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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
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(MARK
ONE)
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[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-10235
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IDEX CORPORATION
(Exact Name of Registrant As Specified in Its Charter)
<TABLE>
<C> <C>
DELAWARE 36-3555336
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
630 DUNDEE ROAD 60062
NORTHBROOK, ILLINOIS (Zip Code)
(Address of principal executive offices)
</TABLE>
Registrant's telephone number, including area code: (847) 498-7070
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
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TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
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COMMON STOCK, PAR VALUE $.01 PER SHARE NEW YORK STOCK EXCHANGE
CHICAGO STOCK EXCHANGE
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES [X] NO [ ]
Indicate by check mark 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. [X]
The aggregate market value of the voting stock held by nonaffiliates of
IDEX Corporation as of December 31, 1997 was $671,020,773.
The number of shares outstanding of IDEX Corporation's common stock, par
value $.01 per share (the "Common Stock"), as of January 30, 1998 was
29,262,375.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the 1997 annual report to shareholders of IDEX Corporation (the
"1997 Annual Report") are incorporated by reference into Parts I and II of this
Form 10-K and portions of the definitive Proxy Statement of IDEX Corporation
(the "1998 Proxy Statement") with respect to the 1998 annual meeting of
shareholders are incorporated by reference into Part III of this Form 10-K.
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PART I
ITEM 1. BUSINESS.
IDEX Corporation ("IDEX" or the "Company") designs, manufactures and
markets a broad range of pump products and engineered equipment serving a
diverse customer base in the United States and internationally. For each of its
ten principal business units, the Company believes that it holds the number-one
or number-two market share position in that unit's niche market. IDEX believes
that its consistent financial performance has been attributable to the
manufacture of quality proprietary products designed and engineered by the
Company and sold to a wide range of customers, coupled with its ability to
identify and successfully integrate strategic acquisitions. IDEX consists of two
business segments, the Pump Products Group and the Engineered Equipment Group.
PUMP PRODUCTS GROUP
The Pump Products Group designs, manufactures and sells a wide variety of
industrial pumps and related controls, and low-horsepower compressors for the
movement of liquids, air, and gases. The devices and equipment produced by this
Group are used in a large and diverse set of industries, including chemical
processing, non-electrical machinery, water and wastewater treatment, medical
equipment, petroleum distribution, oil and refining, and food processing. In
1997, the five business units then comprising the group -- Corken, Micropump,
Pulsafeeder, Viking Pump, and Warren Rupp -- accounted for 48% of the Company's
net sales. The Company acquired Gast Manufacturing Corporation ("Gast"), now
part of the Pump Products Group, on January 21, 1998, for a cash purchase price
of approximately $120 million. Approximately 36% of 1997 net sales in this Group
were to customers outside the United States.
Corken. Management estimates that Corken has approximately 50% of the U.S.
market for pumps and small horsepower compressors used in liquefied petroleum
gas distribution facilities. Corken produces low-horsepower compressors, vane
and turbine pumps, and valves used for the transfer of liquefied petroleum gas,
compressed natural gas and other gaseous substances. Most of Corken's sales are
made through domestic and international distributors, and they often incorporate
Corken's products into engineered packages sold to end users. Approximately 45%
of Corken's 1997 net sales were to customers outside the United States.
Corken, which was acquired by IDEX in 1991, is based in Oklahoma City, Oklahoma.
Gast. Gast is one of the world's leading manufacturers of an extensive and
versatile line of air-moving products, including vacuum pumps, air motors,
vacuum generators, regenerative blowers and fractional horsepower compressors.
Gast is headquartered in Benton Harbor, Michigan, with an assembly facility in
England. Founded in 1921, Gast, had 1997 net sales of approximately $105
million. Approximately 17% of Gast's sales are outside the United States.
Management believes that Gast has a leading position with an estimated one-third
U.S. market share in air motors, low and medium range vacuum pumps, and rotary
and diaphragm fractional horsepower compressors.
Micropump. Micropump is, according to management estimates, the leader in
corrosion-resistant, magnetically-driven miniature pump technology with an
estimated 40% U.S. market share. Micropump's products include pumps and fluid
management systems for low-flow abrasive and corrosive applications such as
inks, dyes, solvents, chemicals, petrochemicals, acids and chlorides. Micropump
products are used in a variety of industries including chemical processing,
laboratory, medical, printing, electronics, pulp and paper, water treatment and
textiles. Approximately 45% of Micropump's 1997 net sales were to customers
outside the United States in 1997. Micropump, which was acquired by IDEX in
1995, has its headquarters and principal manufacturing facility in Vancouver,
Washington, and also conducts operations in England.
Pulsafeeder. Management estimates that Pulsafeeder has approximately 40%
of the U.S. market for metering pumps used in the process industries and water
treatment markets. Pulsafeeder designs and markets a wide range of metering
pumps, dispensing equipment and controllers. These products regulate precisely
the flow of liquids in mixing, blending and injection applications. Primary
markets served are water conditioning and wastewater treatment, chemical and
hydrocarbon processing, food processing, chemical metering and institutional
warewash. Pulsafeeder products are grouped into three categories: engineered
pumps, standard pumps and
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electronic controls. Engineered pumps include positive displacement,
hydraulically-actuated diaphragm pumps used in precise metering applications, as
well as specialty pumps targeted at niche markets. Standard pumps include
lower-priced metering pumps designed for water treatment and water conditioning
applications. Electronic controls are of microprocessor-based design and are
used to control the chemical composition of fluids being pumped. Pulsafeeder
products are sold through an extensive distribution network, which includes
company sales personnel, distributors and independent representatives and an
estimated 25% of its 1997 net sales to customers outside of the United States.
Pulsafeeder, which was acquired by IDEX in 1992, is headquartered in Rochester,
New York with an additional manufacturing facility in Punta Gorda, Florida, and
has sales offices in Singapore and China.
In December 1997, IDEX acquired Knight Equipment International, Inc.
("Knight") for a cash purchase price of approximately $38 million. The business
will continue to operate as Knight, Inc., but administratively will function as
part of Pulsafeeder. Knight is a leading manufacturer of pumps and dispensing
equipment for the commercial dishwashing, industrial laundry and chemical
metering markets with 1997 net sales of approximately $25 million, of which
approximately 50% were to customers outside the United States. In addition,
Knight manufactures a variety of pumps and electronic controls for industrial
applications. Management believes that Knight has a leading position worldwide
in commercial dishwashing and liquid-laundry systems, with an estimated 35% U.S.
market share. In addition to its headquarters and manufacturing facility in
Costa Mesa, California, Knight has manufacturing locations in Georgia,
Australia, Canada, England and the Netherlands.
Viking Pump. Viking Pump is one of the world's largest manufacturers of
positive displacement rotary gear pumps. Management believes that Viking pumps
represent approximately 35% of the U.S. rotary gear pump market. Viking's other
products include rotary lobe and metering pumps, speed reducers, flow dividers
and basket-type line strainers. Viking pumps are used by numerous industries
such as the chemical, petroleum, food, pulp and paper, machinery and
construction industries. Sales of Viking pumps and replacement parts are made
through approximately 100 independent distributors and directly to original
equipment manufacturers. Approximately 35% of Viking's 1997 net sales were to
customers outside of the United States. In addition to its facilities in Cedar
Falls, Iowa, Viking also maintains manufacturing facilities in England, Canada
and Ireland, and has sales offices in the Netherlands, Singapore, Mexico, Canada
and China. Viking operates two foundries in Cedar Falls, Iowa which supply a
majority of Viking's castings requirements. In addition, these foundries sell a
variety of castings to outside customers.
Warren Rupp. Warren Rupp is a producer of air-operated and motor-driven
double-diaphragm pumps. Management believes that Warren Rupp has approximately
one-third of the U.S. market for air-operated double-diaphragm pumps. Blagdon
Pump, the U.K.-based manufacturer of air-operated diaphragm pumps acquired by
IDEX in April 1997, is operated as part of Warren Rupp. Warren Rupp's pumps are
well suited for pumping liquids, slurries and solids in suspension. End-user
markets include the paint, chemical, mining, construction, and automotive
service industries. Warren Rupp pumps are sold through a network of independent
distributors and directly to a small number of original equipment manufacturers.
Sales to customers outside of the U.S. represented approximately 50% of Warren
Rupp 1997 net sales. Warren Rupp is headquartered in Mansfield, Ohio, and has a
distribution and assembly facility in Shannon, Ireland and a sales office in
Singapore. Blagdon Pump has a manufacturing facility in England to serve the
European market and a sales office in Singapore.
ENGINEERED EQUIPMENT GROUP
The Engineered Equipment Group which is comprised of four business units,
designs, manufactures, and sells proprietary equipment that may combine pumps or
other devices into products for industrial, commercial and safety applications.
The products and devices manufactured by these business units are used in a
variety of industries and applications, including paints and coatings, fire and
rescue, transportation equipment, non-electrical machinery, traffic sign and
signal, and oil and refining. In 1997, the four business units comprising this
group -- Band-It, Fluid Management, Hale and Lubriquip -- accounted for 52% of
the Company's net sales. Approximately 52% of this Group's 1997 net sales were
to customers outside the United States.
Band-It. Band-It, headquartered in Denver, Colorado, is one of the largest
worldwide producers of stainless steel bands, buckles and preformed clamps and
related installation tools. Its products include stainless
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steel bands and clamps for various municipal, commercial and industrial
applications and road, traffic and commercial sign-mounting systems. Management
believes that Band-It has approximately 50% of the U.S. market for quality
stainless steel band and buckle. Its clamps are used to secure hoses to nipples,
devices to pipes and poles, signs to sign standards, fences to posts, insulation
to pipes and for hundreds of other industrial clamping functions. Band-It also
has developed an exclusive line of tools for installing its band, buckle and
preformed clamps. Band-It's Signfix operating division, acquired by IDEX in
1993, is the leading U.K.-based manufacturer of sign-mounting devices and
related equipment with an estimated 45% U.K. market share. Band-It markets its
products domestically and internationally. It has manufacturing and distribution
facilities in three locations in England, as well as in Germany and Singapore to
serve the European and Far East markets. International sales accounted for
approximately 60% of Band-It's 1997 net sales. Its products are sold through a
worldwide network of over 4,500 distributors to a wide range of markets,
including the transportation, commercial and governmental signage, utilities,
mining, oil and gas, industrial maintenance, construction, communication and
electronics industries.
Fluid Management. Fluid Management is the world's leading manufacturer of
dispensing and mixing equipment that precisely meters and mixes a wide variety
of liquids including paints, colorants, inks, dyes and other liquids and pastes.
Management believes Fluid Management has a 50% worldwide share in its niche
market. Its products can be found in local paint and building supply stores,
paint plants, vehicle manufacturing facilities and other locations where fluids
are dispensed and mixed in precise volumes. Fluid Management, which was acquired
by IDEX in 1996, has manufacturing facilities in Wheeling, Illinois, the
Netherlands and Australia, with sales and distribution facilities worldwide.
Approximately 55% of its 1997 net sales were to customers outside the United
States.
Hale. Hale, acquired by IDEX in 1994, is the world's leading manufacturer
of truck-mounted fire-fighting pumps and also manufactures a wide range of
portable, mobile and freestanding pumping units. Hale also is the world's
leading manufacturer of rescue tool systems with the Hurst Jaws of Life(R) and
Lukas rescue systems. Lukas, headquartered in Germany, was acquired by IDEX in
1995. Hale is estimated to have a worldwide market share for truck-mounted
fire-fighting pumps and rescue systems in excess of 50%. Sales of Hale's
truck-mounted fire-fighting pumps are made directly to manufacturers of fire
trucks, while portable pumps and rescue tools are generally sold through
independent distributors. Approximately 55% of Hale's 1997 net sales were to
customers outside the United States. Hale has its headquarters and a
manufacturing facility in Conshohocken, Pennsylvania. It also has production
facilities in North Carolina, Tennessee, England and Germany and service and
distribution centers in Germany and Singapore.
Lubriquip. Lubriquip is, according to management estimates, the largest
United States producer of centralized oil and grease lubrication systems and
force-feed lubricators, with approximately one-third of the U.S. market for its
type of products. Lubriquip's lubrication system components include pumps and
pump packages for pneumatic, mechanical, electric and hydraulic operations,
metering devices, electronic controllers, monitors and timers, and accessories.
These systems are sold through a variety of sales channels, including
independent distributors, to a wide range of industrial markets including
machine tools (both automotive and general purpose), chemical processing,
construction equipment, food processing machinery, engine and compressor,
railroad, and over-the-road truck industries. Lubriquip's products are available
worldwide through over 100 independent distributors, with international sales
representing approximately 20% of its 1997 net sales. Lubriquip, headquartered
in Warrensville Heights, Ohio, also has manufacturing plants in Pennsylvania and
Wisconsin and has sales offices in Belgium and Singapore.
DISCONTINUED OPERATIONS
In December 1997, the Company announced its intention to divest its
Strippit and Vibratech businesses because management concluded that they no
longer fit the profile of the Company's other business units or acquisition
strategy. These two business units generated 1997 net sales and earnings before
interest and taxes of approximately $84 million and $9 million, respectively.
Strippit, which produces computer-controlled turret punch presses, laser cutting
machinery and related tooling used in metal fabrication, and Vibratech, which
makes engineered motion-damping products used in diesel and motor sport engines,
rail cars, off-road vehicles and other applications, both serve higher ticket
capital goods markets that tend to be more cyclical than the markets served
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by IDEX's other businesses. IDEX anticipates that these divestitures will allow
resources formerly allocated to Strippit and Vibratech to be used for the
development of positions in areas more consistent with its present strategy.
Strippit and Vibratech have been treated as discontinued operations in the
Company's 1997 consolidated financial statements.
GENERAL ASPECTS APPLICABLE TO THE COMPANY'S BUSINESS GROUPS
COMPETITORS
The Company's businesses are highly competitive in most product lines.
Generally, all of the Company's businesses compete on the basis of performance,
quality, service and price.
Principal competitors of the businesses in the Pump Products Group are the
Blackmer division of Dover Corporation (with respect to rotary gear pumps, and
pumps and small horsepower compressors used in liquefied petroleum gas
distribution facilities); Milton Roy, a unit of Sundstrand Corporation (with
respect to metering pumps and controls); Roper Industries (with respect to
rotary gear pumps); Wilden Pump and Engineering Co. (with respect to
air-operated double-diaphragm pumps); Tuthill Corporation (with respect to
rotary gear pumps); and Thomas Industries (with respect to vacuum pumps and
compressors).
The principal competitors of the Engineered Equipment Group are the
Waterous Company, a subsidiary of American Cast Iron Pipe Company (with respect
to truck-mounted fire-fighting pumps); Corob North America (with respect to
dispensing and mixing equipment for the paint industry); A.J. Gerrard (with
respect to stainless steel bands, buckles and tools); and Lincoln, a unit of
Pentair Corporation (with respect to centralized lubrication systems).
EMPLOYEES
At December 31, 1997, IDEX had approximately 3,800 employees of which
approximately 500 employees were employed by the Company's discontinued
operations. Approximately 23% were represented by labor unions with various
contracts expiring through December 2000. Management believes that the Company's
relationship with its employees is good. The Company has historically been able
to satisfactorily renegotiate its collective bargaining agreements, with its
last work stoppage in March 1993.
SUPPLIERS
IDEX manufactures many of the parts and components used in its products.
Substantially all materials, parts and components purchased by IDEX are
available from multiple sources.
INVENTORY AND BACKLOG
Backlogs do not have material significance in either of the Company's
business segments. The Company regularly and systematically adjusts production
schedules and quantities based on the flow of incoming orders. Backlogs are
therefore typically limited to approximately 1 to 1 1/2 months of production.
While total inventory levels may also 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.
SEGMENT INFORMATION
For segment financial information for the years 1997, 1996 and 1995 see the
table titled "Company and Business Group Financial Information" presented on
page 19 under "Management's Discussion and Analysis of Financial Condition and
Results of Operations," as set forth in the 1997 Annual Report and incorporated
herein by reference, and Note 11 of the "Notes to Consolidated Financial
Statements" on page 32 of the 1997 Annual Report, which is incorporated herein
by reference.
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EXPORTS
For export information for the years 1997, 1996 and 1995, see Note 11 of
the "Notes to Consolidated Financial Statements" on page 32 of the 1997 Annual
Report, which is incorporated herein by reference.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth the names of the executive officers of the
Company, their ages, the positions and offices with the Company held by them,
and their business experience during the past 5 years.
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YEARS OF
NAME AGE SERVICE(1) POSITION
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Donald N. Boyce...................... 59 28 Chairman of the Board and Chief Executive
Officer
Frank J. Hansen...................... 56 22 President, Chief Operating Officer and
Director
Wayne P. Sayatovic................... 51 25 Senior Vice President--Finance, Chief
Financial Officer and Secretary
Jerry N. Derck....................... 51 5 Vice President--Human Resources
David T. Windmuller.................. 40 17 Vice President--Operations
James R. Fluharty.................... 54 7 Vice President--Corporate Marketing and
President, Fluid Management
P. Peter Merkel, Jr.................. 64 25 Vice President--Group Executive and
President, Band-It
Dennis L. Metcalf.................... 50 24 Vice President--Corporate Development
Wade H. Roberts, Jr.................. 51 7 Vice President--Group Executive and
President, Hale
Rodney L. Usher...................... 52 17 Vice President--Group Executive and
President, Pulsafeeder
Clinton L. Kooman.................... 54 33 Controller
Douglas C. Lennox.................... 45 18 Treasurer
</TABLE>
(1) The years of service for executive officers include the period prior to
acquisition by IDEX or with IDEX's predecessor company.
Mr. Boyce was elected Chairman of the Board, President and Chief Executive
Officer of the Company on January 22, 1988, the date of the Company's
acquisition of its six original operating subsidiaries from Houdaille
Industries, Inc. On January 1, 1998, Mr. Hansen assumed the title of President
from Mr. Boyce with Mr. Boyce continuing as Chairman of the Board and Chief
Executive Officer. Mr. Boyce is a director of United Dominion Industries Ltd.
and Metromail Corporation.
Mr. Hansen has served as President, Chief Operating Officer and Director of
the Company since January 1998. Previously, he served as Senior Vice
President--Operations and Chief Operating Officer from August 1994 to December
1997. Mr. Hansen was Vice President--Group Executive of the Company from January
1993 to July 1994. From 1989 to July 1994, Mr. Hansen was President of Viking
Pump. Mr. Hansen is a director of Gardner Denver Machinery, Inc.
Mr. Sayatovic has been Senior Vice President--Finance, Chief Financial
Officer and Secretary of the Company since August 1994. Mr. Sayatovic was Vice
President--Finance, Chief Financial Officer and Secretary from January 1992 to
July 1994, and he was Vice President, Treasurer and Secretary from January 1988
to December 1991.
Mr. Derck has been Vice President--Human Resources of the Company since
November 1992.
Mr. Windmuller has served as Vice President--Operations of the Company
since January 1998. Previously, Mr. Windmuller was President of Fluid Management
from January 1997 to December 1997. From July 1994 to December 1996, Mr.
Windmuller served as President of Viking Pump, and from May 1993 to June 1994 as
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Executive Vice President of Viking Pump. Mr. Windmuller served as Vice
President--Engineering of Viking Pump from November 1991 to April 1993.
Mr. Fluharty has served as Vice President--Corporate Marketing of the
Company since March 1997 and as President of Fluid Management since January
1998. From April 1996 to February 1997, Mr. Fluharty was President of Micropump.
Previously, Mr. Fluharty served as President of John Crane North America from
May 1993 to March 1996, as Executive Vice President of Viking Pump from May 1992
to April 1993, and Vice President-Marketing of Viking Pump from 1988 to April
1992.
Mr. Merkel has been Vice President--Group Executive of the Company since
October 1995 and Chairman of Band-It since January 1998. He was President of
Band-It from March 1978 to December 1997.
Mr. Metcalf has served as Vice President--Corporate Development of the
Company since March 1997. Mr. Metcalf was Director of Business Development of
the Company from March 1991 to February 1997.
Mr. Wade Roberts has been Vice President--Group Executive of the Company
since January 1993 and President of Hale since May 1994. Mr. Roberts served as
President of Strippit from September 1990 to April 1994.
Mr. Usher has been Vice President--Group Executive of the Company since
August 1997 and President of Pulsafeeder since August 1994. From 1986 to July
1994, Mr. Usher served as President of Warren Rupp.
Mr. Kooman has been Controller of the Company since November 1995. Mr.
Kooman served as Assistant Controller of Manufacturing Accounting from January
1988 to October 1995.
Mr. Lennox has served as Treasurer of the Company since November 1995. From
April 1991 to October 1995, Mr. Lennox was Vice President--Controller of
Lubriquip. Mr. Lennox was Assistant Controller of Financial Accounting from
January 1988 to March 1991.
The Company's executive officers are elected at a meeting of the Board of
Directors immediately following the annual meeting of shareholders, and they
serve until the next annual meeting of the Board, or until their successors are
duly elected.
ITEM 2. PROPERTIES.
The Company's principal plants and offices have an aggregate floor space
area of approximately 2.1 million square feet, of which 1.6 million square feet
(76%) are located in the U.S., and approximately .5 million (24%) are located
outside the U.S., primarily in the U.K. (10%), Germany (7%) and the Netherlands
(4%). These facilities are considered to be suitable and adequate for their
operations. Management believes that utilization of manufacturing capacity
ranges from 50% to 80% in each facility. The Company's executive offices occupy
approximately 12,000 square feet of leased space in Northbrook, Illinois.
Approximately 1.5 million square feet (73%) of the principal plant and
office floor area is owned by the Company, and the balance is held under lease.
Approximately 1.0 million square feet (48%) of the principal plant and office
floor area is held by business units in the Pump Products Group and 1.1 million
square feet (52%) is held by business units in the Engineered Equipment Group.
ITEM 3. LEGAL PROCEEDINGS.
The Company and the Company's Subsidiaries ("Subsidiaries") are party to
various legal proceedings arising in the ordinary course of business, none of
which is expected to have a material adverse effect on the Company's business or
financial condition.
The Subsidiaries are subject to extensive federal, state and local laws,
rules and regulations pertaining to environmental, waste management and health
and safety matters. Permits are or may be required for some of the Subsidiaries'
facilities and waste-handling activities and these permits are subject to
revocation, modification and renewal. In addition, risks of substantial costs
and liabilities are inherent in the Subsidiaries' operations and facilities, as
they are with other companies engaged in similar industries, and there can be no
assurance that such costs and liabilities will not be incurred. The Company is
not aware of any environmental, health or safety matter
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which could, individually or in the aggregate, materially adversely affect the
business or financial condition of the Company or any of its Subsidiaries.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER MATTERS.
Information regarding the prices of, and dividends on, the Common Stock,
and certain related matters, is incorporated herein by reference to "Shareholder
Information" at page 37 of the 1997 Annual Report.
The principal market for the Common Stock is the New York Stock Exchange.
As of January 30, 1998, the Common Stock was held by 1,269 shareholders and
there were 29,262,375 shares of Common Stock outstanding.
ITEM 6. SELECTED FINANCIAL DATA.
The information set forth under "Historical Data" at pages 14 and 15 of the
1997 Annual Report is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The information set forth under "Management's Discussion and Analysis of
Financial Condition and Results of Operations" at pages 17 to 21 of the 1997
Annual Report is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The Consolidated Financial Statements of IDEX, including the Notes thereto,
together with the independent auditors' report thereon of Deloitte & Touche LLP
at pages 22 to 34 of the 1997 Annual Report are incorporated herein by
reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH INDEPENDENT AUDITORS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Certain information regarding the directors of the Company is incorporated
herein by reference to the information set forth under "Election of Directors"
in the 1998 Proxy Statement.
Information regarding executive officers of the Company is incorporated
herein by reference to Item 1 of this report under the caption "Executive
Officers of the Registrant" at page 5.
Certain information regarding compliance with Section 16(a) of the
Securities and Exchange Act of 1934, as amended, is incorporated herein by
reference to the information set forth under "Compliance with Section 16(a) of
the Exchange Act" in the 1998 Proxy Statement.
ITEM 11. EXECUTIVE COMPENSATION.
Information regarding executive compensation is incorporated by reference
to the materials under the caption "Compensation of Directors and Executive
Officers" in the 1998 Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information regarding security ownership of certain beneficial owners and
management is incorporated herein by reference set forth under "Principal
Shareholders" in the 1998 Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information regarding certain relationships and related transactions is
incorporated herein by reference to the information set forth under "Election of
Directors -- Certain Interests" in the 1998 Proxy Statement.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(A) 1. Financial Statements
The following financial statements are incorporated herein by reference to
the 1997 Annual Report.
<TABLE>
<CAPTION>
1997 ANNUAL
REPORT PAGE
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<S> <C>
Consolidated Balance Sheets as of December 31, 1997 and
1996...................................................... 22
Statements of Consolidated Operations for the Years Ended
December 31, 1997, 1996 and 1995.......................... 23
Statements of Consolidated Shareholders' Equity for the
Years Ended December 31, 1997, 1996 and 1995.............. 24
Statements of Consolidated Cash Flows for the Years Ended
December 31, 1997, 1996 and 1995.......................... 25
Notes to Consolidated Financial Statements.................. 26-33
Independent Auditors' Report................................ 34
</TABLE>
<TABLE>
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1997 FORM
10-K PAGE
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2. Financial Statement Schedule
(a) Independent Auditors' Report.................... 10
(b) Schedule II -- Valuation and Qualifying
Accounts............................................ 10
All other schedules are omitted because they
are not applicable, or not
required, or because the required information
is included in the
Consolidated Financial Statements of IDEX or
the Notes thereto.
</TABLE>
3. Exhibits
The exhibits filed with this report are listed on the "Exhibit Index."
(B) Reports on Form 8-K
None filed in the fourth quarter of 1997.
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INDEPENDENT AUDITORS' REPORT
IDEX Corporation:
We have audited the financial statements of IDEX Corporation and its
Subsidiaries as of December 31, 1997 and 1996 and for each of the three years in
the period ended December 31, 1997, and have issued our report thereon, dated
January 20, 1998; such financial statements and report are included in your 1997
Annual Report to Shareholders and are incorporated herein by reference. Our
audits also included the financial statement schedule of IDEX Corporation,
listed in Item 14. This financial statement schedule is the responsibility of
the Company's management. Our responsibility is to express an opinion based on
our audits. In our opinion, such financial statement schedule, when considered
in relation to the basic consolidated financial statements taken as a whole,
presents fairly in all material respects the information set forth herein.
Deloitte & Touche LLP
Chicago, Illinois
January 20, 1998
IDEX CORPORATION AND SUBSIDIARIES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
CHARGED
BALANCE TO BALANCE
BEGINNING OF COSTS AND DEDUCTIONS END
DESCRIPTION YEAR EXPENSES (1) OTHER(2) OF YEAR
----------- ------------ --------- ---------- -------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1997:
Deducted From Assets To Which They Apply:
Allowance for Doubtful Accounts........ $2,111 $1,315 $1,083 $ 218 $2,561
Year Ended December 31, 1996:
Deducted From Assets To Which They Apply:
Allowance for Doubtful Accounts........ 1,820 1,302 1,325 314 2,111
Year Ended December 31, 1995:
Deducted From Assets To Which They Apply:
Allowance for Doubtful Accounts........ 1,526 1,145 643 (208) 1,820
</TABLE>
- -------------------------
(1) Represents uncollectible accounts, net of recoveries.
(2) Represents acquisition, translation and reclassification adjustments.
10
<PAGE> 12
SIGNATURES
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, on the 6th day of
February, 1998.
