How did the recent acquisitions impact AMETEK's financial performance?

The three acquisitions completed in the first nine months of 2003 (Airtechnology, Solidstate Controls, and Chandler Instruments) significantly contributed to revenue growth, segment operating income, and an increase in goodwill. They were a primary driver for the growth in both the Electronic Instruments Group and Electromechanical Group, and their integration led to improved operating margins.

What is the outlook for AMETEK's base businesses given the economic slowdown?

AMETEK's base businesses experienced a sales decline in both the third quarter and the first nine months of 2003, attributed to the broader economic slowdown impacting the manufacturing sector. While the company is implementing operational excellence initiatives and cost reductions, the performance of these base businesses will likely remain sensitive to macroeconomic conditions.

What was the impact of the one-time deferred compensation expense?

In the third quarter of 2003, AMETEK recorded a $2.1 million (or $0.06 per diluted share) non-cash expense related to the accelerated recognition of deferred compensation for the Chairman and CEO. This charge negatively impacted net income and diluted EPS for the quarter and the nine-month period, and also contributed to a higher effective tax rate due to its non-deductibility.

How is AMETEK funding its growth and operations?

AMETEK's liquidity is strong, supported by operating cash flow, which increased substantially in the first nine months of 2003. The company also utilized a combination of short-term and long-term borrowings, including new long-term borrowings in British Pounds to hedge its investment in Airtechnology, to finance its acquisitions. AMETEK has approximately $210.6 million in unused borrowing commitments available as of September 30, 2003.

AME 10-Q Quarterly Report Q3 FY2003 — Revenue, Net Income, EPS

Summary

AMETEK Inc. reported solid financial results for the third quarter and the first nine months of 2003. Net sales showed a modest increase year-over-year, driven by acquisitions and favorable foreign currency translation, although base business sales experienced a decline due to economic slowdowns. The company successfully integrated three key acquisitions in the first nine months of 2003: Airtechnology Holdings Limited, Solidstate Controls, Inc., and Chandler Instruments Company, LLC. These acquisitions significantly contributed to the increase in goodwill and segment assets, demonstrating AMETEK's strategy of growth through targeted acquisitions in specialized markets. The company maintained healthy operating margins, which improved in some segments due to the acquired businesses and ongoing operational excellence initiatives like cost reduction programs and manufacturing localization. Despite increased corporate expenses, largely due to a one-time deferred compensation charge and higher insurance costs, consolidated operating income saw a slight increase. Diluted earnings per share also experienced a modest rise, even after accounting for the non-recurring charge. AMETEK's liquidity remains strong, supported by operating cash flow and available credit facilities, enabling continued investment in growth and operations.

Key Highlights

1Net sales increased by 4.2% to $267.8 million for the third quarter of 2003 compared to the prior year, with acquisitions and currency translation contributing positively.
2Net income for the third quarter of 2003 was $21.9 million, a 2.5% increase year-over-year, with diluted EPS at $0.65.
3The company completed three significant acquisitions in the first nine months of 2003 (Airtechnology, Solidstate Controls, Chandler Instruments), totaling approximately $163 million in net assets, significantly increasing goodwill.
4Segment operating income increased by 9.8% to $46.5 million in Q3 2003, and operating margins improved to 17.4% from 16.5% in Q3 2002, driven by acquisitions and operational efficiencies.
5Despite a 4.5% decline in sales from base businesses due to economic slowdown, overall consolidated operating income increased by 2.4% to $114.9 million for the first nine months of 2003.
6Cash provided by operating activities increased by $27.8 million to $108.1 million for the first nine months of 2003, reflecting strong working capital management.
7The company's backlog of unfilled orders increased to $285.3 million at September 30, 2003, up from $240.9 million at December 31, 2002, largely due to acquisitions.

AMETEK INC/ Quarterly Report for Q3 Ended Oct 30, 2003

Summary

Key Highlights

Frequently Asked Questions