10-K 1 iex-20141231x10k.htm 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, 2014

¨ | 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 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, as of the last business day of the registrant's most recently completed second fiscal quarter, of the common stock (based on the June 30, 2014 closing price of $80.74) held by non-affiliates of IDEX Corporation was $6,428,282,555.
The number of shares outstanding of IDEX Corporation’s common stock, par value $.01 per share, as of February 17, 2015 was 78,232,245.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the proxy statement with respect to the IDEX Corporation 2015 annual meeting of stockholders (the “2015 Proxy Statement”) 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 | 7
Item 1B. | Unresolved Staff Comments | 8
Item 2. | Properties | 8
Item 3. | Legal Proceedings | 9
Item 4. | Mine Safety Disclosures | 9
PART II.
Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 10
Item 6. | Selected Financial Data | 12
Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 13
Item 7A. | Quantitative and Qualitative Disclosures About Market Risk | 23
Item 8. | Financial Statements and Supplementary Data | 25
Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 63
Item 9A. | Controls and Procedures | 63
Item 9B. | Other Information | 63
PART III.
Item 10. | Directors, Executive Officers and Corporate Governance | 64
Item 11. | Executive Compensation | 64
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 64
Item 13. | Certain Relationships and Related Transactions, and Director Independence | 64
Item 14. | Principal Accountant Fees and Services | 64
PART IV.
Item 15. | Exhibits and Financial Statement Schedules | 65
Signatures | 66
Exhibit Index | 67

Table of Contents
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.
The Company has three reportable business segments: Fluid & Metering Technologies ("FMT"), Health & Science Technologies ("HST") and Fire & Safety/Diversified Products ("FSDP"). Within our three reportable segments, the Company maintains six platforms, where we will invest in organic growth and acquisitions with a strategic view towards a platform with the potential for at least $500 million in revenue, and seven groups, where we will focus on organic growth and strategic acquisitions. The Fluid & Metering Technologies segment contains the Energy, Water (comprised of Water Services & Technology and Diaphragm & Dosing Pump Technology), and Chemical, Food & Process platforms as well as the Agricultural group (comprised of Banjo). The Health & Science Technologies segment contains the IDEX Optics & Photonics, Scientific Fluidics and Material Processing Technologies platforms, as well as the Sealing Solutions and the Industrial (comprised of Micropump and Gast) groups. The Fire & Safety/Diversified Products segment is comprised of the Dispensing, Rescue, Band-It, and Fire Suppression groups. Each platform or group is comprised of one or more of our 15 reporting units: five reporting units within Fluid & Metering Technologies (Energy; Chemical, Food, & Process; Water Services & Technology; Banjo; and Diaphragm & Dosing Pump Technology); six reporting units within Health & Science Technologies (IDEX Optics and Photonics; Scientific Fluidics; Material Processing Technologies; Sealing Solutions; Micropump; and Gast); and four reporting units within Fire & Safety/Diversified Products (Dispensing, Rescue, Band-It, and Fire Suppression).
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
The Fluid & Metering Technologies segment designs, produces and distributes positive displacement pumps, flow meters, injectors, and other fluid-handling pump modules and systems and provides flow monitoring and other services for the food, chemical, general industrial, water & wastewater, agricultural and energy industries. Fluid & Metering Technologies application-specific pump and metering solutions serve a diverse range of end markets, including industrial infrastructure (fossil fuels, refined & alternative fuels, and water & wastewater), chemical processing, agricultural, food & beverage, pulp and paper, transportation, plastics and resins, electronics and electrical, construction & mining, pharmaceutical and bio-pharmaceutical, machinery and numerous other specialty niche markets. Fluid & Metering Technologies accounted for 42% of IDEX’s sales and 43% of IDEX’s operating income in 2014, with approximately 45% of its sales to customers outside the U.S.
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 13% of Banjo’s 2014 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 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); 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 49% of Energy’s 2014 sales were to customers outside the U.S.
Chemical, Food & Process ("CFP"). CFP consists of the Company’s Richter, Viking and Aegis (acquired in April 2014) businesses. CFP is a producer of fluoroplastic lined corrosion-resistant magnetic drive and mechanical seal pumps, shut-off, control and safety valves for corrosive, hazardous, contaminated, pure and high-purity fluids, as well as rotary internal gear, external gear, vane and rotary lobe pumps, custom-engineered OEM pumps, strainers, gear reducers and engineered pump systems. Richter’s corrosion resistant fluoroplastic lined products offer superior solutions for demanding applications in the
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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 brands. Viking products primarily serve the chemical, petroleum, pulp & paper, plastics, paints, inks, tanker trucks, compressor, construction, food & beverage, personal care, pharmaceutical and biotech markets. Aegis is a leader in the design, manufacture and sale of specialty chemical processing valves for use in the chemical, petro-chemical, chlor-alkali, pharmaceutical, semiconductor and pulp/paper industries. CFP maintains operations in Kempen, Germany and Suzhou, China (Richter products); Cedar Falls, Iowa (Richter and Viking products); Eastbourne, England and Shannon, Ireland (Viking products); and Geismar, Louisiana (Aegis products). CFP primarily uses independent distributors to market and sell its products. Approximately 51% of CFP’s 2014 sales were to customers outside the U.S.
Diaphragm & Dosing Pump Technology ("DDPT"). DDPT consists of the Company’s Knight, Pulsafeeder-EPO, Pulsafeeder-SPO, Trebor and Warren Rupp businesses. DDPT is a leading provider of ultra-pure chemical pumps, liquid heating systems, air-operated and natural gas-operated double diaphragm pumps, high-pressure pumps, alloy and non-metallic gear pumps, centrifugal pumps, special purpose rotary pumps, peristaltic pumps, transfer pumps, as well as dispensing equipment for industrial laundries, commercial dishwashing and chemical metering. Knight is a leading manufacturer of pumps and dispensing equipment for industrial laundries, commercial dishwashing and chemical metering. Pulsafeeder products (which also include OBL 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 & wastewater treatment, oil and gas, power generation, pulp and paper, chemical and hydrocarbon processing, and swimming pools. Trebor 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. 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. Warren Rupp products primarily serve the chemical, paint, food processing, electronics, construction, utilities, mining and industrial maintenance markets. DDPT maintains operations in Salt Lake City, Utah (Trebor products); Mansfield, Ohio (Warren Rupp products); Rochester, New York, Punta Gorda, Florida and Milan, Italy (Pulsafeeder products); Lake Forest, California, Mississauga, Ontario, Canada, Eastbourne, England, and Unanderra, Australia (Knight products); and a maquiladora in Ciudad Juarez, Chihuahua, Mexico (Knight products). Approximately 48% of DDPT’s 2014 sales were to customers outside the U.S.
Water Services & Technology ("WST"). WST consists of the Company’s ADS, IETG and iPEK businesses. WST is a leading provider of metering technology and flow monitoring products and underground surveillance services for wastewater markets. 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. WST maintains operations in Huntsville, Alabama and various other locations in the United States and Australia (ADS products and services); Leeds, England (IETG products and services); and Hirschegg, Austria, and Sulzberg, Germany (iPEK products). Approximately 44% of WST’s 2014 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, biotechnology, aerospace, telecommunications and electronics manufacturing, laboratory and commercial equipment used in the production of micro and nano scale materials, precision photonic solutions used in life sciences, research and defense markets, and precision gear and peristaltic pump technologies that meet exacting original equipment manufacturer specifications. The segment accounted for 35% of IDEX’s sales and 31% of IDEX's operating income in 2014, with approximately 54% of its sales to customers outside the U.S.
Scientific Fluidics. Scientific Fluidics consists of the Company's Eastern Plastics, Rheodyne, Ismatec, Sapphire Engineering, Upchurch Scientific and ERC businesses. Scientific Fluidics has facilities in Rohnert Park, California (Rheodyne products); Bristol, Connecticut (Eastern Plastics products); Wertheim-Mondfeld, Germany (Ismatec products); Middleboro, Massachusetts (Sapphire Engineering products); Oak Harbor, Washington (Ismatec and Upchurch Scientific products); and Kawaguchi, Japan (ERC products). 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,
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and laboratory automation. Rheodyne products consist of injectors, valves, fittings and accessories for the analytical instrumentation market. These products are used by manufacturers of high pressure liquid chromatography (“HPLC”) equipment servicing the pharmaceutical, biotech, life science, food & beverage, and chemical markets. Ismatec products include peristaltic metering pumps, analytical process controllers, and sample preparation systems. Sapphire Engineering and Upchurch Scientific products consist of 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, as well as advanced column hardware and accessories for the high performance liquid chromatography market. The products produced by Sapphire Engineering and Upchurch Scientific primarily serve the pharmaceutical, drug discovery, chemical, biochemical processing, genomics/proteomics research, environmental labs, food/agriculture, medical lab, personal care, and plastics/polymer/rubber production markets. ERC manufactures gas liquid separations and detection solutions for the life science, analytical instrumentation and clinical chemistry markets. ERC’s products consist of in-line membrane vacuum degassing solutions, refractive index detectors and ozone generation systems. Approximately 56% of Scientific Fluidics' 2014 sales were to customers outside the U.S.
IDEX Optics and Photonics ("IOP"). IOP consists of the Company's CVI Melles Griot (“CVI MG”), Semrock, and AT Films (including Precision Photonics products) businesses. 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; Rochester, New York; Leicester, England; Kyongki-Do, Korea; Tokyo, Japan; and Didam, The Netherlands. 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. The Precision Photonics portion of its business specializes in optical components and coatings for applications in the fields of scientific research, aerospace, telecommunications and electronics manufacturing. AT Films is headquartered in Boulder, Colorado. Approximately 50% of IOP’s 2014 sales were to customers outside the U.S.
Sealing Solutions. Sealing Solutions consists of the Company's Precision Polymer Engineering (“PPE”) and FTL Sealing Solutions ("FTL") businesses. PPE, which 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. FTL, located in Leeds, England, specializes in the design and application of high integrity rotary seals, specialty bearings, and other custom products for the oil & gas, mining, power generation, and marine markets. Approximately 80% of Sealing Solutions' 2014 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. Gast products primarily serve the medical equipment, environmental equipment, computers and electronics, printing machinery, paint mixing machinery, packaging machinery, graphic arts, and industrial manufacturing markets. 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 logistics and commercial center in Redditch, England. Approximately 28% of Gast’s 2014 sales were to customers outside the U.S.
Micropump. 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. Micropump products primarily serve the printing machinery, medical equipment, paints and inks, chemical processing, pharmaceutical, refining, laboratory, electronics, pulp and paper, water treatment, textiles, peristaltic metering pumps, analytical process controllers and sample preparation systems markets. Approximately 72% of Micropump’s 2014 sales were to customers outside the U.S.
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Material Processing Technologies ("MPT"). MPT consists of the Company's Quadro, Fitzpatrick, Microfluidics and Matcon Group Limited (“Matcon”) businesses. Quadro is a leading provider of particle control solutions for the pharmaceutical and bio-pharmaceutical markets. Based in Waterloo, 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. 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 has offices in Newton, Massachusetts. Matcon is a global leader in material processing solutions for high value powders used in the manufacture of pharmaceuticals, food, plastics, and fine chemicals. Matcon’s innovative products consist of the original cone valve powder discharge system and filling, mixing and packaging systems, all of which support its customers’ automation and process requirements. These products are critical to its customers’ need to maintain clean, reliable and repeatable formulations of prepackaged foods and pharmaceuticals while helping them achieve lean and agile manufacturing. Matcon is located in Evesham, England. Approximately 60% of MPT’s 2014 sales were 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, engineered stainless steel banding and clamping devices used in a variety of industrial and commercial applications, and precision equipment for dispensing, metering and mixing colorants and paints used in a variety of retail and commercial businesses around the world. The segment accounted for 23% of IDEX’s sales and 26% of IDEX’s operating income in 2014, with approximately 54% of its sales to customers outside the U.S.
Fire Suppression. Fire Suppression consists of the Company’s 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 and Hale products), with additional facilities located in Warwick, England (Godiva products). Approximately 41% of Fire Suppression’s 2014 sales were to customers outside the U.S.
Rescue. Rescue consists of the Company’s Dinglee, Hurst Jaws of Life, 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. Rescue's customers are primarily public and private fire and rescue organizations. Rescue has facilities in Shelby, North Carolina (Hurst Jaws of Life products); Tianjin, China (Dinglee products); Erlangen, Germany (Lukas products); and Zulpich, Germany (Vetter products). Approximately 80% of Rescue’s 2014 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 in numerous other industrial and commercial applications. Band-It products primarily serve the automotive, transportation equipment, oil and gas, general industrial maintenance, electronics, electrical, communications, aerospace, utility, municipal and subsea marine markets. Band-It is based in Denver, Colorado, with additional operations in Staveley, England, and an IDEX shared manufacturing facility in China. Approximately 39% of Band-It’s 2014 sales were to customers outside the U.S.
Dispensing. Dispensing produces precision equipment for dispensing, metering and mixing colorants and paints used in a variety of retail and commercial businesses around the world. Dispensing is a global supplier of precision-designed tinting, mixing, dispensing and measuring equipment for auto refinishing and architectural paints. Dispensing 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 is headquartered in Sassenheim, The Netherlands with additional facilities in Wheeling, Illinois; Unanderra, Australia; and Milan, Italy, as well as IDEX shared manufacturing facilities in India and China. Approximately 54% of Dispensing's 2014 sales were to customers outside the U.S.
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INFORMATION APPLICABLE TO THE COMPANY’S BUSINESS IN GENERAL AND ITS 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 (Maag, 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); Milton Roy LLC (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); Valco Instruments Co., Inc. (with respect to fluid injectors and valves); and Gooch & Housego PLC (with respect to electro-optic and precision photonics solutions used in the life sciences market).
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), CPS Color Group Oy (with respect to dispensing and mixing equipment for the paint industry) and Panduit Corporation (with respect to stainless steel bands, buckles and clamping systems).
Employees
At December 31, 2014, the Company had 6,712 employees. Approximately 7% of employees were represented by labor unions, with various contracts expiring through July 2018. Management believes that the Company’s relationship with its employees is good. The Company historically has been able to renegotiate its collective bargaining agreements satisfactorily, 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 production facilities in Suzhou, China and Vadodara, India that support multiple business units. IDEX also has personnel in China, India, Dubai, Latin America 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 2014, 2013 and 2012, see “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.”
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Executive Officers of the Registrant
Set forth below are 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 five years.

Name |  | Age |  | Years of Service |  | Position
Andrew K. Silvernail |  | 44 |  | 6 |  | Chairman of the Board and Chief Executive Officer
Heath A. Mitts |  | 44 |  | 9 |  | Senior Vice President and Chief Financial Officer
Frank J. Notaro |  | 51 |  | 17 |  | Senior Vice President-General Counsel and Secretary
Daniel J. Salliotte |  | 48 |  | 10 |  | Senior Vice President-Corporate Strategy, Mergers and Acquisitions and Treasury
Michael J. Yates |  | 49 |  | 9 |  | Vice President and Chief Accounting Officer
Jeffrey D. Bucklew |  | 44 |  | 3 |  | Senior Vice President-Chief Human Resources Officer
Eric D. Ashleman |  | 47 |  | 6 |  | Senior Vice President-Group Executive
Brett E. Finley |  | 44 |  | 5 |  | Senior Vice President-Group Executive

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 from January 2011 to August 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.
Mr. Mitts has served as Senior Vice President and Chief Financial Officer since March 2011. Mr. Mitts joined IDEX as Vice President-Corporate Finance in September 2005.
Mr. Notaro has served as Senior Vice President-General Counsel and Secretary since March 1998.
Mr. Salliotte has served as Senior 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 joined IDEX as Vice President-Controller in October 2005.
Mr. Bucklew has served as the Senior Vice President-Chief Human Resources Officer since joining IDEX in March 2012. Prior to joining IDEX, Mr. Bucklew served as the Vice President of Human Resources for Accretive Health from March 2009 to March 2012.
Mr. Ashleman has served as Senior Vice President-Group Executive since August 2011. Mr. Ashleman joined IDEX in 2008 as the President of Gast Manufacturing.
Mr. Finley has served as Senior Vice President-Group Executive since February 2012. Mr. Finley joined IDEX in 2009 as the President of Pulsafeeder.
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 meeting of the Board immediately following the next annual meeting of stockholders, or until their successors are duly elected and qualified or until 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. Information on the Company’s website is not incorporated into this Form 10-K.
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Item 1A. Risk Factors.
For an enterprise as diverse and complex as the Company, a wide range of factors present risks to the Company and could materially affect future developments and performance. In addition to the factors affecting specific business operations identified in connection with the description of our operations and the financial results of our operations elsewhere in this report, the most significant of these factors are as follows:
Changes in U.S. or International Economic Conditions Could Adversely Affect the Sales and Profitability of Our Businesses.
In 2014, 50% of the Company’s sales were derived from domestic operations while 50% were derived from international operations. The Company’s largest end markets include life sciences and medical technologies, fire and rescue, liquefied petroleum gas, paint and coatings, chemical processing, water & wastewater treatment and optical filters and components. A slowdown in the U.S. or global economy and, in particular, any of these specific end markets could reduce the Company’s sales and profitability.
Conditions in Foreign Countries in Which We Operate Could Adversely Affect Our Business.
In 2014, approximately 50% 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. Our sales from international operations and our sales from export are both 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.

