Quarterly Report (10-q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2014

¨	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 1-12981

AMETEK, Inc.

(Exact name of registrant as specified in its charter)


Delaware		14-1682544
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1100 Cassatt Road Berwyn, Pennsylvania		19312-1177
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (610) 647-2121

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 þ No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ

Accelerated filer ¨

Non-accelerated filer ¨

(Do not check if a smaller reporting company)

Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ

The number of shares of the registrant’s common stock outstanding as of the latest practicable date was: Common Stock, $0.01 Par Value, outstanding at October 29, 2014 was 245,932,769 shares.

AMETEK, Inc.

Form 10-Q

Table of Contents


	Page

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Consolidated Statement of Income for the three and nine months ended September 30, 2014 and 2013		2
Consolidated Statement of Comprehensive Income for the three and nine months ended September 30, 2014 and 2013		3
Consolidated Balance Sheet at September 30, 2014 and December 31, 2013		4
Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2014 and 2013		5
Notes to Consolidated Financial Statements		6

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		16
Item 4. Controls and Procedures		22

PART II. OTHER INFORMATION

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		23
Item 6. Exhibits		24

SIGNATURES		25

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

AMETEK, Inc.

Consolidated Statement of Income

(In thousands, except per share amounts)

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Net sales	$	1,031,811		$	890,006		$	2,997,821		$	2,651,668

Operating expenses:
Cost of sales, excluding depreciation		677,739			572,125			1,933,554			1,713,797
Selling, general and administrative		119,205			98,969			345,146			291,489
Depreciation		16,724			14,226			47,619			41,848

Total operating expenses		813,668			685,320			2,326,319			2,047,134


Operating income		218,143			204,686			671,502			604,534
Other expenses:
Interest expense		(19,543	)		(18,243	)		(57,362	)		(54,720	)
Other, net		(8,639	)		(6,291	)		(16,842	)		(11,482	)

Income before income taxes		189,961			180,152			597,298			538,332
Provision for income taxes		48,150			52,288			164,838			157,001


Net income	$	141,811		$	127,864		$	432,460		$	381,331


Basic earnings per share	$	0.58		$	0.52		$	1.76		$	1.56

Diluted earnings per share	$	0.57		$	0.52		$	1.75		$	1.55


Weighted average common shares outstanding:
Basic shares		245,439			244,049			245,184			243,667

Diluted shares		247,643			245,930			247,425			245,815

Dividends declared and paid per share	$	0.09		$	0.06		$	0.24		$	0.18

See accompanying notes.

AMETEK, Inc.

Consolidated Statement of Comprehensive Income

(In thousands)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Total comprehensive income	$	58,400	$	171,760	$	356,228	$	401,737

See accompanying notes.

AMETEK, Inc.

Consolidated Balance Sheet

(In thousands)


	September 30,			December 31,
	2014			2013
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	369,613		$	295,203
Receivables, less allowance for possible losses		593,452			536,701
Inventories		526,674			452,848
Deferred income taxes		47,404			38,815
Other current assets		52,987			45,562

Total current assets		1,590,130			1,369,129

Property, plant and equipment, net		451,551			402,790
Goodwill		2,633,188			2,408,363
Other intangibles, net of accumulated amortization		1,665,033			1,473,926
Investments and other assets		231,159			223,694

Total assets	$	6,571,061		$	5,877,902


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings and current portion of long-term debt	$	163,202		$	273,315
Accounts payable		381,820			347,638
Income taxes payable		35,441			40,007
Accrued liabilities		251,246			213,585

Total current liabilities		831,709			874,545

Long-term debt		1,473,482			1,141,750
Deferred income taxes		634,611			558,555
Other long-term liabilities		163,452			166,931

Total liabilities		3,103,254			2,741,781


Stockholders’ equity:
Common stock		2,587			2,581
Capital in excess of par value		481,142			448,700
Retained earnings		3,339,749			2,966,015
Accumulated other comprehensive loss		(141,471	)		(65,239	)
Treasury stock		(214,200	)		(215,936	)

Total stockholders’ equity		3,467,807			3,136,121

Total liabilities and stockholders’ equity	$	6,571,061		$	5,877,902

See accompanying notes.

AMETEK, Inc.

Condensed Consolidated Statement of Cash Flows

(In thousands)

(Unaudited)


	Nine Months Ended
	September 30,
	2014			2013
Cash provided by (used for):
Operating activities:
Net income	$	432,460		$	381,331
Adjustments to reconcile net income to total operating activities:
Depreciation and amortization		102,800			86,941
Deferred income taxes		(346	)		(1,656	)
Share-based compensation expense		15,055			16,526
Gain on sale of facility		(869	)		(11,590	)
Net change in assets and liabilities, net of acquisitions		(32,720	)		(13,732	)
Pension contribution and other		(3,726	)		(6,713	)

Total operating activities		512,654			451,107


Investing activities:
Additions to property, plant and equipment		(47,279	)		(37,147	)
Purchases of businesses, net of cash acquired		(573,647	)		(163,978	)
Proceeds from sale of facility		950			12,799
Other		2,392			4,837

Total investing activities		(617,584	)		(183,489	)


Financing activities:
Net change in short-term borrowings		(262,943	)		(155,208	)
Additional long-term borrowings		500,000			872
Reduction in long-term borrowings		(533	)		(486	)
Repurchases of common stock		(1,885	)		(8,452	)
Cash dividends paid		(58,726	)		(43,759	)
Excess tax benefits from share-based payments		6,279			12,861
Proceeds from employee stock plans		11,743			19,489

Total financing activities		193,935			(174,683	)


Effect of exchange rate changes on cash and cash equivalents		(14,595	)		3,959

Increase in cash and cash equivalents		74,410			96,894

Cash and cash equivalents:
As of January 1		295,203			157,984

As of September 30	$	369,613		$	254,878

See accompanying notes.

AMETEK, Inc.

Notes to Consolidated Financial Statements

September 30, 2014

(Unaudited)

1.	Basis of Presentation

The accompanying consolidated financial statements are unaudited. AMETEK, Inc. (the “Company”) believes that all adjustments (which primarily consist of normal recurring accruals) necessary for a fair presentation of the consolidated financial position of the Company at September 30, 2014, and the consolidated results of its operations for the three and nine months ended September 30, 2014 and 2013 and its cash flows for the nine months ended September 30, 2014 and 2013 have been included. Quarterly results of operations are not necessarily indicative of results for the full year. The accompanying consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 as filed with the Securities and Exchange Commission.

2.	Recent Accounting Pronouncements

In March 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-05, Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity (“ASU 2013-05”). ASU 2013-05 provides guidance for the treatment of the cumulative translation adjustment when an entity ceases to hold a controlling financial interest in a subsidiary or group of assets within a foreign entity. The Company adopted ASU 2013-05 effective January 1, 2014 and the adoption did not have a significant impact on the Company’s consolidated results of operations, financial position or cash flows.

In July 2013, the FASB issued ASU No. 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (“ASU 2013-11”). ASU 2013-11 provides guidance for the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The Company adopted ASU 2013-11 effective January 1, 2014 and the adoption did not have a significant impact on the Company’s consolidated financial statement presentation.

In April 2014, the FASB issued ASU No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-08”). ASU 2014-08 revised guidance to only allow disposals of components of an entity that represent a strategic shift (e.g., disposal of a major geographical area, a major line of business, a major equity method investment, or other major parts of an entity) and that have a major effect on a reporting entity’s operations and financial results to be reported as discontinued operations. The revised guidance also requires expanded disclosure in the financial statements for discontinued operations as well as for disposals of significant components of an entity that do not qualify for discontinued operations presentation. ASU 2014-08 is effective for interim and annual reporting periods beginning after December 15, 2014. The Company does not expect the adoption of ASU 2014-08 to have a significant impact on the Company’s consolidated results of operations, financial position or cash flows.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers. The objective of ASU 2014-09 is to establish a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and will supersede most of the existing revenue recognition guidance. The core principle of ASU 2014-09 is that an entity recognizes revenue at the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In applying the new guidance, the Company must (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the contract’s performance obligations; and (5) recognize revenue when the Company satisfies a performance obligation. ASU 2014-09 applies to all contracts with customers except those that are within the scope of other topics in the FASB Accounting Standards Codification. ASU 2014-09 is effective for interim and annual reporting periods beginning after December 15, 2016 and can be adopted by the Company using either a full retrospective or modified retrospective approach, with early adoption prohibited. The Company is currently evaluating ASU 2014-09 and has not determined the impact it may have on the Company’s consolidated results of operations, financial position or cash flows nor decided upon the method of adoption.

AMETEK, Inc.

Notes to Consolidated Financial Statements

September 30, 2014

(Unaudited)

3.	Earnings Per Share

The calculation of basic earnings per share is based on the weighted average number of common shares considered outstanding during the periods. The calculation of diluted earnings per share reflects the effect of all potentially dilutive securities (principally outstanding stock options and restricted stock grants). The number of weighted average shares used in the calculation of basic earnings per share and diluted earnings per share was as follows:

Three Months Ended
September 30,

Nine Months Ended
September 30,

2014

2013

2014

2013

(In thousands)

Weighted average shares:

Basic shares

245,439

244,049

245,184

243,667

Equity-based compensation plans

2,204

1,881

2,241

2,148

Diluted shares

247,643

245,930

247,425

245,815

4.	Accumulated Other Comprehensive Income (Loss)

The components of accumulated other comprehensive income (loss) consisted of the following:


	Three Months Ended September 30, 2014									Three Months Ended September 30, 2013
	Foreign Currency Items and Other			Defined Benefit Pension Plans			Total			Foreign Currency Items and Other			Defined Benefit Pension Plans			Total
	(In thousands)
Balance at the beginning of the period	$	4,668		$	(62,728	)	$	(58,060	)	$	(59,418	)	$	(115,402	)	$	(174,820	)

Other comprehensive income (loss) before reclassifications:
Translation adjustments		(39,899	)		—			(39,899	)		24,755			—			24,755
Change in long-term intercompany notes		(37,018	)		—			(37,018	)		8,752			—			8,752
Net investment hedges		(11,021	)		—			(11,021	)		11,234			—			11,234
Gross amounts reclassified from accumulated other comprehensive income (loss)		—			1,030			1,030			—			3,411			3,411
Income tax benefit (expense)		3,857			(360	)		3,497			(3,063	)		(1,193	)		(4,256	)

Other comprehensive (loss) income, net of tax		(84,081	)		670			(83,411	)		41,678			2,218			43,896

