1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended June 30, 1994
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 1-10235
IDEX 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, Suite 400
Northbrook, Illinois 60062
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (708) 498-7070
______________________________________________________________________________
Former name, former address and former fiscal year, if changed 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) 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 9, 1994: 12,710,161 shares.
Documents Incorporated by Reference: None.
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
IDEX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, December 31,
1994 1993
----------- ------------
(unaudited)
ASSETS
Current Assets
Cash and cash equivalents................. $ 3,427 $ 3,513
Receivables - net......................... 56,579 43,318
Inventories............................... 79,119 60,973
Deferred taxes............................ 7,986 6,602
Other current assets...................... 2,426 1,060
-------- --------
Total Current Assets..................... 149,537 115,466
Property, Plant and Equipment - net........ 66,361 53,525
Intangible Assets - net.................... 149,258 84,772
Other Noncurrent Assets.................... 5,006 5,204
-------- --------
Total Assets............................ $370,162 $258,967
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Trade accounts payable.................... $ 30,090 $ 21,405
Accrued expenses.......................... 30,338 21,235
-------- --------
Total Current Liabilities............... 60,428 42,640
Long-Term Debt............................. 191,930 117,464
Other Noncurrent Liabilities............... 18,284 15,177
-------- --------
Total Liabilities....................... 270,642 175,281
-------- --------
Shareholders' Equity
Common stock, par value $.01 per share;
Shares authorized: 50,000,000
Shares issued and outstanding:
1994: 12,708,744
1993: 12,701,588....................... 127 127
Additional paid-in capital................ 84,793 84,713
Retained earnings......................... 18,076 2,551
Accumulated translation adjustment........ (3,476) ( 3,705)
-------- --------
Total Shareholders' Equity............... 99,520 83,686
-------- --------
Total Liabilities and Shareholders'
Equity................................. $370,162 $258,967
======== ========
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 June 30, 1994 1993
---- ----
(unaudited)
Net sales................................ $93,559 $78,052
Cost of sales............................ 57,402 47,893
------- -------
Gross profit............................. 36,157 30,159
Selling, general and administrative
expenses................................ 19,799 17,221
------- -------
Income from operations................... 16,358 12,938
Other expense - net...................... 558 242
Interest expense......................... 3,113 2,809
------- -------
Income before income taxes .............. 12,687 9,887
Provision for income taxes............... 4,509 3,427
------- -------
Net income............................... $ 8,178 $ 6,460
======= =======
Earnings per common share................ $ .63 $ .50
======= =======
Weighted average common shares
outstanding............................. 13,042 12,947
======= =======
See Notes to Consolidated Financial Statements.
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4
IDEX CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED OPERATIONS
(In thousands, except per share amounts)
For the Six Months Ended June 30, 1994 1993
---- ----
(unaudited)
Net sales................................ $179,433 $151,603
Cost of sales............................ 109,886 93,723
-------- --------
Gross profit............................. 69,547 57,880
Selling, general and administrative
expenses................................ 38,781 34,441
-------- --------
Income from operations................... 30,766 23,439
Other expense - net...................... 1,029 377
Interest expense......................... 5,746 5,668
-------- --------
Income before income taxes............... 23,991 17,394
Provision for income taxes............... 8,466 6,055
-------- --------
Net income............................... $ 15,525 $ 11,339
======== ========
Earnings per common share................ $ 1.19 $ .88
======== ========
Weighted average common shares
outstanding............................. 13,035 12,943
======== ========
See Notes to Consolidated Financial Statements.
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5
IDEX CORPORATION AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED SHAREHOLDERS' EQUITY
(In thousands)
Shareholders' Equity
--------------------------------------------
Additional Accumulated
Common Paid-In Retained Translation
Stock Capital Earnings Adjustment
------ ---------- ----------- -----------
Balance:
December 31, 1993........ $127 $84,713 $ 2,551 $(3,705)
Stock options exercised... 80
Unrealized trans-
lation adjustment........ 229
Net income................ 15,525
---- ------- -------- -------
Balance:
June 30, 1994............ $127 $84,793 $ 18,076 $(3,476)
(unaudited) ==== ======= ======== =======
See Notes to Consolidated Financial Statements.
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6
IDEX CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
(In thousands)
For the Six Months Ended June 30, 1994 1993
---- ----
(unaudited)
Cash Flows From Operating Activities:
Net income..................................... $15,525 $11,339
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization................. 4,619 4,463
Amortization of intangibles................... 1,652 1,400
Amortization of debt issuance expenses........ 318 322
Increase in receivables....................... ( 4,762) ( 2,743)
Decrease in inventories....................... 479 1,343
Increase (decrease) in trade accounts payable. 3,676 ( 118)
Increase (decrease) in accrued expenses....... ( 528) 492
(Increase) decrease in deferred taxes......... ( 736) 1,809
Other transactions - net...................... 952 1,916
------- -------
Net cash flows from operating activities..... 21,195 20,223
------- -------
Cash Flows From Investing Activities:
Additions to property, plant and equipment..... ( 4,194) ( 3,482)
Acquisition of businesses (net of cash
acquired)..................................... (91,553)
------- -------
Net cash flows from investing activities..... (95,747) ( 3,482)
------- -------
Cash Flows From Financing Activities:
Net borrowings (repayments) of long-term debt.. 74,000 (16,000)
Increase in accrued interest................... 466 295
Payment of deferred financing costs............ ( 638)
------- -------
Net cash flows from financing activities...... 74,466 (16,343)
------- -------
Net increase (decrease) in cash................. ( 86) 398
Cash and cash equivalents at beginning of period 3,513 2,370
------- -------
Cash and cash equivalents at end of period...... $ 3,427 $ 2,768
======= =======
Supplemental Disclosure of Cash Flow Information
------------------------------------------------
Cash paid during the period for:
Interest....................................... $ 4,835 $ 4,943
Taxes (including foreign)...................... 7,016 1,095
See Notes to Consolidated Financial Statements.
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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 comprising IDEX
Corporation ("IDEX" or the "Company") was not accounted for as a purchase
transaction. Consequently, the accounting for the acquisition does not reflect
any adjustment of the carrying value of the assets and liabilities to their
fair values at the time of the acquisition. Accordingly, the shareholders'
equity of IDEX at June 30, 1994 and December 31, 1993 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.
2. Acquisition of Hale Products, Inc.
On May 26, 1994, IDEX purchased all of the outstanding shares of common
stock of Hale Products, Inc. ("Hale"), a leading manufacturer of fire-fighting
pumps and rescue tools. The purchase price for the acquisition including stock
purchase, debt assumption and transaction fees was approximately $95 million in
cash. The purchase was financed through borrowings under the Company's bank
revolving credit facility which was amended to provide an additional $50
million of availability ($150 million of total availability) and improvement to
the interest rate structure. The excess of the purchase price over the fair
value of the net assets acquired of $61.5 million will be amortized over 40
years. The acquisition has been accounted for by the purchase method of
accounting. The liabilities assumed in connection with the acquisition of Hale
were as follows:
Fair value of assets acquired............ $ 49,578
Cost in excess of net assets acquired.... 61,459
Cash paid for common stock of Hale and
related transaction expenses............ (56,068)
Cash paid to retire Hale's senior notes.. (38,750)
--------
Liabilities assumed...................... $ 16,219
========
Hale's financial performance for the period January 1 to May 25, 1994,
prior to acquisition by IDEX, was adversely affected by several factors.
Customarily, Hale's shipments are stronger in the second half of a calendar
year than the first half due to the purchasing practices of customers in
industries that it serves. In 1994, shipments were further reduced by
production curtailments at the Conshohocken facilities because of severe winter
weather and unexpected facility repairs at its foundry. In addition, Hale was
in the process of moving production of certain products between its
Conshohocken, Pennsylvania and St. Joseph, Tennessee facilities during this
period which created certain temporary inefficiencies and loss of overhead
absorption. Higher than normal selling, general and administrative expenses
were incurred during this period due to Hale's participation in a major
international fire and rescue trade show which is held every six years in
Germany. During the period January 1 through May 25, 1994 order activity
remained strong as sales backlogs increased by $5.5 million.
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8
The unaudited pro forma consolidated results of operations of IDEX for the
six months ended June 30, 1994 and 1993 reflecting the allocation of the
purchase price and related financing of the transactions, would have been as
follows (in thousands except per share amounts), assuming that the Hale
acquisition had occurred at the beginning of each of the respective periods.
