MTD US Equity☆

Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read together with our consolidated financial statements.

Changes in local currencies exclude the effect of currency exchange rate fluctuations. Local currency amounts are determined by translating current and previous year consolidated financial information at an index utilizing historical currency exchange rates. We believe local currency information provides a helpful assessment of business performance and a useful measure of results between periods. We do not, nor do we suggest that investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. We present non-GAAP financial measures in reporting our financial results to provide investors with an additional analytical tool to evaluate our operating results.

We also include in the discussion below disclosures of immaterial qualitative factors that are not quantified. Although the impact of such factors is not considered material, we believe these disclosures can be useful in evaluating our operating results.

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Overview

We operate a global business with sales that are diversified by geographic region, product range, and customer. We hold leading positions worldwide in many of our markets and attribute this leadership to several factors, including the strength of our brand name and reputation, our comprehensive offering of innovative instruments and solutions, our Spinnaker sales and marketing program, and the breadth and quality of our global sales and service network.

Net sales in U.S. dollars increased 21% in 2021 and 3% in 2020. Excluding the effect of currency exchange rate fluctuations, or in local currencies, net sales increased 18% in 2021 and 2% in 2020. In 2021, we experienced broad-based growth with robust customer demand in most businesses and regions as global economies recovered from COVID-19. We also benefited from excellent execution of our sales and marketing programs and effectively navigated supply chain challenges to meet heightened customer demand. Growth in China was particularly strong. We continue to benefit from our strong global leadership positions, diversified customer base, innovative product offering, investment in emerging markets, significant installed base, and the impact of our sophisticated global sales and marketing programs. Examples of these programs include identifying and investing in growth and market penetration opportunities, more effectively pricing our products and services, increasing our sales force effectiveness through improved guidance and redirecting resources to our most promising growth opportunities, increasing digitalization tools, and continuing to optimize our lead generation and lead nurturing processes.

During the past two years, we accelerated our ability to use advanced analytics to identify and pursue growth opportunities, while increasing the effectiveness of our digital tools to support our global sales organization. We have also successfully adapted to remote and hybrid work environments and increased engagement with our customers with our Go-to-Market and digital approaches. While global market conditions are currently favorable, challenges remain in the global supply chain and we will face difficult prior period comparisons in 2022 due to strong results in 2021. Uncertainties and challenges relating to COVID-19 also continue, including new variants (such as Omicron), lockdowns, logistical and inflationary challenges, and the potential impact on global economies, and market conditions may change quickly.

Our laboratory sales experienced excellent growth in 2021, particularly from life sciences and biotech customers, while other end-markets such as the chemical industry experienced a strong recovery. We also continue to support COVID-19 testing, development, treatment, and vaccine production activities in biopharma. We expect to continue to benefit from favorable biopharma market trends. We also believe we will benefit from increased customer demand for automation, digitalization, and safety; new facility investments; and continued focus on regulatory compliance including data integrity requirements. Overall, we believe we are well positioned to continue to capture growth and gain market share in our laboratory business.

Our industrial sales experienced strong growth in 2021 in both core industrial and product inspection. Core industrial experienced particularly strong growth, especially in China and the Americas. We continue to benefit from our strong product offering and focus on the more attractive, faster-growing segments of the market and strong execution of our growth initiatives in each region.We also continue to benefit from market trends in automation and digitalization. Emerging market economies, especially China, have historically been an important source of growth based upon the expansion of their domestic economies, and we expect this to be a continued source of future growth. Our core industrial-related products are also especially sensitive to changes in economic growth. Our product inspection business experienced improved customer demand during 2021 after being negatively impacted by COVID-19 in 2020. We

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expect our product inspection end-market to also benefit from our customers’ focus on brand protection, food safety, and productivity.

Our food retailing sales decreased during 2021 primarily due to weak market dynamics, the timing of project activity, and the negative impact of component shortages. Traditionally, the spending levels in this sector have experienced more volatility than our other end-markets due to the timing of customer project activity and new regulations.

In 2022, we will continue to pursue the overall business growth strategies which we have followed in recent years:

Gaining Market Share. Innovation is essential to gaining market share and is fundamental in all aspects of our business including sales and marketing and technology leadership. Our global sales and marketing initiative, Spinnaker, continues to be an important growth strategy. We aim to gain market share by implementing sophisticated sales and marketing programs, leveraging our extensive customer databases, and leveraging our product offering to larger customers through key account management. While this initiative is broad-based, efforts to improve these processes include the use of advanced data analytics to identify, prioritize, and pursue growth opportunities; the implementation of more effective pricing and value-based selling strategies and processes; improved sales force guidance, training and effectiveness; cross-selling; increased segment marketing; and leads generation and nurturing activities. We have also added field sales and service resources to pursue underpenetrated market opportunities and will make additional investments to front-end resources in 2022. We also continue to adapt our Go-to-Market approaches with additional inside and telesales resources, while also increasing digital customer interaction. We continue to benefit from digitalization tools to gain efficiencies and increase the effectiveness of our field sales force. In addition, our comprehensive service offerings, and our initiatives to globalize and harmonize these offerings, help us further penetrate developed markets. We estimate that we have the largest installed base of weighing instruments in the world, and we continue to leverage advanced data analytics and invest in sales and marketing activities to increase the proportion of our installed base that is under service contract, or sell new products that replace old products in our installed base. In addition to traditional repair and maintenance, our service offerings continue to expand into value-added services for a range of market needs, including regulatory compliance. We have also made adjustments to our service model to incorporate remote service, depot drop-off/pickup, and other approaches to ensure the safety of our technicians and customers.

Expanding Emerging Markets. Emerging markets, comprising Asia (excluding Japan), Eastern Europe, Latin America, the Middle East, and Africa, account for approximately 36% of our total net sales. We have a two-pronged strategy in emerging markets: first, to capitalize on long-term growth opportunities in these markets, and second, to leverage our low-cost manufacturing operations in China. We have nearly a 35-year track record in China, and our sales in Asia have grown more than 13% on a compound annual growth basis in local currencies since 1999. Over the years, we have also broadened our product offering to the Asian markets. India has also been a source of emerging market sales growth in past years due to increased life science research activities. Overall, versus the prior year, we experienced a 20% increase in emerging market local currency sales by destination during 2021, which included 25% local currency sales growth in China. Within China, we continue to redeploy resources and sales and marketing efforts to the faster-growing segments of pharma, food manufacturing, chemical, and environment. We believe the long-term growth of these segments will be favorably impacted by the Chinese government’s emphasis on science, high-value industries, product quality, and food safety. We expect our laboratory and product inspection businesses will particularly benefit from our focus on these segments. We also continue to invest and add sales and marketing resources to pursue growth in under-penetrated emerging markets. However, emerging market sales can be volatile. In particular, China has historically been volatile and market conditions may change unfavorably due to various factors.

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Extending Our Technology Lead. We continue to focus on product innovation. In the last three years, we spent approximately 5% of net sales on research and development. We seek to improve our product offerings and their capabilities with additional integrated technologies and software, which we believe supports our pricing differentiation and accelerates product replacement cycles. In addition, we aim to create value for our customers by having thorough knowledge of their processes via our significant installed product base.

