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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ___________ TO ___________
COMMISSION FILE NUMBER 1-10235
IDEX CORPORATION
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 36-3555336
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
630 DUNDEE ROAD, NORTHBROOK, ILLINOIS 60062
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (847) 498-7070
Securities registered pursuant to section 12(B) of the act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
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Common stock, New York Stock Exchange
par value $.01 per share Chicago Stock Exchange
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 non-affiliates of
IDEX Corporation as of December 31, 1999 was $601,638,111.
The number of shares outstanding of IDEX Corporation's common stock, par
value $.01 per share (the "Common Stock"), as of January 28, 2000 was
29,661,553.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the 1999 Annual Report to Shareholders of IDEX Corporation (the
"1999 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 "2000 Proxy Statement") with respect to the 2000 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") manufactures an extensive array
of proprietary, engineered industrial products sold to customers in a variety of
industries around the world. The Company believes that each of its principal
business units holds the number-one or number-two market share position in each
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, coupled with its ability to identify and
successfully integrate strategic acquisitions. IDEX consists of three reportable
business segments: Pump Products Group, Dispensing Equipment Group, and Other
Engineered Products Group.
PUMP PRODUCTS GROUP
The Pump Products Group designs, produces and distributes a wide variety of
industrial pumps, compressors and related controls for the movement of liquids,
air and gases. The devices and equipment produced by this Group are used by a
large and diverse set of industries, including chemical processing, machinery,
water treatment, medical equipment, petroleum distribution, oil and refining,
and food processing. In 1999, the six business units that comprised this group
were Corken, Gast Manufacturing, Micropump, Pulsafeeder, Viking Pump, and Warren
Rupp. The group accounted for 57% of sales and 56% of operating income in 1999,
with 31% of sales shipped to customers outside the U.S.
Corken. Corken is a leading producer of positive displacement rotary vane
pumps, single and multistage regenerative turbine pumps, and small horsepower
reciprocating piston compressors. Management estimates that Corken has
approximately a 50% U.S. market share for pumps and compressors used in
liquefied petroleum gas distribution facilities. Corken's products are used for
the transfer and recovery of non-viscous, toxic, and hazardous fluids in either
liquid or vapor form. Corken's products are used in a variety of industries
including liquefied petroleum gas, oil and gas, petrochemical, pulp and paper,
transportation, marine, food processing and general industrial. Approximately
45% of Corken's 1999 sales were to customers outside the U.S. Corken, which was
acquired by IDEX in 1991, is based in Oklahoma City, Oklahoma.
Gast Manufacturing. Gast Manufacturing (Gast) is a leading manufacturer of
air-moving products with an estimated 33% U.S. market share in air motors, low
and medium range vacuum pumps, vacuum generators, regenerative blowers and
fractional horsepower compressors. Gast's products are used in applications
requiring a quiet, clean source of moderate vacuum or pressure. Gast's primary
markets served are medical equipment, environmental equipment, computers and
electronics, printing machinery, paint mixing machinery, packaging machinery,
graphic arts and industrial manufacturing. Approximately 20% of Gast's 1999
sales were to customers outside the U.S. Gast was acquired in 1998 and is based
in Benton Harbor, Michigan, with an additional operation in England.
Micropump. Micropump is a leader in small, precision-engineered,
magnetically and electromagnetically driven rotary gear, piston and centrifugal
pumps with an approximate 40% U.S. market share. Micropump's products are used
in low-flow abrasive and corrosive applications. Micropump serves markets
including printing machinery, medical equipment, chemical processing,
pharmaceutical, refining, laboratory, electronics, pulp and paper, water
treatment and textiles. Micropump's sales in 1999 to customers outside the U.S.
were 50%. Micropump, which was acquired by IDEX in 1995, has its headquarters
facility in Vancouver, Washington, and also has an operation in England.
Pulsafeeder. Pulsafeeder is a leading manufacturer of metering pumps,
special purpose rotary pumps, peristaltic pumps, electronic controls and
dispensing equipment with an estimated 40% U.S. market share. Pulsafeeder's
products are used to introduce precise amounts of fluids into processes to
manage water quality and chemical composition. Pulsafeeder's markets include
water and wastewater treatment, power generation, pulp and paper, chemical and
hydrocarbon processing, swimming pool, industrial and commercial laundry and
dishwashing. In 1999, approximately 30% of Pulsafeeder's sales were to customers
outside the U.S. Knight Equipment International (Knight) was acquired in 1997
and is operated as part of the Pulsafeeder business unit. Pulsafeeder was
acquired in 1992 and is headquartered in Rochester, New York, with additional
operations in Lake Forest, California, Punta Gorda, Florida, and Enschede, The
Netherlands.
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Viking Pump. Viking Pump is one of the world's largest internal gear pump
producers. Management believes that Viking has an estimated 35% of the U.S.
rotary gear pump market. Viking also produces lobe and metering pumps, strainers
and reducers, and related controls. These products are used for transferring and
metering thin and viscous liquids. Markets served by Viking include chemical,
petroleum, pulp and paper, plastics, paints, inks, tanker trucks, compressor,
construction, food, beverage, personal care, pharmaceutical and biotech.
Approximately 30% of Viking's 1999 sales were to customers outside the U.S.
Viking operates two foundries that supply a majority of Viking's castings
requirements. In addition, these foundries sell a variety of castings to outside
customers. Viking is based in Cedar Falls, Iowa with additional operations in
Canada, England and Ireland.
Warren Rupp. Warren Rupp is a leading producer of double-diaphragm pumps,
both air-operated and motor-driven, and accessories with an estimated 25% U.S.
market share. Warren Rupp's products are used for abrasive and semisolid
materials as well as for applications where product degradation is a concern or
where electricity is not available or should not be used. Warren Rupp serves
markets including chemical, paint, food processing, electronics, construction,
utilities, mining and industrial maintenance. Sales to customers outside the
U.S. in 1999 were 50%. Blagdon Pump was acquired in 1997 and is operated as part
of the Warren Rupp business unit. Warren Rupp is based in Mansfield, Ohio, with
an additional operation in England.
DISPENSING EQUIPMENT GROUP
The Dispensing Equipment Group produces highly engineered equipment for
dispensing, metering and mixing colorants, paints, inks, dyes; refinishing
equipment; and centralized lubrication systems. This proprietary equipment is
used in a variety of retail and commercial industries around the world. These
units provide componentry and systems for applications such as tinting paints
and coatings; providing industrial and automotive refinishing equipment; and the
precise lubrication of machinery and transportation equipment. In 1999, the
three business units that comprised this group were FAST, Fluid Management, and
Lubriquip. The group accounted for 21% of sales and 22% of operating income in
1999, with 48% of sales shipped to customers outside the U.S.
FAST. The Company acquired FAST S.p.A. (FAST) on June 4, 1999, at a cost of
approximately $62 million. FAST is a leading European manufacturer of
precision-designed tinting, mixing, dispensing and measuring equipment for
refinishing, architectural and industrial paints, inks, dyes, pastes and other
liquids. Management estimates that FAST has a 33% worldwide share of the
refinishing equipment market. FAST's products are used for the precise and
reliable reproduction of colors based on paint producers' formulas. Through
architectural, refinishing and industrial paint producers, precision equipment
is supplied to retail and commercial stores, home centers, and automotive body
shops. Approximately 95% of FAST's sales in 1999 were to customers outside the
U.S. FAST is based in Milan, Italy.
Fluid Management. Fluid Management is a market leader in automatic and
manually operated dispensing, metering and mixing equipment for the paints and
coatings market with an estimated 50% worldwide market share. Fluid Management's
products are used for the precise blending of base paints, tints and colorants,
and inks and dyes. Fluid Management's markets include retail and commercial
paint stores, hardware stores, home centers, department stores, printers, and
paint and ink manufacturers. Approximately 50% of Fluid Management's 1999 sales
were to customers outside the U.S. Fluid Management was acquired by IDEX in 1996
and is based in Wheeling, Illinois. Additional operations are located in The
Netherlands and Australia.
Lubriquip. Lubriquip is a market leader in centralized oil and grease
lubrication systems, force-feed lubricators, metering devices, related
electronic controls and accessories with an estimated 33% share of the U.S.
market for centralized oil lubrication systems. Lubriquip's products are used to
prolong equipment life, reduce maintenance costs and increase productivity.
Lubriquip serves markets including machine tools, transfer machines, conveyors,
packaging equipment, transportation equipment, construction machinery, food
processing and paper machinery. Approximately 20% of Lubriquip's sales in 1999
were to customers outside the U.S. Lubriquip is headquartered in Warrensville
Heights, Ohio, with an additional operation in Madison, Wisconsin.
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OTHER ENGINEERED PRODUCTS GROUP
The Other Engineered Products Group manufactures engineered banding and
clamping devices, fire fighting pumps and rescue tools. The high-quality
stainless steel bands, buckles and preformed clamps and related installation
tools are used in applications including securing hoses, signals, pipes, poles,
electrical lines, sign-mounting systems and numerous other "hold-together"
applications. The group also includes the world's leading manufacturer of
truck-mounted fire pumps and rescue tool systems used by public and private fire
and rescue organizations. In 1999, the two units that comprised this group were
Band-It and Hale Products. The group accounted for 22% of sales and operating
income in 1999, with 51% of sales shipped to customers outside the U.S.
Band-It. Band-It is a leading producer of high-quality stainless steel
bands, buckles and clamping systems with an estimated 40% worldwide market
share. Band-It's products are used for securing hose fittings, signs, signals,
pipes, poles, electrical shielding and bundling and numerous other
"hold-together" applications for industrial and commercial use. Band-It's
markets include transportation equipment, oil and gas, industrial maintenance,
electronics, electrical, communications, aerospace, traffic and commercial
signs. In 1999, approximately 60% of Band-It's sales were to customers outside
the U.S. Signfix was acquired in 1993 and is being operated as part of the
Band-It business unit. Band-It is based in Denver, Colorado, with three
additional operations in England and one in Singapore.
Hale Products. Hales Products (Hale) is the world's leading manufacturer of
truck-mounted fire pumps and rescue systems with an estimated 50% worldwide
market share. Hale's products include the Hurst Jaws of Life(R) and Lukas(R)
rescue systems. Hale's pumps are used to pump water or foam to extinguish fires;
its rescue equipment is used to extricate accident victims; and its forced entry
equipment is used for law enforcement and disaster recovery. Hale's markets
include public and private fire and rescue organizations. Approximately 45% of
Hale's 1999 sales were to customers outside the U.S. Lukas was acquired in 1995
and is operated as part of the Hale Products business unit. Hale was acquired by
IDEX in 1994. Hale is headquarted in Conshohocken, Pennsylvania, with additional
operations in Shelby, North Carolina, St. Joseph, Tennessee, Warwick, England,
and Erlangen, Germany.
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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 liquified petroleum gas
distribution facilities); Milton Roy, a division of United Technologies
Corporation (with respect to metering pumps and controls); Roper Industries
(with respect to rotary gear pumps); Wilden Pump and Engineering Co., a division
of Dover Corporation (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 Dispensing Equipment Group are Corob (with
respect to dispensing and mixing equipment for the paint industry); Dedoes
Industries Incorporated (with respect to automotive and industrial refinishing
equipment); and Lincoln Industrial, a division of Pentair Incorporated (with
respect to centralized lubrication systems).
The Other Engineered Products Group's principal competitors are A.J.
Gerrard & Company (with respect to stainless steel bands, buckles and tools);
Waterous Company, a division of American Cast Iron Pipe Company (with respect to
truck-mounted fire-fighting pumps); and Holmotro (with respect to rescue tools).
EMPLOYEES
At December 31, 1999, IDEX had approximately 3,800 employees. Approximately
15% were represented by labor unions with various contracts expiring though
March 2003. 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 any 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 1999, 1998, and 1997, see
the table titled "Company and Business Group Financial Information" presented on
page 18 under "Management's Discussion & Analysis of Financial Condition &
Results of Operations" and Note 10 of the "Notes to Consolidated Financial
Statements" on pages 30 and 31 of the 1999 Annual Report, which is incorporated
herein by reference.
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EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth the names of the executive officers of the
Company, their ages, years of service, the positions held by them, and their
business experience during the past 5 years.
<TABLE>
<CAPTION>
YEARS OF
NAME AGE SERVICE (1) POSITION
- ---- --- ----------- --------
<S> <C> <C> <C>
Frank J. Hansen...................... 58 24 President, Chief Executive Officer
and Director
Wayne P. Sayatovic................... 53 27 Senior Vice President-Finance and
Chief Financial Officer
Jerry N. Derck....................... 52 7 Vice President-Human Resources
James R. Fluharty.................... 56 12 Vice President-Corporate Marketing
and Group Executive
Clinton L. Kooman.................... 56 35 Vice President-Controller
Douglas C. Lennox.................... 47 20 Vice President-Treasurer
John L. McMurray..................... 49 7 Vice President-Group Executive and
President, Viking Pump
Dennis L. Metcalf.................... 52 26 Vice President-Corporate Development
Frank J. Notaro...................... 36 2 Vice President-General Counsel and
Secretary
Rodney L. Usher...................... 54 19 Vice President-Group Executive and
President, Pulsafeeder
David T. Windmuller.................. 42 19 Vice President-Operations
</TABLE>
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(1) The years of service for executive officers include the period prior to
acquisition by IDEX or with IDEX's predecessor company.
Mr. Hansen was appointed President and Director of IDEX by the Board of
Directors on January 1, 1998 and was appointed Chief Executive Officer on April
1, 1999. Previously, Mr. Hansen 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. In the fourth quarter of 1999, the
Company announced that Mr. Hansen had made a decision to retire. Mr. Hansen will
remain President and Chief Executive Officer until his replacement has been
selected.
Mr. Sayatovic has been Senior Vice President-Finance and Chief Financial
Officer of the Company since January 1992 and was Vice President-Treasurer from
January 1988 to December 1991. He also served as Secretary from January 1988 to
February 1998.
Mr. Derck has been Vice President-Human Resources of the Company since
November 1992.
Mr. Fluharty has served as Vice President-Corporate Marketing of the
Company since March 1997 and as Vice President-Group Executive since December
1998. He was President of Fluid Management from January 1998 to December 1998
and from April 1996 to February 1997 he 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. Kooman has been Vice President-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 Vice President-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.
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Mr. McMurray has been Vice President-Group Executive of the Company since
November 1998 and President of Viking Pump since January 1997. He was Executive
Vice President of Viking Pump from August 1994 to December 1996, and Vice
President-Finance of Viking Pump from October 1992 to July 1994.
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. Notaro has served as Vice President-General Counsel and Secretary since
March 1998. Previously, Mr. Notaro was a partner of Hodgson, Russ, Andrews,
Woods and Goodyear LLP from January 1993 to February 1998.
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. 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 Executive
Vice President of Viking Pump. Mr. Windmuller served as Vice President-
Engineering of Viking Pump from November 1991 to April 1993.
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 2.7 million square feet, of which 1.9 million square feet
(70%) are located in the U.S. and approximately 800,000 square feet (30%) are
located outside the U.S., primarily in the U.K. (10%), Italy (10%), Germany (5%)
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 office occupies approximately 12,000 square feet of leased space in
Northbrook, Illinois.
Approximately 2.0 million square feet (74%) of the principal plant and
office floor area is owned by the Company, and the balance is held under lease.
Approximately 1.5 million square feet (56%) of the principal plant and office
floor area is held by business units in the Pump Products Group; 600,000 square
feet (22%) is held by business units in the Dispensing Equipment Group; and
600,000 square feet (22%) is held by business units in the Other Engineered
Products 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 which could,
individually or in the aggregate, cause a material adverse effect on the
business, financial condition, results of operations, or cash flows of the
Company or any of its Subsidiaries.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
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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" on page 37 of the 1999 Annual Report.
The principal market for the Common Stock is the New York Stock Exchange,
but the Common Stock is also listed on the Chicago Stock Exchange. As of January
28, 2000, the Common Stock was held by approximately 7,000 shareholders and
there were 29,661,553 shares of Common Stock outstanding.
ITEM 6. SELECTED FINANCIAL DATA.
The information set forth under "Historical Data" on pages 14 and 15 of the
1999 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 & Analysis of
Financial Condition & Results of Operations" on pages 16 to 21 of the 1999
Annual Report is incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.
The information set forth under the caption "Quantitative and Qualitative
Disclosure about Market Risk" on page 21 of the 1999 Annual Report is
incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The Consolidated Financial Statements of IDEX, including Notes thereto,
together with the independent auditors' report thereon of Deloitte & Touche LLP
on pages 22 to 34 of the 1999 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 the caption "Election of
Directors" in the 2000 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" on 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 2000 Proxy Statement.
ITEM 11. EXECUTIVE COMPENSATION.
Information regarding executive compensation is incorporated herein by
reference to the materials under the caption "Compensation of Executive
Officers" in the 2000 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 to the information set forth
under the caption "Security Ownership" in the 2000 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 the caption
"Certain Interests" in the 2000 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 1999 Annual Report.
1999 ANNUAL
REPORT PAGE
-----------
Consolidated Balance Sheets as of December 31, 1999 and
1998...................................................... 22
Statements of Consolidated Operations for the Years Ended
December 31, 1999, 1998 and 1997.......................... 23
Statements of Consolidated Shareholders' Equity for the
Years Ended December 31, 1999, 1998 and 1997.............. 24
Statements of Consolidated Cash Flows for the Years Ended
December 31, 1999, 1998 and 1997.......................... 25
Notes to Consolidated Financial Statements.................. 26-33
Independent Auditors' Report................................ 34
1999 FORM
10-K PAGE
---------
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, not required, or because the required
information is included in the Consolidated Financial
Statements of IDEX or the Notes thereto.
3. Exhibits
The exhibits filed with this report are listed on the "Exhibit Index."
(B) Report on Form 8-K
In a report on Form 8-K, dated December 6, 1999, and filed with the
Securities and Exchange Commission on December 6, 1999, IDEX Corporation
announced that Frank J. Hansen, the Company's President and Chief Executive
Officer had made a decision to retire. Mr. Hansen, 58, has been with the Company
for 24 years, was named President in January 1998 and assumed the additional
duties of CEO as of April 1, 1999.
The Board of Directors expressed its appreciation for his many years of
valuable contributions to the success of the Company and reported that the
search for a successor is underway. Mr. Hansen will remain President and CEO
until his replacement has been selected.
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INDEPENDENT AUDITORS' REPORT
IDEX CORPORATION:
We have audited the consolidated financial statements of IDEX Corporation
and its Subsidiaries as of December 31, 1999 and 1998 and for each of the three
years in the period ended December 31, 1999, and have issued our report thereon,
dated January 18, 2000: such financial statements and report are included in
your 1999 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 as
whole, presents fairly, in all material respects, the information set forth
therein.
DELOITTE & TOUCHE LLP
Chicago, Illinois
January 18, 2000
IDEX CORPORATION AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
BALANCE CHARGED TO BALANCE
BEGINNING COSTS AND END OF
DESCRIPTION OF YEAR EXPENSES DEDUCTIONS (1) OTHER (2) YEAR
----------- --------- ---------- -------------- --------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1999:
Deducted from Assets to Which They
Apply:
Allowance for Doubtful Accounts...... $2,484 $1,392 $1,051 $310 $3,135
Year Ended December 31, 1998:
Deducted from Assets to Which They
Apply:
Allowance for Doubtful Accounts...... 2,561 665 1,060 318 2,484
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
</TABLE>
- -------------------------
(1) Represents uncollectible accounts, net of recoveries.
(2) Represents acquisition, translation and reclassification adjustments.
10
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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 4th day of
February, 2000.
IDEX CORPORATION
By /s/ WAYNE P. SAYATOVIC
------------------------------------
Wayne P. Sayatovic
Senior Vice President - Finance
and Chief Financial Officer
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 and Director February 4, 2000
- ------------------------------------------------
Donald N. Boyce
/s/ FRANK J. HANSEN President, Chief Executive Officer February 4, 2000
- ------------------------------------------------ (Principal Executive Officer) and
Frank J. Hansen Director
/s/ WAYNE P. SAYATOVIC Senior Vice President - Finance February 4, 2000
- ------------------------------------------------ and Chief Financial Officer
Wayne P. Sayatovic (Principal Financial and
Accounting Officer)
/s/ RICHARD E. HEATH Director February 4, 2000
- ------------------------------------------------
Richard E. Heath
/s/ HENRY R. KRAVIS Director February 4, 2000
- ------------------------------------------------
Henry R. Kravis
/s/ WILLIAM H. LUERS Director February 4, 2000
- ------------------------------------------------
William H. Luers
/s/ PAUL E. RAETHER Director February 4, 2000
- ------------------------------------------------
Paul E. Raether
/s/ GEORGE R. ROBERTS Director February 4, 2000
- ------------------------------------------------
George R. Roberts
/s/ NEIL A. SPRINGER Director February 4, 2000
- ------------------------------------------------
Neil A. Springer
/s/ MICHAEL T. TOKARZ Director February 4, 2000
- ------------------------------------------------
Michael T. Tokarz
</TABLE>
11
<PAGE> 13
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
2.1 Acquisition Agreement between IDEX Corporation, Gecofin
S.p.A., and PL&C S.r.l. dated June 3, 1999 (incorporated by
reference to Exhibit No. 2.1 to the Quarterly Report of IDEX
on Form 10-Q for the quarter ended June 30, 1999, Commission
File No. 1-10235)
3.1 Restated Certificate of Incorporation of IDEX Corporation
(formerly HI, Inc.) (incorporated by reference to Exhibit
No. 3.1 to the Registration Statement on Form S-1 of IDEX,
et al., Registration No. 33-21205, as filed on April 21,
1988)
3.1(a) Amendment to Restated Certificate of Incorporation of IDEX
Corporation (formerly HI, Inc.) (incorporated by reference
to Exhibit No. 3.1(a) to the Quarterly Report of IDEX on
Form 10-Q for the quarter ended March 31, 1996, Commission
File No. 1-10235)
3.2 Amended and Restated By-Laws of IDEX Corporation
(incorporated by reference to Exhibit No. 3.2 to
Post-Effective Amendment No. 2 to the Registration Statement
on Form S-1 of IDEX, et al., Registration No. 33-21205, as
filed on July 17, 1989)
3.2(a) Amended and Restated Article III, Section 13 of the Amended
and Restated By-Laws of IDEX Corporation (incorporated by
reference to Exhibit No. 3.2(a) to Post-Effective Amendment
No. 3 to the Registration Statement on Form S-1 of IDEX, et
al., Registration No. 33-21205, as filed on February 12,
1990)
4.1 Restated Certificate of Incorporation and By-Laws of IDEX
Corporation (filed as Exhibits No. 3.1 through 3.2 (a))
4.2 Indenture, dated as of February 23, 1998, between IDEX
Corporation, and Norwest Bank Minnesota, National
Association, as Trustee, relating to the 6 7/8% of Senior
Notes of IDEX due February 15, 2008 (incorporated by
reference to Exhibit No. 4.1 to the Current Report of IDEX
on Form 8-K dated February 23, 1998, Commission File
No.1-10235)
4.3 Specimen Senior Note of IDEX Corporation (incorporated by
reference to Exhibit No. 4.1 to the Current Report of IDEX
on Form 8-K dated February 23, 1998, Commission File No.
1-10235)
4.4 Specimen Certificate of Common Stock of IDEX Corporation
(incorporated by reference to Exhibit No. 4.3 to the
Registration Statement on Form S-2 of IDEX, et al.,
Registration No. 33-42208, as filed on September 16, 1991)
4.5 Third Amended and Restated Credit Agreement dated as of July
17, 1996, among IDEX Corporation, Bank of America NT&SA, as
Agent, and other financial institutions named therein (the
"Banks") (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)
4.5(a) First Amendment to the Third Amended and Restated Credit
Agreement dated as of April 11, 1997 (incorporated by
reference to Exhibit No. 4.5(a) to the Quarterly Report of
IDEX on Form 10-Q for the quarter ended June 30, 1998,
Commission File No. 1-10235)
4.5(b) Second Amendment to the Third Amended and Restated Credit
Agreement dated as of January 20, 1998 (incorporated by
reference to Exhibit No. 4.5(b) to the Quarterly Report of
IDEX on Form 10-Q for the quarter ended June 30, 1998,
Commission File No. 1-10235)
4.5(c) Third Amendment to the Third Amended and Restated Credit
Agreement dated as of February 9, 1998 (incorporated by
reference to Exhibit No. 4.5(c) to the Quarterly Report of
IDEX on Form 10-Q for the quarter ended June 30, 1998,
Commission File No. 1-10235)
</TABLE>
12
<PAGE> 14
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
4.5(d) Fourth Amendment to the Third Amended and Restated Credit
Agreement dated as of April 3, 1998 (incorporated by
reference to Exhibit No. 4.5(d) to the Quarterly Report of
IDEX on Form 10-Q for the quarter ended June 30, 1998,
Commission File No. 1-10235)
4.5(e) Fifth Amendment to the Third Amended and Restated Credit
Agreement dated as of June 8, 1999 (incorporated by
reference to Exhibit No. 4.5(e) to the Quarterly Report of
IDEX on Form 10-Q for the quarter ended June 30, 1999,
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 , et al., Registration No. 33-28317, as filed on June
1, 1989)
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)** Third Amendment to the Amended and Restated Employment
Agreement between IDEX Corporation and Donald N. Boyce,
dated December 19, 1997 (incorporated by reference to
Exhibit No. 10.1(c) to the Annual Report of IDEX on Form
10-K for the year ending December 31, 1997, Commission File
No. 1-10235)
10.1(d)** Consulting Agreement between IDEX Corporation and Donald N.
