10-Q 1 mtd-20220331.htm 10-Q mtd-20220331
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

(Mark One)
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2022, OR
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ____________ TO ________________
Commission File Number: 1-13595
Mettler Toledo International Inc
_______________________________________________________________________________________________________________________________________
(Exact name of registrant as specified in its charter)
Delaware13-3668641
(State or other jurisdiction of(I.R.S Employer Identification No.)
incorporation or organization)
1900 Polaris Parkway
Columbus, OH 43240
and
Im Langacher, P.O. Box MT-100
CH 8606 Greifensee, Swizterland
1-614-438-4511 and +41-44-944-22-11
________________________________________________________________________________
(Registrant's telephone number, including area code)

not applicable
______________________________________________________________________________________________________________________
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, $0.01 par valueMTDNew York Stock Exchange

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 No

Indicate by checkmark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 No     
        
Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer. Accelerated filer Non-accelerated filer Smaller reporting company Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

The Registrant had 22,680,305 shares of Common Stock outstanding at March 31, 2022.





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

PAGE



PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

METTLER-TOLEDO INTERNATIONAL INC.
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Three months ended March 31, 2022 and 2021
(In thousands, except share data)
(unaudited)

March 31,
2022
March 31,
2021
Net sales
Products
$706,615 $626,915 
Service
191,176 177,475 
Total net sales897,791 804,390 
Cost of sales
Products
289,089 245,270 
Service
89,117 87,424 
Gross profit519,585 471,696 
Research and development43,028 39,272 
Selling, general and administrative235,312 221,752 
Amortization16,604 13,884 
Interest expense11,338 9,471 
Restructuring charges4,011 1,193 
Other charges (income), net(3,709)710 
Earnings before taxes213,001 185,414 
Provision for taxes39,000 35,751 
Net earnings$174,001 $149,663 
Basic earnings per common share:
Net earnings$7.64 $6.41 
Weighted average number of common shares22,768,298 23,365,077 
Diluted earnings per common share:
Net earnings$7.55 $6.32 
Weighted average number of common and common equivalent shares23,040,231 23,685,665 
Total comprehensive income, net of tax (Note 9)$178,351 $172,844 


The accompanying notes are an integral part of these interim consolidated financial statements.
- 3 -

METTLER-TOLEDO INTERNATIONAL INC.
INTERIM CONSOLIDATED BALANCE SHEETS
As of March 31, 2022 and December 31, 2021
(In thousands, except share data)
(unaudited)
March 31,
2022
December 31,
2021
ASSETS
Current assets:  
Cash and cash equivalents$116,949 $98,564 
Trade accounts receivable, less allowances of $23,098 at March 31, 2022
and $22,176 at December 31, 2021617,880 647,335 
Inventories446,490 414,543 
Other current assets and prepaid expenses128,567 108,916 
Total current assets1,309,886 1,269,358 
Property, plant and equipment, net787,472 799,365 
Goodwill650,118 648,622 
Other intangible assets, net305,079 307,450 
Deferred tax assets, net38,920 39,496 
Other non-current assets264,708 262,507 
Total assets$3,356,183 $3,326,798 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:  
Trade accounts payable$259,352 $272,911 
Accrued and other liabilities214,558 208,811 
Accrued compensation and related items143,632 236,265 
Deferred revenue and customer prepayments215,680 192,648 
Taxes payable148,929 134,769 
Short-term borrowings and current maturities of long-term debt105,262 101,134 
Total current liabilities1,087,413 1,146,538 
Long-term debt1,766,832 1,580,808 
Deferred tax liabilities, net65,174 62,230 
Other non-current liabilities352,194 365,801 
Total liabilities3,271,613 3,155,377 
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 22,680,305 and 22,843,103 shares at March 31, 2022 and December 31, 2021, respectively448 448 
Additional paid-in capital831,503 825,974 
Treasury stock at cost (22,105,706 shares at March 31, 2022 and 21,942,908 shares at December 31, 2021)(6,527,380)(6,259,049)
Retained earnings6,030,873 5,859,272 
Accumulated other comprehensive loss(250,874)(255,224)
Total shareholders’ equity84,570 171,421 
Total liabilities and shareholders’ equity$3,356,183 $3,326,798 

The accompanying notes are an integral part of these interim consolidated financial statements.
- 4 -

METTLER-TOLEDO INTERNATIONAL INC.
INTERIM CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
Three months ended March 31, 2022 and 2021
(In thousands, except share data)
(unaudited)

