Item 8. Financial Statements and Supplementary Data.

153K characters. Original on sec.gov · Markdown

Item 8. Financial Statements and Supplementary Data.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of IDEX Corporation

We have audited the internal control over financial reporting of IDEX Corporation and subsidiaries (the “Company”) as of December 31, 2015, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. As described in Management’s Report on Internal Control Over Financial Reporting, management excluded from its assessment the internal control over financial reporting at Novotema SpA (Novotema), which was acquired on May 29, 2015, Alfa Valvole S.r.l. (Alfa) which was acquired on June 10, 2015, and CiDRA Precision Services (CiDRA), which was acquired on July 1, 2015. These exclusions constitute 14.1% and 8.5% of net and total assets, respectively, 1.8% of net sales, and 1.0% of net income of the consolidated financial statement amounts as of and for the year ended December 31, 2015. Accordingly, our audit did not include the internal control over financial reporting at Novotema, Alfa, or CiDRA. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

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

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

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

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2015, based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended December 31, 2015, of the Company and our report dated February 19, 2016, expressed an unqualified opinion on those consolidated financial statements and included an explanatory paragraph regarding the Company’s adoption of Accounting Standards Update 2015-17 “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes.”




	Deloitte & Touche LLP
Chicago, Illinois
February 19, 2016

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of IDEX Corporation

We have audited the accompanying consolidated balance sheets of IDEX Corporation and subsidiaries (the "Company") as of December 31, 2015 and 2014, and the related consolidated statements of operations, comprehensive income, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 2015. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the consolidated financial statements based on our audits.

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

In our opinion, such consolidated financial statements present fairly, in all material respects, the consolidated financial position of IDEX Corporation and subsidiaries as of December 31, 2015 and 2014, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2015, in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 1 to the consolidated financial statements, the Company has changed its method of accounting for deferred income taxes in 2015 due to the adoption of Accounting Standards Update 2015-17 “Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes.”

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of December 31, 2015, based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 19, 2016, expressed an unqualified opinion on the Company's internal control over financial reporting.




	Deloitte & Touche LLP
Chicago, Illinois
February 19, 2016

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America, and as defined in Exchange Act Rule 13a-15(f).

Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting.

Management has used the framework set forth in the report entitled “Internal Control — Integrated Framework” (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission to assess the effectiveness of the Company’s internal control over financial reporting. Based on that assessment, management has concluded that the Company’s internal control over financial reporting was effective as of December 31, 2015.

The Company completed the acquisitions of Novotema SpA in May 2015, Alfa Valvole S.r.l. in June 2015 and CiDRA Precision Services in July 2015. Due to the timing of the acquisitions, management has excluded these acquisitions from our evaluation of effectiveness of internal controls over financial reporting. This exclusion represented 1.8% of net sales and 1.0% of net income as well as 14.1% of net assets and 8.5% of total assets for the year ended December 31, 2015. The effectiveness of the Company’s internal control over financial reporting as of December 31, 2015, has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report which appears herein.

IDEX CORPORATION

CONSOLIDATED BALANCE SHEETS



	As of December 31,
	2015			2014
	(In thousands except share and per share amounts)
ASSETS
Current assets
Cash and cash equivalents	$	328,018		$	509,137
Receivables — net	260,000			256,040
Inventories	239,124			237,631
Other current assets	35,542			72,983
Total current assets	862,684			1,075,791
Property, plant and equipment — net	240,945			219,543
Goodwill	1,396,529			1,321,277
Intangible assets — net	287,837			271,164
Other noncurrent assets	17,448			15,688
Total assets	$	2,805,443		$	2,903,463
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Trade accounts payable	$	128,911		$	127,462
Accrued expenses	153,672			163,409
Short-term borrowings	1,087			98,946
Dividends payable	25,927			22,151
Total current liabilities	309,597			411,968
Long-term borrowings	839,707			760,399
Deferred income taxes	110,483			130,368
Other noncurrent liabilities	102,365			114,277
Total liabilities	1,362,152			1,417,012
Commitments and contingencies (Note 8)
Shareholders’ equity
Preferred stock:
Authorized: 5,000,000 shares, $.01 per share par value; Issued: none	—			—
Common stock:
Authorized: 150,000,000 shares, $.01 per share par value; Issued: 90,151,131 shares at December 31, 2015 and 89,761,305 shares at December 31, 2014	902			898
Additional paid-in capital	679,623			647,553
Retained earnings	1,666,680			1,483,821
Treasury stock at cost: 13,616,592 shares at December 31, 2015 and 10,995,361 shares at December 31, 2014	(757,416		)	(553,543		)
Accumulated other comprehensive loss	(146,498		)	(92,278		)
Total shareholders’ equity	1,443,291			1,486,451
Total liabilities and shareholders’ equity	$	2,805,443		$	2,903,463

See Notes to Consolidated Financial Statements.

IDEX CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS



	For the Years Ended December 31,
	2015			2014			2013
	(In thousands except per share amounts)
Net sales	$	2,020,668		$	2,147,767		$	2,024,130
Cost of sales	1,116,353			1,198,452			1,150,766
Gross profit	904,315			949,315			873,364
Selling, general and administrative expenses	479,408			504,419			477,851
Gain on sale of business	(18,070		)	—			—
Restructuring expenses	11,239			13,672			—
Operating income	431,738			431,224			395,513
Other (income) expense — net	(2,243		)	(3,111		)	178
Interest expense	41,636			41,895			42,206
Income before income taxes	392,345			392,440			353,129
Provision for income taxes	109,538			113,054			97,914
Net income	$	282,807		$	279,386		$	255,215
Earnings per common share:
Basic earnings per common share	$	3.65		$	3.48		$	3.11
Diluted earnings per common share	$	3.62		$	3.45		$	3.09
Share data:
Basic weighted average common shares outstanding	77,126			79,715			81,517
Diluted weighted average common shares outstanding	77,972			80,728			82,489

See Notes to Consolidated Financial Statements.

IDEX CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME



	For the Years Ended December 31,
	2015			2014			2013
	(In thousands)
Net income	$	282,807		$	279,386		$	255,215
Other comprehensive income (loss)
Reclassification adjustments for derivatives, net of tax	4,531			4,510			4,738
Pension and other postretirement adjustments, net of tax	9,415			(16,459		)	21,788
Foreign currency translation adjustments
Cumulative translation adjustment	(63,441		)	(77,024		)	13,572
Reclassification of foreign currency translation to earnings upon sale of business	(4,725		)	—			—
Other comprehensive income (loss)	(54,220		)	(88,973		)	40,098
Comprehensive income	$	228,587		$	190,413		$	295,313

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, 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
Net income	—		282,807			—			—			—			—			282,807
Cumulative translation adjustment	—		—			(68,166		)	—			—			—			(68,166		)
Net change in retirement obligations (net of tax of $3,842)	—		—			—			9,415			—			—			9,415
Net change on derivatives designated as cash flow hedges (net of tax of $2,499)	—		—			—			—			4,531			—			4,531
Issuance of 685,501 shares of common stock from issuance of unvested shares, exercise of stock options and deferred compensation plans (net of tax of $3,794)	14,545		—			—			—			—			9,937			24,482
Repurchase of 2,811,002 shares of common stock	—		—			—			—			—			(210,551		)	(210,551		)
Share-based compensation	17,529		—			—			—			—			—			17,529
Unvested shares surrendered for tax withholding	—		—			—			—			—			(3,259		)	(3,259		)
Cash dividends declared — $1.28 per common share outstanding	—		(99,948		)	—			—			—			—			(99,948		)
Balance, December 31, 2015	$	680,525	$	1,666,680		$	(92,979	)	$	(30,901	)	$	(22,618	)	$	(757,416	)	$	1,443,291

See Notes to Consolidated Financial Statements.

IDEX CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS



	For the Years Ended December 31,
	2015			2014			2013
	(In thousands)
Cash flows from operating activities
Net income	$	282,807		$	279,386		$	255,215
Adjustments to reconcile net income to net cash provided by operating activities:
Gain on sale of fixed assets	(114		)	(351		)	(96		)
Gain on sale of business	(18,070		)	—			—
Asset impairments	795			2,473			2,747
Depreciation and amortization	35,694			33,720			35,007
Amortization of intangible assets	42,426			43,187			44,327
Amortization of debt issuance expenses	1,612			1,723			1,703
Share-based compensation expense	20,048			20,717			16,993
Deferred income taxes	(339		)	(8,593		)	(3,156		)
Excess tax benefit from share-based compensation	(5,265		)	(6,275		)	(8,560		)
Non-cash interest expense associated with forward starting swaps	7,030			7,223			7,430
Changes in (net of the effect from acquisitions and divestitures):
Receivables	8,832			(11,110		)	6,195
Inventories	4,557			(7,821		)	9,088
Other current assets	(2,728		)	(5,201		)	6,562
Trade accounts payable	(2,828		)	(2,466		)	15,460
Accrued expenses	(16,672		)	23,760			11,790
Other — net	2,536			(2,411		)	817
Net cash flows provided by operating activities	360,321			367,961			401,522
Cash flows from investing activities
Purchases of property, plant and equipment	(43,776		)	(47,997		)	(31,536		)
Acquisition of businesses, net of cash acquired	(195,013		)	(25,443		)	(36,849		)
Proceeds from fixed asset disposals	894			1,460			567
Proceeds from sale of business	27,677			—			—
Other — net	(273		)	(280		)	(344		)
Net cash flows used in investing activities	(210,491		)	(72,260		)	(68,162		)
Cash flows from financing activities
Borrowings under revolving credit facilities	414,032			165,014			73,101
Payment of 2.58% Senior Euro Notes	(88,420		)	—			—
Payments under revolving credit facilities	(333,630		)	(61,951		)	(89,478		)
Debt issuance costs	(1,739		)	—			—
Dividends paid	(96,172		)	(85,726		)	(72,905		)
Proceeds from stock option exercises	19,217			17,161			35,306
Excess tax benefit from share-based compensation	5,265			6,275			8,560
Purchase of common stock	(210,822		)	(219,893		)	(167,503		)
Unvested shares surrendered for tax withholding	(3,259		)	(4,952		)	(1,902		)
Other	—			—			(4,224		)
Net cash flows used in financing activities	(295,528		)	(184,072		)	(219,045		)
Effect of exchange rate changes on cash and cash equivalents	(35,421		)	(42,121		)	6,450
Net increase (decrease) in cash	(181,119		)	69,508			120,765
Cash and cash equivalents at beginning of year	509,137			439,629			318,864
Cash and cash equivalents at end of period	$	328,018		$	509,137		$	439,629
Supplemental cash flow information
Cash paid for:
Interest	$	33,502		$	32,565		$	33,432
Income taxes	112,613			122,295			73,657
Significant non-cash activities:
Contingent consideration for acquisition	4,705			—			—

See Notes to Consolidated Financial Statements.

