UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

(Mark One)

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

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

Commission File Number 1-12981

AMETEK, Inc.

(Exact name of registrant as specified in its charter)

Delaware		14-1682544
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

37 North Valley Road, Building 4
P.O. Box 1764
Paoli, Pennsylvania		19301-0801
(Address of principal executive offices)		(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 þ No o

     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 þ No o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company o

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

     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 July 30, 2009 was 107,518,291 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 six months ended June 30, 2009 and 2008			3
Consolidated Balance Sheet as of June 30, 2009 and December 31, 2008			4
Condensed Consolidated Statement of Cash Flows for the six months ended June 30, 2009 and 2008			5
Notes to Consolidated Financial Statements			6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			16
Item 4. Controls and Procedures			22
PART II. OTHER INFORMATION
Item 6. Exhibits			23
SIGNATURES			24
EX-31.1
EX-31.2
EX-32.1
EX-32.2
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

AMETEK, Inc.
Consolidated Statement of Income
(In thousands, except per share amounts)
(Unaudited)

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2009				2008				2009				2008
Net sales		$	524,929			$	648,771			$	1,077,795			$	1,259,968
Operating expenses:
Cost of sales, excluding depreciation			361,578				437,183				732,221				848,200
Selling, general and administrative			61,017				85,653				125,547				159,020
Depreciation			9,154				11,824				20,645				22,404
Total operating expenses			431,749				534,660				878,413				1,029,624
Operating income			93,180				114,111				199,382				230,344
Other expenses:
Interest expense			(17,141	)			(15,328	)			(34,696	)			(30,462	)
Other, net			(1,001	)			(929	)			(1,024	)			(1,626	)
Income before income taxes			75,038				97,854				163,662				198,256
Provision for income taxes			23,225				32,012				52,794				66,057
Net income		$	51,813			$	65,842			$	110,868			$	132,199
Basic earnings per share		$	0.49			$	0.62			$	1.04			$	1.25
Diluted earnings per share		$	0.48			$	0.61			$	1.03			$	1.23
Weighted average common shares outstanding:
Basic shares			106,708				105,950				106,564				105,946
Diluted shares			107,955				107,476				107,638				107,613
Dividends declared and paid per share		$	0.06			$	0.06			$	0.12			$	0.12

See accompanying notes.

AMETEK, Inc.
Consolidated Balance Sheet
(In thousands)

		June 30,				December 31,
		2009				2008
		(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	137,402			$	86,980
Marketable securities			5,542				4,230
Receivables, less allowance for possible losses			356,830				406,012
Inventories			325,472				349,509
Deferred income taxes			29,744				30,919
Other current assets			57,315				76,936
Total current assets			912,305				954,586
Property, plant and equipment, net			309,263				307,908
Goodwill			1,281,579				1,240,052
Other intangibles, net of accumulated amortization			497,448				441,785
Investments and other assets			112,327				111,211
Total assets		$	3,112,922			$	3,055,542
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings and current portion of long-term debt		$	5,110			$	18,438
Accounts payable			176,494				203,742
Income taxes payable			50,636				31,649
Accrued liabilities			157,622				193,684
Total current liabilities			389,862				447,513
Long-term debt			1,053,886				1,093,243
Deferred income taxes			180,308				144,941
Other long-term liabilities			64,835				82,073
Total liabilities			1,688,891				1,767,770
Stockholders’ equity:
Common stock			1,106				1,102
Capital in excess of par value			217,044				203,000
Retained earnings			1,418,484				1,320,470
Accumulated other comprehensive loss			(120,325	)			(144,767	)
Treasury stock			(92,278	)			(92,033	)
Total stockholders’ equity			1,424,031				1,287,772
Total liabilities and stockholders’ equity		$	3,112,922			$	3,055,542

See accompanying notes.

AMETEK, Inc.
Condensed Consolidated Statement of Cash Flows
(In thousands)
(Unaudited)

		Six Months Ended
		June 30,
		2009				2008
Cash provided by (used for):
Operating activities:
Net income		$	110,868			$	132,199
Adjustments to reconcile net income to total operating activities:
Depreciation and amortization			31,677				30,076
Deferred income tax expense (benefit)			197				(2,187	)
Share-based compensation expense			6,273				14,293
Net change in assets and liabilities, net of acquisitions			54,042				(28,024	)
Pension contribution			(19,048	)			(1,752	)
Other			239				(2,803	)
Total operating activities			184,248				141,802
Investing activities:
Additions to property, plant and equipment			(15,187	)			(19,911	)
Purchases of businesses, net of cash acquired			(38,409	)			(278,310	)
Other			(1,294	)			5,220
Total investing activities			(54,890	)			(293,001	)
Financing activities:
Net change in short-term borrowings			(12,003	)			185,051
Reduction in long-term borrowings			(63,964	)			(7,417	)
Repurchases of common stock			—				(57,444	)
Cash dividends paid			(12,764	)			(12,719	)
Excess tax benefits from share-based payments			1,727				4,915
Proceeds from employee stock plans and other			5,655				6,347
Total financing activities			(81,349	)			118,733
Effect of exchange rate changes on cash and cash equivalents			2,413				3,935
Increase (decrease) in cash and cash equivalents			50,422				(28,531	)
Cash and cash equivalents:
As of January 1			86,980				170,139
As of June 30		$	137,402			$	141,608

See accompanying notes.

Notes to Consolidated Financial Statements
June 30, 2009
(Unaudited)

1. Basis of Presentation

     The accompanying consolidated financial statements are unaudited. 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 June 30, 2009, the consolidated results of its operations for the three and six months ended June 30, 2009 and 2008 and its cash flows for the six months ended June 30, 2009 and 2008 have been included. Quarterly results of operations are not necessarily indicative of results for the full year. The accompanying financial statements should be read in conjunction with the financial statements and related notes presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008 as filed with the Securities and Exchange Commission.

