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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2005
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 1-10235
IDEX CORPORATION
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 36-3555336
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
630 DUNDEE ROAD, NORTHBROOK, ILLINOIS 60062
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (847) 498-7070
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
Yes [X] No [ ]
Number of shares of common stock of IDEX Corporation outstanding as of
April 30, 2005: 51,095,074 (net of treasury shares).
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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,
2005 2004
----------- -----------
ASSETS
Current assets
Cash and cash equivalents ........................................................ $ 8,191 $ 7,274
Receivables - net ................................................................ 132,168 119,567
Inventories ...................................................................... 125,884 126,978
Other current assets ............................................................. 12,924 7,419
----------- -----------
Total current assets ........................................................... 279,167 261,238
Property, plant and equipment - net .................................................. 152,177 155,602
Goodwill - net ....................................................................... 704,671 713,619
Intangible assets - net .............................................................. 29,392 29,545
Other noncurrent assets .............................................................. 29,069 26,288
----------- -----------
Total assets ................................................................... $ 1,194,476 $ 1,186,292
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Trade accounts payable ........................................................... $ 72,926 $ 71,405
Dividends payable ................................................................ 6,143 6,105
Accrued expenses ................................................................. 68,275 70,745
----------- -----------
Total current liabilities ...................................................... 147,344 148,255
Long-term debt ....................................................................... 217,827 225,317
Other noncurrent liabilities ......................................................... 99,636 99,115
----------- -----------
Total liabilities .............................................................. 464,807 472,687
----------- -----------
Shareholders' equity
Common stock, par value $.01 per share
Shares issued and outstanding: 2005 - 51,077,943; 2004 - 50,996,444 ............. 511 510
Additional paid-in capital ...................................................... 243,702 234,354
Retained earnings ............................................................... 456,674 439,137
Minimum pension liability adjustment ............................................ (4,644) (4,644)
Accumulated translation adjustment .............................................. 44,273 53,046
Treasury stock, at cost: 2005 - 10,360; 2004 - 175,650 .......................... (327) (4,209)
Unearned compensation on restricted stock ....................................... (10,520) (4,589)
----------- -----------
Total shareholders' equity ..................................................... 729,669 713,605
----------- -----------
Total liabilities and shareholders' equity ..................................... $ 1,194,476 $ 1,186,292
=========== ===========
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,
---------------
2005 2004
-------- --------
Net sales .............................................. $252,058 $214,600
Cost of sales .......................................... 150,101 128,870
-------- --------
Gross profit ........................................... 101,957 85,730
Selling, general and administrative expenses ........... 61,262 54,444
-------- --------
Operating income ....................................... 40,695 31,286
Other income - net ..................................... 130 11
-------- --------
Income before interest expense and income taxes ........ 40,825 31,297
Interest expense ....................................... 3,879 3,436
-------- --------
Income before income taxes ............................. 36,946 27,861
Provision for income taxes ............................. 13,301 10,169
-------- --------
Net income ............................................. $ 23,645 $ 17,692
======== ========
Basic earnings per common share ........................ $ .47 $ .36
======== ========
Diluted earnings per common share ...................... $ .45 $ .35
======== ========
Share data:
Basic weighted average common shares outstanding ....... 50,679 49,475
Diluted weighted average common shares outstanding...... 52,383 51,279
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, 2004.............. $ 234,864 $439,137 $ (4,644) $ 53,046 $ (4,209) $ (4,589) $ 713,605
Net income.............................. 23,645 23,645
Other comprehensive income
Unrealized translation adjustment...... (8,773) (8,773)
---------- ----------
Other comprehensive income........ (8,773) (8,773)
--------- ---------- ----------
Comprehensive income.............. 23,645 (8,773) 14,872
--------- ---------- ----------
Issuance of 246,724 shares of
common stock from exercise of
stock options and deferred
compensation plans..................... 6,562 6,562
Issuance of restricted stock............ 2,787 3,882 (6,669) -
Amortization of restricted stock........ 738 738
Cash dividends declared - $.12 per
common share outstanding............... (6,108) (6,108)
--------- --------- --------- ---------- --------- --------- ----------
Balance, March 31, 2005................. $ 244,213 $456,674 $ (4,644) $ 44,273 $ (327) $ (10,520) $ 729,669
========= ========= ========= ========== ========= ========= ==========
See Notes to Consolidated Financial Statements.
