2015 ANNUAL REPORT
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IDEX Corporation • 1925 West Field Court, Suite 200 • Lake Forest, Illinois 60045 USA • www.idexcorp.com
2 015 AN NUAL RE PO RT
the value of our the value of our values
As the foundation of our Operating Model, the IDEX Values unite our
teams around the world. They are the behaviors that encourage and guide
our employees to do and be their best every day. The value of our values is
reflected in their efforts and the results we achieve together.
IDEX CORPORATION IS A GLOBAL LEADER
in applied solutions, specializing in fluid
and metering technologies, health and
science technologies, and fire, safety
and other diversified products in high-
growth markets. IDEX was founded
in 1987 and stands for Innovation,
Diversity and Excellence. Our company
trades under the symbol “IEX” on the
New York Stock Exchange and Chicago
Stock Exchange. Headquartered in Lake
Forest, IL, USA, we have operating
facilities across five continents with
more than 6,800 dedicated employees
worldwide. For more information, visit
www.idexcorp.com.
Stockholder
CORPORATE OFFICE
IDEX Corporation
1925 West Field Court, Suite 200
Lake Forest, Illinois 60045 USA
847.498.7070
INVESTOR INFORMATION
Inquiries from stockholders and
prospective investors should be directed
to Heath Mitts, Senior Vice President and
DIVIDEND POLICY
ANNUAL MEETING
IDEX paid a quarterly dividend of
The Annual Meeting of IDEX stockholders
$0.32 per share on its common stock on
will be held on April 6, 2016, at 9:00 a.m.
January 29, 2016. The declaration of
Central Time at:
future dividends is within the discretion
of the Company’s Board of Directors and
will depend upon, among other things,
business conditions, and IDEX’s earnings
and financial conditions.
The Westin North Shore Hotel
601 North Milwaukee Avenue
Wheeling, Illinois 60090
CERTIFICATIONS
IDEX Corporation has included as
Exhibit 31 to its Annual Report on Form
10-K for fiscal year 2015 filed with the
Securities and Exchange Commission
certificates of its Chief Executive Officer
and Chief Financial Officer certifying
the quality of IDEX Corporation’s public
disclosure. IDEX Corporation has also
submitted to the New York Stock Exchange
(NYSE) a certificate of its Chief Executive
Officer certifying that he was not aware of
any violation by IDEX Corporation of NYSE
corporate governance listing standards as
of the date of the certification.
Chief Financial Officer, at the Corporate
STOCK MARKET INFORMATION
Office. Further information may also be
IDEX common stock was held by an
obtained at www.idexcorp.com.
estimated 6,760 stockholders at
REGISTRAR AND TRANSFER AGENT
Inquiries about stock transfers, address
changes or IDEX’s dividend reinvestment
December 31, 2015, and is traded under
the symbol “IEX” on the New York Stock
Exchange and Chicago Stock Exchange.
program should be directed to:
PUBLIC FILINGS
Computershare
P.O. Box 30170
866.282.4944
College Station, Texas 77842-3170
www.computershare.com/investor
INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
Deloitte & Touche LLP
111 South Wacker Drive
Chicago, Illinois 60606
Stockholders may obtain a copy of
a Form 10-K, 8-K, or 10-Q filed with
the United States Securities and
Exchange Commission via our website
at www.idexcorp.com or by written
request to the attention of Mark
Zanichelli, Director, Financial Planning
and Analysis, at the Corporate Office.
QUARTERLY STOCK PRICE
2015
2014
High
Low
Close
High
Low
Close
FIRST
$ 78.85
69.44
75.83
68.58
72.89
SECOND
$ 80.31
73.80
78.58
69.17
80.74
THIRD
$ 79.61
66.88
71.30
72.27
72.37
FOURTH
$ 79.59
69.40
76.61
65.91
77.84
$ 79.27
$ 80.85
$ 81.82
$ 78.97
Brand names shown in this report are registered trademarks of IDEX Corporation and/or its subsidiaries.
DESIGN BY DIX & EATON
Financial Highlights
Dollars in thousands, except per share amounts
Years ended December 31
Results of Operations
Net sales
Adjusted operating income*
Adjusted net income*
Free cash flow
Financial Position
Total assets
Total borrowings
Shareholders’ equity
Performance Measures
Percent of net sales:
Adjusted operating income*
Adjusted net income*
Return on average assets*
Net debt as a percent of capitalization
Return on average shareholders’ equity*
Per Share Data
Adjusted net income*
Cash dividends declared
Shareholders’ equity
Other Data
Employees at year end
Stockholders at year end
Diluted weighted average
shares outstanding (in thousands)
2015
2014
$2,020,668
$2,147,767
424,907
277,229
321,810
$2,805,443
840,794
1,443,291
21.0%
13.7%
9.7%
26.2%
18.9%
$3.55
1.28
18.86
6,801
6,760
77,972
444,896
288,823
326,239
$2,903,463
859,345
1,486,451
20.7%
13.4%
10.0%
19.1%
18.9%
$3.57
1.12
18.87
6,712
6,500
80,728
*Amounts have been adjusted; refer to non-GAAP reconciliations within Item 6. Selected Financial Data, of Form 10-K.
NET SALES
Dollars in billions
CAGR 2%
$2.02
FREE CASH FLOW
Dollars in millions
CAGR 9%
$322
EARNINGS PER SHARE*
CAGR 9%
$3.55
$2.5
2.0
1.5
1.0
0.5
0.0
$400
300
200
100
0
$3.75
3.00
2.25
1.50
0.75
0.00
2015 ANNUAL REPORT 1
IDEX
BRANDS
Banjo / Corken / Faure Herman / Liquid
Controls / SAMPI / Toptech Systems /
Accusonic / ADS / Hydra-Stop / IETG /
iPEK / Knight / OBL / Pulsafeeder / Trebor /
Warren Rupp (including SANDPIPER,
Versa-Matic, Blagdon and Pumper Parts) /
Aegis / Richter / Viking / Wright Flow
Technologies / Alfa Valvole
FEATURES HIGHLY ENGINEERED
PRODUCTS including pumps, valves,
meters and systems that help in
the processing, measurement and
distribution of liquids, gases and
solids. Our core capabilities support
growth in process industries such as
chemical processing, oil and gas and
water treatment. With operations
on five continents, we work with
our customers to develop the right
applied solutions to meet their
specifications.
5% 2%
5% 2%
7%
7%
29%
29%
14%
14%
19%
19%
24%
24%
2015 END MARKETS
29%
Industrial
24%
Energy
19%
Chemical Processing
14%
7%
5%
Water
Agriculture
Food & Pharma
2% Other
SERVES THE life sciences,
pharmaceutical and cosmetics,
analytical instrumentation, clinical
diagnostics and drug discovery,
medical, dental, optical components,
scientific research, defense, aerospace,
telecommunications, beverage,
food processing and electronics
manufacturing industries. Known
for extremely precise components
and integrated solutions delivering
consistent, repeatable results, we are
helping to support innovation across
our markets.
2%2%
2%2%
4%
4%
6%
6%
29%
29%
32%
32%
9%
9%
10%
10%
14%
14%
21%
21%
2
43% of sales36% of saleshealth & science TECHNOLOGIESfluid & metering TECHNOLOGIES IDEX IS AN APPLIED SOLUTIONS PROVIDER SERVING NICHE MARKETS WORLDWIDE. We are best known for our expertise
in highly engineered fluidics systems and components, as well as for our expertise in fire and safety products. A strong
foothold in developed countries has allowed us to make great strides to expand our footprint in emerging markets, where
we see tremendous potential for growth across all our segments. From leak detection within water infrastructure to
enabling the push toward personalized medicine, IDEX is a leader in creating enabling technology, and improving business
prospects for a diverse customer set across the globe.
BRANDS
Class 1 / Godiva / Hale / Dinglee /
HURST Jaws of Life® / LUKAS / Vetter /
BAND-IT / Fast & Fluid Management /
Fluid Management
BRANDS
Eastern Plastics / ERC / IDEX Health &
Science / Isolation Technologies /
Rheodyne / Sapphire Engineering /
Systec / Upchurch Scientific / CiDRA
Precision Services / AT Films /
CVI Laser Optics / Melles Griot / Precision
Photonics / Semrock / Gast / JUN-AIR /
Fitzpatrick / Microfluidics / Matcon /
Quadro Engineering / Micropump /
Precision Polymer Engineering / FTL Seals /
Novotema
INCLUDES A BROAD RANGE of high-
value, in-demand niche products
including firefighting pumps and
controls, rescue tools, lifting bags
and other components and systems
for the fire and rescue industry;
engineered stainless steel banding
and clamping devices used in a
variety of industrial and commercial
applications; and precision equipment
for dispensing and mixing colorants
and paints used in a variety of retail
and commercial businesses around
the world.
2015 END MARKETS
32%
Analytical Instruments
21%
Industrial
14%
Food & Pharma
10% Medical/Dental
9%
Life Sciences
6%
Semiconductor/Electronics
4% Military/Defense
2%
2%
Printing
Other
2015 END MARKETS
29% Dispensing
25%
24%
22%
Rescue Tools
Fire Suppression
Band Clamping
22%
29%
24%
25%
2015 ANNUAL REPORT 3
21% of salesfire & safety/diversified PRODUCTS Dear Fellow
Trust. Team. Excellence. These are simple concepts,
but they have deep meaning to all of us at IDEX.
When we set out more than 18 months ago to cement the
Our strong cash flow and balance sheet allow us to continue to
values for our company, we wanted to articulate what it is that
reward our stockholders. This past December, the Board of Directors
defines and differentiates IDEX as an organization. What’s
declared our 85th consecutive regular quarterly dividend and
important to us. What we expect from ourselves and from one
authorized up to $300 million in additional share repurchases.
another. What we aspire to. The non-negotiables. The heart and
The success of each of our business segments in 2015 offers
soul of IDEX.
further evidence of the value of our values.
We did so from the perspective of let’s understand, not
let’s tell. Led by a small core team, the tremendous effort
represented input from a diverse group of nearly 4,000 employees
in 16 countries, as well as feedback from partners and customers
from across the globe.
The broad perspectives – from newer and longer-term
employees, hourly and salaried, men and women – represented
a cross-section of our businesses and geographies and provided
rich insights into the fabric of IDEX. In the end, certain themes
consistently stood out in capturing the culture that shapes us today
and our aspirations for the future.
It is these values – Trust. Team. Excellence. – that drive us
as we carry out our strategy. These values extend to all of our
constituents. From the communities in which we live to our supplier
partners, and to our customers, we pledge to uphold our values. To
you, our fellow owners, the IDEX team is committed to earning and
keeping your trust by building an organization that will stand the
test of time and consistently deliver superior profitable growth.
The value of our values is reflected in the efforts of our
talented people, and given the current environment I am very
pleased with the relative performance we have achieved. Despite
tremendous headwinds in many areas of our business, our teams
• Fluid and Metering Technologies (FMT) revenues were
$861 million and adjusted operating income was $212 million,
representing 43 percent of total IDEX sales and operating
income, respectively. Although challenged by depressed
commodity prices including weakness in the agriculture and oil &
gas markets, our teams worked hard to improve profitability and
create opportunities through new product development, market
segmentation and effective cost management. A slight uptick in
the municipal marketplace benefited our Water platform, while
the acquisition of Alfa Valvole added important technologies to
our rapidly expanding specialty Valve platform.
• Health and Science Technologies (HST) sales of $739 million
were 36 percent of total IDEX sales while adjusted operating
income of $161 million was 33 percent of operating income.
IDEX Health & Science LLC, which enjoyed a particularly
strong year, was further enhanced by the acquisition of CiDRA
Precision Services, a critical building block to our microfluidic
and nanofluidics technologies. Success in the pharma and food
markets drove growth in the Material Process Technologies
business, and the Novotema acquisition added to the global
build-out of our Sealing Solutions platform.
are making decisions that reflect our values and the long-term
• Fire and Safety/Diversified Products (FSD) recorded
interests of our company and our customers. They are doing an
$424 million in sales and $116 million in adjusted operating
outstanding job of improving our position in the marketplace and
income, representing 21 percent of total IDEX sales and
increasing profitability.
24 percent of operating income. Despite the absence of
IDEX achieved $2 billion in sales in 2015, with adjusted
significant volume from several major one-time projects it served
net income of $277 million and adjusted earnings per share of
the year before, success in the Dispensing platform was driven
$3.55. Companywide, adjusted operating margins remain strong
by improvement in construction markets in several key regions,
at 21 percent, 30 basis points higher than 2014 levels, and our
as well as the continued strength of the entry-level X-Smart
balance sheet remains extremely favorable with a net leverage
dispenser. Meanwhile, the Fire Suppression business and
ratio of 1.0x and net debt to capitalization at 26 percent.
4
ANDREW K. SILVERNAIL
Chairman and Chief Executive Officer
BAND-IT, our band clamping business, offset market softness
At IDEX, our culture is to win as a team in a high-performance
by segmenting our products and customers to improve their
environment where people are invited to do and be their best every
business mix.
day. Our values are the foundation of our culture and guide our
As I devote even greater attention to accelerating the
growth of IDEX through organic investments and strategic
acquisitions, I am very pleased to have Eric Ashleman as our
Senior Vice President and Chief Operating Officer.
Eric was promoted last July, and we have worked closely
together since I joined the company. He has been instrumental
in developing the IDEX Operating Model and building a strong
talent bench, while delivering exceptional results in each of his
previous leadership roles.
We are also very pleased to welcome Katrina Helmkamp to
our Board of Directors. Ms. Helmkamp brings strategic vision
and experience across multiple markets and technologies,
having previously served as CEO of SVP Worldwide and
held leadership positions at Whirlpool Corporation and The
ServiceMaster Company.
decisions and actions.
Throughout this annual report, you will see examples of how
our people are applying our values to the important work that
we do in improving lives. As always, thank you to our customers,
suppliers, employees and stockholders for believing in IDEX and all
that we value.
Andrew K. Silvernail
Chairman and Chief Executive Officer
March 2, 2016
2015 ANNUAL REPORT 5
6
TRUSTIt all begins with•Make and keep commitments • Be credible, competent and transparent with the facts • Act with courage, candor and compassion A shared set of values is essential in an organization as diverse and
decentralized as IDEX, which is comprised of businesses representing
a wide variety of origins and histories. And it all begins with trust.
Within their businesses and across our segments and company, our people
are entrusted to make decisions based on good judgment, transparency
and efficiency, unencumbered by bureaucracy. They are empowered and
encouraged to express themselves with candor in front of peers and
superiors alike – even in societies where that is uncommon and may seem
uncomfortable at first. They know they can count on one another to do what
they say they will do.
With trust as a strong foundation, associates embrace the IDEX Values
and look for opportunities to weave them deeper into our culture. The “trust
team” at iPEK’s locations in Germany and Austria, for example, created “Values
Feedback Boxes” to solicit concrete ideas for work-related improvements.
But trust is much more than an internal mantra.
We’re able to win in our markets because of our trust-based relationships
with key channel partners and OEMs. Customers rely on us for their critical
applications not only because they trust our engineering expertise but because
they know we will work with them to find the best solution and see it through.
The expanded SANDPIPER® Heavy Duty Flap Pump line from Warren Rupp
and Viking’s new XPD series of fully compliant API 676 internal gear pumps,
backed by a five-year warranty, are among many innovations that address
customer challenges.
In everything we do, we strive to earn the trust of our stockholders by
demonstrating that IDEX is a high-performing company worthy of their
investment and by delivering exceptional value over the long term.
2015 ANNUAL REPORT 7
• Make and keep commitments • Be credible, competent and transparent with the facts • Act with courage, candor and compassion 8
TEAMIt takes a •Insist on winning together with integrity • Insist on winning together with integrity • Embrace diversity • Service before self In the highly collaborative team environment at IDEX, no one
has to go it alone. When it comes to tackling problems and
going after opportunities, we’re in it together.
From specialized customer account teams and local teams within departments
to cross-functional teams that span geographies and link multiple business units,
IDEX associates thrive as part of something bigger than themselves. They see the
incremental value of what can be accomplished together and want to do and be
their best every day so as not to let the team down.
Any great team needs a steady stream of talent and leadership. Skill
development at all levels is a priority at IDEX, including training programs within
each business as well as the IDEX Academy, our multi-tiered leadership
development curriculum.
At Lukas Hydraulik, for example, a “team” component has been incorporated into
Young Talent Training for junior associates. Lukas employees have also incorporated
the team concept into the restructuring of their shipping department.
The team approach is also inherent in the efforts of the IDEX Foundation,
which helps to engage IDEX businesses and employees in their local communities.
During the past year, local events in four countries enabled IDEX associates to
reap the intangible benefits of camaraderie with their colleagues while touching
thousands of lives in their communities. The Toptech team, for example, created
a learning lab at a local Boys & Girls Club; several dozen employees from Liquid
Controls pitched in to gut and replace a badly outdated kitchen at the Boys &
Girls Club in their community; and CVI Laser Optics employees served meals to
the homeless and helped to update a local shelter.
Our goal is to win as a team, but never at all costs. We insist on integrity and
have no tolerance for actions that are unethical or that compromise our values.
Employees know that there are many ways to report any concerns, including
directly to the CEO.
2015 ANNUAL REPORT 9
•Insist on winning together with integrity • Embrace diversity • Service before self•Embrace diversity • Service before self 10
EXCELLENCEIt all comes down to •Exercise discipline and focus • Make a positive impact • Exercise discipline and focus • Make a positive impact • Build a legacy of greatness The IDEX Values define the culture we are building across the
enterprise. They are the compass that guides the decisions
we make.
Across the organization, our associates are embracing these values, making
them part of their daily routine and looking for opportunities to apply new
approaches and ideas.
Yet while trust, team and excellence are interwoven in the fabric of our
organization, there is one value that stands out.
We strive for excellence in everything we are and in everything we do.
An excellent place to work. Excellent solutions for customers. An excellent
member of the community. Excellence in delivering for stockholders.
We are shaping a culture where people can achieve their goals and
aspirations and are recognized for living our values.
A 25-foot “values wall” near the entrance to CVI Laser Optics reminds
employees, customers and other visitors of our values. A reward program at
Fluid Management recognizes employees who go above and beyond. And at
Pulsafeeder EPO, every employee town hall meeting highlights examples of
how our values are at the core of the way we operate the business.
An outstanding testimony to our values and culture is IDEX India, which
opened its second plant this past year to meet burgeoning demand. In
a growing economy where competition for talent is fierce and employee
turnover can approach 30 percent, our attrition rate is virtually zero.
Ultimately, delivering excellence requires building trust and working as a
team to serve our customers.
At Gast Manufacturing, such an effort led to a new air motor being
designed, prototyped and delivered to a new customer in only a few weeks.
Just as importantly, it resulted in the awarding of two major contracts and the
launch of a new product platform to take to new markets.
Now, that’s The Value of Our Values.
2015 ANNUAL REPORT 11
•Exercise discipline and focus • Make a positive impact • Build a legacy of greatness •Build a legacy of greatness Global
NORTH AMERICA
41
locations
ASIA
14
locations
EUROPE
30
locations
SOUTH AMERICA
1
location
CORPORATE
HEADQUARTERS
Lake Forest, IL
UNITED STATES
Huntsville, AL
Carlsbad, CA
Lake Forest, CA
Rohnert Park, CA
Boulder, CO
Denver, CO
Bristol, CT
Wallingford, CT
Longwood, FL
Ocala, FL
Punta Gorda, FL
Cedar Falls, IA
Burr Ridge, IL
Chicago, IL
Elmhurst, IL
Lake Bluff, IL
Wheeling, IL
Crawfordsville, IN
Geismar, LA
Middleboro, MA
12
New Bedford, MA
Newton, MA
Benton Harbor, MI
Shelby, NC
Albuquerque, NM
Rochester, NY
Mansfield, OH
Oklahoma City, OK
Brenham, TX
Houston, TX
Pasadena, TX
West Jordan, UT
Oak Harbor, WA
Vancouver, WA
AUSTRALIA
Melbourne
Sydney
Unanderra
AUSTRIA
Hirschegg
BELGIUM
Zwijndrecht
BRAZIL
Valinhos
CANADA
Edmonton, AB
Mississauga, ON
Waterloo, ON
Windsor, ON
CHINA
Beijing
Chengdu
Guangzhou
Shanghai
Suzhou
Tianjin
FRANCE
La Ferté-Bernard
GERMANY
Bensheim
Erlangen
Kempen
Sulzberg
Zülpich
INDIA
Mumbai
Vadodara
IRELAND
Shannon, County Clare
ITALY
Altopascio
Casorezzo
Cinisello Balsamo
Segrate
Villongo
JAPAN
Kawaguchi
Tamagawa
Tokyo
MEXICO
Juárez
Mexico City
THE NETHERLANDS
Breda
Didam
Sassenheim
Woerden
AUSTRALIA
3
locations
SINGAPORE
SOUTH KOREA
Bucheon
SWEDEN
Stockholm
UNITED ARAB EMIRATES
Dubai
UNITED KINGDOM
Aberdeen
Blackburn
Eastbourne
Leeds
Leicester
Lewes
Redditch
Sevenoaks
Staveley
Warwick
Worcestershire
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the Fiscal Year Ended December 31, 2015
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the Transition Period From
to
Commission file number 1-10235
IDEX CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Delaware
36-3555336
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
1925 West Field Court, Lake Forest, Illinois
(Address of principal executive offices)
60045
(Zip Code)
Registrant’s telephone number:
(847) 498-7070
Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each Class
Common Stock, par value $.01 per share
Name of Each Exchange on Which Registered
New York Stock Exchange
and Chicago Stock Exchange
Securities Registered Pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
No
Act. Yes
No
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
No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files). Yes
No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act. (Check one):
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
The aggregate market value, as of the last business day of the registrant’s most recently completed second fiscal quarter, of the
common stock (based on the June 30, 2015 closing price of $78.58) held by non-affiliates of IDEX Corporation was $6,085,231,271.
No
The number of shares outstanding of IDEX Corporation’s common stock, par value $.01 per share, as of February 16, 2016 was
75,929,397.
Portions of the proxy statement with respect to the IDEX Corporation 2016 annual meeting of stockholders (the “2016 Proxy
Statement”) are incorporated by reference into Part III of this Form 10-K.
DOCUMENTS INCORPORATED BY REFERENCE
Table of Contents
PART I.
Business
Item 1.
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 2.
Properties
Legal Proceedings
Item 3.
Item 4. Mine Safety Disclosures
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
PART II.
Selected Financial Data
Item 6.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 8.
Item 9.
Item 9A. Controls and Procedures
Item 9B. Other Information
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
PART III.
Item 10. Directors, Executive Officers and Corporate Governance
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14. Principal Accountant Fees and Services
Item 15. Exhibits and Financial Statement Schedules
Signatures
Exhibit Index
PART IV.
1
8
10
10
11
11
12
14
19
28
30
72
72
72
73
73
73
73
73
74
75
76
PART I
Cautionary Statement Under the Private Securities Litigation Reform Act
This report contains “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of
1995, as amended. These statements may relate to, among other things, capital expenditures, acquisitions, cost reductions, cash
flow, revenues, earnings, market conditions, global economies and operating improvements, and are indicated by words or
phrases such as “anticipate,” “estimate,” “plans,” “expects,” “projects,” “forecasts,” “should,” “could,” “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
report. 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 report, and
management undertakes no obligation to publicly update them to reflect subsequent events or circumstances, except as may be
required by law. Investors are cautioned not to rely unduly on forward-looking statements when evaluating the information
presented here.
Item 1.
Business.
IDEX Corporation (“IDEX,” the “Company,” “us,” “our,” or “we”) is a Delaware corporation incorporated on
September 24, 1987. The Company is an applied solutions business that sells an extensive array of pumps, flow meters and
other fluidics systems and components and engineered products to customers in a variety of markets around the world. All of
the Company’s business activities are carried out through wholly-owned subsidiaries.
The Company has three reportable business segments: Fluid & Metering Technologies (“FMT”), Health & Science
Technologies (“HST”) and Fire & Safety/Diversified Products (“FSDP”). Within our three reportable segments, the Company
maintains fifteen platforms, where we focus on organic growth and strategic acquisitions. Each of our fifteen platforms is also a
reporting unit, where we annually test for goodwill impairment.
During the third quarter of 2015, the Company announced the appointment of Eric Ashleman as Chief Operating Officer.
While there were no changes to the reportable segments or movement of businesses between the reportable segments, the Company
no longer delineates between “platforms” and “groups” and made the following changes to how certain businesses are managed
internally:
•
•
•
•
Created the Valves platform as a result of the Alfa Valvole acquisition in June 2015.
Eliminated the Diaphragm and Dosing Pump Technology (“DDPT”) platform.
Created the Industrial platform from the businesses previously reported within Chemical, Food & Process (Richter,
Viking, and Aegis) plus the Warren Rupp and Trebor businesses from DDPT.
Created the Water platform from the businesses previously reported within Water Services & Technology (ADS, IETG,
and iPEK) plus the Pulsafeeder and Knight businesses from DDPT.
The Fluid & Metering Technologies segment contains the Energy (comprised of Corken, Faure Herman, Liquid Controls,
SAMPI and Toptech), Valves (comprised of Alfa Valvole), Water (comprised of Pulsafeeder, Knight, ADS, IETG, and iPEK),
Industrial (comprised of Richter, Viking, Aegis, Warren Rupp, and Trebor), and Agriculture (comprised of Banjo) platforms. The
Health & Science Technologies segment contains the Scientific Fluidics (comprised of Eastern Plastics, Rheodyne, Sapphire
Engineering, Upchurch Scientific, ERC, and CiDRA Precision Services), IDEX Optics & Photonics (comprised of CVI Melles
Griot, Semrock, and AT Films), Sealing Solutions (comprised of Precision Polymer Engineering, FTL Seals Technology, and
Novotema), Gast, Micropump, and Material Processing Technologies (comprised of Quadro, Fitzpatrick, Microfluidics, and
Matcon) platforms. The Fire & Safety/Diversified Products segment is comprised of the Fire Suppression (comprised of Class 1,
Hale and Godiva), Rescue (comprised of Dinglee, Hurst Jaws of Life, Lukas, and Vetter), Band-It, and Dispensing platforms.
IDEX believes that each of its reporting units is a leader in its product and service areas. The Company also believes that
its strong financial performance has been attributable to its ability to design and engineer specialized quality products, coupled
with its ability to identify and successfully consummate and integrate strategic acquisitions.
1
FLUID & METERING TECHNOLOGIES SEGMENT
The Fluid & Metering Technologies segment designs, produces and distributes positive displacement pumps, flow meters,
injectors, and other fluid-handling pump modules and systems and provides flow monitoring and other services for the food,
chemical, general industrial, water & wastewater, agriculture and energy industries. Fluid & Metering Technologies application-
specific pump and metering solutions serve a diverse range of end markets, including industrial infrastructure (fossil fuels, refined &
alternative fuels, and water & wastewater), chemical processing, agriculture, food & beverage, pulp and paper, transportation,
plastics and resins, electronics and electrical, construction & mining, pharmaceutical and bio-pharmaceutical, machinery and
numerous other specialty niche markets. Fluid & Metering Technologies accounted for 43%, 42% and 43% of IDEX’s sales in
2015, 2014 and 2013, respectively, with approximately 44% of its 2015 sales to customers outside the U.S. The segment accounted
for 43%, 43% and 47% of IDEX’s operating income in 2015, 2014 and 2013, respectively.
Energy. Energy consists of the Company’s Corken, Faure Herman, Liquid Controls, SAMPI and Toptech businesses.
Energy is a leading supplier of flow meters, electronic registration and control products, rotary vane and turbine pumps,
reciprocating piston compressors, and terminal automation control systems. Headquartered in Lake Bluff, Illinois (Liquid
Controls products), Energy has additional facilities in Longwood, Florida and Zwijndrecht, Belgium (Toptech products);
Oklahoma City, Oklahoma (Corken products); La Ferté Bernard, France (Faure Herman products); and Altopascio, Italy
(SAMPI products). Applications for Liquid Controls and SAMPI positive displacement flow meters, electronic, registration and
control products include mobile and stationary metering installations for wholesale and retail distribution of petroleum and
liquefied petroleum gas, aviation refueling, and industrial metering and dispensing of liquids and gases. Corken products
consist of positive-displacement rotary vane pumps, single and multistage regenerative turbine pumps, and small horsepower
reciprocating piston compressors. Toptech supplies terminal automation hardware and software to control and manage
inventories, as well as transactional data and invoicing, to customers in the oil, gas and refined-fuels markets. Faure Herman is
a leading supplier of ultrasonic and helical turbine flow meters used in the custody transfer and control of high value fluids and
gases. Approximately 44% of Energy’s 2015 sales were to customers outside the U.S.
Valves. Valves consists of the Company’s Alfa Valvole (“Alfa”) business. Alfa is a leader in the design, manufacture
and sale of specialty valve products for use in the chemical, petro-chemical, energy and sanitary markets. Located in
Casorezzo, Italy, Alfa’s products are used in various industrial fields for fluid control, in both gas and liquid form, in all sectors
of plant engineering, cosmetics, detergents, food industry, electric energy, pharmaceutical, chemical plants, petrochemical
plants, oil, heating/air conditioning and in all markets worldwide and also on ships, ferries and marine oil platforms. 100% of
Alfa’s 2015 sales were to customers outside the U.S.
