<PAGE>
 
                               [CONFORMED COPY]
 
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                                   FORM 10-K
 
                      SECURITIES AND EXCHANGE COMMISSION
 
                            WASHINGTON, D.C. 20549
 
                             ---------------------
 
(Mark One)
 
  [X]            ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
                    OF THE SECURITIES EXCHANGE ACT OF 1934
 
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
 
                                      OR
 
  [_]          TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
                    OF THE SECURITIES EXCHANGE ACT OF 1934
 
FOR THE TRANSITION PERIOD FROM  TO
 
                         COMMISSION FILE NUMBER 1-168
 
                             ---------------------
 
                                 AMETEK, INC.
            (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
 
               DELAWARE                              13-4923320
    (STATE OR OTHER JURISDICTION OF     (I.R.S. EMPLOYER IDENTIFICATION NO.)
    INCORPORATION OR ORGANIZATION) 
 
       STATION SQUARE, PAOLI, PA                        19301 
    (ADDRESS OF PRINCIPAL EXECUTIVE                  (ZIP CODE)
               OFFICES)                                        
                                   
 
                                (610) 647-2121
              REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
 
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
 
                                             NAME OF EACH EXCHANGE
             TITLE OF EACH CLASS              ON WHICH REGISTERED
             -------------------            -----------------------
     COMMON STOCK, $.01 PAR VALUE (VOTING)  NEW YORK STOCK EXCHANGE
                                            PACIFIC STOCK EXCHANGE
        9 3/4% SENIOR NOTES DUE 2004        NEW YORK STOCK EXCHANGE
 
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
 
                                     NONE
                             (TITLE OF EACH CLASS)
 
  INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO
SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS.   YES  X    NO  
                                                     ---       ---
 
  INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM
405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO
THE BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION
STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS FORM 10-K OR ANY
AMENDMENT TO THIS FORM 10-K. [X]
 
  The aggregate market value of the voting stock held by non-affiliates of the
registrant as of March 1, 1996, was $539,708,622.
 
  The number of shares of common stock outstanding as of March 1, 1996, was
32,605,818.
 
                      DOCUMENTS INCORPORATED BY REFERENCE
 
  Part III incorporates information by reference from the Proxy Statement for
Annual Meeting of Stockholders on April 23, 1996.
 
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<PAGE>
 
                                  AMETEK, INC.
 
                          1995 FORM 10-K ANNUAL REPORT
                               TABLE OF CONTENTS
 
<TABLE>
<CAPTION>
                                                                        PAGE(S)
                                                                        -------
 <C>      <S>                                                           <C>
                                    PART I
 Item 1.  Business...................................................     3-10
 Item 2.  Properties.................................................       10
 Item 3.  Legal Proceedings..........................................       10
 Item 4.  Submission of Matters to a Vote of Security Holders........       10

                                    PART II
 Item 5.  Market for Registrant's Common Equity and Related
           Stockholder Matters.......................................       10
 Item 6.  Selected Financial Data....................................       11
 Item 7.  Management's Discussion and Analysis of Financial Condition
           and Results of Operations.................................    12-18
 Item 8.  Financial Statements and Supplementary Data................    18-38
 Item 9.  Change in and Disagreements with Accountants on Accounting
           and Financial Disclosure..................................       38

                                   PART III
 Item 10. Directors and Executive Officers of the Registrant.........       39
 Item 11. Executive Compensation.....................................       39
 Item 12. Security Ownership of Certain Beneficial Owners and
           Management................................................       39
 Item 13. Certain Relationships and Related Transactions.............       39

                                    PART IV
 Item 14. Exhibits, Financial Statement Schedules and Reports on Form
           8-K.......................................................       39
 Signatures...........................................................      40
</TABLE>
 
                                       2
<PAGE>
 
                                    PART I
 
ITEM 1. BUSINESS
 
GENERAL DEVELOPMENT OF BUSINESS
 
  AMETEK, Inc. (AMETEK or the Company) was incorporated in Delaware in 1930
under the name of American Machine and Metals, Inc. and maintains its
principal executive offices at Station Square, Paoli, Pennsylvania 19301.
 
  AMETEK is a leading global manufacturer of electrical and electro-mechanical
products, and materials, engineered for niche markets. Operations are in the
U.S., Europe, Asia, and Mexico, with one-third of sales to international
markets. The Company has a significant market share for many of its products:
the Electro-mechanical Group is the world's largest producer of electric
motors and blowers for vacuum cleaners and floor care products; the Precision
Instruments Group builds technologically advanced monitoring, sensing,
calibration, and display devices for the aerospace, process, and heavy vehicle
industries; and, the Industrial Materials Group uses plastics, metals, and
fibers for a variety of consumer and industrial products. The Company has
grown through a primary focus on the manufacturing of electronic, electro-
mechanical and electrical products in which its technology or cost advantage
leads to a significant share of one or more niche markets.
 
 Shareholder Value Enhancement Plan
 
  In November 1993, the Company completed a broad strategic review and
announced the long-term Shareholder Value Enhancement Plan (Plan). The Company
has increased profitability and growth (i) by capitalizing on the competitive
advantages of the floor care, precision instruments, specialty metals, and
water filtration businesses; by building on unique advantages in other
businesses, and by extending core competencies into new products and markets;
(ii) by restructuring the Precision Instruments Group and by placing continued
emphasis on cost control throughout the Company; (iii) by expanding
internationally in the Pacific Rim and Europe; and by (iv) pursuing strategic
acquisitions and divestments on a selective basis.
 
  In March 1995, the Company acquired the heavy vehicle instrumentation
business of privately held Dixson, Inc. (Dixson). The Microfoam Division was
divested in May 1995 with cash proceeds of about $37 million. In November
1995, AMETEK announced it was seeking to divest the Westchester Plastics
Division.
 
  In addition to operational growth, the Company's Plan uses its historically
strong cash flow to reduce debt and repurchase AMETEK common stock under Board
authorizations totaling $175 million. The debt at November 1993 was refinanced
with the proceeds of the March 1994 public issuance of $150 million principal
amount of 9 3/4% senior notes, borrowings under a secured bank credit
agreement, and available cash. The Plan also reduced the quarterly per share
dividend rate on the Company's common stock from $.17 to $.06, and today
continues 55 years of continuous dividend payments. As of December 31, 1995,
11.5 million AMETEK shares were repurchased for $158 million, which in
combination with the dividend reduction, generates incremental after-tax cash
flow of approximately $22 million per year.
 
  After the Company's refinancing in March 1994, early debt repayments and
strong business performance led to an unsecured $195 million revolving credit
agreement with a group of banks in August 1995. The new agreement includes
lower interest rate spreads, reduced commitment fees, and increased
operational flexibility. Early debt repayment continues to be a financial
strategy that enhances financial strength, return on capital, and
profitability.
 
  The Company also provided in 1993 for after-tax restructuring charges of
$33.5 million, primarily to restructure Precision Instrument's U.S. Gauge and
Aerospace divisions, with the remaining charges reflecting asset write-downs
and other special charges against income. These and other actions improved the
competitive position of the Precision Instruments Group and led both to a 70%
increase in operating income to $29 million in 1994, compared to 1993; and to
further increases in profitability in 1995.
 
                                       3
<PAGE>
 
FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS, FOREIGN OPERATIONS AND EXPORT
SALES
 
  Business segment and geographic information is shown on pages 35-37 of this
report.
 
  The Company has expanded its international operations to capitalize on
opportunities for growth. The expansion resulted from a combination of
increasing levels of export sales of products manufactured in the United
States, sales from overseas operations and strategic alliances.
 
  The Company's growth strategy includes international market expansion.
International operations of the Company are subject to certain risks that are
inherent in conducting business outside the United States, such as fluctuation
in currency exchange rates and controls, restrictions on the movement of funds,
import and export controls, and other economic, political, and regulatory
policies of the countries in which business is conducted.
 
NARRATIVE DESCRIPTION OF BUSINESS
 
PRODUCTS AND SERVICES
 
  The Company classifies its operations into three principal business segments:
Electro-mechanical, Precision Instruments, and Industrial Materials. The
business, products, and markets of each segment are described below:
 
ELECTRO-MECHANICAL GROUP
 
  The Company's Electro-mechanical Group (EMG) is a global supplier of
fractional-horsepower electric motors and blowers to original equipment
manufacturers (OEM) of vacuum cleaners and other floor care products. EMG also
manufactures electric motors and blowers for applications in: heating,
ventilating and cooling, lawn and garden care, medical products, and computer
equipment.
 
  EMG has ten manufacturing locations: six in the United States, three in
Italy, and one in Mexico. A lease for an additional manufacturing facility in
Mexico was signed in January 1996. EMG employs approximately 2,700 people, of
whom approximately 1,200 are covered by collective bargaining agreements. EMG
produced approximately 23 million motor products in each of the past two years,
and its plants are equipped with automated production lines designed to
maximize manufacturing flexibility. EMG's economies of scale, high production
volume, and technological resources provide its customers with cost competitive
and custom-designed products for global markets. Almost 50% of sales are
international. Through the Company's Singapore sales subsidiary and its
Shanghai office, in addition to pursuit of strategic acquisitions and joint
ventures, EMG has amplified its presence in the Pacific Rim.
 
 Floor Care Market and Product Line
 
  EMG has a major market share in floor care markets, through the sale of air-
moving electric motors to most of the world's major floor care OEMs, including
integrated OEMs that produce some of their own motors. The Group produces a
full range of floor care products ranging from the hand held, canister,
upright, and central vacuums for household use to more sophisticated vacuum
products for commercial and industrial applications.
 
  In recent years, EMG has expanded its sales in the floor care industry by
marketing products to vertically integrated vacuum cleaner manufacturers that
outsource to realize the economic and operational advantages of reducing or
discontinuing their own motor production. By purchasing EMG's motors, vacuum
cleaner manufacturers can reduce the substantial capital expenditures they
would otherwise make in their motor production to meet consumer demands. The
consumer trend toward multiple floor care products in a residence increases the
variety and frequency of investments by OEMs, which are striving to operate at
economic volumes.
 
  In addition, EMG's new product development focuses on enhancing motor blower
cost-performance through new applications and advances in power, efficiency,
and quieter operation. EMG recently developed a 1,200-watt brushless motor
blower for high-end floor care applications in commercial vacuum cleaners and
central vacuum
 
                                       4
<PAGE>
 
systems. Development and manufacture of the world lamination motor is
expanding as EMG pursues new applications in Asia, the lawn and garden
industry, and other high-volume applications.
 
  EMG is pursuing joint ventures to serve the Pacific Rim market and the
market in Eastern Europe. It has a significant position in the European market
for floor care products by virtue of production at both its Italian and U.S.
operations. The motors produced in Italy are similar to those produced in the
United States and capacity at the plants in Italy has been increased through
product standardization, manufacturing integration and efficiency, and as
improvement in labor flexibility. EMG's plants in Italy are producing electric
motors for vacuum cleaner manufacturers throughout Western Europe and, to a
more limited extent, in Eastern Europe where the Company is pursuing a
manufacturing operation in the Czech Republic.
 
  Consistent with its strategy for long-term growth, EMG increased its unit
production capacity for floor care products by approximately 50% over the past
three years to meet anticipated customer demand for newer, more efficient
motors over the next several years. This is being accomplished by adding
substantial production capacity at the Graham, North Carolina facility, and at
the Italian facilities.
 
 Technical Motor Market and Product Line
 
  EMG formed its Technical Motor Division to focus and expand its production
of brushless DC and other motor blowers by capitalizing on its global market
presence and technological expertise in floor care products. It is
establishing a significant market position in customer applications with its
brushless motor technology.
 
  Technical motors and blowers are used in furnaces, lawn tools, photocopiers,
computer equipment, business machines, medical equipment, and evaporative
cooling equipment. EMG's brushless motors, which are free of static charges,
are increasingly popular in medical and other applications where flammability
is a concern. Continuing product developments include the use of brushless
motors in systems designed to assist patients with sleep-breathing disorders,
air-mattress systems that help patients avoid bedsores, and systems to recover
gasoline fumes at automotive fueling stations.
 
  Consistent with its strategy for long term growth, EMG recently increased
its unit production capacity for technical motor products by approximately 25%
to meet anticipated growth in customer demand with production at its Rock
Creek, North Carolina plant. The Tijuana, Mexico facility was expanded to
handle the requirements of customers for its evaporative cooler.
 
 Customers
 
  EMG is not dependent on any single customer such that the loss of that
customer would have a material adverse effect on the Company's operations.
Approximately 31% of EMG's sales for 1995 were made to its five largest
customers.
 
PRECISION INSTRUMENTS GROUP
 
  The Precision Instruments Group (PI) serves three markets: aerospace,
process industries, and heavy-duty vehicles; 24% of sales are international.
Through its five operating divisions and 14 plants, PI employs approximately
2,500 people; about 700 are covered by collective bargaining agreements. PI's
business strategy is to grow sales with new product development and expansion
into Europe and Asia, as well as to optimize the benefits of its restructuring
and reengineering.
 
 Aerospace Market and Product Line
 
  Approximately 35% of PI revenues are from the sale of aerospace products,
including cockpit instruments/displays, engine sensors and monitoring systems,
fuel/liquid sensors, thermocouple sensors, and
 
                                       5
<PAGE>
 
signal cables for aircraft and aircraft engines. Such products are designed
and manufactured to record, process, and display information for use by flight
and ground crews. PI serves primarily all segments of the commercial aerospace
industry, including business jets, commuter aircraft, and large jets; defense
markets account for about 25% of aerospace sales. There are three customer
categories: OEM airframe manufacturers, OEM jet engine producers, and repair
and maintenance products and service. Aerospace products are designed to
customer specifications and meet stringent operational and reliability
requirements.
 
  PI's strategy in aerospace products is to operate in niche categories in
which its products have a technological and/or cost advantage. PI believes
that its extensive experience and technological expertise in aerospace,
together with long-standing customer relationships with leading international
manufacturers of commercial aircraft, provide it with a competitive advantage.
PI was selected by Boeing to manufacture an engine vibration monitoring system
and sensor system for Boeing's new 777 aircraft. Variations of that product
are marketed to other aircraft and engine manufacturers. Strategic investment
in new product development has resulted in orders for aircraft engine sensors,
an active matrix liquid crystal display, and a business jet fuel quantity
system.
 
  During the past few years, as a result of overall weakness in the aerospace
industry due to industry consolidation and deregulation, PI sales to the
military and commercial aircraft markets declined significantly. Beginning in
1993, PI aggressively reduced costs and restructured operations to increase
profitability. In mid-1995, demand in the Aerospace market began to strengthen
as a result of improved market conditions. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" on pages 12-18 of
this report.
 
 Process and Pressure Sensor Markets and Product Lines
 
  Approximately 49% of PI sales are to the process and pressure sensor
markets. Constituting approximately 32% of these sales are process and
analytical instruments which include gas, moisture, combustion and liquid
analyzers; emission monitors; and process annunciators and control room
displays. PI concentrates in the measurement and analysis portion of the
process industry, which includes refining and petrochemical plants; power
generation; specialty gas, water and waste treatment; natural gas
distribution; and semiconductor manufacturing.
 
  The remainder of PI's sales to the pressure sensor market comprise a wide
variety of pressure gauges, and products for industrial measurement, and
calibration, devices that measure temperature, force, air, noise, and speed.
The U.S. Gauge Division is a leader in the North American pressure sensor
market. The general pressure sensor market has been adversely affected by
competition from low cost offshore producers; PI has reduced costs and is
refocusing its domestic manufacturing on more advanced pressure gauge
applications. AMETEK has a 50% participation in a joint venture which
manufactures low-cost pressure gauges in Taiwan and the People's Republic of
China. The joint venture markets theses products only in the People's Republic
of China and Taiwan. Separately, AMETEK is the exclusive marketer of these
products for the remainder of the world.
 
  Market conditions in the U.S. have been soft due primarily to adverse
conditions in the refining and petrochemical industry, accentuated by
environmental regulations that reduced refinery and petrochemical plant
construction and industry operating rates. PI is expanding into Europe and
Asia where markets for the process industry are stronger due to industry
economic conditions and new construction.
 
