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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED MARCH 31, 2004
OR
[ ] 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
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act).
Yes [X] No [ ]
Number of shares of common stock of IDEX Corporation outstanding as of
April 30, 2004: 33,428,534 (net of treasury shares).
================================================================================
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
IDEX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
MARCH 31, DECEMBER 31,
2004 2003
----------- -----------
ASSETS
Current assets
Cash and cash equivalents ................................................ $ 7,832 $ 8,552
Receivables - net ........................................................ 113,216 101,859
Inventories .............................................................. 109,077 105,304
Other current assets ..................................................... 10,464 8,781
----------- -----------
Total current assets ................................................... 240,589 224,496
Property, plant and equipment - net .......................................... 150,127 147,095
Goodwill - net ............................................................... 592,556 559,008
Intangible assets - net ...................................................... 19,470 19,401
Other noncurrent assets ...................................................... 17,276 10,739
----------- -----------
Total assets ........................................................... $ 1,020,018 $ 960,739
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Trade accounts payable ................................................... $ 67,233 $ 56,252
Dividends payable ........................................................ 4,669 4,622
Accrued expenses ......................................................... 60,667 54,807
----------- -----------
Total current liabilities .............................................. 132,569 115,681
Long-term debt ............................................................... 198,794 176,546
Other noncurrent liabilities ................................................. 77,532 76,410
----------- -----------
Total liabilities ...................................................... 408,895 368,637
----------- -----------
Shareholders' equity
Common stock, par value $.01 per share
Shares issued and outstanding: 2004 - 33,389,615; 2003 - 33,075,552 ..... 334 331
Additional paid-in capital .............................................. 208,659 198,165
Retained earnings ....................................................... 388,646 375,629
Minimum pension liability adjustment .................................... (12,481) (12,481)
Accumulated translation adjustment ...................................... 31,729 35,892
Treasury stock, at cost: 2004 and 2003 - 89,485 ......................... (2,903) (2,903)
Unearned compensation on restricted stock ............................... (2,861) (2,531)
----------- -----------
Total shareholders' equity ............................................. 611,123 592,102
----------- -----------
Total liabilities and shareholders' equity ............................. $ 1,020,018 $ 960,739
=========== ===========
See Notes to Consolidated Financial Statements.
1
IDEX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
FIRST QUARTER
ENDED MARCH 31,
-------------------
2004 2003
-------- --------
Net sales .............................................. $214,600 $195,498
Cost of sales .......................................... 128,870 121,195
-------- --------
Gross profit ........................................... 85,730 74,303
Selling, general and administrative expenses ........... 54,444 50,902
-------- --------
Operating income ....................................... 31,286 23,401
Other income - net ..................................... 11 20
-------- --------
Income before interest expense and income taxes ........ 31,297 23,421
Interest expense ....................................... 3,436 3,739
-------- --------
Income before income taxes ............................. 27,861 19,682
Provision for income taxes ............................. 10,169 6,987
-------- --------
Net income ............................................. $ 17,692 $ 12,695
======== ========
Basic earnings per common share ........................ $ .54 $ .39
======== ========
Diluted earnings per common share ...................... $ .52 $ .39
======== ========
Share data:
Basic weighted average common shares outstanding ....... 32,983 32,291
======== ========
Diluted weighted average common shares outstanding ..... 34,186 32,805
======== ========
See Notes to Consolidated Financial Statements.
2
IDEX CORPORATION AND SUBSIDIARIES
CONSOLIDATED SHAREHOLDERS' EQUITY
(IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
COMMON UNEARNED
STOCK & MINIMUM COMPENSATION
ADDITIONAL PENSION ACCUMULATED ON TOTAL
PAID-IN RETAINED LIABILITY TRANSLATION TREASURY RESTRICTED SHAREHOLDERS'
CAPITAL EARNINGS ADJUSTMENT ADJUSTMENT STOCK STOCK EQUITY
---------- -------- ---------- ----------- -------- ------------ -------------
Balance, December 31, 2003............. $ 198,496 $375,629 $ (12,481) $ 35,892 $ (2,903) $ (2,531) $ 592,102
Net income............................. 17,692 17,692
Other comprehensive income
Unrealized translation adjustment (4,163) (4,163)
-------- ----------
Other comprehensive income....... (4,163) (4,163)
-------- -------- ----------
Comprehensive income............. 17,692 (4,163) 13,529
-------- -------- ----------
Issuance of 294,063 shares of
common stock from exercise of
stock options and deferred
compensation plans.................... 10,497 10,497
Issuance of restricted stock........... (839) (839)
Amortization of restricted stock....... 509 509
Cash dividends declared - $.14 per
common share outstanding.............. (4,675) (4,675)
---------- -------- ---------- -------- -------- --------- ----------
Balance, March 31, 2004................ $ 208,993 $388,646 $ (12,481) $ 31,729 $ (2,903) $ (2,861) $ 611,123
========== ======== ========== ======== ======== ========= ==========
See Notes to Consolidated Financial Statements.
