QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
(Address of principal executive offices) |
(Zip Code) |
☒ |
Accelerated filer |
☐ | ||||
Non-accelerated filer |
☐ |
Smaller reporting company |
||||
Emerging growth company |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
Page |
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Item 1. |
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2 |
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3 |
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4 |
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5 |
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6 |
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7 |
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Item 2. |
21 |
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Item 4. |
27 |
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Item 2. |
28 |
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Item 6. |
29 |
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30 |
Item 1. |
Financial Statements |
Three Months Ended |
Six Months Ended |
|||||||||||||||
June 30, |
June 30, |
|||||||||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||||||
Net sales |
$ |
|
$ | |
$ |
|
$ | |
||||||||
Cost of sales |
|
|
|
|
||||||||||||
Selling, general and administrative |
|
|
|
|
||||||||||||
Total operating expenses |
|
|
|
|
||||||||||||
Operating income |
|
|
|
|
||||||||||||
Interest expense |
( |
) |
( |
) | ( |
) |
( |
) | ||||||||
Other expense, net |
( |
) |
( |
) | ( |
) |
( |
) | ||||||||
Income before income taxes |
|
|
|
|
||||||||||||
Provision for income taxes |
|
|
|
|
||||||||||||
Net income |
$ |
|
$ | |
$ |
|
$ | |
||||||||
Basic earnings per share |
$ |
|
$ | |
$ |
|
$ | |
||||||||
Diluted earnings per share |
$ |
|
$ | |
$ |
|
$ | |
||||||||
Weighted average common shares outstanding: |
||||||||||||||||
Basic shares |
|
|
|
|
||||||||||||
Diluted shares |
|
|
|
|
||||||||||||
Dividends declared and paid per share |
$ |
|
$ | |
$ |
|
$ | |
||||||||
Three Months Ended |
Six Months Ended |
|||||||||||||||
June 30, |
June 30, |
|||||||||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||||||
Total comprehensive income |
$ |
$ | $ |
$ | ||||||||||||
June 30, |
December 31, |
|||||||
2019 |
2018 |
|||||||
(Unaudited) |
||||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ |
|
$ | |
||||
Receivables, net |
|
|
||||||
Inventories, net |
|
|
||||||
Other current assets |
|
|
||||||
Total current assets |
|
|
||||||
Property, plant and equipment, net |
|
|
||||||
Right of use assets, net |
|
— |
||||||
Goodwill |
|
|
||||||
Other intangibles, net |
|
|
||||||
Investments and other assets |
|
|
||||||
Total assets |
$ |
|
$ | |
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
Current liabilities: |
||||||||
Short-term borrowings and current portion of long-term debt, net |
$ |
|
$ | |
||||
Accounts payable |
|
|
||||||
Customer advanced payments |
|
|
||||||
Income taxes payable |
|
|
||||||
Accrued liabilities and other |
|
|
||||||
Total current liabilities |
|
|
||||||
Long-term debt, net |
|
|
||||||
Deferred income taxes |
|
|
||||||
Other long-term liabilities |
|
|
||||||
Total liabilities |
|
|
||||||
Stockholders’ equity: |
||||||||
Common stock |
|
|
||||||
Capital in excess of par value |
|
|
||||||
Retained earnings |
|
|
||||||
Accumulated other comprehensive loss |
( |
) |
( |
) | ||||
Treasury stock |
( |
) |
( |
) | ||||
Total stockholders’ equity |
|
|
||||||
Total liabilities and stockholders’ equity |
$ |
|
$ | |
||||
Three months ended June 30, |
Six months ended June 30, |
|||||||||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||||||
Capital stock |
||||||||||||||||
Preferred stock, $ |
$ |
— |
$ | — |
$ |
— |
$ | — |
||||||||
Common stock, $ |
||||||||||||||||
Balance at the beginning of the period |