IDEX CORPORATION
By /s/ WAYNE P. SAYATOVIC
--------------------------------------
Wayne P. Sayatovic
Senior Vice President -- Finance,
Chief Financial Officer and Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ DONALD N. BOYCE Chairman of the Board February 6, 1998
- ------------------------------------------------ and Chief Executive Officer
Donald N. Boyce (Principal Executive Officer)
/s/ FRANK J. HANSEN President, Chief Operating Officer February 6, 1998
- ------------------------------------------------ and Director
Frank J. Hansen
/s/ WAYNE P. SAYATOVIC Senior Vice President -- Finance, February 6, 1998
- ------------------------------------------------ Chief Financial Officer and
Wayne P. Sayatovic Secretary (Principal Financial and
Accounting Officer)
/s/ RICHARD E. HEATH Director February 6, 1998
- ------------------------------------------------
Richard E. Heath
/s/ HENRY R. KRAVIS Director February 6, 1998
- ------------------------------------------------
Henry R. Kravis
/s/ WILLIAM H. LUERS Director February 6, 1998
- ------------------------------------------------
William H. Luers
/s/ PAUL E. RAETHER Director February 6, 1998
- ------------------------------------------------
Paul E. Raether
/s/ CLIFTON S. ROBBINS Director February 6, 1998
- ------------------------------------------------
Clifton S. Robbins
/s/ GEORGE R. ROBERTS Director February 6, 1998
- ------------------------------------------------
George R. Roberts
/s/ NEIL A. SPRINGER Director February 6, 1998
- ------------------------------------------------
Neil A. Springer
/s/ MICHAEL T. TOKARZ Director February 6, 1998
- ------------------------------------------------
Michael T. Tokarz
</TABLE>
11
<PAGE> 13
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
------- ----------- ----
<C> <S> <C>
2.1 Asset Purchase Agreement dated July 26, 1996 between IDEX
and Fluid Management Limited Partnership, Fluid Management
U.S., L.L.C., Fluid Management Service, Inc., Fluid
Management Canada, LLC, Fluid Management France, SNC, FM
International, Inc., Fluid Management Europe B.V.
(incorporated by reference to Exhibit No. 2.1 to the
Quarterly Report of IDEX on Form 10-Q for the quarter ended
June 30, 1996, Commission File No. 1-10235).
3.1 Restated Certificate of Incorporation of IDEX (formerly HI,
Inc.) (incorporated by reference to Exhibit No. 3.1 to the
Registration Statement on Form S-1 of IDEX Corporation, et
al., Registration No. 33-21205, as filed on April 21, 1988).
3.1(a) Amendment to Restated Certificate of Incorporation of IDEX
(formerly HI, Inc.), as amended (incorporated by reference
to Exhibit No. 3.1(a) to the Quarterly Report of IDEX on
Form 10-Q for the quarter ended March 31, 1996, Commission
File No. 1-10235).
3.2 Amended and Restated By-Laws of IDEX (incorporated by
reference to Exhibit No. 3.2 to Post-Effective Amendment No.
2 to the Registration Statement on Form S-1 of IDEX
Corporation, et al., Registration No. 33-21205, as filed on
July 17, 1989).
3.2(a) Amended and Restated Article III, Section 13 of the Amended
and Restated By-Laws of IDEX (incorporated by reference to
Exhibit No. 3.2(a) to Post-Effective Amendment No. 3 to the
Registration Statement on Form S-1 of IDEX Corporation, et
at., Registration No. 33-21205, as filed on February 12,
1990).
4.1 Restated Certificate of Incorporation and By-Laws of IDEX
(filed as Exhibits No. 3.1 through No. 3.2(a)).
4.2 Indenture, dated as of September 15, 1992, among IDEX, the
Subsidiaries and Fleet National Bank of Connecticut, as
Trustee, relating to the 9 3/4% Senior Subordinated Notes of
IDEX due 2002 (incorporated by reference to Exhibit No. 4.2
to the Annual Report of IDEX on Form 10-K for the year
ending December 31, 1992, Commission File No. 1-10235).
4.2(a) First Supplemental Indenture dated as of December 22, 1995
among IDEX and the Subsidiaries named therein and Fleet
National Bank of Connecticut, a national banking
association, as trustee (incorporated by reference to
Exhibit No. 4.2(a) to the Annual Report of IDEX on Form 10-K
for the year ending December 31, 1995, Commission File No.
1-10235).
4.2(b) Second Supplemental Indenture dated as of July 29, 1996
among IDEX and the Subsidiaries named therein and Fleet
National Bank of Connecticut, a national banking
association, as trustee (incorporated by reference to
Exhibit No. 4.2(b) to the Quarterly Report of IDEX on Form
10-Q for the quarter ended June 30, 1996, Commission File
No. 1-10235).
4.3 Specimen Senior Subordinated Note of IDEX (including
specimen Guarantee) (incorporated by reference to Exhibit
No. 4.3 to the Annual Report of IDEX on Form 10-K for the
year ending December 31, 1992, Commission File No.1-10235).
4.4 Specimen Certificate of Common Stock (incorporated by
reference to Exhibit No. 4.3 to the Registration Statement
on Form S-2 of IDEX Corporation, et al., Registration No.
33-42208, as filed on September 16, 1991).
4.5 Third Amended and Restated Credit Agreement dated as of July
17, 1996 among IDEX, Bank of America Illinois, as Agent, and
other financial institutions named therein (incorporated by
reference to Exhibit No. 4.5 to the Quarterly Report of IDEX
on Form 10-Q for the quarter ended June 30, 1996, Commission
File No. 1-10235).
4.6 Registration Rights Agreement dated as of July 26, 1996,
between IDEX and Mitchell H. Saranow (incorporated by
reference to Exhibit No. 4.8 to the Quarterly Report of IDEX
on Form 10-Q for the quarter ended June 30, 1996, Commission
File No. 1-10235).
**10.1 Amended and Restated Employment Agreement between IDEX
Corporation and Donald N. Boyce, dated as of January 22,
1988 (incorporated by reference to Exhibit No. 10.15 to
Amendment No. 1 to the Registration Statement on Form S-1 of
IDEX Corporation, Registration No. 33-28317, as filed on
June 1, 1989).
</TABLE>
12
<PAGE> 14
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
------- ----------- ----
<C> <S> <C>
**10.1(a) First Amendment to the Amended and Restated Employment
Agreement between IDEX Corporation and Donald N. Boyce,
dated as of January 13, 1993 (incorporated by reference to
Exhibit No. 10.5(a) to the Annual Report of IDEX on Form
10-K for the year ending December 31, 1992, Commission File
No. 1-10235).
**10.1(b) Second Amendment to the Amended and Restated Employment
Agreement between IDEX Corporation and Donald N. Boyce,
dated as of September 27, 1994 (incorporated by reference to
Exhibit No. 10.5(b) to the Annual Report of IDEX on Form
10-K for the year ending December 31, 1994, Commission File
No. 1-10235).
**10.1(c)* First Amendment to the Amended and Restated Employment
Agreement between IDEX Corporation and Donald N. Boyce,
dated December 19, 1997.
**10.2 Amended and Restated Employment Agreement between IDEX
Corporation and Wayne P. Sayatovic, dated as of January 22,
1988 (incorporated by reference to Exhibit No. 10.17 to
Amendment No. 1 to the Registration Statement on Form S-1 of
IDEX Corporation, Registration No. 33-28317, as filed on
June 1, 1989).
**10.2(a) First Amendment to the Amended and Restated Employment
Agreement between IDEX Corporation and Wayne P. Sayatovic,
dated as of January 13, 1993 (incorporated by reference to
Exhibit No. 10.7(a) to the Annual Report of IDEX on Form
10-K for the year ending December 31, 1992, Commission File
No. 1-10235).
**10.2(b) Second Amendment to the Amended and Restated Employment
Agreement between IDEX Corporation and Wayne P. Sayatovic,
dated as of September 27, 1994 (incorporated by reference to
Exhibit No. 10.6(b) to Amendment No. 1 to the Annual Report
of IDEX on Form 10-K for the year ending December 31, 1994,
Commission File No. 1-10235).
**10.3 Employment Agreement between IDEX Corporation and Frank J.
Hansen dated as of August 1, 1994 (incorporated by reference
to Exhibit No. 10.7 to the Quarterly Report of IDEX on Form
10-Q for the quarter ended September 30, 1994, Commission
File No. 1-10235).
**10.3(a) First Amendment to the Employment Agreement between IDEX
Corporation and Frank J. Hansen, dated as of September 27,
1994 (incorporated by reference to Exhibit No. 10.7(a) to
the Annual Report of IDEX on Form 10-K for the year ending
December 31, 1994, Commission File No. 1-10235).
**10.3(b)* Amended and Restated Employment Agreement between IDEX
Corporation and Frank J. Hansen, dated December 19, 1997.
**10.4 Employment Agreement between IDEX Corporation and Jerry N.
Derck dated as of September 27, 1994 (incorporated by
reference to Exhibit No. 10.8 to the Annual Report of IDEX
on Form 10-K for the fiscal year ending December 31, 1994,
Commission File No. 1-10235).
**10.5 Management Incentive Compensation Plan (incorporated by
reference to Exhibit No. 10.21 to Amendment No. 1 to the
Registration Statement on Form S-1 of IDEX Corporation,
Registration No. 33-28317, as filed on June 1, 1989).
**10.5(a) Amended Management Incentive Compensation Plan (incorporated
by reference to Exhibit No. 10.9(a) to the Quarterly Report
of IDEX on Form 10-Q for the quarter ended March 31, 1996,
Commission File No. 1-10235).
**10.6 Form of Indemnification Agreement (incorporated by reference
to Exhibit No. 10.23 to the Registration Statement on Form
S-1 of IDEX Corporation, Registration No. 33-28317, as filed
on April 26, 1989).
**10.7 Form of Shareholder Purchase and Sale Agreement
(incorporated by reference to Exhibit No. 10.24 to Amendment
No. 1 to the Registration Statement on Form S-1 of IDEX
Corporation, Registration No. 33-28317, as filed on June 1,
1989).
</TABLE>
13
<PAGE> 15
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
------- ----------- ----
<C> <S> <C>
**10.8 Revised Form of IDEX Corporation Stock Option Plan for
Outside Directors (incorporated by reference to Exhibit No.
10.22 to Post-Effective Amendment No. 4 to the Registration
Statement on Form S-1 of IDEX Corporation, et al.,
Registration No. 33-21205, as filed on March 2, 1990).
**10.9 Amendment to the IDEX Corporation Stock Option Plan for
Outside Directors adopted by resolution to the Board of
Directors dated as of January 28, 1992 (incorporated by
reference to Exhibit No. 10.21(a) of the Annual Report of
IDEX on Form 10-K for the year ended December 31, 1992,
Commission File No. 1-10235).
**10.10 Non-Qualified Stock Option Plan for Non-Officer Key
Employees of IDEX Corporation (incorporated by reference to
Exhibit No. 10.15 to the Annual Report of IDEX on Form 10-K
for the year ended December 31, 1992, Commission File No.
1-102351).
**10.10(a) 1996 Stock Plan for Non-Officer Key Employees of IDEX
Corporation (incorporated by reference to Exhibit No. 4.5 to
the Registration Statement on Form S-8 of IDEX, Registration
No. 333-18643, as filed on December 23, 1996).
**10.11 Non-Qualified Stock Option Plan for Officers of IDEX
Corporation (incorporated by reference to Exhibit No. 10.16
to the Annual Report of IDEX on Form 10-K for the year ended
December 31, 1992, Commission File No. 1-102351).
**10.12 IDEX Corporation Supplemental Executive Retirement Plan
(incorporated by reference to Exhibit No. 10.17 to the
Annual Report of IDEX on Form 10-K for the year ended
December 31, 1992, Commission File No. 1-102351).
**10.13 1996 Stock Plan for Officers of IDEX (incorporated by
reference to Exhibit No. 4.4 to the Registration Statement
on Form S-8 of IDEX Registration No. 333-18643, as filed on
December 23, 1996).
**10.14* Amended and Restated IDEX Corporation Directors Deferred
Compensation Plan, as amended (incorporated by reference to
Exhibit No. 4.6 to the Registration Statement on Form S-8 of
IDEX Registration No. 333-18643, as filed on December 23,
1996).
**10.14(b) Second Amended and Restated IDEX Corporation Directors
Deferred Compensation Plan, dated December 16, 1997.
**10.15 IDEX Corporation 1996 Deferred Compensation Plan for
Officers, as amended (incorporated by reference to Exhibit
No. 4.8 to the Registration Statement on Form S-8 of IDEX,
Registration No. 333-18643, as filed on December 23, 1996).
**10.16 IDEX Corporation 1996 Deferred Compensation Plan for
Non-Officer Presidents, as amended (incorporated by
reference to Exhibit No. 4.7 to the Registration Statement
on Form S-8 of IDEX, Registrant No. 333-18643, as filed on
December 23, 1996).
*13 1997 Annual Report to Shareholders of IDEX.
*21 Subsidiaries of IDEX.
*24 Consent of Deloitte & Touche LLP.
*27 Financial Data Schedule.
Revolving Credit Facility, dated as of September 29, 1995,
between Dunja Verwaltungsgesellschaft GmbH and Bank of
America NT & SA, Frankfurt Branch (a copy of the agreement
will be furnished to the Commission upon request).
</TABLE>
- -------------------------
* Filed herewith.
** Management contract or compensatory plan or arrangement.
14
<PAGE> 1
Exhibit 10.1(c)
FIRST AMENDMENT
TO THE
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
BETWEEN
IDEX CORPORATION
AND
DONALD N. BOYCE
<PAGE> 2
FIRST AMENDMENT
TO THE
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
BETWEEN
IDEX CORPORATION
AND
DONALD N. BOYCE
THIS AGREEMENT made as of the 1st day of January, 1998, between IDEX
CORPORATION, a Delaware corporation with its executive offices at 630 Dundee
Road, Suite 400, Northbrook, Illinois 60062 (the "Corporation"), and DONALD N.
BOYCE, residing at 1251 N. Sheridan Road, Lake Forest, Illinois 60045 (the
"Executive").
IDEX and the Executive entered into an Employment Agreement dated as of
January 22, 1988 and executed on May 30, 1989 and subsequently amended as of
January 13, 1993 and as of September 27, 1994 and amended and restated in its
entirety as of November 22, 1996. Effective as of January 1, 1998, Executive
will no longer be serving as President of the Corporation and the parties now
wish to modify certain provisions of the Employment Agreement to conform to
this change. Therefore, IDEX and the Executive agree as follows:
1. Effective as of January 1, 1998, in each instance in Section 2, Section
5(a) and Section 5(b)(3) of the Agreement where the phrase "...Chairman of the
Board, President and the Chief Executive Officer of the Corporation..." appears
such phrase shall be deleted and in its stead the phrase "...Chairman of the
Board and the Chief Executive Officer of the Corporation..." is substituted in
lieu thereof.
2. Effective as of January 1, 1998, the first sentence of Subsection 4(a)
of the Agreement is amended by deleting the phrase "...$445,000 per year
commencing as of January 1,
<PAGE> 3
- 3 -
1997,..." and the phrase "...$470,000 per year commencing as of January 1,
1998,..." is substituted in lieu thereof.
IN WITNESS WHEREOF, the Executive has hereunto set his hand and the
Corporation has caused this Agreement to be executed in its name and on its
behalf as of the date first above written.
___________________________________
Donald N. Boyce
DATE OF EXECUTION: _________, 1997
IDEX CORPORATION
By: _______________________________
Wayne P. Sayatovic, Senior Vice
President - Finance and Chief
Financial Officer
DATE OF EXECUTION: _________, 1997
<PAGE> 1
Exhibit 10.3(b)
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
BETWEEN
IDEX CORPORATION
AND
FRANK J. HANSEN
<PAGE> 2
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made as of the 1st day of January, 1998, between IDEX
CORPORATION, a Delaware corporation with its executive offices at 630 Dundee
Road, Suite 400, Northbrook, Illinois 60062 ("IDEX"), and FRANK J. HANSEN, 1716
Mulberry Drive, Libertyville, Illinois 60048 (the "Executive").
IDEX and the Executive entered into an Employment Agreement dated as of
August 1, 1994 and subsequently amended as of September 27, 1994 and amended
and restated in its entirety as of November 22, 1996. The parties now wish to
modify certain provisions of the Employment Agreement and to restate the
Employment Agreement in its entirety as modified. Therefore, IDEX and the
Executive agree as follows:
1. Introductory statement. The Executive has previously served as
President of Viking Pump, Inc., a business unit of IDEX Corporation, and as
Vice President-Group Executive and Senior Vice President-Operations of IDEX
Corporation ("IDEX"). IDEX desires to secure the full-time services of the
Executive as President and Chief Operating Officer effective as of January 1,
1998, until at least December 31, 2001, on the terms and conditions as provided
in this Agreement. The Executive is willing to execute this Agreement with
respect to his employment upon the terms and conditions set forth in this
Agreement.
<PAGE> 3
- 2 -
2. Agreement of employment. IDEX agrees to, and hereby does, employ the
Executive, and the Executive agrees to, and hereby does accept, employment by
IDEX (hereafter, the "Corporation"), as President and Chief Operating Officer
of the Corporation, subject to the provisions of the by-laws of the Corporation
in respect of the duties and responsibilities assigned from time to time by the
Chief Executive Officer of the Corporation and subject also at all times to the
control of the Board of Directors of the Corporation.
The Executive has been elected to be a member of the Board of Directors as
of January 1, 1998 for a term ending at the time of the annual meeting of
shareholders in March, 1998. Subject to election by the shareholders of the
Corporation at such annual meeting, it is contemplated that the Executive will
continue to be elected to be a member of the Board of Directors. Further,
subject to yearly election by the Board of Directors in the exercise of its
judgment, it is contemplated that the Executive will continue to be elected to
the position of President and Chief Operating Officer.
The Corporation shall not require the Executive to perform services
hereunder away from the Chicago, Illinois area of such frequency and duration
as would necessitate, in the
<PAGE> 4
- 3 -
reasonable judgment of the Executive, the Executive moving his residence from
the Chicago, Illinois area.
3. Executive's obligations; vacations; automobile. During the period of
his full-time service under this Agreement, the Executive shall devote
substantially all of his time and energies during business hours to the
supervision and conduct, faithfully and to the best of his ability, of the
business and affairs of the Corporation, and to the furtherance of its
interests, and shall not accept other gainful employment except with the prior
consent of the Chief Executive Officer of the Corporation. With the approval
of the Chief Executive Officer of the Corporation, however, the Executive may
become a director, trustee or other fiduciary of other corporations, trusts or
entities. The Executive may take four weeks vacation each year with pay. The
Corporation shall furnish and maintain an automobile for the use of the
Executive consistent with the policy of the Corporation in effect at any time;
provided, however, that at no time shall the policy of the Corporation be
materially less generous than that in effect as of January 1, 1998.
4. Compensation.
4(a) Annual salary. The Corporation shall pay to the Executive for his
services under this Agreement a salary at the rate of $310,000 per year
commencing as of January 1, 1998,
<PAGE> 5
- 4 -
payable in equal monthly installments, and continuing during the period of his
full-time service hereunder; provided, however, that the Corporation shall in
good faith review the salary of the Executive, on an annual basis, with a view
to consideration of appropriate increases in such salary. If the Executive
dies during the period of his full-time service hereunder, service for any part
of the month of his death shall be considered service for the entire month.
4(b) Bonus. The Executive shall be entitled to receive an annual cash
bonus from the Corporation calculated pursuant to the Corporation's management
incentive compensation program in effect from time to time, but in an amount
not less than would result if such bonus were calculated pursuant to the
Corporation's management incentive compensation program in effect on January 1,
1998. The Board of Directors of the Corporation, in its discretion, may award
bonuses to the Executive in addition to those provided for above, as it may
from time to time determine. The Target Incentive Amount for the Executive
with respect to any calculation of bonus shall be at least 75% of his base
salary as of the end of the fiscal period of the Corporation for which the
bonus is calculated.
<PAGE> 6
- 5 -
5. Period of service and benefits.
5(a) Period of full-time service. The period of full-time service of the
Executive under this Agreement shall continue to December 31, 2001, and for
successive 12 month periods thereafter; provided, however, that the Corporation
may terminate at any time the full-time service of the Executive hereunder by
delivering written notice of termination to the Executive at least three months
prior to the effective date of such termination, or the Executive may resign
and terminate his full-time service hereunder at any time (i) if the
Corporation does not retain him in the positions of President and Chief
Operating Officer or if the Executive's scope of duties hereunder is
significantly reduced, (ii) at any time within the 24-month period following an
Acquisition (as hereinafter defined), liquidation or dissolution of the
Corporation, or (iii) if the services required to be performed by the Executive
would necessitate, in the reasonable judgment of the Executive, the Executive's
moving his residence from the Chicago, Illinois area by delivering written
notice of his intention to resign to the Corporation at least three months
prior to the effective date of such resignation.
<PAGE> 7
- 6 -
In the event of termination of the Executive by the Corporation, the
Executive shall be entitled to receive his full annual salary and fringe
benefits in effect on the date of receipt of the notice of termination for a
continuing period of 24 months beginning with that month next following the
month during which he ceases to be actively employed. In the event of the
Executive's death, the balance of the continuing salary payments shall be made
to his wife, if surviving, or if not, to his estate in addition to any and all
other benefits payable under this Agreement upon his death.
In the event of resignation by the Executive as permitted under the first
paragraph of this Section 5(a), the Executive shall be entitled to receive his
full annual salary and fringe benefits in effect on the date of receipt of the
notice of resignation for a continuing period of 24 months beginning with that
next month following the month during which he ceases to be actively employed.
In the event of the Executive's death, in addition to any and all other
benefits payable under this Agreement upon his death, the balance of the
continuing salary payments shall be made to his wife, if surviving, or if not,
to his estate.
Except as otherwise provided in Section 5(c)(4), continuing fringe
benefits under this Section 5(a) shall be
<PAGE> 8
- 7 -
reduced to the extent of any fringe benefits provided by and available to the
Executive from any subsequent employer but shall not be limited by the terms of
any such fringe benefit of a subsequent employer.
In the event of termination of the Executive by the Corporation, the
Executive's death or disability, or resignation by the Executive as permitted
under the first paragraph of this Section 5(a), the Executive or his estate
shall receive a cash bonus for the entire fiscal year in which such
termination, death, or resignation occurs or disability commences. Such bonus
shall be calculated in accordance with the management incentive compensation
program of the Corporation in effect from time to time and shall in no event be
less than the full target amount for the Executive for such fiscal year. If no
policy of the Corporation then exists with regard to calculation and payment of
bonuses, the bonus shall be calculated and paid in accordance with the policy
of the Corporation in effect as of January 1, 1998.
In addition, in the event of termination of the Executive by the
Corporation, the Executive's death or disability, or the resignation by the
Executive (whether or not permitted under the first paragraph of this Section
5(a)), the Executive shall receive payment for accrued but unused vacation,
<PAGE> 9
- 8 -
which payment shall be equitably prorated based on the period of active
employment for that portion of the fiscal year in which the termination or
resignation becomes effective, death occurs, or disability commences, plus
payment for accrued but unused vacation for the prior fiscal year. Payment for
accrued but unused vacation shall be payable in one lump sum on the effective
date of termination or resignation, the date of death (or as soon thereafter as
practicable) or the date disability commences.
In the event of termination of the Executive by the Corporation or
resignation by the Executive as permitted under the first paragraph of this
Section 5(a) within 24 months following an "Acquisition" of the Corporation (as
hereinafter defined), the benefits to be provided to the Executive upon such
termination, regardless of the continued effectiveness of this Agreement or of
the provisions of this Section 5(a), shall be in an amount and character not
less generous than the benefits payable upon a termination of the Executive by
the Corporation as set forth in this Section 5(a).
For purposes of this Agreement, an "Acquisition" means (I) any transaction
or series of transactions which within a 12-month period constitute a change of
control where (i) at least 51 percent of the then outstanding common shares of
the Corporation are (for cash, property (including, without limitation, stock
in
<PAGE> 10
- 9 -
any corporation), or indebtedness, or any combination thereof), redeemed by
the Corporation or purchased by an person(s), firm(s) or entity(ies), or
exchanged for shares in any other corporation whether or not affiliated with
the Corporation, or any combination of such redemption, purchase or exchange,
or (ii) at least 51 percent of the Corporation's assets are purchased by any
person(s), firm(s) or entity(ies) whether or not affiliated with the
Corporation for cash, property (including, without limitation, stock in any
corporation) or indebtedness or any combination thereof, or (iii) the
Corporation is merged or consolidated with another corporation regardless of
whether the Corporation is the survivor, or (II) any substantial equivalent of
any such redemption, purchase, exchange, change, transaction or series of
transactions, merger or consolidation, constituting such change of control.
For purposes of this paragraph, the term "control" shall have the meaning
ascribed thereto under the Securities Exchange Act of 1934, as amended, and the
regulations thereunder. For purposes of clause (I)(ii) above or as appropriate
for purposes of clause (II) above, the Corporation shall be deemed to include
on a consolidated basis all subsidiaries and other affiliated corporations or
other entities with the same effect as if they were divisions.
The benefits provided for under this section shall be in lieu of, and not
in addition to, any and all benefits to which
<PAGE> 11
- 10 -
the Executive may be entitled under any bonus or severance program or policy
adopted by the Corporation from time to time unless otherwise expressly stated
therein.
5(b)(1) Death benefit. If the Executive dies during the period of his
full-time service hereunder, his wife, if surviving, or if not, his estate
shall be entitled to receive his full annual salary in effect on the date of
his death for a continuing period of 12 months commencing on the first day of
the month immediately following the date of his death.
5(b)(2) Disability benefits. In the event the Executive ceases to be
actively employed by the Corporation for any reason during any period of his
disability, he shall be entitled to receive (i) his full annual salary in
effect on the date he ceased to be employed for a continuing period of 12
months from the date he ceases to be employed by the Corporation, and (ii) the
fringe benefits provided by the Corporation under its executive disability
policy in effect on the date he ceases to be employed.
5(b)(3) Determination of disability. Any question as to the existence,
extent or potentiality of disability of the Executive upon which the Executive
and the Corporation cannot agree shall be determined by a qualified independent
physician
<PAGE> 12
- 11 -
selected by the Executive and reasonably acceptable to the Corporation (or, if
the Executive is unable to make such selection, it shall be made by any adult
member of his immediate family). For the purpose of this Agreement,
"disability" shall mean a disability which is, or has the potential to become,
total and permanent and because of which the Executive is or may become
physically or mentally unable to substantially perform his regular duties as
President or Chief Operating Officer of the Corporation, as the case may be.
The determination of such physician made in writing to the Corporation and to
the Executive shall be final and conclusive for all purposes of this Agreement.
In the event of his disability, the Executive shall cease to be employed on
the last day of the month in which the Executive's disability is determined by
written agreement of the Executive and the Corporation or the written
determination of a physician, as the case may be.
5(c)(1) Retirement compensation and obligations. Upon the retirement or
resignation of the Executive or upon his termination from full-time service
with the Corporation, in either case pursuant to the provisions of this Section
5 hereof, the full-time service obligations of the Executive and the
Corporation to each other under Sections 2, 3 and 4 hereof shall cease, and the
Executive shall be entitled to receive benefits and compensation as specified
in the preceding provisions of this
<PAGE> 13
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Section 5.
5(c)(2) Guarantee of pension benefits. In addition to the compensation
otherwise provided herein, the Executive and his beneficiaries shall be
entitled to receive the retirement and death benefits they would receive at the
times and under such optional arrangements as the Executive is entitled to
under the terms of any defined benefit retirement or pension plan adopted and
implemented by the Corporation for its executive office employees in effect at
the date of the Executive's retirement, resignation or termination (for
whatever reason) from full-time service with the Corporation or at any time
during the Executive's service with the Corporation (any such plan is referred
to hereafter as the "Plan") (such Plan shall include a lump sum option)
pursuant to the Plan provisions as in effect at the point in time during the
Executive's employment at which the Plan would provide the greatest benefits
for the Executive and his beneficiaries and, in addition, the greatest latitude
in choice of options (including, but not limited to, a lump sum option), but in
any event computed without reference to (i) any restrictions in the Plan upon
payments to the Executive, as described in Section 1.401(a)(4)-5(b) of the
Treasury Regulations; (ii) any restrictions in the Plan upon the maximum
contributions to the Plan or upon the maximum benefits payable under the Plan,
as the case may be, pursuant to Section 415 of
<PAGE> 14
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the Internal Revenue Code of 1986, as in effect at such point in time (the
"Code"); (iii) any limitations on the amount of the Executive's compensation
that may be taken into account under the Plan pursuant to Section 401(a)(17) of
the Code or any successor section; (iv) the limitations on compensation that
would exclude any income attributable to the exercise of the nonqualified stock
options granted in replacement of Equity Appreciation Rights granted under the
First Restatement of the Amended and Restated 1988 Equity Appreciation Rights
Plan or the 1989 Equity Appreciation Rights Plan (hereafter the "EAR Plans");
(v) for purposes of determining eligibility for a lump sum distribution, any
condition under the Plan considered necessary to receive a lump sum
distribution, such as the submission of medical evidence of reasonable health
of the Participant or the meeting of a specified age or service requirement (in
other words the lump sum distribution shall be an election solely in the
discretion of the Executive); or (vi) any other restriction on the Executive's
benefits as determined under the Plan pursuant to the Code, to the Employee
Retirement Income Security Act of 1974, as in effect at such point in time
("ERISA") or to any other law affecting the determination of such benefits.
