UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________

FORM 10-Q

_________________________

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2020~~2021


☐			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

(Address of principal executive offices)

14-1682544

(I.R.S. Employer

Identification No.)

19312-1177

(Zip Code)

Registrant’s telephone number, including area code: (610) 647-2121

_________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post 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	☐ (Do not check if a smaller reporting company)	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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

_________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange
on which registered

Common Stock

AME

New York Stock Exchange

The number of shares of the registrant’s common stock outstanding as of the latest practicable date was: Common Stock, $0.01 Par Value, outstanding at October ~~23, 2020~~29, 2021 was ~~230,064,856~~231,325,166 shares.

AMETEK, Inc.

Form 10-Q

Table of Contents


			Page

PART I. FINANCIAL INFORMATION

Item 1.Financial Statements

Consolidated Statement of Income for the three and nine months ended September 30, ~~2020~~2021 and ~~2019~~2020			4
Condensed Consolidated Statement of Comprehensive Income for the three and nine months ended September 30, ~~2020~~2021 and ~~2019~~2020			5
Consolidated Balance Sheet at September 30, ~~2020~~2021 and December 31, ~~2019~~2020			6
Consolidated Statement of Stockholders’ Equity for the three and nine months ended September 30, ~~2020~~2021 and ~~2019~~2020			7
Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, ~~2020~~2021 and ~~2019~~2020			8
Notes to Consolidated Financial Statements			9

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations			2322
Item 4.Controls and Procedures			2827

PART II. OTHER INFORMATION

Item 1A.Risk Factors			2928
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds			2928
Item 6.Exhibits			3129

SIGNATURES			3230

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

AMETEK, Inc.

Consolidated Statement of Income

(In thousands, except per share amounts)

(Unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Net sales	Net sales	$	1,126,942	$	1,276,633	$	3,341,082	$	3,853,736	Net sales	$	1,440,681	$	1,126,942	$	4,042,769	$	3,341,082
Cost of sales	Cost of sales	732,705		823,262		2,226,547		2,512,722		Cost of sales	949,402		732,705		2,651,506		2,226,547
Selling, general and administrative	Selling, general and administrative	123,496		152,315		384,764		461,289		Selling, general and administrative	153,716		123,496		443,744		384,764
Total operating expenses	Total operating expenses	856,201		975,577		2,611,311		2,974,011		Total operating expenses	1,103,118		856,201		3,095,250		2,611,311
Operating income	Operating income	270,741		301,056		729,771		879,725		Operating income	337,563		270,741		947,519		729,771
Interest expense	Interest expense	(21,187)		(21,308)		(66,597)		(65,436)		Interest expense	(20,476)		(21,187)		(59,865)		(66,597)
Other (expense) income, net		(1,479)		(5,517)		142,428		(12,521)
Other income (expense), net										Other income (expense), net	2,581		(1,479)		(3,775)		142,428
Income before income taxes	Income before income taxes	248,075		274,231		805,602		801,768		Income before income taxes	319,668		248,075		883,879		805,602
Provision for income taxes	Provision for income taxes	43,494		53,482		154,188		161,248		Provision for income taxes	62,208		43,494		175,507		154,188
Net income	Net income	$	204,581	$	220,749	$	651,414	$	640,520	Net income	$	257,460	$	204,581	$	708,372	$	651,414
Basic earnings per share	Basic earnings per share	$	0.89	$	0.97	$	2.84	$	2.82	Basic earnings per share	$	1.11	$	0.89	$	3.07	$	2.84
Diluted earnings per share	Diluted earnings per share	$	0.88	$	0.96	$	2.82	$	2.79	Diluted earnings per share	$	1.10	$	0.88	$	3.04	$	2.82
Weighted average common shares outstanding:	Weighted average common shares outstanding:									Weighted average common shares outstanding:
Basic shares	Basic shares	229,576		228,041		229,254		227,493		Basic shares	231,171		229,576		230,811		229,254
Diluted shares	Diluted shares	231,460		229,560		230,904		229,191		Diluted shares	233,000		231,460		232,712		230,904
Dividends declared and paid per share	Dividends declared and paid per share	$	0.18	$	0.14	$	0.54	$	0.42	Dividends declared and paid per share	$	0.20	$	0.18	$	0.60	$	0.54

See accompanying notes.

Table of Contents

AMETEK, Inc.

Condensed Consolidated Statement of Comprehensive Income

(In thousands)

(Unaudited)

Three Months Ended
September 30, Nine Months Ended
September 30,
2020 2019 2020 2019
Total comprehensive income $ 229,713 $ 198,102 $ 650,908 $ 633,135


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Total comprehensive income	$	240,076	$	229,713	$	688,575	$	650,908

See accompanying notes.

Table of Contents

AMETEK, Inc.

Consolidated Balance Sheet

(In thousands)


		September 30, 2020		December 31, 2019			September 30, 2021		December 31, 2020
		(Unaudited)					(Unaudited)
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	1,304,838	$	393,030	Cash and cash equivalents	$	358,676	$	1,212,822
Receivables, net	Receivables, net	614,773		744,760		Receivables, net	768,386		597,472
Inventories, net	Inventories, net	584,753		624,567		Inventories, net	738,688		559,171
Other current assets	Other current assets	138,654		263,414		Other current assets	196,065		153,005
Total current assets	Total current assets	2,643,018		2,025,771		Total current assets	2,061,815		2,522,470
Property, plant and equipment, net	Property, plant and equipment, net	508,645		548,908		Property, plant and equipment, net	597,488		526,530
Right of use assets, net	Right of use assets, net	166,728		179,679		Right of use assets, net	169,075		167,233
Goodwill	Goodwill	4,188,754		4,047,539		Goodwill	5,180,999		4,224,906
Other intangibles, net	Other intangibles, net	2,644,404		2,762,872		Other intangibles, net	3,344,855		2,623,719
Investments and other assets	Investments and other assets	281,837		279,790		Investments and other assets	325,463		292,625
Total assets	Total assets	$	10,433,386	$	9,844,559	Total assets	$	11,679,695	$	10,357,483

LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY					LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Short-term borrowings and current portion of long-term debt, net	Short-term borrowings and current portion of long-term debt, net	$	505,030	$	497,449	Short-term borrowings and current portion of long-term debt, net	$	415,667	$	132,284
Accounts payable	Accounts payable	324,837		377,219		Accounts payable	446,409		360,370
Customer advanced payments	Customer advanced payments	175,834		156,818		Customer advanced payments	287,404		194,633
Income taxes payable	Income taxes payable	40,771		30,292		Income taxes payable	66,017		38,896
Accrued liabilities and other	Accrued liabilities and other	357,022		364,080		Accrued liabilities and other	418,329		349,732
Total current liabilities	Total current liabilities	1,403,494		1,425,858		Total current liabilities	1,633,826		1,075,915
Long-term debt, net	Long-term debt, net	2,295,810		2,271,292		Long-term debt, net	2,238,920		2,281,441
Deferred income taxes	Deferred income taxes	541,516		536,140		Deferred income taxes	697,688		533,478
Other long-term liabilities	Other long-term liabilities	488,374		495,777		Other long-term liabilities	550,865		517,303
Total liabilities	Total liabilities	4,729,194		4,729,067		Total liabilities	5,121,299		4,408,137
Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Common stock	Common stock	2,671		2,662		Common stock	2,686		2,676
Capital in excess of par value	Capital in excess of par value	890,585		832,821		Capital in excess of par value	986,317		921,752
Retained earnings	Retained earnings	6,914,976		6,387,612		Retained earnings	7,664,682		7,094,656
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(533,645)		(533,139)		Accumulated other comprehensive loss	(524,265)		(504,468)
Treasury stock	Treasury stock	(1,570,395)		(1,574,464)		Treasury stock	(1,571,024)		(1,565,270)
Total stockholders’ equity	Total stockholders’ equity	5,704,192		5,115,492		Total stockholders’ equity	6,558,396		5,949,346
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	10,433,386	$	9,844,559	Total liabilities and stockholders’ equity	$	11,679,695	$	10,357,483

See accompanying notes.

Table of Contents

AMETEK, Inc.

Consolidated Statement of Stockholders’ Equity

(In thousands)

(Unaudited)


		Three months ended September 30,				Nine Months Ended September 30,					Three months ended September 30,				Nine months ended September 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Capital stock	Capital stock									Capital stock
Preferred stock, $0.01 par value		$	—	$	—	$	—	$	—

Common stock, $0.01 par value	Common stock, $0.01 par value									Common stock, $0.01 par value
Balance at the beginning of the period	Balance at the beginning of the period	2,668		2,654		2,662		2,640		Balance at the beginning of the period	$	2,684	$	2,668	$	2,676	$	2,662
Shares issued	Shares issued	3		3		9		17		Shares issued	2		3		10		9
Balance at the end of the period	Balance at the end of the period	2,671		2,657		2,671		2,657		Balance at the end of the period	2,686		2,671		2,686		2,671
Capital in excess of par value	Capital in excess of par value									Capital in excess of par value
Balance at the beginning of the period	Balance at the beginning of the period	860,771		759,775		832,821		706,743		Balance at the beginning of the period	964,791		860,771		921,752		832,821
Issuance of common stock under employee stock plans	Issuance of common stock under employee stock plans	18,989		19,347		27,886		56,933		Issuance of common stock under employee stock plans	10,098		18,989		29,544		27,886
Share-based compensation costs		10,825		13,558		29,878		29,004
Share-based compensation expense										Share-based compensation expense	11,428		10,825		35,021		29,878
Balance at the end of the period	Balance at the end of the period	890,585		792,680		890,585		792,680		Balance at the end of the period	986,317		890,585		986,317		890,585
Retained earnings	Retained earnings									Retained earnings
Balance at the beginning of the period	Balance at the beginning of the period	6,751,686		6,009,968		6,387,612		5,653,811		Balance at the beginning of the period	7,453,401		6,751,686		7,094,656		6,387,612
Net income	Net income	204,581		220,749		651,414		640,520		Net income	257,460		204,581		708,372		651,414
Cash dividends paid	Cash dividends paid	(41,291)		(31,883)		(123,690)		(95,498)		Cash dividends paid	(46,178)		(41,291)		(138,345)		(123,690)
Adoption of ASU 2016-13	Adoption of ASU 2016-13	0		—		(360)		—		Adoption of ASU 2016-13	—		—		—		(360)
Other	Other	—		2		—		3		Other	(1)		—		(1)		—
Balance at the end of the period	Balance at the end of the period	6,914,976		6,198,836		6,914,976		6,198,836		Balance at the end of the period	7,664,682		6,914,976		7,664,682		6,914,976
Accumulated other comprehensive (loss) income	Accumulated other comprehensive (loss) income									Accumulated other comprehensive (loss) income
Foreign currency translation:	Foreign currency translation:									Foreign currency translation:
Balance at the beginning of the period	Balance at the beginning of the period	(315,252)		(292,790)		(286,248)		(302,138)		Balance at the beginning of the period	(256,421)		(315,252)		(250,748)		(286,248)
Translation adjustments	Translation adjustments	46,922		(44,543)		(2,103)		(38,368)		Translation adjustments	(31,207)		46,922		(45,160)		(2,103)
Change in long-term intercompany notes	Change in long-term intercompany notes	9,003		(11,292)		7,979		(12,312)		Change in long-term intercompany notes	(5,475)		9,003		(11,041)		7,979
Net investment hedge instruments gain (loss), net of tax of $10,459 and $(9,736) for the quarter ended September 30, 2020 and 2019 and $3,681 and $(11,086) for the nine months ended September 30, 2020 and 2019, respectively		(32,476)		30,231		(11,431)		34,424
Net investment hedge instruments gain (loss), net of tax of $(5,715) and $10,459 for the quarter ended September 30, 2021 and 2020, and $(10,194) and $3,681 for the nine months ended September 30, 2021 and 2020, respectively										Net investment hedge instruments gain (loss), net of tax of $(5,715) and $10,459 for the quarter ended September 30, 2021 and 2020, and $(10,194) and $3,681 for the nine months ended September 30, 2021 and 2020, respectively	17,668		(32,476)		31,514		(11,431)
Balance at the end of the period	Balance at the end of the period	(291,803)		(318,394)		(291,803)		(318,394)		Balance at the end of the period	(275,435)		(291,803)		(275,435)		(291,803)
Defined benefit pension plans:	Defined benefit pension plans:									Defined benefit pension plans:
Balance at the beginning of the period	Balance at the beginning of the period	(243,525)		(243,036)		(246,891)		(248,950)		Balance at the beginning of the period	(250,460)		(243,525)		(253,720)		(246,891)
Amortization of net actuarial loss (gain) and other, net of tax of $(531) and $(873) for the quarter ended September 30, 2020 and 2019, and $(1,593) and $(2,620) for the nine months ended September 30, 2020 and 2019, respectively		1,683		2,957		5,049		8,871
Amortization of net actuarial loss and other, net of tax of $(527) and $(531) for the quarter ended September 30, 2021 and 2020, and $(1,581) and $(1,593) for the nine months ended September 30, 2021 and 2020, respectively										Amortization of net actuarial loss and other, net of tax of $(527) and $(531) for the quarter ended September 30, 2021 and 2020, and $(1,581) and $(1,593) for the nine months ended September 30, 2021 and 2020, respectively	1,630		1,683		4,890		5,049
Balance at the end of the period	Balance at the end of the period	(241,842)		(240,079)		(241,842)		(240,079)		Balance at the end of the period	(248,830)		(241,842)		(248,830)		(241,842)
Accumulated other comprehensive loss at the end of the period	Accumulated other comprehensive loss at the end of the period	(533,645)		(558,473)		(533,645)		(558,473)		Accumulated other comprehensive loss at the end of the period	(524,265)		(533,645)		(524,265)		(533,645)
Treasury stock	Treasury stock									Treasury stock
Balance at the beginning of the period	Balance at the beginning of the period	(1,569,908)		(1,569,790)		(1,574,464)		(1,570,184)		Balance at the beginning of the period	(1,570,696)		(1,569,908)		(1,565,270)		(1,574,464)
Issuance of common stock under employee stock plans	Issuance of common stock under employee stock plans	(414)		346		8,638		7,062		Issuance of common stock under employee stock plans	(143)		(414)		7,309		8,638
Purchase of treasury stock	Purchase of treasury stock	(73)		(291)		(4,569)		(6,613)		Purchase of treasury stock	(185)		(73)		(13,063)		(4,569)
Balance at the end of the period	Balance at the end of the period	(1,570,395)		(1,569,735)		(1,570,395)		(1,569,735)		Balance at the end of the period	(1,571,024)		(1,570,395)		(1,571,024)		(1,570,395)
Total stockholders’ equity	Total stockholders’ equity	$	5,704,192	$	4,865,965	$	5,704,192	$	4,865,965	Total stockholders’ equity	$	6,558,396	$	5,704,192	$	6,558,396	$	5,704,192