1994 1993
-------- --------
Net sales................................ $202,019 $183,665
Income before extraordinary item and
cumulative effect of changes in
accounting for income taxes............. 13,210 11,476
Net income............................... 13,210 10,881
Earnings per common share:
Income before extraordinary item and
cummulative effect of change in
accounting for income tax.............. 1.01 .89
Net income............................... 1.01 .84
3.(a) Significant Accounting Policies
In the opinion of management, the unaudited information presented as of June
30, 1994 and for the six-month periods ended June 30, 1994 and 1993 reflects
all adjustments necessary, which consist only of normal recurring adjustments,
for a fair presentation of the interim periods.
(b) Earnings Per Share
Earnings per share is 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,
have been included in the calculation of weighted average shares outstanding
under the treasury stock method.
4. Inventory
The components of inventories as of June 30, 1994 and December 31, 1993 were
(000's omitted):
June 30, December 31,
1994 1993
-------- ------------
Inventories
Raw materials and supplies $ 9,407 $ 8,498
Work in process 10,776 7,018
Finished goods 58,936 45,457
------- -------
Totals $79,119 $60,973
======= =======
The inventories on a LIFO basis amounted to $45,873 and $25,874 at June
30, 1994 and December 31, 1993, respectively. The excess of current cost over
LIFO inventory value and the impact on earnings of using the LIFO method are
not material.
5. Preferred Stock
The Company had five million shares of preferred stock authorized but
unissued at June 30, 1994 and December 31, 1993.
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9
Company and Business Group Financial Information
(000's omitted)
For the Second Quarter Ended June 30, 1994(1) 1993
---- ----
(unaudited)
Fluid Handling Group (2)
Net sales............................... $63,267 $53,542
Income from operations.................. 13,739 10,891
Operating margin........................ 21.7% 20.3%
Depreciation and amortization (4)....... $ 2,507 $ 2,275
Capital expenditures.................... 2,096 1,292
Industrial Products Group (2)
Net sales............................... $30,393 $24,582
Income from operations.................. 4,644 3,646
Operating margin........................ 15.3% 14.8%
Depreciation and amortization (4)....... $ 754 $ 648
Capital expenditures.................... 490 504
Company (3)
Net sales............................... $93,559 $78,052
Income from operations.................. 16,358 12,938
Operating margin........................ 17.5% 16.6%
Depreciation and amortization (4)....... $ 3,273 $ 2,935
Capital expenditures.................... 2,636 1,822
(1) Includes the operations of Signfix from January 1,
1994, which are not material to the Company, and Hale
from May 26, 1994.
(2) Income from operations excludes unallocated corporate
operating expenses.
(3) Includes the operations of the two business groups in
addition to corporate operating expenses and inter-group
eliminations.
(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, 1994(1) 1993
---- ----
(unaudited)
Fluid Handling Group (2)
Net sales............................... $119,818 $104,713
Income from operations.................. 25,635 20,219
Operating margin........................ 21.4% 19.3%
Depreciation and amortization (4)....... $ 4,753 $ 4,553
Capital expenditures.................... 3,264 2,672
Industrial Products Group (2)
Net sales............................... $ 59,785 $ 47,028
Income from operations.................. 8,892 6,410
Operating margin........................ 14.9% 13.6%
Depreciation and amortization (4)....... $ 1,492 $ 1,287
Capital expenditures.................... 880 781
Company (3)
Net sales............................... $179,433 $151,603
Income from operations.................. 30,766 23,439
Operating margin........................ 17.1% 15.5%
Depreciation and amortization (4)....... $ 6,271 $ 5,863
Capital expenditures.................... 4,194 3,482
(1) Includes the operations of Signfix from January 1,
1994, which are not material to the Company, and Hale
from May 26, 1994.
(2) Income from operations excludes unallocated corporate
operating expenses.
(3) Includes the operations of the two business groups in
addition to corporate operating expenses and inter-group
eliminations.
(4) Excludes amortization of debt issuance expenses.
9
11
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Historical Overview and Outlook
IDEX sells a broad range of fluid handling and industrial products to a
diverse customer base in the United States and internationally. Accordingly,
IDEX's businesses are generally affected by levels of industrial activity and
economic conditions in the United States and in those foreign countries where
its products are sold, and to some extent, by the relationship of the dollar to
other currencies. Among the factors that affect the demand for IDEX's products
are interest rates, levels of capital spending by industry and overall
industrial growth.
The incoming order rate for IDEX for the second quarter of 1994 increased
24% over the second quarter of 1993 and represented a new record for orders
written in a quarter. Base businesses contributed 14% of the increase while
Signfix, acquired late in 1993, and Hale, acquired in May of 1994, contributed
10% of the increase. As a result, backlogs are somewhat stronger; however, the
Company continues to operate with very low order backlogs, typically about
1-1/2 months' sales, in order to provide superior customer service, and any
decline in orders would have an immediate effect on sales and profits.
The second quarter of 1994 compared favorably to the second quarter of 1993
as IDEX achieved record quarterly sales, net income and earnings per common
share. Sales increased 20%, net income was up 27% and earnings per share rose
26% in the second quarter of 1994 compared to the second quarter of 1993.
Changes in IDEX's quarterly results from the comparable prior year period
resulted from improved economic conditions as all of IDEX's base business units
reported stronger operating results which were further enhanced by inclusion of
activity from recent acquisitions - Signfix in November 1993 and Hale in May
1994. Signfix was an addition to the Company's Industrial Products group and
Hale was added to the Fluid Handling Group.
The Company is well positioned in its markets, serves diverse industries,
sells throughout the world and enjoys high margins. Given current business
conditions and a continuation of current industrial activity, management
expects that IDEX will attain new records in sales, net income, and earnings
per share for the year.
10
12
Results of Operations
For purposes of this discussion and analysis section, reference is made to
the tables set forth on pages 8 and 9 and the Company's Statements of
Consolidated Operations included in the Financial Statement section. IDEX
consists of two business segments: Fluid Handling and Industrial Products.
Performance in the Second Quarter Ended June 30, 1994 Compared to 1993
Sales, net income and earnings per common share were at record levels in
the three months ended June 30, 1994 versus the same period in 1993. Incoming
orders, also at record levels, rose 14% in the Company's base businesses and
the acquisition of Signfix and Hale added another 10% to the prior year's
second quarter order rate.
Second quarter 1994 consolidated net sales of $93.6 million increased $15.5
million or 20% from the comparable period in 1993. Fluid Handling Group sales
of $63.3 million increased $9.7 million or 18% due to stronger volume resulting
from improved economic conditions and inclusion of Hale activity from its May
1994 acquisition. Sales in the Industrial Products Group of $30.4 million
increased $5.8 million or 24% due to the inclusion of Signfix activity from its
November 1993 acquisition and improved sales demand for the other units in this
Group.
Gross profit of $36.2 million in the second quarter of 1994 increased $6.0
million or 20% from the corresponding 1993 period. Gross profit as a
percentage of sales in the 1994 period of 38.7% was approximately equivalent to
that of 1993. Selling, general and administrative expenses increased to $19.8
million in the second quarter of 1994 from $17.2 million in the second quarter
of 1993 principally as a result of acquisitions, but decreased as a percentage
of sales to 21.1% in 1994 from 22.1% in 1993.
Income from operations increased 26% to $16.4 million in the second quarter
of 1994 from $12.9 million in the second quarter of 1993 as operating margin as
a percent of sales increased to 17.5% from 16.6%. In the Fluid Handling Group,
income from operations of $13.7 million and operating margin of 21.7% for the
second quarter of 1994 were higher than income from operations of $10.9 million
and operating margin of 20.3% in the second quarter of 1993 due to
volume-related gains with improving business conditions. Income from
operations in the Industrial Products Group of $4.6 million and operating
margin of 15.3% in the second quarter of 1994 were higher than income from
operations of $3.6 million and operating margin of 14.8% in the second quarter
of 1993 as all units in the Industrial Products Group experienced
volume-related improvements.
Interest expense increased to $3.1 million in the second quarter of 1994
from $2.8 million in the comparable 1993 period due to additional borrowings
from the November 1993 acquisition of Signfix and the May 1994 acquisition of
Hale and higher interest rates.
The provision for income taxes increased to $4.5 million in the second
quarter of 1994 from $3.4 million in the second quarter of 1993. The effective
tax rate of 35.5% in the second quarter of 1994 increased from the 1993 rate of
35.0% as the amortization of goodwill expense arising from the Hale acquisition
is not deductible for tax purposes. Net income was $8.2 million in the second
quarter of 1994 and was 27% higher than the $6.5 million recorded in the 1993
period. Earnings per common share amounted to $.63 in the second quarter of
1994 which was 26% higher than the $.50 recorded in the second quarter of 1993.