Boyce, dated March 31, 1999 (incorporated by reference to
Exhibit No. 10.1 to the Quarterly Report of IDEX on Form
10-Q for the quarter ended March 31, 1999, Commission File
No. 1-10235)
10.1(e)** Indemnity Agreement between IDEX Corporation and Mr. Donald
N. Boyce, dated April 1, 1999 (incorporated by reference to
Exhibit No. 10.2 to the Quarterly Report of IDEX on Form
10-Q for the quarter ended June 30, 1999, Commission File
No. 1-10235)
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, et al., 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 the Annual Report of IDEX on Form
10-K for the year ended December 31, 1994, Commission File
No. 1-10235)
*10.2(c)** Letter Agreement between IDEX Corporation and Wayne P.
Sayatovic dated December 3, 1999.
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)
</TABLE>
13
<PAGE> 15
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
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 as of December 19,
1997 (incorporated by reference to Exhibit No. 10.3(b) to
the Annual Report of IDEX on Form 10-K for the year ending
December 31, 1997, Commission File No. 1-10235)
10.3(c)** Amended and Restated Employment Agreement between IDEX
Corporation and Frank J. Hansen, dated December 23, 1998
(incorporated by reference to Exhibit No. 10.3(c) to the
Annual Report of IDEX on Form 10-K for the year ending
December 31, 1998, Commission File No. 1-10235)
*10.3(d)** Letter Agreement between IDEX Corporation and Frank J.
Hansen dated November 24, 1999.
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 year ending December 31, 1994,
Commission File No.
1-10235)
10.5** Management Incentive Compensation Plan of IDEX Corporation
(incorporated by reference to Exhibit No. 10.21 to Amendment
No. 1 to the Registration Statement on Form S-1 of IDEX, et
al., Registration No. 33-28317, as filed on June 1, 1989)
10.5(a)** Amended Management Incentive Compensation Plan of IDEX
Corporation (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 of IDEX Corporation
(incorporated by reference to Exhibit No. 10.23 to the
Registration Statement on Form S-1 of IDEX, et al.,
Registration No. 33-28317, as filed on April 26, 1989)
10.7** Form of Shareholder Purchase and Sale Agreement of IDEX
Corporation (incorporated by reference to Exhibit No. 10.24
to Amendment No. 1 to the Registration Statement on Form S-1
of IDEX, et al., Registration No. 33-28317, as filed on June
1, 1989)
10.8** Revised Form of IDEX Corporation Stock Option Plan for
Outside Directors (incorporated reference to Exhibit No.
10.22 to Post-Effective Amendment No. 4 to the Registration
Statement on Form S-1 of IDEX, 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 21, 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.
1-10235)
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, et al.,
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. 1-10235)
</TABLE>
14
<PAGE> 16
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
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. 1-10235)
10.13** 1996 Stock Plan for Officers of IDEX Corporation
(incorporated by reference to Exhibit No. 4.4 to the
Registration Statement on Form S-8 of IDEX, et al.,
Registration No. 333-18643, as filed on December 23, 1996)
10.14** Amended and Restated IDEX Corporation Directors Deferred
Compensation Plan (incorporated by reference to Exhibit No.
4.6 to the Registration Statement on Form S-8 of IDEX, et
al., Registration No. 333-18643, as filed on December 23,
1996)
10.14(a)** Second Amended and Restated IDEX Corporation Directors
Deferred Compensation Plan (incorporated by reference to
Exhibit No. 10.14(b) to the Annual Report of IDEX on Form
10-K for the year ending December 31, 1997, Commission File
No. 1-10235)
10.15** IDEX Corporation 1996 Deferred Compensation Plan for
Officers (incorporated by reference to Exhibit No. 4.8 to
the Registration Statement on Form S-8 of IDEX, et al.,
Registration No. 333-18643, as filed on December 23, 1996)
10.16** IDEX Corporation 1996 Deferred Compensation Plan for
Non-Officer Presidents (incorporated by reference to Exhibit
No. 4.7 to the Registration Statement on Form S-8 of IDEX,
et al., Registrant No. 333-18643, as filed on December 23,
1996)
*10.17** Letter Agreement between IDEX Corporation and David T.
Windmuller dated December 3, 1999.
*10.18** Letter Agreement between IDEX Corporation and James R.
Fluharty dated December 3, 1999.
*10.19** Letter Agreement between IDEX Corporation and Rodney L.
Usher dated December 3, 1999.
13* 1999 Annual Report to Shareholders of IDEX
21* Subsidiaries of IDEX
23* Consent of Deloitte & Touche LLP
27* Financial Data Schedule
99 Revolving Credit Facility, dated as of September 29, 1995,
as amended, 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 agreement.
15
<PAGE> 1
EXHIBIT 10.2(c)
December 3, 1999
PERSONAL AND CONFIDENTIAL
Mr. Wayne P. Sayatovic
91 West Mallard Lane
Lake Forest, Illinois 60045
Dear Wayne:
Re: Severance Agreement
This is to confirm that in the event of your Termination of Service, as
hereafter defined, with IDEX Corporation or its successors ("IDEX"), within
twenty-four (24) months following, or, directly or indirectly, in connection
with, or in anticipation of, a Change of Management, as hereinafter defined, you
will be entitled to the following benefits as a severance payment (hereafter
referred to individually as a "Severance Benefit" and collectively as "Severance
Benefits"):
1) Payment of your base salary and vacation pay (for vacation not
taken, including vacation carryover from the prior year plus a
pro rata accrual for the current year) accrued but unpaid
through the date of termination of employment payable in a
single lump sum payment on the last day employed or as soon
thereafter as practicable.
2) Any amount earned under the Management Incentive Compensation
Plan ("MICP") for the calendar year preceding the year in
which the termination of employment occurs which has not been
paid will be paid in a single lump sum payment on the last day
employed or as soon thereafter as practicable.
3) An amount equal to two times the sum of (a) your annual base
salary, at the rate in effect on the Determination Date, as
hereafter defined, and (b) your full year's bonus under the
MICP at your target bonus level in effect on the Determination
Date, calculated in accordance with the practice in effect on
the Determination Date. This amount will be paid in a single
lump sum payment on the last day employed or as soon
thereafter as practicable.
<PAGE> 2
Mr. Wayne P. Sayatovic
December 3, 1999
Page 2
4) A proportionate bonus, as described in this subparagraph,
under the MICP. The portion of the bonus payable will be the
amount determined by multiplying a full year's MICP bonus, at
your target bonus level in effect on the Determination Date,
calculated in accordance with the practice in effect on the
Determination Date, by a fraction the numerator of which is
the number of full and partial calendar months in the calendar
year which precede the date of the termination of employment
and the denominator of which is 12. This amount will be paid
in a single lump sum payment on the last day employed or as
soon thereafter as practicable.
5) Fringe benefits for a continuing period of twenty-four (24)
months following the date of termination of employment.
Covered fringe benefits for purposes of this agreement
include: (a) term life insurance in an amount in effect on the
Determination Date, (b) medical benefits at the level in
effect on the Determination Date, (c) to the extent coverage
is available under the insurance policy in effect, the
personal accident plan at the level in effect on the
Determination Date, (d) the use of an IDEX-provided
automobile, plus related expenses, comparable to that provided
to you on the Determination Date, and (e) other miscellaneous
fringe benefits in effect on the Determination Date. Medical
benefits will be reduced to the extent of coverage provided by
subsequent employers. For purposes of COBRA health care
continuation coverage, the "qualifying event" will be deemed
to have occurred at the end of the twenty-four (24) month
period following termination of employment.
6) For a twenty-four (24) month period following the date of your
termination of employment, IDEX will promptly pay or reimburse
you for expenses, in an aggregate amount not to exceed 10% of
your annual base salary, at the rate in effect on the
Determination Date, incurred by you for outplacement services,
which may include consultants, reasonable travel, rental of an
office off IDEX's premises, secretarial support, and
photocopying, telephone, and other miscellaneous office
expenses.
<PAGE> 3
Mr. Wayne P. Sayatovic
December 3, 1999
Page 3
7) For sixty (60) months following the date of your termination
of employment, IDEX will continue any indemnification
agreement with you and will provide directors' and officers'
liability insurance insuring you, such coverage to have limits
and scope of coverage not less than that in effect on the
Determination Date or January 1, 2000, whichever is greater.
At your request, IDEX will cause a certificate of insurance,
in a form satisfactory to you, verifying this coverage to be
provided to you on an annual basis.
8) You will be fully vested in your accrued benefit under any
qualified pension or profit sharing plan maintained by IDEX,
provided, however, if the terms of such plan do not permit
acceleration of full vesting, you will receive a lump sum
payment on the last day employed, or as soon thereafter as
practicable, in an amount equal to the value of your accrued
benefit which was not vested.
9) All stock options previously granted to you will immediately
vest and you will have twelve (12) months following the last
day of employment to exercise all options you hold.
Notwithstanding anything in this letter agreement or any other
agreement to the contrary, in the event it is determined that any payments or
distributions by IDEX 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 you, whether paid or payable pursuant to the terms of this
letter agreement, or pursuant to any other agreement or arrangement with IDEX or
any such affiliate ("Payments"), would be subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended, or any successor
provision, 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 you will be entitled to
receive an additional payment from IDEX (a "Gross-Up Payment") in an amount such
that after payment by you 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, you retain an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments. The amount of the Gross-Up
Payment will be calculated by IDEX's usual
<PAGE> 4
Mr. Wayne P. Sayatovic
December 3, 1999
Page 4
outside counsel engaged immediately prior to the Change of Management or by a
party selected by such counsel in their discretion. The Gross-Up Payment will be
paid on your last day employed or on the occurrence of the event that results in
the imposition of the Excise Tax, if later. If the precise amount of the
Gross-Up Payment cannot be determined on the date it is to be paid, an amount
equal to the best estimate of the Gross-Up Payment will be made on that date
and, within ten (10) days after the precise calculation is obtained, either IDEX
will pay any additional amount to you or you will pay any excess amount to IDEX,
as the case may be. If subsequently the Internal Revenue Service (IRS) claims
that any additional Excise Tax is owing, an additional Gross-Up Payment will be
paid to you within thirty (30) days of your providing substantiation of the
claim made by the IRS. After payment to you of the Gross-Up Payment, you will
provide to IDEX any information reasonably requested by IDEX relating to the
Excise Tax, you will take such actions as IDEX reasonable requests to contest
such Excise Tax, cooperate in good faith with IDEX to effectively contest the
Excise Tax and permit IDEX to participate in any proceedings contesting the
Excise Tax. IDEX will bear and pay directly all costs and expenses (including
any interest or penalties on the Excise Tax), and indemnify and hold you
harmless, on an after-tax basis, from all such costs and expenses related to
such contest. Should it ultimately be determined that any amount of an Excise
Tax is not properly owed, you will refund to IDEX the related amount of the
Gross-Up Payment.
For the purposes of this letter agreement, Termination of Service is
defined as (1) a termination of your employment by IDEX for any reason other
than for Cause, as hereafter defined; (2) your reasonable belief that there has
been a material diminution in responsibilities, duties, title, reporting
responsibilities within the business organization, status, role or authority
(without limiting the generality of the foregoing, such a material diminution in
responsibilities, duties, title, reporting responsibilities within the business
organization, status, role or authority will be deemed to have taken place if
any of the following occur: (a) you cease to be an officer of a reporting
company under the Securities Exchange Act of 1934, (b) you retain the position
as an officer of the reporting company but your primary responsibilities,
duties, title, status, role or authority are with an entity within the business
organization which is not the reporting company, or (c) your degree of
involvement in executive decision making relating to IDEX has been materially
diminished); (3) IDEX moves your primary worksite to a location outside of the
Northbrook, Illinois region which necessitates, in your reasonable judgment,
your
<PAGE> 5
Mr. Wayne P. Sayatovic
December 3, 1999
Page 5
required relocation from your current residence which you choose not to
accept; or (4) reduction in your annual base salary, reduction in the aggregate
compensation provided to you (aggregate compensation to be determined by taking
into consideration, without limitation, the target level of MICP awards (other
than changes in award amounts which are the result of IDEX performance),
retirement or pension plans, non-qualified deferred compensation plans, stock
option awards, severance benefits, or any other fringe benefit plan), or
degradation in working conditions. After notification to you or your obtaining
specific and reliable information which gives rise to your reasonable belief
that one of the preceding events has occurred or is to occur in the near future,
you may, after providing reasonable notice, voluntarily terminate your
employment (which, if prior to the happening of such event, must be effective no
earlier than, and be contingent on, the occurrence of such event). If one of the
events which would be a Termination of Services occurs, and if your termination
of employment at that time would be in a period of time during which you would
be unable to exercise stock options or sell shares of IDEX or its successor,
either by law or contractual agreement (a "restrictive period"), then you may
continue in employment until a reasonable period after the restrictive period
ends and your subsequent termination of employment will be a Termination of
Service.
For purposes of this letter agreement, a "Change of Management" occurs
if the Chief Executive Officer of IDEX, determined as of November 1, 1999, is no
longer serving as President and Chief Executive Officer and a successor has
assumed such positions.
For purposes of this letter agreement, "Cause" exists if (1) you
breach, in a substantive and material manner, your fiduciary duty to IDEX, (2)
you commit a felony criminal act, or (3) you fail, after repeated requests of
the Chief Executive Officer of IDEX, which have been documented to you in
writing, to perform duties assigned to you (the nature of which must be
consistent with the duties assigned to you prior to the Change of Management or
prior to any modification of your assigned duties made in connection with, or in
anticipation of, such Change of Management).
For purposes of this letter agreement, the term "Determination Date"
means the date immediately prior to the date of (1) payment of any Severance
Benefit, (2) the Change of Management, (3) your Termination of Service, or (4)
your last day of
<PAGE> 6
Mr. Wayne P. Sayatovic
December 3, 1999
Page 6
employment, on whichever of the four preceding dates a factor (i.e. the rate,
level, amount, practice, quality or other factor, as the context may indicate)
used to calculate a Severance Benefit under this letter agreement is the factor
which will result, with respect to such Severance Benefit, in the greatest or
largest benefit to be provided. For the avoidance of doubt, the Determination
Date may be different with respect to different Severance Benefits.
If IDEX or any entity which has an obligation to you under this letter
agreement fails to honor any provision of this letter agreement or if a contest
or dispute as to the terms of this letter agreement arises, all legal fees and
expenses incurred by you to enforce this agreement or to contest or dispute its
terms will be paid, or at your request, advanced, to you or directly to your
attorney, as you may direct.
To the extent that this letter agreement provides a larger or greater
separate severance benefit than may be provided to you pursuant to any policy,
program, contract or arrangement adopted by IDEX prior to your Termination of
Service, this letter agreement will supersede and be in full substitution of
such other policy, program, contract or arrangement with respect to the larger
or greater separate severance benefit to be provided. To the extent that any
policy, program, contract or arrangement adopted by IDEX prior to your
Termination of Service provides a larger or greater separate severance benefit
than may be provided to you pursuant to this letter agreement, such other
policy, program, contract or arrangement will supersede and be in full
substitution of this letter agreement with respect to the larger or greater
separate severance benefit to be provided.
The terms of this letter agreement will be governed by the laws of the
State of Illinois and will be binding on IDEX and its successors (who consent to
jurisdiction in the State of Illinois with respect to the subject matter of this
letter agreement) and will inure to the benefit of your heirs. You will not be
required to mitigate the amount of any payment or benefit provided for in this
letter agreement by obtaining other employment or other sources of income or
benefits nor will the amount of any payment or benefit be reduced by offset
against any amount claimed to be owed by you to IDEX (except to the extent that
medical benefits are provided by a subsequent employer). For any matter in this
letter agreement wherein the determination of the existence of any fact or other
matter is indicated to be in your reasonable belief, your belief will be
respected and upheld provided you have
<PAGE> 7
Mr. Wayne P. Sayatovic
December 3, 1999
Page 7
obtained specific and reliable information giving rise to your reasonable belief
and unless IDEX demonstrates, by a preponderance of the evidence, that the basis
for your belief was arbitrary or capricious. If any provision of this letter
agreement is held invalid or unenforceable for any reason, all other provisions
will remain in effect.
All notices and other communications given pursuant to this letter
agreement will be deemed to have been properly given if hand delivered or
mailed, addressed to the appropriate party at the address as shown on the first
page of this letter agreement, postage prepaid, by certified or registered mail,
return receipt requested and, in the case of notice to IDEX to the attention of
the President. A copy of any notice sent must also be sent to Hodgson, Russ,
Andrews, Woods & Goodyear, LLP, 1800 One M&T Plaza, Buffalo, New York 14203,
Attention: Richard E. Heath, Esq. and Richard W. Kaiser, Esq. Any party may from
time to time designate, by written notice given in accordance with these
provisions, any other address or party to which such notice or communication or
copies thereof must be sent.
Very truly yours,
Frank J. Hansen
Agreed to and accepted by:
- --------------------------
Wayne P. Sayatovic
Date: December ______, 1999
<PAGE> 1
EXHIBIT 10.3(d)
November 24, 1999
PERSONAL AND CONFIDENTIAL
Mr. Frank J. Hansen
1716 Mulberry Drive
Libertyville, Illinois 60048
Dear Frank:
Re: Retirement Benefits Agreement
This letter agreement sets forth certain benefits to be
provided to you in recognition of your long and dedicated service to IDEX and in
consideration of your continued service to IDEX through your retirement which is
to be effective as of the date on which a successor to your positions with IDEX
commences services or such other date established by the Board of Directors of
IDEX (hereafter the "Retirement Date"). On your retirement IDEX will provide you
the following benefits:
1. Payment of your base salary, at the rate of $36,667 per month,
vacation pay, for vacation not taken, including vacation carryover from
the prior year plus a pro rata accrual for the current year, and
provision of all fringe benefits, through the end of the month that
includes your Retirement Date.
2. Any amount earned under the Management Incentive Compensation Plan
("MICP") for the 1999 calendar year, determined based on the same
percentage of target bonus that applies to other officers at the IDEX
corporate location, which has not been paid will be paid in a single
lump sum payment on your Retirement Date.
3. An amount equal to your full year's bonus under the MICP at your
target bonus level of 80% of your annual base salary of $440,000 plus,
a proportionate bonus, as described in this subparagraph, under the
MICP will be paid on your Retirement Date. The proportionate bonus
payable will be the amount determined by multiplying a full year's MICP
<PAGE> 2
Mr. Frank J. Hansen
November 24, 1999
Page 2
bonus, at your target bonus level of 80% of your annual base salary of
$440,000, by a fraction the numerator of which is the number of full
and partial calendar months in the calendar year 2000 which precede
your Retirement Date and the denominator of which is 12.
4. You will be paid your monthly base salary of $36,667 per month, for
a period of 24 months commencing with the month following the month
which contains your Retirement Date.
5. You will receive fringe benefits for a period of twenty-four (24)
months commencing with the month following the month that contains your
Retirement Date. Covered fringe benefits for purposes of this agreement
include: (a) term life insurance in an amount in effect on your
Retirement Date, (b) to the extent coverage is available under the
insurance policy in effect, the personal accident plan at the level in
effect on your Retirement Date, (c) the use of an IDEX-provided
automobile, plus related expenses, comparable to that provided to you
on your Retirement Date, and (d) other miscellaneous fringe benefits
all as currently in effect.
6. Upon completion of the payments provided for in subparagraph 4, you
will receive payment of supplemental retirement compensation at an
annual rate equal to 40% of your annual base salary of $440,000. Such
supplemental retirement compensation shall be paid in monthly
installments for a period of 36 months. If you should die prior to
completion of the payments under this subparagraph 6, the remaining
payments will be paid to your wife, if surviving, or your estate, as
the case may be.
7. Upon completion of the payments provided for in subparagraph 6, you
will receive payment of supplemental retirement compensation at an
annual rate equal to 20% of your annual base salary of $440,000. Such
supplemental retirement compensation shall be paid in monthly
installments and shall continue for the remainder of your life.
8. Lifetime medical benefits will be provided to you and your spouse in
accordance with the provisions of Section 5(c)(4) of your
<PAGE> 3
Mr. Frank J. Hansen
November 24, 1999
Page 3
Employment Agreement. Such medical benefits will be reduced to the
extent of any medical benefits actually available and actually provided
to you or your wife by any subsequent employer as provided in Section
5(c)(4) of your Employment Agreement
If on the date that benefits are to commence under
subparagraph 7 your spouse is surviving, in lieu of the benefits provided in
subparagraph 7 to you for your life, you and your spouse shall receive payments
in the form of a joint and 50% surviving spouse annuity which are actuarially
equivalent calculated under the assumptions then in effect for the IDEX
Corporation Retirement Plan. However, at any time prior to commencement of the
benefit payable under subparagraph 7, you shall have the right to elect, subject
to attaining any spousal consent that may be required under law, to receive
payment for the period of your life or in the form of some other actuarially
equivalent joint and surviving spouse annuity.
All payments under subparagraphs 6 and 7 shall be
appropriately increased at such time as IDEX shall first become obligated to
make such payments, and at the beginning of each year thereafter, in proportion
to the amount, if any, by which the Consumer Price Index (the "CPI") for the
then most recently reported month exceeds the CPI as of the end of the month in
which your Retirement Date occurs. The CPI to be used hereunder shall be the CPI
for All Urban Consumers (CPI-U) (All Cities, All Items, 1982-84 = 100),
published by the Bureau of Labor Statistics of the United States Department of
Labor. In the event of any substantial change in the composition of the CPI to
be used hereunder or in the event of discontinuance or termination of such
index, the most appropriate available price index shall be substituted and
utilized hereunder.
In accordance with the provisions of the IDEX Corporation
Stock Option Plan, you shall have a period of three years from your Retirement
Date to exercise any outstanding options unless the options otherwise expire
prior to that time.
For sixty (60) months following your Retirement Date, IDEX
will continue any indemnification agreement with you and will provide directors'
and officers' liability insurance insuring you, such coverage to have
<PAGE> 4
Mr. Frank J. Hansen
November 24, 1999
Page 4
limits and scope of coverage not less than that in effect on January 1, 2000. At
your request, IDEX will cause a certificate of insurance, in a form satisfactory
to you, verifying this coverage to be provided to you on an annual basis.
If IDEX or any entity which has an obligation to you under
this letter agreement fails to honor any provision of this letter agreement or
if a contest or dispute as to the terms of this letter agreement arises, all
legal fees and expenses incurred by you to enforce this agreement or to contest
or dispute its terms will be paid, or at your request, advanced, to you or
directly to your attorney, as you may direct.
To the extent that this letter agreement provides a larger or
greater separate benefit than may be provided to you pursuant to your Employment
Agreement or any policy, program, contract or arrangement adopted by IDEX prior
to your Retirement Date, this letter agreement will supersede and be in full
substitution of benefit provided under the Employment Agreement or such other
policy, program, contract or arrangement with respect to the larger or greater
separate benefit to be provided. To the extent that your Employment Agreement or
any policy, program, contract or arrangement adopted by IDEX prior to your
Retirement Date provides a larger or greater separate benefit than may be
provided to you pursuant to this letter agreement, the Employment Agreement or
such other policy, program, contract or arrangement will supersede and be in
full substitution of this letter agreement with respect to the larger or greater
separate benefit to be provided.
The terms of this letter agreement will be governed by the
laws of the State of Illinois and will be binding on IDEX and its successors
(who consent to jurisdiction in the State of Illinois with respect to the
subject matter of this letter agreement) and will inure to the benefit of your
heirs. Except with respect to medical benefits which may be provided by a
subsequent employer as described in subparagraph 8, you will not be required to
mitigate the amount of any payment or benefit provided for in this letter
agreement by obtaining other employment or other sources of income or benefits
nor will the amount of any payment or benefit be reduced by offset against any
amount claimed to be owed by you to IDEX.
<PAGE> 5
Mr. Frank J. Hansen
November 24, 1999
Page 5
All notices and other communications given pursuant to this
letter agreement will be deemed to have been properly given if hand delivered or
mailed, addressed to the appropriate party at the address as shown on the first
page of this letter agreement, postage prepaid, by certified or registered mail,
return receipt requested and, in the case of notice to IDEX to the attention of
the Vice President - General Counsel. A copy of any notice sent must also be
sent to Hodgson, Russ, Andrews, Woods & Goodyear, LLP, 1800 One M&T Plaza,
Buffalo, New York 14203, Attention: Richard E. Heath, Esq. and Richard W.
Kaiser, Esq. Any party may from time to time designate, by written notice given
in accordance with these provisions, any other address or party to which such
notice or communication or copies thereof must be sent.
Very truly yours,
IDEX Corporation
Donald N. Boyce, Chairman
Agreed to and accepted by:
- ---------------------------
Frank J. Hansen
Date:______________________
<PAGE> 1
EXHIBIT 10.17
December 3, 1999
PERSONAL AND CONFIDENTIAL
Mr. David T. Windmuller
1615 Mulberry Drive
Libertyville, Illinois 60048
Dear Dave:
Re: Severance Agreement
This is to confirm that in the event of your Termination of Service, as
hereafter defined, with IDEX Corporation or its successors ("IDEX"), within
twenty-four (24) months following, or, directly or indirectly, in connection
with, or in anticipation of, a Change of Management, as hereinafter defined, you
will be entitled to the following benefits as a severance payment (hereafter
referred to individually as a "Severance Benefit" and collectively as "Severance
Benefits"):
1) Payment of your base salary and vacation pay (for vacation not
taken, including vacation carryover from the prior year plus a
pro rata accrual for the current year) accrued but unpaid
through the date of termination of employment payable in a
single lump sum payment on the last day employed or as soon
thereafter as practicable.
2) Any amount earned under the Management Incentive Compensation
Plan ("MICP") for the calendar year preceding the year in
which the termination of employment occurs which has not been
paid will be paid in a single lump sum payment on the last day
employed or as soon thereafter as practicable.