Any of these events could have an adverse impact on our business and operations.
Our Inability to Continue to Develop New Products Could Limit Our Sales Growth.
The Company’s sales grew 5% organically in 2014 and 2% in 2013. Approximately 12% of our 2014 sales were derived from new products developed over the past three years. Our ability to continue to grow organically is tied in large part 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 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 otherwise prove 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 and this Competition Could Reduce our Sales and Operating Margins.
Most of our products are sold in competitive markets. 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
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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 sales, 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 certain 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, Indian Rupee 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 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, 2014, goodwill and intangible assets totaled $1,321.3 million and $271.2 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. See Note 4 in Part II, Item 8, "Financial Statements and Supplementary Data" for further discussion on goodwill and intangible assets.
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 2.7 million square feet (65%) is located in the U.S. and approximately 1.5 million square feet (35%) is located outside the U.S., primarily in the U.K. (9%), Germany (8%), China (4%), India (2%) and The Netherlands (2%). Management considers these facilities suitable and adequate for the Company's operations. Management believes the Company can meet demand increases over the near term with its existing facilities, especially given its operational improvement initiatives that usually increase capacity. The Company’s executive office occupies 36,588 square feet of leased space in Lake Forest, Illinois and 4,420 square feet of leased space in Chicago, Illinois.
Approximately 2.6 million square feet (63%) 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 (40%) 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
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Health & Science Technologies segment; and 1.0 million square feet (23%) is held by business units in the Fire & Safety/Diversified Products segment.
Item 3. Legal Proceedings.
The Company and six of its subsidiaries are presently named as defendants in a number of lawsuits claiming various asbestos-related personal injuries 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 its 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.
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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, 2015, there were approximately 6,500 shareholders of record of our common stock and there were 78,232,245 shares outstanding.
The high and low sales prices of the common stock per share and the dividends paid per share during the last two years are as follows:

| 2014 |  | 2013
| High |  | Low |  | Dividends |  | High |  | Low |  | Dividends
First Quarter | $ | 79.27 |  |  | $ | 68.58 |  |  | $ | 0.23 |  |  | $ | 53.84 |  |  | $ | 47.43 |  |  | $ | 0.20 |
Second Quarter | 80.85 |  |  | 69.17 |  |  | 0.28 |  |  | 57.38 |  |  | 49.55 |  |  | 0.23 |
Third Quarter | 81.82 |  |  | 72.27 |  |  | 0.28 |  |  | 65.32 |  |  | 53.95 |  |  | 0.23 |
Fourth Quarter | 78.97 |  |  | 65.91 |  |  | 0.28 |  |  | 74.08 |  |  | 63.21 |  |  | 0.23 |

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’s purchases of common stock during the quarter ended December 31, 2014:

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, 2014 to October 31, 2014 | 436,658 |  |  | $ | 70.78 |  |  | 436,658 |  |  | $ | 187,335,900 |
November 1, 2014 to November 30, 2014 | 292,500 |  |  | 76.10 |  |  | 292,500 |  |  | 565,076,201 |
December 1, 2014 to December 31, 2014 | 256,966 |  |  | 76.39 |  |  | 256,966 |  |  | 545,447,449 |
Total | 986,124 |  |  | $ | 73.82 |  |  | 986,124 |  |  | $ | 545,447,449 |

(1) | On November 6, 2014, the Company’s Board of Directors approved an increase of $400.0 million in the authorized level for repurchases of common stock. This followed the prior Board of Directors approved repurchase authorizations of $300.0 million, announced by the Company on November 8, 2013; $200.0 million, announced by the Company on October 22, 2012; $50.0 million, announced by the Company on December 6, 2011; and the original repurchase authorization of $125.0 million announced by the Company on April 21, 2008.

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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 Midcap Industrials Sector Index and the Russell 2000 Index assuming the value of the investment in our common stock and each index was $100 on December 31, 2009. Total return values for our common stock, the S&P 500 Index, S&P Midcap Industrials Sector 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.

| 12/09 | 12/10 | 12/11 | 12/12 | 12/13 | 12/14
IDEX Corporation | $ | 100.00 |  | $ | 125.59 |  | $ | 119.00 |  | $ | 149.37 |  | $ | 237.08 |  | $ | 249.89 |
S&P 500 Index | $ | 100.00 |  | $ | 112.78 |  | $ | 112.78 |  | $ | 127.90 |  | $ | 165.76 |  | $ | 184.64 |
S&P Midcap Industrials Sector Index | $ | 100.00 |  | $ | 129.63 |  | $ | 127.26 |  | $ | 152.92 |  | $ | 217.83 |  | $ | 221.84 |
Russell 2000 Index | $ | 100.00 |  | $ | 125.31 |  | $ | 118.47 |  | $ | 143.38 |  | $ | 186.06 |  | $ | 192.63 |

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Item 6. Selected Financial Data.(1)

(Dollars in thousands, except per share data) | 2014 |  | 2013 |  | 2012 (2) |  | 2011 |  | 2010
RESULTS OF OPERATIONS |  |  |  |  |  |  |  |  |
Net sales | $ | 2,147,767 |  |  | $ | 2,024,130 |  |  | $ | 1,954,258 |  |  | $ | 1,838,451 |  |  | $ | 1,513,073 |
Gross profit | 949,315 |  |  | 873,364 |  |  | 803,700 |  |  | 738,673 |  |  | 618,483 |
Selling, general and administrative expenses | 504,419 |  |  | 477,851 |  |  | 444,490 |  |  | 421,703 |  |  | 358,272 |
Asset impairments | — |  |  | — |  |  | 198,519 |  |  | — |  |  | — |
Restructuring expenses | 13,672 |  |  | — |  |  | 32,473 |  |  | 12,314 |  |  | 11,095 |
Operating income | 431,224 |  |  | 395,513 |  |  | 128,218 |  |  | 304,656 |  |  | 249,116 |
Other (income) expense — net | (3,111 | ) |  | 178 |  |  | (236 | ) |  | 1,443 |  |  | 1,092 |
Interest expense | 41,895 |  |  | 42,206 |  |  | 42,250 |  |  | 29,332 |  |  | 16,150 |
Provision for income taxes | 113,054 |  |  | 97,914 |  |  | 48,574 |  |  | 80,024 |  |  | 74,774 |
Net income | 279,386 |  |  | 255,215 |  |  | 37,630 |  |  | 193,857 |  |  | 157,100 |
Earnings per share (3) |  |  |  |  |  |  |  |  |
— basic | $ | 3.48 |  |  | $ | 3.11 |  |  | $ | 0.45 |  |  | $ | 2.34 |  |  | $ | 1.93 |
— diluted | $ | 3.45 |  |  | $ | 3.09 |  |  | $ | 0.45 |  |  | $ | 2.32 |  |  | $ | 1.90 |
Weighted average shares outstanding |  |  |  |  |  |  |  |  |
— basic | 79,715 |  |  | 81,517 |  |  | 82,689 |  |  | 82,145 |  |  | 80,466 |
— diluted | 80,728 |  |  | 82,489 |  |  | 83,641 |  |  | 83,543 |  |  | 81,983 |
Year-end shares outstanding | 78,766 |  |  | 81,196 |  |  | 82,727 |  |  | 83,234 |  |  | 82,070 |
Cash dividends per share | $ | 1.12 |  |  | $ | 0.89 |  |  | $ | 0.80 |  |  | $ | 0.68 |  |  | $ | 0.60 |
FINANCIAL POSITION |  |  |  |  |  |  |  |  |
Current assets | $ | 1,075,791 |  |  | $ | 990,953 |  |  | $ | 881,865 |  |  | $ | 789,161 |  |  | $ | 692,758 |
Current liabilities | 411,968 |  |  | 304,609 |  |  | 291,427 |  |  | 258,278 |  |  | 353,668 |
Current ratio | 2.6 |  |  | 3.3 |  |  | 3.0 |  |  | 3.1 |  |  | 2.0 |
Operating working capital (4) | 366,209 |  |  | 350,881 |  |  | 373,704 |  |  | 396,126 |  |  | 306,044 |
Total assets | $ | 2,908,070 |  |  | $ | 2,887,577 |  |  | $ | 2,785,390 |  |  | $ | 2,836,107 |  |  | $ | 2,381,695 |
Total borrowings | 863,952 |  |  | 773,876 |  |  | 786,576 |  |  | 808,810 |  |  | 527,895 |
Shareholders’ equity | 1,486,451 |  |  | 1,572,989 |  |  | 1,464,998 |  |  | 1,513,135 |  |  | 1,375,660 |
PERFORMANCE MEASURES AND OTHER DATA |  |  |  |  |  |  |  |  |
Percent of net sales: |  |  |  |  |  |  |  |  |
Gross profit | 44.2 | % |  | 43.1 | % |  | 41.1 | % |  | 40.2 | % |  | 40.9 | %
SG&A expenses | 23.5 | % |  | 23.6 | % |  | 22.7 | % |  | 22.9 | % |  | 23.7 | %
Operating income | 20.1 | % |  | 19.5 | % |  | 6.6 | % |  | 16.6 | % |  | 16.5 | %
Income before income taxes | 18.3 | % |  | 17.4 | % |  | 4.4 | % |  | 14.9 | % |  | 15.3 | %
Net income | 13.0 | % |  | 12.6 | % |  | 1.9 | % |  | 10.5 | % |  | 10.4 | %
Capital expenditures | $ | 47,997 |  |  | $ | 31,536 |  |  | $ | 35,520 |  |  | $ | 34,548 |  |  | $ | 32,769 |
Depreciation and amortization | 76,907 |  |  | 79,334 |  |  | 78,312 |  |  | 72,386 |  |  | 58,108 |
Return on average assets | 9.6 | % |  | 9.0 | % |  | 1.3 | % |  | 7.4 | % |  | 7.0 | %
Borrowings as a percent of capitalization | 36.8 | % |  | 33.0 | % |  | 34.9 | % |  | 34.8 | % |  | 27.7 | %
Return on average shareholders' equity | 18.3 | % |  | 16.8 | % |  | 2.5 | % |  | 13.4 | % |  | 11.9 | %
Employees at year end | 6,712 |  |  | 6,787 |  |  | 6,717 |  |  | 6,814 |  |  | 5,966 |
Shareholders at year end | 6,500 |  |  | 6,500 |  |  | 6,700 |  |  | 7,000 |  |  | 7,000 |
NON-GAAP MEASURES (5) |  |  |  |  |  |  |  |  |
EBITDA | $ | 511,242 |  |  | $ | 474,669 |  |  | $ | 206,766 |  |  | $ | 375,599 |  |  | $ | 306,132 |
EBITDA margin | 23.8 | % |  | 23.5 | % |  | 10.6 | % |  | 20.4 | % |  | 20.2 | %
Adjusted EBITDA | $ | 524,914 |  |  | $ | 474,669 |  |  | $ | 437,758 |  |  | $ | 387,913 |  |  | $ | 317,227 |
Adjusted EBITDA margin | 24.4 | % |  | 23.5 | % |  | 22.4 | % |  | 21.1 | % |  | 21.0 | %
Adjusted operating income | $ | 444,896 |  |  | $ | 395,513 |  |  | $ | 359,210 |  |  | $ | 332,772 |  |  | $ | 260,211 |
Adjusted operating margin | 20.7 | % |  | 19.5 | % |  | 18.4 | % |  | 18.1 | % |  | 17.2 | %
Adjusted net income | $ | 288,823 |  |  | $ | 255,215 |  |  | $ | 224,067 |  |  | $ | 213,758 |  |  | $ | 164,617 |
Adjusted earnings per share | $ | 3.57 |  |  | $ | 3.09 |  |  | $ | 2.68 |  |  | $ | 2.56 |  |  | $ | 1.99 |

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

(2) | Fiscal year 2012 includes an impairment charge for goodwill and intangible assets within the IOP platform and an impairment charge for goodwill and long-lived assets within the WST group.

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

(4) | Operating working capital is defined as inventory plus accounts receivable minus accounts payable.

(5) | Set forth below are reconciliations of Adjusted operating income, Adjusted net income, Adjusted EPS, EBITDA and Adjusted EBITDA to the comparable measures of net income and operating income, as determined in accordance with U.S. GAAP. We have reconciled Adjusted operating income to Operating income; Adjusted net income to Net income; Adjusted EPS to EPS; consolidated EBITDA to net income; and segment EBITDA to segment operating income.

Management uses Adjusted operating income, Adjusted net income, and Adjusted EPS as metrics by which to measure performance of the Company since they exclude items that are not reflective of ongoing operations, such as asset impairments and restructuring expenses. Management also supplements its U.S. GAAP financial statements with adjusted information to provide investors with greater insight, transparency, and a more comprehensive understanding of the information used by management in its financial and operational decision making.
EBITDA means earnings before interest, income taxes, depreciation and amortization. Given the acquisitive nature of the Company which results in a higher level of amortization expense at recently acquired businesses, management uses EBITDA as an internal operating metric to provide management with another representation of performance of businesses across our three segments and for enterprise valuation purposes. EBITDA is also used to calculate certain financial covenants, as discussed in Note 5 of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplementary Data.” In addition, EBITDA has been adjusted for items that are not reflective of ongoing operations, such as asset impairments and restructuring expenses to arrive at Adjusted EBITDA. Management believes that Adjusted EBITDA is useful as a performance indicator on ongoing operations. We believe that Adjusted EBITDA is also useful to some investors as an indicator of the strength and performance of the Company's and its segments ongoing business operations and a way to evaluate and compare operating performance and value companies within our industry. The definition of Adjusted EBITDA used here may differ from that used by other companies.
The non-GAAP financial measures disclosed by the Company should not be considered a substitute for, or superior to, financial measures prepared in accordance with U.S. GAAP, and the financial results prepared in accordance with U.S. GAAP and the reconciliations from these results should be carefully evaluated.

Reconciliations of Consolidated EBITDA |  |  |  |  |  |  |  |  |  |
|  | For the Years Ended December 31,
|  | 2014 |  | 2013 |  | 2012 |  | 2011 |  | 2010
|  | (In thousands)
Net income |  | $ | 279,386 |  |  | $ | 255,215 |  |  | $ | 37,630 |  |  | $ | 193,857 |  |  | $ | 157,100 |
+ Provision for income taxes |  | 113,054 |  |  | 97,914 |  |  | 48,574 |  |  | 80,024 |  |  | 74,774 |
+ Interest expense |  | 41,895 |  |  | 42,206 |  |  | 42,250 |  |  | 29,332 |  |  | 16,150 |
+ Depreciation and amortization |  | 76,907 |  |  | 79,334 |  |  | 78,312 |  |  | 72,386 |  |  | 58,108 |
EBITDA |  | 511,242 |  |  | 474,669 |  |  | 206,766 |  |  | 375,599 |  |  | 306,132 |
+ Restructuring expenses |  | 13,672 |  |  | — |  |  | 32,473 |  |  | 12,314 |  |  | 11,095 |
+ Asset impairments |  | — |  |  | — |  |  | 198,519 |  |  | — |  |  | — |
Adjusted EBITDA |  | $ | 524,914 |  |  | $ | 474,669 |  |  | $ | 437,758 |  |  | $ | 387,913 |  |  | $ | 317,227 |
Net sales |  | $ | 2,147,767 |  |  | $ | 2,024,130 |  |  | $ | 1,954,258 |  |  | $ | 1,838,451 |  |  | $ | 1,513,073 |
EBITDA margin |  | 23.8 | % |  | 23.5 | % |  | 10.6 | % |  | 20.4 | % |  | 20.2 | %
Adjusted EBITDA margin |  | 24.4 | % |  | 23.5 | % |  | 22.4 | % |  | 21.1 | % |  | 21.0 | %

