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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
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SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2001
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
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EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 1-12981
AMETEK, Inc.
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(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
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(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code 610-647-2121
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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
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The number of shares of the issuer's common stock outstanding as of the
latest practicable date was: Common Stock, $0.01 Par Value, outstanding at
April 30, 2001 was 32,975,276 shares.
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AMETEK, INC.
FORM 10-Q
TABLE OF CONTENTS
PAGE NUMBER
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statement of Income for
the Three Months Ended March 31, 2001 and 2000 ................. 3
Consolidated Balance Sheet as of
March 31, 2001 and December 31, 2000 ........................... 4
Condensed Consolidated Statement of Cash Flows for
the Three Months Ended March 31, 2001 and 2000 ................. 5
Notes to Consolidated Financial Statements ....................... 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations ...................................... 8
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K ............................. 12
SIGNATURES ................................................................. 13
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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
March 31,
---------
2001 2000
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Net sales $ 264,071 $ 255,812
Expenses:
Cost of sales, excluding depreciation 195,924 189,967
Selling, general and administrative 24,144 23,832
Depreciation 8,300 8,126
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Total expenses 228,368 221,925
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Operating income 35,703 33,887
Other income (expenses):
Interest expense (7,660) (7,029)
Other, net 255 (679)
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Income before income taxes 28,298 26,179
Provision for income taxes 10,026 9,425
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Net Income $ 18,272 $ 16,754
========= =========
Basic earnings per share $ 0.56 $ 0.52
========= =========
Diluted earnings per share $ 0.55 $ 0.52
========= =========
Average common shares outstanding:
Basic shares 32,624 32,005
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Diluted shares 33,243 32,428
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Dividends per share $ 0.06 $ 0.06
========= =========
See accompanying notes.
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AMETEK, Inc.
CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
March 31, December 31,
2001 2000
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(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 7,207 $ 7,187
Marketable securities 6,783 8,111
Receivables, less allowance for possible losses 145,546 139,568
Inventories 136,994 129,365
Deferred income taxes 10,592 10,516
Other current assets 10,783 8,353
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Total current assets 317,905 303,100
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Property, plant and equipment, at cost 527,930 528,521
Less accumulated depreciation (318,428) (314,566)
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209,502 213,955
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Goodwill, net of accumulated amortization 296,177 299,479
Investments and other assets 46,033 42,454
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Total assets $ 869,617 $ 858,988
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings and current
portion of long-term debt $ 130,218 $ 127,601
Accounts payable 77,564 87,315
Accruals 83,355 82,739
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Total current liabilities 291,137 297,655
Long-term debt 232,977 233,616
Deferred income taxes 34,182 33,166
Other long-term liabilities 11,406 13,713
Stockholders' equity :
Common stock 334 334
Capital in excess of par value 163 2,248
Retained earnings 347,007 330,696
Accumulated other comprehensive losses (33,388) (30,165)
Treasury stock (14,201) (22,275)
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299,915 280,838
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Total liabilities and stockholders' equity $ 869,617 $ 858,988
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See accompanying notes
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AMETEK, Inc.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
Three months ended
March 31,
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2001 2000
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Cash provided by (used for):
Operating activities:
Net income $ 18,272 $ 16,754
Adjustments to reconcile net income to total operating activities:
Depreciation and amortization 11,256 10,802
Net change in assets and liabilities (28,954) (23,623)
Other (3,437) (2,021)
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Total operating activities (before sale of accounts receivable) (2,863) 1,912
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Proceeds from sale of accounts receivable 2,000 6,000
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Total operating activities (863) 7,912
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Investing activities:
Additions to property, plant and equipment (7,013) (5,558)
Other 1,302 947
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Total investing activities (5,711) (4,611)
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Financing activities:
Net change in short-term borrowings 3,302 (2,977)
Repurchases of common stock -- (1,611)
Cash dividends paid (1,961) (1,916)
Proceeds from stock options and other 5,253 (611)
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Total financing activities 6,594 (7,115)
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Increase (decrease) in cash and cash equivalents 20 (3,814)
Cash and cash equivalents:
As of January 1 7,187 8,636
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As of March 31 $ 7,207 $ 4,822
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See accompanying notes.
