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UNITED STATES
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 QUARTERLY PERIOD ENDED SEPTEMBER 30, 2005
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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, NORTHBROOK, ILLINOIS 60062
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (847) 498-7070
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
Yes [X] No [ ]
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act).
Yes [ ] No [X]
Number of shares of common stock of IDEX Corporation outstanding as of
October 31, 2005: 52,318,243 (net of treasury shares).
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TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements. 1
Condensed Consolidated Balance Sheets 1
Condensed Consolidated Statements of Operations 2
Condensed Consolidated Shareholders' Equity 3
Condensed Consolidated Cash Flows 4
Notes to Condensed Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. 10
Cautionary Statement Under the Private Securities Litigation Reform Act 10
Historical Overview and Outlook 10
Results of Operations 11
Liquidity and Capital Resources 14
Critical Accounting Estimates 15
Item 3. Quantitative and Qualitative Disclosures About Market Risk. 16
Item 4. Controls and Procedures. 16
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. 17
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. 17
Item 5. Other Information. 18
Item 6. Exhibits. 18
Signatures 18
Exhibit Index 19
Certifications 24
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
IDEX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
SEPTEMBER 30, DECEMBER 31,
2005 2004
------------- ------------
ASSETS
Current assets
Cash and cash equivalents ........................................ $ 33,662 $ 7,274
Receivables, less allowance for doubtful accounts of $4,576 at
September 30, 2005 and $4,260 at December 31, 2004 ............ 141,684 119,567
Inventories ...................................................... 129,390 126,978
Other current assets ............................................. 8,905 7,419
---------- ----------
Total current assets .......................................... 313,641 261,238
Property, plant and equipment - net ................................. 146,720 155,602
Goodwill ............................................................ 694,077 713,619
Intangible assets - net ............................................. 28,790 29,545
Other noncurrent assets ............................................. 28,470 26,288
---------- ----------
Total assets .................................................. $1,211,698 $1,186,292
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Trade accounts payable ........................................... $ 76,813 $ 71,405
Dividends payable ................................................ 6,268 6,105
Accrued expenses ................................................. 74,449 70,745
---------- ----------
Total current liabilities ..................................... 157,530 148,255
Long-term debt ...................................................... 160,780 225,317
Other noncurrent liabilities ........................................ 102,703 99,115
---------- ----------
Total liabilities ............................................. 421,013 472,687
---------- ----------
Shareholders' equity
Common stock:
Authorized: 150,000,000 shares, $.01 per share par value
Issued: 52,236,166 shares at September 30, 2005 and
50,996,444 shares at December 31, 2004 ..................... 522 510
Additional paid-in capital ....................................... 274,711 234,354
Retained earnings ................................................ 501,667 439,137
Minimum pension liability adjustment ............................. (4,644) (4,644)
Cumulative translation adjustment ................................ 29,392 53,046
Treasury stock at cost: 51,783 shares at September 30, 2005 and
175,650 shares at December 31, 2004 ........................ (1,873) (4,209)
Unearned compensation ............................................ (9,090) (4,589)
---------- ----------
Total shareholders' equity .................................... 790,685 713,605
---------- ----------
Total liabilities and shareholders' equity .................... $1,211,698 $1,186,292
========== ==========
-1-
See Notes to Condensed Consolidated Financial Statements.
IDEX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
THIRD QUARTER NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
------------------- -------------------
2005 2004 2005 2004
-------- -------- -------- --------
Net sales ........................................... $257,930 $237,557 $781,746 $685,747
Cost of sales ....................................... 153,886 142,568 464,096 411,105
-------- -------- -------- --------
Gross profit ........................................ 104,044 94,989 317,650 274,642
Selling, general and administrative expenses ........ 57,395 55,028 182,174 163,581
-------- -------- -------- --------
Operating income .................................... 46,649 39,961 135,476 111,061
Other income (expense) - net ........................ 141 (384) 516 (608)
-------- -------- -------- --------
Income before interest expense and income taxes ..... 46,790 39,577 135,992 110,453
Interest expense .................................... 3,548 3,856 11,233 10,911
-------- -------- -------- --------
Income before income taxes .......................... 43,242 35,721 124,759 99,542
Provision for income taxes .......................... 14,727 12,502 43,666 35,797
-------- -------- -------- --------
Net income .......................................... $ 28,515 $ 23,219 $ 81,093 $ 63,745
======== ======== ======== ========
Basic earnings per common share ..................... $ .55 $ .46 $ 1.59 $ 1.28
======== ======== ======== ========
Diluted earnings per common share ................... $ .54 $ .44 $ 1.54 $ 1.23
======== ======== ======== ========
Share data:
Basic weighted average common shares outstanding .... 51,618 50,293 51,087 49,943
Diluted weighted average common shares outstanding .. 53,071 52,400 52,503 51,837
See Notes to Condensed Consolidated Financial Statements.
-2-
IDEX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED SHAREHOLDERS' EQUITY
(IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
COMMON UNEARNED
STOCK & MINIMUM COMPENSATION
ADDITIONAL PENSION CUMULATIVE ON TOTAL
PAID-IN RETAINED LIABILITY TRANSLATION TREASURY RESTRICTED SHAREHOLDERS'
CAPITAL EARNINGS ADJUSTMENT ADJUSTMENT STOCK STOCK EQUITY
---------- -------- ---------- ----------- -------- ------------ -------------
Balance, December 31, 2004................. $234,864 $439,137 $(4,644) $ 53,046 $(4,209) $(4,589) $713,605
Net income................................. 81,093 81,093
Other comprehensive income
Cumulative translation adjustment....... (23,654) (23,654)
-------- --------
Other comprehensive income........... (23,654) (23,654)
-------- -------- --------
Comprehensive income................. 81,093 (23,654) 57,439
-------- -------- --------
Issuance of 1,404,947 shares of common
stock from exercise of stock options and
deferred compensation plans............. 37,582 37,582
Issuance of restricted stock............... 2,787 3,882 (6,669) --
Amortization of unearned
compensation............................ 2,168 2,168
Restricted shares surrendered for tax
withholdings............................ (1,546) (1,546)
Cash dividends declared - $.36 per common
share outstanding....................... (18,563) (18,563)
-------- -------- ------- -------- ------- ------- --------
Balance, September 30, 2005................ $275,233 $501,667 $(4,644) $ 29,392 $(1,873) $(9,090) $790,685
======== ======== ======= ======== ======= ======= ========
See Notes to Condensed Consolidated Financial Statements.
