UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
----------------
FORM
10-K
þ ANNUAL REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the fiscal year ended December 31, 2008
¨ 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
|
51-0263969
|
|
|
(State
or other jurisdiction of
|
(I.R.S.
Employer
|
|
|
incorporation
or organization)
|
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:
|
Name
of Each Exchange
|
||
|
Title
of Each Class
|
On
Which Registered
|
|
|
Common
Stock, $0.01 Par Value
|
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. þ 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 þ 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. þ 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 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).
þ 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 þ No
Based on
the closing sale price on the New York Stock Exchange on June 30, 2008, the
aggregate market value of the voting and non-voting common stock held by
non-affiliates of the registrant was: $5,913,756,279.
Number of
shares of Registrant’s Common Stock outstanding as of February 20, 2009:
89,765,578.
----------------
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 3, 2009,
are incorporated by reference into Part III of this Annual Report on Form
10-K.
ROPER
INDUSTRIES, INC.
FORM
10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2008
Table
of Contents
|
PART
I
|
||
|
Item
1.
|
Business
|
3
|
|
Item
1A.
|
Risk
Factors
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7
|
|
Item
1B.
|
Unresolved
Staff Comments
|
10
|
|
Item
2.
|
Properties
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11
|
|
Item
3.
|
Legal
Proceedings
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11
|
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
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
|
15
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|
Item
7A.
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Quantitative
and Qualitative Disclosures about Market Risk
|
23
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|
Item
8.
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Financial
Statements and Supplementary Data
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24
|
|
Item
9.
|
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
|
53
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|
Item
9A.
|
Controls
and Procedures
|
53
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|
Item
9B.
|
Other
Information
|
53
|
|
PART
III
|
||
|
Item
10.
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Directors,
Executive Officers and Corporate Governance
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54
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Item
11.
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Executive
Compensation
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54
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|
Item
12.
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
|
54
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|
Item
13.
|
Certain
Relationships and Related Transactions, and Director
Independence
|
54
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|
Item
14.
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Principal
Accountant Fees and Services
|
54
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|
PART
IV
|
||
|
Item
15.
|
Exhibits
and Financial Statement Schedules
|
55
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Signatures
|
57
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Information
About Forward-Looking Statements
This
Annual Report on 10-K ("Annual Report") includes and incorporates by
reference “forward-looking statements” within the meaning 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 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,” “project,”
“intend,” “expect,” “believe,” “anticipate,” and similar expressions identify
forward-looking statements. These forward-looking statements include statements
regarding our expected financial position, business, financing 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
acquisitions, 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:
|
·
|
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, parts and
components;
|
|
·
|
environmental
compliance costs and liabilities;
|
|
·
|
risks
and costs associated with asbestos-related
litigation;
|
|
·
|
potential
write-offs of our substantial intangible
assets;
|
|
·
|
our
ability to successfully develop new
products:
|
|
·
|
failure
to protect our intellectual
property;
|
|
·
|
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 statements, 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.
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 energy systems and controls,
scientific and industrial imaging products and software, industrial technology
products and radio frequency (“RF”) products and services. We market these
products and services to selected segments of a broad range of markets including
RF applications, water, energy, research and medical, education, security and
other niche markets.
We pursue
consistent and sustainable growth in sales and earnings 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, engineered products and solutions and are capable of achieving growth
and maintaining high margins. We compete in many niche markets and believe that
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 for existing products 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. Over the past decade, we have strategically expanded
the number of end markets we serve to increase revenue and business stability
and expand our opportunities for growth. 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 $919 million
in 2008, compared to $859 million in 2007. Information regarding our
international operations is set forth in Note 14 of the Notes to Consolidated
Financial Statements included in this Annual Report on Form 10-K (“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 increased to $87.4 million in 2008 as compared to $67.9 and
$58.6 million in 2007 and 2006, respectively. Research and development expense
as a percentage of sales increased to 3.8% in 2008 from 3.2% in 2007. The
increase is due to acquisitions made during 2008 which have higher research and
development spending compared to many other Roper entities, and continued
investment in existing businesses.
Our
Business Segments
Our
operations are reported in four market-focused segments around common customers,
markets, sales channels, technologies and common cost opportunities. The
segments are: Industrial Technology, Energy Systems and Controls, Scientific and
Industrial Imaging, and RF Technology. Financial information about our business
segments is presented in Note 14 of the Notes to Consolidated Financial
Statements.
Scientific
and Industrial Imaging
Energy
Systems and Controls
Our
Scientific and Industrial Imaging segment principally offers high performance
digital imaging products and software, patient positioning products and software
in medical applications and handheld and vehicle mount computers and software.
These products and solutions are provided through five U.S-based and one
Canadian-based operating units. For 2008, this segment had net sales of $375.5
million, representing 16.3% of our total net sales.
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 spectroscopy
applications. We principally sell these products for use within academic,
government research, semiconductor, security, automotive, and other end-user
markets such as biological and material science. They are frequently
incorporated into products by OEMs.
Patient
Positioning Products and Software - We manufacture and sell patient
positioning devices, image-guided therapy software and supply diagnostic and
therapeutic disposable products used in conjunction with ultrasound imaging for
minimally invasive medical
procedures.
Handheld and
Vehicle Mount Computers and Software - We manufacture and sell fully
rugged handheld and vehicle mount computers for utility, principally water
management, and non-utility markets and we develop and sell software to assist
in utility meter reading and service order
management.
Backlog
- - Our Scientific and Industrial 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 original
equipment manufacturers (“OEMs”) and end-users, with continuing
requirements for fulfillment over specified periods of time. The segment’s
backlog of firm unfilled orders, including blanket purchase orders, totaled
$80.0 million at December 31, 2008, as compared to $74.8 million at December 31,
2007.
Distribution
and Sales - Distribution and sales occur through direct sales personnel,
manufacturers’ representatives, value added resellers (“VARs”), OEMs and
distributors.
Our
Energy Systems and Controls segment principally produces control systems, fluid
properties testing equipment, industrial valves and controls, vibration and
other non-destructive inspection and measurement products and solutions, which
are provided through six U.S.-based operating units. For 2008, this segment had
net sales of $548.2 million, representing 23.8% of our total net
sales.
Control Systems - We
manufacture control systems and panels 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, 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, measurement 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, and 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 totaled
$85.0 million at December 31, 2008 compared to $93.1 million at December 31,
2007.
Distribution and Sales -
Distribution and sales occur through direct sales offices, manufacturers’
representatives and distributors in both the U.S. and various other
countries.
Industrial
Technology
Our
Industrial Technology segment produces industrial pumps, equipment and
consumables for materials analysis, industrial leak testing equipment, flow
measurement and metering equipment and water meter and automatic meter reading
(“AMR”) products and systems. These products and solutions are provided through
six U.S.-based and two European-based operating units. For 2008, this segment
had net sales of $687.6 million, representing 29.8% of our total net
sales.
Industrial
Pumps - We manufacture and distribute 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.
Industrial 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, industrial and consumer products
applications.
Flow
Measurement Equipment - We manufacture and distribute turbine and
positive displacement flow meters, emissions measurement 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, and certain 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, including blanket purchase orders, totaled $59.1 million
at December 31, 2008, as compared to $93.1 million at December 31,
2007.
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”) and other communication related technology and software
solutions that are used primarily in comprehensive toll and traffic systems and
processing, security and access control, campus card systems, freight matching,
mobile asset tracking and water sub-metering and remote monitoring applications.
These products and solutions are provided through six U.S.-based and one
European-based operating units. This segment had sales of $695.0 million for the
year ended December 31, 2008, representing 30.1% 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.
Freight Matching - We
maintain an electronic marketplace that matches available capacity of trucking
units with the available loads of freight to be moved from location to location
throughout North America.
Card Systems/Integrated Security
Solutions - We provide card systems and integrated security solutions to
education, health care and various other markets. In the education and health
care markets, we also provide an integrated nutrition management
solution.
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 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 totaled $365.7 million at December 31, 2008
compared to $271.3 million at December 31, 2007.
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 used by us 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
components to our specifications. We regularly investigate and identify
alternative sources where possible, and we believe that these conditions equally
affect our competitors. Thus far, 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 potentially material liabilities relating to the
investigation and clean-up of contaminated properties and to claims alleging
personal injury. We are required continually to conform our operations and
properties to these laws and adapt to regulatory requirements in all countries
as these requirements change. We have experienced, and expect to continue to
experience, modest costs relating to our 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, 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 clean-up requirements
could increase our environmental compliance costs or subject us to new or
increased liabilities.
Customers
No
customer accounted for 10% or more of net sales for 2008 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 confidentiality and non-disclosure agreements with
employees, 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, 2008, we had approximately 7,900 total employees, with
approximately 5,800 located in the United States. Approximately 275 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 filed electronically by Roper with the United States Securities and
Exchange Commission (“SEC”), including our annual report 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 website at www.roperind.com. These filings are also accessible on
the SEC’s website at www.sec.gov. You may also read and copy any material Roper
files 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. The Company’s
Corporate Governance Guidelines; the charters of the Audit Committee, the
Compensation Committee, and the Nominating and Governance Committee; and the
Code of Business Conduct & Ethics are also available on the Company’s
website.
We have
included the Chief Executive Officer and the Chief Financial Officer
certifications regarding Roper’s public disclosure required by Section 302
of the Sarbanes-Oxley Act of 2002 as Exhibits 31.1 and 31.2 of this report.
Additionally, Roper filed with the New York Stock Exchange (the “NYSE”) the
Chief Executive Officer certification regarding Roper’s 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 July 3, 2008 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, 2008, we had approximately $1.27 billion in total consolidated
indebtedness. In addition, we had approximately $524 million undrawn
availability under our senior unsecured credit
facility, as well as the ability to request additional term loans or revolving
credit commitments not to exceed $350 million in aggregate. Our total
consolidated debt could increase using this additional borrowing capacity.
Subject to certain restrictions contained in our senior unsecured credit
facility, we may incur additional indebtedness in the future, including
indebtedness incurred to finance, or which is assumed in connection with,
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
than us;
|
|
|
·
|
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
senior unsecured
credit facility contains financial covenants requiring us to achieve certain
financial and operating results and maintain compliance with specified financial
ratios. Our ability to meet the financial covenants or requirements in our
senior unsecured
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 senior unsecured credit facility could result in an event of
default under this facility, which in turn could result in an event of default
under the terms of our other indebtedness. Upon the occurrence of an event of
default under our senior unsecured 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, Danish krone and
Japanese yen. Sales by our operating companies whose functional currency is not
the U.S. dollar represented approximately 24% of our total net sales for the
year ended December 31, 2008 compared to 28% for the year ended December 31,
2007. Unfavorable changes in exchange rates between the U.S. dollar and those
currencies could significantly reduce our reported sales and earnings. At
present, we do not hedge against foreign currency risks.
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 approximately
16% and 17% of our net sales for the years ended December 31, 2008 and December
31, 2007, respectively. 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
materially negatively affect our future sales and earnings.
The effects of
the recent global financial crisis and general weakness in the global economy
may impact our business.
The
recent global financial crisis and general weakness in the global economy have
resulted in a general tightening in the credit markets, lower levels of
liquidity and corresponding increases in the rates of default and bankruptcy,
and extreme volatility in credit, equity and fixed income
markets. These macroeconomic developments have had adverse effects on
our customers and could have adverse effects on our business, including
decreased revenue from the sales of products and increased financing costs due
to the failure of financial institutions. The combination of some or
all of these factors could adversely affect our results of operations and
ability to execute our business strategy.
Economic,
political and other risks associated with our international operations could
adversely affect our business.
As of
December 31, 2008, approximately 19% 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 foreseeable future. Our international operations are subject to varying
degrees of risk inherent in doing business outside the U.S. including, 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;
|
|
|
·
|
trade
liberalization measures which could expose our international operations to
increased competition;
|
|
|
·
|
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;
|
|
|
·
|
unexpected
changes in regulatory requirements;
|
|
|
·
|
longer
payment cycles of foreign customers and difficulty in collecting
receivables in foreign jurisdictions;
and
|
|
|
·
|
international
sentiment towards the U.S.
|
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 globally. There are no assurances, however, that we
will be able to successfully identify suitable candidates, negotiate appropriate
acquisition terms, obtain necessary financing on acceptable terms, complete
proposed acquisitions, successfully integrate acquired businesses into our
existing operations or expand into new markets. Once integrated, acquired
operations may not achieve levels of revenues, profitability or productivity
comparable with those achieved by our existing operations, or otherwise perform
as expected.
Acquisitions
involve numerous 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 evaluate 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 acquisitions 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 potential product liability risks that are inherent in
the design, manufacturing and distribution of our products. In addition, certain
of our products are used in potentially hazardous environments. We currently
have product liability insurance; however, we may not be able to maintain our
insurance at a reasonable cost or in sufficient amounts to protect us against
potential losses. We also maintain other insurance policies, including directors
and officers’ liability insurance. Our insurance costs increased in recent
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 policies, with respect to all product liability and other
claims, based upon our past experience and available facts. However, a
successful product 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.
Changes
in the supply of, or price for, parts and components used in our products could
affect our business.
We
purchase many parts and components from suppliers. The availability and prices
of 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 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 laws and regulations governing 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 costly pollution control
equipment or operational changes to limit pollution emissions 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 liabilities 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 contamination 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, energy and semiconductor 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 operations could be materially adversely affected in
any given quarter. 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
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, 2008, goodwill totaled $2.12 billion compared to $2.00 billion of
stockholders’ equity, which was 53% of our total assets of $3.97 billion. The
goodwill results from our acquisitions, representing 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 impairment in the value of our 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, under current
applicable accounting rules, a non-cash charge to operating earnings for
goodwill impairment. Any determination requiring the write-off of a significant
portion of 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 investment by us. 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.
Because
many of our products rely on proprietary technology, 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. The
steps we have taken may not prevent unauthorized use of our technology,
particularly in foreign countries where the laws may not protect our proprietary
rights as fully as in the U.S. 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.
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 negatively impact our
operations, cause general economic conditions in the U.S. and abroad to
deteriorate or cause world-wide demand for U.S. products to decline. A prolonged
economic slowdown or recession in the U.S. or in other areas of the world 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 and may result in the
volatility of the market price of our common stock.
ITEM
1B. UNRESOLVED
STAFF COMMENTS
There
were no unresolved comments received from the SEC regarding Roper’s periodic or
current reports within the last 180 days prior to December 31,
2008.
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 118 principal locations around the world to support our operations,
of which 44 are manufacturing facilities, and the remaining 74 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 plant capacity to meet our current and
anticipated operating requirements.
The
following table summarizes the size, location and usage of our principal
properties as of December 31, 2008.
|
Segment
|
Region
|
Office
|
Office
& Manufacturing
|
||
|
Leased
|
Leased
|
Owned
|
|||
|
Industrial
Technology
|
(amounts
in thousands of square feet)
|
||||
|
US
|
42
|
159
|
559
|
||
|
Canada
|
36
|
-
|
-
|
||
|
Europe
|
30
|
92
|
485
|
||
|
Asia
|
9
|
-
|
-
|
||
|
Mexico
|
-
|
60
|
-
|
||
|
Energy
Systems & Controls
|
|||||
|
US
|
-
|
346
|
-
|
||
|
Canada
|
-
|
43
|
-
|
||
|
Europe
|
10
|
8
|
128
|
||
|
Asia
|
6
|
-
|
-
|
||
|
Scientific
& Industrial Imaging
|
|||||
|
US
|
43
|
134
|
127
|
||
|
Canada
|
-
|
70
|
-
|
||
|
Europe
|
-
|
21
|
-
|
||
|
RF
Technology
|
|||||
|
US
|
505
|
168
|
-
|
||
|
Canada
|
11
|
-
|
-
|
||
|
Europe
|
-
|
-
|
16
|
||
|
Middle
East
|
140
|
-
|
-
|
||
|
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.
|
SUBMISSION
OF MATTERS TO A VOTE OF
SECURITY-HOLDERS
|
There
were no matters submitted to a vote of our security-holders during the fourth
quarter of 2008.
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 2008 and 2007
quarters.
|
High
|
Low
|
Cash
Dividends Declared
|
||
|
2008
|
4th
Quarter
|
$
54.66
|
$
35.19
|
$ 0.0825
|
|
3rd
Quarter
|
65.49
|
54.75
|
0.0725
|
|
|
2nd
Quarter
|
67.70
|
59.39
|
0.0725
|
|
|
1st
Quarter
|
61.01
|
50.05
|
0.0725
|
|
|
2007
|
4th
Quarter
|
$
70.81
|
$
60.43
|
$ 0.0725
|
|
3rd
Quarter
|
65.50
|
58.36
|
0.0650
|
|
|
2nd
Quarter
|
58.36
|
53.88
|
0.0650
|
|
|
1st
Quarter
|
55.14
|
48.61
|
0.0650
|
Based on
information available to us and our transfer agent, we believe that as of
February 20, 2009 there were 285 record holders of our common
stock.
Dividends - Roper has 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 2008, our Board of Directors increased the quarterly
dividend paid January 31, 2009 to $0.0825 per share from $0.0725 per share, an
increase of 13.8%. 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 2008, there were no sales of unregistered
securities.
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 filing of Roper under the Securities Act of
1933, as amended, or the Exchange Act.
The
following graph compares, for the five year period ended December 31, 2008, the
cumulative total stockholder return for the Company’s common 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 the Company’s fiscal years ended December
31, 2003, December 31, 2004, December 31, 2005, December 31, 2006, December 31,
2007 and December 31, 2008. The graph assumes that $100 was invested on December
31, 2003 in the common stock of the Company, 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.
|
12/31/03
|
12/31/04
|
12/31/05
|
12/31/06
|
12/31/07
|
12/31/08
|
|
|
Roper
Industries, Inc.
|
100.00
|
124.26
|
162.21
|
207.35
|
259.29
|
180.96
|
|
S&P
500
|
100.00
|
110.88
|
116.33
|
134.70
|
142.10
|
89.53
|
|
S&P
500 Industrials
|
100.00
|
118.03
|
120.78
|
136.83
|
153.29
|
92.09
|
The
information set forth in Item 12 “Securities Authorized for Issuance under
Equity Compensation Plans” is incorporated herein by reference.
ITEM
6. SELECTED
FINANCIAL DATA
The
following summary consolidated selected financial data for and as of the end of
the years ended December 31, 2008, 2007, 2006, 2005 and 2004 was derived from
our audited consolidated financial statements. Our consolidated financial
statements for and as of the end of each of the years ended December 31, 2008,
2007, 2006, 2005 and 2004 were audited by PricewaterhouseCoopers LLP, an
independent registered public accounting firm.
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).
|
Years
ended December 31,
|
||||||||||||||||
|
2008(1)
|
2007(2)
|
2006(3)
|
2005(4)
|
2004(5)
|
||||||||||||
|
Operations
data:
|
||||||||||||||||
|
Net
sales
|
$
|
2,306,371
|
$
|
2,102,049
|
$
|
1,700,734
|
$
|
1,453,731
|
$
|
969,764
|
||||||
|
Gross
profit
|
1,188,288
|
1,058,395
|
861,325
|
726,407
|
485,045
|
|||||||||||
|
Income
from operations
|
486,161
|
438,354
|
337,653
|
264,899
|
171,302
|
|||||||||||
|
Net
earnings
|
286,515
|
250,033
|
193,324
|
153,175
|
93,852
|
|||||||||||
|
Per
share data:
|
||||||||||||||||
|
Basic
earnings per share
|
$
|
3.20
|
$
|
2.83
|
$
|
2.23
|
$
|
1.79
|
$
|
1.26
|
||||||
|
Diluted
earnings per share
|
3.06
|
2.68
|
2.13
|
1.74
|
1.24
|
|||||||||||
|
Dividends
declared
|
0.30
|
0.27
|
0.24
|
0.22
|
0.20
|
|||||||||||
|
Balance
sheet data:
|
||||||||||||||||
|
Working
capital(6)
|
$
|
239,099
|
$
|
283,607
|
$
|
39,846
|
$
|
(7,418
|
)
|
$
|
302,610
|
|||||
|
Total
assets
|
3,971,538
|
3,453,184
|
2,995,359
|
2,522,306
|
2,366,404
|
|||||||||||
|
Long-term
debt, less current portion
|
1,033,689
|
727,489
|
726,881
|
620,958
|
855,364
|
|||||||||||
|
Stockholders’
equity
|
2,003,738
|
1,789,806
|
1,486,839
|
1,249,788
|
1,114,086
|
|||||||||||
|
(1)
|
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.
|
|
(2)
|
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.
|
|
(3)
|
Includes
results from the acquisitions of Sinmed Holding International BV from
April 5, 2006, Intellitrans, LLC from April 26, 2006, Lumenera Corporation
from July 25, 2006, AC Analytic Controls BV from August 8, 2006 and
Dynisco Parent, Inc. from November 30,
2006.
|
|
(4)
|
Includes
results from the acquisitions of Inovonics Corporation from February 25,
2005, CIVCO Holding, Inc. from June 17, 2005 and MEDTEC, Inc. from
November 30, 2005.
|
|
(5)
|
Includes
results from the acquisitions of the power generation business of R/D Tech
from June 7, 2004 and TransCore Holdings, Inc. from December 13,
2004.
|
|
(6)
|
The
years ended December 31, 2008, 2007, 2006 and 2005 include $230 million of
senior subordinated convertible notes required to be classified as
short-term debt, based upon the triggering of the conversion feature of
the notes due to increases in the trading price of the Company’s
stock.
|
|
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, scientific and industrial 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, water, energy, research and medical,
education, security and other niche markets.
We pursue
consistent and sustainable growth in earnings by emphasizing continuous
improvement in the operating performance of our existing businesses and by
acquiring other carefully selected businesses. Our acquisitions have represented
both bolt-ons and new strategic platforms. We strive for high cash and earnings
returns from our acquisition investments. On February 20, 2008, we purchased
CBORD Holdings Corp. (“CBORD”), a provider of card systems and integrated
security solutions to higher education, healthcare and other markets. On March
20, 2008, we acquired Tech-Pro, Inc. (“Tech-Pro”), a manufacturer of physical
testing instruments for the rubber and plastic industries. On June 18, 2008, we
purchased Chalwyn Limited (“Chalwyn”), an air shut-off valve provider. On July
17, 2008, we purchased the assets, intellectual property and internet domain
names of Getloaded.com, LLC (“Getloaded”), adding new subscribers to our
existing freight matching services. On August 27, 2008, we purchased Horizon
Software Holdings, Inc. (“Horizon”), a provider of comprehensive software
solutions and related services for the K-12 education market. On September 10,
2008 we purchased Technolog Holdings Limited (“Technolog”), an end-to-end
solutions provider for network monitoring, pressure management, automatic meter
reading and smart metering solutions.