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AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2001
(Unaudited)
Note 1 - Financial Statement Presentation
The accompanying consolidated financial statements are unaudited. The
Company believes that all adjustments (which consist of normal recurring
accruals) necessary for a fair presentation of the consolidated financial
position of the Company at March 31, 2001 and the consolidated results of its
operations and cash flows for the three-month periods ended March 31, 2001 and
2000 have been included. Quarterly results of operations are not necessarily
indicative of results for the full year. Quarterly financial statements should
be read in conjunction with the financial statements and related notes presented
in the Company's 2000 Form 10-K as filed with the Securities and Exchange
Commission.
Note 2 - Earnings Per Share
The calculation of basic earnings per share for the three-month periods
ended March 31, 2001 and 2000 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)
Three months ended March 31,
2001 2000
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(Unaudited)
Basic 32,624 32,005
Stock option and award plans 619 423
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Diluted 33,243 32,428
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Note 3 - Inventories
The estimated components of inventory stated at lower of LIFO cost or
market are:
(In thousands)
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March 31, December 31,
2001 2000
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(Unaudited)
Finished goods and parts $ 27,448 $ 22,879
Work in process 33,365 31,020
Raw materials and purchased parts 76,181 75,466
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$136,994 $129,365
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Note 4 - 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
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AMETEK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2001
(Unaudited)
comprehensive income for the three-month periods ended March 31, 2001 and 2000:
(In thousands)
Three months ended March 31,
2001 2000
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(Unaudited)
Net income $ 18,272 $ 16,754
Foreign currency translation adjustment (3,750) (3,276)
Unrealized gain on marketable securities 527 461
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Total comprehensive income $ 15,049 $ 13,939
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Note 5 - Segment Disclosure
The Company has two reportable business segments, the Electronic
Instruments Group and the Electromechanical Group. The Company organizes its
businesses primarily on the basis of product type, production processes,
distribution methods, and management organizations.
At March 31, 2001, there were no significant changes in identifiable
assets of reportable segments from the amounts disclosed at December 31, 2000,
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 month period ended March 31, 2001 and 2000 can
be found in the table on page 8 in the Management's Discussion & Analysis
section of this Report.
Note 6 - New Accounting Pronouncements
Effective January 1, 2001, the Company adopted Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities". This 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. Derivatives that are not hedges must be adjusted to fair value
through earnings. Changes in the fair value of certain derivatives are
recognized in comprehensive income until the hedged item is recognized in
earnings. The Company makes limited use of derivative financial instruments,
therefore, based on the Company's derivative position at January 1, 2001 and
March 31, 2001, the effect of adopting Statement 133 and its effect during the
first quarter of 2001 did not have a material effect on the Company's
consolidated results of operations, financial position, or cash flows.
FASB Statement No. 140, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishment of Liabilities", became effective on April
1, 2001. Although Statement No. 140 has changed many of the accounting rules
regarding securitizations, it continues to require an entity to recognize in its
financial statements, the financial assets it controls. It also requires an
entity to derecognize financial assets (as sales to special-purpose entities)
when control has been surrendered in accordance with the criteria provided in
the Statement. After an extensive study of Statement No. 140, the Company has
decided not to modify its existing accounts receivable securitization agreements
to meet the new accounting requirements to continue sales treatment for
financial assets transferred to its special purpose subsidiary after March 31,
2001. Therefore, disqualifying its special purpose subsidiary after March 31,
2001 under the new accounting rules. Accordingly, as of April 1, 2001, the
Company will record the outstanding balance of the financial assets transferred
to its special purpose subsidiary on the Company's balance sheet as
collateralized secured borrowings. Such amount totaled $47 million in accounts
receivable at March 31, 2001. This change in accounting will have no material
effect on the Company's net income, or earnings per share.
