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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report: JULY 24, 2007
(Date of earliest event reported)
IDEX CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 1-10235 36-3555336
(State of (Commission File Number) (IRS Employer
Incorporation) Identification No.)
630 DUNDEE ROAD
NORTHBROOK, ILLINOIS 60062
(Address of principal executive offices, including zip code)
(847) 498-7070
(Registrant's telephone number, including area code)
Check the appropriate box if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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Item 2.02 - Results of Operations and Financial Condition.
The information in this Item is furnished to, but not filed with, the Securities
and Exchange Commission solely under Item 2.02 of Form 8-K, "Results of
Operations and Financial Condition."
On July 24, 2007, IDEX Corporation issued a press release announcing financial
results for the quarter ended June 30, 2007. A copy of the press release is
furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated
herein by reference.
Item 9.01 - Financial Statements and Exhibits.
(d) Exhibits
99.1 Press release dated July 24, 2007
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
IDEX CORPORATION
By: /s/ Dominic A. Romeo
------------------------------------
Dominic A. Romeo
Vice President and
Chief Financial Officer
July 24, 2007
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
99.1 Second quarter 2007 earnings release dated July 24, 2007
EXHIBIT 99.1
IDEX CORPORATION REPORTS RECORD SALES, INCOME AND FREE CASH FLOW;
16 PERCENT SALES GROWTH AND 19 PERCENT INCREASE IN DILUTED EPS
NORTHBROOK, IL, JULY 24 - IDEX CORPORATION (NYSE: IEX) today announced its
financial results for the quarter ended June 30, 2007. From continuing
operations, orders in the second quarter were up 17 percent, sales increased 16
percent, and income rose 21 percent to $41.8 million compared to the second
quarter of 2006. Diluted earnings per share from continuing operations were 51
cents versus 43 cents in the year-ago quarter.
SECOND QUARTER 2007 HIGHLIGHTS (FROM CONTINUING OPERATIONS)
- Orders in the second quarter of 2007 were $339.3 million, 17 percent
higher than a year ago; excluding foreign currency translation and
acquisitions, organic orders growth was 7 percent.
- Second quarter sales of $344.5 million rose 16 percent; excluding
foreign currency translation and acquisitions, organic sales growth
was 6 percent.
- Operating margin at 20 percent was 110 basis points higher than a year
ago.
- Income increased 21 percent to $41.8 million.
- Diluted EPS at 51 cents was 8 cents or 19 percent ahead of last year.
- EBITDA of $78.7 million was 23 percent of sales and covered interest
expense by 13 times.
- Second quarter free cash flow was $58.3 million.
- As previously announced, the acquisition of Quadro Engineering was
completed in a strategic expansion of the company's Fluid & Metering
Technologies segment.
"We are pleased with our performance in the first six months of 2007. As we move
into the second half of 2007, the markets we serve and our overall business
fundamentals remain solid. We foresee continued strong global demand for our
fluid and metering, fire and safety and engineered band clamping products.
Within health and science, we believe our core analytical instrumentation, IVD,
biotechnology and the other end market segments remain highly attractive.
"For the second half of 2007, organic growth rates in both Fluid & Metering
Technologies and Fire & Safety Products are projected to achieve results that
are consistent with their respective first half performance. The third quarter
of 2007 for Dispensing Equipment is expected to result in flat sales versus the
prior year and operating margin rates that are consistent with prior-year
levels, due to timing of retail projects. The second half 2007 growth rate for
Health & Science Technologies will continue to be adversely impacted by the
completion and the exiting of specific, maturing OEM contracts. As we progress
through 2007, we are focused throughout the company on generating growth and
reinvesting in new products, markets and strategic acquisitions that complement
our current capabilities."
