EXHIBIT 99.1
IDEX CORPORATION REPORTS RECORD SECOND QUARTER SALES AND EARNINGS;
TENTH CONSECUTIVE QUARTER OF YEAR-OVER-YEAR GROSS MARGIN EXPANSION
NORTHBROOK, IL, JULY 22, 2004 - IDEX CORPORATION (NYSE: IEX) today reported
record sales and earnings for the three- and six-month periods ended June 30,
2004. Diluted earnings per share for the second quarter were 44 cents on a
split-adjusted basis, up 29 percent from the second quarter of 2003 and up 26
percent sequentially. First half 2004 earnings per diluted share were 79 cents,
up 32 percent versus 2003.
SECOND QUARTER HIGHLIGHTS
o Orders written of $230.7 million were 13 percent higher than a year ago;
base business orders - excluding acquisitions and foreign currency
translation - were up 5 percent.
o Record sales of $233.6 million increased 13 percent from last year and were
up 9 percent sequentially; base business sales in the quarter - excluding
acquisitions and foreign currency - were up 5 percent.
o Gross margins improved 60 basis points to 40.2 percent, while operating
margins at 17.0 percent were 270 basis points higher than last year.
o Net income rose 35 percent year-over-year to $22.8 million, an all-time
high.
o Diluted EPS at 44 cents was 10 cents ahead of last year and 9 cents higher
than the first quarter.
o EBITDA for the quarter was 20.3% of sales and covered interest expense by
more than 13 times.
o Debt to total capitalization at June 30 was 31 percent.
o Free cash flow was strong at $28.3 million and 1.2 times net income.
o Systec, Inc. and Scivex, Inc. were acquired during the second quarter in a
strategic expansion of the analytical instrument and life sciences portion
of the company.
o On July 16, 2004, IDEX acquired Tianjin Dinglee, the leading manufacturer
of rescue tools in China.
o Operational excellence initiatives remain on track, fueling new product
innovation to drive growth.
o Lawrence D. Kingsley to join IDEX in newly created position of chief
operating officer.
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"We are pleased with our second quarter and year-to-date performance in 2004.
The second quarter is historically our company's strongest and, again, our
business units delivered with record sales and earnings and our tenth
consecutive quarter of year-over-year gross margin expansion. The period also
marked our eighth consecutive quarter of year-over-year earnings growth and our
seventh consecutive quarter of year-over-year organic sales growth. We are
especially pleased with the organic revenue growth of our Pump and Engineered
Products businesses, which more than offset the decline we experienced in
Dispensing Equipment sales following that segment's record second quarter
performance in 2003. Our recent performance reflects improved economic
conditions and the success of our efforts to drive organic growth through new
product innovation, our focus on meeting critical-to-customer needs, and our
expanding global presence. Although the short cycle nature of our business
limits our visibility on the remainder of the year, we are off to a strong start
in 2004 and continue to use all the tools at our disposal to drive future
growth, profitability and cash generation."
Dennis K. Williams
Chairman, President and CEO
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SECOND QUARTER FINANCIAL HIGHLIGHTS
(In millions, except per share amounts and percentages)
FOR THE QUARTER ENDED
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June 30, March 31,
JUNE 30, --------------------------------------------------------
2004 2003 Change 2004 Change
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Orders Written $ 230.7 $ 204.2 13% $ 237.8 (3)%
Sales 233.6 207.1 13 214.6 9
Operating Income 39.8 29.6 35 31.3 27
Operating Margin 17.0% 14.3% 270 bp 14.6% 240 bp
Net Income $ 22.8 $ 16.9 35% $ 17.7 29%
Diluted EPS .44 .34 29 .35 26
Other Data
--Income before Taxes $ 36.0 $ 26.3 37% $ 27.9 29%
--Depreciation and Amortization 7.8 7.5 4 7.6 2
--Interest 3.6 3.6 -- 3.4 5
--EBITDA 47.4 37.4 27 38.9 22
--Cash Flow from Operating Activities 32.7 30.2 8 19.4 68
--Capital Expenditures 4.4 4.6 (4) 5.3 (18)
--Free Cash Flow 28.3 25.6 11 14.1 100
SECOND QUARTER SALES, NET INCOME, AND EPS INCREASE YEAR-OVER-YEAR AND
SEQUENTIALLY
New orders in the second quarter totaled $230.7 million, 13 percent higher than
the same period of 2003 and down seasonally 3 percent from the first quarter of
2004. Excluding the impact of foreign currency translation and acquisitions,
orders were 5 percent higher than the second quarter of 2003 and 4 percent lower
than the first quarter of 2004. At June 30, 2004, IDEX had an unfilled order
backlog of just over one month's sales.
