================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------ FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM __________________ TO ___________________ COMMISSION FILE NUMBER 1-10235 IDEX CORPORATION (Exact Name of Registrant as Specified in its Charter) DELAWARE 36-3555336 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 630 DUNDEE ROAD, NORTHBROOK, ILLINOIS 60062 (Address of principal executive offices) (Zip Code) Registrant's telephone number: (847) 498-7070 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED - ----------------------- ----------------------------------------- COMMON STOCK, PAR VALUE NEW YORK STOCK EXCHANGE $.01 PER SHARE CHICAGO STOCK EXCHANGE SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] The aggregate market value of the voting stock held by non-affiliates of IDEX Corporation as of December 31, 2002 was $891,691,395. The number of shares outstanding of IDEX Corporation's common stock, par value $.01 per share (the "Common Stock"), as of January 31, 2003 was 32,504,959 (net of treasury shares). DOCUMENTS INCORPORATED BY REFERENCE Portions of the 2002 Annual Report to Shareholders of IDEX Corporation (the "2002 Annual Report") are incorporated by reference into Parts I and II of this Form 10-K and portions of the definitive Proxy Statement of IDEX Corporation (the "2003 Proxy Statement") with respect to the 2003 annual meeting of shareholders are incorporated by reference into Part III of this Form 10-K. ================================================================================
PART I ITEM 1. BUSINESS. We manufacture an extensive array of engineered industrial products sold to customers in a variety of industries around the world. We believe that each of our principal business units holds the number-one or number-two market share position in each unit's niche market. We also believe that our consistent financial performance has been attributable to the manufacture of quality products designed and engineered by us, coupled with our ability to identify and successfully integrate strategic acquisitions. IDEX Corporation ("IDEX" or the "Company") consists of three reportable business segments: Pump Products Group, Dispensing Equipment Group, and Other Engineered Products Group. PUMP PRODUCTS GROUP 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 devices and equipment produced by this group are used by a large and diverse set of industries including chemical processing, machinery, water treatment, medical equipment, liquid petroleum distribution, oil and refining, food and beverage, biotech, life sciences and drug processing. The seven business units that comprise this group are Gast Manufacturing, Liquid Controls, Micropump, Pulsafeeder, Rheodyne, Viking Pump and Warren Rupp. The group accounted for 58% of sales and 62% of operating income in 2002, with 37% of sales shipped to customers outside the U.S. Gast Manufacturing. Gast Manufacturing (Gast), acquired in 1998, is a leading manufacturer of air-moving products with an estimated one-third U.S. market share in air motors, low- and medium-range vacuum pumps, vacuum generators, regenerative blowers and fractional horsepower compressors. Gast's products are used in applications requiring a quiet, clean source of moderate vacuum or pressure. Gast's primary markets served are medical equipment, environmental equipment, computers and electronics, printing machinery, paint mixing machinery, packaging machinery, graphic arts and industrial manufacturing. Gast is based in Benton Harbor, Michigan, with an additional operation in England. Approximately 20% of Gast's 2002 sales were to customers outside the U.S. Liquid Controls. Liquid Controls, acquired in January 2001, is a leading manufacturer of positive displacement flow meters and electronic registration and control products with an estimated one-third market share in its U.S. markets. Applications for its products include mobile and stationary metering installations for wholesale and retail distribution of petroleum and LP gas, aviation refueling, and industrial metering and dispensing of liquids and gases. Liquid Controls is headquartered in Lake Bluff, Illinois, with additional operations in Italy and India. During 2001, the Company decided to operate its previously acquired Corken business unit as part of Liquid Controls. Corken, based in Oklahoma City, Oklahoma and acquired by IDEX in 1991, is a leading producer of positive displacement rotary vane pumps, single and multistage regenerative turbine pumps, and small horsepower reciprocating piston compressors. Approximately 50% of Liquid Controls' 2002 sales were outside the U.S. Micropump. Micropump, acquired in 1995, is a leader in small, precision-engineered, magnetically and electromagnetically driven rotary gear, piston and centrifugal pumps with an approximate 40% U.S. market share. Micropump's products are used in low-flow abrasive and corrosive applications. Micropump serves markets including printing machinery, medical equipment, chemical processing, pharmaceutical, refining, laboratory, electronics, pulp and paper, water treatment and textiles. Micropump has its headquarters facility in Vancouver, Washington, and also has operations in England. In April 2000, IDEX acquired Ismatec SA. Ismatec is a leading manufacturer of peristaltic metering pumps, analytical process controllers, and sample preparation systems. Headquartered near Zurich, Switzerland, the business operates as part of Micropump and provides Micropump with entry into scientific R&D markets including pharmaceutical, medical, biotech and institutional laboratory. In May 2000, IDEX acquired Trebor International, which also now operates as part of Micropump. Trebor is headquartered in Salt Lake City, Utah, and is a leader in high-purity fluid handling products, including air-operated diaphragm pumps and deionized water-heating systems. Its products are used to make semiconductors, disk drives and flat panel displays. Approximately 65% of Micropump's 2002 sales were to customers outside the U.S. 1
Pulsafeeder. Pulsafeeder, acquired in 1992, is a leading manufacturer of metering pumps, special purpose rotary pumps, peristaltic pumps, electronic controls and dispensing equipment with an estimated one-third U.S. market share. Pulsafeeder's products are used to introduce precise amounts of fluids into processes to manage water quality and chemical composition. Pulsafeeder's markets include water and wastewater treatment, power generation, pulp and paper, chemical and hydrocarbon processing and swimming pools. This business is headquartered in Rochester, New York, with additional operations in Punta Gorda, Florida. Knight Equipment International was acquired in 1997 and is operated as part of the Pulsafeeder business unit. Knight, headquartered in Lake Forest, California, also has additional operations in The Netherlands. Knight is a leading manufacturer of pumps and dispensing equipment for industrial laundries, commercial dishwashing and chemical metering. Halox Technologies, Inc. was acquired in April 2002 and is also operated as part of the Pulsafeeder business unit. Halox is a small Bridgeport, Connecticut based manufacturer of point-of-use chlorine dioxide equipment. Its products produce chlorine dioxide for use in water treatment and disinfectant applications. Chlorine dioxide is an effective biocide treatment of legionella and other water-borne pathogens. Halox products can be used in a wide variety of end markets including food and beverage, cooling towers and potable water treatement. In 2002, approximately 30% of Pulsafeeder's sales were to customers outside the U.S. Rheodyne. Rheodyne L.P., acquired in July 2002, is a leading manufacturer of injectors, valves, fittings and accessories for the analytical instrumentation market. Its products are used by manufacturers of high performance liquid chromatography equipment servicing the pharmaceutical, biotech, life science, food and beverage, and chemical markets. Rheodyne, based in Rohnert Park, California, became IDEX's twelfth stand-alone business unit and its activities are closely coordinated with those of Ismatec, Trebor and Micropump. Approximately 45% of Rheodyne's 2002 sales were to customers outside the U.S. Viking Pump. Viking Pump is one of the world's largest internal gear pump producers. In the U. S., it has an estimated 40% of the rotary gear pump market. Viking also produces lobe and external gear pumps, strainers and reducers, and related controls. These products are used for transferring and metering thin and viscous liquids. Markets served by Viking include chemical, petroleum, pulp and paper, plastics, paints, inks, tanker trucks, compressor, construction, food, beverage, personal care, pharmaceutical and biotech. Viking operates two foundries that supply a majority of Viking's castings requirements and also sells a variety of castings to outside customers. Viking is based in Cedar Falls, Iowa, with additional operations in Canada, England and Ireland. Wrightech Corporation was acquired in October 2002 and is headquartered in Waukesha, Wisconsin. Wrightech, which operates as part of Viking Pump, is a small manufacturer of stainless-steel positive displacement pumps and replacement parts for the sanitary product marketplace. This market includes beverage, food processing, pharmaceutical, cosmetics and other industries that require sanitary processing. Approximately 30% of Viking's 2002 sales were to customers outside the U.S. Warren Rupp. Warren Rupp is a leading producer of double-diaphragm pumps, both air-operated