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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
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, 2006
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 a large accelerated filer,
an accelerated filer or a non-accelerated filer.
Large accelerated filer [X] Accelerated filer [ ] Non-accelerated filer [ ]
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act).
Yes [ ] No [X]
Number of shares of common stock of IDEX Corporation outstanding as of
April 27, 2006: 53,371,927 (net of treasury shares).
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TABLE OF CONTENTS
101 PART I. FINANCIAL INFORMATION
102 Item 1. Financial Statements. 1
103 Consolidated Balance Sheets 1
104 Consolidated Statements of Operations 2
105 Consolidated Shareholders' Equity 3
106 Consolidated Cash Flows 4
107 Notes to Consolidated Financial Statements 5
108 Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations. 11
109 Cautionary Statement Under the Private Securities Litigation
Reform Act 11
110 Historical Overview and Outlook 11
111 Results of Operations 12
112 Liquidity and Capital Resources 14
113 Item 3. Quantitative and Qualitative Disclosures About Market Risk. 15
114 Item 4. Controls and Procedures. 15
115 PART II. OTHER INFORMATION
116 Item 1. Legal Proceedings. 16
117 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. 16
118 Item 5. Other Information. 16
119 Item 6. Exhibits. 16
120 Signatures 17
121 Exhibit Index 18
122 Certifications 19
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,
2006 2005
---------- ------------
ASSETS
Current assets
Cash and cash equivalents ..................................... $ 71,111 $ 77,290
Receivables, less allowance for doubtful accounts of $4,175 at
March 31, 2006 and $3,816 at December 31, 2005 ............. 154,327 132,544
Inventories ................................................... 136,744 126,576
Other current assets .......................................... 19,600 11,091
---------- ----------
Total current assets ....................................... 381,782 347,501
Property, plant and equipment - net .............................. 148,508 145,485
Goodwill ......................................................... 709,255 691,869
Intangible assets - net .......................................... 37,343 28,615
Other noncurrent assets .......................................... 30,575 30,710
---------- ----------
Total assets ............................................... $1,307,463 $1,244,180
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Trade accounts payable ........................................ $ 80,995 $ 69,473
Accrued expenses .............................................. 74,232 74,358
Short-term borrowings ......................................... 6,982 3,144
Dividends payable ............................................. -- 6,321
---------- ----------
Total current liabilities .................................. 162,209 153,296
Long-term borrowings ............................................. 159,978 156,899
Other noncurrent liabilities ..................................... 116,067 110,975
---------- ----------
Total liabilities .......................................... 438,254 421,170
---------- ----------
Shareholders' equity
Common stock:
Authorized: 150,000,000 shares, $.01 per share par value
Issued: 53,188,841 shares at March 31, 2006 and 52,857,059
shares at December 31, 2005 ............................. 531 529
Additional paid-in capital .................................... 302,209 290,428
Retained earnings ............................................. 554,113 524,035
Minimum pension liability adjustment .......................... (5,884) (5,884)
Cumulative translation adjustment ............................. 29,324 25,160
Treasury stock at cost: 73,181 shares at March 31, 2006 and
63,318 shares at December 31, 2005 ......................... (2,866) (2,361)
Unearned stock compensation ................................... (8,218) (8,897)
---------- ----------
Total shareholders' equity ................................. 869,209 823,010
---------- ----------
Total liabilities and shareholders' equity ................. $1,307,463 $1,244,180
========== ==========
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,
-------------------
2006 2005
-------- --------
Net sales ........................................... $275,071 $252,058
Cost of sales ....................................... 161,961 150,101
-------- --------
Gross profit ........................................ 113,110 101,957
Selling, general and administrative expenses ........ 64,649 61,262
-------- --------
Operating income .................................... 48,461 40,695
Other income - net .................................. 66 130
Interest expense .................................... 2,954 3,879
-------- --------
Income before income taxes .......................... 45,573 36,946
Provision for income taxes .......................... 15,495 13,301
-------- --------
Net income .......................................... $ 30,078 $ 23,645
======== ========
Basic earnings per common share ..................... $ .57 $ .47
======== ========
Diluted earnings per common share ................... $ .56 $ .45
======== ========
Share data:
Basic weighted average common shares outstanding .... 52,637 50,679
Diluted weighted average common shares outstanding .. 53,857 52,383
See Notes to Consolidated Financial Statements.