See accompanying notes.

Table of Contents

AMETEK, Inc.

Condensed Consolidated Statement of Cash Flows

(In thousands)

(Unaudited)


		Nine months ended September 30,					Nine months ended September 30,
		2020		2019			2021		2020
Cash provided by (used for):	Cash provided by (used for):					Cash provided by (used for):
Operating activities:	Operating activities:					Operating activities:
Net income	Net income	$	651,414	$	640,520	Net income	$	708,372	$	651,414
Adjustments to reconcile net income to total operating activities:	Adjustments to reconcile net income to total operating activities:					Adjustments to reconcile net income to total operating activities:
Depreciation and amortization	Depreciation and amortization	190,398		169,935		Depreciation and amortization	214,494		190,398
Deferred income taxes	Deferred income taxes	(4,532)		13,397		Deferred income taxes	(7,209)		(4,532)
Share-based compensation expense	Share-based compensation expense	29,878		29,004		Share-based compensation expense	35,021		29,878
Gain on sale of business	Gain on sale of business	(141,020)		0		Gain on sale of business	(6,349)		(141,020)
Gain on sale of facilities	Gain on sale of facilities	(7,523)		(4,529)		Gain on sale of facilities	—		(7,523)
Net change in assets and liabilities, net of acquisitions	Net change in assets and liabilities, net of acquisitions	176,743		(82,604)		Net change in assets and liabilities, net of acquisitions	(60,947)		176,743
Pension contributions	Pension contributions	(5,110)		(2,505)		Pension contributions	(6,414)		(5,110)
Other, net	Other, net	4,850		8,996		Other, net	1,592		4,850
Total operating activities	Total operating activities	895,098		772,214		Total operating activities	878,560		895,098
Investing activities:	Investing activities:					Investing activities:
Additions to property, plant and equipment	Additions to property, plant and equipment	(37,164)		(61,525)		Additions to property, plant and equipment	(67,229)		(37,164)
Purchases of businesses, net of cash acquired	Purchases of businesses, net of cash acquired	(116,509)		(122,149)		Purchases of businesses, net of cash acquired	(1,839,664)		(116,509)
Proceeds from sale of business	Proceeds from sale of business	245,311		0		Proceeds from sale of business	12,000		245,311
Proceeds from sale of facilities	Proceeds from sale of facilities	9,508		8,263		Proceeds from sale of facilities	—		9,508
Other, net	Other, net	(2,457)		2,059		Other, net	(291)		(2,457)
Total investing activities	Total investing activities	98,689		(173,352)		Total investing activities	(1,895,184)		98,689
Financing activities:	Financing activities:					Financing activities:
Net change in short-term borrowings	Net change in short-term borrowings	109,997		(258,211)		Net change in short-term borrowings	286,126		109,997
Proceeds from long-term borrowings		0		100,000

Repayments of long-term borrowings	Repayments of long-term borrowings	(102,947)		0		Repayments of long-term borrowings	—		(102,947)
Repurchases of common stock	Repurchases of common stock	(4,569)		(6,613)		Repurchases of common stock	(13,063)		(4,569)
Cash dividends paid	Cash dividends paid	(123,690)		(95,498)		Cash dividends paid	(138,345)		(123,690)
Proceeds from stock option exercises	Proceeds from stock option exercises	39,880		59,645		Proceeds from stock option exercises	42,301		39,880
Other, net	Other, net	(3,389)		(7,249)		Other, net	(5,818)		(3,389)
Total financing activities	Total financing activities	(84,718)		(207,926)		Total financing activities	171,201		(84,718)
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	2,739		(9,535)		Effect of exchange rate changes on cash and cash equivalents	(8,723)		2,739
Increase in cash and cash equivalents		911,808		381,401
(Decrease) Increase in cash and cash equivalents						(Decrease) Increase in cash and cash equivalents	(854,146)		911,808
Cash and cash equivalents:	Cash and cash equivalents:					Cash and cash equivalents:
Beginning of period	Beginning of period	393,030		353,975		Beginning of period	1,212,822		393,030
End of period	End of period	$	1,304,838	$	735,376	End of period	$	358,676	$	1,304,838

See accompanying notes.

Table of Contents

AMETEK, Inc.

Notes to Consolidated Financial Statements

September 30, ~~2020~~2021

(Unaudited)

1. Basis of Presentation

The accompanying consolidated financial statements are unaudited. AMETEK, Inc. (the “Company”) believes that all adjustments (which primarily consist of normal recurring accruals) necessary for a fair presentation of the consolidated financial position of the Company at September 30, ~~2020,~~2021, the consolidated results of its operations for the three and nine months ended September 30, ~~2020~~2021 and ~~2019~~2020 and its cash flows for the nine months ended September 30, ~~2020~~2021 and ~~2019~~2020 have been included. Quarterly results of operations are not necessarily indicative of results for the full year. The accompanying consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes presented in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 as filed with the U.S. Securities and Exchange Commission.

~~COVID-19~~

On March 11, 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic. As a result of market and economic conditions, in accordance with the guidelines set forth in ASC 350 and ASC 360, the Company performed an analysis for potential interim impairment indicators of its intangible and other long-lived assets. As of September 30, 2020, the Company concluded there were no indicators of impairment that resulted in a triggering event to perform an interim test of impairment of goodwill, other indefinite-lived intangibles, or long-lived assets.

2. Recent Accounting Pronouncements

Recently Adopted Accounting ~~Pronouncements~~

~~Effective January 1, 2020, the Company adopted ASU No. 2016-13,~~ ~~Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments~~ (“ASU 2016-13”), using the modified retrospective transition method. ASU 2016-13 provides guidance on the estimation of current expected credit losses on financial instruments, including trade receivables. ASU 2016-13 requires entities to consider a broad range of information to estimate expected credit losses, including increased forward-looking information, which may result in earlier recognition of losses when compared to prior standards. The adoption of ~~ASU 2016-13~~ ~~was a decrease to net Accounts Receivable and a decrease to Retained Earnings of $0.4 million. See Note 3 - Revenues, for further discussion.~~

~~In August 2018, the FASB issued ASU No. 2018-13,~~ ~~Fair Value Measurement~~ ~~(“ASU 2018-13”), which changes the fair value measurement disclosure requirements of ASC Topic 820,~~ ~~Fair Value Measurement~~ (“ASC 820”), by eliminating, modifying and adding to those requirements. ASU 2018-13 also modifies the disclosure objective paragraphs of ASC 820 to eliminate (1) “at a minimum” from the phrase “an entity shall disclose at a minimum” and (2) other similar “open ended” disclosure requirements to promote the appropriate exercise of discretion by entities. The Company prospectively adopted ASU 2018-13, effective January 1, 2020, and the adoption did not have a significant impact on the Company’s consolidated results of operations, financial position, cash flows and 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 recognized over the term of the arrangement, if those costs would be capitalized by the customer in a software licensing arrangement under the internal-use software guidance in ASC Topic 350, Intangibles–Goodwill and Other. ASU 2018-15 requires a customer to disclose the nature of its hosting arrangements that are service contracts and provide disclosures as if the deferred implementation costs were a separate, major depreciable asset class. The Company prospectively adopted ASU 2018-15, effective January 1, 2020, and the adoption did not have a significant impact on the Company’s consolidated results of operations, financial position, cash flows and financial statement disclosures.

~~Table of Contents~~

~~AMETEK, Inc.~~

~~Notes to Consolidated Financial Statements~~

~~September 30, 2020~~

~~(Unaudited)~~

~~Recent Accounting Pronouncements~~Pronouncement

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which simplifies the accounting for income taxes by removing certain exceptions to the general principles in ASC Topic 740. The Company prospectively adopted ASU 2019-12, is effective ~~for fiscal years beginning after December 15, 2021. Early adoption is permitted~~January 1, 2021, and the ~~amendments in this ASU should be applied on~~adoption did not have a ~~retrospective basis to all periods presented. The Company has not determined the~~significant impact ~~ASU 2019-12 may have~~ on the Company’s consolidated results of operations, financial position, cash flows ~~or financial statement disclosures.~~

In August 2018, the FASB issued ASU No. 2018-14, Compensation–Retirement Benefits–Defined Benefit Plans–General (“ASU 2018-14”), which changes the disclosure requirements of ASC Topic 715, Compensation – Retirement Benefits, by eliminating, modifying and adding to those requirements. ASU 2018-14 is effective for fiscal years beginning after December 15, 2020. Early adoption is permitted and the amendments in this ASU should be applied on a retrospective basis to all periods presented. The Company has not determined the impact ASU 2018-14 may have on the Company’s consolidated financial statement disclosures.

3. Revenues

The outstanding contract asset and liability accounts were as follows:


		2020		2019			2021		2020
		(In thousands)					(In thousands)
Contract assets—January 1	Contract assets—January 1	$	73,039	$	58,266	Contract assets—January 1	$	68,971	$	73,039
Contract assets – September 30	Contract assets – September 30	68,157		78,010		Contract assets – September 30	82,986		68,157
Change in contract assets – (decrease) increase		(4,882)		19,744
Change in contract assets – increase (decrease)						Change in contract assets – increase (decrease)	14,015		(4,882)
Contract liabilities – January 1	Contract liabilities – January 1	167,306		146,162		Contract liabilities – January 1	215,093		167,306
Contract liabilities – September 30	Contract liabilities – September 30	198,660		152,897		Contract liabilities – September 30	311,674		198,660
Change in contract liabilities – increase	Change in contract liabilities – increase	(31,354)		(6,735)		Change in contract liabilities – increase	(96,581)		(31,354)
Net change	Net change	$	(36,236)	$	13,009	Net change	$	(82,566)	$	(36,236)

The net change for the nine months ended September 30, ~~2020~~2021 was primarily driven by contract liabilities from the ~~receipt of~~2021 acquisitions' advance payments from ~~customers exceeding the recognition of revenue as performance obligations were satisfied.~~customers. For the nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, the Company recognized revenue of ~~$120.6~~$179.1 million and ~~$123.6~~$120.6 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 September 30, ~~2020~~2021 and December 31, ~~2019, $22.9~~2020, $24.3 million and ~~$10.6~~$20.5 million of Customer advanced payments (contract liabilities), respectively, were recorded in Other long-term liabilities in the consolidated balance sheets.

~~Applying the practical expedient available under ASC 606, the~~The remaining performance obligations exceeding one year as of September 30, ~~2020~~2021 and December 31, ~~2019~~2020 were ~~$322.0~~$545.3 million and ~~$233.3~~$300.8 million, respectively. The increase was primarily driven by the 2021 acquisitions. Remaining performance obligations represent the transaction price of firm, non-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 three and nine months ended September 30, 2020 is shown below. Net sales were attributed to geographic areas based on the location of the customer.

