UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
October 26, 2006
ROPER INDUSTRIES, INC.
DELAWARE
| 1-12273 | 51-0263969 | |
| (COMMISSION FILE NUMBER) | (IRS EMPLOYER IDENTIFICATION NO.) | |
| 2160 SATELLITE BLVD., SUITE 200, DULUTH, GEORGIA | 30097 | |
| (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) | (ZIP CODE) | |
(770) 495-5100
NOT APPLICABLE
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] Written
communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
On October 26, 2006, Roper Industries, Inc. (the “Company”) issued a press release containing information about the Company’s results of operations for the quarter ended September 30, 2006. A copy of the press release is furnished as Exhibit 99.1.
In the press release, the Company uses a non-GAAP financial measure EBITDA. EBITDA is defined as net earnings plus (a) interest expense, (b) income taxes and (c) depreciation and amortization. The Company believes EBITDA is an important indicator of operational strength and performance of the Company’s business because it provides a link between profitability and operating cash flow. EBITDA as calculated by the Company is not necessarily comparable to similarly titled measures reported by other companies. In addition, EBITDA: (a) does not represent net income or cash flows from operations as defined by GAAP; (b) is not necessarily indicative of cash available to fund the Company’s cash flow needs; and (c) should not be considered as an alternative to net earnings, operating income, cash flows from operating activities or the Company’s other financial information determined under GAAP. The Company believes that the line on the Company’s consolidated statement of operations entitled net earnings is the most directly comparable GAAP measure to EBITDA.
Item 9.01. Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired.
| Not applicable. |
(b) Pro Forma Financial Information.
| Not applicable. |
(c) Exhibits.
| 99.1 Press Release of the Company dated October 26, 2006. |
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Roper Industries, Inc. | |||||||
| (Registrant) | |||||||
| BY: /s/ John Humphrey | |||||||
| John Humphrey, Vice President and Chief Financial Officer |
Date: October 26, 2006 | ||||||
EXHIBIT INDEX
| Exhibit No. | Description | |
| 99.1 | Press Release of the Company dated October 26, 2006 |
Exhibit 99.1
Roper Industries, Inc.
Contact Information:
Investor Relations
+1 (770) 495-5100
investor-relations@roperind.com
Roper Industries Announces Record Third Quarter Results
Diluted Earnings Per
Share of $0.56;
Sales Up 17%; Net Earnings Up 30% to $51 Million
Duluth, Georgia, October 26, 2006 … Roper Industries, Inc. (NYSE: ROP) reported record results for its third quarter ended September 30, 2006. Net sales were up 17% to $427 million. Excluding acquisitions, sales were up 11%. Diluted earnings per share (DEPS) were $0.56, up from $0.45 in the third quarter 2005. Current year results include the effects from implementation of SFAS 123R and related equity compensation costs. The results also include the dilution from the Company’s senior subordinated convertible notes. Without this dilution DEPS would have been $0.57 in the quarter.
“We are pleased to report strong sales and income growth during the quarter,” said Brian Jellison, Roper’s Chairman, President and CEO. “Operating margins expanded in all four segments reaching 20.5% for the Company, up 140 basis points from the prior year. Our internal growth and operating improvements drove EBITDA margins up to 25.4% in the third quarter 2006. Business conditions continue to be strong, and we closed the third quarter with a record $431 million in backlog.”
Operating income was $88 million and net earnings grew 30% to $51 million. The Company reported third quarter EBITDA of $109 million. Net working capital was reduced 110 basis points to 16.3% of third quarter annualized 2006 sales. Net debt (debt minus cash) was reduced to 36.5% of total net capitalization.
Orders totaled $436 million for the quarter, up 7% and excluding the Radio Frequency (RF) segment, orders were up 18%. Industrial Technology was up 18%, Energy Systems up 12% and Scientific Imaging up 26%. While RF third quarter net orders were off 17% in the quarter, fourth quarter RF orders are expected to be up more than 30% from the comparable quarter in 2005. Despite the lumpy nature of RF segment quarterly net order numbers, the Company expects the 2006 RF segment net orders to be up 12% or more over 2005.
Roper is increasing its full year DEPS and EBITDA guidance, which does not include benefits from future acquisitions or the dilutive effects resulting from the Company’s convertible notes. The Company is increasing its full year DEPS guidance from $2.05-$2.11 to $2.11-$2.15. In the first three quarters of 2006 the dilutive effect resulting from the Company’s convertible notes totaled $0.03 per share or $0.01 per share per quarter. The Company is increasing its full year EBITDA guidance from $405+ million to $413+ million.