-2-
IDEX CORPORATION AND SUBSIDIARIES
CONSOLIDATED SHAREHOLDERS' EQUITY
(IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
COMMON
STOCK & MINIMUM
ADDITIONAL PENSION CUMULATIVE UNEARNED TOTAL
PAID-IN RETAINED LIABILITY TRANSLATION TREASURY STOCK SHAREHOLDERS'
CAPITAL EARNINGS ADJUSTMENT ADJUSTMENT STOCK COMPENSATION EQUITY
---------- -------- ---------- ----------- -------- ------------ -------------
Balance, December 31, 2005............. $290,957 $524,035 $(5,884) $25,160 $(2,361) $(8,897) $823,010
Net income............................. 30,078 30,078
Other comprehensive income
Cumulative translation adjustment... 4,164 4,164
--------
Other comprehensive income....... 4,164
--------
Comprehensive income............. 34,242
--------
Issuance of 326,182 shares of
common stock from exercise of
stock options and deferred
compensation plans.................. 11,783 11,783
Amortization of restricted stock....... 679 679
Restricted shares surrendered for
tax withholdings.................... (505) (505)
-------- -------- ------- ------- ------- ------- --------
Balance, March 31, 2006.............. $302,740 $554,113 $(5,884) $29,324 $(2,866) $(8,218) $869,209
======== ======== ======= ======= ======= ======= ========
See Notes to Consolidated Financial Statements.
-3-
IDEX CORPORATION AND SUBSIDIARIES
CONSOLIDATED CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
THREE MONTHS
ENDED MARCH 31,
-------------------
2006 2005
-------- --------
Cash flows from operating activities
Net income .................................................... $ 30,078 $ 23,645
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization .............................. 6,222 6,958
Amortization of intangibles assets ......................... 267 181
Amortization of debt issuance expenses ..................... 114 144
Stock-based compensation expense ........................... 2,416 738
Deferred income taxes ...................................... 5,477 3,171
Excess tax benefit from stock-based compensation ........... (2,543) --
Changes in (net of the effect from acquisitions):
Receivables ............................................. (16,403) (13,320)
Inventories ............................................. (3,793) (736)
Trade accounts payable .................................. 6,823 1,721
Accrued expenses ........................................ 1,746 (1,798)
Other - net ................................................ (5,881) (4,437)
-------- --------
Net cash flows from operating activities ............. 24,523 16,267
Cash flows from investing activities
Additions to property, plant and equipment ................. (4,121) (5,707)
Acquisition of businesses, net of cash acquired ............ (27,255) (425)
Proceeds from fixed assets disposals ....................... -- 25
-------- --------
Net cash flows from investing activities ............. (31,376) (6,107)
Cash flows from financing activities
Borrowings under credit facilities for acquisitions ........ -- 425
Net repayments under credit facilities ..................... -- (5,165)
Net repayments of other long-term debt ..................... (599) (41)
Dividends paid ............................................. (6,321) (6,070)
Proceeds from stock option exercises ....................... 6,163 4,004
Excess tax benefit from stock-based compensation ........... 2,543 --
Other - net ................................................ (504) (2,396)
-------- --------
Net cash flows from financing activities ............. 1,282 (9,243)
Effect of exchange rate changes on cash and cash equivalents .. (608) --
-------- --------
Net increase (decrease) in cash ............................... (6,179) 917
Cash and cash equivalents at beginning of year ................ 77,290 7,274
-------- --------
Cash and cash equivalents at end of period .................... $ 71,111 $ 8,191
======== ========
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for:
Interest ................................................... $ 5,423 $ 6,131
Income taxes ............................................... 5,796 2,929
Significant non-cash activities:
Debt assumed upon acquisition of business .................. $ 6,996 $ --
See Notes to Consolidated Financial Statements.
-4-
IDEX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements of IDEX Corporation (IDEX or the
Company) have been prepared in accordance with the instructions to Form 10-Q
under the Securities Exchange Act of 1934, as amended. The statements are
unaudited but include all adjustments, consisting only of recurring items,
except as noted, which the Company considers necessary for a fair presentation
of the information set forth herein. The results of operations for the three
months ended March 31, 2006 are not necessarily indicative of the results to be
expected for the entire year.
The consolidated financial statements and Management's Discussion and
Analysis of Financial Condition and Results of Operations should be read in
conjunction with the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2005.