 Heavy Vehicle Market and Product Line
 
  Approximately 16% of PI sales were to the heavy vehicle market; PI is a
leading domestic producer of electronic instrument panels and instruments for
the U.S. heavy truck market in which the level of demand is expected to be
below that of 1995. PI has grown in that market by working closely with heavy
truck manufacturers to develop solid-state instruments that monitor engine
efficiency and emissions. PI has expanded
 
                                       6
<PAGE>
 
this product line into construction and agricultural equipment as well as
international markets with similar products. In March 1995 the Company
acquired for cash the heavy vehicle instrumentation business of privately held
Dixson, Inc. The strategic acquisition of Dixson and its electronic
instrumentation products has strengthened new product development, increased
international sales and expanded sales into agricultural, construction, and
other off-road vehicles.
 
 Customers
 
  The Precision Instruments Group is not dependent on any single customer such
that the loss of that customer would have a material adverse effect on the
Group's operations. Approximately 25% of PI's 1995 sales were made to its five
largest customers.
 
INDUSTRIAL MATERIALS GROUP
 
  The Industrial Materials Group (IMG) manufactures water filtration products,
high-purity engineered metals, compounded plastics, and temperature-resistant
fabrics in four divisions (respectively): Plymouth Products, Specialty Metal
Products, Westchester Plastics, and Haveg. IMG employs approximately 1,000
people, of whom approximately 500 are covered by collective bargaining units.
IMG's strategic focuses are to target niche markets by differentiating its
products on the basis of quality, price, and service and, through new products
and applications, to develop and exploit proprietary technologies and
manufacturing processes. APIC/AFIMO, a French producer of filtration products,
was acquired in November 1995 and operates as a part of the Plymouth Products
Division.
 
 Water and Fluid Filtration Markets and Product Line
 
  The Plymouth Products Division (including AMETEK Filters Ltd. and APIC)
produces water and fluid filtration products for residential, commercial, and
industrial uses in the United States and 85 other countries. Plymouth Products
sells its products in retail and wholesale markets. Plymouth has the broadest
cartridge filter line of any company. It includes complete water filtration
systems, special-purpose filter housings, and many different replacement
cartridges. Plymouth's filter cartridges and housings are used in applications
such as water filtration, food and beverage dispensing, and cosmetics and
chemical production. Plymouth's point-of-use drinking water filters are used
for the removal of objectionable taste and odor, hazardous chemicals,
bacteria, and heavy metals. In addition, the Division produces filters,
housings, and cartridges for plumbing professionals to serve their residential
and commercial customers.
 
 Specialty Metals Markets and Product Line
 
  The Specialty Metal Products Division produces metal powder, and high-purity
strip and wire from metal powder, and manufactures clad products with specific
metallurgical properties. Products are used in the manufacture of appliances,
electronic connectors, rechargeable batteries, and TV cathode ray tubes. Clad
metals are used in gourmet cookware and chemical and pressure vessels. Metal
matrix composites, a new product development, are used for thermal management
in high-power electronic circuits.
 
 Temperature and Corrosion Resistant Materials and Other Products
 
  The Haveg Division manufactures products for high-temperature and highly
corrosive environments. Haveg's products are made of silicas, phenolic resins,
and Teflon (R) (a registered trademark of Du Pont). Product applications
include protective welding curtains, as a textile replacement for asbestos, as
a laminate for printed circuit boards, and in foundries to filter molten
metal.
 
  The Westchester Plastics Division is the world's largest independent custom
compounder of specialty resins and thermoplastics, including development of
processing techniques that enhance properties such as fire
 
                                       7
<PAGE>
 
retardance and adhesion. Markets include automotive parts, electronics,
appliances, and telecommunications housings. In September 1995 the Company
announced it was seeking bids from potential buyers of Westchester.
 
  In May 1995 the Company sold its Microfoam Division, a producer of low
density polypropylene foam, for $37 million cash.
 
 Customers
 
  Although IMG is not dependent on any single customer such that the loss of
that customer would have a material adverse effect on its operations,
approximately 17% of IMG's sales for 1995 were made to its five largest
customers.
 
MARKETING
 
  Generally, the Company's marketing efforts are organized and carried out at
the Group and divisional levels.
 
  Given the similarity of EMG's many products, a significant market share
worldwide, and the technical nature of its products, EMG conducts most of its
domestic and international marketing activities through its direct sales
force. The Group makes only limited use of sales agents in foreign countries
with nominal sales activity.
 
  Because of their relatively diverse product lines, PI and IMG make
significant use of distributors and sales agents in their marketing. With its
specialized customer base of aircraft and jet engine manufacturers and
airlines, PI's aerospace products and services are marketed primarily by its
sales engineers.
 
COMPETITION
 
  Generally, most markets in which the Company operates are highly
competitive. The principal elements of competition for the products
manufactured in each of the Company's business segments are price, product
features, distribution, quality, and service.
 
  For EMG, the primary competition in the United States floor care market is
from a few competitors, each of which has a smaller market share but is part
of a company that is larger and has greater resources than AMETEK. Additional
competition could come from vertically integrated manufacturers of floor care
products that produce their own motors and blowers. In Europe, competition
comes from a small group of very large competitors and numerous small
competitors.
 
  In the markets served by PI, the Company believes that it is one of the
world's largest pressure gauge manufacturers and ranks among the top ten
producers of certain measuring and control instruments in the United States.
It is one of the leading instrument and sensor suppliers, with a focused
product offering for commercial and military aviation. Competition is strong
and could intensify for certain aerospace products. In the pressure gauge and
heavy vehicle markets served by PI, only a limited number of companies compete
on price and technology. In the process and analytical instrument markets,
numerous companies in each market niche compete on the basis of product
quality, performance, and innovation.
 
  Many of the products sold by IMG are made by only a few competitors, and
competition is mainly from producers of substitute materials. Plymouth
Products is one of the major suppliers of household water filtration systems,
a market with numerous competitors. In the industrial and commercial
filtration markets Plymouth Products serves, it does not have a major market
share and faces competition from many sources. Specialty Metals comprises five
niche product lines that have few competitors. The primary form of competition
comes from competitive materials and processes. The Westchester Plastics
Division is one of the nation's largest independent plastics compounders.
Competition is from other independent toll compounders and from some customers
that have similar in-house compounding capabilities.
 
                                       8
<PAGE>
 
BACKLOG AND SEASONAL VARIATIONS OF BUSINESS
 
  The Company's approximate backlog of unfilled orders at the dates specified
by business segment was as follows:
 
<TABLE>
<CAPTION>
                                                                DECEMBER 31,
                                                            --------------------
                                                             1995  1994*  1993*
                                                            ------ ------ ------
                                                               (IN MILLIONS)
     <S>                                                    <C>    <C>    <C>
     Electro-mechanical.................................... $ 96.7 $111.3 $ 66.0
     Precision Instruments.................................  108.5  101.7  121.8
     Industrial Materials..................................   23.5   21.2   23.3
                                                            ------ ------ ------
         Total............................................. $228.7 $234.2 $211.1
                                                            ====== ====== ======
</TABLE>
--------
* Restated for discontinued operations.
 
  Of the total backlog of unfilled orders at December 31, 1995, approximately
94% are expected to be shipped by December 31, 1996.
 
  The Company believes that neither its business as a whole nor any of its
business segments is subject to significant seasonal variations, although
certain individual operations experience some seasonal variability.
 
RAW MATERIALS
 
  The Company's business segments obtain raw materials and supplies from a
variety of sources, and generally from more than one supplier. However, in the
Industrial Materials segment, certain items are available only from a limited
number of suppliers. The Company believes its sources and supply of raw
materials are adequate for its needs.
 
RESEARCH, PRODUCT DEVELOPMENT AND ENGINEERING
 
  The Company continues to be committed to appropriate research, product
development and engineering activities designed to identify and develop
potential new and improved products, and enhance existing products. Research,
product development and engineering costs during the past three years were:
1995-$33.2 million, 1994-$32.8 million, and 1993-$31.0 million. Company-funded
research and development costs included in total product development and
engineering costs were: 1995-$16.0 million, and on a restated basis, 1994-$17.7
million, and 1993-$14.6 million. Product research and engineering activities
are conducted by the various businesses of the Company in their respective
technologies and markets.
 
ENVIRONMENTAL COMPLIANCE
 
  Information with respect to environmental compliance by the Company is set
forth on page 18 of this report in the section of Management's Discussion and
Analysis of Financial Condition and Results of Operations entitled
"Environmental Matters."
 
PATENTS, LICENSES, AND TRADEMARKS
 
  The Company owns numerous unexpired United States patents, United States
design patents, and foreign patents, including counterparts of its more
important United States patents, in the major industrial countries of the
world. The Company is a licensor or licensee under patent agreements of various
types and its products are marketed under various registered United States and
foreign trademarks and trade names. However, the Company does not consider any
single patent or trademark, or any group thereof, essential either to its
business as a whole or to any of its business segments. The annual royalties
received or paid under license agreements are not significant to any single
business segment or to the Company's overall operations.
 
                                       9
<PAGE>
 
EMPLOYEES
 
  At December 31, 1995, the Company employed approximately 6,300 individuals.
 
WORKING CAPITAL PRACTICES
 
  The Company does not have extraordinary working capital requirements in any
of its business segments. Customers generally are billed at normal trade terms
with no extended payment provisions. Inventories are closely controlled and
maintained at levels related to production cycles and are responsive to the
normal delivery requirements of customers.
 
ITEM 2. PROPERTIES
 
  The Company has 33 operating plant facilities in 13 states and six foreign
countries. Of these facilities, 25 are owned by the Company and 8 are leased.
The properties owned by the Company consist of approximately 410 acres, of
which approximately 3,288,000 square feet are under roof. Under lease is a
total of approximately 511,000 square feet. The leases expire over a range of
years from 1996 to 2009, with renewal options for varying terms contained in
most of the leases. Production facilities in Taiwan and China provide the
Company with additional production capacity through the Company's 50%
ownership in a joint venture. Recently, the Company signed a lease for an
additional manufacturing facility in Reynosa, Mexico. The Company also owns
certain parcels of land that are pending sale. The Company's executive offices
in Paoli, Pennsylvania, occupy approximately 32,000 square feet under a lease
that will expire in 1997.
 
  The Company's machinery, plants, and offices are in satisfactory operating
condition and are adequate for the uses to which they are put. The operating
facilities of the Company by business segment are summarized in the following
table:
 
<TABLE>
<CAPTION>
                                        NUMBER OF
                                     PLANT FACILITIES     SQUARE FEET UNDER ROOF
                                     ------------------   ------------------------
                                      OWNED     LEASED       OWNED       LEASED
                                     --------  --------   ------------ -----------
     <S>                             <C>       <C>        <C>          <C>
     Electro-mechanical.............         9         1     1,170,000     98,000
     Precision Instruments..........         9         5       959,000    387,000
     Industrial Materials...........         7         2     1,159,000     26,000
                                      --------  --------  ------------ ----------
         TOTAL......................        25         8     3,288,000    511,000
                                      ========  ========  ============ ==========
</TABLE>
 
ITEM 3. LEGAL PROCEEDINGS
 
  Not applicable.
 
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
 
  No matters were submitted to a vote of the Company's security holders,
through the solicitation of proxies or otherwise, during the last quarter of
the fiscal year ended December 31, 1995.
 
                                    PART II
 
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
 
  The principal market on which the Company's common stock is traded is the
New York Stock Exchange. The Company's common stock is also listed on the
Pacific Stock Exchange. On March 1, 1996, there were approximately 5,100
record holders of the Company's common stock.
 
  Market price and dividend information with respect to the Company's common
stock are set forth on page 38 in the section of the Notes to the Consolidated
Financial Statements entitled "Quarterly Financial Data (Unaudited)." Future
dividend payments by the Company will be dependent on future earnings,
financial requirements, contractual provisions of debt agreements, and other
relevant factors.
 
                                      10
<PAGE>
 
ITEM 6. SELECTED FINANCIAL DATA(/1/)
<TABLE>
<CAPTION>
                                      1995           1994           1993             1992           1991
                                   -----------    -----------    -----------      -----------    -----------
                                   (DOLLARS AND SHARES IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S>                                <C>            <C>            <C>              <C>            <C>
CONSOLIDATED OPERATING RESULTS
 Years Ended December 31
Net sales........................  $     837.5    $     774.7    $     701.8      $     738.7    $     685.2
Costs and expenses...............        748.2          699.4          703.1            662.1          619.3
                                   -----------    -----------    -----------      -----------    -----------
Operating income (loss)..........         89.3           75.3           (1.3)            76.6           65.9
Other (expense) income--net......        (20.0)         (17.5)         (11.3)           (12.5)         (13.9)
                                   -----------    -----------    -----------      -----------    -----------
Income (loss) from continuing
 operations before income taxes..         69.3           57.8          (12.6)            64.1           52.0
Provision for (benefit from)
 income taxes....................         25.5           21.2           (4.5)            21.3           14.2
                                   -----------    -----------    -----------      -----------    -----------
Income (loss) from continuing
 operations......................         43.8           36.6           (8.1)            42.8           37.8
Special items(/2/)...............          8.5           (5.6)            .8              1.6             .2
                                   -----------    -----------    -----------      -----------    -----------
Net income (loss)................  $      52.3    $      31.0    $      (7.3)     $      44.4    $      38.0
                                   ===========    ===========    ===========      ===========    ===========
Earnings per share:
 Income (loss) from continuing
  operations.....................  $      1.31    $       .99    $      (.18)     $       .97    $       .86
 Special items(/2/)..............          .25           (.15)           .01              .04            .01
                                   -----------    -----------    -----------      -----------    -----------
 Net income (loss)...............  $      1.56    $       .84    $      (.17)     $      1.01    $       .87
                                   ===========    ===========    ===========      ===========    ===========
Dividends declared and paid per
 share...........................  $       .24    $       .24    $       .57      $       .68    $       .66
                                   ===========    ===========    ===========      ===========    ===========
CONSOLIDATED FINANCIAL POSITION
 at December 31
Working capital from continuing
 operations......................  $      38.7    $      80.5    $     143.1      $     194.0    $     178.4
Property, plant and equipment,
 net.............................        176.8          164.3          165.9            166.3          172.3
Net assets of discontinued and
 spun-off operations.............          --            10.6           19.0             19.7           22.9
Intangibles, investments and
 other assets....................        100.6           72.9           75.8             89.2           98.8
                                   -----------    -----------    -----------      -----------    -----------
 Total...........................        316.1          328.3          403.8            469.2          472.4
Long-term debt...................        150.4          190.3          172.4            187.2          204.8
Deferred income taxes and
 credits.........................         31.9           26.1           25.9             40.2           33.9
Other long-term liabilities......         46.7           38.7           40.2             31.5           22.2
                                   -----------    -----------    -----------      -----------    -----------
Stockholders' equity.............  $      87.1    $      73.2    $     165.3      $     210.3    $     211.5
                                   ===========    ===========    ===========      ===========    ===========
Additional Financial Data
 Financial Ratios:
  Return on beginning--Capital...         23.6%          12.7%           1.0%            13.3%          12.1%
         --Stockholders' equity..         71.4%          18.8%          (3.5)%           21.0%          19.0%
  Return on net sales............          6.2%           4.0%          (1.0)%            6.0%           5.5%
  Total debt as a percentage of
   capitalization................         70.4%          73.4%          53.1%            49.6%          51.1%
  Ratio of EBITDA to interest
   expense(/3/)..................          5.8            4.9            5.0              5.6            4.5
  Ratio of debt to EBITDA(/3/)...          1.7            1.8            2.1              1.8            2.2
  Ratio of earnings to fixed
   charges.......................          4.0            3.3            -- (/4/)         3.9            3.2
OTHER DATA
 FOR THE YEAR:
 Capital expenditures............  $      31.7    $      22.8    $      35.8      $      23.8    $      18.4
 Depreciation and amortization...  $      34.5    $      35.5    $      33.7      $      34.6    $      34.0
 EBITDA(/3/).....................  $     123.7    $     113.1    $      88.8      $     112.4    $     100.7
 Research and development
  expenses.......................  $      16.0    $      17.7    $      14.6      $      14.1    $      11.4
 Sales per employee (in
  thousands).....................  $     135.4    $     131.0    $     118.6      $     123.2    $     115.4
 Common stock trading range:
  High...........................          19 1/2         18 3/4         17 1/2           18 1/8          14
  Low............................          15 3/4         11 5/8         10 5/8           13 1/8          8 1/2
 AT YEAR END:
 Number of shares outstanding....         32.9           34.7           43.6             44.2           44.0
 Stockholders' equity per share..  $      2.65    $      2.11    $      3.79      $      4.76    $      4.81
 Total assets....................  $     526.7    $     494.2    $     556.1      $     596.6    $     606.8
 Number of stockholders of
  record.........................        5,156          5,952          6,509            7,227          7,486
 Number of employees.............        6,300          6,000          5,800            6,000          6,000
</TABLE>
--------
(1) Years prior to 1995 have been restated for operations discontinued in May
    1995.
(2) Special items in 1995 includes a $10.4 million ($.31 per share) gain from
    the sale of a discontinued operation and a $2.7 million ($.08 per share)
    after-tax loss related to debt agreements. Amounts in 1994 includes $11.8
    million ($.32 per share) after-tax loss on the early extinguishment of
    debt, and an after-tax gain of $3.8 million ($.11 per share) from the
    effect of a change in accounting for certain marketable securities.
(3) EBITDA represents income from continuing operations before interest, taxes,
    depreciation and amortization, amortization of deferred financing costs,
    and nonrecurring items. 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.
(4) Earnings from continuing operations in 1993 were insufficient to cover
    fixed charges by approximately $13.5 million.
 