Balance at the end of the period	$	(79,413	)	$	(62,058	)	$	(141,471	)	$	(17,740	)	$	(113,184	)	$	(130,924	)


	Nine Months Ended									Nine Months Ended
	September 30, 2014									September 30, 2013
	Foreign Currency Items and Other			Defined Benefit Pension Plans			Total			Foreign Currency Items and Other			Defined Benefit Pension Plans			Total
	(In thousands)
Balance at the beginning of the period	$	(1,171	)	$	(64,068	)	$	(65,239	)	$	(31,492	)	$	(119,838	)	$	(151,330	)

Other comprehensive income (loss) before reclassifications:
Translation adjustments		(35,540	)		—			(35,540	)		3,388			—			3,388
Change in long-term intercompany notes		(38,154	)		—			(38,154	)		927			—			927
Net investment hedges		(6,997	)		—			(6,997	)		9,761			—			9,761
Gross amounts reclassified from accumulated other comprehensive income (loss)		—			3,092			3,092			—			10,233			10,233
Income tax benefit (expense)		2,449			(1,082	)		1,367			(324	)		(3,579	)		(3,903	)

Other comprehensive (loss) income, net of tax		(78,242	)		2,010			(76,232	)		13,752			6,654			20,406

Balance at the end of the period	$	(79,413	)	$	(62,058	)	$	(141,471	)	$	(17,740	)	$	(113,184	)	$	(130,924	)

Reclassifications for the amortization of defined benefit pension plans are included in Cost of sales, excluding depreciation in the consolidated statement of income. See Note 13 for further details.

AMETEK, Inc.

Notes to Consolidated Financial Statements

September 30, 2014

(Unaudited)

5.	Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

The Company utilizes a valuation hierarchy for disclosure of the inputs to the valuations used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on the Company’s own assumptions used to measure assets and liabilities at fair value. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

The following table provides the Company’s assets that are measured at fair value on a recurring basis as of September 30, 2014 and December 31, 2013, consistent with the fair value hierarchy:


	September 30, 2014		December 31, 2013
	Fair Value		Fair Value
	(In thousands)
Fixed-income investments	$	9,520	$	8,234

The fair value of fixed-income investments, which are valued as level 1 investments, was based on quoted market prices. The fixed-income investments are shown as a component of long-term assets on the consolidated balance sheet.

For the nine months ended September 30, 2014, gains and losses on the investments noted above were not significant. No transfers between level 1 and level 2 investments occurred during the nine months ended September 30, 2014.

Financial Instruments

Cash, cash equivalents and fixed-income investments are recorded at fair value at September 30, 2014 and December 31, 2013 in the accompanying consolidated balance sheet.

The following table provides the estimated fair values of the Company’s financial instrument liabilities, for which fair value is measured for disclosure purposes only, compared to the recorded amounts at September 30, 2014 and December 31, 2013:


	September 30, 2014						December 31, 2013
	Recorded Amount			Fair Value			Recorded Amount			Fair Value
	(In thousands)
Short-term borrowings	$	(5,360	)	$	(5,360	)	$	(268,764	)	$	(268,764	)
Long-term debt (including current portion)		(1,631,324	)		(1,760,278	)		(1,146,301	)		(1,290,466	)

The fair value of short-term borrowings approximates the carrying value. Short-term borrowings are valued as level 2 investments as they are corroborated by observable market data. The Company’s long-term debt is all privately held with no public market for this debt, therefore, the fair value of long-term debt was computed based on comparable current market data for similar debt instruments and is considered to be a level 3 liability.

AMETEK, Inc.

Notes to Consolidated Financial Statements

September 30, 2014

(Unaudited)

Foreign Currency

At September 30, 2014, the Company had no forward contracts outstanding. For the three and nine months ended September 30, 2014, realized gains and losses on foreign currency forward contracts were not significant. At December 31, 2013, the Company had two Euro forward contracts for a total of 21.7 million Euro ($28 thousand fair value unrealized loss at December 31, 2013) and one 61.0 million Swiss franc forward contract ($511 thousand fair value unrealized loss at December 31, 2013) outstanding. The Company has not designated its foreign currency forward contracts as hedges.

6.	Hedging Activities

The Company has designated certain foreign-currency-denominated long-term borrowings as hedges of the net investment in certain foreign operations. As of September 30, 2014, these net investment hedges included British-pound-denominated long-term debt and Euro-denominated short-term debt. These borrowings were designed to create net investment hedges in each of the designated foreign subsidiaries. The Company designated the British-pound- and Euro-denominated loans referred to above as hedging instruments to offset translation gains or losses on the net investment due to changes in the British pound and Euro exchange rates. These net investment hedges are evidenced by management’s contemporaneous documentation supporting the hedge designation. Any gain or loss on the hedging instrument (the debt) following hedge designation is reported in accumulated other comprehensive income in the same manner as the translation adjustment on the investment based on changes in the spot rate, which is used to measure hedge effectiveness.

At September 30, 2014, the Company had $194.6 million of British-pound-denominated loans, which were designated as a hedge against the net investment in British pound functional currency foreign subsidiaries. At September 30, 2014, the Company had a $63.1 million Euro-denominated loan, which was designated as a hedge against the net investment in Euro functional currency foreign subsidiaries. As a result of these British-pound- and Euro-denominated loans being designated and 100% effective as net investment hedges, $10.0 million of currency remeasurement gains have been included in the foreign currency translation component of other comprehensive income for the nine months ended September 30, 2014.

7.	Inventories


	September 30, 2014		December 31, 2013
	(In thousands)
Finished goods and parts	$	87,474	$	76,086
Work in process		107,830		85,518
Raw materials and purchased parts		331,370		291,244

Total inventories	$	526,674	$	452,848

AMETEK, Inc.

Notes to Consolidated Financial Statements

September 30, 2014

(Unaudited)

8.	Acquisitions

The Company spent $573.6 million in cash, net of cash acquired, to acquire Teseq Group in January 2014, VTI Instruments (“VTI”) in February 2014, Luphos GmbH in May 2014, Zygo Corporation in June 2014 and Amptek, Inc. in August 2014. Teseq is a manufacturer of test and measurement instrumentation for electromagnetic compatibility (“EMC”) testing. VTI is a manufacturer of high precision test and measurement instrumentation. Luphos’ core technology is used in the measurement of complex aspheric optical surfaces and other surfaces through non-contact methods. Zygo is a provider of optical metrology solutions, high precision optics and optical assemblies for use in a wide range of scientific, industrial and medical applications. Amptek is a manufacturer of instrumentation and detectors used to identify composition of materials using x-ray fluorescence. Teseq, VTI, Luphos, Zygo and Amptek are part of AMETEK’s Electronic Instruments Group.

The following table represents the preliminary allocation of the aggregate purchase price for the net assets of the above acquisitions based on their estimated fair values at acquisition (in millions):


Property, plant and equipment	$	61.8
Goodwill		267.4
Other intangible assets		275.9
Deferred income taxes		(70.9	)
Net working capital and other*		39.4

Total purchase price	$	573.6

*	Includes $33.9 million in accounts receivable, whose fair value, contractual cash flows and expected cash flows are approximately equal.

The amount allocated to goodwill is reflective of the benefits the Company expects to realize from the acquisitions as follows: Teseq manufactures a broad line of conducted and radiated EMC compliance testing systems and radio-frequency amplifiers for a wide range of industries, including aerospace, automotive, consumer electronics, medical equipment, telecommunications and transportation. Teseq provides the Company with opportunities for accelerating product innovation and market expansion worldwide. VTI broadens the Company’s capabilities in the high end test and measurement market and provides additional technology differentiation. Luphos’ technology expands the Company’s metrology capabilities across a broader range of surface finishes and profiles. Zygo’s position in non-contact optical metrology complements the Company’s position in contact metrology and enables the Company to offer its customers a full range of metrology solutions. Amptek broadens the Company’s position in the process and analytical instrumentations markets. The Company expects approximately $6.3 million of the goodwill recorded in connection with the 2014 acquisitions will be tax deductible in future years.

The Company is in the process of finalizing the measurement of certain tangible and intangible assets and liabilities for its 2014 acquisitions, as well as accounting for income taxes associated with its 2014 acquisitions and the 2013 acquisition of Creaform, Inc.

At September 30, 2014, purchase price allocated to other intangible assets of $275.9 million consists of $52.7 million of indefinite-lived intangible trademarks and trade names, which are not subject to amortization. The remaining $223.2 million of other intangible assets consist of $175.8 million of customer relationships, which are being amortized over a period of five to 20 years, $0.8 million of trade names, which are being amortized over a period of ten years and $46.6 million of purchased technology, which is being amortized over a period of 15 to 18 years. Amortization expense for each of the next five years for the 2014 acquisitions listed above is expected to approximate $12.0 million per year.

The 2014 acquisitions noted above had an immaterial impact on reported net sales, net income and diluted earnings per share for the three and nine months ended September 30, 2014. Had the 2014 acquisitions been made at the beginning of 2014 or 2013, unaudited pro forma net sales, net income and diluted earnings per share for the three and nine months ended September 30, 2014 and 2013, respectively, would not have been materially different than the amounts reported. Pro forma results are not necessarily indicative of the results that would have occurred if the acquisitions had been completed at the beginning of 2014 or 2013.

AMETEK, Inc.

Notes to Consolidated Financial Statements

September 30, 2014

(Unaudited)

9.	Goodwill

The changes in the carrying amounts of goodwill by segment were as follows:


	Electronic Instruments Group			Electro- mechanical Group			Total
				(In millions)
Balance at December 31, 2013	$	1,410.8		$	997.6		$	2,408.4
Goodwill acquired		267.4			—			267.4
Purchase price allocation adjustments and other		(1.2	)		—			(1.2	)
Foreign currency translation adjustments		(22.2	)		(19.2	)		(41.4	)

Balance at September 30, 2014	$	1,654.8		$	978.4		$	2,633.2

10.

Income Taxes

At September 30, 2014, the Company had gross unrecognized tax benefits of $67.8 million, of which $61.2 million, if recognized, would impact the effective tax rate.

The following is a reconciliation of the liability for uncertain tax positions (in millions):


Balance at December 31, 2013	$	55.2
Additions for tax positions		23.5
Reductions for tax positions		(10.9	)

Balance at September 30, 2014	$	67.8

Additions for tax positions were primarily driven by acquisitions. Reductions for tax positions were primarily driven by the final closure of a tax year related to an acquired entity.