3) An amount equal to two times the sum of (a) your annual base
salary, at the rate in effect on the Determination Date, as
hereafter defined, and (b) your full year's bonus under the
MICP at your target bonus level in effect on the Determination
Date, calculated in accordance with the practice in effect on
the Determination Date. This amount will be paid in a single
lump sum payment on the last day employed or as soon
thereafter as practicable.
<PAGE> 2
Mr. David T. Windmuller
December 3, 1999
Page 2
4) A proportionate bonus, as described in this subparagraph,
under the MICP. The portion of the bonus payable will be the
amount determined by multiplying a full year's MICP bonus, at
your target bonus level in effect on the Determination Date,
calculated in accordance with the practice in effect on the
Determination Date, by a fraction the numerator of which is
the number of full and partial calendar months in the calendar
year which precede the date of the termination of employment
and the denominator of which is 12. This amount will be paid
in a single lump sum payment on the last day employed or as
soon thereafter as practicable.
5) Fringe benefits for a continuing period of twenty-four (24)
months following the date of termination of employment.
Covered fringe benefits for purposes of this agreement
include: (a) term life insurance in an amount in effect on the
Determination Date, (b) medical benefits at the level in
effect on the Determination Date, (c) to the extent coverage
is available under the insurance policy in effect, the
personal accident plan at the level in effect on the
Determination Date, (d) the use of an IDEX-provided
automobile, plus related expenses, comparable to that provided
to you on the Determination Date, and (e) other miscellaneous
fringe benefits in effect on the Determination Date. Medical
benefits will be reduced to the extent of coverage provided by
subsequent employers. For purposes of COBRA health care
continuation coverage, the "qualifying event" will be deemed
to have occurred at the end of the twenty-four (24) month
period following termination of employment.
6) For a twenty-four (24) month period following the date of your
termination of employment, IDEX will promptly pay or reimburse
you for expenses, in an aggregate amount not to exceed 10% of
your annual base salary, at the rate in effect on the
Determination Date, incurred by you for outplacement services,
which may include consultants, reasonable travel, rental of an
office off IDEX's premises, secretarial support, and
photocopying, telephone, and other miscellaneous office
expenses.
<PAGE> 3
Mr. David T. Windmuller
December 3, 1999
Page 3
7) For sixty (60) months following the date of your termination
of employment, IDEX will continue any indemnification
agreement with you and will provide directors' and officers'
liability insurance insuring you, such coverage to have limits
and scope of coverage not less than that in effect on the
Determination Date or January 1, 2000, whichever is greater.
At your request, IDEX will cause a certificate of insurance,
in a form satisfactory to you, verifying this coverage to be
provided to you on an annual basis.
8) You will be fully vested in your accrued benefit under any
qualified pension or profit sharing plan maintained by IDEX,
provided, however, if the terms of such plan do not permit
acceleration of full vesting, you will receive a lump sum
payment on the last day employed, or as soon thereafter as
practicable, in an amount equal to the value of your accrued
benefit which was not vested.
9) All stock options previously granted to you will immediately
vest and you will have twelve (12) months following the last
day of employment to exercise all options you hold.
Notwithstanding anything in this letter agreement or any other
agreement to the contrary, in the event it is determined that any payments or
distributions by IDEX 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 you, whether paid or payable pursuant to the terms of this
letter agreement, or pursuant to any other agreement or arrangement with IDEX or
any such affiliate ("Payments"), would be subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended, or any successor
provision, 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 you will be entitled to
receive an additional payment from IDEX (a "Gross-Up Payment") in an amount such
that after payment by you 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, you retain an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments. The amount of the Gross-Up
Payment will be calculated by IDEX's usual
<PAGE> 4
Mr. David T. Windmuller
December 3, 1999
Page 8
outside counsel engaged immediately prior to the Change of Management or by a
party selected by such counsel in their discretion. The Gross-Up Payment will be
paid on your last day employed or on the occurrence of the event that results in
the imposition of the Excise Tax, if later. If the precise amount of the
Gross-Up Payment cannot be determined on the date it is to be paid, an amount
equal to the best estimate of the Gross-Up Payment will be made on that date
and, within ten (10) days after the precise calculation is obtained, either IDEX
will pay any additional amount to you or you will pay any excess amount to IDEX,
as the case may be. If subsequently the Internal Revenue Service (IRS) claims
that any additional Excise Tax is owing, an additional Gross-Up Payment will be
paid to you within thirty (30) days of your providing substantiation of the
claim made by the IRS. After payment to you of the Gross-Up Payment, you will
provide to IDEX any information reasonably requested by IDEX relating to the
Excise Tax, you will take such actions as IDEX reasonable requests to contest
such Excise Tax, cooperate in good faith with IDEX to effectively contest the
Excise Tax and permit IDEX to participate in any proceedings contesting the
Excise Tax. IDEX will bear and pay directly all costs and expenses (including
any interest or penalties on the Excise Tax), and indemnify and hold you
harmless, on an after-tax basis, from all such costs and expenses related to
such contest. Should it ultimately be determined that any amount of an Excise
Tax is not properly owed, you will refund to IDEX the related amount of the
Gross-Up Payment.
For the purposes of this letter agreement, Termination of Service is
defined as (1) a termination of your employment by IDEX for any reason other
than for Cause, as hereafter defined; (2) your reasonable belief that there has
been a material diminution in responsibilities, duties, title, reporting
responsibilities within the business organization, status, role or authority
(without limiting the generality of the foregoing, such a material diminution in
responsibilities, duties, title, reporting responsibilities within the business
organization, status, role or authority will be deemed to have taken place if
any of the following occur: (a) you cease to be an officer of a reporting
company under the Securities Exchange Act of 1934, (b) you retain the position
as an officer of the reporting company but your primary responsibilities,
duties, title, status, role or authority are with an entity within the business
organization which is not the reporting company, or (c) your degree of
involvement in executive decision making relating to IDEX has been materially
diminished); (3) IDEX moves your primary worksite to a location outside of the
Northbrook, Illinois region which necessitates, in your reasonable judgment,
your
<PAGE> 5
Mr. David T. Windmuller
December 3, 1999
Page 5
required relocation from your current residence which you choose not to accept;
or (4) reduction in your annual base salary, reduction in the aggregate
compensation provided to you (aggregate compensation to be determined by taking
into consideration, without limitation, the target level of MICP awards (other
than changes in award amounts which are the result of IDEX performance),
retirement or pension plans, non-qualified deferred compensation plans, stock
option awards, severance benefits, or any other fringe benefit plan), or
degradation in working conditions. After notification to you or your obtaining
specific and reliable information which gives rise to your reasonable belief
that one of the preceding events has occurred or is to occur in the near future,
you may, after providing reasonable notice, voluntarily terminate your
employment (which, if prior to the happening of such event, must be effective no
earlier than, and be contingent on, the occurrence of such event). If one of the
events which would be a Termination of Services occurs, and if your termination
of employment at that time would be in a period of time during which you would
be unable to exercise stock options or sell shares of IDEX or its successor,
either by law or contractual agreement (a "restrictive period"), then you may
continue in employment until a reasonable period after the restrictive period
ends and your subsequent termination of employment will be a Termination of
Service.
For purposes of this letter agreement, a "Change of Management" occurs
if the Chief Executive Officer of IDEX, determined as of November 1, 1999, is no
longer serving as President and Chief Executive Officer and a successor has
assumed such positions.
For purposes of this letter agreement, "Cause" exists if (1) you
breach, in a substantive and material manner, your fiduciary duty to IDEX, (2)
you commit a felony criminal act, or (3) you fail, after repeated requests of
the Chief Executive Officer of IDEX, which have been documented to you in
writing, to perform duties assigned to you (the nature of which must be
consistent with the duties assigned to you prior to the Change of Management or
prior to any modification of your assigned duties made in connection with, or in
anticipation of, such Change of Management).
For purposes of this letter agreement, the term "Determination Date"
means the date immediately prior to the date of (1) payment of any Severance
Benefit, (2) the Change of Management, (3) your Termination of Service, or (4)
your last day of
<PAGE> 6
Mr. David T. Windmuller
December 3, 1999
Page 6
employment, on whichever of the four preceding dates a factor (i.e. the rate,
level, amount, practice, quality or other factor, as the context may indicate)
used to calculate a Severance Benefit under this letter agreement is the factor
which will result, with respect to such Severance Benefit, in the greatest or
largest benefit to be provided. For the avoidance of doubt, the Determination
Date may be different with respect to different Severance Benefits.
If IDEX or any entity which has an obligation to you under this letter
agreement fails to honor any provision of this letter agreement or if a contest
or dispute as to the terms of this letter agreement arises, all legal fees and
expenses incurred by you to enforce this agreement or to contest or dispute its
terms will be paid, or at your request, advanced, to you or directly to your
attorney, as you may direct.
To the extent that this letter agreement provides a larger or greater
separate severance benefit than may be provided to you pursuant to any policy,
program, contract or arrangement adopted by IDEX prior to your Termination of
Service, this letter agreement will supersede and be in full substitution of
such other policy, program, contract or arrangement with respect to the larger
or greater separate severance benefit to be provided. To the extent that any
policy, program, contract or arrangement adopted by IDEX prior to your
Termination of Service provides a larger or greater separate severance benefit
than may be provided to you pursuant to this letter agreement, such other
policy, program, contract or arrangement will supersede and be in full
substitution of this letter agreement with respect to the larger or greater
separate severance benefit to be provided.
The terms of this letter agreement will be governed by the laws of the
State of Illinois and will be binding on IDEX and its successors (who consent to
jurisdiction in the State of Illinois with respect to the subject matter of this
letter agreement) and will inure to the benefit of your heirs. You will not be
required to mitigate the amount of any payment or benefit provided for in this
letter agreement by obtaining other employment or other sources of income or
benefits nor will the amount of any payment or benefit be reduced by offset
against any amount claimed to be owed by you to IDEX (except to the extent that
medical benefits are provided by a subsequent employer). For any matter in this
letter agreement wherein the determination of the existence of any fact or other
matter is indicated to be in your reasonable belief, your belief will be
respected and upheld provided you have
<PAGE> 7
Mr. David T. Windmuller
December 3, 1999
Page 7
obtained specific and reliable information giving rise to your reasonable belief
and unless IDEX demonstrates, by a preponderance of the evidence, that the basis
for your belief was arbitrary or capricious. If any provision of this letter
agreement is held invalid or unenforceable for any reason, all other provisions
will remain in effect.
All notices and other communications given pursuant to this letter
agreement will be deemed to have been properly given if hand delivered or
mailed, addressed to the appropriate party at the address as shown on the first
page of this letter agreement, postage prepaid, by certified or registered mail,
return receipt requested and, in the case of notice to IDEX to the attention of
the President. A copy of any notice sent must also be sent to Hodgson, Russ,
Andrews, Woods & Goodyear, LLP, 1800 One M&T Plaza, Buffalo, New York 14203,
Attention: Richard E. Heath, Esq. and Richard W. Kaiser, Esq. Any party may from
time to time designate, by written notice given in accordance with these
provisions, any other address or party to which such notice or communication or
copies thereof must be sent.
Very truly yours,
Frank J. Hansen
Agreed to and accepted by:
- ---------------------------
David T. Windmuller
Date: December ______, 1999
<PAGE> 1
EXHIBIT 10.18
December 3, 1999
PERSONAL AND CONFIDENTIAL
Mr. James R. Fluharty
308 Camelot Lane
Libertyville, Illinois 60048
Dear Jim:
Re: Severance Agreement
This is to confirm that in the event of your Termination of Service, as
hereafter defined, with IDEX Corporation or its successors ("IDEX"), within
twenty-four (24) months following, or, directly or indirectly, in connection
with, or in anticipation of, a Change of Management, as hereinafter defined, you
will be entitled to the following benefits as a severance payment (hereafter
referred to individually as a "Severance Benefit" and collectively as "Severance
Benefits"):
1) Payment of your base salary and vacation pay (for vacation not
taken, including vacation carryover from the prior year plus a
pro rata accrual for the current year) accrued but unpaid
through the date of termination of employment payable in a
single lump sum payment on the last day employed or as soon
thereafter as practicable.
2) Any amount earned under the Management Incentive Compensation
Plan ("MICP") for the calendar year preceding the year in
which the termination of employment occurs which has not been
paid will be paid in a single lump sum payment on the last day
employed or as soon thereafter as practicable.
3) An amount equal to two times the sum of (a) your annual base
salary, at the rate in effect on the Determination Date, as
hereafter defined, and (b) your full year's bonus under the
MICP at your target bonus level in effect on the Determination
Date, calculated in accordance with the practice in effect on
the Determination Date. This amount will be paid in a single
lump sum payment on the last day employed or as soon
thereafter as practicable.
<PAGE> 2
Mr. James R. Fluharty
December 3, 1999
Page 2
4) A proportionate bonus, as described in this subparagraph,
under the MICP. The portion of the bonus payable will be the
amount determined by multiplying a full year's MICP bonus, at
your target bonus level in effect on the Determination Date,
calculated in accordance with the practice in effect on the
Determination Date, by a fraction the numerator of which is
the number of full and partial calendar months in the calendar
year which precede the date of the termination of employment
and the denominator of which is 12. This amount will be paid
in a single lump sum payment on the last day employed or as
soon thereafter as practicable.
5) Fringe benefits for a continuing period of twenty-four (24)
months following the date of termination of employment.
Covered fringe benefits for purposes of this agreement
include: (a) term life insurance in an amount in effect on the
Determination Date, (b) medical benefits at the level in
effect on the Determination Date, (c) to the extent coverage
is available under the insurance policy in effect, the
personal accident plan at the level in effect on the
Determination Date, (d) the use of an IDEX-provided
automobile, plus related expenses, comparable to that provided
to you on the Determination Date, and (e) other miscellaneous
fringe benefits in effect on the Determination Date. Medical
benefits will be reduced to the extent of coverage provided by
subsequent employers. For purposes of COBRA health care
continuation coverage, the "qualifying event" will be deemed
to have occurred at the end of the twenty-four (24) month
period following termination of employment.
6) For a twenty-four (24) month period following the date of your
termination of employment, IDEX will promptly pay or reimburse
you for expenses, in an aggregate amount not to exceed 10% of
your annual base salary, at the rate in effect on the
Determination Date, incurred by you for outplacement services,
which may include consultants, reasonable travel, rental of an
office off IDEX's premises, secretarial support, and
photocopying, telephone, and other miscellaneous office
expenses.
<PAGE> 3
Mr. James R. Fluharty
December 3, 1999
Page 3
7) For sixty (60) months following the date of your termination
of employment, IDEX will continue any indemnification
agreement with you and will provide directors' and officers'
liability insurance insuring you, such coverage to have limits
and scope of coverage not less than that in effect on the
Determination Date or January 1, 2000, whichever is greater.
At your request, IDEX will cause a certificate of insurance,
in a form satisfactory to you, verifying this coverage to be
provided to you on an annual basis.
8) You will be fully vested in your accrued benefit under any
qualified pension or profit sharing plan maintained by IDEX,
provided, however, if the terms of such plan do not permit
acceleration of full vesting, you will receive a lump sum
payment on the last day employed, or as soon thereafter as
practicable, in an amount equal to the value of your accrued
benefit which was not vested.
9) All stock options previously granted to you will immediately
vest and you will have twelve (12) months following the last
day of employment to exercise all options you hold.
Notwithstanding anything in this letter agreement or any other
agreement to the contrary, in the event it is determined that any payments or
distributions by IDEX 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 you, whether paid or payable pursuant to the terms of this
letter agreement, or pursuant to any other agreement or arrangement with IDEX or
any such affiliate ("Payments"), would be subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended, or any successor
provision, 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 you will be entitled to
receive an additional payment from IDEX (a "Gross-Up Payment") in an amount such
that after payment by you 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, you retain an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments. The amount of the Gross-Up
Payment will be calculated by IDEX's usual
<PAGE> 4
Mr. James R. Fluharty
December 3, 1999
Page 4
outside counsel engaged immediately prior to the Change of Management or by a
party selected by such counsel in their discretion. The Gross-Up Payment will be
paid on your last day employed or on the occurrence of the event that results in
the imposition of the Excise Tax, if later. If the precise amount of the
Gross-Up Payment cannot be determined on the date it is to be paid, an amount
equal to the best estimate of the Gross-Up Payment will be made on that date
and, within ten (10) days after the precise calculation is obtained, either IDEX
will pay any additional amount to you or you will pay any excess amount to IDEX,
as the case may be. If subsequently the Internal Revenue Service (IRS) claims
that any additional Excise Tax is owing, an additional Gross-Up Payment will be
paid to you within thirty (30) days of your providing substantiation of the
claim made by the IRS. After payment to you of the Gross-Up Payment, you will
provide to IDEX any information reasonably requested by IDEX relating to the
Excise Tax, you will take such actions as IDEX reasonable requests to contest
such Excise Tax, cooperate in good faith with IDEX to effectively contest the
Excise Tax and permit IDEX to participate in any proceedings contesting the
Excise Tax. IDEX will bear and pay directly all costs and expenses (including
any interest or penalties on the Excise Tax), and indemnify and hold you
harmless, on an after-tax basis, from all such costs and expenses related to
such contest. Should it ultimately be determined that any amount of an Excise
Tax is not properly owed, you will refund to IDEX the related amount of the
Gross-Up Payment.
For the purposes of this letter agreement, Termination of Service is
defined as (1) a termination of your employment by IDEX for any reason other
than for Cause, as hereafter defined; (2) your reasonable belief that there has
been a material diminution in responsibilities, duties, title, reporting
responsibilities within the business organization, status, role or authority
(without limiting the generality of the foregoing, such a material diminution in
responsibilities, duties, title, reporting responsibilities within the business
organization, status, role or authority will be deemed to have taken place if
any of the following occur: (a) you cease to be an officer of a reporting
company under the Securities Exchange Act of 1934 or (b) your degree of
involvement in executive decision making relating to IDEX has been materially
diminished); or (3) reduction in your annual base salary, reduction in the
aggregate compensation provided to you (aggregate compensation to be determined
by taking into consideration, without limitation, the target level of MICP
awards (other than changes in award amounts which are the result of IDEX
performance), retirement or pension plans, non-qualified deferred compensation
plans, stock option
<PAGE> 5
Mr. James R. Fluharty
December 3, 1999
Page 5
awards, severance benefits, or any other fringe benefit plan), or degradation in
working conditions. After notification to you or your obtaining specific and
reliable information which gives rise to your reasonable belief that one of the
preceding events has occurred or is to occur in the near future, you may, after
providing reasonable notice, voluntarily terminate your employment (which, if
prior to the happening of such event, must be effective no earlier than, and be
contingent on, the occurrence of such event). If one of the events which would
be a Termination of Services occurs, and if your termination of employment at
that time would be in a period of time during which you would be unable to
exercise stock options or sell shares of IDEX or its successor, either by law or
contractual agreement (a "restrictive period"), then you may continue in
employment until a reasonable period after the restrictive period ends and your
subsequent termination of employment will be a Termination of Service.
For purposes of this letter agreement, a "Change of Management" occurs
if the Chief Executive Officer of IDEX, determined as of November 1, 1999, is no
longer serving as President and Chief Executive Officer and a successor has
assumed such positions.
For purposes of this letter agreement, "Cause" exists if (1) you
breach, in a substantive and material manner, your fiduciary duty to IDEX, (2)
you commit a felony criminal act, or (3) you fail, after repeated requests of
the Chief Executive Officer of IDEX, which have been documented to you in
writing, to perform duties assigned to you (the nature of which must be
consistent with the duties assigned to you prior to the Change of Management or
prior to any modification of your assigned duties made in connection with, or in
anticipation of, such Change of Management).
For purposes of this letter agreement, the term "Determination Date"
means the date immediately prior to the date of (1) payment of any Severance
Benefit, (2) the Change of Management, (3) your Termination of Service, or (4)
your last day of employment, on whichever of the four preceding dates a factor
(i.e. the rate, level, amount, practice, quality or other factor, as the context
may indicate) used to calculate a Severance Benefit under this letter agreement
is the factor which will result, with respect to such Severance Benefit, in the
greatest or largest benefit to be provided. For the avoidance of doubt, the
Determination Date may be different with respect to different Severance
Benefits.
<PAGE> 6
Mr. James R. Fluharty
December 3, 1999
Page 6
If IDEX or any entity which has an obligation to you under this letter
agreement fails to honor any provision of this letter agreement or if a contest
or dispute as to the terms of this letter agreement arises, all legal fees and
expenses incurred by you to enforce this agreement or to contest or dispute its
terms will be paid, or at your request, advanced, to you or directly to your
attorney, as you may direct.
To the extent that this letter agreement provides a larger or greater
separate severance benefit than may be provided to you pursuant to any policy,
program, contract or arrangement adopted by IDEX prior to your Termination of
Service, this letter agreement will supersede and be in full substitution of
such other policy, program, contract or arrangement with respect to the larger
or greater separate severance benefit to be provided. To the extent that any
policy, program, contract or arrangement adopted by IDEX prior to your
Termination of Service provides a larger or greater separate severance benefit
than may be provided to you pursuant to this letter agreement, such other
policy, program, contract or arrangement will supersede and be in full
substitution of this letter agreement with respect to the larger or greater
separate severance benefit to be provided.
The terms of this letter agreement will be governed by the laws of the
State of Illinois and will be binding on IDEX and its successors (who consent to
jurisdiction in the State of Illinois with respect to the subject matter of this
letter agreement) and will inure to the benefit of your heirs. You will not be
required to mitigate the amount of any payment or benefit provided for in this
letter agreement by obtaining other employment or other sources of income or
benefits nor will the amount of any payment or benefit be reduced by offset
against any amount claimed to be owed by you to IDEX (except to the extent that
medical benefits are provided by a subsequent employer). For any matter in this
letter agreement wherein the determination of the existence of any fact or other
matter is indicated to be in your reasonable belief, your belief will be
respected and upheld provided you have obtained specific and reliable
information giving rise to your reasonable belief and unless IDEX demonstrates,
by a preponderance of the evidence, that the basis for your belief was arbitrary
or capricious. If any provision of this letter agreement is held invalid or
unenforceable for any reason, all other provisions will remain in effect.
<PAGE> 7
Mr. James R. Fluharty
December 3, 1999
Page 7
All notices and other communications given pursuant to this letter
agreement will be deemed to have been properly given if hand delivered or
mailed, addressed to the appropriate party at the address as shown on the first
page of this letter agreement, postage prepaid, by certified or registered mail,
return receipt requested and, in the case of notice to IDEX to the attention of
the President. A copy of any notice sent must also be sent to Hodgson, Russ,
Andrews, Woods & Goodyear, LLP, 1800 One M&T Plaza, Buffalo, New York 14203,
Attention: Richard E. Heath, Esq. and Richard W. Kaiser, Esq. Any party may from
time to time designate, by written notice given in accordance with these
provisions, any other address or party to which such notice or communication or
copies thereof must be sent.
Very truly yours,
Frank J. Hansen
Agreed to and accepted by:
- ---------------------------
James R. Fluharty
Date: December _____, 1999
<PAGE> 1
EXHIBIT 10.19
December 3, 1999
PERSONAL AND CONFIDENTIAL
Mr. Rodney L. Usher
2 Neuchatel Lane
Fairport, New York 14450
Dear Rod:
Re: Severance Agreement
This is to confirm that in the event of your Termination of Service, as
hereafter defined, with IDEX Corporation or its successors ("IDEX"), within
twenty-four (24) months following, or, directly or indirectly, in connection
with, or in anticipation of, a Change of Management, as hereinafter defined, you
will be entitled to the following benefits as a severance payment (hereafter
referred to individually as a "Severance Benefit" and collectively as "Severance
Benefits"):
1) Payment of your base salary and vacation pay (for vacation not
taken, including vacation carryover from the prior year plus a
pro rata accrual for the current year) accrued but unpaid
through the date of termination of employment payable in a
single lump sum payment on the last day employed or as soon
thereafter as practicable.
2) Any amount earned under the Management Incentive Compensation
Plan ("MICP") for the calendar year preceding the year in
which the termination of employment occurs which has not been
paid will be paid in a single lump sum payment on the last day
employed or as soon thereafter as practicable.
3) An amount equal to two times the sum of (a) your annual base
salary, at the rate in effect on the Determination Date, as
hereafter defined, and (b) your full year's bonus under the
MICP at your target bonus level in effect on the Determination
Date, calculated in accordance with the practice in effect on
the Determination Date. This amount will be paid in a single
lump sum payment on the last day employed or as soon
thereafter as practicable.
<PAGE> 2
Mr. Rodney L. Usher
December 3, 1999
Page 2
4) A proportionate bonus, as described in this subparagraph,
under the MICP. The portion of the bonus payable will be the
amount determined by multiplying a full year's MICP bonus, at
your target bonus level in effect on the Determination Date,
calculated in accordance with the practice in effect on the
Determination Date, by a fraction the numerator of which is
the number of full and partial calendar months in the calendar
year which precede the date of the termination of employment
and the denominator of which is 12. This amount will be paid
in a single lump sum payment on the last day employed or as
soon thereafter as practicable.
5) Fringe benefits for a continuing period of twenty-four (24)
months following the date of termination of employment.
Covered fringe benefits for purposes of this agreement
include: (a) term life insurance in an amount in effect on the
Determination Date, (b) medical benefits at the level in
effect on the Determination Date, (c) to the extent coverage
is available under the insurance policy in effect, the
personal accident plan at the level in effect on the
Determination Date, (d) the use of an IDEX-provided
automobile, plus related expenses, comparable to that provided
to you on the Determination Date, and (e) other miscellaneous
fringe benefits in effect on the Determination Date. Medical
benefits will be reduced to the extent of coverage provided by
subsequent employers. For purposes of COBRA health care
continuation coverage, the "qualifying event" will be deemed
to have occurred at the end of the twenty-four (24) month
period following termination of employment.
