1
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, 2000
-------------------------
OR
[__] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
----------------------- -------------------
Commission file number 1-12981
AMETEK, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 14-1682544
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
37 North Valley Road, Building 4, P.O. Box 1764, Paoli, Pennsylvania 19301-0801
- --------------------------------------------------------------------------------
(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 [ X ] No [ ]
--
The number of shares of the issuer's common stock outstanding as of the latest
practicable date was: Common Stock, $.01 Par Value, outstanding at October 31,
2000 was 32,156,070 shares.
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AMETEK, INC.
FORM 10-Q
TABLE OF CONTENTS
PAGE NUMBER
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statement of Income for
the Three and Nine Months Ended September 30, 2000 and 1999 . 3
Consolidated Balance Sheet as of
September 30, 2000 and December 31, 1999 .................... 4
Condensed Consolidated Statement of Cash Flows for
the Nine Months Ended September 30, 2000 and 1999 ........... 5
Notes to Consolidated Financial Statements ..................... 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations .................................. 9
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K .......................... 15
SIGNATURES ......................................................... 16
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3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
AMETEK, INC.
CONSOLIDATED STATEMENT OF INCOME (Unaudited)
--------------------------------------------
(Dollars and shares in thousands, except per share amounts)
Three months ended Nine months ended
September 30, September 30,
--------------------------- ----------------------------
2000 1999 2000 1999
--------- --------- --------- ---------
Net sales $ 255,098 $ 226,258 $ 766,414 $ 688,776
Expenses:
Cost of sales, excluding depreciation 189,458 167,150 570,001 517,647
Selling, general and administrative 24,241 21,452 71,541 59,880
Depreciation 7,293 7,138 23,109 21,998
--------- --------- --------- ---------
Total expenses 220,992 195,740 664,651 599,525
--------- --------- --------- ---------
Operating income 34,106 30,518 101,763 89,251
Other income (expenses):
Interest expense (7,839) (6,512) (21,533) (18,399)
Other, net 249 182 (499) 545
--------- --------- --------- ---------
Income before income taxes 26,516 24,188 79,731 71,397
Provision for income taxes 9,198 8,594 28,436 25,644
--------- --------- --------- ---------
Net Income $ 17,318 $ 15,594 $ 51,295 $ 45,753
========= ========= ========= =========
Basic earnings per share $ 0.54 $ 0.48 $ 1.60 $ 1.42
========= ========= ========= =========
Diluted earnings per share $ 0.53 $ 0.47 $ 1.58 $ 1.39
========= ========= ========= =========
Average common shares outstanding:
Basic shares 32,138 32,466 32,074 32,323
========= ========= ========= =========
Diluted shares 32,529 33,163 32,470 32,992
========= ========= ========= =========
Dividends per share $ 0.06 $ 0.06 $ 0.18 $ 0.18
========= ========= ========= =========
See accompanying notes.
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AMETEK, INC.
CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
September 30, December 31,
2000 1999
--------- ---------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 6,942 $ 8,636
Marketable securities 8,546 6,764
Receivables, less allowance for possible losses 136,706 112,756
Inventories 130,034 102,396
Deferred income taxes 9,346 12,001
Other current assets 11,604 13,548
--------- ---------
Total current assets 303,178 256,101
--------- ---------
Property, plant and equipment, at cost 518,987 516,780
Less accumulated depreciation (309,176) (297,209)
--------- ---------
209,811 219,571
--------- ---------
Goodwill, net of accumulated amortization 298,265 248,304
Investments and other assets 47,536 44,174
--------- ---------
Total assets $ 858,790 $ 768,150
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings and current
portion of long-term debt $ 147,283 $ 99,674
Accounts payable 77,026 73,377
Accruals 91,061 89,685
--------- ---------
Total current liabilities 315,370 262,736
Long-term debt 232,942 231,756
Deferred income taxes 28,733 27,781
Other long-term liabilities 23,804 29,661
Stockholders' equity :
Common stock 334 334
Capital in excess of par value 798 2,041
Retained earnings 315,393 269,861
Accumulated other comprehensive losses (32,793) (27,395)
Treasury stock (25,791) (28,625)
--------- ---------
257,941 216,216
--------- ---------
Total liabilities and stockholders' equity $ 858,790 $ 768,150
========= =========
See accompanying notes
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AMETEK, Inc.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
----------------------------------------------
(Unaudited)
