Cover
Cover - shares | 6 Months Ended | |
Jun. 30, 2019 | Jul. 26, 2019 | |
Cover page. | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Transition Report | false | |
Document Period End Date | Jun. 30, 2019 | |
Document Quarterly Report | true | |
Entity File Number | 1-12273 | |
Entity Registrant Name | ROPER TECHNOLOGIES, INC. | |
Entity Central Index Key | 0000882835 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q2 | |
Current Fiscal Year End Date | --12-31 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 51-0263969 | |
Entity Address, Address Line One | 6901 Professional Pkwy. East, Suite 200 | |
Entity Address, Postal Zip Code | 34240 | |
Entity Address, City or Town | Sarasota, | |
Entity Address, State or Province | FL | |
City Area Code | 941 | |
Local Phone Number | 556-2601 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Title of 12(b) Security | Common Stock, $0.01 Par Value | |
Trading Symbol | ROP | |
Security Exchange Name | NYSE | |
Entity Common Stock, Shares Outstanding | 104,001,819 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Earnings (unaudited) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Income Statement [Abstract] | ||||
Net revenues | $ 1,330.3 | $ 1,293.7 | $ 2,617.5 | $ 2,496.2 |
Cost of sales | 480.3 | 477.8 | 956.9 | 929.8 |
Gross profit | 850 | 815.9 | 1,660.6 | 1,566.4 |
Selling, general and administrative expenses | 481.6 | 461.6 | 945.8 | 911.9 |
Income from operations | 368.4 | 354.3 | 714.8 | 654.5 |
Interest expense, net | 45.1 | 43.2 | 88.8 | 86.4 |
Other income (expense), net | (1) | 2.3 | (4.1) | 0.6 |
Gain on disposal of business | 0 | 0 | 119.6 | 0 |
Earnings before income taxes | 322.3 | 313.4 | 741.5 | 568.7 |
Income taxes | 72.6 | 85 | 122.2 | 129 |
Net earnings | $ 249.7 | $ 228.4 | $ 619.3 | $ 439.7 |
Net earnings per share: | ||||
Basic (in dollars per share) | $ 2.40 | $ 2.21 | $ 5.97 | $ 4.26 |
Diluted (in dollars per share) | $ 2.38 | $ 2.19 | $ 5.90 | $ 4.22 |
Weighted average common shares outstanding: | ||||
Basic (in shares) | 103.9 | 103.2 | 103.7 | 103.1 |
Diluted (in shares) | 105.1 | 104.4 | 104.9 | 104.3 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (unaudited) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Statement of Comprehensive Income [Abstract] | ||||
Net earnings | $ 249.7 | $ 228.4 | $ 619.3 | $ 439.7 |
Other comprehensive income, net of tax: | ||||
Foreign currency translation adjustments | (28.6) | (76.2) | 0.1 | (18.4) |
Total other comprehensive income, net of tax | (28.6) | (76.2) | 0.1 | (18.4) |
Comprehensive income | $ 221.1 | $ 152.2 | $ 619.4 | $ 421.3 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (unaudited) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
ASSETS: | ||
Cash and cash equivalents | $ 320.8 | $ 364.4 |
Accounts receivable, net | 698.2 | 700.8 |
Inventories, net | 203.5 | 190.8 |
Income taxes receivable | 34.3 | 21.7 |
Unbilled receivables | 206.6 | 169.4 |
Other current assets | 88.9 | 80 |
Current assets held for sale | 50 | 83.6 |
Total current assets | 1,602.3 | 1,610.7 |
Property, plant and equipment, net | 134.2 | 128.7 |
Goodwill | 9,657.7 | 9,346.8 |
Other intangible assets, net | 3,943.1 | 3,842.1 |
Deferred taxes | 92.1 | 52.2 |
Other assets | 381.7 | 101.1 |
Assets held for sale | 97.2 | 167.9 |
Total assets | 15,908.3 | 15,249.5 |
LIABILITIES AND STOCKHOLDERS’ EQUITY: | ||
Accounts payable | 162.2 | 165.3 |
Accrued compensation | 186.8 | 248.3 |
Deferred revenue | 729.1 | 677.9 |
Other accrued liabilities | 288.1 | 258 |
Income taxes payable | 46.8 | 58.3 |
Current portion of long-term debt, net | 2.1 | 1.5 |
Current liabilities held for sale | 28.1 | 38.9 |
Total current liabilities | 1,443.2 | 1,448.2 |
Long-term debt, net of current portion | 4,718.9 | 4,940.2 |
Deferred taxes | 948.9 | 931.1 |
Other liabilities | 425.8 | 191.5 |
Liabilities held for sale | 20.5 | 0 |
Total liabilities | 7,557.3 | 7,511 |
Commitments and contingencies (Note 9) | ||
Common stock | 1.1 | 1.1 |
Additional paid-in capital | 1,840.5 | 1,751.5 |
Retained earnings | 6,771 | 6,247.7 |
Accumulated other comprehensive loss | (243.2) | (243.3) |
Treasury stock | (18.4) | (18.5) |
Total stockholders’ equity | 8,351 | 7,738.5 |
Total liabilities and stockholders’ equity | $ 15,908.3 | $ 15,249.5 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Cash flows from operating activities: | ||
Net earnings | $ 619.3 | $ 439.7 |
Adjustments to reconcile net earnings to cash flows from operating activities: | ||
Depreciation and amortization of property, plant and equipment | 23.4 | 25.2 |
Amortization of intangible assets | 169.4 | 153 |
Amortization of deferred financing costs | 3.3 | 3.2 |
Non-cash stock compensation | 54.3 | 54 |
Gain on disposal of business, net of associated income tax | (88.5) | 0 |
Changes in operating assets and liabilities, net of acquired businesses: | ||
Accounts receivable | 38.5 | (28.4) |
Unbilled receivables | (37) | (24) |
Inventories | (18.4) | (15.2) |
Accounts payable and accrued liabilities | (94) | (30.8) |
Deferred revenue | 51.2 | 39.5 |
Income taxes, excluding tax associated with gain on disposal of businesses | (77.6) | (61.7) |
Cash tax paid for gain on disposal of businesses | (39.4) | 0 |
Other, net | (13.4) | (6.7) |
Cash provided by operating activities | 591.1 | 547.8 |
Cash flows used in investing activities: | ||
Acquisitions of businesses, net of cash acquired | (539.2) | (1,182.3) |
Capital expenditures | (27.9) | (23.1) |
Capitalized software expenditures | (4.9) | (4.4) |
Proceeds from disposal of business | 220.5 | 0 |
Other, net | (2.6) | (0.8) |
Cash used in investing activities | (354.1) | (1,210.6) |
Cash flows from (used in) financing activities: | ||
Borrowings (payments) under revolving line of credit, net | (225) | 465 |
Cash dividends to stockholders | (95.6) | (84.5) |
Proceeds from stock-based compensation, net | 33 | 32.7 |
Treasury stock sales | 3.6 | 2.8 |
Other | 1.1 | 0.4 |
Cash provided by (used in) financing activities | (282.9) | 416.4 |
Effect of foreign currency exchange rate changes on cash | 2.3 | (3.1) |
Net decrease in cash and cash equivalents | (43.6) | (249.5) |
Cash and cash equivalents, beginning of period | 364.4 | 671.3 |
Cash and cash equivalents, end of period | $ 320.8 | $ 421.8 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Changes in Stockholders' Equity (unaudited) - USD ($) $ in Millions | Total | Common stock | Additional paid-in capital | Retained earnings | Accumulated other comprehensive loss | Treasury stock |
Balance at Dec. 31, 2017 | $ 6,863.6 | $ 1 | $ 1,602.9 | $ 5,464.6 | $ (186.2) | $ (18.7) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net earnings | 439.7 | 439.7 | ||||
Stock option exercises | 39.3 | 0.1 | 39.2 | |||
Treasury stock sold | 2.8 | 2.7 | 0.1 | |||
Currency translation adjustments | (18.4) | (18.4) | ||||
Stock-based compensation | 53.4 | 53.4 | ||||
Restricted stock activity | (6.6) | (6.6) | ||||
Dividends declared | (85.2) | (85.2) | ||||
Balance at Jun. 30, 2018 | 7,302.9 | 1.1 | 1,691.6 | 5,833.4 | (204.6) | (18.6) |
Balance at Mar. 31, 2018 | 7,155.5 | 1 | 1,653.9 | 5,647.6 | (128.4) | (18.6) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net earnings | 228.4 | 228.4 | ||||
Stock option exercises | 10.2 | 0.1 | 10.1 | |||
Treasury stock sold | 1.2 | 1.2 | 0 | |||
Currency translation adjustments | (76.2) | (76.2) | ||||
Stock-based compensation | 27.7 | 27.7 | ||||
Restricted stock activity | (1.3) | (1.3) | ||||
Dividends declared | (42.6) | (42.6) | ||||
Balance at Jun. 30, 2018 | 7,302.9 | 1.1 | 1,691.6 | 5,833.4 | (204.6) | (18.6) |
Balance at Dec. 31, 2018 | 7,738.5 | 1.1 | 1,751.5 | 6,247.7 | (243.3) | (18.5) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net earnings | 619.3 | 619.3 | ||||
Stock option exercises | 49.1 | 49.1 | ||||
Treasury stock sold | 3.6 | 3.5 | 0.1 | |||
