Item 8. Financial Statements and Supplementary Data.

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Item 8. Financial Statements and Supplementary Data.

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

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. Management excluded ABEL and Airtech (Note 2 - Acquisitions) from its assessment of internal controls over financial reporting as these acquisitions occurred in 2021. This exclusion is in accordance with the general guidance from the Staff of the Securities and Exchange Commission that an assessment of a recently acquired business may be omitted from the scope of management’s assessment of internal control over financial reporting for one year following the acquisition. The total assets (excluding goodwill and intangible assets) and net sales of current year acquisitions represented were approximately 2 percent and 3 percent, respectively, of the consolidated financial statement amounts as of and for the year ended December 31, 2021. Based on that assessment, management has concluded that the Company’s internal control over financial reporting was effective as of December 31, 2021.

The effectiveness of the Company’s internal control over financial reporting as of December 31, 2021, has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report which appears herein.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of IDEX Corporation

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of IDEX Corporation and subsidiaries (the “Company”) as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2021, of the Company and our report dated February 24, 2022, expressed an unqualified opinion on those financial statements.

As described in Management’s Report on Internal Control over Financial Reporting, management excluded ABEL and Airtech from its assessment of internal control over financial reporting as these acquisitions occurred in the twelve months ended December 31, 2021. The combined net sales and total assets of these acquisitions represented approximately 3 percent and 2 percent, respectively, of the consolidated financial statement amounts as of and for the year ended December 31, 2021. Accordingly, our audit did not include the internal control over financial reporting at these acquired companies.

Basis for Opinion

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 are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. 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.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. 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 its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.


/s/ DELOITTE & TOUCHE LLP


Chicago, Illinois
February 24, 2022

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of IDEX Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of IDEX Corporation and subsidiaries (the "Company") as of December 31, 2021 and 2020, the related consolidated statements of income, comprehensive income, equity, and cash flows, for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 24, 2022, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Revenue - Disaggregation of Revenue - Refer to Note 5 to the Financial Statements

Critical Audit Matter Description

The Company is a highly diversified business with a wide range of products and services that are offered in various markets throughout the world. The Company’s business activities are carried out by numerous individual business units, which offer a unique set of products and include niche markets within specific geographic areas.

We identified revenue as a critical audit matter given the disaggregated nature of the Company’s operations and business units generating revenue. This required extensive audit effort due to the volume of the underlying transactions and distinctiveness of each individual business unit. High levels of auditor judgment were necessary to determine the nature, timing, and extent of audit procedures and the level of disaggregation within the Company at which to perform such procedures, especially given limited market data for certain products or geographic areas.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the Company’s revenue transactions included the following, among others:

We tested internal controls within the relevant revenue business processes, including controls over revenue recognition and controls over the review of significant revenue transactions and operating results.
For a sample of revenue transactions, we performed detail transaction testing by agreeing the amounts recorded to source documents and determined that revenue was recognized appropriately.
For the revenue populations subject to detail testing, we tested the completeness of revenue by making selections from reciprocal populations (e.g., shipping logs) and determined whether the transaction was recorded as a sale in the general ledger.
For revenue transactions not subject to detail transaction testing, we aggregated the revenue transactions at the reporting unit level and performed substantive analytical procedures. We developed independent expectations of revenue based on data derived from published industry indices and market and customer trends and compared our independent expectations to the revenue recorded by management.


/s/ DELOITTE & TOUCHE LLP


Chicago, Illinois
February 24, 2022

We have served as the Company’s auditor since 1987.

IDEX CORPORATION

CONSOLIDATED BALANCE SHEETS


	As of December 31,
	2021		2020
	(Dollars in millions except per share amounts)
ASSETS
Current assets
Cash and cash equivalents	$	855.4	$	1,025.9
Receivables - net	356.4		293.1
Inventories	370.4		289.9
Other current assets	95.8		48.3
Total current assets	1,678.0		1,657.2
Property, plant and equipment - net	327.3		298.3
Goodwill	2,167.7		1,895.6
Intangible assets - net	597.3		415.6
Other noncurrent assets	146.9		147.7
Total assets	$	4,917.2	$	4,414.4
LIABILITIES AND EQUITY
Current liabilities
Trade accounts payable	$	178.8	$	152.0
Accrued expenses	259.8		208.8
Short-term borrowings	—		0.1
Dividends payable	41.4		38.1
Total current liabilities	480.0		399.0
Long-term borrowings	1,190.3		1,044.4
Deferred income taxes	196.4		163.9
Other noncurrent liabilities	247.4		266.8
Total liabilities	2,114.1		1,874.1
Commitments and contingencies (Note 11)
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: 90,067,996 shares at December 31, 2021 and 90,071,763 shares at December 31, 2020	0.9		0.9
Additional paid-in capital	795.6		775.2
Retained earnings	3,126.5		2,841.5
Treasury stock at cost: 13,872,555 shares at December 31, 2021 and 14,111,221 shares at December 31, 2020	(1,050.3)		(1,063.9)
Accumulated other comprehensive loss	(69.6)		(13.5)
Total shareholders’ equity	2,803.1		2,540.2
Noncontrolling Interest	—		0.1
Total equity	2,803.1		2,540.3
Total liabilities and equity	$	4,917.2	$	4,414.4

See Notes to Consolidated Financial Statements.

IDEX CORPORATION

CONSOLIDATED STATEMENTS OF INCOME


	For the Year Ended December 31,
	2021		2020		2019
	(In millions except per share amounts)
Net sales	$	2,764.8	$	2,351.6	$	2,494.6
Cost of sales	1,540.3		1,324.2		1,369.6
Gross profit	1,224.5		1,027.4		1,125.0
Selling, general and administrative expenses	578.2		494.9		525.0
Restructuring expenses and asset impairments	9.3		11.8		21.0
Operating income	637.0		520.7		579.0
Other expense - net	16.2		5.6		1.8
Interest expense	41.0		44.8		44.3
Income before income taxes	579.8		470.3		532.9
Provision for income taxes	130.5		92.5		107.4
Net income	449.3		377.8		425.5
Net loss attributable to noncontrolling interest	0.1		—		—
Net income attributable to IDEX	$	449.4	$	377.8	$	425.5

Earnings per common share:
Basic earnings per common share attributable to IDEX	$	5.91	$	4.98	$	5.62
Diluted earnings per common share attributable to IDEX	$	5.88	$	4.94	$	5.56

Share data:
Basic weighted average common shares outstanding	76.0		75.7		75.6
Diluted weighted average common shares outstanding	76.4		76.4		76.5

See Notes to Consolidated Financial Statements.

IDEX CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


	For the Year Ended December 31,
	2021		2020		2019
	(In millions)
Net income	$	449.3	$	377.8	$	425.5
Other comprehensive (loss) income:
Reclassification adjustments for derivatives, net of tax	2.5		4.6		4.9
Pension and other postretirement adjustments, net of tax	17.0		1.4		(3.1)
Cumulative translation adjustment	(75.6)		107.8		0.1
Other comprehensive (loss) income	(56.1)		113.8		1.9
Comprehensive income	393.2		491.6		427.4
Comprehensive loss attributable to noncontrolling interest	—		—		—
Comprehensive income attributable to IDEX	$	393.2	$	491.6	$	427.4

See Notes to Consolidated Financial Statements.

IDEX CORPORATION

CONSOLIDATED STATEMENTS OF EQUITY


	Common Stock and Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss						Treasury Stock		Total Shareholders’ Equity		Noncontrolling Interest		Total Equity
	Cumulative Translation Adjustment		Retirement Benefits Adjustments		Cumulative Unrealized Gain (Loss) on Derivatives
	(Dollars in millions except share and per share amounts)
Balance, December 31, 2018	$	739.2	$	2,342.1	$	(94.5)	$	(22.7)	$	(12.0)	$	(957.5)	$	1,994.6	$	—	$	1,994.6
Net income	—		425.5		—		—		—		—		425.5		—		425.5
Cumulative translation adjustment	—		—		0.1		—		—		—		0.1		—		0.1
Net change in retirement obligations (net of tax of $1.6)	—		—		—		(3.1)		—		—		(3.1)		—		(3.1)
Net change on derivatives designated as cash flow hedges (net of tax of $1.4)	—		—		—		—		4.9		—		4.9		—		4.9
Issuance of 696,133 shares of common stock from issuance of unvested shares, performance share units and exercise of stock options (net of tax of $5.5)	—		—		—		—		—		38.8		38.8		—		38.8
Repurchase of 388,953 shares of common stock	—										(54.7)		(54.7)		—		(54.7)
Share-based compensation	22.1		—		—		—		—		—		22.1		—		22.1
Shares surrendered for tax withholding	—		—		—		—		—		(12.5)		(12.5)		—		(12.5)
Cash dividends declared - $2.00 per common share outstanding	—		(152.5)		—		—		—		—		(152.5)		—		(152.5)
Balance, December 31, 2019	$	761.3	$	2,615.1	$	(94.4)	$	(25.8)	$	(7.1)	$	(985.9)	$	2,263.2	$	—	$	2,263.2
Net income	—		377.8		—		—		—		—		377.8		—		377.8
Cumulative translation adjustment	—		—		107.8		—		—		—		107.8		—		107.8
Net change in retirement obligations (net of tax of $0.1)	—		—		—		1.4		—		—		1.4		—		1.4
Net change on derivatives designated as cash flow hedges (net of tax of $1.4)	—		—		—		—		4.6		—		4.6		—		4.6
Issuance of 688,563 shares of common stock from issuance of unvested shares, performance share units and exercise of stock options (net of tax of $5.0)	—		—		—		—		—		44.6		44.6		—		44.6
Repurchase of 876,423 shares of common stock	—		—		—		—		—		(110.3)		(110.3)		—		(110.3)
Share-based compensation	14.8		—		—		—		—		—		14.8		—		14.8
Shares surrendered for tax withholding	—		—		—		—		—		(12.3)		(12.3)		—		(12.3)
Cash dividends declared - $2.00 per common share outstanding	—		(151.4)		—		—		—		—		(151.4)		—		(151.4)
Contributions received from joint venture partner	—		—		—		—		—		—		—		0.1		0.1
Balance, December 31, 2020	$	776.1	$	2,841.5	$	13.4	$	(24.4)	$	(2.5)	$	(1,063.9)	$	2,540.2	$	0.1	$	2,540.3
Net income (loss)	—		449.4		—		—		—		—		449.4		(0.1)		449.3
Cumulative translation adjustment	—		—		(75.6)		—		—		—		(75.6)		—		(75.6)
Net change in retirement obligations (net of tax of $5.3)	—		—		—		17.0		—		—		17.0		—		17.0
Net change on derivatives designated as cash flow hedges (net of tax of $0.8)	—		—		—		—		2.5		—		2.5		—		2.5
Issuance of 258,875 shares of common stock from issuance of unvested shares, performance share units and exercise of stock options (net of tax of $3.1)	—		—		—		—		—		19.7		19.7		—		19.7
Share-based compensation	20.4		—		—		—		—		—		20.4		—		20.4
Shares surrendered for tax withholding	—		—		—		—		—		(6.1)		(6.1)		—		(6.1)
Cash dividends declared - $2.16 per common share outstanding	—		(164.4)		—		—		—		—		(164.4)		—		(164.4)
Balance, December 31, 2021	$	796.5	$	3,126.5	$	(62.2)	$	(7.4)	$	—	$	(1,050.3)	$	2,803.1	$	—	$	2,803.1

See Notes to Consolidated Financial Statements.

IDEX CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS


	For the Year Ended December 31,
	2021		2020		2019
	(In millions)
Cash flows from operating activities
Net income	$	449.3	$	377.8	$	425.5
Adjustments to reconcile net income to net cash provided by operating activities:
Asset impairments	0.8		3.1		10.2
Depreciation and amortization	46.6		41.7		39.6
Amortization of intangible assets	56.4		41.8		37.3
Amortization of debt issuance expenses	1.7		1.7		1.4
Share-based compensation expense	20.4		14.8		22.1
Deferred income taxes	(6.1)		8.2		6.6
Non-cash interest expense associated with forward starting swaps	3.3		6.0		6.3
Termination of the U.S. pension plan, net of curtailment	8.6		—		—
Changes in (net of the effect from acquisitions/divestitures and foreign exchange):
Receivables	(49.4)		20.9		22.3
Inventories	(46.1)		36.5		(3.3)
Other current assets	9.0		(10.3)		(2.4)
Trade accounts payable	22.9		2.7		(9.1)
Deferred revenue	19.8		39.0		8.7
Accrued expenses	25.8		(13.7)		(44.0)
Other - net	2.3		(0.9)		6.9
Net cash flows provided by operating activities	565.3		569.3		528.1
Cash flows from investing activities
Purchases of property, plant and equipment	(72.7)		(51.6)		(50.9)
Acquisition of businesses, net of cash acquired	(577.4)		(123.1)		(87.2)
Note receivable from collaborative partner	(4.2)		—		—
Purchase of marketable securities	(45.2)		—		—
Other - net	1.4		2.1		1.1
Net cash flows used in investing activities	(698.1)		(172.6)		(137.0)
Cash flows from financing activities
Borrowings under revolving credit facilities	—		150.0		—
Payments under revolving credit facilities	—		(150.0)		—
Proceeds from issuance of long-term borrowings	499.4		499.1		—
Payment of long-term borrowings	(350.1)		(300.4)		(50.1)
Payment of make-whole redemption premium	(6.7)		(6.8)		—
Debt issuance costs	(4.6)		(4.7)		—
Dividends paid	(161.1)		(151.8)		(147.2)
Proceeds from stock option exercises	19.7		44.6		38.8
Repurchases of common stock	—		(110.3)		(54.7)
Shares surrendered for tax withholding	(6.1)		(12.3)		(12.6)
Other - net	—		—		(1.8)
Net cash flows used in financing activities	(9.5)		(42.6)		(227.6)
Effect of exchange rate changes on cash and cash equivalents	(28.2)		39.2		2.7
Net (decrease) increase in cash and cash equivalents	(170.5)		393.3		166.2
Cash and cash equivalents at beginning of year	1,025.9		632.6		466.4
Cash and cash equivalents at end of year	$	855.4	$	1,025.9	$	632.6
Supplemental cash flow information
Cash paid for:
Interest	$	36.0	$	35.2	$	36.7
Income taxes - net	118.2		87.2		109.0
Significant non-cash activities:
Debt acquired with acquisition of business	—		—		51.1

See Notes to Consolidated Financial Statements.