The Company recognizes interest and penalties accrued related to uncertain tax positions in income tax expense. The amounts recognized in income tax expense for interest and penalties during the three and nine months ended September 30, 2014 and 2013 were not significant.

11.

Debt

In the third quarter of 2014, the Company completed a private placement agreement to sell $700 million in senior notes to a group of institutional investors. There are three funding dates for the senior notes. The first funding occurred in September 2014 for $500 million, consisting of $300 million in aggregate principal amount of 3.73% senior notes due September 2024, $100 million in aggregate principal amount of 3.83% senior notes due September 2026 and $100 million in aggregate principal amount of 3.98% senior notes due September 2029. The second funding date will be in June 2015 for $50 million in aggregate principal amount of 3.91% senior notes due June 2025. The third funding date will be in August 2015 for $150 million, consisting of $100 million in aggregate principal amount of 3.96% senior notes due August 2025 and $50 million in aggregate principal amount of 4.45% senior notes due August 2035. The senior notes will carry a weighted average interest rate of 3.88%. The senior notes are subject to certain customary covenants, including financial covenants that, among other things, require the Company to maintain certain debt to EBITDA (earnings before interest, income taxes, depreciation and amortization) and interest coverage ratios. The proceeds from the first funding of the senior notes were used to pay down all domestic borrowings under the Company’s revolving credit facility.

AMETEK, Inc.

Notes to Consolidated Financial Statements

September 30, 2014

(Unaudited)

12.

Share-Based Compensation

The fair value of each stock option grant is estimated on the date of grant using a Black-Scholes-Merton option pricing model. The following weighted average assumptions were used in the Black-Scholes-Merton model to estimate the fair values of stock options granted during the periods indicated:


	Nine Months Ended September 30, 2014			Year Ended December 31, 2013
Expected volatility		23.9	%		28.1	%
Expected term (years)		5.0			5.0
Risk-free interest rate		1.63	%		0.75	%
Expected dividend yield		0.45	%		0.57	%
Black-Scholes-Merton fair value per stock option granted	$	12.21		$	10.17

Expected volatility is based on the historical volatility of the Company’s stock. The Company used historical exercise data to estimate the stock options’ expected term, which represents the period of time that the stock options granted are expected to be outstanding. Management anticipates that the future stock option holding periods will be similar to the historical stock option holding periods. The risk-free interest rate for periods within the contractual life of the stock option is based on the U.S. Treasury yield curve at the time of grant. Compensation expense recognized for all share-based awards is net of estimated forfeitures. The Company’s estimated forfeiture rates are based on its historical experience.

Total share-based compensation expense was as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
	(In thousands)
Stock option expense	$	1,887		$	2,946		$	7,227		$	8,005
Restricted stock expense		2,860			2,072			7,828			8,521

Total pre-tax expense		4,747			5,018			15,055			16,526
Related tax benefit		(1,423	)		(1,657	)		(4,710	)		(5,390	)

Reduction of net income	$	3,324		$	3,361		$	10,345		$	11,136

Pre-tax share-based compensation expense is included in the consolidated statement of income in either Cost of sales, excluding depreciation or Selling, general and administrative expenses, depending on where the recipient’s cash compensation is reported.

The following is a summary of the Company’s stock option activity and related information:

Shares

Weighted
Average
Exercise
Price

Weighted
Average
Remaining
Contractual
Life

Aggregate
Intrinsic
Value

(In thousands)

(Years)

(In millions)

Outstanding at December 31, 2013

6,394

27.13

Granted

976

53.13

Exercised

(664

)

22.08

Forfeited

(130

)

39.19

Outstanding at September 30, 2014

6,576

31.26

3.8

127.4

Exercisable at September 30, 2014

4,008

23.45

2.7

107.3

AMETEK, Inc.

Notes to Consolidated Financial Statements

September 30, 2014

(Unaudited)

The aggregate intrinsic value of stock options exercised during the nine months ended September 30, 2014 was $20.3 million. The total fair value of stock options vested during the nine months ended September 30, 2014 was $8.9 million. As of September 30, 2014, there was approximately $18.2 million of expected future pre-tax compensation expense related to the 2.6 million nonvested stock options outstanding, which is expected to be recognized over a weighted average period of less than two years.

The following is a summary of the Company’s nonvested restricted stock activity and related information:


	Shares			Weighted Average Grant Date Fair Value
	(In thousands)
Nonvested restricted stock outstanding at December 31, 2013		987		$	36.12
Granted		316			52.80
Vested		(102	)		34.04
Forfeited		(71	)		36.71

Nonvested restricted stock outstanding at September 30, 2014		1,130		$	41.11

The total fair value of restricted stock vested during the nine months ended September 30, 2014 was $3.5 million. As of September 30, 2014, there was approximately $29.3 million of expected future pre-tax compensation expense related to the 1.1 million nonvested restricted shares outstanding, which is expected to be recognized over a weighted average period of approximately two years.

13.

Retirement and Pension Plans

The components of net periodic pension benefit expense (income) were as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
	(In thousands)
Defined benefit plans:
Service cost	$	1,630		$	1,462		$	4,910		$	4,724
Interest cost		7,237			6,393			21,732			19,441
Expected return on plan assets		(12,582	)		(11,219	)		(37,749	)		(33,677	)
Amortization of net actuarial loss and other		1,030			3,176			3,092			9,998

Pension (income) expense		(2,685	)		(188	)		(8,015	)		486


Other plans:
Defined contribution plans		5,163			4,280			15,888			13,842
Foreign plans and other		1,397			1,282			4,169			3,837

Total other plans		6,560			5,562			20,057			17,679

Total net pension expense	$	3,875		$	5,374		$	12,042		$	18,165

For the nine months ended September 30, 2014 and 2013, contributions to the Company’s defined benefit pension plans were not significant.

AMETEK, Inc.

Notes to Consolidated Financial Statements

September 30, 2014

(Unaudited)

14.

Product Warranties

The Company provides limited warranties in connection with the sale of its products. The warranty periods for products sold vary widely among the Company’s operations, but for the most part do not exceed one year. The Company calculates its warranty expense provision based on past warranty experience and adjustments are made periodically to reflect actual warranty expenses.

Changes in the accrued product warranty obligation were as follows:


	Nine Months Ended September 30,
	2014			2013
	(In thousands)
Balance at the beginning of the period	$	28,036		$	27,792
Accruals for warranties issued during the period		7,252			5,064
Settlements made during the period		(9,291	)		(7,238	)
Warranty accruals related to acquired businesses and other during the period		3,268			255

Balance at the end of the period	$	29,265		$	25,873

Certain settlements of warranties made during the period were for specific nonrecurring warranty obligations. Product warranty obligations are reported as current liabilities in the consolidated balance sheet.

15.

Contingencies

Asbestos Litigation

The Company (including its subsidiaries) has been named as a defendant, along with many other companies, in a number of asbestos-related lawsuits. Many of these lawsuits either relate to businesses which were acquired by the Company and do not involve products which were manufactured or sold by the Company or relate to previously owned businesses of the Company which are under new ownership. In connection with many of these lawsuits, the sellers or new owners of such businesses, as the case may be, have agreed to indemnify the Company against these claims (the “Indemnified Claims”). The Indemnified Claims have been tendered to, and are being defended by, such sellers and new owners. These sellers and new owners have met their obligations, in all respects, and the Company does not have any reason to believe such parties would fail to fulfill their obligations in the future; however, one of these companies filed for bankruptcy liquidation in 2007. To date, no judgments have been rendered against the Company as a result of any asbestos-related lawsuit. The Company believes it has strong defenses to the claims being asserted and intends to continue to vigorously defend itself in these matters.

Environmental Matters

Certain historic processes in the manufacture of products have resulted in environmentally hazardous waste by-products as defined by federal and state laws and regulations. At September 30, 2014, the Company is named a Potentially Responsible Party (“PRP”) at 16 non-AMETEK-owned former waste disposal or treatment sites (the “non-owned” sites). The Company is identified as a “de minimis” party in 14 of these sites based on the low volume of waste attributed to the Company relative to the amounts attributed to other named PRPs. In ten of these sites, the Company has reached a tentative agreement on the cost of the de minimis settlement to satisfy its obligation and is awaiting executed agreements. The tentatively agreed-to settlement amounts are fully reserved. In the other four sites, the Company is continuing to investigate the accuracy of the alleged volume attributed to the Company as estimated by the parties primarily responsible for remedial activity at the sites to establish an appropriate settlement amount. At the two remaining sites where the Company is a non-de minimis PRP, the Company is participating in the investigation and/or related required remediation as part of a PRP Group or investigating the PRP claim and reserves have been established sufficient to satisfy the Company’s expected obligations. The Company historically has resolved these issues within established reserve levels and reasonably expects this result will continue. In addition to these non-owned sites, the Company has an ongoing practice of providing reserves for probable remediation activities at certain of its current or previously owned manufacturing locations (the “owned” sites). For claims and proceedings against the Company with respect to other environmental matters, reserves are established once the

AMETEK, Inc.

Notes to Consolidated Financial Statements

September 30, 2014

(Unaudited)

Company has determined that a loss is probable and estimable. This estimate is refined as the Company moves through the various stages of investigation, risk assessment, feasibility study and corrective action processes. In certain instances, the Company has developed a range of estimates for such costs and has recorded a liability based on the low end of the range. It is reasonably possible that the actual cost of remediation of the individual sites could vary from the current estimates and the amounts accrued in the consolidated financial statements; however, the amounts of such variances are not expected to result in a material change to the consolidated financial statements. In estimating the Company’s liability for remediation, the Company also considers the likely proportionate share of the anticipated remediation expense and the ability of the other PRPs to fulfill their obligations.

Total environmental reserves at September 30, 2014 and December 31, 2013 were $25.2 million and $21.9 million, respectively, for both non-owned and owned sites. For the nine months ended September 30, 2014, the Company recorded $5.0 million in reserves, primarily related to a 2014 business acquisition. These reserves relate to the estimated costs to remediate known environmental issues at sites associated with the acquired business. Additionally, the Company spent $1.7 million on environmental matters for the nine months ended September 30, 2014. The Company’s reserves for environmental liabilities at September 30, 2014 and December 31, 2013 include reserves of $12.7 million and $13.3 million, respectively, for an owned site acquired in connection with the 2005 acquisition of HCC Industries (“HCC”). The Company is the designated performing party for the performance of remedial activities for one of several operating units making up a Superfund site in the San Gabriel Valley of California. The Company has obtained indemnifications and other financial assurances from the former owners of HCC related to the costs of the required remedial activities. At September 30, 2014, the Company had $11.5 million in receivables related to HCC for probable recoveries from third-party escrow funds and other committed third-party funds to support the required remediation. Also, the Company is indemnified by HCC’s former owners for approximately $19.0 million of additional costs.

