Common use of RETIREMENT AND PENSION PLANS Clause in Contracts

RETIREMENT AND PENSION PLANS. The Company maintains noncontributory defined benefit retirement and pension plans, with benefits for eligible United States salaried and hourly employees funded through trusts established in conjunction with these plans. Employees of certain foreign operations participate in various local plans which in the aggregate are not significant. The Company also has nonqualified unfunded retirement plans for its directors and certain retired employees, and contractual arrangements with certain executives that provide for supplemental pension benefits in excess of those provided by the Company's primary pension plan. Fifty percent of the projected benefit obligation of the supplemental pension benefit arrangements with the executives has been funded by grants of restricted shares of the Company's common stock. The remaining 50% is unfunded. The Company is providing for these arrangements by charges to earnings over the periods to age 65 of the participants. The Company's funding policy with respect to its qualified plans is to contribute amounts determined annually on an actuarial basis that provides for current and future benefits in accordance with funding requirements of federal law and regulations. Assets of funded benefit plans are invested in a variety of equity and debt instruments and in pooled temporary funds. Net pension expense, excluding plan administrative expenses, consists of the following components: (IN THOUSANDS) ---------------------------- 1993 1992 1991 -------- -------- -------- Service cost for benefits earned during the period.......................................... $ 6,902 $ 6,601 $ 5,662 Interest cost on projected benefit obligation.... 14,374 13,106 12,108 Actual return on plan assets..................... (15,605) (14,452) (26,254) Net amortization and deferrals................... 652 673 15,025 -------- -------- -------- Net pension expense.............................. $ 6,323 $ 5,928 $ 6,541 ======== ======== ======== In addition to pension expense shown above, in 1993 the Company also recorded a charge for curtailments of $7.6 million related to an hourly pension plan as part of the resizing and restructuring of its general gauge and aerospace operations (see Note 2). The charge to income for all retirement and pension plans, including the 1993 curtailment provision, was $14.4 million in 1993, $6.7 million in 1992 and $7.2 million in 1991. AMETEK, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) Net pension expense reflects an expected long-term rate of return on plan assets of 9 1/2% for 1993, 1992 and 1991. The actual return has been adjusted to defer gains or losses which differ from the expected return. The present value of projected benefit obligations was determined using an assumed discount rate of 7 1/4% for 1993, 8% for 1992 and 8 1/4% for 1991. The assumed rate of compensation increase used in determining the present value of projected benefit obligations was 5 1/2% for 1993 and 1992 and 6% for 1991. For pension plans with accumulated benefits in excess of assets at December 31, 1993, the balance sheet reflects an additional long-term pension liability of $11.0 million ($17.2 million--1992), a long-term intangible asset of $3.7 million ($10.8 million--1992), and a charge to stockholders' equity of $4.7 million ($4.2 million--1992 and $1.1 million--1991), net of a deferred tax benefit, representing the excess of the additional long-term liability over unrecognized prior service cost. No balance sheet recognition is given to pension plans with assets in excess of accumulated benefits. The Company provides limited postretirement benefits other than pensions to certain retirees, and a small number of employees. These benefits are accounted for on the accrual basis, thereby meeting accounting requirements of the new accounting standard for postretirement benefits other than pensions. The following table sets forth the funded status of the plans: (IN THOUSANDS) ----------------------------------------------- DECEMBER 31, 1993 DECEMBER 31, 1992 ----------------------- ----------------------- ASSETS ACCUMULATED ASSETS ACCUMULATED EXCEED BENEFITS EXCEED BENEFITS ACCUMULATED EXCEED ACCUMULATED EXCEED BENEFITS ASSETS BENEFITS ASSETS ----------- ----------- ----------- ----------- Actuarial present value of benefit obligations: Vested benefit obligation.... $113,823 $ 72,070 $ 95,563 $ 63,872 -------- -------- -------- -------- Accumulated benefit obliga- tion........................ $117,875 $ 76,147 $ 98,433 $ 67,379 -------- -------- -------- -------- Projected benefit obligation. $136,340 $ 76,437 $113,988 $ 70,250 Plan assets at fair value...... 136,923 57,839 114,229 51,924 -------- -------- -------- -------- Plan assets in excess of (less than) projected benefit obligation.................... 583 (18,598) 241 (18,326) Unrecognized prior service cost.......................... 2,160 2,294 1,892 6,319 Unrecognized net loss.......... 9,214 8,275 11,518 8,350 Unrecognized net transition (asset) obligation, net of am- ortization.................... (5,433) 781 (6,637) 4,538 -------- -------- -------- -------- Prepaid (accrued) pension expense....................... $ 6,524 $ (7,248) $ 7,014 $ 881 ======== ======== ======== ========

