Ametek (AME) 10-K risk factor changes: FY2017 vs FY2016

Since the beginning of [removed: 2012,] [added: 2013,] through December 31, [removed: 2016,] [added: 2017,] we have completed [removed: 22] [added: 18] acquisitions.

_We may not properly execute, or realize anticipated cost savings or benefits from, our [removed: cost reduction] [added: Operational Excellence] initiatives._

These initiatives are primarily designed to make the [removed: company] [added: Company] more efficient, which is necessary in the [removed: company’s] [added: Company’s] highly competitive [removed: industry.][added: industries.]

International sales for [removed: 2016] [added: 2017] and [removed: 2015] [added: 2016] represented [removed: 52.4%] [added: 51.5%] and [removed: 51.7%] [added: 52.4%] of our consolidated net sales, respectively.

[removed: We] [added: As of December 31, 2017, we] have manufacturing operations in 17 countries outside the United States, with significant operations in China, the Czech [removed: Republic] [added: Republic, Mexico] and [removed: Mexico.][added: Serbia.]

Any such improper actions or allegations of such acts could damage our reputation and subject us to civil or criminal investigations in the U.S. and in other jurisdictions and related shareholder lawsuits could lead to substantial civil and criminal, monetary and non-monetary penalties and could cause us to [removed: incur significant legal and investigatory fees.]

Although we believe we have certain technological and other advantages over our competitors, maintaining such advantages will require [added: us to continue investing in research and development and sales and marketing.]

Our businesses, operations and facilities are subject to a number of federal, state, local and foreign environmental and occupational health and safety laws and regulations concerning, among other things, air [removed: emissions, discharges to waters and the use, manufacturing, generation, handling, storage, transportation and disposal of hazardous substances and wastes.]

[removed: In the markets served by EIG, although] [added: Although] we believe EIG is a market leader, competition is strong and could [removed: intensify.][added: intensify in the markets served by EIG.]

In the aerospace [removed: and heavy-vehicle] markets served by EIG, a limited number of companies compete on the basis of product quality, performance and innovation.

These restrictions could limit our ability to effectuate future acquisitions, limit our ability to pay dividends, limit our [added: ability to make capital expenditures or restrict our financial flexibility.]

_Our business and financial performance may be adversely affected by [added: cybersecurity incidents, and other] information technology and [removed: other] business disruptions._

Our facilities, supply chains, distribution [removed: systems] [added: systems, products] and information technology systems may be impacted by natural or man-made disruptions, including [added: cybersecurity attacks, other] information technology attacks or failures, threats to physical security, armed conflict, as well as damaging weather or other acts of nature, pandemics or other public health crises.

For example, our information technology systems may be damaged, disrupted or shut down due to attacks by computer hackers, computer viruses, [added: cyberattacks or other security breach,] employee error or malfeasance, power outages, hardware failures, telecommunications or utility failures, or other unforeseen events, and in any such circumstances our disaster recovery planning [added: and security upgrade efforts] may be ineffective or inadequate.

A shutdown of, or inability to utilize, one or more of our facilities, our supply chain, our distribution system, [added: our products] or our information technology, telecommunications or other systems, could significantly disrupt our operations, delay production and shipments, [removed: damage customer] [added: our] relationships and [removed: our reputation,] [added: 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 [removed: repair and replacement] [added: remediation or other] expenses.

_Our goodwill and other intangible assets represent a substantial [removed: amount] [added: proportion] of our total assets and the impairment of such substantial goodwill and intangible assets could have a negative impact on our financial condition and results of operations._

At December 31, [removed: 2016,] [added: 2017,] goodwill and other intangible assets, net of accumulated amortization, totaled [removed: $4,553.0] [added: $5,129.0] million or [removed: 64%] [added: 66%] of our total assets.

incur significant legal and investigatory fees.

emissions, discharges to waters and the use, manufacturing, generation, handling, storage, transportation and disposal of hazardous substances and wastes.

| --- | --- |

us to continue investing in research and development and sales and marketing.

ability to make capital expenditures or restrict our financial flexibility.

For the year ended December 31, 2016, the Company recorded a $13.9 million non-cash impairment charge related to certain of the Company’s trade names.

For further discussion, see “Critical Accounting Policies” in Management’s Discussion and Analysis of Financial Condition and Results of Operations and Note 6 to the Consolidated Financial Statements in this Annual Report on Form 10-K.

| | • | | During [removed: 2016,] [added: 2017,] the Company recorded pre-tax realignment costs totaling [removed: $25.6] [added: $16.8] million. The realignment costs had the effect of reducing net income for [removed: 2016] [added: 2017] by [removed: $17.0] [added: $13.0] million [removed: ($0.07] [added: ($0.05] per diluted share). See below for further discussion. |

[removed: | | • | | During] [added: Also, in the fourth quarter of] 2016, the Company recorded a $13.9 million non-cash impairment charge related to certain of the Company’s trade names. [removed: The impairment charge had the effect of reducing net income for 2016 by $8.6 million ($0.04 per diluted share). See below for further discussion. |]

| | • | | During [removed: 2016,] [added: 2017,] the Company spent [removed: $391.4] [added: $556.6] million in cash, net of cash acquired, to acquire [removed: five] [added: three] businesses: |

| | • | | The Company continued its emphasis on investment in research, development and engineering, spending [removed: $200.8] [added: $221.2] million in [removed: 2016] [added: 2017] before customer reimbursement of [removed: $7.2] [added: $5.4] million. Sales from products introduced in the past three years were [removed: $929.6] [added: $1,042.9] million or [removed: 24.2%] [added: 24.3%] of net sales. |

| | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | |

| Electronic Instruments | | $ | [removed: 2,360,285] [added: 2,690,554] | | | $ | [removed: 2,417,192] [added: 2,360,285] | | | $ | [removed: 2,421,638] [added: 2,417,192] | |

| Electromechanical | | | [removed: 1,479,802] [added: 1,609,616] | | | | [removed: 1,557,103] [added: 1,479,802] | | | | [removed: 1,600,326] [added: 1,557,103] | |

| Consolidated net sales | | $ | [removed: 3,840,087] [added: 4,300,170] | | | $ | [removed: 3,974,295] [added: 3,840,087] | | | $ | [removed: 4,021,964] [added: 3,974,295] | |

| Electronic Instruments | | $ | [removed: 577,717] [added: 677,489] | | | $ | [removed: 639,399] [added: 577,717] | | | $ | [removed: 612,992] [added: 639,399] | |

| Electromechanical | | | [removed: 277,873] [added: 310,875] | | | | [removed: 318,098] [added: 277,873] | | | | [removed: 335,046] [added: 318,098] | |

| Total segment operating income | | | [removed: 855,590] [added: 988,364] | | | | [removed: 957,497] [added: 855,590] | | | | [removed: 948,038] [added: 957,497] | |

| Corporate administrative and other expenses | | | [removed: (53,693] [added: (73,270] | ) | | | [removed: (49,781] [added: (53,693] | ) | | | [removed: (49,452] [added: (49,781] | ) |

| Consolidated operating income | | | [removed: 801,897] [added: 915,094] | | | | [removed: 907,716] [added: 801,897] | | | | [removed: 898,586] [added: 907,716] | |

| Interest and other expenses, net | | | [removed: (108,794] [added: (118,365] | ) | | | [removed: (101,336] [added: (108,794] | ) | | | [removed: (93,754] [added: (101,336] | ) |

| Consolidated income before income taxes | | $ | [removed: 693,103] [added: 796,729] | | | $ | [removed: 806,380] [added: 693,103] | | | $ | [removed: 804,832] [added: 806,380] | |

The [removed: full year impact of] [added: continued strengthening global economic environment, contributions from] the [removed: 2016] acquisitions [added: completed in 2017] and [added: the acquisitions of Laserage Technology Corporation (“Laserage”) in October 2016, HS Foils and Nu Instruments in July 2016, and Brookfield Engineering Laboratories (“Brookfield”) and ESP/SurgeX in January 2016, and] continued focus on and implementation of Operational Excellence initiatives, including the [added: 2017 and] 2016 realignment actions (described further throughout the results of operations for the fourth quarter and year ended December 31, [removed: 2016),] [added: 2017),] are expected to have a positive impact on the Company’s [removed: 2017] [added: 2018] results.

[removed: Electronic Instruments Group (“EIG”)] [added: EIG] net sales were $2,360.3 million in 2016, a decrease of 2.4%, compared with $2,417.2 million in 2015.

[removed: Electromechanical Group (“EMG”)] [added: EMG] net sales were $1,479.8 million in 2016, a decrease of 5.0%, compared with $1,557.1 million in 2015.

The Company recorded [removed: 2015] [added: 2017] realignment costs totaling [removed: $36.6 million, with $15.9 million recorded in the first quarter of 2015 and $20.7] [added: $16.8] million [removed: recorded] in the fourth quarter of [removed: 2015] [added: 2017] (the [removed: “2015] [added: “2017] realignment costs”).

The [removed: 2015] [added: 2016] realignment costs primarily related to [removed: reductions] [added: $19.3 million] in [added: severance costs for a reduction in] workforce [added: and $6.2 million of asset write-downs] in response to the impact of a weak global economy on certain of the Company’s businesses, as well as the effects of a continued strong U.S. dollar.

The expected annualized cash savings from the [removed: 2016] [added: 2017] realignment costs is expected to be approximately [removed: $35 million, with approximately $15] [added: $5] million [added: and is] expected to be [added: fully] realized in [removed: 2017.][added: 2019.]

Segment operating income and segment operating margins for 2016 and 2015 [removed: include] [added: included] the impact of the realignment costs detailed in the tables above.

Cost of sales for 2016 and 2015 [removed: include] [added: included] the impact of the realignment costs detailed in the tables above.

[removed: Selling, general and administrative (“SG&A”)] [added: SG&A] expenses for 2016 were $463.0 [removed: million,] [added: million or 12.1% of net sales,] an increase of $14.4 million or 3.2%, compared with $448.6 million [added: or 11.3% of net sales] in 2015.

[removed: As a percentage of net sales, SG&A expenses were 12.1%] [added: sales] for [added: the fourth quarter of] 2016, compared with [removed: 11.3% in] [added: 25.7% of net sales for the fourth quarter of] 2015.

For 2016 and 2015, [removed: corporate administrative] [added: SG&A] expenses [removed: include] [added: included] $1.6 million and $0.8 million, respectively, of realignment costs noted above.

The [added: interest expense] increase [added: for 2016] was primarily due to higher average borrowings to fund acquisitions and share repurchases.

The [removed: 2015] [added: 2017] realignment costs had the effect of reducing [removed: 2015] [added: 2017] diluted earnings per share by [removed: $0.10.]

The decrease in EIG [removed: segment] operating income and [removed: segment] operating margins for 2016 resulted primarily from the decrease in net sales noted above and a $20.5 million increase in depreciation and amortization expense, which included a $9.2 million impairment charge.

The 2016 impairment charge negatively [added: impacted EIG’s operating margins by approximately 40 basis points.]

[added: The fourth quarter of 2016 impairment charge negatively] impacted [removed: EIG segment] [added: EIG’s] operating margins by approximately [removed: 40] [added: 150] basis points.

[removed: EIG segment] [added: EIG’s] operating income and [removed: segment] operating margins for 2016 and 2015 [removed: include] [added: included] the impact of the realignment costs detailed in the tables above.