-3-
IDEX CORPORATION AND SUBSIDIARIES
CONSOLIDATED CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
THREE MONTHS
ENDED MARCH 31,
---------------
2005 2004
-------- --------
Cash flows from operating activities
Net income .................................................... $ 23,645 $ 17,692
Adjustments to reconcile to net cash from operating activities:
Depreciation and amortization ............................. 6,958 6,976
Amortization of intangibles ............................... 181 143
Amortization of unearned compensation ..................... 738 509
Amortization of debt issuance expenses .................... 144 145
Deferred income taxes ..................................... 3,171 1,143
Changes in:
Receivables - net ...................................... (13,320) (9,729)
Inventories ............................................ (736) (1,668)
Trade accounts payable ................................. 1,721 6,817
Accrued expenses ....................................... (1,798) 5,336
Other - net ............................................... (4,437) (7,904)
-------- --------
Net cash flows from operating activities ................. 16,267 19,460
Cash flows from investing activities
Additions to property, plant and equipment ................ (5,707) (5,348)
Acquisition of businesses, net of cash acquired ........... (425) (40,648)
Other - net ............................................... 25 330
-------- --------
Net cash flows from investing activities ................ (6,107) (45,666)
Cash flows from financing activities
Borrowings under credit facilities for acquisitions ....... 425 40,648
Net repayments under credit facilities .................... (5,165) (16,644)
(Repayments) borrowings of other long-term debt ........... (41) 643
Dividends paid ............................................ (6,070) (4,628)
Proceeds from stock option exercises ...................... 4,004 8,017
Other - net ............................................... (2,396) (2,550)
-------- --------
Net cash flows from financing activities ................ (9,243) 25,486
-------- --------
Net increase (decrease) in cash ............................... 917 (720)
Cash and cash equivalents at beginning of year ................ 7,274 8,552
-------- --------
Cash and cash equivalents at end of period .................... $ 8,191 $ 7,832
======== ========
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for:
Interest ...................................................... $ 6,131 $ 5,841
Income taxes .................................................. 2,929 (881)
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,
---------------
2005 2004
--------- ---------
Net sales
Pump Products:
External customers ...................... $ 145,161 $ 120,538
Intersegment sales ...................... 1,137 672
--------- ---------
Total group sales ..................... 146,298 121,210
--------- ---------
Dispensing Equipment:
External customers ...................... 51,327 41,619
Intersegment sales ...................... -- --
--------- ---------
Total group sales ..................... 51,327 41,619
--------- ---------
Other Engineered Products:
External customers ...................... 55,570 52,443
Intersegment sales ...................... 2 1
--------- ---------
Total group sales ..................... 55,572 52,444
--------- ---------
Intersegment elimination .................. (1,139) (673)
--------- ---------
Total net sales ....................... $ 252,058 $ 214,600
========= =========
Operating income
Pump Products ............................. $ 24,331 $ 18,800
Dispensing Equipment ...................... 11,578 7,896
Other Engineered Products ................. 11,561 10,669
Corporate office and other................. (6,775) (6,079)
--------- ---------
Total operating income................ $ 40,695 $ 31,286
========= =========
2. 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,
---------------
2005 2004
------- -------
Basic weighted average common shares outstanding................................. 50,679 49,475
Dilutive effect of stock options, unvested restricted shares, and DCUs........... 1,704 1,804
------- -------
Diluted weighted average common shares outstanding............................... 52,383 51,279
======= =======
-5-
IDEX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
3. INVENTORIES
The components of inventories as of March 31, 2005 and December 31, 2004
were:
MARCH 31, DECEMBER 31,
2005 2004
--------- -----------
Raw materials................................................ $ 50,224 $ 52,824
Work-in-process.............................................. 15,019 14,181
Finished goods............................................... 60,641 59,973
--------- ---------
Total.................................................... $ 125,884 $ 126,978
========= =========
Inventories carried on a LIFO basis amounted to $102,094 and $104,957 at
March 31, 2005 and December 31, 2004, respectively. The impact on earnings of
using the LIFO method is not material.
4. COMMON AND PREFERRED STOCK
The Company had five million shares of preferred stock authorized but
unissued at March 31, 2005 and December 31, 2004.
5. STOCK OPTIONS
The Company uses the intrinsic-value method of accounting for stock option
awards as prescribed by Accounting Principles Board Opinion No. 25 and,
accordingly, does not recognize compensation expense for its stock option awards
in the 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,
---------------
2005 2004
--------- -----------
Net income
As reported............................................. $ 23,645 $ 17,692
========= =========
Pro forma............................................... $ 21,714 $ 16,470
========= =========
Basic EPS
As reported............................................. $ .47 $ .36
========= =========
Pro forma............................................... $ .43 $ .33
========= =========
Diluted EPS
As reported............................................. $ .45 $ .35
========= =========
Pro forma............................................... $ .42 $ .32
========= =========
-6-
IDEX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
6. RETIREMENT BENEFITS
The Company sponsors several qualified and nonqualified defined benefit
and defined contribution pension plans and other postretirement plans for its
employees. The following tables provide the components of net periodic benefit
cost for its major defined benefit plans and its other postretirement plans.