-3-
IDEX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
NINE MONTHS
ENDED SEPTEMBER 30,
--------------------
2005 2004
-------- ---------
Cash flows from operating activities
Net income .................................................................. $ 81,093 $ 63,745
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization ............................................ 20,140 21,252
Amortization of intangibles .............................................. 547 463
Amortization of unearned compensation .................................... 2,168 1,620
Amortization of debt issuance expenses ................................... 428 435
Stock option income tax benefits ......................................... 10,239 4,239
Deferred income taxes .................................................... 7,218 6,250
Changes in:
Receivables - net ..................................................... (23,688) (18,217)
Inventories ........................................................... (6,222) (9,018)
Trade accounts payable ................................................ 5,708 13,591
Accrued expenses ...................................................... 5,118 14,085
Other - net .............................................................. (856) (4,266)
-------- ---------
Net cash flows from operating activities .............................. 101,893 94,179
Cash flows from investing activities
Additions to property, plant and equipment ............................... (17,154) (14,805)
Acquisition of businesses, net of cash acquired .......................... (425) (171,220)
Other - net .............................................................. 42 345
-------- ---------
Net cash flows from investing activities .............................. (17,537) (185,680)
Cash flows from financing activities
Borrowings under credit facilities for acquisitions ...................... 425 171,220
Net repayments under credit facilities ................................... (60,458) (81,187)
Repayments of other long-term debt ....................................... (891) (37)
Dividends paid ........................................................... (18,400) (15,345)
Proceeds from stock option exercises ..................................... 25,575 18,439
Other - net .............................................................. (4,219) (3,781)
-------- ---------
Net cash flows from financing activities .............................. (57,968) 89,309
-------- ---------
Net increase (decrease) in cash ............................................. 26,388 (2,192)
Cash and cash equivalents at beginning of year .............................. 7,274 8,552
-------- ---------
Cash and cash equivalents at end of period .................................. $ 33,662 $ 6,360
======== =========
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for:
Interest ................................................................. $ 13,478 $ 12,951
Income taxes ............................................................. 22,559 19,286
SUPPLEMENTAL NON-CASH INFORMATION
Issuance of restricted stock ................................................ $ 6,669 $ 4,371
See Notes to Condensed Consolidated Financial Statements.
-4-
IDEX CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
1. BASIS OF PRESENTATION
The financial statements of IDEX Corporation (IDEX or the Company) have
been prepared in accordance with the instructions to Form 10-Q under the
Securities Exchange Act of 1934, as amended. The statements are unaudited but
include all adjustments, consisting only of recurring items, except as noted,
which the Company considers necessary for a fair presentation of the information
set forth herein. The results of operations for the three months ended September
30, 2005 are not necessarily indicative of the results to be expected for the
entire year.
The financial statements and Management's Discussion and Analysis of
Financial Condition and Results of Operations should be read in conjunction with
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2004.
Certain amounts in the prior years' financial statements have been
reclassified to conform to the current year presentation.
2. BUSINESS SEGMENTS
Information on IDEX's business segments is presented below, based on the
nature of products and services offered. IDEX evaluates performance based on
several factors, of which operating income is the primary financial measure.
Intersegment sales are accounted for at fair value as if the sales were to third
parties.
THIRD QUARTER NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
-------------------- -------------------
2005 2004 2005 2004
-------- -------- -------- --------
Net sales
Pump Products:
External customers ......... $157,607 $141,526 $460,212 $395,317
Intersegment sales ......... 1,014 832 3,007 2,222
-------- -------- -------- --------
Total group sales ....... 158,621 142,358 463,219 397,539
-------- -------- -------- --------
Dispensing Equipment:
External customers ......... 40,936 40,028 145,380 127,545
Intersegment sales ......... -- -- -- 1
-------- -------- -------- --------
Total group sales ....... 40,936 40,028 145,380 127,546
-------- -------- -------- --------
Other Engineered Products:
External customers ......... 59,387 56,003 176,154 162,885
Intersegment sales ......... 1 2 5 4
-------- -------- -------- --------
Total group sales ....... 59,388 56,005 176,159 162,889
-------- -------- -------- --------
Intersegment elimination ...... (1,015) (834) (3,012) (2,227)
-------- -------- -------- --------
Total net sales ......... $257,930 $237,557 $781,746 $685,747
======== ======== ======== ========
Operating income
Pump Products ................. $ 30,895 $ 26,284 $ 83,639 $ 68,234
Dispensing Equipment .......... 7,882 7,348 32,690 26,590
Other Engineered Products ..... 14,972 12,501 40,521 34,052
Corporate office and other .... (7,100) (6,172) (21,374) (17,815)
-------- -------- -------- --------
Total operating income .. $ 46,649 $ 39,961 $135,476 $111,061
======== ======== ======== ========
-5-
IDEX CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
3. EARNINGS PER COMMON SHARE
Earnings per common share (EPS) are computed by dividing net income by the
weighted average number of shares of common stock (basic) plus common stock
equivalents outstanding (diluted) during the period. Common stock equivalents
consist of stock options, which have been included in the calculation of
weighted average shares outstanding using the treasury stock method, unvested
restricted shares, and shares issuable in connection with certain deferred
compensation agreements (DCUs). Basic weighted average shares reconciles to
diluted weighted average shares as follows:
THIRD QUARTER NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
------------------- -------------------
2005 2004 2005 2004
------ ------ ------ ------
Basic weighted average common shares outstanding ............... 51,618 50,293 51,087 49,943
Dilutive effect of stock options, unvested restricted shares,
and DCUs .................................................... 1,453 2,107 1,416 1,894
------ ------ ------ ------
Diluted weighted average common shares outstanding ............. 53,071 52,400 52,503 51,837
====== ====== ====== ======
4. INVENTORIES
The components of inventories as of September 30, 2005 and December 31,
2004 were:
SEPTEMBER 30, DECEMBER 31,
2005 2004
------------- ------------
Raw materials .... $ 52,949 $ 52,824
Work-in-process .. 14,438 14,181
Finished goods ... 62,003 59,973
-------- --------
Total ......... $129,390 $126,978
======== ========
Inventories carried on a LIFO basis amounted to $99,831 and $104,957 at
September 30, 2005 and December 31, 2004, respectively. The impact on earnings
of using the LIFO method was not material.
