AMETEK INC/ (AME) FY 2024 MD&A
This page reproduces the company's own Item 7 MD&A text from the linked SEC filing. It is filer text, not grepcent analysis, scoring, or investment advice.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This report includes forward-looking statements based on the Company’s current assumptions, expectations and projections about future events. When used in this report, the words “believes,” “anticipates,” “may,” “expect,” “intend,” “estimate,” “project” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such words. In this report, the Company discloses important factors that could cause actual results to differ materially from management’s expectations. For more information on these and other factors, see “Forward-Looking Information” herein.
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with “Item 1A. Risk Factors,” and the consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K.
Business Overview
AMETEK’s operations are affected by global, regional and industry-specific economic factors. However, the Company’s strategic geographic and industry diversification, and its mix of products and services, have helped to mitigate the potential adverse impact of any unfavorable developments in any one industry or the economy of any single country on its consolidated operating results. In 2024, the Company posted record sales, operating income, net income, diluted earnings per share, and operating cash flow. Positive market trends, the Company's backlog, contributions from recent acquisitions, and continued focus on and implementation of Operational Excellence initiatives had a positive impact on 2024 results. The Company also benefited from its strategic initiatives under AMETEK's four key strategies: Operational Excellence, Strategic Acquisitions, Global & Market Expansion and New Products.
Highlights in 2024 were:
•Net sales for 2024 were a record $6,941.2 million, an increase of $344.2 million or 5.2%, compared with net sales of $6,597.0 million in 2023.
•Net income for 2024 was a record $1,376.1 million, an increase of $62.9 million or 4.8%, compared with $1,313.2 million in 2023.
•Diluted earnings per share for 2024 were a record $5.93, an increase of $0.26 or 4.5%, compared with $5.67 per diluted share in 2023.
•Cash provided by operating activities totaled a record $1,828.8 million in 2024, an increase of $93.5 million or 5.4%, compared with cash provided by operating activities of $1,735.3 million in 2023.
•The Company's backlog of unfilled orders at December 31, 2024 was $3,403.2 million.
•In October 2024, the Company spent $117.5 million in cash, net of cash acquired, to purchase Virtek Vision International ("Virtek"), a leading provider of advanced laser-based projection and inspection systems.
•EBITDA (earnings before interest, income taxes, depreciation, and amortization) was a record $2,151.6 million in 2024, compared with $2,014.7 million in 2023.
•In the third quarter of 2024, the Company paid in full, at maturity, a $300 million in aggregate principal amount of 3.73% senior notes.
•The Company continued its emphasis on investment in research, development and engineering, spending $371.9 million in 2024. Approximately 27% of sales in 2024 were from products introduced in the past three years.
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Results of Operations
The following “Results of Operations of the year ended December 31, 2024 compared with the year ended December 31, 2023” section presents an analysis of the Company’s consolidated operating results displayed in the Consolidated Statement of Income. A discussion regarding our financial condition and results of operations for the year ended December 31, 2023 compared to the year ended December 31, 2022 can be found under Item 7 in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the Securities and Exchange Commission on February 22, 2024.
Results of Operations for the year ended December 31, 2024 compared with the year ended December 31, 2023
Net sales for 2024 were $6,941.2 million, an increase of $344.2 million or 5.2%, compared with net sales of $6,597.0 million in 2023. The increase in net sales for 2024 was due to a 7% increase from acquisitions, partially offset by a 2% organic sales decline. EIG net sales were $4,659.9 million in 2024, an increase of 0.8%, compared with $4,624.3 million in 2023. EMG net sales were $2,281.3 million in 2024, an increase of 15.6%, compared with $1,972.7 million in 2023.
Total international sales for 2024 were $3,291.7 million or 47.4% of net sales, an increase of $163.5 million or 5.2%, compared with international sales of $3,128.2 million or 47.4% of net sales in 2023. The increase in international sales was primarily driven by strong demand in Europe and Asia, as well as contributions from the 2023 acquisitions. Export shipments from the United States, which are included in total international sales, were $1,880.8 million in 2024, an increase of $148.4 million or 8.6%, compared with $1,732.4 million in 2023.