                                       11
<PAGE>
 
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
 
  Management's discussion and analysis of the Company's financial condition
and results of operations set forth below should be read in conjunction with
the consolidated financial statements of the Company and the related notes
shown in the index on page 18 of this report.
 
YEAR ENDED DECEMBER 31, 1995, COMPARED TO YEAR ENDED DECEMBER 31, 1994
 
 Results of Operations
 
  For 1995, the Company achieved record sales and earnings. Sales were a
record $837.5 million for 1995, an increase of $62.8 million or 8.1% from the
1994 total of $774.7 million, which was also a record at that time. Sales and
other amounts for years prior to 1995 have been restated for the May 1995 sale
of the Microfoam Division, which is reported in the accompanying financial
statements as discontinued operations. All business segments reported
increased sales, led by the Electro-mechanical Group, whose introduction of
new products and entry into emerging markets benefited 1995. Softness in the
U.S. floor care markets experienced in the second half of 1995 reduced
domestic sales growth. The Precision Instruments Group 1995 sales increased
largely due to the Company's acquisition of the heavy-vehicle instrumentation
business of privately held Dixson, Inc. in late March 1995. In 1995, the
Industrial Materials Group continued to benefit from improved business
conditions in many of its markets, resulting in increased sales led by the
Company's metal powder business. Sales by all business segments to foreign
markets totaled $281.3 million in 1995 compared to $237.7 million in 1994, an
increase of 18.3%. Export shipments from the United States in 1995 continued
to increase, reaching $139.1 million compared to $116.2 million in 1994, an
increase of 19.7%.
 
  New orders during 1995 were $832.0 million, compared to $797.8 million for
1994, an increase of $34.2 million or 4.3%. The backlog of orders was $228.7
million at year end 1995, a decrease of 2.4% from the end of 1994. Business
segment operating profit was $111.4 million in 1995 compared to $98.6 million
in 1994, an increase of 12.9%. The increase in profits was due to the higher
sales volume and the successful implementation of cost reduction programs in
the Precision Instruments and Industrial Materials Groups. The Precision
Instruments Group also benefited from the restructuring of the aerospace
business, which was initiated in 1993. Lower operating costs in the
temperature and corrosion-resistant materials and plastic compounding
businesses enhanced the profitability of the Industrial Materials Group.
 
  Corporate administrative and other expenses were $22.1 million in 1995,
slightly lower than the $23.4 million incurred in 1994. Operating income
reached a record $89.3 million in 1995, an increase of $14.0 million or 19%
over 1994. Interest and other expenses, net were $20.0 million in 1995
compared to $17.5 million in 1994, an increase of $2.5 million. The increase
in net expenses reflects lower interest expenses during 1995 due to lower
effective interest rates on debt outstanding during the year, but it was more
than offset by lower interest and other investment income.
 
  The effective tax rate was approximately 37% for both 1995 and 1994. Both
years reflect a lower net state tax provision, and the 1995 rate included
foreign tax benefits related to certain capital investments.
 
  Income from continuing operations in 1995 was $43.8 million, or $1.31 per
share, compared to $36.6 million, or $.99 per share in 1994, an improvement of
19.5%. Income from discontinued operations was $.8 million, or $.02 per share
in 1995, compared to $2.4 million, or $.06 per share in 1994. Results in 1995
also included an after-tax gain of $10.4 million ($.31 per share), due to the
sale of the Microfoam Division in the second quarter of 1995.
 
  Income before extraordinary items was $55.0 million, or $1.64 per share in
1995, and $39.0 million, or $1.05 per share in 1994, an income improvement of
$16.0 million or 41%. After an extraordinary after-tax charge in the third
quarter of 1995 for the write-off of deferred debt issuance costs of $2.7
million, or $.08 per share, net income for 1995 was $52.3 million, or $1.56
per share, compared to 1994 net income of $31.0 million, or $.84 per share.
Net income for 1994 included a first quarter after-tax charge for an
extraordinary loss of $11.8
 
                                      12
<PAGE>
 
million ($.32 per share) due to the early extinguishment of debt, and a $3.8
million ($.11 per share) after-tax gain due to a change in accounting for
certain marketable securities.
 
  The weighted average shares outstanding during 1995 was 33.4 million shares,
compared to the average of 37.1 million shares for 1994, a reduction of 3.7
million shares or 10%. The reduced number of shares in 1995 resulted from the
repurchase and retirement of shares under the Company's ongoing share
repurchase program, which began in March 1994. Shares outstanding at December
31, 1995 and 1994 were 32.9 million shares and 34.7 million shares,
respectively.
 
 Business Segment Results
 
<TABLE>
<CAPTION>
                                              YEAR ENDED DECEMBER 31,
                                             ----------------------------
                                               1995      1994      1993
                                             --------  --------  --------
                                               (DOLLARS IN THOUSANDS)
<S>                                          <C>       <C>       <C>
NET SALES:(/1/)
  Electro-mechanical........................ $372,038  $340,358  $280,732
  Precision Instruments.....................  301,440   280,638   275,351
  Industrial Materials......................  164,012   153,742   145,707
                                             --------  --------  --------
    Total net sales......................... $837,490  $774,738  $701,790
                                             ========  ========  ========
INCOME (LOSS):
Segment operating profit:(/2/)
  Electro-mechanical........................ $ 48,858  $ 46,203  $ 35,018
  Precision Instruments.....................   34,803    29,189   (30,643)(/3/)
  Industrial Materials......................   27,741    23,251    16,920 (/4/)
                                             --------  --------  --------
    Total segment operating profit..........  111,402    98,643    21,295
  Corporate administrative and other 
   expenses.................................  (22,104)  (23,351)  (22,587)
                                             --------  --------  --------
    Consolidated operating income (loss)....   89,298    75,292    (1,292)
  Interest and other expenses, net..........  (20,041)  (17,529)  (11,269)
                                             --------  --------  --------
    Consolidated income (loss) from
     continuing operations before income
     taxes.................................. $ 69,257  $ 57,763  $(12,561)
                                             ========  ========  ========
</TABLE>
--------
(1) After elimination of intra and intersegment sales, which are not
    significant in amount.
(2) Segment operating profit represents sales less all direct costs and
    expenses (including certain administrative and other expenses) applicable
    to each segment, but does not include interest expense.
(3) Reflects charges of $47.8 million primarily for resizing and restructuring
    activities, principally workforce reductions, asset write-downs,
    relocation of product lines, and the overall consolidation of the
    Company's aerospace operations.
(4) Reflects charge of $3.9 million primarily for asset write-downs.
 
  The ELECTRO-MECHANICAL GROUP'S sales increased $31.7 million or 9.3% to
$372.0 million, primarily due to increased market share, introduction of new
products, and the 1994 completion of capacity expansion programs at the two
plants in North Carolina. Sales for 1995 from the Company's Italian operations
increased 25.6% before currency translation effects, which were minimal.
However, softness in the U.S. floor care markets experienced in the second
half of 1995 limited domestic sales growth. Operating profit of the Group
increased 5.7% to $48.8 million in 1995 due primarily to the increase in sales
volume. The Group's profit margin in 1995 was 13.1% compared to 13.6% in 1994.
Higher material costs primarily in the Italian operations exceeded modest
price increases and cost reductions, which reduced Group profitability. This
condition is being moderated by additional cost saving activities.
 
  PRECISION INSTRUMENTS GROUP sales in 1995 were $301.4 million, an increase
of $20.8 million or 7.4% from 1994. The increase is largely due to increased
sales of heavy-vehicle instruments, resulting from the acquisition of the
Dixson business at the end of the first quarter of 1995. An expected market
downturn started to affect fourth-quarter 1995 shipments of heavy-truck
instruments, which is expected to be alleviated somewhat by
 
                                      13
<PAGE>
 
improving sales of commercial aerospace products. Sales of process instruments
also increased in 1995; however, this increase was mostly offset by lower
first half sales of aerospace instruments. Group operating profit in 1995
increased 19.2% to $34.8 million, compared to $29.2 million in 1994. A profit
contribution by Dixson, a manufacturing joint venture in Asia, and increased
operating efficiencies in the aerospace business resulting from the
restructuring activities, along with benefits from cost reduction programs
initiated in prior years, accounted for the improved operating results. The
cost savings being realized from the restructuring of the Group are expected
to continue.
 
  INDUSTRIAL MATERIALS GROUP sales from continuing operations were $164.0
million in 1995, an increase of $10.3 million or 6.7% from 1994, due primarily
to higher sales by the Company's metal powder business. Sales growth of water
filtration products, which had been strong in prior years, was reduced due to
softness in the U.S. retail market segment. Group operating profit in 1995
increased $4.5 million or 19.3% to $27.7 million. The increase in
profitability was due in part to the higher sales volume, but mostly to cost
reduction programs and improved operating efficiencies in the Company's
temperature and corrosion-resistant materials business. The plastic
compounding business benefited primarily from a third quarter 1995 cost
recovery from an insurance settlement. The overall profit increase was offset
somewhat by reduced performance by the water filtration business. In May 1995
the Microfoam Division was sold, and in September 1995, the Company announced
it was seeking bids for the sale of its Westchester Plastics Division. The
Company expects positive financial results from the sale of that business,
which is expected to be completed by mid-1996. In November 1995, APIC/AFIMO, a
French producer of filtration products, was acquired and added to the Group.
The acquisition had no significant effect on the Group's results for 1995.
 
YEAR ENDED DECEMBER 31, 1994, COMPARED TO YEAR ENDED DECEMBER 31, 1993
 
 Results of Operations
 
  Sales from continuing operations for 1994 were a record $774.7 million, an
increase of $72.9 million or 10.4% from 1993. All business segments reported
improved sales, led by the Electro-mechanical Group, where increased worldwide
demand for electric motor products manufactured by the Company's United States
and Italian operations resulted in a significant sales increase by these
businesses in 1994. The Precision Instruments Group's 1994 sales increased due
to improved demand for heavy-truck instruments, offset somewhat by lower sales
of aerospace instruments. The Industrial Materials Group benefited from
improved business conditions in many of its markets, resulting in increased
sales by most of the businesses in the Group. Sales by all business segments
to foreign markets totaled $237.7 million in 1994 compared to $202.7 million
in 1993, an increase of 17.3%. Export shipments from the United States in 1994
were $116.2 million, compared to $105.4 million in 1993, an increase of 10.2%.
 
  New orders during 1994 totaled $797.8 million, an increase of $124.8 million
or 18.5% from 1993, reflecting the overall increases in demand mentioned
above. The backlog of orders was $234.2 million at year-end, an increase of
10.9% from $211.1 million at the end of 1993.
 
  Business segment operating profit was $98.6 million in 1994, compared to
$73.4 million in 1993, an increase of 34.4% before 1993 restructuring and
other unusual operating charges. The increase in profits was due to the higher
sales volume, and improved operating efficiencies in the Precision Instruments
Group, due primarily to the realization of significant cost savings that
resulted from the restructuring activities initiated in 1993. After reflecting
the restructuring and other unusual charges, business segment operating profit
for 1993 was $21.3 million.
 
  Corporate administrative and other expenses were $23.4 million in 1994, up
slightly from $22.6 million in 1993. Net interest and other expenses increased
$6.2 million, due primarily to increased interest expense and higher
amortization of debt issuance costs, both associated with the new debt
agreements entered into by the Company in March 1994. Interest income was
lower in 1994, resulting from a decrease in average invested cash during the
year as the Company made substantial early debt repayments and repaid
revolving credit loans in the third and fourth quarters of the year.
 
                                      14
<PAGE>
 
  The effective tax rate for 1994 was 36.6% and reflected favorable state
income tax adjustments recorded in the third and fourth quarters, related
primarily to prior tax years. The effective rate of income tax benefit for
1993 was 35.6% and reflected the 1993 increase in the U.S. federal statutory
rate from 34% to 35%. The 1993 U.S. income tax benefit was reduced somewhat by
a tax provision on foreign pretax earnings.
 
  Income from continuing operations in 1994 was $36.6 million, or $.99 per
share, compared to $25.4 million, or $.59 per share in 1993 before
restructuring and other unusual charges. Income from discontinued operations
in 1994 was $2.4 million, or $.06 per share, compared to $.8 million, or $.01
per share in 1993. Income before an extraordinary charge and a gain from the
cumulative effect of an accounting change in 1994 was $39.0 million, or $1.05
per share, compared with 1993, when earnings before restructuring and other
unusual charges were $26.2 million, or $.60 per share, an improvement of
49.0%.
 
  After an extraordinary loss of $11.8 million, net of taxes, or $.32 per
share, from the early extinguishment of debt, and a $3.8 million after-tax
gain ($.11 per share) due to a required change in accounting for certain
marketable securities, both occurring in the first quarter of 1994, net income
for 1994 was $31.0 million or $.84 per share. This compares to a net loss of
$7.3 million or $.17 per share for 1993, which included a $.77 per share
charge for resizing, restructuring, and other unusual charges.
 
  Operating profit by business segment in the fourth quarter of 1994 increased
by $6.1 million, or 35.3% to $23.5 million compared to the 1993 fourth quarter
profit of $17.4 million before $43.8 million of pretax unusual charges; all
business segments reflected an increase in fourth quarter operating profit.
Income from continuing operations for the fourth quarter of 1994 was $9.1
million, or $.26 per share on sales of $190.2 million, compared to income from
continuing operations of $6.7 million or $.15 per share on sales of $174.7
million for the fourth quarter of 1993 before unusual charges. Income from
discontinued operations for the fourth quarter of 1994 was $1.2 million, or
$.04 per share, compared to $.3 million, or $.01 per share in the fourth
quarter of 1993. Net income for the fourth quarter of 1994 was $10.3 million,
or $.30 per share, compared to a fourth quarter 1993 net loss of $21.6
million, or $.50 per share, after reflecting charges of $28.6 million, or $.66
per share, net of taxes, for restructuring and other unusual items.
 
  The weighted average shares outstanding during 1994 was 37.1 million shares,
compared to the average of 43.9 million shares for 1993, a reduction of 15.4%.
The net reduction in the average number of shares outstanding in 1994 results
from the repurchase and retirement of 9.2 million shares under the Company's
share repurchase program, which began in March 1994.
 
 Business Segment Results
 
  The ELECTRO-MECHANICAL GROUP'S sales increased $59.6 million or 21.2% to
$340.4 million primarily due to increased market share and improved worldwide
demand for electric motor products manufactured by the Group. Domestic sales
increased $28.5 million or 18.3%, and international sales improved $31.2
million or 24.9% over 1993. Operating profit of the Group increased 31.9% to
$46.2 million in 1994, due to the increase in sales volume and improved
operating margins, primarily by the Italian motor businesses. Italian
operations reported a 29.1% increase in sales in 1994, and operating profit
grew by 82.7% with minimal currency translation effects. Capacity expansions
at the two plants in North Carolina were substantially completed in 1994,
providing for potentially higher sales and increased efficiency.
 