----------------------------------------
Lawrence D. Kingsley
Chairman and Chief Executive Officer
SECOND QUARTER FINANCIAL RESULTS
(Dollars in millions, except per share amounts)
FOR THE QUARTER ENDED
---------------------------------------------
June 30,
--------------- March 31,
2007 2006 Change 2007 Change
------ ------ ------ --------- ------
ORDERS WRITTEN $339.3 $289.9 17% $360.0 (6)%
SALES 344.5 296.6 16 333.3 3
OPERATING INCOME 68.9 56.0 23 61.6 12
OPERATING MARGIN 20.0% 18.9% 110bp 18.5% 150bp
INCOME FROM CONTINUING OPERATIONS $ 41.8 $ 34.6 21% $ 36.8 14%
NET INCOME 41.6 35.0 19 36.7 14
DILUTED EPS:
INCOME FROM CONTINUING OPERATIONS .51 .43 19 .45 13
NET INCOME .51 .43 19 .45 13
OTHER DATA (FROM CONTINUING OPERATIONS)
- Income before Taxes $ 63.3 $ 52.2 21% $ 55.7 14%
- Depreciation and Amortization 9.3 7.8 20 9.1 2
- Interest 6.1 4.1 49 6.4 (5)
- EBITDA 78.7 64.1 23 71.2 10
- Cash Flow from Operating Activities 63.8 44.7 43 15.7 307
- Capital Expenditures 7.4 5.7 30 5.4 37
- Excess Tax Benefit from Stock-Based
Compensation 1.9 2.1 (11) 1.8 5
- Free Cash Flow 58.3 41.1 42 12.1 384
Q2 ORDERS, SALES, INCOME AND EPS FROM CONTINUING OPERATIONS INCREASE
YEAR-OVER-YEAR
New orders in the quarter totaled $339.3 million, 17 percent higher than the
same period in 2006. Excluding the impact of acquisitions and foreign currency
translation, orders were up 7 percent.
Sales in the second quarter of $344.5 million increased 16 percent from the
prior-year period. Excluding the impact of acquisitions and foreign currency
translation, organic growth was 6 percent. Sales to international customers
represented approximately 47 percent of total sales for the second quarter of
2007 versus 45 percent in the same period of 2006.
Second quarter operating margin was 20 percent, 110 basis points higher than the
18.9 percent reported in the prior-year period. Gross margin of 42.8 percent was
130 basis points higher than the second quarter of 2006. Volume leverage, impact
from acquisitions, strategic sourcing and operational excellence initiatives
drove the gross margin improvement. Selling, general and administrative expenses
as a percent of sales were 22.8 percent, slightly higher compared to the prior
year as a result of acquisitions and reinvestment in the business to drive
organic growth.
Income from continuing operations of $41.8 million increased 21 percent over the
second quarter of 2006. Diluted earnings per share from continuing operations of
51 cents improved 8 cents, or 19 percent, from the second quarter of 2006.
YEAR-TO-DATE FINANCIAL RESULTS
(Dollars in millions, except per share amounts)
SIX MONTHS ENDED JUNE 30
------------------------
2007 2006 Change
------ ------ ------
ORDERS WRITTEN $699.2 $584.0 20%
SALES 677.8 563.0 20
OPERATING INCOME 130.4 103.8 26
OPERATING MARGIN 19.2% 18.4% 80bp
INCOME FROM CONTINUING OPERATIONS $ 78.7 $ 64.2 23%
NET INCOME 78.3 65.0 20
DILUTED EPS:
INCOME FROM CONTINUING OPERATIONS .96 .79 22
NET INCOME .96 .80 20
OTHER DATA
- Income before Taxes $119.1 $ 97.0 23%
- Depreciation and Amortization 18.5 14.1 31
- Interest 12.4 7.0 78
- EBITDA 150.0 118.1 27
- Cash Flow from Operating Activities 79.5 68.8 16
- Capital Expenditures 12.8 9.7 32
- Excess Tax Benefit from Stock-Based
Compensation 3.6 4.6 (21)
- Free Cash Flow 70.3 63.7 10
FIRST HALF ORDERS, SALES, INCOME AND EPS FROM CONTINUING OPERATIONS AHEAD OF
LAST YEAR
New orders for the first six months of 2007 totaled $699.2 million, 20 percent
higher than the first six months of last year. Excluding the impact of
acquisitions and foreign currency translation, orders in the first six months of
2007 were 7 percent higher than in 2006.