RETIREMENT AND PENSION PLANS. The Company maintains noncontributory defined benefit retirement and pension plans, with benefits for eligible United States salaried and hourly employees funded through trusts established in conjunction with these plans. Employees of certain foreign operations participate in various local plans which in the aggregate are not significant. The Company also has nonqualified unfunded retirement plans for its directors and certain retired employees, and contractual arrangements with certain executives that provide for supplemental pension benefits in excess of those provided by the Company's primary pension plan. Fifty percent of the projected benefit obligation of the supplemental pension benefit arrangements with the executives has been funded by grants of restricted shares of the Company's common stock. The remaining 50% is unfunded. The Company is providing for these arrangements by charges to earnings over the periods to age 65 of the participants. The Company's funding policy with respect to its qualified plans is to contribute amounts determined annually on an actuarial basis that provides for current and future benefits in accordance with funding requirements of federal law and regulations. Assets of funded benefit plans are invested in a variety of equity and debt instruments and in pooled temporary funds. AMETEK, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) Net pension expense, excluding plan administrative expenses, consists of the following components: (IN THOUSANDS) ---------------------------- 1994 1993 1992 1991 -------- -------- -------- Service cost for benefits earned during the period.......................................... $ 6,952 $ 6,902 $ 6,601 $ 5,662 Interest cost on projected benefit obligation.... 15,041 14,374 13,106 12,108 Actual return on plan assets..................... (18,208) (15,605) (14,452) (26,254) Net amortization and deferrals................... 206 652 673 15,025 -------- -------- -------- Net pension expense.............................. $ 3,991 $ 6,323 $ 5,928 $ 6,541 ======== ======== ======== In addition to pension expense shown in the table above, in 1993 the Company also recorded a charge for curtailments of $7.6 million related to an hourly pension plan as part of the resizing and restructuring of its general gauge and aerospace operations (see Note 2)operations. This action, in part, accounts for the lower pension expense in 1994. The charge to income for all retirement and pension plans, including the 1993 curtailment provision, was $4.5 million in 1994, $14.4 million in 1993, and $6.7 million in 1992 and $7.2 million in 19911992. AMETEK, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) Net pension expense reflects an expected long-term rate of return on plan assets of 9 1/4% for 1994, and 9 1/2% for 1993, 1992 1993 and 19911992. The actual return has been adjusted to defer gains or and losses which differ from the expected return. The present value of projected benefit obligations was determined using an assumed discount rate of 7 3/4% for 1994, 7 1/4% for 1993, and 8% for 1992 and 8 1/4% for 19911992. The assumed rate of compensation increase used in determining the present value of projected benefit obligations was 5 1/4% for 1994, and 5 1/2% for 1993 and 1992 and 6% for 19911992. For pension plans with accumulated benefits in excess of assets at December 31, 19931994, the balance sheet reflects an additional long-term pension liability of $11.0 10.0 million ($17.2 million--199211.0 million--1993), a long-term intangible asset of $3.7 3.2 million ($10.8 million--19923.7 million--1993), and a charge to stockholders' equity of $4.7 4.4 million ($4.2 million--1992 4.7 million--1993 and $1.1 million--19914.2 million--1992), net of a deferred tax benefit, representing the excess of the additional long-term liability over unrecognized prior service cost. No balance sheet recognition is given to pension plans with assets in excess of accumulated benefits. The Company provides limited postretirement benefits other than pensions to certain retirees, and a small number of employees. These benefits are accounted for on the accrual basis, thereby meeting the accounting requirements of the new current accounting standard for postretirement benefits other than pensions. AMETEK, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) The following table sets forth the funded status of the plans: (IN THOUSANDS) ----------------------------------------------- DECEMBER 31, 1993 1994 DECEMBER 31, 1992 1993 ----------------------- ----------------------- ASSETS ACCUMULATED ASSETS ACCUMULATED EXCEED BENEFITS EXCEED BENEFITS ACCUMULATED EXCEED ACCUMULATED EXCEED BENEFITS ASSETS BENEFITS ASSETS ----------- ----------- ----------- ----------- Actuarial present value of benefit obligations: Vested benefit obligation.... $109,587 $ 70,476 $113,823 $ 72,070 $ 95,563 $ 63,872 -------- -------- -------- -------- Accumulated benefit obliga- tion........................ obligation.................. $119,576 $ 74,551 $117,875 $ 76,147 $ 98,433 $ 67,379 -------- -------- -------- -------- Projected benefit obligation. $134,593 $ 75,034 $136,340 $ 76,437 $113,988 $ 70,250 Plan assets at fair value...... 