2. Recent Accounting Pronouncements

     Effective January 1, 2009, the Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 141(R), Business Combinations (“SFAS 141R”). SFAS 141R retains the underlying concepts of SFAS No. 141 Business Combinations, but changes the method of applying the acquisition method in a number of significant aspects. SFAS 141R is effective on a prospective basis for all acquisitions on or after January 1, 2009. SFAS 141R amends SFAS No. 109, Accounting for Income Taxes, such that adjustments made to valuation allowances on deferred taxes and acquired tax contingencies associated with acquisitions that closed prior to the effective date of SFAS 141R would also apply the provisions of SFAS 141R. The adoption of SFAS 141R did not have a significant impact on the Company’s consolidated results of operations, financial position or cash flows. However, depending on the nature of an acquisition or the quantity of acquisitions entered into after the adoption, SFAS 141R may significantly impact the Company’s consolidated results of operations, financial position or cash flows and result in more earnings volatility and generally lower earnings due to, among other items, the expensing of transaction costs and restructuring costs of acquired companies.

     In April 2009, the Financial Accounting Standards Board (“FASB”) issued FASB Staff Position (“FSP”) No. FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly (“FSP FAS 157-4”). FSP FAS 157-4 amends SFAS No. 157, Fair Value Measurements (“SFAS 157”), and provides additional guidance for estimating fair value in accordance with SFAS 157 when the volume and level of activity for the asset or liability have significantly decreased and also includes guidance on identifying circumstances that indicate a transaction is not orderly for fair value measurements. This FSP is applied prospectively with retrospective application not permitted. This FSP is effective for interim and annual periods ending after June 15, 2009. The adoption of FSP FAS 157-4 did not have a significant impact on the Company’s consolidated results of operations, financial position and cash flows.

     In April 2009, the FASB issued FSP FAS 115-2 and FAS 124-2. This FSP amends SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities, SFAS No. 124, Accounting for Certain Investments Held by Not-for-Profit Organizations and Emerging Issues Task Force (“EITF”) Issue No. 99-20, Recognition of Interest Income and Impairment on Purchased Beneficial Interests and Beneficial Interests That Continue to Be Held by a Transferor in Securitized Financial Assets, to make the other-than-temporary impairments guidance more operational and to improve the presentation of other-than-temporary impairments in the financial statements. This FSP replaces the existing requirement that the entity’s management assert it has both the intent and ability to hold an impaired debt security until recovery with a requirement that management assert it does not have the intent to sell the security, and it is more likely than not it will not have to sell the security before recovery of its cost basis. This FSP provides increased disclosure about the credit and noncredit components of impaired debt securities that are not expected to be sold and also requires increased and more frequent disclosures regarding expected cash flows, credit losses and an aging of securities with unrealized losses. Although this FSP does not result in a change in the carrying amount of debt securities, it does require that the portion of an other-than-temporary impairment not related to a credit loss for a held-to-maturity security be recognized in a new category of other comprehensive income and be amortized over the remaining life of the debt security as an increase in the carrying value of the security. This FSP is

AMETEK, Inc.
Notes to Consolidated Financial Statements
June 30, 2009
(Unaudited)

effective for interim and annual periods ending after June 15, 2009. The adoption of FSP FAS 115-2 and FAS 124-2 did not have a significant impact on the Company’s consolidated results of operations, financial position and cash flows.

     In April 2009, the FASB issued FSP FAS 107-1 and APB 28-1. This FSP amends SFAS No. 107, Disclosures about Fair Value of Financial Instruments (“SFAS 107”), to require disclosures about fair value of financial instruments not measured on the balance sheet at fair value in interim financial statements as well as in annual financial statements. Prior to this FSP, fair values for these assets and liabilities were only disclosed annually. This FSP applies to all financial instruments within the scope of SFAS 107 and requires all entities to disclose the methods and significant assumptions used to estimate the fair value of financial instruments. This FSP is effective for interim periods ending after June 15, 2009.

     In May 2009, the FASB issued SFAS No. 165, Subsequent Events (“SFAS 165”). SFAS 165 establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. SFAS 165 is effective for interim and annual reporting periods ending after June 15, 2009. The adoption of SFAS 165 did not have a significant impact on the Company’s consolidated results of operations, financial position and cash flows. The Company evaluated all events and transactions that occurred after June 30, 2009 up through August 5, 2009, the date the Company issued these financial statements. During this period, the Company did not have any material recognizable or non-recognizable subsequent events.

     In June 2009, the FASB issued SFAS No. 168, The FASB Accounting Standards Codification^TM and the Hierarchy of Generally Accepted Accounting Principles a replacement of FASB Statement No. 162 (“SFAS 168”). SFAS 168 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles (“GAAP”) in the United States (the “GAAP hierarchy”). SFAS 168 replaces SFAS 162 and establishes the FASB Accounting Standards Codification^TM as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with GAAP. Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. SFAS 168 is effective for financial statements issued after September 15, 2009.

3. Fair Value Measurement

     SFAS 157 defines fair value, establishes a framework for measuring fair value under GAAP and enhances disclosures about fair value measurements. Fair value is defined under SFAS 157 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 adopted SFAS 157 as of January 1, 2008, with the exception of the application of the statement to nonfinancial assets and nonfinancial liabilities, which was delayed by the Financial Accounting Standards Board (“FASB”) FASB Staff Position No. 157-2, Effective Date of FASB Statement No. 157 to fiscal years beginning after November 15, 2008, which the Company adopted January 1, 2009.

     SFAS 157 establishes a valuation hierarchy for disclosure of the inputs to the valuation 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

AMETEK, Inc.
Notes to Consolidated Financial Statements
June 30, 2009
(Unaudited)

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.