Sales in the second quarter were $233.6 million, a 13 percent increase over the
second quarter of 2003 and 9 percent higher than the first quarter of 2004.
Compared with last year, base business shipments grew 5 percent, foreign
currency translation provided a 2 percent improvement, and acquisitions
accounted for a 6 percent increase. Base business sales grew 10 percent
domestically, but were down 2 percent internationally during the recent quarter.
International sales increases in base Pump Products were offset by reductions in
Dispensing Equipment. Sales to international customers from base business
represented 45 percent of the total, compared with 44 percent in the first
quarter and the record 48 percent last year.
Second quarter gross margin of 40.2 percent of sales was 60 basis points higher
than the second quarter of 2003 and 30 basis points higher than the first
quarter of 2004. The second quarter 2004 operating margin was 17.0 percent of
sales, 270 basis points higher than last year and 240 basis points ahead of the
first quarter. The significant increase in operating margin is attributable to
increased sales volume for Pump Products and Other Engineered Products and the
continuing favorable impact of savings realized from the company's Global
Sourcing, Six Sigma, Kaizen and Lean Manufacturing initiatives. Total SG&A
expense for the second quarter of $54.1 million increased from $52.6 million a
year earlier primarily due to acquisitions, while SG&A as a percent of sales
declined to 23.2 percent of sales from 25.3 percent in both the second quarter
of 2003 and the first quarter of 2004.
Net income at $22.8 million, an all-time high, increased 35 percent over last
year's second quarter and was up 29 percent from the first quarter of 2004.
Diluted earnings per share of 44 cents improved 10 cents from last year and 9
cents from the first quarter of this year.
YEAR-TO-DATE FINANCIAL HIGHLIGHTS
(In millions, except per share amounts and percentages)
SIX MONTHS ENDED JUNE 30,
-------------------------------------
2004 2003 Change
-------------------------------------
Orders Written $ 468.6 $ 410.3 14%
Sales 448.2 402.6 11
Operating Income 71.1 53.0 34
Operating Margin 15.9% 13.2% 270 bp
Net Income $ 40.5 $ 29.6 37%
Diluted EPS .79 .60 32
Other Data
--Income before Taxes $ 63.8 $ 46.0 39%
--Depreciation and Amortization 15.4 15.4 --
--Interest 7.1 7.3 (4)
--EBITDA 86.3 68.7 26
--Cash Flow from Operating Activities 52.2 47.0 11
--Capital Expenditures 9.8 8.4 16
--Free Cash Flow 42.4 38.6 10
FIRST HALF ORDERS, SALES, NET INCOME, AND EPS AHEAD OF LAST YEAR
New orders for the first six months totaled $468.6 million and were 14 percent
higher than last year. Excluding the impact of foreign currency translation and
acquisitions, orders were 6 percent higher in the first six months of 2004 than
in 2003.
Sales for the first six months increased 11 percent to $448.2 million from
$402.6 million a year earlier. Base business sales rose 4 percent, foreign
currency translation added 3 percent , and acquisitions accounted for a 4
percent improvement. Base business sales, which grew 7 percent domestically,
were down 2 percent internationally during the first six months of 2004. For the
first half of the year, base business sales to international customers were 44
percent of total sales, versus 46 percent in the first half of 2003.