Table of Contents

AMETEK, Inc.

Notes to Consolidated Financial Statements

September 30, ~~2020~~2021

(Unaudited)

Geographic Areas

Net sales were attributed to geographic areas based on the location of the customer. Information about the Company’s operations in different geographic areas was as follows for the three and nine months ended September 30:


	Three months ended September 30, 2021						Nine months ended September 30, 2021
	EIG		EMG		Total		EIG		EMG		Total
	(In thousands)
United States	$	509,075	$	230,524	$	739,599	$	1,393,015	$	666,618	$	2,059,633
International(1):
United Kingdom	25,358		32,846		58,204		67,954		91,465		159,419
European Union countries	117,035		102,069		219,104		338,556		300,970		639,526
Asia	242,063		65,624		307,687		657,478		192,267		849,745
Other foreign countries	88,284		27,803		116,087		249,670		84,776		334,446
Total international	472,740		228,342		701,082		1,313,658		669,478		1,983,136
Consolidated net sales	$	981,815	$	458,866	$	1,440,681	$	2,706,673	$	1,336,096	$	4,042,769

________________

(1) Includes U.S. export sales of $391.0 million and $1,087.3 million for the three and nine months ended September 30, 2021, respectively.


	Three months ended September 30, 2020						Nine months ended September 30, 2020
	EIG		EMG		Total		EIG		EMG		Total
	(In thousands)
United States	$	379,744	$	198,440	$	578,184	$	1,125,046	$	622,498	$	1,747,544
International(1):
United Kingdom	11,488		28,657		40,145		39,708		84,547		124,255
European Union countries	97,028		78,851		175,879		282,605		246,944		529,549
Asia	188,254		47,496		235,750		514,189		138,862		653,051
Other foreign countries	71,858		25,126		96,984		208,931		77,752		286,683
Total international	368,628		180,130		548,758		1,045,433		548,105		1,593,538
Consolidated net sales	$	748,372	$	378,570	$	1,126,942	$	2,170,479	$	1,170,603	$	3,341,082

~~________________~~______________

(1) Includes U.S. export sales of $303.2 million and $866.3 million for the three and nine months ended September 30, 2020, respectively.

Information about the Company’s operations in different geographic areas for the three and nine months ended September 30, 2019 is shown below. Net sales were attributed to geographic areas based on the location of the customer.

Three months ended September 30, 2019 Nine months ended September 30, 2019
EIG EMG Total EIG EMG Total
(In thousands)
United States $ 421,629 $ 252,343 $ 673,972 $ 1,250,564 $ 764,001 $ 2,014,565
International(1):
United Kingdom 19,538 34,319 53,857 47,885 100,657 148,542
European Union countries 99,180 98,357 197,537 302,800 308,138 610,938
Asia 190,419 46,347 236,766 569,553 142,035 711,588
Other foreign countries 84,786 29,715 114,501 271,908 96,195 368,103
Total international 393,923 208,738 602,661 1,192,146 647,025 1,839,171
Consolidated net sales $ 815,552 $ 461,081 $ 1,276,633 $ 2,442,710 $ 1,411,026 $ 3,853,736

~~______________~~

~~(1) Includes U.S. export sales of $317.6 million and $965.1 million for the three and nine months ended September 30, 2019, respectively.~~

Major Products and Services

The Company’s major products and services in the reportable segments were as follows:


		Three months ended September 30, 2020						Nine months ended September 30, 2020							Three months ended September 30, 2021						Nine months ended September 30, 2021
		EIG		EMG		Total		EIG		EMG		Total			EIG		EMG		Total		EIG		EMG		Total
		(In thousands)													(In thousands)
Process and analytical instrumentation	Process and analytical instrumentation	$	557,570	$	—	$	557,570	$	1,589,550	$	—	$	1,589,550	Process and analytical instrumentation	$	661,243	$	—	$	661,243	$	1,881,923	$	—	$	1,881,923
Aerospace and power	Aerospace and power	190,802		116,126		306,928		580,929		347,510		928,439		Aerospace and power	320,572		130,671		451,243		824,750		379,310		1,204,060
Automation and engineered solutions	Automation and engineered solutions	—		262,444		262,444		—		823,093		823,093		Automation and engineered solutions	—		328,195		328,195		—		956,786		956,786
Consolidated net sales	Consolidated net sales	$	748,372	$	378,570	$	1,126,942	$	2,170,479	$	1,170,603	$	3,341,082	Consolidated net sales	$	981,815	$	458,866	$	1,440,681	$	2,706,673	$	1,336,096	$	4,042,769

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AMETEK, Inc.

Notes to Consolidated Financial Statements

September 30, ~~2020~~2021

(Unaudited)


		Three months ended September 30, 2019						Nine months ended September 30, 2019							Three months ended September 30, 2020						Nine months ended September 30, 2020
		EIG		EMG		Total		EIG		EMG		Total			EIG		EMG		Total		EIG		EMG		Total
		(In thousands)													(In thousands)
Process and analytical instrumentation	Process and analytical instrumentation	$	586,430	$	—	$	586,430	$	1,747,708	$	—	$	1,747,708	Process and analytical instrumentation	$	557,570	$	—	$	557,570	$	1,589,550	$	—	$	1,589,550
Aerospace and power	Aerospace and power	229,122		123,228		352,350		695,002		362,498		1,057,500		Aerospace and power	190,802		116,126		306,928		580,929		347,510		928,439
Automation and engineered solutions	Automation and engineered solutions	—		337,853		337,853		—		1,048,528		1,048,528		Automation and engineered solutions	—		262,444		262,444		—		823,093		823,093
Consolidated net sales	Consolidated net sales	$	815,552	$	461,081	$	1,276,633	$	2,442,710	$	1,411,026	$	3,853,736	Consolidated net sales	$	748,372	$	378,570	$	1,126,942	$	2,170,479	$	1,170,603	$	3,341,082

Timing of Revenue Recognition


		Three months ended September 30, 2020						Nine months ended September 30, 2020							Three months ended September 30, 2021						Nine months ended September 30, 2021
		EIG		EMG		Total		EIG		EMG		Total			EIG		EMG		Total		EIG		EMG		Total
		(In thousands)													(In thousands)
Products transferred at a point in time	Products transferred at a point in time	$	603,602	$	346,237	$	949,839	$	1,762,310	$	1,049,798	$	2,812,108	Products transferred at a point in time	$	791,486	$	413,062	$	1,204,548	$	2,206,252	$	1,204,662	$	3,410,914
Products and services transferred over time	Products and services transferred over time	144,770		32,333		177,103		408,169		120,805		528,974		Products and services transferred over time	190,329		45,804		236,133		500,421		131,434		631,855
Consolidated net sales	Consolidated net sales	$	748,372	$	378,570	$	1,126,942	$	2,170,479	$	1,170,603	$	3,341,082	Consolidated net sales	$	981,815	$	458,866	$	1,440,681	$	2,706,673	$	1,336,096	$	4,042,769


		Three months ended September 30, 2019						Nine months ended September 30, 2019							Three months ended September 30, 2020						Nine months ended September 30, 2020
		EIG		EMG		Total		EIG		EMG		Total			EIG		EMG		Total		EIG		EMG		Total
		(In thousands)													(In thousands)
Products transferred at a point in time	Products transferred at a point in time	$	652,950	$	416,280	$	1,069,230	$	1,984,938	$	1,286,060	$	3,270,998	Products transferred at a point in time	$	603,602	$	346,237	$	949,839	$	1,762,310	$	1,049,798	$	2,812,108
Products and services transferred over time	Products and services transferred over time	162,602		44,801		207,403		457,772		124,966		582,738		Products and services transferred over time	144,770		32,333		177,103		408,169		120,805		528,974
Consolidated net sales	Consolidated net sales	$	815,552	$	461,081	$	1,276,633	$	2,442,710	$	1,411,026	$	3,853,736	Consolidated net sales	$	748,372	$	378,570	$	1,126,942	$	2,170,479	$	1,170,603	$	3,341,082

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:


		Nine Months Ended September 30,					Nine Months Ended September 30,
		2020		2019			2021		2020
		(In thousands)					(In thousands)
Balance at the beginning of the period	Balance at the beginning of the period	$	27,611	$	23,482	Balance at the beginning of the period	$	27,839	$	27,611
Accruals for warranties issued during the period	Accruals for warranties issued during the period	9,766		14,342		Accruals for warranties issued during the period	8,379		9,766
Settlements made during the period	Settlements made during the period	(11,513)		(13,335)		Settlements made during the period	(9,112)		(11,513)
Warranty accruals related to acquired businesses and other during the period	Warranty accruals related to acquired businesses and other during the period	2,594		617		Warranty accruals related to acquired businesses and other during the period	2,227		2,594
Balance at the end of the period	Balance at the end of the period	$	28,458	$	25,106	Balance at the end of the period	$	29,333	$	28,458

Accounts Receivable

The Company maintains allowances for estimated losses resulting from the inability of customers to meet their financial obligations to the Company. The Company recognizes an allowance for ~~doubtful accounts,~~credit losses, on all accounts receivable and contract assets, which considers ~~the length~~risk of ~~time receivables are past due, customers’ billing exposure, ability to pay, and~~future credit losses based on factors such as historical experience, contract ~~terms. The Company also considers~~terms, as well as general and market business conditions, country, and political risk. Balances are written off when determined to be uncollectible.

At September 30, ~~2020,~~2021, the Company ~~recorded $614.8~~had $768.4 million of accounts ~~and notes~~ receivable, net of allowances of ~~$12.6~~$12.1 million. Changes in the allowance were not material for the three and nine months ended September 30, ~~2020.~~2021.

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AMETEK, Inc.

Notes to Consolidated Financial Statements

September 30, ~~2020~~2021

(Unaudited)

4. 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). Securities that are anti-dilutive have been excluded and are not significant. The number of weighted average shares used in the calculation of basic earnings per share and diluted earnings per share was as follows:


		Three Months Ended September 30,		Nine Months Ended September 30,			Three Months Ended September 30,		Nine Months Ended September 30,
		2020	2019	2020	2019		2021	2020	2021	2020
		(In thousands)					(In thousands)
Weighted average shares:	Weighted average shares:					Weighted average shares:
Basic shares	Basic shares	229,576	228,041	229,254	227,493	Basic shares	231,171	229,576	230,811	229,254
Equity-based compensation plans	Equity-based compensation plans	1,884	1,519	1,650	1,698	Equity-based compensation plans	1,829	1,884	1,901	1,650
Diluted shares	Diluted shares	231,460	229,560	230,904	229,191	Diluted shares	233,000	231,460	232,712	230,904

5. 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.

The Company utilizes a valuation hierarchy for disclosure of the inputs to the valuations used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets 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. Level 3 inputs are unobservable inputs based on the Company’s own assumptions used to measure assets and liabilities at fair 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 provides the Company’s assets that are measured at fair value on a recurring basis, consistent with the fair value hierarchy, at September 30, ~~2020~~2021 and December 31, ~~2019:~~2020:

September 30, 2020 December 31, 2019
Fair Value Fair Value
(In thousands)
Mutual fund investments $ 8,177 $ 8,390


	September 30, 2021		December 31, 2020
	Fair Value		Fair Value
	(In thousands)
Mutual fund investments	$	10,456	$	8,969

The fair value of mutual fund investments, which are valued as level 1 investments, was based on quoted market prices. The mutual fund investments are shown as a component of investments and other assets on the consolidated balance sheet.

For the nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, gains and losses on the investments noted above were not significant. ~~NaN~~No transfers between level 1 and level 2 investments occurred during the nine months ended September 30, ~~2020~~2021 and ~~2019.~~2020.

Financial Instruments

Cash, cash equivalents and mutual fund investments are recorded at fair value at September 30, ~~2020~~2021 and December 31, ~~2019~~2020 in the accompanying consolidated balance sheet.

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AMETEK, Inc.

Notes to Consolidated Financial Statements

September 30, ~~2020~~2021

(Unaudited)

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 September 30, ~~2020~~2021 and December 31, ~~2019:~~2020:

September 30, 2020 December 31, 2019
Recorded
Amount
Fair Value
Recorded
Amount
Fair Value
(In thousands)
Long-term debt, net (including current portion) $ (2,299,924) $ (2,492,828) $ (2,382,041) $ (2,531,549)


	September 30, 2021				December 31, 2020
	Recorded Amount		Fair Value		Recorded Amount		Fair Value
	(In thousands)
Long-term debt, net (including current portion)	$	(2,302,585)	$	(2,467,313)	$	(2,347,587)	$	(2,550,956)

The fair value of net short-term borrowings approximates the carrying value. Net short-term borrowings are valued as level 2 liabilities as they are corroborated by observable market data. The Company’s net long-term debt is all privately held with no public market for this debt, therefore, the fair value of net long-term debt was computed based on comparable current market data for similar debt instruments and is considered a level 3 liability.

