Roper (ROP) 10-Q 7 May 10 2010 Q1 Quarterly report Financial data

Condensed Consolidated Statemen

Condensed Consolidated Statements of Earnings (unaudited) (USD $)
In Thousands, except Share data	3 Months Ended Mar. 31, 2010	3 Months Ended Mar. 31, 2009
Condensed Consolidated Statements of Earnings
Net sales	$534,441	$505,444
Cost of sales	254,876	254,308
Gross profit	279,565	251,136
Selling, general and administrative expenses	178,849	164,344
Income from operations	100,716	86,792
Interest expense	16,181	13,509
Other income/(expense)	447	(356)
Earnings before income taxes	84,982	72,927
Income taxes	25,257	21,368
Net earnings	$59,725	$51,559
Earnings per share:
Basic	0.64	0.57
Diluted	0.62	0.56
Weighted average common shares outstanding:
Basic	93,810,000	90,132,000
Diluted	96,036,000	92,302,000

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (unaudited) (USD $)
In Thousands	Mar. 31, 2010	Dec. 31, 2009
Assets
Cash and cash equivalents	$191,285	$167,708
Accounts receivable, net	352,505	381,658
Inventories, net	174,535	178,795
Deferred taxes	26,505	27,306
Unbilled receivables	64,130	57,153
Other current assets	53,363	58,125
Total current assets	862,323	870,745
Property, plant and equipment, net	107,193	109,493
Goodwill	2,377,257	2,388,432
Other intangible assets, net	853,296	868,900
Deferred taxes	29,965	33,123
Other assets	59,527	57,043
Total assets	4,289,561	4,327,736
Liabilities and Stockholders' Equity
Accounts payable	121,472	110,103
Accrued liabilities	214,576	253,441
Deferred taxes	1,452	1,671
Current portion of long-term debt, net	110,804	112,796
Total current liabilities	448,304	478,011
Long-term debt, net of current portion	1,007,443	1,040,962
Deferred taxes	326,085	328,299
Other liabilities	59,563	58,974
Total liabilities	1,841,395	1,906,246
Common stock	960	958
Retained earnings	1,446,390	1,395,586
Accumulated other comprehensive earnings	32,694	63,945
Treasury stock	21,243	21,320
Total stockholders' equity	2,448,166	2,421,490
Total liabilities and stockholders' equity	$4,289,561	$4,327,736

1_Condensed Consolidated Statem

Condensed Consolidated Statements of Cash Flows (unaudited) (USD $)
In Thousands	3 Months Ended Mar. 31, 2010	3 Months Ended Mar. 31, 2009
Cash flows from operating activities:
Net earnings	$59,725	$51,559
Adjustments to reconcile net earnings to cash flows from operating activities:
Depreciation and amortization of property, plant and equipment	9,409	8,769
Amortization of intangible assets	19,095	17,457
Amortization of deferred financing costs	590	676
Non-cash stock compensation	7,008	6,985
Changes in operating assets and liabilities, net of acquired businesses:
Accounts receivable	9,758	30,414
Inventories	(2,344)	(2,855)
Unbilled Receivables	(6,977)	(3,150)
Accounts payable and accrued liabilities	(11,861)	(46,985)
Income taxes payable	11,353	(12,449)
Other, net	(670)	156
Cash provided by operating activities	95,086	50,577
Cash flows from investing activities:
Acquisitions of businesses, net of cash acquired	15,000	683
Capital expenditures	6,485	5,228
Proceeds from sale of assets	3,840	367
Other, net	(999)	(1,330)
Cash provided by/(used in) investing activities	(18,644)	(6,874)
Cash flows from financing activities:
Borrowings/(payments) under revolving line of credit, net	(40,000)	51,000
Principal payments on convertible notes	(2,999)	(83,917)
Debt issuance costs	0	(404)
Cash dividends to stockholders	(8,878)	(7,394)
Stock award tax excess windfall benefit	1,021	0
Proceeds from stock option exercises	2,443	1,168
Treasury stock sales	408	512
Other	42	1,859
Cash provided by /(used in) financing activities	(48,047)	(40,894)
Effect of exchange rate changes on cash	(4,818)	(3,369)
Net increase/(decrease) in cash and cash equivalents	23,577	(560)
Cash and cash equivalents, beginning of period	167,708
Cash and cash equivalents, end of period	191,285
Noncash investing activities:
Cash paid, net of cash acquired	$15,000	$683

