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    responsetoinquiry-22210.htm

      March 5,
2010

      Mr.
Terence O’Brien

      Accounting
Branch Chief

      Division
of Corporate Finance

      Securities
and Exchange Commission

      100 F
Street, N.E.

      Washington,
D.C. 20549-7010

      Re:           Matthews
International Corporation

      Form 10-K for the fiscal year ended
September 30, 2009

      Definitive Proxy filed January 15,
2010

      File Number 000-09115

      Dear Mr.
O’Brien:

      Thank you
for your review of the above referenced documents.  Pursuant to your
request, Matthews International Corporation (“Matthews” or the “Company”)
provides the following responses to the comments provided in your letter dated
February 22, 2010.

      Form 10-K for the fiscal
year ended September 30, 2009

      Liquidity and Capital
Resources, page 24

      Securities and Exchange
Commission (“SEC”) Comment No. 1:

      You state
on page 11 in your risk factors that you enter into contracts with several large
customers, which can obligate you to sell products at contracted prices for
extended periods of time and may limit your ability to increase prices in
response to raw material prices increases.  Please revise your
disclosure, in future filings, to discuss these contracts, quantify the amount
of sales received and costs incurred related to these contracts and the impact,
if any, these contracts have had or will have on liquidity and
operations.  Further revise your commodity price risk disclosure on
page 32 to address these contracts, your risks associated with them and how you
mitigate the risks of these contracts.

      Response:

      The
Company references this risk under “Increased Prices for Raw Materials” on page
10 and “Changes in the Distribution of the Company’s Products or the Loss of a
Large Customer” on page 11.  The discussion of this risk is more
appropriate under “Increased

      Prices
for Raw Materials” and, therefore, will be eliminated from “Changes in the
Distribution of the Company’s Products or the Loss of a Large Customer” in
future filings.  In addition, as recommended, the Company will revise
its “Commodity Price Risks” disclosure (page 32) in future filings to reference
this risk.

      In
developing this disclosure, the Company’s intention was to advise the investor
of the general risk that exists as a result of commodity cost fluctuation and
the ability to adjust selling prices to customers.  In this
environment, the Company believes that acknowledgement of this general risk is
appropriate.  The principal commodities considered in developing this
disclosure are bronze and steel, which are primarily utilized in the Company’s
Bronze and Casket segments, respectively.  On a stand-alone basis, no
similar commodity / customer pricing exposure would warrant such a disclosure
for the Company’s Cremation segment or any of the Company’s Brand Solutions
businesses.

      In the
Bronze and Casket segments, most of the Company’s more significant customer
contracts and similar arrangements provide pricing terms based on a discount
percentage from list prices.  List pricing is generally established on
an annual basis and, as such, could result in a short-term risk if commodity
costs fluctuate significantly.  To mitigate this risk on a more-timely
basis, list pricing can be adjusted more frequently.  In addition, the
Company has applied temporary price surcharges on an interim basis in prior
years, particularly in the Bronze segment.  However, in determining
whether interim price adjustments are appropriate, several significant factors
must be considered including, among others:  current economic and
market conditions, the ability to mitigate commodity cost increases through
other short-term cost control initiatives, expected reaction from customers, and
expected response from competitors.  As a result, reasonable
quantification of this risk is not feasible.  Further, for competitive
reasons, the Company does not disclose pricing arrangements with customers or
purchasing arrangements with vendors.

      As the
Company does have some limited flexibility in customer pricing and because of
the separate risks associated with hedging the aforementioned commodities, the
Company has chosen not to enter into hedging arrangements as a means to mitigate
commodity risk.  The Company does attempt to purchase additional
quantities of these metals from time-to-time when pricing is considered more
advantageous.

      Based on
the foregoing, the Company will revise its disclosures of “Increased Prices for
Raw Materials” on page 10 and “Commodity Price Risks” on page 32 in future
filings consistent with the following (changes are underlined):

      Increased Prices for Raw
Materials. The Company’s profitability is affected by the prices of
the raw materials used in the manufacture of its products.  These
prices may fluctuate based on a number of factors, including changes in supply
and demand, domestic and global economic conditions, currency exchange rates,
labor costs and fuel-

          2

      related
costs.  If suppliers increase the price of critical raw materials,
alternative sources of supply, or an alternative material, may not
exist.