Water. Water consists of the Company’s ADS, IETG, iPEK, Knight and Pulsafeeder businesses. Water is a leading
provider of metering technology, flow monitoring products and underground surveillance services for wastewater markets,
alloy and non-metallic gear pumps, peristaltic pumps, transfer pumps, as well as dispensing equipment for industrial laundries,
commercial dishwashing and chemical metering. ADS’s products and services provide comprehensive integrated solutions that
enable industry, municipalities and government agencies to analyze and measure the capacity, quality and integrity of
wastewater collection systems, including the maintenance and construction of such systems. IETG’s products and services
enable water companies to effectively manage their water distribution and sewerage networks, while its surveillance service
specializes in underground asset detection and mapping for utilities and other private companies. iPEK supplies remote
controlled systems used for infrastructure inspection. Knight is a leading manufacturer of pumps and dispensing equipment for
industrial laundries, commercial dishwashing and chemical metering. Pulsafeeder products (which also include OBL products)
are used to introduce precise amounts of fluids into processes to manage water quality and chemical composition, as well as
peristaltic pumps. Its markets include water & wastewater treatment, oil & gas, power generation, pulp & paper, chemical and
hydrocarbon processing, and swimming pools. Water maintains operations in Huntsville, Alabama and various other locations
in the United States and Australia (ADS products and services); Leeds, England (IETG products and services); Hirschegg,
Austria, and Sulzberg, Germany (iPEK products); Rochester, New York, Punta Gorda, Florida and Milan, Italy (Pulsafeeder
products); Lake Forest, California, Mississauga, Ontario, Canada, and Lewes, England, (Knight products); and a maquiladora
in Ciudad Juarez, Chihuahua, Mexico (Knight products). Approximately 40% of Water’s 2015 sales were to customers outside
the U.S.
Industrial. Industrial consists of the Company’s Richter, Viking, Aegis, Warren Rupp, and Trebor businesses. Industrial
is a producer of fluoroplastic lined corrosion-resistant magnetic drive and mechanical seal pumps, shut-off, control and safety
valves for corrosive, hazardous, contaminated, pure and high-purity fluids, as well as rotary internal gear, external gear, vane
and rotary lobe pumps, custom-engineered OEM pumps, strainers, gear reducers and engineered pump systems. Richter’s
products offer superior solutions for demanding and complex pump applications in the process industry. Viking’s products
consist of external gear pumps, strainers and reducers, and related controls used for transferring and metering thin and viscous
liquids sold under the Viking and Wright Flow brands. Viking products primarily serve the chemical, petroleum, pulp & paper,
plastics, paints, inks, tanker trucks, compressor, construction, food & beverage, personal care, pharmaceutical and biotech
2
markets. Aegis is a leader in the design, manufacture and sale of specialty chemical processing valves for use in the chemical,
petro-chemical, chlor-alkali, pharmaceutical, semiconductor and pulp & paper industries. Warren Rupp products (which also
include Pumper Parts and Versa-Matic products) are used for abrasive and semisolid materials as well as for applications where
product degradation is a concern or where electricity is not available or should not be used. Warren Rupp products, which
include air-operated diaphragm pumps, primarily serve the chemical, paint, food processing, electronics, construction, utilities,
oil & gas, mining and industrial maintenance markets. Trebor is a leader in high-purity fluid handling products, including air-
operated diaphragm pumps and deionized water-heating systems. Trebor products are used in manufacturing of
semiconductors, disk drives and flat panel displays. Industrial maintains operations in Kempen, Germany and Suzhou, China
(Richter products); Cedar Falls, Iowa (Viking, Wright Flow, and Richter products); Eastbourne, England (Wright Flow
products); and Shannon, Ireland (Viking and Blagdon products); Geismar, Louisiana (Aegis products); Mansfield, Ohio
(Warren Rupp products); Salt Lake City, Utah (Trebor products). Industrial primarily uses independent distributors to market
and sell its products. Approximately 51% of Industrial’s 2015 sales were to customers outside the U.S.
Agriculture. Agriculture consists of the Company’s Banjo business. Banjo is a provider of special purpose, severe-duty
pumps, valves, fittings and systems used in liquid handling. Banjo is based in Crawfordsville, Indiana with a facility in Didam,
The Netherlands, and its products are used in agriculture and industrial applications. Approximately 15% of Banjo’s 2015 sales
were to customers outside the U.S.
HEALTH & SCIENCE TECHNOLOGIES SEGMENT
The Health & Science Technologies segment designs, produces and distributes a wide range of precision fluidics, rotary
lobe pumps, centrifugal and positive displacement pumps, roll compaction and drying systems used in beverage, food
processing, pharmaceutical and cosmetics, pneumatic components and sealing solutions, including very high precision, low-
flow rate pumping solutions required in analytical instrumentation, clinical diagnostics and drug discovery, high performance
molded and extruded, biocompatible medical devices and implantables, air compressors used in medical, dental and industrial
applications, optical components and coatings for applications in the fields of scientific research, defense, biotechnology,
aerospace, telecommunications and electronics manufacturing, laboratory and commercial equipment used in the production of
micro and nano scale materials, precision photonic solutions used in life sciences, research and defense markets, and precision
gear and peristaltic pump technologies that meet exacting original equipment manufacturer specifications. Health & Science
Technologies accounted for 36%, 35% and 35% of IDEX’s sales in 2015, 2014 and 2013, respectively, with approximately 55%
of its 2015 sales to customers outside the U.S. The segment accounted for 33%, 31% and 30% of IDEX’s operating income in
2015, 2014 and 2013, respectively.
Scientific Fluidics. Scientific Fluidics consists of the Company’s Eastern Plastics, Rheodyne, Sapphire Engineering,
Upchurch Scientific, ERC, and CiDRA Precision Services (“CPS”) businesses. Scientific Fluidics has facilities in Rohnert
Park, California (Rheodyne products); Bristol, Connecticut (Eastern Plastics products); Middleboro, Massachusetts (Sapphire
Engineering products); Oak Harbor, Washington (Upchurch Scientific products); Kawaguchi, Japan (ERC products); and
Wallingford, Connecticut (CPS products). Eastern Plastics products, which consist of high-precision integrated fluidics and
associated engineered manifolds, are used in a broad set of end markets including medical diagnostics, analytical
instrumentation, and laboratory automation. Rheodyne products consist of injectors, valves, fittings and accessories for the
analytical instrumentation market. These products are used by manufacturers of high pressure liquid chromatography
(“HPLC”) equipment servicing the pharmaceutical, biotech, life science, food & beverage, and chemical markets. Sapphire
Engineering and Upchurch Scientific products consist of fluidic components and systems for the analytical, biotech and
diagnostic instrumentation markets, such as fittings, precision-dispensing pumps and valves, tubing and integrated tubing
assemblies, filter sensors and other micro-fluidic and nano-fluidic components, as well as advanced column hardware and
accessories for the high performance liquid chromatography market. The products produced by Sapphire Engineering and
Upchurch Scientific primarily serve the pharmaceutical, drug discovery, chemical, biochemical processing, genomics/
proteomics research, environmental labs, food/agriculture, medical lab, personal care, and plastics/polymer/rubber production
markets. ERC manufactures gas liquid separations and detection solutions for the life science, analytical instrumentation and
clinical chemistry markets. ERC’s products consist of in-line membrane vacuum degassing solutions, refractive index detectors
and ozone generation systems. CPS products consist of microfluidic components serving the life science, health and industrial
market. Approximately 55% of Scientific Fluidics’ 2015 sales were to customers outside the U.S.
IDEX Optics and Photonics (“IOP”). IOP consists of the Company’s CVI Melles Griot (“CVI MG”), Semrock, and AT
Films (including Precision Photonics products) businesses. CVI MG is a global leader in the design and manufacture of
precision photonic solutions used in the life sciences, research, semiconductor, security and defense markets. CVI MG’s
innovative products are focused on the generation, control and productive use of light for a variety of key science and industrial
applications. Products consist of specialty lasers and light sources, electro-optical components, specialty shutters, opto-
mechanical assemblies and components. In addition, CVI MG produces critical components for life science research,
electronics manufacturing, military and other industrial applications including lenses, mirrors, filters and polarizers. These
3
components are utilized in a number of important applications such as spectroscopy, cytometry (cell counting), guidance
systems for target designation, remote sensing, menology and optical lithography. CVI MG has manufacturing sites located in
Albuquerque, New Mexico; Carlsbad, California; Rochester, New York; Leicester, England; Kyongki-Do, Korea; Tamagawa,
Japan; and Didam, The Netherlands. Semrock is a provider of optical filters for biotech and analytical instrumentation in the
life sciences markets. Semrock’s optical filters are produced using state-of-the-art manufacturing processes which enable it to
offer its customers significant improvements in instrument performance and reliability. Semrock is located in Rochester, New
York. AT Films specializes in optical components and coatings for applications in the fields of scientific research, defense,
aerospace, telecommunications and electronics manufacturing. AT Films’ core competence is the design and manufacture of
filters, splitters, reflectors and mirrors with the precise physical properties required to support their customers’ most challenging
and cutting-edge optical applications. The Precision Photonics portion of its business specializes in optical components and
coatings for applications in the fields of scientific research, aerospace, telecommunications and electronics manufacturing. AT
Films is headquartered in Boulder, Colorado. Approximately 54% of IOP’s 2015 sales were to customers outside the U.S.
Sealing Solutions. Sealing Solutions consists of the Company’s Precision Polymer Engineering (“PPE”), FTL Seals
Technology (“FTL”), and Novotema businesses. PPE is a provider of proprietary high performance seals and advanced sealing
solutions for a diverse range of global industries and applications, including hazardous duty, analytical instrumentation,
semiconductor, process technologies, oil & gas, pharmaceutical, electronics, and food applications. PPE is headquartered in
Blackburn, England with an additional manufacturing facility in Brenham, Texas. FTL, located in Leeds, England, specializes
in the design and application of high integrity rotary seals, specialty bearings, and other custom products for the mining, power
generation, and marine markets. Novotema, located in Villongo, Italy, is a leader in the design, manufacture and sale of
specialty sealing solutions for use in the building products, gas control, transportation, industrial and water markets.
Approximately 78% of Sealing Solutions’ 2015 sales were to customers outside the U.S.
Gast. Gast consists of the Company’s Gast and Jun-Air businesses. The Gast business is a leading manufacturer of air-
moving products, including air motors, low-range and medium-range vacuum pumps, vacuum generators, regenerative blowers
and fractional horsepower compressors. Gast products are used in a variety of long-life applications requiring a quiet, clean
source of moderate vacuum or pressure. Gast products primarily serve the medical equipment, environmental equipment,
computers and electronics, printing machinery, paint mixing machinery, packaging machinery, graphic arts, and industrial
manufacturing markets. The Jun-Air business is a provider of low-decibel, ultra-quiet vacuum compressors suitable for
medical, dental and laboratory applications. Based in Benton Harbor, Michigan, Gast also has a logistics and commercial center
in Redditch, England. Approximately 26% of Gast’s 2015 sales were to customers outside the U.S.
Micropump. Micropump, headquartered in Vancouver, Washington, is a leader in small, precision-engineered,
magnetically and electromagnetically driven rotary gear, piston and centrifugal pumps. Micropump products are used in low-
flow abrasive and corrosive applications. Micropump products primarily serve the continuous ink-jet printing, medical
equipment, chemical processing, pharmaceutical, refining, laboratory, electronics, textiles, peristaltic metering pumps,
analytical process controllers and sample preparation systems markets. Approximately 72% of Micropump’s 2015 sales were to
customers outside the U.S.
Material Processing Technologies (“MPT”). MPT consists of the Company’s Quadro, Fitzpatrick, Microfluidics and
Matcon businesses. Quadro is a leading provider of particle control solutions for the pharmaceutical and bio-pharmaceutical
markets. Based in Waterloo, Canada, Quadro’s core capabilities include fine milling, emulsification and special handling of
liquid and solid particulates for laboratory, pilot phase and production scale processing. Fitzpatrick is a global leader in the
design and manufacture of process technologies for the pharmaceutical, food and personal care markets. Fitzpatrick designs
and manufactures customized size reduction, roll compaction and drying systems to support their customers’ product
development and manufacturing processes. Fitzpatrick is headquartered in Elmhurst, Illinois. Microfluidics is a global leader in
the design and manufacture of laboratory and commercial equipment used in the production of micro and nano scale materials
for the pharmaceutical and chemical markets. Microfluidics is the exclusive producer of the Microfluidizer family of high shear
fluid processors for uniform particle size reduction, robust cell disruption and nanoparticle creation. Microfluidics is based in
Waterloo, Canada and has offices in Newton, Massachusetts. Matcon is a global leader in material processing solutions for high
value powders used in the manufacture of pharmaceuticals, food, plastics, and fine chemicals. Matcon’s innovative products
consist of the original cone valve powder discharge system and filling, mixing and packaging systems, all of which support its
customers’ automation and process requirements. These products are critical to its customers’ need to maintain clean, reliable
and repeatable formulations of prepackaged foods and pharmaceuticals while helping them achieve lean and agile
manufacturing. Matcon is located in Evesham, England. Approximately 59% of MPT’s 2015 sales were to customers outside
the U.S.
4
FIRE & SAFETY/DIVERSIFIED PRODUCTS SEGMENT
The Fire & Safety/Diversified Products segment produces firefighting pumps and controls, rescue tools, lifting bags and
other components and systems for the fire and rescue industry, engineered stainless steel banding and clamping devices used in
a variety of industrial and commercial applications, and precision equipment for dispensing, metering and mixing colorants and
paints used in a variety of retail and commercial businesses around the world. The Fire & Safety/Diversified Products segment
accounted for 21%, 23% and 22% of IDEX’s sales in 2015, 2014 and 2013, respectively, with approximately 52% of its 2015
sales to customers outside the U.S. The segment accounted for 24%, 26% and 23% of IDEX’s operating income in 2015, 2014
and 2013, respectively.
Fire Suppression. Fire Suppression consists of the Company’s Class 1, Hale and Godiva businesses, which produce
truck-mounted and portable fire pumps, stainless steel valves, foam and compressed air foam systems, pump modules and
pump kits, electronic controls and information systems, conventional and networked electrical systems, and mechanical
components for the fire, rescue and specialty vehicle markets. Fire Suppression’s customers are primarily OEMs. Fire
Suppression is headquartered in Ocala, Florida (Class 1 and Hale products), with additional facilities located in Warwick,
England (Godiva products). Approximately 38% of Fire Suppression’s 2015 sales were to customers outside the U.S.
Rescue. Rescue consists of the Company’s Dinglee, Hurst Jaws of Life, Lukas and Vetter businesses, which produce
hydraulic, battery, gas and electric-operated rescue equipment, hydraulic re-railing equipment, hydraulic tools for industrial
applications, recycling cutters, pneumatic lifting and sealing bags for vehicle and aircraft rescue, environmental protection and
disaster control, and shoring equipment for vehicular or structural collapse. Rescue’s customers are primarily public and private
fire and rescue organizations. Rescue has facilities in Shelby, North Carolina (Hurst Jaws of Life products); Tianjin, China
(Dinglee products); Erlangen, Germany (Lukas products); and Zulpich, Germany (Vetter products). Approximately 71% of
Rescue’s 2015 sales were to customers outside the U.S.
Band-It. Band-It is a leading producer of high-quality stainless steel banding, buckles and clamping systems. The
BAND-IT brand is highly recognized worldwide. Band-It products are used for securing exhaust system heat and sound
shields, industrial hose fittings, traffic signs and signals, electrical cable shielding, identification and bundling, and in numerous
other industrial and commercial applications. Band-It products primarily serve the automotive, transportation equipment, oil &
gas, general industrial maintenance, electronics, electrical, communications, aerospace, utility, municipal and subsea marine
markets. Band-It is based in Denver, Colorado, with additional operations in Staveley, England. Approximately 36% of Band-
It’s 2015 sales were to customers outside the U.S.
Dispensing. Dispensing produces precision equipment for dispensing, metering and mixing colorants and paints used in
a variety of retail and commercial businesses around the world. Dispensing is a global supplier of precision-designed tinting,
mixing, dispensing and measuring equipment for auto refinishing and architectural paints. Dispensing products are used in
retail and commercial stores, hardware stores, home centers, department stores, automotive body shops as well as point-of-
purchase dispensers. Dispensing is headquartered in Sassenheim, The Netherlands with additional facilities in Wheeling,
Illinois; Unanderra, Australia; and Milan, Italy, as well as IDEX shared manufacturing facilities in India and China.
Approximately 61% of Dispensing’s 2015 sales were to customers outside the U.S.
INFORMATION APPLICABLE TO THE COMPANY’S BUSINESS IN GENERAL AND ITS SEGMENTS
Competitors
The Company’s businesses participate in highly competitive markets. IDEX believes that the principal points of
competition are product quality, price, design and engineering capabilities, product development, conformity to customer
specifications, quality of post-sale support, timeliness of delivery, and effectiveness of our distribution channels.
Principal competitors of the Fluid & Metering Technologies segment are the Pump Solutions Group (Maag, Blackmer
and Wilden products) of Dover Corporation (with respect to pumps and small horsepower compressors used in liquified
petroleum gas distribution facilities, rotary gear pumps, and air-operated double-diaphragm pumps); Milton Roy LLC (with
respect to metering pumps and controls); and Tuthill Corporation (with respect to rotary gear pumps).
Principal competitors of the Health & Science Technologies segment are the Thomas division of Gardner Denver, Inc.
(with respect to vacuum pumps and compressors); Thermo Scientific Dionex products (with respect to analytical
instrumentation); Parker Hannifin (with respect to sealing devices); Valco Instruments Co., Inc. (with respect to fluid injectors
and valves); and Gooch & Housego PLC (with respect to electro-optic and precision photonics solutions used in the life
sciences market).
The principal competitors of the Fire & Safety/Diversified Products segment are Waterous Company, a unit of American
Cast Iron Pipe Company (with respect to truck-mounted firefighting pumps); Holmatro, Inc. (with respect to rescue tools); CPS
5
Color Group Oy (with respect to dispensing and mixing equipment for the paint industry); and Panduit Corporation (with
respect to stainless steel bands, buckles and clamping systems).
Customers
The principal customers for our products are discussed immediately above by product category in each segment. None of
our customers in 2015 accounted for more than two percent of net sales.
Employees
At December 31, 2015, the Company had 6,801 employees. Approximately 7% of employees were represented by labor
unions, with various contracts expiring through June 2020. Management believes that the Company has a positive relationship
with its employees. The Company historically has been able to renegotiate its collective bargaining agreements satisfactorily,
with its last work stoppage in March 1993.
Suppliers
The Company manufactures many of the parts and components used in its products. Substantially all materials, parts and
components purchased by the Company are available from multiple sources.
Inventory and Backlog
The Company regularly and systematically adjusts production schedules and quantities based on the flow of incoming
orders. Backlogs typically are limited to one to one and a half months of production. While total inventory levels also may be
affected by changes in orders, the Company generally tries to maintain relatively stable inventory levels based on its
assessment of the requirements of the various industries served.
Raw Materials
The Company uses a wide variety of raw materials which are generally available from a number of sources. As a result,
shortages from any single supplier have not had, and are not likely to have a material impact on operations.
Shared Services
The Company has production facilities in Suzhou, China and Vadodara, India that support multiple business units. IDEX
also has personnel in China, India, Dubai, Latin America and Singapore that provide sales and marketing, product design and
engineering, and sourcing support to its business units, as well as personnel in various locations in South America, the Middle
East and Japan to support sales and marketing efforts of IDEX businesses in those regions.
Segment Information
For segment financial information for the years 2015, 2014 and 2013, including financial information about foreign and
domestic sales and operations, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
and Note 11 of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplementary
Data.”
6
Executive Officers of the Registrant
Set forth below are the names of the executive officers of the Company, their ages, years of service, the positions held by
them, and their business experience during the past five years.
Name
Andrew K. Silvernail
Heath A. Mitts
Eric D. Ashleman
Denise R. Cade
Daniel J. Salliotte
Michael J. Yates
Jeffrey D. Bucklew
Age
Years of
Service
Position
45
45
48
53
49
50
45
7
10
7
<1
11
10
4
Chairman of the Board and Chief Executive Officer
Senior Vice President and Chief Financial Officer
Senior Vice President and Chief Operating Officer
Senior Vice President, General Counsel and Corporate Secretary
Senior Vice President-Corporate Strategy, Mergers and Acquisitions and Treasury
Vice President and Chief Accounting Officer
Senior Vice President-Chief Human Resources Officer
Mr. Silvernail has served as Chief Executive Officer since August 2011 and as Chairman of the Board since January
2012. Prior to that, Mr. Silvernail was Vice President-Group Executive Health & Science Technologies, Global Dispensing and
Fire & Safety/Diversified Products from January 2011 to August 2011. From February 2010 to December 2010, Mr. Silvernail
was Vice President-Group Executive Health & Sciences Technologies and Global Dispensing. Mr. Silvernail joined IDEX in
January 2009 as Vice President-Group Executive Health & Science Technologies.
Mr. Mitts has served as Senior Vice President and Chief Financial Officer since March 2011. Mr. Mitts joined IDEX as
Vice President-Corporate Finance in September 2005.
Mr. Ashleman has served as Senior Vice President and Chief Operating Officer since July 2015. Mr. Ashleman joined
IDEX in 2008 as the President of Gast Manufacturing.
Ms. Cade has served as Senior Vice President, General Counsel and Corporate Secretary since joining IDEX in October
2015. Prior to joining IDEX, Ms. Cade was Senior Vice President, General Counsel, Corporate Secretary and Chief
Compliance Officer for SunCoke Energy, Inc. from March 2011 to October 2015 and held various roles at PPG Industries
before joining SunCoke.
Mr. Salliotte has served as Senior Vice President-Mergers, Acquisitions and Treasury since February 2011. Mr. Salliotte
joined IDEX in October 2004 as Vice President-Strategy and Business Development.
Mr. Yates has served as Vice President and Chief Accounting Officer since February 2010. Mr. Yates joined IDEX as Vice
President-Controller in October 2005.
Mr. Bucklew has served as the Senior Vice President-Chief Human Resources Officer since joining IDEX in March 2012.
Prior to joining IDEX, Mr. Bucklew served as the Vice President of Human Resources for Accretive Health from March 2009
to March 2012.
The Company’s executive officers are elected at a meeting of the Board of Directors immediately following the annual
meeting of stockholders, and they serve until the meeting of the Board immediately following the next annual meeting of
stockholders, or until their successors are duly elected and qualified or until their death, resignation or removal.
Public Filings
Copies of the Company’s annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and
amendments to those reports are made available free of charge at www.idexcorp.com as soon as reasonably practicable after
being filed electronically with the United States Securities and Exchange Commission (the “SEC”). Our reports are also
available free of charge on the SEC’s website, www.sec.gov. Information on the Company’s website is not incorporated into
this Form 10-K.
7
Item 1A.
Risk Factors.
For an enterprise as diverse and complex as the Company, a wide range of factors present risks to the Company and could
materially affect future developments and performance. In addition to the factors affecting specific business operations
identified in connection with the description of our operations and the financial results of our operations elsewhere in this
report, the most significant of these factors are as follows:
Changes in U.S. or International Economic Conditions Could Adversely Affect the Sales and Profitability of Our
Businesses.
In 2015, 50% of the Company’s sales were derived from domestic operations while 50% were derived from international
operations. The Company’s largest end markets include life sciences and medical technologies, fire and rescue, oil & gas, paint
and coatings, chemical processing, agriculture, water & wastewater treatment and optical filters and components. A slowdown
in the U.S. or global economy and, in particular, any of these specific end markets could reduce the Company’s sales and
profitability.
Conditions in Foreign Countries in Which We Operate Could Adversely Affect Our Business.
In 2015, approximately 50% of our total sales were to customers outside the U.S. We expect our international operations
and export sales to continue to be significant for the foreseeable future. Our sales from international operations and our sales
from export are both subject in varying degrees to risks inherent in doing business outside the U.S. These risks include the
following:
•
•
•
•
•
•
•
possibility of unfavorable circumstances arising from host country laws or regulations;
risks of economic instability;
currency exchange rate fluctuations and restrictions on currency repatriation;
potential negative consequences from changes to taxation policies;
disruption of operations from labor and political disturbances;
changes in tariff and trade barriers and import or export licensing requirements; and,
political instability, terrorism, insurrection or war.
Any of these events could have an adverse impact on our business and operations.
Our Inability to Continue to Develop New Products Could Limit Our Sales Growth.
The Company’s sales were down 6% in 2015. Approximately 8% of our 2015 sales were derived from new products
developed over the past three years. Our ability to continue to grow organically is tied in large part to our ability to continue to
develop new products.
Our Growth Strategy Includes Acquisitions and We May Not be Able to Make Acquisitions of Suitable Candidates or
Integrate Acquisitions Successfully.
Our historical growth has included, and our future growth is likely to continue to include, acquisitions. We intend to
continue to seek acquisition opportunities both to expand into new markets and to enhance our position in existing markets
throughout the world. We may not be able to successfully identify suitable candidates, negotiate appropriate acquisition terms,
obtain financing needed to consummate those acquisitions, complete proposed acquisitions or successfully integrate acquired
businesses into our existing operations. In addition, any acquisition, once successfully integrated, may not perform as planned,
be accretive to earnings, or otherwise prove beneficial to us.
Acquisitions involve numerous risks, including the assumption of undisclosed or unindemnified liabilities, difficulties in
the assimilation of the operations, technologies, services and products of the acquired companies and the diversion of
management’s attention from other business concerns. In addition, prior acquisitions have resulted, and future acquisitions
could result, in the incurrence of substantial additional indebtedness and other expenses.
The Markets We Serve are Highly Competitive and this Competition Could Reduce our Sales and Operating Margins.
Most of our products are sold in competitive markets. Maintaining and improving our competitive position will require
continued investment by us in manufacturing, engineering, quality standards, marketing, customer service and support, and our
distribution networks. We may not be successful in maintaining our competitive position. Our competitors may develop
products that are superior to our products, or may develop methods of more efficiently and effectively providing products and
8
services or may adapt more quickly than us to new technologies or evolving customer requirements. Pricing pressures may
require us to adjust the prices of our products to stay competitive. We may not be able to compete successfully with our existing
competitors or with new competitors. Failure to continue competing successfully could reduce our sales, operating margins and
overall financial performance.
We are Dependent on the Availability of Raw Materials, Parts and Components Used in Our Products.
While we manufacture certain parts and components used in our products, we require substantial amounts of raw
materials and purchase some parts and components from suppliers. The availability and prices for raw materials, parts and
components may be subject to curtailment or change due to, among other things, suppliers’ allocations to other purchasers,
interruptions in production by suppliers, changes in exchange rates and prevailing price levels. Any change in the supply of, or
price for, these raw materials or parts and components could materially affect our business, financial condition, results of
operations and cash flow.
Significant Movements in Foreign Currency Exchange Rates May Harm Our Financial Results.
We are exposed to fluctuations in foreign currency exchange rates, particularly with respect to the Euro, Canadian Dollar,
British Pound, Indian Rupee and Chinese Renminbi. Any significant change in the value of the currencies of the countries in
which we do business against the U.S. Dollar could affect our ability to sell products competitively and control our cost
structure, which could have a material adverse effect on our results of operations. For additional detail related to this risk, see
Part II, Item 7A, “Quantitative and Qualitative Disclosure About Market Risk.”
An Unfavorable Outcome of Any of Our Pending Contingencies or Litigation Could Adversely Affect Us.
We currently are involved in legal and regulatory proceedings. Where it is reasonably possible to do so, we accrue
estimates of the probable costs for the resolution of these matters. These estimates are 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 quarter or annual period could be materially affected by
changes in our assumptions or the effectiveness of our strategies related to these proceedings. For additional detail related to
this risk, see Item 3, “Legal Proceedings.”
Our Intangible Assets, Including Goodwill, are a Significant Portion of Our Total Assets and a Write-off of Our
Intangible Assets Would Adversely Impact Our Operating Results and Significantly Reduce Our Net Worth.
Our total assets reflect substantial intangible assets, primarily goodwill and identifiable intangible assets. At
December 31, 2015, goodwill and intangible assets totaled $1,396.5 million and $287.8 million, respectively. These assets
result from our acquisitions, representing the excess of cost over the fair value of the tangible net assets we have acquired.
Annually, or when certain events occur that require a more current valuation, we assess whether there has been an impairment
in the value of our goodwill and identifiable intangible assets. If future operating performance at one or more of our reporting
units were to fall significantly below forecast levels, we could be required to reflect, under current applicable accounting rules,
a non-cash charge to operating income for an impairment. Any determination requiring the write-off of a significant portion of
our goodwill or identifiable intangible assets would adversely impact our results of operations and net worth. See Note 4 in Part
II, Item 8, “Financial Statements and Supplementary Data” for further discussion on goodwill and intangible assets.
A Significant or Sustained Decline in Commodity Prices, Including Oil, Could Negatively Impact the Levels of
Expenditures by Certain of Our Customers.