However, except as specifically described otherwise in the preceding sentence,
all calculations pursuant to this Section 5(c)(2) of benefits shall be made on
the basis of the actual years of service to the Corporation, including any
Affiliated Corporation and Company as defined under
<PAGE> 15
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the Plan, and actual compensation of the Executive taken into account under the
applicable Plan provisions. In calculating the Executive's compensation and
years of service to the Corporation under the Plan for purposes of benefit
accrual and to determine active employment on any date relevant for any purpose
under the Plan, compensation shall be deemed to include amounts termed
severance and service shall be deemed to include the periods for which the
Executive receives payments termed severance (based on the period over which
the severance amount would have been paid if paid as compensation over the
entire period as to which severance is calculated) even if such amount is paid
as a lump sum settlement. To the extent that the benefits to which the
Executive or his beneficiaries are entitled under this Section 5(c)(2) are not
paid from the Trust under the Plan or from the IDEX Corporation Supplemental
Executive Retirement Plan, the Corporation shall pay such benefits directly
from its general assets.
If payments are being made, pursuant to this Section 5(c)(2), in the form
of an annuity or other periodic form of distribution, and the portion of the
total amount to be paid from the Trust under the Plan shall thereafter be
reduced after the date such payments have been determined pursuant to the
preceding paragraph, by virtue of the operation of restrictions in the Plan
upon payments to the Executive, as described in
<PAGE> 16
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Section 1.401(a)(4)-5(b) of the Treasury Regulations, or by virtue of the
termination of the Plan (including the operation of Section 4045 of ERISA or
any successor section) or for any other reason other than the operation of the
provisions of the optional form selected under the Plan, the Corporation shall
increase, in an amount equal to any such reduction, the amount of the benefit
under this Section 5(c)(2) which is to be paid directly from its general
assets, and such increase shall be prorated over the remaining payments or used
to recalculate the annuity payments, as the case may be.
If payments are being made or have been made in full, pursuant to this
Section 5(c)(2), but the Executive or any of his beneficiaries is required to
make a payment to the Trustee under the Plan (whether in the form of a loss of
collateral, interest on such collateral or otherwise) as the result of the
application of the restrictions in the Plan upon payments to the Executive, as
described in Section 1.401(a)(4)-5(b) of the Treasury Regulations, or by virtue
of the termination of the Plan (including the operation of Section 4045 of
ERISA or any successor section) or for any other reason, the Corporation shall
reimburse the Executive or his beneficiaries, as the case may be, directly from
its general assets, for each such payment to the Trustee, and if the Executive
or any of his beneficiaries does not receive a deduction for federal, state
and/or local income
<PAGE> 17
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tax purposes for such a payment and/or if such payment would result in the
imposition of any penalty tax because of such repayment, then the amount of
such reimbursement shall be increased by an amount such that after payment by
the Executive or his beneficiaries of all taxes, including, without limitation,
any interest or penalties imposed with respect to such reimbursement, the
Executive or his beneficiaries retain an amount from the Corporation
approximately equal to the amount repaid to the Trustee.
In the event (I) the Executive requests a lump sum distribution from the
Trustee or Committee under the Plan and is denied the request, regardless of
the reason for the denial, or (II) (i) if the Plan is amended to eliminate the
lump sum distribution option on future benefit accruals or (ii) the Executive
is not otherwise entitled to a lump sum distribution under the Plan terms and,
in the case of (i) or (ii), the Executive states in writing to the Corporation
at any time prior to the Executive or his beneficiaries receiving a benefit
under the Plan that he otherwise would have requested the lump sum distribution
option, the Corporation shall pay the Executive, or his beneficiaries, as the
case may be, in cash in a single lump sum benefit, an amount equal to the
benefit hereinbefore determined less any amount received by the Executive or
his beneficiaries from the Plan directly or indirectly in a single
<PAGE> 18
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payment, regardless of the form of payment in which the benefit is being paid
or is to be paid under the Plan. In the case of a benefit provided under this
paragraph, the Corporation shall pay the Executive or his beneficiaries an
additional amount in cash in a single lump sum payment such that after payment
by the Executive or his beneficiaries of all federal, state, and/or local
income taxes (including, without limitation, any interest or penalties imposed
with respect to such taxes) imposed upon such single lump sum payment, the
Executive or his beneficiaries retain an amount that would have been retained
by him or them (without regard to any limitations as described in the first
paragraph of this Section 5(c)(2)) had he or they directly rolled the amount
from the Plan into an individual retirement account. If the Executive or his
beneficiaries receive the single lump sum payment from the Corporation under
this paragraph, the Executive and his beneficiaries agree to waive and/or
return to the Corporation all benefits to him or them that he or they
subsequently receive from the Plan. Notwithstanding the preceding sentence, if
the Executive or any of his beneficiaries does not receive a deduction for
federal, state and/or local income tax purposes for such benefits and/or if
such benefits would result in the imposition of any penalty tax because of such
repayment, then the amount of such waiver and/or return to the Corporation
shall be decreased by an amount such that after payment by the Executive or his
beneficiaries of all taxes,
<PAGE> 19
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including, without limitation, any interest or penalties imposed with respect
to such waiver and/or return, the Executive or his beneficiaries incur no net
expense from such benefits he or they subsequently receive from the Plan. For
purposes of this Section, beneficiaries means the beneficiaries as determined
under the Plan.
Notwithstanding the preceding provisions of this Section 5(c)(2), in
calculating the benefit provided under this Section 5(c)(2) under the terms of
any Plan, compensation shall include in any year any amount otherwise excluded
from compensation in such year as a result of an election to defer income made
pursuant to the provisions of the IDEX Corporation 1996 Deferred Compensation
Plan for Officers and shall exclude in any year any amount that would otherwise
be included in compensation in a year which relates to an amount deferred in a
prior year under the provisions of the IDEX Corporation 1996 Deferred
Compensation Plan for Officers.
Notwithstanding the preceding provisions of this Section 5(c)(2), in
calculating the benefit provided under this Section 5(c)(2) under the terms of
the Plan, the following rules shall apply:
<PAGE> 20
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(a) In computing average compensation for purposes of any benefit
formula under the Plan, compensation shall not include any income
includable in the Executive's income for income tax purposes attributable
to the exercise of stock options granted in replacement for Equity
Appreciation Rights under the EAR Plans at any time.
(b) An additional benefit under this Section 5(c)(2) shall be
payable in an amount equal to the benefit accrued at the rate provided in
the Plan's career average formula applied to the income includable in the
Executive's income for income tax purposes attributable to the exercise
of stock options granted in replacement of Equity Appreciation Rights
under the EAR Plans at any time.
5(c)(3) Supplemental retirement compensation.
(i) If the Executive ceases to be actively employed by the Corporation
upon resignation, termination, death or disability on or after December 31,
2002, or is receiving continuing salary payments or disability payments on or
after December 31, 2002, pursuant to Section 5(a) or Section 5(b)(2),
respectively, the Executive shall be entitled to receive, in addition to the
other benefits and compensation specified in this Section 5 and commencing upon
completion of the continuing salary
<PAGE> 21
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payments provided for in Section 5(a) and Section 5(b)(2) of up to 24 or 12
months, respectively, (and excluding any salary payments pursuant to fringe
benefit plans), supplemental retirement compensation at the annual rate of 40%
of his Adjusted Salary (as that term is defined under 5(c)(3)(v) below)
calculated as of the date he ceases to be employed by the Corporation. Such
supplemental retirement compensation shall be paid in equal monthly
installments and such payments of supplemental retirement compensation shall
continue for a period of three years from the date continuing salary payments
under Section 5(a) and Section 5(b)(2) cease. Regardless of the Executive's
death prior to or after commencement of benefits under this paragraph, the
benefits provided for in this paragraph shall be paid to him, his wife, if
surviving, or his estate, as the case may be.
(ii) If the Executive ceases to be actively employed by the Corporation
upon resignation, termination or disability other than death (unless the
election under (iii) below is in effect on the date of the Executive's death)
on or after December 31, 2002, the Executive shall also be entitled to receive,
in addition to the other benefits and compensation specified in this Section 5,
supplemental retirement compensation at the annual rate of 20% of his Adjusted
Salary. Such supplemental retirement compensation shall be paid in equal
<PAGE> 22
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monthly installments commencing on the first day of the month next following
the last payment under Section 5(c)(3)(i) and shall continue for the remainder
of his life.
(iii) If the Executive's spouse is surviving on the date that the
benefits under (i) commence, the Executive hereby elects in lieu of his
benefits under (i) or (ii) above, an actuarially equivalent joint and 50%
surviving spouse annuity calculated using the actuarial assumptions under the
Plan; provided, however, that he reserves the right to revoke such election at
any time prior to the commencement of payment of the benefits under (i); said
spouse's consent shall not be required for such revocation. If such election
is effective on the date of the Executive's death, any benefit payable pursuant
to Section 5(c)(3)(i) and (ii) shall commence immediately upon the date of his
death notwithstanding any other death benefits payable under this Agreement.
(iv) Notwithstanding any provision in this Section 5(c)(3) to the
contrary, if the Executive ceases to be actively employed by the Corporation
due to resignation, termination, death or disability prior to January 1, 2003,
but on or after December 31, 2001, then payments under Section 5(c)(3)(i) or
Section 5(c)(3)(ii) shall be made in an amount adjusted so that the present
value of benefit payments at
<PAGE> 23
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the date of commencement is equivalent to the present value of the benefits
payable if benefit payments commenced at the time they otherwise would have
commenced if the Executive actually ceased to be actively employed on December
31, 2002, using an interest rate and mortality factor of one-half percent
(1/2%) per month without compounding.
(v) For purposes of this Agreement, the term Adjusted Salary shall mean
the highest base salary paid to the Executive at any time during the term of
this Agreement.
5(c)(4) Medical benefits. The Executive and/or his wife, as the case may
be, shall be entitled to prompt reimbursement for all medical, dental,
hospitalization, convalescent, nursing, extended care facilities (including,
without limitation, long term care facilities such as convalescent and nursing
homes) and similar health and welfare expenses incurred by the Executive (or by
his wife in the event of the Executive's death or disability) for the Executive
or for the benefit of his wife or other dependents (hereinafter collectively
referred to as "medical benefits"). Such medical benefits shall continue at
all times while the Executive is employed by the Corporation, and thereafter
for the remainder of his life or the life of his wife, whichever shall be the
longer time. The Corporation may, in its discretion, insure such
<PAGE> 24
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medical benefits; provided, however, that such benefits shall not be affected
by the existence or non-existence of any available insurance from any source,
shall not be limited by the terms of any such insurance or the failure of any
insurer to meet its obligations thereunder, shall not limit the Executive or
his wife or other dependents in the choice of any physician, medical care
facility or type of medical expenses in any way, and, except as provided in the
following sentence, shall not be affected by the availability of any medical
benefits provided by and available to the Executive from any subsequent
employer. Such medical benefits shall be reduced to the extent of any medical
benefits actually available and actually provided by any subsequent employer to
the Executive, his wife, or other dependents only until the commencement of his
60th year if he ceases to be employed by the Corporation as a result of his
resignation or retirement prior to the commencement of his 60th year. Without
limiting the foregoing, there shall be no such offset in the event of:
(a) termination for any reason after commencement of the Executive's
60th year,
(b) resignation permitted under the first paragraph of Section 5(a),
(c) involuntary termination following an Acquisition, or
<PAGE> 25
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(d) the death or disability of the Executive while in the active
employment of the Corporation.
In any case such reduction in medical benefits shall be only to the extent of
any medical benefits actually provided by and actually available to the
Executive (and/or his wife or other dependents) from any subsequent employer
without cost to the Executive (and/or his wife or other dependents) or subject
to full reimbursement of any such cost by the Corporation to the Executive
(and/or his wife or other dependents), but shall not be limited by the terms of
any such insurance or reimbursement. For purposes of this Agreement, the term
"medical expenses" shall include, but not be limited to, prescription drugs,
prosthetics, optical care (including corrective lenses) and travel and lodging
associated with medical expenses, with the selection of medical providers and
institutions and related travel and lodging to be solely in the discretion of
the Executive (and/or his wife or other dependents).
5(d) Confidentiality agreement. During the course of his employment, the
Executive has had and will have access to confidential information relating to
the lines of business of the Corporation, its trade secrets, marketing
techniques, technical and cost data, information concerning customers and
suppliers, information relating to product lines, and other valuable and
<PAGE> 26
- 25 -
confidential information relating to the business operations of the Corporation
not generally available to the public (the "Confidential Information"). The
parties hereby acknowledge that any unauthorized disclosure or misuse of the
Confidential Information could cause irreparable damage to the Corporation.
The parties also agree that covenants by the Executive not to make unauthorized
use or disclosures of the Confidential Information are essential to the growth
and stability of the business of the Corporation. Accordingly, the Executive
agrees to the confidentiality covenants set forth in this section.
The Executive agrees that, except as required by his duties with the
Corporation or as authorized by the Corporation in writing, he will not use or
disclose to anyone at any time, regardless of whether before or after the
Executive ceases to be employed by the Corporation, any of the Confidential
Information obtained by him in the course of his employment with the
Corporation.
The Executive agrees that since irreparable damage could result from his
breach of the covenants in this Section 5(d) of this Agreement, in addition to
any and all other remedies available to the Corporation, the Corporation shall
have the remedies of a restraining order, injunction or other equitable relief
to enforce the provisions thereof. The Employee
<PAGE> 27
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consents to jurisdiction in Lake County, Illinois on the date of the
commencement of any action for purposes of any claims under this Section 5(d).
In addition, the Executive agrees that the issues in any action brought under
this section will be limited to claims under this section, and all other claims
or counterclaims under other provisions of this Agreement will be excluded.
6. Compensation under this Agreement not exclusive. Except as expressly
stated to the contrary in this Agreement, the compensation and benefits payable
by the Corporation to the Executive under the provisions of this Agreement
shall be in addition to and separate and apart from such additional
compensation or incentives and such retirement, disability or other benefits as
the Executive may be entitled to under any present or future extra compensation
or bonus plan, stock option plan, share purchase agreement, pension plan,
disability insurance plan, medical insurance plan, life insurance program, or
other plan or arrangement of the Corporation established for its executives or
employees, and the provisions of this Agreement shall not affect any such
compensation, incentives or benefits. The Board of Directors of the
Corporation, in its discretion, may award the Executive such additional
compensation, incentives or benefits, pursuant to such plans or otherwise, as
it may from time to time determine.
<PAGE> 28
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7. Termination of this Agreement. This Agreement shall terminate when the
Corporation has made the last payment provided for hereunder; provided,
however, that the obligations set forth under Section 5(d) of this Agreement
shall survive any such termination and shall remain in full force and effect.
Without the written consent of the Executive, the Corporation shall have no
right to terminate this Agreement prior thereto. In the event the Executive,
or his beneficiaries, as the case may be, and the Corporation shall disagree as
to their respective rights and obligations under this Agreement, and the
Executive or his beneficiaries are successful in establishing, privately or
otherwise, that his or their position is substantially correct, or that the
Corporation's position is substantially wrong or unreasonable, or in the event
that the disagreement is resolved by settlement, the Corporation shall pay all
costs and expenses, including counsel fees, which the Executive or his
beneficiaries may incur in connection therewith directly to the provider of the
services or as may otherwise be directed by the Executive or his beneficiaries.
The Corporation shall not delay or reduce the amount of any payment provided
for hereunder or setoff or counterclaim against any such amount for any reason
whatever; it is the intention of the Corporation and the Executive that the
amounts payable to the Executive or his beneficiaries hereunder shall continue
to be paid in all events in the manner and at the
<PAGE> 29
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times herein provided. All payments made by the Corporation hereunder shall be
final and the Corporation shall not seek to recover all or any part of any such
payments for any reason whatsoever.
8. Additional payments by Corporation.
8(a) Notwithstanding anything in this Agreement or any other agreement to
the contrary, in the event it shall be determined that any payment or
distribution by the Corporation or any affiliate (as defined under the
Securities Act of 1933, as amended, and the regulations thereunder) thereof or
any other person to or for the benefit of the Executive, whether paid or
payable or distributed or distributable pursuant to the terms of this
Agreement, pursuant to that certain shareholder purchase and sale agreement
between Executive and the Corporation made as of January 22, 1988, as amended
and restated, pursuant to all non-qualified stock option plans of the
Corporation now or hereafter in effect, pursuant to the IDEX Corporation
Supplemental Executive Retirement Plan, pursuant to the IDEX Corporation 1996
Deferred Compensation Plan for Officers, pursuant to any other plan of deferred
compensation, or pursuant to any other agreement or arrangement with the
Corporation or any affiliate thereof now or hereafter in effect (a "Payment"),
would be subject to the excise tax imposed by Section 4999 of the Code,
<PAGE> 30
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or any successor statute thereto, or any interest or penalties with respect to
such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise Tax"), then
the Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive of all taxes
(including, without limitation, any interest or penalties imposed with respect
to such taxes and any Excise Tax) imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.
8(b) The Executive and/or the Corporation shall notify each other in
writing as soon as practicable of any claim by the Internal Revenue Service
that, if successful, would require the payment by the Corporation of the
Gross-Up Payment. Such notification shall state the nature of such claim and
the date on which such claim is requested to be paid. Neither the Executive
nor the Corporation shall pay such claim for taxes prior to the expiration of
the thirty-day period following the date on which the notice is given (or such
shorter period ending on the date that any payment of taxes with respect to
such claim is due). If the Executive or Corporation (hereafter the "Notifying
Party") notifies the other party in writing prior to the expiration of such
period that it desires to contest such claim, such other
<PAGE> 31
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party shall take such action, in connection with contesting such claim as the
Notifying Party shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect to
such claim by an attorney selected by the Notifying Party and approved by the
other party, provided, however, that the Corporation shall bear and pay
directly all costs and expenses (including additional interest and penalties
and counsel fees as submitted) incurred in connection with such contest and
shall indemnity and hold the Executive harmless, on an after-tax basis, for any
Excise Tax or income tax, including interest and penalties with respect
thereto, imposed as a result of such representation and payment of costs and
expenses. Furthermore, if the Corporation is the Notifying Party, the
Corporation's control of the contest shall be limited to issues with respect to
which a Gross-Up Payment would be payable hereunder and the Executive shall be
entitled to settle or contest, as the case may be, any other issue raised by
the Internal Revenue Service or any other taxing authority.
9. Assurances on liquidation. The Corporation agrees that until the
termination of this Agreement as above provided, it will not voluntarily
liquidate or dissolve, or enter into or be a party to any other transaction the
effect of which would be to materially reduce the net assets or operations of
the Corporation, without first making a written agreement with the
<PAGE> 32
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Executive or other beneficiary, satisfactory to and approved by him or such
beneficiary in writing within 30 days of receipt of a notice from the
Corporation of such proposed liquidation, dissolution or other transaction, in
fulfillment of or in lieu of its obligations to him or such beneficiary under
this Agreement or any other agreement, plan, policy or program of the
Corporation or, in the absence of such agreement, paying him or such
beneficiary in a lump sum settlement of all such obligations prior to such
proposed liquidation, dissolution or other transaction. Notwithstanding
anything in the preceding sentence to the contrary, in the event that pursuant
to the preceding sentence the Corporation is obligated to pay to the Executive
or such beneficiary in a lump sum settlement all of the obligations of the
Corporation to the Executive or such beneficiary under this Agreement or any
other agreement, plan, policy or program of the Corporation, the Executive or,
in the event of his death or inability to act, his wife or, if not surviving,
his eldest surviving child (or in the event of their inability to act, such
person who has the legal power to act on their behalf), shall have the right,
in his or her sole discretion, to elect not to receive a lump sum settlement of
the obligations of the Corporation to the Executive or other beneficiary under
Section 5(c)(4) of this Agreement and, in lieu thereof, to receive a guaranty
(including, without limitation, a letter of credit), in form and substance
satisfactory to the Executive or
<PAGE> 33
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other beneficiary, as the case may be, in his or her sole discretion, of the
payment of such obligations from any entity satisfactory to the Executive or
other beneficiary, as the case may be, in his or her sole discretion. Any lump
sum settlement shall reflect a reasonable assumption of cost-of-living
adjustments, if appropriate to such obligation, and shall be determined using
the mortality assumptions of the "applicable mortality table" under Section
417(e) of the Code and either (i) the interest rate that would be used (as of
the date of payment) by the Pension Benefit Guaranty Corporation for purposes
of valuing a lump sum distribution upon a plan termination on the January 1 of
the calendar year in which the single sum is paid or (ii) the "applicable
interest rate" under Section 417(e) of the Code, determined as of the first
month of the calendar year in which the single sum is paid, whichever would
produce the greater single sum amount. For purposes of this Subsection, the
Corporation shall be deemed to include on a consolidated basis all subsidiaries
and other affiliated corporations or other entities with the same effect as if
they were divisions.
10. Definitions. For purposes of this Agreement, the term "year" shall
mean fiscal year, the term "dependents" shall have the same meaning as pursuant
to Section 152 of the Code and the term "his 60th year" shall mean immediately
following the Executive's 59th birthday. Any reference in this Agreement to
<PAGE> 34
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the Code or ERISA or to related regulations shall be deemed to include any
subsequent amendments to the Code or ERISA or related regulations and to
include any successor provision of law or related regulation.
11. Amendments. This Agreement may not be amended or modified orally, and
no provision hereof may be waived, except in a writing signed by the parties
hereto, and specifically the agreement of any beneficiary, wife, dependents or
other potential or actual third party beneficiary shall not be required, except
as specifically provided for in this Agreement.
12. Assignment. This Agreement cannot be assigned by either party hereto
except with the written consent of the other.
13. Binding effect. This Agreement shall be binding upon and inure to the
benefit of the personal representatives and successors in interest of the
Executive and any successors in interest of the Corporation. In addition to
inuring to the benefit of the Executive, Sections 5(a) and 5(b) are intended to
inure to the benefit of the Executive's beneficiaries, Section 5(c)(2) is
intended to inure to the benefit of the Executive's beneficiaries, to the
extent contemplated in that provision, Section 5(c)(4) is intended to inure to
the benefit of the Executive's wife and his dependents, Sections 5(c)(3)(i) and
<PAGE> 35
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(ii) is intended to insure to the benefit of the Executive's wife, to the
extent of any election under Section 5(c)(3)(iii) and Section 7, Section 8 and
Section 9 are intended to inure to the benefit of the Executive's
beneficiaries; such provisions shall be enforceable by the aforesaid
beneficiaries, wife and/or dependents, as the case may be, who upon the
Executive's death shall be deemed successors in interest.
14. Choice of law. This Agreement shall be governed by the law of the
State of Illinois (excluding the law of the State of Illinois with regard to
conflicts of law) as to all matters, including but not limited to matters of
validity, construction, effect and performance.
15. Notice. Except as otherwise provided in this Agreement, all notices
and other communications given pursuant to this Agreement shall be deemed to
have been properly given if personally delivered or mailed, addressed to the
appropriate party at the address of such party as shown at the beginning of
this Agreement, postage prepaid, by certified mail or by Federal Express or
similar overnight courier service. A copy of any notice sent pursuant to this
section shall also be sent to Hodgson, Russ, Andrews, Woods & Goodyear, 1800
One M & T Plaza, Buffalo, New York 14203, Attention: Richard E. Heath, Esq.
and Dianne Bennett, Esq. Any party may from time to time designate
<PAGE> 36
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by written notice given in accordance with the provisions of this paragraph any
other address or party to which such notice or communication or copies thereof
shall be sent.
16. Severability of provisions. In case any one or more of the provisions
contained in this Agreement shall be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be effected or impaired thereby and this
Agreement shall be interpreted as if such invalid, illegal or unenforceable
provision was not contained herein.
17. Titles. Titles are provided herein for convenience only and are not
to serve as a basis for interpretation or construction of this Agreement.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Executive has hereunto set his hand and the
Corporation has caused this Agreement to be executed in its name and on its
behalf as of the date first above written.
_______________________________________________
Frank J. Hansen
Date of Execution: December ___, 1997
IDEX CORPORATION
By:____________________________________________
Donald N. Boyce, Chairman of the Board and
Chief Executive Officer
Date of Execution: December ___, 1997
The undersigned hereby executes this Amendment to evidence her agreement
to be bound by the terms of Subsection 5(c)(2) and 5(c)(3) of the Employment
Agreement.
_______________________________________________
Kathryn Hansen
DATE OF EXECUTION: December ___, 1997
<PAGE> 1
SECOND AMENDED AND RESTATED IDEX CORPORATION
DIRECTORS DEFERRED COMPENSATION PLAN
ARTICLE I
BACKGROUND, PURPOSE, AND EFFECTIVE DATE
IDEX Corporation, a Delaware corporation (the "Corporation"), by
resolution of its Board of Directors, adopted the IDEX Corporation Directors
Deferred Compensation Plan (the "Plan"), effective as of January 1, 1993, for
the benefit of the non-employee members of its Board of Directors (the
"Directors").
In order to make certain changes to the Plan, an Amended and Restated IDEX
Corporation Directors Deferred Compensation Plan was adopted by a resolution of
the Board of Directors of IDEX Corporation, effective as provided below (the
"Amended Plan").
In order to make further changes to the Amended Plan, the Directors have
adopted the changes set forth in new Section 2.1.b and accompanying Exhibit D
and other clarifying changes in this Second Amended and Restated IDEX
Corporation Directors Deferred Compensation Plan (the "Second Amended Plan").
SECTION 1.1--BACKGROUND AND PURPOSE OF THE PLAN
The Corporation wishes to provide members of its Board of Directors who
are not employees of the Corporation with the opportunity to defer payment of
all of the compensation they receive in a particular year or years for serving
as Directors.
SECTION 1.2--EFFECTIVE DATE AND TERM
The Amended Plan was effective as of January 1, 1997. The Plan as in
effect prior to the date of approval of the Amended Plan by the shareholders of
the Corporation was in effect through December 31, 1996. The Second Amended
Plan shall become effective as of November 20, 1997 and shall continue until
such time as it is terminated or amended and restated by resolution of the
Board of Directors in accordance with Article V.
SECTION 1.3--SHARES SUBJECT TO PLAN
The shares of stock subject to Deferred Compensation Units shall be shares
of the Corporation's Common Stock. The aggregate number of such shares which
may be distributed pursuant to Deferred Compensation Units under the Amended
Plan shall not exceed 50,000 shares.
