Edgar Filing: IDEX CORP /DE/

Form 10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

þ	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 2011

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From to

Commission file number 1-10235

IDEX CORPORATION

(Exact Name of Registrant as Specified in its Charter)


Delaware		36-3555336
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1925 West Field Court, Lake Forest, Illinois		60045
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number:

(847) 498-7070

Securities Registered Pursuant to Section 12(b) of the Act:

Title of Each Class

Name of Each Exchange on Which Registered

Common Stock, par value $.01 per share

New York Stock Exchange

and Chicago Stock Exchange

Securities Registered Pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ No ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No þ

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer þ	Accelerated filer ¨	Non-accelerated filer ¨	Smaller reporting company ¨
	(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No þ

The aggregate market value of the voting stock (based on the June 30, 2011 closing price of $45.85) held by non-affiliates of IDEX Corporation was $3,755,534,573.

The number of shares outstanding of IDEX Corporation’s common stock, par value $.01 per share (the “Common Stock”), as of February 17, 2012 was 83,804,606.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the 2011 Annual Report to stockholders of IDEX Corporation (“the 2011 Annual Report”) are incorporated by reference in Part II of this Form 10-K and portions of the Proxy Statement of IDEX Corporation (the “2012 Proxy Statement”) with respect to the 2012 annual meeting of stockholders are incorporated by reference into Part III of this Form 10-K.

Table of Contents


PART I.
Item 1.	Business	1
Item 1A.	Risk Factors	8
Item 1B.	Unresolved Staff Comments	10
Item 2.	Properties	10
Item 3.	Legal Proceedings	10
Item 4.	Mine Safety Disclosures	10

PART II.
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	11
Item 6.	Selected Financial Data	13
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 8.	Financial Statements and Supplementary Data	28
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	68
Item 9A.	Controls and Procedures	68
Item 9B.	Other Information	68

PART III.
Item 10.	Directors, Executive Officers and Corporate Governance	68
Item 11.	Executive Compensation	68
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	69
Item 13.	Certain Relationships and Related Transactions, and Director Independence	69
Item 14.	Principal Accountant Fees and Services	69

PART IV.
Item 15.	Exhibits and Financial Statement Schedules	70
Signatures		71
Exhibit Index		72

PART I

Item 1.

Business.

IDEX Corporation (“IDEX” or the “Company”) is a Delaware corporation incorporated on September 24, 1987. The Company is an applied solutions business that sells an extensive array of pumps, flow meters and other fluidics systems and components and engineered products to customers in a variety of markets around the world. All of the Company’s business activities are carried out through wholly-owned subsidiaries.

IDEX has four reportable business segments: Fluid & Metering Technologies, Health & Science Technologies, Dispensing Equipment, and Fire & Safety/Diversified Products. Reporting units in the Fluid & Metering Technologies segment consist of: Banjo; Energy and Fuels (“Energy”); Chemical, Food & Process (“CFP”) and Water & Waste Water (“Water”). Reporting units in the Health & Science Technologies segment consist of: IDEX Health & Science (“IH&S”); IDEX Optics and Photonics (“IOP”); Precision Polymer Engineering (“PPE”); Gast; Micropump and Materials Process Technologies (“MPT”) which we previously referred to as the Pharma group. The Dispensing Equipment segment is a reporting unit. Reporting units in the Fire & Safety/Diversified Products segment consist of: Fire Suppression; Rescue Tools and Band-It.

IDEX believes that each of its reporting units is a leader in its product and service areas. The Company also believes that its strong financial performance has been attributable to its ability to design and engineer specialized quality products, coupled with its ability to identify and successfully consummate and integrate strategic acquisitions.

FLUID & METERING TECHNOLOGIES SEGMENT

Banjo. Banjo is a provider of special purpose, severe-duty pumps, valves, fittings and systems used in liquid handling. Banjo is based in Crawfordsville, Indiana and its products are used in agricultural and industrial applications. Approximately 11% of Banjo’s 2011 sales were to customers outside the U.S.

Energy. Energy consists of the Company’s Corken, Faure Herman, Liquid Controls, S.A.M.P.I. and Toptech businesses. Energy is a leading supplier of flow meters, electronic registration and control products, rotary vane and turbine pumps, reciprocating piston compressors, and terminal automation control systems. Headquartered in Lake Bluff, Illinois (Liquid Controls and Sponsler products), Energy has additional facilities in Longwood, Florida and Zwijndrech, Belgium (Toptech products), Oklahoma City, Oklahoma (Corken products), La Ferté Bernard, France (Faure Herman products), Vadodara, Gujarat, India (Liquid Controls products), and Altopascio, Italy (S.A.M.P.I. products). Applications for Liquid Controls and S.A.M.P.I. positive displacement flow meters, electronic, registration and control products include mobile and stationary metering installations for wholesale and retail distribution of petroleum and liquefied petroleum gas, aviation refueling, and industrial metering and dispensing of liquids and gases. Corken products consist of positive-displacement rotary vane pumps, single and multistage regenerative turbine pumps, and small horsepower reciprocating piston compressors. Toptech supplies terminal automation hardware and software to control and manage inventories, as well as transactional data and invoicing, to customers in the oil, gas and refined-fuels markets. Faure Herman is a leading supplier of ultrasonic and helical turbine flow meters used in the custody transfer and control of high value fluids and gases. Approximately 57% of Energy’s 2011 sales were to customers outside the U.S.

Chemical, Food & Process. CFP consists of the Company’s Richter, Viking and Warren Rupp businesses. CFP is a leading producer of air-operated and motor-driven double-diaphragm pumps and replacement parts, premium quality lined pumps, valves and control equipment for the chemical, fine chemical and pharmaceutical industries, and external gear pumps. Richter’s corrosion resistant fluoroplastic lined products offer superior solutions for demanding applications in the process industry. Viking’s products consist of external gear pumps, strainers and reducers, and related controls used for transferring and metering thin and viscous liquids sold under the Viking^® and Wright Flow^TM brands and air-operated double-diaphragm pumps sold under the Blagdon^® brand. Markets served by Viking products include chemical, petroleum, pulp & paper, plastics, paints, inks, tanker trucks, compressor, construction, food & beverage, personal care, pharmaceutical and biotech. Warren Rupp products (which also include Pumper Parts and Versa-Matic products) are used for abrasive and semisolid materials as well as for applications where product degradation is a concern or where electricity is not available or should not be used. Markets served by Warren Rupp products include chemical, paint, food processing, electronics, construction, utilities, mining and industrial maintenance. CFP maintains operations in Kampen, Germany (Richter products), Cedar Falls, Iowa (Richter and Viking products), Eastbourne, East Sussex, England, Shannon, Ireland (Viking products) and Mansfield, Ohio (Warren Rupp products). CFP primarily uses independent distributors to market and sell its products. Approximately 55% of CFP’s 2011 sales were to customers outside the U.S.

Water & Waste Water. Water consists of the Company’s ADS, IETG, iPEK, Knight and Pulsafeeder businesses. Water is a leading provider of metering technology and flow monitoring products and underground surveillance services for water & wastewater markets, as well as a leading manufacturer of pumps and dispensing equipment for industrial laundries, commercial dishwashing and chemical metering, and a provider of metering pumps, special-purpose rotary pumps, peristaltic pumps, fully integrated pump and metering systems, custom chemical-feed systems, electronic controls and dispensing equipment. ADS’s products and services provide comprehensive integrated solutions that enable industry, municipalities and government agencies to analyze and measure the capacity, quality and integrity of wastewater collection systems, including the maintenance and construction of such systems. IETG’s products and services enable water companies to effectively manage their water distribution and sewerage networks, while its surveillance service specializes in underground asset detection and mapping for utilities and other private companies. iPEK supplies remote controlled systems used for infrastructure inspection. Knight is a leading manufacturer of pumps and dispensing equipment for industrial laundries, commercial dishwashing and chemical metering. Pulsafeeder products are used to introduce precise amounts of fluids into processes to manage water quality and chemical composition, as well as peristaltic pumps. Its markets include water and wastewater treatment, oil & gas, power generation, pulp & paper, chemical and hydrocarbon processing, and swimming pools. Water maintains operations in Huntsville, Alabama and various other locations in the United States, Sydney, New South Wales, Australia and Melbourne, Victoria, Australia (ADS products), Leeds, England (IETG products and services), Hirschegg, Austria, and Sulzberg, Germany (iPEK products), Lake Forest, California, Mississauga, Ontario, Canada, Eastbourne, East Sussex, England, Unanderra, Australia, and Ciudad Juarez, Chihuahua, Mexico (Knight products), Rochester, New York, Punta Gorda, Florida and Milan, Italy (Pulsafeeder products). Approximately 46% of Water’s 2011 sales were to customers outside the U.S.

HEALTH & SCIENCE TECHNOLOGIES SEGMENT

The Health & Science Technologies Segment designs, produces and distributes a wide range of precision fluidics, rotary lobe pumps, centrifugal and positive displacement pumps, roll compaction and drying systems used in beverage, food processing, pharmaceutical and cosmetics, pneumatic components and sealing solutions, including very high precision, low-flow rate pumping solutions required in analytical instrumentation, clinical diagnostics and drug discovery, high performance molded and extruded, biocompatible medical devices and implantables, air compressors used in medical, dental and industrial applications, optical components and coatings for applications in the fields of scientific research, defense, aerospace, telecommunications and electronics manufacturing, laboratory and commercial equipment used in the production of micro and nano scale

materials, precision photonic solutions used in life sciences, research and defense markets, and precision gear and peristaltic pump technologies that meet exacting original equipment manufacturer specifications. The segment accounted for 34% of IDEX’s sales and 31% of operating income in 2011, with approximately 53% of its sales to customers outside the U.S.

IDEX Health & Science. IH&S consists of the Eastern Plastics, Innovadyne, Isolation Technologies, Rheodyne, Ismatec, Sapphire Engineering, Systec and Upchurch Scientific businesses and has facilities in Rohnert Park, California (Innovadyne, Rheodyne and Systec products); Bristol, Connecticut (Eastern Plastics products); Glattbrugg, Switzerland and Wertheim-Mondfeld, Germany (Ismatec products), Middleboro, Massachusetts (Isolation Technologies and Sapphire Engineering products), and Oak Harbor, Washington (Ismatec and Upchurch Scientific products). Rheodyne and Systec products consist of injectors, valves, fittings and accessories for the analytical instrumentation market. Rheodyne and Systec products are used by manufacturers of high pressure liquid chromatography equipment servicing the pharmaceutical, biotech, life science, food & beverage, and chemical markets. Ismatec is a manufacturer of peristaltic metering pumps, analytical process controllers, and sample preparation systems. Sapphire Engineering and Upchurch Scientific products include fluidic components and systems for the analytical, biotech and diagnostic instrumentation markets, such as fittings, precision-dispensing pumps and valves, tubing and integrated tubing assemblies, filter sensors and other micro-fluidic and nano-fluidic components. Markets for Sapphire Engineering and Upchurch Scientific products include pharmaceutical, drug discovery, chemical, biochemical processing, genomics/proteomics research, environmental labs, food/agriculture, medical lab, personal care, and plastics/polymer/rubber production. Eastern Plastics products, which consist of high- precision integrated fluidics and associated engineered plastics solutions, are used in a broad set of end markets including medical diagnostics, analytical instrumentation, and laboratory automation. Isolation Technologies products consist of advanced column hardware and accessories for the high performance liquid chromatography (“HPLC”) market. HPLC instruments are used in a variety of analytical chemistry applications, with primary commercial applications including drug discovery and quality control measurements for pharmaceutical and food/beverage testing. Approximately 51% of IH&S’s 2011 sales were to customers outside the U.S.

IDEX Optics and Photonics. IOP consists of CVI Melles Griot (“CVI MG”), which was acquired in June 2011, Semrock, and AT Films, which was acquired in January 2011. CVI MG is a global leader in the design and manufacture of precision photonic solutions used in the life sciences, research, semiconductor, security and defense markets. CVI MG’s innovative products are focused on the generation, control and productive use of light for a variety of key science and industrial applications. Products consist of specialty lasers and light sources, electro-optical components, specialty shutters, opto-mechanical assemblies and components. In addition, CVI MG produces critical components for life science research, electronics manufacturing, military and other industrial applications including lenses, mirrors, filters and polarizers. These components are utilized in a number of important applications such as spectroscopy, cytometry (cell counting), guidance systems for target designation, remote sensing, menology and optical lithography. CVI MG is headquartered in Albuquerque, New Mexico, with additional manufacturing sites located in Carlsbad, California, Covina, California, Rochester, New York, Isle of Man, British Isles; Leicester, England, Kyongki-Do, Korea, Tokyo, Japan, Didam, The Netherlands, and Singapore. Semrock is a provider of optical filters for biotech and analytical instrumentation in the life sciences markets. Semrock’s optical filters are produced using state-of-the-art manufacturing processes which enable it to offer its customers significant improvements in instrument performance and reliability. Semrock is located in Rochester, New York. AT Films specializes in optical components and coatings for applications in the fields of scientific research, defense, aerospace, telecommunications and electronics manufacturing. AT Films’ core competence is the design and manufacture of filters, splitters, reflectors and mirrors with the precise physical properties required to support their customers’ most challenging and cutting-edge optical applications. AT Films is headquartered in Boulder, Colorado. Approximately 54% of IOP’s 2011 sales were to customers outside the U.S.

Precision Polymer Engineering. PPE, which was acquired in April 2010 and is located in Blackburn, England, is a provider of proprietary high performance seals and advanced sealing solutions for a diverse range

of global industries and applications, including hazardous duty, analytical instrumentation, semiconductor/solar, process technologies, pharmaceutical, electronics, and food applications. Approximately 82% of PPE’s 2011 sales were to customers outside the U.S.

Gast. Gast consists of the Company’s Gast and Jun-Air businesses. The Gast business is a leading manufacturer of air-moving products, including air motors, low-range and medium-range vacuum pumps, vacuum generators, regenerative blowers and fractional horsepower compressors. Gast products are used in a variety of long-life applications requiring a quiet, clean source of moderate vacuum or pressure. Markets served by Gast products include medical equipment, environmental equipment, computers & electronics, printing machinery, paint mixing machinery, packaging machinery, graphic arts, and industrial manufacturing. The Jun-Air business is a provider of low-decibel, ultra-quiet vacuum compressors suitable for medical, dental and laboratory applications. Based in Benton Harbor, Michigan, Gast also has a manufacturing site in Redditch, England. Approximately 33% of Gast’s 2011 sales were to customers outside the U.S.

Micropump. Micropump consists of the Company’s Micropump and Trebor businesses. Micropump, headquartered in Vancouver, Washington, is a leader in small, precision-engineered, magnetically and electromagnetically driven rotary gear, piston and centrifugal pumps. Micropump products are used in low-flow abrasive and corrosive applications. Markets served by Micropump products include printing machinery, medical equipment, paints & inks, chemical processing, pharmaceutical, refining, laboratory, electronics, pulp & paper, water treatment, textiles, peristaltic metering pumps, analytical process controllers and sample preparation systems. Located in Salt Lake City, Utah, the Trebor business is a leader in high-purity fluid handling products, including air-operated diaphragm pumps and deionized water-heating systems. Trebor products are used in manufacturing of semiconductors, disk drives and flat panel displays. Approximately 71% of Micropump’s 2011 sales were to customers outside the U.S.

Materials Process Technologies: MPT consists of the Quadro, Fitzpatrick and Microfluidics businesses. Quadro is a leading provider of particle control solutions for the pharmaceutical and bio-pharmaceutical markets. Based in Waterloo, Ontario, Canada, Quadro’s core capabilities include fine milling, emulsification and special handling of liquid and solid particulates for laboratory, pilot phase and production scale processing within the pharmaceutical and bio-pharmaceutical markets. Fitzpatrick is a global leader in the design and manufacture of process technologies for the pharmaceutical, food and personal care markets. Fitzpatrick designs and manufactures customized size reduction, roll compaction and drying systems to support their customers’ product development and manufacturing processes. Fitzpatrick is headquartered in Elmhurst, Illinois. Microfluidics is a global leader in the design and manufacture of laboratory and commercial equipment used in the production of micro and nano scale materials for the pharmaceutical and chemical markets. Microfluidics is the exclusive producer of the Microfluidizer^® family of high shear fluid processors for uniform particle size reduction, robust cell disruption and nanoparticle creation. Microfluidics is headquartered in Newton, Massachusetts. Approximately 53% of MPT’s 2011 sales were to customers outside the U.S.

DISPENSING EQUIPMENT SEGMENT

The Dispensing Equipment Segment produces precision equipment for dispensing, metering and mixing colorants and paints used in a variety of retail and commercial businesses around the world. Dispensing Equipment is a global supplier of precision-designed tinting, mixing, dispensing and measuring equipment for auto refinishing and architectural paints. Dispensing Equipment products are used in retail and commercial stores, hardware stores, home centers, department stores, automotive body shops as well as point-of-purchase dispensers. Dispensing Equipment is headquartered in Wheeling, Illinois with additional facilities in Sassenheim, The Netherlands, Unanderra, Australia, Gennevilliers, France, Milan, Italy, Barcelona, Spain, and Scarborough, Ontario, Canada. The segment accounted for 6% of IDEX’s sales and 4% of IDEX’s operating income in 2011, with approximately 77% of its sales to customers outside the U.S.

FIRE & SAFETY/DIVERSIFIED PRODUCTS SEGMENT

The Fire & Safety/Diversified Products Segment produces firefighting pumps and controls, rescue tools, lifting bags and other components and systems for the fire and rescue industry, and engineered stainless steel banding and clamping devices used in a variety of industrial and commercial applications. The segment accounted for 16% of IDEX’s sales and 20% of IDEX’s operating income in 2011, with approximately 57% of its sales to customers outside the U.S.

Fire Suppression. Fire Suppression consists of the Class 1, Hale and Godiva businesses, which produce truck-mounted and portable fire pumps, stainless steel valves, foam and compressed air foam systems, pump modules and pump kits, electronic controls and information systems, conventional and networked electrical systems, and mechanical components for the fire, rescue and specialty vehicle markets. Fire Suppression’s customers are primarily OEMs. Fire Suppression is headquartered in Ocala, Florida (Class 1 products), with additional facilities located in Conshohocken, Pennsylvania (Hale products) and Warwick, England (Godiva products). Approximately 41% of Fire Suppression’s 2011 sales were to customers outside the U.S.

Rescue Tools. Rescue Tools consists of the Company’s Dinglee, Hurst, Lukas and Vetter businesses, which produce hydraulic, battery, gas and electric-operated rescue equipment, hydraulic re-railing equipment, hydraulic tools for industrial applications, recycling cutters, pneumatic lifting and sealing bags for vehicle and aircraft rescue, environmental protection and disaster control, and shoring equipment for vehicular or structural collapse. Markets served by Rescue Tools products include public and private fire and rescue organizations. Rescue Tools has facilities in Shelby, North Carolina (Hurst products), Tianjin, China (Dinglee products), Erlangen, Germany (Lukas products), and Zulpich, Germany (Vetter products). Approximately 78% of Rescue Tools’s 2011 sales were to customers outside the U.S.

Band-It. Band-It is a leading producer of high-quality stainless steel banding, buckles and clamping systems. The BAND-IT^® brand is highly recognized worldwide. Band-It products are used for securing exhaust system heat and sound shields, industrial hose fittings, traffic signs and signals, electrical cable shielding, identification and bundling, and numerous other industrial and commercial applications. Markets for Band-It products include automotive, transportation equipment, oil & gas, general industrial maintenance, electronics, electrical, communications, aerospace, utility, municipal and subsea marine. Band-It is based in Denver, Colorado, with additional operations in Staveley, Derbyshire, England, and Singapore. Approximately 42% of Band-It’s 2011 sales were to customers outside the U.S.

GENERAL ASPECTS APPLICABLE TO THE COMPANY’S BUSINESS SEGMENTS

Competitors

The Company’s businesses participate in highly competitive markets. IDEX believes that the principal points of competition are product quality, price, design and engineering capabilities, product development, conformity to customer specifications, quality of post-sale support, timeliness of delivery, and effectiveness of our distribution channels.

Principal competitors of the Fluid & Metering Technologies Segment are the Pump Solutions Group (Blackmer and Wilden products) of Dover Corporation (with respect to pumps and small horsepower compressors used in liquified petroleum gas distribution facilities, rotary gear pumps, and air-operated double-diaphragm pumps); the Milton Roy unit of United Technologies Corporation (with respect to metering pumps and controls); and Tuthill Corporation (with respect to rotary gear pumps).

