Y e a r s
Annual Report
A Diversified Growth Company
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Roper is a diversified growth company and a constituent of the S&P 500,
Fortune 1000, and Russell 1000 indices. We provide engineered products and
solutions that create global leadership positions across a diverse set of niche markets.
These markets include water, energy, transportation, medical, education, and
SaaS-based information networks.
Sales and Operating Cash Flow Chart
Sales and Operating Cash Flow Chart
($ in millions)
($ in millions)
Added to
the S&P 1000
and S&P Small Cap 600
Indices
Shares begin
trading on the
New York
Stock Exchange
Roper shares begin trading on
the American Stock Exchange
on Feb. 12, 1992
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Promoted to the
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Promoted to
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Roper invests nearly $150 million in acquisitions
from 1992–1996, including Compressor Controls,
which wins a large international contract and
delivers significant growth.
Roper invests $486 million in acquisitions from
1997–2001 with a primary focus on instrumen
tation and scientific imaging solutions and
positions the Company’s niche technologies.
Roper invests nearly $1.9 billion in acquisitions
from 2002–2006 and builds sustainable
platforms in water, transportation, and medical.
The Company strengthens its governance process
to enhance organic growth and execution.
A focus on an assetlight business strategy fuels
increased free cash flow.
Roper expands into software and SaaSbased
information networks while adding to its medical
platform from 2007–2011. New acquisitions,
acceleration of organic growth, and adoption of cash
return disciplines deliver over $2 billion in free
cash flow. With substantial financial capacity and
expanded capabilities, the Company is well posi
tioned for continued growth into the next decade.
Roper 2011 Annual Report / Page 1
Letter to Shareholders
On the inside front cover of this report, we underscore Roper’s
long-standing commitment to creating shareholder value. This
commitment has resulted in a 20-year record of success, driven
primarily by a consistent focus on growing cash flow. As a result,
shareholders have been rewarded. We have been able to drive these
substantial cash flows due to several factors. First, our strategy to
acquire great businesses and help them grow has been proven
time and again to be an excellent source of future cash flows. Next,
Brian Jellison, Chairman and
Chief Executive Officer
as we have moved from the S&P SmallCap 600 Index to the S&P MidCap 400 Index and
more recently to the large-cap S&P 500 Index, we have steadily mastered the challenge
of maintaining a business culture that is based on the principle that Simple Ideas and
Nimble Execution produce Powerful Results in our businesses. This culture has proven
as scalable as we always believed it would be. Further, our leaders continue to demonstrate
an intricate understanding of their businesses, while adhering to and executing our com-
pelling cash performance disciplines. This powerful combination of clear focus, proven
strategy, and disciplined principles has created solid growth platforms at Roper—and
paves the way for our future success.
Last year, we concluded our letter to shareholders with the expectation that 2011 would be a record year.
And it was. We set new performance records, including:
• $2.8 billion in revenue, with organic growth of 13%
• $427 million in net earnings, a 32% increase
• Gross margin of 54.2%
• EBITDA of $802 million, or 28.7% of sales
• Operating income of $661 million, or 23.6% of
sales, a 200 basis point increase over 2010
• $602 million in operating cash flow, representing
22% of sales
Roper 2011 Annual Report / Page 2
S&P 500 Index
Roper Industries Inc.
Comparison of Cumulative T otal Shareholder Return – Roper Industries vs. S&P 500 Index
Comparison of Cumulative Total Shareholder Return—Roper Industries vs. S&P 500 Index
Roper Industries Inc.
S&P 500 Index
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IPO
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Creating Shareholder Value Through Cash Deployment
In 2011, we expanded our growing medical platform with the
We believe the disciplined deployment of cash flow, both
acquisition of Northern Digital, Inc., a provider of optical and
organically and into high-value acquisitions, creates substan-
electromagnetic tracking systems and consumables for the
tial shareholder value over time. We highlighted this simple
growing image-guided, minimally invasive surgery market.
idea when we identified “cash as a weapon” in our first annual
In addition, we acquired United Controls Group and Trinity
report in 1992. We emphasized it again when we said that
Integrated Systems, both of which add new technologies and
“cash is king” in our 2003 annual report. And we continue to
expanded market opportunities to our energy systems business.
believe–and demonstrate–this principle today.
Our balance sheet is stronger than ever before. With more
In addition to maintaining an unwavering focus on cash flow,
than $600 million in operating cash flow in 2011, our com-
we have spent the past decade transforming our enterprise
pelling cash flow provided us with ample capacity to make
into a diversified growth company. This effort has included
additional investments, improve our investment grade credit
building sustainable growth platforms, focusing on cash-return
rating and increase dividends. In fact, we have increased
disciplines and cultivating a performance-driven culture. Our
our dividend every year since becoming a public company,
transformation has enabled us to sharpen our focus on both
including increases of 15% in 2009, 16% in 2010 and, reflect-
internal growth objectives and acquisitions that have yielded
ing our continued growth, 25% in 2011.
powerful results.
Roper 2011 Annual Report / Page 3
Revenue
EBITDA
Free Cash Flow
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Revenue
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EBITDA
($ in millions)
Free Cash Flow*
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* Free Cash Flow = Operating Cash Flow Less Capital Expenditures
Culture and the Governance Model
Revenue
EBITDA
environments. We continue to improve margins and capture
Free Cash Flow
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We believe cash is the best measure of performance. We
($ in millions)
appreciate and preserve what works in our businesses, while
2,797
being committed to stimulating progress and change that can
accelerate growth and drive cash returns. And we believe that
positive leverage from our sales growth. Our end markets are
($ in millions)
diverse and enjoy enhanced resistance to cyclical risk. We
have more recurring revenue from our disciplined acquisitions
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802
of the last several years. Our investments in technology, cus-
more value is created from localized innovation than central-
tomer relationships and channel development provide us with
ized control. Our businesses are driven by customer intimacy,
significant capabilities to drive growth. We continue to find our
application engineering expertise, technology leadership and
niche again and again, and we see exciting new opportunities
nimble execution, and we govern with common tools and
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metrics that enable focused resource allocation to enhance
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growth. We emphasize financial ratio discipline to facilitate
understanding and continually improve performance. We
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ahead in 2012 and beyond. Our continuing use of embedded
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software in products and addition of SaaS-based information
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networks open new avenues for growth. With the optimism
2011
of our business teams and strength of our balance sheet, we
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invest in the long-term success of our businesses, and it shows:
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are on track for another record year. And as we move forward,
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2011
Since our first year as a public company, sales have increased
we will continue to demonstrate the long-standing premise
dramatically, while free cash flow has grown even faster.
that has underpinned our past success—Simple Ideas and
Nimble Execution produce Powerful Results.
Looking Ahead
We enter our 21st year in the best position in our history. Our
leadership teams are broader and deeper. Our focus on cash
is as clear and determined as ever, and our execution on our
cash return principles has been proven in many economic
Brian Jellison
Chairman and Chief Executive Officer
Roper 2011 Annual Report / Page 4
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2011
□ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
to
Commission File Number 1-12273
Roper Industries, Inc.
(Exact name of Registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
51-0263969
(I.R.S. Employer
Identification No.)
6901 Professional Parkway East, Suite 200
Sarasota, Florida 34240
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (941) 556-2601
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of Each Class
Common Stock, $0.01 Par Value
Name of Each Exchange
On Which Registered
New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes □ No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934. □ Yes No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes □ No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and
will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K. □
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§223.405) during the preceding 12 months (or for
such shorter period that the registrant was required to submit and post such files). Yes □ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company (as defined in Rule 12b-2 of the Exchange Act).
Large accelerated filer □ Accelerated filer □ Non-accelerated filer □ Smaller reporting company
Indicate by check mark if the registrant is a shell company (as defined in Rule 12-b2 of the Act). □ Yes No
Based on the closing sale price on the New York Stock Exchange on June 30, 2011, the aggregate market value of the voting and non-voting
common stock held by non-affiliates of the registrant was: $8,071,156,496.
Number of shares of Registrant’s Common Stock outstanding as of February 17, 2012: 96,892,635.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant’s Proxy Statement to be furnished to Stockholders in connection with its Annual Meeting of Stockholders to be
held on June 4, 2012, are incorporated by reference into Part III of this Annual Report on Form 10-K.
TABLE OF CONTENTS ROPER INDUSTRIES, INC.
FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2011
PART I
Item 1.
Business 4
Item 1A.
Risk Factors 7
Item 1B.
Unresolved Staff Comments 11
Item 2.
Properties 11
Item 3.
Legal Proceedings 11
Item 4.
Mine Safety Disclosures 11
PART II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 12
Item 6.
Selected Financial Data 14
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations 14
Item 7A.
Quantitative and Qualitative Disclosures about Market Risk 24
Item 8.
Financial Statements and Supplementary Data 25
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 48
Item 9A.
Controls and Procedures 48
Item 9B.
Other Information 48
PART III
Item 10.
Directors, Executive Officers and Corporate Governance 49
Item 11.
Executive Compensation 49
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 49
Item 13.
Certain Relationships and Related Transactions, and Director Independence 49
Item 14.
Principal Accountant Fees and Services 49
PART IV
Item 15.
Exhibits and Financial Statement Schedules 50
Signatures 53
page 2 Roper Industries, Inc. 2011 Annual Report
INFORMATION ABOUT FORwARD-LOOKING STATEMENTS
This Annual Report on Form 10-K (“Annual Report”) includes and incorporates by reference “forward-looking statements” within the mean-
ing of the federal securities laws. In addition, we, or our executive officers on our behalf, may from time to time make forward-looking
statements in reports and other documents we file with the U.S. Securities and Exchange Commission (“SEC”) or in connection with
oral statements made to the press, potential investors or others. All statements that are not historical facts are “forward-looking statements.”
The words “estimate,” “plan,” “project,” “intend,” “expect,” “believe,” “anticipate,” and similar expressions identify forward-looking statements.
These forward-looking statements include, but are not limited to, statements regarding our expected financial position, business, financ-
ing plans, business strategy, business prospects, revenues, working capital, liquidity, capital needs, interest costs and income, in each
case relating to our company as a whole, as well as statements regarding acquisitions, potential acquisitions and the benefits of acquisitions.
Forward-looking statements are estimates and projections reflecting our best judgment and involve a number of risks and uncertainties
that could cause actual results to differ materially from those suggested by the forward-looking statements. These statements are based
on our management’s beliefs and assumptions, which in turn are based on currently available information. Examples of forward-looking
statements in this report include but are not limited to our expectations regarding our ability to generate operating cash flows and reduce
debt and associated interest expense and our expectations regarding growth through acquisitions. Important assumptions relating to the
forward-looking statements include, among others, assumptions regarding demand for our products, the cost, timing and success of product
upgrades and new product introductions, raw materials costs, expected pricing levels, the timing and cost of expected capital expenditures,
expected outcomes of pending litigation, competitive conditions, general economic conditions and expected synergies relating to acquisi-
tions, joint ventures and alliances. These assumptions could prove inaccurate. Although we believe that the estimates and projections
reflected in the forward-looking statements are reasonable, our expectations may prove to be incorrect. Important factors that could cause
actual results to differ materially from estimates or projections contained in the forward-looking statements include, but are not limited to:
• general economic conditions;
• difficulty making acquisitions and successfully integrating acquired businesses;
• any unforeseen liabilities associated with future acquisitions;
• limitations on our business imposed by our indebtedness;
• unfavorable changes in foreign exchange rates;
• difficulties associated with exports;
• risks and costs associated with our international sales and operations;
• increased directors’ and officers’ liability and other insurance costs;
• risk of rising interest rates;
• product liability and insurance risks;
• increased warranty exposure;
• future competition;
• the cyclical nature of some of our markets;
• reduction of business with large customers;
• risks associated with government contracts;
• changes in the supply of, or price for, raw materials, parts and components;
• environmental compliance costs and liabilities;
• risks and costs associated with asbestos-related litigation;
• potential write-offs of our substantial goodwill and other intangible assets;
• our ability to successfully develop new products;
• failure to protect our intellectual property;
• the effect of, or change in, government regulations (including tax);
• economic disruption caused by terrorist attacks, health crises or other unforeseen events; and
• the factors discussed in Item 1A to this Annual Report under the heading “Risk Factors.”
we believe these forward-looking statements are reasonable. However, you should not place undue reliance on any forward-looking state-
ments, which are based on current expectations. Further, forward-looking statements speak only as of the date they are made, and we
undertake no obligation to publicly update any of them in light of new information or future events.
Roper Industries, Inc. 2011 Annual Report page 3
PART I
ITEM 1. BUSINESS
OUR BUSINESS
Roper Industries, Inc. (“Roper” or the “Company”) was incorporated on December 17, 1981 under the laws of the State of Delaware. we
are a diversified growth company that designs, manufactures and distributes radio frequency (“RF”) products and services, industrial
technology products, energy systems and controls and medical and scientific imaging products and software. we market these products
and services to selected segments of a broad range of markets including RF applications, medical, water, energy, research, education,
software-as-a-service (“SaaS”)-based information networks, security and other niche markets.
we pursue consistent and sustainable growth in sales, earnings and cash flow by emphasizing continuous improvement in the operating
performance of our existing businesses and by acquiring other carefully selected businesses that offer high value-added services, engi-
neered products and solutions and are capable of achieving growth in sales, earnings and cash flow. we compete in many niche markets
and believe we are the market leader or a competitive alternative to the market leader in the majority of these markets.
MARKET SHARE, MARKET ExPANSION, AND PRODUCT DEVELOPMENT
Leadership with Engineered Content for Niche Markets—we maintain a leading position in many of our markets. we believe our market
positions are attributable to the technical sophistication of our products, the applications expertise used to create our advanced products
and systems, and our distribution and service capabilities. Our operating units grow their businesses through new product development
and development of new applications and services to satisfy customer needs. In addition, our operating units grow our customer base by
expanding our distribution, selling other products through our existing channels and entering adjacent markets.
Diversified End Markets and Geographic Reach—we have a global presence, with sales of products manufactured and exported from
the United States (“U.S.”) and manufactured abroad and sold to customers outside the U.S. totaling $1.2 billion in 2011. Information regard-
ing our international operations is set forth in Note 15 of the notes to Consolidated Financial Statements included in this Annual Report.
Research and Development—we conduct applied research and development to improve the quality and performance of our products and
to develop new technologies and products. Our research and development spending was $121.7 million in 2011 as compared to $102.4
and $83.4 million in 2010 and 2009, respectively. Research and development expense as a percentage of sales increased to 4.4% in 2011
from 4.3% in 2010. The percentage has increased as the mix of our businesses shifts to higher technology, medical and software platforms.
OUR BUSINESS SEGMENTS
Our operations are reported in four segments based upon common customers, markets, sales channels, technologies and common cost
opportunities. The segments are: Medical and Scientific Imaging, Energy Systems and Controls, Industrial Technology and RF Technology.
Financial information about our business segments is presented in Note 15 of the notes to Consolidated Financial Statements.
MEDICAL AND SCIENTIFIC IMAGING
Our Medical and Scientific Imaging segment principally offers products and software in medical applications, high performance digital
imaging products and software and handheld and vehicle mount computers. These products and solutions are provided through eight
operating units. For 2011, this segment had net sales of $610.6 million, representing 21.8% of our total net sales.
Medical Products and Software—we manufacture and sell patient positioning devices and related software for use in radiation
oncology, 3-D measurement technology in computer-assisted surgery and computer-assisted therapy and supply diagnostic and therapeu-
tic disposable products used in ultrasound imaging for minimally invasive medical procedures. we also design and manufacture a non-
invasive instrument for portable ultrasound bladder volume measurement and a video laryngoscope designed to enable rapid intubation
even in the most difficult settings.
Digital Imaging Products and Software—we manufacture and sell extremely sensitive, high-performance charged couple device
(“CCD”) and complementary metal oxide semiconductor (“CMOS”) cameras, detectors and related software for a variety of scientific and
industrial uses, which require high resolution and/or high speed digital video, including transmission electron microscopy and spectros-
copy applications. we principally sell these products for use within academic, government research, semiconductor, security and other
end-user markets such as biological and material science. They are frequently incorporated into products by original equipment manu-
facturers (“OEMs”).
page 4 Roper Industries, Inc. 2011 Annual Report
Handheld and Vehicle Mount Computers and Software—we manufacture and sell fully rugged handheld and vehicle mount com-
puters for utility (principally water management) and non-utility markets.
Backlog—Our Medical and Scientific Imaging segment companies have lead times of up to several months on many of their product
sales, although standard products are often shipped within two weeks of receipt of order. Blanket purchase orders are placed by certain
OEM and end-users, with continuing requirements for fulfillment over specified periods of time. The segment’s backlog of firm unfilled
orders shippable within twelve months, including blanket purchase orders, totaled $118.6 million at December 31, 2011, as compared to
$103.8 million at December 31, 2010.
Distribution and Sales—Distribution and sales occur through direct sales personnel, manufacturers’ representatives, value added resellers
(“VARs”), OEMs and distributors.
ENERGY SYSTEMS AND CONTROLS
Our Energy Systems and Controls segment principally produces control systems, fluid properties testing equipment, industrial valves and
controls, vibration sensors and controls and nondestructive inspection and measurement products and solutions, which are provided
through six operating units. For 2011, this segment had net sales of $597.8 million, representing 21.4% of our total net sales.
Control Systems—we manufacture control systems and provide related engineering and commissioning services for turbomachinery
applications, predominately in energy markets.
Fluid Properties Testing Equipment—we manufacture and sell automated and manual test equipment to determine physical and
elemental properties, such as sulfur and nitrogen content, flash point, viscosity, freeze point and distillation range of liquids and gases
for the petroleum and other industries.
Industrial Valves and Controls—we manufacture and distribute a variety of valves, sensors, switches and control products used on
engines, compressors, turbines and other powered equipment for the oil and gas, pipeline, power generation, marine engine and general
industrial markets. Many of these products are designed for use in hazardous environments.
Sensors and Controls—we manufacture sensors and control equipment including pressure sensors, temperature sensors, measure-
ment instruments and control software for global rubber, plastics and process industries.
Non-destructive Inspection and Measurement Instrumentation—we manufacture non-destructive inspection and measurement
solutions including measurement probes, robotics, vibration sensors, switches and transmitters. These solutions are applied principally
in energy markets. Many of these products are designed for use in hazardous environments.
Backlog—The Energy Systems and Controls operating units’ sales reflect a combination of standard products and large engineered
projects. Standard products generally ship within two weeks of receipt of order, and large engineered projects may have lead times of
several months. As such, backlog may fluctuate depending upon the timing of large project awards. This segment’s backlog of firm unfilled
orders shippable within twelve months totaled $120.5 million at December 31, 2011 compared to $104.5 million at December 31, 2010.
Distribution and Sales—Distribution and sales occur through direct sales offices, manufacturers’ representatives and distributors.
INDUSTRIAL TECHNOLOGY
Our Industrial Technology segment produces water and fluid handling pumps, equipment and consumables for materials analysis, leak
testing equipment, flow measurement and metering equipment and water meter and automatic meter reading (“AMR”) products and sys-
tems. These products and solutions are provided through eight operating units. For 2011, this segment had net sales of $737.4 million,
representing 26.4% of our total net sales.
Water and Fluid Handling Pumps—we manufacture and sell a wide variety of pumps. These pumps vary significantly in complexity
and in pumping method employed, which allows for the movement and application of a diverse range of liquids and solids including low
and high viscosity liquids, high solids content slurries and chemicals. Our pumps are used in large and diverse sets of end markets such
as oil and gas, agricultural, water and wastewater, chemical and general industrial.
Materials Analysis Equipment and Consumables—we manufacture and sell equipment and supply various types of consumables
necessary to prepare materials samples for testing and analysis. These products are used mostly within the academic, government
research, electronics, material science, basic materials, steel and automotive end-user markets.
Leak Testing Equipment—we manufacture and sell products and systems to test for leaks and confirm the integrity of assemblies
and sub-assemblies in automotive, medical and industrial applications.
Roper Industries, Inc. 2011 Annual Report page 5
Flow Measurement Equipment—we manufacture and distribute turbine and positive displacement flow meters, emissions measure-
ment equipment and flow meter calibration products for aerospace, automotive, power generation and other industrial applications.
Water Meter and AMR Products and Systems—we manufacture and distribute several classes of water meter products serving the
residential, commercial and industrial water management markets, and several lines of automatic meter reading products and systems
serving these markets.
Backlog—The Industrial Technology operating units’ sales reflect a combination of standard products and specially engineered, application-
specific products. Standard products are typically shipped within two weeks of receipt of order, with certain valve and pump products
shipped on an immediate basis. Application-specific products typically ship within 6 to 12 weeks following receipt of order. However,
larger project orders and blanket purchase orders for certain OEMs may extend shipment for longer periods. This segment’s backlog of
firm unfilled orders shippable within twelve months, including blanket purchase orders, totaled $141.8 million at December 31, 2011, as
compared to $114.0 million at December 31, 2010.
Distribution and Sales—Distribution and sales occur through direct sales personnel, manufacturers’ representatives and distributors.
RF TECHNOLOGY
Our RF Technology segment provides radio frequency identification (“RFID”) communication technology and software solutions that are
used primarily in toll and traffic systems and processing, security and access control, campus card systems, software-as-a-service in the
freight matching and food industries and metering and remote monitoring applications. These products and solutions are provided
through seven operating units. This segment had sales of $851.3 million for the year ended December 31, 2011, representing 30.4% of our
total net sales.