<PAGE> 2
ARTICLE II
CONTRIBUTIONS
SECTION 2.1--DEFERRED COMPENSATION
a. DEFERRAL ELECTION PROCEDURE. With respect to each quarter, beginning
with the first quarter of 1997 and continuing during the period in which this
Plan remains in effect, the Corporation shall credit with all of the amount of
future compensation as such Director has elected in writing to defer under the
Amended Plan (pursuant to the form attached hereto as Exhibit A and
incorporated herein by this reference) and carried in the accounts provided for
in Section 3.1 (the "Deferred Amounts"). An election to defer shall be made
prior to the calendar year for which the compensation so deferred is earned,
and shall be irrevocable with respect to the calendar year to which it applies
and shall remain in effect for future calendar years unless a new election is
made by such Director effective with respect to a calendar year and delivered
to the Corporation by the December 31 preceding such calendar year, provided,
however, that, to the extent necessary for such election or new election and
related deferrals to qualify for the exemption specified by Rule 16b-3 under
the Securities Exchange Act of 1934 as then in effect ("Rule 16b-3"), no such
election or new election may be made less than six months (or such other period
as Rule 16b-3 may specify) prior to the first date on which such deferred
compensation would have been paid if no deferral election were made, and such
election or new election shall otherwise comply with any applicable
requirements for exemption under Rule 16b-3. In that regard, a Director may
make a new election each year setting forth a deferral period and form of
payment pursuant to the form attached hereto as Exhibit A. The crediting of
the Deferred Amounts under this Amended Plan shall be made on the first day of
the quarter after the amounts are earned, or such other date on which such
amounts would otherwise have been paid to the Director. Any amounts credited to
the Deferred Compensation Account under the Plan prior to January 1, 1997 (the
"Prior Deferred Amounts") shall be credited to the Interest-Bearing Account as
set forth in Section 3.1.
b. DEFERRAL DISTRIBUTION DATE ELECTION CHANGES. A Director may change the
distribution date, subject to the requirements and limitations of this Section
2.1.b. A Director may change his or her distribution date by completing and
signing a Deferral Distribution Date Election Change Form and returning it to
the Administrator in accordance with the rules of the Second Amended Plan.
Such Deferral Distribution Date Election Change Form shall be in the form
attached hereto as Exhibit D. For purposes of this Section 2.1.b., a Director
shall be considered to have made a new deferral distribution date election on
the date that the Administrator receives such form.
If a Director's new deferral distribution date election made in accordance
with this Section 2.1.b. designates a new distribution date, such distribution
date shall be no earlier than the later of (i) such Director's distribution
date (if any) under his or her present deferral election (as elected on the
original election form or a prior deferral distribution date election change
form, as the case may be), or (ii) the first day of the second deferral year
following the year in which the change in the deferral is made. A Director may
not make a new deferral election in
2
<PAGE> 3
accordance with this Section 2.1.b. during the four calendar years following
the year in which the Director made his or her last change in the deferral
distribution date.
ARTICLE III
ACCOUNTS AND INVESTMENT
SECTION 3.1--THE DEFERRED AMOUNTS
The Corporation shall establish on its books the necessary accounts to
accurately reflect the Corporation's liability to each Director who has
deferred compensation under the Amended Plan. To each account shall be
credited, as applicable, Deferred Amounts and Dividend Equivalents (as defined
below) on the common stock, par value $.01 per share, of the Corporation (the
"Common Stock") and interest. The Corporation shall maintain separate
subaccounts for each annual compensation deferral election in order to
accurately reflect the Benefits (as defined in Section 4.1 ) distributable in a
particular distribution year. Payments to the Director under the Amended Plan
shall be debited to the appropriate accounts.
a. INTEREST-BEARING ACCOUNT. Compensation which a Director has elected to
defer into an Interest-Bearing Account shall be credited to the
Interest-Bearing Account on the same date that it would otherwise be payable to
such Director (the "Deferral Date"). Deferred Amounts carried in this account
shall earn interest from the Deferral Date to the date of payment. The
Deferred Amount allocated to the Interest-Bearing Account shall be adjusted no
less often than quarterly to reflect hypothetical earnings for the quarter
equal to the U.S. Government Securities Treasury Constant Maturities with 10
year maturities as of the December 1 of the calendar year preceding the quarter
for which the earnings are credited plus 200 basis points, compounded at least
annually. Such adjustments shall be made until no amounts remain in the
Director's Interest-Bearing Account.
b. DEFERRED COMPENSATION UNITS ACCOUNT. A Director who has elected to
defer compensation into a Deferred Compensation Units Account shall have the
amount of such compensation credited to his or her account as of the Deferral
Date, and such Deferred Amount shall also be converted into a number of
Deferred Compensation Units as of the Deferral Date by dividing the Deferred
Amount by the Fair Market Value of the Corporation's Common Stock as of the
Deferral Date. For purposes of the Plan, "Fair Market Value" shall mean the
fair market value of a share of the Common Stock as of a given date measured as
(i) the closing price of a share of the Common Stock on the principal exchange
on which shares of the Common Stock are then trading, if any, on the day
previous to such date, or, if shares were not traded on the day previous to
such date, then on the next preceding trading day during which a sale occurred;
or (ii) if such Common Stock is not traded on an exchange but is quoted on
NASDAQ or a successor quotation system, (1) the last sales price (if the Common
Stock is then listed as a National Market Issue under the NASD National Market
System) or (2) the mean between the closing representative bid and asked prices
(in all other cases) for the Common Stock on the day
3
<PAGE> 4
previous to such date as reported by NASDAQ or such successor quotation system;
or (iii) if such Common Stock is not publicly traded on an exchange and not
quoted on NASDAQ or a successor quotation system, the mean between the closing
bid and asked prices for the Common Stock, on the day previous to such date, as
determined in good faith by the Committee; or (iv) if the Common Stock is not
publicly traded, the fair market value established by the Compensation
Committee of the Board acting in good faith.
If Deferred Compensation Units exist in a Director's account on a dividend
record date for the Common Stock, Dividend Equivalents shall be credited to the
Director's account on the corresponding dividend payment date, and shall be
converted into the number of Deferred Compensation Units which could be
purchased. at a price equal to the Fair Market Value of the Common Stock as of
such dividend payment date, with the amount of Dividend Equivalents so
credited. For purposes of the Amended Plan, "Dividend Equivalent" shall mean an
amount equal to the cash dividend payable on any dividend payment date on one
share of Common Stock multiplied by the number of Deferred Compensation Units
in the Deferred Compensation Units Account as of the dividend record date.
In the event of any change in the Corporation's Common Stock outstanding,
by reason of any stock split or dividend, recapitalization, merger,
consolidation, combination or exchange of stock or similar corporate change,
such equitable adjustments, if any, by reason of any such change, shall be made
in the number of Deferred Compensation Units credited to each Director's
Deferred Compensation Units Account.
c. TRANSFERS BETWEEN ACCOUNTS. If and only if permissible under any
applicable provisions of Rule 16b-3 as then in effect without affecting a
director's disinterested status thereunder, upon advice of counsel, transfers
from the Interest-Bearing Account to the Deferred Compensation Units Account
may be made at any time requested by the Director on a date specified in a
notice to the Corporation; provided, however, that, to the extent necessary for
such transfer to qualify for the exemption specified by Rule 16b-3, the date
such notice is received by the Corporation must be at least six months (or such
other period as Rule 16b-3 may specify) prior to the date specified for such
transfer and such transfer shall otherwise comply with any applicable
requirements for exemption under Rule 16b-3. No transfers may be made from the
Deferred Compensation Units Account to the Interest-Bearing Account.
SECTION 3.2--VESTING
At all times a Director shall have a 100% nonforfeitable right to the
amounts credited to his or her accounts.
4
<PAGE> 5
ARTICLE IV
BENEFITS
SECTION 4.1--AFTER STATED PERIOD OR UPON CESSATION OF SERVICE AS DIRECTOR
The balance in the Interest-Bearing Account, including adjustments that
continue to be made pursuant to Article Ill, shall be paid in cash by the
Corporation. and the number of shares of Common Stock equal to the number of
Deferred Compensation Units (rounded down to the nearest whole unit) (together,
the balance in the Interest-Bearing Account and the Deferred Compensation Units
are referred to as the "Benefit") shall be paid or distributed, as the case may
be, to the Director on the January 1 following the number of deferral years
elected by the Director (either five or ten years after the year for which
compensation is deferred) (for example if a five year deferral election were
made, deferral of 1993 compensation would first be distributed on January 1,
1999) or following the Director's cessation of service as Director for any
reason other than death (the date of which shall be referred to as the "Date of
Cessation"), in one lump sum or in five substantially equal annual payments
with respect to the balance in the Interest-Bearing Account and five
substantially equal numbers of shares of Common Stock with respect to Deferred
Compensation Units, as selected by a Director. Elections pursuant to this
Section shall be made at the same time and in the same manner as election to
defer is made pursuant to Section 2.1.
SECTION 4.2--UPON DEATH
In the event of a Director's death, the Corporation shall pay the Benefit,
or in the event of a Director's death after commencement of the payment of the
Benefit under Section 4.1, the remaining balance of the Benefit, in one lump
sum as soon as practicable following the death of the Director or to the
Director's Beneficiary.
SECTION 4.3--CHANGE IN CONTROL
In the event of (a) any transaction or series of transactions which within
a 12-month period constitute a change of management or control where (i) at
least 51 percent of the then outstanding common shares of the Corporation are
(for cash, property (including, without limitation, stock in any corporation),
or indebtedness, or any combination thereof) redeemed by the Corporation or
purchased by any person (s), firm (s) or entity(ies), or exchanged for shares
in any other corporation whether or not affiliated with the Corporation, or any
combination of such redemption, purchase or exchange, or (ii) at least 51
percent of the Corporation's assets are purchased by any person(s), firm(s) or
entity(ies) whether or not affiliated with the Corporation for cash, property
(including, without limitation, stock in any corporation) or indebtedness or
any combination thereof, or (iii) the Corporation is merged or consolidated
with another corporation regardless of whether the Corporation is the survivor
(except any such transaction solely for the purpose of changing the
Corporation's domicile or which does not change the ultimate beneficial
ownership of the equity interests in the Corporation), or (b) any substantial
equivalent of any
5
<PAGE> 6
such redemption, purchase, exchange, change, transaction or series of
transactions, merger or consolidation constituting such change of management or
control, the Corporation shall pay the Benefit to the Director in one lump sum.
In the transaction giving rise to such change of management or control was
approved in advance by a majority of the Board of Directors, payment of the
Benefit shall be made at the closing of such transaction. If the transaction
giving rise to the change of management or control was not so approved, payment
of the Benefit shall be made immediately upon the occurrence of the event or
transaction giving rise to the change of management or control.
ARTICLE V
AMENDMENT, SUSPENSION, OR TERMINATION
SECTION 5.1--AMENDMENT, SUSPENSION, OR TERMINATION
The Board of Directors may amend, suspend or terminate the Amended Plan,
in whole or in pan, at any time and from time to time by resolution adopted at
a regular or special meeting of the Board or Directors, and only in such
manner.
SECTION 5.2--NO REDUCTION
No amendment, suspension or termination shall operate to adversely affect
the Benefit otherwise available to a Director if the Director had ceased being
a Director as of the effective date of such amendment, suspension, or
termination. Any Benefit determined as of such date shall continue to be
adjusted as provided in Article III and payable as provided in Article IV.
ARTICLE VI
MISCELLANEOUS PROVISIONS
SECTION 6.1--BENEFICIARY
"Beneficiary" shall mean any one or more persons, corporation, trusts,
estates, or any combination thereof, last designated by a Director to receive
the Benefit provided under this Amended Plan. Any designation made hereunder
shall be revocable, shall be in writing either on a facsimile of the form
annexed hereto as Schedule I or in a written instrument containing the
information requested in Schedule 1, and shall be effective when delivered to
the Corporation at its principal office. If the Corporation, in its sole
discretion, determines that there is not a valid designation, the Beneficiary
shall be the executor or administrator of the Director's estate.
6
<PAGE> 7
SECTION 6.2--NONASSIGNABILITY
The interest of any person under this Amended Plan (other than the
Corporation) shall not be subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, attachment or encumbrance, or to the claims
of creditors of such person, and any attempt to effectuate any such actions
shall be void.
SECTION 6.3--INTEREST OF DIRECTOR
The Director and any Beneficiary shall, in respect to accounts and any
Benefit to be paid, shall be and remain simply a general unsecured creditor of
the Corporation in the same manner as any other creditor having a general claim
for compensation, if and when the Director's or Beneficiary's rights to receive
payments shall mature and become payable. At no time shall the Director be
deemed to have any right, title or interest, legal or equitable, in any asset
of the Corporation, including, but not limited to, any Common Stock or
investments which represent amounts credited to the Interest-Bearing Account.
SECTION 6.4--WITHHOLDING
The Corporation shall have the right to deduct or withhold from the Benefits
paid under this Amended Plan or otherwise all taxes which may be required to be
deducted or withheld under any provision of law (including, but not limited to,
Social Security payments, income tax withholding and any other deduction or
withholding required by law) now in effect or which may become effective any
time during the term of this Amended Plan.
SECTION 6.5--FUNDING
This Amended Plan shall not be a funded plan. The Corporation shall not
set aside any funds, or make any investments or set aside Common Stock, for the
specific purpose of making payments under the Amended Plan. All Benefits paid
under the Amended Plan shall be paid from the general assets of the
Corporation. Benefits payable under the Amended Plan may be reflected on the
accounting records of the Corporation, but such accounting shall not be
construed to create or require the creation of a trust, custodial or escrow
account.
SECTION 6.6--EXCLUSIVITY OF PLAN
This Amended Plan is intended solely for the purpose of deferring
compensation to the Directors to the mutual advantage of the parties. Nothing
contained in this Amended Plan shall in any way affect or interfere with the
right of a Director to participate in any other benefit plan in which he or she
may be entitled to participate.
SECTION 6.7--NO RIGHT TO CONTINUED SERVICE
This Amended Plan shall not confer any right to continued service on a Director.
7
<PAGE> 8
SECTION 6.8--NOTICE
Each notice and other communication to be given pursuant to this Amended
Plan shall be in writing and shall be deemed given only when (a) delivered by
hand, (b) transmitted by telex or telecopier (provided that a copy is sent at
approximately the same time by registered or certified mail, return receipt
requested), (c) received by the addressee, if sent by registered or certified
mail, return receipt requested, or by Express Mail, Federal Express or other
overnight delivery service, to the Corporation at its principal office and to a
Director at the last known address of such Director (or to such other address
or telecopier number as a party may specify by notice given to the other party
pursuant to this Section).
SECTION 6.9--CLAIMS PROCEDURES
If a Director or the Director's Beneficiary does not receive benefits to
which he or she believes he or she is entitled, such person may file a claim in
writing with the Corporation. The Corporation shall establish a claims
procedure under which:
(a) the Corporation shall be required to provide adequate notice in
writing to the Director or the Beneficiary whose claim for benefits has
been denied, setting forth specific reasons for such denial, written in a
manner calculated to be understood by the Director or the Beneficiary,
and
(b) the Corporation shall afford a reasonable opportunity to the
Director or the Beneficiary whose claim for Benefits has been denied for
a full and fair review by the Corporation of the decision denying the
claim.
SECTION 6.10--ILLINOIS LAW CONTROLLING
This Amended Plan shall be construed in accordance with the laws of the
State of Illinois.
SECTION 6.11--BINDING ON SUCCESSORS
This Amended Plan shall be binding upon the Directors and the Corporation,
their heirs, successors, legal representatives and assigns.
8
<PAGE> 9
* * * *
I hereby certify that the foregoing Plan was duly approved by the Board of
Directors of IDEX Corporation effective November 20, 1997.
Executed on this 16th day of December, 1997.
/s/ Wayne P. Sayatovic
Secretary
9
<PAGE> 10
Exhibit A
IDEX CORPORATION
SECOND AMENDED AND RESTATED DIRECTORS DEFERRED COMPENSATION PLAN
ELECTION FORM
I hereby elect to defer all of my compensation earned after December 31 of this
year for serving as Director of IDEX Corporation (the "Corporation"). This
election is irrevocable and shall remain in effect for the calendar year
beginning with the next January 1. My election shall remain in effect for each
subsequent calendar year until it is revoked by me in a writing delivered to
the Corporation, in accordance with the terms of the Second Amended and
Restated Directors Deferred Compensation Plan (the "Plan"), prior to the
beginning of such calendar year. Once revoked, there will be no deferral of my
compensation until I make a new election in accordance with the terms of the
Plan.
With respect to the compensation deferred pursuant to this election, I
hereby elect to have such deferral credited as follows [check one]:
<TABLE>
<S><C>
______ interest-Bearing Account, or
______ Deferred Compensation Units Account; and
I further elect to receive distribution of the Deferred Amount in [check one]:
______ five annual installments pursuant to Section 4.1 of the Plan, or
______ a single lump sum pursuant to Section 4.1 of the Plan;
beginning on the January 1 following [check one]:
______ my cessation of service as a Director of IDEX Corporation,
______ five years after the year for which compensation is deferred, or
______ ten years after the year for which compensation is deferred.
</TABLE>
I understand that in the event that my directorship with IDEX Corporation
terminates for any reason other than death, payment of the balance of my
Accounts shall be accelerated beginning on the January 1 following my cessation
of service as a director and I shall receive such payment or the distribution
of such payment will commence as elected above. I understand that in the event
of my death, payment of the entire balance of my Accounts shall be made to my
beneficiary(ies) as soon as practicable following my death. I also understand
that in the event of a change of control, payment of the entire balance of my
Accounts in one lump sum will be made immediately upon the occurrence of the
event giving rise to the change of control.
I acknowledge that I have received a copy of the Plan, and I understand
that all of my deferred Director's compensation and my Deferred Compensation
Accounts are subject to the terms and conditions of the Corporation's Directors
Deferred Compensation Plan, including that such Accounts are unfunded and my
right to such compensation is subject to the claims of general creditors.
-----------------------------------
Director's Name
Dated:
------------------- -----------------------------------
Director's Signature
A-1
<PAGE> 11
Exhibit B
IDEX CORPORATION
SECOND AMENDED AND RESTATED DIRECTORS
DEFERRED COMPENSATION PLAN
INVESTMENT CHANGE FORM
**********
INVESTMENT CHANGE
I hereby elect to change the vehicle used for the investment of Deferred
Amounts under the Plan from Interest-Bearing Account to Deferred
Compensation Units Account for the following Plan Year(s): ______________.
I understand that the number of Deferred Compensation Units to be credited
to the Deferred Compensation Units Account as a result of this investment
change election will be based upon the value of IDEX Corporation's Common Stock
on the fourth business day following the date of release of the quarterly or
annual summary statement of sales and earnings preceding this election, as
specified in Section 3.1(c) of the Second Amended and Restated Directors
Deferred Compensation Plan.
**********
- ---------------------------- ------------------------------
Name Social Security Number
- ---------------------------- ------------------------------
Signature Date
B-1
<PAGE> 12
EXHIBIT C
IDEX CORPORATION
SECOND AMENDED AND RESTATED DIRECTORS
DEFERRED COMPENSATION PLAN
BENEFICIARY DESIGNATION FORM
Name [ ] Original
---------------------------------------
Social Security Number [ ] Change
----------------------
Instructions: This form is used to designate a beneficiary under the Second
Amended and Restated IDEX Corporation Directors Deferred Compensation Plan.
The percentages indicated must total 100%. If you desire, you may indicate a
primary beneficiary(ies) and a contingent beneficiary(ies) (the person who will
receive the benefit if your primary beneficiary does not survive you).
I hereby direct that any benefits which may become payable under the Second
Amended and Restated IDEX Corporation Directors Deferred Compensation Plan on
my death be paid as I have indicated below:
Name of Beneficiary* Relationship Address Percentage
- -------------------- ------- ------------ -------
- -------------------- ------- ------------ -------
- -------------------- ------- ------------ -------
- -------------------- ------- ------------ -------
* See reverse side for alternative designations
I understand that if I do not complete this form or if my beneficiary does not
survive me, the benefits will be paid to my estate.
SIGN HERE:
- --------------------------- ---------------------
Signature Date
C-1
<PAGE> 13
OTHER TYPES OF BENEFICIARY DESIGNATIONS
TYPE OF BENEFICIARY LANGUAGE TO BE USED
1. One Beneficiary and Dorothy Smith, Wife, if she survives
per stirpes provision me; otherwise, the issue of my
for unnamed children marriage to said Wife who survives me,
and their children. per stirpes. (This provides that
Children shall take equally but that
Children of a deceased Child shall
take equally the share their parent
would have received if living.)
2. One Beneficiary and Dorothy Smith, Wife, if she survives
Unnamed Children. me; otherwise in equal shares to such
of the Children born of my marriage to
said Wife as survive me.
3. Two Beneficiaries in Three-eighths (3/8) to Peter Smith,
Unequal Portions. Father, and five-eighths (5/8) to Joan
Smith, Mother, if both survive me;
otherwise all to such one of them as
survive me.
4. Trustee (see note (Name and Complete Address) Trustee,
below) under a trust agreement with me
dated ________, or to the successor
in said Trust.
5. Common Disaster Dorothy Smith, if living on the tenth
(10) day after my death; otherwise, in
equal shares to such of the Children
born of my marriage to said Wife as
survive me.
6. Director's Estate Executor or Administrator of my Estate.
NOTE: Enter the address for each beneficiary.
If a beneficiary is a married women, her given name must be used; for
example: "Mary A. Doe" and not "Mrs. John C. Doe".
If a beneficiary is not related to the Director, use the term "no
relation".
Under No. 1 through No. 3, the phrase "otherwise the executor or
administrator of my estate" may be added to the designation if desired by
the Director.
No. 4 should not be used unless there is an executed Trust Agreement in
existence.
C-2
<PAGE> 14
EXHIBIT D
IDEX CORPORATION
SECOND AMENDED AND RESTATED DIRECTORS DEFERRED
COMPENSATION PLAN
DEFERRAL DISTRIBUTION DATE ELECTION CHANGE FORM
CHANGE IN DEFERRAL DISTRIBUTION DATE ELECTION
I hereby elect to change my distribution date for my Deferred Amount (for
compensation originally deferred from the 19__ calendar year) from January 1,
_________ (the "Current Distribution Date") to. January 1 following [check
one]:
______ my cessation of service as a Director of IDEX Corporation.
______ five years after the Current Distribution Date.
______ ten years after the Current Distribution Date.
I understand that this new deferral election may not be made earlier than
the later of my Current Distribution Date or the first day of the second
deferral year following the year in which the change in the deferral is made.
I also understand that I may not make a new deferral election during the four
calendar years following the year in which I have made my last change in the
deferral distribution date.
--------------------------------
Director's Name
Dated:
--------------------
--------------------------------
Director's Signature
D-1
<PAGE> 1
IDEX Corporation manufactures an extensive array of proprietary, engineered
industrial products sold to customers in a variety of industries around the
globe. Our businesses have leading positions in their niche markets, and we have
a history of achieving high profit margins.
Among the factors in the success equation at IDEX are emphasis on the worth
of our people, fleetfootedness, ethical business conduct, continuing new product
development, superior customer service, top-quality products, market share
growth, international expansion, and above-average shareholder returns. The IDEX
acronym stands for -- and the essence of IDEX is -- Innovation, Diversity, and
EXcellence. IDEX shares are traded on the New York Stock Exchange and the
Chicago Stock Exchange under the symbol IEX.
Total return to IDEX shareholders since going public in June 1989 has been 400%
In the same period the S&P 500 Index has increased 28%.
<TABLE>
<CAPTION>
<S> <C>
Shareholders' Letter .................................................... 2
Business Groups ......................................................... 4
Business Profile ........................................................ 6
Market Leadership ....................................................... 8
Product and Process
Innovation .............................................................. 10
Acquisition Strategy .................................................... 12
Historical Data ......................................................... 14
Ten Year Growth
History Highlights ...................................................... 16
Management's Discussion and Analysis .................................... 17
Financial Statements .................................................... 22
Business Units .......................................................... 35
Corporate Officers
and Directors ........................................................... 36
Shareholder Information ................................................. 37
</TABLE>
<PAGE> 2
Financial
HIGHLIGHTS
(dollars and share amounts in thousands except per share data)
<TABLE>
<CAPTION>
Years ended December 31, 1997 Change 1996 Change 1995
- --------------------------------------------------------------------------------------------------
RESULTS OF
OPERATIONS
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales $552,163 16% $474,699 20% $395,480
==================================================================================================
Operating income 103,595 18 87,616 17 74,769
==================================================================================================
Interest expense 18,398 5 17,476 22 14,301
==================================================================================================
Income from
continuing operations 53,475 20 44,424 13 39,147
==================================================================================================
Net income 58,626 17 50,198 11 45,325
Financial Position
Working capital $119,466 10% $108,313 5% $103,091
==================================================================================================
Total assets 599,193 5 569,745 27 450,077
==================================================================================================
Long-term debt 258,417 (5) 271,709 32 206,184
==================================================================================================
Shareholders' equity 238,671 22 195,509 30 150,945
Performance
Measures
Percent of net sales:
Operating income 18.8% 18.5% 18.9%
==================================================================================================
Income from
continuing operations 9.7 9.4 9.9
==================================================================================================
Net income return on
average assets 10.0 9.8 11.2
==================================================================================================
Debt as a percent of
capitalization 52.0 58.2 57.7
==================================================================================================
Net income return on
average shareholders'
equity 27.0 29.0 33.9
Per Share Data-
Diluted
Income from
continuing operations $ 1.78 19% $ 1.49 13% $ 1.32
==================================================================================================
Net income 1.95 15 1.69 10 1.53
==================================================================================================
Cash dividends paid .480 12 .427 14 .373
==================================================================================================
Shareholders' equity 8.16 21 6.76 29 5.26
Other Data
Employees 3,326 8% 3,093 15% 2,680
==================================================================================================
Shareholders of record 1,268 (3) 1,305 (4) 1,359
==================================================================================================
Weighted average
shares outstanding 29,999 1 29,779 1 29,609
</TABLE>
* All share and per share data throughout this report have been restated to
reflect the three-for-two stock splits effected in the form of 50% stock
dividends in January 1995 and 1997.
* The information presented above for continuing operations excludes the
Strippit and Vibratech businesses, which are classified as discontinued
operations.
Sales have grown at a 21% compound annual rate since 1992.
Earnings per share have increased at a 22% compound annual rate in the last five
years.
1
<PAGE> 3
Shareholders'
LETTER
To Our Shareholders:
As we conclude our tenth year of operation, we are pleased to report that
IDEX again set new records in sales, net income, and earnings per share in 1997.
With this achievement, we have an unbroken string of improvements in net income
before extraordinary items since the company was formed in January 1988.
While financial measures are usually viewed as the primary indicators of
success, IDEX also accomplished numerous other objectives in 1997 that aren't
apparent in the sales and profit figures. For example, we completed two
acquisitions and made substantial progress toward buying a third company during
the year; we strengthened our management team; and we positioned the company for
further growth with investments in equipment, management information systems,
and new product development. We also reached the difficult decision to consider
the sale of two business units -- Strippit and Vibratech -- which no longer fit
the IDEX profile. This decision has resulted in a restatement of our
financial data to exclude these two businesses from the continuing operations
results, and a change in our segment reporting. Our new segments are Pump
Products and Engineered Equipment.
In our opinion, IDEX is comprised of an exceptional group of people that
performs admirably, thereby benefiting our customers and our shareholders.
Recognizing the company's success and its prospects, the Board of Directors in
December again increased the dividend on our common shares, this time by 12.5%,
from 12 cents per share per quarter to 13-1/2 cents, effective with the January
30, 1998 dividend payment.
Continuing Operations Sales Up 16%; Net Income Up 20%
Net sales from continuing operations were a record $552 million in 1997, and
increased by 16% over the $475 million of 1996. Net income from continuing
operations of $53.5 million was also at a new high, and improved by 20% over the
$44.4 million reported in 1996, while earnings per share from continuing
operations at $1.78 were up 29 cents from the $1.49 earned last year. Including
Strippit and Vibratech, 1997 sales totaled $636 million (up 13% from 1996), net
income was $58.6 million (up 17%), and earnings per share reached $1.95 (up 26
cents from $1.69).
Even though the strong dollar and turmoil in Asian markets hampered our
ability to reach international growth targets, sales in our continuing base
businesses were up by 3%. Inclusion of results of acquired companies provided
14% of our revenue growth, while foreign currency had a negative 1% effect.
Sales from continuing operations to customers outside of the United States
represented 44% of total sales, up slightly from 43% in 1996. Our operating
profit margins, which have always been well above average for an industrial
company, amounted to 18.8% in 1997 as compared with 18.5% last year, even though
margins in recently acquired companies are not up to those of our base
businesses. Yet margins in all of the acquired businesses have improved since
they were brought into the IDEX family of companies. Those improvements stem
from financial discipline and sharing best practices from business to business.
Two Acquisitions Completed in 1997; A Third in January of 1998
During the year, we completed two acquisitions and we made significant
progress in reaching an agreement for a third. Each of the acquisitions meets
all of our rigid criteria, fitting the IDEX profile very well.