Orders for 2024 were $6,810.3 million, a decrease of $102.1 million or 1.5% compared with $6,912.4 million in 2023. The decrease in orders was due to a 2% organic order decrease, a 1% unfavorable effect of foreign currency translation, partially offset by a 2% increase from acquisitions. The organic orders decrease is due to customer inventory normalization in our automation and engineered solutions core businesses. The Company’s backlog of unfilled orders at December 31, 2024 was $3,403.2 million, a decrease of $130.9 million or 3.7%, compared with $3,534.1 million at December 31, 2023.
Segment operating income for 2024 was $1,884.9 million, an increase of $77.4 million or 4.3%, compared with segment operating income of $1,807.5 million in 2023. Segment operating income, as a percentage of net sales, decreased to 27.2% in 2024, compared with 27.4% in 2023. Segment operating income and operating margins in 2024 included $29.2 million of integration costs related to the Paragon acquisition, which negatively impacted segment operating margins by 40 basis points. The dilutive impact of the 2023 acquisitions negatively impacted segment operating margins by 110 basis points in 2024. Excluding the dilutive impact of the 2023 acquisitions and the Paragon integration costs, segment operating margins increased 130 basis points compared to 2023, due to the continued benefits from the Company's Operational Excellence initiatives.
Cost of sales for 2024 was $4,464.7 million or 64.3% of net sales, an increase of $252.2 million or 6.0%, compared with $4,212.5 million or 63.9% of net sales for 2023. The cost of sales increase was primarily due to the net sales increase discussed above.
Selling, general and administrative expenses for 2024 were $696.9 million or 10.0% of net sales, an increase of $19.9 million or 2.9%, compared with $677.0 million or 10.3% of net sales in 2023. Selling expenses increased primarily due to the increase in net sales discussed above. General and administrative expenses for 2024 were $105.3 million, compared with $100.1 million in 2023.
Consolidated operating income was $1,779.6 million or 25.6% of net sales for 2024, an increase of $72.1 million or 4.2%, compared with $1,707.5 million or 25.9% of net sales in 2023.
Other expense, net was $5.1 million for 2024, compared with $19.3 million of other expense in 2023, a change of $14.2 million. During 2024, the Company recorded higher pension income of $6.5 million and lower acquisition-related due diligence expense compared to 2023.
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The effective tax rate for 2024 was 17.2%, compared with 18.3% in 2023. See Note 9 to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for further details.
Net income for 2024 was $1,376.1 million, an increase of $62.9 million or 4.8%, compared with $1,313.2 million in 2023.
Diluted earnings per share for 2024 were $5.93, an increase of $0.26 or 4.5%, compared with $5.67 per diluted share in 2023.
Segment Results
EIG’s net sales totaled a record $4,659.9 million for 2024, an increase of $35.6 million or 0.8%, compared with $4,624.3 million in 2023. The net sales increase was due to a 2% increase from acquisitions, partially offset by a 1% organic sales decrease.
EIG’s operating income was a record $1,428.4 million for 2024, an increase of $117.4 million or 9.0%, compared with $1,311.0 million in 2023. EIG’s operating margins were a record 30.7% of net sales for 2024, compared with 28.3% of net sales in 2023. EIG's operating margins increased in 2024 compared to 2023 due to the continued benefits from the Company's Operational Excellence initiatives.
EMG’s net sales totaled a record $2,281.3 million for 2024, an increase of $308.6 million or 15.6%, compared with $1,972.7 million in 2023. The net sales increase was due to a 20% increase from acquisitions, partially offset by a 5% organic sales decrease. The organic sales decrease for 2024 is due to customer inventory normalization in our automation and engineered solutions core businesses.
EMG’s operating income was $456.5 million for 2024, a decrease of $40.1 million or 8.1%, compared with $496.6 million in 2023. EMG’s operating margins were 20.0% of net sales for 2024, compared with 25.2% of net sales in 2023. EMG's operating margins were negatively impacted by the dilutive impact of the 2023 acquisitions. EMG's operating income and operating margins for 2024 included $29.2 million of integration costs related to the Paragon acquisition, which negatively impacted segment operating margins by 130 basis points. The dilutive impact of the 2023 acquisitions negatively impacted EMG operating margins by 270 basis points in 2024. Excluding the dilutive impact of the 2023 acquisitions and the Paragon integration costs, EMG operating margins decreased 120 basis points compared to 2023, due to the organic sales decrease discussed above.
