Item 8. Financial Statements and Supplementary Data.

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Item 8. Financial Statements and Supplementary Data.

IDEX CORPORATION

CONSOLIDATED BALANCE SHEETS



	As of December 31,
	2014			2013
	(In thousands except share and per share amounts)
ASSETS
Current assets
Cash and cash equivalents	$	509,137		$	439,629
Receivables — net	256,040			253,226
Inventories	237,631			230,967
Other current assets	72,983			67,131
Total current assets	1,075,791			990,953
Property, plant and equipment — net	219,543			213,488
Goodwill	1,321,277			1,349,456
Intangible assets — net	271,164			311,227
Other noncurrent assets	20,295			22,453
Total assets	$	2,908,070		$	2,887,577
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Trade accounts payable	$	127,462		$	133,312
Accrued expenses	163,409			150,751
Short-term borrowings	98,946			1,871
Dividends payable	22,151			18,675
Total current liabilities	411,968			304,609
Long-term borrowings	765,006			772,005
Deferred income taxes	130,368			144,908
Other noncurrent liabilities	114,277			93,066
Total liabilities	1,421,619			1,314,588
Commitments and contingencies (Note 8)
Shareholders’ equity
Preferred stock:
Authorized: 5,000,000 shares, $.01 per share par value; Issued: none	—			—
Common stock:
Authorized: 150,000,000 shares, $.01 per share par value; Issued: 89,761,305 shares at December 31, 2014 and 89,154,190 shares at December 31, 2013	898			892
Additional paid-in capital	647,553			607,766
Retained earnings	1,483,821			1,293,740
Treasury stock at cost: 10,995,361 shares at December 31, 2014 and 7,958,510 shares at December 31, 2013	(553,543		)	(326,104		)
Accumulated other comprehensive loss	(92,278		)	(3,305		)
Total shareholders’ equity	1,486,451			1,572,989
Total liabilities and shareholders’ equity	$	2,908,070		$	2,887,577

See Notes to Consolidated Financial Statements.

IDEX CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS



	For the Years Ended December 31,
	2014			2013		2012
	(In thousands except per share amounts)
Net sales	$	2,147,767		$	2,024,130	$	1,954,258
Cost of sales	1,198,452			1,150,766		1,150,558
Gross profit	949,315			873,364		803,700
Selling, general and administrative expenses	504,419			477,851		444,490
Asset impairments	—			—		198,519
Restructuring expenses	13,672			—		32,473
Operating income	431,224			395,513		128,218
Other (income) expense — net	(3,111		)	178		(236		)
Interest expense	41,895			42,206		42,250
Income before income taxes	392,440			353,129		86,204
Provision for income taxes	113,054			97,914		48,574
Net income	$	279,386		$	255,215	$	37,630
Earnings per common share:
Basic earnings per common share	$	3.48		$	3.11	$	0.45
Diluted earnings per common share	$	3.45		$	3.09	$	0.45
Share data:
Basic weighted average common shares outstanding	79,715			81,517		82,689
Diluted weighted average common shares outstanding	80,728			82,489		83,641

See Notes to Consolidated Financial Statements.

IDEX CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME



	For the Years Ended December 31,
	2014			2013		2012
	(In thousands)
Net income	$	279,386		$	255,215	$	37,630
Other comprehensive income (loss)
Reclassification adjustments for derivatives, net of tax	4,510			4,738		4,780
Pension and other postretirement adjustments, net of tax	(16,459		)	21,788		(7,159		)
Cumulative translation adjustment	(77,024		)	13,572		14,445
Comprehensive income	$	190,413		$	295,313	$	49,696

See Notes to Consolidated Financial Statements.

IDEX CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY



	Common Stock and Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)									Treasury Stock			Total Shareholders’ Equity
	Cumulative Translation Adjustment		Retirement Benefits Adjustments			Cumulative Unrealized Gain (Loss) on Derivatives
	(In thousands except share and per share amounts)
Balance, December 31, 2011	$	490,988	$	1,142,412		$	24,194		$	(38,486	)	$	(41,177	)	$	(64,796	)	$	1,513,135
Net income	—		37,630			—			—			—			—			37,630
Cumulative translation adjustment	—		—			14,445			—			—			—			14,445
Net change in retirement obligations (net of tax benefit of $1,647)	—		—			—			(7,159		)	—			—			(7,159		)
Net change on derivatives designated as cash flow hedges (net of tax of $2,791)	—		—			—			—			4,780			—			4,780
Issuance of 1,826,977 shares of common stock from issuance of unvested shares, exercise of stock options and deferred compensation plans (net of tax of $4,865)	49,721		—			—			—			—			—			49,721
Repurchase of 2,182,946 shares of common stock	—														(89,563		)	(89,563		)
Share-based compensation	10,850		—			—			—			—			—			10,850
Unvested shares surrendered for tax withholding	—		—			—			—			—			(2,340		)	(2,340		)
Cash dividends declared — $.80 per common share outstanding	—		(66,501		)	—			—			—			—			(66,501		)
Balance, December 31, 2012	$	551,559	$	1,113,541		$	38,639		$	(45,645	)	$	(36,397	)	$	(156,699	)	$	1,464,998
Net income	—		255,215			—			—			—			—			255,215
Cumulative translation adjustment	—		—			13,572			—			—			—			13,572
Net change in retirement obligations (net of tax of $13,085)	—		—			—			21,788			—			—			21,788
Net change on derivatives designated as cash flow hedges (net of tax of $2,692)	—		—			—			—			4,738			—			4,738
Issuance of 1,471,568 shares of common stock from issuance of unvested shares, exercise of stock options and deferred compensation plans (net of tax of $4,514)	43,749		—			—			—			—			—			43,749
Repurchase of 2,916,280 shares of common stock	—		—			—			—			—			(167,503		)	(167,503		)
Share-based compensation	13,350		—			—			—			—			—			13,350
Unvested shares surrendered for tax withholding	—		—			—			—			—			(1,902		)	(1,902		)
Cash dividends declared — $.89 per common share outstanding	—		(75,016		)	—			—			—			—			(75,016		)
Balance, December 31, 2013	$	608,658	$	1,293,740		$	52,211		$	(23,857	)	$	(31,659	)	$	(326,104	)	$	1,572,989
Net income	—		279,386			—			—			—			—			279,386
Cumulative translation adjustment	—		—			(77,024		)	—			—			—			(77,024		)
Net change in retirement obligations (net of tax benefit of $6,852)	—		—			—			(16,459		)	—			—			(16,459		)
Net change on derivatives designated as cash flow hedges (net of tax of $2,713)	—		—			—			—			4,510			—			4,510
Issuance of 571,751 shares of common stock from issuance of unvested shares, exercise of stock options and deferred compensation plans (net of tax of $3,425)	23,195		—			—			—			—			—			23,195
Repurchase of 2,970,461 shares of common stock	—		—			—			—			—			(222,487		)	(222,487		)
Share-based compensation	16,598		—			—			—			—			—			16,598
Unvested shares surrendered for tax withholding	—		—			—			—			—			(4,952		)	(4,952		)
Cash dividends declared — $1.12 per common share outstanding	—		(89,305		)	—			—			—			—			(89,305		)
Balance, December 31, 2014	$	648,451	$	1,483,821		$	(24,813	)	$	(40,316	)	$	(27,149	)	$	(553,543	)	$	1,486,451

See Notes to Consolidated Financial Statements.

IDEX CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS



	For the Years Ended December 31,
	2014			2013			2012
	(In thousands)
Cash flows from operating activities
Net income	$	279,386		$	255,215		$	37,630
Adjustments to reconcile net income to net cash provided by operating activities:
Gain on sale of fixed assets	(351		)	(96		)	—
Asset impairments	2,473			2,747			198,519
Depreciation and amortization	33,720			35,007			36,827
Amortization of intangible assets	43,187			44,327			41,485
Amortization of debt issuance expenses	1,723			1,703			1,685
Share-based compensation expense	20,717			16,993			13,102
Deferred income taxes	(8,593		)	(3,156		)	(37,229		)
Excess tax benefit from share-based compensation	(6,275		)	(8,560		)	(4,474		)
Non-cash interest expense associated with forward starting swaps	7,223			7,430			7,637
Changes in (net of the effect from acquisitions):
Receivables	(11,110		)	6,195			12,747
Inventories	(7,821		)	9,088			23,799
Other current assets	(5,201		)	6,562			(12,127		)
Trade accounts payable	(2,466		)	15,460			(1,376		)
Accrued expenses	23,760			11,790			9,944
Other — net	(2,411		)	817			(1,989		)
Net cash flows provided by operating activities	367,961			401,522			326,180
Cash flows from investing activities
Purchases of property, plant and equipment	(47,997		)	(31,536		)	(35,807		)
Acquisition of businesses, net of cash acquired	(25,443		)	(36,849		)	(68,930		)
Proceeds from fixed asset disposals	1,460			567			—
Other — net	(280		)	(344		)	(529		)
Net cash flows used in investing activities	(72,260		)	(68,162		)	(105,266		)
Cash flows from financing activities
Borrowings under revolving credit facilities	165,014			73,101			129,479
Payments under revolving credit facilities	(61,951		)	(89,478		)	(158,825		)
Dividends paid	(85,726		)	(72,905		)	(64,087		)
Proceeds from stock option exercises	17,161			35,306			45,771
Excess tax benefit from share-based compensation	6,275			8,560			4,474
Purchase of common stock	(219,893		)	(167,503		)	(89,563		)
Unvested shares surrendered for tax withholding	(4,952		)	(1,902		)	(2,340		)
Other	—			(4,224		)	(1,394		)
Net cash flows used in financing activities	(184,072		)	(219,045		)	(136,485		)
Effect of exchange rate changes on cash and cash equivalents	(42,121		)	6,450			4,176
Net increase in cash	69,508			120,765			88,605
Cash and cash equivalents at beginning of year	439,629			318,864			230,259
Cash and cash equivalents at end of period	$	509,137		$	439,629		$	318,864
Supplemental cash flow information
Cash paid for:
Interest	$	32,565		$	33,432		$	32,639
Income taxes	122,295			73,657			87,603
Significant non-cash activities:
Contingent consideration for acquisition	—			—			8,370
Debt acquired with acquisition of business	—			—			4,680

See Notes to Consolidated Financial Statements.

IDEX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMETNS

Significant Accounting Policies

Business

IDEX is an applied solutions company specializing in fluid and metering technologies, health and science technologies, and fire, safety and other diversified products built to its customers’ specifications. IDEX's products are sold in niche markets to a wide range of industries throughout the world. The Company’s products include industrial pumps, compressors, flow meters, injectors and valves, and related controls for use in a wide variety of process applications; precision fluidics solutions, including pumps, valves, degassing equipment, corrective tubing, fittings, and complex manifolds, precision photonic solutions, optical filters and specialty medical equipment and devices used in life science applications; precision-engineered equipment for dispensing, metering and mixing paints; refinishing equipment; and engineered products for industrial and commercial markets, including fire and rescue, transportation equipment, oil and gas, electronics, and communications. These activities are grouped into three reportable segments: Fluid & Metering Technologies, Health & Science Technologies and Fire & Safety/Diversified Products.