IDEX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Significant Accounting Policies

Business

IDEX is an applied solutions provider specializing in the manufacture of fluid and metering technologies, health and science technologies and fire, safety and other diversified products built to customers’ specifications. IDEX’s products are sold in niche markets across a wide range of industries throughout the world. The Company’s products and services include positive displacement pumps, valves, small volume provers, flow meters, injectors and other fluid-handling pump modules and systems, flow monitoring and other services, precision fluidics, rotary lobe pumps, roll compaction and drying systems, pneumatic components and sealing solutions, including very high precision, low-flow rate pumping solutions, high performance molded and extruded sealing components, custom mechanical and shaft seals, engineered hygienic mixers and valves, biocompatible medical devices and implantables, air compressors and blowers, optical components and coatings, laboratory and commercial equipment, precision photonic solutions, precision gear and peristaltic pump technologies, firefighting pumps, valves and controls, rescue tools, lifting bags and other components and systems for the fire and rescue industry, engineered stainless steel banding and clamping devices and precision equipment for dispensing, metering and mixing colorants and paints. These products and services are grouped into three reportable segments: Fluid & Metering Technologies (“FMT”), Health & Science Technologies (“HST”) and Fire & Safety/Diversified Products (“FSDP”).

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 (“U.S. GAAP”) 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, allowance for credit losses, inventory valuation, recoverability of long-lived assets, valuation of goodwill and intangible 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 accounts for a contract with a customer when it has approval from both parties, the rights and payment terms are identified, the contract has commercial substance and collectability of the consideration is probable. The Company determines the appropriate revenue recognition by analyzing the terms and conditions of the contract. Revenue is recognized when control of products or services is transferred to a customer in an amount that reflects the consideration the Company expects to be entitled to in exchange for transferring the products or providing the services. Control is transferred to customers when performance obligations within a contract are satisfied. A performance obligation is a promise to transfer a distinct product or service to a customer.

For contracts that require complex design, manufacturing and installation activities, certain performance obligations may not be separately identifiable and, therefore, not distinct. As a result, the entire contract is accounted for as a single performance obligation. For contracts that include distinct products or services that are substantially the same and have the same pattern of transfer to the customer over time, they are recognized as a series of distinct products or services. Certain contracts have multiple performance obligations for which the Company allocates the transaction price to each performance obligation using an estimate of the standalone selling price of each distinct product or service and recognizes as revenue when, or as, the performance obligation is satisfied. For product sales, each product sold to a customer generally represents a distinct performance obligation. In such cases, the observable standalone sales are used to determine the standalone selling price. In certain cases, the Company may be required to estimate the standalone selling price using the expected cost plus margin approach, under which it forecasts the expected costs of satisfying a performance obligation and then adds an appropriate margin for the distinct product or service.

The Company’s performance obligations are satisfied at either a point in time or over time as work progresses. Revenue recognized at a point in time is approximately 95% while revenue recognized over time is approximately 5%. For performance obligations satisfied at a point in time, generally revenue recognition occurs with the transfer of control of the asset, which is in line with shipping terms. For performance obligations satisfied over time, revenue is recognized as work is performed based on the relationship between actual costs incurred to date for each contract and the total estimated costs for such contract at completion of the performance obligation (i.e. the cost-to-cost method) or ratably over the contract term for service revenue. The Company defines service revenue as revenue from activities that are not associated with the design, development or manufacture of a product or the delivery of a software license.

When accounting for over-time contracts, the Company uses an input measure to determine the extent of progress towards completion of the performance obligation. The Company believes this measure of progress best depicts the transfer of control to the customer which occurs as the Company incurs costs on its contracts. Incurred cost represents work performed, which corresponds with the transfer of control to the customer. Contract costs include labor, material and overhead. Contract estimates are based on various assumptions to project the outcome of future events. These assumptions include labor productivity and availability; the complexity of the work to be performed; the cost and availability of materials; the performance of subcontractors; and the availability and timing of funding from the customer. Revenues, including estimated fees or profits, are recorded proportionally as costs are incurred.

As a significant change in one or more of these estimates could affect the profitability of the Company’s contracts, the Company reviews and updates its estimates regularly. 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. Such revisions to costs and income are recognized in the period in which the revisions are determined as a cumulative catch-up adjustment. The impact of the adjustment on profit recorded to date on a contract is recognized in the period the adjustment is identified. Revenue and profit in future periods of contract performance are recognized using the adjusted estimate. If at any time the estimate of contract profitability indicates an anticipated loss on the contract, the Company recognizes provisions for estimated losses on incomplete contracts in the period in which such losses are determined.

The Company records allowances for discounts and product returns 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 (primarily assurance-type) 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 $10.7 million, $9.9 million and $15.7 million for 2021, 2020 and 2019, 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 3 months or less to be cash and cash equivalents.

Marketable Securities

The Company holds investments in marketable securities, which are recorded in Other current assets in the Consolidated Balance Sheets. These investments are recorded at fair value, with gains and losses, dividends and interest income included in Other expense - net in the Consolidated Statements of Income. See Note 9 for further discussion on the marketable securities held by the Company.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are recorded at face amount less an allowance for doubtful accounts. The Company maintains an allowance for doubtful accounts for expected losses as a result of customers’ 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 receivable that may not be collected in the future and records the appropriate provision.

Inventories

The Company states inventories at the lower of cost or net realizable value. Cost, which includes material, labor and overhead, is determined on a first in, first out basis. The Company makes adjustments to reduce the cost of inventory to its net realizable value, if required, for estimated excess, obsolete, zero usage or impaired balances. Factors influencing these adjustments include changes in market demand, product life cycle and engineering changes.

Impairment of Long-Lived Assets

A long-lived asset is reviewed for impairment if an event occurs or circumstances change that would more likely than not reduce the fair value of the asset below its carrying value, as measured by comparing its net book value to the projected undiscounted future cash flows generated by its use. A long-lived asset impairment exists when the carrying value of the asset exceeds its fair value. The amount and timing of the impairment charge for an asset requires the estimation of future cash flows to determine the fair value of the asset. An impaired asset is recorded at its estimated fair value based on a discounted cash flow analysis. Refer to Note 1 5 for further discussion on impairment of long-lived assets.

Goodwill and Indefinite-Lived Intangible Assets

Accounting Standards Codification (“ASC”) 350, Goodwill and Other Intangible Assets, requires that the Company review the carrying value of goodwill and indefinite-lived intangible assets annually, or if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. The Company evaluates the recoverability of these assets as of October 31 based on the estimated fair value of each of the 13 reporting units and the indefinite-lived intangible assets. See Note 6 for further discussion on goodwill and indefinite-lived 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 Income.

Earnings per Common Share

Diluted earnings per common share (“EPS”) attributable to IDEX is computed by dividing net income attributable to IDEX by the weighted average number of shares of common stock (basic) plus common stock equivalents outstanding (diluted) 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 and performance share units.

ASC 260, Earnings per Share, concludes that all outstanding unvested share-based payment awards that contain rights to non-forfeitable 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, diluted EPS attributable to IDEX was computed using the two-class method prescribed by ASC 260.

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


	2021	2020	2019
	(In millions)
Basic weighted average common shares outstanding	76.0	75.7	75.6
Dilutive effect of stock options, restricted stock and performance share units	0.4	0.7	0.9
Diluted weighted average common shares outstanding	76.4	76.4	76.5

Options to purchase approximately 0.3 million shares of common stock in each of 2021, 2020 and 2019, respectively, were not included in the computation of diluted EPS attributable to IDEX 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 16 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			2 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 15 years
Trade names			5 to 20 years
Customer relationships			9 to 20 years
Unpatented technology			7 to 20 years

Research and Development Expenditures

Costs associated with engineering activities, including research and development, are expensed in the period incurred and are included in Cost of sales.

Total engineering expenses, which include research and development as well as application and support engineering, were $82.9 million, $82.3 million and $92.4 million in 2021, 2020 and 2019, respectively. Research and development expenses, which include costs associated with developing new products and major improvements to existing products, were $50.1 million, $48.2 million and $56.4 million in 2021, 2020 and 2019, respectively.

Foreign Currency Translation and Transaction

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 and the income statement amounts have been translated using the average monthly exchange rates for the year. Translation adjustments from year to year have been reported in Accumulated other comprehensive loss in the Consolidated Balance Sheets. Foreign currency transaction gains and losses from transactions denominated in a currency other than the functional currency of the subsidiary involved are reported within Other expense - net in the Consolidated Statements of Income. Net losses for the years ending December 31, 2021, 2020 and 2019 were $1.1 million, $3.0 million and $3.3 million, respectively.

Income Taxes

Income tax expense includes U.S., 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 bases 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 the 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. See Note 13 for further discussion on income taxes.

Concentration of Credit Risk

The Company is not dependent on a single customer as its largest customer accounted for less than 3% of net sales for all years presented.

Recently Adopted Accounting Standards

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Simplifying the Accounting for Income Taxes, which eliminates the need to analyze whether the following apply in a given period (1) exception to the incremental approach for intraperiod tax allocation, (2) exceptions to accounting for basis differences when there are ownership changes in foreign investments and (3) exceptions in interim period income tax accounting for year-to-date losses that exceed anticipated losses. This ASU is also designed to improve the application of income tax-related guidance and simplify U.S. GAAP for (1) franchise taxes that are partially based on income, (2) transactions with a government that result in a step-up in the tax basis of goodwill, (3) separate financial statements of legal entities that are not subject to tax and (4) enacted changes in tax laws in interim periods. The Company adopted this standard on January 1, 2021. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

Recently Issued Accounting Standards

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which adds contract assets and contract liabilities to the list of exceptions to the recognition and measurement principles that apply to business combinations and requires that an acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with revenue recognition guidance. ASU 2021-08 is effective for annual periods beginning after December 15, 2022 and interim periods therein. Early adoption is permitted. Entities should apply the ASU’s provisions prospectively to business combinations occurring on or after the effective date of the amendments. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

In November 2021, the FASB issued ASU 2021-10, Government Assistance (ASC 832): Disclosures by Business Entities about Government Assistance, which requires entities to provide certain annual disclosures when they (1) have received government assistance and (2) use a grant or contribution accounting model by analogy to other accounting guidance. ASU 2021-10 is effective for annual periods beginning after December 15, 2021. Early adoption is permitted, and entities may apply the ASU’s provisions prospective or retrospectively. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

2. Acquisitions and Divestitures

All of the Company’s acquisitions of businesses have been accounted for under ASC 805, Business Combinations. Accordingly, the accounts of the acquired companies, after adjustments to reflect the fair values assigned to assets and liabilities, have been included in the Company’s 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 dates of 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 the aggregate.

2021 Acquisitions

ABEL

On March 10, 2021, the Company acquired the stock of ABEL Pumps, L.P. and certain of its affiliates (“ABEL”). ABEL designs and manufactures highly engineered reciprocating positive displacement pumps for a variety of end markets, including mining, marine, power, water, wastewater and other general industries. Headquartered in Büchen, Germany, with sales and service locations in Madrid, Spain, and subsequent to the acquisition with operations in Mansfield, Ohio, ABEL operates in the Company’s Pumps reporting unit within the FMT segment. ABEL was acquired for cash consideration of $106.3 million. The entire purchase price was funded with cash on hand. Goodwill and intangible assets recognized as part of this transaction were $42.4 million and $46.0 million, respectively. The goodwill is not deductible for tax purposes.

The Company made a preliminary allocation of the purchase price for the ABEL acquisition as of the acquisition date 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 continues to obtain additional information

about these assets and liabilities, including intangible asset appraisals, inventory valuation and accrued expenses, and continues to integrate the newly acquired business, the Company 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 will continue to make required adjustments to the purchase price allocation prior to the completion of the measurement period.

The preliminary allocation of the purchase price to the assets acquired and liabilities assumed, based on their estimated fair values at the acquisition date, is as follows:


(In millions)	Total
Current assets, net of cash acquired	$	18.4
Property, plant and equipment	4.0
Goodwill	42.4
Intangible assets	46.0
Deferred income taxes	2.6
Other noncurrent assets	0.1
Total assets acquired	113.5
Current liabilities	(7.1)
Other noncurrent liabilities	(0.1)
Net assets acquired	$	106.3

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

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


(In millions, except weighted average life)	Total		Weighted Average Life
Trade names	$	9.0	15
Customer relationships	30.0		13
Unpatented technology	7.0		11
Acquired intangible assets	$	46.0

Airtech

On June 14, 2021, the Company acquired the stock of Airtech Group, Inc., US Valve Corporation and related entities (“Airtech”). Airtech designs and manufactures a wide range of highly-engineered pressure technology products, including vacuum pumps, regenerative blowers, compressor systems and valves for a variety of end markets, including alternative energy, food processing, medical, packaging and transportation. Headquartered in Rutherford, New Jersey, with primary manufacturing operations in Werneck, Germany and Shenzhen, China, Airtech operates in the Company’s Performance Pneumatic Technologies reporting unit within the HST segment. Airtech was acquired for cash consideration of $471.0 million. The entire purchase price was funded with cash on hand. Goodwill and intangible assets recognized as part of this transaction were $267.6 million and $202.3 million, respectively. The goodwill is not deductible for tax purposes.