(Dollars in thousands)
Nine months ended
September 30,
--------------------------
2000 1999
-------- ---------
Cash provided by (used for):
Operating activities:
Net income $ 51,295 $ 45,753
Adjustments to reconcile net income to total operating activities:
Depreciation and amortization 31,084 28,315
Deferred income taxes 4,402 3,030
Net change in assets and liabilities (39,243) (19,492)
Other (1,239) (2,160)
-------- ---------
Total operating activities (before sale of accounts receivable) 46,299 55,446
-------- ---------
Proceeds from sale of accounts receivable 5,000 --
-------- ---------
Total operating activities 51,299 55,446
-------- ---------
Investing activities:
Additions to property, plant and equipment (17,658) (19,757)
Purchase of businesses (81,017) (123,797)
Proceeds from sale of assets 3,920 7,484
Increase in marketable securities (1,815) (3,513)
-------- ---------
Total investing activities (96,570) (139,583)
-------- ---------
Financing activities:
Net change in short-term borrowings 45,596 99,568
Additional long-term borrowings 3,702 --
Repayment of long-term debt (1,281) (14,136)
Repurchases of common stock (1,611) --
Cash dividends paid (5,763) (5,816)
Proceeds from stock options 2,934 4,355
-------- ---------
Total financing activities 43,577 83,971
-------- ---------
Decrease in cash and cash equivalents (1,694) (166)
Cash and cash equivalents:
Beginning of period 8,636 9,768
-------- ---------
As of September 30 $ 6,942 $ 9,602
======== =========
See accompanying notes.
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AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2000
(Unaudited)
NOTE 1 - FINANCIAL STATEMENT PRESENTATION
The accompanying consolidated financial statements as of and for the three
and nine-month period ended September 30, 2000 and 1999 are unaudited. The
Company believes that all adjustments (which consist of normal recurring
accruals) necessary for a fair presentation of the consolidated financial
statements of the Company for the periods presented have been included.
Quarterly results of operations are not necessarily indicative of results for
the full year. These consolidated financial statements should be read in
conjunction with the audited financial statements and related notes in the
Company's 1999 Annual Report on Form 10-K as filed with the Securities and
Exchange Commission. Presentation of certain amounts appearing in the prior
years' financial statements has been reclassified to conform to the current
year's presentation.
NOTE 2 - EARNINGS PER SHARE
The calculation of basic earnings per share for the three and nine-month
periods ended September 30, 2000 and 1999 are based on the average number of
common shares considered outstanding during the periods. Diluted earnings per
share for such periods reflect the effect of all potentially dilutive securities
(primarily outstanding common stock options). The following table presents the
number of shares used in the calculation of basic earnings per share and diluted
earnings per share for the periods:
Weighted average shares (in thousands) (unaudited)
Three months ended Sept. 30, Nine months ended Sept. 30,
---------------------------- ---------------------------
2000 1999 2000 1999
Basic 32,138 32,466 32,074 32,323
Stock option and award plans 391 697 396 669
------ ------ ------ ------
Diluted 32,529 33,163 32,470 32,992
====== ====== ====== ======
NOTE 3 - ACQUISITIONS
On September 5, 2000, the Company acquired the assets of Rochester
Instrument Systems, Inc. ("RiS"), along with the power instrumentation product
line of a related company, Rochester Instruments Systems, Ltd., for
approximately $20 million in cash, subject to adjustment. RiS is a leading
supplier of measurement instrumentation for the electric power generation and
distribution market. The acquired business generated sales of approximately $33
million in 1999 and employs 175 people in the United States and the United
Kingdom. The acquisition is now part of the Company's Electronic Instruments
segment.
On August 4, 2000, the Company acquired the assets of certain businesses of
Prestolite Electric Incorporated ("Prestolite") for approximately $61 million in
cash, subject to adjustment. The acquired businesses consist of Prestolite's
Switch Division, its Industrial Battery Charger business, and its Direct-Current
(DC) motor business. The acquired businesses had 1999 sales of approximately $71
million and employ 475 people at six worldwide locations. The acquisition is now
part of the Company's Electromechanical segment.
These acquisitions were accounted for by the purchase method, and
accordingly, the results of their operations are included in the Company's
consolidated results from their respective dates of acquisition. The estimated
goodwill acquired with these businesses is being amortized on a straight-line
basis over thirty years. The acquisitions would not have had a material effect
on sales or earnings had they been made at the beginning of 2000 or 1999.
