UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

Commission file number 1-13595

Mettler-Toledo International Inc.

(Exact name of registrant as specified in its charter)

011-41-44-944-2211

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

NONE

      Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes þ          No o

      Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.     Yes þ          No o

      Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12 b-2 of the Act).     Yes þ          No o

      As of February 1, 2005 there were 43,268,039 shares of the Registrant’s Common Stock, $0.01 par value per share, outstanding. The aggregate market value of the shares of Common Stock held by non-affiliates of the Registrant on June 30, 2004 (based on the closing price for the Common Stock on the New York Stock Exchange as of the last business day of the registrant’s most recently completed second fiscal quarter, June 30, 2004) was approximately $2.1 billion. For purposes of this computation, shares held by affiliates and by directors of the Registrant have been excluded. Such exclusion of shares held by directors is not intended, nor shall it be deemed, to be an admission that such persons are affiliates of the Registrant.

Documents Incorporated By Reference

METTLER-TOLEDO INTERNATIONAL INC.

ANNUAL REPORT ON FORM 10-K

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004

DISCLAIMER

      Some of the statements in this annual report and in documents incorporated by reference constitute “forward-looking statements” within the meaning of Section 27A of the U.S. Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of 1934. These statements relate to future events or our future financial performance, including, but not limited to, strategic plans, potential growth opportunities in both developed markets and emerging markets, impact of inflation, currency and interest rate fluctuations, planned research and development efforts, product introductions and innovation, manufacturing capacity, adequacy of facilities, expected customer demand, meeting customer expectations, planned operational changes and productivity improvements, research and development expenditures, competitors’ product development, expected capital expenditures, future cash sources and requirements, liquidity, impact of long term incentive plans, expected pension contributions and payments, impact of taxes, expected compliance with laws, changes in law and regulations, impact of environmental costs, expected trading volume and value of stocks and options, expected cost savings, impact of litigation, benefits and other effects of completed or future acquisitions, which involve known and unknown risks, uncertainties and other factors that may cause our or our businesses’ actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by any forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of those terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially because of market conditions in our industries or other factors. Moreover, we do not, nor does any other person, assume responsibility for the accuracy and completeness of those statements. Unless otherwise required by applicable laws, we disclaim any intention or obligation to publicly update or revise any of the forward-looking statements after the date of this annual report to conform them to actual results, whether as a result of new information, future events, or otherwise. All of the forward-looking statements are qualified in their entirety by reference to the factors discussed under the captions “Factors affecting our future operating results” in the “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of this annual report, which describe risks and factors that could cause results to differ materially from those projected in those forward-looking statements.

      We caution the reader that the above list of risks and factors that may affect results addressed in the forward-looking statements may not be exhaustive. Other sections of this annual report and other documents incorporated by reference may describe additional risks or factors that could adversely impact our business and financial performance. We operate in a continually changing business environment, and new risk factors emerge from time to time. Management cannot predict these new risk factors, nor can it assess the impact, if any, of these new risk factors on our businesses or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those projected in any forward-looking statements. Accordingly, forward-looking statements should not be relied upon as a prediction of actual results.

PART I

      We are a leading global supplier of precision instruments and services. We are the world’s largest manufacturer of weighing instruments for use in laboratory, industrial, packaging, logistics and food retailing applications. We also hold top-three market positions in several related analytical instruments, and are a leading provider of automated chemistry systems used in drug and chemical compound discovery and development. In addition, we are the world’s largest manufacturer and marketer of metal detection and other end-of-line inspection systems used in production and packaging, and hold a leading position in certain process analytics applications.

      Our business is geographically diversified, with sales in 2004 derived 43% from Europe, 40% from North and South America and 17% from Asia and other countries. Our customer base is also diversified by industry and by individual customer.

      Mettler-Toledo International Inc. was incorporated as a Delaware corporation in 1991 and became a publicly traded company with its initial public offering in November 1997. In November 2001, we acquired Rainin Instrument, a leading manufacturer of pipetting solutions used in pharmaceutical, biotech and medical research applications.

Business Segments

      We have six reportable segments: Principal U.S. Operations, Other Western European Operations, Principal Central European Operations, Swiss R&D and Manufacturing Operations, Asia and Other. See Note 16 to the audited consolidated financial statements and Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations under “Results of Operations — by Operating Segment” for detailed results by segment and geographic region.

      We manufacture a wide variety of precision instruments and provide value-added services to our customers. Our principal products and principal services are set forth below. Given the inherently global nature of our business, the following description of our products, customers and distribution, sales and services, research and development, manufacturing and other elements of our business apply, for the most part, to each of our segments. In some instances particular products are targeted for particular segments but none of these are material in nature to the entire business or an individual segment.

Laboratory Instruments

      We make a wide variety of precision laboratory instruments, including laboratory balances, pipettes, titrators, thermal analysis systems and other analytical instruments. The laboratory instruments business accounted for approximately 45% of our net sales in 2004.

      Our laboratory balances have weighing ranges from one ten-millionth of a gram up to 32 kilograms. To cover a wide range of customer needs and price points, we market our balances in a range of product tiers offering different levels of functionality. Based on the same technology platform, we also manufacture mass comparators, which are used by weights and measures regulators as well as laboratories to ensure the accuracy of reference weights.

      In addition to Mettler-Toledo branded products, we manufacture and sell balances under the brand name “Ohaus.” Ohaus branded products principally target the educational market and other markets in which customers are interested in lower cost, a more limited set of features and less comprehensive support and service.

      Pipettes are used in laboratories for dispensing small volumes of liquids. In late 2001, we acquired Rainin Instrument, a premier provider of pipetting solutions based in California. Rainin develops, manufactures and distributes advanced pipettes, tips and accessories, including single- and multi-channel manual and electronic

pipettes. Rainin maintains service centers in the key markets where customers periodically send in their pipettes for certified recalibrations. Rainin’s principal end markets are pharmaceutical, biotech, clinical and academia.

      Titrators measure the chemical composition of samples and are used in laboratories as well as the food and beverage and other industries. Our high-end titrators are multi-tasking models, which can perform two determinations simultaneously on multiple vessels. Our offering includes robotics to automate routine work in quality control applications.

      Thermal analysis systems measure material properties as a function of temperature, such as weight, dimension, energy flow and viscoelastic properties. Thermal analysis systems are used in nearly every industry, but primarily in the plastics and polymer industries and increasingly in the pharmaceutical industry.

      pH meters measure acidity in laboratory samples. We also sell density and refractometry instruments, which measure chemical concentrations in solutions. In addition, we manufacture and sell moisture analyzers, which precisely determine the moisture content of a sample by utilizing an infrared dryer to evaporate moisture.

      LabX, our PC-based laboratory software platform, manages and analyzes data generated by our titrators and balances. LabX provides full network capability, has efficient, intuitive protocols, and enables customers to collect and archive data in compliance with the U.S. Food and Drug Administration’s traceability requirements for electronically stored data (also known as 21 CFR Part 11). We plan to expand LabX to include other laboratory instruments.

      Our current drug discovery offerings are focused on key aspects of process development, as well as on identification of leads and optimization of those leads. Our automated lab reactors and reaction calorimeters are integral to the process research and development and scale-up activities of our customers. We offer a range of technologies including automated synthesizers to support chemists working on lead identification and optimization, automated workstations that support the synthesis process, and systems for cleaning up and purifying synthesis products. In addition, we allow customers to monitor the reaction and crystallization processes with on-line measurement technologies based on infrared and laser light. We believe that our portfolio of integrated technologies can bring significant efficiencies to the drug discovery process, enabling our customers to create larger numbers of higher quality candidate compounds and bring them to market faster.

      Our process analytics business provides instruments for the in-line measurement of liquid parameters used primarily in the production process of pharmaceutical, biotech, beverage, microelectronics, and chemical companies. About half of our process analytics sales are to the pharmaceutical and biotech markets, where our customers need fast and secure scale-up and production that meets the validation processes required for GMP (Good Manufacturing Processes) and other regulatory standards. We are a leading solution provider for liquid analytical measurement to control and optimize production processes. Our solutions include sensor technology for pH, dissolved oxygen, CO₂, conductivity, turbidity and TOC and automated systems for calibration and cleaning of measurement points. Our instruments offer leading multi-parameter capabilities and plant-wide control system integration, which are key for integrated measurement of multiple parameters to secure production quality and efficiency. With a worldwide network of specialists, we support customers in critical process applications, compliance and systems integration questions.

Industrial Instruments

      We manufacture numerous industrial weighing instruments and related terminals and we offer dedicated software solutions for the chemical, pharmaceutical and food industries. We supply automatic identification and data capture solutions, which integrate in-motion weighing, dimensioning and identification technologies for transport, shipping and logistics customers. We also offer heavy industrial scales and related software. The industrial instruments business accounted for approximately 42% of our net sales in 2004.

      We offer a comprehensive line of industrial scales and balances, such as bench scales and floor scales, for weighing loads from a few grams to several thousand kilograms in applications ranging from measuring materials in chemical production to weighing mail and packages. Our products are used in a wide range of applications, such as counting applications and in formulating and mixing ingredients.

      Our industrial scale terminals integrate collected data and control and automate manufacturing processes. They allow users to remotely download programs or access setup data and can minimize down time through predictive rather than reactive maintenance.

      We are a leading global supplier of automatic identification and data capture solutions, which integrate in-motion weighing, dimensioning and identification technologies. With these solutions, customers can measure the weight and cubic volume of packages for appropriate billing, logistics and quality control. Our solutions also integrate into customers’ information systems.

      Our primary heavy industrial products are scales for weighing trucks or railcars (i.e., weighing bulk goods as they enter or leave a factory or at a toll station). Heavy industrial scales are capable of measuring weights up to 500 tons and permit accurate weighing under extreme environmental conditions. We also offer advanced computer software, including, that can be used with our heavy industrial scales to facilitate a broad range of customer solutions and provides a complete system for managing vehicle transaction processing.

      We offer a wide range of software that can be used with our industrial instruments. Examples include FreeWeigh.net, a statistical quality control software, Formweigh, our formulation/batching software, and OverDrive. FreeWeigh.net and Formweigh provide full network capability and enable customers to collect and archive data in compliance with the U.S. Food and Drug Administration’s traceability requirements for electronically stored data (21 CFR part 11). In addition, our Q.i365 software controls batching processes by monitoring the material transfer control process. Q.i365 also provides statistical, diagnostic and operational information for asset management, process control and database applications.

      Increasing safety and consumer protection requirements are driving the need for more and more sophisticated end-of-line inspection systems (e.g., for use in food processing and packaging, and pharmaceutical and other industries). We are the world’s leading provider of metal detectors, x-ray visioning equipment and checkweighers that are used in these industries. Metal detectors are most commonly used to detect fine particles of metal that may be contained in raw materials or may be generated by the manufacturing process itself. X-ray-based vision inspection helps detect non-metallic contamination, such as glass, stones and pits, which enter the manufacturing process for similar reasons. Our x-ray systems can detect metal in metallized containers and can be used for mass control. Both x-ray and metal detection systems may be used together with checkweighers as components of integrated packaging

lines. Checkweighers are used to control the filling content of packaged goods such as food, pharmaceuticals and cosmetics. FreeWeigh.net is our statistical and quality control software that optimizes package filling, monitors weight-related data and integrates it in real time into customers’ enterprise resource planning and/or process control systems.