Expanding Our Margins. During 2021, we experienced increased inflation in our cost structure, particularly regarding material product costs and transportation and logistics, and we expect our cost structure to further increase in 2022 due to these inflationary dynamics. However, despite these challenges to our cost structure, we continue to strive to improve our margins by more effectively pricing our products and services, optimizing our cost structure, and improving our mix in higher-margin businesses such as service. For example, sophisticated data analytic tools provide us new insights to further refine our price strategies and processes. We also focus on reallocating resources and better aligning our cost structure to support our investments in market penetration initiatives, higher-growth/profitable areas, and opportunities for margin improvement.

We have also initiated various cost reduction programs over the past few years, including temporary cost containment measures during 2020 in response to COVID-19. We have also implemented global procurement and supply chain management programs over the last several years aimed at lowering supply costs, and have increased our focus on these programs with our SternDrive initiative. SternDrive is our global operational excellence program for continuous improvement efforts within our supply chain, manufacturing, and back-office operations. Blue Ocean is also an important enabler of our various margin expansion initiatives. Our move to standardized business processes, systems, and data structures throughout our global organization provides greater data transparency and faster access to real-time data. Our cost leadership and productivity initiatives are also focused on continuously improving our invested capital efficiency, such as reducing our working capital levels, improving our order to cash cycle, and ensuring appropriate returns on our expenditures.

Pursuing Strategic Acquisitions. We seek to pursue "bolt-on" acquisitions that may leverage our global sales and service network, respected brand, extensive distribution channels, and technological leadership. We have identified life sciences, process analytics, and product inspection as three key areas for acquisitions. For example, in March 2021, we acquired all the membership interests of Mayfair Technology, LLC (PendoTECH), a manufacturer and distributor of single-use sensors, transmitters, control systems, and software for measuring, monitoring, and data collection primarily in bioprocess applications. PendoTECH serves biopharmaceutical manufacturers and life science laboratories and is located in the United States. The initial cash payment was $185.0 million and we made other post-closing payments of $7.4 million. We may be required to pay additional consideration of up to $20.0 million. In October 2021, we also acquired Scale-up Systems Inc., a leading software provider for scale-up and reaction modeling serving the biopharma and chemical markets. The initial cash payment was $20.2 million and we may be required to pay additional amounts up to EUR 3.0 million.

COVID-19

Since late 2019, the coronavirus pandemic (COVID-19) has spread globally in all countries where we conduct business. The COVID-19 pandemic is evolving and has led to the implementation of various responses, including government-imposed quarantines, stay-at-home orders and lockdowns, travel restrictions, vaccination and testing requirements, and other public health safety measures. These restrictions continue to change as COVID-19 evolves, variants are discovered, and vaccinations are distributed in each country and region. The emergence of the Omicron variant of COVID-19 in late 2021 has presented particular challenges to the global economy given its high level of transmissibility, which

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can cause many people to be affected at the same time or over a short period of time, leading to potential disruptions to our business and supply chain.

The health and safety of our employees and business partners have been our highest priority throughout the COVID-19 pandemic, and we have implemented several preventative and protective measures. We also have continued to support our customers with their essential businesses, such as life sciences, food manufacturing, chemicals (e.g., sanitizers, disinfectants, soaps, etc.), food retail, and transportation and logistics.

Our production and logistics facilities are currently operational, and our office-based employees continue to adhere to any applicable jurisdictional stay-at-home orders. Our supply chain is currently facing wide-ranging global challenges, although we have been able to meet delivery requirements of our customers with some interruption. We continue to closely monitor risks associated with our supply chain, including the availability of certain components, material shortages, supplier delays, potential transportation delays, and higher transportation and material costs, which could significantly adversely affect sales and/or profitability in future quarters. We also continue to leverage our digital and remote sales capabilities, and our service organization continues to provide on-site and remote customer support to facilitate uptime, productivity, and regulatory compliance.

COVID-19 presents several risks to our business as further described on page 14 in the Risk Factors section of this Form 10-K. Uncertainties related to COVID-19 and the resulting impact to the global economy continue in most regions of the world, and market conditions can change quickly. The longer-term effects on our business will be influenced by the global economy and any economic implications in different regions of the world.

Results of Operations — Consolidated

Net sales

Net sales were $3.7 billion for the year ended December 31, 2021, compared to $3.1 billion in 2020 and $3.0 billion in 2019. This represents an increase of 21% in 2021 and 3% in 2020 in U.S. dollars and an increase of 18% in 2021 and 2% in 2020 in local currencies. The PendoTECH acquisition contributed 1% to our net sales in 2021. In 2021, we experienced broad-based growth with robust customer demand in most businesses and regions, with particularly strong growth in China. We continue to benefit from the execution of our global sales and marketing programs, our innovative product portfolio, and investments in our field organization, particularly surrounding digital tools and techniques. However, uncertainties and challenges relating to COVID-19 continue, including new variants (such as Omicron), lockdowns, supply chain and inflationary challenges, and the potential impact on global economies, and market conditions may change quickly.

In 2021, our net sales by geographic destination increased in U.S. dollars compared to 2020 by 20% in the Americas, 15% in Europe, and 26% in Asia/Rest of World. In local currencies, our net sales by geographic destination increased in 2021 by 20% in the Americas, 12% in Europe, and 21% in Asia/Rest of World, with 25% growth in China. The PendoTECH acquisition contributed approximately 2% to net sales in the Americas and 1% to net sales in Europe during 2021. A discussion of sales by operating segment is included below.

As described in Note 3 to our consolidated financial statements, our net sales comprise product sales of precision instruments and related services. Service revenues are primarily derived from repair and other services, including regulatory compliance qualification, calibration, certification, preventative maintenance, and spare parts.

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Net sales of products increased 23% in U.S. dollars and 20% in local currencies during 2021 and increased 2% in both U.S. dollars and in local currencies in 2020. The PendoTECH acquisition contributed approximately 1% to our net sales of products during 2021. Service revenue (including spare parts) increased 11% in U.S. dollars and 8% in local currencies in 2021 and increased 3% in U.S. dollars and 2% in local currencies in 2020.

Net sales of our laboratory products and services, which represented approximately 56% of our total net sales in 2021, increased 25% in U.S. dollars and 22% in local currencies during 2021. The local currency increase in net sales of our laboratory-related products during 2021 includes very strong growth in most product categories, especially in pipettes and process analytics. Net sales of our laboratory products also benefited approximately 2% from the PendoTECH acquisition.

Net sales of our industrial products and services, which represented approximately 39% of our total net sales in 2021, increased 18% in U.S. dollars and 15% in local currencies during 2021. The local currency increase in net sales of our industrial-related products during 2021 includes strong growth in most product categories, with particularly strong growth in core industrial, especially in China and the Americas.

Net sales of our food retailing products and services, which represented approximately 5% of our total net sales in 2021, decreased 3% in U.S. dollars and 6% in local currencies during 2021. The decline in food retailing is primarily due to weak market dynamics, the timing of project activity, and the negative impact of component shortages.

Gross profit

Gross profit as a percentage of net sales was 58.4% for both 2021 and 2020 and 57.9% for 2019.

Gross profit as a percentage of net sales for products was 60.1% for 2021, compared to 60.3% for 2020 and 60.4% for 2019. Gross profit as a percentage of net sales for services (including spare parts) was 51.8% for 2021, compared to 51.6% for 2020 and 49.0% for 2019.

