UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 _____________________________ 
Form 10-Q
 
þ
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended March 31, 2015
OR
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-10235
IDEX CORPORATION
(Exact Name of Registrant as Specified in its Charter)
 
Delaware
 
36-3555336
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
 
1925 West Field Court, Lake Forest, Illinois
 
60045
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number: (847) 498-7070
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes  þ    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes  þ    No   ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
Large accelerated filer  þ
 
Accelerated filer  ¨
 
Non-accelerated filer ¨
 
Smaller reporting company  ¨
 
 
 
 
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes  ¨   No   þ 
Number of shares of common stock of IDEX Corporation outstanding as of April 22, 2015: 77,943,229.
 



TABLE OF CONTENTS
 
 
Item 1.
 
 
 
 
 
 
Item 2.
 
 
 
 
 
Item 3.
Item 4.
 
 
 
Item 1.
Item 2.
Item 6.


PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements.

IDEX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands except share and per share amounts)
(unaudited)
 
 
March 31, 2015
 
December 31, 2014
ASSETS
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
494,496

 
$
509,137

Receivables, less allowance for doubtful accounts of $6,401 at March 31, 2015 and $6,961 at December 31, 2014
267,206

 
256,040

Inventories — net
243,565

 
237,631

Other current assets
76,121

 
72,983

Total current assets
1,081,388

 
1,075,791

Property, plant and equipment — net
216,336

 
219,543

Goodwill
1,293,768

 
1,321,277

Intangible assets — net
257,459

 
271,164

Other noncurrent assets
20,203

 
20,295

Total assets
$
2,869,154

 
$
2,908,070

LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
Current liabilities
 
 
 
Trade accounts payable
$
131,018

 
$
127,462

Accrued expenses
140,669

 
163,409

Notes payable and current portion of long-term borrowings
88,350

 
98,946

Dividends payable
—

 
22,151

Total current liabilities
360,037

 
411,968

Long-term borrowings
819,863

 
765,006

Deferred income taxes
130,967

 
130,368

Other noncurrent liabilities
107,295

 
114,277

Total liabilities
1,418,162

 
1,421,619

Commitments and contingencies

 

Shareholders’ equity
 
 
 
Preferred stock:
 
 
 
Authorized: 5,000,000 shares, $.01 per share par value; Issued: None
—

 
—

Common stock:
 
 
 
Authorized: 150,000,000 shares, $.01 per share par value
 
 
 
Issued: 90,136,827 shares at March 31, 2015 and 89,761,305 shares at December 31, 2014
901

 
898

Additional paid-in capital
666,103

 
647,553

Retained earnings
1,549,775

 
1,483,821

Treasury stock at cost: 11,864,771 shares at March 31, 2015 and 10,995,361 shares at December 31, 2014
(618,782
)
 
(553,543
)
Accumulated other comprehensive income (loss)
(147,005
)
 
(92,278
)
Total shareholders’ equity
1,450,992

 
1,486,451

Total liabilities and shareholders’ equity
$
2,869,154

 
$
2,908,070

See Notes to Condensed Consolidated Financial Statements

1

IDEX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share amounts)
(unaudited)
 
 
 
Three Months Ended 
 March 31,
 
 
2015
 
2014
Net sales
 
$
502,198

 
$
543,996

Cost of sales
 
276,157

 
299,576

Gross profit
 
226,041

 
244,420

Selling, general and administrative expenses
 
124,284

 
130,585

Operating income
 
101,757

 
113,835

Other (income) expense — net
 
(1,723
)
 
(844
)
Interest expense
 
10,597

 
10,457

Income before income taxes
 
92,883

 
104,222

Provision for income taxes
 
26,929

 
29,674

Net income
 
$
65,954

 
$
74,548

 
 
 
 
 
Basic earnings per common share
 
$
0.84

 
$
0.92

Diluted earnings per common share
 
$
0.84

 
$
0.91

 
 
 
 
 
Share data:
 
 
 
 
Basic weighted average common shares outstanding
 
77,996

 
80,527

Diluted weighted average common shares outstanding
 
78,856

 
81,575

See Notes to Condensed Consolidated Financial Statements

2

IDEX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(unaudited)
 
 
 
Three Months Ended 
 March 31,
 
 
2015
 
2014
Net income
 
$
65,954

 
$
74,548

Other comprehensive income (loss)
 
 
 
 
Reclassification adjustments for derivatives, net of tax
 
1,130

 
1,157

Pension and other postretirement adjustments, net of tax
 
780

 
439

Cumulative translation adjustment
 
(56,637
)
 
284

Other comprehensive income (loss)
 
(54,727
)
 
1,880

Comprehensive income
 
$
11,227

 
$
76,428

See Notes to Condensed Consolidated Financial Statements

3

IDEX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(in thousands except share amounts)
(unaudited)
 
 
 
 
 
 
Accumulated Other Comprehensive
Income (Loss)
 
 
 
 
 
Common
Stock and
Additional
Paid-In Capital
 
Retained
Earnings
 
Cumulative
Translation
Adjustment
 
Retirement
Benefits
Adjustment
 
Cumulative
Unrealized Gain (Loss) on
Derivatives
 
Treasury
Stock
 
Total
Shareholders’
Equity
Balance, December 31, 2014
$
648,451

 
$
1,483,821

 
$
(24,813
)
 
$
(40,316
)
 
$
(27,149
)
 
$
(553,543
)
 
$
1,486,451

Net income
—

 
65,954

 
—

 
—

 
—

 
—

 
65,954

Cumulative translation adjustment
—

 
—

 
(56,637
)
 
—

 
—

 
—

 
(56,637
)
Pension and other postretirement adjustments (net of tax of $395)
—

 
—

 
—

 
780

 
—

 
—

 
780

Amortization of forward starting swaps (net of tax of $642)
—

 
—

 
—

 
—

 
1,130

 
—

 
1,130

Issuance of 392,810 shares of common stock from issuance of unvested shares, exercise of stock options and deferred compensation plans
9,169

 
—

 
—

 
—

 
—

 
—

 
9,169

Excess tax benefit from share-based compensation
3,220

 
—

 
—

 
—

 
—

 
—

 
3,220

Repurchase of 829,744 shares of common stock
—

 
—

 
—

 
—

 
—

 
(62,132
)
 
(62,132
)
Shares surrendered for tax withholding
—

 
—

 
—

 
—

 
—

 
(3,107
)
 
(3,107
)
Share-based compensation
6,164

 
—

 
—

 
—

 
—

 
—

 
6,164

Balance, March 31, 2015
$
667,004

 
$
1,549,775

 
$
(81,450
)
 
$
(39,536
)
 
$
(26,019
)
 
$
(618,782
)
 
$
1,450,992

See Notes to Condensed Consolidated Financial Statements

4

IDEX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited) 
 
Three Months Ended March 31,
 
2015
 
2014
Cash flows from operating activities
 
 
 
Net income
$
65,954

 
$
74,548

Adjustments to reconcile net income to net cash provided by operating activities
 
 
 
Depreciation and amortization
8,580

 
8,394

Amortization of intangible assets
9,930

 
10,863

Amortization of debt issuance expenses
434

 
429

Share-based compensation expense
6,882

 
6,312

Deferred income taxes
1,000

 
(748
)
Excess tax benefit from share-based compensation
(3,220
)
 
(2,925
)
Non-cash interest expense associated with forward starting swaps
1,772

 
1,820

Changes in:
 
 
 
Receivables
(18,039
)
 
(33,910
)
Inventories
(11,215
)
 
(12,605
)
Other current assets
(4,591
)
 
(6,285
)
Trade accounts payable
6,857

 
15,392

Accrued expenses
(14,230
)
 
14,419

Other — net
(710
)
 
(1,519
)
Net cash flows provided by operating activities
49,404

 
74,185

Cash flows from investing activities
 
 
 
Cash purchases of property, plant and equipment
(10,077
)
 
(10,809
)
Other — net
(48
)
 
21

Net cash flows used in investing activities
(10,125
)
 
(10,788
)
Cash flows from financing activities
 
 
 
Borrowings under revolving facilities
55,000

 
20,014

Payments under revolving facilities
(77
)
 
(13,617
)
Dividends paid
(22,151
)
 
(18,628
)
Proceeds from stock option exercises
9,185

 
6,154

Excess tax benefit from share-based compensation
3,220

 
2,925

Purchase of common stock
(62,132
)
 
(37,537
)
Unvested shares surrendered for tax withholding
(3,107
)
 
(2,614
)
Net cash flows used in financing activities
(20,062
)
 
