================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported: JANUARY 20, 2005 IDEX CORPORATION (Exact Name of Registrant as Specified in its Charter)
ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION. The information in this Item is furnished to, but not filed with, the Securities and Exchange Commission solely under Item 2.02 of Form 8-K, "Results of Operations and Financial Condition." On January 20, 2005, IDEX Corporation issued a press release announcing financial results for the quarter ended December 31, 2004. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference. ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS. (c) EXHIBITS 99.1 Press release dated January 20, 2005 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 hereunto duly authorized. IDEX CORPORATION /s/ Dominic A. Romeo -------------------------------------------- Dominic A. Romeo Vice President and Chief Financial Officer January 20, 2005
EXHIBIT INDEX
EXHIBIT 99.1 IDEX REPORTS RECORD 2004 ORDERS, SALES, NET INCOME AND FREE CASH FLOW; FOURTH QUARTER BASE BUSINESS SALES GROWTH OF 12 PERCENT; 12TH CONSECUTIVE QUARTER OF YEAR-OVER-YEAR GROSS MARGIN EXPANSION NORTHBROOK, IL, JANUARY 20, 2005 - IDEX CORPORATION (NYSE: IEX) today reported record orders, sales, net income and free cash flow for the 12-month period ended December 31, 2004. For the latest quarter, the company's financial results were also significantly improved versus the prior-year period. Orders in the fourth quarter of 2004 increased 23 percent, sales were up 23 percent, and diluted earnings per share rose 34 percent to 43 cents. For the full year 2004, orders increased 18 percent, sales grew 16 percent, and diluted earnings per share were $1.68, up 34 percent versus 2003. 2004 HIGHLIGHTS o Orders were a record $942.4 million, 18 percent higher than a year ago; base business orders - excluding acquisitions and foreign currency translation - were up 9 percent. o Sales of $928.3 million set a new record and were up 16 percent from last year; base business sales - excluding acquisitions and foreign currency - were up 7 percent. o Gross margins improved 120 basis points to 40.0 percent of sales, while operating margins at 16.1 percent were 230 basis points higher than 2003. o Net income rose 39 percent to $86.4 million. o Diluted EPS of $1.68 was 43 cents ahead of last year. o Record EBITDA of $179.6 million was 19 percent of sales and covered interest expense by 12 times. o Debt-to-total capitalization at December 31 was 24 percent. o Free cash flow was strong at $121.2 million, a new record, and 1.4 times net income. o Four strategic acquisitions were completed in 2004 - Vetter, Systec, Scivex and Dinglee. o Operational excellence disciplines continue, fueling new product innovation to drive growth. "We are pleased to report record results for 2004. The momentum we experienced throughout the year continued in the fourth quarter, as our business units delivered record orders, sales and cash flows and our 12th consecutive quarter of year-over-year gross margin expansion. The period also marked our 10th consecutive quarter of year-over-year earnings growth and our 9th consecutive quarter of year-over-year organic sales growth. We are especially pleased with the organic revenue growth of 12 percent during the quarter - clear evidence that our organic growth strategy is working. All three segments experienced organic growth. Our recent performance reflects the improved economy, as well as our operational excellence discipline and continuous drive to innovate new products that meet critical-to-customer needs. Although the short cycle nature of our business limits our visibility on the first quarter and remainder of 2005, we enter the year well positioned for continued growth and are using all the tools at our disposal to drive revenues, profitability and cash generation." Dennis K. Williams Chairman, President and CEO
2004 FINANCIAL HIGHLIGHTS (In millions, except per share amounts and percentages)
FOURTH QUARTER FINANCIAL HIGHLIGHTS (In millions, except per share amounts and percentages)
FOURTH QUARTER SEGMENT RESULTS For the fourth quarter, Pump Product sales of $144.8 million rose 23 percent compared to 2003, reflecting 12 percent base business growth, a 2 percent favorable impact from foreign currency translation, and a 9 percent increase due to acquisitions. Operating profit of $25.1 million increased 26 percent and represented a 30 basis point operating margin improvement compared with the fourth quarter of 2003, attributable to volume leverage and the impact of operational excellence initiatives. Dispensing Equipment sales in the fourth quarter of $42.7 million increased 20 percent, reflecting a 5 percent increase due to foreign currency translation and a 15 percent increase in base business. Operating profit of $6.9 million increased 34 percent and represented a 180 basis point operating margin improvement compared with a year