6) For a twenty-four (24) month period following the date of your
termination of employment, IDEX will promptly pay or reimburse
you for expenses, in an aggregate amount not to exceed 10% of
your annual base salary, at the rate in effect on the
Determination Date, incurred by you for outplacement services,
which may include consultants, reasonable travel, rental of an
office off IDEX's premises, secretarial support, and
photocopying, telephone, and other miscellaneous office
expenses.
<PAGE> 3
Mr. Rodney L. Usher
December 3, 1999
Page 3
7) For sixty (60) months following the date of your termination
of employment, IDEX will continue any indemnification
agreement with you and will provide directors' and officers'
liability insurance insuring you, such coverage to have limits
and scope of coverage not less than that in effect on the
Determination Date or January 1, 2000, whichever is greater.
At your request, IDEX will cause a certificate of insurance,
in a form satisfactory to you, verifying this coverage to be
provided to you on an annual basis.
8) You will be fully vested in your accrued benefit under any
qualified pension or profit sharing plan maintained by IDEX,
provided, however, if the terms of such plan do not permit
acceleration of full vesting, you will receive a lump sum
payment on the last day employed, or as soon thereafter as
practicable, in an amount equal to the value of your accrued
benefit which was not vested.
9) All stock options previously granted to you will immediately
vest and you will have twelve (12) months following the last
day of employment to exercise all options you hold.
Notwithstanding anything in this letter agreement or any other
agreement to the contrary, in the event it is determined that any payments or
distributions by IDEX 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 you, whether paid or payable pursuant to the terms of this
letter agreement, or pursuant to any other agreement or arrangement with IDEX or
any such affiliate ("Payments"), would be subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended, or any successor
provision, 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 you will be entitled to
receive an additional payment from IDEX (a "Gross-Up Payment") in an amount such
that after payment by you 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, you retain an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments. The amount of the Gross-Up
Payment will be calculated by IDEX's usual
<PAGE> 4
Mr. Rodney L. Usher
December 3, 1999
Page 4
outside counsel engaged immediately prior to the Change of Management or by a
party selected by such counsel in their discretion. The Gross-Up Payment will be
paid on your last day employed or on the occurrence of the event that results in
the imposition of the Excise Tax, if later. If the precise amount of the
Gross-Up Payment cannot be determined on the date it is to be paid, an amount
equal to the best estimate of the Gross-Up Payment will be made on that date
and, within ten (10) days after the precise calculation is obtained, either IDEX
will pay any additional amount to you or you will pay any excess amount to IDEX,
as the case may be. If subsequently the Internal Revenue Service (IRS) claims
that any additional Excise Tax is owing, an additional Gross-Up Payment will be
paid to you within thirty (30) days of your providing substantiation of the
claim made by the IRS. After payment to you of the Gross-Up Payment, you will
provide to IDEX any information reasonably requested by IDEX relating to the
Excise Tax, you will take such actions as IDEX reasonable requests to contest
such Excise Tax, cooperate in good faith with IDEX to effectively contest the
Excise Tax and permit IDEX to participate in any proceedings contesting the
Excise Tax. IDEX will bear and pay directly all costs and expenses (including
any interest or penalties on the Excise Tax), and indemnify and hold you
harmless, on an after-tax basis, from all such costs and expenses related to
such contest. Should it ultimately be determined that any amount of an Excise
Tax is not properly owed, you will refund to IDEX the related amount of the
Gross-Up Payment.
For the purposes of this letter agreement, Termination of Service is
defined as (1) a termination of your employment by IDEX for any reason other
than for Cause, as hereafter defined; (2) your reasonable belief that there has
been a material diminution in responsibilities, duties, title, reporting
responsibilities within the business organization, status, role or authority
(without limiting the generality of the foregoing, such a material diminution in
responsibilities, duties, title, reporting responsibilities within the business
organization, status, role or authority will be deemed to have taken place if
any of the following occur: (a) you cease to be an officer of a reporting
company under the Securities Exchange Act of 1934 or (b) your degree of
involvement in executive decision making relating to IDEX has been materially
diminished); or (3) reduction in your annual base salary, reduction in the
aggregate compensation provided to you (aggregate compensation to be determined
by taking into consideration, without limitation, the target level of MICP
awards (other than changes in award amounts which are the result of IDEX
performance), retirement or pension plans, non-qualified deferred compensation
plans, stock option
<PAGE> 5
Mr. Rodney L. Usher
December 3, 1999
Page 5
awards, severance benefits, or any other fringe benefit plan), or degradation in
working conditions. After notification to you or your obtaining specific and
reliable information which gives rise to your reasonable belief that one of the
preceding events has occurred or is to occur in the near future, you may, after
providing reasonable notice, voluntarily terminate your employment (which, if
prior to the happening of such event, must be effective no earlier than, and be
contingent on, the occurrence of such event). If one of the events which would
be a Termination of Services occurs, and if your termination of employment at
that time would be in a period of time during which you would be unable to
exercise stock options or sell shares of IDEX or its successor, either by law or
contractual agreement (a "restrictive period"), then you may continue in
employment until a reasonable period after the restrictive period ends and your
subsequent termination of employment will be a Termination of Service.
For purposes of this letter agreement, a "Change of Management" occurs
if the Chief Executive Officer of IDEX, determined as of November 1, 1999, is no
longer serving as President and Chief Executive Officer and a successor has
assumed such positions.
For purposes of this letter agreement, "Cause" exists if (1) you
breach, in a substantive and material manner, your fiduciary duty to IDEX, (2)
you commit a felony criminal act, or (3) you fail, after repeated requests of
the Chief Executive Officer of IDEX, which have been documented to you in
writing, to perform duties assigned to you (the nature of which must be
consistent with the duties assigned to you prior to the Change of Management or
prior to any modification of your assigned duties made in connection with, or in
anticipation of, such Change of Management).
For purposes of this letter agreement, the term "Determination Date"
means the date immediately prior to the date of (1) payment of any Severance
Benefit, (2) the Change of Management, (3) your Termination of Service, or (4)
your last day of employment, on whichever of the four preceding dates a factor
(i.e. the rate, level, amount, practice, quality or other factor, as the context
may indicate) used to calculate a Severance Benefit under this letter agreement
is the factor which will result, with respect to such Severance Benefit, in the
greatest or largest benefit to be provided. For the avoidance of doubt, the
Determination Date may be different with respect to different Severance
Benefits.
<PAGE> 6
Mr. Rodney L. Usher
December 3, 1999
Page 6
If IDEX or any entity which has an obligation to you under this letter
agreement fails to honor any provision of this letter agreement or if a contest
or dispute as to the terms of this letter agreement arises, all legal fees and
expenses incurred by you to enforce this agreement or to contest or dispute its
terms will be paid, or at your request, advanced, to you or directly to your
attorney, as you may direct.
To the extent that this letter agreement provides a larger or greater
separate severance benefit than may be provided to you pursuant to any policy,
program, contract or arrangement adopted by IDEX prior to your Termination of
Service, this letter agreement will supersede and be in full substitution of
such other policy, program, contract or arrangement with respect to the larger
or greater separate severance benefit to be provided. To the extent that any
policy, program, contract or arrangement adopted by IDEX prior to your
Termination of Service provides a larger or greater separate severance benefit
than may be provided to you pursuant to this letter agreement, such other
policy, program, contract or arrangement will supersede and be in full
substitution of this letter agreement with respect to the larger or greater
separate severance benefit to be provided.
The terms of this letter agreement will be governed by the laws of the
State of Illinois and will be binding on IDEX and its successors (who consent to
jurisdiction in the State of Illinois with respect to the subject matter of this
letter agreement) and will inure to the benefit of your heirs. You will not be
required to mitigate the amount of any payment or benefit provided for in this
letter agreement by obtaining other employment or other sources of income or
benefits nor will the amount of any payment or benefit be reduced by offset
against any amount claimed to be owed by you to IDEX (except to the extent that
medical benefits are provided by a subsequent employer). For any matter in this
letter agreement wherein the determination of the existence of any fact or other
matter is indicated to be in your reasonable belief, your belief will be
respected and upheld provided you have obtained specific and reliable
information giving rise to your reasonable belief and unless IDEX demonstrates,
by a preponderance of the evidence, that the basis for your belief was arbitrary
or capricious. If any provision of this letter agreement is held invalid or
unenforceable for any reason, all other provisions will remain in effect.
<PAGE> 7
Mr. Rodney L. Usher
December 3, 1999
Page 7
All notices and other communications given pursuant to this letter
agreement will be deemed to have been properly given if hand delivered or
mailed, addressed to the appropriate party at the address as shown on the first
page of this letter agreement, postage prepaid, by certified or registered mail,
return receipt requested and, in the case of notice to IDEX to the attention of
the President. A copy of any notice sent must also be sent to Hodgson, Russ,
Andrews, Woods & Goodyear, LLP, 1800 One M&T Plaza, Buffalo, New York 14203,
Attention: Richard E. Heath, Esq. and Richard W. Kaiser, Esq. Any party may from
time to time designate, by written notice given in accordance with these
provisions, any other address or party to which such notice or communication or
copies thereof must be sent.
Very truly yours,
Frank J. Hansen
Agreed to and accepted by:
- ---------------------------
Rodney L. Usher
Date: December _____, 1999
<PAGE> 1
TABLE OF CONTENTS
Shareholders' Letter............. 2
Business Groups.................. 4
Business Profile................. 6
New Products, New Markets,
New Applications ................ 8
Acquisition Strategy.............10
Market Leadership................12
Historical Data..................14
Management's Discussion
& Analysis ......................16
Financial Statements.............22
Business Units...................35
Corporate Officers
& Directors .....................36
Shareholder Information......... 37
IDEX CORPORATION manufactures an extensive array of proprietary, engineered
industrial products sold to customers in a variety of industries around the
world. 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, superior customer
service, top-quality products, continuing new product development, 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 Shareholder Returns
- -------------------------
[ ] IDEX
[ ] Russell 2000 Index
[ ] S&P 500 Index
[BAR GRAPH APPEARS HERE]
$600
500
400
300
200
100
88 89 90 91 92 93 94 95 96 97 98 99
Total return to IDEX shareholders since going public in June 1989 has been
416%. In the same period the S&P 500 Index has increased 492%, and the Russell
2000 Index rose 246%.
<PAGE> 2
Financial Highlights (in thousands except share and per share amounts)
<TABLE>
<CAPTION>
Years ended December 31, 1999 CHANGE 1998 CHANGE 1997
================================================================================================
<S> <C> <C> <C> <C> <C>
RESULTS OF
OPERATIONS
Net sales $655,041 2% $640,131 16% $552,163
Operating income 104,677 (4) 109,543 6 103,595
Interest expense 18,020 (19) 22,359 22 18,398
Income from
continuing operations 54,428 -- 54,396 2 53,475
Net income 54,428 (12) 62,064 6 58,626
FINANCIAL POSITION
Working capital $122,081 6% $115,635 (3)% $119,466
Total assets 738,567 6 695,811 16 599,193
Long-term debt 268,589 (5) 283,410 10 258,417
Shareholders' equity 329,024 15 286,037 20 238,671
PERFORMANCE MEASURES
Percent of net sales
Operating income 16.0% 17.1% 18.8%
Income from
continuing operations 8.3 8.5 9.7
Net income return on
average assets 7.6 9.6 10.0
Debt as a percent of
capitalization 44.9 49.8 52.0
Net income return on
average shareholders'
equity 17.7 23.7 27.0
PER SHARE DATA-DILUTED
Income from
continuing operations $ 1.81 --% $ 1.81 2% $ 1.78
Net income 1.81 (13) 2.07 6 1.95
Cash dividends paid .56 4 .54 13 .48
Shareholders' equity 11.10 14 9.71 19 8.16
OTHER DATA
Employees at year end 3,773 (1)% 3,803 14% 3,326
Shareholders at year end 7,000 (9) 7,700 10 7,000
Weighted average
shares outstanding 30,085 -- 30,052 -- 29,999
</TABLE>
1
Net Sales
- ---------
(in millions)
[BAR GRAPH APPEARS HERE]
$700
600
500
400
300
200
100
88 89 90 91 92 93 94 95 96 97 98 99
Sales have grown at a 15% compound annual rate since 1994.
Earnings Per Share - Diluted
- ----------------------------
(continuing operations)
[BAR GRAPH APPEARS HERE]
$1.80
1.60
1.40
1.20
1.00
.80
.60
.40
.20
88 89 90 91 92 93 94 95 96 97 98 99
Diluted earnings per share have increased at a 13% compound annual rate in the
last five years.
<PAGE> 3
International Sales
- -------------------
[ ] Percent of net sales
[ ] Amount in millions
[BAR GRAPH APPEARS HERE]
$250 50%
200 45
150 40
100 35
50 30
25
20
15
10
5
87 88 89 90 91 92 93 94 95 96 97 98 99
International growth continues to be a key factor in IDEX's success.
Operating Margins
- -----------------
[ ] IDEX
[ ] Value Line Industrial Composite Index
[LINE CHART APPEARS HERE]
25%
20
15
10
5
88 89 90 91 92 93 94 95 96 97 98 99
Since its formation, IDEX has continuously achieved significantly higher
operating margins than most manufacturers.
Net Income Margins from
Continuing Operations
- -----------------------
[ ] IDEX
[ ] Value Line Industrial Composite Index
[LINE CHART APPEARS HERE]
15%
10
5
88 89 90 91 92 93 94 95 96 97 98 99
IDEX's net income margins exceed those of most manufacturers.
Shareholders' Letter
2
To Our Shareholders:
We are pleased to report that IDEX Corporation achieved another year of strong
profitability and cash flow, although conditions in certain of the markets we
serve were somewhat less favorable than had been anticipated when the year
began. The rebound in the important process markets has yet to occur, but our
diversity served us well, and we experienced improving conditions in several
other markets, including those served by our Dispensing Equipment Group. We were
further aided in 1999 by the introduction of new products, the development of a
number of new market opportunities and by gaining share in existing markets. An
acquisition at midyear was also helpful, and we were able to use our very strong
cash flow to reduce debt and interest expense.
Sales increased to $655.0 million, up 2% over the $640.1 million recorded in
1998. Net income from continuing operations of $54.4 million and diluted
earnings per share of $1.81 matched last year's records. Operating income
represented a strong 16.0% of sales in 1999, but was below the 17.1% recorded in
1998, primarily because of conditions in process markets served by our higher
margin businesses.
Interest expense decreased by over 19% to a total of $18.0 million in 1999. The
decline in interest expense offset the somewhat lower operating income. This
enabled IDEX to achieve income before tax from continuing operations of $87.2
million, essentially equivalent to last year's record of $87.7 million.
IDEX again demonstrated its strong cash flow characteristics in 1999. Earnings
before interest, taxes, depreciation and amortization totaled $140 million, and
debt to total capitalization of 44.9% was the lowest in the company's history.
This puts us in an excellent position to aggressively pursue profitable growth
initiatives both internally and through additional acquisitions.
Internal Development
We believe that one of the keys to IDEX's success has been the internal
benchmarking that takes place among our business units. Our businesses share
many common characteristics, and people from various functional areas regularly
meet to share best practices. This has resulted in a process of continuous
improvement, capitalizing on the best ideas to improve not only financial
results, but every aspect of the business from customer service, to product
development, to quality, to human resource development.
We worked hard to maintain our leading positions in niche markets in 1999. Among
the reasons for our success is our continued dedication to customer service.
Many of our businesses are working to provide "just-in-time" delivery support to
their customers and all of our companies are operating with state-of-the-art
business systems. Every IDEX business unit is certified under the
internationally recognized ISO 9000 quality standard, and each expects full
certification under the ISO 14000 environmental standards by the end of 2000.
While our facilities are in excellent condition and we have ample production
capacity, we continue to
<PAGE> 4
Donald N. Boyce
Chairman of the Board
Frank J. Hansen
President and Chief Executive Officer
invest in the latest production equipment to maintain our leading edge in the
marketplace.
Importantly, we are guided by a strict code of ethics that provides the fabric
to tie our almost 4,000 people together in a common commitment to excellence.
External Development
Acquisitions are an important part of the IDEX growth strategy and we continue
to place heavy emphasis on finding candidates that meet our criteria of having
leading positions in niche markets and serving a diverse customer base. We're
looking for profitable industrial businesses, both private and public, that have
the potential for growth and margin improvement.
On June 4, 1999, we acquired FAST S.p.A., headquartered in Milan, Italy, in a
$62 million cash transaction. FAST is a leading European manufacturer of
refinishing and color-formulation equipment for a number of applications
including paints, coatings, inks, colorants and dyes. This company, similar to
our Fluid Management business, fits the IDEX profile very well, giving us
further market diversity and an increased presence in Europe and other
international markets.
Emphasizing Profitable Top-Line Growth
Our entire management team is dedicated to achieving profitable top-line growth.
This objective is being pursued in the following ways:
- - New Product Development
IDEX has long had a history of successfully introducing market-driven,
innovative products and 1999 was no exception. Every IDEX business launched
exciting new products that will further enhance our leadership positions in
the markets we serve. Again in 1999, we estimate that approximately 25% of our
sales resulted from products that were either newly introduced or totally
redesigned within the last four years.
- - New Markets and Applications
Exciting new growth initiatives are underway at IDEX. In 1999, we launched a
major effort to find new market opportunities. We also identified currently
served niche markets where our shares were lower than our overall market share
and where the opportunity for growth was high. You'll read more about some of
these market initiatives in other sections of this report. Every IDEX business
unit has identified and is actively attacking specific profitable growth
opportunities by entering new markets, appointing niche distributors to expand
existing markets, and strengthening their international presence. These growth
opportunities are explored in regular strategic meetings, and our incentive
systems reward profitable growth. We're confident that significant growth
potential exists in all of our business units, and that we'll begin to see the
results of our efforts in the coming years.
- - Electronic Commerce
IDEX businesses are aggressively pursuing growth opportunities through
e-commerce. Every business unit has an excellent Website, and we are
partnering with our distributors to provide technical support, products and
services through the Internet. We encourage you to check out our business unit
Websites identified on pages 6 and 7 of this annual report.
Management Transition
On March 31, 1999, Donald N. Boyce, who had been Chairman and Chief Executive
Officer of IDEX since its founding in 1988, retired from active service. Mr.
Boyce continues in his role as Chairman of the Board. Succeeding Mr. Boyce as
Chief Executive Officer on April 1, 1999, was Frank J. Hansen, who had been
named President and Chief Operating Officer on January 1, 1998. On November 30,
1999, it was announced that Mr. Hansen had made the decision to retire when a
successor is appointed. While both Messrs. Boyce and Hansen have served the
company for many years, they are backed by a seasoned and deep management team
that has an excellent track record in operating highly profitable manufacturing
businesses. We are confident that this very capable group, led by an outstanding
new chief executive officer, will continue IDEX's strong record of profitable
growth in the years ahead.
Outlook
As IDEX enters the new millennium, we are very optimistic about both our short-
and long-term prospects. We anticipate improving results as the new year
progresses, and, barring unforeseen circumstances, we expect to achieve record
orders, sales and earnings per share in 2000. Several factors should contribute
to growth. These include the positive trend of leading economic indicators for
our end-markets, and an improving international economy led by the rebound
underway in the Asia Pacific region. We'll also benefit from our continued
emphasis on profitable growth initiatives, margin improvement at recently
acquired businesses, the use of the company's strong cash flow to cut debt and
interest expense, and our continued pursuit of an active and successful
acquisition strategy. We have many good things going for us with our
proprietary, market-leading products serving diverse markets around the world,
our outstanding dedicated employees, and all of the efforts that are underway to
assure future growth.
We want to thank our customers for their confidence in our products, our vendors
for their valued assistance, and the people of IDEX for their significant
contributions to the success of our company. With the continued support of these
people, we can't help but be excited about IDEX's future prospects.
3
<PAGE> 5
4
1999 Sales
- ----------
[PIE CHART APPEARS HERE]
[ ] 57% Pump Products
[ ] 21% Dispensing Equipment
[ ] 22% Other Engineered Products
Rod Usher, IDEX Vice President -- Group Executive and President of Pulsafeeder,
pictured with a new high-pressure, high-flow PULSA series diaphragm metering
pump.
Business Groups
IDEX's business units are organized into three groups: Pump Products,
Dispensing Equipment and Other Engineered Products.
These businesses design, manufacture and market an extensive array of
proprietary, highly engineered fluid handling devices and other engineered
equipment to customers in a variety of industries around the world.
PUMP PRODUCTS
- Corken
- Gast Manufacturing
- Micropump
- Pulsafeeder
- Viking Pump
- Warren Rupp
These six business units design, produce and distribute some of the most
recognized names in industrial pumps, compressors and related controls.
Applications range from pumping chemicals and lubricants; to moving paints,
inks and fuels; to providing clean, quiet sources of air in medical and
industrial applications. The group's complementary lines of specialized positive
displacement pumps and related products include rotary gear, vane and lobe
pumps; air-operated diaphragm pumps; miniature gear pumps; peristaltic metering
pumps and vacuum pumps; air motors and compressors. These precision-engineered
devices give customers an unparalleled range of choices to meet their needs.
The Pump Products Group accounted for 57% of our sales and 56% of our profits
in 1999, with 31% of sales to customers outside the United States.
- ---------------
Pulsafeeder PULSAtron(R) PLUS metering pump and controller
- ---------------
Gast regenerative blower
- ---------------
Blagdon (Warren Rupp) high-pressure diaphragm pump
- ---------------
Micropump metal injection molded mag drive pump
<PAGE> 6
Roger Gibbins, President of Band-It, with Tom Roter, Application Engineer, as he
demonstrates a new band packaging machine.
DISPENSING EQUIPMENT
- FAST
- Fluid Management
- Lubriquip
This group consists of three business units that produce highly engineered
equipment for dispensing, metering and mixing colorants, paints, inks, dyes;
refinishing equipment; and centralized lubrication systems. This proprietary
equipment is used in a variety of retail and commercial industries around the
world. These units provide componentry and systems for applications such as
tinting paints and coatings; providing industrial and automotive refinishing
equipment; and the precise lubrication of machinery and transportation
equipment.
The Dispensing Equipment Group contributed 21% of our sales and 22% of our
profits in 1999, and 48% of the group's sales were to international customers.
FAST Help 2000 computerized scale
Lubriquip lubrication system controllers
Fluid Management computer-controlled colorant dispenser
Band-It battery-operated clamping tool
Hurst (Hale Products) telescoping rescue ram
OTHER ENGINEERED PRODUCTS
- Band-It
- Hale Products
The two business units in this group manufacture engineered banding and
clamping devices, fire fighting pumps and rescue tools. Our high quality
stainless steel bands, buckles and preformed clamps and related installation
tools are used worldwide in industrial and commercial markets. Their
applications include securing hoses, signals, pipes, poles, electrical lines,
sign-mounting systems and numerous other "hold-together" applications. The group
also includes the world's leading manufacturer of truck-mounted fire pumps and
rescue tool systems, sold under the Hale, Hurst Jaws of Life(R) and Lukas(R)
tradenames.
This group represented 22% of our sales and our profits in 1999. Sales to
non-U.S. customers accounted for 51% of total group sales.
5
1999 Profits
- ------------
[PIE CHART APPEARS HERE]
[ ] 56% Pump Products
[ ] 22% Dispensing Equipment
[ ] 22% Other Engineered Products
<PAGE> 7
8
New Product Sales
- -----------------
[PIE CHART APPEARS HERE]
[ ] One-quarter of sales come from new products
Leen Hellenberg, President of Fluid Management - Europe/Asia, with a new
computer-controlled paint dispenser.
<PAGE> 8
Pump Products
- -------------
Corken
Gast Manufacturing
Micropump
Pulsafeeder
Viking Pump
Warren Rupp
Dispensing Equipment
- --------------------
FAST
Fluid Management
Lubriquip
Other Engineered Products
- -------------------------
Band-It
Hale Products
Photo - 1:
Bill Kysor, President of Hale Products, watches Mike Farmer, Product Specialist,
demonstrate how to use the Hurst Jaws of Life(R) to extricate a victim of a car
crash.
Photo - 2:
Jeff Fehr, President of Warren Rupp, in the test lab with a next generation
aluminum SandPIPER II(R) double-diaphragm pump.
Photo - 3:
Jeff Hohman, President of Micropump (center), with Dan Spencer (left) and Sally
DeVore (right) from their Flow Components distributor, observing the new metal
injection molded pump.
Photo - 4:
Steve Semmier, President of Lubriquip, stands beside a Trabon(R) Lubrication
System installed on an injection molding machine.
<PAGE> 9
Business Profile
6 / 7
Product offerings
<TABLE>
<CAPTION>
<S> <C> <C>
CORKEN GAST MANUFACTURING MICROPUMP
Positive displacement rotary vane Vacuum pumps, air motors, Small, precision-engineered,
pumps, single and multistage vacuum generators, regenerative magnetically and electromagnetically
regenerative turbine pumps, and blowers and fractional horsepower driven rotary gear, piston and
small horsepower reciprocating compressors. centrifugal pumps.
piston compressors.
PULSAFEEDER VIKING PUMP WARREN RUPP
Metering pumps, special purpose Rotary gear, lobe and metering Double-diaphragm pumps, both
rotary pumps, peristaltic pumps, pumps, strainers and reducers, air-operated and motor-driven,
electronic controls and dispensing and related electronic controls. and accessories.
equipment.
FAST
Precision-designed tinting, mixing,
measuring and dispensing equipment
for refinishing, architectural and
industrial paints, inks, dyes,
pastes and other liquids.
