================================================================================
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) : APRIL 16, 2003
IDEX CORPORATION
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 1-10235 36-3555336
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification No.)
630 DUNDEE ROAD
NORTHBROOK, ILLINOIS 60062
(Address of principal executive offices, including zip code)
(847) 498-7070
(Registrant's telephone number)
================================================================================
ITEM 9. INFORMATION PROVIDED UNDER ITEM 12 (RESULTS OF OPERATIONS AND
FINANCIAL CONDITION)
The information required by Item 12 is being provided under Item 9
pursuant to SEC interim filing guidance provided in SEC press
release No. 2003-41.
The following information is furnished pursuant to Item 12,
"Results of Operations and Financial Condition." The information
in this Form 8-K and the Exhibit attached hereto shall not be
deemed "filed" for purposes of Section 18 of the Securities Act of
1934, nor shall it be deemed incorporated by reference in any
filing under the Securities Act of 1933, except as shall be
expressly set forth by specific reference in such filing.
On April 16, 2003, IDEX Corporation issued a press release
announcing financial results for the quarter ended March 31, 2003.
A copy of the press release is attached as Exhibit 99.1 to this
Current Report on Form 8-K.
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/ WAYNE P. SAYATOVIC
---------------------------------------------
Wayne P. Sayatovic
Senior Vice President--Finance, and Chief
Financial Officer
April 16, 2003
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
99.1* First quarter 2003 earnings release dated April 16, 2003
- ----------
* Filed herewith
EXHIBIT 99.1
IDEX CORPORATION REPORTS FIRST QUARTER RESULTS;
ORDERS, SALES AND EARNINGS IMPROVE;
2003 PERFORMANCE DEPENDS ON SPEED OF ECONOMIC RECOVERY
NORTHBROOK, IL, APRIL 16 - IDEX CORPORATION (NYSE: IEX) today reported that
orders, sales, net income, and earnings per share improved from the fourth
quarter and the first quarter of last year.
FIRST QUARTER HIGHLIGHTS
o Orders written of $206.1 million were up 12 percent from last year.
o Sales improved 12 percent from last year to $195.5 million, reflecting 4
percent growth from acquisitions, favorable foreign currency translation of
5 percent and a 3 percent increase in base business activity.
o Gross margins improved 0.6 of a percentage point to 38.0 percent.
o Operating margins at 12.0 percent were below the prior year's 12.9 percent.
o Net income at $12.7 million increased 10 percent.
o Diluted EPS at 39 cents was 2 cents ahead of last year's first and fourth
quarters.
o Debt to total capitalization was 31 percent.
o Progress continues on corporate initiatives.
o 2003 performance will depend on pace of new orders and speed of economic
recovery.
- --------------------------------------------------------------------------------
"We were encouraged by the second consecutive quarter of higher sales at our
base businesses compared with the year-ago period - something we haven't seen
since 2000. In addition, our operational excellence initiatives continue to
reduce our costs and improve our gross margin while strengthening our
relationships with customers. This is happening as our employees use these tools
to transform the way we do business. We believe this will give IDEX the power to
continue improving its performance over the long term, whatever the economic
environment may be."
Dennis K. Williams
Chairman, President and CEO
- --------------------------------------------------------------------------------
-MORE-
FINANCIAL HIGHLIGHTS
(in millions, except per share amounts and percentages)
FOR THE QUARTER ENDED
------------------------------------------------
March 31, December 31,
MARCH 31, --------------- ---------------
2003 2002 Change 2002 Change
--------- ------ ------ ------ ------
Orders Written $ 206.1 $184.1 12% $189.1 9%
Sales 195.5 174.9 12 187.5 4
Operating Income 23.4 22.5 4 22.8 3
Operating Margin 12.0% 12.9% (90)bp 12.1% (10)bp
Net Income $ 12.7 $ 11.5 10% $ 12.2 4%
Diluted EPS .39 .37 5 .37 5
Other Data
--Income Before Taxes $ 19.7 $ 18.0 9% $ 18.9 4%
--Depreciation and Amortization 7.9 7.7 3 6.7 18
--Interest 3.7 4.7 (21) 3.8 (3)
--EBITDA 31.3 30.4 3 29.4 6
--Cash Flow from Operating Activities 16.9 23.8 (29) 25.9 (35)
--Capital Expenditures 3.8 4.4 (14) 6.2 (39)
--Free Cash Flow 13.1 19.4 (32) 19.7 (34)
ORDERS, SALES, NET INCOME AND EPS EXCEED LAST YEAR'S FOURTH QUARTER AND FIRST
QUARTER RESULTS
Sales in the latest quarter increased 12 percent, to $195.5 million, from the
comparable prior-year quarter, and were 4 percent higher than last year's fourth
quarter.