Liquidity and Capital Resources
Cash provided by operating activities totaled $1,828.8 million in 2024, an increase of $93.5 million or 5.4%, compared with cash provided by operating activities of $1,735.3 million in 2023. The increase in cash provided by operating activities for 2023 was primarily due to higher net income, net of higher noncash depreciation and amortization expense related to recent acquisitions, and improved working capital management.
Free cash flow (cash flow provided by operating activities less capital expenditures) was $1,701.7 million in 2024, compared with $1,599.1 million in 2023. EBITDA (earnings before interest, income taxes, depreciation and amortization) was $2,151.7 million in 2024, compared with $2,014.7 million in 2023. Free cash flow and EBITDA are presented because the Company is aware that they are measures used by third parties in evaluating the Company. (See "Non-GAAP Financial Measures" for a reconciliation of U.S. GAAP measures to comparable non-GAAP measures).
Cash used by investing activities totaled $244.8 million in 2024, compared with cash used by investing activities of $2,376.4 million in 2023. In 2024, the Company paid $117.5 million, net of cash acquired, to purchase Virtek Vision International, compared to $2,237.9 million, net of cash acquired, to purchase Bison Gear & Engineering Corp., United Electronic Industries, Amplifier Research Corp. and Paragon Medical in 2023. Additions to property, plant and equipment totaled $127.1 million in 2024, compared with $136.2 million in 2023.
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Cash used by financing activities totaled $1,602.5 million in 2024, compared with $697.3 million of cash provided by financing activities in 2023. At December 31, 2024, total debt, net was $2,079.7 million, compared with $3,313.3 million at December 31, 2023. In 2024, total borrowings decreased by $1,189.7 million, compared with an increase of $892.3 million in 2023. At December 31, 2024, the Company had available borrowing capacity of $2,020.3 million under its revolving credit facility and term loan, excluding the $700 million accordion feature.
At December 31, 2024, the Company had $230.0 million outstanding on the revolver with a maturity date of May 2027. The amount outstanding under the revolver that the Company expects, but is not required, to repay in 2025 is recorded in current liabilities on the consolidated balance sheet at December 31, 2024.
In the third quarter of 2024, the Company paid in full, at maturity, a $300 million in aggregate principal amount of 3.73% senior notes. The debt-to-capital ratio was 17.7% at December 31, 2024, compared with 27.5% at December 31, 2023. The net debt-to-capital ratio (total debt, net less cash and cash equivalents divided by the sum of net debt and stockholders’ equity) was 15.0% at December 31, 2024, compared with 25.0% at December 31, 2023. The net debt-to-capital ratio is presented because the Company is aware that this measure is used by third parties in evaluating the Company. (See "Non-GAAP Financial Measures" for a reconciliation of U.S. GAAP measures to comparable non-GAAP measures).
In 2024, the Company repurchased approximately 1.2 million shares of its common stock for $212.0 million, compared with $7.8 million used for repurchases of approximately 0.1 million shares in 2023. At December 31, 2024, $604.1 million was available under the Company’s Board of Directors authorization for future share repurchases.
Additional financing activities for 2024 included cash dividends paid of $258.8 million, compared with $230.3 million in 2023. Effective February 9, 2024, the Company’s Board of Directors approved a 12% increase in the quarterly cash dividend on the Company’s common stock to $0.28 per common share from $0.25 per common share. Proceeds from the exercise of employee stock options were $66.9 million in 2024, compared with $50.9 million in 2023.
As a result of all of the Company’s cash flow activities in 2024, cash and cash equivalents at December 31, 2024 totaled $374.0 million, compared with $409.8 million at December 31, 2023. At December 31, 2024, the Company had $361.5 million in cash outside the United States, compared with $375.9 million at December 31, 2023. The Company utilizes this cash to fund its international operations, as well as to acquire international businesses. The Company is in compliance with all covenants, including financial covenants, for all of its debt agreements. The Company believes it has sufficient cash-generating capabilities from domestic and unrestricted foreign sources, available credit facilities and access to long-term capital funds to enable it to meet its operating needs and contractual obligations for the foreseeable future.
Subsequent Events
On January 6, 2025, the Company established a commercial paper program under which it may issue short-term, unsecured commercial paper notes. Amounts available under the commercial paper program may be borrowed, repaid and re-borrowed, with the aggregate face or principal amount of the notes outstanding under the commercial paper program at any time not to exceed $2.3 billion. The notes will have maturities of up to 364 days from the date of issue. The Company intends the commercial paper program to provide additional financing flexibility for various purposes including acquisitions. The Company expects that outstanding indebtedness of the Company under both the revolving credit facility and the commercial paper program will not exceed $2.3 billion at any time.