The gross profit as a percentage of net sales for 2021 reflects increased sales volume and favorable price realization, offset by higher material and transportation costs in 2021 and temporary cost savings in 2020.

Research and development and selling, general, and administrative expenses

Research and development expenses as a percentage of net sales were 4.6% for 2021, 4.5% for 2020, and 4.8% for 2019. Research and development expenses in U.S. dollars increased 21% in 2021 and decreased 3% in 2020, and in local currencies increased 17% in 2021 and decreased 5% in 2020. The increase during 2021 primarily relates to increased project activity and temporary savings in the prior year.

Selling, general, and administrative expenses as a percentage of net sales were 25.4% for 2021, compared to 26.6% for 2020 and 27.2% for 2019. Selling, general, and administrative expenses increased 15% in U.S. dollars and increased 12% in local currencies in 2021 and were flat in U.S. dollars and decreased 1% in local currencies in 2020. The increase during 2021 primarily includes higher cash incentive expense, temporary savings in the prior year, and increased sales and marketing investments.

Amortization expense

Amortization expense was $63.1 million in 2021, compared to $56.7 million and $49.7 million in 2020 and 2019, respectively. The increase in amortization expense primarily includes intangible assets related to the PendoTECH acquisition, as well as our investments in information technology, including our Blue Ocean program.

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Restructuring charges

During the past few years, we initiated various cost reduction measures. Restructuring charges were $5.2 million in 2021, compared to $10.5 million and $15.8 million in 2020 and 2019, respectively. Restructuring expenses are primarily comprised of employee-related costs.

Other charges (income), net

Other charges (income), net consisted of net income of $3.1 million, $13.8 million, and $6.2 million in 2021, 2020, and 2019, 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 $11.4 million, $12.2 million, and $4.8 million in 2021, 2020, and 2019, respectively. Other charges (income), net also includes $3.4 million of acquisition costs for the year ended December 31, 2021, as well as a $6.8 million charge to increase the PendoTECH acquisition contingent consideration and related obligations to the sellers.

Interest expense and taxes

Interest expense was $43.2 million for 2021, compared to $38.6 million for 2020 and $37.4 million for2019.

Our reported tax rate was 19% during 2021, compared to 19.5% and 17.7% during 2020 and 2019, respectively. The 2019 reported tax rate includes a net benefit of $15.8 million associated with Swiss tax reform described below.

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. The changes in Swiss federal tax had an immaterial effect on our financial statements. We recognized a discrete non-cash net deferred tax benefit of $15.8 million as a result of the enactment of the cantonal law in the fourth quarter of 2019. A further description of Swiss tax reform is in Note 14 to our consolidated financial statements.

Results of Operations — by Operating Segment

The following is a discussion of the financial results of our operating segments. We currently have five reportable segments: U.S. Operations, Swiss Operations, Western European Operations, Chinese Operations, and Other. A more detailed description of these segments is outlined in Note 18 to our consolidated financial statements.

U.S. Operations (amounts in thousands)

Total net sales increased 21% in 2021 and 2% in 2020 and net sales to external customers increased 20% in 2021 and 1% in 2020. The increase during 2021 is driven by very strong growth in most product categories, especially laboratory and core industrial. These results were partially offset by a significant decline in food retailing that was impacted by weak market dynamics, the timing of customer project

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activity, and component shortages. Net sales to external customers in our U.S. Operations also benefited approximately 3% from the PendoTECH acquisition.

Segment profit increased $57.2 million in our U.S. Operations segment during 2021, compared to an increase of $34.8 million during 2020. The segment profit increase in 2021 includes higher sales volume and benefits from our margin expansion initiatives, offset in part by higher transportation and material costs and temporary cost savings in the prior year.

Swiss Operations (amounts in thousands)

(1)Represents U.S. dollar growth.

Total net sales in U.S. dollars increased 21% in 2021 and 3% in 2020, and in local currencies increased 19% in 2021 and decreased 2% in 2020. Net sales to external customers in U.S. dollars increased 19% in 2021 and increased 3% in 2020, and in local currencies increased 17% in 2021 and decreased 1% in 2020. Local currency net sales to external customers during 2021 includes strong growth in most product categories.

Segment profit increased $55.7 million in our Swiss Operations segment during 2021, compared to an increase of $12.2 million during 2020. The segment profit increase in 2021 includes higher sales volume, benefits from our productivity initiatives, and favorable foreign currency translation, offset in part by higher transportation and material costs and temporary cost savings in the prior year.

Western European Operations (amounts in thousands)

(1)Represents U.S. dollar growth.

Total net sales in U.S. dollars increased 17% in 2021 and 2% in 2020, and in local currencies increased 12% in 2021 and decreased 1% in 2020. Net sales to external customers in U.S. dollars increased 16% in 2021 and increased 2% in 2020, and in local currencies increased 12% in 2021 and were flat in 2020. Local currency net sales to external customers during 2021 includes strong growth in most product categories, especially in laboratory-related products.

Segment profit increased $24.7 million in our Western European Operations segment during 2021, compared to an increase of $23.7 million in 2020. The segment profit increase in 2021 is primarily due to higher sales volume, benefits from our margin expansion initiatives, and favorable currency translation, offset in part by higher transportation and material costs and temporary cost savings in the prior year.

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Chinese Operations (amounts in thousands)

(1)Represents U.S. dollar growth.

Total net sales in U.S. dollars increased 34% in 2021 and increased 3% in 2020, and in local currencies increased 26% in 2021 and 3% in 2020. Net sales by origin to external customers in U.S. dollars increased 33% in 2021 and 6% in 2020, and in local currencies increased 25% in 2021 and 6% in 2020. The increase in net sales to external customers during 2021 reflects particularly strong growth in both laboratory and industrial products. However, market conditions may change quickly and we will face difficult prior period comparisons in 2022.

Segment profit increased $99.3 million in our Chinese Operations segment during 2021, compared to an increase of $4.0 million in 2020. The increase in segment profit during 2021 primarily reflects increased sales volume, benefits from our margin expansion initiatives, and favorable foreign currency translation, offset in part by higher transportation and material costs and temporary cost savings in the prior year.

Other (amounts in thousands)

(1)Represents U.S. dollar growth.

Other includes reporting units in Southeast Asia, Latin America, Eastern Europe, and other countries. Net sales to external customers in U.S. dollars increased 14% in 2021 and 1% in 2020, and in local currencies increased 12% in 2021 and 2% in 2020. The increase in local currency growth in net sales to external customers during 2021 includes strong growth in most product categories.

Segment profit increased $22.1 million in our Other segment during 2021, compared to an increase of $6.4 million during 2020. The increase in segment profit during 2021 primarily relates to increased sales volume and favorable foreign currency translation.

Liquidity, Capital Resources, and Future Cash Requirements

Liquidity is our ability to generate sufficient cash to meet our obligations and commitments. Sources of liquidity include cash flows from operating activities, available borrowings under our Credit Agreement, the ability to obtain appropriate financing, and our cash and cash equivalent balances. Currently, our financing requirements are primarily driven by working capital requirements, capital expenditures, share repurchases, and acquisitions. Global market conditions can be uncertain, and our ability to generate cash flows could be reduced by a deterioration in global markets.