-------------------- ----------------------
PENSION BENEFITS OTHER BENEFITS
-------------------- ----------------------
FIRST QUARTER FIRST QUARTER
ENDED MARCH 31, ENDED MARCH 31,
-------------- --------------
2005 2004 2005 2004
------- ------- ------- -------
Service cost ............................ $ 1,365 $ 1,097 $ 120 $ 100
Interest cost ........................... 1,532 1,252 316 279
Expected return on plan assets........... (1,786) (1,126) -- --
Net amortization ........................ 818 760 20 29
------- ------- ------- -------
Net periodic benefit cost............ $ 1,929 $ 1,983 $ 456 $ 408
======= ======= ======= =======
The company previously disclosed in its financial statements for the year
ended December 31, 2004, that it expected to contribute approximately $1.6
million to these pension plans and $1.0 million to its other postretirement
benefit plans in 2005. As of March 31, 2005, $1.5 million of contributions have
been made to the pension plans and $.2 million has been made to its other
postretirement benefit plans. The company presently anticipates contributing an
additional $.7 million and $.8 million to fund the pension plans and other
postretirement benefit plans, respectively, in 2005 for a total of $2.2 million
and $1.0 million.
7. 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 and overall industrial activity are among the
factors that influence the demand for our products.
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, hair colorants and other personal care products; refinishing
equipment; and centralized lubrication systems. The Other Engineered Products
Group produces firefighting pumps, rescue tools, lifting bags and other
components and systems for the fire and rescue industry; and engineered
stainless steel banding and clamping devices used in a variety of industrial and
commercial applications.
IDEX has a history of achieving above-average operating margins. Our
operating margins have exceeded the average operating margin for the companies
that comprise the Value Line Composite Index (VLCI) every year since 1988. We
view the VLCI operating performance statistics as a proxy for an average
industrial company. Our operating margins are influenced by, among other things,
utilization of facilities as sales volumes change and inclusion of newly
acquired businesses.
Some of our key first quarter 2005 financial highlights were as follows:
o Orders were a record $266.6 million, 12% higher than a year ago; base
business orders - excluding acquisitions and foreign currency translation
- were up 5%.
o Sales of $252.1 million set a new record and rose more than 17%; base
business sales - excluding acquisitions and foreign currency translation
- were up 10%.
o Gross margins improved 50 basis points to 40.4% of sales, while operating
margins at 16.1% were 150 basis points higher than a year ago.
o Net income increased 34% to $23.6 million, an all-time high.
o Diluted EPS at 45 cents were 10 cents ahead of the first quarter of 2004.
We are pleased with our results for the first three months of 2005. Our
business units continue to execute at a high level in terms of both operational
excellence and new product initiatives. During the first quarter, we delivered
record orders, sales, and net income, as well as our 13th consecutive quarter of
year-over-year gross margin expansion. The quarter also marked our 11th
consecutive quarter of year-over-year earnings growth and our 10th consecutive
quarter of year-over-year growth in base business sales. We are especially
pleased with the Company's 10% organic revenue growth during the quarter. All
three business segments experienced organic sales growth with the strongest
performance in Pump Products and Dispensing Equipment. As we move forward, we
remain focused on the voice of our customer, while using the powerful
combination of continuous process improvement and new product innovation to
drive our future performance.
The following forward-looking statements are qualified by the cautionary
statement under the Private Securities Litigation Reform Act set forth below.
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. As we move forward in 2005, we believe IDEX is well positioned for
earnings expansion. This is based on our lower cost structure resulting from our
operational excellence discipline, our investment in new products, applications
and global markets, and our pursuit of strategic acquisitions to help drive
IDEX's longer term profitable growth.
-8-
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.
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.
PERFORMANCE IN THE THREE MONTHS ENDED MARCH 31, 2005 COMPARED TO THE SAME PERIOD
OF 2004
For the three months ended March 31, 2005, orders, sales and profits were
higher than the comparable first quarter of last year. New orders totaled $266.6
million, 12% higher than the same period last year. Excluding the impact of
foreign currency translation and the three acquisitions made since the beginning
of 2004 (Systec - April 2004; Scivex - May 2004 and Dinglee - July 2004), orders
were 5% higher than the same period one year ago.
Sales in the first quarter were $252.1 million, a 17% improvement from
last year's first quarter as base business shipments grew 10%, foreign currency
translation provided a 1% improvement and acquisitions accounted for a 6%
increase. Base business sales grew 11% domestically and 9% internationally
during the recent quarter. Sales to international customers from base businesses
represented approximately 46% of total sales for both the 2005 and 2004
quarters.