Effective February 7, 2025, the Company's Board of Directors approved an 11% increase in the quarterly cash dividend on its common stock to $0.31 per share from $0.28 per share.
Effective February 7, 2025, the Company's Board of Directors approved a $1.25 billion share repurchase authorization. This new authorization replaces the previous $1 billion share repurchase authorization approved in May 2022.
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Acquisition subsequent to December 31, 2024
In January 2025, the Company acquired Kern Microtechnik ("Kern"), a leading manufacturer of high-precision machining and optical inspection solutions supporting a wide range of applications within the medical, semiconductor, research, and space markets. Kern has annual sales of approximately 50 million Euros. Kern will join EIG.
Contractual Obligations and Other Commitments
Material contractual obligations arising in the normal course of business primarily consist of purchase obligations, long-term debt and related interest payments, and leases. See Note 10 to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for more information on the nature and timing of debt obligations.
Leases expire over a range of years from 2025 to 2038. Most of the leases contain renewal or purchase options, subject to various terms and conditions. See Note 14 to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for more information on the nature and timing of lease obligations.
Purchase obligations primarily consist of contractual commitments to purchase certain inventories at fixed prices. At December 31, 2024, the Company had $695.9 million of purchase obligations due within one year and $66.0 million of purchase obligations due in more than one year.
The Company has standby letters of credit and surety bonds of $173.1 million related to performance and payment guarantees at December 31, 2024. Based on experience with these arrangements, the Company believes that any obligations that may arise will not be material to its financial position.
Non-GAAP Financial Measures
EBITDA represents earnings before interest, income taxes, depreciation and amortization. EBITDA is presented because the Company is aware that it is used by rating agencies, securities analysts, investors and other parties in evaluating the Company. It should not be considered, however, as an alternative to operating income as an indicator of the Company’s operating performance or as an alternative to cash flows as a measure of the Company’s overall liquidity as presented in the Company’s consolidated financial statements. Furthermore, EBITDA measures shown for the Company may not be comparable to similarly titled measures used by other companies. The following table presents the reconciliation of net income reported in accordance with U.S. generally accepted accounting principles (“GAAP”) to EBITDA:
| Year Ended December 31, | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2024 | 2023 | 2022 | ||||||||
| (In millions) | ||||||||||
| Net income | $ | 1,376.1 | $ | 1,313.2 | $ | 1,159.5 | ||||
| Add (deduct): | ||||||||||
| Interest expense | 113.0 | 81.8 | 83.2 | |||||||
| Interest income | (5.8) | (11.1) | (1.7) | |||||||
| Income taxes | 285.4 | 293.2 | 269.2 | |||||||
| Depreciation | 135.3 | 122.5 | 113.7 | |||||||
| Amortization | 247.7 | 215.1 | 205.8 | |||||||
| Total adjustments | 775.6 | 701.5 | 670.2 | |||||||
| EBITDA | $ | 2,151.7 | $ | 2,014.7 | $ | 1,829.7 |
Free cash flow represents cash flow from operating activities less capital expenditures. Free cash flow is presented because the Company is aware that it is used by rating agencies, securities analysts, investors and other parties in
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evaluating the Company. The following table presents the reconciliation of cash flow from operating activities reported in accordance with U.S. GAAP to free cash flow:
| Year Ended December 31, | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2024 | 2023 | 2022 | ||||||||
| (In millions) | ||||||||||
| Cash provided by operating activities | $ | 1,828.8 | $ | 1,735.3 | $ | 1,149.4 | ||||
| Deduct: Capital expenditures | (127.1) | (136.2) | (139.0) | |||||||
| Free cash flow | $ | 1,701.7 | $ | 1,599.1 | $ | 1,010.4 |
Net debt represents total debt, net minus cash and cash equivalents. Net debt is presented because the Company is aware that it is used by rating agencies, securities analysts, investors and other parties in evaluating the Company. The following table presents the reconciliation of total debt, net reported in accordance with U.S. GAAP to net debt:
| December 31, | ||||||
|---|---|---|---|---|---|---|
| 2024 | 2023 | |||||
| (In millions) | ||||||
| Total debt, net | $ | 2,079.7 | $ | 3,313.3 | ||
| Less: Cash and cash equivalents | (374.0) | (409.8) | ||||
| Net debt | 1,705.7 | 2,903.5 | ||||
| Stockholders’ equity | 9,655.3 | 8,730.2 | ||||
| Capitalization (net debt plus stockholders’ equity) | $ | 11,361.0 | $ | 11,633.7 | ||
| Net debt as a percentage of capitalization | 15.0 | % | 25.0 | % |
Internal Reinvestment
Capital Expenditures
Capital expenditures were $127.1 million or 1.8% of net sales in 2024, compared with $136.2 million or 2.1% of net sales in 2023. Capital expenditures in 2025 are expected to be approximately 2% of net sales, with a continued emphasis on spending to improve productivity.
