1
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form------------------------
FORM 10-Q
X[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)15(d)
OF THE
- ----- SECURITIES EXCHANGE ACT OF 1934
For the quarter ended JuneFOR THE QUARTER ENDED JUNE 30, 19961997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)15(d)
OF THE
- ----- SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file numberFOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-10235
IDEX Corporation
----------------------------------------------------CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 36-3555336
- -------------------------------------- --------------------------------------
State or other jurisdiction of (I.R.S. Employer
Incorporation or Organization Identification No.)
630 Dundee Road
Northbrook, Illinois
DELAWARE 36-3555336
(State or other jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
630 DUNDEE ROAD, NORTHBROOK, ILLINOIS 60062
- -------------------------------------- --------------------------------------
(Address of principal Executive Offices) (Zip Code)
Executive Offices)
Registrant's telephone number, including area code (847) 498-7070
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changes since last
report.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d)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 ----- -----___
Number of shares of common stock of IDEX Corporation ("IDEX" or the
"Company") outstanding as of August 12, 1996: 19,267,471July
28, 1997: 29,217,748 shares.
Documents Incorporated by Reference:DOCUMENTS INCORPORATED BY REFERENCE: None.
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2
PART I. FINANCIAL INFORMATION
ItemITEM 1. Financial StatementsFINANCIAL STATEMENTS
IDEX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
JUNE 30, DECEMBER 31,
1997 1996
1995----------- ------------ ------------------
(UNAUDITED)
ASSETS
Current assets
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . .equivalents................................. $ 6,7665,408 $ 5,9375,295
Receivables - net . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,540 70,338
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93,864 101,052
Deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,944 7,045-- net........................................ 94,291 91,200
Inventories............................................... 96,794 97,516
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,038 1,527
--------- ---------assets...................................... 6,223 7,159
-------- --------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . 180,152 185,899assets................................... 202,716 201,170
Property, plant and equipment - net . . . . . . . . . . . . . . . . . . . . . 90,077 91,278-- net........................ 100,521 102,383
Intangible assets - net . . . . . . . . . . . . . . . . . . . . . . . . . . . 180,029 184,217-- net.................................... 274,179 274,511
Other non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . 4,773 4,728
--------- ---------noncurrent assets..................................... 6,654 5,709
-------- --------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 455,031 $ 466,122
========= =========assets........................................... $584,070 $583,773
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Trade accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . .payable.................................... $ 32,33141,571 $ 36,84640,670
Dividends payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,069 3,061payable......................................... 3,503 3,471
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,355 42,901
--------- ---------expenses.......................................... 49,533 48,716
-------- --------
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . 72,755 82,808liabilities.............................. 94,607 92,857
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185,650 206,184debt.............................................. 247,997 271,709
Other non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . 25,407 26,185
--------- ---------noncurrent liabilities................................ 26,054 23,698
-------- --------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 283,812 315,177
--------- ---------liabilities...................................... 368,658 388,264
-------- --------
Shareholders' equity
Common stock, par value $.01 per share;share
Shares authorized: 1996:1997 and 1996 -- 75,000,000
1995: 50,000,000
Shares issued and outstanding: 1996: 19,183,661
1995: 19,130,284 . . . . . . . . . . . . . . . . . . . . . . . . . . 192 1911997 -- 29,194,693; 1996
-- 28,925,867......................................... 292 289
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . 86,976 86,118capital................................ 89,481 89,657
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86,472 67,729earnings......................................... 126,625 105,238
Minimum pension liability adjustment...................... (632)
Accumulated translation adjustment . . . . . . . . . . . . . . . . . . . . . (2,421) (3,093)
--------- ---------adjustment........................ (354) 325
-------- --------
Total shareholders' equity . . . . . . . . . . . . . . . . . . . . . . . . 171,219 150,945
--------- ---------equity............................. 215,412 195,509
-------- --------
Total liabilities and shareholders' equity . . . . . . . . . . . . . . . $ 455,031 $ 466,122
========= =========equity............. $584,070 $583,773
======== ========
- ---------------
See Notes to Consolidated Financial Statements.
1
3
IDEX CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
For the Second Quarter Ended JuneSECOND QUARTER ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------- --------------------
1997 1996 1995
---------- ----------1997 1996
-------- -------- -------- --------
(UNAUDITED) (UNAUDITED)
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 131,169 $ 127,203sales......................................... $165,174 $131,169 $317,013 $265,055
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .sales..................................... 100,148 80,116 78,030193,076 162,338
-------- -------- -------- --------
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .profit...................................... 65,026 51,053 49,173123,937 102,717
Selling, general and administrative expenses . . . . . . . . . . . . . . . . .expenses...... 33,999 26,084 24,97664,738 53,100
Goodwill amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . .amortization............................. 2,159 1,232 1,0504,069 2,464
-------- -------- -------- --------
Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . .operations............................ 28,868 23,737 23,14755,130 47,153
Other income (expense) - net . . . . . . . . . . . . . . . . . . . . . . . . . (96) 41expense -- net.............................. 19 96 156 53
-------- -------- -------- --------
Income before interest expense and income taxes . . . . . . . . . . . . . . . .taxes... 28,849 23,641 23,18854,974 47,100
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .expense.................................. 4,901 4,066 3,9419,911 8,291
-------- -------- -------- --------
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . .taxes........................ 23,948 19,575 19,24745,063 38,809
Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . .taxes........................ 8,953 6,913 6,92816,673 13,933
-------- -------- -------- --------
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .income........................................ $ 14,995 $ 12,662 $ 12,31928,390 $ 24,876
======== ======== ======== ========
Earnings per common share . . . . . . . . . . . . . . . . . . . . . . . . . . .share......................... $ .64.50 $ .63.43 $ .95 $ .84
======== ======== ======== ========
Weighted average common shares outstanding . . . . . . . . . . . . . . . . . . 19,823 19,701outstanding........ 30,028 29,735 29,902 29,706
======== ======== ======== ========
- ---------------
See Notes to Consolidated Financial Statements.
2
4
IDEX CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
For the Six Months Ended June 30, 1996 1995
---------- ----------
(UNAUDITED)
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 265,055 $ 243,783
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162,338 149,537
--------- ---------
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102,717 94,246
Selling, general and administrative expenses . . . . . . . . . . . . . . . . . 53,100 48,615
Goodwill amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,464 2,010
--------- ---------
Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47,153 43,621
Other income (expense) - net . . . . . . . . . . . . . . . . . . . . . . . . . (53) 50
--------- ---------
Income before interest expense and income taxes . . . . . . . . . . . . . . . . 47,100 43,671
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,291 7,607
--------- ---------
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 38,809 36,064
Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 13,933 12,983
--------- ---------
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 24,876 $ 23,081
========= =========
Earnings per common share . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.26 $ 1.17
========= =========
Weighted average common shares outstanding . . . . . . . . . . . . . . . . . . 19,804 19,652
========= =========
- ---------------
See Notes to Consolidated Financial Statements.
3
5
IDEX CORPORATION AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED SHAREHOLDERS' EQUITY
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
COMMON STOCK MINIMUM
& ADDITIONAL PENSION ACCUMULATED TOTAL
AND ADDITIONALPAID-IN RETAINED LIABILITY TRANSLATION SHAREHOLDERS'
PAID-IN
CAPITAL EARNINGS ADJUSTMENT ADJUSTMENT EQUITY
------------------------------- -------- ---------- ------------ ------------------------------ -------------
Balance:
Balance, December 31, 1995 . . . . . . . .1996......... $89,946 $105,238 $ 86,309325 $ 67,729195,509
Issuance of 268,827 shares of
common stock from exercise of
stock options, net of stock
options surrendered.............. (173) (173)
Minimum pension liability
adjustment....................... $ (3,093) $ 150,945
Stock options exercised . . . . . . 859 859(632) (632)
Unrealized translation
adjustment . 672 672adjustment....................... (679) (679)
Cash dividends declared on common
stock ($.32.24 per share) . . . . . . (6,133) (6,133)........... (7,003) (7,003)
Net income . . . . . . . . . . . .