133,678 59,637 136,923 57,839 114,229 51,924 -------- -------- -------- -------- Plan assets in excess of (less than) projected benefit obligation.................... (915) (15,397) 583 (18,598) 241 (18,326) Unrecognized prior service cost.......................... 1,899 2,148 2,160 2,294 1,892 6,319 Unrecognized net loss.......... 10,377 8,014 9,214 8,275 11,518 8,350 Unrecognized net transition (asset) obligation, net of am- ortization.................... amortization.................. (4,630) 499 (5,433) 781 (6,637) 4,538 -------- -------- -------- -------- Prepaid (accrued) pension expense....................... $ 6,731 $ (4,736) $ 6,524 $ (7,248) $ 7,014 $ 881 ======== ======== ======== ========

RETIREMENT AND PENSION PLANS. The Company maintains noncontributory defined benefit retirement and pension plans, with benefits . Benefits for eligible United States salaried and hourly employees are funded through trusts established in conjunction with these the plans. Employees of certain foreign operations participate in various local plans which that in the aggregate are not significant. The Company also has nonqualified unfunded retirement plans for its directors Directors and certain retired employees, and as well as contractual arrangements with certain executives that provide for supplemental pension benefits in excess of those provided by the Company's primary pension plan. Fifty percent of the projected benefit obligation of the supplemental pension benefit arrangements with the executives has been funded by grants of restricted shares of the Company's common stock. The remaining 50% is unfunded. The Company is providing for these those arrangements by charges to earnings over the periods to age 65 of the participants. The Company's funding policy with respect to its qualified plans is to contribute amounts determined annually on an actuarial basis that provides provide for current and future benefits in accordance with funding requirements of federal law and regulations. Assets of funded benefit plans are invested in a variety of equity and debt instruments and in pooled temporary funds. AMETEK, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) Net pension expense, excluding plan administrative expenses, consists of the following components: (IN THOUSANDS) ---------------------------- 1995 1994 1993 1992 1991 -------- -------- -------- Service cost for benefits earned during the period.......................................... ......................................... $ 6,902 5,999 $ 6,601 6,676 $ 5,662 6,669 Interest cost on projected benefit obligation.... 14,374 13,106 12,108 ... 15,446 14,742 14,108 Actual return on plan assets..................... .................... (15,60523,665) (14,45217,922) (26,25415,401) Net amortization and deferrals................... 652 673 15,025 .................. 6,894 215 541 -------- -------- -------- Net pension expense.............................. ............................. $ 6,323 4,674 $ 5,928 3,711 $ 6,541 5,917 ======== ======== ======== In addition to pension expense shown in the table above, the Company also incurs other pension-related expenses, including plan administrative expenses. Also, in 1993 the Company also recorded a charge for curtailments of $7.6 million for curtailments related to an hourly pension plan as part of the resizing and restructuring of its general gauge and aerospace operations (see Note 2)operations. The charge to income for all retirement and pension plansplans during the past three years, including the 1993 curtailment provision, was $14.4 5.6 million in 1995, $4.2 million in 1994, and $14.0 million in 1993, $6.7 million in 1992 and $7.2 million in 1991. AMETEK, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) Net pension expense reflects an expected long-term rate of return on plan assets of 9 1/4% for 1995 and 1994, and 9 1/2% for 1993, 1992 and 1991. The actual return has been adjusted to defer gains or and losses which that differ from the expected return. The present value of projected benefit obligations was determined by using an assumed discount rate of 7 1/2% for 1995, 7 3/4% for 1994, and 7 1/4% for 1993, 8% for 1992 and 8 1/4% for 1991. The assumed rate of compensation increase used in determining the present value of projected benefit obligations was 5% for 1995, 5 1/4% for 1994, and 5 1/2% for 1993 and 1992 and 6% for 19911993. For pension plans with accumulated benefits in excess of assets at December 31, 19931995, the balance sheet reflects an additional long-term pension liability of $11.0 11.5 million ($17.2 million--199210.0 million--1994), a long-term intangible asset of $3.7 4.8 million ($10.8 million--19923.2 million--1994), and a charge to in stockholders' equity (net of deferred taxes) of $4.4 million in 1995 and 1994, and $4.7 million ($4.2 million--1992 and $1.1 million--1991), net of a deferred tax benefit, representing in 1993. The charges in stockholders' equity represents the excess of the additional long-term liability over unrecognized