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Brand names*
<TABLE>
<CAPTION>
<S> <C> <C>
CORKEN GAST MANUFACTURING MICROPUMP
Corken, Coro-Flo, Coro-Vane, Gast, Regenair, Smart-Air, Roc-R Micropump, Delta, Integral Series
Coro-Vac, Sabre
PULSAFEEDER VIKING PUMP WARREN RUPP
Pulsafeeder, Knight, PULSAR, Viking, Vican, Viking Mag Drive, Warren Rupp, SandPIPER, Marathon,
PULSAtron, PULSAtrol, Chem-Tech, Viking Flow Manager, Vi-Corr, PoweRupp, RuppTech, Blagdon
Eco, Isochem, Mec-O-Matic Duralobe, Classic, On-Line, SQ,
RTP, Lid Ease
FAST
FAST, Leonardo, Donatello,
Michaelangelo, Giotto, Hercules,
Galileo, Top Mix, Vincent, Newton,
Unicover, Eurocombi, Help 2000
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Markets served
<TABLE>
<CAPTION>
<S> <C> <C>
CORKEN GAST MANUFACTURING MICROPUMP
Liquefied petroleum gas (LPG), oil Medical equipment, environmental Printing machinery, medical equipment,
and gas, petrochemical, pulp and equipment, computers and electronics, chemical processing, pharmaceutical,
paper, transportation, marine, printing machinery, paint mixing refining, laboratory, electronics,
food processing and general machinery, packaging machinery, pulp and paper, water treatment
industrial. 45% of sales outside graphic arts and industrial and textiles. 50% of sales
the U.S. manufacturing. 20% of sales outside outside the U.S.
the U.S.
PULSAFEEDER VIKING PUMP WARREN RUPP
Water and wastewater treatment, Chemical, petroleum, pulp and paper, Chemical, paint, food processing,
power generation, pulp and paper, plastics, paints, inks, tanker electronics, construction, utilities,
chemical and hydrocarbon processing, trucks, compressor, construction, mining and industrial maintenance.
swimming pool, industrial and food, beverage, personal care, 50% of sales outside the U.S.
commercial laundry and dishwashing. pharmaceutical and biotech. 30% of
30% of sales outside the U.S. sales outside the U.S.
FAST
Through architectural, refinishing
and industrial paint producers,
precision equipment is supplied to
retail and commercial stores, home
centers, and automotive body shops.
95% of sales outside the U.S.
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Product applications
<TABLE>
<CAPTION>
<S> <C> <C>
CORKEN GAST MANUFACTURING MICROPUMP
Products used for transfer and Air motors for industrial equipment Pumps and fluid management systems
recovery of non-viscous, toxic, applications, and vacuum pumps and for low-flow abrasive and corrosive
and hazardous fluids in either fractional horsepower compressors applications such as inks, dyes,
liquid or vapor form, such as LPG, for specialty pneumatic applications solvents, chemicals, petrochemicals,
chlorine, high temperature water, requiring a quiet, clean source acids and chlorides.
fluorocarbons, carbon dioxide, of moderate vacuum or pressure.
solvents, ammonia, natural gas, and
nitrogen.
PULSAFEEDER VIKING PUMP WARREN RUPP
Pumps, controls and dispensing Pumps for transferring and metering Pumps for abrasive and semisolid
equipment for introducing precise thin and viscous liquids, including materials as well as for applications
amounts of fluids into processes chemicals, petroleum products, where product degradation is a concern
to manage water quality and chemical paints, inks, coatings, adhesives, or where electricity is not available
composition. asphalt, foods, pharmaceuticals, or should not be used.
soaps, beverages and shampoos.
FAST
Dispensing, metering and mixing
equipment for precise and reliable
reproduction of colors based on
paint producers' formulas.
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Competitive strengths
<TABLE>
<CAPTION>
<S> <C> <C>
CORKEN GAST MANUFACTURING MICROPUMP
Market leader for pumps and A leading manufacturer of Market and technology leader in
compressors used in LPG air-moving products with an corrosion-resistant, magnetically and
distribution facilities with an estimated one-third U.S. market electromagnetically driven, miniature
estimated 50% U.S. market share. share in air motors, low and pump technology with an estimated
medium range vacuum pumps, vacuum 40% U.S. market share.
generators, regenerative blowers
and fractional horsepower
compressors.
PULSAFEEDER VIKING PUMP WARREN RUPP
A leading manufacturer of metering Largest internal gear pump producer A leading double-diaphragm pump
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 composites,
process applications and warewash producer of external gear and rotary stainless steel, aluminum and cast
institutional applications. lobe pumps. iron. Estimated one-quarter U.S. market
Estimated 40% U.S. market share. share.
FAST
Quality service, innovative
components and products for the
architectural paint and refinishing
markets. Estimated 33% worldwide
share of refinishing equipment
market.
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Website addresses
<TABLE>
<CAPTION>
<S> <C> <C>
CORKEN GAST MANUFACTURING MICROPUMP
www.corken.com www.gastmfg.com www.micropump.com
www.gasthk.com www.micropump.co.uk
www.gastltd.com
www.yourairstore.com
PULSAFEEDER VIKING PUMP WARREN RUPP
www.pulsa.com www.vikingpump.com www.warrenrupp.com
www.knightequip.com www.johnsonpumpuk.co.uk www.blagdonpump.com
www.vikingpumpeurope.com
www.vikingpumpcanada.com
www.pumpschool.com
FAST
www.fast.it
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Examples of recently
introduced products*
<TABLE>
<CAPTION>
<S> <C> <C>
CORKEN GAST MANUFACTURING MICROPUMP
High-pressure two-stage vertical New series of regenerative blowers Electronic drives for industrial
compressors used for handling CO2 for parts washing, air knives, and and bench-top laboratory applications
in the dry cleaning industry and cleaning equipment. New series of and an abrasives handling pump for
industrial parts cleaning miniature diaphragm pumps for white inks and pigments. Expanded
applications. New high-capacity personal air sampling and gas flow and pressure envelope for new
Coro-Vac vacuum pump for purging detection. Linear technology pumps metal injection molded stainless
air from cylinders and tanks prior for sewage aeration and air bed steel pump.
to filling with LP gas. inflation systems.
PULSAFEEDER VIKING PUMP WARREN RUPP
Two advanced PULSAtron PLUS solenoid A new line of metric gear pumps New series of next generation
metering pumps with innovative to run at standard motor speeds. SandPIPER II non-metallic diaphragm
monitoring and control features. O-ring seal rotary lobe pump pumps and the SandPIPER II 3" lightweight
New high-pressure and high-flow that provides ease of maintenance aluminum diaphragm pump. New series
PULSA series diaphragm metering for strip clean applications. of non-metallic surge dampeners.
pumps and a series of PULSAtrol Stainless steel rotary lobe pump
PLUS multi-purpose cooling for synthetic fiber applications.
tower/boiler water treatment Rotary transport pump, for
controllers. high-speed unloading of food,
beverage and chemical transport
trucks.
FAST
New series of fully automatic
dispensers with flat screen
technology, and a line of automatic
gyroscopic mixers. A new
computerized scale for the automotive
refinishing market designed
exclusively for FAST by Pininfarina,
the designer of Ferrari and Alfa
Romeo cars.
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Manufacturing locations
<TABLE>
<CAPTION>
<S> <C> <C>
CORKEN GAST MANUFACTURING MICROPUMP
Oklahoma City, Oklahoma Benton Harbor, Michigan Vancouver, Washington
Bridgman, Michigan St. Neots, England
High Wycombe, England
PULSAFEEDER VIKING PUMP WARREN RUPP
Rochester, New York Cedar Falls, Iowa Mansfield, Ohio
Lake Forest, California Windsor, Ontario, Canada Washington, England
Punta Gorda, Florida Eastbourne, England
Enschede, The Netherlands Shannon, Ireland
FAST
Cinisello Balsamo (Milan),
Italy
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Brand names shown are registered trademarks of IDEX and/or its subsidiaries.
<PAGE> 10
Product offerings
<TABLE>
<CAPTION>
<S> <C> <C>
FLUID MANAGEMENT LUBRIQUIP BAND-IT
Precision-engineered equipment for Centralized oil and grease lubrication Stainless steel bands, buckles,
dispensing, metering and mixing systems, force-feed lubricators, preformed clamps, cable ties,
paints, coatings, colorants, inks, metering devices, related electronic installation tools and modular
dyes, and other liquids and pastes. controls and accessories. sign-mounting systems.
HALE PRODUCTS
Truck-mounted and portable fire
pumps, and rescue tool systems.
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Brand names*
<TABLE>
<CAPTION>
<S> <C> <C>
FLUID MANAGEMENT LUBRIQUIP BAND-IT
Fluid Management, Harbil, Miller, Trabon, Manzel, Kipp, OPCO, Grease Band-It, Signfix, Tespa, Self-Lok,
Blendorama, Tintmaster, Accutinter, Jockey, TrackMaster, Spindl-Gard, Ultra-Lok, Band-It Jr, Ball-Lok,
Eurotinter, ColorPro, Prisma, Injecto-Flo, Mill-Gard Band-Lok, Infocurve
EZ Load, GyroMixer
HALE PRODUCTS
Hale, Godiva, LUKAS, Hurst Jaws
of Life, FoamMaster, CAFSMaster,
Century, Green Cross, Hurst Entry
Systems, Typhoon, Qflo, Qmax
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Markets served
<TABLE>
<CAPTION>
<S> <C> <C>
FLUID MANAGEMENT LUBRIQUIP BAND-IT
Retail and commercial paint stores, Machine tools, transfer machines, Transportation equipment, oil
hardware stores, home centers, conveyors, packaging machinery, and gas, industrial maintenance,
department stores, printers, and transportation equipment, construction electronics, electrical, communications,
paint and ink manufacturers. 50% of machinery, and food processing aerospace, traffic and commercial
sales outside the U.S. and paper machinery. 20% of sales signs. 60% of sales outside the U.S.
outside the U.S.
HALE PRODUCTS
Public and private fire and rescue
applications. 45% of sales outside
the U.S.
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Product applications
<TABLE>
<CAPTION>
<S> <C> <C>
FLUID MANAGEMENT LUBRIQUIP BAND-IT
Fluid management systems for precise Lubrication devices to prolong Clamps and bands for securing hose
blending of base paint, tints and equipment life, reduce maintenance fittings, signs, signals, pipes, poles,
colorants, and inks and dyes in a costs and increase productivity. electrical shielding and bundling
broad range of industries from retail and numerous other "hold-together"
point-of-sale equipment to in-plant applications for industrial and
manufacturing systems. commercial use.
HALE PRODUCTS
Pumps for water or foam to extinguish
fires, rescue equipment for extricating
accident victims, forced entry
equipment for law enforcement and
disaster recovery, and tools for use
in the structural collapse of buildings
and automotive recycling.
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Competitive strengths
<TABLE>
<CAPTION>
<S> <C> <C>
FLUID MANAGEMENT LUBRIQUIP BAND-IT
Industry innovator and worldwide Market leader in centralized oil World's leading producer of
market leader in automatic and lubrication systems serving a broad high-quality stainless steel bands,
manually operated dispensing, range of industries. Estimated one-third buckles and clamping systems, with
metering and mixing equipment for the U.S. market share. an estimated 40% worldwide market
paints and coatings market. Estimated share.
50% worldwide market share.
HALE PRODUCTS
World's leading manufacturer of
truck-mounted fire pumps and rescue
systems with an estimated 50%
worldwide market share.
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Website addresses
<TABLE>
<CAPTION>
<S> <C> <C>
FLUID MANAGEMENT LUBRIQUIP BAND-IT
www.fluidman.com www.lubriquip.com www.band-it-idex.com
www.fluidman.nl www.signfix.co.uk
www.fluidman.com.au
HALE PRODUCTS
www.haleproducts.com
www.hurstjaws.com
www.lukas.de
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Examples of recently
introduced products*
<TABLE>
<CAPTION>
<S> <C> <C>
FLUID MANAGEMENT LUBRIQUIP BAND-IT
Space saving, stackable, one-gallon New variable output grease system for Patented Ultra-Lok free-end clamping
orbital mixer with low-maintenance on-highway truck chassis/trailer market. system for municipal sign, signal and
gear drive. Modular industrial OPCOnet Conveyer Monitoring System with utility pole applications. New
coatings dispenser with Colorpro chain wear monitoring and data Ultra-Lok portable battery-powered
software. ColorPro ink formula and acquisition modules for the installation tool, and 5/8" coated
Inventory Management software. conveyor/material handling market. Band-It ties for heavy-duty marine
New high-speed colorant dispenser applications.
for home centers.
HALE PRODUCTS
Redesigned line of portable,
gasoline and diesel powered pumps.
New line of Hurst tools, including
the Transformer Spreader and X-Tractor
tools. Hurst forcible entry tools for
the police and SWAT markets.
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Manufacturing locations
<TABLE>
<CAPTION>
<S> <C> <C>
FLUID MANAGEMENT LUBRIQUIP BAND-IT
Wheeling, Illinois Warrensville Heights, Ohio Denver, Colorado
Sassenheim, The Netherlands Madison, Wisconsin Bristol, England
Unanderra, Australia Staveley, England
Tipton, England
Singapore
HALE PRODUCTS
Conshohocken, Pennsylvania
Shelby, North Carolina
St. Joseph, Tennessee
Warwick, England
Erlangen, Germany
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 11
Steve Fairbanks, President of Corken, shown with a new high-pressure, two-stage
compressor for gas and liquid transfer and recovery.
New Products, New Markets, New Applications
IDEX continually improves product and process technologies and introduces new
products to meet the needs of our customers. In fact, one in 10 people at IDEX
is directly involved in product or process technology development.
Product innovation is a key factor in our success. This is illustrated by the
fact that, for each of the last 12 years, about one-fourth of IDEX sales came
from products that were totally redesigned or introduced within the preceding
four years.
But our efforts don't stop there. In addition to creating new products and
improving our processes, IDEX constantly seeks out new markets and applications
for our products, creating greater sales opportunities. Examples of recently
identified markets and applications for our products include:
- Hale Products, makers of the Hurst Jaws of Life(R) rescue tools, has
redesigned and developed new products for law enforcement and other agencies
for use in gaining fast entry into structures during drug enforcement and
other emergency procedures. The Hurst and Lukas tools are now also being
marketed for use in the structural collapse of buildings and automotive
recycling.
- Viking Pump -- long a well-known name in the chemical processing industry --
is making inroads in the sanitary markets for food, pharmaceutical and
medical applications through the introduction of new products and the
appointment of focused niche distributors.
- Corken -- the established leader in pumps and compressors for liquefied
petroleum gas (LPG) -- is utilizing its newly developed products in the
emerging CO2 dry cleaning industry, helping to eliminate the use of toxic
materials.
- Fluid Management -- the world's leading producer of color-formulation
equipment for the paints and coatings industry -- has utilized its
technology to automate the dispensing of dye in the hair coloring process in
styling salons. In addition, a direct service organization has been
established to support and maintain all dispensing and mixing equipment in
the paint departments of home improvement stores.
IDEX will continue to tap new markets and applications for its products. We
will use a disciplined approach to identify areas with the strongest potential.
We have a unique combination of experience, engineering knowledge, and
manufacturing capabilities that will enable IDEX to build sales opportunities in
diverse markets worldwide.
Whether developing new products or targeting new markets and applications, the
foundation for IDEX's success is quality. The internationally recognized ISO
9000 quality standard is the benchmark for quality, and each of our worldwide
manufacturing locations is certified under this standard. This certification
reinforces our tradition of manufacturing integrity, and ensures our customers
always receive first-class, high quality products.
Innovation is the first word in the IDEX acronym. It refers not only to the
new products we develop, but also to the innovative ideas we conceive to compete
in new markets and develop new applications. IDEX is committed to growing
stronger through product, application and market innovation.
9
<PAGE> 12
Don Rimes, President of Gast, holds a miniature diaphragm vacuum pump for
environmental applications, and is next to a new regenerative blower used in
material handling and sewage treatment applications.
10
1999 Repair & Replacement Sales
- -------------------------------
[PIE CHART APPEARS HERE]
[ ] Estimated one-third of sales come from repair & replacement
1999 Sales from Acquisitions
- ----------------------------
[PIE CHART APPEARS HERE]
[ ] 18% of sales came from Gast Manufacturing and FAST
<PAGE> 13
Reza Arabnia, President of FAST, IDEX's newest acquisition, at its
headquarters in Milan, Italy.
Acquisition Strategy
IDEX has a time-tested acquisition strategy that promotes growth in
shareholder value rather than growth for growth's sake. We apply carefully
designed criteria to acquire good companies and make them better, through
internal benchmarking, sharing of best practices and financial discipline.
IDEX has completed 14 acquisitions since 1989. Each has met our strict
criteria and contributes to the strength of our bottom line. We will continue to
follow this disciplined approach, and we plan to acquire more companies that
produce proprietary industrial products with leading positions in their niche
markets.
Our most recently completed acquisitions are:
- FAST, acquired in June 1999, is a Milan, Italy-based leading producer of
high-quality refinishing equipment, including stirring lids, mixing racks and
mixers for a number of automotive and industrial refinishing applications. It is
also a leading manufacturer of color-formulation equipment for dispensing and
mixing applications, including paints, coatings, inks, colorants and dyes.
- Gast Manufacturing, purchased in January 1998, is one of the world's leading
manufacturers of air-moving products. These include air motors, vacuum pumps and
generators, regenerative blowers and fractional horsepower compressors.
The employees and customers of the companies IDEX acquires enjoy many
advantages. Because there is commonality in many of our engineering
principles, manufacturing methods, distribution channels and business systems,
the new operations benefit from sharing best practices with our other business
units. They also benefit from implementing financial control systems immediately
after the acquisition.
We implement what works successfully and avoid the problems of what does not.
The result has been exceptional customer service, improved margins and higher
asset utilization in our acquired businesses.
Since IDEX was formed in 1988, acquisitions have been an important part of our
growth strategy. We will continue to use our very strong cash flow to acquire
companies that meet our criteria and enhance shareholder value.
11
<PAGE> 14
John McMurray, IDEX Vice President -- Group Executive and President of Viking
Pump, with a new sanitary lobe pump for high purity food processing and
pharmaceutical applications.
12
Market Share Leadership
- -----------------------
[PIE CHART APPEARS HERE]
[ ] Estimated 40% weighted average share of markets served
1999 International Sales
- ------------------------
[PIE CHART APPEARS HERE]
[ ] 61% Domestic
[ ] 24% Europe
[ ] 6% Far East & Oceania
[ ] 9% Rest of World
<PAGE> 15
John Snow, President of Fluid Management - Americas, with Catalina Reyes,
Mechanical Assembler, inspecting the Duraflow(R) pump system of an Accutinter
6000 automatic colorant dispensing machine.
Market Leadership
IDEX has leadership positions in the niche markets it serves. Each IDEX
business unit holds either the number-one market position or has a sizable share
as the number-two producer. On a weighted average basis, we enjoy an estimated
40% share of those markets.
IDEX fosters a company-wide commitment to offer our customers the best overall
value in the marketplace. We respond quickly to customer needs with the highest
quality products of the latest design. We thrive on the sense of immediacy this
requires, and cut through red tape that slows our response to customers.
IDEX companies are market leaders because customers recognize the superior
value we offer. We maintain our leadership positions by continually expanding
our capabilities in the areas of service, reliability, performance, selection,
easy-to-use features, productivity, safety, maintenance, and long-term cost
effectiveness.
We continue to build on our market leadership by expanding our e-business
capabilities and by strengthening our international presence. IDEX conducts
business in more than 100 countries in every corner of the world. International
sales have grown from 24% 12 years ago to 39% in 1999, and we expect this trend
to continue. By sharing application ideas with agents, distributors and
customers, we continue to widen our global customer base. We serve a variety of
industries worldwide so we are not significantly affected by business cycles in
specific markets or countries.
The well-established industrial distribution network that handles many of
IDEX's products continues to play a key role in its market leadership. Our
distributors are our partners in assisting thousands of customers worldwide with
product selection, installation and service. They share our technological
expertise and receive extensive training and support to ensure that IDEX's
reputation for excellence continues.
Most of all, our market leadership positions prove IDEX has the best people
in the business. Our dedicated employees follow a strict code of ethics and make
IDEX a company that people are proud to work for, buy from, sell to and invest
in. Through their efforts, our business units are among the most respected in
their industries.
IDEX follows ethical business practices; provides top quality,
state-of-the-art products; continuously works to introduce innovative new
products; seeks new markets and applications for its products; sells to a broad
base of customers and industries worldwide; cares for its people; and strives
for superiority in everything it does. We believe the very essence of IDEX is
defined in its acronym: Innovation, Diversity, and EXcellence.
Markets Served
- --------------
[PIE CHART APPEARS HERE]
[ ] Paints & Coatings
[ ] Chemical Processing
[ ] Machinery
[ ] Fire & Rescue
[ ] Water Treatment
[ ] Transportation Equipment
[ ] Oil & Refining
[ ] Food Processing
[ ] Medical Equipment
[ ] All Other
13
<PAGE> 16
Net Sales
- ---------
(in millions)
[BAR CHART APPEARS HERE]
$700
600
500
400
300
200
100
Historical Data (dollars in thousands except per share amounts)
88 89 90 91 92 93 94 95 96 97 98 99
Sales have grown at a 15% compound annual rate since 1994.
Operating Margins
- -----------------
[ ] IDEX
[ ] Value Line Industrial Composite Index
[LINE GRAPH APPEARS HERE]
25%
20
15
10
5
88 89 90 91 92 93 94 95 96 97 98 99
Since its formation, IDEX has continuously achieved significantly higher
operating margins than most manufacturers.
Net Income Margins from Continuing Operations
- ----------------------------------------------
[ ] IDEX
[ ] Value Line Industrial Composite Index
[LINE GRAPH APPEARS HERE]
15%
10
5
88 89 90 91 92 93 94 95 96 97 98 99
IDEX's net income margins exceed those of most manufacturers.
14
<TABLE>
<CAPTION>
1999 1998 1997
==================================================================================
<S> <C> <C> <C>
RESULTS OF OPERATIONS
Net sales $ 655,041 $ 640,131 $ 552,163
Gross profit 256,484 252,846 222,357
SG&A expenses 140,495 132,627 110,588
Goodwill amortization 11,312 10,676 8,174
Operating income 104,677 109,543 103,595
Other income (expense) - net 568 479 (693)
Interest expense 18,020 22,359 18,398
Provision for income taxes 32,797 33,267 31,029
Income from continuing operations 54,428 54,396 53,475
Income from discontinued operations - 10,182 5,151
Extraordinary items - (2,514) -
Net income 54,428 62,064 58,626
Income applicable to common stock 54,428 62,064 58,626
FINANCIAL POSITION
Current assets $ 213,715 $ 195,900 $ 197,267
Current liabilities 91,634 80,265 77,801
Working capital 122,081 115,635 119,466
Current ratio 2.3 2.4 2.5
Capital expenditures 18,338 20,763 13,562
Depreciation and amortization 34,835 33,575 24,943
Total assets 738,567 695,811 599,193
Long-term debt 268,589 283,410 258,417
Shareholders' equity 329,024 286,037 238,671
PERFORMANCE MEASURES
Percent of net sales
Gross profit 39.2% 39.5% 40.3%
SG&A expenses 21.4 20.7 20.0
Goodwill amortization 1.7 1.7 1.5
Operating income 16.0 17.1 18.8
Income before income taxes 13.3 13.7 15.3
Income from continuing operations 8.3 8.5 9.7
Effective tax rate 37.6 37.9 36.7
Net income return on average assets 7.6 9.6 10.0
Debt as a percent of capitalization 44.9 49.8 52.0
Net income return on average shareholders'
equity 17.7 23.7 27.0
PER SHARE DATA
Basic - income from continuing operations $ 1.84 $ 1.85 $ 1.83
- net income 1.84 2.12 2.01
Diluted - income from continuing operations 1.81 1.81 1.78
- net income 1.81 2.07 1.95
Cash dividends declared .560 .545 .495
Shareholders' equity 11.10 9.71 8.16
Stock price - high 34 1/8 38 3/4 36 11/16
- low 21 5/8 19 1/2 23 1/4
- close 30 3/8 24 1/2 34 7/8
Price/earnings ratio at year end 17 14 20
OTHER DATA
Employees at year end 3,773 3,803 3,326
Shareholders at year end 7,000 7,700 7,000
Weighted average shares outstanding - basic 29,544 29,332 29,184
- diluted 30,085 30,052 29,999
Shares outstanding at year end 29,636 29,466 29,250
</TABLE>
<PAGE> 17
15
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992 1991 1990 1989 1988
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 474,699 $ 395,480 $ 319,231 $ 239,704 $ 215,778 $ 166,724 $ 160,605 $ 148,870 $ 127,048
187,074 157,677 126,951 96,903 88,312 67,845 65,712 60,584 52,171
93,217 78,712 66,743 52,950 49,326 34,046 29,930 27,391 23,356
6,241 4,196 3,025 1,889 1,422 525 487 487 453
87,616 74,769 57,183 42,064 37,564 33,274 35,295 32,706 28,362
(696) 524 281 728 602 587 448 951 (1,123)
17,476 14,301 11,939 9,168 9,809 10,397 11,795 13,989 14,486
25,020 21,845 16,181 11,187 9,763 8,993 9,221 7,964 5,929
44,424 39,147 29,344 22,437 18,594 14,471 14,727 11,704 6,824
5,774 6,178 4,266 2,889 1,552 1,446 976 3,404 3,830
- - - - (3,441) 1,214 2,145 2,972 4,583
50,198 45,325 33,610 25,326 16,705 17,131 17,848 18,080 15,237
50,198 45,325 33,610 25,326 16,705 17,131 17,848 14,857 10,012
$ 191,599 $ 173,889 $ 140,450 $ 106,864 $ 107,958 $ 68,671 $ 68,807 $ 66,512 $ 59,126
83,286 70,798 58,443 34,038 31,276 25,940 23,852 20,198 18,055
108,313 103,091 82,007 72,826 76,682 42,731 44,955 46,314 41,071
2.3 2.5 2.4 3.1 3.5 2.6 2.9 3.3 3.3
11,634 8,181 6,818 6,120 5,657 2,778 4,025 3,146 1,683
21,312 15,277 12,515 10,092 8,758 5,750 4,842 4,641 4,499
569,745 450,077 357,980 245,291 240,175 137,349 127,466 124,998 118,266
271,709 206,184 168,166 117,464 139,827 65,788 103,863 124,942 143,308
195,509 150,945 116,305 83,686 58,731 37,112 (4,287) (23,282) (84,681)
39.4% 39.9% 39.8% 40.4% 40.9% 40.7% 40.9% 40.7% 41.1%
19.6 19.9 20.9 22.1 22.9 20.4 18.6 18.4 18.4
1.3 1.1 1.0 .8 .7 .3 .3 .3 .4
18.5 18.9 17.9 17.5 17.4 20.0 22.0 22.0 22.3
14.6 15.4 14.3 14.0 13.1 14.1 14.9 13.2 10.0
9.4 9.9 9.2 9.4 8.6 8.7 9.2 7.9 5.4
36.0 35.8 35.5 33.3 34.4 38.3 38.5 40.5 46.5
9.8 11.2 11.1 10.4 8.9 12.9 14.1 12.2 8.0
58.2 57.7 59.1 58.4 70.4 63.9 104.3 122.9 244.4
29.0 33.9 33.6 35.6 34.9 104.4 - - -
$ 1.54 $ 1.37 $ 1.03 $ .79 $ .66 $ .57 $ .61 $ .41 $ .10
1.74 1.58 1.18 .89 .59 .68 .73 .72 .64
1.49 1.32 1.00 .77 .65 .57 .61 .41 .10
1.69 1.53 1.15 .87 .59 .68 .73 .72 .64
.440 .387 .093 - - - - - -
6.76 5.26 4.06 2.93 2.07 1.32 (.18) (.96) (5.38)
27 5/8 29 1/2 19 1/2 16 10 5/8 8 7/8 7 3/4 7 1/2 -
19 7/8 18 3/8 15 1/8 9 3/4 7 3/8 4 1/4 4 5/8 6 1/8 -
26 5/8 27 1/8 18 3/4 15 7/8 10 5/8 7 3/8 4 3/4 7 1/2 -
16 18 16 18 18 11 7 10 -
3,093 2,680 2,305 1,828 1,864 1,418 1,367 1,391 1,222
6,100 5,300 4,400 4,300 4,200 3,900 3,700 3,600 -
28,818 28,662 28,600 28,396 28,353 25,367 24,309 20,537 15,740
29,779 29,609 29,331 28,976 28,389 25,367 24,309 20,537 15,740
28,926 28,695 28,619 28,580 28,353 28,184 24,303 24,317 15,740
</TABLE>
- - 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.