IDEX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Significant Accounting Policies

Business

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

Principles of Consolidation

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

Use of Estimates

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

Revenue Recognition

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

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

Shipping and Handling Costs

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

Advertising Costs

Advertising costs of $16.1 million, $14.5 million and $14.6 million for 2015, 2014 and 2013, respectively, are expensed as incurred within Selling, general and administrative expenses.

Cash and Cash Equivalents

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

Allowance for Doubtful Accounts

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

Inventories

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

Impairment of Long-Lived Assets

Long-lived assets are reviewed for impairment upon the occurrence of events or changes in circumstances that indicate that the carrying value of the assets may not be recoverable, as measured by comparing their net book value to the projected undiscounted future cash flows generated by their use. Impaired assets are recorded at their estimated fair value based on a discounted cash flow analysis. A long-lived asset impairment exists when the carrying amount of the asset exceeds its fair value. Assessments of possible impairments of long-lived assets are made when events or changes in circumstances indicate that the carrying value of the asset may not be recoverable through future operations. The amount and timing of impairment charges for these assets require the estimation of future cash flows and the fair value of the related assets. In 2015, 2014 and 2013, the Company concluded that certain long lived assets had a fair value that was less than the carrying value of the assets, resulting in $0.8 million, $2.5 million and $2.7 million, respectively, of long-lived asset impairment charges.

Goodwill and Indefinite-Lived Intangible Assets

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

Borrowing Expenses

Expenses incurred in securing and issuing debt are capitalized and included as a reduction of Long-term borrowings. These amounts are amortized over the life of the related borrowing and the related amortization is included in Interest expense in the Consolidated Statements of Operations. See Recently Adopted Accounting Standards within this footnote for further discussion.

Earnings per Common Share

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

ASC 260, Earnings per Share, concludes that all outstanding unvested share-based payment awards that contain rights to nonforfeitable dividends participate in undistributed earnings with common shareholders. If awards are considered participating securities, the Company is required to apply the two-class method of computing basic and diluted earnings per share. The Company has determined that its outstanding shares of restricted stock are participating securities. Accordingly, earnings per common share were computed using the two-class method prescribed by ASC 260. Net income attributable to common shareholders was reduced by $0.8 million, $1.3 million and $1.2 million in 2015, 2014 and 2013, respectively.

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



	2015	2014	2013
	(In thousands)
Basic weighted average common shares outstanding	77,126	79,715	81,517
Dilutive effect of stock options, restricted stock, performance share units and DCUs	846	1,013	972
Diluted weighted average common shares outstanding	77,972	80,728	82,489

Options to purchase approximately 0.9 million, 0.5 million and zero shares of common stock in 2015, 2014 and 2013, respectively, were not included in the computation of diluted EPS because the effect of their inclusion would have been antidilutive.

Share-Based Compensation

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

Depreciation and Amortization

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



Land improvements	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 $33.6 million, $36.8 million and $33.0 million in 2015, 2014 and 2013, respectively.

Foreign Currency

The functional currency of substantially all operations outside the United States is the respective local currency. Accordingly, those foreign currency balance sheet accounts have been translated using the exchange rates in effect as of the balance sheet date. Income statement amounts have been translated using the average exchange rate for the year. The gains and losses resulting from changes in exchange rates from year to year have been reported in Accumulated other comprehensive loss in the Consolidated Balance Sheets. The foreign currency transaction losses (gains) for the period ending December 31, 2015, 2014 and 2013 were $(0.1) million, $0.9 million, and $2.2 million, respectively, and are reported within Other (income) expense-net on the Consolidated Statements of Operations.

Income Taxes

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

Concentration of Credit Risk

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

Recently Adopted Accounting Standards

In November 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes, requiring all deferred tax assets and liabilities, and any related valuation allowance, to be classified as noncurrent on the balance sheet. The classification change for all deferred taxes as noncurrent simplifies entities’ processes as it eliminates the need to separately identify the net current and net noncurrent deferred tax asset or liability in each jurisdiction and allocate valuation allowances. This standard is effective for fiscal years beginning after December 15, 2016. The Company elected to prospectively adopt the accounting standard in the beginning of the fourth quarter of fiscal year 2015. Prior periods in our Consolidated Financial Statements were not adjusted.

In September 2015, the FASB issued ASU 2015-16, Simplifying the Accounting for Measurement-Period Adjustments, that eliminates the requirement for an acquirer in a business combination to account for measurement-period adjustments retrospectively. Instead, acquirers must recognize measurement-period adjustments during the period in which they determine the amounts, including the effect on earnings of any amounts they would have recorded in previous periods if the accounting had been completed at the acquisition date. This standard is effective for fiscal years beginning after December 15, 2015. The Company elected to adopt this guidance early, effective in the fourth quarter of fiscal year 2015. The impact of the early adoption did not impact the consolidated financial position, results of operations or cash flows of the Company.

In April 2015, the FASB issued ASU 2015-03, Interest-Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs, which simplifies the presentation of debt issuance costs. Under ASU 2015-03, an entity presents such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs is reported as interest expense. This standard is effective for fiscal years beginning after December 15, 2015. The Company elected to early adopt this guidance effective in the fourth quarter of fiscal year 2015. The retroactive impact of the early adoption resulted in a decrease to Other noncurrent assets and Long-term debt of $4.6 million on the Consolidated Balance Sheet as of December 31, 2014.

In April 2014, the FASB issued ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, which includes amendments that change the requirements for reporting discontinued operations. Under the new guidance, only disposals representing a strategic shift in operations with a major effect on the organization’s operations and financial results should be presented as discontinued operations. Additionally, the ASU requires expanded disclosures about disposal transactions that do not meet the discontinued operations criteria. The Company adopted the standard effective January 1, 2015 and the adoption did not impact the consolidated financial position, results of operations or cash flows of the Company. The Company concluded that the divestiture of the Ismatec product line did not quality for reporting as discontinued operations; however, the Company did include required disclosures in Note 2.

New Accounting Pronouncements

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which introduces a new five-step revenue recognition model. Under ASU 2014-09, an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires disclosures sufficient to enable users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative disclosures about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. This standard is effective for fiscal years beginning after December 15, 2017, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect

of initially adopting ASU 2014-09 recognized at the date of adoption. The Company is currently evaluating the impact of the new guidance on our consolidated financial statements and have not yet determined the method by which we will adopt the standard in 2018.

Acquisitions and Divestitures

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

2015 Acquisitions

On May 29, 2015, the Company acquired the stock of Novotema, SpA (“Novotema”), a leader in the design, manufacture and sale of specialty sealing solutions for use in the building products, gas control, transportation, industrial and water markets. The business was acquired to complement and create synergies with our existing Sealing Solutions platform. Located in Villongo, Italy, Novotema has annual revenues of approximately $33 million and operates within our Health & Science Technologies segment. Novotema was acquired for cash consideration of $61.1 million (€56 million). The entire purchase price was funded with cash on hand. Goodwill and intangible assets recognized as part of this transaction were $33.9 million and $20.0 million, respectively. The $33.9 million of goodwill is not deductible for tax purposes.

On June 10, 2015, the Company acquired the stock of Alfa Valvole, S.r.l (“Alfa”), a leader in the design, manufacture and sale of specialty valve products for use in the chemical, petro-chemical, energy and sanitary markets. The business was acquired to expand our valve capabilities. Located in Casorezzo, Italy, Alfa has annual revenues of approximately $33 million and operates within our Fluid & Metering Technologies segment. Alfa was acquired for cash consideration of $112.6 million (€99.8 million). The entire purchase price was funded with cash on hand. Goodwill and intangible assets recognized as part of this transaction were $71.2 million and $32.1 million, respectively. The $71.2 million of goodwill is not deductible for tax purposes.