Currency translation adjustments | 0.1 | 0.1 | ||||
Stock-based compensation | 52.5 | 52.5 | ||||
Restricted stock activity | (16.1) | (16.1) | ||||
Dividends declared | (96) | (96) | ||||
Balance at Jun. 30, 2019 | 8,351 | 1.1 | 1,840.5 | 6,771 | (243.2) | (18.4) |
Balance at Mar. 31, 2019 | 8,137.4 | 1.1 | 1,799.9 | 6,569.4 | (214.6) | (18.4) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net earnings | 249.7 | 249.7 | ||||
Stock option exercises | 12.3 | 12.3 | ||||
Treasury stock sold | 1.4 | 1.4 | 0 | |||
Currency translation adjustments | (28.6) | (28.6) | ||||
Stock-based compensation | 28.2 | 28.2 | ||||
Restricted stock activity | (1.3) | (1.3) | ||||
Dividends declared | (48.1) | (48.1) | ||||
Balance at Jun. 30, 2019 | $ 8,351 | $ 1.1 | $ 1,840.5 | $ 6,771 | $ (243.2) | $ (18.4) |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Changes in Stockholders' Equity (unaudited) (Parenthetical) - $ / shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Statement of Stockholders' Equity [Abstract] | ||||
Dividends declared (in dollars per share) | $ 0.4625 | $ 0.4125 | $ 0.4625 | $ 0.4125 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying Condensed Consolidated Financial Statements for the three and six months ended June 30, 2019 and 2018 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, comprehensive income and cash flows of Roper Technologies, Inc. and its subsidiaries (“Roper,” the “Company,” “we,” “our” or “us”) for all periods presented. The December 31, 2018 financial position data included herein was derived from the audited consolidated financial statements included in the Company’s 2018 Annual Report on Form 10-K (“Annual Report”) filed on February 25, 2019 with the Securities and Exchange Commission (“SEC”) but does not include all disclosures required by U.S. generally accepted accounting principles (“GAAP”). Roper’s management has made 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 GAAP. Actual results could differ from those estimates. The results of operations for the three and six months ended June 30, 2019 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 Roper’s audited consolidated financial statements and the notes thereto included in its Annual Report. Certain prior period amounts have been reclassified to conform to current period presentation. Changes in Segment Reporting Structure During the first quarter of 2019, we implemented a realignment of our reportable segment structure. The new reportable segments continue to provide a transparent view into Roper’s operations and capital deployment objectives. The Company’s new reporting segment structure reinforces Roper’s diversified, niche market strategy by reporting based upon business models instead of end markets. The four new reportable segments (and businesses within each - including acquisitions since the realignment) are as follows: – Application Software - Aderant, CBORD, CliniSys, Data Innovations, Deltek, Horizon, IntelliTrans, PowerPlan, Strata, Sunquest – Network Software & Systems - ConstructConnect, DAT, Foundry, Inovonics, iTradeNetwork, Link Logistics, MHA, RF IDeas, SHP, SoftWriters, TransCore – Measurement & Analytical Solutions - Alpha, CIVCO Medical Solutions, CIVCO Radiotherapy, Dynisco, FMI, Gatan, Hansen, Hardy, IPA, Logitech, Neptune, Northern Digital, Struers, Technolog, Uson, Verathon – Process Technologies - AMOT, CCC, Cornell, FTI, Metrix, PAC, Roper Pump, Viatran, Zetec The day-to-day operations of our businesses, our organizational structure, and our strategy remain unchanged. All prior periods have been recast to reflect the changes noted above. Accounting Policies Update The Company adopted the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 842, Leases (“ASC 842”), as of January 1, 2019 using the cumulative effect transition method for leases in existence as of the date of adoption. Our accounting policies are detailed in Note 1 of the Notes to Consolidated Financial Statements of our Annual Report. Changes to our accounting policies as a result of adopting ASC 842 are as follows: Leases - The Company adopted ASC 842 on January 1, 2019 using the cumulative effect transition method for leases in existence as of the date of adoption. The reported results for 2019 reflect the application of ASC 842 guidance while the reported results for 2018 were prepared under the previous guidance of ASC 840, Leases (“ASC 840”). The adoption of ASC 842 represents a change in accounting principle that recognizes right-of-use (“ROU”) assets and lease liabilities arising from all leases based on the present value of future minimum lease payments over the lease term. Consistent with ASC 840, lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The Company’s adoption of ASC 842 had no impact on our Condensed Consolidated Statement of Earnings or our Condensed Consolidated Statement of Cash Flows. We elected the package of practical expedients permitted under the transition guidance within ASC 842, which allowed us: (i) to carry forward the historical lease classification, (ii) not to reassess whether any existing contract contains a lease, and (iii) not to reassess initial direct costs for existing leases. Operating leases are classified as non-current operating lease ROU assets and current and non-current operating lease liabilities on our Condensed Consolidated Balance Sheet. Finance leases are not material. Adoption of ASC 842 resulted in the recognition of operating lease ROU assets and total operating lease liabilities of $274.0 and $282.7 , respectively, as of January 1, 2019. Certain of the ROU assets and total operating lease liabilities have been reclassified within the held for sale line items on the Condensed Consolidated Balance Sheet related to the classification of the Gatan business as held for sale. The difference between the operating lease ROU assets and total operating lease liabilities is the reclassification of previously recognized deferred rent liabilities against operating lease ROU assets. The adoption of ASC 842 did not result in an adjustment to retained earnings and it did not impact our deferred tax assets or liabilities. The Company’s operating leases are primarily for real property in support of our business operations. Although many of our leases contain renewal options, we generally are not reasonably certain to exercise these options at the commencement date. Accordingly, renewal options are generally not included in the lease term for determining the ROU asset and lease liability at commencement. Variable lease payments generally depend on an inflation-based index and such payments are not included in the original estimate of the lease liability. These variable lease payments are not material. Discount rates are determined based on Roper’s incremental borrowing rate as our leases generally do not provide an implicit rate. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 6 Months Ended |
Jun. 30, 2019 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements The FASB establishes changes to accounting principles under GAAP in the form of accounting standards updates (“ASUs”) to the ASC. The Company considers the applicability and impact of all ASUs. Any recent ASUs not listed below were assessed and determined to be either not applicable or are expected to have an immaterial impact on the Company’s results of operations, financial position or cash flows. Recently Adopted Accounting Pronouncements In February 2016, the FASB issued ASC 842, which included the recognition of right-of-use lease assets and lease liabilities on the balance sheet and the disclosure of other key information about leasing arrangements. The Company adopted ASC 842 on January 1, 2019 using the cumulative effect transition method for leases in existence as of the date of adoption. See Note 1 of the Condensed Consolidated Financial Statements for details. In May 2014, the FASB issued ASC 606, which created a single, comprehensive revenue recognition model for all contracts with customers. The Company adopted ASC 606 as of January 1, 2018 using the modified retrospective transition method resulting in a $14.3 increase to beginning retained earnings. Recently Released Accounting Pronouncements In June 2016, the FASB issued an update which amends the measurement of credit losses on financial instruments by requiring entities to use a forward-looking approach based on expected losses rather than incurred losses to estimate credit losses on certain types of financial instruments, including trade receivables. This update is effective for public entities for fiscal years beginning after December 15, 2019, with early adoption permitted. The Company is evaluating the impact of this update on its results of operations and financial condition. |