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AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2000
-------------------
(Unaudited)
Note 4 - Inventories
The estimated components of inventory stated at lower of LIFO cost or
market are:
In thousands
----------------------------
September 30, December 31,
2000 1999
(Unaudited)
Finished goods and parts $ 31,814 $ 18,749
Work in process 32,404 26,904
Raw materials and purchased parts 65,816 56,743
-------- --------
$130,034 $102,396
======== ========
Note 5 - Comprehensive Income
Comprehensive income includes all changes in stockholders' equity during a
period except those resulting from investments by and distributions to
stockholders. The following table presents comprehensive income for the three
and nine-month periods ended September 30, 2000 and 1999:
In thousands (Unaudited)
-------------------------------------------------------------
Three months ended Sept. 30, Nine months ended Sept. 30,
2000 1999 2000 1999
-------- -------- -------- --------
Net income $ 17,318 $ 15,594 $ 51,295 $ 45,753
Foreign currency translation adjustment (2,905) 2,379 (6,720) (5,523)
Unrealized gain (loss) on marketable
securities and other 786 (676) 1,322 (348)
-------- -------- -------- --------
Total comprehensive income $ 15,199 $ 17,297 $ 45,897 $ 39,882
======== ======== ======== ========
Note 6 - Segment Disclosure
The Company's two reportable business segments, the Electronic
Instruments Group and the Electromechanical Group are organized primarily on the
basis of product type, production processes, distribution methods, and
management organizations.
At September 30, 2000, there were no significant changes in identifiable
assets of reportable segments from the amounts disclosed at December 31, 1999,
nor were there any 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-month periods ended September 30,
2000 and 1999 can be found in the table on page 9 in the Management's Discussion
and Analysis section of this Report.
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AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2000
------------------
(Unaudited)
Note 7 - Receivables Securitization
Under the Company's accounts receivable securitization program, the
Company sold an additional $5.0 million of trade accounts receivable in the
nine-month period ended September 30, 2000. The proceeds were used to reduce
bank borrowings. As of September 30, 2000, $49 million of the maximum $50
million allowable accounts receivable securitization facility had been used.
Note 8 - Accounting Pronouncements
In June 1998, the FASB issued Statement No. 133, "Accounting for Derivative
Instruments and Hedging Activities." The Statement requires recognition of all
derivative instruments measured at fair value in the statement of financial
position. Gains or losses resulting from changes in the value of derivatives
would be accounted for depending on the intended use of the derivative and
whether it qualifies for hedge accounting. In June 1999, the FASB approved a
one-year delay in the effective date of this Statement until January 2001.
In June 2000, the FASB issued Statement No. 138, "Accounting for Certain
Derivative Instruments and Certain Hedging Activities". This Statement amends
Statement No. 133 for certain impractical aspects of the original Statement
which were incompatible with many common current hedging approaches. Statement
No. 138 is effective simultaneously with Statement No. 133.
The provisions of SFAS 133 and related amendments and interpretations become
effective for the Company beginning January 1, 2001, including the interim
periods of that year. Based on the Company's limited use of derivative financial
instruments, it does not expect the adoption of these Statements to have a
significant effect on the Company's consolidated results of operations,
financial position, or cash flows.
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" (SAB
101). SAB 101 summarizes certain SEC staff views in applying generally accepted
accounting principles to revenue recognition in financial statements. In October
2000, the SEC staff issued a Frequently Asked Question (FAQ) document on SAB
101. SAB 101 will become effective for the Company in the fourth quarter of
2000. The Company is currently evaluating the impact of SAB 101 and the FAQ,
however, it does not expect adoption to have a material effect on the Company's
consolidated results of operations, financial position, or cash flows.
In September 2000, the FASB issued Statement No. 140, "Accounting for
Transfer and Servicing of Financial Assets and Extinguishments of Liabilities."
Statement 140 replaces Statement 125, issued in June 1996. Statement 140 revises
the standards for accounting for securitizations and other transfers of
financial assets and collateral, and requires certain expanded disclosures, but
carries over most of Statement 125's provisions. Statement 140 is effective for
transfers occurring after March 31, 2000. However, the expanded disclosures
about securitizations and collateral are effective for the Company in the fourth
quarter of 2000. The Company is currently studying the implications of adopting
Statement 140, however, it does not expect adoption to have a material effect on
its business.