We currently believe that cash flows from operating activities, together with liquidity available under our Credit Agreement, local working capital facilities, and cash balances, will be sufficient to fund currently anticipated working capital needs and spending requirements for at least the foreseeable future.

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Cash provided by operating activities totaled $908.8 million in 2021, compared to $724.7 million in 2020 and $603.5 million in 2019. The increase in 2021 is primarily due to higher net earnings.

Capital expenditures are made primarily for investments in information systems and technology, machinery, equipment, and the purchase and expansion of facilities. Our capital expenditures totaled $107.6 million in 2021, $92.5 million in 2020, and $97.3 million in 2019. Capital expenditures are expected to increase in 2022 similarly as we experienced in 2021, subject to business and economic conditions.

In September 2021, the Company entered into an agreement with the U.S. Department of Defense to increase domestic production capacity of pipette tips and enhance manufacturing automation and logistics. The Company will receive funding of $35.8 million over the next two years, which will offset future capital expenditures.

We continue to explore potential acquisitions. In connection with any acquisition, we may incur additional indebtedness. In March 2021, we acquired all the membership interests of Mayfair Technology, LLC (PendoTECH), a manufacturer and distributor of single-use sensors, transmitters, control systems, and software for measuring, monitoring, and data collection primarily in bioprocess applications. PendoTECH serves biopharmaceutical manufacturers and life science laboratories and is located in the United States. The initial cash payment was $185.0 million and we made other post-closing payments of $7.4 million. We may be required to pay additional consideration of up to $20.0 million. In October 2021, the Company acquired Scale-up Systems Inc., a leading software provider for scale-up and reaction modeling serving the biopharma and chemical markets. The initial cash payment was $20.2 million and the Company may be required to pay additional amounts up to EUR 3.0 million. For additional information related to these acquisitions, refer to Note 4 to the consolidated financial statements.

In 2021, 2020, and 2019, we also incurred additional acquisition payments totaling $8.3 million, $6.2 million, and $2.0 million, respectively.

Cash flows used in financing activities during 2021 primarily comprised share repurchases. In accordance with our share repurchase program, we spent $1.0 billion in 2021 and $775 million in both 2020 and 2019 on the repurchase of 739,486 shares, 815,652 shares, and 1,094,648 shares, respectively. Our share repurchase program does not obligate us to acquire any specific number of shares; however, in 2022, we intend to spend a similar amount on the repurchase of shares as we spent in 2021, subject to business and economic conditions.

We plan to continue to repatriate earnings from China, Switzerland, Germany, the United Kingdom, and certain other countries in future years and expect the only additional cost associated with the repatriation of such foreign earnings will be withholding taxes. All other undistributed earnings are considered to be permanently reinvested. We believe the ongoing tax impact associated with repatriating our undistributed foreign earnings will not have a material effect on our liquidity.

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Senior Notes and Credit Facility Agreement

Our short-term borrowings and long-term debt consisted of the following at December 31, 2021:

U.S. Dollar Other PrincipalTrading Currencies Total

Senior Notes debt issuance costs, net (2,546) (1,569) (4,115)

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

As of December 31, 2021, approximately $649.0 million of additional borrowings were available under our Credit Agreement and we maintained $98.6 million of cash and cash equivalents. We expect to make interest payments of approximately $50 million during 2022 associated with our debt outstanding as of December 31, 2021.

Changes in exchange rates between the currencies in which we generate cash flow and the currencies in which our borrowings are denominated affect our liquidity. In addition, because we borrow in a variety of currencies, our debt balances fluctuate due to changes in exchange rates. Further, we do not have any downgrade triggers from rating agencies that would accelerate the maturity dates of our debt. We were in compliance with our debt covenants as of December 31, 2021.

Senior Notes

The Senior Notes listed above are senior unsecured obligations and interest is payable semi-annually. The Senior Notes each contain customary affirmative and negative covenants as further described in Note 10 to our consolidated financial statements.

In December 2021, we entered into an agreement to issue and sell $300 million 15-year Senior Notes in a private placement. We will issue $150 million with a fixed interest rate of 2.81% (2.81% Senior Notes) in March 2022, which will mature in March 2037, and we will issue $150 million with a fixed interest rate of 2.91% (2.91% Senior Notes) in September 2022, which will mature in September 2037. We will use the proceeds from the sale of the notes to refinance existing indebtedness and for other general corporate purposes.

In May 2021, we entered into an agreement to issue and sell $125 million 12-year Senior Notes with a fixed interest rate of 2.83%. The Senior Notes were issued in July 2021 and will mature in July 2033.

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We used the proceeds from the sale of the notes to refinance existing indebtedness and for other general corporate purposes.

Credit Agreement

On June 25, 2021, we entered into a $1.25 billion Credit Agreement (the Credit Agreement), which amended our $1.1 billion Amended and Restated Credit Agreement (the Prior Credit Agreement), which is further described in Note 10 to our consolidated financial statements.

Other Local Arrangements

In April 2018, two of our 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 2021.

Share Repurchase Program

In November 2020, the Company’s Board of Directors authorized an additional $2.5 billion to the share repurchase program which has $2.1 billion of remaining availability as of December 31, 2021. 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.

We have purchased 30.2 million common shares since the inception of the program in 2004 through December 31, 2021, at a total cost of $6.9 billion. During the years ended December 31, 2021 and 2020, we spent $1.0 billion and $775.0 million on the repurchase of 739,486 shares and 815,652 shares at an average price per share of $1,352.27 and $950.14, respectively. We reissued 110,748 shares and 162,176 shares held in treasury for the exercise of stock options and restricted stock units during 2021 and 2020, respectively.

Effect of Currency on Results of Operations

Our earnings are affected by changing exchange rates. We are particularly sensitive to changes in the exchange rates between the Swiss franc, euro, Chinese renminbi, and U.S. dollar. We have more Swiss franc expenses than we do Swiss franc sales because we develop and manufacture products in Switzerland that we sell globally and have a number of corporate functions located in Switzerland. When the Swiss franc strengthens against our other trading currencies, particularly the U.S. dollar and euro, our earnings go down. We also have significantly more sales in the euro than we do expenses. When the euro weakens against the U.S. dollar and Swiss franc, our earnings also go down. We estimate a 1% strengthening of the Swiss franc against the euro would reduce our earnings before tax by approximately $1.9 million to $2.1 million annually.

We also conduct business throughout the world, including Asia Pacific, the United Kingdom, Eastern Europe, Latin America, and Canada. Fluctuations in these currency exchange rates against the U.S. dollar can also affect our operating results. The most significant of these currency exposures is the Chinese renminbi. The impact on our earnings before tax of the Chinese renminbi weakening 1% against the U.S. dollar is a reduction of approximately $2.9 million to $3.1 million annually.

In addition to the effects of exchange rate movements on operating profits, our debt levels can fluctuate due to changes in exchange rates, particularly between the U.S. dollar, the Swiss franc, and euro. Based on our outstanding debt at December 31, 2021, we estimate that a 5% weakening of the U.S. dollar

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against the currencies in which our debt is denominated would result in an increase of $34.3 million in the reported U.S. dollar value of our debt.