Stock-based Compensation
Effective January 1, 2006, IDEX adopted the fair value recognition
provisions of Statement of Financial Accounting Standards (SFAS) No. 123(R),
"Share-Based Payment," using the modified prospective transition method and
therefore has not restated results for prior periods. Under this transition
method, stock-based compensation expense for the first quarter of 2006 includes
compensation expense for all stock-based compensation awards granted prior to,
but not yet vested as of December 31, 2005, based on the grant date fair value
estimated in accordance with the original provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation." Stock-based compensation expense for
all stock-based compensation awards granted after December 31, 2005 is based on
the grant-date fair value estimated in accordance with the provisions of SFAS
No. 123(R). IDEX recognizes these compensation costs on a straight-line basis
over the requisite service period of the award, which is generally the option
vesting period of four years. Prior to the adoption of SFAS No. 123(R), IDEX
recognized stock-based compensation expense in accordance with Accounting
Principles Bulletin Opinion (APB) No. 25, "Accounting for Stock Issued to
Employees." In March 2005, the Securities and Exchange Commission (SEC) issued
Staff Accounting Bulletin (SAB) No. 107 regarding the SEC's interpretation of
SFAS No. 123(R) and the valuation of share-based payments for public companies.
IDEX has applied the provisions of SAB No. 107 in its adoption of SFAS No.
123(R). See Note 7 to the Consolidated Condensed Financial Statements for a
further discussion on stock-based compensation.
2. ACQUISITIONS
On January 12, 2006, the Company acquired the assets of Airshore
International (Airshore), based in British Columbia, Canada. Airshore, with
annual sales of approximately $5 million, provides stabilization struts for
collapsed buildings and vehicles, high and low pressure lifting bags and
forcible entry tools for the fire and rescue markets. Airshore operates as part
of our Hale business unit within the Other Engineered Products Group. IDEX
acquired Airshore for a purchase price of $12.6 million, consisting entirely of
cash.
On February 28, 2006, the Company acquired JUN-AIR International A/S
(JUN-AIR), based in Norresundby, Denmark. JUN-AIR, with annual sales of
approximately $22 million, is a leading, global provider of low decibal, ultra
quiet vacuum compressors suitable to medical, dental and laboratory
applications. JUN-AIR operates as part of our Gast business unit within IDEX's
Pump Products Group. IDEX acquired JUN-AIR for an aggregate purchase price of
$21.6 million, consisting of cash consideration of $14.6 million and acquired
debt of approximately $7.0 million.
On April 25, 2006, the Company announced that it had entered into a
definitive agreement to acquire EPI, a global leader in high-precision
integrated fluidics and associated engineered plastics solutions. Based in
Bristol, Connecticut, with revenues of approximately $30 million, EPI's products
are used in a broad set of end markets including medical diagnostics, analytical
instrumentation, and laboratory automation.
The purchase price for Airshore and JUN-AIR, including transaction costs,
have been allocated to the assets acquired and liabilities assumed based on
estimated fair values at the date of the acquisitions. The purchase price
allocation is preliminary and further refinements may be necessary.
-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, individually or in
aggregate, to be material to its results of operations, financial position, or
cash flows for any of the periods presented.
3. 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.
THREE MONTHS
ENDED MARCH 31,
-------------------
2006 2005
-------- --------
Net sales
Pump Products:
External customers ......... $164,245 $145,161
Intersegment sales ......... 1,052 1,137
-------- --------
Total group sales ....... 165,297 146,298
-------- --------
Dispensing Equipment:
External customers ......... 49,611 51,327
Intersegment sales ......... 1 --
-------- --------
Total group sales ....... 49,612 51,327
-------- --------
Other Engineered Products:
External customers ......... 61,215 55,570
Intersegment sales ......... 1 2
-------- --------
Total group sales ....... 61,216 55,572
-------- --------
Intersegment elimination ...... (1,054) (1,139)
-------- --------
Total net sales ......... $275,071 $252,058
======== ========
Operating income
Pump Products ................. $ 31,576 $ 24,331
Dispensing Equipment .......... 11,432 11,578
Other Engineered Products ..... 13,675 11,561
Corporate office and other .... (8,222) (6,775)
-------- --------
Total operating income .. $ 48,461 $ 40,695
======== ========
4. 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:
THREE MONTHS
ENDED MARCH 31,
---------------
2006 2005
------ ------
Basic weighted average common shares outstanding ....... 52,637 50,679
Dilutive effect of stock options, unvested restricted
shares, and DCUs .................................... 1,220 1,704
------ ------
Diluted weighted average common shares outstanding ..... 53,857 52,383
====== ======
-6-
IDEX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
5. INVENTORIES
The components of inventories as of March 31, 2006 and December 31, 2005
were:
MARCH 31, DECEMBER 31,
2006 2005
--------- ------------
Raw materials .... $ 54,730 $ 52,215
Work-in-process .. 14,170 13,138
Finished goods ... 67,844 61,223
-------- --------
Total ......... $136,744 $126,576
======== ========
Inventories carried on a LIFO basis amounted to $108,823 and $97,785 at
March 31, 2006 and December 31, 2005, respectively. The excess of current cost
over LIFO inventory value amounted to $1,943 and $1,686 at March 31, 2006 and
December 31, 2005, respectively.