Weighted Average Shares Outstan
Weighted Average Shares Outstanding | 6 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share [Abstract] | |
Weighted Average Shares Outstanding | Weighted Average Shares Outstanding 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 based upon the trading price of Roper’s common stock. The effects of potential common stock were determined using the treasury stock method. Weighted average shares outstanding are shown below: Three months ended June 30, Six months ended June 30, 2019 2018 2019 2018 Basic shares outstanding 103.9 103.2 103.7 103.1 Effect of potential common stock: Common stock awards 1.2 1.2 1.2 1.2 Diluted shares outstanding 105.1 104.4 104.9 104.3 For the three and six months ended June 30, 2019 , there were 0.596 and 0.644 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 0.678 outstanding stock options that would have been antidilutive in the respective 2018 periods. |
Business Acquisition and Assets
Business Acquisition and Assets and Liabilities Held for Sale | 6 Months Ended |
Jun. 30, 2019 | |
Business Combinations [Abstract] | |
Business Acquisition and Assets and Liabilities Held for Sale | Business Acquisition and Assets and Liabilities Held for Sale On April 18, 2019, Roper acquired 100% of the shares of Foundry, a leading provider of software technologies used to deliver visual effects and 3D content for the entertainment, digital design, and visualization industries. The purchase price was $536.0 , net of cash acquired. The results of operations of Foundry are included in Roper's Condensed Consolidated Financial Statements since the date of the acquisition within the Network Software & Systems reportable segment. Supplemental pro forma information has not been provided as the acquisition did not have a material impact on Roper's Condensed Consolidated Financial Statements. The Company recorded $311.1 in goodwill and $269.5 of other identifiable intangibles in connection with the acquisition; however, purchase price allocations are preliminary pending final tax-related adjustments. The majority of the goodwill is not expected to be deductible for tax purposes. The amortizable intangible assets include customer relationships of $215.3 (16 year weighted average useful life) and technology of $42.6 (8 year weighted average useful life). Assets and Liabilities Held for Sale During the second quarter of 2018, Roper and Thermo Fisher Scientific, Inc. (“Thermo Fisher”) entered into a definitive agreement under which Thermo Fisher would acquire 100% of the shares of Gatan, Inc. (“Gatan”), a wholly owned subsidiary of Roper, for approximately $925.0 in cash. On June 10, 2019, Roper and Thermo Fisher announced a mutual termination of this agreement due to the challenges in obtaining regulatory approval in the United Kingdom. The Company remains committed to completing the sale of Gatan. The Company has engaged in marketing efforts and expects to reach an agreement with a buyer within the next twelve months. At December 31, 2018 and June 30, 2019, the assets and liabilities of Gatan were classified as held for sale on Roper’s Condensed Consolidated Balance Sheets. The Company recognized a deferred tax liability of $10.0 associated with the excess of book basis over tax basis in the shares of Gatan during 2018. The Company closed on its sale of Princeton Instruments, Photometrics, Lumenera, and other brands (collectively, the “Imaging” businesses) to Teledyne Technologies Incorporated on February 5, 2019 for approximately $225.0 in cash. The results of the Imaging businesses are reported in the Measurement & Analytical Solutions segment through such date. The sale resulted in a pretax gain of $119.6 , which is reported within “Gain on disposal of business” in the Condensed Consolidated Statement of Earnings. In addition, we recognized income tax expense of $31.1 in connection with the sale, which is included within “Income taxes” in the Condensed Consolidated Statement of Earnings. The assets and liabilities of the Imaging businesses were classified as held for sale on Roper’s Condensed Consolidated Balance Sheet at December 31, 2018. |
Stock Based Compensation
Stock Based Compensation | 6 Months Ended |
Jun. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Stock Based Compensation | Stock Based Compensation The Roper Technologies, Inc. 2016 Incentive Plan (“2016 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. The following table provides information regarding the Company’s stock-based compensation expense: Three months ended June 30, Six months ended June 30, 2019 2018 2019 2018 Stock-based compensation $ 29.0 $ 28.0 $ 54.3 $ 54.0 Tax effect recognized in net earnings 6.1 5.9 11.4 11.3 Stock Options - In the six months ended June 30, 2019 , 0.721 options were granted with a weighted average fair value of $67.87 per option. During the same period in 2018 , 0.660 options were granted with a weighted average fair value of $57.45 per option. All options were issued with an exercise price equal to the closing price of Roper’s common stock on the date of grant, as required by the 2016 Plan. 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 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 periods using the Black-Scholes option-pricing model: Six months ended June 30, 2019 2018 Risk-free interest rate (%) 2.42 2.63 Expected option life (years) 5.41 5.32 Expected volatility (%) 19.23 18.02 Expected dividend yield (%) 0.58 0.59 Cash received from option exercises for the six months ended June 30, 2019 and 2018 was $49.1 and $39.3 , respectively. Restricted Stock Grants - During the six months ended June 30, 2019 , the Company granted 0.294 shares with a weighted average grant date fair value of $315.00 per restricted share. During the same period in 2018 , the Company granted 0.357 shares with a weighted average grant date fair value of $277.72 per restricted share. All grants were issued at grant date fair value. During the six months ended June 30, 2019 , 0.170 restricted shares vested with a weighted average grant date fair value of $193.50 per restricted share and a weighted average vest date fair value of $311.77 per restricted share. Employee Stock Purchase Plan - 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. Common stock sold to employees pursuant to the stock purchase plan may be either treasury stock, stock purchased on the open market, or newly issued shares. During the six months ended June 30, 2019 and 2018 , participants in the employee stock purchase plan purchased 0.012 and 0.011 shares of Roper’s common stock for total consideration of $3.6 and $2.8 , respectively. All shares were purchased from Roper’s treasury shares. |
Inventories
Inventories | 6 Months Ended |
Jun. 30, 2019 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories The components of inventory were as follows: June 30, December 31, Raw materials and supplies $ 128.9 $ 120.3 Work in process 29.0 26.2 Finished products 78.4 74.6 Inventory reserves (32.8 ) (30.3 ) $ 203.5 $ 190.8 |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 6 Months Ended |