The Company made a preliminary allocation of the purchase price for the Airtech acquisition as of the acquisition date 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 continues to obtain additional information about these assets and liabilities, including intangible asset appraisals, inventory valuation and accrued expenses, and continues to integrate the newly acquired business, the Company 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 will continue to make required adjustments to the purchase price allocation prior to the completion of the measurement period.

The preliminary allocation of the purchase price to the assets acquired and liabilities assumed, based on their estimated fair values at the acquisition date, is as follows:


(In millions)	Total
Current assets, net of cash acquired	$	45.3
Property, plant and equipment	4.8
Goodwill	267.6
Intangible assets	202.3
Other noncurrent assets	10.1
Total assets acquired	530.1
Current liabilities	(10.1)
Deferred income taxes	(40.6)
Other noncurrent liabilities	(8.4)
Net assets acquired	$	471.0

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


(In millions, except weighted average life)	Total		Weighted Average Life
Trade names	$	15.4	15
Customer relationships	162.9		13
Unpatented technology	24.0		11
Acquired intangible assets	$	202.3

The Company incurred $6.5 million of acquisition-related transaction costs in 2021. These costs were recorded in Selling, general and administrative expenses and were related to completed transactions, pending transactions and potential transactions, including transactions that ultimately were not completed. The Company also incurred fair value inventory step-up charges of $2.5 million and $9.1 million associated with the acquisitions of ABEL and Airtech, respectively, which were recorded in Cost of sales in the Consolidated Statements of Income for the year ended December 31, 2021.

2020 Acquisitions

Flow MD

On February 28, 2020, the Company acquired the membership interests of Flow Management Devices, LLC (“Flow MD”), a privately held provider of flow measurement systems that ensure custody transfer accuracy in the oil and gas industry. Flow MD engineers and manufactures small volume provers. Headquartered in Phoenix, Arizona, with operations in Houston, Texas and Pittsburgh, Pennsylvania, Flow MD operates in the Company’s Energy reporting unit within the FMT segment. Flow MD was acquired for cash consideration of $121.2 million. The entire purchase price was funded with cash on hand. Goodwill and intangible assets recognized as part of this transaction were $60.0 million and $53.0 million, respectively. The goodwill is deductible for tax purposes.

The Company finalized the allocation of the purchase price for the Flow MD acquisition as of the acquisition date 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.

The final allocation of the purchase price to the assets acquired and liabilities assumed, based on their estimated fair values at the acquisition date, is as follows:


(In millions)	Total
Current assets, net of cash acquired	$	32.9
Property, plant and equipment	4.2
Goodwill	60.0
Intangible assets	53.0
Other noncurrent assets	1.3
Total assets acquired	151.4
Current liabilities	(32.3)
Deferred income taxes	2.5
Other noncurrent liabilities	(0.4)
Net assets acquired	$	121.2

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


(In millions, except weighted average life)	Total		Weighted Average Life
Trade names	$	6.0	15
Customer relationships	31.5		10
Unpatented technology	15.5		20
Acquired intangible assets	$	53.0

Qualtek

On November 23, 2020, the Company acquired Qualtek Manufacturing, Inc. (“Qualtek”), a manufacturer of high quality specialty metal components and parts by providing vertically integrated tool and die, metal stamping and metal finishing services. Headquartered in Colorado Springs, Colorado, Qualtek operates in the BAND-IT reporting unit within the FSDP segment. Qualtek was acquired for cash consideration of $1.9 million. The entire purchase price was funded with cash on hand. Goodwill recognized as part of this transaction was $1.1 million. The goodwill recorded for the acquisition reflects the strategic fit, revenue and earnings growth potential of this business. The goodwill is deductible for tax purposes.

The Company finalized its allocation of the purchase price for the Qualtek acquisition as of the acquisition date based on its understanding of the fair value of the acquired assets. These nonrecurring fair value measurements are classified as Level 3 in the fair value hierarchy.

The Company incurred $4.3 million of acquisition-related transaction costs in 2020. These costs were recorded in Selling, general and administrative expenses and were related to completed transactions, pending transactions and potential transactions, including transactions that ultimately were not completed. The Company also incurred fair value inventory step-up charges of $4.1 million and $0.1 million associated with the acquisitions of Flow MD and Qualtek, respectively, which were recorded in Cost of sales in the Consolidated Statements of Income for the year ended December 31, 2020.

2019 Acquisition

Velcora

On July 18, 2019, the Company acquired the stock of Velcora Holding AB (“Velcora”) and its operating subsidiaries, Roplan and Steridose. Roplan is a global manufacturer of custom mechanical and shaft seals for a variety of end markets including food and beverage, marine, chemical, wastewater and water treatment. Steridose develops engineered hygienic mixers and valves for the global biopharmaceutical industry. Both companies are headquartered in Sweden but also have operations in Ningbo, China; Berkshire, England and Madison, Wisconsin. Roplan and Steridose operate in the HST segment. Velcora was acquired for cash consideration of $87.2 million and the assumption of $51.1 million of debt. The entire purchase price was funded with cash on hand. Goodwill and intangible assets recognized as part of this transaction were $86.6 million and $48.2 million, respectively. The goodwill is not deductible for tax purposes.

The Company finalized the allocation of the purchase price for the Velcora acquisition as of the acquisition date 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.

The final allocation of the purchase price to the assets acquired and liabilities assumed, based on their estimated fair values at the acquisition date, is as follows:


(In millions)	Total
Current assets, net of cash acquired	$	20.2
Property, plant and equipment	1.7
Goodwill	86.6
Intangible assets	48.2
Other noncurrent assets	0.8
Total assets acquired	157.5
Current liabilities	(7.6)
Long-term borrowings	(51.1)
Deferred income taxes	(11.1)
Other noncurrent liabilities	(0.5)
Net assets acquired	$	87.2

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

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


(In millions, except weighted average life)	Total		Weighted Average Life
Trade names	$	7.1	15
Customer relationships	34.7		12
Unpatented technology	6.4		9
Acquired intangible assets	$	48.2

On September 3, 2019, the Company settled the debt assumed in the Velcora acquisition and incurred a loss on early retirement of $0.7 million which was recorded in Other expense - net in the Consolidated Statements of Income for the year ended December 31, 2019.

The Company incurred $1.7 million of acquisition-related transaction costs in 2019. These costs were recorded in Selling, general and administrative expenses and were related to completed transactions, pending transactions and potential transactions, including transactions that ultimately were not completed. The Company also incurred a fair value inventory step-up charge of $3.3 million associated with the acquisition of Velcora, which was recorded in Cost of sales in the Consolidated Statements of Income for the year ended December 31, 2019.

Divestitures

The Company periodically reviews its operations for businesses which may no longer be aligned with its strategic objectives and focuses on core business and customers. Any resulting gain or loss recognized due to divestitures is recorded within Loss (gain) on sale of businesses - net within Selling, general and administrative expenses in the Consolidated Statements of Income.

On March 12, 2021, the Company completed the sale of CiDRA Precision Services (“CiDRA”) for $1.0 million in cash, resulting in a pre-tax gain on the sale of $0.5 million. The Company recorded $0.1 million of income tax expense associated with this transaction during the year ended December 31, 2021. The results of CiDRA were reported within the HST segment and generated $0.9 million of revenues in 2021 through the date of sale. The Company concluded that this divestiture did not meet the criteria for reporting the results of CiDRA as discontinued operations.

On December 28, 2020, the Company completed the sale of its Avery Hardoll product line for $0.5 million in cash, resulting in a pre-tax loss on the sale of $0.4 million. The Company recorded $0.3 million of income tax benefit associated with this transaction during the year ended December 31, 2020. The results of Avery Hardoll were reported within the FMT segment and generated $1.2 million of revenues in 2020 through the date of sale. The Company concluded that this divestiture did not meet the criteria for reporting discontinued operations. There were no divestitures that took place during the year ended December 31, 2019.

3. Collaborative Investments

On May 12, 2020, a subsidiary of IDEX entered into a joint venture agreement with a third party to form a limited liability company (the “Joint Venture”) that will manufacture and sell high performance elastomer seals for the oil and gas industry to customers within the Kingdom of Saudi Arabia as well as export these high performance elastomer seals outside of the Kingdom of Saudi Arabia. The Joint Venture will be headquartered in Dammam, Saudi Arabia and operates in the Company’s Sealing Solutions reporting unit within the HST segment. During the year ended December 31, 2020, the Company contributed $0.1 million and owns 55% of the share capital while the third party partner contributed $0.1 million and owns 45% of the share capital. During the year ended December 31, 2021, the Company contributed an additional $0.6 million. As of December 31, 2021, the Joint Venture has incurred start-up expenses, but has not yet begun manufacturing. Since IDEX controls the entity, IDEX has consolidated the Joint Venture and recorded a noncontrolling interest in its Consolidated Financial Statements.

On June 29, 2021, a subsidiary of IDEX funded a $4.2 million convertible promissory note to a start-up company that provides communication technology to improve individual performance and team coordination for firefighters’ responses. The investment aligns with the FSDP segment’s strategic plan to reduce response time and greatly increase life-safety outcomes and is an extension of FSDP’s smart and connected products. The note bears paid-in-kind interest at a rate of 5% per annum and is secured by the Company’s interest in the intellectual property of the start-up company. Unless earlier converted, the principal amount outstanding and the related accrued interest are due upon the earliest of (a) June 28, 2024, (b) a change in control or (c) when declared due and payable by the Company upon an event of default. The note is included in Other noncurrent assets on the Company’s Consolidated Balance Sheets. In addition, the Company recorded $0.1 million of accrued interest in Other noncurrent assets on the Company’s Consolidated Balance Sheets. The Company will measure the allowance for credit losses under the current expected credit loss model. As of December 31, 2021, no allowance for credit losses has been recorded.

4. Balance Sheet Components


	December 31,
	2021		2020
	(In millions)
RECEIVABLES
Customers	$	354.9	$	288.3
Other	8.7		10.9
Total	363.6		299.2
Less allowance for doubtful accounts	7.2		6.1
Total receivables - net	$	356.4	$	293.1
INVENTORIES
Raw materials and components parts	$	229.4	$	173.2
Work in process	47.4		29.5
Finished goods	93.6		87.2
Total inventories	$	370.4	$	289.9
PROPERTY, PLANT AND EQUIPMENT
Land and improvements	$	39.1	$	33.7
Buildings and improvements	197.9		192.4
Machinery, equipment and other	467.8		430.4
Office and transportation equipment	96.7		95.6
Construction in progress	30.5		28.7
Total	832.0		780.8
Less accumulated depreciation and amortization	504.7		482.5
Total property, plant and equipment - net	$	327.3	$	298.3
ACCRUED EXPENSES
Payroll and related items	$	91.5	$	75.2
Management incentive compensation	25.0		15.8
Income taxes payable	17.9		13.4
Insurance	11.0		11.1
Warranty	7.6		7.4
Deferred revenue	49.0		28.4
Lease liability	17.6		16.7
Restructuring	2.8		3.9
Accrued interest	3.6		3.6
Pension and retiree medical obligations	3.5		3.0
Other	30.3		30.3
Total accrued expenses	$	259.8	$	208.8
OTHER NONCURRENT LIABILITIES
Pension and retiree medical obligations	$	82.2	$	99.4
Transition tax payable	14.1		14.2
Deferred revenue	32.2		30.4
Lease liability	93.4		94.3
Other	25.5		28.5
Total other noncurrent liabilities	$	247.4	$	266.8

The valuation and qualifying account activity for the years ended December 31, 2021 and 2020 is as follows:


	2021		2020
	(In millions)
ALLOWANCE FOR DOUBTFUL ACCOUNTS
Beginning balance January 1	$	6.1	$	6.3
Charged to costs and expenses, net of recoveries	1.5		—
Utilization	(0.9)		(0.5)
Other adjustments, including acquisitions and currency translation	0.5		0.3
Ending balance December 31	$	7.2	$	6.1

5. Revenue

Disaggregation of Revenue

The Company has a comprehensive offering of products, including technologies, built to customers’ specifications that are sold in niche markets throughout the world. The Company disaggregates revenue from contracts with customers by reporting unit and geographical region for each segment as the Company believes it best depicts how the amount, nature, timing and uncertainty of its revenue and cash flows are affected by economic factors. Revenue was attributed to geographical region based on the location of the customer. The following tables present revenue disaggregated by reporting unit and geographical region.

Revenue by reporting unit for the years ended December 31, 2021, 2020 and 2019 was as follows:


	For the Year Ended December 31,
	2021		2020		2019
	(In millions)
Pumps	$	345.1	$	265.3	$	331.1
Water(1)	255.3		225.3		239.9
Energy	169.0		200.0		164.8
Valves(1)	121.9		118.6		129.0
Agriculture	107.4		87.1		92.2
Intersegment elimination	(0.7)		(0.9)		(0.5)
Fluid & Metering Technologies	998.0		895.4		956.5
Scientific Fluidics & Optics	508.0		415.8		434.6
Sealing Solutions	264.2		207.6		200.5
Performance Pneumatic Technologies(2)	182.2		122.9		133.5
Material Processing Technologies	134.5		120.0		113.6
Micropump	32.9		29.7		32.2
Intersegment elimination	(2.8)		(2.6)		(1.8)
Health & Science Technologies	1,119.0		893.4		912.6
Fire & Safety	377.5		376.3		404.0
Dispensing	169.6		98.5		116.2
BAND-IT	100.8		88.1		106.6
Intersegment elimination	(0.1)		(0.1)		(1.3)
Fire & Safety/Diversified Products	647.8		562.8		625.5
Total net sales	$	2,764.8	$	2,351.6	$	2,494.6

(1) During the third quarter of 2021, the Company merged a business in the Water reporting unit with a business in the Valves reporting unit. Revenue for each reporting unit has been restated to reflect this change for all years presented.

(2) This reporting unit was previously named Gast and was renamed Performance Pneumatic Technologies upon the acquisition of Airtech. Prior to 2021, amounts reflect only the Gast business.