The decrease in [removed: EMG segment] [added: EMG’s] operating income and [removed: segment] operating margins for [added: the fourth quarter of] 2016 resulted primarily from the decrease in net sales noted above and a [removed: $9.2] [added: $6.2] million increase in depreciation and amortization expense, which included a $4.7 million impairment charge.

The 2016 impairment charge negatively impacted [removed: EMG segment] [added: EMG’s] operating margins by approximately 30 basis points.

[removed: EMG segment] [added: EMG’s] operating income and [removed: segment] operating margins for 2016 and 2015 [removed: include] [added: included] the impact of the realignment costs detailed in the tables above.

Segment operating income and segment operating margins for the fourth quarter of 2016 and 2015 [removed: include] [added: included] the impact of the realignment costs detailed in the tables above.

Cost of sales for the fourth quarter of 2016 and 2015 [removed: include] [added: included] the impact of the realignment costs detailed in the tables above.

The fourth quarter of [removed: 2015] [added: 2017] realignment costs reduced the fourth quarter of [removed: 2015] [added: 2017] net income by [removed: $13.9] [added: $13.0 million and the net benefit related to the Act increased fourth quarter of 2017 net income by $91.6] million.

The [removed: fourth quarter] [added: Company recorded $25.6 million] of 2016 realignment [added: costs in the fourth quarter of 2016.]

[added: The fourth quarter of 2016 realignment] costs and fourth quarter of 2016 impairment charge had the effect of reducing the fourth quarter of 2016 diluted earnings per share by $0.07 and $0.04, respectively.

The strengthening global economic environment compared to 2016, contributions from recent acquisitions, and continued focus on and implementation of Operational Excellence initiatives, had a positive impact on 2017 results.

Highlights of 2017 were:

| | • | | Orders for 2017 were $4,539.8 million, an increase of $691.0 million or 18.0%, compared with $3,848.8 million in 2016. As a result, the Company’s backlog of unfilled orders at December 31, 2017 was a record $1,396.1 million. |

| | • | | Net sales for 2017 were $4,300.2 million, an increase of $460.1 million or 12.0%, compared with $3,840.1 million in 2016. The increase in net sales for 2017 was due to 6% organic sales growth, with 5% organic sales growth in the Electronic Instruments Group (“EIG”) and 8% organic sales growth in the Electromechanical Group (“EMG”), and a 6% increase from the 2017 and 2016 acquisitions. |

| | • | | Cash flow provided by operating activities for 2017 was $833.3 million, an increase of $76.5 million or 10.1%, compared with $756.8 million in 2016. |

| | • | | In February 2017, acquired Rauland-Borg Corporation (“Rauland”), a global provider of enterprise clinical and education communications solutions for hospitals, healthcare systems and educational facilities; |

| | • | | In June 2017, acquired MOCON, Inc., a provider of laboratory and field gas analysis instrumentation to research laboratories, production facilities and quality control departments in food and beverage, pharmaceutical and industrial applications; and |

| | • | | In December 2017, acquired Arizona Instrument LLC, a provider of differentiated, high-precision moisture and gas measurement instruments in food, pharmaceutical and environmental markets. |

| | • | | On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act (the “Act”). As a result, in the fourth quarter of 2017, the Company recorded a net benefit of $91.6 million in the consolidated statement of income as a component of Provision for income taxes. The Act had the effect of increasing 2017 diluted earnings per share by $0.39. See below for further discussion. |

| | • | | In the fourth quarter of 2017, the Company paid in full, at maturity, $270 million in aggregate principal amount of 6.20% private placement senior notes. |

In 2017, the Company established records for orders, sales, operating income, net income, diluted earnings per share and operating cash flow.

Net sales for 2017 were $4,300.2 million, an increase of $460.1 million or 12.0%, compared with net sales of $3,840.1 million in 2016.

Foreign currency translation was essentially flat period over period.

EIG net sales were $2,690.6 million in 2017, an increase of 14.0%, compared with $2,360.3 million in 2016.

EMG net sales were $1,609.6 million in 2017, an increase of 8.8%, compared with $1,479.8 million in 2016.

Total international sales for 2017 were $2,214.0 million or 51.5% of net sales, an increase of $203.3 million or 10.1%, compared with international sales of $2,010.7 million or 52.4% of net sales in 2016.

The $203.3 million increase in international sales was primarily driven by organic sales growth.

Export shipments increased primarily due to organic sales growth.

Orders for 2017 were $4,539.8 million, an increase of $691.0 million or 18.0%, compared with $3,848.8 million in 2016.

The 2017 realignment costs were composed of $3.0 million in severance costs for a reduction in workforce, $7.8 million of asset write-downs and $6.0 million in costs to withdraw from a multiemployer defined benefit pension plan.

The 2017 realignment costs better position the Company’s long-term cost structure and included costs associated with the continued consolidation of the Company’s floor care and specialty motors businesses into its precision motion control businesses.

| | | 2017 | | | | | | | | 2016 | | | | | | |

| Realignment costs | | $ | 16.8 | | | $ | 16.8 | | | $ | 24.0 | | | $ | 24.0 | |

| Impairment charge | | | — | | | | — | | | | 13.9 | | | | 13.9 | |

| | | | | | | | | | | | | | | | | |

| Cost of sales | | | 16.8 | | | | 16.8 | | | | 37.9 | | | | 37.9 | |

| | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | |

| Realignment costs | | | — | | | | — | | | | 1.6 | | | | 1.6 | |

| Impairment charge | | | — | | | | — | | | | — | | | | — | |

| | | | | | | | | | | | | | | | | |

| Selling, general and administrative expenses | | | — | | | | — | | | | 1.6 | | | | 1.6 | |

| | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | |

| Realignment costs | | | 16.8 | | | | 16.8 | | | | 25.6 | | | | 25.6 | |

| Impairment charge | | | — | | | | — | | | | 13.9 | | | | 13.9 | |

| | | | | | | | | | | | | | | | | |

| Total reported in the consolidated statement of income | | $ | 16.8 | | | $ | 16.8 | | | $ | 39.5 | | | $ | 39.5 | |

| | | | | | | | | | | | | | | | | |

The 2017 and 2016 realignment costs and 2016 impairment charge were reported in segment operating income as follows (in millions):

In 2016, the Company was impacted by a weak global economy and the effects of a continued strong U.S. dollar.

Specifically, the Company experienced lower sales in its process businesses that have exposure to oil and gas markets and in its engineered materials, interconnects and packaging businesses that have exposure to metals markets.

Contributions from recent acquisitions, combined with successful Operational Excellence initiatives, helped to partially offset the oil and gas and metals markets weakness.

Items of note in 2016 were:

| --- | --- | --- | --- |

| | • | | In January 2016, AMETEK acquired Brookfield Engineering Laboratories (“Brookfield”), a manufacturer of viscometers and rheometers, as well as instrumentation to analyze texture and powder flow; |

| | • | | In January 2016, AMETEK acquired ESP/SurgeX, a manufacturer of energy intelligence and power protection, monitoring and diagnostic solutions; |

| | • | | In July 2016, AMETEK acquired HS Foils, a developer and manufacturer of key components used in radiation detectors including ultra-thin radiation windows, silicon drift detectors and x-ray filters; |

| | • | | In July 2016, AMETEK acquired Nu Instruments, a provider of magnetic sector mass spectrometers used for elemental and isotope analysis; and |

| | • | | In October 2016, AMETEK acquired Laserage Technology Corporation (“Laserage”), a provider of laser fabrication services for the medical device market. |

| | • | | During 2016, the Company established record cash flow provided by operating activities that totaled $756.8 million for 2016, an $84.3 million or 12.5% increase from 2015. |

| | • | | In March 2016, the Company along with certain of its foreign subsidiaries amended and restated its credit agreement dated as of September 22, 2011 (the “Credit Agreement”). The Credit Agreement amends and restates the Company’s existing $700 million revolving credit facility, which was due to expire in December 2018. The Credit Agreement consists of a five-year revolving credit facility in an aggregate principal amount of $850 million with a final maturity date in March 2021. The revolving credit facility total borrowing capacity excludes an accordion feature that permits the Company to request up to an additional $300 million in revolving credit commitments at any time during the life of the Credit Agreement under certain conditions. The revolving credit facility provides the Company with additional financial flexibility to support its growth plans, including its acquisition strategy. |

| | • | | In October 2016, the Company completed a private placement agreement to sell 500 million Euros and 225 million British pounds in senior notes to a group of institutional investors (the “2016 Private Placement”). There were two funding dates under the 2016 Private Placement. The first funding occurred in October 2016 for 500 million Euros ($546.8 million) and the second funding occurred in November 2016 for 225 million British pounds ($274.1 million). The proceeds from the first funding of the 2016 Private Placement were used to pay down domestic borrowings under the Company’s revolving credit facility. The proceeds from the second funding of the 2016 Private Placement were used to pay down, at maturity, a 40 million British pound ($48.7 million) 5.99% senior note in November 2016 and provides the Company with additional financial flexibility to support its growth plans, including its acquisition strategy. See “Liquidity and Capital Resources” section for further discussion. |

In the second half of 2016, the Company noted stabilization in the markets mentioned above compared to 2015; however, the Company still expects the challenging global economic environment to continue to impact its markets and geographies into the first half of 2017.

Export shipments decreased primarily due to a weak global economy, as well as the competitive impacts of a strong U.S. dollar.

Selling expenses for 2016 were $410.6 million, an increase of $11.1 million or 2.8%, compared with $399.5 million in 2015.

The selling expenses increase was due primarily to business acquisitions.

Selling expenses, as a percentage of net sales, increased to 10.7% for 2016, compared with 10.1% in 2015.

Corporate administrative expenses for 2016 were $52.4 million, an increase of $3.3 million or 6.7%, compared with $49.1 million in 2015.

As a percentage of net sales, corporate administrative expenses were 1.4% for 2016, compared with 1.2% in 2015.

The 2015 effective tax rate reflects the first quarter of 2015 release of uncertain tax position liabilities related to the conclusion of an advance thin capitalization agreement in the European Union, the second quarter of 2015 effective settlement of the U.S. research and development tax credit from the completion of an Internal Revenue Service examination for 2010 and 2011, and the third quarter of 2015 $7.5 million of tax benefits related to the closure of an international subsidiary.

The 2015 realignment costs reduced 2015 net income by $24.7 million.

Contributions from the acquisitions completed in 2015 and the acquisitions of Amptek, Inc. in August 2014 and Zygo Corporation in June 2014, as well as the Company’s Operational Excellence initiatives had a positive impact on 2015 results.

Net sales for 2015 were $3,974.3 million, a decrease of $47.7 million or 1.2%, compared with net sales of $4,022.0 million in 2014.

EIG net sales were $2,417.2 million in 2015 or essentially flat on a percentage basis, compared with $2,421.6 million in 2014.

EMG net sales were $1,557.1 million in 2015, a decrease of 2.7%, compared with $1,600.3 million in 2014.

Total international sales for 2015 were $2,054.7 million or 51.7% of net sales, a decrease of $141.5 million or 6.4%, compared with international sales of $2,196.2 million or 54.6% of net sales in 2014.

The $141.5 million decrease in international sales was primarily driven by a weak global economy, as well as the foreign currency

translation headwind noted above.