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Performance in the Six Months Ended June 30, 1994 Compared to 1993
Sales, net income and earnings per common share were also at record levels
in the six months ended June 30, 1994 versus 1993. Incoming orders rose 12% in
the Company's base businesses and inclusion of Hale and Signfix activity added
another 7% to the prior year's first six months rate.
Six-month 1994 net sales of $179.4 million increased $27.8 million or 18%
from 1993. Fluid Handling Group sales of $119.8 million increased $15.1
million or 14% due to stronger volume from improved market conditions and Hale
activity from its May 1994 acquisition. Sales in the Industrial Products Group
of $59.8 million increased $12.8 million or 27% due to the inclusion of Signfix
activity in the first six months of 1994 and improved sales demand for the
other units in this group.
Gross profit of $69.5 million in the first six months of 1994 increased
$11.7 million or 20% from the corresponding 1993 period, and gross profit as a
percentage of sales of 38.8% in 1994 increased from 38.2% in 1993. Selling,
general and administrative expenses increased to $38.8 million in the first six
months of 1994 from $34.4 million in the first six months of 1993, but as a
percentage of sales, decreased to 21.6% in 1994 from 22.7% in 1993.
Income from operations for the six months ended June 30, 1994 increased to
$30.8 million or 31% from $23.4 million in the same period of 1993. In the
Fluid Handling Group, income from operations of $25.6 million and operating
margin of 21.4% for the six months ended June 30, 1994 were higher than income
from operations of $20.2 million and operating margin of 19.3% in the same
period of 1993 due to volume-related gains with improving business conditions.
Income from operations in the Industrial Products Group of $8.9 million and
operating margin of 14.9% in the first six months of 1994 were higher than
income from operations of $6.4 million and operating margin of 13.6% in the
comparable 1993 period as all units in the Industrial Products Group
experienced volume-related improvements.
Interest expense of $5.7 million in the first six months of 1994 was
approximately equivalent to the comparable 1993 period as interest rates and
average borrowings outstanding under the Credit Agreement during the first six
months of 1994 were approximately equivalent to the 1993 period.
The provision for income taxes increased to $8.5 million in the first half
of 1994 from $6.1 million in the first half of 1993. The 1994 effective tax
rate of 35.3% increased slightly from the 35.0% 1993 rate as the amortization
of goodwill expense arising from the Hale acquisition is not deductible for tax
purposes. Net income was $15.5 million in the first six months of 1994, up 37%
from $11.3 million in the 1993 period. Earnings per common share amounted to
$1.19 in the first six months of 1994 which was 35% higher than the $.88
recorded in the first six months of 1993.
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14
Liquidity and Capital Resources
On June 30, 1994 IDEX's working capital was $89.1 million and its current
ratio was 2.5 to 1. Internally generated funds were adequate to fund capital
expenditures of $4.2 million and $3.5 million for the six months ended June 30,
1994 and 1993, respectively. These 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 expected needs for future
growth in the intermediate term. During the six months ended June 30, 1994 and
1993, depreciation and amortization expense, excluding amortization of debt
issuance expenses, was $6.3 million, and $5.9 million, respectively.
In connection with the acquisition of Hale, the Credit Agreement was
amended on May 23, 1994 to provide for an additional $50 million of
availability and improved interest rate structure. IDEX borrowed approximately
$95 million under the Credit Agreement to finance the acquisition of Hale. At
June 30, 1994, the maximum amount available under the Credit Agreement was $150
million, of which $114 million was being used. The availability under the
Credit Agreement declines in stages commencing December 31, 1995 to $100
million on December 31, 1997. Any amount outstanding at June 30, 1999 becomes
due at that date. Interest is payable quarterly on the outstanding balance at
the Bank Agent's reference rate, or at rates applicable to certain dollar
deposits in the interbank Eurodollar market plus 1-1/4%.
IDEX believes it will generate sufficient cash flow from operations to meet
its operating requirements, scheduled amortization payments under the Credit
Agreement, interest and principal payments on the Senior Subordinated Notes and
approximately $11 million of planned capital expenditures in 1994. From
commencement of operations in January, 1988 until June 30, 1994, IDEX borrowed
$210 million to complete seven acquisitions and during this same period
generated, principally from operation, cash flow of $186 million to reduce its
indebtedness. IDEX intends to consider additional acquisitions in the future.
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.
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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.
Set forth below is the information required by 7(a),
Financial Statements of Acquired Businesses, and 7(b),
Pro Forma Financial Statements of Form 8-K with
respect to the Hale Products, Inc. acquisition filed
with the SEC on June 6, 1994.
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Financial Statements of Acquired Business and Pro Forma Financial Statements
Unaudited Financial Statements
Consolidated Balance Sheet as of May 25, 1994 and
December 31, 1993 F-1
Consolidated Statements of Operations for the period
January 1 to May 25, 1994 and the six months ended
June 30, 1993 F-2
Consolidated Statements of Stockholders' Equity
(Deficit) for the period January 1 to May 25, 1994 F-3
Consolidated Statements of Cash Flows for the period
January 1 to May 25, 1994 and the six months ended
June 30, 1993 F-4
Notes to the Consolidated Financial Statements F-5
Audited Financial Statements
Report of Independent Auditors F-6
Consolidated Balance Sheets as of December 31, 1993
and 1992 F-7
Consolidated Statements of Operations for the
Years Ended December 31, 1993, 1992, and 1991 F-9
Consolidated Statements of Stockholders' Equity
(Deficit) for the Years Ended December 31, 1993,
1992, and 1991 F-10
Consolidated Statements of Cash Flows for the Years
Ended December 31, 1993, 1992, and 1991 F-11
Notes to the Consolidated Financial Statements F-12
Pro Forma Financial Statements F-21
Unaudited Pro Forma Statement of Operations for the
twelve months ended December 31, 1993 F-22
Unaudited Pro Forma Statement of Operations for the six
months ended June 30, 1994 F-23
Unaudited Pro Forma Notes to Statements of Operations F-24
F
17
Hale Products, Inc.
Consolidated Balance Sheets
May 25, 1994 and December 31, 1993
(IN THOUSANDS)
MAY 25, DECEMBER 31,
1994 1993
ASSETS (UNAUDITED)
- - ------ ------------ ------------
Current assets:
Cash and cash equivalents $ 3,265 $4,583
Accounts receivable 8,730 12,452
Inventories 15,216 13,545
Prepaid expenses 637 355
Income taxes receivable 637
Deferred income taxes 420 449
------- -------
Total current assets 28,905 31,384
Property, plant and equipment, at cost 22,889 22,174
Less accumulated depreciation 10,372 9,695
------- -------
Net property, plant and equipment 12,517 12,479
Other 1,651 1,566
------- -------
$43,073 $45,429
======= =======
LIABILITIES AND EQUITY (DEFICIT)
- - --------------------------------
Current liabilities:
Accounts payable $4,480 $4,466
Accrued interest 566 892
Income taxes payable 447
Current portion of long-term debt 106 844
Other accrued liabilities 3,507 3,537
------- -------
Total current liabilities 8,659 10,186
Deferred income taxes 1,235 1,006
Long-term debt 36,304 36,356
Stockholders' equity (deficit):
Common stock $.01 par value; 1,000,000 shares
authorized, 491,935 and 486,375 shares
issued and outstanding in 1994 and 1993 5 5
Capital in excess of par value 3,506 3,413
Retained earnings (deficit) (6,663) (5,400)
Common stock held in treasury-at cost; 12,764
shares in 1994 and 1993 (149) (149)
Cumulative effect of foreign currency
translation 176 12
------- -------
Total stockholders' equity (deficit) (3,125) (2,119)
------- -------
$43,073 $45,429
======= =======
F-1
18
Hale Products, Inc.
Consolidated Statements of Operations
for the Period January 1 to May 25, 1994 and
the Six Months Ended June 30, 1993
(in thousands)
1994 1993
(unaudited)
----------------------------
Revenues $22,586 $32,062
Cost of goods sold 15,687 20,131
------- -------
Gross margin 6,899 11,931
Operating costs:
Selling, general and administrative 6,475 7,681
Depreciation 715 833
Amortization 159 566
Other 107
------- -------
Operating income (loss) (450) 2,744
Interest expense 1,399 1,844
Minority interest in net loss of subsidiary (37)
------- -------
Income (loss) before income taxes,
extraordinary item, and cumulative effect of
change in accounting for income taxes (1,849) 937
Income tax (benefit) provision (586) 471
------- -------
Loss before extraordinary item and cumulative
effect of change in accounting for
income taxes (1,263) 466
Extraordinary item, net of income tax benefit 709
Cumulative effect of change in accounting
for income taxes (114)
------- -------
Net loss $(1,263) $(129)
======= =====
F-2
19
Hale Products, Inc.