  PRECISION INSTRUMENTS GROUP sales in 1994 were $280.6 million, an increase
of $5.3 million or 1.9% from 1993. Higher sales of heavy-truck instruments
were significantly reduced by lower sales of aerospace and process measuring
instruments caused by the continuing overall weakness in those markets. Group
operating profit in 1994 increased sharply to $29.2 million, compared to $17.1
million in 1993, before the 1993 restructuring and other unusual operating
charges of $47.8 million. The increased profitability was due primarily to
realized cost savings from successful implementation of the restructuring
program initiated in 1993. The cost savings from the restructuring program
resulted from relocation of aerospace manufacturing operations and facilities
combination, as well as selected workforce reductions (including certain
pension-related costs) and production
 
                                      15
<PAGE>
 
efficiencies. The cost savings realized from the restructuring program were
ahead of plan for 1994 and are continuing.
 
  Under the restructuring program, the Group was experiencing a delay in the
timing of certain planned workforce reductions, due to a one-year extension of
the labor contract at a facility in Sellersville, PA to September 1995. Except
for that delay, the restructuring program was on schedule and was still
expected to be fully implemented as planned. In February 1995, the Company
announced it had reached an agreement in principle to acquire, for cash, the
heavy-vehicle instrumentation business of privately owned Dixson, Inc. Upon
completion of the acquisition, estimated for the second quarter of 1995, that
business was included in the Precision Instruments Group.
 
  INDUSTRIAL MATERIALS GROUP sales from continuing operations were $153.7
million in 1994, an increase of $8.0 million or 5.5% from 1993 due to general
improvements in most of the markets served by the Group. All but one business
in the Group reported 1994 sales increases. Group operating profit in 1994
increased $2.4 million or 11.4% to $23.2 million, before reflecting 1993
restructuring charges of $3.9 million. The increase in profitability was
attributable mainly to improved operating efficiencies in the Group, despite
significant increases in raw material costs experienced by the specialty metal
business. The higher sales volume also contributed to the profit improvement,
due in part to a cyclical rebound by the plastics compounding business.
 
  In November 1994, the Company announced it intended to sell its Microfoam
packaging division, which was part of the Group. The Company expected positive
financial results from the sale of this business, which was planned to be
completed in the second quarter of 1995.
 
LIQUIDITY AND CAPITAL RESOURCES
 
 Liquidity
 
  Working capital at December 31, 1995 amounted to $38.7 million, a decrease
of $41.9 million from continuing operations at December 31, 1994, largely due
to additional short-term borrowings, which were used in part to fund non-
working-capital requirements. During 1995, the Company purchased two
businesses for cash and invested in a joint venture. Cash expenditures for the
repurchase of shares of the Company's common stock were also incurred in 1995.
In connection with the execution of a new unsecured bank credit agreement in
August 1995, short-term borrowings were partially used to repay long-term debt
outstanding under the previous bank credit agreement. In May 1995, the Company
received proceeds from the sale of the Microfoam Division that were used to
repay debt and to fund other operating requirements. Partly offsetting these
items were increases in receivables and inventories, due to the higher level
of business activity in 1995.
 
  The Company's earnings before interest, taxes, depreciation and amortization
(EBITDA) from continuing operations was $123.7 million in 1995, compared to
$113.1 million in 1994.
 
  Cash provided by the Company's continuing operations totaled $68.0 million
in 1995 compared to $106.9 million in 1994, a net decrease of $39.0 million.
The net decrease reflects the absence in 1995 of cash inflow from the sale of
marketable securities in a trading portfolio which totaled $31.6 million in
1994. Also, included in 1995 is higher net cash requirements to fund operating
working capital needs (primarily the funding of 1993 restructuring accruals),
and other operating activities. Discontinued operations used cash of $2.6
million in 1995, whereas such operations provided cash of $7.6 million in
1994. These items resulted in cash provided by all operating activities
reaching $65.4 million in 1995, compared to $114.6 million in 1994.
 
  Total 1995 charges against reserves for restructuring and other unusual
items amounted to $13.0 million, compared to $10.9 million in 1994. The
charges were primarily for cash, and did not significantly affect the
Company's liquidity. Charges in 1995 were primarily for the relocation of
aerospace operations, facilities combination, and workforce reductions, which
required cash outlays, and for the write-off of certain assets, which did not
require the use of cash. In August 1995, a new five-year labor agreement was
reached with the
 
                                      16
<PAGE>
 
union at the Sellersville, PA plant. The new contract is expected to result in
improved cost competitiveness at the plant and will facilitate the
restructuring program. In 1996, the Company expects to incur additional
restructuring-related cash and noncash charges against these reserves and
anticipates completion of the restructuring program in 1997 as planned except
for certain pension-related aspects of the program. When the restructuring
program is completed, it is anticipated that the benefits, which have already
been substantial, will more than offset the required cash expenditures under
the plan over time.
 
  Cash used for investing activities totaled $28.7 million in 1995, compared
to cash used totaling $9.9 million in 1994, an increase of $18.8 million. Cash
expenditures in 1995 included the acquisition of two businesses and an
investment in a joint venture, requiring a total cash outlay of $44.0 million.
Capital expenditures increased $8.9 million in 1995 to $31.7 million. Partly
offsetting these higher cash outlays was $47.4 million in cash proceeds,
received primarily from the sale of the Microfoam Division and from sales of
other assets in 1995. Investing activities in 1994 included $13.1 million in
net proceeds from the sale of investment assets.
 
  Financing activities used cash totaling $36.9 million in 1995, compared to
$137.9 million in 1994. During 1995, the Company received net proceeds
totaling $54.5 million from short-term borrowings, and it repaid $50.0 million
in term loans, of which $5 million was required. The remaining $45 million
represented an early repayment of term loans outstanding under the Company's
previous bank credit agreement.
 
  On August 2, 1995, the previous secured bank credit facility was replaced by
a new five-year unsecured bank credit agreement. The new credit facility
provides up to $195 million in revolving credit loans, with scheduled
reductions in the total facility to $150 million by August 1999. The new
credit agreement provides the Company with enhanced operating flexibility and
with certain performance incentives that, when met, will lower interest rates
and reduce commitment fees. As a result of the new agreement, and the
repayment of the prior term loans, the Company recorded a noncash after-tax
extraordinary charge of $2.7 million, or $.08 per share in the third quarter
of 1995, for the write-off of debt issuance costs related to the previous bank
credit agreement.
 
  Additionally in 1995, cash expended for financing activities included $39.6
million for the repurchase of 2.3 million shares of the Company's common stock
and for the funding of $8.0 million in dividends, offset somewhat by proceeds
of $6.3 million from stock option transactions. Financing activities in 1994
included (a) the proceeds from the sale of $150 million of 9 3/4% senior
public notes, (b) borrowings of $156 million under the Company's previously
existing bank credit agreement, (c) early repayment of $185.4 million of debt,
(d) repayment of $107.1 million which was borrowed in the last nine months of
1994, and (e) repurchase of 9.2 million shares of the Company's common stock
at a total cost of $118.8 million. Since the beginning of the stock repurchase
program in March 1994 a total of 11.5 million shares have been acquired as of
December 31, 1995, at a total cost of $158.5 million under a total
authorization of $175 million.
 
  The restructuring and refinancing of the Company in 1994 resulted in a more
highly leveraged capital structure, as debt outstanding rose modestly and
equity decreased more significantly from repurchase of the Company's common
stock. However, management believes it has taken steps to ensure the Company
has sufficient financial flexibility to meet its future needs. In addition to
its historically strong operational cash flow, the Company had 74% of its $195
million revolving credit facility, available at December 31, 1995. The
Company's subsidiaries also had unused foreign lines of credit with European
banks totaling approximately $15 million at December 31, 1995.
 
  As a result of all 1995 cash flow activities, cash and cash equivalents at
December 31, 1995 totaled $7.0 million, essentially unchanged from $7.2
million at December 31, 1994. The Company believes it has sufficient cash-
generating capabilities and available credit facilities to enable it to meet
its needs in the foreseeable future.
 
INTERNAL REINVESTMENT
 
 Capital Expenditures
 
  Capital expenditures were $31.7 million in 1995, compared to $22.8 million
in 1994, or an increase of $8.9 million or 39.3%. Most of the 1995 and 1994
expenditures were for additional manufacturing equipment to
 
                                      17
<PAGE>
 
increase production efficiencies, and to provide expanded production capacity,
primarily in the Electro-mechanical Group. A portion of the 1994 expenditures
were for the completion of a plant expansion in the Industrial Materials
Group. The Company expects to increase its capital spending in 1996
significantly above 1995 levels, with continued emphasis on investment in the
Electro-mechanical Group.
 
 Product Development and Engineering
 
  Product development and engineering expenses in 1995 totaled $33.2 million
compared to $32.8 million in 1994, and $31.0 million in 1993. These amounts
include expenses for research and development of $16.0 million in 1995, $17.7
million in 1994, and $14.6 million in 1993. Such expenditures were directed
toward the development of new products and processes, and improvement of
existing products and processes.
 
ENVIRONMENTAL MATTERS
 
  The Company is subject to environmental laws and regulations, as well as
stringent cleanup requirements, and has also been named a potentially
responsible party at several sites which are the subject of government
mandated cleanups. Provisions for environmental cleanup at these sites and
other sites were approximately $2.4 million in 1995, $1.6 million in 1994, and
$4.9 million in 1993.
 
  It is not possible to accurately quantify the potential financial impact of
actions regarding environmental matters, but the Company believes that, based
on past experience and current evaluations, the outcome of these actions are
not likely to have a material adverse effect on future results of operations,
financial position, or cash flows of the Company.
 
IMPACT OF INFLATION
 
  The Company attempts to minimize the impact of inflation through cost
reduction programs and by improving productivity. In addition, the Company
uses the LIFO method of accounting for inventories (whereby the cost of
products sold approximates current costs), and therefore, the impact of
inflation is substantially reflected in operating costs. In general, the
Company believes programs are in place that are designed to monitor the impact
of inflation and to take necessary steps to minimize inflation's effect on
operations.
 
OUTLOOK
 
  The Company is subject to economic uncertainties in its worldwide markets.
However, management believes the Company's continued expansion of its global
businesses, operational restructuring, and historically strong cash flow
combine to position the Company to deal effectively with those uncertainties.
The Company believes 1996 will provide opportunities to continue the growth
trends established in 1994 and 1995.
 
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
 
<TABLE>
<CAPTION>
                                                                           PAGE
                                                                           ----
   <S>                                                                     <C>
   INDEX TO FINANCIAL STATEMENTS (ITEM 14(A) 1)
   Report of Independent Auditors........................................   19
   Consolidated Statement of Income for the years ended December 31,
    1995, 1994, and 1993.................................................   20
   Consolidated Balance Sheet at December 31, 1995 and 1994..............   21
   Consolidated Statement of Stockholders' Equity for the years ended 
    December 31, 1995, 1994, and 1993....................................   22
   Consolidated Statement of Cash Flows for the years ended December 31,
    1995, 1994, and 1993.................................................   23
   Notes to the Consolidated Financial Statements........................   24
</TABLE>
 
  FINANCIAL STATEMENT SCHEDULES (ITEM 14(A) 2)
 
  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.
 
                                      18
<PAGE>
 
                        REPORT OF INDEPENDENT AUDITORS
 
To the Board of Directors and Shareholders of AMETEK, Inc.
 
  We have audited the accompanying consolidated balance sheets of AMETEK, Inc.
as of December 31, 1995 and 1994, and the related consolidated statements of
income, cash flows and stockholders' equity for each of the three years in the
period ended December 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
 
  We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
 
  In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of AMETEK, Inc. at December 31, 1995 and 1994, and the consolidated results of
its operations and its cash flows for each of the three years in the period
ended December 31, 1995, in conformity with generally accepted accounting
principles.
 
  As discussed in Note 1 to the consolidated financial statements, the Company
changed its method of accounting for marketable securities.
 
                                          /s/ ERNST & YOUNG LLP
 
Philadelphia, PA
January 23, 1996
 
                                      19
<PAGE>
 
                                  AMETEK, INC.
 
                        CONSOLIDATED STATEMENT OF INCOME
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
 
<TABLE>
<CAPTION>
                                                 YEAR ENDED DECEMBER 31,
                                             ----------------------------------
                                                1995      1994(A)     1993(A)
                                             ----------  ----------  ----------
<S>                                          <C>         <C>         <C>
Net sales..................................  $  837,490  $  774,738  $  701,790
                                             ----------  ----------  ----------
Expenses:
  Cost of sales (excluding depreciation)...     647,008     600,290     563,059
  Selling, general and administrative......      74,790      70,980      68,840
  Depreciation.............................      26,394      28,176      26,094
  Resizing and restructuring charges.......         --          --       45,089
                                             ----------  ----------  ----------
    Total expenses.........................     748,192     699,446     703,082
                                             ----------  ----------  ----------
Operating income (loss)....................      89,298      75,292      (1,292)
Other income (expenses):
  Interest expense.........................     (20,175)    (21,618)    (17,603)
  Other, net...............................         134       4,089       6,334
                                             ----------  ----------  ----------
Income (loss) from continuing operations
 before income taxes.......................      69,257      57,763     (12,561)
Provision for (benefit from) income taxes..      25,500      21,144      (4,472)
                                             ----------  ----------  ----------
Income (loss) from continuing operations...      43,757      36,619      (8,089)
Discontinued operations, net of taxes:
  Income from discontinued operations......         779       2,372         757
  Gain on sale of discontinued operations..      10,420         --          --
                                             ----------  ----------  ----------
Income (loss) before extraordinary items
 and cumulative effect of accounting
 change....................................      54,956      38,991      (7,332)
Extraordinary loss on early extinguishment
 of debt, net of taxes.....................      (2,676)    (11,810)        --
Cumulative effect of accounting change for
 marketable securities, net of taxes.......         --        3,819         --
                                             ----------  ----------  ----------
Net income (loss)..........................  $   52,280  $   31,000  $   (7,332)
                                             ==========  ==========  ==========
Earnings (loss) per share:
  Income (loss) from continuing
   operations..............................  $     1.31  $      .99  $     (.18)
  Discontinued operations:
    Income from discontinued operations....         .02         .06         .01
    Gain on sale of discontinued 
     operations............................         .31         --          --
                                             ----------  ----------  ----------
  Income (loss) before extraordinary items
   and cumulative effect of accounting
   change..................................        1.64        1.05        (.17)
  Extraordinary loss on early
   extinguishment of debt..................        (.08)       (.32)        --
  Cumulative effect of accounting change...         --          .11         --
                                             ----------  ----------  ----------
  Net income (loss)........................  $     1.56  $      .84  $     (.17)
                                             ==========  ==========  ==========
Average common shares outstanding..........  33,426,436  37,125,569  43,901,767
                                             ==========  ==========  ==========
</TABLE>
--------
(a) Restated for discontinued operations.
 
                            See accompanying notes.
 
                                       20
<PAGE>
 
                                  AMETEK, INC.
 
                           CONSOLIDATED BALANCE SHEET
                             (DOLLARS IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                              DECEMBER 31,
                                                            ------------------
                                                              1995    1994(A)
                                                            --------  --------
<S>                                                         <C>       <C>
                          ASSETS
Current assets:
  Cash and cash equivalents................................ $  7,011  $  7,245
  Marketable securities....................................    5,694    10,480
  Receivables, less allowance for possible losses..........  118,782   110,927
  Inventories..............................................  101,515    98,689
  Deferred income taxes....................................   11,825    12,637
  Net assets of discontinued operations....................      --     10,583
  Other current assets.....................................    4,518     6,417
                                                            --------  --------
    Total current assets...................................  249,345   256,978
Property, plant and equipment, net.........................  176,838   164,285
Intangibles, investments and other assets..................  100,562    72,924
                                                            --------  --------
                                                            $526,745  $494,187
                                                            ========  ========
           LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Short-term borrowings and current portion of long-term
   debt.................................................... $ 56,374  $ 11,821
  Accounts payable.........................................   76,569    72,815
  Income taxes payable.....................................    9,177     9,296
  Accrued liabilities......................................   68,556    71,938
                                                            --------  --------
    Total current liabilities..............................  210,676   165,870
Long-term debt.............................................  150,430   190,336
Deferred income taxes......................................   31,927    26,088
Other long-term liabilities................................   46,653    38,713
Stockholders' equity:
  Preferred stock, $1.00 par value; authorized: 5,000,000
   shares; none issued.....................................      --        --
  Common stock, $.01 par value; authorized: 100,000,000
   shares;
   issued: 1995--34,906,717 shares; 1994--37,193,217
   shares..................................................      349       372
  Capital in excess of par.................................      783     7,382
  Retained earnings........................................  124,503   111,150
                                                            --------  --------
                                                             125,635   118,904
  Net unrealized losses....................................  (18,691)  (21,222)
  Less: Cost of shares held in treasury: 1995--2,049,194
   shares; 1994--2,486,057 shares..........................  (19,885)  (24,502)
                                                            --------  --------
    Total stockholders' equity.............................   87,059    73,180
                                                            --------  --------
                                                            $526,745  $494,187
                                                            ========  ========
</TABLE>
--------
(a) Restated for discontinued operations.
 