 Additional Paid-in Capital  Accumulated Other Comprehensive Income (Loss) 
 Common StockTreasury StockRetained Earnings 
 SharesAmountTotal
Balance at December 31, 202023,471,841 $448 $805,140 $(5,283,584)$5,095,596 $(334,925)$282,675 
Exercise of stock options, restricted stock units and performance stock units22,388 — 1,239 4,682 (872) 5,049 
Repurchases of common stock(224,808)— — (262,500)— — (262,500)
Share-based compensation— — 4,575 — — — 4,575 
Net earnings— — — — 149,663 — 149,663 
Other comprehensive income (loss), net of tax— — — — — 23,181 23,181 
Balance at March 31, 202123,269,421 $448 $810,954 $(5,541,402)$5,244,387 $(311,744)$202,643 
Balance at December 31, 202122,843,103 $448 $825,974 $(6,259,049)$5,859,272 $(255,224)$171,421 
Exercise of stock options, restricted stock units and performance stock units
27,795 — 1,020 6,669 (2,400) 5,289 
Repurchases of common stock(190,593)— — (275,000)— — (275,000)
Share-based compensation
— — 4,509 — — — 4,509 
Net earnings— — — — 174,001 — 174,001 
Other comprehensive income (loss), net of tax— — — — — 4,350 4,350 
Balance at March 31, 202222,680,305 $448 $831,503 $(6,527,380)$6,030,873 $(250,874)$84,570 


The accompanying notes are an integral part of these interim consolidated financial statements.
- 5 -

METTLER-TOLEDO INTERNATIONAL INC.
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended March 31, 2022 and 2021
(In thousands)
(unaudited)

March 31,
2022
March 31,
2021
Cash flows from operating activities:  
Net earnings$174,001 $149,663 
Adjustments to reconcile net earnings to net cash provided by operating activities: 
Depreciation11,880 10,943 
Amortization16,604 13,884 
Deferred tax benefit(1,096)(5,068)
Share-based compensation4,509 4,575 
Increase (decrease) in cash resulting from changes in: 
Trade accounts receivable, net23,293 12,232 
Inventories(37,643)(28,029)
Other current assets(15,031)(4,175)
Trade accounts payable(15,396)15,543 
Taxes payable16,308 15,411 
Accruals and other(86,592)(26,102)
Net cash provided by operating activities90,837 158,877 
Cash flows from investing activities:  
Purchase of property, plant and equipment(19,151)(24,605)
Proceeds from government funding18,000 — 
Acquisitions
(9,704)(185,074)
Other investing activities3,743 18,226 
Net cash used in investing activities(7,112)(191,453)
Cash flows from financing activities:  
Proceeds from borrowings684,037 827,991 
Repayments of borrowings(478,479)(523,146)
Proceeds from stock option exercises5,289 5,049 
Repurchases of common stock(275,000)(262,500)
Other financing activities(332)(714)
Net cash (used in) provided by financing activities(64,485)46,680 
Effect of exchange rate changes on cash and cash equivalents(855)(1,704)
Net increase in cash and cash equivalents18,385 12,400 
Cash and cash equivalents: 
Beginning of period98,564 94,254 
End of period$116,949 $106,654 


The accompanying notes are an integral part of these interim consolidated financial statements.
- 6 -

METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS – 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 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, 2021.
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 months ended March 31, 2022 are not necessarily indicative of the results to be expected for the full year ending December 31, 2022.
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. These financial statements were prepared using information reasonably available as of March 31, 2022 and through the date of this Report. Actual results may differ from those estimates due to uncertainty relating to the COVID-19 pandemic, the invasion of Ukraine, as well as other factors.
All intercompany transactions and balances have been eliminated.

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 expected credit losses represents the Company's best estimate based on historical information, current information, and reasonable and supportable forecasts of future events and circumstances.
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 the Company’s 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.
- 7 -

METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS – Unaudited
(In thousands, except share data, unless otherwise stated)