|
|
|
|
||||||||||||
Shares issued |
|
|
|
|
||||||||||||
Balance at the end of the period |
|
|
|
|
||||||||||||
Capital in excess of par value |
||||||||||||||||
Balance at the beginning of the period |
|
|
|
|
||||||||||||
Issuance of common stock under employee stock plans |
|
( |
) | |
|
|||||||||||
Share-based compensation costs |
|
|
|
|
||||||||||||
Balance at the end of the period |
|
|
|
680,863 |
||||||||||||
Retained earnings |
||||||||||||||||
Balance at the beginning of the period |
|
|
|
|
||||||||||||
Net income |
|
|
|
|
||||||||||||
Cash dividends paid |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Other |
|
|
|
|
||||||||||||
Balance at the end of the period |
|
|
|
|
||||||||||||
Accumulated other comprehensive (loss) income |
||||||||||||||||
Foreign currency translation: |
||||||||||||||||
Balance at the beginning of the period |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Translation adjustments |
( |
) | ( |
) | |
( |
) | |||||||||
Change in long-term intercompany notes |
|
( |
) | ( |
) | ( |
) | |||||||||
Net investment hedge instruments gain (loss), net of tax of ($ for the quarter ended June 30, 2019 and 2018 and ($ ) and ($ ) ) and ($ ) for the six months ended June 30, 2019 and 2018, respectively |
|
|
|
|
||||||||||||
Balance at the end of the period |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Defined benefit pension plans: |
||||||||||||||||
Balance at the beginning of the period |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Amortization of net actuarial loss (gain) and other, net of tax of ($ quarter ended June 30, 2019 and 2018, and ($ ) and ($ ) for the ) and ($ ) for the six months ended June 30, 2019 and 2018, respectively |
|
|
|
|
||||||||||||
Balance at the end of the period |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Unrealized holding gain (loss) on available-for-sale securities: |
||||||||||||||||
Balance at the beginning of the period |
— |
— |
— |
|
||||||||||||
Increase (decrease) during the year, net of tax |
— |
— |
— |
( |
) | |||||||||||
Balance at the end of the period |
— |
— |
— |
— |
||||||||||||
Accumulated other comprehensive loss at the end of the period |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Treasury stock |
||||||||||||||||
Balance at the beginning of the period |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Issuance of common stock under employee stock plans |
|
|
|
|
||||||||||||
Purchase of treasury stock |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Balance at the end of the period |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Total stockholders’ equity |
$ |
|
$ | |
$ |
|
$ | |
||||||||
Six Months Ended |
||||||||
June 30, |
||||||||
2019 |
2018 |
|||||||
Cash provided by (used for): |
||||||||
Operating activities: |
||||||||
Net income |
$ |
|
$ | |
||||
Adjustments to reconcile net income to total operating activities: |
||||||||
Depreciation and amortization |
|
|
||||||
Deferred income taxes |
|
( |
) | |||||
Share-based compensation expense |
|
|
||||||
Gain on sale of facilities |
( |
) |
— |
|||||
Net change in assets and liabilities, net of acquisitions |
( |
) |
( |
) | ||||
Pension contributions |
( |
) |
( |
) | ||||
Other, net |
( |
) |
|
|||||
Total operating activities |
|
|
||||||
Investing activities: |
||||||||
Additions to property, plant and equipment |
( |
) |
( |
) | ||||
Purchases of businesses, net of cash acquired |
— |
( |
) | |||||
Other, net |
|
|
||||||
Total investing activities |
( |
) |
( |
) | ||||
Financing activities: |
||||||||
Net change in short-term borrowings |
( |
) |
( |
) | ||||
Proceeds from long-term borrowings |
|
— |
||||||
Repurchases of common stock |
( |
) |
( |
) | ||||
Cash dividends paid |
( |
) |
( |
) | ||||
Proceeds from stock option exercises |
|
|
||||||