6. COMMON AND PREFERRED STOCK
The Company had five million shares of preferred stock authorized but
unissued at March 31, 2006 and December 31, 2005.
7. SHARE-BASED COMPENSATION
As of March 31, 2006, the Company has a stock-based compensation plan for
executives, non-employee directors, and certain key employees which authorizes
the granting of stock options, restricted stock, restricted stock units, and
other types of awards consistent with the purpose of the plans. The number of
shares authorized for issuance under the Company's plans as of March 31, 2006
totals 2.3 million shares, of which 1.5 million shares were available for future
issuance. Stock options granted under these plans are generally non-qualified,
and are granted with an exercise price equal to the market price of the
Company's stock at the date of grant. Substantially all of the options issued to
employees prior to 2005 become exercisable in five equal installments, while all
options issued to employees in 2005 and after become exercisable in four equal
installments, beginning one year from the date of grant, and generally expire 10
years from the date of grant. Stock options granted to non-employee directors
cliff vest after one or two years. Restricted stock and restricted stock unit
awards generally cliff vest after four years for employees, and two to three
years for non-employee directors.
Prior to January 1, 2006, the Company accounted for its stock-based
compensation using the intrinsic value method of APB Opinion No. 25, "Accounting
for Stock Issued to Employees," and related interpretations. The Company
provided pro forma disclosure in accordance with SFAS No. 148, "Accounting for
Stock-Based Compensation-Transition and Disclosure," as if the fair value method
of SFAS 123 had been applied to stock-based compensation. In accordance with APB
Opinion No. 25, no stock-based compensation cost was reflected in the Company's
prior year net income for grants of stock options to employees because the
Company granted stock options with an exercise price equal to the market value
of the stock on the date of grant. The reported stock-based compensation
expense, net of related tax effects, in prior periods represents the
amortization of restricted stock grants.
-7-
Had the Company used the fair value based accounting method for stock
compensation expense prescribed by SFAS Nos. 123 and 148 for the first quarter
ended March 31, 2005, the Company's consolidated net income and earnings per
share would have been reduced to the pro-forma amounts illustrated as follows:
QUARTER ENDED
MARCH 31, 2005
--------------
Net income - as reported $23,645
Add: Total stock-based employee compensation included in
reported net income, net of related tax effects 469
Deduct: Total stock-based compensation expense determined
under fair-value based method for all awards, net of
related tax effects (2,400)
-------
Net income - pro forma $21,714
=======
Earnings per share:
Basic - as reported $ 0.47
=======
Basic - pro forma $ 0.43
=======
Diluted - as reported $ 0.45
=======
Diluted - pro forma $ 0.42
=======
Effective January 1, 2006, the Company adopted the fair value recognition
provisions of SFAS No. 123(R) using the modified prospective method, and thus
did not restate any prior period amounts. Under this method, compensation cost
in the first quarter of 2006 includes the portion vesting in the period for (1)
all share-based payments granted prior to, but not vested as of December 31,
2005, based on the grant date fair value estimated using the Black-Scholes
option-pricing model in accordance with the original provisions of SFAS No. 123
and (2) all share-based payments granted subsequent to December 31, 2005, based
on the grant date fair value estimated using the Binomial lattice option-pricing
model. Weighted average fair values and assumptions for the period specified are
disclosed in the following table:
QUARTER ENDED MARCH 31,
-----------------------
2006 2005
------------- ------
Weighted average fair value of grants $10.95 $12.33
Dividend yield 1.04% 1.50%
Volatility 30.66% 30.00%
Risk-free interest rate 4.48% - 4.78% 4.3%
Expected life (in years) 3.6 5.5
The assumptions are as follows:
- - The Company estimated volatility using its historical share price
performance over the contractual term of the option.