Revenue by geographical region for the years ended December 31, 2021, 2020 and 2019 was as follows:


	For the Year Ended December 31, 2021
	FMT		HST		FSDP		IDEX
	(In millions)
U.S.	$	532.9	$	489.7	$	317.0	$	1,339.6
North America, excluding U.S.	61.6		23.7		28.5		113.8
Europe	197.2		341.0		161.5		699.7
Asia	143.7		241.8		110.0		495.5
Other (1)	63.3		25.6		30.9		119.8
Intersegment elimination	(0.7)		(2.8)		(0.1)		(3.6)
Total net sales	$	998.0	$	1,119.0	$	647.8	$	2,764.8


	For the Year Ended December 31, 2020
	FMT		HST		FSDP		IDEX
	(In millions)
U.S.	$	505.8	$	387.6	$	269.9	$	1,163.3
North America, excluding U.S.	52.8		21.3		23.2		97.3
Europe	174.9		249.8		149.2		573.9
Asia	109.1		221.2		94.2		424.5
Other (1)	53.7		16.1		26.4		96.2
Intersegment elimination	(0.9)		(2.6)		(0.1)		(3.6)
Total net sales	$	895.4	$	893.4	$	562.8	$	2,351.6


	For the Year Ended December 31, 2019
	FMT		HST		FSDP		IDEX
	(In millions)
U.S.	$	542.0	$	411.7	$	303.6	$	1,257.3
North America, excluding U.S.	58.3		21.7		26.3		106.3
Europe	170.7		263.5		159.2		593.4
Asia	125.0		201.8		103.4		430.2
Other (1)	61.0		15.7		34.3		111.0
Intersegment elimination	(0.5)		(1.8)		(1.3)		(3.6)
Total net sales	$	956.5	$	912.6	$	625.5	$	2,494.6

(1) Other includes: South America, Middle East, Australia and Africa.

Performance Obligations

The Company’s performance obligations are satisfied either at a point in time or over time as work progresses. Revenue from products and services transferred to customers at a point in time approximated 95% of total revenues in each of the years ended December 31, 2021, 2020 and 2019. Revenue from products and services transferred to customers over time approximated 5% of total revenues in each of the years ended December 31, 2021, 2020 and 2019.

Contract Balances

The timing of revenue recognition, billings and cash collections can result in customer receivables, advance payments or billings in excess of revenue recognized. Customer receivables include both amounts billed and currently due from customers as well as unbilled amounts (contract assets) and are included in Receivables - net on the Consolidated Balance Sheets.

Amounts are billed in accordance with contractual terms or as work progresses. Unbilled amounts arise when the timing of billing differs from the timing of revenue recognized, such as when contract provisions require specific milestones to be met before a customer can be billed. Unbilled amounts primarily relate to performance obligations satisfied over time when the cost-to-cost method is utilized and the revenue recognized exceeds the amount billed to the customer as there is not yet a right to invoice in accordance with contractual terms. Unbilled amounts are recorded as a contract asset when the revenue associated with the contract is recognized prior to billing and derecognized when billed in accordance with the terms of the contract.

The composition of Customer receivables was as follows:


	December 31, 2021		December 31, 2020
	(In millions)
Billed receivables	$	344.0	$	273.5
Unbilled receivables	10.9		14.8
Total customer receivables	$	354.9	$	288.3

Advance payments, deposits and billings in excess of revenue recognized are included in Deferred revenue which is classified as current or noncurrent based on the timing of when the Company expects to recognize the revenue. The current portion is included in Accrued expenses and the noncurrent portion is included in Other noncurrent liabilities on the Consolidated Balance Sheets. Advance payments and deposits represent contract liabilities and are recorded when customers remit contractual cash payments in advance of us satisfying performance obligations under contractual arrangements, including those with performance obligations satisfied over time. The Company generally receives advance payments from customers related to maintenance services which are recognized ratably over the service term. The Company also receives deposits from customers on certain orders which the Company recognizes as revenue at a point in time in the future. Billings in excess of revenue recognized represent contract liabilities and primarily relate to performance obligations satisfied over time when the cost-to-cost method is utilized and revenue cannot yet be recognized as the Company has not completed the corresponding performance obligation. Contract liabilities are derecognized when revenue is recognized and the performance obligation is satisfied.

The composition of Deferred revenue was as follows:


	December 31, 2021		December 31, 2020
	(In millions)
Deferred revenue - current	$	49.0	$	28.4
Deferred revenue - noncurrent	32.2		30.4
Total deferred revenue	$	81.2	$	58.8

6. Goodwill and Intangible Assets

The changes in the carrying amount of goodwill for 2021 and 2020, by reportable business segment, were as follows:


	FMT		HST		FSDP		Total
	(In millions)
Goodwill	$	599.6	$	981.6	$	399.1	$	1,980.3
Accumulated goodwill impairment losses	(20.7)		(149.8)		(30.1)		(200.6)
Balance at January 1, 2020	578.9		831.8		369.0		1,779.7
Foreign currency translation	10.4		29.1		13.1		52.6
Acquisitions	60.4		—		1.1		61.5
Acquisition adjustments	—		1.8		—		1.8
Balance at December 31, 2020	649.7		862.7		383.2		1,895.6
Foreign currency translation	(10.7)		(15.7)		(11.0)		(37.4)
Acquisitions	42.4		267.6		—		310.0
Disposition of businesses	—		(0.1)		—		(0.1)
Acquisition adjustments	(0.4)		—		—		(0.4)
Balance at December 31, 2021	$	681.0	$	1,114.5	$	372.2	$	2,167.7

Goodwill represents the purchase price in excess of the net amount assigned to the assets acquired and liabilities assumed and was tested for impairment at each of the Company’s 13 reporting units as of October 31, 2021, the Company’s annual impairment test date. In assessing the fair value of the reporting units, the Company considers both the market approach and the income approach. Under the market approach, the fair value of the reporting unit is determined by the respective trailing 12 month EBITDA and the forward looking 2022 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 rates and discount rates. Weighting was equally attributed to both the market and the income approaches (50% each) in arriving at the fair value of the reporting units. In 2021 and 2020, there were no events or circumstances that would have required an interim impairment test.

The following table provides the gross carrying value and accumulated amortization for each major class of intangible asset at December 31, 2021 and 2020:


	At December 31, 2021							At December 31, 2020
	Gross Carrying Amount		Accumulated Amortization		Net		Weighted Average Life	Gross Carrying Amount		Accumulated Amortization		Net
			(In millions)							(In millions)
Amortized intangible assets:
Patents	$	3.2	$	(2.0)	$	1.2	10	$	3.0	$	(1.8)	$	1.2
Trade names	140.9		(72.4)		68.5		15	130.8		(72.7)		58.1
Customer relationships	495.9		(144.2)		351.7		13	318.4		(120.3)		198.1
Unpatented technology	143.8		(58.8)		85.0		13	122.3		(55.1)		67.2
Other	—		—		—		—	0.7		(0.6)		0.1
Total amortized intangible assets	783.8		(277.4)		506.4			575.2		(250.5)		324.7
Indefinite-lived intangible assets:
Banjo trade name	62.1		—		62.1			62.1		—		62.1
Akron Brass trade name	28.8		—		28.8			28.8		—		28.8
Total intangible assets	$	874.7	$	(277.4)	$	597.3		$	666.1	$	(250.5)	$	415.6

The Banjo trade name and the Akron Brass trade name are indefinite-lived intangible assets that were also tested for impairment as of October 31, 2021, the Company’s annual impairment test date. These indefinite-lived intangible assets are tested for impairment on an annual basis in accordance with ASC 350 or more frequently if events or changes in circumstances indicate that the assets might be impaired. The Company uses the relief-from-royalty method, a form of the income approach, to determine the fair value of these trade names. The relief-from-royalty method is dependent on a number of significant management assumptions, including estimates of revenues, royalty rates and discount rates. In 2021 and 2020, there were no events or circumstances that would have required an interim impairment test.

Refer to Note 15 for discussion on impairment of definite-lived intangibles.

Amortization of intangible assets was $56.4 million, $41.8 million and $37.3 million in 2021, 2020 and 2019, respectively. Based on the intangible asset balances as of December 31, 2021, amortization expense is expected to approximate $61.3 million in 2022, $58.1 million in 2023, $53.6 million in 2024, $52.0 million in 2025 and $50.2 million in 2026.

7. Borrowings

Borrowings at December 31, 2021 and 2020 consisted of the following:


	2021		2020
	(In millions)
4.20% Senior Notes, repaid in June 2021	$	—	$	350.0
3.20% Senior Notes, due June 2023	100.0		100.0
3.37% Senior Notes, due June 2025	100.0		100.0
3.00% Senior Notes, due May 2030	500.0		500.0
2.625% Senior Notes, due June 2031	500.0		—
Other borrowings	0.1		0.2
Total borrowings	1,200.1		1,050.2
Less current portion	—		0.1
Less deferred debt issuance costs	8.4		4.8
Less unaccreted debt discount	1.4		0.9
Long-term borrowings	$	1,190.3	$	1,044.4

Issuance of 2.625% Senior Notes in 2021

On May 28, 2021, the Company completed a public offering of $500.0 million in aggregate principal amount of 2.625% Senior Notes due June 2031 (the “2.625% Senior Notes”). The net proceeds from the offering were approximately $494.7 million, after deducting the issuance discount of $0.6 million, the underwriting commission of $3.3 million and offering expenses of $1.4 million. The net proceeds were used to redeem and repay the $350.0 million aggregate principal amount outstanding of its 4.20% Senior Notes due December 15, 2021 (the “4.20% Senior Notes”) and a $6.7 million make-whole redemption premium, with the remaining balance used for general corporate purposes. The 2.625% Senior Notes bear interest at a rate of 2.625% per annum, which is payable semi-annually in arrears on June 15 and December 15 of each year. The 2.625% Senior Notes mature on June 15, 2031. The 2.625% Senior Notes were issued under an Indenture, dated as of December 6, 2010 (the “Base Indenture”), between the Company and Wells Fargo Bank, National Association, as trustee (the “Trustee”), as supplemented by the Fourth Supplemental Indenture, dated as of May 28, 2021 (the “Supplemental Indenture” and, together with the Base Indenture and other supplements thereto, the “Indenture”), between the Company and the Trustee.

The Company may redeem all or a portion of the 2.625% Senior Notes at any time prior to maturity at the redemption prices set forth in the Indenture. The Indenture and the 2.625% Senior Notes contain covenants that limit the Company’s ability to, among other things, incur certain liens, enter into certain sale and leaseback transactions and enter into certain mergers, consolidations and transfers of substantially all of the Company’s assets. The terms of the 2.625% Senior Notes also require the Company to make an offer to repurchase the 2.625% Senior Notes upon a change of control triggering event (as defined in the Indenture) at a price equal to 101% of the principal amount plus accrued and unpaid interest, if any. The Indenture also provides for customary events of default, which include nonpayment, breach of covenants or warranties in the Indenture and certain events of bankruptcy, insolvency or reorganization. Generally, if an event of default occurs, the Trustee or holders of at least 25% of the then outstanding 2.625% Senior Notes may declare the principal amount of all of the 2.625% Senior Notes to be due and payable immediately.

On May 17, 2021, the Company provided notice of its election to redeem early, on June 16, 2021, the $350.0 million aggregate principal amount outstanding of its 4.20% Senior Notes at a redemption price of $350.0 million plus a make-whole redemption premium of $6.7 million using proceeds from the Company’s 2.625% Senior Notes. In addition, the Company recognized the remaining $1.3 million of the pre-tax amount included in Accumulated other comprehensive loss in shareholders’ equity related to the interest rate exchange agreement associated with the 4.20% Senior Notes and wrote off the remaining $0.1 million of deferred issuance costs and $0.1 million of the debt issuance discount associated with the 4.20% Senior Notes as well as $0.4 million of deferred taxes for a total loss on early debt redemption of $8.6 million which was recorded within Other expense - net in the Consolidated Statements of Income.

Issuance of 3.00% Senior Notes in 2020

On April 29, 2020, the Company completed a public offering of $500.0 million in aggregate principal amount of 3.00% Senior Notes due May 2030 (the “3.00% Senior Notes”). The net proceeds from the offering were approximately $494.4 million, after deducting the issuance discount of $0.9 million, the underwriting commission of $3.3 million and offering expenses of $1.4 million. The net proceeds were used to redeem and repay the $300.0 million aggregate principal amount outstanding of its 4.50% Senior Notes due December 15, 2020 (the “4.50% Senior Notes”) and the related accrued interest and a make-whole redemption premium, with the remaining balance used for general corporate purposes. The 3.00% Senior Notes bear interest at a rate of 3.00% per annum, which is payable semi-annually in arrears on May 1 and November 1 of each year. The 3.00% Senior Notes mature on May 1, 2030.

The Company may redeem all or a portion of the 3.00% Senior Notes at any time prior to maturity at the redemption prices set forth in the Indenture governing the 3.00% Senior Notes. The Indenture and 3.00% 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 of the Company’s assets. The terms of the 3.00% Senior Notes also require the Company to make an offer to repurchase the 3.00% Senior Notes upon a change of control triggering event (as defined in the Indenture) at a price equal to 101% of the principal amount plus accrued and unpaid interest, if any. The Indenture also provides for customary events of default, which include nonpayment, breach of covenants in the Indenture and certain events of bankruptcy and insolvency. Generally, if an event of default occurs, the Trustee or holders of at least 25% of the then outstanding 3.00% Senior Notes may declare the principal amount of all of the 3.00% Senior Notes to be due and payable immediately.

