Item 16. Form 10-K Summary

None.

EXHIBIT INDEX


Exhibit
No.			Description
3.1			Amended and Restated Certificate of Incorporation of the Company(1)
3.2			Amended By-laws of the Company, effective as of November 3, 2016(2)
4.3*			Description of Capital Stock of Capital Stock
10.1			Credit Agreement among Mettler-Toledo International Inc., certain of its subsidiaries, JPMorgan Chase Bank, N.A., and certain other financial institutions, dated as of June 15, 2018(3)
10.11			Note Purchase Agreement dated as of October 10, 2012 by and among Mettler-Toledo International Inc., Massachusetts Mutual Life Insurance Company, C.M. Life Insurance Company, MassMutual Asia Limited, The Lincoln National Life Insurance Company, Lincoln Life & Annuity Company of New York , and Aviva Life and Annuity Company Royal Neighbors of America(4)
10.12			Note Purchase Supplement dated July 29, 2013 by and among Mettler-Toledo International Inc., Aviva Life and Annuity Company , and Teachers Insurance and Annuity Association of America to a Note Purchase Agreement dated October 10, 2012 by and among Mettler-Toledo International Inc., Massachusetts Mutual Life Insurance Company, C.M. Life Insurance Company, MassMutual Asia Limited, The Lincoln National Life Insurance Company, Lincoln Life & Annuity Company of New York, and Aviva Life and Annuity Company Royal Neighbors of America(5)
10.13			Note Purchase Agreement dated as of June 27, 2014 by and among Mettler-Toledo International Inc., Babson Capital Management LLC, Cigna Investments, Inc., and Teachers Insurance and Annuity Association of America(6)
10.14			Note Purchase Agreement dated as of March 31, 2015 by and among Mettler-Toledo International Inc., Metropolitan Life Insurance Company, MetLife Insurance Company USA, OMI MLIC Investments Limited, and Massachusetts Mutual Life Insurance Company(7)
10.15			Note Purchase Agreement dated as of April 18, 2019 by and among Mettler-Toledo International Inc., Connecticut General Life Insurance Company, Life Insurance Company of North America, Cigna Health and Life Insurance Company, MetLife Insurance K.K., Brighthouse Life Insurance Company, Brighthouse Reinsurance Company of Delaware, Transatlantic Reinsurance Company, and Pensionskasse des Bundes PUBLICA(8)
10.16			Note Purchase Agreement dated as of November 6, 2019 by and among Mettler-Toledo International Inc., Metlife Insurance K.K., Metropolitan Tower Life Insurance Company, Pensionskasse des Bundes PUBLICA, The Northwestern Mutual Life Insurance Company, The Prudential Insurance Company of America, Athene Annuity and Life Company, Athene Annuity & Life Assurance Company, and The Lincoln National Life Insurance Company(9)
10.17			Note Purchase Agreement dated as of December 16, 2020 by and among Mett ler-Toledo International Inc., Pruco Life Insurance Company , The Pr udential Insurance Company of America , American General Life Insurance C ompany, The United States Life Insurance Company in the Ci ty of New York, The Variable Annuity Life Insurance Company, Athene Annuity and Life Company, Jackson Nationa l Life Insurance Com pany , The Lincoln National Life Insurance Company, Lincol n Life & Annuity Company of New York, MetLife Insurance K.K., Metropolitan Life Insurance Company , and the Northwestern M utual Life Insurance Company (10)
10.21†			Mettler-Toledo International Inc. 2007 Share Plan, effective February 7, 2008(11)
10.22†			Mettler-Toledo International Inc. 2013 Equity Incentive Plan(12)
10.23†			Form of Restricted Stock Unit Agreement(13)
10.24†*			Form of Performance Share Unit Agreement
10.25†			Performance Stock Option Agreement(13)
10.26†			Form of Stock Option Agreement Directors(13)
10.27†			Form of Stock Option Agreement CEO(13)
10.28†			Form of Stock Option Agreement NEOs(13)
10.29†*			Non-Employee Director Share Award Agreement
10.31†			Regulations of the POBS PLUS — Incentive Scheme for Senior Management of Mettler Toledo, effective as of November, 2006(14)
10.32†			Regulations of the POBS PLUS — Incentive Scheme for Members of the Group Management of Mettler Toledo, effective as of January, 2009(14)
10.50†			Employment Agreement between Peter Aggersbjerg and Mettler-Toledo International Inc., dated as of November 8, 2019(15)
10.51†			Employment Agreement between Marc de La Guéronnière and Mettler-Toledo International Inc., dated as of January 27, 2011(16)
10.52†			Employment Agreement between Olivier Filliol and Mettler-Toledo International Inc., dated as of November 1, 2007(17)
10.53†			A mended Employment Agreement between Olivier Filliol and Metter-Toledo In ternational Inc., dated as of December 14, 2020(18)
10.54†			E mploy ment Agreement between Patrick Kaltenbach and Mett ler-Toledo International Inc., dated as o f December 14, 2020(18)
10.55†			Employment Agreement between Christian Magloth and Mettler-Toledo International Inc., dated as of March 22, 2010(16)
10.56†			Employment Agreement between Gerhard Keller and Mettler-Toledo International Inc., dated as of April 27, 2018(19)
10.57†			Employment Agreement between Shawn P. Vadala and Mettler-Toledo International Inc., dated as of October 24, 2016(13)

E-1

Table of Contents


Exhibit
No.			Description
10.58†			Form of Tax Equalization Agreement between Messrs. Filliol, Aggersbjerg, Keller, and Magloth and Mettler-Toledo International Inc., dated October 10, 2007(12)
21*			Subsidiaries of the Company
23.1*			Consent of PricewaterhouseCoopers LLP
31.1*			Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*			Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32*			Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*			XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH*			XBRL Taxonomy Extension Schema Document
101.CAL*			XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB*			XBRL Taxonomy Extension Label Linkbase Document
101.PRE*			XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF*			XBRL Taxonomy Extension Definition Linkbase Document
104*			Cover Page Interactive Data File (embedded within the Inline XBRL Document)

*(1)*Incorporated by reference to the Company’s Report on Form 10-K dated March 13, 1998

*(2)*Incorporated by reference to the Company’s Report on Form 8-K dated November 8, 2016

*(3)*Incorporated by reference to the Company’s Report on Form 8-K dated June 21, 2018

*(4)*Incorporated by reference to the Company’s Report on Form 8-K dated October 16, 2012

*(5)*Incorporated by reference to the Company’s Report on Form 8-K dated July 29, 2013

*(6)*Incorporated by reference to the Company’s Report on Form 8-K dated July 2, 2014

*(7)*Incorporated by reference to the Company’s Report on Form 8-K dated March 31, 2015

*(8)*Incorporated by reference to the Company’s Report on Form 8-K dated April 18, 2019

*(9)*Incorporated by reference to the Company’s Report on Form 8-K dated November 6, 2019

*(10)*Incorporated by reference to the Company’s Report on Form 8-K dated December 16, 2020

*(11)*Incorporated by reference to the Company’s Report on Form 10-K dated February 15, 2008

*(12)*Incorporated by reference to the Company’s Registration Statement on Form S-8 dated July 26, 2013 (Reg. No. 333-190181)

*(13)*Incorporated by reference to the Company’s Report on Form 10-K dated February 2, 2017

*(14)*Incorporated by reference to the Company’s Report on Form 10-K dated February 13, 2009

*(15)*Incorporated by reference to the Company’s Report on Form 10-K dated February 7, 2020

*(16)*Incorporated by reference to the Company’s Report on Form 10-K dated February 16, 2011

*(17)*Incorporated by reference to the Company’s Report on Form 8-K dated November 1, 2007

*(18)*Incorporated by reference to the Company’s Report on Form 8-K dated December 15, 2020

*(19)*Incorporated by reference to the Company’s Report on Form 10-Q dated July 27, 2018

** Filed herewith*

† Management contract or compensatory arrangement

E-2

Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Mettler-Toledo International Inc.

(Registrant)

Date: February 8, 2021


By:			/s/ Olivier A. Filliol
			Olivier A. Filliol
			President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Annual Report on Form 10-K has been signed below by the following persons on behalf of the registrant as of the date set out above and in the capacities indicated.


Signature						Title

/s/ Olivier A. Filliol						President and Chief Executive Officer
Olivier A. Filliol

/s/ Shawn P. Vadala						Chief Financial Officer
Shawn P. Vadala

/s/ Olivier A. Filliol						Director
Olivier A. Filliol

/s/ Wah-Hui Chu						Director
Wah-Hui Chu

/s/ Domitille Doat-Le Bigot						Director
Domitille Doat-Le Bigot

/s/ Elisha Finney						Director
Elisha Finney

/s/ Richard Francis						Director
Richard Francis

/s/ Michael A. Kelly						Director
Michael A. Kelly

/s/ Thomas P. Salice						Director
Thomas P. Salice

/s/ Robert F. Spoerry						Director
Robert F. Spoerry

E-3

METTLER-TOLEDO INTERNATIONAL INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


			Page
Report of Independent Registered Public Accounting Firm			F-2
Consolidated Statements of Operations for the years ended December 31, 2020, 2019, and 2018			F-5
Consolidated Statements of Comprehensive Income for the years ended December 31, 2020, 2019, and 2018			F-6
Consolidated Balance Sheets as of December 31, 2020 and 2019			F-7
Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2020, 2019, and 2018			F-8
Consolidated Statements of Cash Flows for the years ended December 31, 2020, 2019, and 2018			F-9
Notes to the Consolidated Financial Statements			F-10

F-1

Table of Contents

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Mettler-Toledo International Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Mettler-Toledo International Inc. and its subsidiaries (the “Company”) as of December 31, 2020 and 2019, and the related consolidated statements of operations, of comprehensive income, of shareholders’ equity and of cash flows for each of the three years in the period ended December 31, 2020, including the related notes, and the schedule of valuation and qualifying accounts for each of the three years in the period ended December 31, 2020 appearing on page S-1 (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Change in Accounting Principle

As discussed in Note 17 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2019.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

F-2

Table of Contents

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Valuation of Deferred Tax Assets

As described in Notes 2 and 14 to the consolidated financial statements, the Company recorded deferred tax assets of $210.4 million, net of a valuation allowance of $52.4 million, as of December 31, 2020. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities, their respective tax bases, and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates in the respective jurisdictions in which the Company operates. In assessing the ability to realize deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The valuation allowance is based on management’s estimates of future taxable income and application of relevant income tax law.

The principal considerations for our determination that performing procedures relating to the valuation of deferred tax assets is a critical audit matter are (i) the significant judgment by management when assessing the ability to realize deferred tax assets, particularly as it relates to estimates of future taxable income and application of income tax law in relevant foreign jurisdictions; (ii) the high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to management’s assessment of the realizability of deferred tax assets as it relates to estimates of future taxable income and application of relevant income tax law; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the valuation of deferred tax assets, including controls over estimates of future taxable income and application of relevant income tax law. These procedures also included, among others (i) evaluating management’s assessment of the realizability of deferred tax assets on a jurisdictional basis; (ii) evaluating management's estimates of future taxable income; (iii) evaluating management's application of relevant income tax law; and (iv) testing the completeness and accuracy of the underlying data used in management’s assessment.

F-3

Table of Contents

Evaluating management’s estimates of future taxable income involved evaluating whether the estimates were reasonable considering (i) the current and past performance of the respective entity and (ii) whether the estimates were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in evaluating the application of relevant income tax law.


/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP

Columbus, Ohio

February 8, 2021

We have served as the Company’s auditor since 2005.