Principal competitors of the Health & Science Technologies Segment are the Thomas division of Gardner Denver, Inc. (with respect to vacuum pumps and compressors); Thermo Scientific Dionex products (with respect to analytical instrumentation); Parker Hannifin (with respect to sealing devices); and Valco Instruments Co., Inc. (with respect to fluid injectors and valves).

The principal competitor of the Dispensing Equipment Segment is CPS Color Group Oy, which is owned by Nordic Capital (with respect to dispensing and mixing equipment for the paint industry).

The principal competitors of the Fire & Safety/Diversified Products Segment are Waterous Company, a unit of American Cast Iron Pipe Company (with respect to truck-mounted firefighting pumps), Holmatro, Inc. (with respect to rescue tools), and Panduit Corporation (with respect to stainless steel bands, buckles and tools).

Employees

At December 31, 2011, the Company had 6,814 employees. Approximately 8% were represented by labor unions with various contracts expiring through June 2015. Management believes that the Company’s relationship with its employees is good. The Company historically has been able to satisfactorily renegotiate its collective bargaining agreements, with its last work stoppage in March 1993.

Suppliers

The Company manufactures many of the parts and components used in its products. Substantially all materials, parts and components purchased by the Company are available from multiple sources.

Inventory and Backlog

The Company regularly and systematically adjusts production schedules and quantities based on the flow of incoming orders. Backlogs typically are limited to one to one and a half months of production. While total inventory levels also may be affected by changes in orders, the Company generally tries to maintain relatively stable inventory levels based on its assessment of the requirements of the various industries served.

Raw Materials

The Company uses a wide variety of raw materials which are generally available from a number of sources. As a result, shortages from any single supplier have not had, and are not likely to have a material impact on operations.

Shared Services

The Company has two production facilities in Suzhou, China, that support multiple business units. IDEX also has personnel in China, India and Singapore that provide sales and marketing, product design and engineering, and sourcing support to its business units, as well as personnel in various locations in Europe, South America, the Middle East and Japan to support sales and marketing efforts of IDEX businesses in those regions.

Segment Information

For segment financial information for the years 2011, 2010, and 2009, see the table titled “Company and Business Segment Financial Information” presented in Part II. Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 11 of the Notes to Consolidated Financial Statements in Part II. Item 8. “Financial Statements and Supplementary Data.”

Executive Officers of the Registrant

The following table sets forth the names of the executive officers of the Company, their ages, years of service, the positions held by them, and their business experience during the past 5 years.


Name	Age		Years of Service		Position
Andrew K. Silvernail		40		3	Chairman of the Board and Chief Executive Officer
Heath A. Mitts		41		6	Vice President and Chief Financial Officer
Frank J. Notaro		48		14	Vice President-General Counsel and Secretary
Daniel J. Salliotte		45		7	Vice President-Mergers, Acquisitions and Treasury
Michael J. Yates		46		6	Vice President and Chief Accounting Officer

Mr. Silvernail has served as Chief Executive Officer since August 2011, and as Chairman of the Board since January 2012. Prior to that, Mr. Silvernail was Vice President-Group Executive Health & Science Technologies, Global Dispensing and Fire & Safety/Diversified Products since January 2011. From February 2010 to December 2010, Mr. Silvernail was Vice President-Group Executive Health & Sciences Technologies and Global Dispensing. Mr. Silvernail joined IDEX in January 2009 as Vice President-Group Executive Health & Science Technologies. Prior to joining IDEX, Mr. Silvernail served as Group President at Rexnord Industries from April 2005 to August 2008.

Mr. Mitts has served as Vice President and Chief Financial Officer since March 2011. Mr. Mitts was hired as Vice President-Corporate Finance in September 2005.

Mr. Notaro has served as Vice President-General Counsel and Secretary since March 1998.

Mr. Salliotte has served as Vice President-Mergers, Acquisitions and Treasury since February 2011. Mr. Salliotte joined IDEX in October 2004 as Vice President-Strategy and Business Development.

Mr. Yates has served as Vice-President and Chief Accounting Officer since February 2010. Mr. Yates was hired as Vice President-Controller in October 2005.

The Company’s executive officers are elected at a meeting of the Board of Directors immediately following the annual meeting of stockholders, and they serve until the next annual meeting of the Board, or until their successors are duly elected and qualified or their death, resignation or removal.

Public Filings

Copies of the Company’s annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports are made available free of charge at www.idexcorp.com as soon as reasonably practicable after being filed electronically with the SEC. Our reports are also available free of charge on the SEC’s website, www.sec.gov. The information on the Company’s website is not incorporated into this Form 10-K.

Item 1A.

Risk Factors.

For an enterprise as diverse and complex as the Company, a wide range of factors could materially affect future developments and performance. In addition to the factors affecting specific business operations identified in connection with the description of those operations and the financial results of these operations elsewhere in this report, the most significant factors affecting our operations include the following:

Changes in U.S. or International Economic Conditions Could Adversely Affect the Revenues and Profitability of Any of Our Businesses.

In 2011, 47% of the Company’s revenue was derived from domestic operations while 53% was derived from international operations. The Company’s largest end markets include life sciences and medical technologies, fire and rescue, petroleum LPG, paint and coatings, chemical processing and water and wastewater treatment. A slowdown in the U.S. or global economy and in particular any of these specific end markets could reduce the Company’s revenue stream and profitability.

Conditions in Foreign Countries in Which We Operate Could Adversely Affect Our Business.

In 2011, approximately 53% of our total sales were to customers outside the U.S. We expect our international operations and export sales to continue to be significant for the foreseeable future. Both our sales from international operations and export sales are subject in varying degrees to risks inherent in doing business outside the United States. These risks include the following:

•

possibility of unfavorable circumstances arising from host country laws or regulations;

•

risks of economic instability;

•

currency exchange rate fluctuations and restrictions on currency repatriation;

•

potential negative consequences from changes to taxation policies;

•

disruption of operations from labor and political disturbances;

•

changes in tariff and trade barriers and import or export licensing requirements; and,

•

insurrection or war.

We cannot predict the impact such future, largely unforeseeable events might have on the Company’s operations.

Our Inability to Continue to Develop New Products Could Limit Our Revenue Growth.

The Company’s revenue grew 9% organically in 2011 and 12% in 2010. Approximately 15% of our revenue was derived from new products developed over the past three years. Our ability to continue to grow organically is tied to our ability to continue to develop new products.

Our Growth Strategy Includes Acquisitions and We May Not be Able to Make Acquisitions of Suitable Candidates or Integrate Acquisitions Successfully.

Our historical growth has included, and our future growth is likely to continue to include acquisitions. We intend to continue to seek acquisition opportunities both to expand into new markets and to enhance our position in existing markets throughout the world. We may not be able to successfully identify suitable candidates, negotiate appropriate acquisition terms, obtain financing which may be needed to consummate those acquisitions, complete proposed acquisitions or successfully integrate acquired businesses into our existing operations. In addition, any acquisition, once successfully integrated, may not perform as planned, be accretive to earnings, or prove to be beneficial to us.

Acquisitions involve numerous risks, including the assumption of undisclosed or unindemnified liabilities, difficulties in the assimilation of the operations, technologies, services and products of the acquired companies and the diversion of management’s attention from other business concerns. In addition, prior acquisitions have resulted, and future acquisitions could result, in the incurrence of substantial additional indebtedness and other expenses.

The Markets We Serve are Highly Competitive. This Competition Could Reduce our Sales and Operating Margins.

Most of our products are sold in competitive markets. We believe that the principal points of competition in our markets are product quality, price, design and engineering capabilities, product development, conformity to customer specifications, quality of post-sale support, timeliness of delivery, and effectiveness of our distribution channels. Maintaining and improving our competitive position will require continued investment by us in manufacturing, engineering, quality standards, marketing, customer service and support, and our distribution networks. We may not be successful in maintaining our competitive position. Our competitors may develop products that are superior to our products, or may develop methods of more efficiently and effectively providing products and services or may adapt more quickly than us to new technologies or evolving customer requirements. Pricing pressures may require us to adjust the prices of our products to stay competitive. We may not be able to compete successfully with our existing competitors or with new competitors. Failure to continue competing successfully could reduce our revenues, operating margins and overall financial performance.

We are Dependent on the Availability of Raw Materials, Parts and Components Used in Our Products.

While we manufacture many of the parts and components used in our products, we require substantial amounts of raw materials and purchase some parts and components from suppliers. The availability and prices for raw materials, parts and components may be subject to curtailment or change due to, among other things, suppliers’ allocations to other purchasers, interruptions in production by suppliers, changes in exchange rates and prevailing price levels. Any change in the supply of, or price for, these raw materials or parts and components could materially affect our business, financial condition, results of operations and cash flow.

Significant Movements in Foreign Currency Exchange Rates May Harm Our Financial Results.

We are exposed to fluctuations in foreign currency exchange rates, particularly with respect to the Euro, Canadian Dollar, British Pound and Chinese Renminbi. Any significant change in the value of the currencies of the countries in which we do business against the U.S. Dollar could affect our ability to sell products competitively and control our cost structure, which could have a material adverse effect on our results of operations. For additional detail related to this risk, see Part II. Item 7A. “Quantitative and Qualitative Disclosure About Market Risk.”

An Unfavorable Outcome of Any of Our Pending Contingencies or Litigation Could Adversely Affect Us.

We currently are involved in several legal and regulatory proceedings. Where it is reasonably possible to do so, we accrue estimates of the probable costs for the resolution of these matters. These estimates are developed in consultation with outside counsel and are based upon an analysis of potential results, assuming a combination of litigation and settlement strategies. It is possible, however, that future operating results for any particular quarter or annual period could be materially affected by changes in our assumptions or the effectiveness of our strategies related to these proceedings. For additional detail related to this risk, see Item 3. “Legal Proceedings.”

Our Intangible Assets, Including Goodwill, are a Significant Portion of Our Total Assets and a Write-off of Our Intangible Assets Would Adversely Impact Our Operating Results and Significantly Reduce Our Net Worth.

Our total assets reflect substantial intangible assets, primarily goodwill and identifiable intangible assets. At December 31, 2011, goodwill and intangible assets totaled $1,431.4 million and $382.2 million, respectively. These assets result from our acquisitions, representing the excess of cost over the fair value of the tangible net assets we have acquired. Annually, or when certain events occur that require a more current valuation, we assess whether there has been an impairment in the value of our goodwill and identifiable intangible assets. If future operating performance at one or more of our reporting units were to fall significantly below forecast levels, we could be required to reflect, under current applicable accounting rules, a non-cash charge to operating income for an impairment. Any determination requiring the write-off of a significant portion of our goodwill or identifiable intangible assets would adversely impact our results of operations and net worth.

Item 1B.

Unresolved Staff Comments.

None.

Item 2.

Properties.

The Company’s principal plants and offices have an aggregate floor space area of approximately 4.2 million square feet, of which 2.8 million square feet (66%) is located in the U.S. and approximately 1.4 million square feet (34%) is located outside the U.S., primarily in Germany (8%), the U.K. (7%), China (4%) and The Netherlands (2%). Management considers these facilities suitable and adequate for their operations. Management believes the Company can meet the expected demand increase over the near term with its existing facilities, especially given its operational improvement initiatives that usually increase capacity. The Company’s executive office occupies 33,085 square feet of leased space in Lake Forest, Illinois.

Approximately 2.7 million square feet (65%) of the principal plant and office floor area is owned by the Company, and the balance is held under lease. Approximately 1.7 million square feet (41%) of the principal plant and office floor area is held by business units in the Fluid & Metering Technologies Segment; 1.3 million square feet (31%) is held by business units in the Health & Science Technologies Segment; 0.3 million square feet (7%) is held by business units in the Dispensing Equipment Segment; and 0.7 million square feet (17%) is held by business units in the Fire & Safety/Diversified Products Segment.

Item 3.

Legal Proceedings.

The Company and seven of its subsidiaries are presently named as defendants in a number of lawsuits claiming various asbestos-related personal injuries and seeking money damages, allegedly as a result of exposure to products manufactured with components that contained asbestos. These components were acquired from third party suppliers, and were not manufactured by any of the subsidiaries. To date, the majority of the Company’s settlements and legal costs, except for costs of coordination, administration, insurance investigation and a portion of defense costs, have been covered in full by insurance subject to applicable deductibles. However, the Company cannot predict whether and to what extent insurance will be available to continue to cover such settlements and legal costs, or how insurers may respond to claims that are tendered to them. Claims have been filed in jurisdictions throughout the United States. Most of the claims resolved to date have been dismissed without payment. The balance have been settled for various insignificant amounts. Only one case has been tried, resulting in a verdict for the affected business unit. No provision has been made in the financial statements of the Company for these asbestos-related claims, other than for insurance deductibles in the ordinary course, and the Company does not currently believe these claims will have a material adverse effect on it.

The Company is also party to various other legal proceedings arising in the ordinary course of business, none of which is expected to have a material adverse effect on it.

Item 4.

Mine Safety Disclosures

Not applicable.

PART II

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

The principal market for the Company’s Common Stock is the New York Stock Exchange, but the Common Stock is also listed on the Chicago Stock Exchange. As of February 17, 2012, the Common Stock was held by approximately 7,000 recordholders and there were 83,804,606 shares of Common Stock outstanding.

The high and low sales prices of the Common Stock per share and the dividends paid per share during the last two years is as follows:


	2011						2010
	High		Low		Dividends Per Share		High		Low		Dividends Per Share
First Quarter	$	43.78	$	38.02	$	0.15	$	33.66	$	28.09	$	0.12
Second Quarter		47.50		41.90		0.17		35.54		28.49		0.15
Third Quarter		47.28		30.09		0.17		36.24		27.54		0.15
Fourth Quarter		38.36		29.29		0.17		40.29		35.08		0.15

Our payment of dividends in the future will be determined by our Board of Directors and will depend on business conditions, our earnings and other factors.

For information pertaining to securities authorized for issuance under equity compensation plans and the related weighted average exercise price, see Part III, Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.”

The following table provides information about the Company purchases of Common Stock during the quarter ended December 31, 2011:


Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs⁽¹⁾		Maximum Dollar Value that May Yet be Purchased Under the Plans or Programs⁽¹⁾
October 1, 2011 to October 31, 2011		—		—		—	$	125,000,020
November 1, 2011 to November 30, 2011		—		—		—	$	125,000,020
December 1, 2011 to December 31, 2011		—		—		—	$	125,000,020

Total		—		—		—	$	125,000,020

(1)

On December 6, 2011, the Company announced that its Board of Directors had increased the authorized level for repurchases of its Common Stock by approximately $50.0 million. The increased authorization was added to the approximately $75.0 million that remains available from the existing authorization approved by the Board of Directors on April 21, 2008, resulting in a total authorized repurchase amount of $125.0 million.

Performance Graph. The following table compares total shareholder returns over the last five years to the Standard & Poor’s (the “S&P”) 500 Index, the S&P 600 Small Cap Industrial Machinery Index and the Russell 2000 Index assuming the value of the investment in our Common Stock and each index was $100 on December 31, 2006. Total return values for our Common Stock, the S&P 500 Index, S&P 600 Small Cap Industrial Machinery Index and the Russell 2000 Index were calculated on cumulative total return values assuming reinvestment of dividends. The shareholder return shown on the graph below is not necessarily indicative of future performance.

LOGO


	12/06		12/07		12/08		12/09		12/10		12/11
IDEX Corporation	$	100.00	$	115.80	$	78.67	$	103.05	$	132.21	$	127.50
S&P 500 Index		100.00		103.53		63.69		78.62		88.67		88.67
S&P Industrial Machinery Index		100.00		110.94		73.52		86.02		111.39		107.23
Russell 2000 Index		100.00		97.25		63.41		79.40		99.49		94.07

Item 6. Selected Financial Data.⁽¹⁾


(dollars in thousands, except per share data)	2011			2010			2009			2008			2007
RESULTS OF OPERATIONS
Net sales	$	1,838,451		$	1,513,073		$	1,329,661		$	1,489,471		$	1,358,631
Gross profit		738,673			618,483			522,386			597,433			566,161
Selling, general and administrative expenses		421,703			358,272			325,453			343,392			313,366
Goodwill impairment		—			—			—			30,090			—
Restructuring expenses		12,314			11,095			12,079			17,995			—
Operating income		304,656			249,116			184,854			205,956			252,795
Other income (expense) — net		(1,443	)		(1,092	)		1,151			5,123			3,434
Interest expense		29,332			16,150			17,178			18,852			23,353
Provision for income taxes		80,024			74,774			55,436			65,201			78,457
Income from continuing operations		193,857			157,100			113,391			127,026			154,419
Loss from discontinued operations-net of tax		—			—			—			—			(719	)
Net income		193,857			157,100			113,391			127,026			153,700
FINANCIAL POSITION
Current assets	$	789,161		$	692,758		$	451,712		$	480,688		$	617,622
Current liabilities		258,278			353,668			189,682			219,869			198,953
Working capital		530,883			339,090			262,030			260,819			418,669
Current ratio		3.1			2.0			2.4			2.2			3.1
Capital expenditures		34,548			32,769			25,525			28,358			26,496
Depreciation and amortization		72,386			58,108			56,346			48,599			38,038
Total assets		2,836,107			2,381,695			2,098,157			2,151,800			1,970,078
Total borrowings		808,810			527,895			400,100			554,000			454,731
Shareholders’ equity		1,513,135			1,375,660			1,268,104			1,144,783			1,143,207
PERFORMANCE MEASURES
Percent of net sales:
Gross profit		40.2	%		40.9	%		39.3	%		40.1	%		41.7	%
SG&A expenses		22.9			23.7			24.5			23.1			23.1
Operating income		16.6			16.5			13.9			13.8			18.6
Income before income taxes		14.9			15.3			12.7			12.9			17.1
Income from continuing operations		10.5			10.4			8.5			8.5			11.4
Effective tax rate		29.2			32.2			32.8			33.9			33.7
Return on average assets⁽²⁾		7.4			7.0			5.3			6.2			8.5
Borrowings as a percent of capitalization		34.8			27.7			24.0			32.6			28.5
Return on average shareholders’ equity⁽²⁾		13.4			11.9			9.4			11.1			14.7
PER SHARE DATA⁽³⁾⁽⁴⁾
Basic
— income from continuing operations	$	2.34		$	1.93		$	1.41		$	1.55		$	1.90
— net income		2.34			1.93			1.41			1.55			1.89
Diluted
— income from continuing operations		2.32			1.90			1.40			1.53			1.88
— net income		2.32			1.90			1.40			1.53			1.87
Cash dividends declared		.68			.60			.48			.48			.48
Shareholders’ equity		18.18			16.76			15.66			14.26			14.01
Stock price
— high		47.50			40.29			32.85			40.75			44.99
— low		29.29			27.54			16.67			17.70			30.41
— close		37.11			39.12			31.15			24.15			36.13
Price/earnings ratio at year end		16			21			22			16			19
Other Data
Employees at year end		6,814			5,966			5,300			5,813			5,009
Shareholders at year end		7,000			7,000			7,000			7,000			7,000
Shares outstanding (in 000s)⁽³⁾:
Weighted average
— basic		82,145			80,466			79,716			81,123			80,666
— diluted		83,543			81,983			80,727			82,320			82,086
At year end		83,234			82,070			80,970			80,302			81,579

(1)	For additional detail, see Notes to Consolidated Financial Statements in Part II. Item 8. “Financial Statements and Supplementary Data.”

(2)	Return calculated based on income from continuing operations.

(3)	All share and per share data has been restated to reflect the three-for-two stock split effected in the form of a 50% stock dividend in May 2007.

(4)	Calculated by applying the two-class method of allocating earnings to common stock and participating securities as required by ASC 260, Earnings Per Share.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Cautionary Statement Under the Private Securities Litigation Reform Act

This management’s discussion and analysis, including, but not limited to, the section entitled “2011 Overview and Outlook”, and other portions of this report, contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act of 1934, as amended. These statements may relate to, among other things, capital expenditures, cost reductions, cash flow, and operating improvements and are indicated by words or phrases such as “anticipate,” “estimate,” “plans,” “expects,” “projects,” “should,” “will,” “management believes,” “the Company believes,” “we believe,” “the Company intends” and similar words or phrases. These statements are subject to inherent uncertainties and risks that could cause actual results to differ materially from those anticipated at the date of this filing. The risks and uncertainties include, but are not limited to: economic and political consequences resulting from terrorist attacks and wars; levels of industrial activity and economic conditions in the U.S. and other countries around the world; pricing pressures and other competitive factors, and levels of capital spending in certain industries — all of which could have a material impact on our order rates and results, particularly in light of the low levels of order backlogs we typically maintain; our ability to make acquisitions and to integrate and operate acquired businesses on a profitable basis; the relationship of the U.S. dollar to other currencies and its impact on pricing and cost competitiveness; political and economic conditions in foreign countries in which we operate; interest rates; capacity utilization and its effect on costs; labor markets; market conditions and material costs; and developments with respect to contingencies, such as litigation and environmental matters. The forward-looking statements included here are only made as of the date of this report, and we undertake no obligation to update them to reflect subsequent events or circumstances. Investors are cautioned not to rely unduly on forward-looking statements when evaluating the information presented here.