Principles of Consolidation

The consolidated financial statements include the Company and its subsidiaries. All intercompany transactions and accounts have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The principal areas of estimation reflected in the financial statements are revenue recognition, sales returns and allowances, allowance for doubtful accounts, inventory valuation, recoverability of long-lived assets, income taxes, product warranties, contingencies and litigation, insurance-related items, defined benefit retirement plans and purchase accounting related to acquisitions.

Revenue Recognition

The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable, and collectability of the sales price is reasonably assured. For product sales, delivery does not occur until the products have been shipped and risk of loss has been transferred to the customer. Revenue from services is recognized when the services are provided or ratably over the contract term. Some arrangements with customers may include multiple deliverables, including the combination of products and services. In such cases the Company has identified these as separate elements in accordance with ASC 605-25 and recognizes revenue consistent with the policy for each separate element based on the relative selling price method. Revenues from certain long-term contracts are recognized on the percentage-of-completion method. Percentage-of-completion is measured principally by the percentage of costs incurred to date for each contract to the estimated total costs for such contract at completion. Provisions for estimated losses on uncompleted long-term contracts are made in the period in which such losses are determined. Due to uncertainties inherent in the estimation process, it is reasonably possible that completion costs, including those arising from contract penalty provisions and final contract settlements, will be revised in the near-term. Such revisions to costs and income are recognized in the period in which the revisions are determined.

The Company records allowances for discounts, product returns and customer incentives at the time of sale as a reduction of revenue as such allowances can be reliably estimated based on historical experience and known trends. The Company also offers product warranties and accrues its estimated exposure for warranty claims at the time of sale based upon the length of the warranty period, warranty costs incurred and any other related information known to the Company.

Shipping and Handling Costs

Shipping and handling costs are included in cost of sales and are recognized as a period expense during the period in which they are incurred.

Advertising Costs

Advertising costs of $14.5 million, $14.6 million and $15.3 million for 2014, 2013 and 2012, respectively, are expensed as incurred within Selling, general and administrative expenses.

Cash and Cash Equivalents

The Company considers all highly liquid instruments purchased with an original maturity of 90 days or less to be cash and cash equivalents.

Allowance for Doubtful Accounts

The Company maintains allowances for doubtful accounts for estimated losses as a result of customer’s inability to make required payments. Management evaluates the aging of the accounts receivable balances, the financial condition of its customers, historical trends and the time outstanding of specific balances to estimate the amount of accounts receivables that may not be collected in the future and records the appropriate provision.

Inventories

The Company states inventories at the lower of cost or market. Cost, which includes material, labor, and factory overhead, is determined on a FIFO basis. We make adjustments to reduce the cost of inventory to its net realizable value, if required, at the business unit level for estimated excess, obsolescence or impaired balances. Factors influencing these adjustments include changes in market demand, product life cycle and engineering changes.

Impairment of Long-Lived Assets

Long-lived assets are reviewed for impairment upon the occurrence of events or changes in circumstances that indicate that the carrying value of the assets may not be recoverable, as measured by comparing their net book value to the projected undiscounted future cash flows generated by their use. Impaired assets are recorded at their estimated fair value based on a discounted cash flow analysis.

A long-lived asset impairment exists when the carrying amount of the asset exceeds its fair value. Assessments of possible impairments of long-lived assets are made when events or changes in circumstances indicate that the carrying value of the asset may not be recoverable through future operations. The amount and timing of impairment charges for these assets require the estimation of future cash flows and the fair value of the related assets. In 2014, 2013 and 2012, the Company concluded that certain long lived assets had a fair value that was less than the carrying value of the assets, resulting in $2.5 million, $2.7 million and $7.0 million, respectively, of long-lived asset impairment charges.

Goodwill and Indefinite-Lived Intangible Assets

In accordance with ASC 350, the Company reviews the carrying value of goodwill and indefinite-lived intangible assets annually on October 31, or upon the occurrence of events or changes in circumstances that indicate that the carrying value of the goodwill or intangible assets may not be recoverable. The Company evaluates the recoverability of these assets based on the estimated fair value of each of the fifteen reporting units and the indefinite-lived intangible asset. See Note 4 for a further discussion on goodwill and intangible assets.

Borrowing Expenses

Expenses incurred in securing and issuing debt are capitalized and included in Other noncurrent assets. These assets are amortized over the life of the related borrowing and the related amortization is included in Interest expense in the Consolidated Statements of Operations.

Earnings per Common Share

Earnings per common share (“EPS”) is computed by dividing net income by the weighted average number of shares of common stock (basic) plus common stock equivalents (diluted) outstanding during the year. Common stock equivalents consist of stock options, which have been included in the calculation of weighted average shares outstanding using the treasury stock method, unvested shares, performance share units, and shares issuable in connection with certain deferred compensation agreements ("DCUs").

ASC 260 concludes that all outstanding unvested share-based payment awards that contain rights to nonforfeitable

dividends participate in undistributed earnings with common shareholders. If awards are considered participating securities, the Company is required to apply the two-class method of computing basic and diluted earnings per share. The Company has determined that its outstanding unvested shares are participating securities. Accordingly, earnings per common share were computed using the two-class method prescribed by ASC 260. Net income attributable to common shareholders was reduced by $1.3 million, $1.2 million and $0.1 million in 2014, 2013 and 2012, respectively.

Basic weighted average shares outstanding reconciles to diluted weighted average shares outstanding as follows:



	2014	2013	2012
	(In thousands)
Basic weighted average common shares outstanding	79,715	81,517	82,689
Dilutive effect of stock options, unvested shares, performance share units and DCUs	1,013	972	952
Diluted weighted average common shares outstanding	80,728	82,489	83,641

Options to purchase approximately 0.5 million, zero and 1.2 million shares of common stock in 2014, 2013 and 2012, respectively, were not included in the computation of diluted EPS because the effect of their inclusion would have been antidilutive.

Share-Based Compensation

The Company accounts for share-based payments in accordance with ASC 718. Accordingly, the Company expenses the fair value of awards made under its share-based compensation plans. That cost is recognized in the consolidated financial statements over the requisite service period of the grants. See Note 13 for further discussion on share-based compensation.

Depreciation and Amortization

Property and equipment are stated at cost, with depreciation and amortization provided using the straight-line method over the following estimated useful lives:



Land improvements	8 to 12 years
Buildings and improvements	8 to 30 years
Machinery, equipment and other	3 to 12 years
Office and transportation equipment	3 to 10 years

Certain identifiable intangible assets are amortized over their estimated useful lives using the straight-line method. The estimated useful lives used in the computation of amortization of identifiable intangible assets are as follows:



Patents	5 to 17 years
Trade names	10 to 20 years
Customer relationships	5 to 20 years
Non-compete agreements	3 years
Unpatented technology and other	5 to 20 years

Research and Development Expenditures

Costs associated with research and development are expensed in the period incurred and are included in Cost of sales within the Consolidated Statements of Operations. Research and development expenses, which include costs associated with developing new products and major improvements to existing products, were $36.8 million, $33.0 million and $36.4 million in 2014, 2013 and 2012, respectively.

Foreign Currency Translation

The functional currency of substantially all operations outside the United States is the respective local currency. Accordingly, those foreign currency balance sheet accounts have been translated using the exchange rates in effect as of the balance sheet date. Income statement amounts have been translated using the average exchange rate for the year. The gains and losses resulting from changes in exchange rates from year to year have been reported in Accumulated other comprehensive loss in the Consolidated Balance Sheets. The foreign currency transaction losses for the period ending December 31, 2014, 2013 and 2012 were $0.9 million, $2.2 million, and $2.3 million, respectively, and are reported within Other (income) expense-net on the Consolidated Statements of Operations.

Income Taxes

Income tax expense includes United States, state, local and international income taxes. Deferred tax assets and liabilities are recognized for the tax consequences of temporary differences between the financial reporting and the tax basis of existing assets and liabilities and for loss carryforwards. The tax rate used to determine the deferred tax assets and liabilities is the enacted tax rate for the year and manner in which the differences are expected to reverse. Valuation allowances are recorded to reduce deferred tax assets to the amount that will more likely than not be realized.

Concentration of Credit Risk

The Company is not dependent on a single customer, the largest of which accounted for less than 2% of net sales for all years presented.

New Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09 which introduces a new five-step revenue recognition model. Under ASU 2014-09, an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires disclosures sufficient to enable users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative disclosures about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. This standard is effective for fiscal years beginning after December 15, 2016, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption. The Company is currently evaluating the impact of the new guidance on our consolidated financial statements and have not yet determined the method by which we will adopt the standard in 2017.

Acquisitions

All of the Company’s acquisitions have been accounted for under ASC 805, Business Combinations. Accordingly, the accounts of the acquired companies, after adjustments to reflect fair values assigned to assets and liabilities, have been included in the consolidated financial statements from their respective dates of acquisition. The results of operations of the acquired companies have been included in the Company’s consolidated results since the date of each acquisition. Supplemental pro forma information has not been provided as the acquisitions did not have a material impact on the Company’s consolidated results of operations individually or in aggregate.

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 has annual revenues of

approximately $15.0 million and operates in our Chemical, Food & Process platform within our Fluid & Metering

Technologies segment. Aegis was acquired for cash consideration of approximately $25 million. The entire purchase price was

funded with borrowings under the Company's Revolving Facility. Goodwill and intangible assets recognized as part of this

transaction were $7.7 million and $8.8 million, respectively. The $7.7 million of goodwill is deductible for tax purposes.

The purchase price for Aegis has been allocated to the assets acquired and liabilities assumed based on estimated fair values at the date of the acquisition.

The allocation of the acquisition costs to the assets acquired and liabilities assumed, based on their estimated fair values, is as follows:



(In thousands)
Accounts receivable	$	1,147
Inventory	6,230
Other current assets, net of cash acquired	232
Property, plant and equipment	2,988
Goodwill	7,711
Intangible assets	8,770
Total assets acquired	27,078
Total liabilities assumed	(1,633		)
Net assets acquired	$	25,445

Acquired intangible assets consist of trade names, customer relationships and unpatented technology. The goodwill recorded for the acquisitions reflects the strategic fit and revenue and earnings growth potential of these businesses.

The acquired intangible assets and weighted average amortization periods are as follows:



(In thousands, except weighted average life)	Total		Weighted Average Life
Trade names	$	3,304	15
Customer relationships	4,393		13.5
Unpatented technology	1,073		7.5
Total acquired intangible assets	$	8,770

The Company incurred $1.7 million of acquisition-related transaction costs in 2014. These costs were recorded in selling, general and administrative expense and were related to completed transactions, pending transactions and potential transactions, including transactions that ultimately were not completed. The Company incurred $1.3 million of non-cash acquisition fair value inventory charges in 2014. These charges were recorded in cost of sales.