In April, we acquired Blagdon Pump, a United Kingdom-based manufacturer of
air-operated diaphragm pumps with particular strength in Europe and the Far
East. Blagdon's sales are in the $8 million range, and we paid approximately
$12 million for this business. We will continue to market its products under the
Blagdon name, but it is being operated as part of our Warren Rupp business unit.
In December, we acquired Knight Equipment, a California-based manufacturer
of dispensing equipment, pumps and controls for the commercial laundry and
dishwashing markets, as well as for industrial maintenance and chemical
injection applications. Knight's annual sales are approximately $25 million, and
the purchase price of this business was approximately $38 million. Knight has
operations in California, Georgia, Australia, Canada, England, and the
Netherlands. Its products are marketed under the Knight name, and it is being
operated as a part of our Pulsafeeder business unit.
On January 7, 1998, we entered into an agreement to acquire Gast
Manufacturing of Benton Harbor, Michigan, and the transaction closed
2
<PAGE> 4
on January 21, 1998. Gast is a leading producer of air-moving products
including vacuum pumps, air motors, vacuum generators, regenerative blowers and
fractional horsepower compressors. It also has operations in the United Kingdom.
Gast has sales of approximately $105 million, and the purchase price of the
business was about $120 million. Gast will be in our Pump Products Group.
Decision to Consider Strategic Alternatives for Two Business Units
While it is always difficult to consider selling good businesses, we reached
a decision to do just that in December. Our Strippit and Vibratech businesses
were among the six companies acquired by IDEX in 1988, and were a part of the
predecessor company for many years. Unfortunately, they no longer fit the IDEX
profile well because they differ from our other businesses in product
technology, methods of distribution and markets served, and they tend to be more
sensitive to business cycles. It is expected that proceeds from the probable
sale of these businesses will enable us to further develop the company in areas
of principal focus.
Management Development
Recognizing the contributions of the individuals involved and to position the
company for future growth, several new officer appointments were made in 1997.
Frank J. Hansen, who has been our Senior Vice President - Operations since 1994,
was named President and Chief Operating Officer and a member of the Board of
Directors as of January 1, 1998. He joined our Viking Pump business unit in
1975, and became President of Viking in 1989. Mr. Hansen assumed the President
title from Donald N. Boyce, who remains Chairman and Chief Executive Officer.
Other officer appointments were:
David T. Windmuller, who most recently served as President of our Fluid
Management unit and previously was President of Viking Pump, was named Vice
President - Operations as of January 1, 1998.
James R. Fluharty was named Vice President - Corporate Marketing in May 1997.
He was previously President of our Micropump business unit and Executive Vice
President of Viking Pump, and now also serves as President of our Fluid
Management business unit.
Rodney L. Usher was named a Vice President - Group Executive in June 1997. He
has served as President of our Pulsafeeder business unit since 1994 (a position
he still holds), and was President of our Warren Rupp unit from 1987 to 1994.
Dennis L. Metcalf, previously Corporate Director of Business Development
since 1991, was named Vice President - Corporate Development in May 1997.
Earlier, he was with our Band-It and Viking Pump business units.
Internal Development
Again in 1997, about one-fourth of sales resulted from products redesigned or
introduced within the preceding four years. Among the items introduced last year
were a new line of state-of-the-art composite pumps by Warren Rupp; a
mechanically actuated diaphragm pump and peristaltic metering pumps by
Pulsafeeder; a new stainless steel industrial pump from Corken; a line of
miniature dual piston pumps at Micropump; an injection-type lubrication system
at Lubriquip; new banding devices and installation tools at Band-It; and several
new dispenser models at Fluid Management.
We believe we sustained our hefty market positions within the U.S., and we
expanded our international presence to garner market share in other regions of
the world.
The IDEX management team believes that we must always strive to find a better
way, and change is a constant in our businesses. We aim to be the best in
product design, quality and service, and we usually command a slight price
premium for our products.
10 Years of Progress
Since the company was formed 10 years ago, including the results of
discontinued operations, our total sales have grown at a 14% compound annual
growth rate and our earnings per share have grown at a compound annual rate of
21%. Similarly, in the past five years our continuing operations sales have
grown at a 21% compound annual rate, and earnings per share have grown at a 22%
compound annual rate. We have made 13 acquisitions in the past 10 years.
Recently acquired companies are being integrated very well, and earlier
acquisitions have been successfully integrated and are contributing nicely to
our bottom line.
Had one invested $100 in IDEX stock at the time of our initial public
offering in June 1989, by December 31, 1997, that investment would be worth
$569. The same $100 investment in the S&P 500 would have been worth $381. While
IDEX is still a mid-sized company, it is one with a well above average history
of performance.
The Outlook For Tomorrow
IDEX is a company whose very name embodies its principles -- Innovation,
Diversity, and EXcellence. We have the desire to improve our already excellent
operations even further, and we will use our strong cash flow to buy more good
companies and make them even better by sharing ideas that work and avoiding
those that don't. We operate in a highly ethical manner and don't abide by
"iffy" practices. We stress quality, and we have leading market positions with
healthy operating margins. We serve a wide range of customers in a diversity of
markets throughout the world.
These characteristics have propelled our growth thus far, and we're convinced
they will result in even more growth tomorrow. We believe 1998 will be another
very good year for IDEX, and that the years beyond are filled with opportunity.
We thank our shareholders, our customers, our Board, our employees, and our
suppliers for their support, and we trust that all of our constituents share in
our optimism for the future of IDEX.
From left to right:
Donald N. Boyce,
Frank J. Hansen
Donald N. Boyce
Chairman and Chief Executive Officer
Frank J. Hansen
President and Chief Operating Officer
January 20, 1998
3
<PAGE> 5
Pump Products
GROUP
CORKEN
GAST MANUFACTURING
MICROPUMP
PULSAFEEDER
VIKING PUMP
WARREN RUPP
Johnson (Viking) SQ super clean rotary lobe pump
IDEX's Pump Products Group is comprised of six business units that design,
produce and distribute a wide range of engineered industrial pumps and related
controls for process applications such as chemicals, foods, paints, inks,
lubricants and fuels, as well as for water treatment, medical applications, and
production operations. These pumps are special purpose devices such as rotary
gear, vane or lobe pumps, diaphragm and peristaltic metering pumps, miniature
magnetically and electromagnetically driven pumps, air-operated double-
diaphragm pumps, and vacuum pumps.
The Pump Products Group accounted for 48% of sales and 54% of profits in
1997. With the acquisition of Gast Manufacturing Corporation in January 1998,
the contribution of the Pump Products Group to overall results is expected to
increase in the year ahead. Sales to customers outside the U.S. represented 36%
of the Group's shipments.
Warren Rupp SandPIPER(R) air-operated double-diaphragm pump
An LP gas distribution center with Corken pumps and compressors
SALES
[ ] 48% Pump Products
[ ] 52% Engineered Equipment
4
<PAGE> 6
Engineered Equipment
GROUP
BAND-IT
FLUID MANAGEMENT
HALE PRODUCTS
LUBRIQUIP
PROFITS
Band-It smooth inside diameter clamps and installation tools
[ ] 54% Pump Products
[ ] 46% Engineered Equipment
IDEX's Engineered Equipment Group includes four businesses that design,
produce and distribute proprietary equipment that may combine pumps or other
devices into products for industrial, commercial and safety applications. These
products and devices are used in a variety of industries, including paints and
coatings, fire and rescue, transportation equipment and non-electrical
machinery.
The Engineered Equipment Group accounted for 52% of sales and 46% of profits
in 1997, and sales to customers outside the U.S. represented 52% of the Group's
shipments.
Lubriquip's Trabon(R) Lubrication System Pump Package
Colorant dispensing mechanism in a Fluid Management machine
5
<PAGE> 7
Business
PROFILE
<TABLE>
<CAPTION>
CORKEN GAST MICROPUMP
MANUFACTURING
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Product Small horsepower compressors, vane Vacuum pumps, air motors, vacuum Small, precision-engineered,
offering and turbine pumps, and valves. generators, regenerative blowers and magnetically and electro-
fractional horsepower compressors. magnetically driven centrifugal
and rotary gear pumps.
- -----------------------------------------------------------------------------------------------------------------------------------
Brand Corken(R), Coro-Flo(R), Gast(R), Regenair(R), Micropump(R), Delta
names Coro-Vane(R) Smart-Air(R),Roc-R(R)
- -----------------------------------------------------------------------------------------------------------------------------------
Markets Liquefied petroleum gas (LPG), Environmental, medical, food Chemical processing, refining,
served oil and gas, petrochemical, processing, business machines laboratory, medical, printing,
environmental, health care and and office equipment,graphic arts, electronics, pulp and paper,
general industrial industrial manufacturing, and water treatment and textiles.
paint mixing machinery.
- -----------------------------------------------------------------------------------------------------------------------------------
Product Products used for transfer of Air motors for industrial equipment Pumps and fluid management systems
applications LPG, alternative fuels and applications, and vacuum pumps and for low-flow abrasive and
other gases and liquids. fractional horsepower compressors for corrosive applications such
specialty pneumatic applications that as inks, dyes, solvents,
require a quiet, clean source of chemicals, petrochemicals,
moderate vacuum or pressure. acids and chlorides.
- -----------------------------------------------------------------------------------------------------------------------------------
Competitive Market leader for pumps and A leading manufacturer of air-moving Market leader in corrosion
strengths compressors used in LPG distribution products with an estimated one-third U.S. resistant, magnetically and
facilities with an estimated 50% market share in air motors, low and medium electro-magnetically driven
U.S. market share. range vacuum pumps, vacuum generators, miniature pump technology with an
regenerative blowers and fractional estimated 40% U.S. market share
horsepower compressors.
- -----------------------------------------------------------------------------------------------------------------------------------
International 45% of sales outside the U.S. 20% of sales outside the U.S. 45% of sales outside the U.S.
sales
- -----------------------------------------------------------------------------------------------------------------------------------
Examples New stainless steel vane pump Extended line of miniature diaphragm New patented dual piston pump
of recently for industrial applications, vacuum pumps and fractional horsepower for clinical and analytical
introduced transport LPG pump, and a new compressors for instrumentation and instrumentation, and a new rotary
products oil-free compressor for toxic gases. medical applications. gear pump for industrial chemical
dispensing.
- -----------------------------------------------------------------------------------------------------------------------------------
Manufacturing Oklahoma City, Oklahoma Benton Harbor, Michigan Vancouver, Washington
locations Bridgman, Michigan St. Neots, England
High Wycombe, England
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE> 8
<TABLE>
<CAPTION>
PULSAFEEDER VIKING PUMP WARREN RUPP
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Product Metering pumps, special purpose Positive displacement rotary Double-diaphragm pumps, both
offering rotary pumps, peristaltic pumps, gear, lobe and metering pumps air-operated and motor-driven,
electronic controls and dispensing and related electronic controls. and accessories.
equipment.
- -----------------------------------------------------------------------------------------------------------------------------------
Brand Pulsafeeder(R), Knight(R), Viking Pump(R), Vican(TM), Warren Rupp(R), SandPIPER(R),
names PULSAR(R), PULSAtron(R), Duralobe(R), Viking Mag Drive(R), Blagdon(R), Marathon(R),
PULSAtrol(R), Chem-Tech, Eco(R), Johnson Classic(R), PoweRupp(R), RuppTech(R)
Isochem(R), Mec-O-Matic(R) Viking Flow Manager(R),
VI-CORR(R), Johnson On-Line(R)
- -----------------------------------------------------------------------------------------------------------------------------------
Markets Water and wastewater treatment, Chemical processing, petroleum, Chemical, paint, food processing,
served chemical and hydrocarbon processing, food processing, pulp and paper, electronics, construction,
swimming pool, industrial laundry, pharmaceutical, biotechnology, paint industrial maintenance, utilities,
commercial dishwashing and industrial and ink, and power generation. mining and OEM.
maintenance.
- -----------------------------------------------------------------------------------------------------------------------------------
Product Pumps, controls and dispensing Pumps for materials ranging from Pumps for abrasive and semisolid
applications equipment for introducing precise anhydrous ammonia to peanut butter, materials as well as for
amounts of fluids into processes from thin to highly viscous liquids. applications where product
to manage chemical composition. degradation is a concern.
- -----------------------------------------------------------------------------------------------------------------------------------
Competitive A leading manufacturer of metering Largest internal gear pump producer A leading double-diaphragm pump
strengths pumps, controls and dispensing with an estimated 35% share of U.S. producer offering products in
equipment used in water treatment, rotary gear pump market. Also a several materials including
process applications and warewash producer of external gear and rotary composites, stainless steel and
institutional applications. Estimated lobe pumps. cast iron. Estimated one-third
40% U.S. market share. U.S. market share.
- -----------------------------------------------------------------------------------------------------------------------------------
International 25% of sales outside the U.S. 35% of sales outside the U.S. 50% of sales outside the U.S.
sales
- -----------------------------------------------------------------------------------------------------------------------------------
Examples New line of PULSAtron(R) New enhanced non-contact double New line of high efficiency
of recently mechanically actuated diaphragm seal design utilizing gas barrier composite air-operated double-
introduced metering pumps and peristaltic technology, and self-draining pump diaphragm pumps for highly
products metering pumps. to minimize product contamination corrosive applications, and
in blending applications. expanded line of thermoplastic
diaphragms for SandPIPER(R) pumps.
- -----------------------------------------------------------------------------------------------------------------------------------
Manufacturing Rochester, New York Cedar Falls, Iowa Mansfield, Ohio
locations Lake Forest, California Windsor, Ontario, Canada Newcastle, England
Punta Gorda, Florida Eastbourne, England Shannon, Ireland
Covington, Georgia Shannon, Ireland
Enschede, The Netherlands
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 9
<TABLE>
<CAPTION>
BAND-IT FLUID HALE PRODUCTS
MANAGEMENT
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Product Stainless steel bands, buckles, Precision-engineered equipment for Truck-mounted and portable fire
offering preformed clamps, cable ties, dispensing, metering and mixing paints, pumps, and rescue tool systems.
installation tools, and modular coatings, colorants, inks, dyes,
sign-mounting systems. and other liquids and pastes.
- -----------------------------------------------------------------------------------------------------------------------------------
Brand Band-It(R), Signfix(R), Tespa(R) Fluid Management(R), Harbil(R), Hale(R), Godiva(R), LUKAS(R),
names Miller(R), Skandex(R), Blendorama(R), Hurst(R), Jaws of Life(R),
Accutinter(R), Eurotinter, Accuview FoamMaster(R)
- -----------------------------------------------------------------------------------------------------------------------------------
Markets Transportation equipment, oil Retail and commercial paint stores, Public and private fire and
served and gas, industrial maintenance, home centers, printers, and paint rescue applications.
electronics, electrical, communi- and ink manufacturers.
cations,and traffic and commercial
signs.
- -----------------------------------------------------------------------------------------------------------------------------------
Product Clamps and bands for securing hoses, Fluid management systems for precise Pumps for water or foam to
applications signs, signals, pipes, poles, blending of base paint, tints and extinguish fires, and rescue
electrical lines and numerous other colorants, and inks and dyes in a equipment for extricating
applications for industrial and broad range of industries from retail accident victims.
"hold-together" commercial use. point-of-sale equipment to manufacturing
systems.
- -----------------------------------------------------------------------------------------------------------------------------------
Competitive World's leading producer of Industry innovator and worldwide market World's leading manufacturer of
strengths high-quality stainless steel bands, leader in automatic and manually truck-mounted fire pumps and
buckles and clamping products operated dispensing, metering and rescue systems with an estimated
with an estimated 50% U.S. mixing equipment. Estimated 50% worldwide market share in excess
market share. worldwide market share. of 50%
- -----------------------------------------------------------------------------------------------------------------------------------
International 60% of sales outside the U.S. 55% of sales outside the U.S. 55% of sales outside the U.S.
sales
- -----------------------------------------------------------------------------------------------------------------------------------
Examples New industrial application tools Newly designed line of volumetric and New compressed-air foam system,
of recently and smooth band self-locking ties. gravimetric dispensers for retail and special purpose midship fire
introduced industrial applications. Comprehensive pumps, and super silent LUKAS(R)
products software for retail paint outlets and rescue tool power packs.
printing facilities.
- -----------------------------------------------------------------------------------------------------------------------------------
Manufacturing Denver, Colorado Wheeling, Illinois Conshohocken, Pennsylvania
locations Bristol, England Sassenheim, The Netherland Shelby, North Carolina
Staveley, England Unanderra, Australia St. Joseph, Tennessee
Tipton, England Warwick, England
Singapore Erlangen, Germany
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
LUBRIQUIP
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Product Centralized oil and grease lubrication
offering systems, force-feed lubricators,
metering devices, related electronic
controls and accessories.
- --------------------------------------------------------------------------------------------------------------------------------
Brand Trabon(R), Manzel(R), Kipp(R),
names OPCO(R), Grease Jockey(R),
TrackMaster(R)
- --------------------------------------------------------------------------------------------------------------------------------
Markets Machine tools, transfer machines,
served conveyors, packaging machinery, transportation
equipment, construction machinery,
and food processing and paper machinery.
- --------------------------------------------------------------------------------------------------------------------------------
Product Lubrication devices to prolong equipment
applications life, reduce maintenance costs and
increase productivity.
- --------------------------------------------------------------------------------------------------------------------------------
Competitive Market leader in centralized lubrication
strengths systems serving a broad range of industries.
Estimated one-third U.S. market
share.
- --------------------------------------------------------------------------------------------------------------------------------
International 20% of sales outside the U.S.
sales
- --------------------------------------------------------------------------------------------------------------------------------
Examples New European CE compatible injection-type
of recently lubrication system, innovative
introduced microprocessor-based electronic monitors
products and controllers for machine tool and
process applications.
- --------------------------------------------------------------------------------------------------------------------------------
Manufacturing Warrensville Heights, Ohio
locations McKees Rocks, Pennsylvania
Madison, Wisconsin
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE> 10
Pump Products Group
CORKEN
GAST MANUFACTURING
MICROPUMP
PULSAFEEDER
VIKING PUMP
WARREN RUPP
Engineered Equipment Group
BAND-IT
FLUID MANAGEMENT
HALE PRODUCTS
LUBRIQUIP
<PAGE> 11
Market
LEADERSHIP
IDEX enjoys strong leadership positions in the markets it serves. Each of our
business units holds either the number-one market position or has a sizable
share as the number-two producer in its niche. On a weighted average basis, we
enjoy an estimated 40% share of the markets we serve.
IDEX achieves these healthy positions by being customer-driven, responding
quickly to users' needs with first-quality products of the latest design. We are
a fleetfooted organization - nimble and deft - with strong controls, a sense of
immediacy, and a will to eliminate unnecessary red tape that slows
responsiveness
A market focus pervades our organization. We want to offer the best overall
value in the market. This does not mean the lowest price - but the best
proposition for customers considering such factors as service, durability,
performance, selection, ease of use, features, productivity, safety, maintenance
and long-term costs. As market leaders, we have a rigorous program of market,
product and process development, leaving no doubt with our customers that we
offer the best value.
Viking magnetically driven rotary gear pump
MARKETS SERVED
[ ] Paints & Coatings
[ ] Non-Electrical Machinery
[ ] Chemical Processing
[ ] Fire & Rescue
[ ] Water Treatment
[ ] Medical Equipment
[ ] Transportation Equipment
[ ] Oil & Refining
[ ] All Other
8
<PAGE> 12
MARKET SHARE LEADERSHIP
[ ] Estimated 40% weighted
average share of markets served
Micropump magnetically driven gear pump
Most of our products are sold through well-established industrial
distribution networks with technological competence. Where unit volume
requirements are higher, we also sell directly to original equipment
manufacturers. Our distributors receive extensive training and support, and are
our partners in assisting thousands of end-users worldwide with product
selection and installation.
Our market development efforts have taken us into more than 100 countries
around the world. International sales have grown from 24% of sales 10 years ago
to 44% today, and we expect the pace of international expansion to continue. We
share application ideas with agents, distributors and customers, thereby
widening the base of industries and customers served. No single industry and no
single customer accounts for a major part of our sales.
IDEX's success hinges on the talent and performance of our people. We have an
outstanding team of dedicated employees who follow a strict code of ethics. We
want to be a company that people are proud to buy from, sell to, work for, and
invest in. By following ethical practices; striving for operational superiority;
providing superior quality, state-of-the-art products; selling our wide product
range to a broad spectrum of customers and industries; and continuously working
with end-users and customers to develop new products, we believe IDEX
exemplifies its acronym -- Innovation, Diversity, and Excellence.
INTERNATIONAL SALES
[ ] 56% Domestic
[ ] 26% Europe
[ ] 8% Far East & Oceania
[ ] 10% Rest of World
Fluid Management automatic paint colorant dispensing equipment
9
<PAGE> 13
Product and Process
INNOVATION
Innovation is the word represented by the first letter of the IDEX name, and
it is a key ingredient in our success equation. We support and foster processes
that lead to product improvements and new products for our customers. For a
number of years, about one-quarter of our sales have come from products that
have been redesigned or newly introduced within the preceding four years.
One in 10 people at IDEX is directly engaged in product or process technology
development. However, it is every employee's job to contribute to new product
development, so all business disciplines participate in the effort.
Multidisciplinary teams work with customers, specifying engineers, end-users,
distributors and focus groups to ensure that our products are state-of-the-art,
incorporating the latest proven technology, and providing the best overall value
to the customer.
Pulsafeeder's new PULSAR(R) series metering pump
New LUKAS(R) rescue tool system
New Warren Rupp SandPIPER(R)
composite pump
10
<PAGE> 14
While most of our products are mechanical in nature, they often include
electronic control devices, so our engineering processes include the spectrum of
technical specialties from mechanical, materials, hydraulics and pneumatics to
electrical, electronic and software development.
Among the many new products introduced by IDEX business units in 1997 were:
* A new line of high efficiency composite pumps at Warren Rupp,
* A mechanically actuated diaphragm pump and peristaltic metering pumps by
Pulsafeeder,
* A new stainless steel vane pump for industrial applications at Corken,
* A new miniature dual piston pump line at Micropump,
* An injection-type lubrication system at Lubriquip,
* New banding devices and installation tools at Band-It, and
* Several new paint pigment dispenser models at Fluid Management.
Delivering top-quality products has always been a cornerstone of business
practice at IDEX. However, in recent years, the internationally recognized ISO
9000 quality system has become the benchmark for quality. We are pleased to say
that all of our manufacturing locations (except recently acquired Knight) are
certified under the ISO 9000 standards, reinforcing our long-standing
manufacturing integrity, and placing us at the forefront with customers who
rightfully demand first-class products.
We have a persistent urge to create new products within IDEX - to leapfrog
our own technology - and to stay well ahead of the competition. Our fleet-footed
approach helps us bring new products with proven reliability to the market at a
rapid pace. IDEX's customers deserve the best and the latest of new product
technology.
Micropump's new miniature dual piston pump
NEW PRODUCT SALES
From left to right: David T. Windmuller, Vice President - Operations; Vice
President - Group Executives: Rodney L. Usher, Wade H. Roberts, Jr., P. Peter
Merkel, Jr
[ ] One-quarter of sales
come from new products
11
<PAGE> 15
Acquisition
STRATEGY
IDEX is comprised of companies that manufacture proprietary products with
leading positions in niche markets, and those are the type of companies we seek
to acquire. Our carefully crafted and rigidly applied acquisition criteria are
designed to promote growth in shareholder value rather than growth for growth's
sake. We acquire good companies and make them better, rather than trying to make
sick companies well.
Since 1989, we have completed 12 strategic acquisitions, each fitting the
IDEX mold and now contributing strongly to our bottom line. Two of those
acquisitions were completed in 1997, and we made significant progress on
another, enabling us to add our 13th acquisition in January 1998.
The acquisitions completed in 1997 were:
* Blagdon Pump, a United Kingdom-based manufacturer of air-operated
diaphragm pumps. This business, acquired in April, has sales of about $8
million, and naturally complements our Warren Rupp business unit. It is now
being operated as a part of Warren Rupp, but maintains the Blagdon name on
its products in the marketplace.
* Knight Equipment, a California-based leading manufacturer of pumps and
dispensing equipment for industrial laundries, commercial dishwashing, and
chemical injection, has annual revenues of about $25 million. This
business, which was acquired on December 9, 1997, complements the
activities of our Pulsafeeder operation and administratively functions as a
part of it.
1997 SALES FROM ACQUISITIONS
Blagdon (Warren Rupp) 1/4" stainless steel double-diaphragm pump
[ ] 19% of sales came from Fluid Management, Blagdon & Knight
12
<PAGE> 16
1997 REPAIR &
REPLACEMENT SALES
The third acquisition, on which a great deal of work occurred in 1997 but
closed in January 1998, is Gast Manufacturing Corporation. Gast is also an
"IDEX type" company, and is one of the world's leading manufacturers of
air-moving products such as vacuum pumps, air motors, vacuum generators,
regenerative blowers, and fractional horsepower compressors with annual sales
of about $105 million. Gast will be included in the Pump Products Group.
Following the acquisition of a company, we immediately implement IDEX's
financial control systems and begin the process of sharing the best practices
of our business units because there is commonality in the engineering
principles, manufacturing methods, distribution channels and business systems
in all of our companies. We have the advantage of implementing what works
successfully in some locations and avoiding the problems of what doesn't work.
This "cross pollination" has resulted in superior customer service and
improved margins in our acquired businesses.
Acquisitions have been an important element of IDEX's success, with a
track record that speaks for itself. We will continue to use our very
strong cash flow to enhance shareholder value by adding businesses from time
to time that meet our strict standards.
[ ] Estimated one-third of sales come from repair & replacement
Knight (Pulsafeeder) injection system with data acquisition capabilities
From left to right: Vice Presidents - Jerry N. Derck (Human Resources), James
R. Fluharty (Corporate Marketing), Dennis L. Metcalf (Corporate
Development)
Gast diaphragm vacuum pump
13
<PAGE> 17
Sales have grown at a 21% compound annual rate since 1992.
IDEX's operating margins have consistently been well above average for an
industrial company.
Aftertax margins for IDEX compare very favorably to those of the average
industrial company.