and motor-driven, and accessories with an estimated 30% U.S. market share. Warren Rupp's products are used for abrasive and semisolid materials as well as for applications where product degradation is a concern or where electricity is not available or should not be used. This business serves markets including chemical, paint, food processing, electronics, construction, utilities, mining and industrial maintenance. Warren Rupp is based in Mansfield, Ohio, with additional operations in England. Blagdon Pump, located in the U.K., was acquired in 1997 and is operated as part of the Warren Rupp business unit. Versa-Matic Tool, Inc. (Versa-Matic) was acquired in June 2001 and also operates as part of Warren Rupp. Headquartered in Export, Pennsylvania, Versa-Matic is a leading manufacturer and distributor of air-operated double-diaphragm pumps and pump replacement parts. Warren Rupp's sales to customers outside the U.S. in 2002 were approximately 45%. DISPENSING EQUIPMENT GROUP The Dispensing Equipment Group produces highly engineered equipment for dispensing, metering and mixing colorants, paints, inks and dyes; refinishing equipment; and centralized lubrication systems. This equipment is used in a variety of retail and commercial industries around the world. This group provides equipment, systems, and services for applications such as tinting paints and coatings, industrial and automotive refinishing, and the precise lubrication of machinery and transportation equipment. The three business units that comprise this group are FAST, Fluid Management and Lubriquip. The group accounted for 19% of sales and 16% of operating income in 2002, with 54% of sales shipped to customers outside the U.S. 2
FAST. The Company acquired FAST S.p.A. (FAST) in 1999. FAST is a leading European manufacturer of precision-designed tinting, mixing, dispensing and measuring equipment for refinishing, architectural and industrial paints, inks, dyes, pastes and other liquids. Management estimates that FAST has a 20% European share of the architectural and refinishing equipment markets. FAST's products are used for the precise and reliable reproduction of colors based on paint producers' formulas. Through architectural, refinishing and industrial paint producers, precision equipment is supplied to retail and commercial stores, home centers, and automotive body shops. Over 95% of FAST's sales in 2002 were to customers outside the U.S. FAST is based in Milan, Italy. Fluid Management. Fluid Management, acquired in 1996, is the market leader in automatic and manually operated dispensing, metering and mixing equipment for the paints and coatings market with an estimated 50% worldwide market share. Fluid Management's products are used for the precise blending of base paints, tints and colorants, and inks and dyes. Fluid Management's markets include retail and commercial paint stores, hardware stores, home centers, department stores, printers, and paint and ink manufacturers. Fluid Management is based in Wheeling, Illinois. Additional operations are located in The Netherlands and Australia. Approximately 45% of Fluid Management's 2002 sales were to customers outside the U.S. Lubriquip. Lubriquip is a market leader in centralized oil and grease lubrication systems, force-feed lubricators, metering devices, related electronic controls and accessories with an estimated 25% share of the U.S. market for centralized oil lubrication systems. Lubriquip's products are used to prolong equipment life, reduce maintenance costs and increase productivity. Lubriquip serves markets including machine tools, transfer machines, conveyors, packaging equipment, transportation equipment, construction machinery, food processing and paper machinery. Lubriquip is headquartered in Warrensville Heights, Ohio, with an additional operation in Madison, Wisconsin. Approximately 20% of Lubriquip's sales in 2002 were to customers outside the U.S. OTHER ENGINEERED PRODUCTS GROUP The Other Engineered Products Group produces firefighting pumps, rescue tools 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. The two business units that comprise this group are Hale Products and Band-It. The group accounted for 23% of sales and 22% of operating income in 2002, with 42% of sales shipped to customers outside the U.S. Band-It. Band-It is a leading producer of high-quality stainless steel bands, buckles and clamping systems with an estimated 45% worldwide market share. Band-It's products are used for securing hose fittings, signs, signals, pipes, poles, electrical shielding and bundling and numerous other industrial and commercial applications. Signfix was acquired in 1993 and is being operated as part of the Band-It business unit. Band-It's markets include transportation equipment, oil and gas, industrial maintenance, electronics, electrical, communications, aerospace, traffic and commercial signs. Band-It is based in Denver, Colorado, with three additional operations in England and one in Singapore. In 2002, approximately 55% of Band-It's sales were to customers outside the U.S. Hale Products. Hale Products (Hale), acquired in 1994, is a leading manufacturer of truck-mounted fire pumps and rescue systems with an estimated 40% worldwide market share. Hale's products include the Hurst Jaws of Life(R) and LUKAS(R) rescue tool and re-railing systems. Hale's pumps are used to pump water or foam to extinguish fires; its rescue equipment is used to extricate accident victims; and its forced entry equipment is used for law enforcement, disaster recovery, and recycling. Hale's markets include public and private fire and rescue organizations. In January 2001, IDEX acquired Class 1, headquartered in Ocala, Florida, which now is also operated as part of Hale. Class 1 is a leading supplier of components and systems to the fire and rescue vehicle market. Its primary products include electronic information controls, engine information systems, electronic multiplexing units, electrical monitoring equipment and systems and fire truck mechanical components. LUKAS was acquired in 1995 and is operated as part of the Hale business unit. Hale is headquartered in Ocala, Florida, with additional operations in Conshohocken, Pennsylvania, Shelby, North Carolina, England and Germany. Approximately 35% of Hale's 2002 sales were to customers outside the U.S. 3
GENERAL ASPECTS APPLICABLE TO THE COMPANY'S BUSINESS GROUPS COMPETITORS The Company's businesses participate in highly competitive markets. Generally, all of the Company's businesses compete on the basis of performance, quality, service, and price. Principal competitors of the businesses in the Pump Products Group are the Blackmer division of Dover Corporation (with respect to rotary gear pumps, and pumps and small horsepower compressors used in liquified petroleum gas distribution facilities); Milton Roy, a division of United Technologies Corporation (with respect to metering pumps and controls); Roper Industries and Tuthill Corporation (with respect to rotary gear pumps); Wilden Pump and Engineering Co., a division of Dover Corporation (with respect to air-operated double-diaphragm pumps); and Thomas Industries (with respect to vacuum pumps and compressors). The principal competitors of the Dispensing Equipment Group are Corob S.p.A. (with respect to dispensing and mixing equipment for the paint industry) and Lincoln Industrial (with respect to centralized lubrication systems). The Other Engineered Products Group's principal competitors are A.J. Gerrard & Company, a division of Illinois Tool Works Inc. (with respect to stainless steel bands, buckles and tools) and Waterous Company, a division of American Cast Iron Pipe Company (with respect to truck-mounted fire-fighting pumps). EMPLOYEES At December 31, 2002, IDEX had approximately 3,900 employees. Approximately 15% were represented by labor union with various contracts expiring though March 2007. Management believes that the Company's relationship with its employees is good. The Company has historically been able to satisfactorily renegotiate its collective bargaining agreements, with its last work stoppage in March 1993. SUPPLIERS IDEX manufactures many of the parts and components used in its products. Substantially all materials, parts and components purchased by IDEX are available from multiple sources. INVENTORY AND BACKLOG The Company regularly and systematically adjusts production schedules and quantities based on the flow of incoming orders. Backlogs are therefore typically limited to approximately 1 to 1 1/2 months of production. While total inventory levels may also be affected by changes in orders, the Company generally tries to maintain relatively stable inventory levels based on its assessment of the requirements of the various industries served. SEGMENT INFORMATION For segment financial information for the years 2002, 2001, and 2000, see the table titled "Company and Business Group Financial Information" presented on page 18 under "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 9 of the "Notes to Consolidated Financial Statements" on page 31 of the 2002 Annual Report, which is incorporated herein by reference. 4