On July 1, 2015, the Company acquired the membership interests of CiDRA Precision Services, LLC (“CPS”), a leader in the design, manufacture and sale of microfluidic components serving the life science, health and industrial markets. The business was acquired to provide a critical building block to our emerging microfluidic and nanofludics capabilities. Located in Wallingford, Connecticut, CPS has annual revenues of approximately $9 million and operates within our Health & Sciences Technologies segment. CPS was acquired for an aggregate purchase price of $24.2 million, consisting of $19.5 million in cash and contingent consideration valued at $4.7 million as of the opening balance sheet date. The contingent consideration is based on the achievement of EBITDA targets during the 12-month period following the close. Based on potential outcomes, the undiscounted amount of all the future payments that the Company could be required to make under the contingent consideration arrangement is between $0 and $5.5 million. The entire purchase price was funded with cash on hand. Goodwill and intangible assets recognized as part of this transaction were $9.6 million and $12.3 million, respectively. The $9.6 million of goodwill is deductible for tax purposes.

On December 1, 2015, the Company acquired the assets of a complementary product line within our Fluid & Metering Technologies segment. The purchase price and goodwill associated with this transaction was $1.9 million and $0.7 million, respectively.

The Company made an initial allocation of the purchase price for the Novotema, Alfa, and CPS acquisitions as of the date of acquisition based on its understanding of the fair value of the acquired assets and assumed liabilities. These nonrecurring fair value measurements are classified as Level 3 in the fair value hierarchy. As the Company obtains additional information about these assets and liabilities, including tangible and intangible asset appraisals, and learns more about the newly acquired businesses, we will refine the estimates of fair value and more accurately allocate the purchase price. Only items identified as of the acquisition date are considered for subsequent adjustment. The Company is continuing to evaluate the valuation of inventory and accounts receivable associated with the Alfa acquisition and is in the process of finalizing purchase price allocations for the Novotema, Alfa, and CPS acquisitions. The Company will make appropriate adjustments to the purchase price allocations prior to the completion of the measurement period, as required.

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



	Novotema			Alfa			CPS			Other		Total
(In thousands)
Accounts receivable	$	8,029		$	13,487		$	945		$	—	$	22,461
Inventory	2,886			11,036			442			1,102		15,466
Other assets, net of cash acquired	1,484			3,367			79			—		4,930
Property, plant and equipment	11,844			8,395			1,084			—		21,323
Goodwill	33,934			71,191			9,575			748		115,448
Intangible assets	20,011			32,058			12,290			—		64,359
Total assets acquired	78,188			139,534			24,415			1,850		243,987
Total liabilities assumed	(17,090		)	(26,944		)	(235		)	—		(44,269		)
Net assets acquired	$	61,098		$	112,590		$	24,180		$	1,850	$	199,718

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

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



(In thousands, except weighted average life)	Total		Weighted Average Life
Trade names	$	9,247	15
Customer relationships	44,401		12
Unpatented technology	10,711		8
Total acquired intangible assets	$	64,359

The Company incurred $2.6 million of acquisition-related transaction costs in 2015. These costs were recorded in selling, general and administrative expense and were related to completed transactions, pending transactions and potential transactions, including transactions that ultimately were not completed. The Company also incurred $3.4 million of non-cash acquisition fair value inventory charges in 2015. These charges were recorded in cost of sales.

2014 Acquisitions

On April 28, 2014, the Company acquired the stock of Aegis Flow Technologies (“Aegis”), a leader in the design,

manufacture and sale of specialty chemical processing valves for use in the chemical, petro-chemical, chlor-alkali,

pharmaceutical, semiconductor and pulp/paper industries. Located in Geismar, Louisiana, Aegis operates within our Fluid & Metering Technologies segment. Aegis was acquired for cash consideration of approximately $25 million. The entire purchase price was funded with borrowings under the Company’s Revolving Facility. Goodwill and intangible assets recognized as part of this transaction were $7.7 million and $8.8 million, respectively. The $7.7 million of goodwill is deductible for tax purposes.

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

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

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		14
Unpatented technology	1,073		8
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.

2015 Divestiture

The Company periodically reviews its operations for businesses which may no longer be aligned with its strategic objectives and focus on core business and customers. On July 31, 2015, the Company completed the sale of its Ismatec product line to Cole-Palmer Instruments Company for $27.7 million in cash, resulting in a pre-tax gain on the sale of $18.1 million. The Company recorded $4.8 million of income tax expense associated with this transaction during the three months ended September 30, 2015. The results of the Ismatec product line were reported within the Health & Science Technologies segment through the date of sale.

Balance Sheet Components



	December 31,
	2015		2014
	(In thousands)
RECEIVABLES
Customers	$	262,304	$	260,412
Other	5,508		2,589
Total	267,812		263,001
Less allowance for doubtful accounts	7,812		6,961
Total receivables — net	$	260,000	$	256,040
INVENTORIES
Raw materials and components parts	$	141,671	$	137,584
Work in process	32,387		37,178
Finished goods	65,066		62,869
Total	$	239,124	$	237,631
PROPERTY, PLANT AND EQUIPMENT
Land and improvements	$	34,343	$	31,121
Buildings and improvements	157,946		148,749
Machinery, equipment and other	331,146		311,036
Office and transportation equipment	97,250		98,279
Construction in progress	13,377		14,335
Total	634,062		603,520
Less accumulated depreciation and amortization	393,117		383,977
Total property, plant and equipment — net	$	240,945	$	219,543
ACCRUED EXPENSES
Payroll and related items	$	67,209	$	64,124
Management incentive compensation	12,599		21,567
Income taxes payable	3,836		9,305
Insurance	9,505		10,058
Warranty	7,936		7,196
Deferred revenue	9,885		11,813
Restructuring	6,636		6,056
Liability for uncertain tax positions	3,498		2,084
Accrued interest	1,230		1,738
Contingent consideration for acquisition	4,705		—
Other	26,633		29,468
Total accrued expenses	$	153,672	$	163,409
OTHER NONCURRENT LIABILITIES
Pension and retiree medical obligations	$	76,190	$	90,584
Liability for uncertain tax positions	4,252		2,471
Deferred revenue	3,763		4,612
Other	18,160		16,610
Total other noncurrent liabilities	$	102,365	$	114,277

The valuation and qualifying account activity for the years ended December 31, 2015, 2014 and 2013 is as follows:



	2015			2014			2013
	(In thousands)
ALLOWANCE FOR DOUBTFUL ACCOUNTS (1)
Beginning balance January 1	$	6,961		$	5,841		$	5,596
Charged to costs and expenses, net of recoveries	1,556			2,643			2,288
Utilization	(1,009		)	(1,195		)	(1,921		)
Currency translation and other	304			(328		)	(122		)
Ending balance December 31	$	7,812		$	6,961		$	5,841


(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 2015 and 2014, by business segment, were as follows:



	Fluid & Metering Technologies			Health & Science Technologies			Fire & Safety/ Diversified Products			Total
	(In thousands)
Goodwill	$	548,765		$	721,495		$	279,827		$	1,550,087
Accumulated goodwill impairment losses	(20,721		)	(149,820		)	(30,090		)	(200,631		)
Balance at January 1, 2014	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
Acquisitions (Note 2)	71,939			43,508			—			115,447
Foreign currency translation	(11,318		)	(6,155		)	(12,509		)	(29,982		)
Divestiture (Note 2)	—			(10,213		)	—			(10,213		)
Balance at December 31, 2015	$	584,770		$	590,605		$	221,154		$	1,396,529

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

Goodwill and other acquired intangible assets with indefinite lives were tested for impairment as of October 31, 2015, the Company’s annual impairment date. In assessing the fair value of the reporting units, the Company considers both the market approach and income approach. Under the market approach, the fair value of the reporting unit is determined by the respective trailing twelve month EBITDA and forward looking 2016 EBITDA (50% each), based on multiples of comparable public companies. The market approach is dependent on a number of significant management assumptions including forecasted EBITDA and selected market multiples. Under the income approach, the fair value of the reporting unit is determined based on the present value of estimated future cash flows. The income approach is dependent on a number of significant management assumptions including estimates of operating results, capital expenditures, net working capital requirements, long-term growth rate and discount rates. Weighting was equally attributed to both the market and income approaches (50% each) in arriving at the fair value of the reporting units.

There were no triggering events or changes in circumstances that would have required a review other than as of our annual test date, in 2015 or 2014. Based on the results of our measurement at October 31, 2015, all reporting units had a fair value that was greater than 70% in excess of carrying value, except for our IOP and Valves reporting unit. Our IOP reporting

unit had a fair value that was approximately 20% in excess of carrying value and our Valves reporting unit had a fair value near its carrying value as a result of the formation of this reporting unit in conjunction with our Alfa acquisition in June 2015.

The gross carrying value and accumulated amortization for each major class of intangible asset at December 31, 2015 and 2014 is as follows:



	At December 31, 2015								At December 31, 2014
	Gross Carrying Amount		Accumulated Amortization			Net		Weighted Average Life	Gross Carrying Amount		Accumulated Amortization			Net
			(In thousands)								(In thousands)
Amortizable intangible assets
Patents	$	10,202	$	(6,175	)	$	4,027	11	$	10,016	$	(5,313	)	$	4,703
Trade names	110,658		(38,696		)	71,962		16	104,118		(32,881		)	71,237
Customer relationships	257,071		(144,134		)	112,937		11	222,486		(126,193		)	96,293
Non-compete agreements	794		(775		)	19		3	840		(636		)	204
Unpatented technology	78,562		(42,745		)	35,817		10	69,760		(35,165		)	34,595
Other	6,554		(5,579		)	975		10	7,034		(5,002		)	2,032
Total amortizable intangible assets	463,841		(238,104		)	225,737			414,254		(205,190		)	209,064
Unamortized intangible assets
Banjo trade name	62,100		—			62,100			62,100		—			62,100
Total intangible assets	$	525,941	$	(238,104	)	$	287,837		$	476,354	$	(205,190	)	$	271,164

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

In 2015 and 2014, there were no triggering events or changes in circumstances that would have required a review other than as of our annual test date. Based on the results of our measurement as of October 31, 2015, the fair value of the Banjo trade name was greater than 20% in excess of carrying value.