- - The Company uses historical data to estimate the expected life of the
option. The expected life assumption for the quarter ended March 31, 2006
is an output of the Binomial lattice option-pricing model, which
incorporates vesting provisions, rate of voluntary exercise and rate of
post-vesting termination over the contractual life of the option to define
expected employee behavior.
- - The risk-free interest rate is based on the U.S. Treasury yield curve in
effect at the time of grant for periods within the contractual life of the
option. For the quarter ended March 31, 2006, the Company presented the
range of risk-free one-year forward rates, derived from the U.S. Treasury
yield curve, utilized in the Binomial lattice option-pricing model.
- - The expected dividend yield is based on the Company's current dividend
yield as the best estimate of projected dividend yield for periods within
the contractual life of the option.
Results of prior periods do not reflect any restated amounts and the
Company had no cumulative effect adjustment upon adoption of SFAS No. 123(R)
under the modified prospective method. The Company's policy is to recognize
compensation cost on a straight-line basis over the requisite service period for
the entire award. Additionally, the Company's general policy is to issue new
shares of common stock to satisfy stock option exercises or grants of restricted
shares.
-8-
The adoption of SFAS No. 123(R) decreased the Company's first quarter 2006
reported operating income and income before income taxes by $1.7 million,
reported net income by $1.1 million and reported basic and diluted net income
per share by $0.02 per share. The adoption of SFAS No. 123(R) resulted in a
decrease in reported cash flow from operating activities of $2.5 million offset
by an increase in reported cash flow from financing activities of $2.5 million
in the first quarter of 2006. The Company's adoption of SFAS No. 123(R) did not
affect operating income, income before income taxes, net income, cash flow from
operations, cash flow from financing activities, basic and diluted net income
per share in the comparable first quarter of 2005.
Total compensation cost for stock-based compensation arrangements
recognized in the first quarter of 2006 was $1.7 million for stock options and
$.7 million for restricted stock. Compensation cost recognized in general and
administrative expenses for the first quarter of 2006 was $1.5 million for stock
options and $.6 million for restricted stock. Compensation cost recognized in
cost of goods sold for the first quarter of 2006 was $.2 million for stock
options and $0 for restricted stock. Recognition of compensation cost was
consistent with recognition of cash compensation for the same employees. The
total income tax benefit recognized in the income statement for the first
quarter of 2006 for stock-based compensation arrangements was $.6 million.
A summary of the Company's stock option activity as of March 31, 2006, and
changes during the first quarter of 2006 is presented in the following table:
Weighted Weighted-Average Aggregate
Average Remaining Intrinsic
Fixed Options (shares in 000's) Shares Price Contractual Term Value
- ------------------------------- --------- -------- ---------------- -----------
Outstanding at January 1, 2006 4,197,150 $26.57
Granted 13,500 46.01
Exercised (314,312) 22.73
Forfeited/Expired (95,351) 26.77
--------- ------ ----
Outstanding at March 31, 2006 3,800,987 $26.90 7.24 $96,032,818
========= ====== ====
Exercisable at March 31, 2006 1,817,719 $23.73 6.45 $51,703,270
========= ====== ====
The intrinsic value for stock options outstanding and exercisable is
defined as the difference between the market value of the Company's common stock
as of the end of the period, and the grant price. The total intrinsic value of
options exercised during the first quarter of 2006 was $8.0 million. During the
first quarter of 2006, cash received from options exercised was $7.1 million and
the actual tax benefit realized for the tax deductions from stock options
exercised totaled $2.9 million.
A summary of the Company's restricted stock activity as of December 31,
2005, and changes during the first quarter of 2006 is presented in the following
table:
Weighted-Average
Restricted Stock (Shares in 000's) Shares Grant Date Fair Value
- ---------------------------------- ------- ---------------------
Nonvested at January 1, 2006 321,210 $35.91
Granted 4,050 46.01
Vested (25,000) 40.33
Forfeited (3,060) 40.33
-------
Nonvested at March 31, 2006 297,200 $32.97
=======
Restricted stock grants accrue dividends and their fair value is equal to
the market price of the Company's stock at the date of the grant. As of March
31, 2006, there was $8.2 million of total unrecognized compensation cost related
to unvested share-based compensation arrangements that is expected to be
recognized over a weighted-average period of 1.7 years.
-9-
IDEX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
8. 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.