Compared with last year's first quarter, acquisitions accounted for a 4 percent
sales improvement, foreign currency translation provided a 5 percent increase,
and base business shipments were up 3 percent. Domestic sales in the quarter
were unchanged while international sales - net of foreign currency translation -
were 7 percent higher. Sales to international customers were 45 percent of the
total, up from 40 percent last year. Compared with the 2002 fourth quarter, base
business sales improved 2 percent and foreign currency translation provided a 2
percent increase.
First quarter 2003 operating margins were 12.0 percent of sales, which was 0.9
percentage points lower than last year's first quarter and virtually unchanged
from the fourth quarter. The decline from last year's first quarter resulted
from an unfavorable mix of sales (away from higher margin pump businesses), and
an increase in selling, general and administrative expenses (SGA), which were
partially offset by an improvement in gross margins.
Approximately a quarter of the $8.0 million increase in SGA was attributable to
costs associated with the sale of a non-material product line, final resolution
of the previously mentioned patent infringement litigation, and higher than
normal adjustments to estimates and accruals for one of IDEX's foreign
subsidiaries. The other portion of the SGA increase reflected the cumulative
impact of acquisitions made in 2002, deliberate reinvestment in the businesses
to drive organic growth, and cost inflation including pension and insurance
expenses. Some of these increases are higher than normally would be expected
and, excluding these items, SGA as a percent of sales in the first quarter would
have been below the fourth quarter rate. Management anticipates savings from
operational excellence activities will keep full year 2003 SGA as a percent of
sales at a level similar to 2002.
Net income at $12.7 million increased 10 percent over last year's first quarter,
and was up 4 percent sequentially from the fourth quarter. Diluted earnings per
share at 39 cents increased 2 cents from both the first and fourth quarters of
last year.
New orders in the current quarter totaled $206.1 million, 12 percent higher than
the same 2002 quarter and 9 percent above the fourth quarter. Excluding the
impact of foreign currency translation and the three acquisitions made since the
beginning of 2002 - Halox (April 2002), Rheodyne (July 2002), and Wrightech
(October 2002) - orders were 3 percent higher than in the first quarter of 2002.
Sequentially, base business orders were up 4 percent excluding foreign currency
translation. At the end of the current quarter, the company had a typical
unfilled order backlog of slightly over one month's sales.
For the latest three months, the Pump Products Group contributed 57 percent of
both sales and operating income, the Dispensing Equipment Group accounted for 20
percent of sales and 17 percent of operating income, and the Other Engineered
Products Group represented 23 percent of sales and 26 percent of operating
income.
STRONG FINANCIAL POSITION
IDEX ended the quarter with total assets of $939.4 million and working capital
of $128.8 million. Total debt decreased $2.9 million during the period. Free
cash flow (cash flow from operating activities less capital expenditures) for
the first quarter was $13.1 million. The decline from the comparable prior-year
and sequential prior-year quarters primarily was attributable to improvement in
first quarter sales activity and the related increase in accounts receivable and
inventory to support the higher business volume. Compared with a year ago, both
days' sales in receivables and inventory turns showed improvement. Free cash
flow for the last 12 months totaled $82.7 million and was 1.5 times net income.
Trailing 12-month EBITDA (earnings before interest, taxes, depreciation and
amortization) totaled $130.7 million and covered interest expense by more than 8
times. Debt to total capitalization at the end of the first quarter was 31
percent.
PROGRESS CONTINUES ON CORPORATE INITIATIVES
"We continue to use our long-term initiatives to create top- and bottom- line
growth at IDEX," Williams said. "Our drive for operational excellence is
improving the gross margin. First quarter savings from Six Sigma, Kaizen and
Lean Manufacturing more than doubled our comparable 2002 period savings, as the
business units are making the transition from just using the tools to truly
running the business differently. Global sourcing saved us $4.0 million in the
first quarter versus $1.9 million at this time in 2002, which represented a
savings of 27 percent versus our prior sources. This process has continued to
improve, and we have shortened the time to qualify global suppliers. We also
continue to invest in products and markets to increase our organic growth rate."