2013 Acquisitions

On March 18, 2013, the Company acquired the stock of FTL Seals Technology, Ltd (“FTL”). FTL specializes in the design and application of high integrity rotary seals, specialty bearings, and other custom products for the oil & gas, mining, power generation, and marine markets. Located in Leeds, England, FTL, along with Precision Polymer Engineering (“PPE”), operates within the Health & Science Technologies segment as part of the Sealing Solutions group and will expand the range of PPE’s technology expertise and markets served. FTL was acquired for an aggregate purchase price of $34.5 million (£23.1 million) in cash. The entire purchase price was funded with borrowings under the Revolving Facility. Goodwill and intangible assets recognized as part of this transaction were $18.0 million and $13.0 million, respectively. The $18.0 million of goodwill is not deductible for tax purposes.

The purchase price for FTL has been allocated to the assets acquired and liabilities assumed based on estimated fair values at the date of the acquisition.

The allocation of the acquisition costs to the assets acquired and liabilities assumed, based on their estimated fair values, is as follows:



(In thousands)
Accounts receivable	$	3,454
Inventory	4,524
Other current assets, net of cash acquired	131
Property, plant and equipment	1,357
Goodwill	17,994
Intangible assets	13,016
Total assets acquired	40,476
Total liabilities assumed	(5,939		)
Net assets acquired	$	34,537

Acquired intangible assets consist of trade names, non-compete agreements, customer relationships and unpatented technology. The goodwill recorded for the acquisitions reflects the strategic fit and revenue and earnings growth potential of these businesses.

The acquired intangible assets and weighted average amortization periods are as follows:



(In thousands, except weighted average life)	Total		Weighted Average Life
Trade names	$	1,005	15
Non-compete agreements	224		3
Customer relationships	10,950		9
Unpatented technology	837		8
Total acquired intangible assets	$	13,016

The Company incurred $1.4 million of acquisition-related transaction costs in 2013. These costs were recorded in selling, general and administrative expense and were related to completed transactions, pending transactions and potential transactions, including transactions that ultimately were not completed. The Company incurred $1.8 million of non-cash acquisition fair value inventory charges in 2013. These charges were recorded in cost of sales.

2012 Acquisitions

On April 11, 2012, the Company acquired the stock of Precision Photonics Corporation ("PPC"). PPC specializes in optical components and coatings for applications in the fields of scientific research, aerospace, telecommunications and electronics manufacturing. Located in Boulder, Colorado, PPC operates within the Health & Science Technologies segment as a part of the IOP platform. The Company acquired PPC for an aggregate purchase price of $20.6 million in cash, which was funded from operations. Goodwill and intangible assets recognized as part of this transaction were $13.9 million and $5.1 million, respectively. The $13.9 million of goodwill is not deductible for tax purposes.

On April 30, 2012, the Company acquired the stock of ERC. ERC is a leader in the manufacture of gas liquid separations and detection solutions for the life science, analytical instrumentation and clinical chemistry markets. ERC’s pioneering products include in-line membrane vacuum degassing solutions, refractive index detectors and ozone generation systems. ERC’s original equipment degassing solutions are considered the “standard” for many of the world’s leading instrument producers. Located in Kawaguchi, Japan, ERC operates within the Health & Science Technologies segment as part of the Scientific Fluidics platform. The Company acquired ERC for an aggregate purchase price of $18.0 million (¥1.47 billion), consisting of $13.3 million in cash and assumption of approximately $4.7 million of debt. The cash payment was financed with borrowings under the Revolving Facility. Goodwill and intangible assets recognized as part of this transaction were $8.5 million and $5.6 million, respectively. The $8.5 million of goodwill is not deductible for tax purposes.

On July 20, 2012, the Company acquired the stock of Matcon. Matcon is a global leader in material processing solutions for high value powders used in the manufacture of pharmaceuticals, food, plastics, and fine chemicals. Matcon’s innovative products include the original cone valve powder discharge system and filling, mixing and packaging systems, all of which support their customers’ automation and process requirements. Matcon’s products are critical to their customers’ need to maintain clean, reliable and repeatable formulations of prepackaged foods and pharmaceuticals while helping them achieve lean and agile manufacturing. Located in Evesham, Worcestershire, England, Matcon operates within the Health & Science Technologies segment in the MPT platform. The Company acquired Matcon for an aggregate purchase price of $45.8 million (£29.1 million), consisting of $35.0 million in cash, $2.4 million of working capital adjustments paid in the second quarter of 2013, and contingent consideration valued at $8.4 million as of the opening balance sheet date. The contingent consideration amount was based on 2012 and 2013 earnings before interest, income taxes, depreciation and amortization for Matcon. In April 2013, the Company paid $3.8 million on the contingent consideration arrangement based on Matcon's 2012 operating results. In November 2013, the Company paid $1.1 million of the contingent consideration arrangement based on a settlement agreement with the sellers and the remaining amount was recognized as a benefit within Selling, general and administrative expenses.

Approximately $15.0 million of the purchase price cash payment was financed with borrowings under the Revolving Facility. Goodwill and intangible assets recognized as part of this transaction were $28.0 million and $14.1 million, respectively. The $28.0 million of goodwill is not deductible for tax purposes.

The purchase price for PPC, ERC and Matcon were allocated to the assets acquired and liabilities assumed based on estimated fair values at the date of the acquisition.

The allocation of the acquisition costs to the assets acquired and liabilities assumed, based on their estimated fair values, is as follows:



(In thousands)	ERC			PPC			Matcon			Total
Accounts receivable	$	5,766		$	877		$	7,768		$	14,411
Inventory	4,224			932			604			5,760
Other current assets, net of cash acquired	981			252			1,880			3,113
Property, plant and equipment	2,738			1,936			5,695			10,369
Goodwill	8,499			13,941			27,947			50,387
Intangible assets	5,642			5,104			14,081			24,827
Other assets	1,509			13			53			1,575
Total assets acquired	29,359			23,055			58,028			110,442
Total liabilities assumed	(16,074		)	(2,465		)	(12,215		)	(30,754		)
Net assets acquired	$	13,285		$	20,590		$	45,813		$	79,688

The acquired intangible assets and weighted average amortization periods are as follows:



(In thousands, except weighted average life)	Total		Weighted Average Life
Trade names	$	8,973	15
Non-compete agreements	470		3
Customer relationships	11,343		6
Unpatented technology	4,041		8
2012 acquired intangible assets	$	24,827

The Company incurred $2.7 million of acquisition-related transaction costs in 2012. These costs were recorded in selling, general and administrative expense and were related to completed transactions, pending transactions and potential transactions,

including certain transactions that ultimately were not completed. During 2012, the Company recorded $0.9 million of fair value inventory charges associated with these acquisitions, which were recorded in cost of sales.

Balance Sheet Components



	December 31,
	2014		2013
	(In thousands)
RECEIVABLES
Customers	$	260,412	$	255,992
Other	2,589		3,075
Total	263,001		259,067
Less allowance for doubtful accounts	6,961		5,841
Total receivables — net	$	256,040	$	253,226
INVENTORIES
Raw materials and components parts	$	137,584	$	133,470
Work in process	37,178		41,895
Finished goods	62,869		55,602
Total	$	237,631	$	230,967
PROPERTY, PLANT AND EQUIPMENT
Land and improvements	$	31,121	$	32,723
Buildings and improvements	148,749		150,316
Machinery, equipment and other	311,036		300,858
Office and transportation equipment	98,279		95,923
Construction in progress	14,335		9,201
Total	603,520		589,021
Less accumulated depreciation and amortization	383,977		375,533
Total property, plant and equipment — net	$	219,543	$	213,488
ACCRUED EXPENSES
Payroll and related items	$	64,124	$	63,297
Management incentive compensation	21,567		20,949
Income taxes payable	9,305		11,746
Insurance	10,058		7,741
Warranty	7,196		4,888
Deferred revenue	11,813		9,455
Restructuring	6,056		—
Liability for uncertain tax positions	2,084		1,201
Accrued interest	1,738		1,354
Other	29,468		30,120
Total accrued expenses	$	163,409	$	150,751
OTHER NONCURRENT LIABILITIES
Pension and retiree medical obligations	$	90,584	$	67,777
Liability for uncertain tax positions	2,471		4,624
Deferred revenue	4,612		5,578
Other	16,610		15,087
Total other noncurrent liabilities	$	114,277	$	93,066

The following table presents the valuation and qualifying account activity for the years ended December 31, 2014, 2013 and 2012:



	2014			2013			2012
	(In thousands)
ALLOWANCE FOR DOUBTFUL ACCOUNTS (1)
Beginning balance January 1	$	5,841		$	5,596		$	5,860
Charged to costs and expenses, net of recoveries	2,643			2,288			653
Utilization	(1,195		)	(1,921		)	(1,151		)
Currency translation and other	(328		)	(122		)	234
Ending balance December 31	$	6,961		$	5,841		$	5,596


(1)	Includes provision for doubtful accounts, sales returns and sales discounts granted to customers.

Goodwill and Intangible Assets

The changes in the carrying amount of goodwill for 2014 and 2013, by business segment, were as follows:



	Fluid & Metering Technologies			Health & Science Technologies			Fire & Safety/ Diversified Products			Total
	(In thousands)
Goodwill	$	545,046		$	703,024		$	274,288		$	1,522,358
Accumulated goodwill impairment losses	(20,721		)	(149,820		)	(30,090		)	(200,631		)
Balance at January 1, 2013	524,325			553,204			244,198			1,321,727
Acquisitions (Note 2)	—			17,994			—			17,994
Foreign currency translation	3,719			477			5,539			9,735
Balance at December 31, 2013	528,044			571,675			249,737			1,349,456
Acquisitions (Note 2)	7,711			—			—			7,711
Foreign currency translation	(11,606		)	(8,210		)	(16,074		)	(35,890		)
Balance at December 31, 2014	$	524,149		$	563,465		$	233,663		$	1,321,277

ASC 350 requires that goodwill be tested for impairment at the reporting unit level on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying value. Goodwill represents the purchase price in excess of the net amount assigned to assets acquired and liabilities assumed.

Goodwill and other acquired intangible assets with indefinite lives were tested for impairment as of October 31, 2014, the Company's annual impairment date. In assessing the fair value of the reporting units, the Company considers both the market approach and income approach. Under the market approach, the fair value of the reporting unit is based on comparing the reporting unit to comparable publicly traded companies. Under the income approach, the fair value of the reporting unit is based on the present value of estimated future cash flows. The income approach is dependent on a number of significant management assumptions including estimates of operating results, capital expenditures, net working capital requirements, long-term growth rate and discount rates. Weighting was equally attributed to both the market and income approaches (50% each) in arriving at the fair value of the reporting units.

There were no triggering events or changes in circumstances that would have required a review other than as of our annual test date, in 2014 or 2013. Based on the results of our measurement at October 31, 2014, all reporting units had a fair value that was greater than 100% in excess of carrying value, except for our IOP reporting unit, which had a fair value that was greater than 15% in excess of carrying value.