For the quarter, the Pump Products Group contributed 58% of sales and 51%
of operating income, the Dispensing Equipment Group accounted for 20% of sales
and 25% of operating income, and the Other Engineered Products Group represented
22% of sales and 24% of operating income.
Pump Products Group sales of $146.3 million for the three months ended
March 31, 2005 rose $25.1 million, or 21% compared with 2004, reflecting 10%
base business growth, a 1% favorable impact from foreign currency translation,
and a 10% increase due to the acquisitions of Systec and Scivex. In the first
quarter of 2005, base business sales grew 10% domestically and 12%
internationally. Base business sales to customers outside the U.S. were
approximately 39% of total group sales in 2005 compared with 38% in 2004.
Dispensing Equipment Group sales of $51.3 million increased $9.7 million,
or 23%, in the first quarter of 2005 compared with last year's first quarter.
This increase was attributed to favorable foreign currency translation of 3% and
a 20% increase in base business volume. In the first quarter of 2005, base
business sales increased 29% domestically and 15% internationally. Base business
sales to customers outside the U.S. were approximately 62% of total group sales
in the 2005 quarter, compared with 65% in 2004.
-9-
Other Engineered Products Group sales of $55.6 million increased $3.1
million, or 6%, in the first quarter of 2005 compared with 2004. This increase
reflects a 4% increase in base business volume and favorable foreign currency
translation of 2%. In the first quarter of 2005, base business sales increased
9% domestically, but declined 2% internationally. Base business sales to
customers outside the U.S. were approximately 45% of total group sales in the
2005 quarter, compared with 48% in 2004.
FIRST QUARTER
ENDED MARCH 31, (1)
-------------------
2005 2004
-------- --------
Pump Products Group
Net sales .................................. $146,298 $121,210
Operating income (2) ....................... 24,331 18,800
Operating margin ........................... 16.6% 15.5%
Depreciation and amortization .............. 4,126 $ 3,859
Capital expenditures ....................... 3,584 3,733
Dispensing Equipment Group
Net sales .................................. $ 51,327 $ 41,619
Operating income (2) ....................... 11,578 7,896
Operating margin ........................... 22.6% 19.0%
Depreciation and amortization .............. $ 1,298 $ 1,430
Capital expenditures ....................... 951 651
Other Engineered Products Group
Net sales .................................. $ 55,572 $ 52,444
Operating income (2) ....................... 11,561 10,669
Operating margin ........................... 20.8% 20.3%
Depreciation and amortization .............. $ 1,564 $ 1,432
Capital expenditures ....................... 791 844
Company
Net sales .................................. $252,058 $214,600
Operating income ........................... 40,695 31,286
Operating margin ........................... 16.1% 14.6%
Depreciation and amortization (3)........... $ 7,877 $ 7,628
Capital expenditures ....................... 5,707 5,348
(1) Includes acquisitions of Systec (April 2004) and Scivex (May 2004) in the
Pump Products Group and Dinglee (July 2004) in the Other Engineered
Products Group from the dates of acquisition.
(2) Group operating income excludes unallocated corporate operating expenses.
(3) Excludes amortization of debt issuance expenses.
-10-
Gross profit of $102.0 million in the first quarter of 2005 increased
$16.2 million, or 19%, from 2004. Gross profit as a percent of sales was 40.4%
in 2005 and increased from 39.9% in 2004. The improved gross margins primarily
reflected volume leverage and savings realized from the company's Six Sigma,
Lean Manufacturing and global sourcing initiatives.
Selling, general and administrative (SG&A) expenses increased to $61.3
million in 2005 from $54.4 million in 2004 primarily due to acquisitions,
currency effects and expenses related to higher volume. As a percent of sales,
SG&A expenses were 24.3%, down from 25.3% in 2004.
Operating income increased $9.4 million, or 30%, to $40.7 million in the
first quarter of 2005 from $31.3 million in 2004, primarily reflecting the
higher gross margins partially offset by the increased SG&A expenses. First
quarter operating margins were 16.1% of sales, 150 basis points higher than the
first quarter of 2004. The improvement from last year resulted from a 50 basis
point increase in gross margins and a 100 basis point decrease in SG&A as a
percent of sales. In the Pump Products Group, operating income of $24.3 million
and operating margins of 16.6% in the first quarter of 2005 were up from the
$18.8 million and 15.5% recorded in 2004 principally due to volume leverage and
the impact of our operational excellence initiatives. Operating income for the
Dispensing Equipment Group of $11.6 million and operating margins of 22.6% in
the first quarter of 2005 were up from the $7.9 million and 19.0% in 2004
primarily due to the company's operational excellence initiatives, as well as
volume improvement. Operating income in the Other Engineered Products Group of
$11.6 million and operating margins of 20.8% in the first quarter of 2005
increased from $10.7 million and 20.3% achieved in 2004 and primarily reflected
increased sales volume and the impact of operational excellence initiatives.