(43,303
)
Effect of exchange rate changes on cash and cash equivalents
(33,858
)
 
(1,340
)
Net increase (decrease) in cash
(14,641
)
 
18,754

Cash and cash equivalents at beginning of year
509,137

 
439,629

Cash and cash equivalents at end of period
$
494,496

 
$
458,383

 
 
 
 
Supplemental cash flow information
 
 
 
Cash paid for:
 
 
 
Interest
$
791

 
$
85

Income taxes
10,411

 
17,835

See Notes to Condensed Consolidated Financial Statements

5

IDEX CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)
(unaudited)

1.    Basis of Presentation and Significant Accounting Policies
The Condensed Consolidated Financial Statements of IDEX Corporation (“IDEX” or the “Company”) have been prepared in accordance with the accounting principles generally accepted in the United States of America applicable to interim financial information and the instructions to Form 10-Q under the Securities Exchange Act of 1934, as amended. The statements are unaudited but include all adjustments, consisting only of recurring items, except as noted, that the Company considers necessary for a fair presentation of the information set forth herein. The results of operations for the three months ended March 31, 2015 are not necessarily indicative of the results to be expected for the entire year.
The Condensed Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations set forth in this report should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014.
New Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09 which introduces a new five-step revenue recognition model. Under ASU 2014-09, an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires disclosures sufficient to enable users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative disclosures about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. This standard was initially released as effective for fiscal years beginning after December 15, 2016; however, the FASB has tentatively decided to defer the effective date of ASU 2014-09 for one year. The new guidelines can be implemented using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption. The Company is currently evaluating the impact of the new guidance on our consolidated financial statements and has not yet determined the method by which we will adopt the standard.
In April 2015, the FASB issued ASU 2015-03 which simplifies the presentation of debt issuance costs. Under ASU 2015-03, an entity presents such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs is reported as interest expense. This standard is effective for fiscal years beginning after December 15, 2015. The Company is currently evaluating the impact of the new guidance on our consolidated financial statements and does not expect it to have a material impact on the consolidated financial position, results of operations or cash flows of the Company.  

2.    Acquisitions
All of the Company’s acquisitions have been accounted for under Accounting Standards Codification (“ASC”) 805, Business Combinations. Accordingly, the accounts of the acquired companies, after adjustments to reflect fair values assigned to assets and liabilities, have been included in the Company's consolidated financial statements from their respective dates of acquisition.
The Company incurred $0.2 million of acquisition-related transaction costs in the three months ended March 31, 2015. These costs were recorded in selling, general and administrative expense and were related to completed transactions, pending transactions and potential transactions, including transactions that ultimately were not completed.
2014 Acquisitions
On April 28, 2014, the Company acquired the stock of Aegis Flow Technologies ("Aegis"), a leader in the design, manufacture and sale of specialty chemical processing valves for use in the chemical, petro-chemical, chlor-alkali, pharmaceutical, semiconductor and pulp/paper industries. Located in Geismar, Louisiana, Aegis will operate in our Chemical, Food & Process platform within our Fluid & Metering Technologies segment. Aegis was acquired for cash consideration of approximately $25.0 million. The entire purchase price was funded with borrowings under the Company's revolving credit facility. Goodwill and intangible assets recognized as part of this transaction were $7.7 million and $8.8 million, respectively. The $7.7 million of goodwill is deductible for tax purposes.


6

IDEX CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)
(unaudited)



3.    Business Segments
The Company has three reportable business segments: Fluid & Metering Technologies, Health & Science Technologies and Fire & Safety/Diversified Products.
The Fluid & Metering Technologies segment designs, produces and distributes positive displacement pumps, flow meters, injectors, and other fluid-handling pump modules and systems and provides flow monitoring and other services for the water and wastewater industries. The Health & Science Technologies segment designs, produces and distributes a wide range of precision fluidics, rotary lobe pumps, centrifugal and positive displacement pumps, roll compaction and drying systems used in beverage, food processing, pharmaceutical and cosmetics, pneumatic components and sealing solutions, very high precision, low-flow rate pumping solutions required in analytical instrumentation, clinical diagnostics and drug discovery, high performance molded and extruded, biocompatible medical devices and implantables, air compressors used in medical, dental and industrial applications, optical components and coatings for applications in the fields of scientific research, defense, biotechnology, aerospace, semiconductor, telecommunications and electronics manufacturing, laboratory and commercial equipment used in the production of micro and nano scale materials, precision photonic solutions used in life sciences, research and defense markets, and precision gear and peristaltic pump technologies that meet exacting original equipment manufacturer specifications. The Fire & Safety/Diversified Products segment produces firefighting pumps and controls, rescue tools, lifting bags and other components and systems for the fire and rescue industry, engineered stainless steel banding and clamping devices used in a variety of industrial and commercial applications, and precision equipment for dispensing, metering and mixing colorants and paints used in a variety of retail and commercial businesses around the world.
Information on the Company’s business segments is presented below, based on the nature of products and services offered. The Company evaluates performance based on several factors, of which operating income is the primary financial measure. Intersegment sales are accounted for at fair value as if the sales were to third parties.
 

7

IDEX CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)
(unaudited)



 
 
Three Months Ended 
 March 31,
 
 
2015
 
2014
Net sales
 
 
 
 
Fluid & Metering Technologies
 
 
 
 
External customers
 
$
217,932

 
$
223,007

Intersegment sales
 
316

 
354

Total group sales
 
218,248

 
223,361

Health & Science Technologies
 
 
 
 
External customers
 
177,750

 
183,892

Intersegment sales
 
1,370

 
2,483

Total group sales
 
179,120

 
186,375

Fire & Safety/Diversified Products
 
 
 
 
External customers
 
106,516

 
137,097

Intersegment sales
 
106

 
187

Total group sales
 
106,622

 
137,284

Intersegment elimination
 
(1,792
)
 
(3,024
)
Total net sales
 
$
502,198

 
$
543,996

Operating income
 
 
 
 
Fluid & Metering Technologies
 
$
55,898

 
$
56,407

Health & Science Technologies
 
37,457

 
36,229

Fire & Safety/Diversified Products
 
27,162

 
39,648

Corporate office and other
 
(18,760
)
 
(18,449
)
Total operating income
 
101,757

 
113,835

Interest expense
 
10,597

 
10,457

Other (income) expense - net
 
(1,723
)
 
(844
)
Income before income taxes
 
$
92,883

 
$
104,222


 
March 31,
2015
 
December 31,
2014
Assets
 
 
 
Fluid & Metering Technologies
$
1,010,091

 
$
1,026,238

Health & Science Technologies
1,091,505

 
1,101,155

Fire & Safety/Diversified Products
499,233

 
510,841

Corporate office
268,325

 
269,836

Total assets
$
2,869,154

 
$
2,908,070


4.    Earnings Per Common Share
Earnings per common share (“EPS”) are computed by dividing net income by the weighted average number of shares of common stock (basic) plus common stock equivalents outstanding (diluted) during the period. Common stock equivalents consist of stock options, which have been included in the calculation of weighted average shares outstanding using the treasury stock method, unvested shares, performance share units, and shares issuable in connection with certain deferred compensation agreements (“DCUs”).
ASC 260 “Earnings Per Share” provides that all outstanding unvested share-based payment awards that contain rights to nonforfeitable dividends participate in undistributed earnings with common shareholders. If awards are considered participating securities, the Company is required to apply the two-class method of computing basic and diluted earnings per share. The Company

8

IDEX CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)
(unaudited)



has determined that its outstanding unvested shares are participating securities. Accordingly, earnings per common share are computed using the more dilutive of the treasury stock method and the two-class method prescribed by ASC 260. For purposes of calculating diluted EPS, net income attributable to common shareholders was reduced by $0.3 million and $0.5 million for the three months ended March 31, 2015 and 2014, respectively.
Basic weighted average shares reconciles to diluted weighted average shares as follows:
 
 
 
Three Months Ended 
 March 31,
 
 
2015
 
2014
Basic weighted average common shares outstanding
 
77,996

 
80,527

Dilutive effect of stock options, unvested shares, performance share units and DCUs
 
860

 
1,048

Diluted weighted average common shares outstanding
 
78,856

 
81,575

Options to purchase approximately 0.9 million and 0.5 million shares of common stock for the three months ended March 31, 2015 and 2014, respectively, were not included in the computation of diluted EPS because the effect of their inclusion would be antidilutive.