Toll and Traffic Systems—we manufacture and sell toll tags and monitoring systems as well as provide transaction and violation
processing services for toll and traffic systems to both governmental and private sector entities. In addition, we provide intelligent traffic
systems that assist customers in improving traffic flow and infrastructure utilization.
Card Systems/Integrated Security Solutions—we provide card systems and integrated security solutions to education, health care
and other markets. In the education and health care markets, we also provide an integrated nutrition management solution.
Software-as-a-Service—we maintain electronic marketplaces that match 1) available capacity of trucking units with the available
loads of freight to be moved from location to location throughout North America and 2) food suppliers, distributors and vendors, primar-
ily in the perishable food sector.
Metering and Remote Monitoring—we manufacture and sell meter reading, data logging and pressure control products for use in
water, gas and electricity applications. we also provide network monitoring, leakage reduction and pressure control services in water and
gas distribution networks.
Backlog—The RF Technology operating units’ sales reflect a combination of standard products, large engineered projects, and multi-year
operations and maintenance contracts. Standard products generally ship within two weeks of receipt of order, and large engineered proj-
ects may have lead times of several months. As such, backlog may fluctuate depending upon the timing of large project awards. This seg-
ment’s backlog of firm unfilled orders shippable within twelve months totaled $447.4 million at December 31, 2011 compared to $463.1
million at December 31, 2010.
Distribution and Sales—Distribution and sales occur through direct sales personnel, manufacturers’ representatives and distributors.
MATERIALS AND SUPPLIERS
we believe that most materials and supplies we use are readily available from numerous sources and suppliers throughout the world.
However, some of our components and sub-assemblies are currently available from a limited number of suppliers. Some high-performance
components for digital imaging products can be in short supply and/or suppliers have occasional difficulty manufacturing such compo-
nents to our specifications. we regularly investigate and identify alternative sources where possible, and we believe that these conditions
equally affect our competitors. Supply shortages have not had a material adverse effect on Roper’s sales although delays in shipments
have occurred following such supply interruptions.
ENVIRONMENTAL MATTERS AND OTHER GOVERNMENTAL REGULATION
Our operations and properties are subject to laws and regulations relating to environmental protection, including laws and regulations
governing air emissions, water discharges, waste management and workplace safety. we use, generate and dispose of hazardous substances
and waste in our operations and, as a result, could be subject to material liabilities relating to the investigation and clean-up of contaminated
page 6 Roper Industries, Inc. 2011 Annual Report
properties and related claims. we are required to conform our operations and properties to these laws and adapt to regulatory requirements
in all countries as these requirements change. In connection with our acquisitions, we may assume significant environmental liabilities,
some of which we may not be aware of, or may not be quantifiable, at the time of acquisition. In addition, new laws and regulations,
stricter enforcement of existing laws and regulations, the discovery of previously unknown contamination or the imposition of new
requirements could increase our costs or subject us to new or increased liabilities.
CUSTOMERS
No customer accounted for 10% or more of net sales for 2011 for any segment or for Roper as a whole.
COMPETITION
Generally, our products and solutions face significant competition, usually from a limited number of competitors. we believe that we are
a leader in most of our markets, and no single company competes with us over a significant number of product lines. Competitors might
be large or small in size, often depending on the life cycle and maturity of the technology employed. we compete primarily on product
quality, performance, innovation, technology, price, applications expertise, distribution channel access and customer service capabilities.
PATENTS AND TRADEMARKS
In addition to trade secrets, unpatented know-how, and other intellectual property rights, we own or license the rights under a number of
patents, trademarks and copyrights relating to certain of our products and businesses. we also employ various methods, including confi-
dentiality and non-disclosure agreements with individuals and companies we do business with, employees, distributors, representatives
and customers to protect our trade secrets and know-how. we believe that our operating units are not substantially dependent on any
single patent, trademark, copyright, or other item of intellectual property or group of patents, trademarks or copyrights.
EMPLOYEES
As of December 31, 2011, we had approximately 8,570 total employees, with approximately 6,060 located in the United States.
Approximately 210 of our employees are subject to collective bargaining agreements. we have not experienced any work stoppages and
consider our relations with our employees to be good.
AVAILABLE INFORMATION
All reports we file electronically with the SEC, including our annual reports on Form 10-K, quarterly reports on Form 10-Q, current
reports on Form 8-K and our annual proxy statements, as well as any amendments to those reports, are accessible at no cost on our web-
site at www.roperind.com as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. These
filings are also accessible on the SEC’s website at www.sec.gov. You may also read and copy any material we file with the SEC at the
SEC’s Public Reference Room at 100 F Street, N.E., washington, D.C. 20549. You may obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. Our Corporate Governance Guidelines; the charters of our Audit Committee,
Compensation Committee, and Nominating and Governance Committee; and our Code of Business Conduct and Ethics are also available
on our website. Any amendment to the Code of Business Conduct and Ethics and any waiver applicable to our directors, executive officers
or senior financial officers will be posted on our website within the time period required by the SEC and the New York Stock Exchange
(the “NYSE”). The information posted on our website is not incorporated into the Annual Report.
we have included the Chief Executive Officer and the Chief Financial Officer certifications regarding our public disclosure required by
Section 302 of the Sarbanes-Oxley Act of 2002 as Exhibits 31.1 and 31.2 of this report. Additionally, we filed with the NYSE the Chief
Executive Officer certification regarding our compliance with the NYSE’s Corporate Governance Listing Standards (the “Listing
Standards”) pursuant to Section 303A.12(a) of the Listing Standards. The certification was filed with the NYSE on June 24, 2011 and
indicated that the Chief Executive Officer was not aware of any violations of the Listing Standards by the Company.
ITEM 1A. RISK FACTORS
RISKS RELATING TO OUR BUSINESS
Our indebtedness may affect our business and may restrict our operating flexibility.
As of December 31, 2011, we had $1.09 billion in total consolidated indebtedness. In addition, we had $707 million undrawn availability
under our senior unsecured credit facility, as well as the ability to request additional term loans or revolving credit commitments under
our credit facility not to exceed $350 million in aggregate. Our total consolidated debt could increase using this additional borrowing
Roper Industries, Inc. 2011 Annual Report page 7
capacity. Subject to restrictions contained in our credit facility, we may incur additional indebtedness in the future, including indebted-
ness incurred to finance acquisitions.
Our level of indebtedness and the debt servicing costs associated with that indebtedness could have important effects on our operations
and business strategy. For example, our indebtedness could:
• place us at a competitive disadvantage relative to our competitors, some of which have lower debt service obligations and greater
financial resources;
• limit our ability to borrow additional funds;
• limit our ability to complete future acquisitions;
• limit our ability to pay dividends;
• limit our ability to make capital expenditures; and
• increase our vulnerability to general adverse economic and industry conditions.
Our ability to make scheduled principal payments of, to pay interest on, or to refinance our indebtedness and to satisfy our other debt
obligations will depend upon our future operating performance, which may be affected by factors beyond our control. In addition, there
can be no assurance that future borrowings or equity financing will be available to us on favorable terms for the payment or refinancing
of our indebtedness. If we are unable to service our indebtedness, our business, financial condition and results of operations would be
materially adversely affected.
Our credit facility contains covenants requiring us to achieve certain financial and operating results and maintain compliance with spec-
ified financial ratios. Our ability to meet the financial covenants or requirements in our credit facility may be affected by events beyond
our control, and we may not be able to satisfy such covenants and requirements. A breach of these covenants or our inability to comply
with the financial ratios, tests or other restrictions contained in our facility could result in an event of default under this facility. Upon
the occurrence of an event of default under our credit facility, and the expiration of any grace periods, the lenders could elect to declare
all amounts outstanding under the facility, together with accrued interest, to be immediately due and payable. If this were to occur, our
assets may not be sufficient to fully repay the amounts due under this facility or our other indebtedness.
Unfavorable changes in foreign exchange rates may significantly harm our business.
Several of our operating companies have transactions and balances denominated in currencies other than the U.S. dollar. Most of these
transactions and balances are denominated in euros, Canadian dollars, British pounds and Danish krone. Sales by our operating compa-
nies whose functional currency is not the U.S. dollar represented approximately 27% of our total net sales for the year ended December
31, 2011 compared to 25% for the year ended December 31, 2010. Unfavorable changes in exchange rates between the U.S. dollar and
those currencies could significantly reduce our reported sales and earnings.
We export a significant portion of our products. Difficulties associated with the export of our products could harm our business.
Sales to customers outside the U.S. by our businesses located in the U.S. account for a significant portion of our net sales. These sales
accounted for 15% of our net sales for the years ended December 31, 2011 and December 31, 2010. we are subject to risks that could limit
our ability to export our products or otherwise reduce the demand for these products in our foreign markets.
Such risks include, without limitation, the following:
• unfavorable changes in or noncompliance with U.S. and other jurisdictions’ export requirements;
• restrictions on the export of technology and related products;
• unfavorable changes in or noncompliance with U.S. and other jurisdictions’ export policies to certain countries;
• unfavorable changes in the import policies of our foreign markets; and
• a general economic downturn in our foreign markets.
The occurrence of any of these events could reduce the foreign demand for our products or could limit our ability to export our products
and, therefore, could have a material negative effect on our future sales and earnings.
Economic, political and other risks associated with our international operations could adversely affect our business.
As of and for the year ended December 31, 2011, 29% of our net sales and 21% of our long-lived assets, excluding goodwill and intangibles,
were attributable to operations outside the U.S. we expect our international operations to contribute materially to our business for the
page 8 Roper Industries, Inc. 2011 Annual Report
foreseeable future. Our international operations are subject to varying degrees of risk inherent in doing business outside the U.S. includ-
ing, without limitation, the following:
• adverse changes in a specific country’s or region’s political or economic conditions, particularly in emerging markets;
• trade protection measures and import or export requirements;
• subsidies or increased access to capital for firms that are currently, or may emerge as, competitors in countries in which we have
operations;
• partial or total expropriation;
• potentially negative consequences from changes in tax laws;
• difficulty in staffing and managing widespread operations;
• differing labor regulations;
• differing protection of intellectual property; and
• unexpected changes in regulatory requirements.
The occurrence of any of these events could materially harm our business.
Our growth strategy includes acquisitions. We may not be able to identify suitable acquisition candidates, complete acquisitions or
integrate acquisitions successfully.
Our future growth is likely to depend to some degree on our ability to acquire and successfully integrate new businesses. we intend to
continue to seek additional acquisition opportunities both to expand into new markets and to enhance our position in existing markets.
There are no assurances, however, that we will be able to successfully identify suitable candidates, negotiate appropriate terms, obtain
financing on acceptable terms, complete proposed acquisitions, successfully integrate acquired businesses or expand into new markets.
Once acquired, operations may not achieve anticipated levels of revenues or profitability.
Acquisitions involve risks, including difficulties in the integration of the operations, technologies, services and products of the acquired
companies and the diversion of management’s attention from other business concerns. Although our management will endeavor to eval-
uate the risks inherent in any particular transaction, there are no assurances that we will properly ascertain all such risks. In addition,
prior acquisitions have resulted, and future acquisitions could result, in the incurrence of substantial additional indebtedness and other
expenses. Future acquisitions may also result in potentially dilutive issuances of equity securities. Difficulties encountered with acquisi-
tions may have a material adverse effect on our business, financial condition and results of operations.
Product liability, insurance risks and increased insurance costs could harm our operating results.
Our business exposes us to product liability risks in the design, manufacturing and distribution of our products. In addition, certain of
our products are used in hazardous environments. we currently have product liability insurance; however, we may not be able to main-
tain our insurance at a reasonable cost or in sufficient amounts to protect us against losses. we also maintain other insurance policies,
including directors’ and officers’ liability insurance. Our insurance costs increased in prior periods and may continue to increase in the
future. we believe that we have adequately accrued estimated losses, principally related to deductible amounts under our insurance poli-
cies, with respect to all product liability and other claims, based upon our past experience and available facts. However, a successful prod-
uct liability or other claim or series of claims brought against us could have a material adverse effect on our business, financial condition
and results of operations. In addition, a significant increase in our insurance costs could have an adverse impact on our operating results.
Our operating results could be adversely affected by a reduction of business with our large customers.
In some of our businesses, we derive a significant amount of revenue from large customers. The loss or reduction of any significant contracts
with any of these customers could materially reduce our revenue and cash flows. Additionally, many of our customers are government
entities. In many situations, government entities can unilaterally terminate or modify our existing contracts without cause and without
penalty to the government agency.
We face intense competition. If we do not compete effectively, our business may suffer.
we face intense competition from numerous competitors. Our products compete primarily on the basis of product quality, performance,
innovation, technology, price, applications expertise, system and service flexibility and established customer service capabilities. we may
not be able to compete effectively on all of these fronts or with all of our competitors. In addition, new competitors may emerge, and product
lines may be threatened by new technologies or market trends that reduce the value of these product lines. To remain competitive, we
must develop new products, respond to new technologies and periodically enhance our existing products in a timely manner. we anticipate
that we may have to adjust prices of many of our products to stay competitive.
Roper Industries, Inc. 2011 Annual Report page 9
Changes in the supply of, or price for, raw materials, parts and components used in our products could affect our business.
The availability and prices of raw materials, parts and components are subject to curtailment or change due to, among other things,
suppliers’ allocations to other purchasers, interruptions in production by suppliers, changes in exchange rates and prevailing price levels.
Some high-performance components for digital imaging products may be in short supply and/or suppliers may have occasional difficulty
manufacturing these components to meet our specifications. In addition, some of our products are provided by sole source suppliers. Any
change in the supply of, or price for, these parts and components, as well as any increases in commodity prices, particularly copper,
could affect our business, financial condition and results of operations.
Environmental compliance costs and liabilities could increase our expenses and adversely affect our financial condition.
Our operations and properties are subject to laws and regulations relating to environmental protection, including air emissions, water
discharges, waste management and workplace safety. These laws and regulations can result in the imposition of substantial fines and
sanctions for violations and could require the installation of pollution control equipment or operational changes to limit pollution emis-
sions and/or decrease the likelihood of accidental hazardous substance releases. we must conform our operations and properties to these
laws and adapt to regulatory requirements in the countries in which we operate as these requirements change.
we use and generate hazardous substances and wastes in our operations and, as a result, could be subject to potentially material liabili-
ties relating to the investigation and clean-up of contaminated properties and to claims alleging personal injury. we have experienced,
and expect to continue to experience, costs relating to compliance with environmental laws and regulations. In connection with our
acquisitions, we may assume significant environmental liabilities, some of which we may not be aware of at the time of acquisition. In
addition, new laws and regulations, stricter enforcement of existing laws and regulations, the discovery of previously unknown contami-
nation or the imposition of new clean-up requirements could require us to incur costs or become the basis for new or increased liabilities
that could have a material adverse effect on our business, financial condition and results of operations.
Some of the industries in which we operate are cyclical, and, accordingly, our business is subject to changes in the economy.
Some of the business areas in which we operate are subject to specific industry and general economic cycles. Certain businesses are subject
to industry cycles, including but not limited to, the industrial and energy markets. Accordingly, any downturn in these or other markets
in which we participate could materially adversely affect us. If demand changes and we fail to respond accordingly, our results of opera-
tions could be materially adversely affected. The business cycles of our different operations may occur contemporaneously. Consequently,
the effect of an economic downturn may have a magnified negative effect on our business.
Our goodwill and intangible assets are valued at an amount that is high relative to our total assets, and a write-off of our intangible
assets would negatively affect our results of operations and total capitalization.
Our total assets reflect substantial intangible assets, primarily goodwill. At December 31, 2011, goodwill totaled $2.87 billion compared to
$3.20 billion of stockholders’ equity, and represented 54% of our total assets of $5.32 billion. The goodwill results from our acquisitions, repre-
senting the excess of cost over the fair value of the net assets we have acquired. we assess at least annually whether there has been an impair-
ment in the value of our goodwill and indefinite economic life intangible assets. If future operating performance at one or more of our
business units were to fall significantly below current levels, if competing or alternative technologies emerge or if business valuations decline,
we could incur a non-cash charge to operating earnings. Any determination requiring the write-off of a significant portion of goodwill or
unamortized intangible assets would negatively affect our results of operations and total capitalization, the effect of which could be material.
We depend on our ability to develop new products, and any failure to develop or market new products could adversely affect our business.
The future success of our business will depend, in part, on our ability to design and manufacture new competitive products and to
enhance existing products so that our products can be sold with high margins. This product development may require substantial inter-
nal investment. There can be no assurance that unforeseen problems will not occur with respect to the development, performance or
market acceptance of new technologies or products or that we will otherwise be able to successfully develop and market new products.
Failure of our products to gain market acceptance or our failure to successfully develop and market new products could reduce our
margins, which would have an adverse effect on our business, financial condition and results of operations.
Our technology is important to our success and our failure to protect this technology could put us at a competitive disadvantage.
Many of our products rely on proprietary technology; therefore we believe that the development and protection of intellectual property
rights through patents, copyrights, trade secrets, trademarks, confidentiality agreements and other contractual provisions is important
to the future success of our business. Despite our efforts to protect proprietary rights, unauthorized parties or competitors may copy or
otherwise obtain and use our products or technology. Current and future actions to enforce these rights may result in substantial costs
and diversion of resources and we make no assurances that any such actions will be successful.
page 10 Roper Industries, Inc. 2011 Annual Report
Any business disruptions due to political instability, armed hostilities, incidents of terrorism or natural disasters could adversely
impact our financial performance.
If terrorist activity, armed conflict, political instability or natural disasters occur in the U.S. or other locations, such events may nega-
tively impact our operations, cause general economic conditions to deteriorate or cause demand for our products to decline. A prolonged
economic slowdown or recession could reduce the demand for our products, and therefore, negatively affect our future sales and profits.
Any of these events could have a significant impact on our business, financial condition or results of operations.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None
ITEM 2. PROPERTIES
Roper’s corporate offices, consisting of 22,000 square feet of leased space, are located at 6901 Professional Parkway East, Sarasota, Florida.
we have established 114 principal locations around the world to support our operations, of which 53 are manufacturing facilities, and the
remaining 61 locations provide sales, service and administrative support functions. we consider our facilities to be in good operating
condition and adequate for their present use and believe that we have sufficient capacity to meet our anticipated operating requirements.
The following table summarizes the size, location and usage of our principal properties as of December 31, 2011.
Segment
Industrial Technology
Energy Systems and Controls
Medical and Scientific Imaging
RF Technology
Region
U.S.
Canada
Europe
Asia
Mexico
U.S.
Canada
Europe
Asia
U.S.
Canada
Europe
U.S.
Canada
Europe
Office
Leased
Office & Manufacturing
Leased
Owned
(amounts in thousands of square feet)
48
36
92
23
—
—
—
10
6
89
—
17
789
11
15
294
—
88
—
60
262
44
20
30
212
151
44
123
—
5
524
—
485
—
—
—
—
128
34
127
—
—
—
—
16
ITEM 3. LEGAL PROCEEDINGS
we are defendants in various lawsuits involving product liability, employment practices and other matters, none of which we believe will
have a material adverse effect on our consolidated financial position or results of operations. The majority of such claims are subject to
insurance coverage.
we and/or one of our subsidiaries are named as defendants, along with many other companies, in asbestos-related personal injury or
wrongful death actions. The allegations in these actions are vague, general and speculative. Given the state of these claims, it is not
possible to determine the potential liability, if any.
ITEM 4. MINE SAFETY DISCLOSURES
None
Roper Industries, Inc. 2011 Annual Report page 11
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
Our common stock trades on the NYSE under the symbol “ROP”. The table below sets forth the range of high and low sales prices for our
common stock as reported by the NYSE as well as cash dividends declared during each of our 2011 and 2010 quarters.
2011
4th Quarter
3rd Quarter
2nd Quarter
1st Quarter
2010
4th Quarter
3rd Quarter
2nd Quarter
1st Quarter
High
Low
Declared
Cash Dividends
$88.42
$66.40
83.75
88.45
87.49
68.91
78.30
73.56
$78.43
$64.98
65.59
63.91
58.34
54.78
55.47
50.08
$0.1375
0.1100
0.1100
0.1100
$0.1100
0.0950
0.0950
0.0950
Based on information available to us and our transfer agent, we believe that as of February 17, 2012 there were 205 record holders of our
common stock.
Dividends—we have declared a cash dividend in each quarter since our February 1992 initial public offering and we have annually
increased our dividend rate since our initial public offering. In November 2011, our Board of Directors increased the quarterly dividend
paid January 27, 2012 to $0.1375 per share from $0.1100 per share, an increase of 25.0%. The timing, declaration and payment of future
dividends will be at the sole discretion of our Board of Directors and will depend upon our profitability, financial condition, capital
needs, future prospects and other factors deemed relevant by our Board of Directors.
Recent Sales of Unregistered Securities—In 2011, there were no sales of unregistered securities.
page 12 Roper Industries, Inc. 2011 Annual Report
Performance Graph—This performance graph shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities under that Section and shall not be deemed to be
incorporated by reference into any of our filings under the Securities Act of 1933, as amended, or the Exchange Act.