Sales for the first six months of 2007 increased 20 percent to $677.8 million
from $563.0 million a year earlier. Excluding the impact of acquisitions and
foreign currency translation, organic growth was 7 percent. Sales to
international customers from base businesses represented approximately 45
percent of total sales for the first six months of both 2007 and 2006.
First half operating margin was 19.2 percent, 80 basis points higher than the
18.4 percent reported in the prior-year period. Gross margin in first half 2007
improved 100 basis points to 42.4 percent, while selling, general and
administrative expenses as a percent of sales of 23.2 percent increased by 20
basis points from the first half of 2006, reflecting acquisitions and
reinvestment in the business to drive organic growth.
Year-to-date income from continuing operations of $78.7 million increased 23
percent compared to 2006. Diluted earnings per share from continuing operations
of 96 cents rose 17 cents, or 22 percent, from the 79 cents recorded for the
first half of 2006.
SEGMENT RESULTS
Fluid & Metering Technologies sales in the second quarter of $141.1 million
reflected 31 percent growth (23 percent acquisitions, 7 percent organic and 1
percent foreign currency translation). Strong global demand for
infrastructure-related applications, coupled with acquisitions, drove the sales
growth within the segment. Operating margin of 21.4 percent represented a 130
basis point improvement compared with the second quarter of 2006.
Health & Science Technologies sales in the second quarter of $82.4 million
reflected 1 percent growth. Compared to second quarter 2006, the expected
decline from the completion of specific, maturing OEM contracts resulted in
approximately 200 basis points of lower sales growth in the quarter. Operating
margin of 18.4 percent represented a 50 basis point improvement compared with
the second quarter of 2006.
Dispensing Equipment sales of $49.9 million in the second quarter reflected 12
percent growth (7 percent organic and 5 percent foreign currency translation)
due primarily to the improved market conditions in Europe. Operating margin of
28.6 percent represented a 230 basis point improvement compared with the second
quarter of 2006.
Fire & Safety/Diversified Products sales in the second quarter of $72.8 million
reflected 13 percent growth (10 percent organic and 3 percent foreign currency
translation) driven by continued innovation and increased global demand.
Operating margin of 24.9 percent represented a 30 basis point decline compared
with the second quarter of 2006.
For the second quarter of 2007, Fluid & Metering Technologies contributed 41
percent of sales and 39 percent operating income; Health & Science Technologies
accounted for 24 percent of sales and 20 percent of operating income; Dispensing
Equipment accounted for 14 percent of sales and 18 percent of operating income;
and Fire & Safety/Diversified Products represented 21 percent of sales and 23
percent of operating income.
ACQUISITION OF QUADRO ENGINEERING
As previously announced, on June 12, 2007, the company acquired Quadro
Engineering, a leading provider of particle control solutions for the
pharmaceutical and bio-pharmaceutical markets. Headquartered in Waterloo,
Ontario, Canada, Quadro Engineering has revenues of approximately $22 million
(USD) and is being operated as a standalone unit within the company's Fluid &
Metering Technologies segment. The addition of Quadro Engineering is expected to
be accretive to IDEX's earnings beginning in 2008.
"We are extremely pleased with Quadro Engineering's decision to become part of
IDEX," said IDEX Chairman and Chief Executive Officer Larry Kingsley. "Quadro is
a technology leader in customized, critical particle control applications,
providing a basis for us to serve selective, higher growth sanitary applications
worldwide. Quadro's capabilities expand IDEX's ability to provide customized
solutions for the movement, transformation, measurement and dispensing of high
value fluids and solids."