F-4

Table of Contents

METTLER-TOLEDO INTERNATIONAL INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

For the years ended December 31

(In thousands, except share data)


	2020		2019		2018
Net sales
Products	$	2,405,172	$	2,346,845	$	2,300,075
Service	680,005		661,807		635,511
Total net sales	3,085,177		3,008,652		2,935,586
Cost of sales
Products	954,697		929,669		914,086
Service	329,449		337,772		337,122
Gross profit	1,801,031		1,741,211		1,684,378
Research and development	140,102		143,950		141,071
Selling, general, and administrative	820,221		819,183		812,802
Amortization	56,665		49,690		47,524
Interest expense	38,616		37,411		34,511
Restructuring charges	10,516		15,760		18,420
Other income, net	(13,832)		(6,177)		(21,808)
Earnings before taxes	748,743		681,394		651,858
Provision for taxes	146,004		120,285		139,247
Net earnings	$	602,739	$	561,109	$	512,611

Basic earnings per common share:
Net earnings	$	25.24	$	22.84	$	20.33
Weighted average number of common shares	23,882,648		24,567,609		25,215,674
Diluted earnings per common share:
Net earnings	$	24.91	$	22.47	$	19.88
Weighted average number of common and common equivalent shares	24,199,230		24,974,457		25,781,324

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

F-5

Table of Contents

METTLER-TOLEDO INTERNATIONAL INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the years ended December 31

(In thousands, except share data)


	2020		2019		2018

Net earnings	$	602,739	$	561,109	$	512,611

Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment	29,914		2,898		(32,573)
Unrealized gains (losses) on cash flow hedging arrangements:
Unrealized gains (losses)	(11,323)		(1,063)		(658)
Effective portion of (gains) losses included in net earnings	11,066		(861)		2,441
Defined benefit pension and post-retirement plans:
Net actuarial gains (losses)	(35,662)		(32,699)		(23,326)
Plan amendments and prior service cost	(93)		430		(780)
Amortization of actuarial (gains) losses and plan amendments and prior service cost	14,547		12,144		14,366
Impact of foreign currency	(19,701)		(2,108)		3,522
Total other comprehensive income (loss), net of tax	(11,252)		(21,259)		(37,008)

Comprehensive income	$	591,487	$	539,850	$	475,603

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

F-6

Table of Contents

METTLER-TOLEDO INTERNATIONAL INC.

CONSOLIDATED BALANCE SHEETS

As of December 31

(In thousands, except share data)


	2020		2019
ASSETS
Current assets:
Cash and cash equivalents	$	94,254	$	207,785
Trade accounts receivable, less allowances of $18,625 in 2020 and $17,009 in 2019	593,809		566,256
Inventories	297,611		274,285
Other current assets and prepaid expenses	71,230		61,321
Total current assets	1,056,904		1,109,647
Property, plant, and equipment, net	798,868		748,657
Goodwill	550,270		535,979
Other intangible assets, net	196,785		206,242
Deferred tax assets, net	41,836		36,978
Other non-current assets	169,886		151,818
Total assets	$	2,814,549	$	2,789,321
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Trade accounts payable	$	175,801	$	185,592
Accrued and other liabilities	196,834		166,118
Accrued compensation and related items	179,252		155,402
Deferred revenue and customer prepayments	149,106		122,489
Taxes payable	89,017		69,043
Short-term borrowings and current maturities of long-term debt	50,317		55,868
Total current liabilities	840,327		754,512
Long-term debt	1,284,174		1,235,350
Deferred tax liabilities, net	34,448		45,267
Other non-current liabilities	372,925		333,412
Total liabilities	2,531,874		2,368,541
Commitments and contingencies (Note 18)
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 23,471,841 and 24,125,317 shares at December 31, 2020 and 2019, respectively	448		448
Additional paid-in capital	805,140		783,871
Treasury stock at cost (21,314,170 and 20,660,694 shares at December 31, 2020 and 2019, respectively)	(5,283,584)		(4,539,154)
Retained earnings	5,095,596		4,499,288
Accumulated other comprehensive income (loss)	(334,925)		(323,673)
Total shareholders’ equity	282,675		420,780
Total liabilities and shareholders’ equity	$	2,814,549	$	2,789,321

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

F-7

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METTLER-TOLEDO INTERNATIONAL INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

For the years ended December 31

(In thousands, except share data)


	Common Stock			Additional Paid-In Capital		Treasury Stock		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total
	Shares	Amount
Balance at December 31, 2017	25,541,393	$	448	$	747,138	$	(3,368,182)	$	3,433,282	$	(265,406)	$	547,280
Exercise of stock options and restricted stock units	183,379	—		—		28,577		(3,977)		—		24,600
Repurchases of common stock	(802,809)	—		—		(474,999)		—		—		(474,999)
Share-based compensation	—	—		17,579		—		—		—		17,579
Net earnings	—	—		—		—		512,611		—		512,611
Other comprehensive income (loss), net of tax	—	—		—		—		—		(37,008)		(37,008)
Balance at December 31, 2018	24,921,963	$	448	$	764,717	$	(3,814,604)	$	3,941,916	$	(302,414)	$	590,063
Exercise of stock options and restricted stock units	298,002	—		869		50,449		(3,737)		—		47,581
Repurchases of common stock	(1,094,648)	—		—		(774,999)		—		—		(774,999)
Share-based compensation	—	—		18,285		—		—		—		18,285
Net earnings	—	—		—		—		561,109		—		561,109
Other comprehensive income (loss), net of tax	—	—		—		—		—		(21,259)		(21,259)
Balance at December 31, 2019	24,125,317	$	448	$	783,871	$	(4,539,154)	$	4,499,288	$	(323,673)	$	420,780
Exercise of stock options and restricted stock units	162,176	—		2,582		30,568		(6,431)		—		26,719
Repurchases of common stock	(815,652)	—		—		(774,998)		—		—		(774,998)
Share-based compensation	—	—		18,687		—		—		—		18,687
Net earnings	—	—		—		—		602,739		—		602,739
Other comprehensive income (loss), net of tax	—	—		—		—		—		(11,252)		(11,252)
Balance at December 31, 2020	23,471,841	$	448	$	805,140	$	(5,283,584)	$	5,095,596	$	(334,925)	$	282,675

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

F-8

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METTLER-TOLEDO INTERNATIONAL INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended December 31

(In thousands)


	2020		2019		2018
Cash flows from operating activities:
Net earnings	$	602,739	$	561,109	$	512,611
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation	42,044		38,991		37,167
Amortization	56,665		49,690		47,524
Deferred tax (benefit) provision	(12,784)		11,203		2,302
Share-based compensation	18,687		18,285		17,579
Swiss tax reform (Note 14)	—		(15,833)		—
U.S. tax reform (Note 14)	—		—		3,597
Acquisition gain (Note 16)	—		—		(18,674)
Other	(2,399)		133		(2,559)
Increase (decrease) in cash resulting from changes in:
Trade accounts receivable	(4,495)		(31,408)		(19,540)
Inventories	(3,836)		(4,603)		(21,195)
Other current assets	(4,763)		(335)		622
Trade accounts payable	(17,803)		(12,221)		33,671
Taxes payable	14,049		(6,176)		(1,528)
Accruals and other	36,595		(5,385)		(26,572)
Net cash provided by operating activities	724,699		603,450		565,005
Cash flows from investing activities:
Proceeds from sale of property, plant, and equipment	3,106		1,422		8,190
Purchase of property, plant, and equipment	(92,494)		(97,341)		(142,726)
Acquisitions	(6,242)		(2,004)		(5,527)
Net hedging settlements on intercompany loans	(4,730)		(1,160)		1,119
Net cash used in investing activities	(100,360)		(99,083)		(138,944)
Cash flows from financing activities:
Proceeds from borrowings	1,489,040		1,435,081		940,615
Repayments of borrowings	(1,483,869)		(1,176,784)		(876,324)
Proceeds from exercise of stock options	26,719		47,581		24,600
Repurchases of common stock	(774,998)		(774,999)		(474,999)
Acquisition contingent consideration paid	—		(10,000)		—
Other financing activities	(800)		1,753		(1,914)
Net cash used in financing activities	(743,908)		(477,368)		(388,022)
Effect of exchange rate changes on cash and cash equivalents	6,038		2,676		(8,616)
Net increase (decrease) in cash and cash equivalents	(113,531)		29,675		29,423
Cash and cash equivalents:
Beginning of period	207,785		178,110		148,687
End of period	$	94,254	$	207,785	$	178,110
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest	$	37,772	$	37,499	$	34,451
Taxes	$	134,674	$	129,347	$	132,410

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

F-9

METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(In thousands, except share data, unless otherwise stated)

**1.**BUSINESS DESCRIPTION AND 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, Switzerland, the United States, Germany, the United Kingdom, and Mexico. The Company’s principal executive offices are located in Columbus, Ohio and Greifensee, Switzerland.

The 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 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 due to uncertainty around the magnitude and duration of the COVID-19 pandemic, as well as other factors. 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 within this filing.

All intercompany transactions and balances have been eliminated.

**2.**SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents

Cash and cash equivalents include highly liquid investments with original maturity dates of three months or less. The carrying value of these cash equivalents approximates fair value.

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 current and historical 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, expected future 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.

F-10

METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(In thousands, except share data, unless otherwise stated)

Long-Lived Assets

*a)*Property, Plant, and Equipment

Property, plant, and equipment are stated at cost less accumulated depreciation. Repair and maintenance costs are charged to expense as incurred. The Company capitalizes certain direct costs related to the acquisition and development of internal-use computer software. Externally purchased software is capitalized when we obtain legal ownership and is amortized over its useful life ranging from three to five years. Internally developed software costs for internal use are capitalized once the preliminary project stage is complete and it is probable that the project will be completed and the software will be used to perform the function intended. Costs associated with internal-use software are amortized on a straight-line basis over 10 years. Fully depreciated assets other than capitalized internally developed software are retained in property, plant, and equipment and accumulated depreciation accounts until disposal.

Depreciation and amortization are charged on a straight-line basis over the estimated useful lives of the assets as follows:


Buildings and improvements			15 to 50 years
Machinery and equipment			3 to 12 years
Computer software			3 to 10 years
Leasehold improvements			Shorter of useful life or lease term

*b)*Goodwill and Other Intangible Assets

Goodwill, representing the excess of purchase price over the fair value of the net assets 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 evaluations of 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.

If the Company is unable to conclude whether the goodwill or indefinite-lived intangible asset is not impaired after considering the totality of events and circumstances during its qualitative assessment, the Company performs a quantitative assessment by estimating the fair value of the respective reporting unit or indefinite-lived intangible asset and comparing the fair value to the carrying amount. If the carrying amount of the reporting unit or indefinite-lived intangible asset exceeds its fair value, an impairment charge equal to the difference is recognized.

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 - Intangible - Goodwill and Other and ASC 360 - Property, Plant, and Equipment.

F-11

METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(In thousands, except share data, unless otherwise stated)

Accounting for Impairment of Long-Lived Assets

The Company assesses the need to record impairment losses on long-lived assets (asset group) with finite lives when events or changes in circumstances indicate that the carrying amount of assets may not be recoverable. An impairment loss would be recognized when future estimated undiscounted cash flows expected to result from use and eventually disposition of that asset (asset group) are less than the asset’s carrying value, with the loss measured as the difference between carrying value and estimated fair value.

Taxation

The Company files tax returns in each jurisdiction in which it operates. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities, their respective tax bases, and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates in the respective jurisdictions in which the Company operates. In assessing the ability to realize deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The valuation allowance is based on management’s estimates of future taxable income and application of relevant income tax law.

Deferred taxes are not provided on the unremitted earnings of subsidiaries outside of the United States when it is expected that these earnings are permanently reinvested. Such earnings may become taxable upon the sale or liquidation of these subsidiaries or upon the remittance of dividends. Deferred taxes are provided when the Company no longer considers subsidiary earnings to be permanently invested, such as in situations where the Company’s subsidiaries plan to make future dividend distributions.

In accordance with the Tax Cuts and Jobs Act, the Company treats taxes due on future Global Intangible Low-Taxed Income ("GILTI") inclusions in U.S. taxable income as a current period expense when incurred.