Research, Development and Engineering
The Company is committed to, and has consistently invested in, research, development and engineering activities to design and develop new and improved products and solutions. Research, development and engineering costs were $371.9 million in 2024, $351.7 million in 2023 and $322.1 million in 2022. These amounts included research and development expenses of $236.6 million, $220.8 million and $198.8 million in 2024, 2023, and 2022, respectively. All such expenditures were directed toward the development of new products and solutions and the improvement of existing products and solutions.
Environmental Matters
Information with respect to environmental matters is set forth in Note 13 to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Critical Accounting Policies and Estimates
Critical accounting policies are those policies that can have a significant impact on the presentation of the Company’s financial condition and results of operations and that require the use of complex and subjective estimates based on the Company’s historical experience and management’s judgment. Because of the uncertainty inherent in such estimates, actual results may differ materially from the estimates used. Below are the policies used in preparing
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the Company's financial statements that management believes are the most dependent upon the application of estimates and assumptions. A complete list of the Company’s significant accounting policies is in Note 1 to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
•Business Combinations. The Company allocates the purchase price of an acquired company, including when applicable, the acquisition date fair value of contingent consideration between tangible and intangible assets acquired and liabilities assumed from the acquired business based on their estimated fair values, with the residual of the purchase price recorded as goodwill. Third party appraisal firms and other consultants are engaged to assist management in determining the fair values of certain assets acquired and liabilities assumed. In the absence of a third party appraisal, the Company uses internal valuation estimates based on pertinent data from comparable prior acquisitions. Estimating fair values requires significant judgments, estimates and assumptions, including but not limited to: discount rates, future cash flows and the economic lives of trade names, technology, and customer relationships. These estimates are based on historical experience and information obtained from the management of the acquired companies and are inherently uncertain.
•Goodwill and Other Intangible Assets. Goodwill and other intangible assets with indefinite lives, primarily trademarks and trade names, are not amortized; rather, they are tested for impairment at least annually. The Company performs either a qualitative or quantitative analysis to determine if it is more likely than not that the fair values of its reporting units are less than the respective carrying values of those reporting units. The Company elected to bypass performing the qualitative screen and performed a quantitative analysis of the goodwill impairment test in the current year. The Company may elect to perform a qualitative analysis in future periods.
The Company principally relies on a discounted cash flow analysis to determine the fair value of each reporting unit, which considers cash flows discounted at an appropriate discount rate. The annual goodwill impairment test requires the Company to make a number of assumptions and estimates concerning future levels of revenue growth, operating margins, depreciation, amortization and working capital requirements, which are based on the Company’s long-range plan and are considered level 3 inputs. The discount rate is an estimate of the overall after-tax rate of return required by a market participant whose weighted average cost of capital includes both equity and debt, including a risk premium. While the Company uses the best available information to prepare its cash flow and discount rate assumptions, actual future cash flows or market conditions could differ significantly resulting in future impairment charges related to recorded goodwill balances. While there are always changes in assumptions to reflect changing business and market
conditions, the Company’s overall methodology and the population of assumptions used have remained
unchanged. In order to evaluate the sensitivity of the goodwill impairment test to changes in the fair value
calculations, the Company applied a hypothetical 10% decrease in fair values of each reporting unit. The
2024 results (expressed as a percentage of carrying value for the respective reporting unit) showed that,
despite the hypothetical 10% decrease in fair value, the fair values of the Company’s reporting units still
exceeded their respective carrying values by 95% to 388%.