Interest expense increased to $3.9 million in the current quarter from
$3.4 million in the first quarter of 2004. The increase was principally due to
higher debt levels resulting from the company's acquisitions as well as a higher
interest rate environment.
The provision for income taxes increased to $13.3 million in the first
quarter of 2005 from $10.2 million in 2004. The effective tax rate decreased to
36.0% in 2005 from 36.5% in 2004 due to a favorable impact from research and
development credits and a reduction in statutory rates in certain foreign
jurisdictions.
Net income for the current quarter was $23.6 million, 34% higher than the
$17.7 million earned in the first quarter of 2004. Diluted earnings per share in
the first quarter of 2005 of $.45 increased $.10, or 29%, compared with the
first quarter of 2004.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2005, working capital was $131.8 million and our current
ratio was 1.9 to 1. Cash flows from operating activities decreased $3.2 million,
or 16%, to $16.3 million in 2005 mainly due to the improved operating results
discussed above offset by unfavorable working capital, reflecting an increase in
receivables as a result of higher sales.
Cash flows provided from operations was more than adequate to fund capital
expenditures of $5.7 million and $5.3 million in the first quarter of 2005 and
2004, 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 plants and equipment to meet expected needs for future growth in
the intermediate term.
In 2004, the company acquired Systec in April 2004, Scivex in May 2004 and
Dinglee in July 2004 at a cost of $22.4 million, $98.6 million and $4.1 million,
respectively. All payments for acquisitions were financed under the company's
credit facility.
In addition to the $150.0 million of 6.875% Senior Notes due February 15,
2008, the company also has a $600.0 million domestic multi-currency bank
revolving credit facility (Credit Facility), which expires December 14, 2009. At
March 31, 2005, the maximum amount available under the Credit Facility was
$600.0 million, of which $21.3 million was borrowed, with outstanding letters of
credit totaling $5.1 million. The Credit Facility contains a covenant that
limits total debt outstanding to 3.25 times operating cash flow, as defined in
the agreement. Our total debt outstanding was $217.8 million at March 31, 2005,
and based on the covenant, total debt outstanding was limited to $620.7 million.
Interest is payable quarterly on the outstanding balance at the bank agent's
reference rate
-11-
or, at the Company's election, at LIBOR plus an applicable margin. The
applicable margin is based on the credit rating of our Senior Notes, and can
range from 27 basis points to 75 basis points. Based on the Company's BBB rating
at March 31, 2005, the applicable margin was 55 basis points. We also pay an
annual fee of 15 basis points on the total Credit Facility.
In December 2001, we, and certain of our subsidiaries, entered into a
one-year, renewable agreement with a financial institution, under which we
collateralized certain receivables for borrowings (Receivables Facility). This
agreement was renewed in December 2004 for another year. The Receivables
Facility provides for borrowings of up to $30.0 million, depending upon the
level of eligible receivables. At March 31, 2005, there were $25.0 million in
borrowings outstanding and included in long-term debt at an interest rate of
approximately 2.9%.
We also have a one-year, renewable $30.0 million demand line of credit
(Short-Term Facility), which expires on May 20, 2005. Borrowings under the
Short-Term Facility are at LIBOR plus the applicable margin in effect under the
Credit Facility. At March 31, 2005, there were $9.0 million in borrowings
outstanding and included in long-term debt at an interest rate of approximately
3.4%.
We believe the company will generate sufficient cash flow from operations
for the next 12 months and in the long term to meet its operating requirements,
interest on all borrowings, required debt repayments, any authorized share
repurchases, planned capital expenditures, and annual dividend payments to
holders of common stock. In the event that suitable businesses are available for
acquisition upon terms acceptable to the Board of Directors, we may obtain all
or a portion of the financing for the acquisitions through the incurrence of
additional long-term debt.
Our contractual obligations and commercial commitments include rental
payments under operating leases, payments under capital leases, and other
long-term obligations arising in the ordinary course of business. There are no
identifiable events or uncertainties, including the lowering of our credit
rating that would accelerate payment or maturity of any of these commitments or
obligations.
CRITICAL ACCOUNTING ESTIMATES
We believe that the application of the following accounting policies,
which are important to our financial position and results of operations,
requires significant judgments and estimates on the part of management. For a
summary of all of our accounting policies, including the accounting policies
discussed below, see Note 1 of the Notes to Consolidated Financial Statements in
our 2004 Annual Report on Form 10-K.