5.    Inventories
The components of inventories as of March 31, 2015 and December 31, 2014 were:
 
 
March 31,
2015
 
December 31,
2014
Raw materials and component parts
$
140,239

 
$
137,584

Work in process
40,311

 
37,178

Finished goods
63,015

 
62,869

Total
$
243,565

 
$
237,631

Inventories are stated at the lower of cost or market. Cost, which includes material, labor, and factory overhead, is determined on a FIFO basis.

6.    Goodwill and Intangible Assets
The changes in the carrying amount of goodwill for the three months ended March 31, 2015, by reportable business segment, were as follows:
 
 
Fluid &
Metering
Technologies
 
Health &
Science
Technologies
 
Fire & Safety/
Diversified
Products
 
Total
Balance at December 31, 2014
$
524,149

 
$
563,465

 
$
233,663

 
$
1,321,277

Foreign currency translation
(9,388
)
 
(5,209
)
 
(12,912
)
 
(27,509
)
Balance at March 31, 2015
$
514,761

 
$
558,256

 
$
220,751

 
$
1,293,768

ASC 350 “Goodwill and Other Intangible Assets” requires that goodwill be tested for impairment at the reporting unit level on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying value. Annually on October 31, goodwill and other acquired intangible assets with indefinite lives are tested for impairment. The Company did not consider there to be any triggering event that would require an interim impairment assessment, therefore none of the goodwill or other acquired intangible assets with indefinite lives were tested for impairment during the three months ended March 31, 2015. Based on the results of our annual impairment test at October 31, 2014, all reporting units had a fair value that was more than 100% greater than the carrying value, except for our IDEX Optics and Photonics ("IOP") reporting unit, which had a fair value approximately 15% greater than the carrying value.


9

IDEX CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)
(unaudited)



     The following table provides the gross carrying value and accumulated amortization for each major class of intangible asset at March 31, 2015 and December 31, 2014:
 
 
At March 31, 2015
 
 
 
At December 31, 2014
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
 
Weighted
Average
Life
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Amortized intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
Patents
$
10,062

 
$
(5,541
)
 
$
4,521

 
11
 
$
10,016

 
$
(5,313
)
 
$
4,703

Trade names
102,228

 
(33,778
)
 
68,450

 
16
 
104,118

 
(32,881
)
 
71,237

Customer relationships
213,427

 
(124,939
)
 
88,488

 
11
 
222,486

 
(126,193
)
 
96,293

Non-compete agreements
793

 
(661
)
 
132

 
3
 
840

 
(636
)
 
204

Unpatented technology
68,309

 
(36,392
)
 
31,917

 
11
 
69,760

 
(35,165
)
 
34,595

Other
7,027

 
(5,176
)
 
1,851

 
10
 
7,034

 
(5,002
)
 
2,032

Total amortized intangible assets
401,846

 
(206,487
)
 
195,359

 
 
 
414,254

 
(205,190
)
 
209,064

Unamortized intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
Banjo trade name
62,100

 
—

 
62,100

 
 
 
62,100

 
—

 
62,100

Total intangible assets
$
463,946

 
$
(206,487
)
 
$
257,459

 
 
 
$
476,354

 
$
(205,190
)
 
$
271,164

The unamortized Banjo trade name is an indefinite lived intangible asset which is tested for impairment on an annual basis in accordance with ASC 350 or more frequently if events or changes in circumstances indicate that the asset might be impaired.

7.    Accrued Expenses
The components of accrued expenses as of March 31, 2015 and December 31, 2014 were:
 
 
March 31,
2015
 
December 31,
2014
Payroll and related items
$
50,149

 
$
64,124

Management incentive compensation
5,240

 
21,567

Income taxes payable
17,116

 
9,305

Insurance
10,069

 
10,058

Warranty
7,416

 
7,196

Deferred revenue
11,182

 
11,813

Restructuring
1,632

 
6,056

Liability for uncertain tax positions
1,504

 
2,084

Accrued interest
9,338

 
1,738

Other
27,023

 
29,468

Total accrued expenses
$
140,669

 
$
163,409



10

IDEX CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)
(unaudited)



8.    Other Noncurrent Liabilities
The components of other noncurrent liabilities as of March 31, 2015 and December 31, 2014 were:
 
 
March 31,
2015
 
December 31,
2014
Pension and retiree medical obligations
$
86,237

 
$
90,584

Liability for uncertain tax positions
2,385

 
2,471

Deferred revenue
4,097

 
4,612

Other
14,576

 
16,610

Total other noncurrent liabilities
$
107,295

 
$
114,277


9.    Borrowings
Borrowings at March 31, 2015 and December 31, 2014 consisted of the following:
 
 
March 31,
2015
 
December 31,
2014
Revolving Facility
$
170,000

 
$
115,000

2.58% Senior Euro Notes, due June 2015
87,885

 
98,456

4.5% Senior Notes, due December 2020
299,013

 
298,975

4.2% Senior Notes, due December 2021
349,371

 
349,351

Other borrowings
1,944

 
2,170

Total borrowings
908,213

 
863,952

Less current portion
88,350

 
98,946

Total long-term borrowings
$
819,863

 
$
765,006

The Company maintains a $700.0 million revolving credit facility (the "Revolving Facility") with a maturity date of June 27, 2016. Up to $75.0 million of the Revolving Facility is available for the issuance of letters of credit, and up to $25.0 million is available to the Company for swing line loans, available on a same-day basis.
Proceeds from the Revolving Facility are available for working capital, acquisitions and other general corporate purposes, including refinancing existing debt of the Company and its subsidiaries.
Borrowings under the Revolving Facility bear interest, at either an alternate base rate or an adjusted LIBOR rate plus, in each case, an applicable margin. This applicable margin is based on the Company’s senior, unsecured, long-term debt rating and can range from .875% to 1.70%. Based on the Company’s credit rating at March 31, 2015, the applicable margin was 1.05%. Interest is payable (a) in the case of base rate loans, quarterly, and (b) in the case of LIBOR rate loans, on the maturity date of the borrowing, or quarterly from the effective date for borrowings exceeding three months. An annual Revolving Facility fee, also based on the Company’s credit rating, is currently 20 basis points and is payable quarterly.
At March 31, 2015, $170.0 million was outstanding under the Revolving Facility, with $7.1 million of outstanding letters of credit, resulting in net available borrowing capacity under the Revolving Facility at March 31, 2015 of approximately $522.9 million.
At March 31, 2015, the Company included the outstanding balance of the 2.58% Senior Euro Notes, $87.9 million, within Current liabilities on the Consolidated Balance Sheet as the maturity date is within twelve months and the Company expects to repay the principal balance using cash on the balance sheet.
Other borrowings of $1.9 million at March 31, 2015 consisted primarily of debt at international locations maintained for working capital purposes. Interest is payable on the outstanding debt balances at rates ranging from 0.2% to 1.3% per annum.
There are two key financial covenants that the Company is required to maintain in connection with the Revolving Facility and 2.58% Senior Euro Notes. The most restrictive financial covenants under these debt instruments require a minimum interest

11

IDEX CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)
(unaudited)



coverage ratio of 3.0 to 1 and a maximum leverage ratio of 3.25 to 1. At March 31, 2015, the Company was in compliance with both of these financial covenants. There are no financial covenants relating to the 4.5% Senior Notes or 4.2% Senior Notes; however, both are subject to cross-default provisions.

10.    Derivative Instruments
The Company enters into cash flow hedges from time to time to reduce the exposure to variability in certain expected future cash flows. The type of cash flow hedges the Company enters into includes foreign currency contracts and interest rate exchange agreements that effectively convert a portion of floating-rate debt to fixed-rate debt and are designed to reduce the impact of interest rate changes on future interest expense.
The effective portion of gains or losses on interest rate exchange agreements is reported in accumulated other comprehensive income (loss) in shareholders’ equity and reclassified into net income in the same period or periods in which the hedged transaction affects net income. See Note 13 for the amount of loss reclassified into income for interest rate contracts for the three months ended March 31, 2015 and 2014. The remaining gain or loss in excess of the cumulative change in the present value of future cash flows or the hedged item, if any, is recognized into net income during the period of change.
 
Fair values relating to derivative financial instruments reflect the estimated amounts that the Company would receive or pay to sell or buy the contracts based on quoted market prices of comparable contracts at each balance sheet date. As of March 31, 2015, the Company did not have any interest rate contracts outstanding.
In 2010 and 2011, the Company entered into two separate forward starting interest rate contracts in anticipation of the issuance of the 4.2% Senior Notes and the 4.5% Senior Notes. The Company cash settled these two interest rate contracts in 2010 and 2011 for a total of $68.9 million, which is being amortized into interest expense over the 10 year term of the debt instruments. Approximately $7.0 million of the pre-tax amount included in accumulated other comprehensive income (loss) in shareholders’ equity at March 31, 2015 will be recognized to net income over the next 12 months as the underlying hedged transactions are realized.