Inventories consisted of the following:
March 31,
2022
December 31,
2021
Raw materials and parts$199,933 $184,624 
Work-in-progress84,081 76,019 
Finished goods162,476 153,900 
 $446,490 $414,543 
Goodwill and Other Intangible Assets
Goodwill, representing the excess of purchase price over the net asset value of companies acquired, and indefinite-lived intangible assets are not amortized, but are reviewed for impairment annually in the fourth quarter, or more frequently if events or changes in circumstances indicate that an asset might be impaired. The annual evaluation for goodwill and indefinite-lived intangible assets are generally based on an assessment of qualitative factors to determine whether it is more likely than not that the fair value of the asset is less than its carrying amount.
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.”
    Other intangible assets consisted of the following:
 March 31, 2022December 31, 2021
Gross
Amount
Accumulated
Amortization
Intangibles, NetGross
Amount
Accumulated
Amortization
Intangibles, Net
Customer relationships$285,764 $(82,997)$202,767 $282,470 $(79,782)$202,688 
Proven technology and patents112,613 (57,775)54,838 115,680 (56,305)59,375 
Trade name (finite life)7,425 (2,927)4,498 8,206 (3,731)4,475 
Trade name (indefinite life)35,903 — 35,903 35,949 — 35,949 
Other13,056 (5,983)7,073 10,641 (5,678)4,963 
 $454,761 $(149,682)$305,079 $452,946 $(145,496)$307,450 
The Company recognized amortization expense associated with the above intangible assets of $6.8 million and $4.1 million for the three months ended March 31, 2022 and 2021, respectively. The annual aggregate amortization expense based on the current balance of other intangible assets is estimated at $26.3 million for 2022, $25.3 million for 2023, $23.1 million for 2024, $22.2 million for 2025, $20.0 million for 2026 and $18.6 million for 2027. Purchased intangible amortization was $6.6 million, $5.1 million after tax, and $3.8 million, $2.9 million after tax, for the three months ended March 31, 2022 and 2021, respectively.
In addition to the above amortization, the Company recorded amortization expense associated with capitalized software of $9.7 million and $9.8 million for the three months ended March 31, 2022 and 2021, respectively.
Revenue Recognition
Product revenue is recognized from contracts with customers when a customer has obtained control of a product. The Company considers control to have transferred based upon shipping terms. To the extent the Company’s arrangements have a separate performance obligation, revenue related to any
- 8 -

METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS – Unaudited
(In thousands, except share data, unless otherwise stated)

post-shipment performance obligation is deferred until completed. Shipping and handling costs charged to customers are included in total net sales and the associated expense is a component of cost of sales. Certain products are also sold through indirect distribution channels whereby the distributor assumes any further obligations to the end customer. Revenue is recognized on these distributor arrangements upon transfer of control to the distributor. Contracts do not contain variable pricing arrangements that are retrospective, except for rebate programs. Rebates are estimated based on expected sales volumes and offset against revenue at the time such revenue is recognized. 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. The related provisions for estimated returns and rebates are immaterial to the consolidated financial statements.
Certain of the Company’s product arrangements include separate performance obligations, primarily related to installation. Such performance obligations are accounted for separately when the deliverables have stand-alone value and the satisfaction of the undelivered performance obligations is probable and within the Company's control. The allocation of revenue between the performance obligations is based on the observable stand-alone selling prices at the time of the sale in accordance with a number of factors including service technician billing rates, time to install, and geographic location.
Software is generally not considered a distinct performance obligation with the exception of a few small software applications. The Company generally does not sell software products without the related hardware instrument as the software is embedded in the product. 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.
Service revenue not under contract is recognized upon the completion of the service performed. Revenue from spare parts sold on a stand-alone basis is recognized when control is transferred to the customer, which is generally at the time of shipment or delivery. Revenue from service contracts is recognized ratably over the contract period using a time-based method. 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.
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 statements of operations and comprehensive income with a corresponding offset to additional paid-in capital in the consolidated balance sheet. The Company recorded $4.5 million and $4.6 million of share-based compensation expense for the three months ended March 31, 2022 and 2021, respectively.
Research and Development
Research and development costs primarily consist of salaries, consulting and other costs. The Company expenses these costs as incurred.