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, 2008 included
in this Annual Report.
GAAP
offers acceptable alternative methods for accounting for certain issues
affecting our financial results, such as determining inventory 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.
Effective
January 1, 2006, the Company adopted the provisions of Statement of
Financial Accounting Standard (“SFAS”) No. 123 (revised 2004), “Share-Based
Payment” (“SFAS 123R”), which requires the Company to recognize expense for the
grant date fair value of its employee stock option awards. The Company
recognizes the expense of all share-based awards on a straight-line basis over
the employee’s requisite service period (generally the vesting period of the
award).
On
January 1, 2007 the Company adopted the provisions of Financial Accounting
Standards Board (“FASB”) Interpretation (“FIN”) No. 48, “Accounting for
Uncertainty in Income Taxes - an Interpretation of FASB Statement No. 109” (“FIN
48”). This Interpretation requires the Company to recognize 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.
The
preparation of financial statements in accordance with GAAP requires the use of
estimates, assumptions, judgments and interpretations 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 estimate changes, its effects
are accounted for prospectively.
Our most
significant accounting uncertainties are encountered in the areas of accounts
receivable collectibility, inventory valuation, future warranty obligations,
revenue recognition (percent of completion), income taxes and goodwill and
indefinite-lived asset analyses. These issues, except for income taxes, which
are not allocated to our business segments, affect each of our business
segments. These issues are evaluated primarily 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 current and near-term
forecast 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 determine likely future rates for such
credits. At December 31, 2008, our allowance for doubtful accounts receivable
was $11.2 million and our allowance for sales returns and sales credits was $1.5
million, for a total of $12.7 million, or 3.2% 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, 2008 is $0.8 million higher
than at December 31, 2007 and is unchanged as a percent of sales.
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 estimate of future usage. Business trends can change rapidly and these
events can affect the evaluation of inventory balances. At December 31, 2008,
inventory reserves for excess and obsolete inventory were $30.1 million, or
13.9% of gross inventory cost, as compared to $28.4 million, or 14.0% of gross
inventory cost, at December 31, 2007. 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 business as well as
the physical disposal of our 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, 2008, 2007, and
2006.
Revenues
related to the use of the percentage-of-completion method of accounting are
dependent on a comparison of total costs incurred compared with total estimated
costs for a project. During the year ended December 31, 2008, we recognized
revenue of approximately $127.9 million using this method, primarily for major
turn-key, longer term toll and traffic and energy projects. Approximately $135.5
million and $94.8 million of revenue was recognized using this method during the
years ended December 31, 2007 and December 31, 2006, respectively. At December
31, 2008, approximately $206.8 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
United States, combined with other aspects of an overall income tax strategy.
Additionally, taxing jurisdictions could retroactively 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 2008, our effective income tax
rate was 34.3%, which was lower than the 2007 rate of 34.8%, due primarily to
certain foreign tax planning initiatives.
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 intangible
assets, if applicable, occurs over their estimated useful lives. SFAS No. 142,
“Goodwill and Other Intangible Assets” (“SFAS 142”) requires companies to cease
amortizing goodwill that existed at June 30, 2001 and establishes a two-step
method for testing goodwill for impairment on an annual basis (or an interim
basis if an event occurs that might reduce the fair value of a reporting unit
below its carrying value). Total goodwill includes 25 different business
components with individual amounts ranging from zero to approximately $502
million. SFAS 142 also requires that an identifiable intangible asset that is
determined to have an indefinite useful economic life not be amortized, but
separately tested for impairment using a one-step fair value based approach.
Roper conducts these reviews for all of its reporting units during the fourth
quarter of the fiscal year. No impairment resulted from the annual reviews
performed in 2008.
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.
|
Years
ended December 31,
|
||||||||||
|
Net
sales
|
2008
|
2007
|
2006
|
|||||||
|
Industrial
Technology
|
$
|
687,622
|
$
|
644,436
|
$
|
549,993
|
||||
|
Energy
Systems and Controls(1)
|
548,214
|
516,420
|
343,699
|
|||||||
|
Scientific
and Industrial Imaging(2)
|
375,542
|
376,163
|
338,906
|
|||||||
|
RF
Technology(3)
|
694,993
|
565,030
|
468,136
|
|||||||
|
Total
|
$
|
2,306,371
|
$
|
2,102,049
|
$
|
1,700,734
|
||||
|
Gross
profit:
|
||||||||||
|
Industrial
Technology
|
48.5
|
%
|
48.2
|
%
|
47.9
|
%
|
||||
|
Energy
Systems and Controls
|
53.8
|
53.6
|
54.2
|
|||||||
|
Scientific
and Industrial Imaging
|
55.0
|
54.9
|
56.8
|
|||||||
|
RF
Technology
|
50.8
|
46.8
|
46.8
|
|||||||
|
Total
|
51.5
|
50.4
|
50.6
|
|||||||
|
Operating
profit:
|
||||||||||
|
Industrial
Technology
|
25.9
|
%
|
25.6
|
%
|
23.4
|
%
|
||||
|
Energy
Systems and Controls
|
23.1
|
24.5
|
26.3
|
|||||||
|
Scientific
and Industrial Imaging
|
19.9
|
19.5
|
21.4
|
|||||||
|
RF
Technology
|
23.0
|
20.7
|
17.3
|
|||||||
|
Total
|
23.4
|
22.9
|
21.9
|
|||||||
|
Corporate
administrative expenses
|
(2.3
|
)%
|
(2.0
|
)%
|
(2.0
|
)%
|
||||
|
Income
from continuing operations
|
21.1
|
20.9
|
19.9
|
|||||||
|
Interest
expense
|
(2.3
|
)
|
(2.5
|
)
|
(2.6
|
)
|
||||
|
Loss
on extinguishment of debt
|
(0.1
|
)
|
—
|
—
|
||||||
|
Other
income/(expense)
|
0.2
|
(0.1
|
)
|
—
|
||||||
|
Income
from continuing operations before taxes
|
18.9
|
18.3
|
17.3
|
|||||||
|
Income
taxes
|
(6.5
|
)
|
(6.4
|
)
|
(5.9
|
)
|
||||
|
Net
earnings
|
12.4
|
%
|
11.9
|
%
|
11.4
|
%
|
||||
|
(1)
|
Includes
results from the acquisitions of Tech-Pro from March 20, 2008, Chalwyn
from June 18, 2008, DJ Instruments from February 28, 2007, Roda Deaco from
March 22, 2007, Dynamic Instruments from June 21, 2007, AC Controls from
August 8, 2006 and Dynisco from November 30,
2006.
|
|
(2)
|
Includes
results from the acquisitions of JLT from February 21, 2007, Sinmed from
April 5, 2006, and Lumenera from July 25,
2006.
|
|
(3)
|
Includes
results from the acquisitions of CBORD from February 20, 2008, Getloaded
from July 17, 2008, Horizon from August 27, 2008, Technolog from September
10, 2008, Black Diamond from September 24, 2007, and Intellitrans from
April 26, 2006.
|
Year
Ended December 31, 2008 Compared to Year Ended December 31, 2007
Net sales
for the year ended December 31, 2008 were $2.31 billion as compared to sales of
$2.10 billion for the year ended December 31, 2007, an increase of 9.7%. This
increase was the result of sales from acquired companies and internal growth.
Our 2008 results included a full year of sales from our 2007 acquisitions of
JLT, DJ Instruments, Roda Deaco, Dynamic Instruments and Black Diamond. These
results also included ten months of sales from CBORD, nine months from Tech-Pro,
six months from Chalwyn, five months from Getloaded, four months from Horizon
and three months from Technolog. Net sales of these acquisitions accounted for
approximately $133 million of our 2008 net sales increase over 2007 and growth
of our other business accounted for $71 million of the increase, or internal
growth of 3.4% including a 1% foreign currency exchange
impact.
Our Scientific and
Industrial Imaging segment reported a $0.6 million or 0.2% decrease in net sales
for the year ended December 31, 2008 over the year ended December 31, 2007. The
decrease was attributable to the year over year impact of the removal of the
Redlake motion camera product line. Internal growth for 2008 was 0.8% led by
increased sales in our medical businesses, partially offset by slowing sales in
our industrial camera businesses.
In our
Energy Systems and Controls segment, net sales for the year ended December 31,
2008 increased by $31.8 million or 6.2% over the year ended December 31, 2007.
Approximately $18 million of the increase was due to full year results from the
2007 acquisitions of DJ Instruments, Roda Deaco, and Dynamic Instruments, as
well as partial year results from the 2008 acquisitions of Tech-Pro and Chalwyn.
Internal growth was approximately $14 million or 2.8%, led by strength in our
protective technology and oil and gas pipeline controls businesses.
Net sales
for our Industrial Technology segment increased by $43.2 million or 6.7% for the
year ended December 31, 2008 over the year ended December 31, 2007. The increase
was due to broad-based moderate growth in all businesses in this
segment.
In our RF
Technology segment, net sales for the year ended December 31, 2008 increased by
$130.0 million or 23.0% over the year ended December 31, 2007. The partial year
results from the acquisitions of CBORD, Getloaded, Horizon, and Technolog and
full-year results of 2007 acquisitions accounted for approximately $119 million
of the increase. Internal growth increased 1.9% due to growth in our intelligent
traffic systems business, offset by anticipated declines in our large Middle
East project as it transitions from the design and installation phase to
operations and maintenance.
Our
overall gross profit percentage was 51.5% for the year ended December 31, 2008,
as compared to 50.4% for the year ended December 31, 2007 due to operating
leverage on increased sales. Our Industrial Technology, Energy Systems and
Controls, and Scientific and Industrial Imaging segments gross margins were
relatively unchanged in 2008 as compared to 2007. Our RF Technology segment
gross margins increased to 50.8% in 2008 as compared to 46.8% in 2007, due to
the favorable mix within existing businesses and higher gross margins at
acquired businesses.
Selling,
general and administrative (“SG&A”) expenses increased to 30.4% of net sales
for the year ended December 31, 2008 from 29.5% of net sales for the year ended
December 31, 2007. The increase is primarily due to the higher SG&A
structure in our education market businesses within the RF Technology segment.
In addition, corporate expenses increased due to higher equity compensation
costs and the additional costs to the Company due to the increase in Roper’s
stock price on the grant dates of stock awards.
Interest
expense increased $1.5 million, or 2.8%, for the year ended December 31, 2008
compared to the year ended December 31, 2007, primarily due to higher average
debt balances throughout 2008, offset by lower interest rates on our variable
debt throughout the year.
The
change in other income for the year ended December 31, 2008 as compared to the
year ended December 31, 2007 was primarily due to foreign exchange gains at our
non-U.S. based companies on U.S. dollar cash, receivables and payables balances
as the U.S. dollar strengthened against most currencies in the fourth quarter of
2008. These foreign exchange gains were offset by a $3.1 million pre-tax debt
restructuring charge in the third quarter of 2008 related to the refinancing of
our credit facility.
During
2008, our effective income tax rate was 34.3% versus 34.8% in 2007. This
decrease was due primarily to certain foreign tax planning
initiatives.
At
December 31, 2008, the functional currencies of our European and Canadian
subsidiaries were weaker against the U.S. dollar compared to currency exchange
rates at December 31, 2007. The net result of these changes led to a decrease in
the foreign exchange component of comprehensive earnings of $86.7 million in the
year ending December 31, 2008. Approximately $59.8 million of these adjustments
related to goodwill and are not expected to directly affect our projected future
cash flows. For the entire year of 2008, operating profit increased by less than
1% of sales due to fluctuations in non-U.S. currencies.
The following table summarizes our net
sales order information for the years ended December 31, 2008 and 2007 (dollar
amounts in thousands).
|
2008
|
2007
|
change
|
|||||||
|
Industrial
Technology
|
$
|
656,176
|
$
|
639,348
|
2.6
|
%
|
|||
|
Energy
Systems and Controls
|
541,472
|
525,899
|
3.0
|
||||||
|
Scientific
and Industrial Imaging
|
383,543
|
377,653
|
1.6
|
||||||
|
RF
Technology
|
722,670
|
575,100
|
25.7
|
||||||
|
Total
|
$
|
2,303,861
|
$
|
2,118,000
|
8.8
|
%
|
|||
The
increase in sales orders is due to internal growth of 2.3% with the remainder
from acquisitions. The Industrial Technology segment net orders strengthened in
most markets over the prior year. Net orders in the Energy Systems
and Controls segment increased due to the 2007 and 2008
acquisitions. Scientific and Industrial Imaging net orders increased
due to strength in our medical business and camera sales into the security and
teleconferencing application markets, offset by decreases in industrial cameras
sales. The RF Technology segment experienced strong order growth for
projects in the tolling and traffic control businesses.
The
following table summarizes sales order backlog information at December 31, 2008
and 2007 (dollar amounts in thousands). Roper’s policy is to include in backlog
only orders scheduled for shipment within twelve months.
|
2008
|
2007
|
change
|
|||||||
|
Industrial
Technology
|
$
|
59,128
|
$
|
93,076
|
(36.5
|
)%
|
|||
|
Energy
Systems and Controls
|
84,997
|
93,102
|
(8.7
|
)
|
|||||
|
Scientific
and Industrial Imaging
|
80,020
|
74,834
|
6.9
|
||||||
|
RF
Technology
|
365,669
|
271,305
|
34.8
|
||||||
|
Total
|
$
|
589,814
|
$
|
532,317
|
10.8
|
%
|
|||
Year
Ended December 31, 2007 Compared to Year Ended December 31, 2006
Net sales
for the year ended December 31, 2007 were $2.10 billion as compared to sales of
$1.70 billion for the year ended December 31, 2006, an increase of 23.6%. This
increase was the result of sales from acquired companies and strong internal
growth. Our 2007 results included a full year of sales from our 2006
acquisitions of Sinmed, Intellitrans, Lumenera, AC Controls, and Dynisco. These
results also included ten months of sales from JLT and DJ Instruments, nine
months from Roda Deaco, six months from Dynamic Instruments and three months
from Black Diamond, all purchased in 2007. Net sales of these acquisitions
accounted for approximately $158 million of our 2007 net sales increase over
2006 and growth of our other business accounted for $243 million of the
increase, or internal growth of 14.5% including a 2% foreign currency exchange
impact.
Our
Scientific and Industrial Imaging segment reported an increase in net sales of
$37.3 million or 11.0% for the year ended December 31, 2007 over the year ended
December 31, 2006. The increase was attributable to the full-year impact of
Sinmed and Lumenera acquired in 2006, and partial year impact of JLT in 2007,
which accounted for approximately $23 million of the increase over prior year.
Internal growth was 4.2%, which was related to increased sales in the electron
microscopy market due to higher demand from OEM customers, offset by weakness in
our motion camera product line and decreased sales of handheld computers due to
supplier issues encountered during the year. The supplier issues were resolved
in 2007 and did not impact operations in 2008.
In our
Energy Systems and Controls segment, net sales for the year ended December 31,
2007 increased by $172.7 million or 50.3% over the year ended December 31, 2006.
Approximately $127 million of the increase was due to full year results from the
2006 acquisitions of AC Controls and Dynisco, as well as partial year results
for DJ Instruments, Roda Deaco, and Dynamic Instruments. Internal growth was
approximately $45 million or 14%, primarily from strength in the oil and gas
related businesses, which have benefited from the strong global oil and gas
market, as well as improved market penetration in our control valve
business.
Net sales
for our Industrial Technology segment increased by $94.4 million or 17.2% for
the year ended December 31, 2007 over the year ended December 31, 2006. The
increase was due primarily to high market penetration for our new
radio-frequency integrated water meter at Neptune Technologies, accounting for
63% of the year over year growth. In addition, sales in our materials testing
businesses were up $19 million over the prior year due to increased unit
sales.
In our RF
Technology segment, net sales for the year ended December 31, 2007 increased by
$96.9 million or 20.7% over the year ended December 31, 2006. The full-year
results of Intellitrans, purchased in April, 2006, and four months from the
acquisition of Black Diamond on September 24, 2007, accounted for approximately
$7 million of the increase. Internal growth increased 19.3% due to strong
performance in our traffic and tolling business, which benefited in 2007 from a
large Middle East project that continued into 2008.
Our
overall gross profit percentage was 50.4% for the year ended December 31, 2007,
as compared to 50.6% for the year ended December 31, 2006. Industrial Technology
gross margins increased to 48.2% as compared to 47.9% in the prior year. Our
Energy Systems and Controls segment gross margins decreased to 53.6% in 2007 as
compared to 54.2% in 2006, due to the mix change within the segment caused by
the inclusion of the lower gross margin Dynisco business. Our
Scientific and Industrial Imaging segment gross margins were 54.9% in 2007 as
compared to 56.8% in 2006, due primarily to the additional costs related to the
DAP touch screen quality issue. Our RF Technology segment gross margins remained
constant at 46.8% in both 2007 and 2006.
Selling,
general and administrative expenses decreased to 29.5% of net sales for the year
ended December 31, 2007 from 30.8% of net sales for the year ended December 31,
2006. The decrease is due to leverage from higher sales while making a conscious
effort to control general and administrative expenses.
Interest
expense increased $7.4 million, or 16.5%, for the year ended December 31, 2007
compared to the year ended December 31, 2006, primarily due to higher average
debt balances throughout 2007 related to the November 30, 2006 acquisition of
Dynisco, and additional borrowings throughout the year for the 2007 acquisitions
offset by payments on these balances throughout the year.
The
change in other income for the year ended December 31, 2007 as compared to the
year ended December 31, 2006 was primarily due to foreign exchange losses at our
non-U.S. based companies on U.S. dollar cash, receivables and payables balances
as the U.S. dollar weakened against most currencies in 2007.
During
2007, our effective income tax rate was 34.8% versus 34.0% in 2006. This
increase was due primarily to the expiration of the extraterritorial income
inclusion offset somewhat by an increased benefit from our foreign rate
differential.
At
December 31, 2007, the functional currencies of our European and Canadian
subsidiaries were stronger against the U.S. dollar compared to currency exchange
rates at December 31, 2006. The net result of these changes led to an increase
in the foreign exchange component of comprehensive earnings of $52.3 million in
the year period ending December 31, 2007. Approximately $34.8 million of these
adjustments related to goodwill and are not expected to directly affect our
projected future cash flows. For the entire year of 2007, operating profit
increased by approximately 1% of sales due to fluctuations in non-U.S.
currencies.
The
following table summarizes our net sales order information for the years ended
December 31, 2007 and 2006 (dollar amounts in thousands).
|
2007
|
2006
|
change
|
|||||||
|
Industrial
Technology
|
$
|
639,348
|
$
|
589,322
|
8.5
|
%
|
|||
|
Energy
Systems and Controls
|
525,899
|
346,880
|
51.6
|
||||||
|
Scientific
and Industrial Imaging
|
377,653
|
341,178
|
10.7
|
||||||
|
RF
Technology
|
575,100
|
511,188
|
12.5
|
||||||
|
Total
|
$
|
2,118,000
|
$
|
1,788,568
|
18.4
|
%
|
|||
The
increase in sales orders is due to internal growth of 9.7% with the remainder
from acquisitions. The Industrial Technology segment net orders strengthened in
most markets over the prior year. Net orders in the Energy Systems and Controls
segment increased due to the 2006 and 2007 acquisitions, which accounted for
38.7% of the increase. In addition, there was strong internal growth in our
fluid properties testing, non-destructive testing and valve and control
businesses. Scientific and Industrial Imaging net orders increased from the
inclusion of orders from 2006 and 2007 acquisitions, and also from stronger
orders in the electron microscopy market, which led to the higher backlog at
2007 in the Scientific and Industrial Imaging segment. The RF Technology segment
experienced strong order growth including a significant international project
which began in the fourth quarter of 2006 and continued throughout
2007.
The
following table summarizes sales order backlog information at December 31, 2007
and 2006 (dollar amounts in thousands). Roper’s policy is to include in backlog
only orders scheduled for shipment within twelve months.
|
2007
|
2006
|
change
|
|||||||
|
Industrial
Technology
|
$
|
93,076
|
$
|
95,539
|
(2.6
|
)%
|
|||
|
Energy
Systems and Controls
|
93,102
|
79,217
|
17.5
|
||||||
|
Scientific
and Industrial Imaging
|
74,834
|
68,600
|
9.1
|
||||||
|
RF
Technology
|
271,305
|
261,243
|
3.9
|
||||||
|
Total
|
$
|
532,317
|
$
|
504,599
|
5.5
|
%
|
|||
Financial
Condition, Liquidity and Capital Resources
Net cash
provided by operating activities was $434.4 million for the year ended December
31, 2008, $343.8 million for the year ended December 31, 2007 and $262.5 million
for the year ended December 31, 2006. The 2008 increase was primarily due to
higher earnings over the prior year and improved receivables collection. Cash
used by investing activities during 2008, 2007, and 2006 were primarily business
acquisition costs. Cash from financing activities during each of these years was
largely debt repayments and borrowings for acquisitions. Financing activities in
2008 included replacing our previous $1.355 billion secured credit facility with
our current $1.1 billion unsecured credit facility and the issuance of our $500
million senior notes.
Net
working capital (current assets, excluding cash, less total current liabilities,
excluding debt) was $294.9 million at December 31, 2008 compared to $305.9
million at December 31, 2007. We acquired approximately $7.9 million of net
current assets through business acquisitions during 2008.
Total
debt was $1.3 billion at December 31, 2008 (38.7% of total capital) compared to
$1.1 billion at December 31, 2007 (37.2% of total capital). Our increased debt
at December 31, 2008 compared to December 31, 2007 was due to the replacement of
our previous $1.355 billion secured credit facility with our current $1.1
billion unsecured credit facility and the issuance of our $500 million senior
notes.