prior service cost. No balance sheet recognition is given to pension plans with assets in excess of accumulated benefits. The Company provides limited postretirement benefits other than pensions to certain retirees, and a small number of employees. These benefits are accounted for on the accrual basis, thereby meeting accounting requirements of the new accounting standard for postretirement benefits other than pensions. The following table sets forth the funded status of the plans: (IN THOUSANDS) ----------------------------------------------- DECEMBER 31, 1993 1995 DECEMBER 31, 1992 1994 ----------------------- ----------------------- ASSETS ACCUMULATED ASSETS ACCUMULATED EXCEED BENEFITS EXCEED BENEFITS ACCUMULATED EXCEED ACCUMULATED EXCEED BENEFITS ASSETS BENEFITS ASSETS ----------- ----------- ----------- ----------- Actuarial present value of benefit obligations: Vested benefit obligation.... ... $113,823 115,129 $ 72,070 91,750 $109,587 $ 95,563 $ 63,872 69,390 -------- -------- -------- -------- Accumulated benefit obliga- tion........................ obligation................. $117,875 118,348 $ 76,147 84,780 $119,576 $ 98,433 $ 67,379 73,683 -------- -------- -------- -------- Projected benefit obligation. ................. $136,340 130,038 $ 76,437 93,617 $113,988 134,593 $ 70,250 73,948 Plan assets at fair value...... 136,923 57,839 114,229 51,924 ..... 132,370 75,520 133,678 58,802 -------- -------- -------- -------- Plan assets in excess of (less than) projected benefit obligation.................... 583 ................... 2,332 (18,59818,097) 241 (18,326915) (15,146) Unrecognized prior service cost.......................... 2,160 2,294 1,892 6,319 ......................... 1,479 4,145 1,899 2,126 Unrecognized net loss.......... 9,214 8,275 11,518 8,350 ......... 6,016 8,876 10,377 7,530 Unrecognized net transition (asset) obligation, net of am- ortization.................... amortization................. (5,4334,207) 781 621 (6,6374,630) 4,538 525 -------- -------- -------- -------- Prepaid (accrued) pension expense....................... ...................... $ 6,524 5,620 $ (7,2484,455) $ 7,014 6,731 $ 881 (4,965) ======== 33 AMETEK, ======== INC. ======== ======== ======== ========NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) The Company provides limited postretirement benefits other than pensions to certain retirees, and a small number of employees. Benefits under these arrangements are not significant. The Company also provides limited postemployment benefits to former or inactive employees after employment but before retirement. Those benefits, which are not significant in amount, have always been accounted for on the accrual basis, thereby meeting the current accounting requirement for postemployment benefits.

RETIREMENT AND PENSION PLANS. The Company maintains noncontributory defined benefit retirement and pension plans, with benefits . Benefits for eligible United States salaried and hourly employees are funded through trusts established in conjunction with these the plans. Employees of certain foreign operations participate in various local plans which that in the aggregate are not significant. The Company also has nonqualified unfunded retirement plans for its directors Directors and certain retired employees, and as well as contractual arrangements with a current and certain former executives that provide for supplemental pension benefits in excess of those provided by the Company's primary pension plan. Fifty percent of the projected benefit obligation of the supplemental pension benefit arrangements with the executives has been funded by grants of restricted shares of the Company's common stock. The remaining 50% is unfunded. The Company is providing for these those arrangements by charges to earnings (included in net pension expense below) over the periods to age 65 of the participants. AMETEK, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) The Company's funding policy with respect to its qualified plans is to contribute amounts determined annually on an actuarial basis that provides provide for current and future benefits in accordance with the funding requirements of federal law and regulations. Assets of funded benefit plans are invested in a variety of equity and debt instruments and in pooled temporary funds, as well as the Company's common stock, not material to total plan assets. Net pension expense, excluding plan administrative expenses, consists of the following components: (IN THOUSANDS) ---------------------------- 1993 1992 1991 1996 -------- 1995 -------- 1994 -------- Service cost for benefits earned during the period.......................................... ......................................... $ 6,902 6,320 $ 6,601 5,999 $ 5,662 6,676 Interest cost on projected benefit obligation.... 14,374 13,106 12,108 ... 16,292 15,446 14,742 Actual return on plan assets..................... .................... (15,60521,780) (14,45223,665) (26,25417,922) Net amortization and deferrals................... 652 673 15,025 -------- -------- -------- .................. Net pension expense.............................. ............................. 