11.    Fair Value Measurements
ASC 820 “Fair Value Measurements and Disclosures” defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The standard utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:
•
Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
•
Level 2: Inputs, other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
•
Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions.
The following table summarizes the basis used to measure the Company’s financial assets at fair value on a recurring basis in the balance sheet at March 31, 2015 and December 31, 2014:
 
 
Basis of Fair Value Measurements
 
Balance at 
 March 31, 2015
 
Level 1
 
Level 2
 
Level 3
Money market investment
$
27,933

 
$
27,933

 
$
—

 
$
—

Available for sale securities
5,079

 
5,079

 
—

 
—

 
 
Basis of Fair Value Measurements
 
Balance at 
 December 31, 2014
 
Level 1
 
Level 2
 
Level 3
Money market investment
$
21,094

 
$
21,094

 
$
—

 
$
—

Available for sale securities
4,513

 
4,513

 
—

 
—


12

IDEX CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)
(unaudited)



There were no transfers of assets or liabilities between Level 1 and Level 2 during the quarter ended March 31, 2015 or the year ended December 31, 2014.
The carrying value of our cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximates their fair values because of the short term nature of these instruments. At March 31, 2015, the fair value of the outstanding indebtedness under our Revolving Facility, 2.58% Senior Euro Notes, 4.5% Senior Notes and 4.2% Senior Notes, based on quoted market prices and current market rates for debt with similar credit risk and maturity, was approximately $944.7 million compared to the carrying value of $906.3 million. This fair value measurement is classified as Level 2 within the fair value hierarchy since it is determined based upon significant inputs observable in the market, including interest rates on recent financing transactions to entities with a credit rating similar to ours.

12.    Restructuring
During 2014, the Company recorded restructuring costs as a part of restructuring initiatives that support the implementation of key strategic efforts designed to facilitate long-term, sustainable, growth through cost reduction actions, primarily consisting of employee reductions and facility rationalization. The costs incurred related to these initiatives were included in Restructuring expenses in the Consolidated Statements of Operations while the related accruals were included in Accrued expenses in the Consolidated Balance Sheets. Severance costs primarily consisted of severance benefits through payroll continuation, COBRA subsidies, outplacement services, conditional separation costs and employer tax liabilities, while exit costs primarily consisted of asset disposals or impairments and lease exit costs.
Restructuring accruals of $1.6 million and $6.1 million at March 31, 2015 and December 31, 2014, respectively, are recorded in Accrued liabilities in the Consolidated Balance Sheets. Severance benefits are expected to be paid by the end of 2015 using cash from operations. The changes in the restructuring accrual for the three months ended March 31, 2015 are as follows:
Balance at January 1, 2015
 
$
6,056

Payments, utilization and other
 
(4,424
)
Balance at March 31, 2015
 
$
1,632


13.    Other Comprehensive Income (Loss)
The components of other comprehensive income (loss) are as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended 
 March 31, 2015
 
Three Months Ended 
 March 31, 2014
 
Pre-tax
 
Tax
 
Net of tax
 
Pre-tax
 
Tax
 
Net of tax
Cumulative translation adjustment
$
(56,637
)
 
$
—

 
$
(56,637
)
 
$
284

 
$
—

 
$
284

Pension and other postretirement adjustments
1,175

 
(395
)
 
780

 
679

 
(240
)
 
439

Reclassification adjustments for derivatives
1,772

 
(642
)
 
1,130

 
1,820

 
(663
)
 
1,157

Total other comprehensive income (loss)
$
(53,690
)
 
$
(1,037
)
 
$
(54,727
)
 
$
2,783

 
$
(903
)
 
$
1,880



13

IDEX CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)
(unaudited)



The following table summarizes the amounts reclassified from accumulated other comprehensive income to net income during the three months ended March 31, 2015 and 2014:
 
 
 
Three Months Ended 
 March 31,
 
 
 
 
2015
 
2014
 
Income Statement Caption
Pension and other postretirement plans:
 
 
 
 
 
 
Amortization of service cost
 
$
1,175

 
$
679

 
Selling, general and administrative expense
Total before tax
 
1,175

 
679

 
 
Provision for income taxes
 
(395
)
 
(240
)
 
 
Total net of tax
 
$
780

 
$
439

 
 
Derivatives:
 
 
 
 
 
 
Reclassification adjustments
 
$
1,772

 
$
1,820

 
Interest expense
Total before tax
 
1,772

 
1,820

 
 
Provision for income taxes
 
(642
)
 
(663
)
 
 
Total net of tax
 
$
1,130

 
$
1,157

 
 

14.    Common and Preferred Stock
On November 6, 2014, the Company’s Board of Directors approved a $400.0 million increase in the authorized level for repurchases of common stock. Repurchases will be funded with future cash flow generation or borrowings available under the Revolving Facility. During the three months ended March 31, 2015, the Company purchased a total of 830 thousand shares at a cost of $62.1 million, of which $2.7 million was settled in April 2015. During the three months ended March 31, 2014, the Company purchased 551 thousand shares at a cost of $40.1 million, of which $2.6 million was settled in April 2014. As of March 31, 2015, the amount of share repurchase authorization remaining is $483.3 million.
At March 31, 2015 and December 31, 2014, the Company had 150 million shares of authorized common stock, with a par value of $.01 per share, and 5 million shares of authorized preferred stock, with a par value of $.01 per share. No preferred stock was outstanding at March 31, 2015 or December 31, 2014.

15.    Share-Based Compensation
During the three months ended March 31, 2015, the Company granted approximately 0.4 million stock options, 0.1 million unvested shares and 0.1 million performance share units. During the three months ended March 31, 2014, the Company granted approximately 0.5 million stock options, 0.1 million unvested shares and 0.1 million performance share units.
Weighted average option fair values and assumptions for the periods specified are disclosed below. The fair value of each option grant was estimated on the date of the grant using the Binomial lattice option pricing model.
 
 
 
 
 
 
 
 
 
Three Months Ended 
 March 31,
 
2015
 
2014
Weighted average fair value of option grants
$20.40
 
$19.53
Dividend yield
1.42%
 
1.26%
Volatility
29.94%
 
30.36%
Risk-free forward interest rate
0.23% - 2.75%
 
0.12% - 4.69%
Expected life (in years)
5.90
 
5.89

Weighted average performance share unit fair values and assumptions for the period specified are disclosed below. The performance share units are market condition awards and have been assessed at fair value on the date of grant using a Monte Carlo simulation model.

14

IDEX CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)
(unaudited)



 
 
Three Months Ended March 31,
 
 
2015
 
2014
Weighted average fair value of performance share units
 
$95.07
 
$94.55
Dividend yield
 
0.00%
 
0.00%
Volatility
 
19.14%
 
26.41%
Risk-free forward interest rate
 
1.01%
 
0.65%
Expected life (in years)
 
2.86
 
2.88
Total compensation cost for stock options is as follows:
 
 
 
Three Months Ended 
 March 31,
 
 
2015
 
2014
Cost of goods sold
 
$
226

 
$
242

Selling, general and administrative expenses
 
2,197

 
2,190

Total expense before income taxes
 
2,423

 
2,432

Income tax benefit
 
(767
)
 
(755
)
Total expense after income taxes
 
$
1,656

 
$
1,677

 
Total compensation cost for unvested shares is as follows:
 
 
 
Three Months Ended 
 March 31,
 
 
2015
 
2014
Cost of goods sold
 
$
420

 
$
472

Selling, general and administrative expenses
 
2,697

 
2,746

Total expense before income taxes
 
3,117

 
3,218

Income tax benefit
 
(806
)
 
(687
)
Total expense after income taxes
 
$
2,311

 
$
2,531

Total compensation cost for performance share units is as follows:
 
 
 
Three Months Ended 
 March 31,
 
 
2015
 
2014
Cost of goods sold
 
$
—

 
$
—

Selling, general and administrative expenses
 
1,342

 
661

Total expense before income taxes
 
1,342

 
661

Income tax benefit
 
(430
)
 
(186
)
Total expense after income taxes
 
$
912

 
$
475

The Company’s policy is to recognize compensation cost on a straight-line basis, assuming forfeitures, over the requisite service period for the entire award. Classification of stock compensation cost within the Consolidated Statements of Operations is consistent with classification of cash compensation for the same employees.
As of March 31, 2015, there was $15.0 million of total unrecognized compensation cost related to stock options that is expected to be recognized over a weighted-average period of 1.6 years, $13.5 million of total unrecognized compensation cost related to unvested shares/units that is expected to be recognized over a weighted-average period of 1.2 years, and $10.1 million of total unrecognized compensation cost related to performance share units that is expected to be recognized over a weighted-average period of 1.2 years.