Retail Weighing Solutions

      Supermarkets, hypermarkets and other food retail organizations make use of multiple weighing applications for handling fresh goods (such as meats, vegetables, fruits and cheeses). We offer stand-alone scales for basic counter weighing and pricing, price finding and printing. In addition, we offer network scales and software, which can integrate backroom, counter, self-service and checkout functions and can incorporate weighing data into a supermarket’s overall fresh goods management system. Customer benefits are in the areas of pricing, merchandising, inventory management, and regulatory compliance. The retail business accounted for approximately 13% of our net sales in 2004.

      Our subsidiary SofTechnics provides retail software for in-store item and inventory management solutions. SofTechnics’ offering complements our solutions to food retailers. Its software provides the full scope of real-time item management, thereby allowing retailers to match local store inventory levels with local customer demand. As our traditional retail weighing business become more focused on information technology, the opportunity to cross-sell SofTechnics’ software and services expands. We have begun to introduce SofTechnics software for the improved management of fresh goods and plan to sell more integrated data management solutions for fresh goods now and in the future.

Customers and Distribution

      Our principal customers include companies in the following key end markets: the life science industry (pharmaceutical and biotech companies, as well as independent research organizations); food producers; food retailers; the beverage industry; specialty chemicals and cosmetics companies; the transportation and logistics industry; the metals industry; the electronics industry; and the academic market.

      Our products are sold through a variety of distribution channels. Generally, more technically sophisticated products are sold through our direct sales force, while less complicated products are sold through indirect channels. Our sales through direct channels exceed our sales through indirect channels. A significant portion of our sales in the Americas is generated through the indirect channels. We have a diversified customer base, with no single customer accounting for more than 2% of 2004 net sales.

Sales and Service

      We maintain geographically focused market organizations around the world that are responsible for all aspects of our sales and service. The market organizations are local marketing and service organizations designed to maintain close relationships with our customers. Each market organization has the flexibility to adapt its marketing and service efforts to account for different cultural and economic conditions. Market organizations also work closely with our producing organizations (described below) by providing feedback on manufacturing and product development initiatives and relaying new product and application ideas.

      We have one of the largest and broadest global sales and service organizations among precision instrument manufacturers. At December 31, 2004, our sales and services group consisted of over 4,500 employees in sales, marketing and customer service (including related administration) and post-sales technical service, located in 37 countries. This field organization has the capability to provide service and support to our customers and distributors in major markets across the globe. This is important because our customers are seeking to do more and more business with a consistent global approach.

      We have expanded our service business from one centered on calibration, repair and maintenance to one driven by regulatory compliance and other value-added services, which we call Service XXL. We have a unique offering to our pharmaceutical customers in assuring that our instruments are used in compliance with FDA regulations and we can provide these services regardless of the customer’s location throughout the world. This global service network also is an important factor in our ability to expand in emerging markets. We estimate that we have the largest installed base of weighing instruments in the world. In 2004, service (representing service contracts, repairs and replacement parts) accounted for approximately 23% of our total net sales. A significant portion of this amount is derived from replacement parts.

      Beyond revenue opportunities, we believe service is a key part of our solution offering and helps significantly in customer retention. The close relationships and frequent contact with our large customer base provides us with sales opportunities and innovative product and application ideas.

Research and Development and Manufacturing

      Our research, product development and manufacturing efforts are organized into a number of producing organizations which specialize in specific products on a global basis. Our focused producing organizations help reduce product development time and costs, improve customer focus and maintain technological leadership. The producing organizations work together to share ideas and best practices, and there is a close interface and coordinated customer interaction among marketing organizations and producing organizations.

      We intend to continue to invest in product innovation in order to provide technologically advanced products to our customers for existing and new applications. Over the last three years, we have invested $231.8 million in research and development ($83.2 million in 2004, $78.0 million in 2003, and $70.6 million in 2002). In 2004, we spent approximately 5.9% of net sales on research and development. Our research and development efforts fall into two categories:

      We have devoted an increasing proportion of our research and development budget to software development. This includes software to process the signals captured by the sensors of our instruments, application-specific software, and software that connects our solutions into customers’ IT systems. We closely integrate research and development with marketing, manufacturing and product engineering. We have over 800 employees in research and development and product engineering.

      We are a worldwide manufacturer, with facilities principally in the United States, Switzerland, Germany, the United Kingdom and China. Laboratory instruments are produced mainly in Switzerland and to a lesser extent in the United States and China, while our remaining products are produced worldwide. We emphasize product quality in our manufacturing operations, and most of our products require very strict tolerances and exact specifications. We use an extensive quality control system that is integrated into each step of the manufacturing process. All major manufacturing facilities have achieved ISO 9001 certification. We believe that our manufacturing capacity is sufficient to meet our present and currently anticipated needs.

      We generally manufacture only critical components ourselves, usually components that contain proprietary technology. When outside manufacturing is more efficient, we contract with others for certain components. We use a wide range of suppliers. We believe our supply arrangements to be adequate and that there are no material

constraints on the sources and availability of materials. From time to time we rely on a single supplier for all of our requirements of a particular component. Supply arrangements for electronics are generally made globally.

Backlog; Seasonality

      Our manufacturing turnaround time is generally sufficiently short so as to permit us to manufacture to fill orders for most of our products, which helps to limit inventory costs. Backlog is therefore generally a function of requested customer delivery dates and is typically no longer than one to two months.

      Our business has historically experienced a slight amount of seasonal variation, particularly the high-end laboratory instruments business. Traditionally, sales in the first quarter are slightly lower than, and sales in the fourth quarter are slightly higher than, sales in the second and third quarters. Fourth quarter sales have historically generated approximately 27-28% of our sales. This trend has a somewhat greater effect on income from operations than on net sales because fixed costs are spread evenly across all quarters.

Employees

      As of December 31, 2004, we had approximately 8,700 employees throughout the world, including approximately 4,100 in Europe, 3,000 in North and South America, and 1,600 in Asia and other countries.

      We believe our employee relations are good, and we have not suffered any material employee work stoppage or strike during the last five years, except for a strike in early 2003 at our Bethune, France facility, which has been closed. Labor unions do not represent a meaningful number of our employees.

Intellectual Property

      We hold over 1,700 patents and trademarks, primarily in the United States, Switzerland, Germany, the United Kingdom, France, Japan and China. Our products generally incorporate a wide variety of technological innovations, some of which are protected by patents of various durations. Products are generally not protected as a whole by individual patents, and as a result, no one patent or group of related patents is material to our business. We have numerous trademarks, including the Mettler-Toledo name and logo, which are material to our business. We regularly protect against infringement of our intellectual property.

Regulation

      Our products are subject to various regulatory standards and approvals by weights and measures regulatory authorities. All of our electrical components are subject to electrical safety standards. We believe that we are in compliance in all material respects with applicable regulations.

      Approvals are required to ensure our instruments do not impermissibly influence other instruments, and are themselves not affected by other instruments. In addition, some of our products are used in “legal for trade” applications, in which prices based on weight are calculated, and for which specific weights and measures approvals are required. Although there are a large number of regulatory agencies across our markets, there is an increasing trend toward harmonization of standards, and weights and measures regulation is harmonized across the European Union.

      Our products may also be subject to special requirements depending on the end-user and market. For example, laboratory customers are typically subject to Good Laboratory Practices (GLP), industrial customers to Good Manufacturing Practices (GMP), pharmaceutical customers to U.S. Food and Drug Administration (FDA) regulations, and customers in food processing industries may be subject to Hazard Analysis and Critical Control Point (HACCP) regulations. Products used in hazardous environments may also be subject to special requirements.

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 in both the United States and abroad.

      We are currently involved in, or have potential liability with respect to, the remediation of past contamination in certain of our facilities in both the United States and abroad. Our subsidiary Hi-Speed Checkweigher Co., Inc. (“Hi-Speed”) is one of two private parties ordered to perform certain remedial actions under an administrative consent order that the New Jersey Department of Environmental Protection (“NJDEP”) signed on June 13, 1988 with respect to certain property in Landing, New Jersey. GEI International Corporation (“GEI”) is the other ordered party. GEI has failed to fulfil all its obligations under the NJDEP order, and Hi-Speed has recently entered into discussions with the NJDEP about the next steps to be undertaken as a result. NJDEP has agreed with Hi-Speed that the residual contaminants can be addressed through the establishment of a Classification Exception Area and concurrent Well Restriction Area for the site. The NJDEP 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 will be approximately $0.3 million over the next seven years.

      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. Accordingly, 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 material environmental liabilities in the future.

Competition

      Our markets are highly competitive. Weighing and analytical instruments markets are fragmented both geographically and by application, particularly the industrial and food retailing markets. As a result, we face numerous regional or specialized competitors, many of which are well established in their markets. In addition, some of our competitors are divisions of larger companies with potentially greater financial and other resources than our own. Taken together, the competitive forces present in our markets can impair our operating margins in certain product lines and geographic markets.

      We expect our competitors to continue to improve the design and performance of their products and to introduce new products with competitive prices. Although we believe that we have technological and other competitive advantages over many of our competitors, we may not be able to realize and maintain these advantages. These advantages include our worldwide market leadership positions; our global brand and reputation; our track record of technological innovation; our comprehensive, high-quality solution offering; our global sales and service offering; our large installed base of weighing instruments; and the fact that our revenue base is diversified by geographic region, product range and customer. To remain competitive, we must continue to invest in research and development, sales and marketing and customer service and support. We cannot be sure that we will have sufficient resources to continue to make these investments or that we will be successful in identifying, developing and maintaining any competitive advantages.

      We believe that the principal competitive factors in developed markets for purchasing decisions are the product itself, application support, service support and price. In emerging markets, where there is greater demand for less sophisticated products, price is a more important factor than in developed markets. Competition in the U.S. laboratory market is also influenced by the presence of large distributors that sell not only our products but those of our competitors as well.

Factors affecting our future operating results

      We have substantial debt and we may incur substantial additional debt in the future. As of December 31, 2004, we had total indebtedness of approximately $136.0 million, net of cash of $67.2 million. We are also permitted by the terms of our debt instruments to incur substantial additional indebtedness, subject to the restrictions therein.

      Our debt could have important consequences to you. For example, it could:

      Our ability to make payments on our debt and to fund planned capital expenditures and research and development efforts will depend on our ability to generate cash in the future. This, to an extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors, including those described in this section, that are beyond our control.

      We cannot assure you that our business will generate sufficient cash flow from operations or that future borrowings will be available to us under our senior credit facility in an amount sufficient to enable us to pay our debt, or to fund our other liquidity needs. We may need to refinance all or a portion of our indebtedness on or before maturity. We cannot assure you that we will be able to refinance any of our debt, including our senior credit facility and the senior notes, on commercially reasonable terms or at all.

      The indenture governing our senior notes and the agreements governing our senior credit facility contain a number of covenants imposing significant restrictions on our business. These restrictions may affect our ability to operate our business and may limit our ability to take advantage of potential business opportunities as they arise. The restrictions these covenants place on us and our restricted subsidiaries include limitations on our ability and the ability of our restricted subsidiaries to:

      Our senior credit facility also requires us to meet several financial ratios.