The Company recognizes accrued amounts of interest and penalties related to its uncertain tax positions as part of income tax expense within its consolidated statement of operations.

Currency Translation and Transactions

The reporting currency for the consolidated financial statements of the Company is the U.S. dollar. The functional currency for the Company’s operations is generally the applicable local currency. Accordingly, the assets and liabilities of companies whose functional currency is other than the U.S. dollar are included in the consolidated financial statements by translating the assets and liabilities into the reporting currency at the exchange rates applicable at the end of the reporting period. The statements of operations and cash flows of such non-U.S. dollar functional currency operations are translated at the monthly weighted average exchange rates during the year. Translation gains or losses are accumulated in other comprehensive income (loss) in the consolidated statements of shareholders’ equity. Transaction gains and losses are included as a component of net earnings or in certain circumstances as a component of other comprehensive income (loss) where the underlying item is considered a hedge of a net investment or relates to intercompany notes that are long term in nature.

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 contracts have a separate performance obligation, revenue related to any post-shipment

F-12

METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(In thousands, except share data, unless otherwise stated)

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 limited number of small software applications. The Company generally sells software products with 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.

Leases

The Company considers an arrangement a lease if the arrangement transfers the right to control the use of an identified asset in exchange for consideration. The Company has operating leases, but does not have material financing leases.

Operating lease right-of-use assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make payments arising from the lease agreement. These assets and liabilities are recognized at the commencement of the lease based upon the present value of the lease payments over the lease term. Lease payments include both lease and non-lease components for items or activities that transfer a good and service. Vehicle lease and non-lease components are separately accounted for based on stand-alone value. Real estate lease and non-lease components are accounted for as a single component. Operating lease right-of-use assets include initial direct costs, advanced lease payments, and lease incentives.

F-13

METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(In thousands, except share data, unless otherwise stated)

The lease term reflects the noncancellable period of the lease together with periods covered by an option to extend or terminate the lease when management is reasonably certain that it will exercise such option. The Company applies its incremental borrowing rate at the lease commencement date in determining the present value of lease payments as the information necessary to determine the rate implicit in the lease is not readily available. The incremental borrowing rate reflects similar terms by geographic location to the underlying leases. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Lease expense for operating leases is recognized on a straight-line basis over the lease term. Variable lease payments consist of non-lease services related to the lease. Variable lease payments are excluded from the right-of-use asset and lease liabilities and are expensed as incurred. Short-term leases are less than one year without purchase or renewal options that are reasonably certain to be exercised and are recognized on a straight-line basis over the lease term. The right-of-use asset is tested for impairment in accordance with ASC 360.

Research and Development

Research and development costs primarily consist of salaries, consulting, and other costs. The Company expenses these costs as incurred.

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.

Earnings per Common Share

In accordance with the treasury stock method, the Company has included 316,582, 406,848, and 565,650 common equivalent shares in the calculation of diluted weighted average number of common shares for the years ended December 31, 2020, 2019, and 2018, respectively, relating to outstanding stock options and restricted stock units.

Outstanding options and restricted stock units to purchase or receive 36,263, 71,660, and 63,019 shares of common stock for the years ended December 31, 2020, 2019, and 2018, 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.

Equity-Based Compensation

The Company applies the fair value methodology in accounting for its equity-based compensation plan.

F-14

METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(In thousands, except share data, unless otherwise stated)

Derivative Financial Instruments

The Company has limited involvement with derivative financial instruments and does not use them for trading purposes. As described more fully in Note 6, the Company primarily enters into foreign currency forward exchange contracts to economically hedge certain short-term intercompany balances involving its international businesses. Such contracts limit the Company’s exposure to currency fluctuations on the underlying hedged item. These contracts are adjusted to fair market value as of each balance sheet date, with the resulting changes in fair value being recognized in other charges (income), consistent with the underlying hedged item.

The Company also enters into interest rate swap agreements and cross currency swaps in order to manage its exposure to changes in interest rates. The differential paid or received on interest rate swap agreements is recognized as incurred in interest expense over the life of the hedge agreements. Floating to fixed interest rate swap agreements are accounted for as cash flow hedges. Changes in fair value of outstanding interest rate swap agreements that are effective as cash flow hedges are initially recognized in other comprehensive income as incurred.

Fair Value Measurements

The Company measures or monitors certain assets and liabilities on a fair value basis. Fair value is used on a recurring basis for assets and liabilities in which fair value is the primary basis of accounting, mainly derivative instruments. 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. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability. The Company applies the fair value hierarchy established under U.S. GAAP and when possible looks to active and observable markets to price identical assets and liabilities. If identical assets and liabilities are not traded in active markets, the Company looks to observable market data for similar assets and liabilities.

Business Combinations and Asset Acquisitions

The Company accounts for business acquisitions under the accounting standards for business combinations. 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. 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 June 2016, the FASB issued ASU 2016-13: Financial Instruments - Credit Losses. The ASU requires the allowance for doubtful accounts to be estimated based on an incurred loss model, which considers historical and forecasted conditions. The guidance became effective for the Company January 1, 2020 on a prospective basis and did not have an impact on the consolidated financial statements.

F-15

METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(In thousands, except share data, unless otherwise stated)

In August 2018, the FASB issued ASU 2018-14: Compensation - Retirement Benefit which amends the current disclosure requirements for defined benefit pension plans and other post-retirement plans. The change in the disclosures has been applied retrospectively and became effective for fiscal years ending after December 15, 2020. The adoption of this guidance did not have a material impact and is disclosed in Note 13 to the consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15: Internal-Use Software which clarifies the accounting for implementation costs associated with cloud-computing internal-use software arrangements. The implementation costs should be capitalized and expensed over the service term, including options to extend, and recognized in selling, general, and administrative in the statement of operations. The guidance became effective January 1, 2020 and is applied on a prospective basis. The adoption of this guidance did not have a material impact on the consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12: Income Taxes which removes certain exceptions to the general principles of ASC 740 related to intraperiod tax allocation exceptions, deferred tax liabilities related to outside basis differences, and year-to-date losses in interim periods. In addition, the ASU amends the interim guidance to clarify that all tax effects, both deferred and current, related to enactments of tax laws or rate changes should be accounted for in the interim period that includes the enactment date. The change is applied prospectively and became effective December 15, 2020 with early adoption permitted. The adoption of this guidance did not have a material impact on the consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04: Reference Rate Reform which provides optional expedients and exceptions for applying U.S. 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 is currently evaluating the impact of this guidance on the consolidated 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 for the years ended December 31:


Twelve months ended December 31, 2020	U.S. Operations		Swiss Operations		Western European Operations		Chinese Operations		Other Operations		Total
Product Revenue	$	815,046	$	112,542	$	509,385	$	526,231	$	441,968	$	2,405,172
Service Revenue:
Point in time	199,247		22,733		135,793		39,705		110,542		508,020
Over time	58,026		8,648		71,537		12,674		21,100		171,985
Total	$	1,072,319	$	143,923	$	716,715	$	578,610	$	573,610	$	3,085,177

F-16

METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(In thousands, except share data, unless otherwise stated)


Twelve months ended December 31, 2019	U.S. Operations		Swiss Operations		Western European Operations		Chinese Operations		Other Operations		Total
Product Revenue	$	801,181	$	110,390	$	500,978	$	495,579	$	438,717	$	2,346,845
Service Revenue:
Point in time	207,707		20,968		135,612		37,370		109,802		511,459
Over time	48,227		8,141		64,151		11,767		18,062		150,348
Total	$	1,057,115	$	139,499	$	700,741	$	544,716	$	566,581	$	3,008,652


Twelve months ended December 31, 2018	U.S. Operations		Swiss Operations		Western European Operations		Chinese Operations		Other Operations		Total
Product Revenue	$	769,971	$	106,400	$	517,855	$	475,025	$	430,824	$	2,300,075
Service Revenue:
Point in time	196,314		19,430		134,052		38,528		100,638		488,962
Over time	41,512		8,234		66,881		11,556		18,366		146,549
Total	$	1,007,797	$	134,064	$	718,788	$	525,109	$	549,828	$	2,935,586

The Company's global revenue mix by product category for the year ending December 31, 2020 is laboratory (54% of sales), industrial (40% of sales), and retail (6% of sales). The Company’s product revenue by reportable segment is proportionately similar to the Company’s global mix with the exception of the Company’s Swiss Operations, which is largely comprised of laboratory products, and the Company’s Chinese Operations, which has a slightly higher percentage of industrial products. A breakdown of the Company’s sales by product category for the year ended December 31 follows:


	2020		2019		2018
Laboratory	$	1,669,791	$	1,578,625	$	1,504,600
Industrial	1,224,497		1,233,970		1,211,362
Retail	190,889		196,057		219,624
Total net sales	$	3,085,177	$	3,008,652	$	2,935,586

A breakdown of net sales to external customers by geographic customer destination, net for the year ended December 31 follows:


	2020		2019		2018
Americas	$	1,180,626	$	1,165,847	$	1,105,956
Europe	921,266		892,092		908,773
Asia/Rest of World	983,285		950,713		920,857
Total	$	3,085,177	$	3,008,652	$	2,935,586

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 December 31, 2020, 2019, and 2018 was $22.6 million, $17.4 million, and $12.4 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.

F-17

METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(In thousands, except share data, unless otherwise stated)

Changes in the components of deferred revenue and customer prepayments during the period are as follows:


	2020		2019		2018
Beginning balances as of January 1	$	122,489	$	105,381	$	107,166
Customer pre-payments/deferred revenue	617,643		633,190		619,257
Revenue recognized	(595,802)		(615,957)		(618,002)
Foreign currency translation	4,776		(125)		(3,040)
Ending balance as of December 31	$	149,106	$	122,489	$	105,381

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 prepayments and deferred revenue as most contracts have an expected length of one year or less and amounts greater than one year are immaterial.

4. ACQUISITIONS

In 2020, 2019, and 2018, we incurred acquisition payments totaling $6.2 million, $2.0 million, and $5.5 million, respectively.

In 2017, the Company acquired all of the shares of Biotix, Inc., a U.S.-based manufacturer and distributor of plastic consumables associated with pipettes, including tips, tubes, and reagent reservoirs used in the life sciences market, for an initial cash payment of $105 million plus additional cash consideration of $10 million that was paid in the first quarter of 2019.

5. INVENTORIES

Inventories consisted of the following at December 31:


	2020		2019
Raw materials and parts	$	132,041	$	129,294
Work-in-progress	55,688		43,202
Finished goods	109,882		101,789
Total inventory	$	297,611	$	274,285

6. 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 and cross currency swap agreements in order to manage its exposure to changes in interest rates. At December 31, 2020, the interest payments associated with 78% of the Company’s debt are fixed obligations. The amount of the Company’s fixed obligation interest payments may change based upon the expiration dates of its interest rate and cross currency swap agreement 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 portion of the cash flow hedges, also see Note 7 and Note 11 to the consolidated financial statements. As

F-18

METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(In thousands, except share data, unless otherwise stated)

also mentioned in Note 10, the Company has designated its euro-denominated debt as a hedge of a portion of its net investment in a euro-denominated foreign subsidiary.

Cash Flow Hedges

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 payment, 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 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 payment, excluding the credit spread, to a fixed Swiss franc income of 0.95%. The swap began in June 2019 and matures in June 2021.

In February 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 payment, excluding the credit spread, to a fixed Swiss franc income of 0.78%. The swap began in February 2019 and matures in June 2021.

In 2015, the Company entered into a forward-starting interest rate swap agreement. The agreement changes 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% which began in February 2017 and matures in February 2022.