15

IDEX CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)
(unaudited)



A summary of the Company’s stock option activity as of March 31, 2015, and changes during the three months ended March 31, 2015, is presented in the following table:
 
Stock Options
Shares
 
Weighted
Average
Price
 
Weighted-Average
Remaining
Contractual Term
 
Aggregate
Intrinsic
Value
Outstanding at January 1, 2015
2,378,559

 
$
46.91

 
6.69
 
$
73,561,785

Granted
440,945

 
78.43

 
 
 
 
Exercised
(238,352
)
 
38.75

 
 
 
 
Forfeited
(12,082
)
 
57.62

 
 
 
 
Outstanding at March 31, 2015
2,569,070

 
$
53.03

 
7.15
 
$
59,729,867

Vested and expected to vest as of March 31, 2015
2,409,629

 
$
51.87

 
7.02
 
$
58,689,128

Exercisable at March 31, 2015
1,394,118

 
$
41.37

 
5.72
 
$
48,047,309


16.    Retirement Benefits
The Company sponsors several qualified and nonqualified defined benefit and defined contribution pension plans and other postretirement plans for its employees. The following tables provide the components of net periodic benefit cost for its major defined benefit plans and its other postretirement plans.
 
 
 
 
 
 
 
 
 
Pension Benefits
 
Three Months Ended March 31,
 
2015
 
2014
 
U.S.
 
Non-U.S.
 
U.S.
 
Non-U.S.
Service cost
$
375

 
$
381

 
$
323

 
$
374

Interest cost
938

 
435

 
1,053

 
599

Expected return on plan assets
(1,248
)
 
(276
)
 
(1,408
)
 
(327
)
Net amortization
824

 
459

 
699

 
219

Net periodic benefit cost
$
889

 
$
999

 
$
667

 
$
865

 
 
 
 
 
 
Three Months Ended March 31,
 
 
2015
 
2014
Service cost
 
$
169

 
$
178

Interest cost
 
209

 
233

Net amortization
 
(108
)
 
(118
)
Net periodic benefit cost
 
$
270

 
$
293

The Company previously disclosed in its financial statements for the year ended December 31, 2014, that it expected to contribute approximately $1.6 million to its defined benefit plans and $0.5 million to its other postretirement benefit plans in 2015. As of March 31, 2015, the Company now expects to contribute $5.7 million to its defined benefit plans and $0.6 million to its other postretirement benefit plans in 2015. The Company contributed a total of $0.5 million during the first three months of 2015 to fund these plans.

17.    Legal Proceedings
The Company is party to various legal proceedings arising in the ordinary course of business, none of which are expected to have a material impact on its financial condition, results of operations or cash flows.


16

IDEX CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)
(unaudited)



18.    Income Taxes
The Company’s provision for income taxes is based upon estimated annual tax rates for the year applied to federal, state and foreign income. The provision for income taxes decreased to $26.9 million in the three months ended March 31, 2015 from $29.7 million in the same period of 2014. The effective tax rate increased to 29.0% for the three months ended March 31, 2015 compared to 28.5% in the same period of 2014 due to the mix of global pre-tax income among jurisdictions. Additionally, the effective tax rate for the first three months of 2014 was favorably impacted by settlements with taxing authorities primarily related to purchase price adjustments for prior period acquisitions.
The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. Due to the potential for resolution of federal, state and foreign examinations, and the expiration of various statutes of limitation, it is reasonably possible that the Company’s gross unrecognized tax benefits balance may change within the next twelve months by a range of zero to $1.5 million.

19.    Subsequent Events
On April 20, 2015, the Company entered into a definitive agreement to acquire Novotema, SpA, ("Novotema") a leader in the design, manufacture and sale of specialty sealing solutions for a purchase price of approximately $61 million (€57 million). The acquisition is subject to customary closing conditions, including receipt of regulatory approvals, and is expected to be completed within 45 days. Located in Vilongo, Italy, Novotema had revenues of $32 million in the most recent completed fiscal year and is expected to become part of the Company's Sealing Solutions group within the Health & Science Technologies segment.


17

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Cautionary Statement Under the Private Securities Litigation Reform Act
This quarterly report on Form 10-Q, including the “Overview and Outlook” and the “Liquidity and Capital Resources” sections of this Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements relate to, among other things, operating results and are indicated by words or phrases such as “expects,” "anticipates," “should,” “will,” and similar words or phrases. These statements are subject to inherent uncertainties and risks that could cause actual results to differ materially from those statements. The risks and uncertainties include, but are not limited to, those risks and uncertainties identified under the heading “Risk Factors” in item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, and information contained in subsequent reports filed by IDEX with the Securities and Exchange Commission. Investors are cautioned not to rely unduly on forward-looking statements when evaluating the information presented here.

Overview and Outlook
IDEX is an applied solutions company specializing in fluid and metering technologies, health and science technologies, and fire, safety and other diversified products built to customers’ specifications. IDEX’s products are sold in niche markets to a wide range of industries throughout the world. Accordingly, IDEX's businesses are affected by levels of industrial activity and economic conditions in the U.S. and in other countries where it does business and by the relationship of the U.S. dollar to other currencies. Levels of capacity utilization and capital spending in certain industries and overall industrial activity are among the factors that influence the demand for IDEX’s products.
The Company has three reportable business segments: Fluid & Metering Technologies, Health & Science Technologies and Fire & Safety/Diversified Products. Within our three reportable segments, the Company maintains six platforms, where we will invest in organic growth and acquisitions with a strategic view towards a platform with the potential for at least $500 million in revenue, and seven groups, where we will focus on organic growth and strategic acquisitions. The Fluid & Metering Technologies segment contains the Energy, Water (comprised of Water Services & Technology and Diaphragm & Dosing Pump Technology), and Chemical, Food & Process platforms as well as the Agricultural group (comprised of Banjo). The Health & Science Technologies segment contains the IDEX Optics & Photonics, Scientific Fluidics and Material Processing Technologies platforms, as well as the Sealing Solutions and the Industrial groups (comprised of Micropump and Gast). The Fire & Safety/Diversified Products segment is comprised of the Dispensing, Rescue, Band-It, and Fire Suppression groups. Each platform/group is comprised of one or more of our 15 reporting units: five reporting units within Fluid & Metering Technologies (Energy; Chemical, Food, & Process; Water Services & Technology; Banjo; and Diaphragm & Dosing Pump Technology); six reporting units within Health & Science Technologies (IDEX Optics and Photonics; Scientific Fluidics; Material Processing Technologies; Sealing Solutions; Micropump; and Gast); and four reporting units within Fire & Safety/Diversified Products (Dispensing, Rescue, Band-It, and Fire Suppression). 
The Fluid & Metering Technologies segment designs, produces and distributes positive displacement pumps, flow meters, injectors, and other fluid-handling pump modules and systems and provides flow monitoring and other services for the food, chemical, general industrial, water and wastewater, agricultural and energy industries.
The Health & Science Technologies segment designs, produces and distributes a wide range of precision fluidics, rotary lobe pumps, centrifugal and positive displacement pumps, roll compaction and drying systems used in beverage, food processing, pharmaceutical and cosmetics, pneumatic components and sealing solutions, very high precision, low-flow rate pumping solutions required in analytical instrumentation, clinical diagnostics and drug discovery, high performance molded and extruded, biocompatible medical devices and implantables, air compressors used in medical, dental and industrial applications, optical components and coatings for applications in the fields of scientific research, defense, biotechnology, aerospace, telecommunications and electronics manufacturing, laboratory and commercial equipment used in the production of micro and nano scale materials, precision photonic solutions used in life sciences, research and defense markets, and precision gear and peristaltic pump technologies that meet exacting original equipment manufacturer specifications.
The Fire & Safety/Diversified Products segment produces firefighting pumps and controls, rescue tools, lifting bags and other components and systems for the fire and rescue industry, and engineered stainless steel banding and clamping devices used in a variety of industrial and commercial applications, precision equipment for dispensing, metering and mixing colorants and paints used in a variety of retail and commercial businesses around the world.
Management’s primary measurements of segment performance are sales, operating income, and operating margin. In addition, due to the highly acquisitive nature of the Company, the determination of operating income includes amortization of acquired intangible assets and, as a result, management reviews depreciation and amortization as a percentage of sales. These measures are