      Our ability to comply with these agreements may be affected by events beyond our control, including prevailing economic, financial and industry conditions, and are subject to the risks in this section. The breach of any of these covenants or restrictions could result in a default under the indenture governing the senior notes or under our senior credit facility. An event of default under our senior credit facility would permit our lenders to declare all amounts

borrowed from them to be immediately due and payable. Acceleration of our other indebtedness may cause us to be unable to make interest payments on the senior notes and repay the principal amount of the senior notes.

      Because we conduct operations in many countries, our operating income can be significantly affected by fluctuations in currency exchange rates. Swiss franc-denominated expenses represent a much greater percentage of our operating expenses than Swiss franc-denominated sales represent of our net sales. In part, this is because most of our manufacturing costs in Switzerland relate to products that are sold outside Switzerland. Moreover, a substantial percentage of our research and development expenses and general and administrative expenses are incurred in Switzerland. Therefore, if the Swiss franc strengthens against all or most of our major trading currencies (e.g., the U.S. dollar, the euro, other major European currencies and the Japanese yen), our operating profit is reduced. We also have significantly more sales in European currencies (other than the Swiss franc) than we have expenses in those currencies. Therefore, when European currencies weaken against the U.S. dollar and the Swiss franc, it also decreases our operating profits. Accordingly, the Swiss franc exchange rate to the euro is an important cross-rate monitored by the Company. We estimate that a 1% strengthening of the Swiss franc against the euro would result in a decrease in our earnings before tax of $0.9 million to $1.1 million on an annual basis. In addition to the effects of exchange rate movements on operating profits, our debt levels can fluctuate due to changes in exchange rates, particularly between the U.S. dollar and the Swiss franc. Based on our outstanding debt at December 31, 2004, we estimate that a 10% weakening of the U.S. dollar against the currencies in which our debt is denominated would result in an increase of approximately $2.8 million in the reported U.S. dollar value of the debt.

      We conduct business in many countries, including emerging markets in Asia, Latin America and Eastern Europe. In addition to the currency risks discussed above, international operations pose other substantial risks and problems for us. For instance, various local jurisdictions in which we operate may revise or alter their respective legal and regulatory requirements. In addition, we may encounter one or more of the following obstacles or risks:

      We must also comply with a variety of regulations regarding the conversion and repatriation of funds earned in local currencies. For example, converting earnings from our operations in China into other currencies and repatriating these funds require governmental approvals. If we cannot comply with these or other applicable regulations, we may face increased difficulties in utilizing cash flow generated by these operations outside of China.

      Economic conditions in emerging markets have from time to time deteriorated significantly, and some emerging markets are experiencing recessionary trends, severe currency devaluations and inflationary prices. Moreover, economic problems in individual markets can spread to other economies, adding to the adverse conditions we face in emerging markets. We remain committed to emerging markets, particularly those in Asia, Latin America and Eastern Europe. However, we expect the fluctuating economic conditions will affect our results of operations in these markets for the foreseeable future.

      Our markets are highly competitive. Weighing and analytical instruments markets are also fragmented both geographically and by application, particularly the industrial and food retailing markets. As a result, we face numerous regional or specialized competitors, many of whom are well established in their markets. In addition, some of our competitors are divisions of larger companies with potentially greater financial and other resources than our company. Taken together, the competitive forces present in our markets can impair our operating margins in certain product lines and geographic markets. We expect our competitors to continue to improve the design and performance of their products and to introduce new products with competitive prices. Although we believe that we have certain technological and other advantages over our competitors, we may not be able to realize and maintain these advantages.

      We must introduce new products and enhancements in a timely manner, or our products could become technologically obsolete over time, which would harm our operating results. To remain competitive, we must continue to make significant investments in research and development, sales and marketing, and customer service and support. We cannot be sure that we will have sufficient resources to continue to make these investments. In developing new products, we may be required to make substantial investments before we can determine their commercial viability. As a result, we may not be successful in developing new products and we may never realize the benefits of our research and development activities.

      Our products are used extensively in the pharmaceutical, food and beverage and chemical industries. Consolidation in the pharmaceutical and chemicals industries hurt our sales in prior years. A prolonged downturn or additional consolidation in any of these industries could adversely affect our operating results. In addition, the capital spending policies of our customers in these industries are based on a variety of factors we cannot control, including the resources available for purchasing equipment, the spending priorities among various types of equipment and policies regarding capital expenditures generally. Any decrease or delay in capital spending by our customers would cause our revenues to decline and could harm our profitability.

      We plan to pursue acquisitions of complementary product lines, technologies or businesses. Acquisitions involve numerous risks, including:

      If we successfully identify acquisitions in the future, completing such acquisitions may result in:

      Any of these acquisition-related risks could materially adversely affect our profitability.

      Larger companies have identified life sciences and instruments as businesses they will consider entering, which could change the competitive dynamics of these markets. In addition, we may not be able to identify, successfully complete or integrate potential acquisitions in the future. However, even if we can do so, we cannot be sure that these acquisitions will have a positive impact on our business or operating results.

      Our success depends on our ability to obtain and enforce patents on our technology and to protect our trade secrets. Our patents may not provide complete protection, and competitors may develop similar products that are not covered by our patents. Our patents may also be challenged by third parties and invalidated or narrowed. Although we take measures to protect confidential information, improper use or disclosure of our trade secrets may still occur.

      We may be sued for infringing on the intellectual property rights of others. The cost of any litigation could affect our profitability regardless of the outcome, and management attention could be diverted. If we are unsuccessful in such litigation, we may have to pay damages, stop the infringing activity and/or obtain a license. If we fail to obtain a required license, we may be unable to sell some of our products, which could result in a decline in our revenues.

      We have employment contracts with each of our key employees. In addition, our key employees own shares of our common stock and/or have options to purchase additional shares. Nevertheless, such individuals could leave the Company. If any key employees stopped working for us, our operations could be harmed. We have no key man life insurance policies with respect to any of our senior executives.

      We are subject to various environmental laws and regulations, including those relating to:

      We incur capital and operating expenditures in complying with environmental laws and regulations both in the U.S. and abroad. We are currently involved in, or have potential liability with respect to, the remediation of past contamination in facilities both in the U.S. and abroad. In addition, some of these facilities have or had been in operation for many decades and may have used substances or generated and disposed of wastes that are hazardous or may be considered hazardous in the future. These sites and disposal sites owned by others to which we sent waste may in the future be identified as contaminated and require remediation. Accordingly, it is possible that we could become subject to additional environmental liabilities in the future that may harm our results of operations or financial condition.

      Our products are subject to regulation by governmental agencies. These regulations govern a wide variety of activities relating to our products, from design and development, to labeling, manufacturing, promotion, sales and distribution. If we fail to comply with these regulations, we may have to recall products and cease their manufacture and distribution. In addition, we could be subject to fines or criminal prosecution.

      Starting in 2002, our goodwill amortization charges have ceased. As at December 31, 2004, our consolidated balance sheet included goodwill of $433.7 million and other intangible assets of $126.5 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 that we will incur. 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 SFAS No. 142, “Goodwill and Other Intangible Assets” (“SFAS 142”), 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 evaluation is

based on valuation models that estimate fair value based on expected future cash flows and profitability projections. In preparing the valuation models we consider a number of factors, including operating results, business plans, economic conditions, future cash flows, and transactions and market place data. There are inherent uncertainties related to these factors and our judgment in applying them to the impairment analyses. The significant estimates and assumptions within our fair value models include sales growth, controllable cost growth, perpetual growth, effective tax rates and discount rates. Our assessments to date have indicated that there has been no impairment of these assets.

      Our drug discovery reporting unit is sensitive to changes in biopharma capital spending. We currently estimate the fair value of the Company’s drug discovery reporting unit exceeds its carrying value of $34.2 million as of December 31, 2004. In accordance with the provisions of SFAS 142, the Company monitors the fair value of this reporting unit closely to determine if the business plans are being achieved. For example, we monitor whether the forecasted benefits of our drug discovery cost reduction programs are being realized.

      The Company’s intangible assets include a $19.9 million indefinite life intangible asset relating to an intellectual property license. This license is currently subject to litigation with the grantor. While the Company believes its rights under the license will be upheld, if they were not to be upheld, expected cash flows generated by the license would be reduced and the related $19.9 million asset could be impaired, causing a non-cash charge of up to $14 million after tax. Management does not believe this outcome or any other consequences of the case will have a material adverse effect on the Company’s consolidated financial condition or results of operations.

      Should any of these estimates or assumptions in the preceding paragraphs not be accurate, or should we incur lower than expected operating performance or cash flows, 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.

      We are subject to income taxes in both the United States and various other foreign jurisdictions, and our domestic and international tax liabilities are subject to allocation of expenses among different jurisdictions. Our effective tax rates could be adversely affected by:

      In particular, the carrying value of deferred tax assets, which are predominantly in the U.S., is dependent upon our ability to generate future taxable income in the U.S. In addition, the amount of income taxes we pay is subject to ongoing audits in various jurisdictions and a material assessment by a governing tax authority could affect our profitability.

Company Website and Information

      Our website can be found on the Internet at www.mt.com. The website contains information about us and our operations. Copies of each of our filings with the SEC on Form 10-K, Form 10-Q and Form 8-K and all amendments to those reports can be viewed and downloaded free of charge when they are filed with the SEC by accessing www.mt.com, clicking on Investor Relations and then clicking on SEC Filings.

      Our website also contains copies of the following documents that can be downloaded free of charge:

      Any of the above documents, and any of our reports on Form 10-K, Form 10-Q and Form 8-K and all amendments to those reports, can also be obtained in print by sending a written request to our Investor Relations Department:

CEO and CFO Certifications

      Our CEO submits an annual written affirmation to the New York Stock Exchange (NYSE) certifying the company’s compliance with NYSE listing rules. The most recent annual affirmation was submitted in 2004.

      Our CEO and CFO also 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 following table lists our principal facilities, indicating the location and whether the facility is owned or leased. Our Greifensee, Switzerland facility also serves as our worldwide headquarters and our Columbus, Ohio

facility serves as our North American headquarters. We believe our facilities are adequate for our current and reasonably anticipated future needs.

      We are not currently involved in any legal proceeding which we believe could have a material adverse effect upon our financial condition or results of operations. See the disclosure above under “Environmental Matters”.

      No matters were submitted to a vote of security holders during the fourth quarter of 2004.

Executive Officers of the Registrant

      See Part III, Item 10 of this annual report for information about our executive officers.

PART II

Market Information for Common Stock

      Our common stock is traded on the New York Stock Exchange under the symbol “MTD”. The following table sets forth on a per share basis the high and low sales prices for consolidated trading in our common stock as reported on the New York Stock Exchange Composite Tape for the quarters indicated.

Holders

      At February 1, 2005 there were 142 holders of record of common stock and 43,268,039 shares of common stock outstanding. We estimate we have approximately 15,000 beneficial owners of common stock held in street name.

Dividend Policy

      Historically we have not paid dividends on our common stock. However, we will evaluate this policy on a periodic basis taking into account our results of operations, financial condition, capital requirements, including potential acquisitions, our share buyback program, the taxation of dividends to our shareholders, and other factors deemed relevant by our Board of Directors.

Securities Authorized for Issuance under Equity Compensation Plans

Equity Compensation Plan Information as of December 31, 2004

      We do not have any equity compensation plans that have not been approved by our shareholders that are required to be disclosed in this annual report on Form 10-K or our proxy statement.