Demand for our products depends, in part, on the level of new and planned expenditures by certain of our customers. The
level of expenditures by our customers is dependent on, among other factors, general economic conditions, availability of
credit, economic conditions within their respective industries and expectations of future market behavior. Volatility in
commodity prices, including oil, can negatively affect the level of these activities and can result in postponement of capital
spending decisions or the delay or cancellation of existing orders. The ability of our customers to finance capital investment
and maintenance may also be affected by the conditions in their industries. Reduced demand for our products could result in the
delay or cancellation of existing orders or lead to excess manufacturing capacity, which unfavorably impacts our absorption of
fixed manufacturing costs. This reduced demand could have a material adverse effect on our business, financial condition and
results of operations.
9
Our Success Depends on Our Executive Management and Other Key Personnel.
Our future success depends to a significant degree on the skills, experience and efforts of our executive management and
other key personnel and their ability to provide the Company with uninterrupted leadership and direction. The loss of the
services of any of our executive officers or a failure to provide adequate succession plans for key personnel could have an
adverse impact. The availability of highly qualified talent is limited, and the competition for talent is robust. However, we
provide long-term equity incentives and certain other benefits for our executive officers which provide incentives for them to
make a long-term commitment to our Company. Our future success will also depend on our ability to have adequate succession
plans in place and to attract, retain and develop qualified personnel. A failure to efficiently replace executive management
members and other key personnel and to attract, retain and develop new qualified personnel could have an adverse effect on our
operations and implementation of our strategic plan.
Our Business Operations May Be Adversely Affected by Information Systems Interruptions or Intrusion.
We depend on various information technologies throughout our Company to administer, store and support multiple
business activities. If these systems are damaged, cease to function properly, or are subject to cyber-security attacks, such as
those involving unauthorized access, malicious software and/or other intrusions, we could experience production downtimes,
operational delays, other detrimental impacts on our operations or ability to provide products and services to our customers, the
compromising of confidential or otherwise protected information, destruction or corruption of data, security breaches, other
manipulation or improper use of our systems or networks, financial losses from remedial actions, loss of business or potential
liability, and/or damage to our reputation. While we attempt to mitigate these risks by employing a number of measures,
including employee training, technical security controls, and maintenance of backup and protective systems, our systems,
networks, products and services remain potentially vulnerable to known or unknown threats, any of which could have a
material adverse effect on our business, financial condition or results of operations.
Failure To Comply with the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act or Other Applicable Anti-bribery
Laws Could Have an Adverse Effect on Our Business.
The U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act and similar anti-bribery laws in other jurisdictions generally
prohibit companies and their intermediaries from making improper payments for the purpose of obtaining or retaining business.
Recent years have seen a substantial increase in anti-bribery law enforcement activity with more frequent and aggressive
investigations and enforcement proceedings by both the Department of Justice and the SEC, increased enforcement activity by
non-U.S. regulators and increases in criminal and civil proceedings brought against companies and individuals. Our policies
mandate compliance with all anti-bribery laws. However, we operate in certain countries that are recognized as having
governmental and commercial corruption. Our internal control policies and procedures may not always protect us from reckless
or criminal acts committed by our employees or third-party intermediaries. Violations of these anti-bribery laws may result in
criminal or civil sanctions, which could have a material adverse effect on our business, financial condition and results of
operations.
Item 1B.
Unresolved Staff Comments.
None.
Item 2.
Properties.
The Company’s principal plants and offices have an aggregate floor space area of approximately 4.5 million square feet,
of which 2.9 million square feet (63%) is located in the U.S. and approximately 1.7 million square feet (37%) is located outside
the U.S., primarily in the U.K. (8%), Germany (7%), Italy (6%), China (4%), India (3%) and The Netherlands (2%).
Management considers these facilities suitable and adequate for the Company’s operations. Management believes the Company
can meet demand increases over the near term with its existing facilities, especially given its operational improvement
initiatives that usually increase capacity. The Company’s executive office occupies 36,588 square feet of leased space in Lake
Forest, Illinois and 4,420 square feet of leased space in Chicago, Illinois.
Approximately 3.0 million square feet (67%) of the principal plant and office floor area is owned by the Company, and
the balance is held under lease. Approximately 1.9 million square feet (41%) of the principal plant and office floor area is held
by business units in the Fluid & Metering Technologies segment; 1.4 million square feet (31%) is held by business units in the
Health & Science Technologies segment; and 1.0 million square feet (21%) is held by business units in the Fire & Safety/
Diversified Products segment.
10
Item 3.
Legal Proceedings.
The Company and four of its subsidiaries are presently named as defendants in a number of lawsuits claiming various
asbestos-related personal injuries and seeking money damages, allegedly as a result of exposure to products manufactured with
components that contained asbestos. These components were acquired from third party suppliers, and were not manufactured
by the Company or any of the defendant subsidiaries. To date, the majority 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 its settlements and legal costs, or how insurers may respond to claims that are tendered to
them. Claims have been filed in jurisdictions throughout the United States. Most of the claims resolved to date have been
dismissed without payment. The balance have been settled for various insignificant amounts. Only one case has been tried,
resulting in a verdict for the affected business unit. No provision has been made in the financial statements of the Company for
these asbestos-related claims, other than for insurance deductibles in the ordinary course, and the Company does not currently
believe these claims will have a material adverse effect on it.
The Company 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 it.
Item 4.
Mine Safety Disclosures.
Not applicable.
11
PART II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities.
The principal market for the Company’s common stock is the New York Stock Exchange, but the common stock is also
listed on the Chicago Stock Exchange. As of February 16, 2016, there were approximately 6,760 stockholders of record of our
common stock and there were 75,929,397 shares outstanding.
The high and low sales prices of the common stock per share and the dividends paid per share during the last two years
are as follows:
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
High
2015
Low
$
78.85
$
69.44
$
80.31
79.61
79.59
73.80
66.88
69.40
Dividends
High
2014
Low
Dividends
0.28
0.32
0.32
0.32
$
79.27
$
68.58
$
80.85
81.82
78.97
69.17
72.27
65.91
0.23
0.28
0.28
0.28
Our payment of dividends in the future will be determined by our Board of Directors and will depend on business
conditions, our earnings and other factors.
For information pertaining to securities authorized for issuance under equity compensation plans and the related weighted
average exercise price, see Part III, Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters.”
The Company’s purchases of common stock during the quarter ended December 31, 2015 are as follows:
Period
October 1, 2015 to October 31, 2015
November 1, 2015 to November 30, 2015
December 1, 2015 to December 31, 2015
Total
Total Number of
Shares Purchased
Average Price
Paid per Share
189,470
$
—
219,803
409,273
$
74.60
—
76.94
75.86
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans
or Programs
(1)
Maximum Dollar
Value that May Yet
be Purchased Under
the Plans
or Programs
(1)
189,470
$
351,872,224
—
219,803
351,872,224
634,960,648
409,273
$
634,960,648
(1) On December 1, 2015, the Company’s Board of Directors approved an increase of $300.0 million in the authorized
level for repurchases of common stock. This followed the prior Board of Directors approved repurchase authorization
of $400.00 million, announced by the Company on November 6, 2014. These authorizations have no expiration date.
12
Performance Graph. The following table compares total stockholder returns over the last five years to the Standard &
Poor’s (the “S&P”) 500 Index, the S&P Midcap Industrials Sector Index and the Russell 2000 Index assuming the value of the
investment in our common stock and each index was $100 on December 31, 2010. Total return values for our common stock,
the S&P 500 Index, S&P Midcap Industrials Sector Index and the Russell 2000 Index were calculated on cumulative total
return values assuming reinvestment of dividends. The stockholder return shown on the graph below is not necessarily
indicative of future performance.
12/10
12/11
12/12
12/13
12/14
12/15
IDEX Corporation
S&P 500 Index
S&P Midcap 400 Industrials Sector Index
Russell 2000 Index
$
$
$
$
100.00 $
100.00 $
100.00 $
100.00 $
94.76 $
100.00 $
98.18 $
94.55 $
118.94 $
113.40 $
117.97 $
114.43 $
188.78 $
146.97 $
168.05 $
148.48 $
198.98 $
163.71 $
171.14 $
153.73 $
195.83
162.47
161.34
144.95
13
Item 6. Selected Financial Data.(1)
(Dollars in thousands, except per share data)
2015
2014
2013
2012
2011
RESULTS OF OPERATIONS
Net sales
Gross profit
Selling, general and administrative expenses
Gain on sale of business
Restructuring expenses
Asset impairments
Operating income
Other (income) expense — net
Interest expense
Provision for income taxes
Net income
Earnings per share (2)
— basic
— diluted
Weighted average shares outstanding
— basic
— diluted
Year-end shares outstanding
Cash dividends per share
FINANCIAL POSITION
Current assets
Current liabilities
Current ratio
Operating working capital (3)
Total assets (4)
Total borrowings (4)
Shareholders’ equity
PERFORMANCE MEASURES AND OTHER DATA
Percent of net sales:
Gross profit
Selling, general and administrative expenses
Operating income
Income before income taxes
Net income
Capital expenditures
Depreciation and amortization
Return on average assets (5)
Borrowings as a percent of capitalization (5)
Return on average shareholders’ equity (5)
Employees at year end
Record holders at year end
NON-GAAP MEASURES (6)
EBITDA
EBITDA margin
Adjusted EBITDA
Adjusted EBITDA margin
Adjusted operating income
Adjusted operating margin
Adjusted net income
Adjusted earnings per share
$
2,020,668
$
2,147,767
$
2,024,130
$
1,954,258
$
1,838,451
904,315
479,408
(18,070)
11,239
—
431,738
(2,243)
41,636
109,538
282,807
3.65
3.62
77,126
77,972
76,535
1.28
862,684
309,597
2.8
370,213
$
$
$
$
949,315
504,419
—
13,672
—
431,224
(3,111)
41,895
113,054
279,386
3.48
3.45
79,715
80,728
78,766
1.12
1,075,791
411,968
2.6
366,209
$
$
$
$
$
$
$
$
873,364
477,851
—
—
—
395,513
178
42,206
97,914
255,215
3.11
3.09
81,517
82,489
81,196
0.89
990,953
304,609
3.3
350,881
$
$
$
$
803,700
444,490
—
32,473
198,519
128,218
(236)
42,250
48,574
37,630
0.45
0.45
82,689
83,641
82,727
0.80
881,865
291,427
3.0
373,704
$
$
$
$
738,673
421,703
—
12,314
—
304,656
1,443
29,332
80,024
193,857
2.34
2.32
82,145
83,543
83,234
0.68
789,161
258,278
3.1
396,126
$
2,805,443
$
2,903,463
$
2,881,118
$
2,777,821
$
2,827,535
840,794
1,443,291
859,345
1,486,451
767,417
1,572,989
779,007
1,464,998
800,238
1,513,135
44.8%
23.7%
21.4%
19.4%
14.0%
44.2%
23.5%
20.1%
18.3%
13.0%
43.1%
23.6%
19.5%
17.4%
12.6%
41.1%
22.7%
6.6%
4.4%
1.9%
40.2%
22.9%
16.6%
14.9%
10.5%
$
43,776
78,120
$
47,997
76,907
$
31,536
79,334
$
35,520
78,312
34,548
72,386
9.9%
36.8%
19.3%
6,801
6,760
9.7%
36.6%
18.3%
6,712
6,500
512,101
25.3%
505,270
25.0%
424,907
21.0%
277,229
3.55
$
$
$
$
$
511,242
23.8%
524,914
24.4%
444,896
20.7%
288,823
3.57
$
$
$
$
$
9.0%
32.8%
16.8%
6,787
6,500
474,669
23.5%
474,669
23.5%
395,513
19.5%
255,215
3.09
$
$
$
$
$
1.3%
34.7%
2.5%
6,717
6,700
206,766
10.6%
437,758
22.4%
359,210
18.4%
224,067
2.68
$
$
$
$
$
13.7%
34.6%
13.4%
6,814
7,000
375,599
20.4%
387,913
21.1%
332,772
18.1%
213,758
2.56
$
$
$
$
$
$
(1) For additional detail, see Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and
Supplementary Data.”
14
(2) Calculated by applying the two-class method of allocating earnings to common stock and participating securities as
required by ASC 260, Earnings Per Share.
(3) Operating working capital is defined as inventory plus accounts receivable minus accounts payable.
(4)
In the fourth quarter of fiscal year 2015, the Company adopted Accounting Standards Update 2015-03 regarding
simplifying the presentation of debt issuance costs. The update was applied retrospectively to all periods presented in
accordance with the provisions of the update. Refer to Note 1 for additional information related to ASU 2015-03 and Note
5 in the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplementary Data” for
additional information related to the impact on the financials.
(5) Return on average assets is calculated as: Net income / (Current year Total assets + Prior year Total assets) / 2;
Borrowings as a percent of capitalization is calculated as: (Long-term borrowings + Short-term borrowings) / (Long-term
borrowings + Short-term borrowings + Total shareholders’ equity); Return on average shareholders’ equity is calculated as
Net Income / (Current year Total shareholders’ equity + Prior year Total shareholders’ equity) / 2
(6) Set forth below are reconciliations of Adjusted operating income, Adjusted net income, Adjusted EPS, EBITDA and
Adjusted EBITDA to the comparable measures of net income and operating income, as determined in accordance with
U.S. GAAP. We have reconciled Adjusted operating income to Operating income; Adjusted net income to Net income;
Adjusted EPS to EPS; consolidated EBITDA to net income; and segment EBITDA to segment operating income.
Management uses Adjusted operating income, Adjusted net income, and Adjusted EPS as metrics by which to measure
performance of the Company since they exclude items that are not reflective of ongoing operations, such as gains on the
sale of business and restructuring expenses. Management also supplements its U.S. GAAP financial statements with
adjusted information to provide investors with greater insight, transparency, and a more comprehensive understanding of
the information used by management in its financial and operational decision making.
EBITDA means earnings before interest, income taxes, depreciation and amortization. Given the acquisitive nature of the
Company which results in a higher level of amortization expense at recently acquired businesses, management uses
EBITDA as an internal operating metric to provide management with another representation of performance of businesses
across our three segments and for enterprise valuation purposes. EBITDA is also used to calculate certain financial
covenants, as discussed in Note 5 of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial
Statements and Supplementary Data.” In addition, EBITDA has been adjusted for items that are not reflective of ongoing
operations, such as gains on the sale of business and restructuring expenses to arrive at Adjusted EBITDA. Management
believes that Adjusted EBITDA is useful as a performance indicator on ongoing operations. We believe that Adjusted
EBITDA is also useful to some investors as an indicator of the strength and performance of the Company and its
segments’ ongoing business operations and a way to evaluate and compare operating performance and value companies
within our industry. The definition of Adjusted EBITDA used here may differ from that used by other companies.
The non-GAAP financial measures disclosed by the Company should not be considered a substitute for, or superior to,
financial measures prepared in accordance with U.S. GAAP, and the financial results prepared in accordance with U.S.
GAAP and the reconciliations from these results should be carefully evaluated.
15
Reconciliations of Consolidated EBITDA
Net income
+ Provision for income taxes
+ Interest expense
+ Depreciation and amortization
EBITDA
+ Restructuring expenses
+ Gain on sale of business
+ Asset impairments
Adjusted EBITDA
Net sales
EBITDA margin
Adjusted EBITDA margin
For the Years Ended December 31,
2015
2014
2013
2012
2011
(In thousands)
$
282,807
$
279,386
$
255,215
$
37,630
$
193,857
109,538
41,636
78,120
512,101
11,239
(18,070)
—
505,270
2,020,668
25.3%
25.0%
$
$
113,054
41,895
76,907
511,242
13,672
—
—
97,914
42,206
79,334
474,669
—
—
—
$
$
524,914
2,147,767
$
$
474,669
2,024,130
$
$
23.8%
24.4%
23.5%
23.5%
48,574
42,250
78,312
206,766
32,473
—
198,519
437,758
1,954,258
10.6%
22.4%
80,024
29,332
72,386
375,599
12,314
—
—
$
$
387,913
1,838,451
20.4%
21.1%
Reconciliations of Segment EBITDA
For the Years Ended December 31,
FMT
2015
HST
FSDP
FMT
2014
HST
(In thousands)
FSDP
FMT
2013
HST
FSDP
Operating income
$ 204,506
$ 157,948
$ 115,745
$ 216,886
$ 152,999
$ 130,494
$ 211,256
$ 136,707
$ 102,730
- Other (income)
expense
+ Depreciation and
amortization
EBITDA
+ Restructuring
expenses
(840)
(178)
(1,453)
(560)
(542)
(990)
1,789
(508)
(342)
27,662
233,008
42,827
200,953
6,051
123,249
26,453
243,899
42,478
196,019
6,583
138,067
27,633
237,100
43,496
180,711
6,852
109,924
7,090
3,408
576
6,413
4,912
1,034
—
—
—
Adjusted EBITDA
$ 240,098
$ 204,361
$ 123,825
$ 250,312
$ 200,931
$ 139,101
$ 237,100
$ 180,711
$ 109,924
Net sales
$ 860,792
$ 738,996
$ 423,915
$ 899,588
$ 752,021
$ 502,749
$ 871,814
$ 714,650
$ 445,049
EBITDA margin
Adjusted EBITDA
margin
27.1%
27.2%
29.1%
27.1%
26.1%
27.5%
27.2%
25.3%
24.7%
27.9%
27.7%
29.2%
27.8%
26.7%
27.7%
27.2%
25.3%
24.7%
16
Reconciliations of Consolidated Reported-to-Adjusted Operating Income and Margin
For the Years Ended December 31,
2015
2014
2013
2012
2011
(In thousands)
Operating income
$
431,738
$
431,224
$
395,513
$
128,218
$
304,656
+ Restructuring expenses
+ Gain on sale of business
+ Asset impairments
+ CVI fair value inventory charge
Adjusted operating income
Net sales
Operating margin
Adjusted operating margin
11,239
(18,070)
—
—
424,907
2,020,668
$
$
13,672
—
—
—
444,896
2,147,767
$
$
—
—
—
—
$
$
395,513
2,024,130
$
$
32,473
—
198,519
—
359,210
1,954,258
12,314
—
—
15,802
332,772
1,838,451
$
$
21.4%
21.0%
20.1%
20.7%
19.5%
19.5%
6.6%
18.4%
16.6%
18.1%
Reconciliations of Segment Reported-to-Adjusted Operating Income and Margin
For the Years Ended December 31,
FMT
2015
HST
FSDP
FMT
2014
HST
(In thousands)
FSDP
FMT
2013
HST
FSDP
Operating income
$ 204,506
$ 157,948
$ 115,745
$ 216,886
$ 152,999
$ 130,494
$ 211,256
$ 136,707
$ 102,730
+ Restructuring
expenses
Adjusted operating
income
7,090
3,408
576
6,413
4,912
1,034
—
—
—
$ 211,596
$ 161,356
$ 116,321
$ 223,299
$ 157,911
$ 131,528
$ 211,256
$ 136,707
$ 102,730
Net sales
$ 860,792
$ 738,996
$ 423,915
$ 899,588
$ 752,021
$ 502,749
$ 871,814
$ 714,650
$ 445,049
Operating margin
Adjusted operating
margin
23.8%
21.4%
27.3%
24.1%
20.3%
26.0%
24.2%
19.1%
23.1%
24.6%
21.8%
27.4%
24.8%
21.0%
26.2%
24.2%
19.1%
23.1%
17
Reconciliations of Reported-to-Adjusted Net Income and EPS
For the Years Ended December 31,
2015
2014
2013
2012
2011
(In thousands)
Net income
$
282,807
$
279,386
$
255,215
$
37,630
$
193,857
+ Restructuring expenses, net of tax
+ Gain on sale of business, net of tax
+ Asset impairments, net of tax
+ CVI fair value inventory charge, net of
tax
Adjusted net income
EPS
+ Restructuring expenses, net of tax
+ Gain on sale of business, net of tax
+ Asset impairments, net of tax
+ CVI fair value inventory charge
Adjusted EPS
7,653
(13,231)
—
—
277,229
3.62
0.10
(0.17)
—
—
$
$
9,437
—
—
—
288,823
3.45
0.12
—
—
—
$
$
—
—
—
—
255,215
3.09
—
—
—
—
$
$
22,926
—
163,511
—
224,067
0.45
0.27
—
1.96
—
$
$
3.55
$
3.57
$
3.09
$
2.68
$
8,716
—
—
11,185
213,758
2.32
0.10
—
—
0.14
2.56
$
$
$
Diluted weighted average shares
77,972
80,728
82,489
83,641
83,543
18
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
2015 Overview and Outlook
IDEX is an applied solutions company specializing in fluid and metering technologies, health and science technologies,
and fire, safety and other diversified products built to customer specifications. IDEX’s products are sold in niche markets to a
wide range of industries throughout 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 the industries that use our products and overall industrial
activity are important factors that influence the demand for our products.
The Company has three reportable business segments: Fluid & Metering Technologies, Health & Science Technologies
and Fire & Safety/Diversified Products. Within our three reportable segments, the Company maintains fifteen platforms, where
we focus on organic growth and strategic acquisitions. Each of our fifteen platforms is also a reporting unit, where we annually
test for goodwill impairment.
The Fluid & Metering Technologies segment contains the Energy (comprised of Corken, Faure Herman, Liquid Controls,
SAMPI and Toptech), Valves (comprised of Alfa Valvole), Water (comprised of Pulsafeeder, Knight, ADS, IETG, and iPEK),
Industrial (comprised of Richter, Viking, Aegis, Warren Rupp, and Trebor), and Agriculture (comprised of Banjo) platforms. The
Health & Science Technologies segment contains the Scientific Fluidics (comprised of Eastern Plastics, Rheodyne, Sapphire
Engineering, Upchurch Scientific, ERC, and CiDRA Precision Services), IDEX Optics & Photonics (comprised of CVI Melles
Griot, Semrock, and AT Films), Sealing Solutions (comprised of PPE, FTL, and Novotema), Gast, Micropump, and Material
Processing Technologies (comprised of Quadro, Fitzpatrick, Microfluidics, and Matcon) platforms. The Fire & Safety/Diversified
Products segment is comprised of the Fire Suppression (comprised of Class 1, Hale, and Godiva), Rescue (comprised of Dinglee,
Hurst Jaws of Life, Lukas, and Vetter), Band-It, and Dispensing platforms.
The Fluid & Metering Technologies segment designs, produces and distributes positive displacement pumps, flow
meters, valves, injectors, and other fluid-handling pump modules and systems and provides flow monitoring and other services
for the food, chemical, general industrial, water & wastewater, agriculture and energy industries. The Health & Science
Technologies segment designs, produces and distributes a wide range of precision fluidics, rotary lobe pumps, centrifugal and
positive displacement pumps, roll compaction and drying systems used in beverage, food processing, pharmaceutical and
cosmetics, pneumatic components and sealing solutions, including very high precision, low-flow rate pumping solutions
required in analytical instrumentation, clinical diagnostics and drug discovery, high performance molded and extruded,
biocompatible medical devices and implantables, air compressors used in medical, dental and industrial applications, optical
components and coatings for applications in the fields of scientific research, defense, biotechnology, life sciences, aerospace,
telecommunications and electronics manufacturing, laboratory and commercial equipment used in the production of micro and
nano scale materials, precision photonic solutions used in life sciences, research and defense markets, and precision gear and
peristaltic pump technologies that meet exacting original equipment manufacturer specifications. The Fire & Safety/Diversified
Products segment produces firefighting pumps and controls, 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, precision equipment for dispensing, metering and mixing colorants and paints used in a variety of
retail and commercial businesses around the world.
Our 2015 financial results are as follows:
Sales of $2.0 billion decreased (6)%; reflecting a 4% decrease in organic sales (excluding acquisitions and foreign
currency translation), a 4% decrease due to foreign currency, and a 2% increase due to acquisitions.
Operating income of $431.7 million remained flat and operating margin of 21.4% was up 130 basis points from the
prior year.
Net income increased 1% to $282.8 million.
Diluted EPS of $3.62 increased $0.17 or 5% compared to 2014.
•
•
•
•
Our 2015 financial results, adjusted for $11.2 million of restructuring costs and an $18.1 million gain on the sale of a
business, are as follows (these non-GAAP measures have been reconciled to U.S. GAAP measures in Item 6, “Selected
Financial Data”):
•
•
•
Adjusted operating income of $424.9 million decreased 4% and adjusted operating margin of 21.0% was up 30 basis
points from the prior year adjusted operating income of $444.9 million and adjusted operating margin of 20.7%.
Adjusted net income of $277.2 million is 4% lower than the prior year of $288.8 million.
Adjusted EPS of $3.55 was 1% lower than the prior year adjusted EPS of $3.57.
19
Overall, we believe the current contraction of global economies will continue to pressure our end markets, creating an
unstable growth environment for 2016. Based on the Company’s current outlook, we anticipate organic growth to be flat in
2016 with full year EPS of $3.60 to $3.70.
Results of Operations
The following is a discussion and analysis of our results of operations for each of the three years in the period ended
December 31, 2015. For purposes of this Item, reference is made to the Consolidated Statements of Operations in Part II,
Item 8, “Financial Statements and Supplementary Data.” Segment operating income excludes unallocated corporate operating
expenses. Management’s primary measurements of segment performance are sales, operating income, and operating margin.
In the following discussion, and throughout this report, references to organic sales, a non-GAAP measure, refers to sales
from continuing operations calculated according to generally accepted accounting principles in the United States but excludes
(1) the impact of foreign currency translation and (2) sales from acquired businesses during the first twelve months of
ownership. The portion of sales attributable to foreign currency translation is calculated as the difference between (a) the
period-to-period change in organic sales and (b) the period-to-period change in organic sales after applying prior period foreign
exchange rates to the current year period. Management believes that reporting organic sales provides useful information to
investors by helping identify underlying growth trends in our business and facilitating easier comparisons of our revenue
performance with prior and future periods and to our peers. The Company excludes the effect of foreign currency translation
from organic sales because foreign currency translation is not under management’s control, is subject to volatility and can
obscure underlying business trends. The Company excludes the effect of acquisitions because the nature, size, and number of
acquisitions can vary dramatically from period to period and between the Company and its peers and can also obscure
underlying business trends and make comparisons of long-term performance difficult.
Performance in 2015 Compared with 2014
(In thousands)
Net sales
Operating income
Operating margin
2015
2014
Change
$ 2,020,668
$ 2,147,767
431,738
431,224
(6)%
— %
21.4%
20.1%
130
bps
Sales in 2015 were $2.0 billion, a (6)% decrease from the comparable period last year. This decrease reflects a 4%
decrease in organic sales, a 4% decrease from foreign currency translation and a 2% increase from acquisitions (CiDRA
Precision Services — July 2015; Alfa Valvole — June 2015; Novotema — May 2015 and Aegis — April 2014). Sales to
customers outside the U.S. represented approximately 50% of total sales in both 2015 and 2014.
In 2015, Fluid & Metering Technologies contributed 43% of sales and 43% of operating income; Health & Science
Technologies contributed 36% of sales and 33% of operating income; and Fire & Safety/Diversified Products contributed 21%
of sales and 24% of operating income.
Gross profit of $904.3 million in 2015 decreased $45.0 million, or 5%, from 2014, while gross margins increased 60
basis points to 44.8% in 2015 from 44.2% in 2014. The margin increase is mainly attributable to benefits from productivity
initiatives, partially offset by decreased sales volume.
SG&A expenses decreased to $479.4 million in 2015 from $504.4 million in 2014. The $25.0 million decrease is mainly
attributable to a reduction in volume-related expenses of $35.1 million, partially offset by approximately $10.1 million of
incremental costs from new acquisitions. As a percentage of sales, SG&A expenses were 23.7% for 2015 and 23.5% for 2014.
During 2015, the Company recorded pre-tax restructuring expenses totaling $11.2 million compared to $13.7 million
recorded in 2014. The restructuring expenses for both years were mainly attributable to employee severance related to head
count reductions across all three segments and corporate.
Operating income of $431.7 million in 2015 increased slightly from the $431.2 million recorded in 2014, primarily
reflecting improved productivity offset by decreased volumes. Operating margin of 21.4% in 2015 was up 130 basis points
from 20.1% in 2014 primarily due to the gain on the sale of the Ismatec product line and productivity improvements.
Other (income) expense decreased $0.9 million from other income of $3.1 million in 2014 to $2.2 million of income in
2015 mainly due to mark-to-market gains in available for sale securities in 2014 compared to losses in 2015.
20
Interest expense decreased slightly to $41.6 million in 2015 from $41.9 million in 2014. The decrease was primarily due
to the maturation of the 2.58% Senior Euro Notes, partially offset by a higher balance on the Revolving Facility.
The 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 decreased to $109.5 million in 2015 compared to $113.1 million in 2014. The effective
tax rate decreased to 27.9% in 2015 compared to 28.8% in 2014, due to the revaluation of the Italian deferred tax liability
related to the reduction in the Italian statutory tax rate, the disposition of the Ismatec product line and the mix of global pre-tax
income among jurisdictions.