Jun. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets The carrying value of goodwill by segment was as follows: Application Software Network Software & Systems Measurement &Analytical Solutions Process Technologies Total Balances at December 31, 2018 $ 5,236.1 $ 2,623.7 $ 1,174.7 $ 312.3 $ 9,346.8 Additions — 311.1 — — 311.1 Other 0.8 — — — 0.8 Currency translation adjustments 2.2 (5.9 ) 1.3 1.4 (1.0 ) Balances at June 30, 2019 $ 5,239.1 $ 2,928.9 $ 1,176.0 $ 313.7 $ 9,657.7 Other relates primarily to purchase accounting adjustments for acquisitions. Other intangible assets were comprised of: Cost Accumulated amortization Net book value Assets subject to amortization: Customer related intangibles $ 3,926.8 $ (1,083.6 ) $ 2,843.2 Unpatented technology 504.0 (199.5 ) 304.5 Software 172.0 (93.2 ) 78.8 Patents and other protective rights 9.7 (7.5 ) 2.2 Trade names 7.3 (2.8 ) 4.5 Assets not subject to amortization: Trade names 608.9 — 608.9 Balances at December 31, 2018 $ 5,228.7 $ (1,386.6 ) $ 3,842.1 Assets subject to amortization: Customer related intangibles $ 4,140.8 $ (1,205.3 ) $ 2,935.5 Unpatented technology 546.3 (237.6 ) 308.7 Software 172.1 (102.4 ) 69.7 Patents and other protective rights 12.1 (7.9 ) 4.2 Trade names 7.9 (3.4 ) 4.5 Assets not subject to amortization: Trade names 620.5 — 620.5 Balances at June 30, 2019 $ 5,499.7 $ (1,556.6 ) $ 3,943.1 Amortization expense of other intangible assets was $168.9 and $152.6 during the six months ended June 30, 2019 and 2018 , respectively. An evaluation of the carrying value of goodwill and indefinite-lived intangibles is required to be performed on an annual basis and on an interim basis if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. There have been no events or changes in circumstances which indicate an interim impairment review is required in 2019 . The Company will perform the annual analysis during the fourth quarter of 2019 . |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Roper’s debt at June 30, 2019 included $4,100 of fixed-rate senior notes with the following fair values: $600 3.000% senior notes due 2020 604 $500 2.800% senior notes due 2021 504 $500 3.125% senior notes due 2022 509 $700 3.650% senior notes due 2023 729 $300 3.850% senior notes due 2025 317 $700 3.800% senior notes due 2026 730 $800 4.200% senior notes due 2028 856 The fair values of the senior notes are based on the trading prices of the notes, which the Company has determined to be Level 2 in the FASB fair value hierarchy. |
Contingencies
Contingencies | 6 Months Ended |
Jun. 30, 2019 | |
Loss Contingency [Abstract] | |
Contingencies | Contingencies Roper, in the ordinary course of business, is the subject of, or a party to, various pending or threatened legal actions, including product liability and employment practices that, in general, are based upon claims of the kind that have been customary over the past several years and which the Company is vigorously defending. 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. Roper or its subsidiaries have been named defendants along with numerous industrial companies in asbestos-related litigation claims in certain U.S. states. No significant resources have been required by Roper to respond to these cases and Roper 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. In April 2018, a stockholder derivative complaint was filed in Sarasota County, Florida against the Company, nominally, and its directors and former chairman & chief executive officer (“CEO”), alleging the directors breached their fiduciary duties and were unjustly enriched by the compensation earned by the nonexecutive directors and the CEO in 2015 and 2016. The matter was settled in June 2019, subject to court approval, which is pending. Under the terms of the settlement, the Company agreed to, among other things, expand future disclosures regarding its compensation practices, submit a new director compensation plan to shareholders for approval in 2020, and pay plaintiff’s attorneys’ fees and expenses. |
Business Segments
Business Segments | 6 Months Ended |
Jun. 30, 2019 | |
Segment Reporting [Abstract] | |
Business Segments | Business Segments Net revenues and operating profit by segment are set forth in the following table: Three months ended June 30, Six months ended June 30, 2019 2018 Change % 2019 2018 Change % Net revenues: Application Software $ 390.6 $ 358.2 9.0 % $ 771.8 $ 682.1 13.2 % Network Software & Systems 366.8 333.9 9.9 % 712.5 647.8 10.0 % Measurement & Analytical Solutions 408.4 425.8 (4.1 )% 810.2 829.8 (2.4 )% Process Technologies 164.5 175.8 (6.4 )% 323.0 336.5 (4.0 )% Total $ 1,330.3 $ 1,293.7 2.8 % $ 2,617.5 $ 2,496.2 4.9 % Gross profit: Application Software $ 262.7 $ 242.9 8.2 % $ 516.1 $ 456.8 13.0 % Network Software & Systems 252.7 225.4 12.1 % 491.7 438.1 12.2 % Measurement & Analytical Solutions 240.2 249.9 (3.9 )% 471.4 483.9 (2.6 )% Process Technologies 94.4 97.7 (3.4 )% 181.4 187.6 (3.3 )% Total $ 850.0 $ 815.9 4.2 % $ 1,660.6 $ 1,566.4 6.0 % Operating profit*: Application Software $ 98.4 $ 97.7 0.7 % $ 189.8 $ 167.9 13.0 % Network Software & Systems 129.2 115.6 11.8 % 254.5 221.6 14.8 % Measurement & Analytical Solutions 130.3 128.3 1.6 % 248.4 243.7 1.9 % Process Technologies 57.2 57.6 (0.7 )% 107.3 107.9 (0.6 )% Total $ 415.1 $ 399.2 4.0 % $ 800.0 $ 741.1 7.9 % Long-lived assets: Application Software $ 83.3 $ 80.2 3.9 % Network Software & Systems 38.6 39.4 (2.0 )% Measurement & Analytical Solutions 41.7 38.8 7.5 % Process Technologies 21.8 21.3 2.3 % Total $ 185.4 $ 179.7 3.2 % *Segment operating profit is before unallocated corporate general and administrative expenses; these expenses were $46.7 and $44.9 for the three months ended June 30, 2019 and 2018 , respectively, and $85.2 and $86.6 for the six months ended June 30, 2019 and 2018 , respectively. |
Revenues from Contracts
Revenues from Contracts | 6 Months Ended |
Jun. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Revenues from Contracts | Revenues from Contracts Disaggregated Revenue - We disaggregate our revenues into two categories: (i) software and related services; and (ii) engineered products and related services. Software and related services revenues are primarily derived from our Application Software and Network Software & Systems reportable segments. Engineered products and related services revenues are derived from all of our reportable segments except Application Software and comprise substantially all of the revenues generated in our Measurement & Analytical Solutions and Process Technologies reportable segments. See details in the table below. Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Software and related services $ 594.7 $ 533.1 $ 1,171.5 $ 1,025.7 Engineered products and related services 735.6 760.6 1,446.0 1,470.5 Net revenues $ 1,330.3 $ 1,293.7 $ 2,617.5 $ 2,496.2 Remaining performance obligations - Remaining performance obligations represents the transaction price of firm orders for which work has not been performed and excludes unexercised contract options. As of June 30, 2019 , the aggregate amount of the transaction price allocated to remaining performance obligations was $3,044.8 . We expect to recognize revenue on approximately 59% of our remaining performance obligations over the next 12 months , with the remainder to be recognized thereafter. Contract balances Balance Sheet Account June 30, 2019 December 31, 2018 Change Unbilled receivables $ 206.6 $ 169.4 $ 37.2 Contract liabilities - current (1) (758.0 ) (714.1 ) (43.9 ) Deferred revenue - non-current (2) (36.5 ) (29.8 ) (6.7 ) Net contract assets/(liabilities) $ (587.9 ) $ (574.5 ) $ (13.4 ) (1) Consists of “Deferred revenue,” billings in-excess of revenues (“BIE”) and customer deposits. BIE and customer deposits are reported in “Other accrued liabilities” in our Condensed Consolidated Balance Sheets. (2) The non-current portion of deferred revenue is included in “Other liabilities” in our Condensed Consolidated Balance Sheets. The change in our net contract assets/(liabilities) from December 31, 2018 , to June 30, 2019 was due primarily to the acquisition of Foundry, which increased net contract liabilities by $23.1 as of June 30, 2019 , and the timing of payments and invoicing relating to SaaS and PCS renewals, partially offset by revenues recognized in the three and six months ended June 30, 2019 of $235.5 and $543.7 , respectively, related to our contract liability balances at December 31, 2018 . In order to determine revenues recognized in the period from contract liabilities, we allocate revenue to the individual deferred revenue, BIE or customer deposit balance outstanding at the beginning of the year until the revenue exceeds that balance. Impairment losses recognized on our accounts receivable and unbilled receivables were immaterial in the three and six months ended June 30, 2019 . |