Foreign Currency

At September 30, 2021, the Company had no foreign currency forward contracts outstanding. For the nine months ended September 30, 2021, the Company had no realized or unrealized gains or losses on foreign currency forward contracts. At September 30, 2020, the Company had a Canadian dollar forward contract for a total notional value of 24.0 million Canadian dollars and an immaterial unrealized gain outstanding. For the nine months ended September 30, 2020 realized and ~~2019, realized~~unrealized gains and losses on foreign currency forward contracts were not significant. The Company does not typically designate its foreign currency forward contracts as hedges.

6. 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 September 30, ~~2020,~~2021, these net investment hedges included British-pound-and Euro-denominated long-term debt. These borrowings were designed to create net investment hedges in certain 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 September 30, ~~2020,~~2021, the Company had ~~$290.7~~$303.0 million of British-pound-denominated loans, which were designated as a hedge against the net investment in British pound functional currency foreign subsidiaries. At September 30, ~~2020,~~2021, the Company had ~~$670.8~~$665.7 million 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- and Euro-denominated loans designated and 100% effective as net investment hedges, ~~$15.1~~$41.7 million of pre-tax currency remeasurement ~~losses~~gains have been included in the foreign currency translation component of other comprehensive income for the nine months ended September 30, ~~2020.~~2021.

7. Inventories, net


		September 30, 2020		December 31, 2019			September 30, 2021		December 31, 2020
		(In thousands)					(In thousands)
Finished goods and parts	Finished goods and parts	$	83,093	$	99,773	Finished goods and parts	$	87,370	$	81,619
Work in process	Work in process	110,593		118,240		Work in process	137,283		102,945
Raw materials and purchased parts	Raw materials and purchased parts	391,067		406,554		Raw materials and purchased parts	514,035		374,607
Total inventories, net	Total inventories, net	$	584,753	$	624,567	Total inventories, net	$	738,688	$	559,171

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AMETEK, Inc.

Notes to Consolidated Financial Statements

September 30, ~~2020~~2021

(Unaudited)

8. 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 right of use assets, accrued liabilities and other, and other long-term liabilities on our consolidated balance sheets. Operating lease right of use 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. Cash used in operations for operating leases was not materially different from operating lease expense for the nine months ended September 30, ~~2020~~2021 and ~~September 30, 2019.~~2020. The Company's leases have initial lease terms ranging from one month to 1416 years. Certain lease agreements contain provisions for future rent increases.

The components of lease expense were as follows:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			2021		2020		2021		2020
		(In thousands)									(In thousands)
Operating lease cost	Operating lease cost	$	10,715	$	10,500	$	31,704	$	29,209	Operating lease cost	$	13,560	$	10,715	$	37,083	$	31,704
Variable lease cost	Variable lease cost	1,611		543		3,701		3,073		Variable lease cost	1,737		1,611		4,609		3,701
Total lease cost	Total lease cost	$	12,326	$	11,043	$	35,405	$	32,282	Total lease cost	$	15,297	$	12,326	$	41,692	$	35,405

Supplemental balance sheet information related to leases was as follows:


	September 30, 2021		December 31, 2020
	(In thousands)
Right of use assets, net	$	169,075	$	167,233
Lease liabilities included in Accrued Liabilities and other	47,803		44,948
Lease liabilities included in Other long-term liabilities	126,695		128,173
Total lease liabilities	$	174,498	$	173,121

Maturities of lease liabilities as of September 30, 2021 were as follows:


Lease Liability Maturity Analysis	Operating Leases
	(In thousands)
Remaining 2021	$	13,886
2022	50,802
2023	41,065
2024	29,023
2025	21,312
Thereafter	40,161
Total lease payments	196,249
Less: imputed interest	21,751
	$	174,498

The Company does not have any significant leases that have not yet commenced.

9. Acquisitions and Divestiture

Acquisitions

The Company spent $1,839.7 million in cash, net of cash acquired, to acquire Magnetrol International ("Magnetrol"), Crank Software, and EGS Automation ("EGS") in March 2021, and NSI-MI Technologies ("NSI-MI") and Abaco Systems, Inc. ("Abaco") in April 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. Crank Software is a leading provider of embedded graphical user interface software and services. EGS is an automation solutions provider that designs and manufactures highly engineered, customized robotic solutions used in critical applications for the medical, food and beverage, and general industrial markets. NSI-MI is a leading provider of radio

1413

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AMETEK, Inc.

Notes to Consolidated Financial Statements

September 30, ~~2020~~2021

(Unaudited)

~~Supplemental balance sheet information related to leases was as follows:~~

September 30,
2020 December 31,
2019
(In thousands)
Right of use assets, net $ 166,728 $ 179,679
Lease liabilities included in Accrued Liabilities and other 43,219 43,025
Lease liabilities included in Other long-term liabilities 129,286 142,620
Total lease liabilities $ 172,505 $ 185,645

~~Supplemental cash flow information~~frequency and ~~other information related to leases was as follows:~~

Nine Months Ended
September 30,
2020 2019
(In thousands)
Right-of-use assets obtained in exchange for new operating liabilities $ 25,981 $ 12,952
Weighted-average remaining lease terms—operating leases (years) 5.56 5.93
Weighted-average discount rate—operating leases 3.56 % 3.81 %

~~Maturities of lease liabilities as of September 30, 2020 were as follows:~~

Lease Liability Maturity Analysis Operating Leases
(In thousands)
Remaining 2020 $ 12,793
2021 46,702
2022 38,489
2023 29,394
2024 19,764
Thereafter 42,595
Total lease payments 189,737
Less: imputed interest 17,232
$ 172,505

~~The Company does not have any significant leases that have not yet commenced.~~

~~9. Acquisition~~microwave test and ~~Divestiture~~

~~Acquisition~~

~~The Company spent $116.5 million~~measurement systems for niche applications across the aerospace, defense, automotive, wireless communications, and research markets. Abaco specializes in ~~cash, net of cash acquired, to acquire IntelliPower in January 2020. IntelliPower designs~~open-architecture computing and ~~manufactures a broad portfolio of ruggedized solutions including uninterruptible power~~electronic systems ~~external battery packs, power distribution units~~for aerospace, defense, and ~~power conditioners. IntelliPower was privately held~~specialized industrial markets and is ~~headquartered in Orange, California. IntelliPower~~a leading provider of mission critical embedded computing systems. Magnetrol, Crank Software, NSI-MI, and Abaco are part of EIG. EGS is part of ~~EIG.~~EMG.

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~~AMETEK, Inc.~~

~~Notes to Consolidated Financial Statements~~

~~September 30, 2020~~

~~(Unaudited)~~

The following table represents the allocation of the purchase price for the net assets of the ~~IntelliPower acquisition~~acquisitions based on the estimated fair values at acquisition (in millions):


~~Property, plant and equipment~~	$	~~1.8~~
~~Goodwill~~	~~58.0~~
~~Other intangible assets~~	~~59.5~~
~~Deferred income taxes~~	~~(13.1)~~
~~Net working capital and other(1)~~	~~10.3~~
~~Total cash paid~~	$	~~116.5~~


	Abaco		Other Acquisitions		Total
	(in millions)
Property, plant and equipment	$	56.2	$	39.2	$	95.4
Goodwill	737.9		244.7		982.6
Other intangible assets	616.9		252.8		869.7
Deferred income taxes	(122.2)		(30.5)		(152.7)
Net working capital and other(1)	57.1		(12.4)		44.7
Total cash paid	$	1,345.9	$	493.8	$	1,839.7

________________

(1)Includes ~~$6.4~~$66.2 million in accounts receivable, whose fair value, contractual cash flows and expected cash flows are approximately equal.

The amount allocated to goodwill is reflective of the benefits the Company expects to realize ~~as IntelliPower’s products~~from the 2021 acquisitions. Abaco's computing and electronic solutions ~~broaden~~expand and complement the Company's existing aerospace and defense businesses. NSI-MI strengthens the Company's test and measurement platform. Magnetrol's solutions combined with the Company’s existing Sensors, Test and Calibration business, becomes an industry leading differentiated ~~product offerings~~sensor platform with a broad range of level and flow measurement solutions. Crank Software expands the Company's growing portfolio of software solutions. EGS complements the Company's existing Dunkermotoren business providing highly customizable engineering design and automation capabilities. The Company expects approximately $108 million of the goodwill relating to the 2021 acquisitions will be tax deductible in ~~the power systems and instruments sectors.~~future years.

At September 30, ~~2020,~~2021, the purchase price allocated to other intangible assets of ~~$59.5~~$869.7 million consists of ~~$9.0~~$116.1 million of indefinite-lived intangible trade names, which are not subject to amortization. The remaining ~~$50.5~~$753.6 million of other intangible assets consists of ~~$38.0~~$569.9 million of customer relationships, which are being amortized over a period of 15 to 20 years, and ~~$12.5~~$183.7 million of purchased technology, which is being amortized over a period of 1511 to 20 years. Amortization expense for each of the next five years for the ~~2020 acquisition~~2021 acquisitions is expected to approximate $3$41 million per year.

~~The~~At September 30, 2021, the Company finalized the ~~measurement~~measurements of certain tangible and intangible assets and liabilities for its ~~2020 acquisition~~2021 acquisitions of ~~IntelliPower, as well as the accounting for income taxes. The Company finalized the measurement of its goodwill~~EGS and ~~other intangible assets related to its fourth quarter of 2019 acquisition of Gatan,~~Crank Software, which had no material impact to the ~~Company's Statement~~consolidated statement of ~~Income.~~income. The Company is in the process of finalizing the measurement of the intangible assets and certain tangible assets and liabilities, as well as accounting for income taxes, for its 2021 acquisitions of Abaco, Magnetrol, and NSI-MI.

The ~~IntelliPower acquisition~~acquisitions had an immaterial impact on reported ~~net sales,~~ net income and diluted earnings per share for the three and nine months ended September 30, ~~2020.~~2021. The acquisitions increased net sales by approximately 11% and 6% for the three and nine months ended September 30, 2021, respectively. Had the ~~acquisition~~acquisitions been made at the beginning of ~~2020~~2021 or ~~2019, unaudited~~2020, pro forma ~~net sales,~~ net income and diluted earnings per share for the three and nine months ended September 30, ~~2020~~2021 and ~~2019, respectively,~~2020, would not have been materially different than the amounts reported. Pro forma net sales would not have been materially different than the amounts reported for the three and nine months ended September 30, 2021 and would have been approximately 10% higher than the reported amounts for the three and nine months ended September 30, 2020.

Divestiture

The Company completed its sale of Reading Alloys to Kymera International in March 2020 for net cash proceeds of $245.3 million. The sale resulted in a pretax gain of $141.0 million, recorded in Other income, ~~(expense),~~ net in the Consolidated

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AMETEK, Inc.

Notes to Consolidated Financial Statements

September 30, 2021

(Unaudited)

Statement of Income, and income tax expense of approximately $31.4 million in connection with the sale. Reading Alloys revenue and costs were reported within the EMG segment through the date of sale.

10. Goodwill

The changes in the carrying amounts of goodwill by segment were as follows:

EIG EMG Total
(In millions)
Balance at December 31, 2019 $ 2,892.2 $ 1,155.3 $ 4,047.5
Goodwill acquired 58.0 — 58.0
Purchase price allocation adjustments and other 75.2 (0.2) 75.0
Foreign currency translation adjustments 5.3 3.0 8.3
Balance at September 30, 2020 $ 3,030.7 $ 1,158.1 $ 4,188.8


	EIG		EMG		Total
	(In millions)
Balance at December 31, 2020	$	3,050.3	$	1,174.6	$	4,224.9
Goodwill acquired from 2021 acquisitions	976.7		5.9		982.6
Purchase price allocation adjustments and other	1.9		—		1.9
Foreign currency translation adjustments	(15.9)		(12.5)		(28.4)
Balance at September 30, 2021	$	4,013.0	$	1,168.0	$	5,181.0

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~~AMETEK, Inc.~~

~~Notes to Consolidated Financial Statements~~

~~September 30, 2020~~

~~(Unaudited)~~

11. Income Taxes

At September 30, ~~2020,~~2021, the Company had gross uncertain tax benefits of ~~$95.1~~$156.6 million, of which ~~$56.8~~$103.7 million, if recognized, would impact the effective tax rate.

The following is a reconciliation of the liability for uncertain tax positions (in millions):


Balance at December 31, ~~2019~~2020	$	~~109.1~~100.7
Additions for tax positions	~~15.3~~56.7
Reductions for tax positions	~~(29.3)~~(0.8)
Balance at September 30, ~~2020~~2021	$	~~95.1~~156.6

The additions above primarily reflect the tax positions included as a component of goodwill for businesses recently acquired and foreign tax planning initiatives. The Company recognizes interest and penalties accrued related to uncertain tax positions in income tax expense. The amounts recognized in income tax expense for interest and penalties during the three and nine months ended September 30, ~~2020~~2021 and ~~2019~~2020 were not significant.