Net income for the year of $282.8 million increased from the $279.4 million earned in 2014. Diluted earnings per share in
2015 of $3.62 increased $0.17 from $3.45 in 2014 as a result of the gain on the sale of the Ismatec product line and lower share
count resulting from share repurchases, partially offset by lower sales volume.
Fluid & Metering Technologies Segment
(In thousands)
Net sales
Operating income
Operating margin
2015
2014
Change
$ 860,792
$ 899,588
204,506
216,886
(4)%
(6)%
23.8%
24.1%
(30)
bps
Sales of $860.8 million decreased $38.8 million, or 4%, in 2015 compared with 2014. This decrease reflected a 2%
decline in organic growth, a 2% increase from acquisitions (Alfa Valvole — June 2015 and Aegis — April 2014) and 4% of
unfavorable foreign currency translation. In 2015, sales decreased approximately 3% domestically and 5% internationally.
Sales to customers outside the U.S. were approximately 44% of total segment sales in 2015, compared with 45% in 2014.
Sales within our Energy platform decreased compared to 2014 primarily due to the fall in oil prices and the related delay
in large capital projects in Europe and the Middle East. Sales within our Industrial platform similarly decreased compared to
2014 due to the fall in oil & gas prices, but also due to the weakening of the North American industrial distribution market.
This decrease was partially offset by an increase in European chemical project activity. Sales within our Agriculture platform
decreased as OEM and after-market distribution sales fell significantly due to depressed commodity prices and lower farm
incomes. The slight sales decrease in the Water platform was driven by weakness in North American industrial markets, offset
by growth in the global municipal markets and share gains from new products. Sales in the Valves platform, which was created
in the third quarter of 2015, increased as a result of the Alfa acquisition.
Operating income and operating margin of $204.5 million and 23.8%; respectively, were lower than the $216.9 million
and 24.1%; respectively, recorded in 2014, primarily due to the lower sales volume.
Health & Science Technologies Segment
(In thousands)
Net sales
Operating income
Operating margin
2015
2014
Change
$ 738,996
$ 752,021
157,948
152,999
(2)%
3 %
21.4%
20.3%
110
bps
Sales of $739.0 million decreased $13.0 million, or 2%, in 2015 compared with 2014. This decrease reflected a 1%
decline in organic sales, a 2% increase from acquisitions (CiDRA Precision Services — July 2015 and Novotema — May
2015) and 3% unfavorable foreign currency translation. In 2015, sales decreased 3% domestically and 1% internationally. Sales
to customers outside the U.S. were approximately 55% of total segment sales in 2015 compared with 54% in 2014.
Sales within our Scientific Fluidics platform increased as demand from the core biotech, in-vitro diagnostic and analytical
instrumentation markets grew and remained consistently strong through the year. Sales within our Material Processing
Technologies platform decreased compared to 2014 due to softer orders in the first half of the year, as general spending on large
capital projects declined. Sales within our Sealing Solutions platform increased compared to 2014 due to the acquisition of
Novotema and strong growth in the semiconductor markets, partially offset by declines in the oil & gas market. Sales within the
IDEX Optics and Photonics platform decreased compared to 2014, primarily from slow demand in the industrial and laser
optical end markets. Sales in our Gast platform decreased compared to 2014 due to softness in North American industrial
21
distribution markets. Sales in our Micropump platform decreased compared to 2014 due to softness in Asian printing markets,
and declines in the North American industrial distribution market.
Operating income and operating margin of $157.9 million and 21.4%, respectively, in 2015 were up from $153.0 million
and 20.3%, respectively, recorded in 2014, primarily due to productivity initiatives, partially offset by lower volume.
Fire & Safety/Diversified Products Segment
(In thousands)
Net sales
Operating income
Operating margin
2015
2014
Change
$
423,915
$
502,749
115,745
130,494
(16)%
(11)%
27.3%
26.0%
130
bps
Sales of $423.9 million decreased $78.8 million, or 16%, in 2015 compared with 2014. This decrease reflected a 10%
decline in organic growth and 6% unfavorable foreign currency translation. In 2015, sales decreased 12% domestically and
19% internationally. Sales to customers outside the U.S. were approximately 52% of total segment sales in 2015, compared
with 54% in 2014.
Sales within our Dispensing platform decreased due to the benefit of large projects in the first half of the prior year and
softness in Asian markets. The sales decrease in our Band-It platform was driven by the decline of upstream oil & gas sales,
due to depressed prices, slightly offset by continued strength in the North American transportation markets. Sales within our
Fire Suppression platform decreased due to prior year trailer sales for North American power production facilities, and lack of
project orders in China and North America. Sales within our Rescue platform decreased, due to continued decision delays on
municipal projects in Europe and Asia.
Operating income of $115.7 million was lower than the $130.5 million recorded in 2014, while operating margin of
27.3% was higher than the 26.0% recorded in 2014, primarily due to favorable mix within the Dispensing platform along with
productivity improvements across the entire segment, partially offset by lower volume.
Performance in 2014 Compared with 2013
(In thousands)
Net sales
Operating income
Operating margin
2014
2013
Change
$
2,147,767
$
2,024,130
431,224
20.1%
395,513
19.5%
60
bps
6%
9%
Sales in 2014 were $2.1 billion, a 6% increase from the comparable period the previous year. This increase reflects a 5%
increase in organic sales and 1% from acquisitions (Aegis — April 2014 and FTL — March 2013). Organic sales to customers
outside the U.S. represented approximately 50% of total sales in 2014 compared with 51% in 2013.
In 2014, Fluid & Metering Technologies contributed 42% of sales and 43% of operating income; Health & Science
Technologies contributed 35% of sales and 31% of operating income; and Fire & Safety/Diversified Products contributed 23%
of sales and 26% of operating income.
Gross profit of $949.3 million in 2014 increased $76.0 million, or 9%, from 2013, while gross margins were 44.2% in
2014 and 43.1% in 2013. The increases are mainly attributable to increased sales volume, favorable net material costs as well
as benefits from productivity initiatives.
SG&A expenses increased to $504.4 million in 2014 from $477.9 million in 2013. The $26.6 million increase reflects
approximately $4.0 million of incremental costs from new acquisitions and $22.6 million of volume-related expenses. As a
percentage of sales, SG&A expenses were 23.5% for 2014 and 23.6% for 2013.
During 2014, the Company recorded pre-tax restructuring expenses totaling $13.7 million. No restructuring expenses
were recorded in 2013. The 2014 restructuring expenses were mainly attributable to employee severance related to head count
reductions across all three segments and corporate.
Operating income of $431.2 million in 2014 increased from the $395.5 million recorded in 2013, primarily reflecting an
increase in volume, improved productivity partially offset by the $13.7 million of restructuring-related charges recorded in
22
2014. Operating margin of 20.1% in 2014 was up from 19.5% in 2013 primarily due to volume leverage and productivity
partially offset by the restructuring-related charges in 2014.
Other (income) expense increased $3.3 million from other expense of $0.2 million in 2013 to $3.1 million of income in
2014 mainly due to a favorable impact from foreign currency transactions and an increase in interest income.
Interest expense decreased slightly to $41.9 million in 2014 from $42.2 million in 2013. The decrease was principally due
to lower interest rates.
The 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 $113.1 million in 2014 compared to $97.9 million in 2013. The effective
tax rate increased to 28.8% in 2014 compared to 27.7% in 2013, due to a mix of global pre-tax income among jurisdictions and
the 2012 U.S. R&D credit in 2013, which was retroactively reinstated to January 1, 2012 as a result of the the enactment of the
American Taxpayer Relief Act of 2012 on January 2, 2013.
Net income for the year of $279.4 million increased from the $255.2 million earned in 2013. Diluted earnings per share in
2014 of $3.45 increased $0.36 from $3.09 in 2013 due to higher net income and lower share count resulting from share
repurchases.
Fluid & Metering Technologies Segment
(In thousands)
Net sales
Operating income
Operating margin
2014
2013
Change
$
899,588
$
216,886
24.1%
871,814
211,256
24.2%
3%
3%
(10)
bps
Sales of $899.6 million increased $27.8 million, or 3%, in 2014 compared with 2013. This increase reflected 2% organic
growth and 1% acquisition. The increase in organic sales was attributable to growth across all our platforms and groups within
the segment. In 2014, organic sales increased approximately 4% domestically and 1% internationally. Organic sales to
customers outside the U.S. were approximately 45% of total segment sales in 2014, compared with 46% in 2013.
Sales within our Energy platform increased modestly compared to 2013, due to the strength of the LPG and refined fuel
markets. Sales have grown in the North American and Asian markets, while Europe and the Middle East sales have declined,
due to the fall in oil prices and large project delays. Sales within our Industrial platform increased compared to 2013 on
continued strength of the North American industrial distribution and chemical markets. This increase was partially offset by a
decline in Industrial chemical sales in Europe due to a lack of project activity. Sales within our Agriculture platform increased
slightly driven by strong aftermarket demand in North America, which was offset by weak OEM demand due to falling farm
income. The sales increase in our Water platform was driven by share gains from new products and increased global project
activity.
Operating income of $216.9 million was higher than the $211.3 million recorded in 2013, while operating margin of
24.1% was lower than the 24.2% recorded in 2013, primarily due to $6.4 million of restructuring charges recorded in 2014,
partially offset by volume leverage and productivity initiatives.
Health & Science Technologies Segment
(In thousands)
Net sales
Operating income (loss)
Operating margin
2014
2013
Change
$
752,021
$
152,999
20.3%
714,650
136,707
5%
12%
19.1%
120
bps
Sales of $752.0 million increased $37.4 million, or 5%, in 2014 compared with 2013. This increase reflected 4% growth
in organic sales and 1% favorable foreign currency translation. In 2014, organic sales increased 7% domestically and 1%
internationally. Organic sales to customers outside the U.S. were approximately 54% of total segment sales in 2014 compared
with 53% in 2013.
23
Sales within our MPT platform increased compared to 2013 due to large projects in the Asian food and pharmaceutical
markets. Sales within our Scientific Fluidics platform increased after pausing in the middle part of 2014 as customers right-
sized their inventory. In the latter part of 2014 we saw increased demand from the core biotech, in-vitro diagnostic and
analytical instrumentation markets. Sales within our Sealing Solutions platform increased compared to 2013 due to strong
growth in the semiconductor and marine diesel markets, partially offset by softness in oil & gas towards year end due to
declining oil prices. Sales within our IOP platform were flat when compared to 2013, primarily from continued slow demand in
the industrial and life sciences markets. Sales in our Gast platform increased compared to 2013 due to strong growth in the
North American distribution markets. Sales in our Micropump platform increased compared to 2013 due to the success of new
product introductions.
Operating income and operating margin of $153.0 million and 20.3%, respectively, in 2014 were up from $136.7 million
and 19.1%, respectively, recorded in 2013, primarily due to volume leverage and productivity initiatives, partially offset by
$4.9 million of restructuring charges recorded in 2014.
Fire & Safety/Diversified Products Segment
(In thousands)
Net sales
Operating income
Operating margin
2014
2013
Change
$
502,749
$
130,494
26.0%
445,049
102,730
23.1%
13%
27%
290
bps
Sales of $502.7 million increased $57.7 million, or 13%, in 2014 compared with 2013. This increase was driven entirely
by organic growth. In 2014, organic sales increased 17% domestically and 9% internationally. Organic sales to customers
outside the U.S. were approximately 54% of total segment sales in 2014, compared with 56% in 2013.
Sales within our Dispensing platform increased due to the fulfillment of a large order in the first quarter of 2014 and the
strength of Asian and Western European markets. The sales increase within our Band-It platform was driven by continued
strength in the transportation, cable management and industrial industries, offset by declines in oil & gas application markets to
close out the year. Sales within our Fire Suppression platform increased as a result of orders for fire suppression trailers at
power production facilities and stable project orders in China and North America. Sales within our Rescue platform decreased
slightly, due to delayed decision making for municipal projects in Europe and Asia.
Operating income and operating margin of $130.5 million and 26.0%, respectively, were higher than the $102.7 million
and 23.1% recorded in 2013, primarily due to volume leverage, partially offset by $1.0 million of restructuring charges
recorded in 2014.
Liquidity and Capital Resources
Operating Activities
Cash flows from operating activities decreased $7.6 million, or 2.1%, to $360.3 million in 2015, primarily due to lower
earnings (excluding the gain on sale of business), partially offset by improved working capital performance. At December 31,
2015, working capital was $553.1 million and the Company’s current ratio was 2.79 to 1. At December 31, 2015, the
Company’s cash and cash equivalents totaled $328.0 million, of which $298.8 million was held outside of the United States.
Investing Activities
Cash flow used in investing activities increased $138.2 million to $210.5 million in 2015, primarily as a result of cash
paid for acquisitions, partially offset by proceeds from the sale of a business.
Cash flows from operations were more than adequate to fund capital expenditures of $43.8 million and $48.0 million in
2015 and 2014, respectively. Capital expenditures were generally for machinery and equipment that improved productivity,
although a portion was for business system technology, replacement of equipment, and construction of new facilities.
Management believes that the Company has ample capacity in its plants and equipment to meet demand increases for future
growth in the intermediate term.
The Company acquired Novotema in May 2015 for cash consideration of $61.1 million (€56 million); Alfa in June 2015
for cash consideration of $112.6 million (€99.8 million); and CPS in July 2015 for cash consideration of $19.5 million and non-
cash contingent consideration valued at $4.7 million. The entire purchase price for all of the 2015 acquisitions were funded
with cash on hand. The Company acquired Aegis in April 2014 for cash consideration of $25.4 million and the entire purchase
price was funded with borrowings under the Company’s bank credit facility.
24
Financing Activities
Cash flow used in financing activities increased $111.5 million, or 60.6% to $295.5 million in 2015, primarily as a result
of the Company paying off the $88.4 million balance on the 2.58% Senior Euro Notes and increased payments, net of
borrowings, of $23 million on the Company’s revolving credit facility.
The Company maintains a revolving credit facility (the “Revolving Facility”), which is a $700.0 million unsecured,
multi-currency bank credit facility expiring on June 23, 2020. At December 31, 2015, $195.0 million was outstanding under the
Revolving Facility, with $7.2 million of outstanding letters of credit resulting in net available borrowing capacity under the
Revolving Facility at December 31, 2015, was approximately $497.8 million. Borrowings under the Revolving Facility bear
interest, at either an alternate base rate or an adjusted LIBOR rate plus, in each case, an applicable margin. This applicable
margin is based on the Company’s senior, unsecured, long-term debt rating and can range from .005% to 1.50%. Based on the
Company’s credit rating at December 31, 2015, the applicable margin was 1.10% resulting in an interest rate of 1.51% at
December 31, 2015. Interest is payable (a) in the case of base rate loans, quarterly, and (b) in the case of LIBOR rate loans, on
the maturity date of the borrowing, or quarterly from the effective date for borrowings exceeding three months. The Company
may request increases in the lending commitments under the Credit Agreement, but the aggregate lending commitments
pursuant to such increases may not exceed $350.0 million. An annual Revolving Facility fee, also based on the Company’s
credit rating, is currently 15 basis points and is payable quarterly.
As of December 31, 2014 the Company included the outstanding balance of the 2.58% Senior Euro Notes, $98.5 million,
within Current liabilities on the Consolidated Balance Sheet as the maturity date was within twelve months. On June 9, 2015,
the Company paid the balance of the 2.58% Senior Euro Notes, upon its maturity, using cash on hand.
On December 6, 2010, the Company completed a public offering of $300.0 million 4.5% senior notes due December 15,
2020 (“4.5% Senior Notes”). The net proceeds from the offering of approximately $295.7 million, after deducting a
$1.6 million issuance discount, a $1.9 million underwriting commission and $0.8 million offering expenses, were used to repay
$250.0 million of outstanding bank indebtedness, with the balance used for general corporate purposes. The 4.5% Senior Notes
bear interest at a rate of 4.5% per annum, which is payable semi-annually in arrears on each June 15 and December 15. The
Company may redeem all or a portion of the 4.5% Senior Notes at any time prior to maturity at the redemption prices set forth
in the Note Indenture governing the 4.5% Senior Notes. The Company may issue additional debt from time to time pursuant to
the Indenture. The Indenture and 4.5% Senior Notes contain covenants that limit the Company’s ability to, among other things,
incur certain liens securing indebtedness, engage in certain sale-leaseback transactions, and enter into certain consolidations,
mergers, conveyances, transfers or leases of all or substantially all the Company’s assets. The terms of the 4.5% Senior Notes
also require the Company to make an offer to repurchase the 4.5% Senior Notes upon a change of control triggering event (as
defined in the Indenture) at a price equal to 101% of their principal amount plus accrued and unpaid interest, if any.
On December 9, 2011, the Company completed a public offering of $350.0 million 4.2% senior notes due December 15,
2021 (“4.2% Senior Notes”). The net proceeds from the offering of approximately $346.2 million, after deducting a
$0.9 million issuance discount, a $2.3 million underwriting commission and $0.6 million offering expenses, were used to repay
$306.0 million of outstanding bank indebtedness, with the balance used for general corporate purposes. The 4.2% Senior Notes
bear interest at a rate of 4.2% per annum, which is payable semi-annually in arrears on each June 15 and December 15. The
Company may redeem all or part of the 4.2% Senior Notes at any time prior to maturity at the redemption prices set forth in the
Note Indenture governing the 4.2% Senior Notes. The Company may issue additional debt from time to time pursuant to the
Indenture. The Indenture and 4.2% Senior Notes contain covenants that limit the Company’s ability to, among other things,
incur certain liens securing indebtedness, engage in certain sale-leaseback transactions, and enter into certain consolidations,
mergers, conveyances, transfers or leases of all or substantially all the Company’s assets. The terms of the 4.2% Senior Notes
also require the Company to make an offer to repurchase the 4.2% Senior Notes upon a change of control triggering event (as
defined in the Indenture) at a price equal to 101% of their principal amount plus accrued and unpaid interest, if any.
There are two key financial covenants that the Company is required to maintain in connection with the Revolving
Facility, which requires a minimum interest coverage ratio of 3.0 to 1 and a maximum leverage ratio of 3.50 to 1. At
December 31, 2015, the Company was in compliance with both of these financial covenants, as the Company’s interest
coverage ratio was 12.73 to 1 and the leverage ratio was 1.63 to 1. There are no financial covenants relating to the 4.5% Senior
Notes or 4.2% Senior Notes; however, both are subject to cross-default provisions.
On December 1, 2015 the Company’s Board of Directors approved an increase of $300.0 million in the authorized level
for repurchases of common stock. Repurchases under the program will be funded with future cash flow generation or
borrowings available under the Revolving Facility. During 2015, the Company purchased a total of 2.8 million shares at a cost
of $210.5 million, of which $2.3 million was settled in January 2016, compared to 3.0 million shares purchased at a cost of
$222.5 million in 2014. As of December 31, 2015, there was $635 million of repurchase authorization remaining.
25
The Company believes current cash, cash from operations and cash available under the Revolving Facility will be
sufficient to meet its operating cash requirements, planned capital expenditures, interest and principal payments on all
borrowings, pension and postretirement funding requirements, authorized share repurchases and annual dividend payments to
holders of the Company’s common stock for the next twelve months. Additionally, in the event that suitable businesses are
available for acquisition on acceptable terms, the Company may obtain all or a portion of the financing for these acquisitions
through the incurrence of additional borrowings. As of December 31, 2015, $195.0 million was outstanding under the
Revolving Facility, with $7.2 million of outstanding letters of credit, resulting in net available borrowing capacity under the
Revolving Facility at December 31, 2015 of approximately $497.8 million.
Contractual Obligations
Our contractual obligations include pension and postretirement medical benefit plans, 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, which would accelerate payment or maturity of
any of these commitments or obligations.
The following table summarizes our significant contractual obligations and commercial commitments at December 31,
2015, and the future periods in which such obligations are expected to be settled in cash. In addition, the table reflects the
timing of principal and interest payments on outstanding borrowings. Additional detail regarding these obligations is provided
in the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplementary Data.”
Payments Due by Period
Total
Less
Than
1 Year
1-3
Years
(In thousands)
3-5
Years
More
Than
5 Years
Borrowings (1)
Operating lease obligations
Capital lease obligations (2)
Purchase obligations (3)
Pension and post-retirement obligations
Total contractual obligations (4)
$
1,018,228
$
32,782
$
64,504
$
556,855
$
364,087
54,406
1,960
99,299
108,276
16,253
601
96,878
14,170
21,679
1,350
1,570
20,636
9,574
9
851
20,876
6,900
—
—
52,594
$
1,282,169
$
160,684
$
109,739
$
588,165
$
423,581
(1) Includes interest payments based on contractual terms and current interest rates for variable debt.
(2) Consists primarily of tangible personal property leases.
(3) Consists primarily of inventory commitments.
(4) Comprises liabilities recorded on the balance sheet of $918.2 million, and obligations not recorded on the balance sheet
of $364.0 million.
Critical Accounting Policies
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 Part II, Item 8, “Financial Statements and Supplementary Data.”
Revenue recognition — The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery
has occurred, the sales price is fixed or determinable, and collectibility of the sales price is reasonably assured. For product
sales, delivery does not occur until the products have been shipped and risk of loss has been transferred to the customer.
Revenue from services is recognized when the services are provided or ratably over the contract term. Some arrangements with
customers may include multiple deliverables, including the combination of products and services. In such cases, the Company
has identified these as separate elements in accordance with Accounting Standards Codification (“ASC”) 605-25, Revenue
Recognition-Multiple-Element Arrangements-Recognition, and recognizes revenue consistent with the policy for each separate
element based on the relative selling price method. Revenues from some long-term contracts are recognized on the percentage-
of-completion method. Percentage-of-completion is measured principally by the percentage of costs incurred to date for each
contract to the estimated total costs for such contract at completion. Provisions for estimated losses on uncompleted long-term
contracts are made in the period in which such losses are determined. Due to uncertainties inherent in the estimation process, it
is reasonably possible that completion costs, including those arising from contract penalty provisions and final contract
26
settlements, will be revised in the near-term. Such revisions to costs and income are recognized in the period in which the
revisions are determined.
The Company records allowances for discounts, product returns and customer incentives at the time of sale as a reduction
of revenue as such allowances can be reliably estimated based on historical experience and known trends. The Company also
offers product warranties and accrues its estimated exposure for warranty claims at the time of sale based upon the length of the
warranty period, warranty costs incurred and any other related information known to the Company.
Goodwill, long-lived and intangible assets — The Company evaluates the recoverability of certain noncurrent assets
utilizing various estimation processes. An impairment of a long-lived asset exists when the asset’s carrying amount exceeds its
fair value, and is recorded when the carrying amount is not recoverable through future operations. An indefinite lived intangible
asset or goodwill impairment exists when the carrying amount of intangible assets and goodwill exceeds its fair value.
Assessments of possible impairments of goodwill, long-lived or intangible assets are made when events or changes in
circumstances indicate that the carrying value of the asset may not be recoverable through future operations. Additionally,
testing for possible impairment of recorded goodwill and indefinite-lived intangible asset balances is performed annually. The
amount and timing of impairment charges for these assets require the estimation of future cash flows and the fair value of the
related assets.
The Company’s business acquisitions result in recording goodwill and other intangible assets, which affect the amount of
amortization expense and possible impairment expense that the Company will incur in future periods. The Company follows
the guidance prescribed in ASC 350, Goodwill and Other Intangible Assets, to test goodwill and intangible assets for
impairment. Annually, on October 31, or more frequently if triggering events occur, the Company compares the fair value of
their reporting units to the carrying value of each reporting unit to determine if a goodwill impairment exists.
The Company determines the fair value of each reporting unit utilizing an income approach (discounted cash flows)
weighted 50% and a market approach consisting of a comparable public company multiples methodology weighted 50%. To
determine the reasonableness of the calculated fair values, the Company reviews the assumptions to ensure that neither the
income approach nor the market approach yielded significantly different valuations.
The key assumptions are updated every year for each reporting unit for the income and market methodology used to
determine fair value. Various assumptions are utilized including forecasted operating results, annual operating plans, strategic
plans, economic projections, anticipated future cash flows, the weighted average cost of capital, market data and market
multiples. The assumptions that have the most significant effect on the fair value calculation are the weighted average cost of
capital, the market multiples, forecasted EBITDA, and terminal growth rates. The 2015 and 2014 ranges for these three
assumptions utilized by the Company are as follows:
Assumptions
Weighted average cost of capital
Market multiples
Terminal growth rates
2015
Range
9.5% to 13.0%
7.5x to 14.0x
3.0% to 3.5%
2014
Range
10.0% to 14.0%
7.5x to 12.5x
3.0% to 3.5%
In assessing the fair value of the reporting units, the Company considered both the market approach and income
approach. Under the market approach, the fair value of the reporting unit is determined by the respective trailing twelve month
EBITDA and forward looking 2016 EBITDA (50% each), based on multiples of comparable public companies. The market
approach is dependent on a number of significant management assumptions including forecasted EBITDA and selected market
multiples. Under the income approach, the fair value of the reporting unit is determined based on the present value of estimated
future cash flows. The income approach is dependent on a number of significant management assumptions including estimates
of operating results, capital expenditures, net working capital requirements, long term growth rate and discount rates.
Weighting was equally attributed to both the market and income approaches (50% each) in arriving at the fair value of the
reporting units.
In 2015 and 2014, there were no triggering events or changes in circumstances that would have required a review other
than as of our annual test date. Based on the results of our measurement as of October 31, 2015, all reporting units had a fair
value that was greater than 70% in excess of carrying value, except for our IOP and Valves reporting unit. Our IOP reporting
unit had a fair value that was approximately 20% in excess of carrying value and our Valves reporting unit had a fair value near
its carrying value as a result of the formation of this reporting unit in conjunction with our Alfa acquisition in June 2015.
27
The unamortized Banjo trade name was determined to be an indefinite lived intangible asset which is tested for
impairment on an annual basis in accordance with ASC 350 or more frequently if events or changes in circumstances indicate
that the asset might be impaired. The Company uses the relief-from-royalty method, a form of the income approach. The relief-
from-royalty method is dependent on a number of significant management assumptions, including estimates of revenues,
royalty rates and discount rates.
In 2015 and 2014, there were no triggering events or changes in circumstances that would have required a review other
than as of our annual test date. Based on the results of our measurement as of October 31, 2015, the fair value of the Banjo
trade name was greater than 20% in excess of carrying value.
A long-lived asset impairment exists when the carrying amount of the asset exceeds its fair value. Assessments of
possible impairments of long-lived assets are made when events or changes in circumstances indicate that the carrying value of
the asset may not be recoverable through future operations. The amount and timing of impairment charges for these assets
require the estimation of future cash flows and the fair value of the related assets. In 2015 and 2014, the Company concluded
that certain long lived assets had a fair value that was less than the carrying value of the assets, resulting in $0.8 million and
$2.5 million, respectively, of impairment charges.
Defined benefit retirement plans — The plan obligations and related assets of the defined benefit retirement plans are
presented in Note 15 of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and
Supplementary Data.” Level 1 assets are valued using unadjusted quoted prices for identical assets in active markets. Level 2
assets are valued using quoted prices or other observable inputs for similar assets. Level 3 assets are valued using unobservable
inputs, but reflect the assumptions market participants would use in pricing the assets. Plan obligations and the annual pension
expense are determined by consulting with actuaries using a number of assumptions provided by the Company. Key
assumptions in the determination of the annual pension expense include the discount rate, the rate of salary increases, and the
estimated future return on plan assets. To the extent actual amounts differ from these assumptions and estimated amounts,
results could be adversely affected.
The Society of Actuaries recently released revised mortality tables, which update life expectancy assumptions. In
consideration of these tables, we modified the mortality assumptions used in determining our pension and post-retirement
benefit obligations as of December 31, 2015, which will have a related impact on our annual benefit expense in future years.
The new mortality tables may result in additional funding requirements dependent upon the funded status of our plans. These
expectations presume all other assumptions remain constant and there are no changes to applicable funding regulations.
Changes in the discount rate assumptions will impact the (gain) loss amortization and interest cost components of the
projected benefit obligation (“PBO”), which in turn, may impact the Company’s funding decisions if the PBO exceeds plan
assets. Each 100 basis point increase in the discount rate will cause a corresponding decrease in the PBO of approximately
$22 million based upon the December 31, 2015 data. Each 100 basis point decrease in the discount rate will cause a
corresponding increase in the PBO of approximately $26 million based upon the December 31, 2015 data.
New Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
2014-09 which introduces a new five-step revenue recognition model. Under ASU 2014-09, an entity should recognize revenue
to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity
expects to be entitled in exchange for those goods or services. This ASU also requires disclosures sufficient to enable users to
understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers,
including qualitative and quantitative disclosures about contracts with customers, significant judgments and changes in
judgments, and assets recognized from the costs to obtain or fulfill a contract. This standard is effective for fiscal years
beginning after December 15, 2017, using either of the following transition methods: (i) a full retrospective approach reflecting
the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a
retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption. The
Company is currently evaluating the impact of the new guidance on our consolidated financial statements and have not yet
determined the method by which we will adopt the standard in 2018.
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk.