                            See accompanying notes.
 
                                       21
<PAGE>
 
                                  AMETEK, INC.
 
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                             (DOLLARS IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                    YEAR ENDED DECEMBER 31,
                                                    --------------------------
                                                     1995     1994      1993
                                                    -------  -------  --------
<S>                                                 <C>      <C>      <C>
CAPITAL STOCK
 Preferred Stock................................... $   --   $   --   $    --
                                                    -------  -------  --------
 Common Stock, $.01 par value ($1.00 par value--
  1993),
  Balance at the beginning of the year.............     372   46,414    46,414
  Common stock retirement..........................     (23)  (6,988)      --
  Reduction in par value from $1.00 per share to
   $.01 per share..................................     --   (39,054)      --
                                                    -------  -------  --------
    Balance at the end of the year.................     349      372    46,414
                                                    -------  -------  --------
CAPITAL IN EXCESS OF PAR VALUE
  Balance at the beginning of the year.............   7,382    6,389     5,679
  Employee stock options and savings plan..........   2,093      976       571
  Reduction in par value of common stock...........     --    39,054       --
  Common stock retirement..........................  (8,661) (39,607)      --
  Other............................................     (31)     570       139
                                                    -------  -------  --------
    Balance at the end of the year.................     783    7,382     6,389
                                                    -------  -------  --------
RETAINED EARNINGS
  Balance at the beginning of the year............. 111,150  161,297   193,724
  Net income (loss)................................  52,280   31,000    (7,332)
  Cash dividends paid..............................  (7,983)  (8,910)  (25,095)
  Common stock retirement.......................... (30,944) (72,237)      --
                                                    -------  -------  --------
    Balance at the end of the year................. 124,503  111,150   161,297
                                                    -------  -------  --------
NET UNREALIZED LOSSES
 Foreign currency translation:
  Balance at the beginning of the year............. (16,148) (20,163)  (12,205)
  Translation adjustments..........................   1,140    4,015    (7,958)
                                                    -------  -------  --------
    Balance at the end of the year................. (15,008) (16,148)  (20,163)
                                                    -------  -------  --------
 Pension liability in excess of unrecognized prior
  service cost:
  Balance at the beginning of the year.............  (4,391)  (4,731)   (4,224)
  Adjustments during the year......................       7      340      (507)
                                                    -------  -------  --------
    Balance at the end of the year.................  (4,384)  (4,391)   (4,731)
                                                    -------  -------  --------
 Other (principally valuation allowance for
  marketable securities):
  Balance at the beginning of the year.............    (683)   3,262       --
  Appreciation (depreciation) in marketable
   securities......................................   1,384   (2,547)    1,864
  Other............................................     --    (1,398)    1,398
                                                    -------  -------  --------
    Balance at the end of the year.................     701     (683)    3,262
                                                    -------  -------  --------
    Balance at the end of the year................. (18,691) (21,222)  (21,632)
                                                    -------  -------  --------
TREASURY STOCK
  Balance at the beginning of the year............. (24,502) (27,142)  (19,116)
  Employee stock options and savings plan..........   4,237    2,577       744
  Purchase of treasury stock.......................     --       --     (8,878)
  Other............................................     380       63       108
                                                    -------  -------  --------
    Balance at the end of the year................. (19,885) (24,502)  (27,142)
                                                    -------  -------  --------
      Total Stockholders' Equity................... $87,059  $73,180  $165,326
                                                    =======  =======  ========
</TABLE>
 
                            See accompanying notes.
 
                                       22
<PAGE>
 
                                  AMETEK, INC.
 
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                  YEARS ENDED DECEMBER 31,
                                                 -----------------------------
                                                   1995     1994(A)   1993(A)
                                                 --------  ---------  --------
<S>                                              <C>       <C>        <C>
Cash provided by (used for):
Operating activities:
  Net income (loss)............................. $ 52,280  $  31,000  $ (7,332)
  Deduct discontinued operations:
    Net income from discontinued operations.....     (779)    (2,372)     (757)
    Net gain on sale of discontinued 
     operations.................................  (10,420)       --        --
  Extraordinary loss on early extinguishment of
   debt.........................................    2,676     11,810       --
  Cumulative effect of accounting change........      --      (3,819)      --
                                                 --------  ---------  --------
      Income (loss) from continuing operations..   43,757     36,619    (8,089)
  Adjustments to reconcile income (loss) from
   continuing operations to net cash provided by
   continuing operations:
    Depreciation and amortization...............   34,461     35,469    33,724
    Deferred income taxes.......................    3,989      4,585   (19,647)
    Resizing, restructuring and other unusual
     charges....................................      --         --     50,898
    Proceeds from sale of securities in trading
     portfolio..................................      --      31,566       --
    Changes in operating working capital:
      Increase in receivables...................   (3,511)    (7,902)     (387)
      Decrease (increase) in inventories and
       other current assets.....................    1,243     (9,703)   (1,171)
      (Decrease) increase in payables, accruals
       and income taxes.........................  (17,948)    20,323     2,286
    Increase (decrease) in other long-term 
     liabilities................................... 6,273       (723)    8,091
    Other.......................................     (304)    (3,289)   (4,138)
                                                 --------  ---------  --------
Cash provided by continuing operations..........   67,960    106,945    61,567
Cash (used for) provided by discontinued
 operations.....................................   (2,572)     7,645     1,163
                                                 --------  ---------  --------
      Total operating activities................   65,388    114,590    62,730
                                                 --------  ---------  --------
Investing activities:
  Additions to property, plant and equipment....  (31,746)   (22,798)  (35,810)
  Proceeds from sale of discontinued operations
   and other assets.............................   42,709      8,428     7,795
  Purchase of businesses and investments........  (43,980)    (1,144)  (16,586)
  Decrease in marketable securities.............    4,665      5,843    14,998
  Other.........................................     (372)      (232)      244
                                                 --------  ---------  --------
      Total investing activities................  (28,724)    (9,903)  (29,359)
                                                 --------  ---------  --------
Financing activities:
  Net change in short-term borrowings...........   54,544      1,600       --
  Cash dividends paid...........................   (7,983)    (8,910)  (25,095)
  Additional long-term borrowings...............      --     306,004       --
  Repayment of long-term debt...................  (50,000)  (292,506)  (19,411)
  Debt issuance costs and debt prepayment
   premiums.....................................     (166)   (29,211)      --
  Repurchases of common stock...................  (39,628)  (118,832)   (8,878)
  Other (principally proceeds from stock
   options).....................................    6,335      3,954     1,335
                                                 --------  ---------  --------
      Total financing activities................  (36,898)  (137,901)  (52,049)
                                                 --------  ---------  --------
Decrease in cash and cash equivalents...........     (234)   (33,214)  (18,678)
Cash and cash equivalents:
  Beginning of year.............................    7,245     40,459    59,137
                                                 --------  ---------  --------
  End of year................................... $  7,011  $   7,245  $ 40,459
                                                 ========  =========  ========
</TABLE>
--------
(a) Restated for discontinued operations.
 
                            See accompanying notes.
 
                                       23
<PAGE>
 
                                 AMETEK, INC.
 
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
1. SIGNIFICANT ACCOUNTING POLICIES
 
 Basis of Consolidation
 
  The consolidated financial statements include the accounts of the Company
and subsidiaries, after elimination of all significant intercompany
transactions in consolidation.
 
 Use of Estimates
 
  The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
 
 Cash Equivalents, Securities, and Other Investments
 
  All highly liquid investments with maturities of three months or less when
purchased are considered cash equivalents. In January 1994, the Company
adopted Statement of Financial Accounting Standard (SFAS) No. 115, Accounting
for Certain Investment in Debt and Equity Securities. SFAS No. 115 requires
that equity securities and fixed income securities be carried at market value,
and that the unrealized gains and losses on securities, less deferred income
taxes, be reflected as a component of stockholders' equity for securities
considered available for sale, and be reflected in income for securities held
for trading purposes. The cumulative effect on net income of adopting that
standard for securities, then classified in a trading portfolio, was to
increase net income for 1994 by $3.8 million (net of taxes), or $.11 per
share. At December 31, 1995 and 1994, all of the Company's equity securities
and fixed income securities (primarily those of a captive insurance
subsidiary) are classified as available-for-sale. The aggregate market value
of such securities at December 31, 1995 and 1994 were: 1995--$12.2 million
($10.9 million amortized cost), and 1994--$18.1 million ($19.3 million
amortized cost). The Company's other investments are accounted for by the
equity method.
 
 Inventories
 
  Inventories are stated at the lower of cost or market, cost being determined
principally by the last-in, first-out (LIFO) method of inventory valuation,
and market on the basis of the lower of replacement cost or estimated net
proceeds from sales. The excess of the first-in, first-out (FIFO) method over
the LIFO value was $36.4 million and $33.1 million at December 31, 1995 and
1994.
 
 Property, Plant and Equipment
 
  Property, plant and equipment are stated at cost. Expenditures for additions
to plant facilities, or which extend their useful lives, are capitalized. The
cost of tools, jigs and dies, and maintenance and repairs is charged to
operations as incurred. Depreciation of plant and equipment is calculated
principally on a straight-line basis over the estimated useful lives of the
related assets.
 
 Revenue Recognition
 
  The Company's revenues are recorded as products are shipped and services are
rendered. The policy with respect to sales returns and allowances generally
provides that a customer may not return products, or be given allowances,
except at the Company's option. The aggregate provisions for estimated
warranty costs (not significant in amount) are recorded at the time of sale
and periodically adjusted to reflect actual experience.
 
 Research and Development
 
  Company-funded research and development costs are charged to operations as
incurred and during the past three years were: 1995--$16.0 million, 1994--
$17.7 million, and 1993--$14.6 million.
 
                                      24
<PAGE>
 
                                 AMETEK, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
 Earnings Per Share
 
  Earnings per share are based on the average number of common shares
outstanding during the period. No material dilution of earnings per share
would result for the periods if it were assumed that all outstanding stock
options were exercised.
 
 Foreign Currency Translation
 
  Assets and liabilities of foreign operations are translated by using
exchange rates in effect at the balance sheet date, and their results of
operations are translated by using average exchange rates for the year.
 
  Certain transactions of the Company and its subsidiaries are made in
currencies other than their own. Gains and losses from those transactions (not
significant in amount) are included in operating results for the year.
 
  In addition, the Company utilizes hedging arrangements in the context of its
operational transactions to hedge firm commitments for certain export sales,
thereby minimizing its exposure to foreign currency fluctuation.
 
  Foreign exchange contracts, foreign currency options, and foreign currency
swaps may be entered into for periods consistent with the Company's exposure,
generally one year or less. Gains and losses from those arrangements are
deferred and are reflected as adjustments of the related foreign currency
transaction.
 
 Interest Rate Swap and Cap Agreements
 
  The Company enters into interest rate swap and cap agreements to modify the
interest characteristics of certain of its revolving credit loans, and to
reduce the impact of increases in interest rates on its floating-rate loans.
Such agreements generally involve the exchange of fixed and floating rate
interest payments periodically over the life of the agreement without an
exchange of the underlying principal amount. The differential to be paid or
received is accrued as interest rates change, and it is recognized as an
adjustment to interest expense related to the debt over the life of the
agreements. Under interest rate cap agreements, the interest rate on a
specified percentage of certain revolving credit loans outstanding, which is
subject to the floating interest rate, cannot exceed a fixed percentage. The
Company also uses foreign currency and interest rate swaps in its selective
hedging of certain foreign currency and interest rate risk exposure.
 
 Intangible Assets
 
  The excess of cost over net assets acquired (goodwill) is being amortized on
a straight-line basis over periods of 20 to 30 years. The Company reviews the
carrying value of goodwill for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable.
Patents are being amortized on a straight-line basis over their estimated
useful lives of 9 to 10 years. Other acquired intangibles are being amortized
on a straight-line basis over their estimated useful lives of 5 to 30 years.
 
 Reclassifications
 
  In addition to restatement for discontinued operations, certain amounts
appearing in the prior year's financial statements and supporting footnote
disclosures have been reclassified to conform to the current year's
presentation.
 
2. RESTRUCTURING
 
  In 1993 the Company recorded a charge of $45.1 million ($27.5 million after-
tax, or $.63 per share) for resizing and restructuring and a charge of $9.8
million ($6 million after-tax, or $.14 per share) for other unusual
 
                                      25
<PAGE>
 
                                 AMETEK, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

items. The restructuring charges relate primarily to strategic initiatives
designed to increase productivity and efficiency in the Company's Precision
Instruments Group. The charges were for asset write-downs, planned workforce
reductions (including certain pension-related costs), and relocation of
certain product lines and consolidation of the Company's aerospace operations.
 
  As of December 31, 1995, the Company has charged approximately $25 million
against the restructuring reserves of which $13 million was charged in 1995
and $7.9 million was charged in 1994. The charges were for costs related to a
facility combination and asset write-downs. The remaining reserves of $20.1
million (representing the current and noncurrent portions) related to
facilities combinations, product line relocation, and workforce reduction are
currently anticipated to be fully utilized with no material change in the
estimates. The majority of these actions should be completed by the end of
1997 except for amounts related to certain pension obligations.
 
3. ACQUISITIONS
 
  On March 31, 1995, the Company purchased the heavy vehicle instrumentation
business of privately held Dixson, Inc. for cash. The acquisition was
accounted for by the purchase method, and accordingly, the results of Dixson's
operations are included in the Company's consolidated results from the date of
acquisition.
 
  On November 1, 1995, the Company completed the acquisition of APIC/AFIMO
(APIC), a French-based manufacturer of water filtration products, for cash.
This acquisition will be accounted for by the purchase method pending the
determination of fair values of the assets acquired and the liabilities
assumed. The results of APIC's operations (not significant in amount) are
included in the Company's consolidated results from the acquisition date. The
acquisitions of Dixson and APIC would not have had a material effect on sales
or earnings for 1995 or 1994 had they been made at the beginning of the
respective periods.
 
  On March 1, 1995, the Company acquired a 50% ownership interest in a joint
venture established with a Taiwanese supplier to manufacture low-cost pressure
gauges in China and Taiwan for worldwide markets. The investment is accounted
for by the equity method, and the Company's 50% share of the operating results
since March 1, 1995 (not significant in amount), are included in the earnings
of its domestic gauge manufacturing Division.
 
  The aggregate cost of the acquisitions and the investment in the joint
venture totaled $46.8 million, consisting of $44.0 million in cash paid at
closing, and $2.8 million of deferred payment obligations payable over periods
up to three years. The purchase price of APIC and the investment in the joint
venture are reported with Intangibles, Investments and Other Assets in the
December 31, 1995 balance sheet.
 
  In March 1993, the Company purchased certain assets of Revere Aerospace
Inc., a United States subsidiary of Dobson Park Industries plc, United
Kingdom, for approximately $7 million in cash. Revere is a producer of
thermocouple and fiber optic cable assemblies. The acquisition was accounted
for by the purchase method, and results of Revere's operations were included
from the acquisition date. The acquisition would not have had a material
effect on sales or earnings for 1993 had it been made at the beginning of the
year.
 
4. DISCONTINUED OPERATIONS
 
  On May 18, 1995, the Company sold its foam packaging business (Microfoam
Division) for approximately $37 million in cash. The sale of the assets of
Microfoam, after providing for certain costs related to the sale, resulted in
a second quarter 1995 gain of $10.4 million, net of taxes of $6.4 million. As
a result of the transaction, the consolidated financial statements have been
restated to report Microfoam as discontinued operations.
 