3
IDEX CORPORATION AND SUBSIDIARIES
CONSOLIDATED CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
FIRST QUARTER
ENDED MARCH 31,
--------------------
2004 2003
-------- --------
Cash flows from operating activities
Net income ......................................................... $ 17,692 $ 12,695
Adjustments to reconcile to net cash from operating activities:
Depreciation and amortization .................................. 6,976 7,282
Amortization of intangibles .................................... 143 154
Amortization of unearned compensation .......................... 509 475
Amortization of debt issuance expenses ......................... 145 145
Deferred income taxes .......................................... 1,143 1,402
Changes in:
Receivables - net ........................................... (9,729) (6,736)
Inventories ................................................. (1,668) (1,544)
Trade accounts payable ...................................... 6,817 3,302
Accrued expenses ............................................ 5,336 181
Other - net .................................................... (7,904) (496)
-------- --------
Net cash flows from operating activities ...................... 19,460 16,860
Cash flows from investing activities
Additions to property, plant and equipment ..................... (5,348) (3,792)
Acquisition of businesses, net of cash acquired ................ (40,648) (8,000)
Other - net .................................................... 330 3,037
-------- --------
Net cash flows from investing activities ..................... (45,666) (8,755)
Cash flows from financing activities
Borrowings under credit facilities for acquisitions ............ 40,648 8,000
Net repayments under credit facilities ......................... (16,644) (6,432)
Repayments (borrowings) of other long-term debt ................ 643 (2,268)
Dividends paid ................................................. (4,628) (4,551)
Proceeds from stock option exercises ........................... 8,017 548
Other - net .................................................... (2,550) (2,582)
-------- --------
Net cash flows from financing activities ..................... 25,486 (7,285)
-------- --------
Net (decrease) increase in cash .................................... (720) 820
Cash and cash equivalents at beginning of year ..................... 8,552 6,952
-------- --------
Cash and cash equivalents at end of period ......................... $ 7,832 $ 7,772
======== ========
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for:
Interest ...................................................... $ 5,841 $ 6,176
Income taxes .................................................. (881) 947
Significant non-cash activities:
Debt assumed upon acquisition of businesses ................... - -
See Notes to Consolidated Financial Statements.
4
IDEX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
1. BUSINESS SEGMENTS
Information on IDEX's business segments is presented below, based on
the nature of products and services offered. IDEX evaluates performance based on
several factors, of which operating income is the primary financial measure.
Intersegment sales are accounted for at fair value as if the sales were to third
parties.
FIRST QUARTER
ENDED MARCH 31,
----------------------
2004 2003
--------- ---------
Net sales
Pump Products:
External customers ...................... $ 120,538 $ 110,212
Intersegment sales ...................... 672 792
--------- ---------
Total group sales ..................... 121,210 111,004
--------- ---------
Dispensing Equipment:
External customers ...................... 41,619 39,282
Intersegment sales ...................... - -
--------- ---------
Total group sales ..................... 41,619 39,282
--------- ---------
Other Engineered Products:
External customers ...................... 52,443 46,004
Intersegment sales ...................... 1 -
--------- ---------
Total group sales ..................... 52,444 46,004
--------- ---------
Intersegment elimination .................. (673) (792)
--------- ---------
Total net sales ....................... $ 214,600 $ 195,498
========= =========
Operating income
Pump Products ............................. $ 18,800 $ 15,675
Dispensing Equipment ...................... 7,896 4,852
Other Engineered Products ................. 10,669 7,150
Corporate office and other ................ (6,079) (4,276)
--------- ---------
Total operating income ............... $ 31,286 $ 23,401
========= =========
2. ACQUISITIONS
On January 6, 2004, the company acquired Manfred Vetter GmbH, based in
Zulpich, Germany. Vetter, with annual sales of approximately $15 million,
designs and manufactures pneumatic lifting and sealing bags for vehicle and air
rescue, environmental protection, industrial maintenance, and disaster recovery
and control. Vetter will operate as part of our Hale business unit. IDEX
acquired Vetter for an aggregate purchase price of $40.6 million, with financing
provided by borrowings under the company's credit facilities. This acquisition
also contains a purchase price contingency, which is not considered material to
the company.
On April 26, 2004, the company announced that it has entered into a
definitive agreement to acquire Scivex, Inc., a leading provider of fluidic
components and systems for the analytical, biotechnology and diagnostic
instrumentation markets. Scivex operates Upchurch Scientific in Oak Harbor,
Washington, Sapphire Engineering in Pocasset, Massachusetts, and J.L. White in
Santa Clara, California, and has annual sales of approximately $31 million. It
is expected that Scivex will be operated as a stand-alone business in IDEX's
Pump Products Group.
On April 28, 2004, the company acquired Systec, Inc., based in New
Brighton, Minnesota. Systec, with annual sales of approximately $9 million,
designs and manufactures vacuum degassing products for the analytical chemistry
instrumentation market. Degassing of fluids is critical to the instrumentation
and analytical chemistry markets since dissolved gasses within a given fluid can
be detrimental to the accuracy of test results. Systec will operate as part of
IDEX's Pump Products Group.
5
IDEX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
The Company does not consider any of the acquisitions to be material to
its financial position, liquidity or results of operations.
3. EARNINGS PER COMMON SHARE
Earnings per common share (EPS) are computed by dividing net income by
the weighted average number of shares of common stock (basic) plus common stock
equivalents outstanding (diluted) during the period. Common stock equivalents
consist of stock options, which have been included in the calculation of
weighted average shares outstanding using the treasury stock method, unvested
restricted shares, and shares issuable in connection with certain deferred
compensation agreements (DCUs). Basic weighted average shares reconciles to
diluted weighted average shares as follows:
FIRST QUARTER
ENDED MARCH 31,
---------------
2004 2003
------ ------
Basic weighted average common shares outstanding ............................. 32,983 32,291
Dilutive effect of stock options, unvested restricted shares, and DCUs ....... 1,203 514
------ ------
Diluted weighted average common shares outstanding ........................... 34,186 32,805
====== ======
4. INVENTORIES
The components of inventories as of March 31, 2004 and December 31,
2003 were:
MARCH 31, DECEMBER 31,
2004 2003
--------- -----------
Raw materials ............................... $ 41,502 $ 38,998
Work-in-process ............................. 13,270 13,651
Finished goods .............................. 54,305 52,655
-------- --------
Total .............................. $109,077 $105,304
======== ========
Those inventories which were carried on a LIFO basis amounted to
$93,380 and $90,812 at March 31, 2004 and December 31, 2003, respectively. The
impact on earnings of using the LIFO method is not material.