18

monitored by management and significant changes in operating results versus current trends in end markets and variances from forecasts are analyzed with segment management.
In this report, references to organic sales, a non-GAAP measure, refers to sales from continuing operations calculated according to generally accepted accounting principles in the United States but excludes (1) sales from acquired businesses during the first twelve months of ownership and (2) the impact of foreign currency translation. The portion of sales attributable to foreign currency translation is calculated as the difference between (a) the period-to-period change in organic sales and (b) the period-to-period change in organic sales after applying prior period foreign exchange rates to the current year period. Management believes that reporting organic sales provides useful information to investors by helping identify underlying growth trends in our business and facilitating easier comparisons of our revenue performance with prior and future periods and to our peers. The Company excludes the effect of foreign currency translation from organic sales because foreign currency translation is not under management’s control, is subject to volatility and can obscure underlying business trends. The Company excludes the effect of acquisitions because the nature, size, and number of acquisitions can vary dramatically from period to period and between the Company and its peers and can also obscure underlying business trends and make comparisons of long-term performance difficult. In addition, this report references EBITDA. This non-GAAP measure has been reconciled to net income and operating income in this Item 2 under the heading "Non-GAAP Disclosures." Given the acquisitive nature of the Company, management believes that EBITDA provides important information about the performance of the Company's businesses by, among other matters, eliminating the impact of higher amortization expense at recently acquired businesses.
The non-GAAP financial measures disclosed by the Company should not be considered a substitute for, or superior to, financial measures prepared in accordance with U.S. GAAP, and the financial results prepared in accordance with U.S. GAAP and the reconciliations from these results should be carefully evaluated.
Some of our key financial highlights for the three months ended March 31, 2015 are as follows:
•
Sales of $502.2 million decreased 8%; organic sales — excluding acquisitions and foreign currency translation — were down 4%.
•
EBITDA of $122.0 million was over 24 percent of sales and covered interest expense by more than 11 times
•
Operating income of $101.8 million decreased 11%.
•
Net income decreased 12% to $66.0 million.
•
Diluted EPS of $0.84 decreased 7 cents, or 8%.
Given the Company’s current outlook we are projecting second quarter 2015 diluted EPS is in the range of $0.88 to $0.90 with full year 2015 diluted EPS of $3.50 to $3.60.

Results of Operations
The following is a discussion and analysis of our results of operations for the three month periods ended March 31, 2015 and 2014. Segment operating income and EBITDA excludes unallocated corporate operating expenses.

Consolidated Results in the Three Months Ended March 31, 2015 Compared with the Same Period of 2014
 
(In thousands)
Three Months Ended 
 March 31,
 
2015
 
2014
Net sales
$
502,198

 
$
543,996

Operating income
101,757

 
113,835

Operating margin
20.3
%
 
20.9
%
For the three months ended March 31, 2015, Fluid & Metering Technologies contributed 43% of sales, 46% of operating income and 45% of EBITDA; Health & Science Technologies contributed 36% of sales, 31% of operating income and 34% of EBITDA; and Fire & Safety/Diversified Products contributed 21% of sales, 23% of operating income and 21% of EBITDA. The aforementioned percentages are calculated on the basis of total segment (and not total Company) sales, operating income and EBITDA.
Sales in the three months ended March 31, 2015 were $502.2 million, an 8% decrease from the comparable period last year. This decrease reflects a 4% decrease in organic sales and a 4% decrease in foreign currency translation. Organic sales to customers

19

outside the U.S. represented approximately 50% of total sales in the first three months of 2015, compared to 48% during the same period of 2014.
Gross profit of $226.0 million in the first three months of 2015 decreased $18.4 million, or 8%, from the same period in 2014. Gross margin of 45.0% in the first three months of 2015 increased slightly from 44.9% during the same period in 2014. The increase in gross margin primarily resulted from benefits of the Company’s restructuring actions taken in the prior year.
Selling, general and administrative expenses decreased to $124.3 million in the first three months of 2015 from $130.6 million during the same period of 2014. The change reflects a decrease in volume related expenses of $7.7 million partially offset by an increase of approximately $1.4 million of incremental costs from the Aegis acquisition. As a percentage of sales, SG&A expenses were 24.7% for the first three months of 2015 compared to 24.0% during the same period of 2014.
Operating income of $101.8 million in the first three months of 2015 was down from the $113.8 million recorded during the same period in 2014, primarily reflecting a decrease in volume partially offset by improved productivity, including benefits from our 2014 restructuring actions. Operating margin of 20.3% in the first three months of 2015 was down from 20.9% during the same period of 2014, primarily due to the fulfillment of a large Dispensing order in the prior year period.
Other income - net of $1.7 million in the first three months of 2015 increased $0.9 million compared with the same period in 2014, primarily due to favorable gains on foreign currency transactions.
The provision for income taxes is based upon estimated annual tax rates for the year applied to federal, state and foreign income. The provision for income taxes of $26.9 million for the first three months of 2015 decreased compared to $29.7 million recorded in the same period of 2014. The effective tax rate increased slightly to 29.0% for the first three months of 2015 compared to 28.5% in the same period of 2014 due to the mix of global pre-tax income among jurisdictions. Additionally, the effective tax rate for the first three months of 2014 was favorably impacted by settlements with taxing authorities primarily related to purchase price adjustments for prior period acquisitions.
Net income in the first three months of 2015 of $66.0 million decreased from $74.5 million during the same period of 2014. Diluted earnings per share in the first three months of 2015 of $0.84 decreased $0.07, or 8%, compared with the same period in 2014.
Fluid & Metering Technologies Segment
(In thousands)
Three Months Ended 
 March 31,
 
2015
 
2014
Net sales
$
218,248

 
$
223,361

Operating income
55,898

 
56,407

Operating margin
25.6
%
 
25.3
%
Sales of $218.2 million decreased $5.1 million, or 2%, in the first three months of 2015 compared with the same period of 2014. This reflects a 1% increase in organic sales, a 1% favorable impact from acquisitions (Aegis - April 2014) and 4% unfavorable foreign currency translation. In the first three months of 2015, organic sales decreased 1% domestically and increased 2% internationally compared to the same period in 2014. Organic sales to customers outside the U.S. were approximately 44% of total segment sales during the first three months of 2015 compared to 43% during the same period of 2014.
Sales within our Energy platform decreased in the first three months of 2015 compared to the same period of 2014 primarily due to the decline in oil prices and delay of large capital projects, as well as the negative impact of foreign currency translation. Sales within our Chemical, Food & Process platform increased compared to the first three months of 2014 based on strong demand from chemical and petrochemical industries in both North American and European end markets and the impact from the Aegis acquisition, partially offset by the negative impact of foreign currency translation. Sales within our Agricultural group decreased due to the soft OEM market and the larger than anticipated deterioration in the after-market and distribution business. Diaphragm & Dosing Pump Technology sales were flat compared to the first three months of 2014 as weakness in the North American oil and gas markets was offset by petrochemical demand. Sales in Water Services & Technology were down slightly in the first three months of 2015 compared to the same period in 2014 based on the success of new products and municipal spending uptick, offset by the negative impact of the strong US dollar.
Operating income of $55.9 million was slightly lower than the $56.4 million recorded in the first three months of 2014, primarily due to decreased volume partially offset by productivity and the benefits from our 2014 restructuring actions. Operating margin of 25.6% was higher than the 25.3% recorded in the first three months of 2014, primarily due to improved productivity including benefits from our 2014 restructuring actions, partially offset by decreased volume.