24,876 24,876income......................... 28,390 28,390
------- -------- ------- ----- ---------
--------- --------- ---------
Balance:Balance, June 30, 19961997
(unaudited) . . . ....................... $89,773 $126,625 $ 87,168(632) $(354) $ 86,472 $ (2,421) $ 171,219
========= ========= =========215,412
======= ======== ======= ===== =========
- ---------------See Notes to Consolidated Financial Statements.
3
5
IDEX CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
(IN THOUSANDS)
SIX MONTHS ENDED
JUNE 30,
--------------------
1997 1996
-------- --------
(UNAUDITED)
Cash flows from operating activities:
Net income................................................ $ 28,390 $ 24,876
Adjustments to reconcile net income to net cash flows from
operating activities:
Depreciation........................................... 8,550 6,865
Amortization of intangibles............................ 4,979 3,371
Amortization of debt issuance expenses................. 324 312
Deferred income taxes.................................. 3,014 587
Increase in receivables................................ (1,634) (202)
Decrease in inventories................................ 3,162 7,188
Decrease in trade accounts payable..................... (884) (4,515)
Decrease in accrued expenses........................... (223) (5,546)
Other transactions -- net.............................. 4,226 957
-------- --------
Net cash flows from operating activities............... 49,904 33,893
-------- --------
Cash flows from investing activities:
Additions to property, plant and equipment................ (7,237) (6,405)
Acquisition of business (net of cash acquired)............ (11,871)
-------- --------
Net cash flows from investing activities............... (19,108) (6,405)
-------- --------
Cash flows from financing activities:
Dividends paid............................................ (6,971) (6,125)
Borrowing under notes payable for acquisition of
business............................................... 9,909
Borrowing under U.S. credit agreement for acquisition of
business............................................... 3,073
Net repayments under the credit agreements................ (36,404) (20,138)
Decrease in accrued interest.............................. (290) (396)
-------- --------
Net cash flows from financing activities............... (30,683) (26,659)
-------- --------
Net increase in cash........................................ 113 829
Cash and cash equivalents at beginning of period............ 5,295 5,937
-------- --------
Cash and cash equivalents at end of period.................. $ 5,408 $ 6,766
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest.................................................. $ 9,757 $ 8,254
Income taxes.............................................. 6,218 13,354
See Notes to Consolidated Financial Statements.
4
6
IDEX CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
(IN THOUSANDS)
For the Six Months Ended June 30, 1996 1995
---------- ----------
(UNAUDITED)
Cash Flows From Operating Activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 24,876 $ 23,081
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,865 5,681
Amortization of intangibles . . . . . . . . . . . . . . . . . . . . . . . 3,371 2,537
Amortization of debt issuance expenses . . . . . . . . . . . . . . . . . 312 312
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 587 150
Increase in receivables . . . . . . . . . . . . . . . . . . . . . . . . . (202) (8,443)
(Increase) decrease in inventories . . . . . . . . . . . . . . . . . . . 7,188 (8,114)
Increase (decrease) in trade accounts payable . . . . . . . . . . . . . . (4,515) 1,386
Increase (decrease) in accrued expenses . . . . . . . . . . . . . . . . . (5,546) 2,016
Other transactions - net . . . . . . . . . . . . . . . . . . . . . . . . 957 274
-------- ---------
Net cash flows from operating activities . . . . . . . . . . . . . . . 33,893 18,880
-------- ---------
Cash Flows From Investing Activities:
Additions to property, plant and equipment . . . . . . . . . . . . . . . . . (6,405) (5,539)
Acquisition of business (net of cash required) . . . . . . . . . . . . . . . (32,905)
-------- ---------
Net cash flows from investing activities . . . . . . . . . . . . . . . . . (6,405) (38,444)
-------- ---------
Cash Flows From Financing Activities:
Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,125) (5,348)
Net borrowings (repayments) of long-term debt . . . . . . . . . . . . . . . . (20,138) 21,500
Decrease in accrued interest . . . . . . . . . . . . . . . . . . . . . . . . (396) (21)
-------- ---------
Net cash flows from financing activities . . . . . . . . . . . . . . . . (26,659) 16,131
-------- ---------
Net increase (decrease) in cash . . . . . . . . . . . . . . . . . . . . . . . . 829 (3,433)
Cash and cash equivalents at beginning of period . . . . . . . . . . . . . . . 5,937 6,288
-------- ---------
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . $ 6,766 $ 2,855
======== =========
Supplemental Disclosure of Cash Flow Information
------------------------------------------------
Cash paid during the period for:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,254 $ 7,192
Taxes (including foreign) . . . . . . . . . . . . . . . . . . . . . . . . . . 13,354 10,913
- ---------------
See Notes to Consolidated Financial Statements.
5
7
IDEX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization and Acquisition
Pursuant to the requirements of the Securities and Exchange Commission,
the January 22, 1988 acquisition of the initial six businesses comprisingBUSINESS
IDEX Corporation ("IDEX" or the "Company") was not accounted for asis a purchase
transaction. Consequently,manufacturer of a wide
array of proprietary, engineered industrial products sold to a diverse customer
base in a variety of industries in the accounting for the acquisition does not reflect
any adjustment of the carrying value of the assetsU.S. and liabilities to their
fair values at the time of the acquisition. Accordingly, the total
shareholders' equity of IDEX at June 30, 1996internationally. Its products
include industrial pumps and December 31, 1995 includes a
charge of $96.5 million which represents the excess of the purchase price over
the book value of the subsidiaries purchased at the date of the acquisition.controls; fire-fighting pumps and rescue equipment;
dispensing and mixing equipment; stainless steel banding, clamping and
sign-mounting devices; sheet metal fabricating equipment and tooling; automatic
lubrication systems; small-horsepower compressors; and energy absorption
equipment. These activities are grouped into two business segments; Fluid
Handling and Industrial Products.
2. (a) Significant Accounting PoliciesSIGNIFICANT ACCOUNTING POLICIES
In the opinion of management, the unaudited information presented as of
June 30, 19961997 and for the three and six months ended June 30, 19961997 and 19951996 reflects all
adjustments necessary, which consist only of normal recurring adjustments, for a
fair presentation of the interim periods. (b) Earnings Per ShareCertain previously reported amounts
have been reclassified to conform to the current presentation format.
Earnings per common share is(EPS) are computed by dividing net income by the
weighted average number of shares of common stock and common stock equivalents
outstanding during the period. Common stock equivalents, in the form of stock
options and deferred compensation units, have been included in the calculation
of weighted average shares outstanding using the treasury stock method. All
share and per share data have been restated for the three-for-two stock split
effected in the form of a 50% stock dividend in January 1997.
In February 1997 the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards (SFAS) No. 128, "Earnings Per Share,"
effective for interim and annual periods ending after December 15, 1997 which
superseded Accounting Principles Board Opinion No. 15. This statement replaces
primary EPS with basic EPS. Basic EPS is computed by dividing net income by the
weighted average number of shares of common stock outstanding during the period.
Diluted EPS, formerly fully diluted EPS, must be presented in all cases with
basic EPS. Had SFAS No. 128 been effective for the six-month periods ending June
30, 1997 and 1996, EPS for the Company would have been as follows (in thousands
except per share amounts):
1997 1996
---- ----
(UNAUDITED)
Net income............................................... $28,390 $24,876
Weighted average common shares outstanding............... 29,140 28,736
Basic EPS................................................ $ .97 $ .87
Weighted average common shares outstanding............... 29,140 28,736
Weighted average common stock equivalents outstanding.... 762 971
------- -------
Total weighted average shares outstanding................ 29,902 29,706
Diluted EPS.............................................. $ .95 $ .84
In June 1997 the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income" and SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information", both of which are effective for
fiscal years beginning after December 15, 1997. SFAS No. 130 establishes
standards for reporting and display of comprehensive income and its components.