Reconciliations of Segment EBITDA |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | For the Years Ended December 31,
|  | 2014 |  | 2013 |  | 2012
|  | FMT |  | HST |  | FSDP |  | FMT |  | HST |  | FSDP |  | FMT |  | HST |  | FSDP
|  | (In thousands)
Operating income (loss) |  | $ | 216,886 |  |  | $ | 152,999 |  |  | $ | 130,494 |  |  | $ | 211,256 |  |  | $ | 136,707 |  |  | $ | 102,730 |  |  | $ | 146,650 |  |  | $ | (62,835 | ) |  | $ | 96,120 |
- Other (income) expense |  | (560 | ) |  | (542 | ) |  | (990 | ) |  | 1,789 |  |  | (508 | ) |  | (342 | ) |  | (25 | ) |  | 511 |  |  | (143 | )
+ Depreciation and amortization |  | 26,453 |  |  | 42,478 |  |  | 6,583 |  |  | 27,633 |  |  | 43,496 |  |  | 6,852 |  |  | 29,637 |  |  | 39,981 |  |  | 7,107 |
EBITDA |  | 243,899 |  |  | 196,019 |  |  | 138,067 |  |  | 237,100 |  |  | 180,711 |  |  | 109,924 |  |  | 176,312 |  |  | (23,365 | ) |  | 103,370 |
+ Restructuring expenses |  | 6,413 |  |  | 4,912 |  |  | 1,034 |  |  | — |  |  | — |  |  | — |  |  | 6,262 |  |  | 14,744 |  |  | 8,340 |
+ Asset impairments |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 27,721 |  |  | 170,798 |  |  | — |
Adjusted EBITDA |  | $ | 250,312 |  |  | $ | 200,931 |  |  | $ | 139,101 |  |  | $ | 237,100 |  |  | $ | 180,711 |  |  | $ | 109,924 |  |  | $ | 210,295 |  |  | $ | 162,177 |  |  | $ | 111,710 |
Net sales |  | $ | 899,588 |  |  | $ | 752,021 |  |  | $ | 502,749 |  |  | $ | 871,814 |  |  | $ | 714,650 |  |  | $ | 445,049 |  |  | $ | 833,288 |  |  | $ | 695,235 |  |  | $ | 437,053 |
EBITDA margin |  | 27.1 | % |  | 26.1 | % |  | 27.5 | % |  | 27.2 | % |  | 25.3 | % |  | 24.7 | % |  | 21.2 | % |  | (3.4 | )% |  | 23.7 | %
Adjusted EBITDA margin |  | 27.8 | % |  | 26.7 | % |  | 27.7 | % |  | 27.2 | % |  | 25.3 | % |  | 24.7 | % |  | 25.2 | % |  | 23.3 | % |  | 25.6 | %

Reconciliations of Consolidated Reported-to-Adjusted Operating Income and Margin
|  | For the Years Ended December 31,
|  | 2014 |  | 2013 |  | 2012 |  | 2011 |  | 2010
|  | (In thousands)
Operating income |  | $ | 431,224 |  |  | $ | 395,513 |  |  | $ | 128,218 |  |  | $ | 304,656 |  |  | $ | 249,116 |
+ Restructuring expenses |  | 13,672 |  |  | — |  |  | 32,473 |  |  | 12,314 |  |  | 11,095 |
+ Asset impairments |  | — |  |  | — |  |  | 198,519 |  |  | — |  |  | — |
+ CVI fair value inventory charge |  | — |  |  | — |  |  | — |  |  | 15,802 |  |  | — |
Adjusted operating income |  | $ | 444,896 |  |  | $ | 395,513 |  |  | $ | 359,210 |  |  | $ | 332,772 |  |  | $ | 260,211 |
Net sales |  | $ | 2,147,767 |  |  | $ | 2,024,130 |  |  | $ | 1,954,258 |  |  | $ | 1,838,451 |  |  | $ | 1,513,073 |
Operating margin |  | 20.1 | % |  | 19.5 | % |  | 6.6 | % |  | 16.6 | % |  | 16.5 | %
Adjusted operating margin |  | 20.7 | % |  | 19.5 | % |  | 18.4 | % |  | 18.1 | % |  | 17.2 | %

Reconciliations of Segment Reported-to-Adjusted Operating Income and Margin
|  | For the Years Ended December 31,
|  | 2014 |  | 2013 |  | 2012
|  | FMT |  | HST |  | FSDP |  | FMT |  | HST |  | FSDP |  | FMT |  | HST |  | FSDP
|  | (In thousands)
Operating income (loss) |  | $ | 216,886 |  |  | $ | 152,999 |  |  | $ | 130,494 |  |  | $ | 211,256 |  |  | $ | 136,707 |  |  | $ | 102,730 |  |  | $ | 146,650 |  |  | $ | (62,835 | ) |  | $ | 96,120 |
+ Restructuring expenses |  | 6,413 |  |  | 4,912 |  |  | 1,034 |  |  | — |  |  | — |  |  | — |  |  | 6,262 |  |  | 14,744 |  |  | 8,340 |
+ Asset impairments |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 27,721 |  |  | 170,798 |  |  | — |
Adjusted operating income |  | $ | 223,299 |  |  | $ | 157,911 |  |  | $ | 131,528 |  |  | $ | 211,256 |  |  | $ | 136,707 |  |  | $ | 102,730 |  |  | $ | 180,633 |  |  | $ | 122,707 |  |  | $ | 104,460 |
Net sales |  | $ | 899,588 |  |  | $ | 752,021 |  |  | $ | 502,749 |  |  | $ | 871,814 |  |  | $ | 714,650 |  |  | $ | 445,049 |  |  | $ | 833,288 |  |  | $ | 695,235 |  |  | $ | 437,053 |
Operating margin |  | 24.1 | % |  | 20.3 | % |  | 26.0 | % |  | 24.2 | % |  | 19.1 | % |  | 23.1 | % |  | 17.6 | % |  | (9.0 | )% |  | 22.0 | %
Adjusted operating margin |  | 24.8 | % |  | 21.0 | % |  | 26.2 | % |  | 24.2 | % |  | 19.1 | % |  | 23.1 | % |  | 21.7 | % |  | 17.6 | % |  | 23.9 | %

Reconciliations of Reported-to-Adjusted Net Income and EPS
|  | For the Years Ended December 31,
|  | 2014 |  | 2013 |  | 2012 |  | 2011 |  | 2010
|  | (In thousands)
Net income |  | $ | 279,386 |  |  | $ | 255,215 |  |  | $ | 37,630 |  |  | $ | 193,857 |  |  | $ | 157,100 |
+ Restructuring expenses, net of tax |  | 9,437 |  |  | — |  |  | 22,926 |  |  | 8,716 |  |  | 7,517 |
+ Asset impairments, net of tax |  | — |  |  | — |  |  | 163,511 |  |  | — |  |  | — |
+ CVI fair value inventory charge, net of tax |  | — |  |  | — |  |  | — |  |  | 11,185 |  |  | — |
Adjusted net income |  | $ | 288,823 |  |  | $ | 255,215 |  |  | $ | 224,067 |  |  | $ | 213,758 |  |  | $ | 164,617 |
EPS |  | $ | 3.45 |  |  | $ | 3.09 |  |  | $ | 0.45 |  |  | $ | 2.32 |  |  | $ | 1.90 |
+ Restructuring expenses, net of tax |  | 0.12 |  |  | — |  |  | 0.27 |  |  | 0.10 |  |  | 0.09 |
+ Asset impairments, net of tax |  | — |  |  | — |  |  | 1.96 |  |  | — |  |  | — |
+ CVI fair value inventory charge |  | — |  |  | — |  |  | — |  |  | 0.14 |  |  | — |
Adjusted EPS |  | $ | 3.57 |  |  | $ | 3.09 |  |  | $ | 2.68 |  |  | $ | 2.56 |  |  | $ | 1.99 |
Diluted weighted average shares |  | 80,728 |  |  | 82,489 |  |  | 83,641 |  |  | 83,543 |  |  | 81,983 |

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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 “2014 Overview and Outlook”, and other portions of this report, contains 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 the results described in those statements. These risks and uncertainties include, but are not limited to, the risks described in Item 1A, "Risk Factors" of this report, 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 in this report 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.
2014 Overview and Outlook
IDEX is an applied solutions company specializing in fluid and metering technologies, health and science technologies, and fire, safety and other diversified products built to customer specifications. IDEX’s products are sold in niche markets to a wide range of industries throughout the world. Accordingly, our businesses are affected by levels of industrial activity and economic conditions in the U.S. and in other countries where we do business and by the relationship of the U.S. dollar to other currencies. Levels of capacity utilization and capital spending in the industries that use our products and overall industrial activity are important factors that influence the demand for our products.
The Company has three reportable business segments: Fluid & Metering Technologies, Health & Science Technologies and Fire & Safety/Diversified Products. Within our three reportable segments, the Company maintains six platforms, where we will invest in organic growth and acquisitions with a strategic view towards a platform with the potential for at least $500 million in revenue, and seven groups, where we will focus on organic growth and strategic acquisitions. The Fluid & Metering Technologies segment contains the Energy, Water (comprised of Water Services & Technology and Diaphragm & Dosing Pump Technology), and Chemical, Food & Process platforms as well as the Agricultural group (comprised of Banjo.) The Health & Science Technologies segment contains the IDEX Optics & Photonics, Scientific Fluidics and Material Processing Technologies platforms, as well as the Sealing Solutions and the Industrial (comprised of Micropump and Gast) groups. The Fire & Safety/Diversified Products segment is comprised of the Dispensing, Rescue, Band-It, and Fire Suppression groups. Each platform or group is comprised of one or more of our 15 reporting units: five reporting units within Fluid & Metering Technologies (Energy; Chemical, Food, & Process; Water Services & Technology; Banjo; Diaphragm & Dosing Pump Technology); six reporting units within Health & Science Technologies (IDEX Optics and Photonics; Scientific Fluidics; Material Processing Technologies; Sealing Solutions; Micropump; and Gast); and four reporting units within Fire & Safety/Diversified Products (Dispensing, Rescue, Band-It, and Fire Suppression).
The Fluid & Metering Technologies segment designs, produces and distributes positive displacement pumps, flow meters, valves, injectors, and other fluid-handling pump modules and systems and provides flow monitoring and other services for the food, chemical, general industrial, water and wastewater, agricultural and energy industries. The Health & Science Technologies segment designs, produces and distributes a wide range of precision fluidics, rotary lobe pumps, centrifugal and positive displacement pumps, roll compaction and drying systems used in beverage, food processing, pharmaceutical and cosmetics, pneumatic components and sealing solutions, including very high precision, low-flow rate pumping solutions required in analytical instrumentation, clinical diagnostics and drug discovery, high performance molded and extruded, biocompatible medical devices and implantables, air compressors used in medical, dental and industrial applications, optical components and coatings for applications in the fields of scientific research, defense, biotechnology, life sciences, aerospace, telecommunications and electronics manufacturing, laboratory and commercial equipment used in the production of micro and nano scale materials, precision photonic solutions used in life sciences, research and defense markets, and precision gear and peristaltic pump technologies that meet exacting original equipment manufacturer specifications. The Fire & Safety/Diversified Products segment produces firefighting pumps and controls, rescue tools, lifting bags and other components and systems for the
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fire and rescue industry, and engineered stainless steel banding and clamping devices used in a variety of industrial and commercial applications, precision equipment for dispensing, metering and mixing colorants and paints used in a variety of retail and commercial businesses around the world.
Our 2014 financial results are as follows:

• | Sales of $2.1 billion increased 6%; organic sales — excluding acquisitions and foreign currency translation — were up 5%.

• | Operating income of $431.2 million increased 9% and operating margin of 20.1% was up 60 basis points from the prior year.

• | Net income increased 9% to $279.4 million.

• | Diluted EPS of $3.45 increased $0.36 or 12% compared to 2013.

Our 2014 financial results, adjusted for $13.7 million of restructuring costs, are as follows (These non-GAAP measures have been reconciled to U.S. GAAP measures in Item 6, "Selected Financial Data"):

• | Adjusted operating income of $444.9 million increased 12% and adjusted operating margin of 20.7% was up 120 basis points from the prior year.

• | Adjusted net income of $288.8 million is 13% higher than the prior year of $255.2 million.

• | Adjusted EPS of $3.57 was 16% higher than the prior year EPS of $3.09.

Overall, we believe we are operating in a challenging market environment, which will continue throughout 2015. On a regional basis, we anticipate North American demand will be solid, the European market will remain soft throughout 2015, and Asia will be volatile. For 2015, based on the Company’s current outlook, we anticipate 1 to 2 percent organic revenue growth and EPS of $3.65 to $3.75.
Results of Operations
The following is a discussion and analysis of our results of operations for each of the three years in the period ended December 31, 2014. For purposes of this Item, reference is made to the Consolidated Statements of Operations in Part II, Item 8, “Financial Statements and Supplementary Data.” Segment operating income excludes unallocated corporate operating expenses. Management's primary measurements of segment performance are sales, operating income, and operating margin.
In the following discussion, and throughout this report, references to organic sales, a non-GAAP measure, refers to sales from continuing operations calculated according to generally accepted accounting principles in the United States but excludes (1) the impact of foreign currency translation and (2) sales from acquired businesses during the first twelve months of ownership. The portion of sales attributable to foreign currency translation is calculated as the difference between (a) the period-to-period change in organic sales and (b) the period-to-period change in organic sales after applying prior period foreign exchange rates to the current year period. Management believes that reporting organic sales provides useful information to investors by helping identify underlying growth trends in our business and facilitating easier comparisons of our revenue performance with prior and future periods and to our peers. The Company excludes the effect of foreign currency translation from organic sales because foreign currency translation is not under management’s control, is subject to volatility and can obscure underlying business trends. The Company excludes the effect of acquisitions because the nature, size, and number of acquisitions can vary dramatically from period to period and between the Company and its peers and can also obscure underlying business trends and make comparisons of long-term performance difficult.
Performance in 2014 Compared with 2013

(In thousands) | 2014 |  | 2013 |  | Change |
Net sales | $ | 2,147,767 |  |  | $ | 2,024,130 |  |  | 6 | % |
Operating income | 431,224 |  |  | 395,513 |  |  | 9 | % |
Operating margin | 20.1 | % |  | 19.5 | % |  | 60 |  | bps

Sales in 2014 were $2.1 billion, a 6% increase from the comparable period last year. This increase reflects a 5% increase in organic sales and 1% from acquisitions (Aegis — April 2014 and FTL — March 2013). Organic sales to customers outside the U.S. represented approximately 50% of total sales in 2014 compared with 51% in 2013.
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In 2014, Fluid & Metering Technologies contributed 42% of sales and 43% of operating income; Health & Science Technologies contributed 35% of sales and 31% of operating income; and Fire & Safety/Diversified Products contributed 23% of sales and 26% of operating income.
Gross profit of $949.3 million in 2014 increased $76.0 million, or 9%, from 2013, while gross margins were 44.2% in 2014 and 43.1% in 2013. The increases are mainly attributable to increased sales volume, favorable net material costs as well as benefits from productivity initiatives.
SG&A expenses increased to $504.4 million in 2014 from $477.9 million in 2013. The $26.6 million increase reflects approximately $4.0 million of incremental costs from new acquisitions and $22.6 million of volume-related expenses. As a percentage of sales, SG&A expenses were 23.5% for 2014 and 23.6% for 2013.
During 2014, the Company recorded pre-tax restructuring expenses totaling $13.7 million. No restructuring expenses were recorded in 2013. The 2014 restructuring expenses were mainly attributable to employee severance related to head count reductions across all three segments and corporate.
Operating income of $431.2 million in 2014 increased from the $395.5 million recorded in 2013, primarily reflecting an increase in volume, improved productivity partially offset by the $13.7 million of restructuring-related charges recorded in 2014. Operating margin of 20.1% in 2014 was up from 19.5% in 2013 primarily due to volume leverage and productivity partially offset by the restructuring-related charges in 2014.
Other (income) expense increased $3.3 million from other expense of $0.2 million in 2013 to $3.1 million of income in 2014 mainly due to a favorable impact from foreign currency transactions and an increase in interest income.
Interest expense decreased slightly to $41.9 million in 2014 from $42.2 million in 2013. The decrease was principally due to lower interest rates.
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 $113.1 million in 2014 compared to $97.9 million in 2013. The effective tax rate increased to 28.8% in 2014 compared to 27.7% in 2013, due to a mix of global pre-tax income among jurisdictions and the 2012 U.S. R&D credit in 2013, which was retroactively reinstated to January 1, 2012 as a result of the the enactment of the American Taxpayer Relief Act of 2012 on January 2, 2013.
Net income for the year of $279.4 million increased from the $255.2 million earned in 2013. Diluted earnings per share in 2014 of $3.45 increased $0.36 from $3.09 in 2013 due to higher net income and lower share count resulting from share repurchases.
Fluid & Metering Technologies Segment

(In thousands) | 2014 |  | 2013 |  | Change |
Net sales | $ | 899,588 |  |  | $ | 871,814 |  |  | 3 | % |
Operating income | 216,886 |  |  | 211,256 |  |  | 3 | % |
Operating margin | 24.1 | % |  | 24.2 | % |  | (10 | ) | bps