In 2013, the Company entered into an interest rate swap agreement designated as a cash flow hedge. The agreement was a swap which had the effect of changing the floating rate LIBOR-based interest payments associated with $50 million in borrowings under the Company’s credit agreement to a fixed obligation of 2.52% which began in October 2015 and matured in October 2020.

The Company’s cash flow hedges are recorded gross at fair value in the consolidated balance sheet at December 31, 2020 and 2019 and are disclosed in Note 7 to the consolidated financial statements. A derivative loss of $0.7 million based upon interest rates at December 31, 2020 is expected to be reclassified from other comprehensive income (loss) to earnings in the next 12 months. Through December 31, 2020, no hedge ineffectiveness has occurred in relation to these cash flow hedges.

Other Derivatives

The Company primarily enters into foreign currency forward contracts in order to economically hedge short-term 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 December 31, 2020 and 2019, as disclosed in Note 7 to the consolidated financial statements. The Company recognized in other charges (income) a net gain of $4.8 million and net loss of $3.7 million and $1.2 million during the years ended December 31, 2020, 2019, and 2018, respectively, which offset the related net transaction gains (losses) associated with these

F-19

METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(In thousands, except share data, unless otherwise stated)

contracts. At December 31, 2020 and 2019, these contracts had a notional value of $536.5 million and $494.6 million, respectively.

The Company may be exposed to credit losses in the event of nonperformance by the counterparties to its derivative financial instrument contracts. Counterparties are established banks and financial institutions with high credit ratings. The Company believes that such counterparties will be able to fully satisfy their obligations under these contracts.

7. FAIR VALUE MEASUREMENTS

At December 31, 2020 and 2019, the Company had derivative assets totaling $2.2 million and $1.6 million, respectively, and derivative liabilities totaling $23.3 million and $9.0 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 value 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 for the years ended December 31, 2020 and 2019.

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

F-20

METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(In thousands, except share data, unless otherwise stated)

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 December 31, 2020 and 2019.


	2020		2019		Balance Sheet Location
Foreign currency forward contracts not designated as hedging instruments	$	2,227	$	1,568	Other current assets and prepaid expenses
Total derivative assets	$	2,227	$	1,568

Foreign currency forward contracts not designated as hedging instruments	$	1,399	$	2,392	Accrued and other liabilities
Cash flow hedges:
Interest rate swap agreements	—		371		Accrued and other liabilities
Cross currency swap agreements	13,093		—		Accrued and other liabilities
Interest rate swap agreements	2,502		1,548		Other non-current liabilities
Cross currency swap agreements	6,297		4,706		Other non-current liabilities
Total derivative liabilities	$	23,291	$	9,017

The Company had $14.3 million and $8.2 million of cash equivalents at December 31, 2020 and 2019, 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 $57.4 million as of December 31, 2020. The fair value of the Company’s fixed interest rate debt was estimated using Level 2 inputs and primarily discounted cash flow models, based on estimated current rates offered for similar debt under current market conditions for the Company.

8. PROPERTY, PLANT, AND EQUIPMENT, NET

Property, plant, and equipment, net consisted of the following at December 31:


	2020		2019
Land	$	61,838	$	58,047
Building and leasehold improvements	356,699		326,743
Machinery and equipment	458,174		413,411
Computer software	544,490		514,400
Property, plant, and equipment, gross	1,421,201		1,312,601
Less accumulated depreciation and amortization	(622,333)		(563,944)
Property, plant, and equipment, net	$	798,868	$	748,657

9. GOODWILL AND OTHER INTANGIBLE ASSETS

The following table shows the changes in the carrying amount of goodwill for the years ended December 31:


	2020		2019
Balance at beginning of year	$	535,979	$	534,780
Goodwill acquired	6,169		—
Foreign currency translation	8,122		1,199
Balance at year end	$	550,270	$	535,979

F-21

METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(In thousands, except share data, unless otherwise stated)

Goodwill and indefinite-lived assets are reviewed for impairment on an annual basis in the fourth quarter. The Company completed its impairment review and determined that there had been no impairment of these assets through December 31, 2020. The Company identified no triggering events or other circumstances which indicated the carrying amount of goodwill or intangible assets may not be recoverable.

The components of other intangible assets as of December 31 are as follows:


	2020						2019
	Gross Amount		Accumulated Amortization		Intangibles, Net		Gross Amount		Accumulated Amortization		Intangibles, Net
Customer relationships	$	201,445	$	(68,319)	$	133,126	$	197,764	$	(58,851)	$	138,913
Proven technology and patents	78,312		(52,138)		26,174		75,170		(46,532)		28,638
Tradenames (finite life)	4,896		(3,444)		1,452		4,594		(3,124)		1,470
Tradenames (indefinite life)	35,595		—		35,595		35,474		—		35,474
Other	5,215		(4,777)		438		5,462		(3,715)		1,747
	$	325,463	$	(128,678)	$	196,785	$	318,464	$	(112,222)	$	206,242

The Company recognized amortization expense associated with the above intangible assets of $15.7 million, $15.1 million, and $14.3 million for the years ended December 31, 2020, 2019, and 2018, respectively. The annual aggregate amortization expense based on the current balance of other intangible assets is estimated at $14.7 million for 2021, $13.2 million for 2022, $13.5 million for 2023, $12.9 million for 2024, and $11.8 million for 2025. The finite-lived intangible assets are amortized on a straight-line basis over periods ranging from 3 to 45 years. 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. Purchased intangibles amortization was $14.9 million, $11.2 million after tax, $14.3 million, $10.8 million after tax, and $13.3 million, $10.0 million after tax, for the years ended December 31, 2020, 2019, and 2018, respectively.

In addition to the above amortization, the Company recorded amortization expense associated with capitalized software, which is included in Property, Plant, and Equipment in Note 8, of $40.7 million, $34.4 million, and $33.0 million for the years ended December 31, 2020, 2019, and 2018, respectively.

F-22

METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(In thousands, except share data, unless otherwise stated)

10. DEBT

Debt consisted of the following at December 31:


	2020		2019
3.67% $50 million 10-year Senior Notes due December 17, 2022	$	50,000	$	50,000
4.10% $50 million 10-year Senior Notes due September 19, 2023	50,000		50,000
3.84% $125 million 10-year Senior Notes due September 19, 2024	125,000		125,000
4.24% $125 million 10-year Senior Notes due June 25, 2025	125,000		125,000
3.91% $75 million 10-year Senior Notes due June 25, 2029	75,000		75,000
3.19% $50 million 15-year Senior Notes due January 24, 2035	50,000		—
1.47% EUR 125 million 15-year Senior Notes due June 17, 2030	153,299		140,197
1.30% EUR 135 million 15-year Senior Notes due November 6, 2034	165,563		151,413
Senior Notes debt issuance costs, net	(2,760)		(2,259)
Total Senior Notes	791,102		714,351
$1.1 billion Credit Agreement, interest at LIBOR plus 87.5 basis points(1)	491,419		520,999
Other local arrangements	51,970		55,868
Total debt	1,334,491		1,291,218
Less: current portion	(50,317)		(55,868)
Total long-term debt	$	1,284,174	$	1,235,350

(1) See Note 6 and Note 7 for additional disclosures on the financial instruments associated with the Credit Agreement.

The Company’s weighted average interest rate was 2.9% and 3.3% for the years ended December 31, 2020 and 2019, respectively.

Senior Notes

The Senior Notes listed above are senior unsecured obligations of the Company and interest is payable semi-annually. The Company may at any time prepay the Senior Notes, in whole or in part, at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interests, and in some instances a “make whole” prepayment premium. The Euro Senior Notes, if prepaid, may also include a swap related currency loss. The Senior Notes each contain customary affirmative and negative covenants 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 agreements also require 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 Senior Notes also contain customary events of default with customary grace periods, as applicable. The Company was in compliance with its covenants at December 31, 2020.

Total issuance costs of approximately $3.4 million have been incurred by the Company related to the Senior Notes mentioned above and are being amortized to interest expense over the various term.

The Company has designated the EUR 125 million 1.47% Euro Senior Notes and the EUR 135 million 1.30% 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 loss of $27.3 million for the year ended December 31, 2020 and an unrealized gain of $1.3 million and of $6.7

F-23

METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(In thousands, except share data, unless otherwise stated)

million for the years ended December 31, 2019 and 2018, respectively. The Company has a loss of $28.8 million recorded in accumulated other comprehensive income (loss) as of December 31, 2020.

In December 2020, the Company entered into an agreement to issue and sell EUR 125.0 million of 15-year 1.06% Euro Senior Notes ("1.06% Euro Senior Notes"). The terms of the Euro Senior Notes are consistent with the previous Euro Senior Notes as described above. The Company also entered into a forward contract to receive $152.1 million at the time of issuing the 1.06% Euro Senior Notes in March 2021. The proceeds will be used to repay outstanding amounts on the Company’s credit facility and fund operational expenses. The 1.06% Euro Senior Notes will be designated as a hedge of a portion of the Company’s net investment in a euro-denominated foreign subsidiary to reduce foreign currency risk associated with this net investment.

Credit Agreement

The Company has a $1.1 billion Credit Agreement (the “Credit Agreement”), which has $602.5 million of availability remaining as of December 31, 2020. The Credit Agreement is provided by a group of financial institutions and has a maturity date of June 15, 2023. It is a revolving credit facility and is not subject to any scheduled principal payments prior to maturity. The obligations under the Credit Agreement are unsecured.

Borrowings under the Credit Agreement bear interest at current market rates plus a margin based on the Company’s consolidated leverage ratio, which was set at LIBOR plus 87.5 basis points as of June 15, 2018. The Company must also pay facility fees that are tied to its leverage ratio. The Company is required to maintain a ratio of funded debt to consolidated EBITDA of 3.5 to 1.0 or less and an interest coverage ratio of 3.5 to 1.0 or greater. The Credit Agreement also places certain limitations on the Company, including limiting the ability to incur liens or indebtedness at a subsidiary level. In addition, the Credit Agreement has several events of default. The Company was in compliance with its covenants as of December 31, 2020. The Company capitalized $2.0 million in financing fees in other long-term assets during 2018 associated with the Credit Agreement which will be amortized to interest expense on a straight-line basis through 2023.

Other Local Arrangements

In April 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 Swiss franc LIBOR plus 87.5 basis points. The loans were renewed for one year in April 2020.

11. SHAREHOLDERS’ EQUITY

Common Stock

The number of authorized shares of the Company’s common stock is 125,000,000 shares with a par value of $0.01 per share. Holders of the Company’s common stock are entitled to one vote per share. At December 31, 2020, 2,797,351 shares of the Company’s common stock were reserved for issuance pursuant to the Company’s stock option plans.

F-24

METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(In thousands, except share data, unless otherwise stated)

Preferred Stock

The Board of Directors, without further shareholder authorization, is authorized to issue up to 10,000,000 shares of preferred stock, par value $0.01 per share in one or more series and to determine and fix the rights, preferences, and privileges of each series, including dividend rights and preferences over dividends on the common stock and one or more series of the preferred stock, conversion rights, voting rights (in addition to those provided by law), redemption rights, and the terms of any sinking fund therefore, and rights upon liquidation, dissolution, or winding up, including preferences over the common stock and one or more series of the preferred stock. The issuance of shares of preferred stock, or the issuance of rights to purchase such shares, may have the effect of delaying, deferring, or preventing a change in control of the Company or an unsolicited acquisition proposal.

Share Repurchase Program

In November 2020, the Company’s Board of Directors authorized an additional $2.5 billion to the share repurchase program which had $3.1 billion of remaining availability as of December 31, 2020. 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 29.4 million common shares since the inception of the program in 2004 through December 31, 2020, at a total cost of $5.9 billion. During the years ended December 31, 2020 and 2019, the Company spent $775 million, and in 2018, $475 million on the repurchase of 815,652 shares, 1,094,648 shares, and 802,809 shares at an average price per share of $950.14, $707.97, and $591.65, respectively. The Company reissued 162,176 shares, 298,002 shares, and 183,379 shares held in treasury for the exercise of stock options and restricted stock units during 2020, 2019, and 2018, respectively.