Taxes

We are subject to taxation in many jurisdictions throughout the world. Our effective tax rate and tax liability will be affected by a number of factors, such as changes in law, the amount of taxable income in particular jurisdictions, the tax rates in such jurisdictions, tax treaties between jurisdictions, the extent to which we transfer funds between jurisdictions, and earnings repatriations between jurisdictions. Generally, the tax liability for each taxpayer within the Mettler-Toledo International Inc. group of companies is determined either (i) on a non-consolidated/non-combined basis or (ii) on a consolidated/combined basis only with other eligible entities subject to tax in the same jurisdiction, in either case without regard to the taxable losses of non-consolidated/non-combined affiliated legal entities.

Environmental Matters

We are subject to environmental laws and regulations in the jurisdictions in which we operate. We own or lease a number of properties and manufacturing facilities around the world. Like many of our competitors, we have incurred, and will continue to incur, capital and operating expenditures and other costs in complying with such laws and regulations.

We are currently involved in, or have potential liability with respect to, the remediation of past contamination in certain of our facilities. A former subsidiary of Mettler-Toledo, LLC known as Hi-Speed Checkweigher Co., Inc. was one of two private parties ordered by the New Jersey Department of Environmental Protection, in an administrative consent order signed on June 13, 1988, to investigate and remediate certain ground water contamination at a property in Landing, New Jersey. After the other party under this order failed to fulfill its obligations, Hi-Speed became solely responsible for compliance with the order. Residual ground water contamination at this site is now within a Classification Exception Area which the Department of Environmental Protection has approved and within which the Company oversees monitoring of the decay of contaminants of concern. A concurrent Well Restriction Area also exists for the site. The Department of Environmental Protection does not view these vehicles as remedial measures, but rather as “institutional controls” that must be adequately maintained and periodically evaluated. We estimate that the costs of compliance associated with the site over the next several years will approximate a total of $0.4 million.

In addition, certain of our present and former facilities have or had been in operation for many decades and, over such time, some of these facilities may have used substances or generated and disposed of wastes which are or may be considered hazardous. It is possible that these sites, as well as disposal sites owned by third parties to which we have sent wastes, may in the future be identified and become the subject of remediation. Although we believe that we are in substantial compliance with applicable environmental requirements and, to date, we have not incurred material expenditures in connection with environmental matters, it is possible that we could become subject to additional environmental liabilities in the future that could have a material adverse effect on our financial condition, results of operations, or cash flows.

Inflation

Inflation can affect the costs of goods and services that we use, including raw materials to manufacture our products, as well as transportation and logistical costs. The competitive environment in which we operate limits somewhat our ability to recover higher costs through increased selling prices. Global inflation significantly increased during 2021 related to the COVID-19 economic recovery and associated disruptions in global demand, logistics, and labor markets. These inflationary conditions could have a greater impact on our operating results in future years.

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Moreover, there may be differences in inflation rates between countries in which we incur the major portion of our costs and other countries in which we sell products, which may limit our ability to recover increased costs. We remain committed to operations in China, Eastern Europe, India, and Brazil, which have experienced inflationary conditions. To date, these inflationary conditions have not had a material effect on our operating results. However, as our presence in China, Eastern Europe, India, and Brazil increases, these inflationary conditions could have a greater impact on our operating results.

Quantitative and Qualitative Disclosures about Market Risk

We have only limited involvement with derivative financial instruments and do not use them for trading purposes.

We have entered into certain interest rate swap agreements. These contracts are more fully described in Note 6 to our consolidated financial statements. The fair value of these contracts was a net liability of $0.4 million at December 31, 2021. Based on our agreements outstanding at December 31, 2021, a 100-basis-point change in interest rates would result in a change in the net aggregate market value of these instruments of approximately $0.2 million. Any change in fair value would not affect our consolidated statement of operations unless such agreements and the debt they hedge were prematurely settled.

We have entered into certain cross currency swap agreements. The fair value of these contracts was a net liability of $3.4 million at December 31, 2021. Based on our agreements outstanding at December 31, 2021, a 100-basis-point change in interest rates and foreign currency exchange rates would result in a change in the net aggregate market value of these instruments by approximately $4.2 million. Any change in fair value would not affect our consolidated statement of operations unless such agreements and the debt they hedge were prematurely settled.

Critical Accounting Estimates

Management’s discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to revenue, income taxes, inventories, goodwill and intangibles, leases, and pensions and other post-retirement benefits. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. The results form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We believe the following critical accounting estimates affect our more significant judgments used in the preparation of our consolidated financial statements. For a detailed discussion on the application of these and other accounting policies, see Note 2 to our consolidated financial statements.

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Income taxes

Income tax expense, deferred tax assets and liabilities, and reserves for unrecognized tax benefits reflect management’s assessment of estimated future taxes to be paid on items in the consolidated financial statements. We record a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized. The valuation allowance of $51.1 million as of December 31, 2021 is based on management’s estimates of future taxable income and application of relevant income tax law. In the event we were to determine that we would be able to realize our deferred tax assets in the future in excess of the net recorded amount, an adjustment to the valuation allowance would increase income or equity in the period such determination was made. Likewise, should we determine that we would not be able to realize all or part of the valuation allowance in the future, an adjustment to the net deferred tax asset would be charged to income in the period such determination was made.

We plan to repatriate earnings from China, Switzerland, Germany, the United Kingdom, and certain other countries in future years and expect the additional tax costs associated with the repatriation of such earnings will be non-U.S. withholding taxes, certain state taxes, and U.S. taxes on currency gains, if any. All other undistributed earnings are considered permanently reinvested.

The significant assumptions and estimates described in the preceding paragraphs are important contributors to our ultimate effective tax rate for each year in addition to our income mix from geographical regions. If any of our assumptions or estimates were to change, or should our income mix from our geographical regions change, our effective tax rate could be materially affected. Based on earnings before taxes of $949.4 million for the year ended December 31, 2021, each increase of $9.5 million in tax expense would increase our effective tax rate by 1%.

Employee benefit plans

The net periodic pension cost for 2021 and projected benefit obligation as of December 31, 2021 were $0.6 million and $141.9 million, respectively, for our U.S. pension plan. The net periodic cost for 2021 and projected benefit obligation as of December 31, 2021 were $9.1 million and $1.0 billion, respectively, for our international pension plans. The net periodic post-retirement benefit for 2021 and expected post-retirement benefit obligation as of December 31, 2021 for our U.S. post-retirement medical benefit plan were $0.1 million and $0.9 million, respectively.

Pension and post-retirement benefit plan expense and obligations are developed from assumptions utilized in actuarial valuations. The most significant of these assumptions include the discount rate and expected return on plan assets. In accordance with U.S. GAAP, actual results that differ from the assumptions are accumulated and deferred over future periods. While management believes the assumptions used are appropriate, differences in actual experience or changes in assumptions may affect our plan obligations and future expense.

The expected rates of return on the various defined benefit pension plans’ assets are based on the asset allocation of each plan and the long-term projected return of those assets, which represent a diversified mix of U.S. and international corporate equities and government and corporate debt securities. In 2002, we froze our U.S. defined benefit pension plan and discontinued our retiree medical program for certain current and all future employees. Consequently, no significant future service costs will be incurred on these plans. For 2021, the weighted average return on assets assumption was 5.75% for the U.S. plan and 3.78% for the international plans. A change in the rate of return of 1% would impact annual benefit plan expense by approximately $9.0 million after tax.