Parenthetical Data to the Conde

Parenthetical Data to the Condensed Consolidated Statements of Changes in Stockholders' Equity (USD $)
In Thousands	3 Months Ended Mar. 31, 2010
Condensed Consolidated Statements of Changes in Stockholders' Equity
Currency translation adjustments, tax	$896

2_Condensed Consolidated Statem

Condensed Consolidated Statements of Changes in Stockholders' Equity (unaudited) (USD $)
In Thousands	Common stock	Additional paid-in capital	Retained earnings	Accumulated other comprehensive earnings	Treasury stock	Total
Beginning Balance at Dec. 31, 2009	$958	$982,321	$1,395,586	$63,945	($21,320)	$2,421,490
Stock option exercises	1	2,442	0	0	0
Treasury stock sold	0	331	0	0	77
Currency translation adjustments, net of tax	0	0	0	(31,251)	0
Stock based compensation	0	6,663	0	0	0
Restricted stock grants	1	(3,577)	0	0	0
Stock option tax benefit, net of shortfalls	0	1,049	0	0	0
Conversion of senior subordinated convertible notes	0	136	0	0	0
Dividends declared	0	0	(8,921)	0	0
Ending Balance at Mar. 31, 2010						$2,448,166

Basis of Presentation

Basis of Presentation
	3 Months Ended Mar. 31, 2010
Notes to Financial Statements [Abstract]
Basis of Presentation	1. Basis of Presentation The accompanying condensed consolidated financial statements for the three month periods ended March 31, 2010 and 2009 are unaudited. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, which include only normal recurring adjustments, necessary to state fairly the financial position, results of operations and cash flows of Roper Industries, Inc. and its subsidiaries (Roper or the Company) for all periods presented. Ropers management has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP). Actual results could differ from those estimates. The results of operations for the three month period ended March 31, 2010 are not necessarily indicative of the results to be expected for the full year. You should read these unaudited condensed consolidated financial statements in conjunction with Ropers consolidated financial statements and the notes thereto included in its 2009 Annual Report on Form 10-K (Annual Report) filed on February 26, 2010 with the Securities and Exchange Commission (SEC). The Company has evaluated subsequent events for the period from March 31, 2010, the date of these financial statements. There were no events or transactions occurring during this subsequent event reporting period that require recognition or disclosure in the financial statements.

Recent Accounting Pronouncement

Recent Accounting Pronouncements
	3 Months Ended Mar. 31, 2010
Notes to Financial Statements [Abstract]
Recent Accounting Pronouncements	2. Recent Accounting Pronouncements In October 2009, the FASB issued amendments to the accounting and disclosure for revenue recognition. These amendments, effective for fiscal years beginning on or after June 15, 2010 (early adoption is permitted), modify the criteria for recognizing revenue in multiple element arrangements and the scope of what constitutes a non-software deliverable. The Company is currently assessing the impact of these amendments on our results of operations, financial condition and cash flows.

Earnings Per Share

Earnings Per Share
	3 Months Ended Mar. 31, 2010
Notes to Financial Statements [Abstract]
Earnings Per Share	3. Earnings Per Share Basic earnings per share were calculated using net earnings and the weighted average number of shares of common stock outstanding during the respective period. Diluted earnings per share were calculated using net earnings and the weighted average number of shares of common stock and potential common stock outstanding during the respective period. Potentially dilutive common stock consisted of stock options and the premium over the conversion price on our senior subordinated convertible notes based upon the trading price of Ropers common stock. The effects of potential common stock were determined using the treasury stock method.Weighted average shares outstanding are as shown below (in thousands): Three months ended March 31, 2010 2009 Basic shares outstanding 93,810 90,132 Effect of potential common stock Common stock awards 915 791 Senior subordinated convertible notes 1,311 1,379 Diluted shares outstanding 96,036 92,302 As of March 31, 2010 there were 1,398,000 outstanding stock options that were not included in the determination of diluted earnings per share because doing so would have been antidilutive as compared to 2,544,000 outstanding stock options that would have been antidilutive on March 31, 2009.