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AMETEK, Inc.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
RESULTS OF OPERATIONS
The following table sets forth sales and income by reportable segment, and
consolidated operating and pretax income:
(Dollars in thousands)
Three months ended Sept. 30, Nine months ended Sept. 30,
2000 1999 2000 1999
--------- --------- --------- ---------
Net sales
Electronic Instruments $ 124,206 $ 114,729 $ 381,055 333,566
Electromechanical 130,892 111,529 385,359 355,210
--------- --------- --------- ---------
Consolidated net sales $ 255,098 $ 226,258 $ 766,414 $ 688,776
========= ========= ========= =========
Operating income and income before income taxes
Electronic Instruments $ 19,658 $ 18,140 $ 58,309 $ 50,885
Electromechanical 19,776 16,851 58,676 52,057
--------- --------- --------- ---------
Total segment operating income 39,434 34,991 116,985 102,942
Corporate and other (5,328) (4,473) (15,222) (13,691)
--------- --------- --------- ---------
Consolidated operating income 34,106 30,518 101,763 89,251
Interest and other expenses, net (7,590) (6,330) (22,032) (17,854)
--------- --------- --------- ---------
Consolidated income
before income taxes $ 26,516 $ 24,188 $ 79,731 $ 71,397
========= ========= ========= =========
Operations for the third quarter of 2000 compared with the third quarter of 1999
Net sales for the third quarter of 2000 were $255.1 million, an increase of
$28.8 million or 12.7%, compared with the third quarter 1999 net sales of $226.3
million. The Electronic Instruments Group (EIG) benefited from the contributions
of the 1999 acquisitions of Patriot Sensors and Controls (Patriot) and
Drexelbrook Engineering (Drexelbrook), and the September 2000 acquisition of
Rochester Instrument Systems (RiS). This group also benefited from the continued
strength of the process instrumentation and aerospace products businesses. The
Group is experiencing the anticipated downturn in its heavy-vehicle business due
to a decline in the heavy-truck market. The Electromechanical Group (EMG)
reported higher sales due to the August 2000 acquisition of certain businesses
of Prestolite Electric, Inc. (Prestolite), improved demand for specialty metal
products, and good worldwide floor-care markets. Strong revenue growth achieved
by the Company in local foreign currencies in Europe was reduced by
approximately $4 million from the effect of translating European currencies into
U.S. dollars during the third quarter.
9
10
AMETEK, Inc.
RESULTS OF OPERATIONS (CONTINUED)
Total segment operating income for the third quarter of 2000 was $39.4 million,
an increase of $4.4 million or 12.7% from $35.0 million in the third quarter of
1999. Segment operating income as a percentage of sales was 15.5% of sales in
the current third quarter, the same as the third quarter of 1999. The third
quarter 2000 operating income benefited from the profit contribution on the
higher sales and lower operating expenses as a result of the Company's continued
cost reduction and operational excellence initiatives.
Corporate expenses for the third quarter of 2000 were $5.3 million compared with
$4.5 million in the third quarter of 1999, an increase of $.9 million, or 19.1%,
due primarily to spending on the company's information technology and e-commerce
initiatives. Both amounts represent approximately 2.0% of sales. After deducting
corporate expenses, consolidated operating income totaled $34.1 million, or
13.4% of sales for the third quarter of 2000, compared with $30.5 million, or
13.5% of sales for the 1999 third quarter.
Interest and other expenses, net were $7.6 million in the third quarter of 2000,
compared with $6.3 million for the same quarter of 1999, an increase of $1.3
million. The increase was due to higher interest expense because of higher rates
and higher average levels of debt to finance the acquisitions.
Net income for the third quarter of 2000 totaled $17.3 million, or $.53 per
share on a diluted basis, compared with net income of $15.6 million, or $.47 per
diluted share for the same quarter of 1999. Third quarter 2000 net income
increased $1.7 million, or 11.1%, and diluted earnings per share increased $.06,
or 12.8%.
Segment Results
Electronic Instruments Group (EIG) sales totaled $124.2 million in the
third quarter of 2000, an increase of $9.5 million or 8.3% from the same
quarter of 1999. The Group's third quarter sales benefited from the 1999
acquisitions of Patriot and Drexelbrook and the third quarter 2000
acquisition of RiS. The aerospace business continues to grow through
strength in the aircraft market. The Group's sales improvement was reduced
by lower sales from the anticipated decline in the heavy-vehicle business
due to a recent slow-down of the heavy-truck market.
Operating income of EIG was $19.7 million for the third quarter of 2000,
an increase of $1.5 million or 8.4% when compared with the third quarter
of 1999. The sales improvement mentioned above was the reason for the
increase in operating income. Operating income margins were 15.8%,
unchanged from the comparable 1999 quarter.