2011 Overview and Outlook

The Company consists of four reportable segments: Fluid & Metering Technologies, Health & Science Technologies, Dispensing Equipment and Fire & Safety/Diversified Products.

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

pumps and controls, rescue tools, lifting bags and other components and systems for the fire and rescue industry, and engineered stainless steel banding and clamping devices used in a variety of industrial and commercial applications.

Some of our key 2011 financial highlights are as follows:

•

Sales of $1.8 billion rose 22%; organic sales — excluding acquisitions and foreign currency translation — were up 9%.

•

Operating income of $304.7 million increased 22% compared to 2010.

•

Net income increased 23% to $193.9 million.

•

Diluted EPS of $2.32 increased 42 cents compared to 2011.

In 2012, the Company is expecting mid-single digit organic growth. For 2012 based on the Company’s current outlook, we are forecasting fully diluted EPS of $2.74 to $2.82.

Results of Operations

The following is a discussion and analysis of our financial position and results of operations for each of the three years in the period ended December 31, 2011. For purposes of this discussion and analysis section, reference is made to the table on page 18 and the Consolidated Statements of Operations in Part II. Item 8. “Financial Statements and Supplementary Data.” Certain prior year amounts have been revised to reflect the movement of the MPT reporting unit from the Fluid & Metering Technologies Segment to the Health & Science Technologies Segment.

Performance in 2011 Compared with 2010

Sales in 2011 of $1,838.5 million were 22% higher than the $1,513.1 million recorded a year ago. This increase reflects a 9% increase in organic sales, 11% from seven acquisitions (PPE — April 2010, OBL — July 2010, Periflo — September 2010, Fitzpatrick — November 2010, AT Films — January 2011, Microfluidics — March 2011 and CVI MG — June 2011) and 2% favorable foreign currency translation. Organic sales increased in Fluid & Metering Technologies, Health & Science Technologies and Fire & Safety/Diversified Products segments, but declined in the Dispensing Equipment segment. Domestic organic sales were up 4% versus the prior year, while international organic sales increased 15%. Organic sales to customers outside the U.S. represented 52% of total sales in 2011 and 49% in 2010.

In 2011, Fluid & Metering Technologies contributed 44% of sales and 45% of operating income; Health & Science Technologies accounted for 34% of sales and 31% of operating income; Dispensing Equipment accounted for 6% of sales and 4% of operating income; and Fire & Safety/Diversified Products represented 16% of sales and 20% of operating income.

Fluid & Metering Technologies sales of $816.9 million in 2011 increased $112.0 million, or 16%, compared with 2010. This reflects a 13% increase in organic sales, 1% for acquisitions (OBL and Periflo) and 2% favorable foreign currency translation. The increase in organic sales was driven by strong global growth in our agriculture, chemical and energy end markets. In 2011, organic sales increased approximately 9% domestically and 19% internationally. Organic sales to customers outside the U.S. were approximately 48% of total segment sales in 2011 and 46% in 2010.

Health & Science Technologies sales of $622.3 million increased $200.1 million, or 47%, in 2011 compared with last year. This change reflects a 9% increase in organic growth, 37% for acquisitions (PPE, Fitzpatrick, AT Films, Microfluidics and CVI MG) and 1% favorable foreign currency translation. The increase in organic sales

reflects market strength across all Health & Science Technologies product markets. In 2011, organic sales increased 2% domestically and 17% internationally. Organic sales to customers outside the U.S. were approximately 51% of total segment sales in 2011 and 47% in 2010.

Dispensing Equipment sales of $117.4 million decreased $7.9 million, or 6%, in 2011 compared with the prior year. This change reflects an 11% organic decline, partially offset by a 5% favorable foreign currency translation. The decrease in organic sales was due to market softness in North America, partially offset by strength in Eastern Europe and Asia. Organic sales decreased 36% domestically, primarily due to North American replenishment programs in 2010 and increased 2% internationally. Organic sales to customers outside the U.S. were 76% of total segment sales in 2011 and 67% in 2010.

Fire & Safety/Diversified Products sales of $285.0 million increased $19.5 million, or 7%, in 2011 compared with 2010. This change reflects 5% organic growth and a 2% favorable foreign currency translation. The change in organic sales reflects strength in rescue equipment and engineered band clamping systems, partially offset by weakness in fire suppression. In 2011, organic sales increased 3% domestically and 6% internationally. Organic sales to customers outside the U.S. were 56% of total segment sales for both 2011 and 2010.

Gross profit of $738.7 million in 2011 was $120.2 million, or 19%, higher than 2010. As a percentage of sales, gross profit was 40.2% in 2011, a 70 basis-point decrease from 40.9% in 2010. The decrease in gross margin primarily reflects acquisition fair value inventory charges of $15.8 million related to our CVI MG acquisition, partially offset by higher volume and product mix.

Selling, general and administrative (“SG&A”) expenses increased to $421.7 million in 2011 from $358.3 million in 2010. The $63.4 million increase reflects approximately $16.7 million in volume-related expenses, $46.4 million for incremental costs associated with acquisitions and $5.8 million of acquisition-related costs, partially offset by a $2.8 million gain from the sale of a facility in Italy and $2.7 million from the reversal of previously recorded share based compensation costs related to the CEO transition. As a percentage of sales, SG&A expenses were 22.9% for 2011 and 23.7% for 2010.

During 2011, the Company recorded pre-tax restructuring expenses totaling $12.3 million, while $11.1 million was recorded for the same period in 2010. These restructuring expenses were mainly attributable to employee severance related to employee reductions across various functional areas and facility rationalization resulting from the Company’s cost savings initiatives. These initiatives included severance benefits for 292 employees in 2011 and 215 in 2010. The current restructuring initiative will continue into 2012 with severance payments to be fully paid by the end of 2012 using cash from operations.

Operating income increased $55.5 million, or 22%, to $304.7 million in 2011 from $249.1 million in 2010. This increase primarily reflects an increase in volume, improved productivity and a gain from the sale of a facility in Italy, partially offset by acquisition fair value inventory charges and acquisition-related costs. Operating margins in 2011 were 16.6% of sales compared with 16.5% recorded in 2010.

In the Fluid & Metering Technologies Segment, operating income of $160.0 million and operating margins of 19.6% in 2011 were up from the $127.2 million and 18.0% recorded in 2010 principally due to higher sales, sourcing initiatives, strategic pricing and cost control. In the Health & Science Technologies Segment, operating income of $110.9 million in 2011 was up from the $87.0 million recorded in 2010 due to volume leverage, improved mix with new products and increased content on OEM platforms, partially offset by the inventory fair value charge associated with the CVI MG acquisition. Operating margin in the Health & Science Technologies Segment of 17.8% in 2011 was down from 20.6% in 2010 primarily due to the inventory fair value charge associated with the CVI MG acquisition, partially offset by higher volume. In the Dispensing Equipment Segment, operating income of $15.4 million and operating margins of 13.1% in 2011 were down from the $19.5 million and 15.6% operating margins recorded in 2010, primarily due to lower volume and restructuring

related costs, partially offset by a gain from the sale of a facility in Italy. Operating income and operating margins in the Fire & Safety/Diversified Products Segment of $70.5 million and 24.7%, respectively, were higher than the $62.8 million and 23.7% recorded in 2010, primarily due to volume leverage and favorable product mix. The Company incurred $22.6 million of acquisition related transaction costs and fair value inventory charges in 2011, of which $5.8 million was recorded in SG&A expense and $16.8 million was recorded in cost of sales.

Other expense of $1.4 million in 2011 was higher than the $1.1 million expense in 2010, primarily due to higher losses on foreign currency transactions and a loss on an interest rate contract settlement, partially offset by an increase in interest income.

Interest expense increased to $29.3 million in 2011 from $16.2 million in 2010. The increase was principally due to higher debt levels resulting from the funding of the CVI MG acquisition and a higher interest rate associated with the 4.5% senior notes issued in December 2010 with a 5.8% effective interest rate.

The provision for income taxes is based upon estimated annual tax rates for the year applied to federal, state and foreign income. The provision for income taxes increased to $80.0 million for 2011 compared to $74.8 million in 2010. The effective tax rate decreased to 29.2% for 2011 compared to 32.2% in 2010 primarily due to the mix of global pre-tax income among jurisdictions and as a result of recent acquisitions.

Net income in 2011 of $193.9 million increased from the $157.1 million earned in 2010. Diluted earnings per share in 2011 of $2.32 increased $0.42, or 22%, compared with diluted earnings per share of $1.90 in 2010.

Company and Business Segment Financial Information


	For the Years Ended December 31,⁽¹⁾
	2011			2010⁽²⁾			2009⁽²⁾
	(In thousands)
Fluid & Metering Technologies
Net sales⁽³⁾	$	816,875		$	704,891		$	621,536
Operating income⁽⁴⁾		159,984			127,192			97,867
Operating margin⁽⁴⁾		19.6	%		18.0	%		15.7	%
Identifiable assets	$	1,048,682		$	1,040,601		$	1,011,392
Depreciation and amortization		32,258			31,762			31,540
Capital expenditures		12,481			17,206			12,785
Health & Science Technologies
Net sales⁽³⁾	$	622,312		$	422,252		$	323,901
Operating income⁽⁴⁾		110,871			87,084			54,134
Operating margin⁽⁴⁾		17.8	%		20.6	%		16.7	%
Identifiable assets	$	1,201,994		$	718,884		$	598,786
Depreciation and amortization		30,165			17,384			15,337
Capital expenditures		13,000			7,618			6,447
Dispensing Equipment
Net sales⁽³⁾	$	117,410		$	125,320		$	127,279
Operating income⁽⁴⁾		15,409			19,490			15,147
Operating margin⁽⁴⁾		13.1	%		15.6	%		11.9	%
Identifiable assets	$	149,813		$	205,540		$	164,979
Depreciation and amortization		3,181			3,753			3,124
Capital expenditures		1,179			1,129			864
Fire & Safety/Diversified Products
Net sales⁽³⁾	$	285,015		$	265,501		$	262,809
Operating income⁽⁴⁾		70,492			62,844			59,884
Operating margin⁽⁴⁾		24.7	%		23.7	%		22.8	%
Identifiable assets	$	292,587		$	278,567		$	285,893
Depreciation and amortization		5,335			4,885			5,328
Capital expenditures		4,465			3,513			3,686
Total IDEX
Net sales	$	1,838,451		$	1,513,073		$	1,329,661
Operating income		304,656			249,116			184,854
Operating margin		16.6	%		16.5	%		13.9	%
Total assets	$	2,836,107		$	2,381,695		$	2,098,157
Depreciation and amortization⁽⁵⁾		72,386			58,108			56,346
Capital expenditures		34,548			32,769			25,525

(1)

Data includes acquisitions of Periflo (September 2010) and OBL (July 2010) in the Fluid & Metering Technologies segment and CVI MG (June 2011), Microfluidics (March 2011), AT Films (January 2011), Fitzpatrick (November 2010) and PPE (April 2010) in the Health & Science Technologies segment from the respective dates of acquisition.

(2)	Revised to reflect the movement of the MPT reporting unit from the Fluid & Metering Technologies Segment to the Health & Science Technologies Segment.

(3)	Segment net sales include intersegment sales.

(4)	Segment operating income excludes unallocated corporate operating expenses.

(5)	Excludes amortization of debt issuance expenses.

Performance in 2010 Compared with 2009

Sales in 2010 of $1,513.1 million were 14% higher than the $1,329.7 million recorded in 2009. This increase reflects a 12% increase in organic sales and 3% from four acquisitions (PPE — April 2010, OBL — July 2010, Periflo — September 2010 and Fitzpatrick — November 2010), partially offset by 1% unfavorable foreign currency translation. Organic sales increased in Fluid & Metering Technologies, Health & Science Technologies and Fire & Safety/Diversified Products segments, but were flat in the Dispensing Equipment segment. Domestic organic sales were up 9% versus the prior year, while international organic sales increased 15% in 2010. Organic sales to customers outside the U.S. represented 49% of total sales in 2010 and 46% in 2009.

In 2010, Fluid & Metering Technologies contributed 46% of sales and 43% of operating income; Health & Science Technologies accounted for 28% of sales and 29% of operating income; Dispensing Equipment accounted for 8% of sales and 7% of operating income; and Fire & Safety/Diversified Products represented 18% of sales and 21% of operating income.

Fluid & Metering Technologies sales of $704.9 million in 2010 increased $83.4 million, or 13%, compared with 2009. This reflects a 12% increase in organic sales and 2% for acquisitions (OBL and Periflo), partially offset by 1% unfavorable foreign currency translation. The increase in organic growth was driven by strong global growth across energy, chemical, food & pharma and water & wastewater markets. In 2010, organic sales increased approximately 12% domestically and 13% internationally. Organic sales to customers outside the U.S. were approximately 46% of total segment sales in 2010 and 41% in 2009.

Health & Science Technologies sales of $422.2 million increased $98.3 million, or 30%, in 2010 compared with 2009. This change reflects a 21% increase in organic growth and a 9% increase from acquisitions (PPE and Fitzpatrick). The increase in organic sales reflects market strength across all Health & Science Technologies products. In 2010, organic sales increased 14% domestically and 33% internationally. Organic sales to customers outside the U.S. were approximately 44% of total segment sales in 2010 and 41% in 2009.

Dispensing Equipment sales of $125.3 million decreased $2.0 million, or 2%, in 2010 compared with the prior year. This change reflects 2% unfavorable foreign currency translation, while organic growth was flat in 2010 compared to 2009. The Dispensing Equipment Segment experienced strength in Asia and parts of Eastern Europe, offset by softness in North America and Western Europe. Organic domestic sales decreased 9% compared with 2009, while organic international sales increased 5%. Organic sales to customers outside the U.S. were 67% of total segment sales in 2010 and 66% in 2009.

Fire & Safety/Diversified Products sales of $265.5 million increased $2.7 million, or 1%, in 2010 compared with 2009. Organic sales activity increased 2%, while foreign currency translation accounted for a 1% decrease. The increase in organic business growth was driven by higher demand for engineered band clamping systems, partially offset by weakness in fire suppression. In 2010, organic sales decreased 3% domestically and increased 7% internationally. Organic sales to customers outside the U.S. were 56% of total segment sales in 2010 and 55% in 2009.

Gross profit of $618.5 million in 2010 was $96.1 million, or 18%, higher than 2009. As a percent of sales, gross profit was 40.9% in 2010, which represented a 160 basis-point increase from 39.3% in 2009. The increase in gross margin primarily reflects higher sales volume, cost reductions due to our restructuring initiatives and change in product mix.

SG&A expenses increased to $358.3 million in 2010 from $325.5 million in 2009. The $32.8 million increase reflects approximately $22.0 million for volume related expenses and $10.8 million for incremental costs associated with the acquisitions of PPE in April 2010, OBL in July 2010, Periflo in September 2010 and Fitzpatrick in November 2010. As a percentage of net sales, SG&A expenses were 23.7% in 2010 and 24.5% in 2009.

In 2010, the Company recorded pre-tax restructuring expenses totaling $11.1 million, while $12.1 million was recorded in 2009. These restructuring expenses were mainly attributable to employee severance related to employee reductions across various functional areas and facility closures resulting from the Company’s cost savings initiatives. These initiatives included severance benefits for 215 employees in 2010 and 478 employees in 2009. The Company has completed these employee reductions in 2010 and severance payments have been fully paid using cash from operations.

Operating income increased $64.3 million, or 35%, to $249.1 million in 2010 from $184.9 million in 2009. This increase primarily reflects an increase in volume, changes in product mix and cost reductions due to our restructuring initiatives. Operating margins in 2010 were 16.5% of sales compared with 13.9% recorded in 2009.

In the Fluid & Metering Technologies segment, operating income of $127.2 million and operating margins of 18.0% in 2010 were up from the $97.9 million and 15.7% recorded in 2009, principally due to higher sales and cost reduction initiatives. In the Health & Science Technologies segment, operating income of $87.0 million and operating margins of 20.6% in 2010 were up from the $54.1 million and 16.7% recorded in 2009 due to higher volume and cost reduction initiatives. In the Dispensing Equipment segment, operating income of $19.5 million and operating margins of 15.6% in 2010 were up from the $15.1 million and 11.9% recorded in 2009 due to cost reduction initiatives and improved productivity. Operating income and operating margins in the Fire & Safety/Diversified Products segment of $62.8 million and 23.7%, respectively, were higher than the $59.9 million and 22.8% recorded in 2009, due to higher volume and favorable mix.

Other expense was $1.1 million in 2010 compared with a $1.2 million gain in 2009, due to unfavorable foreign currency translation.

Interest expense decreased to $16.2 million in 2010 from $17.2 million in 2009. The decrease was principally due to lower debt levels and a lower interest rate environment.

The provision for income taxes increased to $74.8 million in 2010 from $55.4 million in 2009. The effective tax rate decreased to 32.2% in 2010 from 32.8% in 2009, due to changes in the mix of global pre-tax income among taxing jurisdictions.

Net income in 2010 was $157.1 million, 39% higher than the $113.4 million earned in 2009. Diluted earnings per share in 2010 of $1.90 increased $0.50, or 36%, compared with diluted earnings per share of $1.40 in 2009.

Liquidity and Capital Resources

At December 31, 2011, working capital was $530.9 million and the Company’s current ratio was 3.1 to 1. Cash flows from operating activities increased $32.8 million, or 18%, to $217.2 million in 2011, primarily due to increased volume. At December 31, 2011, the Company’s cash and cash equivalents totaled $230.3 million, of which $122.8 million was held outside of the United States. The Company has not provided an estimate for any U.S. or additional foreign taxes on undistributed earnings of foreign subsidiaries that might be payable if these earnings were repatriated since the Company considers these amounts to be permanently invested.

Cash flows from operations were more than adequate to fund capital expenditures of $34.5 million and $32.8 million in 2011 and 2010, respectively. Capital expenditures were generally for machinery and equipment that improved productivity and tooling to support global sourcing initiatives, although a portion was for business system technology and replacement of equipment and facilities. Management believes that the Company has ample capacity in its plants and equipment to meet expected needs for future growth in the intermediate term.

The Company completed the acquisitions of AT Films on January 31, 2011 for cash consideration of $31.8 million and contingent consideration valued at approximately $2.7 million, Microfluidics on March 11, 2011 for cash consideration of $18.5 million and CVI MG on June 10, 2011 for cash consideration of

$393.3 million and the assumption of approximately $1.4 million of debt. Approximately $365.0 million of the cash payment for CVI MG was financed with borrowings under the Company’s revolving credit facility while the remaining cash payments were funded from cash on hand.

The Company acquired PPE in April 2010 for cash consideration of $51.3 million and the assumption of approximately $2.7 million in debt related items, OBL in July 2010 for cash consideration of $15.4 million, Periflo in September 2010 for cash consideration of $4.3 million and Fitzpatrick in November 2010 for cash consideration of $20.3 million and the assumption of approximately $0.4 million in debt related items. The cash payment for PPE was financed with borrowings under the Company’s credit facility, while the other acquisitions were paid with cash from operations.

The Company maintains a revolving credit facility (the “Revolving Facility”), which is a $700.0 million unsecured, multi-currency bank credit facility expiring on June 27, 2016. At December 31, 2011, there was $50.8 million outstanding under the Revolving Facility with $7.8 million of outstanding letters of credit. The net available borrowing capacity under the Revolving Facility at December 31, 2011, was approximately $641.4 million. Borrowings under the Revolving Facility bear interest, at either an alternate base rate or an adjusted LIBOR rate plus, in each case, an applicable margin. Such applicable margin is based on the Company’s senior, unsecured, long-term debt rating and can range from .875% to 1.70%. Based on the Company’s credit rating at December 31, 2011, the applicable margin was 1.05%. Interest is payable (a) in the case of base rate loans, quarterly, and (b) in the case of LIBOR rate loans, on the maturity date of the borrowing, or quarterly from the effective date for borrowings exceeding three months. An annual Revolving Facility fee, also based on the Company’s credit rating, is currently 20 basis points and is payable quarterly.