5. COMMON AND PREFERRED STOCK
The company had five million shares of preferred stock authorized but
unissued at March 31, 2004 and December 31, 2003.
6
IDEX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
6. STOCK OPTIONS
The company uses the intrinsic-value method of accounting for stock
option awards as prescribed by Accounting Principles Bulletin No. 25 and,
accordingly, does not recognize compensation expense for its stock option awards
in the Consolidated Statements of Operations. The following table reflects
pro-forma net income and net income per common share had the company elected to
adopt the fair value approach of Statement of Financial Accounting Standards No.
123, "Accounting for Stock-Based Compensation."
FIRST QUARTER
ENDED MARCH 31,
-----------------------
2004 2003
---------- ----------
Net income
As reported ................. $ 17,692 $ 12,695
========== ==========
Pro forma ................... $ 16,470 $ 11,503
========== ==========
Basic EPS
As reported ................. $ .54 $ .39
========== ==========
Pro forma ................... $ .50 $ .36
========== ==========
Diluted EPS
As reported ................. $ .52 $ .39
========== ==========
Pro forma ................... $ .48 $ .35
========== ==========
7. RETIREMENT BENEFITS
The company sponsors several qualified and nonqualified defined benefit
and defined contribution pension plans and other postretirement plans for its
employees. The following table provides the components of net periodic benefit
cost for its major defined benefit plans and its other postretirement plans.
PENSION BENEFITS OTHER BENEFITS
------------------ -----------------
FIRST QUARTER FIRST QUARTER
ENDED MARCH 31, ENDED MARCH 31,
------------------ -----------------
2004 2003 2004 2003
------- ------- ------- -------
Service cost .......................... $ 1,097 $ 844 $ 100 $ 95
Interest cost ......................... 1,252 1,054 279 308
Expected return on plan assets ........ (1,126) (773) - -
Net amortization ...................... 760 721 29 (9)
------- ------- ------- -------
Net periodic benefit cost ............. $ 1,983 $ 1,846 $ 408 $ 394
======= ======= ======= =======
The company previously disclosed in its financial statements for the
year ended December 31, 2003, that it expected to contribute approximately $9.0
million to these pension plans and $.7 million to its other postretirement
benefit plans in 2004. As of March 31, 2004, $8.6 million of contributions have
been made to the pension plans and $.1 million has been made to its other
postretirement benefit plans. The company presently anticipates contributing an
additional $.8 million and $.4 million to fund the pension plans and other
postretirement benefit plans, respectively, in 2004 for a total of $9.4 million
and $.5 million.
8. LEGAL PROCEEDINGS
IDEX is a party to various legal proceedings arising in the ordinary
course of business, none of which is expected to have a material adverse effect
on its business, financial condition or results of operations.
7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
HISTORICAL OVERVIEW AND OUTLOOK
IDEX Corporation 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. Levels of capacity utilization and capital
spending in certain industries are among the factors that influence the demand
for our products.
We have a history of achieving above-average operating margins. Our
operating margins have exceeded the average operating margin for the companies
that comprise the Value Line Composite Index (VLCI) every year since 1988. We
view the VLCI operating performance statistics as a proxy for an average
industrial company. Our operating margins are influenced by, among other things,
utilization of facilities as sales volumes change and inclusion of newly
acquired businesses. Newly acquired businesses may have lower operating margins
than the company's operating margins.
For the three months ended March 31, 2004, we reported higher orders,
sales, operating income, net income and diluted earnings per share as compared
with the same period of last year. We are encouraged by the company's financial
and operating performance during the first three months of 2004. Improving
economic conditions and global demand enabled our business units to deliver
historic high levels of orders and sales and a 39% increase in first quarter
earnings. The quarter reflects our ninth consecutive quarter of year-over-year
gross margin expansion, our seventh consecutive quarter of year-over-year
earnings growth, and our sixth consecutive quarter of year-over-year growth in
base business sales. Organic revenue growth in our pump and engineered products
businesses more than offset the slight weakness we experienced during the
quarter in dispensing equipment sales.
The following forward-looking statements are qualified by the
cautionary statement under the Private Securities Litigation Reform Act set
forth below. Business conditions in the first three months of 2004 certainly
improved from the prior year and our performance in subsequent quarters will
depend on the strength of the economic recovery. As a short-cycle business, our
performance is reliant upon the current pace of incoming orders, and we have
limited visibility on future business conditions. We believe IDEX is well
positioned for earnings growth as the economy improves. This is based on our
lower cost levels resulting from our restructuring actions; our operational
excellence initiatives; and our use of strong cash flow to cut debt and interest
expense. We continue to invest in new products, applications and global markets,
while pursuing strategic acquisitions to help drive IDEX's longer term
profitable growth.