SFAS No. 131 establishes standards for the way that public business enterprises
report information about operating segments in annual financial statements and
related disclosures about products and services, geographic areas and major
customers. The requirements of both statements impact financial statement
disclosure only. Accordingly, SFAS No. 130 and 131, when adopted, will not have
a material impact on the Company's financial position or the results of its
operations.
5
7
IDEX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
3. InventoriesINVENTORIES
The components of inventories as of June 30, 19961997 and December 31, 19951996
were (000's omitted)(in thousands):
JuneJUNE 30, DecemberDECEMBER 31,
1997 1996
1995-------- ------------
-------------
(unaudited)(UNAUDITED)
Inventories
Raw materials and supplies $ 12,807 $ 13,978supplies.......................... $18,608 $18,351
Work in process 13,311 15,434process..................................... 17,449 14,909
Finished goods 67,746 71,640
--------- ---------
Totals $ 93,864 $101,052
========= ========goods...................................... 60,737 64,256
------- -------
Total.......................................... $96,794 $97,516
======= =======
Those inventories which were carried on a LIFO basis amounted to $55,418$61,822
and $57,409$62,068 at June 30, 19961997 and December 31, 1995,1996, respectively. The excess of
current cost over LIFO inventory value and the impact on earnings of using the
LIFO method are not material.
4. Common and Preferred StockCOMMON AND PREFERRED STOCK
The Company had five million shares of preferred stock authorized but
unissued at June 30, 19961997 and December 31, 1995.
5. Subsequent Events
On July 17, 1996, IDEX entered into a multi-currency Third Amended and
Restated Credit Agreement ("Amended U.S. Credit Agreement") increasing the
maximum availability to $250 million along with making certain adjustments to
the interest rate structure. The availability under the Amended U.S. Credit
Agreement declines in stages commencing July 1, 1999 to $200 million on July 1,
2000. Any amount outstanding at July 1, 2001 becomes due at that date.
Interest is payable quarterly on the outstanding balance at the bank agent's
reference rate, or at LIBOR plus an applicable margin.
On July 29, 1996, IDEX purchased certain assets and assumed certain
liabilities of Fluid Management L.P. for approximately $137 million. The
purchase price was financed through a borrowing of $135 million under the
Amended U.S. Credit Agreement and the issuance of 75,700 shares of IDEX Common
Stock.1996.
6
8
ItemITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of OperationsMANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Historical Overview and Outlook
IDEX sells a broad range of proprietary fluid handling and industrial
products to a diverse customer base in the U.S. and, to an increasing extent,
internationally. Accordingly, IDEX's businesses are affected by levels of
industrial activity and economic conditions in the U.S. and in other countries
where its products are sold and by the relationship of the U.S. dollar to other
currencies. Among the factors that affect the demand for IDEX's products are
interest rates, levels of capital spending in certain industries, currency
exchange rate fluctuations, and overall industrial growth.
IDEX has a history of strong operating margins. The Company's operating
margins are affectedimpacted by, among other things, utilization of facilities as sales
volumes change, and inclusion of newly acquired businesses which may have lower
margins that could be further affected by purchase accounting adjustments.
IDEX's orders, sales, net income and earnings per share in the second
quarter of 19961997 were the highest of any second quarter in its history.
Business conditions have shown more modest growth this year than in the first
half of 1995. Incoming orders in the 1996 second quarter increased 6% over the
same quarter of 1995, which was IDEX's previous record second quarter. Sales in the
second quarter of 1996 increased 3% over the same quarter of last year,
as sales in the core businesses decreased 5%, while the inclusion of Micropump
(acquired May 1995) and Lukas (acquired October 1995) added 8% to the volume
increase. Shipments in the quarter outpaced incoming orders by $2.9were $165.2 million and backlogs declined accordingly, butslightly exceeded orders of $164.6
million. Second quarter orders increased by about 3% from the 1997 first quarter
rate, and excluding orders at recent acquisitions, were 5% higher than the
second quarter 1996 rate. Backlogs of unfilled orders remain at IDEX's typical
operating level of about 1.41.5 months' sales.
This low levelThe following forward-looking statements are qualified by the cautionary
statement under the Private Securities Litigation Reform Act set forth below.
The pace of backlog allows IDEXincoming orders has been steady, IDEX's recent acquisitions are
contributing nicely to provide
excellent customer service, but also means that changes in orders are felt
quickly in operating results.
Clearly, growth in the U.S.earnings and Europe is more sluggish this year than
last. Nevertheless, with the Company's strong market position, new product
emphasis, international presence, and the integration of recent acquisitions,
including the Fluid Management acquisition, IDEX's prospects are quiteremain good. The second quarter provided a difficult comparison with the prior year because
of IDEX's all-time recordIDEX
expects earnings in the three months ended June 30, 1995,
following a surge in orders across the company. Based on current conditions
and barring unforeseen circumstances, IDEX expects operating results in each of
the third and fourthnext two quarters will improve fromto exceed those of the samecorresponding
1996 quarters last
year, and second half results to at least match, if not exceed, first
half results. That would enable the Company willto again setreport new records in sales, net
income before extraordinary charges for every year since IDEX went public in
1989. For the longer term, management remains confident of IDEX's prospects
given its strong market positions, new product and earnings per share in 1996.international emphasis and
use of the Company's fine cash flow to cut debt and interest expense or make
acquisitions following its disciplined approach.
Cautionary Statement Under the Private Securities Litigation Reform Act
Demand for the company'sIDEX's products is cyclical in nature and subject to changes in
general market conditions that affect demand. The Company's customers operate
primarily in industries that are affectedrapidly impacted by changes in economic
conditions, which in turn can affectinfluence orders. The CompanyIDEX operates without
significant order backlogs. As a result, economic slowdowns could quickly have
an adverse effect on the Company'sits performance. In addition, the Company's operating
forecasts and budgets are based upon detailed assumptions which it believes are
reasonable, but inherent difficulties in predicting the impact of certain
factors may cause actual results to differ materially from the forward-looking
statements set forth above.in this discussion and analysis section. These factors
include but are not limited to the following: Thethe Company's utilization of its
capacity and the impact of capacity utilization on costs; developments with
respect to contingencies such as environmental matters and litigation; labor
market conditions and raw materials costs; levels of industrial activity and
economic conditions in the U.S. and other countries around the worldworld; and levels
of capital spending in certain industries, all of which have a material
influence on order rates:rates; the relationship of the U.S. dollar to other
currencies; interest rates; the Company's ability to integrate and operate
acquired businesses on a profitable basis; and other risks detailed from time to
time in the Company'sIDEX's filings with the Securities and Exchange Commission.
7
9
IDEX CORPORATION AND SUBSIDIARIES
COMPANY AND BUSINESS GROUP FINANCIAL INFORMATION
(000'S OMITTED)(IN THOUSANDS)
For the Second Quarter Ended JuneSECOND QUARTER ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------- --------------------
1997(1) 1996 1995
---------- ----------1997(1) 1996
-------- -------- -------- --------
(UNAUDITED) (UNAUDITED)
Fluid Handling Group
(1) . . . . . . . . . . . . . . . . . . . . . .
