Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
FORM 10-K
FORM
10-K_____________________
(Mark One)
☒
☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 20192022
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
(State or other jurisdiction of
incorporation or organization)
1100 Cassatt Road
Berwyn, Pennsylvania
Delaware
(Address of principal executive offices)
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
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, $0.01 Par Value (voting)
Title of each class
Trading symbol(s)
AME
Trading symbol(s)
Name of each exchange on which registered
Common Stock, $0.01 Par Value (voting)
AME
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
_____________________
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes
☒
No 
☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes
☐
No
☒
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 
☒
 No
☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes 
☒
 No
☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule
 12b-2
of the Exchange Act.
Large accelerated filer
☒
☒
Accelerated filer
☐
Non-accelerated filer☐
Non-accelerated
filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 
☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule
 12b-2
of the Act).  Yes 
☐
 No
☒
The aggregate market value of the voting stock held by
non-affiliates
of the registrant was approximately $20.7$25.2 billion as of June 28, 2019,30, 2022, the last business day of the registrant’s most recently completed second fiscal quarter.
The number of shares of the registrant’s Common Stock outstanding as of January 31, 20202023 was 229,124,099.230,093,810.
Documents Incorporated by Reference
Part III incorporates information by reference from the Proxy Statement for the Annual Meeting of Stockholders on May 6, 2020.4, 2023.

AMETEK, Inc.
20192022 Form
10-K
Annual Report
Table of Contents
Page
Page
PART I
PART I
Item 1.
2
Business11
2
11
Item 1B.
Unresolved Staff Comments
1718
Properties18
18
1819
1819
PART II
PART II
Item 5.
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
1920
Selected Financial Data22
22
2423
3433
3534
8681
8681
8681
PART III
PART III
Item 10.
Item 10.
Directors, Executive Officers and Corporate Governance
8682
8782
8783
8783
8783
PART IV
PART IV
Item 15.
Item 15.
Exhibits and Financial Statement Schedules
8884
87
90
9188
1
PART I
Item 1.Business
Item 1.    Business
General Development of Business
AMETEK, Inc. (“AMETEK” or the “Company”) is incorporated in Delaware. Its predecessor was originally incorporated in Delaware in 1930 under the name American Machine and Metals, Inc. AMETEK is a leading global manufacturer of electronic instruments and electromechanical devices with operations in North America, Europe, Asia and South America. AMETEK maintains its principal executive offices in suburban Philadelphia at 1100 Cassatt Road, Berwyn, Pennsylvania, 19312. Listed on the New York Stock Exchange (symbol: AME), the common stock of AMETEK is a component of the Standard and Poor’s 500 and the Russell 1000 Indices.
Products and Services
AMETEK’s products are marketed and sold worldwide through two operating groups: Electronic Instruments (“EIG”) and Electromechanical (“EMG”). Electronic Instruments is a leader in the design and manufacture of advanced instruments for the process, power and industrial, and aerospace markets. Electromechanical is a differentiated supplier of precision motion control solutions, thermal management systems, specialty metals and electrical interconnects. Its end markets include aerospace and defense, medical, automation and other industrial markets.
Competitive Strengths
Management believes AMETEK has significant competitive advantages that help strengthen and sustain its market positions. Those advantages include:
Significant Market Share.    AMETEK maintains significant market share in a number of targeted niche markets through its ability to produce and deliver high-quality, differentiated products at competitive prices. EIG has significant market positions in niche segments of the process, power and industrial, and aerospace markets. EMG holds significant positions in niche segments of the aerospace and defense, automation and medical markets.
Technological and Development Capabilities.    AMETEK believes it has certain technological advantages over its competitors that allow it to maintain its leading market positions. Historically, the Company has demonstrated an ability to develop innovative new products and solutions that anticipate customer needs. AMETEK has consistently added to its investment in research, development and engineering, and improved its new product development efforts with the adoption of Design for Six Sigma and Value Analysis/Value Engineering methodologies. These have improved the pace and quality of product innovation and resulted in the introduction of a steady stream of new products across all of AMETEK’s businesses.
Efficient and Flexible Manufacturing Operations.    Through its Operational Excellence initiatives, AMETEK has established a lean and flexible manufacturing platform for its businesses. In its effort to achieve best-cost manufacturing, AMETEK had operating facilities, as of December 31, 2022, in China, Czechia, Malaysia, Mexico, and Serbia. These facilities offer proximity to customers and provide opportunities for increasing international sales. Acquisitions also have allowed AMETEK to achieve operating synergies by consolidating operations, product lines and distribution channels, benefiting both of AMETEK’s operating groups.
Experienced Management Team.    Another component of AMETEK’s success is the strength of its management team and that team’s commitment to improving Company performance. AMETEK senior management has extensive industry experience and an average of approximately 24 years of AMETEK service. The management team is focused on delivering strong, consistent and profitable growth, growing
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shareholder value, and creating a sustainable future for all stakeholders. Individual performance is tied to financial results through Company-established stock ownership guidelines and equity incentive programs.
Business Strategy
AMETEK is committed to achieving earnings growth through the successful implementation of the AMETEK Growth Model. The goal of that model is double-digit annual percentage growth in sales and earnings per share over the business cycle and a superior return on total capital. Other financial initiatives have been or may be undertaken, including public and private debt or equity issuance, bank debt refinancing, local financing in certain foreign countries and share repurchases.
AMETEK’s Growth Model integrates the four growth strategies of Operational Excellence, Strategic Acquisitions, Global and Market Expansion, and New Product Development with a focus on cash generation and capital deployment.
Operational Excellence.    Operational Excellence is AMETEK’s cornerstone strategy for accelerating growth, improving profit margins and strengthening its competitive position across its businesses. Operational Excellence focuses on initiatives to drive increased organic sales growth, improvements in operating efficiencies and sustainable practices. It emphasizes team building and a participative management culture. AMETEK’s Operational Excellence strategies include lean manufacturing, global sourcing, Design for Six Sigma, Value Engineering/Value Analysis, growth kaizens, and digitalization. Each plays an important role in improving efficiency, enhancing the pace and quality of innovation and driving profitable sales growth. Operational Excellence initiatives have yielded lower operating and administrative costs, shortened manufacturing cycle times, resulted in higher cash flow from operations and increased customer satisfaction. They also have played a key role in achieving synergies from newly acquired companies.
Strategic Acquisitions.    Acquisitions are a key to achieving the goals of the AMETEK Growth Model. Since the beginning of 2018 through December 31, 2022, AMETEK has completed 17 acquisitions with annualized sales totaling approximately $1.3 billion. AMETEK targets companies that offer a compelling strategic, technical and cultural fit. It seeks to acquire businesses in adjacent markets with complementary products and technologies. It also looks for businesses that provide attractive growth opportunities aligned with strong secular growth themes, often in new and emerging markets. Through these and prior acquisitions, AMETEK’s management team has developed considerable skill in identifying, acquiring and integrating new businesses. As it has executed its acquisition strategy, AMETEK’s mix of businesses has shifted toward those that are more highly differentiated and, therefore, offer better opportunities for growth and profitability.
Global & Market Expansion.    AMETEK has historically experienced growth outside the United States, reflecting an expanding international customer base, investments in its global infrastructure and the attractive growth potential of its businesses in overseas markets. While Europe remains its largest overseas market, AMETEK has pursued growth opportunities worldwide, especially in key emerging markets. It has grown sales in Latin America and Asia by strategically building, acquiring and expanding manufacturing facilities. AMETEK also has expanded its sales, service, and engineering capabilities globally. Recently acquired businesses have further added to AMETEK’s international presence.
New Product Development.    New products are essential to AMETEK’s long-term growth. As a result, AMETEK has maintained a consistent investment in new product development and engineering. AMETEK's businesses help solve our customers' most complex challenges with differentiated technology solutions. In 2022, AMETEK added to its highly differentiated product portfolio with a range of new products across many of its businesses.
AMETEK focuses on cash generation and capital deployment.  AMETEK generates strong cash flow given its asset-light business model and strong operational execution. This cash flow supports AMETEK’s capital deployment strategy with its primary focus on strategic, value-enhancing acquisitions. AMETEK is also committed to paying a modest quarterly dividend.
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Attracting, retaining, and developing talent is critical to the success and sustainability of the AMETEK Growth Model as our employees are responsible for successfully driving these strategies.
2022 Overview
Operating Performance
In 2022, the Company posted record sales, operating income, operating margins, net income, diluted earnings per share, backlog, and orders. The Company achieved these results from organic sales growth in both EIG and EMG, contributions from the 2022 acquisitions of Navitar, Inc. and RTDS Technologies, Inc., as well as the Company's Operational Excellence Initiatives. See "Results of Operations" in Part II, Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations for further details.
In 2022, the Company achieved record sales of $6,150.5 million, an increase of 10.9% from 2021 due to an 11% organic sales increase, a 2% increase from acquisitions, partially offset by an unfavorable 2% effect of foreign currency translation. Diluted earnings per share for 2022 were a record $5.01, an increase of $0.76 or 17.8%, compared with $4.25 per diluted share in 2021.
Recent Acquisitions
AMETEK spent $429.7 million in cash, net of cash acquired, to purchase two businesses:
In September 2022, AMETEK acquired Navitar, Inc. ("Navitar"), a designer and manufacturer of customized, fully integrated optical imaging systems, components, and software.
In October 2022, AMETEK acquired RTDS Technologies ("RTDS"), a leading provider of real-time power simulation systems used by utilities, and research and education institutions in the development and testing of the electric power grid and renewable energy applications.
Financing
On May 12, 2022, the Company along with certain of its foreign subsidiaries amended and restated its credit agreement dated as of September 22, 2011, as amended and restated as of March 10, 2016 and as further amended and restated as of October 30, 2018, with the lenders, JPMorgan Chase Bank, N.A., as Administrative Agent and Bank of America, N.A., PNC Bank, National Association, Trust Bank and Wells Fargo Bank, National Association, as Co-Syndication Agents. The credit agreement amends and restates the Company’s existing revolving credit facility to increase the size from $1.5 billion to $2.3 billion and terminates the $800 million term loan. The credit agreement places certain restrictions on allowable additional indebtedness.
Recent Events and Market Conditions
Recent events and market conditions impacting our business include the inflationary cost environment, rising interest rates, supply chain constraints, the COVID-19 pandemic, and the ongoing conflict in Ukraine. As a result of these events and conditions, we anticipate the challenging global economic environment to continue into 2023.
Beginning in 2021, we experienced heightened levels of inflation in material and transportation costs. We have taken steps to mitigate the impacts of material and transportation cost inflation by implementing pricing actions. We experienced additional pressure in our supply chain due to component shortages and strained transportation capacity, as well as the impact of continued elevated customer demand. In response to these supply chain pressures, we have taken actions to build inventory and seek alternative sources of supply to support sales and backlog growth. The inflationary environment has also resulted in central banks raising short-term interest rates. We expect inflation to continue into 2023 and will continue to take actions to mitigate this inflationary pressure.
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There still remains uncertainty concerning the COVID-19 pandemic, its effect on labor, government mandated lockdowns and other restrictive measures, and the pandemic's ultimate duration. Lockdowns in China during 2022 limited our ability to access customer sites, operate certain facilities, and placed additional constraints on our supply chain. Depending on the course of the pandemic, additional lockdowns in China or elsewhere could impact our operations and results of operations.
The invasion of Ukraine by Russia and the sanctions imposed in response to this conflict have increased global economic and political uncertainty. While we do not have operations in Russia or Ukraine and do not have significant exposure to customers and vendors in those countries, a significant expansion of the conflict's current scope could further complicate the economic environment.
While the ultimate impact of these events remains uncertain, we will continue to evaluate the extent to which these factors will impact our business, financial condition, and results of operations.
Description of Business
Described below are the products and markets of each reportable segment:
EIG
EIG is a leader in the design and manufacture of advanced analytical, test and measurement instruments for the process, aerospace, medical, research, power and industrial markets. Its growth is based on the strategies outlined in the AMETEK Growth Model. In many instances, EIG's products differ from or are technologically superior to its competitors’ products. EIG has achieved competitive advantage through continued investment in research, development and engineering to develop market-leading products and solutions that serve niche markets. EIG has also has expanded its sales and service capabilities globally to serve its customers.
EIG is a leader in many of the specialized markets it serves. Products supplied to these markets include process control instruments for the life sciences, pharmaceutical, semiconductor, automation, power, food and beverage, oil and gas, and petrochemical industries. It provides a growing range of instruments to the research and laboratory equipment, ultra-precision manufacturing, medical, and test and measurement markets. It is a leader in power quality monitoring and metering, uninterruptible power systems, programmable power equipment, electromagnetic compatibility test equipment, sensors for gas turbines, dashboard instruments for heavy trucks, and instrumentation and controls for the food and beverage industries. EIG supplies the aerospace industry with aircraft and engine sensors, monitoring systems, power supplies, fuel and fluid measurement systems, and data acquisition systems.
In 2022, 49% of EIG’s net sales were to customers outside the United States. At December 31, 2022, EIG employed approximately 11,700 people, of whom approximately 800 were covered by collective bargaining agreements. At December 31, 2022, EIG had operating facilities in the United States, the United Kingdom, Germany, Canada, China, Denmark, Finland, France, Switzerland, Argentina, Austria and Mexico. EIG also shares operating facilities with EMG in China and Mexico.
Process and Analytical Instrumentation Markets and Products
Process and analytical instrumentation sales represented 72% of EIG’s 2022 net sales. These businesses include process analyzers, emission monitors and spectrometers; elemental and surface analysis instruments; level, pressure and temperature sensors and transmitters; radiation measurement devices; level measurement devices; precision manufacturing systems; materials- and force-testing instruments; contact and non-contact metrology products; and clinical and educational communication solutions. Among the industries it serves are power generation; pharmaceutical manufacturing; medical and healthcare; research and development; water and waste treatment; renewable energy production, semiconductor manufacturing; natural gas distribution; emissions monitoring, and oil, gas, and petrochemical refining. Its instruments are used for precision measurement in a number of applications, including radiation detection, trace element and materials analysis, nanotechnology research, ultraprecise manufacturing, and test and measurement.
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Acquired in September 2022, Navitar is a designer and manufacturer of customized, fully integrated optical imaging systems, components, and software. Navitar's market leading optical components and solutions complement the Company's existing optics portfolio.
Acquired in November 2021, Alphasense is a leading provider of gas and particulate sensors for use in environmental, health and safety, and air quality applications. Alphasense complements the Company's existing sensor business expanding the Company's presence in the environmental health and safety market.
Acquired in March 2021, Magnetrol is a leading provider of level and flow control solutions for challenging process applications across a diverse set of end markets including medical, pharmaceutical, oil and gas, food and beverage, and general industrial. Magnetrol's solutions combined with the Company's existing Sensors, Test and Calibration business, becomes an industry leading differentiated sensor platform with a broad range of level and flow measurement solutions.
Aerospace and Power Instrumentation Markets and Products
Aerospace and Power Instrumentation sales represented 28% of EIG’s 2022 net sales. These businesses produce a wide array of instrumentation, systems and sensors for applications in the aerospace, power and industrial markets.
These businesses produce power monitoring and metering instruments, uninterruptible power supply systems and programmable power supplies used in a wide range of industrial settings. It is a leader in the design and manufacture of power measurement, quality monitoring and event recorders for use in power generation, transmission and distribution. These businesses provide uninterruptible power supply systems, multifunction electric meters, annunciators, alarm monitoring systems and highly specialized communications equipment for smart grid applications and renewable energy applications. It also offers precision power supplies and power conditioning products, and electrical immunity and EMC test equipment, sensors for electric vehicle testing, gas turbines, dashboard instruments for heavy trucks and other vehicles, and instrumentation and controls for the food and beverage industries.
AMETEK’s aerospace products are designed to customer specifications and manufactured to stringent operational and reliability requirements. These products include airborne data systems, turbine engine temperature measurement products, vibration-monitoring systems, cockpit instruments and displays, fuel and fluid measurement products, embedded computing systems, and sensors and switches. AMETEK serves all segments of the commercial and military aerospace market, including commercial airliners, business jets, regional aircraft and helicopters.
AMETEK operates in highly specialized aerospace market segments in which it has proven technological or manufacturing advantages versus its competition. Among its more significant competitive advantages is its 70-year-plus reputation as an established aerospace supplier. AMETEK has long-standing relationships with the world’s leading commercial and military aircraft, jet engine and original equipment manufacturers and aerospace system integrators. AMETEK also is a leading provider of spare part sales, repairs and overhaul services to commercial aerospace.
Acquired in October 2022, RTDS is a leading provider of real-time power simulation systems used by utilities, and research and education institutions in the development and testing of the electric power grid and renewable energy applications. RTDS's solutions complement the Company's existing power instruments businesses.
Acquired in April 2021, Abaco Systems specializes in open-architecture computing and electronic systems for aerospace, defense, and specialized industrial markets and is a leading provider of mission critical embedded computing systems. Abaco's solutions expand and complement the Company's existing aerospace and defense businesses.
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Acquired in April 2021, NSI-MI is a leading provider of radio frequency and microwave test and measurement systems for niche applications across the aerospace, defense, automotive, wireless communications, and research markets. NSI-MI strengthens the Company's test and measurement platforms.
Acquired in March 2021, Crank Software is a leading provider of embedded graphical user interface software and services. Crank Software expands the Company's growing portfolio of software solutions.
Customers
EIG is not dependent on any single customer such that the loss of that customer would have a material adverse effect on EIG’s operations. Approximately 6% of EIG’s 2022 net sales were made to its five largest customers. No single customer comprises more than 3% of net sales.
EMG
EMG is a differentiated supplier of automation solutions, thermal management systems, specialty metals and electrical interconnects. EMG is a leader in many of the niche markets in which it competes. Products supplied to these markets include advanced precision motion control solutions, which are used in a wide range of automation applications across the medical, semiconductor, aerospace, defense, and food and beverage industries, as well as highly engineered electrical connectors and electronics packaging used in aerospace and defense, medical, and industrial applications.
EMG supplies high-purity powdered metals, strip and foil, specialty clad metals and metal matrix composites. EMG's heat exchangers provide electronic cooling and environmental control for the aerospace and defense and semiconductor industries. EMG's motors are widely used in commercial appliances, fitness equipment, food and beverage machines, hydraulic pumps and industrial blowers. Additionally, EMG operates a global network of aviation maintenance, repair and overhaul (“MRO”) facilities.
EMG designs and manufactures products that, in many instances, are significantly different from or technologically superior to competitors’ products. It has achieved competitive advantage through continued investment in research, development and engineering, efficiency improvements from operational excellence, acquisition synergies and improved supply chain management.
In 2022, 49% of EMG’s net sales were to customers outside the United States. At December 31, 2022, EMG employed approximately 7,500 people, of whom approximately 1,900 were covered by collective bargaining agreements. At December 31, 2022, EMG had operating facilities in the United States, the United Kingdom, China, Germany, France, Italy, Mexico, Serbia, Czechia, Malaysia and Taiwan.

Automation and Engineered Solutions Markets and Products
Automation and Engineered Solution sales represented 71% of EMG’s 2022 net sales. These businesses produce precision motion control solutions, brushless motors, blowers and pumps, heat exchangers and other electromechanical systems. These products are used in a wide variety of high-precision automation applications, including semiconductor equipment, and laboratory and medical equipment.
AMETEK is a leader in highly engineered electrical connectors and electronics packaging used to protect sensitive devices and mission-critical electronics. Its electrical connectors, terminals, headers and packaging are designed specifically for harsh environments and highly customized applications. In addition, AMETEK is an innovator and market leader in specialized metal powder, strip, wire and bonded products used in medical, aerospace and defense, telecommunications, automotive and general industrial applications.

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Aerospace Markets and Products
Aerospace sales represented 29% of EMG’s 2022 net sales. These businesses produce motor-blower systems and heat exchangers used in thermal management and other applications on a variety of military and commercial aircraft and military ground vehicles. In addition, these businesses provide the commercial and military aerospace industry with third-party MRO services on a global basis with facilities in the United States, Europe and Asia.
Customers
EMG is not dependent on any single customer such that the loss of that customer would have a material adverse effect on EMG’s operations. Approximately 9% of EMG’s 2022 net sales were made to its five largest customers. No single customer comprises greater than 3% of net sales.
Marketing
AMETEK’s marketing efforts generally are organized and carried out at the business level. EIG makes use of specialized distributors and sales representatives to market its products along with a direct sales force for its technically sophisticated products. Within aerospace, the specialized customer base of aircraft and jet engine manufacturers is served primarily by direct sales engineers. Given the technical nature of its many products, as well as its significant market share, EMG conducts much of its domestic and international marketing activities through a direct sales force and makes some use of sales representatives and distributors, both in the United States and in other countries.
Competition
In general, AMETEK’s markets are highly competitive with competition based on technology, performance, quality, service and price.
In EIG’s markets, AMETEK believes it ranks as a leader in certain analytical measurement and control instruments, and power and industrial markets. It also is a major instrument and sensor supplier to commercial aviation. In process and analytical instruments, numerous companies compete in each market on the basis of product quality, performance and innovation. In power and industrial and in aerospace, AMETEK competes with a number of companies depending on the specific market segment.
EMG’s businesses compete with a number of companies in each of its markets. Competition is generally based on product innovation, performance and price. There also is competition from alternative materials and processes.
Availability of Raw Materials
AMETEK’s reportable segments obtain raw materials and supplies from a variety of sources and generally from more than one supplier. For EMG, however, certain items, including various base metals and certain steel components, are available from only a limited number of suppliers. AMETEK believes its sources and supplies of raw materials are adequate for its needs.
Environmental and Other Governmental Regulation
AMETEK's operations and properties are subject to laws and regulations relating to environmental protection, including those governing air emissions, water discharges, waste management, and workplace safety. The Company uses, generates and disposes of hazardous substances and waste in its operations and could be subject to material liabilities relating to the investigation and clean-up of contaminated properties and related claims. The Company is required to conform our operations and properties to these laws and adapt to regulatory requirements in all countries as these requirements change. The Company has a robust Environmental Health and Safety program responsible for supporting its environmental monitoring and compliance efforts. In connection with acquisitions, the Company will
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assess potential material environmental liabilities, and determine regulatory and fiduciary obligations during the course of the due diligence process. In addition, new laws and regulations, the discovery of previously unknown contamination or the imposition of new requirements could increase costs or subject AMETEK to new or increased liabilities.
Information with respect to environmental matters is set forth in Note 13 to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Patents, Licenses and Trademarks
AMETEK owns numerous unexpired U.S. and foreign patents, including counterparts of its more important U.S. patents, in the major industrial countries of the world. It is a licensor or licensee under patent agreements of various types, and its products are marketed under various registered and unregistered U.S. and foreign trademarks and trade names. AMETEK, however, does not consider any single patent or trademark, or any group of them, essential either to its business as a whole or to either one of its reportable segments. The annual royalties received or paid under license agreements are not significant to either of its reportable segments or to AMETEK’s overall operations.
Environmental, Social, and Governance ("ESG") and Human Capital Management
Environmental, Social, and Governance
AMETEK is committed to providing a consistent and excellent return to our stakeholders, all while maintaining a strong commitment to environmental stewardship, social responsibility, diversity and inclusion, and sound corporate governance. We believe that effectively prioritizing and managing our ESG initiatives will help create long-term value and a better future for our stakeholders.
Our Sustainability Report highlights our sustainability initiatives and is available on our website at www.ametek.com/aboutus/sustainability.
The Company's ESG highlights include the following:
Core Values.Our core values — Ethics and Integrity, Respect for the Individual, Diversity and Inclusion, Teamwork, and Social Responsibility — remain the most critical components of our sustainability efforts. Sustainability is an integral aspect of the core values that guide the way we do business.
Environmental Stewardship. Our ongoing commitment to serve as environmental stewards and protect the environment for future generations is reflected in our corporate governance and oversight of compliance and risk management.We are reducing our environmental impact and increasing operational efficiency across our global footprint, and have established greenhouse gas emission reduction targets.Across AMETEK, our businesses are committed to developing innovative products and solutions to help reduce carbon emissions, increase the use and adoption of renewable energy, and address the impacts of climate change.
Commitment to Diversity and Inclusion. AMETEK is committed to developing a diverse and inclusive culture to help power innovation, growth and greater opportunities for all employees.Our hiring practices are geared toward identifying the most diverse set of candidates for open positions.Our training and development programs are focused on providing meaningful opportunities for personal and professional development. And our charitable arm, the AMETEK Foundation, provides wide-ranging support to nonprofit and educational organizations in the communities where we operate.
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Our Solutions. AMETEK’s portfolio of differentiated technology solutions has grown significantly. Many of AMETEK’s products and solutions are creating a more sustainable future by supporting customers’ environmentally focused applications across a diverse set of markets.AMETEK partners with customers to develop sustainable solutions with specialized technology that help in the effort to improve the quality of life and the environment.
Human Capital Management
As a global organization, we have seen firsthand that the innovation needed to solve our customers’ biggest challenges can only come from employees that are fully engaged and committed, and who have diverse perspectives and backgrounds. Our Board regularly receives updates and presentations on key topics, including ESG, compliance, diversity and inclusion, and employee development and succession.
Our executive management team reviews the key talent across our company annually and assesses the adequacy of talent to meet business challenges and future growth needs. A major area of focus is a review of diversity and inclusion improvement efforts. We have a Women’s Business Council and an African American Business Council, both of which drive initiatives focused on mentorship, education and career guidance. Diverse candidate slates are required for external salaried openings, including executive management and Board appointments, where at least one diverse candidate is interviewed.
We have created a leadership development program for employees on track to become P&L leaders in the company.This focused and intensive program involves both internal and external training on leadership effectiveness as well as specific job-related skills.In addition, participants receive hands-on experience in key AMETEK business system processes such as growth kaizens and acquisition due diligence.We have a long-standing commitment to responsible corporate conduct.Each employee is provided with annual performance goals which are reviewed in a performance review with their manager.Employee feedback is actively encouraged through an open-door policy for all managers, regular town hall/all hands meetings, executive presentations with Q&A sessions, a regular CEO podcast for all employees, and a hotline that can be used to report complaints.
Giving back to our community is an important part of our culture. Established in 1960, the AMETEK Foundation is the charitable giving arm of AMETEK, Inc. The Foundation’s mission is to empower AMETEK colleagues making a positive impact in their local communities, with a focus on health and welfare, civic and social service programs, and education.
As of December 31, 2022, we have approximately 19,600 employees, of which 42% are diverse (global female full-time and part-time employees plus diverse U.S. male full-time and part-time employees).Our compensation programs are designed to provide competitive salaries and benefit programs to attract, retain and motivate a world-class workforce. Selected employees participate in short- and long-term incentive programs that align employee and shareholder interests and promote long-term retention.Additionally, we strive to protect health and safety in every aspect of our enterprise – from the way we design, manufacture and deliver our products to the way our customers use them.We continue to drive towards our goal of zero lost-time work incidents.2022 was our lowest lost-time incident rate on record.We continue to enhance our safety initiatives as each facility is tasked with identifying opportunities for additional safety measures.Businesses with zero incidents share best practices and ensure ongoing training to maintain their safety excellence. In addition to our EHS facility audits, our facilities’ activities include safety committees, continual training, documented self-audits, and behavior-based safety observations and feedback.
Our U.S. Federal Employment Information Report (EEO-1) for 2021 is available at www.ametek.com and offers a snapshot of U.S. diversity data as of December 31, 2021.The EEO-1 data captures only U.S. employees and does not reflect the broad diversity of our approximately 9,500international employees.

10

Available Information
Operating Performance
AMETEK’s annual report on Form
 10-K,
quarterly reports on Form
 10-Q,
current reports on Form
 8-K
In 2022, the Company posted record sales, operating income, operating margins, net income, diluted earnings per share, backlog, and all amendmentsorders. The Company achieved these results from organic sales growth in both EIG and EMG, contributions from the 2022 acquisitions of Navitar, Inc. and RTDS Technologies, Inc., as well as the Company's Operational Excellence Initiatives. See "Results of Operations" in Part II, Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations for further details.
In 2022, the Company achieved record sales of $6,150.5 million, an increase of 10.9% from 2021 due to those reports filedan 11% organic sales increase, a 2% increase from acquisitions, partially offset by an unfavorable 2% effect of foreign currency translation. Diluted earnings per share for 2022 were a record $5.01, an increase of $0.76 or furnished pursuant17.8%, compared with $4.25 per diluted share in 2021.
Recent Acquisitions
AMETEK spent $429.7 million in cash, net of cash acquired, to Section 13(a)purchase two businesses:
In September 2022, AMETEK acquired Navitar, Inc. ("Navitar"), a designer and manufacturer of customized, fully integrated optical imaging systems, components, and software.
In October 2022, AMETEK acquired RTDS Technologies ("RTDS"), a leading provider of real-time power simulation systems used by utilities, and research and education institutions in the development and testing of the Securities Exchange Actelectric power grid and renewable energy applications.
Financing
On May 12, 2022, the Company along with certain of 1934 are made available freeits foreign subsidiaries amended and restated its credit agreement dated as of chargeSeptember 22, 2011, as amended and restated as of March 10, 2016 and as further amended and restated as of October 30, 2018, with the lenders, JPMorgan Chase Bank, N.A., as Administrative Agent and Bank of America, N.A., PNC Bank, National Association, Trust Bank and Wells Fargo Bank, National Association, as Co-Syndication Agents. The credit agreement amends and restates the Company’s existing revolving credit facility to increase the size from $1.5 billion to $2.3 billion and terminates the $800 million term loan. The credit agreement places certain restrictions on allowable additional indebtedness.
Recent Events and Market Conditions
Recent events and market conditions impacting our business include the inflationary cost environment, rising interest rates, supply chain constraints, the COVID-19 pandemic, and the ongoing conflict in Ukraine. As a result of these events and conditions, we anticipate the challenging global economic environment to continue into 2023.
Beginning in 2021, we experienced heightened levels of inflation in material and transportation costs. We have taken steps to mitigate the impacts of material and transportation cost inflation by implementing pricing actions. We experienced additional pressure in our supply chain due to component shortages and strained transportation capacity, as well as the impact of continued elevated customer demand. In response to these supply chain pressures, we have taken actions to build inventory and seek alternative sources of supply to support sales and backlog growth. The inflationary environment has also resulted in central banks raising short-term interest rates. We expect inflation to continue into 2023 and will continue to take actions to mitigate this inflationary pressure.
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There still remains uncertainty concerning the COVID-19 pandemic, its effect on labor, government mandated lockdowns and other restrictive measures, and the pandemic's ultimate duration. Lockdowns in China during 2022 limited our ability to access customer sites, operate certain facilities, and placed additional constraints on our supply chain. Depending on the Company’s website at
www.ametek.com
course of the pandemic, additional lockdowns in China or elsewhere could impact our operations and results of operations.
The invasion of Ukraine by Russia and the “Investors – Financial Information” section as soon as reasonably practicable after such material is electronically filed with,sanctions imposed in response to this conflict have increased global economic and political uncertainty. While we do not have operations in Russia or furnishedUkraine and do not have significant exposure to customers and vendors in those countries, a significant expansion of the U.S. Securitiesconflict's current scope could further complicate the economic environment.
While the ultimate impact of these events remains uncertain, we will continue to evaluate the extent to which these factors will impact our business, financial condition, and Exchange Commission. All reports filed withresults of operations.
Description of Business
Described below are the Securities Exchange Commission can also be viewed on their website at
www.sec.gov
. AMETEK has posted in the “Investors – Governance” sectionproducts and markets of its website its corporate governance guidelines, Board committee charters and codes of ethics. Those documents also are available free of charge in published form to any stockholder who requests them by writing to the Investor Relations Department at AMETEK, Inc., 1100 Cassatt Road, Berwyn, Pennsylvania, 19312.each reportable segment:
Products and Services
EIG
AMETEK’s products are marketed and sold worldwide through two operating groups: Electronic Instruments (“EIG”) and Electromechanical (“EMG”). Electronic InstrumentsEIG is a leader in the design and manufacture of advanced analytical, test and measurement instruments for the process, aerospace, medical, research, power and industrial markets. Its growth is based on the strategies outlined in the AMETEK Growth Model. In many instances, EIG's products differ from or are technologically superior to its competitors’ products. EIG has achieved competitive advantage through continued investment in research, development and engineering to develop market-leading products and solutions that serve niche markets. EIG has also has expanded its sales and service capabilities globally to serve its customers.
EIG is a leader in many of the specialized markets it serves. Products supplied to these markets include process control instruments for the life sciences, pharmaceutical, semiconductor, automation, power, food and beverage, oil and gas, and petrochemical industries. It provides a growing range of instruments to the research and laboratory equipment, ultra-precision manufacturing, medical, and test and measurement markets. It is a leader in power quality monitoring and metering, uninterruptible power systems, programmable power equipment, electromagnetic compatibility test equipment, sensors for gas turbines, dashboard instruments for heavy trucks, and instrumentation and controls for the food and beverage industries. EIG supplies the aerospace industry with aircraft and engine sensors, monitoring systems, power supplies, fuel and fluid measurement systems, and data acquisition systems.
In 2022, 49% of EIG’s net sales were to customers outside the United States. At December 31, 2022, EIG employed approximately 11,700 people, of whom approximately 800 were covered by collective bargaining agreements. At December 31, 2022, EIG had operating facilities in the United States, the United Kingdom, Germany, Canada, China, Denmark, Finland, France, Switzerland, Argentina, Austria and Mexico. EIG also shares operating facilities with EMG in China and Mexico.
Process and Analytical Instrumentation Markets and Products
Process and analytical instrumentation sales represented 72% of EIG’s 2022 net sales. These businesses include process analyzers, emission monitors and spectrometers; elemental and surface analysis instruments; level, pressure and temperature sensors and transmitters; radiation measurement devices; level measurement devices; precision manufacturing systems; materials- and force-testing instruments; contact and non-contact metrology products; and clinical and educational communication solutions. Among the industries it serves are power generation; pharmaceutical manufacturing; medical and healthcare; research and development; water and waste treatment; renewable energy production, semiconductor manufacturing; natural gas distribution; emissions monitoring, and oil, gas, and petrochemical refining. Its instruments are used for precision measurement in a number of applications, including radiation detection, trace element and materials analysis, nanotechnology research, ultraprecise manufacturing, and test and measurement.
5
Acquired in September 2022, Navitar is a designer and manufacturer of customized, fully integrated optical imaging systems, components, and software. Navitar's market leading optical components and solutions complement the Company's existing optics portfolio.
Acquired in November 2021, Alphasense is a leading provider of gas and particulate sensors for use in environmental, health and safety, and air quality applications. Alphasense complements the Company's existing sensor business expanding the Company's presence in the environmental health and safety market.
Acquired in March 2021, Magnetrol is a leading provider of level and flow control solutions for challenging process applications across a diverse set of end markets including medical, pharmaceutical, oil and gas, food and beverage, and general industrial. Magnetrol's solutions combined with the Company's existing Sensors, Test and Calibration business, becomes an industry leading differentiated sensor platform with a broad range of level and flow measurement solutions.
Aerospace and Power Instrumentation Markets and Products
Aerospace and Power Instrumentation sales represented 28% of EIG’s 2022 net sales. These businesses produce a wide array of instrumentation, systems and sensors for applications in the aerospace, power and industrial markets.
These businesses produce power monitoring and metering instruments, uninterruptible power supply systems and programmable power supplies used in a wide range of industrial settings. It is a leader in the design and manufacture of power measurement, quality monitoring and event recorders for use in power generation, transmission and distribution. These businesses provide uninterruptible power supply systems, multifunction electric meters, annunciators, alarm monitoring systems and highly specialized communications equipment for smart grid applications and renewable energy applications. It also offers precision power supplies and power conditioning products, and electrical immunity and EMC test equipment, sensors for electric vehicle testing, gas turbines, dashboard instruments for heavy trucks and other vehicles, and instrumentation and controls for the food and beverage industries.
AMETEK’s aerospace products are designed to customer specifications and manufactured to stringent operational and reliability requirements. These products include airborne data systems, turbine engine temperature measurement products, vibration-monitoring systems, cockpit instruments and displays, fuel and fluid measurement products, embedded computing systems, and sensors and switches. AMETEK serves all segments of the commercial and military aerospace market, including commercial airliners, business jets, regional aircraft and helicopters.
AMETEK operates in highly specialized aerospace market segments in which it has proven technological or manufacturing advantages versus its competition. Among its more significant competitive advantages is its 70-year-plus reputation as an established aerospace supplier. AMETEK has long-standing relationships with the world’s leading commercial and military aircraft, jet engine and original equipment manufacturers and aerospace system integrators. AMETEK also is a leading provider of spare part sales, repairs and overhaul services to commercial aerospace.
Acquired in October 2022, RTDS is a leading provider of real-time power simulation systems used by utilities, and research and education institutions in the development and testing of the electric power grid and renewable energy applications. RTDS's solutions complement the Company's existing power instruments businesses.
Acquired in April 2021, Abaco Systems specializes in open-architecture computing and electronic systems for aerospace, defense, and specialized industrial markets and is a leading provider of mission critical embedded computing systems. Abaco's solutions expand and complement the Company's existing aerospace and defense businesses.
6
Acquired in April 2021, NSI-MI is a leading provider of radio frequency and microwave test and measurement systems for niche applications across the aerospace, defense, automotive, wireless communications, and research markets. ElectromechanicalNSI-MI strengthens the Company's test and measurement platforms.
Acquired in March 2021, Crank Software is a leading provider of embedded graphical user interface software and services. Crank Software expands the Company's growing portfolio of software solutions.
Customers
EIG is not dependent on any single customer such that the loss of that customer would have a material adverse effect on EIG’s operations. Approximately 6% of EIG’s 2022 net sales were made to its five largest customers. No single customer comprises more than 3% of net sales.
EMG
EMG is a differentiated supplier of precision motion controlautomation solutions, thermal management systems, specialty metals and electrical interconnects. Its endEMG is a leader in many of the niche markets in which it competes. Products supplied to these markets include advanced precision motion control solutions, which are used in a wide range of automation applications across the medical, semiconductor, aerospace, defense, and food and beverage industries, as well as highly engineered electrical connectors and electronics packaging used in aerospace and defense, medical, automation and other industrial markets.
Competitive Strengths
Management believes AMETEK has significant competitive advantages that help strengthen and sustain its market positions. Those advantages include:
Significant Market Share
.    AMETEK maintains significant market share in a number of targeted niche markets through its ability to produce and deliver high-quality products at competitive prices. EIG has significant market positions in niche segments of the process, power and industrial applications.
EMG supplies high-purity powdered metals, strip and aerospace markets. EMG holds significant positions in niche segments offoil, specialty clad metals and metal matrix composites. EMG's heat exchangers provide electronic cooling and environmental control for the aerospace and defense automation and medical markets.semiconductor industries. EMG's motors are widely used in commercial appliances, fitness equipment, food and beverage machines, hydraulic pumps and industrial blowers. Additionally, EMG operates a global network of aviation maintenance, repair and overhaul (“MRO”) facilities.
TechnologicalEMG designs and Development Capabilities
.    AMETEK believes it has certain technological advantages over its competitorsmanufactures products that, allow itin many instances, are significantly different from or technologically superior to maintain its leading market positions. Historically, it has demonstrated an ability to develop innovative new products and solutions that anticipate customer needs.competitors’ products. It has consistently added to itsachieved competitive advantage through continued investment in research, development and engineering, efficiency improvements from operational excellence, acquisition synergies and improved its new product development efforts withsupply chain management.
In 2022, 49% of EMG’s net sales were to customers outside the adoptionUnited States. At December 31, 2022, EMG employed approximately 7,500 people, of Design for Six Sigma and Value Analysis/Value Engineering methodologies. These have improved the pace and quality of product innovation and resultedwhom approximately 1,900 were covered by collective bargaining agreements. At December 31, 2022, EMG had operating facilities in the introductionUnited States, the United Kingdom, China, Germany, France, Italy, Mexico, Serbia, Czechia, Malaysia and Taiwan.

Automation and Engineered Solutions Markets and Products
Automation and Engineered Solution sales represented 71% of EMG’s 2022 net sales. These businesses produce precision motion control solutions, brushless motors, blowers and pumps, heat exchangers and other electromechanical systems. These products are used in a steady streamwide variety of newhigh-precision automation applications, including semiconductor equipment, and laboratory and medical equipment.
AMETEK is a leader in highly engineered electrical connectors and electronics packaging used to protect sensitive devices and mission-critical electronics. Its electrical connectors, terminals, headers and packaging are designed specifically for harsh environments and highly customized applications. In addition, AMETEK is an innovator and market leader in specialized metal powder, strip, wire and bonded products across all of AMETEK’s lines of business.used in medical, aerospace and defense, telecommunications, automotive and general industrial applications.

2
7
Aerospace Markets and Products
Aerospace sales represented 29% of EMG’s 2022 net sales. These businesses produce motor-blower systems and heat exchangers used in thermal management and other applications on a variety of military and commercial aircraft and military ground vehicles. In addition, these businesses provide the commercial and military aerospace industry with third-party MRO services on a global basis with facilities in the United States, Europe and Asia.
Customers
EMG is not dependent on any single customer such that the loss of that customer would have a material adverse effect on EMG’s operations. Approximately 9% of EMG’s 2022 net sales were made to its five largest customers. No single customer comprises greater than 3% of net sales.
Marketing
AMETEK’s marketing efforts generally are organized and carried out at the business level. EIG makes use of specialized distributors and sales representatives to market its products along with a direct sales force for its technically sophisticated products. Within aerospace, the specialized customer base of aircraft and jet engine manufacturers is served primarily by direct sales engineers. Given the technical nature of its many products, as well as its significant market share, EMG conducts much of its domestic and international marketing activities through a direct sales force and makes some use of sales representatives and distributors, both in the United States and in other countries.
Competition
In general, AMETEK’s markets are highly competitive with competition based on technology, performance, quality, service and price.
In EIG’s markets, AMETEK believes it ranks as a leader in certain analytical measurement and control instruments, and power and industrial markets. It also is a major instrument and sensor supplier to commercial aviation. In process and analytical instruments, numerous companies compete in each market on the basis of product quality, performance and innovation. In power and industrial and in aerospace, AMETEK competes with a number of companies depending on the specific market segment.
EMG’s businesses compete with a number of companies in each of its markets. Competition is generally based on product innovation, performance and price. There also is competition from alternative materials and processes.
Availability of Raw Materials
AMETEK’s reportable segments obtain raw materials and supplies from a variety of sources and generally from more than one supplier. For EMG, however, certain items, including various base metals and certain steel components, are available from only a limited number of suppliers. AMETEK believes its sources and supplies of raw materials are adequate for its needs.
Environmental and Other Governmental Regulation
AMETEK's operations and properties are subject to laws and regulations relating to environmental protection, including those governing air emissions, water discharges, waste management, and workplace safety. The Company uses, generates and disposes of hazardous substances and waste in its operations and could be subject to material liabilities relating to the investigation and clean-up of contaminated properties and related claims. The Company is required to conform our operations and properties to these laws and adapt to regulatory requirements in all countries as these requirements change. The Company has a robust Environmental Health and Safety program responsible for supporting its environmental monitoring and compliance efforts. In connection with acquisitions, the Company will
8
Efficient
assess potential material environmental liabilities, and Low-Cost Manufacturing Operations.determine regulatory and fiduciary obligations during the course of the due diligence process. In addition, new laws and regulations, the discovery of previously unknown contamination or the imposition of new requirements could increase costs or subject AMETEK to new or increased liabilities.
Information with respect to environmental matters is set forth in Note 13 to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Patents, Licenses and Trademarks
AMETEK owns numerous unexpired U.S. and foreign patents, including counterparts of its more important U.S. patents, in the major industrial countries of the world. It is a licensor or licensee under patent agreements of various types, and its products are marketed under various registered and unregistered U.S. and foreign trademarks and trade names. AMETEK, however, does not consider any single patent or trademark, or any group of them, essential either to its business as a whole or to either one of its reportable segments. The annual royalties received or paid under license agreements are not significant to either of its reportable segments or to AMETEK’s overall operations.
Environmental, Social, and Governance ("ESG") and Human Capital Management
Environmental, Social, and Governance
AMETEK is committed to providing a consistent and excellent return to our stakeholders, all while maintaining a strong commitment to environmental stewardship, social responsibility, diversity and inclusion, and sound corporate governance. We believe that effectively prioritizing and managing our ESG initiatives will help create long-term value and a better future for our stakeholders.
Our Sustainability Report highlights our sustainability initiatives and is available on our website at www.ametek.com/aboutus/sustainability.
The Company's ESG highlights include the following:
Core Values.Our core values — Ethics and Integrity, Respect for the Individual, Diversity and Inclusion, Teamwork, and Social Responsibility — remain the most critical components of our sustainability efforts. Sustainability is an integral aspect of the core values that guide the way we do business.
Environmental Stewardship. Our ongoing commitment to serve as environmental stewards and protect the environment for future generations is reflected in our corporate governance and oversight of compliance and risk management.We are reducing our environmental impact and increasing operational efficiency across our global footprint, and have established greenhouse gas emission reduction targets.Across AMETEK, our businesses are committed to developing innovative products and solutions to help reduce carbon emissions, increase the use and adoption of renewable energy, and address the impacts of climate change.
Commitment to Diversity and Inclusion. AMETEK is committed to developing a diverse and inclusive culture to help power innovation, growth and greater opportunities for all employees.Our hiring practices are geared toward identifying the most diverse set of candidates for open positions.Our training and development programs are focused on providing meaningful opportunities for personal and professional development. And our charitable arm, the AMETEK Foundation, provides wide-ranging support to nonprofit and educational organizations in the communities where we operate.
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    Through its Operational Excellence initiatives,
Our Solutions. AMETEK’s portfolio of differentiated technology solutions has grown significantly. Many of AMETEK’s products and solutions are creating a more sustainable future by supporting customers’ environmentally focused applications across a diverse set of markets.AMETEK has established a lean manufacturing platform for its businesses. In itspartners with customers to develop sustainable solutions with specialized technology that help in the effort to achieve best-cost manufacturing,improve the quality of life and the environment.
Human Capital Management
As a global organization, we have seen firsthand that the innovation needed to solve our customers’ biggest challenges can only come from employees that are fully engaged and committed, and who have diverse perspectives and backgrounds. Our Board regularly receives updates and presentations on key topics, including ESG, compliance, diversity and inclusion, and employee development and succession.
Our executive management team reviews the key talent across our company annually and assesses the adequacy of talent to meet business challenges and future growth needs. A major area of focus is a review of diversity and inclusion improvement efforts. We have a Women’s Business Council and an African American Business Council, both of which drive initiatives focused on mentorship, education and career guidance. Diverse candidate slates are required for external salaried openings, including executive management and Board appointments, where at least one diverse candidate is interviewed.
We have created a leadership development program for employees on track to become P&L leaders in the company.This focused and intensive program involves both internal and external training on leadership effectiveness as well as specific job-related skills.In addition, participants receive hands-on experience in key AMETEK had plants,business system processes such as growth kaizens and acquisition due diligence.We have a long-standing commitment to responsible corporate conduct.Each employee is provided with annual performance goals which are reviewed in a performance review with their manager.Employee feedback is actively encouraged through an open-door policy for all managers, regular town hall/all hands meetings, executive presentations with Q&A sessions, a regular CEO podcast for all employees, and a hotline that can be used to report complaints.
Giving back to our community is an important part of our culture. Established in 1960, the AMETEK Foundation is the charitable giving arm of AMETEK, Inc. The Foundation’s mission is to empower AMETEK colleagues making a positive impact in their local communities, with a focus on health and welfare, civic and social service programs, and education.
As of December 31, 2022, we have approximately 19,600 employees, of which 42% are diverse (global female full-time and part-time employees plus diverse U.S. male full-time and part-time employees).Our compensation programs are designed to provide competitive salaries and benefit programs to attract, retain and motivate a world-class workforce. Selected employees participate in short- and long-term incentive programs that align employee and shareholder interests and promote long-term retention.Additionally, we strive to protect health and safety in every aspect of our enterprise – from the way we design, manufacture and deliver our products to the way our customers use them.We continue to drive towards our goal of zero lost-time work incidents.2022 was our lowest lost-time incident rate on record.We continue to enhance our safety initiatives as each facility is tasked with identifying opportunities for additional safety measures.Businesses with zero incidents share best practices and ensure ongoing training to maintain their safety excellence. In addition to our EHS facility audits, our facilities’ activities include safety committees, continual training, documented self-audits, and behavior-based safety observations and feedback.
Our U.S. Federal Employment Information Report (EEO-1) for 2021 is available at www.ametek.com and offers a snapshot of U.S. diversity data as of December 31, 2019, in Brazil, China,2021.The EEO-1 data captures only U.S. employees and does not reflect the Czech Republic, Malaysia, Mexico, and Serbia. These plants offer proximity to customers and provide opportunities for increasing broad diversity of our approximately 9,500international sales. Acquisitions also have allowed AMETEK to reduce costs and achieve operating synergies by consolidating operations, product lines and distribution channels, benefitting both of AMETEK’s operating groups.employees.