The following table provides the gross carrying value and accumulated amortization for each major class of intangible asset at December 31, 2014 and 2013:



	At December 31, 2014								At December 31, 2013
	Gross Carrying Amount		Accumulated Amortization			Net		Weighted Average Life	Gross Carrying Amount		Accumulated Amortization			Net
			(In thousands)								(In thousands)
Amortizable intangible assets
Patents	$	10,016	$	(5,313	)	$	4,703	11	$	10,673	$	(5,179	)	$	5,494
Trade names	104,118		(32,881		)	71,237		16	104,582		(28,310		)	76,272
Customer relationships	222,486		(126,193		)	96,293		11	242,674		(121,092		)	121,582
Non-compete agreements	840		(636		)	204		3	3,769		(3,272		)	497
Unpatented technology	69,760		(35,165		)	34,595		11	75,528		(32,905		)	42,623
Other	7,034		(5,002		)	2,032		10	6,958		(4,299		)	2,659
Total amortizable intangible assets	414,254		(205,190		)	209,064			444,184		(195,057		)	249,127
Unamortized intangible assets
Banjo trade name	62,100		—			62,100			62,100		—			62,100
Total intangible assets	$	476,354	$	(205,190	)	$	271,164		$	506,284	$	(195,057	)	$	311,227

The unamortized Banjo trade name was determined to be an indefinite lived intangible asset which is tested for impairment on an annual basis in accordance with ASC 350 or more frequently if events or changes in circumstances indicate that the asset might be impaired. The Company uses the relief-from-royalty method, a form of the income approach. The relief-from-royalty method is dependent of a number of significant management assumptions, including estimates of revenues, royalty rates and discount rates.

In 2014 and 2013, there were no triggering events or changes in circumstances that would have required a review other than as of our annual test date. Based on the results of our measurement as of October 31, 2014, the fair value of the Banjo trade name was greater than 40% in excess of carrying value.

Amortization of intangible assets was $43.2 million, $44.3 million and $41.5 million in 2014, 2013 and 2012, respectively. Based on intangible asset balances as of December 31, 2014, amortization expense is expected to approximate $40.4 million in 2015, $38.5 million in 2016, $29.8 million in 2017, $18.9 million in 2018 and $14.9 million in 2019.

Borrowings

Borrowings at December 31, 2014 and 2013 consisted of the following:



	2014		2013
	(In thousands)
Revolving Facility	$	115,000	$	10,000
4.2% Senior Notes, due December 2021	349,351		349,272
4.5% Senior Notes, due December 2020	298,975		298,828
2.58% Senior Euro Notes, due June 2015	98,456		111,505
Other borrowings	2,170		4,271
Total borrowings	863,952		773,876
Less current portion	98,946		1,871
Total long-term borrowings	$	765,006	$	772,005

On June 27, 2011 the Company and certain of its subsidiaries entered into a credit agreement (the “Credit Agreement”), as borrowers with Bank of America, N.A., as administrative agent, swing line lender and an issuer of letters of credit, and other

lenders party thereto which provided for a new revolving credit facility (the “Revolving Facility”). The Revolving Facility replaced the Company’s previous $600.0 million credit facility, which expired in December 2011.

The Revolving Facility is in an aggregate principal amount of $700.0 million 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. Additionally, up to $25.0 million of the Revolving Facility is available to the Company for swing line loans, available on a same-day basis.

Proceeds of the Revolving Facility are available for working capital and other general corporate purposes, including refinancing existing debt of the Company and its subsidiaries. The Company may request increases in the lending commitments under the Credit Agreement, but the aggregate lending commitments may not exceed $950.0 million. The Company has the right, subject to certain conditions set forth in the Credit Agreement, to designate certain foreign subsidiaries of the Company as borrowers under the Credit Agreement. In connection with any such designation, the Company is required to guarantee the obligations of any such subsidiaries under the Credit Agreement. Under the Credit Agreement, Fast & Fluid Management Europe B.V., (“FME”) and IDEX UK Ltd. (“IDEX UK”) were approved by the lenders as designated borrowers. At December 31, 2014, FME and IDEX UK had no borrowings under the Revolving Facility.

Borrowings under the Revolving Facility bear interest, at either an alternate base rate or an adjusted LIBOR rate plus, in each case, an applicable margin. Such applicable margin is based on the Company’s senior, unsecured, long-term debt rating and can range from .875% to 1.70%. Based on the Company’s credit rating at December 31, 2014, 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.

The Credit Agreement contains affirmative and negative covenants that the Company believes are usual and customary for senior unsecured credit agreements, including a financial covenant requiring a maximum leverage ratio of a 3.25 to 1.0, which is the ratio of the Company’s consolidated total debt to its consolidated EBITDA, each as defined in the Credit Agreement.

The Credit Agreement also contains customary events of default (subject to grace periods, as appropriate) including among others: nonpayment of principal, interest or fees; breach of the representations or warranties in any material respect; breach of the financial, affirmative or negative covenants; payment default on, or acceleration of, other material indebtedness; bankruptcy or insolvency; material judgments entered against the Company or any of its subsidiaries; certain specified events under the Employee Retirement Income Security Act of 1974, as amended; certain changes in control of the Company; and the invalidity or unenforceability of the Credit Agreement or other documents associated with the Credit Agreement.

At December 31, 2014, $115.0 million was outstanding under the Revolving Facility, with $7.4 million of outstanding letters of credit, resulting in net available borrowing capacity under the Revolving Facility at December 31, 2014 of approximately $577.6 million.

On June 9, 2010 the Company completed a private placement of €81.0 million aggregate principal amount of 2.58% Series 2010 Senior Euro Notes due June 9, 2015 (“2.58% Senior Euro Notes”) pursuant to a Master Note Purchase Agreement, dated June 9, 2010 (the “Purchase Agreement”). The Purchase Agreement provides for the issuance of additional series of notes in the future, provided that the aggregate principal amount outstanding under the agreement at any time does not exceed $750.0 million. The 2.58% Senior Euro Notes bear interest at a rate of 2.58% per annum, which is payable semi-annually in arrears on each June 9th and December 9th and will mature on June 9, 2015. The 2.58% Senior Euro Notes are unsecured obligations of the Company and rank pari passu in right of payment with all of the Company’s other senior debt. The Company may at any time prepay all or any portion of the 2.58% Senior Euro Notes; provided that any such portion is greater than 5% of the aggregate principal amount of Notes then outstanding under the Purchase Agreement. In the event of a prepayment, the Company would be required to pay an amount equal to par plus accrued interest plus a make-whole premium. The Purchase Agreement contains certain covenants that restrict the Company’s ability to, among other things, transfer or sell assets, create liens and engage in certain mergers or consolidations. In addition, the Company must comply with a leverage ratio and interest coverage ratio as set forth in the Purchase Agreement. The Purchase Agreement provides for customary events of default. In the case of an event of default arising from specified events of bankruptcy or insolvency, all outstanding 2.58% Senior Euro Notes will become due and payable immediately without further action or notice. In the case of payment events of defaults, any holder of the 2.58% Senior Euro Notes affected thereby may declare all the 2.58% Senior Euro Notes held by it due and payable immediately. In the case of any other event of default, a majority of the holders of the 2.58% Senior Euro Notes may declare all the 2.58% Senior Euro Notes to be due and payable immediately.

As of December 31, 2014 the Company included the outstanding balance of the 2.58% Senior Euro Notes, $98.5 million, within Current liabilities on the Consolidated Balance Sheet as the maturity date is within twelve months and the Company expects to repay the principal balance using cash on the balance sheet.

On December 6, 2010 the Company completed a public offering of $300.0 million 4.5% senior notes due December 15, 2020 (“4.5% Senior Notes”). The net proceeds from the offering of $295.7 million, after deducting a $1.6 million issuance discount, a $1.9 million underwriting commission and $0.8 million offering expenses, were used to repay $250.0 million of outstanding bank indebtedness, with the balance used for general corporate purposes. The 4.5% Senior Notes bear interest at a rate of 4.5% per annum, which is payable semi-annually in arrears on each June 15th and December 15th. The Company may redeem all or a portion of the 4.5% Senior Notes at any time prior to maturity at the redemption prices set forth in the Note Indenture governing the 4.5% Senior Notes. The Company may issue additional debt from time to time pursuant to the Indenture. The Indenture and 4.5% Senior Notes contain covenants that limit the Company’s ability to, among other things, incur certain liens securing indebtedness, engage in certain sale-leaseback transactions, and enter into certain consolidations, mergers, conveyances, transfers or leases of all or substantially all the Company’s assets. The terms of the 4.5% Senior Notes also require the Company to make an offer to repurchase the 4.5% Senior Notes upon a change of control triggering event (as defined in the Indenture) at a price equal to 101% of their principal amount plus accrued and unpaid interest, if any.

On December 9, 2011 the Company completed a public offering of $350.0 million 4.2% senior notes due December 15, 2021 (“4.2% Senior Notes”). The net proceeds from the offering of $346.2 million, after deducting a $0.9 million issuance discount, a $2.3 million underwriting commission and $0.6 million offering expenses, were used to repay $306.0 million of outstanding bank indebtedness, with the balance used for general corporate purposes. The 4.2% Senior Notes bear interest at a rate of 4.2% per annum, which is payable semi-annually in arrears on each June 15th and December 15th. The Company may redeem all or a portion of the 4.2% Senior Notes at any time prior to maturity at the redemption prices set forth in the Note Indenture governing the 4.2% Senior Notes. The Company may issue additional debt from time to time pursuant to the Indenture. The Indenture and 4.2% Senior Notes contain covenants that limit the Company’s ability to, among other things, incur certain liens securing indebtedness, engage in certain sale-leaseback transactions, and enter into certain consolidations, mergers, conveyances, transfers or leases of all or substantially all the Company’s assets. The terms of the 4.2% Senior Notes also require the Company to make an offer to repurchase the 4.2% Senior Notes upon a change of control triggering event (as defined in the Indenture) at a price equal to 101% of their principal amount plus accrued and unpaid interest, if any.

Other borrowings of $2.2 million at December 31, 2014 consisted primarily of debt at international locations maintained for working capital purposes. Interest is payable on the outstanding debt balances at the international locations at rates ranging from 0.2% to 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 coverage ratio of 3.0 to 1 and a maximum leverage ratio of 3.25 to 1. At December 31, 2014 the Company was in compliance with both of these financial covenants. There are no financial covenants relating to the 4.5% Senior Notes or 4.2% Senior Notes; however, both are subject to cross-default provisions.

Total borrowings at December 31, 2014 have scheduled maturities as follows:



(In thousands)
2015	$	98,946
2016	115,522
2017	1,056
2018	102
2019	—
Thereafter	648,326
Total borrowings	$	863,952

Derivative Instruments

The Company enters into cash flow hedges 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. 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.

On April 15, 2010 the Company entered into a forward starting interest rate contract with a notional amount of $300.0 million with a settlement date in December 2010. This contract was entered into in anticipation of the issuance of the 4.5% Senior Notes and was designed to lock in the market interest rate as of April 15, 2010. In December 2010, the Company settled and paid this interest rate contract for $31.0 million. The $31.0 million is being amortized into interest expense over the 10 year term of the 4.5% Senior Notes, which results in an effective interest rate of 5.8%.