Sales of $899.6 million increased $27.8 million, or 3%, in 2014 compared with 2013. This increase reflected 2% organic growth and 1% acquisition. The increase in organic sales was attributable to growth across all our platforms and groups within the segment. In 2014, organic sales increased approximately 4% domestically and 1% internationally. Organic sales to customers outside the U.S. were approximately 45% of total segment sales in 2014, compared with 46% in 2013.
Sales within our Energy platform increased modestly compared to 2013, due to the strength of the LPG and refined fuel markets. Sales have grown in the North American and Asian markets, while Europe and the Middle East sales have declined, due to the fall in oil prices and large project delays. Sales within our CFP platform increased compared to 2013 on continued strength of the North American industrial distribution and chemical markets. This increase was partially offset by a decline in CFP chemical sales in Europe due to a lack of project activity. Sales within our Agriculture group increased slightly driven by strong aftermarket demand in North America, which was offset by weak OEM demand due to falling farm income. The sales increase in WST was driven by share gains from new products and increased global project activity. DDPT saw modest sales growth due to softness in the Asian and European markets, offset by a pickup in the Middle East and the semiconductor markets.
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Operating income of $216.9 million was higher than the $211.3 million recorded in 2013, while operating margin of 24.1% was lower than the 24.2% recorded in 2013, primarily due to $6.4 million of restructuring charges recorded in 2014, partially offset by volume leverage and productivity initiatives.
Health & Science Technologies Segment

(In thousands) | 2014 |  | 2013 |  | Change |
Net sales | $ | 752,021 |  |  | $ | 714,650 |  |  | 5 | % |
Operating income | 152,999 |  |  | 136,707 |  |  | 12 | % |
Operating margin | 20.3 | % |  | 19.1 | % |  | 120 |  | bps

Sales of $752.0 million increased $37.4 million, or 5%, in 2014 compared with 2013. This increase reflected 4% growth in organic sales and 1% favorable foreign currency translation. In 2014, organic sales increased 7% domestically and 1% internationally. Organic sales to customers outside the U.S. were approximately 54% of total segment sales in 2014 compared with 53% in 2013.
Sales within our MPT platform increased compared to 2013 due to large projects in the Asian food and pharmaceutical markets. Sales within our Scientific Fluidics platform increased after pausing in the middle part of 2014 as customers right-sized their inventory. In the latter part of 2014 we saw increased demand from the core biotech, in-vitro diagnostic and analytical instrumentation markets. Sales within our Sealing Solutions group increased compared to 2013 due to strong growth in the semiconductor and marine diesel markets, partially offset by softness in oil & gas towards year end due to declining oil prices. Sales within our IOP platform were flat when compared to 2013, primarily from continued slow demand in the industrial and life sciences markets. Sales in our Industrial group increased compared to 2013 due strong growth in the North American distribution markets, and the success of new product introductions.
Operating income and operating margin of $153.0 million and 20.3%, respectively, in 2014 were up from $136.7 million and 19.1%, respectively, recorded in 2013, primarily due to volume leverage and productivity initiatives, partially offset by $4.9 million of restructuring charges recorded in 2014.
Fire & Safety/Diversified Products Segment

(In thousands) | 2014 |  | 2013 |  | Change |
Net sales | $ | 502,749 |  |  | $ | 445,049 |  |  | 13 | % |
Operating income | 130,494 |  |  | 102,730 |  |  | 27 | % |
Operating margin | 26.0 | % |  | 23.1 | % |  | 290 |  | bps

Sales of $502.7 million increased $57.7 million, or 13%, in 2014 compared with 2013. This increase was driven entirely by organic growth. In 2014, organic sales increased 17% domestically and 9% internationally. Organic sales to customers outside the U.S. were approximately 54% of total segment sales in 2014, compared with 56% in 2013.
Sales within our Dispensing group increased due to the fulfillment of a large order in the first quarter of 2014 and the strength of Asian and Western European markets. The sales increase within our Band-It group was driven by continued strength in the transportation, cable management and industrial industries, offset by declines in oil and gas application markets to close out the year. Sales within our Fire Suppression group increased as a result of orders for fire suppression trailers at power production facilities and stable project orders in China and North America. Sales within our Rescue group decreased slightly, due to delayed decision making for municipal projects in Europe and Asia.
Operating income and operating margin of $130.5 million and 26.0%, respectively, were higher than the $102.7 million and 23.1% recorded in 2013, primarily due to volume leverage, partially offset by $1.0 million of restructuring charges recorded in 2014.
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Performance in 2013 Compared with 2012

(In thousands) | 2013 |  | 2012 |  | Change |
Net sales | $ | 2,024,130 |  |  | $ | 1,954,258 |  |  | 4 | % |
Operating income | 395,513 |  |  | 128,218 |  |  | 208 | % |
Operating margin | 19.5 | % |  | 6.6 | % |  | 1,290 |  | bps

Sales in 2013 were $2.0 billion, a 4% increase from 2012. This increase reflects a 2% increase in organic sales and 2% from acquisitions (ERC — April 2012, Matcon — July 2012 and FTL —March 2013). Organic sales to customers outside the U.S. represented approximately 51% of total sales in the period compared with 50% in 2012.
In 2013, Fluid & Metering Technologies contributed 43% of sales and 47% of operating income; Health & Science Technologies contributed 35% of sales and 30% of operating income; and Fire & Safety/Diversified Products contributed 22% of sales and 23% of operating income.
Gross profit of $873.4 million in 2013 increased $69.7 million, or 8.7%, from 2012. Gross margins were 43.1% in 2013 and 41.1% in 2012.
SG&A expenses increased to $477.9 million in 2013 from $444.5 million in 2012. The $33.4 million increase reflects approximately $10.4 million of incremental costs from new acquisitions, $5.6 million of cost-out actions, a $1.7 million pension settlement, $1.2 million related to environmental reserve costs, and $18.6 million of volume-related expenses, partially offset by a $4.0 million gain on the settlement of the contingent consideration related to the Matcon business acquired in July 2012. As a percentage of sales, SG&A expenses were 23.6% for 2013 and 22.7% for 2012.
During 2012, the Company recorded pre-tax restructuring expenses totaling $32.5 million. These restructuring expenses were mainly attributable to employee severance related to employee reductions across various functional areas, the termination of a defined benefit pension plan and facility rationalization resulting from the Company’s cost savings initiatives. These initiatives included exit costs related to five facility closures and severance benefits for 491 employees in 2012.
Operating income of $395.5 million in 2013 increased from the $128.2 million recorded in 2012, primarily reflecting an increase in volume, improved productivity and the impact of the $198.5 million asset impairment charges and the $32.5 million of restructuring-related charges recorded in 2012. Operating margin of 19.5% in 2013 was up from 6.6% in 2012 primarily due to volume leverage, productivity and the impact of asset impairment charges and restructuring-related charges in 2012.
Interest expense decreased slightly to $42.2 million in 2013 from $42.3 million in 2012. The decrease was principally due to lower debt levels.
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 $97.9 million in 2013 compared to $48.6 million in 2012. The effective tax rate decreased to 27.7% in 2013 compared to 56.3% in 2012, mainly due to the 2012 asset impairment charge recorded in the fourth quarter of 2012. The impairment charge increased our 2012 effective tax rate by 26.9%. Our effective tax rate was also impacted by recognition of the 2012 U.S. R&D credit in 2013 due to the enactment of the American Taxpayer Relief Act of 2012 on January 2, 2013 which reinstated the U.S. R&D Credit retroactively to January 1, 2012, recognition of additional UK R&D tax benefits, revaluation of the UK deferred tax liability due to the reduction in the UK statutory tax rate, the settlement of the contingent consideration agreement related to the Matcon business acquired in July 2012, and the mix of global pre-tax income among jurisdictions.
Net income for the year of $255.2 million increased from the $37.6 million earned in 2012. Diluted earnings per share in 2013 of $3.09 increased $2.64 from $0.45 in 2012.
Fluid & Metering Technologies Segment

(In thousands) | 2013 |  | 2012 |  | Change |
Net sales | $ | 871,814 |  |  | $ | 833,288 |  |  | 5 | % |
Operating income | 211,256 |  |  | 146,650 |  |  | 44 | % |
Operating margin | 24.2 | % |  | 17.6 | % |  | 660 |  | bps

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Sales of $871.8 million increased $38.5 million, or 5%, in 2013 compared with 2012. This increase reflected 4% organic growth and 1% favorable foreign currency translation. The increase in organic sales was attributable to growth across all our platforms and groups within the segment. In 2013, organic sales increased approximately 3% domestically and 6% internationally. Organic sales to customers outside the U.S. were approximately 46% of total segment sales in 2013, compared with 47% in 2012.
Sales within our Energy platform increased compared to 2012, due to the strength of OEM truck builds and electronic retrofits in North America. Additional growth has been driven by growth across the LPG market, including North America, China, India and Russia. Sales within our CFP platform increased compared to 2012 on continued strength in the chemical markets, particularly with project opportunities in the Middle East and Asia, coupled with solid aftermarket performance. The CFP North American industrial distribution market started the year soft, but gradually recovered in the second half of 2013. Sales increases within our Agriculture group were driven by strong OEM demand in North America, new product introductions and an increase in market share. The sales increase in WST was driven by share gains and strong global project activity, specifically for projects in the US and Japan. DDPT saw only modest sales growth due to softness in several core markets, but this was offset by a pickup in the Middle East and the semiconductor markets.
Operating income and operating margin of $211.3 million and 24.2%, respectively, were higher than the $146.7 million and 17.6% recorded in 2012, primarily due to volume leverage and productivity initiatives as well as the impact of the $27.7 million of impairment charges and $6.3 million of restructuring charges recorded in 2012.
Health & Science Technologies Segment

(In thousands) | 2013 |  | 2012 |  | Change |
Net sales | $ | 714,650 |  |  | $ | 695,235 |  |  | 3 | % |
Operating income (loss) | 136,707 |  |  | (62,835 | ) |  | 318 | % |
Operating margin | 19.1 | % |  | (9.0 | )% |  | 2,810 |  | bps

Sales of $714.7 million increased $19.4 million, or 3%, in 2013 compared with 2012. This increase reflected 6% growth from acquisitions (ERC, Matcon and FTL), offset by a 1% unfavorable foreign currency translation and a 2% decrease in organic sales. In 2013, organic sales decreased 1% domestically and 3% internationally. Organic sales to customers outside the U.S. were approximately 53% of total segment sales in 2013 compared with 51% in 2012.
Sales within our MPT platform increased compared to 2012 due to large projects in the pharmaceutical and chemical markets, driven by released capital spending, particularly in North America and Europe. Sales within our Scientific Fluidics platform increased on the success of new products introduced throughout 2013 and share gains. In the latter part of 2013, Scientific Fluidics benefited from the the easing of National Institute of Health funding constraints, which opened up further spending in our core Analytical Instruments and In Vitro Diagnostic markets. Sales within our Specialty Seals group increased compared to 2012 due to a full nine months of sales from FTL, acquired in March 2013, continued strong growth in oil & gas, and stability in the scientific and commercial aircraft end markets. Sales within our IOP platform decreased compared to 2012, primarily from continued weak demand in the defense, biotechnology and electronics end markets as well as the decision to exit certain product lines. Sales in our Industrial group decreased compared to 2012 due to several original equipment manufacturer orders that did not repeat in 2013.
Operating income and operating margin of $136.7 million and 19.1%, respectively, in 2013 were up from the operating loss and negative operating margin of $62.8 million and 9.0%, respectively, recorded in 2012, primarily due to volume leverage and productivity initiatives as well as the impact of the $170.8 million of impairment charges and the $14.7 million of restructuring charges recorded in 2012.
Fire & Safety/Diversified Products Segment

(In thousands) | 2013 |  | 2012 |  | Change |
Net sales | $ | 445,049 |  |  | $ | 437,053 |  |  | 2 | % |
Operating income | 102,730 |  |  | 96,120 |  |  | 7 | % |
Operating margin | 23.1 | % |  | 22.0 | % |  | 110 |  | bps

Sales of $445.0 million increased $8.0 million, or 2%, in 2013 compared with 2012. This increase reflected 1% organic growth and 1% favorable foreign currency translation. In 2013, organic sales increased 1% domestically and 2%
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internationally. Organic sales to customers outside the U.S. were approximately 56% of total segment sales in 2013, compared with 57% in 2012.
Sales within our Dispensing group decreased due to the fulfillment of a large replenishment order in the first half of 2012. However, excluding this order, sales increased on strength in our core North American markets, driven by low volatile organic compound programs, and expanded sales from our low-end automatic dispenser, X-Smart, in EMEA and Asia. The sales increase within our Band-It group was driven by general strength in the oil and gas applications market and large automotive blanket orders for new vehicle platforms in North America. Sales within our Fire Suppression group increased as a result of orders for fire suppression trailers at power production facilities, project orders in China, and a stable core business in North America and Western Europe. Sales within our Rescue group increased as a result of robust demand for our rescue tools within the North American and European markets.
Operating income and operating margin of $102.7 million and 23.1%, respectively, were higher than the $96.1 million and 22.0% recorded in 2012, primarily due to the impact of the $8.3 million of restructuring charges recorded in 2012, as well as volume leverage, partially offset by mix across businesses.
Liquidity and Capital Resources
Operating Activities
Cash flows from operating activities decreased $33.6 million, or 8.4%, to $368.0 million in 2014, primarily due to higher investments in working capital, partially offset by an increase in net income and accrued expenses. At December 31, 2014, working capital was $663.8 million and the Company’s current ratio was 2.61 to 1. At December 31, 2014, the Company’s cash and cash equivalents totaled $509.1 million, of which $403.5 million was held outside of the United States.
Investing Activities
Cash flow used in investing activities increased $4.1 million, or 6.0% to $72.3 million in 2014, primarily as a result of higher capital expenditures, partially offset by lower cash paid for acquisitions.
Cash flows from operations were more than adequate to fund capital expenditures of $48.0 million and $31.5 million in 2014 and 2013, respectively. Capital expenditures were generally for machinery and equipment that improved productivity, although a portion was for business system technology, replacement of equipment, and construction of new facilities. Management believes that the Company has ample capacity in its plants and equipment to meet demand increases for future growth in the intermediate term.
The Company acquired Aegis Flow Technologies ("Aegis") in April 2014 for cash consideration of $25.4 million, and FTL Seals Technology, Ltd ("FTL") in March 2013 for cash consideration of $34.5 million (£23.1 million). The entire purchase price for both acquisitions was funded with borrowings under the Company's bank credit facility.
Financing Activities
Cash flow used in financing activities decreased $35.0 million, or 16.0% to $184.1 million in 2014, primarily as a result of increased borrowings, net of payments, of $119.4 million under our credit facility, partially offset by an increase of $12.8 million of dividends paid, $18.1 million of lower proceeds from the exercise of stock options, and an increase of $52.4 million in purchases of common stock.
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, 2014, $115.0 million was outstanding under the Revolving Facility, with $7.4 million of outstanding letters of credit. The net available borrowing capacity under the Revolving Facility at December 31, 2014, was approximately $577.6 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. This applicable margin is based on the Company’s senior, unsecured, long-term debt rating and can range from .875% to 1.70%. Based on the Company’s credit rating at December 31, 2014, the applicable margin was 1.05%. Interest is payable (a) in the case of base rate loans, quarterly, and (b) in the case of LIBOR rate loans, on the maturity date of the borrowing, or quarterly from the effective date for borrowings exceeding three months. An annual Revolving Facility fee, also based on the Company’s credit rating, is currently 20 basis points and is payable quarterly.
On June 9, 2010, the Company completed a private placement of €81.0 million aggregate principal amount of 2.58% Series 2010 Senior Euro Notes due June 9, 2015 (“2.58% Senior Euro Notes”) pursuant to a Master Note Purchase Agreement, dated June 9, 2010 (the “Purchase Agreement”). The Purchase Agreement provides for the issuance of additional series of notes in the future, provided that the aggregate principal amount outstanding under the agreement at any time does not exceed $750.0 million. The 2.58% Senior Euro Notes bear interest at a rate of 2.58% per annum, which is payable semi-annually in arrears on each June 9th and December 9th and will mature on June 9, 2015. The 2.58% Senior Euro Notes are unsecured
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obligations of the Company and rank pari passu in right of payment with all of the Company’s other senior debt. The Company may at any time prepay all or any portion of the 2.58% Senior Euro Notes; provided that any such portion is greater than 5% of the aggregate principal amount of notes then outstanding under the Purchase Agreement. In the event of a prepayment, the Company would be required to pay an amount equal to par plus accrued interest plus a make-whole premium. The Purchase Agreement contains certain covenants that restrict the Company’s ability to, among other things, transfer or sell assets, create liens and engage in certain mergers or consolidations. In addition, the Company must comply with a leverage ratio and interest coverage ratio as set forth in the Purchase Agreement. The Purchase Agreement provides for customary events of default. In the case of an event of default arising from specified events of bankruptcy or insolvency, all outstanding 2.58% Senior Euro Notes will become due and payable immediately without further action or notice. In the case of payment events of defaults, any holder of the 2.58% Senior Euro Notes affected thereby may declare all the 2.58% Senior Euro Notes held by it due and payable immediately. In the case of any other event of default, a majority of the holders of the 2.58% Senior Euro Notes may declare all the 2.58% Senior Euro Notes to be due and payable immediately.
As of December 31, 2014, the Company included the outstanding balance of the 2.58% Senior Euro Notes, $98.5 million, within Current liabilities on the Consolidated Balance Sheet as the maturity date is within twelve months and the Company expects to repay the principal balance using cash on the balance sheet.
On December 6, 2010, the Company completed a public offering of $300.0 million 4.5% senior notes due December 15, 2020 (“4.5% Senior Notes”). The net proceeds from the offering of approximately $295.7 million, after deducting a $1.6 million issuance discount, a $1.9 million underwriting commission and $0.8 million offering expenses, were used to repay $250.0 million of outstanding bank indebtedness, with the balance used for general corporate purposes. The 4.5% Senior Notes bear interest at a rate of 4.5% per annum, which is payable semi-annually in arrears on each June 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.
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 a $0.9 million issuance discount, a $2.3 million underwriting commission and $0.6 million offering expenses, were used to repay $306.0 million of outstanding bank indebtedness, with the balance used for general corporate purposes. The 4.2% Senior Notes bear interest at a rate of 4.2% per annum, which is payable semi-annually in arrears on each June 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.
There are two key financial covenants that the Company is required to maintain in connection with the Revolving Facility and the 2.58% Senior Euro Notes. The most restrictive financial covenants under these debt instruments require a minimum interest coverage ratio of 3.0 to 1 and a maximum leverage ratio of 3.25 to 1. At December 31, 2014, the Company was in compliance with both of these financial covenants, as the Company’s interest coverage ratio was 12.72 to 1 and the leverage ratio was 1.69 to 1. There are no financial covenants relating to the 4.5% Senior Notes or 4.2% Senior Notes; however, both are subject to cross-default provisions.
On November 6, 2014 the Company’s Board of Directors approved an increase of $400.0 million in the authorized level for repurchases of common stock. Repurchases under the program will be funded with future cash flow generation. During 2014, the Company purchased a total of 3.0 million shares at a cost of $222.5 million, of which $2.6 million was settled in January 2015, compared to 2.9 million shares purchased at a cost of $167.5 million in 2013. As of December 31, 2014, there was $545 million of repurchase authorization remaining.
The Company believes current cash, cash from operations and cash available under the Revolving Facility will be sufficient to meet its operating cash requirements, planned capital expenditures, interest and principal payments on all borrowings, pension and postretirement funding requirements, authorized share repurchases and annual dividend payments to holders of the Company’s common stock for the next twelve months. Additionally, in the event that suitable businesses are
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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, 2014, $115.0 million was outstanding under the Revolving Facility, with $7.4 million of outstanding letters of credit, resulting in net available borrowing capacity under the Revolving Facility at December 31, 2014 of approximately $577.6 million.
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, which 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, 2014, 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) | $ | 1,051,512 |  |  | $ | 130,613 |  |  | $ | 172,774 |  |  | $ | 56,400 |  |  | $ | 691,725 |
Operating lease obligations | 52,494 |  |  | 16,206 |  |  | 19,702 |  |  | 9,581 |  |  | 7,005 |
Capital lease obligations (2) | 2,195 |  |  | 499 |  |  | 1,594 |  |  | 102 |  |  | — |
Purchase obligations (3) | 92,006 |  |  | 88,506 |  |  | 3,366 |  |  | 119 |  |  | 15 |
Pension and post-retirement obligations | 104,147 |  |  | 9,038 |  |  | 19,707 |  |  | 21,437 |  |  | 53,965 |
Total contractual obligations (4) | $ | 1,302,354 |  |  | $ | 244,862 |  |  | $ | 217,143 |  |  | $ | 87,639 |  |  | $ | 752,710 |

