
(unaudited)

																						Accumulated
										Additional												Other
		Common Stock								Paid-in				Treasury				Retained				Comprehensive
		Shares				Amount				Capital				Stock				Earnings				(Loss) Income				Total
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			308,154				—				—				21,998				(10,930	)			—				11,068
Other treasury stock issuances			6,467				—				—				461				(157	)			—				304
Repurchases of common stock			(58,800	)			—				—				(5,988	)			—				—				(5,988	)
Tax benefit resulting from exercise of certain employee stock options			—				—				2,895				—				—				—				2,895
Share-based compensation			—				—				11,367				—				—				—				11,367
Total comprehensive income:
Net earnings			—				—				—				—				172,593				—				172,593
Net unrealized gain on cash flow hedging arrangements, net of tax			—				—				—				—				—				5,401				5,401
Change in currency translation adjustment, net of tax			—				—				—				—				—				15,835				15,835
Pension adjustment, net of tax			—				—				—				—				—				(5,584	)			(5,584	)
Comprehensive income																											188,245
Balance at December 31, 2009			33,851,124			$	448			$	574,034			$	(857,130	)		$	1,009,995			$	(16,209	)		$	711,138
Exercise of stock options and restricted stock units			216,270				—				—				15,704				(6,320	)			—				9,384
Other treasury stock issuances			2,549				—				—				183				87				—				270
Repurchases of common stock			(662,999	)			—				—				(72,794	)			—				—				(72,794	)
Tax benefit resulting from exercise of certain employee stock options			—				—				3,534				—				—				—				3,534
Share-based compensation			—				—				6,009				—				—				—				6,009
Total comprehensive income:
Net earnings			—				—				—				—				89,215				—				89,215
Net unrealized gain on cash flow hedging arrangements, net of tax			—				—				—				—				—				(6,039	)			(6,039	)
Change in currency translation adjustment, net of tax			—				—				—				—				—				(25,247	)			(25,247	)
Pension adjustment, net of tax			—				—				—				—				—				1,722				1,722
Comprehensive income (a)																											59,651
Balance at June 30, 2010			33,406,944			$	448			$	583,577			$	(914,037	)		$	1,092,977			$	(45,773	)		$	717,192

The accompanying notes are an integral part of these interim consolidated financial statements.

METTLER-TOLEDO INTERNATIONAL INC.

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended June 30, 2010 and 2009
(In thousands)
(unaudited)

		June 30,				June 30,
		2010				2009
Cash flows from operating activities:
Net earnings		$	89,215			$	61,610
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation			14,465				14,353
Amortization			6,946				5,497
Deferred tax provision			(4,534	)			(10,797	)
Excess tax benefits from share-based payment arrangements			(2,718	)			(202	)
Share-based compensation			6,009				5,532
Other			129				315
Increase (decrease) in cash resulting from changes in:
Trade accounts receivable, net			(10,697	)			57,613
Inventories			(23,633	)			12,610
Other current assets			(2,325	)			(3,865	)
Trade accounts payable			9,481				(25,920	)
Taxes payable			8,957				5,497
Accruals and other			27,963				(13,349	)
Net cash provided by operating activities			119,258				108,894
Cash flows from investing activities:
Proceeds from sale of property, plant and equipment			102				1,917
Purchase of property, plant and equipment			(19,803	)			(24,020	)
Acquisitions			(12,557	)			(170	)
Net cash used in investing activities			(32,258	)			(22,273	)
Cash flows from financing activities:
Proceeds from borrowings			52,143				167,905
Repayments of borrowings			(47,058	)			(217,333	)
Debt issuance costs			—				(602	)
Debt extinguishment costs			—				(1,301	)
Proceeds from stock option exercises			9,384				4,609
Repurchases of common stock			(72,794	)			—
Excess tax benefits from share-based payment arrangements			2,718				202
Other financing activities			(3,538	)			(1,078	)
Net cash used in financing activities			(59,145	)			(47,598	)
Effect of exchange rate changes on cash and cash equivalents			(1,295	)			2,630
Net increase in cash and cash equivalents			26,560				41,653
Cash and cash equivalents:
Beginning of period			85,031				78,073
End of period		$	111,591			$	119,726

The accompanying notes are an integral part of these interim consolidated financial statements.

METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
At June 30, 2010 — 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 Columbus, Ohio and Greifensee, Switzerland.

     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 June 30, 2010 and for the three and six month periods ended June 30, 2010 and 2009 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, 2009.

     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 six months ended June 30, 2010 are not necessarily indicative of the results to be expected for the full year ending December 31, 2010.

     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 and the Notes to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009.

     All intercompany transactions and balances have been eliminated.

     Certain reclassifications have been made to prior year amounts to conform to the current year presentation.

METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
At June 30, 2010 — 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:

		June 30,				December 31,
		2010				2009
Raw materials and parts		$	84,992			$	80,150
Work-in-progress			32,169				29,695
Finished goods			68,012				58,197
		$	185,173			$	168,042

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.”

METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
At June 30, 2010 — Unaudited (Continued)
(In thousands, except share data, unless otherwise stated)

     Other intangible assets consisted of the following:

		June 30, 2010								December 31, 2009
		Gross				Accumulated				Gross				Accumulated
		Amount				Amortization				Amount				Amortization
Customer relationships		$	83,902			$	(16,037	)		$	80,357			$	(15,622	)
Proven technology and patents			35,560				(22,669	)			38,242				(23,011	)
Tradename (finite life)			3,034				(1,058	)			1,993				(909	)
Tradename (indefinite life)			23,634				—				23,634				—
Other			510				(51	)			600				—
		$	146,640			$	(39,815	)		$	144,826			$	(39,542	)

     The annual aggregate amortization expense based on the current balance of other intangible assets is estimated at $6.1 million for 2010, $5.9 million for 2011, $5.5 million for 2012, $4.1 million for 2013 and $3.7 million for 2014. The Company recognized amortization expense associated with the above intangible assets of $1.5 million and $1.1 million for the three months ended June 30, 2010 and 2009, respectively and $3.1 million and $2.3 million for the six months ended June 30, 2010 and 2009, respectively. Purchased intangible amortization, net of tax was $0.9 million and $0.7 million for the three months ended June 30, 2010 and 2009, respectively and $1.8 million and $1.3 million for the six months ended June 30, 2010 and 2009, respectively.

     In addition to the above amortization, the Company recorded amortization expense associated with capitalized software of $2.1 million and $1.7 million for the three months ended June 30, 2010 and 2009, respectively and of $3.9 million and $3.2 million for the six months ended June 30, 2010 and 2009, 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 and risk of loss 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.

METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
At June 30, 2010 — Unaudited (Continued)
(In thousands, except share data, unless otherwise stated)

     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 and risk of loss 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 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:

		June 30,				June 30,
		2010				2009
Balance at beginning of period		$	15,856			$	12,822
Accruals for warranties			6,851				8,888
Foreign currency translation			(997	)			6
Payments / utilizations			(8,656	)			(8,053	)
Balance at end of period		$	13,054			$	13,663

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 $3.0 million and $6.0 million of share-based compensation expense for the three and six months ended June 30, 2010, respectively, compared to $2.6 million and $5.5 million for the corresponding periods in 2009.

METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
At June 30, 2010 — 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.

3. ACQUISITIONS

     In January 2010, the Company acquired a pipette distributor located in the United Kingdom for an aggregate purchase price of approximately $12.5 million. The Company may be required to pay additional cash consideration up to a maximum amount of approximately $1.2 million related to an earn-out period. Goodwill recorded in connection with the acquisition totaled approximately $7.4 million, which is included in the Company’s Western European Operations segment. The Company also recorded $4.5 million of identified intangibles pertaining to a tradename and customer relationships.

4. FINANCIAL INSTRUMENTS

     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. 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. The Company does not use derivative financial instruments for trading purposes. For additional disclosures on the fair value of financial instruments, see Note 5 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 LIBOR-based interest payments associated with $40 million outstanding under the Company’s credit facility to a fixed obligation of 2.70%.