Consolidated Statement of Stockholders' Equity (Deficit)
(in thousands, except share data)
TOTAL
CAPITAL RETAINED FOREIGN STOCKHOLDERS'
COMMON STOCK IN EXCESS EARNINGS CURRENCY TREASURY EQUITY
SHARES AMOUNT OF PAR VALUE (DEFICIT) TRANSLATION STOCK (DEFICIT)
--------- -------- ------------ ---------- ----------- -------- ------------
Balance, January 1, 1994 486,375 $5 $3,413 $(5,400) $12 $(149) $(2,119)
Exercise of stock options 5,560 93 93
Foreign currency translation 164 164
Net loss (1,263) (1,263)
------- -- ------- -------- ---- ------- -------
Balance, May 25, 1994
(unaudited) 491,935 $5 $3,506 $(6,663) $176 $(149) ($3,125)
======= === ======= ======= ==== ====== =======
F-3
20
Hale Products, Inc.
Consolidated Statements of Cash Flows
for the Period January 1 to May 25, 1994 and
the Six Months Ended June 30, 1993
(in thousands)
1994 1993
(unaudited)
--------------------------
Operating activities
Net loss $(1,263) $(129)
Adjustments to reconcile net loss to
net cash (used in) provided by operating
activities:
Depreciation and amortization 874 1,399
Noncash charges 122
Extraordinary items 709
Minority interest in net loss of subsidiary (37)
Cumulative effect of change in accounting for
income taxes (114)
Change in operating assets and liabilities,
net of extraordinary items:
Accounts receivable 3,840 835
Inventory (1,466) (1,391)
Prepaid expenses (250) (588)
Accounts payable (66) (2,151)
Accrued interest (326) 901
Income taxes payable (1,133) (391)
Other liabilities (10) (127)
------ ------
Total adjustments 1,463 (833)
------ ------
Net cash (used in) provided by operating activities 200 (962)
Investing activities
Capital expenditures (687) (331)
Acquisition of minority interest (102)
Other (5) (215)
------ ------
Net cash used in investing activities (692) (648)
Financing activities
Proceeds from sale of senior notes 36,000
Net borrowings on line of credit agreements 278
Principal payments on long-term debt (806) (33,062)
Proceeds from the exercise of stock options 93 10
Purchase of treasury shares (3)
Debt fees (1,850)
------ ------
Net cash (used in) provided by financing
activitities (713) 1,373
Effect of exchange rate changes on cash (113) 151
------ ------
Net decrease in cash (1,318) (86)
Cash and cash equivalents, beginning of period 4,583 2,491
------ ------
Cash and cash equivalents, end of period $3,265 $2,405
====== ======
F-4
21
Hale Products, Inc.
Notes to Consolidated Financial Statements
May 25, 1994
1. SIGNIFICANT ACCOUNTING POLICIES
In the opinion of Hale's management, the unaudited information presented as
of May 25, 1994 and for the period January 1 to May 25, 1994 and for the six
months ended June 30 1993 reflects all adjustments necessary, which consists
only of normal recurring adjustments, for a fair presentation of the interim
period.
2. INVENTORIES
Inventories are valued at lower of cost (first-in first-out) or market and
at May 25, 1994 and December 31, 1993 of the following (in thousands):
MAY 25, DECEMBER
1994 1993
(unaudited)
-----------------------
Raw Materials and finished goods $12,327 $11,364
Work in progress 2,889 2,181
----------------------
Total inventory $15,216 $13,545
======================
3. SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the period January 1 to May 25, 1994 and for the six
months ended June 30, 1993 was as follows (in thousands):
MAY 25, JUNE 30
1994 1993
(unaudited)
----------------------
Interest $1,748 $896
Income taxes 557 829
4. SUBSEQUENT EVENT
On May 26, 1994, IDEX Corporation purchased all of the company's
outstanding shares of common stock for $54 million and assumed $36 million of
senior notes.
F-5
22
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Hale Products, Inc.
We have audited the accompanying consolidated balance sheets of Hale Products,
Inc. as of December 31, 1993 and 1992 and the related consolidated statements
of operations, stockholders' equity, and cash flows for each of the three years
in the period ended December 31, 1993. 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 financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Hale Products,
Inc. at December 31, 1993 and 1992, and the consolidated results of its
operations and cash flows for each of the three years in the period ended
December 31, 1993, 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 income taxes in 1993.
/s/ ERNST & YOUNG
ERNST & YOUNG
March 24, 1994
F-6
23
Hale Products, Inc.
Consolidated Balance Sheets
DECEMBER 31
1993 1992
------------------------
(In Thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 4,583 $ 2,491
Accounts receivable, net of allowance
for doubtful accounts of $171 and
$343 in 1993 and 1992, respectively 12,452 12,049
Inventories 13,545 12,622
Prepaid expenses 355 513
Deferred taxes 449 17
--------------------
Total current assets 31,384 27,692
Property, plant and equipment, at cost:
Land 1,710 1,726
Building 5,679 5,615
Machinery and equipment 13,012 11,995
Furniture and fixtures 1,773 1,481
--------------------
22,174 20,817
Less accumulated depreciation 9,695 8,006
--------------------
Net property, plant and equipment 12,479 12,811
Excess of cost over net assets
acquired, net of accumulated amortization
of $52 and $2,422 in 1993 and 1992,
respectively 103 12,481
Other 1,463 910
--------------------
$45,429 $53,894
====================
See accompanying notes.
F-7
24
Hale Products, Inc.
Consolidated Balance Sheet (Continued)
DECEMBER 31
1993 1992
-----------------------
(In Thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 4,466 $ 4,738
Accrued compensation 1,056 1,504
Accrued pension and profit-sharing 1,383 1,033
Accrued interest 892 22
Income taxes payable 447 930
Current portion of long-term debt 844 995
Other liabilities 1,098 2,680
--------------------
Total current liabilities 10,186 11,902
Deferred taxes 1,006 917
Long-term debt, less current portion 36,356 33,406
Minority interest in subsidiary - 520
Stockholders' equity (deficit):
Common Stock $.01 par value;
1,000,000 shares authorized, 486,375
and 437,702 shares issued and
outstanding in 1993 and 1992 5 4
Capital in excess of par value 3,413 2,732
Retained earnings (deficit) (5,400) 4,595
Common Stock held in treasury - at
cost; 12,764 and 12,514 shares in
1993 and 1992 (149) (145)
Cumulative effect of foreign currency
translation 12 (37)
--------------------
Total stockholders' equity (deficit) (2,119) 7,149
--------------------
$45,429 $53,894
====================
See accompanying notes.
F-8
25
Hale Products, Inc.
Consolidated Statements of Operations
YEAR ENDED DECEMBER 31
1993 1992 1991
----------------------------------
(In Thousands)
Revenues $68,868 $70,339 $65,592
Cost of goods sold 43,178 45,254 43,773
----------------------------------
Gross margin 25,690 25,085 21,819
Operating costs:
Selling, general and
administrative 14,711 14,271 11,934
Depreciation 1,530 1,756 1,472
Amortization 1,330 1,328 1,620
Goodwill write-off and other
charges 11,823 - -
----------------------------------
Operating (loss) income (3,704) 7,730 6,793
Interest expense 3,648 4,550 5,555
Minority interest in net loss
(income) of subsidiary 37 (3) 74
----------------------------------
(Loss) income before income taxes,
extraordinary items, and
cumulative effect of change in
accounting for income taxes (7,315) 3,177 1,312
Income tax provision 1,941 1,235 863
----------------------------------
(Loss) income before extraordinary
items and cumulative effect of
change in accounting for income
taxes (9,256) 1,942 449
Extraordinary items, net of
income tax benefit of $945 853 - -
Cumulative effect of change in
accounting for income taxes (114) - -
----------------------------------
Net (loss) income $(9,995) $ 1,942 $ 449
==================================
See accompanying notes.
F-9
26
Hale Products, Inc.