      Further details in relation to our stock option plan are given in Note 11 to the audited consolidated financial statements included herein.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

      The Company has only one share repurchase program. Under this program, announced on February 5, 2004 and November 4, 2004, the Company is authorized to buy back up to $100 million of equity shares over the two-year period ending December 31, 2005, and an additional $200 million of equity shares over the two-year period ending December 31, 2006.

      During the twelve months ended December 31, 2004 the Company spent $103.8 million on the repurchase of 2,208,500 shares at an average price of $46.97.

      The selected historical financial information set forth below at December 31 and for the years then ended is derived from our audited consolidated financial statements. The financial information presented below, in thousands except share data, was prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

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

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, and the breadth and quality of our global sales and service network.

      Net sales in U.S. dollars increased by 8% and 7% in 2004 and 2003, respectively, of which 5% and 7% was due to currency exchange rate fluctuations. We have continued to face a challenging world economy in 2004 with conditions generally strong in Asia and stabilizing to improving in the United States and Europe.

      Looking forward to 2005, we anticipate overall customer spending patterns to be similar to 2004 with certain differences based on geographic regions. In Asia we expect continued growth, but at a slower level than 2004. Specifically, we believe growth in China will be less than the 21% growth we experienced in 2004. In the U.S. we expect to see similar customer spending levels to what we saw in 2004 and in Europe we expect some improvement from the relatively weak levels of recent years.

      In respect of our end user markets, we experienced improved results during 2004 in our laboratory-related end user markets, such as pharmaceutical and biotech customers. We believe that the long-term fundamentals of this market are attractive and our solutions assist these companies in enhancing their productivity as they meet the challenges of new drug approval activity, heightened price regulation and industry consolidation.

      In our industrial markets, the principal growth driver in recent years has been increased investment in China related to production capacity. Although this provides a significant opportunity for our Chinese operations, this manufacturing shift has a negative impact on certain of our industrial end user markets in the U.S. and Europe. Food producers and packagers also remain a large part of our industrial customer base. In recent years, we have benefited from these companies’ efforts to improve product quality and safety. However, this sector is experiencing high levels of competitive pressure which may negatively impact customer spending levels.

      In our retail end markets, we experienced improved results in both the U.S. and Europe relative to weak activity in recent years. Traditionally the spending levels in this sector have experienced more volatility than our other customer sectors. Increased spending in the past has come from events such as Y2K and the introduction of the euro currency. We have not experienced similar triggering events in recent years. Similar to our industrial business, China is also an important driver of growth as the expansion of their local economy is creating a significant number of new retail stores each year.

      In 2005, we expect to continue to pursue the overall business growth strategies which we have followed in recent years:

      Gaining Market Share. We launched a global sales and marketing initiative during 2004. We aim to accelerate our sales growth by improving the productivity and effectiveness of our global sales and marketing processes. While this initiative is broad based, initial efforts to improve these processes include the implementation of more effective pricing strategies and processes, increased activities for leads generation and further automation of field processes. Our comprehensive service offering also helps us further penetrate developed markets. In addition to traditional services, we offer installation, calibration, regulatory compliance services and remote service support.

      Expanding Emerging Markets. We have a two-pronged strategy in Asia: first, to capitalize on growth opportunities in these markets and second, to leverage our low-cost manufacturing operations in China. We have a long track record in China, and our sales in Asia have grown at more than 10% per year in local currency since 1999. We have broadened our product offering to the Asian markets and are benefiting as multinational customers shift production to China. We are shifting more of our manufacturing to China to reduce costs, where our three facilities manufacture for the local markets as well as for export.

      Extending Our Technology Lead. We continue to focus on product innovation. In the last three years, we spent between 5.5% and 6.0% of net sales on research and development. We seek to drive shorter product life cycles, as well as improve our product offerings and their capabilities with additional integrated technologies and software.

      Maintaining Cost Leadership. We continue to strive to improve our margins by reducing our cost basis. During the period following our buyout in 1996, we reduced the number of our manufacturing facilities from 29 to 19. Shifting production to China has been an important component of this consolidation. We have also implemented global procurement programs over the last several years aimed at lowering supply costs.

      Pursuing Strategic Acquisitions. While we have not completed a significant acquisition since 2001, acquisitions remain part of our growth strategy. We seek to pursue acquisitions that may leverage our global sales and service network, respected brand, extensive distribution channels and technological leadership. We have identified life sciences, packaging and process analytics as three key areas for acquisitions.

Non-GAAP Financial Measures

      We supplement our U.S. GAAP results with non-GAAP financial measures. The principal non-GAAP financial measure we use is Adjusted Operating Income, which we define as gross profit less research and development, selling, general and administrative expenses and restructuring charges, before amortization, interest, other charges and taxes. The most directly comparable U.S. GAAP financial measure is net earnings.

      We believe that Adjusted Operating Income is important supplemental information for investors. Adjusted Operating Income is used internally as the principal profit measurement by our segments in their reporting to management. We use this measure because it excludes amortization, interest, other charges and taxes, which are not allocated to the segments.

      On a consolidated basis, we also believe Adjusted Operating Income is an important supplemental method of measuring profitability. It is used internally by senior management for measuring profitability, setting performance targets for managers and has historically been used as one of the means of publicly providing guidance on possible future results. We also believe that Adjusted Operating Income is an important performance measure because it provides a measure of comparability to other companies with different capital or legal structures, which accordingly may be subject to disparate interest rates and effective tax rates, and to companies which may incur different amortization expenses or impairment charges related to intangible assets.

      Adjusted Operating Income is used in addition to and in conjunction with results presented in accordance with U.S. GAAP. Adjusted Operating Income is not intended to represent operating income under U.S. GAAP and should not be considered as an alternative to net earnings as an indicator of our performance because of the following limitations.

      Our non-GAAP measure, Adjusted Operating Income, has certain material limitations as follows:

      Adjusted Operating Income should not be relied upon to the exclusion of U.S. GAAP financial measures, but reflects an additional measure of comparability and means of viewing aspects of our operations that, when viewed together with our U.S. GAAP results and the accompanying reconciliation to net earnings, provides a more complete understanding of factors and trends affecting our business.

      Because Adjusted Operating Income is not standardized, it may not be possible to compare with other companies’ non-GAAP financial measures having the same or a similar name. We strongly encourage investors to review our financial statements and publicly filed reports in their entirety and not to rely on any single financial measure.

      Our Adjusted Operating Income increased from $136.5 million in 2002 to $179.4 million in 2004. This performance was achieved while we continued to invest in product development and in our distribution and manufacturing infrastructure. Adjusted Operating Income includes restructuring charges of $28.7 million in 2002. This charge is described more fully below. A reconciliation of Adjusted Operating Income to net earnings for 2002 to 2004 is included in “Results of Operations” below.

Restructuring Activities

      As further described in Note 14 to our audited consolidated financial statements, during the three months ended June 30, 2002 we recorded a restructuring charge of $28.7 million ($20.1 million after tax) which comprised severance, asset write-downs and other exit costs, primarily related to headcount reductions and manufacturing transfers. As a result of these actions, we eliminated approximately $18 million of costs from the business. We estimate that approximately $6 million of these savings were realized in 2002, $8 million in 2003, and $4 million in 2004.

      In accordance with U.S. GAAP, the charge taken in the second quarter of 2002 related to the exit of our French manufacturing facility was limited to the minimum contractual payment required by French law. During the three months ended March 31, 2003, we recorded a restructuring charge of $5.4 million ($3.8 million after tax), related to the final union settlement on the closure of this facility. This charge comprised the additional employee-related costs resulting from final settlement of the social plan negotiated with the French workers’ council during the first quarter of 2003.

      We assess our accrual for restructuring activities on an ongoing basis. During the three months ended September 30, 2003, we recorded a reduction in the restructuring accrual of $1.0 million, included within Other charges (income), net, as a result of lower employee-related charges than originally anticipated. Also, a restructuring charge of $1.4 million was recorded during the three months ended September 30, 2003, related to an extension of manufacturing consolidation activities. This charge comprised severance of $1.0 million, included within Other charges (income), net, and inventory write-downs of $0.4 million, included within Cost of sales.

      At December 31, 2003, we had substantially completed the restructuring programs described above.

Results of Operations

      The following table sets forth certain items from our consolidated statements of operations for the years ended December 31, 2004, 2003 and 2002 (amounts in thousands).

Footnotes on following page.

     A reconciliation of Adjusted Operating Income to net earnings follows:

Results of Operations – Consolidated

      Net sales were $1,404.5 million for the year ended December 31, 2004, compared to $1,304.4 million in 2003 and $1,213.7 million in 2002. This represents increases in U.S. dollars of 8% and 7% in 2004 and 2003, respectively, of which 5% and 7% was due to currency exchange rate fluctuations.

      In 2004, our net sales by geographic destination in U.S. dollars increased by 2% in the Americas, 9% in Europe and 19% in Asia/ Rest of World, of which 9% and 4% in Europe and Asia/ Rest of World, respectively, was due to currency exchange rate fluctuations. A discussion of sales by operating segment is included below.

      As described in Note 16 to our consolidated financial statements, our net sales comprise product sales of precision instruments and related services. Service revenues are primarily derived from regulatory compliance qualification, calibration, certification and repair services, much of which is provided under contracts, as well as sales of spare parts.

      Net sales of products increased in U.S. dollars by 7% and 6% in 2004 and 2003, respectively, of which 5% and 7% was due to currency exchange rate fluctuations. Service revenue (including spare parts) increased in U.S. dollars by 11% and 12% in 2004 and 2003, respectively, of which 5% and 9% was due to currency exchange rate fluctuations.

      Excluding the effect of currency exchange rate fluctuations, net sales for our laboratory-related products increased 4% during 2004. This includes growth in each major product category, particularly process analytics. Our sales growth of laboratory-related products was also reduced by approximately 2% during 2004 due to the phase-out of our exit of third party electronic component sales. Excluding the effect of currency exchange rate fluctuations, net sales for our laboratory-related products decreased 1% during 2003, primarily due to a decrease in drug discovery products as a result of weakness in customer spending.

      Net sales of our industrial-related products increased 1% in 2004 excluding the effect of currency exchange rate fluctuations. We experienced sales growth in our core industrial and packaging products, offset by a decrease in sales of transportation and logistics products relative to strong project activity in 2003. While the long-term fundamentals of the market for our transportation and logistics products are strong, the timing of projects can impact the year-over-year comparison significantly. Excluding the effect of currency exchange rate fluctuations, net sales of industrial-related products increased 5% during 2003.

      In our food retailing markets, net sales excluding the effect of currency exchange rate fluctuations increased 8% in 2004 over the previous year, as customer spending patterns in the U.S. and Europe continue to improve relative to weak activity last year. Retail sales growth also includes improved sales of our in-store retail item management software solutions and expansion of our core retail products into Asia. Net sales in food retailing decreased 6% in 2003 excluding the effect of currency exchange rate fluctuations. This decrease was principally due to difficult comparisons relating to strong U.S. project activity in 2002, as well as suppressed spending patterns in Europe after the significant euro conversion-related investments by customers in previous years and weak consumer confidence in major European economies.