2003 FINANCIAL PERFORMANCE DEPENDS ON SPEED OF ECONOMIC RECOVERY
Looking ahead, Williams said, "We are encouraged by the orders, sales and
earnings improvements achieved in the first quarter versus both the preceding
and year-ago quarters. It is important to note that this quarter represented the
second consecutive period our base businesses showed year-over-year quarterly
sales growth. The last time this occurred was in the third quarter of 2000.
"As a short-cycle business, our financial performance depends on the current
pace of incoming orders, and we have very limited visibility of future business
conditions. However, we believe IDEX is well positioned for earnings
improvements as the economy strengthens. This is based on our lower cost
structures resulting from restructuring actions; our operational excellence
initiatives of Kaizen and Lean Manufacturing, Six Sigma, global sourcing and
eBusiness; and using our strong cash flow to cut debt and interest expense. In
addition, we continue to pursue acquisitions to drive the company's longer term
profitable growth," Williams concluded.
CONFERENCE CALL TO BE BROADCAST OVER THE INTERNET
IDEX will broadcast its first quarter conference call over the Internet on
Wednesday, April 16, at 1:30 p.m. CDT. Chairman, President and Chief Executive
Officer Dennis K. Williams, and Senior Vice President - Finance and Chief
Financial Officer Wayne P. Sayatovic 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 at www.idexcorp.com. Access also is
available at www.ccbn.com by selecting "Investment Portals" then "Company
Boardroom," followed by entering the IDEX ticker symbol "IEX." Those who wish to
listen should go to either Web 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 to hear the event, or download
the correct applications at no charge. Investors will be able to access a replay
of the call through April 30 at either Web site or by dialing 800-891-8251 (or
402-220-6016 for international participants) and using the passcode "IDEX."
A NOTE ON EBITDA AND FREE CASH FLOW
EBITDA means earnings before interest, income taxes, depreciation and
amortization, and free cash flow means cash from operating activities minus
capital expenditures. Management believes these non-GAAP financial measures are
useful as analytical indicators of leverage capacity and debt servicing ability
and should not be considered as alternatives to net income, cash flows from
operating activities or any other items calculated in accordance with U.S. GAAP,
or as an indicator of operating performance. The definitions of EBITDA and free
cash flow used here may differ from those being used by other companies.
FORWARD-LOOKING STATEMENTS
This news release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Exchange Act of 1934, as amended. These statements may relate to, among other
things, capital expenditures, cost reductions, cash flow, and operating
improvements and are indicated by words or phrases such as "anticipate,"
"estimate," "plans," "expects," "projects," "should," "will," "management
believes," "the company believes," "the company intends," and similar words
or phrases. These statements are subject to inherent uncertainties and risks
that could cause actual results to differ materially from those anticipated at
the date of this news release. The risks and uncertainties include, but are not
limited to, the following: economic and political consequences resulting from
the September 11, 2001 terrorist attacks and the 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 IDEX's results, particularly in light of the low
levels of order backlogs it typically maintains; its ability to make
acquisitions and to integrate and operate acquired businesses on a profitable
basis; the relationship of the U.S. dollar to other currencies and its impact on
pricing and cost competitiveness; political and economic conditions in foreign
countries in which the company operates; interest rates; capacity utilization
and the effect this has on costs; labor markets; market conditions and material
costs; and developments with respect to contingencies, such as litigation and
environmental matters. The forward-looking statements included here are only
made as of the date of this news release, and management undertakes no
obligation to publicly update them to reflect subsequent events or
circumstances. Investors are cautioned not to rely unduly on forward-looking
statements when evaluating the information presented here.
ABOUT IDEX
IDEX Corporation is a proprietary manufacturer of pumps and metering products,
dispensing equipment, and other engineered products with leading positions in
niche markets. Its products are sold to a wide range of industries throughout
the world. IDEX shares are traded on the New York Stock Exchange and Chicago
Stock Exchange under the symbol "IEX."
FOR FURTHER INFORMATION ON IDEX CORPORATION AND ITS BUSINESS UNITS,
VISIT THE COMPANY'S WEB SITE AT WWW.IDEXCORP.COM.