Consolidated Statements of Stockholders' Equity (Deficit)
(In thousands, except share data)
COMMON STOCK CAPITAL RETAINED
------------------------ IN EXCESS EARNINGS
SHARES AMOUNT OF PAR VALUE (DEFICIT)
------------------------ ------------- ----------
Balance, December 31, 1990 428,235 $4 $2,672 $2,204
Purchase of treasury stock
Exercise of stock options 3,700 - 19
Foreign currency translation
Net income 449
------------------------------------------------------------
Balance, December 31, 1991 431,935 4 2,691 2,653
Purchase of treasury stock
Exercise of stock options 5,767 - 41
Foreign currency translation
Net income 1,942
------------------------------------------------------------
Balance, December 31, 1992 437,702 4 2,732 4,595
Purchase of treasury stock
Exercise of stock options 1,000 10
Stock issued in exchange for
subsidiary minority interest 47,673 1 671
Foreign currency translation
Net loss (9,995)
------------------------------------------------------------
Balance, December 31, 1993 486,375 $5 $3,413 $(5,400)
============================================================
TOTAL
FOREIGN STOCKHOLDERS'
CURRENCY TREASURY EQUITY
TRANSLATION STOCK (DEFICIT)
----------- -------- -------------
Balance, December 31, 1990 $ 287 $ - $5,167
Purchase of treasury stock (84) (84)
Exercise of stock options 19
Foreign currency translation (70) (70)
Net income 449
------------------------------------------
Balance, December 31, 1991 217 (84) 5,481
Purchase of treasury stock (61) (61)
Exercise of stock options 41
Foreign currency translation (254) (254)
Net income 1,942
------------------------------------------
Balance, December 31, 1992 (37) (145) 7,149
Purchase of treasury stock (4) (4)
Exercise of stock options 10
Stock issued in exchange for
subsidiary minority interest 672
Foreign currency translation 49 49
Net loss (9,995)
------------------------------------------
Balance, December 31, 1993 $ 12 $ (149) $(2,119)
==========================================
See accompanying notes.
F-10
27
Hale Products, Inc.
Consolidated Statements of Cash Flows
YEAR ENDED DECEMBER 31
1993 1992 1991
--------------------------------------
(In Thousands)
OPERATING ACTIVITIES
Net (loss) income $(9,995) $1,942 $ 449
Adjustments to reconcile net (loss) income to net cash
provided by operating activities:
Depreciation and amortization 2,860 3,084 3,092
Goodwill write-off and other noncash charges 11,838 56 49
Extraordinary items 853 - -
Pension fund settlement (1,290) - -
Minority interest in net (loss) income of subsidiary (37) 3 (74)
Deferred income tax provision (benefit) 145 (45) 477
Cumulative effect of change in accounting for
income taxes (114) - -
Change in operating assets and liabilities,
net of extraordinary items:
Accounts receivable (533) (3,209) 3,204
Inventory (1,045) 376 (475)
Prepaid expenses 102 659 (724)
Accounts payable (261) (1,216) 167
Accrued interest 870 (19) (30)
Income taxes payable 120 412 (89)
Accrued compensation (479) 553 (253)
Accrued pension and profit sharing (139) 138 (35)
Other liabilities (581) 1,367 (1,111)
--------------------------------------
Total adjustments 12,309 2,159 4,198
--------------------------------------
Net cash provided by operating activities 2,314 4,101 4,647
INVESTING ACTIVITIES
Capital expenditures (1,183) (767) (1,507)
Acquisition of GPL minority interest (102) - -
Other (107) (112) 17
--------------------------------------
Net cash used in investing activities (1,392) (879) (1,490)
FINANCING ACTIVITIES
Proceeds from sale of senior notes 36,000 - -
Net borrowings (payments) on line of credit agreements - 438 (37)
Principal payments on long-term debt (32,977) (2,211) (3,359)
Proceeds from the exercise of stock options 12 41 19
Purchase of treasury shares (4) (61) (84)
Debt fees (1,926) (152) -
--------------------------------------
Net cash provided by (used in) financing activities 1,105 (1,945) (3,461)
Effect of exchange rate changes on cash 65 (228) (25)
--------------------------------------
Net increase (decrease) in cash 2,092 1,049 (329)
Cash and cash equivalents, beginning of year 2,491 1,442 1,771
--------------------------------------
Cash and cash equivalents, end of year $4,583 $2,491 $1,442
======================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during year for:
Interest $2,766 $4,459 $6,243
======================================
Income taxes $1,625 $ 628 $ 848
======================================
See accompanying notes.
F-11
28
Hale Products, Inc.
Notes to Consolidated Financial Statements
December 31, 1993
1. SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Hale Products, Inc. (the Company) is a worldwide manufacturer and distributor
of products and services for the fire and rescue industry. The Company's
wholly owned subsidiaries are Hale Fire Pump Company (HFP), American Godiva,
Inc. (AGI), and Hale Products Finance, Inc. (HPF), all of which are located in
the United States, and Godiva Products Limited (GPL), located in the United
Kingdom.
The financial statements of those subsidiaries have been included in the
Company's consolidated financial statements. The United States
operations represent approximately 71% of the Company's revenues in 1993
and 1992 and 67% in 1991, and the United Kingdom represents the remaining
29% in 1993 and 1992 and 33% in 1991. All intercompany transactions have
been eliminated in consolidation.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with a maturity of three
months or less at the time of purchase to be cash equivalents.
CAPITALIZED LEASES
Assets recorded under capital leases are amortized over the initial or
remaining term of the related leases by the straight-line method.
Amortization of assets recorded under capital leases is included within
depreciation expense.
DEPRECIATION
For financial statement purposes, depreciation is determined on the
straight-line method. The estimated useful lives for depreciation are
as follows:
Building 31-50 years
Machinery and equipment 2-13 years
Furniture and fixtures 5-13 years
The Company uses accelerated depreciation methods for income tax purposes.
EXCESS OF COST OVER NET ASSETS ACQUIRED
Excess of cost over net assets acquired arising from the acquisition of HFP is
being amortized by the straight-line method over a period of 20 years. In
1993, the excess of cost over net assets acquired related to the acquisition of
GPL was written off (see note 3).
F-12
29
Hale Products, Inc.
Notes to Consolidated Financial Statements (continued)
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
DEFERRED INCOME TAXES
The Company provides deferred income taxes on the differences between financial
accounting and taxable income. The differences principally relate to the
timing of depreciation, pension, and warranty expense.
In January 1993, the Company adopted Financial Accounting Standards Board
Statement No. 109, "Accounting for Income Taxes." The adoption of this
Statement caused a change in the Company's method of accounting for deferred
income taxes as the new standard requires the liability method of accounting
for income taxes.
FOREIGN CURRENCY TRANSLATION
Assets and liabilities of foreign entities are translated using exchange rates
in effect at the balance sheet date and operations are translated using
average exchange rates for the year. Translation gains and losses are recorded
in stockholders' equity, and transaction gains and losses (not significant in
amount) are included in operating results for the year.
RECLASSIFICATION OF PRIOR YEAR AMOUNTS
Certain balances have been reclassified, where appropriate, to conform with the
1993 presentation.
2. INVENTORIES
Inventories are valued at lower of cost (first-in, first-out) or market and at
December 31 consisted of the following (in thousands):
1993 1992
------- -------
Raw materials and finished goods $11,364 $10,392
Work in progress 2,181 2,230
------- -------
Total inventory $13,545 $12,622
======= =======
F-13
30
Hale Products, Inc.
Notes to Consolidated Financial Statements (continued)
3. GOODWILL WRITE-OFF
As a result of an analysis of the continuing value of its remaining excess of
cost over net assets acquired, the Company recorded a charge of $11,716,000
for the year ended December 31, 1993 related to the excess of cost over net
assets acquired of GPL. The primary factor in evaluating the continuing value
was an assessment that cash flows from GPL's operations would not be
sufficient to recover such excess cost. In that regard, since its acquisition
in 1989, GPL has not achieved the sales, earnings or cash flow projections
prepared at the time of the acquisition. In addition, future earnings and
cash flow projections continue to deviate significantly from the original
projections. A second factor relates to the management team which was in
place at the time of the acquisition. The management team was assumed to
contribute to the continued development of the acquired business, however, a
number of the original members have had to be replaced in 1993. The third
factor relates to industry standards that were in place at the time of the
acquisition. The Company anticipated significant savings from the acquisition
of an established product line which would require minimal additional
development costs. In late 1993, the European regulatory body responsible for
setting fire pump standards modified those standards which negated the
anticipated savings. Accordingly, the Company's management determined that
the excess of cost over net assets acquired related to the GPL acquisition was
not recoverable.
4. RETIREMENT PLANS
The Company sponsors a defined benefit pension plan for the bargaining
unit employees in the United States and a contributory defined benefit pension
plan for all eligible employees in the United Kingdom. In the pension plan
for United States bargaining unit employees, benefits are based on years of
service and the employee's compensation during the last five years of
employment. Benefits for eligible United Kingdom employees are based on
compensation during the employee's final year of service. Employee
contributions are based on 2% of current salary. Assets of the United States
plan are comprised principally of equity securities and fixed income
investments. Assets of the United Kingdom plan are comprised of money market
funds.