The following graph compares, for the five year period ended December 31, 2011, the cumulative total stockholder return for our com-
mon stock, the Standard and Poor’s 500 Stock Index (the “S&P 500”) and the Standard and Poor’s 500 Industrials Index (the “S&P 500
Industrials”). Measurement points are the last trading day of each of our fiscal years ended December 31, 2006, 2007, 2008, 2009, 2010
and 2011. The graph assumes that $100 was invested on December 31, 2006 in our common stock, the S&P 500 and the S&P 500
Industrials and assumes reinvestment of any dividends. The stock price performance on the following graph is not necessarily indicative
of future stock price performance.
Roper Industries, Inc.
S&P 500
S&P 500 Industrials
12/31/06
12/31/07
12/31/08
12/31/09
12/31/10
12/31/11
100.00
100.00
100.00
125.05
105.49
112.03
87.27
66.46
67.30
106.07
84.05
81.39
155.82
96.71
103.51
178.09
98.75
102.54
The information set forth in Item 12 under the heading “Securities Authorized for Issuance under Equity Compensation Plans” is incor-
porated herein by reference.
Roper Industries, Inc. 2011 Annual Report page 13
$40$80$120$160$20012/0612/0712/0812/0912/1012/11Roper Industries, Inc.S&P 500S&P Industrials ITEM 6. SELECTED FINANCIAL DATA
You should read the table below in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” and our Consolidated Financial Statements and related notes included in this Annual Report (amounts in thousands, except
per share data).
Operations data:
Net sales
Gross profit
Income from operations
Net earnings
Per share data:
Basic earnings per share
Diluted earnings per share
Dividends declared
Balance sheet data:
working capital
Total assets
Long-term debt, less current portion
Stockholders’ equity
As of and for the Years Ended December 31,
2011(1)
2010(2)
2009(3)
2008(4)
2007(5)
$ 2,797,089
1,515,564
660,539
427,247
$ 2,386,112
1,275,126
514,294
322,580
$ 2,049,668
1,043,138
395,396
239,481
$ 2,306,371
1,188,288
486,161
281,874
$ 2,102,049
1,058,395
438,354
245,705
$
4.45
4.34
0.4675
$
3.42
3.34
0.3950
$
2.64
2.58
0.3425
$
3.15
3.01
0.3000
$
2.78
2.64
0.2675
$ 561,277
5,319,417
1,015,110
3,195,096
$ 458,446
5,069,524
1,247,703
2,750,907
$ 392,734
4,327,736
1,040,962
2,421,490
$ 239,400
3,971,538
1,033,689
2,003,934
$ 291,047
3,453,184
727,489
1,794,643
(1) Includes results from the acquisitions of NDI Holding Corp. from June 3, 2011, United Controls Group, Inc. from September 26, 2011 and Trinity
Integrated Systems Ltd. from December 1, 2011.
(2) Includes results from the acquisitions of Heartscape, Inc. from February 22, 2010 and iTradeNetwork, Inc. from July 27, 2010.
(3) Includes results from the acquisitions of United Toll Systems, LLC from October 30, 2009 and Verathon, Inc. from December 3, 2009.
(4) Includes results from the acquisitions of CBORD Holdings Corp. from February 20, 2008, Chalwyn Ltd. from June 18, 2008, Getloaded.com, LLC
from July 17, 2008, Horizon Software Holdings, Inc. from August 27, 2008 and Technolog Holdings Ltd. from September 10, 2008.
(5) Includes results from the acquisitions of JLT Mobile Computers, Inc. from February 21, 2007, DJ Instruments from February 28, 2007, Roda
Deaco Valve, Ltd. from March 22, 2007, Dynamic Instruments, Inc. from June 21, 2007, and Black Diamond Advanced Technology, LLC from
September 24, 2007.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion in conjunction with “Selected Financial Data” and our Consolidated Financial Statements and
related notes included in this Annual Report.
OVERVIEw
we are a diversified growth company that designs, manufactures and distributes energy systems and controls, medical and scientific
imaging products and software, industrial technology products and radio frequency products and services. we market these products
and services to selected segments of a broad range of markets including RF applications, medical, water, energy, research, education,
software-as-a-service (“SaaS”)-based information networks, security and other niche markets.
we pursue consistent and sustainable growth in earnings and cash flow by emphasizing continuous improvement in the operating per-
formance of our existing businesses and by acquiring other carefully selected businesses. Our acquisitions have represented both bolt-ons
and new strategic platforms. On June 3, 2011, we purchased the assets of NDI Holding Corp. (“Northern Digital”), a provider of 3-D
measurement technology for medical applications in computer-assisted surgery and computer-assisted therapy. On September 26, 2011,
we purchased the shares of United Controls Group, Inc. (“UCG”), a manufacturer of control systems in the oil and gas industry. On
December 1, 2011, we purchased the shares of Trinity Integrated Systems Ltd. (“Trinity”), a specialist provider of requirements capture,
safety lifecycle management and engineering software tools, and safety and control system solutions to the oil and gas, industrial process
and control markets.
page 14 Roper Industries, Inc. 2011 Annual Report
APPLICATION OF CRITICAL ACCOUNTING POLICIES
Our Consolidated Financial Statements are prepared in conformity with generally accepted accounting principles in the United States
(“GAAP”). A discussion of our significant accounting policies can also be found in the notes to our Consolidated Financial Statements
for the year ended December 31, 2011 included in this Annual Report.
GAAP offers acceptable alternative methods for accounting for certain issues affecting our financial results, such as determining inven-
tory cost, depreciating long-lived assets and recognizing revenue. we have not changed the application of acceptable accounting methods
or the significant estimates affecting the application of these principles in the last three years in a manner that had a material effect on
our financial statements.
The preparation of financial statements in accordance with GAAP requires the use of estimates, assumptions, judgments and interpreta-
tions that can affect the reported amounts of assets, liabilities, revenues and expenses, the disclosure of contingent assets and liabilities
and other supplemental disclosures.
The development of accounting estimates is the responsibility of our management. Our management discusses those areas that require
significant judgments with the audit committee of our Board of Directors. The audit committee has reviewed all financial disclosures
in our annual filings with the SEC. Although we believe the positions we have taken with regard to uncertainties are reasonable, others
might reach different conclusions and our positions can change over time as more information becomes available. If an accounting esti-
mate changes, its effects are accounted for prospectively or through a cumulative catch up adjustment.
Our most significant accounting uncertainties are encountered in the areas of accounts receivable collectibility, inventory valuation,
future warranty obligations, revenue recognition (percentage-of-completion), income taxes and goodwill and indefinite-lived asset analy-
ses. These issues, except for income taxes, which are not allocated to our business segments, affect each of our business segments. These
issues are evaluated using a combination of historical experience, current conditions and relatively short-term forecasting.
Accounts receivable collectibility is based on the economic circumstances of customers and credits given to customers after shipment of
products, including in certain cases credits for returned products. Accounts receivable are regularly reviewed to determine customers
who have not paid within agreed upon terms, whether these amounts are consistent with past experiences, what historical experience has
been with amounts deemed uncollectible and the impact that economic conditions might have on collection efforts in general and with
specific customers. The returns and other sales credit allowance is an estimate of customer returns, exchanges, discounts or other forms
of anticipated concessions and is treated as a reduction in revenue. The returns and other sales credits histories are analyzed to deter-
mine likely future rates for such credits. At December 31, 2011, our allowance for doubtful accounts receivable was $8.2 million and our
allowance for sales returns and sales credits was $2.4 million, for a total of $10.6 million, or 2.4% of total gross accounts receivable. This
percentage is influenced by the risk profile of the underlying receivables, and the timing of write-offs of accounts deemed uncollectible.
The total allowance at December 31, 2011 was $0.3 million higher than at December 31, 2010. The allowance will continue to fluctuate as
a percentage of sales based on specific identification of allowances needed due to changes in our business as well as the write-off of
uncollectible receivables.
we regularly compare inventory quantities on hand against anticipated future usage, which we determine as a function of historical
usage or forecasts related to specific items in order to evaluate obsolescence and excessive quantities. when we use historical usage, this
information is also qualitatively compared to business trends to evaluate the reasonableness of using historical information as an esti-
mate of future usage. At December 31, 2011, inventory reserves for excess and obsolete inventory were $35.2 million, or 14.7% of gross
inventory cost, as compared to $32.5 million, or 15.4% of gross inventory cost, at December 31, 2010. The inventory reserve as a percent
of gross inventory cost will continue to fluctuate based upon specific identification of reserves needed based upon changes in our busi-
ness as well as the physical disposal of obsolete inventory.
Most of our sales are covered by warranty provisions that generally provide for the repair or replacement of qualifying defective items
for a specified period after the time of sale, typically 12 months. Future warranty obligations are evaluated using, among other factors,
historical cost experience, product evolution and customer feedback. Our expense for warranty obligations was less than 1% of net sales
for each of the years ended December 31, 2011, 2010, and 2009.
Revenues related to the use of the percentage-of-completion method of accounting are dependent on total costs incurred compared with
total estimated costs for a project. During the year ended December 31, 2011, we recognized revenue of approximately $151.5 million using
this method, primarily for major turn-key, longer term toll and traffic and energy projects. Approximately $131.0 million and $142.5
million of revenue was recognized using this method during the years ended December 31, 2010 and December 31, 2009, respectively.
Roper Industries, Inc. 2011 Annual Report page 15
At December 31, 2011, $132.1 million of revenue related to unfinished percentage-of-completion contracts had yet to be recognized.
Contracts accounted for under this method are generally not significantly different in profitability from revenues accounted for under
other methods.
Income taxes can be affected by estimates of whether and within which jurisdictions future earnings will occur and if, how and when
cash is repatriated to the U.S., combined with other aspects of an overall income tax strategy. Additionally, taxing jurisdictions could ret-
roactively disagree with our tax treatment of certain items, and some historical transactions have income tax effects going forward.
Accounting rules require these future effects to be evaluated using current laws, rules and regulations, each of which can change at any
time and in an unpredictable manner. During 2011, our effective income tax rate was 29.4%, which was higher than the 2010 rate of
28.1% due primarily to a foreign tax credit received in 2010 which did not recur in 2011.
we account for goodwill in a purchase business combination as the excess of the cost over the fair value of net assets acquired. Business
combinations can also result in other intangible assets being recognized. Amortization of intangible assets, if applicable, occurs over
their estimated useful lives. Goodwill, which is not amortized, is tested for impairment on an annual basis (or 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) using
a two-step process. The first step of the process utilizes both an income approach (discounted cash flows) and a market approach consist-
ing of a comparable public company earnings multiples methodology to estimate the fair value of a reporting unit. To determine the rea-
sonableness of the estimated fair values, we review the assumptions to ensure that neither the income approach nor the market approach
provides significantly different valuations. If the estimated fair value exceeds the carrying value, no further work is required and no
impairment loss is recognized. If the carrying value exceeds the estimated fair value, the goodwill of the reporting unit is potentially
impaired and then the second step would be completed in order to measure the impairment loss by calculating the implied fair value of
goodwill by deducting the fair value of all tangible and intangible net assets (including unrecognized intangible assets) of the reporting
unit from the fair value of the reporting unit. If the implied fair value of goodwill is less than the carrying value of goodwill, an impair-
ment loss would be recognized.
Key assumptions used in the income and market methodologies are updated when the analysis is performed for each reporting unit.
Various assumptions are utilized including forecasted operating results, strategic plans, economic projections, anticipated future cash flows,
the weighted average cost of capital, comparable transactions, market data and earnings multiples. The assumptions that have the most
significant effect on the fair value calculations are the anticipated future cash flows, discount rates, and the earnings multiples. while we
use reasonable and timely information to prepare our cash flow and discount rate assumptions, actual future cash flows or market condi-
tions could differ significantly resulting in future impairment charges related to recorded goodwill balances.
Total goodwill includes 26 reporting units with individual amounts ranging from zero to $536 million. we concluded that the fair value
of each of our reporting units was substantially in excess of its carrying value as of December 31, 2011, and thus no goodwill impairment
was identified.
Identifiable intangible assets that are determined to have an indefinite useful economic life are not amortized, but separately tested for
impairment annually using a one-step fair value based approach. Roper conducts these reviews for all of its reporting units and indefinite-
lived intangibles during the fourth quarter of the fiscal year or on an interim basis if an event occurs that it is more likely than not the
fair value of the intangible asset is below its carrying value. No impairment resulted from the annual reviews performed in 2011.
Roper evaluates whether there has been an impairment of identifiable intangible assets with definite useful economic lives, or of the
remaining life of such assets, when certain indicators of impairment are present. In the event that facts and circumstances indicate
that the cost or remaining period of amortization of any asset may be impaired, an evaluation of recoverability would be performed.
If an evaluation is required, the estimated future gross, undiscounted cash flows associated with the asset would be compared to the
asset’s carrying amount to determine if a write-down to fair value or a revision in the remaining amortization period is required.
page 16 Roper Industries, Inc. 2011 Annual Report
RESULTS OF OPERATIONS
The following table sets forth selected information for the years indicated. Dollar amounts are in thousands and percentages are of net
sales. Amounts may not foot due to rounding.
Net sales:
Industrial Technology
Energy Systems and Controls(1)
Medical and Scientific Imaging(2)
RF Technology(3)
Total
Gross profit:
Industrial Technology
Energy Systems and Controls
Medical and Scientific Imaging
RF Technology
Total
Operating profit:
Industrial Technology
Energy Systems and Controls
Medical and Scientific Imaging
RF Technology
Total
Corporate administrative expenses
Income from continuing operations
Interest expense, net
Other income/(expense)
Income from continuing operations before taxes
Income taxes
Net earnings
Years Ended December 31,
2011
2010
2009
$ 737,356
$ 607,564
$ 536,219
597,802
610,617
851,314
503,897
548,718
725,933
440,919
354,776
717,754
$ 2,797,089
$ 2,386,112
$ 2,049,668
49.8%
51.0%
47.6%
55.5
63.3
50.6
54.2
53.7
61.3
49.4
53.4
53.1
56.5
49.3
50.9
28.2%
26.7%
23.1%
26.4
24.3
23.8
25.6
23.9
23.8
20.8
23.6
21.0
20.9
21.5
21.7
(2.0)%
(2.1)%
(2.4)%
23.6
(2.3)
0.3
21.6
(6.4)
21.6
(2.8)
—
18.8
(5.3)
19.3
(2.9)
0.2
16.6
(4.9)
15.3%
13.5%
11.7%
(1) Includes results from the acquisitions of UCG from September 26, 2011 and Trinity from December 1, 2011.
(2) Includes results from the acquisitions of Verathon from December 3, 2009, Heartscape from February 22, 2010 and Northern Digital from June 3, 2011.
(3) Includes results from the acquisitions of UTS from October 30, 2009 and iTrade from July 27, 2010.
Roper Industries, Inc. 2011 Annual Report page 17
YEAR ENDED DECEMBER 31, 2011 COMPARED TO YEAR ENDED DECEMBER 31, 2010
Net sales for the year ended December 31, 2011 were $2.78 billion as compared to sales of $2.39 billion for the year ended December 31,
2010, an increase of 17.2%. The increase was the result of organic sales growth of 12.7%, favorable effect from foreign exchange of 1.4%
and 3.1% from acquisitions.
Our Medical and Scientific Imaging segment reported a $61.9 million or 11.3% increase in net sales for the year ended December 31, 2011
over the year ended December 31, 2010. Acquisitions added $26.1 million in sales, while organic sales increased 5.1% due to increased
sales in our electron microscopy and medical businesses. The impact from foreign exchange was a positive 1.4%.
In our Energy Systems and Controls segment, net sales for the year ended December 31, 2011 increased by $93.9 million or 18.6% over
the year ended December 31, 2010. Organic sales increased 15.9% while acquisitions added $4 million, or 0.8%. The increase in organic
sales was primarily due to increased demand in industrial process end markets and growth in our diesel engine safety systems. The
impact from foreign exchange was a positive 2.0%.
Net sales for our Industrial Technology segment increased by $129.8 million or 21.4% for the year ended December 31, 2011 over the year
ended December 31, 2010. The increase was due to broad-based growth in all businesses in the segment, with particular strength in our
materials testing business and fluid handling businesses, as well as a positive 1.8% impact from foreign exchange.
In our RF Technology segment, net sales for the year ended December 31, 2011 increased by $125.4 million or 17.3% over the year ended
December 31, 2010. Organic sales increased 10.3% due to strength in sales to colleges and universities, growth in our water and gas network
monitoring products and growth in our toll and traffic solutions. Foreign exchange added 0.7% to revenue and acquisitions added 6.3%.
Our overall gross profit percentage was 54.2% for the year ended December 31, 2011, as compared to 53.4% for the year ended December
31, 2010. Our Energy Systems and Controls and RF Technology segments both experienced higher gross margins due to higher sales vol-
ume while maintaining a relatively flat cost structure. Our Medical and Scientific Imaging segment gross margins increased primarily
due to additional sales from medical products which have a higher gross margin. Our Industrial Technology segment gross margins
decreased slightly due to product mix.
Selling, general and administrative (“SG&A”) expenses increased $94.2 million to $855.0 million in 2011 as compared to $760.8 million
in 2010, while decreasing as a percentage of net sales to 30.6% for the year ended December 31, 2011 as compared to 31.9% for the year
ended December 31, 2010. The decrease in percentage of net sales is due to operating leverage on higher sales volume, offset in part by
increased research and development spending of $19 million as we continued to invest in new product development.
Interest expense decreased $2.9 million, or 4.3%, for the year ended December 31, 2011 compared to the year ended December 31, 2010.
The decrease is due primarily to lower average debt balances and higher interest income throughout 2011.
Other income for the year ended December 31, 2011 was $8.1 million, which was primarily due to a currency remeasurement gain on an
intercompany note. Other income for the year ended December 31, 2010 was $0.6 million, primarily due to gain on sale of assets offset by
foreign exchange losses at our non-U.S. based companies.
During 2011, our effective income tax rate was 29.4% versus 28.1% in 2010. This increase was due primarily to a foreign tax credit
received in 2010 which did not recur in 2011.
At December 31, 2011, the functional currencies of our Canadian and most of our European subsidiaries were weaker against the U.S.
dollar compared to currency exchange rates at December 31, 2010. The net result of these changes led to a decrease in the foreign
exchange component of comprehensive earnings of $11.0 million in the year ending December 31, 2011. Approximately $5.1 million of
these adjustments related to goodwill and are not expected to directly affect our projected future cash flows. For the entire year of 2011,
operating profit increased by 1.4% due to fluctuations in non-U.S. currencies.
page 18 Roper Industries, Inc. 2011 Annual Report
The following table summarizes our net order information for the years ended December 31, 2011 and 2010 (dollar amounts in thousands).
Change
2011
2010
Industrial Technology
Energy Systems and Controls
Medical & Scientific Imaging
RF Technology
Total
$ 767,020
$ 669,882
608,538
612,787
834,903
538,861
578,957
748,536
$ 2,823,248
$ 2,536,236
14.5%
12.9
5.8
11.5
11.3%
The increase in orders was due to internal growth of 8.3%, as well as orders from acquisitions which added $78 million. Our Industrial
Technology, Energy Systems and Controls and RF Technology segments experienced strong internal growth throughout 2011. Our
Medical and Scientific Imaging segment experienced moderate internal growth.
The following table summarizes order backlog information at December 31, 2011 and 2010 (dollar amounts in thousands). Our policy is
to include in backlog only orders scheduled for shipment within twelve months.
Industrial Technology
Energy Systems and Controls
Medical & Scientific Imaging
RF Technology
Total
2011
2010
Change
$ 141,836
$ 113,981
120,497
118,609
447,355
104,466
103,796
463,115
$ 828,297
$ 785,358
24.4%
15.3
14.3
(3.4)
5.5%
YEAR ENDED DECEMBER 31, 2010 COMPARED TO YEAR ENDED DECEMBER 31, 2009
Net sales for the year ended December 31, 2010 were $2.39 billion as compared to sales of $2.05 billion for the year ended December 31,
2009, an increase of 16.4%. The increase was the result of internal sales growth of 7.8% as well as a full year of sales from our 2009
acquisitions of UTS and Verathon and five months of sales from iTrade. Net sales of these acquisitions accounted for approximately $179
million of additional sales in 2010 over 2009.
Our Medical and Scientific Imaging segment reported a $193.9 million or 54.7% increase in net sales for the year ended December 31,
2010 over the year ended December 31, 2009. Acquisitions added $147.9 million in sales, while organic sales increased 12.5% due to
broad-based increases in medical, imaging and handheld computer markets. The impact from foreign exchange was a positive 1.0%,
resulting in internal growth of 13.5%.
In our Energy Systems and Controls segment, net sales for the year ended December 31, 2010 increased by $63.0 million or 14.3% over
the year ended December 31, 2009. The increase in sales was due to broad-based recovery in the markets served by the segment which led
to increased demand for our instruments, valves and sensors sold into these markets.
Net sales for our Industrial Technology segment increased by $71.3 million or 13.3% for the year ended December 31, 2010 over the year
ended December 31, 2009. The increase was due to a broad-based economic recovery in the industrial end markets, strong sales growth
in our Neptune water meter business and increased sales in our materials testing businesses as customer manufacturing facilities which
had experienced slowdowns or temporary shutdowns in 2009 came back on line or increased production.