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 terrorist attacks
and wars; levels of industrial activity and economic conditions in the U.S. and
other countries around the world; pricing pressures and other competitive
factors, and levels of capital spending in certain industries - all of which
could have a material impact on our order rates and results, particularly in
light of the low levels of order backlogs we typically maintain; our ability to
make acquisitions and to integrate and operate acquired businesses on a
profitable basis; the relationship of the U.S. dollar to other currencies and
its impact on pricing and cost competitiveness; political and economic
conditions in foreign countries in which we operate; interest rates; capacity
utilization and the effect this has on costs; labor markets; market conditions
and material costs; and developments with respect to contingencies, such as
litigation and environmental matters. The forward-looking statements included
here are only made as of the date of this report, and we undertake no obligation
to publicly update them to reflect subsequent events or circumstances. Investors
are cautioned not to rely unduly on forward-looking statements when evaluating
the information presented here.
8
RESULTS OF OPERATIONS
For purposes of this discussion and analysis section, reference is made
to the table on the following page and the company's Consolidated Statements of
Operations included in the Financial Statements section. IDEX consists of three
reporting groups: Pump Products, Dispensing Equipment and Other Engineered
Products.
PERFORMANCE IN THE THREE MONTHS ENDED MARCH 31, 2004 COMPARED TO THE SAME PERIOD
OF 2003
For the three months ended March 31, 2004, orders, sales and profits
were higher than the comparable first quarter of last year. New orders for the
latest three months totaled $237.8 million, 15% higher than the same period last
year. Excluding the impact of foreign currency translation and the Sponsler
(June 2003), Classic (September 2003) and Vetter (January 2004) acquisitions,
orders were 7% higher than the first quarter of 2003.
Sales in the first quarter were $214.6 million, a 10% improvement from
last year's first quarter as base business shipments grew 3%, foreign currency
translation provided a 5% improvement and acquisitions accounted for a 2%
increase. Base business sales grew 4% domestically and 2% internationally during
the quarter. Sales to international customers from base businesses represented
approximately 44% of total sales for both the 2004 and 2003 first quarters.
For the quarter, the Pump Products Group contributed 56% of sales and
50% of operating income, the Dispensing Equipment Group accounted for 19% of
sales and 21% of operating income, and the Other Engineered Products Group
represented 25% of sales and 29% of operating income.
Pump Products Group sales of $121.2 million for the three months ended
March 31, 2004, were $10.2 million, or 9%, higher than the prior year mainly due
to increased base business activity, favorable foreign currency translation, and
the acquisition of Sponsler and Classic in June 2003 and September 2003,
respectively. Compared with the first quarter last year, acquisitions accounted
for a 3% sales improvement, foreign currency translation added 2%, while base
business shipments were up 4%. In the first quarter of 2004, base business sales
grew 6% domestically and 2% internationally. Base business sales to customers
outside the U.S. were approximately 38% of total group sales in both periods.
Dispensing Equipment Group sales of $41.6 million increased $2.3
million, or 6%, in the first quarter of 2004 compared with last year's first
quarter. This increase was attributed to favorable foreign currency translation
of 10% partially offset by a 4% decrease in base business volume related to
weaker domestic demand. In the first quarter of 2004, base business sales
decreased 10% domestically and 1% internationally. Base business sales to
customers outside the U.S. were approximately 61% of total group sales in the
2004 quarter, compared with 59% in 2003.
Other Engineered Products Group sales of $52.4 million increased by
$6.4 million, or 14%, in the first quarter of 2004 compared with 2003. This
increase reflects a 6% increase in base business volume, favorable foreign
currency translation of 6% and a 2% increase due to acquisitions. In the first
quarter of 2004, base business sales increased 8% domestically and 5%
internationally. Base business sales to customers outside the U.S. were
approximately 42% of total group sales in both periods.
9
IDEX CORPORATION AND SUBSIDIARIES
COMPANY AND BUSINESS GROUP FINANCIAL INFORMATION
(IN THOUSANDS)
(UNAUDITED)
FIRST QUARTER
ENDED MARCH 31, (1)
--------------------
2004 2003
-------- --------
Pump Products Group
Net sales .............................. $121,210 $111,004
Operating income (2) ................... 18,800 15,675
Operating margin ....................... 15.5% 14.1%
Depreciation and amortization .......... $ 3,859 $ 4,432
Capital expenditures ................... 3,733 2,339
Dispensing Equipment Group
Net sales .............................. $ 41,619 $ 39,282
Operating income (2) ................... 7,896 4,852
Operating margin ....................... 19.0% 12.4%
Depreciation and amortization .......... $ 1,430 $ 1,574
Capital expenditures ................... 651 414
Other Engineered Products Group
Net sales .............................. $ 52,444 $ 46,004
Operating income (2) ................... 10,669 7,150
Operating margin ....................... 20.3% 15.5%
Depreciation and amortization .......... $ 1,432 $ 1,300
Capital expenditures ................... 844 1,008
Company
Net sales .............................. $214,600 $195,498
Operating income ....................... 31,286 23,401
Operating margin ....................... 14.6% 12.0%
Depreciation and amortization (3) ...... $ 7,628 $ 7,911
Capital expenditures ................... 5,348 3,792
(1) Includes acquisition of Sponsler Co., Inc. (June 2003) and Classic
Engineering, Inc. (September 2003) in the Pump Products Group and
Manfred Vetter GmbH (January 2004) in the Other Engineered Products
Group from the dates of acquisition.
(2) Group operating income excludes unallocated corporate operating
expenses in both years.
(3) Excludes amortization of debt issuance expenses.