On July 12, 2011 the Company entered into a forward starting interest rate contract with a notional amount of $350.0 million and a settlement date of September 30, 2011. This contract was entered into in anticipation of the issuance of the 4.2% Senior Notes and was designed to lock in the market interest rate as of July 12, 2011. On September 29, 2011, the Company settled this interest rate contract for $34.7 million with a payment made on October 3, 2011. Simultaneously, the Company entered into a separate interest rate contract with a notional amount of $350.0 million and a settlement date of February 28, 2012. The contract was entered into in anticipation of the expected issuance of the 4.2% Senior Notes and was designed to maintain the market rate as of July 12, 2011. In December 2011, the Company settled and paid the September interest rate contract for $4.0 million, resulting in a total settlement of $38.7 million. Of the $38.7 million, $0.8 million was recognized as other expense in 2011 and the balance of $37.9 million is being amortized into interest expense over the 10 year term of the 4.2% Senior Notes, which results in an effective interest rate of 5.3%.

As of December 31, 2014 and 2013 the Company did not have any interest rate or foreign exchange contracts outstanding.

The following table summarizes the gain (loss) recognized and the amounts and location of income (expense) and gain (loss) reclassified into income for interest rate contracts and foreign currency contracts for the years ended December 31, 2014, 2013 and 2012:



	Loss Recognized in Other Comprehensive Income						Income (Expense) and Gain (Loss) Reclassified into Income									Income Statement Caption
	Twelve Months Ended December 31,
	2014		2013		2012		2014			2013			2012
	(In thousands)
Interest rate agreements	$	—	$	—	$	—	$	(7,223	)	$	(7,430	)	$	(7,637	)	Interest expense

Approximately $7.0 million of the pre-tax amount included in accumulated other comprehensive loss in shareholders’ equity at December 31, 2014 will be recognized to net income over the next 12 months as the underlying hedged transactions are realized.

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 (liabilities) at fair value on a recurring basis in the balance sheet at December 31, 2014 and 2013:



	Basis of Fair Value Measurements
	Balance at December 31, 2014		Level 1		Level 2		Level 3
	(In thousands)
Money market investments	$	21,094	$	21,094	$	—	$	—
Available for sale securities	4,513		4,513		—		—



	Balance at December 31, 2013		Level 1		Level 2		Level 3
	(In thousands)
Money market investments	$	27,871	$	27,871	$	—	$	—
Available for sale securities	3,255		3,255		—		—

There were no transfers of assets or liabilities between Level 1 and Level 2 in 2014 or 2013.

The carrying value of our cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximates their fair values because of the short term nature of these instruments. At December 31, 2014, the fair value of 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 $898.7 million compared to the carrying value of $861.8 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.

Commitments and Contingencies

The Company leases certain office facilities, warehouses and data processing equipment under operating leases. Rental expense totaled $19.2 million, $18.9 million and $18.4 million in 2014, 2013 and 2012, respectively.

The aggregate future minimum lease payments for operating and capital leases as of December 31, 2014 were as follows:



	Operating		Capital
	(In thousands)
2015	$	16,206	$	499
2016	11,534		536
2017	8,168		1,058
2018	6,100		102
2019	3,481		—
2020 and thereafter	7,005		—
	$	52,494	$	2,195

Warranty costs are provided for at the time of sale. The warranty provision is based on historical costs and adjusted for specific known claims. A rollforward of the warranty reserve is as follows:



	2014			2013			2012
	(In thousands)
Beginning balance January 1	$	4,888		$	4,875		$	4,417
Provision for warranties	6,220			3,845			5,398
Claim settlements	(3,823		)	(3,865		)	(5,214		)
Other adjustments, including acquisitions and currency translation	(89		)	33			274
Ending balance December 31	$	7,196		$	4,888		$	4,875

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

Common and Preferred Stock

On November 6, 2014 the Company’s Board of Directors approved an increase in the authorized level for repurchases of common stock by $400.0 million. Repurchases under the program will be funded with future cash flow generation and cash available under the Revolving Facility. During 2014 the Company purchased a total of 3.0 million shares at a cost of $222.5 million compared to 2.9 million shares purchased at a cost of $167.5 million in 2013. As of December 31, 2014, there was $545 million of repurchase authorization remaining.

At December 31, 2014 and 2013 the Company had 150 million shares of authorized common stock, with a par value of $.01 per share and five million shares of authorized preferred stock with a par value of $.01 per share. No preferred stock was issued as of December 31, 2014 and 2013.

Income Taxes

Pretax income for 2014, 2013 and 2012 was taxed in the following jurisdictions:



	2014		2013		2012
	(In thousands)
Domestic	$	275,334	$	233,530	$	65,738
Foreign	117,106		119,599		20,466
Total	$	392,440	$	353,129	$	86,204

The provision (benefit) for income taxes for 2014, 2013 and 2012, was as follows:



	2014			2013			2012
	(In thousands)
Current
U.S.	$	77,454		$	59,707		$	59,811
State and local	7,133			8,123			5,764
Foreign	37,060			33,240			20,228
Total current	121,647			101,070			85,803
Deferred
U.S.	(3,176		)	1,500			(31,246		)
State and local	(1,708		)	(55		)	(2,377		)
Foreign	(3,709		)	(4,601		)	(3,606		)
Total deferred	(8,593		)	(3,156		)	(37,229		)
Total provision for income taxes	$	113,054		$	97,914		$	48,574

Deferred tax assets (liabilities) at December 31, 2014 and 2013 were:



	2014			2013
	(In thousands)
Employee and retiree benefit plans	$	38,871		$	27,361
Depreciation and amortization	(172,766		)	(175,894		)
Inventories	11,229			9,627
Allowances and accruals	14,552			9,632
Interest rate exchange agreement	15,448			18,165
Other	4,626			4,636
Total	$	(88,040	)	$	(106,473	)

The deferred tax assets and liabilities recognized in the Company’s Consolidated Balance Sheets as of December 31, 2014 and 2013 were:



	2014			2013
	(In thousands)
Deferred tax asset — other current assets	$	39,305		$	34,151
Deferred tax asset — other noncurrent assets	3,080			4,284
Total deferred tax assets	42,385			38,435
Deferred tax liability — accrued expenses	(57		)	—
Noncurrent deferred tax liability — deferred income taxes	(130,368		)	(144,908		)
Total deferred tax liabilities	(130,425		)	(144,908		)
Net deferred tax liabilities	$	(88,040	)	$	(106,473	)

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 2014, 2013 and 2012 are shown in the following table:



	2014			2013			2012
	(In thousands)
Pretax income	$	392,440		$	353,129		$	86,204
Provision for income taxes
Computed amount at statutory rate of 35%	$	137,354		$	123,595		$	30,171
State and local income tax (net of federal tax benefit)	4,875			4,382			2,406
Taxes on non-U.S. earnings-net of foreign tax credits	(9,378		)	(9,683		)	1,189
Effect of flow-through entities	(9,018		)	(7,267		)	(7,846		)
Goodwill and intangible asset impairments	—			—			28,524
U.S. business tax credits	(1,680		)	(1,516		)	—
Domestic activities production deduction	(7,489		)	(6,217		)	(5,267		)
Other	(1,610		)	(5,380		)	(603		)
Total provision for income taxes	$	113,054		$	97,914		$	48,574

The Company has $683 million and $597 million of undistributed earnings of non-U.S. subsidiaries as of December 31, 2014 and 2013, respectively. No deferred U.S. income taxes have been provided on these earnings as they are considered to be reinvested for an indefinite period of time or will be repatriated when it is tax effective to do so. If these amounts were distributed to the U.S., in the form of dividends or otherwise, the Company would be subject to additional U.S. income taxes, which could be material. Determination of the amount of unrecognized deferred income tax liabilities on these earnings is not practicable because of the complexities with the hypothetical calculation, and the amount of liability, if any, is dependent on

circumstances if and when remittance occurs. During the years ended December 31, 2014 and 2013, the Company repatriated $6.5 million and $11.7 million of foreign earnings, respectively, resulting in $0.2 million of incremental tax benefit and $0.9 million of incremental income tax expense, respectively. The Company did not repatriate any foreign earnings during the year ended December 31, 2012. These repatriations in 2013 and 2014 represent distributions of current year earnings and distributions from liquidating subsidiaries and do not impact our representation that the undistributed earnings are permanently invested.

A reconciliation of the beginning and ending amount of unrecognized tax benefits for 2014, 2013 and 2012 is shown in the following table:



	2014			2013			2012
	(In thousands)
Beginning balance January 1	$	5,124		$	6,506		$	5,548
Gross increases for tax positions of prior years	834			1,357			3,017
Gross decreases for tax positions of prior years	(51		)	(99		)	(98		)
Settlements	(2,057		)	(1,219		)	—
Lapse of statute of limitations	(231		)	(1,421		)	(1,961		)
Ending balance December 31	$	3,619		$	5,124		$	6,506

We recognize interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2014, 2013 and 2012, we had approximately $0.7 million, $0.5 million and $0.7 million, respectively, of accrued interest related to uncertain tax positions. As of December 31, 2014, 2013 and 2012, we had approximately $0.3 million, $0.2 million and $0.5 million, respectively, of accrued penalties related to uncertain tax positions.

The total amount of unrecognized tax benefits that would affect our effective tax rate if recognized is $2.9 million, $4.5 million and $5.8 million as of December 31, 2014, 2013 and 2012, respectively. The tax years 2008-2013 remain open to examination by major taxing jurisdictions. Due to the potential for resolution of federal, state and foreign examinations, and the expiration of various statutes of limitation, it is reasonably possible that the Company’s gross unrecognized tax benefits balance may change within the next 12 months by a range of zero to $2.1 million.

The Company had net operating loss carry forwards related to prior acquisitions for U.S. federal purposes at December 31, 2014 and 2013 of $7.1 and $9.4 million, respectively. For non-U.S. purposes the Company had net operating loss carry forwards at December 31, 2014 and 2013 of $5.0 and $7.0 million, respectively. The federal net operating loss carry forwards are available for use against the Company’s consolidated federal taxable income and expire between 2018 and 2031. The entire balance of the non-U.S. net operating losses is available to be carried forward, with $1.9 million of these losses beginning to expire during the year 2021. The remaining $2.2 million of such losses can be carried forward indefinitely.

At both December 31, 2014 and 2013, the Company had a foreign capital loss carry forward of approximately $1.0 million. The foreign capital loss can be carried forward indefinitely. At both December 31, 2014 and 2013 the Company has a valuation allowance against the deferred tax asset attributable to the foreign capital loss of $0.2 million. At December 31, 2014 and 2013 the Company had state net operating loss and credit carry forwards of approximately $23.7 million and $22.4 million, respectively. If unutilized, the state net operating loss will expire between 2022 and 2034. At December 31, 2014 and 2013 the Company recorded a valuation allowance against the deferred tax asset attributable to the state net operating loss of $0.8 million and $0.7 million, respectively.

Business Segments and Geographic Information

IDEX has three reportable business segments: Fluid & Metering Technologies, Health & Science Technologies and Fire & Safety/Diversified Products.