Experienced Management Team
.    Another component of AMETEK’s success is the strength of its management team and that team’s commitment to improving Company performance. AMETEK senior management has extensive industry experience and an average of approximately 27 years of AMETEK service. The management team is focused on delivering strong, consistent and profitable growth, and growing shareholder value. Individual performance is tied to financial results through Company-established stock ownership guidelines and equity incentive programs.
Business Strategy10
AMETEK is committed to achieving earnings growth through the successful implementation of the AMETEK Growth Model. The goal of that model is double-digit annual percentage growth in sales and earnings per share over the business cycle and a superior return on total capital. In addition, other financial initiatives have been or may be undertaken, including public and private debt or equity issuance, bank debt refinancing, local financing in certain foreign countries and share repurchases.
AMETEK’s Growth Model integrates the four growth strategies of Operational Excellence, Strategic Acquisitions, Global and Market Expansion, and New Product Development with a focus on cash generation and capital deployment.
Operational Excellence.
    Operational Excellence is AMETEK’s cornerstone strategy for accelerating growth, improving profit margins and strengthening its competitive position across its businesses. Operational Excellence focuses on initiatives to drive increased organic sales growth, improvements in operating efficiencies and sustainable practices. It emphasizes team building and a participative management culture. AMETEK’s Operational Excellence strategies include lean manufacturing, global sourcing, Design for Six Sigma, Value Engineering/Value Analysis and growth kaizens. Each plays an important role in improving efficiency, enhancing the pace and quality of innovation and driving profitable sales growth. Operational Excellence initiatives have yielded lower operating and administrative costs, shortened manufacturing cycle times, resulted in higher cash flow from operations and increased customer satisfaction. They also have played a key role in achieving synergies from newly acquired companies.
Strategic Acquisitions
.    Acquisitions are a key to achieving the goals of the AMETEK Growth Model. Since the beginning of 2015 through December 31, 2019, AMETEK has completed 18 acquisitions with annualized sales totaling more than $1.1 billion, including two acquisitions in 2019 (see “Recent Acquisitions”). AMETEK targets companies that offer compelling strategic, technical and cultural fit. It seeks to acquire businesses in adjacent markets with complementary products and technologies. It also looks for businesses that provide attractive growth opportunities, often in new and emerging markets. Through these and prior acquisitions, AMETEK’s management team has developed considerable skill in identifying, acquiring and integrating new businesses. As it has executed its acquisition strategy, AMETEK’s mix of businesses has shifted toward those that are more highly differentiated and, therefore, offer better opportunities for growth and profitability.
Global & Market Expansion
.    AMETEK has experienced strong growth outside the United States, reflecting an expanding international customer base, investments in its global infrastructure and the attractive growth potential of its businesses in overseas markets. While Europe remains its largest overseas
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Table of Contents
market, AMETEK has pursued growth opportunities worldwide, especially in key emerging markets. It has grown sales in Latin America and Asia by strategically building, acquiring and expanding manufacturing facilities. AMETEK also has expanded its sales and service capabilities in China and enhanced its sales presence and engineering capabilities in India. Elsewhere in Asia and the Middle East, it has expanded sales, service and technical support. Recently acquired businesses have further added to AMETEK’s international presence.
New Products
.    New products are essential to AMETEK’s long-term growth. As a result, AMETEK has maintained a consistent investment in new product development and engineering. In 2019, AMETEK added to its highly differentiated product portfolio with a range of new products across many of its businesses. They included:
AMETEK Programmable Power launched the RX0424, a rugged accelerometer instrument for measuring acceleration forces in extreme environmental conditions
AMETEK SMP added two new titanium strip grades to expand their product portfolio for medical application that will ultimately help in the treatment of Parkinson’s disease, sleep apnea and chronic pain without the use of opioids
Barben Analytical introduced the second generation OXYvisor
®
, a trace to percent level, optical process oxygen analyzer to help prevent the corrosion of capital equipment and ensure product quality
The SPECTROGREEN is the latest inductively coupled plasma optical emission spectrometer from SPECTRO Analytical Instruments that features revolutionary Dual
Side-On
Interface plasma viewing technology
Vision Research launched several new cameras, including the Phantom
®
S640 and VEO 440 high-speed cameras as well as the Phantom Miro C320J and C320 for automotive crash testing
AMETEK Land launched two new continuous emission monitoring systems, the
4650-PM
and
4750-PM,
to accurately and reliably measure particulate matter from the industrial combustion processes
Creaform launched two new handheld scanners, the HandySCAN BLACK and the Go!SCAN SPARK, both of which are third-generation versions of the company’s patented 3D scanning technology
To better detect leaks in Modified Atmosphere Packaging, AMETEK MOCON developed the Dansensor LeakPointer 3 and LeakPointer 3+ for the food industry, where micro leaks in packaging can drastically affect product integrity
Adding to their legacy of innovation, Haydon Kerk Pittman launched the EC042B IDEA Motor Series, a brushless motor with integrated drive optimized for specialized motion applications
AMETEK Grabner Instruments launched the MINIFLASH FP Vision, which determines the flashpoint of flammable liquid mixtures with faster cooling cycles and sample turnaround times thanks to advanced Peltier technology
The
EIKOS-UV,
a new atom probe microscope from AMETEK CAMECA, delivers nanoscale structural information to help develop products across industrial applications
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AMETEK EDAX, a leader in
X-ray
microanalysis and electron diffraction instrumentation, launched the OIM Matrix
™
software package, Elite T Ultra EDS System and the Velocity
™
Super EBSD Camera, which was developed in partnership with the Vision Research team.
Cash Flow Generation and Disciplined Capital Deployment
.    AMETEK generates strong cash flow given its asset-light business model and strong operational execution. This cash flow supports AMETEK’s capital deployment strategy with its primary focus on strategic, value-enhancing acquisitions. We are committed to paying a modest quarterly dividend.
2019 OVERVIEW
Operating Performance
In 2019,2022, the Company posted record sales, operating income, operating margins, net income, diluted earnings per share, orders, backlog, and operating cash flow.orders. The Company achieved these results from organic sales growth in both EIG and EMG, contributions from recentthe 2022 acquisitions of Navitar, Inc. and RTDS Technologies, Inc., as well as from the Company’sCompany's Operational Excellence initiatives.Initiatives. See “Results"Results of Operations”Operations" in Part II, Item 7 Management’sManagement's Discussion and Analysis of Financial Condition and Results of Operations for further details.
In 2019, AMETEK2022, the Company achieved record sales of $5,158.6$6,150.5 million, an increase of 6.5%10.9% from 20182021 due to 2%an 11% organic sales growth,increase, a 5%2% increase from the 2019 and 2018 acquisitions, partially offset by an unfavorable 2% effect of foreign currency translation. Diluted earnings per share for 20192022 were $3.75,a record $5.01, an increase of $0.41$0.76 or 12.3%17.8%, compared with $3.34$4.25 per diluted share in 2018.2021.
Recent Acquisitions
AMETEK spent $1,061.9$429.7 million in cash, net of cash acquired, to acquirepurchase two businesses in 2019.businesses:
In September 2019,2022, AMETEK acquired Pacific Design Technologies,Navitar, Inc. (“PDT”("Navitar"), a providerdesigner and manufacturer of advanced, mission-critical thermal management solutions. PDT is part of EMG.customized, fully integrated optical imaging systems, components, and software.
In October 2019,2022, AMETEK acquired Gatan,RTDS Technologies ("RTDS"), a leading provider of instrumentationreal-time power simulation systems used by utilities, and software usedresearch and education institutions in the development and testing of the electric power grid and renewable energy applications.
Financing
On May 12, 2022, the Company along with certain of its foreign subsidiaries amended and restated its credit agreement dated as of September 22, 2011, as amended and restated as of March 10, 2016 and as further amended and restated as of October 30, 2018, with the lenders, JPMorgan Chase Bank, N.A., as Administrative Agent and Bank of America, N.A., PNC Bank, National Association, Trust Bank and Wells Fargo Bank, National Association, as Co-Syndication Agents. The credit agreement amends and restates the Company’s existing revolving credit facility to enhanceincrease the size from $1.5 billion to $2.3 billion and extendterminates the operation$800 million term loan. The credit agreement places certain restrictions on allowable additional indebtedness.
Recent Events and performanceMarket Conditions
Recent events and market conditions impacting our business include the inflationary cost environment, rising interest rates, supply chain constraints, the COVID-19 pandemic, and the ongoing conflict in Ukraine. As a result of electron microscopes. Gatan is partthese events and conditions, we anticipate the challenging global economic environment to continue into 2023.
Beginning in 2021, we experienced heightened levels of EIG.
inflation in material and transportation costs. We have taken steps to mitigate the impacts of material and transportation cost inflation by implementing pricing actions. We experienced additional pressure in our supply chain due to component shortages and strained transportation capacity, as well as the impact of continued elevated customer demand. In response to these supply chain pressures, we have taken actions to build inventory and seek alternative sources of supply to support sales and backlog growth. The inflationary environment has also resulted in central banks raising short-term interest rates. We expect inflation to continue into 2023 and will continue to take actions to mitigate this inflationary pressure.
Financing4
In the fourth quarter of 2019, the Company paid in full, at maturity, $100 million in aggregate principal amount of 6.30% private placement senior notes.
In December 2018, the Company completed a private placement agreement to sell $575 million and 75 million Euros in senior notes to a group of institutional investors (the “2018 Private Placement”) utilizing two funding dates. The first funding occurred in December 2018 for $475 million and 75 million Euros ($85.1 million). The second funding was in January 2019 for $100 million. The proceeds from the fundings of the 2018 Private Placement were used to pay down domestic borrowings under the Company’s revolving credit facility. See Note 10 to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form
 10-K
for further details
Recent Accounting Pronouncements
Effective January 1, 2019, the Company adopted the requirements of Financial Accounting Standards Board Accounting Standards Update (“ASU”) No.
 2016-02
(ASC 842),
Leases
, using the effective date transition method. Also, effective January 1, 2019, the Company adopted ASU No.
 2018-02,
Income Statement – Reporting
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Comprehensive Income (Topic 220), Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income
. Upon adoption,There still remains uncertainty concerning the Company did not electCOVID-19 pandemic, its effect on labor, government mandated lockdowns and other restrictive measures, and the pandemic's ultimate duration. Lockdowns in China during 2022 limited our ability to reclassifyaccess customer sites, operate certain facilities, and placed additional constraints on our supply chain. Depending on the stranded income tax effectscourse of the Tax Act from accumulated other comprehensive incomepandemic, additional lockdowns in China or elsewhere could impact our operations and results of operations.
The invasion of Ukraine by Russia and the sanctions imposed in response to retained earnings. See Note 2this conflict have increased global economic and political uncertainty. While we do not have operations in Russia or Ukraine and do not have significant exposure to customers and vendors in those countries, a significant expansion of the Consolidated Financial Statements included in Part II, Item 8conflict's current scope could further complicate the economic environment.
While the ultimate impact of this Annual Report on Form
 10-K
for further details.
Financial Information About Reportable Segments, Foreign Operationsthese events remains uncertain, we will continue to evaluate the extent to which these factors will impact our business, financial condition, and Export Sales
Information with respect to reportable segments and geographic areas is set forth in Note 3 and Note 15 to the Consolidated Financial Statements included in Part II, Item 8results of this Annual Report on Form
 10-K.operations.
AMETEK’s international sales increased 1.1% to $2,474.9 million in 2019. International sales represented 48.0% of consolidated net sales in 2019 compared with 50.5% in 2018.
Description of Business
Described below are the products and markets of each reportable segment:
EIG
EIG is a leader in the design and manufacture of advanced analytical, test and measurement instruments for the process, aerospace, medical, research, power and industrial markets. Its growth is based on the strategies outlined in the AMETEK Growth Model. In many instances, itsEIG's products differ from or are technologically superior to its competitors’ products. ItEIG has achieved competitive advantage through continued investment in research, development and engineering to develop market-leading products and solutions that serve niche markets. ItEIG has also has expanded its sales and service capabilities globally to serve its customers.
EIG is a leader in many of the specialized markets it serves. Products supplied to these markets include process control instruments for the life sciences, pharmaceutical, semiconductor, automation, power, food and beverage, oil and gas, petrochemical, pharmaceutical, semiconductor, automation, and food and beveragepetrochemical industries. It provides a growing range of instruments to the research and laboratory equipment, ultraprecisionultra-precision manufacturing, medical, and test and measurement markets. It is a leader in power quality monitoring and metering, uninterruptible power systems, programmable power equipment, electromagnetic compatibility (“EMC”) test equipment, sensors for gas turbines, dashboard instruments for heavy trucks, and instrumentation and controls for the food and beverage industries. ItEIG supplies the aerospace industry with aircraft and engine sensors, monitoring systems, power supplies, fuel and fluid measurement systems, and data acquisition systems.
In 2019,2022, 49% of EIG’s net sales were to customers outside the United States. At December 31, 2019,2022, EIG employed approximately 10,30011,700 people, of whom approximately 900800 were covered by collective bargaining agreements. At December 31, 2019,2022, EIG had operating facilities in the United States, the United Kingdom, Germany, Canada, China, Denmark, Finland, France, Switzerland, Argentina, Austria and Mexico. EIG also shares operating facilities with EMG in Brazil, China and Mexico.
Process and Analytical Instrumentation Markets and Products
Process and analytical instrumentation sales represented 72% of EIG’s 20192022 net sales. These businesses include process analyzers, emission monitors and spectrometers; elemental and surface analysis instruments; level, pressure and temperature sensors and transmitters; radiation measurement devices; level measurement devices; precision manufacturing systems; materials- and force-testing instruments; contact and
non-contact
metrology products; and clinical and educational communication solutions. Among the industries it serves are oil, gas and petrochemical refining; power generation; pharmaceutical manufacturing; medical and healthcare; research and development; water and waste treatment; renewable energy production, semiconductor manufacturing; natural gas distribution; emissions monitoring, and semiconductor manufacturing.oil, gas, and petrochemical refining. Its instruments are used for precision measurement in a number of applications, including radiation detection, trace element and materials analysis, nanotechnology research, ultraprecise manufacturing, and test and measurement.
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5
Acquired in October 2019, GatanSeptember 2022, Navitar is a designer and manufacturer of customized, fully integrated optical imaging systems, components, and software. Navitar's market leading optical components and solutions complement the Company's existing optics portfolio.
Acquired in November 2021, Alphasense is a leading manufacturerprovider of instrumentationgas and software used to enhanceparticulate sensors for use in environmental, health and extend the operationsafety, and performance of electron microscopes. Gatan’s differentiated technology solutions, premier brand and leadership positions in growth marketsair quality applications. Alphasense complements the Company’sCompany's existing portfolio of specialized offeringssensor business expanding the Company's presence in
high-end the environmental health and safety market.
analytical instrumentation.
Acquired in November 2018, Spectro ScientificMarch 2021, Magnetrol is a leading provider of machine condition monitoringlevel and flow control solutions for critical assets in high-value industrial applications. Spectro Scientific’s differentiated solutions serve an increasing need for predictive maintenance inchallenging process applications across a broad and growingdiverse set of end markets including militarymedical, pharmaceutical, oil and defense, process, power generationgas, food and transportation. Spectro Scientific expandsbeverage, and general industrial. Magnetrol's solutions combined with the Company’s strategy to integrate instrumentation dataCompany's existing Sensors, Test and Calibration business, becomes an industry leading differentiated sensor platform with cloud-based softwarea broad range of level and analytics.
Acquired in October 2018, Telular is a provider of communication solutions for logistics management, tank monitoring and security applications. Telular’s
end-to-end
solutions include purpose-built hardware, proprietary software and wireless connectivity services to enhance the efficiency and safety of critical assets. The combination of Telular’s IoT capabilities and the Company’s highly differentiatedflow measurement technology provides additional growth opportunities for its businesses.solutions.
Acquired in October 2018, Forza Silicon Corporation (“Forza”) is a leader in the design and production of high-performance imaging sensors used in medical, defense and industrial applications. Forza provides the Vision Research business with custom sensor design and production capability, allowing for accelerated development of next-generation sensor technology for use across the Company’s market-leading, high-speed cameras.
Acquired in April 2018, SoundCom Systems (“SoundCom”) is a provider of design, integration, installation and support of clinical workflow and communication systems for healthcare facilities, educational institutions and corporations. SoundCom expands Rauland’s presence in the healthcare and education markets in the Midwest while providing customers with expanded value-added solutions and services.
Aerospace and Power Instrumentation Markets and Products
Aerospace and Power Instrumentation sales represented 28% of EIG’s 20192022 net sales. These businesses produce a wide array of instrumentation, systems and sensors for applications in the aerospace, power and industrial markets.
These businesses produce power monitoring and metering instruments, uninterruptible power supply systems and programmable power supplies used in a wide range of industrial settings. It is a leader in the design and manufacture of power measurement, quality monitoring and event recorders for use in power generation, transmission and distribution. It providesThese businesses provide uninterruptible power supply systems, multifunction electric meters, annunciators, alarm monitoring systems and highly specialized communications equipment for smart grid applications and renewable energy applications. It also offers precision power supplies and power conditioning products, and electrical immunity and EMC test equipment, sensors for electric vehicle testing, gas turbines, dashboard instruments for heavy trucks and other vehicles, and instrumentation and controls for the food and beverage industries.
AMETEK’s aerospace products are designed to customer specifications and manufactured to stringent operational and reliability requirements. These products include airborne data systems, turbine engine temperature measurement products, vibration-monitoring systems, cockpit instruments and displays, fuel and fluid measurement products, embedded computing systems, and sensors and switches. AMETEK serves all segments of the commercial and military aerospace market, including commercial airliners, business jets, regional aircraft and helicopters.
AMETEK operates in highly specialized aerospace market segments in which it has proven technological or manufacturing advantages versus its competition. Among its more significant competitive advantages is its
70-year-plus
reputation as an established aerospace supplier. ItAMETEK has long-standing relationships with the world’s
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leading commercial and military aircraft, jet engine and original equipment manufacturers and aerospace system integrators. AMETEK also is a leading provider of spare part sales, repairs and overhaul services to commercial aerospace.
Acquired in June 2018, MotecOctober 2022, RTDS is a leading provider of integrated visionreal-time power simulation systems servingused by utilities, and research and education institutions in the high-growth mobile machine vision market. Motec’s ruggedized vision productsdevelopment and integrated softwaretesting of the electric power grid and renewable energy applications. RTDS's solutions provide customers with improved operational efficiency and enhanced safety across a variety of critical mobile machine applications in transportation, agriculture, logistics and construction which complement the Company’sCompany's existing instrumentation businesses by expanding itspower instruments businesses.
Acquired in April 2021, Abaco Systems specializes in open-architecture computing and electronic systems for aerospace, defense, and specialized industrial markets and is a leading provider of mission critical embedded computing systems. Abaco's solutions expand and complement the Company's existing aerospace and defense businesses.
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Acquired in April 2021, NSI-MI is a leading provider of radio frequency and microwave test and measurement systems for niche applications across the aerospace, defense, automotive, wireless communications, and research markets. NSI-MI strengthens the Company's test and measurement platforms.
Acquired in March 2021, Crank Software is a leading provider of embedded graphical user interface software and services. Crank Software expands the Company's growing portfolio of solutions to its customers.software solutions.
Customers
EIG is not dependent on any single customer such that the loss of that customer would have a material adverse effect on EIG’s operations. Approximately 8%6% of EIG’s 20192022 net sales were made to its five largest customers. No single customer comprises more than 5%3% of net sales.
EMG
EMG is a differentiated supplier of automation solutions, thermal management systems, specialty metals and electrical interconnects. EMG is a leader in many of the niche markets in which it competes. Products supplied to these markets include its advanced precision motion control solutions, which are used in a wide range of automation applications across the medical, semiconductor, aerospace, defense, and food and beverage industries, as well as its highly engineered electrical connectors and electronics packaging used in aerospace and defense, medical, and industrial applications.
EMG supplies high-purity powdered metals, strip and foil, specialty clad metals and metal matrix composites. Its blowers andEMG's heat exchangers provide electronic cooling and environmental control for the aerospace and defense and semiconductor industries. ItsEMG's motors are widely used in commercial appliances, fitness equipment, food and beverage machines, hydraulic pumps and industrial blowers. Additionally, itEMG operates a global network of aviation maintenance, repair and overhaul (“MRO”) facilities.
EMG designs and manufactures products that, in many instances, are significantly different from or technologically superior to competitors’ products. It has achieved competitive advantage through continued investment in research, development and engineering, efficiency improvements from operational excellence, acquisition synergies and improved supply chain management.
In 2019, 46%2022, 49% of EMG’s net sales were to customers outside the United States. At December 31, 2019,2022, EMG employed approximately 7,500 people, of whom approximately 1,6001,900 were covered by collective bargaining agreements. At December 31, 2019,2022, EMG had operating facilities in the United States, the United Kingdom, China, Germany, France, Italy, Mexico, Serbia, Brazil, the Czech Republic,Czechia, Malaysia and Taiwan.

Automation and Engineered Solutions Markets and Products
Automation and Engineered Solution sales represented 73%71% of EMG’s 20192022 net sales. These businesses produce precision motion control solutions, brushless motors, blowers and pumps, heat exchangers and other electromechanical systems. These products are used in a wide variety of high-precision automation applications, including semiconductor equipment, and laboratory and medical equipment and power industries among others. Additionally, these businesses produce specialty motors which are used in a wide range of products, such as household, commercial and personal care appliances, fitness equipment, food and beverage machines, hydraulic pumps and industrial blowers.
equipment.
AMETEK is a leader in highly engineered electrical connectors and electronics packaging used to protect sensitive devices and
mission-critical
electronics. Its electrical connectors, terminals, headers and packaging are
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designed specifically for harsh environments and highly customized applications. In addition, AMETEK is an innovator and market leader in specialized metal powder, strip, wire and bonded products used in medical, aerospace and defense, telecommunications, automotive and general industrial applications.

7
Aerospace Markets and Products
Aerospace sales represented 27%29% of EMG’s 20192022 net sales. These businesses produce motor-blower systems and heat exchangers used in thermal management and other applications on a variety of military and commercial aircraft and military ground vehicles. In addition, these businesses provide the commercial and military aerospace industry with third-party MRO services on a global basis with facilities in the United States, Europe and Asia.
Acquired in September 2019, PDT designs and manufactures a complete range of custom-engineered, liquid cooling systems and components used in a broad set of current and next-generation commercial aerospace, defense and space platforms. PDT enhances the Company’s position in the aerospace and defense sectors with its innovative technology and differentiated solutions in thermal management systems.
Acquired in January 2018, FMH Aerospace (“FMH”) is a provider of complex, highly engineered solutions for the aerospace, defense and space industries. FMH’s products and solutions further broaden the Company’s differentiated product offerings in the aerospace and defense markets.
Customers
EMG is not dependent on any single customer such that the loss of that customer would have a material adverse effect on EMG’s operations. Approximately 13%9% of EMG’s 20192022 net sales were made to its five largest customers. No single customer comprises greater than 5%3% of net sales.
Marketing
AMETEK’s marketing efforts generally are organized and carried out at the business level. EIG makes use of specialized distributors and sales representatives to market its products along with a direct sales force for its technically sophisticated products. Within aerospace, the specialized customer base of aircraft and jet engine manufacturers is served primarily by direct sales engineers. Given the technical nature of its many products, as well as its significant worldwide market share, EMG conducts much of its domestic and international marketing activities through a direct sales force and makes some use of sales representatives and distributors, both in the United States and in other countries.
Competition
In general, AMETEK’s markets are highly competitive with competition based on technology, performance, quality, service and price.
In EIG’s markets, AMETEK believes it ranks as a leader in certain analytical measurement and control instruments, and power and industrial markets. It also is a major instrument and sensor supplier to commercial aviation. In process and analytical instruments, numerous companies compete in each market on the basis of product quality, performance and innovation. In power and industrial and in aerospace, AMETEK competes with a number of companies depending on the specific market segment.
EMG’s businesses compete with a number of companies in each of its markets. Competition is generally based on product innovation, performance and price. There also is competition from alternative materials and processes.
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Availability of Raw Materials
AMETEK’s reportable segments obtain raw materials and supplies from a variety of sources and generally from more than one supplier. For EMG, however, certain items, including various base metals and certain steel components, are available from only a limited number of suppliers. AMETEK believes its sources and supplies of raw materials are adequate for its needs.
Environmental and Other Governmental Regulation
AMETEK's operations and properties are subject to laws and regulations relating to environmental protection, including those governing air emissions, water discharges, waste management, and workplace safety. The Company uses, generates and disposes of hazardous substances and waste in its operations and could be subject to material liabilities relating to the investigation and clean-up of contaminated properties and related claims. The Company is required to conform our operations and properties to these laws and adapt to regulatory requirements in all countries as these requirements change. The Company has a robust Environmental Health and Safety program responsible for supporting its environmental monitoring and compliance efforts. In connection with acquisitions, the Company will
Backlog8
assess potential material environmental liabilities, and Seasonal Variationsdetermine regulatory and fiduciary obligations during the course of Business
AMETEK’s backlogthe due diligence process. In addition, new laws and regulations, the discovery of unfilled orders by reportable segment was as follows at December 31:
             
 
2019
  
2018
  
2017
 
 
(In millions)
 
             
Electronic Instruments
 $
842.5
  $
765.5
  $
718.1
 
             
Electromechanical
  
875.4
   
836.6
   
678.0
 
             
             
Total
 $
1,717.9
  $
1,602.1
  $
1,396.1
 
             
Ofpreviously unknown contamination or the total backlog of unfilled orders at December 31, 2019, approximately 86% is expected to be shipped by December 31, 2020. The Company believes that neither its business, nor either of its reportable segments, is subject to significant seasonal variations, although certain individual operations experience some seasonal variability.
Research, Development and Engineering
AMETEK is committed to, and has consistently invested in, research, development and engineering activities. These investments support AMETEK’s efforts in designing and developing new and improved products and solutions for our customers. Research, development and engineering costs before customer reimbursement were $260.3 million in 2019, $230.2 million in 2018 and $221.2 million in 2017, respectively. Customer reimbursements in 2019, 2018 and 2017 were $3.2 million, $5.2 million and $5.4 million, respectively. These amounts included research and development expenses of $161.9 million, $141.0 million and $130.4 million in 2019, 2018 and 2017, respectively. All such expenditures were directed toward the developmentimposition of new products and solutions and the improvement of existing products and solutions.
Environmental Matters
requirements could increase costs or subject AMETEK to new or increased liabilities.
Information with respect to environmental matters is set forth in Part II, Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations section entitled “Environmental Matters” and in Note 13 to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form
10-K.
Patents, Licenses and Trademarks
AMETEK owns numerous unexpired U.S. and foreign patents, including counterparts of its more important U.S. patents, in the major industrial countries of the world. It is a licensor or licensee under patent agreements of various types, and its products are marketed under various registered and unregistered U.S. and foreign trademarks and trade names. AMETEK, however, does not consider any single patent or trademark, or any group of them, essential either to its business as a whole or to either one of its reportable segments. The annual royalties received or paid under license agreements are not significant to either of its reportable segments or to AMETEK’s overall operations.
Environmental, Social, and Governance ("ESG") and Human Capital Management
Environmental, Social, and Governance
AMETEK is committed to providing a consistent and excellent return to our stakeholders, all while maintaining a strong commitment to environmental stewardship, social responsibility, diversity and inclusion, and sound corporate governance. We believe that effectively prioritizing and managing our ESG initiatives will help create long-term value and a better future for our stakeholders.
Our Sustainability Report highlights our sustainability initiatives and is available on our website at www.ametek.com/aboutus/sustainability.
The Company's ESG highlights include the following:
Core Values.Our core values — Ethics and Integrity, Respect for the Individual, Diversity and Inclusion, Teamwork, and Social Responsibility — remain the most critical components of our sustainability efforts. Sustainability is an integral aspect of the core values that guide the way we do business.
Environmental Stewardship. Our ongoing commitment to serve as environmental stewards and protect the environment for future generations is reflected in our corporate governance and oversight of compliance and risk management.We are reducing our environmental impact and increasing operational efficiency across our global footprint, and have established greenhouse gas emission reduction targets.Across AMETEK, our businesses are committed to developing innovative products and solutions to help reduce carbon emissions, increase the use and adoption of renewable energy, and address the impacts of climate change.
Commitment to Diversity and Inclusion. AMETEK is committed to developing a diverse and inclusive culture to help power innovation, growth and greater opportunities for all employees.Our hiring practices are geared toward identifying the most diverse set of candidates for open positions.Our training and development programs are focused on providing meaningful opportunities for personal and professional development. And our charitable arm, the AMETEK Foundation, provides wide-ranging support to nonprofit and educational organizations in the communities where we operate.
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Our Solutions. AMETEK’s portfolio of differentiated technology solutions has grown significantly. Many of AMETEK’s products and solutions are creating a more sustainable future by supporting customers’ environmentally focused applications across a diverse set of markets.AMETEK partners with customers to develop sustainable solutions with specialized technology that help in the effort to improve the quality of life and the environment.
Human Capital Management
As a global organization, we have seen firsthand that the innovation needed to solve our customers’ biggest challenges can only come from employees that are fully engaged and committed, and who have diverse perspectives and backgrounds. Our Board regularly receives updates and presentations on key topics, including ESG, compliance, diversity and inclusion, and employee development and succession.
Our executive management team reviews the key talent across our company annually and assesses the adequacy of talent to meet business challenges and future growth needs. A major area of focus is a review of diversity and inclusion improvement efforts. We have a Women’s Business Council and an African American Business Council, both of which drive initiatives focused on mentorship, education and career guidance. Diverse candidate slates are required for external salaried openings, including executive management and Board appointments, where at least one diverse candidate is interviewed.
We have created a leadership development program for employees on track to become P&L leaders in the company.This focused and intensive program involves both internal and external training on leadership effectiveness as well as specific job-related skills.In addition, participants receive hands-on experience in key AMETEK business system processes such as growth kaizens and acquisition due diligence.We have a long-standing commitment to responsible corporate conduct.Each employee is provided with annual performance goals which are reviewed in a performance review with their manager.Employee feedback is actively encouraged through an open-door policy for all managers, regular town hall/all hands meetings, executive presentations with Q&A sessions, a regular CEO podcast for all employees, and a hotline that can be used to report complaints.
Giving back to our community is an important part of our culture. Established in 1960, the AMETEK Foundation is the charitable giving arm of AMETEK, Inc. The Foundation’s mission is to empower AMETEK colleagues making a positive impact in their local communities, with a focus on health and welfare, civic and social service programs, and education.
As of December 31, 2022, we have approximately 19,600 employees, of which 42% are diverse (global female full-time and part-time employees plus diverse U.S. male full-time and part-time employees).Our compensation programs are designed to provide competitive salaries and benefit programs to attract, retain and motivate a world-class workforce. Selected employees participate in short- and long-term incentive programs that align employee and shareholder interests and promote long-term retention.Additionally, we strive to protect health and safety in every aspect of our enterprise – from the way we design, manufacture and deliver our products to the way our customers use them.We continue to drive towards our goal of zero lost-time work incidents.2022 was our lowest lost-time incident rate on record.We continue to enhance our safety initiatives as each facility is tasked with identifying opportunities for additional safety measures.Businesses with zero incidents share best practices and ensure ongoing training to maintain their safety excellence. In addition to our EHS facility audits, our facilities’ activities include safety committees, continual training, documented self-audits, and behavior-based safety observations and feedback.
Our U.S. Federal Employment Information Report (EEO-1) for 2021 is available at www.ametek.com and offers a snapshot of U.S. diversity data as of December 31, 2021.The EEO-1 data captures only U.S. employees and does not reflect the broad diversity of our approximately 9,500international employees.

10
Employees

Available Information
At December 31, 2019, AMETEK employed approximately 18,100 peopleAMETEK’s annual report on Form  10-K, quarterly reports on Form  10-Q, current reports on Form  8-K and all amendments to those reports filed or furnished pursuant to Section 13(a) of the Securities Exchange Act of 1934 are made available free of charge on the Company’s website at its EIG, EMGwww.ametek.com in the “Investors – Reporting” section as soon as reasonably practicable after such material is electronically filed with, or furnished to, the U.S. Securities and corporate operations, of whom approximately 2,500 employees were covered by collective bargaining agreements.Exchange Commission. All reports filed with the Securities Exchange Commission can also be viewed on their website at www.sec.gov. AMETEK has three collective bargaining agreements that expireposted in 2020, which cover fewer than 100 employees. It expects no material adverse effects from these pending labor contract negotiations.
Working Capital Practices
AMETEK does not have extraordinary working capital requirements in eitherthe “Investors – Governance” section of its reportable segments. Its customers generallywebsite its corporate governance guidelines, Board committee charters, codes of ethics, and social and environmental policies. Those documents also are billedavailable free of charge in published form to any stockholder who requests them by writing to the Investor Relations Department at normal trade terms that may include extended payment provisions. Inventories are closely controlled and maintained at levels related to production cycles and normal delivery requirements of customers.
AMETEK, Inc., 1100 Cassatt Road, Berwyn, Pennsylvania, 19312.

Item 1A.    Risk Factors
You should consider carefully the following risk factors and all other information contained in this Annual Report on Form
10-K
and the documents we incorporate by reference in this Annual Report on Form
10-K.
Any of the following risks could materially and adversely affect our business, financial condition, results of operations and cash flows.
Risks Related to Our Operations
The coronavirus global pandemic could have a material adverse effect on our ability to operate, results of operations, financial condition, liquidity and ability to consummate future acquisitions.
We continue to address the impact of the COVID-19 pandemic. The outbreak of COVID-19, and any other significant outbreak of epidemic, pandemic or contagious disease, could have a negative effect on our ability to operate, results of operations, financial condition, liquidity and ability to consummate future acquisitions. In addition, the outbreak of COVID-19 has resulted in a widespread health crisis that is adversely affecting the economies and financial markets of many countries and the end markets for many of our products, which could result in an economic downturn that may negatively affect demand for our products. The extent to which COVID-19 will impact our business, results of operations and financial condition is highly uncertain and will depend on future developments. Such developments may include the geographic spread and duration of the virus, the severity of the disease and the actions that may be taken by various governmental authorities and other third parties in response to the outbreak.
Our global manufacturing facilities remain open with a focus on safety protocols, though a range of external factors related to the pandemic that are not within our control have restricted our ability to keep our manufacturing facilities fully operational. Any decline or lower than expected demand in our served markets could diminish demand for our products and services, which would adversely affect our financial condition and results of operations. Moreover, the COVID-19 pandemic may adversely affect the financial condition of our customers and suppliers in the future or their ability to purchase Company products, may delay customers’ purchasing decisions, result in a shift to lower-priced products or away from discretionary products, and may result in longer payment terms or inability to collect customer payments. These issues may also materially affect our future access to our sources of liquidity, particularly our cash flows from operations, financial condition and ability to consummate future acquisitions.
In compliance with stay-at-home orders issued in connection with the COVID-19 pandemic, a significant subset of our employees have transitioned to working from home. As a result, more of our employees are working from locations where our cybersecurity program may be less effective and IT security may be less robust. This change may create increased vulnerability to cybersecurity incidents, including breaches of information systems
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security, which could result in a disruption of our operations, customer dissatisfaction, damage to our reputation and a loss of customers or revenues.
If significant portions of our workforce are unable to work effectively, including because of illness, quarantines or absenteeism; government actions; facility closures; work slowdowns or stoppages; limited supplies or resources; or other circumstances related to COVID-19, our operations will be further impacted. We may be unable to perform fully on our customer obligations and we may incur liabilities and suffer losses as a result. The continued spread of COVID-19 may also affect our ability to hire, develop and retain our talented and diverse workforce, and our ability in short periods to fully maintain and support our corporate culture.
A scarcity of resources or other hardships caused by the COVID-19 pandemic may result in increased nationalism, protectionism and political tensions which may cause governments and/or other entities to take actions that may have significant negative impact on the Company, its suppliers, and its customers to conduct business in the future. Risks related to consumers and businesses lowering or changing spending, which impact domestic and cross-border spend, are described in our risk factor titled “Foreign and domestic economic, political, legal, compliance and business factors could negatively affect our international sales and operations”.
The duration and intensity of the impact of the COVID-19 pandemic and the resulting disruption to our operations is uncertain but could have a material impact on our operations, cash flows, financial condition and ability to consummate future acquisitions. We will continue to assess the financial impact of the pandemic on our business.
A downturn in the economy generally or in the markets we serve could adversely affect our business.
A number of the industries in which we operate are cyclical in nature and therefore are affected by factors beyond our control. A downturn in the U.S. or global economy, and, in particular, in the aerospace and defense, oil and gas, process instrumentation or power markets could have an adverse effect on our business, financial condition and results of operations.
Our growth could suffer if the markets into which we sell our products and services decline, do not grow as anticipated or experience cyclicality.
Our growth depends in part on the growth of the markets which we serve. Visibility into the future performance of certain of our markets is limited (particularly for markets into which we sell through distribution). Our quarterly sales and profits depend substantially on the volume and timing of orders received during the fiscal quarter, which are difficult to forecast. Any decline or lower than expected growth in our served markets could diminish demand for our products and services, which would adversely affect our financial statements. A number of our businesses operate in industries that may experience periodic, cyclical downturns. In addition, in certain of our businesses, demand depends on customers’ capital spending budgets, as well as government funding policies. Matters of public policy and government budget dynamics, as well as product and economic cycles, can affect the spending decisions of these customers. Demand for our products and services is also sensitive to changes in customer order patterns, which may be affected by announced price changes, changes in incentive programs, new product introductions and customer inventory levels. Any of these factors could adversely affect our growth and results of operations in any given period.

Our growth strategy includes strategic acquisitions. We may not be able to consummate future acquisitions or successfully integrate recent and future acquisitions.
A portion of our growth has been attributed to acquisitions of strategic businesses. Since the beginning of 2015, through December 31, 2019, we have completed 18 acquisitions. We plan to continue making strategic acquisitions to enhance our global market position and broaden our product offerings. Although we have been successful with our acquisition strategy in the past, our ability to successfully effectuate acquisitions will be dependent upon a number of factors, including:
Our ability to identify acceptable acquisition candidates;
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The impact of increased competition for acquisitions, which may increase acquisition costs, affect our ability to consummate acquisitions on favorable terms, and result in us assuming a greater portion of the seller’s liabilities;
Successfully integrating acquired businesses, including integrating the management, technological and operational processes, procedures and controls of the acquired businesses with those of our existing operations;
Adequate financing for acquisitions being available on terms acceptable to us;
Unexpected losses of key employees, customers and suppliers of acquired businesses;
Mitigating assumed, contingent and unknown liabilities; and
Challenges in managing the increased scope, geographic diversity and complexity of our operations.
The process of integrating acquired businesses into our existing operations may result in unforeseen operating difficulties and may require additional financial resources and attention from management that would otherwise be available for the ongoing development or expansion of our existing operations. Furthermore, even if successfully integrated, the acquired business may not achieve the results we expected or produce expected benefits in the time frame planned. Failure to continue with our acquisition strategy and the successful integration of acquired businesses could have an adverse effect on our business, financial condition, results of operations and cash flows.
The indemnification provisions of acquisition agreements by which we have acquired companies may not fully protect us and as a result we may face unexpected liabilities.
Certain of the acquisition agreements by which we have acquired companies require the former owners to indemnify us against certain liabilities related to the operation of the company before we acquired it. In most of these agreements, however, the liability of the former owners is limited, and certain former owners may be unable to meet their indemnification responsibilities. We cannot assure you that these indemnification provisions will protect us fully or at all, and as a result we may face unexpected liabilities that adversely affect our financial statements.
We may not properly execute, or realize anticipated cost savings or benefits from, our Operational Excellence initiatives.
Our success is partly dependent upon properly executing and realizing cost savings or other benefits from our ongoing production and procurement initiatives. These initiatives are primarily designed to make the Company more efficient, which is necessary in the Company’s highly competitive industries. These initiatives are often complex, and a failure to implement them properly may, in addition to not meeting projected cost savings or benefits, adversely affect our business and operations.
12

Foreign and domestic economic, political, legal, compliance and business factors could negatively affect our international sales and operations.
International sales for 20192022 and 20182021 represented 48.0%48.7% and 50.5%49.5% of our consolidated net sales, respectively. As a result of our growth strategy, we anticipate that the percentage of sales outside the United States will increase in the future. As of December 31, 2019,2022, we have manufacturing operations in 1718 countries outside the United States, with significant operations in China, the Czech Republic,Czechia, Germany, Mexico, Serbia and the United Kingdom. A disruption of our ability to obtain a supply of goods from these countries or a change
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in the cost to purchase, manufacture, or distribute these products could have an adverse effect on our sales and operations. International sales and operations are subject to the customary risks of operating in an international environment, including:
•Imposition of trade or foreign exchange restrictions, including in the United States;
•Overlap of different tax structures;
•Unexpected changes in regulatory requirements, including in the United States;
•Trade protection measures, such as the imposition of or increase in tariffs and other trade barriers, including in the United States;
•The difficulty and/or costs of designing and implementing an effective control environment across diverse regions and employee bases;
•Restrictions on currency repatriation;
•General economic conditions;
•Unstable political situations;situations and social unrest, both internationally and in the United States;
•Increasing trade tensions between the United States and certain countries, including China;
•Nationalization of assets; and
•Compliance with a wide variety of international and U.S. laws and regulatory requirements.
Furthermore, fluctuations in foreign currency exchange rates, including changes in the relative value of currencies in the countries where we operate, subject us to exchange rate exposure and may adversely affect our financial statements. For example, increased strength in the U.S. dollar will increase the effective price of our products sold overseas, which may adversely affect sales or require us to lower our prices. In addition, our consolidated financial statements are presented in U.S. dollars, and we must translate our assets, liabilities, sales and expenses into U.S. dollars for external reporting purposes. As a result, changes in the value of the U.S. dollar due to fluctuations in currency exchange rates or currency exchange controls may materially and negatively affect the value of these items in our consolidated financial statements, even if their value has not changed in their local currency.

Our international sales and operations may be adversely impacted by compliance with export laws.
We are required to comply with various import, export, export control and economic sanctions laws, which may affect our transactions with certain customers, business partners and other persons, including in certain cases dealings with or between our employees and subsidiaries. In certain circumstances, export control and economic sanctions regulations may prohibit the export of certain products, services and technologies and in other circumstances, we may be required to obtain an export license before exporting a controlled item. In addition, failure to comply with any of these regulations could result in civil and criminal, monetary and non-monetary penalties,
non-monetary
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disruptions to our business, limitations on our ability to import and export products and services and damage to our reputation.
Our reputation, ability to do business and financial statements may be impaired by improper conduct by any of our employees, agents or business partners.
We cannot provide assurance that our internal controls and compliance systems will always protect us from acts committed by employees, agents or business partners of ours (or of businesses we acquire or partner with)
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that would violate U.S. and/or
non-U.S.
laws, including the laws governing payments to government officials, bribery, fraud, kickbacks and false claims, pricing, sales and marketing practices, conflicts of interest, competition, export and import compliance, money laundering and data privacy. In particular, the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act and similar anti-bribery laws in other jurisdictions generally prohibit companies and their intermediaries from making improper payments to government officials for the purpose of obtaining or retaining business, and we operate in many parts of the world that have experienced governmental corruption to some degree. Any such improper actions or allegations of such acts could damage our reputation and subject us to civil or criminal investigations in the U.S. and in other jurisdictions and related shareholder lawsuits could lead to substantial civil and criminal, monetary and
non-monetary
penalties and could cause us to incur significant legal and investigatory fees. In addition, we rely on our suppliers to adhere to our supplier standards of conduct and violations of such standards of conduct could occur that could have a material effect on our financial statements.
Any inability to hire, train and retain a sufficient number of skilled officers and other employees could impede our ability to compete successfully.
If we cannot hire, train and retain a sufficient number of qualified employees, we may not be able to effectively integrate acquired businesses and realize anticipated results from those businesses, manage our expanding international operations and otherwise profitably grow our business. Even if we do hire and retain a sufficient number of employees, the expense necessary to attract and motivate these officers and employees may adversely affect our results of operations.
If we are unable to develop new products on a timely basis, it could adversely affect our business and prospects.
We believe that our future success depends, in part, on our ability to develop, on a timely basis, technologically advanced products that meet or exceed appropriate industry standards. Maintaining our existing technological advantages will require us to continue investing in research and development and sales and marketing. There can be no assurance that we will have sufficient resources to make such investments, that we will be able to make the technological advances necessary to maintain such competitive advantages or that we can recover major research and development expenses. We are not currently aware of any emerging standards or new products which could render our existing products obsolete, although there can be no assurance that this will not occur or that we will be able to develop and successfully market new products.

Our technology is important to our success and our failure to protect this technology could put us at a competitive disadvantage.
Many of our products rely on proprietary technology; therefore, we endeavor to protect our intellectual property rights through patents, copyrights, trade secrets, trademarks, confidentiality agreements and other contractual provisions. Despite our efforts to protect proprietary rights, unauthorized parties or competitors may copy or otherwise obtain and use our products or technology. In addition, our ability to protect and enforce our intellectual property rights may be limited in certain countries outside the U.S. Actions to enforce our rights may result in substantial costs and diversion of resources and we make no assurances that any such actions will be successful.

14
A disruption in, shortage of, or price increases for, supply of our components and raw materials may adversely impact our operations.
While we manufacture certain parts and components used in our products, we require substantial amounts of raw materials and purchase some parts and components, including semiconductor chips and other electronic components, from suppliers. The availability and prices for raw materials, parts and components may be subject to curtailment or change due to, among other things, supplier’ssuppliers' allocation to other purchasers, interruptions in production by suppliers, changes in exchange rates and prevailing
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price levels. In addition, our facilities, supply chains, distribution systems, and products may be impacted by natural or
man-made
disruptions, including armed conflict, damaging weather or other acts of nature, pandemics or other public health crises. A shutdown of, or inability to utilize, one or more of our facilities, our supply chain, or our distribution system could significantly disrupt our operations, delay production and shipments, damage our relationships and reputation with customers, suppliers, employees, stockholders and others, result in lost sales, result in the misappropriation or corruption of data, or result in legal exposure and large remediation or other expenses. Furthermore, certain items, including base metals and certain steel components, are available only from a limited number of suppliers and are subject to commodity market fluctuations. Shortages in raw materials or price increases therefore could affect the prices we charge, our operating costs and our competitive position, which could adversely affect our business, financial condition, results of operations and cash flows.
Certain environmental risks may cause us to be liable for costs associated with hazardous or toxic substance
clean-up
which may adversely affect our financial condition.
Our businesses, operations and facilities are subject to a number of federal, state, local and foreign environmental and occupational health and safety laws and regulations concerning, among other things, air emissions, discharges to waters and the use, manufacturing, generation, handling, storage, transportation and disposal of hazardous substances and wastes. Environmental risks are inherent in many of our manufacturing operations. Certain laws provide that a current or previous owner or operator of property may be liable for the costs of investigating, removing and remediating hazardous materials at such property, regardless of whether the owner or operator knew of, or was responsible for, the presence of such hazardous materials. In addition, the Comprehensive Environmental Response, Compensation and Liability Act generally imposes joint and several liability for
clean-up
costs, without regard to fault, on parties contributing hazardous substances to sites designated for
clean-up
under the Act. We have been named a potentially responsible party at several sites, which are the subject of government-mandated
clean-ups.
As the result of our ownership and operation of facilities that use, manufacture, store, handle and dispose of various hazardous materials, we may incur substantial costs for investigation, removal, remediation and capital expenditures related to compliance with environmental laws. While it is not possible to precisely quantify the potential financial impact of pending environmental matters, based on our experience to date, we believe that the outcome of these matters is not likely to have a material adverse effect on our financial position or future results of operations. In addition, new laws and regulations, new classification of hazardous materials, stricter enforcement of existing laws and regulations, the discovery of previously unknown contamination or the imposition of new
clean-up
requirements could require us to incur costs or become the basis for new or increased liabilities that could have a material adverse effect on our business, financial condition and results of operations. There can be no assurance that future environmental liabilities will not occur or that environmental damages due to prior or present practices will not result in future liabilities.
We are subject to numerous governmental regulations, which may be burdensome or lead to significant costs.
Our operations are subject to numerous federal, state, local and foreign governmental laws and regulations. In addition, existing laws and regulations may be revised or reinterpreted and new laws and regulations, including with respect to privacy legislation and climate change, may be adopted or become applicable to us or customers for our products. For example, we are subject to federal, state and international privacy laws relating to the collection, use, retention, security and transfer of personally identifiable information. In many cases, these laws apply not only to third-party transactions, but also to transfers of information between the Company and its subsidiaries, and among the Company, its subsidiaries and other parties with which the Company has commercial relations. Several jurisdictions have passed laws in this area, and other jurisdictions are considering imposing additional restrictions. These laws continue to develop and may be inconsistent from jurisdiction to jurisdiction. Complying with emerging and changing international requirements may cause the Company to incur substantial costs or require the Company to change its business practices. We cannot predict the form any such new laws or regulations will take or the impact any of these laws and regulations will have on our business or operations.
We operate in highly competitive industries, which may adversely affect our results of operations or ability to expand our business.
Our markets are highly competitive. We compete, domestically and internationally, with individual producers, as well as with vertically integrated manufacturers, some of which have resources greater than we do. The principal elements of competition for our products are product technology, quality, service, distribution and price. Although we believe EIG is a market leader, competition is strong and could intensify in the markets served by EIG. In the aerospace markets served by EIG, a limited number of companies compete on the basis of product quality, performance and innovation. EMG’s competition in specialty metal products stems from alternative materials and processes. Our competitors may develop new or improve existing products that are superior to our products or may adapt more readily to new technologies or changing requirements of our customers. There can be no assurance that our business will not be adversely affected by increased competition in the markets in which it operates or that our products will be able to compete successfully with those of our competitors.
Our business and financial performance could be adversely impacted by a significant disruption in, or breach in security of, our information technology systems.
We rely on information technology systems, some of which are managed by third-parties, to process, transmit and store electronic information (including sensitive data such as confidential business information and personally identifiable data relating to employees, customers, other business partners and patients), and to manage or support a
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variety of critical business processes and activities (such as receiving and fulfilling orders, billing, collecting and making payments, shipping products, providing services and support to customers and fulfilling contractual obligations). These systems, products and services may be damaged, disrupted or shut down due to attacks by computer hackers, computer viruses, ransomware, human error or malfeasance, power outages, hardware failures, telecommunication or utility failures, catastrophes or other unforeseen events. In any such circumstances our system redundancy and other disaster recovery planning may be ineffective or inadequate. Further, given a significant subset of our employees have transitioned to working from home, disaster recovery may take longer to complete.
Attacks may also target hardware, software and information installed, stored or transmitted in our products after such products have been purchased and incorporated into third-party products, facilities or infrastructure. Like most multinational corporations, our information technology systems have been subject to computer viruses, malicious codes, unauthorized access and other cyber-attacks and we expect the sophistication and frequency of such attacks to continue to increase. Any of the attacks, breaches or other disruptions or damage described above could interrupt our operations or the operations of our customers and partners, delay production and shipments, result in theft of intellectual property and trade secrets, damage customer and business partner relationships and our reputation or result in defective products or services, legal claims and proceedings, liability and penalties under privacy laws and increased costs for security and remediation, each of which could adversely affect our business, reputation and financial statements. Although we maintain cyber risk insurance, damages and claims arising from such incidents may not be covered or may exceed the amount of any insurance available.
Risks Related to Our Acquisitions
Our growth strategy includes strategic acquisitions. We may not be able to consummate future acquisitions or successfully integrate recent and future acquisitions.
A portion of our growth has been attributed to acquisitions of strategic businesses. We plan to continue making strategic acquisitions to enhance our global market position and broaden our product offerings. Although we have been successful with our acquisition strategy in the past, our ability to successfully effectuate acquisitions will be dependent upon a number of factors, including:
•Our ability to identify acceptable acquisition candidates;
•The impact of increased competition for acquisitions, which may increase acquisition costs, affect our ability to consummate acquisitions on favorable terms, and result in us assuming a greater portion of the seller’s liabilities;
•Successfully integrating acquired businesses, including integrating the management, technological and operational processes, procedures and controls of the acquired businesses with those of our existing operations;
•Adequate financing for acquisitions being available on terms acceptable to us;
•Unexpected losses of key employees, customers and suppliers of acquired businesses;
•Mitigating assumed, contingent and unknown liabilities; and
•Challenges in managing the increased scope, geographic diversity and complexity of our operations.
The process of integrating acquired businesses into our existing operations may result in unforeseen operating difficulties and may require additional financial resources and attention from management that would otherwise be available for the ongoing development or expansion of our existing operations. Furthermore, even if successfully integrated, the acquired business may not achieve the results we expected or produce expected benefits in the time frame planned. Failure to continue with our acquisition strategy and the successful integration of acquired businesses could have an adverse effect on our business, financial condition, results of operations and cash flows.
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The indemnification provisions of acquisition agreements by which we have acquired companies may not fully protect us and as a result we may face unexpected liabilities.
Certain of the acquisition agreements by which we have acquired companies require the former owners to indemnify us against certain liabilities related to the operation of the company before we acquired it. In most of these agreements, however, the liability of the former owners is limited, and certain former owners may be unable to meet their indemnification responsibilities. We cannot assure you that these indemnification provisions will protect us fully or at all, and as a result we may face unexpected liabilities that adversely affect our financial statements.