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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 operating income by
reportable segment, and consolidated operating and pretax income:
Three months ended March 31,
2001 2000
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(Dollars in thousands)
Net sales
Electronic Instruments $ 126,028 $ 130,814
Electromechanical 138,043 124,998
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Consolidated net sales $ 264,071 $ 255,812
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Operating income and income before income taxes
Electronic Instruments $ 18,844 $ 19,641
Electromechanical 21,891 19,215
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Total segment operating income 40,735 38,856
Corporate and other (5,032) (4,969)
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Consolidated operating income 35,703 33,887
Interest and other expenses, net (7,405) (7,708)
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Consolidated income before income taxes $ 28,298 $ 26,179
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Operations for the first quarter of 2001 compared with the first quarter of 2000
Net sales for the first quarter 2001 were $264.1 million, an increase of $8.3
million or 3.2% compared with the first quarter of 2000. In the first quarter
2001, the Electromechanical Group (EMG) benefited from the 2000 acquisition of
several businesses from Prestolite Electric Inc. (Prestolite). The European
floor-care market was strong, compared to a weaker North American floor-care
market. Revenue growth in Europe continues to be partially offset by the effect
of translating European currencies into U.S. dollars in the current first
quarter. The Electronic Instruments Group (EIG) sales were down due to a general
slowdown in its process and industrial businesses, as well as a continued
decline in demand for heavy-vehicle instruments. Strength in the aerospace and
power instrument markets partially offset EIG's sales decrease.
New orders for the first quarter of 2001 were $277.7 million, up 2.3% when
compared with the same quarter in 2000. The Company's backlog of unfilled orders
at March 31, 2001 was $270.1 million, up 5.3% from $256.4 million at December
31, 2000.
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AMETEK, Inc.
RESULTS OF OPERATIONS (CONTINUED)
Segment operating income for the first quarter 2001 was $40.7 million,
an increase of $1.9 million or 4.8% when compared with the first
quarter 2000. Segment operating income as a percentage of sales
increased to 15.4% of sales in the current first quarter from 15.2% of
sales in the first quarter of 2000. Although the economy continued to
weaken during the quarter, the Company continues to benefit from its
cost reduction initiatives, which began in the fourth quarter of 2000.
These actions include headcount reductions and the elimination of
certain discretionary spending. The acquired businesses, along with
strong aerospace and power instrument markets also contributed to the
higher operating income.
Consolidated operating income totaled $35.7 million, or 13.5% of sales,
compared with $33.9 million, or 13.2% of sales for the first quarter of
2000, an increase of 5.4%.
Interest and other expenses, net were $7.4 million in the first quarter
2001, compared with $7.7 million for the same quarter of 2000. Interest
expense was higher in the 2001 quarter related to increased average
debt levels partially offset by reduced interest rates compared to the
first quarter of 2000. In the first quarter 2001, the Company had other
income of $0.3 million compared with $0.7 million in other expenses in
the first quarter of 2000. This change primarily resulted from gains
from the sale of marketable securities in the first quarter of 2001,
compared with losses from the sale of marketable securities in the
first quarter of 2000.
Net income for the first quarter 2001 totaled $18.3 million, up 9.1%
from $16.8 million in the first quarter of 2000. Diluted earnings per
share rose 5.8% to $0.55 per share, compared with $0.52 per share for
the same quarter of 2000.
Segment Results
Electromechanical Group (EMG) sales totaled $138.0 million in the first
quarter 2001, an increase of $13.0 million or 10.4% from the same
quarter of 2000. The sales increase was primarily due to the Prestolite
acquisition mentioned earlier. EMG's base businesses reported a
moderate decline in first quarter sales. The European floor-care market
was strong compared to a weak North American floor-care market. Local
currency revenue growth from increased unit volume in Europe continues
to be offset by the effect of translating European currencies into US
dollars. Before the effect of currency translation, Group sales
increased 11.9% from the first quarter of 2000.