Leases
Leases | 6 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
Leases | Leases The Company’s operating leases are primarily for real property in support of our business operations. Although many of our leases contain renewal options, we generally are not reasonably certain to exercise these options at the commencement date. Accordingly, renewal options are generally not included in the lease term for determining the ROU asset and lease liability at commencement. Variable lease payments generally depend on an inflation-based index and such payments are not included in the original estimate of the lease liability. These variable lease payments are not material. For the three and six months ended June 30, 2019 , the Company recognized $16.8 and $32.7 in operating lease expense, respectively. The following table presents the supplemental cash flow information related to the Company’s operating leases for the six months ended June 30, 2019 : Operating cash flows used for operating leases $ 32.9 Right-of-use assets obtained in exchange for operating lease obligations 38.4 The following table presents the lease balances (excluding the Gatan business which is classified as held for sale) within the Consolidated Condensed Balance Sheet related to the Company’s operating leases as of June 30, 2019 : Lease Assets and Liabilities Balance Sheet Account ASSETS: Operating lease ROU assets Other assets $ 270.7 LIABILITIES: Current operating lease liabilities Other accrued liabilities $ 54.3 Operating lease liabilities Other liabilities 225.4 Total operating lease liabilities $ 279.7 Future minimum lease payments under non-cancellable leases (excluding the Gatan business which is classified as held for sale) were as follows: Remainder of 2019 $ 31.1 2020 58.0 2021 50.1 2022 38.0 2023 31.0 Thereafter 100.9 Total operating lease payments 309.1 Less: Imputed interest 29.4 Total operating lease liabilities $ 279.7 Weighted average remaining lease term - operating leases (years) 7 Weighted average discount rate (%) 2.9 |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Segment Reporting | During the first quarter of 2019, we implemented a realignment of our reportable segment structure. The new reportable segments continue to provide a transparent view into Roper’s operations and capital deployment objectives. The Company’s new reporting segment structure reinforces Roper’s diversified, niche market strategy by reporting based upon business models instead of end markets. The four new reportable segments (and businesses within each - including acquisitions since the realignment) are as follows: – Application Software - Aderant, CBORD, CliniSys, Data Innovations, Deltek, Horizon, IntelliTrans, PowerPlan, Strata, Sunquest – Network Software & Systems - ConstructConnect, DAT, Foundry, Inovonics, iTradeNetwork, Link Logistics, MHA, RF IDeas, SHP, SoftWriters, TransCore – Measurement & Analytical Solutions - Alpha, CIVCO Medical Solutions, CIVCO Radiotherapy, Dynisco, FMI, Gatan, Hansen, Hardy, IPA, Logitech, Neptune, Northern Digital, Struers, Technolog, Uson, Verathon – Process Technologies - AMOT, CCC, Cornell, FTI, Metrix, PAC, Roper Pump, Viatran, Zetec The day-to-day operations of our businesses, our organizational structure, and our strategy remain unchanged. All prior periods have been recast to reflect the changes noted above. |
Leases | The Company adopted ASC 842 on January 1, 2019 using the cumulative effect transition method for leases in existence as of the date of adoption. The reported results for 2019 reflect the application of ASC 842 guidance while the reported results for 2018 were prepared under the previous guidance of ASC 840, Leases (“ASC 840”). The adoption of ASC 842 represents a change in accounting principle that recognizes right-of-use (“ROU”) assets and lease liabilities arising from all leases based on the present value of future minimum lease payments over the lease term. Consistent with ASC 840, lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The Company’s adoption of ASC 842 had no impact on our Condensed Consolidated Statement of Earnings or our Condensed Consolidated Statement of Cash Flows. We elected the package of practical expedients permitted under the transition guidance within ASC 842, which allowed us: (i) to carry forward the historical lease classification, (ii) not to reassess whether any existing contract contains a lease, and (iii) not to reassess initial direct costs for existing leases. Operating leases are classified as non-current operating lease ROU assets and current and non-current operating lease liabilities on our Condensed Consolidated Balance Sheet. Finance leases are not material. |
Recent Accounting Pronouncements | The FASB establishes changes to accounting principles under GAAP in the form of accounting standards updates (“ASUs”) to the ASC. The Company considers the applicability and impact of all ASUs. Any recent ASUs not listed below were assessed and determined to be either not applicable or are expected to have an immaterial impact on the Company’s results of operations, financial position or cash flows. Recently Adopted Accounting Pronouncements In February 2016, the FASB issued ASC 842, which included the recognition of right-of-use lease assets and lease liabilities on the balance sheet and the disclosure of other key information about leasing arrangements. The Company adopted ASC 842 on January 1, 2019 using the cumulative effect transition method for leases in existence as of the date of adoption. See Note 1 of the Condensed Consolidated Financial Statements for details. In May 2014, the FASB issued ASC 606, which created a single, comprehensive revenue recognition model for all contracts with customers. The Company adopted ASC 606 as of January 1, 2018 using the modified retrospective transition method resulting in a $14.3 increase to beginning retained earnings. Recently Released Accounting Pronouncements In June 2016, the FASB issued an update which amends the measurement of credit losses on financial instruments by requiring entities to use a forward-looking approach based on expected losses rather than incurred losses to estimate credit losses on certain types of financial instruments, including trade receivables. This update is effective for public entities for fiscal years beginning after December 15, 2019, with early adoption permitted. The Company is evaluating the impact of this update on its results of operations and financial condition. |
Weighted Average Shares Outst_2