Stock Based Compensation

Stock Based Compensation
	3 Months Ended Mar. 31, 2010
Notes to Financial Statements [Abstract]
Stock-Based Compensation	4. Stock Based Compensation The Roper Industries, Inc. Amended and Restated 2006 Incentive Plan is a stock based compensation plan used to grant incentive stock options, nonqualified stock options, restricted stock, stock appreciation rights or equivalent instruments to Roper's employees, officers, directors and consultants. Roper's stock purchase plan allows employees in the U.S. and Canada to designate up to 10% of eligible earnings to purchase Roper's common stock at a 5% discount to the average closing price of the stock at the beginning and end of a quarterly offering period. The common stock sold to the employees may be either treasury stock, stock purchased on the open market, or newly issued shares. The following table provides information regarding our stock based compensation expense (in millions): Three months ended March 31, 2010 2009 Stock based compensation $7.0 $7.0 Tax effect recognized in net income 2.5 2.4 Windfall tax benefit/(shortfall), net 1.0 (0.4) Stock Options - In the quarter ended March 31, 2010, 571,000 options were granted with a weighted average fair value of $16.81. During the same period in 2009, 485,000 options were granted with a weighted average fair value of $12.34. All options were issued at grant date fair value. Roper records compensation expense for employee stock options based on the estimated fair value of the options on the date of grant using the Black-Scholes option-pricing model. Historical data, among other factors, is used to estimate the expected price volatility, the expected dividend yield, the expected option life and the expected forfeiture rate. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the estimated life of the option. The following weighted average assumptions were used to estimate the fair value of options granted during current and prior year quarters using the Black-Scholes option-pricing model: Three months ended March31, 2010 2009 Fair value per share ($) 16.81 12.34 Risk-free interest rate (%) 2.38 1.73 Expected option life (years) 5.38 5.37 Expected volatility (%) 34.53 32.05 Expected dividend yield (%) 0.72 0.79 Cash received from option exercises for the three months ended March31, 2010 and 2009 was approximately $2.4 million and $1.2 million, respectively. Restricted Stock Awards - During the quarter ended March 31, 2010, 206,000 restricted stock awards were granted with a weighted average fair value of $51.11. During the same period in 2009, 150,000 awards were granted with a weighted average fair value of $40.66. All grants were issued at grant date fair value. During the quarter ended March 31, 2010, 200,000 restricted awards vested with a weighted average grant date fair value of $50.66, at a weighted average vest date fair value of $55.30. Employee Stock Purchase Plan - During the three month periods ended March 31, 2010 and 2009, participants of the employee stock purchase plan purchased 8,000 and 12,000 shares, respectively, of Roper's common stock for total consideration of $0.41 millio

Comprehensive Earnings

Comprehensive Earnings
	3 Months Ended Mar. 31, 2010
Notes to Financial Statements [Abstract]
Comprehensive Earnings	5. Comprehensive Earnings Comprehensive earnings include net earnings and all other non-owner sources of changes in net assets and were as follows (in thousands): Three months ended March 31, 2010 2009 Net income $ 59,725 $ 51,559 Currency translation adjustments (31,251 ) (19,499 ) Comprehensive earnings $ 28,474 $ 32,060

Inventories

Inventories
	3 Months Ended Mar. 31, 2010
Notes to Financial Statements [Abstract]
Inventories	6. Inventories March 31, 2010 December31, 2009 (in thousands) Raw materials and supplies $ 110,630 $ 111,546 Work in process 26,029 24,557 Finished products 66,647 71,729 Inventory reserves (28,771 ) (29,037 ) $ 174,535 $ 178,795