EXECUTIVE OFFICERS OF THE REGISTRANT The following table sets forth the names of the executive officers of the Company, their ages, years of service, the positions held by them, and their business experience during the past 5 years. YEARS OF NAME AGE SERVICE (1) POSITION - ---- --- ----------- -------- Dennis K. Williams........ 56 3 Chairman of the Board, President and Chief Executive Officer Wayne P. Sayatovic........ 56 30 Senior Vice President-Finance and Chief Financial Officer Kimberly K. Bors.......... 42 -- Vice President-Human Resources James S. Dahlke........... 52 -- Vice President-Group Executive Harley B. Kaplan.......... 48 1 Vice President-Group Executive Clinton L. Kooman......... 59 38 Vice President-Controller Douglas C. Lennox......... 50 23 Vice President-Treasurer John L. McMurray.......... 52 10 Vice President-Operational Excellence Dennis L. Metcalf......... 55 29 Vice President-Corporate Development Frank J. Notaro........... 39 5 Vice President-General Counsel and Secretary David T. Windmuller....... 45 22 Vice President-Group Executive - ------------- (1) The years of service for executive officers include the period prior to acquisition by IDEX or with IDEX's predecessor company. Mr. Williams was appointed Chairman of the Board, President and Chief Executive Officer by the Board of Directors, effective May 1, 2000. Prior to joining IDEX, Mr. Williams was a senior executive of the General Electric Company, most recently serving as President and Chief Executive Officer of GE Power Systems Industrial Products, a global business with $4 billion in sales, based in Florence, Italy. Prior to heading GE Power Systems Industrial Products, he was President and Chief Executive Officer of GE's Nuovo Pignone business, one of the world's leading manufacturers of gas turbines and high-pressure industrial compressors. Mr. Sayatovic has been Senior Vice President-Finance and Chief Financial Officer of the Company since January 1992. Ms. Bors has been Vice President-Human Resources of the Company since January 2003. Prior to joining IDEX, Ms. Bors was vice president of people and process integration from December 2000 to December 2002 for Brunswick Corporation's Boat Group, a $1.4 billion manufacturer of recreational boats. From December 1998 to December 2000, Ms. Bors was president of Chris Craft Boat, a division of Outboard Marine Corporation, a $1 billion recreational marine company. From December 1995 to December 1998, Ms. Bors was vice president of human resources at Outboard Marine Corporation. Mr. Dahlke has been Vice President-Group Operations since September 2002. Prior to joining IDEX, Mr. Dahlke was president from September 1999 to August 2002 of the Office Products Division of Knape & Vogt, a manufacturer of hardware for the office furniture industry as well as office accessories. From 1995 to 1999, Mr. Dahlke was president of Harrow Industries in Grand Rapids, MI. Harrow Industries was a holding company of six autonomous businesses serving the commercial, industrial and consumer markets. Mr. Dahlke was also a shareholder and officer of Wrightech Corporation, which was acquired by IDEX in October 2002. Mr. Kaplan has been Vice President-Group Operations since March 2002. Prior to joining IDEX, Mr. Kaplan was president and chief executive officer from March 2001 to March 2002 of Wells Lamont Corporation, a worldwide leader in industrial and consumer hand protection. From October 1996 to March 2001, Mr. Kaplan was president of Koehler-Bright Star, Inc., a wholly-owned subsidiary of the Marmon Group. Mr. Kooman has been Vice President-Controller of the Company since November 1995. 5
Mr. Lennox has served as Vice President-Treasurer of the Company since November 1995. Mr. McMurray has been Vice President-Operational Excellence of the Company since October 2000. Mr. McMurray previously served as Vice President-Group Executive from November 1998 through September 2000, and President of Viking Pump from January 1997 through September 2000. Mr. Metcalf has served as Vice President-Corporate Development of the Company since March 1997. Mr. Notaro has served as Vice President-General Counsel and Secretary since March 1998. Previously, Mr. Notaro was a partner of Hodgson Russ LLP. Mr. Windmuller has served as Vice President-Group Executive since October 2000. Mr. Windmuller served as Vice President-Operations of the Company from January 1998 through September 2000. The Company's executive officers are elected at a meeting of the Board of Directors immediately following the annual meeting of shareholders, and they serve until the next annual meeting of the Board, or until their successors are duly elected. PUBLIC FILINGS Copies of the Company's annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports are available through the Company's web site at http://www.idexcorp.com. ----------------------- ITEM 2. PROPERTIES. The Company's principal plants and offices have an aggregate floor space area of approximately 2.9 million square feet, of which 2.0 million square feet (69%) are located in the U.S. and approximately 0.9 million square feet (31%) are located outside the U.S., primarily in Italy (10%), the U.K. (9%), The Netherlands (5%) and Germany (4%). These facilities are considered to be suitable and adequate for their operations. Management believes that utilization of manufacturing capacity ranges from 40% to 70% in each facility. The Company's executive office occupies approximately 18,000 square feet of leased space in Northbrook, Illinois. Approximately 2.1 million square feet (72%) of the principal plant and office floor area is owned by the Company, and the balance is held under lease. Approximately 1.6 million square feet (55%) of the principal plant and office floor area is held by business units in the Pump Products Group; 0.7 million square feet (23%) is held by business units in the Dispensing Equipment Group; and 0.6 million square feet (22%) is held by business units in the Other Engineered Products Group. ITEM 3. 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. 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 California, Illinois, Michigan, Mississippi, New Jersey, New York, Ohio, Pennsylvania and Washington. A few claims have been settled for minimal amounts and some have been dismissed without payment. None have been tried. No provision has been made in the financial statements of the Company, 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 are expected to have a material adverse effect on its business, financial condition or results of operations. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None. 6
PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER MATTERS. Information regarding the prices of, and dividends on, the Common Stock, and certain related matters, is incorporated herein by reference to "Shareholder Information" on page 41 of the 2002 Annual Report. The principal market for the Common Stock is the New York Stock Exchange, but the Common Stock is also listed on the Chicago Stock Exchange. As of January 31, 2003, the Common Stock was held by approximately 4,700 shareholders and there were 32,504,959 shares of Common Stock outstanding, net of treasury shares. ITEM 6. SELECTED FINANCIAL DATA. The information set forth under "Historical Data" on pages 14 and 15 of the 2002 Annual Report is incorporated herein by reference. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The information set forth under "Management's Discussion and Analysis of Financial Condition and Results of Operations" on pages 16 to 23 of the 2002 Annual Report is incorporated herein by reference. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK. The information set forth under the caption "Market Risk" on page 23 of the 2002 Annual Report is incorporated herein by reference. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. The Consolidated Financial Statements of IDEX, including Notes thereto, together with the independent auditors' report thereon of Deloitte & Touche LLP on pages 24 to 37 of the 2002 Annual Report are incorporated herein by reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH INDEPENDENT AUDITORS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None. 7
PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. Certain information regarding the directors of the Company is incorporated herein by reference to the information set forth under the caption "Election of Directors" in the 2003 Proxy Statement. Information regarding executive officers of the Company is incorporated herein by reference to Item 1 of this report under the caption "Executive Officers of the Registrant" on page 5. Certain information regarding compliance with Section 16(a) of the Securities and Exchange Act of 1934, as amended, is incorporated herein by reference to the information set forth under "Section 16(a) Beneficial Ownership Reporting Compliance" in the 2003 Proxy Statement. ITEM 11. EXECUTIVE COMPENSATION. Information regarding executive compensation is incorporated herein by reference to the materials under the caption "Compensation of Executive Officers" in the 2003 Proxy Statement. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. Information regarding security ownership of certain beneficial owners and management is incorporated herein by reference to the information set forth under the caption "Security Ownership" in the 2003 Proxy Statement. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. Information regarding certain relationships and related transactions is incorporated herein by reference to the information set forth under the caption "Certain Interests" in the 2003 Proxy Statement. 8
PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K. (A) 1. Financial Statements The following financial statements are incorporated herein by reference to the 2002 Annual Report. 2002 ANNUAL REPORT PAGE ----------- Consolidated Balance Sheets as of December 31, 2002 and 2001 ................................ 24 Consolidated Statements of Operations for the Years Ended December 31, 2002, 2001 and 2000... 25 Consolidated Shareholders' Equity for the Years Ended December 31, 2002, 2001 and 2000 ...... 26 Consolidated Cash Flows for the Years Ended December 31, 2002, 2001 and 2000 ................ 27 Notes to Consolidated Financial Statements .................................................. 28-36 Independent Auditors' Report ................................................................ 37 2. Financial Statement Schedule
IDEX CORPORATION / 15
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 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 our products are sold, and by the relationship of the U.S. dollar to other currencies. Among the factors that influence the demand for our products are interest rates, levels of capacity utilization and capital spending in certain industries and overall industrial activity. We have a history of achieving above-average operating margins. Our operating margins have exceeded the average for the companies that comprise the Value Line Composite Index (VLCI) every year since 1988. IDEX views 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. The operating margins of newly acquired businesses have typically been lower than the average of our base businesses and, prior to 2002, those margins were further reduced by amortization of goodwill and trademark assets. In accordance with new accounting rules, we discontinued amortizing assets with indefinite lives to earnings as of January 1, 2002. Instead, these assets are reviewed periodically for impairment. In 2002, we reported higher orders, sales, operating income, net income and earnings per share compared with the prior year. New orders in 2002 totaled $749.8 million, 5% higher than in 2001. Excluding the impact of the Versa-Matic (June 2001), Halox (April 2002), Rheodyne (July 2002) and Wrightech (October 2002) acquisitions to the Pump Products Group and foreign currency translation, orders were 1% higher than in the prior year. During 2002, IDEX's backlog increased $7.8 million. At December 31, 2002, we had a typical unfilled order backlog of slightly over one month's sales. The year 2002 was once again a very difficult one for IDEX as a manufacturer of industrial products. We saw no significant recovery in our markets throughout the year. While business was clearly better in 2002 than it was in the second half of 2001, our level of orders for the last four quarters has remained essentially flat. Our focus on operational excellence has driven improvements in all businesses and is rapidly becoming part of the IDEX culture. This allowed us to expand gross margins by 1.6 percentage points in 2002 and produce another record year in cash flow, while absorbing some of the expense of our investment in new products and markets. Looking ahead to 2003, there is no indication that the sluggishness in the U.S. and other worldwide end markets we serve will change any time soon. Unfortunately, we are not in a position to project how the economy will perform over the next year. As a short-cycle business, our financial performance depends on the pace of incoming orders, and we have very limited visibility of future business conditions. We believe IDEX is well positioned for earnings improvement as the economy strengthens. This is based on our lower cost structures resulting from our restructuring activities; our operational excellence initiatives of Six Sigma, Kaizen, Lean and global sourcing; and the use of our strong cash flow to reduce debt and interest expense. In addition, we continue to pursue acquisitions - such as Rheodyne, Halox and Wrightech - to drive the Company's longer term profitable growth. [PHOTO] Pictured from left to right are Doug Lennox (Vice President-Treasurer), Wayne Sayatovic (Senior Vice President-Finance and Chief Financial Officer) and Clint Kooman (Vice President-Controller). 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 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 the September 11, 2001 terrorist attacks and a possible war with Iraq; 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 our 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;
IDEX CORPORATION / 17 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. RESULTS OF OPERATIONS For purposes of this discussion and analysis section, we refer to the table on page 18 and the Consolidated Statements of Operations on page 25. IDEX consists of three reporting groups: 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; refinishing equipment; and centralized lubrication systems. The Other Engineered Products Group produces firefighting pumps, rescue tools and other components and systems for specialty vehicles, as well as engineered banding and clamping devices used in a variety of industrial and commercial applications. PERFORMANCE IN 2002 COMPARED WITH 2001 Orders, sales, net income and earnings per diluted share were higher in 2002 compared with 2001. New orders in 2002 totaled $749.8 million and were 5% higher than the prior year. Excluding the impact of the four acquisitions made since mid-2001 and foreign currency translation, orders were 1% higher than in 2001. Sales in 2002 of $742.0 million were 2% higher than the $726.9 million recorded in the prior year. Acquisitions and foreign currency translation accounted for an improvement of 3% and 1%, respectively, but this was offset by a 2% decline in the base businesses. Domestic sales increased 3% while international sales, net of foreign currency translation, decreased 2%. For the year, international sales were 41% of total sales, down slightly from 42% in 2001. In 2002, the Pump Products Group contributed 58% of sales and 62% of operating income, the Dispensing Equipment Group accounted for 19% of sales and 16% of operating income, and the Other Engineered Products Group represented 23% of sales and 22% of operating income. Pump Products Group sales of $436.7 million in 2002, increased $9.6 million, or 2%, compared with 2001. Acquisitions accounted for a 5% sales improvement, but this was partially offset by a 3% decline in base business activity. In 2002, domestic and international sales increased 3% and 1%, respectively, compared with last year. Excluding acquisitions, base business sales volume in both the U.S. and internationally decreased 3%. Sales to customers outside the U.S. were 37% of total group sales in 2002, unchanged from 2001. Dispensing Equipment Group sales of $138.7 million increased $1.3 million, or 1%, in 2002 compared with the prior year. Domestic sales increased 7% compared with 2001, while international sales decreased 4%. Sales to customers outside the U.S. were 54% of total group sales in 2002, down from 57% in 2001. Other Engineered Products Group sales of $169.7 million increased by $4.9 million, or 3%, in 2002 compared with 2001. In 2002, domestic sales increased 1%, while international sales grew by 6%. Sales to customers outside the U.S. were 42% of total group sales in 2002, up slightly from 41% in 2001. Gross profit of $281.4 million in 2002 was $17.7 million higher than in 2001. As a percent of sales, gross profit was 37.9% in 2002, compared with 36.3% in 2001. The higher gross profit margin primarily reflected reduced material costs from our increased global sourcing activities, benefits from our Kaizen, Lean and Six Sigma activities plus savings from actions to consolidate certain production facilities.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS COMPANY AND BUSINESS GROUP FINANCIAL INFORMATION (dollars in thousands)
IDEX CORPORATION / 19 Selling, general and administrative (SG&A) expenses increased to $181.3 million in 2002 from $164.9 million in 2001. This increase was primarily due to including four acquisitions that incrementally added $5.2 million of cost, and increased spending on corporate initiatives and new product/market development. The increased corporate initiative costs included both implementation and training expenses for programs such as eBusiness, Six Sigma, Lean, Kaizen and global sourcing. The goal of these efforts is to increase the Company's organic sales and profit growth. As a percent of net sales, SG&A expenses were 24.4%, up from 22.7% in 2001. While 2002 SG&A expenses are up for the reasons noted, we do not believe this is indicative of a significant negative trend. In accordance with the new accounting rules, we discontinued amortization of goodwill and trademarks as of January 1, 2002. As a result, we did not record any goodwill and trademark amortization expense in 2002 compared with $14.6 million in 2001. We also generated income related to restructuring activity of $.2 million in 2002 compared with a restructuring charge in 2001 of $11.2 million. For more details on our restructuring programs, see "Restructuring Actions" on page 22. Operating income increased by $26.9 million, or 37%, to $100.4 million in 2002 from $73.4 million in 2001. This was primarily due to the absence of goodwill and trademark amortization in 2002, the restructuring charge recorded in 2001 and higher 2002 gross profit. This increase was partially offset by increased SG&A expenses in 2002. Operating margins in 2002 were 13.5% compared with 10.1% in 2001. As described in Note 4 of the "Company and Business Group Financial Information" table on page 18, each group's operating income and margins exclude restructuring activity. In the Pump Products Group, operating income of $71.9 million and operating margins of 16.5% in 2002 compared with $61.8 million and 14.5% in 2001. Operating income for the Dispensing Equipment Group increased