Operating income of EMG was $21.9 million for the first quarter 2001,
an increase of $2.7 million or 13.9% from the first quarter of 2000.
The higher profits were due to contributions from the acquisition,
increased operating income from the European floor-care businesses and
our specialty metals business. The profit margin improvement was the
result of continued implementation of the Company's global "best-cost"
strategy and cost reduction initiatives, noted above. Group operating
income as a percentage of sales for the first quarter 2001 was 15.9%,
compared with operating margins of 15.4% in the first quarter of 2000.
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AMETEK, Inc.
RESULTS OF OPERATIONS (CONTINUED)
Electronic Instruments Group ("EIG") sales were $126.0 million in the
first quarter 2001, a decrease of $4.8 million or 3.7% from the same
quarter of 2000. The lower sales were due to a general weakness in the
process and industrial markets, led by a sizable decline in the
heavy-vehicle instruments market. These decreases were partially offset
by the sales contributions of the September 2000 acquisition of
Rochester Instrument Systems, and by strength in the aerospace and
power instrument markets.
EIG operating income for the first quarter of 2001 decreased by $0.8
million or 4.1% to $18.8 million when compared with the same quarter of
2000. The decrease in operating income was due primarily to the sales
decrease noted above. Operating margins were 15.0% of sales, unchanged
from the first quarter of 2000. Operating margins were maintained
through continued operational excellence and cost reduction
initiatives.
FINANCIAL CONDITION
Liquidity and Capital Resources
Cash used by operating activities before proceeds from the sale of
accounts receivable totaled $2.9 million in the first quarter 2001,
compared with cash provided of $1.9 million for the same quarter of
2000. Higher working capital requirements were partially due to a
build-up in inventories associated with the Company's movement of
certain products to low-cost manufacturing facilities, and higher
inventory levels in several businesses that experienced an economic
downturn. Also, higher receivable levels due in part to increased sales
resulted in the use of cash. Total net cash used by operating
activities in the first quarter 2001, after proceeds from sales under
an accounts receivable securitization agreement, was $0.9 million
compared with cash provided of $7.9 million in the first quarter of
2000.
Cash used for investing activities totaled $5.7 million in the first
quarter 2001, compared with $4.6 million used in the same quarter of
2000. Additions to property, plant and equipment in the first quarter
2001 totaled $7.0 million, compared with $5.6 million in the same
quarter of 2000.
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AMETEK, Inc.
FINANCIAL CONDITION (CONTINUED)
Cash provided by financing activities in the first quarter of 2001
totaled $6.6 million, compared with cash used by financing activities
of $7.1 million in the same quarter of 2000. In the first quarter 2001,
net short-term borrowings increased by $3.3 million, compared with a
decrease of $3.0 million in 2000. Net cash proceeds from the exercise
of employee stock options totaled $5.7 million in the first quarter
2001, compared with $0.7 million in the first quarter of 2000. Cash
paid for dividends of $2.0 million were essentially the same for the
first quarters 2001 and 2000. In the first quarter of 2000, other
financing activities included the repurchase of 83,500 shares of
common stock for $1.6 million.
As a result of all of the Company's cash flow activities, cash and cash
equivalents at March 31, 2001 totaled $7.2 million, which was unchanged
from December 31, 2000. The Company also had unused borrowing
commitments of $77.6 million from its $195.0 million revolving credit
facility available at March 31, 2001. The Company believes it has
sufficient cash-generating capabilities and available credit facilities
to enable it to meet its needs in the foreseeable future.
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 2000 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
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10.1 First Amendment to the Receivables Purchase Agreement, dated
as of March 31, 2001.
10.2 Fourth Amendment to the Receivables Sale Agreement, dated as
of March 31, 2001.
b) Reports on Form 8-K: During the quarter ended March 31, 2001, no
reports were filed on Form 8-K.
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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)
May 10, 2001
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