      The Company has standard
selling price structures (i.e. list prices) in several of its segments, which
are reviewed for adjustment generally on an annual basis.  In
addition, the Company has established pricing terms with several of its
customers through contracts or similar arrangements.  Based on
competitive market conditions and to the extent that the Company has
established pricing
terms with customers, the Company’s ability to
immediately increase the price of its products to offset the increased
costs may be limited.  Significant raw material price increases that
cannot be mitigated by selling price increases or productivity improvements
will negatively affect the Company’s results of operations.

      Commodity Price Risks - In the
normal course of business, the Company is exposed to commodity price
fluctuations related to the purchases of certain materials and supplies (such as
bronze ingot, steel, fuel and wood) used in its manufacturing operations. The
Company obtains competitive prices for materials and supplies when
available.  In addition, based on
competitive market conditions and to the extent that the Company has established
pricing terms with customers through contracts or similar arrangements, the
Company’s ability to immediately increase the price of its products to offset
the increased costs may be limited.

      SEC Comment No.
2:

      You
disclose on page 21 that your selling and administrative costs were higher as a
result of unusual charges of $7.5 million in 2009.  Further explain
the nature of these “unusual” charges and why you believe these charges are not
likely to reoccur.  Your response and revised disclosure should also
address the increase in bad debt expense in the casket segment and increased
write off during 2009.

      Response:

      Unusual
charges included in fiscal 2009 selling and administrative expenses consisted
principally of Saueressig integration costs, bad debt expense,
termination-related expenses and costs related to operational and systems
improvements.

      Saueressig
integration costs included consulting fees incurred for assistance in the
operational integration of this acquisition (which was completed in May 2008)
into the Company’s Graphics Imaging segment.  Integration costs also
included consulting fees for initial Sarbanes-Oxley compliance work and
additional audit-related fees (for example, opening balance sheet
procedures).  Since these costs related to acquisition integration
activities, they have been identified as “unusual”.  Such costs are
not expected to re-occur for the Saueressig acquisition, but could be applicable
for future acquisitions.

          3

      As a
result of recent economic conditions, bad debt expense (particularly in the
Casket segment) was significantly higher in fiscal 2009, compared to prior
years.  This was considered “unusual” based on the Company’s
historical bad debt experience.  The increase reflected a general
deterioration in the aging of outstanding accounts receivable.  The
Company applies a consistent policy for determining the allowance for doubtful
accounts based on various aging thresholds, which was developed from
historical collection experience.    Although not likely to
continue to increase at the same pace, the term “unusual” was applied rather
than “non-recurring” or “one-time” since re-occurrence is possible if economic
conditions continue to remain unfavorable.

      Employee
termination-related expenses and other costs in connection with operational and
systems improvements reflected the Company’s reaction to the current
recession.  The principal objective of these initiatives was to better
align the cost structures of the Company’s businesses with their respective
revenue run rates.  The Company continually strives to improve its
cost structure; therefore, these costs were not identified as “non-recurring” or
“one-time”.  However, the significance of these actions in fiscal 2009
warranted disclosure to the investor as “unusual”.

      Based on
the foregoing, the Company will revise its disclosure in future filings of
“unusual” charges included in fiscal 2009 selling and administrative costs on
page 21 consistent with the following (changes are underlined):

      Selling
and administrative expenses for the year ended September 30, 2009 were
$193.8 million, compared to $190.0 million for fiscal
2008.  Consolidated selling and administrative expenses as a percent
of sales were 24.8% for the year ended September 30, 2009, compared to
23.2% last year.  The increases in costs and percentage of sales
primarily resulted from the Saueressig acquisition and unusual
charges.  Unusual charges included in fiscal 2009 selling and
administrative expenses totaled approximately $7.5 million, and consisted
principally of Saueressig integration costs, bad debt expense,
termination-related expenses and costs related to operational and system
improvements.  Saueressig integration costs
included consulting fees incurred for assistance in the operational and
financial integration into Matthews.  Bad debt expense, particularly
in the Casket segment, was significantly higher in fiscal 2009, compared to
fiscal 2008, reflecting recent economic conditions.  The increase
resulted from a general deterioration in the aging of outstanding accounts
receivable.  Employee termination-related expenses and other costs in
connection with operational and systems improvements primarily reflected the
Company’s initiatives as a result of the current recession.  The
principal objective of these initiatives is to better align the cost structures
of the Company’s businesses with their respective revenue run
rates.