Our $1.1
billion credit facility consists of a two year $350 million term loan and a five
year $750 million revolving loan. The weighted average interest rate on the
borrowings under the facility at December 31, 2008 was 1.90%. At December 31,
2008, our debt consisted of $230 million in senior subordinated convertible
notes due in 2034, $500 million in senior notes due 2013, the $350 million term
loan due 2010 and $179 million on the revolving loan. In addition, we had $8.5
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
various foreign locations to support our non-U.S. businesses. The Company had
$51.1 million of outstanding letters of credit at December 31, 2008, of which
$47.3 million were covered by our lending group, thereby reducing its remaining
revolving credit capacity commensurately. We expect that our available borrowing
capacity, combined with existing cash balances and cash flows expected to be
generated from existing businesses, will be sufficient to fund normal operating
requirements and finance additional acquisitions.
We were
in compliance with all debt covenants related to our credit facilities
throughout the year ended December 31, 2008.
Capital
expenditures of $30.0 million, $30.1 million and $32.2 million were incurred
during 2008, 2007 and 2006, respectively. In the future, we expect capital
expenditures as a percentage of sales to be less than 2% of annual
sales.
Description
of Certain Indebtedness
Senior Unsecured
Credit Facility -
On July 7, 2008, the Company entered into a new $1.1 billion unsecured credit
facility with JPMorgan Chase Bank, N.A., as administrative agent, and a
syndicate of lenders, which replaces its $1.355 billion amended and restated
secured credit facility, dated as of December 13, 2004. The $1.1 billion
facility is 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.
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.
The
facility contains various affirmative and negative covenants which, among other
things, limit our ability to incur new 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.
Senior Notes -
On August 6, 2008, we issued $500 million aggregate principal amount
of 6.625% senior notes due August 15, 2013 (the “Notes”). 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.
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 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.
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 is payable semiannually, beginning July 15, 2004, until January 15,
2009. After that date, we will not pay cash interest on the notes prior to
maturity unless contingent cash interest becomes payable. Instead, after January
15, 2009, interest will be recognized at the effective rate of 3.75% and will
represent accrual of original 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%.
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, the
Company began a consent solicitation to amend the notes such that the Company
would pay the same conversion value upon conversion of the notes, but would
change how the conversion value is paid. In lieu of receiving 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 the
Company’s 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.
Holders
may require us to purchase all or a portion of their notes on January 15,
2009, 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 on or after
January 15, 2009 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.
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 the Company’s 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.
In
accordance with EITF 04-8, “The Effect of Contingently Convertible Debt on
Diluted Earnings Per Share,” the Company is required to include in its diluted
weighted-average common share calculation an increase in shares based upon the
difference between the Company’s average closing stock price for the period and
the conversion price of $31.80. 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, 2008 (dollars in thousands).
|
Contractual
Cash
Obligations
|
Total
|
Payments
Due in Fiscal Year
|
||||||||||||||||||||
|
2009
|
2010
|
2011
|
2012
|
2013
|
Thereafter
|
|||||||||||||||||
|
Long-term
debt
|
$
|
1,260,668
|
$
|
231,668
|
$
|
350,000
|
$
|
—
|
$
|
—
|
$
|
679,000
|
$
|
—
|
||||||||
|
Senior
Note interest
|
169,306
|
34,598
|
33,585
|
33,585
|
33,677
|
33,861
|
—
|
|||||||||||||||
|
Capital
leases
|
6,848
|
2,159
|
1,847
|
1,023
|
523
|
340
|
956
|
|||||||||||||||
|
Operating
leases
|
99,862
|
27,635
|
21,003
|
13,726
|
10,374
|
8,036
|
19,088
|
|||||||||||||||
|
Total
|
$
|
1,536,684
|
$
|
296,060
|
$
|
406,435
|
$
|
48,334
|
$
|
44,574
|
$
|
721,237
|
$
|
20,044
|
||||||||
|
Other
Commercial
Commitments
|
Total
Amount
Committed
|
Amounts
Expiring in Fiscal Year
|
||||||||||||||||||||
|
2009
|
2010
|
2011
|
2012
|
2013
|
Thereafter
|
|||||||||||||||||
|
Standby
letters of credit and
bank guarantees
|
$
|
51,082
|
$
|
47,670
|
$
|
1,262
|
$
|
319
|
$
|
85
|
$
|
1,746
|
$
|
—
|
||||||||
We have
excluded $26 million related to the liability for uncertain tax positions under
FIN 48 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.
At
December 31, 2008, the Company had outstanding surety bonds of $239
million.
At
December 31, 2008 and 2007, 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 various credit facilities will be adequate to finance normal operating
requirements and further acquisition activities. Although we maintain an active
acquisition program, any further 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.
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
2009 (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 the 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, 2008, we had a combination of fixed and floating rate borrowings.
Our $1.1 billion senior credit facility contains $350 million in variable rate
term loans and a $750 million variable rate revolver. At December 31, 2008, the
weighted average interest rate was 1.90% on the variable portion of the term
loans and revolver. Our $500 million senior notes have a fixed interest rate of
6.625%, and our $230 million senior unsecured convertible notes have a fixed
interest rate of 3.75%. At December 31, 2008, the prevailing market rates for
long term notes were between 1.8% and 4.7% higher than the fixed rates on our
debt instruments.
At
December 31, 2008, Roper’s outstanding variable-rate borrowings under the $1.1
billion credit facility were $529 million. An increase in interest rates of 1%
would increase our annualized interest costs by $5.3 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, Danish krone or Japanese yen. Sales by
companies whose functional currency was not the U.S. dollar were 24% of our
total sales and 71% of these sales were by companies with a European functional
currency. The U.S. dollar weakened against most currencies during the first
three quarters of 2008 and then strengthened significantly in the fourth quarter
of 2008, which resulted in a 1% sales increase due to foreign currency exchange.
The difference between 2008 operating income for these companies translated into
U.S. dollars during 2008 and operating income translated into U.S. dollars
during 2007 was less than 1%. If these currency exchange rates had been 10%
different throughout 2008 compared to currency exchange rates actually
experienced, the impact on our expected net earnings would have been
approximately 3.5%.
The
changes in these currency exchange rates relative to the U.S. dollar during 2008
compared to currency exchange rates at December 31, 2007 resulted in a decrease
in net assets of $86.7 million that was reported as a component of comprehensive
earnings, $59.8 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 Roper’s 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 various 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.
ITEM
8. FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA
INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
Page
|
|
|
Consolidated
Financial Statements:
|
|
|
Report
of Independent Registered Public Accounting Firm (PricewaterhouseCoopers
LLP)
|
27
|
|
Consolidated
Balance Sheets as of December 31, 2008 and 2007
|
28
|
|
Consolidated
Statements of Earnings for the Years ended December 31, 2008, 2007 and
2006
|
29
|
|
Consolidated
Statements of Stockholders’ Equity and Comprehensive Earnings for the
Years ended December 31, 2008, 2007 and 2006
|
30
|
|
Consolidated
Statements of Cash Flows for the Years ended December 31, 2008, 2007 and
2006
|
32
|
|
Notes
to Consolidated Financial Statements
|
34
|
|
Supplementary
Data:
|
|
|
Schedule
II – Consolidated Valuation and Qualifying Accounts for the Years ended
December 31, 2008, 2007 and 2006
|
54
|
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, 2008 and December 31, 2007, and the results of their operations and their
cash flows for each of the three years in the period ended December 31,
2008 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,
2008, 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, 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 performing such other
procedures as we considered necessary in the circumstances. We believe that our
audits provide a reasonable basis for our opinions.
As
discussed in Note 8 to the consolidated financial statements, the Company
changed the manner in which it accounts for uncertain tax positions in
2007.
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 maintenance 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 conditions, 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
appearing under Item 9A, management has excluded CBORD Holdings Corp.; Tech-Pro,
Inc.; Chalwyn, Ltd.; GetLoaded.com, LLC; Horizon Software International, LLC;
and Technolog Holdings Ltd. from its assessment of internal control over
financial reporting as of December 31, 2008, because they were acquired by the
Company in purchase business combinations during 2008. We have also excluded
CBORD Holdings Corp.; Tech-Pro, Inc.; Chalwyn, Ltd.; GetLoaded.com, LLC; Horizon
Software International, LLC; and Technolog Holdings Ltd. from our audit of
internal control over financial reporting. CBORD Holdings Corp.; Tech-Pro, Inc.;
Chalwyn, Ltd.; GetLoaded.com, LLC; Horizon Software International, LLC; and
Technolog Holdings Ltd. are wholly-owned subsidiaries whose aggregate total
assets and aggregate total revenues represent 7.2% and 5.4%, respectively, of
the related consolidated financial statement amounts as of and for the year
ended December 31, 2008.
PricewaterhouseCoopers
LLP
Atlanta,
GA
February
27, 2009
ROPER
INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS
December
31, 2008 and 2007
(in
thousands, except per share data)
|
2008
|
2007
|
||||||||
|
Assets
|
|||||||||
|
Cash
and cash equivalents
|
$
|
178,069
|
$
|
308,768
|
|||||
|
Accounts
receivable, net
|
376,855
|
359,808
|
|||||||
|
Inventories,
net
|
185,919
|
174,138
|
|||||||
|
Deferred
taxes
|
29,390
|
27,800
|
|||||||
|
Unbilled
Receivables
|
61,168
|
60,218
|
|||||||
|
Other
current assets
|
26,906
|
20,405
|
|||||||
|
Total
current assets
|
858,307
|
951,137
|
|||||||
|
Property,
plant and equipment, net
|
112,463
|
107,513
|
|||||||
|
Goodwill
|
2,118,852
|
1,706,083
|
|||||||
|
Other
intangible assets, net
|
804,020
|
613,505
|
|||||||
|
Deferred
taxes
|
28,050
|
23,854
|
|||||||
|
Other
assets
|
49,846
|
51,092
|
|||||||
|
Total
assets
|
$
|
3,971,538
|
$
|
3,453,184
|
|||||
|
Liabilities
and Stockholders' Equity
|
|||||||||
|
Accounts
payable
|
$
|
121,807
|
$
|
115,809
|
|||||
|
Accrued
liabilities
|
261,682
|
194,055
|
|||||||
|
Income
taxes payable
|
1,892
|
24,121
|
|||||||
|
Deferred
taxes
|
—
|
2,442
|
|||||||
|
Current
portion of long-term debt
|
233,827
|
331,103
|
|||||||
|
Total
current liabilities
|
619,208
|
667,530
|
|||||||
|
Long-term
debt, net of current portion
|
1,033,689
|
727,489
|
|||||||
|
Deferred
taxes
|
272,077
|
221,411
|
|||||||
|
Other
liabilities
|
42,826
|
46,948
|
|||||||
|
Total
liabilities
|
1,967,800
|
1,663,378
|
|||||||
|
Commitments
and contingencies (Note 13)
|
|||||||||
|
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; 91,909 shares
issued and 89,721 outstanding at December 31, 2008 and 90,995 shares
issued and 88,773 outstanding at December 31, 2007.
|
919
|
910
|
|||||||
|
Additional
paid-in capital
|
798,486
|
757,318
|
|||||||
|
Retained
earnings
|
1,204,521
|
944,886
|
|||||||
|
Accumulated
other comprehensive earnings
|
21,513
|
108,732
|
|||||||
|
Treasury
stock 2,188 shares at December 31, 2008 and 2,222 shares
at December 31, 2007
|
(21,701
|
)
|
(22,040
|
)
|
|||||
|
Total
stockholders' equity
|
2,003,738
|
1,789,806
|
|||||||
|
Total
liabilities and stockholders' equity
|
$
|
3,971,538
|
$
|
3,453,184
|
|||||
See
accompanying notes to consolidated financial statements.
ROPER
INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF EARNINGS
Years
ended December 31, 2008, 2007 and 2006
(Dollar
and share amounts in thousands, except per share data)
|
Years
ended December 31,
|
||||||||||||||
|
2008
|
2007
|
2006
|
||||||||||||
|
Net
sales
|
$
|
2,306,371
|
$
|
2,102,049
|
$
|
1,700,734
|
||||||||
|
Cost
of sales
|
1,118,083
|
1,043,654
|
839,409
|
|||||||||||
|
Gross
profit
|
1,188,288
|
1,058,395
|
861,325
|
|||||||||||
|
Selling,
general and administrative expenses
|
702,127
|
620,041
|
523,672
|
|||||||||||
|
Income
from operations
|
486,161
|
438,354
|
337,653
|
|||||||||||
|
Interest
expense
|
53,680
|
52,195
|
44,801
|
|||||||||||
|
Loss
on extinguishment of debt
|
3,133
|
—
|
—
|
|||||||||||
|
Other
income (expense)
|
6,607
|
(2,502
|
)
|
20
|
||||||||||
|
Earnings
from continuing operations before income taxes
|
435,955
|
383,657
|
292,872
|
|||||||||||
|
Income
taxes
|
149,440
|
133,624
|
99,548
|
|||||||||||
|
Net
earnings
|
$
|
286,515
|
$
|
250,033
|
$
|
193,324
|
||||||||
|
Earnings
per share:
|
||||||||||||||
|
Basic
|
$
|
3.20
|
$
|
2.83
|
$
|
2.23
|
||||||||
|
Diluted
|
$
|
3.06
|
$
|
2.68
|
$
|
2.13
|
||||||||
|
Weighted
average common shares outstanding:
|
||||||||||||||
|
Basic
|
89,468
|
88,390
|
86,842
|
|||||||||||
|
Diluted
|
93,699
|
93,229
|
90,880
|
|||||||||||
See
accompanying notes to consolidated financial statements.
ROPER
INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ EQUITY AND COMPREHENSIVE EARNINGS
Years
ended December 31, 2008, 2007 and 2006
(in
thousands, except per share data)
|
Common
Stock
|
Additional
paid-in capital
|
Unearned
compensation on restricted stock grants
|
Retained
earnings
|
Accumulated
other comprehensive earnings
|
Treasury
stock
|
Total
stockholders equity
|
Compre-hensive
earnings
|
|||||||||||||||||||
|
Shares
|
Amount
|
|||||||||||||||||||||||||
|
Balances
at December 31, 2005
|
85,960
|
$
|
883
|
$
|
685,450
|
$
|
(15,128
|
)
|
$
|
549,603
|
$
|
51,731
|
$
|
(22,751
|
)
|
$
|
1,249,788
|
$
|
128,657
|
|||||||
|
Net
earnings
|
—
|
—
|
—
|
—
|
193,324
|
—
|
—
|
193,324
|
$
|
193,324
|
||||||||||||||||
|
Reclassification
due to change in accounting principle-SFAS 123R
|
—
|
—
|
(15,128
|
)
|
15,128
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||
|
Stock
option exercises
|
1,188
|
12
|
20,692
|
—
|
—
|
—
|
—
|
20,704
|
—
|
|||||||||||||||||
|
Treasury
stock sold
|
38
|
—
|
1,193
|
—
|
—
|
—
|
374
|
1,567
|
—
|
|||||||||||||||||
|
Currency
translation adjustments, net of $5,802 tax
|
—
|
—
|
—
|
—
|
—
|
17,768
|
—
|
17,768
|
17,768
|
|||||||||||||||||
|
Stock
based compensation
|
—
|
—
|
15,415
|
—
|
—
|
—
|
—
|
15,415
|
—
|
|||||||||||||||||
|
Restricted
stock grants
|
593
|
5
|
(1,410
|
)
|
—
|
—
|
—
|
—
|
(1,405
|
)
|
—
|
|||||||||||||||
|
Stock
option tax benefit
|
—
|
—
|
11,539
|
—
|
—
|
—
|
—
|
11,539
|
—
|
|||||||||||||||||
|
Reduction
in unrealized gain on derivative, shown net of $(289) tax
|
—
|
—
|
—
|
—
|
—
|
(537
|
)
|
—
|
(537
|
)
|
(537
|
)
|
||||||||||||||
|
Adjustment
to adopt SFAS No. 158, net of $159 tax
|
—
|
—
|
—
|
—
|
—
|
(296
|
)
|
—
|
(296
|
)
|
—
|
|||||||||||||||
|
Dividends
declared ($0.24125 per share)
|
—
|
—
|
—
|
—
|
(21,028
|
)
|
—
|
—
|
(21,028
|
)
|
—
|
|||||||||||||||
|
Balances
at December 31, 2006
|
87,779
|
$
|
900
|
$
|
717,751
|
$
|
—
|
$
|
721,899
|
$
|
68,666
|
$
|
(22,377
|
)
|
$
|
1,486,839
|
$
|
210,555
|
||||||||
|
Adjustment
to adopt FIN No. 48
|
—
|
—
|
—
|
—
|
(3,349
|
)
|
—
|
—
|
(3,349
|
)
|
—
|
|||||||||||||||
|
Net
earnings
|
—
|
—
|
—
|
—
|
250,033
|
—
|
—
|
250,033
|
$
|
250,033
|
||||||||||||||||
|
Stock
option exercises
|
791
|
8
|
15,256
|
—
|
—
|
—
|
—
|
15,264
|
—
|
|||||||||||||||||
|
Treasury
stock sold
|
27
|
—
|
1,426
|
—
|
—
|
—
|
337
|
1,763
|
—
|
|||||||||||||||||
|
Currency
translation adjustments, net of $9,979 tax
|
—
|
—
|
—
|
—
|
—
|
42,326
|
—
|
42,326
|
42,326
|
|||||||||||||||||
|
Stock
based compensation
|
—
|
—
|
20,716
|
—
|
—
|
—
|
—
|
20,716
|
—
|
|||||||||||||||||
|
Restricted
stock grants
|
176
|
2
|
(3,560
|
)
|
—
|
—
|
—
|
—
|
(3,558
|
)
|
—
|
|||||||||||||||
|
Stock
option tax benefit
|
—
|
—
|
5,729
|
—
|
—
|
—
|
—
|
5,729
|
—
|
|||||||||||||||||
|
Reduction
in unrealized gain on derivative, shown net of $(1,217)
tax
|
—
|
—
|
—
|
—
|
—
|
(2,260
|
)
|
—
|
(2,260
|
)
|
(2,260
|
)
|
||||||||||||||
|
Dividends
declared ($0.2675 per share)
|
—
|
—
|
—
|
—
|
(23,697
|
)
|
—
|
—
|
(23,697
|
)
|
—
|
|||||||||||||||
|
Balances
at December 31, 2007
|
88,773
|
$
|
910
|
$
|
757,318
|
$
|
—
|
$
|
944,886
|
$
|
108,732
|
$
|
(22,040
|
)
|
$
|
1,789,806
|
$
|
290,099
|
||||||||
|
Net
earnings
|
—
|
—
|
—
|
—
|
286,515
|
—
|
—
|
286,515
|
$
|
286,515
|
||||||||||||||||
|
Stock
option exercises
|
462
|
5
|
11,032
|
—
|
—
|
—
|
—
|
11,037
|
—
|
|||||||||||||||||
|
Treasury
stock sold
|
34
|
—
|
1,555
|
—
|
—
|
—
|
339
|
1,894
|
—
|
|||||||||||||||||
|
Currency
translation adjustments, net of $9,404 tax
|
—
|
—
|
—
|
—
|
—
|
(86,679
|
)
|
—
|
(86,679
|
)
|
(86,679
|
)
|
||||||||||||||
|
Stock
based compensation
|
—
|
—
|
30,905
|
—
|
—
|
—
|
—
|
30,905
|
—
|
|||||||||||||||||
|
Restricted
stock grants
|
452
|
4
|
(7,967
|
)
|
—
|
—
|
—
|
—
|
(7,963
|
)
|
—
|
|||||||||||||||
|
Stock
option tax benefit
|
—
|
—
|
5,643
|
—
|
—
|
—
|
—
|
5,643
|
—
|
|||||||||||||||||
|
Reduction
in unrealized gain on derivative, shown net of $(291) tax
|
—
|
—
|
—
|
—
|
—
|
(540
|
)
|
—
|
(540
|
)
|
(540
|
)
|
||||||||||||||
|
Dividends
declared ($0.30 per share)
|
—
|
—
|
—
|
—
|
(26,880
|
)
|
—
|
—
|
(26,880
|
)
|
—
|
|||||||||||||||
|
Balances
at December 31, 2008
|
89,721
|
$
|
919
|
$
|
798,486
|
$
|
—
|
$
|
1,204,521
|
$
|
21,513
|
$
|
(21,701
|
)
|
$
|
2,003,738
|
$
|
199,296
|
||||||||
See
accompanying notes to consolidated financial statements.