Orders for 2015 were $3,924.7 million, a decrease of $154.6 million or 3.8%, compared with $4,079.3 million in 2014.

| | • | | $35.8 million in Cost of sales, with $15.8 million recorded in the first quarter of 2015 and $20.0 million recorded in the fourth quarter of 2015; and |

| | • | | $0.8 million in Selling, general and administrative expenses, with $0.1 million recorded in the first quarter of 2015 and $0.7 million recorded in the fourth quarter of 2015. |

Total segment operating income for 2015 included pre-tax realignment costs totaling $35.8 million, with $15.8 million recorded in the first quarter of 2015 and $20.0 million recorded in the fourth quarter of 2015.

The 2015 realignment costs were reported as follows:

| | • | | $18.5 million in EIG operating income, with $9.3 million recorded in both the first and fourth quarters of 2015; and |

| | • | | $17.3 million in EMG operating income, with $6.5 million recorded in the first quarter of 2015 and $10.8 million recorded in the fourth quarter of 2015. |

Total segment operating margins for 2015 were negatively impacted by approximately 90 basis points due to the 2015 realignment costs.

The 2015 realignment costs impacted segment operating margins as follows:

| | • | | Approximate 70 basis point negative impact on EIG’s 2015 operating margins; and |

| | • | | Approximate 110 basis point negative impact on EMG’s 2015 operating margins. |

AMETEK’s annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports filed or furnished pursuant to Section 13(a) of the Securities Exchange Act of 1934 are made available free of charge on the Company’s website at www.ametek.com in the “Investors [removed: —] [added: –] Financial News and Information” section as soon as reasonably practicable after such material is electronically filed with, or furnished to, the U.S. Securities and Exchange Commission.

Its end markets include aerospace and defense, medical, automation, mass [removed: transit, petrochemical] [added: transit] and other industrial markets.

EMG holds significant positions in niche segments of the aerospace and defense, [removed: precision motion control,] automation, medical and mass transit markets.

Historically, it has demonstrated an ability to develop innovative new products [added: and solutions] that anticipate customer [removed: needs and to bring them to market successfully.][added: needs.]

It has consistently added to its investment in research, development and [removed: engineering] [added: engineering,] and improved its new product development efforts with the adoption of Design for Six Sigma and Value Analysis/Value Engineering methodologies.

In its effort to achieve best-cost manufacturing, [added: as of December 31, 2017,] AMETEK [removed: has established] [added: had] plants in Brazil, China, the Czech Republic, Malaysia, Mexico, and Serbia.

AMETEK senior management has extensive industry experience and an average of approximately [removed: 24] [added: 25] years of AMETEK service.

The goal of that plan is double-digit annual percentage growth in [added: sales and] earnings per share over the business cycle and a superior return on total capital.

_Operational Excellence._ Operational Excellence is AMETEK’s cornerstone strategy for [added: accelerating growth,] improving profit margins and strengthening its competitive position across its businesses.

Operational Excellence focuses on [removed: cost reductions,] [added: initiatives to drive increased organic sales growth,] improvements in operating efficiencies and sustainable practices.

AMETEK’s Operational Excellence strategies include lean manufacturing, global sourcing, Design for Six [removed: Sigma and] [added: Sigma,] Value Engineering/Value [removed: Analysis.][added: Analysis and growth kaizens.]

Each plays an important role in improving efficiency, enhancing the pace and quality of innovation and [removed: cost reduction.][added: driving profitable sales growth.]

Operational Excellence initiatives have yielded lower operating and administrative costs, shortened manufacturing cycle times, [removed: and] resulted in higher cash flow from operations and increased customer satisfaction.

Since the beginning of [removed: 2012] [added: 2013] through December 31, [removed: 2016,] [added: 2017,] AMETEK has completed [removed: 22] [added: 18] acquisitions with annualized sales totaling [removed: approximately $1.2] [added: over $1] billion, including [removed: five] [added: three] acquisitions in [removed: 2016] [added: 2017] (see “Recent Acquisitions”).

[removed: _Global &] [added: _Global_ _&] Market Expansion_.

AMETEK has experienced [removed: dramatic] [added: strong] growth outside the United States, reflecting an expanding international customer [removed: base] [added: base, investments in our global infrastructure] and the attractive growth potential of its businesses in overseas markets.

It has grown sales in Latin America and Asia by strategically building, acquiring and expanding manufacturing [removed: facilities.]

[added: AMETEK also has expanded its] sales and service capabilities in China and enhanced its sales presence and engineering capabilities in India.

In [removed: 2016,] [added: 2017,] AMETEK added to its highly differentiated product portfolio with a range of new products across many of its businesses.

See [added: “Results of Operations” in Part II, Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations and] Note [removed: 9] [added: 8] to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for further details.

AMETEK spent [removed: $391.4] [added: $556.6] million in cash, net of cash acquired, to acquire [removed: five] [added: three] businesses in [removed: 2016.][added: 2017.]

[removed: Brookfield] [added: Rauland] is part of EIG.

[removed: ESP/SurgeX] [added: MOCON] is part of EIG.

[removed: HS Foils] [added: Arizona Instrument] is part of EIG.

International sales represented [removed: 52.4%] [added: 51.5%] of consolidated net sales in [removed: 2016] [added: 2017] compared with [removed: 51.7%] [added: 52.4%] in [removed: 2015.][added: 2016.]

It has achieved competitive advantage through continued investment in research, development and engineering to develop market-leading products [added: and solutions] that serve niche markets.

Products supplied to these markets include process control instruments for the oil and gas, petrochemical, pharmaceutical, [removed: semiconductor] [added: semiconductor, automation,] and [removed: automation] [added: food and beverage] industries.

It is a leader in power quality monitoring and metering, uninterruptible power systems, programmable power equipment, electromagnetic compatibility (“EMC”) test equipment, sensors for gas turbines, [removed: and] dashboard instruments for heavy trucks and other [removed: vehicles.][added: vehicles, and instrumentation and controls for the food and beverage industries.]

In [removed: 2016, 53%] [added: 2017, 52%] of EIG’s net sales was to customers outside the United States.

At December 31, [removed: 2016,] [added: 2017,] EIG employed approximately [removed: 8,300] [added: 9,200] people, of whom approximately [removed: 1,100] [added: 1,200] were covered by collective bargaining agreements.

At December 31, [removed: 2016,] [added: 2017,] EIG had [removed: 84] [added: 86] operating facilities: [removed: 53] [added: 55] in the United States, nine in the United Kingdom, eight in Germany, three in Canada, two each in [removed: China] [added: China, Denmark] and France and one each in Argentina, Austria, [removed: Denmark,] Finland, [removed: Mexico, Switzerland] [added: Mexico] and [removed: Taiwan.][added: Switzerland.]

Process and analytical instrumentation sales represented [removed: 65%] [added: 69%] of EIG’s [removed: 2016] [added: 2017] net sales.

These sales include process analyzers, emission [removed: monitors, spectrometers,] [added: monitors and spectrometers;] elemental and surface analysis [removed: instruments,] [added: instruments;] level, pressure and temperature sensors and [removed: transmitters,] [added: transmitters;] radiation measurement [removed: devices,] [added: devices;] level measurement [removed: devices,] [added: devices;] precision [removed: pumping systems,] [added: manufacturing systems;] materials- and force-testing [removed: instruments, and] [added: instruments;] contact and non-contact metrology [removed: products.][added: products; and clinical and educational communication solutions.]

Among the industries it serves are oil, gas and petrochemical [removed: refining,] [added: refining;] power [removed: generation,] [added: generation;] pharmaceutical [removed: manufacturing, specialty gas production,] [added: manufacturing; medical and healthcare;] water and waste [removed: treatment,] [added: treatment;] natural gas [removed: distribution,] [added: distribution;] and semiconductor manufacturing.

Acquired in July 2016, Nu Instruments offers a full suite of magnetic sector mass spectrometers used in advanced laboratory analysis across demanding research applications in [removed: earth and] [added: the] environmental [added: and earth] sciences, material [removed: characterization,] [added: characterization] and nuclear isotope analysis.

Power and industrial instrumentation sales represented [removed: 27%] [added: 24%] of EIG’s [removed: 2016] [added: 2017] net sales.

It also offers precision power supplies and power conditioning [removed: products] [added: products,] and electrical immunity and EMC test equipment.

Its products are used primarily for quality control applications in a broad range of [removed: markets] [added: markets,] including food and beverage, pharmaceuticals, oil and gas, paints, solvents, chemicals, coatings and packaging.

Aerospace instrumentation sales represented [removed: 8%] [added: 7%] of EIG’s [removed: 2016] [added: 2017] net sales.

These products include airborne data systems, turbine engine temperature measurement products, vibration-monitoring systems, cockpit instruments and displays, fuel and fluid measurement products, [added: and] sensors and switches.

facilities.

| | • | | Creaform has teamed its SmartDENT 3D™ surface inspection software with its HandyPROBE Next 3D scanner to perform inspection and damage assessment of aircraft surfaces; |

| | • | | Dunkermotoren expanded its range of smart motors with external Ethercat electronics with the addition of its flagship BG95 brushless DC motor; |

| | • | | Technical Manufacturing Corporation (“TMC”) incorporated the latest vibration isolation technology into its UltraDamp™ system for highly sensitive equipment and SEM-Base® VI system for scanning electron microscopes; |

| | • | | Vision Research built upon its award-winning imaging technology in designing the Phantom® Flex4K-GS high-speed camera for scientific research, defense and aerospace applications; |

| | • | | Acquired in February 2017, Rauland-Borg Corporation’s (“Rauland”) Responder® 5 systems bring advanced communications, information exchange and intelligent workflow technology solutions to hospitals and healthcare facilities; |

| | • | | Reichert Technologies added to its leading position in vision testing and eye disease diagnosis with its ClearChart® 4 family of digital acuity systems; |

| | • | | Land Instruments introduced its Near Infrared Borescope non-contact thermal imager for the aluminum and glass processing industries; |

| | • | | CAMECA developed the first cryo-transfer local electrode atom probe helping researchers conduct breakthrough research into three-dimensional atomic analysis; |

| | • | | EDAX was granted a U.S. patent for the technology that underlies the software for its latest electron backscatter diffraction microanalysis instruments; |

| | • | | The ORTEC Detective X™, a handheld radioisotope identifier represents the gold standard for many of world’s leading homeland security and defense agencies; |

| | • | | Solidstate Controls designed its SlimLine uninterruptible power supply product line to meet the highly specialized needs of offshore oil and gas platforms; |

| | • | | Acquired in June 2017, MOCON, Inc. launched the AQUATRAN Model 3 system to measure the water vapor transmission rate of ultrahigh barrier materials; |

| | • | | The SPECTROPORT portable metals analyzer from SPECTRO Analytical Instruments offers advanced optical emission spectroscopy technology in an easy-to-use handheld device; and |

| --- | --- | --- | --- |

| | • | | Grabner Instruments’ MINISCAN IR VISION portable analyzer offers cutting-edge performance and speeds in delivering reliable and accurate analysis of diesel and jet fuels. |

| --- | --- | --- | --- |

2017 OVERVIEW

In 2017, the Company established records for orders, sales, operating income, net income, diluted earnings per share and operating cash flow.

The strengthening global economic environment compared to 2016, contributions from recent acquisitions, and continued focus on and implementation of Operational Excellence initiatives, had a positive impact on 2017 results.

See “Results of Operations” in Part II, Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations for further details.

In 2017, AMETEK achieved sales of $4,300.2 million, an increase of 12.0% from 2016 due to 6% organic sales growth, with 5% organic sales growth in EIG and 8% organic sales growth in EMG, and a 6% increase from the 2017 and 2016 acquisitions.