On April 27, 2020, the Company provided notice of its election to redeem early, on May 27, 2020, the $300.0 million aggregate principal amount outstanding of its 4.50% Senior Notes at a redemption price of $300.0 million plus a make-whole redemption premium of $6.8 million and accrued and unpaid interest of $6.1 million using proceeds from the Company’s 3.00% Senior Notes. In addition, the Company recognized the remaining $1.4 million of the pre-tax amount included in Accumulated other comprehensive loss in shareholders’ equity related to the interest rate exchange agreement associated with the 4.50% Senior Notes and wrote off the remaining $0.1 million of deferred issuance costs and $0.1 million of the debt issuance discount associated with the 4.50% Senior Notes for a total loss on early debt redemption of $8.4 million which was recorded within Other expense - net in the Consolidated Statements of Income.

Revolving Credit Facility

On May 31, 2019, 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. The Credit Agreement consists of a revolving credit facility (the “Revolving Facility”) in an aggregate principal amount of $800 million with a final maturity date of May 31, 2024. The maturity date may be extended under certain conditions for an additional one-year term. Up to $75 million of the Revolving Facility is available for the issuance of letters of credit. Additionally, up to $50 million of the Revolving Facility is available to the Company for swing line loans, available on a same-day basis. The Credit Agreement replaced the Company’s prior five-year $700 million credit agreement, dated as of June 23, 2015, which was due to expire in June 2020.

Proceeds of the Revolving Facility are available for use by the Borrowers for acquisitions, 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 $400 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.

Borrowings under the Credit Agreement bear interest at either an alternate base rate or adjusted LIBOR plus, in each case, an applicable margin. Such applicable margin is based on the lower of the Company’s senior, unsecured, long-term debt rating or the Company’s applicable leverage ratio and can range from 0.00% to 1.275%. Interest is payable (a) in the case of base rate loans, quarterly, and (b) in the case of LIBOR loans, on the last day of the applicable interest period selected, or every three months from the effective date of such interest period for interest periods exceeding three months.

The Credit Agreement requires payment to the lenders of a facility fee based upon the amount of the lenders’ commitments under the credit facility from time to time, determined based on the lower of the Company’s senior, unsecured long-term debt rating or the Company’s applicable leverage ratio. Voluntary prepayments of any loans and voluntary reductions of the unutilized portion of the commitments under the Credit Agreement are permissible without penalty, subject to break funding payments and minimum notice and minimum reduction amount requirements.

The Credit Agreement contains customary affirmative and negative covenants for senior unsecured credit agreements. There are two key financial covenants that the Company is required to maintain in connection with the Credit Agreement and the Senior Notes, excluding the 3.00% Senior Notes which have no financial covenants, a minimum interest coverage ratio of 3.0 to 1 and a maximum leverage ratio of 3.50 to 1, which is the ratio of the Company’s consolidated total debt to its consolidated earnings before interest, income taxes, depreciation and amortization (“EBITDA”), both of which are tested quarterly and in the case of the leverage ratio under the Revolving Facility, there is an option to increase the ratio to 4.00 for 12 months in connection with certain acquisitions. At December 31, 2021, the Company was in compliance with each financial covenant under Credit Agreement and the Senior Notes, excluding the 3.00% Senior Notes which have no financial covenants. While there are no financial covenants relating to the 3.00% Senior Notes, they are subject to cross-default provisions. The negative covenants include restrictions on the Company’s 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), make certain subsidiary dividends or distributions, engage in materially different lines of businesses and allow subsidiaries to incur certain additional debt.

The Credit Agreement also contains customary events of default (subject to grace periods, as appropriate).

At December 31, 2021, there was no balance outstanding under the Revolving Facility and $7.2 million of outstanding letters of credit, resulting in a net available borrowing capacity under the Revolving Facility at December 31, 2021 of approximately $792.8 million. In addition, there were no borrowings under the Revolving Facility during the year ended December 31, 2021.

Issuance of 3.20% Senior Notes and 3.37% Senior Notes in 2016

On June 13, 2016, the Company completed a private placement of a $100 million aggregate principal amount of 3.20% Senior Notes due June 13, 2023 (the “3.20% Senior Notes”) and a $100 million aggregate principal amount of 3.37% Senior Notes due June 13, 2025 (the “3.37% Senior Notes” and together with the 3.20% Senior Notes, the “2016 Private Placement Notes”) pursuant to a Note Purchase Agreement dated June 13, 2016 (the “Purchase Agreement”). Each series of the 2016 Private Placement Notes bears interest at the stated amount per annum, which is payable semi-annually in arrears on each June 13th and December 13th. The 2016 Private Placement Notes are unsecured obligations of the Company and rank pari passu in right of payment with all of the Company’s other unsecured, unsubordinated debt. The Company may at any time prepay all, or any portion of the 2016 Private Placement Notes, provided that such portion is greater than 5% of the aggregate principal amount of the 2016 Private Placement Notes then outstanding. In the event of a prepayment, the Company will pay an amount equal to par plus accrued interest plus a make-whole amount. In addition, the Company may repurchase the 2016 Private Placement Notes by making an offer to all holders of the 2016 Private Placement Notes, subject to certain conditions.

The Purchase Agreement contains certain covenants that restrict the Company’s ability to, among other things, transfer or sell assets, incur indebtedness, create liens, transact with affiliates and engage in certain mergers or consolidations or other change of control transactions. In addition, the Company must comply with the leverage ratio and interest coverage ratio described above and the Purchase Agreement also limits the outstanding principal amount of priority debt that may be incurred by the Company to 15% of consolidated assets. The Purchase Agreement provides for customary events of default. In the case of an event of default arising from specified events of bankruptcy or insolvency, all of the outstanding 2016 Private Placement Notes will become due and payable immediately without further action or notice. In the case of payment event of default, any holder of the 2016 Private Placement Notes affected thereby may declare all of the 2016 Private Placement Notes held by it due and payable immediately. In the case of any other event of default, a majority of the holders of the 2016 Private Placement Notes may declare all of the 2016 Private Placement Notes to be due and payable immediately.

Total borrowings at December 31, 2021 have scheduled maturities as follows:


(In millions)
2022	$	—
2023	100.0
2024	—
2025	100.1
2026	—
Thereafter	1,000.0
Total borrowings	$	1,200.1

8. Derivative Instruments

The Company enters into cash flow hedges from time to time to reduce the exposure to variability in certain expected future cash flows. The types of cash flow hedges the Company enters into include foreign currency exchange contracts designed to minimize the earnings impact on certain intercompany loans as well as interest rate exchange agreements designed to reduce the impact of interest rate changes on future interest expense that effectively convert a portion of floating-rate debt to fixed-rate debt.

The effective portion of gains or losses on interest rate exchange agreements is reported in Accumulated other comprehensive 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 in net income during the period of change. See Note 17 for the amount of loss reclassified into net income for interest rate contracts for the years ended December 31, 2021, 2020 and 2019. As of December 31, 2021, the Company did not have any interest rate contracts outstanding.

In 2010 and 2011, the Company entered into two separate forward starting interest rate exchange agreements in anticipation of the issuance of the 4.50% Senior Notes and the 4.20% Senior Notes. The Company cash settled these two interest rate contracts in 2010 and 2011 for a total of $68.9 million, which was being amortized into interest expense over the 10 year terms of the respective debt instruments. In conjunction with the early redemption of the 4.50% Senior Notes on May 27, 2020, the Company accelerated the recognition of the remaining $1.4 million of the pre-tax amount included in Accumulated other comprehensive loss in shareholders’ equity related to the 4.50% Senior Notes and recorded such as Other expense - net in the Consolidated Statements of Income during the year ended December 31, 2020. In conjunction with the early redemption of the 4.20% Senior Notes on June 16, 2021, the Company accelerated the recognition of the remaining $1.3 million of the pre-tax amount included in Accumulated other comprehensive loss in shareholders’ equity related to the 4.20% Senior Notes and recorded such as Other expense - net in the Consolidated Statements of Income during the year ended December 31, 2021. As of December 31, 2021, there was no balance in Accumulated other comprehensive loss related to the cumulative unrealized gain (loss) on derivatives.

The amount of expense reclassified into interest expense for interest rate contracts for the years ended December 31, 2021, 2020 and 2019 is $3.3 million, $6.0 million and $6.3 million, respectively.

9. Fair Value Measurements

ASC 820, Fair Value Measurements and Disclosures, defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow) and the cost approach (cost to replace the service capacity of an asset or replacement cost). The standard utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:

Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs, other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions.

The following table summarizes the basis used to measure the Company’s financial assets (liabilities) at fair value on a recurring basis in the balance sheets at December 31, 2021 and 2020:


	Basis of Fair Value Measurements
	Balance at December 31, 2021		Level 1		Level 2		Level 3
	(In millions)
Trading securities - mutual funds held in nonqualified SERP(1)	$	11.6	$	11.6	$	—	$	—
Available-for-sale securities - equities(2)	45.3		45.3		—		—


	Basis of Fair Value Measurements
	Balance at December 31, 2020		Level 1		Level 2		Level 3
	(In millions)
Trading securities - mutual funds held in nonqualified SERP(1)	$	13.6	$	13.6	$	—	$	—

(1) The Supplemental Executive Retirement Plan (“SERP”) investment assets are offset by a SERP liability which represents the Company’s obligation to distribute SERP funds to participants.

(2) At December 31, 2021, the securities are included in Other current assets on the Company’s Consolidated Balance Sheets and are available for overnight cash settlement, if necessary, to fund current operations.

There were no transfers of assets or liabilities between Level 1 and Level 2 in 2021 or 2020.

The carrying values of the Company’s cash and cash equivalents, accounts receivable, marketable securities, accounts payable and accrued expenses approximate fair value because of the short term nature of these instruments. At December 31, 2021 and 2020, the fair value of the outstanding indebtedness described in Footnote 7 based on quoted market prices and current market rates for debt with similar credit risk and maturity was approximately $1,219.9 million and $1,127.6 million, respectively, compared to the carrying value of $1,198.7 million and $1,049.3 million, respectively. These fair value measurements are classified as Level 2 within the fair value hierarchy since they are determined based upon significant inputs observable in the market, including interest rates on recent financing transactions to entities with a credit rating similar to the Company’s rating.

10. Leases

The Company leases certain office facilities, warehouses, manufacturing plants, equipment (which includes both office and plant equipment) and vehicles under operating leases. Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term.

Certain leases include one or more options to renew. The exercise of lease renewal options is at the Company’s sole discretion. The Company does not include renewal periods in any of the leases’ terms until the renewal is executed as they are generally not reasonably certain of being exercised. The Company does not have any material purchase options.

Certain of the Company’s lease agreements have rental payments that are adjusted periodically for inflation or that are based on usage. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Supplemental balance sheet information related to leases as of December 31, 2021 and 2020 was as follows:


	Balance Sheet Caption	December 31, 2021		December 31, 2020
		(In millions)
Operating leases:
Building right-of-use assets - net	Other noncurrent assets	$	101.0	$	100.8
Equipment right-of-use assets - net	Other noncurrent assets	6.2		5.8
Total right-of-use assets - net		$	107.2	$	106.6
Operating leases:
Current lease liabilities	Accrued expenses	$	17.6	$	16.7
Noncurrent lease liabilities	Other noncurrent liabilities	93.4		94.3
Total lease liabilities		$	111.0	$	111.0

Refer to Note 15 for discussion on impairment of building right-of-use assets.

The components of lease cost for the years ended December 31, 2021, 2020 and 2019 were as follows:


	2021		2020		2019
	(In millions)
Operating lease cost (1)	$	31.5	$	29.5	$	23.0
Variable lease cost	2.3		1.9		2.3
Total lease expense	$	33.8	$	31.4	$	25.3

(1) Includes short-term leases, which are immaterial.

Supplemental cash flow information related to leases for the years ended December 31, 2021, 2020 and 2019 was as follows:


	2021		2020		2019
	(In millions)
Cash paid for amounts included in the measurement of operating lease liabilities	$	31.2	$	28.7	$	22.9
Right-of-use assets obtained in exchange for new operating lease liabilities	16.0		40.4		25.9

Other supplemental information related to leases as of December 31, 2021 and 2020 was as follows:


Lease Term and Discount Rate	December 31, 2021		December 31, 2020
Weighted-average remaining lease term (years):
Operating leases - building and equipment	8.50		9.43
Operating leases - vehicles	2.34		2.01
Weighted-average discount rate:
Operating leases - building and equipment	3.27	%	3.51	%
Operating leases - vehicles	1.08	%	2.05	%

The Company uses its incremental borrowing rate to determine the present value of the lease payments.

Total lease liabilities at December 31, 2021 have scheduled maturities as follows:


Maturity of Lease Liabilities	Operating Leases
	(In millions)
2022	$	20.1
2023	18.3
2024	15.6
2025	13.3
2026	12.0
Thereafter	48.3
Total lease payments	127.6
Less: Imputed interest	(16.6)
Present value of lease liabilities	$	111.0

Total lease liabilities at December 31, 2020 had scheduled maturities as follows:


Maturity of Lease Liabilities	Operating Leases
	(In millions)
2021	$	19.7
2022	17.0
2023	13.7
2024	11.7
2025	11.1
Thereafter	57.6
Total lease payments	$	130.8
Less: Imputed interest	$	(19.8)
Present value of lease liabilities	$	111.0

11. Commitments and Contingencies

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:


	2021		2020		2019
	(In millions)
Beginning balance at January 1	$	7.4	$	5.6	$	5.3
Provision for warranties	3.4		3.0		3.4
Claim settlements	(3.8)		(2.7)		(3.1)
Other adjustments, including acquisitions, divestitures and currency translation	0.6		1.5		—
Ending balance at December 31	$	7.6	$	7.4	$	5.6

The Company and certain of its subsidiaries are involved in pending and threatened legal, regulatory and other proceedings arising in the ordinary course of business. These proceedings may pertain to matters such as product liability or contract disputes, and may also involve governmental inquiries, inspections, audits or investigations relating to issues such as tax matters, intellectual property, environmental, health and safety issues, governmental regulations, employment and other matters. Although the results of such legal proceedings cannot be predicted with certainty, the Company believes that the ultimate disposition of these matters will not have a material adverse effect, individually or in the aggregate, on the Company’s business, financial condition, results of operations or cash flows.