     At June 30, 2009, $15.3 million of the Company’s cash and cash equivalents as well as $5.5 million of marketable securities are valued as level 1 investments. In addition, the Company held $8.9 million valued as level 2 investments in the investments and other assets line of the consolidated balance sheet. For the six months ended June 30, 2009, gains and losses on the investments noted above were not material.

4. Hedging Activities

     In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133 (“SFAS 161”). SFAS 161 requires entities to provide enhanced disclosure about how and why the entity uses derivative instruments, how the instruments and related hedged items are accounted for under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities (“SFAS 133”), and how the instruments and related hedged items affect the financial position, results of operations and cash flows of the entity.

     The Company has designated certain foreign-currency-denominated long-term debt as hedges of the net investment in certain foreign operations. These net investment hedges are the Company’s British-pound-denominated long-term debt and Euro-denominated long-term debt, pertaining to certain European acquisitions whose functional currencies are either the British pound or the Euro. These acquisitions were financed by foreign-currency-denominated borrowings under the Company’s revolving credit facility and subsequently refinanced with long-term private placement debt. These borrowings were designed to create net investment hedges in each of the foreign subsidiaries on their respective dates of acquisition. SFAS 133 permits hedging the foreign currency exposure of a net investment in a foreign operation. In accordance with SFAS 133, on the respective dates of acquisition, the Company designated the British pound- and Euro-denominated loans referred to above as hedging instruments to offset foreign exchange gains or losses on the net investment in the acquired business due to changes in the British pound and Euro exchange rates. These net investment hedges were evidenced by management’s documentation supporting the contemporaneous hedge designation on the acquisition dates. As required by SFAS 133, any gain or loss on the hedging instrument following hedge designation (the debt), is reported in accumulated other comprehensive income in the same manner as the translation adjustment on the investment based on changes in the spot rate, which is used to measure hedge effectiveness.

     At June 30, 2009, the Company had $148.1 million of British pound-denominated loans, which are designated as a hedge against the net investment in foreign subsidiaries acquired in 2004 and 2003. At June 30, 2009, the Company had $70.1 million of Euro-denominated loans, which were designated as a hedge against the net investment in a foreign subsidiary acquired in 2005. As a result of these British pound- and Euro-denominated loans being designated and effective as net investment hedges, $17.0 million of currency losses have been included in the foreign currency translation component of other comprehensive income at June 30, 2009.

AMETEK, Inc.
Notes to Consolidated Financial Statements
June 30, 2009
(Unaudited)

5. 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 common stock options and restricted stock grants). The number of weighted average shares used in the calculation of basic earnings per share and diluted earnings per share were as follows:

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2009				2008				2009				2008
		(In thousands)
Weighted average shares:
Basic shares			106,708				105,950				106,564				105,946
Stock option and awards plans			1,247				1,526				1,074				1,667
Diluted shares			107,955				107,476				107,638				107,613

6. Fourth Quarter of 2008 Restructuring Charges and Asset Write-Downs

     During the fourth quarter of 2008, the Company recorded pre-tax charges totaling $40.0 million, which had the effect of reducing net income by $27.3 million ($0.25 per diluted share). These charges included restructuring costs for employee reductions and facility closures ($32.6 million), as well as asset write-downs ($7.4 million). The charges included $30.1 million for severance costs for slightly more than 10% of the Company’s workforce and $1.5 million for lease termination costs associated with the closure of certain facilities in 2009. Of the $40.0 million in charges, $32.9 million of the restructuring charges and asset write-downs were recorded in cost of sales and $7.1 million of the restructuring charges and asset write-downs were recorded in Selling, general and administrative expenses. The restructuring charges and asset write-downs were reported in segment operating income as follows: $20.4 million in Electronic Instruments (“EIG”), $19.4 million in Electromechanical (“EMG”) and $0.2 million in Corporate administrative and other expenses. The restructuring costs for employee reductions and facility closures relate to plans established by the Company in 2008 as part of cost reduction initiatives being broadly implemented across the Company’s various businesses during fiscal 2009. The restructuring costs resulted from the consolidation of manufacturing facilities, the migration of production to low cost locales and a general reduction in workforce in response to lower levels of expected sales volumes in certain of the Company’s businesses. Substantially all of the payments for employee severance and lease termination costs are expected to be made in 2009.

     The following table provides a rollforward of the accruals established in the fourth quarter of 2008 for restructuring charges (in millions):

Restructuring accruals at December 31, 2008		$	31.6
Utilization			(10.3	)
Foreign currency translation and other			0.1
Restructuring accruals at June 30, 2009		$	21.4

     The fourth quarter of 2008 severance charge was recorded in accordance with SFAS No. 112, Employers’ Accounting for Postemployment Benefits (“SFAS 112”). SFAS 112 is applicable to all types of postemployment benefits, which constitute an ongoing benefit arrangement, including, but not limited to, salary continuation, supplemental unemployment benefits, severance benefits, job training, counseling and continuation of benefits such as health care benefits and life insurance coverage. Under SFAS 112, costs associated with such ongoing benefit arrangements are recorded no later than the period when it becomes probable that the costs will be incurred and the costs are reasonably estimable.

AMETEK, Inc.
Notes to Consolidated Financial Statements
June 30, 2009
(Unaudited)

7. Acquisitions

     The Company spent approximately $40.2 million in cash, net of cash acquired, to acquire High Standard Aviation in January 2009. High Standard Aviation is a provider of electrical and electromechanical, hydraulic and pneumatic repair services to the aerospace industry. High Standard Aviation is part of AMETEK’s Electromechanical Group.

     The acquisition has been accounted for in accordance with SFAS 141R. Accordingly, the operating results of the above acquisition has been included in the Company’s consolidated results from the date of acquisition.