                                      26
<PAGE>
 
                                 AMETEK, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
  Summary operating results of discontinued operations, excluding the above
mentioned gain on sale, are as follows:
 
<TABLE>
<CAPTION>
                                                        YEAR ENDED DECEMBER 31,
                                                        -----------------------
                                                         1995    1994    1993
                                                        ------- ------- -------
                                                            (IN THOUSANDS)
<S>                                                     <C>     <C>     <C>
Net sales.............................................. $12,153 $33,226 $30,405
Income before income taxes.............................   1,291   4,044   1,364
Provision for income taxes.............................     512   1,672     607
Net income............................................. $   779 $ 2,372 $   757
</TABLE>
 
5. ACCOUNTING PRONOUNCEMENTS PENDING ADOPTION
 
  In March 1995, the Financial Accounting Standards Board (FASB) issued
Statement No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of. Statement No. 121 requires the write-down
to market value of certain long-lived assets in certain circumstances. The
Company must adopt the provisions of the statement in 1996. Its adoption will
not have a material effect on the Company's operations or financial position.
 
  In October 1995, the FASB issued Statement No. 123, Accounting for Stock-
Based Compensation. Statement No. 123 requires the recognition of, or
disclosure of, compensation expense for grants of stock options or other
equity instruments issued to employees based upon their fair value. Companies
electing disclosure, instead of recognition of compensation expense, are
permitted to continue to apply existing accounting rules contained in
Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees. Statement No. 123 is effective for the Company beginning in 1996.
The Company anticipates continuing to account for stock-based compensation in
accordance with Opinion No. 25. Therefore the adoption of Statement No. 123
will not have an impact on the Company's financial position or results of
operations.
 
                                      27
<PAGE>
 
                                  AMETEK, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
6. OTHER BALANCE SHEET INFORMATION
 
<TABLE>
<CAPTION>
                                                          (IN THOUSANDS)
                                                        --------------------
                                                          1995       1994
                                                        ---------  ---------
<S>                                                     <C>        <C>
INVENTORIES 
  Finished goods and parts............................. $  31,628  $  33,448
  Work in process......................................    23,491     24,695
  Raw materials and purchased parts....................    46,396     40,546
                                                        ---------  ---------
                                                        $ 101,515  $  98,689
                                                        =========  =========
PROPERTY, PLANT AND EQUIPMENT, at cost
  Land................................................. $   8,107  $   7,575
  Buildings............................................    95,249     90,622
  Machinery and equipment..............................   304,694    274,854
                                                        ---------  ---------
                                                          408,050    373,051
  Less accumulated depreciation......................... (231,212)  (208,766)
                                                        ---------  ---------
                                                        $ 176,838  $ 164,285
                                                        =========  =========
INTANGIBLES, INVESTMENTS AND OTHER ASSETS
  Intangibles, at cost:
    Patents............................................ $  20,993  $  20,993
    Goodwill...........................................    30,626     13,753
    Other acquired intangibles.........................    48,455     41,356
    Less accumulated amortization......................   (54,818)   (46,674)
                                                        ---------  ---------
                                                           45,256     29,428
  Investments..........................................    35,806     22,594
  Other................................................    19,500     20,902
                                                        ---------  ---------
                                                        $ 100,562  $  72,924
                                                        =========  =========
ACCRUED LIABILITIES
  Accrued employee compensation and benefits........... $  22,572  $  21,266
  Resizing and restructuring...........................    11,208     20,570
  Other................................................    34,776     30,102
                                                        ---------  ---------
                                                        $  68,556  $  71,938
                                                        =========  =========
</TABLE>
 
<TABLE>
ALLOWANCES FOR POSSIBLE LOSSES ON ACCOUNTS AND NOTES RECEIVABLE
<CAPTION>
                                                           (IN THOUSANDS)
                                                        -----------------------
                                                         1995    1994    1993
                                                        ------  ------  -------
<S>                                                     <C>     <C>     <C>
  Balance at beginning of year......................... $3,921  $2,394  $ 2,392
  Additions charged to expense.........................  2,723   1,601    1,205
  Recoveries credited to allowance.....................      6     110      112
  Write-offs...........................................   (432)   (219)  (1,339)
  Currency translation adjustment and other............    155      35       24
                                                        ------  ------  -------
  Balance at end of year............................... $6,373  $3,921  $ 2,394
                                                        ======  ======  =======
</TABLE>
 
                                       28
<PAGE>
 
                                  AMETEK, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
7. LONG-TERM DEBT
 
  At December 31, 1995 and 1994, long-term debt consisted of:
 
<TABLE>
<CAPTION>
                                                              (IN THOUSANDS)
                                                             ------------------
                                                               1995      1994
                                                             --------  --------
<S>                                                          <C>       <C>
9 3/4% senior notes due 2004................................ $150,000  $150,000
Fixed and floating rate secured bank term notes.............      --     50,000
Other.......................................................      661       557
                                                             --------  --------
                                                              150,661   200,557
Less: current portion.......................................     (231)  (10,221)
                                                             --------  --------
                                                             $150,430  $190,336
                                                             ========  ========
</TABLE>
 
  The annual future payments required by the terms of the long-term debt for
the years 1997 through 2000 are not significant.
 
  In March 1994, the Company completed an offering of $150 million in principal
amount of 9 3/4% senior notes due March 15, 2004. At the same time it entered
into a senior secured credit agreement with a group of banks led by the Chase
Manhattan Bank, N.A., for $250 million. The net proceeds from those debt
issuances, together with available cash were used to finance the Company's
early retirement of debt in March 1994, to fund prepayment premiums and other
expenses related to the sale of the senior notes and the bank credit agreement,
and to repurchase outstanding shares of the Company's common stock. In October
1994, the Company amended the bank credit agreement by reducing the total
credit facility from $250 million to $200 million.
 
  On August 2, 1995, the Company replaced its $200 million secured bank credit
facility with a new Bank Credit Agreement with a group of banks led by The
Chase Manhattan Bank, N.A. The new five-year revolving credit facility is
unsecured, and provides up to $195 million in revolving credit loans, with
scheduled reductions in the total credit facility to $150 million by August 1,
1999. The new Credit Agreement also contains certain performance criteria,
which when met, provide the Company with increased operating flexibility, lower
interest rates and reduced commitment fees. The new Credit Agreement contains
requirements, that among other things, provide for compliance with certain
financial ratios. At December 31, 1995, the Company met all such requirements.
 
  In connection with the early retirement of debt in 1994, the Company recorded
a first quarter 1994 extraordinary charge of $11.8 million (net of tax benefits
of $7.6 million), or $.32 per share, for the prepayment premiums paid and the
write-off of related deferred debt issuance costs. In connection with the
August 2, 1995 Credit Agreement, the Company recorded a third quarter 1995
noncash extraordinary charge of $2.7 million (net of tax benefits of $1.7
million), or $.08 per share, for the write-off of deferred debt issuance costs
related to the previous bank credit agreement.
 
  Outstanding loans under the credit facility are subject to interest rate swap
and cap agreements based on the combination of a fixed rate and the London
Interbank Offered Rate (LIBOR), plus a negotiated spread over LIBOR. At
December 31, 1995, under the new Credit Agreement, the Company had $50.4
million in revolving credit loans outstanding at an approximate interest rate
of 7%.
 
  The revolving credit loans, along with certain foreign borrowings, are
classified on the accompanying balance sheet as short-term borrowings. The
weighted average interest rate on short-term borrowings outstanding at December
31, 1995 was 7.2%. The Company also has outstanding letters of credit totaling
$13.6 million at December 31, 1995. Foreign subsidiaries of the Company had
lines of credit with European banks of approximately $21.1 million, of which
$15.4 million was unused at December 31, 1995.
 
                                       29
<PAGE>
 
                                  AMETEK, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
8. STOCKHOLDERS' EQUITY
 
  During 1995, the Company repurchased under its $175 million share repurchase
program, approximately 2.3 million shares of its common stock for an aggregate
cost of $39.6 million. As of December 31, 1995, shares repurchased since
inception of the program in March 1994 totaled 11.5 million shares for an
aggregate cost of $158.5 million.
 
  All of the repurchased shares have been retired as required by the Company's
loan agreements, and such shares have been returned to the status of authorized
but unissued shares. At December 31, 1995, shares outstanding totaled
32,857,523, compared to 34,707,160 shares outstanding at December 31, 1994.
 
  A new Stock Incentive Plan was adopted by the Company in 1995, and provides
for the grant of up to 2.2 million shares of common stock to eligible employees
and nonemployee Directors of the Company. Under the Plan, the awards may
include the grant of stock options, stock appreciation rights, restricted stock
awards and phantom stock awards. During 1995, only stock options were awarded
under the Plan.
 
  The Company has a Shareholder Rights Plan, under which the Board of Directors
declared a dividend in 1989 of one Right for each share of Company common stock
owned. The Plan provides, under certain conditions involving acquisition of the
Company's common stock, that holders of Rights, except for the acquiring
entity, would be entitled (i) to purchase shares of preferred stock at a
specified exercise price, or (ii) to purchase shares of common stock of the
Company, or the acquiring company, having a value of twice the Rights exercise
price. The Rights under the Plan expire in 1999.
 
  In certain circumstances, the Company provides for restricted stock awards of
its common stock to eligible employees and nonemployee Directors of the Company
at such cost to the recipient as the Stock Incentive Plan Committee of the
Board of Directors may determine. Such shares are issued subject to certain
conditions, with transfer and other restrictions as prescribed by the Plan. No
restricted stock was awarded during 1995. In 1994 and 1993 respectively, the
Company awarded 20,000 shares of restricted common stock to certain nonemployee
Directors under the Plan. Upon issuance of restricted stock, unearned
compensation, equivalent to the excess of the market value of the shares
awarded over the price paid by the recipient at the date of the grant, is
charged to stockholders' equity and is amortized to expense over the periods
until the restrictions lapse. Amortization expense in 1995, 1994, and 1993 for
awards under the Plan was not significant.
 
  At December 31, 1995, 4,402,164 (4,240,362 in 1994) shares of common stock
were reserved under the Company's incentive and nonqualified stock option
plans. The options are exercisable at prices not less than market value on
dates of grant, and in installments over five- to ten-year periods from such
dates.
 
  Information on options follows:
 
<TABLE>
<CAPTION>
                                   1995                      1994                      1993
                          ------------------------  ------------------------ ------------------------
                           SHARES     PRICE RANGE    SHARES     PRICE RANGE   SHARES     PRICE RANGE
                          ---------  -------------  ---------  ------------- ---------  -------------
<S>                       <C>        <C>            <C>        <C>           <C>        <C>
Outstanding at beginning
 of year. ..............  2,689,961  $ 8.94-$16.50  2,046,225  $ 8.94-$16.50 2,116,289  $ 8.94-$16.50
Granted.................    610,900   17.00- 17.69  1,152,600   12.31- 15.19    93,000   13.13- 14.94
Exercised...............   (542,626)   8.94- 15.44   (302,146)   8.94- 15.44  (136,973)  11.69- 14.06
Canceled................    (43,695)  12.19- 17.50   (206,718)  12.19- 15.44   (26,091)  11.69- 15.75
                          ---------  -------------  ---------  ------------- ---------  -------------
Outstanding at end of
 year...................  2,714,540*  11.69- 17.69* 2,689,961    8.94- 16.50 2,046,225    8.94- 16.50
                          ---------  -------------  ---------  ------------- ---------  -------------
Exercisable at end of
 year...................  1,203,097  $11.69-$16.31  1,102,064  $ 8.94-$16.50 1,050,464  $ 8.94-$16.50
                          =========  =============  =========  ============= =========  =============
</TABLE>
--------
* Expiring from 1996 through 2005.
 
                                       30
<PAGE>
 
                                  AMETEK, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
  The Company also has outstanding 48,500 (148,513 in 1994) stock appreciation
rights exercisable for cash and/or shares of the Company's common stock when
the related option is exercised. Subject to certain limitations, each right
relates to the excess of the market value of the Company's common stock over
the exercise price of the related option. Charges and credits, immaterial in
amount, are made to income for these rights and certain related options.
 
9. LEASES
 
  Minimum aggregate rental commitments under noncancelable leases in effect at
December 31, 1995 (principally for production and administrative facilities and
equipment) amounted to $8.8 million consisting of annual payments of $2.6
million in 1996, $1.7 million in 1997, and decreasing amounts thereafter.
Rental expense of $4.9 million was charged to income in 1995, $4.4 million in
1994 and 1993.
 
10. INCOME TAXES
 
  The components of income (loss) from continuing operations before income
taxes and the details of the provision for (benefit from) income taxes are as
follows:
 
<TABLE>
<CAPTION>
                                                          (IN THOUSANDS)
                                                     ------------------------
                                                      1995    1994     1993
                                                     ------- ------- --------
<S>                                                  <C>     <C>     <C>
Income (loss) from continuing operations before
 income taxes:
  Domestic.......................................... $51,470 $42,995 $(19,233)
  Foreign...........................................  17,787  14,768    6,672
                                                     ------- ------- --------
      Total......................................... $69,257 $57,763 $(12,561)
                                                     ------- ------- --------
Provision for (benefit from) income taxes:
  Current:
    Federal......................................... $12,764 $10,963 $ 10,182
    Foreign.........................................   7,378   5,860    2,001
    State...........................................   1,423     258    2,608
                                                     ------- ------- --------
      Total current.................................  21,565  17,081   14,791
                                                     ------- ------- --------
  Deferred:
    Federal.........................................   1,851   1,214  (17,784)
    Foreign.........................................   1,410   2,209    2,122
    State...........................................     674     640   (3,601)
                                                     ------- ------- --------
      Total deferred................................   3,935   4,063  (19,263)
                                                     ------- ------- --------
      Total provision (benefit)..................... $25,500 $21,144 $ (4,472)
                                                     ======= ======= ========
</TABLE>
 
                                       31
<PAGE>
 
                                  AMETEK, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
  Significant components of the Company's deferred tax (asset) liability as of
December 31 are as follows:
 
<TABLE>
<CAPTION>
                                                             (IN THOUSANDS)
                                                            ------------------
                                                              1995      1994
                                                            --------  --------
<S>                                                         <C>       <C>
Current deferred tax asset:
  Reserves not currently deductible........................ $ (9,825) $(11,106)
  Other....................................................   (2,000)   (1,531)
                                                            --------  --------
    Net current deferred tax asset.........................  (11,825)  (12,637)
                                                            --------  --------
Long-term deferred tax (asset) liability:
  Differences in basis of property and accelerated
   depreciation............................................   21,547    19,698
  Purchased tax benefits...................................   13,268    15,790
  Reserves not currently deductible........................  (13,798)  (15,928)
  Other....................................................   10,910     6,528
                                                            --------  --------
    Net long-term deferred tax liability...................   31,927    26,088
                                                            --------  --------
    Net deferred tax liability............................. $ 20,102  $ 13,451
                                                            ========  ========
</TABLE>
 
  The effective rate of the provision for (benefit from) income taxes
reconciles to the statutory rate as follows:
 
<TABLE>
<CAPTION>
                                                           1995  1994  1993
                                                           ----  ----  -----
<S>                                                        <C>   <C>   <C>
Statutory rate............................................ 35.0% 35.0% (35.0)%
State income taxes, net of federal income tax benefit.....  2.0   0.9   (5.5)
Foreign Sales Corporation and other tax credits........... (2.7) (3.2) (13.3)
Effect of foreign operations..............................  3.9   4.7   13.4
Effect of U.S. federal statutory tax rate increase on
 prior years' deferred taxes..............................  -     -      5.2
Other..................................................... (1.4) (0.8)  (0.4)
                                                           ----  ----  -----
                                                           36.8% 36.6% (35.6)%
                                                           ====  ====  =====
</TABLE>
 
11. RETIREMENT AND PENSION PLANS
 
  The Company maintains noncontributory defined benefit retirement and pension
plans. Benefits for eligible United States salaried and hourly employees are
funded through trusts established in conjunction with the plans. Employees of
certain foreign operations participate in various local plans that in the
aggregate are not significant.
 
  The Company also has nonqualified unfunded retirement plans for its Directors
and certain retired employees, 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 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 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.
 
                                       32
<PAGE>
 
                                 AMETEK, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
  Net pension expense, excluding plan administrative expenses, consists of the
following components:
 
<TABLE>
<CAPTION>
                                                       (IN THOUSANDS)
                                                 ----------------------------
                                                   1995      1994      1993
                                                 --------  --------  --------
<S>                                              <C>       <C>       <C>
Service cost for benefits earned during the
 period......................................... $  5,999  $  6,676  $  6,669
Interest cost on projected benefit obligation...   15,446    14,742    14,108
Actual return on plan assets....................  (23,665)  (17,922)  (15,401)
Net amortization and deferrals..................    6,894       215       541
                                                 --------  --------  --------
Net pension expense............................. $  4,674  $  3,711  $  5,917
                                                 ========  ========  ========
</TABLE>
 
  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 recorded a charge 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.
 