- 9 -

METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS – Unaudited
(In thousands, except share data, unless otherwise stated)

Business Combinations and Asset Acquisitions
The Company accounts for business acquisitions under the accounting standards for business combinations utilizing the acquisition method of accounting. The results of each acquisition are included in the Company's consolidated results as of the acquisition date. The purchase price of an acquisition is allocated to tangible and intangible assets and assumed liabilities based on their estimated fair values and any consideration in excess of the net assets acquired is recognized as goodwill. The determination of the values of the acquired assets and assumed liabilities, including goodwill and intangible assets, require significant judgement. Acquisition transaction costs are expensed when incurred.
In circumstances where an acquisition involves a contingent consideration arrangement, the Company recognizes a liability equal to the fair value of the expected contingent payments as of the acquisition date. Subsequent changes in the fair value of the contingent consideration are recorded to other charges (income), net.
Recent Accounting Pronouncements
In March 2020 and January 2021, the FASB issued ASU 2020-04 and ASU 2021-01: Reference Rate Reform, which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by the discontinuance of LIBOR or another referenced rate. The guidance may be applied to any applicable contract entered into before December 31, 2022. The Company's interest rate and cross currency swaps, as mentioned in Note 4 to the consolidated financial statements, are governed by International Swaps and Derivatives Association (ISDA) agreements, and the Company will adhere to the ISDA's fallback protocol when LIBOR is discontinued. In addition, the Company renewed the LIBOR-based credit agreement, as discussed further in Note 10 of the Annual Report Form 10-K, which includes a fallback protocol when LIBOR is discontinued. Based on these procedures, when LIBOR is discontinued, the interest rate and cross currency swaps will not require de-designation if certain criteria are met. The Company expects the financial impact of the rate change when LIBOR is discontinued to be immaterial to its financial statements.

3.REVENUE
The Company disaggregates revenue from contracts with customers by product, service, timing of revenue recognition, and geography. A summary by the Company’s reportable segments follows:
Three months ended March 31, 2022U.S. OperationsSwiss OperationsWestern European OperationsChinese OperationsOther OperationsTotal
Product Revenue$248,807 $33,910 $138,009 $167,989 $117,900 $706,615 
Service Revenue:
Point in time
60,154 7,168 36,223 10,327 28,600 142,472 
Over time
16,860 2,192 18,654 4,390 6,608 48,704 
Total$325,821 $43,270 $192,886 $182,706 $153,108 $897,791 
Three months ended March 31, 2021U.S. OperationsSwiss OperationsWestern European OperationsChinese OperationsOther OperationsTotal
Product Revenue$205,191 $30,167 $136,899 $143,325 $111,333 $626,915 
Service Revenue:
Point in time
51,591 6,891 35,630 9,342 27,877 131,331 
Over time
15,177 2,223 19,821 3,407 5,516 46,144 
Total$271,959 $39,281 $192,350 $156,074 $144,726 $804,390 
- 10 -

METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS – Unaudited
(In thousands, except share data, unless otherwise stated)

    A breakdown of net sales to external customers by geographic customer destination for the three months ended March 31 follows:
20222021
Americas$352,689 $303,339 
Europe249,784 241,377 
Asia / Rest of World295,318 259,674 
Total$897,791 $804,390 
The Company's global revenue mix by product category is laboratory (57% of sales), industrial (38% of sales) and retail (5% of sales). The Company's product revenue by reportable segment is proportionately similar to the Company's global mix except the Company's Swiss Operations is largely comprised of laboratory products, while the Company's Chinese Operations has a slightly higher percentage of industrial products. A breakdown of the Company’s sales by product category for the three months ended March 31 follows:
20222021
Laboratory$513,550 $444,627 
Industrial343,738 310,777 
Retail40,503 48,986 
Total$897,791 $804,390 
The payment terms in the Company’s contracts with customers do not exceed one year and therefore contracts do not contain a significant financing component. In most cases, after appropriate credit evaluations, payments are due in arrears and are recognized as receivables. Unbilled revenue is recorded when performance obligations have been satisfied, but not yet billed to the customer. Unbilled revenue as of March 31, 2022 and December 31, 2021 was $33.9 million and $32.1 million, respectively, and is included within accounts receivable. Deferred revenue and customer prepayments are recorded when cash payments are received or due in advance of the performance obligation being satisfied. Deferred revenue primarily includes prepaid service contracts, as well as deferred installation.
Changes in the components of deferred revenue and customer prepayments during the periods ended March 31, 2022 and 2021 are as follows:
20222021
Beginning balances as of January 1$192,648 $149,106 
Customer pre-payments/deferred revenue182,539 162,765 
Revenue recognized(156,141)(127,985)
Foreign currency translation(3,366)(3,556)
Ending balance as of March 31$215,680 $180,330 
The Company generally expenses sales commissions when incurred because the contract period is one year or less. These costs are recorded within selling, general, and administrative expenses. The Company has not disclosed the value of unsatisfied performance obligations other than customer pre-payments and deferred revenue above as most contracts have an expected length of one year or less and amounts greater than one year are immaterial.