20

Health & Science Technologies Segment
(In thousands)
Three Months Ended 
 March 31,
 
2015
 
2014
Net sales
$
179,120

 
$
186,375

Operating income
37,457

 
36,229

Operating margin
20.9
%
 
19.4
%
Sales of $179.1 million decreased $7.3 million, or 4%, in the first three months of 2015 compared with the same period in 2014. This decrease reflects flat organic sales growth and was mainly attributable to unfavorable foreign currency translation. In the first three months of 2015, organic sales decreased 2% domestically and increased 1% internationally. Organic sales to customers outside the U.S. were approximately 54% of total segment sales in the first three months of 2015 compared with 52% during the same period in 2014.
Sales within our Material Processing Technologies platform decreased compared to the first three months of 2014 due to a decline in large project based business in both North American and Asian markets as well as the negative impact of foreign currency translation. Sales within our Scientific Fluidics platform were down slightly compared to the first three months of 2014 due to strong demand in the analytical instrumentation market, offset by the negative impact of foreign currency translation. Sales within the Sealing Solutions group increased compared to the first three months of 2014 primarily due to the growth in the semiconductor market, partially offset by the negative impact of foreign currency translation. Sales within our Optics and Photonics platform decreased compared to the first three months of 2014 due to softness in the biomedical and defense markets, partially offset by a recovering semiconductor market. Sales within our Industrial group decreased compared to the first three months of 2014, primarily due to a sluggish market in China, but partially offset by sales growth in the North American distribution market.
Operating income and operating margin of $37.5 million and 20.9%, respectively, in the first three months of 2015 were up from the $36.2 million and 19.4% recorded in the same period of 2014, primarily due to improved productivity including benefits from our 2014 restructuring actions, partially offset by decreased volume.
Fire & Safety/Diversified Products Segment
(In thousands)
Three Months Ended 
 March 31,
 
2015
 
2014
Net sales
$
106,622

 
$
137,284

Operating income
27,162

 
39,648

Operating margin
25.5
%
 
28.9
%
Sales of $106.6 million decreased $30.7 million, or 22%, in the first three months of 2015 compared with the same period in 2014. This reflects a decline in organic revenue of 16% mainly due to the fulfillment of a large dispensing project in the prior year period and 6% unfavorable foreign currency translation. In the first three months of 2015, organic sales decreased 32% domestically and increased 1% internationally, compared with the same period in 2014. Organic sales to customers outside the U.S. were approximately 57% of total segment sales in the first three months of 2015 compared to 47% during the same period of 2014.
Sales within our Dispensing group decreased compared to the first three months of 2014 primarily as a result of fulfilling a large Dispensing project in 2014. Sales within our Band-It group were flat compared to the first three months of 2014 driven by weakness in the downhole oil and gas markets, offset by strength in the North American transportation market. Sales within our Fire Suppression group increased due to stable project orders in China and North America. Sales within our Rescue group decreased due to negative foreign currency translation.
Operating income and operating margin of $27.2 million and 25.5%, respectively, in the first three months of 2015 were lower than the $39.6 million and 28.9% recorded in the first three months of 2014, primarily due to lower volume, partially offset by benefits from our 2014 restructuring actions.

Liquidity and Capital Resources
Operating Activities

21

At March 31, 2015, the Company's cash and cash equivalents totaled $494.5 million, of which $391.2 million was held outside of the United States. At March 31, 2015, working capital was $721.4 million and the current ratio was 3.0 to 1. Cash flows from operating activities for the first three months of 2015 decreased $24.8 million, or 33%, to $49.4 million compared to the first three months of 2014, due to severance payments, the timing of defined contribution pension plan payments and lower earnings.
Investing Activities
Cash flows used in investing activities for the first three months of 2015 decreased $0.7 million, or 6% to $10.1 million compared to the same period of 2014, primarily due to lower capital expenditures.
Cash flows provided by operating activities were more than adequate to fund capital expenditures of $10.1 million and $10.8 million in the first three months of 2015 and 2014, respectively. Capital expenditures were generally for machinery and equipment that improved productivity, tooling, business system technology, replacement of equipment and investments in new facilities. Management believes the Company has sufficient capacity in its plants and equipment to meet expected needs for future growth.
Financing Activities
Cash flows used in financing activities for the first three months of 2015 decreased $23.2 million, or 54% to $20.1 million compared to the same period of 2014, primarily as a result of increased borrowings, net of payments, offset by an increase in dividends paid and an increase in purchases of common stock.
The Company maintains the Revolving Facility, which is a $700.0 million unsecured, multi-currency bank credit facility expiring on June 27, 2016. At March 31, 2015, there were $170.0 million of outstanding borrowings under the Revolving Facility and outstanding letters of credit totaled approximately $7.1 million. The net available borrowing capacity under the Revolving Facility at March 31, 2015, was approximately $522.9 million. Borrowings under the Revolving Facility bear interest, at either an alternate base rate or an adjusted LIBOR rate plus, in each case, an applicable margin. Such applicable margin is based on the Company’s senior, unsecured, long-term debt rating and can range from .875% to 1.70%. Based on the Company’s credit rating at March 31, 2015, the applicable margin was 1.05%. Interest is payable (a) in the case of base rate loans, quarterly, and (b) in the case of LIBOR rate loans, on the maturity date of the borrowing, or quarterly from the effective date for borrowings exceeding three months. An annual Revolving Facility fee, also based on the Company’s credit rating, is currently 20 basis points and is payable quarterly.
At March 31, 2015, the Company included the outstanding balance of the 2.58% Senior Euro Notes, $87.9 million within Current liabilities on the Consolidated Balance Sheet as the maturity date is within twelve months and the Company expects to repay the principal balance using cash on the balance sheet.
There are two key financial covenants that the Company is required to maintain in connection with the Revolving Facility and 2.58% Senior Euro Notes. The most restrictive financial covenants under these debt instruments require a minimum interest coverage ratio of 3.0 to 1 and a maximum leverage ratio of 3.25 to 1. At March 31, 2015, the Company was in compliance with both of these financial covenants, as the Company’s interest coverage ratio was 12.39 to 1 and the leverage ratio was 1.82 to 1. There are no financial covenants relating to the 4.5% Senior Notes or 4.2% Senior Notes; however, both are subject to cross-default provisions.
On November 6, 2014, the Company’s Board of Directors approved a $400.0 million increase in the authorized level for repurchases of common stock. Repurchases under the program will be funded with future cash flow generation or borrowings available under the Revolving Facility. During the first three months of 2015, the Company purchased a total of 0.8 million shares at a cost of $62.1 million, of which $2.7 million was settled in April 2015. As of March 31, 2015, the amount of share repurchase authorization remaining is $483.3 million.
The Company believes current cash, cash from operations and cash available under the Revolving Facility will be sufficient to meet its operating cash requirements, planned capital expenditures, principal payments on the 2.58% Senior Euro notes, interest on all borrowings, pension and postretirement funding requirements, expected share repurchases and annual dividend payments to holders of the Company’s stock for the remainder of 2015. Additionally, in the event that suitable businesses are available for acquisition upon acceptable terms, the Company may obtain all or a portion of the financing for these acquisitions through the incurrence of additional borrowings. As of March 31, 2015, $170.0 million was outstanding under the Revolving Facility, with $7.1 million of outstanding letters of credit, resulting in net available borrowing capacity under the Revolving Facility at March 31, 2015 of approximately $522.9 million.


22

Non-GAAP Disclosures
The following is a reconciliation of EBITDA to the comparable measures of net income and operating income, as determined in accordance with U.S. GAAP. We have reconciled consolidated EBITDA to net income and we have reconciled segment EBITDA to segment operating income, as we do not allocate interest and income taxes to our segments. EBITDA means earnings before interest, income taxes, depreciation and amortization. Given the acquisitive nature of the Company which results in a higher level of amortization expense at recently acquired businesses, management uses EBITDA, in addition to operating income, to provide it with another way to measure financial performance of businesses across our three segments. Management also uses EBITDA for enterprise valuation purposes. We believe that EBITDA is also useful to some investors as an indicator of the strength and performance of the Company's and its segment's ongoing business operations and a way to evaluate and compare operating performance and value companies within our industry. However, it should not be considered as an alternative to net income, operating income or any other items calculated in accordance with U.S. GAAP. The definition of EBITDA used here may differ from that used by other companies.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consolidated EBITDA Reconciliation (in thousands)
 
Three Months Ended 
 March 31,
 
 
2015
 
2014
Net income
 
$
65,954

 
$
74,548

+ Income taxes
 
26,929

 
29,674

+ Interest expense
 
10,597

 
10,457

+ Depreciation and amortization
 
18,510

 
19,257

EBITDA
 
$
121,990

 
$
133,936

 
 
 
 
 
Net sales
 
$
502,198

 
$
543,996

EBITDA as a percentage of net sales
 
24.3
%
 
24.6
%

Segment EBITDA Reconciliation (in thousands)
 
Three Months Ended March 31,
 
 
2015
 
2014
 
 
FMT
 
HST
 
FSDP
 
FMT
 
HST
 
FSDP
Operating income
 
$
55,898

 
$
37,457

 
$
27,162

 
$
56,407

 
$
36,229

 
$
39,648

 - Other (income) expense - net
 
(802
)
 
(131
)
 
(862
)
 
(278
)
 
(13
)
 