Amortization of intangible assets was $42.4 million, $43.2 million and $44.3 million in 2015, 2014 and 2013, respectively. Based on intangible asset balances as of December 31, 2015, amortization expense is expected to approximate $42.9 million in 2016, $34.4 million in 2017, $24.3 million in 2018, $19.8 million in 2019 and $18.6 million in 2020.

Borrowings

Borrowings at December 31, 2015 and 2014 consisted of the following:



	2015		2014
	(In thousands)
Revolving Facility	$	195,000	$	115,000
2.58% Senior Euro Notes, due June 2015	—		98,456
4.5% Senior Notes, due December 2020	300,000		300,000
4.2% Senior Notes, due December 2021	350,000		350,000
Other borrowings	2,436		2,170
Total	847,436		865,626
Less current portion	1,087		98,946
Less deferred debt issuance costs	5,203		4,607
Less unaccreted debt discount	1,439		1,674
Total long-term borrowings	$	839,707	$	760,399

On June 23, 2015, the Company entered into a credit agreement (the “Credit Agreement”) along with certain of its subsidiaries, as borrowers (the “Borrowers”), Bank of America, N.A., as administrative agent, swing line lender and an issuer of letters of credit, with other agents party thereto, which provided for a new revolving credit facility (the “Revolving Facility”). The Revolving Facility replaced the Company’s existing five-year, $600.0 million credit facility, dated as of June 27, 2011, which was due to expire on June 27, 2016.

The Revolving Facility is in an aggregate principal amount of $700.0 million with a maturity date of June 23, 2020. The maturity date may be extended under certain conditions for an additional one-year term. Up to $75.0 million of the Revolving Facility is available for the issuance of letters of credit. Additionally, up to $50.0 million of the Revolving Facility is available to the Company for swing line loans, available on a same-day basis.

Proceeds of the Revolving Facility are available for use by the Borrowers for working capital and other general corporate

purposes, including refinancing existing debt of the Company and its subsidiaries. The Company may request increases in the

lending commitments under the Credit Agreement, but the aggregate lending commitments pursuant to such increases may not exceed $350.0 million. The Company has the right, subject to certain conditions set forth in the Credit Agreement, to designate

certain foreign subsidiaries of the Company as borrowers under the Credit Agreement. In connection with any such designation,

the Company is required to guarantee the obligations of any such subsidiaries. Under the Credit Agreement, Fast & Fluid Management B.V. and IDEX UK Ltd. were approved by the lenders as designated borrowers. At December 31, 2015 neither subsidiary had borrowings under the Revolving Facility.

Borrowings under the Revolving Facility bear interest at either an alternate base rate or an adjusted LIBOR rate plus, in each case, an applicable margin. Such applicable margin is based on the Company’s senior, unsecured, long-term debt rating and can range from .005% to 1.50%. Based on the Company’s credit rating at December 31, 2015, the applicable margin was 1.10% resulting in an interest rate of 1.51% at December 31, 2015. Interest is payable (a) in the case of base rate loans, quarterly, and (b) in the case of LIBOR rate loans, on the maturity date of the borrowing, or quarterly from the effective date for borrowings exceeding three months.

The Credit Agreement requires payment to the lenders of a facility fee based upon (a) the amount of the lenders’ commitments under the credit facility from time to time and (b) the applicable corporate credit ratings of the Company. Voluntary prepayments of any loans and voluntary reductions of the unutilized portion of the commitments under the Revolving Facility are permissible without penalty, subject to break funding payments and minimum notice and minimum reduction amount requirements.

The Credit Agreement contains affirmative and negative covenants that the Company believes are usual and customary for senior unsecured credit agreements, including a financial covenant requiring a maximum leverage ratio of 3.50 to 1.0, which is the ratio of the Company’s consolidated total debt to its consolidated EBITDA, each as defined in the Credit Agreement.

The negative covenants include, among other things, limitations (each of which is subject to customary exceptions for

financings of this type) on our ability to grant liens; enter into transactions resulting in fundamental changes (such as mergers or sales of all or substantially all of the assets of the Company); restrict subsidiary dividends or other subsidiary distributions; enter into transactions with the Company’s affiliates; and incur certain additional subsidiary debt.

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

At December 31, 2015, $195.0 million was outstanding under the Revolving Facility, with $7.2 million of outstanding letters of credit, resulting in net available borrowing capacity under the Revolving Facility at December 31, 2015 of approximately $497.8 million.

As of December 31, 2014 the Company included the outstanding balance of the 2.58% Senior Euro Notes, $98.5 million, within Current liabilities on the Consolidated Balance Sheet as the maturity date was within twelve months. In June 2015, the Company paid the balance of the 2.58% Senior Euro Notes, upon its maturity, using cash on hand.

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

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

Other borrowings of $2.4 million at December 31, 2015 consisted primarily of debt at international locations maintained for working capital purposes. Interest is payable on the outstanding debt balances at the international locations at rates ranging from 0.2% to 2.8% per annum.

There are two key financial covenants that the Company is required to maintain in connection with the Revolving Facility, which requires a minimum interest coverage ratio of 3.0 to 1 and a maximum leverage ratio of 3.50 to 1. At December 31, 2015 the Company was in compliance with both of these financial covenants. There are no financial covenants relating to the 4.5% Senior Notes or 4.2% Senior Notes; however, both are subject to cross-default provisions.

Total borrowings at December 31, 2015 have scheduled maturities as follows:



(In thousands)
2016	$	1,087
2017	1,115
2018	225
2019	9
2020	495,000
Thereafter	350,000
Total borrowings	$	847,436

Derivative Instruments

As of December 31, 2015 and 2014 the Company did not have any interest rate or foreign exchange contracts outstanding. The type of cash flow hedges the Company has entered into includes interest rate exchange agreements that effectively convert a portion of floating-rate debt to fixed-rate debt and are designed to reduce the impact of interest rate changes on future interest expense.

The effective portion of gains or losses on interest rate exchange agreements is reported in accumulated other comprehensive income (loss) in shareholders’ equity and reclassified into net income in the same period or periods in which the hedged transaction affects net income. The remaining gain or loss in excess of the cumulative change in the present value of future cash flows or the hedged item, if any, is recognized into net income during the period of change.

Fair values relating to derivative financial instruments reflect the estimated amounts that the Company would receive or pay to sell or buy the contracts based on quoted market prices of comparable contracts at each balance sheet date.

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

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

The amount of expense reclassified into interest expense for interest rate contracts for the years ended December 31, 2015, 2014 and 2013 is $7.0 million, $7.2 million and $7.4 million, respectively.

Approximately $6.8 million of the pre-tax amount included in accumulated other comprehensive loss in shareholders’ equity at December 31, 2015 will be recognized to net income over the next 12 months as the underlying hedged transactions are realized.

Fair Value Measurements

ASC 820 “Fair Value Measurements and Disclosures” defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service

capacity of an asset or replacement cost). The standard utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:


•	Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.


•	Level 2: Inputs, other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.


•	Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions.

The basis used to measure the Company’s financial assets (liabilities) at fair value on a recurring basis in the balance sheet at December 31, 2015 and 2014 is summarized as follows:



	Basis of Fair Value Measurements
	Balance at December 31, 2015		Level 1		Level 2		Level 3
	(In thousands)
Money market investments	$	21,931	$	21,931	$	—	$	—
Available for sale securities	4,794		4,794		—		—
Contingent consideration	4,705		—		—		4,705



	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		—		—

There were no transfers of assets or liabilities between Level 1 and Level 2 in 2015 or 2014.

The contingent consideration is based on the achievement of EBITDA targets during the 12-month period following the close. In determining the fair value of the contingent consideration due in conjunction with the acquisition of CPS, the Company used probability weighted estimates of potential EBITDA outcomes during the earn-out period. The CPS contingent consideration liability was valued at $4.7 million as of the acquisition date. The Company assesses the fair value of the contingent consideration quarterly based upon actual EBITDA, forecasted EBITDA, and other factors known to management. There have been no changes to the value of the contingent consideration liability and the $4.7 million is included in Accrued expenses in the Consolidated Balance Sheet at December 31, 2015.

The carrying value of our cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximates their fair values because of the short term nature of these instruments. At December 31, 2015, the fair value of our Revolving Facility, 4.5% Senior Notes and 4.2% Senior Notes, based on quoted market prices and current market rates for debt with similar credit risk and maturity, was approximately $859.0 million compared to the carrying value of $843.6 million. This fair value measurement is classified as Level 2 within the fair value hierarchy since it is determined based upon significant inputs observable in the market, including interest rates on recent financing transactions to entities with a credit rating similar to ours.

Commitments and Contingencies

The Company leases certain office facilities, warehouses and data processing equipment under operating leases. Rental expense totaled $18.9 million, $19.2 million and $18.9 million in 2015, 2014 and 2013, respectively.