5. GOODWILL AND INTANGIBLE ASSETS
The changes in the carrying amount of goodwill for the nine months ended
September 30, 2005, by business group, were as follows:
OTHER
PUMP DISPENSING ENGINEERED
PRODUCTS EQUIPMENT PRODUCTS TOTAL
-------- ---------- ---------- --------
Balance at December 31, 2004 ... $443,101 $131,041 $139,477 $713,619
Foreign currency translation ... (1,845) (8,982) (6,512) (17,339)
Acquisition adjustments ........ (2,203) -- -- (2,203)
-------- -------- -------- --------
Balance at September 30, 2005 .. $439,053 $122,059 $132,965 $694,077
======== ======== ======== ========
-6-
IDEX CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
The carrying value of identifiable intangible assets at September 30, 2005
of $28,790 included amortizable and unamortizable assets as follows:
GROSS
CARRYING ACCUMULATED NET CARRYING
AMOUNT AMORTIZATION AMOUNT
-------- ------------ ------------
Amortizable intangible assets:
Patents ............................................ $ 9,843 $(4,867) $ 4,976
Other .............................................. 715 (170) 545
------- ------- -------
Total amortizable intangible assets ................ 10,558 (5,037) 5,521
Unamortizable trademark assets ........................ 23,269 -- 23,269
------- ------- -------
Total intangible assets at September 30, 2005 ... $33,827 $(5,037) $28,790
======= ======= =======
6. ACCRUED EXPENSES
The components of accrued expenses as of September 30, 2005 and
December 31, 2004 were:
SEPTEMBER 30, DECEMBER 31,
2005 2004
------------- ------------
Payroll ............................... $27,252 $23,950
Management incentive compensation ..... 10,963 14,366
Taxes ................................. 16,043 14,676
Insurance ............................. 5,731 4,776
Other ................................. 14,460 12,977
------- -------
Total .............................. $74,449 $70,745
======= =======
7. PREFERRED STOCK
The Company had five million shares of preferred stock authorized but
unissued at September 30, 2005 and December 31, 2004.
8. STOCK-BASED COMPENSATION
The Company uses the intrinsic-value method of accounting for stock option
awards as prescribed by Accounting Principles Board Opinion No. 25 and,
accordingly, does not recognize compensation expense for its stock option awards
in the Condensed Consolidated Statements of Operations. The following table
reflects pro forma net income and net income per common share had the Company
elected to adopt the fair value approach of Statement of Financial Accounting
Standards No. 123R, "Accounting for Stock-Based Compensation."
-7-
IDEX CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
THIRD QUARTER NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
------------------- -------------------
2005 2004 2005 2004
------- ------- ------- -------
Net income
As reported .............................................. $28,515 $23,219 $81,093 $63,745
Stock-based compensation, net of related tax effects ..... 1,421 1,386 4,931 3,969
------- ------- ------- -------
Pro forma ................................................ $27,094 $21,833 $76,162 $59,776
======= ======= ======= =======
Basic EPS
As reported .............................................. $ .55 $ .46 $ 1.59 $ 1.28
Stock-based compensation, net of related tax effects ..... .03 .03 .10 .08
------- ------- ------- -------
Pro forma ................................................ $ .52 $ .43 $ 1.49 $ 1.20
======= ======= ======= =======
Diluted EPS
As reported .............................................. $ .54 $ .44 $ 1.54 $ 1.23
Stock-based compensation, net of related tax effects ..... .03 .02 .09 .08
------- ------- ------- -------
Pro forma ................................................ $ .51 $ .42 $ 1.45 $ 1.15
======= ======= ======= =======
9. RETIREMENT BENEFITS
The Company sponsors several qualified and nonqualified defined benefit and
defined contribution pension plans and other postretirement plans for its
employees. The following tables provide the components of net periodic benefit
cost for its major defined benefit plans and its other postretirement plans.
PENSION BENEFITS
-----------------------------------------
THIRD QUARTER NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
------------------- -------------------
2005 2004 2005 2004
------- ------- ------- -------
Service cost ..................... $ 1,421 $ 1,078 $ 3,872 $ 3,216
Interest cost .................... 1,657 1,270 4,429 3,797
Expected return on plan assets ... (2,176) (1,379) (5,191) (4,141)
Net amortization ................. 835 791 2,282 2,377
------- ------- ------- -------
Net periodic benefit cost ..... $ 1,737 $ 1,760 $ 5,392 $ 5,249
======= ======= ======= =======
OTHER BENEFITS
-----------------------------------------
THIRD QUARTER NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
------------------- -------------------
2005 2004 2005 2004
---- ---- ------ ------
Service cost ................... $121 $107 $ 362 $ 304
Interest cost .................. 318 250 952 797
Net amortization ............... 19 (9) 58 49
---- ---- ------ ------
Net periodic benefit cost ... $458 $348 $1,372 $1,150
==== ==== ====== ======
-8-
The Company previously disclosed in its financial statements for the year
ended December 31, 2004, that it expected to contribute approximately $1.6
million to these pension plans and $1.0 million to its other postretirement
benefit plans in 2005. As of September 30, 2005, $2.0 million of contributions
have been made to the pension plans and $.6 million has been made to its other
postretirement benefit plans. The Company presently anticipates contributing up
to an additional $5.0 million, during the fourth quarter of 2005, to fund the
pension plans and other postretirement benefit plans.
10. LEGAL PROCEEDINGS
IDEX is a party to various legal proceedings arising in the ordinary course
of business, none of which is expected to have a material adverse effect on its
business, financial condition, results of operations or cash flows.
-9-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
CAUTIONARY STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT
The "Historical Overview and Outlook" and the "Liquidity and Capital
Resources" sections of this management's discussion and analysis of our
financial condition and operations contain 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," "we believe," "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 filing. 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
our order rates and results, particularly in light of the low levels of order
backlogs we typically maintain; our 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 we operate; 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 report, and we undertake 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.
HISTORICAL OVERVIEW AND OUTLOOK
IDEX Corporation (IDEX or the Company) sells a broad range of pump
products, dispensing equipment and other engineered products to a diverse
customer base in the United States and other countries around the world.