In our RF Technology segment, net sales for the year ended December 31, 2010 increased by $8.2 million or 1.1% over the year ended
December 31, 2009. Internal sales decreased 3.2% due to delays in transportation projects due to temporary reductions in state and local
governmental funding. Partial year results from the acquisition of iTrade and full-year results of UTS added 4.3%.
In 2009, in order to mitigate the effects of the weakened global economy on our financial results, we committed to certain severance and
related cost-control actions. The cost of these actions during the year ended December 31, 2009 totaled $12.4 million, $4.1 million of
which was recorded as cost of goods sold and the remaining $8.3 million as SG&A expense. we had no additional material severance and
related cost-control actions in 2010 or 2011.
Our overall gross profit percentage was 53.4% for the year ended December 31, 2010, as compared to 50.9% for the year ended December
31, 2009. Our Industrial Technology and Energy Systems and Controls segments both experienced higher gross margins due to higher
sales volume while maintaining a relatively flat cost structure. Our Medical and Scientific Imaging segment gross margins increased
primarily due to additional sales from medical products which have a higher gross margin. Our RF Technology segment gross margins
were relatively unchanged.
Roper Industries, Inc. 2011 Annual Report page 19
Selling, general and administrative expenses increased $113.1 million to $760.8 million in 2010 as compared to $647.7 million in 2009,
while increasing as a percentage of net sales to 31.9% for the year ended December 31, 2010 as compared to 31.6% for the year ended
December 31, 2009. The full-year inclusion of Verathon accounted for $72 million of the increase. In addition, our research and develop-
ment spending increased $19 million as we continued to invest in new product development.
Interest expense increased $8.0 million, or 13.6%, for the year ended December 31, 2010 compared to the year ended December 31, 2009.
The increase is due primarily to higher interest rates in the current year, which accounted for approximately $5 million of the increase,
and a higher average debt balance throughout 2010.
Other income for the year ended December 31, 2010 was $0.6 million, which was primarily due to gain on sale of assets offset by foreign
exchange losses. Other income for the year ended December 31, 2009 was $3.5 million, primarily due to a pre-tax gain of $4.1 million
related to the sale of certain assets of our satellite communications business, partially offset by a $0.4 million pre-tax debt extinguish-
ment charge for the early repayment of our term loan and foreign exchange losses at our non-U.S. based companies.
During 2010, our effective income tax rate was 28.1% versus 29.5% in 2009. This decrease was due primarily to certain foreign tax
planning initiatives and an increase in the Section 199 qualifying production activities deduction.
At December 31, 2010, the functional currencies of our European subsidiaries were weaker, and the Canadian dollar stronger, against the
U.S. dollar compared to currency exchange rates at December 31, 2009. The net result of these changes led to a decrease in the foreign
exchange component of comprehensive earnings of $19.8 million in the year ending December 31, 2010. Approximately $15.5 million of
these adjustments related to goodwill and are not expected to directly affect our projected future cash flows. For the entire year of 2010,
operating profit decreased by less than 0.5% due to fluctuations in non-U.S. currencies.
The following table summarizes our net order information for the years ended December 31, 2010 and 2009 (dollar amounts in thousands).
Industrial Technology
Energy Systems and Controls
Medical and Scientific Imaging
RF Technology
Total
2010
2009
Change
$ 669,882
$ 528,208
538,861
578,957
748,536
427,003
349,132
719,666
$ 2,536,236
$ 2,024,009
26.8%
26.2
65.8
4.0
25.3%
The increase in orders was due to internal growth of 15.8%, as well as orders from acquisitions which added $195 million. Our Industrial
Technology and Energy Systems and Controls segments experienced strong internal growth throughout 2010, as did our Medical and
Scientific Imaging segment which also experienced an increase of $159 million due to 2009 acquisitions. In our RF Technology segment,
internal orders decreased by 1.1%, which was more than offset by acquisition growth.
The following table summarizes order backlog information at December 31, 2010 and 2009 (dollar amounts in thousands). Our policy is
to include in backlog only orders scheduled for shipment within twelve months.
Industrial Technology
Energy Systems and Controls
Medical & Scientific Imaging
RF Technology
Total
2010
2009
Change
$ 113,981
$ 52,079
118.9%
104,466
103,796
463,115
70,901
73,747
368,762
47.3
40.7
25.6
$ 785,358
$ 565,489
38.9%
page 20 Roper Industries, Inc. 2011 Annual Report
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Selected cash flows for the years ended December 31, 2011, 2010 and 2009 are as follows (in millions):
Cash provided by/(used in):
Operating activities
Investing activities
Financing activities
2011
2010
2009
$ 601.6
$ 499.5
$ 367.5
(275.7)
(256.7)
(563.3)
167.6
(374.2)
(13.6)
Operating Activities—The increase in cash provided by operating activities in 2011 was primarily due to higher earnings over the prior
year and increased intangible amortization related to recent acquisitions, offset partially by higher inventory levels and lower accounts
payable balances at year end.
Investing Activities—Cash used by investing activities during 2011, 2010, and 2009 was primarily for business acquisitions.
Financing Activities—Cash used by financing activities in all periods was primarily debt repayments as well as dividends paid to stockhold-
ers. Cash provided by financing activities during 2010 and 2009 was primarily debt borrowings for acquisitions partially offset by debt
payments made using cash from operations, and in 2009 also included $121 million of proceeds from issuance of common stock, net of
issuance costs.
Net working capital (current assets, excluding cash, less total current liabilities, excluding debt) was $293.1 million at December 31, 2011 com-
pared to $281.4 million at December 31, 2010. we acquired net working capital of $5.2 million through business acquisitions during 2011.
Total debt was $1.1 billion at December 31, 2011 (25.4% of total capital) compared to $1.3 billion at December 31, 2010 (32.8% of total
capital). Our decreased debt at December 31, 2011 compared to December 31, 2010 was due to debt payments made using cash from
operations.
Our senior unsecured credit facility originally consisted of a two year $350 million term loan and a five year $750 million revolving loan;
however, the term loan portion was repaid in September 2009 and cannot be reborrowed. At December 31, 2011, our debt consisted of
$67.2 million in senior subordinated convertible notes due 2034, $500 million of senior notes due 2013 and $500 million of senior notes
due 2019. In addition, we had $6.1 million of other debt in the form of capital leases and several smaller facilities that allow for borrowings
or the issuance of letters of credit in foreign locations to support our non-U.S. businesses. we had $49.6 million of outstanding letters of
credit at December 31, 2011, of which $43.5 million was covered by our lending group, thereby reducing its remaining revolving credit
capacity commensurately.
The cash and short-term investments at our foreign subsidiaries at December 31, 2011 totaled $164 million. Repatriation of these funds
under current regulatory and tax law for use in domestic operations would expose us to additional taxes. we consider this cash to be per-
manently reinvested. we expect that cash flows from existing business combined with our available borrowing capacity will be sufficient
to fund operating requirements in the U.S.
we were in compliance with all debt covenants related to our credit facilities throughout the year ended December 31, 2011.
Capital expenditures of $40.7 million, $28.6 million and $25.9 million were incurred during 2011, 2010, and 2009, respectively. In the
future, we expect capital expenditures as a percentage of sales to be between 1.0% and 1.5% of annual net sales.
DESCRIPTION OF CERTAIN INDEBTEDNESS
Senior Unsecured Credit Facility—On July 7, 2008, we entered into a senior unsecured credit facility with JPMorgan Chase Bank, N.A.,
as administrative agent, and a syndicate of lenders. The credit facility is composed of a five year $750 million revolving credit facility
maturing July 7, 2013 and, as originally issued, a $350 million term loan facility originally maturing July 7, 2010. The $350 million term
loan was repaid early in September 2009. we may also, subject to compliance with specified conditions, request additional term loans or
revolving credit commitments in an aggregate amount not to exceed $350 million.
The credit facility contains affirmative and negative covenants which, among other things, limit our ability to incur new debt, prepay
subordinated debt, make certain investments and acquisitions, sell assets and grant liens, make restricted payments (including the payment
of dividends on our common stock) and capital expenditures, or change our line of business. we also are subject to financial covenants
which require us to limit our consolidated total leverage ratio and to maintain a consolidated interest coverage ratio. The most restrictive
covenant is the consolidated total leverage ratio which is limited to 3.5.
Roper Industries, Inc. 2011 Annual Report page 21
Senior Notes Due 2019—In September 2009, we completed a public offering of $500 million aggregate principal amount of 6.25% senior
unsecured notes due September 2019. Net proceeds of $496 million were used to pay off our $350 million term loan originally due July
2010 and the outstanding revolver balance under our credit facility. we recorded a $0.4 million non-cash debt extinguishment charge
related to the early repayment of the term loan portion of the facility.
The notes bear interest at a fixed rate of 6.25% per year, payable semi-annually in arrears on March 1 and September 1 of each year,
beginning March 1, 2010.
we may redeem some of all of these notes at any time or from time to time, at 100% of their principal amount, plus a make-whole pre-
mium based on a spread to U.S. Treasury securities.
The notes are unsecured senior obligations of the Company and rank equally in right of payment with all of our existing and future unse-
cured and unsubordinated indebtedness. The notes are effectively subordinated to any of our existing and future secured indebtedness
to the extent of the value of the collateral securing such indebtedness. The notes are not guaranteed by any of our subsidiaries and are
effectively subordinated to all existing and future indebtedness and other liabilities of our subsidiaries.
Senior Notes Due 2013—On August 6, 2008, we issued $500 million aggregate principal amount of 6.625% senior notes due August 15,
2013. These notes bear interest at a fixed rate of 6.625% per year, payable semi-annually in arrears on February 15 and August 15 of each
year, beginning February 15, 2009. The interest payable on the notes is subject to adjustment if either Moody’s Investors Service or
Standard & Poor’s Ratings Services downgrades the rating assigned to the notes.
we may redeem some or all of the notes at any time or from time to time, at 100% of their principal amount plus a make-whole premium
based on a spread to U.S. Treasury securities as described in the indenture relating to the notes.
The notes are unsecured senior obligations of the Company and rank equally in right of payment with all of our existing and future unse-
cured and unsubordinated indebtedness. The notes are effectively subordinated to any of our existing and future secured indebtedness to
the extent of the value of the collateral securing such indebtedness. The notes are not guaranteed by any of our subsidiaries and are effec-
tively subordinated to all existing and future indebtedness and other liabilities of our subsidiaries.
During 2009, we entered into an aggregate notional amount of $500 million in interest rate swaps designated as fair value hedges, which
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 three month London Interbank Offered Rate (“LIBOR”). Due to the application of fair value hedge
accounting for the swaps, the notes are shown in the balance sheet net of an $11.7 million fair value adjustment at December 31, 2011
and $14.1 million at December 31, 2010.
Senior Subordinated Convertible Notes—In December 2003, we issued $230 million of senior subordinated convertible notes at an original
issue discount of 60.498%, resulting in an effective yield of 3.75% per year to maturity. Interest on the notes was payable semi-annually,
beginning July 15, 2004, until January 15, 2009, after which cash interest is not paid on the notes prior to maturity unless contingent
cash interest becomes payable. As of January 15, 2009, interest is recognized at the effective rate of 3.75% and represents accrual of origi-
nal issue discount, excluding any contingent cash interest that may become payable. we will pay contingent cash interest to the holders
of the notes during any six month period commencing after January 15, 2009 if the average trading price of a note for a five trading day
measurement period preceding the applicable six month period equals 120% or more of the sum of the issue price, accrued original issue
discount and accrued cash interest, if any, for such note. The contingent cash interest payable per note in respect of any six month period
will equal the annual rate of 0.25%. In accordance with this criterion, contingent interest has been paid for each six month period since
January 15, 2009.
The notes are unsecured senior subordinated obligations, rank junior to our existing and future senior secured indebtedness and rank
equally with our existing and future senior subordinated indebtedness.
As originally issued, each $1,000 principal amount of the notes will be convertible at the option of the holder into 12.422 shares of our
common stock (giving effect to the 2-for-1 stock split effective August 26, 2005 and subject to further adjustment), if (i) the sale price of
our common stock reaches, or the trading price of the notes falls below, specified thresholds, (ii) if the notes are called for redemption or
(iii) if specified corporate transactions have occurred. Upon conversion, we would have the right to deliver, in lieu of common stock, cash
or a combination of cash and common stock. On November 19, 2004, we began a consent solicitation to amend the notes such that we
would pay the same conversion value upon conversion of the notes, but would change how the conversion value is paid. In lieu of receiv-
ing exclusively shares of common stock or cash upon conversion, noteholders would receive cash up to the value of the accreted principal
amount of the notes converted and, at our option, any remainder of the conversion value would be paid in cash or shares of common
stock. The consent solicitation was successfully completed on December 6, 2004 and the amended conversion provisions were adopted.
page 22 Roper Industries, Inc. 2011 Annual Report
As of September 30, 2005, the senior subordinated convertible notes were reclassified from long-term to short-term debt as the notes
became convertible on October 1, 2005 based upon our common stock trading above the trigger price for at least 20 trading days during
the 30 consecutive trading-day period ending on September 30, 2005.
Holders may require us to purchase all or a portion of their notes on January 15, 2014, January 15, 2019, January 15, 2024, and January
15, 2029, at stated prices plus accrued cash interest, if any, including contingent cash interest, if any. we may only pay the purchase price
of such notes in cash and not in common stock.
we may redeem for cash all or a portion of the notes at any time at redemption prices equal to the sum of the issue price plus accrued
original issue discount and accrued cash interest, if any, including contingent cash interest, if any, on such notes to the applicable
redemption date.
The Company includes in its diluted weighted-average common share calculation an increase in shares based upon the difference
between our average closing stock price for the period and the conversion price of $31.80, plus accretion. This is calculated using the
treasury stock method.
CONTRACTUAL CASH OBLIGATIONS AND OTHER COMMERCIAL COMMITMENTS
AND CONTINGENCIES
The following tables quantify our contractual cash obligations and commercial commitments at December 31, 2011 (in thousands).
Total
2012
2013
2014
2015
2016
Thereafter
Payments Due in Fiscal Year
$1,079,916
$ 67,975
$ 511,719
239,583
5,100
126,126
31,250
1,931
33,262
31,250
1,312
26,525
$
67
31,250
721
22,454
$
67
31,250
489
17,314
$
53
31,250
440
12,590
$500,035
83,333
207
13,981
$1,450,725
$ 134,418
$ 570,806
$ 54,492
$ 49,120
$ 44,333
$597,556
Amounts Expiring in Fiscal Year
Total Amount
Committed
2012
2013
2014
2015
2016
Thereafter
Contractual Cash Obligations(1)
Long-term debt
Senior note interest(2)
Capital leases
Operating leases
Total
Other Commercial Commitments
Standby letters of credit and
bank guarantees
$ 49,608
$ 36,765
$ 7,330
$
542
$
731
$
826
$ 3,414
(1) we have excluded $19.6 million related to the liability for uncertain tax positions from the tables as the current portion is not material, and we are not able to reasonably
estimate the timing of the long-term portion of the liability. See Note 8 of the Notes to Consolidated Financial Statements.
(2) we have excluded interest on the senior notes due 2013, as they have been effectively converted to variable rate debt due to interest rate swaps. See “Description of Certain
Indebtedness” above.
At December 31, 2011, we had outstanding surety bonds of $313 million.
At December 31, 2011 and 2010, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities
often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating
off-balance sheet arrangements or other contractually narrow or limited purposes.
we believe that internally generated cash flows and the remaining availability under our credit facilities will be adequate to finance
normal operating requirements and future acquisition activities. Although we maintain an active acquisition program, any future
acquisitions will be dependent on numerous factors and it is not feasible to reasonably estimate if or when any such acquisitions will
occur and what the impact will be on our activities, financial condition and results of operations. we may also explore alternatives to
attract additional capital resources.
Roper Industries, Inc. 2011 Annual Report page 23
we anticipate that our recently acquired businesses as well as our other businesses will generate positive cash flows from operating
activities, and that these cash flows will permit the reduction of currently outstanding debt in accordance with the repayment schedule.
However, the rate at which we can reduce our debt during 2012 (and reduce the associated interest expense) will be affected by, among
other things, the financing and operating requirements of any new acquisitions and the financial performance of our existing companies.
None of these factors can be predicted with certainty.
RECENTLY ISSUED ACCOUNTING STANDARDS
See Note 1 of our Notes to Consolidated Financial Statements for information regarding the effect of new accounting pronouncements on
our financial statements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
we are exposed to interest rate risks on our outstanding borrowings, and to foreign currency exchange risks on our transactions denominated
in currencies other than the U.S. dollar. we are also exposed to equity market risks pertaining to the traded price of our common stock.
At December 31, 2011, we had a combination of fixed and floating rate borrowings. Our credit facility contains a $750 million variable
rate revolver; however, there were no outstanding revolver borrowings at December 31, 2011. Our $500 million senior notes due 2019
have a fixed interest rate of 6.25%, and our $67 million senior unsecured convertible notes have a fixed interest rate of 3.75%. Our $500
million senior notes due 2013 have a fixed interest rate of 6.625%; however, in October 2009 we entered into three interest rate swap
agreements totaling $500 million that expire August 2013. The swaps, which are designated as fair value hedges, effectively convert the
notes to a weighted average variable rate obligation with a spread of 4.377% plus LIBOR. At December 31, 2011, the prevailing market
rates for our long-term notes were between 2.5% and 5.1% lower than the fixed rates on our debt instruments.
At December 31, 2011, our outstanding variable-rate borrowing was the $500 million senior notes due 2013. An increase in interest rates
of 1% would increase our annualized interest costs by $5.0 million.
Several of our businesses have transactions and balances denominated in currencies other than the U.S. dollar. Most of these transactions
or balances are denominated in euros, Canadian dollars, British pounds or Danish krone. Sales by companies whose functional currency
was not the U.S. dollar were 27% of our total sales and 63% of these sales were by companies with a European functional currency. The
U.S. dollar was weaker against most currencies throughout most of 2011 as compared to 2010, which resulted in an increase in sales of
1.4% due to foreign currency exchange. If these currency exchange rates had been 10% different throughout 2011 compared to currency
exchange rates actually experienced, the impact on our net earnings would have been approximately 2.7%.
The changes in these currency exchange rates relative to the U.S. dollar at December 31, 2011 compared to currency exchange rates at
December 31, 2010 resulted in a decrease in net assets of $11.0 million that was reported as a component of comprehensive earnings,
$5.1 million of which was attributed to goodwill. Goodwill changes from currency exchange rate changes do not directly affect our reported
earnings or cash flows.
The trading price of our common stock influences the valuation of stock award grants and the effects these grants have on our results of
operations. The stock price also influences the computation of potentially dilutive common stock which includes both stock awards and
the premium over the conversion price on senior subordinated convertible notes to determine diluted earnings per share. The stock price
also affects our employees’ perceptions of programs that involve our common stock. we believe the quantification of the effects of these
changing prices on our future earnings and cash flows is not readily determinable.
page 24 Roper Industries, Inc. 2011 Annual Report
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEx TO CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Consolidated Financial Statements:
Report of Independent Registered Public Accounting Firm (PricewaterhouseCoopers LLP)
Consolidated Balance Sheets as of December 31, 2011 and 2010
Consolidated Statements of Earnings for the Years ended December 31, 2011, 2010 and 2009
Consolidated Statements of Stockholders’ Equity and Comprehensive Earnings
for the Years ended December 31, 2011, 2010 and 2009
Consolidated Statements of Cash Flows for the Years ended December 31, 2011, 2010 and 2009
Notes to Consolidated Financial Statements
Supplementary Data:
Schedule II—Consolidated Valuation and Qualifying Accounts for the Years ended December 31, 2011, 2010 and 2009
Page
26
27
28
29
30
31
47
Roper Industries, Inc. 2011 Annual Report page 25
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders of Roper Industries, Inc.:
In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of earnings, of stockholders’
equity and comprehensive earnings and of cash flows, present fairly, in all material respects, the financial position of Roper Industries,
Inc. and its subsidiaries at December 31, 2011 and December 31, 2010, and the results of their operations and their cash flows for each of
the three years in the period ended December 31, 2011 in conformity with accounting principles generally accepted in the United States
of America. In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 15(a)(2) presents fairly,
in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.
Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December
31, 2011, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements and financial statement
schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control
over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our
responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the Company’s internal
control over financial reporting based on our integrated audits. we conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable
assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial
reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting
included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included per-
forming such other procedures as we considered necessary in the circumstances. we believe that our audits provide a reasonable basis for
our opinions.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the mainte-
nance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii)
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance
with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial
statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of
any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in condi-
tions, or that the degree of compliance with the policies or procedures may deteriorate.
As described in Management’s Report on Internal Control over Financial Reporting, management has excluded NDI Holding Corp.,
United Controls Group, Inc., and Trinity Integrated Systems Ltd. from its assessment of internal control over financial reporting as of
December 31, 2011, because they were acquired by the Company in purchase business combinations during 2011. we have also excluded
NDI Holding Corp., United Controls Group, Inc., and Trinity Integrated Systems Ltd. from our audit of internal control over financial
reporting. NDI Holding Corp., United Controls Group, Inc., and Trinity Integrated Systems Ltd. are wholly-owned subsidiaries whose
aggregated total assets and total revenues represent 0.5% and 1.1% respectively, of the related consolidated financial statement amounts
as of and for the year ended December 31, 2011.