Risks Related to Our Financial Condition
Certain environmental risks may cause us to be liable for costs associated with hazardous or toxic substance clean-up which may adversely affect our financial condition.
Our businesses, operations and facilities are subject to a number of federal, state, local and foreign environmental and occupational health and safety laws and regulations concerning, among other things, air emissions, discharges to waters and the use, manufacturing, generation, handling, storage, transportation and disposal of hazardous substances and wastes. Environmental risks are inherent in many of our manufacturing operations. Certain laws provide that a current or previous owner or operator of property may be liable for the costs of investigating, removing and remediating hazardous materials at such property, regardless of whether the owner or operator knew of, or was responsible for, the presence of such hazardous materials. In addition, the Comprehensive Environmental Response, Compensation and Liability Act generally imposes joint and several liability for clean-up costs, without regard to fault, on parties contributing hazardous substances to sites designated for clean-up under the Act. We have been named a potentially responsible party at several sites, which are the subject of government-mandated clean-ups. As the result of our ownership and operation of facilities that use, manufacture, store, handle and dispose of various hazardous materials, we may incur substantial costs for investigation, removal, remediation and capital expenditures related to compliance with environmental laws. While it is not possible to precisely quantify the potential financial impact of pending environmental matters, based on our experience to date, we believe that the outcome of these matters is not likely to have a material adverse effect on our financial position or future results of operations. In addition, new laws and regulations, new classification of hazardous materials, stricter enforcement of existing laws and regulations, the discovery of previously unknown contamination or the imposition of new clean-up requirements could require us to incur costs or become the basis for new or increased liabilities that could have a material adverse effect on our business, financial condition and results of operations. There can be no assurance that future environmental liabilities will not occur or that environmental damages due to prior or present practices will not result in future liabilities.
We are subject to a variety of litigation and other legal and regulatory proceedings in the course of our business that could adversely affect our financial statements.
We are subject to a variety of litigation and other legal and regulatory proceedings incidental to our business (or the business operations of previously owned entities), including claims for damages arising out of the use of products or services and claims relating to intellectual property matters, employment matters, tax matters, commercial disputes, competition and sales and trading practices, environmental matters, personal injury, insurance coverage and acquisition-related matters, as well as regulatory investigations or enforcement. These lawsuits may include claims for compensatory damages, punitive and consequential damages and/or injunctive relief. The defense of these lawsuits may divert our management’s attention, we may incur significant expenses in defending these lawsuits, and we may be required to pay damage awards or settlements or become subject to equitable remedies that could adversely affect our operations and financial statements. Moreover, any insurance or indemnification rights that we may have may be insufficient or unavailable to protect us against such losses. In addition, developments in proceedings in any given period may require us to adjust the loss contingency estimates that we have recorded in our financial statements, record estimates for liabilities or assets previously not susceptible of reasonable estimates or pay cash settlements or judgments. Any of these developments could adversely affect our financial statements in any particular period. We cannot assure you that our liabilities in connection with litigation and other legal and
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regulatory proceedings will not exceed our estimates or adversely affect our financial statements and reputation. However, based on our experience, current information and applicable law, we do not believe that any amounts we may be required to pay in connection with litigation and other legal and regulatory proceedings in excess of our reserves as of the date of this information statement will have a material effect on our financial statements.
We operate in highly competitive industries, which may adversely affect our results of operations or ability to expand our business.
Our markets are highly competitive. We compete, domestically and internationally, with individual producers, as well as with vertically integrated manufacturers, some of which have resources greater than we do. The principal elements of competition for our products are product technology, quality, service, distribution and price. Although we believe EIG is a market leader, competition is strong and could intensify in the markets served by EIG. In the aerospace markets served by EIG, a limited number of companies compete on the basis of product quality, performance and innovation. EMG’s competition in specialty metal products stems from alternative materials and processes. Our competitors may develop new or improve existing products that are superior to our products or may adapt more readily to new technologies or changing requirements of our customers. There can be no assurance that our business will not be adversely affected by increased competition in the markets in which it operates or that our products will be able to compete successfully with those of our competitors.
Restrictions contained in our revolving credit facility and other debt agreements may limit our ability to incur additional indebtedness.
Our existing revolving credit facility and other debt agreements (each a “Debt Facility” and collectively, “Debt Facilities”) contain restrictive covenants, including restrictions on our ability to incur indebtedness. These restrictions could limit our ability to effectuate future acquisitions, limit our ability to pay dividends, limit our ability to make capital expenditures or restrict our financial flexibility. Our Debt Facilities contain covenants requiring us to achieve certain financial and operating results and maintain compliance with specified financial ratios. Our ability to meet the financial covenants or requirements in our Debt Facilities may be affected by events beyond our control, and we may not be able to satisfy such covenants and requirements. A breach of these covenants or our inability to comply with the financial ratios, tests or other restrictions contained in a Debt Facility could result in an event of default under one or more of our other Debt Facilities. Upon the occurrence of an event of default under a Debt Facility, and the expiration of any grace periods, the lenders could elect to declare all amounts outstanding under one or more of our other Debt Facilities, together with accrued interest, to be immediately due and payable. If this were to occur, our assets may not be sufficient to fully repay the amounts due under our Debt Facilities or our other indebtedness.
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Our business and financial performance could be adversely impacted by a significant disruption in, or breach in security of, our information technology systems.
We rely on information technology systems, some of which are managed by third-parties, to process, transmit and store electronic information (including sensitive data such as confidential business information and personally identifiable data relating to employees, customers, other business partners and patients), and to manage or support a variety of critical business processes and activities (such as receiving and fulfilling orders, billing, collecting and making payments, shipping products, providing services and support to customers and fulfilling contractual obligations). These systems, products and services may be damaged, disrupted or shut down due to attacks by computer hackers, computer viruses, ransomware, human error or malfeasance, power outages, hardware failures, telecommunication or utility failures, catastrophes or other unforeseen events. In any such circumstances our system redundancy and other disaster recovery planning may be ineffective or inadequate. Attacks may also target hardware, software and information installed, stored or transmitted in our products after such products have been purchased and incorporated into third-party products, facilities or infrastructure. Like most multinational corporations, our information technology systems have been subject to computer viruses, malicious codes, unauthorized access and other cyber-attacks and we expect the sophistication and frequency of such attacks to continue to increase. Any of the attacks, breaches or other disruptions or damage described above could interrupt our operations or the operations of our customers and partners, delay production and shipments, result in theft of intellectual property and trade secrets, damage customer and business partner relationships and our reputation or result in defective products or services, legal claims and proceedings, liability and penalties under privacy laws and increased costs for security and remediation, each of which could adversely affect our business, reputation and financial statements. Although we maintain cyber risk insurance, damages and claims arising from such incidents may not be covered or may exceed the amount of any insurance available.
Our goodwill and other intangible assets represent a substantial proportion of our total assets and the impairment of such substantial goodwill and intangible assets could have a negative impact on our financial condition and results of operations.
Our total assets include substantial amounts of intangible assets, primarily goodwill. At December 31, 2019,2022, goodwill and other intangible assets, net of accumulated amortization, totaled $6,810.4$8,714.6 million or 69%70% of our total assets. The goodwill results from our acquisitions, representing the excess of cost over the estimated fair value of the net tangible and other identifiable intangible assets we have acquired. At a minimum, we assess annually whether there has beenFor the year ended December 31, 2022, the Company recorded an $8.6 million non-cash impairment incharge related to certain of the value of our intangible assets.Company's trade names. If future operating performance at one or more of our reporting units were to fall significantly below current levels, we could record, under current applicable accounting rules, a
non-cash
charge to operating income for goodwill or other intangible asset impairment. Any determination requiring the impairment of a significant portion of goodwill or other intangible assets would negatively affect our financial condition and results of operations.
Item 1B.    Unresolved Staff Comments
None.

17Item 2.    Properties
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Item 2.Properties
At December 31, 2019,2022, the Company conducted business from office and operating facilities at owned and leased locations throughout the United States and select global markets. The Company’s leases a facility in Berwyn, Pennsylvania for its corporate headquarters.
The Company believes that all facilities have been adequately maintained, are in good operating condition, and are suitable for our current needs.
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Item 3.
Item 3.    Legal Proceedings
Please refer to “Environmental Matters” in Part II, Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations and Note 13 to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form
10-K
for information regarding certain litigation matters.
The Company is subject to a variety of litigation and other legal and regulatory proceedings incidental to its business (or the business operations of previously owned entities), including claims for damages arising out of the use of the Company’s products or services and claims relating to intellectual property matters, employment matters, tax matters, commercial disputes, competition and sales and trading practices, environmental matters, personal injury, insurance coverage and acquisition-related matters, as well as regulatory investigations or enforcement. Based upon the Company’s experience, the Company does not believe that these proceedings and claims will have a material adverse effect on its results of operations, financial position or cash flows.
Item 4.Mine Safety Disclosures
Item 4.    Mine Safety Disclosures
Not Applicable.
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PART II
Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Item 5.    Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
The principal market on which the Company’s common stock is traded is the New York Stock Exchange and it is traded under the symbol “AME.” On January 31, 2020,2023, there were approximately 1,8001,700 holders of record of the Company’s common stock.
Market price and dividend information with respect to the Company’s common stock is set forth below. Future dividend payments by the Company will be dependent on future earnings, financial requirements, contractual provisions of debt agreements and other relevant factors.
Under its share repurchase program, the Company repurchased approximately 133,0002,673,000 shares of its common stock for $11.9$332.8 million in 20192022 and approximately 5,079,000113,000 shares of its common stock for $367.7$14.7 million in 2018.2021.
Issuer Purchases of Equity Securities
The following table reflects purchases of AMETEK, Inc. common stock by the Company during the three months ended December 31, 2019:
                 
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
 
                 
October 1, 2019 to October 31, 2019
  
��  
  $
—  
   
—  
  $
494,436,704
 
                 
November 1, 2019 to November 30, 2019
  
55,211
   
96.20
   
55,211
   
489,125,278
 
                 
December 1, 2019 to December 31, 2019
  
—  
   
—  
   
—  
   
489,125,278
 
                 
                 
Total
  
55,211
   
96.20
   
55,211
    
                 
2022:
PeriodTotal 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
October 1, 2022 to October 31, 202243 $120.45 43 $825,294,533 
November 1, 2022 to November 30, 202210,202 136.39 10,202 823,903,036 
December 1, 2022 to December 31, 2022— — — 823,903,036 
Total10,245 $136.33 10,245 
_____________________
(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 $1 billion authorization for the repurchase of its common stock announced in May 2022, which replaces the previous $500 million authorization for 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.
20
(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.
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Securities Authorized for Issuance Under Equity Compensation Plan Information
The following table sets forth information as of December 31, 20192022 regarding all of the Company’s existing compensation plans pursuant to which equity securities are authorized for issuance to employees and nonemployeenon-employee directors:
             
Plan category
 
Number of securities
to be issued
upon exercise of
outstanding options,
warrants and rights
(a)
  
Weighted average
exercise price of
outstanding options,
warrants and rights
(b)
  
Number of securities
remaining available
for future issuance
under equity
compensation plans
(excluding securities
reflected in column (a))
(c)
 
             
Equity compensation plans approved by security holders
  
4,302,540
  $
62.50
   
4,579,533
 
             
Equity compensation plans not approved by security holders
  
—
   
—
   
—
 
             
             
Total
  
4,302,540
   
62.50
   
4,579,533
 
             
Plan categoryNumber of securities
to be issued
upon exercise of
outstanding options,
warrants and rights
(a)		Weighted average
exercise price of
outstanding options,
warrants and rights
(b)		Number of securities
remaining available
for future issuance
under equity
compensation plans
(excluding securities
reflected in column (a))
(c)
Equity compensation plans approved by security holders3,059,845 $79.46 6,118,226 
Equity compensation plans not approved by security holders— — — 
Total3,059,845 $79.46 6,118,226 
20
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Table of Contents
Stock Performance Graph
The following graph and accompanying table compare the cumulative total stockholder return for AMETEK over the last five years ended December 31, 20192022 with total returns for the same period for the Standard and Poor’s (“S&P”) 500 Index and S&P Industrials. AMETEK’s stock price is a component of both indices. The performance graph and table assume a $100 investment made on December 31, 20142017 and reinvestment of all dividends. The stock performance shown on the graph below is based on historical data and is not necessarily indicative of future stock price performance.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
ame-20221231_g1.jpg
December 31,
201720182019202020212022
AMETEK, Inc.$100.00 $94.11 $139.53 $170.55 $208.62 $199.60 
S&P 500 Index100.00 95.62 125.72 148.85 191.58 156.89 
S&P Industrials100.00 86.71 112.17 124.59 150.89 142.63 

Item 6.    Reserved

COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
                         
 
December 31,
 
 
2014
  
2015
  
2016
  
2017
  
2018
  
2019
 
                         
AMETEK, Inc.
 $
100.00
  $
102.51
  $
93.66
  $
140.48
  $
132.20
  $
196.00
 
                         
S&P 500 Index
  
100.00
   
101.38
   
113.51
   
138.29
   
132.23
   
173.86
 
                         
S&P Industrials
  
100.00
   
97.47
   
115.85
   
140.22
   
121.58
   
157.29
 
21
22
Table of Contents
Item 6.Selected Financial Data
The following financial information for the five years ended December 31, 2019, has been derived from the Company’s consolidated financial statements. This information should be read in conjunction withItem 7.    Management’s Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements and related notes thereto included elsewhere in this Annual Report on Form
 10-K.
                     
 
2019
  
2018
  
2017
  
2016
  
2015
 
 
(In millions, except per share amounts)
 
                     
Consolidated Operating Results
(Year Ended December 31):
               
                     
Net sales
 $
5,158.6
  $
4,845.9
  $
4,300.2
  $
3,840.1
  $
3,974.3
 
                     
Operating income
(1)
 $
1,177.4
  $
1,075.5
  $
903.6
  $
791.0
  $
907.7
 
Interest expense
 $
88.5
  $
82.2
  $
98.0
  $
94.3
  $
91.8
 
Net income
 $
861.3
  $
777.9
  $
681.5
  $
512.2
  $
590.9
 
                     
Earnings per share:
               
                     
Basic
 $
3.78
  $
3.37
  $
2.96
  $
2.20
  $
2.46
 
                     
Diluted
 $
3.75
  $
3.34
  $
2.94
  $
2.19
  $
2.45
 
                     
Dividends declared and paid per share
 $
0.56
  $
0.56
  $
0.36
  $
0.36
  $
0.36
 
                     
Weighted average common shares outstanding:
               
                     
Basic
  
227.8
   
230.8
   
230.2
   
232.6
   
239.9
 
                     
Diluted
  
229.4
   
232.7
   
231.8
   
233.7
   
241.6
 
                     
Performance Measures and Other Data:
               
                     
Operating income — Return on net sales
(1)
  
22.8
%  
22.2
%  
21.0
%  
20.6
%  
22.8
%
                     
  — Return on average total assets
(1)
  
12.7
%  
13.1
%  
12.1
%  
11.5
%  
13.9
%
Net income — Return on average total capital
  
11.7
%  
11.9
%  
11.6
%  
9.5
%  
11.6
%
 — Return on average stockholders’ equity
  
18.4
%  
18.8
%  
18.7
%  
15.7
%  
18.2
%
EBITDA
(2)
 $
1,388.3
  $
1,267.7
  $
1,076.0
  $
966.0
  $
1,046.9
 
Ratio of EBITDA to interest expense
(2)
  
15.7x
   
15.4x
   
11.0x
   
10.2x
   
11.4x
 
Depreciation and amortization
 $
234.0
  $
199.5
  $
183.2
  $
179.7
  $
149.5
 
Capital expenditures
 $
102.3
  $
82.1
  $
75.1
  $
63.3
  $
69.1
 
Cash provided by operating activities
 $
1,114.4
  $
925.5
  $
833.3
  $
756.8
  $
672.5
 
Free cash flow
(3)
 $
1,012.1
  $
843.4
  $
758.2
  $
693.5
  $
603.4
 
                     
Consolidated Financial Position
(At December 31):
               
Current assets
 $
2,025.8
  $
1,836.1
  $
1,934.7
  $
1,928.2
  $
1,618.8
 
                     
Current liabilities
 $
1,425.9
  $
1,258.7
  $
1,138.7
  $
924.4
  $
1,024.0
 
Property, plant and equipment, net
 $
548.9
  $
554.1
  $
493.3
  $
473.2
  $
484.5
 
Total assets
 $
9,844.6
  $
8,662.3
  $
7,796.1
  $
7,100.7
  $
6,660.5
 
Long-term debt, net
 $
2,271.3
  $
2,273.8
  $
1,866.2
  $
2,062.6
  $
1,553.1
 
Total debt, net
 $
2,768.7
  $
2,632.7
  $
2,174.3
  $
2,341.6
  $
1,938.0
 
Stockholders’ equity
 $
5,115.5
  $
4,241.9
  $
4,027.6
  $
3,256.5
  $
3,254.6
 
Stockholders’ equity per share
 $
22.33
  $
18.68
  $
17.42
  $
14.20
  $
13.82
 
Total debt as a percentage of capitalization
  
35.1
%  
38.3
%  
35.1
%  
41.8
%  
37.3
%
Net debt as a percentage of capitalization
(4)
  
31.7
%  
34.9
%  
27.5
%  
33.3
%  
32.4
%
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Table of Contents
Notes to Selected Financial Data
(1)Amounts prior to 2016 do not reflect the adoption of ASU No.
 2017-07,
Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost
(“ASU
 2017-07”).
(2)EBITDA represents earnings before interest, income taxes, depreciation and amortization. EBITDA is presented because the Company is aware that it is used by rating agencies, securities analysts, investors and other parties in evaluating the Company. It should not be considered, however, as an alternative to operating income as an indicator of the Company’s operating performance or as an alternative to cash flows as a measure of the Company’s overall liquidity as presented in the Company’s consolidated financial statements. Furthermore, EBITDA measures shown for the Company may not be comparable to similarly titled measures used by other companies. The following table presents the reconciliation of net income reported in accordance with U.S. generally accepted accounting principles (“GAAP”) to EBITDA:
                     
 
Year Ended December 31,
 
 
2019
  
2018
  
2017
  
2016
  
2015
 
 
(In millions)
 
                     
Net income
 $
861.3
  $
777.9
  $
681.5
  $
512.2
  $
590.9
 
                     
                
Add (deduct):
           
                     
Interest expense
  
88.5
   
82.2
   
98.0
   
94.3
   
91.8
 
                     
Interest income
  
(4.0
)  
(1.7
)  
(2.0
)  
(1.1
)  
(0.8
)
                     
Income taxes
  
208.5
   
209.8
   
115.3
   
180.9
   
215.5
 
                     
Depreciation
  
101.4
   
85.4
   
82.0
   
74.8
   
68.7
 
                     
Amortization
  
132.6
   
114.1
   
101.2
   
104.9
   
80.8
 
                     
                     
Total adjustments
  
527.0
   
489.8
   
394.5
   
453.8
   
456.0
 
                     
                     
EBITDA
 $
1,388.3
  $
1,267.7
  $
1,076.0
  $
966.0
  $
1,046.9
 
                     
(3)Free cash flow represents cash flow from operating activities less capital expenditures. Free cash flow is presented because the Company is aware that it is used by rating agencies, securities analysts, investors and other parties in evaluating the Company. The following table presents the reconciliation of cash flow from operating activities reported in accordance with U.S. GAAP to free cash flow:
                     
 
Year Ended December 31,
 
 
2019
  
2018
  
2017
  
2016
  
2015
 
 
(In millions)
 
                     
Cash provided by operating activities
 $
1,114.4
  $
925.5
  $
833.3
  $
756.8
  $
672.5
 
                     
Deduct: Capital expenditures
  
(102.3
)  
(82.1
)  
(75.1
)  
(63.3
)  
(69.1
)
                     
                     
Free cash flow
 $
1,012.1
  $
843.4
  $
758.2
  $
693.5
  $
603.4
 
                     
(4)Net debt represents total debt, net minus cash and cash equivalents. Net debt is presented because the Company is aware that it is used by rating agencies, securities analysts, investors and other parties in evaluating the Company. The following table presents the reconciliation of total debt, net reported in accordance with U.S. GAAP to net debt:
                     
 
December 31,
 
 
2019
  
2018
  
2017
  
2016
  
2015
 
 
(In millions)
 
                     
Total debt, net
 $
2,768.7
  $
2,632.7
  $
2,174.3
  $
2,341.6
  $
1,938.0
 
                     
Less: Cash and cash equivalents
  
(393.0
)  
(354.0
)  
(646.3
)  
(717.3
)  
(381.0
)
                     
                     
Net debt
  
2,375.7
   
2,278.7
   
1,528.0
   
1,624.3
   
1,557.0
 
                     
Stockholders’ equity
  
5,115.5
   
4,241.9
   
4,027.6
   
3,256.5
   
3,254.6
 
                     
                     
Capitalization (net debt plus stockholders’ equity)
 $
7,491.2
  $
6,520.6
  $
5,555.6
  $
4,880.8
  $
4,811.6
 
                     
                     
Net debt as a percentage of capitalization
  
31.7
%  
34.9
%  
27.5
%  
33.3
%  
32.4
%
                     
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Table of Contents
Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations
This report includes forward-looking statements based on the Company’s current assumptions, expectations and projections about future events. When used in this report, the words “believes,” “anticipates,” “may,” “expect,” “intend,” “estimate,” “project” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such words. In this report, the Company discloses important factors that could cause actual results to differ materially from management’s expectations. For more information on these and other factors, see “Forward-Looking Information” herein.
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with “Item 1A. Risk Factors,” “Item 6. Selected Financial Data” and the consolidated financial statements and related notes included elsewhere in this Annual Report on Form
10-K.
Business Overview
AMETEK’s operations are affected by global, regional and industryindustry-specific economic factors. However, the Company’s strategic geographic and industry diversification, and its mix of products and services, have helped to mitigate the potential adverse impact of any unfavorable developments in any one industry or the economy of any single country on its consolidated operating results. In 2019,2022, the Company posted record backlog, orders, sales, operating income, operating margins, net income, diluted earnings per share, backlog, and operating cash flow. The Company’s record backlog, contributions from recent acquisitions, and continued focus on and implementation of Operational Excellence initiatives, had a positive impact on 2019 results.orders. The Company also benefited from its strategic initiatives under AMETEK’sAMETEK's four key strategies: Operational Excellence, Strategic Acquisitions, Global & Market Expansion and New Products.
Highlights of 2019in 2022 were:
Orders•Net sales for 20192022 were $5,274.3a record $6,150.5 million, an increase of $222.5$604.0 million or 4.4%10.9%, compared with $5,051.8net sales of $5,546.5 million in 2018.2021. The increase in net sales for 2022 was due to an 11% organic sales increase, a 2% increase from acquisitions, partially offset by an unfavorable 2% effect of foreign currency translation.
•Net income for 2022 was a record $1,159.5 million, an increase of $169.4 million or 17.1%, compared with $990.1 million in 2021.
•Diluted earnings per share for 2022 were a record $5.01, an increase of $0.76 or 17.8%, compared with $4.25 per diluted share in 2021.
•Orders for 2022 were a record $6,639.1 million, an increase of $164.7 million or 2.5%, compared with $6,474.4 million in 2021. The increase in orders was due to a 9% organic order increase, partially offset by a 3% unfavorable effect of foreign currency translation, as well as a 3% decrease from the year-over-year impact of acquisitions. As a result, the Company’sCompany's backlog of unfilled orders at December 31, 20192022 was $1,717.9a record $3,218.6 million.
Net sales for 2019 were $5,158.6 million, an increase of $312.7 million or 6.5%, compared with $4,845.9 million in 2018. The increase in net sales for 2019 was due to 2% organic sales growth, a 5% increase from the 2019 and 2018 acquisitions, partially offset by unfavorable foreign currency translation.
Net income for 2019 was $861.3 million, an increase of $83.4 million or 10.7%, compared with $777.9 million in 2018.
Diluted earnings per share for 2019 were $3.75, an increase of $0.41 or 12.3%, compared with $3.34 per diluted share in 2018.
Cash flow provided by operating activities for 2019 was $1,114.4 million, an increase of $188.9 million or 20.4%, compared with $925.5 million in 2018.
•During 2019,2022, the Company spent $1,061.9$429.7 million in cash, net of cash acquired, to acquirepurchase two businesses:
•In September 2019,2022, AMETEK acquired Pacific Design Technologies,Navitar, Inc. (“PDT”("Navitar"), a designer and manufacturer of customized, fully integrated optical imaging systems, components, and software.
•In October 2022, AMETEK acquired RTDS Technologies Inc. ("RTDS"), a leading provider of advanced, mission-critical thermal management solutions;real-time power simulation systems used by utilities, and research and education institutions in the development and testing of the electric power grid and renewable energy applications.
In October 2019, AMETEK acquired Gatan, a provider of instrumentation and software used to enhance and extend the operation and performance of electron telescopes.
•Cash flow provided by operating activities for 2022 was $1,149.4 million. Free cash flow (cash flow provided by operating activities less capital expenditures) was $1,010.4 million in 2022.
24
23
Table of Contents
In the fourth quarter of 2019, the Company paid in full, at maturity, $100•EBITDA (earnings before interest, income taxes, depreciation, and amortization) was a record $1,829.7 million in aggregate principal amount of 6.30% private placement senior notes.2022, compared with $1,594.3 million in 2021.
A $100 million second funding of the December 2018 Private Placement occurred in January 2019.
In 2019, the Company repurchased approximately 133,000 shares of its common stock for $11.9 million.
•The Company continued its emphasis on investment in research, development and engineering, spending $260.3$322.1 million in 2019 before2022. Sales from products introduced in the past three years were $1,674.2 million.
Recent Events and Market Conditions
Recent events and market conditions impacting our business include the inflationary cost environment, rising interest rates, supply chain constraints, the COVID-19 pandemic, and the ongoing conflict in Ukraine. As a result of these events and conditions, we anticipate the challenging global economic environment to continue into 2023.
Beginning in 2021, we experienced heightened levels of inflation in material and transportation costs. We have taken steps to mitigate the impacts of material and transportation cost inflation by implementing pricing actions. We experienced additional pressure in our supply chain due to component shortages and strained transportation capacity, as well as the impact of continued elevated customer reimbursementdemand. In response to these supply chain pressures, we have taken actions to build inventory and seek alternative sources of $3.2 million.supply to support sales and backlog growth. The inflationary environment has also resulted in central banks raising short-term interest rates. We expect inflation to continue into 2023 and will continue to take actions to mitigate this inflationary pressure.
There still remains uncertainty concerning the COVID-19 pandemic, its effect on labor, government mandated lockdowns and other restrictive measures, and the pandemic's ultimate duration. Lockdowns in China during 2022 limited our ability to access customer sites, operate certain facilities, and placed additional constraints on our supply chain. Depending on the course of the pandemic, additional lockdowns in China or elsewhere could impact our operations and results of operations.
The invasion of Ukraine by Russia and the sanctions imposed in response to this conflict have increased global economic and political uncertainty. While we do not have operations in Russia or Ukraine and do not have significant exposure to customers and vendors in those countries, a significant expansion of the conflict's current scope could further complicate the economic environment.
While the ultimate impact of these events remains uncertain, we will continue to evaluate the extent to which these factors will impact our business, financial condition, and results of operations.

24
Results of Operations
The following table sets forth net sales and income by reportable segment and on a consolidated basis:
      
 
Year Ended December 31,
 
 
2019
  
2018
  
2017
 Year Ended December 31,
 
(In thousands)
 202220212020
 (In thousands)
Net sales:
         Net sales:
 
Electronic Instruments
 $
3,322,881
  $
3,028,959
  $
2,690,554
 Electronic Instruments$4,229,353 $3,763,758 $2,989,928 
 
Electromechanical
  
1,835,676
   
1,816,913
   
1,609,616
 Electromechanical1,921,177 1,782,756 1,550,101 
         
Consolidated net sales
 $
5,158,557
  $
4,845,872
  $
4,300,170
 Consolidated net sales$6,150,530 $5,546,514 $4,540,029 
         
 
Operating income and income before income taxes:
         Operating income and income before income taxes:
 
Segment operating income:
         Segment operating income:
 
Electronic Instruments
 $
865,307
  $
782,144
  $
671,646
 Electronic Instruments$1,089,729 $958,183 $770,620 
 
Electromechanical
  
387,931
   
363,765
   
306,779
 Electromechanical503,593 437,378 324,962 
         
 
Total segment operating income
  
1,253,238
   
1,145,909
   
978,425
 Total segment operating income1,593,322 1,395,561 1,095,582 
 
Corporate administrative expenses
  
(75,858
)  
(70,369
)  
(74,805
)Corporate administrative expenses(92,630)(86,891)(67,698)
         
 
Consolidated operating income
  
1,177,380
   
1,075,540
   
903,620
 Consolidated operating income1,500,692 1,308,670 1,027,884 
 
Interest expense
  
(88,481
)  
(82,180
)  
(98,029
)Interest expense(83,186)(80,381)(86,062)
 
Other expense, net
  
(19,151
)  
(5,615
)  
(8,862
)
         
 
Other (expense) income, netOther (expense) income, net11,186 (5,119)140,487 
Consolidated income before income taxes
 $
1,069,748
  $
987,745
  $
796,729
 Consolidated income before income taxes$1,428,692 $1,223,170 $1,082,309 
         
______________________
The following “Results of Operations of the year ended December 31, 20192022 compared with the year ended December 31, 2018”2021” section presents an analysis of the Company’s consolidated operating results displayed in the Consolidated Statement of Income. A discussion regarding our financial condition and results of operations for the year ended December 31, 20182021 compared to the year ended December 31, 20172020 can be found under Item 7 in our Annual Report on Form
10-K
for the fiscal year ended December 31, 2018,2021, filed with the Securities and Exchange Commission on February 21, 2019.22, 2022.
Results of Operations for the year ended December 31, 20192022 compared with the year ended December 31, 20182021
In 2019, the Company posted record sales, operating income, net income, diluted earnings per share, orders, backlog and operating cash flow. The Company achieved these results from organic sales growth in both EIG and EMG, contributions from the 2019 acquisitions of Gatan and PDT and 2018 acquisitions of Spectro Scientific, Telular, Forza, Motec and SoundCom, as well as from the Company’s Operational Excellence initiatives.
25
Table of Contents
The Company’s record backlog, the full year impact of the 2019 acquisitions and continued focus on and implementation of Operational Excellence initiatives are expected to have a positive impact on the Company’s 2020 results.
Net sales for 20192022 were $5,158.6a record $6,150.5 million, an increase of $312.7$604.0 million or 6.5%10.9%, compared with net sales of $4,845.9$5,546.5 million in 2018.2021. The increase in net sales for 20192022 was due to 2%an 11% organic sales growth,increase, a 5%2% increase from acquisitions, partially offset by an unfavorable 2% effect of foreign currency translation. EIG net sales were $3,322.9$4,229.4 million in 2019,2022, an increase of 9.7%12.4%, compared with $3,029.0$3,763.8 million in 2018.2021. EMG net sales were $1,835.7$1,921.2 million in 2019,2022, an increase of 1.0%7.8%, compared with $1,816.9$1,782.8 million in 2018.2021.
Total international sales for 20192022 were $2,474.9$2,996.3 million or 48.0%48.7% of net sales, an increase of $26.4$250.7 million or 1.1%9.1%, compared with international sales of $2,448.5$2,745.6 million or 50.5%49.5% of net sales in 2018.2021. The increase in international sales was primarily driven by strong demand in all regions as well as contributions from recent acquisitions. Export shipments from the United States, which are included in total international sales, were $1,306.2$1,688.7 million in 2019,2022, an increase of $36.8$213.1 million or 2.9%14.4%, compared with $1,269.4$1,475.6 million in 2018.2021.
Orders for 20192022 were $5,274.3a record $6,639.1 million, an increase of $222.5$164.7 million or 4.4%,2.5% compared with $5,051.8$6,474.4 million in 2018.2021. The increase in orders for 2019 was drivendue to a 9% organic order increase, partially offset by a 3% unfavorable effect of foreign currency translation, as well as a 3% decrease from the 2018 and 2019year-over-year impact of acquisitions. The Company’s backlog of unfilled orders at December 31, 20192022 was $1,717.9a record $3,218.6 million, an increase of $115.8$488.5 million or 7.2%17.9%, compared with $1,602.1$2,730.1 million at December 31, 2018.2021.
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Table of Contents
Segment operating income for 20192022 was $1,253.2$1,593.3 million, an increase of $107.3$197.7 million or 9.4%14.2%, compared with segment operating income of $1,145.9$1,395.6 million in 2018.2021. Segment operating income was positively impacted in 2022 by the increased sales discussed above. Segment operating income, as a percentage of net sales, increased to 24.3%25.9% in 2019,2022, compared with 23.6%25.2% in 2018. The increase in segment2021. Segment operating income andmargins for 2022 were negatively impacted by the dilutive impact of the 2021 acquisitions. Excluding the dilutive impact of recent acquisitions, segment operating margins for 2019 resulted primarily from the increase in net sales, as well ascore businesses increased 120 basis points compared to 2021, due to the benefits of the Company’sCompany's Operational Excellence initiatives.
Cost of sales for 20192022 was $3,370.9$4,005.3 million or 65.3%65.1% of net sales, an increase of $184.6$371.4 million or 5.8%10.2%, compared with $3,186.3$3,633.9 million or 65.8%65.5% of net sales for 2018. Cost2021. The cost of sales increasedincrease was primarily due to the increase in net sales notedincrease discussed above.
Selling, general and administrative expenses for 20192022 were $610.3$644.6 million or 11.8%10.5% of net sales, an increase of $26.3$40.7 million or 4.5%6.7%, compared with $584.0$603.9 million or 12.1%10.9% of net sales in 2018.2021. Selling, general and administrative expenses increased primarily due to the increase in net sales noteddiscussed above.
Consolidated operating income was $1,177.4$1,500.7 million or 22.8%a record 24.4% of net sales for 2019,2022, an increase of $101.9$192.0 million or 9.5%14.7%, compared with $1,075.5$1,308.7 million or 22.2%23.6% of net sales in 2018.
2021.
Interest expenseOther income, net was $88.5$11.2 million for 2019, an increase of $6.3 million or 7.7%,2022, compared with $82.2$5.1 million of other expense in 2018. The interest expense increase for 2019 was primarily driven by2021, a change of $16.3 million. During 2022, the 2018 private placement senior notes issued in December 2018 ($475Company recorded higher pension income of $9.9 million and 75 million Euros) and January 2019 ($100 million), partially offset by a decrease relatedlower acquisition-related due diligence expense compared to the repayment in full, at maturity, of $80 million in aggregate principal amount of 6.35% private placement senior notes and $160 million in aggregate principal amount of 7.08% private placement senior notes in the third quarter of 2018, $65 million in aggregate principal amount of 7.18% private placement senior notes in the fourth quarter of 2018, and $100 million in aggregate principal amount of 6.03% private placement senior notes in the fourth quarter of 2019.2021.
Other expense, net was $19.2 million for 2019, an increase of $13.6 million, compared with $5.6 million in 2018. The Other expense, net increase for 2019 was primarily due to lower defined benefit pension income included in Other expenses.
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Table of Contents
The effective tax rate for 20192022 was 19.5%18.8%, compared with 21.2%19.1% in 2018. The lower rate for 2019 mainly reflects higher year over year tax benefits related to share-based payment transactions as well as lower tax cost on foreign source income. The 2019 and 2018 effective tax rates also reflect the release of uncertain tax position liabilities primarily relating to statute expirations for U.S. Federal and State jurisdictions totaling $23.3 million and $11.4 million, respectively.2021. See Note 9 to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form
10-K
for further details.
Net income for 20192022 was $861.3a record $1,159.5 million, an increase of $83.4$169.4 million or 10.7%17.1%, compared with $777.9$990.1 million in 2018. 2021.
Diluted earnings per share for 20192022 were $3.75,a record $5.01, an increase of $0.41$0.76 or 12.3%17.8%, compared with $3.34$4.25 per diluted share in 2018.2021.
Segment Results
EIG’s
net
sales totaled $3,322.9a record $4,229.4 million for 2019,2022, an increase of $293.9$465.6 million or 9.7%12.4%, compared with $3,029.0$3,763.8 million in 2018.2021. The net sales increase was due to 3%an 11% organic sales growth, an 8%increase, a 4% increase from the 2019 acquisition of Gatan and the 2018 acquisitions, of Spectro Scientific, Telular, Forza, Motec and SoundCom, partially offset by an unfavorable 1%3% effect of foreign currency translation.
EIG’s operating income was $865.3a record $1,089.7 million for 2019,2022, an increase of $83.2$131.5 million or 10.6%13.7%, compared with $782.1$958.2 million in 2018.2021. EIG’s operating margins were 26.0%25.8% of net sales for 2019,2022, compared with 25.8%25.5% of net sales in 2018. The increase in EIG’s operating income and2021. EIG's operating margins for 2019 resulted primarily fromin 2022 were negatively impacted by the dilutive impact of the 2021 acquisitions. Excluding the dilutive impact of the 2021 acquisitions, EIG operating margins increased 100 basis points compared to 2021, due to the increase in net sales noteddiscussed above, as well as continued benefits from the benefits of the Group’sCompany's Operational Excellence initiatives.
EMG’s
net sales totaled $1,835.7a record $1,921.2 million for 2019,2022, an increase of $18.8$138.4 million or 1.0%7.8%, compared with $1,816.9$1,782.8 million in 2018.2021. The net sales increase was due to 2%an 11% organic sales growth, a 1% increase, from the 2019 acquisition of PDT and the 2018 acquisition of FMH, partially offset by an unfavorable 2%3% effect of foreign currency translation.translations.
EMG’s operating income was $387.9a record $503.6 million for 2019,2022, an increase of $24.1$66.2 million or 6.6%15.1%, compared with $363.8$437.4 million in 2018.2021. EMG's operating income included a $7.1 million gain on the sale of a facility during 2022. EMG’s operating margins were 21.1%a record 26.2% of net sales for 2019,2022, compared with 20.0%24.5% of net sales in 2018. The increase in EMG’s2021. Excluding the gain on the sale of a facility, EMG operating income in 2019 resulted primarily frommargins increased 130 basis points compared to
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Table of Contents
2021, due to the increase in net sales noteddiscussed above, as well as continued benefits from the benefits of the Group’sCompany's Operational Excellence initiatives.
Liquidity and Capital Resources
Cash provided by operating activities totaled $1,114.4$1,149.4 million in 2019, an increase2022, a decrease of $188.9$11.1 million or 20.4%1.0%, compared with $925.5$1,160.5 million in 2018.2021. The increasedecrease in cash provided by operating activities for 20192022 was primarily due to higher working capital levels, primarily driven by higher investments in inventory to support sales and backlog growth, and to mitigate inventory supply chain constraints, partially offset by higher net income of $83.4 million and lower deferred income taxes.
income.
Free cash flow (cash flow provided by operating activities less capital expenditures) was $1,012.1$1,010.4 million in 2019,2022, compared with $843.4$1,049.8 million in 2018.2021. EBITDA (earnings before interest, income taxes, depreciation and amortization) was $1,388.3a record $1,829.7 million in 2019,2022, compared with $1,267.7$1,594.3 million in 2018.2021. Free cash flow and EBITDA are presented because the Company is aware that they are measures used by third parties in evaluating the Company. (See the “Notes to Selected"Non-GAAP Financial Data” included in Item 6 in this Annual Report on Form
 10-K
Measures" for a reconciliation of U.S. GAAP measures to comparable
non-GAAP
measures).
Cash used forby investing activities totaled $1,150.9$552.8 million in 2019,2022, compared with $1,210.0cash used by investing activities of $2,055.8 million in 2018.2021. In 2019,2022, the Company paid $1,061.9, net of cash acquired, to acquire PDT in September 2019 and Gatan in October 2019. In 2018, the Company paid $1,129.3$429.7 million, net of cash acquired, to acquire Spectro Scientificpurchase Navitar, Inc. and RTDS Technologies Inc., compared to $1,959.2 million, net of cash acquired, to purchase Abaco Systems, Magnetrol International, NSI-MI Technologies, Crank Software, EGS Automation, and Alphasense in November 2018, Telular and Forza in October 2018, Motec in June 2018, SoundCom in April 2018 and FMH in January 2018.2021. Additions to property, plant and equipment totaled $102.3$139.0 million in 2019,2022, compared with $82.1$110.7 million in 2018.2021.
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Table of Contents
Cash providedused by financing activities totaled $72.9$575.7 million in 2019,2022, compared with $13.0$39.3 million of cash provided by financing activities in 2018.2021. At December 31, 2019,2022, total debt, net was $2,768.7$2,385.0 million, compared with $2,632.7$2,544.2 million at December 31, 2018.2021. In 2019, short-term2022, total borrowings increased $130.7decreased by $73.7 million, compared with an increase of $258.3$183.9 million in 2018. There was no net change in long-term borrowings in 2019, compared with an increase2021. At December 31, 2022, the Company had available borrowing capacity of $255.1$2,745.2 million in 2018.
under its revolving credit facility and term loan, including the $700 million accordion feature.
In October 2018,On May 12, 2022, the Company along with certain of its foreign subsidiaries amended and restated its Credit Agreement.Agreement dated as of September 22, 2011, as amended and restated as of March 10, 2016 and as further amended and restated as of October 30, 2018, with the lenders, JPMorgan Chase Bank, N.A., as Administrative Agent and Bank of America, N.A., PNC Bank, National Association, Trust Bank and Wells Fargo Bank, National Association, as Co-Syndication Agents. The Credit Agreementcredit agreement amends and restates the Company’s existing $850 million revolving credit facility which was due to expire in March 2021. The amended Credit Agreement consists of a five-year revolving credit facility in an aggregate principal amount ofincrease the size from $1.5 billion with a final maturity date in October 2023.to $2.3 billion and terminates the $800 million term loan. The revolving credit facility total borrowing capacity excludes an accordion feature that permitsagreement places certain restrictions on allowable additional indebtedness. In November 2021, the Company to request up to an additional $500 million in revolving credit commitments at any time during the life offurther amended the Credit Agreement underto address the cessation of LIBOR on certain conditions. The revolving credit facility provides the Company with additional financial flexibility to support its growth plans, including its acquisition strategy.currencies. At December 31, 2019,2022, the Company had available borrowing capacity$219.0 million outstanding on the revolver with a maturity date of $1,580.5 million under its revolving credit facility, including the $500 million accordion feature.
In December 2018, the Company completed the 2018 private placement agreement to sell $575 million and 75 million Euros in senior notes to a group of institutional investors utilizing two funding dates. The first funding occurred in December 2018 for $475 million and 75 million Euros ($85.1 million). The second funding occurred in January 2019 for $100 million. The 2018 Private Placement senior notes carry a weighted average interest rate of 3.93% and are subject to certain customary covenants, including financial covenants that, among other things, require the Company to maintain certain
debt-to-EBITDA
and interest coverage ratios. The proceeds from the 2018 Private Placement fundings were used to pay down domestic borrowings under the Company’s revolving credit facility.May 2027.
In the fourth quarter of 2019, $1002021, a 55 million of 6.30%Swiss franc ($59.7 million) 2.44% senior notesnote matured and werewas paid. In the third quarter of 2018, $80 million of 6.35% senior notes and $160 million of 7.08% senior notes matured and were paid. In the fourth quarter of 2018, $65 million of 7.18% senior notes matured and were paid. The
debt-to-capital
ratio was 35.1%24.2% at December 31, 2019,2022, compared with 38.3%27.0% at December 31, 2018.2021. The net
debt-to-capital
ratio (total debt, net less cash and cash equivalents divided by the sum of net debt and stockholders’ equity) was 31.7%21.4% at December 31, 2019,2022, compared with 34.9%24.2% at December 31, 2018.2021. 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. (See the “Notes to Selected"Non-GAAP Financial Data” included in Item 6 in this Annual Report on Form
 10-K
Measures" for a reconciliation of U.S. GAAP measures to comparable
non-GAAP
measures).
In 2019,2022, the Company repurchased approximately 133,0002.7 million shares of its common stock for $11.9$332.8 million, compared with $367.7$14.7 million used for repurchases of approximately 5,079,000113,000 shares in 2018.2021. Effective May 5, 2022, the Company's Board of Directors approved a $1 billion share repurchase authorization. This authorization replaces an earlier $500 million share repurchase authorization approved by the Board in February 2019. At December 31, 2019, $489.12022, $823.9 million was available under the Company’s Board of Directors authorization for future share repurchases.
27
Additional financing activities for 2022 included cash dividends paid of $202.2 million, compared with $184.6 million in 2021. On February 12, 2019,9, 2022, the Company’s Board of Directors approved ana 10% increase of $500 million in the authorization for the repurchase ofquarterly cash dividend on the Company’s common stock.
Additional financing activities for 2019 included cash dividends paid of $127.5 million, compared with $128.9 million in 2018.stock to $0.22 per common share from $0.20 per common share. Proceeds from the exercise of employee stock options were $90.4$49.9 million in 2019,2022, compared with $30.0$60.3 million in 2018. In the fourth quarter of 2018, the Company made a $30.0 million contingent payment related to the Rauland acquisition. Cash provided by financing activities includes $25.5 million related to the acquisition date estimated fair value of the contingent payment liability, which was based on a probabilistic approach using level 3 inputs. See Note 6 to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form
 10-K2021.
for further details.
As a result of all of the Company’s cash flow activities in 2019,2022, cash and cash equivalents at December 31, 20192022 totaled $393.0$345.4 million, compared with $354.0$346.8 million at December 31, 2018.2021. At December 31, 2019,2022, the
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Table of Contents
Company had $357.9$334.1 million in cash outside the United States, compared with $311.2$344.0 million at December 31, 2018.2021. The Company utilizes this cash to fund its international operations, as well as to acquire international businesses. 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 infor the foreseeable future.
Subsequent Event
Effective February 12, 2020,9, 2023, the Company’s Board of Directors approved a 29%14% increase in the quarterly cash dividend on the Company’s common stock to $0.18$0.25 per common share from $0.14$0.22 per common share.
Contractual Obligations and Other Commitments
The following table summarizes AMETEK’sMaterial contractual cash obligations arising in the normal course of business primarily consist of purchase obligations, long-term debt and related interest payments, and leases. See Note 10 to the effect such obligations are expected to haveConsolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for more information on the Company’s liquiditynature and cash flowstiming of debt obligations.

Leases expire over a range of years from 2023 to 2032. Most of the leases contain renewal or purchase options, subject to various terms and conditions. See Note 14 to the Consolidated Financial Statements included in future yearsPart II, Item 8 of this Annual Report on Form 10-K for more information on the nature and timing of lease obligations.

Purchase obligations primarily consist of contractual commitments to purchase certain inventories at fixed prices. At December 31, 2019.2022, the Company had $1,003.9 million of purchase obligations due within one year and $115.8 million of purchase obligations due in more than one year.
                     