Electromechanical Group (EMG) sales totaled $130.9 million in the third
quarter 2000, an increase of $19.4 million or 17.4% from the same quarter
of 1999. The acquisition of the Prestolite electric power and switch and
motor businesses contributed significantly to the increase. The Group also
achieved internal growth during the current third quarter resulting from
increased sales of specialty metal products and higher sales to worldwide
floor-care markets.
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AMETEK, Inc.
RESULTS OF OPERATIONS (CONTINUED)
However, EMG's sales growth achieved in local foreign currencies to
European floor-care markets were more than offset by the unfavorable
effect of translating those currencies to U.S. dollars. Without the effect
of the currency impact, EMG sales would have grown $22.8 million, or 20%.
Operating income of EMG was $19.8 million for the third quarter of 2000,
an increase of $2.9 million or 17.4% compared to the third quarter of
1999. Group operating income as a percentage of sales for the third
quarter of 2000 was 15.1%, the same as operating income margins in the
third quarter of 1999. Operating profits on the increased sales, favorable
product mix, and lower operating costs were the reasons for the profit
improvement.
Operations for the first nine months of 2000 compared with the first nine months
of 1999.
Net sales for the first nine months of 2000 were $766.4 million,
an increase of $77.6 million or 11.3% higher than net sales of $688.8 million
reported for the first nine months of 1999. EIG sales increased for the
comparable periods due to incremental sales generated by the acquisitions of the
GST transducer business in April 1999, Patriot in July 1999, Drexelbrook in
December 1999 and RiS in September 2000. Continued strong business demand in the
process instruments, power and aerospace markets also contributed to the sales
increase. However, the anticipated slowdown in the heavy truck markets, which
began in the second quarter of 2000, resulted in lower sales to heavy vehicle
manufacturers.
New orders for the nine months ended September 30, 2000 were $794.7 million, an
increase of 10.4% from $720.1 million for the same period in 1999, primarily
reflecting the acquisitions made in late 1999 and during 2000, along with strong
market conditions for specialty metal products and aerospace instruments. The
order backlog at September 30, 2000 was $271.8 million, compared with $243.5
million at December 31, 1999, an increase of $28.3 million or 11.6%. The backlog
increase was primarily due to the 2000 acquisitions.
Segment operating income for the first nine months of 2000 was $117.0 million,
an increase of $14.0 million or 13.6% compared with the same period in 1999. As
a percentage of sales, segment operating income rose to 15.3% from 14.9% for the
comparable periods. Profit margins in both operating segments continued to be
strong.
Corporate expenses were $15.2 million, an increase of $1.5 million or 11.2% when
compared with the same period in 1999, but remained at 2% of sales for both
periods. The increase was primarily due to higher expenses in connection with
the Company's information technology and e-commerce initiatives.
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AMETEK, Inc.
RESULTS OF OPERATIONS (CONTINUED)
Operating income was $101.8 million, a $12.5 million, or 14.0% increase when
compared with the same period in 1999. This represents an operating income
margin of 13.3% for the first nine months of 2000 compared with 13.0% for the
same period in 1999.
Interest and other expenses were $22.0 million for the first nine months of
2000, an increase of $4.1 million when compared with the first nine months of
1999. Interest expense increased by $3.1 million primarily on higher average
levels of debt to fund the 1999 and 2000 acquisitions. Other expenses increased
by $1.0 million because of lower investment income primarily due to the absence
of an investment asset, which was liquidated in the fourth quarter of 1999.
Net income for the first nine months in 2000 was $51.3 million, or $1.58 per
share on a diluted basis, compared with net income of $45.7 million or $1.39 per
diluted share for the first nine months of 1999.
Segment Results
Electronic Instruments Group (EIG) sales were $381.1 million for the first
nine months of 2000, an increase of $47.5 million or 14.2% compared with
the same period of 1999. Net sales increased for the Group because of
contributions from the 1999 acquisitions of GST, Patriot and Drexelbrook
and the September 2000 acquisition of RiS. Sales gains reported by the
aerospace and process instruments businesses were partially offset by
lower sales of the heavy-vehicle instruments which began in the second
quarter of 2000.
EIG's operating income for the first nine months of 2000 increased to
$58.3 million, a $7.4 million or 14.6% increase compared with the first
nine months of 1999 primarily due to the contribution from the sales
increase mentioned above. The Group's operating margins were 15.3% of
sales in the first nine months of 2000, unchanged from the 1999 comparable
period. Improved operating performance, primarily by the Group's aerospace
and process instruments businesses, were reduced by margin declines due to
the lower sales of heavy-vehicle instruments.