/s/ PricewaterhouseCoopers LLP
Tampa, Florida
February 24, 2012
page 26 Roper Industries, Inc. 2011 Annual Report
ROPER INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 2011 and 2010
(In thousands, except per share data)
Assets
Cash and cash equivalents
Accounts receivable, net
Inventories, net
Deferred taxes
Unbilled receivables
Other current assets
Total current assets
Property, plant and equipment, net
Goodwill
Other intangible assets, net
Deferred taxes
Other assets
Total assets
Liabilities and Stockholders’ Equity
Accounts payable
Accrued liabilities
Income taxes payable
Deferred taxes
Current portion of long-term debt, net
Total current liabilities
Long-term debt, net of current portion
Deferred taxes
Other liabilities
Total liabilities
Commitments and contingencies (Note 14)
Stockholders’ equity:
Preferred stock, $0.01 par value per share; 2,000 shares authorized; none outstanding
Common stock, $0.01 par value per share; 350,000 shares authorized;
98,684 shares issued and 96,678 outstanding at December 31, 2011 and
97,122 shares issued and 95,088 outstanding at December 31, 2010
Additional paid-in capital
Retained earnings
Accumulated other comprehensive earnings
Treasury stock 2,006 shares at December 31, 2011 and 2,034 shares at December 31, 2010.
Total stockholders’ equity
Total liabilities and stockholders’ equity
See accompanying notes to consolidated financial statements.
Roper Industries, Inc. 2011 Annual Report page 27
2011
2010
$ 338,101
439,134
204,758
38,004
63,829
31,647
1,115,473
108,775
2,866,426
1,094,142
63,006
71,595
$ 270,394
403,337
178,559
32,894
75,620
37,287
998,091
103,487
2,727,780
1,104,513
57,850
77,803
$ 5,319,417
$ 5,069,524
$ 141,943
322,904
8,895
10,548
69,906
554,196
1,015,110
482,603
72,412
$ 137,778
298,080
—
10,445
93,342
539,645
1,247,703
465,001
66,268
2,124,321
2,318,617
—
—
987
1,117,093
2,063,110
33,800
(19,894)
971
1,045,286
1,680,849
43,978
(20,177)
3,195,096
2,750,907
$ 5,319,417
$ 5,069,524
ROPER INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
Years Ended December 31, 2011, 2010 and 2009
(Dollar and share amounts in thousands, except per share data)
2011
2010
2009
Years Ended December 31,
Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Income from operations
Interest expense, net
Loss on extinguishment of debt
Other income, net
Earnings before income taxes
Income taxes
Net earnings
Earnings per share:
Basic
Diluted
weighted-average common shares outstanding:
Basic
Diluted
See accompanying notes to consolidated financial statements.
$ 2,797,089
1,281,525
1,515,564
855,025
660,539
63,648
—
8,096
604,987
177,740
$ 2,386,112
1,110,986
1,275,126
760,832
514,294
66,533
—
633
448,394
125,814
$ 2,049,668
1,006,530
1,043,138
647,742
395,396
58,544
403
3,319
339,768
100,287
$ 427,247
$ 322,580
$ 239,481
$
$
4.45
4.34
$
$
3.42
3.34
$
$
2.64
2.58
95,959
98,386
94,242
96,653
90,685
92,820
page 28 Roper Industries, Inc. 2011 Annual Report
ROPER INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND COMPREHENSIVE EARNINGS
Years Ended December 31, 2011, 2010 and 2009
(In thousands, except per share data)
Shares
Amount
Common Stock
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Earnings
Treasury
Stock
Total
Stockholders’
Equity
Comprehensive
Earnings
Balances at December 31, 2008
89,721
$ 919
$ 815,736
$ 1,187,467
$ 21,513
$ (21,701)
$ 2,003,934
$ 194,655
Net earnings
Stock option exercises
Treasury stock sold
Currency translation adjustments,
net of $5,257 tax
Stock-based compensation
Restricted stock activity
Stock option tax benefit, net of shortfalls
Issuance of common stock,
net of issue costs
Conversion of senior subordinated
convertible notes
Dividends declared ($0.34 per share)
—
421
38
—
—
87
—
2,300
1,051
—
—
4
—
—
—
1
—
23
11
—
—
10,502
1,312
—
26,660
(3,648)
2,032
121,427
239,481
—
—
—
—
—
—
—
8,300
—
—
(31,362)
—
—
—
42,432
—
—
—
—
—
—
—
—
381
—
—
—
—
—
—
—
239,481
10,506
1,693
42,432
26,660
(3,647)
2,032
121,450
8,311
(31,362)
$ 239,481
—
—
42,432
—
—
—
—
—
—
Balances at December 31, 2009
93,618
$ 958
$ 982,321
$ 1,395,586
$ 63,945
$ (21,320)
$ 2,421,490
$ 281,913
Net earnings
Stock option exercises
Stock issued for Lumenera contingent
consideration
Treasury stock sold
Currency translation adjustments,
net of $153 tax
Stock-based compensation
Restricted stock activity
Stock option tax benefit, net of shortfalls
Conversion of senior subordinated
convertible notes
Dividends declared ($0.40 per share)
—
864
86
29
—
—
165
—
326
—
—
8
—
—
—
—
2
—
3
—
—
29,039
4,740
1,405
—
23,980
(4,547)
7,282
322,580
—
—
—
—
—
—
—
—
—
—
—
(19,967)
—
—
—
1,066
—
—
(37,317)
—
—
—
—
851
292
—
—
—
—
—
—
322,580
29,047
$ 322,580
—
5,591
1,697
(19,967)
23,980
(4,545)
7,282
1,069
(37,317)
—
—
(19,967)
—
—
—
—
—
Balances at December 31, 2010
95,088
$971
$ 1,045,286
$ 1,680,849
$ 43,978
$ (20,177)
$2,750,907
$302,613
Net earnings
Stock option exercises
Treasury stock sold
Currency translation adjustments,
net of $866 tax
Stock-based compensation
Restricted stock activity
Stock option tax benefit, net of shortfalls
Conversion of senior subordinated
convertible notes
Dividends declared ($0.47 per share)
—
838
29
—
—
268
—
456
—
—
8
—
—
—
3
—
5
—
—
28,159
1,821
—
30,906
(6,008)
12,684
427,247
—
—
—
—
—
—
—
—
—
(10,178)
—
—
—
4,245
—
—
(44,986)
—
—
—
—
283
—
—
—
—
—
—
427,247
28,167
2,104
(10,178)
30,906
(6,005)
12,684
4,250
(44,986)
$ 427,247
—
—
(10,178)
—
—
—
—
—
Balances at December 31, 2011
96,679
$987
$ 1,117,093
$ 2,063,110
$ 33,800
$ (19,894)
$3,195,096
$417,069
See accompanying notes to consolidated financial statements.
Roper Industries, Inc. 2011 Annual Report page 29
ROPER INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOwS
Years Ended December 31, 2011, 2010 and 2009
(In thousands)
Cash flows from operating activities:
Net earnings
Adjustments to reconcile net earnings to cash flows from operating activities:
Depreciation and amortization of property, plant and equipment
Amortization of intangible assets
Amortization of deferred financing costs
Non-cash stock compensation
Changes in operating assets and liabilities, net of acquired businesses:
Accounts receivable
Inventories
Unbilled receivables
Accounts payable and accrued liabilities
Income taxes
Other, net
Cash provided by operating activities
Cash flows from investing activities:
Acquisitions of businesses, net of cash acquired
Capital expenditures
Proceeds from sale of assets
Other, net
Cash used in investing activities
Cash flows from financing activities:
Proceeds from senior notes
Proceeds from/(payments on) senior unsecured term loan
Borrowings/(payments) under revolving line of credit, net
Principal payments on convertible notes
Debt issuance costs
Cash dividends to stockholders
Treasury stock sales
Stock award tax excess windfall benefit
Proceeds from issuance of common stock, net of issue costs
Proceeds from stock option exercises
Other
Cash provided by/(used in) financing activities
Effect of exchange rate changes on cash
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
Supplemental disclosures:
Cash paid for:
Interest
Income taxes, net of refunds received
Noncash investing activities:
Net assets of businesses acquired:
Fair value of assets, including goodwill
Liabilities assumed
Cash paid, net of cash acquired
See accompanying notes to consolidated financial statements.
page 30 Roper Industries, Inc. 2011 Annual Report
Years Ended December 31,
2011
2010
2009
$ 427,247
$ 322,580
$ 239,481
36,780
103,363
2,362
31,730
(33,333)
(23,033)
11,759
24,347
14,526
5,870
36,728
86,293
2,362
25,150
(9,697)
(5,687)
(16,115)
52,540
10,123
(4,737)
34,163
69,285
2,573
27,476
26,978
31,081
4,015
(58,801)
(6,225)
(2,527)
601,618
499,540
367,499
(233,594)
(40,702)
1,990
(3,443)
(536,413)
(28,591)
6,068
(4,338)
(354,561)
(25,885)
11,218
(4,964)
(275,749)
(563,274)
(374,192)
—
—
(230,000)
(26,457)
—
(42,090)
2,104
12,664
—
28,167
(1,067)
—
500,000
— (350,000)
(139,000)
(124,270)
(4,708)
(29,823)
1,693
2,813
121,450
10,506
(2,258)
190,000
(23,411)
—
(35,706)
1,697
6,364
—
29,047
(382)
(256,679)
167,609
(13,597)
(1,483)
(1,189)
9,929
67,707
270,394
102,686
167,708
(10,361)
178,069
$ 338,101
$ 270,394
$ 167,708
$ 62,840
$ 64,831
$ 47,867
$ 150,550
$ 109,327
$ 103,699
$ 256,589
(22,995)
$ 687,017
(150,604)
$ 384,055
(29,494)
$ 233,594
$ 536,413
$ 354,561
ROPER INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended December 31, 2011, 2010 and 2009
(1) SUMMARY OF ACCOUNTING POLICIES
Basis of Presentation—These financial statements present consolidated information for Roper Industries, Inc. and its subsidiaries
(“Roper” or the “Company”). All significant intercompany accounts and transactions have been eliminated.
Nature of the Business—Roper is a diversified growth company that designs, manufactures and distributes energy systems and controls,
medical and scientific imaging products and software, industrial technology products and radio frequency products and services. Roper
markets these products and services to selected segments of a broad range of markets, including radio frequency applications, medical,
water, energy, research, education, software-as-a-service (“SaaS”)-based information networks, security and other niche markets.
Accounts Receivable—Accounts receivable were stated net of an allowance for doubtful accounts and sales allowances of $10.6 million
and $10.3 million at December 31, 2011 and 2010, respectively. Outstanding accounts receivable balances are reviewed periodically, and
allowances are provided at such time that management believes it is probable that an account receivable is uncollectible. The returns and
other sales credit allowance is an estimate of customer returns, exchanges, discounts or other forms of anticipated concessions and is
treated as a reduction in revenue.
Cash and Cash Equivalents—Roper considers highly liquid financial instruments with remaining maturities at acquisition of three months
or less to be cash equivalents. Roper had in $136 million in cash equivalents at December 31, 2011 and $10 million at December 31, 2010.
Contingencies—Management continually assesses the probability of any adverse judgments or outcomes to its potential contingencies.
Disclosure of the contingency is made if there is at least a reasonable possibility that a loss or an additional loss may have been incurred.
In the assessment of contingencies as of December 31, 2011, management concluded that no accrual was necessary and that there were
no matters for which there was a reasonable possibility of a material loss.
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 year. 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 year. 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 the Company’s common stock. The effects of potential common stock were determined using the treasury stock method
(in thousands):
Basic shares outstanding
Effect of potential common stock
Common stock awards
Senior subordinated convertible notes
Diluted shares outstanding
Years Ended December 31,
2011
2010
2009
95,959
94,242
90,685
1,213
1,214
1,009
1,402
853
1,282
98,386
96,653
92,820
As of and for the years ended December 31, 2011, 2010 and 2009, there were 760,000, 1,143,350 and 2,124,650 outstanding stock options,
respectively, that were not included in the determination of diluted earnings per share because doing so would have been antidilutive.
Estimates—The preparation of financial statements in conformity with accounting principles generally accepted in the United States
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities. Actual results could differ from those estimates.
Foreign Currency Translation and Transactions—Assets and liabilities of subsidiaries whose functional currency is not the U.S. dollar
were translated at the exchange rate in effect at the balance sheet date, and revenues and expenses were translated at average exchange
rates for the period in which those entities were included in Roper’s financial results. Translation adjustments are reflected as a compo-
nent of other comprehensive earnings. Foreign currency transaction gains and losses are recorded in the income statement as other
income. The gain or loss included in pre-tax income was a net gain of $6.9 million for the year ended December 31, 2011 and a net loss
of $0.9 million and $2.2 million for the years ended December 31, 2010 and 2009, respectively.
Goodwill and Other Intangibles—Roper accounts for goodwill in a purchase business combination as the excess of the cost over the
fair value of net assets acquired. Business combinations can also result in other intangible assets being recognized. Amortization of
Roper Industries, Inc. 2011 Annual Report page 31
intangible assets, if applicable, occurs over their estimated useful lives. Goodwill, which is not amortized, is tested for impairment on an
annual basis (or 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) using a two-step process. The first step of the process utilizes both an income approach (dis-
counted cash flows) and a market approach consisting of a comparable public company earnings multiples methodology to estimate the
fair value of a reporting unit. To determine the reasonableness of the estimated fair values, the Company reviews the assumptions to
ensure that neither the income approach nor the market approach provides significantly different valuations. If the estimated fair value
exceeds the carrying value, no further work is required and no impairment loss is recognized. If the carrying value exceeds the estimated
fair value, the goodwill of the reporting unit is potentially impaired and then the second step would be completed in order to measure
the impairment loss by calculating the implied fair value of goodwill by deducting the fair value of all tangible and intangible net assets
(including unrecognized intangible assets) of the reporting unit from the fair value of the reporting unit. If the implied fair value of
goodwill is less than the carrying value of goodwill, an impairment loss would be recognized.
Key assumptions used in the income and market methodologies are updated when the analysis is performed for each reporting unit.
Various assumptions are utilized including forecasted operating results, strategic plans, economic projections, anticipated future cash
flows, the weighted average cost of capital, comparable transactions, market data and earnings multiples. The assumptions that have the
most significant effect on the fair value calculations are the anticipated future cash flows, discount rates, and the earnings multiples.
while the Company uses reasonable and timely information to prepare its cash flow and discount rate assumptions, actual future cash
flows or market conditions could differ significantly resulting in future impairment charges related to recorded goodwill balances.
Total goodwill includes 26 reporting units with individual amounts ranging from zero to $536 million. The Company concluded that the
fair value of each of its reporting units was substantially in excess of its carrying value as of December 31, 2011, and thus no goodwill
impairment was identified.
The following events or circumstances would be considered to determine whether interim testing of goodwill would be required:
• a significant adverse change in legal factors or in the business climate;
• an adverse action or assessment by a regulator;
• unanticipated competition;
• a loss of key personnel;
• a more-likely-than-not expectation that a reporting unit or a significant portion of a reporting unit will be sold or otherwise disposed of;
• the testing for recoverability under the Impairment or Disposal of Long-Lived Assets of a significant asset group within a reporting
unit; and
• recognition of a goodwill impairment loss in the financial statements of a subsidiary that is a component of a reporting unit.
Identifiable intangible assets that are determined to have an indefinite useful economic life are not amortized, but separately tested for
impairment annually using a one-step fair value based approach. Roper conducts these reviews for all of its reporting units and indefinite-
lived intangibles during the fourth quarter of the fiscal year or on an interim basis if an event occurs that it is more likely than not the
fair value of the intangible asset is below its carrying value. No impairment resulted from the annual reviews performed in 2011.
Roper evaluates whether there has been an impairment of identifiable intangible assets with definite useful economic lives, or of the
remaining life of such assets, when certain indicators of impairment are present. In the event that facts and circumstances indicate
that the cost or remaining period of amortization of any asset may be impaired, an evaluation of recoverability would be performed. If
an evaluation is required, the estimated future gross, undiscounted cash flows associated with the asset would be compared to the asset’s
carrying amount to determine if a write-down to fair value or a revision in the remaining amortization period is required.
Impairment of Long-Lived Assets—The Company determines whether there has been an impairment of long-lived assets, excluding
goodwill and identifiable intangible assets that are determined to have indefinite useful economic lives, when certain indicators of
impairment are present. In the event that facts and circumstances indicate that the cost or life of any long-lived assets may be impaired,
an evaluation of recoverability would be performed. If an evaluation is required, the estimated future gross, undiscounted cash flows
associated with the asset would be compared to the asset’s carrying amount to determine if a write-down to fair value or revision to
remaining life is required. Future adverse changes in market conditions or poor operating results of underlying long-lived assets could
result in losses or an inability to recover the carrying value of the long-lived assets that may not be reflected in the assets’ current carry-
ing value, thereby possibly requiring an impairment charge or acceleration of depreciation or amortization expense in the future.
Income Taxes—Roper is a U.S.-based multinational company and the calculation of its worldwide provision for income taxes requires
analysis of many factors, including income tax systems that vary from country to country, and the United States’ treatment of non-U.S.
page 32 Roper Industries, Inc. 2011 Annual Report
earnings. The Company provides U.S. income taxes for unremitted earnings of foreign subsidiaries that are not considered permanently
reinvested overseas. As of December 31, 2011, the approximate amount of earnings of foreign subsidiaries that the Company considers
permanently reinvested and for which deferred taxes have not been provided was approximately $874 million. Because of the availability
of U.S. foreign tax credits, it is not practicable to determine the U.S. federal income tax liability that would be payable if such earnings
were not reinvested indefinitely.
Although it is the Company’s intention to permanently reinvest these earnings indefinitely, there are certain events that would cause
these earnings to become taxable. These events include, but are not limited to, changes in U.S. tax laws, dividends paid between foreign
subsidiaries in the absence of Section 954(c)(6) of the Internal Revenue Code (“IRC”), foreign subsidiary guarantees of U.S. parent debt
and the liquidation of foreign subsidiaries or actual distributions by foreign subsidiaries into a U.S. affiliate.
Certain assets and liabilities have different bases for financial reporting and income tax purposes. Deferred income taxes have been provided
for these differences at the tax rates expected to be paid.
Interest Rate Risk—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. Interest rate
swaps are recorded at fair value in the balance sheet as an asset or liability, and the changes in fair values of both the swap and the
hedged item are recorded as interest expense in current earnings.
Inventories—Inventories are valued at the lower of cost or market. Cost is determined using the first-in, first-out method. The Company
writes down its inventory for estimated obsolescence or excess inventory equal to the difference between the cost of inventory and the
estimated market value based upon assumptions about future demand and market conditions.
Other Comprehensive Earnings—Comprehensive earnings includes net earnings and all other non-owner sources of changes in a com-
pany’s net assets. The differences between net earnings and comprehensive earnings were currency translation adjustments, net of tax.
Product Warranties—The Company sells certain of its products to customers with a product warranty that allows customers to return a
defective product during a specified warranty period following the purchase in exchange for a replacement product, repair at no cost to
the customer or the issuance of a credit to the customer. The Company accrues its estimated exposure to warranty claims based upon
current and historical product sales data, warranty costs incurred and any other related information known to the Company.
Property, Plant and Equipment and Depreciation and Amortization—Property, plant and equipment is stated at cost less accumulated
depreciation and amortization. Depreciation and amortization are provided for using principally the straight-line method over the estimated
useful lives of the assets as follows:
Buildings
Machinery
Other equipment
20–30 years
8–12 years
3–5 years
Recently Released Accounting Pronouncements—In September 2011, the Financial Accounting Standards Board (“FASB”) issued
updated accounting guidance which allows entities to perform a qualitative assessment on goodwill impairment to determine whether
it is more likely than not (defined as having a likelihood of more than 50 percent) that the fair value of a reporting unit is less than its
carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. This guidance is
effective for goodwill impairment tests performed in interim and annual periods for fiscal years beginning after December 15, 2011, with
early adoption permitted. The implementation of this guidance is not expected to have a material impact on the Company’s results of
operations, financial position or cash flows.
In June 2011, the FASB issued updated accounting guidance which requires entities to present comprehensive income, which is currently
presented in the Consolidated Condensed Statement of Stockholders’ Equity, either as a single continuous statement of comprehensive
income or as two separate but consecutive statements. This guidance is effective for fiscal years, and interim periods within those fiscal
years, beginning after December 15, 2011, with early adoption permitted. As this new guidance is related to presentation only, the imple-
mentation in the first quarter of fiscal year 2012 will not have a material impact on the Company’s results of operations, financial position
or cash flows.
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, modify the criteria for recognizing revenue in multiple element arrangements and the
scope of what constitutes a non-software deliverable. The Company implemented the amendments on January 1, 2011. The impact on its
results of operations, financial condition and cash flows was immaterial.
Roper Industries, Inc. 2011 Annual Report page 33
Research and Development—Research and development (“R&D”) costs include salaries and benefits, rents, supplies, and other costs
related to products under development. Research and development costs are expensed in the period incurred and totaled $121.7 million,
$102.4 million and $83.4 million for the years ended December 31, 2011, 2010 and 2009, respectively.
Revenue Recognition—The Company recognizes revenue when all of the following criteria are met:
• persuasive evidence of an arrangement exists;
• delivery has occurred or services have been rendered;
• the seller’s price to the buyer is fixed or determinable; and
• collectibility is reasonably assured.