to $18.6 million from $14.0 million last year, and operating margins improved to 13.4% from 10.2% in 2001. Operating income in the Other Engineered Products Group of $25.6 million and operating margins of 15.1% compared with the $25.0 million and 15.2% achieved in 2001. In the Pump Products Group, 2001 operating income and margins excluding goodwill and trademark amortization of $7.7 million, or 1.8% of sales, were $69.5 million and 16.3%, respectively. In the Dispensing Equipment Group, operating income and margins in 2001 were $17.9 million and 13.0%, respectively, excluding goodwill and trademark amortization of $3.9 million, or 2.8% of sales. Operating income and margins in the Other Engineered Products Group in 2001 were $27.9 million and 17.0%, respectively, excluding goodwill and trademark amortization of $2.9 million, or 1.8% of sales. The expenses related to the corporate initiatives of eBusiness (including ERP implementation), Six Sigma, Lean, Kaizen, and global sourcing are allocated to the reporting units in each segment based on expected usage. The businesses in the Pump Products and Dispensing Equipment segments have been more successful than those in the Other Engineered Products segment at offsetting the SG&A cost increases resulting from the corporate initiatives, new product/market development, and other cost increases, with efficiencies related to the initiatives as well as other operational improvements. The Other Engineered Products Group was also affected by higher than normal costs associated primarily with ERP implementations and a reserve established for a patent infringement suit. Interest expense decreased to $16.4 million in 2002 from $20.7 million in 2001. The decrease was principally due to lower debt levels as a result of debt paydowns from operating cash flow and proceeds from the common stock offering, and a lower interest rate environment. The provision for income taxes increased to $29.8 million in 2002 from $20.7 million in 2001. The effective tax rate decreased to 35.5% in 2002 from 38.8% in 2001. This was primarily due to the discontinuation of goodwill and trademark amortization in 2002, a portion of which was nondeductible for tax purposes. Net income was $54.1 million, or $1.67 per share, compared with $32.7 million, or $1.05 per share, in 2001. When adjusted to exclude goodwill and trademark amortization of $11.4 million, or $.37 per share, 2001's net income and earnings per diluted share were $44.1 million and $1.42 per share, respectively. PERFORMANCE IN 2001 COMPARED WITH 2000 The following discussion of operating results for 2001 and 2000 includes the impact of goodwill and trademark amortization. We achieved record orders and sales, but reported lower net income and earnings per diluted share in 2001 compared with 2000. New orders totaled $713.4 million and were 2% above the prior year. Excluding the impact of foreign currency and the five acquisitions made since the beginning of 2000, orders were 9% lower. Sales for 2001 increased 3% to $726.9 million from $704.3 million. Acquisitions accounted for a 13% improvement, which was partially offset by a 9% decline in base business sales and a 1% unfavorable currency translation. In 2001, international sales were up 6% and domestic sales increased 1% compared with 2000. International sales were 42% of total sales, up from 41% in 2000. For 2001, the Pump Products Group contributed 59% of sales and 61% of operating income, the Dispensing Equipment Group accounted for 19% of sales and 14% of operating income, and the Other Engineered Products Group represented 22% of sales and 25% of operating income. Pump Products Group 2001 sales of $427.0 million increased by $32.0 million, or 8%, compared with 2000. The change principally reflected the Ismatec, Trebor, Liquid Controls and Versa-Matic acquisitions, which added 17% to sales in 2001. Compared with 2000, base business sales volume was down 8% and foreign currency had a 1% negative effect. In 2001, international sales grew 22% and domestic sales increased 1%, principally reflecting the recent acquisitions. As a result, sales to customers outside the U.S. increased to 37% of total group sales in 2001 from 33% in 2000. Excluding
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS acquisitions and foreign currency, base business international sales were down 3% from the prior year and base business U.S. sales volume decreased by 10%, with the lower sales principally caused by weaknesses in the North American and European manufacturing sectors. Dispensing Equipment Group sales of $137.4 million in 2001 decreased by $29.0 million, or 17%, compared with 2000. Base business sales were down 16% and foreign currency translation had a 1% negative effect. Excluding foreign currency, international sales declined 10% in 2001 from the prior year and domestic sales decreased by 22%. This was due to the weak conditions in the North American and European end markets, which caused significant year-over-year volume declines at all three businesses in this group. Sales to customers outside the U.S. were 57% of total group sales in 2001, up from 55% in 2000. In 2001, Other Engineered Products Group sales of $164.8 million increased by $19.0 million, or 13%, compared with 2000. The improvement principally reflected the Class 1 acquisition, which added 18% to sales in 2001. Overall base business sales decreased 3% and foreign currency translation had a 2% negative effect. In 2001, domestic sales increased 23% and international sales grew 1%. Sales to customers outside the U.S. were 41% of total group sales in 2001, down from 46% in 2000, principally reflecting the change in sales mix due to the Class 1 acquisition. Excluding foreign currency and acquisitions, base business international sales in 2001 increased 4% compared with the prior year, while the base business U.S. sales volume decreased 9%, due to the soft conditions in most U.S. end markets. Gross profit of $263.7 million in 2001 decreased by $14.2 million, or 5%, from 2000. Gross profit as a percent of sales was 36.3% in 2001, down from 39.5% in 2000. The decline in gross profit and gross margins was attributable to significantly lower base business sales volumes, production inefficiencies and under-absorption of manufacturing expenses related to lower volumes and planned inventory reductions, and the addition of lower margin acquisitions. SG&A expenses increased to $164.9 million in 2001 from $149.6 million in 2000 due to five acquisitions, which incrementally added $12.1 million of cost, and increased spending on corporate initiatives and new product/market development. As a percent of net sales, SG&A expenses were 22.7%, up from 21.2% in 2000. The increase principally reflected significantly lower base business sales volumes and incremental up-front costs associated with implementing the Company's Six Sigma and eBusiness initiatives. Goodwill and trademark amortization increased by $2.4 million to $14.6 million in 2001, reflecting the five acquisitions. As a percent of sales, goodwill amortization remained flat at about 2% for both years. We recorded a restructuring charge in 2001 totaling $11.2 million. For more details on our restructuring programs, see "Restructuring Actions" on page 22. Operating income decreased by $43.1 million, or 37%, to $73.4 million in 2001 from $116.5 million in 2000. Operating income as a percent of sales decreased to 10.1% in 2001 from 16.5% in 2000. The decreases in operating income and operating margins were reflected at all three business groups. They were attributable to significantly lower base business sales volumes, production inefficiencies and under-absorption of manufacturing expenses related to lower volumes and planned inventory reductions, the addition of lower margin acquisitions, and incremental costs associated with implementing the corporate initiatives. In the Pump Products Group, operating income of $61.8 million and operating margins of 14.5% in 2001 compared with the $73.6 million and 18.6% recorded in 2000. With a 17% year-over-year sales decline, profitability of the Dispensing Equipment Group had the most significant decrease of the Company's three groups, as operating income of $14.0 million and operating margins of 10.2% decreased from $32.5 million and 19.5% in 2000. Operating income in the Other Engineered Products Group of $25.0 million and operating margins of 15.2% in 2001 decreased from $27.4 million and 18.8% in 2000. Interest expense increased to $20.7 million in 2001 from $16.5 million in 2000. The increase was principally due to the additional debt incurred to acquire the Ismatec, Trebor, Liquid Controls, Class 1 and Versa-Matic businesses, which was partially offset by lower interest rates. The provision for income taxes decreased to $20.7 million in 2001 from $37.6 million in 2000, reflecting lower pretax income. The effective tax rate increased to 38.8% in 2001 from 37.2% in 2000, primarily due to the lower pretax income levels relative to nondeductible goodwill amortization. Net income of $32.7 million in 2001 was 48% lower than the $63.4 million reported in 2000. Diluted earnings per share were $1.05 in 2001, a decrease of $1.02 per share, or 49%, from the $2.07 per share achieved in 2000. [PHOTO] Pictured from left to right, seated, are Kim Bors (Vice President-Human Resources) and Dennis Metcalf (Vice President-Corporate Development). Standing from left to right are Chuck Hemann (Director-eBusiness), John McMurray (Vice President-Operational Excellence) and Frank Notaro (Vice President-General Counsel and Secretary).