<PAGE> 18
EXHIBIT 13
16
[GRAPH OF EARNINGS PER SHARE]
[GRAPH OF EBITDA AND INTEREST EXPENSE]
[GRAPH OF TOTAL ASSETS AND LONG TERM DEBT]
HISTORICAL OVERVIEW AND OUTLOOK
IDEX sells a broad range of proprietary pump products, dispensing equipment and
other engineered products 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 U.S. and in 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 capacity utilization and capital spending in certain
industries, 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 that may have lower
margins and whose margins normally are further reduced by purchase accounting
adjustments.
IDEX achieved record orders and sales for 1999 while income and earnings per
share from continuing operations matched last year's record levels. New orders
totaled $656.4 million and slightly exceeded shipments. IDEX ended 1999 with a
typical backlog of unfilled orders of about 1-1/4 months' sales. This
customarily low level of backlog allows the Company to provide excellent
customer service, but also means that changes in orders are quickly felt in
operating results.
The following forward-looking statements are qualified by the cautionary
statement under the Private Securities Litigation Reform Act set forth below. As
the Company enters the new millennium, management is very optimistic about both
its short- and long-term prospects. IDEX anticipates improving results as the
new year progresses, and, barring unforeseen circumstances, expects to achieve
record orders, sales and earnings per share in 2000. Several factors should
contribute to IDEX's sales and earnings growth, including the positive trend of
leading economic indicators for its end markets, and an improving international
economy led by the rebound underway in the Asia Pacific region. IDEX also will
benefit from its continued emphasis on profitable growth initiatives; margin
improvement at recently acquired businesses; the use of its strong cash flow to
cut debt and interest expense; and the Company's continued pursuit of an active
and successful acquisition strategy. Management believes that IDEX is
well-positioned to continue its profitable growth.
<PAGE> 19
CAUTIONARY STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT
The preceding paragraph, the Shareholders' Letter, and the "Liquidity and
Capital Resources" and "Euro Preparations" sections 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, cash flow and operating improvements, and are
indicated by words such as "anticipate," "estimate," "expects," "plans,"
"projects," "should," "will," "management believes," "the Company intends," and
similar words or phrases. Such statements are subject to uncertainties and risks
which could cause actual results to vary materially from suggested results.
These uncertainties and risks include but are not limited to the following:
levels of industrial activity and economic conditions in the U.S. and other
countries around the world, pricing pressures and other competitive factors, and
levels of capital spending in certain industries - all of which could have a
material impact on order rates and 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 FAST, 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 purposes of this discussion and analysis section, reference is made to the
table on page 18 and the Company's Statements of Consolidated Operations on page
23.
IDEX consists of three reporting groups: Pump Products, Dispensing Equipment and
Other Engineered Products.
The Pump Products Group designs, produces and distributes a wide range of
engineered industrial pumps, compressors and related controls for process
applications, including mixing paints, inks, chemicals, foods, lubricants and
fuels, as well as in medical applications, water treatment and industrial
production operations. The Dispensing Equipment Group designs, manufacturers and
markets precision-engineered equipment for dispensing, metering and mixing
paints; refinishing equipment; and automatic lubrication systems. The Other
Engineered Products Group designs, produces and distributes proprietary
engineered products for industrial and commercial markets including fire and
rescue, transportation equipment, oil and gas, electronics, communications, and
traffic and commercial signs.
In December 1997, IDEX announced its intention to divest its Strippit and
Vibratech business units. The Company completed the sale of Vibratech on June 9,
1998, and Strippit on August 25, 1998. The financial statements report Strippit
and Vibratech as discontinued operations. Revenues from the discontinued
operations amounted to $42.1 million and $83.9 million for the years ended 1998
and 1997, respectively.
PERFORMANCE IN 1999 COMPARED TO 1998
Orders and sales from continuing operations exceeded the levels achieved in all
prior years, and income and earnings per share from continuing operations were
equal to the record levels achieved in 1998. Incoming orders were 5% higher than
in 1998, with the recent acquisitions of Gast Manufacturing (January 1998) and
FAST S.p.A. (June 1999) contributing a majority of the growth. Orders in the
base businesses increased 2% in 1999 compared to 1998.
Net sales for 1999 reached $655.0 million and increased $14.9 million, or 2%,
over 1998. The acquisitions of Gast and FAST added 3% to sales volume. However,
base business sales were flat with the prior year, and foreign currency
translation had a 1% negative effect. In 1999, total domestic sales increased by
3% and total international sales were up 2%. Base business shipments to the Asia
Pacific region increased by 14%, while Europe was down 8% and Latin America
declined 14%. Sales to customers outside the U.S. were 39% of total sales in
both 1999 and 1998.
Pump Products Group sales of $372.4 million in 1999 decreased by $3.3 million,
or 1%, from 1998. The inclusion of Gast, acquired on January 21, 1998, for a
full year in 1999 added 2% to the sales growth, but was offset by a 3% decline
in base business activity of the Pump Products Group. This was caused by sales
declines at business units serving the process industries. Sales to customers
outside the U.S. declined to 31% of total Group sales in 1999 from 32%
principally due to lower sales in Europe.
Dispensing Equipment Group sales of $141.0 million increased $18.2 million, or
15%, compared to 1998 mainly due to the inclusion of the recently acquired FAST
business. Overall base business increased by 5% and foreign currency translation
had a 2% negative effect on this Group's sales volume. Sales to customers
outside the U.S. were 48% of total Group sales in 1999, up from 46% as the
additional international sales from FAST were partially offset by lower sales
from the rest of the Group.
Other Engineered Products Group sales of $144.5 million were essentially equal
to 1998 as higher sales volume in the fire and rescue equipment markets was
offset by a 1% negative effect in foreign currency translation. Sales to
customers outside the U.S. were 51% of total Group sales in 1999, down from 53%
in 1998 due to lower sales activity in Europe.
Gross profit of $256.5 million in 1999 increased by $3.6 million, or 1%, from
1998. Gross profit as a percent of sales was 39.2% in 1999, down slightly from
39.5% in 1998. Selling, general and administrative expenses increased to $140.5
million in 1999 from $132.6 million in 1998, and as a percent of net sales,
increased to 21.4% from 20.7% in 1998. Goodwill amortization increased by 6% to
$11.3 million in 1999 from $10.7 million in 1998. As a percent of sales,
goodwill amortization remained flat at about 1.7% for both years. The
year-over-year increase in gross profit and goodwill amortization was due
primarily to including recently acquired businesses. The increase in selling,
general and administrative expenses was attributable to inclusion of
acquisitions, and market development initiatives.
Operating income decreased by $4.9 million, or 4%, to $104.7 million in 1999
from $109.5 million in 1998. Operating income as a percent of sales decreased to
16.0% in 1999 from 17.1% in 1998. In the Pump Products Group, operating income
of $65.7 million
<PAGE> 20
18
MANAGEMENT'S DISCUSSION & ANALYSIS OF
FINANCIAL CONDITION & RESULTS OF OPERATIONS
Company and Business Group Financial Information
(in thousands)
<TABLE>
<CAPTION>
For the years ended December 31, (1) 1999 1998 1997
======================================================================================
<S> <C> <C> <C>
PUMP PRODUCTS GROUP
Net sales (2) $ 372,440 $ 375,692 $ 265,918
Operating income (3) 65,673 74,812 61,443
Operating margin 17.6% 19.9% 23.1%
Identifiable assets $ 355,983 $ 370,578 $ 237,870
Depreciation and amortization 19,327 19,326 10,193
Capital expenditures 8,616 8,652 6,875
DISPENSING EQUIPMENT GROUP
Net sales (2) $ 140,996 $ 122,844 $ 138,202
Operating income (3) 25,614 22,483 25,636
Operating margin 18.2% 18.3% 18.5%
Identifiable assets $ 216,273 $ 151,380 $ 156,304
Depreciation and amortization 8,124 7,132 7,092
Capital expenditures 5,896 4,000 3,000
OTHER ENGINEERED PRODUCTS GROUP
Net sales (2) $ 144,486 $ 144,004 $ 150,455
Operating income (3) 26,660 24,596 26,426
Operating margin 18.5% 17.1% 17.6%
Identifiable assets $ 154,490 $ 158,930 $ 166,189
Depreciation and amortization 6,769 6,275 6,916
Capital expenditures 3,739 5,328 3,318
COMPANY
Net sales $ 655,041 $ 640,131 $ 552,163
Operating income 104,677 109,543 103,595
Operating margin 16.0% 17.1% 18.8%
Income before interest expense and income taxes $ 105,245 $ 110,022 $ 102,902
Total assets 738,567 695,811 599,193
Depreciation and amortization (4) 34,464 32,935 24,293
Capital expenditures 18,338 20,763 13,562
</TABLE>
(1) Includes acquisition of Blagdon Pump (April 4, 1997), Knight
Equipment (December 9, 1997) and Gast Manufacturing (January
21, 1998) in the Pump Products Group; and FAST S.p.A. (June 4,
1999) in the Dispensing 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.
and operating margin of 17.6% in 1999 compared to the $74.8 million and 19.9%
recorded in 1998. The declines in operating income and margins for the Company
and the Pump Products Group were caused primarily by lower sales from high
margin business units in the Pump Products Group that serve the chemical
processing, oil and gas, and pulp and paper markets. Operating income of $25.6
million in the Dispensing Equipment Group increased by $3.1 million from 1998
principally reflecting improved conditions in the paints and coatings markets,
inclusion of the FAST acquisition in 1999, and a one-time charge recorded in
1998 for a plant closing. Operating margins in the Dispensing Equipment Group of
18.2% decreased slightly from the 18.3% achieved in 1998. Operating income in
the Other Engineered Products Group of $26.7 million and operating margin of
18.5% in 1999 increased from $24.6 million and 17.1% achieved in 1998,
principally due to improved efficiencies and cost reduction programs.
Interest expense decreased to $18.0 million in 1999 from $22.4 million in 1998.
The decrease in interest expense was due to lower interest rates, debt
reductions from operating cash flow, and the proceeds from the sales of
discontinued businesses during 1998, partially offset by additional debt
required for the FAST acquisition.
The provision for income taxes decreased to $32.8 million in 1999 from $33.3
million in 1998. The effective tax rate declined to 37.6% in 1999 from 37.9% in
1998.
<PAGE> 21
19
Income from continuing operations of $54.4 million in 1999 matched 1998's total.
Diluted earnings per share from continuing operations amounted to $1.81 in 1999,
equalling the $1.81 achieved in 1998.
During 1998, the Company recorded income from discontinued operations of $10.2
million, or 34 cents per share. This included a net gain of $9.0 million related
to the sale of discontinued businesses during 1998. The Company completed the
sale of Vibratech on June 9, 1998, and the sale of Strippit on August 25, 1998.
In the first quarter of 1998, the Company retired, at a premium, its 9-3/4% $75
million Senior Subordinated Notes due in 2002. The transaction resulted in an
extraordinary charge of $2.5 million, net of income tax benefit.
Total net income of $54.4 million in 1999 was 12% lower than the net income of
$62.1 million recorded in 1998. Diluted earnings per share on a net income basis
were $1.81 in 1999, a decrease of 26 cents, or 13%, from the $2.07 achieved in
1998.
PERFORMANCE IN 1998 COMPARED TO 1997
Orders, 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 1997, with the recent acquisitions of Blagdon Pump (April 1997),
Knight Equipment (December 1997) and Gast Manufacturing (January 1998)
contributing all of the growth. Orders in the base businesses decreased 6% in
1998 compared to 1997.
Net sales for 1998 reached $640.1 million and increased $87.9 million, or 16%,
over 1997 due to inclusion of the recently acquired Blagdon, Knight, and Gast
businesses. Overall base business volume was down about 5% in 1998 and foreign
currency translation had a negative 1% effect on the Company's sales growth. In
1998, total international sales in base businesses were down 9%, primarily due
to economic conditions in Asia and Latin America. Base business domestic sales
were down 2%. Sales to the Far East and Asian countries from base businesses
declined by about 29%, and represented 6% of total base business sales in 1998
versus 8% in 1997. Sales to customers outside the U.S. were 39% of total sales
in 1998 compared with 44% in 1997. The decline in international sales as a
percent of total sales was attributable primarily to inclusion in 1998 of Gast,
whose international sales represent about 20% of its total sales. Total domestic
sales increased by 27% in 1998, while international sales grew only 3%.
Pump Products Group sales of $375.7 million in 1998 increased by $109.8 million,
or 41%, from 1997 due to the recently acquired Blagdon, Knight and Gast
businesses. Base business sales volume was down 4% in 1998, and foreign currency
translation had almost no effect on the Group's sales. Sales to customers
outside the U.S. declined to 32% of total Group sales in 1998 from 36% in 1997,
principally due to the inclusion of Gast in 1998.
Dispensing Equipment Group sales of $122.8 million decreased $15.4 million, or
11%, compared to 1997. The decrease reflected conditions in the domestic paint
dispensing markets and lower sales to the Far East, Asia and Latin America.
Foreign currency translation had a negative 1% effect on this Group's sales
volume. Sales to customers outside the U.S. were 46% of total Group sales in
1998, down slightly from 47% in 1997.
Other Engineered Products sales of $144.0 million decreased by $6.5 million, or
4%, compared to 1997. The decrease reflected conditions in the fire and rescue
markets and lower sales to the Far East and Asia. Foreign currency translation
had a negative effect of 1% on this Group's sales volume. Sales to customers
outside the U.S. were 53% of total Group sales in 1998, down from 57% in 1997.
Gross profit of $252.8 million in 1998 increased by $30.5 million, or 14%, from
1997. Gross profit as a percent of sales was 39.5% in 1998, down slightly from
40.3% in 1997. Selling, general and administrative expenses increased to $132.6
million in 1998 from $110.6 million in 1997, and as a percent of net sales,
increased to 20.7% from 20.0% in 1997. Goodwill amortization increased by 31% to
$10.7 million in 1998 from $8.2 million in 1997. As a percent of sales, goodwill
amortization amounted to 1.7% in 1998, up from 1.5% in 1997. The year-over-year
increases in gross profit; selling, general and administrative expenses; and
goodwill amortization were due primarily to including recently acquired
businesses.
Operating income increased by $5.9 million, or 6%, to $109.5 million in 1998
from $103.6 million in 1997. Operating income as a percent of sales decreased to
17.1% in 1998 from 18.8% in 1997. In the Pump Products Group, operating income
of $74.8 million and operating margin of 19.9% in 1998 compared to $61.4 million
and 23.1% in 1997. The operating margin decline for the Pump Products Group
resulted from the inclusion of recently acquired businesses, whose operating
margins were lower than other business units in the Group, and whose operating
income was further reduced by purchase accounting adjustments. Operating margins
in the base businesses of the Pump Products Group improved slightly despite the
sales decline. Operating income in the Dispensing Equipment Group of $22.5
million decreased by $3.1 million, principally due to lower sales volume and the
cost associated with closing a small plant in McKees Rocks, Pennsylvania.
Operating margins in the Dispensing Equipment Group of 18.3% in 1998 decreased
slightly from the 18.5% achieved in 1997 due to the costs associated with the
plant closing. Without this charge, operating margins would have increased
despite the sales decline. Operating income in the Other Engineered Products
Group of $24.6 million and operating margin of 17.1% in 1998 decreased from
$26.4 million and 17.6% achieved in 1997, principally due to lower volume.
Interest expense increased to $22.4 million in 1998 from $18.4 million in 1997
because of the additional borrowings to complete the Blagdon, Knight and Gast
acquisitions, partially offset by lower interest rates, debt reductions from
operating cash flow, and the proceeds from the sale of discontinued businesses.
The provision for income taxes increased to $33.3 million in 1998 from $31.0
million in 1997. The effective tax rate increased to 37.9% in 1998 from the
36.7%, mainly due to higher nondeductible goodwill amortization resulting from
the recent acquisitions.
Income from continuing operations of $54.4 million in 1998 was 2% higher than
the $53.5 million recorded in 1997. Diluted earnings per share from continuing
operations amounted to $1.81 in 1998, an increase of 3 cents from the $1.78
achieved in 1997. Diluted earnings per share in 1998 were adversely affected by
about 3 cents per share because of a one-time charge associated with the closing
of a small plant in the Dispensing Equipment Group.
<PAGE> 22
20
MANAGEMENT'S DISCUSSION & ANALYSIS OF
FINANCIAL CONDITION & RESULTS OF OPERATIONS
[GRAPH OF NET SALES BY GROUP]
[GRAPH OF OPERATING INCOME BY GROUP]
During 1998, the Company recorded income from discontinued operations of $10.2
million, or 34 cents per share. This included a net gain of $9.0 million related
to the sale of discontinued businesses during 1998. The Company completed the
sale of Vibratech on June 9, 1998, and the sale of Strippit on August 25, 1998.
In the first quarter of 1998, the Company retired, at a premium, its 9-3/4% $75
million Senior Subordinated Notes due in 2002. The transaction resulted in an
extraordinary charge of $2.5 million, net of income tax benefit.
Total net income of $62.1 million in 1998 was 6% higher than net income of $58.6
million in 1997. Diluted earnings per share on a net income basis were $2.07 in
1998, an increase of 12 cents, or 6%, from the $1.95 achieved in 1997.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1999, IDEX's working capital was $122.1 million and its current
ratio was 2.3 to 1. The Company's cash flow from continuing operations of $96.2
million in 1999 remained strong, increasing by $11.3 million from 1998. The
improvement was due primarily to an increase in current liabilities, principally
accrued taxes. Cash flow from discontinued operations in 1999 decreased by $4.2
million as a result of selling the discontinued operations during 1998.
Cash flow provided from operations was more than adequate to fund capital
expenditures of $18.3 million, $20.8 million and $13.6 million in 1999, 1998 and
1997, respectively. Capital expenditures were generally for machinery and
equipment that 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.
The Company acquired FAST on June 4, 1999, at a cost of approximately $62
million. The acquisition was accounted for using the purchase method and was
financed through borrowings under the Company's U.S. bank credit facilities and
debt acquired from FAST. IDEX acquired bank credit facilities and notes payable
of 24.3 billion lira ($13.1 million) in connection with this acquisition.
Interest is payable on the outstanding balance at rates ranging from 1.9% to
5.3%.
At December 31, 1999, the maximum amount available under the U.S. Bank Credit
Facility was $235 million of which $84.3 million was borrowed, including an 82
million Netherlands guilder borrowing ($37.5 million) and a 90 billion Italian
lira borrowing ($46.8 million). The Netherlands guilder and the Italian lira
borrowings provide an economic hedge against the
<PAGE> 23
21
net investment in Fluid Management's Netherlands operation and FAST's Italian
operation, respectively. The availability under the U.S. Bank Credit Facility
declines to $210 million on July 1, 2000. Any amount outstanding at July 1,
2001, becomes due at that date. 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, 1999, the applicable margin was 50 basis points. The
Company pays an annual facility fee of 15 basis points on the total facility.
The Company has a $15 million demand line of credit available for short-term
borrowing requirements at the bank's reference rate or at an optional rate based
on the bank's cost of funds. At December 31, 1999, IDEX had $6 million borrowed
under this short-term line of credit at an interest rate of 6.31% per annum.
At December 31, 1999, the maximum amount available under the Company's German
credit agreement was 52.5 million marks ($27.0 million), of which 26.5 million
marks ($13.6 million) was being used, providing an economic hedge against the
net investment in Hale Products' German subsidiary. The availability under this
agreement declines to 37 million marks 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, 1999, the applicable margin was 77.5 basis points.
On October 20, 1998, IDEX's Board of Directors authorized the repurchase of up
to 1.5 million shares of common stock either at market prices or on a negotiated
basis as market conditions warrant. Any such purchases would be funded with
borrowings under the Company's existing credit facilities. During 1999, 4,500
shares were repurchased under the program at a cost of approximately $98,000.
IDEX believes it will generate sufficient cash flow from operations in 2000 to
meet its operating requirements, interest and scheduled amortization payments
under the U.S. Bank Credit Facility, the Italian credit facilities and notes
payable, the demand line of credit, the German credit agreement, interest and
principal payments on the Senior Notes, any share repurchases, approximately $25
million of planned capital expenditures, and approximately $17 million of annual
dividend payments to holders of common stock. From commencement of operations
in January 1988 until December 31, 1999, IDEX has borrowed $639 million under
its various credit facilities to complete 14 acquisitions. During this same
period IDEX generated, principally from operations, cash flow of $540 million to
reduce its indebtedness. In the event that suitable businesses are available for
acquisition by IDEX upon terms acceptable to the Board of Directors, IDEX may
obtain all or a portion of the financing for the acquisitions through the
incurrence of additional long-term indebtedness.
YEAR 2000
IDEX initiated a Year 2000 compliance program in late 1996 to ensure that its
information systems and other date-sensitive equipment continue uninterrupted
into the Year 2000. All of the Company's essential processes, systems, and
business functions were compliant with the Year 2000 requirements by the end of
1999. IDEX did not experience any Year 2000 consequences that affected its
financial position, liquidity, or results of operations.
The costs of IDEX's Year 2000 compliance program were funded with cash flows
from operations. Some of these costs related solely to the modification of
existing systems, while others were for new systems, that also improved business
functionality. In total, these costs were not substantially different from the
normal, recurring costs for system development, in part due to the reallocation
of internal resources to implement the new business systems. Expenditures
related to this multi-year program were approximately $6 million.
EURO PREPARATIONS
During 1998 and 1999, the Company upgraded its business systems to accommodate
the Euro currency. The cost of this upgrade was immaterial to the Company's
financial results. Although difficult to predict, any competitive implications
or impact on existing financial instruments resulting from the Euro
implementation also are expected to be immaterial to the Company's results of
operations, liquidity, or financial position.
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Company is subject to market risk principally associated with changes in
interest rates and foreign currency exchange rates. Interest rate exposure is
limited principally to the $268.6 million of long-term debt outstanding at
December 31, 1999. Approximately 15% of the debt is priced at interest rates
that float with the market. A 50 basis point movement in the interest rate on
the floating rate debt would result in an approximate $200,000 annualized
increase or decrease in interest expense and cash flows. The remaining debt is
either fixed-rate debt or debt that essentially has been fixed through the use
of interest rate swaps. The Company will from time to time enter into interest
rate swaps on its debt when it believes there is a clear financial advantage for
doing so. A formalized treasury risk management policy, adopted by the Board of
Directors, exists that describes the procedures and controls over derivative
financial and commodity instruments, including interest rate swaps. Under the
policy, the Company does not use derivative financial or commodity instruments
for trading purposes and the use of such instruments is subject to strict
approval levels by senior officers. Typically, the use of such derivative
instruments is limited to interest rate swaps on the Company's outstanding
long-term debt. The Company's exposure related to such derivative instruments
is, in the aggregate, not material to the Company's financial position,
liquidity, or results of operations.