Accordingly, our businesses are affected by levels of industrial activity and
economic conditions in the U.S. and in other countries where we do business and
by the relationship of the U.S. dollar to other currencies. Levels of capacity
utilization and capital spending in certain industries and overall industrial
activity are among the factors that influence the demand for our products.
IDEX consists of three reportable segments: Pump Products, Dispensing
Equipment and Other Engineered Products.
The Pump Products Group produces a wide variety of pumps, compressors, flow
meters, injectors and valves, and related controls for the movement of liquids,
air and gases. The Dispensing Equipment Group produces highly engineered
equipment for dispensing, metering and mixing colorants, paints, inks and dyes,
hair colorants and other personal care products; refinishing equipment; and
centralized lubrication systems. The Other Engineered Products Group produces
firefighting pumps, rescue tools, lifting bags and other components and systems
for the fire and rescue industry; and engineered stainless steel banding and
clamping devices used in a variety of industrial and commercial applications.
IDEX has a history of achieving above-average operating margins. Our
operating margins have exceeded the average operating margin for the companies
that comprise the Value Line Composite Index (VLCI) every year since 1988. We
view the VLCI operating performance statistics as a proxy for an average
industrial company. Our operating margins are influenced by, among other things,
utilization of facilities as sales volumes change and inclusion of newly
acquired businesses.
Some of our key 2005 financial highlights for the nine months ended
September 30, 2005 were as follows:
- - Orders were $797.5 million, 13% higher than a year ago; base business
orders - excluding acquisitions and foreign currency translation - were up
9%.
- - Sales of $781.7 million rose 14%; base business sales - excluding
acquisitions and foreign currency translation - were up 10%.
-10-
- - Gross margins improved 50 basis points to 40.6% of sales, while operating
margins at 17.3% were 110 basis points higher than a year ago.
- - Net income increased 27% to $81.1 million.
- - Diluted EPS of $1.54 was 31 cents ahead of the same period of 2004.
We are pleased with our results for the first nine months of 2005. Our
business units continue to deliver profitable sales growth as a result of new
technology initiatives and market initiatives and our on-going commitment to
operational excellence. During the first nine months of the year, Pump Products
and Dispensing Equipment led the organic sales growth with 11%. Organic sales
growth in Dispensing Equipment was 6%. Demand remained strong in North America
and was offset by the impact of continued unfavorable economic conditions in
Europe. We are focused on the voice of our customer, while using the powerful
combination of continuous process improvement and new product innovation to
drive our future performance.
The following forward-looking statements are qualified by the cautionary
statement under the Private Securities Litigation Reform Act set forth above.
As a short-cycle business, our performance is reliant upon the current pace
of incoming orders, and we have limited visibility on future business
conditions. We believe IDEX is well positioned for earnings expansion. This is
based on our lower cost structure resulting from our operational excellence
discipline, our investment in new products, applications and global markets, and
our pursuit of strategic acquisitions to help drive IDEX's longer term
profitable growth.
RESULTS OF OPERATIONS
For purposes of this discussion and analysis section, reference is made to
the table on the following page and the Company's Condensed Consolidated
Statements of Operations included in Item 1.
Performance in the Three Months Ended September 30, 2005 Compared with the Same
Period of 2004
For the three months ended September 30, 2005, orders, sales and profits
were higher than the comparable third quarter of last year. New orders totaled
$258.9 million, 10% higher than the same period last year. Base business orders
were also 10% higher than the same period one year ago.
Sales in the third quarter were $257.9 million, an 8% improvement from last
year's third quarter. Base business shipments also grew 8% as European currency
rates contributed little to sales. Base business sales grew 10% domestically and
6% internationally during the recent quarter. Sales to international customers
from base businesses represented approximately 42% of total sales in the third
quarter of 2005, compared with 43% in the year-ago quarter.
For the quarter, the Pump Products Group contributed 61% of sales and 57%
of operating income, the Dispensing Equipment Group accounted for 16% of sales
and 15% of operating income, and the Other Engineered Products Group represented
23% of sales and 28% of operating income.
Pump Products Group sales of $158.6 million for the three months ended
September 30, 2005 rose $16.3 million, or 11% compared with 2004, reflecting all
base business growth. In the third quarter of 2005, base business sales grew 11%
domestically and 9% internationally. Base business sales to customers outside
the U.S. were approximately 36% of total group sales in 2005 compared with 37%
in 2004.
Dispensing Equipment Group sales of $40.9 million increased $.9 million, or
2%, in the third quarter of 2005 compared with last year's third quarter. This
increase was attributed to favorable foreign currency translation of 1% and a 1%
increase in base business volume. In the third quarter of 2005, base business
sales increased 15% domestically but declined 6% internationally. Base business
sales to customers outside the U.S. were approximately 57% of total group sales
in the 2005 quarter, compared with 61% in 2004.
Other Engineered Products Group sales of $59.4 million increased $3.4
million, or 6%, in the third quarter of 2005 compared with 2004. This increase
reflects a 6% increase in base business volume. In the third quarter of 2005,
base business sales increased slightly domestically and 13% internationally.
Base business sales to customers outside the U.S. were approximately 45% of
total group sales in the 2005 quarter, compared with 42% in 2004.
-11-
IDEX CORPORATION AND SUBSIDIARIES
COMPANY AND BUSINESS GROUP FINANCIAL INFORMATION
(IN THOUSANDS)
(UNAUDITED)
THIRD QUARTER NINE MONTHS
ENDED SEPTEMBER 30, (1) ENDED SEPTEMBER 30, (1)
----------------------- -----------------------
2005 2004 2005 2004
-------- -------- -------- ----------
Pump Products Group
Net sales .......................... $158,621 $142,358 $463,219 $397,539
Operating income (2) ............... 30,895 26,284 83,639 68,234
Operating margin ................... 19.5% 18.5% 18.1% 17.2%
Depreciation and amortization ...... $ 3,898 $ 4,290 $ 12,078 $ 12,467
Capital expenditures ............... 3,100 3,234 10,791 9,835
Dispensing Equipment Group
Net sales .......................... $ 40,936 $ 40,028 $145,380 $127,546
Operating income (2) ............... 7,882 7,348 32,690 26,590
Operating margin ................... 19.3% 18.4% 22.5% 20.8%
Depreciation and amortization ...... $ 1,257 $ 1,384 $ 3,853 $ 4,218
Capital expenditures ............... 1,012 545 2,866 1,961
Other Engineered Products Group
Net sales .......................... $ 59,388 $ 56,005 $176,159 $162,889
Operating income (2) ............... 14,972 12,501 40,521 34,052
Operating margin ................... 25.2% 22.3% 23.0% 20.9%
Depreciation and amortization ...... $ 1,297 $ 1,546 $ 4,348 $ 4,649
Capital expenditures ............... 854 940 2,640 2,462
Company
Net sales .......................... $257,930 $237,557 $781,746 $685,747
Operating income ................... 46,649 39,961 135,476 111,061
Operating margin ................... 18.1% 16.8% 17.3% 16.2%
Depreciation and amortization (3) .. $ 7,194 $ 7,950 $ 22,855 $ 23,335
Capital expenditures ............... 5,287 5,046 17,154 14,805
(1) Third quarter data includes acquisition of Dinglee (July 2004) in the Other
Engineered Products Group from the date of acquisition while the nine month
data includes Dinglee as well as the acquisitions of Systec (April 2004)
and Scivex (May 2004) in the Pump Products Group from the respective dates
of acquisition.