Conference Call to be Held at 10:00 AM (ET) Tomorrow
A conference call to discuss these
results has been scheduled for 10:00 AM ET on Friday, October 27, 2006. The call can be
accessed via webcast or by dialing (800) 811-8824 or +1 (913) 981-4903, using access code
5472533. Webcast information and conference call materials will be made available in the
“Investor” section of Roper’s website (www.roperind.com) prior to the start
of the call. Telephonic replays will be available for up to two weeks by calling +1 (719)
457-0820 and using the access code 5472533.
Table 1: EBITDA (Millions)
| Q3 2005 |
Q3 2006 |
2006 Full Year Estimates |
|||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Net Earnings | $ | 39 | $ | 51 | $ | 188 | + | ||||
| Add: Interest Expense | 11 | 11 | 44 | ||||||||
| Add: Income Taxes | 20 | 26 | 99 | + | |||||||
| Add: Depreciation and Amortization | 18 | 21 | 82 | ||||||||
| Rounding | 1 | 0 | 0 | ||||||||
| EBITDA | 89 | 109 | 413 | + | |||||||
Table 2: Net Debt-to-Net Capital Ratio (Millions)
| Q3 2006 |
|||||
|---|---|---|---|---|---|
| Total Debt | $ | 856 | |||
| Less: Cash | (41 | ) | |||
| Equals: Net Debt | 815 | ||||
| Add: Shareholders' Equity | 1,419 | ||||
| Equals: Net Capital | $ | 2,234 | |||
| Net Debt Divided by Net Capital | 36.5 | % | |||
Table 3: Diluted Earnings Per Share (Thousands, Except Earnings Per Share)
| Q1 2006 |
Q2 2006 |
Q3 2006 |
|||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Net Earnings | $ | 37,686 | $ | 48,093 | $ | 50,814 | |||||
| Diluted Weighted Average Common Shares | 89,711 | 91,043 | 90,963 | ||||||||
| Diluted Earnings Per Share (DEPS) | $ | 0.42 | $ | 0.53 | $ | 0.56 | |||||
| Diluted Weighted Average Common Shares, | |||||||||||
| Excluding Effect of Convertible Notes | 87,887 | 88,699 | 88,843 | ||||||||
| DEPS, Excluding Dilution From Convertible Notes | $ | 0.43 | $ | 0.54 | $ | 0.57 | |||||
About Roper Industries
Roper Industries is a market-driven, diversified growth company with annual revenues of $1.5 billion, and is a component of the S&P MidCap 400 and the Russell 1000 Indexes. Roper provides engineered products and solutions for global niche markets, including water, energy, radio frequency and research/medical applications. Additional information about Roper Industries is available on the Company’s website at www.roperind.com.
The information provided in this press release contains forward-looking statements within the meaning of the federal securities laws. These forward-looking statements include, among others, statements regarding operating results, the success of our internal operating plans, and the prospects for newly acquired businesses to be integrated and contribute to future growth and profit expectations. Forward-looking statements may be indicated by words or phrases such as “anticipate,” “estimate,” “plans,” “expects,” “projects,” “should,” “will,” “believes” or “intends” and similar words and phrases. These statements reflect management’s current beliefs and are not guarantees of future performance. They involve risks and uncertainties that could cause actual results to differ materially from those contained in any forward-looking statement. Such risks and uncertainties include our ability to integrate our acquisitions and realize expected synergies. We also face other general risks, including our ability to realize cost savings from our operating initiatives, unfavorable changes in foreign exchange rates, difficulties associated with exports, risks associated with our international operations, difficulties in making and integrating acquisitions, risks associated with newly acquired businesses, increased product liability and insurance costs, increased warranty exposure, future competition, changes in the supply of, or price for, parts and components, environmental compliance costs and liabilities, risks and cost associated with asbestos related litigation and potential write-offs of our substantial intangible assets, and risks associated with obtaining governmental approvals and maintaining regulatory compliance for new and existing products. Important risks may be discussed in current and subsequent filings with the SEC. You should not place undue reliance on any forward-looking statements. These statements speak only as of the date they are made, and we undertake no obligation to update publicly any of them in light of new information or future events.
_________________
Roper Industries, Inc.