The Company's foreign currency exchange rate risk is limited principally to the
Euro, British Pound Sterling, German Mark, Dutch Guilder, Italian Lira and other
Western European currencies. The Company manages its foreign exchange risk
principally through the invoicing of customers in the same currency as the
source of the products. The implementation of the Euro currency as of January 1,
1999, did not materially affect the Company's foreign currency exchange risk
profile, although some customers may require the Company to invoice or pay in
Euros rather than the functional currency of the manufacturing entity.
<PAGE> 24
22
IDEX CORPORATION & SUBSIDIARIES
Consolidated Balance Sheets
(in thousands except share and per share amounts)
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1999 1998
========================================================================================
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 2,895 $ 2,721
Receivables - net 100,805 86,006
Inventories 106,141 101,201
Other current assets 3,874 5,972
----------------------------------------------------------------------------------------
Total current assets 213,715 195,900
Property, plant and equipment - net 129,917 125,422
Intangible assets - net 385,061 360,810
Other noncurrent assets 9,874 13,679
----------------------------------------------------------------------------------------
Total assets $ 738,567 $ 695,811
========================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Trade accounts payable $ 44,289 $ 39,521
Dividends payable 4,153 4,125
Accrued expenses 43,192 36,619
----------------------------------------------------------------------------------------
Total current liabilities 91,634 80,265
Long-term debt 268,589 283,410
Other noncurrent liabilities 49,320 46,099
----------------------------------------------------------------------------------------
Total liabilities 409,543 409,774
----------------------------------------------------------------------------------------
Commitments and contingencies (Note 6)
Shareholders' equity
Common stock, par value $.01 per share
Shares authorized 1999 and 1998 - 75,000,000
Shares issued and outstanding:
1999 - 29,635,576; 1998 - 29,466,416 296 295
Additional paid-in capital 99,802 96,064
Retained earnings 233,326 195,465
Minimum pension liability adjustment (1,759) (1,489)
Accumulated translation adjustment (2,543) (4,298)
Treasury stock (98) -
----------------------------------------------------------------------------------------
Total shareholders' equity 329,024 286,037
----------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 738,567 $ 695,811
========================================================================================
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE> 25
23
IDEX CORPORATION & SUBSIDIARIES
STATEMENTS OF CONSOLIDATED OPERATIONS
(in thousands except per share amounts)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31, 1999 1998 1997
===================================================================================================
<S> <C> <C> <C>
Net sales $ 655,041 $ 640,131 $ 552,163
Cost of sales 398,557 387,285 329,806
- ---------------------------------------------------------------------------------------------------
Gross profit 256,484 252,846 222,357
Selling, general and administrative expenses 140,495 132,627 110,588
Goodwill amortization 11,312 10,676 8,174
- ---------------------------------------------------------------------------------------------------
Operating income 104,677 109,543 103,595
Other income (expense) - net 568 479 (693)
- ---------------------------------------------------------------------------------------------------
Income before interest expense and income taxes 105,245 110,022 102,902
Interest expense 18,020 22,359 18,398
- ---------------------------------------------------------------------------------------------------
Income before income taxes 87,225 87,663 84,504
Provision for income taxes 32,797 33,267 31,029
- ---------------------------------------------------------------------------------------------------
Income from continuing operations before extraordinary item 54,428 54,396 53,475
- ---------------------------------------------------------------------------------------------------
Discontinued operations:
Income from discontinued operations, net of taxes - 1,202 5,151
Gain on sale of discontinued operations, net of taxes - 8,980 -
- ---------------------------------------------------------------------------------------------------
Income from discontinued operations - 10,182 5,151
- ---------------------------------------------------------------------------------------------------
Extraordinary loss from early extinguishment of debt, net of taxes - (2,514) -
- ---------------------------------------------------------------------------------------------------
Net income $ 54,428 $ 62,064 $ 58,626
===================================================================================================
EARNINGS PER COMMON SHARE - BASIC
Continuing operations $ 1.84 $ 1.85 $ 1.83
Discontinued operations - .36 .18
Extraordinary loss from early extinguishment of debt - (.09) -
- ---------------------------------------------------------------------------------------------------
Net income $ 1.84 $ 2.12 $ 2.01
===================================================================================================
EARNINGS PER COMMON SHARE - DILUTED
Continuing operations $ 1.81 $ 1.81 $ 1.78
Discontinued operations - .34 .17
Extraordinary loss from early extinguishment of debt - (.08) -
- ---------------------------------------------------------------------------------------------------
Net income $ 1.81 $ 2.07 $ 1.95
===================================================================================================
SHARE DATA
Weighted average common shares outstanding 29,544 29,332 29,184
===================================================================================================
Weighted average common shares outstanding
assuming full dilution 30,085 30,052 29,999
===================================================================================================
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE> 26
24
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 TREASURY SHAREHOLDERS'
PAID-IN CAPITAL EARNINGS ADJUSTMENT ADJUSTMENT STOCK EQUITY
=============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1996 $ 89,946 $ 105,238 $ - $ 325 $ $195,509
- -----------------------------------------------------------------------------------------------------------------------------
Net income 58,626 58,626
- -----------------------------------------------------------------------------------------------------------------------------
Other comprehensive income, net of taxes
Unrealized translation adjustment (1,099) (1,099)
Minimum pension adjustment (756) (756)
- -----------------------------------------------------------------------------------------------------------------------------
Other comprehensive income (756) (1,099) (1,855)
- -----------------------------------------------------------------------------------------------------------------------------
Comprehensive income 58,626 (756) (1,099) 56,771
- -----------------------------------------------------------------------------------------------------------------------------
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)
- -----------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1997 90,798 149,403 (756) (774) - 238,671
- -----------------------------------------------------------------------------------------------------------------------------
Net income 62,064 62,064
- -----------------------------------------------------------------------------------------------------------------------------
Other comprehensive income, net of taxes
Unrealized translation adjustment (3,524) (3,524)
Minimum pension adjustment (733) (733)
- -----------------------------------------------------------------------------------------------------------------------------
Other comprehensive income (733) (3,524) (4,257)
- -----------------------------------------------------------------------------------------------------------------------------
Comprehensive income 62,064 (733) (3,524) 57,807
- -----------------------------------------------------------------------------------------------------------------------------
Issuance of 216,808 shares of common
stock from exercise of stock options,
net of those surrendered, and earned
compensation 5,561 5,561
Cash dividends declared - $.545 per
common share outstanding (16,002) (16,002)
- -----------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1998 96,359 195,465 (1,489) (4,298) - 286,037
- -----------------------------------------------------------------------------------------------------------------------------
Net income 54,428 54,428
- -----------------------------------------------------------------------------------------------------------------------------
Other comprehensive income, net of taxes
Unrealized translation adjustment 1,755 1,755
Minimum pension adjustment (270) (270)
- -----------------------------------------------------------------------------------------------------------------------------
Other comprehensive income (270) 1,755 1,485
- -----------------------------------------------------------------------------------------------------------------------------
Comprehensive income 54,428 (270) 1,755 55,913
- -----------------------------------------------------------------------------------------------------------------------------
Issuance of 173,660 shares of common
stock from exercise of stock options,
and deferred compensation plans 3,739 3,739
Purchase of common stock (98) (98)
Cash dividends declared - $.56 per
common share outstanding (16,567) (16,567)
- -----------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1999 $ 100,098 $ 233,326 $ (1,759) $ (2,543) $ (98) $329,024
=============================================================================================================================
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE> 27
25
IDEX CORPORATION & SUBSIDIARIES
Statements of Consolidated Cash Flows
(in thousands)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31, 1999 1998 1997
========================================================================================
<S> <C> <C> <C>
Cash flows from operating activities
Income from continuing operations $ 54,428 $ 54,396 $ 53,475
Adjustments to reconcile to net cash
provided by continuing operations:
Depreciation and amortization 21,619 20,747 14,350
Amortization of intangibles 12,845 12,188 9,943
Amortization of debt issuance expenses 371 640 650
Deferred income taxes 3,742 3,445 6,304
(Increase) decrease in receivables (867) 7,360 3,605
Decrease in inventories 4,797 1,199 7,659
(Decrease) increase in trade accounts payable (3,057) 10 (2,216)
Increase (decrease) in accrued expenses 3,363 (11,224) (8,117)
Other - net (1,085) (3,867) (5,107)
----------------------------------------------------------------------------------------
Net cash provided by continuing operations 96,156 84,894 80,546
Net cash provided by discontinued operations - 4,159 5,669
----------------------------------------------------------------------------------------
Net cash flows from operating activities 96,156 89,053 86,215
----------------------------------------------------------------------------------------
Cash flows from investing activities
Additions to property, plant and equipment (18,338) (20,763) (13,562)
Acquisition of businesses (net of cash acquired) (48,497) (118,088) (49,744)
Proceeds from sale of businesses - 39,695 -
----------------------------------------------------------------------------------------
Net cash flows from investing activities (66,835) (99,156) (63,306)
----------------------------------------------------------------------------------------
Cash flows from financing activities
Net repayments under credit facilities (55,718) (166,314) (51,909)
Borrowings under credit facilities for acquisitions 48,497 118,088 36,198
(Repayments) borrowings of other long-term debt (7,455) (9,962) 13,546
Proceeds from issuance of 6.875% Senior Notes - 150,000 -
Repayment of 9.75% Senior Subordinated Notes - (75,000) -
Financing payments - (5,031) -
(Decrease) increase in accrued interest (772) 1,769 (736)
Dividends paid (16,539) (15,826) (13,983)
Proceeds from stock option exercises 2,938 3,329 1,016
Purchase of common stock (98) - -
----------------------------------------------------------------------------------------
Net cash flows from financing activities (29,147) 1,053 (15,868)
----------------------------------------------------------------------------------------
Net increase (decrease) in cash 174 (9,050) 7,041
Cash and cash equivalents at beginning of year 2,721 11,771 4,730
----------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 2,895 $ 2,721 $ 11,771
========================================================================================
Supplemental cash flow information
Cash paid for:
Interest $ 18,420 $ 20,070 $ 18,781
Income taxes 25,297 36,568 25,446
Significant non-cash activities:
Debt acquired with acquisition of business 13,065 - -
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE> 28
26
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, dispensing equipment, and other engineered products
sold to a diverse customer base in a variety of industries in the U.S. and
internationally. Its products include industrial pumps, compressors and related
controls for use in a wide variety of process applications; precision-engineered
equipment for dispensing, metering and mixing paints, and centralized
lubrication systems; and proprietary engineered products for industrial and
commercial markets including fire and rescue, transportation equipment, oil and
gas, electronics, communications, and traffic and commercial signs. These
activities are grouped into three business segments: Pump Products, Dispensing
Equipment and Other Engineered Products.
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
IDEX 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
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.
RECLASSIFICATIONS
Certain amounts in the prior years' financial statements have been reclassified
to conform to the current year presentation.
EARNINGS PER COMMON SHARE
Earnings per common share (EPS) are computed by dividing net income by the
weighted average number of shares of common stock (basic) plus common stock
equivalents (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.
Basic weighted average shares reconciles to diluted weighted average shares as
follows:
<TABLE>
<CAPTION>
1999 1998 1997
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Basic weighted average common shares outstanding 29,544 29,332 29,184
Dilutive effect of stock options 541 720 815
- ------------------------------------------------------------------------------------------------------
Weighted average common shares outstanding assuming
full dilution 30,085 30,052 29,999
======================================================================================================
</TABLE>
DEPRECIATION AND AMORTIZATION
Depreciation is recorded using the straight-line method. The estimated useful
lives used in the computation of depreciation are as follows:
<TABLE>
<S> <C>
Land improvements 10 to 12 years
Buildings and improvements 3 to 30 years
Machinery and equipment
and engineering drawings 3 to 12 years
Office and transportation equipment 3 to 10 years
</TABLE>
Identifiable intangible assets are amortized over their estimated useful lives
using the straight-line method. 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.
RESEARCH AND DEVELOPMENT EXPENDITURES
Expenditures associated with research and development are expensed in the year
incurred and included in cost of sales, except for software development
capitalized under Statement of Financial Accounting Standards (SFAS) No. 86.
Research and development expenses, which include costs associated with the
development of new products and major improvements to existing products, were
$6.8 million, $6.3 million and $6.7 million in 1999, 1998 and 1997,
respectively.
<PAGE> 29
27
New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. This statement is effective for fiscal years beginning after
June 15, 2000. Management is still assessing the effects adoption of SFAS No.
133 will have on its financial position, liquidity, or results of operations.
2. ACQUISITIONS
On June 4, 1999, IDEX acquired FAST S.p.A. at a cost of $61.6 million, with
financing provided by borrowings under the Company's U.S. bank credit facilities
and debt acquired. FAST, with headquarters near Milan, Italy, is a leading
European manufacturer of refinishing and color-formulation equipment for a
number of applications, including paints, coatings, inks, colorants and dyes.
FAST is being operated as part of IDEX's Dispensing Equipment Group.
On January 21, 1998, IDEX completed the acquisition of Gast Manufacturing
Corporation for a cash purchase price of $118.1 million, with financing provided
by borrowings under the Company's U.S. bank credit facilities. Gast,
headquartered in Benton Harbor, Michigan, is one of the world's leading
manufacturers of air-moving pumps, compressors and blowers.
Both of these acquisitions were accounted for as purchases, and operating
results include the acquisitions from the dates of purchase. Cost in excess of
net assets acquired is amortized on a straight-line basis over a period not
exceeding 40 years.
The unaudited pro forma consolidated results of operations for the years ended
December 31, 1999 and 1998, 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.
1999 1998
==================================================================
Net sales $ 674,850 $ 682,677
Income from continuing operations 55,998 55,766
Net income 55,998 63,434
Basic EPS
Continuing operations 1.90 1.90
Net income 1.90 2.16
Diluted EPS
Continuing operations 1.86 1.86
Net income 1.86 2.11
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. Financing was
provided by borrowings under the Company's U.S. bank credit facilities and the
issuance of notes to the sellers. Blagdon, which manufactures air-operated
diaphragm pumps, is located in Washington, Tyne & Wear, England, and is operated
as part of Warren Rupp. Knight, based in Lake Forest, California, is a leading
manufacturer of pumps and dispensing equipment for industrial laundries,
commercial dishwashing and chemical metering, and is operated as part of
Pulsafeeder.
The liabilities assumed that represent noncash investing activities in
connection with the acquisition of businesses for 1999, 1998 and 1997 were as
follows:
1999 1998 1997
===========================================================
Fair value of
assets acquired $ 34,743 $ 71,206 $ 16,884
Cost in excess of
net assets acquired 42,603 75,942 38,599
Cash paid (48,497) (118,088) (49,744)
Debt acquired
in connection with
acquisition of business (13,065) - -
- -----------------------------------------------------------
Liabilities assumed $ 15,784 $ 29,060 $ 5,739
===========================================================
3. DISCONTINUED OPERATIONS
In December 1997, IDEX announced its intention to divest its Strippit and
Vibratech businesses. The Company completed the sale of Vibratech on June 9,
1998, for $23.0 million in cash, and the sale of Strippit on August 25, 1998,
for $19.5 million in cash and notes. The sale of Vibratech generated a gain on
disposition, while the Strippit sale resulted in a small loss. The proceeds
were used to repay borrowings under the Company's U.S. bank credit facilities.
In 1998, these two businesses contributed net income of $10.2 million, including
a net gain of $9.0 million (net of taxes of $3.1 million) from the sale of these
units.
Revenues from discontinued operations amounted to $42.1 million and $83.9
million in 1998 and 1997, respectively. Income from discontinued operations is
net of taxes of $0.7 million and $3.1 million in 1998 and 1997, respectively.
Interest expense of $0.1 million and $0.6 million for 1998 and 1997,
respectively, has been allocated to these operations based on their acquisition
debt, less repayments generated from operating cash flows that can be
specifically attributed to these operations.
4. COMPREHENSIVE INCOME
The tax effects of the components of other comprehensive income for 1999, 1998
and 1997 were:
1999 1998 1997
========================================================
Unrealized translation
adjustment:
Pretax amount $ 1,755 $ (3,524) $ (1,099)
Income tax - - -
- --------------------------------------------------------
Aftertax amount $ 1,755 $ (3,524) $ (1,099)
========================================================
Minimum pension
adjustment:
Pretax amount $ (570) $(1,109) $ (1,181)
Tax benefit 300 376 425
- --------------------------------------------------------
Aftertax amount $ (270) $ (733) $ (756)
========================================================
<PAGE> 30
28
IDEX CORPORATION & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands except share and per share amounts)
5. BALANCE SHEET COMPONENTS
The components of inventories at December 31, 1999 and 1998 were:
1999 1998
===========================================================
Raw materials $ 28,930 $ 27,361
Work in process 12,722 13,904
Finished goods 64,489 59,936
-----------------------------------------------------------
Total $ 106,141 $ 101,201
===========================================================
Those inventories, which were carried on a LIFO basis, amounted to
$86,587 and $81,317 at December 31, 1999 and 1998, respectively. The
excess of current cost over LIFO inventory value and the impact of using
the LIFO method on earnings are not material.
The components of certain other balance sheet accounts at December 31,
1999 and 1998 were:
1999 1998
======================================================================
Receivables
Customers $ 101,990 $ 86,915
Other 1,949 1,575
----------------------------------------------------------------------
Total 103,939 88,490
Less allowance for doubtful accounts 3,134 2,484
----------------------------------------------------------------------
Receivables - net $ 100,805 $ 86,006
======================================================================
Property, plant and equipment, at cost
Land and improvements $ 9,068 $ 8,069
Buildings and improvements 61,710 52,767
Machinery and equipment 157,872 151,696
Engineering drawings 3,248 3,237
Office and transportation equipment 38,583 33,138
Construction in progress 3,248 2,813
----------------------------------------------------------------------
Total 273,729 251,720
Less accumulated depreciation
and amortization 143,812 126,298
----------------------------------------------------------------------
Property, plant and equipment - net $ 129,917 $ 125,422
======================================================================
Intangible assets
Cost in excess of net assets acquired $ 419,917 $ 387,209
Other 28,345 24,963
----------------------------------------------------------------------
Total 448,262 412,172
Less accumulated amortization 63,201 51,362
----------------------------------------------------------------------
Intangible assets - net $ 385,061 $ 360,810
======================================================================
Accrued expenses
Accrued payroll and related items $ 21,421 $ 22,967
Accrued taxes 9,165 870
Accrued insurance 4,037 3,731
Other 8,569 9,051
----------------------------------------------------------------------
Total $ 43,192 $ 36,619
======================================================================
Other noncurrent liabilities
Pension and retiree medical reserves $ 26,887 $ 26,845
Deferred income taxes 15,824 14,860
Other 6,609 4,394
----------------------------------------------------------------------
Total $ 49,320 $ 46,099
======================================================================
6. COMMITMENTS AND CONTINGENCIES
At December 31, 1999, total minimum rental payments under noncancelable
operating leases, primarily for office facilities, warehouses and data
processing equipment, were $31.1 million. The minimum rental commitments
for each of the next five years are as follows: 2000 - $6.9 million;
2001 - $5.3 million; 2002 - $3.4 million; 2003 - $2.5 million; 2004 -
$2.1 million; thereafter - $10.9 million.
Rental expense totaled $9.0 million, $8.7 million and $6.7 million for
the years ended December 31, 1999, 1998 and 1997, 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, liquidity, 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.
7. Stock Options
The Company has stock option plans for outside directors, executives and
certain key employees. These options are accounted for using the
intrinsic value method and, accordingly, no compensation cost has been
recognized. Had compensation cost been determined using the fair value
method in 1999, 1998 and 1997, the Company's pro forma net income and
EPS would have been as follows:
1999 1998 1997
============================================================
Net income
As reported $ 54,428 $ 62,064 $ 58,626
Pro forma 51,675 59,602 57,063
Basic EPS
As reported 1.84 2.12 2.01
Pro forma 1.75 2.03 1.96
Diluted EPS
As reported 1.81 2.07 1.95
Pro forma 1.72 1.98 1.90
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 1999, 1998 and 1997, respectively: dividend yield of
2.29%, 1.55% and 1.94%; volatility of 32.5%, 27.7% and 28.9%; risk-free
interest rates of 5.2%, 5.6% and 6.6%; 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 1.4 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.
<PAGE> 31
29
The following table summarizes option activity under the plans:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
NUMBER OPTION PRICE
OF OPTIONS PER SHARE
- ---------------------------------------------------------------
<S> <C> <C>
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
Granted 605,000 34.86
Exercised (227,376) 14.01
Forfeited (111,730) 28.07
----------
Outstanding at December 31, 1998 2,395,108 22.89
Granted 647,039 24.79
Exercised (170,715) 16.75
Forfeited (107,010) 28.83
----------
Outstanding at December 31, 1999 2,764,422 23.54
==========
Exercisable at December 31, 1997 943,431 14.25
==========
Exercisable at December 31, 1998 1,124,197 16.43
==========
Exercisable at December 31, 1999 1,485,426 19.98
==========
</TABLE>
The following table summarizes information about options outstanding at
December 31, 1999:
<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
<S> <C> <C> <C> <C> <C>
$0 to 11 119,275 2.0 years $ 7.74 119,275 $ 7.74
12 to 23 823,500 4.3 years 16.14 777,702 15.90
24 to 34 1,821,647 8.2 years 27.91 588,449 27.85
--------- ---------
Total 2,764,422 6.8 years 23.54 1,485,426 19.98
========= =========
</TABLE>
8. LONG-TERM DEBT
Long-term debt at December 31, 1999 and 1998 consisted of the following:
<TABLE>
<CAPTION>
1999 1998
- ---------------------------------------------------------------------
<S> <C> <C>
Bank revolving credit facilities,
including accrued interest $108,753 $128,692
6.875% Senior Notes 150,000 150,000
Other long-term debt 9,836 4,718
- ---------------------------------------------------------------------
Total $268,589 $283,410
=====================================================================
</TABLE>
The Company has a $235 million domestic multi-currency bank revolving credit
facility (U.S. Credit Facility). The availability under the U.S. Credit Facility
declines to $210 million on July 1, 2000. Any amount outstanding at July 1,
2001, becomes due at that date. At December 31, 1999, approximately $146.7
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 50 basis points per annum. The
weighted average interest rate on outstanding borrowings under the U.S. Credit
Facility was 3.83% at December 31, 1999. 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 entered into a $15 million demand line of credit (Short-Term
Facility) expiring on March 31, 2000. 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, 1999, there was $6 million borrowed under
the Short-Term Facility at an interest rate of 6.31% per annum.
The Company's DM 52.5 million ($27.0 million) credit facility (German Facility)
declines to DM 37 million at November 1, 2000. Any amount outstanding at
November 1, 2001, becomes due at that date. At December 31, 1999, DM 26.5
million ($13.6 million) was outstanding. Interest is payable quarterly on the
outstanding balance at LIBOR plus 77.5 basis points per annum.
Total long-term debt outstanding at December 31, 1999 and 1998 included $4.4
million and $5.2 million, respectively, of accrued interest, as interest
generally is paid through borrowings under the U.S. Credit Facility.
In February 1998, the Company sold $150 million of Senior Notes due February 15,
2008, with a coupon interest rate of 6.875% and an effective rate of 6.919% to
maturity. Interest is payable semiannually. The Senior Notes are redeemable at
any time at the option of the Company in whole or in part. At December 31, 1999,
the fair market value of the Senior Notes was approximately $135 million, based
on the quoted market price. Proceeds from the Senior Note offering were used to
reduce bank debt, and to repay in March 1998 the $75 million principal amount of
the 9.75% Senior Subordinated Notes originally due in 2002. After related
expenses and fees, this redemption resulted in an extraordinary loss of $2.5
million, or 8 cents per diluted share, net of an income tax benefit of $1.5
million.
At December 31, 1999, other long-term debt included $9.0 million of debt
acquired in connection with the acquisition of FAST. Interest is payable on the
outstanding balances at rates ranging from 1.9% to 5.3% per annum.
The U.S. Credit Facility and the Indenture for the Senior Notes permit the
payment of cash dividends only to the extent that no default exists under these
agreements, and limit the amount of cash dividends in accordance with specified
formulas. At December 31, 1999, under the most restrictive of these provisions,
the Company has available approximately $95.5 million for the payment of cash
dividends in 2000.
<PAGE> 32
30
IDEX CORPORATION & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands except share and per share amounts)
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. At December 31, 1999, the Company had entered into
three interest rate swaps, expiring between August 2000 and August 2001, which
have effectively converted approximately $61 million of floating rate debt into
fixed rate debt at rates approximating 4.0%.
9. COMMON AND PREFERRED STOCK
On October 20, 1998, IDEX's Board of Directors authorized the repurchase of up
to 1.5 million shares of its common stock either at market prices or on a
negotiated basis as market conditions warrant. During 1999, the Company
repurchased 4,500 shares of common stock at a cost of approximately $98,000.
At December 31, 1999 and 1998, the Company had 5 million shares of preferred
stock with a par value of $.01 per share authorized but unissued.
10. BUSINESS SEGMENTS AND GEOGRAPHIC INFORMATION
IDEX's operations have been aggregated (primarily on the basis of products,
production processes, distribution methods and management organizations) into
three reportable segments: Pump Products Group, Dispensing Equipment Group and
Other Engineered Products Group. The Pump Products Group designs, produces and
distributes a wide range of engineered industrial pumps, compressors and
related controls for process applications. The Dispensing Equipment Group
designs, manufactures and markets precision-engineered equipment for dispensing,
metering and mixing paints; refinishing equipment; and centralized lubrication
systems. The Other Engineered Products Group designs, produces and distributes
proprietary engineered equipment for industrial and commercial markets including
fire and rescue, transportation equipment, oil and gas, electronics,
communications, and traffic and commercial signs. No single customer accounted
for more than 2% of net sales in 1999.