On June 9, 2010, the Company completed a private placement of €81.0 million ($96.8 million) aggregate principal amount of 2.58% Series 2010 Senior Euro Notes due June 9, 2015 (“2.58% Senior Euro Notes”) pursuant to a Master Note Purchase Agreement, dated June 9, 2010 (the “Purchase Agreement”). The Purchase Agreement provides for the issuance of additional series of notes in the future, provided that the aggregate principal amount outstanding under the agreement at any time does not exceed $750.0 million. The 2.58% Senior Euro Notes bear interest at a rate of 2.58% per annum and will mature on June 9, 2015. The 2.58% Senior Euro Notes are unsecured obligations of the Company and rank pari passu in right of payment with all of the Company’s other senior debt. The Company may at any time prepay all or any portion of the 2.58% Senior Euro Notes; provided that any such portion is greater than 5% of the aggregate principal amount of Notes then outstanding under the Purchase Agreement. In the event of a prepayment, the Company would be required to pay an amount equal to par plus accrued interest plus a make-whole premium. The Purchase Agreement contains certain covenants that restrict the Company’s ability to, among other things, transfer or sell assets, create liens and engage in certain mergers or consolidations. In addition, the Company must comply with a leverage ratio and interest coverage ratio as set forth in the Purchase Agreement. The Purchase Agreement provides for customary events of default. In the case of an event of default arising from specified events of bankruptcy or insolvency, all outstanding 2.58% Senior Euro Notes will become due and payable immediately without further action or notice. In the case of payment events of defaults, any holder of the 2.58% Senior Euro Notes affected thereby may declare all the 2.58% Senior Euro Notes held by it due and payable immediately. In the case of any other event of default, a majority of the holders of the 2.58% Senior Euro Notes may declare all the 2.58% Senior Euro Notes to be due and payable immediately.

Indenture. The Indenture and 4.5% Senior Notes contain covenants that limit the Company’s ability to, among other things, incur certain liens securing indebtedness, engage in certain sale-leaseback transactions, and enter into certain consolidations, mergers, conveyances, transfers or leases of all or substantially all the Company’s assets. The terms of the 4.5% Senior Notes also require the Company to make an offer to repurchase the 4.5% Senior Notes upon a change of control triggering event (as defined in the Indenture) at a price equal to 101% of their principal amount plus accrued and unpaid interest, if any.

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

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

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

There are two key financial covenants that the Company is required to maintain in connection with the Revolving Facility and 2.58% Senior Euro Notes. The key financial covenants require a minimum interest coverage ratio of 3.0 to 1 and a maximum leverage ratio of 3.25 to 1. At December 31, 2011, the Company was in compliance with both of these financial covenants, as the Company’s interest coverage ratio was 12.4 to 1 and the leverage ratio was 2.2 to 1. There are no financial covenants relating to the 4.5% Senior Notes or 4.2% Senior Notes.

On December 21, 2011, the Company retired the outstanding balance of $82.0 million on its $100.0 million unsecured senior bank term loan agreement using proceeds from the Company’s 4.2% Senior Notes and the Revolving Facility.

On December 6, 2011, the Company announced that its Board of Directors increased the authorized level for repurchases of its common stock by approximately $50.0 million. The increased authorization will be added to the approximately $75.0 million that remains available from the existing authorization approved by the Board of Directors on April 21, 2008, resulting in a total authorized repurchase amount of $125.0 million.

The Company believes current cash and cash that will be generated from operations will be sufficient to meet its operating cash requirements, planned capital expenditures, interest on all borrowings, pension and postretirement funding requirements and annual dividend payments to stockholders during the next 12 months. Additionally, in the event that suitable businesses are available for acquisition on acceptable terms, the Company may obtain all or a portion of the financing for these acquisitions through the incurrence of additional borrowings. As of December 31, 2011, $50.8 million is outstanding under the Revolving Facility.

Contractual Obligations

Our contractual obligations include pension and postretirement medical benefit plans, rental payments under operating leases, payments under capital leases, and other long-term obligations arising in the ordinary course of business. There are no identifiable events or uncertainties, including the lowering of our credit rating that would accelerate payment or maturity of any of these commitments or obligations.

The following table summarizes our significant contractual obligations and commercial commitments at December 31, 2011, and the future periods in which such obligations are expected to be settled in cash. In addition, the table reflects the timing of principal and interest payments on outstanding borrowings. Additional detail regarding these obligations is provided in the Notes to Consolidated Financial Statements in Part II. Item 8. “Financial Statements and Supplementary Data.”


Payments Due by Period	Total		Less Than 1 Year		1-3 Years		3-5 Years		More Than 5 Years
	(In thousands)
Borrowings⁽¹⁾	$	1,093,768	$	35,054	$	66,129	$	216,260	$	776,325
Operating lease obligations		47,054		13,679		17,559		8,150		7,666
Capital lease obligations⁽²⁾		4,079		586		1,149		1,110		1,234
Purchase obligations⁽³⁾		85,669		79,462		6,207		—		—
Pension and post-retirement obligations		105,900		9,900		20,100		20,000		55,900
Income tax obligations⁽⁴⁾		5,548		1,217		3,095		905		331

Total contractual obligations⁽⁵⁾	$	1,342,018	$	139,898	$	114,239	$	246,425	$	841,456

(1)	Includes interest payments based on contractual terms and current interest rates for variable debt.

(2)	Consists primarily of tangible personal property leases.

(3)	Consists primarily of inventory commitments.

(4)	Excludes interest and penalties.

(5)	Comprises liabilities recorded on the balance sheet of $904,880, and obligations not recorded on the balance sheet of $437,138.

Critical Accounting Policies

We believe that the application of the following accounting policies, which are important to our financial position and results of operations, requires significant judgments and estimates on the part of management. For a summary of all of our accounting policies, including the accounting policies discussed below, see Note 1 of the Notes to Consolidated Financial Statements in Part II. Item 8. “Financial Statements and Supplementary Data.”

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

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

Goodwill, long-lived and intangible assets — The Company evaluates the recoverability of certain noncurrent assets utilizing various estimation processes. An impairment of a long-lived asset exists when the asset’s carrying amount exceeds its fair value, and is recorded when the carrying amount is not recoverable through future operations. An intangible asset or goodwill impairment exists when the carrying amount of intangible assets and goodwill exceeds its fair value. Assessments of possible impairments of goodwill, long-lived or intangible assets are made when events or changes in circumstances indicate that the carrying value of the asset may not be recoverable through future operations. Additionally, testing for possible impairment of recorded goodwill and indefinite-lived intangible asset balances is performed annually. The amount and timing of impairment charges for these assets require the estimation of future cash flows and the fair value of the related assets.

The Company’s business acquisitions result in recording goodwill and other intangible assets, which affect the amount of amortization expense and possible impairment expense that the Company will incur in future periods. The Company follows the guidance prescribed in ASC 350, “Goodwill and Other Intangible Assets” to test goodwill and intangible assets for impairment. Annually, on October 31^st or more frequently if triggering events occur, the Company compares the fair value of their reporting units to the carrying value of each reporting unit to determine if a goodwill impairment exists.

The Company determines the fair value of each reporting unit utilizing an income approach (discounted cash flows) weighted 50% and a market approach consisting of a comparable public company multiples methodology weighted 50%. To determine the reasonableness of the calculated fair values, the Company reviews the assumptions to ensure that neither the income approach nor the market approach yielded significantly different valuations.

The key assumptions are updated every year for each reporting unit for the income and market methodology used to determine fair value. Various assumptions are utilized including forecasted operating results, annual operating plans, strategic plans, economic projections, anticipated future cash flows, the weighted average cost of capital, market data and market multiples. The assumptions that have the most significant effect on the fair value calculation are the weighted average cost of capital, the market multiples and terminal growth rates. The 2011 and 2010 ranges for these three assumptions utilized by the Company are as follows:


Assumptions:	2011 Range	2010 Range
Weighted average cost of capital	12.5% to 14.5%	12.1% to 13.9%
Market multiples	6.5x to 13.0x	9.0x to 12.0x
Terminal growth rates	3.0% to 3.5%	3.0% to 3.5%

The Company concluded that the fair value of each of its reporting units was substantially in excess of its carrying value as of October 31, 2011, and thus no goodwill impairment was identified. However, a 10% decrease in the fair value of the Water reporting unit within the Fluid & Metering Technologies segment could potentially result in a goodwill impairment charge. The total goodwill balance of the Water reporting unit as of October 31, 2011 was $222.3 million.

Defined benefit retirement plans — The plan obligations and related assets of the defined benefit retirement plans are presented in Note 14 of the Notes to Consolidated Financial Statements in Part II. Item 8. “Financial Statements and Supplementary Data.” Level 1 assets are valued using unadjusted quoted prices for identical assets in active markets. Level 2 assets are valued using quoted prices or other observable inputs for similar assets. Level 3 assets are valued using unobservable inputs, but reflect the assumptions market participants would use in pricing the assets. Plan obligations and the annual pension expense are determined by consulting with actuaries using a number of assumptions provided by the Company. Key assumptions in the determination of the annual pension expense include the discount rate, the rate of salary increases, and the estimated future return on plan assets. To the extent actual amounts differ from these assumptions and estimated amounts, results could be adversely affected.

Recently Adopted Accounting Pronouncements

In October 2009, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2009-13, “Revenue Recognition (Topic 605) — Multiple-Deliverable Revenue Arrangements.” ASU No. 2009-13 addresses the accounting for multiple-deliverable arrangements to enable vendors to account for products or services (deliverables) separately rather than as a combined unit. This guidance establishes a selling price hierarchy for determining the fair value of a deliverable, which is based on: (a) vendor-specific objective evidence; (b) third-party evidence; or (c) estimated selling price. This guidance also eliminates the residual method of allocation and requires that arrangement consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method. ASU No. 2009-13 is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. The Company’s adoption of ASU No. 2009-13 effective January 1, 2011 did not have a material impact on its consolidated financial position, results of operations or cash flows.

In December 2010, the FASB issued ASU No. 2010-29, Business Combinations (Topic 805), “Disclosure of Supplementary Pro Forma Information for Business Combinations.” ASU No. 2010-29 requires revenues and earnings of the combined entity be disclosed as if the business combination occurred as of the beginning of the comparable prior annual reporting period. This ASU also requires additional disclosures about adjustments included in the reported pro forma revenues and earnings. The Company adopted the provisions of ASU No. 2010-29 prospectively for business combinations for which the acquisition date was on or after January 1, 2011.

multiemployer pension plans. The standard is intended to provide more information about an employer’s financial obligations to a multiemployer pension plan to help financial statement users better understand the financial health of the significant plans in which the employer participates. This guidance became effective for the Company for its fiscal 2011 year-end reporting. Its adoption did not have a material impact on its consolidated financial position, results of operations or cash flows.

New Accounting Pronouncements

In May 2011, the FASB issued ASU 2011-04, which is an update to Topic 820, “Fair Value Measurement.” This update establishes common requirements for measuring fair value and related disclosures in accordance with accounting principles generally accepted in the United Sates and international financial reporting standards. This amendment did not require additional fair value measurements. ASU 2011-04 is effective for all interim and annual reporting periods beginning after December 15, 2011. ASU 2011-04 is not expected to have a material impact on the consolidated financial position, results of operations or cash flows of the Company.

In June 2011, the FASB issued ASU 2011-05, an update to Topic 220, “Comprehensive Income.” This update eliminates the option of presenting the components of other comprehensive income as part of the statement of changes in stockholders’ equity, requires consecutive presentation of the statement of net income and other comprehensive income and requires reclassification adjustments from other comprehensive income to net income to be shown on the financial statements. ASU 2011-05 is effective for all interim and annual reporting periods beginning after December 15, 2011. ASU 2011-05 is not expected to have a material impact on the consolidated financial position, results of operations or cash flows of the Company.

In September 2011, the FASB issued ASU 2011-08 which provides an entity the option to first assess qualitative factors to determine whether it is necessary to perform the current two-step test for goodwill impairment. If an entity believes, as a result of its qualitative assessment, that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, the quantitative impairment test is required. Otherwise, no further testing is required. The revised standard is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. However, an entity can choose to adopt earlier even if its annual test date is before the issuance of the final standard, provided that the entity has not yet performed its 2011 annual impairment test or issued its financial statements. As of December 31, 2011, the Company did not elect to early adopt ASU 2011-08. ASU 2011-08 is not expected to have a material impact on the consolidated financial position, results of operations or cash flows of the Company.

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk.

The Company is subject to market risk associated with changes in foreign currency exchange rates and interest rates. We may, from time to time, enter into foreign currency forward contracts and interest rate exchange agreements on our debt when we believe there is a financial advantage in doing so. A treasury risk management policy, adopted by the Board of Directors, describes the procedures and controls over derivative financial and commodity instruments, including foreign currency forward contracts and interest rate exchange agreements. Under the policy, we do not use financial or commodity derivative instruments for trading purposes, and the use of these instruments is subject to strict approvals by senior officers. Typically, the use of derivative instruments is limited to foreign currency forward contracts and interest rate exchange agreements on the Company’s outstanding long-term debt or long-term debt that is expected to be issued. The Company’s exposure related to derivative instruments is, in the aggregate, not material to its financial position, results of operations or cash flows.

The Company’s foreign currency exchange rate risk is limited principally to the Euro, Canadian Dollar, British Pound and Chinese Renminbi. We manage our foreign exchange risk principally through invoicing our customers in the same currency as the source of our products. The effect of transaction gains and losses is reported within “Other income (expense)-net” on the Consolidated Statements of Operations.

The Company’s interest rate exposure is primarily related to the $818.8 million of total debt outstanding at December 31, 2011. Approximately 7% of the debt is priced at interest rates that float with the market. A 50 basis point movement in the interest rate on the floating rate debt would result in an approximate $0.3 million annualized increase or decrease in interest expense and cash flows. The remaining debt is fixed rate debt.

Item 8.

Financial Statements and Supplementary Data.

IDEX CORPORATION

CONSOLIDATED BALANCE SHEETS


	As of December 31,
	2011			2010
	(In thousands except share and per share amounts)
ASSETS
Current assets
Cash and cash equivalents	$	230,259		$	235,136
Receivables — net		252,845			213,553
Inventories		254,258			196,546
Other current assets		51,799			47,523

Total current assets		789,161			692,758
Property, plant and equipment — net		213,717			188,562
Goodwill		1,431,366			1,207,001
Intangible assets — net		382,222			281,392
Other noncurrent assets		19,641			11,982

Total assets	$	2,836,107		$	2,381,695

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Trade accounts payable	$	110,977		$	104,055
Accrued expenses		130,696			117,879
Short-term borrowings		2,444			119,445
Dividends payable		14,161			12,289

Total current liabilities		258,278			353,668
Long-term borrowings		806,366			408,450
Deferred income taxes		142,482			148,534
Other noncurrent liabilities		115,846			95,383

Total liabilities		1,322,972			1,006,035

Commitments and contingencies (Note 8)
Shareholders’ equity
Preferred stock:
Authorized: 5,000,000 shares, $.01 per share par value; Issued: none		—			—
Common stock:
Authorized: 150,000,000 shares, $.01 per share par value; Issued: 85,968,630 shares at December 31, 2011 and 84,636,668 shares at December 31, 2010		860			846
Additional paid-in capital		490,128			441,271
Retained earnings		1,142,412			1,005,040
Treasury stock at cost: 2,734,747 shares at December 31, 2011 and 2,566,985 shares at December 31, 2010		(64,796	)		(58,788	)
Accumulated other comprehensive loss		(55,469	)		(12,709	)

Total shareholders’ equity		1,513,135			1,375,660

Total liabilities and shareholders’ equity	$	2,836,107		$	2,381,695

See Notes to Consolidated Financial Statements.

IDEX CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS


	For the Years Ended December 31,
	2011			2010			2009
	(In thousands except per share amounts)
Net sales	$	1,838,451		$	1,513,073		$	1,329,661
Cost of sales		1,099,778			894,590			807,275

Gross profit		738,673			618,483			522,386
Selling, general and administrative expenses		421,703			358,272			325,453
Restructuring expenses		12,314			11,095			12,079

Operating income		304,656			249,116			184,854
Other income (expense) — net		(1,443	)		(1,092	)		1,151
Interest expense		29,332			16,150			17,178

Income before income taxes		273,881			231,874			168,827
Provision for income taxes		80,024			74,774			55,436

Net income	$	193,857		$	157,100		$	113,391

Earnings per common share:
Basic earnings per common share	$	2.34		$	1.93		$	1.41

Diluted earnings per common share	$	2.32		$	1.90		$	1.40

Share data:
Basic weighted average common shares outstanding		82,145			80,466			79,716
Diluted weighted average common shares outstanding		83,543			81,983			80,727

See Notes to Consolidated Financial Statements.

IDEX CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY


	Common Stock and Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)									Treasury Stock			Total Shareholders’ Equity
	Common Stock and Additional Paid-In Capital		Retained Earnings			Cumulative Translation Adjustment			Retirement Benefits Adjustments			Cumulative Unrealized Loss on Derivatives			Treasury Stock			Total Shareholders’ Equity
	(In thousands except share and per share amounts)
Balance, December 31, 2008	$	377,982	$	822,286		$	40,204		$	(33,654	)	$	(6,642	)	$	(55,393	)	$	1,144,783

Net income		—		113,391			—			—			—			—			113,391
Other comprehensive income, net of tax:
Cumulative translation adjustment		—		—			19,195			—			—			—			19,195
Net change in retirement obligations (net of tax expense of $3.5 million)		—		—			—			6,396			—			—			6,396
Net change on derivatives designated as cash flow hedges (net of tax benefit of $0.1 million)		—		—			—			—			(71	)		—			(71	)

Other comprehensive income		—		—			—			—			—			—			25,520

Comprehensive income		—		—			—			—			—			—			138,911

Issuance of 744,827 shares of common stock from issuance of unvested shares, exercise of stock options and deferred compensation plans		8,713		—			—			—			—			—			8,713
Share-based compensation		15,710		—			—			—			—			—			15,710
Unvested shares surrendered for tax withholding		—		—			—			—			—			(1,313	)		(1,313	)
Cash dividends declared — $.48 per common share outstanding		—		(38,700	)		—			—			—			—			(38,700	)

Balance, December 31, 2009	$	402,405	$	896,977		$	59,399		$	(27,258	)	$	(6,713	)	$	(56,706	)	$	1,268,104

Net income		—		157,100			—			—			—			—			157,100
Other comprehensive income, net of tax:
Cumulative translation adjustment		—		—			(21,097	)		—			—			—			(21,097	)
Net change in retirement obligations (net of tax benefit of $1.7 million)		—		—			—			(2,830	)		—			—			(2,830	)
Net change on derivatives designated as cash flow hedges (net of tax benefit of $11.9 million)		—		—			—			—			(14,210	)		—			(14,210	)

Other comprehensive loss		—		—			—			—			—			—			(38,137	)

Comprehensive income		—		—			—			—			—			—			118,963

Issuance of 1,222,274 shares of common stock from issuance of unvested shares, exercise of stock options and deferred compensation plans		22,354		—			—			—			—			—			22,354
Share-based compensation		17,358		—			—			—			—			—			17,358
Unvested shares surrendered for tax withholding		—		—			—			—			—			(2,082	)		(2,082	)
Cash dividends declared — $.60 per common share outstanding		—		(49,037	)		—			—			—			—			(49,037	)

Balance, December 31, 2010	$	442,117	$	1,005,040		$	38,302		$	(30,088	)	$	(20,923	)	$	(58,788	)	$	1,375,660

Net income		—		193,857			—			—			—			—			193,857
Other comprehensive income, net of tax:
Cumulative translation adjustment		—		—			(14,108	)		—			—			—			(14,108	)
Net change in retirement obligations (net of tax benefit of $4.2 million)		—		—			—			(8,398	)		—			—			(8,398	)
Net change on derivatives designated as cash flow hedges (net of tax benefit of $12.5 million)		—		—			—			—			(20,254	)		—			(20,254	)

Other comprehensive loss		—		—			—			—			—			—			(42,760	)

Comprehensive income		—		—			—			—			—			—			151,097

Issuance of 1,596,145 shares of common stock from issuance of unvested shares, exercise of stock options and deferred compensation plans		37,621		—			—			—			—			—			37,621
Share-based compensation		11,250		—			—			—			—			—			11,250
Unvested shares surrendered for tax withholding		—		—			—			—			—			(6,008	)		(6,008	)
Cash dividends declared — $.68 per common share outstanding		—		(56,485	)		—			—			—			—			(56,485	)

Balance, December 31, 2011	$	490,988	$	1,142,412		$	24,194		$	(38,486	)	$	(41,177	)	$	(64,796	)	$	1,513,135

See Notes to Consolidated Financial Statements.