F-25

METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(In thousands, except share data, unless otherwise stated)

Accumulated Other Comprehensive Income (Loss)

The following table presents changes in accumulated other comprehensive income by component for the period ended December 31, 2020, 2019, and 2018:


	Currency Translation Adjustment, Net of Tax		Net 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, 2017	$	(31,340)	$	(1,081)	$	(232,985)	$	(265,406)
Other comprehensive income (loss), net of tax:
Net unrealized actuarial gains (loss), prior service costs, and plan amendments	—		—		(24,106)		(24,106)
Net unrealized gains (loss) on cash flow hedging arrangements	—		(658)		—		(658)
Foreign currency translation adjustment	(32,573)		—		3,522		(29,051)
Amounts recognized from accumulated other comprehensive income (loss), net of tax	—		2,441		14,366		16,807
Net change in other comprehensive income (loss), net of tax	(32,573)		1,783		(6,218)		(37,008)
Balance at December 31, 2018	$	(63,913)	$	702	$	(239,203)	$	(302,414)
Other comprehensive income (loss), net of tax:
Net unrealized actuarial gains (loss), prior service costs, and plan amendments	—		—		(32,269)		(32,269)
Net unrealized gains (loss) on cash flow hedging arrangements	—		(1,063)		—		(1,063)
Foreign currency translation adjustment	2,898		—		(2,108)		790
Amounts recognized from accumulated other comprehensive income (loss), net of tax	—		(861)		12,144		11,283
Net change in other comprehensive income (loss), net of tax	2,898		(1,924)		(22,233)		(21,259)
Balance at December 31, 2019	$	(61,015)	$	(1,222)	$	(261,436)	$	(323,673)
Other comprehensive income (loss), net of tax:
Net unrealized actuarial gains (loss), prior service costs, and plan amendments	—		—		(35,755)		(35,755)
Net unrealized gains (loss) on cash flow hedging arrangements	—		(11,323)		—		(11,323)
Foreign currency translation adjustment	29,914		—		(19,701)		10,213
Amounts recognized from accumulated other comprehensive income (loss), net of tax	—		11,066		14,547		25,613
Net change in other comprehensive income (loss), net of tax	29,914		(257)		(40,909)		(11,252)
Balance at December 31, 2020	$	(31,101)	$	(1,479)	$	(302,345)	$	(334,925)

F-26

METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(In thousands, except share data, unless otherwise stated)

The following table presents amounts recognized from accumulated other comprehensive income (loss) during the years ended December 31, 2020, 2019, and 2018:


	2020		2019		2018		Location of Amounts Recognized in Earnings
Effective portion of losses (gains) on cash flow hedging arrangements:
Interest rate swap agreements	$	2,413	$	109	$	539	Interest expense
Cross currency swap	11,531		(1,022)		2,212		(a)
Total before taxes	13,944		(913)		2,751
Provision for taxes	2,878		(52)		310		Provision for taxes
Total, net of taxes	$	11,066	$	(861)	$	2,441

Recognition of defined benefit pension and post-retirement items:
Recognition of actuarial losses, plan amendments, prior service cost, and settlement charge before taxes	$	18,609	$	15,467	$	18,756	(b)
Provision for taxes	4,062		3,323		4,390		Provision for taxes
Total, net of taxes	$	14,547	$	12,144	$	14,366

(a)The cross currency swap reflects an unrealized loss of $13.8 million, $3.6 million, and $0.8 million recorded in other charges (income) during the years ended December 31, 2020, 2019, and 2018, respectively, that was offset by the underlying unrealized gain on the hedged debt. The cross currency swap also reflects a realized gain of $2.3 million, $4.6 million, and $3.0 million recorded in interest expense during the years ended December 31, 2020, 2019, and 2018, respectively.

(b)These accumulated other comprehensive income (loss) components are included in the computation of net periodic pension and post-retirement cost. See Note 13 for additional details.

12. EQUITY INCENTIVE PLAN

The Company’s equity incentive plan provides employees and directors of the Company additional incentives to join and/or remain in the service of the Company as well as to maintain and enhance the long-term performance and profitability of the Company. The Company’s 2013 equity incentive plan was approved by shareholders on May 2, 2013 and provides that 2 million shares of common stock, plus any shares that remained available for grant under the Company’s prior equity incentive plan as well as options outstanding that terminate without being exercised, may be the subject of awards. The plan provides for the grant of options, restricted stock units, and other equity-based awards. The exercise price of options granted shall not be less than the fair market value of the common stock on the date of the award. Options primarily vest equally over a five-year period from the date of grant and have a maximum term of up to 10 years. Restricted units primarily vest equally over a five-year period from the date of grant. Performance share units generally vest after a three-year period from the date of the grant based upon satisfaction of the performance condition. The compensation committee of the Board of Directors has generally granted restricted share units to participating managers and non-qualified stock options and performance share units to executive officers.

All share-based compensation arrangements granted to employees, including stock option grants, are recognized in the consolidated statement of operations based on the grant-date fair value of the award over the period during which an employee is required to provide service in exchange for the award. Share-based compensation expense is recorded 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.

F-27

METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(In thousands, except share data, unless otherwise stated)

The fair values of stock options granted were calculated using the Black-Scholes pricing model. The aggregate intrinsic value of an option is the amount by which the fair value of the underlying stock exceeds its exercise price. The following table summarizes all stock option activity from December 31, 2019 through December 31, 2020:


	Number of Options	Weighted Average Exercise Price		Aggregate Intrinsic Value (in millions)
Outstanding at December 31, 2019	608,715	$	334.20	$	279.5
Granted	16,273	1,103.74
Exercised	(141,139)	319.84
Forfeited	(9,746)	505.95
Outstanding at December 31, 2020	474,103	400.21		350.6
Options exercisable at December 31, 2020	367,451	$	319.84	$	301.3

The following table details the weighted average remaining contractual life of options outstanding at December 31, 2020 by range of exercise prices:


Number of Options Outstanding	Weighted Average Exercise Price	Remaining Contractual Life of Options Outstanding	Options Exercisable

78,288	$168.98	1.8	78,288
131,501	$253.87	3.3	131,501
128,642	$357.51	5.4	105,179
135,672	$715.98	8.1	52,483
474,103		5.0	367,451

As of the date granted, the weighted average grant-date fair value of the options granted during the years ended December 31, 2020, 2019, and 2018 was $284.25, $196.40, and $189.78, respectively.

Such weighted average grant-date fair value was determined using the following assumptions:


	2020		2019		2018
Risk-free interest rate	0.34	%	1.74	%	3.09	%
Expected life in years	6.0		6.0		5.9
Expected volatility	26	%	24	%	26	%
Expected dividend yield	—		—		—

The total intrinsic value of options exercised during the years ended December 31, 2020, 2019, and 2018 was approximately $84.5 million, $146.6 million, and $74.3 million, respectively.

The compensation expense for options recognized during the years ended December 31, 2020, 2019, and 2018 was $7.7 million, $8.0 million, and $8.4 million, respectively.

During the fourth quarter of 2016, the Company granted 12,678 performance-based options, with a grant-date fair value of $1.5 million. Compensation expense is recognized over the five-year vesting provisions based upon the probability of the performance condition being met.

F-28

METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(In thousands, except share data, unless otherwise stated)

The following table summarizes all restricted stock unit and performance share unit activity from December 31, 2019 through December 31, 2020:


	Number of Restricted Stock Units	Aggregate Intrinsic Value (in millions)	Number of Performance Share Units	Aggregate Intrinsic Value (in millions)
Outstanding at December 31, 2019	40,985	$32.5	17,183	$13.6
Granted	8,285		2,690
Adjustment for performance results achieved(1)	—		1,838
Vested	(14,667)		(6,370)
Forfeited	(1,507)		—
Outstanding at December 31, 2020	33,096	$37.7	15,341	$17.5

(1) 2016 performance share units vested in the first quarter 2020.

The weighted average grant-date fair value of the restricted stock units granted during years ended 2020, 2019, and 2018 was $1,104.02, $720.81, and $595.31 per unit, respectively, which primarily vest ratably over a five-year period. The total fair value of the restricted stock units on the date of grant was $9.1 million for 2020, $8.9 million for 2019, and $9.6 million for 2018 and will be recorded as compensation expense on a straight-line basis over the vesting period. The total fair value of restricted stock units vested during the years ended December 31, 2020, 2019, and 2018 was approximately $7.7 million, $7.0 million, and $7.2 million, respectively. Approximately $7.9 million, $7.1 million, and $6.8 million of compensation expense was recognized during the years ended December 31, 2020, 2019, and 2018, respectively.

The Company granted performance share units with a market condition during 2020, 2019, and 2018, respectively. Grantees of performance share units will be eligible to receive shares of the Company’s common stock depending upon the Company’s total shareholder return relative to the performance of companies in the S&P 500 Healthcare and S&P 500 Industrials over a three-year period. The awards actually earned will range from zero to 200% of the targeted number of performance share units for the three-year performance period and will be paid, to the extent earned, in the fiscal quarter following the end of the applicable three-year performance period. During 2020, the market conditions for the 2017 performance share units were met and will vest in the first quarter 2021 with a payout of 132%. Performance share unit awards were valued using a Monte Carlo simulation based on the following assumptions:


	2020		2019		2018
Risk-free interest rate	0.18	%	1.69	%	3.03	%
Expected life in years	3		3		3
Expected volatility	26	%	24	%	26	%
Expected dividend yield	—		—		—

As of the date granted, the fair value of the performance share units granted was $1,345.03 for 2020, $803.26 for 2019, and $733.35 for 2018. The total fair value of the performance share units on the date of the grant was $3.6 million for 2020, 2019, and 2018, and will be recorded as compensation expense on a straight-line basis over the three-year performance period.

At December 31, 2020, a total of 2,080,274 shares of common stock were available for grant in the form of stock options, restricted stock units, or performance share units.

F-29

METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(In thousands, except share data, unless otherwise stated)

As of December 31, 2020, the unrecorded deferred share-based compensation balance related to stock options, restricted stock units, and performance share units was $48.2 million and will be recognized using a straight-line method over an estimated weighted average amortization period of 2.2 years.

13. BENEFIT PLANS

The Company maintains a number of retirement and other post-retirement employee benefit plans.

Certain subsidiaries sponsor defined contribution plans. Benefits are determined and funded annually based upon the terms of the plans. Amounts recognized as cost under these plans amounted to $19.3 million, $18.8 million, and $18.9 million for the years ended December 31, 2020, 2019, and 2018, respectively.

Certain subsidiaries sponsor defined benefit plans. Benefits are provided to employees primarily based upon years of service and employees’ compensation for certain periods during the last years of employment. Prior to 2002, the Company’s U.S. operations also provided post-retirement medical benefits to their employees. Contributions for medical benefits are related to employee years of service.