      Gross profit as a percentage of net sales was 48.6% for 2004, compared to 47.4% for 2003 and 46.8% for 2002. Improvements in the margin over the two-year-period reflect the benefits of our cost rationalization and product transfer initiatives, partially offset by adverse currency impacts.

      Gross profit as a percentage of net sales for products was 52.3% for 2004, compared to 50.9% for 2003 and 50.8% for 2002. These improvements also reflect the benefits of our cost rationalization and product transfer initiatives, offset by adverse currency impacts.

      Gross profit as a percentage of net sales for services (including spare parts) was 36.1% for 2004, compared to 35.1% for 2003 and 32.0% for 2002. The increase in the margin over the two years reflects improved productivity, as well as the expansion of higher margin regulatory compliance service sales.

      Research and development expenses as a percentage of net sales were 5.9% for 2004, compared to 6.0% for 2003 and 5.8% in 2002. Research and development expenses increased in U.S. dollars by 7% in 2004 and 10% in 2003, of which 6% and 8% was due to currency exchange rate fluctuations. The increases in 2004 and 2003 are principally due to investments in our new laboratory and other products.

      Selling, general and administrative expenses as a percentage of net sales increased to 29.9% for 2004, compared to 28.6% for 2003 and 27.4% for 2002. Selling, general and administrative expenses increased in U.S. dollars by 13% in 2004 and 12% in 2003, of which 5% and 8% was due to currency exchange rate fluctuations. During 2004 we incurred $5.0 million related to an investigation into allegations made by an employee with respect to the Company and various company processes. Our spending also includes a significant increase in Sarbanes Oxley regulatory compliance costs, including approximately $3.5 million of external professional fees during 2004. The increases in 2004 and 2003 also include spending related to our new product introductions as well as higher performance related compensation during 2004.

      Other charges (income), net were $0.1 million in 2004, compared to $4.6 million in 2003 and $28.2 million in 2002. The 2003 and 2002 amounts include restructuring charges of $5.4 million ($3.8 million after tax) and $28.7 million ($20.1 million after tax), respectively, comprising severance, asset write-downs and other exit costs primarily related to headcount reductions and manufacturing transfers, described more fully in “Restructuring Activities” above.

      Interest expense was $12.9 million for 2004, compared to $14.2 million for 2003 and $17.2 million for 2002. The decreases are principally due to lower average borrowings.

      The provision for taxes is based upon our effective tax rate for the related periods, which was 30% for 2004 and 2003 and 9% for 2002. During the three months ended June 30, 2002 we recorded a one-time tax gain of $23.1 million related to the completion of a tax reorganization program and related tax audits, which contributed to an overall lower effective tax rate in 2002.

      During the fourth quarter of 2002, we began a program of repatriating foreign subsidiary earnings to the United States in a tax efficient manner. This program resulted in a repatriation of foreign earnings of $85 million during 2002, $100 million during 2003 and a further $5 million in 2004. In addition, this program will result in the repatriation of $75 million of foreign earnings over the next few years. The 2002 repatriation of $85 million created additional U.S. taxable income resulting in the utilization of certain historical tax attributes related to our U.S. operations and release of the related U.S. federal deferred tax valuation allowance. The tax effects related to the future repatriation of $75 million have been accrued.

      The Company is currently under examination in various taxing jurisdictions in which it conducts business operations. While the Company has not yet received any material assessments from these taxing authorities, the Company believes that adequate amounts of taxes and related interest and penalties have been provided for any adverse adjustments as a result of these examinations and that the ultimate outcome of these examinations will not result in an adverse material impact on the Company’s consolidated results of operations or financial position.

      Earnings before taxes were $154.2 million for 2004, compared to $136.9 million in 2003 and $110.4 million in 2002. Net earnings were $108.0 million for 2004, compared to $95.8 million in 2003 and $100.4 million in 2002.

      The 2004 results include $5.0 million ($3.5 million after tax) related to the previously mentioned investigation and $3.5 million ($2.5 million after tax) of external professional fees related to Sarbanes Oxley regulatory compliance costs.

      These results also include the restructuring charge of $5.4 million ($3.8 million after tax) in 2003 and the restructuring charge of $28.7 million ($20.1 million after tax) and one-time tax gain of $23.1 million in 2002.

      See “Non-GAAP Financial Measures” above. Adjusted Operating Income (gross profit less research and development, selling, general and administrative expenses and restructuring charges, before amortization, interest expense and other charges) increased to $179.4 million or 12.8% of net sales for 2004, compared to $161.9 million or 12.4% of net sales in 2003 and $136.5 million or 11.2% of net sales in 2002. Adjusted Operating Income includes restructuring charges of $5.4 million in 2003 and $28.7 million in 2002.

      Adjusted Operating Income increased in 2004 and 2003 as a result of our increased sales volume, benefits of our cost rationalization and product transfer initiatives and a decrease in restructuring charges recorded in 2003 and 2002. These benefits were offset in part by higher research and development costs and selling costs principally related to new products, as well as the previously mentioned costs in 2004 associated with the investigation and external professional fees related to Sarbanes Oxley regulatory compliance.

Results of Operations – by Operating Segment

      The following is a discussion of the financial results of our operating segments. We currently have six reportable segments: Principal U.S. Operations, Other Western European Operations, Principal Central European Operations, Swiss R&D and Manufacturing Operations, Asia and Other. A more detailed description of these segments is outlined in Note 16 to our consolidated financial statements.

     Net sales to external customers in our Principal U.S. Operations segment increased 4% in 2004, compared to a decrease of 3% in 2003. Our Principal U.S. Operations segment benefited from improved market conditions in 2004, as well as new product introductions. The 2004 increase in net sales to external customers reflects growth in most products, particularly our food retailing end markets.

      The net sales growth in our food retail business was primarily due to improved results relative to weak project activity in 2003. Our U.S. food retail sales growth also includes improved sales of our in-store retail item management software solutions. Net sales to external customers of our laboratory-related products increased during 2004 due to solid performance of our process analytics end market and growth in our liquid handling products. We also experienced increased net sales of industrial related products during 2004 primarily due to improved results in most product lines, offset in part by a decrease of approximately $5.8 million in industrial OEM product sales. Net sales to external customers in our Principal U.S. Operations segment also benefited by approximately 1% from business transfers from our Other segment.

      The decrease in 2003 sales of our Principal U.S. Operations was primarily the result of a decline in laboratory customer spending, as well as a decrease in our retail business due to relative strong 2002 project activity.

      The decrease in segment profit or Adjusted Operating Income of our Principal U.S. Operations segment during 2004 reflects the impact of our product transfer initiatives on this segment, as well as additional costs related to product launches, a North American sales meeting held once every five years, increased employee healthcare costs and an impairment charge relating to a building held for sale of $1.3 million during 2004 pertaining to this segment.

      The increase in 2003 segment profit or Adjusted Operating Income is due primarily to the restructuring charge recorded in 2002, of which $11.8 million relates to this segment. Adjusted Operating Income in 2003 was also impacted by the reduced sales volume.

     Currency exchange rate fluctuations increased net sales growth to external customers of our Other Western European Operations segment by 10% and 17% in 2004 and 2003, respectively. Local currency net sales to external customers of our Other Western European Operations segment increased 1% in 2004, compared to a decrease of 1% in 2003.

      Western Europe benefited from improved market conditions in most countries during 2004, as well as new product introductions. Our 2004 local currency net sales to external customers in our Other Western European Operations segment primarily reflects growth in our laboratory-related products and our food retailing end markets. These trends were partially offset by a decline in our industrial-related products, which includes a decrease in transportation and logistics products relative to strong 2003 project activity.

      Sales trends in 2003 were particularly notable in the major Western European economies, which faced low consumer confidence. Our local currency sales decline in 2003 was also the result of the declines in our laboratory and retail end markets, partially offset by solid results for packaging and transportation and logistics products. The

decline in sales of our European retail end markets in 2003 was partly due to the significant euro conversion related investments by customers in 2001.

      Segment profit or Adjusted Operating Income increased $6.1 million in our Other Western European Operations segment during 2004, compared to an increase of $14.8 million in 2003. These increases are principally the result of reduced restructuring charges, as well as benefits of our cost rationalization and product transfer initiatives and favorable currency translation fluctuations. Restructuring charges had the effect of reducing Adjusted Operating Income of our Other Western European Operations segment by $4.4 million and $11.4 million in 2003 and 2002, respectively. In addition, this segment benefited in 2004 due to a $1.1 million reduction of our restructuring related accruals as a result of lower employee related charges than originally anticipated.

     Currency exchange rate fluctuations increased net sales growth to external customers of our Principal Central European Operations segment by 9% and 18% in 2004 and 2003, respectively. Local currency net sales to external customers of our Principal Central European Operations segment increased 1% in 2004, compared to a decrease of 4% in 2003.

      Similar to our Other Western European Operations segment, Central Europe benefited from improved market conditions in most countries during 2004, as well as new product introductions. Our 2004 local currency net sales to external customers in our Principal Central European segment primarily reflects growth in our laboratory-related products and our food retailing end markets. These trends were partially offset by a decline in our industrial-related products, which includes a decrease in transportation and logistics products relative to strong 2003 project activity.

      Sales trends in 2003 were particularly notable in the major Central European economies, which faced low consumer confidence. Our local currency sales decline in 2003 was also the result of the declines in our laboratory and retail end markets, partially offset by solid results for packaging and transportation and logistics products. The decline in sales of our European retail end markets in 2003 was partly due to the significant euro conversion related investments by customers in 2001.

      Segment profit or Adjusted Operating Income increased $2.2 million in our Principal Central European Operations segment during 2004, compared to an increase of $7.1 million in 2003. The 2004 increase is primarily the result of improved sales volume and favorable currency translation fluctuations. The 2003 increase is principally the result of reduced restructuring charges, as well as benefits of our cost rationalization and product transfer initiatives and favorable currency translation fluctuations. Restructuring charges had the effect of reducing Adjusted Operating Income of our Principal Central European Operations segment by $2.8 million in 2002.

     Currency exchange rate fluctuations increased net sales growth to external customers of our Swiss R&D and Manufacturing Operations segment by 7% and 14% in 2004 and 2003, respectively. Local currency net sales to external customers of our Swiss R&D and Manufacturing Operations segment decreased 12% in 2004 and 13% in 2003. This decrease is primarily due to the exit of our third party electronic component product line, which had the

effect of reducing net sales growth to external customers in this segment by approximately 22% during 2004. Excluding the effect of the exit of our third party electronic component product line, net sales to external customers increased approximately 10% in local currency, primarily due to the benefit of business transfers from our Other segment, as well as increased sales of laboratory balances and analytical instruments.

      Segment profit or Adjusted Operating Income increased $4.1 million in our Swiss R&D and Manufacturing Operations segment during 2004, compared to a decrease of $7.2 million in 2003. The increase in 2004 is principally the result of increased sales to other segments of laboratory-related products, benefits of our cost rationalization initiatives and favorable currency translation fluctuations.

     Currency exchange rate fluctuations had the effect of increasing our Asian segment net sales growth to external customers by 2% and 3% in 2004 and 2003, respectively. Local currency net sales to external customers in our Asian segment increased 19% and 21% in 2004 and 2003, respectively.