Other, net |
( |
) |
( |
) | ||||
Total financing activities |
( |
) |
( |
) | ||||
Effect of exchange rate changes on cash and cash equivalents |
|
( |
) | |||||
Increase (decrease) in cash and cash equivalents |
|
( |
) | |||||
Cash and cash equivalents: |
||||||||
Beginning of period |
|
|
||||||
End of period |
$ |
|
$ | |
||||
1. |
Basis of Presentation |
2. |
Recent Accounting Pronouncements |
3. |
Revenues |
2019 |
2018 |
|||||||
(In thousands) |
||||||||
Contract assets - January 1 |
$ | |
$ | |
||||
Contract assets – June 30 |
|
|
||||||
Change in contract assets – increase |
|
|
||||||
Contract liabilities – January 1 |
|
|
||||||
Contract liabilities – June 30 |
|
|
||||||
Change in contract liabilities – increase |
( |
) |
( |
) | ||||
Net change |
$ |
|
$ | ( |
) | |||
Three Months Ended June 30, 2019 |
Six Months Ended June 30, 2019 |
|||||||||||||||||||||||
EIG |
EMG |
Total |
EIG |
EMG |
Total |
|||||||||||||||||||
(In thousands) |
||||||||||||||||||||||||
United States |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||
International (1): |
||||||||||||||||||||||||
United Kingdom |
||||||||||||||||||||||||
European Union countries |
||||||||||||||||||||||||
Asia |
||||||||||||||||||||||||
Other foreign countries |
||||||||||||||||||||||||
Total international |
||||||||||||||||||||||||
Consolidated net sales |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||
(1) | Includes U.S. export sales of $ |
Three Months Ended June 30, 2018 |
Six Months Ended June 30, 2018 |
|||||||||||||||||||||||
EIG |
EMG |
Total |
EIG |
EMG |
Total |
|||||||||||||||||||
(In thousands) |
||||||||||||||||||||||||
United States |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||
International(1): |
||||||||||||||||||||||||
United Kingdom |
||||||||||||||||||||||||
European Union countries |
||||||||||||||||||||||||
Asia |
||||||||||||||||||||||||
Other foreign countries |
||||||||||||||||||||||||
Total international |
||||||||||||||||||||||||
Consolidated net sales |
$ |
$ |
$ |
1,208,935 |
$ |
$ |
$ |
2,381,582 |
||||||||||||||||
(1) | Includes U.S. export sales of $ |
Three Months Ended June 30, 2019 |
Six Months Ended June 30, 2019 |
|||||||||||||||||||||||
EIG |
EMG |
Total |
EIG |
EMG |
Total |
|||||||||||||||||||
(In thousands) |
||||||||||||||||||||||||
Process and analytical instrumentation |
$ |
$ |
— |
$ |
$ |
$ |
— |
$ |
||||||||||||||||
Aerospace and Power |
||||||||||||||||||||||||
Automation and engineered solutions |
— |
— |
||||||||||||||||||||||
Consolidated net sales |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||
Three Months Ended June 30, 2018 |
Six Months Ended June 30, 2018 |
|||||||||||||||||||||||
EIG |
EMG |
Total |
EIG |
EMG |
Total |
|||||||||||||||||||
(In thousands) |
||||||||||||||||||||||||
Process and analytical instrumentation |
$ |
$ |
— |
$ |
$ |
$ |
— |
$ |
||||||||||||||||
Aerospace and Power |
||||||||||||||||||||||||
Automation and engineered solutions |
— |
— |
||||||||||||||||||||||
Consolidated net sales |
$ |
744,458 |
$ |
464,477 |
$ |
1,208,935 |
$ |
1,460,884 |
$ |
920,698 |
$ |
2,381,582 |
||||||||||||
Three Months Ended June 30, 2019 |
Six Months Ended June 30, 2019 |
|||||||||||||||||||||||
EIG |
EMG |
Total |
EIG |
EMG |
Total |
|||||||||||||||||||
(In thousands) |
||||||||||||||||||||||||
Products transferred at a point in time |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||
Products and services transferred over time |
||||||||||||||||||||||||
Consolidated net sales |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||
Three Months Ended June 30, 2018 |
Six Months Ended June 30, 2018 |
|||||||||||||||||||||||
EIG |
EMG |
Total |
EIG |
EMG |
Total |
|||||||||||||||||||
(In thousands) |
||||||||||||||||||||||||
Products transferred at a point in time |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||