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . .sales(2)...................................... $127,604 $ 96,513 $ 91,426$245,303 $193,130
Income from operations . . . . . . . . . . . . . . . . . . . .operations(3)......................... 25,422 20,580 19,76148,537 40,373
Operating margin . . . . . . . . . . . . . . . . . . . . . . .margin.................................. 19.9% 21.3% 21.6%19.8% 20.9%
Depreciation and amortization . . . . . . . . . . . . . . . . .amortization..................... $ 5,987 $ 4,179 $ 3,42311,595 $ 8,482
Capital expenditures . . . . . . . . . . . . . . . . . . . . .expenditures.............................. 3,029 2,468 2,2585,298 3,798
Industrial Products Group
(1)
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . .sales(2)...................................... $ 37,720 $ 34,712 $ 35,87071,945 $ 72,040
Income from operations . . . . . . . . . . . . . . . . . . . .operations(3)......................... 6,240 5,143 5,82211,808 11,023
Operating margin . . . . . . . . . . . . . . . . . . . . . . .margin.................................. 16.5% 14.8% 16.2%16.4% 15.3%
Depreciation and amortization . . . . . . . . . . . . . . . . .amortization..................... $ 925 $ 829 $ 7221,839 $ 1,680
Capital expenditures . . . . . . . . . . . . . . . . . . . . . $expenditures.............................. 933 1,248 1,0241,660 2,588
Company
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . .sales......................................... $165,174 $131,169 $127,203$317,013 $265,055
Income from operations . . . . . . . . . . . . . . . . . . . .operations............................ 28,868 23,737 23,14755,130 47,153
Operating margin . . . . . . . . . . . . . . . . . . . . . . .margin.................................. 17.5% 18.1% 18.2%17.4% 17.8%
Depreciation and amortization (2) . . . . . . . . . . . . . . .amortization(4).................. $ 6,962 $ 5,046 $ 4,16013,529 $ 10,236
Capital expenditures . . . . . . . . . . . . . . . . . . . . .expenditures.............................. 4,236 3,716 3,2837,237 6,405
- -------------------------
(1) Includes acquisition of Blagdon Pumps (April 4, 1997) and Fluid Management
(July 29, 1996) in the Fluid Handling Group.
(2) Group net sales include intersegment sales.
(3) Group income from operations excludes net unallocated corporate operating
expenses.
(2)(4) Excludes amortization of debt issuance expenses.
8
10
COMPANY AND BUSINESS GROUP FINANCIAL INFORMATION
(000'S OMITTED)
For the Six Months Ended June 30, 1996 1995
---------- ----------
(UNAUDITED)
Fluid Handling Group (1) . . . . . . . . . . . . . . . . . . . . . .
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . $193,130 $172,953
Income from operations . . . . . . . . . . . . . . . . . . . . 40,373 36,668
Operating margin . . . . . . . . . . . . . . . . . . . . . . . 20.9% 21.2%
Depreciation and amortization . . . . . . . . . . . . . . . . . $ 8,482 6,625
Capital expenditures . . . . . . . . . . . . . . . . . . . . . 3,798 3,599
Industrial Products Group (1)
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 72,040 $ 71,030
Income from operations . . . . . . . . . . . . . . . . . . . . 11,023 11,712
Operating margin . . . . . . . . . . . . . . . . . . . . . . . 15.3% 16.5%
Depreciation and amortization . . . . . . . . . . . . . . . . . $ 1,680 $ 1,563
Capital expenditures . . . . . . . . . . . . . . . . . . . . . 2,588 1,919
Company
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . $265,055 $243,783
Income from operations . . . . . . . . . . . . . . . . . . . . 47,153 43,621
Operating margin . . . . . . . . . . . . . . . . . . . . . . . 17.8% 17.9%
Depreciation and amortization (2) . . . . . . . . . . . . . . . $ 10,236 $ 8,218
Capital expenditures . . . . . . . . . . . . . . . . . . . . . 6,405 5,539
(1) Group income from operations excludes net unallocated corporate operating
expenses.
(2) Excludes amortization of debt issuance expenses.
9
11
Results of OperationsRESULTS OF OPERATIONS
For purposes of this discussion and analysis section, reference is made to
the tablestable on the preceding pages 8 and 9page and the Company's Statements of Consolidated
Operations included in the Financial StatementStatements section. IDEX consists of two
business segments: Fluid Handling and Industrial Products.
PerformanceAll share and per share data have been restated to reflect the
three-for-two stock split effected in the Second Quarter Ended Juneform of a 50% stock dividend paid on
January 31, 1997.
PERFORMANCE IN THE SECOND QUARTER ENDED JUNE 30, 1997 COMPARED TO 1996
Compared to 1995
Sales in the second quarter of 1996 were $131.2 million, and increased by
3 percent over $127.2 million in the corresponding period of 1995.
Fluid Handling GroupNet sales of $96.5$165.2 million infor the three months ended June 30, 19961997
increased by $5.126% over $131.2 million or 6% overin the same period last year. Sales in 1995,the
base businesses were up about 5% in the second quarter of 1997, with
acquisitions (Fluid Management on July 29, 1996 and Blagdon Pumps on April 4,
1997) contributing 21% of the rise in sales. Net income of $15.0 million in the
second quarter of 1997 rose by 18% over the $12.7 million in 1996's second
quarter. Earnings per share of $.50 in this year's second quarter improved by
$.07 over the $.43 earned in the same quarter of last year.
In the second quarter of 1997, the Fluid Handling Group generated 77% of
sales and 80% of profits, and the Industrial Products Group contributed 23% of
sales and 20% of profits. International sales accounted for 41% of total sales
in the 1997 period, versus 38% in the corresponding quarter of 1996.
Fluid Handling Group sales of $127.6 million increased by $31.1 million, or
32%, most of which was due to the inclusion of recent acquisitions, Micropump (May, 1995)the Fluid Management and Lukas (October,
1995).Blagdon
operations in this year's second quarter results. Sales outside the U.S.
increased to 38%41% of total Fluid Handling Group sales in the second quarter of
19961997 from 33%38% in the comparable 1995 period due
to the inclusion of Lukas, based in Germany, and the U.K. - based operations of
Micropump.1996 period. Second quarter 19961997 sales of $37.7
million in the Industrial Products Group ofincreased $3.0 million, or 9%, from
$34.7 million decreased $1.2 million, or 3%, fromrecorded in the same quarterperiod of last year due
to lower worldwide demand for higher-ticket capital goods, particularly metal
fabrication equipment.year. Shipments outside the
U.S. were 39%38% of total sales in the Industrial Products Group in the second
quarter of 1996,1997, down slightly from 42%39% in the comparable 19951996 period.
Gross profit of $65.0 million in the second quarter of 1997 increased $14.0
million, or 27%, from the comparable period of 1996. Gross profit as a percent
to sales was 39.4% in the 1997 period, up slightly from 38.9% in last year's
second quarter. Selling, general and administrative (SG&A) expenses of $34.0
million in 1997's second quarter increased 30% from $26.1 million in the same
three months of 1996. As a percentage of sales, these expenses increased
slightly to 20.6% in 1997 from 19.9% in 1996. Goodwill amortization increased
75% to $2.2 million in the second quarter of 1997 from $1.2 million in the
comparable prior year period and, as a percent of sales, increased to 1.3% from
.9%. The year over year increases in gross profit, SG&A expenses and goodwill
amortization were largely attributable to the inclusion of recent acquisitions.
Income from operations increased $.6$5.2 million, or 3%22%, to $23.7$28.9 million in
the three months ended June 30, 19961997 from $23.1$23.7 million in 1995's1996's second
quarter. Second quarter 1996 operatingOperating margins at 17.5% of 18.1%sales also were justvery strong and improved
slightly from the immediately preceding quarter. However, margins were off by
about the same as the
18.2% recorded in6/10ths of 1% from last year's record second quarter. In the Fluid Handling
Group, income from operations of $20.6 million and operating margin of 21.3% in
the three-month 1996 period compare to the $19.8 million and 21.6% recorded in
1995. The slight operating margin decline resulted from thequarter, with inclusion of recent acquisitions whose operatingacquired
companies having a slight negative effect. Nevertheless, the acquired companies
have good margins as expected, were somewhat lower
than the other units in the Group and whose profits were further affected by
purchase accounting adjustments. Income from operations in the Industrial
Products Group of $5.1which are improving.