The following tables set forth the change in benefit obligation, the change in plan assets, the funded status, and amounts recognized in the consolidated financial statements for the Company’s defined benefit plans and post-retirement plan at December 31, 2020 and 2019:


	U.S. Pension Benefits				Non-U.S. Pension Benefits				Other Benefits				Total
	2020		2019		2020		2019		2020		2019		2020		2019
Change in benefit obligation:
Benefit obligation at beginning of year	$	142,450	$	130,202	$	961,263	$	864,095	$	1,295	$	2,186	$	1,105,008	$	996,483
Service cost, gross	1,304		1,063		33,995		30,665		—		—		35,299		31,728
Interest cost	3,556		4,585		4,778		10,192		25		64		8,359		14,841
Actuarial losses (gains)	10,733		14,449		43,508		84,262		(70)		(129)		54,171		98,582
Plan amendments and other	—		—		112		—		—		(576)		112		(576)
Benefits paid	(8,096)		(7,849)		(39,412)		(38,181)		(220)		(250)		(47,728)		(46,280)
Impact of foreign currency	—		—		87,567		10,230		—		—		87,567		10,230
Benefit obligation at end of year	$	149,947	$	142,450	$	1,091,811	$	961,263	$	1,030	$	1,295	$	1,242,788	$	1,105,008
Change in plan assets:
Fair value of plan assets at beginning of year	$	102,812	$	95,541	$	861,962	$	767,410	$	—	$	—	$	964,774	$	862,951
Actual return on plan assets	9,223		15,037		39,535		76,732		—		—		48,758		91,769
Employer contributions	5,523		83		26,249		25,323		220		250		31,992		25,656
Plan participants’ contributions	—		—		15,681		15,130		—		—		15,681		15,130
Benefits paid	(8,096)		(7,849)		(39,412)		(38,181)		(220)		(250)		(47,728)		(46,280)
Impact of foreign currency and other	—		—		80,307		15,548		—		—		80,307		15,548
Fair value of plan assets at end of year	$	109,462	$	102,812	$	984,322	$	861,962	$	—	$	—	$	1,093,784	$	964,774
Funded status	$	(40,485)	$	(39,638)	$	(107,489)	$	(99,301)	$	(1,030)	$	(1,295)	$	(149,004)	$	(140,234)

F-30

METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(In thousands, except share data, unless otherwise stated)

The change in the benefit obligation for 2020 and 2019 includes an actuarial loss primarily related to a decline in discount rates, offset in part by plan asset returns.

The accumulated benefit obligations at December 31, 2020 and 2019 were $149.9 million and $142.5 million, respectively, for the U.S. defined benefit pension plan and $920.3 million and $812.0 million, respectively, for all non-U.S. plans. Certain of the plans included within non-U.S. pension benefits have accumulated benefit obligations which exceed the fair value of plan assets. The projected benefit obligation, the accumulated benefit obligation, and fair value of assets of these plans as of December 31, 2020 were $216.7 million, $205.3 million, and $57.4 million, respectively. The projected benefit obligation, the accumulated benefit obligation, and fair value of assets of these plans as of December 31, 2019 were $195.3 million, $184.4 million, and $51.5 million, respectively.

Amounts recognized in the consolidated balance sheets consist of:


	U.S. Pension Benefits				Non-U.S. Pension Benefits				Other Benefits				Total
	2020		2019		2020		2019		2020		2019		2020		2019
Other non-current assets	$	—	$	—	$	51,619	$	44,536	$	—	$	—	$	51,619	$	44,536
Accrued and other liabilities	(133)		(126)		(5,549)		(5,023)		(153)		(239)		(5,835)		(5,388)
Pension and other post-retirement liabilities	(40,353)		(39,512)		(153,559)		(138,813)		(877)		(1,057)		(194,789)		(179,382)
Accumulated other comprehensive loss (income)	69,296		64,269		332,280		286,370		(891)		(924)		400,685		349,715
Total	$	28,810	$	24,631	$	224,791	$	187,070	$	(1,921)	$	(2,220)	$	251,680	$	209,481

The following amounts have been recognized in accumulated other comprehensive income (loss), before taxes, at December 31, 2020 and have not yet been recognized as a component of net periodic pension cost:


	U.S. Pension Benefits		Non-U.S. Pension Benefits		Other Benefits		Total		Total, After Tax
Plan amendments and prior service cost	$	—	$	(9,857)	$	(501)	$	(10,358)	$	(8,262)
Actuarial losses (gains)	69,296		342,137		(390)		411,043		322,947
Total	$	69,296	$	332,280	$	(891)	$	400,685	$	314,685

The following changes in plan assets and benefit obligations were recognized in other comprehensive income (loss), before taxes, for the year ended December 31, 2020:


	U.S. Pension Benefits		Non-U.S. Pension Benefits		Other Benefits		Total		Total, After Tax
Net actuarial losses (gains)	$	7,605	$	37,041	$	(70)	$	44,576	$	35,662
Plan amendment	—		112		—		112		93
Amortization of:
Actuarial (losses) gains	(2,578)		(23,251)		28		(25,801)		(20,370)
Plan amendments and prior service cost	—		7,117		75		7,192		5,823
Impact of foreign currency	—		24,891		—		24,891		19,701
Total	$	5,027	$	45,910	$	33	$	50,970	$	40,909

F-31

METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(In thousands, except share data, unless otherwise stated)

The assumed discount rates and rates of increase in future compensation levels used in calculating the projected benefit obligations vary according to the economic conditions of the country in which the retirement plans are situated. The weighted average rates used for the purposes of the Company’s plans are as follows:


	U.S.				Non-U.S.
	2020		2019		2020		2019
Discount rate	2.22	%	3.03	%	0.32	%	0.51	%
Compensation increase rate	n/a		n/a		0.86	%	0.86	%
Expected long-term rate of return on plan assets	5.75	%	6.25	%	3.73	%	3.76	%
Interest crediting risk	n/a		n/a		0.50	%	0.80	%

The assumed discount rates, rates of increase in future compensation levels, and the long-term rate of return used in calculating the net periodic pension cost vary according to the economic conditions of the country in which the retirement plans are situated. The weighted average rates used for the purposes of the Company’s plans are as follows:


	U.S.						Non-U.S.
	2020		2019		2018		2020		2019		2018
Discount rate	3.03	%	4.11	%	3.49	%	0.51	%	1.22	%	0.97	%
Compensation increase rate	n/a		n/a		n/a		0.86	%	0.87	%	0.87	%
Expected long-term rate of return on plan assets	6.25	%	6.50	%	6.50	%	3.76	%	3.84	%	3.86	%

Net periodic pension cost and net periodic post-retirement benefit for the defined benefit plans and U.S. post-retirement plan include the following components for the years ended December 31:


	U.S.									Non-U.S.									Other Benefits									Total
2020			2019			2018			2020			2019			2018			2020			2019			2018			2020			2019			2018
Service cost, net	$	1,304		$	1,063		$	1,090		$	18,314		$	15,534		$	15,545		$	—		$	—		$	—		$	19,618		$	16,597		$	16,635
Interest cost on projected benefit obligations	3,556			4,585			4,242			4,778			10,192			8,630			25			64			66			8,359			14,841			12,938
Expected return on plan assets	(6,094)			(5,887)			(6,929)			(33,067)			(29,162)			(31,005)			—			—			—			(39,161)			(35,049)			(37,934)
Recognition of actuarial losses/(gains) and prior service costs	2,578			2,374			5,804			16,134			13,784			14,575			(103)			(691)			(1,623)			18,609			15,467			18,756
Net periodic pension cost / (benefit)	$	1,344		$	2,135		$	4,207		$	6,159		$	10,348		$	7,745		$	(78)		$	(627)		$	(1,557)		$	7,425		$	11,856		$	10,395

The projected post-retirement benefit obligation was principally determined using discount rates of 1.47% in 2020 and 2.54% in 2019. Net periodic post-retirement benefit cost was principally determined using discount rates of 2.54% in 2020, 3.75% in 2019, and 3.15% in 2018. The health care cost trend rate was 6.0% in 2020, 6.2% in 2019, and 6.4% in 2018, decreasing to 4.50% in 2029.

The Company’s overall asset investment strategy is to achieve long-term growth while minimizing volatility by widely diversifying among asset types and strategies. Target asset allocations and investment return criteria are established by the pension committee or designated officers of each plan. Target asset allocation ranges for the U.S. pension plan include 40-60% in equity securities, 23-33% in fixed income securities, and 15-25% in other types of investments. International plan assets relate primarily to the Company’s Swiss plan with target allocations of 24-45% in equities, 35-55% in fixed income securities, and 15-25% in other types of investments. Actual results are monitored against targets and the trustees are required to report to the members of each plan, including an analysis of investment performance on an

F-32

METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(In thousands, except share data, unless otherwise stated)

annual basis at a minimum. Day-to-day asset management is typically performed by third-party asset managers, reporting to the pension committees or designated officers.

The long-term rate of return on plan asset assumptions used to determine pension expense under U.S. GAAP is generally based on estimated future returns for the target investment mix determined by the trustees as well as historical investment performance.

The following table presents the fair value measurement of the Company’s plan assets by hierarchy level:


	December 31, 2020								December 31, 2019
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Observable Inputs for Identical Assets (Level 2)		Unobservable Inputs (Level 3)		Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Observable Inputs for Identical Assets (Level 2)		Unobservable Inputs (Level 3)		Total
Asset Category:
Cash and Cash Equivalents	$	166,614	$	—	$	—	$	166,614	$	104,144	$	—	$	—	$	104,144
Equity Securities:
Mettler-Toledo Stock	3,767		—		—		3,767		2,620		—		—		2,620
Equity Mutual Funds:
U.S.(1)	7,467		30,460		—		37,927		7,245		29,885		—		37,130
International(2)	83,309		41,027		—		124,336		62,569		53,188		—		115,757
Emerging Markets(3)	131,103		966		—		132,069		110,972		822		—		111,794
Fixed Income Securities:
Corporate/Government Bonds(4)	92,085		—		—		92,085		84,020		—		—		84,020
Fixed Income Mutual Funds:
Insurance Contracts(5)	—		43,055		1,793		44,848		—		37,459		1,486		38,945
Core Bond(6)	72,061		64,111		—		136,172		116,629		61,960		—		178,589
Real Asset Mutual Funds:
Real Estate(7)	117,089		15,864		—		132,953		95,580		14,185		—		109,765
Commodities(8)	53,088		—		—		53,088		47,697		—		—		47,697
Other Types of Investments:
Debt Securities (9)	43,060		—		—		43,060		39,275		—		—		39,275
Global Allocation Funds(10)	12,359		—		—		12,359		12,269		—		—		12,269
Insurance Linked Securities(11)	19,038		—		—		19,038		18,434		—		—		18,434
Total assets in fair value hierarchy	$	801,040	$	195,483	$	1,793	$	998,316	$	701,454	$	197,499	$	1,486	$	900,439
Investments measured at net asset value:
International(12)							2,930								3,288
Emerging Markets (12)							7,262								6,650
Multi-Strategy Fund of Hedge Funds (12)							85,276								54,397
Total pension assets at fair value							$	1,093,784							$	964,774

*(1)*Represents primarily large capitalization equity mutual funds tracking the S&P 500 Index.

*(2)*Represents all capitalization core and value equity mutual funds located primarily in Switzerland, the United Kingdom, and Canada.

*(3)*Represents core and growth mutual funds and funds of mutual funds invested in emerging markets primarily in Eastern Europe, Latin America, and Asia.

*(4)*Represents investments in high-grade corporate and government bonds located in Switzerland and the European Union.

*(5)*Represents fixed and variable rate annuity contracts provided by insurance companies.

*(6)*Represents fixed income mutual funds invested in the U.S., the United Kingdom, Switzerland, and European government bonds, high-grade corporate bonds, mortgage-backed securities, and collateralized mortgage obligations.

F-33

METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(In thousands, except share data, unless otherwise stated)

*(7)*Represents mutual funds invested in real estate located primarily in Switzerland.

*(8)*Represents commodity funds invested across a broad range of sectors.

*(9)*Represents a loan to a wholly owned subsidiary of the Company. See Note 10 for additional disclosure.

*(10)*Represents mutual funds invested globally in both equities and fixed income securities.

*(11)*Represents a broadly diversified portfolio of assets that carry exposure to insurance risks, particularly insurance linked securities.

*(12)*Investments that are measured using the net asset value (NAV) per share practical expedient have not been categorized in the fair value hierarchy. The amounts presented above are intended to permit reconciliation of the fair value hierarchy to the fair value of total plan assets in order to determine the amounts included in the consolidated balance sheet.