Historical
DATA
(dollars and share amounts in thousands except per share data)
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
- ------------------------------------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS
Net sales ....................................... $ 552,163 $ 474,699 $ 395,480 $ 319,231 $ 239,704
Gross profit .................................... 222,357 187,074 157,677 126,951 96,903
SG&A expenses ................................... 110,588 93,217 78,712 66,743 52,950
Goodwill amortization ........................... 8,174 6,241 4,196 3,025 1,889
Operating income ................................ 103,595 87,616 74,769 57,183 42,064
Other income (expense) .......................... (693) (696) 524 281 728
Interest expense ................................ 18,398 17,476 14,301 11,939 9,168
Provision for income taxes ...................... 31,029 25,020 21,845 16,181 11,187
Income from continuing operations ............... 53,475 44,424 39,147 29,344 22,437
Income from discontinued operations ............. 5,151 5,774 6,178 4,266 2,889
Extraordinary items ............................. -- -- -- -- --
Net income ...................................... 58,626 50,198 45,325 33,610 25,326
Income applicable to common stock ............... 58,626 50,198 45,325 33,610 25,326
FINANCIAL POSITION
Current assets .................................. $ 197,267 $ 191,599 $ 173,889 $ 140,450 $ 106,864
Current liabilities ............................. 77,801 83,286 70,798 58,443 34,038
Working capital ................................. 119,466 108,313 103,091 82,007 72,826
Current ratio ................................... 2.5 2.3 2.4 2.4 3.1
Capital expenditures ............................ 13,562 11,634 8,181 6,818 6,120
Depreciation and amortization ................... 24,943 21,312 15,277 12,515 10,092
Total assets .................................... 599,193 569,745 450,077 357,980 245,291
Long-term debt .................................. 258,417 271,709 206,184 168,166 117,464
Shareholders' equity ............................ 238,671 195,509 150,945 116,305 83,686
PERFORMANCE MEASURES
Percent of net sales
Gross profit .................................. 40.3% 39.4% 39.9% 39.8% 40.4%
SG&A expenses ................................. 20.0 19.6 19.9 20.9 22.1
Goodwill amortization ......................... 1.5 1.3 1.1 .9 .8
Operating income .............................. 18.8 18.5 18.9 17.9 17.5
Income from continuing operations ............. 9.7 9.4 9.9 9.2 9.4
Net income return on average assets ............. 10.0 9.8 11.2 11.1 10.4
Debt as a percent of capitalization ............. 52.0 58.2 57.7 59.1 58.4
Net income return on average
shareholders' equity........................... 27.0 29.0 33.9 33.6 35.6
PER SHARE DATA
Basic - income from continuing operations ...... $ 1.83 $ 1.54 $ 1.37 $ 1.03 $ .79
- net income ............................. 2.01 1.74 1.58 1.18 .89
Diluted- income from continuing operations ...... 1.78 1.49 1.32 1.00 .77
- net income ............................. 1.95 1.69 1.53 1.15 .87
Cash dividends declared ......................... .495 .440 .387 .093 --
Shareholders' equity ............................ 8.16 6.76 5.26 4.06 2.93
Stock price- high ............................... 36 11/16 27 5/8 29 1/2 19 1/2 16
- low ................................ 23 1/4 19 7/8 18 3/8 15 1/8 9 3/4
- close .............................. 34 7/8 26 5/8 27 1/8 18 3/4 15 7/8
Price/earnings ratio at year end ................ 18 16 18 16 18
OTHER DATA
Employees ....................................... 3,326 3,093 2,680 2,305 1,828
Shareholders of record .......................... 1,268 1,305 1,359 1,388 1,454
Weighted average shares outstanding - basic ..... 29,184 28,818 28,662 28,600 28,396
- diluted ... 29,999 29,779 29,609 29,331 28,976
Shares outstanding at year end .................. 29,250 28,926 28,695 28,619 28,580
<CAPTION>
1992 1991 1990 1989 1988
- ------------------------------------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS
Net sales ....................................... $ 215,778 $ 166,724 $ 160,605 $ 148,870 $ 127,048
Gross profit .................................... 88,312 67,845 65,712 60,584 52,171
SG&A expenses ................................... 49,326 34,046 29,930 27,391 23,356
Goodwill amortization ........................... 1,422 525 487 487 453
Operating income ................................ 37,564 33,274 35,295 32,706 28,362
Other income (expense) .......................... 602 587 448 951 (1,123)
Interest expense ................................ 9,809 10,397 11,795 13,989 14,486
Provision for income taxes ...................... 9,763 8,993 9,221 7,964 5,929
Income from continuing operations ............... 18,594 14,471 14,727 11,704 6,824
Income from discontinued operations ............. 1,552 1,446 976 3,404 3,830
Extraordinary items ............................. (3,441) 1,214 2,145 2,972 4,583
Net income ...................................... 16,705 17,131 17,848 18,080 15,237
Income applicable to common stock ............... 16,705 17,131 17,848 14,857 10,012
FINANCIAL POSITION
Current assets .................................. $ 107,958 $ 68,671 $ 68,807 $ 66,512 $ 59,126
Current liabilities ............................. 31,276 25,940 23,852 20,198 18,055
Working capital ................................. 76,682 42,731 44,955 46,314 41,071
Current ratio ................................... 3.5 2.6 2.9 3.3 3.3
Capital expenditures ............................ 5,657 2,778 4,025 3,146 1,683
Depreciation and amortization ................... 8,758 5,750 4,842 4,641 4,499
Total assets .................................... 240,175 137,349 127,466 124,998 118,266
Long-term debt .................................. 139,827 65,788 103,863 124,942 143,308
Shareholders' equity ............................ 58,731 37,112 (4,287) (23,282) (84,681)
PERFORMANCE MEASURES
Percent of net sales
Gross profit .................................. 40.9% 40.7% 40.9% 40.7% 41.1%
SG&A expenses ................................. 22.9 20.4 18.6 18.4 18.4
Goodwill amortization ......................... .7 .3 .3 .3 .4
Operating income .............................. 17.4 20.0 22.0 22.0 22.3
Income from continuing operations ............. 8.6 8.7 9.2 7.9 5.4
Net income return on average assets ............. 8.9 12.9 14.1 12.2 8.0
Debt as a percent of capitalization ............. 70.4 63.9 104.3 122.9 244.4
Net income return on average shareholders' equity 34.9 104.4 -- -- --
PER SHARE DATA
Basic - income from continuing operations....... $ .66 $ .57 $ .61 $ .41 $ .10
- net income.............................. .59 .68 .73 .72 .64
Diluted- income from continuing operations....... .65 .57 .61 .41 .10
- net income.............................. .59 .68 .73 .72 .64
Cash dividends declared ......................... -- -- -- -- --
Shareholders' equity ............................ 2.07 1.32 (.18) (.96) (5.38)
Stock price- high................................ 10 5/8 8 7/8 7 3/4 7 1/2 --
- low................................. 7 3/8 4 1/4 4 5/8 6 1/8 --
- close............................... 10 5/8 7 3/8 4 3/4 7 1/2 --
Price/earnings ratio at year end ................ 15 12 7 13 --
OTHER DATA
Employees ....................................... 1,864 1,418 1,367 1,391 1,222
Shareholders of record .......................... 1,551 1,602 1,714 1,820 --
Weighted average shares outstanding - basic...... 28,353 25,367 24,309 20,537 15,740
- diluted.... 28,389 25,367 24,309 20,537 15,740
Shares outstanding at year end .................. 28,353 28,184 24,303 24,317 15,740
</TABLE>
o All share and per share data have been restated to reflect the
three-for-two stock splits effected in the form of 50% stock dividends in
January 1995 and 1997.
o The information presented above for continuing operations excludes the
Strippit and Vibratech businesses, which are classified as discontinued
operations.
14
<PAGE> 18
Earnings per share have grown at a 22% compound annual rate in the last five
years.
IDEX's cash flow coverage of interest expense has improved significantly.
IDEX's balance sheet has strengthened considerably since its first year of
operations in 1988.
IDEX Corporation's
TEN YEAR GROWTH HISTORY HIGHLIGHTS
1998
10th Anniversary
o Gast Manufacturing acquired
1997
o Knight Equipment acquired (Pulsafeeder)
o Blagdon Pump acquired (Warren Rupp)
o 3-for-2 Common Stock split
1996
o Fluid Management acquired
o National Emerging Growth Award
1995
o Lukas acquired (Hale)
o Micropump acquired
o 3-for-2 Common Stock split
o Dividend on Common Stock instituted
1994
o Hale Products acquired
1993
o Signfix acquired (Band-It)
1992
o Pulsafeeder acquired
o Viking Pump of Canada acquired (Viking)
o Johnson Pump acquired (Viking)
o Senior Subordinated Debt refinanced
1991
o Additional Offering of Common Stock
o Corken acquired
1990
1989
o Initial Public Offering of Common Stock on NYSE
o KLS acquired (Lubriquip)
1988
o IDEX formed to purchase Band-It, Lubriquip, Strippit, Vibratech, Viking
Pump and Warren Rupp
15
<PAGE> 19
Management's Discussion & Analysis of
FINANCIAL CONDITION & RESULTS OF OPERATIONS
Historical Overview and Outlook
IDEX sells a broad range of proprietary pump products and engineered equipment
to a diverse customer base in the United States and internationally.
Accordingly, IDEX's businesses are affected by levels of industrial activity and
economic conditions in the United States and other countries where its products
are sold, and by the relationship of the U.S. dollar to other currencies. Among
the factors that influence the demand for IDEX's products are interest rates,
levels of capital spending, and overall industrial activity.
IDEX has a history of above-average operating margins. The Company's operating
margins are affected by, among other things, utilization of facilities as sales
volumes change and inclusion of newly acquired businesses which may have lower
margins that usually are further reduced by purchase accounting adjustments.
Orders, net sales, income from continuing operations, net income and earnings
per share for 1997 surpassed the levels achieved in all prior years. Backlogs
decreased nominally as shipments exceeded incoming orders during 1997, but
remained at IDEX's typical operating level of approximately 1 to 1-1/2 months'
sales. This customarily low level of backlog improves IDEX's ability to respond
quickly to customer needs, but also means that changes in orders are felt
quickly in operating results.
The following forward-looking statements are qualified by the cautionary
statement under the Private Securities Litigation Reform Act set forth below.
The slow rate of growth in 1996 in the U.S. economy and many other economies in
which IDEX sells its products continued during 1997. With a steady incoming
order pace, strong market positions, a continuous flow of new and redesigned
products, recent acquisitions, and increasing opportunities for expansion
worldwide, management believes the outlook for IDEX remains positive. Based on
current activity levels and barring unforeseen circumstances, IDEX expects that
orders, net sales, income from continuing operations, net income and earnings
per share in 1998 will exceed 1997 levels. By stressing new product development;
market share growth; international expansion; and operating improvements,
particularly in newly acquired businesses; and by adhering to its disciplined
approach to acquisitions, management believes IDEX is well positioned to
continue profitable growth. The Company is addressing compliance with the year
2000 information processing issue and does not anticipate any significant
expense or interruption to its operations.
Cautionary Statement Under The Private Securities Litigation Reform Act
The preceding paragraph and the "Liquidity and Capital Resources" section of
this management's discussion and analysis of IDEX's operations contain
forward-looking statements within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act. Such statements relate to, among other
things, capital expenditures, cost reduction, and cash flow and operating
improvements, and are indicated by words such as "anticipates", "estimates",
"expects", "plans", "should", "will", "management believes", "the Company
intends", and similar words or phrases. Such statements are subject to inherent
uncertainties and risks which could cause actual results to vary materially from
suggested results, including but not limited to the following: levels of
industrial activity and economic conditions in the United States 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 the Company's results, particularly in light
of the low levels of order backlogs typically maintained by the Company; IDEX's
ability to integrate and operate acquired businesses, including Gast and Knight,
on a profitable basis; the relationship of the U.S. dollar to other currencies
and its impact on pricing and cost competitiveness; interest rates; utilization
of IDEX's capacity and the effect of capacity utilization on costs; labor market
conditions and raw material costs; developments with respect to contingencies,
such as environmental matters and litigation; and other risks detailed from time
to time in the Company's filings with the Securities and Exchange Commission.
Results of Operations
For the purposes of this discussion and analysis, reference is made to the table
on page 19 and the Company's Statements of Consolidated Operations on page 23.
In December 1997, IDEX announced its intention to divest its Strippit and
Vibratech businesses. Revenues from the discontinued operations amounted to
$83.9 million, $87.9 million and $91.9 million for the years ended 1997, 1996
and 1995, respectively. In addition, the Company has realigned its historical
presentation of business segments into two new groups: Pump Products and
Engineered Equipment.
The Pump Products Group designs, produces and distributes a wide range of
engineered industrial pumps and related controls for process applications. The
Engineered Equipment Group designs, produces and distributes proprietary
equipment that may combine pumps or other devices into products for industrial,
commercial and safety applications.
The financial statements and the group financial information have been
reclassified to reflect Strippit and Vibratech as discontinued operations and
IDEX's revised group reporting structure.
Performance in 1997 Compared to 1996
Orders, net sales, income from continuing operations, net income and earnings
per share exceeded the levels achieved in all prior years. Incoming orders were
15% higher than in 1996, with recent acquisitions of Fluid Management (July
1996), Blagdon Pump
16
<PAGE> 20
Management's Discussion & Analysis of
FINANCIAL CONDITION & RESULTS OF OPERATIONS CONT'D
From left to right: Wayne P. Sayatovic (Senior Vice President - Finance, Chief
Financial Officer and Secretary), Clinton L. Kooman (Controller), Douglas C.
Lennox (Treasurer)
(April 1997) and Knight Equipment (December 1997) contributing the majority of
the growth. Orders for the base businesses increased 3% in 1997 compared to
1996.
Net sales for 1997 reached a record $552.2 million and increased $77.5 million
or 16% over 1996. Overall base business volume was up about 3% in 1997, with
acquisitions accounting for 14%, and foreign currency translation having a
negative 1% effect on the Company's sales growth. International sales
contributed 44% of the 1997 total, up from 43% last year. The increase in
international sales generated approximately 50% of the year-over-year
improvement in total sales.
Pump Products Group net sales of $265.9 million in 1997 increased by $20.3
million or 8% from 1996 with approximately two-thirds of the increase occurring
in the Company's base businesses and the remaining increase resulting from the
recently acquired Blagdon Pump and Knight Equipment businesses. Sales to
customers outside the U.S. in 1997 were unchanged from 36% of total in 1996.
Engineered Equipment Group net sales of $288.7 million increased by $58.5
million or 25% compared to 1996 with almost all of the increase resulting from
inclusion of Fluid Management for a full year in 1997. Base business sales in
1997 were essentially equal to the prior year with steady demand for this
Group's products. Sales to customers outside the U.S. increased to 52% of total
Engineered Equipment Group net sales in 1997, up from 51% in 1996 principally
due to the inclusion of Fluid Management for a full year in 1997.
Gross profit of $222.4 million in 1997 increased by $35.3 million, or 19% from
1996. Gross profit as a percent of net sales was 40.3% in 1997, up from 39.4% in
1996. The improvement in gross profit margin principally was due to sales volume
growth, product mix and product efficiency improvements. Selling, general and
administrative expenses increased to $110.6 million in 1997 from $93.2 million
in 1996, and as a percent of net sales, increased slightly to 20.0% from 19.6%
in 1996. Goodwill amortization increased by 31% to $8.2 million in 1997 from
$6.2 million in 1996. As a percent of net sales, goodwill amortization remained
flat at about 1% for both years. The year-over-year increases in gross profit;
selling, general and administrative expenses; and goodwill amortization are
primarily due to the inclusion of Fluid Management for a full year in 1997.
Operating income increased by $16.0 million or 18% to $103.6 million in 1997
from $87.6 million in 1996. Operating margin as a percent of net sales increased
to 18.8% in 1997 from 18.5% in 1996. In the Pump Products Group, operating
income of $61.4 million and operating margin of 23.1% in 1997 compared to the
$55.1 million and 22.4% recorded in 1996. Operating margin improvements resulted
primarily from volume-related gains. Operating income of $52.1 million in the
Engineered Equipment Group and operating margin of 18.0% in 1997 compared to the
totals of $41.0 million and 17.8% achieved in 1996. The increase in operating
income for this Group primarily reflected the full year inclusion of Fluid
Management in 1997.
Interest expense increased to $18.4 million in 1997 from $17.5 million in 1996
because of the additional long-term debt incurred to complete the acquisitions
of Fluid Management, Blagdon Pump and Knight Equipment, partially offset by debt
reductions from operating cash flow in 1997.
The provision for income taxes increased to $31.0 million in 1997 from $25.0
million in 1996. The effective tax rate increased to 36.7% in 1997 from 36.0% in
1996 due to the changing mix of international earnings, state taxes, and
franchise taxes.
Income from continuing operations of $53.5 million in 1997 was 20% higher than
the $44.4 million in 1996. Diluted earnings per share from continuing operations
amounted to $1.78 in 1997, an increase of 29 cents per share or 19% from $1.49
achieved in 1996.
Performance in 1996 Compared to 1995
In 1996, orders, net sales, income from continuing operations, net income and
earnings per share exceeded the levels achieved in all previous years. Incoming
orders were 22% higher than in 1995, with almost all of the increase resulting
from the acquisitions of Micropump (May 1995), Lukas (October 1995) and Fluid
Management (July 1996). Orders for the base businesses increased 3% in 1996
compared to 1995.
Net sales from continuing operations of $474.7 million for 1996 increased by
$79.2 million or 20% over 1995. The inclusion of acquired businesses noted above
accounted for substantially all of the volume growth, while sales in the core
business units
17
<PAGE> 21
Company and Business Group Financial Information
(dollars in thousands)
<TABLE>
<CAPTION>
For the years ended December 31, (1) 1997 1996 1995
- ------------------------------------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
PUMP PRODUCTS GROUP
Net sales (2) ......................................... $ 265,918 $ 245,620 $ 228,909
Operating income (3) .................................. 61,443 55,129 48,365
Operating margin ...................................... 23.1% 22.4% 21.1%
Identifiable assets ................................... $ 237,870 $ 183,749 $ 195,166
Depreciation and amortization ......................... 10,193 9,509 9,023
Capital expenditures .................................. 6,875 5,175 4,901
ENGINEERED EQUIPMENT GROUP
Net sales (2) ......................................... $ 288,657 $ 230,118 $ 167,125
Operating income (3) .................................. 52,062 40,965 34,628
Operating margin ...................................... 18.0% 17.8% 20.7%
Identifiable assets ................................... $ 322,493 $ 341,016 $ 205,838
Depreciation and amortization ......................... 14,008 10,957 5,511
Capital expenditures .................................. 6,318 6,425 3,243
COMPANY
Net sales ............................................. $ 552,163 $ 474,699 $ 395,480
Operating income ...................................... 103,595 87,616 74,769
Operating margin ...................................... 18.8% 18.5% 18.9%
Income before interest expense and income taxes ....... $ 102,902 $ 86,920 $ 75,293
Identifiable assets ................................... 599,193 569,745 450,077
Depreciation and amortization (4) ..................... 24,293 20,672 14,653
Capital expenditures .................................. 13,562 11,634 8,181
</TABLE>
(1) Includes acquisition of Micropump (May 2, 1995), Blagdon Pump (April 4,
1997) and Knight Equipment (December 9, 1997) in the Pump Products Group;
and acquisition of Lukas (October 2, 1995) and Fluid Management (July 29,
1996) in the Engineered Equipment Group.
(2) Group net sales include intersegment sales.
(3) Group operating income excludes net unallocated corporate operating
expenses.
(4) Excludes amortization of debt issuance expenses.
increased by 2% from 1995. Generally, the Company's Pump Products Group
experienced modest growth in net sales. Declines in volume at capital
goods-related industries unfavorably affected the year-to-year comparisons of
the Engineered Equipment Group net sales. International sales accounted for 43%
of the 1996 total, up from 37% in 1995. The increase in international sales
accounted for about three-quarters of the year-over-year improvement in total
net sales.
Pump Products Group net sales of $245.6 million increased by $16.7 million or 7%
from 1995. Base business sales were up about 4%, with the inclusion of Micropump
for a full year in 1996 accounting for the remaining sales improvement. Sales to
customers outside the U.S. increased to 36% of total Pump Products Group net
sales in 1996, up from 34% in 1995 due to the inclusion of recent acquisitions
which have a greater international presence.
Engineered Equipment Group net sales of $230.1 million in 1996 increased by
$63.0 million or 38% compared to 1995. Inclusion of Fluid Management for a
portion of the year, along with Lukas for a full year, accounted for almost all
of the sales improvement. Base business sales were down about 1% from the prior
year. Sales to customers outside the U.S. were 51% of total Engineered Equipment
Group net sales in 1996, up from 42% in 1995 due to the inclusion of recent
acquisitions, each of which has a significant international presence, and a
stronger demand internationally for products in the Group's core businesses.
Gross profit of $187.1 million in 1996 increased by $29.4 million or 19% from
1995. Gross profit as a percent of net sales was 39.4% in 1996, down slightly
from 39.9% in 1995. Selling, general and administrative expenses increased to
$93.2 million in 1996 from $78.7 million, but as a percent of net sales,
decreased slightly to
18
<PAGE> 22
Management's Discussion & Analysis of
FINANCIAL CONDITION & RESULTS OF OPERATIONS CONT'D
19.6% from 19.9% in 1995. Goodwill amortization increased by 49% to $6.2 million
in 1996 from $4.2 million in 1995. As a percent of net sales, goodwill
amortization remained flat at about 1% for both years. The year-over-year
increases in gross profit; selling, general and administrative expenses; and
goodwill amortization are primarily due to inclusion of Micropump and Lukas for
a full year and Fluid Management from its acquisition in July 1996.
Operating income increased by $12.8 million or 17% to $87.6 million in 1996 from
$74.8 million in 1995. Operating margin as a percent of net sales decreased to
18.5% in 1996 from 18.9% in 1995. In the Pump Products Group, operating income
of $55.1 million and operating margin of 22.4% compared to the $48.4 million and
21.1% recorded in 1995. The slight operating margin improvement resulted
primarily from volume-related gains. The Engineered Equipment Group operating
income of $41.0 million and operating margin of 17.8% in 1996 compared to the
$34.6 million and 20.7% achieved in 1995. The operating margin decline resulted
from the inclusion of Fluid Management, whose operating margins were lower than
the other business units in the Group and whose operating income was further
reduced by purchase accounting adjustments.
Interest expense increased to $17.5 million in 1996 from $14.3 million in 1995
because of the additional borrowing required to complete the Fluid Management
acquisition, offset by debt reductions from operating cash flow and a slightly
lower interest rate environment in 1996.
The provision for income taxes increased to $25.0 million in 1996 from $21.8
million in 1995. The effective tax rate of 36.0% in 1996 increased slightly from
the 35.8% recorded in 1995.
Income from continuing operations of $44.4 million in 1996 was 13% higher than
the $39.1 million recorded in 1995. Diluted earnings per share from continuing
operations were $1.49 in 1996, an increase of 17 cents per share from $1.32
achieved in 1995.
Liquidity and Capital Resources
At December 31, 1997, IDEX's working capital was $119.5 million and its current
ratio was 2.5 to 1. The Company's cash provided by continuing operations
increased by $3.9 million in 1997 to $81.6 million. The improvement in cash flow
resulted from the following: income from continuing operations increasing $9.1
million; depreciation and amortization adding $3.6 million; and deferred income
taxes generating $1.9 million; offset by working capital and other - net
declining by $10.7 million. Working capital was well managed in 1997 as
receivables generated cash flow of $3.6 million or 5% and inventories provided
another $7.7 million or 9%. Both of these improvements occurred during a year
when net sales increased by 16%. Decreases in current liabilities and other -
net caused a usage of cash of $14.4 million due to reductions in general
corporate liabilities. Cash from discontinued operations decreased $6.8 million
to $5.7 million principally because of lower operating earnings and a decline in
cash generated from working capital in 1997 compared to 1996.
Cash flow provided by operations was more than adequate to fund capital
expenditures of $13.6 million, $11.6 million and $8.2 million in 1997, 1996 and
1995, respectively. Generally, capital expenditures were for machinery and
equipment which improved productivity, although a portion was for repair and
replacement of equipment and facilities. Management believes that IDEX has ample
capacity in its plant and equipment to meet expected needs for future growth in
the intermediate term.
In 1997, the Company acquired Blagdon Pump on April 4 and Knight Equipment on
December 9 for an aggregate purchase price of $49.7 million. These acquisitions
were accounted for using the purchase method of accounting and were financed
through
19
<PAGE> 23
borrowings under the Company's $250 million domestic multi-currency bank
revolving credit facility (the "U.S. Credit Facility") and the issuance of notes
to the sellers. At December 31, 1997, the notes payable to the seller of Blagdon
Pump totaled a U.S. dollar-equivalent $9.8 million, and notes payable to the
seller of Knight Equipment amounted to $3.8 million.
At December 31, 1997, the maximum amount available under the U.S. Credit
Facility was $250 million, of which $132.5 million was borrowed, including a
Netherlands guilder borrowing of NGL 82 million ($40.5 million), which provides
an economic hedge against the net investment in Fluid Management's Netherlands
operation. The availability under this facility declines in stages commencing
July 1, 1999, to $200 million on July 1, 2000. Any amount outstanding at July 1,
2001, becomes due at that date. At December 31, 1997, approximately $102.5
million of the facility was unused. Interest is payable quarterly on the
outstanding balance at the agent bank's reference rate or at LIBOR plus an
applicable margin. At December 31, 1997, the applicable margin was 25 basis
points.
The Company also has a $10 million demand line of credit (the "Short-Term
Facility") available for borrowing at the bank agent's reference rate or at an
optional rate based on the bank's cost of funds. At December 31, 1997, there was
$5 million of borrowing under the Short-Term Facility and the interest rate was
6.375% per annum. To complete the Gast acquisition in January 1998, IDEX and the
bank agent amended the Short-Term Facility to provide for a temporary increase
to $50 million for up to 60 days, after which time the maximum line of credit
returns to $10 million.
On May 23, 1997, the Company's Lukas subsidiary amended the German credit
agreement (the "German Facility") reducing the interest rate structure and
eliminating certain reductions in availability. At December 31, 1997, the
maximum amount available under the German Facility was DM 52.5 million ($29.2
million), of which DM 52.0 million ($28.9 million) was being used. The
availability under this facility declines in stages commencing November 1, 1999,
to DM 31.3 million at November 1, 2000. Any amount outstanding at November 1,
2001, becomes due at that date. Interest is payable quarterly on the outstanding
balance at LIBOR plus an applicable margin. At December 31, 1997, the applicable
margin was 62.5 basis points.
IDEX believes it will generate sufficient cash flow from operations in 1998 to
meet its operating requirements, interest and scheduled amortization payments
under both the U.S. Credit Facility and the German Facility, interest and
borrowings under the Short-Term Facility, interest and principal payments on the
9.75% Senior Subordinated Notes, approximately $25 million of planned capital
expenditures, and approximately $16 million of annual dividend payments to
holders of common stock. From commencement of operations in January 1988 until
December 31, 1997, IDEX had borrowed $460 million under the credit agreements
and notes to sellers to complete 12 acquisitions. During this same period IDEX
generated, principally from operations, cash flow of $370 million to reduce its
indebtedness. In the event that suitable businesses are available for
acquisition upon terms acceptable to the Company's Board of Directors, IDEX may
obtain all or a portion of the financing for the acquisitions through the
incurrence of additional long-term indebtedness.
The divestiture of the Strippit and Vibratech businesses, which generated
approximately $84 million in net sales and approximately $9 million of operating
income in 1997, will allow resources formerly allocated to these businesses to
be used to develop positions in areas more consistent with the Company's present
strategy.
In January 1998, IDEX acquired Gast Manufacturing Corporation for a cash
purchase price of approximately $120 million. The acquisition was accounted for
using the purchase method of accounting and was financed with borrowings under
the U.S. Credit Facility and the Short-Term Facility. Gast, which will be part
of the Pump Products Group, had net sales of approximately $105 million in 1997,
and is one of the world's leading manufacturers of air-moving products.
In 1997, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income", SFAS
No. 131, "Disclosures about Segments of an Enterprise and Related Information",
and SFAS No. 132, "Employers' Disclosures about Pensions and Other
Postretirement Benefits". SFAS No. 130 establishes standards for reporting and
display of comprehensive income and its components. SFAS No. 131 establishes
standards for reporting information about operating segments and related
disclosures about products and services, geographic areas and major customers.
SFAS No. 132 revises current disclosure requirements for employers' pensions and
other retiree benefits. These standards are effective for years beginning after
December 15, 1997. These standards expand or modify current disclosures and,
accordingly, will have no impact on the Company's reported financial position,
results of operations and cash flows. The Company is assessing the impact of
SFAS No. 131 on its reported segments.
In December 1997 the Securities and Exchange Commission declared effective the
Company's shelf registration statement covering the possible future sale of up
to $250 million in securities, including senior and subordinated debt
securities, common and preferred stock, and warrants. The terms of any such
securities would be specified in a prospectus supplement.
20
<PAGE> 24
IDEX Corporation & Subsidiaries
CONSOLIDATED BALANCE SHEETS
(in thousands except share and per share amounts)
<TABLE>
<CAPTION>
As of December 31, 1997 1996
- ------------------------------------------------------------------------------- --------- ---------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents .................................................... $ 11,771 $ 4,730
Receivables - net ............................................................ 80,766 79,130
Inventories .................................................................. 84,240 84,731
Net current assets of companies held for disposition ......................... 16,200 16,918
Other current assets ......................................................... 4,290 6,090
--------- ---------
Total current assets ....................................................... 197,267 191,599
Property, plant and equipment - net ............................................ 88,628 88,377
Intangible assets - net ........................................................ 293,803 272,160
Net noncurrent assets of companies held for disposition ........................ 13,089 12,889
Other noncurrent assets ........................................................ 6,406 4,720
--------- ---------
Total assets ............................................................... $ 599,193 $ 569,745
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Trade accounts payable ....................................................... $ 34,991 $ 34,824
Dividends payable ............................................................ 3,949 3,471
Accrued expenses ............................................................. 38,861 44,991
--------- ---------
Total current liabilities .................................................. 77,801 83,286
Long-term debt ................................................................. 258,417 271,709
Other noncurrent liabilities ................................................... 24,304 19,241
--------- ---------
Total liabilities .......................................................... 360,522 374,236
--------- ---------
Commitments and contingencies (Note 7)
Shareholders' equity
Common stock, par value $.01 per share
Shares authorized 1997 and 1996 - 75,000,000
Shares issued and outstanding: 1997 - 29,249,608; 1996 - 28,925,867 ........ 292 289
Additional paid-in capital ................................................... 90,506 89,657
Retained earnings ............................................................ 149,403 105,238
Minimum pension liability adjustment ......................................... (756) --
Accumulated translation adjustment ........................................... (774) 325
--------- ---------
Total shareholders' equity ................................................. 238,671 195,509
--------- ---------
Total liabilities and shareholders' equity ................................. $ 599,193 $ 569,745
========= =========
</TABLE>
See Notes to Consolidated Financial Statements.