ROPER
INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CASH FLOWS
Years
ended December 31, 2008, 2007 and 2006
(in
thousands)
|
Years
ended December 31,
|
||||||||||
|
2008
|
2007
|
2006
|
||||||||
|
Cash
flows from operating activities:
|
||||||||||
|
Net
earnings
|
$
|
286,515
|
$
|
250,033
|
$
|
193,324
|
||||
|
Adjustments
to reconcile net earnings to cash flows from operating
activities:
|
||||||||||
|
Depreciation
and amortization of property, plant and equipment
|
33,900
|
31,805
|
29,939
|
|||||||
|
Amortization
of intangible assets and deferred financing costs
|
69,208
|
61,375
|
52,105
|
|||||||
|
Non-cash
stock compensation
|
30,905
|
20,688
|
15,415
|
|||||||
|
Changes
in operating assets and liabilities, net of acquired
businesses:
|
||||||||||
|
Accounts
receivable
|
14,609
|
(21,243
|
)
|
(34,580
|
)
|
|||||
|
Inventories
|
(8,728
|
)
|
(489
|
)
|
(14,442
|
)
|
||||
|
Unbilled
Receivables
|
(950
|
)
|
(30,971
|
)
|
(5,032
|
)
|
||||
|
Accounts
payable and accrued liabilities
|
9,209
|
14,219
|
32,943
|
|||||||
|
Income
taxes payable
|
(177
|
)
|
23,840
|
(4,506
|
)
|
|||||
|
Other,
net
|
(53
|
)
|
(5,450
|
)
|
(2,628
|
)
|
||||
|
Cash
provided by operating activities
|
434,438
|
343,807
|
262,538
|
|||||||
|
Cash
flows from investing activities:
|
||||||||||
|
Acquisitions
of businesses, net of cash acquired
|
(704,764
|
)
|
(106,942
|
)
|
(352,125
|
)
|
||||
|
Capital
expenditures
|
(30,047
|
)
|
(30,107
|
)
|
(32,153
|
)
|
||||
|
Other,
net
|
(4,483
|
)
|
(5,339
|
)
|
(2,387
|
)
|
||||
|
Cash
used in investing activities
|
(739,294
|
)
|
(142,388
|
)
|
(386,665
|
)
|
||||
|
Cash
flows from financing activities:
|
||||||||||
|
Proceeds
from senior unsecured term loan
|
350,000
|
—
|
—
|
|||||||
|
Proceeds
from senior notes
|
500,000
|
—
|
—
|
|||||||
|
Repayment
of borrowings under prior credit facility
|
(908,620
|
)
|
—
|
—
|
||||||
|
Principal
borrowings/(payments) on term notes under prior credit
facility
|
(49,125
|
)
|
234,500
|
(32,750
|
)
|
|||||
|
Borrowings/(payments)
under revolving line of credit, net
|
313,000
|
(206,900
|
)
|
158,413
|
||||||
|
Debt
issuance costs
|
(10,226
|
)
|
—
|
—
|
||||||
|
Cash
dividends to stockholders
|
(25,887
|
)
|
(22,954
|
)
|
(20,402
|
)
|
||||
|
Treasury
stock sales
|
1,894
|
1,763
|
1,567
|
|||||||
|
Stock
award tax excess windfall benefit
|
5,359
|
7,876
|
10,771
|
|||||||
|
Proceeds
from stock option exercises
|
11,037
|
15,263
|
20,692
|
|||||||
|
Other
|
487
|
—
|
—
|
|||||||
|
Cash
provided by financing activities
|
187,919
|
29,548
|
138,291
|
|||||||
|
Effect
of exchange rate changes on cash
|
(13,762
|
)
|
8,323
|
2,198
|
||||||
|
Net
increase (decrease) in cash and cash equivalents
|
(130,699
|
)
|
239,290
|
16,362
|
||||||
|
Cash
and cash equivalents, beginning of year
|
308,768
|
69,478
|
53,116
|
|||||||
|
Cash
and cash equivalents, end of year
|
$
|
178,069
|
$
|
308,768
|
$
|
69,478
|
||||
|
Supplemental
disclosures:
|
||||||||||
|
Cash
paid for:
|
||||||||||
|
Interest
|
$
|
39,063
|
$
|
50,157
|
$
|
43,721
|
||||
|
Income
taxes, net of refunds received
|
$
|
144,258
|
$
|
101,908
|
$
|
93,284
|
||||
|
Noncash
investing activities:
|
||||||||||
|
Net
assets of businesses acquired:
|
||||||||||
|
Fair
value of assets, including goodwill
|
$
|
774,164
|
$
|
112,112
|
$
|
408,571
|
||||
|
Liabilities
assumed
|
(69,400
|
)
|
(5,170
|
)
|
(56,446
|
)
|
||||
|
Cash
paid, net of cash acquired
|
$
|
704,764
|
$
|
106,942
|
$
|
352,125
|
||||
See
accompanying notes to consolidated financial statements.
ROPER
INDUSTRIES, INC. AND SUBSIDIARIES
Notes to
Consolidated Financial Statements
Years
ended December 31, 2008, 2007 and 2006
|
(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,
scientific and industrial 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 radio
frequency applications, water, energy, research and medical, education, security
and other niche markets.
Accounts Receivable -
Accounts receivable were stated net of an allowance for doubtful accounts and
sales allowances of $12.7 million and $11.9 million at December 31, 2008
and 2007, respectively. Outstanding accounts receivable balances are reviewed
periodically, and allowances are provided at such time that management believes
reasonable doubt exists that such balances will be collected within a reasonable
period of time. 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 no cash equivalents at December 31, 2008 and $198 million
at December 31, 2007.
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, restricted stock awards 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).
|
Years
ended December 31,
|
|||
|
2008
|
2007
|
2006
|
|
|
Basic
shares outstanding
|
89,468
|
88,390
|
86,842
|
|
Effect
of potential common stock
|
|||
|
Common
stock awards
|
1,155
|
1,511
|
1,823
|
|
Senior
subordinated convertible notes
|
3,076
|
3,328
|
2,215
|
|
Diluted
shares outstanding
|
93,699
|
93,229
|
90,880
|
As of and
for the years ended December 31, 2008, 2007 and 2006, there were 190,000, 29,000
and 79,000 outstanding stock options 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.
Fair Value of Financial
Instruments - Roper’s long-term debt at December 31, 2008 included $500
million of fixed-rate notes, the interest rate on which was 1.8% lower than
prevailing market rates which results in a valuation of approximately $465
million. Our short-term debt included $230 million of fixed-rate notes which
were at fair value due to the short term nature of the debt. Most of Roper’s
other borrowings at December 31, 2008 were at various interest rates that adjust
relatively frequently under its $1.1 billion credit facility. The fair value for
each of these borrowings at December 31, 2008 was estimated to be the face value
of these borrowings.
Foreign Currency
Translation - 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 component of other
comprehensive earnings.
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 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 market
value 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 carrying value, thereby possibly requiring an impairment
charge 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. earnings. The Company provides income taxes for unremitted earnings
of foreign subsidiaries that are not considered permanently reinvested overseas.
As of December 31, 2008, 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 $238 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.
On
January 1, 2007 the Company adopted the provisions of FIN 48, “Accounting for
Uncertainty in Income Taxes - an Interpretation of FASB Statement No.
109.” This Interpretation requires the Company to recognize 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. As a result of the adoption of FIN 48, the
Company recorded an increase of $3.3 million in the liability for unrecognized
tax benefits, which was accounted for as a decrease to the January 1, 2007
balance of retained earnings.
Certain
assets and liabilities have different bases for financial reporting and income
tax purposes. Deferred income taxes have been provided for these
differences.
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 intangible assets, if applicable, occurs over their
estimated useful lives. SFAS No. 142, “Goodwill and Other Intangible Assets,”
requires companies to cease amortizing goodwill that existed at June 30, 2001
and establishes a two-step method for testing goodwill for impairment on an
annual basis (or an interim basis if an event occurs that might reduce the fair
value of a reporting unit below its carrying value). Total goodwill includes 25
different business components with individual amounts ranging from zero to
approximately $502 million. SFAS 142 also requires that an identifiable
intangible asset that is determined to have an indefinite useful economic life
not be amortized, but separately tested for impairment using a one-step fair
value based approach. Roper conducts these reviews for all of its reporting
units during the fourth quarter of the fiscal year. No impairment resulted from
the annual reviews performed in 2008.
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 company’s net assets. The differences between
net earnings and comprehensive earnings were currency translation adjustments
and the unrealized gain related to an interest rate swap, net of
tax.
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
|
20-30
years
|
|
Machinery
|
8-12
years
|
|
Other
equipment
|
3-5
years
|
Capitalized Software
– The Company accounts for capitalized software under Statement of Position
(“SOP”) 98-1, “Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use.” Among other provisions, SOP 98-1 requires
that entities capitalize certain internal-use software costs once certain
criteria are met. Under SOP 98-1, overhead, general and administrative and
training costs are not capitalized. Capitalized software was $14.5 million and
$11.3 million at December 31, 2008 and 2007, respectively.
Recently Released Accounting
Pronouncements – In June 2008, the FASB issued FASB Staff Position
(“FSP”) EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based
Payment Transactions Are Participating Securities” (“FSP EITF 03-6-1”). FSP EITF
03-6-1 clarified that all outstanding unvested share-based payment awards that
contain rights to nonforfeitable dividends participate in undistributed earnings
with common shareholders. Awards of this nature are considered participating
securities and the two-class method of computing basic and diluted earnings per
share must be applied. FSP EITF 03-6-1 is effective for fiscal years beginning
after December 15, 2008. The implementation of this standard will not have a
material impact on our consolidated financial position and results of
operations.
In
May 2008, the FASB issued FSP APB 14-1, “Accounting for Convertible Debt
Instruments That May Be Settled in Cash upon Conversion (Including Partial
Cash Settlement)” (“FSP APB 14-1”). FSP APB 14-1 clarifies that convertible debt
instruments that may be settled in cash upon either mandatory or optional
conversion (including partial cash settlement) are not addressed by paragraph 12
of APB Opinion No. 14, “Accounting for Convertible Debt and Debt issued
with Stock Purchase Warrants.” Additionally, FSP APB 14-1 specifies that issuers
of such instruments should separately account for the liability and equity
components in a manner that will reflect the entity’s nonconvertible debt
borrowing rate when interest cost is recognized in subsequent periods. FSP APB
14-1 is effective for financial statements issued for fiscal years beginning
after December 15, 2008, and interim periods within those fiscal years. We
will adopt FSP APB 14-1 on January 1, 2009, and this standard must be applied on
a retrospective basis. The adoption of FSP APB 14-1 will result in
the recognition of an estimated $8 million decrease to retained earnings as a
cumulative effect of accounting change, net as of January 1,
2007. We have determined that the adoption of FSP APB 14-1
would result in a non-cash reduction in basic and diluted earnings per
common share from continuing operations before cumulative effect of accounting
change by approximately $0.05 per share for each of the years ended December 31,
2008, 2007 and 2006.
In
May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally
Accepted Accounting Principles” (“SFAS 162”). This standard is intended to
improve financial reporting by identifying a consistent framework, or hierarchy,
for selecting accounting principles to be used in preparing financial statements
that are presented in conformity with generally accepted accounting principles
in the United States for non-governmental entities. SFAS 162 is effective
60 days following approval by the SEC of the Public Company Accounting Oversight
Board’s amendments to AU Section 411, “The Meaning of Present Fairly in
Conformity with Generally Accepted Accounting Principles.” We do not expect SFAS
162 to have a material impact on the preparation of our consolidated financial
statements.
In April
2008, the FASB issued FSP No. 142-3, “Determination of the Useful Life of
Intangible Assets” (“FSP 142-3”). FSP 142-3 amends the factors an entity should
consider in developing renewal or extension assumptions used in determining the
useful life of recognized intangible assets under FASB Statement No. 142,
“Goodwill and Other Intangible Assets”. This new guidance applies prospectively
to intangible assets that are acquired individually or with a group of other
assets in business combinations and asset acquisitions. FSP 142-3 is effective
for financial statements issued for fiscal years and interim periods beginning
after December 15, 2008. Early adoption is prohibited. The adoption of FSP 142-3
will require certain additional disclosures beginning January 1, 2009 and
application to useful life estimates prospectively for intangible assets
acquired after December 31, 2008. We are currently evaluating the
impact, if any, that FSP 142-3 will have on our consolidated financial
statements.
In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative
Instruments and Hedging Activities—an amendment of FASB Statement No. 133,”
(“SFAS 161”) which requires enhanced disclosures about an entity’s derivative
and hedging activities. SFAS 161 is effective for fiscal years and interim
periods beginning after November 15, 2008. This Statement will not impact the
Company’s consolidated financial position as it is disclosure-only in
nature.
In
September 2006, the FASB issued SFAS No. 157, “Fair Value
Measurements,” (“SFAS 157”) which clarifies the definition of fair value,
establishes a framework for measuring fair value and expands the disclosures on
fair value measurements. SFAS 157 is effective for fiscal years beginning
after November 15, 2007. In February 2008, the FASB issued FSP 157-2
“Partial Deferral of the Effective Date of Statement 157” (“FSP 157-2”). FSP
157-2 delays the effective date of SFAS 157, for all nonfinancial assets and
nonfinancial liabilities, except those that are recognized or disclosed at fair
value in the financial statements on a recurring basis (at least annually) to
fiscal years beginning after November 15, 2008. The adoption of SFAS 157 did not
have a material effect on the consolidated financial position for fair value
measurements made during 2008. While the Company does not expect the adoption of
this Statement to have a material impact on its consolidated financial position
in subsequent reporting periods, the Company continues to monitor any additional
implementation guidance that is issued that addresses the fair value
measurements for certain financial assets, nonfinancial assets and nonfinancial
liabilities not disclosed at fair value in the financial statements on at least
an annual basis.
In
December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business
Combinations” (“SFAS 141(R)”). SFAS 141(R) establishes principles and
requirements for how an acquirer in a business combination recognizes and
measures the assets acquired, liabilities assumed, and any noncontrolling
interest (previously referred to as minority interest) in the acquiree. The
provisions of SFAS 141(R) are effective for business combinations occurring on
or after January 1, 2009.
In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements” (“SFAS 160”). SFAS 160 establishes
requirements for ownership interests in subsidiaries held by parties other than
the Company (sometimes called “minority interests”) be clearly identified,
presented, and disclosed in the consolidated statement of financial position
within equity, but separate from the parent’s equity. All changes in the
parent’s ownership interests are required to be accounted for consistently as
equity transactions and any noncontrolling equity investments in deconsolidated
subsidiaries must be measured initially at fair value. SFAS 160 is effective, on
a prospective basis, for fiscal years beginning after December 15, 2008.
However, presentation and disclosure requirements must be retrospectively
applied to comparative financial statements. The Company is currently assessing
the impact of SFAS 160 on its consolidated financial position and results of
operations.
Research and
Development - Research and development costs include salaries and
benefits, rents, supplies, and other costs related to various products under
development. Research and development costs are expensed in the period incurred
and totaled $87.4 million, $67.9 million and $58.6 million for the years ended
December 31, 2008, 2007 and 2006, respectively.
Revenue Recognition and
Product Warranties – 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 rendered upon customer 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 $127.9 million,
$135.5 million and $94.8 million for the years ended December 31, 2008, 2007 and
2006, respectively, using this method. Estimated losses on any projects are
recognized as soon as such losses become known.
The
Company sells certain of its products to customers with a product warranty that
provides that customers can 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 date, warranty costs incurred and any other related
information known to the Company.
Stock-Based
Compensation – Effective January 1, 2006, Roper adopted the
provisions of SFAS 123R, which requires recognition of expense for the grant
date fair value of its employee stock option awards. The Company estimates the
fair value of its option awards using the Black-Scholes option valuation model
and recognizes the expense of all share-based awards on a straight-line basis
over the employee’s requisite service period (generally the vesting period of
the award).
Effective
January 1, 2006 and in accordance with SFAS 123R, 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
|
2008 Acquisitions - During
the year ended December 31, 2008, Roper completed six 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.
CBORD Acquisition - The
largest of the 2008 acquisitions was the purchase of all outstanding shares of
CBORD Holdings Corporation on February 20, 2008. CBORD, whose operations are
reported in the RF Technology segment, is a provider of card systems and
integrated security solutions to higher education, healthcare and other markets.
CBORD’s principal facilities are located in Ithaca, New York. The aggregate
gross purchase price was $375 million of cash, which includes amounts incurred
for direct external transaction costs associated with the
acquisition.
Roper
acquired CBORD due to growth prospects in CBORD’s end markets of education and
health care. In addition, CBORD has excellent customer retention and strong
recurring revenues. We also see opportunities to realize complementary
technologies within our RF Technology segment to CBORD’s product
offerings.
The
allocation of the purchase resulted in $158 million of identifiable intangible
assets, and $258 million of goodwill. The following table (in thousands)
summarizes the fair values of the assets acquired and liabilities assumed at the
date of acquisition.
|
February
20, 2008
|
||||
|
Current
assets
|
$
|
31,666
|
||
|
Other
assets
|
4,916
|
|||
|
Intangible
assets
|
158,180
|
|||
|
Goodwill
|
257,871
|
|||
|
Total
assets acquired
|
452,633
|
|||
|
Current
liabilities
|
(34,823
|
)
|
||
|
Other
liabilities
|
(42,887
|
)
|
||
|
Net
assets acquired
|
$
|
374,923
|
||
Of the
$158 million of acquired intangible assets, $28 million was assigned to trade
names that are not subject to amortization. The remaining $130 million of
acquired intangible assets have a weighted-average useful life of approximately
15 years. The intangible assets that make up that amount include customer
relationships of $114 million (20 year weighted-average useful life), unpatented
technology of $12 million (6 year weighted-average useful life), and protective
rights of $4 million (5 year weighted-average useful life).
The
majority of the $258 million of goodwill is not expected to be deductible for
tax purposes.
Other 2008 acquisitions - The
aggregate purchase price of all other acquisitions made in 2008 totaled $331
million, which includes amounts incurred for direct external transaction costs
associated with the acquisitions. We recorded approximately $219
million in goodwill and $122 million in other identifiable intangibles in
connection with these acquisitions. The majority of the goodwill is
not expected to be deductible for tax purposes.
On March
20, 2008, we acquired the assets of Tech-Pro, Inc. a provider of industrial test
instruments and software in our Energy Systems & Controls
segment.
On June
18, 2008, we acquired all of the outstanding shares of Chalwyn Limited, a
U.K.-based air shut-off valve provider in our Energy Systems & Controls
segment.
On July
17, 2008, we acquired the assets, intellectual property and domain name of
Getloaded.com, LLC, which adds new subscribers for our freight matching services
in the RF Technology segment.
On August
27, 2008, we acquired the assets of Horizon Software Holdings, Inc., a leading
provider of comprehensive software solutions and related services that
complements CBORD’s higher education business to allow us to better serve the
entire education spectrum. The operations of Horizon are reported in the RF
Technology segment.
On
September 10, 2008, we acquired all of the outstanding shares of Technolog
Holdings Limited, a U.K.-based end-to-end solutions provider for network
monitoring, pressure management, automatic meter reading and smart metering
solutions. The operations of Technolog are reported in the RF Technology
segment.
Of the
$122 million of acquired intangible assets, $22 million was assigned to trade
names that are not subject to amortization. The remaining $100 million of
acquired intangible assets have a weighted-average useful life of approximately
13 years. The intangible assets that make up that amount include customer
relationships of $82 million (14 year weighted-average useful life), unpatented
technology of $14 million (9 year weighted-average useful life), protective
rights of $2 million (7 year weighted-average useful life) and backlog of $2
million (1 year weighted-average useful life).
2007 Acquisitions - During
the year ended December 31, 2007, Roper completed six business combinations for
an aggregate purchase price of $106 million, which includes amounts incurred for
direct external transaction costs associated with the
acquisitions. 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. We recorded
approximately $40 million in goodwill and $50 million in other identifiable
intangibles in connection with these acquisitions. The majority of
the goodwill is not expected to be deductible for tax purposes.
On
February 21, 2007, we acquired all the outstanding shares of JLT Mobile
Computers, Inc., a provider of rugged computers and software for mobile
computing. The operations of JLT are included in the Scientific and Industrial
Imaging segment.
On
February 28, 2007, we acquired the assets of DJ Instruments, a manufacturer and
provider of pressure measurement sensors. The operations of DJ Instruments are
included in the Energy Systems and Controls segment.
On March
22, 2007, we acquired the assets of Roda Deaco Valve Ltd., a Canadian-based
developer and manufacturer of air intake cut-off devices. The operations of Roda
Deaco are included in the Energy Systems and Controls segment.
On June
21, 2007, we acquired all the outstanding shares of Dynamic Instruments, Inc.,
including its wholly owned subsidiary, Hardy Instruments, Inc., a provider of
audio recording, vibration monitoring and process control equipment for
commercial and military markets. The operations of Dynamic Instruments are
included in the Energy Systems and Controls segment.
On
September 24, 2007, we acquired the assets of Black Diamond Advanced Technology,
LLC, a provider of rugged mobile computers. The operations of Black Diamond are
included in the RF Technology segment.
Of the
$50 million of acquired intangible assets, $12 million was assigned to trade
names that are not subject to amortization. The remaining $38 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 $35 million (10 year weighted-average useful life) and
unpatented technology of $3 million (11 year weighted-average useful
life).
2006 Acquisitions - During
the year ended December 31, 2006, Roper completed five 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.
Dynisco Acquisition - The
largest of the 2006 acquisitions was the purchase of all outstanding shares of
Dynisco Parent, Inc., a provider of highly engineered sensors and software used
in testing, measurement and control applications. The operations of Dynisco are
included in the Energy Systems and Controls segment. Dynisco’s principal
facilities are located in Franklin, Massachusetts; Akron, Ohio; and Grand
Island, New York. The aggregate gross purchase price of the Dynisco acquisition
was approximately $247 million of cash and includes amounts incurred for direct
external transaction costs associated with the acquisition.
Roper
acquired Dynisco as a strategic fit for our businesses which determine physical
and elemental properties of various liquids and materials and to gain Dynisco’s
base of recurring business, technical and engineering competencies, and market
channels. The purchase price reflected these factors and Dynisco’s historically
strong margins and operating cash flows, and its future prospects and growth
potential.
The
allocation of the purchase resulted in $120 million of identifiable intangible
assets, and $153 million of goodwill, the majority of which is not expected to
be deductible for tax purposes. The following table (in thousands) summarizes
the fair values of the assets acquired and liabilities assumed at the date of
acquisition.
|
November
30, 2006
|
||||
|
Current
assets
|
$
|
28,924
|
||
|
Other
assets
|
3,730
|
|||
|
Intangible
assets
|
119,690
|
|||
|
Goodwill
|
153,297
|
|||
|
Total
assets acquired
|
305,641
|
|||
|
Current
liabilities
|
(33,201
|
)
|
||
|
Other
liabilities
|
(25,579
|
)
|
||
|
Net
assets acquired
|
$
|
246,861
|
||
Of the
$120 million of acquired intangible assets, $12 million was assigned to trade
names that are not subject to amortization. The remaining $108 million of
acquired intangible assets have a weighted-average useful life of approximately
17 years. The intangible assets that make up that amount include customer
relationships of $89 million (19 year weighted-average useful life), unpatented
technology of $11 million (9 year weighted-average useful life), software of $7
million (9 year weighted-average useful life), and patents of $1 million (8 year
weighted-average useful life).
Other 2006 Acquisitions - The
aggregate purchase price of all other acquisitions made in 2006 totaled $96
million, which includes amounts incurred for direct external transaction costs
associated with the acquisitions. We recorded approximately $63
million in goodwill and $26 million in other identifiable intangibles in
connection with these acquisitions. The majority of the goodwill is
not expected to be deductible for tax purposes.
On April
5, 2006, the Company acquired all the outstanding shares of Sinmed Holding
International B.V., a European-based maker of medical positioning equipment. The
operations of Sinmed are included in the Scientific and Industrial Imaging
segment.
On April
26, 2006, the Company acquired the assets of Intellitrans, LLC, a provider of
asset tracking technology. The operations of Intellitrans are included in the RF
Technology segment.
On July
25, 2006, the Company acquired all the outstanding shares of Lumenera
Corporation, a Canadian-based developer and manufacturer of high performance
digital cameras for industrial, scientific and security markets. The operations
of Lumenera are included in the Scientific and Industrial Imaging
segment.