      The 2004 increase in local currency net sales to external customers in Asia reflects 21% growth in China and 9% growth in Japan. These results compare to a 2003 increase of 40% in China and a decrease of 8% in Japan. We have continued to experience solid sales growth in China based upon the expansion of their economy, as well as returns on investments in our Chinese business including the addition of a new manufacturing facility in 2003. Despite this significant sales growth, our Chinese net sales growth to external customers slowed during the fourth quarter of 2004 due to exceptional project activity in the prior year comparable period. In addition, we believe our Chinese customer spending patterns may be reduced as a result of the Chinese government’s efforts to slow the Chinese economy.

      Segment profit or Adjusted Operating Income increased $11.7 million in Asia during 2004, compared to an increase of $8.6 million in 2003. These increases were primarily due to the increased sales volume to external customers and other segments, and the benefits of product transfer initiatives from our other segments.

     Net sales in local currencies to external customers in our Other operating segment was flat in 2004, compared to an increase of 3% in 2003. These results reflect sales growth in geographies such as Russia, Eastern Europe and Mexico. In addition, our net sales to external customers in this segment were reduced by approximately 5% due to business transfers to our Principal U.S. Operations and Swiss Manufacturing and R&D Operations segments.

      Segment profit or Adjusted Operating Income increased $9.3 million in 2004, compared to an increase of $5.0 million in 2003. The 2004 increase is primarily due to favorable currency translation fluctuations, the benefits of our cost rationalization programs as well as certain product transfers. The 2003 increase was due to the impact of restructuring charges in the prior year and improved sales volume. In addition, 2002 was also negatively affected by the economic downturn in Latin America.

Liquidity and Capital Resources

      Liquidity is our ability to generate sufficient cash flows from operating activities to meet our obligations and commitments. In addition, liquidity includes the ability to obtain appropriate financing. Currently, our liquidity needs arise primarily from working capital requirements, capital expenditures and acquisitions.

      Cash provided by operating activities totaled $166.0 million in 2004, compared to $117.2 million in 2003 and $115.4 million in 2002. The increase in 2004 resulted principally from increased net earnings and improved management of operating assets and liabilities. Cash provided by operating activities in 2004 was impacted by voluntary incremental pension contributions of $10.0 million to our U.S. pension plan. The increase in 2003 cash provided by operating activities also resulted principally from improved management of operating assets and liabilities, partially offset by higher restructuring and tax payments. Cash provided by operating activities in 2003 reflected voluntary incremental pension contributions of $10.0 million to the U.S. pension plan and $7.1 million to our U.K. pension plan. Cash provided by operating activities in 2002 includes a voluntary contribution of $19.0 million to the U.S. pension plan. Similar to previous years, we expect to make normal employer pension contributions of $14.7 million in 2005. Cash provided by operating activities also includes payments for restructuring and related activities in 2004, 2003 and 2002 of $4.0 million, $16.8 million and $11.1 million, respectively.

      During 2004, we spent approximately $2.3 million on acquisitions, including additional consideration related to earn-out periods associated with acquisitions consummated in prior years. The cash portions of these purchases were funded from cash generated from operations. We continue to explore potential acquisitions. In connection with any acquisition, we may incur additional indebtedness. In addition, the terms of certain of our acquisitions provide for possible additional earn-out payments. However, we do not currently believe we will make any material payments relating to such earn-outs.

      Capital expenditures are a significant use of funds and are made primarily for machinery, equipment and the purchase and expansion of facilities. Our capital expenditures totaled $27.9 million in 2004, $27.2 million in 2003 and $33.2 million in 2002. We expect capital expenditures to increase as our business grows, and to fluctuate as currency exchange rates change.

      On November 12, 2003, we closed a new five-year $300 million credit facility and completed the issuance of $150 million seven-year Senior Notes. The proceeds from this refinancing were immediately used to repay all of the borrowings under our former credit agreement, which was then terminated.

      The $300 million credit facility is provided by a group of financial institutions and has a bullet maturity in November 2008. It is not subject to any scheduled principal payments. Borrowings under the $300 million credit facility bear interest at current market rates plus a margin based on our senior unsecured credit ratings (currently “BBB” by Standard & Poor’s and “Baa3” by Moody’s), and is currently set at LIBOR plus 0.6%. We must also pay utilization and facility fees that are tied to our credit ratings. The $300 million credit facility contains covenants including maintaining a ratio of debt to earnings before interest, tax, depreciation and amortization of less than 3.25 to 1.0 and an interest coverage ratio of more than 3.5 to 1.0. The facility also places certain limitations on us, including limiting the ability to grant liens or incur debt at a subsidiary level. In addition, the $300 million credit facility has several events of default including upon a change of control. The credit facility is unsecured.

      In November 2003, we issued $150 million of 4.85% unsecured Senior Notes due November 15, 2010. The Senior Notes rank equally with all our unsecured and unsubordinated indebtedness. Interest is payable semi-annually in May and November. Discount and issuance costs approximated $1.2 million and are being amortized to interest expense over the seven-year term of the Senior Notes.

      At our option, the Senior Notes may be redeemed in whole or in part at any time at a redemption price equal to the greater of:

      The Senior Notes contain limitations on our ability to incur liens and enter into sale and leaseback transactions exceeding 10% of our consolidated net worth.

      At December 31, 2004, our consolidated debt, net of cash of $67.2 million, was $136.0 million. In addition to the Senior Notes, we had borrowings of $46.1 million under our credit facility and $6.9 million under various other local arrangements. Also at December 31, 2004, we had $244.6 million of availability remaining under the credit facility.

      At December 31, 2004, approximately $27.6 million of the borrowings under the credit facility and local working capital facilities were denominated in U.S. dollars. The balance of the borrowings under the credit facility and local working capital facilities were denominated in certain of our other principal trading currencies amounting to approximately $25.4 million. 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.

      At December 31, 2004, we were in compliance with all covenants set forth in our credit facility and Senior Notes agreements. In addition, we do not have any downgrade triggers relating to ratings from rating agencies that would accelerate the maturity dates of our debt.

      We currently believe that cash flow from operating activities, together with liquidity available under our credit facility and local working capital facilities, will be sufficient to fund currently anticipated working capital needs and capital spending requirements for at least the next several years.

      The following summarizes certain of our contractual obligations at December 31, 2004 and the effect such obligations are expected to have on our liquidity and cash flow in future periods. We do not have significant outstanding letters of credit or other financial commitments.

     We have purchase commitments for materials, supplies, services and fixed assets in the normal course of business. Due to the proprietary nature of many of our materials and processes, certain supply contracts contain penalty provisions. We do not expect potential payments under these provisions to materially affect results of operations or financial condition. This conclusion is based upon reasonably likely outcomes derived by reference to historical experience and current business plans.

      On February 5, 2004, we announced a share repurchase program, commencing with an initial buyback of up to $100 million over the two-year period ending December 31, 2005. In November 2004, in addition to the $100 million buyback amount the Company’s Board of Directors approved an additional buyback of up to $200 million under its share repurchase program over the two-year period ending December 31, 2006. Our share repurchases are expected to be funded from cash generated from operating activities. Repurchases will be made through open market transactions, and the timing will depend on the level of acquisition activity, business and market conditions, the stock price, trading restrictions and other factors.

      During the year ending December 31, 2004, we spent $103.8 million on the repurchase of 2,208,500 shares at an average price of $46.97.

      As of December 31, 2004, approximately 1.0 million stock options were outstanding that are scheduled to expire in October 2006. These options were granted before the Company’s initial public offering in connection with the buy-out from Ciba-Geigy. The Company expects that these options will be exercised before their expiration date. Any purchases under the share repurchase program over this time would operate to offset the dilution from these exercises.

      At the April 2004 Audit Committee meeting, management informed the committee that the Company had received allegations from an employee. As a matter of good corporate governance, management recommended, and the Audit Committee agreed, to conduct an independent investigation of the allegations. The allegations covered a number of accounting, disclosure and non-financial statement-related items.

      The Audit Committee retained independent outside counsel and forensic accountants to conduct an investigation of these matters, as well as certain other areas directly or indirectly related to the Company’s preparation of its financial statements.

      In August 2004, the Company announced the completion of the financial aspects of the investigation and that the Audit Committee and Board of Directors concluded there would be no change to the Company’s financial statements. Based on the investigation, the Board (based on the recommendation of the Audit Committee) made changes to improve the leadership and oversight of its financial operations and to reinforce the Board’s commitment to maintaining strong corporate governance. Mr. William Donnelly, who was Chief Financial Officer from 1997 to mid-2002 returned from an operating job inside the Company to the position of CFO in August 2004. The Company has also stated that it plans additional changes to enhance its financial organization, as well as the methods by which complaints may be reported.

      All aspects of the Audit Committee’s investigation are now complete.

Off-Balance Sheet Arrangements

      Currently, we have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material.

Effect of Currency on Results of Operations

      Because we conduct operations in many countries, our operating income can be significantly affected by fluctuations in currency exchange rates. Swiss franc-denominated expenses represent a much greater percentage of our operating expenses than Swiss franc-denominated sales represent of our net sales. In part, this is because most of our manufacturing costs in Switzerland relate to products that are sold outside Switzerland. Moreover, a substantial percentage of our research and development expenses and general and administrative expenses are incurred in Switzerland. Therefore, if the Swiss franc strengthens against all or most of our major trading currencies (e.g., the U.S. dollar, the euro, other major European currencies and the Japanese yen), our operating profit is reduced. We also have significantly more sales in European currencies (other than the Swiss franc) than we have expenses in

those currencies. Therefore, when European currencies weaken against the U.S. dollar and the Swiss franc, it also decreases our operating profits. Accordingly, the Swiss franc exchange rate to the euro is an important cross-rate monitored by the Company. We estimate that a 1% strengthening of the Swiss franc against the euro would result in a decrease in our earnings before tax of $0.9 million to $1.1 million on an annual basis. In addition to the effects of exchange rate movements on operating profits, our debt levels can fluctuate due to changes in exchange rates, particularly between the U.S. dollar and the Swiss franc. Based on our outstanding debt at December 31, 2004, we estimate that a 10% weakening of the U.S. dollar against the currencies in which our debt is denominated would result in an increase of approximately $2.8 million in the reported U.S. dollar value of the 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 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, earnings repatriations between jurisdictions and changes in law. Generally, the tax liability for each taxpayer within the group 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. As a result, we may pay income taxes to certain jurisdictions even though on an overall basis we incur a net loss for the period.

      Our effective tax rates for the years ended December 31, 2004, 2003 and 2002 were approximately 30%, 30% and 9%, respectively, as described in “Results of Operations — Consolidated — Interest expense and taxes”.

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 in both the United States and abroad.

      We are currently involved in, or have potential liability with respect to, the remediation of past contamination in certain of our facilities in both the United States and abroad. Our subsidiary Hi-Speed Checkweigher Co., Inc. (“Hi-Speed”) is one of two private parties ordered to perform certain remedial actions under an administrative consent order that the New Jersey Department of Environmental Protection (“NJDEP”) signed on June 13, 1988 with respect to certain property in Landing, New Jersey. GEI International Corporation (“GEI”) is the other ordered party. GEI has failed to fulfill all its obligations under the NJDEP order, and Hi-Speed has recently entered into discussions with the NJDEP about the next steps to be undertaken as a result. NJDEP has agreed with Hi-Speed that the residual contaminants can be addressed through the establishment of a Classification Exception Area and concurrent Well Restriction Area for the site. The NJDEP does not view these vehicles as remedial measures, but rather as “institutional controls” that must be adequately maintained and periodically evaluated. The Company estimates that the costs of compliance associated with the site will be approximately $0.3 million over the next seven years.