Diluted earnings per share for 2017 were $2.94, an increase of $0.75 or 34.2%, compared with $2.19 per diluted share in 2016.

On December 22, 2017, the U.S. enacted the Tax Cuts and Jobs Act (the “Act”).

As a result, in the fourth quarter of 2017, the Company recorded a net benefit of $91.6 million in the consolidated statement of income as a component of Provision for income taxes.

The Act had the effect of increasing 2017 diluted earnings per share by $0.39.

In February 2017, AMETEK acquired Rauland, a global provider of enterprise clinical and education communications solutions for hospitals, healthcare systems and educational facilities.

In June 2017, AMETEK acquired MOCON, a provider of laboratory and field gas analysis instrumentation to research laboratories, production facilities and quality control departments in food and beverage, pharmaceutical and industrial applications.

In December 2017, AMETEK acquired Arizona Instrument LLC, a provider of differentiated, high-precision moisture and gas measurement instruments for use in the food, pharmaceutical and environmental markets.

In the fourth quarter of 2017, the Company paid in full, at maturity, $270 million in aggregate principal amount of 6.20% private placement senior notes.

AMETEK’s international sales increased 10.1% to $2,214.0 million in 2017.

The increase in international sales was primarily driven by organic sales growth.

Acquired in June 2017, MOCON is a leading provider of detectors, instruments, systems and consulting services to research laboratories, production facilities, and quality control and safety departments in the medical, pharmaceutical, food and beverage, packaging, environmental, oil and gas and other industries worldwide.

MOCON’s products and technologies complement the Company’s existing gas analysis instrumentation business and provides it with opportunities to expand into the growing food and pharmaceutical package testing market.

Acquired in February 2017, Rauland is a global provider of enterprise clinical and education communications solutions for hospitals, healthcare systems and educational facilities.

Rauland provides the Company with attractive new growth opportunities within the medical technology market, strong growth opportunities in its core markets and incremental growth opportunities through acquisitions and international expansion.

Acquired in December 2017, Arizona Instrument is a provider of differentiated, high-precision moisture and gas measurement instruments for use in the food, pharmaceutical and environmental markets.

Arizona Instrument complements the Company’s existing Brookfield Engineering Laboratories (“Brookfield”) viscosity measurement business.

Its high-quality products support their customers’ increasingly complex production processes and more stringent environmental and safety standards.

sensitive devices and mission-critical electronics.

AMETEK also has expanded its

| | • | | Creaform’s HandyPROBE Next 3D scanner represents the latest advancement in optical-based, non-contact inspection for quality control, offering a rugged design, accuracy and ease of use; |

| | • | | TMC’s EverstillTM K-400 benchtop platform offers patented vibration cancellation technology for highly sensitive devices such as optical and scanning probe microscopes and metrology instruments; |

| | • | | Sensors and Fluid Management Systems’ jet engine exhaust gas thermocouple is made of an advance ceramic matrix composite that extends the thermocouple’s life and performance; |

| | • | | Vision Research’s Phantom® VEO high-speed camera is built into a five-inch cube that is packed with full-size camera features and has the ability to withstand up to 100Gs of force; |

| | • | | Solartron Analytical’s Apps-XM (extreme measurement) Series instruments were developed for such highly targeted research applications as the testing of energy storage devices and solar cell materials; |

| | • | | Grabner Instruments’ MINIVAP VP Vision vapor pressure tester offers portability and versatility in testing the vapor pressure of gasolines, jet fuels, crude oils, and volatile solvents; |

| | • | | Rotron’s SemiCool precision fans and custom cooling systems offer precise temperature control in a compact package for semiconductor-specific applications; |

| | • | | Programmable Power’s Asterion™ AC/DC Power Platform established new industry benchmarks in terms of power density performance, versatility, adaptability and ease of use; |

| | • | | Chandler Engineering’s Model 5400 AUTO Shear History Simulator simplifies preparation and loading of water-based fracturing fluids used by the oil and gas industry to enhance production; |

| | • | | Zygo’s latest Verifire optical testing products incorporate software and hardware technology enhancements that help to ensure the production of more precise optical components and systems; |

| | • | | Pittman Motor’s 22mm DC022C Series motors are highly customizable for such high-tech applications as medical devices, process equipment and laboratory instruments; and |

| | • | | CAMECA’s EIKOS™ atom probe microscope brings state-of-art atom probe tomography cost effectively to academic and industrial researchers conduction nanoscale materials research. |

2016 OVERVIEW

In 2016, AMETEK achieved sales of $3,840.1 million, a decrease of 3.4% from 2015.

The Company was impacted by a weak global economy and the effects of a continued strong U.S. dollar.

Specifically, the Company experienced lower sales in its process businesses that have exposure to oil and gas markets and in its engineered materials, interconnects and packaging businesses that have exposure to metals markets.

In 2016, AMETEK established record operating cash flow.

In March 2016, the Company along with certain of its foreign subsidiaries amended and restated its credit agreement dated as of September 22, 2011 (the “Credit Agreement”).

The Credit Agreement amends and restates the Company’s existing $700 million revolving credit facility, which was due to expire in December 2018.

The Credit Agreement consists of a five-year revolving credit facility in an aggregate principal amount of $850 million with a final maturity date in March 2021.

The revolving credit facility total borrowing capacity excludes an accordion feature that permits the Company to request up to an additional $300 million in revolving credit commitments at any time during the life of the Credit Agreement under certain conditions.

The revolving credit facility provides the Company with additional financial flexibility to support its growth plans, including its acquisition strategy.

In October 2016, the Company completed a private placement agreement to sell 500 million Euros and 225 million British pounds in senior notes to a group of institutional investors (the “2016 Private Placement”).

There were two funding dates under the 2016 Private Placement.

The first funding occurred in October 2016 for 500 million Euros ($546.8 million) and the second funding occurred in November 2016 for 225 million British pounds ($274.1 million).

The proceeds from the first funding of the 2016 Private Placement were used to pay down domestic borrowings under the Company’s revolving credit facility.

The proceeds from the second funding of the 2016 Private Placement were used to pay down, at maturity, a 40 million British pound ($48.7 million) 5.99% senior note in November 2016 and provides the Company with additional financial flexibility to support its growth plans, including its acquisition strategy.

In January 2016, AMETEK acquired Brookfield Engineering Laboratories (“Brookfield”), a manufacturer of viscometers and rheometers, as well as instrumentation to analyze texture and powder flow.

In January 2016, AMETEK acquired ESP/SurgeX, a manufacturer of energy intelligence and power protection, monitoring and diagnostic solutions.

In July 2016, AMETEK acquired HS Foils, a developer and manufacturer of key components used in radiation detectors including ultra-thin radiation windows, silicon drift detectors and x-ray filters.

In July 2016, AMETEK acquired Nu Instruments, a provider of magnetic sector mass spectrometers used for elemental and isotope analysis.

Nu Instruments is part of EIG.

In October 2016, AMETEK acquired Laserage Technology Corporation (“Laserage”), a provider of laser fabrication services for the medical device market.

Laserage is part of EMG.

AMETEK’s international sales decreased 2.1% to $2,010.7 million in 2016.

The decrease in international sales was primarily driven by a weak global economy and the effects of a continued strong U.S. dollar noted above.

Acquired in July 2015, Surface Vision is a global leader in non-destructive process inspection.

Surface Vision’s in-line image processing technology detects, classifies, filters and accurately maps specific defects over an entire surface area.

End markets include the metals, paper, nonwovens, plastics and glass industries.

The Company is subject to a variety of litigation and other legal and regulatory proceedings incidental to its business (or the business operations of previously owned entities), including claims for damages arising out of the use of the Company’s products or services and claims relating to intellectual property matters, employment matters, tax matters, commercial disputes, competition and sales and trading practices, environmental matters, personal injury, insurance coverage and acquisition-related matters, as well as regulatory investigations or enforcement.

The Company is, from time to time, subject to a variety of litigation and similar proceedings incidental to its business.

These lawsuits may involve claims for damages arising out of the use of the Company’s products and services, personal injury, employment matters, tax matters, commercial disputes and intellectual property matters.

The Company may also become subject to lawsuits as a result of past or future acquisitions.

| | [removed: ☑] [added: ☒] | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |

For the fiscal year ended December 31, [removed: 2016][added: 2017]

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

Yes [removed: ☑] [added: ☒] No ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or [added: Section] 15(d) of the Act.

Yes ☐ No [removed: ☑][added: ☒]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, [removed: or a] smaller reporting [added: company, or an emerging growth] company.

See the definitions of “large accelerated filer,” “accelerated [removed: filer” and] [added: filer,”] “smaller reporting [added: company,” and “emerging growth] company” in Rule 12b-2 of the Exchange Act.

| Large accelerated filer [removed: ☑] [added: ☒] | | Accelerated filer ☐ | | Non-accelerated filer ☐ | | Smaller reporting company ☐ |

| | | | | (Do not check if a smaller reporting company) | | [added: Emerging growth company ☐] |

The aggregate market value of the voting stock held by non-affiliates of the registrant was approximately [removed: $10.8] [added: $14.0] billion as of June 30, [removed: 2016,] [added: 2017,] the last business day of the registrant’s most recently completed second fiscal quarter.

The number of shares of the registrant’s Common Stock outstanding as of January 31, [removed: 2017] [added: 2018] was [removed: 229,472,920.][added: 231,334,609.]

Part III incorporates information by reference from the Proxy Statement for the Annual Meeting of Stockholders on May [removed: 9, 2017.][added: 8, 2018.]

[removed: 2016] [added: 2017] Form 10-K Annual Report

| [removed: Item 1.] [added: [Item 1.](#tx507265_1)] | | [removed: [Business](#tx309462_1)] [added: [Business](#tx507265_1)] | | | 2 | |

| [removed: Item 1A.] [added: [Item 1A.](#tx507265_2)] | | [Risk [removed: Factors](#tx309462_2)] [added: Factors](#tx507265_2)] | | | [removed: 10] [added: 11] | |

| [removed: Item 1B.] [added: [Item 1B.](#tx507265_3)] | | [Unresolved Staff [removed: Comments](#tx309462_3)] [added: Comments](#tx507265_3)] | | | [removed: 16] [added: 17] | |

| [removed: Item 2.] [added: [Item 2.](#tx507265_4)] | | [removed: [Properties](#tx309462_4)] [added: [Properties](#tx507265_4)] | | | [removed: 17] [added: 18] | |

| [removed: Item 3.] [added: [Item 3.](#tx507265_5)] | | [Legal [removed: Proceedings](#tx309462_5)] [added: Proceedings](#tx507265_5)] | | | [removed: 17] [added: 18] | |

| [removed: Item 5.] [added: [Item 5.](#tx507265_6)] | | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#tx309462_6)] [added: Securities](#tx507265_6)] | | | [removed: 18] [added: 19] | |

| [removed: Item 6.] [added: [Item 6.](#tx507265_7)] | | [Selected Financial [removed: Data](#tx309462_7)] [added: Data](#tx507265_7)] | | | [removed: 21] [added: 22] | |

| [removed: Item 7.] [added: [Item 7.](#tx507265_8)] | | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#tx309462_8)] [added: Operations](#tx507265_8)] | | | [removed: 23] [added: 24] | |

| [removed: Item 7A.] [added: [Item 7A.](#tx507265_9)] | | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#tx309462_9)] [added: Risk](#tx507265_9)] | | | [removed: 45] [added: 46] | |