(2) Group operating income excludes unallocated corporate operating expenses.
(3) Excludes amortization of debt issuance expenses.
-12-
Gross profit of $104.0 million in the third quarter of 2005 increased $9.1
million, or 10%, from 2004. Gross profit as a percent of sales was 40.3% in 2005
and increased from 40.0% in 2004. The improved gross margins primarily reflected
volume leverage and savings realized from the Company's Six Sigma, Lean
Manufacturing and global sourcing initiatives.
Selling, general and administrative (SG&A) expenses increased to $57.4
million in 2005 from $55.0 million in 2004 primarily due to higher volume and
reinvestment in the business to drive organic growth. As a percent of sales,
SG&A expenses were 22.2%, down from 23.2% in 2004.
Operating income increased $6.7 million, or 17%, to $46.6 in the third
quarter of 2005 from $40.0 million in 2004, primarily reflecting the higher
gross margins, partially offset by increased SG&A expenses. Third quarter
operating margins were 18.1% of sales, 130 basis points higher than the third
quarter of 2004. The improvement from last year resulted from a 30 basis point
increase in gross margins and a 100 basis point decrease in SG&A as a percent of
sales. In the Pump Products Group, operating income of $30.9 million and
operating margins of 19.5% in the third quarter of 2005 were up from the $26.3
million and 18.5% recorded in 2004 principally due to volume leverage and the
impact of our operational excellence initiatives. Operating income for the
Dispensing Equipment Group of $7.9 million and operating margins of 19.3% in the
third quarter of 2005 were up from the $7.3 million and 18.4% in 2004 primarily
due to the Company's operational excellence initiatives, as well as volume
improvement. Operating income in the Other Engineered Products Group of $15.0
million and operating margins of 25.2% in the third quarter of 2005 increased
from $12.5 million and 22.3% achieved in 2004 and primarily reflected increased
sales volume and the impact of operational excellence initiatives.
Other income in the third quarter of 2005 of $.1 million was favorable
compared with $.4 million of expense in 2004 mainly due to hurricane-related
costs incurred at our Punta Gorda, Florida, pump manufacturing facility in 2004.
Interest expense decreased to $3.5 million in the current quarter from $3.9
million in the third quarter of 2004. The decrease was principally due to lower
debt levels partially offset by a higher interest rate environment.
IDEX's provision for income taxes is based upon estimated annual tax rates
for the year applied to federal, state and foreign income. The provision for
income taxes increased to $14.7 million in the third quarter of 2005 from $12.5
million in 2004. The effective tax rate decreased to 34.1% in the third quarter
of 2005 from 35.0% in 2004 due to a favorable impact from foreign tax credits.
Net income for the current quarter was $28.5 million, 23% higher than the
$23.2 million earned in the third quarter of 2004. Diluted earnings per share in
the third quarter of 2005 of $.54 increased $.10, or 23%, compared with the
third quarter of 2004.
Performance in the Nine Months Ended September 30, 2005 Compared with the Same
Period of 2004
Orders, sales and profits were higher for the first nine months of 2005
compared with the same period last year. New orders for the first nine months of
2005 totaled $797.5 million, 13% higher than last year. Excluding the impact of
foreign currency translation and the three acquisitions made since the beginning
of 2004 (Systec - April 2004; Scivex - May 2004 and Dinglee - July 2004), orders
were 9% higher than the comparable period of 2004.
Sales in the first nine months of the year increased 14% to $781.7 million
from $685.7 million a year ago. Base business sales rose 10%, foreign currency
translation added 1%, and acquisitions accounted for a 3% improvement. Base
business sales grew 12% domestically and 7% internationally during the first
nine months of 2005. For the first nine months of the year, base business sales
to international customers were approximately 44% of total sales, versus 45% in
the first nine months of 2004.
For the first nine months of 2005, the Pump Products Group contributed 59%
of sales and 53% of operating income, the Dispensing Equipment Group accounted
for 19% of sales and 21% of operating income, and the Other Engineered Products
Group represented 22% of sales and 26% of operating income.
Pump Products Group sales of $463.2 million increased $65.7 million, or
17%, for the nine months ended September 30, 2005 compared with 2004. Base
business sales provided an 11% increase, acquisitions accounted for a 5% sales
improvement and foreign currency translation added 1%. In the first nine months
of 2005, base business
-13-
sales grew 12% domestically and 8% internationally. Base business sales to
customers outside the U.S. were approximately 38% of total group sales in both
the 2005 and 2004 periods.
Dispensing Equipment Group sales of $145.4 million increased $17.8 million,
or 14%, in the first nine months of 2005 compared with the same period in 2004.
The increase was attributable to an increase in base business sales of 11% and
favorable foreign currency translation of 3%. In the first nine months of 2005,
base business sales increased 23% domestically and 5% internationally. Base
business sales to customers outside the U.S. were approximately 61% of total
group sales in the first nine months of 2005, compared with 65% in 2004.
Other Engineered Products Group sales of $176.2 million increased $13.3
million, or 8%, in the first nine months of 2005 compared with 2004. This
reflected a 6% increase in base business volume, a 1% improvement from foreign
currency translation, and a 1% favorable impact from the Dinglee acquisition. In
the first nine months of 2005, base business sales increased 7% domestically and
6% internationally. Base business sales to customers outside the U.S. were
approximately 45% of total group sales in both the 2005 and 2004 periods.