On August
8, 2006, the Company acquired all the outstanding shares of AC Analytical
Controls Holding B.V., a European-based provider of chromatographic analyzers
for the petrochemical industry. The operations of AC Controls are included in
the Energy Systems and Controls segment.
Of the
$26 million of acquired intangible assets, $3 million was assigned to trade
names that are not subject to amortization. The remaining $23 million of
acquired intangible assets have a weighted-average useful life of approximately
9 years. The intangible assets that make up that amount include customer
relationships of $16 million (11 year weighted-average useful life), unpatented
technology of $5 million (5 year weighted-average useful life) and backlog of $1
million (2 year weighted-average useful life).
|
(3)
|
Inventories
|
The
components of inventories at December 31 were as follows (in
thousands):
|
2008
|
2007
|
||||||
|
Raw
materials and supplies
|
$
|
120,604
|
$
|
113,327
|
|||
|
Work
in process
|
26,913
|
28,503
|
|||||
|
Finished
products
|
68,510
|
60,698
|
|||||
|
Inventory
reserves
|
(30,108
|
)
|
(28,390
|
)
|
|||
|
$
|
185,919
|
$
|
174,138
|
||||
|
(4)
|
Property, Plant and
Equipment
|
The
components of property, plant and equipment at December 31 were as follows (in
thousands):
|
2008
|
2007
|
||||||
|
Land
|
$
|
2,947
|
$
|
2,936
|
|||
|
Buildings
|
59,821
|
52,795
|
|||||
|
Machinery,
tooling and other equipment
|
229,486
|
207,906
|
|||||
|
292,254
|
263,637
|
||||||
|
Accumulated
depreciation and amortization
|
(179,791
|
)
|
(156,124
|
)
|
|||
|
$
|
112,463
|
$
|
107,513
|
||||
Depreciation
expense was $33,900, $31,805 and $29,939 for the years ended December 31, 2008,
2007 and 2006, respectively.
|
(5)
|
Goodwill
|
|
Industrial
Technology
|
Energy
Systems and Controls
|
Scientific
and Industrial Imaging
|
RF
Technology
|
Total
|
||||||||||||
|
(in
thousands)
|
||||||||||||||||
|
Balances
at December 31, 2006
|
$
|
428,290
|
$
|
364,548
|
$
|
393,776
|
$
|
464,594
|
$
|
1,651,208
|
||||||
|
Goodwill
acquired
|
—
|
49,325
|
7,929
|
3,239
|
60,493
|
|||||||||||
|
Currency
translation adjustments
|
13,735
|
7,750
|
9,437
|
3,925
|
34,847
|
|||||||||||
|
Reclassifications
and other
|
118
|
(40,739
|
)
|
48
|
108
|
(40,465
|
)
|
|||||||||
|
Balances
at December 31, 2007
|
$
|
442,143
|
$
|
380,884
|
$
|
411,190
|
$
|
471,866
|
$
|
1,706,083
|
||||||
|
Goodwill
acquired
|
—
|
15,795
|
—
|
460,771
|
476,566
|
|||||||||||
|
Currency
translation adjustments
|
(18,482
|
)
|
(8,800
|
)
|
(10,838
|
)
|
(21,677
|
)
|
(59,797
|
)
|
||||||
|
Reclassifications
and other
|
—
|
(6,223
|
)
|
126
|
2,097
|
(4,000
|
)
|
|||||||||
|
Balances
at December 31, 2008
|
$
|
423,661
|
$
|
381,656
|
$
|
400,478
|
$
|
913,057
|
$
|
2,118,852
|
||||||
Goodwill
acquired during the year ended December 31, 2008 was attributable to the
acquisitions of CBORD, Tech-Pro, Chalwyn, Getloaded, Horizon and Technolog. The
reclassifications and other are the result of final purchase price allocations
from deferred tax accounting and final asset valuations related to 2007
acquisitions.
|
(6)
|
Other intangible
assets, net
|
|
Cost
|
Accum.
amort.
|
Net
book value
|
||||||||
|
(in
thousands)
|
||||||||||
|
Assets
subject to amortization:
|
||||||||||
|
Customer
related intangibles
|
$
|
504,850
|
$
|
(99,079
|
)
|
$
|
405,771
|
|||
|
Unpatented
technology
|
46,116
|
(13,714
|
)
|
32,402
|
||||||
|
Software
|
58,152
|
(24,278
|
)
|
33,874
|
||||||
|
Patents
and other protective rights
|
33,480
|
(18,246
|
)
|
15,234
|
||||||
|
Backlog
|
16,560
|
(13,196
|
)
|
3,364
|
||||||
|
Trade
secrets
|
6,930
|
(3,443
|
)
|
3,487
|
||||||
|
Assets
not subject to amortization:
|
||||||||||
|
Trade
names
|
119,373
|
—
|
119,373
|
|||||||
|
Balances
at December 31, 2007
|
$
|
785,461
|
$
|
(171,956
|
)
|
$
|
613,505
|
|||
|
Assets
subject to amortization:
|
||||||||||
|
Customer
related intangibles
|
$
|
683,130
|
$
|
(137,794
|
)
|
$
|
545,336
|
|||
|
Unpatented
technology
|
70,693
|
(22,232
|
)
|
48,461
|
||||||
|
Software
|
58,053
|
(30,215
|
)
|
27,838
|
||||||
|
Patents
and other protective rights
|
38,195
|
(21,998
|
)
|
16,197
|
||||||
|
Backlog
|
18,257
|
(17,024
|
)
|
1,233
|
||||||
|
Trade
secrets
|
5,116
|
(3,890
|
)
|
1,226
|
||||||
|
Assets
not subject to amortization:
|
||||||||||
|
Trade
names
|
163,729
|
—
|
163,729
|
|||||||
|
Balances
at December 31, 2008
|
$
|
1,037,173
|
$
|
(233,153
|
)
|
$
|
804,020
|
|||
Amortization
expense of other intangible assets was $64,017, $55,653, and $46,756 during the
years ended 2008, 2007 and 2006, respectively. Estimated amortization expense
for the five years subsequent to 2008 is $66,236, $62,078, $59,044, $56,120 and
$54,565 for 2009, 2010, 2011, 2012 and 2013, respectively.
|
(7)
|
Accrued
Liabilities
|
Accrued
liabilities at December 31 were as follows (in thousands):
|
2008
|
2007
|
||||||
|
Wages
and other compensation
|
$
|
63,878
|
$
|
63,365
|
|||
|
Commissions
|
13,419
|
14,081
|
|||||
|
Warranty
|
9,885
|
8,486
|
|||||
|
Accrued
dividend
|
7,403
|
6,438
|
|||||
|
Deferred
revenue
|
73,308
|
32,638
|
|||||
|
Billings
in excess of cost
|
18,398
|
9,728
|
|||||
|
Customer
deposits
|
13,825
|
8,794
|
|||||
|
Interest
|
18,649
|
6,299
|
|||||
|
Other
|
42,917
|
44,226
|
|||||
|
$
|
261,682
|
$
|
194,055
|
||||
|
(8)
|
Income
Taxes
|
Earnings
before income taxes for the years ended December 31, 2008, 2007 and 2006
consisted of the following components (in thousands):
|
2008
|
2007
|
2006
|
||||||||
|
United
States
|
$
|
267,386
|
$
|
253,841
|
$
|
191,649
|
||||
|
Other
|
168,569
|
129,816
|
101,223
|
|||||||
|
$
|
435,955
|
$
|
383,657
|
$
|
292,872
|
|||||
Components
of income tax expense for the years ended December 31, 2008, 2007 and 2006 were
as follows (in thousands):
|
2008
|
2007
|
2006
|
||||||||
|
Current:
|
||||||||||
|
Federal
|
$
|
77,920
|
$
|
82,923
|
$
|
53,937
|
||||
|
State
|
12,309
|
6,940
|
4,896
|
|||||||
|
Foreign
|
40,739
|
39,062
|
29,942
|
|||||||
|
Deferred:
|
||||||||||
|
Federal
|
19,526
|
4,343
|
11,506
|
|||||||
|
Foreign
|
(1,054
|
)
|
356
|
(733
|
)
|
|||||
|
$
|
149,440
|
$
|
133,624
|
$
|
99,548
|
|||||
Reconciliations
between the statutory federal income tax rate and the effective income tax rate
for the years ended December 31, 2008, 2007 and 2006 were as
follows:
|
2008
|
2007
|
2006
|
|||||
|
Federal
statutory rate
|
35.00
|
%
|
35.00
|
%
|
35.00
|
%
|
|
|
Extraterritorial
income exclusion
|
—
|
—
|
(1.04
|
)
|
|||
|
Foreign
rate differential
|
(2.54
|
)
|
(1.66
|
)
|
(0.97
|
)
|
|
|
R&D
tax credits
|
(0.41
|
)
|
(0.44
|
)
|
(0.36
|
)
|
|
|
State
taxes, net of federal benefit
|
2.02
|
1.93
|
1.67
|
||||
|
Other,
net
|
0.21
|
—
|
(0.31
|
)
|
|||
|
34.28
|
%
|
34.83
|
%
|
33.99
|
%
|
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):
|
2008
|
2007
|
||||||
|
Deferred
tax assets:
|
|||||||
|
Reserves
and accrued expenses
|
$
|
42,408
|
$
|
31,352
|
|||
|
Inventories
|
6,914
|
5,764
|
|||||
|
Net
operating loss carryforwards
|
3,983
|
3,930
|
|||||
|
Foreign
tax credits
|
1,244
|
7,862
|
|||||
|
R&D
credits
|
757
|
747
|
|||||
|
Plant
and equipment
|
2,134
|
1,999
|
|||||
|
Total
deferred tax assets
|
$
|
57,440
|
$
|
51,654
|
|||
|
Deferred
tax liabilities:
|
|||||||
|
Reserves
and accrued expenses
|
$
|
38,734
|
$
|
43,580
|
|||
|
Amortizable
intangible assets
|
233,130
|
180,058
|
|||||
|
Other
|
213
|
215
|
|||||
|
Total
deferred tax liabilities
|
$
|
272,077
|
$
|
223,853
|
|||
At
December 31, 2008, Roper had approximately $11.9 million of U.S. federal net
operating loss carryforwards. If not utilized, these carryforwards will expire
in years 2023 through 2027. Additionally, Roper had foreign tax credit
carryforwards and research and development credit carryforwards. Roper has not
recognized a valuation allowance 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,
2008, 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 $237.8 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.
The
Company adopted the provisions of FIN 48, “Accounting for Uncertainty in Income
Taxes - an Interpretation of FASB Statement No. 109,” on January 1, 2007. This
Interpretation requires the Company to recognize 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):
|
2008
|
2007
|
||||||
|
Beginning
balance
|
$
|
20,773
|
$
|
19,628
|
|||
|
Additions
for tax positions of prior periods
|
960
|
84
|
|||||
|
Additions
for tax positions of the current
period
|
3,086
|
2,876
|
|||||
|
Reductions
for tax positions of prior years
for:
|
|||||||
|
Settlements
with taxing authorities during the
period
|
(1,609
|
)
|
—
|
||||
|
Lapse
of applicable statute of
limitations
|
(572
|
)
|
(1,815
|
)
|
|||
|
Ending
balance
|
$
|
22,638
|
$
|
20,773
|
|||
The total
amount of unrecognized tax benefits that, if recognized, would affect the
effective tax rate is $12.0 million. Interest and penalties related to
unrecognized tax benefits are classified as a component of income tax expense
and totaled $1.1 million in 2008. Accrued interest and penalties were $2.1
million at December 31, 2007 and $3.2 million at December 31, 2008. During the
next twelve months, it is expected that the unrecognized tax benefits will be
reduced by a net $1.1 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 jurisdictions. The Company’s
federal income tax returns for 2005 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.
|
(9)
|
Long-Term
Debt
|
On July
7, 2008, the Company entered into a new $1.1 billion unsecured credit facility
with JPMorgan Chase Bank, N.A., as administrative agent, and a syndicate of
lenders, which replaces its $1.355 billion amended and restated secured credit
facility, dated as of December 13, 2004. The $1.1 billion facility is composed
of a $350.0 million term loan facility maturing July 7, 2010 and a five year
$750.0 million revolving credit facility maturing July 7, 2013. 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
$350.0 million.
On August
6, 2008, we issued $500 million aggregate principal amount of 6.625% senior
notes due August 15, 2013 (the “Notes”). 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.
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 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.
Other
debt includes $230 million of senior subordinated convertible notes due
2034.
Total
debt at December 31 consisted of the following (table amounts in
thousands):
|
2008
|
2007
|
|||||
|
$350
million term loan
|
$
|
350,000
|
$
|
—
|
||
|
$750
million revolving credit facility
|
179,000
|
—
|
||||
|
$955
million term loan
|
—
|
823,745
|
||||
|
$400
million revolving credit facility
|
—
|
—
|
||||
|
Senior
Notes
|
500,000
|
—
|
||||
|
Senior
Subordinated Convertible Notes
|
230,000
|
230,000
|
||||
|
Other
|
8,516
|
4,847
|
||||
|
Total
debt
|
1,267,516
|
1,058,592
|
||||
|
Less
current portion
|
233,827
|
331,103
|
||||
|
Long-term
debt
|
$
|
1,033,689
|
$
|
727,489
|
Our
principal $1.1 billion credit facility, $500 million senior notes and $230
million senior subordinated convertible notes provide substantially all of our
daily external financing requirements. The interest rate on the borrowings under
the $1.1 billion credit facility is calculated based upon various recognized
indices plus a margin as defined in the credit agreement. At December 31, 2008,
the weighted average interest rate on the term and revolver loans was 1.90%. At
December 31, 2008, our debt consisted of the $500 million senior notes, $230
million in senior subordinated convertible notes, $350 million term loans and a
$179 million revolver balance. In addition, we had $8.5 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 various foreign locations to support our
non-U.S. businesses and $51 million of outstanding letters of credit at December
31, 2008. We expect that our available additional borrowing capacity combined
with the cash flows expected to be generated from existing business will be
sufficient to fund normal operating requirements and finance some additional
acquisitions.
The
Company recorded a $3.1 million non-cash pre-tax debt extinguishment charge in
the third quarter of 2008 related to the early termination of the previous
$1.355 billion secured credit facility. This charge reflects the unamortized
fees associated with the $1.355 billion secured credit facility and was reported
as other expense.
In
December 2003, we 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 our existing and future senior debt.
Interest on the notes is payable semiannually, beginning July 15, 2004,
until January 15, 2009. After that date, we will not pay cash interest on
the notes prior to maturity unless contingent cash interest becomes payable.
Instead, after January 15, 2009, interest will be recognized at the
effective rate of 3.75% and will represent accrual of original 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%. As originally issued, holders could convert
their notes into 12.422 shares of our common stock (giving effect for the
2-for-1 stock split effective August 26, 2005), subject to adjustment, only (1)
if the sale price of our common stock reaches, or the trading price of the notes
falls below, specified thresholds, (2) if the notes are called for redemption,
or (3) if specified corporate transactions have occurred. Upon conversion, we
would have had the right to deliver, in lieu of our common stock, cash or common
stock or a combination of cash and common stock. On December 6, 2004, the
Company completed a consent solicitation to amend the notes such that the
Company pays the same conversion value upon conversion of the notes, but changes
how the conversion value is paid. In lieu of receiving 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 the
Company’s option, any remainder of the conversion value would be paid in cash or
shares of common stock. Holders may require us to purchase all or a portion of
their notes on January 15, 2009 at a price of $395.02 per note, 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. We may only pay the purchase
price of such notes in cash and not in common stock. In addition, if we
experience a change in control, each holder may require us 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.
As of
September 30, 2005, our $230 million of senior subordinated convertible notes
were reclassified from long term to 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.
Our $1.1
billion credit facility contains various affirmative and negative covenants
which, among other things, limit our ability to incur new 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.
At
December 31, 2008, and 2007, the Company was in compliance with our debt
covenants.
Future
maturities of long-term debt during each of the next five years ending December
31 and thereafter were as follows (in thousands):
|
2009
|
$
|
233,827
|
||
|
2010
|
351,847
|
|||
|
2011
|
1,023
|
|||
|
2012
|
523
|
|||
|
2013
|
679,340
|
|||
|
Thereafter
|
956
|
|||
|
$
|
1,267,516
|
|
(10)
|
Retirement and Other
Benefit Plans
|
Roper
maintains eight defined contribution retirement plans under the provisions of
Section 401(k) of the Internal Revenue Code covering substantially all U.S.
employees not subject to collective bargaining agreements. Roper partially
matches employee contributions. Its costs related to these plans were $12.9
million, $10.3 million and $9.9 million for 2008, 2007 and 2006,
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.
|
(11)
|
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, 2008, 5,429,000 shares were available to grant.
In 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 discount to the average closing price of its
common stock at the beginning and end of a quarterly offering period. Effective
January 1, 2008, the ESPP was modified to change the discount from 10% to 5%.
The common stock sold to the employees may be either treasury stock, stock
purchased on the open market, or newly issued shares.
The
Company recognized stock based compensation expense of $30.9 million and $20.7
million for the years ended December 31, 2008 and 2007, respectively. The total
tax effect recognized in net income related to stock based compensation during
2008 and 2007 was $10.8 million and $7.2 million, respectively. The tax benefit
from option exercises and restricted stock vesting under all plans totaled
approximately $5.6 million and $5.7 million in 2008 and 2007,
respectively.
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 $8.2 and $5.1
million of compensation expense relating to outstanding options during 2008 and
2007, respectively, as a component of corporate and certain segment general and
administrative expenses.
The
Company estimates the fair value of its option awards using the Black-Scholes
option valuation model that uses the assumptions noted in the following table.
The stock volatility for each grant is measured using the weighted average of
historical daily price changes of the Company’s common stock over the most
recent period equal to the expected life of the grant. The expected term of
options granted is derived from historical data to estimate option exercises and
employee terminations, and represents the period of time that options granted
are expected to be outstanding. The risk-free rate for periods within the
contractual life of the option is based on the U.S. Treasury yield curve in
effect at the time of grant. The weighted average fair value of options granted
in 2008, 2007 and 2006 were calculated using the following weighted average
assumptions:
|
2008
|
2007
|
2006
|
|
|
Weighted
average fair value ($)
|
12.83
|
15.50
|
13.19
|
|
Risk-free
interest rate (%)
|
2.87
|
4.69
|
4.67
|
|
Average
expected option life (years)
|
5.02
|
5.02
|
4.51
|
|
Expected
volatility (%)
|
21.10
|
23.08
|
28.24
|
|
Expected
dividend yield (%)
|
0.53
|
0.50
|
0.54
|
The
following table summarizes the Company’s activities with respect to its stock
option plans for the year ended December 31, 2008:
|
Number
of shares
|
Weighted
average exercise price per share
|
Weighted
average contractual term
|
Aggregate
intrinsic value
|
|
|
Outstanding
at January 1, 2008
|
3,656,000
|
$
30.84
|
||
|
Granted
|
1,051,000
|
55.50
|
||
|
Exercised
|
(463,000)
|
23.59
|
||
|
Canceled
|
(57,000)
|
46.74
|
||
|
Outstanding
at December 31, 2008
|
4,187,000
|
37.77
|
5.20
|
$
42,411,000
|
|
Exercisable
at December 31, 2008
|
2,611,000
|
$
28.06
|
4.01
|
$
42,285,000
|
The
following table summarizes information for stock options outstanding at December
31, 2008:
|
Outstanding
options
|
Exercisable
options
|
||||
|
Exercise
price
|
Number
|
Average
exercise
price
|
Average remaining
life
(years)
|
Number
|
Average
exercise
price
|
|
$ 3.97
– 20.00
|
609,000
|
$ 17.72
|
3.5
|
609,000
|
$ 17.72
|
|
20.01
- 30.00
|
894,000
|
21.82
|
3.8
|
894,000
|
21.82
|
|
30.01
– 40.00
|
597,000
|
31.45
|
3.8
|
593,000
|
31.39
|
|
40.01
– 50.00
|
500,000
|
43.62
|
4.3
|
332,000
|
43.64
|
|
50.00
– 60.00
|
1,559,000
|
54.81
|
7.4
|
180,000
|
53.64
|
|
60.00
– 70.81
|
28,000
|
64.10
|
7.6
|
3,000
|
64.44
|
|
$ 3.97
– 70.81
|
4,187,000
|
$ 37.77
|
5.2
|
2,611,000
|
$ 28.06
|
At
December 31, 2008, there was $14.5 million of total unrecognized compensation
expense related to nonvested options 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 2.5 years. The total intrinsic
value of options exercised in 2008 and 2007 was $16.3 million and $29.8 million,
respectively. Cash received from option exercises under all plans in 2008 and
2007 was approximately $11.0 million and $15.3 million,
respectively.
Restricted Stock Awards -
During 2008 and 2007, the Company granted 610,000 and 240,000 shares,
respectively, of restricted stock to certain employee and director participants
under the 2006 Plan. Restricted stock awards generally vest over a period of 1
to 3 years. The weighted average fair value of the shares granted in 2008 was
$55.68 per share. The Company recorded approximately $22.7 million and $15.3
million of compensation expense related to outstanding shares of restricted
stock held by employees and directors during 2008 and 2007, respectively. A
summary of the Company’s nonvested shares activity for 2008 is as
follows:
|
Number
of shares
|
Weighted
average fair value
|
|
|
Nonvested
at January 1, 2008
|
663,000
|
$ 43.13
|
|
Granted
|
610,000
|
55.68
|
|
Vested
|
(476,000)
|
51.65
|
|
Forfeited
|
(5,000)
|
54.45
|
|
Nonvested
at December 31, 2008
|
792,000
|
$ 53.83
|
At
December 31, 2008, there was $25.4 million of total unrecognized compensation
expense related to nonvested shares 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 3.1 years. There were 476,000 and
231,000 shares that vested during 2008 and 2007, respectively. Unrecognized
compensation expense related to nonvested shares of restricted stock awards is
recorded as a reduction to additional paid-in capital in shareholder’s equity at
December 31, 2008.