Interest expense increased to $4.9 million in the second quarter of 1996 declined $.7
million1997
from the $5.8 million in 1995. Operating margin of 14.8% in the 1996
second quarter decreased from the 16.2% achieved in 1995 due primarily to
volume-related profit declines associated with lower sales of metal fabrication
equipment.
Interest expense increased to $4.1 million in the second quartersame period of 1996
from $3.9 million in the 1995 period because of additional borrowings under the
credit agreements forlong-term
debt incurred to complete the acquisitions of MicropumpFluid Management and Lukas.Blagdon Pumps
offset by cash flow from operations.
The provision for income taxes remained the same at $6.9increased to $9.0 million in the three
months ended June 30, 1997, from $6.9 million in the comparable 1996 and 1995.period. The
effective tax rate decreasedincreased to 37.4% in the 1997 period from 35.3% in 1996's
second quarter due to the 1996 period from 36.0%changing mix of international earnings and state
franchise tax factors.
Net income of $15.0 million in the corresponding periodsecond quarter of 1995.
Net1997 was 18% higher
than the net income of $12.7 million in the second quarter of 1996 was 3% higher
than the net income of $12.3 million in same period of 1995. Record earnings1996. Earnings per
share of 64 centsamounted to $.50 in this year's second quarter, improved 2% fromwhich was 16% higher than
the 63
cents earned$.43 recorded in the samesecond quarter of last year, which was the previous all-time
high for any quarter in IDEX's history.
101996.
9
12
Performance in the Six Months Ended June11
PERFORMANCE IN THE SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO 1996 Compared to 1995
In the six months ended June 30, 1996,1997, IDEX had record sales of $265.1$317.0
million, up 9%20% from last year's previous record of $243.8$265.1 million and net income of
$28.4 million, up 14% from last year's $24.9 million. Overall
growth was dampened by those businesses that produce or sell to manufacturersEarnings per share of higher-ticket capital goods. Specifically, Strippit, which produces metal
fabrication equipment; Vibratech, which serves the heavy-duty truck engine
market; and Lubriquip, which makes centralized lubrication systems for
machinery, have experienced sales declines$.95
in this year. On an overall basis,
salesyear's first half compared with $.84 in the base businesses were essentially flat with last year, with
acquisitions accounting for the volume increases. International sales
accounted for 38% of the total in the 1996 first half, up from 35% last year.year-ago period. Incoming
orders in the first six months of 1997 totaled $261.9$323.8 million, almost
equivalentslightly in
excess of sales, indicating that business pace continues to be good. The Company
ended the period with a typical backlog of approximately 1.5 months' sales.
In the first half of 1997, the Fluid Handling Group generated 77% of sales
and backlogs at June 30 were at a typical 1.4 months'
sales.80% of profits, and the Industrial Products Group contributed 23% of sales
and 20% of profits. International sales accounted for 40% of total sales in the
1997 first half, up from 38% last year.
Fluid Handling Group sales of $193.1$245.3 million increased $20.2$52.2 million, or
12%27%, due to the inclusion of the recently acquired MicropumpFluid Management and Lukas
operations.Blagdon Pumps operations
in this year's results. Sales outside the U.S. increased to 38%40% of total Fluid
Handling Group sales in the first six months of 19961997 from 32%38% in the comparable
19951996 period due to the inclusion of Lukas,Blagdon Pumps, based in Germany, the U.K. - based, the
international operations of Micropump,Fluid Management, and stronger worldwide demand for
industrial pumps and certain other products of the Group's corebase businesses.
First half 19961997 sales of $71.9 million in the Industrial Products Group
ofwere essentially equal to the $72.0 million increased $1.0 million, or 1%, overrecorded in the same period of last
year due to higher customer demand for banding and clamping devices and sign
mounting systems, offset by lower worldwide shipments of metal fabrication equipment.activity levels in the capital goods-related
businesses. Shipments outside the U.S. were 38% of total sales in the Industrial
Products Group in the six-month 19961997 period, down slightly from 39%the same percentage as in the
comparable 19951996 period.
Gross profit of $123.9 million in the first half of 1997 increased $21.2
million, or 21%, from the comparable period of 1996. Gross profit as a percent
to sales was 39.1% in the 1997 period, up slightly from 38.8% in last year's
first half. Selling, general and administrative (SG&A) expenses of $64.7 million
in 1997's first six months increased 22% from $53.1 million in the same period
of 1996. As a percentage of sales, these expenses increased slightly to 20.4% in
1997 from 20.0% in 1996. Goodwill amortization increased 65% to $4.1 million in
the first half of 1997 from $2.5 million in the comparable prior year period
and, as a percent of sales, increased to 1.3% from .9%. The year over year
increases in gross profit dollars, SG&A expenses as a percent of sales and
goodwill amortization resulted from the acquisitions of Fluid Management and
Blagdon Pumps.
Income from operations increased $3.5$7.9 million, or 8%17%, to $47.2$55.1 million in
the six months ended June 30, 19961997 from $43.6$47.2 million in 1995's1996's first half.
Six-month 1996 operatingOperating profit margins in this year's first half were 17.4% of sales versus
17.8% were just aboutin the same asperiod last year, with the 17.9%
postedslight decline caused by including
acquired companies in lastthis year's record first six months.results. Margins in the Company's base
businesses actually improved somewhat. In the Fluid Handling Group, income from
operations of $40.4$48.5 million and operating margin of 20.9 %19.8% in the first six
months of 19961997 compare to the $36.7$40.4 million and 21.2%20.9% recorded in 1995.1996. The
slight operating margin decline resulted from the inclusion of recent
acquisitions whose operating margins, as expected, were somewhat lower
than the other units in the Group and whose profits were further affected by
purchase accounting adjustments.this year's results. Income from operations in the Industrial
Products Group of $11.0$11.8 million in the six-month 19961997 period was down $.7up $.8 million
from the $11.7$11.0 million in 1995.1996. Operating margin of 15.3%16.4% in the 19961997 first half
decreased fromcompares favorably to the 16.5%15.3% achieved in 1995 because of volume-related
profit declines at the Company's Strippit operations.1996.
Interest expense increased to $8.3$9.9 million in the first half of 19961997 from
$7.6$8.3 million in the 19951996 period because of additional borrowings under the
credit agreements forlong-term debt incurred to
complete the acquisitions of MicropumpFluid Management and Lukas.Blagdon Pumps offset by cash
flow from operations.
The provision for income taxes increased to $13.9$16.7 million in the six months
ended June 30, 19961997 from $13.0$13.9 million in the comparable 19951996 period. The
effective tax rate decreased slightlyincreased to 37.0% in 1997 from 35.9% in 1996 from 36.0%due to the
changing mix of international earnings and state franchise tax factors.
Record net income of $28.4 million in 1995.
Recordthe first six months of 1997 was 14%
higher than the net income of $24.9 million in the first six months of 1996 was 8%
higher than the net income of $23.1 million in the same period of 1995.1996. Earnings
per share amounted to $1.26$.95 in 1996's1997's first half, a new all-time high, which was
8%13% higher than the $1.17$.84 recorded in the year-ago period.
1110
13
Liquidity and Capital Resources12
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1996,1997, IDEX's working capital was $107.4$108.1 million and its current
ratio was 2.52.1 to 1. Internally generated funds were adequate to fund capital
expenditures of $6.4$7.2 million and $5.5$6.4 million, and dividends on common stock of
$6.1$7.0 million and $5.3$6.1 million, for the six months ended June 30, 19961997 and 1995,1996,
respectively. The capital expenditures were generally for machinery and
equipment which improved productivity, although a portion was for repair and
replacement of equipment and facilities. Management believes that IDEX has ample
capacity in its plant and equipment to meet expectedany intermediate and long-term needs
for future growth in the intermediate term.growth. During the six months ended June 30, 19961997 and 1995,1996,
depreciation and amortization expense, excluding amortization of debt issuance
expenses, was $10.2$13.5 million and $8.2$10.2 million, respectively.
