<PAGE>
[CONFORMED COPY]
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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
(Mark One)
[X]
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM __________ TO __________
COMMISSION FILE NUMBER 1-168
---------------------
AMETEK, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 13-4923320
(I.R.S. EMPLOYER IDENTIFICATION NO.)
(STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION)
19301
(ZIP CODE)
STATION SQUARE, PAOLI, PA
(ADDRESS OF PRINCIPAL EXECUTIVE
OFFICES)
610-647-2121
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- -----------------------
<S> <C>
COMMON STOCK, $.01 PAR VALUE (VOTING) NEW YORK STOCK EXCHANGE
PACIFIC STOCK EXCHANGE
9 3/4% SENIOR NOTES DUE 2004 NEW YORK STOCK EXCHANGE
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NONE
(TITLE OF EACH CLASS)
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES X NO
--- ---
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM
405 OF REGULATION S-K 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. [_]
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of March 3, 1995, was $582,749,299.
The number of shares of common stock outstanding as of March 3, 1995, was
33,922,042.
DOCUMENTS INCORPORATED BY REFERENCE
Part III incorporates information by reference from the Proxy Statement for
Annual Meeting of Stockholders on April 25, 1995.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
AMETEK, INC.
1994 FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE(S)
-------
PART I
<C> <S> <C>
Item 1. Business.................................................... 3-10
Item 2. Properties.................................................. 10
Item 3. Legal Proceedings........................................... 10
Item 4. Submission of Matters to a Vote of Security Holders......... 10
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters........................................ 10
Item 6. Selected Financial Data..................................... 11-12
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................. 13-19
Item 8. Financial Statements and Supplementary Data................. 19-38
Item 9. Change in and Disagreements with Accountants on Accounting
and Financial Disclosure................................... 38
PART III
Item 10. Directors and Executive Officers of the Registrant.......... 39
Item 11. Executive Compensation...................................... 39
Item 12. Security Ownership of Certain Beneficial Owners and
Management................................................. 39
Item 13. Certain Relationships and Related Transactions.............. 39
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form
8-K........................................................ 39
Signatures............................................................ 40
</TABLE>
2
<PAGE>
PART I
ITEM 1. BUSINESS.
GENERAL DEVELOPMENT OF BUSINESS
AMETEK, Inc. ("AMETEK" or the "Company") was incorporated in Delaware in 1930
under the name of American Machine and Metals, Inc. and maintains its principal
executive offices at Station Square, Paoli, Pennsylvania 19301.
AMETEK is an international manufacturer of high-quality, engineered products
for industrial and commercial markets. The Company has a significant market
share for many of its products: Electro-mechanical Group is the world's largest
producer of electric motors for vacuum cleaners and floor care products;
Precision Instruments Group builds high-technology monitoring, sensing,
calibration and alarm devices for the aerospace and process and heavy vehicle
industries; and Industrial Materials Group uses plastics, metals and fibers for
a variety of consumer and industrial products. The Company has grown through a
primary focus on manufacturing electronic, electro-mechanical and electrical
products for diverse markets where its technology or cost advantage will lead
to a significant share of one or more niche markets.
Shareholder Value Enhancement Plan ("Plan")
In November 1993, the Company completed a broad strategic review and
announced a Plan intended to enhance shareholder value over the long term. From
an operational point of view, the Company is increasing profitability and
growth by (i) capitalizing on the competitive advantages of the floor care,
specialty metals and water filtration businesses; and building on unique
advantages in other businesses, by extending core technologies into new
products and markets, (ii) placing continued emphasis on cost control, (iii)
expanding internationally in the Pacific Rim and Europe and, (iv) pursuing
strategic acquisitions and divestments on a selective basis. In February 1995,
the Company reached an agreement in principle to acquire the heavy vehicle
instrumentation business of privately held Dixson, Inc. On March 21, 1995, the
Company signed an agreement to sell its Microfoam Division to Astro Valcour,
Inc.
From a financial perspective, the Company's Plan takes advantage of its
historically strong cash flow to decrease debt and repurchase its common stock
up to a total of $150 million. Existing debt was refinanced with the proceeds
of the March 1994 public issuance of $150 million principal amount of 9 3/4%
senior notes, borrowings under a bank credit agreement, and available cash. In
the first quarter of 1994 the Company recorded an extraordinary after tax
charge of $11.8 million or $.32 per share for the early retirement of then-
existing debt in accordance with the Plan (above); a $3.8 million after tax
gain was recorded due to a required change in accounting for marketable
securities. The Plan also reduced the quarterly per share dividend rate on the
Company's common stock from $.17 to $.06, beginning with the dividend payable
December 24, 1993. The effect of the 9.2 million shares repurchased as of
December 31, 1994 for $119 million in combination with the dividend reduction
is to generate incremental after tax cash flow of approximately $22 million per
year. Since refinancing the Company in March 1994, revolving credit loans have
been reduced by $61 million and early debt repayments of $40 million were made,
as of December 31, 1994. Early debt repayment is a key part of the Plan to
enhance financial strength, return on assets, and profitability. The Company
amended its bank credit agreement in October 1994, which reduced the available
credit facility from $250 million to $200 million, negotiated lower interest
rates and reduced commitment fees on all bank debt.
In connection with a business restructuring program, the Company recorded
after tax charges against earnings of $28.6 million during the fourth quarter
of 1993, resulting in aggregate charges of $33.5 million for all of 1993. A
substantial portion of these charges related to the restructuring of U.S. Gauge
and Aerospace divisions and the remainder reflects asset write-downs and other
special charges against income. The restructuring charges primarily result from
actions taken or planned to improve competitive position due to the weak
aerospace market and the actions at a U.S. Gauge facility in Sellersville,
Pennsylvania, to make this operation competitive.
3
<PAGE>
FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS, FOREIGN OPERATIONS AND EXPORT
SALES
Business segment and geographic information is shown on pages 36 and 37 of
this report.
In response to increasing globalization of its markets and opportunities for
growth, the Company has expanded its international operations. This expansion
has resulted from a combination of increasing export sales of products
manufactured in the United States, sales from overseas operations and strategic
alliances.
The Company's strategy for international growth requires global cost-
competitiveness. AMETEK Singapore Private, Ltd. was established to expand its
product sales throughout the Pacific Rim and to secure lower-cost supply
arrangements.
International operations of the Company are subject to certain risks which
are inherent in conducting business outside the United States, such as
fluctuation in currency exchange rates and controls, restrictions on the
movement of funds, import and export controls, and other economic, political
and regulatory policies of the countries in which business is conducted.
NARRATIVE DESCRIPTION OF BUSINESS
PRODUCTS AND SERVICES
The Company classifies its operations into three principal business segments.
A description of the business, products and markets of each segment is
described below:
ELECTRO-MECHANICAL GROUP
The Company's Electro-mechanical Group ("EMG") is a major supplier of
fractional-horsepower electric motors and blowers for vacuum cleaners and other
floor care products. EMG also manufactures electric motors and blowers for
furnaces, lawn tools, photocopiers, computer equipment and other applications.
EMG has ten manufacturing locations, six in the United States, three in Italy
and one in Mexico. It employs approximately 2,600 people. EMG produced over 24
million motors in 1994 and approximately 18 million motors in 1993. EMG's
facilities are equipped with efficient state-of-the-art production lines
designed to maximize manufacturing flexibility. Because of its high production
volume and technological resources, EMG offers its customers cost competitive
and custom-designed products on a timely basis.
Floor Care Products
EMG has a major market share, through the sale of air-moving electric motors
to most of the major vacuum cleaner original equipment manufacturers (OEMs) on
a global scale including integrated OEMs who produce some of their own motors.
It produces a full range of floor care products from the hand-held, canister,
upright and central vacuums for household use to the more sophisticated vacuum
products for commercial and industrial applications.
In recent years, EMG has expanded its sales in the floor care industry by
marketing to vertically integrated vacuum cleaner manufacturers who realize the
economic and operational advantages of reducing or discontinuing their own
motor production and instead purchase EMG's motors. By using EMG's motors,
vacuum cleaner manufacturers are able to reduce the substantial capital
expenditures they would otherwise have to make to maintain their own motor
production, with frequent design changes, at acceptable volumes.
EMG will continue to participate in the growth of the floor care market by
investing in production capacity and new product development to serve its
customers' proliferation of new products. Changing customer demands increase
the necessary investment of vertically integrated OEMs to design and produce
motors for the resulting stream of new products. In addition, EMG's floor care
product development is
4
<PAGE>
focused on enhancing motor-blower cost-performance through advances in power,
efficiency and quieter operation. EMG has recently developed a 1200-watt
brushless motor-blower for high-end floor care applications in commercial
vacuum cleaners and central vacuum systems, as well as a new low-cost "world
lamination" motor designed for export markets with high-volume applications.
EMG is pursuing joint ventures to serve the Pacific Rim market and the market
in Eastern Europe. It has a significant position in the European market for
floor care products based on exports from the United States and production from
its Italian operations. EMG's plants in Italy are producing electric motors for
vacuum cleaner manufacturers throughout Western Europe and, to a more limited
extent, Eastern Europe. These motors are similar to those produced in the
United States. Capacity at these plants has been increased through product
standardization, manufacturing integration and efficiency, as well as
improvement in labor flexibility.
Consistent with its strategy for long-term growth, EMG is increasing its unit
production capacity for floor care products by approximately 50%, principally
to meet anticipated growth in customer demand for smaller size motors over the
next several years. This is being accomplished primarily by adding substantial
production capacity at the Graham, North Carolina facility.
Technical Motor Products
EMG formed its Technical Motor Division to focus and expand its production of
motor-blowers for nonfloor care applications by capitalizing on its market
presence and technological expertise in floor care products. It is establishing
a significant market position in customer applications by introducing brushless
motor technology.
EMG's technical motor products include motors for furnaces, lawn tools,
photocopiers, computer equipment, business machines, medical equipment and
evaporative cooling equipment. Its brushless motors, which are free of static
charges, are becoming increasingly popular in medical and other applications
where flammability is a concern. Recent product developments include the use of
brushless motors in systems designed to assist patients with sleep-breathing
disorders, systems which help bedridden patients avoid bedsores and systems to
recover gasoline fumes at automotive fueling stations.
Consistent with its strategy for long-term growth, EMG has recently increased
its unit production capacity for technical motor products by approximately 25%
to meet anticipated growth in customer demand with production at its Rock
Creek, North Carolina plant.
Through the Company's Singapore sales subsidiary, its Shanghai office, and
the pursuit of joint ventures, EMG is building a presence in the Pacific Rim.
Customers
EMG is not dependent on any single customer such that its loss would have a
material adverse effect on its operations. Approximately 25% of EMG's sales for
1994 were made to its five largest customers.
PRECISION INSTRUMENTS GROUP
The Precision Instruments Group ("PI") serves a diverse group of markets, the
largest of which are the aerospace, general gauge, process industries and
heavy-duty vehicle markets; 22% of sales are international. Through its six
operating divisions and 14 plants, PI employs approximately 2300 people.
Aerospace Products
Approximately 40% of PI revenues are from the sale of aerospace products
including cockpit instruments/displays, engine sensors and monitoring systems,
fuel/liquid sensors, thermocouple sensors, and
5
<PAGE>
optical cables for aircraft and aircraft engines. These products are designed
and manufactured to record, process and display information for use by flight
and ground crews. PI serves all segments of the commercial aerospace industry
including business and commuter aircraft and the commercial airlines; defense
markets account for about one-third of aerospace sales. There are three
customer categories: OEM air frame manufacturers; jet engine producers; repair
and maintenance products which are marketed to the airlines. PI's aerospace
products are designed to customer specifications and meet stringent operational
and reliability requirements.
PI's strategy in aerospace products is to operate in niche categories where
its products have a technological or cost advantage. PI believes that its
extensive experience and technological expertise in aerospace, together with
long-standing customer relationships with leading international manufacturers
of commercial aircraft, provide it with a competitive advantage. PI was
selected by Boeing to manufacture an engine vibration monitoring system and
sensor system for Boeing's new 777 aircraft. Variations of this product are
marketed to other aircraft manufacturers. Strategic investment in new product
development has resulted in orders for aircraft engine sensors, an active
matrix liquid crystal display and a business jet fuel quantity system.
As a result of the overall weakness in the aerospace industry, PI sales to
the military and commercial aircraft markets have declined significantly. In
response to these conditions, PI aggressively reduced costs through
consolidation and downsizing. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" on page 13 of this report.
Process Industry and General Gauge Products
Approximately 45% of PI sales are from the sale of products to general gauge
markets and the process industry, including gas and liquid analyzers, emission
monitors, process annunciators and control room graphic displays. PI
concentrates in the process measurement portion of this business serving
segments of the process industry, including refining and petrochemical, power
generators, steel plants, water and waste treatment, natural gas distribution,
and pulp and paper. PI also produces a wide variety of pressure gauge products
for numerous industrial and commercial uses. These products primarily measure
physical characteristics such as pressure, temperature, gas, moisture and
liquid concentration, force, air, noise levels, and speed.
In recent years, domestic market conditions have been soft due primarily to
adverse conditions in the refining and petrochemical industry. These conditions
have been accentuated by environmental regulations which have reduced new
refinery and petrochemical plant construction, and industry operating rates in
the United States. PI is expanding into Asia where markets for the process
industry are stronger due to new construction.
PI's business strategy is to concentrate on markets where it has a
competitive advantage and to customize products around core technologies to
meet customer requirements. For example, PI's oxygen and combustion analyzers
have a leading market position and are designed to meet customer-specific
applications.
Pressure gauges are produced by the U.S. Gauge Division, a leader in the
North American pressure gauge market, for a wide variety of industrial and
manufacturing processes. The general pressure gauge market has been adversely
affected by competition from low-cost offshore producers; PI is reducing costs
and refocusing its domestic manufacturing to concentrate on higher-priced
pressure gauge applications. In addition, through a joint venture with a
Taiwanese company, PI is producing and marketing low-cost pressure gauges
manufactured in Taiwan and the People's Republic of China.
Heavy Vehicle Products
PI is a leading domestic producer of electronic instrument panels and
instruments for the heavy truck market which has been strong; domestic truck
manufacturers have faced a growing demand for more fuel-
6
<PAGE>
efficient trucks that satisfy applicable air pollution guidelines. PI has
participated in this market by working closely with heavy truck manufacturers
to develop solid-state instruments to monitor engine efficiency and emissions.
PI is expanding this product line into construction and agricultural equipment
and into international markets with products similar to those currently
produced. In February 1995 the Company reached an agreement in principle to
acquire for cash the heavy vehicle instrumentation business of privately held
Dixson, Inc. The strategic acquisition of this producer of electronic
instrumentation products will strengthen new product development and increase
international sales. Terms of the transaction were not disclosed and it is
subject to the signing of a definitive agreement and other conditions.
Customers
The Precision Instruments Group is not dependent on any single customer such
that its loss would have a material adverse effect on its operations.
Approximately 27% of its 1994 sales were made to its five largest customers.
INDUSTRIAL MATERIALS GROUP
The Industrial Materials Group ("IMG") manufactures water filtration
products, high-purity engineered metals, compounded plastics, high-temperature
fabrics and plastic packaging materials in five divisions (respectively):
Plymouth Products, Specialty Metal Products, Westchester Plastics, Haveg and
Microfoam. IMG's strategic focus is to target niche markets by differentiating
its products on the basis of quality, price and service and to pursue new
product development by exploiting its proprietary technologies and specialized
manufacturing processes.
The Plymouth Products Division (including AMETEK Filters Ltd.) produces water
filtration products for residential, commercial and industrial uses in the
United States and over 80 other countries. Plymouth Products sells its products
in retail and wholesale markets. Plymouth has the broadest cartridge filter
line of any company; this includes complete water filtration systems, special-
purpose filter housings and many different replacement cartridges. Plymouth's
filter cartridges and housings are used in applications such as water
filtration, food and beverage dispensing, and cosmetics and chemical
production. Plymouth's point-of-use drinking water filters are used for the
removal of objectionable taste and odor, hazardous chemicals, bacteria and
heavy metals. In addition, it produces filters, housings and cartridges for
plumbing professionals to serve their residential and commercial customers. The
Company has identified the water filtration market as a significant growth
opportunity and recently completed a $4 million plant expansion, the fifth in
13 years.
The Specialty Metal Products Division produces high-purity strip and wire
from metal powder and manufactures clad products with multiple metallurgical
properties. Products are used in the manufacture of appliances, electronic
connectors, rechargeable batteries and TV cathode ray tubes. Clad metals are
used in gourmet cookware and chemical and pressure vessels. Metal matrix
composites, a new product development, are used for thermal management in high-
power electronic circuits.
The Westchester Plastics Division is the world's largest independent custom
compounder of specialty resins and thermoplastics, including developing
processing techniques that enhance properties such as fire retardance and
adhesion. Markets include automotive parts, electronics, appliances and
telecommunications housings.
The Haveg Division manufactures products for high-temperature and highly
corrosive environments. Haveg's products are made of silicas, phenolic resins
and Teflon (R) (a registered trademark of the DuPont Company). Product
applications include protective welding curtains, as a textile replacement for
asbestos, as a laminate for printed circuit boards, and in foundries to filter
molten metal.
The Microfoam Division is the world's only producer of a very low-density
polypropylene foam used primarily for packaging items, such as furniture and
agricultural products, that require cushioning, surface
7
<PAGE>
protection and insulation. CouchPouch(TM) is made from the division's
MicroTuff(TM) composite material and is stitched into bags large enough to
protect furniture. Because they are made of pure polypropylene, the products
are suitable for reuse and recycling. On March 21, 1995, the Company signed an
agreement to sell the Microfoam Division to Astro Valcour, Inc. The division's
sales in 1994 were approximately $34 million.
Customers
Although IMG is not dependent on any single customer such that its loss would
have a material adverse effect on its operations, approximately 15% of IMG's
sales for 1994 were made to its five largest customers.
MARKETING
Generally, the Company's marketing efforts are organized and carried out at
the divisional level.
Given the similarity of its many products, its significant market share
worldwide and the technical nature of its products, EMG conducts most of its
domestic and international marketing activities through its direct sales force.
EMG makes limited use of sales agents in those foreign countries where its
sales activity is relatively low.
Because of their relatively diverse product lines, PI and IMG make
significant use of distributors and sales agents in their marketing. With its
specialized customer base of aircraft manufacturers and airlines, PI's
Aerospace Division relies primarily on its sales engineers.
COMPETITION
Generally, most markets in which the Company operates are highly competitive.
The principal elements of competition for the products manufactured in each of
the Company's business segments are price, product features, distribution,
quality and service.
For EMG, the primary competition in the United States floor care market is
from a few competitors, one of which has a smaller market share but is part of
a company which is larger and has greater resources than AMETEK. Additional
competition could come from vertically integrated manufacturers of floor care
products which produce their own motors and blowers. In Europe, competition is
from a small group of very large competitors and numerous small competitors.
In the markets served by PI, the Company believes that it is one of the
world's largest pressure gauge manufacturers and ranks among the top 10
producers of certain measuring and control instruments in the United States. It
is one of the leading instrument and sensor suppliers, with a broad product
offering for military and commercial aviation. As a result of the decline in
demand for aircraft instruments and engine sensors due to the consolidation and
deregulation of the airline industry and reduced military spending, competition
is strong and is expected to intensify for certain aerospace products. In the
pressure gauge and heavy vehicle markets served by PI, there are a limited
number of companies competing on price and technology. In process measurement
markets, there are numerous companies in each market niche competing on the
basis of product quality, performance and innovation.