     The second agreement is a forward-starting swap which changes the floating rate LIBOR-based interest payments associated with $100 million in forecasted borrowings under the Company’s credit facility to a fixed obligation of 3.24% beginning in October 2010. During the six months ended June 30, 2010, the Company settled $100 million of its original $200 million arrangement, resulting in an expense of $0.6 million being reclassified from other comprehensive income to interest expense.

     The Company has also 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)

METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
At June 30, 2010 — Unaudited (Continued)
(In thousands, except share data, unless otherwise stated)

income, net of tax and reclassifies these amounts into 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 June 30, 2010, no hedge ineffectiveness has occurred in relation to these cash flow hedges.

     The fair value of these derivative instruments at June 30, 2010 and December 31, 2009 are as follows:

						Fair Value				Fair Value
		Balance Sheet Location				June 30, 2010				December 31, 2009
Derivatives designated as hedging instruments:
Cash flow hedges:
Interest rate swap agreement		Current liabilities				$	(297	)		$	(733	)
Interest rate forward-starting swap agreement		Other non-current (liabilities)/assets				$	(5,339	)		$	3,419
Foreign currency forward contract		Current assets				$	378			$	1,566

     The effects of these derivative instruments on the consolidated statement of operations before taxes for the three and six month periods ended June 30, 2010 are as follows:

						Three months ended June 30, 2010								Six months ended June 30, 2010
		Location of								Gain/(Loss)								Gain/(Loss)
		Derivative								Reclassified from								Reclassified from
		Gain/(Loss)				Derivative				AOCI into				Derivative				AOCI into
		Recognized in				Gain/(Loss)				Earnings (Effective				Gain/(Loss)				Earnings (Effective
		Earnings				Recognized in OCI				Portion)				Recognized in OCI				Portion)
Derivatives designated as hedging instruments:
Cash flow hedges:
Interest rate swaps		Interest expense				$	(4,443	)		$	(230	)		$	(8,322	)		$	(1,016	)
Foreign currency forward contract		Net sales				$	(135	)		$	164			$	(1,188	)		$	676

METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
At June 30, 2010 — Unaudited (Continued)
(In thousands, except share data, unless otherwise stated)

     The effects of these derivative instruments on the consolidated statement of operations before taxes for the three and six month periods ended June 30, 2009 were as follows:

Three months ended June 30, 2009

Six months ended June 30, 2009

Location of

Gain/(Loss)

Gain/(Loss)

Derivative

Reclassified from

Reclassified from

Gain/(Loss)

Derivative

AOCI into

Derivative

AOCI into

Recognized in

Gain/(Loss)

Earnings (Effective

Gain/(Loss)

Earnings (Effective

Earnings

Recognized in OCI

Portion)

Recognized in OCI

Portion)

Derivatives designated as hedging instruments:

Cash flow hedges:

Interest rate swaps

Interest expense

$

6,074

$

(831

)

$

6,154

$

(1,664

)

Foreign currency forward contract

Net sales

$

2,743

$

327

$

3,437

$

327

     A net after tax derivative loss of $1.1 million based upon interest rates and foreign currency exchange rates at June 30, 2010 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 U.S. GAAP, 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 are reported in current earnings. At June 30, 2010 and December 31, 2009, these contracts had a notional value of $131.5 million and $128.7 million, respectively.

     The fair value of these derivative instruments and their effects on the consolidated balance sheet at June 30, 2010 and December 31, 2009 were as follows:

						Fair Value				Fair Value
		Balance Sheet Location				June 30, 2010				December 31, 2009
Derivatives designated as hedging instruments:
Fair value hedges:
Interest rate swap agreement		Other non-current assets				$	408			$	846
Derivatives not designated as hedging instruments:
Other derivatives:
Foreign currency forward contracts — liabilities		Accrued and other liabilities				$	(2,184	)		$	(344	)
Foreign currency forward contracts — assets		Other current assets				$	1,547			$	453

METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
At June 30, 2010 — Unaudited (Continued)
(In thousands, except share data, unless otherwise stated)