IDEX CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS


	For The Years Ended December 31,
	2011			2010			2009
	(In thousands)
Cash flows from operating activities
Net income	$	193,857		$	157,100		$	113,391
Adjustments to reconcile net income to net cash provided by operating activities:
Loss (gain) on sale of fixed assets		(2,831	)		12			447
Depreciation and amortization		36,882			32,367			31,850
Amortization of intangible assets		35,504			25,741			24,496
Amortization of debt issuance expenses		1,263			547			308
Share-based compensation expense		12,076			17,358			15,710
Deferred income taxes		(3,576	)		(7,336	)		1,081
Excess tax benefit from share-based compensation		(5,298	)		(3,457	)		(2,762	)
Forward starting interest rate contract settlement		(38,707	)		(30,970	)		—
Changes in (net of the effect from acquisitions):
Receivables		(16,488	)		(22,162	)		26,069
Inventories		(607	)		(26,651	)		23,149
Trade accounts payable		(8,645	)		21,432			(16,310	)
Accrued expenses		7,411			17,941			(14,294	)
Other — net		6,400			2,555			9,397

Net cash flows provided by operating activities		217,241			184,477			212,532
Cash flows from investing activities
Cash purchases of property, plant and equipment		(35,175	)		(31,740	)		(25,059	)
Acquisition of businesses, net of cash acquired		(443,634	)		(91,286	)		—
Proceeds from fixed asset disposals		12,651			720			3,582
Other — net		(3,379	)		—			1,860

Net cash flows used in investing activities		(469,537	)		(122,306	)		(19,617	)
Cash flows from financing activities
Borrowings under credit facilities for acquisitions		365,000			53,866			—
Borrowings under revolving facilities		471,222			—			—
Borrowings under credit facilities and term loan		1,890			7,685			70,114
Proceeds from issuance of 4.2% Senior Notes		349,125			—			—
Proceeds from issuance of 2.58% Senior Euro Notes		—			96,762			—
Payments under revolving facilities, credit facilities and term loan		(906,115	)		(331,632	)		(225,604	)
Proceeds from issuance of 4.5% Senior Notes		—			298,427			—
Debt issuance costs		(5,451	)		(2,685	)		—
Dividends paid		(54,613	)		(46,334	)		(38,637	)
Proceeds from stock option exercises		33,064			18,057			7,694
Excess tax benefit from share-based compensation		5,298			3,457			2,762
Unvested shares surrendered for tax withholding		(6,008	)		(2,082	)		(1,313	)

Net cash flows provided by (used in) financing activities		253,412			95,521			(184,984	)
Effect of exchange rate changes on cash and cash equivalents		(5,993	)		3,918			4,242

Net increase (decrease) in cash		(4,877	)		161,610			12,173
Cash and cash equivalents at beginning of year		235,136			73,526			61,353

Cash and cash equivalents at end of period	$	230,259		$	235,136		$	73,526

Supplemental cash flow information
Cash paid for:
Interest	$	27,749		$	16,776		$	17,311
Income taxes		66,087			73,867			50,796
Significant non-cash activities:
Contingent consideration for acquisition		3,000			—			—
Debt acquired with acquisition of business		1,400			758			—
Issuance of unvested shares		12,488			5,603			5,131

See Notes to Consolidated Financial Statements.

IDEX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.	Significant Accounting Policies

Business

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

Principles of Consolidation

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

Use of Estimates

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

Revenue Recognition

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

IDEX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

trends. The Company also offers product warranties and accrues its estimated exposure for warranty claims at the time of sale based upon the length of the warranty period, warranty costs incurred and any other related information known to the Company.

Shipping and Handling Costs

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

Advertising Costs

Advertising costs of $13.4 million, $11.0 million and $11.4 million for December 31, 2011, 2010 and 2009, respectively, are expensed as incurred.

Cash and Cash Equivalents

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

Allowance for Doubtful Accounts

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

Inventories

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

Impairment of Long-Lived Assets

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

Goodwill and Indefinite-Lived Intangible Assets

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

IDEX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Borrowing Expenses

Expenses, inclusive of commissions and professional fees, incurred in securing and issuing debt are capitalized and included in Other non-current assets and amortized over the life of the related borrowing and are included in Interest expense in the Consolidated Statements of Operations.

Earnings per Common Share

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

ASC 260 concludes that all outstanding unvested share-based payment awards that contain rights to nonforfeitable dividends participate in undistributed earnings with common shareholders. If awards are considered participating securities, the Company is required to apply the two-class method of computing basic and diluted earnings per share. The Company has determined that its outstanding unvested shares are participating securities. Accordingly, earnings per common share were computed using the two-class method prescribed by ASC 260. Net income attributable to common shareholders was reduced by $1.2 million, $1.4 million and $0.8 million in 2011, 2010 and 2009, respectively.

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


	2011		2010		2009
	(In thousands)
Basic weighted average common shares outstanding		82,145		80,466		79,716
Dilutive effect of stock options, DCUs and unvested shares		1,398		1,517		1,011

Diluted weighted average common shares outstanding		83,543		81,983		80,727

Options to purchase approximately 0.7 million, 0.2 million and 2.2 million shares of common stock as of December 31, 2011, 2010 and 2009, respectively, were not included in the computation of diluted EPS because the exercise price was greater than the average market price of the Company’s common stock and, therefore, the effect of their inclusion would have been antidilutive.

Share-Based Compensation

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

Depreciation and Amortization

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


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

IDEX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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


Patents			5 to 17 years
Trade names			10 to 20 years
Customer relationships			3 to 20 years
Non-compete agreements			2 to 5 years
Unpatented technology and other			4 to 20 years

Research and Development Expenditures

Costs associated with research and development are expensed in the period incurred and are included in Cost of sales within the Consolidated Statements of Operations. Research and development expenses, which include costs associated with developing new products and major improvements to existing products, were $36.0 million, $31.8 million and $29.6 million in 2011, 2010 and 2009, respectively.

Foreign Currency Translation

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

Income Taxes

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

Concentration of Credit Risk

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

Recently Adopted Accounting Pronouncements

In October 2009, the FASB issued ASU No. 2009-13, “Revenue Recognition (Topic 605) — Multiple-Deliverable Revenue Arrangements.” ASU No. 2009-13 addresses the accounting for multiple-deliverable arrangements to enable vendors to account for products or services (deliverables) separately rather than as a combined unit. This guidance establishes a selling price hierarchy for determining the fair value of a deliverable, which is based on: (a) vendor-specific objective evidence; (b) third-party evidence; or (c) estimated selling price. This guidance also eliminates the residual method of allocation and requires that arrangement consideration be

IDEX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

allocated at the inception of the arrangement to all deliverables using the relative selling price method. ASU No. 2009-13 is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. The Company’s adoption of ASU No. 2009-13 effective January 1, 2011 did not have a material impact on its consolidated financial position, results of operations or cash flows.

In September 2011, the FASB issued ASU 2011-09, “Disclosures about an Employer’s Participation in a Multiemployer Plan.” ASU 2011-09 requires enhanced disclosures around an employer’s participation in multiemployer pension plans. The standard is intended to provide more information about an employer’s financial obligations to a multiemployer pension plan to help financial statement users better understand the financial health of the significant plans in which the employer participates. This guidance became effective for the Company for its fiscal 2011 year-end reporting. Its adoption did not have a material impact on its consolidated financial position, results of operations or cash flows.

New Accounting Pronouncements

IDEX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2.	Restructuring

During 2011 and 2010 the Company recorded restructuring costs as a result of initiatives that support the implementation of key strategic efforts designed to facilitate long-term sustainable growth through cost reduction actions, primarily consisting of employee reductions and facility rationalization. The costs incurred related to these initiatives are included in Restructuring expenses in the Consolidated Statements of Operations while the restructuring accruals are included in Accrued expenses in our Consolidated Balance Sheets.

2011 Initiatives

During 2011, the Company recorded $12.3 million of pre-tax restructuring expenses for exit costs and employee severance related to employee reductions across various functional areas as well as facility rationalization. The 2011 restructuring initiative included severance benefits for 292 employees.

2009 Initiatives

During 2010, the Company recorded $11.1 million of pre-tax restructuring expenses related to our 2009 restructuring initiative for employee severance related to employee reductions across various functional areas as well as facility closures resulting from the Company’s cost savings initiatives. The 2009 restructuring initiative included severance benefits for over 700 employees.

Pre-tax restructuring expenses, by segment, for 2011, were as follows:


	Severance Costs		Exit Costs		Total
	(In thousands)
Fluid & Metering Technologies	$	2,800	$	61	$	2,861
Health & Science Technologies		2,007		123		2,130
Dispensing Equipment		2,948		797		3,745
Fire & Safety/Diversified Products		1,482		—		1,482
Corporate/Other		2,096		—		2,096

Total restructuring costs	$	11,333	$	981	$	12,314

Pre-tax restructuring expenses, by segment, for 2010, were as follows:


	Severance Costs		Exit Costs		Total
	(In thousands)
Fluid & Metering Technologies	$	2,630	$	320	$	2,950
Health & Science Technologies		3,511		1,650		5,161
Dispensing Equipment		641		—		641
Fire & Safety/Diversified Products		589		—		589
Corporate/Other		1,754		—		1,754

Total restructuring costs	$	9,125	$	1,970	$	11,095

IDEX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Pre-tax restructuring expenses, by segment, for 2009, were as follows:


	Severance Costs		Exit Costs		Total
	(In thousands)
Fluid & Metering Technologies	$	2,694	$	1,364	$	4,058
Health & Science Technologies		2,201		1,303		3,504
Dispensing Equipment		1,155		860		2,015
Fire & Safety/Diversified Products		1,308		—		1,308
Corporate/Other		488		706		1,194

Total restructuring costs	$	7,846	$	4,233	$	12,079

Restructuring accruals of $5.9 million and $3.5 million at December 31, 2011 and 2010, respectively, are reflected in Accrued expenses in our Consolidated Balance Sheets as follows:


	2011 Initiative			2009 Initiative			Total
	(In thousands)
Balance at January 1, 2010	$	—		$	6,878		$	6,878
Restructuring expenses		—			11,095			11,095
Payments/utilization		—			(14,430	)		(14,430	)

Balance at December 31, 2010		—			3,543			3,543
Restructuring expenses		12,314			—			12,314
Payments/utilization		(6,439	)		(3,543	)		(9,982	)

Balance at December 31, 2011	$	5,875		$	—		$	5,875

IDEX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

3.	Balance Sheet Components


	December 31,
	2011		2010
	(In thousands)
RECEIVABLES
Customers	$	254,816	$	212,899
Other		3,889		5,976

Total		258,705		218,875
Less allowance for doubtful accounts		5,860		5,322

Total receivables — net	$	252,845	$	213,553

INVENTORIES
Raw materials and components parts	$	155,577	$	126,901
Work in process		40,506		23,164
Finished goods		58,175		46,481

Total	$	254,258	$	196,546

PROPERTY, PLANT AND EQUIPMENT
Land and improvements	$	30,320	$	23,956
Buildings and improvements		128,932		127,272
Machinery, equipment and other		278,936		254,649
Office and transportation equipment		98,341		95,141
Construction in progress		8,820		7,003

Total		545,349		508,021
Less accumulated depreciation and amortization		331,632		319,459

Total property, plant and equipment — net	$	213,717	$	188,562


	December 31,
	2011		2010
	(In thousands)
ACCRUED EXPENSES
Payroll and related items	$	51,728	$	46,937
Management incentive compensation		17,402		19,985
Income taxes payable		8,456		6,126
Deferred income taxes		167		723
Insurance		6,495		5,544
Warranty		4,417		3,831
Deferred revenue		7,954		7,172
Restructuring		5,875		3,543
Interest rate exchange agreement		—		2,328
Liability for uncertain tax positions		1,061		1,647
Accrued interest		1,424		—
Contingent consideration for acquisition		1,500		—
Other		24,217		20,043

Total accrued expenses	$	130,696	$	117,879

OTHER NONCURRENT LIABILITIES
Pension and retiree medical obligations	$	91,542	$	74,559
Liability for uncertain tax positions		5,262		5,912
Deferred revenue		3,198		4,225
Other		15,844		10,687

Total other noncurrent liabilities	$	115,846	$	95,383

IDEX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


	2011		2010		2009
	(In thousands)
VALUATION AND QUALIFYING ACCOUNTS⁽¹⁾
Beginning balance January 1	$	5,322	$	6,160	$	5,600
Charged to costs and expenses		1,044		945		1,789
Deductions⁽²⁾		917		1,879		617
Currency translation and other		411		96		(612	)

Ending balance December 31	$	5,860	$	5,322	$	6,160

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

(2)	Represents uncollectible accounts, net of recoveries.

4.	Goodwill and Intangible Assets

The changes in the carrying amount of goodwill for the years ended December 31, 2011 and 2010, by business segment, were as follows:


	Fluid & Metering Technologies			Health & Science Technologies			Dispensing Equipment			Fire & Safety/ Diversified Products			Total
	(In thousands)
Goodwill	$	528,634		$	404,383		$	135,063		$	149,114		$	1,217,194
Accumulated impairment losses		(6,659	)		—			(30,090	)		—			(36,749	)

Balance at January 1, 2010⁽¹⁾		521,975			404,383			104,973			149,114			1,180,445
Acquisitions		10,254			35,227			—			—			45,481
Foreign currency translation		(8,463	)		(195	)		(6,193	)		(4,074	)		(18,925	)

Balance at December 31, 2010⁽¹⁾		523,766			439,415			98,780			145,040			1,207,001
Acquisition adjustments		—			434			—			—			434
Acquisitions (Note 12)		—			231,189			—			—			231,189
Foreign currency translation		(2,765	)		(1,493	)		(1,926	)		(1,074	)		(7,258	)

Balance at December 31, 2011	$	521,001		$	669,545		$	96,854		$	143,966		$	1,431,366

(1)	Revised to reflect the movement of the MPT reporting unit from the Fluid & Metering Technologies segment to the Health & Science Technologies segment.

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

Goodwill and other acquired intangible assets with indefinite lives were tested for impairment as of October 31, 2011, the Company’s annual impairment date. In 2011, there were no triggering events or change in circumstances that would have required a review other than as of our annual test date. The Company concluded that the fair value of each of the reporting units and indefinite-lived intangible assets was in excess of the carrying value as of October 31, 2011. However, a 10% decrease in the fair value of the Water reporting unit within the Fluid & Metering Technologies segment could potentially result in a goodwill impairment charge. The total goodwill balance of the Water reporting unit as of October 31, 2011 was $222.3 million.

IDEX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table provides the gross carrying value and accumulated amortization for each major class of intangible asset at December 31, 2011 and 2010:


	At December 31, 2011									At December 31, 2010
	Gross Carrying Amount		Accumulated Amortization			Net		Weighted Average Life		Gross Carrying Amount		Accumulated Amortization			Net
			(In thousands)									(In thousands)
Amortizable intangible assets:
Patents	$	11,506	$	(4,315	)	$	7,191		11	$	9,906	$	(5,052	)	$	4,854
Trade names		72,823		(18,205	)		54,618		17		69,043		(13,769	)		55,274
Customer relationships		221,076		(69,280	)		151,796		10		169,065		(47,686	)		121,379
Non-compete agreements		4,801		(4,053	)		748		2		4,087		(3,501	)		586
Unpatented technology		70,741		(15,617	)		55,124		11		43,206		(9,407	)		33,799
Other		6,793		(3,156	)		3,637		10		5,957		(2,557	)		3,400

Total amortizable intangible assets		387,740		(114,626	)		273,114				301,264		(81,972	)		219,292
Unamortized intangible assets:
Banjo trade name		62,100		—			62,100				62,100		—			62,100
CVI Melles Griot trade name		47,008		—			47,008				—		—			—

Total intangible assets	$	496,848	$	(114,626	)	$	382,222			$	363,364	$	(81,972	)	$	281,392

The unamortized trade names are indefinite lived intangible assets which are tested for impairment on an annual basis or more frequently if events or changes in circumstances indicate that the asset might be impaired. Amortization of intangible assets was $35.5 million, $25.7 million and $24.5 million in 2011, 2010 and 2009, respectively. Amortization expense for each of the next five years is estimated to be approximately $39.9 million annually.

5.	Borrowings

Borrowings at December 31, 2011 and 2010 consisted of the following:


	2011		2010
	(In thousands)
Revolving Facility	$	50,798	$	—
Credit Facility		—		27,842
Term Loan		—		90,000
4.2% Senior Notes, due December 2021		349,125		—
4.5% Senior Notes, due December 2020		298,555		298,427
2.58% Senior Euro Notes, due June 2015		104,655		107,341
Other borrowings		5,677		4,285

Total borrowings		808,810		527,895
Less current portion		2,444		119,445

Total long-term borrowings	$	806,366	$	408,450

IDEX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

On June 27, 2011, the Company entered into a credit agreement (the “Credit Agreement”) along with certain of its subsidiaries, as borrowers (the “Borrowers”), with Bank of America, N.A., as administrative agent, swing line lender and an issuer of letters of credit, and other lenders party thereto. The Credit Agreement replaced the Company’s previous $600.0 million credit facility, which was due to expire in December 2011.

The Credit Agreement consists of a revolving Credit Facility in an aggregate principal amount of $700.0 million with a maturity date of June 27, 2016. The maturity date may be extended under certain conditions for an additional one-year term prior to the second anniversary of the initial closing date of June 27, 2011. Up to $75.0 million of the Revolving Facility is available for the issuance of letters of credit. Additionally, up to $25.0 million of the Revolving Facility is available to the Company for swing line loans, available on a same-day basis.

Proceeds of the Revolving Facility are available for use by the Borrowers for working capital and other general corporate purposes, including refinancing existing debt of the Company and its subsidiaries. The Company may request increases in the lending commitments under the Credit Agreement, but the aggregate lending commitments may not exceed $950.0 million. The Company has the right, subject to certain conditions set forth in the Credit Agreement, to designate certain foreign subsidiaries of the Company as borrowers under the Credit Agreement. In connection with any such designation, the Company is required to guarantee the obligations of any such subsidiaries under the Credit Agreement. Under the Credit Agreement, Fluid Management Europe B.V., (“FME”) and IDEX UK Ltd. (“IDEX UK”) were approved by the lenders as designated borrowers. At December 31, 2011, FME had no borrowings under the Revolving Facility, while IDEX UK’s borrowings under the Revolving Facility were £7.0 million ($10.8 million). As IDEX UK’s borrowings under the Revolving Facility are British Pound denominated and the cash flows that will be used to make payments of principal and interest are predominately generated in British Pounds, the Company does not anticipate any significant foreign exchange gains or losses in servicing this debt.

Borrowings under the Revolving Facility bear interest, at either an alternate base rate or an adjusted LIBOR rate plus, an applicable margin. Such applicable margin is based on the Company’s senior, unsecured, long-term debt rating and can range from .875% to 1.70%. Based on the Company’s credit rating at December 31, 2011, the applicable margin was 1.05%. Interest is payable (a) in the case of base rate loans, quarterly, and (b) in the case of LIBOR rate loans, on the maturity date of the borrowing, or quarterly from the effective date for borrowings exceeding three months. An annual Revolving Facility fee, also based on the Company’s credit rating, is currently 20 basis points and is payable quarterly.

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

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

The Credit Agreement also contains customary events of default (subject to grace periods, as appropriate) including among others: nonpayment of principal, interest or fees; breach of the representations or warranties in any material respect; breach of the financial, affirmative or negative covenants; payment default on, or

IDEX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

acceleration of, other material indebtedness; bankruptcy or insolvency; material judgments entered against the Company or any of its subsidiaries; certain specified events under the Employee Retirement Income Security Act of 1974, as amended; certain changes in control of the Company; and the invalidity or unenforceability of the Credit Agreement or other documents associated with the Credit Agreement.

At December 31, 2011, there was $50.8 million outstanding under the Revolving Facility with $7.8 million of outstanding letters of credit. The net available borrowing capacity under the Revolving Facility at December 31, 2011, was approximately $641.4 million.