4.     FINANCIAL INSTRUMENTS
The Company has limited involvement with derivative financial instruments and does not use them for trading purposes. The Company enters into certain interest rate swap agreements in order to manage its
- 11 -

METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS – Unaudited
(In thousands, except share data, unless otherwise stated)

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. For additional disclosures on derivative instruments regarding balance sheet location, fair value, and the amounts reclassified into other comprehensive income and the effective portions of the cash flow hedges, also see Notes 5 and 9 to the interim consolidated financial statements. As also mentioned in Note 7, the Company has designated its euro-denominated debt as a hedge of a portion of its net investment in euro-denominated foreign subsidiary.
Cash Flow Hedges
In November 2021, the Company entered into a cross currency swap arrangement designated as a cash flow hedge. The agreement converts $50 million of borrowings under the Company's credit facility into synthetic Swiss franc debt, which allows the Company to effectively change the floating rate LIBOR-based interest payments, excluding the credit spread, to a fixed Swiss franc income of 0.64%. The swap matures in November 2023.
In June 2021, the Company entered into a cross currency swap arrangement designated as a cash flow hedge. The agreement converts $50 million of borrowings under the Company's credit facility into synthetic Swiss franc debt, which allows the Company to effectively change the floating rate LIBOR-based interest payments, excluding the credit spread, to a fixed Swiss franc income of 0.57%. The swap matures in June 2025. This cross currency swap replaced a similar $50 million swap entered into in June 2019 which matured in June 2021, which converted floating rate LIBOR to a fixed Swiss franc income of 0.95%.
In June 2021, the Company entered into a cross currency swap arrangement designated as a cash flow hedge. The agreement converts $50 million of borrowings under the Company's credit facility into synthetic Swiss franc debt, which allows the Company to effectively change the floating rate LIBOR-based interest payments, excluding the credit spread, to a fixed Swiss franc income of 0.66%. The swap matures in June 2024. This cross currency swap replaced a similar $50 million swap entered into in February 2019 and matured in June 2021, which converted floating rate LIBOR to a fixed Swiss franc income of 0.78%.
In June 2019, the Company entered into a cross currency swap arrangement designated as a cash flow hedge. The agreement converts $50 million of borrowings under the Company's credit facility into synthetic Swiss franc debt, which allows the Company to effectively change the floating rate LIBOR-based interest payments, excluding the credit spread, to a fixed Swiss franc income of 0.82%. The swap began in June 2019 and matures in June 2023.
In 2015, the Company entered into an interest rate swap agreement designated as a cash flow hedge. The agreement is a swap which has the effect of changing the floating rate LIBOR-based interest payments associated with $100 million in borrowings under the Company's credit agreement to a fixed obligation of 2.25%. The swap began in February 2017 and matured in February 2022.
The Company's cash flow hedges are recorded gross at fair value in the consolidated balance sheet at March 31, 2022 and December 31, 2021, respectively. A derivative gain of $4.0 million based upon interest rates at March 31, 2022, is expected to be reclassified from other comprehensive income (loss) to earnings in the next twelve months. The cash flow hedges remain effective as of March 31, 2022.
Other Derivatives
The Company enters into foreign currency forward contracts in order to economically hedge short-term trade and non-trade intercompany balances largely denominated in Swiss franc, other major European currencies, and the Chinese renminbi with its foreign businesses. In accordance with U.S. GAAP, these contracts are considered “derivatives not designated as hedging instruments.” Gains or losses on these instruments are reported in current earnings. The foreign currency forward contracts are recorded at fair value in the consolidated balance sheet at March 31, 2022 and December 31, 2021, as
- 12 -

METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS – Unaudited
(In thousands, except share data, unless otherwise stated)

disclosed in Note 5. The Company recognized in other charges (income) a net gain of $1.5 million and net gain of $12.5 million during the three months ended March 31, 2022 and 2021, respectively, which offset the related transaction gains (losses) associated with these contracts. At March 31, 2022 and December 31, 2021, these contracts had a notional value of $948.6 million and $1.0 billion, respectively.
    