In addition, the Company recognizes revenue from the sale of product when title and risk of loss pass to the customer, which is generally
when product is shipped. The Company recognizes revenue from services when such services are rendered or, if applicable, upon cus-
tomer acceptance. Revenues under certain relatively long-term and relatively large-value construction projects are recognized under the
percentage-of-completion method using the ratio of costs incurred to total estimated costs as the measure of performance. The Company
recognized revenues of approximately $151.5 million, $131.0 million and $142.5 million for the years ended December 31, 2011, 2010 and
2009, respectively, using this method. Estimated losses on any projects are recognized as soon as such losses become known.
Capitalized Software—The Company accounts for capitalized software under applicable accounting guidance which, among other provisions,
requires capitalization of certain internal-use software costs once certain criteria are met. Overhead, general and administrative and
training costs are not capitalized. Capitalized software was $14.1 million and $17.3 million at December 31, 2011 and 2010, respectively.
Stock-Based Compensation—The Company recognizes expense for the grant date fair value of its employee stock option awards on a
straight-line basis over the employee’s requisite service period (generally the vesting period of the award). The fair value of its option
awards is estimated using the Black-Scholes option valuation model and recognizes the expense of all share-based awards. The Company
presents the cash flows resulting from the tax benefits arising from tax deductions in excess of the compensation cost recognized for
stock award exercises (excess tax benefits) as financing cash flows.
(2) BUSINESS ACQUISITIONS
2011 Acquisitions—During the year ended December 31, 2011, Roper completed three business combinations. The results of operations
of the acquired companies have been included in Roper’s consolidated results since the date of each acquisition. Supplemental pro forma
information has not been provided as the acquisitions did not have a material impact on Roper’s consolidated results of operations
individually or in aggregate.
The aggregate purchase price of 2011 acquisitions totaled $234 million of cash. The Company recorded $91 million in other identifiable
intangibles and $149 million in goodwill in connection with these acquisitions. The majority of the goodwill is not expected to be deductible
for tax purposes. The Company expensed transaction costs of $2.1 million related to these acquisitions, as incurred.
On June 3, 2011, Roper acquired 100% of the shares of NDI Holding Corp. (“Northern Digital”), a provider of 3-D measurement technology
for medical applications in computer-assisted surgery and computer-assisted therapy. Roper acquired Northern Digital as an addition to
its medical platform, and it is reported in the Medical and Scientific Imaging segment.
On September 26, 2011, Roper acquired 100% of the shares of United Controls Group, Inc. (“UCG”), a manufacturer of control systems in
the oil and gas industry. UCG was acquired as an addition to our existing process control systems businesses, and is reported in the
Energy Systems and Controls segment.
On December 1, 2011, Roper acquired 100% of the shares of Trinity Integrated Systems Ltd. (“Trinity”), a specialist provider of requirements
capture, safety lifecycle management and engineering software tools, and safety and control system solutions to the oil and gas, industrial
process and control markets. Trinity was acquired as an addition to our existing process control systems businesses, and is reported in
the Energy Systems and Controls segment.
Of the $91 million of acquired intangible assets acquired in 2011, $3 million was assigned to trade names that are not subject to amortization.
The remaining $88 million of acquired intangible assets have a weighted-average useful life of approximately 11 years. The intangible
assets that make up that amount include customer relationships of $70 million (12 year weighted-average useful life), and unpatented
technology of $18 million (8 year weighted-average useful life).
page 34 Roper Industries, Inc. 2011 Annual Report
2010 Acquisitions—During the year ended December 31, 2010, Roper completed two business combinations. The results of operations
of the acquired companies have been included in Roper’s consolidated results since the date of each acquisition. Supplemental pro forma
information has not been provided as the acquisitions did not have a material impact on Roper’s consolidated results of operations indi-
vidually or in aggregate.
The aggregate purchase price of 2010 acquisitions totaled $538 million of cash. The Company recorded $320 million in other identifiable
intangibles and $345 million in goodwill, $115 million of which was recorded due to a deferred tax liability related to intangible assets, in
connection with these acquisitions. The majority of the goodwill is not expected to be deductible for tax purposes. The Company expensed
transaction costs of $2.1 million related to these acquisitions.
iTrade Acquisition—The largest of the 2010 acquisitions was the purchase of all outstanding shares of iTradeNetwork, Inc. on July 27,
2010. iTrade, whose operations are reported in the RF Technology segment, is a global provider of software as a service (“SaaS”)-based
trading network and business intelligence solutions primarily to the perishable food market. iTrade’s principal facilities are located in
Pleasanton, California. The aggregate gross purchase price was $523 million of cash.
The Company acquired iTrade in order to complement and expand existing software services at other Roper businesses. The following
table (in thousands) summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition.
Current assets
Other assets
Intangible assets
Goodwill
Total assets acquired
Current liabilities
Other liabilities
Net assets acquired
July 27, 2010
$ 14,174
2,998
313,600
335,971
666,743
(15,301)
(128,841)
$ 522,601
On February 22, 2010, Roper purchased the assets of Heartscape, Inc, including a technology with the capability to improve the speed
and accuracy of detecting heart attacks. The operations of Heartscape are reported in the Medical and Scientific Imaging segment.
Of the $320 million of acquired intangible assets acquired in 2010, $35 million was assigned to trade names that are not subject to amor-
tization. The remaining $285 million of acquired intangible assets have a weighted-average useful life of approximately 14 years. The
intangible assets that make up that amount include customer relationships of $234 million (15 year weighted-average useful life) and
unpatented technology of $51 million (8 year weighted-average useful life).
2009 Acquisitions—During the year ended December 31, 2009, Roper completed two business combinations. The results of operations
of the acquired companies have been included in Roper’s consolidated results since the date of each acquisition. Supplemental pro forma
information has not been provided as the acquisitions did not have a material impact on Roper’s consolidated results of operations indi-
vidually or in aggregate.
The aggregate purchase price of 2009 acquisitions totaled $353 million. Roper recorded approximately $246 million in goodwill and
$126 million in other identifiable intangibles in connection with these acquisitions. The majority of the goodwill is not expected to be
deductible for tax purposes. The Company recorded $2.2 million in transaction costs related to these acquisitions.
On October 30, 2009, Roper purchased the assets of United Toll Systems, LLC, which provides software and in-lane hardware systems for
toll and traffic markets. The operations of UTS are reported in the RF Technology segment.
On December 3, 2009, Roper purchased Verathon, Inc., a leading global provider of proprietary medical devices and services, in order to
expand its medical product lines. The results of Verathon are reported in the Medical and Scientific Imaging segment.
Of the $126 million of acquired intangible assets, $27 million was assigned to trade names that are not subject to amortization. The
remaining $99 million of acquired intangible assets have a weighted-average useful life of approximately 10 years. The intangible assets
that make up that amount include customer relationships of $46 million (14 year weighted-average useful life), unpatented technology of
$53 million (7 year weighted-average useful life) and protective rights of $0.5 million (3 year weighted-average useful life).
Roper Industries, Inc. 2011 Annual Report page 35
(3) INVENTORIES
The components of inventories at December 31 were as follows (in thousands):
Raw materials and supplies
work in process
Finished products
Inventory reserves
(4) PROPERTY, PLANT AND EQUIPMENT
The components of property, plant and equipment at December 31 were as follows (in thousands):
Land
Buildings
Machinery and other equipment
Accumulated depreciation
2011
2010
$ 119,550
$ 113,415
31,085
89,334
(35,211)
26,358
71,302
(32,516)
$ 204,758
$ 178,559
2011
2010
$
4,228
$
4,194
69,871
264,216
338,315
(229,540)
68,077
239,940
312,211
(208,724)
$ 108,775
$ 103,487
Depreciation expense was $36,780, $36,728 and $34,163 for the years ended December 31, 2011, 2010 and 2009, respectively.
(5) GOODwILL
(In thousands)
Balances at December 31, 2009
Goodwill acquired
Currency translation adjustments
Reclassifications and other
Medical
Industrial
Technology
Energy Systems
and Scientific
RF
and Controls
Imaging
Technology
Total
$ 431,073
$ 383,207
$ 623,786
$ 950,366
$ 2,388,432
—
(11,071)
—
—
(2,554)
(58)
8,593
804
4,808
341,243
(2,657)
240
349,836
(15,478)
4,990
Balances at December 31, 2010
$ 420,002
$ 380,595
$ 637,991
$1,289,192
$ 2,727,780
Goodwill acquired
Currency translation adjustments
Reclassifications and other
—
(949)
—
13,663
(291)
—
135,379
(5,142)
—
—
1,258
(5,272)
149,042
(5,124)
(5,272)
Balances at December 31, 2011
$419,053
$393,967
$768,228
$1,285,178
$ 2,866,426
Goodwill acquired during the year ended December 31, 2011 was attributable to the acquisitions of Northern Digital, UCG and Trinity.
The reclassifications and other are due to working capital and final purchase accounting tax adjustments related to iTrade, which was
acquired in 2010.
page 36 Roper Industries, Inc. 2011 Annual Report
(6) OTHER INTANGIBLE ASSETS, NET
(In thousands)
Assets subject to amortization:
Customer-related intangibles
Unpatented technology
Software
Patents and other protective rights
Trade secrets
Assets not subject to amortization:
Trade names
Balances at December 31, 2010
Assets subject to amortization:
Customer-related intangibles
Unpatented technology
Software
Patents and other protective rights
Trade secrets
Assets not subject to amortization:
Trade names
Balances at December 31, 2011
Accumulated
Net
Cost
Amortization
Book Value
$ 960,013
$(235,885)
$ 724,128
175,819
49,095
25,505
1,604
229,386
(54,376)
(30,182)
(15,292)
(1,174)
121,443
18,913
10,213
430
—
229,386
$ 1,441,422
$(336,909)
$ 1,104,513
$1,022,134
$(302,156)
$ 719,978
193,915
49,395
25,398
1,500
231,207
(72,358)
(35,833)
(17,699)
(1,361)
121,557
13,562
7,699
139
—
231,207
$ 1,523,549
$(429,407)
$ 1,094,142
Amortization expense of other intangible assets was $97.9 million, $83.7 million, and $66.8 million during the years ended 2011, 2010
and 2009, respectively. Amortization expense is expected to be $93.3 million in 2012, $90.3 million in 2013, $82.6 million in 2014, $68.8
million in 2015 and $66.0 million in 2016.
(7) ACCRUED LIABILITIES
Accrued liabilities at December 31 were as follows (in thousands):
wages and other compensation
Deferred revenue
Interest
Customer deposits
Commissions
Accrued dividend
warranty
Billings in excess of cost
Other
2011
2010
$105,955
$ 91,181
94,761
26,744
20,095
12,132
13,297
8,147
6,351
35,422
93,498
26,404
13,941
12,086
10,456
7,038
6,763
36,713
$ 322,904
$ 298,080
Roper Industries, Inc. 2011 Annual Report page 37
(8) INCOME TAxES
Earnings before income taxes for the years ended December 31, 2011, 2010 and 2009 consisted of the following components (in thousands):
United States
Other
2011
2010
2009
$ 359,800
245,187
$ 270,281
178,113
$ 210,559
129,209
$ 604,987
$ 448,394
$ 339,768
Components of income tax expense for the years ended December 31, 2011, 2010 and 2009 were as follows (in thousands):
Current:
Federal
State
Foreign
Deferred:
Federal
Foreign
2011
2010
2009
$123,310
$ 93,594
$ 54,636
14,903
41,437
1,846
(3,756)
8,185
32,706
(23,107)
14,436
6,990
23,720
14,880
61
$177,740
$ 125,814
$ 100,287
Reconciliations between the statutory federal income tax rate and the effective income tax rate for the years ended December 31, 2011,
2010 and 2009 were as follows:
Federal statutory rate
Foreign rate differential
R&D tax credits
State taxes, net of federal benefit
Foreign tax credit
Other, net
2011
2010
2009
35.0%
35.0%
35.0%
(3.7)
(0.7)
1.7
—
(2.9)
(4.3)
(0.6)
1.6
(2.4)
(1.2)
(3.9)
(0.6)
1.8
—
(2.8)
29.4%
28.1%
29.5%
The deferred income tax balance sheet accounts arise from temporary differences between the amount of assets and liabilities recognized
for financial reporting and tax purposes.
Components of the deferred tax assets and liabilities at December 31 were as follows (in thousands):
Deferred tax assets:
Reserves and accrued expenses
Inventories
Net operating loss carryforwards
R&D credits
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Reserves and accrued expenses
Amortizable intangible assets
Plant and equipment
Total deferred tax liabilities
2011
2010
$ 72,150
$ 64,946
7,104
20,642
1,114
—
5,947
19,600
1,047
(796)
$ 101,010
$ 90,744
$ 33,861
$ 33,884
456,613
435,143
2,677
6,419
$ 493,151
$ 475,446
The presentation of the deferred tax assets as of December 31, 2010 has been revised to reflect an adjustment to the classification of
certain federal and state net operating losses and state R&D credit carryforwards in 2011. The impact of this adjustment changed the
Company’s other deferred tax asset classifications by $12.1 million as of December 31, 2010. The adjustment had no impact on Roper’s
consolidated financial statements.
page 38 Roper Industries, Inc. 2011 Annual Report
The Company establishes a valuation allowance against its deferred tax asset when it is more likely than not that all or a portion of the
deferred tax asset will not be realized. In 2010, the Company recorded a valuation allowance of $0.8 million against a deferred tax asset
for certain foreign operations that were in a cumulative loss position. The release of this valuation allowance in 2011 was contemplated
after an assessment of both positive and negative evidence as to whether it is more likely than not that the deferred tax assets are recover-
able. Based on the weight of available evidence, the Company believes it is more likely than not that the deferred tax asset will be utilized
and accordingly, a release of the entire valuation allowance was recorded in the fourth quarter of 2011.
At December 31, 2011, Roper has approximately $30.1 million of U.S. federal net operating loss carryforwards. If not utilized, these carry-
forwards will expire in years 2021 through 2031. The net operating loss carryforward increased between 2010 and 2011 primarily because
of losses incurred by a U.S. entity that is not a member of the Company’s consolidated tax group and whose losses are therefore not avail-
able for offset against the taxable income of other members of the group. Also, due to a recent acquisition, the consolidated group has
acquired a net operating loss subject to a Section 382 limitation of the IRC; however, the Company expects to utilize the entire net operating
loss prior to expiration. The majority of the state net operating loss carryforward is related to Florida and, if not utilized, will expire in
years 2027 through 2030. The Company had smaller net operating losses in various other states. Additionally, Roper has foreign tax
credit carryforwards and R&D credit carryforwards. Roper has not recognized a valuation allowance on these attributes since management
has determined that it is more likely than not that the results of future operations will generate sufficient taxable income to realize these
deferred tax assets.
The Company provides income taxes for unremitted earnings of foreign subsidiaries that are not considered permanently reinvested overseas.
As of December 31, 2011, the approximate amount of earnings of foreign subsidiaries that the Company considers permanently reinvested
and for which deferred taxes have not been provided was approximately $874 million. Because of the availability of U.S. foreign tax credits, it
is not practicable to determine the U.S. federal income tax liability that would be payable if such earnings were not reinvested indefinitely.
Although it is the Company’s intention to permanently reinvest these earnings indefinitely there are certain events that would cause
these earnings to become taxable. These events include, but are not limited to, change in U.S. tax laws, dividends paid between foreign
subsidiaries in the absence of Section 954(c)(6) of the IRC, foreign subsidiary guarantees of U.S. parent debt and the liquidation of foreign
subsidiaries or actual distributions by foreign subsidiaries into a U.S. affiliate.
The Company recognizes in the consolidated financial statements only those tax positions determined to be “more likely than not” of
being sustained upon examination based on the technical merits of the positions. A reconciliation of the beginning and ending amount
of unrecognized tax benefits is as follows (in thousands):
Beginning balance
Additions for tax positions of prior periods
Additions for tax positions of the current period
Additions due to acquisitions
Reductions for tax positions of prior periods
Reductions for tax positions of the current period
Settlements with taxing authorities
Lapse of applicable statute of limitations
Ending balance
2011
2010
2009
$ 24,765
$ 22,922
$ 22,638
470
2,572
—
(558)
(4,043)
(3,650)
203
3,169
3,546
(565)
—
(4,510)
156
4,750
—
(250)
(224)
(4,148)
$ 19,556
$ 24,765
$ 22,922
The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is $12.8 million. Interest and penalties
related to unrecognized tax benefits are classified as a component of income tax expense and totaled $(0.5) million in 2011. Accrued interest
and penalties were $3.5 million at December 31, 2011 and $4.1 million at December 31, 2010. During the next twelve months, it is expected
that the unrecognized tax benefits will be reduced by a net $3.8 million, due mainly to a lapse in the applicable statute of limitations.
The Company and its subsidiaries are subject to U.S. federal income tax as well as income tax of multiple state, city and foreign jurisdic-
tions. The Company’s federal income tax returns for 2008 through the current period remain subject to examination and the relevant
state, city and foreign statutes vary. There are no current tax examinations in progress where the Company expects the assessment of
any significant additional tax in excess of amounts reserved.
Roper Industries, Inc. 2011 Annual Report page 39
(9) LONG-TERM DEBT
In September 2009, the Company completed a public offering of $500 million aggregate principal amount of 6.25% senior unsecured
notes due September 2019. The notes bear interest at a fixed rate of 6.25% per year, payable semi-annually in arrears on March 1 and
September 1 of each year, beginning March 1, 2010.
Roper may redeem some of all of these notes at any time or from time to time, at 100% of their principal amount, plus a make-whole
premium based on a spread to U.S. Treasury securities.
The notes are unsecured senior obligations of the Company and rank equally in right of payment with all of Roper’s existing and future
unsecured and unsubordinated indebtedness. The notes are effectively subordinated to any of its existing and future secured indebted-
ness to the extent of the value of the collateral securing such indebtedness. The notes are not guaranteed by any of Roper’s subsidiaries
and are effectively subordinated to all existing and future indebtedness and other liabilities of Roper’s subsidiaries.
On August 6, 2008, Roper issued $500 million aggregate principal amount of 6.625% senior notes due August 15, 2013. The notes bear
interest at a fixed rate of 6.625% per year, payable semi-annually in arrears on February 15 and August 15 of each year, beginning
February 15, 2009. The interest payable on the notes is subject to adjustment if either Moody’s Investors Service or Standard & Poor’s
Ratings Services downgrades the rating assigned to the notes.
Roper may redeem some or all of the notes at any time or from time to time, at 100% of their principal amount plus a make-whole
premium based on a spread to U.S. Treasury securities as described in the indenture relating to the notes.
The notes are unsecured senior obligations of the Company and rank equally in right of payment with all of the Company’s existing and
future unsecured and unsubordinated indebtedness. The notes are effectively subordinated to any of the Company’s existing and future
secured indebtedness to the extent of the value of the collateral securing such indebtedness. The notes are not guaranteed by any of the
Company’s subsidiaries and are effectively subordinated to all existing and future indebtedness and other liabilities of the Company’s
subsidiaries.
On July 7, 2008, the Company entered into an unsecured credit facility with JPMorgan Chase Bank, N.A., as administrative agent, and a
syndicate of lenders. The facility was originally composed of a $350 million term loan facility maturing July 7, 2010 and a five year $750
million revolving credit facility maturing July 7, 2013; however, the $350 million term loan was repaid in September 2009. The Company
recorded a $0.4 million non-cash pre-tax debt extinguishment charge in the third quarter of 2009 related to the early termination of the
term loan. This charge reflects the unamortized fees associated with the term loan. The Company may also, subject to compliance with
specified conditions, request additional term loans or revolving credit commitments in an aggregate amount not to exceed $350 million.
Other debt includes $67 million of senior subordinated convertible notes due 2034.
Total debt at December 31 consisted of the following (in thousands):
$750 million revolving credit facility
Senior Notes due 2013(1)
Senior Notes due 2019
Senior Subordinated Convertible Notes
Other
Total debt
Less current portion
Long-term debt
2011
2010
$
—
$ 230,000
511,652
500,000
67,250
6,114
1,085,016
69,906
514,092
500,000
90,981
5,972
1,341,045
93,342
$ 1,015,110
$ 1,247,703
(1) Shown net of fair value swap adjustment of $11,652 at December 31, 2011 and $14,092 at December 31, 2010.