The aggregate future minimum lease payments for operating and capital leases as of December 31, 2015 were as follows:



	Operating		Capital
	(In thousands)
2016	$	16,253	$	601
2017	12,123		1,123
2018	9,556		227
2019	5,540		9
2020	4,034		—
2021 and thereafter	6,900		—
	$	54,406	$	1,960

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:



	2015			2014			2013
	(In thousands)
Beginning balance January 1	$	7,196		$	4,888		$	4,875
Provision for warranties	4,788			6,220			3,845
Claim settlements	(3,864		)	(3,823		)	(3,865		)
Other adjustments, including acquisitions and currency translation	(184		)	(89		)	33
Ending balance December 31	$	7,936		$	7,196		$	4,888

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

Common and Preferred Stock

On December 1, 2015 the Company’s Board of Directors approved an increase in the authorized level for repurchases of common stock by $300.0 million. Repurchases under the program will be funded with future cash flow generation or borrowings available under the Revolving Facility. During 2015 the Company purchased a total of 2.8 million shares at a cost of $210.5 million, of which $2.3 million was settled in January 2016, compared to 3.0 million shares purchased at a cost of $222.5 million in 2014, of which $2.6 million was settled in January 2015. As of December 31, 2015, there was $635 million of repurchase authorization remaining.

At December 31, 2015 and 2014 the Company had 150 million shares of authorized common stock, with a par value of $.01 per share and five million shares of authorized preferred stock with a par value of $.01 per share. No preferred stock was issued as of December 31, 2015 and 2014.

Income Taxes

Pretax income for 2015, 2014 and 2013 was taxed in the following jurisdictions:



	2015		2014		2013
	(In thousands)
Domestic	$	285,399	$	275,334	$	233,530
Foreign	106,946		117,106		119,599
Total	$	392,345	$	392,440	$	353,129

The provision (benefit) for income taxes for 2015, 2014 and 2013, was as follows:



	2015			2014			2013
	(In thousands)
Current
U.S.	$	73,059		$	77,454		$	59,707
State and local	6,188			7,133			8,123
Foreign	30,630			37,060			33,240
Total current	109,877			121,647			101,070
Deferred
U.S.	7,125			(3,176		)	1,500
State and local	(1,017		)	(1,708		)	(55		)
Foreign	(6,447		)	(3,709		)	(4,601		)
Total deferred	(339		)	(8,593		)	(3,156		)
Total provision for income taxes	$	109,538		$	113,054		$	97,914

Deferred tax assets (liabilities) at December 31, 2015 and 2014 were:



	2015			2014
	(In thousands)
Employee and retiree benefit plans	$	37,393		$	38,871
Depreciation and amortization	(185,321		)	(172,766		)
Inventories	12,615			11,229
Allowances and accruals	12,528			14,552
Interest rate exchange agreement	12,948			15,448
Other	2,800			4,626
Total	$	(107,037	)	$	(88,040	)

The deferred tax assets and liabilities recognized in the Company’s Consolidated Balance Sheets as of December 31, 2015 and 2014 were:



	2015			2014
	(In thousands)
Deferred tax asset — other current assets	$	—		$	39,305
Deferred tax asset — other noncurrent assets	3,446			3,080
Total deferred tax assets	3,446			42,385
Deferred tax liability — accrued expenses	—			(57		)
Noncurrent deferred tax liability — deferred income taxes	(110,483		)	(130,368		)
Total deferred tax liabilities	(110,483		)	(130,425		)
Net deferred tax liabilities	$	(107,037	)	$	(88,040	)

The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to pretax income. The computed amount and the differences for 2015, 2014 and 2013 are as follows:



	2015			2014			2013
	(In thousands)
Pretax income	$	392,345		$	392,440		$	353,129
Provision for income taxes
Computed amount at statutory rate of 35%	$	137,321		$	137,354		$	123,595
State and local income tax (net of federal tax benefit)	5,033			4,875			4,382
Taxes on non-U.S. earnings-net of foreign tax credits	(11,663		)	(9,378		)	(9,683		)
Effect of flow-through entities	(8,358		)	(9,018		)	(7,267		)
U.S. business tax credits	(1,273		)	(1,680		)	(1,516		)
Domestic activities production deduction	(6,521		)	(7,489		)	(6,217		)
Deferred tax effect of foreign tax rate change	(2,636		)	—			—
Other	(2,365		)	(1,610		)	(5,380		)
Total provision for income taxes	$	109,538		$	113,054		$	97,914

The Company has $715 million and $683 million of undistributed earnings of non-U.S. subsidiaries as of December 31, 2015 and 2014, respectively. No deferred U.S. income taxes have been provided on these earnings as they are considered to be reinvested for an indefinite period of time or will be repatriated when it is tax effective to do so. If these amounts were distributed to the U.S., in the form of dividends or otherwise, the Company would be subject to additional U.S. income taxes, which could be material. Determination of the amount of unrecognized deferred income tax liabilities on these earnings is not practicable because of the complexities with the hypothetical calculation, and the amount of liability, if any, is dependent on circumstances if and when remittance occurs. During the years ended December 31, 2015, 2014 and 2013, the Company repatriated $14.3 million, $6.5 million and $11.7 million of foreign earnings, respectively, resulting in $0.3 million of incremental tax expense, $0.2 million of incremental tax benefit and $0.9 million of incremental income tax expense, respectively. These repatriations represent distributions of current year earnings and distributions from liquidating subsidiaries and do not impact our representation that the undistributed earnings are permanently invested.

A reconciliation of the beginning and ending amount of unrecognized tax benefits for 2015, 2014 and 2013 is as follows:



	2015			2014			2013
	(In thousands)
Beginning balance January 1	$	3,619		$	5,124		$	6,506
Gross increase due to non-U.S. acquisitions	3,772			—			—
Gross increases for tax positions of prior years	1,256			834			1,357
Gross decreases for tax positions of prior years	—			(51		)	(99		)
Settlements	(667		)	(2,057		)	(1,219		)
Lapse of statute of limitations	(752		)	(231		)	(1,421		)
Ending balance December 31	$	7,228		$	3,619		$	5,124

We recognize interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2015, 2014 and 2013, we had approximately $0.2 million, $0.7 million and $0.5 million, respectively, of accrued interest related to uncertain tax positions. As of December 31, 2015, 2014 and 2013, we had approximately $0.3 million, $0.3 million and $0.2 million, respectively, of accrued penalties related to uncertain tax positions.

The total amount of unrecognized tax benefits that would affect our effective tax rate if recognized is $3.0 million, $2.9 million and $4.5 million as of December 31, 2015, 2014 and 2013, respectively. The tax years 2009-2014 remain open to examination by major taxing jurisdictions. Due to the potential for resolution of federal, state and foreign examinations, and the expiration of various statutes of limitation, it is reasonably possible that the Company’s gross unrecognized tax benefits balance may change within the next 12 months by a range of zero to $3.5 million.

The Company had net operating loss carry forwards related to prior acquisitions for U.S. federal purposes at December 31, 2015 and 2014 of $4.8 million and $7.1 million, respectively. For non-U.S. purposes the Company had net operating loss carry forwards at December 31, 2015 and 2014 of $1.6 million and $5.0 million, respectively. The federal net operating loss carry forwards are available for use against the Company’s consolidated federal taxable income and expire between 2018 and 2031. The entire balance of the non-U.S. net operating losses is available to be carried forward.

At December 31, 2015 and 2014, the Company had a foreign capital loss carry forward of approximately $0.9 million and $1.0 million, respectively. The foreign capital loss can be carried forward indefinitely. At both December 31, 2015 and 2014 the Company has a valuation allowance against the deferred tax asset attributable to the foreign capital loss of $0.2 million. At December 31, 2015 and 2014, the Company had state net operating loss and credit carry forwards of approximately $27.0 million and $23.7 million, respectively. If unutilized, the state net operating loss will expire between 2019 and 2035. At December 31, 2015 and 2014, the Company recorded a valuation allowance against the deferred tax asset attributable to the state net operating loss of $1.0 million and $0.8 million, respectively.

Business Segments and Geographic Information

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

The Fluid & Metering Technologies segment designs, produces and distributes positive displacement pumps, flow meters, injectors, and other fluid-handling pump modules and systems and provides flow monitoring and other services for the food, chemical, general industrial, water & wastewater, agriculture and energy industries. The Health & Science Technologies segment designs, produces and distributes a wide range of precision fluidics, rotary lobe pumps, centrifugal and positive displacement pumps, roll compaction and drying systems used in beverage, food processing, pharmaceutical and cosmetics, pneumatic components and sealing solutions, including very high precision, low-flow rate pumping solutions required in analytical instrumentation, clinical diagnostics and drug discovery, high performance molded and extruded, biocompatible medical devices and implantables, air compressors used in medical, dental and industrial applications, optical components and coatings for applications in the fields of scientific research, defense, biotechnology, aerospace, telecommunications and electronics manufacturing, laboratory and commercial equipment used in the production of micro and nano scale materials, precision photonic solutions used in life sciences, research and defense markets, and precision gear and peristaltic pump technologies that meet exacting original equipment manufacturer specifications. The Fire & Safety/Diversified Products segment produces firefighting pumps and controls, rescue tools, lifting bags and other components and systems for the fire and rescue industry, engineered stainless steel banding and clamping devices used in a variety of industrial and commercial applications, and precision equipment for dispensing, metering and mixing colorants and paints used in a variety of retail and commercial businesses around the world.