The discount rates for defined benefit and post-retirement plans are set by benchmarking against high-quality corporate bonds. For 2021, the weighted average discount rate assumption was 2.6% for the U.S. plan and 0.4% for the international plans, representing a weighted average of local rates in countries

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where such plans exist. A change in the discount rate of 1% would impact annual benefit plan expense by approximately $11.7 million after tax.

Goodwill and other intangible assets

As of December 31, 2021, our consolidated balance sheet included goodwill of $648.6 million and other intangible assets of $307.5 million.

Our business acquisitions typically result in goodwill and other intangible assets, which affect the amount of future period amortization expense and possible impairment expense. The determination of the value of such intangible assets requires management to make estimates and assumptions that affect our consolidated financial statements.

In accordance with U.S. GAAP, our goodwill and indefinite-lived intangible assets are not amortized, but are evaluated 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 we are unable to conclude whether the goodwill or indefinite-lived intangible asset is not impaired after considering the totality of events and circumstances during our qualitative assessment, we perform a quantitative impairment test by estimating the fair value of the respective reporting unit or indefinite-lived intangible asset and comparing the fair value to the carrying amount of the goodwill asset. 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.

Both the qualitative and quantitative evaluations consider operating results, business plans, economic conditions, and market data, among other factors. There are inherent uncertainties related to these factors and our judgment in applying them to the impairment analyses. Our assessments to date have indicated that there has been no impairment of these assets.

Should any of these estimates or assumptions change, or should we incur lower than expected operating performance or cash flows, including from a prolonged economic slowdown, we may experience a triggering event that requires a new fair value assessment for our reporting units, possibly prior to the required annual assessment. These types of events and resulting analysis could result in impairment charges for goodwill and other indefinite-lived intangible assets if the fair value estimate declines below the carrying value.

Our amortization expense related to intangible assets with finite lives may materially change should our estimates of their useful lives change.

New Accounting Pronouncements

See Note 2 to the consolidated financial statements.

Item 7A.Quantitative and Qualitative Disclosures about Market Risk

Discussion of this item is included in Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Item 8.Financial Statements and Supplementary Data

The financial statements required by this item are set forth starting on page F-1 and the related financial schedule is set forth on page S-1.

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Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A.Controls and Procedures

Conclusions Regarding the Effectiveness of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including the Chief Executive Officer and the Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that these disclosure controls and procedures are effective.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external reporting purposes in accordance with accounting principles generally accepted in the United States of America.

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.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2021. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework (2013). Based on our assessment, we concluded that, as of December 31, 2021, the Company’s internal control over financial reporting is effective.

PricewaterhouseCoopers LLP, an independent registered public accounting firm that audited the financial statements included in this Report on Form 10-K, has issued their integrated audit report, which covers our internal control over financial reporting, which appears on page F-2.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended December 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B.Other Information

None.

Item 9C.Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

None.

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PART III

Item 10.Directors, Executive Officers, and Corporate Governance

The executive officers of the Company are set forth below. Officers are appointed by the Board of Directors and serve at the discretion of the Board.

Name Age Position

Patrick Kaltenbach 58 President and Chief Executive Officer

Peter Aggersbjerg 53 Head of Divisions

Gerhard Keller 54 Head of Process Analytics

Christian Magloth 56 Head of Human Resources

Shawn P. Vadala 53 Chief Financial Officer

Patrick Kaltenbach joined the Company in January 2021 and assumed the role of Chief Executive Officer beginning April 1, 2021. Prior to joining the Company, he served as the President of the Life Sciences Segment at Becton Dickinson since 2018. He was President of Life Sciences and Applied Markets Group at Agilent from 2014 to 2018. Previously, he held wide-ranging and increasing leadership roles at Agilent and its predecessor company, Hewlett Packard, since joining in 1991.

Peter Aggersbjerg has been Head of Divisions since January 2020 and Head of Laboratory since January 2018. From February 2016 to December 2017, he served as the Head of our Laboratory Weighing strategic business unit. Prior to joining the Company, he served as the Global BU Head for Medela’s Neonatal Care business and a member of its Group management. Prior to Medela, Mr. Aggersbjerg worked in various CEO roles in the health care, medical devices, and industrial sectors in Switzerland, Denmark, and the U.S.

Marc de La Guéronnière has been Head of European Market Organizations of the Company since January 2008 and Head of North American Market Organizations since April 2014. He was Head of Region South and General Manager of the Company’s market organization in Spain from January 2006 to January 2008. He joined the Company in 2001 as the Industrial Business Area Manager for our market organization in France. Prior to joining the Company, Mr. de La Guéronnière held various management positions in Europe and the United States with ABB-Elsag Bailey and Danaher-Zellweger.

Gerhard Keller joined the Company in 1991 and has been Head of Process Analytics since July 2018 and Head of Pipettes since July 2013. He previously was Head of Region East Asia/Pacific and also served in various Sales and Marketing leadership functions in Europe and Asia Pacific. Prior to joining the Company, he worked in Quality Control at Sandoz, now Novartis, in Switzerland.

Christian Magloth joined the Company in October 2010 and has been Head of Human Resources since December 2010. Prior to joining the Company, he served as Head of Human Resources of Straumann, a leading global medical devices company listed on the Swiss stock exchange, from April 2006 to September 2010. He previously served as Head of Human Resources at Hero Group, an international consumer foods company, and in various management positions at Hilti, a leading global construction supply company.

Shawn P. Vadala joined the Company in 1997 and has been Chief Financial Officer since January 2014 and also responsible for the Company’s Pricing program since 2008. Mr. Vadala previously held various senior financial positions at the Company’s Columbus, Ohio and Greifensee, Switzerland offices and was also responsible for Business Intelligence from 2010 to 2018. Prior to joining the Company, he worked in the Boston and Zurich, Switzerland offices of PricewaterhouseCoopers.

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Certifications

Our Chief Executive Officer and Chief Financial Officer provide certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 in connection with our quarterly and annual financial statement filings with the Securities and Exchange Commission. The certifications relating to this annual report are attached as Exhibits 31.1 and 31.2.

The remaining information called for by this item is incorporated by reference from the discussion in the sections “Proposal One: Election of Directors,” “Board of Directors — General Information,” “Board of Directors — Operation,” and “Additional Information — Section 16(a) Beneficial Ownership Reporting Compliance” in the 2022 Proxy Statement.

Item 11.Executive Compensation

The information appearing in the sections captioned “Board of Directors — General Information —Director Compensation,” “Compensation Discussion and Analysis,” “Compensation Committee Report,” and “Additional Information — Compensation Committee Interlocks and Insider Participation” in the 2022 Proxy Statement is incorporated by reference herein.

Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information appearing in the section “Share Ownership” in the 2022 Proxy Statement is incorporated by reference herein. Information appearing in “Securities Authorized for Issuance under Equity Compensation Plans as of December 31, 2021” is included within Note 12 to the financial statements.

Item 13.Certain Relationships and Related Transactions and Director Independence

Certain Relationships and Related Transactions — None.