Gross profit of $317.7 million in the first nine months of 2005 increased
$43.0 million, or 16%, from 2004. Gross profit as a percent of sales was 40.6%
in 2005, an increase from 40.1% in 2004. The improved gross margins primarily
reflected volume leverage and savings realized from our global sourcing, Six
Sigma and Lean Manufacturing initiatives.
SG&A increased to $182.2 million in 2005 from $163.6 million in 2004, and
as a percent of sales was 23.3%, down from 23.9% in 2004. The increase in SG&A
expenses reflected the acquisitions, volume-related expenses and the deliberate
reinvestment in the businesses to drive organic growth.
Operating income increased by $24.4 million, or 22%, to $135.5 million in
the first nine months of 2005 from $111.1 million in 2004, primarily reflecting
the higher gross margins discussed above, partially offset by increased SG&A
expenses. Operating margins for the first nine months of 2005 were 17.3%
compared with 16.2% in the prior year period. The margin increase from last year
was primarily due to volume leverage and the improvement in gross margins
discussed above. In the Pump Products Group, operating income of $83.6 million
and operating margins of 18.1% in 2005 were up from the $68.2 million and 17.2%
recorded in 2004. Operating income for the Dispensing Equipment Group of $32.7
million and operating margins of 22.5% in 2005 were up from the $26.6 million
and 20.8% in 2004. Operating income in the Other Engineered Products Group of
$40.5 million and operating margins of 23.0% in 2005 increased from $34.1
million and 20.9% achieved in 2004.
Other income in the first nine months of 2005 of $.5 million was favorable
compared with $.6 million of expense in 2004 mainly due to hurricane-related
costs incurred at our Punta Gorda, Florida, pump manufacturing facility in 2004.
Interest expense increased to $11.2 million in the first nine months of
2005 from $10.9 million in 2004. This increase was principally attributable to a
higher interest rate environment partially offset by lower debt levels.
IDEX's provision for income taxes is based upon estimated annual tax rates
for the year applied to federal, state and foreign income. The provision for
income taxes increased to $43.7 million in 2005 from $35.8 million in 2004. The
effective tax rate decreased to 35.0% in 2005 from 36.0% in 2004 due to a
favorable impact from foreign tax credits.
Net income for the first nine months of 2005 was $81.1 million, 27% higher
than the $63.7 million earned in the same period of 2004. Diluted earnings per
share in the first nine months of 2005 of $1.54 increased $.31 compared with the
same period last year.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 2005, working capital was $156.1 million and our current
ratio was 2.0 to 1. Cash flows from operating activities increased $7.7 million,
or 8%, to $101.9 million in 2005 mainly due to the improved operating results
discussed above offset by unfavorable working capital, reflecting an increase in
receivables as a result of higher sales.
Cash flows provided from operations were more than adequate to fund capital
expenditures of $17.2 million and $14.8 million in the first nine months of 2005
and 2004, respectively. Capital expenditures were generally for
-14-
machinery and equipment that improved productivity and tooling to support IDEX's
global sourcing initiatives, although a portion was for business system
technology and replacement of equipment and facilities. Management believes that
IDEX has ample capacity in its plants and equipment to meet expected needs for
future growth in the intermediate term.
The Company acquired Vetter in January 2004, Systec in April 2004, Scivex
in May 2004 and Dinglee in July 2004 at a cost of $44.8 million, $22.4 million,
$98.6 million and $4.1 million, respectively. The Company also paid $1.1 million
in settlement of a purchase price contingency related to the 2003 acquisition of
Classic. All payments for acquisitions were financed under the Company's credit
facility.
In addition to the $150.0 million of 6.875% Senior Notes due February 15,
2008, the Company also has a $600.0 million domestic multi-currency bank
revolving credit facility (Credit Facility), which expires December 14, 2009. At
September 30, 2005, the maximum amount available under the Credit Facility was
$600.0 million, of which zero was borrowed, with outstanding letters of credit
totaling $5.1 million. The Credit Facility contains a covenant that limits total
debt outstanding to 3.25 times operating cash flow, as defined in the agreement.
Our total debt outstanding was $160.8 million at September 30, 2005, and based
on the covenant, total debt outstanding was limited to $663.7 million. Interest
is payable quarterly on the outstanding balance at the bank agent's reference
rate or, at the Company's election, at LIBOR plus an applicable margin. The
applicable margin is based on the credit rating of our Senior Notes, and can
range from 27 basis points to 75 basis points. Based on the Company's BBB rating
at September 30, 2005, the applicable margin was 55 basis points. We also pay an
annual fee of 15 basis points on the total Credit Facility.
In December 2001, we, and certain of our subsidiaries, entered into a
one-year, renewable agreement with a financial institution, under which we
collateralized certain receivables for borrowings (Receivables Facility). This
agreement was renewed in December 2004 for one year. The Receivables Facility
provides for borrowings of up to $30.0 million, depending upon the level of
eligible receivables. At September 30, 2005, there were no borrowings
outstanding under this facility.
We also have a one-year, renewable $30.0 million demand line of credit
(Short-Term Facility), which expires on December 13, 2005. Borrowings under the
Short-Term Facility are at LIBOR plus the applicable margin in effect under the
Credit Facility. At September 30, 2005, there were no borrowings outstanding
under this facility.
We believe the Company will generate sufficient cash flow from operations
for the next 12 months and in the long term to meet its operating requirements,
interest on all borrowings, required debt repayments, any authorized share
repurchases, planned capital expenditures, and annual dividend payments to
holders of common stock. In the event that suitable businesses are available for
acquisition upon terms acceptable to the Board of Directors, we may obtain all
or a portion of the financing for the acquisitions through the incurrence of
additional long-term debt.
Our contractual obligations and commercial commitments include rental
payments under operating leases, payments under capital leases, and other
long-term obligations arising in the ordinary course of business. There are no
identifiable events or uncertainties, including the lowering of our credit
rating that would accelerate payment or maturity of any of these commitments or
obligations.
CRITICAL ACCOUNTING ESTIMATES
We believe that the application of the following accounting policies, which
are important to our financial position and results of operations, requires
significant judgments and estimates on the part of management. For a summary of
all of our accounting policies, including the accounting policies discussed
below, see Note 1 of the Notes to Consolidated Financial Statements in our 2004
Annual Report on Form 10-K.