10
Gross profit of $85.7 million in the first quarter of 2004 increased by
$11.4 million, or 15%, from 2003. Gross profit as a percent of sales was 39.9%
in 2004 and increased from 38.0% in 2003. The improved gross margins primarily
reflected volume leverage and savings realized from the company's Global
Sourcing, Six Sigma, Kaizen and Lean Manufacturing initiatives.
Selling, general and administrative expenses (SG&A) increased to $54.4
million in 2004 from $50.9 million in 2003, and as a percent of sales was 25.3%,
down from 26.0% in 2003. The increase in SG&A expenses reflected acquisitions,
currency effects, and expenses related to higher volume in this year's first
quarter partially offset by higher than normal legal, professional and other
costs in the first quarter of 2003.
Operating income increased by $7.9 million, or 34%, to $31.3 million in
2004 from $23.4 million in 2003, primarily reflecting the higher gross margins
partially offset by the increased SG&A expenses. First quarter operating margins
were 14.6% of sales, 2.6 percentage points higher than at this time last year.
The improvement from last year resulted from the 1.9 percentage point increase
in gross margins and a .7 percentage point decrease in SG&A as a percent of
sales. In the Pump Products Group, operating income of $18.8 million and
operating margins of 15.5% in 2004 were up from the $15.7 million and 14.1%
recorded in 2003 principally due to increased volumes. Operating income for the
Dispensing Equipment Group of $7.9 million and operating margins of 19.0% in
2004 were up from the $4.9 million and 12.4% in 2003 due to favorable sales
volumes and higher than normal expenses in the first quarter of 2003. Operating
income in the Other Engineered Products Group of $10.7 million and operating
margins of 20.3% in 2004 increased from $7.2 million and 15.5% achieved in 2003
and primarily reflected increased sales volume and a more favorable mix of
product shipments.
Interest expense decreased to $3.4 million in the first quarter of 2004
from $3.7 million in 2003. This reduction was principally attributable to lower
debt levels this year due to debt paydowns from operating cash flow and a
slightly lower interest rate environment.
The provision for income taxes increased to $10.2 million in 2004 from
$7.0 million in 2003. The effective tax rate increased to 36.5% in 2004 from
35.5% in 2003 due to a greater proportion of income in higher tax jurisdictions
and the resolution of certain tax matters.
Net income for the current quarter was $17.7 million, 39% higher than
the $12.7 million earned in the first quarter of 2003. Diluted earnings per
share in the first quarter of 2004 of $.52 increased $.13 compared with the
first quarter of 2003.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2004, working capital was $108.0 million and our current
ratio was 1.8 to 1. Cash flows from operating activities increased $2.5 million,
or 15%, to $19.4 million in 2004 mainly due to the improved operating results
discussed above, offset by a contribution to one of our pension plans of $6.7
million in 2004.
Cash flow provided from operations was more than adequate to fund
capital expenditures of $5.3 million and $3.8 million in the first quarter of
2004 and 2003, respectively. Capital expenditures were generally for machinery
and equipment that improved productivity and tooling to support IDEX's Global
Sourcing initiatives, although a portion was for business system technology and
replacement of equipment and facilities. Management believes that IDEX has ample
capacity in its plant and equipment to meet expected needs for future growth in
the intermediate term.
In January 2004, the company acquired Manfred Vetter at a cost of $40.6
million. In February 2003, an $8.0 million payment of deferred consideration was
made in respect of the Rheodyne acquisition, which was consummated in July 2002.
All payments for acquisitions, including the pending payments for the
acquisitions of Scivex and Systec, were financed under the company's credit
facility.
In addition to the $150.0 million of 6.875% Senior Notes due February
15, 2008, the company also has a $300.0 million domestic multi-currency bank
revolving credit facility (Credit Facility), which expires June 8, 2006. At
March 31, 2004, the maximum amount available under the Credit Facility was
$300.0 million, of which $30.0 million was borrowed, with outstanding letters of
credit totaling $4.0 million. The Credit Facility contains a covenant that
limits total debt outstanding to three times operating cash flow, as defined in
the agreement. Our total debt outstanding was $198.8 million at March 31, 2004,
and based on the covenant, total debt outstanding was limited to $456.5 million.
Interest is payable quarterly on the outstanding balance at the agent bank's
reference rate
11
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. On March 27,
2003, Standard & Poor's upgraded its corporate credit and senior unsecured debt
ratings on IDEX to BBB from BBB-. As a result of this change, at March 31, 2004,
the applicable margin was 57.5 basis points and the utilization fee was zero. We
also pay an annual fee of 17.5 basis points on the total Credit Facility.
In December 2001, we, and certain of our subsidiaries, entered into a
one-year, renewable agreement with a financial institution, under which we
collateralized certain receivables for borrowings (Receivables Facility). This
agreement was renewed in December 2003 for another year. The Receivables
Facility provides for borrowings of up to $25.0 million, depending upon the
level of eligible receivables. At March 31, 2004, there were no borrowings
outstanding under the Receivables Facility.
We also have a $30.0 million demand line of credit (Short-Term
Facility), which expires May 21, 2004. Borrowings under the Short-Term Facility
are at LIBOR plus the applicable margin in effect under the Credit Facility. At
March 31, 2004, $8.0 million was borrowed under this facility at an interest
rate of 1.68% per annum.
We believe the company will generate sufficient cash flow from
operations for the next twelve months and in the long term to meet its operating
requirements, interest on all borrowings, required debt repayments, any
authorized share repurchases, planned capital expenditures, and annual dividend
payments to holders of common stock. Since we began operations in January 1988
and through March 31, 2004, we have borrowed approximately $947.0 million under
our various credit agreements to complete 25 acquisitions. During the same
period we generated, principally from operations, cash flow of $913.0 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.