Director Independence — The information in the section “Board of Directors — General Information — Independence of the Board” in the 2022 Proxy Statement is incorporated by reference herein.

Item 14.Principal Accounting Fees and Services

Information appearing in the section “Audit Committee Report” in the 2022 Proxy Statement is hereby incorporated by reference.

PART IV

Item 15.Exhibits and Financial Statement Schedules

(a) Exhibits, Financial Statements, and Schedules:

1. Financial Statements. See Index to consolidated financial statements included on page F-1.

2. Report of Independent Registered Public Accounting Firm (PCAOB ID 238). See page F-2.

3. Financial Statement Schedule. See Schedule II, which is included on page S-1.

4. List of Exhibits. See Exhibit Index included on page E-1.

Item 16.Form 10-K Summary

None.

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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(3)

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Exhibit

No. Description

10.22† Form of Restricted Stock Unit Agreement(16)

10.23†* Form of Performance Share Unit Agreement

10.24† Performance Stock Option Agreement(17)

10.25† Form of Stock Option Agreement Directors(16)

10.26† Form of Stock Option Agreement CEO(16)

10.27† Form of Stock Option Agreement NEOs(16)

10.28† Non-Employee Director Share Award Agreement(3)

21* Subsidiaries of the Company

23.1* Consent of PricewaterhouseCoopers LLP

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Exhibit

No. Description

32* Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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 10-K dated February 8, 2021

(4)Incorporated by reference to the Company’s Report on Form 8-K dated June 30, 2021

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

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

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

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

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

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

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

(12)Incorporated by reference to the Company’s Report on Form 8-K dated May 20, 2021

(13)Incorporated by reference to the Company’s Report on Form 8-K dated December 29, 2021

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

(15)Incorporated by reference to the Company’s Registration Statement on Form S-8 dated July 30, 2021 (Reg. No. 333-258294)

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

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

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

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

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

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

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

(23)Incorporated by reference to the Company’s Report on Form 8-K dated April 24, 2015

* Filed herewith

† Management contract or compensatory arrangement

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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 11, 2022

By: /s/Patrick Kaltenbach

Patrick Kaltenbach

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/Patrick Kaltenbach President and Chief Executive Officer

Patrick Kaltenbach

/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-4

METTLER-TOLEDO INTERNATIONAL INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Page

Report of Independent Registered Public Accounting Firm F-2

Consolidated Balance Sheets as of December 31, 2021 and 2020 F-7

Notes to the Consolidated Financial Statements F-10

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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, 2021 and 2020, 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, 2021, including the related notes, and the schedule of valuation and qualifying accounts for each of the three years in the period ended December 31, 2021 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, 2021, 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, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021 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, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

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 consolidatedfinancial 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.

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

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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 consolidatedfinancial 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 $205.6 million, net of a valuation allowance of $51.1 million, as of December 31, 2021.

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.

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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 11, 2022

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

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METTLER-TOLEDO INTERNATIONAL INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

For the years ended December 31

(In thousands, except share data)

Net sales

Cost of sales

Basic earnings per common share:

Diluted earnings per common share:

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

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METTLER-TOLEDO INTERNATIONAL INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the years ended December 31

(In thousands, except share data)

Other comprehensive income (loss), net of tax:

Unrealized gains (losses) on cash flow hedging arrangements:

Defined benefit pension and post-retirement plans:

Plan amendments and prior service cost 18,831 (93) 430

Total other comprehensive income (loss), net of tax 79,701 (11,252) (21,259)

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

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METTLER-TOLEDO INTERNATIONAL INC.

CONSOLIDATED BALANCE SHEETS

As of December 31

(In thousands, except share data)

ASSETS

Current assets:

Other current assets and prepaid expenses 108,916 71,230

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:

Short-term borrowings and current maturities of long-term debt 101,134 50,317

Commitments and contingencies (Note 17)

Shareholders’ equity:

Preferred stock, $0.01 par value per share; authorized 10,000,000 shares — —

Accumulated other comprehensive income (loss) (255,224) (334,925)

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

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METTLER-TOLEDO INTERNATIONAL INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

For the years ended December 31

(In thousands, except share data)

Shares Amount

Other comprehensive income (loss), net of tax — — — — — (21,259) (21,259)

Other comprehensive income (loss), net of tax — — — — — (11,252) (11,252)

Other comprehensive income (loss), net of tax — — — — — 79,701 79,701

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

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METTLER-TOLEDO INTERNATIONAL INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended December 31

(In thousands)

Cash flows from operating activities:

Swiss tax reform (Note 14) — — (15,833)

Increase in acquisition contingent consideration 6,849 — —

Increase (decrease) in cash resulting from changes in:

Cash flows from investing activities:

Proceeds from sale of property, plant, and equipment 3,652 3,106 1,422

Cash flows from financing activities:

Acquisition contingent consideration paid — — (10,000)

Effect of exchange rate changes on cash and cash equivalents 142 6,038 2,676

Cash and cash equivalents:

Supplemental disclosures of cash flow information:

Cash paid during the year for:

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

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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 significant accounting policies is included in 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.

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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

In September 2021, the Company entered into an agreement with the U.S. Department of Defense to increase domestic production capacity of pipette tips and enhance manufacturing automation and logistics. The Company will receive funding of $35.8 million over the next two years, which will offset future capital expenditures. In accordance with ASU 2021-10: Government Assistance, the Company will apply guidance within IAS 20 - Accounting for Government Grants and Disclosure and will account for the government agreement by reducing the cost of the asset within property, plant, and equipment in the consolidated balance sheets by the amount of the funds received.

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

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METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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.

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.

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METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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 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

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METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

a single component. Operating lease right-of-use assets include initial direct costs, advanced lease payments, and lease incentives.

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 327,768, 316,582, and 406,848 common equivalent shares in the calculation of diluted weighted average number of common shares for the years ended December 31, 2021, 2020, and 2019, respectively, relating to outstanding stock options and restricted stock units.

Outstanding options and restricted stock units to purchase or receive 24,036, 36,263, and 71,660 shares of common stock for the years ended December 31, 2021, 2020, and 2019, 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.

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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 March 2020 and January 2021, the FASB issued ASU 2020-04 and ASU 2021-01: Reference Rate Reform, which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by the discontinuance of LIBOR or another referenced rate. The guidance may be applied to any applicable contract entered into before December 31, 2022. The Company's interest rate and cross currency swaps, as mentioned in Note 6 to the consolidated financial

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METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

statements, are governed by International Swaps and Derivatives Association (ISDA) agreements, and the Company will adhere to the ISDA's fallback protocol when LIBOR is discontinued. In addition, the Company renewed the LIBOR-based credit agreement, as discussed further in Note 10, which includes a fallback protocol when LIBOR is discontinued. Based on these procedures, when LIBOR is discontinued, the interest rate and cross currency swaps will not require de-designation if certain criteria are met. The Company expects the financial impact of the rate change when LIBOR is discontinued to be immaterial to its financial statements.

In November 2021, the FASB issued ASU 2021-10: Government Assistance, which increases the transparency of government assistance including the disclosure of the types of assistance, an entity's accounting for the assistance, and the effect of the assistance on an entity's financial statements. The Company early adopted this guidance on a prospective basis in the fourth quarter of 2021. The adoption of this guidance did not have a material impact on the Company's disclosures.