STRONG FINANCIAL POSITION
IDEX ended the quarter with total assets of $1.7 billion and working capital of
$98 million. Total borrowings were $329 million at June 30, 2007. Free cash flow
(cash flow from operating activities less capital expenditures plus the excess
tax benefit from stock-based compensation) for the first half of 2007 was $70
million. Year-to-date, 2007 EBITDA (earnings before interest, taxes,
depreciation and amortization) totaled $150 million (22 percent of sales) and
covered interest expense by 12 times. Debt-to-total capitalization at June 30,
2007, was 24 percent.
PROGRESS CONTINUES ON GROWTH INITIATIVES: COMMERCIAL AND OPERATIONAL EXCELLENCE
"Commercial and operational excellence remain at the foundation of our business
to drive innovation and leveraged earnings growth," Kingsley said. "We continue
to reinvest in marketing and sales to expand our served market and deploy new,
company-wide best practices in adjacent market identification. Our focus on
applied fluidics solutions and other carefully targeted engineered products
segments, such as our expansion into critical particle control applications
through the recent acquisition of Quadro, continues to serve as the basis for
geographic, product and industry segment expansion.
"Our operating mindset, which centers on Mixed Model Lean, enables us to respond
flexibly to new market and customer requirements across all four business
segments," Kingsley said. "We are focused on reducing plant cycle times and lead
times to help customers remain competitive. At the same time, other continuous
improvement and strategic sourcing initiatives are improving our operating
efficiency. This contributed to the 110 basis point improvement in our operating
margin in the second quarter to 20 percent."
CONFERENCE CALL TO BE BROADCAST OVER THE INTERNET
IDEX will broadcast its second quarter earnings conference call over the
Internet on Tuesday, July 24, 2007 at 1:30 p.m. CDT. Chairman and Chief
Executive Officer Larry Kingsley and Vice President and Chief Financial Officer
Dominic Romeo will discuss the company's recent financial performance and
respond to questions from the financial analyst community. IDEX invites
interested investors to listen to the call and view the accompanying slide
presentation, which will be carried live on its website at www.idexcorp.com.
Those who wish to participate should log on several minutes before the
discussion begins. After clicking on the presentation icon, investors should
follow the instructions to ensure their systems are set up to hear the event and
view the presentation slides, or download the correct applications at no charge.
Investors also will be able to hear a replay of the call by dialing 800.642.1687
or 706.645.9291 and using conference ID #5708063.
A NOTE ON EBITDA AND FREE CASH FLOW
EBITDA means earnings before interest, income taxes, depreciation and
amortization, while free cash flow means cash flow from operating activities
less capital expenditures plus the excess tax benefit from stock-based
compensation. Management uses these non-GAAP financial measures as internal
operating metrics and for enterprise valuation purposes. Management believes
these measures are useful as analytical indicators of leverage capacity and debt
servicing ability, and uses them to measure financial performance as well as for
planning purposes. However, they should not be considered as alternatives to net
income, cash flow from operating activities or any other items calculated in
accordance with U.S. GAAP, or as an indicator of operating performance. The
definitions of EBITDA and free cash flow used here may differ from those used by
other companies.
FORWARD-LOOKING STATEMENTS
This news release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Exchange Act of 1934, as amended. These statements may relate to, among other
things, capital expenditures, cost reductions, cash flow, and operating
improvements and are indicated by words or phrases such as "anticipate,"
"estimate," "plans," "expects," "projects," "should," "will," "management
believes," "the company believes," "the company intends," and similar words or
phrases. These statements are subject to inherent uncertainties and risks that
could cause actual results to differ materially from those anticipated at the
date of this news release. The risks and uncertainties include, but are not
limited to, the following: economic and political consequences resulting from
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 order rates and IDEX's
results, particularly in light of the low levels of order backlogs it typically
maintains; its ability to make acquisitions and to integrate and operate
acquired businesses on a profitable basis; the relationship of the U.S. dollar
to other currencies and its impact on pricing and cost competitiveness;
political and economic conditions in foreign countries in which the company
operates; interest rates; capacity utilization and the effect this has on costs;
labor markets; market conditions and material costs; and developments with
respect to contingencies, such as litigation and environmental matters. The
forward-looking statements included here are only made as of the date of this
news release, and management undertakes no obligation to publicly update them to
reflect subsequent events or circumstances. Investors are cautioned not to rely
unduly on forward-looking statements when evaluating the information presented
here.