Revenue recognition - We recognize revenue from products sales when title passes
and the risks of ownership have passed to the customer, based on the terms of
the sale. Our customary terms are FOB shipping point. We estimate and record
provisions for sales returns, sales allowances and original warranties in the
period the related products are sold, in each case based on our historical
experience. To the extent actual results differ from these estimated amounts,
results could be adversely affected.
Noncurrent assets - The Company evaluates the recoverability of certain
noncurrent assets utilizing various estimation processes. In particular, the
recoverability of March 31, 2005 balances for goodwill and intangible assets of
$704.7 million and $29.4 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 and estimated future cash flows
(derived from estimated earnings and cash flow multiples). The recoverability of
these assets depends on the reasonableness of these assumptions and how they
compare with the eventual operating performance of the specific businesses to
which the assets are attributed. To the extent actual business values or cash
flows differ from those estimated amounts, the recoverability of these
noncurrent assets could be affected.
Income taxes - Deferred taxes are recognized for the future tax effects of
temporary differences between financial and income tax reporting using tax rates
in effect for the years in which the differences are expected to reverse.
Federal income taxes are provided on that portion of the income of foreign
subsidiaries that is expected to be remitted to the United States and be
taxable. The management of the company periodically estimates the company's
probable tax obligations using historical experience in tax jurisdictions and
informed judgments. To the extent actual results differ from these estimated
amounts, results could be adversely affected.
Contingencies and litigation - We are currently involved in certain legal and
regulatory proceedings and, as required and where it is reasonably possible to
do so, have accrued our estimates of the probable costs for the resolution of
-12-
these matters. These estimates have been developed in consultation with outside
counsel and are based upon an analysis of potential results, assuming a
combination of litigation and settlement strategies. It is possible, however,
that future operating results for any particular quarterly or annual period
could be materially affected by changes in our assumptions or the effectiveness
of our strategies related to these proceedings.
Defined benefit retirement plans - The plan obligations and related assets of
defined benefit retirement plans are presented in Note 14 of the Notes to
Consolidated Financial Statements in the 2004 Annual Report on Form 10-K. Plan
assets, which consist primarily of marketable equity and debt instruments, are
valued using market quotations. Plan obligations and the annual pension expense
are determined by consulting actuaries using a number of assumptions. Key
assumptions in measuring the plan obligations include the discount rate at which
the obligation could be effectively settled and the anticipated rate of future
salary increases. Key assumptions in the determination of the annual pension
expense include the discount rate, the rate of salary increases, and the
estimated future return on plan assets. To the extent actual amounts differ from
these assumptions and estimated amounts, operating results could be adversely
affected.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We are subject to market risk associated with changes in interest rates
and foreign currency exchange rates. Interest rate exposure is limited to the
$217.8 million of total debt outstanding at March 31, 2005. Approximately 30% 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 $.3 million annualized increase or decrease in interest expense and
cash flows. The remaining debt is fixed rate debt. We will, from time to time,
enter into interest rate swaps on our debt when we believe there is a financial
advantage for doing so. A treasury risk management policy, adopted by the Board
of Directors, describes the procedures and controls over derivative financial
and commodity instruments, including interest rate swaps. Under the policy, we
do not use derivative financial or commodity instruments for trading purposes,
and the use of these instruments is subject to strict approvals by senior
officers. Typically, the use of derivative instruments is limited to interest
rate swaps on the company's outstanding long-term debt. As of March 31, 2005,
the Company did not have any derivative instruments outstanding.
Our foreign currency exchange rate risk is limited principally to the euro
and British pound. We manage our foreign exchange risk principally through
invoicing our customers in the same currency as the source of our products. As a
result, the company's exposure to any movement in foreign currency exchange
rates is immaterial to the Consolidated Statements of Operations.
ITEM 4. CONTROLS AND PROCEDURES.
The company maintains disclosure controls and procedures that are designed
to ensure that information required to be disclosed in the company's Exchange
Act reports is recorded, processed, summarized and reported within the time
periods specified in the SEC's rules and forms, and that such information is
accumulated and communicated to the company's management, including its Chief
Executive Officer and Chief Financial Officer, as appropriate, to allow timely
decisions regarding required disclosure. In designing and evaluating the
disclosure controls and procedures, management recognized that any controls and
procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives, and management
is required to apply its judgment in evaluating the cost-benefit relationship of
possible controls and procedures.
As required by SEC Rule 13a-15(b), the company carried out an evaluation,
under the supervision and with the participation of the company's management,
including the company's Chief Executive Officer and the company's Chief
Financial Officer, of the effectiveness of the design and operation of the
company's disclosure controls and procedures as of the end of the period covered
by this report. Based on the foregoing, the company's Chief Executive Officer
and Chief Financial Officer concluded that the company's disclosure controls and
procedures were effective at the reasonable assurance level.