Products and services transferred over time |
||||||||||||||||||||||||
Consolidated net sales |
$ |
$ |
$ |
1,208,935 |
$ |
$ |
$ |
2,381,582 |
||||||||||||||||
Six Months Ended June 30, |
||||||||
2019 |
2018 |
|||||||
(In thousands) |
||||||||
Balance at the beginning of the period |
$ | |
$ | |
||||
Accruals for warranties issued during the period |
|
|
||||||
Settlements made during the period |
( |
) |
( |
) | ||||
Warranty accruals related to acquired businesses and other during the period |
( |
) |
|
|||||
Balance at the end of the period |
$ |
|
$ | |
||||
4. |
Earnings Per Share |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||||||
(In thousands) |
||||||||||||||||
Weighted average shares: |
||||||||||||||||
Basic shares |
|
|
|
|
||||||||||||
Equity-based compensation plans |
|
|
|
|
||||||||||||
Diluted shares |
|
|
|
|
||||||||||||
5. |
Fair Value Measurements |
June 30, 2019 |
December 31, 2018 |
|||||||
Fair Value |
Fair Value |
|||||||
(In thousands) |
||||||||
Fixed-income investments |
$ |
|
$ | |
June 30, 2019 |
December 31, 2018 |
|||||||||||||||
Recorded Amount |
Fair Value |
Recorded Amount |
Fair Value |
|||||||||||||
(In thousands) |
||||||||||||||||
Long-term debt, net (including current portion) |
$ |
( |
) |
$ |
( |
) |
$ | ( |
) | $ | ( |
) |
6. |
Hedging Activities |
7. |
Inventories, net |
June 30, 2019 |
December 31, 2018 |
|||||||
(In thousands) |
||||||||
Finished goods and parts |
$ |
|
$ | |
||||
Work in process |
|
|
||||||
Raw materials and purchased parts |
|
|
||||||
Total inventories, net |
$ |
|
$ | |
||||
8. |
Leases |
Three Months Ended June 30, 2019 |
Six Months Ended June 30, 2019 |
|||||||
(In thousands) |
(In thousands) |
|||||||
Operating lease cost |
$ |
|
$ |
|
||||
Variable lease cost |
|
|
||||||
Total lease cost |
$ |
|
$ |
|
||||
June 30, 2019 |
||||
(In thousands) |
||||
Right of use assets, net |
$ |
|
||
Lease liabilities included in Accrued liabilities and other |
|
|||
Lease liabilities included in Other long-term liabilities |
|
|||
Total lease liabilities |
$ |
|
||
Six Months Ended June 30, 2019 |
||||
(In thousands) |
||||
Cash used in operations for operating leases |
$ |
|
||
Right-of-use assets obtained in exchange for new operating liabilities |
$ |
|
||
Weighted-average remaining lease terms - operating leases (years) |
|
|||
Weighted-average discount rate - operating leases |
|
% |
Lease Liability Maturity Analysis |
Operating Leases |
|||
(In thousands) |
||||
Remaining 2019 |
$ |
|
||
2020 |
|
|||
2021 |
|
|||
2022 |
|
|||
2023 |
|
|||
Thereafter |
|
|||
Total lease payments |
|
|||
Less: imputed interest |
|
|||
$ |
|
|||
9. |
Goodwill |
EIG |
EMG |
Total |
||||||||||
(In millions) |
||||||||||||
Balance at December 31, 2018 |
$ | |
$ | |
$ | 3,612.0 |
||||||
Goodwill acquired |
|
|
|
|||||||||
Purchase price allocation adjustments and other |
|
( |
) |
|
||||||||
Foreign currency translation adjustments |
|
( |
) |
( |
) | |||||||
Balance at June 30, 2019 |
$ |
|
$ |
|
$ |
3,613.2 |
||||||
10. |
Income Taxes |
Balance at December 31, 2018 |
$ | |
||
Additions for tax positions |
|
|||
Reductions for tax positions |
|
|||
Balance at June 30, 2019 |
$ |
|
||
11. |
Debt |
12. |
Share-Based Compensation |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||||||
(In thousands) |
||||||||||||||||
Stock option expense |
$ |
|
$ | |
$ |
|
$ | |
||||||||
Restricted stock expense |
|
|
|
|
||||||||||||
PRSU expense |
|
|
|
|
||||||||||||
Total pre-tax expense |
$ |
|
$ | |
$ |
|
$ | |
||||||||
Six Months Ended June 30, 2019 |
Year Ended December 31, 2018 |
|||||||
Expected volatility |
|
% |
|
% | ||||
Expected term (years) |
|
|
||||||
Risk-free interest rate |
|
% |
|
% | ||||
Expected dividend yield |
|
% |
|
% | ||||
Black-Scholes-Merton fair value per stock option granted |
$ |
|