3,460 -------- $ 6,323 4,292 6,894 -------- $ 5,928 4,674 215 -------- $ 6,541 3,711 ======== ======== ======== In addition to pension expense shown in the table above, in 1993 the Company also recorded a charge for curtailments of $7.6 million incurs other pension-related to an hourly pension plan as part of the resizing and restructuring of its general gauge and aerospace operations (see Note 2). The charge to income for all retirement and pension plansexpenses, including plan administrative expenses prior to 1996. Such additional expense for the 1993 curtailment provision, past three years was $14.4 million not material in 1993, $6.7 million in 1992 and $7.2 million in 1991amount. AMETEK, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) Net pension expense reflects an expected long-term rate of return on plan assets of 9 1/21/4% for 19931996, 1992 1995, and 19911994. The actual return has been adjusted to defer gains or and losses which that differ from the expected return. The present value of projected benefit obligations was determined by using an assumed discount rate of 7 1/43/4% for 19931996, 87 1/2% for 1992 1995, and 8 1/47 3/4% for 19911994. The assumed rate of compensation increase used in determining the present value of projected benefit obligations was 5 1/25% for 1993 1996 and 1992 1995, and 65 1/4% for 19911994. For pension plans with accumulated benefits in excess of assets at December 31, 19931996, the balance sheet reflects an additional long-term pension liability of $11.0 7.4 million ($17.2 million--199211.5 million in 1995), a long-term intangible asset of $3.7 3.5 million ($10.8 million--19924.8 million in 1995), and a charge to in stockholders' equity (net of deferred taxes) of $4.7 2.6 million ($4.2 million--1992 in 1996, and $1.1 million--1991), net of a deferred tax benefit, representing 4.4 million in 1995 and 1994. The charge in stockholders' equity represents the excess of the additional long-term liability over unrecognized prior service cost. No balance sheet recognition is given to pension plans with assets in excess of accumulated benefits. The Company provides limited postretirement benefits other than pensions to certain retirees, and a small number of employees. These benefits are accounted for on the accrual basis, thereby meeting accounting requirements of the new accounting standard for postretirement benefits other than pensions. The following table sets forth the funded status of the plans: (IN THOUSANDS) ----------------------------------------------- DECEMBER 31, 1993 1996 DECEMBER 31, 1992 1995 ----------------------- ----------------------- ASSETS ACCUMULATED ASSETS ACCUMULATED EXCEED BENEFITS EXCEED BENEFITS ACCUMULATED EXCEED ACCUMULATED EXCEED BENEFITS ASSETS BENEFITS ASSETS ----------- ----------- ----------- ----------- Actuarial present value of benefit enefit obligations: Vested benefit obligation.... $113,823 138,083 $ 72,070 66,157 $115,129 $ 95,563 $ 63,872 -------- -------- -------- -------- Accumulated benefit obliga- tion........................ $117,875 $ 76,147 $ 98,433 $ 67,379 -------- -------- -------- -------- Projected benefit obligation. $136,340 $ 76,437 $113,988 $ 70,250 Plan assets at fair value...... 136,923 57,839 114,229 51,924 -------- -------- -------- -------- Plan assets in excess of (less than) projected benefit obligation.................... 583 (18,598) 241 (18,326) Unrecognized prior service cost.......................... 2,160 2,294 1,892 6,319 Unrecognized net loss.......... 9,214 8,275 11,518 8,350 Unrecognized net transition (asset) obligation, net of am- ortization.................... (5,433) 781 (6,637) 4,538 -------- -------- -------- -------- Prepaid (accrued) pension expense....................... $ 6,524 $ (7,248) $ 7,014 $ 881 84,780 ======== ======== ======== ======== Accumulated benefit obligation.................. $143,946 $ 71,987 $118,348 $ 91,750 ======== ======== ======== ======== Projected benefit obligation.................. $156,626 $ 72,068 $130,038 $ 93,617 Plan assets at fair value.... 164,038 61,870 132,370 75,520 -------- -------- -------- -------- Plan assets in excess (less than) projected benefit obligation.................. 7,412 (10,198) 2,332 (18,097) Unrecognized prior service cost........................ 1,302 3,963 1,479 4,145 Unrecognized net loss........ 5,091 2,563 6,016 8,876 Unrecognized net transition (asset) obligation, net of amortization................ (3,641) 574 (4,207) 621 -------- -------- -------- -------- Prepaid (accrued) pension expense..................... $ 10,164 $ (3,098) $ 5,620 $ (4,455) ======== ======== ======== ======== Actuarial present value of b AMETEK, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED) The company provides limited postretirement benefits other than pensions for certain retirees and a small number of employees. Benefits under these arrangements are not significant. The Company also provides limited postemployment benefits for former or inactive employees after employment but before retirement. Those benefits, which are not significant in amount, have always been accounted for on the accrual basis, thereby meeting the current accounting requirement for postemployment benefits.