Revenue recognition - We recognize revenue from products sales when title passes
and the risks of ownership have passed to the customer, based on the terms of
the sale. Our customary terms are FOB shipping point. We estimate and record
provisions for sales returns, sales allowances and original warranties in the
period the related products are sold, in each case based on our historical
experience. To the extent actual results differ from these estimated amounts,
results could be adversely affected.
Noncurrent assets - The Company evaluates the recoverability of certain
noncurrent assets utilizing various estimation processes. In particular, the
recoverability of September 30, 2005 balances for goodwill and intangible assets
of $694.1 million and $28.8 million, respectively, are subject to estimation
processes, which depend on the
-15-
accuracy of underlying assumptions, including future operating results. The
company evaluates the recoverability of each of these assets based on estimated
business values and estimated future cash flows (derived from estimated earnings
and cash flow multiples). The recoverability of these assets depends on the
reasonableness of these assumptions and how they compare with the eventual
operating performance of the specific businesses to which the assets are
attributed. To the extent actual business values or cash flows differ from those
estimated amounts, the recoverability of these noncurrent assets could be
affected.
Income taxes - Deferred taxes are recognized for the future tax effects of
temporary differences between financial and income tax reporting using tax rates
in effect for the years in which the differences are expected to reverse.
Federal income taxes are provided on that portion of the income of foreign
subsidiaries that is expected to be remitted to the United States and be
taxable. The management of the Company periodically estimates the Company's
probable tax obligations using historical experience in tax jurisdictions and
informed judgments. To the extent actual results differ from these estimated
amounts, results could be adversely affected.
Contingencies and litigation - We are currently involved in certain legal and
regulatory proceedings and, as required and where it is reasonably possible to
do so, have accrued our estimates of the probable costs for the resolution of
these matters. These estimates have been developed in consultation with outside
counsel and are based upon an analysis of potential results, assuming a
combination of litigation and settlement strategies. It is possible, however,
that future operating results for any particular quarterly or annual period
could be materially affected by changes in our assumptions or the effectiveness
of our strategies related to these proceedings.
Defined benefit retirement plans - The plan obligations and related assets of
defined benefit retirement plans are presented in Note 14 of the Notes to
Consolidated Financial Statements in the 2004 Annual Report on Form 10-K. Plan
assets, which consist primarily of marketable equity and debt instruments, are
valued using market quotations. Plan obligations and the annual pension expense
are determined by consulting actuaries using a number of assumptions. Key
assumptions in measuring the plan obligations include the discount rate at which
the obligation could be effectively settled and the anticipated rate of future
salary increases. Key assumptions in the determination of the annual pension
expense include the discount rate, the rate of salary increases, and the
estimated future return on plan assets. To the extent actual amounts differ from
these assumptions and estimated amounts, operating results could be adversely
affected.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We are subject to market risk associated with changes in interest rates and
foreign currency exchange rates. Interest rate exposure is limited to the $160.8
million of total debt outstanding at September 30, 2005. Approximately 6% of the
debt is priced at interest rates that float with the market. A 50-basis point
movement in the interest rate on the floating rate debt would result in an
approximate $.1 million annualized increase or decrease in interest expense and
cash flows. The remaining debt is fixed rate debt. We will, from time to time,
enter into interest rate swaps on our debt when we believe there is a financial
advantage for doing so. A treasury risk management policy, adopted by the Board
of Directors, describes the procedures and controls over derivative financial
and commodity instruments, including interest rate swaps. Under the policy, we
do not use derivative financial or commodity instruments for trading purposes,
and the use of these instruments is subject to strict approvals by senior
officers. Typically, the use of derivative instruments is limited to interest
rate swaps on the company's outstanding long-term debt. As of September 30,
2005, the Company did not have any derivative instruments outstanding.
Our foreign currency exchange rate risk is limited principally to the euro
and British pound. We manage our foreign exchange risk principally through
invoicing our customers in the same currency as the source of our products. As a
result, the company's exposure to any movement in foreign currency exchange
rates is immaterial to the Consolidated Statements of Operations.
ITEM 4. CONTROLS AND PROCEDURES.
The Company maintains disclosure controls and procedures that are designed
to ensure that information required to be disclosed in the company's Exchange
Act reports is recorded, processed, summarized and reported within the time
periods specified in the SEC's rules and forms, and that such information is
accumulated and communicated to the company's management, including its Chief
Executive Officer and Chief Financial Officer, as appropriate, to allow timely
decisions regarding required disclosure. In designing and evaluating the
disclosure controls and procedures, management recognized that any controls and
procedures, no matter how well designed and
-16-
operated, can provide only reasonable assurance of achieving the desired control
objectives, and management is required to apply its judgment in evaluating the
cost-benefit relationship of possible controls and procedures.
As required by SEC Rule 13a-15(b), the Company carried out an evaluation,
under the supervision and with the participation of the Company's management,
including the Company's Chief Executive Officer and the Company's Chief
Financial Officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures as of the end of the period covered
by this report. Based on the foregoing, the Company's Chief Executive Officer
and Chief Financial Officer concluded that the Company's disclosure controls and
procedures were effective at the reasonable assurance level.
There has been no change in the Company's internal controls over financial
reporting during the Company's most recent fiscal quarter that has materially
affected, or is reasonably likely to materially affect, the Company's internal
controls over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
IDEX and five of its subsidiaries have been named as defendants in a number
of lawsuits claiming various asbestos-related personal injuries, allegedly as a
result of exposure to products manufactured with components that contained
asbestos. Such components were acquired from third party suppliers, and were not
manufactured by any of the subsidiaries. To date, all of the Company's
settlements and legal costs, except for costs of coordination, administration,
insurance investigation and a portion of defense costs, have been covered in
full by insurance subject to applicable deductibles. However, the Company cannot
predict whether and to what extent insurance will be available to continue to
cover such settlements and legal costs, or how insurers may respond to claims
that are tendered to them.
Claims have been filed in Alabama, California, Connecticut, Delaware,
Georgia, Illinois, Louisiana, Maryland, Michigan, Minnesota, Mississippi,
Missouri, Nevada, New Jersey, New York, Ohio, Oregon, Pennsylvania, Texas, Utah,
Washington and Wyoming. Most of the claims resolved to date have been dismissed
without payment. The balance have been settled for reasonable amounts. Only one
case has been tried, resulting in a verdict for the Company's business unit.