The Company's policy is to annually contribute an amount between the
minimum required by law and the maximum which can be deducted for income tax
purposes. Contributions are intended to provide not only for benefits
attributed to service to date but also for those expected to be earned in
the future.
The provisions of Financial Accounting Standards Board Statement No. 87,
"Employers Accounting for Pensions," require recognition of an additional
minimum liability and related intangible asset for pension plans with
accumulated benefits in excess of plan assets. At December 31, 1993 an
additional liability of $192,000 and an intangible asset of equal value are
reflected in the consolidated balance sheet.
F-14
31
Hale Products, Inc.
Notes to Consolidated Financial Statements (continued)
4. RETIREMENT PLANS (CONTINUED)
Components of net periodic pension for the year ended December 31 were:
1993 1992 1991
U.S. U.K. U.S. U.K. U.S. U.K.
PLAN PLAN PLAN PLAN PLAN PLAN
--------------------------------------------
(Dollars in thousands)
Service cost - benefits earned
during the period $138 $195 $150 $246 $151 $214
Interest cost 171 390 172 440 160 427
Actual return on plan assets (332) (435) (74) (493) (268) (481)
Net amortization and deferral 167 (60) (101) (70) 112 (71)
--------------------------------------------
Net periodic pension cost $144 $ 90 $147 $123 $155 $ 89
============================================
The funded status of these plans at December 31 was:
1993 1992
U.S. U.K. U.S. U.K.
PLAN PLAN PLAN PLAN
------------------------------
Plan assets at fair value $2,239 $4,011 $2,075 $4,153
==============================
Actuarial present value of benefit obligations:
Vested benefits $1,753 $3,922 $1,510 $3,080
Nonvested 11 533 21 423
------------------------------
Accumulated benefit obligation 1,764 4,455 1,531 3,503
Additional benefits based on future salary increases 1,025 192 824 181
------------------------------
Projected benefit obligation 2,789 4,647 2,355 3,684
------------------------------
Projected benefit obligation (in excess of) less than
plan assets (550) (636) (280) 469
Unrecognized net loss (gain) 20 1,213 (258) 166
Unrecognized prior service cost 416 - 449 -
Unrecognized transition asset (320) (533) (354) (604)
Additional minimum liability recognized - (192) - -
------------------------------
Net (accrued) prepaid liability at year end $ (434) $ (148) $ (443) $ 31
==============================
F-15
32
Hale Products, Inc.
Notes to Consolidated Financial Statements (continued)
4. RETIREMENT PLANS (CONTINUED)
Key economic assumptions used in these determinations were as follows:
1993 1992
U.S. U.K. U.S. U.K.
PLAN PLAN PLAN PLAN
-----------------------------
Discount rate:
January 1 8.00% 10.50% 8.00% 10.75%
December 31 7.00 8.25 8.00 10.50
Rate of increase in compensation levels 4.00 6.50 4.00 6.50
Expected long-term rate of return:
January 1 8.00 10.50 8.00 10.50
December 31 7.00 10.50 8.00 10.50
The Company also sponsors a defined contribution pension, profit-sharing and
savings plan covering substantially all of the United States non bargaining
unit employees. Contributions are determined each year by the Board of
Directors. Expense for the years ended December 31, 1993, 1992 and 1991 was
$490,000 $556,000 and $515,000, respectively.
5. INCOME TAXES
Income taxes have been provided as follows:
1993 1992 1991
(In Thousands)
---------------------------
Expected tax (benefit) at statutory tax rate $(2,077) $1,080 $446
State taxes net of federal benefit 274 175 68
Net foreign losses not available to offset
domestic taxes - 109 45
Permanent differences 58 31 13
Amortization of foreign goodwill (a) 3,831 273 276
FSC Benefit (48) (49) (20)
Foreign tax refund (b) (56) (495) -
Other (41) 111 35
---------------------------
$ 1,941 $1,235 $863
===========================
(a) In 1993, the Company wrote off all goodwill relating to GPL. The
non-recurring charge of $11,716,000 provided no tax benefit.
(b) In 1992, The Company received a tax refund related to the pre-acquisition
period of its subsidiary in the United Kingdom. In accordance with the
original purchase agreement, part of the proceeds were payable to the
previous owner and the remainder has been shown as a reduction to the 1992
tax provision.
F-16
33
Hale Products, Inc.
Notes to Consolidated Financial Statements (continued)
5. INCOME TAXES (CONTINUED)
1993
- - ----
CURRENT DEFERRED TOTAL
--------------------------------
(In Thousands)
Federal $1,052 $120 $1,172
State 317 25 342
Foreign 427 - 427
-------------------------------
$1,796 $145 $1,941
===============================
1992
- - ----
CURRENT DEFERRED TOTAL
--------------------------------
(In Thousands)
Federal $1,155 $(34) $1,121
State 273 (8) 265
Foreign (148) (3) (151)
-------------------------------
$1,280 $(45) $1,235
===============================
1991
- - ----
CURRENT DEFERRED TOTAL
--------------------------------
(In Thousands)
Federal $199 $215 $414
State 51 52 103
Foreign 73 273 346
-------------------------------
$323 $540 $863
===============================
At December 31, 1993, the Company had approximately $904,000 of foreign
net operating loss (NOL) carryforwards available to reduce future foreign
taxable income. The NOL carryforwards have no expiration date.
6. EXTRAORDINARY ITEMS
At the time of the original acquisition of GPL by the Company, an agreement had
been entered into with the seller to fund the acquired subsidiary's pension
plan based on an actuarial valuation to be performed subsequent to the
acquisition. The Company had also entered into an agreement to share tax
refunds originating prior to the acquisition. In 1992, the Company received a
tax refund, of which the seller was entitled to $929,000. In 1993, the
actuarial valuation was finalized and the pension funding became due, however,
the Company became concerned with the seller's ability to fund the pension plan
and entered into an agreement by which the Company
F-17
34
Hale Products, Inc.
Notes to Consolidated Financial Statements (continued)
6. EXTRAORDINARY ITEMS (CONTINUED)
would settle the seller's pension liability in exchange for the Company
keeping the full tax refund. The pension funding, including related
professional fees, is $1,607,000. The Company received a tax benefit
related to the expense of $534,000 and since the $929,000 credit arose as
the result of a tax refund, there was no tax effect.
In connection with the refinancing of substantially all of the Company's
long-term debt, the Company incurred an extraordinary loss of $709,000 which
is net of a tax benefit of $411,000. The charge resulted from the prepayment
penalties on extinguishing the refinanced debt and the write-off of
unamortized debt discount.
7. LONG-TERM DEBT
1993 1992
-----------------------
Senior Notes due 2003 $36,000 $ -
Various notes, refinanced March 1993 - 33,223
Capitalized lease obligations 460 423
Unsecured, interest-free note payable to
vendor due September 1994 740 755
-----------------------
37,200 34,401
Less amounts due within one year 844 995
-----------------------
$36,356 $33,406
=======================
On March 26, 1993, the Company refinanced substantially all of its long-term
debt with the proceeds from $36,000,000 of Senior Notes due 2003. The
notes bear interest at rates between 9.28% and 9.86%. Principal is payable
in annual installments of $5,775,000 beginning in March 1996 and interest
is payable semiannually in arrears, each March and September.
The Company has established a $4,500,000 revolving credit facility with a
bank. Borrowings under the revolving credit facility bear interest at the
bank's prime rate plus 1.5%. There were no borrowings during 1993. The
Company is charged a fee of .05% on the unused balance, as defined.
The Senior Notes and revolving credit facility require certain levels of net
worth, working capital, and the maintenance of certain financial ratios.
F-18
35
Hale Products, Inc.
Notes to Consolidated Financial Statements (continued)
7. LONG-TERM DEBT (CONTINUED)
Aggregate scheduled maturities of long-term debt during the next five years
and thereafter are as follows (in thousands):
1994 $ 844
1995 124
1996 5,901
1997 5,841
1998 5,815
Thereafter 18,675
-------
$37,200
=======
Standby letters of credit are issued by the Company during the ordinary course
of business through banks as required by certain vendor contracts. At December
31, 1993, the Company had outstanding standby letters of credit for $1,093,000.
8. OPERATING LEASES
The Company has operating leases for supplemental office space, machinery
and equipment which expire at various dates. Rental expense incurred for all
operating leases was $644,000, $621,000 and $641,000 in 1993, 1992, and 1991,
respectively.