Employee Stock Purchase Plan -
During 2008, 2007 and 2006, participants of the ESPP purchased 34,000, 33,000
and 38,000 shares, respectively, of Roper’s common stock for total consideration
of $1.9 million, $1.7 million, and $1.6 million, respectively. All of these
shares were purchased from Roper’s treasury shares. The Company recorded $0,
$250,000, and $227,000 of compensation expense relating to the stock purchase
plan during 2008, 2007 and 2006, respectively.
|
(12)
|
Common Stock
Transactions
|
At the
2006 Shareholder Meeting, shareholders approved an amendment to the Restated
Certificate of Incorporation, to eliminate time phase voting and give all
outstanding shares of common stock of the Company one vote on matters properly
submitted to the shareholders of the Company for their vote. Previously, Roper’s
restated Certificate of Incorporation provided that each outstanding share of
Roper’s common stock entitled the holder thereof to five votes per share, except
that holders of outstanding shares with respect to which there had been a change
in beneficial ownership during the four years immediately preceding the
applicable record date would have been entitled to one vote per
share.
On
January 8, 2006, the Roper Shareholder Rights Plan expired. This plan had
provided that one Preferred Stock Purchase Right (a “Right”) accompanied each
outstanding share of common stock. Such Rights only became exercisable, or
transferable apart from the common stock, ten business days after a person or
group acquires various specified levels of beneficial ownership.
|
(13)
|
Contingencies
|
Roper, in
the ordinary course of business, is the subject of, or a party to, various
pending or threatened legal actions, including those pertaining to product
liability and employment practices. It is vigorously contesting all lawsuits
that, in general, are based upon claims of the kind that have been customary
over the past several years. After analyzing the Company’s contingent
liabilities on a gross basis and, based upon past experience with resolution of
its product liability and employment practices claims and the limits of the
primary, excess, and umbrella liability insurance coverages that are available
with respect to pending claims, management believes that adequate provision has
been made to cover any potential liability not covered by insurance, and that
the ultimate liability, if any, arising from these actions should not have a
material adverse effect on 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 industrial companies. Roper
or its subsidiaries have been named defendants in some such cases. No
significant resources have been required by Roper to respond to these cases and
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 approximately $24.8 million, $25.4 million and $21.8 million
for 2008, 2007 and 2006, respectively. Roper’s future minimum
property lease commitments totaled $93.6 million at December 31, 2008.
These commitments included $24.2 million in 2009, $19.2 million in 2010, $13.0
million in 2011, $10.2 million in 2012, $8.0 million in 2013 and $19.0 million
thereafter.
A summary
of the Company’s warranty accrual activity for the year ended December 31, 2008
is presented below (in thousands):
|
Balance
at beginning
of year
|
Additions
charged to costs and
expenses
|
Deductions
|
Other
|
Balance
at end
of year
|
|
$ 8,486
|
9,920
|
(8,415)
|
(106)
|
$
9,885
|
At
December 31, 2008 the Company had outstanding surety bonds of $239
million.
|
(14)
|
Segment and Geographic
Area Information
|
Our
operations are reported in four market-focused segments around common customers,
markets, sales channels, technologies and common cost opportunities. The
segments are: Industrial Technology, Energy Systems and Controls, Scientific and
Industrial Imaging, and RF Technology. Products included within the Industrial
Technology segment are industrial pumps, flow measurement and metering
equipment, and 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 and other non-destructive inspection and
measurement products and services. Our Scientific and Industrial Imaging segment
offers high performance digital imaging products and software, patient
positioning products and software in medical applications and handheld and
vehicle mounted computers and software. The RF Technology segment includes
products and systems related to comprehensive toll and traffic systems and
processing, security and access control, campus card systems, freight matching,
mobile asset tracking and water sub-metering and remote temperature monitoring
applications. Roper’s management structure and internal reporting are also
aligned consistent with these four segments.
There
were no material transactions between Roper’s business segments during 2008,
2007 and 2006. 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 sales
less operating costs and expenses. These costs and expenses do not include
unallocated corporate 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,
recoverable insurance claims, deferred compensation assets, unamortized deferred
financing costs and property and equipment.
Selected
financial information by business segment for 2008, 2007 and 2006 follows (in
thousands):
|
Industrial
Technology
|
Energy
Systems and Controls
|
Scientific
and Industrial Imaging
|
RF
Technology
|
Corporate
|
Total
|
||||||||||||||||||||
|
2008
|
|||||||||||||||||||||||||
|
Net
sales
|
$
|
687,622
|
$
|
548,214
|
$
|
375,542
|
$
|
694,993
|
$
|
—
|
$
|
2,306,371
|
|||||||||||||
|
Operating
profit
|
178,270
|
126,609
|
74,739
|
159,787
|
(53,244
|
)
|
486,161
|
||||||||||||||||||
|
Total
assets:
|
|||||||||||||||||||||||||
|
Operating
assets
|
184,445
|
199,049
|
126,657
|
246,785
|
6,375
|
763,311
|
|||||||||||||||||||
|
Intangible
assets, net
|
639,988
|
538,367
|
473,655
|
1,270,862
|
—
|
2,922,872
|
|||||||||||||||||||
|
Other
|
6,814
|
3,522
|
24,322
|
(12,975
|
)
|
(8,405
|
)
|
13,278
|
|||||||||||||||||
|
Total
|
3,699,461
|
||||||||||||||||||||||||
|
Capital
expenditures
|
12,385
|
6,618
|
2,895
|
7,905
|
244
|
30,047
|
|||||||||||||||||||
|
Depreciation
and other amortization
|
24,899
|
19,568
|
17,780
|
38,439
|
2,422
|
103,108
|
|||||||||||||||||||
|
2007
|
|||||||||||||||||||||||||
|
Net
sales
|
$
|
644,436
|
$
|
516,420
|
$
|
376,163
|
$
|
565,030
|
$
|
—
|
$
|
2,102,049
|
|||||||||||||
|
Operating
profit
|
164,750
|
126,367
|
73,230
|
117,057
|
(43,050
|
)
|
438,354
|
||||||||||||||||||
|
Total
assets:
|
|||||||||||||||||||||||||
|
Operating
assets
|
183,639
|
209,152
|
129,342
|
191,889
|
8,060
|
722,082
|
|||||||||||||||||||
|
Intangible
assets, net
|
671,806
|
550,798
|
497,072
|
599,912
|
—
|
2,319,588
|
|||||||||||||||||||
|
Other
|
37,665
|
30,749
|
21,601
|
23,236
|
74,410
|
187,661
|
|||||||||||||||||||
|
Total
|
3,229,331
|
||||||||||||||||||||||||
|
Capital
expenditures
|
9,687
|
6,749
|
4,752
|
8,823
|
96
|
30,107
|
|||||||||||||||||||
|
Depreciation
and other amortization
|
25,601
|
19,093
|
18,183
|
28,079
|
2,224
|
93,180
|
|||||||||||||||||||
|
2006
|
|||||||||||||||||||||||||
|
Net
sales
|
$
|
549,993
|
$
|
343,699
|
$
|
338,906
|
$
|
468,136
|
$
|
—
|
$
|
1,700,734
|
|||||||||||||
|
Operating
profit
|
128,668
|
90,390
|
72,485
|
81,068
|
(34,958
|
)
|
337,653
|
||||||||||||||||||
|
Total
assets:
|
|||||||||||||||||||||||||
|
Operating
assets
|
175,426
|
184,653
|
133,899
|
145,876
|
7,258
|
647,112
|
|||||||||||||||||||
|
Intangible
assets, net
|
669,491
|
438,261
|
478,356
|
609,236
|
—
|
2,195,344
|
|||||||||||||||||||
|
Other
|
4,348
|
6,728
|
20,283
|
(10,949
|
)
|
(39,215
|
)
|
(18,805
|
)
|
||||||||||||||||
|
Total
|
2,823,651
|
||||||||||||||||||||||||
|
Capital
expenditures
|
11,966
|
10,108
|
3,595
|
6,194
|
290
|
32,153
|
|||||||||||||||||||
|
Depreciation
and other amortization
|
26,256
|
8,383
|
16,212
|
28,979
|
2,214
|
82,044
|
|||||||||||||||||||
Summarized
data for Roper’s U.S. and foreign operations (principally in Canada, Europe and
Asia) for 2008, 2007 and 2006, based upon the country of origin of the Roper
entity making the sale, was as follows:
|
United
States
|
Non-U.S.
|
Eliminations
|
Total
|
||||||||||
|
(in
thousands)
|
|||||||||||||
|
2008
|
|||||||||||||
|
Sales
to unaffiliated customers
|
$
|
1,709,844
|
$
|
596,507
|
$
|
—
|
$
|
2,306,351
|
|||||
|
Sales
between geographic areas
|
102,954
|
182,551
|
(285,505
|
)
|
—
|
||||||||
|
Net
sales
|
$
|
1,812,798
|
$
|
779,058
|
$
|
(285,505
|
)
|
$
|
2,306,351
|
||||
|
Long-lived
assets
|
$
|
122,005
|
$
|
29,131
|
$
|
—
|
$
|
151,136
|
|||||
|
2007
|
|||||||||||||
|
Sales
to unaffiliated customers
|
$
|
1,572,660
|
$
|
529,389
|
$
|
—
|
$
|
2,102,049
|
|||||
|
Sales
between geographic areas
|
90,268
|
165,735
|
(256,003
|
)
|
—
|
||||||||
|
Net
sales
|
$
|
1,662,928
|
$
|
695,124
|
$
|
(256,003
|
)
|
$
|
2,102,049
|
||||
|
Long-lived
assets
|
$
|
125,800
|
$
|
27,439
|
$
|
—
|
$
|
153,239
|
|||||
|
2006
|
|||||||||||||
|
Sales
to unaffiliated customers
|
$
|
1,305,772
|
$
|
394,962
|
$
|
—
|
$
|
1,700,734
|
|||||
|
Sales
between geographic areas
|
86,491
|
120,502
|
(206,993
|
)
|
—
|
||||||||
|
Net
sales
|
$
|
1,392,263
|
$
|
515,464
|
$
|
(206,993
|
)
|
$
|
1,700,734
|
||||
|
Long-lived
assets
|
$
|
118,692
|
$
|
26,241
|
$
|
—
|
$
|
144,933
|
|||||
Export
sales from the United States during the years ended December 31, 2008, 2007 and
2006 were $358 million, $359 million and $234 million, respectively. In the year
ended December 31, 2008, these exports were shipped primarily to Europe (26%),
Canada (15%), Middle East (13%), Japan (7%), China (6%), South America (6%),
rest of Asia (17%), and other (10%).
Sales to
customers outside the United States 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, 2008, 2007 and 2006 are shown below by region, except
for Canada, which is the only country in which we have had greater than 5% of
our total sales for any of the three years presented.
|
Industrial
Technology
|
Energy
Systems and Controls
|
Scientific
and Industrial Imaging
|
RF
Technology
|
Total
|
||||||||||||
|
(in
thousands)
|
||||||||||||||||
|
2008
|
||||||||||||||||
|
Canada
|
$
|
39,831
|
$
|
40,951
|
$
|
8,814
|
$
|
30,909
|
$
|
120,505
|
||||||
|
Europe
|
110,590
|
171,627
|
111,373
|
21,372
|
414,962
|
|||||||||||
|
Asia
|
50,333
|
90,265
|
69,820
|
4,473
|
214,891
|
|||||||||||
|
Middle
East
|
3,766
|
23,506
|
1,576
|
34,418
|
63,266
|
|||||||||||
|
Rest
of the world
|
27,406
|
58,330
|
7,732
|
11,993
|
105,461
|
|||||||||||
|
Total
|
$
|
231,926
|
$
|
384,679
|
$
|
199,315
|
$
|
103,165
|
$
|
919,085
|
||||||
|
2007
|
||||||||||||||||
|
Canada
|
$
|
39,841
|
$
|
38,306
|
$
|
6,331
|
$
|
31,506
|
$
|
115,984
|
||||||
|
Europe
|
97,394
|
163,640
|
111,614
|
5,073
|
377,721
|
|||||||||||
|
Asia
|
43,873
|
84,925
|
68,721
|
907
|
198,426
|
|||||||||||
|
Middle
East
|
3,722
|
27,171
|
1,381
|
52,669
|
84,943
|
|||||||||||
|
Rest
of the world
|
22,311
|
45,194
|
7,569
|
6,426
|
81,500
|
|||||||||||
|
Total
|
$
|
207,141
|
$
|
359,236
|
$
|
195,616
|
$
|
96,581
|
$
|
858,574
|
||||||
|
2006
|
||||||||||||||||
|
Canada
|
$
|
34,259
|
$
|
19,763
|
$
|
4,668
|
$
|
25,908
|
$
|
84,598
|
||||||
|
Europe
|
81,799
|
115,790
|
87,822
|
2,534
|
287,945
|
|||||||||||
|
Asia
|
39,248
|
44,589
|
65,277
|
517
|
149,631
|
|||||||||||
|
Middle
East
|
3,815
|
25,573
|
1,119
|
4,348
|
34,855
|
|||||||||||
|
Rest
of the world
|
12,823
|
34,014
|
5,454
|
953
|
53,244
|
|||||||||||
|
Total
|
$
|
171,944
|
$
|
239,729
|
$
|
164,340
|
$
|
34,260
|
$
|
610,273
|
||||||
|
(15)
|
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.
|
(16)
|
Quarterly Financial
Data (unaudited)
|
|
First
Quarter
|
Second
Quarter
|
Third
Quarter
|
Fourth
Quarter
|
||||||||||
|
(in
thousands, except per share data)
|
|||||||||||||
|
2008
|
|||||||||||||
|
Net
sales
|
$
|
542,995
|
$
|
594,414
|
$
|
593,100
|
$
|
575,862
|
|||||
|
Gross
profit
|
276,390
|
305,330
|
308,760
|
297,808
|
|||||||||
|
Income
from operations
|
108,266
|
126,541
|
132,299
|
119,055
|
|||||||||
|
Net
earnings
|
63,582
|
75,673
|
75,199
|
72,061
|
|||||||||
|
Earnings
from continuing operations before change in accounting principle per
common share:
|
|||||||||||||
|
Basic
|
0.71
|
0.85
|
0.84
|
0.80
|
|||||||||
|
Diluted
|
0.68
|
0.80
|
0.80
|
0.78
|
|||||||||
|
2007
|
|||||||||||||
|
Net
sales
|
$
|
478,427
|
$
|
530,636
|
$
|
532,902
|
$
|
560,084
|
|||||
|
Gross
profit
|
238,148
|
262,395
|
271,779
|
286,073
|
|||||||||
|
Income
from operations
|
92,851
|
107,956
|
113,738
|
123,809
|
|||||||||
|
Net
earnings
|
51,434
|
61,229
|
65,140
|
72,230
|
|||||||||
|
Earnings
from continuing operations before change in accounting principle per
common share:
|
|||||||||||||
|
Basic
|
0.59
|
0.69
|
0.74
|
0.81
|
|||||||||
|
Diluted
|
0.56
|
0.66
|
0.70
|
0.77
|
|||||||||
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, 2008, 2007 and 2006|
Balance
at beginning of year
|
Additions
charged to costs and expenses
|
Deductions
|
Other
|
Balance
at end
of
year
|
||
|
(in
thousands)
|
||||||
|
Allowance
for doubtful accounts and sales allowances
|
||||||
|
2008
|
$
11,907
|
$
5,953
|
$
(5,402)
|
$ 200
|
$
12,658
|
|
|
2007
|
9,003
|
4,957
|
(2,429)
|
376
|
11,907
|
|
|
2006
|
8,625
|
1,259
|
(1,539)
|
658
|
9,003
|
|
|
Reserve
for inventory obsolescence
|
||||||
|
2008
|
$
28,390
|
$ 6,321
|
$
(4,063)
|
$ (540)
|
$
30,108
|
|
|
2007
|
27,348
|
4,649
|
(5,402)
|
1,795
|
28,390
|
|
|
2006
|
25,420
|
5,220
|
(5,366)
|
2,074
|
27,348
|
|
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.
|
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, 2008. The Company’s
internal control over financial reporting as of December 31, 2008 has been
audited by PricewaterhouseCoopers LLP, an independent registered public
accounting firm, as stated in their report which is included herein, which
expresses an unqualified opinion on the effectiveness of the Company’s internal
control over financial reporting as of December 31, 2008.
Management
excluded CBORD, Tech-Pro, Chalwyn, Getloaded, Horizon and Technolog from its
assessment of internal control over financial reporting as of December 31, 2008,
because they were acquired by the Company in purchase business combinations
during 2008. CBORD, Tech-Pro, Chalwyn, Getloaded, Horizon and Technolog are
wholly-owned subsidiaries whose excluded aggregate assets represent 7.2%, and
whose aggregate total revenues represent 5.4%, of the related consolidated
financial statement amounts as of and for the year ended December 31,
2008.
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, 2008.
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 periods specified in the Securities and Exchange Commission’s
rules and forms. Disclosure controls and procedures include, without limitation,
controls and procedures designed to ensure that information required to be
disclosed by the Company in the reports that we file or submit under the
Exchange Act are accumulated 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 the Company’s internal control over financial reporting that
occurred during the fourth quarter that has materially affected, or is
reasonably likely to materially affect, the Company’s 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 2008 that were not filed.
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
3, 2009, as specified below:
|
ITEM
10.
|
DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE
|
“Board of
Directors;” “Section 16(a) Beneficial Ownership Reporting Compliance;”
“Corporate Governance;” 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, 2008 regarding
compensation plans (including individual compensation arrangements) under which
our equity securities are authorized for issuance.
|
Plan
Category
|
(a)
Number
of Securities to be Issued Upon Exercise of Outstanding Options, Warrants
and Rights
|
(b)
Weighted-Average
Exercise Price of Outstanding Options, Warrants and Rights
|
(c)
Number
of Securities Remaining Available for Future Issuance Under Equity
Compensation Plans (Excluding Securities Reflected in
Column (a))
|
|
Equity
Compensation Plans Approved by Shareholders (1)
|
4,187,000
|
$
37.77
|
5,429,000
|
|
Equity
Compensation Plans Not Approved by Shareholders
|
-
|
-
|
-
|
|
Total
|
4,187,000
|
$
37.77
|
5,429,000
|
|
(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 “Ratification of the Selection of an Independent Registered
Public Accountants.”
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, 2008 and 2007
Consolidated
Statements of Earnings for the years ended December 31, 2008, 2007 and
2006
Consolidated
Statements of Stockholders’ Equity and Comprehensive Earnings for the years
ended December 31, 2008, 2007 and 2006
Consolidated
Statements of Cash Flows for the years ended December 31, 2008, 2007 and
2006
Notes to
Consolidated Financial Statements
|
|
(2)
|
Consolidated
Valuation and Qualifying Accounts for the years ended December 31, 2008,
2007 and 2006
|
|
(b)
|
Exhibits
|
|
Exhibit
No.
|
Description
of Exhibit
|
|
|
(a)3.1
|
Amended
and Restated Certificate of Incorporation.
|
|
|
(b)3.2
|
Amended
and Restated By-Laws.
|
|
|
(c)3.3
|
Certificate
of Amendment, amending Restated Certificate of
Incorporation.
|
|
|
(d)3.4
|
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.
|
|
|
(e)3.5
|
Certificate
of Amendment, amending Restated Certificate of
Incorporation.
|
|
|
(f)4.2
|
Form
of Indenture for Debt Securities.
|
|
|
4.3
|
Form
of Debt Securities (included in Exhibit 4.4).
|
|
|
(g)4.4
|
First
Supplemental Indenture between Roper Industries, Inc. and SunTrust Bank,
dated as of December 29, 2003.
|
|
|
(h)4.5
|
Second
Supplemental Indenture between Roper Industries, Inc. and Sun Trust Bank,
dated as of December 7, 2004.
|
|
|
(i)4.6
|
Form
of Senior Indenture.
|
|
|
4.7
|
Form
of Note (included in Exhibit 4.6).
|
|
|
(j)10.01
|
1991
Stock Option Plan, as amended. †
|
|
|
(k)10.02
|
1993
Stock Plan for Nonemployee Directors, as amended and restated. †
|
|
|
(l)10.03
|
Form
of Amended and Restated Indemnification Agreement. †
|
|
|
10.04
|
Employee
Stock Purchase Plan, as amended, filed herewith. †
|
|
|
10.05
|
2000
Stock Incentive Plan, as amended, filed herewith. †
|
|
|
10.06
|
Non-Qualified
Retirement Plan, as amended, filed herewith. †
|
|
|
10.07
|
Brian
D. Jellison Employment Agreement, dated as of December 29, 2008, filed
herewith. †
|
|
|
(m)10.08
|
Timothy
J. Winfrey offer letter dated May 20, 2002. †
|
|
|
(n)10.09
|
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 administrative agent.
|
|
|
(o)10.10
|
Form
of Executive Officer Restricted Stock Award Agreement.
†
|
|
|
(o)10.11
|
Brian
D. Jellison Restricted Stock Unit Award Agreement. †
|
|
|
(p)10.12
|
Offer
letter for John Humphrey, dated March 31, 2006. †
|
|
|
(q)10.13
|
2006
Incentive Plan, as amended. †
|
|
|
(r)10.14
|
Form
of Restricted Stock Agreement for Employee Directors. †
|
|
|
(r)10.15
|
Form
of Restricted Stock Agreement for Non-Employee Directors.
†
|
|
|
(r)10.16
|
Form
of Restricted Stock Agreement for Employees. †
|
|
|
(r)10.17
|
Form
of Incentive Stock Option Agreement. †
|
|
|
(r)10.18
|
Form
of Non-Statutory Stock Option Agreement. †
|
|
|
10.19
|
Director
Compensation Plan, as amended, filed herewith. †
|
|
|
10.20
|
David
B. Liner offer letter dated July 21, 2005, filed herewith.
†
|
|
|
10.21
|
Amendment
to John Humphrey offer letter, filed herewith. †
|
|
|
10.22
|
Amendment
to Timothy J. Winfrey offer letter, filed herewith. †
|
|
|
10.23
|
Amendment
to David B. Liner offer letter, filed herewith. †
|
|
|
21.1
|
List
of Subsidiaries, filed herewith.
|
|
|
23.1
|
Consent
of Independent Registered Public Accounting Firm, filed
herewith.
|
|
|
31.1
|
Rule
13a-14(a)/15d-14(a) Certification of Chief Executive Officer, filed
herewith.
|
|
|
31.2
|
Rule
13a-14(a)/15d-14(a) Certification of Chief Financial Officer, filed
herewith.
|
|
|
32.1
|
Section
1350 Certification of Chief Executive and Chief Financial Officers, filed
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 3.1 to the Roper Industries, Inc. Current
Report on Form 8-K filed February 19, 2009 (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).
|
|
|
(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 4.1 to the Registration Statement on Form
S-3 filed July 29, 2008 (file no. 333-152590).
|
|
|
(j)
|
Incorporated
herein by reference to Exhibit 10.02 to the Roper Industries, Inc. Annual
Report on Form 10-K filed January 21, 1998 (file no.