The Fluid & Metering Technologies segment designs, produces and distributes positive displacement pumps, flow meters, injectors, and other fluid-handling pump modules and systems and provides flow monitoring and other services for the food, chemical, general industrial, water 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, including very high precision, low-flow rate pumping solutions

required in analytical instrumentation, clinical diagnostics and drug discovery, high performance molded and extruded, biocompatible medical devices and implantables, air compressors used in medical, dental and industrial applications, optical components and coatings for applications in the fields of scientific research, defense, biotechnology, aerospace, telecommunications and electronics manufacturing, laboratory and commercial equipment used in the production of micro and nano scale materials, precision photonic solutions used in life sciences, research and defense markets, and precision gear and peristaltic pump technologies that meet exacting original equipment manufacturer specifications. The Fire & Safety/Diversified Products segment produces firefighting pumps and controls, rescue tools, lifting bags and other components and systems for the fire and rescue industry, engineered stainless steel banding and clamping devices used in a variety of industrial and commercial applications, and precision equipment for dispensing, metering and mixing colorants and paints used in a variety of retail and commercial businesses around the world.

Information on the Company’s business segments is presented below based on the nature of products and services offered. The Company evaluates performance based on several factors, of which sales and operating income are the primary financial measures. Intersegment sales are accounted for at fair value as if the sales were to third parties.



	2014			2013			2012
	(In thousands)
NET SALES
Fluid & Metering Technologies
External customers	$	898,530		$	870,720		$	829,320
Intersegment sales	1,058			1,094			3,968
	899,588			871,814			833,288
Health & Science Technologies
External customers	747,186			708,940			689,574
Intersegment sales	4,835			5,710			5,661
Total segment sales	752,021			714,650			695,235
Fire & Safety/Diversified Products
External customers	502,051			444,470			435,364
Intersegment sales	698			579			1,689
Total segment sales	502,749			445,049			437,053
Intersegment eliminations	(6,591		)	(7,383		)	(11,318		)
Total net sales	$	2,147,767		$	2,024,130		$	1,954,258
OPERATING INCOME (LOSS) (1)
Fluid & Metering Technologies (2)	$	216,886		$	211,256		$	146,650
Health & Science Technologies (2)	152,999			136,707			(62,835		)
Fire & Safety/Diversified Products	130,494			102,730			96,120
Corporate office	(69,155		)	(55,180		)	(51,717		)
Total operating income	431,224			395,513			128,218
Interest expense	41,895			42,206			42,250
Other (income) expense - net	(3,111		)	178			(236		)
Income before taxes	$	392,440		$	353,129		$	86,204



	2014		2013		2012
	(In thousands)
ASSETS
Fluid & Metering Technologies	$	1,026,238	$	1,025,352	$	1,023,143
Health & Science Technologies	1,101,155		1,113,546		1,102,868
Fire & Safety/Diversified Products	510,841		484,139		488,886
Corporate office	269,836		264,540		170,493
Total assets	$	2,908,070	$	2,887,577	$	2,785,390
DEPRECIATION AND AMORTIZATION (3)
Fluid & Metering Technologies	$	26,453	$	27,633	$	29,637
Health & Science Technologies	42,478		43,496		39,981
Fire & Safety/Diversified Products	6,583		6,852		7,107
Corporate office and other	1,393		1,353		1,587
Total depreciation and amortization	$	76,907	$	79,334	$	78,312
CAPITAL EXPENDITURES
Fluid & Metering Technologies	$	18,215	$	11,581	$	13,535
Health & Science Technologies	19,161		12,280		13,140
Fire & Safety/Diversified Products	6,761		5,040		6,654
Corporate office and other	3,860		2,635		2,191
Total capital expenditures	$	47,997	$	31,536	$	35,520


(1)	Segment operating income (loss) excludes net unallocated corporate operating expenses.


(2)	Segment operating income (loss) includes asset impairment charges in 2012 of $27.7 million within the Fluid & Metering Technologies segment and $170.8 million within the Health & Science Technologies segment.


(3)	Excludes amortization of debt issuance expenses.

Information about the Company’s operations in different geographical regions for the years ended December 31, 2014, 2013 and 2012 is shown below. Net sales were attributed to geographic areas based on location of the customer and no country outside the U.S. was greater than 10% of total revenues.



	2014		2013		2012
	(In thousands)
NET SALES
U.S.	$	1,068,758	$	983,791	$	963,137
North America, excluding U.S.	95,917		88,213		93,010
Europe	527,975		521,491		479,744
Asia	337,668		306,466		305,185
Other	117,449		124,169		113,182
Total net sales	$	2,147,767	$	2,024,130	$	1,954,258
LONG-LIVED ASSETS — PROPERTY, PLANT AND EQUIPMENT
U.S.	$	139,702	$	124,880	$	127,425
North America, excluding U.S.	814		901		1,239
Europe	54,088		63,018		64,137
Asia	24,912		24,590		26,320
Other	27		99		40
Total long-lived assets — net	$	219,543	$	213,488	$	219,161

Restructuring

During 2014 and 2012 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 are included in Restructuring expenses in the Consolidated Statements of Operations while the related accruals are included in Accrued expenses in the Consolidated Balance Sheets. Severance costs primarily consist of severance benefits through payroll continuation, COBRA subsidies, outplacement services, conditional separation costs and employer tax liabilities, while exit costs primarily consist of asset disposals or impairments and lease exit costs.

2014 Initiative

During 2014 the Company recorded pre-tax restructuring expenses in the fourth quarter totaling $13.7 million related to the 2014 restructuring initiative. These expenses consisted of employee severance related to employee reductions across various functional areas as well as exit costs and asset impairments. The 2014 restructuring initiative included severance benefits for 217 employees. Severance payments are expected to be fully paid by the end of 2015 using cash from operations.

Pre-tax restructuring expenses by segment for 2014 were as follows:



	Severance Costs		Exit Costs and Asset Impairments		Total
	(In thousands)
Fluid & Metering Technologies	$	6,413	$	—	$	6,413
Health & Science Technologies	3,520		1,392		4,912
Fire & Safety/Diversified Products	908		126		1,034
Corporate/Other	1,313		—		1,313
Total restructuring costs	$	12,154	$	1,518	$	13,672

2011 Initiative

During 2012 the Company recorded pre-tax restructuring expenses totaling $32.5 million related to the 2011 restructuring initiative. These expenses consisted of exit costs and employee severance related to employee reductions across various functional areas as well as facility rationalization. The 2011 restructuring initiative included severance benefits for 491 employees in 2012. The 2011 initiative was completed by the end of 2012 and severance payments were fully paid in 2013 using cash from operations.

Pre-tax restructuring expenses by segment, for 2012, were as follows:



	Severance Costs		Exit Costs		Total
	(In thousands)
Fluid & Metering Technologies	$	6,226	$	36	$	6,262
Health & Science Technologies	11,223		3,521		14,744
Fire & Safety/Diversified Products	3,226		5,114		8,340
Corporate/Other	2,844		283		3,127
Total restructuring costs	$	23,519	$	8,954	$	32,473

Restructuring accruals of $6.1 million and zero at December 31, 2014 and 2013, respectively, are reflected in Accrued expenses in our Consolidated Balance Sheets as follows:



	Restructuring Initiatives
	(In thousands)
Balance at January 1, 2013	$	10,887
Restructuring expenses	—
Payments, utilization and other	(10,887		)
Balance at December 31, 2013	—
Restructuring expenses	13,672
Payments, utilization and other	(7,616		)
Balance at December 31, 2014	$	6,056

Share-Based Compensation

The Company maintains two share-based compensation plans for executives, non-employee directors and certain key employees that authorize the granting of stock options, unvested shares, unvested share units, and other types of awards consistent with the purpose of the plans. The number of shares authorized for issuance under the Company’s plans as of December 31, 2014 totals 10.6 million, of which 2.3 million shares were available for future issuance. Stock options granted under these plans are generally non-qualified and are granted with an exercise price equal to the market price of the Company’s stock at the date of grant. The majority of the options issued to employees become exercisable in four equal installments, beginning one year from the date of grant, and generally expire 10 years from the date of grant. Stock options granted to non-employee directors cliff vest after one year. Unvested share and unvested share unit awards generally cliff vest after three years for employees and non-employee directors. The Company issued 0.1 million, 0.2 million and 0.2 million of unvested shares as compensation to key employees in 2014, 2013 and 2012, respectively.

All unvested shares carry dividend and voting rights and the sale of the shares is restricted prior to the date of vesting.

Beginning in 2013 the Company granted performance share units to selected key employees that may be earned based on IDEX total shareholder return over the three-year period following the date of grant. Performance share units (referred to as “TSR awards”) are expected to be made annually and are paid out at the end of a three-year period based on the Company’s performance. Performance is measured by determining the percentile rank of the total shareholder return of IDEX common stock in relation to the total shareholder return of the S&P Midcap 400 Industrial Group for the three-year period following the date of grant. The payment of awards following the three-year award period will be based on performance achieved in accordance with the scale set forth in the plan agreement and may range from 0 percent to 250 percent of the initial grant. A target payout of 100 percent is earned if total shareholder return is equal to the 50th percentile of the S&P Midcap 400 Industrial Group. Performance share units earn dividend equivalents for the award period, which will be paid to participants with the award payout at the end of the period based on the actual number of performance share units that are earned. Payments made at the end of the award period will be in the form of stock for performance share units and will be in cash for dividend equivalents. The Company granted approximately 0.1 million performance share units in both 2014 and 2013.

The Company expenses the fair value of awards made under its share-based plans. That cost is recognized in the consolidated financial statements over the requisite service period of the grants.

Weighted average option fair values and assumptions for the period specified are disclosed in the following table:



	Years Ended December 31,
	2014	2013	2012
Weighted average fair value of grants	$19.52	$12.97	$11.40
Dividend yield	1.27%	1.57%	1.59%
Volatility	30.36%	30.92%	32.00%
Risk-free interest rate	0.12% - 4.65%	0.17% - 4.12%	0.17% - 3.96%
Expected life (in years)	5.89	5.86	5.98

The assumptions are as follows:


•	The Company estimated volatility using its historical share price performance over the contractual term of the option.


•	The Company uses historical data to estimate the expected life of the option. The expected life assumption for the years ended December 31, 2014, 2013 and 2012 is an output of the Binomial lattice option-pricing model, which incorporates vesting provisions, rate of voluntary exercise and rate of post-vesting termination over the contractual life of the option to define expected employee behavior.


•	The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods within the contractual life of the option. For the years ended December 31, 2014, 2013 and 2012, we present the range of risk-free one-year forward rates, derived from the U.S. treasury yield curve, utilized in the Binomial lattice option-pricing model.


•	The expected dividend yield is based on the Company’s current dividend yield as the best estimate of projected dividend yield for periods within the contractual life of the option.

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.

Weighted average performance share unit fair values and assumptions for the period specified are disclosed in the following table:



	Years Ended December 31,
	2014	2013
Weighted average fair value of grants	$94.55	$59.58
Dividend yield	—%	—%
Volatility	26.41%	28.99%
Risk-free interest rate	0.65%	0.40%
Expected life (in years)	2.88	2.87

The assumptions are as follows:


•	The Company estimated volatility using its historical share price performance over the remaining performance period as of the grant date.


•	Since Monte Carlo valuation is an open form model that uses an expected life commensurate with the performance period, the expected life of the performance share units was assumed to be the period from the grant date to the end of the performance period.