At June 30, 1996,1997, the maximum amount available under the multi-currency
amended U.S. Credit
Agreementcredit agreement was $150$250 million, of which $75$128.7 million was
being used. On July 17,
1996, IDEX entered intoborrowed, including a Netherlands guilder borrowing of NGL 82.0 million ($42.7
million) which provides an Amended U.S. Credit Agreement increasingeconomic hedge against the maximum
amount available to $250 million along with making certain adjustments to the
interest rate structure.net investment in Fluid
Management's Netherlands operation. The availability under the Amended U.S. Credit
Agreementthis facility
declines in stages commencing July 1, 1999, to $200 million on July 1, 2000. Any
amount outstanding at July 1, 2001 becomes due at that date. Interest is payable
quarterly on the outstanding balance at the bank agent's reference rate or at
LIBOR plus an applicable margin. At June 30, 1996, that1997, the applicable margin was 3550
basis points. In addition,The Company also has a facility fee is$10 million demand line of credit available
for short-term borrowing requirements at the bank agent's reference rate or at
an optional rate based on the bank's cost of funds. At June 30, 1997, there was
$2.0 million borrowed under this short-term line of credit. The U.S. dollar
equivalent of the notes payable at June 30, 1997 issued to the seller in the
April 1997 acquisition of Blagdon Pumps was $9.9 million with interest payable
quarterly onat LIBOR plus an applicable margin.
On May 23, 1997, the entire $250 millionCompany's Lukas subsidiary entered into an amended
German credit agreement improving the interest rate structure and eliminating
certain reductions in availability. At June 30, 1997, the maximum amount
available under the Amended U.S. Credit
Agreement. At June 30, 1996, the applicable facility fee percentage was 15
basis points.
The maximum amount available at June 30, 1996 under the Company's German Credit Agreementcredit agreement was DM 52.5 million ($34.530.8 million),
of which DM 50.0 million52.0 ($32.830.5 million) was being used. The borrowing provides an
economic hedge against the net investment in the Lukas operation. The
availability under the Company's German
Credit Agreementthis agreement declines in stages from DM 52.5 millioncommencing November 1,
1999, to DM 31.3 million at November 1, 2000. Any amount outstanding at November
1, 2001, becomes due at that date. Interest is payable quarterly on the
outstanding balance at LIBOR plus 100an applicable margin. At June 30, 1997, the
applicable margin was 77.5 basis points.
IDEX believes it will generate sufficient cash flow from operations in 1997
to meet its operating requirements, interest and scheduled amortization payments
under both the Amendedamended U.S. Credit Agreement and the German Credit Agreement,credit agreements, interest and principal
payments on the Senior Subordinated Notes, approximately $14$23 million of planned
capital expenditures and $12approximately $14 million of annual dividend payments
to holders of common stock in 1996.stock. From commencement of operations in January 1988
until June 30, 1996,1997, IDEX has borrowed $277$422 million under theits credit agreements
to complete nineeleven acquisitions. During this same period, IDEX generated,
principally from operations, cash flow of $259$343 million to reduce its
indebtedness. In the event that suitable businesses or assets are available for
acquisition by IDEX upon terms acceptable to the Board of Directors, IDEX may
obtain all or a portion of the financing for the acquisitions through the
incurrence of additional long-term indebtedness.
On July 29, 1996 IDEX acquired Fluid Management, a Wheeling,
Illinois-based manufacturer of color formulation equipment for paints,
coatings, inks and dyes for approximately $137 million. Fluid Management,
which also has operations in the Netherlands, Germany and Australia, is the
world's leading producer of this type of equipment, with annual sales of
approximately $90 million. The acquisition was accounted for using the
purchase method of accounting and was financed through a $135 million
borrowing under the Amended U.S. Credit Agreement and the issuance of 75,700
shares of IDEX common stock.
1211
1413
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. None.
Item 2. Changes in Securities. Not Applicable.
Item 3. Defaults upon Senior Securities. None.
Item 4. Submission of Matters to a Vote of Security Holders. None.
Item 5. Other Information.
On July 29, 1996, IDEX Corporation ("IDEX"), through its newly
formed subsidiary Fluid Management, Inc. ("FM"), a Delaware
Corporation, purchased certain assets and assumed certain
liabilities of Fluid Management Limited Partnership ("FMLP")
and certain related entities for approximately $137 million.
The purchase price, arrived at through arms-length
negotiations between IDEX and the partners of FMLP, is subject
to an adjustment equal to the difference between certain
targets provided in the contract and the amounts at closing.
The purchase price was financed through a $135 million
borrowing under IDEX's amended U.S. bank revolving credit
facility with Bank of America Illinois as agent for the
participating banks, and through the issuance of 75,700 shares
of IDEX common stock.
The assets acquired from FMLP include trade accounts
receivable, inventory, machinery and equipment comprising
substantially all of FMLP's assets used in its business of
manufacturing color formulation equipment for paints,
coatings, inks, colorants and dyes. IDEX intends to operate
the acquired assets in the same business in which FMLP
operated.
It is impracticable, at this time, to provide the required
financial statements and pro forma information for FM.
Therefore, the required financial statements and pro forma
information has not been included in this form 10-Q report.
The required financial statements and pro forma financial
information will be filed under cover of a report on Form 8K
within 60 days.
Item 1. Legal Proceedings. None.
Item 2. Changes in Securities. Not Applicable.
Item 3. Defaults upon Senior Securities. None.
Item 4. Submission of Matters to a Vote of Security Holders. None.
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The exhibits listed in the accompanying "Exhibit Index" are
filed as part of this report.
(b) Reports on Form 8-K
There have been no reports on Form 8-K filed during the
quarter for which this report is filed.
13
12
1514
SIGNATURES
Pursuant to the requirements 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 in the capacity and on the date
indicated.
IDEX CORPORATION
August 12, 1996 /s/Wayne WAYNE P. SayatovicSAYATOVIC
--------------------------------------
Wayne P. Sayatovic
Senior Vice President --- Finance,
Chief Financial Officer and Secretary
(Duly Authorized and Principal
Financial Officer)
14July 29, 1997
13
1615
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION PAGE
------- ----------- ----
*2.1 Asset Purchase Agreement dated July 26, 1996 between IDEX and Fluid Management Limited Partnership, Fluid
Management U.S., L.L.C., Fluid Management Service, Inc., Fluid Management Canada, L.L.C., Fluid Management
France SNC, FM International, Inc., Fluid Management Europe B.V.
A copy of the omitted schedules will be furnished to the Commission upon request.
3.1 Restated Certificate of Incorporation of IDEX (formerly HI, Inc.) (incorporated by reference to
Exhibit No. 3.1 to the Registration Statement on Form S-1 of IDEX Corporation, et al.,
Registration No. 33-21205, as filed on April 21, 1988).
3.1(a) Amendment to Restated Certificate of Incorporation of IDEX (formerly HI, Inc.), as amended
(incorporated by reference to Exhibit No. 3.1(a) to the Quarterly Report of IDEX on Form 10-Q
for the quarter ended March 31, 1996, Commission File No. 1-10235).
3.2 Amended and Restated By-Laws of IDEX (incorporated by reference to Exhibit No. 3.2 to Post-
Effective Amendment No. 2 to the Registration Statement on Form S-1 of IDEX Corporation, et al.,
Registration No. 33-21205, as filed on July 17, 1989).
3.2(a) Amended and Restated Article III, Section 13 of the Amended and Restated By-Laws of IDEX
(incorporated by reference to Exhibit No. 3.2(a) to Post-Effective Amendment No. 3 to the
Registration Statement on Form S-1 of IDEX Corporation, et al., Registration No. 33-21205, as
filed on February 12, 1990).
4.1 Restated Certificate of Incorporation and By-Laws of IDEX (filed as Exhibits 3.1 through
3.2(a)).