  The charge to income for all retirement and pension plans during the past
three years, including the 1993 curtailment provision, was $5.6 million in
1995, $4.2 million in 1994, and $14.0 million in 1993.
 
  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. The actual return has
been adjusted to defer gains and losses 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. 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.
 
  For pension plans with accumulated benefits in excess of assets at December
31, 1995, the balance sheet reflects an additional long-term pension liability
of $11.5 million ($10.0 million--1994), a long-term intangible asset of $4.8
million ($3.2 million--1994), and a charge in stockholders' equity (net of
deferred taxes) of $4.4 million in 1995 and 1994, and $4.7 million 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 following table sets forth the funded status of the plans:
 
<TABLE>
<CAPTION>
                                               (IN THOUSANDS)
                               -----------------------------------------------
                                  DECEMBER 31, 1995       DECEMBER 31, 1994
                               ----------------------- -----------------------
                                 ASSETS    ACCUMULATED   ASSETS    ACCUMULATED
                                 EXCEED     BENEFITS     EXCEED     BENEFITS
                               ACCUMULATED   EXCEED    ACCUMULATED   EXCEED
                                BENEFITS     ASSETS     BENEFITS     ASSETS
                               ----------- ----------- ----------- -----------
<S>                            <C>         <C>         <C>         <C>
Actuarial present value of
 benefit obligations:
  Vested benefit obligation...  $115,129    $ 91,750    $109,587    $ 69,390
                                --------    --------    --------    --------
  Accumulated benefit
   obligation.................  $118,348    $ 84,780    $119,576    $ 73,683
                                --------    --------    --------    --------
  Projected benefit
   obligation.................  $130,038    $ 93,617    $134,593    $ 73,948
Plan assets at fair value.....   132,370      75,520     133,678      58,802
                                --------    --------    --------    --------
Plan assets in excess (less
 than) projected benefit
 obligation...................     2,332     (18,097)       (915)    (15,146)
Unrecognized prior service
 cost.........................     1,479       4,145       1,899       2,126
Unrecognized net loss.........     6,016       8,876      10,377       7,530
Unrecognized net transition
 (asset) obligation, net of
 amortization.................    (4,207)        621      (4,630)        525
                                --------    --------    --------    --------
Prepaid (accrued) pension
 expense......................  $  5,620    $ (4,455)   $  6,731    $ (4,965)
                                ========    ========    ========    ========
</TABLE>
 
                                      33
<PAGE>
 
                                 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.
 
12. FINANCIAL INSTRUMENTS
 
  The Company has only limited involvement with derivative financial
instruments and does not use them for trading purposes. Such instruments are
generally used to manage well-defined interest rate risks and to hedge firm
commitments related to certain export sales denominated in a foreign currency.
 
  Interest rate swap and cap agreements are used to reduce the potential
impact of increases in interest rates on the Company's floating-rate revolving
credit loans. Accordingly, the Company enters into those agreements to
effectively convert floating-rate loans to fixed-rate loans and to cap certain
interest rates that are indexed to LIBOR rates to reduce the Company's risk of
incurring higher interest costs due to rising interest rates. At December 31,
1995, the Company was party to one interest rate swap agreement with a
notional amount of $23.8 million, which decreases by $2.2 million semiannually
through the May 1997 termination date. The interest rate cap agreement
entitles the Company to receive amounts from counterparties on a quarterly
basis if specified market interest rates rise above fixed cap rates. The fair
value of both agreements at December 31, 1995 and 1994 were not significant.
 
  Cross currency and interest rate swaps are used to hedge a portion of the
Company's net investment in two of its foreign subsidiaries, whereby the
Company swapped 7.1 million U.S. dollars for an equivalent amount of certain
European currencies. The agreements provide for the Company to make floating
interest payments while receiving interest at fixed and floating rates. The
swap agreements will terminate with settlement of the contracts in 1997. At
December 31, 1995 and 1994, the fair value of the swaps was not significant.
 
  Forward currency contracts are entered into to hedge certain firm export
sales commitments denominated in deutsche marks. The purpose of such hedging
activities is to protect the Company from the risk that the eventual net cash
dollar inflows resulting from the sale of products to foreign customers will
be adversely affected by changes in exchange rates. At December 31, 1995 and
1994, the notional values of the contracts were $6.4 million and $8.8 million,
respectively. The terms of the currency contracts are dependent on the firm
sale commitment and generally do not exceed one year. Deferred gains and
losses on the contracts at December 31, 1995 and 1994 were not significant and
are recognized in operations as the related sales occur.
 
  The estimated fair values of the Company's financial instruments are
compared below to the recorded amounts at December 31. Cash, cash equivalents,
and marketable securities are recorded at fair value at December 31, 1995 and
1994 in the accompanying balance sheet.
 
<TABLE>
<CAPTION>
                                      ASSET (LIABILITY) (IN THOUSANDS)
                                   ------------------------------------------
                                    DECEMBER 31, 1995     DECEMBER 31, 1994
                                   --------------------  --------------------
                                   RECORDED     FAIR     RECORDED     FAIR
                                    AMOUNT      VALUE     AMOUNT      VALUE
                                   ---------  ---------  ---------  ---------
<S>                                <C>        <C>        <C>        <C>
Fixed income and equity
 investments...................... $  30,106  $  30,106  $  22,594  $  22,594
Short-term borrowing..............   (56,143)   (56,143)    (1,600)    (1,600)
Long-term debt (Including current
 portion).........................  (150,661)  (167,000)  (200,557)  (200,000)
Forward currency contracts........       --       6,200        --       8,800
</TABLE>
 
                                      34
<PAGE>
 
                                 AMETEK, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
  The fair values of fixed income and equity investments are based on quoted
market value. The fair value of short-term borrowings is based on the carrying
value at year end. The fair value of the Company's publicly traded notes,
included in long-term debt, are based on the quoted market price for such
notes. The fair value of other long-term debt is estimated based on borrowing
rates currently available to the Company for loans with similar terms and
maturities. The fair value of forward currency contracts (used for hedging
firm commitments) is based on quoted market prices for comparable contracts.
 
13. ADDITIONAL INCOME STATEMENT AND CASH FLOW INFORMATION
 
  Included in other income is interest and other investment income of $2.4
million, $5.0 million, and $8.4 million for 1995, 1994, and 1993. Income taxes
paid in 1995, 1994, and 1993 were $30.3 million, $13.6 million, and $13.8
million. Cash paid for interest for each of the three years approximated
interest expense.
 
14. SEGMENT AND GEOGRAPHIC INFORMATION
 
  The Company classifies its operations into three business segments: Electro-
mechanical, Precision Instruments, and Industrial Materials. The Electro-
mechanical Group produces motor blower systems and injection-molded components
for manufacturers of floor care appliances and produces fractional horsepower
motors and motor blowers for computer, business machine, medical equipment,
and high-efficiency heating equipment producers. Sales of fractional
horsepower electric motors and blowers represented 44.4% in 1995, 43.9% in
1994, and 40.0% in 1993 of the Company's consolidated net sales.
 
  The Precision Instruments Group produces aircraft cockpit instruments and
displays, in addition to pressure, temperature, flow, and liquid level sensors
for aircraft and jet engine manufacturers and for airlines, as well as
airborne electronics systems that monitor and record flight and engine data.
The Group also produces instruments and complete instrument panels for heavy
truck builders and heavy construction vehicles; process monitoring and display
systems; combustion, gas analysis; moisture and emissions monitoring systems;
force and speed measuring instruments; air and noise monitors; pressure and
temperature calibrators; and pressure-indicating and digital manometers.
 
  The Industrial Materials Group produces high-temperature-resistant materials
and textiles; corrosion-resistant heat exchangers; tanks and piping for
process systems; drinking water filter and treatment systems; industrial and
commercial filters for other liquids; replacement filter cartridges; liquid
bag filters and multiple cartridge filter housings; high-purity metals and
alloys in powder; strip and wire form for high-performance aircraft;
automotive and electronics requirements; and thermoplastic compounds and
concentrates for automotive, appliance, and telecommunication applications.
 
                                      35
<PAGE>
 
                                 AMETEK, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
 Business Segment Financial Information
 
<TABLE>
<CAPTION>
                                                   (IN THOUSANDS)
                                             ----------------------------
                                               1995      1994      1993
                                             --------  --------  --------
<S>                                          <C>       <C>       <C>
NET SALES(/1/)
  Electro-mechanical........................ $372,038  $340,358  $280,732
  Precision Instruments.....................  301,440   280,638   275,351
  Industrial Materials......................  164,012   153,742   145,707
                                             --------  --------  --------
    Total Consolidated...................... $837,490  $774,738  $701,790
                                             ========  ========  ========
OPERATING INCOME (LOSS) AND INCOME (LOSS)
 BEFORE INCOME TAXES:
 Operating income (loss):
  Electro-mechanical........................ $ 48,858  $ 46,203  $ 35,018
  Precision Instruments.....................   34,803    29,189   (30,643)(/2/)
  Industrial Materials......................   27,741    23,251    16,920 (/3/)
                                             --------  --------  --------
    Total segments operating income(/4/)....  111,402    98,643    21,295
  Corporate administrative and other
   expenses.................................  (22,104)  (23,351)  (22,587)
                                             --------  --------  --------
 Consolidated operating income (loss).......   89,298    75,292    (1,292)
 Interest and other expenses, net...........  (20,041)  (17,529)  (11,269)
                                             --------  --------  --------
 Consolidated income (loss) from continuing
  operations before income taxes............ $ 69,257  $ 57,763  $(12,561)
                                             ========  ========  ========
IDENTIFIABLE ASSETS
  Electro-mechanical........................ $196,805  $190,339  $164,826
  Precision Instruments.....................  180,837   142,403   147,024
  Industrial Materials......................   77,222    75,509    77,725
                                             --------  --------  --------
    Total segments..........................  454,864   408,251   389,575
  Corporate and discontinued operations.....   71,881    85,936   166,519
                                             --------  --------  --------
    Total Consolidated...................... $526,745  $494,187  $556,094
                                             ========  ========  ========
ADDITIONS TO PROPERTY, PLANT AND
 EQUIPMENT(/5/)
  Electro-mechanical........................ $ 19,891  $ 11,922  $ 25,343
  Precision Instruments.....................   10,417     6,633     6,513
  Industrial Materials......................    5,567     4,073     6,534
                                             --------  --------  --------
    Total segments..........................   35,875    22,628    38,390
  Corporate.................................      583       170       218
                                             --------  --------  --------
    Total Consolidated...................... $ 36,458  $ 22,798  $ 38,608
                                             ========  ========  ========
DEPRECIATION AND AMORTIZATION
  Electro-mechanical........................ $ 13,454  $ 12,430  $ 11,582
  Precision Instruments.....................   15,915    15,253    15,432
  Industrial Materials......................    4,895     7,636     6,500
                                             --------  --------  --------
    Total segments..........................   34,264    35,319    33,514
  Corporate.................................      197       150       210
                                             --------  --------  --------
    Total Consolidated...................... $ 34,461  $ 35,469  $ 33,724
                                             ========  ========  ========
</TABLE>
--------
(1) After elimination of intra and intersegment sales, which are not
    significant in amount. Such sales are generally based on prevailing market
    prices.
(2) Reflects charges of $47.8 million for resizing and restructuring.
(3) Reflects charges of $3.9 million primarily for asset write-downs.
(4) Segment operating income represents sales less all direct costs and
    expenses (including certain administrative and other expenses) applicable
    to each segment, but does not include an allocation of interest expense.
(5) Includes $4.7 million in 1995 and $2.8 million in 1993 from acquired
    businesses.
 
                                      36
<PAGE>
 
                                  AMETEK, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

14. SEGMENT AND GEOGRAPHIC INFORMATION (continued)
 
 Geographic Areas
<TABLE>
<CAPTION>
                                                       (IN THOUSANDS)
                                                 ----------------------------
                                                   1995      1994      1993
                                                 --------  --------  --------
<S>                                              <C>       <C>       <C>
NET SALES (based on destination)
  United States................................. $556,236  $537,048  $499,106
  International (including United States exports
   shown below):
    Europe......................................  201,179   171,088   147,209
    Asia........................................   35,160    25,143    21,860
    Canada......................................   30,273    25,031    21,639
    Other.......................................   14,642    16,428    11,976
                                                 --------  --------  --------
  Total International...........................  281,254   237,690   202,684
                                                 --------  --------  --------
    Total Consolidated.......................... $837,490  $774,738  $701,790
                                                 ========  ========  ========
INCOME (LOSS) BEFORE INCOME TAXES
  United States................................. $ 93,047  $ 82,504  $ 14,109
  International:
    Europe......................................   18,514    16,290     7,357
    Canada, Asia, and other.....................     (159)     (151)     (171)
  Corporate administrative and other expenses...  (22,104)  (23,351)  (22,587)
  Interest and other expenses, net..............  (20,041)  (17,529)  (11,269)
                                                 --------  --------  --------
    Total Consolidated.......................... $ 69,257  $ 57,763  $(12,561)
                                                 ========  ========  ========
IDENTIFIABLE ASSETS
  United States................................. $339,594  $315,242  $305,224
  International:
    Europe......................................  107,314    92,907    83,774
    Canada, Asia, and other (principally Asia in
     1995)......................................    7,956       102       577
  Corporate.....................................   71,881    85,936   166,519
                                                 --------  --------  --------
    Total Consolidated.......................... $526,745  $494,187  $556,094
                                                 ========  ========  ========
UNITED STATES EXPORT SALES (reported in
 international sales above)
  Europe........................................ $ 59,928  $ 50,165  $ 51,179
  Asia..........................................   35,160    25,140    21,517
  Canada........................................   30,273    25,031    21,186
  Other.........................................   13,729    15,869    11,542
                                                 --------  --------  --------
    Total Consolidated.......................... $139,090  $116,205  $105,424
                                                 ========  ========  ========
</TABLE>
 
                                       37
<PAGE>
 
                                 AMETEK, INC.
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
15. QUARTERLY FINANCIAL DATA (Unaudited)
 
<TABLE>
<CAPTION>
                           (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                         --------------------------------------------------------
                          FIRST       SECOND      THIRD       FOURTH      TOTAL
                         QUARTER     QUARTER     QUARTER     QUARTER       YEAR
                         --------    --------    --------    --------    --------
<S>                      <C>         <C>         <C>         <C>         <C>
1995
  Net sales............. $211,527    $219,111    $204,922    $201,930    $837,490
  Operating income...... $ 21,506    $ 24,470    $ 21,476    $ 21,846    $ 89,298
  Income from continuing
   operations........... $ 10,149    $ 11,929    $ 10,830    $ 10,849    $ 43,757
  Net income............ $ 10,662    $ 22,615    $  8,154(a) $ 10,849    $ 52,280(b)
  Earnings per share:(c)
   Income from
    continuing
    operations.......... $    .30    $    .36    $    .33    $    .33    $   1.31
   Net income........... $    .31    $    .68    $    .25(a) $    .33    $   1.56(b)
  Dividends paid per
   share................ $    .06    $    .06    $    .06    $    .06    $    .24
  Common stock trading
   range:(d)
   High.................      18 5/8      18 1/8      19 1/2      19 1/4      19 1/2
   Low..................      15 3/4      16 1/4      16 1/8      16 5/8      15 3/4
1994
  Net sales............. $191,403    $202,710    $190,427    $190,198    $774,738
  Operating income...... $ 16,736    $ 20,847    $ 19,420    $ 18,289    $ 75,292
  Income from continuing
   operations........... $  8,390    $  9,361    $  9,758    $  9,110    $ 36,619
  Net income............ $    816(e) $  9,669    $ 10,226    $ 10,289    $ 31,000(b)
  Earnings per share:(c)
   Income from
    continuing
    operations.......... $    .20    $    .26    $    .28    $    .26    $    .99
   Net income........... $    .02(e) $    .27    $    .29    $    .30    $    .84(b)
  Dividends paid per
   share................ $    .06    $    .06    $    .06    $    .06    $    .24
  Common stock trading
   range:(d)
   High.................      13 1/8      15 5/8      17 3/4      18 3/4      18 3/4
   Low..................      11 5/8       12         14 3/4      16 1/8      11 5/8
</TABLE>
--------
(a) Includes an extraordinary loss of $2.7 million ($.08 per share) associated
    with debt agreements.
(b) Includes income from discontinued operations in the first and second
    quarters of 1995, and for each quarter of 1994. The second quarter of 1995
    also includes a gain of $10.4 million ($.32 per share) on the sale of
    discontinued operations.
(c) The sum of quarterly earnings per share will not equal total year earnings
    per share due to the effect of the Company's purchasing shares of its
    outstanding common stock.
(d) Trading ranges are based on the New York Stock Exchange composite tape.
(e) Includes an extraordinary loss of $11.8 million ($.32 per share) for early
    extinguishment of debt, and a $3.8 million ($.11 per share) after-tax gain
    from the cumulative effect of an accounting change for certain marketable
    securities.
 