Many of the products sold by IMG are made by few competitors and competition
is mainly from producers of substitute materials. The Westchester Plastics
Division is one of the nation's largest independent plastics compounders.
Competition is from other independent toll compounders and some customers which
have similar in-house compounding capabilities. Plymouth Products is one of the
major suppliers of household water filtration systems, a market with numerous
competitors. In the industrial and commercial filtration markets which Plymouth
Products serves, it does not have a major market share and faces competition
from numerous sources. Specialty Metals is comprised of five niche product
lines with few competitors. The primary form of competition is from competitive
materials and processes.
8
<PAGE>
BACKLOG AND SEASONAL VARIATIONS OF BUSINESS
The Company's approximate backlog of unfilled orders at the dates specified
by business segment was as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1994 1993 1992
------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C>
Electro-mechanical.................................... $111.3 $ 66.0 $ 80.8
Precision Instruments................................. 101.7 121.8 137.3
Industrial Materials.................................. 23.0 24.8 22.8
------ ------ ------
Total............................................. $236.0 $212.6 $240.9
====== ====== ======
</TABLE>
Of the total backlog of unfilled orders at December 31, 1994, approximately
92% is expected to be shipped by December 31, 1995.
The Company believes that neither its business as a whole nor any of its
business segments is subject to significant seasonal variations, although
certain individual operations experience some seasonal variability.
RAW MATERIALS
The Company's business segments obtain raw materials and supplies from a
variety of sources, generally from more than one supplier. However, in the
Industrial Materials segment, certain items are only available from a limited
number of suppliers. The Company believes that its sources and supply of raw
materials are adequate for its needs.
RESEARCH AND DEVELOPMENT
The Company continues to be committed to appropriate research and development
activities designed to identify and develop potential new and improved
products. Company-funded research and development costs during the past three
years were: 1994-$17.8 million, 1993-$15.1 million, and 1992-$14.7 million.
Research activities are conducted by the various businesses of the Company in
their respective technologies and markets.
ENVIRONMENTAL COMPLIANCE
Information with respect to environmental compliance by the Company is set
forth on page 18 of this report in the section of Management's Discussion and
Analysis of Financial Condition and Results of Operations entitled
"Environmental Matters."
PATENTS, LICENSES AND TRADEMARKS
The Company owns numerous unexpired United States patents, United States
design patents and foreign patents, including counterparts of its more
important United States patents, in the major industrial countries of the
world. The Company is a licensor or licensee under patent agreements of various
types and its products are marketed under various registered United States and
foreign trademarks and trade names. However, the Company does not consider any
single patent or trademark, or any group thereof, essential to its business as
a whole, or to any of its business segments. The annual royalties received or
paid under license agreements are not significant to any single business
segment or to the Company's overall operations.
EMPLOYEES
At December 31, 1994, the Company employed approximately 6,200 individuals.
9
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WORKING CAPITAL PRACTICES
The Company does not have extraordinary working capital requirements in any
of its business segments. Customers generally are billed at normal trade terms
with no extended payment provisions. Inventories are closely controlled and
maintained at levels related to production cycles and responsive to normal
delivery requirements of customers.
ITEM 2. PROPERTIES.
The Company has 33 plant facilities in 13 states and five foreign countries.
Of these facilities, 26 are owned by the Company and seven are leased. The
properties owned by the Company consist of approximately 441 acres, of which
approximately 3,537,000 square feet are under roof. Under lease is a total of
approximately 463,000 square feet. The leases expire over a range of years from
1995 to 2009 with renewal options for varying terms contained in most of the
leases. The Company also has certain parcels of land available for sale. The
Company's executive offices in Paoli, Pennsylvania occupy approximately 32,000
square feet under a lease which will expire in 1997. The Company's New York
City office occupies approximately 2000 square feet under a lease which will
expire in 1996.
The Company's machinery, plants and offices are in satisfactory operating
condition and are adequate for the uses to which they are put. The operating
facilities of the Company by business segment are summarized in the following
table:
<TABLE>
<CAPTION>
NUMBER OF FACILITIES SQUARE FEET UNDER ROOF
---------------------- ------------------------
OWNED LEASED OWNED LEASED
---------- ---------- ------------ -----------
<S> <C> <C> <C> <C>
Electro-mechanical........ 9 1 1,155,000 66,000
Precision Instruments..... 8 6 856,000 397,000
Industrial Materials...... 9 - 1,526,000 --
---------- ---------- ------------ ----------
Total................. 26 7 3,537,000 463,000
========== ========== ============ ==========
</TABLE>
ITEM 3. LEGAL PROCEEDINGS.
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of the Company's security holders,
through the solicitation of proxies or otherwise, during the last quarter of
its fiscal year ended December 31, 1994.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The principal market on which the Company's common stock is traded is the New
York Stock Exchange. The Company's common stock is also listed on the Pacific
Stock Exchange. On March 3, 1995, there were approximately 5,700 record holders
of the Company's common stock.
The market price and dividend information with respect to the Company's
common stock are set forth on page 38 in the section of the Notes to the
Consolidated Financial Statements entitled "Quarterly Financial Data
(Unaudited)". Future dividend payments by the Company will be dependent upon
future earnings, financial requirements, contractual provisions of debt
agreements and other relevant factors.
10
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA(/1/)
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
----------- ----------- ----------- ----------- -----------
(DOLLARS AND SHARES IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED OPERATING RESULTS
Years ended December 31
Net sales......................... $ 808.0 $ 732.2 $ 769.6 $ 715.1 $ 660.7
Costs and expenses................ 728.7 732.1 690.5 648.8 592.3
----------- ----------- ----------- ----------- -----------
Operating income.................. 79.3 .1 79.1 66.3 68.4
Other (expense) income--net....... (17.5) (11.3) (12.4) (13.9) (11.7)
----------- ----------- ----------- ----------- -----------
Income (loss) before income taxes. 61.8 (11.2) 66.7 52.4 56.7
Provision for (benefit from)
income taxes..................... 22.8 (3.9) 22.3 14.4 19.4
----------- ----------- ----------- ----------- -----------
Income (loss) from continuing
operations before special items.. 39.0 (7.3) 44.4 38.0 37.3
----------- ----------- ----------- ----------- -----------
Net income (loss)(/2/)............ $ 31.0 $ (7.3) $ 44.4 $ 38.0 $ 37.3
=========== =========== =========== =========== ===========
Earnings per share:
Income (loss) from continuing
operations before special items. $ 1.05 $ (.17) $ 1.01 $ .87 $ .85
=========== =========== =========== =========== ===========
Net income (loss)(/2/)........... $ .84 $ (.17) $ 1.01 $ .87 $ .85
=========== =========== =========== =========== ===========
Dividends declared and paid per
share............................ $ .24 $ .57 $ .68 $ .66 $ .64
=========== =========== =========== =========== ===========
CONSOLIDATED FINANCIAL POSITION At
December 31
Working capital................... $ 70.7 $ 134.2 $ 190.2 $ 181.4 $ 184.4
Property, plant and equipment,
net.............................. 175.1 184.8 186.0 194.2 200.7
Net assets of spun off operations. -- -- -- -- --
Other assets...................... 72.9 75.8 89.2 99.2 96.8
----------- ----------- ----------- ----------- -----------
Total............................ 318.7 394.8 465.4 474.8 481.9
Long-term debt.................... 190.3 172.4 187.1 204.8 223.8
Deferred income taxes............. 28.5 28.0 42.7 36.1 33.2
Other long-term liabilities....... 26.7 29.1 25.3 22.4 25.5
----------- ----------- ----------- ----------- -----------
Stockholders' equity.............. $ 73.2 $ 165.3 $ 210.3 $ 211.5 $ 199.4
=========== =========== =========== =========== ===========
ADDITIONAL FINANCIAL DATA
Financial Ratios:
Return on beginning--Capital.... 12.7% 1.0% 13.3% 12.1% 12.0%
--Stockholders' equity. 18.8% (3.5)% 21.0% 19.0% 19.2%
Return on net sales(/4/)........ 3.8% (1.0)% 5.8% 5.3% 5.7%
Total debt as a percent of
capitalization................. 73.4% 53.1% 49.6% 51.1% 55.4%
Ratio of EBITDA to interest
expense(/5/)................... 5.2x 5.2x 5.9x 4.7x 4.8x
Ratio of debt to EBITDA(/5/).... 1.7x 2.0x 1.8x 2.1x 2.4x
Ratio of earnings to fixed
charges........................ 3.4x -- (/6/) 4.0x 3.2x 3.3x
OTHER DATA
For the year:
Capital expenditures............. $ 23.1 $ 38.3 $ 24.0 $ 18.8 $ 35.7
Depreciation and amortization.... $ 37.3 $ 35.9 $ 37.3 $ 36.5 $ 33.5
EBITDA(/5/)...................... $ 119.0 $ 92.4 $ 117.6 $ 103.5 $ 100.7
Research and development
expenses........................ $ 17.8 $ 15.1 $ 14.7 $ 12.1 $ 11.1
Sales per employee (in
thousands)...................... $ 133.2 $ 122.8 $ 123.2 $ 118.3 $ 111.9
Common stock trading range:
High............................. 18 3/4 17 1/2 18 1/8 14 14 1/2
Low.............................. 11 5/8 10 5/8 13 1/8 8 1/2 8 1/4
At year-end:
Number of shares outstanding..... 34.7 43.6 44.2 44.0 43.7
Stockholders' equity per share... $ 2.11 $ 3.79 $ 4.76 $ 4.81 $ 4.56
Total assets..................... $ 502.0 $ 562.7 $ 603.1 $ 612.5 $ 615.2
Number of stockholders of record. 5,952 6,509 7,227 7,486 7,833
Number of employees.............. 6,200 6,000 6,200 6,100 6,100
</TABLE>
--------
(1) Certain prior-year items have been restated to conform to the current
year's presentation.
(2) Amounts in 1994 include an after tax loss on early extinguishment of debt
totaling $11.8 million ($.32 per share), and an after tax gain from the
cumulative effect of an accounting change totaling $3.8 million ($.11 per
share). Amounts in 1993 include after tax charges totaling $33.5 million or
$.77 per share for restructuring and other unusual items. These charges
were for costs related to work force reductions, asset write-downs,
relocation and consolidation of certain product lines and operations, and
for other unusual items.
(3) Net income for 1988 includes costs and losses related to operations spun
off in 1988 totaling $8.1 million, or $.18 per share, and a gain of $3.6
million, or $.08 per share, from a change in accounting for income taxes.
Net income prior to 1988 includes operating results of spun off operations.
SEE ADDITIONAL NOTES ON PAGE 12.
11
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA(/1/)--(CONTINUED)
<TABLE>
<CAPTION>
1989 1988 1987 1986 1985
----------- ----------- ------------ ----------- ------------
(DOLLARS AND SHARES IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED OPERATING
RESULTS Years ended
December 31
Net sales.............. $ 587.8 $ 520.5 $ 431.1 $ 391.9 $ 325.3
Costs and expenses..... 527.6 466.9 374.5 349.2 284.8
---------- ---------- ------------ ---------- ------------
Operating income....... 60.2 53.6 56.6 42.7 40.5
Other (expense)
income--net........... .5 2.2 2.0 13.2 6.7
---------- ---------- ------------ ---------- ------------
Income (loss) before
income taxes.......... 60.7 55.8 58.6 55.9 47.2
Provision for (benefit
from) income taxes.... 22.4 20.7 21.9 19.6 20.1
---------- ---------- ------------ ---------- ------------
Income (loss) from
continuing operations
before special items.. 38.3 35.1 36.7 36.3 27.1
---------- ---------- ------------ ---------- ------------
Net income (loss)(/2/). $ 38.3 $ 30.6(/3/) $ 41.2(/3/) $ 36.6(/3/) $ 34.9(/3/)
========== ========== ============ ========== ============
Earnings per share:
Income (loss) from
continuing operations
before special items. $ .87 $ .80 $ .84 $ .82 $ .62
========== ========== ============ ========== ============
Net income
(loss)(/2/).......... $ .87 $ .70(/3/) $ .94(/3/) $ .83(/3/) $ .80(/3/)
========== ========== ============ ========== ============
Dividends declared and
paid per share........ $ .62 $ .60 $ .52 1/2 $ .50 $ .42 1/2
========== ========== ============ ========== ============
CONSOLIDATED FINANCIAL
POSITION At
December 31
Working capital........ $ 215.1 $ 176.1 $ 227.8 $ 206.8 $ 65.1
Property, plant and
equipment, net........ 153.0 131.1 106.6 91.1 91.2
Net assets of spun off
operations............ -- -- 58.8 52.1 62.7
Other assets........... 94.1 66.4 61.8 76.5 83.1
---------- ---------- ------------ ---------- ------------
Total................. 462.2 373.6 455.0 426.5 302.1
Long-term debt......... 219.6 148.8 155.5 152.0 38.5
Deferred income taxes.. 29.9 30.2 35.8 35.9 36.1
Other long-term
liabilities........... 17.8 13.7 10.8 7.5 7.8
---------- ---------- ------------ ---------- ------------
Stockholders' equity... $ 194.9 $ 180.9 $ 252.9 $ 231.1 $ 219.7
========== ========== ============ ========== ============
ADDITIONAL FINANCIAL
DATA
Financial Ratios:
Return on beginning--
Capital 14.2% 9.3%(/4/) 12.8% 15.8% 15.1%
-- Stockholders'
equity........... 21.2% 18.1%(/4/) 17.8% 16.7% 17.4%
Return on net
sales(/4/).......... 6.5% 6.7% 8.5% 9.3% 8.3%
Total debt as a
percent of
capitalization...... 54.1% 46.5% 39.1% 40.6% 24.8%
Ratio of EBITDA to
interest
expense(/5/)........ 5.9x 5.8x 5.4x 9.3x 12.5x
Ratio of debt to
EBITDA(/5/)......... 2.5x 2.1x 2.2x 2.2x 0.8x
Ratio of earnings to
fixed charges....... 4.5x N/A N/A N/A N/A
OTHER DATA
For the year:
Capital expenditures.. $ 25.7 $ 30.7 $ 24.4 $ 12.1 $ 12.0
Depreciation and
amortization......... $ 25.3 $ 21.1 $ 18.1 $ 17.8 $ 12.0
EBITDA(/5/)........... $ 91.2 $ 75.7 $ 74.7 $ 72.6 $ 53.5
Research and
development expenses. $ 17.6 $ 17.3 $ 16.0 $ 15.3 $ 11.5
Sales per employee (in
thousands)........... $ 106.8 $ 104.8 $ 96.7 $ 90.5 $ 78.1
Common stock trading
range:
High.................. 15 3/4 17 3/8 19 11/16 15 1/2 14 3/4
Low................... 12 12 1/2 12 11 7/8 9 15/16
At year-end:
Number of shares
outstanding.......... 44.3 44.0 43.9 43.8 44.0
Stockholders' equity
per share............ $ 4.40 $ 4.11 $ 5.76 $ 5.27 $ 4.99
Total assets.......... $ 563.3 $ 448.3 $ 521.9 $ 496.6 $ 390.0
Number of stockholders
of record............ 7,988 7,986 7,944 8,203 9,140
Number of employees... 5,900 5,200 4,700 4,200 4,400
</TABLE>
--------
(4) Based on earnings and net assets of continuing operations.
(5) EBITDA represents income before interest, amortization of deferred
financing costs, taxes, depreciation and amortization, and 1994 and 1993
nonrecurring items. It should not be considered, however, as an alternative
to operating income as an indicator of the Company's operating performance,
or as an alternative to cash flows as a measure of the Company's overall
liquidity.
(6) 1993 earnings were insufficient to cover fixed charges by approximately
$12.2 million.
N/A--Data not available for years indicated.
SEE ADDITIONAL NOTES ON PAGE 11.
12
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Management's discussion and analysis of the Company's financial condition and
results of operations set forth below should be read in conjunction with the
consolidated financial statements of the Company and the related notes shown in
the index on page 19 of this report.
YEAR ENDED DECEMBER 31, 1994 COMPARED TO YEAR ENDED DECEMBER 31, 1993
Results of Operations
In 1994, the Company achieved record sales of $808.0 million, an increase of
$75.8 million or 10.3% from 1993. All business segments reported improved
sales, led by the Electro-mechanical Group, where increased worldwide demand
for electric motor products manufactured by the Company's United States and
Italian operations resulted in a significant sales increase by these businesses
in 1994. The Precision Instruments Group's 1994 sales increased due to improved
demand for heavy truck instruments, offset somewhat by lower sales of aerospace
instruments. The Industrial Materials Group benefited from improved business
conditions in many of its markets, resulting in increased sales by most of the
businesses in the group. Sales by all business segments to foreign markets
totaled $238.0 million in 1994 compared to $202.9 million in 1993, an increase
of 17.3%. Export shipments from the United States in 1994 continued to increase
and reached $116.5 million, compared to $105.7 million in 1993, an increase of
10.3%.
New orders during 1994 were $831.4 million, an increase of $127.6 million or
18.1% from 1993, reflecting the overall increases in demand mentioned above.
The backlog of orders was $236.0 million at year-end, an increase of 11.0% from
$212.6 million at the end of 1993.
Business segment operating profit was $102.7 million in 1994, compared to
$74.8 million in 1993, an increase of 37.3% before 1993 restructuring and other
unusual operating charges. The increase in profits was due to the higher sales
volume, and improved operating efficiencies in the Precision Instruments Group,
due primarily to the realization of significant cost savings resulting from the
restructuring activities initiated in 1993. After reflecting the restructuring
and other unusual charges, business segment operating profit for 1993 was $22.7
million.
Corporate expenses (including unallocated administrative expenses, interest
expense and net other income) were $40.9 million in 1994, an increase of $7.0
million or 20.7% from 1993, primarily due to increased interest expense and
higher amortization of debt issuance costs, both associated with the new debt
agreements entered into by the Company in March of 1994. Interest income was
lower in 1994 resulting from a decrease in average invested cash during the
year as the Company made substantial early debt repayments and repaid revolving
credit loans in the third and fourth quarters of the year.
The effective tax rate for 1994 was 36.9%, and reflects favorable state
income tax adjustments recorded in the third and fourth quarters, primarily
related to prior tax years. The effective rate of income tax benefit for 1993
was 34.5%, and reflected the 1993 increase in the U.S. federal statutory rate
from 34% to 35%. The 1993 U.S. income tax benefit was reduced somewhat by a tax
provision on foreign pre-tax earnings.
The weighted average shares outstanding during 1994 was 37.1 million shares,
compared to the average of 43.9 million shares for 1993, a reduction of 15.4%.
The net reduction in the average number of shares outstanding in 1994 results
from the repurchase and retirement of 9.2 million shares under the Company's
share repurchase program which began in March 1994.
Income before an extraordinary charge and a gain from the cumulative effect
of an accounting change in 1994 was $39.0 million, or $1.05 per share, compared
with 1993, when earnings before restructuring and other unusual charges were
$26.2 million, or $.60 per share, an improvement of 49.0%.