The Company is subject to market risk associated with changes in foreign currency exchange rates and interest rates. The
Company may, from time to time, enter into foreign currency forward contracts and interest rate swaps on its debt when it
believes there is a financial advantage in 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 foreign currency forward
28
contracts and interest rate swaps. Under the policy, the Company does not use financial or commodity derivative 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 foreign currency forward contracts and interest rate swaps on the Company’s outstanding
long-term debt.
Foreign Currency Exchange Rates
The Company’s foreign currency exchange rate risk is limited principally to the Euro, British Pound, Canadian Dollar,
Indian Rupee and Chinese Renminbi. The Company manages its foreign exchange risk principally through invoicing customers
in the same currency as the source of products. The foreign currency transaction (gains) losses for the period ending
December 31, 2015, 2014 and 2013 were $(0.1) million, $0.9 million, and $2.2 million, respectively, and are reported within
Other (income) expense-net on the Consolidated Statements of Operations.
Interest Rate Fluctuations
The Company’s interest rate exposure is primarily related to its $847.4 million of total debt outstanding at December 31,
2015. Approximately 23% 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 $1.0 million annualized increase or decrease in interest
expense and cash flows. The remaining debt is fixed rate debt.
29
Item 8.
Financial Statements and Supplementary Data.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of IDEX Corporation
We have audited the internal control over financial reporting of IDEX Corporation and subsidiaries (the “Company”) as
of December 31, 2015, based on criteria established in Internal Control - Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission. As described in Management’s Report on Internal
Control Over Financial Reporting, management excluded from its assessment the internal control over financial reporting at
Novotema SpA (Novotema), which was acquired on May 29, 2015, Alfa Valvole S.r.l. (Alfa) which was acquired on June 10,
2015, and CiDRA Precision Services (CiDRA), which was acquired on July 1, 2015. These exclusions constitute 14.1% and
8.5% of net and total assets, respectively, 1.8% of net sales, and 1.0% of net income of the consolidated financial statement
amounts as of and for the year ended December 31, 2015. Accordingly, our audit did not include the internal control over
financial reporting at Novotema, Alfa, or CiDRA. The Company’s management is responsible for maintaining effective internal
control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included
in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an
opinion on the Company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective
internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding
of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design
and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s
principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s
board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally
accepted in the United States of America (“generally accepted accounting principles”). A company’s internal control over
financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the
financial statements.
Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or
improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a
timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future
periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of
December 31, 2015, based on the criteria established in Internal Control - Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States), the consolidated financial statements as of and for the year ended December 31, 2015, of the Company and our report
dated February 19, 2016, expressed an unqualified opinion on those consolidated financial statements and included an
explanatory paragraph regarding the Company’s adoption of Accounting Standards Update 2015-17 “Income Taxes (Topic
740): Balance Sheet Classification of Deferred Taxes.”
Chicago, Illinois
February 19, 2016
Deloitte & Touche LLP
30
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of IDEX Corporation
We have audited the accompanying consolidated balance sheets of IDEX Corporation and subsidiaries (the "Company")
as of December 31, 2015 and 2014, and the related consolidated statements of operations, comprehensive income, shareholders'
equity, and cash flows for each of the three years in the period ended December 31, 2015. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an opinion on the consolidated financial
statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the consolidated financial
position of IDEX Corporation and subsidiaries as of December 31, 2015 and 2014, and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 2015, in conformity with accounting principles
generally accepted in the United States of America.
As discussed in Note 1 to the consolidated financial statements, the Company has changed its method of accounting for
deferred income taxes in 2015 due to the adoption of Accounting Standards Update 2015-17 “Income Taxes (Topic 740):
Balance Sheet Classification of Deferred Taxes.”
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States), the Company's internal control over financial reporting as of December 31, 2015, based on the criteria established in
Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission, and our report dated February 19, 2016, expressed an unqualified opinion on the Company's internal control over
financial reporting.
Chicago, Illinois
February 19, 2016
Deloitte & Touche LLP
31
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management is responsible for establishing and maintaining adequate internal control over financial reporting.
Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally
accepted in the United States of America, and as defined in Exchange Act Rule 13a-15(f).
Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives
because of its inherent limitations. Because of such limitations, there is a risk that material misstatements may not be prevented
or detected on a timely basis by internal control over financial reporting.
Management has used the framework set forth in the report entitled “Internal Control — Integrated Framework” (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission to assess the effectiveness of the
Company’s internal control over financial reporting. Based on that assessment, management has concluded that the Company’s
internal control over financial reporting was effective as of December 31, 2015.
The Company completed the acquisitions of Novotema SpA in May 2015, Alfa Valvole S.r.l. in June 2015 and CiDRA
Precision Services in July 2015. Due to the timing of the acquisitions, management has excluded these acquisitions from our
evaluation of effectiveness of internal controls over financial reporting. This exclusion represented 1.8% of net sales and 1.0%
of net income as well as 14.1% of net assets and 8.5% of total assets for the year ended December 31, 2015. The effectiveness
of the Company’s internal control over financial reporting as of December 31, 2015, has been audited by Deloitte & Touche
LLP, an independent registered public accounting firm, as stated in their report which appears herein.
32
IDEX CORPORATION
CONSOLIDATED BALANCE SHEETS
ASSETS
Current assets
Cash and cash equivalents
Receivables — net
Inventories
Other current assets
Total current assets
Property, plant and equipment — net
LIABILITIES AND SHAREHOLDERS’ EQUITY
Goodwill
Intangible assets — net
Other noncurrent assets
Total assets
Current liabilities
Trade accounts payable
Accrued expenses
Short-term borrowings
Dividends payable
Total current liabilities
Long-term borrowings
Deferred income taxes
Other noncurrent liabilities
Total liabilities
As of December 31,
2015
2014
(In thousands except share and
per share amounts)
$
328,018
$
260,000
239,124
35,542
862,684
240,945
1,396,529
287,837
17,448
509,137
256,040
237,631
72,983
1,075,791
219,543
1,321,277
271,164
15,688
$
2,805,443
$
2,903,463
$
128,911
$
153,672
1,087
25,927
309,597
839,707
110,483
102,365
127,462
163,409
98,946
22,151
411,968
760,399
130,368
114,277
1,362,152
1,417,012
Commitments and contingencies (Note 8)
Shareholders’ equity
Preferred stock:
Authorized: 5,000,000 shares, $.01 per share par value; Issued: none
—
—
Common stock:
Authorized: 150,000,000 shares, $.01 per share par value; Issued: 90,151,131 shares at
December 31, 2015 and 89,761,305 shares at December 31, 2014
Additional paid-in capital
Retained earnings
Treasury stock at cost: 13,616,592 shares at December 31, 2015 and 10,995,361 shares at
December 31, 2014
Accumulated other comprehensive loss
Total shareholders’ equity
Total liabilities and shareholders’ equity
902
679,623
1,666,680
(757,416)
(146,498)
1,443,291
898
647,553
1,483,821
(553,543)
(92,278)
1,486,451
$
2,805,443
$
2,903,463
See Notes to Consolidated Financial Statements.
33
IDEX CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Gain on sale of business
Restructuring expenses
Operating income
Other (income) expense — net
Interest expense
Income before income taxes
Provision for income taxes
Net income
Earnings per common share:
Basic earnings per common share
Diluted earnings per common share
Share data:
Basic weighted average common shares outstanding
Diluted weighted average common shares outstanding
For the Years Ended December 31,
2015
2014
2013
(In thousands except per share amounts)
$
2,020,668
$
2,147,767
$
2,024,130
1,116,353
1,198,452
1,150,766
904,315
479,408
(18,070)
11,239
431,738
(2,243)
41,636
392,345
109,538
282,807
3.65
3.62
77,126
77,972
$
$
$
949,315
504,419
—
13,672
431,224
(3,111)
41,895
392,440
113,054
279,386
3.48
3.45
79,715
80,728
$
$
$
873,364
477,851
—
—
395,513
178
42,206
353,129
97,914
255,215
3.11
3.09
81,517
82,489
$
$
$
See Notes to Consolidated Financial Statements.
34
IDEX CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net income
Other comprehensive income (loss)
Reclassification adjustments for derivatives, net of tax
Pension and other postretirement adjustments, net of tax
Foreign currency translation adjustments
Cumulative translation adjustment
Reclassification of foreign currency translation to earnings upon sale
of business
Other comprehensive income (loss)
Comprehensive income
For the Years Ended December 31,
2015
2014
2013
(In thousands)
$
282,807
$
279,386
$
255,215
4,531
9,415
4,510
(16,459)
4,738
21,788
(63,441)
(77,024)
13,572
(4,725)
(54,220)
228,587
$
—
(88,973)
190,413
$
—
40,098
$
295,313
See Notes to Consolidated Financial Statements.
35
IDEX CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
Accumulated Other Comprehensive
Income (Loss)
Common
Stock and
Additional
Paid-
In Capital
Retained
Earnings
Cumulative
Translation
Adjustment
Retirement
Benefits
Adjustments
Cumulative
Unrealized
Gain (Loss)
on
Derivatives
Treasury
Stock
Total
Shareholders’
Equity
(In thousands except share and per share amounts)
Balance, December 31, 2012
$
551,559
$ 1,113,541
$
38,639
$
(45,645) $
(36,397) $ (156,699) $
1,464,998
Net income
Cumulative translation adjustment
Net change in retirement obligations (net
of tax of $13,085)
Net change on derivatives designated as
cash flow hedges (net of tax of $2,692)
Issuance of 1,471,568 shares of common
stock from issuance of unvested shares,
exercise of stock options and deferred
compensation plans (net of tax of $4,514)
Repurchase of 2,916,280 shares of
common stock
Share-based compensation
Unvested shares surrendered for tax
withholding
Cash dividends declared — $.89 per
common share outstanding
Balance, December 31, 2013
Net income
Cumulative translation adjustment
Net change in retirement obligations (net
of tax benefit of $6,852)
Net change on derivatives designated as
cash flow hedges (net of tax of $2,713)
Issuance of 571,751 shares of common
stock from issuance of unvested shares,
exercise of stock options and deferred
compensation plans (net of tax of $3,425)
Repurchase of 2,970,461 shares of
common stock
Share-based compensation
Unvested shares surrendered for tax
withholding
Cash dividends declared — $1.12 per
common share outstanding
Balance, December 31, 2014
Net income
Cumulative translation adjustment
Net change in retirement obligations (net
of tax of $3,842)
Net change on derivatives designated as
cash flow hedges (net of tax of $2,499)
Issuance of 685,501 shares of common
stock from issuance of unvested shares,
exercise of stock options and deferred
compensation plans (net of tax of $3,794)
Repurchase of 2,811,002 shares of
common stock
Share-based compensation
Unvested shares surrendered for tax
withholding
Cash dividends declared — $1.28 per
common share outstanding
Balance, December 31, 2015
—
—
—
—
43,749
—
13,350
—
—
255,215
—
—
—
—
—
—
(75,016)
—
13,572
—
—
—
—
—
—
—
—
21,788
—
—
—
—
—
—
—
—
4,738
—
—
—
—
—
—
—
—
—
(167,503)
—
255,215
13,572
21,788
4,738
43,749
(167,503)
13,350
(1,902)
(1,902)
—
(75,016)
$
608,658
$ 1,293,740
$
52,211
$
(23,857) $
(31,659) $ (326,104) $
1,572,989
—
—
—
—
23,195
—
16,598
—
—
279,386
—
—
—
—
—
—
—
(89,305)
$
648,451
—
$ 1,483,821
282,807
$
—
—
—
14,545
—
17,529
—
—
—
—
—
—
—
—
—
(99,948)
—
(77,024)
—
—
—
—
—
—
—
(24,813) $
—
(68,166)
—
—
—
—
—
—
—
—
—
(16,459)
—
—
—
—
—
—
(40,316) $
—
—
9,415
—
—
—
—
—
—
—
—
—
4,510
—
—
—
—
—
—
—
—
4,531
—
—
—
—
—
—
—
—
—
—
(222,487)
—
279,386
(77,024)
(16,459)
4,510
23,195
(222,487)
16,598
(4,952)
(4,952)
—
—
—
—
—
(89,305)
1,486,451
282,807
(68,166)
9,415
4,531
9,937
24,482
(210,551)
—
(210,551)
17,529
(3,259)
(3,259)
—
(99,948)
(27,149) $ (553,543) $
$
680,525
$ 1,666,680
$
(92,979) $
(30,901) $
(22,618) $ (757,416) $
1,443,291
See Notes to Consolidated Financial Statements.
36
IDEX CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
2015
For the Years Ended December 31,
2014
(In thousands)
2013
Cash flows from operating activities
Net income
Adjustments to reconcile net income to net cash provided by operating activities:
$
282,807
$
279,386
$
255,215
Gain on sale of fixed assets
Gain on sale of business
Asset impairments
Depreciation and amortization
Amortization of intangible assets
Amortization of debt issuance expenses
Share-based compensation expense
Deferred income taxes
Excess tax benefit from share-based compensation
Non-cash interest expense associated with forward starting swaps
Changes in (net of the effect from acquisitions and divestitures):
Receivables
Inventories
Other current assets
Trade accounts payable
Accrued expenses
Other — net
Net cash flows provided by operating activities
Cash flows from investing activities
Purchases of property, plant and equipment
Acquisition of businesses, net of cash acquired
Proceeds from fixed asset disposals
Proceeds from sale of business
Other — net
Net cash flows used in investing activities
Cash flows from financing activities
Borrowings under revolving credit facilities
Payment of 2.58% Senior Euro Notes
Payments under revolving credit facilities
Debt issuance costs
Dividends paid
Proceeds from stock option exercises
Excess tax benefit from share-based compensation
Purchase of common stock
Unvested shares surrendered for tax withholding
Other
Net cash flows used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of period
Supplemental cash flow information
Cash paid for:
Interest
Income taxes
Significant non-cash activities:
Contingent consideration for acquisition
(114)
(18,070)
795
35,694
42,426
1,612
20,048
(339)
(5,265)
7,030
8,832
4,557
(2,728)
(2,828)
(16,672)
2,536
360,321
(43,776)
(195,013)
894
27,677
(273)
(210,491)
414,032
(88,420)
(333,630)
(1,739)
(96,172)
19,217
5,265
(210,822)
(3,259)
—
(295,528)
(35,421)
(181,119)
509,137
328,018
33,502
112,613
$
$
(351)
—
2,473
33,720
43,187
1,723
20,717
(8,593)
(6,275)
7,223
(11,110)
(7,821)
(5,201)
(2,466)
23,760
(2,411)
367,961
(47,997)
(25,443)
1,460
—
(280)
(72,260)
165,014
—
(61,951)
—
(85,726)
17,161
6,275
(219,893)
(4,952)
—
(184,072)
(42,121)
69,508
439,629
509,137
32,565
122,295
$
$
(96)
—
2,747
35,007
44,327
1,703
16,993
(3,156)
(8,560)
7,430
6,195
9,088
6,562
15,460
11,790
817
401,522
(31,536)
(36,849)
567
—
(344)
(68,162)
73,101
—
(89,478)
—
(72,905)
35,306
8,560
(167,503)
(1,902)
(4,224)
(219,045)
6,450
120,765
318,864
439,629
33,432
73,657
4,705
—
—
$
$
See Notes to Consolidated Financial Statements.
37
IDEX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1.
Significant Accounting Policies
Business
IDEX is an applied solutions company specializing in fluid and metering technologies, health and science technologies,
and fire, safety and other diversified products built to its customers’ specifications. IDEX’s products are sold in niche markets
to a wide range of industries throughout the world. The Company’s products include industrial pumps, compressors, flow
meters, injectors and valves, and related controls for use in a wide variety of process applications; precision fluidics solutions,
including pumps, valves, degassing equipment, corrective tubing, fittings, and complex manifolds, optical filters and specialty
medical equipment and devices used in life science applications; precision-engineered equipment for dispensing, metering and
mixing paints; and engineered products for industrial and commercial markets, including fire and rescue, transportation
equipment, oil & gas, electronics, and communications. These activities are grouped into three reportable segments: Fluid &
Metering Technologies, Health & Science Technologies and Fire & Safety/Diversified Products.
Principles of Consolidation
The consolidated financial statements include the Company and its subsidiaries. All intercompany transactions and
accounts have been eliminated.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States
of America requires management to make estimates and judgments that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities, and reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates. The principal areas of estimation reflected in the financial statements are revenue
recognition, sales returns and allowances, allowance for doubtful accounts, inventory valuation, recoverability of long-lived
assets, income taxes, product warranties, contingencies and litigation, insurance-related items, defined benefit retirement plans
and purchase accounting related to acquisitions.
Revenue Recognition
The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales
price is fixed or determinable, and collectability of the sales price is reasonably assured. For product sales, delivery does not
occur until the products have been shipped and risk of loss has been transferred to the customer. Revenue from services is
recognized when the services are provided or ratably over the contract term. Some arrangements with customers may include
multiple deliverables, including the combination of products and services. In such cases the Company has identified these as
separate elements in accordance with Accounting Standards Codification (“ASC”) 605-25, Revenue Recognition-Multiple-
Element Arrangements, and recognizes revenue consistent with the policy for each separate element based on the relative
selling price method. Revenues from certain long-term contracts are recognized on the percentage-of-completion method.
Percentage-of-completion is measured principally by the percentage of costs incurred to date for each contract to the estimated
total costs for such contract at completion. Provisions for estimated losses on uncompleted long-term contracts are made in the
period in which such losses are determined. Due to uncertainties inherent in the estimation process, it is reasonably possible that
completion costs, including those arising from contract penalty provisions and final contract settlements, will be revised in the
near-term. Such revisions to costs and income are recognized in the period in which the revisions are determined.
The Company records allowances for discounts, product returns and customer incentives at the time of sale as a reduction
of revenue as such allowances can be reliably estimated based on historical experience and known trends. The Company also
offers product warranties and accrues its estimated exposure for warranty claims at the time of sale based upon the length of the
warranty period, warranty costs incurred and any other related information known to the Company.
Shipping and Handling Costs
Shipping and handling costs are included in cost of sales and are recognized as a period expense during the period in
which they are incurred.
Advertising Costs
Advertising costs of $16.1 million, $14.5 million and $14.6 million for 2015, 2014 and 2013, respectively, are expensed
as incurred within Selling, general and administrative expenses.
38
Cash and Cash Equivalents
The Company considers all highly liquid instruments purchased with an original maturity of 90 days or less to be cash
and cash equivalents.
Allowance for Doubtful Accounts
The Company maintains allowances for doubtful accounts for estimated losses as a result of customer’s inability to make
required payments. Management evaluates the aging of the accounts receivable balances, the financial condition of its
customers, historical trends and the time outstanding of specific balances to estimate the amount of accounts receivables that
may not be collected in the future and records the appropriate provision.
Inventories
The Company states inventories at the lower of cost or market. Cost, which includes material, labor, and factory
overhead, is determined on a FIFO basis. We make adjustments to reduce the cost of inventory to its net realizable value, if
required, at the business unit level for estimated excess, obsolescence or impaired balances. Factors influencing these
adjustments include changes in market demand, product life cycle and engineering changes.
Impairment of Long-Lived Assets
Long-lived assets are reviewed for impairment upon the occurrence of events or changes in circumstances that indicate
that the carrying value of the assets may not be recoverable, as measured by comparing their net book value to the projected
undiscounted future cash flows generated by their use. Impaired assets are recorded at their estimated fair value based on a
discounted cash flow analysis. A long-lived asset impairment exists when the carrying amount of the asset exceeds its fair
value. Assessments of possible impairments of long-lived assets are made when events or changes in circumstances indicate
that the carrying value of the asset may not be recoverable through future operations. The amount and timing of impairment
charges for these assets require the estimation of future cash flows and the fair value of the related assets. In 2015, 2014 and
2013, the Company concluded that certain long lived assets had a fair value that was less than the carrying value of the assets,
resulting in $0.8 million, $2.5 million and $2.7 million, respectively, of long-lived asset impairment charges.
Goodwill and Indefinite-Lived Intangible Assets
In accordance with ASC 350, Goodwill and Other Intangible Assets, the Company reviews the carrying value of goodwill
and indefinite-lived intangible assets annually on October 31, or upon the occurrence of events or changes in circumstances that
indicate that the carrying value of the goodwill or intangible assets may not be recoverable. The Company evaluates the
recoverability of these assets based on the estimated fair value of each of the fifteen reporting units and the indefinite-lived
intangible asset. See Note 4 for a further discussion on goodwill and intangible assets.
Borrowing Expenses
Expenses incurred in securing and issuing debt are capitalized and included as a reduction of Long-term borrowings.
These amounts are amortized over the life of the related borrowing and the related amortization is included in Interest expense
in the Consolidated Statements of Operations. See Recently Adopted Accounting Standards within this footnote for further
discussion.
Earnings per Common Share
Earnings per common share (“EPS”) is computed by dividing net income by the weighted average number of shares of
common stock (basic) plus common stock equivalents (diluted) outstanding during the year. Common stock equivalents consist
of stock options, which have been included in the calculation of weighted average shares outstanding using the treasury stock
method, restricted stock, performance share units, and shares issuable in connection with certain deferred compensation
agreements (“DCUs”).
ASC 260, Earnings per Share, concludes that all outstanding unvested share-based payment awards that contain rights to
nonforfeitable dividends participate in undistributed earnings with common shareholders. If awards are considered participating
securities, the Company is required to apply the two-class method of computing basic and diluted earnings per share. The
Company has determined that its outstanding shares of restricted stock are participating securities. Accordingly, earnings per
common share were computed using the two-class method prescribed by ASC 260. Net income attributable to common
shareholders was reduced by $0.8 million, $1.3 million and $1.2 million in 2015, 2014 and 2013, respectively.
39
Basic weighted average shares outstanding reconciles to diluted weighted average shares outstanding as follows:
Basic weighted average common shares outstanding
Dilutive effect of stock options, restricted stock, performance share units and DCUs
Diluted weighted average common shares outstanding
2015
2014
2013
(In thousands)
77,126
846
77,972
79,715
1,013
80,728
81,517
972
82,489
Options to purchase approximately 0.9 million, 0.5 million and zero shares of common stock in 2015, 2014 and 2013,
respectively, were not included in the computation of diluted EPS because the effect of their inclusion would have been
antidilutive.
Share-Based Compensation
The Company accounts for share-based payments in accordance with ASC 718, Compensation-Stock Compensation.
Accordingly, the Company expenses the fair value of awards made under its share-based compensation plans. That cost is
recognized in the consolidated financial statements over the requisite service period of the grants. See Note 13 for further
discussion on share-based compensation.
Depreciation and Amortization
Property and equipment are stated at cost, with depreciation and amortization provided using the straight-line method
over the following estimated useful lives:
Land improvements
Buildings and improvements
Machinery, equipment and other
Office and transportation equipment
8 to 12 years
8 to 30 years
3 to 12 years
3 to 10 years
Certain identifiable intangible assets are amortized over their estimated useful lives using the straight-line method. The
estimated useful lives used in the computation of amortization of identifiable intangible assets are as follows:
Patents
Trade names
Customer relationships
Non-compete agreements
Unpatented technology and other
Research and Development Expenditures
5 to 17 years
10 to 20 years
5 to 20 years
3 years
5 to 20 years
Costs associated with research and development are expensed in the period incurred and are included in Cost of sales
within the Consolidated Statements of Operations. Research and development expenses, which include costs associated with
developing new products and major improvements to existing products, were $33.6 million, $36.8 million and $33.0 million in
2015, 2014 and 2013, respectively.
Foreign Currency
The functional currency of substantially all operations outside the United States is the respective local currency.
Accordingly, those foreign currency balance sheet accounts have been translated using the exchange rates in effect as of the
balance sheet date. Income statement amounts have been translated using the average exchange rate for the year. The gains and
losses resulting from changes in exchange rates from year to year have been reported in Accumulated other comprehensive loss
in the Consolidated Balance Sheets. The foreign currency transaction losses (gains) for the period ending December 31, 2015,
2014 and 2013 were $(0.1) million, $0.9 million, and $2.2 million, respectively, and are reported within Other (income)
expense-net on the Consolidated Statements of Operations.
40
Income Taxes
Income tax expense includes United States, state, local and international income taxes. Deferred tax assets and liabilities
are recognized for the tax consequences of temporary differences between the financial reporting and the tax basis of existing
assets and liabilities and for loss carryforwards. The tax rate used to determine the deferred tax assets and liabilities is the
enacted tax rate for the year and manner in which the differences are expected to reverse. Valuation allowances are recorded to
reduce deferred tax assets to the amount that will more likely than not be realized.
Concentration of Credit Risk
The Company is not dependent on a single customer as its largest customer accounted for less than 2% of net sales for all
years presented.
Recently Adopted Accounting Standards
In November 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, requiring all deferred tax assets and
liabilities, and any related valuation allowance, to be classified as noncurrent on the balance sheet. The classification change for
all deferred taxes as noncurrent simplifies entities’ processes as it eliminates the need to separately identify the net current and
net noncurrent deferred tax asset or liability in each jurisdiction and allocate valuation allowances. This standard is effective for
fiscal years beginning after December 15, 2016. The Company elected to prospectively adopt the accounting standard in the
beginning of the fourth quarter of fiscal year 2015. Prior periods in our Consolidated Financial Statements were not adjusted.
In September 2015, the FASB issued ASU 2015-16, Simplifying the Accounting for Measurement-Period Adjustments,
that eliminates the requirement for an acquirer in a business combination to account for measurement-period adjustments
retrospectively. Instead, acquirers must recognize measurement-period adjustments during the period in which they determine
the amounts, including the effect on earnings of any amounts they would have recorded in previous periods if the accounting
had been completed at the acquisition date. This standard is effective for fiscal years beginning after December 15, 2015. The
Company elected to adopt this guidance early, effective in the fourth quarter of fiscal year 2015. The impact of the early
adoption did not impact the consolidated financial position, results of operations or cash flows of the Company.
In April 2015, the FASB issued ASU 2015-03, Interest-Imputation of Interest: Simplifying the Presentation of Debt
Issuance Costs, which simplifies the presentation of debt issuance costs. Under ASU 2015-03, an entity presents such costs in
the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs is
reported as interest expense. This standard is effective for fiscal years beginning after December 15, 2015. The Company
elected to early adopt this guidance effective in the fourth quarter of fiscal year 2015. The retroactive impact of the early
adoption resulted in a decrease to Other noncurrent assets and Long-term debt of $4.6 million on the Consolidated Balance
Sheet as of December 31, 2014.
In April 2014, the FASB issued ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of
Components of an Entity, which includes amendments that change the requirements for reporting discontinued operations.
Under the new guidance, only disposals representing a strategic shift in operations with a major effect on the organization’s
operations and financial results should be presented as discontinued operations. Additionally, the ASU requires expanded
disclosures about disposal transactions that do not meet the discontinued operations criteria. The Company adopted the standard
effective January 1, 2015 and the adoption did not impact the consolidated financial position, results of operations or cash flows
of the Company. The Company concluded that the divestiture of the Ismatec product line did not quality for reporting as
discontinued operations; however, the Company did include required disclosures in Note 2.
New Accounting Pronouncements
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which introduces a new five-step
revenue recognition model. Under ASU 2014-09, an entity should recognize revenue to depict the transfer of promised goods or
services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for
those goods or services. This ASU also requires disclosures sufficient to enable users to understand the nature, amount, timing,
and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative
disclosures about contracts with customers, significant judgments and changes in judgments, and assets recognized from the
costs to obtain or fulfill a contract. This standard is effective for fiscal years beginning after December 15, 2017, using either of
the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior
reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect
41
of initially adopting ASU 2014-09 recognized at the date of adoption. The Company is currently evaluating the impact of the
new guidance on our consolidated financial statements and have not yet determined the method by which we will adopt the
standard in 2018.
2.
Acquisitions and Divestitures
All of the Company’s acquisitions have been accounted for under ASC 805, Business Combinations. Accordingly, the
accounts of the acquired companies, after adjustments to reflect fair values assigned to assets and liabilities, have been included
in the consolidated financial statements from their respective dates of acquisition. The results of operations of the acquired
companies have been included in the Company’s consolidated results since the date of each acquisition. Supplemental pro
forma information has not been provided as the acquisitions did not have a material impact on the Company’s consolidated
results of operations individually or in aggregate.
2015 Acquisitions
On May 29, 2015, the Company acquired the stock of Novotema, SpA (“Novotema”), a leader in the design, manufacture
and sale of specialty sealing solutions for use in the building products, gas control, transportation, industrial and water markets.
The business was acquired to complement and create synergies with our existing Sealing Solutions platform. Located in
Villongo, Italy, Novotema has annual revenues of approximately $33 million and operates within our Health & Science
Technologies segment. Novotema was acquired for cash consideration of $61.1 million (€56 million). The entire purchase price
was funded with cash on hand. Goodwill and intangible assets recognized as part of this transaction were $33.9 million and
$20.0 million, respectively. The $33.9 million of goodwill is not deductible for tax purposes.
On June 10, 2015, the Company acquired the stock of Alfa Valvole, S.r.l (“Alfa”), a leader in the design, manufacture and
sale of specialty valve products for use in the chemical, petro-chemical, energy and sanitary markets. The business was
acquired to expand our valve capabilities. Located in Casorezzo, Italy, Alfa has annual revenues of approximately $33 million
and operates within our Fluid & Metering Technologies segment. Alfa was acquired for cash consideration of $112.6 million
(€99.8 million). The entire purchase price was funded with cash on hand. Goodwill and intangible assets recognized as part of
this transaction were $71.2 million and $32.1 million, respectively. The $71.2 million of goodwill is not deductible for tax
purposes.
