Roper (ROP) 8-K Results of Operations and Financial Condition

Roper Industries, Inc.

Contact Information:
Chris Hix
Director of Investor Relations
+1 (770) 495-5100
investor-relations@roperind.com

FOR IMMEDIATE RELEASE

Roper Industries Achieves Record Performance in the Third Quarter

Sales Increase 40%; Net Earnings Grow 53%; Cash Flow Expands 68%

Duluth, Georgia, October 28, 2004 .... Roper Industries, Inc. (NYSE: ROP) reported record diluted earnings per share (DEPS) of $0.73 in the third quarter of 2004, as compared with $0.56 reported in the prior year period. Net earnings grew 53% to a record $27 million on record net sales of $240 million, a 40% increase. Net orders increased 53% in the quarter to $248 million.

“Our record results in the third quarter demonstrate our progress in developing our operational and strategic growth capabilities,” said Brian Jellison, Chairman, President and CEO of Roper Industries. “The Neptune business acquired at the end of 2003 continues to perform strongly. We are on pace to achieve our integration plans with the power generation business acquired from RD Tech earlier this year. Our operations posted 11% organic order growth during the third quarter. Margins have strengthened throughout the year, and cash flow performance is very strong.”

Roper reported record EBITDA of $56 million in the third quarter, 61% higher than the prior year, and EBITDA margins of 23.2%, a 320 basis point improvement. The Company converted 130% of third quarter net earnings into cash flow from operating activities, demonstrating its successful focus on cash generation. Net working capital efficiency improved sequentially from the second quarter. The Company reported $36 million of cash flow from operating activities in the third quarter, 68% higher than the prior year quarter, and continues to expect to achieve cash flow from operating activities of $150-$160 million in 2004 with record performance in the fourth quarter.

The Company expects 2004 net sales of $940-$945 million and affirmed its adjusted DEPS guidance of $2.58-$2.70, excluding inventory revaluation costs from the acquisition of Neptune Technology Group Holdings (NTGH) and any effects from the acquisition of TransCore and related financing initiatives.

Mr. Jellison said, “Over the past few years, we have accelerated our successful growth strategy with the acquisition of new growth platforms, such as Neptune and the recently announced agreement to acquire TransCore Holdings. TransCore clearly meets all of our disciplined criteria, with high levels of recurring revenue, multiple growth paths and scale advantages. The acquisition is expected to close in December, and we look forward to the TransCore team joining us.” TransCore provides technologies and related services in areas such as radio frequency identification (RFID), satellite-based communication, mobile asset tracking, security applications and comprehensive toll system and processing services.

Third Quarter Results by Segment

All comparisons are made against the year-ago period unless otherwise stated.

In the Industrial Technology segment, net sales increased 133% to $101 million in the third quarter due primarily to contributions from the Neptune acquisition and organic sales gains. Net orders increased 153%. The segment produced a record $22 million of operating profit during the quarter and an operating margin of 22%.

Third quarter net sales in the Energy Systems & Controls segment improved 3% to $43 million. Excluding sales to Gazprom, third quarter net sales increased 22% due to strong activity with oil & gas and power utility maintenance customers, and contributions from the power generation business of RD Tech acquired in this year’s second quarter. Excluding Gazprom, third quarter net orders increased 73%; the segment reported total net orders increased 27% to $48 million. The segment reported operating profit of $10 million and operating margins of 23%.

Instrumentation segment net sales grew 14% to $51 million in the third quarter, experiencing continued strength in petroleum analysis and materials testing markets. The segment earned $9 million of operating profit, and operating margins held steady at 18%. Net orders increased 22% to $55 million in the third quarter.

The Scientific & Industrial Imaging segment reported a net sales increase of 8% to $46 million, including sales of handheld instruments acquired as part of the NTGH transaction. Net orders increased 11%. The segment posted operating profit of $8 million with an 18% operating margin.

Conference Call to be Held at 10:00 AM (ET) Tomorrow

A conference call to discuss these results has been scheduled for 10:00 AM ET on Friday, October 29, 2004. The call can be accessed via webcast or by dialing (800) 289-0569 (US/Canada) or +1 (913) 981-5542, using confirmation code 880914. Webcast information and conference call materials will be made available in the “Investor Information” section of Roper’s website (www.roperind.com) prior to the start of the call. Telephonic replays will be available for up to two weeks by calling +1 (719) 457-0820 and using the passcode 880914.