     The purchase price and initial recording of the transaction was based on preliminary valuation assessments and is subject to change. The following table represents the provisional allocation of the aggregate purchase price for the net assets of the above acquisition based on its estimated fair value (in millions):

Property, plant and equipment		$	1.6
Goodwill			10.3
Other intangible assets			22.1
Net working capital and other			6.2
Total purchase price		$	40.2

     The amount allocated to goodwill is reflective of the benefits the Company expects to realize from the acquisition, as High Standard Aviation broadens the global footprint of AMETEK’s aerospace maintenance, repair and overhaul business.

     The Company is in the process of conducting third-party valuations of certain tangible and intangible assets acquired. Adjustments to the allocation of purchase price will be recorded when this information is finalized. Therefore, the allocation of the purchase price is subject to revision.

     Had the above acquisition been made at the beginning of 2009, pro forma net sales, net income and diluted earnings per share for the three and six months ended June 30, 2009 would not have been materially different than the amounts reported.

     Had the above acquisition and the 2008 acquisitions of Drake Air and Motion Control Group in February 2008, Reading Alloys in April 2008, Vision Research, Inc. in June 2008, the programmable power business of Xantrex Technology, Inc. in August 2008 and Muirhead Aerospace Limited in November 2008 been made at the beginning of 2008, unaudited pro forma net sales, net income and diluted earnings per share would have been as follows:

		Three Months Ended				Six Months Ended
		June 30, 2008				June 30, 2008
		(In millions, except per share amounts)
Net sales		$	703.1			$	1,393.6
Net income		$	68.2			$	137.2
Diluted earnings per share		$	0.63			$	1.28

     Pro forma results are not necessarily indicative of the results that would have occurred if the acquisitions had been completed at the beginning of 2008.

AMETEK, Inc.
Notes to Consolidated Financial Statements
June 30, 2009
(Unaudited)

8. Goodwill

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

		EIG				EMG				Total
		(In millions)
Balance at December 31, 2008		$	737.2			$	502.9			$	1,240.1
Goodwill acquired			—				10.3				10.3
Purchase price allocation adjustments and other*			(2.1	)			5.9				3.8
Foreign currency translation adjustments			14.6				12.8				27.4
Balance at June 30, 2009		$	749.7			$	531.9			$	1,281.6

9. Inventories

		June 30,				December 31,
		2009				2008
		(In thousands)
Finished goods and parts		$	49,381			$	66,416
Work in process			68,365				81,282
Raw materials and purchased parts			207,726				201,811
Total inventories		$	325,472			$	349,509

10. Debt

     During the second quarter of 2009, the Company repaid $62.0 million related to a 40 million British pound borrowing under the revolving credit facility. At June 30, 2009, the Company had no borrowings outstanding under the revolving credit facility.

     The $100 million accounts receivable securitization facility was not renewed by the Company in May 2009.

11. Comprehensive Income

     Comprehensive income includes all changes in stockholders’ equity during a period except those resulting from investments by and distributions to stockholders. The components of comprehensive income were as follows:

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2009				2008				2009				2008
		(In thousands)
Net income		$	51,813			$	65,842			$	110,868			$	132,199
Foreign currency translation adjustment			37,151				471				20,056				15,659
Foreign currency net investment hedge*			5,864				17				4,150				2,209
Other			326				135				236				(419	)
Total comprehensive income		$	95,154			$	66,465			$	135,310			$	149,648

AMETEK, Inc.
Notes to Consolidated Financial Statements
June 30, 2009
(Unaudited)

12. Share-Based Compensation

     The fair value of each option grant is estimated on the date of grant using a Black-Scholes-Merton option pricing model. The following weighted average assumptions were used in the Black-Scholes-Merton model to estimate the fair values of options granted during the period indicated:

		Six Months Ended				Year Ended
		June 30, 2009				December 31, 2008
Expected stock volatility			25.8	%			18.4	%
Expected life of the options (years)			4.9				4.7
Risk-free interest rate			1.89	%			2.60	%
Expected dividend yield			0.73	%			0.49	%
Black-Scholes-Merton fair value per option granted		$	7.80			$	9.58

     Expected stock volatility is based on the historical volatility of the Company’s stock. The Company used historical exercise data to estimate the options’ expected life, which represents the period of time that the options granted are expected to be outstanding. Management anticipates that the future option holding periods will be similar to the historical option holding periods. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve at the time of grant. 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.

     Total share-based compensation expense recognized under SFAS No. 123(R), Share-Based Payment, was as follows:

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2009				2008				2009				2008
		(In thousands)
Stock option expense		$	1,847			$	1,811			$	3,133			$	3,238
Restricted stock expense*			1,711				9,319				3,140				11,055
Total pre-tax expense			3,558				11,130				6,273				14,293
Related tax benefit			(1,088	)			(1,393	)			(1,928	)			(2,209	)
Reduction of net income		$	2,470			$	9,737			$	4,345			$	12,084

     Pre-tax share-based compensation expense is included in either cost of sales, or selling, general and administrative expenses, depending on where the recipient’s cash compensation is reported.

AMETEK, Inc.
Notes to Consolidated Financial Statements
June 30, 2009
(Unaudited)

     A summary of the Company’s stock option activity and related information for the six months ended June 30, 2009 were as follows:

										Weighted
						Weighted				Average				Aggregate
						Average				Remaining				Intrinsic
		Shares				Exercise Price				Contractual Life				Value
		(In thousands)								(Years)				(In millions)
Outstanding at the beginning of the year			4,035			$	28.01
Granted			1,318				32.71
Exercised			(403	)			14.57
Forfeited			(96	)			40.01
Outstanding at the end of the period			4,854			$	30.17				4.3			$	32.0
Exercisable at the end of the period			2,589			$	24.37				2.7			$	29.4

     The aggregate intrinsic value of options exercised during the six months ended June 30, 2009 was $7.0 million. The total fair value of the stock options vested during the six months ended June 30, 2009 was $5.3 million.