First half operating margins were 15.9 percent, 270 basis points higher than the
13.2 percent reported in the prior-year period. This improvement reflects volume
leverage, along with a 130 basis point improvement in gross margin to 40.1
percent, resulting mainly from the company's Global Sourcing, Six Sigma, Kaizen
and Lean Manufacturing initiatives. Higher total SG&A expenses year-over-year
reflect acquisitions, volume-related expenses, and the deliberate reinvestment
in the businesses to drive organic growth. Through the first six months of 2004,
SG&A expenses as a percent of sales declined to 24.2 percent versus 25.6 percent
for the first half of 2003.
Year-to-date net income of $40.5 million increased 37 percent over last year.
Diluted earnings per share of 79 cents rose 19 cents, or 32 percent, from the 60
cents recorded in the first half of 2003.
SEGMENT RESULTS
For the quarter, Pump Product sales of $134.0 million rose 18 percent compared
to 2003, reflecting 9 percent base business growth, a 1 percent favorable impact
from currency translation, and an 8 percent increase due to acquisitions.
Operating profit of $23.2 million represented a 310 basis point operating margin
improvement compared with the second quarter of 2003, attributable to volume
leverage and the impact of corporate initiatives.
Dispensing Equipment sales in the second quarter of $45.9 million declined 3
percent, reflecting a 2 percent increase due to currency translation, offset by
a 5 percent reduction in base business related to lower European demand versus
the prior-year's record performance. Operating profit of $11.3 million increased
15 percent and represented a 390 basis point operating margin improvement
compared with a year ago primarily due to the company's operational excellence
initiatives, as well as volume improvement in the domestic units.
Sales of Other Engineered Products during the second quarter totaled $54.4
million, an increase of 15 percent, reflecting 4 percent base business growth, 3
percent favorable foreign currency translation, and an 8 percent improvement due
to acquisitions. Operating profit of $10.9 million represented a 140 basis point
operating margin improvement compared with the year-ago quarter, largely
attributable to volume.
Year-to-date, the Pump Products Group contributed 57 percent of sales and 51
percent of operating income; the Dispensing Equipment Group accounted for 19
percent of sales and 23 percent of operating income; and Other Engineered
Products represented 24 percent of sales and 26 percent of operating income.
STRONG FINANCIAL POSITION AND FREE CASH FLOW
IDEX ended the second quarter with total assets of $1.2 billion and working
capital of $120 million. Total debt increased $110 million during the first six
months of 2004. The increase reflects the previously announced acquisitions of
Manfred Vetter GmbH (January 2004); Systec, Inc. (April 2004); and Scivex, Inc.
(May 2004), partially offset by free cash flow generation during the period.
Free cash flow (cash flow from operating activities less capital expenditures)
for the first half of 2004 was $42.4 million. Year-to-date, EBITDA (earnings
before interest, taxes, depreciation and amortization) totaled $86.3 million
(19.2 percent of sales) and covered interest expense by more than 12 times.
Debt-to-total capitalization at June 30, 2004, was 31 percent.
SYSTEC AND SCIVEX ACQUISITIONS
During the second quarter, IDEX acquired Systec, Inc. and Scivex, Inc. "Both
acquisitions add to the strategically important analytical instrument and life
sciences portion of the company," said Williams. "The addition of these two
businesses positions IDEX very well to provide complete sub-systems and
components to the analytical instrument OEMs in these higher growth end markets.
Further, the capabilities of Scivex open up new markets in clinical diagnostics
and the medical consumable end markets."
Systec, based in New Brighton, MN, has sales of $9 million and is a leading
provider of vacuum degassing products used in analytical instrumentation.
Scivex, which has operations in Oak Harbor, WA; Pocasset, MA; and Santa Clara,
CA, has annual sales of $31 million and is the leading developer, manufacturer,
and marketer of highly engineered, cost-effective fluidic solutions for the
analytical, biotechnology, clinical diagnostic and related life sciences
markets.