     The fair value of these derivative instruments and their effects on the consolidated statement of operations before taxes for the three and six month periods ended June 30, 2010 are as follows:

Derivative Gain/(Loss)

Derivative Gain/(Loss)

Location of Derivative

Recognized in Earnings for

Recognized in Earnings for

Gain/(Loss) Recognized in

the three months ended

the six months ended

Earnings

June 30, 2010

June 30, 2010

Derivatives designated as hedging instruments:

Fair value hedges:

Interest rate swap agreement

Interest Expense

$

279

$

438

Derivatives not designated as hedging instruments:

Other derivatives:

Foreign currency forward contracts — liabilities

Other charges (income), net

$

(3,006

)

$

(4,613

)

Foreign currency forward contracts — assets

     The fair value of these derivative instruments and their effects on the consolidated statement of operations before taxes for the three and six month periods ended June 30, 2009 were as follows:

Derivative Gain/(Loss)

Derivative Gain/(Loss)

Location of Derivative

Recognized in Earnings for

Recognized in Earnings for

Gain/(Loss) Recognized in

the three months ended

the six months ended

Earnings

June 30, 2009

June 30, 2009

Derivatives designated as hedging instruments:

Fair value hedges:

Interest rate swap agreement

Interest Expense

$

(273

)

$

(411

)

Derivatives not designated as hedging instruments:

Other derivatives:

Foreign currency forward contracts — liabilities

Other charges (income), net

$

1,359

$

(432

)

Foreign currency forward contracts — assets

5. FAIR VALUE MEASUREMENTS

     At June 30, 2010 and December 31, 2009, the Company had derivative assets totaling $2.3 million and $6.3 million, respectively and derivative liabilities totaling $7.8 million and $1.1 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 determine whether such valuations are representative of an exit price in the Company’s principal

METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
At June 30, 2010 — Unaudited (Continued)
(In thousands, except share data, unless otherwise stated)

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 at June 30, 2010 and December 31, 2009.

     At June 30, 2010 and December 31, 2009, the Company had $14.5 million and $11.1 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 June 30, 2010 and December 31, 2009:

		June 30, 2010																December 31, 2009
		Total				Level 1				Level 2				Level 3				Total				Level 1				Level 2				Level 3
Assets:
Foreign currency forward contracts		$	1,925			$	—			$	1,925			$	—			$	2,019			$	—			$	2,019			$	—
Interest rate swap agreement			408				—				408				—				4,265				—				4,265				—
Cash equivalents			14,516				—				14,516				—				11,080				—				11,080				—
Total		$	16,849			$	—			$	16,849			$	—			$	17,364			$	—			$	17,364			$	—
Liabilities:
Foreign currency forward contracts		$	2,184			$	—			$	2,184			$	—			$	344			$	—			$	344			$	—
Interest rate swap agreements			5,636				—				5,636				—				733				—				733				—
Total		$	7,820			$	—			$	7,820			$	—			$	1,077			$	—			$	1,077			$	—

METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
At June 30, 2010 — Unaudited (Continued)
(In thousands, except share data, unless otherwise stated)

6. INCOME TAXES

     The provision for taxes is based upon the Company’s projected annual effective rate of 26% for the three and six month periods ended June 30, 2010.

     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 16% for the six month period ended June 30, 2009.

7. DEBT

     Debt consisted of the following at June 30, 2010:

		June 30, 2010
						Other Principal
						Trading
		U.S. Dollar				Currencies				Total
4.85% $75 million Senior Notes (net of unamortized discount)		$	75,401			$	—			$	75,401
6.30% $100 million Senior Notes			100,000				—				100,000
Credit facility			84,879				7,414				92,293
Other local arrangements			—				27,390				27,390
Total debt			260,280				34,804				295,084
Less: current portion			(75,401	)			(15,436	)			(90,837	)
Total long-term debt		$	184,879			$	19,368			$	204,247

     As of June 30, 2010, the Company had $852.3 million of availability remaining 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 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 of 2009, 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. These charges were recorded in interest expense in the consolidated statement of operations.

     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.

METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
At June 30, 2010 — Unaudited (Continued)
(In thousands, except share data, unless otherwise stated)

     The 6.30% Senior Notes 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 (but in an amount not less than 10% of the original aggregate principal amount), 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 in whole 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 not less than 3.5 to 1.0 and a consolidated leverage ratio of not more than 3.5 to 1.0. The agreement contains customary events of default with customary grace periods, as applicable. The Company was in compliance with these covenants at June 30, 2010.

     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 $0.7 million will be amortized to interest expense over the six-year term of the 6.30% Senior Notes.

8. 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 common shares. As of June 30, 2010, there were $337.8 million of remaining common 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 15.9 million shares since the inception of the program through June 30, 2010.

     The Company’s share repurchase program was suspended in October 2008 and re-started in December 2009. During the six months ended June 30, 2010, the Company spent $72.8 million on the repurchase of 662,999 shares at an average price per share of $109.78. The Company reissued 216,270 shares and 105,378 shares held in treasury for the exercise of stock options and restricted stock units during the six months ended June 30, 2010 and 2009, respectively. The Company also reissued 2,549 shares and 6,467 shares held in treasury during the six months ended June 30, 2010 and 2009, 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.

METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
At June 30, 2010 — Unaudited (Continued)
(In thousands, except share data, unless otherwise stated)

9. 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 six month periods ended June 30, solely relating to outstanding stock options and restricted stock units:

		2010				2009
Three months ended			859,382				502,416
Six months ended			817,637				433,724

     Outstanding options and restricted stock units to purchase or receive 517,328 and 1,146,315 shares of common stock for the three month periods ended June 30, 2010 and 2009, respectively, and options and restricted stock units to purchase or receive 620,226 and 1,269,456 shares of common stock for the six month periods ended June 30, 2010 and 2009, 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.

10. 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 June 30:

																		Other U.S.
		U.S. Pension Benefits								Non-U.S. Pension Benefits								Post-retirement Benefits
		2010				2009				2010				2009				2010				2009
Service cost, net		$	66			$	46			$	2,978			$	3,980			$	74			$	95
Interest cost on projected benefit obligations			1,610				1,696				5,339				5,301				190				280
Expected return on plan assets			(1,727	)			(1,710	)			(6,943	)			(6,612	)			—				—
Net amortization and deferral			—				—				(295	)			(242	)			(167	)			(239	)
Recognition of actuarial losses/(gains)			1,325				1,165				260				170				(184	)			(82	)
Recognition of settlement/curtailment losses, net			—				—				58				101				—				—
Net periodic pension cost/(credit)		$	1,274			$	1,197			$	1,397			$	2,698			$	(87	)		$	54

METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
At June 30, 2010 — Unaudited (Continued)
(In thousands, except share data, unless otherwise stated)

     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 six months ended June 30:

																		Other U.S.
		U.S. Pension Benefits								Non-U.S. Pension Benefits								Post-retirement Benefits
		2010				2009				2010				2009				2010				2009
Service cost, net		$	132			$	92			$	6,268			$	7,837			$	148			$	190
Interest cost on projected benefit obligations			3,220				3,392				10,971				10,419				379				560
Expected return on plan assets			(3,454	)			(3,420	)			(14,209	)			(12,957	)			—				—
Net amortization and deferral			—				—				(608	)			(479	)			(335	)			(478	)
Recognition of actuarial losses/(gains)			2,649				2,330				530				360				(368	)			(164	)
Recognition of settlement/curtailment losses, net			—				—				58				101				—				—
Net periodic pension cost/(credit)		$	2,547			$	2,394			$	3,010			$	5,281			$	(176	)		$	108

     As previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009, the Company expects to make employer contributions of approximately $17.6 million to its non-U.S. pension plans and employer contributions of approximately $1.5 million to its U.S. post-retirement medical plan during the year ended December 31, 2010. These estimates may change based upon several factors, including fluctuations in currency exchange rates, actual returns on plan assets and changes in legal requirements.