•	The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant with a term commensurate with the remaining performance period.


•	Total Shareholder Return is determined assuming that dividends are reinvested in the issuing entity over the performance period, which is mathematically equivalent to utilizing a 0% dividend yield.

Total compensation cost for stock options is as follows:



	Years Ended December 31,
	2014			2013			2012
	(In thousands)
Cost of goods sold	$	581		$	479		$	650
Selling, general and administrative expenses	6,245			5,789			5,642
Total expense before income taxes	6,826			6,268			6,292
Income tax benefit	(2,194		)	(2,016		)	(1,988		)
Total expense after income taxes	$	4,632		$	4,252		$	4,304

Total compensation cost for unvested shares is as follows:



	Years Ended December 31,
	2014			2013			2012
	(In thousands)
Cost of goods sold	$	1,753		$	1,380		$	991
Selling, general and administrative expenses	8,917			8,471			5,819
Total expense before income taxes	10,670			9,851			6,810
Income tax benefit	(2,233		)	(2,296		)	(1,682		)
Total expense after income taxes	$	8,437		$	7,555		$	5,128

Total compensation cost for performance share units is as follows:



	Years Ended December 31,
	2014			2013
	(In thousands)
Cost of goods sold	$	—		$	—
Selling, general and administrative expenses	3,220			873
Total expense before income taxes	3,220			873
Income tax benefit	(1,081		)	(280		)
Total expense after income taxes	$	2,139		$	593

Recognition of compensation cost was consistent with recognition of cash compensation for the same employees.

As of December 31, 2014 there was $9.9 million, $9.4 million and $5.4 million of total unrecognized compensation cost related to stock options, time based shares and performance shares, respectively, that is expected to be recognized over a weighted-average period of 1.4 years, 1.0 year and 1.0 year, respectively.

A summary of the Company’s stock option activity as of December 31, 2014, and changes during the year ended December 31, 2014 is presented in the following table:



Stock Options	Shares		Weighted Average Price		Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at January 1, 2014	2,516,618		$	39.60	6.87	$	86,200,655
Granted	514,905		72.77
Exercised	(489,047	)	34.59
Forfeited	(163,917	)	52.59
Outstanding at December 31, 2014	2,378,559		$	46.91	6.69	$	73,561,785
Vested and expected to vest at December 31, 2014	2,279,445		$	46.24	6.60	$	72,026,247
Exercisable at December 31, 2014	1,157,805		$	36.70	5.17	$	47,631,234

The intrinsic value for stock options outstanding and exercisable is defined as the difference between the market value of the Company’s common stock as of the end of the period and the grant price. The total intrinsic value of options exercised in 2014, 2013 and 2012, was $20.0 million, $34.3 million and $23.5 million, respectively. In 2014, 2013 and 2012, cash received from options exercised was $17.2 million, $35.3 million and $45.8 million, respectively, while the actual tax benefit realized for the tax deductions from stock options exercised totaled $7.3 million, $12.5 million and $8.6 million, respectively.

A summary of the Company’s unvested share activity as of December 31, 2014, and changes during the year ending December 31, 2014 is presented in the following table:



Unvested Shares	Shares		Weighted-Average Grant Date Fair Value
Unvested at January 1, 2014	618,679		$	50.33
Granted	146,360		74.10
Vested	(215,576	)	45.10
Forfeited	(70,799	)	57.83
Unvested at December 31, 2014	478,664		$	59.71

Unvested share grants accrue dividends and their fair value is equal to the market price of the Company’s stock at the date of the grant.

A summary of the Company's performance share unit activity as of December 31, 2014, and changes during the year ending December 31, 2014 is presented in the following table:



Performance Share Units	Shares		Weighted-Average Grant Date Fair Value
Unvested at January 1, 2014	53,205		$	59.98
Granted	91,030		94.55
Vested	—		—
Forfeited	(8,695	)	78.26
Unvested at December 31, 2014	135,540		$	81.87

The Company also maintains a cash-settled share based compensation plan for certain employees. Total expense related to this plan, included in the unvested shares table above, was $4.1 million, $3.6 million and $2.3 million in 2014, 2013 and 2012, respectively. At December 31, 2014 and 2013, the Company has $3.5 million and $2.0 million, respectively, included in Accrued expenses in the Consolidated Balance Sheets and $2.5 million and $1.0 million, respectively, included in Other non-current liabilities.

Other Comprehensive Income (Loss)

The components of Other comprehensive income (loss) are as follows:



	For the Year Ended December 31, 2014									For the Year Ended December 31, 2013
	Pre-tax			Tax			Net of tax			Pre-tax		Tax			Net of tax
	(In thousands)
Cumulative translation adjustment	$	(77,024	)	$	—		$	(77,024	)	$	13,572	$	—		$	13,572
Pension and other postretirement adjustments
Net gain (loss) arising during the year	(26,424		)	7,767			(18,657		)	26,274		(9,859		)	16,415
Amortization/settlement recognition of net loss (gain)	3,113			(915		)	2,198			8,599		(3,226		)	5,373
Pension and other postretirement adjustments, net	(23,311		)	6,852			(16,459		)	34,873		(13,085		)	21,788
Reclassification adjustments for derivatives	7,223			(2,713		)	4,510			7,430		(2,692		)	4,738
Total other comprehensive income (loss)	$	(93,112	)	$	4,139		$	(88,973	)	$	55,875	$	(15,777	)	$	40,098



	For the Year Ended December 31, 2012
	Pre-tax			Tax			Net of tax
	(In thousands)
Cumulative translation adjustment	$	14,445		$	—		$	14,445
Pension and other postretirement adjustments
Net gain (loss) arising during the year	(16,607		)	3,107			(13,500		)
Amortization or settlement recognition of net loss (gain)	7,801			(1,460		)	6,341
Pension and other postretirement adjustments, net	(8,806		)	1,647			(7,159		)
Reclassification adjustments for derivatives	7,571			(2,791		)	4,780
Total other comprehensive income (loss)	$	13,210		$	(1,144	)	$	12,066

Amounts reclassified from accumulated other comprehensive income (loss) to net income are summarized as follows:



	For the Years Ended December 31,
	2014			2013			2012			Income Statement Caption
Pension and other postretirement plans:
Amortization of service cost	$	3,113		$	8,599		$	7,801		Selling, general and administrative expense
Total before tax	3,113			8,599			7,801
Provision for income taxes	(915		)	(3,226		)	(1,460		)
Total net of tax	$	2,198		$	5,373		$	6,341
Derivatives:
Reclassification adjustments	$	7,223		$	7,430		$	7,571		Interest expense
Total before tax	7,223			7,430			7,571
Provision for income taxes	(2,713		)	(2,692		)	(2,791		)
Total net of tax	$	4,510		$	4,738		$	4,780

Retirement Benefits

The Company sponsors several qualified and nonqualified pension plans and other postretirement plans for its employees. The Company uses a measurement date of December 31 for its defined benefit pension plans and post retirement medical plans. The Company employs the measurement date provisions of ASC 715, “Compensation-Retirement Benefits”, which require the measurement date of plan assets and liabilities to coincide with the sponsor’s year end.

The following table provides a reconciliation of the changes in the benefit obligations and fair value of plan assets over the two-year period ended December 31, 2014, and a statement of the funded status at December 31 for both years.



	Pension Benefits												Other Benefits
	2014						2013						2014			2013
	U.S.			Non-U.S.			U.S.			Non-U.S.
	(In thousands)
CHANGE IN BENEFIT OBLIGATION
Obligation at January 1	$	92,839		$	60,471		$	111,188		$	56,555		$	21,354		$	25,587
Service cost	1,162			1,331			1,526			1,388			714			968
Interest cost	4,037			2,345			3,766			2,146			932			906
Plan amendments	—			(150		)	—			—			—			—
Benefits paid	(6,230		)	(2,955		)	(2,479		)	(1,957		)	(691		)	(801		)
Actuarial loss (gain)	10,540			15,092			(11,885		)	581			728			(5,139		)
Currency translation	—			(6,646		)	—			1,758			(182		)	(167		)
Curtailments/settlements	(36		)	—			(9,277		)	—			—			—
Acquisition	—			—			—			—			—			—
Obligation at December 31	$	102,312		$	69,488		$	92,839		$	60,471		$	22,855		$	21,354
CHANGE IN PLAN ASSETS
Fair value of plan assets at January 1	$	81,957		$	22,334		$	74,578		$	19,660		$	—		$	—
Actual return on plan assets	2,385			1,738			14,303			2,341			—			—
Employer contributions	1,611			2,424			4,832			1,840			691			801
Benefits paid	(6,230		)	(2,955		)	(2,479		)	(1,957		)	(691		)	(801		)
Currency translation	—			(1,389		)	—			447			—			—
Settlements	(36		)	—			(9,277		)	3			—			—
Other	—			—			—			—			—			—
Fair value of plan assets at December 31	$	79,687		$	22,152		$	81,957		$	22,334		$	—		$	—
Funded status at December 31	$	(22,625	)	$	(47,336	)	$	(10,882	)	$	(38,138	)	$	(22,855	)	$	(21,354	)
COMPONENTS ON THE CONSOLIDATED BALANCE SHEETS
Current liabilities	$	(522	)	$	(805	)	$	(656	)	$	(995	)	$	(905	)	$	(946	)
Other noncurrent liabilities	(22,103		)	(46,531		)	(10,226		)	(37,143		)	(21,950		)	(20,408		)
Net liability at December 31	$	(22,625	)	$	(47,336	)	$	(10,882	)	$	(38,138	)	$	(22,855	)	$	(21,354	)

The accumulated benefit obligation (ABO) for all defined benefit pension plans was $163.3 million and $143.5 million at December 31, 2014 and 2013, respectively.