5.    FAIR VALUE MEASUREMENTS
At March 31, 2022 and December 31, 2021, the Company had derivative assets totaling $8.3 million and $6.0 million, respectively, and derivative liabilities totaling $5.9 million and $10.3 million, respectively. The Company has limited involvement with derivative financial instruments and therefore does not present all the required disclosures in tabular format. The fair values of the interest rate swap agreements, the cross currency swap agreements, and the 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 market. In addition, the Company uses an internally developed model to perform testing on the valuations received from brokers. 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 March 31, 2022 and December 31, 2021.
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 the Company’s assets and liabilities, which are all categorized as Level 2 and are measured at fair value on a recurring basis at March 31, 2022 and December 31, 2021. The Company does not have any assets or liabilities which are categorized as Level 1.
 March 31, 2022December 31, 2021Balance Sheet Location
Foreign currency forward contracts not designated as hedging instruments$3,320 $3,927 Other current assets and prepaid expenses
Cash flow hedges:
Cross currency swap agreements 4,9472,119 Other non-current assets
Total derivative assets$8,267 $6,046 
Foreign currency forward contracts not designated as hedging instruments$2,113 $4,510 Accrued and other liabilities
Cash Flow Hedges:
Interest rate swap agreements 352 Accrued and other liabilities
Cross currency swap agreements3,825 5,482 Other non-current liabilities
Total derivative liabilities$5,938 $10,344 
- 13 -

METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS – Unaudited
(In thousands, except share data, unless otherwise stated)

The Company had $18.8 million and $18.5 million of cash equivalents at March 31, 2022 and December 31, 2021, respectively, the fair value of which is determined using Level 2 inputs, through quoted and corroborated prices in active markets. The fair value of cash equivalents approximates cost.
The fair value of the Company's debt exceeds the carrying value by approximately $67.3 million as of March 31, 2022. The fair value of the Company's fixed interest rate debt was estimated using Level 2 inputs, primarily utilizing discounted cash flow models based on estimated current rates offered for similar debt under current market conditions for the Company.
The Company has a contingent consideration obligation relating to the PendoTECH acquisition of $20.0 million based upon actual results and future financial projections as of March 31, 2022 and December 31, 2021. The fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement.

6.     INCOME TAXES
The Company's reported tax rate was 18.3% and 19.3% during the three months ended March 31, 2022 and 2021, respectively. The provision for taxes is based upon using the Company's projected annual effective tax rate of 19% and 19.5% before non-recurring discrete tax items during 2022 and 2021, respectively. The difference between the Company's projected annual effective tax rate and the reported tax rate is related to the timing of excess tax benefits associated with stock option exercises.

7.     DEBT
    Debt consisted of the following at March 31, 2022:
U.S. DollarOther Principal
Trading
Currencies
Total
3.67% $50 million ten-year Senior Notes due December 17, 2022$50,000 $ $50,000 
4.10% $50 million ten-year Senior Notes due September 19, 202350,000  50,000 
3.84% $125 million ten-year Senior Notes due September 19, 2024125,000  125,000 
4.24% $125 million ten-year Senior Notes due June 25, 2025125,000  125,000 
3.91% $75 million ten-year Senior Notes due June 25, 202975,000  75,000 
2.83% $125 million twelve-year Senior Notes due July 22. 2033125,000 — 125,000 
3.19% $50 million fifteen-year Senior Notes due January 24, 203550,000  50,000 
2.81% $150 million fifteen-year Senior Note due March 17, 2037150,000 — 150,000 
1.47% Euro 125 million fifteen-year Senior Notes due June 17, 2030 138,120 138,120 
1.30% Euro 135 million fifteen-year Senior Notes due November 6, 2034 149,170 149,170 
1.06% Euro 125 million fifteen-year Senior Notes due March 19, 2036 138,120 138,120 
Senior notes debt issuance costs, net(2,426)(1,586)(4,012)
Total Senior Notes
747,574 423,824 1,171,398 
$1.25 billion Credit Agreement, interest at LIBOR plus 87.5 basis points540,346 102,002 642,348 
Other local arrangements3,311 55,037 58,348 
Total debt1,291,231 580,863 1,872,094 
Less: current portion(50,356)(54,906)(105,262)
Total long-term debt$1,240,875 $525,957 $1,766,832 

- 14 -

METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS – Unaudited
(In thousands, except share data, unless otherwise stated)