      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. Accordingly, 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 result in a material adverse effect on our financial condition or results of operations.

Inflation

      Inflation can affect the costs of goods and services that we use, including raw materials to manufacture our products. The competitive environment in which we operate limits somewhat our ability to recover higher costs through increased selling prices. 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 and Eastern Europe, which have experienced inflationary conditions. To date, inflationary conditions have not had a material effect on our operating results. However, as our presence in China and Eastern Europe 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 foreign currency forward contracts to economically hedge short-term intercompany balances with our international businesses and a portion of our Swiss franc/ euro exposure on a monthly basis. Such contracts limit our exposure to both favorable and unfavorable currency fluctuations. A sensitivity analysis to changes in the U.S. dollar and Swiss franc on these foreign currency-denominated contracts indicates that if the U.S. dollar and Swiss franc uniformly worsened by 10% against all of our currency exposures, the fair value of these instruments would decrease by $5.6 million at December 31, 2004, as compared with $4.5 million at December 31, 2003. Any resulting changes in fair value would be offset by changes in the underlying hedged balance sheet position. The sensitivity analysis assumes a parallel shift in foreign currency exchange rates. The assumption that exchange rates change in parallel fashion may overstate the impact of changing exchange rates on assets and liabilities denominated in a foreign currency. We also have other currency risks as described under “Effect of Currency on Results of Operations”.

      We have entered into certain interest rate swap agreements. These contracts are more fully described in Note 5 to our audited consolidated financial statements. The market value of these contracts at both December 31, 2004 and 2003 was $0.4 million. Based on our agreements outstanding at December 31, 2004, a 100-basis-point increase in interest rates would result in a decrease in the net aggregate market value of these instruments of $1.6 million, as compared with a decrease of $1.9 million at December 31, 2003. Conversely, a 100-basis-point decrease in interest rates would result in a $1.7 million increase in the net aggregate market value of these instruments, as compared with a net increase of $1.9 million at December 31, 2003. 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 Policies

      Management’s discussion and analysis of our financial condition and results of operations is based upon our audited consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to pensions and other post-retirement benefits, inventories, intangible assets, income taxes, revenue and warranty costs. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which 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 policies affect our more significant judgments and estimates used in the preparation of our audited consolidated financial statements. For a detailed discussion on the application of these and other accounting policies, see Note 2 to our audited consolidated financial statements.

      The net periodic pension cost for 2004 and projected benefit obligation as of December 31, 2004 were $2.5 million and $107.4 million, respectively, for our U.S. pension plans, and $7.1 million and $465.3 million, respectively, for our international pension plans. The net periodic post-retirement cost for 2004 and projected benefit obligation as of December 31, 2004 for our U.S. post-retirement medical benefit plan were $1.0 million and $26.3 million, respectively.

      Pension and post-retirement benefit plan expense and obligations are developed from assumptions in actuarial valuations. 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 amortized 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 April 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 2004, the average return on assets assumption was 8.5% for the U.S. plan and 5.2% for the international plans. A change in the rate of return of 1% would impact annual benefit plan expense by approximately $4.0 million after tax.

      The discount rates for defined benefit and post-retirement plans are set by benchmarking against high-quality corporate bonds. For 2004, the average discount rate assumption was 5.75% for the U.S. plans and 4.2% for the international plans, representing a weighted average of local rates in countries where such plans exist. A decrease in the discount rate of 1% would impact annual benefit plan expense by approximately $1.6 million after tax.

      In 2004 and 2003, we made voluntary incremental funding payments of $10.0 million and $17.1 million, respectively, to reduce the underfunded status of our U.S. and U.K. pension plans. As a result of these voluntary incremental pension payments, we do not expect to make any significant required pension payments during the next two years. However, if the equity markets do not mirror expected rates of return, in the future we could be required to make additional cash funding payments or adjust the $46.9 million additional minimum pension liability recorded at December 31, 2004.

      The Company also has employee stock option plans which are accounted for under the intrinsic value recognition and measurement provisions of Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” and related interpretations. As stock options have been issued with exercise prices equal to the market value of the underlying shares on the grant date, no compensation cost has resulted. Notes 2 and 11 to the audited consolidated financial statements provide supplemental information, including pro forma earnings and earnings per share, as if the Company had accounted for options based on the fair value method prescribed by SFAS No. 123, “Accounting for Stock-Based Compensation.” That methodology yields an estimate of fair value based in part on a number of management estimates, including future volatility and estimated option lives. Changes in these assumptions could significantly impact the estimated fair value of stock options. See also Statement No. 123 (revised 2004) issued by the FASB in regards to “Stock Based Compensation” in Note 2, Summary of Significant Accounting Policies, New Accounting Pronouncements.

      As of December 31, 2004, inventories net of allowances were $156.5 million.

      We record our inventory 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. Excess and obsolete reserves are established based on forecast usage, orders and technological obsolescence. If actual market conditions are less favorable than those projected by management, reductions in the value of inventory may be required.

      As of December 31, 2004, our consolidated balance sheet included goodwill of $433.7 million and other intangible assets of $126.5 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 that we will incur. 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 SFAS No. 142, “Goodwill and Other Intangible Assets” (“SFAS 142”), 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 evaluation is based on valuation models that estimate fair value based on expected future cash flows and profitability projections. In preparing the valuation models, we consider a number of factors, including operating results, business plans, economic conditions, future cash flows, and transactions and market place data. There are inherent uncertainties related to these factors and our judgment in applying them to the impairment analyses. The significant estimates and assumptions within our fair value models include sales growth, controllable cost growth, perpetual growth, effective tax rates and discount rates. Our assessments to date have indicated that there has been no impairment of these assets.

      Our drug discovery reporting unit is sensitive to changes in biotech and pharmaceutical capital spending. We currently estimate the fair value of the Company’s drug discovery reporting unit exceeds its carrying value of $34.2 million as of December 31, 2004. In accordance with the provisions of SFAS 142, the Company monitors the fair value of this reporting unit closely to determine if the business plans are being achieved. For example, we monitor whether the forecasted benefits of our drug discovery cost reduction programs are being realized.

      The Company’s intangible assets include a $19.9 million indefinite life intangible asset relating to an intellectual property license. This license is currently subject to litigation with the grantor. While the Company believes its rights under the license will be upheld, if they were not to be upheld, expected cash flows generated by the license would be reduced and the related $19.9 million asset could be impaired, causing a non-cash charge of up to $14 million after tax. Management does not believe this outcome or any other consequences of the case will have a material adverse effect on the Company’s consolidated financial condition or results of operations.

      Should any of these estimates or assumptions in the preceding paragraphs not be accurate, or should we incur lower than expected operating performance or cash flows, 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.

      Income tax expense and deferred tax assets and liabilities reflect management’s assessment of actual future taxes to be paid on items in the 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. While we have considered future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for the valuation allowance, 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 deferred tax asset would increase income, equity or goodwill in the period such determination was made. Likewise, should we determine that we would not be able to realize all or part of the net deferred tax asset in the future, an adjustment to the deferred tax asset would be charged to income in the period such determination was made.

      In 2002 and 2004, provisions were made for U.S. income taxes on certain undistributed earnings of non-U.S. subsidiaries as a decision was made to repatriate these earnings rather than permanently reinvest them. If we decide to repatriate an amount of undistributed earnings in excess of those originally planned, we could be subject to additional income tax.

      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 can be materially affected. Based on pre-tax income of $154.2 million for the year ended December 31, 2004, each increase of $1.5 million in tax expense would increase our effective tax rate by 1%.

      Revenue is recognized when title to a product has transferred and any significant customer obligations have been fulfilled. Standard shipping terms are generally FOB shipping point in most countries and, accordingly, title transfers upon shipment. In countries where title cannot legally transfer before delivery, we defer revenue recognition until delivery has occurred. Other than a few small software applications, Mettler-Toledo does not sell its software products without the related hardware instrument as the software is embedded in the instrument. The Company’s typical solution requires no significant production, modification or customization of the hardware or software that is essential to the functionality of the products. We also generally maintain the right to accept or reject a product return in our terms and conditions. To the extent the Company’s solutions have a post shipment obligation, such as customer acceptance, revenue is deferred until the obligation has been completed. In addition, we also defer revenue where installation is required, unless such installation is perfunctory. Distributor discounts are offset against revenue at the time such revenue is recognized. We also maintain accruals for outstanding credits. Revenues from service contracts are recognized ratably over the contract period.

      The Company generally offers one-year warranties on most of its products. Product warranties are recorded at the time revenue is recognized for certain product shipments. While the Company engages in extensive product quality programs and processes, our warranty obligation is affected by product failure rates, material usage and service costs incurred in correcting a product failure. If we experience claims or significant cost changes in material, freight and vendor charges, our cost of goods sold could be affected.

New Accounting Standards

      See Note 2 to the audited consolidated financial statements.

Forward-Looking Statements and Associated Risks

      Some of the statements in this annual report and in documents incorporated by reference constitute “forward-looking statements” within the meaning of Section 27A of the U.S. Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of 1934. These statements relate to future events or our future financial performance, including, but not limited to, strategic plans, potential growth opportunities in both developed markets and emerging markets, impact of inflation, currency and interest rate fluctuations, planned research and development efforts, product introductions and innovation, manufacturing capacity, adequacy of facilities, expected customer demand, meeting customer expectations, planned operational changes and productivity improvements, research and development expenditures, competitors’ product development, expected capital expenditures, future cash sources and requirements, liquidity, impact of long term incentive plans, expected pension contributions and payments, impact of taxes, expected compliance with laws, changes in law and regulations, impact of environmental costs, expected trading volume and value of stocks and options, expected cost savings, impact of litigation, benefits and other effects of completed or future acquisitions, which involve known and unknown risks, uncertainties and other factors that may cause our or our businesses’ actual results, levels of activity, performance or achievements to be materially different from those expressed or implied by any forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of those terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially because of market conditions in our industries or other factors. Moreover, we do not, nor does any other person, assume responsibility for the accuracy and completeness of those statements. Unless otherwise required by applicable laws, we disclaim any intention or obligation to publicly update or revise any of the forward-looking statements after the date of this annual report to conform them to actual results, whether as a result of new information, future events, or otherwise. All of the forward-looking statements are qualified in their entirety by reference to the factors discussed under the captions “Factors affecting our future operating results” in the “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of this annual report, which describe risks and factors that could cause results to differ materially from those projected in those forward-looking statements.

      We caution the reader that the above list of risks and factors that may affect results addressed in the forward-looking statements may not be exhaustive. Other sections of this annual report and other documents incorporated by reference may describe additional risks or factors that could adversely impact our business and financial performance. We operate in a continually changing business environment, and new risk factors emerge from time to time. Management cannot predict these new risk factors, nor can it assess the impact, if any, of these new risk factors on our businesses or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those projected in any forward-looking statements. Accordingly, forward-looking statements should not be relied upon as a prediction of actual results.

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

      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.

      None.