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

IDEX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

purposes. The 4.2% Senior Notes bear interest at a rate of 4.2% per annum, which is payable semi-annually in arrears on each June 15 and December 15. The Company may redeem all or a portion of the 4.2% Senior Notes at any time prior to maturity at the redemption prices set forth in the Note Indenture governing the 4.2% Senior Notes. The Company may issue additional debt from time to time pursuant to the Indenture. The Indenture and 4.2% Senior Notes contain covenants that limit the Company’s ability to, among other things, incur certain liens securing indebtedness, engage in certain sale-leaseback transactions, and enter into certain consolidations, mergers, conveyances, transfers or leases of all or substantially all the Company’s assets. The terms of the 4.2% Senior Notes also require the Company to make an offer to repurchase the 4.2% Senior Notes upon a change of control triggering event (as defined in the Indenture) at a price equal to 101% of their principal amount plus accrued and unpaid interest, if any.

On April 15, 2010 and July 12, 2011, the Company entered into forward starting interest rate contracts in anticipation of the issuance of the 4.5% and 4.2% Senior Notes. See Note 6 for additional details regarding these contracts.

Other borrowings of $5.7 million at December 31, 2011 were comprised of capital leases as well as debt at international locations maintained for working capital purposes. Interest is payable on the outstanding debt balances at the international locations at rates ranging from 1.5% to 5.2% per annum.

There are two key financial covenants that the Company is required to maintain in connection with the Revolving Facility and 2.58% Senior Euro Notes. The most restrictive financial covenants under these debt instruments require a minimum interest coverage ratio of 3.0 to 1 and a maximum leverage ratio of 3.25 to 1. At December 31, 2011, the Company was in compliance with both of these financial covenants. There are no financial covenants relating to the 4.5% Senior Notes or 4.2% Senior Notes.

Total borrowings at December 31, 2011 have scheduled maturities as follows (in thousands):


2012	$	2,444
2013		508
2014		488
2015		105,153
2016		51,308
Thereafter		648,909

Total borrowings	$	808,810

6.	Derivative Instruments

The Company enters into cash flow hedges to reduce the exposure to variability in certain expected future cash flows. The type of cash flow hedges the Company enters into includes foreign currency contracts and interest rate exchange agreements that effectively convert a portion of floating-rate debt to fixed-rate debt and are designed to reduce the impact of interest rate changes on future interest expense.

The effective portion of gains or losses on interest rate exchange agreements is reported in accumulated other comprehensive income (loss) in shareholders’ equity and reclassified into net income in the same period or

IDEX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

periods in which the hedged transaction affects net income. The remaining gain or loss in excess of the cumulative change in the present value of future cash flows or the hedged item, if any, is recognized into net income during the period of change.

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

At December 31, 2011, approximately $7.6 million of the amount included in accumulated other comprehensive income (loss) in shareholders’ equity at December 31, 2011 will be recognized to net income over the next 12 months as the underlying hedged transactions are realized.

On May 31, 2011, the Company settled foreign currency exchange contracts with an aggregate notional amount of $0.5 million; the impact of this settlement was immaterial.

The following table sets forth the fair value amounts of derivative instruments held by the Company as of December 31, 2011 and 2010:


	Fair Value Assets (Liabilities)
	December 31, 2011		December 31, 2010			Balance Sheet Caption
	(In thousands)
Interest rate exchange agreement	$	—	$	(2,328	)	Accrued expenses
Foreign exchange contracts		—		176		Other current assets

IDEX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes the gain (loss) recognized and the amounts and location of income (expense) and gain (loss) reclassified into income for interest rate contracts and foreign currency contracts for the year ended December 31, 2011 and 2010:


	Gain (Loss) Recognized in Other Comprehensive Income						Income (Expense) and Gain (Loss) Reclassified into Income						Income Statement Caption
	Twelve Months Ended December 31,
	2011			2010			2011			2010
	(In thousands)
Interest rate agreements	$	(38,797	)	$	(31,792	)	$	(6,197	)	$	(8,805	)	Interest expense
Interest rate agreements		—			—			(786	)		(440	)	Other expense
Foreign exchange contracts		(55	)		126			227			126		Sales

7.	Fair Value Measurements

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

•

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

•

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

•

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

The following table summarizes the basis used to measure the Company’s financial assets (liabilities) at fair value on a recurring basis in the balance sheet at December 31, 2011 and 2010:


	Basis of Fair Value Measurements
	Balance at December 31, 2011			Level 1		Level 2		Level 3
	(In thousands)
Money market investments	$	11,899		$	11,899		—		—
Available for sale securities		2,785			2,785		—		—
Contingent consideration		(3,000	)		—		—	$	(3,000	)


	Balance at December 31, 2010			Level 1		Level 2			Level 3
	(In thousands)
Money market investment	$	96,730		$	96,730		—			—
Interest rate agreements		(2,328	)		—		(2,328	)		—
Foreign currency contracts		176			—		176			—

There were no transfers of assets or liabilities between Level 1 and Level 2 in 2011 or 2010.

IDEX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In determining the fair value of the Company’s interest rate exchange agreement derivatives, the Company uses a present value of expected cash flows based on market observable interest rate yield curves commensurate with the term of each instrument and the credit default swap market to reflect the credit risk of either the Company or the counterparty.

In determining the fair value of the Company’s contingent consideration, the Company uses a probability weighted estimate based on an independent appraisal, adjusted for the time value of money. The Company increased the fair value of the contingent consideration from $2.7 million at September 30, 2011 to $3.0 million at December 31, 2011 based on updated estimates.

The carrying value of our cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximates their fair values because of the short term nature of these instruments. At December 31, 2011, the fair value of our Revolving Facility, 2.58% Senior Euro Notes, 4.5% Senior Notes and 4.2% Senior Notes, based on quoted market prices and current market rates for debt with similar credit risk and maturity, was approximately $810.8 million compared to the carrying value of $803.1 million.

8.	Commitments and Contingencies

The Company leases certain office facilities, warehouses and data processing equipment under operating leases. Rental expense totaled $19.0 million, $13.9 million and $12.2 million 2011, 2010, and 2009, respectively.

The aggregate future minimum lease payments for operating and capital leases as of December 31, 2011 were as follows:


	Operating		Capital
	(In thousands)
2012	$	13,679	$	586
2013		11,047		591
2014		6,512		558
2015		4,825		555
2016		3,325		555
2017 and thereafter		7,666		1,234

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


	2011			2010			2009
	(In thousands)
Beginning balance January 1	$	3,831		$	4,383		$	3,751
Provision for warranties		4,648			4,331			4,507
Claim settlements		(4,443	)		(4,665	)		(3,918	)
Other adjustments, including acquisitions and currency translation		381			(218	)		43

Ending balance December 31	$	4,417		$	3,831		$	4,383

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

IDEX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

9.	Common and Preferred Stock

At December 31, 2011 and 2010, the Company had 150 million shares of authorized common stock, with a par value of $.01 per share and 5 million shares of authorized preferred stock with a par value of $.01 per share. No preferred stock was issued as of December 31, 2011 and 2010.

10.

Income Taxes

Pretax income for 2011, 2010 and 2009 was taxed in the following jurisdictions:


	2011		2010		2009
	(In thousands)
Domestic	$	192,857	$	161,573	$	114,389
Foreign		81,024		70,301		54,438

Total	$	273,881	$	231,874	$	168,827

The provision (benefit) for income taxes for 2011, 2010, and 2009, was as follows:


	2011			2010			2009
	(In thousands)
Current
U.S.	$	48,823		$	59,384		$	34,921
State and local		3,434			4,548			2,704
Foreign		31,343			18,178			16,730

Total current		83,600			82,110			54,355
Deferred
U.S.		4,792			(6,550	)		1,658
State and local		(1,103	)		(293	)		110
Foreign		(7,265	)		(493	)		(687	)

Total deferred		(3,576	)		(7,336	)		1,081

Total provision for income taxes	$	80,024		$	74,774		$	55,436

Deferred tax assets (liabilities) at December 31, 2011 and 2010 were:


	2011			2010
	(In thousands)
Employee and retiree benefit plans	$	38,626		$	17,764
Depreciation and amortization		(213,002	)		(179,889	)
Inventories		10,274			6,934
Allowances and accruals		14,103			16,690
Interest rate exchange agreement		23,714			11,995
Other		10,033			1,617

Total	$	(116,252	)	$	(124,889	)

IDEX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The deferred tax assets and liabilities recognized in the Company’s Consolidated Balance Sheets as of December 31, 2011 and 2010 were:


	2011			2010
	(In thousands)
Deferred tax asset — other current assets	$	26,037		$	23,829
Deferred tax asset — other noncurrent assets		360			539

Total deferred tax assets		26,397			24,368
Deferred tax liability — accrued expenses		(167	)		(723	)
Noncurrent deferred tax liability — deferred income taxes		(142,482	)		(148,534	)

Total deferred tax liabilities		(142,649	)		(149,257	)

Net deferred tax liabilities	$	(116,252	)	$	(124,889	)

The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to pretax income. The computed amount and the differences for 2011, 2010, and 2009 are shown in the following table:


	2011			2010			2009
	(In thousands)
Pretax income	$	273,881		$	231,874		$	168,827

Provision for income taxes:
Computed amount at statutory rate of 35%	$	95,858		$	81,156		$	59,089
State and local income tax (net of federal tax benefit)		1,515			2,766			1,829
Taxes on non-U.S. earnings-net of foreign tax credits		(4,522	)		(8,545	)		(4,117	)
Effect of flow-through entities		(6,922	)		(516	)		(535	)
U.S. business tax credits		(917	)		(935	)		(754	)
Domestic activities production deduction		(4,589	)		(4,720	)		(1,925	)
Other		(399	)		5,568			1,849

Total provision for income taxes	$	80,024		$	74,774		$	55,436

The Company has not provided an estimate for any U.S. or additional foreign taxes on undistributed earnings of foreign subsidiaries that might be payable if these earnings were repatriated since the Company considers these amounts to be permanently invested.

A reconciliation of the beginning and ending amount of unrecognized tax benefits for 2011, 2010 and 2009 are shown in the following table:


	2011			2010			2009
	(In thousands)
Beginning balance January 1	$	6,440		$	5,285		$	4,009
Gross increases for tax positions of prior years		1,828			3,049			2,138
Gross decreases for tax positions of prior years		(1,595	)		(675	)		—
Settlements		(338	)		(517	)		(628	)
Lapse of statute of limitations		(787	)		(702	)		(234	)

Ending balance December 31	$	5,548		$	6,440		$	5,285

IDEX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

We recognize interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2011, 2010 and 2009 we had approximately $0.5 million, $0.8 million and $0.9 million, respectively, of accrued interest related to uncertain tax positions. As of December 31, 2011, 2010 and 2009 we had approximately $0.2 million, $0.4 million and $0.2 million, respectively, of accrued penalties related to uncertain tax positions.

The total amount of unrecognized tax benefits that would affect our effective tax rate if recognized is $5.0 million, $5.8 million and $4.4 million as of December 31, 2011, December 31, 2010 and December 31, 2009, respectively. The tax years 2006-2010 remain open to examination by major taxing jurisdictions. Due to the potential for resolution of federal, state and foreign examinations, and the expiration of various statutes of limitation, it is reasonably possible that the Company’s gross unrecognized tax benefits balance may change within the next 12 months by a range of zero to $1.1 million.

The Company had net operating loss carry forwards for U.S. federal purposes at December 31, 2011 and 2010 of $14.0 and $3.5 million, respectively. For non-U.S. purposes, the Company had net operating loss carry forwards at December 31, 2011 and 2010 of $12.4 and $13.7 million, respectively. The federal net operating loss carry forwards are available for use against the Company’s consolidated federal taxable income and expire between 2019 and 2030. The entire balance of the non-U.S. net operating losses are available to be carried forward, with $0.7 million of these losses beginning to expire during the years 2018 through 2020. The remaining $11.5 million of such losses can be carried forward indefinitely.

At December 31, 2011 and 2010, the Company had a foreign capital loss carry forward of approximately $1.1 million and $1.3 million respectively. The foreign capital loss can be carried forward indefinitely. At December 31, 2011 and 2010, the Company has a valuation allowance against the deferred tax asset attributable to the foreign capital loss of $0.2 million and $0.4 million, respectively. At December 31, 2011 and 2010, the Company had state net operating loss and credit carry forwards of approximately $18.0 million and $18.7 million, respectively. If unutilized, the state net operating loss will expire between 2016 and 2030. At December 31, 2011 and 2010, the Company recorded a valuation allowance against the deferred tax asset attributable to the state net operating loss of $0.3 million and $0.4 million, respectively.

11.

Business Segments and Geographic Information

IDEX has four reportable business segments: Fluid & Metering Technologies, Health & Science Technologies, Dispensing Equipment, and Fire & Safety/Diversified Products. Reporting units in the Fluid & Metering Technologies segment include Banjo, Energy, CFP and Water. Reporting units in the Health & Science Technologies segment include IH&S, IOP, PPE, Gast, Micropump and MPT. The Dispensing Equipment segment is a reporting unit. Reporting units in the Fire & Safety/Diversified Products segment include Fire Suppression, Rescue Tools and Band-It.

The Fluid & Metering Technologies segment designs, produces and distributes positive displacement pumps, flow meters, injectors, and other fluid-handling pump modules and systems and provides flow monitoring and other services for the water and wastewater industries. The Health & Science Technologies segment designs, produces and distributes a wide range of precision fluidics, rotary lobe pumps, centrifugal and positive displacement pumps, roll compaction and drying systems used in beverage, food processing, pharmaceutical and cosmetics, pneumatic components and sealing solutions, including very high precision, low-flow rate pumping solutions required in analytical instrumentation, clinical diagnostics and drug discovery, high performance molded and extruded, biocompatible medical devices and implantables, air compressors used in medical, dental and industrial applications, optical components and coatings for applications in the fields of

IDEX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

scientific research, defense, aerospace, telecommunications and electronics manufacturing, laboratory and commercial equipment used in the production of micro and nano scale materials, precision photonic solutions used in life sciences, research and defense markets, and precision gear and peristaltic pump technologies that meet exacting original equipment manufacturer specifications. The Dispensing Equipment segment produces precision equipment for dispensing, metering and mixing colorants and paints used in a variety of retail and commercial businesses around the world. The Fire & Safety/Diversified Products segment produces firefighting pumps and controls, rescue tools, lifting bags and other components and systems for the fire and rescue industry, and engineered stainless steel banding and clamping devices used in a variety of industrial and commercial applications.

Information on the Company’s business segments is presented below, based on the nature of products and services offered. The Company evaluates performance based on several factors, of which operating income is the primary financial measure. Intersegment sales are accounted for at fair value as if the sales were to third parties. Certain prior year amounts have been revised to reflect the movement of the MPT reporting unit from the Fluid & Metering Technologies Segment to the Health & Science Technologies Segment.


	2011			2010			2009
	(In thousands)
NET SALES
Fluid & Metering Technologies:
External customers	$	816,409		$	704,179		$	620,670
Intersegment sales		466			712			866

Total segment sales		816,875			704,891			621,536
Health & Science Technologies:
External customers		620,659			418,535			318,908
Intersegment sales		1,653			3,717			4,993

Total segment sales		622,312			422,252			323,901
Dispensing Equipment:
External customers		116,857			125,127			127,279
Intersegment sales		553			193			—

Total segment sales		117,410			125,320			127,279
Fire & Safety/Diversified Products:
External customers		284,526			265,232			262,804
Intersegment sales		489			269			5

Total segment sales		285,015			265,501			262,809
Intersegment eliminations		(3,161	)		(4,891	)		(5,864	)

Total net sales	$	1,838,451		$	1,513,073		$	1,329,661

OPERATING INCOME⁽¹⁾
Fluid & Metering Technologies	$	159,984		$	127,192		$	97,867
Health & Science Technologies		110,871			87,084			54,134
Dispensing Equipment		15,409			19,490			15,147
Fire & Safety/Diversified Products		70,492			62,844			59,884
Corporate office and other⁽²⁾		(52,100	)		(47,494	)		(42,178	)

Total operating income		304,656			249,116			184,854
Interest expense		29,332			16,150			17,178
Other income (expense)-net		(1,443	)		(1,092	)		1,151

Income before taxes	$	273,881		$	231,874		$	168,827

IDEX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


	2011		2010		2009
	(In thousands)
ASSETS
Fluid & Metering Technologies	$	1,048,682	$	1,040,601	$	1,011,392
Health & Science Technologies		1,201,994		718,884		598,786
Dispensing Equipment		149,813		205,540		164,979
Fire & Safety/Diversified Products		292,587		278,567		285,893
Corporate office and other⁽²⁾		143,031		138,103		37,107

Total assets	$	2,836,107	$	2,381,695	$	2,098,157

DEPRECIATION AND AMORTIZATION⁽³⁾
Fluid & Metering Technologies	$	32,258	$	31,762	$	31,540
Health & Science Technologies		30,165		17,384		15,337
Dispensing Equipment		3,181		3,753		3,124
Fire & Safety/Diversified Products		5,335		4,885		5,328
Corporate office and other		1,447		324		1,017

Total depreciation and amortization	$	72,386	$	58,108	$	56,346

CAPITAL EXPENDITURES
Fluid & Metering Technologies	$	12,481	$	17,206	$	12,785
Health & Science Technologies		13,000		7,618		6,447
Dispensing Equipment		1,179		1,129		864
Fire & Safety/Diversified Products		4,465		3,513		3,686
Corporate office and other		3,423		3,303		1,743

Total capital expenditures	$	34,548	$	32,769	$	25,525

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

(2)	Includes intersegment eliminations.

(3)	Excludes amortization of debt issuance expenses.

Information about the Company’s operations in different geographical regions for the years ended December 31, 2011, 2010 and 2009 is shown below. Net sales were attributed to geographic areas based on location of the customer, and no country outside the U.S. was greater than 10% of total revenues.


	2011		2010		2009
	(In thousands)
NET SALES
U.S.	$	857,990	$	766,067	$	698,822
Europe		492,125		402,056		361,774
Other countries		488,336		344,950		269,065

Total net sales	$	1,838,451	$	1,513,073	$	1,329,661

LONG-LIVED ASSETS — PROPERTY, PLANT AND EQUIPMENT
U.S.	$	124,102	$	108,951	$	105,165
Europe		63,433		68,756		61,766
Other countries		26,182		10,855		11,352

Total long-lived assets — net	$	213,717	$	188,562	$	178,283

IDEX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

12.

Acquisitions

All of the Company’s acquisitions have been accounted for under ASC 805, Business Combinations. Accordingly, the accounts of the acquired companies, after adjustments to reflect fair values assigned to assets and liabilities, have been included in the consolidated financial statements from their respective dates of acquisition.

2011 Acquisitions

On January 31, 2011, the Company acquired the membership interests of AT Films. AT Films specializes in optical components and coatings for applications in the fields of scientific research, defense, aerospace, telecommunications and electronics manufacturing. AT Films’ core competence is the design and manufacture of filters, splitters, reflectors and mirrors with the precise physical properties required to support their customers’ most challenging and cutting-edge optical applications. Headquartered in Boulder, Colorado, AT Films has annual revenues of approximately $9.0 million. AT Films operates within the Health & Science Technologies segment as a part of the IOP platform. The Company acquired AT Films for an aggregate purchase price of $34.5 million, consisting of $31.8 million in cash and contingent consideration valued at approximately $2.7 million as of the opening balance sheet date. As of December 31, 2011, the Company expects to pay $3.0 million, which is the maximum amount under the contingent consideration arrangement. Goodwill and intangible assets recognized as part of this transaction were $18.2 million and $11.4 million, respectively. The $18.2 million of goodwill is deductible for tax purposes.

On March 11, 2011, the Company completed the acquisition of Microfluidics. Microfluidics is a global leader in the design and manufacture of laboratory and commercial equipment used in the production of micro and nano scale materials for the pharmaceutical and chemical markets. Microfluidics is the exclusive producer of the Microfluidizer^® family of high shear fluid processors for uniform particle size reduction, robust cell disruption and nanoparticle creation. Microfluidics operates within the Health & Science Technologies segment as a part of the MPT reporting unit. The Company acquired Microfluidics for an aggregate purchase price of $18.5 million in cash. Headquartered in Newton, Massachusetts, Microfluidics has annual revenues of approximately $16.0 million. Goodwill and intangible assets recognized as part of this transaction were $5.7 million and $9.7 million, respectively. The $5.7 million of goodwill is not deductible for tax purposes.