and Subsidiaries
Condensed Consolidated Balance Sheets (unaudited)
(Amounts in thousands)
| September 30, 2006 |
December 31, 2005 |
|||||||
|---|---|---|---|---|---|---|---|---|
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 40,878 | $ | 53,116 | ||||
| Accounts receivable | 304,385 | 257,210 | ||||||
| Inventories | 161,616 | 131,838 | ||||||
| Deferred taxes | 19,827 | 19,145 | ||||||
| Other current assets | 48,548 | 36,898 | ||||||
| Total current assets | 575,254 | 498,207 | ||||||
| PROPERTY, PLANT AND EQUIPMENT, NET | 103,234 | 97,462 | ||||||
| OTHER ASSETS: | ||||||||
| Goodwill | 1,436,161 | 1,353,712 | ||||||
| Other intangible assets, net | 496,609 | 501,365 | ||||||
| Deferred taxes | 25,323 | 25,852 | ||||||
| Other assets | 43,297 | 45,708 | ||||||
| Total other assets | 2,001,390 | 1,926,637 | ||||||
| TOTAL ASSETS | $ | 2,679,878 | $ | 2,522,306 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable | $ | 91,076 | $ | 71,693 | ||||
| Accrued liabilities | 148,532 | 142,835 | ||||||
| Income taxes payable | 13,478 | 14,718 | ||||||
| Deferred taxes | 2,362 | 3,066 | ||||||
| Current portion of long-term debt | 291,458 | 273,313 | ||||||
| Total current liabilities | 546,906 | 505,625 | ||||||
| NONCURRENT LIABILITIES: | ||||||||
| Long-term debt | 564,072 | 620,958 | ||||||
| Deferred taxes | 127,139 | 124,202 | ||||||
| Other liabilities | 22,282 | 21,733 | ||||||
| Total liabilities | 1,260,399 | 1,272,518 | ||||||
| STOCKHOLDERS' EQUITY: | ||||||||
| Common stock | 895 | 883 | ||||||
| Additional paid-in capital | 699,220 | 670,322 | ||||||
| Retained earnings | 670,873 | 549,603 | ||||||
| Accumulated other comprehensive earnings | 70,958 | 51,731 | ||||||
| Treasury stock | (22,467 | ) | (22,751 | ) | ||||
| Total stockholders' equity | 1,419,479 | 1,249,788 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 2,679,878 | $ | 2,522,306 | ||||
Roper Industries, Inc. and
Subsidiaries
Condensed Consolidated
Statements of Earnings (unaudited)
(Amounts in thousands,
except per share data)
| Three months ended September 30, |
Nine months ended September 30, |
|||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2006 |
2005 |
2006 |
2005 |
|||||||||||
| Net sales | $ | 427,217 | $ | 365,164 | $ | 1,235,250 | $ | 1,060,565 | ||||||
| Cost of sales | 208,967 | 180,407 | 609,720 | 533,242 | ||||||||||
| Gross profit | 218,250 | 184,757 | 625,530 | 527,323 | ||||||||||
| Selling, general and administrative expenses | 130,730 | 114,981 | 385,142 | 343,291 | ||||||||||
| Income from operations | 87,520 | 69,776 | 240,388 | 184,032 | ||||||||||
| Interest expense | 11,066 | 11,437 | 33,178 | 32,771 | ||||||||||
| Other income/(expense) | 267 | 867 | 108 | 1,110 | ||||||||||
| Earnings from continuing operations before | ||||||||||||||
| income taxes | 76,721 | 59,206 | 207,318 | 152,371 | ||||||||||
| Income taxes | 25,907 | 20,012 | 70,725 | 49,604 | ||||||||||
| Net Earnings | $ | 50,814 | $ | 39,194 | $ | 136,593 | $ | 102,767 | ||||||
| Earnings per share: | ||||||||||||||
| Basic | $ | 0.58 | $ | 0.46 | $ | 1.58 | $ | 1.20 | ||||||
| Diluted | $ | 0.56 | $ | 0.45 | $ | 1.51 | $ | 1.18 | ||||||
| Weighted average common and common | ||||||||||||||
| equivalent shares outstanding: | ||||||||||||||
| Basic | 87,050 | 85,431 | 86,679 | 85,380 | ||||||||||
| Diluted | 90,963 | 87,096 | 90,640 | 86,896 | ||||||||||
Roper Industries, Inc.