 
Payments Due
 
Contractual Obligations
(1)
 
Total
  
Less Than
One Year
  
One to Three
Years
  
Four to Five
Years
  
After
Five Years
 
 
(In millions)
 
                     
Long-term debt borrowings
(2)
 $
2,382.1
  $
106.1
  $
56.8
  $
725.0
  $
1,494.2
 
                     
Revolving credit loans
(3)
  
384.8
   
384.8
   
—
   
—
   
—
 
                     
Other indebtedness
  
9.2
   
9.2
   
—
   
—
   
—
 
                     
                     
Total debt
(4)
  
2,776.1
   
500.1
   
56.8
   
725.0
   
1,494.2
 
                     
Interest on long-term fixed-rate debt
  
516.2
   
73.6
   
139.0
   
134.9
   
168.7
 
                     
Noncancellable operating leases
(5)
  
208.0
   
49.4
   
76.2
   
43.4
   
39.0
 
                     
Purchase obligations
(6)
  
505.2
   
478.5
   
23.0
   
2.8
   
0.9
 
                     
Restructuring and other
  
23.8
   
23.8
   
—
   
—
   
—
 
                     
                     
Total
 $
4,029.3
  $
1,125.4
  $
295.0
  $
906.1
  $
1,702.8
 
                     
(1)The liability for uncertain tax positions was not included in the table of contractual obligations as of December 31, 2019 because the timing of the settlements of these uncertain tax positions cannot be reasonably estimated at this time. See Note 9 to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form
 10-K
for further details.
(2)See Note 10 to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form
10-K
for further details.
(3)Although not contractually obligated, the Company expects to have the capability to repay the revolving credit loan within one year as permitted in the Credit Agreement. Accordingly, $384.8 million was classified as short-term debt at December 31, 2019.
(4)Excludes debt issuance costs of $7.4 million, of which $2.7 million is classified as current and $4.7 million is classified as long-term. See Note 10 to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form
10-K
for further details.
(5)The leases expire over a range of years from 2020 to 2034, except for a single land lease with 64 years remaining. Most of the leases contain renewal or purchase options, subject to various terms and conditions.
(6)Purchase obligations primarily consist of contractual commitments to purchase certain inventories at fixed prices.
Other Commitments
The Company has standby letters of credit and surety bonds of $63.8$64.9 million related to performance and payment guarantees at December 31, 2019.2022. Based on experience with these arrangements, the Company believes that any obligations that may arise will not be material to its financial position.

28
Non-GAAP Financial Measures
EBITDA represents earnings before interest, income taxes, depreciation and amortization. EBITDA is presented because the Company is aware that it is used by rating agencies, securities analysts, investors and other parties in evaluating the Company. It should not be considered, however, as an alternative to operating income as an indicator of the Company’s operating performance or as an alternative to cash flows as a measure of the Company’s overall liquidity as presented in the Company’s consolidated financial statements. Furthermore, EBITDA measures shown for the Company may not be comparable to similarly titled measures used by other companies. The following table presents the reconciliation of net income reported in accordance with U.S. generally accepted accounting principles (“GAAP”) to EBITDA:
Year Ended December 31,
202220212020
(In millions)
Net income$1,159.5 $990.1 $872.4 
Add (deduct):
Interest expense83.2 80.4 86.1 
Interest income(1.7)(1.4)(2.1)
Income taxes269.2 233.1 209.9 
Depreciation113.7 108.5 101.3 
Amortization205.8 183.6 154.0 
Total adjustments670.2 604.2 549.2 
EBITDA$1,829.7 $1,594.3 $1,421.6 
Free cash flow represents cash flow from operating activities less capital expenditures. Free cash flow is presented because the Company is aware that it is used by rating agencies, securities analysts, investors and other parties in evaluating the Company. The following table presents the reconciliation of cash flow from operating activities reported in accordance with U.S. GAAP to free cash flow:
Year Ended December 31,
202220212020
(In millions)
Cash provided by operating activities$1,149.4 $1,160.5 $1,281.0 
Deduct: Capital expenditures(139.0)(110.7)(74.2)
Free cash flow$1,010.4 $1,049.8 $1,206.8 
Net debt represents total debt, net minus cash and cash equivalents. Net debt is presented because the Company is aware that it is used by rating agencies, securities analysts, investors and other parties in evaluating the Company. The following table presents the reconciliation of total debt, net reported in accordance with U.S. GAAP to net debt:
December 31,
20222021
(In millions)
Total debt, net$2,385.0 $2,544.2 
Less: Cash and cash equivalents(345.4)(346.8)
Net debt2,039.6 2,197.4 
Stockholders’ equity7,476.5 6,871.9 
Capitalization (net debt plus stockholders’ equity)$9,516.1 $9,069.3 
Net debt as a percentage of capitalization21.4 %24.2 %

29
Internal Reinvestment
Capital Expenditures
Capital expenditures were $102.3$139.0 million or 2.3% of net sales in 2022, compared with $110.7 million or 2.0% of net sales in 2019, compared with $82.1 million or 1.7% of net sales in 2018.2021. In 2019,2022, approximately 66%64% of capital expenditures were for improvements to existing equipment or additional equipment to increase productivity and expand capacity. Capital expenditures in 20202023 are expected to be approximately 2% of net sales, with a continued emphasis on spending to improve productivity.
Research, Development and Engineering
The Company is committed to, and has consistently invested in, research, development and engineering activities to design and develop new and improved products and solutions. Research, development and engineering costs before customer reimbursement were $260.3$322.1 million in 2019, $230.22022, $299.6 million in 20182021 and $221.2$246.2 million in 2017. Customer reimbursements in 2019, 2018 and 2017 were $3.2 million, $5.2 million and $5.4 million, respectively.2020. These amounts included research and development expenses of $161.9$198.8 million, $141.0$194.2 million and $130.4$158.9 million in 2019, 20182022, 2021, and 2017,2020, respectively. All such expenditures were directed toward the development of new products and solutions and the improvement of existing products and solutions.
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. The Company believes these waste products were handled in compliance with regulations existing at that time. At December 31, 2019, the Company is named a Potentially Responsible Party (“PRP”) at 13
non-AMETEK-owned
former waste disposal or treatment sites (the
“non-owned”
sites). The Company is identified as a “de minimis” party in 12 of these sites based on the low volume of waste attributed to the Company relative to the amounts attributed to other named PRPs. In eight 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 remaining site 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 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 CompanyInformation with respect to other environmental matters reserves are established once the 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 best estimate. It is reasonably possible that the actual cost of remediation of the individual sites could vary from the current estimates and the amounts accruedset forth in the consolidated financial statements; however, the amounts of such variances are not expected to result in a material changeNote 13 to the consolidated financial statements. In estimating the Company’s liability for remediation, the Company also considers the likely proportionate shareConsolidated Financial Statements included in Part II, Item 8 of the anticipated remediation expense and the ability of the other PRPs to fulfill their obligations.
Total environmental reserves at December 31, 2019 and 2018 were $28.9 million and $27.8 million, respectively, for both
non-owned
and owned sites. In 2019, the Company recorded $7.0 million in reserves. Additionally, in 2019 the Company spent $6.0 millionthis Annual Report on environmental matters and the reserve increasedForm 10-K.

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$0.1 million due to foreign currency translation. The Company’s reserves for environmental liabilities at December 31, 2019 and 2018 included reserves of $9.0 million and $9.6 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.
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 for the environmental matters described above, 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 on presently available information and the Company’s historical 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.
The Company has been remediating groundwater contamination for several contaminants, including trichloroethylene (“TCE”), at a formerly owned site in El Cajon, California. Several lawsuits have been filed against the Company alleging damages resulting from the groundwater contamination, including property damages and personal injury, and seeking compensatory and punitive damages. The Company believes that it has good and valid defenses to each of these claims and intends to defend them vigorously. The Company believes it has established reserves for these lawsuits that are sufficient to satisfy its expected exposure. The Company does not expect the outcome of these matters, either individually or in the aggregate, to materially affect the consolidated results of operations, financial position or cash flows of the Company.
Critical Accounting Policies
and Estimates
The Company has identified its criticalCritical accounting policies asare those accounting policies that can have a significant impact on the presentation of the Company’s financial condition and results of operations and that require the use of complex and subjective estimates based on the Company’s historical experience and management’s judgment. Because of the uncertainty inherent in such estimates, actual results may differ materially from the estimates used. The consolidatedBelow are the policies used in preparing the Company's financial statements that management believes are the most dependent upon the application of estimates and related notes contain information that is pertinent to the Company’s accounting policies and to Management’s Discussion and Analysis. The information that follows represents additional specific disclosures about the Company’s accounting policies regarding risks, estimates, subjective decisions or assessments whereby materially different financial condition and results of operations could have been reported had different assumptions been used or different conditions existed. Primary disclosureassumptions. A complete list of the Company’s significant accounting policies is in Note 1 to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form
10-K.
•Business Combinations
. Combinations. The Company allocates the purchase price of an acquired company, including when applicable, the acquisition date fair value of contingent consideration between tangible and intangible assets acquired and liabilities assumed from the acquired business based on their estimated fair values, with the residual of the purchase price recorded as goodwill. Third party appraisal firms and other consultants are engaged to assist management in determining the fair values of certain assets acquired and liabilities assumed. Estimating fair values requires significant judgments, estimates and assumptions, including but not limited to: discount rates, future cash flows and the economic lives of trade names, technology, and customer relationships, property, plant and equipment, as well as income taxes.relationships. These estimates are based on historical experience and information obtained from the management of the acquired companies and are inherently uncertain.
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Table of Contents
•Goodwill and Other Intangible Assets.
Goodwill and other intangible assets with indefinite lives, primarily trademarks and trade names, are not amortized; rather, they are tested for impairment at least annually. For the purpose of the goodwill impairment test, theThe Company can elect to performperforms either a qualitative or quantitative analysis to determine if it is more likely than not that the fair values of its reporting units are less than the respective carrying values of those reporting units. The
When testing goodwill for impairment, the Company electedhas the option to bypass performingfirst assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the estimated fair value of a reporting unit is less than its carrying amount. If the Company performs a qualitative screenassessment and determines that an impairment is more likely than not, then performance of a quantitative impairment test is required. In conducting a qualitative assessment, the
30
Company analyzes actual and forecasted net sales and selling profit for each reporting unit, as well as historical performance and the results of prior quantitative tests performed. Additionally, the Company assesses critical areas that may impact its business, including macroeconomic conditions, industry and market conditions, cost factors, or any relevant events and factors that may impact projected financial results.
If performed, the first step quantitative analysis of the goodwill impairment test in the current year. The Company may elect to perform the qualitative analysis in future periods. The first step in the quantitative process is to compare the carrying amount of the reporting unit’s net assets to the fair value of the reporting unit. If the fair value exceeds the carrying value, no further evaluation is required, and no impairment loss is recognized. An impairment charge would be recognized to the extent the carrying amount of goodwill exceeds the reporting unit fair value.
The Company identifies its reporting units at the component level, which is one level below its operating segments. Generally, goodwill arises from acquisitions of specific operating companies and is assigned to the reporting unit in which a particular operating company resides. The Company’s reporting units are divisions that are one level below its operating segments and for which discrete financial information is prepared and regularly reviewed by segment management.
The Company principally relies onuses a discounted cash flow analysis to determine the fair value of each reporting unit, which considers forecasted cash flows discounted at an appropriate discount rate. The Company believes that market participants would use a discounted cash flow analysis to determine the fair value of its reporting units in a sale transaction. The annual goodwill impairment test requires the Company to make a number of assumptions and estimates concerning future levels of revenue growth, operating margins, depreciation, amortization and working capital requirements, which are based on the Company’s
long-range
plan and are considered level 3 inputs. The Company’s long-range plan is updated as part of its annual planning process and is reviewed and approved by management. The discount rate is an estimate of the overall
after-tax
rate of return required by a market participant whose weighted average cost of capital includes both equity and debt, including a risk premium. While the Company uses the best available information to prepare its cash flow and discount rate assumptions, actual future cash flows or market conditions could differ significantly resulting in future impairment charges related to recorded goodwill balances. While there are always changes in assumptions to reflect changing business and market conditions, the Company’s overall methodology and the population of assumptions used have remained unchanged. In order to evaluate the sensitivity of the goodwill impairment test to changes in the fair value calculations, the Company applied a hypothetical 10% decrease in fair values of each reporting unit. The 2019 results (expressed as a percentage of carrying value for the respective reporting unit) showed that, despite the hypothetical 10% decrease in fair value, the fair values of the Company’s reporting units still exceeded their respective carrying values by 77% to 1,074% for each of the Company’s reporting units.
The impairment test for indefinite-lived intangibles other than goodwill (primarily trademarks and trade names) consists of a comparison of the estimated fair value of the indefinite-lived intangible asset to the carrying value of the asset as of the impairment testing date. The Company can elect to perform a qualitative analysis to determine if it is more likely than not that the fair values of its indefinite-lived intangible assets are less than the respective carrying values of those assets. The Company elected to bypass performingperform its annual goodwill impairment test using the qualitative screen.quantitative analysis method. The Company may elect to perform the qualitativequantitative analysis in future periods. The Company estimates the fair value of its indefinite-lived intangibles using the relief from royalty method using level 3 inputs. The Company believes the relief from royalty methodinputs, which is a widely used valuation technique for such assets. The fair value derived from the relief from royalty method is measured asdetermined by applying a royalty rate to a projection of net revenues discounted using an appropriate discount rate. Each royalty rate is determined based on the discountedprofitability of the trade name to which it relates and observed market royalty rates. Certain impairment models have discount rates calculated based on a debt/equity cost of capital. While the Company uses the best available information to prepare its cash flow savings realized from owning such trademarks and trade namesdiscount rate assumptions, actual future cash flows or market conditions could differ significantly resulting in future impairment charges related to recorded intangible balances. While there are always changes in assumptions to reflect changing business and not having to pay a royalty for their use.
32
Tablemarket conditions, the Company’s overall methodology and the population of Contentsassumptions used have remained unchanged.
The Company’s acquisitions have generally included a significant goodwill component and the Company expects to continue to make acquisitions. At December 31, 2019,2022, goodwill and other indefinite-lived intangible assets totaled $4,789.4$6,262.2 million or 48.7%50.4% of the Company’s total assets. The Company completed its required annual indefinite-lived intangibles impairment tests in the fourth quarter of 20192022 and determined that the carrying values of certain of the Company’s indefinite-lived intangibles were impaired as a result of higher discount rates driven by higher interest rates. As a result, in the fourth quarter of 2022, the Company recorded an immaterial non-cash impairment charge related to certain of the Company's trade names. The Company completed its annual qualitative goodwill impairment test in the fourth quarter of 2022 and indefinite-liveddetermined the carrying values of its goodwill intangibles were not impaired. There can be no assurance that goodwill or indefinite-lived intangibles impairment will not occur in the future.
Other intangible assets with finite lives are evaluated for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. The carrying value of other intangible assets with finite lives is considered impaired when the total projected undiscounted cash flows from those assets are separately identifiable and are less than the carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of those assets. Fair value is determined primarily using present value techniques based on projected cash flows from the asset group.
•Pensions.
The Company has U.S. and foreign defined benefit and defined contribution pension plans. The most significant elements in determining the Company’s pension income or expense are the assumed pension liability discount rate and the expected return on plan assets. The pension discount rate reflects the current interest rate at which the pension liabilities could be settled at the valuation date. At the end of each year, the Company determines the assumed discount rate to be used to discount plan liabilities. In estimating this rate for 2019,2022, the Company considered rates of return on high-quality, fixed-income investments that have maturities consistent with the anticipated funding requirements of the plan. In estimating the U.S. and foreign discount rates, the Company’s actuaries developed a customized discount
31
rate appropriate to the plans’ projected benefit cash flow based on yields derived from a database of long-term bonds at consistent maturity dates. The Company determines the expected long-term rate of return based primarily on its expectation of future returns for the pension plans’ investments. Additionally, the Company considers historical returns on comparable fixed-income and equity investments and adjusts its estimate as deemed appropriate.
•Income Taxes.
The process of providing for income taxes and determining the related balance sheet accounts requires management to assess uncertainties, make judgments regarding outcomes and utilize estimates. The Company conducts a broad range of operations around the world and is therefore subject to complex tax regulations in numerous international taxing jurisdictions, resulting at times in tax audits, disputes and potential litigation, the outcome of which is uncertain. Management must make judgments currently about such uncertainties and determine estimates of the Company’s tax assets and liabilities. To the extent the final outcome differs, future adjustments to the Company’s tax assets and liabilities may be necessary.
The Company assesses the realizability of its deferred tax assets, taking into consideration the Company’s forecast of future taxable income, available net operating loss carryforwards and available tax planning strategies that could be implemented to realize the deferred tax assets. Based on this assessment, management must evaluate the need for, and the amount of, valuation allowances against the Company’s deferred tax assets. To the extent facts and circumstances change in the future, adjustments to the valuation allowances may be required.
The Company assesses the uncertainty in its tax positions, by applying a minimum recognition threshold which a tax position is required to meet before a tax benefit is recognized in the financial statements. Once the minimum threshold is met, using a more likely than not standard, a series of probability estimates is made for each item to properly measure and record a tax benefit. The tax benefit recorded is generally equal to the highest probable outcome that is more than 50% likely to be realized after full disclosure and resolution of a tax examination. The underlying probabilities are determined based on the best available objective evidence such as recent tax audit outcomes, published guidance, external expert opinion, or by analogy to the outcome of similar issues in the past. There can be no assurance that these estimates will ultimately be realized given continuous changes in tax policy, legislation and audit practice. The Company recognizes interest and penalties accrued related to uncertain tax positions in income tax expense.
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Table of Contents
Recent Accounting Pronouncements
See Note 2, Recent Accounting Pronouncements, to the Company’s Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form
10-K
for information regarding recently issued accounting pronouncements.
Forward-Looking Information
Certain matters discussed in this Form
10-K
are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995 (“PSLRA”), which involve risk and uncertainties that exist in the Company’s operations and business environment and can be affected by inaccurate assumptions, or by known or unknown risks and uncertainties. Many such factors will be important in determining the Company’s actual future results. The Company wishes to take advantage of the “safe harbor” provisions of the PSLRA by cautioning readers that numerous important factors in some cases have caused, and in the future could cause, the Company’s actual results to differ materially from those expressed in any forward-looking statements made by, or on behalf of, the Company. Some, but not all, of the factors or uncertainties that could cause actual results to differ from present expectations are set forth above and under Item 1A. Risk Factors. The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, subsequent events or otherwise, unless required by the securities laws to do so.
32
Item 7A.Quantitative and Qualitative Disclosures About Market Risk
Item 7A.    Quantitative and Qualitative Disclosures About Market Risk
The Company’s primary exposures to market risk are fluctuations in interest rates, foreign currency exchange rates and commodity prices, which could impact its financial condition and results of operations. The Company addresses its exposure to these risks through its normal operating and financing activities. The Company’s differentiated and global business activities help to reduce the impact that any particular market risk may have on its operating income as a whole.
The Company’s short-term debt carries variable interest rates and generally its long-term debt carries fixed rates. These financial instruments are more fully described in the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form
10-K.
The foreign currencies to which the Company has the most significant exchange rate exposure are the Euro, the British pound, the Japanese yen, the Chinese renminbi, the Canadian dollar, and the Mexican peso and the Swiss franc.peso. Exposure to foreign currency rate fluctuation is modest, monitored, and when possible, mitigated through the use of local borrowings and occasional derivative financial instruments in the foreign currency affected. The effect of translating foreign subsidiaries’ balance sheets into U.S. dollars is included in other comprehensive income within stockholders’ equity. Foreign currency transactions have not had a significant effect on the operating results reported by the Company because revenues and costs associated with the revenues are generally transacted in the same foreign currencies.
The primary commodities to which the Company has market exposure are raw material purchases of nickel, aluminum, copper, steel, titanium, vanadium and gold. Exposure to price changes in these commodities are generally mitigated through adjustments in selling prices of the ultimate product and purchase order pricing arrangements, although forward contracts are sometimes used to manage some of those exposures.
Based on a hypothetical ten percent adverse movement in interest rates, commodity prices or foreign currency exchange rates, the Company’s best estimate is that the potential losses in future earnings, fair value of risk-sensitive financial instruments and cash flows are not material, although the actual effects may differ materially from the hypothetical analysis.
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33
Item 8.Item 8.    Financial Statements and Supplementary Data
Page
Index to Financial Statements (Item 15(a)(1))
35
Reports of Independent Registered Public Accounting Firm Ernst & Young LLP, Philadelphia, Auditor Firm ID:
42
36
39
40
41
42
43
44
Page
Index to Financial Statements (Item 15(a)(1))
Reports of Management
36
Reports of Independent Registered Public Accounting Firm
37
Consolidated Statement of Income for the years ended December 31, 2019, 2018 and 2017
41
Consolidated Statement of Comprehensive Income for the years ended December 31, 2019, 2018 and 2017
42
Consolidated Balance Sheet at December 31, 2019 and 2018
43
Consolidated Statement of Stockholders’ Equity for the years ended December 31, 2019, 2018 and 2017
44
Consolidated Statement of Cash Flows for the years ended December 31, 2019, 2018 and 2017
45
Notes to Consolidated Financial Statements
46
Financial Statement Schedules (Item 15(a)(2))
Financial statement schedules have been omitted because either they are not applicable, or the required information is included in the financial statements or the notes thereto.
35
34
Management’s Responsibility for Financial Statements
Management has prepared and is responsible for the integrity of the consolidated financial statements and related information. The statements are prepared in conformity with U.S. generally accepted accounting principles consistently applied and include certain amounts based on management’s best estimates and judgments. Historical financial information elsewhere in this report is consistent with that in the financial statements.
In meeting its responsibility for the reliability of the financial information, management maintains a system of internal accounting and disclosure controls, including an internal audit program. The system of controls provides for appropriate division of responsibility and the application of written policies and procedures. That system, which undergoes continual reevaluation, is designed to provide reasonable assurance that assets are safeguarded, and records are adequate for the preparation of reliable financial data.
Management is responsible for establishing and maintaining adequate internal control over financial reporting. AMETEK, Inc. maintains a system of internal controls that is designed to provide reasonable assurance as to the fair and reliable preparation and presentation of the consolidated financial statements; however, there are inherent limitations in the effectiveness of any system of internal controls.
Management recognizes its responsibility for conducting the Company’s activities according to the highest standards of personal and corporate conduct. That responsibility is characterized and reflected in a code of business conduct for all employees and in a financial code of ethics for the Chief Executive Officer and Senior Financial Officers, as well as in other key policy statements publicized throughout the Company.
The Audit Committee of the Board of Directors, which is composed solely of independent directors who are not employees of the Company, meets with the independent registered public accounting firm, the internal auditors and management to satisfy itself that each is properly discharging its responsibilities. The report of the Audit Committee is included in the Company’s Proxy Statement for the 20202023 Annual Meeting of Stockholders. Both the independent registered public accounting firm and the internal auditors have direct access to the Audit Committee.
The Company’s independent registered public accounting firm, Ernst & Young LLP, is engaged to render an opinion as to whether management’s financial statements present fairly, in all material respects, the Company’s financial position and operating results. This report is included herein.
Management’s Report on Internal Control over Financial Reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in the Exchange Act Rules
13a-15(f)
and
15d-15(f).
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, AMETEK, Inc. conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of December 31, 20192022 based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on that evaluation, our management concluded that the Company’s internal control over financial reporting was effective as of December 31, 2019.2022.
The Company acquired Pacific Design Technologies,Navitar, Inc. (“PDT”("Navitar") in September 20192022 and GatanRTDS Technologies Inc. ("RTDS") in October 2019.2022. As permitted by the U.S. Securities and Exchange Commission staff interpretative guidance for newly acquired businesses, the Company excluded PDTNavitar and GatanRTDS from management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2019. In the aggregate, PDT2022. Navitar, and GatanRTDS constituted 11.2%3.5% of total assets as of December 31, 20192022 and 1.0%0.4% of net sales for the year then ended.
The Company’s internal control over financial reporting as of December 31, 20192022 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report, which is included herein.
/s/ DAVID A. ZAPICO/s/ WILLIAM J. BURKE
/s/
David A. Zapico
/s/
William J. Burke
Chairman of the Board and Chief Executive Officer
Executive Vice President – Chief Financial Officer
February 21, 2023
February 20, 2020
36
35
Report of Independent Registered Public Accounting Firm
on Internal Control Over Financial Reporting
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
ON INTERNAL CONTROL OVER FINANCIAL REPORTING

To the Board of Directors and Stockholders of AMETEK, Inc.:

Opinion on Internal Control over Financial Reporting

We have audited AMETEK, Inc.’s internal control over financial reporting as of December 31, 2019,2022, based on criteria established in Internal Control — Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, AMETEK, Inc. (the(the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019,2022, based on the COSO criteria.

As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Pacific DesignNavitar, Inc. and RTDS Technologies Inc. (“PDT”) and Gatan,, which are included in the 20192022 consolidated financial statements of the Company and constituted 11.2%3.5% of total assets as of December 31, 20192022 and 1.0%0.4% of net sales for the year then ended. Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of PDTNavitar, Inc. and Gatan.
RTDS Technologies Inc.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of AMETEK, Inc. as of December 31, 20192022 and 2018,2021, the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2019,2022, and the related notes and our report dated February 20, 202021, 2023 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting.Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ ERNST & YOUNG LLP
Philadelphia, Pennsylvania
February 20, 2020
/s/ERNST & YOUNG LLP
Philadelphia, Pennsylvania
February 21, 2023
37
36
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
ON FINANCIAL STATEMENTS

To the Board of Directors and Stockholders of AMETEK, Inc.:
Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of AMETEK, Inc. (the Company) as of December 31, 20192022 and 2018,2021, the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2019,2022, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 20192022 and 2018,2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019,2022, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2019,2022, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 20, 202021, 2023 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters
Matter

The critical audit mattersmatter communicated below are mattersis a matter arising from the current period audit of the financial statements that werewas communicated or required to be communicated to the audit committee and that: (1) relaterelates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit mattersmatter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit mattersmatter below, providing a separate opinionsopinion on the critical audit mattersmatter or on the accounts or disclosures to which they relate.
it relates.
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37
Accounting for Acquisitions
Description of the Matter
As described in Note 6 to the consolidated financial statements, the Company completed the acquisition of Gatan in October 2019 for consideration of $938.5 million, net of cash acquired. This acquisition has been accounted for as a business combination. The Company also completed the acquisition of Telular Corporation in October 2018 for consideration of $525 million, net of cash acquired. This acquisition has been accounted for as a business combination and the finalization of the acquisition accounting was completed during the measurement period in 2019.
Auditing the Company’s accounting for the acquisitions of Telular and Gatan were complex and highly judgmental due to subjectivity of the significant assumptions used by management in the valuation of acquired identifiable intangible assets. In particular, the inputs to the valuation models used to estimate the fair value of acquired identifiable intangible assets were inherently uncertain and generally unobservable, and the resulting valuations were sensitive to changes in the underlying significant assumptions. The significant assumptions used included discount rates, royalty rates and certain assumptions that form the basis of the forecasted future cash flows, including revenue growth rates, earnings before interest, taxes, depreciation and amortization (EBITDA) margins and estimated economic lives. These significant assumptions are forward looking and could be affected by future economic or market conditions.
How We Addressed the Matter in Our Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s accounting for business combinations process. For example, we tested controls over the valuation of acquired identifiable intangible assets including controls over management’s review of the valuation models and the significant assumptions described above.
To test the estimated fair value of the identifiable intangible assets, we performed audit procedures that included, among others, assessing the fair value methodologies utilized by management and the significant assumptions discussed above, including the underlying data used in the analyses. For example, when evaluating the significant assumptions, we compared them to current financial and operating plans, market and industry studies, historical trends, and assumptions used in prior periods. We also performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value estimates of the acquired identifiable intangible assets that would result from changes in the assumptions. We involved our valuation specialists to assist in evaluating certain significant assumptions and valuation methodologies used by the Company.
Impairment Assessment of Indefinite Lived Intangible Assets (other than Goodwill)
Description of the Matter
At December 31, 2019,2022, the Company’s indefinite lived intangible assets (other than goodwill) totaled $741.9$889.7 million, consisting of trademarks and trade names. As described in Note 1 to the consolidated financial statements, indefinite lived intangible assets are not amortized but are tested for impairment at least annually in the Company’s fourth quarter.

Auditing management’s indefinite lived intangible asset impairment tests was complex and highly judgmental due to the significant measurement uncertainty in estimating the fair value of the trademarks and trade names. In particular, the fair value estimates were sensitive to significant assumptions such as discount rate, forecasted revenues and royalty rates, which are affected by expectations about future market or economic conditions.
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Table of Contents
How We Addressed the Matter in Our Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s indefinite lived intangible asset impairment process. For example, we tested controls over management’s review of the valuation models and significant assumptions, including forecasted financial information, as well as management’s controls to validate that the data used in the valuations was complete and accurate.

To test the estimated fair value of the Company’s indefinite lived intangible assets, we performed audit procedures that included, among others, assessing the fair value methodologies utilized by management and the significant assumptions discussed above, including the underlying data used in the analyses. For example, when evaluating the significant assumptions, we compared them to current financial and operating plans, market and industry studies, historical trends, and other assumptionsroyalty rates used in prior periods. We also assessed the historical accuracy of management’s forecasts and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value estimates of the trademarks and trade names that would result from changes in the assumptions. We involved our valuation specialists to assist in evaluating the discount rate, royalty rate and valuation methodologies used by the Company.

/s/ ERNST & YOUNG LLP
We have served as the Company’s auditor since 1930.
Philadelphia, Pennsylvania
February 20, 2020
/s/ ERNST & YOUNG LLP
We have served as the Company’s auditor since 1930.
Philadelphia, Pennsylvania
February 21, 2023
40
38
AMETEK, Inc.
Consolidated Statement of Income
(In thousands, except per share amounts)
Year Ended December 31,
202220212020
Net sales$6,150,530 $5,546,514 $4,540,029 
Cost of sales4,005,261 3,633,900 2,996,515 
Selling, general and administrative644,577 603,944 515,630 
Total operating expenses4,649,838 4,237,844 3,512,145 
Operating income1,500,692 1,308,670 1,027,884 
Interest expense(83,186)(80,381)(86,062)
Other income (expense), net11,186 (5,119)140,487 
Income before income taxes1,428,692 1,223,170 1,082,309 
Provision for income taxes269,150 233,117 209,870 
Net income$1,159,542 $990,053 $872,439 
Basic earnings per share$5.04 $4.29 $3.80 
Diluted earnings per share$5.01 $4.25 $3.77 
Weighted average common shares outstanding:
Basic shares230,208 230,955 229,435 
Diluted shares231,536 232,813 231,150 
             
 
Year Ended December 31,
 
 
2019
  
2018
  
2017
 
Net sales
 $
5,158,557
  $
4,845,872
  $
4,300,170
 
             
Cost of sales
  
3,370,897
   
3,186,310
   
2,861,370
 
Selling, general and administrative
  
610,280
   
584,022
   
535,180
 
             
Total operating expenses
  
3,981,177
   
3,770,332
   
3,396,550
 
             
             
Operating income
  
1,177,380
   
1,075,540
   
903,620
 
Interest expense
  
(88,481
)  
(82,180
)  
(98,029
)
Other expense, net
  
(19,151
)  
(5,615
)  
(8,862
)
             
Income before income taxes
  
1,069,748
   
987,745
   
796,729
 
Provision for income taxes
  
208,451
   
209,812
   
115,259
 
             
Net income
 $
861,297
  $
777,933
  $
681,470
 
             
Basic earnings per share
 $
3.78
  $
3.37
  $
2.96
 
             
Diluted earnings per share
 $
3.75
  $
3.34
  $
2.94
 
             
Weighted average common shares outstanding:
         
Basic shares
  
227,759
   
230,823
   
230,229
 
             
Diluted shares
  
229,395
   
232,712
   
231,845
 
             
See accompanying notes.
41
39
AMETEK, Inc.
Consolidated Statement of Comprehensive Income
(In thousands)
Year Ended December 31,
202220212020
Net income$1,159,542 $990,053 $872,439 
Other comprehensive income (loss):
Amounts arising during the period – gains (losses), net of tax (expense) benefit:
Foreign currency translation:
Translation adjustments(123,756)(47,331)64,521 
Change in long-term intercompany notes(21,419)(16,333)16,695 
Net investment hedge instruments gain (loss), net of tax of $(17,070), $(12,631) and $14,787 in 2022, 2021 and 2020, respectively52,416 39,047 (45,716)
Defined benefit pension plans:
Net actuarial (loss) gain, net of tax of $4,769, $(15,298) and $8,637 in 2022, 2021 and 2020, respectively(18,238)46,049 (18,733)
Amortization of net actuarial loss, net of tax of ($2,111), ($4,103) and ($3,539) in 2022, 2021 and 2020, respectively6,420 12,249 11,940 
Amortization of prior service costs, net of tax of $(25), ($114) and $7 in 2022, 2021 and 2020, respectively76 343 (36)
Other comprehensive (loss) income(104,501)34,024 28,671 
Total comprehensive income$1,055,041 $1,024,077 $901,110 
 
Year Ended December 31,
 
 
2019
  
2018
  
2017
 
Net income
 $
861,297
  $
777,933
  $
681,470
 
             
Other comprehensive (loss) income:
         
Amounts arising during the period – gains (losses), net of tax (expense) benefit:
         
Foreign currency translation:
         
Translation adjustments
  
23,692
   
(72,112
)  
159,507
 
Change in long-term intercompany notes
  
(5,999
)  
(16,569
)  
36,320
 
Net investment hedge instruments gain (loss), net of tax of $581, ($12,384) and $41,178 in 2019, 2018 and 2017, respectively
  
(1,803
)  
38,452
   
(109,412
)
Defined benefit pension plans:
         
Net actuarial (loss) gain, net of tax of $767, ($18,825) and
(
$8,384) in 2019, 2018 and 2017, respectively
  
(10,522
)  
(75,253
)  
16,518
 
Amortization of net actuarial loss, net of tax of ($3,505), ($2,716) and ($4,680) in 2019, 2018 and 2017, respectively
  
12,180
   
9,313
   
9,910
 
Amortization of prior service costs, net of tax of ($83), $1,154 and $4 in 2019, 2018 and 2017, respectively
  
401
   
(5,639
)  
(41
)
Unrealized holding gain (loss) on
available-for-sale
securities:
         
Unrealized gain (loss), net of tax of $ -, $ - and ($221) in 2019, 2018 and 2017, respectively
  
—  
   
(104
)  
411
 
             
Other comprehensive income (loss)
  
17,949
   
(121,912
)  
113,213
 
             
Total comprehensive income
 $
879,246
  $
656,021
  $
794,683
 
             
See accompanying notes.
42
40
AMETEK, Inc.
Consolidated Balance Sheet
(In thousands, except share amounts)
December 31,
20222021
ASSETS
Current assets:
Cash and cash equivalents$345,386 $346,772 
Receivables919,335 829,213 
Inventories, net1,044,284 769,175 
Other current assets219,053 183,605 
Total current assets2,528,058 2,128,765 
Property, plant and equipment, net635,641 617,138 
Right of use assets, net170,295 169,924 
Goodwill5,372,562 5,238,726 
Other intangibles, net3,342,085 3,368,629 
Investments and other assets382,479 375,005 
Total assets$12,431,120 $11,898,187 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings and current portion of long-term debt, net$226,079 $315,093 
Accounts payable497,134 470,252 
Customer advanced payments357,674 298,728 
Income taxes payable48,171 35,904 
Accrued liabilities and other435,144 443,337 
Total current liabilities1,564,202 1,563,314 
Long-term debt, net2,158,928 2,229,148 
Deferred income taxes694,267 719,675 
Other long-term liabilities537,211 514,166 
Total liabilities4,954,608 5,026,303 
Stockholders’ equity:
Preferred stock,$0.01 par value; authorized 5,000,000 shares; none issued— — 
Common stock, $0.01 par value; authorized 800,000,000 shares; issued: 2022 – 268,588,293 shares; 2021 – 267,800,160 shares2,700 2,689 
Capital in excess of par value1,094,236 1,012,526 
Retained earnings8,857,485 7,900,113 
Accumulated other comprehensive loss(574,945)(470,444)
Treasury stock: 2022 – 38,537,635 shares; 2021 – 36,137,864 shares(1,902,964)(1,573,000)
Total stockholders’ equity7,476,512 6,871,884 
Total liabilities and stockholders’ equity$12,431,120 $11,898,187 
         
 
December 31,
 
 
2019
  
2018
 
         
ASSETS
      
Current assets:
      
Cash and cash equivalents
 $
393,030
  $
353,975
 
Receivables
  
744,760
   
732,839
 
Inventories, net
  
624,567
   
624,744
 
Other current assets
  
263,414
   
124,586
 
         
Total current assets
  
2,025,771
   
1,836,144
 
Property, plant and equipment, net
  
548,908
   
554,130
 
Right of use assets, net
  
179,679
   
—  
 
Goodwill
  
4,047,539
   
3,612,033
 
Other intangibles, net
  
2,762,872
   
2,403,771
 
         
Investments and other assets
  
279,790
   
256,210
 
         
Total assets
 $
9,844,559
  $
8,662,288
 
         
         
LIABILITIES AND STOCKHOLDERS’ EQUITY
      
Current liabilities:
      
Short-term borrowings and current portion of long-term debt, net
 $
497,449
  $
358,876
 
Accounts payable
  
377,219
   
399,571
 
Customer advanced payments
  
156,818
   
137,229
 
Income taxes payable
  
30,292
   
48,597
 
Accrued liabilities and other
  
364,080
   
314,431
 
         
Total current liabilities
  
1,425,858
   
1,258,704
 
Long-term debt, net
  
2,271,292
   
2,273,837
 
Deferred income taxes
  
536,140
   
528,336
 
Other long-term liabilities
  
495,777
   
359,489
 
         
Total liabilities
  
4,729,067
   
4,420,366
 
         
Stockholders’ equity:
      
Preferred stock, $0.01 par value; authorized 5,000,000 shares; NaN issued
  
—  
   
—  
 
Common stock, $0.01 par value; authorized 800,000,000 shares; issued: 2019 – 265,583,732 shares; 2018 – 263,645,489 shares
  
2,662
   
2,640
 
Capital in excess of par value
  
832,821
   
706,743
 
Retained earnings
  
6,387,612
   
5,653,811
 
Accumulated other comprehensive loss
  
(533,139
)  
(551,088
)
Treasury stock: 2019 – 36,500,908 shares; 2018 – 36,534,802 shares
  
(1,574,464
)  
(1,570,184
)
         
Total stockholders’ equity
  
5,115,492
   
4,241,922
 
         
Total liabilities and stockholders’ equity
 $
9,844,559
  $
8,662,288
 
         
See accompanying notes.
43
41
AMETEK, Inc.
Consolidated Statement of Stockholders’ Equity
(In thousands)
Year Ended December 31,
202220212020
Capital stock
Preferred stock, $0.01 par value$— $— $— 
Common stock, $0.01 par value
Balance at the beginning of the year2,689 2,676 2,662 
Shares issued11 13 14 
Balance at the end of the year2,700 2,689 2,676 
Capital in excess of par value
Balance at the beginning of the year1,012,526 921,752 832,821 
Issuance of common stock under employee stock plans34,335 44,671 47,366 
Share-based compensation costs47,375 46,103 41,565 
Balance at the end of the year1,094,236 1,012,526 921,752 
Retained earnings
Balance at the beginning of the year7,900,113 7,094,656 6,387,612 
Net income1,159,542 990,053 872,439 
Cash dividends paid(202,169)(184,595)(165,035)
Adoption of ASU 2016-13— — (360)
Other(1)(1)— 
Balance at the end of the year8,857,485 7,900,113 7,094,656 
Accumulated other comprehensive (loss) income
Foreign currency translation:
Balance at the beginning of the year(275,365)(250,748)(286,248)
Translation adjustments(123,756)(47,331)64,521 
Change in long-term intercompany notes(21,419)(16,333)16,695 
Net investment hedge instruments gain (loss), net of tax of $(17,070), $(12,631) and $14,787 in 2022, 2021 and 2020, respectively52,416 39,047 (45,716)
Balance at the end of the year(368,124)(275,365)(250,748)
Defined benefit pension plans:
Balance at the beginning of the year(195,079)(253,720)(246,891)
Net actuarial (loss) gain, net of tax of $4,769, $(15,298) and $8,637 in 2022, 2021 and 2020, respectively(18,238)46,049 (18,733)
Amortization of net actuarial loss, net of tax of ($2,111), ($4,103) and ($3,539) in 2022, 2021 and 2020, respectively6,420 12,249 11,940 
Amortization of prior service costs, net of tax of $(25), ($114) and $7 in 2022, 2021 and 2020, respectively76 343 (36)
Balance at the end of the year(206,821)(195,079)(253,720)
Accumulated other comprehensive loss at the end of the year(574,945)(470,444)(504,468)
Treasury stock
Balance at the beginning of the year(1,573,000)(1,565,270)(1,574,464)
Issuance of common stock under employee stock plans2,857 6,981 13,879 
Purchase of treasury stock(332,821)(14,711)(4,685)
Balance at the end of the year(1,902,964)(1,573,000)(1,565,270)
Total stockholders’ equity$7,476,512 $6,871,884 $5,949,346 
 
Year Ended December 31,
 
 
2019
  
2018
  
2017
 
Capital stock
         
Preferred stock, $0.01 par value
 $
—  
  $
—  
  $
—  
 
             
Common stock, $0.01 par value
         
Balance at the beginning of the year
  
2,640
   
2,631
   
2,615
 
Shares issued
  
22
   
9
   
16
 
             
Balance at the end of the year
  
2,662
   
2,640
   
2,631
 
             
             
Capital in excess of par value
         
Balance at the beginning of the year
  
706,743
   
660,894
   
604,143
 
Issuance of common stock under employee stock plans
  
85,684
   
18,534
   
31,660
 
Share-based compensation costs
  
40,394
   
27,315
   
25,091
 
             
Balance at the end of the year
  
832,821
   
706,743
   
660,894
 
             
             
Retained earnings
         
Balance at the beginning of the year
  
5,653,811
   
5,002,419
   
4,403,683
 
Net income
  
861,297
   
777,933
   
681,470
 
Cash dividends paid
  
(127,496
)  
(128,911
)  
(82,735
)
Other
  
—
   
2,370
   
1
 
             
Balance at the end of the year
  
6,387,612
   
5,653,811
   
5,002,419
 
             
             
Accumulated other comprehensive (loss) income
         
Foreign currency translation:
         
Balance at the beginning of the year
  
(302,138
)  
(251,909
)  
(338,324
)
Translation adjustments
  
23,692
   
(72,112
)  
159,507
 
Change in long-term intercompany notes
  
(5,999
)  
(16,569
)  
36,320
 
Net investment hedge instruments (loss) gain, net of tax of $581, ($12,384) and $41,178 in 2019, 2018 and 2017, respectively
  
(1,803
)  
38,452
   
(109,412
)
             
Balance at the end of the year
  
(286,248
)  
(302,138
)  
(251,909
)
             
Defined benefit pension plans:
         
Balance at the beginning of the year
  
(248,950
)  
(177,371
)  
(203,758
)
Net actuarial (loss) gain, net of tax of $767, ($18,825) and ($8,384) in 2019, 2018 and 2017, respectively
  
(10,522
)  
(75,253
)  
16,518
 
Amortization of net actuarial loss, net of tax of ($3,505), ($2,716) and ($4,680) in 2019, 2018 and 2017, respectively
  
12,180
   
9,313
   
9,910
 
Amortization of prior service costs, net of tax of ($83), $1,154 and $4 in 2019, 2018 and 2017, respectively
  
401
   
(5,639
)  
(41
)
             
Balance at the end of the year
  
(246,891
)  
(248,950
)  
(177,371
)
             
Unrealized holding gain (loss) on
available-for-sale
securities:
         
             
Balance at the beginning of the year
  
—  
   
104
   
(307
)
             
Increase (decrease) during the year, net of tax
  
—  
   
(104
)  
411
 
             
Balance at the end of the year
  
—  
   
—  
   
104
 
             
Accumulated other comprehensive loss at the end of the year
  
(533,139
)  
(551,088
)  
(429,176
)
             
Treasury stock
         
Balance at the beginning of the year
  
(1,570,184
)  
(1,209,135
)  
(1,211,539
)
Issuance of common stock under employee stock plans
  
7,644
   
6,629
   
9,271
 
Purchase of treasury stock
  
(11,924
)  
(367,678
)  
(6,867
)
             
Balance at the end of the year
  
(1,574,464
)  
(1,570,184
)  
(1,209,135
)
             
Total stockholders’ equity
 $
5,115,492
  $
4,241,922
  $
4,027,633
 
             
See accompanying notes.
44
42
AMETEK, Inc.
Consolidated Statement of Cash Flows
(In thousands)
Year Ended December 31,
202220212020
Cash provided by (used for):
Operating activities:
Net income$1,159,542 $990,053 $872,439 
Adjustments to reconcile net income to total operating activities:
Depreciation and amortization319,427 292,112 255,275 
Deferred income taxes(67,818)(29,762)1,839 
Share-based compensation expense47,375 46,103 41,565 
Gain on sale of business/investment(3,584)(6,349)(141,020)
Gain on sale of facilities(7,054)— (7,523)
Changes in assets and liabilities, net of acquisitions:
(Increase) decrease in receivables(86,713)(172,791)163,471 
(Increase) decrease in inventories and other current assets(322,467)(129,593)77,448 
Increase in payables, accruals and income taxes95,481 212,101 7,017 
Increase (decrease) in other long-term liabilities47,226 (35,104)20,430 
Pension contributions(8,959)(10,277)(9,527)
Other, net(23,083)3,964 (434)
Total operating activities1,149,373 1,160,457 1,280,980 
Investing activities:
Additions to property, plant and equipment(139,005)(110,671)(74,199)
Purchases of businesses, net of cash acquired(429,714)(1,959,218)(116,509)
Proceeds from sale of business/investment3,734 12,000 245,311 
Proceeds from sale of facilities11,754 2,341 9,508 
Other, net471 (294)(2,481)
Total investing activities(552,760)(2,055,842)61,630 
Financing activities:
Net change in short-term borrowings(73,691)243,615 (328,003)
Repayments of long-term borrowings— (59,718)(102,947)
Repurchases of common stock(332,821)(14,711)(4,685)
Cash dividends paid(202,169)(184,595)(165,035)
Proceeds from stock option exercises49,937 60,297 64,903 
Other, net(16,955)(5,551)(3,669)
Total financing activities(575,699)39,337 (539,436)
Effect of exchange rate changes on cash and cash equivalents(22,300)(10,002)16,618 
(Decrease) increase in cash and cash equivalents(1,386)(866,050)819,792 
Cash and cash equivalents:
Beginning of year346,772 1,212,822 393,030 
End of year$345,386 $346,772 $1,212,822 
 
Year Ended December 31,
 
 
2019
  
2018
  
2017
 
Cash provided by (used for):
         
Operating activities:
         
Net income
 $
861,297
  $
777,933
  $
681,470
 
Adjustments to reconcile net income to total operating activities:
         
Depreciation and amortization
  
234,042
   
199,490
   
183,227
 
Deferred income taxes
  
19,380
   
(73,682
)  
(91,205
)
Share-based compensation expense
  
40,394
   
27,315
   
25,091
 
(Gain) loss on sale of facilities
  
(5,332
)  
127
   
(1,213
)
Changes in assets and liabilities, net of acquisitions:
         
Decrease (increase) in receivables
  
14,398
   
(13,383
)  
(24,581
)
Decrease (increase) in inventories and other current assets
  
16,410
   
(59,472
)  
(6,087
)
(Decrease) increase in payables, accruals and income taxes
  
(58,932
)  
36,547
   
124,399
 
(Decrease) increase in other long-term liabilities
  
(16,845
)  
42,814
   
2,787
 
Pension contributions
  
(5,609
)  
(5,063
)  
(54,796
)
Other, net
  
15,219
   
(7,108
)  
(5,833
)
             
Total operating activities
  
1,114,422
   
925,518
   
833,259
 
             
             
Investing activities:
         
Additions to property, plant and equipment
  
(102,346
)  
(82,076
)  
(75,074
)
Purchases of businesses, net of cash acquired
  
(1,061,945
)  
(1,129,305
)  
(556,634
)
Proceeds from sale of facilities
  
11,306
   
2,570
   
6,290
 
Other, net
  
2,060
   
(1,233
)  
(399
)
             
Total investing activities
  
(1,150,925
)  
(1,210,044
)  
(625,817
)
             
             
Financing activities:
         
Net change in short-term borrowings
  
130,705
   
258,349
   
(9,616
)
Proceeds from long-term borrowings
  
100,000
   
560,050
   
—  
 
Repayments of long-term borrowings
  
(100,000
)  
(305,000
)  
(270,000
)
Repurchases of common stock
  
(11,924
)  
(367,678
)  
(6,867
)
Cash dividends paid
  
(127,496
)  
(128,911
)  
(82,735
)
Acquisition contingent consideration
  
(3,000
)
  
(25,500
)  
—  
 
Proceeds from stock option exercises
  
90,388
   
30,021
   
40,047
 
Other, net
  
(5,760
)  
(8,291
)  
—  
 
             
Total financing activities
  
72,913
   
13,040
   
(329,171
)
             
Effect of exchange rate changes on cash and cash equivalents
  
2,645
   
(20,839
)  
50,770
 
             
Increase (decrease) in cash and cash equivalents
  
39,055
   
(292,325
)  
(70,959
)
Cash and cash equivalents:
         