ABOUT IDEX
IDEX Corporation is an applied solutions company specializing in fluid and
metering technologies, health and science technologies, dispensing equipment,
and fire, safety and other diversified products built to its customers' exacting
specifications. Its products are sold in niche markets to a wide range of
industries throughout the world. IDEX shares are traded on the New York Stock
Exchange and Chicago Stock Exchange under the symbol "IEX".
IDEX CORPORATION
Add -6-
IDEX CORPORATION
CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
SECOND
QUARTER ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------- -------------------
2007 2006 2007 2006
-------- -------- -------- --------
NET SALES $344,482 $296,573 $677,750 $562,961
COST OF SALES 196,948 173,652 390,552 329,907
-------- -------- -------- --------
GROSS PROFIT 147,534 122,921 287,198 233,054
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 78,669 66,937 156,781 129,292
-------- -------- -------- --------
OPERATING INCOME 68,865 55,984 130,417 103,762
OTHER INCOME - NET 521 258 1,094 269
INTEREST EXPENSE 6,058 4,061 12,437 7,002
-------- -------- -------- --------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 63,328 52,181 119,074 97,029
PROVISION FOR INCOME TAXES 21,493 17,562 40,408 32,829
-------- -------- -------- --------
INCOME FROM CONTINUING OPERATIONS 41,835 34,619 78,666 64,200
INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAX (205) 337 (369) 834
-------- -------- -------- --------
NET INCOME $ 41,630 $ 34,956 $ 78,297 $ 65,034
======== ======== ======== ========
BASIC EARNINGS PER COMMON SHARE:
CONTINUING OPERATIONS $ 0.52 $ 0.44 $ 0.98 $ 0.81
DISCONTINUED OPERATIONS -- -- (0.01) 0.01
-------- -------- -------- --------
NET INCOME $ 0.52 $ 0.44 $ 0.97 $ 0.82
======== ======== ======== ========
DILUTED EARNINGS PER COMMON SHARE:
CONTINUING OPERATIONS $ 0.51 $ 0.43 $ 0.96 $ 0.79
DISCONTINUED OPERATIONS -- -- -- 0.01
-------- -------- -------- --------
NET INCOME $ 0.51 $ 0.43 $ 0.96 $ 0.80
======== ======== ======== ========
SHARE DATA:
BASIC WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 80,595 79,521 80,429 79,237
DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 82,046 81,043 81,855 80,928
======== ======== ======== ========
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
JUNE 30, DECEMBER 31,
2007 2006
---------- ------------
ASSETS
CURRENT ASSETS
CASH AND CASH EQUIVALENTS $ 52,025 $ 77,941
RECEIVABLES - NET 199,320 166,485
INVENTORIES 174,054 160,687
ASSETS HELD FOR SALE 776 829
OTHER CURRENT ASSETS 20,093 11,966
---------- ----------
TOTAL CURRENT ASSETS 446,268 417,908
PROPERTY, PLANT AND EQUIPMENT - NET 169,513 165,949
GOODWILL AND INTANGIBLE ASSETS 1,128,378 1,083,963
OTHER NONCURRENT ASSETS 4,953 3,001
---------- ----------
TOTAL ASSETS $1,749,112 $1,670,821