| [removed: Item 8.] [added: [Item 8.](#tx507265_10)] | | [Financial Statements and Supplementary [removed: Data](#tx309462_10)] [added: Data](#tx507265_10)] | | | [removed: 46] [added: 47] | |

| [removed: Item 9.] [added: [Item 9.](#tx507265_11)] | | [Changes in and Disagreements With Accountants on Accounting and Financial [removed: Disclosure](#tx309462_11)] [added: Disclosure](#tx507265_11)] | | | [removed: 93] [added: 94] | |

| [removed: Item 9A.] [added: [Item 9A.](#tx507265_12)] | | [Controls and [removed: Procedures](#tx309462_12)] [added: Procedures](#tx507265_12)] | | | [removed: 93] [added: 94] | |

| [removed: Item 9B.] [added: [Item 9B.](#tx507265_13)] | | [Other [removed: Information](#tx309462_13)] [added: Information](#tx507265_13)] | | | [removed: 93] [added: 94] | |

| [removed: Item 10.] [added: [Item 10.](#tx507265_14)] | | [Directors, Executive Officers and Corporate [removed: Governance](#tx309462_14)] [added: Governance](#tx507265_14)] | | | [removed: 93] [added: 94] | |

| [removed: Item 11.] [added: [Item 11.](#tx507265_15)] | | [Executive [removed: Compensation](#tx309462_15)] [added: Compensation](#tx507265_15)] | | | [removed: 94] [added: 95] | |

| [removed: Item 12.] [added: [Item 12.](#tx507265_16)] | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#tx309462_16)] [added: Matters](#tx507265_16)] | | | [removed: 94] [added: 95] | |

| [removed: Item 13.] [added: [Item 13.](#tx507265_17)] | | [Certain Relationships and Related Transactions, and Director [removed: Independence](#tx309462_17)] [added: Independence](#tx507265_17)] | | | [removed: 94] [added: 95] | |

| [removed: Item 14.] [added: [Item 14.](#tx507265_18)] | | [Principal Accounting Fees and [removed: Services](#tx309462_18)] [added: Services](#tx507265_18)] | | | [removed: 94] [added: 95] | |

| [removed: Item 15.] [added: [Item 15.](#tx507265_19)] | | [Exhibits and Financial Statement [removed: Schedules](#tx309462_19)] [added: Schedules](#tx507265_19)] | | | [removed: 95] [added: 96] | |

10-K 1 d507265d10k.htm FORM 10-K

Yes ☒ No ☐

Yes ☒ No ☐

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.

Yes ☐ No ☒

| [SIGNATURES](#tx507265_20) | | | | | 99 | |

10-K 1 d309462d10k.htm FORM 10-K

| [SIGNATURES](#tx309462_20) | | | | | 96 | |

| [Index to Exhibits](#tx309462_21) | | | | | 98 | |

| --- | --- |

At December 31, [removed: 2016,] [added: 2017,] the Company had 149 operating facilities in 25 states and 17 foreign countries.

Of these facilities, [removed: 61] [added: 60] are owned by the Company and [removed: 88] [added: 89] are leased.

The properties owned by the Company consist of approximately [removed: 739] [added: 724] acres, of which approximately [removed: 5.4] [added: 5.3] million square feet are under roof.

Under lease is a total of approximately [removed: 3.0] [added: 3.3] million square feet.

The leases expire over a range of years from [removed: 2017] [added: 2018] to 2082, with renewal options for varying terms contained in many of the leases.

The operating facilities of the Company by reportable segment were as follows at December 31, [removed: 2016:][added: 2017:]

| Electronic Instruments | | | [removed: 30] [added: 29] | | | | [removed: 54] [added: 57] | | | | [removed: 2,317,000] [added: 2,146,000] | | | | [removed: 2,018,000] [added: 2,194,000] | |

| Electromechanical | | | 31 | | | | 32 | | | | 3,160,000 | | | | 1,056,000 | |

| Total | | | 60 | | | | 89 | | | | 5,306,000 | | | | 3,250,000 | |

| Electromechanical | | | 31 | | | | 34 | | | | 3,052,000 | | | | 1,019,000 | |

| Total | | | 61 | | | | 88 | | | | 5,369,000 | | | | 3,037,000 | |

The principal market on which the Company’s common stock is traded is the New York Stock Exchange and it is traded under the symbol “AME.” On January 31, [removed: 2017,] [added: 2018,] there were approximately [removed: 2,000] [added: 1,900] holders of record of the Company’s common stock.

Under its share repurchase program, the Company repurchased approximately [removed: 7,099,000] [added: 114,000] shares of its common stock for [removed: $336.1] [added: $6.9] million in [removed: 2016] [added: 2017] and approximately [removed: 7,978,000] [added: 7,099,000] shares of its common stock for [removed: $435.4] [added: $336.1] million in [removed: 2015.][added: 2016.]

| [removed: Dividends] [added: Dividends] paid per [removed: share] [added: share] | | $ | 0.09 | | | $ | 0.09 | | | $ | 0.09 | | | $ | 0.09 | |

| [removed: Common] [added: Common] stock trading [removed: range:] [added: range:] | | | | | | | | | | | | | | | | |

| [removed: High] [added: High] | | [removed: $] [added: $] | [removed: 52.93] [added: 52.93] | | | [removed: $] [added: $] | [removed: 52.61] [added: 52.61] | | | [removed: $] [added: $] | [removed: 50.27] [added: 50.27] | | | [removed: $] [added: $] | [removed: 51.26] [added: 51.26] | |

| [removed: Low] [added: Low] | | [removed: $] [added: $] | [removed: 42.82] [added: 42.82] | | | [removed: $] [added: $] | [removed: 43.28] [added: 43.28] | | | [removed: $] [added: $] | [removed: 43.30] [added: 43.30] | | | [removed: $] [added: $] | [removed: 43.98] [added: 43.98] | |

The following table reflects purchases of AMETEK, Inc. common stock by the Company during the three months ended December 31, [removed: 2016:][added: 2017:]

| Period | | Total [removed: Number of Shares Purchased (1)(2)] [added: Number of Shares Purchased (1)(2)] | | | | Average Price Paid per Share | | | | Total Number [removed: of Shares] [added: of Shares] Purchased as Part of Publicly Announced Plan (2) | | | | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan | | |

| (1) | [removed: Includes 458] [added: Represents] shares surrendered to the Company to satisfy tax withholding obligations in connection with employees’ share-based compensation awards. |

| (2) | Consists of the number of shares purchased pursuant to the Company’s Board of Directors [removed: remaining portion of the $350 million authorization for the repurchase of its common stock announced in November 2015 and] $400 million authorization for the repurchase of its common stock announced in November 2016. Such purchases may be effected from time to time in the open market or in private transactions, subject to market conditions and at management’s discretion. |

The following table sets forth information as of December 31, [removed: 2016] [added: 2017] regarding all of the Company’s existing compensation plans pursuant to which equity securities are authorized for issuance to employees and nonemployee directors:

The following graph and accompanying table compare the cumulative total stockholder return for AMETEK over the last five years ended December 31, [removed: 2016] [added: 2017] with total returns for the same period for the Standard and Poor’s (“S&P”) 500 Index and Russell 1000 Index.

The performance graph and table assume a $100 investment made on December 31, [removed: 2011] [added: 2012] and reinvestment of all dividends.

[removed: ][added: ]

| | | [removed: 2011 | | | |] 2012 | | | | 2013 | | | | 2014 | | | | 2015 | | | | 2016 | | | [added: | 2017 | | |]

| 2017 | | | | | | | | | | | | | | | | |

| High | | $ | 55.48 | | | $ | 62.89 | | | $ | 66.70 | | | $ | 73.06 | |

| Low | | $ | 48.55 | | | $ | 53.19 | | | $ | 60.50 | | | $ | 65.65 | |

| October 1, 2017 to October 31, 2017 | | | 1,647 | | | $ | 68.73 | | | | 1,647 | | | $ | 368,751,020 | |

| November 1, 2017 to November 30, 2017 | | | 345 | | | | 68.42 | | | | 345 | | | | 368,727,415 | |

| December 1, 2017 to December 31, 2017 | | | — | | | | — | | | | — | | | | 368,727,415 | |

| Total | | | 1,992 | | | | 68.68 | | | | 1,992 | | | | | |

| Equity compensation plans approved by security holders | | | 5,582,803 | | | $ | 48.99 | | | | 6,395,457 | |

| Total | | | 5,582,803 | | | | 48.99 | | | | 6,395,457 | |

| AMETEK, Inc. | | $ | 100.00 | | | $ | 140.95 | | | $ | 141.73 | | | $ | 145.28 | | | $ | 132.75 | | | $ | 199.09 | |

| S&P 500 Index | | | 100.00 | | | | 132.39 | | | | 150.51 | | | | 152.59 | | | | 170.84 | | | | 208.14 | |

| Russell 1000 Index | | | 100.00 | | | | 133.11 | | | | 150.73 | | | | 152.12 | | | | 170.45 | | | | 207.42 | |

| 2015 | | | | | | | | | | | | | | | | |

| High | | $ | 54.00 | | | $ | 55.56 | | | $ | 57.67 | | | $ | 57.00 | |

| Low | | $ | 47.85 | | | $ | 51.23 | | | $ | 50.55 | | | $ | 50.97 | |

| October 1, 2016 to October 31, 2016 | | | 376 | | | $ | 44.80 | | | | 376 | | | $ | 75,639,899 | |

| November 1, 2016 to November 30, 2016 | | | 2,103,351 | | | | 47.56 | | | | 2,103,351 | | | | 375,594,178 | |

| December 1, 2016 to December 31, 2016 | | | — | | | | — | | | | — | | | | 375,594,178 | |

| Total | | | 2,103,727 | | | | 47.56 | | | | 2,103,727 | | | | | |

| Equity compensation plans approved by security holders | | | 6,010,806 | | | $ | 42.25 | | | | 7,994,840 | |

| Total | | | 6,010,806 | | | $ | 42.25 | | | | 7,994,840 | |

| AMETEK, Inc. | | $ | 100.00 | | | $ | 134.71 | | | $ | 189.86 | | | $ | 190.91 | | | $ | 195.70 | | | $ | 178.82 | |

| S&P 500 Index | | | 100.00 | | | | 116.00 | | | | 153.58 | | | | 174.60 | | | | 177.01 | | | | 198.18 | |

| Russell 1000 Index | | | 100.00 | | | | 116.42 | | | | 154.97 | | | | 175.49 | | | | 177.10 | | | | 198.44 | |

The following financial information for the five years ended December 31, [removed: 2016,] [added: 2017,] has been derived from the Company’s consolidated financial statements.

| | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | | | [removed: 2012] [added: 2013] | | |

| Net sales | | $ | [removed: 3,840.1] [added: 4,300.2] | | | $ | [removed: 3,974.3] [added: 3,840.1] | | | $ | [removed: 4,022.0] [added: 3,974.3] | | | $ | [removed: 3,594.1] [added: 4,022.0] | | | $ | [removed: 3,334.2] [added: 3,594.1] | |

| Operating income | | $ | [removed: 801.9] [added: 915.1] | | | $ | [removed: 907.7] [added: 801.9] | | | $ | [removed: 898.6] [added: 907.7] | | | $ | [removed: 815.1] [added: 898.6] | | | $ | [removed: 745.9] [added: 815.1] | |

| Interest expense | | $ | [removed: 94.3] [added: 98.0] | | | $ | [removed: 91.8] [added: 94.3] | | | $ | [removed: 79.9] [added: 91.8] | | | $ | [removed: 73.6] [added: 79.9] | | | $ | [removed: 75.5] [added: 73.6] | |

| Net income | | $ | [removed: 512.2] [added: 681.5] | | | $ | [removed: 590.9] [added: 512.2] | | | $ | [removed: 584.5] [added: 590.9] | | | $ | [removed: 517.0] [added: 584.5] | | | $ | [removed: 459.1] [added: 517.0] | |

| Basic | | $ | [removed: 2.20] [added: 2.96] | | | $ | [removed: 2.46] [added: 2.20] | | | $ | [removed: 2.39] [added: 2.46] | | | $ | [removed: 2.12] [added: 2.39] | | | $ | [removed: 1.90] [added: 2.12] | |

| Diluted | | $ | [removed: 2.19] [added: 2.94] | | | $ | [removed: 2.45] [added: 2.19] | | | $ | [removed: 2.37] [added: 2.45] | | | $ | [removed: 2.10] [added: 2.37] | | | $ | [removed: 1.88] [added: 2.10] | |

| Dividends declared and paid per share | | $ | 0.36 | | | $ | 0.36 | | | $ | [removed: 0.33] [added: 0.36] | | | $ | [removed: 0.24] [added: 0.33] | | | $ | [removed: 0.22] [added: 0.24] | |

| Basic | | | [removed: 232.6] [added: 230.2] | | | | [removed: 239.9] [added: 232.6] | | | | [removed: 244.9] [added: 239.9] | | | | [removed: 243.9] [added: 244.9] | | | | [removed: 241.5] [added: 243.9] | |

| Diluted | | | [removed: 233.7] [added: 231.8] | | | | [removed: 241.6] [added: 233.7] | | | | [removed: 247.1] [added: 241.6] | | | | [removed: 246.1] [added: 247.1] | | | | [removed: 244.0] [added: 246.1] | |

| Operating income — Return on net sales | | | [removed: 20.9] [added: 21.3] | % | | | [removed: 22.8] [added: 20.9] | % | | | [removed: 22.3] [added: 22.8] | % | | | [removed: 22.7] [added: 22.3] | % | | | [removed: 22.4] [added: 22.7] | % |

| — Return on average total assets | | | [removed: 11.7] [added: 12.3] | % | | | [removed: 13.9] [added: 11.7] | % | | | [removed: 14.6] [added: 13.9] | % | | | [removed: 14.7] [added: 14.6] | % | | | [removed: 15.7] [added: 14.7] | % |

| Net income — Return on average total capital | | | [removed: 9.5] [added: 11.6] | % | | | [removed: 11.6] [added: 9.5] | % | | | [removed: 12.3] [added: 11.6] | % | | | [removed: 12.1] [added: 12.3] | % | | | [removed: 12.6] [added: 12.1] | % |

| — Return on average stockholders’ equity | | | [removed: 15.7] [added: 18.7] | % | | | [removed: 18.2] [added: 15.7] | % | | | [removed: 18.3] [added: 18.2] | % | | | [removed: 18.2] [added: 18.3] | % | | | [removed: 20.0] [added: 18.2] | % |

| EBITDA(1) | | $ | [removed: 966.0] [added: 1,076.0] | | | $ | [removed: 1,046.9] [added: 966.0] | | | $ | [removed: 1,022.6] [added: 1,046.9] | | | $ | [removed: 916.3] [added: 1,022.6] | | | $ | [removed: 842.7] [added: 916.3] | |

| Ratio of EBITDA to interest expense(1) | | | [removed: 10.2x] [added: 11.0x] | | | | [removed: 11.4x] [added: 10.2x] | | | | [removed: 12.8x] [added: 11.4x] | | | | [removed: 12.4x] [added: 12.8x] | | | | [removed: 11.2x] [added: 12.4x] | |

| Depreciation and amortization | | $ | [removed: 179.7] [added: 183.2] | | | $ | [removed: 149.5] [added: 179.7] | | | $ | [removed: 138.6] [added: 149.5] | | | $ | [removed: 118.7] [added: 138.6] | | | $ | [removed: 105.5] [added: 118.7] | |

| Capital expenditures | | $ | [removed: 63.3] [added: 75.1] | | | $ | [removed: 69.1] [added: 63.3] | | | $ | [removed: 71.3] [added: 69.1] | | | $ | [removed: 63.3] [added: 71.3] | | | $ | [removed: 57.4] [added: 63.3] | |

| Cash provided by operating activities | | $ | [removed: 756.8] [added: 833.3] | | | $ | [removed: 672.5] [added: 756.8] | | | $ | [removed: 726.0] [added: 672.5] | | | $ | [removed: 660.7] [added: 726.0] | | | $ | [removed: 612.5] [added: 660.7] | |

| Free cash flow(2) | | $ | [removed: 693.5] [added: 758.2] | | | $ | [removed: 603.4] [added: 693.5] | | | $ | [removed: 654.7] [added: 603.4] | | | $ | [removed: 597.4] [added: 654.7] | | | $ | [removed: 555.1] [added: 597.4] | |

| Current assets | | $ | [removed: 1,928.2] [added: 1,934.7] | | | $ | [removed: 1,618.8] [added: 1,928.2] | | | $ | [removed: 1,577.6] [added: 1,618.8] | | | $ | [removed: 1,368.3] [added: 1,577.6] | | | $ | [removed: 1,163.9] [added: 1,368.3] | |

| Current liabilities | | $ | [removed: 924.4] [added: 1,138.7] | | | $ | [removed: 1,024.0] [added: 924.4] | | | $ | [removed: 934.5] [added: 1,024.0] | | | $ | [removed: 872.7] [added: 934.5] | | | $ | [removed: 878.5] [added: 872.7] | |

| Property, plant and equipment, net | | $ | [removed: 473.2] [added: 493.3] | | | $ | [removed: 484.5] [added: 473.2] | | | $ | [removed: 448.4] [added: 484.5] | | | $ | [removed: 402.8] [added: 448.4] | | | $ | [removed: 383.5] [added: 402.8] | |

| Total assets | | $ | [removed: 7,100.7] [added: 7,796.1] | | | $ | [removed: 6,660.5] [added: 7,100.7] | | | $ | [removed: 6,415.9] [added: 6,660.5] | | | $ | [removed: 5,874.4] [added: 6,415.9] | | | $ | [removed: 5,186.5] [added: 5,874.4] | |

| Long-term debt, net | | $ | [removed: 2,062.6] [added: 1,866.2] | | | $ | [removed: 1,553.1] [added: 2,062.6] | | | $ | [removed: 1,424.4] [added: 1,553.1] | | | $ | [removed: 1,140.1] [added: 1,424.4] | | | $ | [removed: 1,131.0] [added: 1,140.1] | |

| Total debt, net | | $ | [removed: 2,341.6] [added: 2,174.3] | | | $ | [removed: 1,938.0] [added: 2,341.6] | | | $ | [removed: 1,709.0] [added: 1,938.0] | | | $ | [removed: 1,411.5] [added: 1,709.0] | | | $ | [removed: 1,450.2] [added: 1,411.5] | |

| Stockholders’ equity | | $ | [removed: 3,256.5] [added: 4,027.6] | | | $ | [removed: 3,254.6] [added: 3,256.5] | | | $ | [removed: 3,239.6] [added: 3,254.6] | | | $ | [removed: 3,136.1] [added: 3,239.6] | | | $ | [removed: 2,535.2] [added: 3,136.1] | |

| Stockholders’ equity per share | | $ | [removed: 14.20] [added: 17.42] | | | $ | [removed: 13.82] [added: 14.20] | | | $ | [removed: 13.42] [added: 13.82] | | | $ | [removed: 12.80] [added: 13.42] | | | $ | [removed: 10.42] [added: 12.80] | |

| Total debt as a percentage of capitalization | | | [removed: 41.8] [added: 35.1] | % | | | [removed: 37.3] [added: 41.8] | % | | | [removed: 34.5] [added: 37.3] | % | | | [removed: 31.0] [added: 34.5] | % | | | [removed: 36.4] [added: 31.0] | % |

| Net debt as a percentage of capitalization(3) | | | [removed: 33.3] [added: 27.5] | % | | | [removed: 32.4] [added: 33.3] | % | | | [removed: 29.1] [added: 32.4] | % | | | [removed: 26.3] [added: 29.1] | % | | | [removed: 33.8] [added: 26.3] | % |

| Interest expense | | | [removed: 94.3] [added: 98.0] | | | | [removed: 91.8] [added: 94.3] | | | | [removed: 79.9] [added: 91.8] | | | | [removed: 73.6] [added: 79.9] | | | | [removed: 75.5] [added: 73.6] | |

| Interest income | | | [removed: (1.1] [added: (2.0] | ) | | | [removed: (0.8] [added: (1.1] | ) | | | (0.8 | ) | | | (0.8 | ) | | | [removed: (0.7] [added: (0.8] | ) |

| Income taxes | | | [removed: 180.9] [added: 115.3] | | | | [removed: 215.5] [added: 180.9] | | | | [removed: 220.4] [added: 215.5] | | | | [removed: 207.8] [added: 220.4] | | | | [removed: 203.3] [added: 207.8] | |

| Depreciation | | | [removed: 74.8] [added: 82.0] | | | | [removed: 68.7] [added: 74.8] | | | | [removed: 63.7] [added: 68.7] | | | | [removed: 57.2] [added: 63.7] | | | | [removed: 53.7] [added: 57.2] | |

| Amortization | | | [removed: 104.9] [added: 101.2] | | | | [removed: 80.8] [added: 104.9] | | | | [removed: 74.9] [added: 80.8] | | | | [removed: 61.5] [added: 74.9] | | | | [removed: 51.8] [added: 61.5] | |

| Total adjustments | | | [removed: 453.8] [added: 394.5] | | | | [removed: 456.0] [added: 453.8] | | | | [removed: 438.1] [added: 456.0] | | | | [removed: 399.3] [added: 438.1] | | | | [removed: 383.6] [added: 399.3] | |

| EBITDA | | $ | [removed: 966.0] [added: 1,076.0] | | | $ | [removed: 1,046.9] [added: 966.0] | | | $ | [removed: 1,022.6] [added: 1,046.9] | | | $ | [removed: 916.3] [added: 1,022.6] | | | $ | [removed: 842.7] [added: 916.3] | |

| Deduct: Capital expenditures | | | [removed: (63.3] [added: (75.1] | ) | | | [removed: (69.1] [added: (63.3] | ) | | | [removed: (71.3] [added: (69.1] | ) | | | [removed: (63.3] [added: (71.3] | ) | | | [removed: (57.4] [added: (63.3] | ) |

| Free cash flow | | $ | [removed: 693.5] [added: 758.2] | | | $ | [removed: 603.4] [added: 693.5] | | | $ | [removed: 654.7] [added: 603.4] | | | $ | [removed: 597.4] [added: 654.7] | | | $ | [removed: 555.1] [added: 597.4] | |

| | | 2017 | | | | 2016 | | | | 2015 | | | | 2014 | | | | 2013 | | |

| Net income | | $ | 681.5 | | | $ | 512.2 | | | $ | 590.9 | | | $ | 584.5 | | | $ | 517.0 | |