Beginning of year
  
353,975
   
646,300
   
717,259
 
             
End of year
 $
393,030
  $
353,975
  $
646,300
 
             
See accompanying notes.
45
43
AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Significant Accounting Policies
Basis of Consolidation
The accompanying consolidated financial statements reflect the results of operations, financial position and cash flows of AMETEK, Inc. (the “Company”), and include the accounts of the Company and subsidiaries, after elimination of all intercompany transactions in the consolidation.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates and assumptions.
Cash Equivalents, Securities and Other Investments
All highly liquid investments with maturities of three months or less when purchased are considered cash equivalents.
Accounts Receivable
The Company maintains allowances for estimated credit losses resulting from the inability of specific customers to meet their financial obligations to the Company. A specificThe Company recognizes an allowance for doubtfulcredit losses, on all accounts is recorded against the amount due from these customers. For all other customers, the Company recognizes allowance for doubtful accountsreceivable and contract assets, which considers risk of future credit losses based on the length of time specific receivablesfactors such as historical experience, contract terms, as well as general and market business conditions, country, and political risk. Balances are past due based on its historical experience.written off when considered uncollectible. Bad debt expense was $2.8$3.7 million in 2019, $1.72022, $1.2 million in 20182021 and $2.8$3.6 million in 2017.
2020. At December 31, 2022 and 2021, the allowance for estimated credit losses was $14.1 million and $11.2 million, respectively.
Inventories
The Company uses the
first-in,
first-out
(“FIFO”) method of accounting, which approximates current replacement cost, for approximately 86%90% of its inventories at December 31, 2019.2022. The
last-in,
first-out
(“LIFO”) method of accounting is used to determine cost for the remaining 14%10% of the Company’s inventory at December 31, 2019.2022. For inventories where cost is determined by the LIFO method, the FIFO value would have been $23.4$40.3 million and $28.4$29.8 million higher than the LIFO value reported in the consolidated balance sheet at December 31, 20192022 and 2018,2021, respectively. The Company provides estimated inventory reserves for slow-moving and obsolete inventory based on current assessments about future demand, market conditions, customers who may be experiencing financial difficulties and related management initiatives.
Business Combinations
The Company allocates the purchase price of an acquired company, including when applicable, the acquisition date fair value of contingent consideration between tangible and intangible assets acquired and liabilities assumed from the acquired business based on their estimated fair values, with the residual of the purchase price recorded as goodwill. The results of operations of the acquired business are included in the Company’s operating results from the date of acquisition.
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Expenditures for additions to plant facilities, or that extend their useful lives, are capitalized. The cost of minor tools, jigs and dies, and maintenance and repairs is charged
46
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AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
to expense as incurred. Depreciation of plant and equipment is calculated principally on a
straight-line
basis over the estimated useful lives of the related assets. The range of lives for depreciable assets is generally three to 10 years for machinery and equipment, five to 27 years for leasehold improvements and 25 to 50 years for buildings.
44
AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Depreciation expense was $101.4$113.7 million, $85.4$108.5 million and $82.0$101.3 million for the years ended December 31, 2019, 20182022, 2021 and 2017,2020, respectively.
Goodwill and Other Intangible Assets
Goodwill and other intangible assets with indefinite lives, primarily trademarks and trade names, are not amortized; rather, they are tested for impairment at least annually.
The Company identifies its reporting units at the component level, which is one level below its operating segments. Generally, goodwill arises from acquisitions of specific operating companies and is assigned to the reporting unit in which the operating company resides. The Company’s reporting units are divisions that are one level below its operating segments and for which discrete financial information is prepared and regularly reviewed by segment management.
When testing goodwill for impairment, the Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the estimated fair value of a reporting unit is less than its carrying amount. If the Company performs a qualitative assessment and determines that an impairment is more likely than not, then performance of a quantitative impairment test is required. In conducting a qualitative assessment, the Company analyzes actual and forecasted net sales and selling profit for each reporting unit, as well as historical performance and the results of prior quantitative tests performed. Additionally, the Company assesses critical areas that may impact its business, including macroeconomic conditions, industry and market conditions, cost factors, or any relevant events and factors that may impact projected financial results.
The Company principally relies onIf performed, the quantitative goodwill impairment test is performed using a discounted cash flow analysis to determine the fair value of each reporting unit, which considers forecasted cash flows discounted at an appropriate discount rate. The Company believes that market participants would use a discounted cash flow analysis to determine the fair value of its reporting units in a sale transaction. The annual goodwill impairment test requires the Company to make severala number of assumptions and estimates concerning future levels of revenue growth, operating margins, depreciation, amortization and working capital requirements, which are based on the Company’s long-range plan and are considered level 3 inputs. The Company’s long-range plan is updated as part of its annual planning process and is reviewed and approved by management. The discount rate is an estimate of the overall
after-tax
rate of return required by a market participant whose weighted average cost of capital includes both equity and debt, including a risk premium. While the Company uses the best available information to prepare its cash flow and discount rate assumptions, actual future cash flows or market conditions could differ significantly resulting in future impairment charges related to recorded goodwill balances.
During the fourth quarter of 2022, the Company completed its annual goodwill impairment tests and elected to perform a qualitative assessment.
The impairment test for indefinite-lived intangibles other than goodwill (primarily trademarks and trade names) consists of a comparison of the estimated fair value of the indefinite-lived intangible asset to the carrying value of the asset as of the impairment testing date. The Company estimates the fair value of its indefinite-lived intangibles using the relief from royalty method using level 3 inputs for revenue growth rates and royalty rates. The fair value derived from the relief from royalty method is measured as the discounted cash flow savings realized from owning such trademarks and trade names and not having to pay a royalty for their use.
The Company completed its required annual impairment tests in the fourth quarter of 2019, 20182022, 2021, and 20172020 and determined that the carrying values of the Company’sCompany's goodwill were not impaired. The Company completed its required annual indefinite-lived intangibles impairment test as of October 1, 2022 and determined that the carrying values of certain of the Company's trademarks and trade names with indefinite lives were impaired as a result of higher discount rates driven by higher interest rates. As a result, during the fourth quarter of 2022, the Company recorded an immaterial non-cash impairment charge related to certain of the Company's trade names. The Company completed its required annual impairment tests in the fourth quarter of 2019, 20182021 and 20172020 and determined that the carrying values of the Company’sCompany's other intangible assets with indefinite lives were not impaired.
45
AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Other intangible assets with finite lives are evaluated for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. The carrying value of other intangible assets with finite lives is considered impaired when the total projected undiscounted cash flows from the asset group are less than the carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of those assets. Fair value is determined primarily using present value techniques based on projected cash flows from the asset group.
47
Table of Contents
AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Intangible assets, other than goodwill, with definite lives are amortized over their estimated useful lives. Patents and technology are being amortized over useful lives of fivenine to 20 years, with a weighted average life of 1514 years. Customer relationships are being amortized over a period of fiveten to 20 years, with a weighted average life of 19 years. On a quarterly basis, the Company evaluates the reasonableness of the estimated useful lives of these intangible assets.
Recent Accounting Pronouncements
See Note 2, Recent Accounting Pronouncements, to the Company’s Consolidated Financial InstrumentsStatements included in Part II, Item 8 of this Annual Report on Form 10-K for information regarding recently issued accounting pronouncements.
Forward-Looking Information
Certain matters discussed in this Form 10-K are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995 (“PSLRA”), which involve risk and Foreign Currency Translationuncertainties that exist in the Company’s operations and business environment and can be affected by inaccurate assumptions, or by known or unknown risks and uncertainties. Many such factors will be important in determining the Company’s actual future results. The Company wishes to take advantage of the “safe harbor” provisions of the PSLRA by cautioning readers that numerous important factors in some cases have caused, and in the future could cause, the Company’s actual results to differ materially from those expressed in any forward-looking statements made by, or on behalf of, the Company. Some, but not all, of the factors or uncertainties that could cause actual results to differ from present expectations are set forth above and under Item 1A. Risk Factors. The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, subsequent events or otherwise, unless required by the securities laws to do so.
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Assets
Item 7A.    Quantitative and liabilities ofQualitative Disclosures About Market Risk
The Company’s primary exposures to market risk are fluctuations in interest rates, foreign operations are translated usingcurrency exchange rates in effect at the balance sheet date and theircommodity prices, which could impact its financial condition and results of operationsoperations. The Company addresses its exposure to these risks through its normal operating and financing activities. The Company’s differentiated and global business activities help to reduce the impact that any particular market risk may have on its operating income as a whole.
The Company’s short-term debt carries variable interest rates and generally its long-term debt carries fixed rates. These financial instruments are translated using average exchange rates formore fully described in the year. Certain transactionsNotes to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
The foreign currencies to which the Company has the most significant exchange rate exposure are the Euro, the British pound, the Japanese yen, the Chinese renminbi, the Canadian dollar, and its subsidiaries are denominatedthe Mexican peso. Exposure to foreign currency rate fluctuation is modest, monitored, and when possible, mitigated through the use of local borrowings and occasional derivative financial instruments in currencies other than their functional currency. Exchange gains and losses from those transactions arethe foreign currency affected. The effect of translating foreign subsidiaries’ balance sheets into U.S. dollars is included in operating results for the year.
The Company makes infrequent use of derivative financial instruments. Forward contracts are entered into from time to time to hedge certain inventory purchases, export sales, debt or foreign currency transactions, thereby minimizing the Company’s exposure to raw material commodity price or foreign currency fluctuation.
In instances where transactions are designated as hedges of an underlying item, the gains and losses on those transactions are included in accumulated other comprehensive income within stockholders’ equity toequity. Foreign currency transactions have not had a significant effect on the extent they are effective as hedges. An evaluation of hedge effectiveness is performedoperating results reported by the Company on an ongoing basisbecause revenues and anycosts associated with the revenues are generally transacted in the same foreign currencies.
The primary commodities to which the Company has market exposure are raw material purchases of nickel, aluminum, copper, steel, titanium, and gold. Exposure to price changes in the hedgethese commodities are made as appropriate.
Revenue Recognition
Revenue is derived from sales of products and services. The Company’s products and services are marketed and sold worldwidegenerally mitigated through 2 operating groups: EIG and EMG. See Note 15
Descriptive Information about Reportable Segments
.
The majorityadjustments in selling prices of the Company’s revenuesultimate product and purchase order pricing arrangements, although forward contracts are sometimes used to manage some of those exposures.
Based on product sales were recognized at a pointhypothetical ten percent adverse movement in time when the customer obtains control of the product. The transfer in control of the product to the customer was typically evidenced by oneinterest rates, commodity prices or more of the following: the customer having legal title to the product,foreign currency exchange rates, the Company’s present right to payment,best estimate is that the customer’s physical possession of the product, the customer accepting the product, or the customer having the benefits of ownership or risk of loss. For a small percentage of sales where title and risk of loss transfers at the point of delivery, the Company recognized revenue upon delivery to the customer, which is the point that control transferred, assuming all other criteria for revenue recognition were met.
Research and Development
Research and development costs
are includedpotential losses in Cost of sales as incurred and were $161.9 million in 2019, $141.0 million in 2018 and $130.4 million in 2017.
Shipping and Handling Costs
Shipping and handling costs are included in Cost of sales and were $66.7 million in 2019, $62.7 million in 2018 and $53.1 million in 2017.
Share-Based Compensation
The Company expenses thefuture earnings, fair value of share-based awards made under its share-based plansrisk-sensitive financial instruments and cash flows are not material, although the actual effects may differ materially from the hypothetical analysis.
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Item 8.    Financial Statements and Supplementary Data
Page
Index to Financial Statements (Item 15(a)(1))
35
Reports of Independent Registered Public Accounting Firm Ernst & Young LLP, Philadelphia, Auditor Firm ID:
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39
40
41
42
43
44
Financial Statement Schedules (Item 15(a)(2))
Financial statement schedules have been omitted because either they are not applicable, or the required information is included in the financial statements or the notes thereto.
34
Management’s Responsibility for Financial Statements
Management has prepared and is responsible for the integrity of the consolidated financial statements over their requisite service periodand related information. The statements are prepared in conformity with U.S. generally accepted accounting principles consistently applied and include certain amounts based on management’s best estimates and judgments. Historical financial information elsewhere in this report is consistent with that in the financial statements.
In meeting its responsibility for the reliability of the grants.financial information, management maintains a system of internal accounting and disclosure controls, including an internal audit program. The system of controls provides for appropriate division of responsibility and the application of written policies and procedures. That system, which undergoes continual reevaluation, is designed to provide reasonable assurance that assets are safeguarded, and records are adequate for the preparation of reliable financial data.
Management is responsible for establishing and maintaining adequate internal control over financial reporting. AMETEK, Inc. maintains a system of internal controls that is designed to provide reasonable assurance as to the fair and reliable preparation and presentation of the consolidated financial statements; however, there are inherent limitations in the effectiveness of any system of internal controls.
Management recognizes its responsibility for conducting the Company’s activities according to the highest standards of personal and corporate conduct. That responsibility is characterized and reflected in a code of business conduct for all employees and in a financial code of ethics for the Chief Executive Officer and Senior Financial Officers, as well as in other key policy statements publicized throughout the Company.
The Audit Committee of the Board of Directors, which is composed solely of independent directors who are not employees of the Company, meets with the independent registered public accounting firm, the internal auditors and management to satisfy itself that each is properly discharging its responsibilities. The report of the Audit Committee is included in the Company’s Proxy Statement for the 2023 Annual Meeting of Stockholders. Both the independent registered public accounting firm and the internal auditors have direct access to the Audit Committee.
The Company’s independent registered public accounting firm, Ernst & Young LLP, is engaged to render an opinion as to whether management’s financial statements present fairly, in all material respects, the Company’s financial position and operating results. This report is included herein.
Management’s Report on Internal Control over Financial Reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in the Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, AMETEK, Inc. conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2022 based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on that evaluation, our management concluded that the Company’s internal control over financial reporting was effective as of December 31, 2022.
The Company acquired Navitar, Inc. ("Navitar") in September 2022 and RTDS Technologies Inc. ("RTDS") in October 2022. As permitted by the U.S. Securities and Exchange Commission staff interpretative guidance for newly acquired businesses, the Company excluded Navitar and RTDS from management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2022. Navitar, and RTDS constituted 3.5% of total assets as of December 31, 2022 and 0.4% of net sales for the year then ended.
The Company’s internal control over financial reporting as of December 31, 2022 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report, which is included herein.
/s/ DAVID A. ZAPICO/s/ WILLIAM J. BURKE
Chairman of the Board and Chief Executive OfficerExecutive Vice President – Chief Financial Officer
February 21, 2023
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35
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
ON INTERNAL CONTROL OVER FINANCIAL REPORTING

To the Board of Directors and Stockholders of AMETEK, Inc.:

Opinion on Internal Control over Financial Reporting

We have audited AMETEK, Inc.’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, AMETEK, Inc.(the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on the COSO criteria.

As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Navitar, Inc. and RTDS Technologies Inc., which are included in the 2022 consolidated financial statements of the Company and constituted 3.5% of total assets as of December 31, 2022 and 0.4% of net sales for the year then ended. Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of Navitar, Inc. and RTDS Technologies Inc.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of AMETEK, Inc. as of December 31, 2022 and 2021, the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes and our report dated February 21, 2023 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ERNST & YOUNG LLP
Philadelphia, Pennsylvania
February 21, 2023
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
ON FINANCIAL STATEMENTS

To the Board of Directors and Stockholders of AMETEK, Inc.:
Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of AMETEK, Inc. (the Company) as of December 31, 2022 and 2021, the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 21, 2023 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
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Impairment Assessment of Indefinite Lived Intangible Assets (other than Goodwill)
Description of the Matter
At December 31, 2022, the Company’s indefinite lived intangible assets (other than goodwill) totaled $889.7 million, consisting of trademarks and trade names. As described in Note 1 to the consolidated financial statements, indefinite lived intangible assets are not amortized but are tested for impairment at least annually in the Company’s fourth quarter.

Auditing management’s indefinite lived intangible asset impairment tests was complex and highly judgmental due to the significant measurement uncertainty in estimating the fair value of the trademarks and trade names. In particular, the fair value estimates were sensitive to significant assumptions such as discount rate, forecasted revenues and royalty rates, which are affected by expectations about future market or economic conditions.
How We Addressed the Matter in Our Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s indefinite lived intangible asset impairment process. For example, we tested controls over management’s review of the valuation models and significant assumptions, including forecasted financial information, as well as management’s controls to validate that the data used in the valuations was complete and accurate.

To test the estimated fair value of the Company’s indefinite lived intangible assets, we performed audit procedures that included, among others, assessing the fair value methodologies utilized by management and the significant assumptions discussed above, including the underlying data used in the analyses. For example, when evaluating the significant assumptions, we compared them to current financial and operating plans, market and industry studies, historical trends, and royalty rates used in prior periods. We also assessed the historical accuracy of management’s forecasts and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value estimates of the trademarks and trade names that would result from changes in the assumptions. We involved our valuation specialists to assist in evaluating the discount rate, royalty rate and valuation methodologies used by the Company.

/s/ ERNST & YOUNG LLP
We have served as the Company’s auditor since 1930.
Philadelphia, Pennsylvania
February 21, 2023
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AMETEK, Inc.
Consolidated Statement of Income
(In thousands, except per share amounts)
Year Ended December 31,
202220212020
Net sales$6,150,530 $5,546,514 $4,540,029 
Cost of sales4,005,261 3,633,900 2,996,515 
Selling, general and administrative644,577 603,944 515,630 
Total operating expenses4,649,838 4,237,844 3,512,145 
Operating income1,500,692 1,308,670 1,027,884 
Interest expense(83,186)(80,381)(86,062)
Other income (expense), net11,186 (5,119)140,487 
Income before income taxes1,428,692 1,223,170 1,082,309 
Provision for income taxes269,150 233,117 209,870 
Net income$1,159,542 $990,053 $872,439 
Basic earnings per share$5.04 $4.29 $3.80 
Diluted earnings per share$5.01 $4.25 $3.77 
Weighted average common shares outstanding:
Basic shares230,208 230,955 229,435 
Diluted shares231,536 232,813 231,150 
See accompanying notes.
39
AMETEK, Inc.
Consolidated Statement of Comprehensive Income
(In thousands)
Year Ended December 31,
202220212020
Net income$1,159,542 $990,053 $872,439 
Other comprehensive income (loss):
Amounts arising during the period – gains (losses), net of tax (expense) benefit:
Foreign currency translation:
Translation adjustments(123,756)(47,331)64,521 
Change in long-term intercompany notes(21,419)(16,333)16,695 
Net investment hedge instruments gain (loss), net of tax of $(17,070), $(12,631) and $14,787 in 2022, 2021 and 2020, respectively52,416 39,047 (45,716)
Defined benefit pension plans:
Net actuarial (loss) gain, net of tax of $4,769, $(15,298) and $8,637 in 2022, 2021 and 2020, respectively(18,238)46,049 (18,733)
Amortization of net actuarial loss, net of tax of ($2,111), ($4,103) and ($3,539) in 2022, 2021 and 2020, respectively6,420 12,249 11,940 
Amortization of prior service costs, net of tax of $(25), ($114) and $7 in 2022, 2021 and 2020, respectively76 343 (36)
Other comprehensive (loss) income(104,501)34,024 28,671 
Total comprehensive income$1,055,041 $1,024,077 $901,110 
See accompanying notes.
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AMETEK, Inc.
Consolidated Balance Sheet
(In thousands, except share amounts)
December 31,
20222021
ASSETS
Current assets:
Cash and cash equivalents$345,386 $346,772 
Receivables919,335 829,213 
Inventories, net1,044,284 769,175 
Other current assets219,053 183,605 
Total current assets2,528,058 2,128,765 
Property, plant and equipment, net635,641 617,138 
Right of use assets, net170,295 169,924 
Goodwill5,372,562 5,238,726 
Other intangibles, net3,342,085 3,368,629 
Investments and other assets382,479 375,005 
Total assets$12,431,120 $11,898,187 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings and current portion of long-term debt, net$226,079 $315,093 
Accounts payable497,134 470,252 
Customer advanced payments357,674 298,728 
Income taxes payable48,171 35,904 
Accrued liabilities and other435,144 443,337 
Total current liabilities1,564,202 1,563,314 
Long-term debt, net2,158,928 2,229,148 
Deferred income taxes694,267 719,675 
Other long-term liabilities537,211 514,166 
Total liabilities4,954,608 5,026,303 
Stockholders’ equity:
Preferred stock,$0.01 par value; authorized 5,000,000 shares; none issued— — 
Common stock, $0.01 par value; authorized 800,000,000 shares; issued: 2022 – 268,588,293 shares; 2021 – 267,800,160 shares2,700 2,689 
Capital in excess of par value1,094,236 1,012,526 
Retained earnings8,857,485 7,900,113 
Accumulated other comprehensive loss(574,945)(470,444)
Treasury stock: 2022 – 38,537,635 shares; 2021 – 36,137,864 shares(1,902,964)(1,573,000)
Total stockholders’ equity7,476,512 6,871,884 
Total liabilities and stockholders’ equity$12,431,120 $11,898,187 
See accompanying notes.
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AMETEK, Inc.
Consolidated Statement of Stockholders’ Equity
(In thousands)
Year Ended December 31,
202220212020
Capital stock
Preferred stock, $0.01 par value$— $— $— 
Common stock, $0.01 par value
Balance at the beginning of the year2,689 2,676 2,662 
Shares issued11 13 14 
Balance at the end of the year2,700 2,689 2,676 
Capital in excess of par value
Balance at the beginning of the year1,012,526 921,752 832,821 
Issuance of common stock under employee stock plans34,335 44,671 47,366 
Share-based compensation costs47,375 46,103 41,565 
Balance at the end of the year1,094,236 1,012,526 921,752 
Retained earnings
Balance at the beginning of the year7,900,113 7,094,656 6,387,612 
Net income1,159,542 990,053 872,439 
Cash dividends paid(202,169)(184,595)(165,035)
Adoption of ASU 2016-13— — (360)
Other(1)(1)— 
Balance at the end of the year8,857,485 7,900,113 7,094,656 
Accumulated other comprehensive (loss) income
Foreign currency translation:
Balance at the beginning of the year(275,365)(250,748)(286,248)
Translation adjustments(123,756)(47,331)64,521 
Change in long-term intercompany notes(21,419)(16,333)16,695 
Net investment hedge instruments gain (loss), net of tax of $(17,070), $(12,631) and $14,787 in 2022, 2021 and 2020, respectively52,416 39,047 (45,716)
Balance at the end of the year(368,124)(275,365)(250,748)
Defined benefit pension plans:
Balance at the beginning of the year(195,079)(253,720)(246,891)
Net actuarial (loss) gain, net of tax of $4,769, $(15,298) and $8,637 in 2022, 2021 and 2020, respectively(18,238)46,049 (18,733)
Amortization of net actuarial loss, net of tax of ($2,111), ($4,103) and ($3,539) in 2022, 2021 and 2020, respectively6,420 12,249 11,940 
Amortization of prior service costs, net of tax of $(25), ($114) and $7 in 2022, 2021 and 2020, respectively76 343 (36)
Balance at the end of the year(206,821)(195,079)(253,720)
Accumulated other comprehensive loss at the end of the year(574,945)(470,444)(504,468)
Treasury stock
Balance at the beginning of the year(1,573,000)(1,565,270)(1,574,464)
Issuance of common stock under employee stock plans2,857 6,981 13,879 
Purchase of treasury stock(332,821)(14,711)(4,685)
Balance at the end of the year(1,902,964)(1,573,000)(1,565,270)
Total stockholders’ equity$7,476,512 $6,871,884 $5,949,346 
See accompanying notes.
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AMETEK, Inc.
Consolidated Statement of Cash Flows
(In thousands)
Year Ended December 31,
202220212020
Cash provided by (used for):
Operating activities:
Net income$1,159,542 $990,053 $872,439 
Adjustments to reconcile net income to total operating activities:
Depreciation and amortization319,427 292,112 255,275 
Deferred income taxes(67,818)(29,762)1,839 
Share-based compensation expense47,375 46,103 41,565 
Gain on sale of business/investment(3,584)(6,349)(141,020)
Gain on sale of facilities(7,054)— (7,523)
Changes in assets and liabilities, net of acquisitions:
(Increase) decrease in receivables(86,713)(172,791)163,471 
(Increase) decrease in inventories and other current assets(322,467)(129,593)77,448 
Increase in payables, accruals and income taxes95,481 212,101 7,017 
Increase (decrease) in other long-term liabilities47,226 (35,104)20,430 
Pension contributions(8,959)(10,277)(9,527)
Other, net(23,083)3,964 (434)
Total operating activities1,149,373 1,160,457 1,280,980 
Investing activities:
Additions to property, plant and equipment(139,005)(110,671)(74,199)
Purchases of businesses, net of cash acquired(429,714)(1,959,218)(116,509)
Proceeds from sale of business/investment3,734 12,000 245,311 
Proceeds from sale of facilities11,754 2,341 9,508 
Other, net471 (294)(2,481)
Total investing activities(552,760)(2,055,842)61,630 
Financing activities:
Net change in short-term borrowings(73,691)243,615 (328,003)
Repayments of long-term borrowings— (59,718)(102,947)
Repurchases of common stock(332,821)(14,711)(4,685)
Cash dividends paid(202,169)(184,595)(165,035)
Proceeds from stock option exercises49,937 60,297 64,903 
Other, net(16,955)(5,551)(3,669)
Total financing activities(575,699)39,337 (539,436)
Effect of exchange rate changes on cash and cash equivalents(22,300)(10,002)16,618 
(Decrease) increase in cash and cash equivalents(1,386)(866,050)819,792 
Cash and cash equivalents:
Beginning of year346,772 1,212,822 393,030 
End of year$345,386 $346,772 $1,212,822 
See accompanying notes.
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AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Income Taxes
1. Significant Accounting Policies
Basis of Consolidation
The Company’s processaccompanying consolidated financial statements reflect the results of providing for income taxesoperations, financial position and determiningcash flows of AMETEK, Inc. (the “Company”), and include the related balance sheet accounts of the Company and subsidiaries, after elimination of all intercompany transactions in the consolidation.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to assess uncertainties, make judgments regarding outcomesestimates and utilize estimates. assumptions that affect amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates and assumptions.
Cash Equivalents, Securities and Other Investments
All highly liquid investments with maturities of three months or less when purchased are considered cash equivalents.
Accounts Receivable
The Company conducts a broad rangemaintains allowances for estimated credit losses resulting from the inability of operations aroundcustomers to meet their financial obligations to the worldCompany. The Company recognizes an allowance for credit losses, on all accounts receivable and contract assets, which considers risk of future credit losses based on factors such as historical experience, contract terms, as well as general and market business conditions, country, and political risk. Balances are written off when considered uncollectible. Bad debt expense was $3.7 million in 2022, $1.2 million in 2021 and $3.6 million in 2020. At December 31, 2022 and 2021, the allowance for estimated credit losses was $14.1 million and $11.2 million, respectively.
Inventories
The Company uses the first-in, first-out (“FIFO”) method of accounting, which approximates current replacement cost, for approximately 90% of its inventories at December 31, 2022. The last-in, first-out (“LIFO”) method of accounting is therefore subjectused to complex tax regulations in numerous international taxing jurisdictions, resulting at times in tax audits, disputes and potential litigation,determine cost for the outcome of which is uncertain. Management must make judgments currently about such uncertainties and determine estimatesremaining 10% of the Company’s taxinventory at December 31, 2022. For inventories where cost is determined by the LIFO method, the FIFO value would have been $40.3 million and $29.8 million higher than the LIFO value reported in the consolidated balance sheet at December 31, 2022 and 2021, respectively. The Company provides estimated inventory reserves for slow-moving and obsolete inventory based on current assessments about future demand, market conditions, customers who may be experiencing financial difficulties and related management initiatives.
Business Combinations
The Company allocates the purchase price of an acquired company, including when applicable, the acquisition date fair value of contingent consideration between tangible and intangible assets acquired and liabilities. Toliabilities assumed from the extentacquired business based on their estimated fair values, with the final outcome differs, future adjustments toresidual of the purchase price recorded as goodwill. The results of operations of the acquired business are included in the Company’s taxoperating results from the date of acquisition.
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Expenditures for additions to plant facilities, or that extend their useful lives, are capitalized. The cost of minor tools, jigs and dies, and maintenance and repairs is charged to expense as incurred. Depreciation of plant and equipment is calculated principally on a straight-line basis over the estimated useful lives of the related assets. The range of lives for depreciable assets is generally three to 10 years for machinery and liabilities may be necessary. The Company recognizes interestequipment, five to 27 years for leasehold improvements and penalties accrued related25 to uncertain tax positions in income tax expense.
The Company assesses the realizability of its deferred tax assets, taking into consideration the Company’s forecast of future taxable income, available net operating loss carryforwards and available tax planning strategies that could be implemented to realize the deferred tax assets. Based on this assessment, management must evaluate the need50 years for and amount of, valuation allowances against the Company’s deferred tax assets. To the extent facts and circumstances change in the future, adjustments to the valuation allowances may be required.
buildings.
Pensions44
The Company has U.S. and foreign defined benefit and defined contribution pension plans. The most significant elements in determining the Company’s pension income or expense are the assumed pension liability discount rate and the expected return on plan assets. All unrecognized prior service costs, remaining transition obligations or assets and actuarial gains and losses have been recognized, netTable of tax effects, as a charge to accumulated other comprehensive income in stockholders’ equity and will be amortized as a component of net periodic pension cost. The Company uses a measurement date of December 31 (its fiscal year end) for its U.S. and foreign defined benefit plans.Contents
AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
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 optionsDepreciation expense was $113.7 million, $108.5 million 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$101.3 million for the years ended December 31:
 
2019
  
2018
  
2017
 
 
(In thousands)
 
             
Weighted average shares:
         
Basic shares
  
227,759
   
230,823
   
230,229
 
Equity-based compensation plans
  
1,636
   
1,889
   
1,616
 
             
Diluted shares
  
229,395
   
232,712
   
231,845
 
             
31, 2022, 2021 and 2020, respectively.
Goodwill and Other Intangible Assets
Goodwill and other intangible assets with indefinite lives, primarily trademarks and trade names, are not amortized; rather, they are tested for impairment at least annually.
The Company identifies its reporting units at the component level, which is one level below its operating segments. Generally, goodwill arises from acquisitions of specific operating companies and is assigned to the reporting unit in which the operating company resides. The Company’s reporting units are divisions that are one level below its operating segments and for which discrete financial information is prepared and regularly reviewed by segment management.
When testing goodwill for impairment, the Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the estimated fair value of a reporting unit is less than its carrying amount. If the Company performs a qualitative assessment and determines that an impairment is more likely than not, then performance of a quantitative impairment test is required. In conducting a qualitative assessment, the Company analyzes actual and forecasted net sales and selling profit for each reporting unit, as well as historical performance and the results of prior quantitative tests performed. Additionally, the Company assesses critical areas that may impact its business, including macroeconomic conditions, industry and market conditions, cost factors, or any relevant events and factors that may impact projected financial results.
If performed, the quantitative goodwill impairment test is performed using a discounted cash flow analysis to determine the fair value of each reporting unit, which considers cash flows discounted at an appropriate discount rate. The annual goodwill impairment test requires the Company to make a number of assumptions and estimates concerning future levels of revenue growth, operating margins, depreciation, amortization and working capital requirements, which are based on the Company’s long-range plan and are considered level 3 inputs. The discount rate is an estimate of the overall after-tax rate of return required by a market participant whose weighted average cost of capital includes both equity and debt, including a risk premium. While the Company uses the best available information to prepare its cash flow and discount rate assumptions, actual future cash flows or market conditions could differ significantly resulting in future impairment charges related to recorded goodwill balances.
During the fourth quarter of 2022, the Company completed its annual goodwill impairment tests and elected to perform a qualitative assessment.
The impairment test for indefinite-lived intangibles other than goodwill (primarily trademarks and trade names) consists of a comparison of the estimated fair value of the indefinite-lived intangible asset to the carrying value of the asset as of the impairment testing date. The Company estimates the fair value of its indefinite-lived intangibles using the relief from royalty method using level 3 inputs for revenue growth rates and royalty rates. The fair value derived from the relief from royalty method is measured as the discounted cash flow savings realized from owning such trademarks and trade names and not having to pay a royalty for their use.
The Company completed its required annual impairment tests in the fourth quarter of 2022, 2021, and 2020 and determined that the carrying values of the Company's goodwill were not impaired. The Company completed its required annual indefinite-lived intangibles impairment test as of October 1, 2022 and determined that the carrying values of certain of the Company's trademarks and trade names with indefinite lives were impaired as a result of higher discount rates driven by higher interest rates. As a result, during the fourth quarter of 2022, the Company recorded an immaterial non-cash impairment charge related to certain of the Company's trade names. The Company completed its required annual impairment tests in the fourth quarter of 2021 and 2020 and determined that the carrying values of the Company's other intangible assets with indefinite lives were not impaired.
2. Recent Accounting Pronouncements45
Recently Adopted Accounting Pronouncements
In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.
2016-02
Leases (ASC 842). In July 2018, the FASB issued ASU No.
 2018-10,
“Codification Improvements to Topic 842, Leases” (ASU
2018-10),
which provides narrow amendments to
49
Table of Contents
AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
clarify how to apply certain aspectsOther intangible assets with finite lives are evaluated for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. The carrying value of other intangible assets with finite lives is considered impaired when the new lease standard, and ASU No.
 2018-11,
“Leases (Topic 842) –
Targeted Improvements” (ASU
2018-11),
which addressed implementation issues related to the new lease standard. These and certain other lease-related ASUs have generally been codified in ASC 842. ASC 842 supersedes the lease accounting requirements in Accounting Standards Codification Topic 840, Leases (ASC 840). ASC 842 establishes a
right-of-use
model that requires a lessee to record a
right-of-use
(“ROU”) asset and a lease liability on the balance sheet for all leases. Under ASC 842, leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The standard also requires disclosures to help investors and other financial statement users better understand the amount, timing and uncertainty oftotal projected undiscounted cash flows arising from leases. The Company adopted ASC 842 on January 1, 2019 using the effective date transition method. Prior period results continue to be presented under ASC 840asset group are less than the carrying value. In that event, a loss is recognized based on the accounting standards originally in effect for such periods.amount by which the carrying value exceeds the fair value of those assets. Fair value is determined primarily using present value techniques based on projected cash flows from the asset group.
TheIntangible assets, other than goodwill, with definite lives are amortized over their estimated useful lives. Patents and technology are being amortized over useful lives of nine to 20 years, with a weighted average life of 14 years. Customer relationships are being amortized over a period of ten to 20 years, with a weighted average life of 19 years. On a quarterly basis, the Company has elected certain practical expedients permitted underevaluates the transition guidance within ASC 842 to leases that commenced before January 1, 2019, including the package of practical expedients. The electionreasonableness of the packageestimated useful lives of practical expedients resulted in the Company not reassessing prior conclusions under ASC 840 related to lease identification, lease classification and initial direct costs for expired and existing leases prior to January 1, 2019. The Company did not elect the practical expedient to not record short-term leases on its consolidated balance sheet. The adoption of ASU
2016-02these intangible assets.
did not have a significant impact on the Company’s consolidated results of operations or cash flows. Upon adoption, the Company recognized a ROU asset and lease liability of $192.4 million and $198.6 million, respectively.
In February 2018, the FASB issued ASU No.
 2018-02,
 Income Statement
–
Reporting Comprehensive Income (Topic 220), Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income
 (“ASU
 2018-02”).
 ASU
 2018-02
 addresses a specific consequence of the Tax Act by allowing an election to reclassify from accumulated other comprehensive income (loss) to retained earnings for stranded tax effects resulting from the Tax Act’s reduction of the U.S federal corporate income tax rate. ASU
 2018-02
 is effective for all entities for annual reporting periods beginning after December 15, 2018, and is to be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the U.S. federal income tax rate in the Tax Act is recognized. The Company adopted ASU
2018-02
on January 1, 2019, and upon adoption, the Company did not elect to reclassify the stranded income tax effects of the Tax Act from accumulated other comprehensive income to retained earnings.
Recent Accounting Pronouncements
In December 2019, the FASB issued ASU No.
 2019-12,
Income Taxes (Topic 740): Simplifying theSee Note 2, Recent Accounting for Income Taxes
(“ASU
 2019-12”),
which simplifies the accounting for income taxes by removing certain exceptionsPronouncements, to the general principlesCompany’s Consolidated Financial Statements included in ASC Topic 740. ASU
 2019-12
is effectivePart II, Item 8 of this Annual Report on Form 10-K for fiscal years beginning after December 15, 2021. Early adoption is permitted and the amendmentsinformation regarding recently issued accounting pronouncements.
Forward-Looking Information
Certain matters discussed in this ASU shouldForm 10-K are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995 (“PSLRA”), which involve risk and uncertainties that exist in the Company’s operations and business environment and can be applied on a retrospective basis to all periods presented.affected by inaccurate assumptions, or by known or unknown risks and uncertainties. Many such factors will be important in determining the Company’s actual future results. The Company haswishes to take advantage of the “safe harbor” provisions of the PSLRA by cautioning readers that numerous important factors in some cases have caused, and in the future could cause, the Company’s actual results to differ materially from those expressed in any forward-looking statements made by, or on behalf of, the Company. Some, but not determinedall, of the factors or uncertainties that could cause actual results to differ from present expectations are set forth above and under Item 1A. Risk Factors. The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, subsequent events or otherwise, unless required by the securities laws to do so.
32
Item 7A.    Quantitative and Qualitative Disclosures About Market Risk
The Company’s primary exposures to market risk are fluctuations in interest rates, foreign currency exchange rates and commodity prices, which could impact its financial condition and results of operations. The Company addresses its exposure to these risks through its normal operating and financing activities. The Company’s differentiated and global business activities help to reduce the impact ASU
 2019-12
that any particular market risk may have on its operating income as a whole.
The Company’s short-term debt carries variable interest rates and generally its long-term debt carries fixed rates. These financial instruments are more fully described in the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
The foreign currencies to which the Company has the most significant exchange rate exposure are the Euro, the British pound, the Japanese yen, the Chinese renminbi, the Canadian dollar, and the Mexican peso. Exposure to foreign currency rate fluctuation is modest, monitored, and when possible, mitigated through the use of local borrowings and occasional derivative financial instruments in the foreign currency affected. The effect of translating foreign subsidiaries’ balance sheets into U.S. dollars is included in other comprehensive income within stockholders’ equity. Foreign currency transactions have not had a significant effect on the operating results reported by the Company because revenues and costs associated with the revenues are generally transacted in the same foreign currencies.
The primary commodities to which the Company has market exposure are raw material purchases of nickel, aluminum, copper, steel, titanium, and gold. Exposure to price changes in these commodities are generally mitigated through adjustments in selling prices of the ultimate product and purchase order pricing arrangements, although forward contracts are sometimes used to manage some of those exposures.
Based on a hypothetical ten percent adverse movement in interest rates, commodity prices or foreign currency exchange rates, the Company’s best estimate is that the potential losses in future earnings, fair value of risk-sensitive financial instruments and cash flows are not material, although the actual effects may differ materially from the hypothetical analysis.
33
Item 8.    Financial Statements and Supplementary Data
Page
Index to Financial Statements (Item 15(a)(1))
35
Reports of Independent Registered Public Accounting Firm Ernst & Young LLP, Philadelphia, Auditor Firm ID:
42
36
39
40
41
42
43
44
Financial Statement Schedules (Item 15(a)(2))
Financial statement schedules have been omitted because either they are not applicable, or the required information is included in the financial statements or the notes thereto.
34
Management’s Responsibility for Financial Statements
Management has prepared and is responsible for the integrity of the consolidated financial statements and related information. The statements are prepared in conformity with U.S. generally accepted accounting principles consistently applied and include certain amounts based on management’s best estimates and judgments. Historical financial information elsewhere in this report is consistent with that in the financial statements.
In meeting its responsibility for the reliability of the financial information, management maintains a system of internal accounting and disclosure controls, including an internal audit program. The system of controls provides for appropriate division of responsibility and the application of written policies and procedures. That system, which undergoes continual reevaluation, is designed to provide reasonable assurance that assets are safeguarded, and records are adequate for the preparation of reliable financial data.
Management is responsible for establishing and maintaining adequate internal control over financial reporting. AMETEK, Inc. maintains a system of internal controls that is designed to provide reasonable assurance as to the fair and reliable preparation and presentation of the consolidated financial statements; however, there are inherent limitations in the effectiveness of any system of internal controls.
Management recognizes its responsibility for conducting the Company’s activities according to the highest standards of personal and corporate conduct. That responsibility is characterized and reflected in a code of business conduct for all employees and in a financial code of ethics for the Chief Executive Officer and Senior Financial Officers, as well as in other key policy statements publicized throughout the Company.
The Audit Committee of the Board of Directors, which is composed solely of independent directors who are not employees of the Company, meets with the independent registered public accounting firm, the internal auditors and management to satisfy itself that each is properly discharging its responsibilities. The report of the Audit Committee is included in the Company’s Proxy Statement for the 2023 Annual Meeting of Stockholders. Both the independent registered public accounting firm and the internal auditors have direct access to the Audit Committee.
The Company’s independent registered public accounting firm, Ernst & Young LLP, is engaged to render an opinion as to whether management’s financial statements present fairly, in all material respects, the Company’s financial position and operating results. This report is included herein.
Management’s Report on Internal Control over Financial Reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in the Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, AMETEK, Inc. conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2022 based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on that evaluation, our management concluded that the Company’s internal control over financial reporting was effective as of December 31, 2022.
The Company acquired Navitar, Inc. ("Navitar") in September 2022 and RTDS Technologies Inc. ("RTDS") in October 2022. As permitted by the U.S. Securities and Exchange Commission staff interpretative guidance for newly acquired businesses, the Company excluded Navitar and RTDS from management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2022. Navitar, and RTDS constituted 3.5% of total assets as of December 31, 2022 and 0.4% of net sales for the year then ended.
The Company’s internal control over financial reporting as of December 31, 2022 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report, which is included herein.
/s/ DAVID A. ZAPICO/s/ WILLIAM J. BURKE
Chairman of the Board and Chief Executive OfficerExecutive Vice President – Chief Financial Officer
February 21, 2023
35
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
ON INTERNAL CONTROL OVER FINANCIAL REPORTING

To the Board of Directors and Stockholders of AMETEK, Inc.:

Opinion on Internal Control over Financial Reporting

We have audited AMETEK, Inc.’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, AMETEK, Inc.(the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on the COSO criteria.

As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Navitar, Inc. and RTDS Technologies Inc., which are included in the 2022 consolidated financial statements of the Company and constituted 3.5% of total assets as of December 31, 2022 and 0.4% of net sales for the year then ended. Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of Navitar, Inc. and RTDS Technologies Inc.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of AMETEK, Inc. as of December 31, 2022 and 2021, the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes and our report dated February 21, 2023 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ERNST & YOUNG LLP
Philadelphia, Pennsylvania
February 21, 2023
36
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
ON FINANCIAL STATEMENTS

To the Board of Directors and Stockholders of AMETEK, Inc.:
Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of AMETEK, Inc. (the Company) as of December 31, 2022 and 2021, the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 21, 2023 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
37
Impairment Assessment of Indefinite Lived Intangible Assets (other than Goodwill)
Description of the Matter
At December 31, 2022, the Company’s indefinite lived intangible assets (other than goodwill) totaled $889.7 million, consisting of trademarks and trade names. As described in Note 1 to the consolidated financial statements, indefinite lived intangible assets are not amortized but are tested for impairment at least annually in the Company’s fourth quarter.

Auditing management’s indefinite lived intangible asset impairment tests was complex and highly judgmental due to the significant measurement uncertainty in estimating the fair value of the trademarks and trade names. In particular, the fair value estimates were sensitive to significant assumptions such as discount rate, forecasted revenues and royalty rates, which are affected by expectations about future market or economic conditions.
How We Addressed the Matter in Our Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s indefinite lived intangible asset impairment process. For example, we tested controls over management’s review of the valuation models and significant assumptions, including forecasted financial information, as well as management’s controls to validate that the data used in the valuations was complete and accurate.

To test the estimated fair value of the Company’s indefinite lived intangible assets, we performed audit procedures that included, among others, assessing the fair value methodologies utilized by management and the significant assumptions discussed above, including the underlying data used in the analyses. For example, when evaluating the significant assumptions, we compared them to current financial and operating plans, market and industry studies, historical trends, and royalty rates used in prior periods. We also assessed the historical accuracy of management’s forecasts and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value estimates of the trademarks and trade names that would result from changes in the assumptions. We involved our valuation specialists to assist in evaluating the discount rate, royalty rate and valuation methodologies used by the Company.