On July 1, 2015, the Company acquired the membership interests of CiDRA Precision Services, LLC (“CPS”), a leader in
the design, manufacture and sale of microfluidic components serving the life science, health and industrial markets. The
business was acquired to provide a critical building block to our emerging microfluidic and nanofludics capabilities. Located in
Wallingford, Connecticut, CPS has annual revenues of approximately $9 million and operates within our Health & Sciences
Technologies segment. CPS was acquired for an aggregate purchase price of $24.2 million, consisting of $19.5 million in cash
and contingent consideration valued at $4.7 million as of the opening balance sheet date. The contingent consideration is based
on the achievement of EBITDA targets during the 12-month period following the close. Based on potential outcomes, the
undiscounted amount of all the future payments that the Company could be required to make under the contingent consideration
arrangement is between $0 and $5.5 million. The entire purchase price was funded with cash on hand. Goodwill and intangible
assets recognized as part of this transaction were $9.6 million and $12.3 million, respectively. The $9.6 million of goodwill is
deductible for tax purposes.
On December 1, 2015, the Company acquired the assets of a complementary product line within our Fluid & Metering
Technologies segment. The purchase price and goodwill associated with this transaction was $1.9 million and $0.7 million,
respectively.
The Company made an initial allocation of the purchase price for the Novotema, Alfa, and CPS acquisitions as of the date
of acquisition based on its understanding of the fair value of the acquired assets and assumed liabilities. These nonrecurring fair
value measurements are classified as Level 3 in the fair value hierarchy. As the Company obtains additional information about
these assets and liabilities, including tangible and intangible asset appraisals, and learns more about the newly acquired
businesses, we will refine the estimates of fair value and more accurately allocate the purchase price. Only items identified as of
the acquisition date are considered for subsequent adjustment. The Company is continuing to evaluate the valuation of
inventory and accounts receivable associated with the Alfa acquisition and is in the process of finalizing purchase price
allocations for the Novotema, Alfa, and CPS acquisitions. The Company will make appropriate adjustments to the purchase
price allocations prior to the completion of the measurement period, as required.
42
The allocation of the acquisition costs to the assets acquired and liabilities assumed, based on their estimated fair values, is
as follows:
(In thousands)
Accounts receivable
Inventory
Other assets, net of cash acquired
Property, plant and equipment
Goodwill
Intangible assets
Total assets acquired
Total liabilities assumed
Net assets acquired
Novotema
Alfa
CPS
Other
Total
$
8,029
$
13,487
$
2,886
1,484
11,844
33,934
20,011
11,036
3,367
8,395
71,191
32,058
78,188
(17,090)
61,098
$
139,534
(26,944)
112,590
$
$
945
442
79
1,084
9,575
12,290
24,415
(235)
24,180
$
— $
1,102
—
—
748
—
1,850
—
$
1,850
$
22,461
15,466
4,930
21,323
115,448
64,359
243,987
(44,269)
199,718
Acquired intangible assets consist of trade names, customer relationships and unpatented technology. The goodwill
recorded for the acquisitions reflects the strategic fit and revenue and earnings growth potential of these businesses.
The acquired intangible assets and weighted average amortization periods are as follows:
(In thousands, except weighted average life)
Trade names
Customer relationships
Unpatented technology
Total acquired intangible assets
Weighted
Average
Life
15
12
8
Total
9,247
44,401
10,711
64,359
$
$
The Company incurred $2.6 million of acquisition-related transaction costs in 2015. These costs were recorded in selling,
general and administrative expense and were related to completed transactions, pending transactions and potential transactions,
including transactions that ultimately were not completed. The Company also incurred $3.4 million of non-cash acquisition fair
value inventory charges in 2015. These charges were recorded in cost of sales.
2014 Acquisitions
On April 28, 2014, the Company acquired the stock of Aegis Flow Technologies (“Aegis”), a leader in the design,
manufacture and sale of specialty chemical processing valves for use in the chemical, petro-chemical, chlor-alkali,
pharmaceutical, semiconductor and pulp/paper industries. Located in Geismar, Louisiana, Aegis operates within our Fluid &
Metering Technologies segment. Aegis was acquired for cash consideration of approximately $25 million. The entire purchase
price was funded with borrowings under the Company’s Revolving Facility. Goodwill and intangible assets recognized as part
of this transaction were $7.7 million and $8.8 million, respectively. The $7.7 million of goodwill is deductible for tax purposes.
The purchase price for Aegis has been allocated to the assets acquired and liabilities assumed based on estimated fair
values at the date of the acquisition.
43
The allocation of the acquisition costs to the assets acquired and liabilities assumed, based on their estimated fair values, is
as follows:
(In thousands)
Accounts receivable
Inventory
Other current assets, net of cash acquired
Property, plant and equipment
Goodwill
Intangible assets
Total assets acquired
Total liabilities assumed
Net assets acquired
$
$
1,147
6,230
232
2,988
7,711
8,770
27,078
(1,633)
25,445
Acquired intangible assets consist of trade names, customer relationships and unpatented technology. The goodwill
recorded for the acquisitions reflects the strategic fit and revenue and earnings growth potential of these businesses.
The acquired intangible assets and weighted average amortization periods are as follows:
(In thousands, except weighted average life)
Trade names
Customer relationships
Unpatented technology
Total acquired intangible assets
Weighted
Average
Life
15
14
8
Total
3,304
4,393
1,073
8,770
$
$
The Company incurred $1.7 million of acquisition-related transaction costs in 2014. These costs were recorded in selling,
general and administrative expense and were related to completed transactions, pending transactions and potential transactions,
including transactions that ultimately were not completed. The Company incurred $1.3 million of non-cash acquisition fair value
inventory charges in 2014. These charges were recorded in cost of sales.
2013 Acquisitions
On March 18, 2013, the Company acquired the stock of FTL Seals Technology, Ltd. (“FTL”). FTL specializes in the design
and application of high integrity rotary seals, specialty bearings, and other custom products for the oil & gas, mining, power
generation, and marine markets. Located in Leeds, England, FTL, along with Precision Polymer Engineering (“PPE”), operates
within the Health & Science Technologies segment as part of the Sealing Solutions group and will expand the range of PPE’s
technology expertise and markets served. FTL was acquired for an aggregate purchase price of $34.5 million (£23.1 million) in
cash. The entire purchase price was funded with borrowings under the Revolving Facility. Goodwill and intangible assets recognized
as part of this transaction were $18.0 million and $13.0 million, respectively. The $18.0 million of goodwill is not deductible for
tax purposes.
The purchase price for FTL has been allocated to the assets acquired and liabilities assumed based on estimated fair values
at the date of the acquisition.
44
The allocation of the acquisition costs to the assets acquired and liabilities assumed, based on their estimated fair values, is
as follows:
(In thousands)
Accounts receivable
Inventory
Other current assets, net of cash acquired
Property, plant and equipment
Goodwill
Intangible assets
Total assets acquired
Total liabilities assumed
Net assets acquired
$
$
3,454
4,524
131
1,357
17,994
13,016
40,476
(5,939)
34,537
Acquired intangible assets consist of trade names, non-compete agreements, customer relationships and unpatented
technology. The goodwill recorded for the acquisitions reflects the strategic fit and revenue and earnings growth potential of
these businesses.
The acquired intangible assets and weighted average amortization periods are as follows:
(In thousands, except weighted average life)
Trade names
Non-compete agreements
Customer relationships
Unpatented technology
Total acquired intangible assets
Weighted
Average
Life
15
3
9
8
Total
1,005
224
10,950
837
13,016
$
$
The Company incurred $1.4 million of acquisition-related transaction costs in 2013. These costs were recorded in selling,
general and administrative expense and were related to completed transactions, pending transactions and potential transactions,
including transactions that ultimately were not completed. The Company incurred $1.8 million of non-cash acquisition fair value
inventory charges in 2013. These charges were recorded in cost of sales.
2015 Divestiture
The Company periodically reviews its operations for businesses which may no longer be aligned with its strategic
objectives and focus on core business and customers. On July 31, 2015, the Company completed the sale of its Ismatec product
line to Cole-Palmer Instruments Company for $27.7 million in cash, resulting in a pre-tax gain on the sale of $18.1 million.
The Company recorded $4.8 million of income tax expense associated with this transaction during the three months ended
September 30, 2015. The results of the Ismatec product line were reported within the Health & Science Technologies segment
through the date of sale.
45
3.
Balance Sheet Components
RECEIVABLES
Customers
Other
Total
Less allowance for doubtful accounts
Total receivables — net
INVENTORIES
Raw materials and components parts
Work in process
Finished goods
Total
PROPERTY, PLANT AND EQUIPMENT
Land and improvements
Buildings and improvements
Machinery, equipment and other
Office and transportation equipment
Construction in progress
Total
Less accumulated depreciation and amortization
Total property, plant and equipment — net
ACCRUED EXPENSES
Payroll and related items
Management incentive compensation
Income taxes payable
Insurance
Warranty
Deferred revenue
Restructuring
Liability for uncertain tax positions
Accrued interest
Contingent consideration for acquisition
Other
Total accrued expenses
OTHER NONCURRENT LIABILITIES
Pension and retiree medical obligations
Liability for uncertain tax positions
Deferred revenue
Other
Total other noncurrent liabilities
46
December 31,
2015
2014
(In thousands)
$
262,304
$
260,412
$
$
$
$
$
$
$
$
5,508
267,812
7,812
260,000
141,671
32,387
65,066
239,124
34,343
157,946
331,146
97,250
13,377
634,062
393,117
240,945
67,209
12,599
3,836
9,505
7,936
9,885
6,636
3,498
1,230
4,705
26,633
153,672
76,190
4,252
3,763
18,160
$
$
$
$
$
$
$
$
2,589
263,001
6,961
256,040
137,584
37,178
62,869
237,631
31,121
148,749
311,036
98,279
14,335
603,520
383,977
219,543
64,124
21,567
9,305
10,058
7,196
11,813
6,056
2,084
1,738
—
29,468
163,409
90,584
2,471
4,612
16,610
$
102,365
$
114,277
The valuation and qualifying account activity for the years ended December 31, 2015, 2014 and 2013 is as follows:
ALLOWANCE FOR DOUBTFUL ACCOUNTS (1)
Beginning balance January 1
Charged to costs and expenses, net of recoveries
Utilization
Currency translation and other
Ending balance December 31
2015
2014
2013
(In thousands)
$
$
6,961
$
5,841
$
1,556
(1,009)
304
7,812
$
2,643
(1,195)
(328)
6,961
$
5,596
2,288
(1,921)
(122)
5,841
(1) Includes provision for doubtful accounts, sales returns and sales discounts granted to customers.
4.
Goodwill and Intangible Assets
The changes in the carrying amount of goodwill for 2015 and 2014, by business segment, were as follows:
Fluid &
Metering
Technologies
Health &
Science
Technologies
Fire & Safety/
Diversified
Products
Goodwill
$
Accumulated goodwill impairment losses
548,765
(20,721)
528,044
7,711
(11,606)
524,149
71,939
(11,318)
—
(In thousands)
$
$
721,495
(149,820)
571,675
—
(8,210)
563,465
43,508
(6,155)
(10,213)
590,605
$
279,827
(30,090)
249,737
—
(16,074)
233,663
—
(12,509)
—
Total
1,550,087
(200,631)
1,349,456
7,711
(35,890)
1,321,277
115,447
(29,982)
(10,213)
1,396,529
$
584,770
$
$
221,154
$
Balance at January 1, 2014
Acquisitions (Note 2)
Foreign currency translation
Balance at December 31, 2014
Acquisitions (Note 2)
Foreign currency translation
Divestiture (Note 2)
Balance at December 31, 2015
ASC 350 requires that goodwill be tested for impairment at the reporting unit level on an annual basis and between annual
tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit
below its carrying value. Goodwill represents the purchase price in excess of the net amount assigned to assets acquired and
liabilities assumed.
Goodwill and other acquired intangible assets with indefinite lives were tested for impairment as of October 31, 2015, the
Company’s annual impairment date. In assessing the fair value of the reporting units, the Company considers both the market
approach and income approach. Under the market approach, the fair value of the reporting unit is determined by the respective
trailing twelve month EBITDA and forward looking 2016 EBITDA (50% each), based on multiples of comparable public
companies. The market approach is dependent on a number of significant management assumptions including forecasted
EBITDA and selected market multiples. Under the income approach, the fair value of the reporting unit is determined based on
the present value of estimated future cash flows. The income approach is dependent on a number of significant management
assumptions including estimates of operating results, capital expenditures, net working capital requirements, long-term growth
rate and discount rates. Weighting was equally attributed to both the market and income approaches (50% each) in arriving at
the fair value of the reporting units.
There were no triggering events or changes in circumstances that would have required a review other than as of our
annual test date, in 2015 or 2014. Based on the results of our measurement at October 31, 2015, all reporting units had a fair
value that was greater than 70% in excess of carrying value, except for our IOP and Valves reporting unit. Our IOP reporting
unit had a fair value that was approximately 20% in excess of carrying value and our Valves reporting unit had a fair value near
its carrying value as a result of the formation of this reporting unit in conjunction with our Alfa acquisition in June 2015.
47
The gross carrying value and accumulated amortization for each major class of intangible asset at December 31, 2015 and
2014 is as follows:
At December 31, 2015
At December 31, 2014
Gross
Carrying
Amount
Accumulated
Amortization
(In thousands)
Weighted
Average
Life
Gross
Carrying
Amount
Net
Accumulated
Amortization
(In thousands)
Net
$
10,202
$
(6,175) $
4,027
110,658
257,071
794
78,562
6,554
(38,696)
71,962
(144,134)
112,937
(775)
(42,745)
(5,579)
19
35,817
975
11
16
11
3
10
10
$
10,016
$
104,118
222,486
840
69,760
7,034
(5,313) $
(32,881)
(126,193)
(636)
(35,165)
(5,002)
4,703
71,237
96,293
204
34,595
2,032
463,841
(238,104)
225,737
414,254
(205,190)
209,064
Amortizable intangible assets
Patents
Trade names
Customer relationships
Non-compete agreements
Unpatented technology
Other
Total amortizable
intangible assets
Unamortized intangible assets
Banjo trade name
62,100
—
62,100
Total intangible assets
$ 525,941
$ (238,104) $ 287,837
62,100
$ 476,354
—
62,100
$ (205,190) $ 271,164
The unamortized Banjo trade name was determined to be an indefinite lived intangible asset which is tested for
impairment on an annual basis in accordance with ASC 350 or more frequently if events or changes in circumstances indicate
that the asset might be impaired. The Company uses the relief-from-royalty method, a form of the income approach. The relief-
from-royalty method is dependent of a number of significant management assumptions, including estimates of revenues,
royalty rates and discount rates.
In 2015 and 2014, there were no triggering events or changes in circumstances that would have required a review other
than as of our annual test date. Based on the results of our measurement as of October 31, 2015, the fair value of the Banjo
trade name was greater than 20% in excess of carrying value.
Amortization of intangible assets was $42.4 million, $43.2 million and $44.3 million in 2015, 2014 and 2013,
respectively. Based on intangible asset balances as of December 31, 2015, amortization expense is expected to approximate
$42.9 million in 2016, $34.4 million in 2017, $24.3 million in 2018, $19.8 million in 2019 and $18.6 million in 2020.
5.
Borrowings
Borrowings at December 31, 2015 and 2014 consisted of the following:
Revolving Facility
2.58% Senior Euro Notes, due June 2015
4.5% Senior Notes, due December 2020
4.2% Senior Notes, due December 2021
Other borrowings
Total
Less current portion
Less deferred debt issuance costs
Less unaccreted debt discount
Total long-term borrowings
48
2015
2014
(In thousands)
$
195,000
$
115,000
—
300,000
350,000
2,436
847,436
1,087
5,203
1,439
98,456
300,000
350,000
2,170
865,626
98,946
4,607
1,674
$
839,707
$
760,399
On June 23, 2015, the Company entered into a credit agreement (the “Credit Agreement”) along with certain of its
subsidiaries, as borrowers (the “Borrowers”), Bank of America, N.A., as administrative agent, swing line lender and an issuer
of letters of credit, with other agents party thereto, which provided for a new revolving credit facility (the “Revolving
Facility”). The Revolving Facility replaced the Company’s existing five-year, $600.0 million credit facility, dated as of June 27,
2011, which was due to expire on June 27, 2016.
The Revolving Facility is in an aggregate principal amount of $700.0 million with a maturity date of June 23, 2020. The
maturity date may be extended under certain conditions for an additional one-year term. Up to $75.0 million of the Revolving
Facility is available for the issuance of letters of credit. Additionally, up to $50.0 million of the Revolving Facility is available
to the Company for swing line loans, available on a same-day basis.
Proceeds of the Revolving Facility are available for use by the Borrowers for working capital and other general corporate
purposes, including refinancing existing debt of the Company and its subsidiaries. The Company may request increases in the
lending commitments under the Credit Agreement, but the aggregate lending commitments pursuant to such increases may not
exceed $350.0 million. The Company has the right, subject to certain conditions set forth in the Credit Agreement, to designate
certain foreign subsidiaries of the Company as borrowers under the Credit Agreement. In connection with any such designation,
the Company is required to guarantee the obligations of any such subsidiaries. Under the Credit Agreement, Fast & Fluid
Management B.V. and IDEX UK Ltd. were approved by the lenders as designated borrowers. At December 31, 2015 neither
subsidiary had borrowings under the Revolving Facility.
Borrowings under the Revolving Facility bear interest at either an alternate base rate or an adjusted LIBOR rate plus, in
each case, an applicable margin. Such applicable margin is based on the Company’s senior, unsecured, long-term debt rating
and can range from .005% to 1.50%. Based on the Company’s credit rating at December 31, 2015, the applicable margin was
1.10% resulting in an interest rate of 1.51% at December 31, 2015. Interest is payable (a) in the case of base rate loans,
quarterly, and (b) in the case of LIBOR rate loans, on the maturity date of the borrowing, or quarterly from the effective date
for borrowings exceeding three months.
The Credit Agreement requires payment to the lenders of a facility fee based upon (a) the amount of the lenders’ commitments
under the credit facility from time to time and (b) the applicable corporate credit ratings of the Company. Voluntary prepayments
of any loans and voluntary reductions of the unutilized portion of the commitments under the Revolving Facility are permissible
without penalty, subject to break funding payments and minimum notice and minimum reduction amount requirements.
The Credit Agreement contains affirmative and negative covenants that the Company believes are usual and customary
for senior unsecured credit agreements, including a financial covenant requiring a maximum leverage ratio of 3.50 to 1.0,
which is the ratio of the Company’s consolidated total debt to its consolidated EBITDA, each as defined in the Credit
Agreement.
The negative covenants include, among other things, limitations (each of which is subject to customary exceptions for
financings of this type) on our ability to grant liens; enter into transactions resulting in fundamental changes (such as mergers or
sales of all or substantially all of the assets of the Company); restrict subsidiary dividends or other subsidiary distributions; enter
into transactions with the Company’s affiliates; and incur certain additional subsidiary debt.
The Credit Agreement also contains customary events of default (subject to grace periods, as appropriate) including among
others: nonpayment of principal, interest or fees; breach of the representations or warranties in any material respect; breach of the
financial, affirmative or negative covenants; payment default on, or acceleration of, other material indebtedness; bankruptcy or
insolvency; material judgments entered against the Company or any of its subsidiaries; certain specified events under the Employee
Retirement Income Security Act of 1974, as amended; certain changes in control of the Company; and the invalidity or
unenforceability of the Credit Agreement or other documents associated with the Credit Agreement.
At December 31, 2015, $195.0 million was outstanding under the Revolving Facility, with $7.2 million of outstanding
letters of credit, resulting in net available borrowing capacity under the Revolving Facility at December 31, 2015 of
approximately $497.8 million.
As of December 31, 2014 the Company included the outstanding balance of the 2.58% Senior Euro Notes, $98.5 million,
within Current liabilities on the Consolidated Balance Sheet as the maturity date was within twelve months. In June 2015, the
Company paid the balance of the 2.58% Senior Euro Notes, upon its maturity, using cash on hand.
On December 6, 2010 the Company completed a public offering of $300.0 million 4.5% senior notes due December 15,
2020 (“4.5% Senior Notes”). The net proceeds from the offering of $295.7 million, after deducting a $1.6 million issuance
discount, a $1.9 million underwriting commission and $0.8 million offering expenses, were used to repay $250.0 million of
49
outstanding bank indebtedness, with the balance used for general corporate purposes. The 4.5% Senior Notes bear interest at a
rate of 4.5% per annum, which is payable semi-annually in arrears on each June 15th and December 15th. The Company may
redeem all or a portion of the 4.5% Senior Notes at any time prior to maturity at the redemption prices set forth in the Note
Indenture governing the 4.5% Senior Notes. The Company may issue additional debt from time to time pursuant to the
Indenture. The Indenture and 4.5% Senior Notes contain covenants that limit the Company’s ability to, among other things,
incur certain liens securing indebtedness, engage in certain sale-leaseback transactions, and enter into certain consolidations,
mergers, conveyances, transfers or leases of all or substantially all the Company’s assets. The terms of the 4.5% Senior Notes
also require the Company to make an offer to repurchase the 4.5% Senior Notes upon a change of control triggering event (as
defined in the Indenture) at a price equal to 101% of their principal amount plus accrued and unpaid interest, if any.
On December 9, 2011 the Company completed a public offering of $350.0 million 4.2% senior notes due December 15,
2021 (“4.2% Senior Notes”). The net proceeds from the offering of $346.2 million, after deducting a $0.9 million issuance
discount, a $2.3 million underwriting commission and $0.6 million offering expenses, were used to repay $306.0 million of
outstanding bank indebtedness, with the balance used for general corporate purposes. The 4.2% Senior Notes bear interest at a
rate of 4.2% per annum, which is payable semi-annually in arrears on each June 15th and December 15th. The Company may
redeem all or a portion of the 4.2% Senior Notes at any time prior to maturity at the redemption prices set forth in the Note
Indenture governing the 4.2% Senior Notes. The Company may issue additional debt from time to time pursuant to the
Indenture. The Indenture and 4.2% Senior Notes contain covenants that limit the Company’s ability to, among other things,
incur certain liens securing indebtedness, engage in certain sale-leaseback transactions, and enter into certain consolidations,
mergers, conveyances, transfers or leases of all or substantially all the Company’s assets. The terms of the 4.2% Senior Notes
also require the Company to make an offer to repurchase the 4.2% Senior Notes upon a change of control triggering event (as
defined in the Indenture) at a price equal to 101% of their principal amount plus accrued and unpaid interest, if any.
Other borrowings of $2.4 million at December 31, 2015 consisted primarily of debt at international locations maintained
for working capital purposes. Interest is payable on the outstanding debt balances at the international locations at rates ranging
from 0.2% to 2.8% per annum.
There are two key financial covenants that the Company is required to maintain in connection with the Revolving
Facility, which requires a minimum interest coverage ratio of 3.0 to 1 and a maximum leverage ratio of 3.50 to 1. At
December 31, 2015 the Company was in compliance with both of these financial covenants. There are no financial covenants
relating to the 4.5% Senior Notes or 4.2% Senior Notes; however, both are subject to cross-default provisions.
Total borrowings at December 31, 2015 have scheduled maturities as follows:
(In thousands)
2016
2017
2018
2019
2020
Thereafter
Total borrowings
6.
Derivative Instruments
$
$
1,087
1,115
225
9
495,000
350,000
847,436
As of December 31, 2015 and 2014 the Company did not have any interest rate or foreign exchange contracts
outstanding. The type of cash flow hedges the Company has entered into includes interest rate exchange agreements that
effectively convert a portion of floating-rate debt to fixed-rate debt and are designed to reduce the impact of interest rate
changes on future interest expense.
The effective portion of gains or losses on interest rate exchange agreements is reported in accumulated other
comprehensive income (loss) in shareholders’ equity and reclassified into net income in the same period or periods in which the
hedged transaction affects net income. The remaining gain or loss in excess of the cumulative change in the present value of
future cash flows or the hedged item, if any, is recognized into net income during the period of change.
50
Fair values relating to derivative financial instruments reflect the estimated amounts that the Company would receive or
pay to sell or buy the contracts based on quoted market prices of comparable contracts at each balance sheet date.
On April 15, 2010 the Company entered into a forward starting interest rate contract with a notional amount of $300.0
million with a settlement date in December 2010. This contract was entered into in anticipation of the issuance of the
4.5% Senior Notes and was designed to lock in the market interest rate as of April 15, 2010. In December 2010, the Company
settled and paid this interest rate contract for $31.0 million. The $31.0 million is being amortized into interest expense over the
10 year term of the 4.5% Senior Notes, which results in an effective interest rate of 5.8%.
On July 12, 2011 the Company entered into a forward starting interest rate contract with a notional amount of $350.0
million and a settlement date of September 30, 2011. This contract was entered into in anticipation of the issuance of the 4.2%
Senior Notes and was designed to lock in the market interest rate as of July 12, 2011. On September 29, 2011, the Company
settled this interest rate contract for $34.7 million with a payment made on October 3, 2011. Simultaneously, the Company
entered into a separate interest rate contract with a notional amount of $350.0 million and a settlement date of February 28,
2012. The contract was entered into in anticipation of the expected issuance of the 4.2% Senior Notes and was designed to
maintain the market rate as of July 12, 2011. In December 2011, the Company settled and paid the September interest rate
contract for $4.0 million, resulting in a total settlement of $38.7 million. Of the $38.7 million, $0.8 million was recognized as
other expense in 2011 and the balance of $37.9 million is being amortized into interest expense over the 10 year term of the
4.2% Senior Notes, which results in an effective interest rate of 5.3%.
The amount of expense reclassified into interest expense for interest rate contracts for the years ended December 31,
2015, 2014 and 2013 is $7.0 million, $7.2 million and $7.4 million, respectively.
Approximately $6.8 million of the pre-tax amount included in accumulated other comprehensive loss in shareholders’
equity at December 31, 2015 will be recognized to net income over the next 12 months as the underlying hedged transactions
are realized.
7.
Fair Value Measurements
ASC 820 “Fair Value Measurements and Disclosures” defines fair value, provides guidance for measuring fair value and
requires certain disclosures. This standard discusses valuation techniques, such as the market approach (comparable market
prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service
capacity of an asset or replacement cost). The standard utilizes a fair value hierarchy that prioritizes the inputs to valuation
techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:
•
•
•
Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs, other than quoted prices that are observable for the asset or liability, either directly or indirectly.
These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar
assets or liabilities in markets that are not active.
Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions.
The basis used to measure the Company’s financial assets (liabilities) at fair value on a recurring basis in the balance
sheet at December 31, 2015 and 2014 is summarized as follows:
Money market investments
Available for sale securities
Contingent consideration
Balance at
December 31,
2015
Basis of Fair Value Measurements
Level 1
Level 2
Level 3
(In thousands)
$
21,931
$
21,931
$
— $
4,794
4,705
4,794
—
—
—
—
—
4,705
51
Balance at
December 31,
2014
Level 1
Level 2
Level 3
(In thousands)
Money market investments
Available for sale securities
$
21,094
$
21,094
$
4,513
4,513
— $
—
—
—
There were no transfers of assets or liabilities between Level 1 and Level 2 in 2015 or 2014.
The contingent consideration is based on the achievement of EBITDA targets during the 12-month period following the
close. In determining the fair value of the contingent consideration due in conjunction with the acquisition of CPS, the
Company used probability weighted estimates of potential EBITDA outcomes during the earn-out period. The CPS contingent
consideration liability was valued at $4.7 million as of the acquisition date. The Company assesses the fair value of the
contingent consideration quarterly based upon actual EBITDA, forecasted EBITDA, and other factors known to management.
There have been no changes to the value of the contingent consideration liability and the $4.7 million is included in Accrued
expenses in the Consolidated Balance Sheet at December 31, 2015.
The carrying value of our cash and cash equivalents, accounts receivable, accounts payable and accrued expenses
approximates their fair values because of the short term nature of these instruments. At December 31, 2015, the fair value of
our Revolving Facility, 4.5% Senior Notes and 4.2% Senior Notes, based on quoted market prices and current market rates for
debt with similar credit risk and maturity, was approximately $859.0 million compared to the carrying value of $843.6 million.
This fair value measurement is classified as Level 2 within the fair value hierarchy since it is determined based upon significant
inputs observable in the market, including interest rates on recent financing transactions to entities with a credit rating similar
to ours.
8.
Commitments and Contingencies
The Company leases certain office facilities, warehouses and data processing equipment under operating leases. Rental
expense totaled $18.9 million, $19.2 million and $18.9 million in 2015, 2014 and 2013, respectively.