Roper’s principal unsecured credit facility, $1.0 billion senior notes and senior subordinated convertible notes provide substantially all of
Roper’s daily external financing requirements. The interest rate on the borrowings under the credit facility is calculated based upon vari-
ous recognized indices plus a margin as defined in the credit agreement. At December 31, 2011, Roper’s debt consisted of $1.0 billion of
senior notes and $67 million in senior subordinated convertible notes. In addition, the Company had $6.1 million of other debt in the
form of capital leases, several smaller facilities that allow for borrowings or the issuance of letters of credit in foreign locations to support
Roper’s non-U.S. businesses and $50 million of outstanding letters of credit at December 31, 2011.
page 40 Roper Industries, Inc. 2011 Annual Report
In December 2003, the Company issued through a public offering $230 million of 3.75% subordinated convertible notes due in 2034 at an
original issue discount of 60.498% (the “Convertible Notes”). The Convertible Notes are subordinated in right of payment and collateral to
all of Roper’s existing and future senior debt. Cash interest on the notes was paid semi-annually until January 15, 2009, after which inter-
est is recognized at the effective rate of 3.75% and represents accrual of original issue discount, and only contingent cash interest may be
paid. Contingent cash interest may be paid during any six month period if the average trading price of a note for a five trading day mea-
surement period preceding the applicable six month period equals 120% or more of the sum of the issue price, accrued original issue dis-
count and accrued cash interest, if any, for such note. The contingent cash interest payable per note in respect of any six month period
will equal the annual rate of 0.25%. In accordance with this criterion, contingent interest has been paid for each six month period since
January 15, 2009. Holders receive cash up to the value of the accreted principal amount of the notes converted and, at the Company’s
option, any remainder of the conversion value may be paid in cash or shares of common stock. Holders may require Roper to purchase
all or a portion of their notes on January 15, 2014 at a price of $475.66 per note, on January 15, 2019 at a price of $572.76 per note, on
January 15, 2024 at a price of $689.68 per note, and on January 15, 2029 at a price of $830.47 per note, in each case plus accrued cash
interest, if any, and accrued contingent cash interest, if any. The Company may only pay the purchase price of such notes in cash and
not in common stock. In addition, if Roper experiences a change in control, each holder may require Roper to purchase for cash all or
a portion of such holder’s notes at a price equal to the sum of the issue price plus accrued original issue discount for non-tax purposes,
accrued cash interest, if any, and accrued contingent cash interest, if any, to the date of purchase.
The Convertible Notes are classified as short-term debt as the notes became convertible on October 1, 2005 based upon the Company’s
common stock trading above the trigger price for at least 20 trading days during the 30 consecutive trading-day periods ending on
September 30, 2005.
The adoption of accounting guidance on January 1, 2009 regarding convertible debt instruments that may be settled in cash upon either
mandatory or optional conversion impacted the historical accounting for Roper’s Convertible Notes as of December 6, 2004, the date that
the notes were modified to allow holders to receive cash only for accreted principal upon settlement of the notes with any remainder of
the conversion value payable in cash or common stock, thus qualifying the notes for treatment under the new guidance. The required
retrospective adoption resulted in a decrease in long-term debt (debt discount) of $26.5 million, an increase in deferred tax liabilities of
$9.3 million, and an increase in additional paid-in capital of $17.3 million at December 9, 2004. The debt discount was amortized using
the effective interest rate method based on an annual effective rate of 7.0%, which represented a market interest rate for similar debt
without a conversion option on the modification date. The debt discount was amortized through January 15, 2009, the first date that
holders of the notes could exercise their put option and Roper could exercise its call option.
The Company was required to separately account for the liability and equity components of the Convertible Notes in a manner that reflects
Roper’s nonconvertible debt borrowing rate when interest cost is recognized. Interest expense related to the notes was as follows
(amounts in thousands):
Contractual (stated) interest
Amortization of debt discount
Interest expense
Years Ended December 31,
2011
2010
$ 2,750
$ 3,812
—
—
$ 2,750
$ 3,812
2009
$5,209
301
$5,510
At December 31, 2011, the conversion price on the outstanding notes was $440.92. If converted at December 31, 2011, the value would
have exceeded the $67 million principal amount of the notes by $100 million and would have resulted in the issuance of 1,144,214 shares
of the Company’s common stock.
The Company’s unsecured credit facility contains affirmative and negative covenants which, among other things, limit our ability to incur
new debt, prepay subordinated debt, make certain investments and acquisitions, sell assets and grant liens, make restricted payments
(including the payment of dividends on our common stock) and capital expenditures, or change our line of business. we also are subject
to financial covenants which require us to limit our consolidated total leverage ratio and to maintain a consolidated interest coverage
ratio. The most restrictive covenant is the consolidated total leverage ratio which is limited to 3.5.
The Company was in compliance with its debt covenants throughout the years ended December 31, 2011 and 2010.
Roper Industries, Inc. 2011 Annual Report page 41
Future maturities of long-term debt during each of the next five years ending December 31 and thereafter were as follows (in thousands):
2012
2013
2014
2015
2016
Thereafter
(10) FAIR VALUE
$
69,906
513,031
788
556
493
500,242
$1,085,016
Roper’s long-term debt at December 31, 2011 included $500 million of fixed-rate senior notes due 2019, with a fair value of approximately
$583 million, and $500 million of fixed-rate senior notes due 2013, with a fair value of approximately $540 million, based on the trading
prices of the notes. Short-term debt included $67 million of fixed-rate convertible notes which were at fair value due to the short-term
nature of the debt. Most of Roper’s other borrowings at December 31, 2011 were at various interest rates that adjust relatively frequently
under its credit facility. The fair value for each of these borrowings at December 31, 2011 was estimated to be the face value of these
borrowings.
In October 2009, Roper entered into interest rate swap agreements with an aggregate notional amount of $500 million. The swaps are
designated as fair value hedges and effectively changed the Company’s $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 LIBOR. The Company has determined the swaps to be
Level 2 in the FASB fair value hierarchy. To account for the fair value hedge, the swap is recorded at fair value in the balance sheet as an
asset or liability, and the changes in fair values of both the interest rate swap and the hedged senior notes due 2013 are recorded as interest
expense. The fair value of the swap was an asset balance of $11.6 million and $14.1 million at December 31, 2011 and 2010, respectively.
The corresponding change in the fair value of the notes being hedged was an increase of $11.7 million and $14.1 million at December 31,
2011 and 2010, respectively. The impact on earnings was immaterial in the years ended December 31, 2011, 2010 and 2009.
(11) RETIREMENT AND OTHER BENEFIT PLANS
Roper maintains eleven defined contribution retirement plans under the provisions of Section 401(k) of the IRC covering substantially all
U.S. employees not subject to collective bargaining agreements. Roper partially matches employee contributions. Costs related to these
plans were $15.2 million, $14.0 million and $11.9 million for 2011, 2010 and 2009, respectively.
Roper also maintains various defined benefit retirement plans covering employees of non-U.S. and certain U.S. subsidiaries and a plan
that supplements certain employees for the contribution ceiling applicable to the Section 401(k) plans. The costs and accumulated benefit
obligations associated with each of these plans were not material.
(12) STOCK-BASED COMPENSATION
The Roper Industries, Inc. Amended and Restated 2006 Incentive Plan (“2006 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 the Company’s
employees, officers, directors and consultants. The 2006 Plan replaced the Amended and Restated 2000 Incentive Plan (“2000 Plan”), and
no additional grants will be made from the 2000 Plan or the Non-employee Director Plan. The number of shares reserved for issuance
under the 2006 Plan is 8,000,000, plus the 17,000 remaining shares that were available to grant under the 2000 Plan at June 28, 2006,
plus any shares underlying outstanding awards under the 2000 Plan that terminate or expire unexercised, or are cancelled, forfeited or
lapse for any reason subsequent to June 28, 2006. At December 31, 2011, 2,353,051 shares were available to grant.
Under the Roper Industries, Inc., Employee Stock Purchase Plan (“ESPP”), all employees in the U.S. and Canada are eligible to designate
up to 10% of eligible earnings to purchase Roper’s common stock at a 5% discount to the average closing price of its common 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.
Stock-based compensation expense for the years ended December 31, 2011, 2010 and 2009 was as follows (in millions):
Stock-based compensation
Tax benefit recognized in net income
windfall tax benefit/(shortfall), net
page 42 Roper Industries, Inc. 2011 Annual Report
2011
$31.7
11.1
12.7
2010
$25.2
8.8
7.3
2009
$27.5
9.6
2.0
Stock Options—Stock options are typically granted at prices not less than 100% of market value of the underlying stock at the date of grant.
Stock options typically vest over a period of up to three to five years from the grant date and generally expire seven to ten years after the
grant date. The Company recorded $12.2 million, $9.0 million, and $9.1 million of compensation expense relating to outstanding options
during 2011, 2010 and 2009, respectively, as a component of corporate and certain segment general and administrative expenses.
The Company estimates the fair value of its option awards using the Black-Scholes option valuation model that uses the assumptions noted
in the following table. The stock volatility for each grant is measured using the weighted average of historical daily price changes of the
Company’s common stock over the most recent period equal to the expected life of the grant. The expected term of options granted is
derived from historical data to estimate option exercises and employee terminations, and represents the period of time that options granted
are expected to be outstanding. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield
curve in effect at the time of grant. The weighted average fair value of options granted in 2011, 2010 and 2009 were calculated using the
following weighted average assumptions:
weighted-average fair value ($)
Risk-free interest rate (%)
Average expected option life (years)
Expected volatility (%)
Expected dividend yield (%)
2011
24.45
1.91
5.34
35.27
0.60
2010
17.00
2.32
5.38
34.55
0.72
2009
12.68
1.78
5.37
32.24
0.78
The following table summarizes the Company’s activities with respect to its stock option plans for the year ended December 31, 2011.
Outstanding at January 1, 2011
Granted
Exercised
Canceled
Outstanding at December 31, 2011
Exercisable at December 31, 2011
Number
of Shares
3,933,440
755,000
(839,881)
(25,897)
3,822,662
2,238,712
weighted-Average
Exercise Price
weighted-Average
Aggregate
Per Share
Contractual Term
Intrinsic Value
$42.32
74.06
33.62
53.23
50.44
$42.62
5.78
4.11
$139,243,760
$ 99,065,980
The following table summarizes information for stock options outstanding at December 31, 2011:
Exercise Price
$14.73–20.00
20.01–30.00
30.01–40.00
40.01–50.00
50.01–60.00
60.01–70.00
70.01–80.00
80.01–86.46
$14.73–86.46
Outstanding Options
Exercisable Options
Average
Average Remaining
Average
Number
Exercise Price
Life (Years)
Number
Exercise Price
281,938
222,096
186,322
657,166
1,691,307
135,333
570,100
78,400
3,822,662
$19.05
23.48
32.12
42.77
53.47
67.69
73.59
84.19
$50.44
0.9
2.1
0.3
4.7
6.5
9.3
9.1
9.2
5.8
281,938
222,096
186,322
503,790
1,009,258
12,501
—
22,807
2,238,712
$19.05
23.48
32.12
43.03
53.94
64.49
—
84.13
$42.62
At December 31, 2011, there was $18.7 million of total unrecognized compensation expense related to nonvested options granted under
the Company’s share-based payment plans. That cost is expected to be recognized over a weighted-average period of 1.8 years. The total
intrinsic value of options exercised in 2011, 2010 and 2009 was $41.2 million, $27.5 million and $10.5 million, respectively. Cash received
from option exercises under all plans in 2011 and 2010 was $28.2 million and $29.0 million, respectively.
Restricted Stock Grants—During 2011 and 2010, the Company granted 352,330 and 257,893 shares, respectively, of restricted stock to
certain employee and director participants under the 2006 Plan. Restricted stock grants generally vest over a period of 1 to 3 years. The
weighted average fair value of the shares granted in 2011 was $74.66 per share. The Company recorded $19.5 million, $16.2 million and
Roper Industries, Inc. 2011 Annual Report page 43
$18.3 million of compensation expense related to outstanding shares of restricted stock held by employees and directors during 2011,
2010 and 2009, respectively. A summary of the Company’s nonvested shares activity for 2011 is as follows:
Nonvested at January 1, 2011
Granted
Vested
Forfeited
Nonvested at December 31, 2011
Number
of Shares
670,401
352,330
(264,848)
(4,072)
753,811
weighted-Average
Fair Value
$52.64
74.66
78.12
54.38
$61.15
At December 31, 2011, there was $20.3 million of total unrecognized compensation expense related to nonvested awards granted to both
employees and directors under the Company’s share-based payment plans. That cost is expected to be recognized over a weighted-average
period of 2.2 years. There were 264,848 and 289,746 shares that vested during 2011 and 2010, respectively. Unrecognized compensation
expense related to nonvested shares of restricted stock grants is recorded as a reduction to additional paid-in capital in stockholders’
equity at December 31, 2011.
Employee Stock Purchase Plan—During 2011, 2010 and 2009, participants of the ESPP purchased 27,756, 29,439 and 38,428 shares,
respectively, of Roper’s common stock for total consideration of $2.1 million, $1.7 million, and $1.7 million, respectively. All of these
shares were purchased from Roper’s treasury shares. The Company had no compensation expense relating to the stock purchase plan
during 2011, 2010 and 2009.
(13) COMMON STOCK TRANSACTIONS
On December 29, 2009, the Company completed a public offering of 2,300,000 shares of common stock for proceeds of approximately
$121.4 million, net of $0.8 million of costs associated with the offering.
(14) 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. 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 the consolidated financial position, results of operations or cash flows of Roper.
Over recent years, there has been a significant increase in certain U.S. states in asbestos-related litigation claims against numerous indus-
trial 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 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.
Roper’s rent expense was $29.7 million, $29.1 million and $27.0 million for 2011, 2010 and 2009, respectively. Roper’s future minimum
property lease commitments totaled $116.3 million at December 31, 2011. These commitments included $28.6 million in 2012,
$23.3 million in 2013, $20.9 million in 2014, $17.1 million in 2015, $12.5 million in 2016 and $13.9 million thereafter.
A summary of the Company’s warranty accrual activity is presented below (in thousands):
Balance, beginning of year
Additions charged to costs and expenses
Deductions
Other
Balance, end of year
2011
2010
2009
$ 7,038
$ 7,341
$ 9,885
8,846
(7,716)
(21)
5,671
(5,895)
(79)
4,416
(7,659)
699
$ 8,147
$ 7,038
$ 7,341
Other included warranty balances at acquired businesses at the dates of acquisition, the effects of foreign currency translation adjustments,
reclassifications and other.
At December 31, 2011, the Company had outstanding surety bonds of $313 million.
page 44 Roper Industries, Inc. 2011 Annual Report
(15) SEGMENT AND GEOGRAPHIC AREA INFORMATION
Roper’s operations are reported in four segments around common customers, markets, sales channels, technologies and common cost
opportunities. The segments are: Industrial Technology, Energy Systems and Controls, Medical and Scientific Imaging, and RF
Technology. Products included within the Industrial Technology segment are water and fluid handling pumps, flow measurement and
metering equipment, industrial valves and controls, and equipment and consumables for materials analysis and industrial leak testing.
The Energy Systems and Controls segment’s products include control systems, equipment and consumables for fluid properties testing,
vibration sensors and other non-destructive inspection and measurement products and services. The Medical and Scientific Imaging seg-
ment offers medical products and software, high performance digital imaging products and software and handheld and vehicle mounted
computers. The RF Technology segment includes products and systems related to comprehensive toll and traffic systems and processing,
security and access control, campus card systems, software-as-a-service applications in the freight matching and food industries and
utility metering and remote monitoring applications. Roper’s management structure and internal reporting are aligned consistently with
these four segments.
There were no material transactions between Roper’s business segments during 2011, 2010 and 2009. Sales between geographic areas are
primarily of finished products and are accounted for at prices intended to represent third-party prices. Operating profit by business segment
and by geographic area is defined as net sales less operating costs and expenses. These costs and expenses do not include unallocated corpo-
rate administrative expenses. Items below income from operations on Roper’s statement of earnings are not allocated to business segments.
Identifiable assets are those assets used primarily in the operations of each business segment or geographic area. Corporate assets were
principally comprised of cash and cash equivalents, recoverable insurance claims, deferred compensation assets, unamortized deferred
financing costs and property and equipment.
Selected financial information by business segment for 2011, 2010 and 2009 follows (in thousands):
Industrial
Technology
Energy Systems
and Controls
Medical
and Scientific
Imaging
RF
Technology
Corporate
Total
2011
Net sales
Operating profit
Assets:
Operating assets
Intangible assets, net
Other
Total
Capital expenditures
Depreciation and other
amortization
2010
Net sales
Operating profit
Assets:
Operating assets
Intangible assets, net
Other
Total
Capital expenditures
Depreciation and other amortization
2009
Net sales
Operating profit
Assets:
Operating assets
Intangible assets, net
Other
Total
Capital expenditures
Depreciation and other amortization
$737,356
208,188
219,180
597,769
27,376
11,153
23,119
$607,564
162,009
179,458
610,542
47,451
8,849
23,660
$ 536,219
123,959
165,651
635,147
(51)
13,977
24,636
$597,802
157,960
194,527
535,606
58,714
6,889
18,177
$503,897
120,427
166,554
518,849
76,686
3,466
18,472
$ 440,919
92,788
166,461
532,022
8,016
3,185
18,736
$610,617
148,376
176,893
971,584
35,916
12,498
34,224
$548,718
130,558
170,955
791,611
24,694
7,269
27,991
$ 851,314
202,877
$ —
(56,862)
$2,797,089
660,539
237,719
1,855,609
(104,869)
9,634
64,329
19,824
—
418
528
294
848,143
3,960,568
17,555
4,826,266
40,702
140,143
$ 725,933
150,711
$ —
(49,411)
$2,386,112
514,294
256,016
1,911,291
(91,099)
8,976
52,709
17,517
—
(94,237)
31
189
790,500
3,832,293
(36,505)
4,586,288
28,591
123,021
$ 354,776
74,183
$ 717,754
154,430
$ —
(49,964)
$2,049,668
395,396
172,805
787,884
7,219
2,126
16,691
238,249
1,302,279
(27,825)
6,291
43,183
13,894
—
(33,281)
306
202
757,060
3,257,332
(45,922)
3,968,470
25,885
103,448
Roper Industries, Inc. 2011 Annual Report page 45
Summarized data for Roper’s U.S. and foreign operations (principally in Canada, Europe and Asia) for 2011, 2010 and 2009, based upon
the country of origin of the Roper entity making the sale, was as follows (in thousands):
2011
Sales to unaffiliated customers
Sales between geographic areas
Net sales
Long-lived assets
2010
Sales to unaffiliated customers
Sales between geographic areas
Net sales
Long-lived assets
2009
Sales to unaffiliated customers
Sales between geographic areas
Net sales
Long-lived assets
United States
Non-U.S.
Eliminations
Total
$1,985,756
153,121
$ 811,333
229,583
$ —
(382,704)
$ 2,797,089
—
$2,138,877
$1,040,916
$(382,704)
$ 2,797,089
$ 135,399
$
35,729
$ —
$ 171,128
$1,758,797
125,202
$ 627,315
174,265
$ —
(299,467)
$ 2,386,112
—
$1,883,999
$ 801,580
$(299,467)
$ 2,386,112
$ 104,147
$
29,834
$ —
$ 133,981
$ 1,526,390
87,323
$ 523,278
126,093
$ —
(213,416)
$ 2,049,668
—
$ 1,613,713
$ 649,371
$ (213,416)
$ 2,049,668
$ 124,382
$
28,922
$ —
$ 153,304
Export sales from the U.S. during the years ended December 31, 2011, 2010 and 2009 were $410 million, $358 million and $301 million,
respectively. In the year ended December 31, 2011, these exports were shipped primarily to Asia (34%), Europe (24%), Canada (14%), Middle
East (13%), South America (6%) and other (9%).
Sales to customers outside the U.S. accounted for a significant portion of Roper’s revenues. Sales are attributed to geographic areas based
upon the location where the product is ultimately shipped. Roper’s net sales for the years ended December 31, 2011, 2010 and 2009 are
shown below by region, except for Canada, which is presented separately as it is the only country in which Roper has had greater than 5%
of total sales for any of the three years presented (in thousands):
2011
Canada
Europe
Asia
Middle East
Rest of the world
Total
2010
Canada
Europe
Asia
Middle East
Rest of the world
Total
2009
Canada
Europe
Asia
Middle East
Rest of the world
Total
Industrial
Technology
$ 64,864
110,656
67,093
3,964
33,721
Medical
Energy Systems
and Scientific
RF
and Controls
Imaging
Technology
Total
$ 39,547
148,767
118,565
44,792
63,064
$ 21,127
162,725
86,807
5,062
17,194
$ 40,636
$ 166,174
88,741
8,833
28,406
9,790
510,889
281,298
82,224
123,769
$280,298
$414,735
$292,915
$176,406
$1,164,354
$ 44,678
91,815
49,232
2,805
22,328
$210,858
$ 40,121
79,000
41,364
4,040
12,256
$ 27,360
135,019
100,094
34,912
55,280
$352,665
$ 25,746
118,770
85,323
28,121
48,657
$ 15,306
126,116
79,343
5,853
15,169
$ 35,270
$ 122,614
64,605
5,389
22,387
10,542
417,555
234,058
65,957
103,319
$241,787
$138,193
$ 943,503
$ 7,251
$ 30,184
$ 103,302
98,328
65,687
2,162
9,424
48,849
6,157
28,316
11,042
344,947
198,531
62,639
81,379
$ 176,781
$ 306,617
$ 182,852
$ 124,548
$ 790,798
page 46 Roper Industries, Inc. 2011 Annual Report
(16) CONCENTRATION OF RISK
Financial instruments which potentially subject the Company to credit risk consist primarily of cash, cash equivalents and trade
receivables.
The Company maintains cash and cash equivalents with various major financial institutions. Cash equivalents include investments in
commercial paper of companies with high credit ratings, investments in money market securities and securities backed by the U.S.
Government. At times such amounts may exceed the F.D.I.C. limits. The Company limits the amount of credit exposure with any one
financial institution and believes that no significant concentration of credit risk exists with respect to cash investments.