11. RESTRUCTURING CHARGES

     During the fourth quarter of 2008, the Company initiated a global cost reduction program. Charges under the program primarily comprise severance costs and will approximate $40 million. Through June 30, 2010 total charges recognized were $39.7 million, of which $1.9 million and $22.3 million were recorded during the six month periods ended June 30, 2010 and 2009, respectively. Under the program, the Company reduced its workforce (including employees and temporary personnel) by approximately 1,000.

     A rollforward of the Company’s accrual for restructuring activities for the six months ended June 30, 2010 is as follows:

		Employee				Lease
		Related				Termination				Other				Total
Balance at December 31, 2009		$	14,122			$	669			$	15			$	14,806
Restructuring charges			1,285				26				599				1,910
Cash payments			(5,752	)			(262	)			(612	)			(6,626	)
Impact of foreign currency			(1,149	)			—				—				(1,149	)
Balance at June 30, 2010		$	8,506			$	433			$	2			$	8,941

METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
At June 30, 2010 — Unaudited (Continued)
(In thousands, except share data, unless otherwise stated)

12. OTHER CHARGES (INCOME), NET

     Other charges (income), net consists primarily of interest income, (gains) losses from foreign currency transactions and other items.

13. SEGMENT REPORTING

     As disclosed in Note 17 to the Company’s consolidated financial statements for the year ending December 31, 2009, 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 and selling, general and administrative expenses, before amortization, interest expense, restructuring charges, other charges (income), net and taxes). 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
June 30, 2010		Customers				Segments				Sales				Profit				Goodwill (c)
U.S. Operations		$	156,051			$	14,899			$	170,950			$	31,617			$	318,883
Swiss Operations			26,619				79,440				106,059				20,709				17,800
Western European Operations			139,310				22,011				161,321				19,560				89,058
Chinese Operations			72,847				26,002				98,849				23,917				654
Other (a)			73,722				879				74,601				5,850				12,875
Eliminations and Corporate (b)			—				(143,231	)			(143,231	)			(21,735	)			—
Total		$	468,549			$	—			$	468,549			$	79,918			$	439,270

		Net Sales to				Net Sales to
For the six months ended		External				Other				Total Net				Segment
June 30, 2010		Customers				Segments				Sales				Profit
U.S. Operations		$	292,423			$	28,944			$	321,367			$	55,729
Swiss Operations			49,123				152,409				201,532				38,970
Western European Operations			276,068				41,654				317,722				34,632
Chinese Operations			127,598				46,822				174,420				38,753
Other (a)			139,988				1,677				141,665				9,375
Eliminations and Corporate (b)			—				(271,506	)			(271,506	)			(37,094	)
Total		$	885,200			$	—			$	885,200			$	140,365

METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
At June 30, 2010 — Unaudited (Continued)
(In thousands, except share data, unless otherwise stated)

		Net Sales to				Net Sales to
For the three months ended		External				Other				Total Net				Segment
June 30, 2009		Customers				Segments				Sales				Profit				Goodwill
U.S. Operations		$	135,799			$	10,245			$	146,044			$	25,521			$	309,071
Swiss Operations			23,878				65,516				89,394				18,556				17,860
Western European Operations			132,854				16,476				149,330				13,457				90,449
Chinese Operations			55,438				15,857				71,295				15,158				648
Other (a)			59,473				607				60,080				3,818				12,201
Eliminations and Corporate (b)			—				(108,701	)			(108,701	)			(14,839	)			—
Total		$	407,442			$	—			$	407,442			$	61,671			$	430,229

		Net Sales to				Net Sales to
For the six months ended		External				Other				Total Net				Segment
June 30, 2009		Customers				Segments				Sales				Profit
U.S. Operations		$	259,186			$	21,065			$	280,251			$	45,556
Swiss Operations			46,689				125,735				172,424				31,910
Western European Operations			260,491				33,107				293,598				24,830
Chinese Operations			99,829				30,599				130,428				25,091
Other (a)			115,326				1,133				116,459				6,537
Eliminations and Corporate (b)			—				(211,639	)			(211,639	)			(19,936	)
Total		$	781,521			$	—			$	781,521			$	113,988