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
are no identifiable events or uncertainties, including the lowering of our
credit rating, that would accelerate payment or maturity of any of these
commitments or obligations.
CRITICAL ACCOUNTING ESTIMATES
We believe that the application of the following accounting policies,
which are important to our financial position and results of operations,
requires significant judgments and estimates on the part of management. For a
summary of all of our accounting policies, including the accounting policies
discussed below, see Note 1 of the Notes to Consolidated Financial Statements in
our 2003 Annual Report on Form 10-K.
Revenue Recognition - We recognize revenue from products sales when title passes
and the risks of ownership have passed to the customer, based on the terms of
the sale. Our customary terms are FOB shipping point. We estimate and record
provisions for sales returns, sales allowances and original warranties in the
period the related products are sold, in each case based on our historical
experience. To the extent actual results differ from these estimated amounts,
results could be adversely affected.
Noncurrent assets - The company evaluates the recoverability of certain
noncurrent assets utilizing various estimation processes. In particular, the
recoverability of March 31, 2004 balances for goodwill and intangible assets of
$592.5 million and $19.5 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 and estimated future cash flows
(derived from estimated earnings and cash flow multiples). The recoverability of
these assets depends on the reasonableness of these assumptions and how they
compare with the eventual operating performance of the specific businesses to
which the assets are attributed. To the extent actual business values or cash
flows differ from those estimated amounts, the recoverability of these
noncurrent assets could be affected.
Income taxes - Deferred taxes are recognized for the future tax effects of
temporary differences between financial and income tax reporting using tax rates
in effect for the years in which the differences are expected to reverse.
Federal income taxes are provided on that portion of the income of foreign
subsidiaries that is expected to be remitted to the United States and be
taxable. The management of the company, along with third-party advisors,
12
periodically estimates the company's probable tax obligations using historical
experience in tax jurisdictions and informed judgments. To the extent actual
results differ from these estimated amounts, results could be adversely
affected.
Contingencies and litigation - We are currently involved in certain legal and
regulatory proceedings and, as required and where it is reasonably possible to
do so, have accrued our estimates of the probable costs for the resolution of
these matters. These estimates have been developed in consultation with outside
counsel and are based upon an analysis of potential results, assuming a
combination of litigation and settlement strategies. It is possible, however,
that future operating results for any particular quarterly or annual period
could be materially affected by changes in our assumptions or the effectiveness
of our strategies related to these proceedings.
Defined benefit retirement plans - The plan obligations and related assets of
defined benefit retirement plans are presented in Note 14 of the Notes to
Consolidated Financial Statements in the 2003 Annual Report on Form 10-K. Plan
assets, which consist primarily of marketable equity and debt instruments, are
valued using market quotations. Plan obligations and the annual pension expense
are determined by consulting actuaries using a number of assumptions. Key
assumptions in measuring the plan obligations include the discount rate at which
the obligation could be effectively settled and the anticipated rate of future
salary increases. Key assumptions in the determination of the annual pension
expense include the discount rate, the rate of salary increases, and the
estimated future return on plan assets. To the extent actual amounts differ from
these assumptions and estimated amounts, results could be adversely affected.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We are subject to market risk associated with changes in interest rates
and foreign currency exchange rates. Interest rate exposure is limited to the
$198.8 million of total debt outstanding at March 31, 2004. Approximately 24% 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 $.2 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 principally to the
euro and British pound. We manage our foreign exchange risk principally through
invoicing our customers in the same currency as the source of our products. As a
result, the company's exposure to any movement in foreign currency exchange
rates is immaterial to the Consolidated Statements of Operations.
At December 31, 2003 the company had a foreign currency contract that
it entered into in anticipation of the funding of the January 2004 purchase of
Manfred Vetter.
ITEM 4. CONTROLS AND PROCEDURES.
The company maintains disclosure controls and procedures that are
designed to ensure that information required to be disclosed in the company's
Exchange Act reports is recorded, processed, summarized and reported within the
time periods specified in the SEC's rules and forms, and that such information
is accumulated and communicated to the company's management, including its Chief
Executive Officer and Chief Financial Officer, as appropriate, to allow timely
decisions regarding required disclosure. In designing and evaluating the
disclosure controls and procedures, management recognized that any controls and
procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives, and management
is required to apply its judgment in evaluating the cost-benefit relationship of
possible controls and procedures.
As required by SEC Rule 13a-15(b), the company carried out an
evaluation, under the supervision and with the participation of the company's
management, including the company's Chief Executive Officer and the company's
Chief Financial Officer, of the effectiveness of the design and operation of the
company's disclosure controls and procedures as of the end of the period covered
by this report. Based on the foregoing, the company's Chief
13
Executive Officer and Chief Financial Officer concluded that the company's
disclosure controls and procedures were effective at the reasonable assurance
level.
There has been no change in the company's internal controls over
financial reporting during the company's most recent fiscal quarter that has
materially affected, or is reasonably likely to materially affect, the company's
internal control over financial reporting.
14
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
IDEX and nine of its subsidiaries have been named as defendants in a
number of lawsuits claiming various asbestos-related personal injuries,
allegedly as a result of exposure to products manufactured with components that
contained asbestos. Such components were acquired from third party suppliers,
and were not manufactured by any of the subsidiaries. To date, all of the
company's settlements and legal costs, except for costs of coordination,
administration, insurance investigation and a portion of defense costs, have
been covered in full by insurance subject to applicable deductibles. However,
the company cannot predict whether and to what extent insurance will be
available to continue to cover such settlements and legal costs, or how insurers
may respond to claims that are tendered to them.