OTHER
PENSION BENEFITS BENEFITS
THREE MONTHS ENDED MARCH 31, THREE MONTHS
--------------------------------------- ENDED
2006 2005 MARCH 31,
------------------ ------------------ ------------
U.S. NON-U.S. U.S. NON-U.S. 2006 2005
------- -------- ------- -------- ---- ----
Service cost ..................... $ 744 $ 162 $ 1,212 $ 153 $110 $120
Interest cost .................... 945 282 1,234 298 319 316
Expected return on plan assets ... (1,209) (182) (1,613) (173) -- --
Net amortization ................. 625 126 753 65 57 20
------- ----- ------- ----- ---- ----
Net periodic benefit cost ..... $ 1,105 $ 388 $ 1,586 $ 343 $486 $456
======= ===== ======= ===== ==== ====
The company previously disclosed in its financial statements for the year
ended December 31, 2005, that it expected to contribute approximately $6.0
million to these pension plans and $1.0 million to its other postretirement
benefit plans in 2006. As of March 31, 2006, $1.2 million of contributions have
been made to the pension plans and $.4 million has been made to its other
postretirement benefit plans. The company presently anticipates contributing up
to an additional $5.4 million in 2006 to fund the pension plans and other
postretirement benefit plans.
9. 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.
-10-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
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
financial condition and 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.
HISTORICAL OVERVIEW AND OUTLOOK
IDEX Corporation (IDEX or the Company) sells a broad range of pump
products, dispensing equipment and other engineered products to a diverse
customer base in the United States and other countries around the world.
Accordingly, our businesses are affected by levels of industrial activity and
economic conditions in the U.S. and in other countries where we do business 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 reportable segments: 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.
The Dispensing Equipment Group produces highly engineered equipment for
dispensing, metering and mixing colorants, paints, inks and dyes 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 2006 financial highlights for the three months ended March
31, 2006 were as follows:
- - Orders were $303.3 million, 14% higher than a year ago; organic growth -
excluding foreign currency translation - was 16%.
- - Sales of $275.1 million rose 9%; organic growth - excluding foreign
currency translation - was 11%.
- - Gross margins improved 70 basis points to 41.1% of sales, while operating
margins at 17.6% were 150 basis points higher than a year ago.
- - Net income increased 27% to $30.1 million.
- - Diluted EPS of $.56 was 11 cents ahead of the same period of 2005.
-11-
During the first quarter of 2006, our business again delivered with double
digit increases in orders and net income, as well as strong cash flow. Organic
sales growth was 11 percent, while operating margin continued to expand as a
result of operational excellence and new product and market initiatives. Organic
sales growth for both Pump Products and Engineered Products was 14 percent.
Within Dispensing, demand remained strong in North America, offset by the impact
of continued unfavorable market conditions in Europe. The Company also completed
the acquisitions of Airshore and JUN-AIR in the first quarter of 2006, and
recently announced that it has entered into a definitive agreement to acquire
EPI. These acquisitions are excellent strategic complements to our existing
businesses and organic growth plans. The Company is also increasing its focus on
innovation to drive niche market penetration in high growth industry segments.
Our experience in operational excellence and mixed model lean, in particular,
continues to enable reinvestment for growth.
The following forward-looking statements are qualified by the cautionary
statement under the Private Securities Litigation Reform Act set forth above.
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 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.
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 Item 1.
Performance in the Three Months Ended March 31, 2006 Compared with the Same
Period of 2005
For the three months ended March 31, 2006, orders, sales and profits were
higher than the comparable three months of last year. New orders totaled $303.3
million, 14% higher than the same period last year. Excluding the impact of
foreign currency translation, base business orders were 16% higher than the same
period one year ago.
Sales in the three months ended March 31, 2006 were $275.1 million, a 9%
improvement from the comparable period last year. Base business shipments grew
11% as foreign currency translation negatively impacted sales by 2%. Base
business sales grew 14% domestically and 8% internationally during the three
months ended March 31, 2006. Sales to international customers from base
businesses represented approximately 44% of total sales in the current period,
compared with 45% in the year-ago quarter.
For the quarter, the Pump Products Group contributed 60% of sales and 56%
of operating income, the Dispensing Equipment Group accounted for 18% of sales
and 20% of operating income, and the Other Engineered Products Group represented
22% of sales and 24% of operating income.