12. Common and Preferred Stock

On March 17, 2020, the Company’s Board of Directors approved an increase of $500.0 million in the authorized level of repurchases of common stock. This approval is in addition to the prior repurchase authorizations of the Board of Directors of $300.0 million on December 1, 2015. These authorizations have no expiration date. Repurchases under the program will be funded with future cash flow generation or borrowings available under the Revolving Facility. There were no share repurchases during 2021. During 2020, the Company repurchased a total of 0.9 million shares at a cost of $110.3 million. As of December 31, 2021, the amount of share repurchase authorization remaining was $712.0 million.

At December 31, 2021 and 2020, 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 outstanding at December 31, 2021 or 2020.

13. Income Taxes

Pretax income for 2021, 2020 and 2019 was taxed in the following jurisdictions:


	2021		2020		2019
	(In millions)
U.S.	$	350.2	$	296.3	$	377.2
Foreign	229.6		174.0		155.7
Total	$	579.8	$	470.3	$	532.9

The provision (benefit) for income taxes for 2021, 2020 and 2019 was as follows:


	2021		2020		2019
	(In millions)
Current
U.S.	$	64.7	$	29.5	$	49.8
State and local	11.0		4.6		9.1
Foreign	60.9		50.2		41.9
Total current	136.6		84.3		100.8
Deferred
U.S.	(4.1)		10.1		10.1
State and local	(1.4)		1.5		(0.1)
Foreign	(0.6)		(3.4)		(3.4)
Total deferred	(6.1)		8.2		6.6
Total provision for income taxes	$	130.5	$	92.5	$	107.4

Deferred tax assets (liabilities) at December 31, 2021 and 2020 were:


	2021		2020
	(In millions)
Employee and retiree benefit plans	$	23.6	$	26.9
Capital loss and other carryforwards	11.9		16.3
Operating lease assets	25.7		24.7
Operating lease liabilities	(24.8)		(23.9)
Depreciation and amortization	(222.0)		(189.0)
Inventories	11.7		8.8
Allowances and accruals	10.3		7.3
Interest rate exchange agreement	—		0.7
Other	(16.6)		(16.9)
Total gross deferred tax (liabilities)	(180.2)		(145.1)
Valuation allowance	(11.9)		(16.3)
Total deferred tax (liabilities), net of valuation allowances	$	(192.1)	$	(161.4)

The deferred tax assets and liabilities recognized in the Company’s Consolidated Balance Sheets as of December 31, 2021 and 2020 were:


	2021		2020
	(In millions)
Noncurrent deferred tax asset - Other noncurrent assets	$	4.3	$	2.5
Noncurrent deferred tax liabilities - Deferred income taxes	(196.4)		(163.9)
Net deferred tax liabilities	$	(192.1)	$	(161.4)

The Company had prepaid income taxes, recorded within Other current assets on the Consolidated Balance Sheets, of $9.1 million and $20.9 million as of December 31, 2021 and 2020, respectively.

The provision for income taxes differs from the amount calculated by applying the statutory federal income tax rate to pretax income. The calculated amount and the differences for 2021, 2020 and 2019 are shown in the following table:


	2021				2020				2019
	(In millions)
Pretax income	$	579.8			$	470.3			$	532.9
Provision for income taxes:
Computed amount at statutory rate of 21%	$	121.8	21.0	%	$	98.8	21.0	%	$	111.9	21.0	%
State and local income tax (net of federal tax benefit)	8.0		1.4	%	5.9		1.3	%	8.2		1.5	%
Taxes on non-U.S. earnings-net of foreign tax credits	9.2		1.6	%	8.4		1.8	%	6.3		1.2	%
Global Intangible Low-Taxed Income	0.4		0.1	%	(2.7)		(0.6	%)	2.3		0.4	%
Foreign-Derived Intangible Income Deduction	(7.5)		(1.3	%)	(4.9)		(1.0	%)	(5.8)		(1.1	%)
Share-based payments	(3.5)		(0.6	%)	(9.8)		(2.1	%)	(11.0)		(2.1	%)
Other	2.1		0.3	%	(3.2)		(0.7	%)	(4.5)		(0.7	%)
Total provision for income taxes	$	130.5	22.5	%	$	92.5	19.7	%	$	107.4	20.2	%

The Company has $40.6 million and $28.6 million of permanently reinvested earnings of non-U.S. subsidiaries as of December 31, 2021 and 2020, respectively. No deferred U.S. income taxes have been provided on the $40.6 million of earnings that are considered to be permanently reinvested. It should also be noted that the aforementioned earnings will not incur U.S. taxes when ultimately repatriated other than potentially U.S. federal, state and local taxes on foreign exchange gains or losses recognized on the distribution of such earnings. Such distributions could also be subject to additional foreign withholding and foreign income taxes. The amount of unrecognized deferred income tax liabilities on currently permanently reinvested earnings is estimated to be $6.1 million and $4.3 million as of December 31, 2021 and 2020, respectively.

During the years ended December 31, 2021, 2020 and 2019, the Company repatriated $116.0 million, $27.0 million and $99.0 million of foreign earnings, respectively. These actual distributions resulted in no incremental income tax expense for the years ended December 31, 2021, 2020 and 2019. These repatriations represent distributions of previously taxed income as well as distributions from liquidating subsidiaries.

A reconciliation of the beginning and ending amount of unrecognized tax benefits for 2021, 2020 and 2019 is as follows:


	2021		2020		2019
	(In millions)
Beginning balance January 1	$	1.1	$	3.7	$	4.1
Gross increases for tax positions of prior years	0.1		—		—
Gross decreases for tax positions of prior years	(0.3)		—		—
Settlements	(0.2)		(2.6)		(0.1)
Lapse of statute of limitations	(0.6)		—		(0.3)
Ending balance December 31	$	0.1	$	1.1	$	3.7

The Company recognizes interest and penalties related to uncertain tax positions in provision for income taxes in the Consolidated Statements of Income. As of December 31, 2021, the Company accrued interest and penalties of less than $0.1 million related to uncertain tax positions.

The total amount of unrecognized tax benefits that would affect the Company’s effective tax rate if recognized is $0.1 million, $1.1 million and $3.7 million as of December 31, 2021, 2020 and 2019, respectively. The tax years 2016-2020 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. However, these unrecognized tax benefits are long-term in nature and are not expected to change within the next 12 months.

As of December 31, 2021, the Company had non-U.S. and U.S. state net operating loss carryforwards of $0.7 million and $22.5 million, respectively. The entire balance of the non-U.S. net operating losses, the majority of which relates to acquisitions

is available to be carried forward indefinitely. The U.S. state net operating loss will expire between 2033 and 2040. There is no valuation allowance as it is more-likely-than-not that the net operating losses will be realized.

The Company has U.S. federal, U.S. state and non-U.S. capital loss carryforwards of $11.9 million, $11.9 million and $13.5 million, respectively, with a full valuation allowance against the deferred tax asset. The non-U.S. capital loss can be carried forward indefinitely. The U.S. federal and U.S. state capital loss carryforwards will expire at various dates between 2025 and 2040.

As of December 31, 2021, the Company has a foreign tax credit carryforward for U.S. federal purposes of approximately $6.6 million with a full valuation allowance against the deferred tax asset. The U.S. federal foreign tax credit carryover will expire between 2029 and 2031.

14. Business Segments and Geographic Information

IDEX has three reportable business segments: FMT, HST and FSDP.

The FMT segment designs, produces and distributes positive displacement pumps, valves, small volume provers, flow meters, injectors and other fluid-handling pump modules and systems and provides flow monitoring and other services for the food, chemical, general industrial, water and wastewater, agriculture and energy industries.

The HST segment designs, produces and distributes a wide range of precision fluidics, rotary lobe pumps, centrifugal and positive displacement pumps, roll compaction and drying systems, pneumatic components and sealing solutions, high performance molded and extruded sealing components, custom mechanical and shaft seals, engineered hygienic mixers and valves, biocompatible medical devices and implantables, air compressors and blowers, optical components and coatings, laboratory and commercial equipment, precision photonic solutions and precision gear and peristaltic pump technologies. HST serves a variety of end markets, including food and beverage, pharmaceutical and biopharmaceutical, cosmetics, marine, chemical, wastewater and water treatment, life sciences, research and defense markets.

The FSDP segment designs, produces and distributes firefighting pumps, valves and controls, rescue tools, lifting bags, 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 the products and services offered. The Company evaluates performance based on several factors, of which sales, operating income and operating margin are the primary financial measures. Intersegment sales are accounted for at fair value as if the sales were to third parties.


	2021		2020		2019
	(In millions)
NET SALES
Fluid & Metering Technologies
External customers	$	998.0	$	895.4	$	956.5
Intersegment sales	0.7		0.9		0.5
Total segment sales	998.7		896.3		957.0
Health & Science Technologies
External customers	1,119.0		893.4		912.6
Intersegment sales	2.8		2.6		1.8
Total segment sales	1,121.8		896.0		914.4
Fire & Safety/Diversified Products
External customers	647.8		562.8		625.5
Intersegment sales	0.1		0.1		1.3
Total segment sales	647.9		562.9		626.8
Intersegment eliminations	(3.6)		(3.6)		(3.6)
Total net sales	$	2,764.8	$	2,351.6	$	2,494.6
OPERATING INCOME (LOSS) (1)
Fluid & Metering Technologies	$	259.3	$	235.0	$	285.2
Health & Science Technologies	288.9		206.4		200.2
Fire & Safety/Diversified Products	169.3		144.2		165.3
Corporate office and other	(80.5)		(64.9)		(71.7)
Total operating income	637.0		520.7		579.0
Interest expense	41.0		44.8		44.3
Other expense - net	16.2		5.6		1.8
Income before income taxes	$	579.8	$	470.3	$	532.9


	2021		2020		2019
	(In millions)
ASSETS
Fluid & Metering Technologies	$	1,458.8	$	1,387.0	$	1,150.7
Health & Science Technologies	2,138.3		1,576.1		1,507.1
Fire & Safety/Diversified Products	892.5		891.9		825.4
Corporate office and other	427.6		559.4		330.7
Total assets	$	4,917.2	$	4,414.4	$	3,813.9
DEPRECIATION AND AMORTIZATION (2)
Fluid & Metering Technologies	$	30.5	$	25.9	$	22.2
Health & Science Technologies	56.7		41.8		39.7
Fire & Safety/Diversified Products	15.3		15.2		14.3
Corporate office and other	0.5		0.6		0.7
Total depreciation and amortization	$	103.0	$	83.5	$	76.9
CAPITAL EXPENDITURES
Fluid & Metering Technologies	$	21.0	$	11.9	$	17.3
Health & Science Technologies	41.5		27.7		22.0
Fire & Safety/Diversified Products	9.5		8.9		9.8
Corporate office and other	0.7		3.1		1.8
Total capital expenditures	$	72.7	$	51.6	$	50.9

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

(2) Excludes amortization of debt issuance expenses.

Information about the Company’s long-lived assets in different geographical regions for the years ended December 31, 2021, 2020 and 2019 is shown below.


	2021		2020		2019
	(In millions)
LONG-LIVED ASSETS — PROPERTY, PLANT AND EQUIPMENT
U.S.	$	188.3	$	169.2	$	165.7
North America, excluding U.S.	5.4		5.0		3.8
Europe	98.9		100.0		88.1
Asia	34.5		24.0		22.5
Other	0.2		0.1		0.2
Total long-lived assets - net	$	327.3	$	298.3	$	280.3

15. Restructuring Expenses and Asset Impairments

During 2021, 2020 and 2019, the Company incurred restructuring expenses and asset impairments of $9.3 million, $11.8 million and $21.0 million, respectively. These costs were incurred to facilitate long-term sustainable growth through cost reduction actions, consisting of employee reductions, facility rationalization, contract termination costs and asset impairments. Restructuring costs include severance benefits, exit costs and asset impairments and are included in Restructuring expenses and asset impairments in the Consolidated Statements of Income. Severance costs primarily consist of severance benefits through payroll continuation, COBRA subsidies, outplacement services, conditional separation costs and employer tax liabilities, while exit costs primarily consist of lease exit and contract termination costs.

2021 Initiative

During the year ended December 31, 2021, the Company incurred severance costs related to employee reductions. In addition, the Company consolidated certain facilities within the FMT segment which resulted in asset impairments of $0.8 million related to property, plant and equipment that was not relocated to the new locations.

Pre-tax restructuring expenses and asset impairments by segment for the 2021 initiative were as follows:


	Severance Costs		Exit Costs		Asset Impairments		Total
	(In millions)
Fluid & Metering Technologies	$	3.7	$	—	$	0.8	$	4.5
Health & Science Technologies	1.7		—		—		1.7
Fire & Safety/Diversified Products	0.5		—		—		0.5
Corporate/Other	2.6		—		—		2.6
Total restructuring costs	$	8.5	$	—	$	0.8	$	9.3

2020 Initiative

During the year ended December 31, 2020, the Company incurred severance costs related to employee reductions and exit costs related to early lease terminations. In addition, in the fourth quarter of 2020, the Company consolidated certain facilities within the FMT segment, which resulted in an impairment charge of $2.5 million. The Company also relocated its corporate office, which resulted in an impairment charge of $0.6 million.