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



	2015			2014			2013
	(In thousands)
NET SALES
Fluid & Metering Technologies
External customers	$	859,945		$	898,530		$	870,720
Intersegment sales	847			1,058			1,094
Total segment sales	860,792			899,588			871,814
Health & Science Technologies
External customers	737,011			747,186			708,940
Intersegment sales	1,985			4,835			5,710
Total segment sales	738,996			752,021			714,650
Fire & Safety/Diversified Products
External customers	423,712			502,051			444,470
Intersegment sales	203			698			579
Total segment sales	423,915			502,749			445,049
Intersegment eliminations	(3,035		)	(6,591		)	(7,383		)
Total net sales	$	2,020,668		$	2,147,767		$	2,024,130
OPERATING INCOME (LOSS) (1)
Fluid & Metering Technologies	$	204,506		$	216,886		$	211,256
Health & Science Technologies	157,948			152,999			136,707
Fire & Safety/Diversified Products	115,745			130,494			102,730
Corporate office (2)	(46,461		)	(69,155		)	(55,180		)
Total operating income	431,738			431,224			395,513
Interest expense	41,636			41,895			42,206
Other (income) expense - net	(2,243		)	(3,111		)	178
Income before taxes	$	392,345		$	392,440		$	353,129



	2015		2014		2013
	(In thousands)
ASSETS
Fluid & Metering Technologies	$	1,125,266	$	1,026,238	$	1,025,352
Health & Science Technologies	1,108,302		1,101,155		1,113,546
Fire & Safety/Diversified Products	448,867		510,841		484,139
Corporate office (3)	123,008		265,229		258,081
Total assets	$	2,805,443	$	2,903,463	$	2,881,118
DEPRECIATION AND AMORTIZATION (4)
Fluid & Metering Technologies	$	27,662	$	26,453	$	27,633
Health & Science Technologies	42,827		42,478		43,496
Fire & Safety/Diversified Products	6,051		6,583		6,852
Corporate office and other	1,580		1,393		1,353
Total depreciation and amortization	$	78,120	$	76,907	$	79,334
CAPITAL EXPENDITURES
Fluid & Metering Technologies	$	22,846	$	18,215	$	11,581
Health & Science Technologies	13,104		19,161		12,280
Fire & Safety/Diversified Products	5,804		6,761		5,040
Corporate office and other	2,022		3,860		2,635
Total capital expenditures	$	43,776	$	47,997	$	31,536


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


(2)	2015 includes an $18.1 million gain on sale of business.


(3)	2014 balance has been reclassified to conform to the current presentation.


(4)	Excludes amortization of debt issuance expenses.

Information about the Company’s operations in different geographical regions for the years ended December 31, 2015, 2014 and 2013 is shown below. Net sales were attributed to geographic areas based on location of the customer and no country outside the U.S. was greater than 10% of total revenues.



	2015		2014		2013
	(In thousands)
NET SALES
U.S.	$	1,015,277	$	1,068,758	$	983,791
North America, excluding U.S.	85,852		95,917		88,213
Europe	490,435		527,975		521,491
Asia	325,507		337,668		306,466
Other	103,597		117,449		124,169
Total net sales	$	2,020,668	$	2,147,767	$	2,024,130
LONG-LIVED ASSETS — PROPERTY, PLANT AND EQUIPMENT
U.S.	$	144,508	$	139,702	$	124,880
North America, excluding U.S.	643		814		901
Europe	69,082		54,088		63,018
Asia	26,498		24,912		24,590
Other	214		27		99
Total long-lived assets — net	$	240,945	$	219,543	$	213,488

Restructuring

During the third and fourth quarters of 2015 and the fourth quarter of 2014, the Company recorded restructuring costs as a part of restructuring initiatives that support the implementation of key strategic efforts designed to facilitate long-term, sustainable growth through cost reduction actions, primarily consisting of employee reductions and facility rationalization. The costs incurred related to these initiatives were included in Restructuring expenses in the Consolidated Statements of Operations while the related accruals were included in Accrued expenses in the Consolidated Balance Sheets. Severance costs primarily consisted of severance benefits through payroll continuation, COBRA subsidies, outplacement services, conditional separation costs and employer tax liabilities, while exit costs primarily consisted of asset disposals or impairments and lease exit costs.

2015 Initiative

During 2015 the Company recorded pre-tax restructuring expenses totaling $11.2 million related to the 2015 restructuring initiative. These expenses consisted of employee severance related to employee reductions across various functional areas. The 2015 restructuring initiative included severance benefits for 208 employees. Severance payments are expected to be substantially paid by the end of 2016 using cash from operations.

Pre-tax restructuring expenses, comprised solely of severance costs, by segment for 2015 are as follows:



	Total Restructuring Costs
	(In thousands)
Fluid & Metering Technologies	$	7,090
Health & Science Technologies	3,408
Fire & Safety/Diversified Products	576
Corporate/Other	165
Total restructuring costs	$	11,239

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 were 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

Restructuring accruals of $6.6 million and $6.1 million at December 31, 2015 and 2014, respectively, are reflected in Accrued expenses in our Consolidated Balance Sheets as follows:



	Restructuring Initiatives
	(In thousands)
Balance at January 1, 2014	$	—
Restructuring expenses	13,672
Payments, utilization and other	(7,616		)
Balance at December 31, 2014	6,056
Restructuring expenses	11,239
Payments, utilization and other	(10,659		)
Balance at December 31, 2015	$	6,636

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, restricted stock, performance share units, and other types of awards consistent with the purpose of the plans. The number of shares authorized for issuance under the Company’s plans as of December 31, 2015 totaled 15.6 million, of which 6.7 million shares were available for future issuance. The Company’s policy is to recognize compensation cost on a straight-line basis, assuming forfeitures, over the requisite service period for the entire award.

Stock Options

Stock options granted under IDEX plans are generally non-qualified and are granted with an exercise price equal to the market price of the Company’s stock at the date of grant. The majority of the options issued to employees become exercisable in four equal installments, beginning one year from the date of grant, and generally expire 10 years from the date of grant. Stock options granted to non-employee directors cliff vest after one year.

Weighted average option fair values and assumptions for the period are as follows:



	Years Ended December 31,
	2015	2014	2013
Weighted average fair value of grants	$20.32	$19.52	$12.97
Dividend yield	1.45%	1.27%	1.57%
Volatility	29.90%	30.36%	30.92%
Risk-free interest rate	0.24% - 2.82%	0.12% - 4.65%	0.17% - 4.12%
Expected life (in years)	5.93	5.89	5.86

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, 2015, 2014 and 2013 is an output of the Binomial lattice option-pricing model, which incorporates vesting provisions, rate of voluntary exercise and rate of post-vesting termination over the contractual life of the option to define expected employee behavior.


•	The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods within the contractual life of the option. For the years ended December 31, 2015, 2014 and 2013, we present the range of risk-free one-year forward rates, derived from the U.S. treasury yield curve, utilized in the Binomial lattice option-pricing model.


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

A summary of the Company’s stock option activity as of December 31, 2015, and changes during the year ended December 31, 2015 is presented as follows:



Stock Options	Shares		Weighted Average Price		Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at January 1, 2015	2,378,559		$	46.91	6.69	$	73,561,785
Granted	525,255		78.22
Exercised	(469,497	)	40.73
Forfeited/Expired	(167,884	)	65.82
Outstanding at December 31, 2015	2,266,433		$	54.05	6.58	$	51,918,028
Vested and expected to vest at December 31, 2015	2,169,134		$	53.17	6.48	$	51,531,931
Exercisable at December 31, 2015	1,201,889		$	41.72	5.13	$	41,942,569

The intrinsic value for stock options outstanding and exercisable is defined as the difference between the market value of the Company’s common stock as of the end of the period and the grant price. The total intrinsic value of options exercised in 2015, 2014 and 2013 was $16.9 million, $20.0 million and $34.3 million, respectively. In 2015, 2014 and 2013 cash received from options exercised was $19.2 million, $17.2 million and $35.3 million, respectively, while the actual tax benefit realized for the tax deductions from stock options exercised totaled $6.1 million, $7.3 million and $12.5 million, respectively.

Total compensation cost for stock options is as follows:



	Years Ended December 31,
	2015			2014			2013
	(In thousands)
Cost of goods sold	$	543		$	581		$	479
Selling, general and administrative expenses	6,488			6,245			5,789
Total expense before income taxes	7,031			6,826			6,268
Income tax benefit	(2,208		)	(2,194		)	(2,016		)
Total expense after income taxes	$	4,823		$	4,632		$	4,252

As of December 31, 2015 there was $10.5 million of total unrecognized compensation cost related to stock options that is expected to be recognized over a weighted-average period of 1.4 years.

Restricted Stock

Restricted stock awards generally cliff vest after three years for employees and non-employee directors. Unvested restricted stock carries dividend and voting rights and the sale of the shares is restricted prior to the date of vesting. A summary of the Company’s restricted stock activity as of December 31, 2015, and changes during the year ending December 31, 2015 is as follows:



Restricted Stock	Shares		Weighted-Average Grant Date Fair Value
Unvested at January 1, 2015	359,269		$	53.68
Granted	99,130		78.20
Vested	(136,310	)	44.05
Forfeited	(49,334	)	62.00
Unvested at December 31, 2015	272,755		$	65.90

Dividends are paid on restricted stock awards and their fair value is equal to the market price of the Company’s stock at the date of the grant.

Total compensation cost for restricted stock is as follows:



	Years Ended December 31,
	2015			2014			2013
	(In thousands)
Cost of goods sold	$	341		$	369		$	319
Selling, general and administrative expenses	5,213			6,182			5,890
Total expense before income taxes	5,554			6,551			6,209
Income tax benefit	(1,604		)	(1,630		)	(1,801		)
Total expense after income taxes	$	3,950		$	4,921		$	4,408

As of December 31, 2015 there was $8.5 million of total unrecognized compensation cost related to restricted stock that is expected to be recognized over a weighted-average period of 1.0 year.