No provision has been made in the financial statements of the Company,
other than for insurance deductibles in the ordinary course, and IDEX does not
currently believe the asbestos-related claims will have a material adverse
effect on the Company's business or financial position.
IDEX is also party to various other legal proceedings arising in the
ordinary course of business, none of which is expected to have a material
adverse effect on its business, financial condition or results of operations.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
Total Number of Maximum Number
Shares Purchased as of Shares that May
Part of Publicly Yet be Purchased
Total Number of Average Price Announced Plans Under the Plans
Period Shares Purchased Paid per Share or Programs (1) or Programs (1)
------ ---------------- -------------- ------------------- ------------------
July 1, 2005 to
July 31, 2005 -- -- -- 2,240,250
August 1, 2005 to
August 31, 2005 -- -- -- 2,240,250
September 1, 2005 to
September 30, 2005 -- -- -- 2,240,250
(1) On October 20, 1998, IDEX's Board of Directors authorized the repurchase of
up to 2.25 million shares of its common stock, either at market prices or
on a negotiated basis as market conditions warrant.
-17-
ITEM 5. OTHER INFORMATION.
There has been no material change to the procedures by which security
holders may recommend nominees to the Company's board.
ITEM 6. EXHIBITS.
The exhibits listed in the accompanying "Exhibit Index" are filed as part
of this report.
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.
IDEX CORPORATION
November 9, 2005 /s/ Dominic A. Romeo
----------------------------------------
Dominic A. Romeo
Vice President and Chief Financial Officer
(duly authorized principal financial officer)
-18-
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
- -------------- -----------
3.1 Restated Certificate of Incorporation of IDEX Corporation
(formerly HI, Inc.) (incorporated by reference to Exhibit No.
3.1 to the Registration Statement on Form S-1 of IDEX, et al.,
Registration No. 33-21205, as filed on April 21, 1988)
3.1(a) Amendment to Restated Certificate of Incorporation of IDEX
Corporation (formerly HI, Inc.), (incorporated by reference to
Exhibit No. 3.1(a) to the Quarterly Report of IDEX on Form 10-Q
for the quarter ended March 31, 1996, Commission File No.
1-10235)
3.1(b) Amendment to Restated Certificate of Incorporation of IDEX
Corporation (incorporated by reference to Exhibit No. 3.1 (b)
to the Current Report of IDEX on Form 8-K dated March 24, 2005,
Commission File No. 1-10235)
3.2 Amended and Restated By-Laws of IDEX Corporation (incorporated
by reference to Exhibit No. 3.2 to Post-Effective Amendment No.
2 to the Registration Statement on Form S-1 of IDEX, et al.,
Registration No. 33-21205, as filed on July 17, 1989)
3.2(a) Amended and Restated Article III, Section 13 of the Amended and
Restated By-Laws of IDEX Corporation (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, et al.,
Registration No. 33-21205, as filed on February 12, 1990)
4.1 Restated Certificate of Incorporation and By-Laws of IDEX
Corporation (filed as Exhibits No. 3.1 through 3.2 (a))
4.2 Indenture, dated as of February 23, 1998, between IDEX
Corporation, and Norwest Bank Minnesota, National Association,
as Trustee, relating to the 6-7/8% Senior Notes of IDEX
Corporation due February 15, 2008 (incorporated by reference to
Exhibit No. 4.1 to the Current Report of IDEX on Form 8-K dated
February 23, 1998, Commission File No. 1-10235)
4.3 Specimen Senior Note of IDEX Corporation (incorporated by
reference to Exhibit No. 4.1 to the Current Report of IDEX on
Form 8-K dated February 23, 1998, Commission File No. 1-10235)
4.4 Specimen Certificate of Common Stock of IDEX Corporation
(incorporated by reference to Exhibit No. 4.3 to the
Registration Statement on Form S-2 of IDEX, et al.,
Registration No. 33-42208, as filed on September 16, 1991)
4.5 Credit Agreement, dated as of December 14, 2004, among IDEX
Corporation, Bank of America N.A. as Agent and Issuing Bank,
and the Other Financial Institutions Party Hereto (incorporated
by reference to Exhibit No. 4.5 to the Annual Report of IDEX on
Form 10-K for the year ended December 31, 2004, Commission File
No. 1-10235)
4.6 Credit Lyonnais Uncommitted Line of Credit, dated as of
December 3, 2001 (incorporated by reference to Exhibit 4.6 to
the Annual Report of IDEX on Form 10-K for the year ended
December 31, 2001, Commission File No. 1-10235)
*4.6(a) Amendment No. 4 dated as of December 14, 2004 to the Credit
Lyonnais Uncommitted Line of Credit Agreement dated December 3,
2001
*4.6(b) Amendment No. 5 dated as of July 28, 2005 to the Credit
Lyonnais Uncommitted Line of Credit Agreement dated December 3,
2001
4.7 Receivables Purchase Agreement dated as of December 20, 2001
among IDEX Receivables Corporation, as Seller, IDEX
Corporation, as Servicer, Falcon Asset Securitization
Corporation, the Several Financial Institutions from Time to
Time Party Hereto, and Bank One, NA (Main Office Chicago), as
Agent (incorporated by reference to Exhibit 4.7 to the Annual
Report of IDEX on Form 10-K for the year ended December 31,
2001, Commission File No. 1-10235)
4.7(a) Amendment No. 3 to Receivables Purchase Agreement and Restated
Fee Letter dated as of December 15, 2004 (incorporated by
reference to Exhibit 4.7 (a) to the Annual Report of IDEX on
Form 10-K for the year ended December 31, 2004, Commission File
No. 1-10235)
-19-
EXHIBIT INDEX (CON'T.)
EXHIBIT
NUMBER DESCRIPTION
------ -----------
*31.1 Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) or
Rule 15d-14(a)
*31.2 Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) or
Rule 15d-14(a)
*32.1 Certification pursuant to Section 1350 of Chapter 63 of Title 18 of
the United States Code
*32.2 Certification pursuant to Section 1350 of Chapter 63 of Title 18 of
the United States Code
- ----------
* Filed herewith
-20-