ago, due primarily to volume leverage and the company's operational excellence initiatives. Sales of Other Engineered Products during the fourth quarter totaled $56.1 million, an increase of 23 percent, reflecting 8 percent base business growth, 3 percent favorable foreign currency translation, and a 12 percent improvement due to acquisitions. Operating profit of $13.1 million increased 55 percent and represented a 480 basis point operating margin improvement compared with the year-ago quarter, largely attributable to volume and the impact of operational excellence initiatives. STRONG FINANCIAL POSITION AND RECORD FREE CASH FLOW IDEX ended the year with total assets of $1.2 billion and working capital of $114.6 million. Total debt increased by $48.8 million during the year. The increase reflects the previously announced acquisitions of Vetter (January 2004); Systec (April 2004); Scivex (May 2004); and Dinglee (July 2004), partially offset by free cash flow generation during the period. In 2004, free cash flow (cash flow from operating activities less capital expenditures) was a record $121.2 million. For the year, EBITDA (earnings before interest, taxes, depreciation and amortization) totaled a record $179.6 million (19 percent of sales) and covered interest expense by 12 times. Debt-to-total capitalization at December 31, 2004, was 24 percent. STRATEGIC ACQUISITIONS CONTINUE "In 2004, acquisitions continued to be an important part of our growth strategy," said Williams. "During the year, we completed four transactions -- Vetter in Germany, Dinglee in China, and Systec and Scivex in the United States. Vetter is a leader in pneumatic rescue products that fit well with our hydraulic rescue tools business. Dinglee is the leading rescue tool company in China and an important portal into the Chinese market for both our rescue tools and fire suppression products. Scivex and Systec are an excellent fit with our Rheodyne business, giving us unmatched capability to supply components and sub-systems to the analytical instrumentation, medical device, and clinical diagnostic markets. We are continually evaluating our business development opportunities and believe we will continue to find sensible acquisition candidates that will enable us to deploy our strong cash flow from operations." PROGRESS CONTINUES ON OPERATIONAL EXCELLENCE INITIATIVES "We are using our long-term initiatives to create top- and bottom-line growth," Williams said. "Our drive for rapid process improvement is increasing the gross margin. For 2004, the gross margin was 40 percent of sales. Six Sigma, Lean Manufacturing and Global Sourcing continue to contribute to our margin expansion. In 2004, savings from Six Sigma and Lean Manufacturing totaled $11.4 million, while Global Sourcing savings were $13.0 million, representing a savings of 25 percent versus our prior sources." 2005 OUTLOOK: RESULTS DEPEND ON PACE OF NEW ORDERS, SPEED OF RECOVERY Looking ahead, Williams said, "We are pleased with our financial and operating performance in 2004 and enter 2005 with significant momentum in the business. We expect economic conditions to remain favorable as we continue to leverage rapid process improvement to meet customer needs, drive earnings and fund innovation to support our organic growth. As a short cycle business, we are mindful that our financial performance is reliant on the current pace of incoming orders. Although we have limited visibility on future business conditions, we believe IDEX is well positioned for earnings expansion, based on our lower cost levels resulting from our operational excellence discipline, our investments in new products, applications and global markets, and our pursuit of strategic acquisitions to complement our longer-term profitable growth."
CONFERENCE CALL TO BE BROADCAST OVER THE INTERNET IDEX will broadcast its fourth quarter conference call over the Internet on Thursday, January 20, at 1:30 p.m. CST. Chairman, President and Chief Executive Officer Dennis Williams, Chief Operating Officer Larry Kingsley, and Vice President and Chief Financial Officer Dom 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 February 10 at the IDEX site or by dialing 800-839-4232 (or 402-998-1196 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 flow 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 flow 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 the world leader in fluid-handling technologies for positive displacement pumps and pump modules and systems, dispensing equipment for color formulation, and other highly engineered products including fire suppression equipment, rescue tools, and stainless steel band clamping systems. 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 IDEX CORPORATION CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS (IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
IDEX CORPORATION IDEX CORPORATION COMPANY AND BUSINESS GROUP FINANCIAL INFORMATION (DOLLARS IN THOUSANDS)