The Company has agreements with other former owners of certain of its acquired businesses, as well as new owners of previously owned businesses. Under certain of the agreements, the former or new owners retained, or assumed and agreed to indemnify the Company against, certain environmental and other liabilities under certain circumstances. The Company and some of these other parties also carry insurance coverage for some environmental matters. To date, these parties have met their obligations in all material respects.

The Company believes it has established reserves which are sufficient to perform all known responsibilities under existing claims and consent orders. The Company has no reason to believe that other third parties would fail to perform their obligations in the future. In the opinion of management, based upon presently available information and past experience related to such matters, an adequate provision for probable costs has been made and the ultimate cost resulting from these actions is not expected to materially affect the consolidated results of operations, financial position or cash flows of the Company.

16.

Reportable Segments

The Company has two reportable segments, Electronic Instruments Group (“EIG”) and Electromechanical Group (“EMG”). The Company identifies its operating segments for segment reporting purposes primarily on the basis of product type, production processes, distribution methods and management organizations.

At September 30, 2014, there were no significant changes in identifiable assets of reportable segments from the amounts disclosed at December 31, 2013, other than those described in the acquisitions footnote (Note 8), nor were there any significant changes in the basis of segmentation or in the measurement of segment operating results. Operating information relating to the Company’s reportable segments for the three and nine months ended September 30, 2014 and 2013 can be found in the table included in Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report on Form 10-Q.

17.

Subsequent Event

On November 5, 2014, the Company’s Board of Directors approved an increase of $200 million in the authorization for repurchase of Company’s common stock.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

The following table sets forth net sales and income by reportable segment and on a consolidated basis:


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2014			2013			2014			2013
	(In thousands)
Net sales(1):
Electronic Instruments	$	631,569		$	499,847		$	1,777,252		$	1,467,687
Electromechanical		400,242			390,159			1,220,569			1,183,981

Consolidated net sales	$	1,031,811		$	890,006		$	2,997,821		$	2,651,668

Operating income and income before income taxes:
Segment operating income(2):
Electronic Instruments	$	148,313		$	138,934		$	450,131		$	400,255
Electromechanical		82,001			77,480			258,014			238,874

Total segment operating income		230,314			216,414			708,145			639,129
Corporate administrative and other expenses		(12,171	)		(11,728	)		(36,643	)		(34,595	)

Consolidated operating income		218,143			204,686			671,502			604,534
Interest and other expenses, net		(28,182	)		(24,534	)		(74,204	)		(66,202	)

Consolidated income before income taxes	$	189,961		$	180,152		$	597,298		$	538,332

(1)	After elimination of intra- and intersegment sales, which are not significant in amount.

(2)	Segment operating income represents net sales less all direct costs and expenses (including certain administrative and other expenses) applicable to each segment, but does not include interest expense.

Results of operations for the third quarter of 2014 compared with the third quarter of 2013

For the quarter ended September 30, 2014, the Company established records for sales and posted strong operating income, operating income margins, net income, diluted earnings per share and operating cash flow. The Company achieved these results from strong internal sales growth in both the Electronic Instruments Group (“EIG”) and Electromechanical Group (“EMG”), contributions from the acquisitions of Amptek, Inc. in August 2014, Zygo Corporation in June 2014, Luphos GmbH in May 2014, VTI Instruments (“VTI”) in February 2014, Teseq Group in January 2014, Powervar, Inc. in December 2013 and Creaform, Inc. in October 2013, as well as our Operational Excellence initiatives. The full year impact of the 2014 and 2013 acquisitions and our continued focus on and implementation of Operational Excellence initiatives are expected to have a positive impact on the remainder of our 2014 results.

Net sales for the third quarter of 2014 were $1,031.8 million, an increase of $141.8 million or 15.9%, compared with net sales of $890.0 million for the third quarter of 2013. The increase in net sales for the third quarter of 2014 was attributable to higher order rates which drove internal sales growth of approximately 3%, acquisitions added 12% and foreign currency translation was the remainder of the increase.

Total international sales for the third quarter of 2014 were $547.9 million or 53.1% of net sales, an increase of $65.7 million or 13.6%, compared with international sales of $482.2 million or 54.2% of net sales for the third quarter of 2013. The $65.7 million increase in international sales resulted from higher sales growth and the acquisitions mentioned above, and includes the effect of foreign currency translation. Both reportable segments of the Company maintain strong international sales presences in Europe and Asia.

New orders for the third quarter of 2014 were $996.0 million, an increase of $58.9 million or 6.3%, compared with $937.1 million for the third quarter of 2013. The increase in orders for the third quarter of 2014 was due to internal order growth of approximately 3% primarily driven by EIG, acquisitions added 8% and foreign currency translation was an unfavorable 5% effect. As a result, the Company’s backlog of unfilled orders at September 30, 2014 was $1,215.2 million, an increase of $75.2 million or 6.6%, compared with $1,140.0 million at December 31, 2013.

Results of Operations (continued)

Segment operating income for the third quarter of 2014 was $230.3 million, an increase of $13.9 million or 6.4%, compared with segment operating income of $216.4 million for the third quarter of 2013. The increase in segment operating income resulted primarily from the acquisitions and internal sales growth mentioned above, as well as the benefits of the Company’s Operational Excellence initiatives, partially offset by a $9.1 million severance charge and $4.5 million fair value inventory adjustment, both related to the Zygo acquisition (“the Zygo integration costs”). Segment operating income, as a percentage of net sales, decreased to 22.3% for the third quarter of 2014, compared with 24.3% for the third quarter of 2013. The decrease in segment operating margins resulted primarily from the Zygo integration costs noted above, partially offset by the benefits of the Company’s Operational Excellence initiatives. Also, the third quarter of 2013 segment operating income and segment operating margins included an $11.6 million gain on the sale of a facility that was partially offset by incremental growth investments in the businesses.

Selling, general and administrative (“SG&A”) expenses for the third quarter of 2014 were $119.2 million, an increase of $20.2 million or 20.4%, compared with $99.0 million for the third quarter of 2013. As a percentage of net sales, SG&A expenses were 11.6% for the third quarter of 2014, compared with 11.1% for the third quarter of 2013. Selling expenses increased $19.8 million or 22.7% for the third quarter of 2014 primarily driven by the increase in net sales noted above. Selling expenses, as a percentage of net sales, increased to 10.4% for the third quarter of 2014, compared with 9.8% for the third quarter of 2013. Base business selling expenses increased approximately 4% for the third quarter of 2014, which was in line with internal sales growth.

Corporate administrative expenses for the third quarter of 2014 were $12.1 million, an increase of $0.5 million or 4.3%, compared with $11.6 million for the third quarter of 2013. As a percentage of net sales, corporate administrative expenses were 1.2% for the third quarter of 2014, compared with 1.3% for the third quarter of 2013. The increase in corporate administrative expenses was primarily driven by higher compensation-related expenses.

Consolidated operating income was $218.1 million or 21.1% of net sales for the third quarter of 2014, an increase of $13.4 million or 6.5%, compared with $204.7 million or 23.0% of net sales for the third quarter of 2013.

Interest expense was $19.5 million for the third quarter of 2014, an increase of $1.3 million or 7.1%, compared with $18.2 million for the third quarter of 2013. The increase was due to higher borrowings under revolving credit facilities to help fund the recent acquisitions, noted above.

Other expenses, net were $8.6 million for the third quarter of 2014, an increase of $2.3 million, compared with $6.3 million for the third quarter of 2013. The increase was primarily driven by a $5.5 million reversal of an insurance policy receivable related to a specific uncertain tax position liability of an acquired entity discussed further below, partially offset by lower acquisition-related expenses.

The effective tax rate for the third quarter of 2014 was 25.3%, compared with 29.0% for the third quarter of 2013. During the third quarter of 2014, due to the final closure of a tax year, the Company released $12.9 million of uncertain tax position liabilities related to an acquired entity. Partially offsetting this benefit during the third quarter of 2014 were tax costs related to certain international tax planning initiatives and the non-deductibility of an insurance policy receivable reversal and a portion of the third quarter Zygo severance charge, both discussed above.

Net income for the third quarter of 2014 was $141.8 million, an increase of $13.9 million or 10.9%, compared with $127.9 million for the third quarter of 2013. Diluted earnings per share for the third quarter of 2014 were $0.57, an increase of $0.05 or 9.6%, compared with $0.52 per diluted share for the third quarter of 2013.

Results of Operations (continued)

Segment Results

EIG’s net sales totaled $631.6 million for the third quarter of 2014, an increase of $131.8 million or 26.4%, compared with $499.8 million for the third quarter of 2013. The net sales increase included internal sales growth of approximately 4%. The acquisitions of Amptek, Zygo, Luphos, VTI, Teseq, Powervar and Creaform accounted for the remainder of the net sales increase. Foreign currency translation was flat quarter over quarter.

EIG’s operating income was $148.3 million for the third quarter of 2014, an increase of $9.4 million or 6.8%, compared with $138.9 million for the third quarter of 2013. EIG’s increase in operating income was primarily due to higher sales mentioned above, partially offset by the Zygo integration costs noted above. EIG’s operating margins were 23.5% of net sales for the third quarter of 2014, compared with 27.8% of net sales for the third quarter of 2013. EIG’s decrease in operating margins resulted primarily from the Zygo integration costs noted above. Also, EIG’s third quarter of 2013 operating margins included an $11.6 million gain on the sale of a facility that was partially offset by incremental growth investments in the businesses.

EMG’s net sales totaled $400.2 million for the third quarter of 2014, an increase of $10.0 million or 2.6%, compared with $390.2 million for the third quarter of 2013. The net sales increase included internal sales growth of approximately 2%, with foreign currency translation driving the remainder of the increase.

EMG’s operating income was $82.0 million for the third quarter of 2014, an increase of $4.5 million or 5.8%, compared with $77.5 million for the third quarter of 2013. EMG’s operating margins were 20.5% of net sales for the third quarter of 2014, compared with 19.9% of net sales for the third quarter of 2013. EMG’s increase in operating income and operating margins was primarily due to the benefit of the Group’s Operational Excellence initiatives on higher sales.