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:

Service Revenue:

Service Revenue:

Service Revenue:

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METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

The Company's global revenue mix by product category for the year ended December 31, 2021 is laboratory (56% of sales), industrial (39% of sales), and retail (5% 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:

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

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, 2021 and 2020 was $32.1 million and $22.6 million, respectively, and is included within accounts receivable. Deferred revenue and customer prepayments are recorded when cash payments are received or due in advance of the performance obligation being satisfied. Deferred revenue primarily includes prepaid service contracts, as well as deferred installation.

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

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.

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METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

4.ACQUISITIONS

In March 2021, the Company acquired all the membership interests of Mayfair Technology, LLC (PendoTECH), a manufacturer and distributor of single-use sensors, transmitters, control systems, and software for measuring, monitoring, and data collection primarily in bioprocess applications. PendoTECH serves biopharmaceutical manufacturers and life science laboratories and is located in the United States. The initial cash payment was $185.0 million and the Company made other post-closing payments of $7.4 million. The Company may be required to pay additional consideration of up to $20.0 million, which is based upon financial thresholds in 2022 and 2023. The estimated fair value of the contingent consideration obligation at the time of acquisition of $13.5 million was determined using a Monte Carlo simulation based on the Company's forecast of future financial results. During the fourth quarter of 2021, the Company increased the contingent consideration obligation to $20.0 million, based upon actual results and future financial projections, plus related obligations of $0.3 million due to the sellers. The $6.8 million increase to the contingent consideration and related obligations to the sellers was recorded in other charges (income), net.

Goodwill recorded in connection with the acquisition totaled $93.1 million, which is deductible for tax purposes. Identified intangible finite-lived assets acquired include customer relationships of $78.6 million, technology and patents of $21.7 million, trade name of $3.4 million, and other intangibles of $2.4 million. The Company used variations of the income statement approach in determining the fair value of the intangible assets acquired. Specifically, the multi-period excess earnings method was used to determine the fair value of the customer relationships acquired and the relief from royalty method was used to determine the fair value of the technology and patents. The Company's determination of the fair value of the intangible assets acquired involved the use of significant estimates and assumptions principally related to revenue growth, royalty, and customer attrition rates.

The identifiable finite-lived intangible assets will be amortized on a straight-line basis over periods of 5 to 20 years and the annual aggregate amortization expense is estimated at $6.9 million. Net tangible assets acquired were $7.4 million and were recorded at fair value in the consolidated financial statements. All of the acquired assets are included in the Company's U.S. Operations segment.

In October 2021, the Company acquired Scale-up Systems Inc., a leading software provider for scale-up and reaction modeling serving the biopharma and chemical markets. The initial cash payment was $20.2 million and the Company may be required to pay additional amounts up to EUR 3.0 million. Goodwill recorded in connection with the acquisition totaled $11.1 million, which is deductible for tax purposes. The Company also recorded $11.4 million of identifiable finite-lived intangibles primarily pertaining to technology and patents and customer relationships in connection with this acquisition, which will be amortized on a straight-line basis over 7 to 10 years. All of the acquired assets are included in the Company's Western European Operations segment.

In 2021, 2020, and 2019, the Company also incurred additional acquisition payments totaling $8.3 million, $6.2 million, and $2.0 million, respectively.

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METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

5. INVENTORIES

Inventories consisted of the following at December 31:

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, 2021, the interest payments associated with 79% 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 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 November 2021, the Company entered into a cross currency swap arrangement designated as a cash flow hedge. The agreement converts $50 million of borrowings under the Company's credit facility into synthetic Swiss franc debt, which allows the Company to effectively change the floating rate LIBOR-based interest payments, excluding the credit spread, to a fixed Swiss franc income of 0.64%. The swap matures in November 2023.

In June 2021, the Company entered into a cross currency swap arrangement designated as a cash flow hedge. The agreement converts $50 million of borrowings under the Company's credit facility into synthetic Swiss franc debt, which allows the Company to effectively change the floating rate LIBOR-based interest payments, excluding the credit spread, to a fixed Swiss franc income of 0.57%. The swap matures in June 2025. This cross currency swap replaced a similar $50 million swap entered into in June 2019 which matured in June 2021, which converted floating rate LIBOR to a fixed Swiss franc income of 0.95%.

In June 2021, the Company entered into a cross currency swap arrangement designated as a cash flow hedge. The agreement converts $50 million of borrowings under the Company's credit facility into synthetic Swiss franc debt, which allows the Company to effectively change the floating rate LIBOR-based interest payments, excluding the credit spread, to a fixed Swiss franc income of 0.66%. The swap matures in June 2024. This cross currency swap replaced a similar $50 million swap entered into in February 2019 and maturing in June 2021, which converted floating rate LIBOR to a fixed Swiss franc income of 0.78%.

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METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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 matures in June 2023.

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.

The Company’s cash flow hedges are recorded gross at fair value in the consolidated balance sheet at December 31, 2021 and 2020 and are disclosed in Note 7 to the consolidated financial statements. A derivative gain of $1.6 million based upon interest rates at December 31, 2021 is expected to be reclassified from other comprehensive income (loss) to earnings in the next 12 months. Through December 31, 2021, 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, 2021 and 2020, as disclosed in Note 7 to the consolidated financial statements. The Company recognized in other charges (income) net gains of $13.5 million and $4.8 million and a net loss of $3.7 million during the years ended December 31, 2021, 2020, and 2019, respectively, which offset the related net transaction gains (losses) associated with these contracts. At December 31, 2021 and 2020, these contracts had a notional value of $1.0 billion and $536.5 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, 2021 and 2020, the Company had derivative assets totaling $6.0 million and $2.2 million, respectively, and derivative liabilities totaling $10.3 million and $23.3 million, respectively. The Company has limited involvement with derivative financial instruments and therefore does not present all the required disclosures in tabular format. The fair values of the interest rate swap agreements, the cross currency swap agreements, and the foreign currency forward contracts that economically hedge short-term intercompany balances are estimated based upon inputs from current valuation information obtained from dealer quotes and priced with observable market assumptions and appropriate valuation adjustments for credit risk. The Company has evaluated the valuation methodologies used to develop the fair values by dealers in order to determine whether such valuations are representative of an exit price in the Company’s principal market. In addition, the Company uses an internally developed model to perform testing on the valuations received from brokers. The Company has also considered both its own credit risk

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METTLER-TOLEDO INTERNATIONAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

and counterparty credit risk in determining fair value and determined these adjustments were insignificant for the years ended December 31, 2021 and 2020.

Under U.S. GAAP, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value measurement consists of observable and unobservable inputs that reflect the assumptions that a market participant would use in pricing an asset or liability.

A fair value hierarchy has been established that categorizes these inputs into three levels:

Level 1: Quoted prices in active markets for identical assets and liabilities

Level 2: Observable inputs other than quoted prices in active markets for identical assets and liabilities

Level 3: Unobservable inputs

The following table presents the Company’s assets and liabilities, which are all categorized as Level 2 and are measured at fair value on a recurring basis at December 31, 2021 and 2020. The Company does not have any assets or liabilities which are categorized as Level 1.