There has been no change in the company's internal controls over financial
reporting during the company's most recent fiscal quarter that has materially
affected, or is reasonably likely to materially affect, the company's internal
controls over financial reporting.
During the first quarter of 2005, the Company implemented a new ERP system
at one of our larger business units. The Company believes that effective
internal control over financial reporting was maintained during and after this
conversion.
-13-
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, Maryland, Massachusetts, Michigan, Minnesota, Mississippi,
Missouri, Nevada, New Jersey, New York, Ohio, Oregon, Pennsylvania, Texas, Utah,
Washington and Wyoming. Most of the claims resolved to date have been dismissed
without payment. The balance have been settled for reasonable amounts. Only one
case has been tried, resulting in a verdict for the Company's business unit.
No provision has been made in the financial statements of the Company,
other than for insurance deductibles in the ordinary course, and IDEX does not
currently believe the asbestos-related claims will have a material adverse
effect on the Company's business or financial position.
IDEX is also party to various other legal proceedings arising in the
ordinary course of business, none of which is expected to have a material
adverse effect on its business, financial condition or results of operations.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
Total Number of Maximum Number of
Shares Purchased as Shares that May Yet
Part of Publicly be Purchased Under
Total Number of Average Price Announced Plans the Plans
Period Shares Purchased Paid per Share or Programs (1) or Programs (1)
------ ---------------- -------------- --------------- ---------------
January 1, 2005 to
January 31, 2005 - - - 2,240,250
February 1, 2005 to
February 28, 2005 - - - 2,240,250
March 1, 2005 to
March 31, 2005 - - - 2,240,250
(1) On October 20, 1998, IDEX's Board of Directors authorized the
repurchase of up to 2.25 million shares of its common stock, either at market
prices or on a negotiated basis as market conditions warrant.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The company held its Annual Shareholders' Meeting on Tuesday, March 22,
2005 and voted on three 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
I directors.
Director For Withheld Broker Non-Votes
-------- --- -------- ----------------
Bradley J. Bell 47,163,811 1,287,979 0
Gregory B. Kenny 47,149,490 1,302,300 0
Lawrence D. Kingsley 47,232,631 1,219,159 0
-14-
In addition to the Class I directors named above, the following directors'
terms also continued after the March 22, 2005 Annual Shareholders' Meeting.
Frank S. Hermance Michael T. Tokarz
Paul E. Raether Dennis K. Williams
Neil A. Springer
Secondly, shareholders voted to amend Article IV of the Restated
Certificate of Incorporation to increase the total authorized shares of Common
Stock from 75,000,000 to 150,000,000 shares. The proposal received a majority of
the votes cast as follows:
Affirmative votes 43,484,964
Negative votes 4,890,054
Abstentions 76,772
Broker non-votes 0
Thirdly, shareholders voted on approval of the IDEX Corporation Incentive
Award Plan. The proposal received a majority of the votes cast as follows:
Affirmative votes 28,065,783
Negative votes 16,024,138
Abstentions 377,592
Broker non-votes 0
Lastly, 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 44,802,393
Negative votes 3,638,095
Abstentions 11,302
Broker non-votes 0
ITEM 5. OTHER INFORMATION.
There has been no material change to the procedures by which security
holders may recommend nominees to the company's board.
ITEM 6. EXHIBITS.
The exhibits listed in the accompanying "Exhibit Index" are filed as
part of this report.