The fair value of the Company’s stock and corporate and government bonds are valued at the year-end closing price as reported on the securities exchange on which they are traded. Mutual funds are valued at the exchange-listed year-end closing price or at the net asset value of shares held by the fund at the end of the year. Insurance contracts are valued by discounting the related cash flows using a current year-end market rate or at cash surrender value, which is presumed to equal fair value. Funds of hedge funds are valued at the net asset value of shares held by the fund at the end of the year.

The following table presents a roll-forward of activity for the years ended December 31, 2020 and 2019 for Level 3 asset categories:


	Insurance Contracts
Balance at December 31, 2018	$	1,461
Actual return on plan assets related to assets held at end of year	14
Sales	(54)
Purchases	83
Impact of foreign currency	(18)
Balance at December 31, 2019	$	1,486
Actual return on plan assets related to assets held at end of year	22
Purchases	99
Impact of foreign currency	186
Balance at December 31, 2020	$	1,793

There were no transfers between any asset levels during the years ended December 31, 2020 and 2019.

The following benefit payments, which reflect expected future service as appropriate, are expected to be paid:


	U.S. Pension Benefits		Non-U.S. Pension Benefits		Other Benefits Net of Subsidy		Total
2021	$	8,382	$	49,784	$	153	$	58,319
2022	8,507		48,687		128		57,322
2023	8,666		49,242		110		58,018
2024	8,750		50,370		98		59,218
2025	8,778		50,415		87		59,280
2026-2030	42,808		246,920		303		290,031

F-34

METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(In thousands, except share data, unless otherwise stated)

In 2020, the Company expects to make employer pension contributions of approximately $27.9 million to its non-U.S. pension plan and employer contributions of approximately $0.2 million to its U.S. post-retirement medical plan.

14. TAXES

The sources of the Company’s earnings before taxes were as follows for the years ended December 31:


	2020		2019		2018
United States	$	94,651	$	102,262	$	60,043
Non-United States	654,092		579,132		591,815
Earnings before taxes	$	748,743	$	681,394	$	651,858

The provision for taxes consist of:


	Current		Deferred		Total
Year ended December 31, 2020:
United States federal	$	6,242	$	(6,311)	$	(69)
United States state and local	5,563		(1,736)		3,827
Non-United States	146,983		(4,737)		142,246
Total	$	158,788	$	(12,784)	$	146,004
Year ended December 31, 2019:
United States federal	$	3,033	$	(2,622)	$	411
United States state and local	(996)		(1,950)		(2,946)
Non-United States	122,878		(58)		122,820
Total	$	124,915	$	(4,630)	$	120,285
Year ended December 31, 2018:
United States federal	$	3,422	$	(4,699)	$	(1,277)
United States state and local	5,073		(161)		4,912
Non-United States	128,450		7,162		135,612
Total	$	136,945	$	2,302	$	139,247

The provision for tax expense differed from the amounts computed by applying the United States federal income tax rate of 21% for the years ended December 31, 2020, 2019, and 2018 to earnings before taxes as a result of the following:


	2020		2019		2018
Expected tax	$	157,236	$	143,092	$	136,890
United States state and local income taxes, net of federal income tax benefit	3,320		499		2,787
Net effect of Swiss tax reform (see below)	—		(15,833)		—
Net effect of U.S. tax reform (see below)	—		—		3,597
Non-United States income taxes at other than U.S. federal rate	179		18,546		12,710

Excess tax benefits from stock option exercises	(17,261)		(28,279)		(13,836)
Effect of Biotix contingent consideration settlement	—		—		(4,394)
Other, net	2,530		2,260		1,493
Total provision for taxes	$	146,004	$	120,285	$	139,247

F-35

METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(In thousands, except share data, unless otherwise stated)

The Company’s reported effective tax rate was 19.5% in 2020, 17.7% in 2019, and 21.4% in 2018.

As discussed below, the provision for income taxes included a net benefit of $15.8 million in 2019 related to Swiss tax reform and a charge of $3.6 million in 2018 related to the Tax Cuts and Jobs Act, which had the effect of reducing the Company’s effective tax rate by 2.3% in 2019 and increasing the Company’s effective tax rate by 0.6% in 2018. The 2018 effective tax rate also included a benefit of 0.7% associated with the one-time gain related to the settlement of the Biotix contingent consideration.

In May 2019, a public referendum was held in Switzerland that approved Swiss federal tax reform proposals previously approved by the Swiss Parliament. Additional changes in Swiss cantonal law were enacted in October 2019 (collectively "Swiss Tax Reform"). The changes in Swiss federal tax had an immaterial effect on our financial statements. As a result of the enactment of the cantonal law, the Company recognized a deferred tax asset of $48.1 million less a valuation allowance of $31.9 million in the fourth quarter of 2019. The amount primarily related to deferred benefits associated with an allowed step-up of intangible assets for tax purposes. The rate impact of Swiss Tax Reform was effective January 1, 2020 and did not have a material impact on the Company’s consolidated effective tax rate.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below at December 31:


	2020		2019
Deferred tax assets:
Inventory	$	18,849	$	15,756
Lease liability, accrued and other liabilities	94,113		85,590
Accrued post-retirement benefit and pension costs	56,618		53,078
Net operating loss and tax credit carryforwards	27,717		30,647
Swiss tax reform intangible assets	53,080		48,062
Other	12,408		11,918
Total deferred tax assets	262,785		245,051
Less valuation allowance	(52,388)		(50,853)
Total deferred tax assets less valuation allowance	210,397		194,198
Deferred tax liabilities:
Inventory	6,029		5,952
Lease right-of-use assets and other assets	29,553		27,268
Property, plant, and equipment	60,047		51,298
Acquired intangibles amortization	62,584		63,451
Prepaid post-retirement benefit and pension costs	28,270		28,542
International earnings	16,526		24,137
Unrealized currency gains	—		1,839
Total deferred tax liabilities	203,009		202,487
Net deferred tax (liability) asset	$	7,388	$	(8,289)

The Company continues to record valuation allowances related to certain of its deferred income tax assets due to the uncertainty of the ultimate realization of future benefits from such assets. The potential decrease or increase of the valuation allowance in the near term is dependent on the future ability of the Company to realize the deferred tax assets that are affected by the future profitability of operations in the respective/relevant jurisdictions.

F-36

METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(In thousands, except share data, unless otherwise stated)

A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:


	2020		2019
Unrecognized tax benefits at beginning of year	$	29,934	$	25,676
Increases related to current tax positions	9,503		6,215
Decreases related to prior year tax positions	(2,900)		(116)
Decreases resulting from a lapse of the applicable statute of limitations	—		(1,748)
Impact of foreign currency	1,757		(93)
Unrecognized tax benefits at end of year	$	38,294	$	29,934

Included in the balance of unrecognized tax benefits at December 31, 2020 and 2019 were $38.3 million and $29.9 million, respectively, of tax benefits that if recognized would reduce the Company’s effective tax rate. The Company recognizes accrued amounts of interest and penalties related to its uncertain tax positions as part of its income tax expense within its consolidated statement of operations. The amount of accrued interest and penalties included within other non-current liabilities within the Company’s consolidated balance sheet as of December 31, 2020 and 2019 was $6.2 million and $4.5 million, respectively.

The Company believes that it is reasonably possible that the unrecognized tax benefit balance could change over the next 12 months, primarily related to potential disputes raised by the taxing authorities over income and expense recognition. The Company does not expect a change would have a material impact on its financial position, results of operations, or cash flows.

The Company plans to repatriate earnings from China, Switzerland, Germany, the United Kingdom, and certain other countries in future years and believes that there will be no additional tax costs associated with the repatriation of such foreign earnings other than non-U.S. withholding taxes, certain state taxes, and U.S. taxes on currency gains, if any, for which a deferred tax liability has been recognized. All other undistributed earnings and any additional outside basis difference inherent in these entities and the contributed capital of our foreign subsidiaries are considered to be permanently reinvested on which no U.S. deferred income taxes or foreign withholding taxes have been provided. It is not practicable to estimate the amount of deferred tax liability related to these undistributed earnings and additional outside basis differences in these entities due to the complexity of the calculation and the uncertainty regarding assumptions necessary to compute the tax.

As of December 31, 2020, the major jurisdictions for which the Company is subject to examinations are: Germany for years after 2015; the United States after 2016; France after 2017; Switzerland after 2016; the United Kingdom after 2017; and China after 2017. Additionally, the Company is currently under examination in various taxing jurisdictions in which it conducts business operations. While the Company has not yet received any material assessments from these taxing authorities, the Company believes that adequate amounts of taxes and related interest and penalties have been provided for any adverse adjustments as a result of these examinations and that the ultimate outcome of these examinations will not result in a material impact on the Company’s consolidated results of operations or financial position.

15. RESTRUCTURING CHARGES

During the past several years, we have initiated various cost reduction measures. For the years ended December 31, 2020, 2019, and 2018, we have incurred $10.5 million, $15.8 million, and $18.4 million, respectively, of restructuring expenses which primarily comprise employee related costs. Liabilities

F-37

METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(In thousands, except share data, unless otherwise stated)

related to restructuring activities are included in accrued and other liabilities in the consolidated balance sheet.

A roll-forward of the Company’s accrual for restructuring activities for the years ended December 31, 2020 and 2019 is as follows:


	Total
Balance at December 31, 2018	$	7,972
Restructuring charges	15,760
Cash payments / utilization	(16,483)
Impact of foreign currency	(548)
Balance at December 31, 2019	$	6,701
Restructuring charges	10,516
Cash payments / utilization	(8,541)
Impact of foreign currency	508
Balance at December 31, 2020	$	9,184

16. OTHER CHARGES (INCOME), NET

Other charges (income), net consisted of net other income of $13.8 million, $6.2 million, and $21.8 million in 2020, 2019, and 2018, respectively. Other charges (income), net includes non-service pension costs (benefits), net (gains) losses from foreign currency transactions and hedging activities, interest income, and other items. Non-service pension benefits were $12.2 million, $4.8 million, and $6.2 million in 2020, 2019, and 2018, respectively. Other charges (income), net in 2018 also includes a one-time gain of $18.7 million associated with the settlement of the Biotix acquisition contingent consideration, as well as a one-time legal charge of $3 million.

17. LEASES

The Company adopted ASC 842 - Leases with an effective date of January 1, 2019. The operating lease right-of-use asset recognized upon adoption was $92.7 million, and the lease liability was $93.5 million. The Company elected the practical expedients package under ASC 842, and accordingly did not reassess any previously expired or existing arrangements, and related classification under ASC 840 - Leases.

The Company’s operating leases primarily comprise real estate and vehicles. Real estate leases are largely related to sales and marketing, service, and administrative offices, while vehicle leases are primarily related to the Company’s field sales and service organization. The consolidated balance sheet included the following balances as of December 31:


	2020		2019		Balance Sheet Location
Right-of-use assets, net	$	98,624	$	87,317	Other non-current assets

Current lease liability	$	29,216	$	27,584	Accrued and other liabilities
Non-current lease liability	69,830		60,937		Other non-current liabilities
Total operating lease liability	$	99,046	$	88,521

F-38

METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(In thousands, except share data, unless otherwise stated)

As of December 31, 2020, the Company has entered into additional real estate operating leases of $15.3 million that are expected to commence in 2021.

For the years ended December 31, 2020 and 2019, the Company had the following recorded in selling, general, and administrative associated with leasing arrangements:


	2020		2019
Operating lease expense	$	34,559	$	33,666
Variable lease expense	4,182		4,337
Short-term lease expense	991		1,187
Total lease expense	$	39,732	$	39,190

Weighted average remaining lease term	6.8 years		6.4 years
Weighted average discount rate	2.5%		2.9%

Rent expense for operating leases under ASC 840 - Leases was $38.9 million for the year ended December 31, 2018.