Trade receivables subject the Company to the potential for credit risk with customers. To reduce credit risk, the Company performs
ongoing evaluations of its customers’ financial condition.
(17) QUARTERLY FINANCIAL DATA (UNAUDITED)
(In thousands, except per share data)
2011
Net sales
Gross profit
Income from operations
Net earnings
Earnings from continuing operations per common share:
Basic
Diluted
2010
Net sales
Gross profit
Income from operations
Net earnings
Earnings from continuing operations per common share:
Basic
Diluted
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
$ 645,309
$ 699,871
$ 712,705
$ 739,204
350,096
142,000
88,979
377,063
163,970
106,311
382,556
167,215
110,281
405,849
187,354
121,676
0.93
0.91
1.11
1.08
1.15
1.12
1.26
1.23
$ 534,441
$ 567,104
$ 605,088
$ 679,479
279,565
100,716
59,725
0.64
0.62
301,947
119,187
71,281
0.76
0.74
321,749
128,233
84,263
0.89
0.87
371,865
166,158
107,311
1.13
1.10
The sum of the four quarters may not agree with the total for the year due to rounding.
ROPER INDUSTRIES, INC. AND SUBSIDIARIES
SCHEDULE II—CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 2011, 2010 and 2009
(In thousands)
Allowance for doubtful accounts and sales allowances
2011
2010
2009
Reserve for inventory obsolescence
2011
2010
2009
Balance at
Beginning
of Year
$10,349
11,187
12,658
$32,516
29,037
30,108
Additions
Charged to Costs
and Expenses
Deductions
Other
$ 2,816
1,558
2,762
$11,407
12,905
8,789
$ (2,842)
$ 313
(2,900)
(4,874)
$ (8,848)
(9,125)
(10,508)
504
641
$ 149
(301)
648
Balance at
End of Year
$10,636
10,349
11,187
$35,224
32,516
29,037
Deductions from the allowance for doubtful accounts represented the net write-off of uncollectible accounts receivable. Deductions from
the inventory obsolescence reserve represented the disposal of obsolete items.
Other included the allowance for doubtful accounts and reserve for inventory obsolescence of acquired businesses at the dates of
acquisition, the effects of foreign currency translation adjustments for those companies whose functional currency was not the U.S.
dollar, reclassifications and other.
Roper Industries, Inc. 2011 Annual Report page 47
ITEM 9. CHANGES IN AND DISAGREEMENTS wITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
There have been no changes in accountants or disagreements with accountants on accounting and financial disclosures.
ITEM 9A. CONTROLS AND PROCEDURES
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management is responsible for establishing and maintaining adequate control over financial reporting, as such term is defined in
Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with the participation of our management, including our principal
executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial
reporting based on the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of
the Treadway Commission. Based on our evaluation under the framework in Internal Control-Integrated Framework, our management
concluded that our internal control over financial reporting was effective as of December 31, 2011. Our internal control over financial
reporting as of December 31, 2011 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm,
as stated in their report which is included herein.
Our management excluded Northern Digital, UCG and Trinity from its assessment of internal control over financial reporting as of
December 31, 2011, because they were acquired by us in purchase business combinations during 2011. Northern Digital, UCG and Trinity
are wholly-owned subsidiaries whose excluded aggregate assets represent 0.5%, and whose aggregate total revenues represent 1.1%, of the
related consolidated financial statement amounts as of and for the year ended December 31, 2011.
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
As required by SEC rules, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of
the end of the period covered by this report. This evaluation was carried out under the supervision and with the participation of our
management, including our principal executive officer and principal financial officer. Based on this evaluation, we have concluded that
our disclosure controls and procedures are effective as of December 31, 2011.
Disclosure controls and procedures are our controls and other procedures designed to ensure that information required to be disclosed by
us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time peri-
ods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures
designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act are accu-
mulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate,
to allow timely decisions regarding required disclosure.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There was no change in our internal control over financial reporting that occurred during the fourth quarter of 2011 that has materially
affected, or is reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
There were no disclosures of any information required to be filed on Form 8-K during the fourth quarter of 2011 that were not filed.
page 48 Roper Industries, Inc. 2011 Annual Report
PART III
Except as otherwise indicated, the following information required by the Instructions to Form 10-K is incorporated herein by reference
from the sections of the Roper Proxy Statement for the annual meeting of shareholders to be held on June 4, 2012, as specified below:
ITEM 10. DIRECTORS, ExECUTIVE OFFICERS AND CORPORATE GOVERNANCE
“Proposal 1: Election of Directors;” “Section 16(a) Beneficial Ownership Reporting Compliance;” “Corporate Governance;” “Executive
Officers;” “Audit Committee Report;” and “Board Committees and Meetings.”
ITEM 11. ExECUTIVE COMPENSATION
“Compensation Discussion and Analysis;” “Executive Compensation;” “Director Compensation;” “Compensation Committee Interlocks
and Insider Participation;” and “Compensation Committee Report.”
ITEM 12. SECURITY OwNERSHIP OF CERTAIN BENEFICIAL OwNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
“Beneficial Ownership.”
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
The following table provides information as of December 31, 2011 regarding compensation plans (including individual compensation
arrangements) under which our equity securities are authorized for issuance.
(a)
(b)
(c)
Number of Securities to
weighted-Average
Number of Securities Remaining
be Issued Upon Exercise
Exercise Price of
Available for Future Issuance Under
of Outstanding Options,
Outstanding Options,
Equity Compensation Plans (Excluding
Plan Category
warrants and Rights
warrants and Rights
Securities Reflected in Column (a))
Equity Compensation Plans Approved
by Shareholders(1)
Equity Compensation Plans Not Approved
by Shareholders
Total
4,549,506
—
4,549,506
$52.15
—
$52.15
2,353,051
—
2,353,051
(1) Consists of the 1991 Stock Option Plan, the Amended and Restated 2000 Stock Incentive Plan, the 1993 Stock Plan for Non-Employee Directors (no additional equity
awards may be granted under these three plans) and the 2006 Incentive Plan.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND
DIRECTOR INDEPENDENCE
“Review and Approval of Related Party Transactions” and “Director Independence.”
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Fees paid to the Company’s independent registered public accounting firm are disclosed under the caption “Proposal 2: Ratification
of the Appointment of PricewaterhouseCoopers LLP as our Independent Registered Public Accounting Firm for the Year Ending
December 31, 2012.”
Roper Industries, Inc. 2011 Annual Report page 49
PART IV
ITEM 15. ExHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) The following documents are filed as a part of this Annual Report.
(1) Consolidated Financial Statements: The following consolidated financial statements are included in Part II, Item 8 of this report.
Consolidated Balance Sheets as of December 31, 2011 and 2010
Consolidated Statements of Earnings for the Years ended December 31, 2011, 2010 and 2009
Consolidated Statements of Stockholders’ Equity and Comprehensive Earnings for the Years ended December 31, 2011, 2010
and 2009
Consolidated Statements of Cash Flows for the Years ended December 31, 2011, 2010 and 2009
Notes to Consolidated Financial Statements
(2) Consolidated Valuation and Qualifying Accounts for the Years ended December 31, 2011, 2010 and 2009
(b)
Exhibits
Exhibit No.
Description of Exhibit
(a)3.1
(b)3.2
(c)3.3
(d)3.4
(e)3.5
(f )4.2
4.3
(g)4.4
(h)4.5
(i)4.6
( j)4.7
(k)4.8
(l)4.9
Amended and Restated Certificate of Incorporation.
Amended and Restated By-Laws.
Certificate of Amendment, amending Restated Certificate of Incorporation.
Certificate Eliminating References to Roper Industries, Inc.’s Series A Preferred Stock from the Certificate of
Incorporation of Roper Industries, Inc. dated November 16, 2006.
Certificate of Amendment, amending Restated Certificate of Incorporation.
Indenture between Roper Industries, Inc. and SunTrust Bank, dated as of November 28, 2003.
Form of Debt Securities (included in Exhibit 4.2).
First Supplemental Indenture between Roper Industries, Inc. and SunTrust Bank, dated as of December 29, 2003.
Second Supplemental Indenture between Roper Industries, Inc. and Sun Trust Bank, dated as of December 7, 2004.
Indenture between Roper Industries, Inc. and wells Fargo Bank, dated as of August 4, 2008.
Form of Note.
Form of 6.625% Notes due 2013.
Form of 6.25% Senior Notes due 2019.
(m)10.01
Form of Amended and Restated Indemnification Agreement.†
(n)10.02
(o)10.03
(p)10.04
(q)10.05
(r)10.06
Employee Stock Purchase Plan, as amended and restated.†
2000 Stock Incentive Plan, as amended.†
Non-Qualified Retirement Plan, as amended.†
Brian D. Jellison Employment Agreement, dated as of December 29, 2008.†
Timothy J. winfrey offer letter dated May 20, 2002.†
page 50 Roper Industries, Inc. 2011 Annual Report
Exhibit No.
Description of Exhibit
(continued)
(s)10.07
(t)10.08
(u)10.09
(v)10.10
(v)10.11
(w)10.12
(x)10.13
(y)10.14
(y)10.15
(y)10.16
(y)10.17
(y)10.18
(z)10.19
(aa)10.20
(bb)10.21
21.1
23.1
31.1
31.2
32.1
Credit Agreement, dated as of July 7, 2008, among Roper Industries, Inc., as parent borrower, the foreign subsidiary
borrowers of Roper Industries, Inc. from time to time parties thereto, the several lenders from time to time parties
thereto, Bank of Tokyo-Mitsubishi UFJ Trust Company and BNP Paribas, as documentation agents, wachovia Capital
Markets, LLC and Banc of America Securities, LLC, as syndication agents, and JPMorgan Chase Bank, N.A., as admin-
istrative agent.
Form of Executive Officer Restricted Stock Award Agreement.†
Brian D. Jellison Restricted Stock Unit Award Agreement.†
Offer letter for John Humphrey, dated March 31, 2006.†
2006 Incentive Plan, as amended.†
Form of Restricted Stock Agreement for Employee Directors.†
Form of Restricted Stock Agreement for Non-Employee Directors.†
Form of Restricted Stock Agreement for Employees.†
Form of Incentive Stock Option Agreement.†
Form of Non-Statutory Stock Option Agreement.†
Director Compensation Plan, as amended.†
David B. Liner offer letter dated July 21, 2005.†
Amendment to John Humphrey offer letter.†
Amendment to Timothy J. winfrey offer letter.†
Amendment to David B. Liner offer letter.†
List of Subsidiaries, filed herewith.
Consent of Independent Registered Public Accounting Firm, filed herewith.
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer, filed herewith.
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer, filed herewith.
Section 1350 Certification of Chief Executive and Chief Financial Officers, filed herewith.
101.INS
xBRL Instance Document, furnished herewith.
101.SCH
xBRL Taxonomy Extension Schema Document, furnished herewith.
101.CAL
101.DEF
101.LAB
101.PRE
xBRL Taxonomy Extension Calculation Linkbase Document, furnished herewith.
xBRL Taxonomy Extension Definition Linkbase Document, furnished herewith.
xBRL Taxonomy Extension Label Linkbase Document, furnished herewith.
xBRL Taxonomy Extension Presentation Linkbase Document, furnished herewith.
(a) Incorporated herein by reference to Exhibit 3.1 to the Roper Industries, Inc. Quarterly Report on Form 10-Q filed March 17, 2003 (file no. 1-12273),
as amended by the Certificate Eliminating References to the Company’s Series A Preferred Stock from the Certificate of Incorporation of Roper
Industries, Inc. dated November 16, 2006, incorporated herein by reference to Exhibit 3.1 to the Roper Industries, Inc. Current Report on Form 8-K
filed November 16, 2006 (file no. 1-12273).
(b) Incorporated herein by reference to Exhibit 3.2 to the Roper Industries, Inc. Current Report on Form 8-K filed March 22, 2011 (file no. 1-12273).
(c) Incorporated herein by reference to Exhibit 10.1 to the Roper Industries, Inc. Quarterly Report on Form 10-Q filed August 9, 2006 (file no. 1-12273).
(d) Incorporated herein by reference to Exhibit 3.1 to the Roper Industries, Inc. Current Report on Form 8-K filed November 17, 2006 (file no. 1-12273).
Roper Industries, Inc. 2011 Annual Report page 51
(e) Incorporated herein by reference to Exhibit 3.1 to the Roper Industries, Inc. Quarterly Report on Form 10-Q filed on August 9, 2007
(file no. 1-12273).
(f) Incorporated herein by reference to Exhibit 4.2 to the Roper Industries, Inc. Pre-Effective Amendment No. 1 to the Registration Statement on
Form S-3 filed November 28, 2003 (file no. 333-110491).
(g) Incorporated herein by reference to Exhibit 4.1 to the Roper Industries, Inc. Current Report on Form 8-K filed January 13, 2004 (file no. 1-12273).
(h) Incorporated herein by reference to Exhibit 4.1 to the Roper Industries, Inc. Current Report on Form 8-K filed December 7, 2004 (file no. 1-12273).
(i) Incorporated herein by reference to Exhibit 4.2 to the Roper Industries, Inc. Quarterly Report on Form 10-Q filed on November 7, 2008 (file no. 1-12273).
(j) Incorporated herein by reference to Exhibit 4.2 to the Registration Statement on Form S-3 filed July 29, 2008 (file no. 333-152590).
(k) Incorporated herein by reference to Exhibit 4.09 to the Roper Industries, Inc. Current Report on Form 8-K filed August 4, 2008 (file no. 1-12273).
(l) Incorporated herein by reference to Exhibit 4.1 to the Roper Industries, Inc. Current Report on Form 8-K filed September 2, 2009 (file no. 1-12273).
(m) Incorporated herein by reference to Exhibit 10.04 to the Roper Industries, Inc. Quarterly Report on Form 10-Q filed August 31, 1999
(file no. 1-12273).
(n) Incorporated herein by reference to Exhibit 10.1 to the Roper Industries, Inc. Quarterly Report on Form 10-Q filed November 5, 2010 (file no. 1-12273).
(o) Incorporated herein by reference to Exhibit 10.05 to the Roper Industries, Inc. Annual Report on Form 10-K filed March 2, 2009 (file no. 1-12273).
(p) Incorporated herein by reference to Exhibit 10.06 to the Roper Industries, Inc. Annual Report on Form 10-K filed March 2, 2009 (file no. 1-12273).
(q) Incorporated herein by reference to Exhibit 10.07 to the Roper Industries, Inc. Annual Report on Form 10-K filed March 2, 2009 (file no. 1-12273).
(r) Incorporated herein by reference to Exhibits 10.06 and 10.09 to the Roper Industries, Inc. Annual Report on Form 10-K/A filed November 3, 2003
(file no. 1-12273).
(s) Incorporated herein by reference to Exhibit 10.1 to the Roper Industries, Inc. Current Report on Form 8-K filed July 7, 2008 (file no. 1-12273).
(t) Incorporated herein by reference to Exhibits 99.1 and 99.2 to the Roper Industries, Inc. Current Report on Form 8-K filed December 30, 2004
(file no. 1-12273).
(u) Incorporated herein by reference to Exhibit 10.1 to the Roper Industries, Inc. Quarterly Report on Form 10-Q filed August 9, 2006 (file no. 1-12273).
(v) Incorporated herein by reference to Exhibit 10.1 to the Roper Industries, Inc. Quarterly Report on Form 10-Q filed November 7, 2008 (file no. 1-12273).
(w) Incorporated herein by reference to Exhibits 10.1, 10.2, 10.3, 10.4 and 10.5 to the Roper Industries, Inc. Current Report on Form 8-K filed
December 6, 2006 (file no. 1-12273).
(x) Incorporated herein by reference to Exhibit 10.01 to the Roper Industries, Inc. Quarterly Report on Form 10-Q filed May 7, 2009 (file no. 1-12273).
(y) Incorporated herein by reference to Exhibit 10.20 to the Roper Industries, Inc. Annual Report on Form 10-K filed March 2, 2009 (file no. 1-12273).
(z) Incorporated herein by reference to Exhibit 10.21 to the Roper Industries, Inc. Annual Report on Form 10-K filed March 2, 2009 (file no. 1-12273).
(aa) Incorporated herein by reference to Exhibit 10.22 to the Roper Industries, Inc. Annual Report on Form 10-K filed March 2, 2009 (file no. 1-12273).
(bb) Incorporated herein by reference to Exhibit 10.23 to the Roper Industries, Inc. Annual Report on Form 10-K filed March 2, 2009 (file no. 1-12273).
† Management contract or compensatory plan or arrangement.
page 52 Roper Industries, Inc. 2011 Annual Report
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Roper has duly caused this Report to be
signed on its behalf by the undersigned, therewith duly authorized.
ROPER INDUSTRIES, INC.
(Registrant)
By: /S/ BRIAN D. JELLISON
Brian D. Jellison, President and Chief Executive Officer
February 24, 2012
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on
behalf of Roper and in the capacities and on the dates indicated.
/S/ BRIAN D. JELLISON
Brian D. Jellison
/S/ JOHN HUMPHREY
John Humphrey
/S/ PAUL J. SONI
Paul J. Soni
/S/ DAVID w. DEVONSHIRE
President, Chief Executive Officer and
Chairman of the Board of Directors
(Principal Executive Officer)
Vice President, Chief Financial Officer
(Principal Financial Officer)
Vice President and Controller
(Principal Accounting Officer)
February 24, 2012
February 24, 2012
February 24, 2012
David w. Devonshire
Director
February 24, 2012
/S/ JOHN F. FORT, III
John F. Fort, III
/S/ ROBERT D. JOHNSON
Robert D. Johnson
/S/ ROBERT E. KNOwLING
Robert E. Knowling
/S/ wILBUR J. PREZZANO
wilbur J. Prezzano
/S/ RICHARD F. wALLMAN
Richard F. wallman
/S/ CHRISTOPHER wRIGHT
Christopher wright
Director
Director
Director
Director
Director
Director
Roper Industries, Inc. 2011 Annual Report page 53
February 24, 2012
February 24, 2012
February 24, 2012
February 24, 2012
February 24, 2012
February 24, 2012
ExHIBIT 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
we hereby consent to the incorporation by reference in the Registration Statement on Form S-3 (No. 333-152590) and Form S-8
(Nos. 33-71094, 33-77770, 33-78026, 333-36897, 333-73139, 333-35666, 333-35672, 333-35648, 333-59130, 333-105919, 333-105920,
333-135700) of Roper Industries, Inc. of our report dated February 24, 2012 relating to the financial statements, financial statement
schedule and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.
/s/ PricewaterhouseCoopers LLP
Tampa, Florida
February 24, 2012
ExHIBIT 31.1
I, Brian D. Jellison, certify that:
1. I have reviewed this Annual Report on Form 10-K of Roper Industries, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to
the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such
evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the
equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting.
Date: February 24, 2012
/s/ Brian D. Jellison
Brian D. Jellison
Chairman of the Board, President and Chief Executive Officer
(Principal Executive Officer)
page 54 Roper Industries, Inc. 2011 Annual Report
ExHIBIT 31.2
I, John Humphrey, certify that:
1. I have reviewed this Annual Report on Form 10-K of Roper Industries, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to
the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such
evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the regis-
trant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected,
or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the
equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting.
Date: February 24, 2012
/s/ John Humphrey
John Humphrey
Vice President, Chief Financial Officer
(Principal Financial Officer)
Roper Industries, Inc. 2011 Annual Report page 55
EXHIBIT 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Roper Industries, Inc. (the “Company”) on Form 10-K for the period ending December 31, 2011,
as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Brian D. Jellison, Chief Executive Officer of the
Company, and John Humphrey, Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of his knowledge:
1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of
the Company.
Date: February 24, 2012
/s/ Brian D. Jellison
Brian D. Jellison
Chairman of the Board, President and Chief Executive Officer
(Principal Executive Officer)
/s/ John Humphrey
John Humphrey
Vice President, Chief Financial Officer
(Principal Financial Officer)
This certificate is being made for the exclusive purpose of compliance of the Company with the requirements of Section 906 of the
Sarbanes-Oxley Act of 2002, and may not be disclosed, distributed or used by any person or for any reason other than specifically
required by law.
page 56 Roper Industries, Inc. 2011 Annual Report
Board of Directors
Brian D. Jellison
David W. Devonshire
John F. Fort III
Robert D. Johnson
Robert E. knowling, Jr.
Wilbur J. Prezzano
Richard Wallman
Christopher Wright
Shareholder Information
Ticker Symbol: ROP
Roper’s common stock is listed on the New York Stock
Exchange with options trading conducted on the Chicago
Board Options Exchange.
Annual Report on Form 10K
Any shareholder wishing a copy of Roper’s 2011 Annual
Report on Form 10-k filed with the Securities and Exchange
Commission may obtain one without charge by contacting:
Investor Relations
Roper Industries, Inc.
6901 Professional Parkway East, Suite 200
Sarasota, Florida 34240
+1 (941) 556-2601
Investor-relations@roperind.com
Transfer Agent
American Stock Transfer & Trust Company
59 Maiden Lane
New York, New York 10038
+1 (800) 937-5449
Independent Registered Public Accounting Firm
PricewaterhouseCoopers LLC
Tampa, Florida U.S.A.
Roper Industries, Inc.
6901 Professional Parkway East
Suite 200
Sarasota, Florida 34240
Phone: +1 (941) 556-2601
Fax: +1 (941) 556-2670
www.roperind.com