On June 10, 2011, the Company completed the acquisition of CVI MG. CVI MG is a global leader in the design and manufacture of precision photonic solutions used in the life sciences, research, semiconductor, security and defense markets. CVI MG’s innovative products are focused on the generation, control and productive use of light for a variety of key science and industrial applications. Products include specialty lasers and light sources, electro-optical components, specialty shutters, opto-mechanical assemblies and components. In addition, CVI MG produces critical components for life science research, electronics manufacturing, military and other industrial applications including lenses, mirrors, filters and polarizers. These components are utilized in a number of important applications such as spectroscopy, cytometry (cell counting), guidance systems for target designation, remote sensing, menology and optical lithography. CVI MG operates within the Health and Science Technologies segment as part of the IOP platform. The Company acquired CVI MG for an aggregate purchase price of $394.7 million, consisting of $393.3 million in cash and the assumption of approximately $1.4 million of debt. Approximately $365.0 million of the cash payment was financed with borrowings under the Company’s Revolving Facility. Headquartered in Albuquerque, New Mexico, with manufacturing sites located on three continents, CVI MG has annual revenues of approximately $178.0 million. Goodwill and intangible assets recognized as part of this transaction were $207.3 million and $115.8 million, respectively. Approximately $117.7 million of goodwill is deductible for tax purposes.

IDEX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The purchase price for CVI MG, AT Films and Microfluidics has been allocated to the assets acquired and liabilities assumed based on estimated fair values at the date of the acquisition. The Company is continuing to evaluate the initial purchase price allocations with respect to certain inventory items and contingent liabilities, as of the acquisition date, which will be adjusted as additional information relative to the fair values of the assets and liabilities of the businesses, become known. Accordingly, management has used its best estimate in the initial purchase price allocation as of the date of the filing of these financial statements.

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


	AT Films			Microfluidics			CVI MG			Total
	(In thousands)
Accounts receivable	$	947		$	1,760		$	23,978		$	26,685
Inventory		852			2,226			55,435			58,513
Other current assets, net of cash acquired		73			852			6,627			7,552
Property, plant and equipment		5,019			567			30,972			36,558
Goodwill		18,187			5,740			207,262			231,189
Intangible assets		11,435			9,717			115,777			136,929
Other assets		2,704			563			1,943			5,210

Total assets acquired		39,217			21,425			441,994			502,636
Total liabilities assumed		(4,706	)		(2,889	)		(48,680	)		(56,275	)

Net assets acquired	$	34,511		$	18,536		$	393,314		$	446,361

Of the $136.9 million of acquired intangible assets, $47.0 million was assigned to the CVI MG trade name and is not subject to amortization. The remaining $89.9 million of acquired intangible assets consist of patents, trade names, customer relationships, non-compete and unpatented technology. The goodwill recorded for the acquisitions reflects the strategic fit and revenue and earnings growth potential of these businesses.

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


	Total		Weighted Average Life
Patents	$	3,017		10
Trade names		4,168		15
Customer relationships		53,895		7
Non-compete agreements		793		2
Unpatented technology		28,048		6

2011 acquired intangible assets	$	89,921

The Company incurred $5.8 million of acquisition-related transaction costs in 2011. These costs were recorded in selling, general and administrative expense and were related to completed transactions, pending transactions and potential transactions, including certain transactions that ultimately were not completed.

In accordance with ASU 2010-29, “Disclosure of Supplementary Pro Forma Information for Business Combinations,” the following unaudited pro forma information illustrates the effect on the Company’s net sales and net income for December 31, 2011 and 2010, assuming that the 2011 acquisitions had taken place at the

IDEX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

beginning of 2010. The pro forma net income reflects adjustments for the year ended December 31, 2010 to include $16.4 million of pre-tax acquisition fair value inventory charges. The pro forma net income reflects adjustments for the year ended December 31, 2011 to exclude $24.1 million of pre-tax acquisition-related costs and fair value inventory charges. The 2011 and 2010 supplemental pro forma net income are also adjusted to reflect the comparable impact of additional depreciation and amortization expense resulting from the fair value measurement of tangible and intangible assets and financing costs relating to the 2011 acquisitions.


	Twelve Months Ended December 31,
	2011		2010
	(In thousands)
Net sales	$	1,921,515	$	1,706,085
Net income		205,168		146,873
Diluted earnings per share	$	2.46	$	1.79

These pro forma results do not purport to be indicative of the results of operations that would have resulted had the acquisitions occurred on the date indicated or that may result in the future.

2010 Acquisitions

On April 15, 2010, the Company acquired the stock of PPE, previously referred to as Seals, Ltd, a leading provider of proprietary high performance seals and advanced sealing solutions for a diverse range of global industries, including analytical instrumentation, semiconductor/solar and process technologies. PPE consists of the Polymer Engineering and Perlast divisions. PPE’s Polymer Engineering division focuses on sealing solutions for hazardous duty applications. The Perlast division produces highly engineered seals for analytical instrumentation, pharmaceutical, electronics, and food applications. Headquartered in Blackburn, England, PPE operates as part of the Health & Science Technologies Segment with annual revenues of approximately $32.0 million (£21 million). The Company acquired PPE for an aggregate purchase price of $54.0 million, consisting of $51.3 million in cash and the assumption of approximately $2.7 million of debt related items. The cash payment was financed with borrowings under the Company’s credit facility. Goodwill and intangible assets recognized as part of this transaction were $29.7 million and $17.2 million, respectively. The $29.7 million of goodwill is not deductible for tax purposes.

On July 21, 2010, the Company acquired the stock of OBL, S.r.l. (“OBL”), a leading provider of mechanical and hydraulic diaphragm pumps. OBL provides polymer blending systems and related accessories for a diverse range of global industries, including water, waste water, oil and gas, petro-chemical and power generation markets. Headquartered in Milan, Italy, with annual revenues of approximately $10.9 million (€8.5 million), OBL operates within IDEX’s Fluid & Metering Technologies segment as part of the Water reporting unit. The Company acquired OBL for cash consideration of $15.4 million. Goodwill and intangible assets recognized as part of this transaction were $7.7 million and $4.0 million, respectively. The $7.7 million of goodwill is not deductible for tax purposes.

On September 17, 2010, the Company acquired the assets of Periflo, a leading provider of peristaltic pumps for the industrial and municipal water & waste water markets. Periflo offers a complete family of peristaltic hose pumps for a wide variety of applications. Headquartered in Loveland, Ohio, with annual revenues of approximately $3.5 million, Periflo operates within IDEX’s Fluid & Metering Technologies segment as part of the Water reporting unit. The Company acquired Periflo for cash consideration of $4.3 million. Goodwill and intangible assets recognized as part of this transaction were $2.5 million and $0.7 million, respectively. The $2.5 million of goodwill is deductible for tax purposes.

IDEX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

On November 1, 2010, the Company acquired the stock of Fitzpatrick, a global leader in the design and manufacture of process technologies for the pharmaceutical, food and personal care markets. Fitzpatrick designs and manufactures customized size reduction, roll compaction and drying systems to support their customers’ product development and manufacturing processes. Fitzpatrick expands the capability of IDEX’s Quadro Engineering business by adding coarse particle sizing, roll compaction and drying systems to Quadro’s fine particle processing. Headquartered in Elmhurst, Illinois, Fitzpatrick has annual revenues of approximately $22.0 million. Fitzpatrick operates in the MPT reporting unit within the Health & Science Technologies segment. The Company acquired Fitzpatrick for cash consideration of approximately $20.3 million. Goodwill and intangible assets recognized as part of this transaction were $6.0 million and $8.0 million, respectively. The $6.0 million of goodwill is not deductible for tax purposes.

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


	2010
	(In thousands)
Current assets, net of cash acquired	$	24,679
Property, plant and equipment		18,344
Goodwill		45,915
Intangible assets		29,861
Other assets		2,906

Total assets acquired		121,705
Total liabilities assumed		(30,439	)

Net assets acquired	$	91,266

Acquired intangible assets consist of trademarks, customer relationships, unpatented technology and non-compete agreements, which are being amortized over a life of 2-15 years. The goodwill recorded for the acquisitions reflects the strategic fit and revenue and earnings growth potential of these businesses.

The Company incurred $4.0 million of acquisition related transaction costs in 2010, relating to completed, pending and potential transactions that ultimately were not completed.

13.

Share-Based Compensation

The Company maintains two share-based compensation plans for executives, non-employee directors, and certain key employees which authorize the granting of stock options, unvested shares, unvested share units, and other types of awards consistent with the purpose of the plans. The number of shares authorized for issuance under the Company’s plans as of December 31, 2011 totals 10.6 million, of which 4.1 million shares were available for future issuance. Stock options granted under these plans are generally non-qualified, and are granted with an exercise price equal to the market price of the Company’s stock at the date of grant. The majority of the options issued to employees become exercisable in four equal installments, beginning one year from the date of grant, and generally expire 10 years from the date of grant. Stock options granted to non-employee directors cliff vest after one year. Unvested share and unvested share unit awards generally cliff vest after three years for employees and non-employee directors. The Company issued 341,876, 264,915 and 273,000 of unvested shares as compensation to key employees in 2011, 2010 and 2009, respectively.

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

IDEX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

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


	Years Ended December 31,
	2011	2010	2009
Weighted average fair value of grants	$12.30	$ 9.56	$ 5.32
Dividend yield	1.46%	1.51%	2.35%
Volatility	32.72%	33.43%	32.53%
Risk-free interest rate	0.28% - 5.61%	0.32% - 5.67%	0.69% - 4.63%
Expected life (in years)	6.14	5.98	5.85

The assumptions are as follows:

•

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

•

The Company uses historical data to estimate the expected life of the option. The expected life assumption for the years ended December 31, 2011, 2010 and 2009 is an output of the Binomial lattice option-pricing model, which incorporates vesting provisions, rate of voluntary exercise and rate of post-vesting termination over the contractual life of the option to define expected employee behavior.

•

The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods within the contractual life of the option. For the years ended December 31, 2011, 2010 and 2009, we present the range of risk-free one-year forward rates, derived from the U.S. treasury yield curve, utilized in the Binomial lattice option-pricing model.

•

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

The Company’s policy is to recognize compensation cost on a straight-line basis over the requisite service period for the entire award. Additionally, the Company’s general policy is to issue new shares of common stock to satisfy stock option exercises or grants of unvested shares.

Total compensation cost for stock options is as follows:


	Years Ended December 31,
	2011⁽¹⁾			2010			2009
	(In thousands)
Cost of goods sold	$	805		$	804		$	945
Selling, general and administrative expenses		6,153			6,923			6,288

Total expense before income taxes		6,958			7,727			7,233
Income tax benefit		(2,208	)		(2,450	)		(2,322	)

Total expense after income taxes	$	4,750		$	5,277		$	4,911

(1)	Reflects the forfeiture of stock options related to the Company’s transition to a new CEO in August 2011.

IDEX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Total compensation cost for unvested shares is as follows:


	Years Ended December 31,
	2011⁽¹⁾			2010			2009
	(In thousands)
Cost of goods sold	$	684		$	311		$	248
Selling, general and administrative expenses		4,434			8,382			8,229
Restructuring expenses		—			938			—

Total expense before income taxes		5,118			9,631			8,477
Income tax benefit		(1,827	)		(2,097	)		(1,444	)

Total expense after income taxes	$	3,291		$	7,534		$	7,033

(1)	Reflects the forfeiture of unvested shares related to the Company’s transition to a new CEO in August 2011.

Recognition of compensation cost was consistent with recognition of cash compensation for the same employees. Compensation cost capitalized as part of inventory was immaterial.

As of December 31, 2011, there was $8.3 million and $9.0 million of total unrecognized compensation cost related to stock options and unvested shares, respectively, that is expected to be recognized over a weighted-average period of 1.4 years and 1.1 years, respectively.

A summary of the Company’s stock option activity as of December 31, 2011, and changes during the year ended December 31, 2011 is presented in the following table:


Stock Options	Shares			Weighted Average Price		Weighted-Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at January 1, 2011		5,404,223		$	26.85		6.29	$	66,329,686
Granted		770,350			40.98
Exercised		(1,333,185	)		24.10

Forfeited/Expired		(527,344	)		31.79

Outstanding at December 31, 2011		4,314,044		$	29.61		7.01	$	34,899,200

Vested and expected to vest at December 31, 2011		3,659,049		$	28.51		6.55	$	32,886,227
Exercisable at December 31, 2011		2,805,172		$	27.76		5.84	$	26,371,747

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 2011, 2010 and 2009, was $21.9 million, $14.4 million and $5.3 million, respectively. In 2011, 2010 and 2009, cash received from options exercised was $33.1 million, $18.1 million and $7.7 million, respectively, while the actual tax benefit realized for the tax deductions from stock options exercised totaled $8.0 million, $5.2 million and $1.9 million, respectively.

A summary of the Company’s unvested share activity as of December 31, 2011, and changes during the year ending December 31, 2011 is presented in the following table:


Unvested Shares	Shares			Weighted-Average Grant Date Fair Value
Nonvested at January 1, 2011		950,097		$	29.83
Granted		341,876			38.81
Vested		(386,338	)		32.84
Forfeited		(292,260	)		30.03

Nonvested at December 31, 2011		613,375		$	32.44

IDEX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

14.

Retirement Benefits

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

The following table provides a reconciliation of the changes in the benefit obligations and fair value of plan assets over the two-year period ended December 31, 2011, and a statement of the funded status at December 31 for both years.


	Pension Benefits												Other Benefits
	2011						2010						2011			2010
	U.S.			Non-U.S.			U.S.			Non-U.S.
	(In thousands)
CHANGE IN BENEFIT OBLIGATION
Obligation at January 1	$	90,102		$	42,245		$	81,212		$	39,342		$	20,068		$	18,059
Service cost		1,759			1,078			1,665			719			691			528
Interest cost		4,506			2,320			4,525			2,148			1,035			1,008
Plan amendments		—			9			101			128			—			(400	)
Benefits paid		(4,224	)		(1,703	)		(3,567	)		(1,542	)		(734	)		(842	)
Actuarial loss		10,159			18			6,166			3,561			60			1,598
Currency translation		—			(906	)		—			(2,117	)		(47	)		117
Curtailments/settlements		(791	)		—			—			—			—			—
Acquisition		—			4,702			—			6			—			—

Obligation at December 31	$	101,511		$	47,763		$	90,102		$	42,245		$	21,073		$	20,068

CHANGE IN PLAN ASSETS
Fair value of plan assets at January 1	$	58,147		$	17,400		$	53,210		$	15,376		$	—		$	—
Actual return on plan assets		(459	)		(720	)		5,631			1,842			—			—
Employer contributions		6,946			1,569			2,873			1,765			734			842
Benefits paid		(4,224	)		(1,703	)		(3,567	)		(1,542	)		(734	)		(842	)
Currency translation		—			(57	)		—			(381	)		—			—
Settlements		(791	)		—			—			—			—			—
Other		—			425			—			340			—			—

Fair value of plan assets at December 31	$	59,619		$	16,914		$	58,147		$	17,400		$	—		$	—

Funded status at December 31	$	(41,892	)	$	(30,849	)	$	(31,955	)	$	(24,845	)	$	(21,073	)	$	(20,068	)
COMPONENTS ON THE CONSOLIDATED BALANCE SHEETS
Current liabilities	$	(602	)	$	(733	)	$	(657	)	$	(653	)	$	(937	)	$	(999	)
Noncurrent liabilities		(41,290	)		(30,116	)		(31,298	)		(24,192	)		(20,136	)		(19,069	)

Net liability at December 31	$	(41,892	)	$	(30,849	)	$	(31,955	)	$	(24,845	)	$	(21,073	)	$	(20,068	)

IDEX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The accumulated benefit obligation for all defined benefit pension plans was $143.0 million and $126.4 million at December 31, 2011 and 2010, respectively.

The weighted average assumptions used in the measurement of the Company’s benefit obligation at December 31, 2011 and 2010 were as follows:


	U.S. Plans						Non-U.S. Plans
	2011			2010			2011			2010
Discount rate		4.45	%		5.20	%		4.68	%		5.35	%
Rate of compensation increase		3.90	%		3.90	%		2.96	%		3.37	%

The pretax amounts recognized in Accumulated other comprehensive income (loss) as of December 31, 2011 and 2010 were as follows:


	Pension Benefits								Other Benefits
	2011				2010				2011			2010
	U.S.		Non-U.S.		U.S.		Non-U.S
	(In thousands)
Prior service cost (credit)	$	419	$	127	$	597	$	131	$	(2,697	)	$	(3,044	)
Net loss		49,509		8,781		38,813		7,629		2,198			2,313

Total	$	49,928	$	8,908	$	39,410	$	7,760	$	(499	)	$	(731	)

The amounts in Accumulated other comprehensive income (loss) as of December 31, 2011, that are expected to be recognized as components of net periodic benefit cost during 2012 are as follows:


	U.S. Pension Benefit Plans		Non-U.S. Pension Benefit Plans		Other Benefit Plans			Total
	(In thousands)
Prior service cost (credit)	$	126	$	9	$	(373	)	$	(238	)
Net loss		6,240		315		225			6,780

Total	$	6,366	$	324	$	(148	)	$	6,542

The following tables provide the components of, and the weighted average assumptions used to determine, the net periodic benefit cost for the plans in 2011, 2010 and 2009:


	Pension Benefits
	2011						2010						2009
	U.S.			Non-U.S.			U.S.			Non-U.S.			U.S.			Non-U.S.
	(In thousands)
Service cost	$	1,759		$	1,078		$	1,665		$	719		$	1,551		$	824
Interest cost		4,506			2,320			4,525			2,148			4,375			2,122
Expected return on plan assets		(4,755	)		(1,117	)		(4,396	)		(945	)		(3,505	)		(780	)
Net amortization		4,855			442			4,401			302			5,299			370

Net periodic benefit cost	$	6,365		$	2,723		$	6,195		$	2,224		$	7,720		$	2,536

IDEX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


	Other Benefits
	2011			2010			2009
	(In thousands)
Service cost	$	691		$	528		$	468
Interest cost		1,035			1,008			1,018
Net amortization		(156	)		(370	)		(385	)

Net periodic benefit cost	$	1,570		$	1,166		$	1,101


	U.S. Plans									Non-U.S. Plans
	2011			2010			2009			2011			2010			2009
Discount rate		5.20	%		5.80	%		6.30	%		5.35	%		5.88	%		5.73	%
Expected return on plan assets		8.25	%		8.50	%		8.50	%		6.17	%		6.28	%		6.05	%
Rate of compensation increase		3.90	%		3.89	%		4.00	%		3.37	%		3.35	%		3.17	%

The following table provides pretax amounts recognized in Accumulated other comprehensive income (loss) in 2011:


	Pension Benefits
	U.S.			Non-U.S.			Other Benefits
	(In thousands)
Net loss in current year	$	(15,374	)	$	(1,855	)	$	(60	)
Prior service cost		—			(9	)		—
Amortization of prior service cost (credit)		178			10			(346	)
Amortization of net loss (gain)		4,678			432			190
Exchange rate effect on amounts in OCI		—			273			(15	)

Total	$	(10,518	)	$	(1,149	)	$	(231	)

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

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

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

Costs of defined contribution plans were $7.8 million, $7.0 million and $8.8 million for 2011, 2010 and 2009, respectively.

The Company, through its subsidiaries, participates in certain multiemployer pension plans covering approximately 400 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, $0.9 million, and $0.8 million for 2011, 2010, and 2009, respectively.

IDEX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

For measurement purposes, a 7.6% weighted average annual rate of increase in the per capita cost of covered health care benefits was assumed for 2011. The rate was assumed to decrease gradually each year to a rate of 4.48% for 2028, and remain at that level thereafter. Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A 1% increase in the assumed health care cost trend rates would increase the service and interest cost components of the net periodic benefit cost by $0.2 million and the health care component of the accumulated postretirement benefit obligation by $1.5 million. A 1% decrease in the assumed health care cost trend rate would decrease the service and interest cost components of the net periodic benefit cost by $0.1 million and the health care component of the accumulated postretirement benefit obligation by $1.3 million.