Weighted Average Shares Outstanding (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of Weighted Average Shares Outstanding | The effects of potential common stock were determined using the treasury stock method. Weighted average shares outstanding are shown below: Three months ended June 30, Six months ended June 30, 2019 2018 2019 2018 Basic shares outstanding 103.9 103.2 103.7 103.1 Effect of potential common stock: Common stock awards 1.2 1.2 1.2 1.2 Diluted shares outstanding 105.1 104.4 104.9 104.3 |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Stock Based Compensation Expense | The following table provides information regarding the Company’s stock-based compensation expense: Three months ended June 30, Six months ended June 30, 2019 2018 2019 2018 Stock-based compensation $ 29.0 $ 28.0 $ 54.3 $ 54.0 Tax effect recognized in net earnings 6.1 5.9 11.4 11.3 |
Weighted Average Assumptions Used to Value Option Grants | The following weighted average assumptions were used to estimate the fair value of options granted during current and prior year periods using the Black-Scholes option-pricing model: Six months ended June 30, 2019 2018 Risk-free interest rate (%) 2.42 2.63 Expected option life (years) 5.41 5.32 Expected volatility (%) 19.23 18.02 Expected dividend yield (%) 0.58 0.59 |
Inventories (Tables)
Inventories (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Inventory Disclosure [Abstract] | |
Inventories | The components of inventory were as follows: June 30, December 31, Raw materials and supplies $ 128.9 $ 120.3 Work in process 29.0 26.2 Finished products 78.4 74.6 Inventory reserves (32.8 ) (30.3 ) $ 203.5 $ 190.8 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | The carrying value of goodwill by segment was as follows: Application Software Network Software & Systems Measurement &Analytical Solutions Process Technologies Total Balances at December 31, 2018 $ 5,236.1 $ 2,623.7 $ 1,174.7 $ 312.3 $ 9,346.8 Additions — 311.1 — — 311.1 Other 0.8 — — — 0.8 Currency translation adjustments 2.2 (5.9 ) 1.3 1.4 (1.0 ) Balances at June 30, 2019 $ 5,239.1 $ 2,928.9 $ 1,176.0 $ 313.7 $ 9,657.7 |
Other Intangible Assets | Other intangible assets were comprised of: Cost Accumulated amortization Net book value Assets subject to amortization: Customer related intangibles $ 3,926.8 $ (1,083.6 ) $ 2,843.2 Unpatented technology 504.0 (199.5 ) 304.5 Software 172.0 (93.2 ) 78.8 Patents and other protective rights 9.7 (7.5 ) 2.2 Trade names 7.3 (2.8 ) 4.5 Assets not subject to amortization: Trade names 608.9 — 608.9 Balances at December 31, 2018 $ 5,228.7 $ (1,386.6 ) $ 3,842.1 Assets subject to amortization: Customer related intangibles $ 4,140.8 $ (1,205.3 ) $ 2,935.5 Unpatented technology 546.3 (237.6 ) 308.7 Software 172.1 (102.4 ) 69.7 Patents and other protective rights 12.1 (7.9 ) 4.2 Trade names 7.9 (3.4 ) 4.5 Assets not subject to amortization: Trade names 620.5 — 620.5 Balances at June 30, 2019 $ 5,499.7 $ (1,556.6 ) $ 3,943.1 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Fixed-Rate Senior Notes, Fair Value | Roper’s debt at June 30, 2019 included $4,100 of fixed-rate senior notes with the following fair values: $600 3.000% senior notes due 2020 604 $500 2.800% senior notes due 2021 504 $500 3.125% senior notes due 2022 509 $700 3.650% senior notes due 2023 729 $300 3.850% senior notes due 2025 317 $700 3.800% senior notes due 2026 730 $800 4.200% senior notes due 2028 856 |
Business Segments (Tables)
Business Segments (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Segment Reporting [Abstract] | |
Segment Reporting Information | Net revenues and operating profit by segment are set forth in the following table: Three months ended June 30, Six months ended June 30, 2019 2018 Change % 2019 2018 Change % Net revenues: Application Software $ 390.6 $ 358.2 9.0 % $ 771.8 $ 682.1 13.2 % Network Software & Systems 366.8 333.9 9.9 % 712.5 647.8 10.0 % Measurement & Analytical Solutions 408.4 425.8 (4.1 )% 810.2 829.8 (2.4 )% Process Technologies 164.5 175.8 (6.4 )% 323.0 336.5 (4.0 )% Total $ 1,330.3 $ 1,293.7 2.8 % $ 2,617.5 $ 2,496.2 4.9 % Gross profit: Application Software $ 262.7 $ 242.9 8.2 % $ 516.1 $ 456.8 13.0 % Network Software & Systems 252.7 225.4 12.1 % 491.7 438.1 12.2 % Measurement & Analytical Solutions 240.2 249.9 (3.9 )% 471.4 483.9 (2.6 )% Process Technologies 94.4 97.7 (3.4 )% 181.4 187.6 (3.3 )% Total $ 850.0 $ 815.9 4.2 % $ 1,660.6 $ 1,566.4 6.0 % Operating profit*: Application Software $ 98.4 $ 97.7 0.7 % $ 189.8 $ 167.9 13.0 % Network Software & Systems 129.2 115.6 11.8 % 254.5 221.6 14.8 % Measurement & Analytical Solutions 130.3 128.3 1.6 % 248.4 243.7 1.9 % Process Technologies 57.2 57.6 (0.7 )% 107.3 107.9 (0.6 )% Total $ 415.1 $ 399.2 4.0 % $ 800.0 $ 741.1 7.9 % Long-lived assets: Application Software $ 83.3 $ 80.2 3.9 % Network Software & Systems 38.6 39.4 (2.0 )% Measurement & Analytical Solutions 41.7 38.8 7.5 % Process Technologies 21.8 21.3 2.3 % Total $ 185.4 $ 179.7 3.2 % *Segment operating profit is before unallocated corporate general and administrative expenses; these expenses were $46.7 and $44.9 for the three months ended June 30, 2019 and 2018 , respectively, and $85.2 and $86.6 for the six months ended June 30, 2019 and 2018 , respectively. |
Revenues from Contracts (Tables
Revenues from Contracts (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Software and related services $ 594.7 $ 533.1 $ 1,171.5 $ 1,025.7 Engineered products and related services 735.6 760.6 1,446.0 1,470.5 Net revenues $ 1,330.3 $ 1,293.7 $ 2,617.5 $ 2,496.2 |
Contract Balances | Contract balances Balance Sheet Account June 30, 2019 December 31, 2018 Change Unbilled receivables $ 206.6 $ 169.4 $ 37.2 Contract liabilities - current (1) (758.0 ) (714.1 ) (43.9 ) Deferred revenue - non-current (2) (36.5 ) (29.8 ) (6.7 ) Net contract assets/(liabilities) $ (587.9 ) $ (574.5 ) $ (13.4 ) (1) Consists of “Deferred revenue,” billings in-excess of revenues (“BIE”) and customer deposits. BIE and customer deposits are reported in “Other accrued liabilities” in our Condensed Consolidated Balance Sheets. (2) The non-current portion of deferred revenue is included in “Other liabilities” in our Condensed Consolidated Balance Sheets. |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
Supplemental Cash Flow and Other Information | The following table presents the supplemental cash flow information related to the Company’s operating leases for the six months ended June 30, 2019 : Operating cash flows used for operating leases $ 32.9 Right-of-use assets obtained in exchange for operating lease obligations 38.4 Weighted average remaining lease term - operating leases (years) 7 Weighted average discount rate (%) 2.9 |
Lease Balances Within Balance Sheet | The following table presents the lease balances (excluding the Gatan business which is classified as held for sale) within the Consolidated Condensed Balance Sheet related to the Company’s operating leases as of June 30, 2019 : Lease Assets and Liabilities Balance Sheet Account ASSETS: Operating lease ROU assets Other assets $ 270.7 LIABILITIES: Current operating lease liabilities Other accrued liabilities $ 54.3 Operating lease liabilities Other liabilities 225.4 Total operating lease liabilities $ 279.7 |
Future Minimum Lease Payments | Future minimum lease payments under non-cancellable leases (excluding the Gatan business which is classified as held for sale) were as follows: Remainder of 2019 $ 31.1 2020 58.0 2021 50.1 2022 38.0 2023 31.0 Thereafter 100.9 Total operating lease payments 309.1 Less: Imputed interest 29.4 Total operating lease liabilities $ 279.7 |
Basis of Presentation (Narrativ
Basis of Presentation (Narrative) (Details) | 6 Months Ended |
Jun. 30, 2019segment | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of reportable segments | 4 |
Basis of Presentation (Impact o
Basis of Presentation (Impact of ASC 842) (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Jan. 01, 2019 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Operating lease ROU assets | $ 270.7 | |
Operating lease liabilities | $ 279.7 | |