The effective tax rate for the three months ended September 30, ~~2020~~2021 was ~~17.5%~~19.5%, compared with ~~19.5%~~17.5% for the three months ended September 30, ~~2019.~~2020. The higher effective tax rate ~~for~~in 2021 is primarily due to an increase in the ~~nine months ended September 30, 2020 was 19.1%, compared with 20.1% for the nine months ended September 30, 2019. The lower~~foreign rate ~~for 2020 reflects the results of tax planning initiatives and lower overall foreign tax expense partially offset by lower year over year tax benefits~~differential related to ~~share-based payment transactions.~~the mix of earnings generated in higher taxed jurisdictions.

12. Debt

~~In the third quarter of 2020,~~On April 26, 2021, the Company ~~paid in full, at maturity, an 80~~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 add a new five-year, delayed draw, term loan for up to $800 million. The credit agreement places certain restrictions on allowable additional indebtedness. At September 30, 2021, the Company had $150.0 million ~~British pound ($102.9 million) in aggregate principal amount 4.68% senior note.~~outstanding on the term loan.

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AMETEK, Inc.

Notes to Consolidated Financial Statements

September 30, 2021

(Unaudited)

13. Share-Based Compensation

~~Under~~The Company's share-based compensation plans are described in Note 11, Share-Based Compensation, to the ~~terms of~~consolidated financial statements in Part II, Item 8, filed on 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~~Annual Report on Form 10-K for 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.year ended December 31, 2020.

Share Based Compensation Expense

Total share-based compensation expense was as follows:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			2021		2020		2021		2020
		(In thousands)									(In thousands)
Stock option expense	Stock option expense	$	3,331	$	3,214	$	10,330	$	9,594	Stock option expense	$	2,768	$	3,331	$	10,017	$	10,330
Restricted stock expense	Restricted stock expense	4,537		3,995		12,665		11,112		Restricted stock expense	4,848		4,537		16,765		12,665
PRSU expense		2,957		6,349		6,883		8,298
Performance restricted stock unit expense										Performance restricted stock unit expense	3,812		2,957		8,239		6,883
Total pre-tax expense	Total pre-tax expense	$	10,825	$	13,558	$	29,878	$	29,004	Total pre-tax expense	$	11,428	$	10,825	$	35,021	$	29,878

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.

Stock Options

The fair value of each stock option grant is estimated on the grant date 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 periods indicated:


		Nine Months Ended September 30, 2020			Year Ended December 31, 2019				Nine Months Ended September 30, 2021			Year Ended December 31, 2020
Expected volatility	Expected volatility	22.2		%	19.1		%	Expected volatility	24.2		%	22.2		%
Expected term (years)	Expected term (years)	5.0			5.0			Expected term (years)	5.0			5.0
Risk-free interest rate	Risk-free interest rate	0.52		%	2.25		%	Risk-free interest rate	0.85		%	0.52		%
Expected dividend yield	Expected dividend yield	1.14		%	0.66		%	Expected dividend yield	0.66		%	1.14		%
Black-Scholes-Merton fair value per stock option granted	Black-Scholes-Merton fair value per stock option granted	$	11.01		$	16.85		Black-Scholes-Merton fair value per stock option granted	$	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 the time of grant. The expected dividend yield is calculated by dividing the 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:


		Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value			Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value
		(In thousands)			(Years)	(In millions)			(In thousands)			(Years)	(In millions)
Outstanding at December 31, 2019		4,303	$	62.50
Outstanding at December 31, 2020								Outstanding at December 31, 2020	3,950	$	65.16
Granted	Granted	963	63.37					Granted	552	121.91
Exercised	Exercised	(697)	53.71					Exercised	(675)	60.32
Forfeited	Forfeited	(114)	71.27					Forfeited	(96)	84.03
Outstanding at September 30, 2020		4,455	$	63.84	5.8	$	158.4
Exercisable at September 30, 2020		2,540	$	59.31	4.0	$	101.8
Outstanding at September 30, 2021								Outstanding at September 30, 2021	3,731	$	73.95	6.1	$	186.8
Exercisable at September 30, 2021								Exercisable at September 30, 2021	2,410	$	65.00	4.6	$	142.2

The aggregate intrinsic value of stock options exercised during the nine months ended September 30, ~~2020~~2021 was ~~$37.4~~$40.7 million. The total fair value of stock options vested during the nine months ended September 30, ~~2020~~2021 was ~~$12.9~~$13.7 million. As of

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AMETEK, Inc.

Notes to Consolidated Financial Statements

September 30, ~~2020,~~2021

(Unaudited)

September 30, 2021, there was approximately ~~$17.4~~$16.4 million of expected future pre-tax compensation expense related to the ~~1.9~~1.3 million non-vested stock options outstanding, which is expected to be recognized over a weighted average period of approximately two years.

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 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.

Restricted Stock

The following is a summary of the Company’s non-vested restricted stock activity and related information:


		Shares	Weighted Average Grant Date Fair Value			Shares	Weighted Average Grant Date Fair Value
		(In thousands)				(In thousands)
Non-vested restricted stock outstanding at December 31, 2019		561	$	72.46
Non-vested restricted stock outstanding at December 31, 2020					Non-vested restricted stock outstanding at December 31, 2020	701	$	76.86
Granted	Granted	242	63.79		Granted	153	122.51
Vested	Vested	(191)	72.21		Vested	(353)	68.29
Forfeited	Forfeited	(36)	75.28		Forfeited	(37)	93.97
Non-vested restricted stock outstanding at September 30, 2020		576	$	68.72
Non-vested restricted stock outstanding at September 30, 2021					Non-vested restricted stock outstanding at September 30, 2021	464	$	97.07

The total fair value of restricted stock vested during the nine months ended September 30, ~~2020~~2021 was ~~$13.8~~$24.1 million. As of September 30, ~~2020,~~2021, there was approximately ~~$24.6~~$32.6 million of expected future pre-tax compensation expense related to the ~~0.6~~0.5 million non-vested restricted shares outstanding, which is expected to be recognized over a weighted average period of approximately two years.

Performance Restricted Stock Units

In March ~~2020,~~2021, the Company granted ~~PRSUs~~performance restricted stock units ("PRSU") to officers and certain key management-level ~~employees an aggregate target award of approximately 119,000 shares of its common stock.~~employees. 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 ~~2020 through~~of the year of grant to December 31 ~~2022.~~of the third year. 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, which represents a performance condition. The grant date fair value of these PRSUs are recognized as compensation expense over the vesting period based on the probable number of awards 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. ~~Total PRSUs outstanding at~~

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AMETEK, Inc.

Notes to Consolidated Financial Statements

September 30, ~~2020 were~~2021

(Unaudited)

The following is a summary of the Company’s non-vested performance restricted stock activity and related information:


	Shares	Weighted Average Grant Date Fair Value
	(In thousands)
Non-vested performance restricted stock outstanding at December 31, 2020	264	$	72.90
Granted	81	121.91
Performance assumption change 1	39	78.20
Vested	(88)	78.20
Forfeited	(5)	91.58
Non-vested performance restricted stock outstanding at September 30, 2021	291	$	85.29

1 Reflects the number of PRSUs above target levels based on performance metrics.

As of September 30, 2021, there was approximately ~~264,000.~~$7.3 million of expected future pre-tax compensation expense related to the 0.3 million non-vested restricted shares outstanding, which is expected to be recognized over a weighted average period of less than one year.

14. Retirement and Pension Plans

The components of net periodic pension benefit expense (income) were as follows:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			2021		2020		2021		2020
		(In thousands)									(In thousands)
Defined benefit plans:	Defined benefit plans:									Defined benefit plans:
Service cost	Service cost	$	1,979	$	1,678	$	5,858	$	5,093	Service cost	$	2,009	$	1,979	$	6,060	$	5,858
Interest cost	Interest cost	5,657		6,677		16,893		20,179		Interest cost	4,563		5,657		13,711		16,893
Expected return on plan assets	Expected return on plan assets	(13,681)		(13,061)		(40,889)		(39,272)		Expected return on plan assets	(14,172)		(13,681)		(42,567)		(40,889)
Amortization of net actuarial loss and other	Amortization of net actuarial loss and other	4,008		3,902		11,915		11,838		Amortization of net actuarial loss and other	7,550		4,008		16,282		11,915
Pension income	Pension income	(2,037)		(804)		(6,223)		(2,162)		Pension income	(50)		(2,037)		(6,514)		(6,223)
Other plans:	Other plans:									Other plans:
Defined contribution plans	Defined contribution plans	7,068		7,614		23,975		24,876		Defined contribution plans	7,792		7,068		24,208		23,975
Foreign plans and other	Foreign plans and other	1,934		3,816		5,807		6,921		Foreign plans and other	2,074		1,934		6,431		5,807
Total other plans	Total other plans	9,002		11,430		29,782		31,797		Total other plans	9,866		9,002		30,639		29,782
Total net pension expense	Total net pension expense	$	6,965	$	10,626	$	23,559	$	29,635	Total net pension expense	$	9,816	$	6,965	$	24,125	$	23,559

For defined benefit plans, the net periodic benefit income, other than the service cost component, is included in “Other (expense) income, net” in the consolidated statement of income.

For the nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, contributions to the Company’s defined benefit pension plans were ~~$5.1~~$6.4 million and ~~$2.5~~$5.1 million, respectively. The Company’s current estimate of ~~2020~~2021 contributions to its worldwide defined benefit pension plans is in line with the range disclosed in Note 12 of the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

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AMETEK, Inc.

Notes to Consolidated Financial Statements

September 30, 2021

(Unaudited)

15. Contingencies

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 September 30, ~~2020,~~2021, 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 8 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 4 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 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 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 September 30, ~~2020~~2021 and December 31, ~~2019~~2020 were ~~$30.3~~$33.8 million and ~~$28.9~~$32.4 million, respectively, for both non-owned and owned sites. For the nine months ended September 30, ~~2020,~~2021, the Company recorded ~~$6.0~~$7.3 million in reserves. Additionally, the Company spent ~~$4.5~~$5.9 million on environmental matters ~~and the reserve decreased $0.1 million due to foreign currency translation~~ for the nine months ended September 30, ~~2020.~~2021. The Company’s reserves for environmental liabilities at September 30, ~~2020~~2021 and December 31, ~~2019~~2020 included reserves of ~~$7.8~~$4.8 million and ~~$9.0~~$7.4 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

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AMETEK, Inc.

Notes to Consolidated Financial Statements

September 30, 2021

(Unaudited)

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 funds for medical monitoring to detect causally related personal injury, and seeking compensatory and punitive damages. While the Company believes that it has good and valid defenses to each of these claims and intends to defend them vigorously if pursued through trial, the parties agreed to terms to globally settle the cases. After extensive negotiations, the Company ~~entered into~~finalized and paid in April 2021 a global settlement of these lawsuits for an aggregate amount of $6.8 million, for which the Company had previously established reserves sufficient to cover this settlement. ~~The global settlement is subject to court approval in 2 class action cases.~~

~~16. Realignment Costs~~

During the nine months ended September 30, 2020, the Company recorded pre-tax realignment costs totaling $43.9 million, which had the effect of reducing net income by $33.6 million ($0.15 per diluted share). The realignment costs were reported in the consolidated statement of income as follows: $43.7 million in Cost of sales and $0.2 million in Selling, general and administrative expenses. The realignment costs were reported in segment operating income as follows: $22.8 million in EIG, $20.9 million in EMG.

The realignment actions primarily related to a reduction in workforce and asset write-downs, primarily inventory, in response to the weak global economy as a result of the COVID-19 pandemic. The realignment activities have been broadly implemented across the Company’s various businesses with substantially all actions expected to be completed by end of 2020.