Pre-tax restructuring expenses and asset impairments by segment for the 2020 initiative were as follows:


	Severance Costs		Exit Costs		Asset Impairments		Total
	(In millions)
Fluid & Metering Technologies	$	2.9	$	0.2	$	2.5	$	5.6
Health & Science Technologies	2.7		—		—		2.7
Fire & Safety/Diversified Products	2.5		—		—		2.5
Corporate/Other	0.4		—		0.6		1.0
Total restructuring costs	$	8.5	$	0.2	$	3.1	$	11.8

2019 Initiative

During the year ended December 31, 2019, the Company incurred severance costs related to employee reductions and exit costs related to early lease terminations. In addition, in the second quarter of 2019, the Company began to evaluate strategic alternatives for one of its businesses in the HST segment. Prior to making a final decision on the options that were presented for this business, the business was informed of the loss of its largest customer. As a result, the Company accelerated its restructuring activities for this business and a decision was made to wind down the business over time. This event required an interim impairment test be performed on the long-lived tangible and intangible assets of the business, which resulted in an impairment charge of $9.7 million. The Company also consolidated one of its facilities into the Optics Center of Excellence in Rochester, New York, which resulted in an impairment charge of $0.4 million related to a building right-of-use asset.

Pre-tax restructuring expenses and asset impairments by segment for the 2019 initiative were as follows:


	Severance Costs		Exit Costs		Asset Impairments		Total
	(In millions)
Fluid & Metering Technologies	$	2.9	$	—	$	—	$	2.9
Health & Science Technologies	3.0		1.0		10.2		14.2
Fire & Safety/Diversified Products	1.3		—		—		1.3
Corporate/Other	2.6		—		—		2.6
Total restructuring costs	$	9.8	$	1.0	$	10.2	$	21.0

Restructuring accruals reflected in Accrued expenses in the Company’s Consolidated Balance Sheets are as follows:


	Restructuring Initiatives
	(In millions)
Balance at January 1, 2020	$	6.1
Restructuring expenses(1)	8.8
Payments, utilization and other	(11.0)
Balance at December 31, 2020	3.9
Restructuring expenses(2)	8.5
Payments, utilization and other	(9.6)
Balance at December 31, 2021	$	2.8

(1) Excludes $2.9 million of asset impairments related to property, plant and equipment and right-of-use assets.

(2) Excludes $0.8 million of asset impairments related to property, plant and equipment.

16. 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, 2021 totaled 15.6 million, of which 2.4 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.

The Company typically grants equity awards annually at its regularly scheduled first quarter meeting of the Board of Directors based on the recommendation from the Compensation Committee.

Stock Options

Stock options granted under the Company’s plans are generally non-qualified and are granted with an exercise price equal to the market price of the Company’s stock on the date of grant. The fair value of each option grant is estimated on the date of the grant using the Binomial lattice option pricing model (for options granted before March 2021) or the Black Scholes valuation model (for options granted after February 2021). The adoption of the Black Scholes model in 2021 was driven by a historical review of option exercise history, which more closely aligned with the methodology of the Black Scholes model. The majority of the options issued to employees vest ratably over four years, with vesting beginning one year from the date of grant, and generally expire 10 years from the date of grant.

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


	Years Ended December 31,
	2021	2020	2019
Weighted average fair value of grants	$38.88	$34.22	$35.15
Dividend yield	1.01%	1.15%	1.18%
Volatility	23.78%	22.04%	24.77%
Risk-free interest rate	0.12% - 1.54%	1.39% - 1.66%	2.53% - 3.04%
Expected life (in years)	5.70	5.80	5.87

The assumptions are as follows:

The Company estimated volatility using its historical share price performance over the contractual term of the option (for the Binomial lattice option pricing model) or over the expected life of the option (for the Black Scholes valuation model).
The Company uses historical data to estimate the expected life of the option. The expected life assumption for options granted before March 2021 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 expected life assumption for options granted after March 2021 is based on IDEX’s own exercise and cancellation history, adjusted for current vesting schedules.
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 Binomial lattice option pricing model) or commensurate with the expected life of the option (for the Black Scholes valuation model). For options granted before March 2021, the Company presents 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. For options granted after March 2021, the Company presents the spot rate used in the Black Scholes valuation 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, 2021, and changes during the year ended December 31, 2021 is presented as follows:


	Shares	Weighted Average Price		Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value
	(Dollars in millions except weighted average price)
Stock Options
Outstanding at January 1, 2021	963,726	$	125.70	6.94	$	70.8
Granted	279,785	198.29
Exercised	(186,897)	105.22
Forfeited/Expired	(48,028)	168.36
Outstanding at December 31, 2021	1,008,586	$	147.60	6.97	$	89.5
Vested and expected to vest at December 31, 2021	967,228	$	145.97	6.90	$	87.4
Exercisable at December 31, 2021	444,057	$	108.60	5.22	$	56.7

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 2021, 2020 and 2019 was $21.4 million, $41.3 million and $49.5 million, respectively. In 2021, 2020 and 2019, cash received from options exercised was $19.7 million, $44.6 million and $38.8 million, respectively, while the actual tax benefit realized for the tax deductions from stock options exercised totaled $4.5 million, $8.7 million and $10.4 million, respectively.

Total compensation cost for stock options is recorded in the Consolidated Statements of Income as follows:


	Years Ended December 31,
	2021		2020		2019
	(In millions)
Cost of goods sold	$	0.5	$	0.5	$	0.5
Selling, general and administrative expenses	8.0		7.6		8.7
Total expense before income taxes	8.5		8.1		9.2
Income tax benefit	(0.8)		(0.9)		(1.2)
Total expense after income taxes	$	7.7	$	7.2	$	8.0

As of December 31, 2021, there was $9.7 million of total unrecognized compensation cost related to stock options that is expected to be recognized over a weighted-average period of 1.2 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. 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. A summary of the Company’s restricted stock activity as of December 31, 2021, and changes during the year ending December 31, 2021 is as follows:


Restricted Stock	Shares	Weighted-Average Grant Date Fair Value
Unvested at January 1, 2021	111,300	$	147.13
Granted	39,530	206.53
Vested	(34,680)	140.73
Forfeited	(8,675)	170.22
Unvested at December 31, 2021	107,475	$	169.58

Total compensation cost for restricted stock is recorded in the Consolidated Statements of Income as follows:


	Years Ended December 31,
	2021		2020		2019
	(In millions)
Cost of goods sold	$	0.4	$	0.3	$	0.3
Selling, general and administrative expenses	5.1		3.9		4.5
Total expense before income taxes	5.5		4.2		4.8
Income tax benefit	(1.1)		(0.9)		(0.9)
Total expense after income taxes	$	4.4	$	3.3	$	3.9

As of December 31, 2021, there was $6.8 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. Cash-settled restricted stock awards are recorded at fair value on a quarterly basis using the market price of the Company’s stock on the last day of the quarter. Dividend equivalents are paid on certain cash-settled restricted stock awards. A summary of the Company’s unvested cash-settled restricted stock activity as of December 31, 2021, and changes during the year ending December 31, 2021 is as follows:


Cash-Settled Restricted Stock	Shares	Weighted-Average Fair Value
Unvested at January 1, 2021	63,940	$	199.20
Granted	22,385	198.85
Vested	(22,921)	199.78
Forfeited	(5,455)	236.32
Unvested at December 31, 2021	57,949	$	236.32

Total compensation cost for cash-settled restricted stock is recorded in the Consolidated Statements of Income as follows:


	Years Ended December 31,
	2021		2020		2019
	(In millions)
Cost of goods sold	$	0.7	$	0.9	$	1.2
Selling, general and administrative expenses	4.3		3.7		4.1
Total expense before income taxes(1)	5.0		4.6		5.3
Income tax benefit	(0.4)		(0.4)		(0.5)
Total expense after income taxes	$	4.6	$	4.2	$	4.8

(1) The 2020 and 2019 amounts were previously included in Share-based compensation expense on the Consolidated Statements of Cash Flows. These amounts have been reclassified to Accrued expenses and Other-net such that the amounts presented in Share-based compensation expense on the Consolidated Statements of Cash Flows relate solely to non-cash awards for all years presented. There was no change to the reported amount of net cash flows provided by operating activities for either 2020 or 2019 as a result of the reclassification.

At December 31, 2021 and 2020, the Company has accrued $5.9 million and $5.4 million, respectively, for cash-settled restricted stock in Accrued expenses in the Consolidated Balance Sheets and has accrued $2.8 million and $2.9 million, respectively, for cash-settled restricted stock in Other non-current liabilities in the Consolidated Balance Sheets.

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 companies in the Russell Midcap Index (for awards granted from 2016 through 2019) or the S&P 500 Index (for awards granted in 2020 and 2021) 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 peer 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 units are market condition awards, have been assessed at fair value on the date of grant using a Monte Carlo simulation model and are expensed ratably over the three-year term of the awards. The Company granted 29,020, 42,690 and 56,860 performance share units in 2021, 2020 and 2019, respectively.

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


	Years Ended December 31,
	2021	2020	2019
Weighted average fair value of grants	$247.49	$224.14	$207.26
Dividend yield	—%	—%	—%
Volatility	28.60%	19.50%	19.11%
Risk-free interest rate	0.33%	1.30%	2.49%
Expected life (in years)	2.93	2.94	2.83

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, 2021, and changes during the year ending December 31, 2021, is as follows:


Performance Share Units	Shares	Weighted-Average Grant Date Fair Value
Unvested at January 1, 2021	58,695	$	218.16
Granted	29,020	247.49
Vested	(29,840)	212.46
Forfeited	(5,850)	212.44
Unvested at December 31, 2021	52,025	$	236.75

Based on the Company’s relative total shareholder return rank during the three year period ended December 31, 2021, the Company achieved a 143% payout factor and issued 42,688 common shares in February 2022 for awards that vested in 2021.

Total compensation cost for performance share units is as follows:


	Years Ended December 31,
	2021		2020		2019
	(In millions)
Cost of goods sold	$	—	$	—	$	—
Selling, general and administrative expenses	6.4		2.6		8.4
Total expense before income taxes	6.4		2.6		8.4
Income tax benefit	(0.3)		(0.2)		(0.6)
Total expense after income taxes	$	6.1	$	2.4	$	7.8

As of December 31, 2021, there was $4.7 million of total unrecognized compensation cost related to performance shares that is expected to be recognized over a weighted-average period of 0.8 years.

17. Other Comprehensive (Loss) Income

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


	For the Year Ended December 31, 2021						For the Year Ended December 31, 2020
	Pre-tax		Tax		Net of tax		Pre-tax		Tax		Net of tax
	(In millions)
Cumulative translation adjustment	$	(75.6)	$	—	$	(75.6)	$	107.8	$	—	$	107.8
Pension and other postretirement adjustments
Net gain (loss) arising during the year	12.0		(2.9)		9.1		(1.5)		0.1		(1.4)
Amortization and settlement loss, net of curtailment gain	10.3		(2.4)		7.9		2.9		(0.1)		2.8
Pension and other postretirement adjustments	22.3		(5.3)		17.0		1.4		—		1.4
Reclassification adjustments for derivatives	3.3		(0.8)		2.5		6.0		(1.4)		4.6
Total other comprehensive (loss) income	$	(50.0)	$	(6.1)	$	(56.1)	$	115.2	$	(1.4)	$	113.8


	For the Year Ended December 31, 2019
	Pre-tax		Tax		Net of tax
	(In millions)
Cumulative translation adjustment	$	0.1	$	—	$	0.1
Pension and other postretirement adjustments
Net (loss) gain arising during the year	(7.4)		2.4		(5.0)
Amortization/recognition of settlement loss	2.8		(0.9)		1.9
Pension and other postretirement adjustments	(4.6)		1.5		(3.1)
Reclassification adjustments for derivatives	6.3		(1.4)		4.9
Total other comprehensive income (loss)	$	1.8	$	0.1	$	1.9

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


	For the Year Ended December 31,
	2021		2020		2019		Income Statement Caption
	(In millions)
Pension and other postretirement plans:
Amortization of service cost	$	1.8	$	2.9	$	2.9	Other expense - net
Settlement loss recognized	10.5		—		(0.1)		Other expense - net
Curtailment gain recognized	(2.0)		—		—		Other expense - net
Total before tax	10.3		2.9		2.8
Provision for income taxes	(2.4)		(0.1)		(0.9)
Total net of tax	$	7.9	$	2.8	$	1.9
Derivatives:
Reclassification adjustments	$	3.3	$	6.0	$	6.3	Interest expense, Other expense - net
Total before tax	3.3		6.0		6.3
Provision for income taxes	(0.8)		(1.4)		(1.4)
Total net of tax	$	2.5	$	4.6	$	4.9

18. Retirement Benefits

The Company sponsors several qualified and nonqualified defined benefit and defined contribution pension plans as well as other post-retirement 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.

Effective September 30, 2019, the IDEX Corporation Retirement Plan (“Plan”), a U.S. defined benefit plan, was amended to freeze the accrual of retirement benefits for all participants. This action impacted fewer than 60 participants, as the Plan had been closed to new entrants as of December 31, 2004 and frozen as of December 31, 2005 for all but certain older, longer service participants. Subsequent to the freeze, termination of the Plan was approved in November 2019. In addition, the Company recorded a settlement charge of $0.7 million in Other expense - net in the Consolidated Statements of Income for the year ended December 31, 2019.

Participants were notified in February 2020 and the Plan was terminated in May 2020. As a result of the termination, the settlement threshold was reached in early 2020 and the Company recorded a settlement charge of $0.9 million in Other expense - net in the Consolidated Statements of Income for the year ended December 31, 2020. The settlement also triggered the remeasurement of net periodic benefit cost resulting in a reduction of $1.0 million to Other expense - net in the Consolidated Statements of Income for the year ended December 31, 2020 as a result of significant decreases in discount rates and strong asset performance in 2020.

During the year ended December 31, 2021, the Company settled its remaining obligations under the U.S. pension plan through a combination of lump-sum payments to eligible participants who elected them, and through the purchase of annuities from Legal and General, an A rated third-party insurer. The Company recognized a net loss of $9.7 million, which was recorded within Other expense - net. The net loss consisted of $10.7 million related to previously deferred pension related costs, partially offset by $1.0 million related to an increase in plan assets remaining after the settlement. As of December 31, 2021, the Plan had surplus plan assets of approximately $10.2 million, representing cash equivalents held in a trust. These plan assets are included in Other current assets on the Company’s Consolidated Balance Sheets and will be used to fund the Company’s other retirement benefit plans over the next twelve months.