IDEX CORPORATION / 21 LIQUIDITY AND CAPITAL RESOURCES At December 31, 2002, working capital was $112.9 million and our current ratio was 2.0-to-1. Free cash flow (net cash flows from operating activities of $108.4 million less additions to property, plant and equipment of $19.3 million) of $89.1 million in 2002 increased $5.2 million versus 2001, reflecting lower working capital requirements. Cash flows from operating activities increased 3%, or $2.9 million, to $108.4 million in 2002, mainly reflecting higher pretax income and lower tax payments partially offset by less favorable working capital changes from last year caused by an 11% rise in sales volume from the fourth quarter of 2001 to the fourth quarter of 2002. Cash flows from operating activities were more than adequate to fund capital expenditures of $19.3 million and $21.6 million in 2002 and 2001, respectively. Capital expenditures were generally for machinery and equipment that improved productivity, although a portion was for business system technology and repair and replacement of equipment and facilities. Management believes that IDEX has ample capacity in its plant and equipment to meet expected needs for future growth in the intermediate term. In addition to the $150 million of 6.875% Senior Notes due February 15, 2008, the Company also has a $300 million domestic multi-currency bank revolving credit facility (Credit Facility), which expires June 8, 2006. At December 31, 2002, the maximum amount available under the Credit Facility was $300.0 million, of which $54.0 million was borrowed. Interest is payable quarterly on the outstanding balance at the agent bank's reference rate or at LIBOR plus an applicable margin and a utilization fee if the total borrowings exceed certain levels. The applicable margin is based on the credit rating of our Senior Notes, and can range from 25 basis points to 100 basis points. The utilization fee can range from zero to 25 basis points. At December 31, 2002, the applicable margin was 80 basis points and the utilization fee was zero. We pay an annual fee of 20 basis points on the total Credit Facility. We completed the acquisitions of Halox, Rheodyne and Wrightech in 2002 for $74.9 million, with borrowings from the Credit Facility. In conjunction with the acquisitions, $2.1 million of debt was acquired. In December 2001, we and certain of our subsidiaries entered into a one-year agreement with a financial institution, under which we collateralized certain receivables for borrowings (Receivables Facility). This agreement was renewed in December 2002 for another year. The Receivables Facility provides for borrowings of up to $50.0 million, depending upon the level of eligible receivables. At December 31, 2002, $20.0 million was borrowed and included in long-term debt at an interest rate of approximately 2.8% per annum. We also have a $30.0 million demand line of credit (Short-Term Facility), which expires May 24, 2003. Borrowings under the Short-Term Facility are at LIBOR plus the applicable margin in effect under the Credit Facility. At December 31, 2002, there were no borrowings under this facility. Management believes IDEX 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, any authorized share repurchases, planned capital expenditures, and annual dividend payments to holders of common stock. Since we began operations in January 1988 and through December 31, 2002, we have borrowed approximately $884 million under our various credit agreements to complete 22 acquisitions. During this same period we generated, principally from operations, cash flow of $808 million to reduce indebtedness. 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. The Credit Facility contains a covenant that limits total debt outstanding to three-times operating cash flow, as defined in the agreement. At December 31, 2002, we were limited to $397 million of total debt outstanding. 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. We have no off-balance sheet arrangements or material long-term purchase obligations. There [BAR GRAPH]
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 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. [PHOTO] Pictured from left to right are Tom Thomas, Tom Pappas and Gene Viloria. RESTRUCTURING ACTIONS IDEX took actions in 2002 and 2001 to downsize operations to lower its cost structure. The restructuring affected all three business groups and reduced the workforce, lowered costs, improved efficiencies and addressed excess capacity that resulted from lower demand and more efficient processes. These steps were necessary to appropriately size the Company's production capacity to match the declining levels of demand for a broad range of products. The restructuring actions affected multiple employee groups in approximately 20 locations across 11 of our business units. No business activities or product lines were abandoned. The restructuring actions included the layoff of 508 employees with 250 terminations resulting from the first quarter 2001 plan, 231 from the fourth quarter 2001 plan, and 27 from the second quarter 2002 plan. As of December 31, 2002, all planned employee terminations have been completed. All costs of the restructuring activities were charged to expense and included in the single caption "Restructuring activity" in the Consolidated Statements of Operations. The restructuring charges included employee severance, fringe benefits, outplacement fees, idle facility carrying costs, lease termination costs, the loss on sale of equipment and the loss on disposal of two manufacturing facilities owned by the Company. Determination of the restructuring charges was based on the estimated severance benefits paid to terminated employees, the net book value of surplus assets less expected proceeds, and estimated other costs. The restructuring plans have been executed as originally planned. The restructuring activity resulted in income of $.2 million in 2002. This related to a reversal of $1.5 million of certain restructuring expenses initially recorded, which more than offset the 2002 charges of $1.3 million. Of the $1.5 million reversal, $1.1 million was attributed to the sale of a manufacturing facility for more than the value estimated at the time the restructuring plan was adopted. The 2001 restructuring charge was $11.2 million. At December 31, 2002, the amount remaining in accrued expenses for both the 2001 and 2002 restructuring programs was $.5 million. All expenditures have been funded with cash flow from operations. It is expected that the remaining restructuring accrual will be utilized with cash payments during 2003. The annualized savings from these restructuring actions are expected to exceed the total restructuring charges recorded. These restructuring actions will result in decreased employee costs and depreciation expense charged to cost of sales and SG&A expenses of approximately $12.0 million and $8.0 million per year, respectively. For additional detail related to the 2002 and 2001 restructuring programs, see Note 5 of the Notes to Consolidated Financial Statements. 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. Noncurrent assets - The Company evaluates the recoverability of certain noncurrent assets utilizing various estimation processes. In particular, the recoverability of December 31, 2002 balances for goodwill and intangible assets of $530.7 million and $19.4 million, respectively, are subject to estimation processes, which depend on the accuracy of underlying assumptions, including future operating results. The Company evaluates the recoverability of each of these assets based on estimated business values (derived from estimated earnings and cash flow multiples) and estimated future cash flows. 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, along with third-party advisors, periodically estimates the Company's probable tax obligations using historical experience in tax jurisdictions and informed judgments. 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.
IDEX CORPORATION / 23 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. 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, results could be adversely affected. REGISTRATION STATEMENT FILINGS FOR COMMON STOCK OFFERINGS In March 2002, we filed a registration statement on Form S-3 with the Securities and Exchange Commission covering the secondary offering of 2,939,199 shares of common stock owned by IDEX Associates, L.P. In April 2002, that registration statement was amended to also include the secondary offering of 560,801 shares of IDEX common stock owned by KKR Associates, L.P., and the primary offering of 1,500,000 shares of IDEX common stock. Also in April 2002, IDEX announced the pricing of this public offering at $36 per common share. Subsequently, the over-allotment option was exercised by the underwriter for the sale of an additional 750,000 secondary shares owned by KKR Associates, L.P., bringing the total offering to 5,750,000 shares. The $50.8 million of net proceeds we received was used to repay debt under the Credit Facility. This increased the amount available for borrowing under the facility, which IDEX will continue to use for general corporate purposes, including acquisitions. In September 2002, IDEX filed a registration statement on Form S-3 with the Securities and Exchange Commission covering the secondary offering of 1,350,000 shares of IDEX common stock owned by KKR Associates, L.P. This offering, completed in January 2003, did not increase the number of IDEX shares outstanding, and IDEX did not receive any proceeds from the offering. The secondary shares covered by both of these registration statements have been owned by KKR Associates, L.P. and IDEX Associates, L.P. since IDEX was formed in January 1988. NEW ACCOUNTING PRONOUNCEMENTS In June 2002, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard (SFAS) No. 146, "Accounting for Costs Associated with Exit or Disposal Activities." The standard requires companies to recognize certain costs associated with exit or disposal activities when they are incurred, rather than at the date of a commitment to an exit or disposal plan. SFAS No. 146 is to be applied prospectively to exit or disposal activities initiated after December 31, 2002. The adoption of SFAS No. 146 is not expected to affect the Company's financial position, liquidity, or results of operations. 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 $241.1 million of total debt outstanding at December 31, 2002. Approximately 36% 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 $.4 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. Our foreign currency exchange rate risk is limited primarily 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.
CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNT)
IDEX CORPORATION / 25 CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
CONSOLIDATED SHAREHOLDERS' EQUITY (dollars in thousands except per share amounts)
IDEX CORPORATION / 27 CONSOLIDATED CASH FLOWS (in thousands)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS EXCEPT PER SHARE AMOUNTS) 1. SIGNIFICANT ACCOUNTING POLICIES BUSINESS IDEX Corporation ("IDEX" or the "Company") is a manufacturer of a broad range of pumps, metering products, dispensing equipment, and other engineered products sold to a diverse customer base in a variety of industries in the U.S. and internationally. Its products include industrial pumps, compressors, flow meters, injectors and valves, and related controls for use in a wide variety of process applications; precision-engineered equipment for dispensing, metering and mixing paints, refinishing equipment, and centralized lubrication systems; and engineered products for industrial and commercial markets, including fire and rescue, transportation equipment, oil and gas, electronics, communications, and traffic and commercial signs. These activities are grouped into three business segments: Pump Products, Dispensing Equipment and Other Engineered Products. PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the Company and its subsidiaries. Significant intercompany transactions and accounts have been eliminated. USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The principal areas of estimation reflected in the financial statements are noncurrent assets, income taxes, contingencies and litigation, and defined benefit retirement plans. REVENUE RECOGNITION IDEX recognizes revenue from product sales upon shipment. Customary terms are FOB shipping point. The Company estimates and records provisions for sales returns, sales allowances and original warranties in the period the related products are sold, in each case based on its historical experience. CASH EQUIVALENTS The Company considers all highly liquid debt instruments purchased with a maturity of three or fewer months to be cash equivalents. INVENTORIES Inventories are stated at the lower of cost or market. Cost - which includes labor, material and factory overhead - is determined on the first-in, first-out (FIFO) basis or the last-in, first-out (LIFO) basis. Generally, for other than newly introduced products, a reserve for excess inventory is recorded for inventory on hand in excess of one year of historical usage. An obsolescence reserve is recorded for inventory made obsolete by marketplace, product or engineering changes. DEBT EXPENSES Expenses incurred in securing and issuing debt are amortized over the life of the related debt. 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 and unvested restricted shares (diluted) outstanding during the year. Common stock equivalents consist of stock options and deferred compensation equivalent units (DCU's) and have been included in the calculation of weighted average shares outstanding using the treasury stock method. Basic weighted average shares reconciles to diluted weighted average shares as follows:
IDEX CORPORATION / 29 2. COMMITMENTS AND CONTINGENCIES At December 31, 2002, total future minimum rental payments under noncancelable operating leases, primarily for office facilities, warehouses and data processing equipment, were $25,919. The future minimum rental commitments for each of the next five years and thereafter are as follows: 2003 - $6,159; 2004 - $5,213; 2005 - $3,660; 2006 - $2,871; 2007 - $2,604; thereafter - $5,412. Rental expense totaled $9,510, $8,500 and $8,478 for the years ended December 31, 2002, 2001 and 2000, respectively. IDEX is a party to various legal proceedings involving employment, contractual, product liability and other matters, none of which are expected to have a material adverse effect on its business, financial condition or results of operations. 3. GOODWILL AND INTANGIBLE ASSETS The changes in the carrying amount of goodwill for the year ended December 31, 2002, were as follows:
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS) In 2001, the Company completed the acquisitions of Liquid Controls L.L.C. (January 2001), Class 1, Inc. (January 2001) and Versa-Matic Tool Inc. (June 2001). Liquid Controls and Versa-Matic are operated as part of the Pump Products Group, while Class 1 is operated as part of the Other Engineered Products Group. Liquid Controls, headquartered in Lake Bluff, Illinois, is a leading manufacturer of positive displacement flow meters, electronic registration and process control systems. Class 1, headquartered in Ocala, Florida, is a leading manufacturer of electronic and mechanical components and systems for the specialty vehicle market. Versa-Matic, headquartered in Export, Pennsylvania, is a leading manufacturer and distributor of air-operated double-diaphragm pumps and pump replacement parts. IDEX acquired these businesses for an aggregate purchase price of $132,295, with financing provided by borrowings under the Credit Facility. The Company also acquired $2,931 of debt with the acquisitions. Goodwill and intangible assets recognized as part of these acquisitions was $94,320 and $1,061, respectively. Goodwill of $67,782 and intangible assets of $740 were assigned to the Pump Products Group, while goodwill of $26,538 and intangible assets of $321 were assigned to the Other Engineered Products Group. In 2000, the Company acquired Ismatec S.A. (April 2000) and Trebor International, Inc. (May 2000), with both companies being operated as part of the Pump Products Group. Ismatec, headquartered near Zurich, Switzerland, is a leading European manufacturer of peristaltic metering pumps, analytical process controllers and sample preparation systems. These products typically are used for scientific research and development in the pharmaceutical, medical, biotech and institutional laboratory markets. Trebor, headquartered near Salt Lake City, Utah, is a leading designer and manufacturer of high purity fluid handling products, including air-operated diaphragm pumps and deionized water-heating systems. Trebor's products are incorporated into wet chemical processing and chemical delivery and blending systems. These businesses were acquired by the Company for an aggregate purchase price of $34,513, with financing provided by borrowings under the Company's bank credit facilities. Goodwill and intangible assets recognized in accordance with these acquisitions was $25,636 and $619, respectively. All acquisitions were accounted for as purchases, and operating results include the acquisitions from the dates of purchase. The Company does not consider any of the acquisitions to be material to the financial position, liquidity, or results of operations for any of the years noted. Consistent with the guidance of SFAS No. 142, IDEX discontinued the amortization of any cost in excess of net assets acquired, effective January 1, 2002. 5. RESTRUCTURING ACTIVITY IDEX took actions in 2002 and 2001 to downsize operations to lower its cost structure. These steps were necessary to appropriately size the Company's production capacity to match the declining levels of demand for a broad range of products. The restructuring actions affected multiple employee groups in approximately 20 locations across 11 of our operating business units. No business activities or product lines were abandoned. All costs of the restructuring actions were charged to expense and included in "Restructuring activity" in the Consolidated Statements of Operations. The restructuring charges included employee severance, fringe benefits, outplacement fees, idle facility carrying costs, lease termination costs, the loss on sale of equipment, and the loss on disposal of two manufacturing facilities owned by the Company. Determination of the restructuring charges was based on the estimated severance benefits paid to terminated employees, the net book value of surplus assets less expected proceeds, and estimated other costs. In 2002, IDEX reversed $1,531 of accrued restructuring expenses initially recorded. Of this reversal, $1,090 was attributable to the fact that the Company was able to sell one manufacturing facility for more than the value estimated at the time the restructuring plan was adopted. The restructuring activity was separately identified in the Consolidated Statements of Operations and resulted in the following activity to operations for 2002 and 2001:
IDEX CORPORATION / 31 6. BALANCE SHEET COMPONENTS The components of certain balance sheet accounts at December 31, 2002 and 2001 follow:
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands except per share amounts) 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. The accounting policies of the business segments are described in Note 1. Intersegment sales are accounted for at fair value as if the sales were to third parties.