| | | 2017 | | | | 2016 | | | | 2015 | | | | 2014 | | | | 2013 | | |

| Cash provided by operating activities | | $ | 833.3 | | | $ | 756.8 | | | $ | 672.5 | | | $ | 726.0 | | | $ | 660.7 | |

| | | 2017 | | | | 2016 | | | | 2015 | | | | 2014 | | | | 2013 | | |

| Total debt, net | | $ | 2,174.3 | | | $ | 2,341.6 | | | $ | 1,938.0 | | | $ | 1,709.0 | | | $ | 1,411.5 | |

| Index to Financial Statements (Item [removed: 15(a) 1)] [added: 15(a)(1))] | | | | |

| [Reports of [removed: Management](#tx309462_22)] [added: Management](#tx507265_22)] | | | [removed: 47] [added: 48] | |

| [Reports of Independent Registered Public Accounting [removed: Firm](#tx309462_23)] [added: Firm](#tx507265_23)] | | | [removed: 48] [added: 49] | |

| [Consolidated Statement of Income for the years ended December 31, [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014](#tx309462_24)] [added: 2015](#tx507265_24)] | | | [removed: 50] [added: 51] | |

| [Consolidated Statement of Comprehensive Income for the years ended December 31, [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014](#tx309462_25)] [added: 2015](#tx507265_25)] | | | [removed: 51] [added: 52] | |

| [Consolidated Balance Sheet at December 31, [removed: 2016] [added: 2017] and [removed: 2015](#tx309462_26)] [added: 2016](#tx507265_26)] | | | [removed: 52] [added: 53] | |

| [Consolidated Statement of Stockholders’ Equity for the years ended December 31, [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014](#tx309462_27)] [added: 2015](#tx507265_27)] | | | [removed: 53] [added: 54] | |

| [Consolidated Statement of Cash Flows for the years ended December 31, [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014](#tx309462_28)] [added: 2015](#tx507265_28)] | | | [removed: 54] [added: 55] | |

| [Notes to Consolidated Financial [removed: Statements](#tx309462_29)] [added: Statements](#tx507265_29)] | | | [removed: 55] [added: 56] | |

Financial Statement Schedules (Item [removed: 15(a) 2)][added: 15(a)(2))]

The report of the Audit Committee is included in the Company’s Proxy Statement for the [removed: 2017] [added: 2018] Annual Meeting of Stockholders.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, AMETEK, Inc. conducted an evaluation of the effectiveness of the Company’s internal control over financial reporting as of December 31, [removed: 2016] [added: 2017] based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework).

Based on that evaluation, our management concluded that the Company’s internal control over financial reporting was effective as of December 31, [removed: 2016.][added: 2017.]

[removed: The] [added: In 2016, the] Company [removed: acquired] [added: spent $391.4 million in cash, net of cash acquired, to acquire] Brookfield [removed: Engineering Laboratories (“Brookfield”)] and ESP/SurgeX in January 2016, HS Foils and Nu Instruments in July 2016 and Laserage Technology Corporation (“Laserage”) in October 2016.

As permitted by the U.S. Securities and Exchange Commission staff interpretative guidance for newly acquired businesses, the Company excluded [removed: Brookfield, ESP/SurgeX, HS Foils, Nu Instruments] [added: Rauland, MOCON] and [removed: Laserage] [added: Arizona Instrument] from management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, [removed: 2016.][added: 2017.]

In the aggregate, [removed: Brookfield, ESP/SurgeX, HS Foils, Nu Instruments] [added: Rauland, MOCON] and [removed: Laserage] [added: Arizona Instrument] constituted [removed: 5.9%] [added: 8.4%] of total assets as of December 31, [removed: 2016] [added: 2017] and [removed: 2.9%] [added: 4.5%] of net sales for the year then ended.

The Company’s internal control over financial reporting as of December 31, [removed: 2016] [added: 2017] has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report, which is included herein.

| [added: Chairman of the Board and] Chief Executive Officer | | Executive Vice President – Chief Financial Officer [removed: & Treasurer] |

We have audited AMETEK, Inc.’s internal control over financial reporting as of December 31, [removed: 2016,] [added: 2017,] based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the [removed: COSO criteria).][added: “COSO criteria”).]

[removed: AMETEK, Inc.’s] [added: The Company’s] management is responsible for maintaining effective internal control over financial [removed: reporting,] [added: reporting] and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying _Management’s Report on Internal Control Over Financial Reporting_.

We conducted our audit in accordance with the standards of the [removed: Public Company Accounting Oversight Board (United States).][added: PCAOB.]

As indicated in the accompanying _Management’s Report on Internal Control Over Financial Reporting_, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of [removed: Brookfield, ESP/SurgeX, HS Foils, Nu Instruments] [added: Rauland-Borg Corporation (“Rauland”), MOCON, Inc.] and [removed: Laserage,] [added: Arizona Instrument LLC,] which are included in the [removed: 2016] [added: 2017] consolidated financial statements of [removed: AMETEK, Inc.] [added: the Company] and constituted [removed: 5.9%] [added: 8.4%] of total assets as of December 31, [removed: 2016] [added: 2017] and [removed: 2.9%] [added: 4.5%] of net sales for the year then ended.

Our audit of internal control over financial reporting of [removed: AMETEK, Inc.] [added: the Company] also did not include an evaluation of the internal control over financial reporting of [removed: Brookfield, ESP/SurgeX, HS Foils, Nu Instruments] [added: Rauland, MOCON] and [removed: Laserage.][added: Arizona Instrument.]

In our opinion, AMETEK, Inc. [added: (the “Company”)] maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2016,] [added: 2017,] based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United [removed: States),] [added: States) (“PCAOB”),] the consolidated balance sheets of AMETEK, Inc. as of December 31, [removed: 2016] [added: 2017] and [removed: 2015,] [added: 2016] and the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, [removed: 2016,] [added: 2017] and [added: the related notes and] our report dated February [removed: 23, 2017] [added: 22, 2018] expressed an unqualified opinion thereon.

We have audited the accompanying consolidated balance sheets of AMETEK, Inc. [added: (the “Company”)] as of December 31, [removed: 2016] [added: 2017] and [removed: 2015,] [added: 2016,] and the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, [removed: 2016.][added: 2017, and the related notes (collectively referred to as the “consolidated financial statements”).]

Our responsibility is to express an opinion on [removed: these] [added: the Company’s] financial statements based on our audits.

We conducted our audits in accordance with the standards of the [removed: Public Company Accounting Oversight Board (United States).][added: PCAOB.]

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material [removed: misstatement.][added: misstatement, whether due to error or fraud.]

[removed: An audit includes] [added: Such procedures include] examining, on a test basis, evidence [removed: supporting] [added: regarding] the amounts and disclosures in the financial statements.

[removed: An audit] [added: Our audits] also [removed: includes assessing] [added: included evaluating] the accounting principles used and significant estimates made by management, as well as evaluating the overall [added: presentation of the] financial [removed: statement presentation.][added: statements.]

In our opinion, the [added: consolidated] financial statements [removed: referred to above] present fairly, in all material respects, the [removed: consolidated] financial position of [removed: AMETEK, Inc. at] [added: the Company as of] December 31, [removed: 2016] [added: 2017] and [removed: 2015,] [added: 2016,] and the [removed: consolidated] results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2016,] [added: 2017,] in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United [removed: States),] [added: States) (“PCAOB”),] AMETEK, Inc.’s internal control over financial reporting as of December 31, [removed: 2016,] [added: 2017,] based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February [removed: 23, 2017] [added: 22, 2018] expressed an unqualified opinion thereon.

| | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | |

| Net sales | | $ | [removed: 3,840,087] [added: 4,300,170] | | | $ | [removed: 3,974,295] [added: 3,840,087] | | | $ | [removed: 4,021,964] [added: 3,974,295] | |

| Cost of sales | | | [removed: 2,575,220] [added: 2,851,431] | | | | [removed: 2,617,987] [added: 2,575,220] | | | | [removed: 2,660,741] [added: 2,617,987] | |

| Selling, general and administrative | | | [removed: 462,970] [added: 533,645] | | | | [removed: 448,592] [added: 462,970] | | | | [removed: 462,637] [added: 448,592] | |

| Total operating expenses | | | [removed: 3,038,190] [added: 3,385,076] | | | | [removed: 3,066,579] [added: 3,038,190] | | | | [removed: 3,123,378] [added: 3,066,579] | |

| Operating income | | | [removed: 801,897] [added: 915,094] | | | | [removed: 907,716] [added: 801,897] | | | | [removed: 898,586] [added: 907,716] | |

| Interest expense | | | [removed: (94,304] [added: (98,029] | ) | | | [removed: (91,795] [added: (94,304] | ) | | | [removed: (79,928] [added: (91,795] | ) |

The Company acquired Rauland-Borg Corporation (“Rauland”) in February 2017, MOCON, Inc. in June 2017 and Arizona Instrument LLC in December 2017.

February 22, 2018

Opinion on Internal Control over Financial Reporting

Basis for Opinion

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

Definition and Limitations of Internal Control Over Financial Reporting

February 22, 2018

Opinion on the Financial Statements

Basis for Opinion

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

We have served as the Company’s auditor since 1930.

February 22, 2018

| | | 2017 | | | | 2016 | | |

| Translation adjustments | | | 159,507 | | | | (68,774 | ) | | | (67,245 | ) |

| Change in long-term intercompany notes | | | 36,320 | | | | (7,597 | ) | | | (51,235 | ) |

| Net actuarial gain (loss), net of tax of ($8,384), $17,450 and $12,870 in 2017, 2016 and 2015, respectively | | | 16,518 | | | | (55,259 | ) | | | (21,002 | ) |

| Amortization of net actuarial loss, net of tax of ($4,680), ($2,090) and ($3,247) in 2017, 2016 and 2015, respectively | | | 9,910 | | | | 6,618 | | | | 6,137 | |

| Amortization of prior service costs, net of tax of $4, $25 and ($564) in 2017, 2016 and 2015, respectively | | | (41 | ) | | | (79 | ) | | | 1,809 | |

| Net income | | $ | 681,470 | | | $ | 512,158 | | | $ | 590,859 | |

| Cash dividends paid | | | (82,735 | ) | | | (83,267 | ) | | | (85,988 | ) |

The Company completed

provided at the time revenue is recognized based on the Company’s historical experience.

| Basic shares | | | 230,229 | | | | 232,593 | | | | 239,906 | |

| Diluted shares | | | 231,845 | | | | 233,730 | | | | 241,586 | |

The Company will use the modified retrospective method of adoption.

ASU 2014-09 will impact the Company’s revenue recognition procedures by requiring recognition of certain revenues to move from upon shipment or delivery to over-time.

The recording of certain revenues over-time is not expected to have a material impact on the Company’s consolidated results of operations or financial position.

Also, the Company has developed the additional expanded disclosures required.

The Company has implemented the appropriate changes to its business processes to support recognition and disclosure under ASU 2014-09.

The Company prospectively adopted ASU 2015-11 effective January 1, 2017 and the adoption did

Therefore, prior periods have not been adjusted to reflect this adoption.

ASU 2016-02 includes transitional guidance, as currently issued, that calls for a modified retrospective approach.

The FASB has recently proposed adding a transition option to the current guidance and it includes optional practical expedients for ease of transition.

The Company has formed a steering committee to lead the Company’s implementation project.

The Company prospectively adopted ASU 2016-09 effective January 1, 2017.