13
<PAGE>
After an extraordinary loss of $11.8 million, net of taxes, or $.32 per
share, from the early extinguishment of debt, and a $3.8 million after tax
gain ($.11 per share) due to a required change in accounting for certain
marketable securities, both occurring in the first quarter of 1994, net income
for 1994 was $31.0 million or $.84 per share. This compares to a net loss of
$7.3 million or $.17 per share for 1993, which included a $.77 per share
charge for resizing, restructuring and other unusual charges.
Net income for the fourth quarter of 1994 was $10.3 million, or $.30 per
share, on sales of $200.3 million, compared to earnings of $7.0 million or
$.16 per share on sales of $183.3 million for the fourth quarter of 1993
before unusual charges. After a $28.6 million ($.66 per share) charge, net of
taxes, for restructuring and other unusual items, the fourth quarter of 1993
had a net loss of $21.6 million or $.50 per share. Operating profit by
business segment in the fourth quarter of 1994 increased by $7.2 million or
39.4% to $25.4 million, compared to the 1993 fourth quarter profit of $18.2
million before $43.8 million of pre-tax unusual charges; all business segments
reflected an increase in fourth quarter operating profit.
Business Segment Results
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------
1994 1993 1992
-------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
NET SALES(/1/):
Electro-mechanical........................ $340,358 $280,732 $309,556
Precision Instruments..................... 280,638 275,351 297,025
Industrial Materials...................... 186,968 176,112 162,969
-------- -------- --------
Total net sales......................... $807,964 $732,195 $769,550
======== ======== ========
INCOME (LOSS):
Segment operating profit(/2/):
Electro-mechanical........................ $ 46,203 $ 35,018 $ 49,912
Precision Instruments..................... 29,189 (30,643)(/3/) 28,045
Industrial Materials...................... 27,295 18,284 (/4/) 22,096
-------- -------- --------
Total segment operating profit.......... 102,687 22,659 100,053
Corporate and other expenses(/5/)......... (40,880) (33,856) (33,334)
-------- -------- --------
Income (loss) before income taxes....... $ 61,807 $(11,197) $ 66,719
======== ======== ========
</TABLE>
--------
/(1)/ After elimination of intersegment sales, which are not significant in
amount.
/(2)/ Segment operating profit represents sales less all direct costs and
expenses (including certain administrative and other expenses) applicable
to each segment, but does not include interest expense.
/(3)/ Reflects charges of $47.8 million primarily for resizing and restructuring
activities, principally work force reductions, asset write-downs,
relocation of product lines and the overall consolidation of the Company's
aerospace operations.
/(4)/ Reflects charge of $3.9 million primarily for asset write-downs.
/(5)/ Includes unallocated administrative expenses, interest expense and net
other income and, in 1993, $2.8 million of restructuring and other unusual
charges.
The Electro-mechanical Group's sales increased $59.6 million or 21.2% to
$340.4 million primarily due to increased market share and improved worldwide
demand for electric motor products manufactured by this group. Domestic sales
increased $28.5 million or 18.3% and international sales improved $31.2
million or 24.9% over 1993. Operating profit of this group increased 31.9% to
$46.2 million in 1994, due to the increase in sales volume and improved
operating margins, primarily by the Italian motor businesses. The Italian
operations reported a 29.1% increase in sales in 1994, and operating profit
grew by 82.7% with minimal currency translation effects. Capacity expansions
at the two plants in North Carolina were substantially completed in 1994,
providing for potentially higher sales and increased efficiency.
Precision Instruments Group sales in 1994 were $280.6 million, an increase
of $5.3 million or 1.9% from 1993. Higher sales of heavy truck instruments
were significantly offset by lower sales of aerospace and process
14
<PAGE>
measurement instruments caused by the continuing overall weakness in process
instruments markets. Group operating profit in 1994 increased sharply to $29.2
million, compared to $17.1 million in 1993, before 1993 restructuring and other
unusual operating charges of $47.8 million. The increased profitability is due
primarily to realized cost savings from the successful implementation of the
restructuring program initiated in 1993. The cost savings from the
restructuring programs result from the relocation of aerospace manufacturing
operations and facilities combination, as well as selected work force
reductions (including certain pension-related costs) and production
efficiencies. The cost savings being realized from the restructuring program
are ahead of plan, and are expected to continue. Under the restructuring
program, this group is experiencing a delay in the timing of certain planned
work force reductions, due to a one-year extension of the current labor
contract at a facility in Sellersville, Pennsylvania to September 1995. Except
for this delay, the restructuring program is on schedule and is still expected
to be fully implemented as planned. In February 1995, the Company announced
that it had reached an agreement in principle to acquire, for cash, the heavy
vehicle instrumentation business of privately owned Dixson, Inc. Upon
completion of this acquisition, estimated for the second quarter of 1995, this
business will be included in the Precision Instruments Group.
Industrial Materials Group sales were $187.0 million in 1994, an increase of
$10.9 million or 6.2% from 1993 due to general improvements in most of the
markets served by this group. All but one business in this group reported 1994
sales increases. Group operating profit in 1994 increased $5.1 million or 22.8%
to $27.3 million, before 1993 restructuring charges of $3.9 million. The
increase in profitability was mainly attributable to improved operating
efficiencies in the group, despite significant increases in raw materials costs
experienced by the specialty metal business. The higher sales volume also
contributed to the profit improvement, due in part to a cyclical rebound by the
plastics compounding and foam packaging businesses. In November 1994, the
Company announced that it intends to sell its Microfoam packaging division,
which is part of this group. The Company expects positive financial results
from the sale of this business, which is expected to be completed in the second
quarter of 1995.
YEAR ENDED DECEMBER 31, 1993 COMPARED TO YEAR ENDED DECEMBER 31, 1992
Results of Operations
Sales for 1993 were $732.2 million, a decrease of $37.4 million or 4.9% from
1992. The sales decrease was attributable to reduced domestic and European
demand for electric motor products and the negative effect of translating sales
of the Company's Italian operations from the weaker Italian lire to U.S.
dollars. Sales by the Precision Instruments Group also declined as a result of
continued poor market conditions for aerospace products and process and
analytical instruments. A sales improvement was reported by the Industrial
Materials Group due to the strength of demand for liquid filtration products,
specialty metal products and compounded plastics. Sales by all business
segments to foreign markets totaled $202.9 million in 1993 compared to $233.7
million in 1992, a decrease of 13.2%. Export shipments from the United States
in 1993 were $105.7 million, a decrease of 11.4% from 1992, primarily as a
result of weak economic conditions in Europe.
New orders during 1993 were $703.9 million, a decrease of $31.6 million or
4.3% from 1992. The backlog of orders was $212.6 million at year-end, an 11.8%
decrease from 1992, reflecting the lower level of business in the Electro-
mechanical and Precision Instruments Groups.
Business segment operating profit before restructuring and other unusual
operating charges was $74.8 million in 1993, compared to $100.1 million in
1992, a decrease of 25.3%. Along with the reduction due to the lower sales
volume, this decline reflected operating inefficiencies (primarily within the
Electro-mechanical and the Precision Instruments Groups) and higher expenses
caused by a plant start-up and plant rearrangements in the Electro-mechanical
Group. In 1993, business segment results also reflected charges totaling $52.1
million for resizing and restructuring certain operations and other unusual
expenses. After reflecting these charges, business segment operating profit for
1993 was $22.7 million.
15
<PAGE>
Corporate expenses (including unallocated administrative expenses, interest
expense and net other income) were $33.9 million in 1993, substantially
unchanged from $33.3 million in 1992.
The effective rate of income tax benefit for 1993 of 34.5% reflected the new
U.S. federal statutory income tax rate of 35% for all of 1993. The overall
effective rate of the tax benefit was reduced somewhat by a tax provision on
foreign pre-tax earnings.
After tax earnings for 1993, before restructuring and other unusual charges,
were $26.2 million or $.60 per share. This compared to net income of $44.4
million or $1.01 per share earned in 1992. After restructuring and other
unusual charges totaling $33.5 million (after tax), the Company reported a net
loss of $7.3 million, or $.17 per share for 1993.
Business Segment Results
The Electro-mechanical Group's sales decreased $28.8 million or 9.3% to
$280.7 million primarily because of Italian lire currency translation and
because of reduced customer demand for domestically produced electric motor
products during the year. Before currency translation, the Italian operations
reported 2.6% higher sales over 1992. Operating profit of this group decreased
29.8% to $35.0 million due to lower sales volume, higher costs related to new
product introductions, a plant start-up and plant rearrangements, less
favorable product mix and negative foreign currency translation effects.
Precision Instruments Group sales in 1993 were $275.4 million, a decrease of
$21.7 million or 7.3% from 1992. The sales decline reflected the continuing
weakness in demand for aircraft instruments and engine sensors from commercial
airlines and poor conditions in the aerospace industry and in process control
markets. The sales decline was partially offset by increased sales of truck
instruments, flight reference systems and sales by a new business acquired in
the first quarter of 1993. Operating profit of this group before restructuring
and other unusual charges was $17.1 million in 1993 compared to $28.0 million
in 1992, a $10.9 million or 39.0% decline. This decrease was due to the sales
decline, production inefficiencies and changes in product mix. This group's
profits were further reduced by restructuring and unusual operating charges of
$47.8 million in 1993, of which $39.8 million was recorded in the fourth
quarter, and resizing charges of $8.0 million which were recorded in the first
nine months of the year. These charges were primarily for work force reductions
planned or which occurred in 1993 (including certain pension-related costs),
asset write-downs, product line relocations of certain gauge manufacturing
operations, and consolidation of the Company's aerospace businesses. Most of
these actions were necessary due to the unwillingness of the union at the
Company's Sellersville facility to agree to wage and work rule concessions
requested by the Company necessary to make that operation competitive. After
restructuring and other unusual operating charges, this group reported an
operating loss of $30.6 million for 1993.
Industrial Materials Group sales in 1993 were $176.1 million, an increase of
$13.1 million or 8.1% from 1992, largely due to increased sales of liquid
filtration products, compounded plastics and specialty metal products. Group
operating profit before restructuring and other unusual charges was $22.2
million, a slight improvement over operating profit of $22.1 million reported
for 1992. An increase in profits by the Specialty Metal Products Division was
substantially offset by lower profits from the other businesses in this group
due to operating inefficiencies and changes in product mix at certain
divisions. After fourth quarter 1993 restructuring and other unusual charges of
$3.9 million, primarily for certain asset write-downs, group operating profit
was $18.3 million for 1993. In February 1994, a warehouse attached to a plant
in this group collapsed under the weight of heavy snow. Later that month, the
plant returned to full operation and the damages and related losses were
covered by insurance.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity
Working capital at December 31, 1994 amounted to $70.7 million, a decrease of
$63.4 million from December 31, 1993, due primarily to a decrease in cash and
securities caused by scheduled and early debt
16
<PAGE>
repayments, repayment of revolving credit loans and offset somewhat by an
increase in accounts payable and accruals due to the higher level of business
activity. The ratio of current assets to current liabilities at December 31,
1994 was 1.39 to 1, compared to 1.80 to 1 at December 31, 1993.
The Company's earnings before interest, taxes, depreciation and amortization
(EBITDA) was $119.0 million in 1994, compared to $92.4 million in 1993, before
unusual items.
Cash generated by the Company's operating activities totaled $111.7 million
in 1994 compared to $65.3 million in 1993, an increase of $46.5 million. The
increase was caused primarily by net cash inflows of $31.6 million from the
sale of trading securities precipitated by restrictive covenants in the
Company's new bank credit agreement (see Note 4 to the financial statements).
Higher income after adjusting for nonrecurring and other noncash items, reduced
somewhat by slightly less favorable changes in operating working capital items,
also contributed to the improved operating cash flow.
Total cash and noncash charges against reserves for restructuring and other
unusual items, for which $54.9 million was provided in 1993, amounted to $10.9
million in 1994, and did not significantly affect the Company's liquidity. The
cash portion of the 1994 charges was $5.5 million. For 1993, cash and noncash
charges of $6.7 million were incurred, including $4.1 million of cash charges.
Charges in 1994 were primarily for work force reductions, the relocation of
aerospace operations and facilities combination, as well as the planned write-
off of certain assets. In 1995, the Company expects to incur charges in the
range of $14-$17 million (principally cash) related to the restructuring
activities, and anticipates the completion of the restructuring program as
planned. During 1994, the Company experienced certain delays in implementing
specific portions of the restructuring plan, due to a one-year extension to
September 1995, of the current labor contract at its facility in Sellersville,
Pennsylvania. Also, the Company encountered a delay in securing a facility in
Binghamton, New York for the relocation of the Sellersville aerospace
manufacturing operations. The Binghamton facility opened in mid-1994, and
shipments began in September 1994. Although the timing of certain cash
expenditures related to these activities are running behind the original plan,
the Company believes the total restructuring reserve is adequate for its
intended purpose. When the entire restructuring program is completed, it is
anticipated that the benefits, which have already been substantial, will more
than offset the required cash expenditures under the plan over time.
Cash used for investing activities totaled $7.1 million in 1994, compared to
$31.9 million in 1993, a decline of $24.8 million. The current year includes
lower capital expenditures ($23.1 million compared to $38.3 million in 1993),
and cash proceeds from the sale of an idle facility and other assets totaling
$11.5 million. The sale of the noninvestment assets was part of the 1993
restructuring program. Investing activities in 1993 also included the purchase
of a business.
Financing activities used cash totaling $137.9 million in 1994, compared to
$52.0 million in 1993. Total borrowings were $307.6 million in 1994 and
consisted of the public sale of $150 million in 9 3/4% senior notes in March
1994, plus $157.6 million of borrowings under the Company's senior secured bank
credit agreement, also effected in March 1994, and amended in October 1994 (see
Note 6 to the financial statements). These borrowings, plus cash available and
cash generated were used: (a) to prepay outstanding debt of $185.4 million in
March 1994, (b) to fund debt prepayment premiums and debt issuance costs of
$29.2 million, (c) to repay $107.1 million which was borrowed primarily under
the bank credit agreement since March 1994, including early repayments, (d) to
fund $8.9 million in dividend payments, and (e) to repurchase 9.2 million
shares of the Company's common stock at a cost of $118.8 million under the
Company's share repurchase program, offset somewhat by $3.9 million of cash
received from employees upon the exercise of employee stock options.
The financing activities noted above caused the Company's debt at December
31, 1994 to increase $15.2 million from December 31, 1993 to $202.1 million,
while its equity decreased $92.2 million during the same period to $73.2
million, resulting in a total decrease in capitalization for the year of $77.0
million to $275.3 million.
17
<PAGE>
This change resulted in increased leverage. The Company's strong cash flow
since its refinancing in March 1994 permitted the Company to make early debt
repayments of $40 million and reduce revolving credit loans by $61 million as
of year-end. Restrictive covenants in the Company's debt agreements limit the
Company's ability to engage in certain types of investing or financing
activities, including purchases and sales of assets outside the ordinary course
of business, and the incurrence of further indebtedness beyond that allowed by
the credit facility. The Company's increasing cash flow from its operations,
estimated annual savings of $22 million from the reduction in annual dividends
and stock repurchases, and lower required debt principal payments in the near
term are expected to more than compensate for these restrictions.
The Company amended the bank credit agreement in October 1994 allowing for
increased operating and financial flexibility by reducing the total credit
facility, resulting in reduced term loan commitments, and increased revolving
loan commitments, as well as lowering interest rates and commitment fees. The
amended agreement also permits the Company additional flexibility to spend up
to $25 million to repurchase portions of its senior notes, or make additional
repurchases of its common stock, or a combination thereof, subject to approval
by the Board of Directors. The Company now has total domestic bank loan
commitments of $200 million, consisting of a $50 million 5-year term loan and a
$150 million revolving credit commitment. The total commitment of $200 million
was reduced from the initial commitment of $250 million and expires in 1999. At
December 31, 1994, $135.3 million is unused and available. The Company's
subsidiaries also had unused foreign lines of credit with European banks of
approximately $15.9 million at December 31, 1994.
As a result of all 1994 cash flow activities, cash and cash equivalents
decreased $33.2 million since December 31, 1993, to $7.2 million at December
31, 1994. The Company believes it has sufficient cash-generating capabilities
and available credit facilities to enable the Company to meet its needs in the
foreseeable future.
Capital Expenditures
Capital expenditures were $23.1 million in 1994, compared to $38.3 million in
1993. The 1994 expenditures were for additional manufacturing equipment to
provide expanded production capacity, primarily in the Electro-mechanical
Group, and the completion of a plant expansion in the Industrial Materials
Group. The 1993 expenditures included an additional production facility. The
Company expects to increase its capital spending in 1995, to a level
approximating the level incurred in 1993, with continuing emphasis on expansion
of production capacity, primarily in the Electro-mechanical Group.
ENVIRONMENTAL MATTERS
The Company is subject to environmental laws and regulations, as well as
stringent clean-up requirements, and has also been named a potentially
responsible party at several sites which are the subject of government-mandated
clean-ups. Provisions for environmental clean-up at these sites and other sites
were approximately $1.6 million in 1994, $4.9 million in 1993 and $1.4 million
in 1992.
While it is not possible to accurately quantify the potential financial
impact of actions regarding environmental matters, the Company believes that,
based upon past experience and current evaluations, the outcome of these
actions is not likely to have a material adverse effect on future results of
operations, financial position, or cash flows of the Company.
ACCOUNTING STANDARDS RECENTLY ADOPTED
Effective January 1, 1994, the Company adopted FASB Statement No. 115
relating to certain investments in marketable securities. The after tax effect
of this accounting change was a one-time credit to 1994 earnings of $3.8
million, or $.11 per share. Additionally, in 1994 the Company adopted FASB
Statement No. 119 relating to disclosure about derivative financial
instruments.
18
<PAGE>
IMPACT OF INFLATION
The Company attempts to minimize the impact of inflation through cost
reduction programs and by improving productivity. In addition, the Company uses
the LIFO method of accounting for inventories (whereby the cost of products
sold approximates current costs), and therefore, the impact of inflation is
substantially reflected in operating costs. In general, the Company believes
that programs are in place designed to monitor the impact of inflation and to
take necessary steps to minimize its effect on operations.
OUTLOOK
The Company is subject to economic uncertainties in its worldwide markets.
Management believes that operating performance and strong cash flow have
strengthened the Company considerably in 1994, and that the business and
financial strategies initiated in 1993 will continue to benefit the Company. In
management's view, the continued expansion of the Company's global businesses
and historically strong cash flow position AMETEK to deal effectively with the
anticipated business environment. The Company foresees opportunities for
continued growth in 1995.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INDEX TO FINANCIAL STATEMENTS (ITEM 14(A) 1)
Report of Independent Auditors......................................... 20
Consolidated Statement of Income for the years ended December 31, 1994,
1993 and 1992......................................................... 21
Consolidated Balance Sheet at December 31, 1994 and 1993............... 22
Consolidated Statement of Cash Flows for the years ended December 31,
1994, 1993 and 1992................................................... 23
Consolidated Statement of Stockholders' Equity for the years ended
December 31, 1994, 1993 and 1992...................................... 24
Notes to the Consolidated Financial Statements......................... 25
</TABLE>
FINANCIAL STATEMENT SCHEDULES (ITEM 14(A) 2)
Financial statement schedules have been omitted since they are either no
longer required to be submitted, they are inapplicable, or the required
information is included in the financial statements or the notes thereto.