1-12273).
|
|
|
(k)
|
Incorporated
herein by reference to Exhibit 10.2 to the Roper Industries, Inc.
Quarterly Report on Form 10-Q filed June 16, 2003 (file no.
1-12273).
|
|
|
(l)
|
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).
|
|
|
(m)
|
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).
|
|
|
(n)
|
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).
|
|
|
(o)
|
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).
|
|
|
(p)
|
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)
|
|
|
(q)
|
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)
|
|
|
(r)
|
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).
|
|
|
†
|
Management
contract or compensatory plan or
arrangement.
|
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
|
February
27, 2009
|
|
Brian
D. Jellison, President and Chief Executive Officer
|
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
|
President,
Chief Executive Officer and
|
||
|
Brian
D. Jellison
|
Chairman
of the Board of Directors
|
February
27, 2009
|
|
|
(Principal
Executive Officer)
|
|||
|
/S/
JOHN HUMPHREY
|
Vice
President, Chief Financial Officer
|
||
|
John
Humphrey
|
(Principal
Financial Officer)
|
February
27, 2009
|
|
|
/S/
PAUL J. SONI
|
Vice
President and Controller
|
||
|
Paul
J. Soni
|
(Principal
Accounting Officer)
|
February
27, 2009
|
|
|
/S/
W. LAWRENCE BANKS
|
|||
|
W.
Lawrence Banks
|
Director
|
February
27, 2009
|
|
|
/S/
DAVID W. DEVONSHIRE
|
|||
|
David
W. Devonshire
|
Director
|
February
27, 2009
|
|
|
/S/
JOHN F. FORT, III
|
|||
|
John
F. Fort, III
|
Director
|
February
27, 2009
|
|
|
/S/
ROBERT D. JOHNSON
|
|||
|
Robert
D. Johnson
|
Director
|
February
27, 2009
|
|
|
/S/
ROBERT E. KNOWLING
|
|||
|
Robert
E. Knowling
|
Director
|
February
27, 2009
|
|
|
/S/
WILBUR J. PREZZANO
|
|||
|
Wilbur
J. Prezzano
|
Director
|
February
27, 2009
|
|
|
/S/
RICHARD F. WALLMAN
|
|||
|
Richard
F. Wallman
|
Director
|
February
27, 2009
|
|
|
/S/
CHRISTOPHER WRIGHT
|
|||
|
Christopher
Wright
|
Director
|
February
27,
2009
|
Exhibit 10.4
ROPER
INDUSTRIES, INC.
AMENDED
AND RESTATED EMPLOYEE STOCK PURCHASE PLAN
This
Documents restates in its entirety the Employee Stock Purchase Plan previously
adopted by the shareholders of the Company on March 17, 2000 and includes the
amendments thereto adopted by the Board of Directors of the Company and
implemented on July 1, 2001 and August 30, 2007.
1. Purpose. The
purpose of the Roper Industries, Inc. Employee stock Purchase Plan (the “Plan”)
is to provide employees of the subsidiaries of Roper Industries, Inc. (the
“Company”) with an opportunity to participate in the benefit of stock ownership
and to acquire an interest in the Company through the purchase of common stock,
$.01 par value per share, of the Company (the “Common Stock”). The
Company intends the Plan to qualify as an employee stock purchase plan under
Section 423 of the Internal Revenue Code of 1986, as amended (the
“Code”). Accordingly, the provisions of the Plan shall be construed
so as to extend and limit participation in a manner consistent with the
requirements of Code Section 423.
2. Definitions.
(a) “Compensation”
means the base pay, commissions and bonus amount paid to an Employee by a Plan
Sponsor with respect to an Offering Period (defined below). Bonuses
and commissions shall be treated as Compensation, if at all, pursuant to such
rules as may be determined from time to time by the Company.
(b) “Employee”
shall mean any person, including an officer, who is customarily employed for
more than 20 hours per week and for more than five months during any calendar
year, and who is having payroll taxes withheld from his/her Compensation on a
regular basis, by a Plan Sponsor.
(c) “Plan
Sponsor” means the Company and any Subsidiary which adopts the Plan with the
approval of the Company.
(d) “Subsidiary”
means an entity which may be treated as a “subsidiary corporation” within the
meaning of Code Section 424(f).
3. Eligibility.
(a) Any
Employee who has been employed by a Plan Sponsor for at least six months
immediately before the Beginning Date (defined below) of an Offering Period
(defined below) shall be eligible to participate in the Plan for that Offering
Period.
(b) No
Employee shall be granted purchase rights if, immediately after the grant, that
Employee would own shares or hold outstanding rights to purchase shares, or
both, possessing five percent (5%) or more of the total combined voting power or
value of all classes of the Company or any Subsidiaries.
(c) A
person shall cease to be an active participant upon the earliest to occur
of:
(i) the date
of a withdrawal under Paragraph 10(a) or (b) below; or
(ii) the date
of a termination of employment from all Plan Sponsors.
4. Offering
Period. Offering Period shall mean each calendar quarter
beginning with the calendar quarter commencing January 1, 2000 and each calendar
quarter thereafter until the Plan is otherwise amended or
terminated. Each Offering Period will begin on the first day of that
period (the “Beginning Date”) and end on the last day of that period
(the “Exercise Date”).
5. Participation. The
Company will make available to each eligible Employee an authorization notice
(the “Authorization”) which must be completed to effect his or her right to
commence participation in the Plan. An eligible Employee may become a
participant for an Offering Period by completing the Authorization and
delivering same to the Company at least one day prior to the appropriate
Beginning Date (except, with respect to the first Beginning Date, such later
date as is administratively feasible). All employees granted purchase
rights under the Plan shall have the same rights and privileges, except that the
amount of Common Stock which may be purchase under such rights may vary in a
uniform manner according to Compensation.
A
participant will be deemed to have elected to participate in each subsequent
Offering Period following his or her initial election to participate following
his or her initial election to participate in the Plan, unless (i) a written
withdrawal notice for that period is delivered to the Plan Administrator at
least one week prior to the Beginning Date of an immediately succeeding Offering
Period for which the participant desires to withdraw from participation and (ii)
provides other information in accordance with the procedures designated by the
Plan Administrator.
A
participant who has elected not to participate in an Offering Period may resume
participation in the same manner and pursuant to the same rules as any eligible
Employee making an initial election to participate in the Plan.
6. Method of
Payment. A participant may contribute to the Plan through
payroll deductions, as follows:
(a) A
participant shall elect on the Authorization to have deduction made from the
participant’s Compensation for the Offering Period at a rate which, expressed as
a percentage of Compensation in whole number increments of at least one percent
(1%), but not in excess of ten percent (10%), of the participant’s
Compensation.
(b) All
payroll deductions made for a participant shall be credited to the participant’s
account under the Plan. All payroll deductions made from
participants’ Compensation shall be commingled with the general assets of the
Company and no separate fund shall be established. Participants
accounts are solely for bookkeeping purposes and the Company shall not be
obligated to pay interest on any payroll deductions credited to participant’s
accounts.
(c) A
participant may not alter the rate of payroll deductions during the Offering
Period; however, an existing participant may change the rate of payroll
deductions effective for the immediately succeeding Offering Period by filing a
revised Authorization within the same deadline as applies to new participants
for that Offering Period.
(d) Dividends
paid on shares of Common Stock held by the custodian identified in Paragraph 9
for the benefit of a participant also shall be applied to the purchase of shares
of Common Stock for the Offering Period in which the dividends are paid, unless
the participant has withdrawn from the Plan or otherwise ceases to be an active
participant (such dividends are referred to herein as ‘Credited
Dividends’). Credited Dividends shall be credited to the
participant’s bookkeeping account under the Plan; shall be commingled with the
general assets of the Company and the Company shall not be obligated to pay
interest on any such dividends.
7. Granting
of Purchase Rights.
(a) As
of the first day of each Offering Period, a participant shall be granted
purchase rights for a number of shares of Common Stock, subject to the
adjustments provided for in Paragraph 11 (a) below, determined according to the
following procedure:
Step 1
- - Determine
the amount of the participant payroll deduction and Credited Dividends during
the Offering Period;
Step 2
- - Determine
the amount which represents the Purchase Price (as defined below);
and
Step 3
- - Divide
the amount determined in Step 1 by the amount determined in Step 2 and round the
quotient down to the nearest whole number.
Notwithstanding the foregoing and
subject to Paragraph 7(c) below, the maximum number of shares of Common Stock
for which a participant may be granted purchase rights for an Offering Period is
775.
(b) For
each Offering Period, the purchase price of shares of Common Stock to be
purchased with a participant’s payroll deductions and Credited Dividends shall
be the average of (i) 95% of the fair market value of a share of Common Stock on
the Beginning Date, and (ii) 95% of the price of the fair market value of a
share of Common stock on the Exercise Date (the “Purchase Price”).
(c) Notwithstanding
the foregoing, no participant shall be granted purchase rights which permit that
to purchase shares under all employee purchase plans of the Company and its
Subsidiaries at a rate which exceeds $25,000 of the fair market value of the
shares (determined at the time the rights are granted) for each calendar year in
which such rights are outstanding at any time.
(d) For
purposes of this Paragraph, the fair market value of a share of Common Stock on
the Beginning Date and the Exercise Date as of each such date, or the most
immediately preceding business day with respect to which the information
required in the following clauses is available, shall be determined as
follows: (i) if the Common Stock is traded on a national securities
exchange, the closing sale price on that date; (ii) if the Common
Stock is not traded on any such exchange, the closing sale price as reported by
the National Association of Securities Dealers, Inc. Automated Quotation Systems
(“NASDAQ”)); (iii) if no such closing sale price information is available on the
national securities exchange or NASDAQ, the average of the closing bid and asked
prices as reported by the national securities exchange or NASDAQ within a
reasonable period prior to such date; or (iv) if there are no such closing bid
and asked prices within a reasonable period, the determination of fair market
value shall be determined by the Company taking into account material facts and
circumstances pertinent to such determination, as determined by the Company in
its sole discretion.
8. Exercise of Purchase
Rights. Unless a timely withdrawal has been effected pursuant
to Paragraph 10 below, a participant’s rights for the purchase of shares of
Common Stock during an Offering Period will be automatically exercised on the
Exercise Date for that Offering Period for the purchase of the maximum number of
full shares which the sum of the payroll deductions and Credited Dividends
credited to the participant’s account on that Exercise Date can purchase at the
Purchase Price.
9. Delivery. As soon
as administratively feasible after the end of each Exercise Date, the Company
shall deliver to a custodian designated by the Plan Administrator (as defined in
Paragraph 12 below), the shares of Common Stock purchased upon the exercise of
the purchase rights. A participant shall not be allowed to sell,
assign, pledge or otherwise transfer any shares of Common Stock purchased by him
or her under the Plan until the expiration of fifteen (15) months from the last
day of the Offering Period for which such shares were acquired (the “Applicable
Restriction Period”) except as contemplated by Paragraph 13. Once any
Applicable Restriction Period has expired, a participant may elect at any time
thereafter to have the applicable shares of Common Stock delivered to the
participant or to an account established by the participant with any brokerage
firm. The disposition of any payroll deductions and Credited Dividends credited
to a participant’s account during the Offering Period not used for the purchase
of shares (the “Cash Excess”) shall be as follows:
(a) If
the participant has elected to withdraw from the Plan as of the end of the
Offering Period, the Plan Administrator shall deliver the Cash Excess to the
participant.
(b) If
the participant has not elected to withdraw from the Plan as of the end of the
Offering Period, the Cash Excess shall be applied to the purchase of shares of
Common Stock in the immediately succeeding Offering Period.
A
participant may not direct the Plan Administrator to sell any shares of Common
Stock credited to his or her account, regardless of whether such shares are
otherwise immediately deliverable to him or her, The cost of any
disposition of shares of Common Stock acquired through participation in the Plan
shall be the sole responsibility of the participant.
10. Withdrawal.
(a) A
participant will be deemed to have elected to participate in each subsequent
Offering Period following his or her initial election to participate in the
Plan, unless (i) a written withdrawal notice is delivered to the Plan
Administrator at least one week prior to the Beginning Date of an immediately
succeeding Offering Period for which the participant desires to withdraw from
the Plan and, (ii) provides any other information in accordance with the
procedures designated by the Plan Administrator.
(b) A
participant who for any reason, including retirement, termination of employment
or death, ceases to be an eligible Employee prior to the Exercise Date during an
Offering Period will be deemed to have requested a withdrawal from the Plan as
of the date of retirement, termination of employment or death.
(c) Upon
the withdrawal of a participant from the Plan under the terms of this Paragraph
during an Offering Period, the participant’s unexercised purchase rights under
this Plan shall immediately terminate.
(d) In
the event a participant withdraws or is deemed to have withdrawn from the Plan
under this Paragraph, all payroll deductions and Credited Dividends credited to
the participant’s account will be paid to the participant as soon as
administratively feasible after the end of the calendar year in which the
withdrawal is deemed to have occurred, unless, if applicable, such an inactive
participant becomes an active participant again prior to the distribution of his
or her cash account. Any shares of Common Stock held by the custodian
on behalf of such a participant will be delivered to the participant at the end
of the expiration of the Applicable Restriction Period, unless, if applicable,
such an inactive participant becomes an active participant again prior to the
distribution of such shares. In the event of the participant’s death,
all payroll deductions, Credited Dividends and shares of Common Stock shall be
paid to the Participant’s beneficiary, estate or other party as contemplated by
Paragraph 13.
(e) A
participant who has elected to withdraw from the Plan may resume participation
in the same manner and pursuant to the same rules as any eligible Employee
making an initial election to participate in the Plan.
11. Stock.
(a) The
maximum number of shares of Common Stock to be sold to participants under the
Plan shall be 500,000 shares, subject to adjustment upon changes in
capitalization of the Company as provided in Paragraph 15 below. The
shares of Common Stock to be sold to participants under the Plan, may, at the
election of the Company, include treasury shares, shares originally issued for
such purpose, or shares purchased in the open market. If the total
number of shares of Common Stock then available under the Plan for which
purchase rights are to be exercised in accordance with Paragraph 8 exceeds the
number of such shares then available under the Plan, the Company
shall make a pro rata allocation of the shares available in as nearly a uniform
manner as shall be practicable and as it shall determine to be
equitable. If purchase rights expire or terminate for any reason
without being exercised in full, the unpurchased shares subject to the rights
shall again be available for the purposes of the Plan.
(b) A
participant will have no interest in shares of Common Stock covered by his or
her purchase rights until such rights have been exercised.
(c) Shares
to be delivered to a participant under the Plan will be registered in the name
of the participant, or, if the participant so directs, by written notice to the
Plan Administrator prior to the Exercise Date, in the names of the participant
and one other person designated by the participant, as joint tenants with rights
of survivorship, to the extent permitted by applicable law.
12. Administration. The
Plan shall be administered by the Company (the “Plan
Administrator”). The Plan Administrator shall be vested with full
authority to make, administer and interpret such rules and regulations as it
deems necessary to administer the Plan, and any determination or action of the
Plan Administrator in connection with the interpretation or administration of
the Plan shall be final and binding upon all participants and any and all
persons claiming under or through any participant.
13. Designation of
Beneficiary.
(a) A
participant may file with the Plan Administrator a written designation of a
beneficiary who is to receive any cash to his or her credit under the Plan in
the event of the participant's death before an Exercise Date, or any shares of
Common Stock and cash to his or her credit under the Plan in the event of the
participant's death on or after an Exercise Date but prior to the delivery of
such shares and cash. A beneficiary may be changed by the participant
at any time by notice in writing to the Plan Administrator.
(b) Upon
the death of a participant and upon receipt by the Company of the proof the
identity and existence at the time of the participant’s death of a beneficiary
designated by the participant in accordance with the immediately preceding
Subparagraph, the Company shall deliver such shares or cash, or both, to the
beneficiary. In the event a participant dies and is not survived by a
then living or in existence beneficiary designated by him in accordance with the
immediately preceding Subparagraph, the Company shall deliver such
shares or cash, or both, to the personal representative of the estate of the
deceased participant. If to the knowledge of the Company no personal
representative has been appointed within ninety (90) days following the date of
the participant’s death, the Company, in its discretion, may deliver such shares
or cash, or both, to the surviving spouse of the deceased participant, or to any
one or more dependents or relatives of the deceased participant, or if no
spouse, dependent or relative is known to the Company, then to such other person
as the Company may designate.
(c) No
designated beneficiary shall, prior to the death of the participant by whom the
beneficiary has been designated, acquire any interest in the shares or cash
credited to the participant under the Plan.
14. Transferability. Neither
payroll deductions credited to a participant’s account nor any rights with
regard to the exercise or purchase rights or to receive any shares under the
Plan may be assigned, transferred, pledge or otherwise disposed of in any way by
the participant. Any attempted assignment, transfer, pledge or other
disposition shall be without effect, except that the Company may treat such act
as an election to withdraw funds in accordance with Paragraph 10
above.
15. Adjustments Upon Changes in
Capitalization. In the event that the outstanding shares of
Common stock of the Company are hereafter increased or decreased or changed into
or exchanged for a different number or kind of shares or other securities of the
Company by reason of a recapitalization, reclassification, stock split,
combination of shares or dividend payable in shares of Common Stock, an
appropriate adjustment shall be made by the Plan Administrator to the number and
kind of shares available for the granting of purchase rights, or as to which
outstanding purchase rights shall be exercisable, and to the purchase
Price. No fractional shares shall be issued or optioned in
making any such adjustments. All adjustments made by the Plan
Administrator under this Paragraph shall be conclusive.
Subject
to any required action by the shareholders, if the Company shall be a party to
any reorganization involving merger or consolidation with respect to which the
Company will not be the surviving entity or acquisition of substantially all of
the stock or assets of the Company, the Plan Administrator in its discretion (a)
may declare the Plan’s termination in the same manner as if the Board of
Directors of the Company had terminated the Plan pursuant to paragraph 16 below,
or (b) may declare that any purchase rights granted hereunder shall
pertain to and apply with appropriate adjustment as determined by the Plan
Administrator to the securities of the resulting corporation to which a holder
of the number of shares of Common Stock subject to such rights would have been
entitled.
Any issue
by the Company of any class of preferred stock, or securities
convertible into shares of common or preferred stock of any class, shall not
affect, and no adjustment by reason thereof shall be made with respect to, the
number or Purchase price of shares of Common Stock subject to any purchase
rights except as specifically provided otherwise in this Paragraph
15. The grant of purchase rights pursuant to the plan shall not
affect in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge or to consolidate or to dissolve, liquidate or sell, or
transfer all or any part of its business or assets.
16. Amendment
or Termination.
(a) The
Board of Directors of the Company may at any time terminate or amend the
Plan. The cash balances and shares of Common Stock credited to
participants’ accounts as of the date of any Plan termination shall be delivered
to those participants as soon as administratively feasible following the
effective date of the Plan’s termination.
(b) Prior
approval of the shareholders shall be required with respect to any amendment
which would require the sale of more shares than are authorized under Paragraph
11 of the plan.
(c) Where
prior approval of the stockholders of the Company shall be required with respect
to a proposed Plan amendment under applicable federal, state or local law, the
Company shall obtain such approval prior to the effective date of any such
amendment.
17. Notices. All
notices or other communications by a participant to the Plan Administrator under
or in connection with the Plan shall be deemed to have been duly given when
received by the Secretary of the Company or when received in the form specified
by the Company at the location, or by the person, designated by the Company for
the receipt thereof.
18. No Contract. This Plan shall
not be deemed to constitute a contract between the Company or any Subsidiary and
any eligible Employee or to be a consideration or an inducement for the
employment of any Employee. Nothing contained in this Plan shall be
deemed to give any Employee the right to be retained in the service of the
Company or any Subsidiary or to interfere with the right of the Company or any
Subsidiary to discharge any Employee at any time regardless of the effect which
such discharge shall have upon him or her or as a participant of the
Plan.
19. Waiver. No
liability whatever shall attach to or be incurred by any past present or future
shareholders, officers or directors, as such, of the Company or any Subsidiary,
under or by reason of any of the terms, conditions or agreements contained in
this Plan or implied the reform, and any and all liabilities of, and any and all
rights and claims against, the Company or any Subsidiary, or any shareholder,
officer or director as such, whether arising at common law or in
equity or created by statute or constitution or otherwise, pertaining to this
Plan, are hereby expressly waived and released by every eligible Employee as a
part of the consideration for any benefits by the Company under this
Plan.
20. Securities Law
Restrictions. Shares of Common Stock shall not be issued under
the Plan unless (a) the exercise of the related option and the issuance and
delivery of the shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, and any rules and regulations promulgated
pursuant to such laws and with the requirements of any stock exchange upon which
the shares may then be listed; and (b) the express approval of counsel for the
Company with respect to such compliance is first obtained. The
Company reserves the right to place an appropriate legend on any certificate
representing shares of Common Stock issuable under the Plan with any such legend
reflecting restrictions on the transfer of the shares as may be necessary to
assure the availability of applicable exemptions under federal and state
securities laws.
21. Approval of
Shareholders. The Plan shall be submitted to the shareholders
of the Company for their approval within twelve (12) months after the adoption
of the Plan by the Board of Directors of the Company. The Plan is
conditional upon approval of the shareholders of the Company and failure to
receive their approval shall render the Plan and all outstanding purchase rights
issued thereunder void and of no effect.
IN
WITNESS WHEREOF, the Company has caused this Plan to be executed as of this 30th
of August, 2007.
ROPER INDUSTRIES, INC.
/s/ David B. Liner
By: David B.
Liner
Title: Vice President, General
Counsel and Secretary
Exhibit
10.05
ROPER
INDUSTRIES, INC.
2000
STOCK INCENTIVE PLAN, AS AMENDED AND RESTATED
ROPER
INDUSTRIES, INC.