COMPANY ANNOUNCES DINGLEE ACQUISITION - EXPANSION OF RESCUE TOOLS BUSINESS IN
CHINA
On July 19, 2004, IDEX acquired Tianjin Dinglee Machine and Motor Co., Ltd.,
based in Tianjin, China, outside of Beijing. "We are delighted to welcome
Dinglee, the leading manufacturer of rescue tools in the small, but rapidly
growing, Chinese rescue tools market, to our portfolio of rescue tools
businesses," said Williams. "Reporting through our Hale Products business,
Dinglee's manufacturing, product development capabilities, and established
market channels considerably strengthen our ability to penetrate the Asian
rescue tools market with both locally manufactured and imported products. At the
same time, Dinglee is well positioned to be a component supplier to our North
American and European rescue tools businesses. This acquisition now gives our
hydraulic rescue tools business a truly global presence - China, Germany and the
United States." Terms of the cash transaction for this small business were not
disclosed.
PROGRESS CONTINUES ON CORPORATE INITIATIVES
"We continue to use our long-term initiatives to create top- and bottom-line
growth," Williams said. "Rapid process improvement is driving the increase in
the gross margin, which enables us to reinvest in our businesses. Second quarter
gross margin of 40.2 percent improved 60 basis points versus the prior year and
30 basis points sequentially. First half 2004 savings from Six Sigma, Kaizen and
Lean totaled $5.7 million, while year-to-date Global Sourcing savings were $6.6
million, representing a savings of 26 percent versus our prior sources."
LAWRENCE D. KINGSLEY TO JOIN IDEX AS CHIEF OPERATING OFFICER
In a separate news release issued today, IDEX announced the appointment of
Lawrence D. (Larry) Kingsley to the newly created position of chief operating
officer. Reporting to the company's Chairman, President and Chief Executive
Officer Dennis K. Williams, Kingsley will be responsible for assisting in the
development and execution of corporate strategy and driving the financial and
operating performance of IDEX's three global business groups in pumps,
dispensing equipment and engineered products. Kingsley most recently served as
corporate vice president and group executive for the Industrial Controls Group
at Danaher Corporation.
2004 OUTLOOK; SECOND HALF RESULTS DEPEND ON PACE OF NEW ORDERS, SPEED OF
RECOVERY
Looking ahead, Williams said, "Economic conditions during the first half of 2004
improved measurably from a year ago and we anticipate a continuation of
favorable business conditions as we enter the third quarter. As a short cycle
business, however, our financial performance remains reliant on the current pace
of incoming orders. In addition, the second quarter tends to be our strongest
quarter of any given year due to the greater number of working days and the
seasonality of our dispensing equipment businesses. Although we have limited
visibility on future business conditions, we believe IDEX is well positioned for
earnings growth as the economy improves, based on our lower cost structure, our
operational excellence initiatives, and our use of strong cash flow to pay down
debt and reduce interest expense. At the same time, we continue to invest in new
products, applications and global markets, while pursuing strategic acquisitions
to drive the company's longer-term profitable growth."
CONFERENCE CALL TO BE BROADCAST OVER THE INTERNET
IDEX will broadcast its second quarter conference call over the Internet on
Thursday, July 22, at 1:30 p.m. CDT. Chairman, President and Chief Executive
Officer Dennis K. Williams, and Vice President and Chief Financial Officer
Dominic A. Romeo will discuss the company's recent financial performance and
respond to questions from the financial analyst community.
IDEX invites interested investors to listen to the presentation, which will be
carried live on the Internet at its Web site: www.idexcorp.com. To hear the live
call, log on to the site several minutes before the discussion begins. After
clicking on the presentation icon, investors should follow the instructions to
ensure their systems are set up for the event, or download the correct
applications at no charge. Investors will be able to access a replay of the call
through August 5 at the IDEX site or by dialing 800-839-3139 (or 402-998-1075
for international participants) using the pass code "IDEX."