4.2 Indenture, dated as of September 15, 1992, among IDEX, the Subsidiaries and The Connecticut
National Bank, as Trustee, relating to the 9-3/
3.1 Restated Certificate of Incorporation of IDEX (formerly HI,
Inc.) (incorporated by reference to Exhibit No. 3.1 to the
Registration Statement on Form S-1 of IDEX Corporation, et
al., Registration No. 33-21205, as filed on April 21, 1988).
3.1(a) Amendment to Restated Certificate of Incorporation of IDEX
(formerly HI, Inc.), as amended (incorporated by reference
to Exhibit No. 3.1(a) to the Quarterly Report of IDEX on
Form 10-Q for the quarter ended March 31, 1996, Commission
File No. 1-10235).
3.2 Amended and Restated By-Laws of IDEX (incorporated by
reference to Exhibit No. 3.2 to Post-Effective Amendment No.
2 to the Registration Statement on Form S-1 of IDEX
Corporation, et al., Registration No. 33-21205, as filed on
July 17, 1989).
3.2(a) Amended and Restated Article III, Section 13 of the Amended
and Restated By-Laws of IDEX (incorporated by reference to
Exhibit No. 3.2(a) to Post-Effective Amendment No. 3 to the
Registration Statement on Form S-1 of IDEX Corporation, et
al., Registration No. 33-21205, as filed on February 12,
1990).
4.1 Restated Certificate of Incorporation and By-Laws of IDEX
(filed as Exhibits No. 3.1 through No. 3.2(a)).
4.2 Indenture, dated as of September 15, 1992, among IDEX, the
Subsidiaries and Fleet National Bank of Connecticut, a
national banking association, as Trustee, relating to the
9 3/4% Senior Subordinated Notes of IDEX due 2002
(incorporated by reference to Exhibit No. 4.2 to the Annual
Report of IDEX on Form 10-K for the
fiscal year ending December 31, 1992, Commission File No. 1-10235).
4.2(a) First Supplemental Indenture dated as of December 22, 1995 among IDEX and the Subsidiaries named
therein and Fleet National Bank of Connecticut (formerly known as The Connecticut National
Bank), a national banking association, as trustee (incorporated by reference to Exhibit No.
4.2(a) to the Annual Report of IDEX on Form 10-K for the fiscal year ending December 31, 1995,
Commission File No. 1-10235).
*4.2(b) Second Supplemental Indenture dated as of July 29, 1996 among IDEX and the Subsidiaries named therein
and Fleet National Bank (formerly known as Fleet National Bank Connecticut), a national banking
association, as trustee.
4.3 Specimen Senior Subordinated Note of IDEX (including specimen Guarantee) (incorporated by
reference to Exhibit No. 4.3 to the Annual Report of IDEX on Form 10-K for the fiscal year ending December 31,
1992, Commission File No. 1-10235).
4.2(a) First Supplemental Indenture dated as of December 22, 1995,
among IDEX and the Subsidiaries named therein and Fleet
National Bank of Connecticut, a national banking
association, as Trustee (incorporated by reference to
Exhibit No. 4.2(a) to the Annual Report of IDEX on Form 10-K
for the year ending December 31, 1995, Commission File No.
1-10235).
4.2(b) Second Supplemental Indenture dated as of July 29, 1996,
among IDEX and the Subsidiaries named therein and Fleet
National Bank of Connecticut, a national banking
association, as Trustee (incorporated by reference to
Exhibit No. 4.2(b) to the Quarterly Report of IDEX on Form
10-Q for the quarter ended June 30, 1996, Commission File
No. 1-10235).
4.3 Specimen Senior Subordinated Note of IDEX (including
specimen Guarantee) (incorporated by reference to Exhibit
No. 4.3 to the Annual Report of IDEX on Form 10-K for the
year ending December 31, 1992, Commission File No.1-10235).
4.4 Specimen Certificate of Common Stock (incorporated by
reference to Exhibit No. 4.3 to the Registration Statement
on Form S-2 of IDEX Corporation, et al., Registration No.
33-42208, as filed on September 16, 1991).
4.5 Third Amended and Restated Credit Agreement dated as of July
17, 1996, among IDEX, Bank of America Illinois, as Agent,
and other financial institutions named therein (the "Banks")
(incorporated by reference to Exhibit No. 4.5 to the
Quarterly Report of IDEX on Form 10-Q for the quarter ended
June 30, 1996, Commission File No. 1-10235).
4.5(a) First Amendment to the Third Amended and Restated Credit
Agreement dated as of April 15, 1997, among IDEX, Bank of
America Illinois, as Agent, and the Banks (incorporated by
reference to Exhibit 4.5(a) to the Quarterly Report of IDEX
on Form 10-Q for the quarter ended March 31, 1997,
Commission File No. 1-10235).
14
16 1991).
*4.5 Third Amended and Restated Credit Agreement dated as of July 17, 1996 among IDEX, Bank of
America Illinois, as Agent, and other financial institutions named therein.
15
17
Exhibit
Number Description PageEXHIBIT
NUMBER DESCRIPTION PAGE
------- ----------- ----
*4.64.6 Amended and Restated Pledge Agreement dated as of July 17,
1996, by IDEX in favor of the Agent and Banks.
*4.6(a)the Banks
(incorporated by reference to Exhibit No. 4.6 to the
Quarterly Report of IDEX on Form 10-Q for the quarter ended
June 30, 1996, Commission File No. 1-10235).
4.6(a) Supplement No. 1 to the Amended and Restated Pledge
Agreement dated as of August 5, 1996, by IDEX in favor of
the Agent and Banks.
*4.7the Banks (incorporated by reference to
Exhibit No. 4.6(a) to the Quarterly Report of IDEX on Form
10-Q for the quarter ended June 30, 1996, Commission File
No. 1-10235).
4.7 Amended and Restated Subsidiary Guaranty Agreement dated as
of July 17, 1996, by the Subsidiaries named therein in favor
of the Agent and Banks.
*4.7(a)the Banks (incorporated by reference to
Exhibit No. 4.7 to the Quarterly Report of IDEX on Form 10-Q
for the quarter ended June 30, 1996, Commission File No.
1-10235).
4.7(a) Supplement No. 1 to the Amended and Restated Subsidiary
Guaranty Agreement dated as of August 5, 1996, by FMI
Management Company in favor of the Agent and Banks.
*4.7(b)the Banks
(incorporated by reference to Exhibit No. 4.7(a) to the
Quarterly Report of IDEX on Form 10-Q for the quarter ended
June 30, 1996, Commission File No. 1-10235).
4.7(b) Supplement No. 2 to the Amended and Restated Subsidiary
Guaranty Agreement dated as of August 5, 1996, by Fluid
Management, Inc. in favor of the Agent and Banks.
*4.8the Banks
(incorporated by reference to Exhibit No. 4.7(b) to the
Quarterly Report of IDEX on Form 10-Q for the quarter ended
June 30, 1996, Commission File No. 1-10235).
4.8 Registration Rights Agreement dated as of July 29,26, 1996,
between IDEX and Mitchell H. Saranow.
16
18
Saranow (incorporated by
reference to Exhibit Number Description Page
------- ----------- ----
No. 4.8 to the Quarterly Report of IDEX
on Form 10-Q for the quarter ended June 30, 1996, Commission
File No. 1-10235).
**10.1 Amended and Restated Employment Agreement between IDEX
Corporation and Donald N. Boyce, dated as of JanuaryNovember 22,
19881996.
**10.2 Amended and Restated Employment Agreement between IDEX
Corporation and Wayne P. Sayatovic, dated as of November 22,
1996.
**10.3 Amended and Restated Employment Agreement between IDEX
Corporation and Frank J. Hansen, dated as of November 22,
1996.
**10.4 Amended and Restated Employment Agreement between IDEX
Corporation and Jerry N. Derck, dated as of November 22,
1996.
**10.5 Management Incentive Compensation Plan (incorporated by
reference to Exhibit No. 10.1510.21 to Amendment No. 1 to the
Registration Statement on Form S-1 of IDEX Corporation,
Registration No. 33-28317, as filed on June 1, 1989).