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
TRADE ACCOUNTS PAYABLE $ 90,991 $ 75,444
ACCRUED EXPENSES 89,371 95,170
SHORT-TERM BORROWINGS 158,240 8,210
LIABILITIES HELD FOR SALE 129 373
DIVIDENDS PAYABLE 9,758 8,055
---------- ----------
TOTAL CURRENT LIABILITIES 348,489 187,252
LONG-TERM BORROWINGS 170,404 353,770
OTHER NONCURRENT LIABILITIES 163,376 150,527
---------- ----------
TOTAL LIABILITIES 682,269 691,549
SHAREHOLDERS' EQUITY 1,066,843 979,272
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,749,112 $1,670,821
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-MORE-
IDEX CORPORATION
ADD -7-
IDEX CORPORATION
COMPANY AND BUSINESS GROUP FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS)
SECOND
QUARTER ENDED SIX MONTHS ENDED
JUNE 30, (A) JUNE 30, (A)
------------------- -------------------
2007 2006 2007 2006
-------- -------- -------- --------
FLUID & METERING TECHNOLOGIES
NET SALES $141,094 $107,840 $277,800 $209,760
OPERATING INCOME (B) 30,133 21,646 59,884 41,405
OPERATING MARGIN 21.4% 20.1% 21.6% 19.7%
DEPRECIATION AND AMORTIZATION $ 4,269 $ 2,507 $ 8,118 $ 4,740
CAPITAL EXPENDITURES 3,473 1,103 6,109 2,235
HEALTH & SCIENCE TECHNOLOGIES
NET SALES $ 82,370 $ 81,299 $163,090 $144,320
OPERATING INCOME (B) 15,167 14,513 29,030 26,793
OPERATING MARGIN 18.4% 17.9% 17.8% 18.6%
DEPRECIATION AND AMORTIZATION $ 2,277 $ 2,444 $ 4,846 $ 3,843
CAPITAL EXPENDITURES 1,129 1,506 2,780 2,383
DISPENSING EQUIPMENT
NET SALES $ 49,859 $ 44,415 $ 97,752 $ 85,823
OPERATING INCOME (B) 14,248 11,688 25,952 22,018
OPERATING MARGIN 28.6% 26.3% 26.5% 25.7%
DEPRECIATION AND AMORTIZATION $ 1,030 $ 1,052 $ 1,577 $ 2,065
CAPITAL EXPENDITURES 1,462 531 1,754 1,190
FIRE & SAFETY/DIVERSIFIED PRODUCTS
NET SALES $ 72,808 $ 64,552 $142,004 $125,768
OPERATING INCOME (B) 18,117 16,267 33,475 29,922
OPERATING MARGIN 24.9% 25.2% 23.6% 23.8%
DEPRECIATION AND AMORTIZATION $ 1,529 $ 1,540 $ 3,054 $ 3,078
CAPITAL EXPENDITURES 813 1,628 1,699 2,766
COMPANY
NET SALES $344,482 $296,573 $677,750 $562,961
OPERATING INCOME 68,865 55,984 130,417 103,762
OPERATING MARGIN 20.0% 18.9% 19.2% 18.4%
DEPRECIATION AND AMORTIZATION (C) $ 9,340 $ 7,802 $ 18,479 $ 14,095
CAPITAL EXPENDITURES 7,347 5,688 13,130 9,703
(a) Second quarter data includes acquisition of Quadro (June 2007) in the Fluid
& Metering Technologies Group and EPI (May 2006) in the Health & Science
Technologies Group, while six month data includes acquistion of Quadro in
the Fluid & Metering Technologies Group, JUN-AIR (February 2006) and EPI in
the Health & Science Technologies Group and Airshore (January 2006) in the
Fire & Safety/Diversified Products Group from the dates of acquisition.
(b) Group operating income excludes unallocated corporate operating expenses.
(c) Excludes amortization of debt issuance expenses and unearned compensation.