The weighted average assumptions used in the measurement of the Company’s benefit obligation at December 31, 2014 and 2013 were as follows:



	U.S. Plans				Non-U.S. Plans
	2014		2013		2014		2013
Discount rate	3.78	%	4.61	%	2.66	%	4.03	%
Rate of compensation increase	4.00	%	4.00	%	3.00	%	3.14	%

The pretax amounts recognized in Accumulated other comprehensive income (loss) as of December 31, 2014 and 2013 were as follows:



	Pension Benefits									Other Benefits
	2014					2013				2014			2013
	U.S.		Non-U.S.			U.S.		Non-U.S
	(In thousands)
Prior service cost (credit)	$	86	$	(40	)	$	170	$	312	$	(1,580	)	$	(1,951	)
Net loss	34,337		25,275			22,854		14,262		655			(225		)
Total	$	34,423	$	25,235		$	23,024	$	14,574	$	(925	)	$	(2,176	)

The amounts in Accumulated other comprehensive income (loss) as of December 31, 2014, that are expected to be recognized as components of net periodic benefit cost during 2015 are as follows:



	U.S. Pension Benefit Plans		Non-U.S. Pension Benefit Plans			Other Benefit Plans			Total
	(In thousands)
Prior service cost (credit)	$	51	$	(14	)	$	(366	)	$	(329	)
Net loss	3,130		1,904			(50		)	4,984
Total	$	3,181	$	1,890		$	(416	)	$	4,655

The following tables provide the components of, and the weighted average assumptions used to determine, the net periodic benefit cost for the plans in 2014, 2013 and 2012:



	Pension Benefits
	2014						2013						2012
	U.S.			Non-U.S.			U.S.			Non-U.S.			U.S.			Non-U.S.
	(In thousands)
Service cost	$	1,162		$	1,331		$	1,526		$	1,388		$	1,756		$	1,300
Interest cost	4,037			2,345			3,766			2,146			4,247			2,206
Expected return on plan assets	(5,430		)	(1,297		)	(5,318		)	(1,055		)	(4,687		)	(1,035		)
Net amortization	2,187			1,400			7,621			955			5,376			589
Net periodic benefit cost	$	1,956		$	3,779		$	7,595		$	3,434		$	6,692		$	3,060



	Other Benefits
	2014			2013		2012
	(In thousands)
Service cost	$	714		$	968	$	763
Interest cost	932			906		922
Net amortization	(474		)	24		11
Net periodic benefit cost	$	1,172		$	1,898	$	1,696



	U.S. Plans						Non-U.S. Plans
	2014		2013		2012		2014		2013		2012
Discount rate	4.61	%	3.56	%	4.45	%	4.03	%	3.91	%	4.68	%
Expected return on plan assets	7.00	%	7.50	%	8.00	%	5.83	%	5.53	%	5.90	%
Rate of compensation increase	4.00	%	3.94	%	3.90	%	3.14	%	2.99	%	2.96	%

The following table provides the pretax change recognized in Accumulated other comprehensive income (loss) in 2014:



	Pension Benefits
	U.S.			Non-U.S.			Other Benefits
	(In thousands)
Net loss in current year	$	(13,585	)	$	(14,650	)	$	(730	)
Prior service cost	—			150			—
Amortization of prior service cost (credit)	84			188			(371		)
Amortization of net loss	2,102			1,212			(103		)
Exchange rate effect on amounts in OCI	—			2,439			(47		)
Total	$	(11,399	)	$	(10,661	)	$	(1,251	)

The discount rates for our plans are derived by matching the plan’s cash flows to a yield curve that provides the equivalent yields on zero-coupon bonds for each maturity. The discount rate selected is the rate that produces the same present value of cash flows.

In selecting the expected rate of return on plan assets, the Company considers the historical returns and expected returns on plan assets. The expected returns are evaluated using asset return class, variance and correlation assumptions based on the plan’s target asset allocation and current market conditions.

Mortality assumptions are used to estimate life expectancies of plan participants. In October 2014, the Society of Actuaries ("SOA") issued updated mortality tables (RP-2014) and a mortality improvement scale (MP-2014), which reflects longer life expectancies than previously projected. In consideration of this information, we studied our historical mortality experience and developed an expectation for continued future mortality improvements. Based on this data and the RP-2014 tables, we updated the mortality assumptions used in calculating our pension and post-retirement benefit obligations recognized at December 31, 2014, and the amounts estimated for our 2015 expense. Our updated mortality assumptions resulted in an increase of $4.9 million in our pension and post-retirement benefit obligations as of December 31, 2014.

Prior service costs are amortized on a straight-line basis over the average remaining service period of active participants. Gains and losses in excess of 10% of the greater of the benefit obligation or the market value of assets are amortized over the average remaining service period of active participants.

Costs of defined contribution plans were $9.1 million, $8.4 million and $7.9 million for 2014, 2013 and 2012, respectively.

The Company, through its subsidiaries, participates in certain multi-employer pension plans covering approximately 395 participants under U.S. collective bargaining agreements. None of these plans are considered individually significant to the Company as contributions to these plans totaled $1.0 million, $1.1 million, and $1.0 million for 2014, 2013 and 2012, respectively.

For measurement purposes, a 7.12% weighted average annual rate of increase in the per capita cost of covered health care benefits was assumed for 2014. The rate was assumed to decrease gradually each year to a rate of 4.50% for 2027, and remain at that level thereafter. Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A 1% increase in the assumed health care cost trend rates would increase the service and interest cost components of the net periodic benefit cost by $0.1 million and the health care component of the accumulated postretirement benefit obligation by $1.6 million. A 1% decrease in the assumed health care cost trend rate would decrease the service and interest cost components of the net periodic benefit cost by $0.1 million and the health care component of the accumulated postretirement benefit obligation by $1.4 million.

Plan Assets

The Company’s pension plan weighted average asset allocations at December 31, 2014 and 2013, by asset category, were as follows:



	2014		2013
Equity securities	51	%	66	%
Fixed income securities	49	%	34	%
Total	100	%	100	%

The following tables summarize the basis used to measure the defined benefit plans’ assets at fair value at December 31, 2014 and 2013:



	Basis of Fair Value Measurement
	Outstanding Balances		Level 1		Level 2		Level 3
As of December 31, 2014	(In thousands)
Equity
U.S. Large Cap	$	26,787	$	26,787	$	—	$	—
U.S. Small / Mid Cap	7,950		7,950		—		—
International	14,797		8,275		6,522		—
Fixed Income
U.S. Intermediate	14,906		14,906		—		—
U.S. Short Duration	8,817		8,817		—		—
U.S. High Yield	5,270		5,270		—		—
International	20,776		6,679		14,097		—
Other
Insurance Contracts	284		—		284		—
Cash and Equivalents	2,329		2,329		—		—
	$	101,916	$	81,013	$	20,903	$	—



	Basis of Fair Value Measurement
	Outstanding Balances		Level 1		Level 2		Level 3
As of December 31, 2013	(In thousands)
Equity
U.S. Large Cap	$	31,831	$	31,831	$	—	$	—
U.S. Small / Mid Cap	8,783		8,783		—		—
International	25,591		25,591		—		—
Fixed Income
U.S. Intermediate	18,715		18,715		—		—
U.S. Short Duration	8,954		8,954		—		—
U.S. High Yield	1,581		1,581		—		—
International	5,812		5,812		—		—
Other
Insurance Contracts	331		—		331		—
Cash and Equivalents	2,693		2,693		—		—
	$	104,291	$	103,960	$	331	$	—

Equities that are valued using quoted prices are valued at the published market prices. Equities in a common collective trust or a registered investment company that are valued using significant other observable inputs are valued at the net asset value (“NAV”) provided by the fund administrator. The NAV is based on the value of the underlying assets owned by the fund minus its liabilities. Fixed income securities that are valued using significant other observable inputs are valued at prices obtained from independent financial service industry-recognized vendors.

Investment Policies and Strategies

The investment objective of the plan, consistent with prudent standards for preservation of capital and maintenance of liquidity, is to earn the highest possible total rate of return consistent with the plan's tolerance for risk. The general asset allocation guidelines for plan assets are that “equities” will constitute from 40% to 60% of the market value of total fund assets with a target of 50%, and “fixed income” obligations, including cash, will constitute from 40% to 60% with a target of 50%. The term “equities” includes common stock, convertible bonds and convertible stock. The term “fixed income” includes preferred stock and/or contractual payments with a specific maturity date. The Company strives to maintain asset allocations within the designated ranges by conducting periodic reviews of fund allocations and plan liquidity needs, and rebalancing the portfolio accordingly. Diversification of assets is employed to ensure that adverse performance of one security or security class does not have an undue detrimental impact on the portfolio as a whole. Diversification is interpreted to include diversification by type, characteristic and number of investments, as well as by investment style of designated investment fund managers. No restrictions are placed on the selection of individual investments by the investment fund managers. The total fund performance and the performance of the investment fund managers is reviewed on a regular basis, using appointed professional independent advisors. As of December 31, 2014 and 2013, there were no shares of the Company’s stock held in plan assets.

Cash Flows

The Company expects to contribute approximately $1.6 million to its defined benefit plans and $0.5 million to its other postretirement benefit plans in 2015. The Company also expects to contribute approximately $9.1 million to its defined contribution plan and $8.0 million to its 401(k) savings plan in 2015.

Estimated Future Benefit Payments

The future estimated benefit payments for the next five years and the five years thereafter are as follows: 2015 — $9.0 million; 2016 — $9.6 million; 2017 — $10.1 million; 2018 — $10.7 million; 2019 — $10.7 million; 2020 to 2025 — $54.0 million.

Quarterly Results of Operations (Unaudited)

The following table summarizes the unaudited quarterly results of operations for the years ended December 31, 2014 and 2013.



	2014 Quarters								2013 Quarters
	First		Second		Third		Fourth		First		Second		Third		Fourth
	(In thousands, except per share amounts)
Net sales	$	543,996	$	546,693	$	533,179	$	523,899	$	494,448	$	518,445	$	490,617	$	520,620
Gross profit	244,420		241,132		234,646		229,117		211,997		222,849		211,509		227,009
Operating income	113,835		112,088		110,847		94,454		94,712		99,559		97,369		103,873
Net income	74,548		71,777		71,441		61,620		61,300		62,561		63,799		67,555
Basic EPS	$	0.92	$	0.89	$	0.89	$	0.78	$	0.74	$	0.76	$	0.78	$	0.83
Diluted EPS	$	0.91	$	0.88	$	0.88	$	0.77	$	0.74	$	0.76	$	0.78	$	0.82
Basic weighted average shares outstanding	80,527		80,106		79,558		78,669		82,197		81,829		81,259		80,782
Diluted weighted average shares outstanding	81,575		81,149		80,561		79,632		83,152		82,734		82,218		81,854

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of IDEX Corporation

We have audited the accompanying consolidated balance sheets of IDEX Corporation and subsidiaries (the “Company”) as of December 31, 2014 and 2013, and the related consolidated statements of operations, comprehensive income, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2014. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the consolidated financial position of IDEX Corporation and subsidiaries as of December 31, 2014 and 2013, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2014, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2014, based on the criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 23, 2015, expressed an unqualified opinion on the Company’s internal control over financial reporting.




	Deloitte & Touche LLP
Chicago, Illinois
February 23, 2015

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of IDEX Corporation

We have audited the internal control over financial reporting of IDEX Corporation and subsidiaries (the “Company”) as of December 31, 2014, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America (“generally accepted accounting principles”). A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2014, based on the criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended December 31, 2014, of the Company and our report dated February 23, 2015, expressed an unqualified opinion on those consolidated financial statements.




	Deloitte & Touche LLP
Chicago, Illinois
February 23, 2015

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Internal control over financial reporting refers to the process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer, and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America, and includes those policies and procedures that:


•	Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;


•	Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and


•	Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk. Management is responsible for establishing and maintaining effective internal control over financial reporting for the Company. Management has used the framework set forth in the report entitled “Internal Control — Integrated Framework” (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission to assess the effectiveness of the Company’s internal control over financial reporting. Management has concluded that the Company’s internal control over financial reporting was effective as of December 31, 2014.

The effectiveness of the Company’s internal control over financial reporting as of December 31, 2014, has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report which appears herein.




	Andrew K. Silvernail
	Chairman of the Board and Chief Executive Officer




	Heath A. Mitts
	Senior Vice President and Chief Financial Officer
Lake Forest, Illinois
February 23, 2015

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