Plan Assets

The Company’s pension plan weighted average asset allocations at December 31, 2011 and 2010, by asset category, were as follows:


	2011			2010
Equity securities		65	%		67	%
Fixed income securities		35			33

Total		100	%		100	%

The following tables summarize the basis used to measure defined benefit plans’ assets at fair value at December 31, 2011 and 2010:


	Basis of Fair Value Measurement
	Outstanding Balances		Level 1		Level 2		Level 3
As of December 31, 2011	(In thousands)
Equity	$	14,968	$	14,968	$	—	$	—
Absolute return funds⁽¹⁾
U.S.		38,449		38,449		—		—
Non U.S.		21,709		16,520		5,189		—
Other⁽²⁾		1,015		1,015		—		—

	$	76,141	$	70,952	$	5,189	$	—


	Basis of Fair Value Measurement
	Outstanding Balances		Level 1		Level 2		Level 3
As of December 31, 2010	(In thousands)
Equity	$	13,644	$	13,644	$	—	$	—
Absolute return funds⁽¹⁾
U.S.		38,325		18,549		19,776		—
Non U.S.		22,838		17,400		5,438		—
Other⁽²⁾		740		740		—		—

	$	75,547	$	50,333	$	25,214	$	—

(1)

Primarily funds invested by managers that have a global mandate with the flexibility to allocate capital broadly across a wide range of asset classes and strategies including, but not limited to equities, fixed income, commodities, interest rate futures, currencies and other securities to outperform an agreed benchmark with specific return and volatility targets.

(2)	Primarily cash and cash equivalents.

IDEX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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 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 objectives of the Company’s plan assets are to earn the highest possible rate of return consistent with the tolerance for risk as determined periodically by the Company in its role as a fiduciary. The general guidelines of asset allocation of fund assets are that “equities” will represent from 55% to 75% of the market value of total fund assets with a target of 66%, and “fixed income” obligations, including cash, will represent from 25% to 45% with a target of 34%. The term “equities” includes common stock, convertible bonds and convertible stock. The term “fixed income” includes preferred stock and/or contractual payments with a specific maturity date. The Company strives to maintain asset allocations within the designated ranges by conducting periodic reviews of fund allocations and plan liquidity needs, and rebalancing the portfolio accordingly. The total fund performance is monitored and results measured using a 3- to 5-year moving average against long-term absolute and relative return objectives to meet actuarially determined forecasted benefit obligations. No restrictions are placed on the selection of individual investments by the qualified investment fund managers. The performance of the investment fund managers is reviewed on a regular basis, using appointed professional independent advisors. As of December 31, 2011 and 2010, there were no shares of the Company’s stock held in plan assets.

Cash Flows

The Company expects to contribute approximately $9.4 million to its defined benefit plans and $0.9 million to its other postretirement benefit plans in 2012. The Company also expects to contribute approximately $11.7 million to its defined contribution plans in 2012.

Estimated Future Benefit Payments

The future estimated benefit payments for the next five years and the five years thereafter are as follows: 2012 — $9.9 million; 2013 — $9.4 million; 2014 — $10.7 million; 2015 — $10.0 million; 2016 — $10.0 million; 2017 to 2021 — $55.9 million.

IDEX CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

15.

Quarterly Results of Operations (Unaudited)

The following table summarizes the unaudited quarterly results of operations for the years ended December 31, 2011 and 2010.


	2011 Quarters								2010 Quarters
	First		Second		Third		Fourth		First		Second		Third		Fourth
	(In thousands, except per share amounts)								(In thousands, except per share amounts)
Net sales	$	427,089	$	453,798	$	476,881	$	480,683	$	355,598	$	378,526	$	373,731	$	405,218
Gross profit		178,700		184,839		181,532		193,602		147,541		154,821		154,133		161,988
Operating income		77,721		79,629		71,305		76,001		57,893		62,780		62,439		66,004
Net income		47,951		50,182		48,336		47,388		36,625		40,398		38,564		41,513
Basic EPS	$	.58	$	.61	$	.58	$	.57	$	.45	$	.50	$	.47	$	.51
Diluted EPS	$	.57	$	.60	$	.58	$	.57	$	.45	$	.49	$	.47	$	.50
Basic weighted average shares outstanding		81,430		82,151		82,402		82,596		80,080		80,369		80,517		80,899
Diluted weighted average shares outstanding		83,248		83,778		83,586		83,573		81,509		81,800		81,938		82,686

16.

Subsequent Events

On February 6, 2012, the Company announced that it will realign its reportable segments to include the Dispensing Equipment segment as part of the Fire & Safety/Diversified Products segment. As such, effective in 2012 the Company’s reportable segments will be disclosed as: Fluid & Metering Technologies, Health & Science Technologies and Fire & Safety/Diversified Products.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of IDEX Corporation

We have audited the accompanying consolidated balance sheets of IDEX Corporation and subsidiaries (the “Company”) as of December 31, 2011 and 2010, and the related consolidated statements of operations, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2011. These consolidated financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on the consolidated financial statements based on our audits.

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

In our opinion, such consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2011 and 2010, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2011, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2011, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 24, 2012, expressed an unqualified opinion on the Company’s internal control over financial reporting.

Deloitte & Touche LLP

Chicago, Illinois

February 24, 2012

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of IDEX Corporation

We have audited the internal control over financial reporting of IDEX Corporation and subsidiaries (the “Company”) as of December 31, 2011, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. As described in Management’s Report on Internal Control Over Financial Reporting, management excluded from its assessment the internal control over financial reporting at Advanced Thin Films (AT Films), which was acquired on January 31, 2011, Microfluidics, which was acquired on March 11, 2011, and CVI Melles Griot (CVI MG), which was acquired on June 10, 2011. These exclusions constitute 29.5% and 17.4% of net and total assets, respectively, 6.7% of net sales, and (1.9)% of net income of the consolidated financial statement amounts as of and for the year ended December 31, 2011. Accordingly, our audit did not include the internal control over financial reporting at AT Films, Microfluidics and CVI MG. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

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

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

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

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2011, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended December 31, 2011, of the Company and our report dated February 24, 2012, expressed an unqualified opinion on those consolidated financial statements.

Deloitte & Touche LLP

Chicago, Illinois

February 24, 2012

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

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

•

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

•

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

•

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

Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk. Management is responsible for establishing and maintaining effective internal control over financial reporting for the Company. Management has used the framework set forth in the report entitled “Internal Control — Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission to assess the effectiveness of the Company’s internal control over financial reporting. Management has concluded that the Company’s internal control over financial reporting was effective as of December 31, 2011.

The Company completed the acquisitions of AT Films in January 2011, Microfluidics in March 2011 and CVI MG in June 2011. Due to the timing of the acquisitions, management has excluded these acquisitions from our evaluation of effectiveness of internal controls over financial reporting. This exclusion represented 6.7% of total sales and (1.9)% of net income as well as 29.5% of net assets and 17.4% of total assets for the year ended December 31, 2011.

The effectiveness of the Company’s internal control over financial reporting as of December 31, 2011, has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report which appears herein.

Andrew K. Silvernail

Chairman of the Board and Chief Executive Officer

Heath A. Mitts

Vice President and Chief Financial Officer

Lake Forest, Illinois

February 24, 2012

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A.

Controls and Procedures.

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As required by SEC Rule 13a-15(b), the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and the Company’s Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based on the foregoing, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2011.

Management’s Report on Internal Control Over Financial Reporting appearing on page 67 of this report is incorporated into this Item 9A by reference.

There has been no change in the Company’s internal control over financial reporting during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Item 9B.

Other Information.

None.

PART III

Item 10.

Directors, Executive Officers and Corporate Governance.

Information under the headings “Election of Directors” and “Section 16(a) Beneficial Ownership Reporting Compliance,” and the information under the subheading “Information Regarding the Board of Directors and Committees,” in the Company’s 2011 Proxy Statement is incorporated herein by reference. Information regarding executive officers of the Company is located in Part I. Item 1. of this report under the caption “Executive Officers of the Registrant.”

The Company has adopted a Code of Business Conduct and Ethics applicable to the Company’s directors, officers (including the Company’s principal executive officer, principal financial officer and principal accounting officer) and employees. The Code of Business Conduct and Ethics, along with the Audit Committee Charter, Nominating and Corporate Governance Committee Charter, Compensation Committee Charter and Corporate Governance Guidelines are available on the Company’s website at www.idexcorp.com. In the event we amend or waive any of the provisions of the Code of Business Conduct and Ethics applicable to our principal executive officer, principal financial officer or principal accounting officer, we intend to disclose the same on the Company’s website.

Item 11.

Executive Compensation.

Information under the heading “Executive Compensation” in the Company’s 2012 Proxy Statement is incorporated herein by reference.

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters.

Information under the heading “Security Ownership” in the Company’s 2012 Proxy Statement is incorporated herein by reference.

Equity Compensation Plan Information

The following table sets forth certain information with respect to the Company’s equity compensation plans as of December 31, 2011.


Plan Category	Number of Securities To be Issued Upon Exercise of Outstanding Options, Warrants and Rights		Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights		Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans⁽¹⁾⁽²⁾
Equity compensation plans approved by the Company’s shareholders		4,902,103	$	29.61		4,077,708

(1)	Excludes securities to be issued upon the exercise of outstanding options, warrants and rights.

(2)

All Deferred Compensation Units (“DCUs”) issued under the Directors Deferred Compensation Plan and Deferred Compensation Plan for Non-officer Presidents are to be issued under the Company’s Incentive Award Plan and any DCUs remaining in these plans were eliminated by shareholder approval on April 8, 2008. DCUs issued under the Deferred Compensation Plan for Officers continue to be issued under the Incentive Award Plan.

The number of DCUs is determined by dividing the amount deferred by the closing price of the Company’s Common Stock the day before the date of deferral. The DCUs are entitled to receive dividend equivalents which are reinvested in DCUs based on the same formula for investment of a participant’s deferral. Since deferred compensation is payable upon separation of service within the meaning of Section 409A of the Internal Revenue Code, no benefits are payable prior to the date that is six months after the date of separation of service, or the date of death of the employee, if earlier.

Item 13.

Certain Relationships and Related Transactions, and Director Independence.

No certain relationships exist. Information under the heading “Information Regarding the Board of Directors and Committees” in the Company’s 2012 Proxy Statement is incorporated herein by reference.

Item 14.

Principal Accountant Fees and Services

Information under the heading “Principal Accountant Fees and Services” in the Company’s 2012 Proxy Statement is incorporated herein by reference.

PART IV

Item 15.

Exhibits and Financial Statement Schedules.

(A) 1. Financial Statements

Consolidated financial statements filed as part of this report are listed under Part II. Item 8. “Financial Statements and Supplementary Data”.

2. Financial Statement Schedules

Financial statement schedules are omitted because they are not applicable, not required, or because the required information is included in the Consolidated Financial Statements of the Company or the Notes thereto.

3. Exhibits

The exhibits filed with this report are listed on the “Exhibit Index.”

(B) Exhibit Index

Reference is made to the Exhibit Index beginning on page 72 hereof.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


IDEX CORPORATION

By:		/s/ HEATH A. MITTS
		Heath A. Mitts
		Vice President and Chief Financial Officer

Date: February 24, 2012

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.


Signature	Title	Date

/s/ ANDREW K. SILVERNAIL Andrew K. Silvernail	Chairman of the Board and Chief Executive Officer (Principal Executive Officer)	February 24, 2012

/s/ HEATH A. MITTS Heath A. Mitts	Vice President and Chief Financial Officer (Principal Financial Officer)	February 24, 2012

/s/ MICHAEL J. YATES Michael J. Yates	Vice President and Chief Accounting Officer (Principal Accounting Officer)	February 24, 2012

/s/ BRADLEY J. BELL Bradley J. Bell	Director	February 24, 2012

/s/ RUBY R. CHANDY Ruby R. Chandy	Director	February 24, 2012

/s/ WILLIAM M. COOK William M. Cook	Director	February 24, 2012

/s/ FRANK S. HERMANCE Frank S. Hermance	Director	February 24, 2012

/s/ GREGORY F. MILZCIK Gregory F. Milzcik	Director	February 24, 2012

/s/ ERNEST J. MROZEK Ernest J. Mrozek	Director	February 24, 2012

/s/ MICHAEL T. TOKARZ Michael T. Tokarz	Director	February 24, 2012

/s/ LIVINGSTON L. SATTERTHWAITE Livingston L. Satterthwaite	Director	February 24, 2012

Exhibit Index


Exhibit Number		Description

3.1		Restated Certificate of Incorporation of IDEX Corporation (incorporated by reference to Exhibit No. 3.1 to the Registration Statement on Form S-1 of IDEX, et al., Registration No. 33-21205, as filed on April 21, 1988)

3.1(a)		Amendment to Restated Certificate of Incorporation of IDEX Corporation (incorporated by reference to Exhibit No. 3.1 (a) to the Quarterly Report of IDEX on Form 10-Q for the quarter ended March 31, 1996, Commission File No. 1-10235)

3.1(b)		Amendment to Restated Certificate of Incorporation of IDEX Corporation (incorporated by reference to Exhibit No. 3.1 (b) to the Current Report of IDEX on Form 8-K March 24, 2005, Commission File No. 1-10235)

3.2		Amended and Restated By-Laws of IDEX Corporation (incorporated by reference to Exhibit No. 3.1 to the Current Report of IDEX on Form 8-K filed November 14, 2011, Commission File No. 1-10235)

4.1		Specimen Certificate of Common Stock of IDEX Corporation (incorporated by reference to Exhibit No. 4.3 to the Registration Statement on Form S-2 of IDEX, et al., Registration No. 33-42208, as filed on September 16, 1991)

4.2		Credit Agreement, dated as of June 27, 2011, among IDEX Corporation, Bank of America N.A. as Agent and Issuing Bank, and the Other Financial Institutions Party Hereto (incorporated by reference to Exhibit 10.1 to the Current Report of IDEX on Form 8-K dated June 30, 2011, Commission File No. 1-10235)

4.3		Term Loan Agreement, dated April 18, 2008, among IDEX Corporation, Bank of America N.A. as Agent, and the other financial institutions party hereto (incorporated by reference to Exhibit No. 10.1 to the Current Report of IDEX on Form 8-K dated April 18, 2008, Commission File No. 1-10235)

4.4		Master Note Purchase Agreement, dated June 9, 2010 with respect to €81,000,000 2.58% Series 2010 Senior Notes due June 9, 2015 (incorporated by reference to Exhibit No. 4.1 to the Current Report of IDEX on Form 8-K filed June 14, 2010, Commission File No. 1-10235)

4.5		Indenture between IDEX Corporation and Wells Fargo Bank, National Association, as Trustee, dated as of December 6, 2010 (Debt Securities) (incorporated by reference to Exhibit No. 4.1 to the Current Report of IDEX on Form 8-K filed December 7, 2010, Commission File No. 1-10235)

4.6		First Supplemental Indenture between IDEX Corporation and Wells Fargo Bank, National Association, as Trustee, dated as of December 6, 2010 (as to 4.5% Senior Notes due 2020) (incorporated by reference to Exhibit No. 4.2 to the Current Report of IDEX on Form 8-K filed December 7, 2010, Commission File No. 1-10235)

4.7		Second Supplemental Indenture between IDEX Corporation and Wells Fargo Bank, National Association, as Trustee, dated as of December 13, 2011 (as to 4.2% Senior Notes due 2021) (incorporated by reference to Exhibit No. 4.1 to the Current Report of IDEX on Form 8-K filed December 14, 2011, Commission File No. 1-10235)

10.1**		Revised and Restated IDEX Management Incentive Compensation Plan for Key Employees Effective January 1, 2010 (incorporated by reference to Exhibit 10.2 to the Current Report of IDEX on Form 8-K filed March 1, 2010, Commission File No. 1-10235)

10.2**		Form of Indemnification Agreement of IDEX Corporation (incorporated by reference to Exhibit No. 10.23 to the Registration Statement on Form S-1 of IDEX, et al., Registration No. 33-28317, as filed on April 26, 1989, Commission File No. 1-10235)


Exhibit Number		Description

10.3**		IDEX Corporation Amended and Restated Stock Option Plan for Outside Directors, adopted by resolution of the Board of Directors dated as of November 20, 2003 (incorporated by reference to Exhibit 10.6 (a) to the Annual Report of IDEX on Form 10-K for the year ended December 31, 2003)

10.4**		Third Amended and Restated 1996 Stock Option Plan for Non-Officer Key Employees of IDEX Corporation dated January 9, 2003 (incorporated by reference to Exhibit 4.1 to the Registration Statement on Form S-8 of IDEX, Registration No. 333-104768, as filed on April 25, 2003)

10.5**		2001 Stock Plan for Officers dated March 27, 2001 (incorporated by reference to Exhibit No. 10.2 to the Quarterly Report of IDEX on Form 10-Q for the quarter ended March 31, 2001, Commission File No. 1-10235)

10.6**		Form Stock Option Agreement (incorporated by reference to Exhibit 10.23 to the Current Report of IDEX on Form 8-K dated March 24, 2005, Commission File No. 1-10235)

10.7**		Form Unvested Stock Agreement (incorporated by reference to Appendix A of the Proxy Statement of IDEX, dated February 25, 2005, Commission File No. 1-10235)

10.8**		Letter Agreement between IDEX Corporation and Frank J. Notaro, dated April 24, 2000 (incorporated by reference to Exhibit 10.25 to the Annual Report of IDEX on Form 10-K for the year ended December 31, 2005, Commission File No. 1-10235)

10.9**		IDEX Corporation Incentive Award Plan (as Amended and Restated) (incorporated by reference to Appendix A of the Proxy Statement of IDEX, filed March 5, 2010, Commission File No. 1-10235)

10.10**		Form of IDEX Corporation Restricted Stock Award Agreement, dated April 8, 2008 (incorporated by reference to Exhibit 10.4 to the Current Report of IDEX on Form 8-K, filed April 8, 2008, Commission File No. 1-10235)

10.11**		Form of IDEX Corporation Stock Option Agreement (incorporated by reference to Exhibit 10.1 to the Current Report of IDEX on Form 8-K filed February 25, 2011, Commission File No. 1-10235)

10.12**		Employment Agreement between IDEX Service Corporation and Andrew K. Silvernail, dated November 1, 2011 (incorporated by reference to Exhibit No. 10.1 to the Current Report of IDEX on Form 8-K filed November 4, 2011, Commission File No. 1-10235)

10.13**		Letter Agreement between IDEX Corporation and Frank J. Notaro, dated September 30, 2010 (incorporated by reference to Exhibit No. 10.1 to the Current Report of IDEX on Form 8-K filed October 1, 2010, Commission File No. 1-10235)

10.14**		Third Amended and Restated IDEX Corporation Directors Deferred Compensation Plan (incorporated by reference to Exhibit No. 10.30 to the Annual Report of IDEX on Form 10-K for the year ended December 31, 2010, Commission File No. 1-10235)

10.15**		IDEX Corporation Supplemental Executive Retirement and Deferred Compensation Plan (incorporated by reference to Exhibit No. 10.31 to the Annual Report of IDEX on Form 10-K for the year ended December 31, 2010, Commission File No. 1-10235)

10.16**		Transition Services and Separation Agreement between IDEX Service Corporation and Kevin G. Hostetler, dated February 14, 2012 (incorporated by reference to Exhibit No. 10.1 to the Current Report of IDEX on Form 8-K filed February 16, 2012, Commission File No. 1-10235)

10.17*		Letter Agreement between IDEX Corporation and Michael J. Yates, dated September 19, 2005

10.18*		Letter Agreement between IDEX Corporation and Michael J. Yates, dated September 30, 2010


Exhibit Number		Description

*12		Ratio of Earnings to Fixed Charges

*21		Subsidiaries of IDEX

*23		Consent of Deloitte & Touche LLP

*31.1		Certification of Chief Executive Officer Pursuant to Rule 13a-14 (a) or Rule 15d-14 (a)

*31.2		Certification of Chief Financial Officer Pursuant to Rule 13a-14 (a) or Rule 15d-14 (a)

***32.1		Certification pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code

***32.2		Certification pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code

****101		The following materials from IDEX Corporation’s Annual Report on Form 10-K for the year ended December 31, 2011 formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Statements of Operations for the three years ended December 31, 2011, (ii) the Consolidated Balance Sheets at December 31, 2011 and 2010, (iii) the Consolidated Statements of Stockholders’ Equity for the three years ended December 31, 2011, (iv) the Consolidated Statements of Cash Flows for the three years ended December 31, 2011, (v) Notes to the Consolidated Financial Statements, and (vi) Financial Statement Schedule of Valuation and Qualifying Accounts.

*	Filed herewith.

**	Management contract or compensatory plan or agreement.

***	Furnished herewith.

****

In accordance with Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Annual Report on Form 10-K shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be part of any registration statement or other document filed under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.