The impairment test for indefinite-lived intangibles other than goodwill (primarily trademarks and trade names) consists of a comparison of the estimated fair value of the indefinite-lived intangible asset to the carrying value of the asset as of the impairment testing date. The Company can elect to perform a qualitative analysis to determine if it is more likely than not that the fair values of its indefinite-lived intangible assets are less than the respective carrying values of those assets. The Company elected to bypass the performing the qualitative screen. The Company may elect to perform the qualitative analysis in future periods. The Company estimates the fair value of its indefinite-lived intangibles using the relief from royalty method using level 3 inputs, which is a widely used valuation technique for such assets. The fair value derived from the relief from royalty method is determined by applying a royalty rate to a projection of net revenues discounted using an appropriate discount rate. Each royalty rate is determined based on the profitability of the trade name to which it relates and observed market royalty rates. Certain impairment models have discount rates calculated based on a debt/equity cost of capital. While the Company uses the
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best available information to prepare its cash flow and discount rate assumptions, actual future cash flows or market conditions could differ significantly resulting in future impairment charges related to recorded intangible balances. While there are always changes in assumptions to reflect changing business and market conditions, the Company’s overall methodology and the population of assumptions used have remained unchanged.
The Company’s acquisitions have generally included a significant goodwill component and the Company expects to continue to make acquisitions. At December 31, 2024, goodwill and other indefinite-lived intangible assets totaled $7,579.2 million or 51.8% of the Company’s total assets. The Company completed its required annual impairment tests in the fourth quarter of 2024 and determined that the carrying values of the Company’s goodwill and indefinite-lived intangibles were not impaired. There can be no assurance that goodwill or indefinite-lived intangibles impairment will not occur in the future.
•Income Taxes. The process of providing for income taxes and determining the related balance sheet accounts requires management to assess uncertainties, make judgments regarding outcomes and utilize estimates. The Company conducts a broad range of operations around the world and is therefore subject to complex tax regulations in numerous international taxing jurisdictions, resulting at times in tax audits, disputes and potential litigation, the outcome of which is uncertain. Management must make judgments currently about such uncertainties and determine estimates of the Company’s tax assets and liabilities. To the extent the final outcome differs, future adjustments to the Company’s tax assets and liabilities may be necessary.
The Company assesses the realizability of its deferred tax assets, taking into consideration the Company’s forecast of future taxable income, available net operating loss carryforwards and available tax planning strategies that could be implemented to realize the deferred tax assets. Based on this assessment, management must evaluate the need for, and the amount of, valuation allowances against the Company’s deferred tax assets. To the extent facts and circumstances change in the future, adjustments to the valuation allowances may be required.
The Company assesses the uncertainty in its tax positions by applying a minimum recognition threshold which a tax position is required to meet before a tax benefit is recognized in the financial statements. Once the minimum threshold is met, using a more likely than not standard, a series of probability estimates is made for each item to properly measure and record a tax benefit. The tax benefit recorded is generally equal to the highest probable outcome that is more than 50% likely to be realized after full disclosure and resolution of a tax examination. The underlying probabilities are determined based on the best available objective evidence such as recent tax audit outcomes, published guidance, external expert opinion, or by analogy to the outcome of similar issues in the past. There can be no assurance that these estimates will ultimately be realized given continuous changes in tax policy, legislation and audit practice. The Company recognizes interest and penalties accrued related to uncertain tax positions in income tax expense.
Recent Accounting Pronouncements
See Note 2, Recent Accounting Pronouncements, to the Company’s Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for information regarding recently issued accounting pronouncements.
Forward-Looking Information
Certain matters discussed in this Form 10-K are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995 (“PSLRA”), which involve risk and uncertainties that exist in the Company’s operations and business environment and can be affected by inaccurate assumptions, or by known or unknown risks and uncertainties. Many such factors will be important in determining the Company’s actual future results. The Company wishes to take advantage of the “safe harbor” provisions of the PSLRA by cautioning readers that numerous important factors in some cases have caused, and in the future could cause, the Company’s actual
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results to differ materially from those expressed in any forward-looking statements made by, or on behalf of, the Company. Some, but not all, of the factors or uncertainties that could cause actual results to differ from present expectations are set forth above and under Item 1A. Risk Factors. The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, subsequent events or otherwise, unless required by the securities laws to do so.