Goodwill

Goodwill
	3 Months Ended Mar. 31, 2010
Notes to Financial Statements [Abstract]
Goodwill	7. Goodwill Industrial Technology Energy Systems Controls Scientific Industrial Imaging RF Technology Total (in thousands) Balances at December 31, 2009 $ 431,073 $ 383,207 $ 623,786 $ 950,366 $ 2,388,432 Additions - - 8,593 - 8,593 Other - - - (10 ) (10 ) Currency translation adjustments (10,533 ) (2,752 ) (287 ) (6,186 ) (19,758 ) Balances at March 31, 2010 $ 420,540 $ 380,455 $ 632,092 $ 944,170 $ 2,377,257

Other intangible assets, net

Other intangible assets, net
	3 Months Ended Mar. 31, 2010
Notes to Financial Statements [Abstract]
Other intangible assets, net	8. Other intangible assets, net Cost Accumulated amortization Net book value (in thousands) Assets subject to amortization: Customer related intangibles $ 752,913 $ (181,307 ) $ 571,606 Unpatented technology 101,578 (33,532 ) 68,046 Software 53,408 (30,739 ) 22,669 Patents and other protective rights 32,762 (20,187 ) 12,575 Backlog 1,920 (1,920 ) - Trade secrets 2,773 (1,224 ) 1,549 Assets not subject to amortization: Trade names 192,455 - 192,455 Balances at December 31, 2009 $ 1,137,809 $ (268,909 ) $ 868,900 Assets subject to amortization: Customer related intangibles $ 748,540 $ (192,957 ) $ 555,583 Unpatented technology 106,819 (37,084 ) 69,735 Software 53,386 (32,390 ) 20,996 Patents and other protective rights 32,630 (21,141 ) 11,489 Backlog 1,788 (1,788 ) - Trade secrets 1,604 (156 ) 1,448 Assets not subject to amortization: Trade names 194,045 - 194,045 Balances at March 31, 2010 $ 1,138,812 $ (285,516 ) $ 853,296 Amortization expense of other intangible assets was $18,511 and $16,793 during the three months ended March 31, 2010 and 2009, respectively.

Debt

Debt
	3 Months Ended Mar. 31, 2010
Notes to Financial Statements [Abstract]
Debt	9. Debt Roper's 3.75% senior subordinated convertible notes due 2034 became convertible on January 15, 2009.During the quarter ended March 31, 2010, 7,297 notes were converted for $3.0 million in cash and 35,000 shares of common stock at a weighted average share price of $54.19.No gain or loss was recorded upon these conversions.In addition, a related $0.1 million deferred tax liability associated with excess deductions recorded for tax purposes was relieved to additional paid in capital upon the conversions. At March 31, 2010, the conversion price on the outstanding notes was $413.11.If converted at March 31, 2010, the value would exceed the $109 million principal amount of the notes by approximately $78 million and would result in the issuance of 1,368,000 shares of Roper's common stock.

Fair Value of Financial Instrum

Fair Value of Financial Instruments
	3 Months Ended Mar. 31, 2010
Notes to Financial Statements [Abstract]
Fair Value of Financial Instruments	10. Fair Value of Financial Instruments Roper's long-term debt at March 31, 2010 included $500 million of fixed-rate senior notes due 2019, with a fair value of approximately $527 million, and $500 million of fixed-rate senior notes due 2013, with a fair value of approximately $556 million, based on the trading prices of the notes.Short-term debt included $109 million of fixed-rate convertible notes which were at fair value due to the short term nature of the debt. The Company manages interest rate risk by maintaining a combination of fixed and variable rate debt, which may include interest rate swaps to convert fixed rate debt to variable rate debt, or to convert variable rate debt to fixed rate debt.At March 31, 2010 an aggregate notional amount of $500 million in interest rate swaps designated as fair value hedges effectively changed our $500 million senior notes due 2013 with a fixed interest rate of 6.625% to a variable rate obligation at a weighted average spread of 4.377% plus the London Interbank Offered Rate ("LIBOR"). The swaps are recorded at fair value in the balance sheet as an asset or liability, and the changes in fair value of both the interest rate swap and the hedged senior notes due 2013 are recorded as interest expense. At March 31, 2010 the fair value of the swap was an asset balance of $3.24 million, with a corresponding increase of $3.35 million in the notes being hedged.The impact on earnings was $0.1 million. The Company has determined the swaps to be Level 2 in the FASB fair value hierarchy, and uses inputs other than quoted prices that are observable for the asset or liability, including interest rates, yield curves and credit risks in order to value the instruments.