The aggregate future minimum lease payments for operating and capital leases as of December 31, 2015 were as follows:
2016
2017
2018
2019
2020
2021 and thereafter
Operating
Capital
(In thousands)
$
16,253
$
12,123
9,556
5,540
4,034
6,900
601
1,123
227
9
—
—
$
54,406
$
1,960
52
Warranty costs are provided for at the time of sale. The warranty provision is based on historical costs and adjusted for
specific known claims. A rollforward of the warranty reserve is as follows:
Beginning balance January 1
Provision for warranties
Claim settlements
Other adjustments, including acquisitions and currency translation
Ending balance December 31
2015
2014
2013
(In thousands)
7,196
$
4,888
$
4,788
(3,864)
(184)
7,936
$
6,220
(3,823)
(89)
7,196
$
$
$
4,875
3,845
(3,865)
33
4,888
The Company is party to various legal proceedings arising in the ordinary course of business, none of which are expected
to have a material effect on its business, financial condition, results of operations or cash flow.
9.
Common and Preferred Stock
On December 1, 2015 the Company’s Board of Directors approved an increase in the authorized level for repurchases of
common stock by $300.0 million. Repurchases under the program will be funded with future cash flow generation or
borrowings available under the Revolving Facility. During 2015 the Company purchased a total of 2.8 million shares at a cost
of $210.5 million, of which $2.3 million was settled in January 2016, compared to 3.0 million shares purchased at a cost of
$222.5 million in 2014, of which $2.6 million was settled in January 2015. As of December 31, 2015, there was $635 million of
repurchase authorization remaining.
At December 31, 2015 and 2014 the Company had 150 million shares of authorized common stock, with a par value of
$.01 per share and five million shares of authorized preferred stock with a par value of $.01 per share. No preferred stock was
issued as of December 31, 2015 and 2014.
10.
Income Taxes
Pretax income for 2015, 2014 and 2013 was taxed in the following jurisdictions:
Domestic
Foreign
Total
2015
2014
2013
(In thousands)
$
$
285,399
106,946
392,345
$
$
275,334
117,106
392,440
$
$
233,530
119,599
353,129
53
The provision (benefit) for income taxes for 2015, 2014 and 2013, was as follows:
2015
2014
2013
(In thousands)
Current
U.S.
State and local
Foreign
Total current
Deferred
U.S.
State and local
Foreign
Total deferred
Total provision for income taxes
$
Deferred tax assets (liabilities) at December 31, 2015 and 2014 were:
Employee and retiree benefit plans
Depreciation and amortization
Inventories
Allowances and accruals
Interest rate exchange agreement
Other
Total
$
73,059
$
77,454
$
6,188
30,630
109,877
7,125
(1,017)
(6,447)
(339)
109,538
$
$
$
7,133
37,060
121,647
(3,176)
(1,708)
(3,709)
(8,593)
113,054
$
59,707
8,123
33,240
101,070
1,500
(55)
(4,601)
(3,156)
97,914
2015
2014
(In thousands)
$
37,393
(185,321)
12,615
12,528
12,948
2,800
(107,037) $
38,871
(172,766)
11,229
14,552
15,448
4,626
(88,040)
The deferred tax assets and liabilities recognized in the Company’s Consolidated Balance Sheets as of December 31,
2015 and 2014 were:
Deferred tax asset — other current assets
Deferred tax asset — other noncurrent assets
Total deferred tax assets
Deferred tax liability — accrued expenses
Noncurrent deferred tax liability — deferred income taxes
Total deferred tax liabilities
Net deferred tax liabilities
2015
2014
(In thousands)
— $
3,446
3,446
—
(110,483)
(110,483)
(107,037) $
39,305
3,080
42,385
(57)
(130,368)
(130,425)
(88,040)
$
$
54
The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to
pretax income. The computed amount and the differences for 2015, 2014 and 2013 are as follows:
Pretax income
Provision for income taxes
Computed amount at statutory rate of 35%
State and local income tax (net of federal tax benefit)
Taxes on non-U.S. earnings-net of foreign tax credits
Effect of flow-through entities
U.S. business tax credits
Domestic activities production deduction
Deferred tax effect of foreign tax rate change
Other
Total provision for income taxes
2015
2014
2013
(In thousands)
$
$
$
392,345
137,321
5,033
(11,663)
(8,358)
(1,273)
(6,521)
(2,636)
(2,365)
109,538
$
$
$
392,440
137,354
4,875
(9,378)
(9,018)
(1,680)
(7,489)
—
(1,610)
113,054
$
$
$
353,129
123,595
4,382
(9,683)
(7,267)
(1,516)
(6,217)
—
(5,380)
97,914
The Company has $715 million and $683 million of undistributed earnings of non-U.S. subsidiaries as of December 31,
2015 and 2014, respectively. No deferred U.S. income taxes have been provided on these earnings as they are considered to be
reinvested for an indefinite period of time or will be repatriated when it is tax effective to do so. If these amounts were
distributed to the U.S., in the form of dividends or otherwise, the Company would be subject to additional U.S. income taxes,
which could be material. Determination of the amount of unrecognized deferred income tax liabilities on these earnings is not
practicable because of the complexities with the hypothetical calculation, and the amount of liability, if any, is dependent on
circumstances if and when remittance occurs. During the years ended December 31, 2015, 2014 and 2013, the Company
repatriated $14.3 million, $6.5 million and $11.7 million of foreign earnings, respectively, resulting in $0.3 million of
incremental tax expense, $0.2 million of incremental tax benefit and $0.9 million of incremental income tax expense,
respectively. These repatriations represent distributions of current year earnings and distributions from liquidating subsidiaries
and do not impact our representation that the undistributed earnings are permanently invested.
A reconciliation of the beginning and ending amount of unrecognized tax benefits for 2015, 2014 and 2013 is as follows:
Beginning balance January 1
Gross increase due to non-U.S. acquisitions
Gross increases for tax positions of prior years
Gross decreases for tax positions of prior years
Settlements
Lapse of statute of limitations
Ending balance December 31
2015
2014
2013
(In thousands)
$
3,619
$
5,124
$
3,772
1,256
—
(667)
(752)
7,228
$
—
834
(51)
(2,057)
(231)
3,619
$
$
6,506
—
1,357
(99)
(1,219)
(1,421)
5,124
We recognize interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2015,
2014 and 2013, we had approximately $0.2 million, $0.7 million and $0.5 million, respectively, of accrued interest related to
uncertain tax positions. As of December 31, 2015, 2014 and 2013, we had approximately $0.3 million, $0.3 million and $0.2
million, respectively, of accrued penalties related to uncertain tax positions.
The total amount of unrecognized tax benefits that would affect our effective tax rate if recognized is $3.0 million, $2.9
million and $4.5 million as of December 31, 2015, 2014 and 2013, respectively. The tax years 2009-2014 remain open to
examination by major taxing jurisdictions. Due to the potential for resolution of federal, state and foreign examinations, and the
expiration of various statutes of limitation, it is reasonably possible that the Company’s gross unrecognized tax benefits balance
may change within the next 12 months by a range of zero to $3.5 million.
55
The Company had net operating loss carry forwards related to prior acquisitions for U.S. federal purposes at
December 31, 2015 and 2014 of $4.8 million and $7.1 million, respectively. For non-U.S. purposes the Company had net
operating loss carry forwards at December 31, 2015 and 2014 of $1.6 million and $5.0 million, respectively. The federal net
operating loss carry forwards are available for use against the Company’s consolidated federal taxable income and expire
between 2018 and 2031. The entire balance of the non-U.S. net operating losses is available to be carried forward.
At December 31, 2015 and 2014, the Company had a foreign capital loss carry forward of approximately $0.9 million
and $1.0 million, respectively. The foreign capital loss can be carried forward indefinitely. At both December 31, 2015 and
2014 the Company has a valuation allowance against the deferred tax asset attributable to the foreign capital loss of $0.2
million. At December 31, 2015 and 2014, the Company had state net operating loss and credit carry forwards of approximately
$27.0 million and $23.7 million, respectively. If unutilized, the state net operating loss will expire between 2019 and 2035. At
December 31, 2015 and 2014, the Company recorded a valuation allowance against the deferred tax asset attributable to the
state net operating loss of $1.0 million and $0.8 million, respectively.
11.
Business Segments and Geographic Information
IDEX has three reportable business segments: Fluid & Metering Technologies, Health & Science Technologies and
Fire & Safety/Diversified Products.
The Fluid & Metering Technologies segment designs, produces and distributes positive displacement pumps, flow
meters, injectors, and other fluid-handling pump modules and systems and provides flow monitoring and other services for the
food, chemical, general industrial, water & wastewater, agriculture and energy industries. The Health & Science Technologies
segment designs, produces and distributes a wide range of precision fluidics, rotary lobe pumps, centrifugal and positive
displacement pumps, roll compaction and drying systems used in beverage, food processing, pharmaceutical and cosmetics,
pneumatic components and sealing solutions, including very high precision, low-flow rate pumping solutions required in
analytical instrumentation, clinical diagnostics and drug discovery, high performance molded and extruded, biocompatible
medical devices and implantables, air compressors used in medical, dental and industrial applications, optical components and
coatings for applications in the fields of scientific research, defense, biotechnology, aerospace, telecommunications and
electronics manufacturing, laboratory and commercial equipment used in the production of micro and nano scale materials,
precision photonic solutions used in life sciences, research and defense markets, and precision gear and peristaltic pump
technologies that meet exacting original equipment manufacturer specifications. The Fire & Safety/Diversified Products
segment produces firefighting pumps and controls, rescue tools, lifting bags and other components and systems for the fire and
rescue industry, engineered stainless steel banding and clamping devices used in a variety of industrial and commercial
applications, and precision equipment for dispensing, metering and mixing colorants and paints used in a variety of retail and
commercial businesses around the world.
Information on the Company’s business segments is presented below based on the nature of products and services
offered. The Company evaluates performance based on several factors, of which sales and operating income are the primary
financial measures. Intersegment sales are accounted for at fair value as if the sales were to third parties.
56
NET SALES
Fluid & Metering Technologies
External customers
Intersegment sales
Total segment sales
Health & Science Technologies
External customers
Intersegment sales
Total segment sales
Fire & Safety/Diversified Products
External customers
Intersegment sales
Total segment sales
Intersegment eliminations
Total net sales
OPERATING INCOME (LOSS) (1)
Fluid & Metering Technologies
Health & Science Technologies
Fire & Safety/Diversified Products
Corporate office (2)
Total operating income
Interest expense
Other (income) expense - net
Income before taxes
ASSETS
Fluid & Metering Technologies
Health & Science Technologies
Fire & Safety/Diversified Products
Corporate office (3)
Total assets
DEPRECIATION AND AMORTIZATION (4)
Fluid & Metering Technologies
Health & Science Technologies
Fire & Safety/Diversified Products
Corporate office and other
Total depreciation and amortization
CAPITAL EXPENDITURES
Fluid & Metering Technologies
Health & Science Technologies
Fire & Safety/Diversified Products
Corporate office and other
Total capital expenditures
2015
2014
2013
(In thousands)
$
$
$
$
$
$
$
$
$
$
$
859,945
847
860,792
$
898,530
1,058
899,588
737,011
1,985
738,996
423,712
203
423,915
(3,035)
2,020,668
204,506
157,948
115,745
(46,461)
431,738
41,636
(2,243)
392,345
$
$
$
747,186
4,835
752,021
502,051
698
502,749
(6,591)
2,147,767
216,886
152,999
130,494
(69,155)
431,224
41,895
(3,111)
392,440
2015
2014
(In thousands)
1,125,266
1,108,302
448,867
123,008
2,805,443
27,662
42,827
6,051
1,580
78,120
22,846
13,104
5,804
2,022
43,776
$
$
$
$
$
$
1,026,238
1,101,155
510,841
265,229
2,903,463
26,453
42,478
6,583
1,393
76,907
18,215
19,161
6,761
3,860
47,997
$
$
$
$
$
$
$
$
$
870,720
1,094
871,814
708,940
5,710
714,650
444,470
579
445,049
(7,383)
2,024,130
211,256
136,707
102,730
(55,180)
395,513
42,206
178
353,129
2013
1,025,352
1,113,546
484,139
258,081
2,881,118
27,633
43,496
6,852
1,353
79,334
11,581
12,280
5,040
2,635
31,536
57
(1) Segment operating income (loss) excludes net unallocated corporate operating expenses.
(2) 2015 includes an $18.1 million gain on sale of business.
(3) 2014 balance has been reclassified to conform to the current presentation.
(4) Excludes amortization of debt issuance expenses.
Information about the Company’s operations in different geographical regions for the years ended December 31, 2015,
2014 and 2013 is shown below. Net sales were attributed to geographic areas based on location of the customer and no country
outside the U.S. was greater than 10% of total revenues.
NET SALES
U.S.
North America, excluding U.S.
Europe
Asia
Other
Total net sales
LONG-LIVED ASSETS — PROPERTY, PLANT AND EQUIPMENT
U.S.
North America, excluding U.S.
Europe
Asia
Other
2015
2014
2013
(In thousands)
$
1,015,277
$
1,068,758
$
983,791
$
$
85,852
490,435
325,507
103,597
2,020,668
144,508
643
69,082
26,498
214
$
$
95,917
527,975
337,668
117,449
2,147,767
139,702
814
54,088
24,912
27
$
$
88,213
521,491
306,466
124,169
2,024,130
124,880
901
63,018
24,590
99
Total long-lived assets — net
$
240,945
$
219,543
$
213,488
58
12.
Restructuring
During the third and fourth quarters of 2015 and the fourth quarter of 2014, the Company recorded restructuring costs as a
part of restructuring initiatives that support the implementation of key strategic efforts designed to facilitate long-term, sustainable
growth through cost reduction actions, primarily consisting of employee reductions and facility rationalization. The costs incurred
related to these initiatives were included in Restructuring expenses in the Consolidated Statements of Operations while the related
accruals were included in Accrued expenses in the Consolidated Balance Sheets. Severance costs primarily consisted of severance
benefits through payroll continuation, COBRA subsidies, outplacement services, conditional separation costs and employer tax
liabilities, while exit costs primarily consisted of asset disposals or impairments and lease exit costs.
2015 Initiative
During 2015 the Company recorded pre-tax restructuring expenses totaling $11.2 million related to the 2015 restructuring
initiative. These expenses consisted of employee severance related to employee reductions across various functional areas. The
2015 restructuring initiative included severance benefits for 208 employees. Severance payments are expected to be
substantially paid by the end of 2016 using cash from operations.
Pre-tax restructuring expenses, comprised solely of severance costs, by segment for 2015 are as follows:
Fluid & Metering Technologies
Health & Science Technologies
Fire & Safety/Diversified Products
Corporate/Other
Total restructuring costs
2014 Initiative
Total Restructuring Costs
(In thousands)
$
$
7,090
3,408
576
165
11,239
During 2014 the Company recorded pre-tax restructuring expenses in the fourth quarter totaling $13.7 million related to
the 2014 restructuring initiative. These expenses consisted of employee severance related to employee reductions across various
functional areas as well as exit costs and asset impairments. The 2014 restructuring initiative included severance benefits for
217 employees. Severance payments were fully paid by the end of 2015 using cash from operations.
Pre-tax restructuring expenses by segment for 2014 were as follows:
Fluid & Metering Technologies
Health & Science Technologies
Fire & Safety/Diversified Products
Corporate/Other
Total restructuring costs
Severance
Costs
Exit Costs and
Asset Impairments
Total
(In thousands)
6,413
$
— $
3,520
908
1,313
1,392
126
—
6,413
4,912
1,034
1,313
12,154
$
1,518
$
13,672
$
$
59
Restructuring accruals of $6.6 million and $6.1 million at December 31, 2015 and 2014, respectively, are reflected in
Accrued expenses in our Consolidated Balance Sheets as follows:
Balance at January 1, 2014
Restructuring expenses
Payments, utilization and other
Balance at December 31, 2014
Restructuring expenses
Payments, utilization and other
Balance at December 31, 2015
13.
Share-Based Compensation
Restructuring
Initiatives
(In thousands)
$
$
—
13,672
(7,616)
6,056
11,239
(10,659)
6,636
The Company maintains two share-based compensation plans for executives, non-employee directors and certain key
employees that authorize the granting of stock options, restricted stock, performance share 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
December 31, 2015 totaled 15.6 million, of which 6.7 million shares were available for future issuance. The Company’s policy
is to recognize compensation cost on a straight-line basis, assuming forfeitures, over the requisite service period for the entire
award.
Stock Options
Stock options granted under IDEX 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. The majority of the options issued to employees 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 year.
Weighted average option fair values and assumptions for the period are as follows:
Weighted average fair value of grants
Dividend yield
Volatility
Risk-free interest rate
Expected life (in years)
The assumptions are as follows:
Years Ended December 31,
2015
$20.32
1.45%
29.90%
2014
$19.52
1.27%
30.36%
2013
$12.97
1.57%
30.92%
0.24% - 2.82% 0.12% - 4.65% 0.17% - 4.12%
5.93
5.89
5.86
•
•
•
•
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
years ended December 31, 2015, 2014 and 2013 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 years ended December 31, 2015, 2014 and 2013, we present 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.
60
A summary of the Company’s stock option activity as of December 31, 2015, and changes during the year ended
December 31, 2015 is presented as follows:
Stock Options
Outstanding at January 1, 2015
Granted
Exercised
Forfeited/Expired
Outstanding at December 31, 2015
Vested and expected to vest at December 31, 2015
Exercisable at December 31, 2015
Shares
2,378,559
$
525,255
(469,497)
(167,884)
2,266,433
2,169,134
1,201,889
$
$
$
Weighted
Average
Price
Weighted-Average
Remaining
Contractual Term
Aggregate
Intrinsic
Value
46.91
78.22
40.73
65.82
54.05
53.17
41.72
6.69
$
73,561,785
6.58
6.48
5.13
$
$
$
51,918,028
51,531,931
41,942,569
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 in
2015, 2014 and 2013 was $16.9 million, $20.0 million and $34.3 million, respectively. In 2015, 2014 and 2013 cash received
from options exercised was $19.2 million, $17.2 million and $35.3 million, respectively, while the actual tax benefit realized
for the tax deductions from stock options exercised totaled $6.1 million, $7.3 million and $12.5 million, respectively.
Total compensation cost for stock options is as follows:
Cost of goods sold
Selling, general and administrative expenses
Total expense before income taxes
Income tax benefit
Total expense after income taxes
Years Ended December 31,
2015
2014
2013
(In thousands)
581
$
6,245
6,826
(2,194)
4,632
$
$
$
543
6,488
7,031
(2,208)
4,823
$
$
479
5,789
6,268
(2,016)
4,252
As of December 31, 2015 there was $10.5 million of total unrecognized compensation cost related to stock options that is
expected to be recognized over a weighted-average period of 1.4 years.
Restricted Stock
Restricted stock awards generally cliff vest after three years for employees and non-employee directors. Unvested
restricted stock carries dividend and voting rights and the sale of the shares is restricted prior to the date of vesting. A summary
of the Company’s restricted stock activity as of December 31, 2015, and changes during the year ending December 31, 2015 is
as follows:
Restricted Stock
Unvested at January 1, 2015
Granted
Vested
Forfeited
Unvested at December 31, 2015
Shares
Weighted-Average
Grant Date Fair
Value
359,269
$
99,130
(136,310)
(49,334)
272,755
$
53.68
78.20
44.05
62.00
65.90
Dividends are paid on restricted stock awards and their fair value is equal to the market price of the Company’s stock at
the date of the grant.
61
Total compensation cost for restricted stock is as follows:
Cost of goods sold
Selling, general and administrative expenses
Total expense before income taxes
Income tax benefit
Total expense after income taxes
Years Ended December 31,
2015
2014
2013
(In thousands)
341
$
369
$
5,213
5,554
(1,604)
3,950
$
6,182
6,551
(1,630)
4,921
$
$
$
319
5,890
6,209
(1,801)
4,408
As of December 31, 2015 there was $8.5 million of total unrecognized compensation cost related to restricted stock that
is expected to be recognized over a weighted-average period of 1.0 year.
Cash-Settled Restricted Stock
The Company also maintains a cash-settled share based compensation plan for certain employees. Cash-settled restricted
stock awards generally cliff vest after three years. A summary of the Company’s unvested cash-settled restricted stock activity
as of December 31, 2015, and changes during the year ending December 31, 2015 is as follows:
Cash-Settled Restricted Stock
Unvested at January 1, 2015
Granted
Vested
Forfeited
Unvested at December 31, 2015
Shares
Weighted-Average
Fair Value
119,395
$
46,495
(41,640)
(13,390)
110,860
$
77.84
76.56
77.90
76.59
76.61
Dividend equivalents are paid on certain cash-settled restricted stock awards. Total compensation cost for cash-settled
restricted stock is as follows:
Cost of goods sold
Selling, general and administrative expenses
Total expense before income taxes
Income tax benefit
Total expense after income taxes
Years Ended December 31,
2015
2014
2013
(In thousands)
753
$
1,384
$
1,765
2,518
(355)
2,163
$
2,735
4,119
(603)
3,516
$
$
$
1,061
2,581
3,642
(495)
3,147
At December 31, 2015 and 2014, the Company has $3.2 million and $3.5 million, respectively, included in Accrued
expenses in the Consolidated Balance Sheets and $1.8 million and $2.5 million, respectively, included in Other non-current
liabilities.
Performance Share Units
Beginning in 2013 the Company granted performance share units to selected key employees that may be earned based on
IDEX total shareholder return over the three-year period following the date of grant. Performance share units are expected to be
made annually and are paid out at the end of a three-year period based on the Company’s performance. Performance is measured
by determining the percentile rank of the total shareholder return of IDEX common stock in relation to the total shareholder return
of the S&P Midcap 400 Industrial Group for the three-year period following the date of grant. The payment of awards following
62
the three-year award period will be based on performance achieved in accordance with the scale set forth in the plan agreement
and may range from 0 percent to 250 percent of the initial grant. A target payout of 100 percent is earned if total shareholder return
is equal to the 50th percentile of the S&P Midcap 400 Industrial Group. Performance share units earn dividend equivalents for the
award period, which will be paid to participants with the award payout at the end of the period based on the actual number of
performance share units that are earned. Payments made at the end of the award period will be in the form of stock for performance
share units and will be in cash for dividend equivalents. The Company’s performance share awards are considered performance
condition awards and the grant date fair value of the awards, based on a Monte Carlo simulation model, is expensed ratably over
the three-year term of the awards. The Company granted approximately $0.1 million performance share units in each of 2015,
2014 and 2013.
Weighted average performance share unit fair values and assumptions for the period specified are as follows:
Weighted average fair value of grants
Dividend yield
Volatility
Risk-free interest rate
Expected life (in years)
The assumptions are as follows:
Years Ended December 31,
2015
$95.07
—%
19.14%
1.01%
2.86
2014
$94.55
—%
26.41%
0.65%
2.88
2013
$59.58
—%
28.99%
0.40%
2.87
•
•
•
•
The Company estimated volatility using its historical share price performance over the remaining performance period
as of the grant date.
The Company uses a Monte Carlo simulation model that uses an expected life commensurate with the performance
period. As a result, the expected life of the performance share units was assumed to be the period from the grant date
to the end of the performance period.
The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant with a term
commensurate with the remaining performance period.
Total Shareholder Return is determined assuming that dividends are reinvested in the issuing entity over the
performance period, which is mathematically equivalent to utilizing a 0% dividend yield.
A summary of the Company’s performance share unit activity as of December 31, 2015, and changes during the year
ending December 31, 2015 are as follows:
Performance Share Units
Unvested at January 1, 2015
Granted
Vested
Forfeited
Unvested at December 31, 2015
Awards that vested in 2015 will result in 87,600 shares being issued in 2016.
Weighted-
Average
Grant Date Fair
Value
Shares
135,540
$
79,710
(43,800)
(25,175)
146,275
$
81.87
95.07
59.58
87.28
94.80
63
Total compensation cost for performance share units is as follows:
Cost of goods sold
Selling, general and administrative expenses
Total expense before income taxes
Income tax benefit
Total expense after income taxes
Years Ended December 31,
2015
2014
2013
(In thousands)
— $
— $
4,946
4,946
(1,670)
3,276
$
3,220
3,220
(1,081)
2,139
$
$
$
—
873
873
(280)
593
As of December 31, 2015 there was $5.7 million of total unrecognized compensation cost related to performance shares
that is expected to be recognized over a weighted-average period of 0.9 years.
14. Other Comprehensive Income (Loss)
The components of Other comprehensive income (loss) are as follows:
Foreign currency translation adjustments
Cumulative translation adjustment
Reclassification of foreign currency translation to
earnings upon sale of business
Pension and other postretirement adjustments
Net gain (loss) arising during the year
Amortization/settlement recognition of net loss
Pension and other postretirement adjustments, net
Reclassification adjustments for derivatives
For the Year Ended December 31, 2015
For the Year Ended December 31, 2014
Pre-tax
Tax
Net of tax
Pre-tax
Tax
Net of tax
(In thousands)
$ (63,441) $
— $ (63,441) $ (77,024) $
— $ (77,024)
(4,725)
—
(4,725)
—
—
—
8,318
4,939
13,257
7,030
(2,411)
(1,431)
(3,842)
(2,499)
5,907
3,508
9,415
4,531
(26,424)
3,113
(23,311)
7,223
7,767
(915)
6,852
(2,713)
4,139
(18,657)
2,198
(16,459)
4,510
$ (88,973)
Total other comprehensive income (loss)
$ (47,879) $ (6,341) $ (54,220) $ (93,112) $
Foreign currency translation adjustments
Cumulative translation adjustment
Pension and other postretirement adjustments
Net gain (loss) arising during the year
Amortization or settlement recognition of net loss
Pension and other postretirement adjustments, net
Reclassification adjustments for derivatives
Total other comprehensive income (loss)
For the Year Ended December 31, 2013
Pre-tax
Tax
Net of tax
(In thousands)
$ 13,572
$
— $ 13,572
(9,859)
(3,226)
(13,085)
(2,692)
16,415
5,373
21,788
4,738
$ (15,777) $ 40,098
26,274
8,599
34,873
7,430
$ 55,875
64
Amounts reclassified from accumulated other comprehensive income (loss) to net income are summarized as follows:
Foreign currency translation:
Reclassification upon sale of business
Total before tax
Provision for income taxes
Total net of tax
Pension and other postretirement plans:
For the Years Ended December 31,
2015
2014
2013
Income Statement Caption
$ (4,725) $
(4,725)
—
$ (4,725) $
— $
—
—
— $
— Gain on sale of business
—
—
—
Amortization of service cost
$
4,939
$
3,113
$
8,599 Selling, general and administrative expense
Total before tax
Provision for income taxes
Total net of tax
Derivatives:
Reclassification adjustments
Total before tax
Provision for income taxes
Total net of tax
15.
Retirement Benefits
$
$
4,939
(1,431)
3,508
7,030
7,030
(2,499)
$
$
$
4,531
$
3,113
(915)
2,198
7,223
7,223
(2,713)
4,510
$
$
$
8,599
(3,226)
5,373
7,430
7,430
(2,692)
4,738
Interest expense
The Company sponsors several qualified and nonqualified pension plans and other postretirement plans for its
employees. The Company uses a measurement date of December 31 for its defined benefit pension plans and post retirement
medical plans. The Company employs the measurement date provisions of ASC 715, Compensation-Retirement Benefits, which
require the measurement date of plan assets and liabilities to coincide with the sponsor’s year end.
The following table provides a reconciliation of the changes in the benefit obligations and fair value of plan assets over
the two-year period ended December 31, 2015, and a statement of the funded status at December 31 for both years.
65
Pension Benefits
2015
2014
Other Benefits
2015
2014
U.S.
Non-U.S.
U.S.
Non-U.S.
(In thousands)
CHANGE IN BENEFIT OBLIGATION
Obligation at January 1
$
102,312
$
69,488
$
92,839
$
60,471
$
22,855
$
21,354
Service cost
Interest cost
Plan amendments
Benefits paid
Actuarial loss (gain)
Currency translation
Curtailments/settlements
Obligation at December 31
CHANGE IN PLAN ASSETS
Fair value of plan assets at
January 1
Actual return on plan assets
$
$
Employer contributions
Benefits paid
Currency translation
Settlements
Fair value of plan assets at
December 31
1,279
3,770
113
(3,985)
(5,013)
—
—
1,506
1,734
—
(2,448)
(6,909)
(5,308)
—
98,476
$
58,063
$
1,162
4,037
—
(6,230)
10,540
—
(36)
102,312
1,331
2,345
(150)
(2,955)
15,092
(6,646)
—
673
833
—
(622)
(2,966)
(373)
—
714
932
—
(691)
728
(182)
—
$
69,488
$
20,400
$
22,855
79,687
$
22,152
$
81,957
$
22,334
$
— $
(2,587)
4,460
(3,985)
—
—
205
1,837
(2,448)
(1,101)
—
2,385
1,611
(6,230)
—
(36)
1,738
2,424
(2,955)
(1,389)
—
—
622
(622)
—
—
—
—
691
(691)
—
—
Funded status at December 31
$
COMPONENTS ON THE CONSOLIDATED BALANCE SHEETS
(20,901) $
$
77,575
$
20,645
$
(37,418) $
79,687
$
(22,625) $
22,152
$
(47,336) $
— $
(20,400) $
—
(22,855)
Current liabilities
Other noncurrent liabilities
Net liability at December 31
$
$
(743) $
(875) $
(522) $
(805) $
(911) $
(20,158)
(20,901) $
(36,543)
(37,418) $
(22,103)
(22,625) $
(46,531)
(47,336) $
(19,489)
(20,400) $
(905)
(21,950)
(22,855)
The accumulated benefit obligation (“ABO”) for all defined benefit pension plans was $150.4 million and $163.3 million
at December 31, 2015 and 2014, respectively.