Results of Operations (continued)

Results of operations for the first nine months of 2014 compared with the first nine months of 2013

Net sales for the first nine months of 2014 were $2,997.8 million, an increase of $346.1 million or 13.1%, compared with net sales of $2,651.7 million for the first nine months of 2013. The increase in net sales for the first nine months of 2014 was attributable to higher order rates which drove internal sales growth of approximately 3%, acquisitions added 9% and foreign currency translation was the remainder of the increase.

Total international sales for the first nine months of 2014 were $1,646.5 million or 54.9% of net sales, an increase of $205.1 million or 14.2%, compared with international sales of $1,441.4 million or 54.4% of net sales for the first nine months of 2013. The $205.1 million increase in international sales resulted from higher sales growth and the acquisitions mentioned above, and includes the effect of foreign currency translation. Both reportable segments of the Company maintain strong international sales presences in Europe and Asia.

New orders for the first nine months of 2014 were $3,073.0 million, an increase of $363.0 million or 13.4%, compared with $2,710.0 million for the first nine months of 2013. The increase in orders for the first nine months of 2014 was due to internal order growth of approximately 2% primarily driven by EIG and acquisitions added 11%. Foreign currency translation was flat period over period.

Segment operating income for the first nine months of 2014 was $708.1 million, an increase of $69.0 million or 10.8%, compared with segment operating income of $639.1 million for the first nine months of 2013. The increase in segment operating income resulted primarily from the acquisitions and internal sales growth mentioned above, as well as the benefits of the Company’s Operational Excellence initiatives, partially offset by the Zygo integration costs noted above. Segment operating income, as a percentage of net sales, decreased to 23.6% for the first nine months of 2014, compared with 24.1% for the first nine months of 2013. The decrease in segment operating margins resulted primarily from the Zygo integration costs noted above, partially offset by the benefits of the Company’s Operational Excellence initiatives.

SG&A expenses for the first nine months of 2014 were $345.1 million, an increase of $53.6 million or 18.4%, compared with $291.5 million for the first nine months of 2013. As a percentage of net sales, SG&A expenses were 11.5% for the first nine months of 2014, compared with 11.0% for the first nine months of 2013. Selling expenses increased $51.8 million or 20.1% for the first nine months of 2014 primarily driven by the increase in net sales noted above. Selling expenses, as a percentage of net sales, increased to 10.3% for the first nine months of 2014, compared with 9.7% for the first nine months of 2013. Base business selling expenses increased approximately 5% for the first nine months of 2014, which was in line with internal sales growth (net of foreign currency translation).

Corporate administrative expenses for the first nine months of 2014 were $36.2 million, an increase of $1.9 million or 5.5%, compared with $34.3 million for the first nine months of 2013. As a percentage of net sales, corporate administrative expenses were 1.2% for the first nine months of 2014, compared with 1.3% for the first nine months of 2013. The increase in corporate administrative expenses was primarily driven by higher compensation-related expenses.

Consolidated operating income was $671.5 million or 22.4% of net sales for the first nine months of 2014, an increase of $67.0 million or 11.1%, compared with $604.5 million or 22.8% of net sales for the first nine months of 2013.

Interest expense was $57.4 million for the first nine months of 2014, an increase of $2.7 million or 4.9%, compared with $54.7 million for the first nine months of 2013. The increase was due to higher borrowings under revolving credit facilities to help fund the recent acquisitions.

Other expenses, net were $16.8 million for the first nine months of 2014, an increase of $5.3 million, compared with $11.5 million for the first nine months of 2013. The increase was driven by a $5.5 million reversal of an insurance policy receivable related to a specific uncertain tax position liability of an acquired entity.

Results of Operations (continued)

The effective tax rate for the first nine months of 2014 was 27.6%, compared with 29.2% for the first nine months of 2013. The first nine months of 2014 effective tax rate reflects a release of $12.9 million of uncertain tax position liabilities related to an acquired entity due to the final closure of a tax year and a higher proportion of foreign earnings, which are taxed at lower rates. The first nine months of 2013 effective tax rate reflected the retroactive extension of the U.S. research and development tax credit. This credit was not extended into 2014.

Net income for the first nine months of 2014 was $432.5 million, an increase of $51.2 million or 13.4%, compared with $381.3 million for the first nine months of 2013. Diluted earnings per share for the first nine months of 2014 were $1.75, an increase of $0.20 or 12.9%, compared with $1.55 per diluted share for the first nine months of 2013.

Segment Results

EIG’s net sales totaled $1,777.3 million for the first nine months of 2014, an increase of $309.6 million or 21.1%, compared with $1,467.7 million for the first nine months of 2013. The net sales increase included internal sales growth of approximately 4%, the acquisitions of Amptek, Zygo, Luphos, VTI, Teseq, Powervar and Creaform added 16% and foreign currency translation was the remainder of the increase.

EIG’s operating income was $450.1 million for the first nine months of 2014, an increase of $49.8 million or 12.4%, compared with $400.3 million for the first nine months of 2013. EIG’s increase in operating income was primarily due to higher sales mentioned above, partially offset by the Zygo integration costs noted above. EIG’s operating margins were 25.3% of net sales for the first nine months of 2014, compared with 27.3% of net sales for the first nine months of 2013. EIG’s decrease in operating margins resulted primarily from the Zygo integration costs noted above, partially offset by the benefits of the Group’s Operational Excellence initiatives.

EMG’s net sales totaled $1,220.6 million for the first nine months of 2014, an increase of $36.6 million or 3.1%, compared with $1,184.0 million for the first nine months of 2013. The net sales increase included internal sales growth of approximately 2% and foreign currency translation was a favorable 1% effect.

EMG’s operating income was $258.0 million for the first nine months of 2014, an increase of $19.1 million or 8.0%, compared with $238.9 million for the first nine months of 2013. EMG’s operating margins were 21.1% of net sales for the first nine months of 2014, compared with 20.2% of net sales for the first nine months of 2013. EMG’s increase in operating income and operating margins was primarily due to the benefit of the Group’s Operational Excellence initiatives on higher sales.

Financial Condition

Liquidity and Capital Resources

Cash provided by operating activities totaled $512.7 million for the first nine months of 2014, an increase of $61.6 million or 13.7%, compared with $451.1 million for the first nine months of 2013. The increase in cash provided by operating activities was primarily due to the $51.2 million increase in net income, the $15.9 million increase in depreciation and amortization and the $10.7 million decrease in gain on sale of facilities, partially offset by higher overall operating working capital levels necessary to grow the Company’s businesses. Free cash flow (cash flow provided by operating activities less capital expenditures) was $465.4 million for the first nine months of 2014, compared with $414.0 million for the first nine months of 2013. EBITDA (earnings before interest, income taxes, depreciation and amortization) was $757.0 million for the first nine months of 2014, compared with $679.5 million for the first nine months of 2013. Free cash flow and EBITDA are presented because the Company is aware that they are measures used by third parties in evaluating the Company.

Cash used for investing activities totaled $617.6 million for the first nine months of 2014, compared with $183.5 million for the first nine months of 2013. For the first nine months of 2014, the Company paid $573.6 million, net of cash acquired, to acquire Teseq in January 2014, VTI in February 2014, Luphos in May 2014, Zygo in June 2014 and Amptek in August 2014. For the first nine months of 2013, the Company paid $164.0 million, net of cash acquired, to acquire CSI in August 2013. For the first nine months of 2014 and 2013, the Company received $1.0 million and $12.8 million for the sale of a facility, respectively. Additions to property, plant and equipment totaled $47.3 million for the first nine months of 2014, compared with $37.1 million for the first nine months of 2013.

Cash provided by financing activities totaled $193.9 million for the first nine months of 2014, compared with $174.7 million of cash used for financing activities for the first nine months of 2013. The change in financing cash flow was primarily the result of a net total borrowings increase of $236.5 million for the first nine months of 2014 to partially fund the 2014 acquisitions, compared with a net total borrowings decrease of $154.8 million for the first nine months of 2013. Short-term borrowings decreased $262.9 million for the first nine months of 2014, compared with a decrease of $155.2 million for the first nine months of 2013. Long-term borrowings increased $499.5 million for the first nine months of 2014, compared to an increase of $0.4 million for the first nine months of 2013.

For the first nine months of 2014, the Company repurchased approximately 36,000 shares of the Company’s common stock for $1.9 million, compared with $8.5 million used for repurchases of approximately 206,000 shares of the Company’s common stock for the first nine months of 2013. At September 30, 2014, $90.5 million was available under the Company’s Board of Directors $100 million authorization for repurchase of its common stock announced in November 2011.

On November 5, 2014, the Company’s Board of Directors approved an increase of $200 million in the authorization for repurchase of Company’s common stock.

Financial Condition (continued)

Cash dividends paid for the first nine months of 2014 were $58.7 million, compared with $43.8 million of cash dividends paid for the first nine months of 2013. On May 8, 2014, the Company’s Board of Directors approved a 50% increase in the quarterly cash dividend rate on the Company’s common stock to $0.09 per common share from $0.06 per common share.

At September 30, 2014, total debt outstanding was $1,636.7 million, compared with $1,415.1 million at December 31, 2013, with no significant maturities until the third quarter of 2015 of $153.1 million. The debt-to-capital ratio was 32.1% at September 30, 2014, compared with 31.1% at December 31, 2013. The net debt-to-capital ratio (total debt less cash and cash equivalents divided by the sum of net debt and stockholders’ equity) was 26.8% at September 30, 2014, compared with 26.3% at December 31, 2013. The net debt-to-capital ratio is presented because the Company is aware that this measure is used by third parties in evaluating the Company.

As a result of all of the Company’s cash flow activities for the first nine months of 2014, cash and cash equivalents at September 30, 2014 totaled $369.6 million, compared with $295.2 million at December 31, 2013. At September 30, 2014, the Company had $307.1 million in cash outside the United States, compared with $291.4 million at December 31, 2013. The Company utilizes this cash to operate its international operations, as well as acquire international businesses. In January 2014, the Company acquired a Swiss company, Teseq Group, for approximately 78 million Swiss francs (approximately $87 million). The Company is in compliance with all covenants, including financial covenants, for all of its debt agreements. The Company believes it has sufficient cash-generating capabilities from domestic and unrestricted foreign sources, available credit facilities and access to long-term capital funds to enable it to meet its operating needs and contractual obligations in the foreseeable future.