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, 2021 and a statement of the funded status at December 31 for both years.


	Pension Benefits								Other Benefits
	2021				2020				2021		2020
	U.S.		Non-U.S.		U.S.		Non-U.S.
	(In millions)
CHANGE IN BENEFIT OBLIGATION
Obligation at January 1	$	94.0	$	115.7	$	95.9	$	102.0	$	24.2	$	23.3
Service cost	0.1		2.0		0.1		2.2		0.7		0.6
Interest cost	0.3		0.7		1.3		1.1		0.4		0.6
Plan amendments	—		(0.5)		0.2		—		—		(2.9)
Benefits paid	(3.3)		(3.0)		(4.0)		(2.6)		(0.7)		(0.7)
Actuarial loss (gain)	(1.9)		(5.3)		6.5		7.3		(0.8)		3.2
Currency translation	—		(6.0)		—		8.9		—		0.1
Settlements	(78.6)		—		(6.0)		(3.8)		—		—
Curtailments	—		—		—		—		(0.2)		—
Other	—		0.7		—		0.6		—		—
Obligation at December 31	$	10.6	$	104.3	$	94.0	$	115.7	$	23.6	$	24.2
CHANGE IN PLAN ASSETS
Fair value of plan assets at January 1	$	100.0	$	42.2	$	93.4	$	39.3	$	—	$	—
Actual return on plan assets	(0.5)		4.2		16.2		3.6		—		—
Employer contributions	0.4		2.9		0.4		2.4		0.7		0.7
Benefits paid	(3.3)		(3.0)		(4.0)		(2.6)		(0.7)		(0.7)
Currency translation	—		(0.9)		—		2.7		—		—
Settlements	(78.6)		—		(6.0)		(3.8)		—		—
Acquisition/Divestiture	—		—		—		—		—		—
Other	(1.0)		0.7		—		0.6		—		—
Fair value of plan assets at December 31	$	17.0	$	46.1	$	100.0	$	42.2	$	—	$	—
Funded status at December 31	$	6.4	$	(58.2)	$	6.0	$	(73.5)	$	(23.6)	$	(24.2)
COMPONENTS ON THE CONSOLIDATED BALANCE SHEETS
Other current assets	$	10.2	$	—	$	—	$	—	$	—	$	—
Other noncurrent assets	—		0.1		10.7		—		—		—
Current liabilities	(0.8)		(1.5)		(0.5)		(1.5)		(1.2)		(1.0)
Other noncurrent liabilities	(3.0)		(56.8)		(4.2)		(72.0)		(22.4)		(23.2)
Net asset (liability) at December 31	$	6.4	$	(58.2)	$	6.0	$	(73.5)	$	(23.6)	$	(24.2)

The pension benefits actuarial gain in 2021 was primarily driven by the increase in the discount rates from 2020 to 2021. The U.S. actuarial gain was partially offset by an updated projection scale assumption. The non-U.S. actuarial gain was primarily driven by the increase in the discount rates, asset gains and the updated mortality assumptions in Switzerland.

The other benefits actuarial gain in 2021 was primarily driven by the increase in the discount rates from 2020 to 2021 and gains from updated participant data, partially offset by updated claims and contributions experience.

The accumulated benefit obligation (“ABO”) for all defined benefit pension plans was $110.7 million and $204.4 million at December 31, 2021 and 2020, respectively.

The weighted average assumptions used in the measurement of the Company’s benefit obligation at December 31, 2021 and 2020 were as follows:


	U.S. Plans				Non-U.S. Plans				Other Benefits
	2021		2020		2021		2020		2021		2020
Discount rate	2.52	%	2.14	%	1.25	%	0.95	%	2.70	%	2.20	%
Rate of compensation increase	—	%	—	%	2.31	%	2.32	%	—	%	—	%
Cash balance interest credit rate	—	%	4.00	%	1.00	%	1.00	%	—	%	—	%

The pretax amounts recognized in Accumulated other comprehensive loss on the Consolidated Balance Sheets as of December 31, 2021 and 2020 were as follows:


	Pension Benefits								Other Benefits
	2021				2020				2021		2020
	U.S.		Non-U.S.		U.S.		Non-U.S.
	(In millions)
Prior service cost (credit)	$	0.1	$	(0.5)	$	0.2	$	(0.1)	$	(0.5)	$	(2.9)
Net loss (gain)	2.1		12.6		13.4		24.5		(3.0)		(2.3)
Total	$	2.2	$	12.1	$	13.6	$	24.4	$	(3.5)	$	(5.2)

The components of the net periodic (benefit) cost for the plans in 2021, 2020 and 2019 are as follows:


	Pension Benefits
	2021				2020				2019
	U.S.		Non-U.S.		U.S.		Non-U.S.		U.S.		Non-U.S.
	(In millions)
Service cost	$	0.1	$	2.0	$	0.1	$	2.2	$	0.6	$	1.8
Interest cost	0.3		0.7		1.3		1.1		2.8		1.5
Expected return on plan assets	(0.9)		(1.0)		(3.8)		(1.2)		(3.3)		(1.0)
Settlement loss recognized	10.5		—		0.9		(0.4)		0.7		—
Special termination benefit recognized	—		—		—		—		0.3		—
Net amortization	0.4		2.1		1.2		1.7		1.6		1.1
Net periodic cost (benefit)	$	10.4	$	3.8	$	(0.3)	$	3.4	$	2.7	$	3.4


	Other Benefits
	2021		2020		2019
	(In millions)
Service cost	$	0.7	$	0.6	$	0.6
Interest cost	0.4		0.6		0.8
Curtailment gain recognized	(2.0)		—		—
Net amortization	(0.6)		(0.5)		(0.6)
Net periodic (benefit) cost	$	(1.5)	$	0.7	$	0.8

The Company recognizes the service cost component in both Selling, general and administrative expenses and Cost of sales in the Consolidated Statements of Income depending on the functional area of the underlying employees included in the plans.

The assumptions used in determining the net periodic cost (benefit) were as follows:


	U.S. Plans						Non-U.S. Plans
	2021		2020		2019		2021		2020		2019
Discount rate	2.14	%	Various*		4.11%/2.99%**		0.95	%	1.33	%	2.07	%
Expected return on plan assets	2.40	%	4.00	%	4.00	%	2.41	%	3.00	%	3.12	%
Rate of compensation increase	—	%	—	%	4.00	%	2.32	%	2.29	%	2.13	%

*For the IDEX Corporation Retirement Plan, a discount rate of 3.07% was used to determine the net periodic (benefit) cost for the period January 1, 2020 through March 31, 2020, a discount rate of 2.97% was used to determine the net periodic (benefit) cost for the period April 1, 2020 through June 30, 2020, a discount rate of 2.41% was used to determine the net periodic (benefit) cost for the period July 1, 2020 through September 30, 2020 and a discount rate of 2.36% was used to determine the net periodic (benefit) cost for the period October 1, 2020 through December 31, 2020 as a result of the quarterly remeasurements that occurred in conjunction with the termination of the Plan.

For the Pulsafeeder, Inc. Pension Plan for Hourly Employees at Rochester, New York, a discount rate of 3.21% was used to determine the net periodic (benefit) cost for the period January 1, 2020 through June 30, 2020 and a discount rate of 2.62% was used to determine the net periodic (benefit) cost for the period July 1, 2020 through December 31, 2020 as a result of the remeasurement that occurred in conjunction with the ratification of the collective bargaining agreement.

**A discount rate of 4.11% was used to determine the net periodic benefit cost for the period January 1, 2019 through August 31, 2019 and a discount rate of 2.99% was used to determine the net periodic benefit cost for the period September 1, 2019 through December 31, 2019 as a result of the remeasurement that occurred in conjunction with the decision to freeze the Plan.


	Other Benefits
	2021		2020		2019
Discount rate	2.20	%	3.09	%	4.11	%
Expected return on plan assets	—	%	—	%	—	%
Rate of compensation increase	—	%	4.00	%	4.00	%

The pretax change recognized in Accumulated other comprehensive loss on the Consolidated Balance Sheet in 2021 is as follows:


	Pension Benefits				Other Benefits
	U.S.		Non-U.S.
	(In millions)
Net gain (loss) in current year	$	0.5	$	8.5	$	1.0
Prior service cost	—		0.5		—
Amortization of prior service cost (credit)	0.1		—		(2.4)
Amortization of net loss (gain)	10.8		2.1		(0.3)
Exchange rate effect on amounts in other comprehensive income	—		1.5		—
Total	$	11.4	$	12.6	$	(1.7)

The discount rates for the Company’s 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 $12.8 million, $12.5 million and $12.4 million for 2021, 2020 and 2019, respectively.

The Company, through its subsidiaries, participates in certain multi-employer pension plans covering approximately 212 participants under U.S. collective bargaining agreements. None of these plans are considered individually significant to the Company as contributions to these plans totaled $1.0 million, $1.1 million, and $1.1 million for 2021, 2020 and 2019, respectively.

For measurement purposes, a 5.45% weighted average annual rate of increase in the per capita cost of covered health care benefits was assumed for 2021. The rate was assumed to decrease gradually each year to a rate of 4.45% for 2040, and remain at that level thereafter.

Plan Assets

The Company’s pension plan weighted average asset allocations at December 31, 2021 and 2020, by asset category, were as follows:


	U.S. Plans				Non-U.S. Plans
	2021		2020		2021		2020
Equity securities	4	%	7	%	18	%	17	%
Fixed income securities	33	%	65	%	22	%	24	%
Cash/Commingled Funds/Other (1)	63	%	28	%	60	%	59	%
Total	100	%	100	%	100	%	100	%

The basis used to measure the defined benefit plans’ assets at fair value at December 31, 2021 and 2020 is summarized as follows:


	Basis of Fair Value Measurement
	Outstanding Balances		Level 1		Level 2		Level 3
As of December 31, 2021	(In millions)
Equity
U.S. Large Cap	$	0.3	$	0.3	$	—	$	—
U.S. Small / Mid Cap	4.6		—		4.6		—
International	4.2		1.0		3.2		—
Fixed Income
U.S. Intermediate	1.9		—		1.9		—
U.S. Long Term	5.4		—		5.4		—
U.S. High Yield	0.7		—		0.7		—
International	7.5		0.3		7.2		—
Other Commingled Funds(1)	23.7		—		—		23.7
Cash and Equivalents	12.1		11.0		1.1		—
Other	2.7		—		2.7		—
	$	63.1	$	12.6	$	26.8	$	23.7

(1)Other commingled funds represent pooled institutional investments in non-U.S. plans.


	Basis of Fair Value Measurement
	Outstanding Balances		Level 1		Level 2		Level 3
As of December 31, 2020	(In millions)
Equity
U.S. Large Cap	$	3.7	$	3.7	$	—	$	—
U.S. Small / Mid Cap	0.4		—		0.4		—
International	10.4		4.4		6.0		—
Fixed Income
U.S. Intermediate	14.3		—		14.3		—
U.S. Long Term	51.9		—		51.9		—
U.S. High Yield	0.3		—		0.3		—
International	8.4		0.3		8.1		—
Other Commingled Funds(1)	20.7		—		—		20.7
Cash and Equivalents	28.5		27.8		0.7		—
Other	3.5		—		3.5		—
	$	142.1	$	36.2	$	85.2	$	20.7

(1)Other commingled funds represent pooled institutional investments in non-U.S. plans.

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 U.S. 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 10% and “fixed income” obligations, including cash, will constitute 90% of the market value of total fund assets.

The investment objective of the UK plan, consistent with prudent standards for preservation of capital and maintenance of liquidity, is to earn a target return of UK Gilts plus approximately 3.1% per year. The general asset allocation guidelines for plan assets are that “equities” will constitute from 60% to 65% of the market value of total fund assets with a target of 62%, and “fixed income” obligations, including cash, will constitute from 35% to 40% with a target of 38%. The UK plan also has a framework in place such that if the funding position (which is monitored daily) improves to a certain level, the asset allocation will switch out of equities into fixed income assets in order to lower the level of risk of the investments.

The term “equities” includes common stock, while the term “fixed income” includes obligations with contractual payments and a specific maturity date. The Company, through the use of a professional independent advisor, will monitor the asset allocation daily and maintain an asset allocation that closely replicates the designated targets. 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 an appointed professional independent advisor. As of December 31, 2021, there were no shares of the Company’s stock held in plan assets.

Cash Flows

The Company expects to contribute approximately $4.0 million to its defined benefit plans and $1.2 million to its other postretirement benefit plans in 2022. The Company also expects to contribute approximately $15.1 million to its defined contribution plan and $10.2 million to its 401(k) savings plan in 2022 using both the $10.2 million of surplus plan assets described above and cash on hand.

Estimated Future Benefit Payments

The future estimated benefit payments for the next five years and the five years thereafter are as follows: 2022 — $6.4 million; 2023 — $6.0 million; 2024 — $6.0 million; 2025 — $6.3 million; 2026 — $6.3 million; 2027 to 2031 — $31.8 million.

19. Subsequent Events

As previously announced, on November 23, 2021, the Company entered into a definitive agreement to acquire Nexsight, LLC and its businesses Envirosight, WinCan, MyTana and Pipeline Renewal Technologies (“Nexsight”) for cash consideration of $120.0 million, subject to customary post-closing adjustments. Nexsight is based in Randolph, New Jersey. Nexsight will complement and create synergies with the Company’s existing iPEK and ADS business units that design and create sewer crawlers, inspection and monitoring systems and software applications that allow teams to identify, anticipate and correct wastewater system issues remotely. Nexsight will be part of the Company’s Water reporting unit within the FMT segment.

The Company expects to close the transaction by the end of the first quarter of 2022, subject to regulatory approval and customary closing conditions.

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