     As of June 30, 2009, there was approximately $16.5 million of expected future pre-tax compensation expense related to the 2.3 million nonvested options outstanding, which is expected to be recognized over a weighted average period of approximately two years.

     During the second quarter of 2009, the Company granted 0.4 million shares of restricted stock with a fair value of $32.71 per share. At June 30, 2009, 0.9 million nonvested restricted shares were outstanding. As of June 30, 2009, there was approximately $22.1 million of expected future pre-tax compensation expense related to nonvested restricted shares, which is expected to be recognized over a weighted average period of approximately three years.

     Restricted stock awards are 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. On May 19, 2008, the April 27, 2005 grant of 706,605 shares of restricted stock vested under an accelerated vesting provision. The pre-tax charge to income due to the accelerated vesting of these shares was $7.8 million ($7.3 million net after-tax charge) for the six months ended June 30, 2008.

     At June 30, 2009, the Company had gross unrecognized tax benefits of $22.5 million, of which $21.6 million, if recognized, would impact the effective tax rate. At December 31, 2008, the Company had gross unrecognized tax benefits of $18.6 million, all of which would impact the effective tax rate if recognized.

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

Balance at December 31, 2008		$	18.6
Additions for tax positions of prior years			6.2
Reductions for tax positions of prior years			(2.3	)
Balance at June 30, 2009		$	22.5

     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 six months ended June 30, 2009 and 2008 were not significant.

AMETEK, Inc.
Notes to Consolidated Financial Statements
June 30, 2009
(Unaudited)

14. Retirement and Pension Plans

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

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2009				2008				2009				2008
		(In thousands)
Defined benefit plans:
Service cost		$	1,122			$	1,424			$	2,266			$	2,980
Interest cost			7,093				7,231				13,954				14,497
Expected return on plan assets			(9,029	)			(10,525	)			(17,702	)			(21,051	)
Amortization of net actuarial loss and prior service costs			3,336				122				6,644				52
SFAS 87 expense (income)			2,522				(1,748	)			5,162				(3,522	)
Other plans:
Defined contribution plans			3,245				3,158				6,774				6,574
Foreign plans and other			1,020				1,186				2,025				2,458
Total other plans			4,265				4,344				8,799				9,032
Total net pension expense		$	6,787			$	2,596			$	13,961			$	5,510

     For the six months ended June 30, 2009 and 2008, contributions to our defined benefit pension plans were $19.0 million and $1.8 million, respectively. The current estimate of 2009 pension contributions is in line with the range disclosed in our 2008 Form 10-K.

15. Financial Instruments

     The estimated fair values of the Company’s financial instruments are compared below to the recorded amounts at June 30, 2009 and December 31, 2008. Cash, cash equivalents and marketable securities are recorded at fair value at June 30, 2009 and December 31, 2008 in the accompanying consolidated balance sheet.

		Asset (Liability)
		June 30,								December 31,
		2009								2008
		Recorded Amount				Fair Value				Recorded Amount				Fair Value
		(In thousands)
Fixed-income investments		$	8,578			$	8,578			$	8,248			$	8,248
Short-term borrowings			(4,218	)			(4,218	)			(16,028	)			(16,028	)
Long-term debt (including current portion)			(1,054,778	)			(1,054,778	)			(1,095,653	)			(1,095,653	)

     The fair value of fixed-income investments is based on quoted market prices. The fair value of short-term borrowings approximates the carrying value. The Company’s long-term debt is all privately-held with no public market for this debt. It is not practicable to estimate the fair value of this privately-held debt as pricing estimates are contingent upon many financial market, as well as Company specific factors. In conjunction, these factors can produce a wide variance of indicative pricing.

AMETEK, Inc.
Notes to Consolidated Financial Statements
June 30, 2009
(Unaudited)

16. Product Warranties

     The Company provides limited warranties in connection with the sale of its products. The warranty periods for products sold vary widely among the Company’s operations, but for the most part do not exceed one year. The Company calculates its warranty expense provision based on past warranty experience and adjustments are made periodically to reflect actual warranty expenses.

     Changes in accrued product warranty obligation were as follows:

		Six Months Ended
		June 30,
		2009				2008
		(In thousands)
Balance at the beginning of the period		$	16,068			$	14,433
Accruals for warranties issued during the period			3,927				4,678
Settlements made during the period			(5,403	)			(5,106	)
Warranty accruals related to new businesses and other			991				952
Balance at the end of the period		$	15,583			$	14,957

     Certain settlements of warranties made during the period were for specific nonrecurring warranty obligations. Product warranty obligations are reported as current liabilities in the consolidated balance sheet.

17. Reportable Segments

     The Company has two reportable segments, the EIG and the EMG. The Company manages, evaluates and aggregates its operating segments for segment reporting purposes primarily on the basis of product type, production processes, distribution methods and management organizations.

     At June 30, 2009, there were no significant changes in identifiable assets of reportable segments from the amounts disclosed at December 31, 2008, nor were there any changes in the basis of segmentation or in the measurement of segment operating results. Operating information relating to the Company’s reportable segments for the three and six months ended June 30, 2009 and 2008 can be found in the table within Part I, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Report.