~~Accrued liabilities and other in the Company’s consolidated balance sheet included amounts related to the first quarter of 2020 realignment costs as follows (in millions):~~


~~Balance at December 31, 2019~~	$	0
~~Pre-tax charges~~	~~43.9~~
~~Utilization~~	~~(19.0)~~

~~Balance at September 30, 2020~~	$	~~24.9~~

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

The following table sets forth net sales and income by reportable segment and on a consolidated basis:

Three Months Ended
September 30, Nine Months Ended
September 30,
2020 2019 2020 2019
(In thousands)
Net sales:
Electronic Instruments $ 748,372 $ 815,552 $ 2,170,479 $ 2,442,710
Electromechanical 378,570 461,081 1,170,603 1,411,026
Consolidated net sales $ 1,126,942 $ 1,276,633 $ 3,341,082 $ 3,853,736
Operating income and income before income taxes:
Segment operating income:
Electronic Instruments $ 203,749 $ 219,451 $ 534,613 $ 635,448
Electromechanical 84,303 103,451 245,154 303,329
Total segment operating income 288,052 322,902 779,767 938,777
Corporate administrative expenses (17,311) (21,846) (49,996) (59,052)
Consolidated operating income 270,741 301,056 729,771 879,725
Interest expense (21,187) (21,308) (66,597) (65,436)
Other income (expense), net (1,479) (5,517) 142,428 (12,521)
Consolidated income before income taxes $ 248,075 $ 274,231 $ 805,602 $ 801,768


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
	(In thousands)
Net sales:
Electronic Instruments	$	981,815	$	748,372	$	2,706,673	$	2,170,479
Electromechanical	458,866		378,570		1,336,096		1,170,603
Consolidated net sales	$	1,440,681	$	1,126,942	$	4,042,769	$	3,341,082
Operating income and income before income taxes:
Segment operating income:
Electronic Instruments	$	245,118	$	203,749	$	678,652	$	534,613
Electromechanical	114,571		84,303		332,038		245,154
Total segment operating income	359,689		288,052		1,010,690		779,767
Corporate administrative expenses	(22,126)		(17,311)		(63,171)		(49,996)
Consolidated operating income	337,563		270,741		947,519		729,771
Interest expense	(20,476)		(21,187)		(59,865)		(66,597)
Other (expense) income, net	2,581		(1,479)		(3,775)		142,428
Consolidated income before income taxes	$	319,668	$	248,075	$	883,879	$	805,602

For the ~~three and nine months~~quarter ended September 30, ~~2020,~~2021, the Company posted record sales, operating income, and backlog as well as strong operating cash flow. The Company achieved these results from organic sales growth in both EIG and EMG, contributions from the 2021 acquisitions of Abaco Systems, Inc., Magnetrol International, NSI-MI Technologies, Crank Software, and EGS Automation, as well as the Company's Operational Excellence initiatives.

The full year impact of the 2021 acquisitions, continued economic recovery, and benefits from its Operational Excellence initiatives are expected to have a positive impact on the remainder of the Company's 2021 results. While the ultimate duration and impact of the COVID-19 pandemic is unknown, the Company will continue to monitor and address the challenges of the pandemic throughout the remainder of the year.

Impact of COVID-19 Pandemic on our Business

The COVID-19 pandemic resulted in significant global economic disruption and had an adverse impact on the Company's financial results throughout 2020. As the global economy has begun to recover, the Company eliminated certain of the temporary cost saving actions put in place in 2020, but continues to closely monitor its fixed costs, capital expenditure plans, inventory, and capital resources to respond to changing conditions and to ensure it has the resources to meet its future needs. The Company has seen sequential improvement in its financial results since the third quarter of 2020, and this trend has continued in the first nine months of 2021. The current economic environment in which the Company operates is characterized by increased material cost inflation, logistics challenges, labor availability issues, and component part shortages. The Company continues to monitor and closely manage through these conditions. The Company expects the impact of these conditions to continue through the fourth quarter of 2021 and has taken steps to mitigate such impacts.

On September 24, 2021, the U.S. Safer Federal Workforce Task Force issued guidance requiring federal contractors and subcontractors to comply with COVID-19 safety protocols, including requiring certain employees to be fully vaccinated against COVID-19 by December 8, 2021, except in limited circumstances. The vaccination requirements will be incorporated in new government contracts, renewals, extensions and other modifications signed on and after October 15, 2021, and will apply to employees working on or in connection with such contracts, as well as to employees working at a location at which an employee working on such contract is likely to be present. The Company has determined the December 8, 2021 deadline for vaccination will apply to many of the Company's U.S. sites and is in the process of implementing this executive order across its U.S. workforce. It is uncertain to what extent compliance with the vaccine mandate may result in workforce attrition. While this mandate may have an impact on the Company's operations, we do not expect it to have a material adverse effect on the Company's financial condition, results of operations, or liquidity.

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The Company's top priority during this pandemic is the health and safety of its employees. All global manufacturing facilities remained fully operational during the third quarter and continue to operate with safety protocols in place to ensure the health and safety of its employees and communities. The Company will continue to evaluate the nature and extent of future impacts of the COVID-19 pandemic on its business. See Risk Factors, included in Part I, Item 1A of our Annual Report on Form 10-K, for further discussion of the possible impact of the COVID-19 pandemic on our business.

Results of operations for the third quarter of 2021 compared with the third quarter of 2020

Net sales for the third quarter of 2021 were a record $1,440.7 million, an increase of $313.8 million or 27.8%, compared with net sales of $1,126.9 million for the third quarter of 2020. The increase in net sales for the third quarter of 2021 was ~~impacted~~due to a 17% increase in organic sales, and an 11% increase from acquisitions.

Total international sales for the third quarter of 2021 were $701.1 million or 48.7% of net sales, an increase of $152.3 million or 27.8%, compared with international sales of $548.8 million or 48.7% of net sales for the third quarter of 2020. The increase in international sales was primarily driven by strong demand in Europe and Asia during the quarter as well as contributions from recent acquisitions.

Orders for the third quarter of 2021 were $1,552.6 million, an increase of $417.1 million or 36.7%, compared with $1,135.5 million for the third quarter of 2020. The increase in orders for the third quarter of 2021 was due to a 31% increase in organic orders, a 9% increase from acquisitions, partially offset by an unfavorable 3% effect of foreign currency translation. As a result, the Company's backlog of unfilled orders at September 30, 2021 was a record $2,623.5 million, an increase of $821.3 million or 45.6% compared with $1,802.2 million at December 31, 2020.

Segment operating income for the third quarter of 2021 was $359.7 million, an increase of $71.6 million or 24.9%, compared with segment operating income of $288.1 million for the third quarter of 2020. Segment operating margins, as a percentage of net sales, decreased to 25.0% for the third quarter of 2021, compared with 25.6% for the third quarter of 2020.

Cost of sales for the third quarter of 2021 was $949.4 million or 65.9% of net sales, an increase of $216.7 million or 29.6%, compared with $732.7 million or 65.0% of net sales for the third quarter of 2020. The cost of sales increase was primarily due to the net sales increase discussed above.

Selling, general and administrative expenses for the third quarter of 2021 were $153.7 million or 10.7% of net sales, an increase of $30.2 million or 24.5%, compared with $123.5 million or 11.0% of net sales for the third quarter of 2020. Selling, general and administrative expenses increased primarily due to the net sales increase discussed above.

Consolidated operating income was a record $337.6 million or 23.4% of net sales for the third quarter of 2021, an increase of $66.9 million or 24.7%, compared with $270.7 million or 24.0% of net sales for the third quarter of 2020.

Other income, net was $2.6 million for the third quarter of 2021, compared with $1.5 million of other expense, net for the third quarter of 2020, a change of $4.1 million.

The effective tax rate for the third quarter of 2021 was 19.5%, compared with 17.5% for the third quarter of 2020. The higher effective tax rate in 2021 is primarily due to an increase in the foreign rate differential related to the mix of earnings generated in higher taxed jurisdictions.

Net income for the third quarter of 2021 was $257.5 million, an increase of $52.9 million or 25.8%, compared with $204.6 million for the third quarter of 2020.

Diluted earnings per share for the third quarter of 2021 were $1.10, an increase of $0.22 or 25.0%, compared with $0.88 per diluted share for the third quarter of 2020.

Segment Results

EIG’s net sales totaled a record $981.8 million for the third quarter of 2021, an increase of $233.4 million or 31.2%, compared with $748.4 million for the third quarter of 2020. The net sales increase was due to a 15% increase in organic sales, and a 16% increase from acquisitions.

EIG’s operating income was a record $245.1 million for the third quarter of 2021, an increase of $41.4 million or 20.3%, compared with $203.7 million for the third quarter of 2020. EIG's operating income increased primarily due to the sales

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increase discussed above. EIG’s operating margins were 25.0% of net sales for the third quarter of 2021, compared with 27.2% for the third quarter of 2020. The 2021 acquisitions of Abaco, Magnetrol, NSI-MI, and Crank Software diluted operating margins by 220 basis points. Excluding the acquisitions, EIG operating margins were flat when compared to the third quarter of 2020.

EMG’s net sales totaled $458.9 million for the third quarter of 2021, an increase of $80.3 million or 21.2%, compared with $378.6 million for the third quarter of 2020. The net sales increase was due to a 20% organic sales increase, as well as a favorable 1% effect of foreign currency translation.

EMG’s operating income was a record $114.6 million for the third quarter of 2021, an increase of $30.3 million or 35.9%, compared with $84.3 million for the third quarter of 2020. EMG’s operating margins were a record 25.0% of net sales for the third quarter of 2021, compared with 22.3% for the third quarter of 2020. EMG's operating income and operating margins increased primarily due to the increase in sales discussed above as well as benefits from the Company's Operational Excellence initiatives.

Results of operations for the first nine months of 2021 compared with the first nine months of 2020

Net sales for the first nine months of 2021 were $4,042.8 million, an increase of $701.7 million or 21.0%, compared with net sales of $3,341.1 million for the first nine months of 2020. The increase in net sales for the first nine months of 2021 was due to a 14% organic sales increase, a 6% increase from acquisitions as well as a favorable 1% effect of foreign currency translation.

Total international sales for the first nine months of 2021 were $1,983.1 million or 49.1% of net sales, an increase of $389.6 million or 24.4%, compared with international sales of $1,593.5 million or 47.7% of net sales for the first nine months of 2020. The increase in international sales was primarily driven by strong demand in Europe and Asia as well as contributions from recent acquisitions.

Orders for the first nine months of 2021 were $4,864.0 million, an increase of $1,520.4 million or 45.5%, compared with $3,343.6 million for the first nine months of 2020. The increase in orders for the first nine months of 2021 was due to a 27% organic order increase, as well as an 18% increase from acquisitions.

Segment operating income for the first nine months of 2021 was $1,010.7 million, an increase of $230.9 million or 29.6%, compared with segment operating income of $779.8 million for the first nine months of 2020. Segment operating margins, as a percentage of net sales, increased to 25.0% for the first nine months of 2021, compared with 23.3% for the first nine months of 2020. The Company recorded realignment costs of $43.7 million in the first quarter of 2020 in response to the impact of a weak global economy as a result of the COVID-19 ~~pandemic,~~pandemic. The 2020 realignment costs were composed of $35.3 million in severance costs for a reduction in workforce and $8.4 million of asset write-downs, primarily inventory, which decreased margins by130 basis points for the first nine months of 2020. Segment operating income and segment operating margins for the first nine months of 2021 were positively impacted by the increase in net sales discussed ~~below. Contributions from~~above as well as the acquisitions of Pacific Design Technologies, Inc. (“PDT”) in September 2019, Gatan in October 2019, and IntelliPower in January 2020 had a positive impact on third quarter 2020 results. The full year impact of the 2019 and 2020 acquisitions and a continued focus on and implementation ofCompany's Operational Excellence initiatives, including the ~~first quarter~~ 2020 realignment ~~actions which have,~~actions.

Cost of sales for the first nine months of 2021 was $2,651.5 million or ~~are expected~~65.6% of net sales, an increase of $425.0 million or 19.1%, compared with $2,226.5 million or 66.6% of net sales for the first nine months of 2020. The cost of sales increase was primarily due to ~~continue to have, a positive impact on~~ the ~~Company’s~~net sales increase discussed above. The first nine months of 2020 ~~results. While we expect benefits from~~included the realignment ~~actions~~costs discussed above.

Selling, general and administrative expenses for the ~~recent acquisitions, we anticipate continuing challenges~~first nine months of 2021 were $443.7 million or 11.0% of net sales, an increase of $58.9 million or 15.3%, compared with $384.8 million or 11.5% of net sales for the first nine months of 2020. Selling, general and administrative expenses increased primarily due to ~~uncertain market conditions related to~~ the ~~COVID-19 pandemic throughout~~increase in net sales discussed above.

Consolidated operating income was $947.5 million or 23.4% of net sales for the ~~fourth quarter~~first nine months of 2021, an increase of $217.7 million or 29.8%, compared with $729.8 million or 21.8% of net sales for the first nine months of 2020. The consolidated operating income and operating income margins for the first nine months of 2021 were positively impacted by the increase in net sales discussed above as well as the benefits of the Company's Operational Excellence initiatives. The first nine months of 2020 included the realignment costs discussed above, which negatively impacted consolidated operating margins by 140 basis points.