/s/ ERNST & YOUNG LLP
We have served as the Company’s auditor since 1930.
Philadelphia, Pennsylvania
February 21, 2023
38
AMETEK, Inc.
Consolidated Statement of Income
(In thousands, except per share amounts)
Year Ended December 31,
202220212020
Net sales$6,150,530 $5,546,514 $4,540,029 
Cost of sales4,005,261 3,633,900 2,996,515 
Selling, general and administrative644,577 603,944 515,630 
Total operating expenses4,649,838 4,237,844 3,512,145 
Operating income1,500,692 1,308,670 1,027,884 
Interest expense(83,186)(80,381)(86,062)
Other income (expense), net11,186 (5,119)140,487 
Income before income taxes1,428,692 1,223,170 1,082,309 
Provision for income taxes269,150 233,117 209,870 
Net income$1,159,542 $990,053 $872,439 
Basic earnings per share$5.04 $4.29 $3.80 
Diluted earnings per share$5.01 $4.25 $3.77 
Weighted average common shares outstanding:
Basic shares230,208 230,955 229,435 
Diluted shares231,536 232,813 231,150 
See accompanying notes.
39
AMETEK, Inc.
Consolidated Statement of Comprehensive Income
(In thousands)
Year Ended December 31,
202220212020
Net income$1,159,542 $990,053 $872,439 
Other comprehensive income (loss):
Amounts arising during the period – gains (losses), net of tax (expense) benefit:
Foreign currency translation:
Translation adjustments(123,756)(47,331)64,521 
Change in long-term intercompany notes(21,419)(16,333)16,695 
Net investment hedge instruments gain (loss), net of tax of $(17,070), $(12,631) and $14,787 in 2022, 2021 and 2020, respectively52,416 39,047 (45,716)
Defined benefit pension plans:
Net actuarial (loss) gain, net of tax of $4,769, $(15,298) and $8,637 in 2022, 2021 and 2020, respectively(18,238)46,049 (18,733)
Amortization of net actuarial loss, net of tax of ($2,111), ($4,103) and ($3,539) in 2022, 2021 and 2020, respectively6,420 12,249 11,940 
Amortization of prior service costs, net of tax of $(25), ($114) and $7 in 2022, 2021 and 2020, respectively76 343 (36)
Other comprehensive (loss) income(104,501)34,024 28,671 
Total comprehensive income$1,055,041 $1,024,077 $901,110 
See accompanying notes.
40
AMETEK, Inc.
Consolidated Balance Sheet
(In thousands, except share amounts)
December 31,
20222021
ASSETS
Current assets:
Cash and cash equivalents$345,386 $346,772 
Receivables919,335 829,213 
Inventories, net1,044,284 769,175 
Other current assets219,053 183,605 
Total current assets2,528,058 2,128,765 
Property, plant and equipment, net635,641 617,138 
Right of use assets, net170,295 169,924 
Goodwill5,372,562 5,238,726 
Other intangibles, net3,342,085 3,368,629 
Investments and other assets382,479 375,005 
Total assets$12,431,120 $11,898,187 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings and current portion of long-term debt, net$226,079 $315,093 
Accounts payable497,134 470,252 
Customer advanced payments357,674 298,728 
Income taxes payable48,171 35,904 
Accrued liabilities and other435,144 443,337 
Total current liabilities1,564,202 1,563,314 
Long-term debt, net2,158,928 2,229,148 
Deferred income taxes694,267 719,675 
Other long-term liabilities537,211 514,166 
Total liabilities4,954,608 5,026,303 
Stockholders’ equity:
Preferred stock,$0.01 par value; authorized 5,000,000 shares; none issued— — 
Common stock, $0.01 par value; authorized 800,000,000 shares; issued: 2022 – 268,588,293 shares; 2021 – 267,800,160 shares2,700 2,689 
Capital in excess of par value1,094,236 1,012,526 
Retained earnings8,857,485 7,900,113 
Accumulated other comprehensive loss(574,945)(470,444)
Treasury stock: 2022 – 38,537,635 shares; 2021 – 36,137,864 shares(1,902,964)(1,573,000)
Total stockholders’ equity7,476,512 6,871,884 
Total liabilities and stockholders’ equity$12,431,120 $11,898,187 
See accompanying notes.
41
AMETEK, Inc.
Consolidated Statement of Stockholders’ Equity
(In thousands)
Year Ended December 31,
202220212020
Capital stock
Preferred stock, $0.01 par value$— $— $— 
Common stock, $0.01 par value
Balance at the beginning of the year2,689 2,676 2,662 
Shares issued11 13 14 
Balance at the end of the year2,700 2,689 2,676 
Capital in excess of par value
Balance at the beginning of the year1,012,526 921,752 832,821 
Issuance of common stock under employee stock plans34,335 44,671 47,366 
Share-based compensation costs47,375 46,103 41,565 
Balance at the end of the year1,094,236 1,012,526 921,752 
Retained earnings
Balance at the beginning of the year7,900,113 7,094,656 6,387,612 
Net income1,159,542 990,053 872,439 
Cash dividends paid(202,169)(184,595)(165,035)
Adoption of ASU 2016-13— — (360)
Other(1)(1)— 
Balance at the end of the year8,857,485 7,900,113 7,094,656 
Accumulated other comprehensive (loss) income
Foreign currency translation:
Balance at the beginning of the year(275,365)(250,748)(286,248)
Translation adjustments(123,756)(47,331)64,521 
Change in long-term intercompany notes(21,419)(16,333)16,695 
Net investment hedge instruments gain (loss), net of tax of $(17,070), $(12,631) and $14,787 in 2022, 2021 and 2020, respectively52,416 39,047 (45,716)
Balance at the end of the year(368,124)(275,365)(250,748)
Defined benefit pension plans:
Balance at the beginning of the year(195,079)(253,720)(246,891)
Net actuarial (loss) gain, net of tax of $4,769, $(15,298) and $8,637 in 2022, 2021 and 2020, respectively(18,238)46,049 (18,733)
Amortization of net actuarial loss, net of tax of ($2,111), ($4,103) and ($3,539) in 2022, 2021 and 2020, respectively6,420 12,249 11,940 
Amortization of prior service costs, net of tax of $(25), ($114) and $7 in 2022, 2021 and 2020, respectively76 343 (36)
Balance at the end of the year(206,821)(195,079)(253,720)
Accumulated other comprehensive loss at the end of the year(574,945)(470,444)(504,468)
Treasury stock
Balance at the beginning of the year(1,573,000)(1,565,270)(1,574,464)
Issuance of common stock under employee stock plans2,857 6,981 13,879 
Purchase of treasury stock(332,821)(14,711)(4,685)
Balance at the end of the year(1,902,964)(1,573,000)(1,565,270)
Total stockholders’ equity$7,476,512 $6,871,884 $5,949,346 
See accompanying notes.
42
AMETEK, Inc.
Consolidated Statement of Cash Flows
(In thousands)
Year Ended December 31,
202220212020
Cash provided by (used for):
Operating activities:
Net income$1,159,542 $990,053 $872,439 
Adjustments to reconcile net income to total operating activities:
Depreciation and amortization319,427 292,112 255,275 
Deferred income taxes(67,818)(29,762)1,839 
Share-based compensation expense47,375 46,103 41,565 
Gain on sale of business/investment(3,584)(6,349)(141,020)
Gain on sale of facilities(7,054)— (7,523)
Changes in assets and liabilities, net of acquisitions:
(Increase) decrease in receivables(86,713)(172,791)163,471 
(Increase) decrease in inventories and other current assets(322,467)(129,593)77,448 
Increase in payables, accruals and income taxes95,481 212,101 7,017 
Increase (decrease) in other long-term liabilities47,226 (35,104)20,430 
Pension contributions(8,959)(10,277)(9,527)
Other, net(23,083)3,964 (434)
Total operating activities1,149,373 1,160,457 1,280,980 
Investing activities:
Additions to property, plant and equipment(139,005)(110,671)(74,199)
Purchases of businesses, net of cash acquired(429,714)(1,959,218)(116,509)
Proceeds from sale of business/investment3,734 12,000 245,311 
Proceeds from sale of facilities11,754 2,341 9,508 
Other, net471 (294)(2,481)
Total investing activities(552,760)(2,055,842)61,630 
Financing activities:
Net change in short-term borrowings(73,691)243,615 (328,003)
Repayments of long-term borrowings— (59,718)(102,947)
Repurchases of common stock(332,821)(14,711)(4,685)
Cash dividends paid(202,169)(184,595)(165,035)
Proceeds from stock option exercises49,937 60,297 64,903 
Other, net(16,955)(5,551)(3,669)
Total financing activities(575,699)39,337 (539,436)
Effect of exchange rate changes on cash and cash equivalents(22,300)(10,002)16,618 
(Decrease) increase in cash and cash equivalents(1,386)(866,050)819,792 
Cash and cash equivalents:
Beginning of year346,772 1,212,822 393,030 
End of year$345,386 $346,772 $1,212,822 
See accompanying notes.
43
AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Significant Accounting Policies
Basis of Consolidation
The accompanying consolidated financial statements reflect the results of operations, financial position and cash flows of AMETEK, Inc. (the “Company”), and include the accounts of the Company and subsidiaries, after elimination of all intercompany transactions in the consolidation.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates and assumptions.
Cash Equivalents, Securities and Other Investments
All highly liquid investments with maturities of three months or less when purchased are considered cash equivalents.
Accounts Receivable
The Company maintains allowances for estimated credit losses resulting from the inability of customers to meet their financial statement disclosures.obligations to the Company. The Company recognizes an allowance for credit losses, on all accounts receivable and contract assets, which considers risk of future credit losses based on factors such as historical experience, contract terms, as well as general and market business conditions, country, and political risk. Balances are written off when considered uncollectible. Bad debt expense was $3.7 million in 2022, $1.2 million in 2021 and $3.6 million in 2020. At December 31, 2022 and 2021, the allowance for estimated credit losses was $14.1 million and $11.2 million, respectively.
In August 2018,Inventories
The Company uses the FASB issued ASU No.
 2018-13,first-in, first-out (“FIFO”) method of accounting, which approximates current replacement cost, for approximately 90% of its inventories at December 31, 2022. The last-in, first-out (“LIFO”) method of accounting is used to determine cost for the remaining 10% of the Company’s inventory at December 31, 2022. For inventories where cost is determined by the LIFO method, the FIFO value would have been $40.3 million and $29.8 million higher than the LIFO value reported in the consolidated balance sheet at December 31, 2022 and 2021, respectively. The Company provides estimated inventory reserves for slow-moving and obsolete inventory based on current assessments about future demand, market conditions, customers who may be experiencing financial difficulties and related management initiatives.
Business Combinations
Fair Value Measurement
(“ASU
 2018-13”),
which changesThe Company allocates the purchase price of an acquired company, including when applicable, the acquisition date fair value measurement disclosure requirements of ASC Topic 820,
Fair Value Measurement
(“ASC 820”), by eliminating, modifyingcontingent consideration between tangible and adding to those requirements. ASU
 2018-13
also modifies the disclosure objective paragraphs of ASC 820 to eliminate (1) “
at a minimum”intangible assets acquired and liabilities assumed from the phrase “an entity shall disclose at a minimum” and (2) other similar “open ended” disclosure requirements to promoteacquired business based on their estimated fair values, with the appropriate exerciseresidual of discretion by entities. ASU
 2018-13
is effective for fiscal years beginning after December 15, 2019, including interim periods therein.the purchase price recorded as goodwill. The Company does not expect the adoption of ASU
2018-13
to have a material impact on the Company’s consolidated results of operations financial position, cash flowsof the acquired business are included in the Company’s operating results from the date of acquisition.
Property, Plant and financial statement disclosures.Equipment
Property, plant and equipment are stated at cost. Expenditures for additions to plant facilities, or that extend their useful lives, are capitalized. The cost of minor tools, jigs and dies, and maintenance and repairs is charged to expense as incurred. Depreciation of plant and equipment is calculated principally on a straight-line basis over the estimated useful lives of the related assets. The range of lives for depreciable assets is generally three to 10 years for machinery and equipment, five to 27 years for leasehold improvements and 25 to 50 years for buildings.
44
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Table of Contents
AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Depreciation expense was $113.7 million, $108.5 million and $101.3 million for the years ended December 31, 2022, 2021 and 2020, respectively.
Goodwill and Other Intangible Assets
Goodwill and other intangible assets with indefinite lives, primarily trademarks and trade names, are not amortized; rather, they are tested for impairment at least annually.
The Company identifies its reporting units at the component level, which is one level below its operating segments. Generally, goodwill arises from acquisitions of specific operating companies and is assigned to the reporting unit in which the operating company resides. The Company’s reporting units are divisions that are one level below its operating segments and for which discrete financial information is prepared and regularly reviewed by segment management.
When testing goodwill for impairment, the Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the estimated fair value of a reporting unit is less than its carrying amount. If the Company performs a qualitative assessment and determines that an impairment is more likely than not, then performance of a quantitative impairment test is required. In conducting a qualitative assessment, the Company analyzes actual and forecasted net sales and selling profit for each reporting unit, as well as historical performance and the results of prior quantitative tests performed. Additionally, the Company assesses critical areas that may impact its business, including macroeconomic conditions, industry and market conditions, cost factors, or any relevant events and factors that may impact projected financial results.
If performed, the quantitative goodwill impairment test is performed using a discounted cash flow analysis to determine the fair value of each reporting unit, which considers cash flows discounted at an appropriate discount rate. The annual goodwill impairment test requires the Company to make a number of assumptions and estimates concerning future levels of revenue growth, operating margins, depreciation, amortization and working capital requirements, which are based on the Company’s long-range plan and are considered level 3 inputs. The discount rate is an estimate of the overall after-tax rate of return required by a market participant whose weighted average cost of capital includes both equity and debt, including a risk premium. While the Company uses the best available information to prepare its cash flow and discount rate assumptions, actual future cash flows or market conditions could differ significantly resulting in future impairment charges related to recorded goodwill balances.
During the fourth quarter of 2022, the Company completed its annual goodwill impairment tests and elected to perform a qualitative assessment.
The impairment test for indefinite-lived intangibles other than goodwill (primarily trademarks and trade names) consists of a comparison of the estimated fair value of the indefinite-lived intangible asset to the carrying value of the asset as of the impairment testing date. The Company estimates the fair value of its indefinite-lived intangibles using the relief from royalty method using level 3 inputs for revenue growth rates and royalty rates. The fair value derived from the relief from royalty method is measured as the discounted cash flow savings realized from owning such trademarks and trade names and not having to pay a royalty for their use.
The Company completed its required annual impairment tests in the fourth quarter of 2022, 2021, and 2020 and determined that the carrying values of the Company's goodwill were not impaired. The Company completed its required annual indefinite-lived intangibles impairment test as of October 1, 2022 and determined that the carrying values of certain of the Company's trademarks and trade names with indefinite lives were impaired as a result of higher discount rates driven by higher interest rates. As a result, during the fourth quarter of 2022, the Company recorded an immaterial non-cash impairment charge related to certain of the Company's trade names. The Company completed its required annual impairment tests in the fourth quarter of 2021 and 2020 and determined that the carrying values of the Company's other intangible assets with indefinite lives were not impaired.
45
AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Other intangible assets with finite lives are evaluated for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. The carrying value of other intangible assets with finite lives is considered impaired when the total projected undiscounted cash flows from the asset group are less than the carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of those assets. Fair value is determined primarily using present value techniques based on projected cash flows from the asset group.
Intangible assets, other than goodwill, with definite lives are amortized over their estimated useful lives. Patents and technology are being amortized over useful lives of nine to 20 years, with a weighted average life of 14 years. Customer relationships are being amortized over a period of ten to 20 years, with a weighted average life of 19 years. On a quarterly basis, the Company evaluates the reasonableness of the estimated useful lives of these intangible assets.
Financial Instruments and Foreign Currency Translation
Assets and liabilities of foreign operations are translated using exchange rates in effect at the balance sheet date and their results of operations are translated using average exchange rates for the year. Certain transactions of the Company and its subsidiaries are denominated in currencies other than their functional currency. Exchange gains and losses from those transactions are included in operating results for the year.
The Company makes infrequent use of derivative financial instruments. Forward contracts are primarily entered into from time to time to hedge debt or foreign currency transactions, thereby minimizing the Company’s exposure to foreign currency fluctuation.
In August 2018,instances where transactions are designated as hedges of an underlying item, the FASB issued ASU No.
 2018-14,gains and losses on those transactions are included in accumulated other comprehensive income within stockholders’ equity to the extent they are effective as hedges. An evaluation of hedge effectiveness is performed by the Company at inception and on an ongoing basis and any changes in the hedge are made as appropriate.
Leases
Compensation
–
Retirement Benefits
–
Defined Benefit Plans
–
General
(“ASU
 2018-14”),
which changesThe Company determines if an arrangement is a lease at inception. This determination generally depends on whether the disclosure requirementsarrangement conveys to the Company the right to control the use of ASC Topic 715,
Compensation
–
Retirement Benefits
, by eliminating, modifying and adding to those requirements. ASU
 2018-14
is effectivean explicitly or implicitly identified fixed asset for fiscal years beginning after December 15, 2020. Early adoption is permitted and the amendmentsa period of time in this ASU should be applied on a retrospective basis to all periods presented.exchange for consideration. The Company has not determinedlease agreements which include lease and non-lease components, which the impact ASUCompany has elected to account for as a single lease component for all classes of underlying assets. Lease expense for variable lease components are recognized when the obligation is probable.
 2018-14
may haveOperating leases are included in right-of-use ("ROU") assets, accrued liabilities and other, and other long-term liabilities on our consolidated balance sheets. Operating lease ROU assets and liabilities are recognized at commencement date based on the Company’s consolidated financial statement disclosures.
In August 2018, the FASB issued ASU No.
 2018-15,
Intangibles
–
Goodwill and Other
–
Internal-Use Software
(“ASU
 2018-15”),
that requires implementation costs incurred by customers in cloud computing arrangements to be deferred and recognizedpresent value of lease payments over the lease term. Operating lease payments are recognized as lease expense on a straight-line basis over the lease term. The Company has no finance leases. The Company primarily leases buildings (real estate) and automobiles which are classified as operating leases.
The lease term for all of the arrangement, if those costs would be capitalizedCompany’s leases includes the non-cancellable period of the lease plus any additional periods covered by either a Company option to extend (or not to terminate) the lease that the Company is reasonably certain to exercise, or an option to extend (or not to terminate) the lease controlled by the customer in a software licensing arrangement underlessor. Options for lease renewals have been excluded from the
internal-use
software guidance in ASC Topic 350,
Intangibles
–
Goodwill and Other
. ASU
 2018-15
requires a customer to disclose lease term (and lease liability) for the naturemajority of its hosting arrangements that are service contracts and provide disclosures as if the deferred implementation costs were a separate, major depreciable asset class. ASU
 2018-15
is effective for interim and annual periods beginning after December 15, 2019. The Company does not expect the adoption of ASU
2018-15
to have a material impact on the Company’s consolidated resultsleases as the reasonably certain threshold is not met.
Lease payments included in the measurement of operations, financial position, cash flowsthe lease liability are comprised of fixed and financial statement disclosures.variable payments that depend on an index or rate.
In June 2016, the FASB issued ASU No.
2016-13,
 Financial Instruments
–
Credit Losses (Topic 326): Measurement of Credit LossesVariable lease payments not dependent on Financial Instruments
(“ASU
2016-13”).
 The ASU replaces the incurred loss impairment methodology in current GAAPa rate or index associated with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The ASU is effective for the Company for interim and annual periods beginning on or after December 15, 2019. The Company does not expect the adoption of ASU
2016-13
to have a material impact on the Company’s consolidated results of operations, financial position, cash flows and financial statement disclosures.leases are recognized when the events, activities, or circumstances in the lease agreement on which those payments are
3. Revenues46
AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
assessed are probable. Variable lease payments are presented as operating expense in the Company’s income statement in the same line item as expense arising from fixed lease payments. Cash used in operations for operating leases is not materially different than total lease costs.


Revenue Recognition
Revenue is derived from sales of products and services. The Company’s products and services are marketed and sold worldwide through two operating groups: EIG and EMG. See Note 15 Descriptive Information about Reportable Segments.
The majority of the Company’s revenues on product sales arewere recognized at a point in time when the customer obtains control of the product. The transfer in control of the product to the customer was typically evidenced by one or more of the following: the customer having legal title to the product, the Company’s present right to payment, the customer’s physical possession of the product, the customer accepting the product, or the customer having the benefits of ownership or risk of loss. For a small percentage of sales where title and risk of loss transfers at the point of delivery, the Company recognized revenue upon delivery to the customer, which is the point that control transferred, assuming all other criteria for revenue recognition were met.
The Company determined that revenues from certain of its customer contracts met the criteria of satisfying its performance obligations over time, primarily in the areas of the manufacture of custom-made equipment and for service repairs of customer-owned equipment. Recognizing revenue over time for custom-manufactured equipment is based on the Company’s judgment that, in certain contracts, the product does not have an alternative use and the Company has an enforceable right to payment for performance completed to date.
The Company recognizes incremental cost of obtaining contracts as an expense when incurred if the amortization period of the contract cost assets that the Company would have otherwise recognized is one year or less. These costs are included in Selling, general and administrative expenses in the consolidated statement of income.
The determination of the revenue to be recognized in each period for performance obligations satisfied over time is based on the input method. The Company recognizes revenue over time as it performs on these contracts because the transfer of control to the customer occurs over time. Revenue is recognized based on the extent of progress towards completion of the performance obligation. The Company generally uses the total
cost-to-cost
input method of progress because it best depicts the transfer of control to the customer that occurs as costs are incurred. Under the
cost-to-cost
method, the extent of progress towards completion is measured based on the proportion of costs incurred to date to the total estimated costs at completion of the performance obligation. On certain contracts, labor hours are used as the measure of progress when it is determined to be a better depiction of the transfer of control to the customer due to the timing and pattern of labor hours incurred.
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Table of Contents
AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Performance obligations also include post-delivery service, installation and training. Post-delivery service revenues are recognized over the contract term. Installation and training revenues are recognized over the period the service is provided. Warranty terms in customer contracts can also be considered separate performance obligations if the warranty provides services beyond assurance that a product complies with agreed-upon specification or if a warranty can be purchased separately. The Company does not incur significant obligations for customer returns and refunds.
The Company has certain contracts with variable consideration in the form of volume discounts, rebates and early payment options, which may affect the transaction price used as the basis for revenue recognition. In these contracts, the amount of the variable consideration is allocated among the various performance obligations in the customer contract based on the relative standalone selling price of each performance obligation to the total standalone value of all the performance obligations.
47
AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Payment terms generally begin upon shipment of the product. The Company does have contracts with multiple billing terms that are all due within one year from when the product is delivered. No significant financing component exists. Payment terms are generally
30-60
 days from the time of shipment or customer acceptance, but terms can be shorter or longer, not exceeding one year. For customer contracts that have revenue recognized over time, revenue is generally recognized prior to a payment being due from the customer. In such cases, the Company recognizes a contract asset at the time the revenue is recognized. When payment becomes due based on the contract terms, the Company reduces the contract asset and records a receivable. In contracts with billing milestones or in other instances with a long production cycle or concerns about credit, customer advance payments are received. The Company may receive a payment in excess of revenue recognized to that date. In these circumstances, a contract liability is recorded. Contract liabilities are derecognized when the performance obligations are satisfied, and revenue is recognized.
Research and Development
Research and development costs are included in Cost of sales as incurred and were $198.8 million in 2022, $194.2 million in 2021 and $158.9 million in 2020.
Shipping and Handling Costs
Shipping and handling costs are included in Cost of sales and were $103.7 million in 2022, $86.1 million in 2021 and $56.8 million in 2020.
Share-Based Compensation
The Company expenses the fair value of share-based awards made under its share-based plans in the consolidated financial statements over their requisite service period of the grants.
Income Taxes
The Company conducts a broad range of operations around the world and is therefore subject to complex tax regulations in numerous international taxing jurisdictions, resulting at times in tax audits, disputes and potential litigation, the outcome of which is uncertain. Management must make judgments currently about such uncertainties and determine estimates of the Company’s tax assets and liabilities. To the extent the final outcome differs, future adjustments to the Company’s tax assets and liabilities may be necessary.
The Company assesses the realizability of its deferred tax assets, taking into consideration the Company’s forecast of future taxable income, available net operating loss carryforwards and available tax planning strategies that could be implemented to realize the deferred tax assets. Based on this assessment, management must evaluate the need for, and amount of, valuation allowances against the Company’s deferred tax assets. To the extent facts and circumstances change in the future, adjustments to the valuation allowances may be required.
The Company assesses the uncertainty in its tax positions, by applying a minimum recognition threshold which a tax position is required to meet before a tax benefit is recognized in the financial statements. Once the minimum threshold is met, using a more likely than not standard, a series of probability estimates is made for each item to properly measure and record a tax benefit. The tax benefit recorded is generally equal to the highest probable outcome that is more than 50% likely to be realized after full disclosure and resolution of a tax examination. The underlying probabilities are determined based on the best available objective evidence such as recent tax audit outcomes, published guidance, external expert opinion, or by analogy to the outcome of similar issues in the past. There can be no assurance that these estimates will ultimately be realized given continuous changes in tax policy, legislation and audit practice. The Company recognizes interest and penalties accrued related to uncertain tax positions in income tax expense.

48
AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Pensions
The Company has U.S. and foreign defined benefit and defined contribution pension plans. The key assumptions in determining the Company’s pension income or expense are the assumed pension liability discount rate and the expected return on plan assets. All unrecognized prior service costs, remaining transition obligations or assets and actuarial gains and losses have been recognized, net of tax effects, as a charge to accumulated other comprehensive income in stockholders’ equity and will be amortized as a component of net periodic pension cost. The Company uses a measurement date of December 31 (its fiscal year end) for its U.S. and foreign defined benefit plans.
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 for the years ended December 31:
202220212020
(In thousands)
Weighted average shares:
Basic shares230,208 230,955 229,435 
Equity-based compensation plans1,328 1,858 1,715 
Diluted shares231,536 232,813 231,150 

The calculation of diluted earnings per share for 2022 excluded an immaterial number of stock options because the exercise prices of these stock options exceeded the average market price of the Company’s common shares, and the effect of their inclusion would have been antidilutive. There were no antidilutive shares in 2021 and 2020.


2. Recent Accounting Pronouncements
Recently Adopted Accounting Pronouncement
In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 8050): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”), which provides a single comprehensive accounting model for the acquisition of contract balances under ASC 805. ASU 2021-08 is effective for fiscal years beginning after December 15, 2022. Early adoption is permitted. The Company early adopted the ASU on January 1, 2022, and the amendments in this ASU were applied on a prospective basis to all periods presented. The adoption of ASU 2021-08 did not impact the Company’s consolidated results of operations, financial position, cash flows or financial statement disclosures.


49
AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
3. Revenues
The outstanding contract asset and (liability)liability accounts were as follows:
20222021
(In thousands)
Contract assets – January 1$95,274 $68,971 
Contract assets – December 31119,741 95,274 
Change in contract assets – increase24,467 26,303 
Contract liabilities – January 1328,816 215,093 
Contract liabilities – December 31398,692 328,816 
Change in contract liabilities – (increase)(69,876)(113,723)
Net change$(45,409)$(87,420)
 
2019
  
2018
 
 
(In thousands)
 
Contract assets – January 1
 $
58,266
  $
32,658
 
Contract assets – December 31
  
73,039
   
58,266
 
         
Change in contract assets – increase
  
14,773
   
25,608
 
         
Contract liabilities – January 1
  
146,162
   
117,058
 
Contract liabilities – December 31
  
167,306
   
146,162
 
         
Change in contract liabilities – increase
  
(21,144
)  
(29,104
)
         
Net change
 $
(6,371
) $
(3,496
)
         
The net change in 20192022 and 2018
2021 was primarily driven by the receipt of advance payments from customers relating
to 2019 and 2018
acquisitionssignificantly exceeding the recognition of revenue as performance obligations were satisfied prior to billing.and customer advance payments from acquired businesses. For the years
ended December 31, 20192022 and 2018,2021, the Company recognized revenue of $130$272 million and $97$184 million, respectively, that was previously included in the beginning balance of contract liabilities.
Contract assets are reported as a component of Other current assets in the consolidated balance sheet. At December 31, 20192022 and 2018, $10.62021, $41.0 million and $8.9$30.1 million, respectively, of Customer advanced payments (contract liabilities) were recorded in Other long-term liabilities in the consolidated balance sheet.
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AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Applying the practical expedient available under ASC 606, theThe remaining performance obligations exceeding one year as of December 31, 20192022 and 20182021 were $233.3$526.0 million and $187.2$342.5 million, respectively. Remaining performance obligations represent the transaction price of firm, noncancelablenon-cancelable orders, with expected delivery dates to customers greater than one year from the balance sheet date, for which the performance obligation is unsatisfied or partially unsatisfied. These performance obligations will be substantially satisfied within two to three years.
Geographic Areas
Information about the Company’s operations in different geographic areas for the year ended December 31, 2019 is shown below. Net sales were attributed to geographic areas based on the location of the customer
.
.
             
 
2019
 
 
EIG
  
EMG
  
Total
 
 
(In thousands)
 
United States
 $
1,685,369
  $
998,317
  $
2,683,686
 
             
             
International
(1)
:
         
United Kingdom
  
64,423
   
132,485
   
196,908
 
European Union countries
  
434,072
   
392,283
   
826,355
 
Asia
  
773,034
   
186,535
   
959,569
 
Other foreign countries
  
365,983
   
126,056
   
492,039
 
             
             
Total international
  
1,637,512
   
837,359
   
2,474,871
 
             
Consolidated net sales
 $
3,322,881
  $
1,835,676
  $
5,158,557
 
             
(1)Includes U.S. export sales of $1,306.2 million.
Information about the Company’s operations in different geographic areas for the year ended December 31, 2018 is shown below. Net sales were attributed to geographic areas based on the location of the customer.
             
 
2018
 
 
EIG
  
EMG
  
Total
 
 
(In thousands)
 
             
United States
 $
1,446,974
  $
950,358
  $
2,397,332
 
             
             
International
(1)
:
         
             
United Kingdom
  
61,513
   
135,077
   
196,590
 
             
European Union countries
  
389,032
   
399,547
   
788,579
 
             
Asia
  
780,135
   
205,047
   
985,182
 
             
Other foreign countries
  
351,305
   
126,884
   
478,189
 
             
             
Total international
  
1,581,985
   
866,555
   
2,448,540
 
             
             
Consolidated net sales
 $
3,028,959
  $
1,816,913
  $
4,845,872
 
             
(1)Includes U.S. export sales of $1,269.4 million.
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AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Information about the Company’s operations in different geographic areas was as follows for the year ended December 31, 2017 is shown below. Net31:
2022
EIGEMGTotal
(In thousands)
United States$2,171,684 $982,579 $3,154,263 
International(1):
United Kingdom92,668 117,788 210,456 
European Union countries510,052 420,756 930,808 
Asia1,050,843 266,011 1,316,854 
Other foreign countries404,106 134,043 538,149 
Total international2,057,669 938,598 2,996,267 
Consolidated net sales$4,229,353 $1,921,177 $6,150,530 
_________________
(1)Includes U.S. export sales were attributed to geographic areas based on the location of the customer.
             
 
2017
 
 
EIG
  
EMG
  
Total
 
 
(In thousands)
 
             
United States
 $
1,284,570
  $
801,610
  $
2,086,180
 
             
             
International
(1)
:
         
             
United Kingdom
  
59,319
   
127,215
   
186,534
 
             
European Union countries
  
327,970
   
364,146
   
692,116
 
             
Asia
  
685,070
   
194,356
   
879,426
 
             
Other foreign countries
  
333,625
   
122,289
   
455,914
 
             
             
Total international
  
1,405,984
   
808,006
   
2,213,990
 
             
             
Consolidated net sales
 $
2,690,554
  $
1,609,616
  $
4,300,170
 
             
$1,688.7 million.
50
(1)
Includes U.S. export sales of $1,142.3 million
AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
2021
EIGEMGTotal
(In thousands)
United States$1,910,203 $890,737 $2,800,940 
International(1):
United Kingdom96,206 121,290 217,496 
European Union countries482,426 403,890 886,316 
Asia927,027 254,370 1,181,397 
Other foreign countries347,896 112,469 460,365 
Total international1,853,555 892,019 2,745,574 
Consolidated net sales$3,763,758 $1,782,756 $5,546,514 
_________________
(1)Includes U.S. export sales of $1,475.6 million.
2020
EIGEMGTotal
(In thousands)
United States$1,513,967 $816,159 $2,330,126 
International(1):
United Kingdom54,158 117,469 171,627 
European Union countries371,884 324,203 696,087 
Asia769,532 189,987 959,519 
Other foreign countries280,387 102,283 382,670 
Total international1,475,961 733,942 2,209,903 
Consolidated net sales$2,989,928 $1,550,101 $4,540,029 
_________________
(1)Includes U.S. export sales of $1,196.4 million

Major Products and Services
The Company’s major products and services in the reportable segments were as follows for the year ended December 31:
             
 
2019
 
 
EIG
  
EMG
  
Total
 
 
(In thousands)
 
Process and analytical instrumentation
 $
2,393,587
  $
—  
  $
2,393,587
 
Aerospace and power
  
929,294
   
491,171
   
1,420,465
 
Automation and engineered solutions
  
—  
   
1,344,505
   
1,344,505
 
             
Consolidated net sales
 $
3,322,881
  $
1,835,676
  $
5,158,557
 
             
             
 
2018
 
 
EIG
  
EMG
  
Total
 
 
(In thousands)
 
Process and analytical instrumentation
 $
2,120,448
  $
—  
  $
2,120,448
 
Aerospace and power
  
908,511
   
456,517
   
1,365,028
 
Automation and engineered solutions
  
—  
   
1,360,396
   
1,360,396
 
             
Consolidated net sales
 $
3,028,959
  $
1,816,913
  $
4,845,872
 
             
2022
EIGEMGTotal
(In thousands)
Process and analytical instrumentation$3,061,263 $— $3,061,263 
Aerospace and power1,168,090 549,735 1,717,825 
Automation and engineered solutions— 1,371,442 1,371,442 
Consolidated net sales$4,229,353 $1,921,177 $6,150,530 
5451
AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
2021
EIGEMGTotal
(In thousands)
Process and analytical instrumentation$2,627,476 $— $2,627,476 
Aerospace and power1,136,282 506,925 1,643,207 
Automation and engineered solutions— 1,275,831 1,275,831 
Consolidated net sales$3,763,758 $1,782,756 $5,546,514 
2020
EIGEMGTotal
(In thousands)
Process and analytical instrumentation$2,199,167 $— $2,199,167 
Aerospace and power790,761 466,343 1,257,104 
Automation and engineered solutions— 1,083,758 1,083,758 
Consolidated net sales$2,989,928 $1,550,101 $4,540,029 


Timing of Revenue Recognition
The Company’s timing of revenue recognition was as follows for the year ended December 31:
 
2019
 2022
 
EIG
  
EMG
  
Total
 EIGEMGTotal
 
(In thousands)
 (In thousands)
Products transferred at a point in time
 $
2,680,296
  $
1,670,448
  $
4,350,744
 Products transferred at a point in time$3,471,118 $1,680,558 $5,151,676 
Products and services transferred over time
  
642,585
   
165,228
   
807,813
 Products and services transferred over time758,235 240,619 998,854 
         
Consolidated net sales
 $
3,322,881
  $
1,835,676
  $
5,158,557
 Consolidated net sales$4,229,353 $1,921,177 $6,150,530 
         
2021
EIGEMGTotal
(In thousands)
Products transferred at a point in time$3,048,819 $1,596,911 $4,645,730 
Products and services transferred over time714,939 185,845 900,784 
Consolidated net sales$3,763,758 $1,782,756 $5,546,514 
2020
EIGEMGTotal
(In thousands)
Products transferred at a point in time$2,427,254 $1,390,574 $3,817,828 
Products and services transferred over time562,674 159,527 722,201 
Consolidated net sales$2,989,928 $1,550,101 $4,540,029 
 
2018
 
 
EIG
  
EMG
  
Total
 
 
(In thousands)
 
Products transferred at a point in time
 $
2,533,718
  $
1,690,124
  $
4,223,842
 
Products and services transferred over time
  
495,241
   
126,789
   
622,030
 
             
Consolidated net sales
 $
3,028,959
  $
1,816,913
  $
4,845,872
 
             

52
AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Product Warranties
The Company provides limited warranties in connection with the sale of its products. The warranty periods for products sold vary among the Company’s operations, but the majority do not exceed one year. The Company calculates its warranty expense provision based on its historical warranty experience and adjustments are made periodically to reflect actual warranty expenses. Product warranty obligations are reported as a component of Accrued liabilities and other in the consolidated balance sheet.
Changes in the accrued product warranty obligation were as follows:
 
2019
  
2018
  
2017
 
 
(In thousands)
 202220212020
 (In thousands)
Balance at the beginning of the year
 $
23,482
  $
22,872
  $
22,007
 Balance at the beginning of the year$27,478 $27,839 $27,611 
Accruals for warranties issued during the year
  
21,145
   
13,897
   
15,951
 Accruals for warranties issued during the year11,414 11,518 12,000 
Settlements made during the year
  
(19,637
)  
(14,509
)  
(17,854
)Settlements made during the year(11,835)(13,669)(14,602)
Warranty accruals related to acquired businesses and other during the year
  
2,621
   
1,222
   
2,768
 Warranty accruals related to acquired businesses and other during the year(570)1,790 2,830 
         
Balance at the end of the year
 $
27,611
  $
23,482
  $
22,872
 Balance at the end of the year$26,487 $27,478 $27,839 
         

4. 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. See Note 6 for discussion of acquisition date fair value of contingent payment liability.
The Company utilizes a valuation hierarchy for disclosure of the inputs to the valuations used to measure fair value. ThisThe hierarchy prioritizes the inputs into three broad levels as follows. follows:
Level 1 inputs are- quoted prices (unadjusted) in active markets for identical assets or liabilities. liabilities
Level 2 inputs are- quoted prices for similar assets
55
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AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
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. instrument
Level 3 inputs are- unobservable inputs based on the Company’s own assumptions used to measure assets and liabilities at fair value. 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 providestables provide the Company’s assets and liabilities that are measured at fair value on a recurring basis consistent with the fair value hierarchy, at December 31:
 
2019
  
2018
 
 
Fair Value
  
Fair Value
 
 
(In thousands)
 
Mutual fund investments
 $
8,390
  $
7,655
 
2022
TotalLevel 1Level 2Level 3
(In thousands)
Mutual fund investments$9,856 $9,856 $— $— 
Foreign currency forward contracts3,032 — 3,032 — 
53
AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
2021
TotalLevel 1Level 2Level 3
(In thousands)
Mutual fund investments$10,703 $10,703 $— $— 
The fair value of mutual fund investments which are valued as level 1 investments, wasis based on quoted market prices. The mutual fund investments are shown as a component of long-term assets in the consolidated balance sheet.
For the years ended December 31, 20192022 and 2018,2021, gains and losses on the investments noted abovewere not significant.
Foreign Currency
At December 31, 2022 the Company had a Euro forward contract for a total notional value of 40.0 million Euros and a Canadian dollar forward contract for a notional value of 26.5 million dollars. At December 31, 2021 the Company had no foreign currency forward contracts outstanding. Foreign currency forward contracts are valued as level 2 assets as they are corroborated by foreign currency exchange rates and shown as a component of other current assets in the consolidated balance sheet. For the year ended December 31, 2022 and 2021, realized gains and losses on foreign currency forward contracts were not significant. NaN transfers between level 1 and level 2 investments occurred during the years ended December 31, 2019 and 2018.The Company does not typically designate its foreign currency forward contracts as accounting hedges.
Financial Instruments
Cash, cash equivalents and mutual fund investments are recorded at fair value at December 31, 20192022 and 20182021 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 December 31:
 
2019
  
2018
 
 
Recorded
Amount
  
Fair Value
  
Recorded
Amount
  
Fair Value
 
 
(In thousands)
 
Long-term debt, net (including current portion)
 $
(2,382,041
) $
(2,531,549
) $
(2,378,809
) $
(2,368,676
)
The fair value of
short-term
borrowings, net approximates the carrying value. Short-term borrowings, net are valued as level 2 liabilities as they are corroborated by observable market data. The Company’s long-term debt, net is all privately held with no public market for this debt, therefore, the fair value of long-term debt, net was computed based on comparable current market data for similar debt instruments and is considered to be a level 3 liability. At December 31, 2022 and 2021, the fair value of long-term debt (including current portion) was $2,010.9 million and $2,378.9 million and the recorded amount of long-term debt (including current portion) was $2,161.6 million and $2,233.7 million, respectively. See Note 10 for long-term debt principal amounts, interest rates and maturities.
Foreign Currency
At December 31, 2019, the Company had a Canadian dollar forward contract for a total notional value of 14.0 million Canadian dollars ($0.1 million fair value unrealized gain at December 31, 2019) outstanding. At December 31, 2018, the Company had a Canadian dollar forward contract for a total notional value of 30.0 million Canadian dollars ($1.0 million fair value unrealized loss at December 31, 2018) outstanding. At December 31, 2017, the Company had a Canadian dollar forward contract for a total notional value of
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AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
83.0 million Canadian dollars ($1.5 million fair value unrealized gain at December 31, 2017) which settled in the first quarter of 2018. For the year ended December 31, 2019 and 2018, realized gains and losses on foreign currency forward contracts were not significant. The Company does not typically designate its foreign currency forward contracts as accounting hedges.
5. 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 December 31, 2019,2022, and 2018,2021, these net investment hedges included British-pound-British-pound and Euro-denominated long-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 instruments (the debt) following hedge designation is reported in accumulated other comprehensive income in the same manner as the translation adjustment on the hedged investment based on changes in the spot rate, which is used to measure hedge effectiveness.
At December 31, 20192022 and 2018,2021, the Company had $404.7$271.7 million and $389.2$304.6 million, respectively, of British-pound-denominatedBritish-pound denominated loans, which were designated as a hedge against the net investment in British pound functional currency foreign subsidiaries. At December 31, 20192022 and 2018,2021, the Company had $645.6$572.1 million and $658.7$654.1 million, respectively, in Euro-denominated loans, which were designated as a hedge against the net investment in Euro functional currency foreign subsidiaries. As a result of the British-pound-British-pound and Euro-denominated loans being designated and 100% effective as net investment hedges, $2.4$69.5 million of
pre-tax
currency remeasurement losses and $50.8$51.7 million of
pre-tax
currency remeasurement gainslosses have been included in the foreign currency translation component of other comprehensive income for the years ended December 31, 20192022 and 2018,2021, respectively.
6. Acquisitions54
AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

6. Acquisitions and Divestiture
Acquisitions
The Company spent $1,061.9$429.7 million in cash, net of cash acquired, to acquire Pacific Design Technologies,Navitar, Inc. (“PDT”("Navitar") in September 20192022 and GatanRTDS Technologies Inc. ("RTDS") in October 2019. PDT designs2022. Navitar is a market leader in the design, development and manufactures a complete rangemanufacturing of custom-engineered, liquid coolingcustomized, fully integrated optical imaging systems, cameras, components and components used in a broad set of current and next-generation commercial aerospace, defense and space platforms. Gatansoftware. RTDS is a leading manufacturerprovider of instrumentationreal-time power simulation systems used by utilities, and software used to enhanceresearch and extendeducation institutions in the operationdevelopment and performancetesting of electron microscopes. PDT is part of EMGthe electric power grid and Gatan isrenewable energy applications. Navitar and RTDS are part of EIG.


The following table represents the allocation of the aggregate purchase price for the net assets of the 20192022 acquisitions based on theirthe estimated fair values at acquisition (in millions):
 
PDT
  
Gatan
  
Total
 
Property, plant and equipment
 $
1.0
  $
8.8
  $
9.8
 
Goodwill
  
42.3
   
398.9
   
441.2
 
Other intangible assets
  
70.0
   
487.6
   
557.6
 
Long-term assets
  
1.7
   
11.8
   
13.5
 
Long-term liabilities
  
(1.3
)  
(5.0
)  
(6.3
)
Net working capital and other
(1)
  
9.7
   
36.4
   
46.1
 
             
Total cash paid
 $
123.4
  $
938.5
  $
1,061.9
 
             
(1)Includes $8.1 million in accounts receivable at PDT
Property, plant and $37.9 million in accounts receivable at Gatan, whose fair value, contractualequipment$11.8
Goodwill197.8
Other intangible assets213.3
Deferred income taxes(23.5)
Net working capital and other(1)
30.3
Total cash flows and expected cash flows are approximately equal.paid$429.7
______________________
(1)Includes $18.4 million in accounts receivable, whose fair value, contractual cash flows and expected cash flows are approximately equal.
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AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The amount allocated to goodwill is reflective of the benefits the Company expects to realize from the 2019Navitar and RTDS acquisitions. PDT enhancesNavitar's market leading optical components and solutions complement the Company’s position inCompany's existing optics portfolio. RTDS' products and solutions complement the aerospace and defense sectors with its innovative technology and differentiated solutions in thermal management systems. Gatan’s differentiated technology solutions, premier brand and leadership positions in growth markets complements the Company’sCompany's existing portfolio of specialized offerings in
high-end
analytical instrumentation. power instruments businesses. The Company expects approximately $431$71.4 million of the goodwill recorded relating to the 2019 acquisitions will be tax deductible in future years.
At December 31, 2019,2022, the purchase price allocated to other intangible assets of $557.6$213.3 million consists of $73.0$37.2 million of indefinite-lived intangible trade names, which are not subject to amortization. The remaining $484.6$176.1 million of other intangible assets consists of $371.1$120.1 million of customer relationships, which are being amortized over a period of 17 to 2019 years and $113.5$56.0 million of purchased technology, which is being amortized over a period of 1511 to 1715 years. Amortization expense for each of the next five years for the 2019 acquisitions is expected to approximate $28be $11.1 million per year.
The Company is in the process of finalizing the measurement of certain tangible andthe intangible assets and tangible assets and liabilities, for its 2019 acquisitions of PDT and Gatan including inventory, property, plant and equipment, goodwill, trade names, customer relationships and purchased technology and theas well as accounting for income taxes.
taxes, for Navitar and RTDS.
The 2019 acquisitions had an immaterial impact on reported net sales, net income, and diluted earnings per share for the year ended December 31, 2019.2022. Had the 2019 acquisitions been made at the beginning of 20192022 or 2018, unaudited2021, pro forma net sales, net income, and diluted earnings per share for the yearsyear ended December 31, 20192022 and 2018, respectively,2021, would not have been materially different than the amounts reported.
In 2018,2021, the Company spent $1,129.3 million
in cash, net of cash acquired, to acquire FMH Aerospace (“FMH”) in January 2018, SoundCom Systems (“SoundCom”) in April 2018, Motec GmbH in June 2018, Forza Silicon Corporation (“Forza”), Telular Corporation in October 2018 and Spectro Scientific Corporation in November 2018. FMH is a provider of complex, highly-engineered solutions for the aerospace, defense and space industries. SoundCom provides design, integration, installation and support of clinical workflow and communication systems for healthcare facilities, educational institutions and corporations. SoundCom also serves as a value-added reseller for Rauland-Borg Corporation (“Rauland”) in the Midwest portion of the United States. Motec is a provider of integrated vision systems serving the high growth mobile machine vision market. Motec’s ruggedized vision products and integrated software solutions provide customers with improved operational efficiency and enhanced safety across a variety of critical mobile machine applications in transportation, agriculture, logistics and construction. Forza is a leader in the design and production of high-performance imaging sensors used in medical, defense and industrial applications. Telular (total consideration paid of $525 million) is a provider of communication solutions for logistics management, tank monitoring and security applications. Spectro Scientific is a provider of machine condition monitoring solutions for critical assets in high-value industrial applications. FMH is part of EMG. SoundCom, Motec, Forza, Telular and Spectro Scientific are part of EIG.
In 2019, the Company finalized the measurements of certain tangible and intangible assets and liabilities for its 2018 acquisitions, which had no material impact to the consolidated statement of income.
In 2017, the Company spent $556.6$1,959.2 million in cash, net of cash acquired, to acquire RaulandMagnetrol International ("Magnetrol"), Crank Software, and EGS Automation ("EGS") in February 2017, MOCON,March 2021, NSI-MI Technologies ("NSI-MI") and Abaco Systems, Inc. ("Abaco") in June 2017April 2021, and Arizona Instrument LLCAlphasense in December 2017. The Rauland acquisition included a $30 million contingent payment due upon the achievement of certain milestones as described further below. RaulandNovember 2021. Magnetrol is a globalleading provider of enterprise clinicallevel and education communicationsflow control solutions for hospitals, healthcare systemschallenging process applications across a diverse set of end markets including medical, pharmaceutical, oil and educational facilities. MOCONgas, food and beverage, and general industrial. Crank Software is a leading provider of laboratoryembedded graphical user interface software and field gas analysis instrumentation to research laboratories, production facilities and quality control departments
services. EGS is an automation solutions
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AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
provider that designs and manufactures highly engineered, customized robotic solutions used in critical applications for the medical, food and beverage, pharmaceutical and general industrial applications. Arizona Instrumentmarkets. NSI-MI is a provider of differentiated, high-precision moisture and gas measurement instruments in food, pharmaceutical and environmental markets. Rauland, MOCON and Arizona Instrument are part of EIG.
The Rauland acquisition included a potential $30 million contingent payment due upon Rauland achieving a certain cumulative revenue target over the period October 1, 2016 to September 30, 2018. At the acquisition date, the estimated fair value of the contingent payment liability was $25.5 million, which was based on a probabilistic approach using level 3 inputs. At September 30, 2018, Rauland achieved the target. The $30.0 million contingent payment was made in the fourth quarter of 2018.
Assets Held for Sale
The Company and Kymera International entered into a definitive agreement for the sale of its Reading Alloys (“Reading”) business for $250.0 million in cash. The transaction is expected to close in first quarter of 2020 and is subject to customary closing conditions. Reading is part of EMG. 
At December 31, 2019, the Company’s consolidated balance sheet contained assets held for sale of $119.6 
million, including goodwill of $49.7 million, long-lived assets of $39.8 million and current assets of $30.1 million. The Company’s consolidated balance sheet contained liabilities held for sale
of $23.4 million.
Subsequent Event
In January 2020, the Company acquired IntelliPower, a leading provider of high-reliability,radio frequency and microwave test and measurement systems for niche applications across the aerospace, defense, automotive, wireless communications, and research markets. Abaco specializes in open-architecture computing and electronic systems for aerospace, defense, and specialized industrial markets and is a leading provider of mission critical embedded computing systems. Alphasense is a leading provider of gas and particulate sensors for use in environmental, health and safety, and air quality applications. Magnetrol, Crank Software, NSI-MI, Abaco, and Alphasense are part of EIG. EGS is part of EMG.
In 2020, the Company spent $116.5 million in cash, net of cash acquired, to acquire IntelliPower in January 2020. IntelliPower designs and manufactures a broad portfolio of ruggedized uninterruptablesolutions including uninterruptible power systems, servingexternal battery packs, power distribution units and power conditioners. IntelliPower was privately held and is headquartered in Orange, California. IntelliPower is part of EIG.
Divestiture
The Company completed its sale of Reading Alloys to Kymera International in March 2020 for net cash proceeds of  $245.3 million. The transaction resulted in a wide rangepre-tax gain of defense$141.0 million, recorded in Other Income (expense) in the Consolidated Statement of Income, and industrial applications, for approximately $115 million. IntelliPower has annual salesincome tax expense of approximately $40 million. IntelliPower will join EIG. 
$31.4 million in connection with the sale. Reading Alloys revenue and costs were reported within the EMG segment through the date of sale.

7. Goodwill and Other Intangible Assets
The changes in the carrying amounts of goodwill by segment were as follows:
      
 
EIG
  
EMG
  
Total
 EIGEMGTotal
 
(In millions)
 (In millions)
 
Balance at December 31, 2017
 $
2,077.0
  $
1,038.6
  $
3,115.6
 
 
Goodwill acquired
  
396.2
   
139.0
   
535.2
 
 
Purchase price allocation adjustments and other
  
(1.6
)  
—  
   
(1.6
)
 
Foreign currency translation adjustments
  
(19.6
)  
(17.6
)  
(37.2
)
            
 
Balance at December 31, 2018
  
2,452.0
   
1,160.0
   
3,612.0
 
Balance at December 31, 2020Balance at December 31, 2020$3,050.3 $1,174.6 $4,224.9 
Goodwill acquired
  
398.9
   
42.3
   
441.2
 Goodwill acquired1,037.9 5.9 1,043.8 
Purchase price allocation adjustments and other
  
35.5
   
(50.0
)  
(14.5
)Purchase price allocation adjustments and other1.9 — 1.9 
Foreign currency translation adjustments
  
5.8
   
3.0
   
8.8
 Foreign currency translation adjustments(16.3)(15.6)(31.9)
            
Balance at December 31, 2019
 $
2,892.2
  $
1,155.3
  $
4,047.5
 
            
Balance at December 31, 2021Balance at December 31, 20214,073.8 1,164.9 5,238.7 
Goodwill acquiredGoodwill acquired197.8 — 197.8 
Purchase price allocation adjustments and otherPurchase price allocation adjustments and other1.8 — 1.8 
Foreign currency translation adjustmentsForeign currency translation adjustments(37.3)(28.4)(65.7)
Balance at December 31, 2022Balance at December 31, 2022$4,236.1 $1,136.5 $5,372.6 


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Other intangible assets were as follows at December 31:
    
 
2019
  
2018
 20222021
 
(In thousands)
 (In thousands)
Definite-lived intangible assets (subject to amortization):
      Definite-lived intangible assets (subject to amortization):
Patents
 $
47,872
  $
51,348
 Patents$46,418 $48,071 
Purchased technology
  
517,464
   
405,204
 Purchased technology722,277 677,896 
Customer lists
  
2,282,184
   
1,966,709
 Customer lists3,023,762 2,930,120 
        3,792,457 3,656,087 
  
2,847,520
   
2,423,261
 
        
Accumulated amortization:
      Accumulated amortization:
Patents
  
(36,697
)  
(37,768
)Patents(37,215)(37,713)
Purchased technology
  
(164,231
)  
(127,363
)Purchased technology(269,155)(235,989)
Customer lists
  
(625,591
)  
(538,504
)Customer lists(1,033,658)(888,092)
        (1,340,028)(1,161,794)
  
(826,519
)
   
(703,635
)
 
        
Net intangible assets subject to amortization
  
2,021,001
   
1,719,626
 Net intangible assets subject to amortization2,452,429 2,494,293 
        
Indefinite-lived intangible assets (not subject to amortization):
      Indefinite-lived intangible assets (not subject to amortization):
Trademarks and trade names
  
741,871
   
684,145
 Trademarks and trade names889,656 874,336 
        
 $
2,762,872
  $
2,403,771
 
        $3,342,085 $3,368,629 

Amortization expense was $132.6$205.8 million, $114.1$183.6 million, and $101.2$154.0 for the years ended December 31, 2019, 20182022, 2021 and 2017,2020, respectively. Amortization expense for each of the next five years is expected to approximate $158$204 million per year, not considering the impact of potential future acquisitions.