Information on IDEX's business segments is presented below, based on the nature
of products and services offered. IDEX evaluates performance based on several
factors, of which operating income is the primary financial measure. The
accounting policies of the business segments are described in Note 1.
Intersegment sales are accounted for at fair value as if the sales were to third
parties.
1999 1998 1997
==================================================================
Net sales
Pump Products
From external customers $ 369,568 $ 373,333 $ 263,581
Intersegment sales 2,872 2,359 2,337
- ------------------------------------------------------------------
Total group sales 372,440 375,692 265,918
- ------------------------------------------------------------------
Dispensing Equipment
From external customers 140,989 122,796 138,129
Intersegment sales 7 48 73
- ------------------------------------------------------------------
Total group sales 140,996 122,844 138,202
- ------------------------------------------------------------------
Other Engineered Products
From external customers 144,484 144,002 150,453
Intersegment sales 2 2 2
- ------------------------------------------------------------------
Total group sales 144,486 144,004 150,455
- ------------------------------------------------------------------
Intersegment elimination (2,881) (2,409) (2,412)
- ------------------------------------------------------------------
Total net sales $ 655,041 $ 640,131 $ 552,163
==================================================================
Operating income (1)
Pump Products $ 65,673 $ 74,812 $ 61,443
Dispensing Equipment 25,614 22,483 25,636
Other Engineered Products 26,660 24,596 26,426
Corporate office & other (13,270) (12,348) (9,910)
- ------------------------------------------------------------------
Total operating income $ 104,677 $ 109,543 $ 103,595
==================================================================
Assets
Pump Products $ 355,983 $ 370,578 $ 237,870
Dispensing Equipment 216,273 151,380 156,304
Other Engineered Products 154,490 158,930 166,189
Corporate office & other (2) 11,821 14,923 38,830
- ------------------------------------------------------------------
Total assets $ 738,567 $ 695,811 $ 599,193
==================================================================
Depreciation and
amortization (3)
Pump Products $ 19,327 $ 19,326 $ 10,193
Dispensing Equipment 8,124 7,132 7,092
Other Engineered Products 6,769 6,275 6,916
Corporate office & other 244 202 92
- ------------------------------------------------------------------
Total depreciation
and amortization $ 34,464 $ 32,935 $ 24,293
==================================================================
Capital expenditures
Pump Products $ 8,616 $ 8,652 $ 6,875
Dispensing Equipment 5,896 4,000 3,000
Other Engineered Products 3,739 5,328 3,318
Corporate office & other 87 2,783 369
- ------------------------------------------------------------------
Total capital
expenditures $ 18,338 $ 20,763 $ 13,562
==================================================================
(1) Represents business segment operating income after noncash amortization of
intangible assets.
(2) Includes assets held for disposition of $29.3 million at December 31, 1997.
(3) Includes amortization relating to all business combinations accounted for
by the purchase method, but excludes amortization of debt issuance expenses.
<PAGE> 33
31
Information about the Company's operations in different geographical regions for
the years ended December 31, 1999, 1998 and 1997 is shown below. Net sales were
attributed to geographic areas based on location of the customer, and no country
outside the U.S. was deemed material.
1999 1998 1997
=======================================================================
Net sales
U.S. $ 399,286 $ 389,185 $ 307,492
Europe 154,907 153,988 141,371
Other countries 100,848 96,958 103,300
- -----------------------------------------------------------------------
Total net sales $ 655,041 $ 640,131 $ 552,163
=======================================================================
Long-lived assets
U.S. $ 384,389 $ 396,826 $ 301,034
Europe 135,942 98,667 96,160
Other countries 4,521 4,418 4,732
- -----------------------------------------------------------------------
Total long-lived assets $ 524,852 $ 499,911 $ 401,926
=======================================================================
11. INCOME TAXES
Pretax income for the years ended December 31, 1999, 1998 and 1997 was taxed
under the following jurisdictions:
1999 1998 1997
========================================================================
Domestic $ 59,042 $ 61,139 $ 58,748
Foreign 28,183 26,524 25,756
- ------------------------------------------------------------------------
Total $ 87,225 $ 87,663 $ 84,504
========================================================================
The provision for income taxes for the years ended December 31, 1999, 1998 and
1997 was as follows:
Current
U.S. $ 17,329 $ 21,899 $ 17,178
State and local 2,334 1,476 1,379
Foreign 9,392 6,447 6,168
- ------------------------------------------------------------------------
Total current 29,055 29,822 24,725
- ------------------------------------------------------------------------
Deferred
U.S. 2,983 800 3,125
State and local 321 400 500
Foreign 438 2,245 2,679
- ------------------------------------------------------------------------
Total deferred 3,742 3,445 6,304
- ------------------------------------------------------------------------
Total provision for
income taxes $ 32,797 $ 33,267 $ 31,029
========================================================================
Deferred (prepaid) income taxes resulted from the following:
1999 1998 1997
========================================================================
Employee and retiree
benefit plans $ (349) $ 959 $ 1,481
Depreciation and
amortization 1,578 2,848 3,536
Inventories 1,260 (895) 323
Allowances and accruals 624 79 2,103
Other 629 454 (1,139)
- ------------------------------------------------------------------------
Total deferred
tax provision $ 3,742 $ 3,445 $ 6,304
========================================================================
Deferred tax assets (liabilities) related to the following at
December 31, 1999 and 1998:
1999 1998
========================================================================
Employee and retiree benefit plans $ 6,741 $ 6,764
Depreciation and amortization (25,424) (23,846)
Inventories (5,757) (4,716)
Allowances and accruals 4,437 5,165
Other 1,792 2,713
- ------------------------------------------------------------------------
Total $(18,211) $ (13,920)
========================================================================
The consolidated balance sheet at December 31, 1999, included a current deferred
tax liability of $2,387 in "Accrued expenses" and a noncurrent deferred tax
liability of $15,824 in "Other noncurrent liabilities." The consolidated
balance sheet at December 31, 1998, included a current deferred tax asset of
$940 in "Other current assets" and a noncurrent deferred tax liability of
$14,860 in "Other noncurrent liabilities."
The provision for income taxes differs from the amount computed by applying the
statutory federal income tax rate to pretax income. The computed amount and the
differences for the years ended December 31, 1999, 1998 and 1997 were as
follows:
1999 1998 1997
========================================================================
Pretax income $ 87,225 $ 87,663 $ 84,504
========================================================================
Provision for income taxes:
Computed amount at
statutory rate of 35% $ 30,529 $ 30,682 $ 29,576
State and local
income tax (net of
federal tax benefit) 1,726 1,219 1,221
Amortization of cost
in excess of net
assets acquired 1,643 1,583 941
Foreign sales
corporation (1,074) (1,031) (1,192)
Other - net (27) 814 483
- ------------------------------------------------------------------------
Total provision for
income taxes $ 32,797 $ 33,267 $ 31,029
========================================================================
No provision has been made for U.S. or additional foreign taxes on $29.3 million
of undistributed earnings of foreign subsidiaries, which are permanently
reinvested. It is not practical to estimate the amount of additional tax that
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.
<PAGE> 34
32
IDEX CORPORATION & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands except share and per share amount)
12. RETIREMENT BENEFITS
The Company sponsors several qualified and nonqualified pension plans and other
postretirement plans for its employees. The following table provides a
reconciliation of the changes in the benefit obligations and fair value of plan
assets over the two-year period ended December 31, 1999, and a statement of the
funded status at December 31 for both years:
<TABLE>
<CAPTION>
Pension Benefits Other Benefits
1999 1998 1999 1998
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Change in benefit obligation
Obligation at January 1 $ 58,842 $ 49,718 $ 11,186 $ 6,297
Service cost 3,017 3,056 395 367
Interest cost 3,707 3,398 752 698
Plan amendments 968 232 -- --
Acquisitions -- -- -- 3,877
Benefits paid (9,337) (1,822) (536) (332)
Actuarial (gain) loss (2,093) 4,260 (151) 279
- ---------------------------------------------------------------------------------------
Obligation at December 31 $ 55,104 $ 58,842 $ 11,646 $ 11,186
=======================================================================================
Change in plan assets
Fair value of plan assets at January 1 $ 46,504 $ 41,859 $ -- $ --
Actual return on plan assets 8,548 2,367 -- --
Employer contributions 6,275 4,337 536 332
Benefits paid (9,337) (1,822) (536) (332)
Administrative expenses -- (237) -- --
- ---------------------------------------------------------------------------------------
Fair value of plan assets at December 31 $ 51,990 $ 46,504 $ -- $ --
=======================================================================================
Funded status
Funded status at December 31 $(3,114) $ (12,338) $(11,646) $(11,186)
Unrecognized (gain) loss (1,210) 5,452 (169) (156)
Unrecognized transition obligation 392 380 -- --
Unrecognized prior service cost 3,278 2,167 (747) (842)
- ---------------------------------------------------------------------------------------
Net amount recognized at December 31 $ (654) $ (4,339) $(12,562) $(12,184)
=======================================================================================
</TABLE>
The following table provides the amounts recognized in the consolidated balance
sheets at December 31 for both years:
<TABLE>
<S> <C> <C> <C> <C>
Prepaid benefit cost $ 4,577 $ 5,665 $ -- $ --
Accrued benefit liability (10,154) (13,440) (12,562) (12,184)
Intangible asset 2,063 1,146 -- --
Accumulated other comprehensive income 2,860 2,290 -- --
- ---------------------------------------------------------------------------------------
Net amount recognized $ (654) $ (4,339) $(12,562) $ (12,184)
=======================================================================================
</TABLE>
The Company's nonqualified retirement plans and the retirement plan at a German
subsidiary are not funded. The accumulated benefit obligation for these plans
was $9,118 and $12,199 at December 31, 1999 and 1998, respectively. The
Company's plans for postretirement benefits other than pensions also have no
plan assets. The accumulated benefit obligation for these plans was $11,646 and
$11,186 at December 31, 1999 and 1998, respectively.
The assumptions used in the measurement of the Company's benefit obligation at
December 31, 1999 and 1998 were as follows:
<TABLE>
<CAPTION>
U.S. PLANS NON U.S. PLANS
1999 1998 1999 1998
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Weighted-averaged assumptions
Discount rate 7.50% 6.75% 6.0% 6.0%
Expected return on plan assets 9.00% 9.00% 7.5% 7.0%
Rate of compensation increase 4.00% 4.00% 4.5% 4.0%
</TABLE>
The discount rate assumption for benefits other than pension benefit plans was
7.50% and 6.75% at December 31, 1999 and 1998, respectively.
<PAGE> 35
33
The following table provides the components of net periodic benefit cost for the
plans in 1999, 1998 and 1997:
<TABLE>
<CAPTION>
PENSION BENEFITS OTHER BENEFITS
--------------------------------------------------------------------
1999 1998 1997 1999 1998 1997
========================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Service cost $ 3,017 $ 3,056 $ 2,525 $ 395 $ 367 $ 277
Interest cost 3,707 3,398 3,031 752 698 395
Expected return on plan assets (4,219) (3,697) (2,742) - - -
Net amortization 282 295 202 (91) (148) (57)
- --------------------------------------------------------------------------------------------------------
Net periodic benefit cost $ 2,787 $ 3,052 $ 3,016 $ 1,056 $ 917 $ 615
========================================================================================================
</TABLE>
The amounts included in other comprehensive income arising from a change in the
minimum pension liability was $(270) and $(733) at December 31, 1999 and 1998,
respectively.
Prior service costs are amortized on a straight-line basis over the average
remaining service period of active participants. Gains and losses in excess of
10% of the greater of the benefit obligation and the market value of assets are
amortized over the average remaining service period of active participants.
Contributions to bargaining unit-sponsored multiemployer plan and defined
contribution plans were $6,166, $5,272 and $4,423 for 1999, 1998 and 1997,
respectively.
For measurement purposes, a 10% annual rate of increase in the per capita cost
of covered health care benefits was assumed for 1999. The rate was assumed to
decrease gradually each year to a rate of 6% for 2008, and remain at that level
thereafter.
Assumed health care cost trend rates have a significant effect on the amounts
reported for the health care plans. A 1% change in assumed health care cost
trend rates would have the following effects:
<TABLE>
<CAPTION>
1% Increase 1% Decrease
==============================================================================================================
<S> <C> <C>
Effect on the service and interest cost components of the
net periodic benefit cost $ 135 $ (111)
Effect on the health care component of the accumulated
postretirement benefit obligation $ 1,386 $ (1,131)
</TABLE>
13. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following is a summary of the unaudited quarterly results of operations for
the years ended December 31, 1999 and 1998:
<TABLE>
<CAPTION>
1999 QUARTERS 1998 QUARTERS
------------------------------------------------------------------------------------------
FIRST SECOND THIRD FOURTH FIRST SECOND THIRD FOURTH
================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $156,488 $ 161,484 $169,892 $ 167,177 $159,084 $ 169,461 $159,406 $152,180
Gross profit 61,320 64,730 65,827 64,607 64,397 67,335 62,443 58,671
Operating income 23,625 27,008 27,505 26,539 28,392 30,443 27,517 23,191
Income from continuing operations 11,921 14,121 14,451 13,935 13,889 15,144 13,662 11,701
Net income 11,921 14,121 14,451 13,935 12,193 23,914 14,256 11,701
Basic EPS
Continuing operations $ .40 $ .48 $ .49 $ .47 $ .47 $ .52 $ .47 $ .40
Net income .40 .48 .49 .47 .42 .82 .49 .40
Weighted average shares outstanding 29,464 29,484 29,594 29,633 29,267 29,308 29,339 29,413
Diluted EPS
Continuing operations $ .40 $ .47 $ .48 $ .46 $ .46 $ .50 $ .46 $ .39
Net income .40 .47 .48 .46 .40 .79 .48 .39
Weighted average shares outstanding 29,880 30,109 30,301 30,176 30,207 30,311 29,980 29,930
</TABLE>
<PAGE> 36
Reports
34
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, 1999 and 1998 and the related statements
of consolidated operations, consolidated shareholders' equity, and consolidated
cash flows for each of the three years in the period ended December 31, 1999.
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, 1999 and 1998 and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1999 in
conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Chicago, Illinois
January 18, 2000
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 control 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 control 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 control as of December 31,
1999, is effective and adequate to accomplish the above described objectives.
Frank J. Hansen
President and Chief Executive Officer
Wayne P. Sayatovic
Senior Vice President - Finance and Chief Financial Officer
Northbrook, Illinois
January 18, 2000
<PAGE> 37
IDEX '99
Business Units
35
From left to right: Vice Presidents -
Dave Windmuller (Operations), Jim Fluharty
(Corporate Marketing and Group Executive),
John McMurray (Group Executive), Rod Usher
(Group Executive)
BAND-IT-IDEX, INC.
4799 Dahlia St.
Denver, CO 80216
(303) 320-4555
ROGER N. GIBBINS
President
Age: 54
Years of Service: 15
CORKEN, INC.
3805 N.W. 36th St.
Oklahoma City, OK 73112
(405) 946-5576
STEVEN C. FAIRBANKS
President
Age: 40
Years of Service: 4
FLUID MANAGEMENT, INC.
1023 S. Wheeling Rd.
Wheeling, IL 60090
(847) 537-0880
JOHN P. SNOW
President - Americas
Age: 55
Years of Service: 23
FLUID MANAGEMENT EUROPE B.V.
Hub van Doorneweg 31
2171 KZ Sassenheim
The Netherlands
011-31-252-230604
LEENDERT HELLENBERG
President - Europe/Asia
Age: 54
Years of Service: 15
FAST S.R.L.
Via Pelizza da Volpedo, 109
20092 Cinisello Balsamo, Italy
011-39-02-66091-432
A. REZA ARABNIA
President
Age: 44
Years of Service: 12
GAST MANUFACTURING, INC.
2300 Highway M-139
Benton Harbor, MI 49023
(616) 926-6171
DONALD D. RIMES
President
Age: 54
Years of Service: 29
HALE PRODUCTS, INC.
700 Spring Mill Ave.
Conshohocken, PA 19428
(610) 825-6300
WILLIAM D. KYSOR
President
Age: 52
Years of Service: 3
LUBRIQUIP, INC.
18901 Cranwood Pkwy.
Warrensville Heights, OH 44128
(216) 581-2000
STEVEN E. SEMMLER
President
Age: 44
Years of Service: 20
MICROPUMP, INC.
1402 N.E. 136th Ave.
Vancouver, WA 98684
(360) 253-2008
JEFFREY L. HOHMAN
President
Age: 46
Years of Service: 9
PULSAFEEDER, INC.
2883 Brighton-Henrietta Town Line Rd.
Rochester, NY 14623
(716) 292-8000
RODNEY L. USHER
President
Age: 54
Years of Service: 19
VIKING PUMP, INC.
406 State St.
Cedar Falls, IA 50613
(319) 266-1741
JOHN L. MCMURRAY
President
Age: 49
Years of Service: 7
WARREN RUPP, INC.
800 North Main St.
Mansfield, OH 44902
(419) 524-8388
JEFFERY F. FEHR
President
Age: 48
Years of Service: 8
NOTE: Years of service include periods prior to acquisition by IDEX.
<PAGE> 38
Corporate Officers & Directors
36
CORPORATE OFFICERS
Frank J. Hansen
President and Chief Executive Officer
Age: 58
Years of Service: 24
Wayne P. Sayatovic
Senior Vice President -- Finance
and Chief Financial Officer
Age: 53
Years of Service: 27
Jerry N. Derck
Vice President -- Human Resources
Age: 52
Years of Service: 7
James R. Fluharty
Vice President -- Corporate Marketing and Group Executive
Age: 56
Years of Service: 12
Clinton L. Kooman
Vice President -- Controller
Age: 56
Years of Service: 35
Douglas C. Lennox
Vice President -- Treasurer
Age: 47
Years of Service: 20
John L. McMurray
Vice President -- Group Executive
Age: 49
Years of Service: 7
Dennis L. Metcalf
Vice President -- Corporate Development
Age: 52
Years of Service: 26
Frank J. Notaro
Vice President -- General Counsel and Secretary
Age: 36
Years of Service: 2
Rodney L. Usher
Vice President -- Group Executive
Age: 54
Years of Service: 19
David T. Windmuller
Vice President -- Operations
Age: 42
Years of Service: 19
NOTE: Years of service for corporate officers includes periods
with predecessor to IDEX.
DIRECTORS
Donald N. Boyce [ ]
Chairman of the Board
IDEX Corporation
Northbrook, Illinois
Age: 61
Years of Service: 12
Frank J. Hansen [ ]
President and Chief Executive Officer
IDEX Corporation
Northbrook, Illinois
Age: 58
Years of Director Service: 2
Richard E. Heath
Partner
Hodgson, Russ, Andrews, Woods & Goodyear
Buffalo, New York
Age: 69
Years of Service: 11
Henry R. Kravis
Member
Kohlberg Kravis Roberts & Co., L.L.C.
New York, New York
Age: 55
Years of Service: 12
William H. Luers [ ] [ ]
Chairman, Chief Executive Officer and President
United Nations Association of the United States of America
New York, New York
Age: 70
Years of Service: 11
Paul E. Raether
Member
Kohlberg Kravis Roberts & Co., L.L.C.
New York, New York
Age: 53
Years of Service: 12
George R. Roberts
Member
Kohlberg Kravis Roberts & Co., L.L.C.
San Francisco, California
Age: 56
Years of Service: 12
Neil A. Springer [ ] [ ] [ ]
Managing Director
Springer Souder & Assoc. L.L.C.
Chicago, Illinois
Age: 61
Years of Service: 10
Michael T. Tokarz [ ]
Member
Kohlberg Kravis Roberts & Co., L.L.C.
New York, New York
Age: 50
Years of Service: 12
Member of:
[ ] Executive Committee
[ ] Audit Committee
[ ] Compensation Committee
<PAGE> 39
Shareholder Information
Corporate Executive Office
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 and Chief Financial
Officer. Further information on IDEX can be found at www.idexcorp.com on the
Internet.
Registrar and Transfer Agent
Inquiries about stock transfers, address changes or IDEX's dividend
reinvestment program should be directed to:
Harris Trust and Savings Bank
311 West Monroe Street
Chicago, Illinois 60690
(312) 360-5100
Independent Auditors
Deloitte & Touche LLP
Two Prudential Plaza
180 North Stetson Avenue
Chicago, Illinois 60601
Dividend Policy
IDEX paid a quarterly dividend on its common stock on January 31, 2000, of $0.14
per share, which is unchanged from last year's quarterly dividend rate. 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 8 of the
Notes to Consolidated Financial Statements.
Stock Market Information
IDEX common stock was held by an estimated 7,000 shareholders at December 31,
1999, 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 or through its Website at
www.idexcorp.com.
Annual Meeting
The Annual Meeting of IDEX Shareholders will be held on Wednesday, April 19,
2000, at 10:00 a.m. in the:
Shareholders Room of Bank of America NT&SA
231 South LaSalle Street
Chicago, Illinois 60697
37
Stock History
- -------------
[GRAPH APPEARS HERE]
Quarterly Stock Price
- ---------------------
[GRAPH APPEARS HERE]
<PAGE> 1
SUBSIDIARIES OF IDEX CORPORATION
<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. (51% OWNED) SOUTH AFRICA
CORKEN, INC. DELAWARE
IDEX HOLDINGS, INC. DELAWARE
IDEX FINANCE, INC. DELAWARE
FAST LLC DELAWARE
FAST SRL ITALY
FAST IBERICA S.A. SPAIN
FAST U.K. LTD. UNITED KINGDOM
FLUID MANAGEMENT, INC. DELAWARE
FLUID MANAGEMENT EUROPE B.V. NETHERLANDS
FLUID MANAGEMENT U.K., LTD. UNITED KINGDOM
FLUID MANAGEMENT FRANCE SARL FRANCE
FLUID MANAGEMENT ESPANA SLU SPAIN
FLUID MANAGEMENT EASTERN EUROPE SP. Z O.O. SWEDEN
FLUID MANAGEMENT GMBH GERMANY
FLUID MANAGEMENT AUSTRALIA PTY., LTD. AUSTRALIA
FLUID MANAGEMENT CANADA, INC. CANADA
FLUID MANAGEMENT SERVICOS E VENDAS LTD. BRAZIL
GAST MANUFACTURING, INC. MICHIGAN
GAST ASIA, INC. MICHIGAN
GAST FSC, INC. U.S. VIRGIN ISLANDS
GAST MANUFACTURING COMPANY LTD. UNITED KINGDOM
HALE PRODUCTS, INC. PENNSYLVANIA
HALE PRODUCTS EUROPE GMBH GERMANY
GODIVA PRODUCTS LTD. UNITED KINGDOM
GODIVA LIMITED UNITED KINGDOM
HALE PRODUCTS EUROPE LIMITED UNITED KINGDOM
GINSWAT LTD. (35% OWNED) HONG KONG
HALE PRODUCTS BET. GMBH GERMANY
LUKAS HYDRAULIK VER. GMBH GERMANY
LUKAS HYDRAULIK GMBH & CO. KG GERMANY
LUBRIQUIP, INC. DELAWARE
MICROPUMP, INC. DELAWARE
MICROPUMP LIMITED UNITED KINGDOM
PULSAFEEDER, INC. DELAWARE
PULSAFEEDER PTE., LTD. SINGAPORE
KNIGHT, INC. DELAWARE
KNIGHT INTERNATIONAL B.V. NETHERLANDS
KNIGHT EQUIPMENT INTERNATIONAL B.V. NETHERLANDS
KNIGHT U.K. LTD. UNITED KINGDOM
KNIGHT EQUIPMENT AUSTRALIA PTY., LTD. AUSTRALIA
KNIGHT EQUIPMENT (CANADA) LTD. CANADA
SIGNFIX HOLDINGS LIMITED UNITED KINGDOM
SIGNFIX LIMITED UNITED KINGDOM
TESPA GMBH GERMANY
VIKING PUMP, 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 HOLDINGS, LTD. UNITED KINGDOM
BLAGDON PUMP LTD. UNITED KINGDOM
IDEX FOREIGN SALES CORP. BARBADOS
</TABLE>
<PAGE> 1
INDEPENDENT AUDITORS' CONSENT
IDEX Corporation:
We consent to the incorporation by reference in the Registration Statement of
IDEX Corporation on Form S-3 (File Number 333-41627) and in the Registration
Statements of IDEX Corporation on Form S-8 (File Numbers 33-47678, 33-56586,
33-67688 and 333-18643) of our reports dated January 18, 2000, appearing in and
incorporated by reference in this Annual Report on Form 10-K of IDEX Corporation
for the year ended December 31, 1999.
Deloitte & Touche LLP
Chicago, Illinois
February 4, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 2,895
<SECURITIES> 0
<RECEIVABLES> 103,939
<ALLOWANCES> 3,134
<INVENTORY> 106,141
<CURRENT-ASSETS> 213,715
<PP&E> 273,729
<DEPRECIATION> 143,812
<TOTAL-ASSETS> 738,567
<CURRENT-LIABILITIES> 91,634
<BONDS> 268,589
0
0
<COMMON> 296
<OTHER-SE> 328,728
<TOTAL-LIABILITY-AND-EQUITY> 738,567
<SALES> 655,041
<TOTAL-REVENUES> 655,041
<CGS> 398,557
<TOTAL-COSTS> 550,364
<OTHER-EXPENSES> (568)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 18,020
<INCOME-PRETAX> 87,225
<INCOME-TAX> 32,797
<INCOME-CONTINUING> 54,428
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 54,428
<EPS-BASIC> 1.84
<EPS-DILUTED> 1.81
</TABLE>