19
<PAGE>
REPORT OF INDEPENDENT AUDITORS
We have audited the accompanying consolidated balance sheets of AMETEK, Inc.
as of December 31, 1994 and 1993, and the related consolidated statements of
income, cash flows and stockholders' equity for each of the three years in the
period ended December 31, 1994. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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 includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of AMETEK, Inc. at December 31, 1994 and 1993, and the consolidated results of
its operations and its cash flows for each of the three years in the period
ended December 31, 1994, in conformity with generally accepted accounting
principles.
As discussed in Note 4 to the consolidated financial statements, the Company
changed its method of accounting for marketable securities.
/s/ ERNST & YOUNG LLP
Philadelphia, PA
January 31, 1995
20
<PAGE>
AMETEK, INC.
CONSOLIDATED STATEMENT OF INCOME
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
Net sales.................................. $ 807,964 $ 732,195 $ 769,550
---------- ---------- ----------
Expenses:
Cost of sales, excluding depreciation.... 619,389 582,001 583,357
Selling, general and administrative...... 79,248 76,759 77,690
Depreciation............................. 29,986 28,277 29,360
Resizing and restructuring charges....... -- 45,089 --
---------- ---------- ----------
Total expenses......................... 728,623 732,126 690,407
---------- ---------- ----------
Operating income........................... 79,341 69 79,143
Other income (expenses):
Interest expense......................... (21,618) (17,603) (19,721)
Other, net............................... 4,084 6,337 7,297
---------- ---------- ----------
Income (loss) before income taxes.......... 61,807 (11,197) 66,719
Provision for (benefit from) income taxes.. 22,816 (3,865) 22,362
---------- ---------- ----------
Income (loss) before extraordinary item and
cumulative effect of accounting change.... 38,991 (7,332) 44,357
Extraordinary loss on early extinguishment
of debt, net of taxes..................... (11,810) -- --
Cumulative effect of accounting change, net
of taxes.................................. 3,819 -- --
---------- ---------- ----------
Net income (loss).......................... $ 31,000 $ (7,332) $ 44,357
========== ========== ==========
Earnings (loss) per share:
Income (loss) before extraordinary item
and cumulative effect of accounting
change.................................. $ 1.05 $ (.17) $ 1.01
Extraordinary loss on early
extinguishment of debt, net of taxes.... (.32) -- --
Cumulative effect of accounting change,
net of taxes............................ .11 -- --
---------- ---------- ----------
Net income (loss).......................... $ .84 $ (.17) $ 1.01
========== ========== ==========
Average common shares outstanding.......... 37,125,569 43,901,767 44,095,057
========== ========== ==========
</TABLE>
See accompanying notes.
21
<PAGE>
AMETEK, INC.
CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1994 1993
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................ $ 7,248 $ 40,468
Marketable securities.................................... 10,480 44,191
Receivables, less allowance for possible losses.......... 115,672 108,068
Inventories.............................................. 100,607 91,894
Deferred income taxes.................................... 12,637 13,346
Other current assets..................................... 7,317 4,100
-------- --------
Total current assets................................... 253,961 302,067
Property, plant and equipment, net......................... 175,057 184,809
Other assets............................................... 72,946 75,787
-------- --------
$501,964 $562,663
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable......................................... $ 74,922 $ 54,374
Income taxes............................................. 10,712 11,136
Accrued liabilities...................................... 85,771 87,851
Short-term borrowings and current portion of long-term
debt.................................................... 11,821 14,543
-------- --------
Total current liabilities.............................. 183,226 167,904
Long-term debt............................................. 190,336 172,429
Deferred income taxes...................................... 28,482 27,948
Other long-term liabilities................................ 26,740 29,056
Stockholders' equity:
Preferred stock, $1.00 par value, authorized: 5,000,000
shares; none issued..................................... -- --
Common stock, $.01 par value, ($1.00 par value--1993)
authorized: 100,000,000 shares; issued: 1994--37,193,217
shares; 1993--46,414,317 shares......................... 372 46,414
Capital in excess of par value........................... 7,382 6,389
Retained earnings........................................ 111,150 161,297
-------- --------
118,904 214,100
Net unrealized losses.................................... (21,222) (21,632)
Less: Cost of shares held in treasury: 1994--2,486,057
shares; 1993--2,774,672 shares.......................... (24,502) (27,142)
-------- --------
Total stockholders' equity............................. 73,180 165,326
-------- --------
$501,964 $562,663
======== ========
</TABLE>
See accompanying notes.
22
<PAGE>
AMETEK, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1994 1993 1992
--------- -------- --------
<S> <C> <C> <C>
Cash provided by (used for):
Operating activities:
Net income (loss)............................. $ 31,000 $ (7,332) $ 44,357
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Extraordinary loss on early extinguishment of
debt........................................ 11,810 -- --
Cumulative effect of accounting change....... (3,819) -- --
Depreciation and amortization................ 37,279 35,907 37,263
Deferred income taxes........................ 4,833 (19,970) 1,814
Resizing, restructuring and other unusual
charges..................................... -- 50,898 --
Proceeds from sale of trading securities..... 31,566 -- --
Changes in operating working capital:
(Increase) decrease in receivables.......... (8,590) (633) 2,940
(Increase) decrease in inventories and other
current assets............................. (9,944) (1,035) 2,969
Increase (decrease) in payables, accruals
and income taxes........................... 22,423 8,704 (5,228)
Other........................................ (4,814) (1,288) (5,529)
--------- -------- --------
Total operating activities.................. 111,744 65,251 78,586
--------- -------- --------
Investing activities:
Additions to property, plant and equipment.... (23,071) (38,324) (23,990)
Purchase of businesses and investments........ (1,144) (16,585) (16,992)
Decrease in marketable securities............. 5,843 14,998 15,965
Proceeds from sale of investments............. 11,541 7,795 12,806
Other......................................... (232) 244 781
--------- -------- --------
Total investing activities.................. (7,063) (31,872) (11,430)
--------- -------- --------
Financing activities:
Cash dividends paid........................... (8,910) (25,095) (29,991)
Additional long-term borrowings............... 306,004 -- 3,755
Repayment of long-term debt................... (292,506) (19,411) (20,041)
Debt prepayment premiums and debt issuance
costs........................................ (29,211) -- --
Repurchases of common stock................... (118,832) (8,878) --
Other......................................... 5,554 1,335 3,388
--------- -------- --------
Total financing activities.................. (137,901) (52,049) (42,889)
--------- -------- --------
(Decrease) increase in cash and cash
equivalents.................................... (33,220) (18,670) 24,267
Cash and cash equivalents:
Beginning of year............................. 40,468 59,138 34,871
--------- -------- --------
End of year................................... $ 7,248 $ 40,468 $ 59,138
========= ======== ========
</TABLE>
See accompanying notes.
23
<PAGE>
AMETEK, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1994 1993 1992
-------- --------- ---------
<S> <C> <C> <C>
CAPITAL STOCK
Preferred Stock, $1.00 par value (authorized
5,000,000 shares), none issued............... $ -- $ -- $ --
-------- --------- ---------
Common Stock, $.01 par value ($1.00 par
value--1993 and 1992), (authorized
100,000,000 shares):
Balance at the beginning of the year......... 46,414 46,414 46,414
Common stock retirement...................... (6,988) -- --
Reduction in par value from $1.00 per share
to $.01 per share........................... (39,054) -- --
-------- --------- ---------
Balance at the end of the year............. 372 46,414 46,414
-------- --------- ---------
CAPITAL IN EXCESS OF PAR VALUE
Balance at the beginning of the year......... 6,389 5,679 4,428
Employee stock options and savings plan...... 976 571 1,251
Reduction in par value of common stock....... 39,054 -- --
Common stock retirement...................... (39,607) -- --
Other........................................ 570 139 --
-------- --------- ---------
Balance at the end of the year............. 7,382 6,389 5,679
-------- --------- ---------
RETAINED EARNINGS
Balance at the beginning of the year......... 161,297 193,724 179,358
Net income (loss)............................ 31,000 (7,332) 44,357
Cash dividends paid.......................... (8,910) (25,095) (29,991)
Common stock retirement...................... (72,237) -- --
-------- --------- ---------
Balance at the end of the year............. 111,150 161,297 193,724
-------- --------- ---------
NET UNREALIZED LOSSES
Foreign currency translation:
Balance at the beginning of the year......... (20,163) (12,205) 3,922
Translation adjustments...................... 4,015 (7,958) (16,127)
-------- --------- ---------
Balance at the end of the year............. (16,148) (20,163) (12,205)
-------- --------- ---------
Pension liability in excess of unrecognized
prior service cost:
Balance at the beginning of the year......... (4,731) (4,224) (1,056)
Adjustments for the year..................... 340 (507) (3,168)
-------- --------- ---------
Balance at the end of the year............. (4,391) (4,731) (4,224)
-------- --------- ---------
Other (principally valuation allowance for
marketable securities):
Balance at the beginning of the year......... 3,262 -- --
(Depreciation) appreciation in marketable
securities.................................. (2,547) 1,864 --
Other........................................ (1,398) 1,398 --
-------- --------- ---------
Balance at the end of the year............. (683) 3,262 --
-------- --------- ---------
Balance at the end of the year............. (21,222) (21,632) (16,429)
-------- --------- ---------
TREASURY STOCK
Balance at the beginning of the year......... (27,142) (19,116) (21,587)
Employee stock options and savings plan...... 2,577 744 2,137
Purchase of treasury stock................... -- (8,878) --
Other........................................ 63 108 334
-------- --------- ---------
Balance at the end of the year............. (24,502) (27,142) (19,116)
-------- --------- ---------
Total Stockholders' Equity............... $ 73,180 $ 165,326 $ 210,272
======== ========= =========
</TABLE>
See accompanying notes.
24
<PAGE>
AMETEK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Basis of Consolidation
The consolidated financial statements include the accounts of the Company and
subsidiaries, after elimination of all significant intercompany transactions in
consolidation.
Cash Equivalents, Securities and Other Investments
All highly liquid investments with maturities of three months or less when
purchased are considered cash equivalents. Marketable equity securities and
fixed income securities which are available for sale are carried at market
value. Unrealized holding gains and losses on securities classified as
available-for-sale, less deferred income taxes, are reflected as a component of
stockholders' equity. Unrealized holding gains and losses on securities
classified as trading are reported in earnings. At December 31, 1994, the
Company classified all of its equity securities and fixed income securities as
available-for-sale. Other investments are accounted for by the equity method.
Inventories
Inventories are stated at the lower of cost or market, cost being determined
principally by the last-in, first-out (LIFO) method of inventory valuation, and
market on the basis of the lower of replacement cost or estimated net proceeds
from sales. The excess of the first-in, first-out (FIFO) method over the LIFO
value was $33.5 million and $29.4 million at December 31, 1994 and 1993.
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Expenditures for additions
to plant facilities, or which extend their useful lives, are capitalized. The
cost of tools, jigs and dies, and maintenance and repairs are charged to
operations as incurred. Depreciation of plant and equipment is calculated
principally on a straight-line basis over the estimated useful lives of the
related assets.
Revenue Recognition
The Company's revenues are recorded as products are shipped and services are
rendered. The policy with respect to sales returns and allowances generally
provides that a customer may not return products, or be given allowances,
except at the Company's option. The aggregate provisions for estimated warranty
costs (not significant in amount) are recorded at the time of sale and
periodically adjusted through current operations to reflect actual experience.
Research and Development
Company-funded research and development costs are charged to operations as
incurred and during the past three years were: 1994-$17.8 million, 1993-$15.1
million, and 1992-$14.7 million.
Earnings Per Share
Earnings per share are based on the average number of common shares
outstanding during the period. No material dilution of earnings per share would
result for the periods if it were assumed that all outstanding stock options
were exercised.
25
<PAGE>
AMETEK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Foreign Currency Translation
Assets and liabilities of foreign operations are translated using exchange
rates in effect at the balance sheet date, and their results of operations are
translated using average exchange rates for the year.
Certain transactions of the Company and its subsidiaries are made in
currencies other than their own. Gains and losses from these transactions (not
significant in amount) are included in operating results for the year.
Additionally, the Company utilizes hedging arrangements in the context of its
operational transactions to hedge firm commitments for certain export sales,
thereby minimizing its exposure to foreign currency fluctuation.
Foreign exchange contracts, foreign currency options and foreign currency
swaps may be entered into for periods consistent with the Company's exposure,
generally one year or less. Gains and losses from these arrangements are
deferred and are reflected as adjustments of the related foreign currency
transaction.
Interest Rate Swap and Cap Agreements
The Company enters into interest rate swap and cap agreements to modify the
interest characteristics of certain long-term debt and to reduce the impact of
increases in interest rates on its floating-rate long-term debt. These
agreements generally involve the exchange of fixed and floating rate interest
payments periodically over the life of the agreement without an exchange of the
underlying principal amount. The differential to be paid or received is accrued
as interest rates change, and is recognized as an adjustment to interest
expense related to the debt over the life of the agreements. Under interest
rate cap agreements, the interest rate on a specified percentage of certain
long-term debt outstanding, which is subject to a floating interest rate,
cannot exceed a fixed percentage.
Intangible Assets
Patents are being amortized on a straight-line basis over 9 to 10 years. The
excess of cost over net assets acquired is being amortized on a straight-line
basis over 20 to 30 years. Other acquired intangibles are being amortized on a
straight-line basis over 2 to 30 years.
Reclassifications
Certain amounts appearing in the prior year's financial statements and
supporting footnote disclosures have been reclassified to conform to the
current year's presentation.
2. BUSINESS RESTRUCTURING
In 1993 the Company recorded a charge of $45.1 million ($27.5 million after
tax, or $.63 per share) for costs associated with resizing and restructuring
several of its businesses, and also recorded charges of $9.8 million ($6
million after tax, or $.14 per share) for other unusual expenses. Of the
resizing and restructuring charges, $4 million required the use of cash in
1993. Most of the charges were recorded in the fourth quarter of 1993, and were
for planned work force reductions, asset write-downs and the relocation of
certain product lines and overall consolidation of the Company's aerospace
operations. The resizing and restructuring charges primarily related to the
Company's plan to make certain operations in its aerospace and general gauge
businesses more competitive.
26
<PAGE>
AMETEK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The total reserve balance for restructuring at December 31, 1994 was $33.1
million, of which approximately $16 million was for planned work force
reductions (including certain pension-related costs) and the remaining $17.1
million was for asset write-downs, facilities combinations and other items. In
1994, the total reserve balance declined $7.9 million, of which $3.9 million
related to work force reductions, the relocation of aerospace operations and
facilities combination. The remaining $4.0 million reduction was due primarily
to the sale of an idle facility which was included in the restructuring reserve
in 1993. The Company is experiencing a delay in the completion of certain
planned work force reductions at its Sellersville, Pennsylvania facility due to
a one-year extension of the current labor contract to September 1995. However,
the restructuring program is still expected to be fully implemented with no
material change in the estimated costs anticipated.
3. ACQUISITIONS AND DIVESTITURES
In March 1993, the Company purchased certain assets of Revere Aerospace Inc.,
a United States subsidiary of Dobson Park Industries PLC, United Kingdom, for
approximately $7 million in cash. Revere is a producer of thermocouple and
fiber optic cable assemblies.
In February 1992, the Company purchased the Tencal operations of Cambridge-
Lee Industries. Tencal is a producer of small electric motors and injection-
molded plastic components. In August 1992, the Company purchased the industrial
filtration operation of Eurofiltec, Ltd. Early in October 1992, the Company
purchased Debro Messtechnik GmbH, an instrument manufacturer located in
Germany. Also during 1992, the Company acquired two product lines consisting of
silica fiber technology, and consumer filtration products. The cost of these
acquisitions was $11.7 million and the Company assumed $3.8 million in debt.
All of the above acquisitions were accounted for by the purchase method, and
accordingly, the results of their operations are included from the respective
acquisition dates. The above acquisitions would not have had a material effect
on sales or earnings for 1993 or 1992 had they been made at the beginning of
the year prior to their acquisition.
4. ACCOUNTING CHANGE
Effective January 1, 1994, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 115, "Accounting for Certain Investments in
Debt and Equity Securities," which requires that certain debt and equity
securities be carried at market value. The cumulative effect on net income as
of January 1, 1994, of adopting this statement for trading securities was to
increase net income by $3.8 million (net of a tax benefit of $2.4 million), or
$.11 per share. The impact on stockholders' equity of adopting this statement
for all securities was not significant.
As required by SFAS No. 115, management is to reevaluate the appropriate
classification of securities at each balance sheet date, based on its intent to
trade or hold the securities. Accordingly, and as a result of the consummation
of new debt agreements by the Company in late March 1994 which contain
restrictive covenants as to the amount and composition of the Company's
investment portfolio (see Note 6), all securities classified as trading
securities on March 31, 1994 (primarily those of a captive insurance
subsidiary) having an aggregate fair value of $16.7 million were transferred to
available-for-sale securities. The transfer had no effect on income or
stockholders' equity.
Due to the restrictive covenants, most of the Company's trading securities
portfolio were sold in late March 1994 and not replaced. Cash proceeds of $31.6
million were received from the sale of the securities, and the gross realized
holding gains and losses were not significant. Under management's new
investment
27
<PAGE>
AMETEK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
objectives, the Company does not intend to actively trade securities currently
held, or securities to be acquired in the future. Accordingly, at December 31,
1994, all of the Company's equity securities and fixed income securities are
classified as available-for-sale. The aggregate market value of securities
available-for-sale and classified as current and noncurrent assets at December
31, 1994 was $18.1 million ($19.3 million amortized cost). The gross
unrealized holding gains and losses on these securities were not significant.
5. OTHER BALANCE SHEET INFORMATION
<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------------
1994 1993
--------- ---------
<S> <C> <C> <C>
INVENTORIES
Finished goods and parts............................... $ 34,887 $ 32,410
Work in process........................................ 24,695 23,683
Raw materials and purchased parts...................... 41,025 35,801
--------- ---------
$ 100,607 $ 91,894
========= =========
PROPERTY, PLANT AND EQUIPMENT, at cost
Land................................................... $ 7,846 $ 7,926
Buildings.............................................. 92,957 95,393
Machinery and equipment................................ 295,767 281,116
--------- ---------
396,570 384,435
Less accumulated depreciation.......................... (221,513) (199,626)
--------- ---------
$ 175,057 $ 184,809
========= =========
OTHER ASSETS
Intangibles, at cost:
Patents............................................... $ 27,993 $ 28,083
Excess of cost over net assets acquired............... 13,753 14,911
Other acquired intangibles............................ 41,356 41,349
Less accumulated amortization......................... (53,674) (46,358)
--------- ---------
29,428 37,985
Investments............................................ 22,594 23,755
Other.................................................. 20,924 14,047
--------- ---------
$ 72,946 $ 75,787
========= =========
ACCRUED LIABILITIES
Accrued employee compensation and benefits............. $ 21,487 $ 19,109
Resizing and restructuring............................. 20,570 24,471
Accrued interest....................................... 4,362 4,928
Other.................................................. 39,352 39,343
--------- ---------
$ 85,771 $ 87,851
========= =========
ALLOWANCE FOR POSSIBLE LOSSES ON ACCOUNTS AND NOTES RECEIVABLE
<CAPTION>
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Balance at beginning of year................ $ 2,399 $ 2,392 $ 2,451
Additions charged to expense................ 1,659 1,320 1,308
Recoveries credited to allowance............ 111 113 25
Write-offs.................................. (278) (1,337) (888)
Currency translation adjustment............. 35 (89) (504)
--------- --------- ---------
Balance at end of year...................... $ 3,926 $ 2,399 $ 2,392
========= ========= =========
</TABLE>
28
<PAGE>
AMETEK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
6. LONG-TERM DEBT
At December 31, 1994 and 1993, long-term debt consisted of:
<TABLE>
<CAPTION>
(IN THOUSANDS)
-------------------
1994 1993
-------- ---------
<S> <C> <C>
8.95% notes payable....................................... $ -- $ 106,750
9.35% notes payable....................................... -- 75,000
9 3/4% senior notes due 2004.............................. 150,000 --
Fixed/floating rate secured bank term notes due 1995
to 1999.................................................. 50,000 --
Other..................................................... 557 5,222
-------- ---------
200,557 186,972
Less: current portion..................................... (10,221) (14,543)
-------- ---------
$190,336 $ 172,429
======== =========
</TABLE>
The annual future payments required by the terms of the long-term debt is
approximately $10 million per year for the years 1996 through 1999.