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								Six Months Ended
		June 30,								June 30,
		2009				2008				2009				2008
		(In thousands)
Net sales(1):
Electronic Instruments		$	286,260			$	343,050			$	588,726			$	683,425
Electromechanical			238,669				305,721				489,069				576,543
Consolidated net sales		$	524,929			$	648,771			$	1,077,795			$	1,259,968
Operating income and income before income taxes:
Segment operating income(2):
Electronic Instruments		$	59,804			$	78,108			$	128,913			$	157,297
Electromechanical			41,513				53,103				87,683				100,154
Total segment operating income			101,317				131,211				216,596				257,451
Corporate administrative and other expenses			(8,137	)			(17,100	)			(17,214	)			(27,107	)
Consolidated operating income			93,180				114,111				199,382				230,344
Interest and other expenses, net			(18,142	)			(16,257	)			(35,720	)			(32,088	)
Consolidated income before income taxes		$	75,038			$	97,854			$	163,662			$	198,256

Results of operations for the second quarter of 2009 compared with the second quarter of 2008

     For the second quarter of 2009, the Company posted solid sales, operating income, net income and diluted earnings per share given the ongoing global economic recession. The Company’s results include contributions from the acquisitions of Vision Research, Inc. in June 2008, the programmable power business of Xantrex Technology, Inc. (“Xantrex Programmable”) in August 2008, Muirhead Aerospace Limited (“Muirhead”) in November 2008 and High Standard Aviation in January 2009. The Company expects the ongoing global economic recession to continue to have a negative impact on operating results in 2009. The full year impact of the 2008 acquisitions and our Operational Excellence capabilities will continue to have a positive impact on our 2009 results.

     Net sales for the second quarter of 2009 were $524.9 million, a decrease of $123.9 million or 19.1% when compared with net sales of $648.8 million for the second quarter of 2008. The decline in net sales was primarily attributable to lower order rates as a result of the ongoing global economic recession, partially offset by the impact of the acquisitions mentioned above. The Company’s internal sales declined approximately 21% for the second quarter of 2009, which excludes a 4% unfavorable effect of foreign currency translation. The acquisitions mentioned above offset approximately 6% of the Company’s internal sales decline.

     Total international sales for the second quarter of 2009 were $264.9 million or 50.5% of consolidated net sales, a decrease of $41.9 million or 13.7% when compared with international sales of $306.8 million or 47.3% of consolidated net sales for the second quarter of 2008. The decline in international sales resulted from decreased international sales from base businesses of $66.7 million, which includes the effect of foreign currency translation, partially offset by the impact of acquisitions completed in 2009 and 2008. The Company maintains a strong international sales presence in Europe and Asia in both reportable segments.

Results of Operations (continued)

     Segment operating income for the second quarter of 2009 was $101.3 million, a decrease of $29.9 million or 22.8% when compared with segment operating income of $131.2 million for the second quarter of 2008. Segment operating income, as a percentage of sales, decreased to 19.3% for the second quarter of 2009 from 20.2% for the second quarter of 2008. The decrease in segment operating income and operating margins resulted primarily from the decrease in sales noted above and higher defined benefit pension expense, partially offset by profit contributions made by the acquisitions and cost reduction initiatives, including the cost savings achieved in the second quarter of 2009 from the acceleration of restructuring activities related to the fourth quarter of 2008 restructuring charge.

     Selling, general and administrative (“SG&A”) expenses for the second quarter of 2009 were $61.0 million, a decrease of $24.7 million or 28.8% when compared with $85.7 million for the second quarter of 2008. As a percentage of sales, SG&A expenses were 11.6% for the second quarter of 2009, compared with 13.2% for the second quarter of 2008. The decrease in SG&A expenses was primarily the result of lower sales and the Company’s cost savings initiatives. Additionally, the second quarter of 2008 includes a $7.1 million charge recorded in corporate administrative expenses related to the accelerated vesting of an April 2005 restricted stock grant. For the second quarter of 2009, base business selling expenses decreased approximately 28%, compared with the same period of 2008, which was significantly higher than the Company’s internal sales decline. Selling expenses, as a percentage of sales, decreased to 10.1% for the second quarter of 2009, compared with 10.6% for the second quarter of 2008.

     Corporate administrative expenses for the second quarter of 2009 were $8.1 million, a decrease of $9.0 million or 52.6% when compared with $17.1 million for the second quarter of 2008. As a percentage of sales, corporate administrative expenses for the second quarter of 2009 were 1.5%, compared with 2.6% for the second quarter of 2008. The decrease in corporate administrative expenses was driven by the equity based compensation associated with the accelerated vesting of restricted stock in the second quarter of 2008, noted above, as well as, the Company’s cost saving initiatives, including the restructuring activities.

     Consolidated operating income for the second quarter of 2009 was $93.2 million or 17.8% of sales, a decrease of $20.9 million or 18.3% when compared with $114.1 million or 17.6% of sales for the second quarter of 2008.

     Interest expense was $17.1 million for the second quarter of 2009, an increase of $1.8 million or 11.8% when compared with $15.3 million for the second quarter of 2008. The increase was due to the impact of the funding of the long-term private placement senior notes in the third and fourth quarters of 2008.

     The effective tax rate for the second quarter of 2009 was 31.0% compared with 32.7% for the second quarter of 2008. The lower effective tax rate for the second quarter of 2009 primarily reflects the impact of settlements of income tax examinations.

     Net income for the second quarter of 2009 was $51.8 million, a decrease of $14.0 million or 21.3% when compared with $65.8 million for the second quarter of 2008. Diluted earnings per share for the second quarter of 2009 was $0.48, a decrease of $0.13 or 21.3% when compared with $0.61 per diluted share for the second quarter of 2008.

Results of Operations (continued)

Segment Results

     Electronic Instruments (“EIG”) sales totaled $286.3 million for the second quarter of 2009, a decrease of $56.8 million or 16.6% when compared with $343.1 million for the second quarter of 2008. The sales decrease was due to an internal sales decline of approximately 19%, excluding an unfavorable 4% effect of foreign currency translation, driven primarily by EIG’s process and industrial products businesses. Partially offsetting the sales decrease was the recent acquisitions of Vision Research and Xantrex Programmable.