(233
)
+ Depreciation and amortization
 
6,361

 
10,208

 
1,532

 
6,552

 
10,709

 
1,680

EBITDA
 
$
63,061

 
$
47,796

 
$
29,556

 
$
63,237

 
$
46,951

 
$
41,561

 
 
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
$
218,248

 
$
179,120

 
$
106,622

 
$
223,361

 
$
186,375

 
$
137,284

EBITDA as a percentage of net sales
 
28.9
%
 
26.7
%
 
27.7
%
 
28.3
%
 
25.2
%
 
30.3
%


23

Item 3.    Quantitative and Qualitative Disclosures About Market Risk.
The Company is subject to market risk associated with changes in foreign currency exchange rates and interest rates. The Company may, from time to time, enter into foreign currency forward contracts and interest rate swaps on its debt when it believes there is a financial advantage in doing so. A treasury risk management policy, adopted by the Board of Directors, provides for procedures and controls over derivative financial and commodity instruments, including foreign currency forward contracts and interest rate swaps. Under the policy, the Company does not use derivative financial or commodity instruments for trading purposes, and the use of these instruments is subject to strict approvals by senior officers. Typically, the use of derivative instruments is limited to foreign currency forward contracts and interest rate swaps on the Company’s outstanding long-term debt.
The Company’s foreign currency exchange rate risk is limited principally to the Euro, British Pound, Canadian Dollar, Japanese Yen, Indian Rupee and Chinese Renminbi. The Company manages its foreign exchange risk principally through invoicing customers in the same currency as the source of products. The effect of transaction gains and losses is reported within other (income) expense -net on the Consolidated Statements of Operations.

The Company’s interest rate exposure is primarily related to the $908.2 million of total debt outstanding at March 31, 2015. Approximately 19% of the debt, representing the amount drawn on the Revolving Facility at March 31, 2015, 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 $0.9 million annualized increase or decrease in interest expense and cash flows. The remaining debt is fixed rate debt.

Item 4.    Controls and Procedures.
The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
As required by Rule 13a-15(b) promulgated under the Securities Exchange Act, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and the Company’s Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based on the foregoing, the Company’s Chief Executive Officer and Chief Financial Officer concluded as of March 31, 2015, that the Company’s disclosure controls and procedures were effective.
There has been no change in the Company’s internal controls over financial reporting during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal controls over financial reporting.

24

PART II. OTHER INFORMATION
 
Item 1.
Legal Proceedings.
The Company and six of its subsidiaries are presently named as defendants in a number of lawsuits claiming various asbestos-related personal injuries, allegedly as a result of exposure to products manufactured with components that contained asbestos. These components were acquired from third party suppliers, and were not manufactured by any of the subsidiaries. To date, the majority of the Company’s settlements and legal costs, except for costs of coordination, administration, insurance investigation and a portion of defense costs, have been covered in full by insurance, subject to applicable deductibles. However, the Company cannot predict whether and to what extent insurance will be available to continue to cover these settlements and legal costs, or how insurers may respond to claims that are tendered to them. Claims have been filed in jurisdictions throughout the United States. Most of the claims resolved to date have been dismissed without payment. The balance have been settled for various insignificant amounts. Only one case has been tried, resulting in a verdict for the Company’s business unit. No provision has been made in the financial statements of the Company, other than for insurance deductibles in the ordinary course, and the Company does not currently believe the asbestos-related claims will have a material adverse effect on the Company’s business, financial position, results of operations or cash flows.
The Company is also party to various other legal proceedings arising in the ordinary course of business, none of which is expected to have a material adverse effect on its business, financial condition, results of operations or cash flows.
 
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds.
The following table provides information about the Company’s purchases of its common stock during the quarter ended March 31, 2015:
 
Period
Total Number of
Shares Purchased
 
Average Price
Paid per Share
 
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans
or Programs(1)
 
Maximum Dollar
Value that May Yet
be Purchased
Under the Plans
or Programs(1)
January 1, 2015 to January 31, 2015
329,174

 
$
73.19

 
329,174

 
$
521,354,514

February 1, 2015 to February 28, 2015
239,148

 
76.26

 
239,148

 
503,118,161

March 1, 2015 to March 31, 2015
261,422

 
75.75

 
261,422

 
483,315,735

Total
829,744

 
$
74.88

 
829,744

 
$
483,315,735

 
(1)
On November 6, 2014, the Company announced that its Board of Directors had increased the authorized level for repurchases of its common stock by $400.0 million. This followed the prior Board of Directors repurchase authorizations of $300 million, announced by the Company on November 8, 2013; $200.0 million, announced by the Company on October 22, 2012; $50.0 million, announced by the Company on December 6, 2011; and the original repurchase authorization of $125.0 million announced by the Company on April 21, 2008.

Item 6.
Exhibits.
The exhibits listed in the accompanying “Exhibit Index” are filed or furnished as part of this report.


25

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
IDEX Corporation
 
 
 
 
By:
/s/ HEATH A. MITTS
 
 
Heath A. Mitts
 
 
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)
 
 
 
 
By:
/s/ MICHAEL J. YATES
 
 
Michael J. Yates
 
 
Vice President and Chief Accounting Officer
(Principal Accounting Officer)
Date: April 28, 2015

26

EXHIBIT INDEX
 
Exhibit
Number
 
Description
3.1
 
Restated Certificate of Incorporation of IDEX Corporation (incorporated by reference to Exhibit No. 3.1 to the Registration Statement on Form S-1 of IDEX, et al., Registration No. 33-21205, as filed on April 21, 1988)
 
 
3.1(a)
 
Amendment to Restated Certificate of Incorporation of IDEX Corporation (incorporated by reference to Exhibit No. 3.1(a) to the Quarterly Report of IDEX on Form 10-Q for the quarter ended March 31, 1996, Commission File No. 1-10235)
 
 
3.1(b)
 
Amendment to Restated Certificate of Incorporation of IDEX Corporation (incorporated by reference to Exhibit No. 3.1(b) to the Current Report of IDEX on Form 8-K dated March 24, 2005, Commission File No. 1-10235)
 
 
3.2
 
Amended and Restated By-Laws of IDEX Corporation (incorporated by reference to Exhibit No. 3.1 to the Current Report of IDEX Corporation on Form 8-K filed November 14, 2011, Commission File No. 1-10235)
 
 
 
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)
 
 
*31.1
 
Certification of Chief Executive Officer Pursuant to Section 302 of Sarbanes Oxley Act of 2002
 
 
*31.2
 
Certification of Chief Financial Officer Pursuant to Section 302 of Sarbanes Oxley Act of 2002
 
 
*32.1
 
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350
 
 
*32.2
 
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350
 
 
*101
 
The following financial information from IDEX Corporation's Quarterly Report on Form 10-Q for the quarter ended March 31, 2015 formatted in XBRL includes: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Earnings, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Condensed Consolidated Statement of Shareholders’ Equity, (v) the Condensed Consolidated Statements of Cash Flows, and (vi) Notes to the Condensed Consolidated Financial Statements.
 
 
 
* Filed herewith

27




Exhibit 31.1
Certification of Chief Executive Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
I, Andrew K. Silvernail, certify that:
1. I have reviewed this quarterly report on Form 10-Q of IDEX Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
 
 
 
 
 
/s/ ANDREW K. SILVERNAIL
 
 
Andrew K. Silvernail
 
 
Chairman of the Board and Chief Executive Officer
Date: April 28, 2015






Exhibit 31.2
Certification of Chief Financial Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
I, Heath A. Mitts, certify that:
1. I have reviewed this quarterly report on Form 10-Q of IDEX Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
 
 
 
 
 
/s/ HEATH A. MITTS
 
 
Heath A. Mitts
 
 
Senior Vice President and Chief Financial Officer
Date: April 28, 2015






Exhibit 32.1
Certification of Chief Executive Officer
Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of IDEX Corporation (the “Company”) hereby certifies, to such officer's knowledge, that:
(i) the accompanying Quarterly Report on Form 10-Q of the Company for the quarterly period ended March 31, 2015 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
 
 
 
 
/s/ ANDREW K. SILVERNAIL
 
 
Andrew K. Silvernail
 
 
Chairman of the Board and Chief Executive Officer
Date: April 28, 2015







Exhibit 32.2
Certification of Chief Financial Officer
Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of IDEX Corporation (the “Company”) hereby certifies, to such officer's knowledge, that:
(i) the accompanying Quarterly Report on Form 10-Q of the Company for the quarterly period ended March 31, 2015 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
 
 
 
 
/s/ HEATH A. MITTS
 
 
Heath A. Mitts
 
 
Senior Vice President and Chief Financial Officer
Date: April 28, 2015



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