On March 21, 1994, the Company completed an offering of $150 million in
principal amount of 9 3/4% senior notes due March 15, 2004. Also in March 1994,
the Company entered into a $250 million fixed/floating rate senior secured
credit agreement with a group of banks which provided commitments of $125
million each for term loans and revolving loans. The net proceeds from these
debt issuances, together with available cash, were used to: (a) finance the
Company's early retirement of debt in March 1994 aggregating $185.4 million,
(b) fund prepayment premiums and other expenses related to the sale of the
senior notes and the bank credit agreement totaling $29.2 million, and (c)
repurchase outstanding shares of the Company's common stock (see Note 7). In
connection with the early retirement of debt, the Company recorded an
extraordinary loss of $11.8 million (net of tax benefits of $7.6 million) or
$.32 per share, for the prepayment premiums paid and the write-off of related
deferred debt issuance costs.
In October 1994, the Company amended the bank credit agreement, reducing the
total credit facility from $250 million to $200 million. The amended agreement
reduces the term loan commitment from $125 million to $50 million, all of which
is outstanding at December 31, 1994, and which is to be repaid in semiannual
installments over five years beginning in 1995. The agreement also increases
the revolving loan commitment from $125 million to $150 million, of which $1.6
million was outstanding at December 31, 1994 and which is classified as short-
term borrowings. The revolving loan commitment expires in 1999, and any loans
outstanding thereunder are due and payable at final maturity.
Additionally, the amended agreement provides for lower interest rates and a
reduction in commitment fees and, subject to authorization by the Board of
Directors, allows the Company to spend up to $25 million to repurchase a
portion of its 9 3/4% senior notes, or to make additional repurchases of the
Company's common stock, or a combination thereof (see Note 7).
Outstanding loans under the credit facility are subject to interest rate swap
and cap agreements based on a combination of a fixed rate and the London
Interbank Offered Rate (LIBOR), plus a negotiated spread over LIBOR. The
weighted average interest rates on loans under the agreement at December 31,
1994 was 7.48% for term loans and 8.50% for revolving loans. The Company's loan
agreements contain covenants, which among other things, provide for compliance
with certain financial ratios with respect to leverage, net worth and fixed
charge coverage. At December 31, 1994, the Company was in compliance with all
such covenants.
The Company also has outstanding letters of credit totaling $13.1 million at
December 31, 1994, and its subsidiaries had foreign lines of credit with
European banks of approximately $15.9 million, all of which was unused.
29
<PAGE>
AMETEK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
7. STOCKHOLDERS' EQUITY
As part of its plan to enhance shareholder value, the Company announced in
the fourth quarter of 1993 its intent to repurchase outstanding shares of its
common stock for an aggregate purchase price of up to $150 million. As part of
an amendment to its bank credit agreement in October 1994, the Company was
permitted to purchase up to an additional $25 million of its outstanding common
stock, subject to Board approval, for a maximum total potential purchase of
$175 million.
The stock repurchase was contingent upon the Company completing the
refinancing of its long-term debt, which occurred in March of 1994. In
anticipation of the contemplated stock repurchases, the Company, from November
1993 to January 1994, entered into a series of equity option contracts with a
counterparty to hedge itself against changes in the market price of its stock
between the time the plan was announced and completion of the debt refinancing.
These contracts, which were to expire in March and April of 1994, covered an
aggregate of 3,924,200 shares of the Company's common stock.
On February 14, 1994, to extend this hedge, the options (including those
entered into in January 1994) were settled for approximately $330,000 and were
replaced with a swap agreement with the same counterparty covering the same
number of shares. The swap extended the hedge to May 31, 1994, with the Company
maintaining the right to terminate the swap at any time prior to April 5, 1994
and buy the shares at a cost of $12.125 per share plus certain carrying costs.
On March 22, 1994, following completion of the debt refinancing arrangements
mentioned above, the Company exercised its option, terminated the swap
agreement and acquired the 3,924,200 shares covered thereby at a total cost of
approximately $47.8 million.
During 1994, the Company repurchased a total of 9,221,100 shares of its
common stock upon the exercise of the option described above, and in a
combination of privately negotiated and open market transactions for an
aggregate cost of $118.8 million, financed in part by a portion of the proceeds
from the debt issuances described in Note 6.
All of the repurchased shares have been retired as required by the Company's
loan agreements, and such shares have been returned to the status of authorized
but unissued shares. At December 31, 1994, shares outstanding totalled
34,707,160, compared to 43,639,645 shares outstanding at December 31, 1993.
At the Annual Meeting of Stockholders on April 26, 1994, the Company's
shareholders approved a reduction in the par value of the Company's common
stock from $1.00 per share to $.01 per share. This change resulted in a
transfer of $39.1 million from the common stock account to the capital in
excess of par value account.
The Company has a Shareholder Rights Plan, under which the Board of Directors
declared a dividend of one Right for each share of Company common stock owned.
The Plan provides, under certain conditions involving acquisition of the
Company's common stock, that holders of Rights, except for the acquiring
entity, would be entitled (i) to purchase shares of preferred stock at a
specified exercise price, or (ii) to purchase shares of common stock of the
Company, or the acquiring company, having a value of twice the Rights exercise
price. The Rights under the Plan expire in 1999.
The Company provides, among other things, for restricted stock awards of
common stock to eligible employees and nonemployee directors of the Company at
such cost to the recipient as the Stock Incentive Plan Committee of the Board
of Directors may determine. These shares are issued subject to certain
conditions, and transfer and other restrictions as prescribed by the Plan. In
1994 and 1993, the Company awarded 20,000 shares of restricted common stock to
certain directors under the Plan. No restricted stock was awarded during 1992.
Upon issuance of restricted stock, unearned compensation, equivalent to the
excess of the market value of the shares awarded over the price paid by the
recipient at the date of the grant, is charged to stockholders' equity and is
amortized to expense over the periods until the restrictions lapse.
Amortization charged to expense in 1994, 1993, and 1992 was not significant.
30
<PAGE>
AMETEK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
At December 31, 1994, 4,240,362 (4,732,053 in 1993) shares of common stock
were reserved under the Company's incentive and nonqualified stock option
plans. The options are exercisable at prices not less than market value on
dates of grant, and in installments over five- to seven-year periods from such
dates. Information on options follows:
<TABLE>
<CAPTION>
1994 1993 1992
------------------------ ------------------------ ------------------------
SHARES PRICE RANGE SHARES PRICE RANGE SHARES PRICE RANGE
--------- ------------- --------- ------------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning
of year................ 2,046,225 $ 8.94-$16.50 2,116,289 $ 8.94-$16.50 2,040,950 $ 8.94-$14.19
Granted................. 1,152,600 12.31- 15.19 93,000 13.13- 14.94 388,500 12.19- 16.50
Exercised............... (302,146) 8.94- 15.44 (136,973) 11.69- 14.06 (259,486) 11.69- 14.19
Cancelled............... (206,718) 12.19- 15.44 (26,091) 11.69- 15.75 (53,675) 11.81- 14.06
--------- ------------- --------- ------------- --------- -------------
Outstanding at end of
year................... 2,689,961* 8.94- 16.50* 2,046,225 8.94- 16.50 2,116,289 8.94- 16.50
========= ============= ========= ============= ========= =============
Exercisable at end of
year................... 1,102,064 $ 8.94-$16.50 1,050,464 $ 8.94-$16.50 668,698 $ 8.94-$16.31
========= ============= ========= ============= ========= =============
</TABLE>
--------
* Expiring from 1995 through 2001
The Company also has outstanding 148,513 stock appreciation rights
exercisable for cash and/or shares of the Company's common stock when the
related option is exercised. Subject to certain limitations, each right relates
to the excess of the market value of the Company's common stock over the
exercise price of the related option. Charges and credits, immaterial in
amount, are made to income for these rights and certain related options.
8. LEASES
Minimum aggregate rental commitments under noncancellable leases in effect at
December 31, 1994 (principally for production and administrative facilities and
equipment) amounted to $7.7 million consisting of annual payments of $2.2
million in 1995, $1.6 million in 1996, and decreasing amounts thereafter.
Rental expense of $5 million was charged to income in 1994 and 1993 and $4
million in 1992.
9. INCOME TAXES
The components of income (loss) before income taxes, an extraordinary item,
and the cumulative effect of an accounting change, and the details of the
provision for (benefit from) income taxes are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
-------------------------
1994 1993 1992
------- -------- -------
<S> <C> <C> <C>
Income (loss) before income taxes:
Domestic........................................... $47,039 $(17,869) $57,619
Foreign............................................ 14,768 6,672 9,100
------- -------- -------
Total.......................................... $61,807 $(11,197) $66,719
------- -------- -------
Provision for (benefit from) income taxes:
Current:
Federal.......................................... $10,963 $ 10,182 $17,221
Foreign.......................................... 5,860 2,001 1,025
State............................................ 258 2,608 2,189
------- -------- -------
Total current.................................. 17,081 14,791 20,435
------- -------- -------
Deferred:
Federal.......................................... 2,630 (17,307) (864)
Foreign.......................................... 2,209 2,122 3,653
State............................................ 896 (3,471) (862)
------- -------- -------
Total deferred................................. 5,735 (18,656) 1,927
------- -------- -------
Total provision................................ $22,816 $ (3,865) $22,362
======= ======== =======
</TABLE>
31
<PAGE>
AMETEK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Significant components of the Company's deferred tax (asset) liability as of
December 31 are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
------------------
1994 1993
-------- --------
<S> <C> <C>
Current deferred tax assets:
Reserves not currently deductible........................ $(11,106) $(13,235)
Other.................................................... (1,531) (111)
-------- --------
Net current deferred tax asset......................... (12,637) (13,346)
-------- --------
Long-term deferred tax (assets) liabilities:
Differences in basis of property and accelerated
depreciation............................................ 22,075 23,056
Purchased tax benefits................................... 15,790 17,654
Reserves not currently deductible........................ (15,928) (17,015)
Other.................................................... 6,545 4,253
-------- --------
Net long-term deferred tax liability................... 28,482 27,948
-------- --------
Net deferred tax liability............................. $ 15,845 $ 14,602
======== ========
</TABLE>
The effective rate of the provision for (benefit from) income taxes
reconciles to the statutory rate as follows:
<TABLE>
<CAPTION>
1994 1993 1992
---- ----- ----
<S> <C> <C> <C>
Statutory rate............................................. 35.0% (35.0)% 34.0%
State income taxes, net of federal income tax benefit...... 1.2 (5.0) 2.2
Foreign Sales Corporation and other tax credits............ (3.0) (15.0) (2.4)
Effect of foreign operations............................... 4.4 15.0 1.1
Effect of U.S. federal statutory tax rate increase on prior
years' deferred taxes..................................... -- 5.9 --
Other...................................................... (0.7) (0.4) (1.4)
---- ----- ----
36.9% (34.5)% 33.5%
==== ===== ====
</TABLE>
10. RETIREMENT AND PENSION PLANS
The Company maintains noncontributory defined benefit retirement and pension
plans, with benefits for eligible United States salaried and hourly employees
funded through trusts established in conjunction with these plans. Employees of
certain foreign operations participate in various local plans which in the
aggregate are not significant.
The Company also has nonqualified unfunded retirement plans for its directors
and certain retired employees, and contractual arrangements with certain
executives that provide for supplemental pension benefits in excess of those
provided by the Company's primary pension plan. Fifty percent of the projected
benefit obligation of the supplemental pension benefit arrangements with the
executives has been funded by grants of restricted shares of the Company's
common stock. The remaining 50% is unfunded. The Company is providing for these
arrangements by charges to earnings over the periods to age 65 of the
participants.
The Company's funding policy with respect to its qualified plans is to
contribute amounts determined annually on an actuarial basis that provides for
current and future benefits in accordance with funding requirements of federal
law and regulations. Assets of funded benefit plans are invested in a variety
of equity and debt instruments and in pooled temporary funds.
32
<PAGE>
AMETEK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Net pension expense, excluding plan administrative expenses, consists of the
following components:
<TABLE>
<CAPTION>
(IN THOUSANDS)
----------------------------
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Service cost for benefits earned during the
period.......................................... $ 6,952 $ 6,902 $ 6,601
Interest cost on projected benefit obligation.... 15,041 14,374 13,106
Actual return on plan assets..................... (18,208) (15,605) (14,452)
Net amortization and deferrals................... 206 652 673
-------- -------- --------
Net pension expense.............................. $ 3,991 $ 6,323 $ 5,928
======== ======== ========
</TABLE>
In addition to pension expense shown in the table above, in 1993 the Company
also recorded a charge for curtailments of $7.6 million related to an hourly
pension plan as part of the resizing and restructuring of its general gauge and
aerospace operations. This action, in part, accounts for the lower pension
expense in 1994.
The charge to income for all retirement and pension plans, including the 1993
curtailment provision, was $4.5 million in 1994, $14.4 million in 1993, and
$6.7 million in 1992.
Net pension expense reflects an expected long-term rate of return on plan
assets of 9 1/4% for 1994, and 9 1/2% for 1993 and 1992. The actual return has
been adjusted to defer gains and losses which differ from the expected return.
The present value of projected benefit obligations was determined using an
assumed discount rate of 7 3/4% for 1994, 7 1/4% for 1993, and 8% for 1992. The
assumed rate of compensation increase used in determining the present value of
projected benefit obligations was 5 1/4% for 1994, and 5 1/2% for 1993 and
1992.
For pension plans with accumulated benefits in excess of assets at December
31, 1994, the balance sheet reflects an additional long-term pension liability
of $10.0 million ($11.0 million--1993), a long-term intangible asset of $3.2
million ($3.7 million--1993), and a charge to stockholders' equity of $4.4
million ($4.7 million--1993 and $4.2 million--1992), net of a deferred tax
benefit, representing the excess of the additional long-term liability over
unrecognized prior service cost. No balance sheet recognition is given to
pension plans with assets in excess of accumulated benefits.
The Company provides limited postretirement benefits other than pensions to
certain retirees, and a small number of employees. These benefits are accounted
for on the accrual basis, thereby meeting the accounting requirements of the
current accounting standard for postretirement benefits other than pensions.
33
<PAGE>
AMETEK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The following table sets forth the funded status of the plans:
<TABLE>
<CAPTION>
(IN THOUSANDS)
-----------------------------------------------
DECEMBER 31, 1994 DECEMBER 31, 1993
----------------------- -----------------------
ASSETS ACCUMULATED ASSETS ACCUMULATED
EXCEED BENEFITS EXCEED BENEFITS
ACCUMULATED EXCEED ACCUMULATED EXCEED
BENEFITS ASSETS BENEFITS ASSETS
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Actuarial present value of
benefit obligations:
Vested benefit obligation.... $109,587 $ 70,476 $113,823 $ 72,070
-------- -------- -------- --------
Accumulated benefit
obligation.................. $119,576 $ 74,551 $117,875 $ 76,147
-------- -------- -------- --------
Projected benefit obligation. $134,593 $ 75,034 $136,340 $ 76,437
Plan assets at fair value...... 133,678 59,637 136,923 57,839
-------- -------- -------- --------
Plan assets in excess of (less
than) projected benefit
obligation.................... (915) (15,397) 583 (18,598)
Unrecognized prior service
cost.......................... 1,899 2,148 2,160 2,294
Unrecognized net loss.......... 10,377 8,014 9,214 8,275
Unrecognized net transition
(asset) obligation, net of
amortization.................. (4,630) 499 (5,433) 781
-------- -------- -------- --------
Prepaid (accrued) pension
expense....................... $ 6,731 $ (4,736) $ 6,524 $ (7,248)
======== ======== ======== ========
</TABLE>
11. DERIVATIVE FINANCIAL INSTRUMENTS
The Company has only limited involvement with derivative financial
instruments and does not use them for trading purposes. Such instruments are
generally used to manage well-defined interest rate risks and to hedge firm
commitments relating to certain export sales denominated in a foreign currency.
Interest rate swap and cap agreements are used to reduce the potential impact
of increases in interest rates on the Company's floating-rate long-term debt.
Accordingly, the Company enters into these agreements to effectively convert
floating-rate debt to fixed-rate debt and to cap certain rates, which are
indexed to LIBOR rates, to reduce the Company's risk of incurring higher
interest costs due to rising interest rates. At December 31, 1994, the Company
was party to one interest rate swap agreement with a notional amount of $28.3
million, which decreases by $2.2 million semiannually through May of 1997. The
interest rate cap agreement entitles the Company to receive amounts from
counterparties on a quarterly basis if specified market interest rates rise
above fixed cap rates.
Forward currency contracts are entered into to hedge certain firm export
sales commitments denominated in German marks. The purpose of these hedging
activities is to protect the Company from the risk that the eventual net cash
dollar inflows resulting from the sale of products to foreign customers will be
adversely affected by changes in exchange rates. At December 31, 1994 and 1993,
the notional value of these contracts was $10.3 million and $3.0 million,
respectively. The terms of the currency contracts are dependent on the sale
commitment and generally do not exceed one year. Deferred losses on these
contracts at December 31, 1994 and 1993 were not significant and are recognized
in operations as the related sales occur.
In addition, as discussed in Note 7, the Company exercised an option and
terminated a swap agreement covering 3,924,200 shares of its common stock for
an aggregate purchase price of $47.8 million.
34
<PAGE>
AMETEK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
12. FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair values of the Company's financial instruments are compared
below to the recorded amounts at December 31. Cash equivalents, marketable
equity securities and fixed income securities, which are available-for-sale,
are recorded at fair value at December 31, 1994. Prior to the Company's
adoption of SFAS No. 115 for marketable securities on January 1, 1994, fixed
income marketable securities, included in the table below, were carried at the
lower of cost or market.
<TABLE>
<CAPTION>
ASSET (LIABILITY) (IN THOUSANDS)
------------------------------------------
DECEMBER 31, 1994 DECEMBER 31, 1993
-------------------- --------------------
RECORDED FAIR RECORDED FAIR
AMOUNT VALUE AMOUNT VALUE
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Fixed income and equity
investments....................... $ 22,594 $ 22,594 $ 23,755 $ 28,000
Short-term borrowing............... (1,600) (1,600) -- --
Long-term debt (Including current
portion).......................... (200,557) (200,000) (186,972) (208,000)
Forward currency contracts......... -- 9,000 -- 1,600
</TABLE>
The fair values of fixed income and equity investments are based on quoted
market value. The fair value of short-term borrowings is based on the carrying
value at year-end. The fair value of the Company's publicly traded notes,
included in long-term debt, are based on the quoted market price for such
notes. The fair value of other long-term debt is estimated based on borrowing
rates currently available to the Company for loans with similar terms and
maturities. The fair value of forward currency contracts (used for hedging firm
commitments) is based on quoted market prices for comparable contracts.