Claims have been filed in Alabama, California, Connecticut, Georgia,
Illinois, Louisiana, Michigan, Mississippi, Nevada, New Jersey, New York, Ohio,
Pennsylvania, Texas, Utah 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 is expected to have a material
adverse effect on its business, financial condition or results of operations.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
Total Number of Maximum Number
Shares Purchased as of Shares that May
Part of Publicly Yet be Purchased
Total Number of Average Price Announced Plans Under the Plans
Period Shares Purchased Paid per Share or Programs or Programs
------ ---------------- --------------- -------------------- ------------------
January 1, 2004 to
March 31, 2004 - - - 1,493,500
On October 20, 1998 IDEX's Board of Directors authorized the repurchase
of up to 1.5 million shares of its common stock, either at market prices or on a
negotiated basis as market conditions warrant.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The company held its Annual Shareholders' Meeting on Tuesday, March 23,
2004 and voted on two matters. The first matter was the election of three
directors to serve a three-year term on the Board of Directors of IDEX
Corporation. The following persons received a plurality of votes cast for Class
III directors.
Director For Withheld Broker Non-votes
-------- --- -------- ----------------
Paul E. Raether 20,964,116 9,708,924 -
Neil A. Springer 28,117,478 2,555,563 -
Dennis K. Williams 28,311,505 2,361,536 -
In addition to the Class III directors named above, the following
directors' terms also continued after the March 23, 2004 Annual Shareholders'
Meeting.
Bradley J. Bell Gregory B. Kenny
Frank S. Hermance Michael T. Tokarz
Secondly, shareholders voted on a proposal to appoint Deloitte & Touche
LLP as auditors. The proposal received a majority of the votes cast as follows:
Affirmative votes 29,425,683
Negative votes 1,244,617
Abstentions 2,741
Broker Non-votes -
ITEM 5. OTHER INFORMATION.
There has been no material change to the procedures by which security
holders may recommend nominees to the company's board.
15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
The exhibits listed in the accompanying "Exhibit Index" are
filed as part of this report.
(b) Reports on Form 8-K:
On January 22, 2004, we furnished a Current Report on Form 8-K
of a press release reporting our financial results for the
fourth quarter and full year ended December 31, 2004.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
IDEX CORPORATION
May 4, 2004 /s/ DOMINIC A. ROMEO
-------------------------------------
Dominic A. Romeo
Vice President and Chief Financial Officer
(duly authorized principal financial officer)
16
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
3.1 Restated Certificate of Incorporation of IDEX Corporation (formerly
HI, Inc.) (incorporated by reference to Exhibit No. 3.1 to the
Registration Statement on Form S-1 of IDEX, et al., Registration No.
33-21205, as filed on April 21, 1988)
3.1(a) Amendment to Restated Certificate of Incorporation of IDEX
Corporation (formerly HI, Inc.), (incorporated by reference to
Exhibit No. 3.1(a) to the Quarterly Report of IDEX on Form 10-Q for
the quarter ended March 31, 1996, Commission File No. 1-10235)
3.2 Amended and Restated By-Laws of IDEX Corporation (incorporated by
reference to Exhibit No. 3.2 to Post-Effective Amendment No. 2 to
the Registration Statement on Form S-1 of IDEX, et al., Registration
No. 33-21205, as filed on July 17, 1989)
3.2(a) Amended and Restated Article III, Section 13 of the Amended and
Restated By-Laws of IDEX Corporation (incorporated by reference to
Exhibit No. 3.2(a) to Post-Effective Amendment No. 3 to the
Registration Statement on Form S-1 of IDEX, et al., Registration No.
33-21205, as filed on February 12, 1990)
4.1 Restated Certificate of Incorporation and By-Laws of IDEX
Corporation (filed as Exhibits No. 3.1 through 3.2 (a))
4.2 Indenture, dated as of February 23, 1998, between IDEX Corporation,
and Norwest Bank Minnesota, National Association, as Trustee,
relating to the 6-7/8% Senior Notes of IDEX Corporation due February
15, 2008 (incorporated by reference to Exhibit No. 4.1 to the
Current Report of IDEX on Form 8-K dated February 23, 1998,
Commission File No. 1-10235)
4.3 Specimen Senior Note of IDEX Corporation (incorporated by reference
to Exhibit No. 4.1 to the Current Report of IDEX on Form 8-K dated
February 23, 1998, Commission File No. 1-10235)
4.4 Specimen Certificate of Common Stock of IDEX Corporation
(incorporated by reference to Exhibit No. 4.3 to the Registration
Statement on Form S-2 of IDEX, et al., Registration No. 33-42208, as
filed on September 16, 1991)
4.5 Credit Agreement, dated as of June 8, 2001, among IDEX Corporation,
Bank of America N.A. as Agent and Issuing Bank, and the Other
Financial Institutions Party Hereto (incorporated by reference to
Exhibit No. 4.5 to the Quarterly Report of IDEX on Form 10-Q for the
quarter ended June 30, 2001, Commission File No. 1-10235)
4.6 Credit Lyonnais Uncommitted Line of Credit, dated as of December 3,
2001 (incorporated by reference to Exhibit 4.6 to the Annual Report
of IDEX on Form 10-K for the year ended December 31, 2001,
Commission File No. 1-10235)
4.6(a) Amendment No. 2 dated as of May 24, 2003 to the Credit Lyonnais
Uncommitted Line of Credit Agreement dated December 3, 2001
(incorporated by reference to Exhibit 4.6 (a) to the Quarterly
Report of IDEX on Form 10-Q for the quarter ended June 30, 2003,
Commission File No. 1-10235)
4.7 Receivables Purchase Agreement dated as of December 20, 2001 among
IDEX Receivables Corporation, as Seller, IDEX Corporation, as
Servicer, Falcon Asset Securitization Corporation, the Several
Financial Institutions from Time to Time Party Hereto, and Bank One,
NA (Main Office Chicago), as Agent (incorporated by reference to
Exhibit 4.7 to the Annual Report of IDEX on Form 10-K for the year
ended December 31, 2001, Commission File No. 1-10235)
4.7(a) Second Amended and Restated Fee Letter dated as of December 17,
2003 of the Receivables Purchase Agreement dated as of December 20,
2001 (incorporated by reference to Exhibit 4.7 (a) to the Annual
Report of IDEX on Form 10-K for the year ended December 31, 2003,
Commission File No. 1-10235)
*10.1** First Amendment to the IDEX Corporation 1996 Deferred Compensation
Plan for Officers dated March 23, 2004
17
EXHIBIT INDEX (CON'T.)