$ | |
Shares |
Weighted Average Exercise Price |
Weighted Average Remaining Contractual Life |
Aggregate Intrinsic Value |
|||||||||||||
(In thousands) |
(Years) |
(In millions) |
||||||||||||||
Outstanding at December 31, 2018 |
|
$ | |
|||||||||||||
Granted |
|
|
||||||||||||||
Exercised |
( |
) |
|
|||||||||||||
Forfeited |
( |
) |
|
|||||||||||||
Outstanding at June 30, 2019 |
|
$ |
|
|
$ |
|
||||||||||
Exercisable at June 30, 2019 |
|
$ |
|
|
$ |
|
||||||||||
Shares |
Weighted Average Grant Date Fair Value |
|||||||
(In thousands) |
||||||||
Nonvested restricted stock outstanding at December 31, 2018 |
|
$ | |
|||||
Granted |
|
|
||||||
Vested |
( |
) |
|
|||||
Forfeited |
( |
) |
|
|||||
Nonvested restricted stock outstanding at June 30, 2019 |
|
$ |
|
|||||
13. |
Retirement and Pension Plans |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||||||
(In thousands) |
||||||||||||||||
Defined benefit plans: |
||||||||||||||||
Service cost |
$ |
|
$ | |
$ |
|
$ | |
||||||||
Interest cost |
|
|
|
|
||||||||||||
Expected return on plan assets |
( |
) |
( |
) | ( |
) |
( |
) | ||||||||
Amortization of net actuarial loss and other |
|
|
|
|
||||||||||||
Pension expense (income) |
|
( |
) | ( |
) |
( |
) | |||||||||
Other plans: |
||||||||||||||||
Defined contribution plans |
|
|
|
|
||||||||||||
Foreign plans and other |
|
|
|
|
||||||||||||
Total other plans |
|
|
|
|
||||||||||||
Total net pension expense |
$ |
|
$ | |
$ |
|
$ | |
||||||||
14. |
Contingencies |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||||||
(In thousands) |
||||||||||||||||
Net sales: |
||||||||||||||||
Electronic Instruments |
$ |
820,247 |
$ | 744,458 |
$ |
1,627,158 |
$ | 1,460,884 |
||||||||
Electromechanical |
469,165 |
464,477 |
949,945 |
920,698 |
||||||||||||
Consolidated net sales |
$ |
1,289,412 |
$ | 1,208,935 |
$ |
2,577,103 |
$ | 2,381,582 |
||||||||
Operating income and income before income taxes: |
||||||||||||||||
Segment operating income: |
||||||||||||||||
Electronic Instruments |
$ |
212,913 |
$ | 193,831 |
$ |
415,997 |
$ | 377,190 |
||||||||
Electromechanical |
101,065 |
94,250 |
199,878 |
185,252 |
||||||||||||
Total segment operating income |
313,978 |
288,081 |
615,875 |
562,442 |
||||||||||||
Corporate administrative expenses |
(18,568 |
) |
(17,995 |
) | (37,206 |
) |
(34,188 |
) | ||||||||
Consolidated operating income |
295,410 |
270,086 |
578,669 |
528,254 |
||||||||||||
Interest expense |
(21,475 |
) |
(20,784 |
) | (44,128 |
) |
(42,470 |
) | ||||||||
Other expense, net |
(3,337 |
) |
(1,081 |
) | (7,004 |
) |
(1,739 |
) | ||||||||
Consolidated income before income taxes |
$ |
270,599 |
$ | 248,221 |
$ |
527,537 |
$ | 484,045 |
||||||||
Item 4. |
Controls and Procedures |
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
Period |
Total Number of Shares Purchased (1)(2) |
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 |
||||||||||||
April 1, 2019 to April 30, 2019 |
— |
$ | — |
— |
$ | 500,912,305 |
||||||||||
May 1, 2019 to May 31, 2019 |
72,045 |
85.50 |
72,045 |
494,752,129 |
||||||||||||
June 1, 2019 to June 30, 2019 |
283 |
86.48 |
283 |
494,727,655 |
||||||||||||
Total |
72,328 |
85.51 |
72,328 |
|||||||||||||
(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 $500 million authorization for the repurchase of its common stock announced in February 2019. Such purchases may be effected 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 | |||
31.1* |
||||
31.2* |
||||
32.1* |
||||
32.2* |
||||
101.INS* |
XBRL Instance Document. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL 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. |
* | Filed electronically herewith. |
AMETEK, Inc. | ||
(Registrant) | ||
By: |
/s/ Thomas M. Montgomery | |
Thomas M. Montgomery | ||
Senior Vice President – Comptroller | ||
(Principal Accounting Officer) |