As of March 31, 2022, the Company had $601.7 million of additional borrowings available under its Credit Agreement, and the Company maintained $116.9 million of cash and cash equivalents.     
In December 2021, the Company entered into an agreement to issue and sell $300 million 15-year Senior Notes in a private placement. The Company issued $150 million with a fixed interest rate of 2.81% (2.81% Senior Notes) in March 2022 and will issue $150 million with a fixed interest rate of 2.91% (2.91% Senior Notes) in September 2022. The Senior Notes will be senior unsecured obligations of the Company. The 2.81% Senior Notes mature in March 2037 and the 2.91% Senior Notes mature in September 2037. Interest on the 2.81% and 2.91% Senior Notes will be payable semi-annually in March and September each year. Interest on the 2.81% Senior Notes will begin in September 2022 and interest on the 2.91% will begin in March 2023. The terms of the Senior Notes are consistent with the previous Senior Notes as described in the Company's Annual Report Form 10-K. The Company will use the proceeds from the sale of the notes to refinance existing indebtedness and for other general corporate purposes.
    The Company has designated the EUR 125 million 1.47% Euro Senior Notes, the EUR 135 million 1.30% Euro Senior Notes, and the EUR 125 million 1.06% Euro Senior Notes as a hedge of a portion of its net investment in a euro denominated foreign subsidiary to reduce foreign currency risk associated with this net investment. Changes in the carrying value of this debt resulting from fluctuations in the euro to U.S. dollar exchange rate are recorded as foreign currency translation adjustments within other comprehensive income (loss). The Company recorded in other comprehensive income (loss) related to this net investment hedge an unrealized gain of $11.3 million and $17.6 million for the three months ended March 31, 2022 and 2021, respectively. The Company has a gain of $16.8 million recorded in accumulated other comprehensive income (loss) as of March 31, 2022.
Other Local Arrangements
    In 2018, two of the Company's non-U.S. pension plans issued loans totaling $39.6 million (Swiss franc $38 million) to a wholly owned subsidiary of the Company. The loans have the same terms and conditions which include an interest rate of SARON plus 87.5 basis points. The loans were renewed for one year in April 2022.

8.     SHARE REPURCHASE PROGRAM AND TREASURY STOCK
The Company has $1.8 billion of remaining availability for its share repurchase program as of March 31, 2022. The share repurchases are expected to be funded from cash generated from operating activities, borrowings, and cash balances. Repurchases will be made through open market transactions, and the amount and timing of purchases will depend on business and market conditions, the stock price, trading restrictions, the level of acquisition activity, and other factors.
The Company has purchased 30.4 million common shares since the inception of the program in 2004 through March 31, 2022. During the three months ended March 31, 2022 and 2021, the Company spent $275.0 million and $262.5 million on the repurchase of 190,593 shares and 224,808 shares at an average price per share of $1,442.84 and $1,167.64, respectively. The Company reissued 27,795 shares and 22,388 shares held in treasury for the exercise of stock options and restricted stock units during the three months ended March 31, 2022 and 2021, respectively.


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METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS – Unaudited
(In thousands, except share data, unless otherwise stated)

9.    ACCUMULATED COMPREHENSIVE AND OTHER COMPREHENSIVE INCOME
    Comprehensive income (loss), net of tax consisted of the following:
March 31,
2022
March 31, 2021
Net earnings$174,001 $149,663 
Other comprehensive income (loss), net of tax4,350 $23,181 
Comprehensive income, net of tax$178,351 $172,844 
The following table presents changes in accumulated other comprehensive income (loss) by component for the periods ended March 31, 2022 and 2021:
Currency Translation AdjustmentNet Unrealized
Gain (Loss) on
Cash Flow Hedging Arrangements,
Net of Tax
Pension and Post-Retirement Benefit Related Items,
Net of Tax
Total
Balance at December 31, 2021$(19,566)$2 $(235,660)$(255,224)
Other comprehensive income (loss), net of tax:
Unrealized gains (losses) cash flow hedging arrangements
— 3,961 — 3,961 
Foreign currency translation adjustment
5,342 — (4,779)563 
Amounts recognized from accumulated other comprehensive income (loss), net of tax
— (3,623)3,449 (174)
Net change in other comprehensive income (loss), net of tax
5,342 338 (1,330)4,350 
Balance at March 31, 2022$(14,224)$340 $(236,990)$(250,874)
Currency Translation AdjustmentNet Unrealized
Gain (Loss) on
Cash Flow Hedging Arrangements,
Net of Tax
Pension and Post-Retirement Benefit Related Items,
Net of Tax
Total
Balance at December 31, 2020$(31,101)$(1,479)$(302,345)$(334,925)
Other comprehensive income (loss), net of tax:
Unrealized gains (losses) cash flow hedging arrangements
— 8,274 — 8,274 
Foreign currency translation adjustment
3,234 — 13,988 17,222 
Amounts recognized from accumulated other comprehensive income (loss), net of tax
— (7,467)5,152 (2,315)
Net change in other comprehensive income (loss), net of tax
3,234 807 19,140 23,181 
Balance at March 31, 2021$(27,867)$(672)$(283,205)$(311,744)