The weighted average assumptions used in the measurement of the Company’s benefit obligation at December 31, 2015
and 2014 were as follows:
Discount rate
Rate of compensation increase
U.S. Plans
Non-U.S.
Plans
2015
2014
2015
2014
4.12%
4.00%
3.78%
4.00%
2.99%
2.98%
2.66%
3.00%
66
The pretax amounts recognized in Accumulated other comprehensive income (loss) as of December 31, 2015 and 2014
were as follows:
Pension Benefits
Other Benefits
2015
2014
2015
2014
U.S.
Non-U.S.
U.S.
Non-U.S
(In thousands)
Prior service cost (credit)
Net loss
Total
$
$
135
33,461
33,596
$
$
(38) $
15,330
15,292
$
86
34,337
34,423
$
$
(40) $
25,275
25,235
$
(1,215) $
(2,197)
(3,412) $
(1,580)
655
(925)
The amounts in Accumulated other comprehensive income (loss) as of December 31, 2015, that are expected to be
recognized as components of net periodic benefit cost during 2016 are as follows:
Prior service cost (credit)
Net loss
Total
U.S. Pension
Benefit Plans
Non-U.S.
Pension Benefit
Plans
Other
Benefit Plans
Total
$
$
24
3,285
3,309
$
$
(In thousands)
(15) $
1,028
1,013
$
(366) $
(249)
(615) $
(357)
4,064
3,707
The components of, and the weighted average assumptions used to determine, the net periodic benefit cost for the plans
in 2015, 2014 and 2013 are as follows:
2015
Pension Benefits
2014
2013
U.S.
Non-U.S.
U.S.
Non-U.S.
U.S.
Non-U.S.
(In thousands)
Service cost
Interest cost
Expected return on plan assets
Net amortization
Net periodic benefit cost
$
$
1,279
$
1,506
$
1,162
$
1,331
$
1,526
$
3,770
(4,910)
3,422
1,734
(1,114)
1,931
4,037
(5,430)
2,187
2,345
(1,297)
1,400
3,766
(5,318)
7,621
3,561
$
4,057
$
1,956
$
3,779
$
7,595
$
1,388
2,146
(1,055)
955
3,434
Service cost
Interest cost
Net amortization
Net periodic benefit cost
$
$
Other Benefits
2015
2014
2013
(In thousands)
673
$
714
$
833
(414)
1,092
$
932
(474)
1,172
968
906
24
$
1,898
Discount rate
Expected return on plan assets
Rate of compensation increase
2015
3.78%
6.50%
4.00%
Non-U.S. Plans
2013
2015
2014
2013
3.56%
7.50%
3.94%
2.66%
5.19%
3.00%
4.03%
5.83%
3.14%
3.91%
5.53%
2.99%
U.S. Plans
2014
4.61%
7.00%
4.00%
67
The pretax change recognized in Accumulated other comprehensive income (loss) in 2015 is as follows:
Net gain (loss) in current year
Prior service cost
Amortization of prior service cost (credit)
Amortization of net loss
Exchange rate effect on amounts in OCI
Total
Pension Benefits
U.S.
Non-U.S.
(In thousands)
(2,483) $
(113)
64
3,359
—
6,000
$
—
(15)
1,946
2,012
827
$
9,943
$
$
$
Other
Benefits
2,967
—
(365)
(48)
(67)
2,487
The discount rates for our plans are derived by matching the plan’s cash flows to a yield curve that provides the
equivalent yields on zero-coupon bonds for each maturity. The discount rate selected is the rate that produces the same present
value of cash flows.
In selecting the expected rate of return on plan assets, the Company considers the historical returns and expected returns
on plan assets. The expected returns are evaluated using asset return class, variance and correlation assumptions based on the
plan’s target asset allocation and current market conditions.
Prior service costs are amortized on a straight-line basis over the average remaining service period of active participants.
Gains and losses in excess of 10% of the greater of the benefit obligation or the market value of assets are amortized over the
average remaining service period of active participants.
Costs of defined contribution plans were $10.3 million, $9.1 million and $8.4 million for 2015, 2014 and 2013,
respectively.
The Company, through its subsidiaries, participates in certain multi-employer pension plans covering approximately 398
participants under U.S. collective bargaining agreements. None of these plans are considered individually significant to the
Company as contributions to these plans totaled $1.0 million, $1.0 million, and $1.1 million for 2015, 2014 and 2013,
respectively.
For measurement purposes, a 6.94% weighted average annual rate of increase in the per capita cost of covered health care
benefits was assumed for 2015. The rate was assumed to decrease gradually each year to a rate of 4.50% for 2027, and remain
at that level thereafter. Assumed health care cost trend rates have a significant effect on the amounts reported for the health care
plans. A 1% increase in the assumed health care cost trend rates would increase the service and interest cost components of the
net periodic benefit cost by $0.2 million and the health care component of the accumulated postretirement benefit obligation by
$1.6 million. A 1% decrease in the assumed health care cost trend rate would decrease the service and interest cost components
of the net periodic benefit cost by $0.1 million and the health care component of the accumulated postretirement benefit
obligation by $1.3 million.
68
Plan Assets
The Company’s pension plan weighted average asset allocations at December 31, 2015 and 2014, by asset category, were
as follows:
Equity securities
Fixed income securities
Cash/Other
Total
2015
2014
46%
48%
6%
100%
51%
49%
—%
100%
The basis used to measure the defined benefit plans’ assets at fair value at December 31, 2015 and 2014 is summarized as
follows:
As of December 31, 2015
Equity
U.S. Large Cap
U.S. Small / Mid Cap
International
Fixed Income
U.S. Intermediate
U.S. Short Duration
U.S. High Yield
International
Cash and Equivalents
Other
As of December 31, 2014
Equity
U.S. Large Cap
U.S. Small / Mid Cap
International
Fixed Income
U.S. Intermediate
U.S. Short Duration
U.S. High Yield
International
Cash and Equivalents
Other
Basis of Fair Value Measurement
Outstanding
Balances
Level 1
Level 2
Level 3
(In thousands)
$
23,465
$
23,465
$
— $
10,184
11,986
15,000
8,935
7,758
15,249
1,829
3,836
7,482
7,786
15,000
8,935
6,922
7,241
1,829
—
2,702
4,200
—
—
836
8,008
—
3,836
$
98,242
$
78,660
$
19,582
$
Basis of Fair Value Measurement
Outstanding
Balances
Level 1
Level 2
Level 3
(In thousands)
$
26,787
$
26,787
$
— $
7,950
14,797
14,906
8,817
5,270
20,776
2,329
284
7,950
8,275
14,906
8,817
5,270
6,679
2,329
—
—
6,522
—
—
—
14,097
—
284
$
101,916
$
81,013
$
20,903
$
69
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Equities that are valued using quoted prices are valued at the published market prices. Equities in a common collective
trust or a registered investment company that are valued using significant other observable inputs are valued at the net asset
value (“NAV”) provided by the fund administrator. The NAV is based on the value of the underlying assets owned by the fund
minus its liabilities. Fixed income securities that are valued using significant other observable inputs are valued at prices
obtained from independent financial service industry-recognized vendors.
Investment Policies and Strategies
The investment objective of the plan, consistent with prudent standards for preservation of capital and maintenance of
liquidity, is to earn the highest possible total rate of return consistent with the plan’s tolerance for risk. The general asset
allocation guidelines for plan assets are that “equities” will constitute from 40% to 60% of the market value of total fund assets
with a target of 50%, and “fixed income” obligations, including cash, will constitute from 40% to 60% with a target of 50%.
The term “equities” includes common stock, convertible bonds and convertible stock. The term “fixed income” includes
preferred stock and/or contractual payments with a specific maturity date. The Company strives to maintain asset allocations
within the designated ranges by conducting periodic reviews of fund allocations and plan liquidity needs, and rebalancing the
portfolio accordingly. Diversification of assets is employed to ensure that adverse performance of one security or security class
does not have an undue detrimental impact on the portfolio as a whole. Diversification is interpreted to include diversification
by type, characteristic and number of investments, as well as by investment style of designated investment fund managers. No
restrictions are placed on the selection of individual investments by the investment fund managers. The total fund performance
and the performance of the investment fund managers is reviewed on a regular basis, using appointed professional independent
advisors. As of December 31, 2015 and 2014, there were no shares of the Company’s stock held in plan assets.
Cash Flows
The Company expects to contribute approximately $6.1 million to its defined benefit plans and $0.9 million to its other
postretirement benefit plans in 2016. The Company also expects to contribute approximately $20.8 million to its defined
contribution plan and $8.1 million to its 401(k) savings plan in 2016.
Estimated Future Benefit Payments
The future estimated benefit payments for the next five years and the five years thereafter are as follows: 2016 — $14.2
million; 2017 — $10.0 million; 2018 — $10.6 million; 2019 — $10.3 million; 2020 — $10.6 million; 2021 to 2025 — $52.6
million.
16.
Quarterly Results of Operations (Unaudited)
The unaudited quarterly results of operations for the years ended December 31, 2015 and 2014 are as follows:
2015 Quarters
2014 Quarters
First
Second
Third
Fourth
First
Second
Third
Fourth
(In thousands, except per share amounts)
$ 502,198
$ 514,881
$ 503,791
$ 499,798
$ 543,996
$ 546,693
$ 533,179
$ 523,899
226,041
101,757
65,954
231,615
109,909
69,585
223,260
121,813
79,505
223,399
98,259
67,763
244,420
113,835
74,548
241,132
112,088
71,777
234,646
110,847
71,441
229,117
94,454
61,620
$
$
0.84
0.84
$
$
0.89
0.89
$
$
1.03
1.02
$
$
0.89
0.88
$
$
0.92
0.91
$
$
0.89
0.88
$
$
0.89
0.88
$
$
0.78
0.77
77,996
77,466
76,831
76,211
80,527
80,106
79,558
78,669
78,856
78,297
77,646
77,091
81,575
81,149
80,561
79,632
Net sales
Gross profit
Operating income
Net income
Basic EPS
Diluted EPS
Basic weighted average
shares outstanding
Diluted weighted
average shares
outstanding
70
17.
Subsequent Events
On February 4, 2016 the Company entered into a definitive agreement to acquire Akron Brass Holding Corp. (“ABHC”),
a global leader in the manufacturing of safety equipment and emergency response equipment, for cash consideration of $224.2
million, subject to customary adjustments. Operating under the Akron Brass and Weldon brand names, ABHC produces a large
array of engineered life-safety products for the safety and emergency response markets, including apparatus valves, monitors,
nozzles, specialty lighting, electronic vehicle-control systems and firefighting hand tools.
Located in Wooster, Ohio, ABHC had revenues of approximately $120 million for the trailing twelve months
ended December 31, 2015 and will operate within the Fire and Safety/Diversified Products segment. The transaction is
conditioned upon the approval of ABHC’s parent company’s shareholders, and is expected to close within 60 days, subject to
regulatory approvals and customary closing conditions.
71
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
Item 9A.
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.
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 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 as of December 31, 2015.
Management’s Report on Internal Control Over Financial Reporting appearing on page 32 of this report is incorporated
into this Item 9A by reference.
There has been no change in the Company’s internal control over financial reporting during the Company’s most recent
fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over
financial reporting.
Item 9B.
None.
Other Information.
72
PART III
Item 10.
Directors, Executive Officers and Corporate Governance.
Information under the headings “Election of Directors” and “Section 16(a) Beneficial Ownership Reporting
Compliance,” and the information under the subheading “Information Regarding the Board of Directors and Committees,” in
the 2016 Proxy Statement is incorporated into this Item 10 by reference. Information regarding executive officers of the
Company is located in Part I, Item 1, of this report under the caption “Executive Officers of the Registrant.”
The Company has adopted a Code of Business Conduct and Ethics applicable to the Company’s directors, officers
(including the Company’s principal executive officer, principal financial officer and principal accounting officer) and
employees. The Code of Business Conduct and Ethics, along with the Audit Committee Charter, Nominating and Corporate
Governance Committee Charter, Compensation Committee Charter and Corporate Governance Guidelines are available on the
Company’s website at www.idexcorp.com under “Investor Relations.” In the event we amend or waive any of the provisions of
the Code of Business Conduct and Ethics applicable to our principal executive officer, principal financial officer or principal
accounting officer, we intend to disclose the same on the Company’s website.
Item 11.
Executive Compensation.
Information under the heading “Executive Compensation” in the 2016 Proxy Statement is incorporated into this Item 11
by reference.
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Information under the heading “Security Ownership” in the 2016 Proxy Statement is incorporated into this Item 12 by
reference.
Equity Compensation Plan Information
Information with respect to the Company’s equity compensation plans as of December 31, 2015 is as follows:
Plan Category
Equity compensation plans approved by the Company’s
stockholders
Number of Securities
To be Issued Upon
Exercise of
Outstanding Options,
Warrants and Rights
Weighted-Average
Exercise Price of
Outstanding
Options, Warrants
and Rights
Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation
Plans
(1)
2,727,588
$
54.05
6,672,094
(1) Includes an indeterminate number of shares underlying deferred compensation units (“DCUs”) granted under the
Directors Deferred Compensation Plan and Deferred Compensation Plan for Non-officer Presidents which are issuable under
the Company’s Incentive Award Plan. Also includes an indeterminate number of shares underlying DCUs granted under the
Deferred Compensation Plan for Officers, which shares are issuable under the Incentive Award Plan. The number of DCUs
granted under these plans is determined by dividing the amount deferred by the closing price of the common stock the day
before the date of deferral. The DCUs are entitled to receive dividend equivalents which are reinvested in DCUs based on the
same formula for investment of a participant’s deferral.
Item 13.
Certain Relationships and Related Transactions, and Director Independence.
Information under the heading “Information Regarding the Board of Directors and Committees” in the 2016 Proxy
Statement is incorporated into this Item 13 by reference.
Item 14.
Principal Accountant Fees and Services.
Information under the heading “Principal Accountant Fees and Services” in the 2016 Proxy Statement is incorporated
into this Item 14 by reference.
73
Item 15.
Exhibits and Financial Statement Schedules.
(A) 1. Financial Statements
PART IV
Consolidated financial statements filed as part of this report are listed under Part II. Item 8. “Financial Statements
and Supplementary Data.”
2. Financial Statement Schedules
Financial statement schedules are omitted because they are not applicable, not required, or because the required
information is included in the Consolidated Financial Statements of the Company or the Notes thereto.
3. Exhibits
The exhibits filed with this report are listed on the “Exhibit Index.”
(B) Exhibit Index
Reference is made to the Exhibit Index beginning on page 76 hereof.
74
Pursuant to the requirements of Section 13 or 15(d) 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.
SIGNATURES
IDEX CORPORATION
By:
/s/ HEATH A. MITTS
Heath A. Mitts
Senior Vice President and Chief Financial Officer
Date: February 19, 2016
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ ANDREW K. SILVERNAIL
Andrew K. Silvernail
/s/ HEATH A. MITTS
Heath A. Mitts
/s/ MICHAEL J. YATES
Michael J. Yates
/s/ WILLIAM M. COOK
William M. Cook
/s/ KATRINA L. HELMKAMP
Katrina L. Helmkamp
/s/ GREGORY F. MILZCIK
Gregory F. Milzcik
/s/ ERNEST J. MROZEK
Ernest J. Mrozek
/s/ DAVID C. PARRY
David C. Parry
/s/ LIVINGSTON L. SATTERTHWAITE
Livingston L. Satterthwaite
/s/ CYNTHIA J. WARNER
Cynthia J. Warner
February 19, 2016
February 19, 2016
February 19, 2016
February 19, 2016
February 19, 2016
February 19, 2016
February 19, 2016
February 19, 2016
February 19, 2016
February 19, 2016
Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer)
Senior Vice President and Chief Financial
Officer (Principal Financial Officer)
Vice President and
Chief Accounting Officer
(Principal Accounting Officer)
Director
Director
Director
Director
Director
Director
Director
75
Exhibit
Number
3.1
3.1(a)
3.1(b)
3.2
4.1
4.2
4.3
4.4
4.5
10.1**
10.2**
10.3**
10.4**
10.5**
10.6**
Exhibit Index
Description
Restated Certificate of Incorporation of IDEX Corporation (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)
Amendment to Restated Certificate of Incorporation of IDEX Corporation (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)
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 filed March 24, 2005, Commission File
No. 1-10235)
Amended and Restated By-Laws of IDEX Corporation (incorporated by reference to Exhibit No. 3.1 to the
Current Report of IDEX on Form 8-K filed November 14, 2011, Commission File No. 1-10235)
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)
Credit Agreement, dated as of June 23, 2015, 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
10.1 to the Current Report of IDEX on Form 8-K filed June 25, 2015, Commission File No. 1-10235)
Indenture between IDEX Corporation and Wells Fargo Bank, National Association, as Trustee, dated as of
December 6, 2010 (Debt Securities) (incorporated by reference to Exhibit No. 4.1 to the Current Report of
IDEX on Form 8-K filed December 7, 2010, Commission File No. 1-10235)
First Supplemental Indenture between IDEX Corporation and Wells Fargo Bank, National Association, as
Trustee, dated as of December 6, 2010 (as to 4.5% Senior Notes due 2020) (incorporated by reference to
Exhibit No. 4.2 to the Current Report of IDEX on Form 8-K filed December 7, 2010, Commission File
No. 1-10235)
Second Supplemental Indenture between IDEX Corporation and Wells Fargo Bank, National Association,
as Trustee, dated as of December 13, 2011 (as to 4.2% Senior Notes due 2021) (incorporated by reference
to Exhibit No. 4.1 to the Current Report of IDEX on Form 8-K filed December 14, 2011, Commission File
No. 1-10235)
Revised and Restated IDEX Management Incentive Compensation Plan for Key Employees Effective
January 1, 2013 (incorporated by reference to Exhibit 10.2 to the Current Report of IDEX on Form 8-K
filed February 20, 2013, Commission File No. 1-10235)
Form of Indemnification Agreement of IDEX Corporation (incorporated by reference to Exhibit No. 10.23
to the Registration Statement on Form S-1 of IDEX, et al., Registration No. 33-28317, as filed on April 26,
1989, Commission File No. 1-10235)
IDEX Corporation Amended and Restated Stock Option Plan for Outside Directors, adopted by resolution
of the Board of Directors dated as of November 20, 2003 (incorporated by reference to Exhibit 10.6 (a) to
the Annual Report of IDEX on Form 10-K for the year ended December 31, 2003, Commission File
No. 1-10235)
Letter Agreement between IDEX Corporation and Frank J. Notaro, dated April 24, 2000 (incorporated by
reference to Exhibit 10.25 to the Annual Report of IDEX on Form 10-K for the year ended December 31,
2005, Commission File No. 1-10235)
IDEX Corporation Incentive Award Plan (as amended and restated) (incorporated by reference to
Appendix A of the Proxy Statement of IDEX on Schedule 14A, filed March 5, 2010, Commission File
No. 1-10235)
Employment Agreement between IDEX Corporation, IDEX Service Corporation and Andrew K. Silvernail,
dated November 8, 2013 (incorporated by reference to Exhibit No. 10.1 to the Current Report of IDEX on
Form 8-K filed November 14, 2013, Commission File No. 1-10235)
76
Exhibit
Number
10.7**
10.8**
10.9**
10.10**
10.11**
10.12**
10.13**
10.14**
10.15**
10.16**
10.17**
10.18**
10.19**
10.20**
10.21**
10.22**
Description
Letter Agreement between IDEX Corporation and Frank J. Notaro, dated June 22, 2015 (incorporated by
reference to Exhibit No. 10.2 to the Current Report of IDEX on Form 8-K filed June 25, 2015,
Commission File No. 1-10235)
Third Amended and Restated IDEX Corporation Directors Deferred Compensation Plan (incorporated by
reference to Exhibit No. 10.30 to the Annual Report of IDEX on Form 10-K for the year ended
December 31, 2010, Commission File No. 1-10235)
IDEX Corporation Supplemental Executive Retirement and Deferred Compensation Plan (incorporated by
reference to Exhibit No. 10.31 to the Annual Report of IDEX on Form 10-K for the year ended
December 31, 2010, Commission File No. 1-10235)
Letter Agreement between IDEX Corporation and Daniel Salliotte, dated September 30, 2010
(incorporated by reference to Exhibit No. 10.17 to the Annual Report of IDEX on Form 10-K for the year
ended December 31, 2012, Commission File No. 1-10235)
Letter Agreement between IDEX Corporation and Heath A. Mitts, dated September 30, 2010 (incorporated
by reference to Exhibit No. 10.2 to the Quarterly Report of IDEX on Form 10-Q for the quarter ended
March 31, 2012, Commission File No. 1-10235)
Letter Agreement between IDEX Corporation and Jeffrey Bucklew, dated January 16, 2012 (incorporated
by reference to Exhibit No. 10.16 to the Annual Report of IDEX on Form 10-K for the year ended
December 31, 2013, Commission File No. 1-10235)
Letter Agreements between IDEX Corporation and Eric Ashleman, dated January 14, 2008 and February
12, 2014 (incorporated by reference to Exhibit No. 10.14 to the Annual Report of IDEX on Form 10-K for
the year ended December 31, 2014, Commission File No. 1-10235)
Amendment of Letter Agreement between IDEX Corporation and Frank Notaro, dated April 24, 2000
(incorporated by reference to Exhibit No. 10.15 to the Annual Report of IDEX on Form 10-K for the year
ended December 31, 2014, Commission File No. 1-10235)
Form of IDEX Corporation Restricted Stock Award Agreement effective February 2015 (incorporated by
reference to Exhibit No. 10.16 to the Annual Report of IDEX on Form 10-K for the year ended December
31, 2014, Commission File No. 1-10235)
Form of IDEX Corporation Stock Option Agreement effective February 2015 (incorporated by reference to
Exhibit No. 10.17 to the Annual Report of IDEX on Form 10-K for the year ended December 31, 2014,
Commission File No. 1-10235)
Form of IDEX Corporation Restricted Stock Unit Award Agreement effective February 2015 (incorporated
by reference to Exhibit No. 10.18 to the Annual Report of IDEX on Form 10-K for the year ended
December 31, 2014, Commission File No. 1-10235)
Form of IDEX Corporation Restricted Stock Unit Award Agreement - Cash Settled effective February 2015
(incorporated by reference to Exhibit No. 10.19 to the Annual Report of IDEX on Form 10-K for the year
ended December 31, 2015, Commission File No. 1-10235)
Form of IDEX Corporation Performance Share Unit Award Agreement effective February 2015
(incorporated by reference to Exhibit No. 10.20 to the Annual Report of IDEX on Form 10-K for the year
ended December 31, 2015, Commission File No. 1-10235)
Form of IDEX Corporation Restricted Stock Unit Agreement for Directors effective February 2015
(incorporated by reference to Exhibit No. 10.21 to the Annual Report of IDEX on Form 10-K for the year
ended December 31, 2014, Commission File No. 1-10235)
Form of IDEX Corporation Stock Option Agreement effective February 2015 (incorporated by reference to
Exhibit No. 10.22 to the Annual Report of IDEX on Form 10-K for the year ended December 31, 2014,
Commission File No. 1-10235)
Form of IDEX Corporation Restricted Stock Award Agreement effective February 2015 (incorporated by
reference to Exhibit No. 10.23 to the Annual Report of IDEX on Form 10-K for the year ended December
31, 2014, Commission File No. 1-10235)
10.23**
Letter Agreement between IDEX Corporation and Brett Finley, dated December 18, 2015
10.24**
Letter Agreement between IDEX Corporation and Denise Cade, dated September 24, 2015
77
Exhibit
Number
Description
10.25
Stock Purchase Agreement, dated February 4, 2016, by and among IDEX Corporation, Premier Farnell
PLC, Celdis Limited, Premier Farnell Corp. and Akron Brass Holding Corp.
12
21
23
31.1
31.2
Ratio of Earnings to Fixed Charges
Subsidiaries of IDEX
Consent of Deloitte & Touche LLP
Certification of Chief Executive Officer Pursuant to Rule 13a-14 (a) or Rule 15d-14 (a)
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
****101
The following materials from IDEX Corporation’s Annual Report on Form 10-K for the year ended
December 31, 2015 formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated
Balance Sheets at December 31, 2015 and 2014, (ii) the Consolidated Statements of Operations for the
three years ended December 31, 2015, (iii) the Consolidated Statements of Comprehensive Income for the
three years ended December 31, 2015, (iv) the Consolidated Statements of Shareholders’ Equity for the
three years ended December 31, 2015, (v) the Consolidated Statements of Cash Flows for the three years
ended December 31, 2015, and (vi) Notes to the Consolidated Financial Statements.
**
***
****
Management contract or compensatory plan or agreement.
Furnished herewith.
In accordance with Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Annual
Report on Form 10-K shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or
otherwise subject to the liability of that section, and shall not be part of any registration statement or other
document filed under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific
reference in such filing.
78
As the foundation of our Operating Model, the IDEX Values unite our
teams around the world. They are the behaviors that encourage and guide
our employees to do and be their best every day. The value of our values is
reflected in their efforts and the results we achieve together.
IDEX CORPORATION IS A GLOBAL LEADER
in applied solutions, specializing in fluid
and metering technologies, health and
science technologies, and fire, safety
and other diversified products in high-
growth markets. IDEX was founded
in 1987 and stands for Innovation,
Diversity and Excellence. Our company
trades under the symbol “IEX” on the
New York Stock Exchange and Chicago
Stock Exchange. Headquartered in Lake
Forest, IL, USA, we have operating
facilities across five continents with
more than 6,800 dedicated employees
worldwide. For more information, visit
www.idexcorp.com.
Stockholder
CORPORATE OFFICE
IDEX Corporation
1925 West Field Court, Suite 200
Lake Forest, Illinois 60045 USA
847.498.7070
INVESTOR INFORMATION
Inquiries from stockholders and
prospective investors should be directed
to Heath Mitts, Senior Vice President and
Chief Financial Officer, at the Corporate
Office. Further information may also be
obtained at www.idexcorp.com.
REGISTRAR AND TRANSFER AGENT
Inquiries about stock transfers, address
changes or IDEX’s dividend reinvestment
program should be directed to:
Computershare
P.O. Box 30170
College Station, Texas 77842-3170
866.282.4944
www.computershare.com/investor
INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
Deloitte & Touche LLP
111 South Wacker Drive
Chicago, Illinois 60606
DIVIDEND POLICY
IDEX paid a quarterly dividend of
$0.32 per share on its common stock on
January 29, 2016. The declaration of
future dividends is within the discretion
of the Company’s Board of Directors and
will depend upon, among other things,
business conditions, and IDEX’s earnings
and financial conditions.
STOCK MARKET INFORMATION
IDEX common stock was held by an
estimated 6,760 stockholders at
December 31, 2015, and is traded under
the symbol “IEX” on the New York Stock
Exchange and Chicago Stock Exchange.
PUBLIC FILINGS
Stockholders may obtain a copy of
a Form 10-K, 8-K, or 10-Q filed with
the United States Securities and
Exchange Commission via our website
at www.idexcorp.com or by written
request to the attention of Mark
Zanichelli, Director, Financial Planning
and Analysis, at the Corporate Office.
ANNUAL MEETING
The Annual Meeting of IDEX stockholders
will be held on April 6, 2016, at 9:00 a.m.
Central Time at:
The Westin North Shore Hotel
601 North Milwaukee Avenue
Wheeling, Illinois 60090
CERTIFICATIONS
IDEX Corporation has included as
Exhibit 31 to its Annual Report on Form
10-K for fiscal year 2015 filed with the
Securities and Exchange Commission
certificates of its Chief Executive Officer
and Chief Financial Officer certifying
the quality of IDEX Corporation’s public
disclosure. IDEX Corporation has also
submitted to the New York Stock Exchange
(NYSE) a certificate of its Chief Executive
Officer certifying that he was not aware of
any violation by IDEX Corporation of NYSE
corporate governance listing standards as
of the date of the certification.
QUARTERLY STOCK PRICE
2015
2014
High
Low
Close
High
Low
Close
FIRST
$ 78.85
69.44
75.83
$ 79.27
68.58
72.89
SECOND
$ 80.31
73.80
78.58
$ 80.85
69.17
80.74
THIRD
$ 79.61
66.88
71.30
$ 81.82
72.27
72.37
FOURTH
$ 79.59
69.40
76.61
$ 78.97
65.91
77.84
Brand names shown in this report are registered trademarks of IDEX Corporation and/or its subsidiaries.
DESIGN BY DIX & EATON
2015 ANNUAL REPORT
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IDEX Corporation • 1925 West Field Court, Suite 200 • Lake Forest, Illinois 60045 USA • www.idexcorp.com
2015 ANNUAL REPORT
the value of ourthe value of our values