Table 1: EBITDA (Millions)

	Q3 2004		Q3 2003
Net earnings	$	27.4	$	17.9
Interest expense		7.3		4.0
Income tax expense		10.7		8.5
Depreciation & amortization expense		10.2		4.1
EBITDA	$	55.6	$	34.5

Table 2: Adjusted Diluted Earnings per Share

	Full Year 2004 Estimates
Diluted Earnings per Share	$2.54-$2.66
Add Back: $2.2 Million Pre-Tax Inventory
Revaluation Charge from Acquisition of NTGH	$0.04-$0.04
Adjusted Diluted Earnings per Share	$2.58-$2.70

About Roper Industries

Roper Industries is a diversified industrial growth company providing engineered products and solutions for global niche markets. Additional information about Roper Industries, including registration to receive press releases via email, is available on the Company’s website,www.roperind.com.

The information provided in this press release contains forward looking statements within the meaning of the federal securities laws. These forward looking statements include, among others, statements regarding our proposed acquisition of TransCore (the acquisition), the terms of our financing plan, the prospects for TransCore to compete in its market and achieve future growth and profit expectations, and the impact of the acquisition on our future results of operations and cash flows, and may be indicated by words or phrases such as “anticipate,” “estimate,” “plans,” “expects,” “projects,” “should,” “will,” “believes” or “intends” and similar words and phrases. These statements reflect management’s current beliefs and are not guarantees of performance. They involve risks and uncertainties, which could cause actual results to differ materially from those contained in any forward looking statement. Such risks and uncertainties include our ability to complete the acquisition, secure financing on favorable terms and through the facility and issuance currently anticipated, integrate the acquisition and realize expected synergies. We also face other general risks, including further reductions in our business with Gazprom, our ability to realize cost savings from our restructuring initiatives, unfavorable changes in foreign exchange rates, difficulties associated with exports, risks associated with our international operations, difficulties in making and integrating acquisitions, risks associated with TransCore’s business, increased product liability and insurance costs, increased warranty exposure, future competition, changes in the supply of, or price for, parts and components, environmental compliance costs and liabilities, risks and cost associated with asbestos related litigation and potential write-offs of our substantial intangible assets. Important risk factors include those discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2003, and may be discussed in subsequent filings with the SEC. You should not place undue reliance on any forward looking statements. These statements speak only as of the date they are made, and we undertake no obligation to update publicly any of them in light of new information or future events.

We refer to certain non-GAAP financial measures in this press release. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures can be found within this press release.

_________________

Roper Industries, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (unaudited)
(Amounts in thousands)

	September 30, 2004			December 31, 2003
CURRENT ASSETS:
Cash and cash equivalents	$	102,416		$	70,234
Accounts receivable		169,592			150,856
Inventories		109,316			107,082
Deferred taxes		20,671			33,314
Other current assets		9,019			19,706
Total current assets		411,014			381,192
PROPERTY, PLANT AND EQUIPMENT, NET		74,189			78,461
OTHER ASSETS:
Goodwill		739,418			711,158
Other intangible assets, net		297,015			298,669
Deferred taxes		10,828			6,034
Other assets		40,674			39,481
Total other assets		1,087,935			1,055,342
TOTAL ASSETS	$	1,573,138		$	1,514,995
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$	46,165		$	45,412
Accrued liabilities		80,012			93,523
Deferred taxes		1,640			1,639
Current portion of long-term debt		20,951			20,923
Total current liabilities		148,768			161,497
NONCURRENT LIABILITIES:
Long-term debt		594,746			630,186
Deferred taxes		55,426			50,187
Other liabilities		18,692			17,344
Total liabilities		817,632			859,214
STOCKHOLDERS' EQUITY:
Common stock		383			372
Additional paid-in capital		333,516			293,402
Retained earnings		394,908			336,520
Accumulated other comprehensive earnings		49,931			48,989
Treasury stock		(23,232	)		(23,502	)
Total stockholders' equity		755,506			655,781
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,573,138		$	1,514,995

Roper Industries, Inc. and Subsidiaries
Condensed Consolidated Statements of Earnings (unaudited)
(Amounts in thousands, except per share data)