Contingencies

Contingencies
	3 Months Ended Mar. 31, 2010
Notes to Financial Statements [Abstract]
Contingencies	11. Contingencies Roper, in the ordinary course of business, is the subject of, or a party to, various pending or threatened legal actions, including those pertaining to product liability and employment practices. It is vigorously contesting all lawsuits that, in general, are based upon claims of the kind that have been customary over the past several years. After analyzing the Company's contingent liabilities on a gross basis and, based upon past experience with resolution of its product liability and employment practices claims and the limits of the primary, excess, and umbrella liability insurance coverages that are available with respect to pending claims, management believes that adequate provision has been made to cover any potential liability not covered by insurance, and that the ultimate liability, if any, arising from these actions should not have a material adverse effect on Roper's consolidated financial position, results of operations or cash flows. Over recent years there has been an increase in certain U.S. states in asbestos-related litigation claims against numerous industrial companies. Roper or its subsidiaries have been named defendants in some such cases. No significant resources have been required by Roper to respond to these cases and the Company believes it has valid defenses to such claims and, if required, intends to defend them vigorously. Given the state of these claims it is not possible to determine the potential liability, if any. Roper's financial statements include accruals for potential product liability and warranty claims based on its claims experience. Such costs are accrued at the time revenue is recognized. A summary of the warranty accrual activity for the three months ended March 31, 2010 is presented below (in thousands). Balance at December 31, 2009 $ 7,341 Additions charged to costs and expenses 1,842 Deductions (1,550 ) Other (64 ) Balance at March 31, 2010 $ 7,569

Business Segments

Business Segments
	3 Months Ended Mar. 31, 2010
Notes to Financial Statements [Abstract]
Business Segments	12. Business Segments Sales and operating profit by industry segment are set forth in the following table (dollars in thousands): Three months ended March 31, 2010 2009 Change Net sales: Industrial Technology $ 135,312 $ 130,641 3.6 % Energy Systems Controls 105,678 106,611 (0.9 ) Scientific Industrial Imaging 130,244 84,120 54.8 RF Technology 163,207 184,072 (11.3 ) Total $ 534,441 $ 505,444 5.7 % Gross profit: Industrial Technology $ 67,512 $ 62,709 7.7 % Energy Systems Controls 53,491 55,363 (3.4 ) Scientific Industrial Imaging 77,510 45,750 69.4 RF Technology 81,052 87,314 (7.2 ) Total $ 279,565 $ 251,136 11.3 % Operating profit*: Industrial Technology $ 31,766 $ 28,583 11.1 % Energy Systems Controls 18,923 17,519 8.0 Scientific Industrial Imaging 29,334 16,081 82.4 RF Technology 32,201 37,383 (13.9 ) Total $ 112,224 $ 99,566 12.7 % Long-lived assets Industrial Technology $ 41,812 $ 42,208 (0.9 )% Energy Systems Controls 20,816 25,094 (17.0 ) Scientific Industrial Imaging 36,084 25,518 41.4 RF Technology 30,412 35,146 (13.5 ) Total $ 129,124 $ 127,966 0.9 % * Operating profit is before unallocated corporate general and administrative expenses of $11,508 and $12,774 for the three months ended March 31, 2010 and 2009, respectively.

Document Information

Document Information
	3 Months Ended Mar. 31, 2010
Document Information [Text Block]
Document Type	10-Q
Document Period End Date	2010-03-31
Amendment Flag	false

Entity Information

Entity Information (USD $)
	3 Months Ended Mar. 31, 2010	Dec. 31, 2009
Entity [Text Block]
Entity Registrant Name	Roper Industries Inc
Entity Central Index Key	0000882835
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	No
Entity Filer Category	Large Accelerated Filer
Entity Public Float		$4,244,822,629
Entity Common Stock, Shares Outstanding	93,968,290
Document Fiscal Year Focus	2,010
Document Fiscal Period Focus	Q1