13. ADDITIONAL INCOME STATEMENT AND CASH FLOW INFORMATION
Included in other income, net, is interest and other investment income of
$5.0 million, $8.4 million, and $8.6 million for 1994, 1993 and 1992. Income
taxes paid in 1994, 1993 and 1992 were $13.6 million, $13.8 million, and $21.8
million. Cash paid for interest for each of the three years approximated
interest expense.
35
<PAGE>
AMETEK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
14. SEGMENT AND GEOGRAPHIC INFORMATION
The Company classifies its operations into three business segments: Electro-
mechanical, Precision Instruments, and Industrial Materials. The Electro-
mechanical Group produces motor-blower systems and injection-molded components
for manufacturers of floor care appliances, and fractional horsepower motors
and motor-blowers for computer, business machine, medical equipment and high-
efficiency heating equipment producers. Sales of fractional horsepower
electric motors and blowers represented 42% in 1994 (38% in 1993 and 39% in
1992) of the Company's consolidated net sales.
The Precision Instruments Group produces aircraft cockpit instruments and
displays, and pressure, temperature, flow and liquid level sensors for
aircraft and jet engine manufacturers and for airlines, as well as airborne
electronics systems to monitor and record flight and engine data. The group
also produces instruments and complete instrument panels for heavy truck
builders, process monitoring and display systems, combustion, gas analysis,
moisture and emissions monitoring systems, force and speed measuring
instruments, air and noise monitors, pressure and temperature calibrators and
pressure-indicating and digital manometers. The Precision Instruments Group
has for many years been a leading producer of the widely used mechanical
pressure gauge.
The Industrial Materials Group produces high-temperature-resistant materials
and textiles, corrosion-resistant heat exchangers, tanks and piping for
process systems; ultralightweight foam sheet packaging material; drinking
water filter and treatment systems; industrial and commercial filters for
other liquids; replacement filter cartridges, liquid bag filters and multiple
cartridge filter housings, high-purity metals and alloys in powder, strip and
wire form for high-performance aircraft, automotive and electronics
requirements; and thermoplastic compounds and concentrates for automotive,
appliance and telecommunication applications.
36
<PAGE>
AMETEK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
14. SEGMENT AND GEOGRAPHICAL FINANCIAL INFORMATION
Business Segments
<TABLE>
<CAPTION>
(IN THOUSANDS)
-----------------------------------------------------------------------
ELECTRO- PRECISION INDUSTRIAL TOTAL
MECHANICAL INSTRUMENTS MATERIALS CORPORATE CONSOLIDATED
---------- ----------- ------------ --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net sales/(1)/ 1994 $340,358 $280,638 $186,968 $807,964
1993 280,732 275,351 176,112 732,195
1992 309,556 297,025 162,969 769,550
------------------------------------------------------------------------------------------------------
Segment operating profit 1994 46,203 29,189 27,295 (40,880)/(5)/ 61,807
(loss) and consolidated 1993 35,018 (30,643)/(3)/ 18,284/(4)/ (33,856)/(5)/ (11,197)
income (loss) before 1992 49,912 28,045 22,096 (33,334)/(5)/ 66,719
income taxes/(2)/
------------------------------------------------------------------------------------------------------
Identifiable assets 1994 190,340 142,404 94,441 74,779 501,964
1993 164,826 147,024 101,441 149,372 562,663
1992 157,158 177,143 102,385 166,403 603,089
------------------------------------------------------------------------------------------------------
Additions to 1994 11,922 6,633 4,346 170 23,071
property, plant and 1993 25,343 6,513 9,048 218 41,122
equipment/(6)/ 1992 20,706 7,417 5,170 236 33,529
------------------------------------------------------------------------------------------------------
Depreciation and 1994 12,430 15,253 9,488 108 37,279
amortization 1993 11,582 15,432 8,726 167 35,907
1992 12,107 15,979 8,976 201 37,263
------------------------------------------------------------------------------------------------------
Geographic Areas
<CAPTION>
INTERNATIONAL
-----------------------------
UNITED CANADA, ASIA TOTAL
STATES EUROPE AND OTHER CORPORATE CONSOLIDATED
---------- ----------- ------------ --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net sales/(1)/ 1994 $686,479 $120,923 $ 562 $807,964
1993 634,935 96,030 1,230 732,195
1992 655,114 113,111 1,325 769,550
------------------------------------------------------------------------------------------------------
Income (loss) before
income taxes 1994 86,548 16,290 (151) (40,880) 61,807
1993 15,473 7,357 (171) (33,856) (11,197)
1992 87,665 12,601 (213) (33,334) 66,719
------------------------------------------------------------------------------------------------------
Identifiable assets 1994 334,174 92,909 102 74,779 501,964
1993 328,940 83,774 577 149,372 562,663
1992 342,226 93,580 880 166,403 603,089
------------------------------------------------------------------------------------------------------
United States export
sales/(7)/ 1994 50,165 66,383 116,548
1993 51,179 54,500 105,679
1992 65,132 54,171 119,303
------------------------------------------------------------------------------------------------------
</TABLE>
(1) After elimination of intersegment sales and intercompany sales between
geographic areas, which are not significant in amount. Such sales are
generally priced based on prevailing market prices.
(2) Segment operating profit represents sales less all direct costs and
expenses (including certain administrative and other expenses) applicable
to each segment, but does not include interest expense.
(3) Reflects charges of $47.8 million for resizing and restructuring costs
associated with planned work force reductions and those which occurred in
1993, asset write-downs, relocation of product lines and the overall
consolidation of the Company's aerospace operations, and other unusual
charges.
(4) Reflects charge of $3.9 million primarily for asset write-downs.
(5) Includes unallocated administrative expenses, interest expense and net
other income and, in 1993, $2.8 million of restructuring and other unusual
charges.
(6) Includes $2.8 million in 1993 and $9.5 million in 1992 from acquired
businesses.
(7) Included in total United States sales above.
37
<PAGE>
AMETEK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
15. QUARTERLY FINANCIAL DATA (Unaudited)
<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
---------------------------------------------------------
FIRST SECOND THIRD FOURTH TOTAL
QUARTER QUARTER QUARTER QUARTER YEAR
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
1994
Net sales............. $199,273 $209,726 $198,672 $200,293 $807,964
Operating income...... $ 17,474 $ 21,418 $ 20,242 $ 20,207 $ 79,341
Income before
nonrecurring items... $ 8,807(a) $ 9,669 $ 10,226 $ 10,289 $ 38,991
Net income............ $ 816 $ 9,669 $ 10,226 $ 10,289 $ 31,000
Earnings per share:(b)
Income before
nonrecurring items... $ 0.21(a) $ 0.27 $ 0.29 $ 0.30 $ 1.05
Net income............ $ 0.02 $ 0.27 $ 0.29 $ 0.30 $ 0.84
Dividends paid per
share................ $ 0.06 $ 0.06 $ 0.06 $ 0.06 $ 0.24
Common stock trading
range:(c)
High................. 13 1/8 15 5/8 17 3/4 18 3/4 18 3/4
Low.................. 11 5/8 12 14 3/4 16 1/8 11 5/8
1993
Net sales............. $187,114 $186,820 $175,003 $183,258 $732,195
Operating income
(loss)............... $ 12,514 $ 12,629 $ 6,490 $(31,564)(e) $ 69
Income before
nonrecurring
items(d)............. $ 7,868 $ 6,649 $ 4,655 $ 6,991 $ 26,163
Net income (loss)..... $ 6,096 $ 6,222 $ 1,980 $(21,630)(e) $ (7,332)
Earnings (loss) per
share:
Income before
nonrecurring
items(d)............. $ 0.18 $ 0.15 $ 0.11 $ 0.16 $ 0.60
Net income (loss)..... $ 0.14 $ 0.14 $ 0.05 $ (0.50)(e) $ (0.17)
Dividends paid per
share................ $ 0.17 $ 0.17 $ 0.17 $ 0.06 $ 0.57
Common stock trading
range:(c)
High................. 17 1/2 17 1/2 14 1/8 14 1/8 17 1/2
Low.................. 14 1/4 12 7/8 12 5/8 10 5/8 10 5/8
</TABLE>
--------
(a) Excludes an extraordinary loss of $11.8 million ($.32 per share) for early
extinguishment of debt, and a $3.8 million after tax gain ($.11 per share)
from the cumulative effect of an accounting change for certain marketable
securities, which are included in net income (see Notes 4 and 6).
(b) The sum of 1994 quarterly earnings per share will not equal total year
earnings per share due to the effect of the Company purchasing shares of
its outstanding common stock.
(c) Trading ranges are based on the New York Stock Exchange composite tape.
(d) Amounts for each quarter exclude charges for resizing, restructuring and
other unusual items, which are included in net income (loss).
(e) Includes pre-tax charges of $46.9 million ($28.6 million after tax or $.66
per share) for restructuring and other unusual items.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
38
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information with respect to Directors and Executive Officers of the Company,
and information with respect to compliance with Section 16(a) of the Securities
Exchange Act of 1934, is incorporated herein by reference to the Company's
definitive Proxy Statement to be filed with the Securities and Exchange
Commission (the "Commission") not later than 120 days after the close of the
fiscal year ended December 31, 1994, under the captions "Information as to
Nominees for Election of Directors," "Executive Officers of the Registrant" and
"Compliance with Section 16(a) of the Securities Exchange Act of 1934."
ITEMS 11, 12 AND 13.
The information required by Item 11, Executive Compensation, by Item 12,
Security Ownership of Certain Beneficial Owners and Management, and by Item 13,
Certain Relationships and Related Transactions, is incorporated herein by
reference to the Company's definitive Proxy Statement to be filed with the
Commission not later than 120 days after the close of the fiscal year ended
December 31, 1994, under the headings "Executive Compensation," "Stock
Ownership" and "Compensation Committee Interlocks and Insider Participation."
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) Financial Statements, Financial Statement Schedules and Exhibits filed.
1. and 2.
Financial statements and schedules are shown in the index and other
information on page 19 of this report.
3. Exhibits
Exhibits are shown in the index on page 41 of this report.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended December 31,
1994.
39
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
AMETEK, Inc.
/s/ Walter E. Blankley
Dated: March 28, 1995 By __________________________________
WALTER E. BLANKLEY, CHAIRMAN OF
THE BOARD AND CHIEF EXECUTIVE
OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Walter E. Blankley Chairman of the March 28, 1995
------------------------------------- Board and Chief
WALTER E. BLANKLEY Executive Officer
(Principal
Executive Officer)
/s/ Roger K. Derr Executive Vice March 28, 1995
------------------------------------- President--Chief
ROGER K. DERR Operating Officer
/s/ John J. Molinelli Senior Vice March 28, 1995
------------------------------------- President-- Chief
JOHN J. MOLINELLI Financial Officer
(Principal
Financial Officer)
/s/ Otto W. Richards
------------------------------------- Vice President and March 28, 1995
OTTO W. RICHARDS Comptroller
(Principal
Accounting Officer)
/s/ Lewis G. Cole Director March 28, 1995
-------------------------------------
LEWIS G. COLE
/s/ Helmut N. Friedlaender Director March 28, 1995
-------------------------------------
HELMUT N. FRIEDLAENDER
/s/ Sheldon S. Gordon Director March 28, 1995
-------------------------------------
SHELDON S. GORDON
/s/ Charles D. Klein
------------------------------------- Director March 28, 1995
CHARLES D. KLEIN
/s/ James R. Malone Director March 28, 1995
-------------------------------------
JAMES R. MALONE
/s/ David P. Steinmann Director March 28, 1995
-------------------------------------
DAVID P. STEINMANN
/s/ Elizabeth R. Varet
------------------------------------- Director March 28, 1995
ELIZABETH R. VARET
40
<PAGE>
INDEX TO EXHIBITS
ITEM 14(A)3)
<TABLE>
<CAPTION>
INCORPORATED FILED WITH
EXHIBIT HEREIN BY ELECTRONIC
NUMBER DESCRIPTION REFERENCE TO SUBMISSION
------- ----------- ------------ ----------
<C> <S> <C> <C>
3.1 Composite Certificate of Incorporation of AMETEK, Exhibit 3 to June 30,
Inc., as amended to and including April 26, 1994. 1994 10-Q, SEC File
No. 1-168.
3.2 By-laws of the Company. Exhibit (3)b) to 1987
10-K, SEC File No.
1-168.
4.1 Rights Agreement, dated July 26, 1989, between the Exhibit 4 to Form 8-K
Company and the Chase Manhattan Bank, N.A. (the dated July 28, 1989,
"Rights Agreement"). SEC File No. 1-168.
4.2 Amendment No. 1 to the Rights Agreement. Exhibit 4.5 to 1992
10-K, SEC File No.
1-168.
4.3 Certificate of Designation, Preferences and Rights Exhibit (4b) to June 30,
of Series A Junior Participating Preferred Stock. 1989 10-Q, SEC
File No. 1-168.
4.4 Indenture dated as of March 15, 1994 between the Exhibit 4 to March 31,
Company and Corestates Bank N.A., as Trustee, 1994 10-Q, SEC
relating to the Company's 9 3/4% Senior Notes due File No. 1-168.
2004.
4.5 Credit Agreement among the Company, Various Exhibit 10.36 to 1993
Lending Institutions, Bank of Montreal, Corestates 10-K.
Bank, N.A., and PNC Bank, National Association, as
Co-Agents, and the Chase Manhattan Bank, N.A., as
Administrative Agent (the "Credit Agreement").
4.6 First Amendment to the Credit Agreement. Exhibit 10 to March 31,
1994 10-Q.
4.7 Second Amendment to the Credit Agreement. Exhibit 10 to
September 30, 1994
10-Q, SEC File No.
1-168.
10.1 The 1991 Stock Incentive Plan of AMETEK, Inc. (the Annex A to 1991 Proxy
"1991 Plan").* Statement, SEC File
No. 1-168.
10.2 Amendment No. 1 to the 1991 Plan.* Exhibit 10.2 to 1993
10-K, SEC File No.
1-168.
10.3 Amendment No. 2 to the 1991 Plan.* X
10.4 The 1987 Employees' Non-Qualified Stock Option and Annex B to 1991 Proxy
Stock Appreciation Rights Plan (the "1987 Plan").* Statement.
10.5 Amendment No. 1 to the 1987 Plan.* Exhibit 10.4 to 1993
10-K.
10.6 The 1983 Employees' Incentive Stock Option Plan Exhibit 10.5 to 1993
(the "1983 Plan").* 10-K.
</TABLE>
41
<PAGE>
INDEX TO EXHIBITS
ITEM 14(A)3)
<TABLE>
<CAPTION>
INCORPORATED FILED WITH
EXHIBIT HEREIN BY ELECTRONIC
NUMBER DESCRIPTION REFERENCE TO SUBMISSION
------- ----------- ------------ ----------
<C> <S> <C> <C>
10.7 Amendment No. 1 to the 1983 Plan.* Exhibit (19)a) to
September 30, 1987
10-Q, SEC File No.
1-168.
10.8 Amendment No. 2 to the 1983 Plan.* Exhibit (10)e) to
1987 10-K.
10.9 Amendment No. 3 to the 1983 Plan.* Exhibit (10)h) to
1989 10-K, SEC File
No.1-168.
10.10 Amendment No. 4 to the 1983 Plan.* Exhibit 10.9 to 1993
10-K.
10.11 The 1981 Employees' Non-Qualified Stock Option and Exhibit 10.7 to 1991
Stock Appreciation Rights Plan (the "1981 Plan").* 10-K.
10.12 Amendment No. 1 to the 1981 Plan.* Exhibit (10)g) to
1987 10-K.
10.13 Amendment No. 2 to the 1981 Plan.* Exhibit (10)k) to
1989 10-K.
10.14 Amendment No. 3 to the 1981 Plan.* Exhibit (10)i) to
1988 10-K, SEC File
No. 1-168.
10.15 Amendment No. 4 to the 1981 Plan.* Exhibit 10.14 to 1993
10-K.
10.16 Employees' Retirement Plan of AMETEK, Inc., as Exhibit 10.15 to 1993
restated January 1, 1989 and amended to December 10-K.
31, 1993 (the "Retirement Plan").*
10.17 Amendment No. 1 to the Retirement Plan.* X
10.18 Amendment No. 2 to the Retirement Plan.* X
10.19 AMETEK, Inc. Retirement Plan for Directors, dated Exhibit 10.16 to 1993
April 28, 1983 (the "Directors Plan").* 10-K.
10.20 Amendment to the Directors Plan.* X
10.21 Second Amendment to the Directors Plan.* Exhibit (10)m) to
1986 10-K, SEC File
No. 1-168.
10.22 Third Amendment to the Directors Plan.* Exhibit (10)v) to
1987 10-K.
10.23 AMETEK, Inc. Death Benefit Program for Directors, Exhibit (10)y) to
pursuant to which the Company has entered into 1987 10-K.
agreements, restated January 1, 1987, with certain
directors and one former director of the Company
(the "Directors Program").*
10.24 Amendment No. 1 to the Directors Program.* Exhibit (10)z) to
1987 10-K.
</TABLE>
42
<PAGE>
INDEX TO EXHIBITS
ITEM 14(A)3)
<TABLE>
<CAPTION>
INCORPORATED FILED WITH
EXHIBIT HEREIN BY ELECTRONIC
NUMBER DESCRIPTION REFERENCE TO SUBMISSION
------- ----------- ------------ ----------
<C> <S> <C> <C>
10.25 The AMETEK Savings and Investment Plan, as Exhibit 10.31 to 1992
restated and amended to October 1, 1992 (the 10-K.
"Savings Plan").*
10.26 Amendment No. 1 to the Savings Plan.* Exhibit 10.23 to 1993
10-K.
10.27 Amendment No. 2 to the Savings Plan.* X
10.28 Amendment No. 3 to the Savings Plan.* X
10.29 Amendment No. 4 to the Savings Plan.* X
10.30 Amendment No. 5 to the Savings Plan.* X
10.31 Reorganization and Distribution Agreement by and Exhibit (2) to Form
between the Company and Ketema, Inc. 8-K dated November 30,
(the"Reorganization and Distribution Agreement"). 1988, SEC File No
1-168.
10.32 Agreements between the Company and Ketema, Inc. Exhibit 10.56 to 1991
amending certain provisions of the Reorganization 10-K.
and Distribution Agreement.
10.33 Benefits Agreement by and between the Company and Exhibit (10)ss) to
Ketema, Inc. 1988 10-K.
10.34 Tax Agreement by and between the Company and Exhibit (10)tt) to
Ketema, Inc. 1988 10-K.
10.35 Support Services Agreement by and between the Exhibit (10)uu) to
Company and Ketema, Inc. 1988 10-K.
10.36 Form of Severance Benefit Agreement between the Exhibit (10)ww) to
Company and certain executives of the Company.* 1989 10-K.
10.37 Form of Restricted Stock Agreement between the Exhibit 10.59 to 1991
Company and certain directors of the Company, 10-K.
dated as of February 27, 1991.*
10.38 Form of Restricted Stock Agreement between the Exhibit 10.60 to 1991
Company and certain executives of the Company, 10-K.
dated as of May 21, 1991.*
10.39 Form of Supplemental Retirement Benefit Agreement Exhibit 10.61 to 1991
between the Company and certain executives of the 10-K.