57
AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
8. Other Consolidated Balance Sheet Information
 
December 31,
 December 31,
 
2019
  
2018
 20222021
 
(In thousands)
 (In thousands)
INVENTORIES, NET
      INVENTORIES, NET
Finished goods and parts
 $
99,773
  $
107,289
 Finished goods and parts$130,989 $89,985 
Work in process
  
118,240
   
117,899
 Work in process138,043 122,356 
Raw materials and purchased parts
  
406,554
   
399,556
 Raw materials and purchased parts775,252 556,834 
      $1,044,284 $769,175 
 $
624,567
  $
624,744
 
      
PROPERTY, PLANT AND EQUIPMENT, NET
      PROPERTY, PLANT AND EQUIPMENT, NET
Land
 $
33,516
  $
41,751
 Land$55,915 $41,709 
Buildings
  
295,891
   
315,250
 Buildings365,679 343,996 
Machinery and equipment
  
1,074,643
   
1,022,362
 Machinery and equipment1,199,600 1,149,316 
      1,621,194 1,535,021 
  
1,404,050
   
1,379,363
 
Less: Accumulated depreciation
  
(855,142
)  
(825,233
)Less: Accumulated depreciation(985,553)(917,883)
      $635,641 $617,138 
ACCRUED LIABILITIES AND OTHERACCRUED LIABILITIES AND OTHER
Employee compensation and benefitsEmployee compensation and benefits$213,478 $205,994 
Product warranty obligationProduct warranty obligation26,487 27,478 
RealignmentRealignment34,394 30,476 
Short term lease liabilityShort term lease liability46,366 47,353 
 $
548,908
  $
554,130
 
      
OtherOther114,419 132,036 
$435,144 $443,337 


60
58
AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
 
 
December 31,
 
 
 
2019
  
2018
 
 
 
(In thousands)
 
ACCRUED LIABILITIES
 AND OTHER
      
Employee compensation and benefits
 $
137,951
  $
150,006
 
Product warranty obligation
  
27,611
   
23,482
 
Restructuring
  
23,825
   
24,149
 
Short term lease liability
  
43,025
   
—  
 
Liabilities held for sale
  
23,405
   
—  
 
Contingent purchase price
  
—  
   
3,000
 
Other
  
108,263
   
113,794
 
         
 $
364,080
  $
314,431
 
         
 
2019
  
2018
  
2017
 
 
(In thousands)
 
             
ALLOWANCES FOR POSSIBLE LOSSES ON ACCOUNTS RECEIVABLE
         
             
Balance at the beginning of the year
 $
9,270
  $
10,401
  $
10,257
 
Additions charged to expense
  
2,835
   
1,667
   
2,800
 
Write-offs
  
(819
)  
(2,335
)  
(3,208
)
Foreign currency translation adjustments and other
  
(43
)  
(463
)  
552
 
             
Balance at the end of the year
 $
11,243
  $
9,270
  $
10,401
 
             
9. Income Taxes
The components of income before income taxes and the details of the provision for income taxes were as follows for the years ended December 31:
 
2019
  
2018
  
2017
 
 
(In thousands)
 202220212020
 (In thousands)
Income before income taxes:
         Income before income taxes:
Domestic
 $
766,436
  $
555,077
  $
447,853
 Domestic$893,478 $958,206 $810,844 
Foreign
  
303,312
   
432,668
   
348,876
 Foreign535,214 264,964 271,465 
         
Total
 $
1,069,748
  $
987,745
  $
796,729
 Total$1,428,692 $1,223,170 $1,082,309 
         
Provision for income taxes:
         Provision for income taxes:
Current:
         Current:
Federal
 $
88,526
  $
204,712
  $
127,874
 Federal$183,619 $99,706 $126,427 
Foreign
  
81,452
   
51,686
   
71,846
 Foreign119,148 146,890 61,672 
State
  
19,093
   
27,096
   
6,744
 State34,201 16,282 19,932 
         
Total current
  
189,071
   
283,494
   
206,464
 Total current336,968 262,878 208,031 
         
Deferred:
         Deferred:
Federal
  
18,005
   
(62,095
)  
(97,465
)Federal(37,810)23,538 (1,254)
Foreign
  
(29
)  
(3,872
)  
6,204
 Foreign(20,818)(56,572)(4,072)
State
  
1,404
   
(7,715
)  
56
 State(9,190)3,273 7,165 
         
Total deferred
  
19,380
   
(73,682
)  
(91,205
)Total deferred(67,818)(29,761)1,839 
         
Total provision
 $
208,451
  $
209,812
  $
115,259
 Total provision$269,150 $233,117 $209,870 
         

61
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AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Significant components of the deferred tax (asset) liability were as follows at December 31:
 
2019
  
2018
 20222021
 
(In thousands)
 (In thousands)
Noncurrent deferred tax (asset) liability:
      
Non-current deferred tax (asset) liability:Non-current deferred tax (asset) liability:
Differences in basis of property and accelerated depreciation
(1)
 $
45,747
  $
46,103
 
Differences in basis of property and accelerated depreciation (1)
$43,594 $44,199 
Reserves not currently deductible
  
(44,239
)  
(41,159
)Reserves not currently deductible(131,958)(118,578)
Pensions
  
39,820
   
29,624
 Pensions66,558 63,329 
Differences in basis of intangible assets and accelerated amortization
  
537,534
   
554,597
 Differences in basis of intangible assets and accelerated amortization726,525 768,542 
Net operating loss carryforwards
  
(41,782
)  
(52,142
)Net operating loss carryforwards(54,318)(44,164)
Share-based compensation
  
(12,060
)  
(15,399
)Share-based compensation(13,279)(12,728)
Foreign Tax Credit Carryforwards
  
(333
)  
—  
 Foreign Tax Credit Carryforwards(2,317)(2,291)
Unremitted earnings
  
12,977
   
12,598
 Unremitted earnings12,429 11,361 
Other
  
(20,889
)  
(24,492
)Other(13,448)(28,343)
      633,786 681,327 
 
516,775
  
509,730
 
Less: Valuation allowance
  
7,146
   
8,634
 Less: Valuation allowance9,613 11,349 
      643,399 692,676 
 
523,921
  
518,364
 
Portion included in noncurrent assets
  
12,219
   
9,972
 
      
Gross noncurrent deferred tax liability
 $
536,140
  $
528,336
 
      
Portion included in non-current assetsPortion included in non-current assets50,868 26,999 
Gross non-current deferred tax liabilityGross non-current deferred tax liability$694,267 $719,675 
______________________
(1)Presented net of deferred tax assets of approximately $34.1 million and $33.3 million at December 31, 2022 and 2021, respectively, resulting from lease obligations.
59
(1)Presented net of deferred tax asset of approximately $35.1 million at December 31, 2019, associated with the January 1, 2019 adoption of ASC 842.
AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The Company’s effective tax rate reconciles to the U.S. Federal statutory rate as follows for the years ended December 31:
 
2019
  
2018
  
2017
 202220212020
U.S. Federal statutory rate
  
21.0
%  
21.0
%  
35.0
%U.S. Federal statutory rate21.0 %21.0 %21.0 %
State income taxes, net of federal income tax benefit
  
1.8
   
1.2
   
0.4
 State income taxes, net of federal income tax benefit1.6 1.5 2.3 
Foreign operations, net
  
(0.9
)  
(0.1
)  
(6.8
)Foreign operations, net(1.0)(0.4)(1.4)
U.S. Benefits for Manufacturing, Export and credits
  
(2.0
)  
(1.8
)  
(1.8
)U.S. Benefits for Manufacturing, Export and credits(2.9)(2.6)(1.9)
Uncertain Tax Items
  
(1.0
)  
1.7
   
0.4
 Uncertain Tax Items1.0 (0.1)(1.3)
Stock compensation
  
(1.5
)  
(0.5
)  
(1.5
)Stock compensation(0.9)(1.7)(1.0)
Net deferred tax revaluation
  
—  
   
(0.1
)  
(23.3
)
US Tax on Foreign Earnings
  
2.3
   
(0.1
)  
11.9
 
U.S. Tax on Foreign EarningsU.S. Tax on Foreign Earnings0.5 3.9 2.2 
U.S. General Basket FTCU.S. General Basket FTC(0.1)(2.9)(0.1)
Other
  
(0.2
)  
(0.1
)  
0.2
 Other(0.4)0.3 (0.5)
         
Consolidated effective tax rate
  
19.5
%  
21.2
%  
14.5
%Consolidated effective tax rate18.8 %19.1 %19.4 %
         
On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act, which is also commonly referred to as “U.S. tax reform,” significantly changes U.S. corporate income tax laws by, among other things, reducing the U.S. corporate income tax rate to 21% starting in 2018 and creating a territorial tax system with a
one-time
mandatory tax on previously deferred foreign earnings of U.S. subsidiaries. As a result, in the fourth quarter of 2017, the Company recorded a net benefit of $91.6 million in the consolidated statement of income as a component of Provision for income taxes. The $91.6 million net benefit consisted of a
62
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AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
$185.8 million benefit resulting from the remeasurement of the Company’s net deferred tax liabilities in the U.S. based on the new lower corporate income tax rate and $94.2 million expense mostly relating to the
one-time
mandatory tax on previously deferred earnings of certain
non-U.S.
subsidiaries that are owned either wholly or partially by a U.S. subsidiary of the Company as discussed further below.
During 2018 the Company finalized the calculations of the Tax Act transitional tax items and reported a favorable $11.8 million tax benefit of which $10.4 million relates to the
one-time
mandatory deemed repatriation tax and $1.4 million relates to the remeasurement of the net deferred tax liabilities in the U.S. for the impact of the lower tax rates. The Company elected to pay the cash tax cost of the
one-time
mandatory tax on previously deferred earnings of
non-U.S.
subsidiaries over an eight-year period. As of December 31, 2019,2022, the Company has a remaining cash tax obligation of $35.9 
million, all of which NaN is payable within the next twelve
months.classified as non-current.
The Company has evaluated the impact of the global intangible
low-taxed
income (“GILTI”) section of the Tax Act and has made a tax accounting policy election to record the annual tax cost of GILTI as a current period expense when incurred and, as such, will not be measuring an impact of GILTI in its determination of deferred taxes.
As a result of the
one-time
mandatory deemed repatriation and the taxable inclusions under the GILTI provisions of the Tax Act, the Company has approximately $404.0 
$898.0 million in previously taxed income (“PTI”) as of December 31, 20192022 which can be repatriated without incremental U.S. Federal tax. The Company intends to reinvest its earnings indefinitely in operations outside the United States except to the extent of the PTI. There has been no provision for U.S. deferred income taxes for the undistributed earnings over PTI of approximately $714.0$60.4 million and $828.0$186.4 million at December 31, 20192022 and 20182021 respectively because determination of the amount of the unrecognized deferred income tax liability on these undistributed earnings is not practicable.
As of December 31, 2019,2022, and 2018,2021, the Company recorded deferred income taxes totaling $13.0$12.4 million and $12.6$11.4 million respectively in state income and foreign withholding taxes expected to be incurred when the cash amounts related to the mandatory tax are ultimately repatriated to the U.S.
The Company is acquisitive and at times acquires entities with tax attributes (net operating losses or tax credits) that carry over to post-acquisition tax periods of the Company. At December 31, 2019,2022, the Company had 
tax effected benefits, net of $41.8uncertain tax positions of $54.3 million related to net operating loss carryforwards, which will be available to offset future income taxes payable, subject to certain annual or other limitations based on foreign and U.S. tax laws. This amount includes net operating loss carryforwards of $23.4$2.2 million for federal income tax purposes with no valuation allowance $15.7for the U.S. consolidated group, $10.7 million for state income tax purposes with noa valuation allowance of $2.7 million, and $2.7$41.4 million for foreign income tax purposes with a valuation allowance of $2.6$2.7 million. These net operating loss carryforwards, if not used, will expire between 20202023 and 2039.2042.
At December 31, 2019,2022, the Company had tax effected benefits of $8.2$9.3 million related to tax credit carryforwards, which will be available to offset future income taxes payable, subject to certain annual or other limitations based on foreign and U.S. tax laws. This amount includes tax credit carryforwards of $2.1$2.9 million for federal income tax purposes with a valuation allowance of $1.3$0.6 million, $6.1$6.4 million for state income tax purposes with a valuation allowance of $1.9$2.4 million, and no remaining credit carryforwards for foreign income tax purposes. These tax credit carryforwards, if not used, will expire between 20202023 and 2039.2042.
60
AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The Company maintains a valuation allowance (VA) to reduce certain deferred tax assets to amounts that are more likely than not to be realized. This allowance primarily relates to the deferred tax assets established for state
non-deductible
interest expense and federal and state creditcredits and state net operating loss carryforwards. In 2019,2022, the Company recorded a net decrease of $1.5$1.7 million in the valuation allowance of which $0.7 millionallowance. The reduction primarily relates to
the reversal of a valuation allowance on federal tax credits in the amount of $2.3 million, which after considering significant positive evidence the company will be able to utilize in the future. Additionally, there was a reduction of $0.3 million to the valuation allowance due to changes in net operating losses in the normal course of business. Offsetting the reductions was an increase of $1.3 million relating to foreign loss
es
and
acquired
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AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
s
tate loss
and credit carryforwards thatnet operating losses which are not expected to be utilized and $2.2 million for
non-deductibleutilized.
interest expense in states that conform to the Tax Act. There are no material uncertainties related to the realization of any deferred tax assets and their realization does not materially depend on specific tax planning strategies being implemented or changes in future levels of expected profits.
At December 31, 2019,2022, the Company had gross unrecognized tax benefits of $109.1$174.7 million, of which $65.9$128.5 million, if recognized, would impact the effective tax rate. At December 31, 2018,2021, the Company had gross unrecognized tax benefits of $119.3$147.0 million, of which $73.1$110.0 million, if recognized, would impact the effective tax rate.
At December 31, 20192022 and 2018,2021, the Company reported $14.2$12.4 million and $14.0$9.1 million, respectively, related to interest and penalty exposurepenalties as accrued income tax expensea component of other long term liabilities in the consolidated balance sheet. During 2019, 2018 and 2017,2022, the Company recognized a net expense of $0.2 million, $8.9$3.2 million, and $0.9in 2021 a net benefit of $2.5 million, respectively, for interest and penalties related to uncertain tax positions in the consolidated statement of income as a component of income tax expense.
Approximately 70%64% of the Company’s overall tax liability is incurred in the United States. The Company files income tax returns in various other state and foreign tax jurisdictions, in some cases for multiple legal entities per jurisdiction. Generally, the Company has open tax years subject to tax audit on average of between three and six years in these jurisdictions. At December 31, 2019, there were no tax years currently under examination by2022, the Internal Revenue Service (“IRS”("IRS") related toaudit of the Company's consolidated U.S. consolidatedincome tax group, although a separate examination of a
pre-acquisition
net operating lossreturns for the year 2018 and 2019 is ongoing related to a recently acquired company for which no material liability is expected.ongoing. The Company has not materially extended any other statutes of limitation for any significant location and has reviewed and accrued for, where necessary, tax liabilities for open periods including state and foreign jurisdictions that remain subject to examination. There have been no penalties asserted or imposed by the IRS related to substantial understatement of income, gross valuation misstatement or failure to disclose a listed or reportable transaction.
During 2019,2022, the Company added $25.4$43.4 million of tax, interest and penalties related to identified uncertain tax positions and reversed $35.4$4.4 million of tax and interest related to statute expirations and settlement of prior uncertain positions. During 2018,2021, the Company added $81.6$58.6 million
of tax, interest and penalties related to identified uncertain tax positions and reversed $18.4$35.2 million of tax and interest related to statute expirations and settlement of prior uncertain positions.
The following is a reconciliation of the liability for uncertain tax positions at December 31:
 
2019
  
2018
  
2017
 202220212020
 
(In millions)
 (In millions)
Balance at the beginning of the year
 $
119.3
  $
60.3
  $
57.9
 Balance at the beginning of the year$147.0 $100.7 $109.1 
Additions for tax positions related to the current year
  
17.5
   
21.8
   
10.0
 Additions for tax positions related to the current year29.3 41.4 15.6 
Additions for tax positions of prior years
  
2.8
   
53.5
   
3.1
 Additions for tax positions of prior years2.1 34.9 6.2 
Reductions for tax positions of prior years
  
(1.3
)  
(3.9
)  
(2.8
)Reductions for tax positions of prior years(1.0)(1.5)(0.3)
Reductions related to settlements with taxing authorities
  
(0.9
)  
—  
   
—  
 Reductions related to settlements with taxing authorities(0.2)(0.1)(0.5)
Reductions due to statute expirations
  
(28.3
)  
(12.4
)  
(7.9
)Reductions due to statute expirations(2.5)(28.4)(29.4)
         
Balance at the end of the year
 $
109.1
  $
119.3
  $
60.3
 Balance at the end of the year$174.7 $147.0 $100.7 
         
In 2019,2022, the additions above primarily reflect the increase in tax liabilities for uncertain tax positions related to certain higher transfer pricing risks for hard to value intangible assets. The reductions above primarily relate to
statute expirations. The net increase of $27.7 million in uncertain tax positions resulted in an increase of $23.1 million to income tax expense and the remainder primarily in long term receivable. At December 31, 2022, tax, interest and
6461
AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
statute expirations. In 2018
, the additions above primarily reflect the increase in tax liabilities for uncertain tax positions related to certain higher transfer pricing risks for hard to value intangible assets that may more likely be asserted following U.S. tax reform as taxpayer react and adapt to new tax planning initiatives. The reductions above primarily relate to statute expirations.
At December 31, 2019, tax, interest and penalties of $121.8$173.2 million were classified as a noncurrent liability. The net change in uncertain tax positions for the year ended December 31, 2019 resulted innon-current liability and $13.9 million was reflected as a decrease to income tax expense of $10.0 million, which reflects the decrease of $10.2 million in gross uncertain tax positions less offsetting benefits reported as decreases toreduction against deferred tax liabilities or increases in long-term taxes receivable. assets.
10. Debt
Long-term debt, net consisted of the following at December 31:
20222021
(In thousands)
U.S. dollar 3.73% senior notes due September 2024$300,000 $300,000 
U.S. dollar 3.91% senior notes due June 202550,000 50,000 
U.S. dollar 3.96% senior notes due August 2025100,000 100,000 
U.S. dollar 4.18% senior notes due December 2025275,000 275,000 
U.S. dollar 3.83% senior notes due September 2026100,000 100,000 
U.S. dollar 4.32% senior notes due December 2027250,000 250,000 
U.S. dollar 4.37% senior notes due December 202850,000 50,000 
U.S. dollar 3.98% senior notes due September 2029100,000 100,000 
U.S. dollar 4.45% senior notes due August 203550,000 50,000 
British pound 2.59% senior note due November 2028181,157 203,046 
British pound 2.70% senior note due November 203190,579 101,510 
Euro 1.34% senior notes due October 2026320,808 341,284 
Euro 1.71% senior notes due December 202780,205 85,323 
Euro 1.53% senior notes due October 2028213,894 227,541 
Revolving credit facility borrowings219,000 314,480 
Other, principally foreign11,759 1,976 
Less: Debt issuance costs(7,395)(5,919)
Total debt, net2,385,007 2,544,241 
Less: Current portion, net(226,079)(315,093)
Total long-term debt, net$2,158,928 $2,229,148 
 
2019
  
2018
 
 
(In thousands)
 
U.S. dollar 6.30% senior notes due December 2019
 $
—  
  $
100,000
 
U.S. dollar 3.73% senior notes due September 2024
  
300,000
   
300,000
 
U.S. dollar 3.91% senior notes due June 2025
  
50,000
   
50,000
 
U.S. dollar 3.96% senior notes due August 2025
  
100,000
   
100,000
 
U.S. dollar 4.18% senior notes due December 2025
  
275,000
   
275,000
 
U.S. dollar 3.83% senior notes due September 2026
  
100,000
   
100,000
 
U.S. dollar 4.32% senior notes due December 2027
  
150,000
   
150,000
 
U.S. dollar 4.32% senior notes due December 2027
  
100,000
   
—  
 
U.S. dollar 4.37% senior notes due December 2028
  
50,000
   
50,000
 
U.S. dollar 3.98% senior notes due September 2029
  
100,000
   
100,000
 
U.S. dollar 4.45% senior notes due August 2035
  
50,000
   
50,000
 
British pound 4.68% senior note due September 2020
  
106,140
   
102,082
 
British pound 2.59% senior note due November 2028
  
199,011
   
191,405
 
British pound 2.70% senior note due November 2031
  
99,508
   
95,700
 
Euro 1.34% senior notes due October 2026
  
336,797
   
343,666
 
Euro 1.71% senior notes due December 2027
  
84,202
   
85,916
 
Euro 1.53% senior notes due October 2028
  
224,553
   
229,108
 
Swiss franc 2.44% senior note due December 2021
  
56,830
   
55,932
 
Revolving credit facility borrowings
  
384,816
   
260,000
 
Other, principally foreign
  
9,234
   
2,278
 
Less: Debt issuance costs
  
(7,350
)  
(8,374
)
         
Total debt, net
  
2,768,741
   
2,632,713
 
Less: Current portion, net
  
(497,449
)  
(358,876
)
         
Total long-term debt, net
 $
2,271,292
  $
2,273,837
 
         
Maturities of long-term debt borrowings outstanding at December 31, 20192022 were as follows: $56.8 million in 2021; NaN in 2022; NaN in 2023; $300.0 million in 2024; $425.0 million in 2025; and $1,489.5$420.8 million in 20262026; $330.2 million in 2027; $445.1 million in 2027; and $240.6 million in 2028 and thereafter.
In the fourth quarter of 2019,2021, the Company paid in full, at maturity, $100a 55 million Swiss franc ($59.7 million) in aggregate principal amount of 6.30% private placement2.44% senior notes.
note.
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AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
In the fourth quarter of 2018, the Company paid in full, at maturity, $65 million in aggregate principal amount of 7.18% private placement senior notes.
In the third quarter of 2018, the Company paid in full, at maturity, $80 million in aggregate principal amount of 6.35% private placement senior notes and $160 million in aggregate principal amount of 7.08% private placement senior notes.
In December 2018, the Company completed a private placement agreement to sell $575 million and 75
million Euros in senior notes to a group of institutional investors (the “2018 Private Placement”) utilizing two funding dates. The first funding occurred
in December 2018 for $475 million and 75 million Euros ($85.1 million)80.2 million at December 31, 2022). The second funding was in January 2019 for $100 million
.million. The 2018 Private Placement senior notes carry a weighted average interest rate of 3.93% and are subject to certain customary covenants, including financial covenants that, among other things, require the Company to maintain certain
debt-to-EBITDA
(earnings (earnings before interest, income taxes, depreciation and amortization) and interest coverage ratios. The proceeds from the 2018 Private Placement were used to pay down domestic borrowings under the Company’s revolving credit facility.
In December 2007, the Company issued $100 million in aggregate principal amount of 6.30% private placement senior notes due December 2019. In July 2008, the Company issued $80 million in aggregate principal amount of 6.35% private placement senior notes due July 2018 (paid in full, at maturity, as previously noted). In September 2008, the Company issued $160 million in aggregate principal amount of 7.08% private placement senior notes due September 2018 (paid in full, at maturity, as previously noted). In December 2008, the Company issued $65 million in aggregate principal amount of 7.18% private placement senior notes due December 2018 (paid in full, at maturity, as previously noted). In September 2014, the Company issued $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 2029.2029. In June 2015, the Company
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AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
issued $50 million in aggregate principal amount of 3.91% senior notes due June 2025.2025. In August 2015, the Company issued $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.
2035.
In September 2010, the Company issued an 80 million British pound ($106.1 million at December 31, 2019) 4.68% senior note due September 2020. In December 2011, the Company issued a 55 million Swiss franc ($56.8 million at December 31, 2019) 2.44% senior note due December 2021. In October 2016, the Company issued 300 million Euros ($336.8320.8 million at December 31, 2019)2022) in aggregate principal amount of 1.34% senior notes due October 2026 and 200 million Euros ($224.6213.9 million at December 31, 2019)2022) in aggregate principal amount of 1.53% senior notes due October 2028.2028. In November 2016, the Company issued 150 million British pounds ($199.0181.2 million at December 31, 2019)2022) in aggregate principal amount of 2.59% senior notes due November 2028 and 75 million British pounds ($99.590.6 million at December 31, 2019)2022) in aggregate principal amount of 2.70% senior notes due November 2031.
2031.
In October 2018,On May 12, 2022, the Company along with certain of its foreign subsidiaries amended and restated its credit agreement dated as of September 22, 2011, as amended and restated as of March 10, 2016 and as further amended and restated as of October 30, 2018 (the “Credit Agreement”). The Credit Agreement amends and restates the Company’s existing $850 million revolving credit facility which was due to expire in March 2021.increase the size from $1.5 billion to $2.3 billion and terminates the $800 million term loan. The Credit Agreement consists of a five-year revolving credit facility in an aggregate principal amount of $1.5 billion with a final maturity date in October 2023.May 2027. The revolving credit facility total borrowing capacity excludes an accordion feature that permits the Company to request up to an additional $500$700 million in revolving credit commitments at any time during the life of the Credit Agreement under certain conditions. The revolving credit facility providesagreement places certain restrictions on allowable additional indebtedness. In November 2021, the Company with additional financial flexibility
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AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
to support its growth plans, including its acquisition strategy.LIBOR on certain currencies. At December 31, 2019,2022, the Company had available borrowing capacity of $1,580.5$2,745.2 million under its revolving credit facility, including the $500$700 million accordion feature.
Interest rates on outstanding borrowings under the revolving credit facility are at the applicable benchmark rate plus a negotiated spread or at the U.S. prime rate. At December 31, 20192022 and 20182021 the Company had $384.8$219.0 million and $260.0$314.5 million of borrowings outstanding under the revolving credit facility, respectively. The weighted average interest rate on the revolving credit facility for the years ended December 31, 20192022 and 20182021 was 1.13%3.57% and 1.40%1.34%, respectively. The Company had outstanding letters of credit primarily under the revolving credit facility totaling $34.9$35.8 million and $35.1$38.0 million at December 31, 20192022 and 2018,2021, respectively.
The private placements, the senior notes and the revolving credit facility are subject to certain customary covenants, including financial covenants that, among other things, require the Company to maintain certain
debt-to-EBITDA
and interest coverage ratios. The Company was in compliance with all provisions of the debt arrangements at December 31, 2019.2022.
Foreign subsidiaries of the Company had available credit facilities with local foreign lenders of $52.2$64.1 million and $49.1$56.8 million at December 31, 20192022 and 2018,2021, respectively. At December 31, 2019,2022, foreign subsidiaries had $11.8 million in debt borrowings outstanding, totaling $9.2 million, which was reported in short-term borrowings. At December 31, 2018,2021, foreign subsidiaries had $2.0 million of debt borrowings outstanding totaling $2.3 million, which was reported in short-term borrowings.outstanding.
The weighted average interest rate on total debt borrowings outstanding at December 31, 20192022 and 20182021 was 3.5%3.4% and 3.7%3.1%, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
11. Share-Based Compensation
Under the terms of the Company’s stockholder-approved share-based plans, performance restricted stock units (“PRSUs”), incentive and
non-qualified
stock options and restricted stock have been, and may be, issued to the Company’s officers, management-level employees and members of its Board of Directors. Stock options granted prior to 2018 generally vest at a rate of
one-fourth
on each of the first four anniversaries of the grant date and have a maximum contractual term of seven years. Beginning in 2018, stock options granted generally vest at a rate of
one-third
on each of the first three anniversaries of the grant date and have a maximum contractual term of ten years. Restricted stock granted to employees prior to 2018 generally vests
four years after the grant date (cliff vesting) and is subject to accelerated vesting due to certain events, including doubling of the grant price of the Company’s common stock as of the close of business during any five consecutive trading days.
Beginning in 2018, restricted stock granted to employees generally vests
one-third
on each of the first three anniversaries of the grant date. Restricted stock granted to
non-employee
directors generally vests two years after the grant date (cliff vesting) and is subject to accelerated vesting due to certain events, including doubling of the grant price of the Company’s common stock as of the close of business during any five consecutive trading days.
In March 2019, the Company granted PRSUs to officers and certain key management-level employees an aggregate target award of approximately 102,000 shares of its common stock. The PRSUs vest over a period up to three years from the grant date based on continuous service, with the number of shares earned (0% to 200% of the target award) depending upon the extent to which the Company achieves certain financial and market performance targets measured over the period from January 1, 2019 through December 31, 2021. Half of the PRSUs were valued in a manner similar to restricted stock as the financial targets are based on the Company’s operating results. The grant date fair value of these PRSUs are recognized as compensation expense over the vesting period based on the number of awards expected to vest at each reporting date. The other half of the
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PRSUs were valued using a Monte Carlo model as the performance target is related to the Company’s total shareholder return compared to a group of peer companies, which represents a market condition. The Company recognizes the grant date fair value of these awards as compensation expense ratably over the vesting period.
The Company issues previously unissued shares when stock options are exercised, and shares are issued from treasury stock upon the award of restricted stock.
Share Based Compensation Expense
The Company measures and records compensation expense related to all stock awards by recognizing the grant date fair value of the awards over their requisite service periods in the financial statements. For grants under any of the Company’s plans that are subject to graded vesting based on a service condition, the Company recognizes expense on a straight-line basis over the requisite service period for the entire award.
Total share-based compensation expense was as follows for the years ended December 31:
      
 
2019
  
2018
  
2017
 202220212020
 
(In thousands)
 (In thousands)
Stock option expense
 $
12,810
  $
11,390
  $
9,895
 Stock option expense$13,021 $12,733 $13,695 
Restricted stock expense
  
16,169
   
14,400
   
15,196
 Restricted stock expense20,115 21,393 17,997 
PRSU expense
  
11,415
   
1,525
   
—  
 PRSU expense14,239 11,977 9,873 
         
Total
pre-tax
expense
 $
40,394
  $
27,315
  $
25,091
 Total pre-tax expense$47,375 $46,103 $41,565 
         
Pre-tax
share-based compensation expense is included in the consolidated statement of income in either Cost of sales or Selling, general and administrative expenses, depending on where the recipient’s cash compensation is reported. The year ended December 31, 2017 includes a second quarter of 2017 $2.5 million
pre-tax
charge in corporate administrative expenses related to the accelerated vesting of restricted stock grants in association with the retirement of the Company’s Executive Chairman of the Board of Directors.
Stock Options
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 years indicated:
      
 
2019
  
2018
  
2017
 202220212020
Expected volatility
  
19.1
%  
17.3
%  
18.0
%Expected volatility24.5 %24.2 %22.2 %
Expected term (years)
  
5.0
   
5.0
   
5.0
 Expected term (years)5.05.05.0
Risk-free interest rate
  
2.25
%  
2.81
%  
1.94
%Risk-free interest rate2.33 %0.85 %0.52 %
Expected dividend yield
  
0.66
%  
0.76
%  
0.60
%Expected dividend yield0.65 %0.66 %1.14 %
Black-Scholes-Merton fair value per stock option granted
 $
16.85
  $
14.12
  $
11.05
 Black-Scholes-Merton fair value per stock option granted$32.54 $25.63 $11.01 
Expected volatility is based on the historical volatility of the Company’s stock over the stock options’ expected term. 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 expected term of the stock option is based on the U.S. Treasury yield curve at
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AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
the time of grant. The expected dividend yield is calculated by dividing the
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Company’s annual dividend, based on the most recent quarterly dividend rate, by the Company’s closing common stock price on the grant date. 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.
The following is a summary of the Company’s stock option activity and related information for the year ended December 31, 2019:
                 
 
Shares
  
Weighted
Average
Exercise
Price
  
Weighted
Average
Remaining
Contractual
Life 
  
Aggregate
Intrinsic
Value
 
 
(In thousands)
    
(Years)
  
(In millions)
 
                 
Outstanding at the beginning of the year
  
5,629
  $
53.46
       
Granted
  
826
   
85.43
       
Exercised
  
(1,939
)  
45.48
       
Forfeited
  
(210
)  
67.96
       
Expired
  
(3
)  
35.33
       
                 
Outstanding at the end of the year
  
4,303
  $
62.50
   
5.2
  $
160.2
 
                 
Exercisable at the end of the year
  
2,237
  $
54.27
   
3.5
  $
101.7
 
                 
2022:
SharesWeighted
Average
Exercise
Price		Weighted
Average
Remaining
Contractual
Life 		Aggregate
Intrinsic
Value
(In thousands)(Years)(In millions)
Outstanding at the beginning of the year3,352 $76.08 
Granted608 134.69 
Exercised(788)63.75 
Forfeited(107)108.79 
Expired(5)101.38 
Outstanding at the end of the year3,060 $79.46 6.5$153.0 
Exercisable at the end of the year1,944 $75.00 5.4$125.8 
The aggregate intrinsic value of stock options exercised during 2019, 20182022, 2021 and 20172020 was $88.2$50.3 million, $23.9
$59.1 million and $41.3
$63.7 million, respectively. The total fair value of stock options vested during 2019, 20182022, 2021 and 20172020 was $11.8
$11.4 million, $10.1
$13.7 million and $12.4
$12.9 million, respectively.
The following is a summary of the Company’s nonvestednon-vested stock option activity and related information for the year ended December 31, 2019:
         
 
Shares
  
Weighted
Average
Grant Date
Fair Value
 
 
(In thousands)
   
         
Nonvested stock options outstanding at the beginning of the year
  
2,494
  $
11.69
 
Granted
  
826
   
16.85
 
Vested
  
(1,044
)  
11.28
 
Forfeited
  
(210
)  
9.76
 
         
Nonvested stock options outstanding at the end of the year
  
2,066
  $
14.17
 
         
2022:
SharesWeighted
Average
Grant Date
Fair Value
(In thousands)
Non-vested stock options outstanding at the beginning of the year1,292 $18.41 
Granted608 32.54 
Vested(677)16.78 
Forfeited(107)23.86 
Non-vested stock options outstanding at the end of the year1,116 $26.57 
As of December 31, 2019,2022, there was approximately $19
$18 million of expected future
pre-tax
compensation expense related to the
2.1
1.1 million nonvestednon-vested stock options outstanding, which is expected to be recognized over a weighted average period of less than two years.
Restricted Stock
The fair value of restricted shares under the Company’s restricted stock arrangement is determined by the product of the number of shares granted and the Company’s closing common stock price on the grant date. Upon 
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the grant of restricted stock, the fair value of the restricted shares (unearned compensation) at the grant date is charged as a reduction of capital in excess of par value in the Company’s consolidated balance sheet and is amortized to expense on a straight-line basis over the vesting period, which is the same as the calculated derived service period as determined on the grant date.
grant
date.
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AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The following is a summary of the Company’s nonvestednon-vested restricted stock activity and related information for the year ended December 31, 2019:
 
Shares
  
Weighted
Average
Grant Date
Fair Value
 
 
(In thousands)
   
         
Nonvested restricted stock outstanding at the beginning of the year
  
891
  $
58.98
 
Granted
  
212
   
85.81
 
Vested
  
(456
)  
53.82
 
Forfeited
  
(86
)  
64.60
 
         
Nonvested restricted stock outstanding at the end of the year
  
561
  $
72.46
 
         
2022:
SharesWeighted
Average
Grant Date
Fair Value
(In thousands)
Non-vested restricted stock outstanding at the beginning of the year413 $96.07 
Granted184 134.52 
Vested(195)90.78 
Forfeited(46)109.08 
Non-vested restricted stock outstanding at the end of the year356 $117.18 
The total fair value of restricted stock vested during 2019, 20182022, 2021 and 20172020 was $25.2
$17.7 million, $11.6
$28.6 million and $15.8
$14.4 million, respectively. The weighted average fair value of restricted stock granted per share during 20192022 and 20182021 was $85.81
$134.52 and $73.66,$122.60, respectively. As of December 31, 2019,2022, there was approximately $25
$27 million of expected future
pre-tax
compensation expense related to the 0.60.4 million nonvestednon-vested restricted shares outstanding, which is expected to be recognized over a weighted average period of less than two years.
Performance Restricted Stock Units
The PRSUs vest over a period up to three years from the grant date based on continuous service, with the number of shares earned (0% to 200% of the target award) depending upon the extent to which the Company achieves certain financial and market performance targets measured over the period from January 1 of the year of grant through December 31 of the third year. Half of the PRSUs are valued in a manner similar to restricted stock as the financial targets are based on the Company’s operating results. The grant date fair value of these PRSUs are recognized as compensation expense over the vesting period based on the number of awards expected to vest at each reporting date. The other half of the PRSUs were valued using a Monte Carlo model as the performance target is related to the Company’s total shareholder return compared to a group of peer companies, which represents a market condition. The Company recognizes the grant date fair value of these awards as compensation expense ratably over the vesting period.
The following is a summary of the Company’s non-vested performance restricted stock activity and related information for the year ended December 31, 2022:
SharesWeighted
Average
Grant Date
Fair Value
(In thousands)
Non-vested performance restricted stock outstanding at the beginning of the year289 $85.29 
Granted87 134.69 
Performance assumption change 1
66 81.76 
Vested(161)81.76 
Forfeited(6)98.07 
Non-vested performance restricted stock outstanding at the end of the year275 $101.98 

1 Reflects the number of PRSUs above target levels based on performance metrics.
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AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
As of December 31, 2022, there was approximately $4 million of expected future pre-tax compensation expense related to the 0.3 million non-vested performance restricted shares outstanding, which is expected to be recognized over a weighted average period of less than one year.
The Company issues previously unissued shares when stock options are exercised, and shares are issued from treasury stock upon the award of restricted stock.
12. Retirement Plans and Other Postretirement Benefits
Retirement and Pension Plans
The Company sponsors several retirement and pension plans covering eligible salaried and hourly employees. The plans generally provide benefits based on participants’ years of service and/or compensation. The following is a brief description of the Company’s retirement and pension plans.
The Company maintains contributory and noncontributorynon-contributory defined benefit pension plans. Benefits for eligible salaried and hourly employees under all defined benefit plans are funded through trusts established in conjunction with the plans. The Company’s funding policy with respect to its defined benefit plans is to contribute amounts that provide for benefits based on actuarial calculations and the applicable requirements of U.S. federal and local foreign laws. The Company estimates that it will make both required and discretionary cash contributions of approximately $3$7 million to $6$11 million to its worldwide defined benefit pension plans in 2020.2023.
The Company uses a measurement date of December 31 (its fiscal year end) for its U.S. and foreign defined benefit pension plans.
The Company sponsors a 401(k) retirement and savings plan for eligible U.S. employees. Participants in the retirement and savings plan may contribute a specified portion of their compensation on a
pre-tax
basis, which varies by location. The Company matches employee contributions ranging from 20% to 100%, up to a maximum percentage ranging from 1% to 8% of eligible compensation or up to a maximum of $1,200 per participant in some locations.
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AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The Company’s retirement and savings plan has a defined contribution retirement
feature
principally to cover U.S. salaried employees joining the Company after December 31, 1996. Under the retirement feature, the Company makes contributions for eligible employees based on a
pre-established
percentage of the covered employee’s
salary
subject to
pre-established
vesting. Employees of certain of the Company’s foreign operations participate in various local defined contribution plans.
The Company has nonqualifiednon-qualified unfunded retirement plans for itscertain Directors and certain retired employees. It also provides supplemental retirement benefits, through contractual arrangements and/or a Supplemental Executive Retirement Plan (“SERP”) covering certain current and former executives of the Company. These supplemental benefits are designed to compensate the executive for retirement benefits that would have been provided under the Company’s primary retirement plan, except for statutory limitations on compensation that must be taken into account under those plans. The projected benefit obligations of the SERP and the contracts will primarily be funded by a grant of shares of the Company’s common stock upon retirement or termination of the executive. The Company is providing for these obligations by charges to earnings over the applicable periods.
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AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The following tables set forth the changes in net projected benefit obligation and the fair value of plan assets for the funded and unfunded defined benefit plans for the years ended December 31:
U.S. Defined Benefit Pension Plans:
 
2019
  
2018
 
 
(In thousands)
 
         
Change in projected benefit obligation:
      
Net projected benefit obligation at the beginning of the year
 $
471,506
  $
520,376
 
Service cost
  
3,248
   
3,777
 
Interest cost
  
20,287
   
19,183
 
Actuarial losses (gains)
  
46,269
   
(43,163
)
Gross benefits paid
  
(30,796
)  
(30,127
)
Acquisition
  
—  
   
1,460
 
         
Net projected benefit obligation at the end of the year
 $
510,514
  $
471,506
 
         
Change in plan assets:
      
Fair value of plan assets at the beginning of the year
 $
552,187
  $
619,993
 
Actual return on plan assets
  
99,573
   
(39,022
)
Employer contributions
  
668
   
541
 
Gross benefits paid
  
(30,796
)  
(30,127
)
Acquisition
  
—  
   
802
 
         
Fair value of plan assets at the end of the year
 $
621,632
  $
552,187
 
         
20222021
(In thousands)
Change in projected benefit obligation:
Net projected benefit obligation at the beginning of the year$504,773 $532,357 
Service cost2,067 2,767 
Interest cost14,889 14,074 
Actuarial (gains) losses(106,159)(12,593)
Gross benefits paid(32,090)(31,832)
Acquisition(337)— 
Net projected benefit obligation at the end of the year$383,143 $504,773 
Change in plan assets:
Fair value of plan assets at the beginning of the year$701,627 $662,298 
Actual return on plan assets(101,381)70,540 
Employer contributions1,230 621 
Gross benefits paid(32,090)(31,832)
Acquisition(337)— 
Fair value of plan assets at the end of the year$569,049 $701,627 
71
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AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Foreign Defined Benefit Pension Plans:
    
 
2019
  
2018
 
 
(In thousands)
 20222021
 (In thousands)
Change in projected benefit obligation:
      Change in projected benefit obligation:
Net projected benefit obligation at the beginning of the year
 $
268,763
  $
284,178
 Net projected benefit obligation at the beginning of the year$332,422 $351,584 
Service cost
  
3,307
   
3,102
 Service cost2,852 4,218 
Interest cost
  
6,692
   
6,495
 Interest cost5,235 4,458 
Foreign currency translation adjustments
  
9,042
   
(15,568
)Foreign currency translation adjustments(31,367)(6,580)
Employee contributions
  
110
   
108
 Employee contributions— 76 
Actuarial losses (gains)
  
35,021
   
(4,674
)
Actuarial (gains) lossesActuarial (gains) losses(100,201)(10,199)
Expenses paid from assets
  
(747
)  
(572
)Expenses paid from assets(686)(1,121)
Gross benefits paid
  
(8,421
)  
(11,114
)Gross benefits paid(9,409)(10,426)
Settlements
  
(1,984
)  
—  
 Settlements(102)— 
Plan amendments
  
—  
   
6,808
 
CurtailmentsCurtailments— 412 
      
Net projected benefit obligation at the end of the year
 $
311,783
  $
268,763
 Net projected benefit obligation at the end of the year$198,744 $332,422 
      
Change in plan assets:
      Change in plan assets:
Fair value of plan assets at the beginning of the year
 $
196,801
  $
226,968
 Fair value of plan assets at the beginning of the year$266,288 $250,735 
Actual return on plan assets
  
25,391
   
(11,171
)Actual return on plan assets(77,643)20,184 
Employer contributions
  
4,941
   
4,521
 Employer contributions7,729 9,656 
Employee contributions
  
110
   
108
 Employee contributions— 76 
Foreign currency translation adjustments
  
8,256
   
(11,939
)Foreign currency translation adjustments(26,585)(2,816)
Expenses paid from assets
  
(747
)  
(572
)Expenses paid from assets(686)(1,121)
Settlements
  
(1,984
)  
—  
 Settlements(102)— 
Gross benefits paid
  
(8,421
)  
(11,114
)Gross benefits paid(9,409)(10,426)
      
 
Fair value of plan assets at the end of the year
 $
224,347
  $
196,801
 Fair value of plan assets at the end of the year$159,592 $266,288 
      
The projected benefit obligation assumptions impacting net actuarial losses (gains) primarily consist of changes in discount and mortality rates. A significant component of the actuarial gains in 2022 for both the U.S. and Foreign Defined Benefit Plans was the increase in discount rates.

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AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The accumulated benefit obligation consisted of the following at December 31:
U.S. Defined Benefit Pension Plans:
20222021
(In thousands)
Funded plans$374,979 $492,957 
Unfunded plans2,869 3,913 
Total$377,848 $496,870 
         
 
2019
  
2018
 
 
(In thousands)
 
Funded plans
 $
493,756
  $
456,319
 
Unfunded plans
  
5,213
   
5,453
 
         
Total
 $
498,969
  $
461,772
 
         
Foreign Defined Benefit Pension Plans:
20222021
(In thousands)
Funded plans$167,495 $284,013 
Unfunded plans30,924 47,761 
Total$198,419 $331,774 
         
 
2019
  
2018
 
 
(In thousands)
 
Funded plans
 $
264,675
  $
220,842
 
Unfunded plans
  
45,315
   
39,459
 
         
Total
 $
309,990
  $
260,301
 
         
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Weighted average assumptions used to determine benefit obligations at December 31:
20222021
U.S. Defined Benefit Pension Plans:
Discount rate5.65 %3.02 %
Rate of compensation increase (where applicable)3.75 %3.75 %
Foreign Defined Benefit Pension Plans:
Discount rate4.73 %1.78 %
Rate of compensation increase (where applicable)2.50 %2.50 %
         
 
2019
  
2018
 
U.S. Defined Benefit Pension Plans:
      
Discount rate
  
3.45
%  
4.40
%
Rate of compensation increase (where applicable)
  
3.75
%  
3.75
%
Foreign Defined Benefit Pension Plans:
      
Discount rate
  
1.83
%  
2.59
%
Rate of compensation increase (where applicable)
  
2.50
%  
2.50
%
The following is a summary of the fair value of plan assets for U.S. plans at December 31:
20222021
Asset ClassTotalLevel 1Level 2TotalLevel 1Level 2
(In thousands)
Corporate debt instruments$6,192 $— $6,192 $4,053 $— $4,053 
Corporate debt instruments – Preferred13,425 — 13,425 11,265 — 11,265 
Corporate stocks – Common53,629 53,629 — 67,975 67,975 — 
Municipal bonds711 — 711 676 — 676 
Registered investment companies155,541 155,541 — 150,535 150,535 — 
U.S. Government securities1,253 — 1,253 663 — 663 
Total investments230,751 209,170 21,581 235,167 218,510 16,657 
Investments measured at net asset value338,298 — — 466,460 — — 
Total investments$569,049 $209,170 $21,581 $701,627 $218,510 $16,657 
                         
 
2019
  
2018
 
Asset Class
 
Total
  
Level 1
  
Level 2
  
Total
  
Level 1
  
Level 2
 
 
(In thousands)
 
Corporate debt instruments
 $
3,152
  $
—  
  $
3,152
  $
2,440
  $
—  
  $
2,440
 
Corporate debt instruments �� Preferred
  
10,781
   
—  
   
10,781
   
10,967
   
—  
   
10,967
 
Corporate stocks – Common
  
127,221
   
127,221
   
—  
   
115,013
   
115,013
   
—  
 
Municipal bonds
  
574
   
—  
   
574
   
488
   
—  
   
488
 
Registered investment companies
  
288,076
   
288,076
   
—  
   
279,006
   
279,006
   
—  
 
U.S. Government securities
  
240
   
—  
   
240
   
362
   
—  
   
362
 
                         
Total investments
  
430,044
   
415,297
   
14,747
   
408,276
   
394,019
   
14,257
 
                         
Investments measured at net asset value
  
191,588
   
—  
   
—  
   
143,911
   
—  
   
—  
 
                         
Total investments
 $
621,632
  $
415,297
  $
14,747
  $
552,187
  $
394,019
  $
14,257
 
                         
U.S. equity securities and global equity securities categorized as level 1 are traded on national and international exchanges and are valued at their closing prices on the last trading day of the year. For U.S. equity securities and global equity securities not traded on an active exchange, or if the closing price is not available, the trustee obtains indicative quotes from a pricing vendor, broker or investment manager. These securities are categorized as level 2 if the custodian obtains corroborated quotes from a pricing vendor. Additionally, someSome U.S. equity securities and global equity securities are public investment vehicles valued using the Net Asset Value (“NAV”) provided by the fund manager. The NAV is the total value of the fund divided by the number of shares outstanding.
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AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Fixed income securities categorized as level 12 are traded on national and international exchanges and are valued at their closing prices on the last trading day of the year and categorized as level 2 if valued by the trustee using pricing models that use verifiable observable market data, bids provided by brokers or dealers or quoted prices of securities with similar characteristics.
The expected long-term rate of return on these plan assets was 7.50%6.75% in 20192022 and 7.50%6.75% in 2018.2021. Equity securities included 352,601 shares of AMETEK, Inc. common stock with a market value of $49.3 million (8.7% of total plan investment assets) at December 31, 2022 and 384,788 shares of AMETEK, Inc. common stock with a market value of $38.4$56.6 million (6.2%(8.1% of total plan investment assets) at December 31, 2019 and 512,565 shares of AMETEK, Inc. common stock with a market value of $34.7 million (6.3% of total plan investment assets) at December 31, 2018.2021.
The objectives of the Company��sCompany’s U.S. defined benefit plans’ investment strategy are to maximize the plans’ funded status and minimize Company contributions and plan expense. Because the goal is to optimize returns over the long term, an investment policy that favors equity holdings has been established. Since there may be periods of time where both equity and mutual fund markets provide poor returns, an allocation to alternative
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
assets may be made to improve the overall portfolio’s diversification and return potential. The Company periodically reviews its asset allocation, taking into consideration plan liabilities, plan benefit payment streams and the investment strategy of the pension plans. The actual asset allocation is monitored frequently relative to the established targets and ranges and is rebalancedre-balanced when necessary. The target allocations for the U.S. defined benefits plans are approximately 50% equity securities, 20% 
fixed income securities
and 30% other securities and/or cash.
The equity portfolio is diversified by market capitalization and style. The equity portfolio also includes international components.
The objective of the mutual fund portion of the pension assets is to provide interest rate sensitivity for a portion of the assets and to provide diversification. The mutual fund portfolio is diversified within certain quality and maturity guidelines to minimize the adverse effects of interest rate fluctuations.
Certain investments are prohibited and include venture capital, private placements, unregistered or restricted stock, margin trading, commodities, short selling and rights and warrants. Foreign currency futures, options and forward contracts may be used to manage foreign currency exposure.
The following is a summary of the fair value of plan assets for foreign defined benefit pe
n
sion pl
a
nspension plans at December 31:
20222021
Asset ClassTotalLevel 3TotalLevel 3
(In thousands)
Life insurance$13,043 $13,043 $18,806 $18,806 
Total investments13,043 13,043 18,806 18,806 
Investments measured at net asset value146,549 — 247,482 — 
Total investments$159,592 $13,043 $266,288 $18,806 
                 
 
2019
  
2018
 
Asset Class
 
Total
  
Level 3
  
Total
  
Level 3
 
 
(In thousands)
 
Life insurance
 $
19,298
  $
19,298
  $
18,685
  $
18,685
 
                 
Total investments
  
19,298
   
19,298
   
18,685
   
18,685
 
                 
Investments measured at net asset value
  
205,049
   —
   
178,116
   
—  
 
                 
Total investments
 $
224,347
  $
19,298
  $
196,801
  $
18,685
 
                 
Life insurance assets are considered level 3 investments as their values are determined by the sponsor using unobservable market data.
Alternative investmentsLife insurance assets categorized as level 3 are valued based on unobservable inputs and cannot be corroborated using verifiable observable market data. Investments in level 3 funds are redeemable, however, cash reimbursement may be delayed, or a portion held back until asset finalization.