Minimum lease payments for each of the next five years are due as follows
(in thousands):
1994 $387
1995 255
1996 144
1997 95
1998 71
----
$952
====
9. STOCK OPTIONS AND WARRANTS
The Company has a stock option plan which provides for the granting of
incentive stock options to officers and key employees to purchase shares of
common stock at prices ranging from $5.00 to $10.26. Transactions involving
the plan are summarized as follows:
1993 1992
------------------
Shares outstanding at January 1 1,000 5,759
Granted - 2,500
Exercised (1,000) (5,767)
Expired - (1,492)
------------------
Shares outstanding at December 31 - 1,000
==================
F-19
36
Hale Products, Inc.
Notes to Consolidated Financial Statements (continued)
9. STOCK OPTIONS AND WARRANTS (CONTINUED)
In connection with the acquisition of HFP, the Company issued warrants which
enable the purchase of 100,000 shares of the Company's common stock for an
aggregate price of $1,000. The warrants expire March 26, 2000 and all 100,000
were outstanding at December 31, 1993.
10. RELATED PARTY TRANSACTIONS
The Company receives management services from a merchant banking group.
Management fees charged to the Company for such services were $425,000 in 1993
(of which $175,000 related to the refinancing of the Company's debt in March
1993) and $200,000 in 1992 and 1991.
11. RESEARCH AND DEVELOPMENT COSTS
The Company incurred total research and development expense of $1,109,000,
$1,065,000 and $1,108,000 for the years ended December 31, 1993, 1992 and 1991,
respectively.
During 1992, the Company received fees totaling $154,000 for reimbursement of
research and development performed for others.
F-20
37
IDEX CORPORATION AND HALE PRODUCTS
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1993 AND THE SIX
MONTHS ENDED JUNE 30, 1994
The following unaudited pro forma combined statements of operations for the
twelve months ended December 31, 1993 and the six months ended June 30, 1994
give effect to the acquisition by IDEX of the common stock of Hale Products,
Inc. ("Hale") as if the acquisition had occurred on January 1, 1993. The
transaction was accounted for as a purchase in accordance with the provisions
of Accounting Principles Board Opinion No. 16.
The historical financial data included in the pro forma statements is as of the
periods presented. The historical financial data of Hale included in the pro
forma statement of operations for the twelve months ended December 31, 1993 was
derived from audited financial statements for the year ended December 31, 1993.
The historical financial data of Hale for the six months ended June 30, 1994
was derived from unaudited financial statements for the period January 1 to May
25, 1994.
The unaudited pro forma financial data is based on management's best estimate
of the effects of the acquisition of Hale. Pro forma adjustments are based on
currently available information; however, the actual adjustments will be based
on more precise appraisals, evaluations and estimates of fair values. It is
possible that the actual adjustments could differ substantially from those
presented in the unaudited pro forma combined financial statements.
The unaudited pro forma statement of operations for the twelve months ended
December 31, 1993, and the six months ended June 30, 1994, are not necessarily
indicative of the results of operations that actually would have been achieved
had the acquisition of Hale been consummated as of the dates indicated, or that
may be achieved in the future. The unaudited pro forma financial statements
should be read in conjunction with the accompanying notes and historical
financial statements and notes thereto.
Hale's financial performance for the period January 1 to May 25, 1994, prior to
acquisition by IDEX, was adversely affected by several factors. Customarily,
Hale's shipments are stronger in the second half of a calendar year than the
first half due to the purchasing practices of customers in industries that it
serves. In 1994, shipments were further reduced by production curtailments at
the Conshohocken facilities because of severe winter weather and unexpected
facility repairs at its foundry. In addition, Hale was in the process of
moving production of certain products between its Conshohocken, Pennsylvania
and St. Joseph, Tennessee facilities during this period which created certain
temporary inefficiencies and loss of overhead absorption. Higher than normal
selling, general and administrative expenses were incurred during this period
due to Hale's participation in a major international fire and rescue trade show
which is held every six years in Germany. During the period January 1 through
May 25, 1994 order activity remained strong as sales backlogs increased by $5.5
million.
F-21
38
IDEX CORPORATION
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1993
(IN THOUSANDS EXCEPT PER SHARE INFORMATION)
PRO FORMA
IDEX HALE ADJUST-
HISTORICAL HISTORICAL MENTS PRO FORMA
---------- ---------- --------- ----------
Net sales $ 308,638 $ 68,868 $377,506
Cost of sales 190,286 43,178 $ 1,292 (1) 234,756
-------- ------ ------ --------
Gross profit 118,352 25,690 (1,292) 142,750
Selling, general, and administrative
expenses 68,217 14,711 60 (2) 82,988
Depreciation 1,530 (1,530)(3) -
Amortization and other charges 1,437 (1,437)(4) -
Goodwill write-off 11,716 *** 11,716
-------- ------ ------ --------
Income (loss) from operations 50,135 (3,704) 1,615 48,046
Other expense--net 830 (37) 1,538 (4) 2,331
-------- ------ ------ --------
Income (loss) before interest 49,305 (3,667) 77 45,715
Interest expense 11,007 3,648 1,053 (5) 15,708
-------- ------ ------ --------
Income (loss) before income taxes,
extraordinary item, and cumulative
effect of change in accounting for
income taxes 38,298 (7,315) (976) 30,007
Provision for income taxes 12,972 1,941 (4,110)(6) 10,803
-------- ------ ------ --------
Income from continuing operations $ 25,326 $ (9,256) $ 3,134 $ 19,204
======== ====== ====== ========
Earnings per common share $ 1.97 $ 1.49
======== ========
Weighted average shares outstanding 12,878 12,878
======== ========
***The Hale 1993 financial statements include a one-time charge of $11.7
million to write-off the unamortized balance of goodwill deemed
unrecoverable relating to Godiva Products Limited, the United Kingdom
subsidiary of Hale. This charge, while not an extraordinary item that would
be reflected as an adjustment to these pro forma financial statements, is a
nonrecurring charge having no effect on the continuing operations of Hale.
Had this charge been a pro forma adjustment, the 1993 pro forma financial
statements would have reflected the following:
Income from continuing operations $26,703
Earnings per share $ 2.07
F-22
39
IDEX CORPORATION
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1994
(IN THOUSANDS EXCEPT PER SHARE INFORMATION)
PRO FORMA
IDEX HALE ADJUST-
HISTORICAL HISTORICAL MENTS PRO FORMA
---------- ---------- ---------- ---------
Net sales $ 179,433 $ 22,586 $202,019
Cost of sales 109,886 15,687 $ 646 (1) 126,219
-------- ------ ----- --------
Gross profit 69,547 6,899 (646) 75,800
Selling, general, and administrative
expenses 38,781 6,475 55 (2) 45,311
Depreciation 715 (715)(3) -
Amortization 159 (159)(4) -
-------- ------ ----- --------
Income (loss) from operations 30,766 (450) 173 30,489
Other expense--net 1,029 769 (4) 1,798
-------- ------ ----- --------
Income (loss) before interest 29,737 (450) (596) 28,691
Interest expense 5,746 1,399 905 (5) 8,050
-------- ------ ----- --------
Income (loss) before income taxes 23,991 (1,849) (1,501) 20,641
Provision for income taxes 8,466 (586) (449)(6) 7,431
-------- ------ ----- --------
Income from continuing operations $ 15,525 $ (1,263) $ (1,052) $ 13,210
======== ====== ===== ========
Earnings per common share $ 1.19 $ 1.01
======== ========
Weighted average shares outstanding 13,035 13,035
======== ========
F-23
40
IDEX CORPORATION
UNAUDITED PRO FORMA NOTES TO STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE INFORMATION)
NOTES:
(1) Represents depreciation expense on Hale's stepped up value of
property, plant and equipment classified in cost of sales.
(2) Represents the estimated effect from the acquisition of Hale
relating to depreciation expense ($431 for the twelve months and $215 for
the six months) on stepped up value of property, plant and equipment
classified in selling, general and administrative expenses. Elimination of
certain Hale corporate operating expenses ($500 for the twelve months and
$225 for the six months) which will no longer be incurred as a result of the
Hale acquisition. Amortization on $4.5 million of other intangibles ($129
for the twelve months and $65 for the six months) arising from the
acquisition of Hale.
(3) Represents the elimination of Hale's historical depreciation expense.
(4) Represents the reclassification and net increase of amortization
expense and other charges resulting from the acquisition of Hale. The excess
of the purchase price over the fair value of the net assets acquired of
$61.5 million will be amortized over 40 years.