Other expense, net was $3.8 million for the first nine months of 2021, compared with $142.4 million of other income, net for the first nine months of 2020, a change of $146.2 million. In March 2020, the Company completed the sale of its

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Reading Alloys business ~~(“Reading”~~("Reading") to Kymera International for net proceeds of $245.3 million in cash. The sale resulted in a pre-tax gain of $141.0 million recorded in other income, net ~~and income tax~~in the first quarter of 2020. The first nine months of 2021 also includes higher acquisition-related due diligence expense ~~of $31.4 million.~~

~~Impact of COVID-19 Pandemic on our Business~~

~~Our top priority during this pandemic is the health and safety of our employees. All of our manufacturing locations remain operational with enhanced safety measures~~compared to help keep our employees, contractors, customers, and communities safe. In compliance with government protocols, certain of the Company's employees were instructed to work from home until government mandated restrictions allow for a safe return to the workplace. Those working at our sites are required to follow appropriate procedures, including completion of trainings and performance of self- and on-site screenings, as well as adhere to our personal protective equipment, social distancing, and personal hygiene protocols. We are committed to safely maintaining plant operations and focusing on business continuity, while reliably supplying critical products to our customers.

~~As further discussed below, in~~ the first nine months of ~~2020, the COVID-19 pandemic has resulted in significant economic disruption and we expect it will continue to adversely affect our businesses through the fourth quarter of~~ 2020. We continue to experience volatility in demand for some of our products as our customers adapt to the evolving environment. Our financial position remains strong, however, we continue to closely monitor our fixed costs, capital expenditure plans, inventory, and capital resources to respond to changing conditions and to ensure we have the resources to meet our future needs. We believe that we will emerge from these events well positioned for long-term growth, though we cannot reasonably estimate the duration and severity of this global pandemic or its ultimate impact on the global economy and our business and results. We will continue to evaluate the nature and extent of future impacts of the COVID-19 pandemic on our business. See Risk Factors,

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~~included in Part II, Item 1A of this Quarterly Report on Form 10-Q, for further discussion of the possible impact of the COVID-19 pandemic on our business.~~

~~Results of operations for the third quarter of 2020 compared with the third quarter of 2019~~

Net sales for the third quarter of 2020 were $1,126.9 million, a decrease of $149.7 million or 11.7%, compared with net sales of $1,276.6 million for the third quarter of 2019. The decrease in net sales for the third quarter of 2020 was due to a 14% organic sales decline driven by a weak global economy as a result of the COVID-19 pandemic, a favorable 1% effect of foreign currency translation, a favorable 5% increase from acquisitions as well as an unfavorable 3% from the Reading divestiture.

Total international sales for the third quarter of 2020 were $548.8 million or 48.7% of net sales, a decrease of $53.9 million or 8.9%, compared with international sales of $602.7 million or 47.2% of net sales for the third quarter of 2019. The decrease in international sales was primarily driven from lower sales in Europe during the quarter as a result of the COVID-19 pandemic.

Orders for the third quarter of 2020 were $1,135.5 million, a decrease of $92.2 million or 7.5%, compared with $1,227.7 million for the third quarter of 2019. The decrease in orders for the third quarter of 2020 was due to a 12% organic order decline, a favorable 4% effect of foreign currency translation, a favorable 2% increase from acquisitions as well as an unfavorable 2% impact from the Reading divestiture.

Segment operating income for the third quarter of 2020 was $288.1 million, a decrease of $34.8 million or 10.8%, compared with segment operating income of $322.9 million for the third quarter of 2019. The decrease in segment operating income was primarily due to the lower sales discussed above, partially offset by the benefits of the Company’s Operational Excellence initiatives, including the first quarter of 2020 realignment actions. Segment operating margins, as a percentage of net sales, increased to 25.6% for the third quarter of 2020, compared with 25.3% for the third quarter of 2019.

Cost of sales for the third quarter of 2020 was $732.7 million or 65.0% of net sales, a decrease of $90.6 million or 11.0%, compared with $823.3 million or 64.5% of net sales for the third quarter of 2019. The cost of sales decrease was primarily due to the net sales decrease discussed above.

Selling, general and administrative expenses for the third quarter of 2020 were $123.5 million or 11.0% of net sales, a decrease of $28.8 million or 18.9%, compared with $152.3 million or 11.9% of net sales for the third quarter of 2019. Selling, general and administrative expenses decreased primarily due to the decrease in net sales discussed above as well as lower discretionary spending as a result of the COVID-19 pandemic.

Consolidated operating income was $270.7 million or a record 24.0% of net sales for the third quarter of 2020, a decrease of $30.4 million or 10.1%, compared with $301.1 million or 23.6% of net sales for the third quarter of 2019.

Other expense, net was $1.5 million for the third quarter of 2020, compared with $5.5 million of other expense, net for the third quarter of 2019, a decrease of $4.0 million. The decrease in other expense in the third quarter of 2020 was primarily due to lower acquisition-related expenses during the quarter.

The effective tax rate for the third quarter of 2020 was 17.5%, compared with 19.5% for the third quarter of 2019. The lower rate for 2020 reflects the lower overall foreign tax expense and a year over year improved adjustment for finalization of the Federal income tax return. See Note 11 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

~~Net income for the third quarter of 2020 was $204.6 million, a decrease of $16.1 million or 7.3%, compared with $220.7 million for the third quarter of 2019.~~

~~Diluted earnings per share for the third quarter of 2020 were $0.88, a decrease of $0.08 or 8.3%, compared with $0.96 per diluted share for the third quarter of 2019.~~

~~Segment Results~~

~~EIG’~~s net sales totaled $748.4 million for the third quarter of 2020, a decrease of $67.2 million or 8.2%, compared with $815.6 million for the third quarter of 2019. The net sales decrease was due to a 15% organic sales decline driven by a

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weak global economy as a result of the COVID-19 pandemic, partially offset by a favorable 6% impact from the acquisitions of Gatan and IntelliPower and a favorable 1% effect of foreign currency translation.

EIG’s operating income was $203.7 million for the third quarter of 2020, a decrease of $15.8 million or 7.2%, compared with $219.5 million for the third quarter of 2019. EIG’s decrease in operating income was primarily due to the decrease in sales discussed above, partially offset by benefits from the Group's Operating Excellence initiatives. EIG’s operating margins were 27.2% of net sales for the third quarter of 2020, compared with 26.9% for the third quarter of 2019.

~~EMG’s~~ net sales totaled $378.6 million for the third quarter of 2020, a decrease of $82.5 million or 17.9%, compared with $461.1 million for the third quarter of 2019. The net sales decrease was due to a 13% organic sales decline driven by a weak global economy as a result of the COVID-19 pandemic, a favorable 1% effect of foreign currency translation, a favorable 2% impact from the PDT acquisition as well as an unfavorable 8% impact from the Reading divestiture.

EMG’s operating income was $84.3 million for the third quarter of 2020, a decrease of $19.2 million or 18.5%, compared with $103.5 million for the third quarter of 2019. EMG’s decrease in operating income was primarily due to the decrease in sales discussed above, partially offset by benefits from the Group’s Operating Excellence initiatives. EMG’s operating margins were 22.3% of net sales for the third quarter of 2020, compared with 22.4% for the third quarter of 2019.

~~Results of operations for the first nine months of 2020 compared with the first nine months of 2019~~

Net sales for the first nine months of 2020 were $3,341.1 million, a decrease of $512.6 million or 13.3%, compared with net sales of $3,853.7 million for the first nine months of 2019. The decrease in net sales for the first nine months of 2020 was due to a 15% organic sales decline driven by a weak global economy as a result of the COVID-19 pandemic, a favorable 5% increase from acquisitions as well as an unfavorable 3% from the Reading divestiture.

Total international sales for the first nine months of 2020 were $1,593.5 million or 47.7% of net sales, a decrease of $245.7 million or 13.4%, compared with international sales of $1,839.2 million or 47.7% of net sales for the first nine months of 2019. The decrease in international sales was primarily driven by lower sales in Europe and Asia as a result of the COVID-19 pandemic.

Orders for the first nine months of 2020 were $3,343.6 million, a decrease of $540.4 million or 13.9%, compared with $3,884.0 million for the first nine months of 2019. The decrease in orders for the first nine months of 2020 was due to a 15% organic order decline, a favorable 1% effect of foreign currency translation, a favorable 3% increase from acquisitions as well as an unfavorable 3% impact from the Reading divestiture.

The Company recorded 2020 realignment costs totaling $43.9 million in the first nine months of 2020 (the “2020 realignment costs”). The 2020 realignment costs were composed of $35.5 million in severance costs for a reduction in workforce and $8.4 million of asset write-downs, primarily inventory, in response to the impact of a weak global economy as a result of the COVID-19 pandemic. See Note 16 to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further details.

The 2020 realignment costs (in millions) reported in the consolidated statement of income as well as the impact on segment operating margins (in basis points) in the first nine months of 2020 are as follows:

2020
Realignment
Costs Operating
Margins
EIG $ 22.8 (110)
EMG 20.9 (180)
Total reported in segment operating income 43.7 (130)
Selling, general and administrative expenses 0.2
Total reported in the consolidated statement of income $ 43.9 (140)

~~The expected annualized cash savings from the 2020 realignment costs is expected to be approximately $86 million, with approximately $33 million expected to be realized in 2020.~~

Segment operating income for the first nine months of 2020 was $779.8 million, a decrease of $159.0 million or 16.9%, compared with segment operating income of $938.8 million for the first nine months of 2019. The decrease in segment operating income was primarily due to the lower sales discussed above and the $43.7 million of 2020 realignment costs, partially offset by the benefits of the Company’s Operational Excellence initiatives. Segment operating margins, as a percentage

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of net sales, decreased to 23.3% for the first nine months of 2020, compared with 24.4% for the first nine months of 2019. The first nine months of 2020 segment operating margins were negatively impacted by 130 basis points due to the 2020 realignment costs discussed above, partially offset by the benefits of the Company’s Operational Excellence initiatives.

Cost of sales for the first nine months of 2020 was $2,226.5 million or 66.6% of net sales, a decrease of $286.2 million or 11.4%, compared with $2,512.7 million or 65.2% of net sales for the first nine months of 2019. The cost of sales decrease was primarily due to the net sales decrease discussed above, partially offset by the increase from the 2020 realignment costs discussed above.

Selling, general and administrative expenses for the first nine months of 2020 were $384.8 million or 11.5% of net sales, a decrease of $76.5 million or 16.6%, compared with $461.3 million or 12.0% of net sales for the first nine months of 2019. Selling, general and administrative expenses decreased primarily due to the decrease in net sales discussed above as well as lower discretionary spending as a result of the COVID-19 pandemic.

Consolidated operating income was $729.8 million or 21.8% of net sales for the first nine months of 2020, a decrease of $149.9 million or 17.0%, compared with $879.7 million or 22.8% of net sales for the first nine months of 2019. The consolidated operating income margins were negatively impacted by 140 basis points due to the 2020 realignment costs discussed above, partially offset by the benefits of the Company's Operational Excellence initiatives.

Other income, net was $142.4 million for the first nine months of 2020, compared with $12.5 million of other expense, net for the first nine months of 2019, an increase of $154.9 million. The increase in other income in the first nine months of 2020 was primarily due to the gain on the sale of Reading of $141.0 million, higher defined benefit pension income of $4.9 million, and lower acquisition-related expenses.

The effective tax rate for the first nine months of ~~2020~~2021 was ~~19.1%~~19.9%, compared with ~~20.1%~~19.1% for the first nine months of ~~2019.~~2020. The ~~lower~~higher effective tax rate ~~for 2020 reflects~~in 2021 is primarily due to an increase in the ~~results~~foreign rate differential and from the remeasurement of the deferred tax ~~planning initiatives and lower overall foreign~~liabilities due to an increase in the UK tax ~~expense partially offset by lower year over year tax benefits related to share-based payment transactions. See Note 11 to the Consolidated Financial Statements included~~rate in ~~Part I, Item 1 of this Quarterly Report on Form 10-Q.~~2021.

Net income for the first nine months of ~~2020~~2021 was ~~$651.4~~$708.4 million, an increase of ~~$10.9~~$57.0 million or ~~1.7%~~8.7%, compared with ~~$640.5~~$651.4 million for the first nine months of ~~2019.~~2020.

Diluted earnings per share for the first nine months of ~~2020~~2021 were ~~$2.82,~~$3.04, an increase of ~~$0.03~~$0.22 or ~~1.1%~~7.8%, compared with ~~$2.79~~$2.82 per diluted share for the first nine months of ~~2019.~~2020. In the first nine months of 2020, diluted earnings per share included $0.47 for the net gain on the sale of Reading and $0.15 for the net realignment costs.

Segment Results

EIG’s net sales totaled $2,706.7 million for the first nine months of 2021, an increase of $536.2 million or 24.7%, compared with $2,170.5 million for the first nine months of ~~2020,~~2020. The net sales increase was due to a ~~decrease~~13% organic sales increase, a 10% increase from acquisitions, and a favorable 1% effect of ~~$272.2 million or 11.1%, compared with $2,442.7~~foreign currency translation.