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METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS – Unaudited
(In thousands, except share data, unless otherwise stated)

    The following table presents amounts recognized from accumulated other comprehensive income (loss) for the three months ended March 31:
20222021Location of Amounts Recognized in Earnings
Effective portion of (gains) losses on cash flow hedging arrangements:
Interest rate swap agreements
$352 $531 Interest expense
Cross currency swap
(4,797)(9,708)(a)
Total before taxes(4,445)(9,177)
Provision for taxes(822)(1,710)Provision for taxes
Total, net of taxes$(3,623)$(7,467)
Recognition of defined benefit pension and post-retirement items:
Recognition of actuarial (gains) losses, plan amendments and prior service cost, before taxes
$4,393 $6,529 (b)
Provision for taxes944 1,377 Provision for taxes
Total, net of taxes$3,449 $5,152 
(a)The cross currency swap reflects an unrealized gain of $4.4 million recorded in other charges (income) that was offset by the underlying unrealized loss in the hedged debt for the three months ended March 31, 2022. The cross currency swap also reflects a realized gain of $0.4 million recorded in interest expense for the three months ended March 31, 2022.
(b)These accumulated other comprehensive income (loss) components are included in the computation of net periodic pension and post-retirement cost. See Note 12 for additional details for the three months ended March 31, 2022 and 2021.


10.     EARNINGS PER COMMON SHARE
In accordance with the treasury stock method, the Company has included 271,933 and 320,588 common equivalent shares in the calculation of diluted weighted average number of common shares outstanding for the three months ended March 31, 2022 and 2021, respectively, relating to outstanding stock options and restricted stock units.
Outstanding options and restricted stock units to purchase or receive 29,296 and 20,960 shares of common stock for the three months ended March 31, 2022 and 2021, 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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METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS – Unaudited
(In thousands, except share data, unless otherwise stated)

11.     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 March 31:
 U.S. Pension BenefitsNon-U.S. Pension BenefitsOther U.S. Post-retirement BenefitsTotal
 20222021202220212022202120222021
Service cost, net$416 $374 $4,990 $4,945 $ $ $5,406 $5,319 
Interest cost on projected benefit obligations
674 548 1,558 850 3 2 2,235 1,400 
Expected return on plan assets
(1,547)(1,494)(9,424)(8,972)  (10,971)(10,466)
Recognition of prior service cost  (1,095)(471)  (1,095)(471)
Recognition of actuarial losses/(gains)584 729 4,930 6,299 (26)(28)5,488 7,000 
Net periodic pension cost/(credit)$127 $157 $959 $2,651 $(23)$(26)$1,063 $2,782 
As previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, the Company expects to make employer contributions of approximately $28.2 million to its non-U.S. pension plan and employer contributions of approximately $0.1 million to its U.S. post-retirement medical plan during the year ended December 31, 2022. These estimates may change based upon several factors, including fluctuations in currency exchange rates, actual returns on plan assets and changes in legal requirements.

12.    OTHER CHARGES (INCOME), NET
Other charges (income), net includes non-service pension costs (benefits), (gains) losses from foreign currency transactions and related hedging activities, interest income and other items. Non-service pension benefits for the three months ended March 31, 2022 and 2021 were $4.3 million and $2.5 million, respectively. Other charges (income), net also included $0.5 million and $2.8 million of acquisition costs for the three months ended March 31, 2022 and 2021, respectively.

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METTLER-TOLEDO INTERNATIONAL INC.
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS – Unaudited
(In thousands, except share data, unless otherwise stated)

13.     SEGMENT REPORTING
As disclosed in Note 18 to the Company's consolidated financial statements for the year ended December 31, 2021, 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 reportable segments:
Net Sales toNet Sales to
For the three months endedExternalOtherTotal NetSegment 
March 31, 2022CustomersSegmentsSalesProfitGoodwill
U.S. Operations$325,821 $39,573 $365,394 $75,186 $514,022 
Swiss Operations43,270