     EIG’s operating income was $59.8 million for the second quarter of 2009, a decrease of $18.3 million or 23.4% when compared with $78.1 million for the second quarter of 2008. EIG’s operating margins were 20.9% of sales for the second quarter of 2009 compared with 22.8% of sales for the second quarter of 2008. The decrease in segment operating income and operating margins was driven by the decrease in sales noted above, predominantly by weakness in the Process and Industrial businesses, and higher defined benefit pension expense, which was partially offset by the cost savings achieved from the acceleration of restructuring activities related to the fourth quarter of 2008 restructuring charge.

     Electromechanical (“EMG”) sales totaled $238.7 million for the second quarter of 2009, a decrease of $67.0 million or 21.9% from $305.7 million for the second quarter of 2008. The sales decrease was due to an internal sales decline of approximately 24%, excluding an unfavorable 4% effect of foreign currency translation, driven primarily by EMG’s engineered materials, interconnects and packaging and cost driven motors businesses. Partially offsetting the sales decrease was the recent acquisitions of Muirhead and High Standard Aviation.

     EMG’s operating income was $41.5 million for the second quarter of 2009, a decrease of $11.6 million or 21.8% when compared with $53.1 million for the second quarter of 2008. EMG’s decrease in operating income was driven by the decrease in sales, partially offset by profit contributions made by the acquisitions mentioned above. EMG’s operating margins were 17.4% of sales for both the second quarter of 2009 and 2008. Operational Excellence capabilities and cost reduction initiatives throughout the Group, including the cost savings achieved from the restructuring activities related to the fourth quarter of 2008 restructuring charge, offset the impact of lower sales on operating margins.

Results of operations for the first six months of 2009 compared with the first six months of 2008

     Net sales for the first six months of 2009 were $1,077.8 million, a decrease of $182.2 million or 14.5% when compared with net sales of $1,260.0 million for the first six months of 2008. The decline in net sales was primarily attributable to lower order rates as a result of the ongoing global economic recession, partially offset by the contributions from the acquisitions of Drake Air and Motion Control Group (“MCG”) in February 2008, Reading Alloys in April 2008, Vision Research, Inc. in June 2008, Xantrex Programmable in August 2008, Muirhead in November 2008 and High Standard Aviation in January 2009. The Company’s internal sales declined approximately 19% for the first six months of 2009, which excludes a 4% unfavorable effect of foreign currency translation. The acquisitions mentioned above offset approximately 8% of the Company’s internal sales decline.

     Total international sales for the first six months of 2009 were $529.8 million or 49.2% of consolidated net sales, a decrease of $89.6 million or 14.5% when compared with international sales of $619.4 million or 49.2% of consolidated net sales for the first six months of 2008. The decline in international sales resulted from decreased international sales from base businesses of $143.0 million, which includes the effect of foreign currency translation, partially offset by the impact of acquisitions completed in 2009 and 2008. The Company maintains a strong international sales presence in Europe and Asia in both reportable segments.

Results of Operations (continued)

     New orders for the first six months of 2009 were $972.4 million, a decrease of $395.2 million or 28.9% when compared with $1,367.6 million for the first six months of 2008. As a result, the Company’s backlog of unfilled orders at June 30, 2009 was $613.2 million, a decrease of $105.4 million or 14.7% when compared with $718.6 million at December 31, 2008. The Company has experienced lower order rates as a result of the ongoing global economic recession.

     Segment operating income for the first six months of 2009 was $216.6 million, a decrease of $40.9 million or 15.9% when compared with segment operating income of $257.5 million for the first six months of 2008. Segment operating income, as a percentage of sales, decreased to 20.1% for the first six months of 2009 from 20.4% for the first six months of 2008. The decrease in segment operating income and operating margins resulted primarily from the decrease in sales noted above and higher defined benefit pension expense, partially offset by profit contributions made by the acquisitions and cost reduction initiatives, including the cost savings achieved in the first six months of 2009 from the restructuring activities related to the fourth quarter of 2008 restructuring charge.

     SG&A expenses for the first six months of 2009 were $125.5 million, a decrease of $33.5 million or 21.1% when compared with $159.0 million for the first six months of 2008. As a percentage of sales, SG&A expenses were 11.6% for the first six months of 2009, compared with 12.6% for the first six months of 2008. The decrease in SG&A expenses was primarily the result of lower sales and the Company’s cost savings initiatives. Additionally, the first six months of 2008 includes a $7.1 million second quarter charge recorded in corporate administrative expenses related to the accelerated vesting of an April 2005 restricted stock grant. For the first six months of 2009, base business selling expenses decreased approximately 24%, compared with the same period of 2008, which was significantly higher than the Company’s internal sales decline. Selling expenses, as a percentage of sales, decreased to 10.1% for the first six months of 2009, compared with 10.5% for the first six months of 2008.

     Corporate administrative expenses for the first six months of 2009 were $17.1 million, a decrease of $9.9 million or 36.7% when compared with $27.0 million for the first six months of 2008. As a percentage of sales, corporate administrative expenses for the first six months of 2009 were 1.6%, compared with 2.1% for the first six months of 2008. The decrease in corporate administrative expenses was driven by the equity based compensation associated with the accelerated vesting of restricted stock in the second quarter of 2008, noted above, as well as, the Company’s cost saving initiatives, including the restructuring activities.

     Consolidated operating income for the first six months of 2009 was $199.4 million or 18.5% of sales, a decrease of $30.9 million or 13.4% when compared with $230.3 million or 18.3% of sales for the first six months of 2008.

     Interest expense was $34.7 million for the first six months of 2009, an increase of $4.2 million or 13.8% when compared with $30.5 million for the first six months of 2008. The increase was due to the impact of the funding of the long-term private placement senior notes in the third and fourth quarters of 2008.

     The effective tax rate for the first six months of 2009 was 32.3% compared with 33.3% for the first six months of 2008. The lower effective tax rate for the first six months of 2009 primarily reflects the impact of settlements of income tax examinations.