(5) Represents the estimated effect on interest expense ($4,740 for the
twelve months and $2,370 for the six months) from the $94.8 million of
borrowings under the IDEX Credit Agreement to finance the acquisition of
Hale at an effective borrowing cost of approximately 5%. The elimination of
interest expense ($3,487 for the twelve months and $1,365 for the six
months) on Hale's $36 million Senior Notes retired by IDEX. Reduction of
interest expense ($200 for the twelve months and $100 for the six months)
from Hale's application of cash flow from operations to reduce indebtedness.
(6) Represents the tax effect of the pro forma adjustments described
above.
F-24
41
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
On June 6, 1994, the company filed a current report on Form 8-K
(item 2 and 7) stating that the Company purchased for cash all
of the outstanding shares of common stock of Hale Products,
Inc., on May 26, 1994.
Under Item 5, Other Information, of this Form 10-Q, the Company
filed amended items 7(a) and 7(b) to Form 8-K with respect to
audited financial statements of Hale Products, Inc. for the
years ended December 31, 1993, 1992 and 1991, unaudited interim
financial statements of Hale products, Inc. for the period
January 1 to May 25, 1994 and for the six months ended June 30,
1993, and unaudited pro forma financial statements of IDEX
Corporation for the twelve months ended December 31, 1993 and
for the six months ended June 30, 1994, giving effect to the
Hale Products, Inc. acquisition as provided therein.
15
42
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 9, 1994 /s/Wayne P. Sayatovic
------------------------------
Wayne P. Sayatovic
Vice President-
Finance, Chief Financial
Officer and Secretary
(Duly Authorized and Principal
Financial Officer)
16
43
EXHIBIT INDEX
Exhibit
Number Description Page
- - ------- ----------- ----
4.1 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).
4.1(a) Amendment to Restated Certificate of Incorporation of IDEX (incorporated by reference to Exhibit
No. 3.2 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).
4.2 Amended and Restated Bylaws 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).
4.2(a) Amended and Restated Article III, Section 13 of the Amended and Restated Bylaws 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).
4.3 Indenture, dated as of September 15, 1992, among IDEX, the Subsidiaries and the Connecticut National
Bank, as Trustee, relating to the 9-3/4% Senior Subordinated Notes of IDEX due 2002 (incorporated by
reference to Exhibit No. 4.2 of the Annual Report of IDEX Corporation on Form 10-K for the fiscal year
ended December 31, 1992, Commission File No. 1-10235).
4.4 Specimen Senior Subordinated Note including specimen guarantee (incorporated by reference to Exhibit
No. 4.3 of the Annual Report of IDEX Corporation on Form 10-K for the fiscal year ended December 31,
1992, Commission File No. 1-10235).
4.5 Specimen certificate of Common Stock (incorporated by reference to Exhibit 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).
10.1 Second Amended and Restated Credit Agreement dated as of January 29, 1993 among IDEX, various banks
named therein and Continental Bank N.A., as Agent (incorporated by reference to Exhibit 10.1 to the
Annual Report of IDEX on Form 10-K for the fiscal year ending December 31, 1992, Commission File
No. 1-10235).
10.2 Pledge Agreement, dated January 22, 1988, between IDEX and the Bank Agent (incorporated by reference
to Exhibit No. 10.3 to the Registration Statement on Form S-1 of IDEX Corporation, et al.,
Registration No. 33-21205, as filed on April 21, 1988).
10.3 Guaranty Agreement, dated January 22, 1988, between each of the Guarantors named therein and the
Bank Agent (incorporated by reference to Exhibit No. 10.4 to the Registration Statement on Form S-1
of IDEX Corporation, et al., Registration No. 33-21205, as filed on April 21, 1988).
17
44
10.3(a) Guaranty Agreement, dated May 7, 1991, by CIC Acquisition Corporation in favor of the Bank Agent
(incorporated by reference to Exhibit No. 10.3(a) to the Registration Statement on Form S-1 of
IDEX Corporation, et al., Registration No. 33-50220, as filed on July 29, 1992).
10.3(b) Guaranty Agreement, dated May 4, 1992, by PLF Acquisition Corporation and MCL Acquisition
Corporation in favor of the Bank Agent (incorporated by reference to Exhibit No. 10.3(b) to the
Registration Statement on Form S-1 of IDEX Corporation, et al., Registration No. 33-50220, as
filed on July 29, 1992).
10.4 Inter-Guarantor Agreement, dated as of January 22, 1988, among the Subsidiaries named therein and
the Bank Agent (incorporated by reference to Exhibit 4.8 to the Registration Statement on Form S-1
of IDEX Corporation, et al., Registration No. 33-21205, as filed on April 21, 1988).
10.4(a) First Amendment to Inter-Guarantor Agreement, dated as of May 7, 1991, among IDEX Corporation and
the Subsidiaries named therein (incorporated by reference to Exhibit No. 10.6(a) to the Registration
Statement on Form S-1 of IDEX Corporation, et al., Registration No. 33-50220, as filed on July
29, 1992).
10.5 Amended and Restated Employment Agreement between IDEX Corporation and Donald N. Boyce, dated as of
January 22, 1988 (incorporated by reference to Exhibit No. 10.15 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) First Amendment to the Amended and Restated Employment Agreement between IDEX Corporation and
Donald N. Boyce, dated as of January 13, 1993 (incorporated by reference to Exhibit 10.5(a) to the
Annual Report of IDEX on Form 10-K for the fiscal year ending December 31, 1992, Commission File
No. 1-10235).
10.6 Amended and Restated Employment Agreement between IDEX Corporation and Wayne P. Sayatovic, dated
as of January 22, 1988 (incorporated by reference to Exhibit No. 10.17 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).
10.6(a) First Amendment to the Amended and Restated Employment Agreement between IDEX Corporation and
Wayne P. Sayatovic, dated as of January 13, 1993 (incorporated by reference to Exhibit 10.7(a) to
the Annual Report of IDEX on Form 10-K for the fiscal year ending December 31, 1992, Commission
File No. 1-10235).
10.7 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).
10.8 Form of Indemnification Agreement (incorporated by reference to Exhibit No. 10.23 to the Registration
Statement on Form S-1 of IDEX Corporation, Registration No. 33-28317, as filed on April 26, 1989).
18
45
10.9 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).
10.10 Revised Form of IDEX Corporation Stock Option Plan for Outside Directors (incorporated by reference
to Exhibit No. 10.22(a) 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).
10.11 Amendment to the IDEX Corporation Stock Option Plan for Outside Directors, adopted by resolution of
the Board of Directors dated as of January 28, 1992 (incorporated by reference to Exhibit 10.21(a)
of the Annual Report of IDEX on Form 10-K for the fiscal year ended December 31, 1991, Commission
File No. 1-10235).
10.12 Non-Qualified Stock Option Plan for Non-Officer Key Employees of IDEX Corporation (incorporated by
reference to Exhibit 10.15 to the Annual Report of IDEX on Form 10-K for the fiscal year ending
December 31, 1992, Commission File No. 1-102351).
10.13 Non-Qualified Stock Option Plan for Officers of IDEX Corporation (incorporated by reference to
Exhibit 10.16 to the Annual Report of IDEX on Form 10-K for the fiscal year ending December 31,
1992, Commission File No. 1-102351).
10.14 IDEX Corporation Supplemental Executive Retirement Plan (incorporated by reference to Exhibit
10.17 to the Annual Report of IDEX on Form 10-K for the fiscal year ending December 31, 1992,
Commission File No. 1-102351).
10.15 Asset Purchase Agreement, dated as of February 19, 1991, by and among Corken International
Corporation, Corken Properties, Inc., Hinderliter Industries, Inc., CIC Acquisition Corporation and
IDEX (incorporated by reference to Exhibit 10.23 to the Annual Report of IDEX on Form 10-K for the
fiscal year ended December 31, 1990, Commission file number 33-21205).
10.16 Asset Purchase Agreement, dated as of April 9, 1992 by and among PLF Acquisition Corporation, O.D.E.
Manufacturing, Inc., Pulsafeeder, Inc., Morr Control, Inc., Pulsafeeder Far East Pte. Ltd. and PAC,
Inc. (incorporated by reference to Exhibit No. 2.1 to the Current Report of IDEX on Form 8-K filed
with the Commission on May 20, 1992, Commission File No. 1-10235).
*10.17 Stock Purchase Agreement, dated as of May 6, 1994 by and among HPI Acquisition Corp., HFP Partners,
L.P., HMTC Partners L.P., the persons listed on Schedule A and Hale Products, Inc.
*10.18 First Amendment dated as of May 23, 1994 to second amended and restated Credit Agreement dated as
of January 29, 1993 by and among IDEX Corporation, various banks named therein and Continental
Bank N.A., as agent.
*24.1 Consent of Ernst & Young
*Filed herewith
19