IDEX CORPORATION
ADD
IDEX CORPORATION
Condensed Statements of Consolidated Operations
(in thousands except per share amounts)
FIRST QUARTER ENDED
MARCH 31,
2003 (1) 2002
---------- ----------
NET SALES $ 195,498 $ 174,936
COST OF SALES 121,195 109,511
---------- ----------
GROSS PROFIT 74,303 65,425
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 50,902 42,919
---------- ----------
OPERATING INCOME 23,401 22,506
OTHER INCOME - NET 20 203
INTEREST EXPENSE 3,739 4,670
---------- ----------
INCOME BEFORE INCOME TAXES 19,682 18,039
PROVISION FOR INCOME TAXES 6,987 6,494
---------- ----------
NET INCOME $ 12,695 $ 11,545
========== ==========
BASIC EARNINGS PER COMMON SHARE $ 0.39 $ 0.38
========== ==========
DILUTED EARNINGS PER COMMON SHARE $ 0.39 $ 0.37
========== ==========
SHARE DATA:
BASIC WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 32,291 30,513
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 32,805 31,544
========== ==========
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
March 31, December 31,
2003 2002
--------- ------------
ASSETS
CURRENT ASSETS
CASH AND CASH EQUIVALENTS $ 7,772 $ 6,952
RECEIVABLES - NET 107,353 101,494
INVENTORIES 106,257 105,580
OTHER CURRENT ASSETS 10,004 7,234
--------- ------------
TOTAL CURRENT ASSETS 231,386 221,260
PROPERTY, PLANT AND EQUIPMENT - NET 144,373 148,246
GOODWILL - NET 532,821 530,663
INTANGIBLE ASSETS - NET 19,301 19,377
OTHER NONCURRENT ASSETS 11,473 11,504
--------- ------------
TOTAL $ 939,354 $ 931,050
========= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
TRADE ACCOUNTS PAYABLE $ 54,915 $ 61,153
DIVIDENDS PAYABLE 4,552 4,548
ACCRUED EXPENSES 43,111 42,631
--------- ------------
TOTAL CURRENT LIABILITIES 102,578 108,332
LONG-TERM DEBT 238,156 241,051
OTHER NONCURRENT LIABILITIES 78,613 74,876
--------- ------------
TOTAL LIABILITIES 419,347 424,259
SHAREHOLDERS' EQUITY 520,007 506,791
--------- ------------
TOTAL $ 939,354 $ 931,050
========= ============
SEE FOLLOWING PAGE FOR NOTES TO CONDENSED FINANCIAL STATEMENTS.
-MORE-
IDEX CORPORATION
ADD
IDEX CORPORATION
COMPANY AND BUSINESS GROUP FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS)
FIRST QUARTER ENDED
MARCH 31,
2003(1) 2002
-------- --------
PUMP PRODUCTS
NET SALES $111,004 $102,173
OPERATING INCOME (2) 15,675 16,418
OPERATING MARGIN 14.1% 16.1%
DEPRECIATION AND AMORTIZATION $ 4,432 $ 4,297
CAPITAL EXPENDITURES 2,339 1,945
DISPENSING EQUIPMENT
NET SALES $ 39,282 $ 33,090
OPERATING INCOME (2) 4,852 4,139
OPERATING MARGIN 12.4% 12.5%
DEPRECIATION AND AMORTIZATION $ 1,574 $ 1,595
CAPITAL EXPENDITURES 414 916
OTHER ENGINEERED PRODUCTS
NET SALES $ 46,004 $ 40,364
OPERATING INCOME (2) 7,150 5,655
OPERATING MARGIN 15.5% 14.0%
DEPRECIATION AND AMORTIZATION $ 1,300 $ 1,265
CAPITAL EXPENDITURES 1,008 1,460
COMPANY
NET SALES $195,498 $174,936
OPERATING INCOME 23,401 22,506
OPERATING MARGIN 12.0% 12.9%
DEPRECIATION AND AMORTIZATION (3) $ 7,911 $ 7,705
CAPITAL EXPENDITURES 3,792 4,385
- ----------
(1) INCLUDES ACQUISITION OF HALOX TECHNOLOGIES, INC. (APRIL 2002), RHEODYNE,
L.P. (JULY 2002) AND WRIGHTECH CORPORATION (OCTOBER 2002) IN THE PUMP
PRODUCTS GROUP FROM THE DATES OF ACQUISITION.
(2) GROUP OPERATING INCOME EXCLUDES UNALLOCATED CORPORATE OPERATING EXPENSES.
(3) EXCLUDES AMORTIZATION OF DEBT ISSUANCE EXPENSES.