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
 
  Not applicable.
 
                                      38
<PAGE>
 
                                   PART III
 
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
 
  Information with respect to Directors and Executive Officers of the Company,
and information with respect to compliance with Section 16(a) of the
Securities Exchange Act of 1934, is incorporated herein by reference to the
Company's definitive Proxy Statement to be filed with the Securities and
Exchange Commission (the "Commission") not later than 120 days after the close
of the fiscal year ended December 31, 1995, under the captions "Information as
to Nominees for Election of Directors," "Executive Officers of the
Registrant," and "Compliance with Section 16(a) of the Securities Exchange Act
of 1934."
 
ITEMS 11, 12, AND 13.
 
  The information required by Item 11, Executive Compensation, by Item 12,
Security Ownership of Certain Beneficial Owners and Management, and by Item
13, Certain Relationships and Related Transactions, is incorporated herein by
reference to the Company's definitive Proxy Statement to be filed with the
Commission not later than 120 days after the close of the fiscal year ended
December 31, 1995, under the headings "Executive Compensation," "Stock
Ownership," and "Compensation Committee Interlocks and Insider Participation."
 
                                    PART IV
 
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
 
  (a) Financial Statements, Financial Statement Schedules and Exhibits filed.
 
    1. and 2.
 
      Financial statements and schedules are shown in the index and other
       information on page 18 of this report.
 
    3. Exhibits
 
      Exhibits are shown in the index on page 41 of this report.
 
  (b) Reports on Form 8-K
 
    No reports on Form 8-K were filed during the quarter ended December 31,
    1995.
 
                                      39
<PAGE>
 
                                  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.
 
                                                  
Dated: March 22, 1996                     By   /s/ Walter E. Blankley
                                             ----------------------------------
                                              WALTER E. BLANKLEY, CHAIRMAN OF
                                               THE BOARD AND CHIEF EXECUTIVE
                                                          OFFICER
 
  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/ Walter E. Blankley          Chairman of the          March 22, 1996
-------------------------------------   Board and Chief
         WALTER E. BLANKLEY             Executive Officer
                                        (Principal
                                        Executive Officer)
 
        /s/ Frank S. Hermance          Executive Vice           March 22, 1996
-------------------------------------   President--Chief
          FRANK S. HERMANCE             Operating Officer
 
        /s/ John J. Molinelli          Senior Vice              March 22, 1996
-------------------------------------   President-- Chief
          JOHN J. MOLINELLI             Financial Officer
                                        (Principal
                                        Financial Officer)
 
        /s/ Otto W. Richards
-------------------------------------  Vice President and       March 22, 1996
          OTTO W. RICHARDS              Comptroller
                                        (Principal
                                        Accounting Officer)
 
          /s/ Lewis G. Cole            Director                 March 22, 1996
-------------------------------------
            LEWIS G. COLE

     /s/ Helmut N. Friedlaender        Director                 March 22, 1996
-------------------------------------
       HELMUT N. FRIEDLAENDER

        /s/ Sheldon S. Gordon          Director                 March 22, 1996
-------------------------------------
          SHELDON S. GORDON

        /s/ Charles D. Klein
-------------------------------------  Director                 March 22, 1996
          CHARLES D. KLEIN
 
         /s/ James R. Malone           Director                 March 22, 1996
-------------------------------------
           JAMES R. MALONE

       /s/ David P. Steinmann          Director                 March 22, 1996
-------------------------------------
         DAVID P. STEINMANN

       /s/ Elizabeth R. Varet
-------------------------------------  Director                 March 22, 1996
         ELIZABETH R. VARET
 
                                      40
<PAGE>
 
                               INDEX TO EXHIBITS
                                 ITEM 14(A) 3)
 
<TABLE>
<CAPTION>
                                                                   INCORPORATED      FILED WITH
 EXHIBIT                                                            HEREIN BY        ELECTRONIC
 NUMBER                      DESCRIPTION                           REFERENCE TO      SUBMISSION
 -------                     -----------                           ------------      ----------
 <C>     <S>                                                  <C>                    <C>
   3.1   Composite Certificate of Incorporation of AMETEK,    Exhibit 3 to June 30,
         Inc., as amended to and including April 26, 1994.    1994 10-Q, SEC File
                                                              No. 1-168.
   3.2   By-laws of the Company.                              Exhibit (3)b) to 1987
                                                              10-K, SEC File No.
                                                              1-168.
   4.1   Rights Agreement, dated July 26, 1989, between the   Exhibit 4 to Form 8-K
         Company and the Chase Manhattan Bank, N.A. (the      dated July 28, 1989,
         "Rights Agreement").                                 SEC File No. 1-168.
   4.2   Amendment No. 1 to the Rights Agreement.             Exhibit 4.5 to 1992
                                                              10-K, SEC File No. 1-
                                                              168.
   4.3   Certificate of Designation, Preferences and Rights   Exhibit (4b) to June
         of Series A Junior Participating Preferred Stock.    30, 1989 10-Q, SEC
                                                              File No. 1-168.
   4.4   Indenture dated as of March 15, 1994 between the     Exhibit 4 to March
         Company and Corestates Bank N.A., as Trustee,        31, 1994 10-Q, SEC
         relating to the Company's 9 3/4% Senior Notes due    File No. 1-168.
         2004.
   4.5   Credit Agreement among the Company, Various          Exhibit 10.36 to 1993
         Lending Institutions, Bank of Montreal, Corestates   10-K.
         Bank, N.A., and PNC Bank, National Association, as
         Co-Agents, and the Chase Manhattan Bank, N.A., as
         Administrative Agent (the "Credit Agreement").
   4.6   First Amendment to the Credit Agreement.             Exhibit 10 to March
                                                              31, 1994 10-Q.
   4.7   Second Amendment to the Credit Agreement.            Exhibit 10 to
                                                              September 30, 1994
                                                              10-Q, SEC File No.
                                                              1-168.
   4.8   Third Amendment to the Credit Agreement.             Exhibit 4 to March
                                                              31, 1995 10-Q, SEC
                                                              File No. 1-168.
   4.9   Fourth Amendment to the Credit Agreement.            Exhibit 4.1 to March
                                                              31, 1995 10-Q, SEC
                                                              File No. 1-168.
   4.10  Credit Agreement dated August 2, 1995, among the     Exhibit 4 to
         Company, Various Lending Institutions, Bank of       September 30, 1995
         Montreal, Corestates Bank, N.A., and PNC Bank,       10-Q, SEC File No.
         National Association, as Co-Agents, and The Chase    1-168.
         Manhattan Bank, N.A., as Administrative Agent.
   4.11  First Amendment to Credit Agreement dated August     Exhibit 4.1 to
         22, 1995.                                            September 30, 1995
                                                              10-Q, SEC File No.
                                                              1-168.
</TABLE>
 
                                       41
<PAGE>
 
                               INDEX TO EXHIBITS
                                 ITEM 14(A) 3)
 
<TABLE>
<CAPTION>
                                                                   INCORPORATED      FILED WITH
 EXHIBIT                                                            HEREIN BY        ELECTRONIC
 NUMBER                      DESCRIPTION                           REFERENCE TO      SUBMISSION
 -------                     -----------                           ------------      ----------
 <C>     <S>                                                  <C>                    <C>
  10.1   The 1991 Stock Incentive Plan of AMETEK, Inc. (the   Annex A to 1991 Proxy
         "1991 Plan").*                                       Statement, SEC File
                                                              No. 1-168.
  10.2   Amendment No. 1 to the 1991 Plan.*                   Exhibit 10.2 to 1993
                                                              10-K, SEC File No.
                                                              1-168.
  10.3   Amendment No. 2 to the 1991 Plan.*                   Exhibit 10.3 to 1994
                                                              10-K.
  10.4   The 1987 Employees' Non-Qualified Stock Option and   Annex B to 1991 Proxy
         Stock Appreciation Rights Plan (the "1987 Plan").*   Statement.
  10.5   Amendment No. 1 to the 1987 Plan.*                   Exhibit 10.4 to 1993
                                                              10-K.
  10.6   The 1983 Employees' Incentive Stock Option Plan      Exhibit 10.5 to 1993
         (the "1983 Plan").*                                  10-K.
  10.7   Amendment No. 1 to the 1983 Plan.*                   Exhibit (19)a) to
                                                              September 30, 1987
                                                              10-Q, SEC File No. 1-
                                                              168.
  10.8   Amendment No. 2 to the 1983 Plan.*                   Exhibit (10)e) to
                                                              1987 10-K.
  10.9   Amendment No. 3 to the 1983 Plan.*                   Exhibit (10)h) to
                                                              1989 10-K, SEC File
                                                              No.1-168.
  10.10  Amendment No. 4 to the 1983 Plan.*                   Exhibit 10.9 to 1993
                                                              10-K.
  10.11  The 1981 Employees' Non-Qualified Stock Option and   Exhibit 10.7 to 1991
         Stock Appreciation Rights Plan (the "1981 Plan").*   10-K.
  10.12  Amendment No. 1 to the 1981 Plan.*                   Exhibit (10)g) to
                                                              1987 10-K.
  10.13  Amendment No. 2 to the 1981 Plan.*                   Exhibit (10)k) to
                                                              1989 10-K.
  10.14  Amendment No. 3 to the 1981 Plan.*                   Exhibit (10)i) to
                                                              1988 10-K, SEC File
                                                              No. 1-168.
  10.15  Amendment No. 4 to the 1981 Plan.*                   Exhibit 10.14 to 1993
                                                              10-K.
  10.16  Employees' Retirement Plan of AMETEK, Inc., as       Exhibit 10.15 to 1993
         restated January 1, 1989 and amended to December     10-K.
         31, 1993 (the "Retirement Plan").*
  10.17  Amendment No. 1 to the Retirement Plan.*             Exhibit 10.17 to 1994
                                                              10-K.
  10.18  Amendment No. 2 to the Retirement Plan.*             Exhibit 10.18 to 1994
                                                              10-K.
  10.19  Amendment No. 3 to the Retirement Plan.*                                         X
</TABLE>
 
                                       42
<PAGE>
 
                               INDEX TO EXHIBITS
                                 ITEM 14(A) 3)
 
<TABLE>
<CAPTION>
                                                                   INCORPORATED      FILED WITH
 EXHIBIT                                                            HEREIN BY        ELECTRONIC
 NUMBER                      DESCRIPTION                           REFERENCE TO      SUBMISSION
 -------                     -----------                           ------------      ----------
 <C>     <S>                                                  <C>                    <C>
  10.20  AMETEK, Inc. Retirement Plan for Directors, dated    Exhibit 10.16 to 1993
         April 28, 1983 (the "Directors Plan").*              10-K.
  10.21  Amendment to the Directors Plan.*                    Exhibit 10.20 to 1994
                                                              10-K.
  10.22  Second Amendment to the Directors Plan.*             Exhibit (10)m) to
                                                              1986 10-K, SEC File
                                                              No. 1-168.
  10.23  Third Amendment to the Directors Plan.*              Exhibit (10)v) to
                                                              1987 10-K.
  10.24  AMETEK, Inc. Death Benefit Program for Directors,    Exhibit (10)y) to
         pursuant to which the Company has entered into       1987 10-K.
         agreements, restated January 1, 1987, with certain
         directors and one former director of the Company
         (the "Directors Program").*
  10.25  Amendment No. 1 to the Directors Program.*           Exhibit (10)z) to
                                                              1987 10-K.
  10.26  The AMETEK Savings and Investment Plan, as           Exhibit 10.31 to 1992
         restated and amended to October 1, 1992 (the         10-K.
         "Savings Plan").*
  10.27  Amendment No. 1 to the Savings Plan.*                Exhibit 10.23 to 1993
                                                              10-K.
  10.28  Amendment No. 2 to the Savings Plan.*                Exhibit 10.27 to 1994
                                                              10-K.
  10.29  Amendment No. 3 to the Savings Plan.*                Exhibit 10.28 to 1994
                                                              10-K.
  10.30  Amendment No. 4 to the Savings Plan.*                Exhibit 10.29 to 1994
                                                              10-K.
  10.31  Amendment No. 5 to the Savings Plan.*                Exhibit 10.30 to 1994
                                                              10-K.
  10.32  Amendment No. 6 to the Savings Plan.*                                            X
  10.33  Amendment No. 7 to the Savings Plan.*                                            X
  10.34  Reorganization and Distribution Agreement by and     Exhibit (2) to Form
         between the Company and Ketema, Inc. (the            8-K dated November
         "Reorganization and Distribution Agreement").        30, 1988, SEC File
                                                              No. 1-168.
  10.35  Agreements between the Company and Ketema, Inc.      Exhibit 10.56 to 1991
         amending certain provisions of the Reorganization    10-K.
         and Distribution Agreement.
  10.36  Benefits Agreement by and between the Company and    Exhibit (10)ss) to
         Ketema, Inc.                                         1988 10-K.
  10.37  Tax Agreement by and between the Company and         Exhibit (10)tt) to
         Ketema, Inc.                                         1988 10-K.
  10.38  Support Services Agreement by and between the        Exhibit (10)uu) to
         Company and Ketema, Inc.                             1988 10-K.
  10.39  Form of Severance Benefit Agreement between the      Exhibit (10)ww) to
         Company and certain executives of the Company.*      1989 10-K.
</TABLE>
 
                                       43
<PAGE>
 
                               INDEX TO EXHIBITS
                                 ITEM 14(A) 3)
 
<TABLE>
<CAPTION>
                                                                   INCORPORATED      FILED WITH
 EXHIBIT                                                            HEREIN BY        ELECTRONIC
 NUMBER                      DESCRIPTION                           REFERENCE TO      SUBMISSION
 -------                     -----------                           ------------      ----------
 <C>     <S>                                                  <C>                    <C>
  10.40  Form of Restricted Stock Agreement between the       Exhibit 10.59 to 1991
         Company and certain directors of the Company,        10-K.
         dated as of February 27, 1991.*
  10.41  Form of Restricted Stock Agreement between the       Exhibit 10.60 to 1991
         Company and certain executives of the Company,       10-K.
         dated as of May 21, 1991.*
  10.42  Form of Supplemental Retirement Benefit Agreement    Exhibit 10.61 to 1991
         between the Company and certain executives of the    10-K.
         Company, dated as of May 21, 1991.*
  10.43  Supplemental Senior Executive Death Benefit Plan,    Exhibit 10.41 to 1992
         effective as of January 1, 1992 (the "Senior         10-K.
         Executive Plan").*
  10.44  Amendment No. 1 to the Senior Executive Plan.*       Exhibit 10.42 to 1992
                                                              10-K.
  10.45  Senior Executive Split Dollar Death Benefit Plan,    Exhibit 10.43 to 1992
         dated as of December 15, 1992.*                      10-K.
  10.46  The 1995 Stock Incentive Plan of Ametek, Inc. (the   Annex A to 1995 Proxy
         "1995 Plan").*                                       Statement.
  10.47  Amendment No. 1 to the 1995 Plan.*                   Exhibit 10 to June
                                                              30, 1995 10-Q, SEC
                                                              File No. 1-168.
  12     Statement regarding computation of ratio of
         earnings to fixed charges.                                                       X
  21     Subsidiaries of the Registrant.                                                  X
  23     Consent of Independent Auditors.                                                 X
  27     Financial Data Schedule.                                                         X
  99     Letter to the holders of the Company's Common        Exhibit (21) to June
         Stock, dated July 31, 1989 (including Summary of     30, 1989 10-Q.
         Rights).
</TABLE>
--------
* Management contract or compensatory plan required to be filed pursuant to
  Item 601 of Regulation S-K.
 
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