Pump Products Group sales of $165.3 million for the three months ended
March 31, 2006 rose $19.0 million, or 13% compared with 2005, reflecting 14%
base business growth partially offset by a 1% unfavorable impact from foreign
currency translation. In the first quarter of 2006, base business sales grew
approximately 14% both domestically and internationally. Base business sales to
customers outside the U.S. were approximately 38% of total group sales in both
the first quarter of 2006 and 2005.
Dispensing Equipment Group sales of $49.6 million decreased $1.7 million,
or 3%, in the first quarter of 2006 compared with last year's first quarter.
This increase was attributed to unfavorable foreign currency translation of 3%
as base business volume was relatively flat. In the first quarter of 2006, base
business sales increased 12% domestically but declined 7% internationally. Base
business sales to customers outside the U.S. were approximately 59% of total
group sales in the 2006 quarter, compared with 62% in 2005.
Other Engineered Products Group sales of $61.2 million increased $5.6
million, or 10%, in the first quarter of 2006 compared with 2005. This increase
reflects a 14% increase in base business volume partially offset by a 4%
unfavorable impact from foreign currency translation. In the first quarter of
2006, base business sales increased 14% both domestically and internationally.
Base business sales to customers outside the U.S. were approximately 47% of
total group sales in both the 2006 and 2005 quarters.
-12-
IDEX CORPORATION AND SUBSIDIARIES
COMPANY AND BUSINESS GROUP FINANCIAL INFORMATION
(IN THOUSANDS)
(UNAUDITED)
THREE MONTHS
ENDED MARCH 31,
-------------------
2006(1) 2005
-------- --------
Pump Products Group
Net sales ............................................ $165,297 $146,298
Operating income (2) ................................. 31,576 24,331
Operating margin ..................................... 19.1% 16.6%
Depreciation and amortization ........................ $ 3,646 $ 4,126
Capital expenditures ................................. 2,009 3,584
Dispensing Equipment Group
Net sales ............................................ $ 49,612 $ 51,327
Operating income (2) ................................. 11,432 11,578
Operating margin ..................................... 23.0% 22.6%
Depreciation and amortization ........................ $ 1,199 $ 1,298
Capital expenditures ................................. 766 951
Other Engineered Products Group
Net sales ............................................ $ 61,216 $ 55,572
Operating income (2) ................................. 13,675 11,561
Operating margin ..................................... 22.3% 20.8%
Depreciation and amortization ........................ $ 1,533 $ 1,564
Capital expenditures ................................. 1,137 791
Company
Net sales ............................................ $275,071 $252,058
Operating income ..................................... 48,461 40,695
Operating margin ..................................... 17.6% 16.1%
Depreciation and amortization (3) .................... $ 6,489 $ 7,139
Capital expenditures ................................. 4,121 5,707
(1) The impact of the acquisitions completed in the first quarter 2006 did not
have a material effect on the Company's financial results.
(2) Group operating income excludes unallocated corporate operating expenses.
(3) Excludes amortization of debt issuance expenses and unearned stock
compensation.
-13-
Gross profit of $113.1 million, in the first quarter of 2006, increased
$11.2 million, or 11%, from 2005. Gross profit as a percent of sales was 41.1%
in 2006 and increased from 40.4% in 2005. The improved gross margins primarily
reflected volume leverage and savings realized from the Company's operational
initiatives.
Selling, general and administrative (SG&A) expenses increased to $64.6
million in 2006 from $61.3 million in 2005 primarily due to higher volume and
the implementation of Statement of Financial Accounting Standard No. 123(R),
"Share-Based Payment". As a percent of sales, SG&A expenses were 23.5%, down
from 24.3% in 2005.
Operating income increased $7.8 million, or 19%, to $48.5 in the first
quarter of 2006 from $40.7 million in 2005, primarily reflecting the higher
gross margins, partially offset by increased SG&A expenses. First quarter
operating margins were 17.6% of sales, 150 basis points higher than the first
quarter of 2005. The improvement from last year resulted from a 70 basis point
increase in gross margins and an 80 basis point decrease in SG&A as a percent of
sales. In the Pump Products Group, operating income of $31.6 million and
operating margins of 19.1% in the first quarter of 2006 were up from the $24.3
million and 16.6% recorded in 2005 principally due to volume leverage and the
impact of our operational excellence initiatives. Operating income for the
Dispensing Equipment Group of $11.4 million was slightly down from the $11.6
million recorded in 2005 mainly due to continued unfavorable market conditions
in Europe. Operating margins within Dispensing Equipment of 23.0% in the current
quarter were up from 22.6% in 2005 primarily due to savings realized from the
Company's operational excellence initiatives. Operating income in the Other
Engineered Products Group of $13.7 million and operating margins of 22.3% in the
current quarter increased from $11.6 million and 20.8% achieved in 2005 and
primarily reflected increased sales volume and the impact of operational
excellence initiatives.