Company, dated as of May 21, 1991.*
10.40 Supplemental Senior Executive Death Benefit Plan, Exhibit 10.41 to 1992
effective as of January 1, 1992 (the "Senior 10-K.
Executive Plan").*
10.41 Amendment No. 1 to the Senior Executive Plan.* Exhibit 10.42 to 1992
10-K.
10.42 Senior Executive Split Dollar Death Benefit Plan, Exhibit 10.43 to 1992
dated as of December 15, 1992.* 10-K.
12 Statement regarding computation of ratio of
earnings to fixed charges. X
</TABLE>
43
<PAGE>
INDEX TO EXHIBITS
ITEM 14(A)3)
<TABLE>
<CAPTION>
INCORPORATED FILED WITH
EXHIBIT HEREIN BY ELECTRONIC
NUMBER DESCRIPTION REFERENCE TO SUBMISSION
------- ----------- ------------ ----------
<C> <S> <C> <C>
21 Subsidiaries of the Registrant. Exhibit 21 to 1993
10-K.
23 Consent of Independent Auditors. X
27 Financial Data Schedule. X
99 Letter to the holders of the Company's Common Exhibit (21) to June 30,
Stock, dated July 31, 1989 (including Summary of 1989 10-Q.
Rights).
</TABLE>
--------
* Management contract or compensatory plan required to be filed pursuant to
Item 601 of Regulation S-K.
44
<PAGE>
Exhibit 10.3
------------
Amendment No. 2 to the
1991 Stock Incentive Plan
of
AMETEK, Inc.
WHEREAS, AMETEK, Inc. (the "Corporation") has adopted the 1991 Stock
Incentive Plan of AMETEK, Inc. (the "Plan"); and
WHEREAS, Section 19 of the Plan permits the Corporation to amend the Plan;
and
WHEREAS; the Corporation now desires to amend the number of newly elected
non-employee directors receiving an automatic restricted stock award after
February 27, 1991 from four to two.
NOW, THEREFORE, the Plan is hereby amended as follows:
1. The reference to "four Non-Employee Directors" in the first sentence in
section (e) of Section 10 of the Plan be amended to refer to "two Non-Employee
Directors."
2. Except to the extent hereinabove, set forth, the Plan shall remain in
full force and effect.
3. The provisions of this Amendment No. 2 shall be effective December 31,
1994.
IN WITNESS WHEREOF, the Corporation has caused this Amendment to be duly
executed, effective as of the 31st day of December 1994.
AMETEK, Inc.
By: /s/ Robert W. Yannarell
------------------------
ATTEST:
/s/ Dorothy M. Misetic
----------------------
(Seal)
<PAGE>
Exhibit 10.17
-------------
AMENDMENT
to the
EMPLOYEES' RETIREMENT PLAN
OF AMETEK, INC.
---------------
Amendment No. 1
---------------
WHEREAS, there was adopted and made effective as of December 29, 1942, the
Employees' Retirement Plan of AMETEK, Inc. (the "Plan"); and
WHEREAS, the Plan was amended and restated in its entirety, effective
January 1, 1989; and
WHEREAS, Section 9.2 of the Plan provides that AMETEK, Inc. ("AMETEK") may
amend the Plan at any time or from time to time; and
WHEREAS, AMETEK now desires to amend the Plan in certain
respects;
NOW, THEREFORE, the Plan is hereby amended as follows:
FIRST: A new Appendix is hereby added to the Plan to read, in its
-----
entirety, as follows:
"APPENDIX XXVIII
SPECIAL PROVISIONS RELATING TO
CERTAIN EMPLOYEES OF THE
U.S. GAUGE DIVISION OF AMETEK, INC.
-----------------------------------
1. The provisions of this Appendix XXVIII shall apply to each non-
union employee of the U.S. Gauge Division of AMETEK, Inc. ("U.S. Gauge")
who (i) was an employee of Schlumberger Industries, Inc. (the "Predecessor
Employer") immediately prior to the acquisition by the Company from the
Predecessor Employer of the assets of the Predecessor Employer which
compromised its Weston USA Transducer Division, and
<PAGE>
(ii) either directly transferred employment from the Predecessor Employer
to U.S. Gauge or within a reasonable period of time after the acquisition
transferred employment from the Predecessor Employer to U.S. Gauge in
connection with such acquisition. Such persons shall hereinbelow be
referred to as "Covered Employees" for purposes of this Appendix XXVIII.
2. Each Covered Employee who had attained age 21 and completed one
year of credited service with the Predecessor Employer on August 25, 1989
shall be eligible to participate in the Plan as of his date of hire with
the Company. If a Covered Employee has completed less than 5 years of
Credited Service with the Company at his Severance From Service Date, his
Average Annual Compensation shall be determined using his Compensation
earned as an Employee of the Company.
3. Any Covered Employee not referred to in Section 2 of this Appendix
XXVIII shall be eligible to participate in the Plan on the January 1st or
July 1st coincident with or next following the date such Covered Employee
first satisfies the eligibility requirement set forth in Article II of the
Plan.
4. For the purpose of determining the eligibility of any Covered
Employee to become a Participant under the Plan pursuant to Section 2 of
this Appendix XXVIII, and for the purpose of determining any Covered
Employee's nonforfeitable right to an Accrued Annual Pension under the
Plan, Credited Service of such Covered Employee shall be deemed to have
commenced on the first day of the most recent period of continuous service
with the Predecessor Employer. For all other purposes, a Covered
Employee's Credited Service shall commence on his date of hire with the
Company.
5. Defined terms used in this Appendix XXVIII shall have the same
meaning as the identical defined terms as used in the Employees' Retirement
Plan of AMETEK, Inc."
SECOND: The provisions of this Amendment 1 shall be effective as of
------
August 25, 1989.
IN WITNESS WHEREOF, AMETEK has caused these presents to be executed,
in its corporate name, by its duly authorized officer and its corporate seal to
be affixed on this 6th day of July, 1994.
AMETEK, Inc.
By: /s/ Robert W. Yannarell
-----------------------
ATTEST:
/s/ Dorothy M. Misetic
--------------------------
(Seal)
<PAGE>
Exhibit 10.18
-------------
AMENDMENT
to the
EMPLOYEES' RETIREMENT PLAN
OF AMETEK, INC.
---------------
Amendment No. 2
---------------
WHEREAS, there was adopted and made effective as of December 29, 1942, the
Employees' Retirement Plan of AMETEK, Inc. (the "Plan"); and
WHEREAS, the Plan was amended and restated in its entirety, effective
January 1, 1989; and
WHEREAS, Section 9.2 of the Plan provides that AMETEK, Inc. ("AMETEK") may
amend the Plan at any time or from time to time; and
WHEREAS, AMETEK now desires to amend the Plan in certain
respects;
NOW, THEREFORE, the Plan is hereby amended as follows:
FIRST: Section 9.2 of the Plan is hereby amended to read, in its entirety,
-----
as follows:
"9.2. Amendment or Termination. The Board of Directors of the
------------------------
Company may amend, terminate or suspend this Plan at any time or from time
to time by a duly executed written instrument delivered to the Committee
evidencing such action; provided, however, that:
(a) No amendment shall provide for the use of the Trust Fund or
any part thereof other than for the benefit of any Participant, Former
Participant entitled to benefits under this Plan, Pensioner, Alternate
Payee or Beneficiary;
<PAGE>
(b) No amendment shall deprive any Participant, Former
Participant entitled to benefits under this Plan, Pensioner, Alternate
Payee or Beneficiary of any of the benefits which are vested in him or
to which he is entitled under this Plan by reason of the prior death,
disability or severance of covered employment of the Participant,
Former Participant or Pensioner; and
(c) Without limiting the generality of the foregoing and
notwithstanding any provision contained in this Plan to the contrary,
this Plan may be amended at any time and from time to time in any
respect so as to maintain the qualification and exemption of the Plan
and the Trust under Sections 401(a) and 501(a) of the Code, and to
comply with the provisions of ERISA, regardless of whether any such
amendment may change, alter or amend the relative benefits under this
Plan of any Participant, Former Participant entitled to benefits under
this Plan, Pensioner, Alternate Payee or Beneficiary."
SECOND: The provisions of this Amendment No. 2 shall be effective as
------
of August 1, 1994.
IN WITNESS WHEREOF, AMETEK has caused these presents to be executed,
in its corporate name, by its duly authorized officer, and its corporate seal to
be affixed on this 27th day of July, 1994.
AMETEK, Inc.
By: /s/ Robert W. Yannarell
---------------------------
Attest:
/s/ Dorothy M. Misetic
-------------------------------
(Seal)
<PAGE>
Exhibit 10.20
-------------
AMETEK
C E R T I F I C A T E
---------------------
I, Robert J. Coffman, Assistant Secretary of AMETEK, Inc., a Delaware
corporation, hereby certify that the following resolutions were duly adopted by
the Board of Directors of said Corporation, at a meeting duly called and held at
the 60 East Club, 60 East 42nd Street, New York, New York 10017, on September
19, 1984, at which meeting a quorum was present and acting throughout.
RESOLVED, that the Ametek Retirement Plan for Directors be amended
effective July 1, 1984 to increase the benefits under the Plan to an amount
equal to the current annual rate of compensation paid to Directors (but in no
event less than $30,000 per year); and it is further
RESOLVED, that the proper officers of the Corporation be, and each of them
hereby is, authorized, empowered and directed to execute and deliver all such
further agreements, documents and other instruments and to take any and all such
further action as such officers, in their discretion, may consider necessary or
appropriate in carrying out the purpose and intent of the foregoing resolution.
WITNESS, my hand and the seal of said Corporation, this 20th day of March,
1985.
/s/ Robert J. Coffman
-------------------------
Robert J. Coffman,
Assistant Secretary
Corporate
Seal
<PAGE>
Exhibit 10.27
-------------
AMENDMENT
to the
THE AMETEK SAVINGS AND INVESTMENT PLAN
--------------------------------------
Amendment No. 2
---------------
WHEREAS, there was adopted and made effective as of October 1, 1984, The
AMETEK Savings and Investment Plan (the "Plan"); and
WHEREAS, the Plan was amended and restated in its entirety, effective
October 1, 1992; and
WHEREAS, Section 10.1 of the Plan provides that AMETEK, Inc. ("AMETEK") may
amend the Plan at any time, and from time to time; and
WHEREAS, AMETEK now desires to amend the Plan in certain respects;
NOW, THEREFORE, the Plan is hereby amended as follows:
FIRST: A new Appendix is hereby added to the Plan to read, in its
-----
entirety, as follows:
"APPENDIX VIII
SPECIAL PROVISIONS RELATING TO
CERTAIN EMPLOYEES OF THE
U.S. GAUGE DIVISION OF AMETEK, INC.
-----------------------------------
1. The provisions of this Appendix VIII shall apply only to each non-
union employee of the U.S. Gauge Division of AMETEK, Inc. ("U.S. Gauge"),
who (i) was an employee of Schlumberger Industries, Inc. (the "Predecessor
Employer") immediately prior to the acquisition by the Company from the
Predecessor Employer of the assets of the Predecessor Employer which
comprised its Weston U.S.A. Transducer Division, and
<PAGE>
(ii) either directly transferred employment from the Predecessor Employer
to U.S. Gauge or within a reasonable period of time after the acquisition
transferred employment from the Predecessor Employer to U.S. Gauge in
connection with such acquisition. Such persons shall hereinafter be
referred to as "Covered Employees" for purposes of this Appendix VIII.
2. Each Covered Employee who has attained age 21 shall be eligible to
participate in the Plan as of the first day of the month following his date
of hire with the Company.
3. Any Covered Employee not referred to in Section 2 of this Appendix
VIII shall be eligible to participate in the Plan on the January 1st
coincident with or next following the date such Covered Employee first
satisfies the eligibility requirements set forth in Article III of the
Plan.
4. For purposes of determining any Covered Employee's nonforfeitable
right to his Employer Contribution Account pursuant to Section 6.1 of the
Plan, the Years of Service of such Covered Employee shall be deemed to have
commenced on the first day of the most recent period of continuous service
with Predecessor Employer. For all other purposes, a Covered Employee's
Credited Service shall commence on his date of hire with the Company.
5. Defined terms used in this Appendix VIII shall have the same
meaning as the identical defined terms as used in The AMETEK, Inc. Savings
and Investment Plan.
SECOND: The provisions of this Amendment No. 2 shall be effective as
------
of August 25, 1989.
IN WITNESS WHEREOF, AMETEK has caused these presents to be executed,
in its corporate name, by its duly authorized officer, and its corporate seal to
be affixed on this 6th day of July, 1994.
AMETEK, Inc.
By: /s/ Robert W. Yannarell
---------------------------
Attest:
/s/ Donna F. Winquist
-------------------------------
(Seal)
<PAGE>
Exhibit 10.28
-------------
AMENDMENT
to
THE AMETEK SAVINGS AND INVESTMENT PLAN
--------------------------------------
Amendment No. 3
---------------
WHEREAS, there was adopted and made effective as of October 1, 1984, The
AMETEK Savings and Investment Plan (the "Plan"); and
WHEREAS, the Plan was amended and restated in its entirety, effective
October 1, 1992; and
WHEREAS, Section 10.1 of the Plan provides that AMETEK, Inc. ("AMETEK") may
amend the Plan at any time, and from time to time; and
WHEREAS, AMETEK now desires to amend the Plan in certain respects;
NOW, THEREFORE, the Plan is hereby amended as follows:
FIRST: Clause (iii) of Section 2.3 of the Plan is hereby amended by adding
-----
the following to the end of the clause:
"provided, however, that effective October 1, 1994, this provision shall
not apply to employees at Simi Valley in Leadperson, Material Coordinator,
Set-up Person, QC Inspector, Maintenance and Shipping/Receiving Clerk job
classifications."
SECOND: Section 10.1 of the Plan is hereby amended to read, in its
------
entirety, as follows:
"10.1. Amendment or Termination. The Board of Directors, at a
------------------------
regular meeting or by unanimous written consent, may amend, terminate or
suspend this Plan at any time or from time to time by an instrument in
writing duly executed in the name of the Company and delivered to the
Committee; provided, however, that
<PAGE>
(a) No amendment shall provide for the use of the assets of this
Plan or any part thereof other than for the exclusive benefit of
Participants, Former Participants, Alternate Payee and Beneficiaries;
(b) No amendment shall deprive any Participant, Former
Participant, Alternate Payee or Beneficiary of any of the benefits
which are vested in him or to which he is entitled under this Plan by
reason of the prior Years of Service, death, Disability or termination
of employment of such Participant or Former Participant; and
(c) Without limiting the generality of the foregoing and
notwithstanding anything to the contrary in this Plan contained, this
Plan may be amended at any time and from time to time in any respect
so as to qualify this Plan as exempt pursuant to Sections 401 and
501(a) of the Code and like provisions of subsequent Revenue Acts, and
to comply with the provisions of ERISA, regardless of whether any such
amendment may change, alter or amend the relative benefits under this
Plan of any Participant, Former Participant, Alternate Payee or
Beneficiary."
THIRD: Appendix VII of the Plan is hereby amended to read, in its
-----
entirety, as follows:
"APPENDIX VII
------------
SPECIAL PROVISIONS RELATING TO CERTAIN
EMPLOYEES OF THE TECHNICAL MOTORS DIVISION OF AMETEK, INC.
----------------------------------------------------------
1. The provisions of this Appendix VII shall apply only to each
salaried employee and each hourly employee who is classified as a
Leadperson, Material Coordinator, Set-up Person, QC Inspector, Maintenance
or Shipping/Receiving Clerk, of the Technical Motor Division of AMETEK,
Inc. ("Technical Motors") at its Simi Valley location, who (i) was an
employee of Cambridge-Lee Industries, Inc. (the "Predecessor Employer")
immediately prior to the acquisition by AMETEK from the Predecessor
Employer of the assets and business of the Predecessor Employer which
comprised its Tencal operations, and (ii) directly transferred employment
to Technical Motors in connection with the acquisition. Such persons shall
hereinafter be referred to as "Covered Employees" for purposes of this
Appendix VII.
<PAGE>
2. Each salaried Covered Employee who has attained age 21 shall be
eligible to participate in the Plan, effective July 1, 1992, in accordance
with, and subject to, all of the terms, conditions and provisions of the
Plan. Each hourly Covered Employee who has attained age 21 shall be
eligible to participate in the Plan on October 1, 1994, in accordance with,
and subject to, all terms, conditions and provisions of the Plan.
3. Any Covered Employee not referred to in Section 2 of this Appendix
VII shall be eligible to participate in the Plan on the January 1st
coincident with or next following the date such Covered Employee first
satisfies the eligibility requirements set forth in Article III of the
Plan.
4. For purposes of determining any Covered Employee's nonforfeitable
right to his Employer Contribution Account pursuant to Section 6.1 of the
Plan, the Years of Service of such Covered Employee shall be deemed to have
commenced on the first day of the most recent period of continuous service
with Predecessor Employer.
5. Defined terms used in this Appendix VII shall have the same
meaning as the identical defined terms as used in The AMETEK, Inc. Savings
and Investment Plan."
THIRD: The provisions of this Amendment No. 1 shall be effective as
-----
of August 1, 1994.
IN WITNESS WHEREOF, AMETEK has caused these presents to be executed,
in its corporate name, by its duly authorized officer, and its corporate seal to
be affixed on this 27th day of July, 1994.
AMETEK, Inc.
By: /s/ Robert W. Yannarell
---------------------------
Attest:
/s/ Dorothy M. Misetic
-------------------------------
(Seal)
<PAGE>
Exhibit 10.29
-------------
AMENDMENT
to
THE AMETEK SAVINGS AND INVESTMENT PLAN
--------------------------------------
Amendment No. 4
---------------
WHEREAS, there was adopted and made effective as of October 1, 1984, The
AMETEK Savings and Investment Plan (the "Plan"); and
WHEREAS, the Plan was amended and restated in its entirety, effective
October 1, 1992; and
WHEREAS, Section 10.1 of the Plan provides that AMETEK, Inc. ("AMETEK") may
amend the Plan at any time, and from time to time; and
WHEREAS, AMETEK now desires to amend the Plan in certain respects;
NOW, THEREFORE, the Plan is hereby amended as follows:
FIRST: Subsection (b) of Section 4.2 of the Plan is hereby amended to
-----
read, in its entirety, as follows:
"(b) Employer Contributions. Effective January 1, 1995, the Employer
----------------------
shall contribute on behalf of each Participant who has a Deferral Election
in effect during each payroll processing period, an amount equal to 33-1/3%
of the amount contributed on behalf of such Participant pursuant to such
Participant's Deferral Election which does not exceed 6% of his
Compensation. In no event shall the amount contributed, pursuant to this
Section 4.2(b) on behalf of any Participant exceed $1,200 in a Plan Year.
Employer contributions shall be reduced by the amount of any forfeitures
that may have arisen under Section 6.1(b) during such Plan Year."
SECOND: Section 5.4 of the Plan is hereby amended to read, in its
------
entirety, as follows:
<PAGE>
"5.4. Method of Allocating and Crediting Employer Contributions.