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AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The following is a summary of the changes in the fair value of the foreign plans’ level 3 investments (fair value determined using significant unobservable inputs):
Life Insurance
(In thousands)
Balance, December 31, 2020$20,908 
Actual return on assets:
Unrealized losses relating to instruments still held at the end of the year$(2,102)
Realized gains (losses) relating to assets sold during the year$— 
Purchases, sales, issuances and settlements, net$— 
Balance, December 31, 2021$18,806 
Actual return on assets:
Unrealized gains (losses) relating to instruments still held at the end of the year$(5,763)
Realized gains (losses) relating to assets sold during the year$— 
Purchases, sales, issuances and settlements, net$—
Balance, December 31, 2022$13,043
     
 
Life Insurance
 
 
(In thousands)
 
     
Balance, December 31, 2017
 $
21,294
 
     
Actual return on assets:
   
     
Unrealized losses relating to instruments still held at the end of the year
  
(2,609
)
     
Realized gains (losses) relating to assets sold during the year
  
—  
 
     
Purchases, sales, issuances and settlements, net
  
—  
 
     
     
Balance, December 31, 2018
  
18,685
 
     
     
Actual return on assets:
   
     
Unrealized gains (losses) relating to instruments still held at the end of the year
  
613
 
     
Realized gains (losses) relating to assets sold during the year
  
—  
 
     
Purchases, sales, issuances and settlements, net
  
—  
 
     
Balance, December 31, 2019
 $
19,298
 
     
The objective of the Company’s foreign defined benefit plans’ investment strategy is to maximize the long-term rate of return on plan investments, subject to a reasonable level of risk. Liability studies are also performed on a regular basis to provide guidance in setting investment goals with an objective to balance risks against the current and future needs of the plans. The trustees consider the risk associated with the different asset classes, relative to the plans’ liabilities and how this can be affected by diversification, and the relative returns available on equities, mutual fund investments, real estate and cash. Also, the likely volatility of those returns and the cash flow requirements of the plans are considered. It is expected that equities will outperform mutual fund investments over the long term. However, the trustees recognize the fact that mutual fund investments may better match the liabilities for pensioners. Because of the relatively young active employee group covered by the plans and the immature nature of the plans, the trustees have chosen to adopt an asset allocation strategy more heavily weighted toward equity investments. This asset allocation strategy will be reviewed, from time to time, in view of changes in market conditions and in the plans’ liability profile. The target allocations for the foreign defined benefit plans are approximately 22%23% equity securities, 21% 
fixed income securities, 51% multi-asset funds
and 6%5% other securities, insurance or cash.
The assumption for the expected return on plan assets was developed based on a review of historical investment returns for the investment categories for the defined benefit pension assets. This review also considered current capital market conditions and projected future investment returns. The estimates of future capital market
returns by asset class are lower than the actual long-term historical returns. The current low interest rate environment influences this outlook. Therefore, the assumed rate of return for U.S. plans is 7.00%7.59% and 5.97%6.41% for foreign plans in 2020.2023.


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AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for pension plans with a projected benefit obligation in excess of plan assets and pension plans with an accumulated benefit obligation in excess of plan assets were as follows at December 31:
U.S. Defined Benefit Pension Plans:
Projected Benefit
Obligation Exceeds
Fair Value of Assets		Accumulated Benefit
Obligation Exceeds
Fair Value of Assets
2022202120222021
(In thousands)
Benefit obligation$4,043 $6,234 $4,043 $6,234 
Fair value of plan assets707 1,239 707 1,239 
                 
 
Projected Benefit
Obligation Exceeds
Fair Value of Assets
  
Accumulated Benefit
Obligation Exceeds
Fair Value of Assets
 
 
2019
  
2018
  
2019
  
2018
 
 
(In thousands)
 
Benefit obligation
 $
7,119
  $
6,928
  $
7,119
  $
6,928
 
Fair value of plan assets
  
958
   
809
   
958
   
809
 
Foreign Defined Benefit Pension Plans:
Projected Benefit
Obligation Exceeds
Fair Value of Assets		Accumulated Benefit
Obligation Exceeds
Fair Value of Assets
2022202120222021
(In thousands)
Benefit obligation$162,105 $272,245 $161,780 $271,596 
Fair value of plan assets120,056 200,862 120,056 200,862 
                 
 
Projected Benefit
Obligation Exceeds
Fair Value of Assets
  
Accumulated Benefit
Obligation Exceeds
Fair Value of Assets
 
 
2019
  
2018
  
2019
  
2018
 
 
(In thousands)
 
Benefit obligation
 $
311,783
  $
268,763
  $
309,990
  $
260,301
 
Fair value of plan assets
  
224,347
   
196,801
   
224,347
   
196,801
 
The following table provides the amounts recognized in the consolidated balance sheet at December 31:
20222021
(In thousands)
Funded status asset (liability):
Fair value of plan assets$728,641 $967,915 
Projected benefit obligation(581,887)(837,195)
Funded status at the end of the year$146,754 $130,720 
Amounts recognized in the consolidated balance sheet consisted of:
Non-current asset for pension benefits (other assets)$192,140 $207,099 
Current liabilities for pension benefits(2,700)(2,133)
Non-current liability for pension benefits(42,686)(74,246)
Net amount recognized at the end of the year$146,754 $130,720 
         
 
2019
  
2018
 
 
(In thousands)
 
         
Funded status asset (liability):
      
Fair value of plan assets
 $
845,979
  $
748,988
 
Projected benefit obligation
  
(822,297
)  
(740,269
)
         
Funded status at the end of the year
 $
23,682
  $
8,719
 
         
         
Amounts recognized in the consolidated balance sheet consisted of:
      
Noncurrent asset for pension benefits (other assets)
 $
117,278
  $
86,799
 
Current liabilities for pension benefits
  
(1,954
)  
(1,905
)
         
Noncurrent liability for pension benefits
  
(91,642
)  
(76,175
)
         
Net amount recognized at the end of the year
 $
23,682
  $
8,719
 
         
The following table provides the amounts recognized in accumulated other comprehensive income, net of taxes, at December 31:
    
Net amounts recognized:
 
2019
  
2018
 Net amounts recognized:20222021
 
(In thousands)
 (In thousands)
Net actuarial loss
 $
242,696
  $
244,511
 Net actuarial loss$205,193 $193,220 
Prior service costs
  
4,189
   
4,432
 Prior service costs1,625 1,855 
Transition asset
  
6
   
7
 Transition asset3 4 
      
Total recognized
 $
246,891
  $
248,950
 Total recognized$206,821 $195,079 
      


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AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The following table provides the components of net periodic pension benefit expense (income) for the years ended December 31:
      
 
2019
  
2018
  
2017
 
 
(In thousands)
 202220212020
 (In thousands)
Defined benefit plans:
         Defined benefit plans:
Service cost
 $
6,556
  $
6,879
  $
7,138
 Service cost$4,919 $6,985 $7,261 
Interest cost
  
26,979
   
25,678
   
27,424
 Interest cost20,124 18,532 22,611 
Expected return on plan assets
  
(52,402
)  
(59,325
)  
(53,442
)Expected return on plan assets(60,104)(56,752)(54,629)
 
CurtailmentCurtailment— 3,151 — 
Settlement
  
739
   
—  
   
—  
 Settlement(58)— — 
 
Amortization of:
         Amortization of:
Net actuarial loss
  
15,685
   
12,092
   
14,591
 Net actuarial loss8,531 16,353 15,479 
Prior service costs
  
484
   
(49
)  
(47
)Prior service costs100 456 486 
 
Transition asset
  
1
   
1
   
1
 Transition asset1 1 1 
         
Total net periodic benefit income
  
(1,958
)  
(14,724
)  
(4,335
)Total net periodic benefit income(26,487)(11,274)(8,791)
         
 
Other plans:
         Other plans:
Defined contribution plans
  
32,508
   
28,829
   
24,280
 Defined contribution plans39,326 31,149 30,829 
Foreign plans and other
  
9,406
   
6,185
   
5,866
 Foreign plans and other8,373 8,454 7,902 
         
Total other plans
  
41,914
   
35,014
   
30,146
 Total other plans47,699 39,603 38,731 
         
Total net pension expense
 $
39,956
  $
20,290
  $
25,811
 Total net pension expense$21,212 $28,329 $29,940 
         
The total net periodic benefit expense (income) is included in Cost of sales, General and administrative expense and Other income and expense in the consolidated statement of income. The estimated amount that will be amortized from accumulated other comprehensive income into net periodic pension benefit expense in 2020 for the net actuarial losses and prior service costs is expected to be approximately $16 million.
The following weighted average assumptions were used to determine the above net periodic pension benefit income for the years ended December 31:
202220212020
U.S. Defined Benefit Pension Plans:
Discount rate3.02 %2.69 %3.45 %
Expected return on plan assets6.75 %6.75 %7.00 %
Rate of compensation increase (where applicable)3.75 %3.75 %3.75 %
Foreign Defined Benefit Pension Plans:
Discount rate1.78 %1.27 %1.83 %
Expected return on plan assets5.85 %5.47 %5.97 %
Rate of compensation increase (where applicable)2.50 %2.50 %2.50 %
             
 
2019
  
2018
  
2017
 
             
U.S. Defined Benefit Pension Plans:
         
Discount rate
  
4.40
%  
4.40
%  
4.25
%
Expected return on plan assets
  
7.50
%  
7.50
%  
7.50
%
Rate of compensation increase (where applicable)
  
3.75
%  
3.75
%  
3.75
%
Foreign Defined Benefit Pension Plans:
         
Discount rate
  
2.59
%  
2.59
%  
2.56
%
Expected return on plan assets
  
6.52
%  
6.52
%  
6.79
%
Rate of compensation increase (where applicable)
  
2.50
%  
2.50
%  
2.50
%
Estimated Future Benefit Payments
The estimated future benefit payments for U.S. and foreign plans are as follows: 2020
2023 –
 $40.6 $42.7 million; 2021
2024 –
 $41.7 million; 2022
–
 $42.3 million; 2023
–
 $43.1 million; 2024
–
 $44.4 $43.3 million; 2025 – $42.9 million; 2026 – $42.8 million; 2027 – $42.4 million; 2028 to 2029
2032 -
 $224.3 $208.3 million. Future benefit payments primarily represent amounts to be paid from pension trust assets. Amounts included that are to be paid from the Company’s assets are not significant in any individual year.
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AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Postretirement Plans and PostemploymentPost-employment Benefits
The Company provides limited postretirement benefits other than pensions for certain retirees and a small number of former employees. Benefits under these arrangements are not funded and are not significant.
74
AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The Company also provides limited postemploymentpost-employment benefits for certain former or inactive employees after employment but before retirement. Those benefits are not significant in amount.
The Company has a deferred compensation plan, which allows employees whose compensation exceeds the statutory IRS limit for retirement benefits to defer a portion of earned bonus compensation. The plan permits deferred amounts to be deemed invested in either, or a combination of, (a) an interest-bearing account, benefits from which are payable out of the general assets of the Company, or (b) the equivalent of a fund which invests in shares of the Company’s common stock on behalf of the employee. The amount deferred under the plan, including income earned, was $19.0$31.8 million and $14.4$28.4 million at December 31, 20192022 and 2018,2021, respectively. Administrative expense for the deferred compensation plan is borne by the Company and is not significant.
13. Contingencies
Indemnifications
In conjunction with certain acquisition and divestiture transactions, the Company may agree to make payments to compensate or indemnify other parties for possible future unfavorable financial consequences resulting from specified events (e.g., breaches of contract obligations or retention of previously existing environmental, tax or employee liabilities) whose terms range in duration and often are not explicitly defined. Where appropriate, the obligation for such indemnifications is recorded as a liability. Because the amount of these types of indemnifications generally is not specifically stated, the overall maximum amount of the obligation under such indemnifications cannot be reasonably estimated. Further, the Company indemnifies its directors and officers for claims against them in connection with their positions with the Company. Historically, any such costs incurred to settle claims related to these indemnifications have been minimal for the Company. The Company believes that future payments, if any, under all existing indemnification agreements would not have a material impact on its consolidated results of operations, financial position or cash flows.
Asbestos Litigation
The Company (including its subsidiaries) has been named as a defendant in a number of asbestos-related lawsuits. Certain of these lawsuits relate to a business which was acquired by the Company and do not involve products which were manufactured or sold by the Company. In connection with these lawsuits, the seller of such business has agreed to indemnify the Company against these claims (the “Indemnified Claims”). The Indemnified Claims have been tendered to, and are being defended by, such seller. The seller has met its obligations, in all respects, and the Company does not have any reason to believe such party would fail to fulfill its obligations in the future. To date, no judgments have been rendered against the Company as a result of any asbestos-related lawsuit. The Company believes that it has good and valid defenses to each of these claims and intends to defend them vigorously.
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 December 31, 2019,2022, the Company is named a Potentially Responsible Party (“PRP”) at 13
non-AMETEK-owned
former waste disposal or treatment sites (the
“non-owned”
“non-owned”sites). The Company is identified as a “de minimis” party in
12 of these sites based on the low
7
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AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
volume of waste attributed to the Company relative to the amounts attributed to other named PRPs. In eight 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.accrued. 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 remaining site 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 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
75
AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
with respect to other environmental matters, reserves are established once the 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 best estimate. 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 December 31, 20192022 and 20182021 were $28.9$41.0 million and $27.8$37.2 million, respectively, for both
non-owned
and owned sites. In 2019,2022, the Company recorded $7.0$12.0 million in reserves. Additionally, in 20192022 the Company spent $6.0$8.2 million on environmental matters and the reserve decreased $0.1 million due to foreign currency translation. The Company’s reserves for environmental liabilities at December 31, 2019 and 2018 included reserves of $9.0 million and $9.6 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.matters.
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 for the environmental matters described above, 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 on presently available information and the Company’s historical 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.
The Company has been remediating groundwater contamination for several contaminants, including trichloroethylene (“TCE”), at a formerly owned site in El Cajon, California. Several lawsuits have been filed against the Company alleging damages resulting from the groundwater contamination, including property
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AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
damages and personal injury, and seeking compensatory and punitive damages. The Company believes that it has good and valid defenses to each of these claims and intends to defend them vigorously. The Company believes it has established reserves for these lawsuits that are sufficient to satisfy its expected exposure. The Company does not expect the outcome of these matters, either individually or in the aggregate, to materially affect the consolidated results of operations, financial position or cash flows of the Company.
14. Leases and Other Commitments
Leases
The Company determines if an arrangement is a lease at inception. This determination generally depends on whether the arrangement conveys to the Company the right to control the use of an explicitly or implicitly identified fixed asset for a period of time in exchange for consideration. Control of an underlying asset is conveyed to the Company if the Company obtains the rights to direct the use of and to obtain substantially all of the economic benefits from using the underlying asset. The Company has lease agreements which include lease and
non-lease
components, which the Company has elected to account for as a single lease component for all classes of underlying assets. Lease expense for variable lease components are recognized when the obligation is probable.
Operating leases are included in ROU assets, accrued liabilities and other, and other long-term liabilities on our consolidated balance sheets. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Operating lease payments are recognized as lease expense on a straight-line basis over the lease term. The Company has no material finance leases. The Company primarily leases buildings (real estate) and automobiles which are classified as operating leases. ASC 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. As an implicit interest rate is not readily determinable in our leases, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.
The lease term for all of the Company’s leases includes the
non-cancellable
period of the lease plus any additional periods covered by either a Company option to extend (or not to terminate) the lease that the Company is reasonably certain to exercise, or an option to extend (or not to terminate) the lease controlled by the lessor. Options for lease renewals have been excluded from the lease term (and lease liability) for the majority of the Company’s leases as the reasonably certain threshold is not met. In a small number of the Company’s leases, the options for renewals have been included in the lease term as the reasonably certain threshold is met due to the Company having significant economic incentive for extending the lease.
Lease payments included in the measurement of the lease liability are comprised of fixed payments, variable payments that depend on an index or rate and amounts probable to be payable under the exercise of the Company option to purchase the underlying asset if reasonably certain.
Variable lease payments not dependent on a rate or index associated with the Company’s leases are recognized when the events, activities, or circumstances in the lease agreement on which those payments are assessed are probable. Variable lease payments are presented as operating expense in the Company’s income statement in the same line item as expense arising from fixed lease payments.
The Company has commitments under operating leases for certain facilities, vehicles and equipment used in its operations. Our leases have initial lease terms ranging from 2 months1 month to 14 years, with the exception of a single land lease with 64 years remaining. Certain lease agreements contain provisions for future rent increases.15 years.
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AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The components of lease expense were as follows:
202220212020
(In thousands)
Operating lease cost$59,296 $61,680 $44,498 
Variable lease cost11,096 7,724 4,526 
Total lease cost$70,392 $69,404 $49,024 
     
 
2019
 
 
(In thousands)
 
Operating lease cost
 $
45,438
 
Variable lease cost
  
7,813
 
     
Total lease cost
 $
53,251
 
     
Rental expense was $52.5 million in 2018 and $49.7
million in 2017.
Supplemental balance sheet information related to leases was as follows:
  December 31,
 
December 31, 2019
 20222021
 
(In thousands)
 (In thousands)
Right of use assets, net
 $
179,679
 Right of use assets, net$170,295 $169,924 
   
Lease liabilities included in Accrued liabilities and other
  
43,025
 Lease liabilities included in Accrued liabilities and other46,366 47,353 
Lease liabilities included in Other long-term liabilities
  
142,620
 Lease liabilities included in Other long-term liabilities129,227 129,101 
   
Total lease liabilities
 $
185,645
 Total lease liabilities$175,593 $176,454 
   

76
AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Supplemental cash flow information and other information related to leases was as follows for the year ended December 31:
20222021
(In thousands)
Cash used in operations for operating leases$54,724 $55,657 
Right-of-use assets obtained in exchange for new operating liabilities$59,802 $64,653 
Weighted-average remaining lease terms – operating leases (years)5.075.36
Weighted-average discount rate – operating leases3.32 %2.91 %
     
 
2019
 
 
(In thousands)
 
Cash used in operations for operating leases
 $
53,266
 
Right-of-use
assets obtained in exchange for new operating liabilities
 $
40,793
 
Weighted-average remaining lease terms – operating leases (years)
  
5.93
 
Weighted-average discount rate – operating leases
  
3.72
%
Maturities of lease liabilities as of December 31, 20192022 were as follows:
Lease Liability Maturity AnalysisOperating Leases
(In thousands)
2023$51,740 
202441,047 
202531,338 
202623,770 
202715,467 
Thereafter29,523 
Total lease payments192,885 
Less: imputed interest17,292 
$175,593 
     
Lease Liability Maturity Analysis
 
Operating Leases
 
 
(In thousands)
 
2020
 $
49,432
 
     
2021
  
42,084
 
     
2022
  
34,103
 
     
2023
  
25,879
 
     
2024
  
17,543
 
     
Thereafter
  
38,953
 
     
Total lease payments
  
207,994
 
     
Less: imputed interest
  
22,349
 
     
     
 $
185,645
 
     
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AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The Company does not have any significant leases that have not yet commenced which are significant.commenced.
Other Commitments
As of December 31, 2019,2022, and 2018,2021, the Company had $505.2$1,119.7 million and $470.2$890.9 million, respectively, in purchase obligations outstanding, which primarily consisted of contractual commitments to purchase certain inventories at fixed prices.
The Company does not provide significant guarantees on a routine basis. The Company primarily issues guarantees,
stand-by
letters of credit and surety bonds in the ordinary course of its business to provide financial or performance assurance to third parties on behalf of its consolidated subsidiaries to support or enhance the subsidiary’s stand-alone creditworthiness. The amounts subject to certain of these agreements vary depending on the covered contracts outstanding at any particular point in time. At December 31, 2019,2022, the maximum amount of future payment obligations relative to these various guarantees was $97.9$128.0 million and the outstanding liability under certain of those guarantees was $9.2$12.4 million.
15. Reportable Segments and Geographic Areas Information
Descriptive Information about Reportable Segments
The Company has
2
two reportable segments, EIG and EMG. The Company’s operating segments are identified based on the existence of segment managers. Certain of the Company’s operating segments have been aggregated for segment reporting purposes primarily on the basis of product type, production processes, distribution methods and similarity of economic characteristics.
EIG manufactures advanced instruments for the process, power and industrial, and aerospace markets. It provides process and analytical instruments for the oil and gas, petrochemical, pharmaceutical, semiconductor, automation, and food and beverage industries. EIG also provides instruments to the laboratory equipment, ultraprecisionultra-
77
AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
precision manufacturing, medical, and test and measurement markets. It makes power quality monitoring and metering devices, uninterruptible power supplies, programmable power equipment, electromagnetic compatibility test equipment and gas turbines sensors. EIG also provides dashboard instruments for heavy trucks and other vehicles, as well as instrumentation and controls for the food and beverage industries. It supplies the aerospace industry with aircraft and engine sensors, monitoring systems, power supplies, fuel and fluid measurement systems, and data acquisition systems.
EMG is a differentiated supplier of automation solutions, thermal management systems, specialty metals and electrical interconnects. It manufactures highly engineered electrical connectors and electronic packaging used to protect sensitive electronic devices. EMG also makes precision motion control products for data storage, medical devices, business equipment, automation and other applications. It supplies high-purity powdered metals, strip and foil, specialty clad metals and metal matrix composites. EMG also manufactures motors used in commercial appliances, fitness equipment, food and beverage machines, hydraulic pumps and industrial blowers. It produces motor-blower systems and heat exchangers used in thermal management and other applications on a variety of military and commercial aircraft and military ground vehicles. EMG also operates a global network of aviation maintenance, repair and overhaul facilities.
Measurement of Segment Results
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. Net sales by
8
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AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
segment are reported after elimination of intra- and intersegmentinter-segment sales and profits, which are insignificant in amount. Reported segment assets include allocations directly related to the segment’s operations. Corporate assets consist primarily of investments, prepaid pensions, insurance deposits and deferred taxes.
Reportable Segment Financial Information
 
 
2019
  
2018
  
2017
 
 
 
(In thousands)
 
Operating income and income before income taxes:  
 
         
Segment operating income
(1)
:
  
 
         
Electronic Instruments $
865,307
  $782,144  $671,646 
Electromechanical  
387,931
   363,765   306,779 
             
Total segment operating income  
1,253,238
   1,145,909   978,425 
             
Corporate administrative expenses  
(75,858
)  (70,369)  (74,805)
             
Consolidated operating income  
1,177,380
   1,075,540   903,620 
Interest and other expenses, net  
(107,632
)  (87,795)  (106,891)
             
Consolidated income before income taxes $
1,069,748
  $987,745  $796,729 
             
Assets:  
 
         
Electronic Instruments $
6,651,920
  $5,625,303     
Electromechanical  
2,818,155
   2,685,674     
             
             
Total segment assets  
9,470,075
   8,310,977     
Corporate  
374,484
   351,311     
             
Consolidated assets $
9,844,559
  $8,662,288     
             
             
Additions to property, plant and equipment
(2)
:
            
Electronic Instruments $
74,994
  $110,858  $54,321 
             
Electromechanical  
42,924
   42,461   36,829 
             
             
Total segment additions to property, plant and equipment  
117,918
   153,319   91,150 
             
Corporate  
4,770
   3,496   3,002 
             
Consolidated additions to property, plant and equipment $
122,688
  $156,815  $94,152 
             
Depreciation and amortization:  
 
         
Electronic Instruments $
153,111
  $121,709  $108,053 
Electromechanical  
78,664
   75,801   73,222 
             
Total segment depreciation and amortization  
231,775
   197,510   181,275 
Corporate  
2,267
   1,980   1,952 
             
Consolidated depreciation and amortization $
234,042
  $199,490  $183,227 
             
202220212020
(In thousands)
Operating income and income before income taxes:
Segment operating income:
Electronic Instruments$1,089,729 $958,183 $770,620 
Electromechanical503,593 437,378 324,962 
Total segment operating income1,593,322 1,395,561 1,095,582 
Corporate administrative expenses(92,630)(86,891)(67,698)
Consolidated operating income1,500,692 1,308,670 1,027,884 
Interest and other income (expenses), net(72,000)(85,500)54,425 
Consolidated income before income taxes$1,428,692 $1,223,170 $1,082,309 
Assets:
Electronic Instruments$9,430,797 $8,672,711 
Electromechanical2,617,685 2,638,773 
Total segment assets12,048,482 11,311,484 
Corporate382,638 586,703 
Consolidated assets$12,431,120 $11,898,187 
78
(1)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.
(2)Includes $20.3 million in 2019, $74.6 million in 2018 and $19.1
million in 2017 from acquired businesses.
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AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

202220212020
(In thousands)
Additions to property, plant and equipment(1):
Electronic Instruments$93,505 $168,267 $48,638 
Electromechanical38,186 34,586 26,381 
Total segment additions to property, plant and equipment131,691 202,853 75,019 
Corporate19,757 10,417 1,007 
Consolidated additions to property, plant and equipment$151,448 $213,270 $76,026 
Depreciation and amortization:
Electronic Instruments$238,436 $210,118 $174,494 
Electromechanical77,896 79,497 78,297 
Total segment depreciation and amortization316,332 289,615 252,791 
Corporate3,095 2,497 2,484 
Consolidated depreciation and amortization$319,427 $292,112 $255,275 
___________________
(1)Includes $12.4 million in 2022, $102.6 million in 2021 and $1.8 million in 2020 from acquired businesses.
Geographic Areas
Information about the Company’s operations in different geographic areas for the years ended December 31, 20192022 and 20182021 is shown below.
20222021
(In thousands)
Long-lived assets from continuing operations (excluding intangible assets):
United States$412,577 $416,323 
International(1):
United Kingdom71,462 74,525 
European Union countries89,993 87,117 
Asia11,479 11,971 
Other foreign countries50,130 27,202 
Total international223,064 200,815 
Total consolidated$635,641 $617,138 
 
2019
  
2018
 
 
(In thousands)
 
         
Long-lived assets from continuing operations (excluding intangible assets):
      
United States
 $
370,144
  $
380,855
 
         
       �� 
International
(1)
:
      
         
United Kingdom
  
57,675
   
55,527
 
         
European Union countries
  
78,500
   
78,524
 
         
Asia
  
12,869
   
11,846
 
         
Other foreign countries
  
29,720
   
27,378
 
         
         
Total international
  
178,764
   
173,275
 
         
Total consolidated
 $
548,908
  $
554,130
 
         
_________________
(1)Represents long-lived assets of foreign-based operations only.
(1)Represents long-lived assets of foreign-based operations only.
16. Additional Consolidated Income Statement and Cash Flow Information
Included in other
expense, income (expense), net
are interest and other investment income of $4.6$1.0 million, $2.0 million and $2.1$2.7 million for 2019, 20182022, 2021 and 2017,2020, respectively. Income taxes paid in 2019, 20182022, 2021 and 20172020 were $221.6$299.3 million, $195.2$245.5 million and $176.6$210.4 million, respectively. Cash paid for interest was $84.9$80.2 million, $83.6$78.7 million and $96.1$86.2 million in 2019, 20182022, 2021 and 2017,2020, respectively.
17. Stockholders’ Equity
In 2018,2021, the Company repurchased approximately 5,079,000113,000 shares of its common stock for $367.7$14.7 million in cash under its share repurchase authorization. On May 5, 2022, the Company's Board of Directors approved a
79
AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
$1 billion authorization of its common stock, which replaced the previous $500 million authorization announced in February 2019. In 2022, the Company repurchased approximately 2.7 million shares of its common stock for $332.8 million in cash under its share repurchase authorization. At December 31, 2018, $1.02022, $823.9 million was available under the Company’s Board of Directors authorization for future share repurchases.
On February 12, 2019, the Company’s Board of Directors approved an increase of $500 million in the authorization for the repurchase of the Company’s common stock. In 2019, the Company repurchased approximately 133,000 shares of its common stock for $11.9 million in cash under its share repurchase authorization. At December 31, 2019, $489.1 million was available under the Company’s Board of Directors authorization for future share repurchases.
At December 31, 2019, the Company held
36,500,908
 shares in its treasury at a cost of $
1,574.5
 million, compared with
36,534,802
 shares at a cost of $
1,570.2
 million at December 31, 2018. The number of shares outstanding at December 31, 2019 was 229.1 million shares, compared with 227.1 million shares at December 31, 2018.
Subsequent Event
Effective February 12, 2020,9, 2022, the Company’s Board of Directors approved a 29%10% increase in the quarterly cash dividend on the Company’s common stock to $0.18$0.22 per common share from $0.14$0.20 per common share.
At December 31, 2022, the Company held 38.5 million shares in its treasury at a cost of $1,903.0 million, compared with 36.1 million shares at a cost of $1,573.0 million at December 31, 2021. The number of shares outstanding at December 31, 2022 was 230.1 million shares, compared with 231.7 million shares at December 31, 2021.
Subsequent Event
Effective February 9, 2023, the Company’s Board of Directors approved a 14% increase in the quarterly cash dividend on the Company’s common stock to $0.25 per common share from $0.22 per common share.
84
80
AMETEK, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
18. Quarterly Financial Data (Unaudited)
                     
 
First
Quarter
  
Second
Quarter
  
Third
Quarter
  
Fourth
Quarter
  
Total Year
 
 
(In thousands, except per share amounts)
 
2019
               
Net sales
 $
1,287,691
  $
1,289,412
  $
1,276,633
  $
1,304,821
  $
5,158,557
 
Operating income
 $
283,259
  $
295,410
  $
301,056
  $
297,655
  $
1,177,380
 
Net income
 $
204,268
  $
215,503
  $
220,749
  $
220,777
  $
861,297
 
Basic earnings per share
(2)
 $
0.90
  $
0.95
  $
0.97
  $
0.97
  $
3.78
 
Diluted earnings per share
(2)
 $
0.89
  $
0.94
  $
0.96
  $
0.96
  $
3.75
 
Dividends paid per share
 $
0.14
  $
0.14
  $
0.14
  $
0.14
  $
0.56
 
                     
2018
               
                     
Net sales
 $
1,172,647
  $
1,208,935
  $
1,192,962
  $
1,271,328
  $
4,845,872
 
                     
Operating income
 $
258,168
  $
270,086
  $
265,266
  $
282,020
  $
1,075,540
 
                     
Net income
(1)
 $
181,340
  $
193,860
  $
191,213
  $
211,520
  $
777,933
 
                     
Basic earnings per share
(1)
(2)
 $
0.79
  $
0.84
  $
0.83
  $
0.92
  $
3.37
 
                     
Diluted earnings per share
(1)
(2)
 $
0.78
  $
0.83
  $
0.82
  $
0.91
  $
3.34
 
Dividends paid per share
 $
0.14
  $
0.14
  $
0.14
  $
0.14
  $
0.56
 
(1)During 2018, the Company recorded a net benefit of $11.8
million in the consolidated statement of income as a component of Provision for income taxes related to the Tax Act. The net benefit related to the Tax Act had the effect of increasing net income for 2018 by $11.8 million.
(2)The sum of quarterly earnings per share may not equal total year earnings per share due to rounding of earnings per share amounts, and differences in weighted average shares and equivalent shares outstanding for each of the periods presented.
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Table of Contents
Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A.    Controls and Procedures
None.
Item 9A.Controls and Procedures
Disclosure 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 December 31, 2019.2022. 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 December 31, 20192022 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
Internal Control over Financial Reporting
Management’s report on the Company’s internal controls over financial reporting is included in Part II, Item 8 of this Annual Report on Form
 10-K.
The 10-K.The report of the independent registered public accounting firm with respect to the effectiveness of internal control over financial reporting is included in Part II, Item 8 of this Annual Report on Form 10-K.
 10-K.
Item 9B.    Other Information
None
81
Item 9B.Other Information
None
PART III
Item 10.Directors, Executive Officers and Corporate Governance
Item 10.    Directors, Executive Officers and Corporate Governance
a)Directors of the Registrant.
a)Directors of the Registrant.
Information with respect to Directors of the Company is set forth under the heading “Election of Directors” in the Company’s Proxy Statement for the 20202023 Annual Meeting of Stockholders and is incorporated herein by reference.
b)Executive Officers of the Registrant.
b)Executive Officers of the Registrant.
Information with respect to executive officers of the Company is set forth under the heading “Executive Officers” in the Company’s Proxy Statement for the 20202023 Annual Meeting of Stockholders and is incorporated herein by reference.
c)Section 16(a) Compliance.
Information concerning compliance with Section 16(a)c)Identification of the Securities Exchange Act of 1934 is set forth under the heading “Compliance with Section 16(a) of the Securities Exchange Act of 1934” in the Company’s Proxy Statement for the 2020 Annual Meeting of Stockholders and is incorporated herein by reference.Audit Committee.
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Table of Contents
d)Identification of the Audit Committee.
Information concerning the audit committee of the Company is set forth under the heading “Committees of the Board” in the Company’s Proxy Statement for the 20202023 Annual Meeting of Stockholders and is incorporated herein by reference.
d)Audit Committee Financial Experts.
e)Audit Committee Financial Experts.
Information concerning the audit committee financial experts of the Company is set forth under the heading “Committees of the Board” in the Company’s Proxy Statement for the 20202023 Annual Meeting of Stockholders and is incorporated herein by reference.
e)Corporate Governance/Nominating Committee.
f)Corporate Governance/Nominating Committee.
Information concerning any material changes to the way in which security holders may recommend nominees to the Company’s Board of Directors is set forth under the heading “Corporate Governance”“Information about the 2024 Annual Meeting” in the Company’s Proxy Statement for the 20202023 Annual Meeting of Stockholders and is incorporated herein by reference.
f)Code of Ethics for Chief Executive Officer and Senior Financial Officers.
g)Code of Ethics for Chief Executive Officer and Senior Financial Officers.
The Company has adopted a Code of Ethics for the principal executive officer, principal financial officer and principal accounting officer, which may be found on the Company’s website at www.ametek.com. Any amendments to the Code of Ethics or any grant of a waiver from the provisions of the Code of Ethics requiring disclosure under applicable U.S. Securities and Exchange Commission rules will be disclosed on the Company’s website.
Item 11.Executive Compensation
Item 11.    Executive Compensation
Information regarding executive compensation, including the “Compensation Discussion and Analysis,” the “Report of the Compensation“Compensation Committee Report,” “Compensation Tables” and “Potential Payments Upon Termination or Change of Control” is set forth under the heading “Executive Compensation” in the Company’s Proxy Statement for the 20202023 Annual Meeting of Stockholders and is incorporated herein by reference.

82
Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Information regarding security ownership of certain beneficial owners and management appearing under “Stock Ownership of Executive Officers and Directors” and “Beneficial Ownership of Principal Stockholders” in the Company’s Proxy Statement for the 20202023 Annual Meeting of Stockholders is incorporated herein by reference.
Item 13.Certain Relationships and Related Transactions, and Director Independence
Item 13.    Certain Relationships and Related Transactions, and Director Independence
Information appearing under “Certain Relationships and Related Transactions” and “Independence” in the Company’s Proxy Statement for the 20202023 Annual Meeting of Stockholders is incorporated herein by reference.
Item 14.Principal AccountingItem 14.    Principal Accountant Fees and Services
Information appearing under “Ratification of
a
ppointment Appointment of Independent Registered Public Accounting Firm” in the Company’s Proxy Statement for the 20202023 Annual Meeting of Stockholders is incorporated herein by reference.
87
83
PART IV
Item 15.Exhibits and Financial Statement Schedules
Item 15.    Exhibits and Financial Statement Schedules
(a)(1) Financial Statements:
Financial statements are shown in the Index to Financial Statements included in Part II, Item 8 of this Annual Report on Form
10-K.
(a)(2) Financial Statement Schedules:
Financial statement schedules have been omitted because either they are not applicable or the required information is included in the financial statements or the notes thereto.
(a)(3) Exhibits:
Exhibit
Number
Description
Description
Incorporated Herein by Reference to
3.1
    3.1
Conformed Copy of Amended and Restated Certificate of Incorporation of AMETEK, Inc. as amended to and including May 9, 2019.2019
.
Exhibit 3.1 to Form
8-K,
dated May 13, 2019, SEC File No.
 1-12981.
3.2
    3.2
By-Laws of AMETEK, Inc. as amended to and including MayNovember 9, 2019.2018.
Exhibit 3.2 to 2019 Form
10-K,
10-Q dated March 31, 2020, SEC File No.
 1-12981.
4.3†
    4.1†
AMETEK, Inc. 2007 Omnibus Incentive Compensation Plan, dated as of April 24, 2007 (the “2007 Plan”).
Exhibit 4 to Form
S-8
dated May 10, 2007, SEC File No.
 1-12981.
    4.2†
Amendment No. 1 to the 2007 Plan.
Exhibit 4.3 to 2012 Form
10-K,
SEC File No.
 1-12981.
    4.3†
AMETEK, Inc. 2011 Omnibus Incentive Compensation Plan, dated as of May 3, 2011 (the “2011 Plan”).
Exhibit 4 to Form
S-8
dated May 6, 2011, SEC File No.
 1-12981.
4.4†
    4.4†
Amendment No. 1 to the 2011 Plan.
Exhibit 4.5 to 2012 Form
10-K,
SEC File No.
 1-12981.
4.5†Exhibit 4.3 to Form S-8 dated May 8, 2020, No. 1-12981
10.1†
Exhibit 10.4 to Form
10-Q
dated September 30, 2007, SEC File No.
 1-12981.
10.2†
  10.2†
AMETEK, Inc. Director’s Deferred Compensation Plan, amended and restated as of October 1, 2018.2018
.
Exhibit 10.1 to Form
10-Q
dated September 30, 2018, SEC File No.
 1-12981.
10.3†
  10.3†
AMETEK, Inc. Deferred Compensation Plan, amended and restated as of June 15, 2018.
Exhibit 10.1 to Form
10-Q
dated June 30, 2018, SEC File No.
 1-12981.
10.5†
  10.5†
AMETEK, Inc. 2004 Executive Death Benefit Plan, amended and restated effective January 1, 2017.
Exhibit 10.5 to 2016 Form
10-K,
SEC File No.
 1-12981.
10.6†
  10.6†
AMETEK, Inc. Directors’ Death Benefit Plan, effective January 1, 2005.
Exhibit 10.3 to Form
10-Q
dated September 30, 2007, SEC File No.
 1-12981.
10.7†
  10.7†
Form of Executive Change of Control Separation Agreement between AMETEK, Inc. and a named executive.
Exhibit 10.7 to Form
10-Q
dated September 30, 2007, SEC File No.
 1-12981.
8884
Table of Contents
Exhibit
Number
Description
Description
Incorporated Herein by Reference to
10.8†
  10.8†
Termination and Change of Control Agreement between AMETEK, Inc. and a named executive, dated May 8, 2017.
Exhibit 10.1 to Form
10-Q
dated March 31, 2017, SEC File No.
 1-12981.
10.9†
  10.9†
AMETEK, Inc. Retirement and Savings Plan, amended and restated as of September 4, 2018.
Exhibit 10.2 to Form
10-Q
dated September 30, 2018, SEC File No.
 1-12981.
10.10†
  10.10†
AMETEK, Inc. Supplemental Executive Retirement Plan, amended and restated as of October 1, 2018.2018
.
Exhibit 10.3 to Form
10-Q
dated September 30, 2018, SEC File No.
 1-12981.
10.11†
  10.11†
Form of Performance Restricted Stock Unit Agreement for Chief Executive Officer.
Exhibit 10.1 to Form
10-Q
dated March 31, 2018, SEC File No.
 1-12981.
10.12†
  10.12†
Form of Performance Restricted Stock Unit Agreement.
Exhibit 10.2 to Form
10-Q
dated March 31, 2018, SEC File No.
 1-12981.
10.13†
  10.13†
AMETEK, Inc. 2011 Omnibus Incentive Compensation Plan, Form of Restricted Stock Agreement for non-employee Directors.
Exhibit 10.1 to Form
8-K
dated May 8, 2018, SEC File No.
 1-12981.
10.14†
  10.14†
AMETEK, Inc. 2011 Omnibus Incentive Compensation Plan, Form of Restricted Stock Agreement for Chief Executive Officer.
Exhibit 10.2 to Form
8-K
dated May 8, 2018, SEC File No.
 1-12981.
10.15†
  10.15†
AMETEK, Inc. 2011 Omnibus Incentive Compensation Plan, Form of Restricted Stock Agreement for Employees.
Exhibit 10.3 to Form
8-K
dated May 8, 2018, SEC File No.
 1-12981.
10.16†
  10.16†
AMETEK, Inc. 2011 Omnibus Incentive Compensation Plan, Form of Global Non-Qualified Stock Option Agreement for Employees.
Exhibit 10.4 to Form
8-K
dated May 8, 2018, SEC File No.
 1-12981.
10.17
  10.17
Amended and Restated Credit Agreement as of September 22, 2011, as amended and restated as of March 10, 2016, and as further amended and restated as of October 30, 2018, among AMETEK, Inc., the Foreign Subsidiary Borrowers Party Hereto, the Lenders Party Hereto, JPMorgan Chase Bank, N.A., as Administrative Agent, Bank of America, N.A., PNC Bank, National Association, SunTrust Bank and Wells Fargo Bank, National Association, as Co-Syndication Agents, and U.S. Bank National Association, Mizuho Bank (USA), BNP Paribas, National Westminster Bank Plc and Commerzbank AG, New York Branch, as Co-Documentation Agents.
Exhibit 10.4 to Form
10-Q
dated September 30, 2018, SEC File No.
 1-12981.
85
Table of Contents
Exhibit
  10.18
Number		Description
AMETEK, Inc. Note Purchase Agreement, as of August 30, 2007.
Exhibit 10.1Incorporated Herein by Reference to Form
8-K
dated September 5, 2007, SEC File No.
 1-12981.
10.18
  10.19
Amendment No. 1 to Note PurchaseAmended and Restated Credit Agreement, dated April 26, 2021, by and among AMETEK, Inc., AMETEK European Holdings Limited, AMETEK Canada Limited Partnership and AMETEK Material Analysis Holdings GmbH as Foreign Subsidiary Borrowers, with the lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent and Bank of August 30, 2007.America, N.A., PNC Bank, National Association, Truist Bank and Wells Fargo Bank, National Association, as Co-Syndication Agents.
Exhibit 10.1 to Form
10-Q
8-K dated September 30, 2014,April 29, 2021, SEC File No.
 1-12981.
89
Table of Contents
1-12981
Exhibit
Number
Description
Incorporated Herein by Reference to
10.19
  10.20
Amendment No. 2 to Note PurchaseAmended and Restated Credit Agreement, as of August 30, 2007.dated November 18, 2021.
Exhibit 10.210.19 to Form
10-Q
10-K dated September 30, 2016,February 22, 2022, SEC File No.
 1-12981.
1-12981
10.24
  10.24
AMETEK, Inc. Note Purchase Agreement, as of September 30, 2014.2014
.
Exhibit 10.1 to Form
8-K
dated October 2, 2014, SEC File No.
 1-12981.
10.25
  10.25
Amendment No. 1 to Note Purchase Agreement, as of September 30, 2014.
Exhibit 10.1 to Form
10-Q
dated September 30, 2016, SEC File No.
 1-12981.
10.26
  10.26
AMETEK, Inc. Note Purchase Agreement, as of October 31, 2016.2016
.
Exhibit 10.1 to Form
8-K
dated November 2, 2016, SEC File No.
 1-12981.
10.27
  10.27
AMETEK, Inc. 2018 Note Purchase Agreement, dated as of December 13, 2018.
Exhibit 10.1 to Form
8-K
dated December 13, 2018, SEC File No.
 1-12981.
10.28Exhibit 10.1 to Form 10-Q dated March 31, 2021, SEC File No. 1-12981.
10.29Exhibit 10.2 to Form 10-Q dated March 31, 2021, SEC File No. 1-12981.
10.30Exhibit 10.3 to Form 10-Q dated March 31, 2021, SEC File No. 1-12981.
10.31Exhibit 10.4 to Form 10-Q dated March 31, 2021, SEC File No. 1-12981.
10.32Exhibit 10.5 to Form 10-Q dated March 31, 2021, SEC File No. 1-12981.
10.33Exhibit 10.6 to Form 10-Q dated March 31, 2021, SEC File No. 1-12981.
10.34Exhibit 10.7 to Form 10-Q dated March 31, 2021, SEC File No. 1-12981.
10.35*
21*
86
Table of Contents
Exhibit
Number
DescriptionIncorporated Herein by Reference to
23*
  23*
Consent of Independent Registered Public Accounting Firm.
31.1*
  31.1*
Certification of Chief Executive Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*
  31.2*
Certification of Chief Financial Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*
  32.1*
Certification of Chief Executive Officer, Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*
  32.2*
Certification of Chief Financial Officer, Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*
101.INS*
XBRL Instance Document.
101.SCH*
101.SCH*
XBRL Taxonomy Extension Schema Document.
101.CAL*
101.CAL*
XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*
101.DEF*
XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*
101.LAB*
XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*
101.PRE*
XBRL Taxonomy Extension Presentation Linkbase Document.
104Cover Page Interactive Date File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibit 101).
 
__________________
†    Management contract or compensatory plan required to be filed pursuant to Item 601 of Regulation S-K.
*    Filed electronically herewith.
Item 16.    Form 10-K Summary
None.
†Management contract or compensatory plan required to be filed pursuant to Item 601 of Regulation
S-K.
*Filed electronically herewith.
Item 16.
Form
10-K
Summary
None.
90
87
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
By:
/s/
    David A. Zapico
By:
David/s/    DAVID A. Zapico
ZAPICO
David A. Zapico
Chief Executive Officer
Date : February 21, 2023
Date: February 20, 2020
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/
    David    DAVID A. Zapico
David A. Zapico
ZAPICO
Chairman of the Board of Directors

and Chief Executive Officer

(Principal Executive Officer)
February 20, 2020
21, 2023
David A. Zapico

/s/    WILLIAM J. BURKEExecutive Vice President –
Chief Financial Officer
(Principal Financial Officer)		February 21, 2023
William J. Burke
William J. Burke

Executive
/s/    THOMAS M. MONTGOMERYSenior Vice President –
Chief Financial Officer

Comptroller
(Principal FinancialAccounting Officer)
February 20, 2020
21, 2023
/s/    
Thomas M. Montgomery
Thomas M. Montgomery

Senior Vice President –
Comptroller
(Principal Accounting Officer)
February 20, 2020
/s/    
THOMAS A. AMATO
DirectorFebruary 21, 2023
Thomas A. Amato
Thomas A. Amato
Director
February 20, 2020
/s/    TOD E. CARPENTER
DirectorFebruary 21, 2023
Tod E. Carpenter

Director
February 20, 2020
/s/    
Ruby R. Chandy
Ruby R. Chandy
Director
February 20, 2020
/s/    ANTHONY J. CONTIDirectorFebruary 21, 2023
Anthony J. Conti
Anthony J. Conti

Director
February 20, 2020
/s/    
STEVEN W. KOHLHAGEN
DirectorFebruary 21, 2023
Steven W. Kohlhagen
Steven W. Kohlhagen
Director
February 20, 2020
/s/    GRETCHEN W. MCCLAIN
DirectorFebruary 21, 2023
Gretchen W. McClain
Gretchen W. McClain

Director
February 20, 2020
/s/
Elizabeth R. Varet
Elizabeth R. Varet
KARLEEN M. OBERTON
Director
February 20, 2020
21, 2023
Karleen M. Oberton
/s/
Dennis K. Williams
Dennis K. Williams
DEAN SEAVERS
Director
February 20, 2020
21, 2023
Dean Seavers
/s/ SUZANNE L. STEFANYDirectorFebruary 21, 2023
Suzanne L. Stefany
9188