Accounting Standards Update 2016-02 (ASC 842) | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Operating lease ROU assets | $ 274 | |
Operating lease liabilities | $ 282.7 |
Recent Accounting Pronounceme_2
Recent Accounting Pronouncements (Details) - ASC 606 $ in Millions | Jan. 01, 2018USD ($) |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Adoption of ASC 606 | $ 14.3 |
Retained earnings | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Adoption of ASC 606 | $ 14.3 |
Weighted Average Shares Outst_3
Weighted Average Shares Outstanding (Schedule of Weighted Average Shares Outstanding) (Details) - shares shares in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Earnings Per Share [Abstract] | ||||
Basic shares outstanding (in shares) | 103.9 | 103.2 | 103.7 | 103.1 |
Effect of potential common stock: | ||||
Common stock awards (in shares) | 1.2 | 1.2 | 1.2 | 1.2 |
Diluted shares outstanding (in shares) | 105.1 | 104.4 | 104.9 | 104.3 |
Weighted Average Shares Outst_4
Weighted Average Shares Outstanding (Narrative) (Details) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Stock Options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive stock options (in shares) | 596 | 678 | 644 | 678 |
Business Acquisition and Asse_2
Business Acquisition and Assets and Liabilities Held for Sale (Narrative) (Details) - USD ($) $ in Millions | Apr. 18, 2019 | Feb. 05, 2019 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 |
Business Acquisition [Line Items] | |||||||
Goodwill | $ 9,657.7 | $ 9,657.7 | $ 9,346.8 | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Gain on disposal of business | $ 0 | $ 0 | $ 119.6 | $ 0 | |||
Disposal group, not discontinued operations | Gatan, Inc. | |||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Deferred tax liability, book basis over tax basis | $ 10 | $ 10 | |||||
Thermo Fisher | Disposal group, not discontinued operations | Gatan, Inc. | |||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Percentage of shares agreed to be sold | 100.00% | 100.00% | |||||
Sale of business, consideration | $ 925 | $ 925 | |||||
Teledyne | Disposal group, not discontinued operations | Imaging businesses | |||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Sale of business, consideration | $ 225 | ||||||
Gain on disposal of business | $ 119.6 | ||||||
Gain on disposal of business, tax expense | $ 31.1 | ||||||
Foundry | |||||||
Business Acquisition [Line Items] | |||||||
Acquisition consideration | $ 536 | ||||||
Percentage of shares acquired | 100.00% | ||||||
Goodwill | $ 311.1 | ||||||
Intangible assets acquired | 269.5 | ||||||
Foundry | Customer related intangibles | |||||||
Business Acquisition [Line Items] | |||||||
Intangible assets acquired | $ 215.3 | ||||||
Weighted average useful life of intangible assets acquired | 16 years | ||||||
Foundry | Technology | |||||||
Business Acquisition [Line Items] | |||||||
Intangible assets acquired | $ 42.6 | ||||||
Weighted average useful life of intangible assets acquired | 8 years |
Stock Based Compensation (Stock
Stock Based Compensation (Stock Based Compensation Expense) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Share-based Payment Arrangement [Abstract] | ||||
Stock-based compensation | $ 29 | $ 28 | $ 54.3 | $ 54 |
Tax effect recognized in net earnings | $ 6.1 | $ 5.9 | $ 11.4 | $ 11.3 |
Stock Based Compensation (Narra
Stock Based Compensation (Narrative) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Stock Options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Employee stock options granted during the period (in shares) | 721 | 660 |
Fair value per share (in dollars per share) | $ 67.87 | $ 57.45 |
Cash received from exercise of options | $ 49.1 | $ 39.3 |
Restricted Stock Awards | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock awards granted during period (in shares) | 294 | 357 |
Weighted average fair value per share of restricted stock awards granted during the period (in dollars per share) | $ 315 | $ 277.72 |
Restricted stock awards vested during period (in shares) | 170 | |
Weighted average grant date fair value per share (in dollars per share) | $ 193.50 | |
Weighted average vest date fair value per share (in dollars per share) | $ 311.77 | |
Employee Stock Purchase Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Percentage of eligible earnings to purchase common stock through the employee stock purchase plan | 10.00% | |
Discount on the average closing price for the employee stock purchase plan | 5.00% | |
Shares of stock purchased during the period by participants in the employee stock purchase plan (in shares) | 12 | 11 |
Amount paid for stock purchased during the period by participants in the employee stock purchase plan | $ 3.6 | $ 2.8 |
Stock Based Compensation (Weigh
Stock Based Compensation (Weighted Average Assumptions Used to Value Option Grants) (Details) - Employee Stock Option | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Risk-free interest rate (%) | 2.42% | 2.63% |
Expected option life (years) | 5 years 4 months 28 days | 5 years 3 months 25 days |
Expected volatility (%) | 19.23% | 18.02% |
Expected dividend yield (%) | 0.58% | 0.59% |
Inventories (Details)
Inventories (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Inventories [Abstract] | ||
Raw materials and supplies | $ 128.9 | $ 120.3 |
Work in process | 29 | 26.2 |
Finished products | 78.4 | 74.6 |
Inventory reserves | (32.8) | (30.3) |
Total Inventory | $ 203.5 | $ 190.8 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets (Goodwill) (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2019USD ($) | |
Goodwill [Roll Forward] | |
Balances | $ 9,346.8 |
Additions | 311.1 |
Other | 0.8 |
Currency translation adjustments | (1) |
Balances | 9,657.7 |
Application Software | |
Goodwill [Roll Forward] | |
Balances | 5,236.1 |
Additions | 0 |
Other | 0.8 |
Currency translation adjustments | 2.2 |
Balances | 5,239.1 |
Network Software & Systems | |
Goodwill [Roll Forward] | |
Balances | 2,623.7 |
Additions | 311.1 |
Other | 0 |
Currency translation adjustments | (5.9) |
Balances | 2,928.9 |
Measurement &Analytical Solutions | |
Goodwill [Roll Forward] | |
Balances | 1,174.7 |
Additions | 0 |
Other | 0 |
Currency translation adjustments | 1.3 |
Balances | 1,176 |
Process Technologies | |
Goodwill [Roll Forward] | |
Balances | 312.3 |
Additions | 0 |
Other | 0 |
Currency translation adjustments | 1.4 |
Balances | $ 313.7 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets (Other Intangible Assets) (Details) - USD ($) $ in Millions | Jun. 30, 2019 | Dec. 31, 2018 |
Finite-Lived Intangible Assets [Line Items] | ||
Accumulated amortization | $ (1,556.6) | $ (1,386.6) |
Intangible assets, gross (excluding goodwill) | 5,499.7 | 5,228.7 |
Intangible assets, net (excluding goodwill) | 3,943.1 | 3,842.1 |
Trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets (excluding goodwill) | 620.5 | 608.9 |
Customer related intangibles | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross | 4,140.8 | 3,926.8 |
Accumulated amortization | (1,205.3) | (1,083.6) |
Finite-lived intangible assets, net | 2,935.5 | 2,843.2 |
Unpatented technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross | 546.3 | 504 |
Accumulated amortization | (237.6) | (199.5) |
Finite-lived intangible assets, net | 308.7 | 304.5 |
Software | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross | 172.1 | 172 |
Accumulated amortization | (102.4) | (93.2) |
Finite-lived intangible assets, net | 69.7 | 78.8 |
Patents and other protective rights | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross | 12.1 | 9.7 |
Accumulated amortization | (7.9) | (7.5) |
Finite-lived intangible assets, net | 4.2 | 2.2 |
Trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross | 7.9 | 7.3 |
Accumulated amortization | (3.4) | (2.8) |
Finite-lived intangible assets, net | $ 4.5 | $ 4.5 |
Goodwill and Other Intangible_5