Electromechanical Group (EMG) sales totaled $385.4 million for the first
nine months of 2000, an increase of $30.1 million or 8.5% compared with
the same period in 1999. The sales increase was mostly due to strong
demand for floor care and technical motors, specialty metal products and
the third quarter 2000 acquisition of Prestolite. Local foreign currency
sales growth from expanding floor-care markets in Europe was substantially
offset by the unfavorable impact of translating foreign currencies to U.S.
dollars.
EMG's operating income for the first nine months of 2000 was $58.7
million, an increase of $6.6 million or 12.7% when compared with the same
period in 1999. Group operating income as a percentage of sales for the
first nine months of 2000 was 15.2%, an improvement from the 14.7% profit
margin for the comparable period in 1999. The Group benefited in the
current nine-month period from the higher sales and lower operating costs
in its worldwide motor
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AMETEK, Inc.
RESULTS OF OPERATIONS (CONTINUED)
operations as a result of the operational excellence and cost reduction
initiatives, which also contributed to the profit margin improvement
year-to-year.
FINANCIAL CONDITION
Liquidity and Capital Resources
Cash provided by operating activities, before the sale of accounts
receivable, totaled $46.3 million in the first nine months of 2000,
compared with $55.4 million for the same period in 1999 a decrease of $9.2
million. The decrease was caused primarily by higher cash outflows to fund
operating working capital requirements due in part to higher accounts
receivable related to increased sales, and to higher inventory levels
partly associated with the Company's move of certain of its products to
low-cost manufacturing facilities. Total operating activities for the
first nine months of 2000 also included net proceeds of $5.0 million
received from the sale of accounts receivables under an accounts
receivable securitization program, which commenced in the fourth quarter
of 1999.
Cash used for investing activities totaled $96.6 million in the first nine
months of 2000, compared with $139.6 million for the first nine months of
1999. The acquisitions in the first nine months of 2000 required cash
outlays of $81.0 million, compared with $123.8 million for acquisitions in
the comparable 1999 period. Since September 30, 2000, the Company has
made additional working capital investments in the 2000 acquisitions to
bring certain of the acquired businesses to a normal level of operations.
Additions to property, plant and equipment
totaled $17.7 million for the nine months of 2000, compared with $19.7
million expended in the comparable period of 1999. Proceeds from the sale
of idle assets were $3.9 million for the first half of 2000, compared with
$7.5 million received from the sale of idle property in the same period of
1999.
Financing activities provided cash of $43.6 million for the first nine
months of 2000, compared with cash provided by financing activities of
$84.0 million in the same period of 1999. Net short-term borrowings in the
first nine months of 2000 totaled $45.6 million, compared with $99.6
million in the first nine months of 1999. The borrowings were made under
the Company's $195 million revolving bank credit facility, and the
proceeds were primarily used to fund the business acquisitions. In the
1999 period, the Company also used cash to repay $14.0 million of its
long-term debt.
As a result of all of the activities discussed above, the Company's cash
and cash equivalents and short-term marketable securities totaled $15.5
million at September 30, 2000, unchanged from December 31, 1999. The
Company also had unused borrowing commitments of $57.9 million under the
$195 million revolving bank credit facility available at September 30,
2000. The Company believes it has sufficient cash-generating capabilities
and available credit facilities to enable it to meet its liquidity needs.
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AMETEK, Inc
Forward-looking Information
Information contained in this discussion, other than historical
information, are considered "forward-looking statements" and may be
subject to change based on various important factors and uncertainties.
Some, but not all, of the factors and uncertainties that may cause actual
results to differ significantly from those expected in any forward-looking
statement are disclosed in the Company's 1999 Form 10-K as filed with the
Securities and Exchange Commission.
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AMETEK, Inc.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits:
Exhibit
Number Description
------ -----------
10.1 Amendment No. 5 to the AMETEK 401(k) Plan for Acquired
Businesses.
10.2 Amendment No. 6 to the AMETEK 401(k) Plan for Acquired
Businesses.
10.3 First Amendment to Receivables Sales Agreement
27 Financial Data Schedule *
b) Reports on Form 8-K: During the quarter ended September 30, 2000, no
reports were filed on Form 8-K.
* Schedule submitted in electronic format only.
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AMETEK, Inc.
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.
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(Registrant)
By /s/ Robert R. Mandos, Jr.
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Robert R. Mandos, Jr.
Vice President & Comptroller
(Principal Accounting Officer)
November 9, 2000
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