Interest expense decreased to $3.0 million in the current quarter from $3.9
million in the first quarter of 2005, principally due to lower debt levels.
IDEX's provision for income taxes is based upon estimated annual tax rates
for the year applied to federal, state and foreign income. The provision for
income taxes increased to $15.5 million in the first quarter of 2006 from $13.3
million in 2005. The effective tax rate decreased to 34.0% in the current
quarter from 36.0% in the first quarter of 2005 due to changes in the mix of
global pre-tax income among taxing jurisdictions.
Net income for the current quarter was $30.1 million, 27% higher than the
$23.6 million earned in the first quarter of 2005. Diluted earnings per share in
the first quarter of 2006 of $.56 increased $.11, or 24%, compared with the
first quarter of 2005.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2006, working capital was $219.6 million and our current ratio
was 2.4 to 1. Cash flows from operating activities increased $8.3 million, or
51%, to $24.5 million in the first quarter of 2006 mainly due to the improved
operating results discussed above, partially offset by an increase in working
capital requirements.
Cash flows provided from operations were more than adequate to fund capital
expenditures of $4.1 million and $5.7 million in the first three months of 2006
and 2005, 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.
The Company acquired Airshore in January 2006 for cash consideration of
$12.6 million. The Company also acquired JUN-AIR in February 2006 for cash
consideration of $14.6 million and the assumption of approximately $7.0 million
in debt.
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.
With no borrowings outstanding under the facility at March 31, 2006, and
outstanding letters of credit totaling $4.8 million, the maximum amount
available under the Credit Facility was $595.2 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 $167.0
million at March 31, 2006, and based on the covenant, total debt outstanding was
limited to $716.2 million. Interest is payable quarterly on the outstanding
balance at the bank agent's reference rate 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
-14-
rating at March 31, 2006, the applicable margin was 55 basis points. We also pay
an annual fee of 15 basis points on the total Credit Facility.
We also have a one-year, renewable $30.0 million demand line of credit
(Short-Term Facility), which expires on December 12, 2006. Borrowings under the
Short-Term Facility are at LIBOR plus the applicable margin in effect under the
Credit Facility. At March 31, 2006, there were no borrowings outstanding under
this facility.
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 borrowings.
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.
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 $167.0
million of total debt outstanding at March 31, 2006. Approximately 10% 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 $.1 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, 2006,
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.
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.
-15-
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
IDEX and five of its subsidiaries have been named as defendants in a number
of lawsuits claiming various asbestos-related personal injuries, allegedly as a
result of exposure to products manufactured with components that contained
asbestos. Such components were acquired from third party suppliers, and were not
manufactured by any of the subsidiaries. To date, all of the Company's
settlements and legal costs, except for costs of coordination, administration,
insurance investigation and a portion of defense costs, have been covered in
full by insurance 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, Delaware,
Georgia, Illinois, Louisiana, Maryland, Massachusetts, Michigan, Minnesota,
Mississippi, Missouri, Nevada, New Jersey, New York, Ohio, Oklahoma, Oregon,
Pennsylvania, Rhode Island, Texas, Utah, Virginia, 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, 2006 to
January 31, 2006 -- -- -- 2,240,250
February 1, 2006 to
February 28, 2006 -- -- -- 2,240,250
March 1, 2006 to
March 31, 2006 -- -- -- 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 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.
-16-
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 1, 2006 /s/ Dominic A. Romeo
---------------------------------------------
Dominic A. Romeo
Vice President and Chief Financial Officer
(duly authorized principal financial officer)
-17-
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. 6 dated as of December 14, 2005 to the Credit Lyonnais
Uncommitted Line of Credit Agreement dated December 3, 2001
*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
-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 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 1, 2006 /s/ Lawrence D. Kingsley
----------------------------------------
Lawrence D. Kingsley
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)) 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 1, 2006 /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, 2006 (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 1, 2006 /s/ Lawrence D. Kingsley
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Lawrence D. Kingsley
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, 2006 (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 1, 2006 /s/ Dominic A. Romeo
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Dominic A. Romeo
Vice President and
Chief Financial Officer