     Net income for the first six months of 2009 was $110.9 million, a decrease of $21.3 million or 16.1% when compared with $132.2 million for the first six months of 2008. Diluted earnings per share for the first six months of 2009 was $1.03, a decrease of $0.20 or 16.3% when compared with $1.23 per diluted share for the second quarter of 2008.

Results of Operations (continued)

Segment Results

     Electronic Instruments (“EIG”) sales totaled $588.7 million for the first six months of 2009, a decrease of $94.7 million or 13.9% when compared with $683.4 million for the first six months of 2008. The sales decrease was due to an internal sales decline of approximately 17%, excluding an unfavorable 3% effect of foreign currency translation, driven primarily by EIG’s process and industrial products businesses. Partially offsetting the sales decrease was the recent acquisitions of Vision Research and Xantrex Programmable.

     EIG’s operating income was $128.9 million for the first six months of 2009, a decrease of $28.4 million or 18.1% when compared with $157.3 million for the first six months of 2008. EIG’s operating margins were 21.9% of sales for the first six months of 2009 compared with 23.0% of sales for the first six months of 2008. The decrease in segment operating income and operating margins was driven by the decrease in sales noted above, predominantly by weakness in the Process and Industrial businesses, and higher defined benefit pension expense, which was partially offset by the cost savings achieved from the restructuring activities related to the fourth quarter of 2008 restructuring charge.

     Electromechanical (“EMG”) sales totaled $489.1 million for the first six months of 2009, a decrease of $87.4 million or 15.2% from $576.5 million for the first six months of 2008. The sales decrease was due to an internal sales decline of approximately 20%, excluding an unfavorable 5% effect of foreign currency translation, driven primarily by EMG’s engineered materials, interconnects and packaging and cost driven motors businesses. Partially offsetting the sales decrease was the recent acquisitions of Drake Air, MCG, Reading Alloys, Muirhead and High Standard Aviation.

     EMG’s operating income was $87.7 million for the first six months of 2009, a decrease of $12.5 million or 12.5% when compared with $100.2 million for the first six months of 2008. EMG’s decrease in operating income was driven by the decrease in sales, partially offset by profit contributions made by the acquisitions mentioned above. EMG’s operating margins were 17.9% of sales for the first six months of 2009 compared with 17.4% of sales for the first six months of 2008. The increase in operating margins was primarily driven by Operational Excellence capabilities and cost reduction initiatives throughout the Group, including the cost savings achieved from the restructuring activities related to the fourth quarter of 2008 restructuring charge.

Financial Condition

Liquidity and Capital Resources

     Cash provided by operating activities totaled $184.2 million for the first six months of 2009, an increase of $42.4 million or 29.9% when compared with $141.8 million for the first six months of 2008. The increase in operating cash flow was primarily the result of lower overall operating working capital levels, which includes a tax refund that resulted from the Company’s higher year end 2008 defined benefit pension contributions. The increase in cash provided by operating activities was partially offset by the $21.3 million decrease in net income and $19.0 million in defined benefit pension contributions paid for the first six months of 2009, compared with $1.8 million in defined benefit pension contributions paid for the first six months of 2008. Free cash flow (cash flow from operating activities less capital expenditures) was $169.0 million for the first six months of 2009, compared with $121.9 million for the same period in 2008. Free cash flow is presented because the Company is aware that this measure is used by third parties in evaluating the Company.

     Cash used for investing activities totaled $54.9 million for the first six months of 2009, compared with $293.0 million for the first six months of 2008. For the first six months of 2009, the Company paid $40.2 million for one business acquisition, net of cash received, compared with $278.3 million paid for four business acquisitions and one technology line, net of cash received, for the first six months of 2008. Additions to property, plant and equipment totaled $15.2 million for the first six months of 2009, compared with $19.9 million for the first six months of 2008.

Financial Condition (continued)

     Cash used for financing activities totaled $81.3 million for the first six months of 2009, compared with $118.7 million of cash provided by financing activities for the first six months of 2008. In the first six months of 2009, the net total borrowings decreased by $76.0 million, compared with a net total borrowings increase of $177.6 million in the first six months of 2008. Additionally, for the first six months of 2008, the Company repurchased 1.3 million shares of the Company’s common stock for $57.4 million. In May 2009, the Company chose not to renew its $100 million accounts receivable securitization facility.

     At June 30, 2009, total debt outstanding was $1,059.0 million, compared with $1,111.7 million at December 31, 2008, with no significant maturities until 2012. Total long-term debt at June 30, 2009 was $1,053.9 million. The debt-to-capital ratio was 42.6% at June 30, 2009, compared with 46.3% at December 31, 2008. The net debt-to-capital ratio (total debt less cash and cash equivalents divided by the sum of net debt and stockholders’ equity) was 39.3% at June 30, 2009, compared with 44.3% at December 31, 2008. 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.

     As a result of the Company’s cash flow activities discussed above, cash and cash equivalents at June 30, 2009 totaled $137.4 million, compared with $87.0 million at December 31, 2008. The Company’s liquidity has not been impacted by the recent financial crisis nor do we expect liquidity to be impacted in the near future. Additionally, the Company is in compliance with all of its debt covenants, which includes its 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.

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 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 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 Securities and Exchange Commission, including its most recent reports on Form 10-K, 10-Q and 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.

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. The Company’s principal executive officer and principal financial officer evaluated the effectiveness of the system of disclosure controls and procedures as of June 30, 2009. 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 in all material respects as of June 30, 2009.

     Such evaluation did not identify any change in the Company’s internal control over financial reporting during the quarter ended June 30, 2009 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

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.LAB		XBRL Taxonomy Extension Label Linkbase Document.
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document.

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.

August 5, 2009