---------------------------------------------------------
Subject to the conditions and limitations of Section 5.8, as of, or as soon
as administratively possible after, the date of payroll processing, the
Employer's contribution for such payroll processing period made pursuant to
Section 4.2(b) shall be allocated among, and credited to, the Employer
Contribution Accounts of Participants. The Employer Contribution allocated
pursuant to this Section 5.4 shall be made to the same Investment Funds in
the same proportion as the Participant's Deferral Elections are allocated
as of the date the allocation is made."
THIRD: Section 7.1 of the Plan is hereby amended to read, in
-----
its entirety, as follows:
7.1. Loans.
-----
(a) General. The Committee shall be authorized to administer a loan
-------
program under the Plan, pursuant to this Section 7.1. A Participant may
borrow a portion of his Accounts, in accordance with the following
procedures, terms and conditions:
(i) In order to borrow any portion of his Accounts, the
Participant shall file a written application with the Committee and
shall sign a written form, prescribed by the Committee, authorizing
the Employer to deduct from such Participant's pay for each month
during the term of the loan, amounts determined in accordance with
such schedule of repayment as may be determined appropriate by the
Committee in order to repay the principal and accrued interest due
under the loan. In determining a schedule of repayment of any loan
under this Plan, the Committee shall provide for substantially level
amortization of such loan (with payments not less frequently than
quarterly), over the term of the loan. Loan proceeds shall be
distributed to the Participant as soon as administratively practicable
following application.
<PAGE>
(ii) The aggregate total of all outstanding loans to a
Participant under this Plan shall be in an amount specified by the
Participant, which amount shall not be less than $1,000 nor more than
50% of the nonforfeitable value of such Participant's Accounts
determined on the date of the loan application; provided, however,
that any loan amount, when added to the highest outstanding balance of
loans from the Plan during the one-year period ending on the day
before the date on which such loan is made, shall not exceed $50,000.
(iii) Any loan to a Participant under this Plan shall be made at
an interest rate fixed by the Committee, determined as of the date of
the loan application. The Committee shall ascertain a reasonable rate
of interest each month, with respect to loans granted in the following
month, which shall provide the Plan with a return commensurate with,
and be determined on the basis of, the interest rates charged by
commercial lending institutions for loans which would be made under
similar circumstances.
(iv) The aggregate total of all outstanding loans to a
Participant under this Plan shall be adequately secured by up to 50%
of the non-forfeitable value of the Participant's Accounts. In
addition to said value of the Participant's Accounts, the Committee
may require the Participant to post additional security if it believes
such security is necessary or desirable in order to adequately secure
the loan. If, because of a decrease in the value of the Participant's
Accounts or for any other reason, the Committee believes the loan to
be inadequately secured, it shall either require the Participant to
post security in addition to the value of such Accounts or demand
accelerated repayment of the loan. The types of security that may be
required to be posted shall include, but not be limited to,
certificates of deposit, stocks, short-term bonds and other short-term
securities and their cash equivalents.
<PAGE>
(v) Any loan to a Participant under this Plan shall contain
such default provisions as may be determined appropriate by the
Committee, including the provision that if an event of default occurs
and is not cured within 30 days, the unpaid principal and accrued
interest due under the loan shall be declared immediately payable in
full and may be charged back against the Participant's Accounts as a
distribution at the earliest time that the Participant is entitled to
receive a distribution under this Plan. A failure to make a scheduled
payment, or the filing of an application for a benefit distribution
(other than a hardship withdrawal pursuant to Section 7.2) under this
Plan, shall constitute events of default.
(vi) A loan origination fee, in an amount determined by the
Committee annually, will be charged to each Participant obtaining a
loan and will be deducted from the loan proceeds.
(b) Allocation of Loans. The written instrument evidencing any loan
-------------------
made pursuant to this Section 7.1 shall be held by the Trustee for the
benefit of the Participant to whom the loan was made and not for the Trust
Fund as a whole, and the Participant's interest in Investment Funds, other
than the Common Stock Fund or an Insurance Contract will be reduced by a
like amount, in the same proportion that his interest in each such
Investment Fund bears to the amount of the loan.
(c) Aggregation of Loans. For purposes of determining whether the
--------------------
dollar limitations of Section 7.1(a) have been met, the Committee shall
take into account the unpaid principal amount of any loan(s) made to the
Participant under the provisions of any employee benefit plan to which
contributions have been made on his behalf by the Employer or an Affiliate.
(d) Number of Outstanding Loans. Effective January 1, 1995, a
---------------------------
Participant may have up to two (2) outstanding loans from his Accounts at
any given time. If a Participant already has an outstanding loan from his
Accounts, he may request a second loan, provided that (i) the request is
made no sooner than six (6) months after the initial loan request and (ii)
the limits described in subsection (a) are not exceeded by the total of the
two loans.
<PAGE>
(e) Maximum Term of Loans. The Committee may not permit a Participant
---------------------
to borrow any part of the value of the Participant's Accounts pursuant to
Section 7.1 unless the Participant is required, by the terms of the loan,
to repay the amount borrowed within 5 years of the date of the loan.
Notwithstanding the foregoing, if the Participant borrows from his Accounts
under the provisions of this Section 7.1 and the proceeds of such loan will
be used by the Participant to acquire any dwelling unit which, within a
reasonable period of time, is to be used as a principal residence of the
Participant, then the maximum term of the loan need not be restricted to
five years and the loan shall be repaid within a reasonable period of time,
as fixed by the Committee in the loan papers at the time the loan is made.
At the time the loan is made, the Committee shall determine whether a
dwelling unit will be used as a principal residence within a reasonable
period of time.
(f) Allocation of Payments. Each payment by the Participant to the
----------------------
Trustee in repayment of any outstanding loan(s) shall be allocated (i)
first, to repay any amount which may have been borrowed under the terms of
any Insurance Contracts allocated to the Participants Accounts if such loan
was originally charged against such Insurance Contracts and (ii) second, to
the portion of the Participant's Accounts invested in the Investment Funds
in the same proportion as any new contributions on behalf of the
Participant would be allocated between the Investment Funds.
(g) A Participant may repay any outstanding principal and accrued
interest due under the loan without being charged with any prepayment
penalty at any time after the six month period beginning on the date that
the loan was made. No penalty will apply to prepayments.
FOURTH: The provisions of this Amendment No. 4 shall be effective as
------
of January 1, 1995.
IN WITNESS WHEREOF, AMETEK has caused these presents to be executed,
in its corporate name, by its duly authorized officer, and its corporate seal to
be affixed on this 8th day of December, 1994.
AMETEK, Inc.
By: /s/ Robert W. Yannarell
---------------------------
Attest:
/s/ Dorothy M. Misetic
-------------------------------
(Seal)
<PAGE>
Exhibit 10.30
-------------
AMENDMENT
to
THE AMETEK SAVINGS AND INVESTMENT PLAN
--------------------------------------
Amendment No. 5
---------------
WHEREAS, there was adopted and made effective as of October 1, 1984, The
AMETEK Savings and Investment Plan (the "Plan"); and
WHEREAS, the Plan was amended and restated in its entirety, effective
October 1, 1992; and
WHEREAS, the Plan was submitted to the Internal Revenue Service (the "IRS")
in order to receive a favorable letter of determination on July 8, 1994; and
WHEREAS, in order to receive a favorable letter of determination, the IRS
has requested certain changes; and
WHEREAS, Section 10.1 of the Plan provides that AMETEK, Inc. ("AMETEK") may
amend the Plan at any time, and from time to time; and
WHEREAS, AMETEK now desires to amend the Plan in certain respects;
NOW, THEREFORE, the Plan is hereby amended as follows:
FIRST: Section 1.14 of the Plan is hereby amended to add the following to
-----
the end of the section to read in its entirety as follows:
<PAGE>
"In addition to other applicable limitations set forth in the Plan,
and notwithstanding any other provision of the Plan to the contrary, for
Plan Years beginning on or after January 1, 1994, the annual Compensation
of each Employee taken into account under the Plan shall not exceed the
OBRA '93 annual compensation limit. The OBRA '93 annual compensation limit
is $150,000 as adjusted by the Commissioner for increases in the cost of
living in accordance with section 401(a)(17)(B) of the Code. The cost-of-
living adjustment in effect for a calendar year applies to any period, not
exceeding 12 months, over which compensation is determined (determination
period) beginning in such calendar year. If a determination period
consists of fewer than 12 month, the OBRA '93 annual compensation limit
will be multiplied by a fraction, the numerator of which is the number of
months in the determination period, and the denominator of which is 12.
For plan years beginning on or after January 1, 1994, any reference in
this Plan to the limitation under section 401(a)(17) of the Code shall mean
the OBRA '93 annual compensation limit set forth in this provision.
If Compensation for any prior determination period is taken into
account in determining an Employee's benefits accruing in the current Plan
Year, the Compensation for that prior determination period is subject to
the OBRA '93 annual compensation limit in effect for that prior
determination period. For this purpose, for determination periods
beginning before the first day of the first Plan Year beginning on or after
January 1, 1994, the OBRA '93 annual compensation limit is $150,000."
SECOND: Section 1.29 of the Plan is hereby amended to read, in its
------
entirety, as follows:
"1.29. "Highly Compensated Employee" shall mean for any Plan Year an
---------------------------
Employee of the Company or an Affiliate who performs an Hour of Service and
who :
(a) was at any time a Five Percent Owner (within the meaning of
Section 11.1(c)) during the Plan Year or the Look-Back Year;
<PAGE>
(b) received Total Compensation in excess of $75,000, multiplied
by the Adjustment Factor during the Look-Back Year;
(c) received Total Compensation in excess of $50,000, multiplied
by the Adjustment Factor, and his Total Compensation exceeded the
Total Compensation received by at least 80% of the remaining Employees
of the Company and its Affiliates for the Look-Back Year;
(d) was an Officer (within the meaning of Section 11.1(f)) and
his Total Compensation either exceeded the Total Compensation of all
other Officers of the Company and its Affiliates or exceeded 50% of
the dollar limitation set forth in Section 415(b)(1)(A) of the Code as
in effect for the Limitation Year for the Look-Back Year. For
purposes of this subsection (d), the number of Officers taken into
consideration shall not exceed fifty (50), or if lesser, the greater
of three (3) Employees or ten percent (10%) of Employees. If no
Officer has Total Compensation exceeding the amount described above,
the highest paid officer shall be considered a Highly Compensated
Employee;
(e) is described in paragraph (b), (c) or (d) above when such
paragraph is modified to substitute the Plan Year for the Look-Back
Year and who is one of the one hundred (100) Employees who receives
the most compensation from the Company or Affiliate.
For purposes of this section, the determination of the group of Highly
Compensated Employees shall be made in accordance with the calendar
year calculation election contained in the regulations promulgated
under Section 414(q) of the Code.
An Employee is not taken into account for purposes of this Section
1.29 if he has completed a Period of Service of less than six months,
is normally credited with less than 17-1/2 Hours of Service per week,
normally works less than six months during the year, has not reached
age 21, is not eligible to participate in the Plan under Sections 2.1
or
<PAGE>
2.2 or would not be eligible to participate in the Plan under Section
2.3 if he was employed by an Employer.
For purposes of this Section 1.29, the following definitions shall
apply:
'Total Compensation' shall mean the Employee's "compensation" as
defined in Subsection 5.8(f); and
'Look-Back Year' shall mean the twelve (12) month period immediately
preceding the Plan Year."
THIRD: Subsection (e) of Section 4.4 of the Plan is hereby amended
-----
adding the following new paragraphs at the end of the subsection to read, in its
entirety, as follows:
"If a Highly Compensated Employee is subject to the family aggregation
rules of section 414(q)(6) of the Code because he is either a five-percent
owner (as defined in section 426(i) of the Code and the regulations issued
thereunder), or is one of the top 10 Highly Compensated Employees (based on
Total Compensation received during the Plan Year or Look-Back Year (as
defined in Section 1.29), the combined contribution ratio for the family
group (which shall be treated as one Highly Compensated Employee) shall be
the greater of (a) the contribution ratio determined by combining the
applicable contributions and Compensation of all eligible Family Members
who are Highly Compensated Employees without regard to family aggregation;
and (b) the contribution ratio determined by combining the applicable
Deferral Elections and/or Employer Matching Contributions and Compensation
of all the eligible Family Members. Any Family Member(s) included above
shall not be considered a separate Participant in determining the Actual
Deferral Percentage or the Actual Contribution Percentage hereunder.
FOURTH: Subsection (f) of Section 5.8 of the Plan is hereby amended
------
to read, in its entirety, as follows:
<PAGE>
"Compensation - Defined. Solely for purposes of this Section 5.8, the
----------------------
term "compensation" shall mean a Participant's wages, salaries, fees for
professional services, and other amounts received for personal services
actually rendered in the course of employment with the Employer or a
Related Employer (including, but not limited to, commissions paid salesmen,
compensation for services on the basis of percentage of profits,
commissions on insurance premiums, tips, bonuses and contributions to
employee benefit plans pursuant to Section 125, 401(k) and 403 of the
Code); provided, however, that the term "compensation" shall not include
contributions made by the Employer or a Related Employer to this or to any
other plan of deferred compensation (other than contributions made to the
Plan pursuant to Section 4.1) to the extent that, before the application of
the limitations of Section 415 of the Code, such contributions are not
includible in the gross income of the Participant for the taxable year in
which contributed, nor contributions made by the Employer or a Related
Employer to a Simplified Employee Pension described in Section 408(k) of
the Code, to the extent such contributions are deductible by the
Participant under Section 219 of the Code, nor any amounts realized on the
exercise of a non-qualified or incentive stock option, or when restricted
stock (or property) held by a Participant either becomes freely
transferable or is no longer subject to a substantial risk of forfeiture,
nor distributions from a deferred compensation plan (except from an
unfunded non-qualified plan when includible in gross income), nor amounts
realized from the sale, exchange or other disposition of stock acquired
under an incentive stock option, nor any amounts which receive special tax
benefits, such as premiums for group term life insurance, to the extent not
includible in the gross income of the Participant for Federal income tax
purposes. Notwithstanding the preceding, for any Plan Year the term
"compensation" shall not include any amounts in excess of $200,000,
multiplied by the Adjustment Factor.
<PAGE>
FIFTH: Section 5.8 of the Plan is hereby amended adding the
-----
following new subsection (i) at the end of the section to read, in its entirety,
as follows:
"(i) Return of Excess Annual Additions. If a Participant's Annual
---------------------------------
Addition exceeds the amounts specified above:
(i) The Plan shall distribute Deferral Election contributions to
the Participant to the extent an excess exists. The Committee
shall make such distribution in a lump sum as soon as
administratively possible after the excess is determined.
(ii) Employer Matching Contributions based on the Deferral
Election contributions above shall be forfeited in the Plan
Year in which the Deferral Elections are distributed.
Employer Matching Contributions are based on distributed
Deferral Election contributions to the extent that Deferral
Election contributions to the extent that Employer Matching
Contributions would have been reduced if the Participant had
made Deferral Election contributions for the Plan Year equal
to undistributed Deferral Election contributions.
(iii) Deferral Election contributions and Employer Matching
Contributions which are forfeited under (ii) above shall not
be counted in determining whether the limit in Code Section
402(g) has been exceeded or in preforming the
nondiscrimination tests in Section 4.4 of this Plan.
FIFTH: The provisions of this Amendment No. 5 shall be effective as
-----
of January 1, 1989.
IN WITNESS WHEREOF, AMETEK has caused these presents to be executed,
in its corporate name, by its duly authorized officer, and its corporate seal to
be affixed on this 4th day of January, 1995.
AMETEK, Inc.
By: /s/ Robert W. Yannarell
---------------------------
Attest:
/s/ Donna F. Winquist
------------------------------
(Seal)
<PAGE>
Exhibit 12
----------
AMETEK, Inc.
Statement Regarding Computation of Ratio of Earnings to Fixed Charges
(Dollars in thousands)
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------------
Earnings: 1990 1991 1992 1993 1994
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Income from continuing operations $37,338 $37,986 $44,357 ($7,332) $38,991
Income tax expense (benefit) 19,317 14,392 22,362 (3,865) 22,816
Interest expense - gross 21,951 22,252 20,197 18,580 22,295
Capitalized interest (1,133) (173) (476) (977) (677)
Amortization of debt financing costs 171 170 196 173 1,385
Interest portion of rental expense (1) 1,656 1,348 1,345 1,614 1,653
------- ------- ------- ------- -------
Adjusted earnings $79,300 $75,975 $87,981 $8,193 $86,463
======= ======= ======= ======= =======
<CAPTION>
Fixed Charges:
<S> <C> <C> <C> <C> <C>
Interest expense - net $20,818 $22,079 $19,721 $17,603 $21,618
Capitalized interest 1,133 173 476 977 677
Amortization of debt financing costs 171 170 196 173 1,385
Interest portion of rental expense (1) 1,656 1,348 1,345 1,614 1,653
------- ------- ------- ------- -------
Fixed charges $23,778 $23,770 $21,738 $20,367 $25,333
======= ======= ======= ======= =======
Ratio of adjusted earnings to ------- ------- ------- ------- -------
fixed charges 3.3x 3.2x 4.0x - (2) 3.4x
======= ======= ======= ======= =======
</TABLE>
-------------------------
(1) Estimated to be 1/3 of total rent expense.
(2) Earnings were insufficient to cover fixed charges
by approximately $12.2 million in 1993.
<PAGE>
Exhibit 23
-----------
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statements
(Forms S-8 Registration Nos. 33-40223 and 2-97434) pertaining to the Stock
Incentive Plan, Employees' Stock Incentive Plan, Employees' Incentive Stock
Option Plan, and Employees' Non-Qualified Stock Option and Stock Appreciation
Rights Plan of AMETEK, Inc., and to The AMETEK Savings and Investment Plan,
respectively, and in the related Prospectuses, of our report dated January 31,
1995, with respect to the financial statements of AMETEK, Inc. included in the
Annual Report (Form 10-K) for the year ended December 31, 1994.
Philadelphia, PA /s/ ERNST & YOUNG LLP
March 28, 1995
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET OF AMETEK, INC. AT DECEMBER 31, 1994, AND THE
CONSOLIDATED STATEMENT OF INCOME OF AMETEK, INC. FOR THE YEAR ENDED DECEMBER 31,
1994, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 7,248
<SECURITIES> 10,480
<RECEIVABLES> 119,598
<ALLOWANCES> 3,926
<INVENTORY> 100,607
<CURRENT-ASSETS> 253,961
<PP&E> 396,570
<DEPRECIATION> 221,513
<TOTAL-ASSETS> 501,964
<CURRENT-LIABILITIES> 183,226
<BONDS> 190,336
<COMMON> 372
0
0
<OTHER-SE> 72,808
<TOTAL-LIABILITY-AND-EQUITY> 501,964
<SALES> 807,964
<TOTAL-REVENUES> 807,964
<CGS> 619,389
<TOTAL-COSTS> 619,389
<OTHER-EXPENSES> 109,234
<LOSS-PROVISION> 1,659
<INTEREST-EXPENSE> 21,618
<INCOME-PRETAX> 61,807
<INCOME-TAX> 22,816
<INCOME-CONTINUING> 38,991
<DISCONTINUED> 0
<EXTRAORDINARY> (11,810)
<CHANGES> 3,819
<NET-INCOME> 31,000
<EPS-PRIMARY> .84
<EPS-DILUTED> 0
</TABLE>