and Subsidiaries
Condensed Consolidated Statements of Cash Flows (unaudited)
(Amounts in thousands)
| Nine months ended September 30, |
||||||||
|---|---|---|---|---|---|---|---|---|
| 2006 |
2005 |
|||||||
| Net earnings | $ | 136,593 | $ | 102,767 | ||||
| Depreciation | 21,632 | 20,791 | ||||||
| Amortization | 38,694 | 32,036 | ||||||
| Other, net | (43,386 | ) | 20,331 | |||||
| Cash provided by operating activities | 153,533 | 175,925 | ||||||
| Business acquisitions, net of cash acquired | (103,394 | ) | (181,086 | ) | ||||
| Capital expenditures | (23,547 | ) | (16,059 | ) | ||||
| Other, net | (1,383 | ) | (1,014 | ) | ||||
| Cash used by investing activities | (128,324 | ) | (198,159 | ) | ||||
| Debt payments, net | (43,856 | ) | (22,016 | ) | ||||
| Windfall tax benefit from exercise of stock options | 5,051 | -- | ||||||
| Dividends | (15,291 | ) | (13,593 | ) | ||||
| Other, net | 14,448 | 13,124 | ||||||
| Cash used by financing activities | (39,648 | ) | (22,485 | ) | ||||
| Effect of exchange rate changes on cash | 2,201 | (5,604 | ) | |||||
| Net decrease in cash and equivalents | (12,238 | ) | (50,323 | ) | ||||
| Cash and equivalents, beginning of period | 53,116 | 129,419 | ||||||
| Cash and equivalents, end of period | $ | 40,878 | $ | 79,096 | ||||
Roper Industries, Inc. and
Subsidiaries
Selected Segment
Financial Data (unaudited)
(Amounts in thousands
and percents of net sales)
| Three months ended September 30, |
Nine months ended September 30, |
|||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2006 |
2005 |
2006 |
2005 |
|||||||||||||||||||||||
| Amount |
% |
Amount |
% |
Amount |
% |
Amount |
% |
|||||||||||||||||||
| Net sales: | ||||||||||||||||||||||||||
| Industrial Technology | $ | 140,624 | $ | 122,339 | $ | 402,204 | $ | 367,726 | ||||||||||||||||||
| Energy Systems & Controls | 88,485 | 76,208 | 233,109 | 225,388 | ||||||||||||||||||||||
| Scientific & Industrial Imaging | 83,501 | 65,781 | 249,923 | 175,821 | ||||||||||||||||||||||
| RF Technology | 114,607 | 100,836 | 350,014 | 291,630 | ||||||||||||||||||||||
| Total | $ | 427,217 | $ | 365,164 | $ | 1,235,250 | $ | 1,060,565 | ||||||||||||||||||
| Gross profit: | ||||||||||||||||||||||||||
| Industrial Technology | $ | 65,863 | 46.8 | % | $ | 57,203 | 46.8 | % | $ | 192,389 | 47.8 | % | $ | 173,723 | 47.2 | % | ||||||||||
| Energy Systems & Controls | 48,809 | 55.2 | % | 41,490 | 54.4 | % | 126,473 | 54.3 | % | 119,690 | 53.1 | % | ||||||||||||||
| Scientific & Industrial Imaging | 49,017 | 58.7 | % | 37,142 | 56.5 | % | 141,725 | 56.7 | % | 98,603 | 56.1 | % | ||||||||||||||
| RF Technology | 54,561 | 47.6 | % | 48,922 | 48.5 | % | 164,943 | 47.1 | % | 135,307 | 46.4 | % | ||||||||||||||
| Total | $ | 218,250 | 51.1 | % | $ | 184,757 | 50.6 | % | $ | 625,530 | 50.6 | % | $ | 527,323 | 49.7 | % | ||||||||||
| Operating profit*: | ||||||||||||||||||||||||||
| Industrial Technology | $ | 32,747 | 23.3 | % | $ | 25,697 | 21.0 | % | $ | 92,489 | 23.0 | % | $ | 76,127 | 20.7 | % | ||||||||||
| Energy Systems & Controls | 25,108 | 28.4 | % | 20,784 | 27.3 | % | 59,077 | 25.3 | % | 54,441 | 24.2 | % | ||||||||||||||
| Scientific & Industrial Imaging | 18,832 | 22.6 | % | 13,472 | 20.5 | % | 52,703 | 21.1 | % | 32,463 | 18.5 | % | ||||||||||||||
| RF Technology | 19,344 | 16.9 | % | 16,295 | 16.2 | % | 62,368 | 17.8 | % | 40,041 | 13.7 | % | ||||||||||||||
| Total | $ | 96,031 | 22.5 | % | $ | 76,248 | 20.9 | % | $ | 266,637 | 21.6 | % | $ | 203,072 | 19.1 | % | ||||||||||
| Net Orders: | ||||||||||||||||||||||||||
| Industrial Technology | $ | 149,801 | $ | 126,803 | $ | 436,595 | $ | 373,059 | ||||||||||||||||||
| Energy Systems & Controls | 89,003 | 79,654 | 231,350 | 225,298 | ||||||||||||||||||||||
| Scientific & Industrial Imaging | 85,758 | 68,317 | 245,140 | 186,149 | ||||||||||||||||||||||
| RF Technology | 111,113 | 133,221 | 348,614 | 318,305 | ||||||||||||||||||||||
| Total | $ | 435,675 | $ | 407,995 | $ | 1,261,699 | $ | 1,102,811 | ||||||||||||||||||
* Operating profit is before unallocated corporate general and administrative expenses. Such expenses were $8,511 and $6,472 for the three months ended September 30, 2006 and 2005, respectively, and $26,249 and $19,040 for the nine months ended September 30, 2006 and 2005, respectively.