Accruals and other on the consolidated statement of cash flows includes the amortization of the lease right-of-use asset of $32.1 million and $31.1 million, offset by a change in the lease liability of $31.7 million and $30.1 million for the years ended December 31, 2020 and 2019, respectively. Lease payments within operating activities were $36.0 million and $33.5 million for the years ended December 31, 2020 and 2019, respectively. The Company also obtained non-cash lease right-of-use assets in exchange for lease liabilities of $35.0 million and $25.7 million for the years ended December 31, 2020 and 2019, respectively.

The following is a maturity analysis of the annual undiscounted cash flows for the annual periods ended December 31:


2021	$	31,305
2022	21,363
2023	14,716
2024	8,513
2025	4,536
Thereafter	28,160
Total lease payments	108,593
Less imputed interest	(9,547)
Total operating lease liability	$	99,046

F-39

METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(In thousands, except share data, unless otherwise stated)

18. COMMITMENTS AND CONTINGENCIES

Legal

The Company is party to various legal proceedings, including certain environmental matters, incidental to the normal course of business. Management does not expect that any of such proceedings will have a material adverse effect on the Company’s financial condition, results of operations, or cash flows.

19. SEGMENT REPORTING

The Company has five reportable segments: U.S. Operations, Swiss Operations, Western European Operations, Chinese Operations, and Other. U.S. Operations represent certain of the Company’s marketing and producing organizations located in the United States. Western European Operations include the Company’s marketing and producing organizations in Western Europe, excluding operations located in Switzerland. Swiss Operations include marketing and producing organizations located in Switzerland as well as extensive R&D operations that are responsible for the development, production, and marketing of precision instruments, including weighing, analytical, and measurement technologies for use in a variety of laboratory and industrial applications. Chinese Operations represent the Company’s marketing and producing organizations located in China. The Company’s market organizations are geographically focused and are responsible for all aspects of the Company’s sales and service. Operations that exist outside these reportable segments are included in Other.

The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies. The Company evaluates performance based on segment profit for segment reporting (gross profit less research and development and selling, general, and administrative expenses, before amortization, interest expense, restructuring charges, other charges (income), net, and taxes). Inter-segment sales and transfers are priced to reflect consideration of market conditions and the regulations of the countries in which the transferring entities are located.

F-40

METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(In thousands, except share data, unless otherwise stated)

The following tables show the operations of the Company’s reportable segments:


For the Year Ended December 31, 2020	Net Sales to External Customers		Net Sales to Other Segments		Total Net Sales		Segment Profit		Depreciation		Total Assets(c)		Purchase of Property, Plant, and Equipment		Goodwill

U.S. Operations	$	1,072,319	$	121,850	$	1,194,169	$	244,940	$	11,347	$	2,560,652	$	(18,258)	$	415,869
Swiss Operations	143,923		679,837		823,760		245,465		6,257		2,028,879		(5,495)		24,525
Western European Operations	716,715		173,176		889,891		147,562		4,769		1,294,579		(13,678)		93,514
Chinese Operations	578,610		213,735		792,345		270,497		8,506		985,977		(9,755)		686
Other(a)	573,610		4,600		578,210		77,910		3,737		340,786		(5,974)		15,676
Eliminations and Corporate(b)	—		(1,193,198)		(1,193,198)		(145,666)		7,428		(4,396,324)		(39,334)		—
Total	$	3,085,177	$	—	$	3,085,177	$	840,708	$	42,044	$	2,814,549	$	(92,494)	$	550,270


For the Year Ended December 31, 2019	Net Sales to External Customers		Net Sales to Other Segments		Total Net Sales		Segment Profit		Depreciation		Total Assets(c)		Purchase of Property, Plant, and Equipment		Goodwill

U.S. Operations	$	1,057,115	$	114,794	$	1,171,909	$	210,133	$	10,684	$	2,363,725	$	(15,607)	$	410,022
Swiss Operations	139,499		657,678		797,177		233,292		6,069		1,648,065		(5,820)		22,369
Western European Operations	700,741		175,759		876,500		123,845		4,450		1,150,214		(11,267)		87,980
Chinese Operations	544,716		224,517		769,233		266,522		8,045		694,903		(10,252)		633
Other(a)	566,581		5,890		572,471		71,483		3,395		358,281		(4,936)		14,975
Eliminations and Corporate(b)	—		(1,178,638)		(1,178,638)		(127,197)		6,348		(3,425,867)		(49,459)		—
Total	$	3,008,652	$	—	$	3,008,652	$	778,078	$	38,991	$	2,789,321	$	(97,341)	$	535,979


For the Year Ended December 31, 2018	Net Sales to External Customers		Net Sales to Other Segments		Total Net Sales		Segment Profit		Depreciation		Total Assets		Purchase of Property, Plant, and Equipment		Goodwill

U.S. Operations	$	1,007,798	$	104,458	$	1,112,256	$	161,615	$	10,425	$	2,113,268	$	(27,896)	$	410,021
Swiss Operations	134,064		628,529		762,593		202,027		5,835		1,471,625		(1,123)		21,994
Western European Operations	718,788		176,995		895,783		122,574		4,173		983,809		(16,879)		87,242
Chinese Operations	525,109		242,452		767,561		270,668		7,869		1,237,248		(13,248)		644
Other(a)	549,827		6,543		556,370		78,317		3,774		319,070		(8,342)		14,879
Eliminations and Corporate(b)	—		(1,158,977)		(1,158,977)		(104,696)		5,091		(3,506,173)		(75,238)		—
Total	$	2,935,586	$	—	$	2,935,586	$	730,505	$	37,167	$	2,618,847	$	(142,726)	$	534,780

*(a)*Other includes reporting units in Southeast Asia, Latin America, Eastern Europe, and other countries.

*(b)*Eliminations and Corporate includes the elimination of intersegment transactions as well as certain corporate expenses and intercompany investments, which are not included in the Company’s operating segments.

*(c)*The lease right-of-use asset, net increased total assets as of December 31, 2020 and 2019 for U.S. Operations by $35.5 million and $38.3 million, Swiss Operations by $2.3 million and $1.3 million, Western European Operations by $28.9 million and $20.1 million, Chinese Operations by $2.9 million and $3.0 million, Other by $25.9 million and $22.7 million, and Corporate by $3.1 million and $1.9 million million, respectively.

F-41

METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(In thousands, except share data, unless otherwise stated)

A reconciliation of earnings before taxes to segment profit follows:


	2020		2019		2018
Earnings before taxes	$	748,743	$	681,394	$	651,858
Amortization	56,665		49,690		47,524
Interest expense	38,616		37,411		34,511
Restructuring charges	10,516		15,760		18,420
Other income, net	(13,832)		(6,177)		(21,808)
Segment profit	$	840,708	$	778,078	$	730,505

During 2020, restructuring charges of $10.5 million were recognized, of which $3.2 million, $1.0 million, $5.2 million, $0.2 million, and $0.9 million relate to the Company’s U.S., Swiss, Western European, Chinese, and Other Operations, respectively. Restructuring charges of $15.8 million were recognized in 2019, of which $4.2 million, $3.4 million, $6.9 million, $0.5 million, and $0.8 million relate to the Company’s U.S., Swiss, Western European, Chinese, and Other Operations, respectively. Restructuring charges of $18.4 million were recognized in 2018, of which $11.0 million, $4 million, $2.8 million, $0.3 million and $0.3 million relate to the Company’s U.S., Swiss, Western European, Chinese, and Other Operations, respectively.

The Company sells precision instruments, including weighing instruments and certain analytical and measurement technologies, and related services to a variety of customers and industries. None of these end-customers account for more than 1% of net sales. Service revenues are primarily derived from repair and other services including regulatory compliance qualification, calibration, certification, and preventative maintenance, and spare parts. A breakdown of the Company’s sales by product category are disclosed in Note 3 to the consolidated financial statements.

In certain circumstances, our reporting units sell directly into other geographies. A breakdown of net sales to external customers by geographic customer destination and property, plant, and equipment by geographic destination for the years ended December 31 follows:


	Net Sales						Property, Plant, and Equipment, Net
	2020		2019		2018		2020		2019
United States	$	1,014,180	$	984,524	$	933,419	$	208,038	$	200,497
Other Americas	166,446		181,323		172,537		3,713		3,828
Total Americas	1,180,626		1,165,847		1,105,956		211,751		204,325
Germany	199,499		195,790		205,296		48,468		48,401
France	134,542		130,387		141,513		9,123		8,849
United Kingdom	70,163		66,855		70,378		34,631		26,502
Switzerland	69,965		65,202		65,377		314,059		295,029
Other Europe	447,097		433,858		426,209		64,048		59,179
Total Europe	921,266		892,092		908,773		470,329		437,960
China	565,100		527,076		506,360		89,277		85,817
Rest of World	418,185		423,637		414,497		27,511		20,555
Total Asia/Rest of World	983,285		950,713		920,857		116,788		106,372
Total	$	3,085,177	$	3,008,652	$	2,935,586	$	798,868	$	748,657

F-42

METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(In thousands, except share data, unless otherwise stated)

20. QUARTERLY FINANCIAL DATA (UNAUDITED)

Quarterly financial data for the years ended December 31, 2020 and 2019 are as follows:


	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
2020
Net sales	$	649,162	$	690,673	$	807,357	$	937,985
Gross profit	$	374,409	$	397,970	$	469,608	$	559,044
Net earnings	$	98,115	$	126,562	$	161,767	$	216,295
Basic earnings per common share:
Net earnings	$	4.08	$	5.29	$	6.76	$	9.15
Weighted average number of common shares	24,027,833		23,940,278		23,922,272		23,642,415
Diluted earnings per common share:
Net earnings	$	4.03	$	5.22	$	6.68	$	9.03
Weighted average number of common and common equivalent shares	24,353,477		24,228,989		24,225,204		23,965,853
Market price per share:
High	$	835.13	$	859.54	$	1,005.15	$	1,193.36
Low	$	589.41	$	630.58	$	804.79	$	966.92

2019
Net sales	$	679,452	$	731,366	$	753,866	$	843,968
Gross profit	$	388,319	$	419,538	$	435,056	$	498,298
Net earnings(a)	$	111,805	$	127,160	$	129,395	$	192,749
Basic earnings per common share:
Net earnings	$	4.50	$	5.15	$	5.28	$	7.95
Weighted average number of common shares	24,851,340		24,698,032		24,487,268		24,241,383
Diluted earnings per common share:
Net earnings	$	4.42	$	5.06	$	5.20	$	7.84
Weighted average number of common and common equivalent shares	25,310,525		25,118,352		24,880,179		24,599,702
Market price per share:
High	$	729.72	$	840.00	$	872.45	$	793.31
Low	$	513.56	$	701.80	$	642.84	$	658.61

(a) Net earnings includes a non-cash deferred net benefit of $15.8 million for the three months ended December 31, 2019 related to the enactment of Swiss tax reform.

F-43

Table of Contents

Schedule II — Valuation and Qualifying Accounts (in thousands)


Column A	Column B		Column C					Column D		Column E
			Additions
			(1)			(2)
	Balance at the Beginning of Period		Charged to Costs and Expenses			Charged to Other Accounts				Balance at End of Period
Description					-Deductions-
						Note (A)		Note (B)
Deferred tax valuation allowance:
Year ended December 31, 2020	$	50,853	$	2,824		$	3,009	$	4,298	$	52,388
Year ended December 31, 2019	$	15,084	$	36,658		$	—	$	889	$	50,853
Year ended December 31, 2018	$	12,857	$	—		$	3,023	$	796	$	15,084

Note (A)

Amounts in 2020 and 2018 relate primarily to changes in currency translation adjustments and foreign tax credit carryforwards, respectively.

Note (B)

Amounts in 2020, 2019, and 2018 include decreases in state net operating losses and credits, foreign tax credit and R&D credit carryforwards.

S-1

Previous: Item 15. Exhibits and Financial Statement Schedules