	Three months ended September 30,						Nine months ended September 30,
	2004			2003			2004		2003
Net sales	$	240,141		$	72,064		$	693,215	$	487,562
Cost of sales		120,570			78,894			348,191		230,504
Gross profit		119,571			93,170			345,024		257,058
Selling, general and administrative expenses		74,151			60,649			225,924		178,262
Income from operations		45,420			32,521			119,100		78,796
Interest expense		7,327			4,018			21,066		12,653
Other income/(expense)		(17	)		(239	)		18		(195	)
Earnings from continuing operations before
income taxes		38,076			28,264			98,052		65,948
Income taxes		10,694			8,479			28,986		19,784
Earnings from continuing operations		27,382			19,785			69,066		46,164
Loss from discontinued operations, net of tax expense
of $631and $151, respectively for 2003		--			(1,912	)		--		(2,822	)
Net Earnings	$	27,382		$	17,873		$	69,066	$	43,342
Earnings per share:
Basic:
Earnings from continuing operations	$	0.74		$	0.63		$	1.87	$	1.47
Loss from discontinued operations	$	--			(0.06	)	$	--		(0.09	)
Net Earnings	$	0.74		$	0.57		$	1.87	$	1.38
Diluted:
Earnings from continuing operations	$	0.73		$	0.62		$	1.84	$	1.45
Loss from discontinued operations	$	--			(0.06	)	$	--		(0.09	)
Net Earnings	$	0.73		$	0.56		$	1.84	$	1.36
Weighted average common and common
equivalent shares outstanding:
Basic		37,039			31,571			36,870		31,482
Diluted		37,673			32,055			37,474		31,844

Roper Industries, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (unaudited)
(Amounts in thousands)

	Nine months ended September 30,
	2004			2003
Net earnings	$	69,066		$	43,342
Depreciation		13,437			8,556
Amortization		16,390			3,550
Other, net		2,666			2,322
Cash provided by operating activities		101,559			57,770
Business acquisitions, net of cash acquired		(51,861	)		(1,654	)
Capital expenditures		(8,108	)		(8,084	)
Other, net		(3,521	)		(1,969	)
Cash used by investing activities		(63,490	)		(11,707	)
Debt payments, net		(34,954	)		(45,800	)
Issuance of common stock		28,873			--
Dividends		(10,678	)		(8,284	)
Other, net		10,876			5,340
Cash used by financing activities		(5,883	)		(48,744	)
Effect of exchange rate changes on cash		(4	)		1,921
Net increase/(decrease) in cash and equivalents		32,182			(760	)
Cash and equivalents, beginning of period		70,234			15,270
Cash and equivalents, end of period	$	102,416		$	14,510

Roper Industries, Inc. and Subsidiaries
Selected Segment Financial Data (unaudited)
(Amounts in thousands and percents of net sales)

	Three months ended September 30,										Nine months ended September 30,
	2004					2003					2004					2003
	Amount		%			Amount		%			Amount		%			Amount		%
Net sales:
Instrumentation	$	50,751				$	44,607				$	149,578				$	130,445
Industrial Technology		100,735					43,213					294,814					126,816
Energy Systems & Controls		42,807					41,621					111,145					105,260
Scientific & Industrial Imaging		45,848					42,623					137,678					125,041
Total	$	240,141				$	172,064				$	693,215				$	487,562
Gross profit:
Instrumentation	$	28,049		55.3	%	$	26,316		59.0	%	$	85,809		57.4	%	$	76,223		58.4	%
Industrial Technology		43,859		43.5	%		19,926		46.1	%		124,371		42.2	%		58,576		46.2	%
Energy Systems & Controls		21,468		50.2	%		23,053		55.4	%		58,059		52.2	%		55,253		52.5	%
Scientific & Industrial Imaging		26,195		57.1	%		23,875		56.0	%		76,785		55.8	%		67,006		53.6	%
Total	$	119,571		49.8	%	$	93,170		54.1	%	$	345,024		49.8	%	$	257,058		52.7	%
Operating profit*:
Instrumentation	$	9,233		18.2	%	$	8,200		18.4	%	$	27,063		18.1	%	$	21,042		16.1	%
Industrial Technology		22,451		22.3	%		9,394		21.7	%		59,862		20.3	%		27,586		21.8	%
Energy Systems & Controls		9,818		22.9	%		10,636		25.6	%		21,467		19.3	%		19,591		18.6	%
Scientific & Industrial Imaging		8,268		18.0	%		8,097		19.0	%		22,648		16.4	%		20,796		16.6	%
Total	$	49,770		20.7	%	$	36,327		21.1	%	$	131,040		18.9	%	$	89,015		18.3	%
Net Orders:
Instrumentation	$	55,282				$	45,144				$	152,842				$	126,930
Industrial Technology		101,875					40,315					291,185					127,892
Energy Systems & Controls		47,826					37,676					113,571					105,511
Scientific & Industrial Imaging		43,397					39,094					133,896					112,064
Total	$	248,380				$	162,229				$	691,494				$	472,397

* Operating profit is before unallocated corporate general and administrative expenses. Such expenses were $4,350 and $3,806 for the three months ended September 30, 2004 and 2003, respectively, and $11,940 and $10,219 for the nine months ended September 30, 2004 and 2003, respectively.