EXHIBIT
NUMBER DESCRIPTION
*31.1 Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)
or Rule 15d-14(a)
*31.2 Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)
or Rule 15d-14(a)
*32.1 Certification pursuant to Section 1350 of Chapter 63 of Title 18 of
the United States Code
*32.2 Certification pursuant to Section 1350 of Chapter 63 of Title 18 of
the United States Code
--------------------
* Filed herewith
** Management contract or compensatory plan or agreement
18
EXHIBIT 10.1
FIRST AMENDMENT TO IDEX CORPORATION 1996 DEFERRED
COMPENSATION PLAN FOR OFFICERS
WHEREAS, this corporation has adopted the 1996 Deferred Compensation
Plan for Officers (the "Plan");
WHEREAS, the Plan provides for deferred compensation units which are
denominated in common stock, and when distributions are made from the Plan with
respect to deferred compensation units, such distributions are made in the form
of common stock under the 1996 Stock Plan for Officers of IDEX Corporation (the
"1996 Officers Stock Plan");
WHEREAS, this corporation has also adopted the 2001 Stock Plan for
Officers of IDEX Corporation (the "2001 Officers Stock Plan") which provides for
the payment of common stock pursuant to deferred compensation plans;
WHEREAS, it is desirable to amend the Plan to provide that deferred
compensation units credited after the date hereof be paid from common stock
under the 2001 Officers Stock Plan.
NOW, THEREFORE, it is resolved that the Plan is amended effective March
23, 2003 as follows:
1. By deleting the last sentence of the first paragraph of the
Plan.
2. By substituting the following under Section 1.25 definition
of Officers Stock Plan:
"Officers Stock Plan" shall mean (i) for distribution, of Common Stock
with respect to Deferred Compensation Units credited prior to March 23, 2004,
the 1996 Stock Plan for Officers of IDEX Corporation, and (ii) for distribution,
of Common Stock with respect to Deferred Compensation Units credited on or after
March 23, 2004, the 2001 Stock Plan for Officers of IDEX Corporation. Any
investment of Deferred Amounts into the Deferred Compensation Units Account and
subsequent distribution of Common Stock pursuant to Article V shall be subject
to and in accordance with the applicable Officers Stock Plan which are
incorporated herein by reference.
In all other respects the Plan shall remain in full force and effect.
FURTHER RESOLVED, that the officers of this corporation are authorized
to produce a copy of the Plan as conformed to reflect the foregoing amendment
and to take all action appropriate and necessary to effectuate the foregoing
amendment.
* * * * * *
I, Frank Notaro, the Vice President - General Counsel and Secretary of
IDEX Corporation do hereby certify that the foregoing Amendment was adopted by
the Board of Directors of IDEX Corporation at a duly held meeting on March, 23
2004.
- ----------------------------------
Vice President - General Counsel and
Secretary as Aforesaid
EXHIBIT 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Dennis K. Williams, certify that:
1. I have reviewed this quarterly report on Form 10-Q of IDEX Corporation;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
c) disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in
the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent function):
a) all significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonable likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
May 4, 2004 /s/ DENNIS K. WILLIAMS
-----------------------------------------------
Dennis K. Williams
Chairman, President and Chief Executive Officer
EXHIBIT 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
I, Dominic A. Romeo, certify that:
1. I have reviewed this quarterly report on Form 10-Q of IDEX Corporation;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
c) disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in
the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent function):
a) all significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
May 4, 2004 /s/ DOMINIC A. ROMEO
------------------------------------------
Dominic A. Romeo
Vice President and Chief Financial Officer
EXHIBIT 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
Pursuant to 18 U.S.C. Section 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 Quarterly Report on Form 10-Q of the Company for the
quarterly period ended March 31, 2004 (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.
May 4, 2004 /s/ Dennis K. Williams
------------------------------------
Dennis K. Williams
Chairman, President and Chief Executive Officer
EXHIBIT 32.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
Pursuant to 18 U.S.C. Section 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 Quarterly Report on Form 10-Q of the Company for the
quarterly period ended March 31, 2004 (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.
May 4, 2004 /s/ Dominic A. Romeo
----------------------------------
Dominic A. Romeo
Vice President and Chief Financial Officer