IDEX CORPORATION/33 of up to $50 million depending upon the level of eligible receivables. At December 31, 2002, $20 million was borrowed and included in bank credit facilities at an interest rate of approximately 2.8% per annum. The Company has a $30 million demand line of credit (Short-Term Facility), which expires May 24,2003. Borrowings under the Short-Term Facility are based on LIBOR plus the applicable margin in effect under the Credit Facility. At December 31, 2002, there were no borrowings under the Short-Term Facility. Total debt outstanding at December 31, 2002 and 2001 included accrued interest of $4.1 million and $4.5 million,respectively. In February 1998, the Company sold $150 million of Senior Notes due February 15, 2008, with a coupon interest rate of 6.875% and an effective rate of 6.919% to maturity. Interest is payable semiannually. The Senior Notes are redeemable at any time at the option of the Company in whole or in part. At December 31, 2002, the fair market value of the Senior Notes was approximately $180 million, based on the quoted market price. At December 31, 2002, other long-term debt included debt acquired in connection with recent acquisitions and other debt at international locations maintained for working capital purposes. Interest is payable on the outstanding balances at rates ranging from 3.0% to 7.7% per annum. The indenture for the Senior Notes permits the payment of cash dividends only to the extent that no default exists under the notes, and limits the amount of cash dividends in accordance with specified formulas. At December 31, 2002, under the most restrictive of these provisions,the Company had approximately $100.2 million available for the payment of cash dividends in 2003. 11. STOCK OPTIONS The Company has stock option plans for outside directors, executives and certain key employees. These options are accounted for using the intrinsic value method and, accordingly, no compensation cost has been recognized. Had compensation cost been determined using the fair value method, the Company's pro forma net income and EPS would have been as follows:
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands except per share amounts) 12. INCOME TAXES Pretax income for the years ended December 31, 2002, 2001 and 2000 was taxed under the following jurisdictions:
IDEX CORPORATION/35 14. RETIREMENT BENEFITS The Company sponsors several qualified and nonqualified pension plans and other postretirement plans for its employees. The following table provides a reconciliation of the changes in the benefit obligations and fair value of plan assets over the two-year period ended December 31, 2002, and a statement of the funded status at December 31 for both years:
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (in thousands except per share amounts) The following table provides the components of net periodic benefit cost for the plans in 2002, 2001 and 2000:
IDEX CORPORATION /37 REPORTS INDEPENDENT AUDITORS' REPORT To the Board of Directors and Shareholders of IDEX Corporation We have audited the accompanying consolidated balance sheets of IDEX Corporation and its subsidiaries as of December 31,2002 and 2001 and the related consolidated statements of operations, consolidated shareholders' equity, and consolidated cash flows for each of the three years in the period ended December 31, 2002. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly,in all material respects, the financial position of the Company and its subsidiaries at December 31, 2002 and 2001 and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2002 in conformity with accounting principles generally accepted in the United States of America. As discussed in Note 3 to the Consolidated Financial Statements, in 2002 the Company changed its method of accounting for goodwill and intangible assets to conform to Statement of Financial Accounting Standard No. 142, "Goodwill and Other Intangible Assets." /S/ DELOITTE & TOUCHE LLP - ------------------------- Deloitte & Touche LLP Chicago, Illinois January 23, 2003
IDEX CORPORATION / 41 SHAREHOLDER INFORMATION CORPORATE EXECUTIVE OFFICE IDEX Corporation 630 Dundee Road Northbrook, Illinois 60062 (847) 498-7070 INVESTOR INFORMATION Shareholders and prospective investors are welcome to call or write with questions or requests for additional information. Please direct inquiries to: Wayne P. Sayatovic, Senior Vice President - Finance and Chief Financial Officer. Further information on IDEX can be found at www.idexcorp.com. REGISTRAR AND TRANSFER AGENT Inquiries about stock transfers, address changes or IDEX's dividend reinvestment program should be directed to: National City Bank Shareholder Services 3rd Floor North 4100 W. 150th Street Cleveland, Ohio 44135 (800) 622-6757 INDEPENDENT AUDITORS Deloitte & Touche LLP Two Prudential Plaza 180 North Stetson Avenue Chicago, Illinois 60601 DIVIDEND POLICY IDEX paid a quarterly dividend on its common stock on January 31, 2003, of $0.14 per share, which is unchanged from last year's quarterly dividend rate. The declaration of future dividends, subject to certain limitations, is within the discretion of the Board of Directors and will depend upon, among other things, business conditions, earnings, and IDEX's financial condition. See Note 10 of the Notes to Consolidated Financial Statements. STOCK MARKET INFORMATION IDEX common stock was held by an estimated 4,700 shareholders at December 31, 2002, and is traded on the New York Stock Exchange and the Chicago Stock Exchange under the sticker symbol IEX. PUBLIC FILINGS Shareholders may obtain a copy of any Form 10-K and Form 10-Q filed with the Securities and Exchange Commission by directing a request to IDEX or through its Web site at www.idexcorp.com. ANNUAL MEETING The Annual Meeting of IDEX Shareholders will be held on Tuesday, March 25, 2003, at 10:00 a.m. at the following location: LaSalle Room Bank of America 231 South LaSalle Street Chicago, Illinois 60697
EXHIBIT 21 SUBSIDIARIES OF IDEX CORPORATION JURISDICTION OF SUBSIDIARY INCORPORATION - ---------- --------------- BAND-IT-IDEX, INC. DELAWARE BAND-IT COMPANY LTD. UNITED KINGDOM BAND-IT CLAMPS (ASIA) PTE., LTD. SINGAPORE BAND-IT R.S.A. (PTY) LTD. (51% OWNED) SOUTH AFRICA IDEX FINANCE, INC. DELAWARE IDEX HOLDINGS, INC. DELAWARE FAST LLC DELAWARE FAST SRL ITALY FAST IBERICA S.A. SPAIN FAST U.K. LTD. UNITED KINGDOM VIKING PUMP (EUROPE) LTD. IRELAND JOHNSON PUMP (UK) LTD. UNITED KINGDOM VIKING PUMP OF CANADA, INC. ONTARIO FLUID MANAGEMENT, INC. DELAWARE FM INVESTMENT, INC. DELAWARE FM DELAWARE, INC. DELAWARE FLUID MANAGEMENT OPERATIONS, LLC DELAWARE FLUID MANAGEMENT AUSTRALIA PTY., LTD. AUSTRALIA FLUID MANAGEMENT CANADA, INC. CANADA FLUID MANAGEMENT SERVICOS E VENDAS LTD. BRAZIL IDEX EUROPE GMBH GERMANY FLUID MANAGEMENT EUROPE B.V. NETHERLANDS FLUID MANAGEMENT U.K., LTD. UNITED KINGDOM FLUID MANAGEMENT FRANCE SARL FRANCE FLUID MANAGEMENT ESPANA SLU SPAIN FLUID MANAGEMENT EASTERN EUROPE SP. Z O.O. POLAND FLUID MANAGEMENT GMBH GERMANY LUKAS HYDRAULIK GMBH GERMANY LIQUID CONTROLS, LLC DELAWARE LIQUIDQCONTROLSR(INDIA)DPVT.PLTD LTD INDIA S.A.M.P.I. SPL. ITALY HEMINA S.P.A. (30%) ITALY CORKEN, INC. DELAWARE KNIGHT, LLC DELAWARE KNIGHT INTERNATIONAL B.V. NETHERLANDS KNIGHT EQUIPMENT INTERNATIONAL B.V. NETHERLANDS KNIGHT U.K. LTD. UNITED KINGDOM KNIGHT EQUIPMENT AUSTRALIA PTY., LTD. AUSTRALIA KNIGHT EQUIPMENT (CANADA) LTD. CANADA KNIGHT SOUTH EUROPE S.L. SPAIN RHEODYNE, LLC DELAWARE RHEODYNE EUROPE GMBH GERMANY GAST MANUFACTURING, INC. MICHIGAN GAST ASIA, INC. MICHIGAN GAST MANUFACTURING COMPANY LTD. UNITED KINGDOM HALE PRODUCTS, INC. PENNSYLVANIA HALE PRODUCTS EUROPE GMBH GERMANY GODIVA PRODUCTS LTD. UNITED KINGDOM GODIVA LIMITED UNITED KINGDOM HALE PRODUCTS EUROPE LIMITED UNITED KINGDOM CLASS 1 DELAWARE LUBRIQUIP, INC. DELAWARE MICROPUMP, INC. DELAWARE MICROPUMP LIMITED UNITED KINGDOM ISMATEC SA SWITZERLAND ISMATEC GMBH GERMANY TREBOR INTERNATIONAL, INC. UTAH PULSAFEEDER, INC. DELAWARE PULSAFEEDER EUROPE B.V. NETHERLANDS IDEX ASIA PACIFIC PTE. LTD. SINGAPORE HALOX TECHNOLOGIES, INC. DELAWARE SIGNFIX HOLDINGS LIMITED UNITED KINGDOM SIGNFIX LIMITED UNITED KINGDOM TESPA GMBH GERMANY VERSA-MATIC AB SWEDEN DOMINATOR PUMP AB SWEDEN VERSA-MATIC TOOL, INC. OHIO PUMPER PARTS LLC DELAWARE VERSA-MATIC ASIA SDN BHD (50%) MALAYSIA VIKING PUMP, INC. DELAWARE VIKING PUMP LATIN AMERICA S.A. DE C.V. MEXICO WARREN RUPP, INC. DELAWARE WARREN RUPP (EUROPE) LTD. UNITED KINGDOM BLAGDON PUMP HOLDINGS, LTD. UNITED KINGDOM WRIGHTECH, INC. DELAWARE IDEX FOREIGN SALES CORP. BARBADOS IDEX INDIA PRIVATE LTD INDIA IDEX RECEIVABLE CORPORATION DELAWARE IDEX Leasing GMBH GERMANY
DELOITTE & TOUCHE EXHIBIT 23 INDEPENDENT AUDITORS' CONSENT IDEX Corporation: We consent to the incorporation by reference in the Registration Statement of IDEX Corporation on Form S-3 (File Number 333-41627) and in the Registration Statements of IDEX Corporation on Form S-8 (File Numbers 33-47678, 33-56586, 33-67688, 333-18643, 333-70450 and 333-70452) of our reports, dated January 23, 2003, appearing in and incorporated by reference in this Annual Report on Form 10-K of IDEX Corporation for the year ended December 31, 2002. Deloitte & Touche LLP Chicago, Illinois February 27, 2003
EXHIBIT 99.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER Pursuant to 18 U.S.C. ss.1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of IDEX Corporation (the "COMPANY") hereby certifies, to such officer's knowledge, that: (i) the accompanying Annual Report on Form 10-K of the Company for the annual period ended December 31, 2002 (the "REPORT") fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and (ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. February 28, 2003 /s/ Dennis K. Williams ---------------------------- Dennis K. Williams Chairman, President and Chief Executive Officer
EXHIBIT 99.2 CERTIFICATION OF CHIEF EXECUTIVE OFFICER Pursuant to 18 U.S.C. ss.1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of IDEX Corporation (the "COMPANY") hereby certifies, to such officer's knowledge, that: (i) the accompanying Annual Report on Form 10-K of the Company for the annual period ended December 31, 2002 (the "REPORT") fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and (ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. February 28, 2003 /s/ Wayne P. Sayatovic ---------------------------- Wayne P. Sayatovic Senior Vice President-Finance and Chief Financial Officer