Cash-Settled Restricted Stock

The Company also maintains a cash-settled share based compensation plan for certain employees. Cash-settled restricted stock awards generally cliff vest after three years. A summary of the Company’s unvested cash-settled restricted stock activity as of December 31, 2015, and changes during the year ending December 31, 2015 is as follows:



Cash-Settled Restricted Stock	Shares		Weighted-Average Fair Value
Unvested at January 1, 2015	119,395		$	77.84
Granted	46,495		76.56
Vested	(41,640	)	77.90
Forfeited	(13,390	)	76.59
Unvested at December 31, 2015	110,860		$	76.61

Dividend equivalents are paid on certain cash-settled restricted stock awards. Total compensation cost for cash-settled restricted stock is as follows:



	Years Ended December 31,
	2015			2014			2013
	(In thousands)
Cost of goods sold	$	753		$	1,384		$	1,061
Selling, general and administrative expenses	1,765			2,735			2,581
Total expense before income taxes	2,518			4,119			3,642
Income tax benefit	(355		)	(603		)	(495		)
Total expense after income taxes	$	2,163		$	3,516		$	3,147

At December 31, 2015 and 2014, the Company has $3.2 million and $3.5 million, respectively, included in Accrued expenses in the Consolidated Balance Sheets and $1.8 million and $2.5 million, respectively, included in Other non-current liabilities.

Performance Share Units

Beginning in 2013 the Company granted performance share units to selected key employees that may be earned based on IDEX total shareholder return over the three-year period following the date of grant. Performance share units are expected to be made annually and are paid out at the end of a three-year period based on the Company’s performance. Performance is measured by determining the percentile rank of the total shareholder return of IDEX common stock in relation to the total shareholder return of the S&P Midcap 400 Industrial Group for the three-year period following the date of grant. The payment of awards following

the three-year award period will be based on performance achieved in accordance with the scale set forth in the plan agreement and may range from 0 percent to 250 percent of the initial grant. A target payout of 100 percent is earned if total shareholder return is equal to the 50th percentile of the S&P Midcap 400 Industrial Group. Performance share units earn dividend equivalents for the award period, which will be paid to participants with the award payout at the end of the period based on the actual number of performance share units that are earned. Payments made at the end of the award period will be in the form of stock for performance share units and will be in cash for dividend equivalents. The Company’s performance share awards are considered performance condition awards and the grant date fair value of the awards, based on a Monte Carlo simulation model, is expensed ratably over the three-year term of the awards. The Company granted approximately $0.1 million performance share units in each of 2015, 2014 and 2013.

Weighted average performance share unit fair values and assumptions for the period specified are as follows:



	Years Ended December 31,
	2015	2014	2013
Weighted average fair value of grants	$95.07	$94.55	$59.58
Dividend yield	—%	—%	—%
Volatility	19.14%	26.41%	28.99%
Risk-free interest rate	1.01%	0.65%	0.40%
Expected life (in years)	2.86	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.


•	The Company uses a Monte Carlo simulation model that uses an expected life commensurate with the performance period. As a result, the expected life of the performance share units was assumed to be the period from the grant date to the end of the performance period.


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


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

A summary of the Company’s performance share unit activity as of December 31, 2015, and changes during the year ending December 31, 2015 are as follows:



Performance Share Units	Shares		Weighted-Average Grant Date Fair Value
Unvested at January 1, 2015	135,540		$	81.87
Granted	79,710		95.07
Vested	(43,800	)	59.58
Forfeited	(25,175	)	87.28
Unvested at December 31, 2015	146,275		$	94.80

Awards that vested in 2015 will result in 87,600 shares being issued in 2016.

Total compensation cost for performance share units is as follows:



	Years Ended December 31,
	2015			2014			2013
	(In thousands)
Cost of goods sold	$	—		$	—		$	—
Selling, general and administrative expenses	4,946			3,220			873
Total expense before income taxes	4,946			3,220			873
Income tax benefit	(1,670		)	(1,081		)	(280		)
Total expense after income taxes	$	3,276		$	2,139		$	593

As of December 31, 2015 there was $5.7 million of total unrecognized compensation cost related to performance shares that is expected to be recognized over a weighted-average period of 0.9 years.

Other Comprehensive Income (Loss)

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



	For the Year Ended December 31, 2015									For the Year Ended December 31, 2014
	Pre-tax			Tax			Net of tax			Pre-tax			Tax			Net of tax
	(In thousands)
Foreign currency translation adjustments
Cumulative translation adjustment	$	(63,441	)	$	—		$	(63,441	)	$	(77,024	)	$	—		$	(77,024	)
Reclassification of foreign currency translation to earnings upon sale of business	(4,725		)	—			(4,725		)	—			—			—
Pension and other postretirement adjustments
Net gain (loss) arising during the year	8,318			(2,411		)	5,907			(26,424		)	7,767			(18,657		)
Amortization/settlement recognition of net loss	4,939			(1,431		)	3,508			3,113			(915		)	2,198
Pension and other postretirement adjustments, net	13,257			(3,842		)	9,415			(23,311		)	6,852			(16,459		)
Reclassification adjustments for derivatives	7,030			(2,499		)	4,531			7,223			(2,713		)	4,510
Total other comprehensive income (loss)	$	(47,879	)	$	(6,341	)	$	(54,220	)	$	(93,112	)	$	4,139		$	(88,973	)



	For the Year Ended December 31, 2013
	Pre-tax		Tax			Net of tax
	(In thousands)
Foreign currency translation adjustments
Cumulative translation adjustment	$	13,572	$	—		$	13,572
Pension and other postretirement adjustments
Net gain (loss) arising during the year	26,274		(9,859		)	16,415
Amortization or settlement recognition of net loss	8,599		(3,226		)	5,373
Pension and other postretirement adjustments, net	34,873		(13,085		)	21,788
Reclassification adjustments for derivatives	7,430		(2,692		)	4,738
Total other comprehensive income (loss)	$	55,875	$	(15,777	)	$	40,098

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



	For the Years Ended December 31,
	2015			2014			2013			Income Statement Caption
Foreign currency translation:
Reclassification upon sale of business	$	(4,725	)	$	—		$	—		Gain on sale of business
Total before tax	(4,725		)	—			—
Provision for income taxes	—			—			—
Total net of tax	$	(4,725	)	$	—		$	—
Pension and other postretirement plans:
Amortization of service cost	$	4,939		$	3,113		$	8,599		Selling, general and administrative expense
Total before tax	4,939			3,113			8,599
Provision for income taxes	(1,431		)	(915		)	(3,226		)
Total net of tax	$	3,508		$	2,198		$	5,373
Derivatives:
Reclassification adjustments	$	7,030		$	7,223		$	7,430		Interest expense
Total before tax	7,030			7,223			7,430
Provision for income taxes	(2,499		)	(2,713		)	(2,692		)
Total net of tax	$	4,531		$	4,510		$	4,738

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, 2015, and a statement of the funded status at December 31 for both years.



	Pension Benefits												Other Benefits
	2015						2014						2015			2014
	U.S.			Non-U.S.			U.S.			Non-U.S.
	(In thousands)
CHANGE IN BENEFIT OBLIGATION
Obligation at January 1	$	102,312		$	69,488		$	92,839		$	60,471		$	22,855		$	21,354
Service cost	1,279			1,506			1,162			1,331			673			714
Interest cost	3,770			1,734			4,037			2,345			833			932
Plan amendments	113			—			—			(150		)	—			—
Benefits paid	(3,985		)	(2,448		)	(6,230		)	(2,955		)	(622		)	(691		)
Actuarial loss (gain)	(5,013		)	(6,909		)	10,540			15,092			(2,966		)	728
Currency translation	—			(5,308		)	—			(6,646		)	(373		)	(182		)
Curtailments/settlements	—			—			(36		)	—			—			—
Obligation at December 31	$	98,476		$	58,063		$	102,312		$	69,488		$	20,400		$	22,855
CHANGE IN PLAN ASSETS
Fair value of plan assets at January 1	$	79,687		$	22,152		$	81,957		$	22,334		$	—		$	—
Actual return on plan assets	(2,587		)	205			2,385			1,738			—			—
Employer contributions	4,460			1,837			1,611			2,424			622			691
Benefits paid	(3,985		)	(2,448		)	(6,230		)	(2,955		)	(622		)	(691		)
Currency translation	—			(1,101		)	—			(1,389		)	—			—
Settlements	—			—			(36		)	—			—			—
Fair value of plan assets at December 31	$	77,575		$	20,645		$	79,687		$	22,152		$	—		$	—
Funded status at December 31	$	(20,901	)	$	(37,418	)	$	(22,625	)	$	(47,336	)	$	(20,400	)	$	(22,855	)
COMPONENTS ON THE CONSOLIDATED BALANCE SHEETS
Current liabilities	$	(743	)	$	(875	)	$	(522	)	$	(805	)	$	(911	)	$	(905	)
Other noncurrent liabilities	(20,158		)	(36,543		)	(22,103		)	(46,531		)	(19,489		)	(21,950		)
Net liability at December 31	$	(20,901	)	$	(37,418	)	$	(22,625	)	$	(47,336	)	$	(20,400	)	$	(22,855	)

The accumulated benefit obligation (“ABO”) for all defined benefit pension plans was $150.4 million and $163.3 million at December 31, 2015 and 2014, respectively.