(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) | Comprises liabilities recorded on the balance sheet of $956.3 million, and obligations not recorded on the balance sheet of $346.1 million.

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 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 some 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
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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 indefinite lived 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, 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 2014 and 2013 ranges for these three assumptions utilized by the Company are as follows:

Assumptions |  | 2014 Range |  | 2013 Range
Weighted average cost of capital |  | 10.0% to 14.0% |  | 10.0% to 14.5%
Market multiples |  | 7.5x to 12.5x |  | 7.5x to 14.5x
Terminal growth rates |  | 3.0% to 3.5% |  | 3.0% to 3.5%

In assessing the fair value of the reporting units, the Company considered both the market approach and income approach. Under the market approach, the fair value of the reporting unit is based on comparing the reporting unit to comparable publicly traded companies. Under the income approach, the fair value of the reporting unit is based on the present value of estimated future cash flows. The income approach is dependent on a number of significant management assumptions including estimates of operating results, capital expenditures, net working capital requirements, long term growth rate and discount rates. Weighting was equally attributed to both the market and income approaches (50% each) in arriving at the fair value of the reporting units.
In 2014 and 2013, there were no triggering events or changes in circumstances that would have required a review other than as of our annual test date. Based on the results of our measurement as of October 31, 2014, all reporting units had a fair value that was greater than 100% in excess of carrying value, except for our IOP reporting unit, which had a fair value that was greater than 15% in excess of carrying value.
The unamortized Banjo trade name was determined to be an indefinite lived intangible asset which is tested for impairment on an annual basis in accordance with ASC 350 or more frequently if events or changes in circumstances indicate that the asset might be impaired. The Company uses the relief-from-royalty method, a form of the income approach. The relief-from-royalty method is dependent on a number of significant management assumptions, including estimates of revenues, royalty rates and discount rates.
In 2014 and 2013, there were no triggering events or changes in circumstances that would have required a review other than as of our annual test date. Based on the results of our measurement as of October 31, 2014, the fair value of the Banjo trade name was greater than 40% in excess of carrying value.
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A long-lived asset impairment exists when the carrying amount of the asset exceeds its fair value. Assessments of possible impairments of long-lived assets are made when events or changes in circumstances indicate that the carrying value of the asset may not be recoverable through future operations. The amount and timing of impairment charges for these assets require the estimation of future cash flows and the fair value of the related assets. In 2014 and 2013, the Company concluded that certain long lived assets had a fair value that was less than the carrying value of the assets, resulting in $2.5 million and $2.7 million, respectively, of impairment charges.
Defined benefit retirement plans — The plan obligations and related assets of the defined benefit retirement plans are presented in Note 15 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.
The Society of Actuaries recently released revised mortality tables, which update life expectancy assumptions. In consideration of these tables, we modified the mortality assumptions used in determining our pension and post-retirement benefit obligations as of December 31, 2014, which will have a related impact on our annual benefit expense in future years. The new mortality tables may result in additional funding requirements dependent upon the funded status of our plans. These expectations presume all other assumptions remain constant and there are no changes to applicable funding regulations.
Changes in the discount rate assumptions will impact the (gain) loss amortization and interest cost components of the projected benefit obligation (PBO), which in turn, may impact the Company’s funding decisions if the PBO exceeds plan assets. Each 100 basis point increase in the discount rate will cause a corresponding decrease in the PBO of approximately $27 million based upon the December 31, 2014 data. Each 100 basis point decrease in the discount rate will cause a corresponding increase in the PBO of approximately $33 million based upon the December 31, 2014 data.
New Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09 which introduces a new five-step revenue recognition model. Under ASU 2014-09, an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires disclosures sufficient to enable users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative disclosures about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. This standard is effective for fiscal years beginning after December 15, 2016, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption. The Company is currently evaluating the impact of the new guidance on our consolidated financial statements and have not yet determined the method by which we will adopt the standard in 2017.
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. The Company may, from time to time, enter into foreign currency forward contracts and interest rate swaps on its debt when it believes there is a financial advantage in doing so. A treasury risk management policy, adopted by the Board of Directors, describes the procedures and controls over derivative financial and commodity instruments, including foreign currency forward contracts and interest rate swaps. Under the policy, the Company does not use 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 swaps on the Company’s outstanding long-term debt.
The Company’s foreign currency exchange rate risk is limited principally to the Euro, British Pound, Canadian Dollar, Indian Rupee and Chinese Renminbi. The Company manages its foreign exchange risk principally through invoicing customers in the same currency as the source of products. The foreign currency transaction losses for the period ending December 31, 2014, 2013 and 2012 were $0.9 million, $2.2 million, and $2.3 million, respectively, and are reported within Other (income) expense-net on the Consolidated Statements of Operations.
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The Company’s interest rate exposure is primarily related to its $864.0 million of total debt outstanding at December 31, 2014. Approximately 13% 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 $0.6 million annualized increase or decrease in interest expense and cash flows. The remaining debt is fixed rate debt.
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Item 8. Financial Statements and Supplementary Data.
IDEX CORPORATION
CONSOLIDATED BALANCE SHEETS

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

See Notes to Consolidated Financial Statements.
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IDEX CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS

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

See Notes to Consolidated Financial Statements.
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IDEX CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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

See Notes to Consolidated Financial Statements.
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IDEX CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

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

See Notes to Consolidated Financial Statements.
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IDEX CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS

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

See Notes to Consolidated Financial Statements.
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IDEX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMETNS
1. Significant Accounting Policies
Business
IDEX is an applied solutions company specializing in fluid and metering technologies, health and science technologies, and fire, safety and other diversified products built to its customers’ specifications. IDEX's products are sold in niche markets to a wide range of industries throughout the world. The Company’s products include industrial pumps, compressors, flow meters, injectors and valves, and related controls for use in a wide variety of process applications; precision fluidics solutions, including pumps, valves, degassing equipment, corrective tubing, fittings, and complex manifolds, precision photonic solutions, optical filters and specialty medical equipment and devices used in life science applications; precision-engineered equipment for dispensing, metering and mixing paints; refinishing equipment; and engineered products for industrial and commercial markets, including fire and rescue, transportation equipment, oil and gas, electronics, and communications. These activities are grouped into three reportable segments: Fluid & Metering Technologies, Health & Science Technologies and Fire & Safety/Diversified Products.
Principles of Consolidation
The consolidated financial statements include the Company and its subsidiaries. All intercompany transactions and accounts have been eliminated.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The principal areas of estimation reflected in the financial statements are revenue recognition, sales returns and allowances, allowance for doubtful accounts, inventory valuation, recoverability of long-lived assets, income taxes, product warranties, contingencies and litigation, insurance-related items, defined benefit retirement plans and purchase accounting related to acquisitions.
Revenue Recognition
The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable, and collectability of the sales price is reasonably assured. For product sales, delivery does not occur until the products have been shipped and risk of loss has been transferred to the customer. Revenue from services is recognized when the services are provided or ratably over the contract term. Some arrangements with customers may include multiple deliverables, including the combination of products and services. In such cases the Company has identified these as separate elements in accordance with ASC 605-25 and recognizes revenue consistent with the policy for each separate element based on the relative selling price method. Revenues from certain long-term contracts are recognized on the percentage-of-completion method. Percentage-of-completion is measured principally by the percentage of costs incurred to date for each contract to the estimated total costs for such contract at completion. Provisions for estimated losses on uncompleted long-term contracts are made in the period in which such losses are determined. Due to uncertainties inherent in the estimation process, it is reasonably possible that completion costs, including those arising from contract penalty provisions and final contract settlements, will be revised in the near-term. Such revisions to costs and income are recognized in the period in which the revisions are determined.
The Company records allowances for discounts, product returns and customer incentives at the time of sale as a reduction of revenue as such allowances can be reliably estimated based on historical experience and known trends. The Company also offers product warranties and accrues its estimated exposure for warranty claims at the time of sale based upon the length of the warranty period, warranty costs incurred and any other related information known to the Company.
Shipping and Handling Costs
Shipping and handling costs are included in cost of sales and are recognized as a period expense during the period in which they are incurred.
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Advertising Costs
Advertising costs of $14.5 million, $14.6 million and $15.3 million for 2014, 2013 and 2012, respectively, are expensed as incurred within Selling, general and administrative expenses.
Cash and Cash Equivalents
The Company considers all highly liquid instruments purchased with an original maturity of 90 days or less to be cash and cash equivalents.
Allowance for Doubtful Accounts
The Company maintains allowances for doubtful accounts for estimated losses as a result of customer’s inability to make required payments. Management evaluates the aging of the accounts receivable balances, the financial condition of its customers, historical trends and the time outstanding of specific balances to estimate the amount of accounts receivables that may not be collected in the future and records the appropriate provision.
Inventories
The Company states inventories at the lower of cost or market. Cost, which includes material, labor, and factory overhead, is determined on a FIFO basis. We make adjustments to reduce the cost of inventory to its net realizable value, if required, at the business unit level for estimated excess, obsolescence or impaired balances. Factors influencing these adjustments include changes in market demand, product life cycle and engineering changes.
Impairment of Long-Lived Assets
Long-lived assets are reviewed for impairment upon the occurrence of events or changes in circumstances that indicate that the carrying value of the assets may not be recoverable, as measured by comparing their net book value to the projected undiscounted future cash flows generated by their use. Impaired assets are recorded at their estimated fair value based on a discounted cash flow analysis.
A long-lived asset impairment exists when the carrying amount of the asset exceeds its fair value. Assessments of possible impairments of long-lived assets are made when events or changes in circumstances indicate that the carrying value of the asset may not be recoverable through future operations. The amount and timing of impairment charges for these assets require the estimation of future cash flows and the fair value of the related assets. In 2014, 2013 and 2012, the Company concluded that certain long lived assets had a fair value that was less than the carrying value of the assets, resulting in $2.5 million, $2.7 million and $7.0 million, respectively, of long-lived asset impairment charges.
Goodwill and Indefinite-Lived Intangible Assets
In accordance with ASC 350, the Company reviews the carrying value of goodwill and indefinite-lived intangible assets annually on October 31, or upon the occurrence of events or changes in circumstances that indicate that the carrying value of the goodwill or intangible assets may not be recoverable. The Company evaluates the recoverability of these assets based on the estimated fair value of each of the fifteen reporting units and the indefinite-lived intangible asset. See Note 4 for a further discussion on goodwill and intangible assets.
Borrowing Expenses
Expenses incurred in securing and issuing debt are capitalized and included in Other noncurrent assets. These assets are amortized over the life of the related borrowing and the related amortization is included in Interest expense in the Consolidated Statements of Operations.
Earnings per Common Share
Earnings per common share (“EPS”) is computed by dividing net income by the weighted average number of shares of common stock (basic) plus common stock equivalents (diluted) outstanding during the year. Common stock equivalents consist of stock options, which have been included in the calculation of weighted average shares outstanding using the treasury stock method, unvested shares, performance share units, and shares issuable in connection with certain deferred compensation agreements ("DCUs").
ASC 260 concludes that all outstanding unvested share-based payment awards that contain rights to nonforfeitable
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dividends participate in undistributed earnings with common shareholders. If awards are considered participating securities, the Company is required to apply the two-class method of computing basic and diluted earnings per share. The Company has determined that its outstanding unvested shares are participating securities. Accordingly, earnings per common share were computed using the two-class method prescribed by ASC 260. Net income attributable to common shareholders was reduced by $1.3 million, $1.2 million and $0.1 million in 2014, 2013 and 2012, respectively.
Basic weighted average shares outstanding reconciles to diluted weighted average shares outstanding as follows:

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

Options to purchase approximately 0.5 million, zero and 1.2 million shares of common stock in 2014, 2013 and 2012, respectively, were not included in the computation of diluted EPS because the effect of their inclusion would have been antidilutive.
Share-Based Compensation
The Company accounts for share-based payments in accordance with ASC 718. Accordingly, the Company expenses the fair value of awards made under its share-based compensation plans. That cost is recognized in the consolidated financial statements over the requisite service period of the grants. See Note 13 for further discussion on share-based compensation.
Depreciation and Amortization
Property and equipment are stated at cost, with depreciation and amortization provided using the straight-line method over the following estimated useful lives:

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

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

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

Research and Development Expenditures
Costs associated with research and development are expensed in the period incurred and are included in Cost of sales within the Consolidated Statements of Operations. Research and development expenses, which include costs associated with developing new products and major improvements to existing products, were $36.8 million, $33.0 million and $36.4 million in 2014, 2013 and 2012, respectively.
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Foreign Currency Translation
The functional currency of substantially all operations outside the United States is the respective local currency. Accordingly, those foreign currency balance sheet accounts have been translated using the exchange rates in effect as of the balance sheet date. Income statement amounts have been translated using the average exchange rate for the year. The gains and losses resulting from changes in exchange rates from year to year have been reported in Accumulated other comprehensive loss in the Consolidated Balance Sheets. The foreign currency transaction losses for the period ending December 31, 2014, 2013 and 2012 were $0.9 million, $2.2 million, and $2.3 million, respectively, and are reported within Other (income) expense-net on the Consolidated Statements of Operations.
Income Taxes
Income tax expense includes United States, state, local and international income taxes. Deferred tax assets and liabilities are recognized for the tax consequences of temporary differences between the financial reporting and the tax basis of existing assets and liabilities and for loss carryforwards. The tax rate used to determine the deferred tax assets and liabilities is the enacted tax rate for the year and manner in which the differences are expected to reverse. Valuation allowances are recorded to reduce deferred tax assets to the amount that will more likely than not be realized.
Concentration of Credit Risk
The Company is not dependent on a single customer, the largest of which accounted for less than 2% of net sales for all years presented.
New Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09 which introduces a new five-step revenue recognition model. Under ASU 2014-09, an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires disclosures sufficient to enable users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative disclosures about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. This standard is effective for fiscal years beginning after December 15, 2016, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption. The Company is currently evaluating the impact of the new guidance on our consolidated financial statements and have not yet determined the method by which we will adopt the standard in 2017.
2. Acquisitions
All of the Company’s acquisitions have been accounted for under ASC 805, Business Combinations. Accordingly, the accounts of the acquired companies, after adjustments to reflect fair values assigned to assets and liabilities, have been included in the consolidated financial statements from their respective dates of acquisition. The results of operations of the acquired companies have been included in the Company’s consolidated results since the date of each acquisition. Supplemental pro forma information has not been provided as the acquisitions did not have a material impact on the Company’s consolidated results of operations individually or in aggregate.
2014 Acquisitions
On April 28, 2014, the Company acquired the stock of Aegis Flow Technologies ("Aegis"), a leader in the design,
manufacture and sale of specialty chemical processing valves for use in the chemical, petro-chemical, chlor-alkali,
pharmaceutical, semiconductor and pulp/paper industries. Located in Geismar, Louisiana, Aegis has annual revenues of
approximately $15.0 million and operates in our Chemical, Food & Process platform within our Fluid & Metering
Technologies segment. Aegis was acquired for cash consideration of approximately $25 million. The entire purchase price was
funded with borrowings under the Company's Revolving Facility. Goodwill and intangible assets recognized as part of this
transaction were $7.7 million and $8.8 million, respectively. The $7.7 million of goodwill is deductible for tax purposes.
The purchase price for Aegis has been allocated to the assets acquired and liabilities assumed based on estimated fair values at the date of the acquisition.
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The allocation of the acquisition costs to the assets acquired and liabilities assumed, based on their estimated fair values, is as follows:

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

Acquired intangible assets consist of trade names, customer relationships and unpatented technology. The goodwill recorded for the acquisitions reflects the strategic fit and revenue and earnings growth potential of these businesses.
The acquired intangible assets and weighted average amortization periods are as follows:

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

The Company incurred $1.7 million of acquisition-related transaction costs in 2014. These costs were recorded in selling, general and administrative expense and were related to completed transactions, pending transactions and potential transactions, including transactions that ultimately were not completed. The Company incurred $1.3 million of non-cash acquisition fair value inventory charges in 2014. These charges were recorded in cost of sales.
2013 Acquisitions
On March 18, 2013, the Company acquired the stock of FTL Seals Technology, Ltd (“FTL”). FTL specializes in the design and application of high integrity rotary seals, specialty bearings, and other custom products for the oil & gas, mining, power generation, and marine markets. Located in Leeds, England, FTL, along with Precision Polymer Engineering (“PPE”), operates within the Health & Science Technologies segment as part of the Sealing Solutions group and will expand the range of PPE’s technology expertise and markets served. FTL was acquired for an aggregate purchase price of $34.5 million (£23.1 million) in cash. The entire purchase price was funded with borrowings under the Revolving Facility. Goodwill and intangible assets recognized as part of this transaction were $18.0 million and $13.0 million, respectively. The $18.0 million of goodwill is not deductible for tax purposes.
The purchase price for FTL has been allocated to the assets acquired and liabilities assumed based on estimated fair values at the date of the acquisition.
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The allocation of the acquisition costs to the assets acquired and liabilities assumed, based on their estimated fair values, is as follows:

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

Acquired intangible assets consist of trade names, non-compete agreements, customer relationships and unpatented technology. The goodwill recorded for the acquisitions reflects the strategic fit and revenue and earnings growth potential of these businesses.
The acquired intangible assets and weighted average amortization periods are as follows:

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

The Company incurred $1.4 million of acquisition-related transaction costs in 2013. These costs were recorded in selling, general and administrative expense and were related to completed transactions, pending transactions and potential transactions, including transactions that ultimately were not completed. The Company incurred $1.8 million of non-cash acquisition fair value inventory charges in 2013. These charges were recorded in cost of sales.
2012 Acquisitions
On April 11, 2012, the Company acquired the stock of Precision Photonics Corporation ("PPC"). PPC specializes in optical components and coatings for applications in the fields of scientific research, aerospace, telecommunications and electronics manufacturing. Located in Boulder, Colorado, PPC operates within the Health & Science Technologies segment as a part of the IOP platform. The Company acquired PPC for an aggregate purchase price of $20.6 million in cash, which was funded from operations. Goodwill and intangible assets recognized as part of this transaction were $13.9 million and $5.1 million, respectively. The $13.9 million of goodwill is not deductible for tax purposes.
On April 30, 2012, the Company acquired the stock of ERC. ERC is a leader in the manufacture of gas liquid separations and detection solutions for the life science, analytical instrumentation and clinical chemistry markets. ERC’s pioneering products include in-line membrane vacuum degassing solutions, refractive index detectors and ozone generation systems. ERC’s original equipment degassing solutions are considered the “standard” for many of the world’s leading instrument producers. Located in Kawaguchi, Japan, ERC operates within the Health & Science Technologies segment as part of the Scientific Fluidics platform. The Company acquired ERC for an aggregate purchase price of $18.0 million (¥1.47 billion), consisting of $13.3 million in cash and assumption of approximately $4.7 million of debt. The cash payment was financed with borrowings under the Revolving Facility. Goodwill and intangible assets recognized as part of this transaction were $8.5 million and $5.6 million, respectively. The $8.5 million of goodwill is not deductible for tax purposes.
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On July 20, 2012, the Company acquired the stock of Matcon. Matcon is a global leader in material processing solutions for high value powders used in the manufacture of pharmaceuticals, food, plastics, and fine chemicals. Matcon’s innovative products include the original cone valve powder discharge system and filling, mixing and packaging systems, all of which support their customers’ automation and process requirements. Matcon’s products are critical to their customers’ need to maintain clean, reliable and repeatable formulations of prepackaged foods and pharmaceuticals while helping them achieve lean and agile manufacturing. Located in Evesham, Worcestershire, England, Matcon operates within the Health & Science Technologies segment in the MPT platform. The Company acquired Matcon for an aggregate purchase price of $45.8 million (£29.1 million), consisting of $35.0 million in cash, $2.4 million of working capital adjustments paid in the second quarter of 2013, and contingent consideration valued at $8.4 million as of the opening balance sheet date. The contingent consideration amount was based on 2012 and 2013 earnings before interest, income taxes, depreciation and amortization for Matcon. In April 2013, the Company paid $3.8 million on the contingent consideration arrangement based on Matcon's 2012 operating results. In November 2013, the Company paid $1.1 million of the contingent consideration arrangement based on a settlement agreement with the sellers and the remaining amount was recognized as a benefit within Selling, general and administrative expenses.
Approximately $15.0 million of the purchase price cash payment was financed with borrowings under the Revolving Facility. Goodwill and intangible assets recognized as part of this transaction were $28.0 million and $14.1 million, respectively. The $28.0 million of goodwill is not deductible for tax purposes.
The purchase price for PPC, ERC and Matcon were allocated to the assets acquired and liabilities assumed based on estimated fair values at the date of the acquisition.
The allocation of the acquisition costs to the assets acquired and liabilities assumed, based on their estimated fair values, is as follows:

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

Acquired intangible assets consist of trade names, non-compete agreements, customer relationships and unpatented technology. The goodwill recorded for the acquisitions reflects the strategic fit and revenue and earnings growth potential of these businesses.
The acquired intangible assets and weighted average amortization periods are as follows:

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

The Company incurred $2.7 million of acquisition-related transaction costs in 2012. These costs were recorded in selling, general and administrative expense and were related to completed transactions, pending transactions and potential transactions,
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including certain transactions that ultimately were not completed. During 2012, the Company recorded $0.9 million of fair value inventory charges associated with these acquisitions, which were recorded in cost of sales.
3. Balance Sheet Components

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

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

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

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

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

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

ASC 350 requires that goodwill be tested for impairment at the reporting unit level on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying value. Goodwill represents the purchase price in excess of the net amount assigned to assets acquired and liabilities assumed.
Goodwill and other acquired intangible assets with indefinite lives were tested for impairment as of October 31, 2014, the Company's annual impairment date. In assessing the fair value of the reporting units, the Company considers both the market approach and income approach. Under the market approach, the fair value of the reporting unit is based on comparing the reporting unit to comparable publicly traded companies. Under the income approach, the fair value of the reporting unit is based on the present value of estimated future cash flows. The income approach is dependent on a number of significant management assumptions including estimates of operating results, capital expenditures, net working capital requirements, long-term growth rate and discount rates. Weighting was equally attributed to both the market and income approaches (50% each) in arriving at the fair value of the reporting units.
There were no triggering events or changes in circumstances that would have required a review other than as of our annual test date, in 2014 or 2013. Based on the results of our measurement at October 31, 2014, all reporting units had a fair value that was greater than 100% in excess of carrying value, except for our IOP reporting unit, which had a fair value that was greater than 15% in excess of carrying value.
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The following table provides the gross carrying value and accumulated amortization for each major class of intangible asset at December 31, 2014 and 2013:

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

The unamortized Banjo trade name was determined to be an indefinite lived intangible asset which is tested for impairment on an annual basis in accordance with ASC 350 or more frequently if events or changes in circumstances indicate that the asset might be impaired. The Company uses the relief-from-royalty method, a form of the income approach. The relief-from-royalty method is dependent of a number of significant management assumptions, including estimates of revenues, royalty rates and discount rates.
In 2014 and 2013, there were no triggering events or changes in circumstances that would have required a review other than as of our annual test date. Based on the results of our measurement as of October 31, 2014, the fair value of the Banjo trade name was greater than 40% in excess of carrying value.
Amortization of intangible assets was $43.2 million, $44.3 million and $41.5 million in 2014, 2013 and 2012, respectively. Based on intangible asset balances as of December 31, 2014, amortization expense is expected to approximate $40.4 million in 2015, $38.5 million in 2016, $29.8 million in 2017, $18.9 million in 2018 and $14.9 million in 2019.
5. Borrowings
Borrowings at December 31, 2014 and 2013 consisted of the following:

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

On June 27, 2011 the Company and certain of its subsidiaries entered into a credit agreement (the “Credit Agreement”), as borrowers with Bank of America, N.A., as administrative agent, swing line lender and an issuer of letters of credit, and other
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lenders party thereto which provided for a new revolving credit facility (the “Revolving Facility”). The Revolving Facility replaced the Company’s previous $600.0 million credit facility, which expired in December 2011.
The Revolving Facility is in an aggregate principal amount of $700.0 million with a maturity date of June 27, 2016. Up to $75.0 million of the Revolving Facility is available for the issuance of letters of credit. Additionally, up to $25.0 million of the Revolving Facility is available to the Company for swing line loans, available on a same-day basis.
Proceeds of the Revolving Facility are available for working capital and other general corporate purposes, including refinancing existing debt of the Company and its subsidiaries. The Company may request increases in the lending commitments under the Credit Agreement, but the aggregate lending commitments may not exceed $950.0 million. The Company has the right, subject to certain conditions set forth in the Credit Agreement, to designate certain foreign subsidiaries of the Company as borrowers under the Credit Agreement. In connection with any such designation, the Company is required to guarantee the obligations of any such subsidiaries under the Credit Agreement. Under the Credit Agreement, Fast & Fluid Management Europe B.V., (“FME”) and IDEX UK Ltd. (“IDEX UK”) were approved by the lenders as designated borrowers. At December 31, 2014, FME and IDEX UK had no borrowings under the Revolving Facility.
Borrowings under the Revolving Facility bear interest, at either an alternate base rate or an adjusted LIBOR rate plus, in each case, an applicable margin. Such applicable margin is based on the Company’s senior, unsecured, long-term debt rating and can range from .875% to 1.70%. Based on the Company’s credit rating at December 31, 2014, the applicable margin was 1.05%. Interest is payable (a) in the case of base rate loans, quarterly, and (b) in the case of LIBOR rate loans, on the maturity date of the borrowing, or quarterly from the effective date for borrowings exceeding three months. An annual Revolving Facility fee, also based on the Company’s credit rating, is currently 20 basis points and is payable quarterly.
The Credit Agreement contains affirmative and negative covenants that the Company believes are usual and customary for senior unsecured credit agreements, including a financial covenant requiring a maximum leverage ratio of a 3.25 to 1.0, which is the ratio of the Company’s consolidated total debt to its consolidated EBITDA, each as defined in the Credit Agreement.
The Credit Agreement also contains customary events of default (subject to grace periods, as appropriate) including among others: nonpayment of principal, interest or fees; breach of the representations or warranties in any material respect; breach of the financial, affirmative or negative covenants; payment default on, or acceleration of, other material indebtedness; bankruptcy or insolvency; material judgments entered against the Company or any of its subsidiaries; certain specified events under the Employee Retirement Income Security Act of 1974, as amended; certain changes in control of the Company; and the invalidity or unenforceability of the Credit Agreement or other documents associated with the Credit Agreement.
At December 31, 2014, $115.0 million was outstanding under the Revolving Facility, with $7.4 million of outstanding letters of credit, resulting in net available borrowing capacity under the Revolving Facility at December 31, 2014 of approximately $577.6 million.
On June 9, 2010 the Company completed a private placement of €81.0 million aggregate principal amount of 2.58% Series 2010 Senior Euro Notes due June 9, 2015 (“2.58% Senior Euro Notes”) pursuant to a Master Note Purchase Agreement, dated June 9, 2010 (the “Purchase Agreement”). The Purchase Agreement provides for the issuance of additional series of notes in the future, provided that the aggregate principal amount outstanding under the agreement at any time does not exceed $750.0 million. The 2.58% Senior Euro Notes bear interest at a rate of 2.58% per annum, which is payable semi-annually in arrears on each June 9th and December 9th and will mature on June 9, 2015. The 2.58% Senior Euro Notes are unsecured obligations of the Company and rank pari passu in right of payment with all of the Company’s other senior debt. The Company may at any time prepay all or any portion of the 2.58% Senior Euro Notes; provided that any such portion is greater than 5% of the aggregate principal amount of Notes then outstanding under the Purchase Agreement. In the event of a prepayment, the Company would be required to pay an amount equal to par plus accrued interest plus a make-whole premium. The Purchase Agreement contains certain covenants that restrict the Company’s ability to, among other things, transfer or sell assets, create liens and engage in certain mergers or consolidations. In addition, the Company must comply with a leverage ratio and interest coverage ratio as set forth in the Purchase Agreement. The Purchase Agreement provides for customary events of default. In the case of an event of default arising from specified events of bankruptcy or insolvency, all outstanding 2.58% Senior Euro Notes will become due and payable immediately without further action or notice. In the case of payment events of defaults, any holder of the 2.58% Senior Euro Notes affected thereby may declare all the 2.58% Senior Euro Notes held by it due and payable immediately. In the case of any other event of default, a majority of the holders of the 2.58% Senior Euro Notes may declare all the 2.58% Senior Euro Notes to be due and payable immediately.
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As of December 31, 2014 the Company included the outstanding balance of the 2.58% Senior Euro Notes, $98.5 million, within Current liabilities on the Consolidated Balance Sheet as the maturity date is within twelve months and the Company expects to repay the principal balance using cash on the balance sheet.
On December 6, 2010 the Company completed a public offering of $300.0 million 4.5% senior notes due December 15, 2020 (“4.5% Senior Notes”). The net proceeds from the offering of $295.7 million, after deducting a $1.6 million issuance discount, a $1.9 million underwriting commission and $0.8 million offering expenses, were used to repay $250.0 million of outstanding bank indebtedness, with the balance used for general corporate purposes. The 4.5% Senior Notes bear interest at a rate of 4.5% per annum, which is payable semi-annually in arrears on each June 15th and December 15th. The Company may redeem all or a portion of the 4.5% Senior Notes at any time prior to maturity at the redemption prices set forth in the Note Indenture governing the 4.5% Senior Notes. The Company may issue additional debt from time to time pursuant to the Indenture. The Indenture and 4.5% Senior Notes contain covenants that limit the Company’s ability to, among other things, incur certain liens securing indebtedness, engage in certain sale-leaseback transactions, and enter into certain consolidations, mergers, conveyances, transfers or leases of all or substantially all the Company’s assets. The terms of the 4.5% Senior Notes also require the Company to make an offer to repurchase the 4.5% Senior Notes upon a change of control triggering event (as defined in the Indenture) at a price equal to 101% of their principal amount plus accrued and unpaid interest, if any.
On December 9, 2011 the Company completed a public offering of $350.0 million 4.2% senior notes due December 15, 2021 (“4.2% Senior Notes”). The net proceeds from the offering of $346.2 million, after deducting a $0.9 million issuance discount, a $2.3 million underwriting commission and $0.6 million offering expenses, were used to repay $306.0 million of outstanding bank indebtedness, with the balance used for general corporate purposes. The 4.2% Senior Notes bear interest at a rate of 4.2% per annum, which is payable semi-annually in arrears on each June 15th and December 15th. The Company may redeem all or a portion of the 4.2% Senior Notes at any time prior to maturity at the redemption prices set forth in the Note Indenture governing the 4.2% Senior Notes. The Company may issue additional debt from time to time pursuant to the Indenture. The Indenture and 4.2% Senior Notes contain covenants that limit the Company’s ability to, among other things, incur certain liens securing indebtedness, engage in certain sale-leaseback transactions, and enter into certain consolidations, mergers, conveyances, transfers or leases of all or substantially all the Company’s assets. The terms of the 4.2% Senior Notes also require the Company to make an offer to repurchase the 4.2% Senior Notes upon a change of control triggering event (as defined in the Indenture) at a price equal to 101% of their principal amount plus accrued and unpaid interest, if any.
Other borrowings of $2.2 million at December 31, 2014 consisted primarily of debt at international locations maintained for working capital purposes. Interest is payable on the outstanding debt balances at the international locations at rates ranging from 0.2% to 1.3% per annum.
There are two key financial covenants that the Company is required to maintain in connection with the Revolving Facility and 2.58% Senior Euro Notes. The most restrictive financial covenants under these debt instruments require a minimum interest coverage ratio of 3.0 to 1 and a maximum leverage ratio of 3.25 to 1. At December 31, 2014 the Company was in compliance with both of these financial covenants. There are no financial covenants relating to the 4.5% Senior Notes or 4.2% Senior Notes; however, both are subject to cross-default provisions.
Total borrowings at December 31, 2014 have scheduled maturities as follows:

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

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
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agreements that effectively convert a portion of floating-rate debt to fixed-rate debt and are designed to reduce the impact of interest rate changes on future interest expense.
The effective portion of gains or losses on interest rate exchange agreements is reported in accumulated other comprehensive income (loss) in shareholders’ equity and reclassified into net income in the same period or periods in which the hedged transaction affects net income. The remaining gain or loss in excess of the cumulative change in the present value of future cash flows or the hedged item, if any, is recognized into net income during the period of change.
Fair values relating to derivative financial instruments reflect the estimated amounts that the Company would receive or pay to sell or buy the contracts based on quoted market prices of comparable contracts at each balance sheet date.
On April 15, 2010 the Company entered into a forward starting interest rate contract with a notional amount of $300.0 million with a settlement date in December 2010. This contract was entered into in anticipation of the issuance of the 4.5% Senior Notes and was designed to lock in the market interest rate as of April 15, 2010. In December 2010, the Company settled and paid this interest rate contract for $31.0 million. The $31.0 million is being amortized into interest expense over the 10 year term of the 4.5% Senior Notes, which results in an effective interest rate of 5.8%.
On July 12, 2011 the Company entered into a forward starting interest rate contract with a notional amount of $350.0 million and a settlement date of September 30, 2011. This contract was entered into in anticipation of the issuance of the 4.2% Senior Notes and was designed to lock in the market interest rate as of July 12, 2011. On September 29, 2011, the Company settled this interest rate contract for $34.7 million with a payment made on October 3, 2011. Simultaneously, the Company entered into a separate interest rate contract with a notional amount of $350.0 million and a settlement date of February 28, 2012. The contract was entered into in anticipation of the expected issuance of the 4.2% Senior Notes and was designed to maintain the market rate as of July 12, 2011. In December 2011, the Company settled and paid the September interest rate contract for $4.0 million, resulting in a total settlement of $38.7 million. Of the $38.7 million, $0.8 million was recognized as other expense in 2011 and the balance of $37.9 million is being amortized into interest expense over the 10 year term of the 4.2% Senior Notes, which results in an effective interest rate of 5.3%.
As of December 31, 2014 and 2013 the Company did not have any interest rate or foreign exchange contracts outstanding.
The following table summarizes the gain (loss) recognized and the amounts and location of income (expense) and gain (loss) reclassified into income for interest rate contracts and foreign currency contracts for the years ended December 31, 2014, 2013 and 2012:

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

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

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

The following table summarizes the basis used to measure the Company’s financial assets (liabilities) at fair value on a recurring basis in the balance sheet at December 31, 2014 and 2013:

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

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

There were no transfers of assets or liabilities between Level 1 and Level 2 in 2014 or 2013.
The carrying value of our cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximates their fair values because of the short term nature of these instruments. At December 31, 2014, the fair value of our Revolving Facility, 2.58% Senior Euro Notes, 4.5% Senior Notes and 4.2% Senior Notes, based on quoted market prices and current market rates for debt with similar credit risk and maturity, was approximately $898.7 million compared to the carrying value of $861.8 million. This fair value measurement is classified as Level 2 within the fair value hierarchy since it is determined based upon significant inputs observable in the market, including interest rates on recent financing transactions to entities with a credit rating similar to ours.
8. Commitments and Contingencies
The Company leases certain office facilities, warehouses and data processing equipment under operating leases. Rental expense totaled $19.2 million, $18.9 million and $18.4 million in 2014, 2013 and 2012, respectively.
The aggregate future minimum lease payments for operating and capital leases as of December 31, 2014 were as follows:

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

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

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

The Company is party to various legal proceedings arising in the ordinary course of business, none of which are expected to have a material effect on its business, financial condition, results of operations or cash flow.
9. Common and Preferred Stock
On November 6, 2014 the Company’s Board of Directors approved an increase in the authorized level for repurchases of common stock by $400.0 million. Repurchases under the program will be funded with future cash flow generation and cash available under the Revolving Facility. During 2014 the Company purchased a total of 3.0 million shares at a cost of $222.5 million compared to 2.9 million shares purchased at a cost of $167.5 million in 2013. As of December 31, 2014, there was $545 million of repurchase authorization remaining.
At December 31, 2014 and 2013 the Company had 150 million shares of authorized common stock, with a par value of $.01 per share and five million shares of authorized preferred stock with a par value of $.01 per share. No preferred stock was issued as of December 31, 2014 and 2013.
10. Income Taxes
Pretax income for 2014, 2013 and 2012 was taxed in the following jurisdictions:

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

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

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

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

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

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

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

The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to pretax income. The computed amount and the differences for 2014, 2013 and 2012 are shown in the following table:

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

The Company has $683 million and $597 million of undistributed earnings of non-U.S. subsidiaries as of December 31, 2014 and 2013, respectively. No deferred U.S. income taxes have been provided on these earnings as they are considered to be reinvested for an indefinite period of time or will be repatriated when it is tax effective to do so. If these amounts were distributed to the U.S., in the form of dividends or otherwise, the Company would be subject to additional U.S. income taxes, which could be material. Determination of the amount of unrecognized deferred income tax liabilities on these earnings is not practicable because of the complexities with the hypothetical calculation, and the amount of liability, if any, is dependent on
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circumstances if and when remittance occurs. During the years ended December 31, 2014 and 2013, the Company repatriated $6.5 million and $11.7 million of foreign earnings, respectively, resulting in $0.2 million of incremental tax benefit and $0.9 million of incremental income tax expense, respectively. The Company did not repatriate any foreign earnings during the year ended December 31, 2012. These repatriations in 2013 and 2014 represent distribution s of current year earnings and distributions from liquidating subsidiaries and do not impact our representation that the undistributed earnings are permanently invested.
A reconciliation of the beginning and ending amount of unrecognized tax benefits for 2014, 2013 and 2012 is shown in the following table:

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

We recognize interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2014, 2013 and 2012, we had approximately $0.7 million, $0.5 million and $0.7 million, respectively, of accrued interest related to uncertain tax positions. As of December 31, 2014, 2013 and 2012, we had approximately $0.3 million, $0.2 million and $0.5 million, respectively, of accrued penalties related to uncertain tax positions.
The total amount of unrecognized tax benefits that would affect our effective tax rate if recognized is $2.9 million, $4.5 million and $5.8 million as of December 31, 2014, 2013 and 2012, respectively. The tax years 2008-2013 remain open to examination by major taxing jurisdictions. Due to the potential for resolution of federal, state and foreign examinations, and the expiration of various statutes of limitation, it is reasonably possible that the Company’s gross unrecognized tax benefits balance may change within the next 12 months by a range of zero to $2.1 million.
The Company had net operating loss carry forwards related to prior acquisitions for U.S. federal purposes at December 31, 2014 and 2013 of $7.1 and $9.4 million, respectively. For non-U.S. purposes the Company had net operating loss carry forwards at December 31, 2014 and 2013 of $5.0 and $7.0 million, respectively. The federal net operating loss carry forwards are available for use against the Company’s consolidated federal taxable income and expire between 2018 and 2031. The entire balance of the non-U.S. net operating losses is available to be carried forward, with $1.9 million of these losses beginning to expire during the year 2021. The remaining $2.2 million of such losses can be carried forward indefinitely.
At both December 31, 2014 and 2013, the Company had a foreign capital loss carry forward of approximately $1.0 million. The foreign capital loss can be carried forward indefinitely. At both December 31, 2014 and 2013 the Company has a valuation allowance against the deferred tax asset attributable to the foreign capital loss of $0.2 million. At December 31, 2014 and 2013 the Company had state net operating loss and credit carry forwards of approximately $23.7 million and $22.4 million, respectively. If unutilized, the state net operating loss will expire between 2022 and 2034. At December 31, 2014 and 2013 the Company recorded a valuation allowance against the deferred tax asset attributable to the state net operating loss of $0.8 million and $0.7 million, respectively.
11. Business Segments and Geographic Information
IDEX has three reportable business segments: Fluid & Metering Technologies, Health & Science Technologies and Fire & Safety/Diversified Products.
The Fluid & Metering Technologies segment designs, produces and distributes positive displacement pumps, flow meters, injectors, and other fluid-handling pump modules and systems and provides flow monitoring and other services for the food, chemical, general industrial, water and wastewater, agricultural and energy industries. The Health & Science Technologies segment designs, produces and distributes a wide range of precision fluidics, rotary lobe pumps, centrifugal and positive displacement pumps, roll compaction and drying systems used in beverage, food processing, pharmaceutical and cosmetics, pneumatic components and sealing solutions, including very high precision, low-flow rate pumping solutions
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required in analytical instrumentation, clinical diagnostics and drug discovery, high performance molded and extruded, biocompatible medical devices and implantables, air compressors used in medical, dental and industrial applications, optical components and coatings for applications in the fields of scientific research, defense, biotechnology, aerospace, telecommunications and electronics manufacturing, laboratory and commercial equipment used in the production of micro and nano scale materials, precision photonic solutions used in life sciences, research and defense markets, and precision gear and peristaltic pump technologies that meet exacting original equipment manufacturer specifications. The Fire & Safety/Diversified Products segment produces firefighting pumps and controls, rescue tools, lifting bags and other components and systems for the fire and rescue industry, engineered stainless steel banding and clamping devices used in a variety of industrial and commercial applications, and precision equipment for dispensing, metering and mixing colorants and paints used in a variety of retail and commercial businesses around the world.
Information on the Company’s business segments is presented below based on the nature of products and services offered. The Company evaluates performance based on several factors, of which sales and operating income are the primary financial measures. Intersegment sales are accounted for at fair value as if the sales were to third parties.

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

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

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

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

(3) | Excludes amortization of debt issuance expenses.

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

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

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12. Restructuring
During 2014 and 2012 the Company recorded restructuring costs as a part of restructuring initiatives that support the implementation of key strategic efforts designed to facilitate long-term, sustainable, growth through cost reduction actions, primarily consisting of employee reductions and facility rationalization. The costs incurred related to these initiatives are included in Restructuring expenses in the Consolidated Statements of Operations while the related accruals are included in Accrued expenses in the Consolidated Balance Sheets. Severance costs primarily consist of severance benefits through payroll continuation, COBRA subsidies, outplacement services, conditional separation costs and employer tax liabilities, while exit costs primarily consist of asset disposals or impairments and lease exit costs.
2014 Initiative
During 2014 the Company recorded pre-tax restructuring expenses in the fourth quarter totaling $13.7 million related to the 2014 restructuring initiative. These expenses consisted of employee severance related to employee reductions across various functional areas as well as exit costs and asset impairments. The 2014 restructuring initiative included severance benefits for 217 employees. Severance payments are expected to be fully paid by the end of 2015 using cash from operations.
Pre-tax restructuring expenses by segment for 2014 were as follows:

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

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

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

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

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

13. Share-Based Compensation
The Company maintains two share-based compensation plans for executives, non-employee directors and certain key employees that authorize the granting of stock options, unvested shares, unvested share units, and other types of awards consistent with the purpose of the plans. The number of shares authorized for issuance under the Company’s plans as of December 31, 2014 totals 10.6 million, of which 2.3 million shares were available for future issuance. Stock options granted under these plans are generally non-qualified and are granted with an exercise price equal to the market price of the Company’s stock at the date of grant. The majority of the options issued to employees become exercisable in four equal installments, beginning one year from the date of grant, and generally expire 10 years from the date of grant. Stock options granted to non-employee directors cliff vest after one year. Unvested share and unvested share unit awards generally cliff vest after three years for employees and non-employee directors. The Company issued 0.1 million, 0.2 million and 0.2 million of unvested shares as compensation to key employees in 2014, 2013 and 2012, respectively.
All unvested shares carry dividend and voting rights and the sale of the shares is restricted prior to the date of vesting.
Beginning in 2013 the Company granted performance share units to selected key employees that may be earned based on IDEX total shareholder return over the three-year period following the date of grant. Performance share units (referred to as “TSR awards”) are expected to be made annually and are paid out at the end of a three-year period based on the Company’s performance. Performance is measured by determining the percentile rank of the total shareholder return of IDEX common stock in relation to the total shareholder return of the S&P Midcap 400 Industrial Group for the three-year period following the date of grant. The payment of awards following the three-year award period will be based on performance achieved in accordance with the scale set forth in the plan agreement and may range from 0 percent to 250 percent of the initial grant. A target payout of 100 percent is earned if total shareholder return is equal to the 50 th percentile of the S&P Midcap 400 Industrial Group. Performance share units earn dividend equivalents for the award period, which will be paid to participants with the award payout at the end of the period based on the actual number of performance share units that are earned. Payments made at the end of the award period will be in the form of stock for performance share units and will be in cash for dividend equivalents. The Company granted approximately 0.1 million performance share units in both 2014 and 2013.
The Company expenses the fair value of awards made under its share-based plans. That cost is recognized in the consolidated financial statements over the requisite service period of the grants.
Weighted average option fair values and assumptions for the period specified are disclosed in the following table:

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

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The assumptions are as follows:

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

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

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

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

The Company’s policy is to recognize compensation cost on a straight-line basis, assuming forfeitures, over the requisite service period for the entire award.
Weighted average performance share unit fair values and assumptions for the period specified are disclosed in the following table:

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

The assumptions are as follows:

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

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

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

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

Total compensation cost for stock options is as follows:

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

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Total compensation cost for unvested shares is as follows:

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

Total compensation cost for performance share units is as follows:

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

Recognition of compensation cost was consistent with recognition of cash compensation for the same employees.
As of December 31, 2014 there was $9.9 million, $9.4 million and $5.4 million of total unrecognized compensation cost related to stock options, time based shares and performance shares, respectively, that is expected to be recognized over a weighted-average period of 1.4 years, 1.0 year and 1.0 year, respectively.
A summary of the Company’s stock option activity as of December 31, 2014, and changes during the year ended December 31, 2014 is presented in the following table:

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

The intrinsic value for stock options outstanding and exercisable is defined as the difference between the market value of the Company’s common stock as of the end of the period and the grant price. The total intrinsic value of options exercised in 2014, 2013 and 2012, was $20.0 million, $34.3 million and $23.5 million, respectively. In 2014, 2013 and 2012, cash received from options exercised was $17.2 million, $35.3 million and $45.8 million, respectively, while the actual tax benefit realized for the tax deductions from stock options exercised totaled $7.3 million, $12.5 million and $8.6 million, respectively.
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A summary of the Company’s unvested share activity as of December 31, 2014, and changes during the year ending December 31, 2014 is presented in the following table:

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

Unvested share grants accrue dividends and their fair value is equal to the market price of the Company’s stock at the date of the grant.
A summary of the Company's performance share unit activity as of December 31, 2014, and changes during the year ending December 31, 2014 is presented in the following table:

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

The Company also maintains a cash-settled share based compensation plan for certain employees. Total expense related to this plan, included in the unvested shares table above, was $4.1 million, $3.6 million and $2.3 million in 2014, 2013 and 2012, respectively. At December 31, 2014 and 2013, the Company has $3.5 million and $2.0 million, respectively, included in Accrued expenses in the Consolidated Balance Sheets and $2.5 million and $1.0 million, respectively, included in Other non-current liabilities.
14. Other Comprehensive Income (Loss)
The components of Other comprehensive income (loss) are as follows:

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

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

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

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

15. Retirement Benefits
The Company sponsors several qualified and nonqualified pension plans and other postretirement plans for its employees. The Company uses a measurement date of December 31 for its defined benefit pension plans and post retirement medical plans. The Company employs the measurement date provisions of ASC 715, “Compensation-Retirement Benefits”, which require the measurement date of plan assets and liabilities to coincide with the sponsor’s year end.
The following table provides a reconciliation of the changes in the benefit obligations and fair value of plan assets over the two-year period ended December 31, 2014, and a statement of the funded status at December 31 for both years.
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| Pension Benefits |  | Other Benefits
| 2014 |  | 2013 |  | 2014 |  | 2013
| U.S. |  | Non-U.S. |  | U.S. |  | Non-U.S. |  |  |  |
| (In thousands)
CHANGE IN BENEFIT OBLIGATION
Obligation at January 1 | $ | 92,839 |  |  | $ | 60,471 |  |  | $ | 111,188 |  |  | $ | 56,555 |  |  | $ | 21,354 |  |  | $ | 25,587 |
Service cost | 1,162 |  |  | 1,331 |  |  | 1,526 |  |  | 1,388 |  |  | 714 |  |  | 968 |
Interest cost | 4,037 |  |  | 2,345 |  |  | 3,766 |  |  | 2,146 |  |  | 932 |  |  | 906 |
Plan amendments | — |  |  | (150 | ) |  | — |  |  | — |  |  | — |  |  | — |
Benefits paid | (6,230 | ) |  | (2,955 | ) |  | (2,479 | ) |  | (1,957 | ) |  | (691 | ) |  | (801 | )
Actuarial loss (gain) | 10,540 |  |  | 15,092 |  |  | (11,885 | ) |  | 581 |  |  | 728 |  |  | (5,139 | )
Currency translation | — |  |  | (6,646 | ) |  | — |  |  | 1,758 |  |  | (182 | ) |  | (167 | )
Curtailments/settlements | (36 | ) |  | — |  |  | (9,277 | ) |  | — |  |  | — |  |  | — |
Acquisition | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Obligation at December 31 | $ | 102,312 |  |  | $ | 69,488 |  |  | $ | 92,839 |  |  | $ | 60,471 |  |  | $ | 22,855 |  |  | $ | 21,354 |
CHANGE IN PLAN ASSETS |  |  |  |  |  |  |  |  |  |  |
Fair value of plan assets at January 1 | $ | 81,957 |  |  | $ | 22,334 |  |  | $ | 74,578 |  |  | $ | 19,660 |  |  | $ | — |  |  | $ | — |
Actual return on plan assets | 2,385 |  |  | 1,738 |  |  | 14,303 |  |  | 2,341 |  |  | — |  |  | — |
Employer contributions | 1,611 |  |  | 2,424 |  |  | 4,832 |  |  | 1,840 |  |  | 691 |  |  | 801 |
Benefits paid | (6,230 | ) |  | (2,955 | ) |  | (2,479 | ) |  | (1,957 | ) |  | (691 | ) |  | (801 | )
Currency translation | — |  |  | (1,389 | ) |  | — |  |  | 447 |  |  | — |  |  | — |
Settlements | (36 | ) |  | — |  |  | (9,277 | ) |  | 3 |  |  | — |  |  | — |
Other | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Fair value of plan assets at December 31 | $ | 79,687 |  |  | $ | 22,152 |  |  | $ | 81,957 |  |  | $ | 22,334 |  |  | $ | — |  |  | $ | — |
Funded status at December 31 | $ | (22,625 | ) |  | $ | (47,336 | ) |  | $ | (10,882 | ) |  | $ | (38,138 | ) |  | $ | (22,855 | ) |  | $ | (21,354 | )
COMPONENTS ON THE CONSOLIDATED BALANCE SHEETS
Current liabilities | $ | (522 | ) |  | $ | (805 | ) |  | $ | (656 | ) |  | $ | (995 | ) |  | $ | (905 | ) |  | $ | (946 | )
Other noncurrent liabilities | (22,103 | ) |  | (46,531 | ) |  | (10,226 | ) |  | (37,143 | ) |  | (21,950 | ) |  | (20,408 | )
Net liability at December 31 | $ | (22,625 | ) |  | $ | (47,336 | ) |  | $ | (10,882 | ) |  | $ | (38,138 | ) |  | $ | (22,855 | ) |  | $ | (21,354 | )

The accumulated benefit obligation (ABO) for all defined benefit pension plans was $163.3 million and $143.5 million at December 31, 2014 and 2013, respectively.
The weighted average assumptions used in the measurement of the Company’s benefit obligation at December 31, 2014 and 2013 were as follows:

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

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

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

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

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

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

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

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

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

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

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

The discount rates for our plans are derived by matching the plan’s cash flows to a yield curve that provides the equivalent yields on zero-coupon bonds for each maturity. The discount rate selected is the rate that produces the same present value of cash flows.
In selecting the expected rate of return on plan assets, the Company considers the historical returns and expected returns on plan assets. The expected returns are evaluated using asset return class, variance and correlation assumptions based on the plan’s target asset allocation and current market conditions.
Mortality assumptions are used to estimate life expectancies of plan participants. In October 2014, the Society of Actuaries ("SOA") issued updated mortality tables (RP-2014) and a mortality improvement scale (MP-2014), which reflects longer life expectancies than previously projected. In consideration of this information, we studied our historical mortality experience and developed an expectation for continued future mortality improvements. Based on this data and the RP-2014 tables, we updated the mortality assumptions used in calculating our pension and post-retirement benefit obligations recognized at December 31, 2014, and the amounts estimated for our 2015 expense. Our updated mortality assumptions resulted in an increase of $4.9 million in our pension and post-retirement benefit obligations as of December 31, 2014.
Prior service costs are amortized on a straight-line basis over the average remaining service period of active participants. Gains and losses in excess of 10% of the greater of the benefit obligation or the market value of assets are amortized over the average remaining service period of active participants.
Costs of defined contribution plans were $9.1 million, $8.4 million and $7.9 million for 2014, 2013 and 2012, respectively.
The Company, through its subsidiaries, participates in certain multi-employer pension plans covering approximately 395 participants under U.S. collective bargaining agreements. None of these plans are considered individually significant to the Company as contributions to these plans totaled $1.0 million, $1.1 million, and $1.0 million for 2014, 2013 and 2012, respectively.
For measurement purposes, a 7.12% weighted average annual rate of increase in the per capita cost of covered health care benefits was assumed for 2014. The rate was assumed to decrease gradually each year to a rate of 4.50% for 2027, and remain at that level thereafter. Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A 1% increase in the assumed health care cost trend rates would increase the service and interest cost components of the net periodic benefit cost by $0.1 million and the health care component of the accumulated postretirement benefit obligation by $1.6 million. A 1% decrease in the assumed health care cost trend rate would decrease the service and interest cost components of the net periodic benefit cost by $0.1 million and the health care component of the accumulated postretirement benefit obligation by $1.4 million.
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Plan Assets
The Company’s pension plan weighted average asset allocations at December 31, 2014 and 2013, by asset category, were as follows:

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

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

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

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

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Equities that are valued using quoted prices are valued at the published market prices. Equities in a common collective trust or a registered investment company that are valued using significant other observable inputs are valued at the net asset value (“NAV”) provided by the fund administrator. The NAV is based on the value of the underlying assets owned by the fund minus its liabilities. Fixed income securities that are valued using significant other observable inputs are valued at prices obtained from independent financial service industry-recognized vendors.
Investment Policies and Strategies
The investment objective of the plan, consistent with prudent standards for preservation of capital and maintenance of liquidity, is to earn the highest possible total rate of return consistent with the plan's tolerance for risk. The general asset allocation guidelines for plan assets are that “equities” will constitute from 40% to 60% of the market value of total fund assets with a target of 50%, and “fixed income” obligations, including cash, will constitute from 40% to 60% with a target of 50%. The term “equities” includes common stock, convertible bonds and convertible stock. The term “fixed income” includes preferred stock and/or contractual payments with a specific maturity date. The Company strives to maintain asset allocations within the designated ranges by conducting periodic reviews of fund allocations and plan liquidity needs, and rebalancing the portfolio accordingly. Diversification of assets is employed to ensure that adverse performance of one security or security class does not have an undue detrimental impact on the portfolio as a whole. Diversification is interpreted to include diversification by type, characteristic and number of investments, as well as by investment style of designated investment fund managers. No restrictions are placed on the selection of individual investments by the investment fund managers. The total fund performance and the performance of the investment fund managers is reviewed on a regular basis, using appointed professional independent advisors. As of December 31, 2014 and 2013, there were no shares of the Company’s stock held in plan assets.
Cash Flows
The Company expects to contribute approximately $1.6 million to its defined benefit plans and $0.5 million to its other postretirement benefit plans in 2015. The Company also expects to contribute approximately $9.1 million to its defined contribution plan and $8.0 million to its 401(k) savings plan in 2015.
Estimated Future Benefit Payments
The future estimated benefit payments for the next five years and the five years thereafter are as follows: 2015 — $9.0 million; 2016 — $9.6 million; 2017 — $10.1 million; 2018 — $10.7 million; 2019 — $10.7 million; 2020 to 2025 — $54.0 million.
16. Quarterly Results of Operations (Unaudited)
The following table summarizes the unaudited quarterly results of operations for the years ended December 31, 2014 and 2013.

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

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of IDEX Corporation
We have audited the accompanying consolidated balance sheets of IDEX Corporation and subsidiaries (the “Company”) as of December 31, 2014 and 2013, and the related consolidated statements of operations, comprehensive income, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2014. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the consolidated financial position of IDEX Corporation and subsidiaries as of December 31, 2014 and 2013, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2014, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of December 31, 2014, based on the criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 23, 2015, expressed an unqualified opinion on the Company’s internal control over financial reporting.

| Deloitte & Touche LLP
Chicago, Illinois |
February 23, 2015 |

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of IDEX Corporation
We have audited the internal control over financial reporting of IDEX Corporation and subsidiaries (the “Company”) as of December 31, 2014, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America (“generally accepted accounting principles”). A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2014, based on the criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended December 31, 2014, of the Company and our report dated February 23, 2015, expressed an unqualified opinion on those consolidated financial statements.

| Deloitte & Touche LLP
Chicago, Illinois |
February 23, 2015 |

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

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

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

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

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

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

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

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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 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, 2014.
Management’s Report on Internal Control Over Financial Reporting appearing on page 65 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.
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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 2015 Proxy Statement is incorporated into this Item 10 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 under "Investor Relations." 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 2015 Proxy Statement is incorporated into this Item 11 by reference.

Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters.

Information under the heading “Security Ownership” in the 2015 Proxy Statement is incorporated into this Item 12 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, 2014.

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)
Equity compensation plans approved by the Company’s stockholders | 2,727,664 |  |  | $ | 46.91 |  |  | 2,296,363 |

(1) | Includes an indeterminate number of shares underlying deferred compensation units (“DCUs”) granted under the Directors Deferred Compensation Plan and Deferred Compensation Plan for Non-officer Presidents which are issuable under the Company’s Incentive Award Plan. Also includes an indeterminate number of shares underlying DCUs granted under the Deferred Compensation Plan for Officers, which shares are issuable under the Incentive Award Plan. The number of DCUs granted under these plans is determined by dividing the amount deferred by the closing price of the 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.

Item 13. Certain Relationships and Related Transactions, and Director Independence.
Information under the heading “Information Regarding the Board of Directors and Committees” in the 2015 Proxy Statement is incorporated into this Item 13 by reference.
Item 14. Principal Accountant Fees and Services.
Information under the heading “Principal Accountant Fees and Services” in the 2015 Proxy Statement is incorporated into this Item 14 by reference.
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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 70 hereof.
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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
|  | Senior Vice President and Chief Financial Officer

Date: February 23, 2015
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 |  | Chairman of the Board and Chief Executive Officer (Principal Executive Officer) |  |
Andrew K. Silvernail |  |  | February 23, 2015
/s/ HEATH A. MITTS |  | Senior Vice President and Chief Financial Officer (Principal Financial Officer) |  |
Heath A. Mitts |  |  | February 23, 2015
/s/ MICHAEL J. YATES |  | Vice President and Chief Accounting Officer (Principal Accounting Officer) |  |
Michael J. Yates |  |  | February 23, 2015
/s/ BRADLEY J. BELL |  | Director |  |
Bradley J. Bell |  |  | February 23, 2015
/s/ CYNTHIA J. WARNER |  | Director |  |
Cynthia J. Warner |  |  | February 23, 2015
/s/ WILLIAM M. COOK |  | Director |  |
William M. Cook |  |  | February 23, 2015
/s/ GREGORY F. MILZCIK |  | Director |  |
Gregory F. Milzcik |  |  | February 23, 2015
/s/ ERNEST J. MROZEK |  | Director |  |
Ernest J. Mrozek |  |  | February 23, 2015
/s/ MICHAEL T. TOKARZ |  | Director |  |
Michael T. Tokarz |  |  | February 23, 2015
/s/ LIVINGSTON L. SATTERTHWAITE |  | Director |  |
Livingston L. Satterthwaite |  |  | February 23, 2015
/s/ DAVID C. PARRY |  | Director |  |
David C. Parry |  |  | February 23, 2015

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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 filed 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 filed June 30, 2011, Commission File No. 1-10235)
4.3 |  |  | 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)
4.4 |  |  | 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)
4.5 |  |  | 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)
4.6 |  |  | 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, 2013 (incorporated by reference to Exhibit 10.2 to the Current Report of IDEX on Form 8-K filed February 20, 2013, 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)
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** |  |  | 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)
10.5** |  |  | IDEX Corporation Incentive Award Plan (as amended and restated) (incorporated by reference to Appendix A of the Proxy Statement of IDEX on Schedule 14A, filed March 5, 2010, Commission File No. 1-10235)
10.6** |  |  | Employment Agreement between IDEX Corporation, IDEX Service Corporation and Andrew K. Silvernail, dated November 8, 2013 (incorporated by reference to Exhibit No. 10.1 to the Current Report of IDEX on Form 8-K filed November 14, 2013, Commission File No. 1-10235)

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Exhibit Number |  | Description
10.7** |  |  | 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)
10.8** |  |  | 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)
10.9** |  |  | 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)
10.10** |  |  | Letter Agreement between IDEX Corporation and Daniel Salliotte, dated September 30, 2010 (incorporated by reference to Exhibit No. 10.17 to the Annual Report of IDEX on Form 10-K for the year ended December 31, 2012, Commission File No. 1-10235)
10.11** |  |  | Letter Agreement between IDEX Corporation and Heath A. Mitts, dated September 30, 2010 (incorporated by reference to Exhibit No. 10.2 to the Quarterly Report of IDEX on Form 10-Q for the quarter ended March 31, 2012, Commission File No. 1-10235)
10.12** |  |  | Letter Agreement between IDEX Corporation and Jeffrey Bucklew, dated January 16, 2012 (incorporated by reference to Exhibit No. 10.16 to the Annual Report of IDEX on Form 10-K for the year ended December 31, 2013, Commission File No. 1-10235)
10.13** |  |  | Letter Agreements between IDEX Corporation and Brett Finley, dated December 15, 2008 and February 12, 2014.
10.14** |  |  | Letter Agreements between IDEX Corporation and Eric Ashleman, dated January 14, 2008 and February 12, 2014.
10.15** |  |  | Amendment of Letter Agreement between IDEX Corporation and Frank Notaro dated April 24, 2000.
10.16** |  |  | Form of IDEX Corporation Restricted Stock Award Agreement effective February 2015.
10.17** |  |  | Form of IDEX Corporation Stock Option Agreement effective February 2015.
10.18** |  |  | Form of IDEX Corporation Restricted Stock Unit Award Agreement effective February 2015.
10.19** |  |  | Form of IDEX Corporation Restricted Stock Unit Award Agreement - Cash Settled effective February 2015.
10.20** |  |  | Form of IDEX Corporation Performance Share Unit Award Agreement effective February 2015.
10.21** |  |  | Form of IDEX Corporation Restricted Stock Unit Agreement for Directors effective February 2015.
10.22** |  |  | Form of IDEX Corporation Stock Option Agreement effective February 2015.
10.23** |  |  | Form of IDEX Corporation Restricted Stock Award Agreement effective February 2015.
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

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Exhibit Number |  | Description
****101 |  |  | The following materials from IDEX Corporation’s Annual Report on Form 10-K for the year ended December 31, 2014 formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets at December 31, 2014 and 2013, (ii) the Consolidated Statements of Operations for the three years ended December 31, 2014, (iii) the Consolidated Statements of Comprehensive Income for the three years ended December 31, 2014, (iv) the Consolidated Statements of Stockholders’ Equity for the three years ended December 31, 2014, (v) the Consolidated Statements of Cash Flows for the three years ended December 31, 2014, and (vi) Notes to the Consolidated Financial Statements.

** |  | 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.

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