For the year ended December 31, 2017, the Company recorded a tax benefit of $12.3 million within Provision for income taxes related to the tax effects of share-based payment transactions.

Prior to adoption, this amount would have been recorded as a component of Capital in excess of par value.

The adoption of this standard could create volatility in the Company’s effective tax rate going forward.

The Company elected not to change its accounting policy with respect to the estimation of forfeitures.

February 23, 2017

The

At December 31, 2016 and 2015, the accrual for future warranty obligations was $22.0 million and $22.8 million, respectively.

The Company’s expense for warranty obligations was $16.0 million in 2016, $14.8 million in 2015 and $16.5 million in 2014.

The Company is in the process of determining its method of adoption.

The Company has completed its initial assessment phase and is proceeding with its implementation plan.

The initial assessment consisted of reviewing a representative sample of contracts, discussions with key stakeholders and cataloging potential impacts on the Company’s operations, accounting policies, financial control and financial statements.

The Company’s initial assessment indicates the key changes in the standard that impact the Company’s revenue recognition relate to the allocation of contract revenues between various products and services, the timing of when those revenues are recognized and the deferral of incremental costs to obtain a contract.

In February 2015, the FASB issued ASU No. 2015-02, _Amendments to the Consolidation Analysis_ (“ASU 2015-02”).

ASU 2015-02 is intended to improve targeted areas of consolidation guidance for legal entities such as limited partnerships, limited liability corporations, and securitization structures (collateralized debt obligations, collateralized loan obligations, and mortgage-backed security transactions).

ASU 2015-02 makes specific amendments to the current consolidation guidance and ends the deferral granted to investment companies from applying the variable interest entities guidance.

In April 2015, the FASB issued ASU No. 2015-03, _Simplifying the Presentation of Debt Issuance Costs_ (“ASU 2015-03”).

ASU 2015-03 requires debt issuance costs to be presented in the balance sheet as a direct deduction from the associated debt liability.

In April 2015, the FASB issued ASU No. 2015-05_, Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement_ (“ASU 2015-05”).

ASU 2015-05 is intended to help entities evaluate the accounting for fees paid by a customer in a cloud computing arrangement.

The guidance clarifies that customers should determine whether a cloud computing arrangement includes the license of software by applying the same guidance cloud service providers use to make this determination.

ASU 2015-17 may be adopted prospectively or retrospectively and early adoption is permitted.

ASU 2016-02 is to be adopted using a modified retrospective approach and early adoption is permitted.

ASU 2016-09 is effective for interim and annual reporting periods beginning after December 15, 2016 and early adoption is permitted.

The Company is unable to estimate the impact of adoption as it is dependent upon future stock option exercises, which cannot be predicted.

The Company has not determined the impact ASU 2017-01 may have on the Company’s consolidated results of operations, financial position, cash flows and financial statement disclosures.

The Company has not determined the impact ASU 2017-04 may have on the Company’s consolidated results of operations, financial position, cash flows and financial statement disclosures.

| | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Short-term borrowings, net | | $ | — | | | $ | — | | | $ | (312,999 | ) | | $ | (312,999 | ) |

As of December 31, 2015, these net investment hedges included British-pound-denominated long-term debt.

hedges in each of the designated foreign subsidiaries.

The Company spent $391.4 million in cash, net of cash acquired, to acquire Brookfield Engineering Laboratories (“Brookfield”) and ESP/SurgeX in January 2016, HS Foils and Nu Instruments in July 2016 and Laserage Technology Corporation (“Laserage”) in October 2016.

The amount allocated to goodwill is reflective of the benefits the Company expects to realize from the acquisitions as follows: Brookfield’s viscosity measurement instrumentation products and technologies complement the Company’s existing laboratory instrumentation businesses and provides the Company with opportunities to expand that business platform into a broader range of markets and applications.

ESP/SurgeX’s

patented technology is widely used by the business equipment, imaging, audio visual, information technology, gaming and vending industries and is a strategic fit with the Company’s existing power protection platform to accelerate product innovation and market expansion worldwide.

HS Foils broadens the Company’s product offering and technical capabilities with its approach of bringing advanced materials and fabrication methods from micro- and nanofabrication to new application areas.

Nu Instruments broadens the Company’s product offering and technical capabilities in differentiated, high-end analytical instrumentation.

Laserage offers precision tube fabrication of minimally invasive surgical devices, stents and catheter-based delivery systems.

Pro forma results are not necessarily indicative of the results that would have occurred if the acquisitions had been completed at the beginning of 2016 or 2015.

In 2014, the Company spent $573.6 million in cash, net of cash acquired, to acquire Teseq Group in January 2014, VTI Instruments (“VTI”) in February 2014, Luphos GmbH in May 2014, Zygo Corporation in June 2014 and Amptek, Inc. in August 2014.

Teseq is a manufacturer of test and measurement instrumentation for electromagnetic compatibility testing.

VTI is a manufacturer of high-precision test and measurement instrumentation.

Luphos’ core technology is used in the measurement of complex aspheric optical surfaces and other surfaces through non-contact methods.

Zygo is a provider of optical metrology solutions, high-precision optics and optical assemblies for use in a wide range of scientific, industrial and medical applications.

Under the supervision and with the participation of our management, including the Company’s principal executive officer and principal financial officer, we have evaluated the effectiveness of our system of disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of December 31, [removed: 2016.][added: 2017.]

Such evaluation did not identify any change in the Company’s internal control over financial reporting during the quarter ended December 31, [removed: 2016] [added: 2017] that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Information with respect to Directors of the Company is set forth under the heading “Election of Directors” in the Company’s Proxy Statement for the [removed: 2017] [added: 2018] Annual Meeting of Stockholders and is incorporated herein by reference.

Information with respect to executive officers of the Company is set forth under the heading “Executive Officers” in the Company’s Proxy Statement for the [removed: 2017] [added: 2018] Annual Meeting of Stockholders and is incorporated herein by reference.

Information concerning compliance with Section 16(a) of the Securities Exchange Act of 1934 is set forth under the heading “Compliance with Section 16(a) of the Securities Exchange Act of 1934” in the Company’s Proxy Statement for the [removed: 2017] [added: 2018] Annual Meeting of Stockholders and is incorporated herein by reference.

Information concerning the audit committee of the Company is set forth under the heading “Committees of the Board” in the Company’s Proxy Statement for the [removed: 2017] [added: 2018] Annual Meeting of Stockholders and is incorporated herein by reference.

Information concerning the audit committee financial expert of the Company is set forth under the heading “Committees of the Board” in the Company’s Proxy Statement for the [removed: 2017] [added: 2018] Annual Meeting of Stockholders and is incorporated herein by reference.

Information concerning any material changes to the way in which security holders may recommend nominees to the Company’s Board of Directors is set forth under the heading “Corporate Governance” in the Company’s Proxy Statement for the [removed: 2017] [added: 2018] Annual Meeting of Stockholders and is incorporated herein by reference.

Information regarding executive compensation, including the “Compensation Discussion and Analysis,” the “Report of the Compensation Committee,” “Compensation Tables” and “Potential Payments Upon Termination or Change of Control” is set forth under the heading “Executive Compensation” in the Company’s Proxy Statement for the [removed: 2017] [added: 2018] Annual Meeting of Stockholders and is incorporated herein by reference.

Information regarding security ownership of certain beneficial owners and management appearing under “Stock Ownership of Executive Officers and Directors” and “Beneficial Ownership of Principal Stockholders” in the Company’s Proxy Statement for the [removed: 2017] [added: 2018] Annual Meeting of Stockholders is incorporated herein by reference.

Information appearing under “Certain Relationships and Related Transactions” and “Independence” in the Company’s Proxy Statement for the [removed: 2017] [added: 2018] Annual Meeting of Stockholders is incorporated herein by reference.

Information appearing under “Ratification of Appointment of Independent Registered Public Accounting Firm” in the Company’s Proxy Statement for the [removed: 2017] [added: 2018] Annual Meeting of Stockholders is incorporated herein by reference.

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Item 15.

Exhibits and Financial Statement Schedules

Financial Statements and Financial Statement Schedules

(1) Financial Statements:

Financial statements are shown in the Index to Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.

(2) Financial Statement Schedules:

Financial statement schedules have been omitted because either they are not applicable or the required information is included in the financial statements or the notes thereto.

(3) Exhibits:

Exhibits are shown in the index included in Part II, Item 15(3) of this Annual Report on Form 10-K.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

| | | | | | | |

| --- | --- | --- | --- | --- | --- | --- |

| | | | | AMETEK, Inc. | | |

| | | | | By: | | /s/ DAVID A. ZAPICO |

| | | | | | | David A. Zapico |

| | | | | | | Chief Executive Officer |

| Date: February 23, 2017 | | | | | | |

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

| | | | | |

| --- | --- | --- | --- | --- |

| Signature | | Title | | Date |

| /s/ DAVID A. ZAPICO David A. Zapico | | Chief Executive Officer and Director (Principal Executive Officer) | | February 23, 2017 |

| /s/ WILLIAM J. BURKE William J. Burke | | Executive Vice President – Chief Financial Officer & Treasurer (Principal Financial Officer) | | February 23, 2017 |

| /s/ THOMAS M. MONTGOMERY Thomas M. Montgomery | | Senior Vice President – Comptroller (Principal Accounting Officer) | | February 23, 2017 |

| /s/ FRANK S. HERMANCE Frank S. Hermance | | Executive Chairman of the Board of Directors | | February 23, 2017 |

| /s/ RUBY R. CHANDY Ruby R. Chandy | | Director | | February 23, 2017 |

| /s/ ANTHONY J. CONTI Anthony J. Conti | | Director | | February 23, 2017 |

| /s/ STEVEN W. KOHLHAGEN Steven W. Kohlhagen | | Director | | February 23, 2017 |

| /s/ JAMES R. MALONE James R. Malone | | Director | | February 23, 2017 |

| /s/ GRETCHEN W. MCCLAIN Gretchen W. McClain | | Director | | February 23, 2017 |

| /s/ ELIZABETH R. VARET Elizabeth R. Varet | | Director | | February 23, 2017 |

| /s/ DENNIS K. WILLIAMS Dennis K. Williams | | Director | | February 23, 2017 |

Index to Exhibits

| [removed: 3.1*] [added: 3.1] | | [removed: Conformed] [added: [Conformed] Copy of Amended and Restated Certificate of Incorporation of AMETEK, Inc. as amended to and including November 29, [removed: 2016.] [added: 2016.](http://www.sec.gov/Archives/edgar/data/1037868/000119312517053600/d309462dex31.htm)] | | [added: Exhibit 3.1 to 2016 Form 10-K, SEC File No. 1-12981.] |

| 3.2 | | [removed: By-Laws] [added: [By-Laws] of AMETEK, Inc. as amended to and including February 10, [removed: 2017.] [added: 2017.](http://www.sec.gov/Archives/edgar/data/1037868/000129993317000137/exhibit1.htm)] | | Exhibit 3.2 to Form 8-K, dated February 13, 2017, SEC File No. 1-12981. |

| [removed: 4.2†] [added: 4.1†] | | [removed: AMETEK,] [added: [AMETEK,] Inc. 2007 Omnibus Incentive Compensation Plan, dated as of April 24, 2007 (the “2007 [removed: Plan”).] [added: Plan”).](http://www.sec.gov/Archives/edgar/data/1037868/000089322007001824/w34881exv4.htm)] | | Exhibit 4 to Form S-8 dated May 10, 2007, SEC File No. 1-12981. |