The weighted average assumptions used in the measurement of the Company’s benefit obligation at December 31, 2015 and 2014 were as follows:



	U.S. Plans				Non-U.S. Plans
	2015		2014		2015		2014
Discount rate	4.12	%	3.78	%	2.99	%	2.66	%
Rate of compensation increase	4.00	%	4.00	%	2.98	%	3.00	%

The pretax amounts recognized in Accumulated other comprehensive income (loss) as of December 31, 2015 and 2014 were as follows:



	Pension Benefits										Other Benefits
	2015					2014					2015			2014
	U.S.		Non-U.S.			U.S.		Non-U.S
	(In thousands)
Prior service cost (credit)	$	135	$	(38	)	$	86	$	(40	)	$	(1,215	)	$	(1,580	)
Net loss	33,461		15,330			34,337		25,275			(2,197		)	655
Total	$	33,596	$	15,292		$	34,423	$	25,235		$	(3,412	)	$	(925	)

The amounts in Accumulated other comprehensive income (loss) as of December 31, 2015, that are expected to be recognized as components of net periodic benefit cost during 2016 are as follows:



	U.S. Pension Benefit Plans		Non-U.S. Pension Benefit Plans			Other Benefit Plans			Total
	(In thousands)
Prior service cost (credit)	$	24	$	(15	)	$	(366	)	$	(357	)
Net loss	3,285		1,028			(249		)	4,064
Total	$	3,309	$	1,013		$	(615	)	$	3,707

The components of, and the weighted average assumptions used to determine, the net periodic benefit cost for the plans in 2015, 2014 and 2013 are as follows:



	Pension Benefits
	2015						2014						2013
	U.S.			Non-U.S.			U.S.			Non-U.S.			U.S.			Non-U.S.
	(In thousands)
Service cost	$	1,279		$	1,506		$	1,162		$	1,331		$	1,526		$	1,388
Interest cost	3,770			1,734			4,037			2,345			3,766			2,146
Expected return on plan assets	(4,910		)	(1,114		)	(5,430		)	(1,297		)	(5,318		)	(1,055		)
Net amortization	3,422			1,931			2,187			1,400			7,621			955
Net periodic benefit cost	$	3,561		$	4,057		$	1,956		$	3,779		$	7,595		$	3,434



	Other Benefits
	2015			2014			2013
	(In thousands)
Service cost	$	673		$	714		$	968
Interest cost	833			932			906
Net amortization	(414		)	(474		)	24
Net periodic benefit cost	$	1,092		$	1,172		$	1,898



	U.S. Plans						Non-U.S. Plans
	2015		2014		2013		2015		2014		2013
Discount rate	3.78	%	4.61	%	3.56	%	2.66	%	4.03	%	3.91	%
Expected return on plan assets	6.50	%	7.00	%	7.50	%	5.19	%	5.83	%	5.53	%
Rate of compensation increase	4.00	%	4.00	%	3.94	%	3.00	%	3.14	%	2.99	%

The pretax change recognized in Accumulated other comprehensive income (loss) in 2015 is as follows:



	Pension Benefits						Other Benefits
	U.S.			Non-U.S.
	(In thousands)
Net gain (loss) in current year	$	(2,483	)	$	6,000		$	2,967
Prior service cost	(113		)	—			—
Amortization of prior service cost (credit)	64			(15		)	(365		)
Amortization of net loss	3,359			1,946			(48		)
Exchange rate effect on amounts in OCI	—			2,012			(67		)
Total	$	827		$	9,943		$	2,487

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

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

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

Costs of defined contribution plans were $10.3 million, $9.1 million and $8.4 million for 2015, 2014 and 2013, respectively.

The Company, through its subsidiaries, participates in certain multi-employer pension plans covering approximately 398 participants under U.S. collective bargaining agreements. None of these plans are considered individually significant to the Company as contributions to these plans totaled $1.0 million, $1.0 million, and $1.1 million for 2015, 2014 and 2013, respectively.

For measurement purposes, a 6.94% weighted average annual rate of increase in the per capita cost of covered health care benefits was assumed for 2015. The rate was assumed to decrease gradually each year to a rate of 4.50% for 2027, and remain at that level thereafter. Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A 1% increase in the assumed health care cost trend rates would increase the service and interest cost components of the net periodic benefit cost by $0.2 million and the health care component of the accumulated postretirement benefit obligation by $1.6 million. A 1% decrease in the assumed health care cost trend rate would decrease the service and interest cost components of the net periodic benefit cost by $0.1 million and the health care component of the accumulated postretirement benefit obligation by $1.3 million.

Plan Assets

The Company’s pension plan weighted average asset allocations at December 31, 2015 and 2014, by asset category, were as follows:



	2015		2014
Equity securities	46	%	51	%
Fixed income securities	48	%	49	%
Cash/Other	6	%	—	%
Total	100	%	100	%

The basis used to measure the defined benefit plans’ assets at fair value at December 31, 2015 and 2014 is summarized as follows:



	Basis of Fair Value Measurement
	Outstanding Balances		Level 1		Level 2		Level 3
As of December 31, 2015	(In thousands)
Equity
U.S. Large Cap	$	23,465	$	23,465	$	—	$	—
U.S. Small / Mid Cap	10,184		7,482		2,702		—
International	11,986		7,786		4,200		—
Fixed Income
U.S. Intermediate	15,000		15,000		—		—
U.S. Short Duration	8,935		8,935		—		—
U.S. High Yield	7,758		6,922		836		—
International	15,249		7,241		8,008		—
Cash and Equivalents	1,829		1,829		—		—
Other	3,836		—		3,836		—
	$	98,242	$	78,660	$	19,582	$	—



	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		—
Cash and Equivalents	2,329		2,329		—		—
Other	284		—		284		—
	$	101,916	$	81,013	$	20,903	$	—

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

Investment Policies and Strategies

The investment objective of the plan, consistent with prudent standards for preservation of capital and maintenance of liquidity, is to earn the highest possible total rate of return consistent with the plan’s tolerance for risk. The general asset allocation guidelines for plan assets are that “equities” will constitute from 40% to 60% of the market value of total fund assets with a target of 50%, and “fixed income” obligations, including cash, will constitute from 40% to 60% with a target of 50%. The term “equities” includes common stock, convertible bonds and convertible stock. The term “fixed income” includes preferred stock and/or contractual payments with a specific maturity date. The Company strives to maintain asset allocations within the designated ranges by conducting periodic reviews of fund allocations and plan liquidity needs, and rebalancing the portfolio accordingly. Diversification of assets is employed to ensure that adverse performance of one security or security class does not have an undue detrimental impact on the portfolio as a whole. Diversification is interpreted to include diversification by type, characteristic and number of investments, as well as by investment style of designated investment fund managers. No restrictions are placed on the selection of individual investments by the investment fund managers. The total fund performance and the performance of the investment fund managers is reviewed on a regular basis, using appointed professional independent advisors. As of December 31, 2015 and 2014, there were no shares of the Company’s stock held in plan assets.

Cash Flows

The Company expects to contribute approximately $6.1 million to its defined benefit plans and $0.9 million to its other postretirement benefit plans in 2016. The Company also expects to contribute approximately $20.8 million to its defined contribution plan and $8.1 million to its 401(k) savings plan in 2016.

Estimated Future Benefit Payments

The future estimated benefit payments for the next five years and the five years thereafter are as follows: 2016 — $14.2 million; 2017 — $10.0 million; 2018 — $10.6 million; 2019 — $10.3 million; 2020 — $10.6 million; 2021 to 2025 — $52.6 million.

Quarterly Results of Operations (Unaudited)

The unaudited quarterly results of operations for the years ended December 31, 2015 and 2014 are as follows:



	2015 Quarters								2014 Quarters
	First		Second		Third		Fourth		First		Second		Third		Fourth
	(In thousands, except per share amounts)
Net sales	$	502,198	$	514,881	$	503,791	$	499,798	$	543,996	$	546,693	$	533,179	$	523,899
Gross profit	226,041		231,615		223,260		223,399		244,420		241,132		234,646		229,117
Operating income	101,757		109,909		121,813		98,259		113,835		112,088		110,847		94,454
Net income	65,954		69,585		79,505		67,763		74,548		71,777		71,441		61,620
Basic EPS	$	0.84	$	0.89	$	1.03	$	0.89	$	0.92	$	0.89	$	0.89	$	0.78
Diluted EPS	$	0.84	$	0.89	$	1.02	$	0.88	$	0.91	$	0.88	$	0.88	$	0.77
Basic weighted average shares outstanding	77,996		77,466		76,831		76,211		80,527		80,106		79,558		78,669
Diluted weighted average shares outstanding	78,856		78,297		77,646		77,091		81,575		81,149		80,561		79,632

Subsequent Events

On February 4, 2016 the Company entered into a definitive agreement to acquire Akron Brass Holding Corp. (“ABHC”), a global leader in the manufacturing of safety equipment and emergency response equipment, for cash consideration of $224.2 million, subject to customary adjustments. Operating under the Akron Brass and Weldon brand names, ABHC produces a large array of engineered life-safety products for the safety and emergency response markets, including apparatus valves, monitors, nozzles, specialty lighting, electronic vehicle-control systems and firefighting hand tools.

Located in Wooster, Ohio, ABHC had revenues of approximately $120 million for the trailing twelve months ended December 31, 2015 and will operate within the Fire and Safety/Diversified Products segment. The transaction is conditioned upon the approval of ABHC’s parent company’s shareholders, and is expected to close within 60 days, subject to regulatory approvals and customary closing conditions.

Previous: Item 7A. Quantitative and Qualitative Disclosures About Market Risk. · Next: Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.