21
<PAGE> 25
IDEX Corporation & Subsidiaries
STATEMENTS OF CONSOLIDATED OPERATIONS
(in thousands except per share amounts)
<TABLE>
<CAPTION>
For the years ended December 31, 1997 1996 1995
- ------------------------------------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
Net sales ............................................. $ 552,163 $ 474,699 $ 395,480
Cost of sales ......................................... 329,806 287,625 237,803
---------- ---------- ----------
Gross profit .......................................... 222,357 187,074 157,677
Selling, general and administrative expenses .......... 110,588 93,217 78,712
Goodwill amortization ................................. 8,174 6,241 4,196
---------- ---------- ----------
Operating income ...................................... 103,595 87,616 74,769
Other income (expense) - net .......................... (693) (696) 524
---------- ---------- ----------
Income before interest expense and income taxes ....... 102,902 86,920 75,293
Interest expense ...................................... 18,398 17,476 14,301
---------- ---------- ----------
Income before income taxes ............................ 84,504 69,444 60,992
Provision for income taxes ............................ 31,029 25,020 21,845
---------- ---------- ----------
Income from continuing operations ..................... 53,475 44,424 39,147
Income from discontinued operations, net of taxes ..... 5,151 5,774 6,178
---------- ---------- ----------
Net income ............................................ $ 58,626 $ 50,198 $ 45,325
========== ========== ==========
EARNINGS PER COMMON SHARE - BASIC:
Continuing operations ................................. $ 1.83 $ 1.54 $ 1.37
Discontinued operations ............................... .18 .20 .21
---------- ---------- ----------
Net income ............................................ $ 2.01 $ 1.74 $ 1.58
========== ========== ==========
EARNINGS PER COMMON SHARE - DILUTED:
Continuing operations ................................. $ 1.78 $ 1.49 $ 1.32
Discontinued operations ............................... .17 .20 .21
---------- ---------- ----------
Net income ............................................ $ 1.95 $ 1.69 $ 1.53
========== ========== ==========
SHARE DATA:
Weighted average common shares outstanding ............ 29,184 28,818 28,662
========== ========== ==========
Weighted average common shares outstanding
assuming full dilution .............................. 29,999 29,779 29,609
========== ========== ==========
</TABLE>
See Notes to Consolidated Financial Statements.
22
<PAGE> 26
IDEX Corporation & Subsidiaries
STATEMENTS OF CONSOLIDATED SHAREHOLDERS' EQUITY
(in thousands except share and per share amounts)
<TABLE>
<CAPTION>
Minimum
Common Stock Pension Accumulated Total
and Additional Retained Liability Translation Shareholders'
Paid-In Capital Earnings Adjustment Adjustment Equity
- --------------------------------------------- --------------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1994 .................. $ 85,134 $ 33,490 $ -- $ (2,319) $ 116,305
Issuance of 77,461 shares of
common stock from exercise of
stock options ............................. 1,175 1,175
Cash dividends declared - $.387
per common share outstanding .............. (11,086) (11,086)
Unrealized translation adjustment ........... (774) (774)
Net income .................................. 45,325 45,325
--------- --------- --------- --------- ---------
Balance, December 31, 1995 .................. 86,309 67,729 -- (3,093) 150,945
Issuance of 113,550 shares of
common stock related to
an acquisition ............................ 2,271 2,271
Issuance of 116,891 shares of
common stock from exercise of
stock options ............................. 1,366 1,366
Cash dividends declared - $.440
per common share outstanding .............. (12,689) (12,689)
Unrealized translation adjustment ........... 3,418 3,418
Net income .................................. 50,198 50,198
--------- --------- --------- --------- ---------
Balance, December 31, 1996 .................. 89,946 105,238 -- 325 195,509
Issuance of 323,741 shares of
common stock from exercise of
stock options, net of those
surrendered ............................... 852 852
Cash dividends declared - $.495
per common share outstanding .............. (14,461) (14,461)
Minimum pension liability adjustment ........ (756) (756)
Unrealized translation adjustment ........... (1,099) (1,099)
Net income .................................. 58,626 58,626
--------- --------- --------- --------- ---------
Balance, December 31, 1997 .................. $ 90,798 $ 149,403 $ (756) $ (774) $ 238,671
========= ========= ========= ========= =========
</TABLE>
See Notes to Consolidated Financial Statements.
23
<PAGE> 27
IDEX Corporation & Subsidiaries
STATEMENTS OF CONSOLIDATED CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
For the years ended December 31, 1997 1996 1995
- ----------------------------------------------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
Cash flows from operating activities
Income from continuing operations ............................... $ 53,475 $ 44,424 $ 39,147
Adjustments to reconcile to net cash
provided by continuing operations:
Depreciation and amortization ............................... 14,350 12,532 9,240
Amortization of intangibles ................................. 9,943 8,140 5,413
Amortization of debt issuance expenses ...................... 650 640 624
Deferred income taxes ....................................... 6,304 4,385 2,346
(Increase) decrease in receivables .......................... 3,605 (6,587) (2,632)
(Increase) decrease in inventories .......................... 7,659 13,025 (5,811)
Increase (decrease) in trade accounts payable ............... (2,216) (949) 342
Increase (decrease) in accrued expenses ..................... (8,117) (2,312) 3,698
Other - net ................................................. (4,091) 4,390 (1,624)
---------- ---------- ----------
Net cash provided by continuing operations ...................... 81,562 77,688 50,743
Net cash provided by discontinued operations .................... 5,669 12,427 118
---------- ---------- ----------
Net cash flows from operating activities .................. 87,231 90,115 50,861
---------- ---------- ----------
Cash flows from investing activities
Additions to property, plant and equipment .................. (13,562) (11,634) (8,181)
Acquisition of businesses (net of cash acquired) ............ (49,744) (132,584) (69,760)
---------- ---------- ----------
Net cash flows from investing activities .................. (63,306) (144,218) (77,941)
---------- ---------- ----------
Cash flows from financing activities
Dividends paid .............................................. (13,983) (12,278) (10,697)
Notes issued in connection with acquisitions ................ 13,546 -- --
Borrowings under credit agreements for acquisitions ......... 36,198 136,100 69,760
Net repayments under credit agreements ...................... (51,909) (71,514) (31,792)
Increase (decrease) in accrued interest ..................... (736) 939 50
---------- ---------- ----------
Net cash flows from financing activities .................. (16,884) 53,247 27,321
---------- ---------- ----------
Net increase (decrease) in cash ................................. 7,041 (856) 241
Cash and cash equivalents at beginning of year .................. 4,730 5,586 5,345
---------- ---------- ----------
Cash and cash equivalents at end of year ........................ $ 11,771 $ 4,730 $ 5,586
========== ========== ==========
Supplemental cash flow information:
Cash paid for -
Interest .................................................... $ 18,781 $ 17,363 $ 15,303
Income taxes ................................................ 25,446 23,686 21,425
</TABLE>
See Notes to Consolidated Financial Statements.
24
<PAGE> 28
IDEX Corporation & Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands except share and per share amounts)
1. Significant Accounting Policies
Business
IDEX Corporation ("IDEX" or the "Company") is a manufacturer of a broad range of
proprietary pump products and engineered equipment sold to a diverse customer
base in a variety of industries in the U.S. and internationally. Its products
include industrial pumps and related controls for use in a wide variety of
process applications, and proprietary equipment that may combine pumps or other
devices into products for industrial, commercial and safety applications. These
activities are grouped into two business segments: Pump Products and Engineered
Equipment.
Principles of Consolidation
The consolidated financial statements include the Company and its subsidiaries.
Significant intercompany transactions and accounts have been eliminated.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, disclosure of contingent
assets and liabilities, and reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Revenue Recognition
The Company recognizes revenue from product sales upon shipment. The Company
estimates and records provisions for sales returns, allowances and original
warranties in the period the sale is reported, based on its experience.
Cash Equivalents
For purposes of the Statements of Consolidated Cash Flows, the Company considers
all highly liquid debt instruments purchased with a maturity of three or fewer
months to be cash equivalents.
Inventories
Inventories are stated at the lower of cost or market. Cost, which includes
labor, material and factory overhead, is determined on the first-in, first-out
("FIFO") basis or the last-in, first-out ("LIFO") basis.
Debt Expenses
Expenses incurred in securing and issuing long-term debt are amortized over the
life of the related debt.
Earnings Per Common Share
On December 31, 1997, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 128, Earnings Per Share, which requires the disclosure of
two earnings per common share computations: basic and diluted. Earnings per
common share ("EPS") are computed by dividing net income by the weighted average
number of shares of common stock (basic) plus common stock equivalents (diluted)
outstanding during the year. Common stock equivalents consist of stock options
and have been included in the calculation of weighted average shares outstanding
using the treasury stock method. EPS computations for prior years have been
restated to reflect this new standard.
The basic weighted average shares reconciles to fully diluted weighted average
shares as follows:
<TABLE>
<CAPTION>
1997 1996 1995
- -------------------------------------------------- ------ ------ ------
<S> <C> <C> <C>
Basic weighted average
common shares
outstanding .................................... 29,184 28,818 28,662
Dilutive effect of
stock options .................................. 815 961 947
------ ------ ------
Weighted average common
shares outstanding
assuming full dilution.......................... 29,999 29,779 29,609
====== ====== ======
</TABLE>
Depreciation and Amortization
Depreciation is recorded using the straight-line method. The estimated useful
lives used in the computation of depreciation generally are as follows:
Land improvements .......................................... 10 to 12 years
Buildings and improvements ................................. 3 to 30 years
Machinery and equipment, tooling
and engineering drawings ................................. 3 to 12 years
Office and transportation equipment ........................ 3 to 10 years
Identifiable intangible assets are amortized over their estimated useful lives
using the straight-line method. The cost in excess of net assets acquired is
amortized over a period of 30 to 40 years.
The carrying amount of all long-lived assets is evaluated periodically to
determine if adjustment to the depreciation or amortization period or to the
unamortized balance is warranted. Such evaluation is based on the expected
utilization of the long-lived assets and the projected, undiscounted cash flows
of the operations in which the long-lived assets are deployed.
25
<PAGE> 29
Research and Development Expenditures
Expenditures associated with research and development are expensed in the year
incurred and are included in cost of sales. Research and development expenses,
which include costs associated with the development of new products and major
improvements to existing products, were $6.7 million, $6.0 million and $3.8
million in 1997, 1996 and 1995, respectively.
Reclassifications
Certain amounts in the prior years' financial statements have been reclassified
to conform to the current year presentation.
New Accounting Pronouncements
In 1997, the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income", SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information", and SFAS No. 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits". SFAS No. 130
establishes standards for reporting and display of comprehensive income and its
components. SFAS No. 131 establishes standards for reporting information about
operating segments and related disclosures about products and services,
geographic areas and major customers. SFAS No. 132 revises current disclosure
requirements for employers' pensions and other retiree benefits. These standards
are effective for years beginning after December 15, 1997. These standards
expand or modify current disclosures and, accordingly, will have no impact on
the Company's reported financial position, results of operations and cash flows.
The Company is assessing the impact of SFAS No. 131 on its reported segments.
2. Acquisitions
The Company expects to complete the acquisition of Gast Manufacturing
Corporation in January 1998, for a cash purchase price of approximately $120
million. The acquisition cost will be financed through borrowings under the
Company's bank credit facilities. Gast, headquartered in Benton Harbor,
Michigan, is one of the world's leading manufacturers of its type of air-moving
products.
In 1997, the Company acquired Blagdon Pump on April 4 and Knight Equipment on
December 9 at an aggregate purchase price of $49.7 million with financing
provided by borrowings under the Company's U.S. Credit Facility and the issuance
of notes to the sellers. Blagdon Pump manufactures air-operated diaphragm pumps
and is located in Washington, Tyne & Wear, England. Knight is based in Costa
Mesa, California, and is the leading manufacturer of pumps and dispensing
equipment for industrial laundries, commercial dishwashing, and chemical
metering.
On July 29, 1996, IDEX purchased substantially all of the net operating assets
of Fluid Management Limited Partnership, headquartered in Wheeling, Illinois, a
leading worldwide manufacturer of dispensing and mixing equipment for paints,
coatings, inks, colorants and dyes. The $135 million purchase price was financed
through a borrowing under the U.S. Credit Facility and the issuance of 113,550
shares of IDEX common stock.
All acquisitions were accounted for as purchases, and operating results include
the acquisitions from the dates of purchase. The excess of the acquisition
purchase price over the fair market value of net assets acquired is being
amortized on a straight-line basis over periods not exceeding 40 years. The
unaudited pro forma consolidated results of operations, including Gast, for the
years ended December 31, 1997 and 1996, reflecting the allocation of the
purchase price and related financing of the transactions are as follows,
assuming that these acquisitions had occurred at the beginning of each of the
respective periods.
<TABLE>
<CAPTION>
1997 1996
- -------------------------------------------------- ------------ ------------
<S> <C> <C>
Net sales ........................................ $ 679,655 $ 643,012
Income from continuing operations ................ 55,198 46,311
Net income ....................................... 60,349 52,085
Basic EPS
Continuing operations .......................... 1.89 1.61
Net income ..................................... 2.07 1.81
Diluted EPS
Continuing operations .......................... 1.84 1.56
Net income ..................................... 2.01 1.75
</TABLE>
The liabilities assumed in connection with acquisition of businesses that
represent noncash investing activities for 1997, 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
1997 1996 1995
- ---------------------------------------- --------- --------- ---------
<S> <C> <C> <C>
Fair value of
assets acquired ...................... $ 16,884 $ 51,055 $ 50,218
Cost in excess of
net assets acquired .................. 38,599 101,473 34,386
Cash paid .............................. (49,744) (132,584) (69,760)
Common stock issued
in connection with
acquisitions ......................... (2,271)
--------- --------- ---------
Liabilities assumed .................... $ 5,739 $ 17,673 $ 14,844
========= ========= =========
</TABLE>
26
<PAGE> 30
IDEX Corporation & Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONT'D
3. Discontinued Operations
In December 1997, the Company announced its intention to divest its Strippit and
Vibratech business operations. The consolidated financial statements and related
footnotes reflect these businesses as discontinued operations. The revenues from
these operations amounted to $83.9 million in 1997, $87.9 million in 1996 and
$91.9 million in 1995. Income taxes allocated to these operations were $3.1
million, $3.6 million and $3.9 million for the years 1997, 1996 and 1995,
respectively. The assets and liabilities of these operations, consisting
primarily of receivables, inventories, property and accounts payable, are
classified as net current and net noncurrent assets of companies held for
disposition. Interest expense of $0.6 million, $1.5 million, and $1.6 million
for the years 1997, 1996 and 1995, respectively, has been allocated to these
operations based on their acquisition debt less repayments generated from
subsequent operating cash flows that can be specifically attributed to these
operations.
4. Common and Preferred Stock
On December 19, 1996, the Company's Board of Directors authorized a
three-for-two common stock split effected in the form of a 50% stock dividend
payable on January 31, 1997, to shareholders of record on January 15, 1997. Par
value of common stock remained at $.01 per share.
At December 31, 1997 and 1996, the Company had five million shares of preferred
stock with a par value of $.01 per share authorized but unissued.
5. Balance Sheet Components
The components of inventories as of December 31, 1997 and 1996 were:
<TABLE>
<CAPTION>
1997 1996
- -------------------------------------------------- ------- -------
<S> <C> <C>
Raw materials .................................... $20,841 $16,223
Work in process .................................. 13,647 12,030
Finished goods ................................... 49,752 56,478
------- -------
Total .......................................... $84,240 $84,731
======= =======
</TABLE>
Those inventories, which were carried on a LIFO basis, amounted to $65,080 and
$62,068 at December 31, 1997 and 1996, respectively. The excess of current cost
over LIFO inventory value and the impact on earnings of using the LIFO method
are not material.
The components of certain other balance sheet accounts as of December 31, 1997
and 1996 were:
<TABLE>
<CAPTION>
1997 1996
- ------------------------------------------------------ ---------- ----------
<S> <C> <C>
Receivables
Customers .......................................... $ 82,293 $ 76,813
Other .............................................. 1,034 4,428
---------- ----------
Total ............................................ 83,327 81,241
Less allowance for doubtful accounts ............... 2,561 2,111
---------- ----------
Receivables - net ................................ $ 80,766 $ 79,130
========== ==========
Property, plant and equipment, at cost
Land and improvements .............................. $ 7,184 $ 7,127
Buildings and improvements ......................... 45,895 46,684
Machinery and equipment ............................ 112,795 105,137
Engineering drawings ............................... 3,281 3,291
Office and transportation equipment ................ 22,900 20,572
Construction in progress ........................... 5,261 1,002
---------- ----------
Total ............................................ 197,316 183,813
Less accumulated depreciation
and amortization ................................. 108,688 95,436
---------- ----------
Property, plant and equipment - net .............. $ 88,628 $ 88,377
========== ==========
Intangible assets
Cost in excess of net assets acquired .............. $ 310,242 $ 279,049
Other .............................................. 22,416 22,611
---------- ----------
Total ............................................ 332,658 301,660
Less accumulated amortization ...................... 38,855 29,500
---------- ----------
Intangible assets - net .......................... $ 293,803 $ 272,160
========== ==========
Accrued expenses
Accrued payroll and related items .................. $ 22,426 $ 19,123
Accrued taxes ...................................... 4,851 6,149
Accrued insurance .................................. 3,006 2,959
Other .............................................. 8,578 16,760
---------- ----------
Total ............................................ $ 38,861 $ 44,991
========== ==========
Other noncurrent liabilities
Pension and retiree medical reserves ............... $ 13,722 $ 12,157
Lease obligations .................................. 2,097 2,265
Other .............................................. 8,485 4,819
---------- ----------
Total ............................................ $ 24,304 $ 19,241
========== ==========
</TABLE>
27
<PAGE> 31
6. Retirement Benefits
The Company has noncontributory pension plans covering substantially all
employees, other than certain bargaining unit employees who participate in a
multiemployer pension plan. The defined benefit plans covering salaried
employees provide pension benefits that are based on compensation over an
employee's full career. The defined benefit plans covering hourly employees and
bargaining unit members generally provide benefits of stated amounts for each
year of service. The Company's funding policy for these plans is to fund
benefits as accrued within the minimum and maximum limitations of the Internal
Revenue Code. The defined contribution plans provide for annual contributions to
individuals' accounts. The level of the contribution is generally a percent of
salary based on age and years of service.
Pension costs for the years ended December 31, 1997, 1996 and 1995 included the
following components:
<TABLE>
<CAPTION>
1997 1996 1995
- ----------------------------------------------- ------- ------- -------
<S> <C> <C> <C>
Service cost .................................. $ 2,525 $ 2,438 $ 1,609
Interest cost ................................. 3,031 2,808 1,713
Return on assets .............................. (2,742) (4,849) (4,407)
Net amortization and
deferral .................................... 202 2,789 2,881
------- ------- -------
Net periodic pension cost ................... 3,016 3,186 1,796
Contributions to multiemployer
plan, defined contribution
plans and other ............................. 4,423 3,265 2,518
------- ------- -------
Total pension costs ....................... $ 7,439 $ 6,451 $ 4,314
======= ======= =======
</TABLE>
Assumptions used in accounting for pension costs at December 31 were:
<TABLE>
<S> <C> <C> <C>
Assumed discount rate:
U.S. plans ............................. 7.25% 7.50% 7.25%
Non-U.S. plans ......................... 6.0-7.2% 6.0-9.0% 8.0-9.0%
Assumed rate of
compensation increase
for salaried plans:
U.S. plans ............................. 4.0% 4.0% 4.0%
Non-U.S. plans ......................... 5.7% 7.5% 7.5%
Expected rate of return on
plan assets:
U.S. plans ............................. 9.0% 9.0% 8.0%
Non-U.S. plans ......................... 7.2% 9.0% 9.0%
</TABLE>
The funded status of the defined benefit plans and amounts recognized in the
Company's consolidated balance sheets at December 31, 1997 and 1996 are
presented as follows:
<TABLE>
<CAPTION>
U.S.Plans Non-U.S.
-------------------- --------
Assets Accumulated Accumulated
Exceed Benefits Benefits
Accumulated Exceed Exceed
Benefits Assets Assets
- --------------------------------------------- -------- -------- --------
<S> <C> <C> <C>
DECEMBER 31, 1997
Actuarial present value of
benefit obligations
Vested benefit obligation ................. $ 26,094 $ 5,204 $ 9,428
======== ======== ========
Accumulated benefit
obligation .............................. $ 28,841 $ 5,204 $ 9,464
======== ======== ========
Projected benefit obligation ................ $ 34,400 $ 5,284 $ 10,033
Plan assets at fair value (1) ............... 36,889 4,970
-------- -------- --------
Projected benefit obligation
less than (in excess of)
plan assets ............................... 2,489 (5,284) (5,063)
Prior service cost not yet
recognized ................................ 1,957 238
Unrecognized transition
(asset) obligation (2) .................... (457) 814
Unrecognized net (gain) loss ................ (2,955) 1,261 627
Minimum pension liability ................... (2,234) (170)
-------- -------- --------
Pension asset (liability) ................. $ 1,034 $ (5,205) $ (4,606)
DECEMBER 31, 1996
Actuarial present value of
benefit obligations
Vested benefit obligation ................. $ 19,588 $ 6,022 $ 8,471
======== ======== ========
Accumulated benefit
obligation .............................. $ 21,887 $ 6,467 $ 8,504
======== ======== ========
Projected benefit obligation ................ $ 27,716 $ 6,594 $ 8,892
Plan assets at fair value (1) ............... 25,914 1,812 4,196
-------- -------- --------
Projected benefit obligation
less than (in excess of)
plan assets ............................... (1,802) (4,782) (4,696)
Prior service cost not yet
recognized ................................ 1,895 358
Unrecognized transition
(asset) obligation (2) .................... (551) 902
Unrecognized net (gain) loss ................ (509) 1,294 (365)
-------- -------- --------
Pension asset (liability) ................. $ (967) $ (2,228) $ (5,061)
======== ======== ========
</TABLE>
(1) Primarily listed stocks and fixed income securities.
(2) Amortized by plan over the greater of the average remaining service
period of the employee workforce or 15 years.
28
<PAGE> 32
IDEX Corporation & Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONT'D
7. Commitments and Contingencies
At December 31, 1997, total minimum rental payments under noncancelable
operating leases, primarily for office facilities, warehouses and data
processing equipment, were $30.1 million. The minimum rental commitments for
each of the next five years are as follows: 1998 - $6.1 million; 1999 - $4.8
million; 2000 - $4.2 million; 2001 - $3.3 million; 2002 - $2.2 million;
thereafter - $9.5 million.
Rental expense totaled $6.7 million, $5.0 million and $4.0 million for the years
ended December 31, 1997, 1996 and 1995, respectively.
The Company is involved in certain litigation arising in the ordinary course of
business. None of these matters is expected to have a material adverse effect on
the Company's financial position or results of operations. However, the ultimate
resolution of these matters could result in a change in the Company's estimate
of its liability for these matters.
8. Postretirement Health Care and Life Insurance Benefits
The Company provides health care and life insurance benefits to certain retired
employees, their covered dependents, and beneficiaries. The Company provides for
the estimated cost of such retiree benefit payments during the employee's active
service period.
Net periodic postretirement expense for 1997, 1996 and 1995 included the
following components:
<TABLE>
<CAPTION>
1997 1996 1995
- -------------------------------------------------- ------ ------ ------
<S> <C> <C> <C>
Service cost ..................................... $ 277 $ 249 $ 203
Interest cost .................................... 395 348 352
Net amortization and
deferral ....................................... (57) (63) (67)
------ ------ ------
Total cost ................................... $ 615 $ 534 $ 488
====== ====== ======
</TABLE>
The Company's postretirement health and life insurance benefit plans are not
funded. The accumulated postretirement benefit obligation (APBO) of the plans at
December 31, 1997 and 1996 was as follows:
<TABLE>
<CAPTION>
1997 1996
- ------------------------------------------------------- -------- --------
<S> <C> <C>
Retirees .............................................. $ 1,306 $ 1,384
Fully eligible active participants .................... 690 500
Other active participants ............................. 4,301 3,480
-------- --------
Total APBO .......................................... 6,297 5,364
Unrecognized net gain (loss) .......................... (530) (86)
-------- --------
Postretirement health care liability ................ $ 5,767 $ 5,278
======== ========
</TABLE>
For measurement purposes, a 11.5% annual rate of increase in the cost of covered
health care benefits was assumed for 1997, gradually declining to 6% by the year
2008 and remaining at that level thereafter. The health care trend rate
assumption has a significant effect on the amount of the obligation and the net
periodic cost reported. An increase or decrease of the trend rate of 1% would
change the APBO as of December 31, 1997, by $0.9 million and the net periodic
cost for this year by $0.1 million. The assumed discount rate used in
determining the APBO was 7.25% in 1997 and 7.5% in 1996.
9. Stock Options
The Company has stock option plans providing for the grant of options to
purchase common shares to outside directors, executives and certain key
employees which are accounted for using the intrinsic value method. Accordingly,
no compensation cost has been recognized. Had compensation cost been determined
using the fair value method the Company's pro forma net income and diluted EPS
would have been as follows:
<TABLE>
<CAPTION>
1997 1996 1995
- ----------------------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
Net income
As reported ........................... $ 58,626 $ 50,198 $ 45,325
Pro forma ............................. 57,063 49,312 45,022
Basic EPS
As reported ........................... 2.01 1.74 1.58
Pro forma ............................. 1.96 1.71 1.57
Diluted EPS
As reported ........................... 1.95 1.69 1.53
Pro forma ............................. 1.90 1.66 1.52
</TABLE>
The fair value of each option grant was estimated on the date of grant using the
Black-Scholes option pricing model with the following assumptions for 1997, 1996
and 1995, respectively: dividend yield of 1.94%, 1.70% and 1.86%; volatility of
28.9%, 28.6% and 29.7%; risk-free interest rates of 6.6%, 6.2% and 6.9%; and
expected lives of 5.5 years.