-15-
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 6, 2005 /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)
3.1(b) Amendment to Restated Certificate of Incorporation of IDEX
Corporation (incorporated by reference to Exhibit No. 3.1 (b) to
the Current Report of IDEX on Form 8-K dated March 24, 2005,
Commission File No. 1-10235)
3.2 Amended and Restated By-Laws of IDEX Corporation (incorporated by
reference to Exhibit No. 3.2 to Post-Effective Amendment No. 2 to
the Registration Statement on Form S-1 of IDEX, et al.,
Registration No. 33-21205, as filed on July 17, 1989)
3.2(a) Amended and Restated Article III, Section 13 of the Amended and
Restated By-Laws of IDEX Corporation (incorporated by reference to
Exhibit No. 3.2(a) to Post-Effective Amendment No. 3 to the
Registration Statement on Form S-1 of IDEX, et al., Registration
No. 33-21205, as filed on February 12, 1990)
4.1 Restated Certificate of Incorporation and By-Laws of IDEX
Corporation (filed as Exhibits No. 3.1 through 3.2 (a))
4.2 Indenture, dated as of February 23, 1998, between IDEX Corporation,
and Norwest Bank Minnesota, National Association, as Trustee,
relating to the 6-7/8% Senior Notes of IDEX Corporation due
February 15, 2008 (incorporated by reference to Exhibit No. 4.1 to
the Current Report of IDEX on Form 8-K dated February 23, 1998,
Commission File No. 1-10235)
4.3 Specimen Senior Note of IDEX Corporation (incorporated by reference
to Exhibit No. 4.1 to the Current Report of IDEX on Form 8-K dated
February 23, 1998, Commission File No. 1-10235)
4.4 Specimen Certificate of Common Stock of IDEX Corporation
(incorporated by reference to Exhibit No. 4.3 to the Registration
Statement on Form S-2 of IDEX, et al., Registration No. 33-42208,
as filed on September 16, 1991)
4.5 Credit Agreement, dated as of December 14, 2004, among IDEX
Corporation, Bank of America N.A. as Agent and Issuing Bank, and
the Other Financial Institutions Party Hereto (incorporated by
reference to Exhibit No. 4.5 to the Annual Report of IDEX on Form
10-K for the year ended December 31, 2004, Commission File No.
1-10235)
4.6 Credit Lyonnais Uncommitted Line of Credit, dated as of December 3,
2001 (incorporated by reference to Exhibit 4.6 to the Annual Report
of IDEX on Form 10-K for the year ended December 31, 2001,
Commission File No. 1-10235)
4.6(a) Amendment No. 3 dated as of May 21, 2004 to the Credit Lyonnais
Uncommitted Line of Credit Agreement dated December 3, 2001
(incorporated by reference to Exhibit 4.6 (b) to the Quarterly
Report of IDEX on Form 10-Q for the quarter ended June 30, 2004,
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) Amendment No. 3 to Receivables Purchase Agreement and Restated Fee
Letter dated as of December 15, 2004 (incorporated by reference to
Exhibit 4.7 (a) to the Annual Report of IDEX on Form 10-K for the
year ended December 31, 2004, Commission File No. 1-10235)
-17-
EXHIBIT INDEX (CON'T.)
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
10.1** Transition and Retirement Agreement between IDEX Corporation and
Dennis K. Williams, dated February 25, 2005 (incorporated by
reference to Exhibit 10.1 (a) to the Annual Report of IDEX on Form
10-K for the year ended December 31, 2004, Commission File No.
1-10235)
10.2** First Amendment to Employment Agreement between IDEX Corporation
and Lawrence D. Kingsley, dated March 22, 2005 (incorporated by
reference to Exhibit No. 10.20 (a) to the Current Report of IDEX on
Form 8-K dated March 24, 2005, Commission File No. 1-10235)
10.3** IDEX Corporation Incentive Award Plan (incorporated by reference to
Appendix A of the Proxy Statement of IDEX, dated February 25, 2005,
Commission File No. 1-10235)
10.4** Form Stock Option Agreement (incorporated by reference to Exhibit
No. 10.23 to the Current Report of IDEX on Form 8-K dated March 24,
2005, Commission File No. 1-10235)
10.5** Form Restricted Stock Agreement (incorporated by reference to
Exhibit No. 10.24 to the Current Report of IDEX on Form 8-K dated
March 24, 2005, Commission File No. 1-10235)
10.6** Restricted Stock Agreement between IDEX Corporation and Lawrence D.
Kingsley, dated March 22, 2005 (incorporated by reference to
Exhibit No. 10.25 to the Current Report of IDEX on Form 8-K dated
March 24, 2005, Commission File No. 1-10235)
*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 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Lawrence D. Kingsley, 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)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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) Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting
principles;
c) 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
d) 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 6, 2005 /s/ Lawrence D. Kingsley
---------------------------------------
Lawrence D. Kingsley
President and Chief Executive Officer
-19-
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)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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) Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting
principles;
c) 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
d) 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 6, 2005 /s/ Dominic A. Romeo
------------------------------------------
Dominic A. Romeo
Vice President and Chief Financial Officer
-20-
EXHIBIT 32.1
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 Quarterly Report on Form 10-Q of the Company for the
quarterly period ended March 31, 2005 (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 6, 2005 /s/ Lawrence D. Kingsley
-------------------------------------
Lawrence D. Kingsley
President and Chief Executive Officer
-21-
EXHIBIT 32.2
CERTIFICATION OF CHIEF FINANCIAL 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 Quarterly Report on Form 10-Q of the Company for the
quarterly period ended March 31, 2005 (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 6, 2005 /s/ Dominic A. Romeo
------------------------------------------
Dominic A. Romeo
Vice President and Chief Financial Officer
-22-