      Our management carried out an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this annual report under the supervision and with the participation of our disclosure committee, our CFO and CEO. Based upon that evaluation, our CFO and CEO concluded that our disclosure controls and procedures are effective in permitting us to comply with our disclosure obligations and ensure that the material information required to be disclosed is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. There were no changes in our internal control over financial reporting during the quarter ended December 31, 2004 that have materially affected, or are reasonably likely to materially affect, our controls 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 U.S. generally accepted accounting principles.

      Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

      Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2004. 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. Based on our assessment, we concluded that, as of December 31, 2004, the Company’s internal control over financial reporting is effective.

      Our management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2004 has been audited by PricewaterhouseCoopers AG, an independent registered public accounting firm, as stated in their report which appears on page F-2.

PART III

      The directors and executive officers of the Company are set forth below. All directors hold office until the annual meeting of shareholders following their election or until their successors are duly elected and qualified. Officers are appointed by the Board of Directors and serve at the discretion of the Board.

      Robert F. Spoerry has been a Director since October 1996. Mr. Spoerry has been President and Chief Executive Officer of the Company since 1993. He served as Head of Industrial and Retail (Europe) of the Company from 1987 to 1993. Mr. Spoerry has been Chairman of the Board of Directors since May 1998.

      William P. Donnelly has been Chief Financial Officer of the Company from August 2004. From July 2002 to August 2004, he was Head of Product Inspection and the Company’s liquid handling business, and he was Chief Financial Officer of the Company from 1997 to July 2002.

      Peter Bürker has been Head of Human Resources of the Company since 1995. From 1992 to 1994 he was the Company’s General Manager in Spain, and from 1989 to 1991 he headed the Company’s operations in Italy.

      Olivier A. Filliol has been Head of Global Sales, Service and Marketing of the Company since April 2004, and Head of Process Analytics of the Company since June 1999. From June 1998 to June 1999 he served as General Manager of Hi-Speed Checkweigher Inc., a subsidiary of the Company based in New York. Prior to joining the Company, he was a Strategy Consultant with the international consulting firm Bain & Company working in the Geneva, Paris, London and Sydney offices.

      Jean-Lucien Gloor has been Head of Information Systems and Logistics and Chief Information Officer of the Company since March 2001. From 1999 until joining the Company, he served as Head of Central Server Platforms at Credit Suisse Financial Services. Prior to 1999, he held various senior information systems positions during fifteen years with The Dow Chemical Company.

      Timothy P. Haynes has been Head of Retail of the Company since October 2001. From 1999 to 2001 he served as Business Unit Leader for the Company’s Transport, Shipping, Mail and Components business. Prior to joining the Company, he held various management positions at Emerson Electric in its process control and measurement businesses, including from 1997 to 1999 when he served as Vice President of Marketing and Product Development in its Process Analytic Division.

      Beat E. Lüthi has been Head of Laboratory of the Company since March 2003. From 1998 until returning to the Company, he served as Chief Executive Officer of Feintool International Holding, a Swiss public company. Feintool is a global technology and systems provider in fineblanking/forming and assembly/automation as well as a global supplier of metal and plastic components. From 1990 to 1998 he held various management positions with the Company in Switzerland.

      Urs Widmer has been Head of Industrial since 1999. From 1984 to 1999 he served in various management functions within the Company, including most recently Head of Standard Industrial (Europe) from 1995 to 1999. Prior to 1984 he held various management positions with Siemens, a global manufacturer of solutions for information and communications, automation and control, power and transportation.

      Philip Caldwell has been a Director since October 1996. Prior to May 1998, Mr. Caldwell served as Chairman of the Board of Directors. Mr. Caldwell spent 32 years at Ford Motor Company, where he served as Chairman of the Board of Directors and Chief Executive Officer from 1979 to 1985 and a Director from 1973 to 1990. He served as a Director and Senior Managing Director of Lehman Brothers Inc. and its predecessor, Shearson Lehman Brothers Holdings, Inc., from 1985 to February 1998. Mr. Caldwell is also a Director of the Mexico Fund, Russell Reynolds Associates, Inc. and Waters Corporation.

      Francis A. Contino has been a Director since October 2004. Mr. Contino is Executive Vice President — Strategic Planning and Chief Financial Officer of McCormick & Company, Inc. He is a member of the Management Committee and has been a member of the Board of Directors and Chief Financial Officer of McCormick since joining the company in 1998. Prior to joining McCormick, Mr. Contino was Managing Partner of the Baltimore office of Ernst & Young.

      John T. Dickson has been a Director since March 2000. Mr. Dickson has been President and Chief Executive Officer of Agere Systems Inc. since August 2000. Previously, Mr. Dickson had been Executive Vice President and Chief Executive Officer of Lucent Technologies’ Microelectronics and Communications Technologies Group since October 1999. He joined AT&T Corp. in 1993 as Vice President of its Integrated Circuit business unit, moved to Lucent following its spin-off in 1996, and was named Chief Operating Officer of Lucent’s Microelectronics Group in 1997. Mr. Dickson is also a Director of Agere Systems Inc. and the Semiconductor Industry Association and a member of the Board of Trustees of Lehigh Valley Health Network.

      Philip H. Geier has been a Director since July 2001. Mr. Geier was Chairman of the Board and Chief Executive Officer of the Interpublic Group of Companies, Inc. from 1980 to 2000 and was a Director of Interpublic since 1975. Mr. Geier is also a Director of AEA Investors LLC, Alcon, Inc., Fiduciary Trust Co. International, Foot Locker, Inc. and Intermedia Advertising Group.

      John D. Macomber has been a Director since October 1996. He has been a principal of JDM Investment Group since 1992. He was Chairman and President of the Export-Import Bank of the United States (an agency of the U.S. Government) from 1989 to 1992. From 1973 to 1986 Mr. Macomber was Chairman and Chief Executive Officer of Celanese Corporation. Prior to that, Mr. Macomber was a Senior Partner of McKinsey & Company. Mr. Macomber is also a Director of AEA Investors LLC and Lehman Brothers Holdings Inc.

      Hans Ulrich Maerki has been a Director since September 2002. Mr. Maerki has been the Chairman and General Manager of IBM Europe/ Middle East/ Africa since July 2003. He is also a member of the World Wide Management Council of IBM Corporation. From August 2001 to July 2003, Mr. Maerki was Chairman of IBM Europe/ Middle East/ Africa and from 1996 to July 2001, Mr. Maerki was General Manager of IBM Global Services, Europe/ Middle East/ Africa. Mr. Maerki has been with IBM in various positions since 1973. Mr. Maerki is also a Director of ABB Ltd.

      George M. Milne, Jr., Ph.D., has been a Director since September 1999. From 1970 to July 2002, Dr. Milne held various management positions with Pfizer Corporation, including most recently Executive Vice President, Pfizer Global Research and Development and President, Worldwide Strategic and Operations Management. Dr. Milne was also a Senior Vice President of Pfizer Inc. and a member of the Pfizer Management Council. He was President of Central Research from 1993 to July 2002 with global responsibility for Pfizer’s Human and Veterinary Medicine Research and Development. Dr. Milne is also a Director of Athersys, Inc., Charles River Laboratories, Inc. and Conor Medsystems, Inc.

      Thomas P. Salice has been a Director since October 1996. Mr. Salice is a Managing Member of Sceptra Capital Partners, LLC, a private equity firm. Previously, he was President of AEA Investors LLC, a private equity firm, from January 1999, Chief Executive Officer from January 2000, and Vice Chairman from September 2002 to December 2004. Mr. Salice is also a Director of Agere Systems Inc. and Waters Corporation. He also serves on the Board of Trustees of Fordham University.

      On February 3, 2005, Mr. Caldwell announced to the Company that he intends to retire at the end of his current term and will not be running for reelection in 2005.

Audit Committee

      The Company has a separately designated standing Audit Committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. The members of the Audit Committee are Philip Caldwell, Francis Contino, John Macomber (Chair) and Thomas Salice.

Audit Committee Financial Expert

      The Board of Directors has determined that each member of the Audit Committee is an audit committee financial expert as defined by Item 401(h) of Regulation S-K of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and is independent within the meaning of Item 7(d)(3)(iv) of Schedule 14A of the Exchange Act.

Code of Ethics

      The Company has adopted a code of business conduct and ethics for directors, officers (including the principal executive officer, principal financial officer and controller) and employees, known as the Code of Conduct. The Code of Conduct is available on the Company’s website at http://www.mt.com under Investor Relations/ Corporate Governance. Stockholders may request a free copy of the Code of Conduct from:

Corporate Governance Guidelines

      The Company has adopted Corporate Governance Guidelines, which are available on the Company’s website at http://www.mt.com under Investor Relations/ Corporate Governance. Stockholders may request a free copy of the Corporate Governance Guidelines from the address and phone numbers set forth under “Code of Ethics” above.

Section 16(a) Beneficial Ownership Reporting Compliance

      Information regarding Section 16(a) beneficial ownership reporting compliance is set forth under “General Information — Compliance with Section 16(a) Beneficial Ownership Reporting Requirements” in the Proxy Statement for the 2005 Annual Meeting of Shareholders (the “2005 Proxy Statement”), which information is incorporated herein by reference.

      The information appearing in the sections captioned “Board of Directors — General Information,” “Executive Compensation” and “Additional Information — Compensation Committee Interlocks and Insider Participation” in the 2005 Proxy Statement is incorporated by reference herein.

      The information appearing in the section “Share Ownership” in the 2005 Proxy Statement is incorporated by reference herein.

      None.

      Information appearing in the section “Audit Committee Report” in the 2005 Proxy Statement is hereby incorporated by reference.

PART IV

      (a) Exhibits, Financial Statements and Schedules:

      (b) Reports on Form 8-K:

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.

Date: February 25, 2005

      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.

METTLER-TOLEDO INTERNATIONAL INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Shareholders of Mettler-Toledo International Inc.

      We have completed an integrated audit of Mettler-Toledo International Inc.’s 2004 consolidated financial statements and of its internal control over financial reporting as of December 31, 2004 and audits of its 2003 and 2002 consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Our opinions, based on our audits, are presented below.

Consolidated financial statements and financial statement schedule

      In our opinion, the consolidated financial statements listed in the index appearing under Item 15(a)(1) present fairly, in all material respects, the financial position of Mettler-Toledo International Inc. and its subsidiaries at December 31, 2004 and 2003, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2004 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 15(a)(2) presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

Internal control over financial reporting

      Also, in our opinion, management’s assessment, included in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A, that the Company maintained effective internal control over financial reporting as of December 31, 2004 based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), is fairly stated, in all material respects, based on those criteria. Furthermore, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control — Integrated Framework issued by COSO. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express opinions on management’s assessment and on the effectiveness of the Company’s internal control over financial reporting based on our audit. We conducted our audit of internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. An audit of internal control over financial reporting includes obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we consider necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.

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

assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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

/s/ PricewaterhouseCoopers AG

PricewaterhouseCoopers AG

Zurich, Switzerland

February 25, 2005

METTLER-TOLEDO INTERNATIONAL INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

For the years ended December 31

(In thousands, except share data)

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

METTLER-TOLEDO INTERNATIONAL INC.

CONSOLIDATED BALANCE SHEETS

As of December 31

(In thousands, except share data)

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

METTLER-TOLEDO INTERNATIONAL INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY AND COMPREHENSIVE INCOME

For the years ended December 31

(In thousands, except share data)