The Compensation Committee of the Board of Directors administers the plans and
approves stock option grants. The Company may grant additional options for up to
2.4 million shares. Stock options granted under the plans are exercisable at a
price equal to the market value of the stock at the date of grant. The options
become exercisable from one to five years from the date of grant and generally
expire 10 years from the date of grant. The following table summarizes option
activity under the plans:
29
<PAGE> 33
<TABLE>
<CAPTION>
Weighted
Average
Number Option Price
of Options Per Share
---------- ----------
<S> <C> <C>
Outstanding at December 31, 1994 ................. 1,627,464 $ 9.52
Granted ........................................ 336,600 20.08
Exercised ...................................... (77,461) 10.45
Forfeited ...................................... (31,995) 14.51
----------
Outstanding at December 31, 1995 ................. 1,854,608 11.27
Granted ........................................ 442,875 25.56
Exercised ...................................... (116,891) 6.32
Forfeited ...................................... (45,900) 20.63
----------
Outstanding at December 31, 1996 ................. 2,134,692 14.27
Granted ........................................ 514,250 24.90
Exercised ...................................... (431,748) 2.36
Forfeited ...................................... (87,980) 23.47
----------
Outstanding at December 31, 1997 ................ 2,129,214 18.87
==========
Exercisable at December 31, 1995 ................. 786,576 5.59
==========
Exercisable at December 31, 1996 ................. 953,482 8.38
==========
Exercisable at December 31, 1997 ................. 943,431 14.25
==========
</TABLE>
The following table summarizes information about options outstanding at December
31, 1997:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
--------------------------------- -----------------------
Weighted
Average Weighted Weighted
Range of Remaining Average Average
Exercise Number Life of Exercise Number Exercise
Prices Outstanding Contract Price Exercisable Price
- --------- ----------- --------- -------- ----------- --------
<C> <C> <C> <C> <C> <C>
$ 0 to 10 201,157 3.6 years $ 7.27 201,157 $ 7.27
11 to 20 1,114,641 6.4 years 16.17 679,841 15.23
21 to 30 813,416 8.9 years 25.44 62,433 26.14
---------- --------
Total 2,129,214 7.1 years 18.87 943,431 14.25
========== ========
</TABLE>
10. Long-Term Debt
Long-term debt at December 31, 1997 and 1996 consisted of the following:
<TABLE>
<CAPTION>
1997 1996
- ---------------------------------------------------------
<S> <C> <C>
Bank revolving credit facilities,
including accrued interest $169,807 $196,709
9.75% Senior Subordinated Notes 75,000 75,000
Other long-term debt 13,610
-------- --------
Total $258,417 $271,709
======== ========
</TABLE>
The Company has a $250 million domestic multi-currency bank revolving credit
facility (the "U.S. Credit Facility"). The availability under the U.S. Credit
Facility declines in stages commencing July 1, 1999, to $200 million at July 1,
2000. Any amount outstanding at July 1, 2001, becomes due at that date. At
December 31, 1997, approximately $102.5 million of the facility was unused.
Interest on the outstanding borrowings under the U.S. Credit Facility is payable
quarterly at a rate based on the bank agent's reference rate or, at the
Company's election, at a rate based on LIBOR plus 25 basis points per annum. The
weighted average interest rate on outstanding borrowings under the U.S. Credit
Facility was 5.75% at December 31, 1997. A facility fee equal to 15 basis points
per annum is payable quarterly on the entire amount available under the U.S.
Credit Facility.
The Company also has entered into a $10 million demand line of credit (the
"Short-Term Facility") expiring on June 1, 1998. Borrowings under the Short-Term
Facility are at the bank agent's reference rate, or at an optional rate based on
the bank's cost of funds. At December 31, 1997, there was $5 million borrowed
under the Short-Term Facility and the interest rate was 6.375% per annum. To
complete the Gast acquisition in January 1998, IDEX and the bank agent amended
the Short-Term Facility to provide a temporary increase to $50 million for up to
60 days, after which time the Short-Term Facility returns to $10 million.
A DM 52.5 million ($29.2 million) credit facility (the "German Facility")
declines in stages commencing November 1, 1999, to DM 31.3 million at November
1, 2000. Any amount outstanding at November 1, 2001, becomes due at the date. At
December 31, 1997, DM 52.0 million ($28.9 million) was outstanding. Interest is
payable quarterly on the outstanding balance at LIBOR plus 62.5 basis points per
annum.
Total long-term debt outstanding at December 31, 1997 and 1996 included $3.4
million and $4.2 million, respectively, of accrued interest as interest
generally is paid through borrowings under the U.S. Credit Facility.
Borrowings under the U.S. Credit Facility are guaranteed jointly and severally
by certain of the Company's subsidiaries and secured by a pledge of their stock
and intercompany notes.
The Company's $75 million of Senior Subordinated Notes (the "Sub Notes") due
2002 are jointly and severally guaranteed by certain of the Company's
subsidiaries and are subordinated to the U.S. Credit Facility. Interest is
payable semiannually at the rate of 9.75% per annum. The Sub Notes are payable
in annual installments of $18.75 million commencing in 2000 and are redeemable
at various premiums by the Company commencing in 1997. At December 31, 1997, the
fair market value of the Sub Notes was approximately $77.7 million based on the
quoted market price.
Other long term-debt is comprised of notes issued to the sellers in connection
with the acquisitions of Blagdon Pump and Knight Equipment (see Note 2). These
notes generally bear interest at rates ranging from 6.0% to 8.0% per annum.
The U.S. Credit Facility and the Indenture for the Sub Notes permit the payment
of cash dividends only to the extent that no default
30
<PAGE> 34
IDEX Corporation & Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONT'D
exists under these agreements and limit the amount of cash dividends in
accordance with specified formulas. At December 31, 1997, under the most
restrictive of these provisions, the Company has available approximately $69.6
million for the payment of cash dividends in 1998.
The Company does not use derivative financial instruments for trading or other
speculative purposes. Interest rate swaps, a form of derivative, are used to
manage interest rate risk. Currently, the Company has entered into three
interest rate swaps, expiring between August 1998 and August 1999, which have
effectively converted approximately $60 million of floating rate debt into fixed
rate debt at rates ranging from 4.3% to 6.7%.
11. Business Segments and Geographic Information
IDEX consists of two business segments: Pump Products and Engineered Equipment.
No single customer accounted for more than 2% of consolidated net sales.
Segment information for the years ended December 31, 1997, 1996 and 1995 is
presented in the table titled "Company and Business Group Financial Information"
in "Management's Discussion and Analysis of Financial Condition and Results of
Operations".
Information about the Company's operations in different geographical regions for
the years ended December 31, 1997, 1996 and 1995 is shown below. The Company's
primary operations are in the U.S. and Europe.
<TABLE>
<CAPTION>
1997 1996 1995
- ---------------------------------------------------------
<S> <C> <C> <C>
Sales
United States ....... $378,343 $335,393 $304,735
Europe .............. 150,511 125,308 77,183
Americas (Non-U.S.... 14,281 8,236 8,295
Other ............... 9,028 5,762 5,267
-------- -------- --------
Total ............. $552,163 $474,699 $395,480
======== ======== ========
Operating income
United States ....... $ 73,374 $ 64,744 $ 61,140
Europe .............. 26,304 20,211 11,487
Americas (Non-U.S.).. 1,870 1,715 1,120
Other ............... 2,047 946 1,022
-------- -------- --------
Total ............. $103,595 $ 87,616 $ 74,769
======== ======== ========
Identifiable assets
United States ....... $423,988 $393,510 $334,001
Europe .............. 159,722 159,869 106,108
Americas (Non-U.S.).. 9,712 8,608 7,696
Other ............... 5,771 7,758 2,272
-------- -------- --------
Total ............. $599,193 $569,745 $450,077
======== ======== ========
</TABLE>
Export sales from the U.S. for the years ended December 31, 1997, 1996 and 1995
were to the following geographical areas:
<TABLE>
<CAPTION>
1997 1996 1995
- ---------------------------------------------------------
<S> <C> <C> <C>
North America (Non-U.S.).. $21,048 $15,432 $16,801
South America ............ 17,139 12,311 6,393
Far East ................. 14,053 16,354 13,503
Europe ................... 10,481 10,029 9,321
Other .................... 14,471 13,659 11,479
------- ------- -------
Total .................. $77,192 $67,785 $57,497
======= ======= =======
</TABLE>
12. Income Taxes
Pretax income for the years ended December 31, 1997, 1996 and 1995 was taxed
under the following jurisdictions:
<TABLE>
<CAPTION>
1997 1996 1995
- ---------------------------------------------------------
<S> <C> <C> <C>
Domestic.............. $58,748 $49,694 $46,918
Foreign............... 25,756 19,750 14,074
------- ------- -------
Total............... $84,504 $69,444 $60,992
======= ======= =======
</TABLE>
The provision for income taxes for the years ended December 31, 1997, 1996 and
1995 was as follows:
<TABLE>
<S> <C> <C> <C>
Current
U.S ................. $ 17,178 $ 15,356 $ 15,813
State and local ..... 1,379 1,152 960
Foreign ............. 6,168 4,127 2,726
-------- -------- --------
Total current ..... 24,725 20,635 19,499
-------- -------- --------
Deferred
U.S ................. 3,125 1,795 487
State and local ..... 500 125 (189)
Foreign ............. 2,679 2,465 2,048
-------- -------- --------
Total deferred .... 6,304 4,385 2,346
-------- -------- --------
Total provision for
income taxes .... $ 31,029 $ 25,020 $ 21,845
======== ======== ========
</TABLE>
Deferred (prepaid) income taxes result from the following:
<TABLE>
<CAPTION>
1997 1996 1995
- ---------------------------------------------------------
<S> <C> <C> <C>
Employee and retiree
benefit plans ....... $ 1,481 $ (269) $ (23)
Depreciation and
amortization ........ 3,536 852 175
Inventories ........... 323 670 (419)
Allowances and accruals 2,103 3,745 2,204
Financing ............. (103) (100) (86)
Other ................. (1,036) (513) 495
------- ------- -------
Total deferred
tax provision ... $ 6,304 $ 4,385 $ 2,346
======= ======= =======
</TABLE>
31
<PAGE> 35
Deferred tax assets (liabilities) relate to the following at December 31, 1997
and 1996:
<TABLE>
<CAPTION>
1997 1996
- ---------------------------------------------------------
<S> <C> <C>
Employee and retiree benefit plans $ 4,030 $ 5,085
Depreciation and amortization .... (12,545) (8,784)
Inventories ...................... (1,860) (1,486)
Allowances and accruals .......... 3,738 5,086
Financing ........................ (209) (312)
Other ............................ 1,731 404
-------- --------
Total .......................... $ (5,115) $ (7)
======== ========
</TABLE>
The consolidated balance sheets at December 31, 1997 and 1996 include current
deferred tax assets of $2,132 and $4,022, respectively, included in "Other
current assets" and noncurrent deferred tax liabilities of $7,247 and $4,029,
respectively, included in "Other noncurrent liabilities".
The total income tax provision differs from the amount computed by applying the
statutory federal income tax rate to pretax income. The computed amount and the
differences for the years ended December 31,1997, 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
1997 1996 1995
- -----------------------------------------------------------------
<S> <C> <C> <C>
Pretax income ................ $ 84,504 $ 69,444 $ 60,992
======== ======== ========
Income tax provision:
Computed amount at
statutory rate of 35% .... $ 29,576 $ 24,305 $ 21,347
Foreign sales
corporation .............. (1,113) (1,091) (918)
Amortization of cost
in excess of net
assets acquired .......... 941 896 868
State and local
income tax (net of federal
tax benefit) ................. 1,221 830 501
Other - net ................ 404 80 47
-------- -------- --------
Total income tax
provision .............. $ 31,029 $ 25,020 $ 21,845
======== ======== ========
</TABLE>
No provision has been made for U.S. or additional foreign taxes on $17.9 million
of undistributed earnings of foreign subsidiaries, which are permanently
reinvested. It is not practical to estimate the amount of additional tax which
might be payable if these earnings were repatriated. However, the Company
believes that U.S. foreign tax credits would, for the most part, eliminate any
additional U.S. tax and offset any additional foreign tax.
13. Quarterly Results of Operations (unaudited)
The following is a summary of the unaudited quarterly results of operations for
the years ended December 31, 1997 and 1996:
<TABLE>
<CAPTION>
-----------------------------------------
Quarter
- -------------------------------------------------------------
First Second Third Fourth
-------- ------- -------- --------
<S> <C> <C> <C> <C>
December 31, 1997
Net sales ....... $131,375 $141,976 $141,799 $137,013
Gross profit .... 52,109 57,290 56,988 55,970
Operating
income ........ 23,966 25,966 26,568 27,095
Income from
continuing
operations .... 12,101 13,284 13,724 14,366
Net income ...... 13,395 14,995 14,484 15,752
Basic EPS:
Continuing
operations... $ .41 $ .46 $ .47 $ .49
Net income .... .46 .51 .50 .54
Weighted
average shares
outstanding ... 29,178 29,180 29,226 29,247
Diluted EPS:
Continuing
operations... $ .41 $ .44 $ .45 $ .48
Net income .... .45 .50 .48 .52
Weighted
average shares
outstanding ... 29,809 30,028 30,333 30,210
</TABLE>
<TABLE>
<CAPTION>
December 31, 1996
<S> <C> <C> <C> <C>
Net sales ...... $109,445 $109,927 $121,065 $134,262
Gross profit ... 43,854 44,172 47,616 51,432
Operating
income ....... 20,504 21,792 21,282 24,038
Income from
continuing
operations ... 10,698 11,702 10,462 11,562
Net income ..... 12,214 12,662 11,828 13,494
Basic EPS:
Continuing
operations.. $ .37 $ .41 $ .36 $ .40
Net income ... .43 .44 .41 .47
Weighted
average shares
outstanding .. 28,709 28,761 28,902 28,917
Diluted EPS:
Continuing
operations.. $ .36 $ .39 $ .35 $ .39
Net income ... .41 .43 .40 .45
Weighted
average shares
outstanding .. 29,726 29,735 29,735 29,711
</TABLE>
32
<PAGE> 36
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of IDEX Corporation
We have audited the accompanying consolidated balance sheets of IDEX Corporation
and its subsidiaries as of December 31, 1997 and 1996 and the related statements
of consolidated operations, shareholders' equity, and cash flows for each of the
three years in the period ended December 31, 1997. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the 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 financial position of the Company and its subsidiaries at
December 31, 1997 and 1996 and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1997 in
conformity with generally accepted accounting principles.
/s/ DELOITTE & TOUCHE LLP
Deloitte & Touche LLP
Chicago, Illinois
January 20, 1998
MANAGEMENT REPORT
IDEX Corporation's management is responsible for the fair presentation and
consistency of all financial data included in this Annual Report in accordance
with generally accepted accounting principles. Where necessary, the data reflect
management's best estimates and judgments.
Management also is responsible for maintaining a system of internal accounting
controls with the objectives of providing reasonable assurance that IDEX's
assets are safeguarded against material loss from unauthorized use or
disposition and that authorized transactions are properly recorded to permit the
preparation of accurate financial data. Cost benefit judgments are an important
consideration in this regard. The effectiveness of internal controls is
maintained by personnel selection and training, division of responsibilities,
establishment and communication of policies, and ongoing internal review
programs and audits. Management believes that IDEX's system of internal controls
as of December 31, 1997, is effective and adequate to accomplish the above
described objectives.
/s/ DONALD N. BOYCE
Donald N. Boyce
Chairman of the Board and Chief Executive Officer
/s/ FRANK J. HANSEN
Frank J. Hansen
President and Chief Operating Officer
/s/ WAYNE P. SAYATOVIC
Wayne P. Sayatovic
Senior Vice President - Finance, Chief Financial Officer and Secretary
Northbrook, Illinois
January 20, 1998
33
<PAGE> 37
<TABLE>
<CAPTION>
Business
UNITS
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
P. PETER MERKEL, JR. ROGER N. GIBBINS STEVEN E. SEMMLER JAMES R. FLUHARTY LEENDERT HELLENBERG
Chairman President President President - Worldwide President - Europe/Asia
Age: 64 Age: 52 Age: 42 Age: 54 Age: 52
Years of Service: 25 Years of Service: 13 Years of Service: 18 Years of Service: 7 Years of Service: 13
BAND-IT-IDEX, INC. CORKEN, INC. FLUID MANAGEMENT, INC.
4799 Dahlia St., Denver, CO 80216 3805 N.W. 36th St. 1023 S. Wheeling Rd., Wheeling, IL 60090
(303) 320-4555 Oklahoma City, (847) 537-0880
OK 73112
(405) 946-5576
WARREN E. GAST WADE H. ROBERTS, JR. THOMAS L. ANDREWS JEFFREY L. HOHMAN RODNEY L. USHER
President President President President President
Age: 66 Age: 51 Age: 50 Age: 44 Age: 52
Years of Service: 35 Years of Service: 7 Years of Service: 7 Years of Service: 7 Years of Service: 17
GAST HALE PRODUCTS, INC. LUBRIQUIP, INC. MICROPUMP, INC. PULSAFEEDER, INC.
MANUFACTURING, INC. 700 Spring Mill Ave. 18901 Cranwood Pkwy. 1402 N.E. 136th Ave. 2883 Brighton -
2300 Highway M-139 Conshohocken, Warrensville Heights, Vancouver, Henrietta Town Line Rd.
Benton Harbor, MI 49023 PA 19428 OH 44128 WA 98684 Rochester, NY 14623
(616) 926-6171 (610) 825-6300 (216) 581-2000 (360) 253-2008 (716) 292-8000
JOHN P. SNOW RALPH N. YORIO JOHN L. MCMURRAY JEFFERY F. FEHR
President President President President
Age: 53 Age: 51 Age: 47 Age: 46
Years of Service: 21 Years of Service: 11 Years of Service: 5 Years of Service: 6
STRIPPIT, INC. VIBRATECH, INC. VIKING PUMP, INC. WARREN RUPP, INC. NOTE: Years of
12975 Clarence 11980 Walden Ave. 406 State St. 800 North Main St. service include periods
Center Rd. Alden, NY 14004 Cedar Falls, IA 50613 Mansfield, OH 44902 prior to acquisition
Akron, NY 14001 (716) 937-6600 (319) 266-1741 (419) 524-8388 by IDEX.
(716) 542-4511
</TABLE>
34
<PAGE> 38
<TABLE>
<CAPTION>
Corporate
OFFICERS & DIRECTORS
<S> <C> <C>
Corporate Officers CLINTON L. KOOMAN GEORGE R. ROBERTS
Controller Member
DONALD N. BOYCE Age: 54 Kohlberg Kravis Roberts & Co., L.L.C.
Chairman of the Board and Years of Service: 33 San Francisco, California
Chief Executive Officer Age: 54
Age: 59 DOUGLAS C. LENNOX Years of Service: 10
Years of Service: 28 Treasurer
Age: 45
Years of Service: 18 NEIL A. SPRINGER o o
FRANK J. HANSEN Managing Director
President and Springer Souder & Assoc. L.L.C.
Chief Operating Officer Directors Chicago, Illinois
Age: 56 Age: 59
Years of Service: 22 DONALD N. BOYCE o Years of Service: 8
Chairman of the Board and
Chief Executive Officer
WAYNE P. SAYATOVIC IDEX Corporation MICHAEL T. TOKARZ o
Senior Vice President - Northbrook, Illinois Member
Finance, Chief Financial Age: 59 Kohlberg Kravis Roberts & Co., L.L.C.
Officer and Secretary Years of Service: 10 New York, New York
Age: 51 Age: 48
Years of Service: 25 FRANK J. HANSEN Years of Service: 10
President and Chief
Operating Officer
JERRY N. DERCK IDEX Corporation
Vice President - Northbrook, Illinois
Human Resources Age: 56
Age: 50 Appointed: January 1, 1998 Member of:
Years of Service: 5 [] Executive Committee
RICHARD E. HEATH [] Audit Committee
Partner [] Compensation Committee
JAMES R. FLUHARTY Hodgson, Russ, Andrews,
Vice President - Woods & Goodyear NOTE: Years of service for
Corporate Marketing Buffalo, New York corporate officers includes periods
Age: 54 Age: 67 with predecessor to IDEX.
Years of Service: 7 Years of Service: 9
HENRY R. KRAVIS
P. PETER MERKEL, JR. Member
Vice President - Kohlberg Kravis Roberts & Co., L.L.C.
Group Executive New York, New York
Age: 64 Age: 53
Years of Service: 25 Years of Service: 10
WILLIAM H. LUERS o o
DENNIS L. METCALF President
Vice President - Metropolitan Museum of Art
Corporate Development New York, New York
Age: 50 Age: 68
Years of Service: 24 Years of Service: 9
PAUL E. RAETHER
WADE H. ROBERTS, JR. Member
Vice President - Kohlberg Kravis Roberts & Co., L.L.C.
Group Executive New York, New York
Age: 51 Age: 51
Years of Service: 7 Years of Service: 10
CLIFTON S. ROBBINS o
RODNEY L. USHER Member
Vice President - Kohlberg Kravis Roberts & Co., L.L.C.
Group Executive New York, New York
Age: 52 Age: 39
Years of Service: 17 Years of Service: 10
DAVID T. WINDMULLER
Vice President -
Operations
Age: 40
Years of Service: 17
</TABLE>
35
<PAGE> 39
Shareholder
INFORMATION
Corporate Executive Offices
IDEX Corporation
630 Dundee Road
Northbrook, Illinois 60062
(847) 498-7070
Investor Information
Shareholders and prospective investors are welcome to call or write with
questions or requests for additional information. Please direct inquiries to:
Wayne P. Sayatovic, Senior Vice President - Finance, Chief Financial Officer and
Secretary. News releases and other background information are available at no
charge by calling 1-800-758-5804, ext. 110769 for fax service, or under http://
www.prnewswire.com on the Internet.
Registrar and Transfer Agent
Inquiries about stock transfers or address changes should be directed to:
Harris Trust and Savings Bank
311 West Monroe Street
Chicago, Illinois 60690
(312) 461-2288
Independent Auditors
Deloitte & Touche LLP
Two Prudential Plaza
180 North Stetson Avenue
Chicago, Illinois 60601
Dividend Policy
IDEX increased the quarterly dividend on its common stock beginning January 30,
1998, to $.135 per share per calendar quarter, up 12.5% from last year's
dividend. The declaration of future dividends, subject to certain limitations,
is within the discretion of the Board of Directors and will depend upon, among
other things, business conditions, earnings, and IDEX's financial condition. See
Note 10 of the Notes to Consolidated Financial Statements.
Stock Market Information
IDEX common stock was held by 1,268 shareholders at December 31, 1997, and is
traded on the New York Stock Exchange and the Chicago Stock Exchange under the
ticker symbol IEX.
Form 10-K
Shareholders may obtain a copy of the Form 10-K filed with the Securities and
Exchange Commission by directing a request to IDEX.
Annual Meeting
The Annual Meeting of IDEX Shareholders will be held on Tuesday, March 24, 1998
at 10:00 a.m. in the:
Shareholders Room of Bank of America NT&SA
231 South LaSalle Street
Chicago, Illinois 60697
Quarterly Stock Price
<TABLE>
<CAPTION>
Quarter
- ----------------------------------------------------------
First Second Third Fourth
----- ------ ----- ------
<S> <C> <C> <C> <C>
1997 High 27 34 3/8 35 15/16 36 11/16
Low 23 1/2 23 1/4 31 7/16 31 9/16
Close 23 1/2 33 33 3/8 34 7/8
1996 High 27 5/8 27 3/8 26 1/8 26 3/4
Low 24 1/4 25 19 7/8 22
Close 25 7/8 25 3/8 22 1/8 26 5/8
</TABLE>
36
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF IDEX CORPORATION
December 31, 1997
<TABLE>
<CAPTION>
OTHER NAME
JURISDICTION OF WHICH DOING BUSINESS
SUBSIDIARY INCORPORATION IF ANY
- ---------- --------------- --------------------
<S> <C> <C>
BAND-IT-IDEX, INC. DELAWARE
BAND-IT COMPANY LTD. UNITED KINGDOM
BAND-IT CLAMPS (ASIA) PTE. LTD. SINGAPORE
BAND-IT R.S.A. (PTY) LTD. REP. OF S. AFRICA
51% OWNED
CORKEN, INC. DELAWARE
FMI MANAGEMENT COMPANY DELAWARE
FLUID MANAGEMENT, INC. DELAWARE
FLUID MANAGEMENT EUROPE B.V. NETHERLANDS
FLUID MANAGEMENT U.K. LTD. UNITED KINGDOM
FLUID MANAGEMENT FRANCE SARL FRANCE
FLUID MANAGEMENT ESPNANA SLU SPAIN
FLUID MANAGEMENT SCANDINAVIA AB SWEDEN
FLUID MANAGEMENT GmbH GERMANY
FLUID MANAGEMENT AUSTRALIA PTY.LTD. AUSTRALIA
FLUID MANAGEMENT SERVICES, INC.
FLUID MANAGEMENT CANADA CANADA
FLUID MANAGEMENT SERVICES e VENDES BRAZIL
HALE PRODUCTS, INC. PENNSYLVANIA
HALE PRODUCTS EUROPE GmbH GERMANY
GODIVA PRODUCTS LTD. UNITED KINGDOM
SEITHAL LIMITED UNITED KINGDOM
GODIVA GROUP LTD. UNITED KINGDOM
GINSWAT LTD. HONG KONG
HALE PRODUCTS BET. GmbH GERMANY
LUKAS HYDRAULIK VER. GmbH
LUKAS HYDRAULIK GmbH GERMANY
LUBRIQUIP, INC. DELAWARE
KLS ILUBRIQUIP, INC. WISCONSIN
MICROPUMP, INC. DELAWARE
MICROPUMP LIMITED UNITED KINGDOM
PULSAFEEDER, INC. DELAWARE
PULSAFEEDER PTE. LTD. SINGAPORE
KNIGHT INC. DELAWARE
KNIGHT EQUIPMENT AUSTRALIA PTY LTD AUSTRALIA
KNIGHT EQUIPMENT (CANADA) LTD CANADA
KNIGHT INTERNATIONAL B.V. NETHERLANDS
KNIGHT EQUIPMENT INTL. B.V. NETHERLANDS
SIGNFIX HOLDINGS LIMITED UNITED KINGDOM
SIGNFIX LIMITED UNITED KINGDOM
TESPA FRANCE SARL FRANCE
TESPA GmbH GERMANY
STRIPPIT, INC. DELAWARE BURGMASTER
STRIPPIT LIMITED UNITED KINGDOM
VIBRATECH, INC. DELAWARE
</TABLE>
<PAGE> 2
SUBSIDIARIES OF IDEX CORPORATION
December 31, 1997
<TABLE>
<CAPTION>
OTHER NAME
JURISDICTION OF WHICH DOING BUSINESS
SUBSIDIARY INCORPORATION IF ANY
- ---------- --------------- --------------------
<S> <C> <C>
VIKING PUMP, INC. DELAWARE
VIKING PUMP INTERNATIONAL, INC. DELAWARE
VIKING PUMP (EUROPE) LTD. IRELAND
JOHNSON PUMP (UK) LTD. UNITED KINGDOM
VIKING PUMP OF CANADA, INC. ONTARIO
VIKING PUMP LATIN AMERICA S.A. DE C.V. MEXICO
WARREN RUPP, INC. DELAWARE MARATHON PUMP COMPANY
WARREN RUPP (EUROPE) LTD. IRELAND
BLAGDON PUMP LTD UNITED KINGDOM
IDEX FOREIGN SALES CORP. BARBADOS
</TABLE>
<PAGE> 1
EXHIBIT 24
INDEPENDENT AUDITORS' CONSENT
IDEX Corporation
We consent to the incorporation by reference in Registration Statement (File
Number 333-41627) of IDEX Corporation on Form S-3 and in Registration
Statements (File Numbers 33-47678, 33-56586, 33-67688 and 333-18643) of IDEX
Corporation on Form S-8 of our reports dated January 20, 1998, appearing in and
incorporated by reference in this Annual Report on Form 10-K of IDEX Corporation
for the year ended December 31, 1997, and to the reference to us under the
heading "Experts" in the Prospectus Supplement, which is part of the
Registration Statement on Form S-3.
DELOITTE & TOUCHE LLP
Chicago, Illinois
February 6, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 11,771
<SECURITIES> 0
<RECEIVABLES> 83,327
<ALLOWANCES> 2,561
<INVENTORY> 84,240
<CURRENT-ASSETS> 197,267
<PP&E> 197,316
<DEPRECIATION> 108,688
<TOTAL-ASSETS> 599,193
<CURRENT-LIABILITIES> 77,801
<BONDS> 258,417
0
0
<COMMON> 292
<OTHER-SE> 238,379
<TOTAL-LIABILITY-AND-EQUITY> 599,193
<SALES> 552,163
<TOTAL-REVENUES> 552,163
<CGS> 329,806
<TOTAL-COSTS> 448,568
<OTHER-EXPENSES> (693)
<LOSS-PROVISION> 1,315
<INTEREST-EXPENSE> 18,398
<INCOME-PRETAX> 84,504
<INCOME-TAX> 31,029
<INCOME-CONTINUING> 53,476
<DISCONTINUED> 5,151
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 58,626
<EPS-PRIMARY> 1.95
<EPS-DILUTED> 0
</TABLE>