Contractual Obligations

As mentioned above, during the third quarter of 2014, the Company completed a private placement agreement to sell $700 million in senior notes (the first funding occurred in September 2014, the second funding date will be in June 2015 and the third funding date will be in August 2015). As a result of a net increase in long-term borrowings, the Company’s obligation for interest on long-term fixed-rate debt will increase compared to the obligation noted at December 31, 2013. There have been no other material changes to the contractual obligations table presented in our Annual Report on Form 10-K for the year ended December 31, 2013.

Forward-Looking Information

Information contained in this discussion, other than historical information, is considered “forward-looking statements” and is subject to various factors and uncertainties that may cause actual results to differ significantly from expectations. These factors and uncertainties include general economic conditions affecting the industries the Company serves; changes in the competitive environment or the effects of competition in the Company’s markets; risks associated with international sales and operations; the Company’s ability to consummate and successfully integrate future acquisitions; the Company’s ability to successfully develop new products, open new facilities or transfer product lines; the price and availability of raw materials; compliance with government regulations, including environmental regulations; and the ability to maintain adequate liquidity and financing sources. A detailed discussion of these and other factors that may affect the Company’s future results is contained in AMETEK’s filings with the Securities and Exchange Commission, including its most recent reports on Form 10-K, 10-Q and 8-K. AMETEK disclaims any intention or obligation to update or revise any forward-looking statements, unless required by the securities laws to do so.

Item 4. Controls and Procedures

The Company maintains a system of disclosure controls and procedures that is designed to provide reasonable assurance that information, which is required to be disclosed, is accumulated and communicated to management in a timely manner. Under the supervision and with the participation of our management, including the Company’s principal executive officer and principal financial officer, we have evaluated the effectiveness of our system of disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of September 30, 2014. Based on that evaluation, the Company’s principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures are effective at the reasonable assurance level.

Such evaluation did not identify any change in the Company’s internal control over financial reporting during the quarter ended September 30, 2014 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table reflects purchases of AMETEK, Inc. common stock by the Company during the three months ended September 30, 2014:


Period	Total Number of Shares Purchased(1)		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan(2)		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan
July 1, 2014 to July 31, 2014		1,321	$	53.14		1,321	$	90,611,065
August 1, 2014 to August 31, 2014		1,073		53.17		1,073		90,554,014
September 1, 2014 to September 30, 2014		412		53.08		412		90,532,145

Total		2,806		53.14		2,806

(1)	Represents shares surrendered to the Company to satisfy tax withholding obligations in connection with employees’ share-based compensation awards.

(2)

Consists of the number of shares purchased pursuant to the Company’s Board of Directors $100 million authorization for the repurchase of its common stock announced in November 2011. Such purchases may be affected from time to time in the open market or in private transactions, subject to market conditions and at management’s discretion.

Item 6. Exhibits


Exhibit Number		Description
10.1		Amendment No. 1 to the Note Purchase Agreement, dated as of August 30, 2007.

10.2		Amendment No. 1 to the Note Purchase Agreement, dated as of September 17, 2008.

31.1		Certification of Chief Executive Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Chief Executive Officer, Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Chief Financial Officer, Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		XBRL Instance Document.

101.SCH		XBRL Taxonomy Extension Schema Document.

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB		XBRL Taxonomy Extension Label Linkbase Document.

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document.

SIGNATURES

Pursuant to the requirements 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.
(Registrant)

By:		/s/ William J. Burke
		William J. Burke
		Senior Vice President - Comptroller & Treasurer
		(Principal Accounting Officer)

November 6, 2014

Exhibit 10.1

AMENDMENT NO. 1 TO NOTE AGREEMENT

THIS AMENDMENT NO. 1 TO NOTE AGREEMENT (this “Amendment”) is entered into as of September 30, 2014 by and between AMETEK, INC., a Delaware corporation (the “Company”), and the undersigned holders of Notes (as hereinafter defined).

Recitals

A. The Company entered into that certain Note Purchase Agreement dated as of August 30, 2007 (as in effect immediately prior to the effectiveness of this Amendment, the “Existing Note Agreement”), with the several Purchasers listed in Schedule A attached thereto, pursuant to which the Company issued and sold to such Purchasers (i) $270,000,000 in aggregate principal amount of the Company’s 6.20% Series A Senior Notes due December 18, 2017 (the “Series A Notes”), (ii) $100,000,000 in aggregate principal amount of the Company’s 6.30% Series B Senior Notes due December 18, 2019 (the “Series B Notes”) and (iii) $80,000,000 in aggregate principal amount of the Company’s 6.35% Series C Senior Notes due July 16, 2018 (the “Series C Notes” and together with the Series A Notes, the Series B Notes and any such promissory notes that may have been issued in substitution or exchange therefor prior to the date hereof, the “Notes”).

B. The Company has requested that the holders of Notes amend the Existing Note Agreement in certain respects, as set forth in this Amendment (as so amended, the “Note Agreement”), and the undersigned holders of Notes, subject to the terms and conditions set forth herein, are willing to agree to such amendments.

NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. Definitions. Capitalized terms used and not otherwise defined herein shall have the respective meanings ascribed to them in the Note Agreement.

2. Amendments to the Note Agreement. The Existing Note Agreement is hereby amended as follows:

(a) Schedule B Defined Terms. The definition of “Indebtedness” appearing in Schedule B to the Existing Note Agreement is hereby amended and restated in its entirety to read as follows:

““Indebtedness” means, as to any Person, at a particular time without duplication,

(a) its liabilities for borrowed money and its redemption obligations in respect of mandatorily redeemable Preferred Stock;

(b) its liabilities for the deferred purchase price of property acquired by such Person (excluding trade payables and accrued expenses arising in the ordinary course of business but including all liabilities created or arising under any conditional sale or other title retention agreement with respect to any such property);

(d) all liabilities for borrowed money secured by any Lien with respect to any property owned by such Person (whether or not it has assumed or otherwise become liable for such liabilities);

(e) all its reimbursement obligations in respect of letters of credit or instruments serving a similar function issued or accepted for its account by banks and other financial institutions (whether or not representing obligations for borrowed money) solely to the extent drawn and limited to the drawn amounts;

(f) Swaps of such Person;

(g) all obligations in respect of securitization transactions entered into by such Person, including any obligations in respect of any Permitted Receivables Securitization Program; and

(h) any Guaranty of such Person with respect to liabilities of a type described in any of clauses (a) through (g) above.

Indebtedness of any Person shall include all obligations of such Person of the character described in clauses (a) through (h) to the extent such Person remains legally liable in respect thereof notwithstanding that any such obligation is deemed to be extinguished under GAAP.”

(b) The definition of “Operating Lease Attributable Debt” appearing in Schedule B to the Existing Note Agreement is hereby deleted and of no further force or effect.

Representations and Warranties of the Company.

(a) Organization; Power and Authority. The Company hereby represents and warrants that the Company is a corporation duly organized and validly existing in good standing under the laws of the State of Delaware. The Company has all requisite corporate power to execute and deliver this Amendment and to perform its obligations under this Amendment and the Note Agreement.

(b) Authorization, Etc. The execution and delivery by the Company of this Amendment and the performance by the Company of its obligations under this Amendment and the Note Agreement have been duly authorized by all requisite corporate action on the part of the Company. The Company has duly executed and delivered this Amendment, and this Amendment and the Note Agreement constitute the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally, and by general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity).

(c) No Conflicts. The execution, delivery and performance by the Company of this Amendment will not (a) contravene, result in any breach of, or constitute a default under, or result in the creation of any Lien in respect of any property of the Company or any Subsidiary under, any indenture, mortgage, deed of trust, loan, purchase or credit agreement, material lease, corporate charter or by-laws, or any other material agreement or instrument to which the Company or any Subsidiary is bound or by which the Company or any Subsidiary or any of their respective properties may be bound or affected, (b) conflict with or result in a breach of any of the terms, conditions or provisions of any order, judgment, decree, or ruling of any court, arbitrator or Governmental Authority applicable to the Company or any Subsidiary or (c) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to the Company or any Subsidiary.

(d) No Defaults. No Default or Event of Default has occurred and is continuing and no event has occurred and no condition exists that, upon the execution and delivery of this Amendment and the effectiveness of this Amendment, would constitute a Default or an Event of Default.

4. Conditions to Effectiveness. This Amendment shall become effective, as of the date first written above (the “Effective Date”), upon satisfaction of the following conditions precedent:

(a) The undersigned holders of Notes shall have received a counterpart of this Amendment, in form and substance satisfactory to such holders, in their sole discretion, duly executed and delivered by each of the parties thereto.

(b) The representations and warranties of the Company contained in this Amendment shall be true on and as of the Effective Date.

(c) The undersigned holders of Notes shall have received fully executed copies of similar amendments to each of (i) the Note Purchase Agreement, dated as of November 23, 2004, by and between the Company and the requisite holders of the notes issued thereunder, (ii) the Note Purchase Agreement, dated as of August 31, 2005, by and between the Company and the requisite holders of the notes issued thereunder, (iii) the Note Purchase Agreement, dated as of September 17, 2008, by and between the Company and the requisite holders of the notes issued thereunder, (iv) the Note Purchase Agreement, dated as of September 17, 2010, by and between the Company and the requisite holders of the notes issued thereunder, and (v) the Note Purchase Agreement, dated as of December 20, 2011, by and between the Company and the requisite holders of the notes issued thereunder.

(d) Without limiting the provisions of Section 15.1 of the Note Agreement, the Company shall have paid on or before the Effective Date the fees, charges and disbursements of: Bingham McCutchen LLP (“Bingham”), special counsel to the holders of Notes, to the extent reflected in a statement of Bingham rendered to the Company at least one Business Day prior to the Effective Date.

(e) All proceedings taken in connection with the execution and delivery of this Amendment and the transactions contemplated hereby shall be satisfactory to the holders of the Notes and their special counsel; and the holders of the Notes and their special counsel shall have received copies of such documents and papers as they may reasonably request in connection with the execution and delivery of this Agreement. The release by the Noteholders of signature pages to this Amendment shall constitute their acknowledgement that the conditions set forth in this Section 4(d) have been satisfied.

Miscellaneous.

(a) References to Note Agreement. Upon and after the date of this Amendment, each reference to the Note Agreement in the Note Agreement, the Notes or any other instrument or agreement entered into in connection therewith or otherwise related thereto shall mean and be a reference to the Existing Note Agreement as amended by this Amendment (and as hereafter amended from time to time).