          4

      SEC Comment No.
3:

      We note
your disclosure in the last paragraph on page 25 and the first two paragraphs on
page 26 that certain of your subsidiaries have credit facilities with European
banks and Italian banks.  Please tell us what consideration you have
given to publicly filing the agreement underlying these credit
facilities.

      Response:

      The
Company’s domestic revolving credit facility is its primary credit facility,
representing over 70% of consolidated outstanding borrowings and total debt
commitments at September 30, 2009.  The domestic revolving credit
facility, and subsequent amendments, have been filed as exhibits to the Form
10-K (Exhibits 10.1, 10.2, 10.3 and 10.4 to the fiscal 2009 Form
10-K).  The credit facilities with European and Italian banks in the
aggregate constitute less than 10% of total consolidated
liabilities.  In addition, the outstanding balances on these
facilities have generally been less than 10% of total outstanding
debt.  Accordingly, these facilities were not considered individually
significant and have therefore not been publicly filed.

      Note 7 – Long-term Debt,
page 46

      SEC Comment No.
4:

      We note
that you have a significant debt level and have discussed your required
financial covenants on pages 25 and 46.  However, you have not
provided an affirmative statement of whether or not you have passed these
covenants.  In future filings, please disclose if you were in
compliance with such covenants during the periods presented.  In
addition, please revise future filings to present, for your most significant
covenants, your actual ratios and other actual amounts versus the
minimum/maximum ratios/amounts permitted.  Such presentation will
allow an investor to easily understand your current status in meeting your
financial covenants.  Such disclosure should only be excluded if you
believe that the likelihood of default is remote.  Refer to Section
501.03 of the Financial Reporting Codification for guidance.

      Response:

      The
Company’s domestic credit facility includes only two financial covenants, a
leverage ratio (net indebtedness, as defined, divided by EBITDA for the latest
twelve months (“LTM”)) which must be maintained below 2.00, and an interest
coverage ratio (EBIT for the LTM divided by interest expense for the LTM) which
must be maintained above 4.00.  At September 30, 2009, the Company’s
leverage ratio was 1.44 and the interest coverage ratio was
8.35.  Based on the Company’s historical results of operations and
financial condition, the likelihood of default is considered to be
remote.  Debt covenant

          5

      compliance
is monitored quarterly and if an unfavorable trend begins to develop, the
Company will immediately reassess its disclosure relative to the
covenants.

      Note 11. Pension and Other
Postretirement plans, page 53

      SEC Comment No.
5:

      On page
53, you disclose that your plan maintains a substantial portion of its assets in
equity securities and recent market declines could affect the fair value of your
pension assets.  Given the significance of your pension assets as well
as the impact of pension funding on your overall liquidity, please revise future
filings to include a more specific and comprehensive discussion of the current
and expected future impact of the market conditions on each of the significant
estimates and assumptions used in your determination of benefit obligations,
costs and funding requirements.  In this regard, please include a
sensitivity analysis related to each of your significant assumptions based upon
reasonably likely changes.  Further explain to us the nature of the
valuation adjustment made during 2009 to your benefit obligation of $6.3 million
and fair value of plan assets of $6.0 million.  Similar revisions
should be made to your critical accounting policy disclosure.  Refer
to FRC 501.14.

      Response:

      The
Company will expand its discussion of market conditions impacting its pension
obligations as recommended.  The most important of these factors
include the valuation of pension plan assets, the discount rate and the
estimated return on plan assets.  The return on plan assets is
currently based upon projections provided by the Company’s independent
investment advisor, considering the investment policy of the plan and the plan’s
asset allocation.  The fair value of plan assets and discount rate are
“point-in-time” measures, and the recent volatility of the debt and equity
markets makes estimating future changes in fair value of plan assets and
discount rates more challenging.  In future filings, the Company will
provide a sensitivity analysis in “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” of the effects of changes in each
of the pension plan assumptions based upon a percentage change for each of the
assumptions (e.g., one percentage point change in the discount rate, five
percent change in the fair value of plan assets, one pe