A NOTE ON EBITDA AND FREE CASH FLOW
EBITDA means earnings before interest, income taxes, depreciation and
amortization, and free cash flow means cash from operating activities less
capital expenditures. Management uses these non-GAAP financial measures as
internal operating metrics. Management believes these measures are useful as
analytical indicators of leverage capacity and debt servicing ability, and uses
them to measure financial performance as well as for planning purposes. However,
they should not be considered as alternatives to net income, cash flows from
operating activities or any other items calculated in accordance with U.S. GAAP,
or as an indicator of operating performance. The definitions of EBITDA and free
cash flow used here may differ from those being used by other companies.
FORWARD-LOOKING STATEMENTS
This news release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Exchange Act of 1934, as amended. These statements may relate to, among other
things, capital expenditures, cost reductions, cash flow, and operating
improvements and are indicated by words or phrases such as "anticipate,"
"estimate," "plans," "expects," "projects," "should," "will," "management
believes," "the company believes," "the company intends," and similar words or
phrases. These statements are subject to inherent uncertainties and risks that
could cause actual results to differ materially from those anticipated at the
date of this news release. The risks and uncertainties include, but are not
limited to, the following: economic and political consequences resulting from
terrorist attacks and wars; levels of industrial activity and economic
conditions in the U.S. and other countries around the world, pricing pressures
and other competitive factors, and levels of capital spending in certain
industries - all of which could have a material impact on order rates and IDEX's
results, particularly in light of the low levels of order backlogs it typically
maintains; its ability to make acquisitions and to integrate and operate
acquired businesses on a profitable basis; the relationship of the U.S. dollar
to other currencies and its impact on pricing and cost competitiveness;
political and economic conditions in foreign countries in which the company
operates; interest rates; capacity utilization and the effect this has on costs;
labor markets; market conditions and material costs; and developments with
respect to contingencies, such as litigation and environmental matters. The
forward-looking statements included here are only made as of the date of this
news release, and management undertakes no obligation to publicly update them to
reflect subsequent events or circumstances. Investors are cautioned not to rely
unduly on forward-looking statements when evaluating the information presented
here.
ABOUT IDEX
IDEX Corporation is a manufacturer of highly engineered pumps and metering
products, dispensing equipment, and other engineered products with leading
positions in niche markets. Its products are sold to a wide range of industries
throughout the world. IDEX shares are traded on the New York Stock Exchange and
Chicago Stock Exchange under the symbol "IEX."
FOR FURTHER INFORMATION ON IDEX CORPORATION AND ITS BUSINESS UNITS,
VISIT THE COMPANY'S WEB SITE AT www.idexcorp.com.
IDEX CORPORATION
ADD -6-
IDEX CORPORATION
CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
SECOND QUARTER ENDED SIX MONTHS ENDED
JUNE 30, (b) JUNE 30, (b)
2004 2003 2004 2003
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NET SALES $ 233,590 $ 207,147 $ 448,190 $ 402,645
COST OF SALES 139,667 125,024 268,537 246,219
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GROSS PROFIT 93,923 82,123 179,653 156,426
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 54,109 52,566 108,553 103,468
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OPERATING INCOME 39,814 29,557 71,100 52,958
OTHER (EXPENSE) INCOME - NET (235) 341 (224) 361
INTEREST EXPENSE 3,619 3,630 7,055 7,369
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INCOME BEFORE INCOME TAXES 35,960 26,268 63,821 45,950
PROVISION FOR INCOME TAXES 13,126 9,325 23,295 16,312
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NET INCOME $ 22,834 $ 16,943 $ 40,526 $ 29,638
================================================================================================================================
EARNINGS PER COMMON SHARE:
BASIC EARNINGS PER COMMON SHARE $ .46 $ .35 $ .81 $ .61
DILUTED EARNINGS PER COMMON SHARE $ .44 $ .34 $ .79 $ .60
================================================================================================================================
SHARE DATA:
BASIC WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 50,060 48,576 49,768 48,505
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 52,037 49,697 51,578 49,419
================================================================================================================================
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
JUNE 30, DECEMBER 31,
2004 2003
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ASSETS
CURRENT ASSETS
CASH AND CASH EQUIVALENTS $ 5,989 $ 8,552
RECEIVABLES - NET 124,648 101,859
INVENTORIES 119,701 105,304
OTHER CURRENT ASSETS 11,849 8,781
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TOTAL CURRENT ASSETS 262,187 224,496
PROPERTY, PLANT AND EQUIPMENT - NET 153,555 147,095
GOODWILL - NET 692,253 559,008
INTANGIBLE ASSETS - NET 29,237 19,401
OTHER NONCURRENT ASSETS 16,571 10,739
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TOTAL $1,153,803 $ 960,739
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LIABILITIES AND SHAREHOLDERS' EQUITY
TRADE ACCOUNTS PAYABLE $ 77,577 $ 56,252
DIVIDENDS PAYABLE 6,055 4,622
ACCRUED EXPENSES 58,924 54,807
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TOTAL CURRENT LIABILITIES 142,556 115,681
LONG-TERM DEBT 286,150 176,546
OTHER NONCURRENT LIABILITIES 86,453 76,410
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TOTAL LIABILITIES 515,159 368,637
SHAREHOLDERS' EQUITY 638,644 592,102
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TOTAL $1,153,803 $ 960,739
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SEE FOLLOWING PAGE FOR NOTES TO CONDENSED FINANCIAL STATEMENTS.