(b) Ratification and Confirmation. Except as specifically amended herein, the Note Agreement shall remain in full force and effect, and is hereby ratified and confirmed.

(c) No Waiver. The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of any holder of Notes, nor constitute a waiver of any provision of the Note Agreement, any Note or any other instrument or agreement entered into in connection therewith or otherwise related thereto.

(d) Expenses. The Company agrees to pay promptly all expenses of the holders of Notes related to this Amendment and all matters contemplated hereby, including, without limitation, all fees and expenses of the holders’ special counsel.

(e) GOVERNING LAW. THIS AMENDMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF NEW YORK EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.

(f) Counterparts. This Amendment may be executed in counterparts (including those transmitted by electronic transmission (including, without limitation, facsimile and e-mail)), each of which shall be deemed an original and all of which taken together shall constitute one and the same document. Delivery of this Amendment may be made by facsimile or electronic transmission of a duly executed counterpart copy hereof and shall be effective as delivery of a manually executed counterpart hereof.

[The remainder of this page is intentionally left blank; signature pages follow]

IN WITNESS WHEREOF, the undersigned have caused this Amendment to be executed and delivered by their duly authorized officers as of the date first above written.


AMETEK, INC.

By:		/s/ William J. Burke
Name:		William J. Burke
Title:		Senior Vice President – Comptroller & Treasurer

The foregoing is hereby agreed to as of the date hereof.


NEW YORK LIFE INSURANCE COMPANY

By:		/s/ Jessica L. Maizel
Name:		Jessica L. Maizel
Title:		Corporate Vice President


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
By:		NYL Investors LLC, its Investment Manager


By:		/s/ Jessica L. Maizel
Name:		Jessica L. Maizel
Title:		Senior Director


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION INSTITUTIONALLY OWNED LIFE INSURANCE SEPARATE ACCOUNT (BOLI 3)
By:		NYL Investors LLC, its Investment Manager


By:		/s/ Jessica L. Maizel
Name:		Jessica L. Maizel
Title:		Senior Director


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION INSTITUTIONALLY OWNED LIFE INSURANCE SEPARATE ACCOUNT (BOLI 3-2)
By:		NYL Investors LLC, its Investment Manager


By:		/s/ Jessica L. Maizel
Name:		Jessica L. Maizel
Title:		Senior Director


NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION INSTITUTIONALLY OWNED LIFE INSURANCE SEPARATE ACCOUNT (BOLI 30C)
By:		NYL Investors LLC, its Investment Manager


By:		/s/ Jessica L. Maizel
Name:		Jessica L. Maizel
Title:		Senior Director

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA


By:		/s/ Eric Seward
Name:		Eric Seward
Title:		Vice President

UNIVERSAL PRUDENTIAL ARIZONA REINSURANCE COMPANY

By:

Prudential Investment Management, Inc.,

as investment manager


By:		/s/ Eric Seward
Name:		Eric Seward
Title:		Vice President

THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY


By:		/s/ Mark E. Kishler
Name:		Mark E. Kishler
Title:		Authorized Representative

PACIFIC LIFE INSURANCE COMPANY


By:		/s/ Matthew A. Levene
Name:		Matthew A. Levene
Title:		Assistant Vice President


By:		/s/ Cathy L. Schwartz
Name:		Cathy L. Schwartz
Title:		Assistant Secretary

THE LINCOLN NATIONAL LIFE INSURANCE COMPANY

By:

Delaware Investment Advisors, a series of Delaware

Management Business Trust, Attorney in Fact


By:		/s/ Frank LaTorraca
Name:		Frank LaTorraca
Title:		Vice President

THE GUARDIAN LIFE INSURANCE COMPANY OF AMERICA


By:		/s/ Edward Brennan
Name:		Edward Brennan
Title:		Senior Director

BERKSHIRE LIFE INSURANCE COMPANY OF AMERICA


By:		/s/ Edward Brennan
Name:		Edward Brennan
Title:		Senior Manager

BANKERS LIFE AND CASUALTY COMPANY

COLONIAL PENN LIFE INSURANCE COMPANY

WASHINGTON NATIONAL INSURANCE COMPANY

By:

40|86 Advisors, Inc., acting as Investment Advisor


By:		/s/ Jesse E. Horsfall
Name:		Jesse E. Horsfall
Title:		SVP


ATHENE ANNUITY AND LIFE COMPANY (f/k/a AmerUs Life Insurance Company and successor in interest to Aviva Life Insurance Company and American Investors Life Insurance Company)
By:		Athene Asset Managmenet L.P., its investment advisor
By:		AAM GP Ltd., its general partner


By:		/s/ Roger D. Fors
Name:		Roger D. Fors
Title:		Vice President, Fixed Income


MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
By:		Babson Capital Management LLC, as Investment Adviser


By:		/s/ Steven J. Katz
Name:		Steven J. Katz
Title:		Managing Director & Senior Counsel


C.M. LIFE INSURANCE COMPANY
By:		Babson Capital Management LLC, as Investment Adviser


By:		/s/ Steven J. Katz
Name:		Steven J. Katz
Title:		Managing Director & Senior Counsel

STATE FARM LIFE INSURANCE COMPANY


By:		/s/ Julie Hoyer
Name:		Julie Hoyer
Title:		Senior Investment Officer – Fixed Income


By:		/s/ Jeffrey Attwood
Name:		Jeffrey Attwood
Title:		Investment Officer


UNUM LIFE INSURANCE COMPANY OF AMERICA
By:		Provident Investment Management, LLC, its Agent


By:		/s/ Ben S. Miller
Name:		Ben S. Miller
Title:		Senior Managing Director


PROVIDENT LIFE AND ACCIDENT INSURANCE COMPANY
By:		Provident Investment Management, LLC, its Agent


By:		/s/ Ben S. Miller
Name:		Ben S. Miller
Title:		Senior Managing Director

ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA


By:		/s/ Brian F. Landry
Name:		Brian F. Landry
Title:		Assistant Treasurer

UNITED OF OMAHA LIFE INSURANCE COMPANY


By:		/s/ Justin P. Kavan
Name:		Justin P. Kavan
Title:		Vice President

COMPANION LIFE INSURANCE COMPANY


By:		/s/ Justin P. Kavan
Name:		Justin P. Kavan
Title:		An Authorized Signer

AMERICAN UNITED LIFE INSURANCE COMPANY


By:		/s/ Michael I. Bullock
Name:		Michael I. Bullock
Title:		V.P., Private Placements


THE STATE LIFE INSURANCE COMPANY
By:		American United Life Insurance Company, its Agent


By:		/s/ Michael I. Bullock
Name:		Michael I. Bullock
Title:		V.P., Private Placements


PIONEER MUTUAL LIFE INSURANCE COMPANY
By:		American United Life Insurance Company, its Agent


By:		/s/ Michael I. Bullock
Name:		Michael I. Bullock
Title:		V.P., Private Placements

AMERICAN EQUITY INVESTMENT LIFE INSURANCE COMPANY


By:		/s/ Jeffrey A. Fossell
Name:		Jeffrey A. Fossell
Title:		Authorized Signatory

AMERITAS LIFE INSURANCE CORP.

AMERITAS LIFE INSURANCE CORP. successor by merger to ACACIA LIFE

INSURANCE COMPANY

By:

Ameritas Investment Partners, Inc., as Agent


By:		/s/ Tina Udell
Name:		Tina Udell
Title:		Vice President & Managing Director Corporate Credit

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY


By:		/s/ Ernie Friesen
Name:		Ernie Friesen
Title:		SVP and CIO, General Account


By:		/s/ Janet Hurkett
Name:		Janet Hurkett
Title:		Manager, Investments

Exhibit 10.2

AMENDMENT NO. 1 TO NOTE AGREEMENT

Recitals

A. The Company entered into that certain Note Purchase Agreement dated as of September 17, 2008 (as in effect immediately prior to the effectiveness of this Amendment, the “Existing Note Agreement”), with the several Purchasers listed in Schedule A attached thereto, pursuant to which the Company issued and sold to such Purchasers (i) $90,000,000 in aggregate principal amount of the Company’s 6.59% Series D Senior Notes due September 17, 2015 (the “Series D Notes”), (ii) $160,000,000 in aggregate principal amount of the Company’s 7.08% Series E Senior Notes due September 17, 2018 (the “Series E Notes”), (iii) $35,000,000 in aggregate principal amount of the Company’s 6.69% Series F Senior Notes due December 17, 2015 (the “Series F Notes”) and (iv) $65,000,000 in aggregate principal amount of the Company’s 7.18% Series G Senior Notes due December 17, 2018 (the “Series G Notes” and together with the Series D Notes, the Series E Notes, the Series F Notes and any such promissory notes that may have been issued in substitution or exchange therefor prior to the date hereof, the “Notes”).

NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. Definitions. Capitalized terms used and not otherwise defined herein shall have the respective meanings ascribed to them in the Note Agreement.

2. Amendments to the Note Agreement. The Existing Note Agreement is hereby amended as follows:

(a) Schedule B Defined Terms. The definition of “Indebtedness” appearing in Schedule B to the Existing Note Agreement is hereby amended and restated in its entirety to read as follows:

““Indebtedness” means, as to any Person, at a particular time without duplication,

(a) its liabilities for borrowed money and its redemption obligations in respect of mandatorily redeemable Preferred Stock;

(d) all liabilities for borrowed money secured by any Lien with respect to any property owned by such Person (whether or not it has assumed or otherwise become liable for such liabilities);

(f) Swaps of such Person;

(g) all obligations in respect of securitization transactions entered into by such Person, including any obligations in respect of any Permitted Receivables Securitization Program; and

(h) any Guaranty of such Person with respect to liabilities of a type described in any of clauses (a) through (g) above.

(b) The definition of “Operating Lease Attributable Debt” appearing in Schedule B to the Existing Note Agreement is hereby deleted and of no further force or effect.

Representations and Warranties of the Company.

enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the rights of creditors generally, and by general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity).

4. Conditions to Effectiveness. This Amendment shall become effective, as of the date first written above (the “Effective Date”), upon satisfaction of the following conditions precedent:

(b) The representations and warranties of the Company contained in this Amendment shall be true on and as of the Effective Date.