Goodwill and Other Intangible Assets (Narrative) (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Finite-Lived Intangible Assets [Line Items] | ||
Amortization of intangible assets | $ 169.4 | $ 153 |
Other Intangible Assets | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization of intangible assets | $ 168.9 | $ 152.6 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments (Details) - Senior Notes - Fair Value, Inputs, Level 2 | Jun. 30, 2019USD ($) |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Fixed rate senior notes carrying amount | $ 4,100,000,000 |
$600 3.000% senior notes due 2020 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Long-term debt, fair value | 604,000,000 |
Face value of debt | $ 600,000,000 |
Interest rate on senior notes | 3.00% |
$500 2.800% senior notes due 2021 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Long-term debt, fair value | $ 504,000,000 |
Face value of debt | $ 500,000,000 |
Interest rate on senior notes | 2.80% |
$500 3.125% senior notes due 2022 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Long-term debt, fair value | $ 509,000,000 |
Face value of debt | $ 500,000,000 |
Interest rate on senior notes | 3.125% |
$700 3.650% senior notes due 2023 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Long-term debt, fair value | $ 729,000,000 |
Face value of debt | $ 700,000,000 |
Interest rate on senior notes | 3.65% |
$300 3.850% senior notes due 2025 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Long-term debt, fair value | $ 317,000,000 |
Face value of debt | $ 300,000,000 |
Interest rate on senior notes | 3.85% |
$700 3.800% senior notes due 2026 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Long-term debt, fair value | $ 730,000,000 |
Face value of debt | $ 700,000,000 |
Interest rate on senior notes | 3.80% |
$800 4.200% senior notes due 2028 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Long-term debt, fair value | $ 856,000,000 |
Face value of debt | $ 800,000,000 |
Interest rate on senior notes | 4.20% |
Business Segments (Details)
Business Segments (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Segment Reporting Information [Line Items] | ||||
Net revenues: | $ 1,330.3 | $ 1,293.7 | $ 2,617.5 | $ 2,496.2 |
Percent change in net sales | 2.80% | 4.90% | ||
Gross profit | $ 850 | 815.9 | $ 1,660.6 | 1,566.4 |
Percent change in gross profit | 4.20% | 6.00% | ||
Operating profit | $ 415.1 | 399.2 | $ 800 | 741.1 |
Percent change in operating profit | 4.00% | 7.90% | ||
Long-lived assets | $ 185.4 | 179.7 | $ 185.4 | 179.7 |
Percent change in long-lived assets | 3.20% | |||
Application Software | ||||
Segment Reporting Information [Line Items] | ||||
Net revenues: | $ 390.6 | 358.2 | $ 712.5 | 647.8 |
Percent change in net sales | 9.00% | 10.00% | ||
Gross profit | $ 262.7 | 242.9 | $ 491.7 | 438.1 |
Percent change in gross profit | 8.20% | 12.20% | ||
Operating profit | $ 98.4 | 97.7 | $ 254.5 | 221.6 |
Percent change in operating profit | 0.70% | 14.80% | ||
Long-lived assets | $ 83.3 | 80.2 | $ 83.3 | 80.2 |
Percent change in long-lived assets | 3.90% | |||
Network Software & Systems | ||||
Segment Reporting Information [Line Items] | ||||
Net revenues: | $ 366.8 | 333.9 | $ 771.8 | 682.1 |
Percent change in net sales | 9.90% | 13.20% | ||
Gross profit | $ 252.7 | 225.4 | $ 516.1 | 456.8 |
Percent change in gross profit | 12.10% | 13.00% | ||
Operating profit | $ 129.2 | 115.6 | $ 189.8 | 167.9 |
Percent change in operating profit | 11.80% | 13.00% | ||
Long-lived assets | $ 38.6 | 39.4 | $ 38.6 | 39.4 |
Percent change in long-lived assets | (2.00%) | |||
Measurement & Analytical Solutions | ||||
Segment Reporting Information [Line Items] | ||||
Net revenues: | $ 408.4 | 425.8 | $ 810.2 | 829.8 |
Percent change in net sales | (4.10%) | (2.40%) | ||
Gross profit | $ 240.2 | 249.9 | $ 471.4 | 483.9 |
Percent change in gross profit | (3.90%) | (2.60%) | ||
Operating profit | $ 130.3 | 128.3 | $ 248.4 | 243.7 |
Percent change in operating profit | 1.60% | 1.90% | ||
Long-lived assets | $ 41.7 | 38.8 | $ 41.7 | 38.8 |
Percent change in long-lived assets | 7.50% | |||
Process Technologies | ||||
Segment Reporting Information [Line Items] | ||||
Net revenues: | $ 164.5 | 175.8 | $ 323 | 336.5 |
Percent change in net sales | (6.40%) | (4.00%) | ||
Gross profit | $ 94.4 | 97.7 | $ 181.4 | 187.6 |
Percent change in gross profit | (3.40%) | (3.30%) | ||
Operating profit | $ 57.2 | 57.6 | $ 107.3 | 107.9 |
Percent change in operating profit | (0.70%) | (0.60%) | ||
Long-lived assets | $ 21.8 | 21.3 | $ 21.8 | 21.3 |
Percent change in long-lived assets | 2.30% | |||
Corporate | ||||
Segment Reporting Information [Line Items] | ||||
Unallocated corporate general and administrative expenses | $ 46.7 | $ 44.9 | $ 85.2 | $ 86.6 |
Revenues from Contracts (Disagg
Revenues from Contracts (Disaggregation of Revenue) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Disaggregation of Revenue [Line Items] | ||||
Net revenues | $ 1,330.3 | $ 1,293.7 | $ 2,617.5 | $ 2,496.2 |
Software and related services | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenues | 594.7 | 533.1 | 1,171.5 | 1,025.7 |
Engineered products and related services | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenues | $ 735.6 | $ 760.6 | $ 1,446 | $ 1,470.5 |
Revenues from Contracts (Remain
Revenues from Contracts (Remaining Performance Obligations Narrative) (Details) $ in Millions | Jun. 30, 2019USD ($) |
Revenue from Contract with Customer [Abstract] | |
Remaining performance obligations | $ 3,044.8 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-07-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligations, percentage | 59.00% |
Remaining performance obligations, expected timing of satisfaction | 12 months |
Revenues from Contracts (Contra
Revenues from Contracts (Contract Balances) (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2019 | Dec. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | ||
Unbilled receivables | $ 206.6 | $ 169.4 |
Contract liabilities - current | (758) | (714.1) |
Deferred revenue - non-current | (36.5) | (29.8) |
Net contract assets/(liabilities) | (587.9) | $ (574.5) |
Change in unbilled receivables | 37.2 | |
Change in contract liabilities - current | (43.9) | |
Change in deferred revenue - non-current | (6.7) | |
Change in net contract assets/(liabilities) | $ (13.4) |
Revenues from Contracts (Cont_2
Revenues from Contracts (Contract Balances - Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended |
Jun. 30, 2019 | Jun. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | ||
Increase in net contract liabilities from acquisitions | $ 23.1 | |
Contract with customer, revenues recognized | $ 235.5 | $ 543.7 |
Leases (Supplemental Cash Flow
Leases (Supplemental Cash Flow and Other Information) (Details) $ in Millions | 3 Months Ended | 6 Months Ended |
Jun. 30, 2019USD ($) | Jun. 30, 2019USD ($) | |
Leases [Abstract] | ||
Operating lease cost | $ 16.8 | $ 32.7 |
Operating cash flows used for operating leases | 32.9 | |
Right-of-use assets obtained in exchange for operating lease obligations | $ 38.4 | |
Weighted average remaining lease term - operating leases | 7 years | 7 years |
Weighted average discount rate | 2.90% | 2.90% |
Leases (Lease Balances Within B
Leases (Lease Balances Within Balance Sheet) (Details) $ in Millions | Jun. 30, 2019USD ($) |
ASSETS: | |
Operating lease ROU assets | $ 270.7 |
LIABILITIES: | |
Current operating lease liabilities | 54.3 |
Operating lease liabilities | 225.4 |
Total operating lease liabilities | $ 279.7 |
Leases (Future Minimum Lease Pa
Leases (Future Minimum Lease Payments) (Details) $ in Millions | Jun. 30, 2019USD ($) |
Leases [Abstract] | |
Remainder of 2019 | $ 31.1 |
2020 | 58 |
2021 | 50.1 |
2022 | 38 |
2023 | 31 |
Thereafter | 100.9 |
Total operating lease payments | 309.1 |
Less: Imputed interest | 29.4 |
Total operating lease liabilities | $ 279.7 |