**10.1(a) First Amendment to the10.5(a) Amended and Restated Employment Agreement between IDEX and Donald N.
Boyce, dated as of January 13, 1993Management Incentive Compensation Plan (incorporated
by reference to Exhibit No. 10.5(a)10.9(a) to the AnnualQuarterly Report
of IDEX on Form 10-K10-Q for the fiscal year ending Decemberquarter ended March 31, 1992,1996,
Commission File No. 1-10235).
**10.1(b) Second Amendment to the Amended and Restated Employment10.6 Form of Indemnification Agreement between IDEX and Donald N.
Boyce, dated as of September 27, 1994 (incorporated by reference
to Exhibit No. 10.5(b) to the
Annual Report of IDEX on Form 10-K for the fiscal year ending December 31, 1994, Commission File
No. 1-10235).
**10.2 Amended and Restated Employment Agreement between IDEX and Wayne P. Sayatovic, dated as of
January 22, 1988 (incorporated by reference to Exhibit No. 10.17 to Amendment No. 110.23 to the Registration Statement on Form
S-1 of IDEX Corporation, Registration No. 33-28317, as filed
on June 1,April 26, 1989).
**10.2(a) First Amendment to the Amended and Restated Employment Agreement between IDEX and Wayne P.
Sayatovic, dated as of January 13, 1993 (incorporated by reference to Exhibit No. 10.6(b) to the
Annual Report of IDEX on Form 10-K for the fiscal year ending December 31, 1994, commission File
No. 1-10235).
**10.3 Employment Agreement between IDEX and Frank J. Hansen dated as of August 1, 1994 (incorporated
by reference to Exhibit No.10.7 to the Quarterly Report of IDEX on Form 10-Q for the quarter
ended September 30, 1994, Commission File No. 1-10235).
**10.3(a) First Amendment to the Employment Agreement between IDEX and Frank J. Hansen, dated as of
September 27, 1994 (incorporated by reference to Exhibit No. 10.7(a) to the Annual Report of
IDEX on Form 10-K for the fiscal year ending December 31, 1994, Commission File No. 1-10235).
17
19
Exhibit
Number Description Page
------- ----------- ----
**10.4 Employment Agreement between IDEX and Jerry N. Derck, dated as of September 27, 1994
(incorporated by reference to Exhibit No. 10.8 to the Annual Report of IDEX on Form 10-K for the
fiscal year ending December 31, 1994, Commission File No. 1-10235).
**10.5 Management Incentive Compensation Plan (incorporated by reference to Exhibit No. 10.21 to
Amendment No. 1 to the Registration Statement on Form S-1 of IDEX Corporation, Registration No.
33-28317, as filed on June 1, 1989).
**10.5(a) Amended Management Incentive Compensation Plan (incorporated by reference to Exhibit No. 10.9(a)
to the Quarterly Report of IDEX on Form 10-Q for the quarter ended March 31, 1996, Commission
File No. 1-10235).
**10.610.7 Form of IndemnificationShareholder Purchase and Sale Agreement
(incorporated by reference to Exhibit No. 10.2310.24 to Amendment
No. 1 to the Registration Statement on Form S-1 of IDEX
Corporation, Registration No. 33-28317, as filed on April 26, 1989).
**10.7 Form of Shareholder Purchase and Sale Agreement (incorporated by reference to Exhibit No. 10.24
to Amendment No. 1 to the Registration Statement on Form S-1 of IDEX Corporation, Registration
No. 33-28317, as filed on June 1,
1989).
15
17
EXHIBIT
NUMBER DESCRIPTION PAGE
------- ----------- ----
**10.8 Revised Form of IDEX Corporation Stock Option Plan for
Outside Directors (incorporated by reference to Exhibit No.
10.22(a)10.22 to Post-Effective Amendment No. 4 to the Registration
Statement on Form S-1 of IDEX Corporation, et al.,
Registration No. 33-21205, as filed on March 2, 1990).
**10.9 Amendment to the IDEX Corporation Stock Option Plan for
Outside Directors adopted by resolution ofto the Board of
Directors dated as of January 28, 1992 (incorporated by
reference to Exhibit No. 10.21(a) of the Annual Report of
IDEX on Form 10-K for the fiscal year endingended December 31, 1992,
Commission File No. 1-102351)1-10235).
**10.10 Non-Qualified Stock Option Plan for Non-Officer Key
Employees of IDEX Corporation (incorporated by reference to
Exhibit No. 10.15 to the Annual Report of IDEX on Form 10-K
for the fiscal year endingended December 31, 1992, Commission File No.
1-102351)1-10235).
**10.10(a) 1996 Stock Plan for Non-Officer Key Employees of IDEX
Corporation (incorporated by reference to Exhibit No. 4.5 to
the Registration Statement on Form S-8 of IDEX Corporation,
et al., Registration No. 333-18643, as filed on December 23,
1996).
**10.11 Non-Qualified Stock Option Plan for Officers of IDEX
Corporation (incorporated by reference to Exhibit No. 10.16
to the Annual Report of IDEX on Form 10-K for the fiscal year endingended
December 31, 1992, Commission File No. 1-102351)1-10235).
**10.12 IDEX Corporation Supplemental Executive Retirement Plan
(incorporated by reference to Exhibit No. 10.17 to the
Annual Report of IDEX on Form 10-K for the fiscal year endingended
December 31, 1992, Commission File No. 1-102351)1-10235).
**10.13 1996 Stock Plan for Officers of IDEX Corporation
(incorporated by reference to Exhibit No. 10.184.4 to the
Quarterly ReportRegistration Statement on Form S-8 of IDEX Corporation, et
al., Registration No. 333-18643, as filed on Form 10-Q for the Quarter ended March 31, 1996,
Commission File No. 1-10235).
18
20
Exhibit
Number Description Page
------- ----------- ----
December 23,
1996).
**10.14 Amended and Restated IDEX Corporation Directors Deferred
Compensation Plan, as amended (incorporated by reference to
Exhibit No. 10.194.6 to the Registration Statement on Form S-8 of
IDEX Corporation, et al., Registration No. 333-18643, as
filed on December 23, 1996).
**10.15 IDEX Corporation 1996 Deferred Compensation Plan for
Officers, as amended (incorporated by reference to Exhibit
No. 4.8 to the Registration Statement on Form S-8 of IDEX
Corporation, et al., Registration No. 333-18643, as filed on
December 23, 1996).
**10.16 IDEX Corporation 1996 Deferred Compensation Plan for
Non-Officer Presidents, as amended (incorporated by
reference to Exhibit No. 4.7 to the Registration Statement
on Form S-8 of IDEX Corporation, et al., Registration No.
333-18643, as filed on December 23, 1996).
10.17 Asset Purchase Agreement dated July 26, 1996 between IDEX
and Fluid Management Limited Partnership, Fluid Management
U.S. LLC, Fluid Management Services, Inc., Fluid Management
Canada LLC, Fluid Management France SNC, FM International,
Inc., Fluid Management Europe B.V. (incorporated by
reference to Exhibit No. 2.1 to the Quarterly Report ofon IDEX Corporation on
Form 10-Q for the Quarterquarter ended March 31, 1996, Commission File No. 1-10235).
*27 Financial Data Schedule.
Revolving Credit Facility, dated as of September 29, 1995,
between Dunja Verwaltungsgesellschaft mbHJune 30, 1996, Commission
File No. 1-10235).
*27 Financial Data Schedule.
Revolving Credit Facility dated as of September 29, 1995, as
amended, between Dunja Verwaltungsgesellschaft GmbH and Bank
of America NT & SA, Frankfurt Branch (a copy of the
agreement will be furnished to the Commission upon request).
- ---------------
*Filed-------------------------
* Filed herewith.
**Management contract or compensatory plan or arrangement.
1916