(c) The undersigned holders of Notes shall have received fully executed copies of similar amendments to each of (i) the Note Purchase Agreement, dated as of November 23, 2004, by and between the Company and the requisite holders of the notes issued thereunder, (ii) the Note Purchase Agreement, dated as of August 31, 2005, by and between the Company and the requisite holders of the notes issued thereunder, (iii) the Note Purchase Agreement, dated as of August 30, 2007, by and between the Company and the requisite holders of the notes issued thereunder, (iv) the Note Purchase Agreement, dated as of September 17, 2010, by and between the Company and the requisite holders of the notes issued thereunder, and (v) the Note Purchase Agreement, dated as of December 20, 2011, by and between the Company and the requisite holders of the notes issued thereunder.

Miscellaneous.

(b) Ratification and Confirmation. Except as specifically amended herein, the Note Agreement shall remain in full force and effect, and is hereby ratified and confirmed.

[The remainder of this page is intentionally left blank; signature pages follow]

IN WITNESS WHEREOF, the undersigned have caused this Amendment to be executed and delivered by their duly authorized officers as of the date first above written.


AMETEK, INC.

By:		/s/ William J. Burke
Name:		William J. Burke
Title:		Senior Vice President – Comptroller & Treasurer

The foregoing is hereby agreed to as of the date hereof.

HARTFORD LIFE INSURANCE COMPANY

HARTFORD LIFE AND ANNUITY INSURANCE COMPANY


By:		Hartford Investment Management Company its Agent and Attorney-in-Fact

By:		/s/ Dawn Bruneau
Name:		Dawn Bruneau
Title:		Vice President

TEACHERS INSURANCE AND ANNUITY

ASSOCIATION OF AMERICA



By:		/s/ Ho Young Lee
Name:		Ho Young Lee
Title:		Managing Director

THE NORTHWESTERN MUTUAL

LIFE INSURANCE COMPANY



By:		/s/ Mark E. Kishler
Name:		Mark E. Kishler
Title:		Authorized Representative

THE NORTHWESTERN MUTUAL

LIFE INSURANCE COMPANY for its Group Annuity Separate Account



By:		/s/ Mark E. Kishler
Name:		Mark E. Kishler
Title:		Authorized Representative

GREAT-WEST LIFE & ANNUITY INSURANCE COMPANY



By:		/s/ Ernie Friesen
Name:		Ernie Friesen
Title:		SVP and CIO, General Account

By:		/s/ Janet Hurkett
Name:		Janet Hurkett
Title:		Manager, Investments

LONDON LIFE INSURANCE COMPANY



By:		/s/ D.B.E. Ayers
Name:		D.B.E. Ayers
Title:		Authorized Signatory

By:		/s/ W.J. Sharman
Name:		W.J. Sharman
Title:		Authorized Signatory

CONNECTICUT GENERAL LIFE INSURANCE COMPANY


By:		CIGNA Investments, Inc. (authorized agent)

By:		/s/ Elisabeth V. Piker
Name:		Elisabeth V. Piker
Title:		Managing Director

CIGNA HEALTH AND LIFE INSURANCE COMPANY


By:		CIGNA Investments, Inc. (authorized agent)

By:		/s/ Elisabeth V. Piker
Name:		Elisabeth V. Piker
Title:		Managing Director

LIFE INSURANCE COMPANY OF NORTH AMERICA


By:		CIGNA Investments, Inc. (authorized agent)

By:		/s/ Elisabeth V. Piker
Name:		Elisabeth V. Piker
Title:		Managing Director

BRAVO HEALTH PENNSYLVANIA, INC.


By:		CIGNA Investments, Inc. (authorized agent)

By:		/s/ Elisabeth V. Piker
Name:		Elisabeth V. Piker
Title:		Managing Director

THE LINCOLN NATIONAL LIFE INSURANCE COMPANY

By:

Delaware Investment Advisors, a series of Delaware

Management Business Trust, Attorney in Fact


By:		/s/ Frank LaTorraca
Name:		Frank LaTorraca
Title:		Vice President

LINCOLN LIFE & ANNUITY COMPANY OF NEW YORK

By:

Delaware Investment Advisors, a series of Delaware

Management Business Trust, Attorney in Fact


By:		/s/ Frank LaTorraca
Name:		Frank LaTorraca
Title:		Vice President

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA



By:		/s/ Eric Seward
Name:		Eric Seward
Title:		Vice President

PRUCO LIFE INSURANCE COMPANY



By:		/s/ Eric Seward
Name:		Eric Seward
Title:		Assistant Vice President

PRUDENTIAL RETIREMENT INSURANCE AND ANNUITY COMPANY


By:		Prudential Investment Management, Inc., as investment manager


By:		/s/ Eric Seward
Name:		Eric Seward
Title:		Vice President

THRIVENT FINANCIAL FOR LUTHERANS



By:		/s/ William J. Hochmuth
Name:		William J. Hochmuth
Title:		Director

MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY


By:		Babson Capital Management LLC, as Investment Adviser


By:		/s/ Steven J. Katz
Name:		Steven J. Katz
Title:		Managing Director & Senior Counsel

C.M. LIFE INSURANCE COMPANY


By:		Babson Capital Management LLC, as Investment Adviser


By:		/s/ Steven J. Katz
Name:		Steven J. Katz
Title:		Managing Director & Senior Counsel

MASSMUTUAL ASIA LIMITED


By:		Babson Capital Management LLC, as Investment Adviser


By:		/s/ Steven J. Katz
Name:		Steven J. Katz
Title:		Managing Director & Senior Counsel

PROTECTIVE LIFE INSURANCE COMPANY



By:		/s/ Philip E. Passafiume
Name:		Philip E. Passafiume
Title:		Director, Fixed Income

ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA



By:		/s/ Brian F. Landry
Name:		Brian F. Landry
Title:		Assistant Treasurer

BANKERS LIFE AND CASUALTY COMPANY

COLONIAL PENN LIFE INSURANCE COMPANY

WASHINGTON NATIONAL INSURANCE COMPANY


By:		40\|86 Advisors, Inc., acting as Investment Advisor


By:		/s/ Jesse E. Horsfall
Name:		Jesse E. Horsfall
Title:		SVP

AMERICAN UNITED LIFE INSURANCE COMPANY



By:		/s/ Michael I. Bullock
Name:		Michael I. Bullock
Title:		V.P., Private Placements


FARM BUREAU LIFE INSURANCE COMPANY OF MICHIGAN
By:		American United Life Insurance Company, its Agent


By:		/s/ Michael I. Bullock
Name:		Michael I. Bullock
Title:		V.P., Private Placements


UNUM LIFE INSURANCE COMPANY OF AMERICA
By:		Provident Investment Management, LLC, its Agent


By:		/s/ Ben S. Miller
Name:		Ben S. Miller
Title:		Senior Managing Director

ATHENE ANNUITY AND LIFE COMPANY

(Successor in interest to Aviva Life Insurance Company and American Investors Life Insurance Company)


By:		Athene Asset Managmenet L.P., its investment advisor
By:		AAM GP Ltd., its general partner


By:		/s/ Roger D. Fors
Name:		Roger D. Fors
Title:		Vice President, Fixed Income

UNITED OF OMAHA LIFE INSURANCE COMPANY



By:		/s/ Justin P. Kavan
Name:		Justin P. Kavan
Title:		Vice President

AMERICAN EQUITY INVESTMENT LIFE INSURANCE COMPANY



By:		/s/ Jeffrey A. Fossell
Name:		Jeffrey A. Fossell
Title:		Authorized Signatory


AMERITAS LIFE INSURANCE CORP.
AMERITAS LIFE INSURANCE CORP. (successor by merger to THE UNION CENTRAL LIFE INSURANCE COMPANY)
AMERITAS LIFE INSURANCE CORP. OF NEW YORK
By:		Ameritas Investment Partners, Inc., as Agent


By:		/s/ Tina Udell
Name:		Tina Udell
Title:		Vice President & Managing Director Corporate Credit

ASSURITY LIFE INSURANCE COMPANY

By:		/s/ Victor Weber
Name:		Victor Weber
Title:		Senior Director - Investments

STATE FARM LIFE INSURANCE COMPANY

By:		/s/ Julie Hoyer
Name:		Julie Hoyer
Title:		Senior Investment Officer – Fixed Income

By:		/s/ Jeffrey Attwood
Name:		Jeffrey Attwood
Title:		Investment Officer

STATE FARM LIFE AND ACCIDENT ASSURANCE COMPANY



By:		/s/ Julie Hoyer
Name:		Julie Hoyer
Title:		Senior Investment Officer – Fixed Income

By:		/s/ Jeffrey Attwood
Name:		Jeffrey Attwood
Title:		Investment Officer

Exhibit 31.1

CERTIFICATIONS

I, Frank S. Hermance, certify that:

I have reviewed this Quarterly Report on Form 10-Q of AMETEK, Inc. (the “registrant”);

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 6, 2014

/s/ Frank S. Hermance

Frank S. Hermance

Chairman of the Board and Chief Executive Officer

Exhibit 31.2

CERTIFICATIONS

I, Robert R. Mandos, Jr., certify that:

I have reviewed this Quarterly Report on Form 10-Q of AMETEK, Inc. (the “registrant”);

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 6, 2014

/s/ Robert R. Mandos, Jr.

Robert R. Mandos, Jr.

Executive Vice President - Chief Financial Officer

Exhibit 32.1

AMETEK, Inc.

Certification Pursuant to

18 U.S.C. Section 1350,

as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of AMETEK, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Frank S. Hermance, Chairman of the Board and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(a)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(b)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Frank S. Hermance

Frank S. Hermance

Chairman of the Board and Chief Executive Officer

Date: November 6, 2014

A signed original of this written statement required by Section 906 has been provided to AMETEK, Inc. and will be retained by AMETEK, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

Exhibit 32.2

AMETEK, Inc.

Certification Pursuant to

18 U.S.C. Section 1350,

as Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of AMETEK, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Robert R. Mandos, Jr., Executive Vice President - Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(a)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(b)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Robert R. Mandos, Jr.

Robert R. Mandos, Jr.

Executive Vice President - Chief Financial Officer

Date: November 6, 2014

Ametek (NYSE:AME)
Historical Stock Chart
From Mar 2024 to Apr 2024

Ametek (NYSE:AME)
Historical Stock Chart
From Apr 2023 to Apr 2024

Trending Now

Toplists

Market Data

News

Trading Tools

Markets

Discover

Hot Features

Follow Feed

Options Flow

Monitor

AME Ametek Inc

Latest AME Messages

Loading Messages....

Ametek Inc/ News

Loading Messages....

Your Recent History

Company

Business

Popular

Get The App