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Mail Stop 0306
May 16, 2005
Via U.S. Mail and Facsimile to (215) 323-9350
John J. Molinelli
Executive Vice President and Chief Financial Officer
Ametek, Inc.
37 North Valley Road
Paoli, Pennsylvania 19301
Re: Ametek, Inc.
Form 10-K for the year ended December 31, 2004
Filed March 8, 2005
File No. 001-12981
Dear Mr. Molinelli:
We have reviewed your filings and have the following
comments.
We have limited our review to only your financial statements and
related disclosures and will make no further review of your
documents. Where indicated, we think you should revise your
documents in response to these comments. If you disagree, we will
consider your explanation as to why our comment is inapplicable or
a
revision is unnecessary. Please be as detailed as necessary in
your
explanation. In some of our comments, we may ask you to provide
us
with supplemental information so we may better understand your
disclosure. After reviewing this information, we may or may not
raise additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your
filings.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
Form 10-K for the year ended December 31, 2004
Item 7. Management`s Discussion and Analysis of Financial
Condition
and Results of Operations
Year ended December 31, 2004, Compared with Year Ended December
31,
2003 - Page 17
1. MD&A should discuss and quantify each of the reasons for
significant changes in financial statements items. We see that you
generally identify factors responsible for changes in financial
statement items, but each of the specific reasons are not always
discussed and quantified. For instance, you disclose that the
increase in segment operating income resulted from the profit
contributions of the acquisitions, strength in differentiated
business of each group, slightly higher prices by the cost-driven
floor care and specialty motors business, and the benefits from
the
Company`s ongoing cost reduction programs, however you do not
quantify the impact of each of these factors on operating income.
Please apply this general guidance in future filings throughout
MD&A.
2. We note multiple references throughout your filing to cost
saving
initiatives and changes to your overall cost structure. We also
note
that you disclose future liabilities related to employee severance
and other commitments within your contractual obligations table.
To
the extent these costs were incurred as part of a formal
restructuring plan accounted for pursuant to SFAS 146, please
revise
future filings, if significant, to provide the MD&A disclosures
required by SAB Topic 5-P as well as the financial statement
disclosures required by paragraph 20 of the Statement.
Financial Statements
Note 1. Significant Accounting Policies
Inventories - Page 36
3. We note your disclosure that you use the LIFO method for more
than
half of your inventory. Disclose in future filings the method of
determining cost for the remainder of your inventory.
Property, Plant and Equipment - Page 36
4. In future filings please disclose depreciation periods
(depreciable lives) for each major class of depreciable assets.
Refer to Rule 5-02.8 of Regulation S-X for guidance.
Revenue Recognition - Page 37
5. We see that your products are sold through distributors. Tell
us
whether you offer sales incentives, credits or discounts or have
arrangements with these distributors or other parties that are
subject to EITF 01-09. If so, describe how you have applied the
guidance provided in the consensus and, unless insignificant, in
future filings provide disclosures about the nature of these
arrangements and your accounting. In addition, disclose in future
filings whether your revenue recognition policies differ for sales
to
distributors or other resellers.
6. Tell us why shipment is the appropriate point for recognizing
product sales revenue. Specifically address the nature and extent
of
any post shipment obligations, right of return and customer
acceptance provisions, including discussion of how such
obligations
and provisions are considered in your practices. Additionally,
tell
us what you mean by your disclosure that returns and allowances
may
be granted at "the Company`s option." Tell us how this affects
the
timing of your revenue recognition.
Derivative Financial Instruments - Page 38
7. Tell us more about the hedge of your net investment in foreign
operations related to your British-pound-denominated loans. Tell
us
how you determined that the loans are effective as net investment
hedges. Provide details of the specific accounting treatment.
Goodwill and Other Intangible Assets - Page 38
8. We note your disclosure on page 38 that you test goodwill and
intangible assets with indefinite lives for impairment under SFAS
142. Tell us the nature of your indefinite lived intangible
assets
and describe how you concluded that the intangible assets had an
indefinite life. Additionally, we see that your total intangible
assets exceed five percent of your total assets. In future
filings,
please disclose intangible assets as a separate line item on your
balance sheet. Refer to paragraph 42 of SFAS 142 and Rule 5-02.15
of
Regulation S-X.
Note 7. Debt - Page 43
9. Supplementally and in future filings provide more details of
your
accounts receivable securitization program and the impact that
this
had on the financial statements each period.
Note 15. Business Segment and Geographic Information - Page 57
10. In future filings please present only long-lived assets by
geographical area, as required by paragraph 38(b) of SFAS 131.
Consider that long-lived assets presented in your segment
disclosures
should only include tangible assets. See Question 22 on the FASB
Staff Implementation Guide to SFAS 131.
Note 18. Contingencies - Page 61
11. Supplementally and in future filings provide more details of
the
asbestos litigation and environmental matters, particularly those
matters where you have been named a Potentially Responsible Party
(PRP). Clarify the number of asbestos-related claims filed and the
status of each of these claims. Provide more details of the
exposure
related to the PRP sites. Clarify the reason that you believe
these
matters will not have a significant impact on results of
operations,
liquidity or financial condition. Please note that if there is at
least a reasonable possibility that a loss exceeding amounts
already
recognized may have been incurred and the amount of that
additional
loss would be material to a decision to buy or sell your
securities
you should (a) disclose the estimated additional loss, or range of
loss, that is reasonably possible, or (b) state that such an
estimate
cannot be made. Refer to SAB Topic 5.Y. and SOP 96-1.
Item 9A. Controls and Procedures - Page 63
12. We note that you evaluated the system of disclosure controls
and
procedures however your conclusion was not disclosed. Please
revise
to disclose your conclusion related to the effectiveness of the
system. Refer to Item 307 of Regulation S-K. Additionally,
revise
to provide the disclosure related to changes in internal control
over
financial reporting as required by Item 308(c) of Regulation S-K.
* * * *
As appropriate, please respond to these comments within 10
business days or tell us when you will provide us with a response.
Please furnish a cover letter with your amendment that keys your
responses to our comments and provides any requested supplemental
information. Detailed cover letters greatly facilitate our
review.
Please file your cover letter on EDGAR. Please understand that we
may have additional comments after reviewing your responses to our
comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosure in the filing;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
You may contact Traci Hornfeck, Staff Accountant, at (202)
824-
5565 or me at (202) 942-1791 if you have questions regarding these
comments. In this regard, do not hesitate to contact Martin
James,
Senior Assistant Chief Accountant, at (202) 942-1984.
Sincerely,
Brian Cascio
Accounting Branch Chief
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Mr. John J. Molinelli
Ametek, Inc.
May 16, 2005
Page 5
Mr. John J. Molinelli
Ametek, Inc.
May 16, 2005
Page 2