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IDEX CORPORATION
COMPANY AND BUSINESS GROUP FINANCIAL INFORMATION
(dollars in thousands)
SECOND QUARTER ENDED SIX MONTHS ENDED
JUNE 30, (a) JUNE 30, (a)
2004 2003 2004 2003
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PUMP PRODUCTS
NET SALES $ 133,971 $ 113,137 $ 255,181 $ 224,141
OPERATING INCOME (b) 23,150 16,112 41,950 31,787
OPERATING MARGIN 17.3% 14.2% 16.4% 14.2%
DEPRECIATION AND AMORTIZATION $ 4,318 $ 4,059 $ 8,177 $ 8,491
CAPITAL EXPENDITURES 2,868 2,948 6,601 5,287
DISPENSING EQUIPMENT
NET SALES $ 45,899 $ 47,484 $ 87,518 $ 86,766
OPERATING INCOME (b) 11,346 9,857 19,242 14,709
OPERATING MARGIN 24.7% 20.8% 22.0% 17.0%
DEPRECIATION AND AMORTIZATION $ 1,404 $ 1,495 $ 2,834 $ 3,069
CAPITAL EXPENDITURES 765 659 1,416 1,073
OTHER ENGINEERED PRODUCTS
NET SALES $ 54,440 $ 47,158 $ 106,884 $ 93,162
OPERATING INCOME (b) 10,882 8,771 21,551 15,921
OPERATING MARGIN 20.0% 18.6% 20.2% 17.1%
DEPRECIATION AND AMORTIZATION $ 1,671 $ 1,300 $ 3,103 $ 2,600
CAPITAL EXPENDITURES 678 927 1,522 1,935
COMPANY
NET SALES $ 233,590 $ 207,147 $ 448,190 $ 402,645
OPERATING INCOME 39,814 29,557 71,100 52,958
OPERATING MARGIN 17.0% 14.3% 15.9% 13.2%
DEPRECIATION AND AMORTIZATION (c) $ 7,757 $ 7,456 $ 15,385 $ 15,367
CAPITAL EXPENDITURES 4,411 4,615 9,759 8,407
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(a) INCLUDES ACQUISITION OF SPONSLER CO., INC. (JUNE 2003), CLASSIC ENGINEERING,
INC. (SEPTEMBER 2003), SYSTEC, INC. (APRIL 2004) AND SCIVEX, INC. (MAY 2004)
IN THE PUMP PRODUCTS GROUP AND MANFRED VETTER GMBH (JANUARY 2004) IN THE
OTHER ENGINEERED PRODUCTS GROUP FROM THE DATES OF ACQUISITION.
(b) GROUP OPERATING INCOME EXCLUDES UNALLOCATED CORPORATE OPERATING EXPENSES IN
BOTH YEARS.
(c) EXCLUDES AMORTIZATION OF DEBT ISSUANCE EXPENSES.