EIG’s operating income was $678.7 million for the first nine months of ~~2019. The net sales decrease was due to a 17% organic sales decline driven by a weak global economy as a result~~2021, an increase of ~~the COVID-19 pandemic, partially offset by the acquisitions of Gatan and IntelliPower.~~

~~EIG’s operating income was~~$144.1 million or 26.9%, compared with $534.6 million for the first nine months of 2020, a decrease of $100.8 million or 15.9%, compared with $635.4 million for the first nine months of 2019. EIG’s decrease in operating income was primarily due to the decrease in sales discussed above as well as the $22.8 million of 2020 realignment costs.2020. EIG’s operating margins were ~~24.6%~~25.1% of net sales for the first nine months of ~~2020,~~2021, compared with ~~26.0%~~24.6% for the first nine months of ~~2019.~~2020. EIG's operating income and operating margins in the first nine months of 2021 were positively impacted by the sales increase discussed above as well as the Company's Operational Excellence initiatives. The 2021 acquisitions of Abaco, Magnetrol, NSI-MI, and Crank Software diluted operating margins by 150 basis points. Excluding the acquisitions, EIG operating margins would have been 26.6% for the first nine months of 2021. EIG’s ~~2020~~ operating margins were negatively impacted in the first nine months of 2020 by 110 basis points due to the 2020 realignment costs discussed above.

EMG’s net sales totaled $1,336.1 million for the first nine months of 2021, an increase of $165.5 million or 14.1%, compared with $1,170.6 million for the first nine months of ~~2020, a decrease of $240.4 million or 17.0%, compared with $1,411.0 million for the first nine months of 2019.~~2020. The net sales ~~decrease~~increase was due to ~~an 12%~~a 14% organic sales ~~decline driven by a weak global economy as a result of the COVID-19 pandemic,~~increase, a favorable ~~3% impact from the PDT acquisition as well as~~2% effect of foreign currency translation, partially offset by an unfavorable 8%2% impact from the Reading divestiture.

EMG’s operating income was $332.0 million for the first nine months of 2021, an increase of $86.8 million or 35.4%, compared with $245.2 million for the first nine months of 2020, a decrease of $58.1 million or 19.2%, compared with $303.3 million for the first nine months of 2019. EMG’s decrease in operating income was primarily due to the decrease in sales discussed above as well as the $20.9 million of 2020 realignment costs, partially offset by benefits from the Group’s Operating Excellence initiatives.2020. EMG’s operating margins were ~~20.9%~~24.9% of net sales for the first nine months of ~~2020,~~2021, compared with ~~21.5%~~20.9% for the first nine months of ~~2019.~~2020. EMG's operating income and operating margins in the first nine months of 2021 were positively impacted by the sales increase discussed above as well as the Company's Operational Excellence initiatives. EMG’s ~~2020~~ operating margins were negatively impacted in the first nine months of 2020 by 180 basis points due to the 2020 realignment costs discussed above.

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Financial Condition

Liquidity and Capital Resources

Cash provided by operating activities totaled $878.6 million for the first nine months of 2021, a decrease of $16.5 million or 1.8%, compared with $895.1 million for the first nine months of ~~2020, an increase of $122.9 million or 15.9%, compared with $772.2 million for the first nine months of 2019.~~2020. The ~~increase~~decrease in cash provided by operating activities for the first nine months of ~~2020~~2021 was primarily due to ~~strong~~higher working capital ~~management.~~requirements, partially offset by higher net income, net of the gain on the sale of the Reading business in 2020.

Free cash flow (cash flow provided by operating activities less capital expenditures) was $811.3 million for the first nine months of 2021, compared with $857.9 million for the first nine months of ~~2020, compared with $710.7 million for the first nine months of 2019.~~2020. EBITDA (earnings before interest, income taxes, depreciation and amortization) was $1,157.2 million for the first nine months of 2021, compared with $1,060.9 million for the first nine months of 2020, ~~compared with $1,034.5 million for~~which included the ~~first nine months~~gain on the sale of ~~2019.~~the Reading business. Free cash flow and EBITDA are presented because the Company is aware that they are measures used by third parties in evaluating the Company.

Cash used by investing activities totaled $1,895.2 million for the first nine months of 2021, compared with cash provided by investing activities ~~totaled~~of $98.7 million for the first nine months of ~~2020, compared with cash used by investing activities of $173.4 million for~~2020. For the first nine months of ~~2019. Additions~~2021, the Company paid $1,839.7 million, net of cash acquired, to ~~property, plant~~purchase Abaco Systems, Magnetrol International, NSI-MI

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Technologies, Crank Software, and ~~equipment totaled $37.2~~EGS Automation compared to $116.5 million, ~~for~~net of cash acquired, to purchase IntelliPower in the first nine months of ~~2020, compared with $61.5 million for the first nine months of 2019.~~2020. For the first nine months of 2020, the Company ~~paid $116.5 million, net of cash acquired, to acquire IntelliPower in January 2020 and~~ received proceeds of $245.3 million from the sale of its Reading business. Additions to property, plant and equipment totaled $67.2 million for the first nine months of 2021, compared with $37.2 million for the first nine months of 2020.

Cash provided by financing activities totaled $171.2 million for the first nine months of 2021, compared with cash used by financing activities ~~totaled~~of $84.7 million for the first nine months of ~~2020,~~2020. At September 30, 2021, total debt, net was $2,654.6 million, compared with ~~$207.9~~$2,413.7 million at December 31, 2020. For the first nine months of 2021, total borrowings increased by $286.1 million, driven by the 2021 acquisitions, compared with a $7.1 million increase for the first nine months of ~~2019.~~2020. At September 30, 2020, total debt, net was $2,800.8 million, compared with $2,768.7 million at December 31, 2019. For the first nine months of 2020, total borrowings increased by $7.1 million, compared with a $158.2 million decrease for the first nine months of 2019. At September 30, 2020,2021, the Company had available borrowing capacity of ~~$1,468.5~~$2,407.3 million under its revolving credit facility and $800 million term loan, including the $500 million accordion feature.

InOn April 26, 2021, the ~~third quarter~~Company along with certain of ~~2020, an 80~~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 add a new five-year, delayed draw, term loan for up to $800 million. The credit agreement places certain restrictions on allowable additional indebtedness. At September 30, 2021, the Company had $150.0 million ~~British pound ($102.9 million) 4.68% senior note matured and was paid.~~ outstanding on the term loan.

The debt-to-capital ratio was ~~32.9%~~28.8% at September 30, ~~2020,~~2021, compared with ~~35.1%~~28.9% at December 31, ~~2019.~~2020. 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 ~~20.8%~~25.9% at September 30, ~~2020,~~2021, compared with ~~31.7%~~16.8% at December 31, ~~2019.~~2020. 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.

Additional financing activities for the first nine months of ~~2020~~2021 included cash dividends paid of ~~$123.7~~$138.3 million, compared with ~~$95.5~~$123.7 million for the first nine months of ~~2019.~~2020. Effective February ~~12, 2020,~~11, 2021, the Company’s Board of Directors approved ~~a 29%~~an 11% increase in the quarterly cash dividend on the Company’s common stock to ~~$0.18~~$0.20 per common share from ~~$0.14~~$0.18 per common share. Proceeds from stock option exercises were $42.3 million for the first nine months of 2021, compared with $39.9 million for the first nine months of ~~2020, compared with $59.6 million for the first nine months of 2019.~~2020.

As a result of all of the Company’s cash flow activities for the first nine months of ~~2020,~~2021, cash and cash equivalents at September 30, ~~2020~~2021 totaled ~~$1,304.8~~$358.7 million, compared with ~~$393.0~~$1,212.8 million at December 31, ~~2019.~~2020. At September 30, ~~2020,~~2021, the Company had ~~$320.7~~$319.9 million in cash outside the United States, compared with ~~$357.9~~$344.0 million at December 31, ~~2019.~~2020. 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 in the foreseeable future.

Critical Accounting Policies

The Company’s critical accounting policies are detailed in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition of its Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020. Primary disclosure of the Company’s significant accounting policies is also included in Note 1 to the Consolidated Financial Statements included in Part II, Item 8 of its Annual Report on Form 10-K.

Forward-Looking Information

Information contained in this discussion, other than historical information, is considered “forward-looking statements” and is subject to various factors and uncertainties that may cause actual results to differ significantly from expectations. These factors and uncertainties include risks related to the COVID-19 pandemic and its potential impact on AMETEK’s operations, supply chain, and demand across key end markets; general economic conditions affecting the industries the Company serves; changes in the competitive environment or the effects of competition in the Company’s markets; risks associated with international sales and operations; the Company’s ability to consummate and successfully integrate future acquisitions; the

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Company’s ability to successfully develop new products, open new facilities or transfer product lines; the price and availability of raw materials; compliance with government regulations, including environmental regulations; and the ability to maintain adequate liquidity and financing sources. A detailed discussion of these and other factors that may affect the Company’s future results is contained in AMETEK’s filings with the U.S. Securities and Exchange Commission, including its most recent reports on Form 10-K,10-Q and ~~8-K.AMETEK~~8-K. AMETEK disclaims any intention or obligation to update or revise any forward-looking statements, unless required by the securities laws to do so.

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Item 4. 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 September 30, ~~2020.~~2021. 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 September 30, ~~2020~~2021 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1A. Risk Factors

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 ~~coronavirus global pandemic~~availability and prices for raw materials, parts and components may be subject to curtailment or change due to, among other things, suppliers' allocation to other purchasers, interruptions in production by suppliers, changes in exchange rates and prevailing 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 ~~have~~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 ~~material adverse effect on~~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 ~~ability to operate, results of operations,~~operating costs and our competitive position, which could adversely affect our business, financial condition, ~~liquidity and ability to consummate future acquisitions.~~

In March 2020, the World Health Organization declared the COVID-19 outbreak to be a global pandemic. The recent 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.cash flows.

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. Additionally, while our global supply chains are currently not materially affected, it is unknown whether and to what extent they may be affected if the COVID-19 pandemic persists for an extended period. 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 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” in our 2019 Form 10-K.

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. While not yet quantifiable, we will continue to assess the financial impact for the full 2020 fiscal year and beyond. Other than the item listed above, there have been no material changes in our risk factors from those disclosed in Part I, Item 1A. “Risk Factors” filed on the Company’s Annual Report on Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table reflects purchases of AMETEK, Inc. common stock by the Company during the three months ended September 30, ~~2020:~~2021:

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Period
Total Number
of Shares
Purchased (1)
Average Price
Paid per Share
Total Number
of Shares
Purchased as
Part of Publicly
Announced
Plan
Approximate
Dollar Value of
Shares that
May Yet Be
Purchased Under
the Plan
July 1, 2020 to July 31, 2020 — $ — — $ 484,628,926
August 1, 2020 to August 31, 2020 764 94.95 764 484,556,384
September 1, 2020 to September 30, 2020 — — — 484,556,384
Total 764 94.95 764


Period	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan
July 1, 2021 to July 31, 2021	558	$	137.25	558	$	471,486,433
August 1, 2021 to August 31, 2021	785	138.09		785	471,378,035
September 1, 2021 to September 30, 2021	—	—		—	471,378,035
Total	1,343	$	137.74	1,343

________________

(1) Represents shares surrendered to the Company to satisfy tax withholding obligations in connection with employees’ share-based compensation awards.

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Item 6. Exhibits


Exhibit Number						Description


31.1*						Certification of Chief Executive Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*						Certification of Chief Financial Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*						Certification of Chief Executive Officer, Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2*						Certification of Chief Financial Officer, Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS*						XBRL Instance Document.

101.SCH*						XBRL Taxonomy Extension Schema Document.

101.CAL*						XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF*						XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB*						XBRL Taxonomy Extension Label Linkbase Document.

101.PRE*						XBRL Taxonomy Extension Presentation Linkbase Document.

104						Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101).

________________

* Filed electronically herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		AMETEK, Inc.
		(Registrant)

	By:	/s/ THOMAS M. MONTGOMERY
		Thomas M. Montgomery
		Senior Vice President – Comptroller
		(Principal Accounting Officer)
~~October 29, 2020~~November 2, 2021

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	September 30, 2020		December 31, 2019
	Fair Value		Fair Value
	(In thousands)
Mutual fund investments	$	8,177	$	8,390


	EIG		EMG		Total
	(In millions)
Balance at December 31, 2019	$	2,892.2	$	1,155.3	$	4,047.5
Goodwill acquired	58.0		—		58.0
Purchase price allocation adjustments and other	75.2		(0.2)		75.0
Foreign currency translation adjustments	5.3		3.0		8.3
Balance at September 30, 2020	$	3,030.7	$	1,158.1	$	4,188.8


	2020
	Realignment Costs		Operating Margins
EIG	$	22.8	(110)
EMG	20.9		(180)
Total reported in segment operating income	43.7		(130)
Selling, general and administrative expenses	0.2
Total reported in the consolidated statement of income	$	43.9	(140)