2000
STOCK INCENTIVE PLAN, AS AMENDED AND RESTATED
TABLE
OF CONTENTS
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Page
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SECTION
1 DEFINITIONS
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1.1
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DEFINITIONS
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SECTION
2 THE STOCK INCENTIVE PLAN
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2.1
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PURPOSE
OF THE PLAN
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2.2
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STOCK
SUBJECT TO THE PLAN
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2.3
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ADMINISTRATION
OF THE PLAN
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2.4
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ELIGIBILITY
AND LIMITS
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SECTION
3 TERMS OF STOCK INCENTIVES
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3.1
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TERMS
AND CONDITIONS OF ALL STOCK INCENTIVES
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3.2
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TERMS
AND CONDITIONS OF OPTIONS
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(a) Option
Price
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(b) Option
Term
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(c) Payment.
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(d) Conditions
to the Exercise of an Option
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(e) Termination
of Incentive Stock Option
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(f) Special
Provisions for Certain Substitute Options
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(g) No
Deferral Feature
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3.3
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TERMS
AND CONDITIONS OF STOCK APPRECIATION RIGHTS
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(a) Settlement
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(b) Conditions
to Exercise
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(c) No
Deferral Feature
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3.4
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TERMS
AND CONDITIONS OF STOCK AWARDS
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3.4A
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TERMS
AND CONDITIONS OF DEFERRED STOCK AWARDS
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3.5
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TERMS
AND CONDITIONS OF PERFORMANCE UNIT AWARDS
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(a) Payment
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(b) Conditions
to Payment
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3.6
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TREATMENT
OF AWARDS UPON TERMINATION OF EMPLOYMENT
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SECTION
4 RESTRICTIONS ON STOCK
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4.1
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ESCROW
OF SHARES
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4.2
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RESTRICTIONS
ON TRANSFER
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SECTION
5 GENERAL PROVISIONS
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5.1
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WITHHOLDING
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5.2
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CHANGES
IN CAPITALIZATION; MERGER; LIQUIDATION
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(g) Mandatory
Adjustments
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(g) Discretionary
Adjustments
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(g) Incentive
Stock Options
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(g) General
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5.3
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CASH
AWARDS
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5.4
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COMPLIANCE
WITH CODE
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5.5
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RIGHT
TO TERMINATE EMPLOYMENT OR SERVICES
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5.6
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NON-ALIENATION
OF BENEFITS
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5.7
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RESTRICTIONS
ON DELIVERY AND SALE OF SHARES; LEGENDS
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5.8
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LISTING
AND LEGAL COMPLIANCE
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5.9
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TERMINATION
AND AMENDMENT OF THE PLAN
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5.10
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STOCKHOLDER
APPROVAL
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5.11
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CHOICE
OF LAW
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5.12
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EFFECTIVE
DATE OF PLAN
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5.13
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SPECIAL
PROVISIONS RELATED TO SECTION 409A OF THE CODE
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( )
ROPER
INDUSTRIES, INC.
2000
STOCK INCENTIVE PLAN, AS AMENDED AND RESTATED
SECTION
I. DEFINITIONS
1.1 Definitions. Whenever
used herein, the masculine pronoun will be deemed to include the feminine, and
the singular to include the plural, unless the context clearly indicates
otherwise, and the following capitalized words and phrases are used herein with
the meaning thereafter ascribed:
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(a)
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“Board of
Directors” means the board of directors of the
Company.
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(b)
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“Code” means the
Internal Revenue Code of 1986, as
amended.
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(c)
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“Committee”
means the Compensation Committee of the Board of
Directors.
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(d)
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“Company” means
Roper Industries, Inc. or any successor
thereto.
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(e)
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“Deferred Stock
Award” means a stock award described in Section
3.4A.
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(f)
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“Disability” has
the same meaning as provided in the long-term disability plan or policy
maintained or, if applicable, most recently maintained, by the Company or,
if applicable, any Subsidiary of the Company for the
Participant. If no long-term disability plan or policy was ever
maintained on behalf of the Participant or, if the determination of
Disability relates to an Incentive Stock Option, Disability means that
condition described in Code Section 22(e)(3), as amended from time to
time. In the event of a dispute, the determination of Disability will be
made by the Committee and will be supported by advice of a physician
competent in the area to which such Disability
relates.
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(g)
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“Exchange Act”
means the Securities Exchange Act of 1934, as amended from time to
time.
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(h)
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“Fair Market
Value” with regard to a date
means:
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(1) the
average of the high and low prices at which Stock shall have been sold on
that date or the last trading date prior to that date as reported by the
NASDAQ Stock Market (or, if applicable, as reported by a national
securities exchange selected by the Committee on which the shares of Stock
are then actively traded) and published in The Wall Street
Journal,
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(2) if
Stock is not traded on a securities exchange, but is reported by the
NASDAQ Stock Market and market information is published on a regular basis
in The Wall Street
Journal, the average of the published high and low sales prices for
that date or the last business day prior to that date as published in
The Wall Street
Journal,
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(3) if
such market information is not published on a regular basis, the average
of the high bid and low asked prices of Stock in the over-the-counter
market on that date or the last business day prior to that date, as
reported by the NASDAQ Stock Market, or, if not so reported, by a
generally accepted reporting service,
or
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(4) if
Stock is not publicly traded, as determined in good faith by the Committee
with due consideration being given to (i) the most recent independent
appraisal of the Company, if such appraisal is not more than twelve months
old and (ii) the valuation methodology used in any such appraisal provided
that, for purposes of granting awards other than Incentive Stock Options,
Fair Market Value of the shares of Stock may be determined by the
Committee by reference to the average market value determined over a
period certain or as of specified dates, to a tender offer price for the
shares of Stock (if settlement of an award is triggered by such an event)
or to any other reasonable measure of fair market
value.
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(i)
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“Incentive Stock
Option” means an option contemplated by the provisions of Code
Section 422 or any successor
thereto.
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(j)
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“Option” means a
Non-Qualified Stock Option or an Incentive Stock
Option
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(k)
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“Non-Qualified Stock
Option” means an option that is not designated as, or otherwise
intended to be, an Incentive Stock
Option.
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(l)
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“Over 10% Owner”
means an individual who at the time an Incentive Stock Option is granted
owns Stock possessing more than 10% of the total combined voting power of
the Company or one of its Subsidiaries, determined by applying the
attribution rules of Code Section
424(d).
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(m)
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“Participant”
means an individual who receives a Stock Incentive
hereunder.
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(n)
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“Performance Unit
Award” refers to a performance unit award as described in Section
3.5.
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(o)
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“Plan” means the
Roper Industries, Inc. 2000 Stock Incentive Plan, as amended and
restated.
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(p)
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“Stock” means
Company’s common stock, par value
$.01.
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(q)
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“Stock Appreciation
Right” means a stock appreciation right described in Section
3.3.
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(r)
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“Stock Award”
means a stock award described in Section
3.4.
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(s)
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“Stock Incentive
Agreement” means an agreement between the Company and a Participant
or other documentation evidencing an award of a Stock
Incentive.
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(t)
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“Stock Incentive
Program” means a written program established by the Committee,
pursuant to which Stock Incentives are awarded under the Plan under
uniform terms, conditions and restrictions set forth in such written
program.
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(u)
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“Stock
Incentives” means, collectively, Incentive Stock Options,
Non-Qualified Stock Options, Performance Units, Stock Appreciation Rights,
Stock Awards and Deferred Stock
Awards.
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(v)
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“Subsidiary”
means any corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company if, with respect to Incentive
Stock Options, at the time of the granting of the Option, each of the
corporations other than the last corporation in the unbroken chain owns
stock possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in the chain. A
Subsidiary shall include any entity other than a corporation to the extent
permissible under Code Section 424(f) and applicable regulations and
rulings thereunder.
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(w)
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“Termination of
Employment” means the termination of the employee-employer
relationship between a Participant and the Company and its affiliates,
regardless of whether severance or similar payments are made to the
Participant for any reason, including, but not by way of limitation, a
termination by resignation, discharge, death, Disability or retirement.
The Committee will, in its absolute discretion, determine the effect of
all matters and questions relating to a Termination of Employment,
including, but not by way of limitation, the question of whether a leave
of absence constitutes a Termination of
Employment.
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SECTION
2 THE STOCK INCENTIVE PLAN
2.1 Purpose of the
Plan. The Plan is intended to (a) provide incentive to
officers, key employees and consultants of the Company and its affiliates to
stimulate their efforts toward the continued success of the Company and to
operate and manage the business in a manner that will provide for the long-term
growth and profitability of the Company; (b) encourage stock ownership by
officers and key employees by providing them with a means to acquire a
proprietary interest in the Company, to acquire shares of Stock, or to receive
compensation which is based upon appreciation in the value of Stock; and (c)
provide a means of obtaining, rewarding and retaining key personnel and
consultants.
2.2 Stock Subject to the
Plan. Subject to adjustment in accordance with Section 5.2,
the maximum number of shares of Stock that will be available for issuance under
the Plan will be 2,500,000 shares of Stock (the “Maximum Plan Shares”). At no
time may the Company have outstanding under the Plan Stock Incentives subject to
Section 16 of the Exchange Act and shares of Stock issued in respect of Stock
Incentives under the Plan in excess of the Maximum Plan Shares. The shares of
Stock attributable to the nonvested, unpaid, unexercised, unconverted or
otherwise unsettled portion of any Stock Incentive (other than Options and Stock
Appreciation Rights) that is forfeited or cancelled or expires or terminates for
any reason without becoming vested, paid, exercised, converted or otherwise
settled in full will again be available for purposes of the Plan. The shares of
Stock attributable to the nonvested, unpaid, unexercised, unconverted or
otherwise unsettled portion of any Option or Stock Appreciation Right that is
forfeited or cancelled or expires or terminates for any reason without becoming
vested, paid, exercised, converted or otherwise settled in full shall not again
be available for purposes of the Plan.
2.3 Administration of the
Plan. The Plan is administered by the Committee. The Committee
has full authority in its discretion to determine the officers, key employees
and consultants of the Company or its affiliates to whom Stock Incentives will
be granted and the terms and provisions of Stock Incentives, subject to the
Plan. Subject to the provisions of the Plan, the Committee has full and
conclusive authority to interpret the Plan; to prescribe, amend and rescind
rules and regulations relating to the Plan; to determine the terms and
provisions of the respective Stock Incentive Agreements and to make all other
determinations necessary or advisable for the proper administration of the Plan.
The Committee’s determinations under the Plan need not be uniform and may be
made by it selectively among persons who receive, or are eligible to receive,
awards under the Plan (whether or not such persons are similarly situated). The
Committee’s decisions are final and binding on all Participants.
2.4 Eligibility and
Limits. Stock Incentives may be granted only to officers, key
employees and consultants of the Company, or any affiliate of the Company;
provided, however, that an Incentive Stock Option may only be granted to an
employee of the Company or any Subsidiary. In the case of Incentive Stock
Options, the aggregate Fair Market Value (determined as at the date an incentive
stock option is granted) of Stock with respect to which options intended to meet
the requirements of Code Section 422 become exercisable for the first time by an
individual during any calendar year under all plans of the Company and its
Subsidiaries may not exceed $100,000; provided further, that if the limitation
is exceeded, the Incentive Stock Option(s) which cause the limitation to be
exceeded will be treated as Non-Qualified Stock Option(s). Eligible participants
who are service providers to an affiliate of the Company may be granted Options
or Stock Appreciation Rights under this Plan only if the affiliate qualifies as
an “eligible issuer of service recipient stock” within the meaning of
§1.409A-1(b)(5)(iii)(E) of the final regulations under Code Section
409A.
SECTION
3 TERMS OF STOCK INCENTIVES
3.1 Terms and Conditions of All
Stock Incentives.
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(a)
|
The
number of shares of Stock as to which a Stock Incentive may be granted
will be determined by the Committee in its sole discretion, subject to the
provisions of Section 2.2 as to the total number of shares available for
grants under the Plan and subject to the limits on Options and Stock
Appreciation Rights in the following sentence. The maximum
number of shares of Stock with respect to which Options or Stock
Appreciation Rights may be granted during any one year period to any
employee may not exceed 300,000, subject to adjustment in accordance with
Section 5.2.
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(b)
|
Each
Stock Incentive will either be evidenced by a Stock Incentive Agreement in
such form and containing such terms, conditions and restrictions as the
Committee may determine to be appropriate, or be made subject to the terms
of a Stock Incentive Program, containing such terms, conditions and
restrictions as the Committee may determine to be appropriate. Each Stock
Incentive Agreement or Stock Incentive Program is subject to the terms of
the Plan and any provisions contained in the Stock Incentive Agreement or
Stock Incentive Program that are inconsistent with the Plan are null and
void.
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(c)
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The
date a Stock Incentive is granted will be the date on which the Committee
has approved the terms of, and the satisfaction of any conditions
applicable to, the grant of the Stock Incentive and has determined the
recipient of the Stock Incentive and the number of shares covered by the
Stock Incentive, and has taken all such other actions necessary to
complete the grant of the Stock
Incentive.
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(d)
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Any
Stock Incentive may be granted in connection with all or any portion of a
previously or contemporaneously granted Stock Incentive. Exercise or
vesting of a Stock Incentive granted in connection with another Stock
Incentive may result in a pro rata surrender or cancellation of any
related Stock Incentive, as specified in the applicable Stock Incentive
Agreement or Stock Incentive
Program.
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(e)
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Unless
otherwise permitted by the Committee, Stock Incentives are not
transferable or assignable except by will or by the laws of descent and
distribution and are exercisable, during the Participant’s lifetime, only
by the Participant; or in the event of the Disability of the Participant,
by the legal representative of the Participant; or in the event of death
of the Participant, by the legal representative of the Participant’s
estate or if no legal representative has been appointed, by the successor
in interest determined under the Participant’s will. Notwithstanding the
foregoing, the Committee shall not permit Incentive Stock Options to be
transferred or assigned beyond the limitations set forth in this Section
3.1(e).
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(f)
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Notwithstanding
the foregoing, the maximum aggregate number of shares of Stock issued
under Performance Units, Stock Appreciation Rights, Stock Awards and
Deferred Stock Awards shall not exceed thirty three and one-third percent
(33 1/3%)
of the Maximum Plan Shares.
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3.2 Terms and Conditions of
Options. Each Option granted under the Plan must be evidenced
by a Stock Incentive Agreement. At the time any Option is granted, the Committee
will determine whether the Option is to be an Incentive Stock Option or a
Non-Qualified Stock Option, and the Option must be clearly identified as to its
status as such. Incentive Stock Options may only be granted to employees of the
Company or any Subsidiary. At the time any Incentive Stock Option granted under
the Plan is exercised, the Company will be entitled to legend the certificates
representing the shares of Stock purchased pursuant to the Option to clearly
identify them as representing the shares purchased upon the exercise of an
Incentive Stock Option. An Incentive Stock Option may only be granted within ten
(10) years from the earlier of the date the Plan is adopted or approved by the
Company’s stockholders.
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(a)
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Option
Price. Subject to adjustment in accordance with Section
5.2 and the other provisions of this Section 3.2, the exercise price (the
“Exercise Price”) per share of Stock purchasable under any Option must be
as set forth in the applicable Stock Incentive Agreement, but in no event
may the Exercise Price be less than 100% of Fair Market Value. In
addition, with respect to each grant of an Incentive Stock Option to a
Participant who is an Over 10% Owner, the Exercise Price may not be less
than 110% of the Fair Market Value on the date the Option is granted.
Without the approval of shareholders, the Committee shall not, whether
through amendment, cancellation, replacement grants, or any other means,
take any action to reduce the exercise price of previously granted Options
if such action would result in variable accounting treatment for such
Options under FASB Interpretation No. 44 or any subsequent interpretations
of APB Opinion No. 25. With regard to other terms of awards,
the Committee shall have no authority to waive or modify any such award
term after the award has been granted to the extent the waiver or modified
term would be mandatory under the plan for any award newly granted at the
date of the waiver or modification.
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(b)
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Any
Incentive Stock Option granted to a Participant who is not an Over 10% is
not exercisable after the expiration of ten (10) years from the date the
Option is granted. Any Incentive Stock Option granted to an
Over 10% Owner is not exercisable from the expiration of five (5) years
from the date the Option is granted. Any Non-Qualified Stock Option
granted to a Participant is not exercisable after the expiration of ten
(10) years from the date the Non-Qualified Stock Option is
granted.
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(c)
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Payment. Payment
for all shares of Stock purchased pursuant to the exercise of an Option
will be made in any form or manner authorized by the Committee in the
related Stock Incentive Agreement or by any amendment thereto, including,
but not limited to, cash or, if the Stock Incentive Agreement
provides:
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(i)
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by
delivery to the Company of a number of shares of Stock which have been
owned by the holder for at least six (6) months prior to the date of
exercise having an aggregate Fair Market Value of not less than the
product of the Exercise Price multiplied by the number of shares the
Participant intends to purchase upon the exercise of the Option on the
date of delivery; or
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(ii)
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by
a deemed delivery of a number of shares of Stock which the Participant
identifies in a notice to the Company and which had been owned by the
holder for at least six (6) months, in which event the Company shall only
deliver to the Participant pursuant to the exercise of the Option with
such deemed delivery of shares a number of shares equal to the excess of
the number of shares so purchased on such exercise of the Option over the
number of shares described in such notice; or
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(iii)
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in
an exercise effected through delivery of an irrevocable notice of exercise
to a broker.
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Any
delivery or deemed delivery of shares of Stock shall be valued at Fair
Market Value on the date of the delivery of such shares to the Company or,
in the case of a deemed delivery, the date the related notice is delivered
to the Company.
Further,
except as prohibited by law, the Committee may in its discretion authorize
(at the time an Option is granted or thereafter) Company financing to
assist the Participant as to payment of the Exercise Price on such terms
as may be offered by the Committee in its
discretion.
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(d)
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Conditions to the
Exercise of an Option. Each Option granted under the
Plan is exercisable by whom, at such time or times, or upon the occurrence
of such event or events, and in such amounts, as the Committee specifies
in the Stock Incentive Agreement; provided, however, that subsequent to
the grant of an Option, the Committee, at any time before complete
termination of such Option, may accelerate the time or times at which such
Option may be exercised in whole or in part, including, without
limitation, upon any change in control described by the Stock Incentive
Agreement and may permit the Participant or any other designated person to
exercise the Option, or any portion thereof, for all or part of the
remaining Option term, notwithstanding any provision of the Stock
Incentive Agreement to the
contrary.
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(e)
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Termination of
Incentive Stock Option. With respect to an Incentive
Stock Option, in the event of Termination of Employment of a Participant,
the Option or portion thereof held by the Participant which is unexercised
will expire, terminate, and become unexercisable no later than the
expiration of three (3) months after the date of Termination of
Employment; provided, however, that in the case of a holder whose
Termination of Employment is due to death or Disability, one (1) year will
be substituted for such three (3) month period; provided, further that
such time limits may be exceeded by the Committee under the terms of the
grant, in which case, the incentive stock option will be a Non-Qualified
Stock Option if it is exercised after the time limits that would otherwise
apply. For purposes of this Subsection (e), Termination of Employment of
the Participant will not be deemed to have occurred if the Participant is
employed by another corporation (or a parent or subsidiary corporation of
such other corporation) which has assumed the Incentive Stock Option of
the Participant in a transaction to which Code Section 424(a) is
applicable.
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(f)
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Special Provisions for
Certain Substitute Options. Notwithstanding anything to
the contrary in this Section 3.2, any Option issued in substitution for an
option previously issued by another entity, which substitution occurs in
connection with a transaction to which Code Section 424(a) is applicable,
may provide for an exercise price computed in accordance with such Code
Section and the regulations thereunder and may contain such other terms
and conditions as the Committee may prescribe to cause such substitute
Option to contain as nearly as possible the same terms and conditions
(including the applicable vesting and termination provisions) as those
contained in the previously issued option being replaced
thereby.
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(g)
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No Deferral
Feature. No Option shall provide for any feature for the
deferral of compensation other than the deferral of recognition of income
until the later of the exercise or disposition of the
Option.
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3.3 Terms and Conditions of
Stock Appreciation Rights. Each Stock Appreciation Right
granted under the Plan must be evidenced by a Stock Incentive Agreement. A Stock
Appreciation Right entitles the Participant to receive the excess of (1) the
Fair Market Value of a specified or determinable number of shares of the Stock
at the time of payment or exercise over (2) a specified or determinable price
which, in the case of a Stock Appreciation Right granted in connection with an
Option, may not be less than the Exercise Price for that number of shares
subject to that Option. A Stock Appreciation Right granted in
connection with a Stock Incentive may only be exercised to the extent that the
related Stock Incentive has not been exercised, paid or otherwise settled. The
base amount on which a Stock Appreciation Right is calculated shall not be
reduced by the Committee following its date of grant.
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(a)
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Settlement. Upon
settlement of a Stock Appreciation Right, the Company must pay to the
Participant the appreciation in cash or shares of Stock (valued at the
aggregate Fair Market Value on the date of payment or exercise) as
provided in the Stock Incentive Agreement or, in the absence of such
provision, as the Committee may
determine.
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(b)
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Conditions to
Exercise. Each Stock Appreciation Right granted under
the Plan is exercisable or payable at such time or times, or upon the
occurrence of such event or events, and in such amounts, as the Committee
specifies in the Stock Incentive Agreement; provided, however, that
subsequent to the grant of a Stock Appreciation Right, the Committee, at
any time before complete termination of such Stock Appreciation Right, may
accelerate the time or times at which such Stock Appreciation Right may be
exercised or paid in whole or in
part.
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(c)
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No Deferral
Feature. No Stock Appreciation Right shall provide for
any feature for the deferral of compensation other than the deferral of
recognition of income until the later of the exercise or disposition of
the Stock Appreciation Right.
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3.4 Terms and Conditions of
Stock Awards.
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(a)
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The
number of shares of Stock subject to a Stock Award and restrictions or
conditions on such shares, if any, will be as the Committee determines,
and the certificate for such shares will bear evidence of any restrictions
or conditions. Subsequent to the date of the grant of the Stock Award, the
Committee has the power to permit, in its discretion, an acceleration of
the expiration of an applicable restriction period with respect to any
part or all of the shares awarded to a Participant. Subject to Subsections
(b) and (c) below, the Committee may require a cash payment from the
Participant in an amount no greater than the aggregate Fair Market Value
of the shares of Stock awarded determined at the date of grant in exchange
for the grant of a Stock Award or may grant a Stock Award without the
requirement of a cash payment.
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(b)
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[Reserved]
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(c)
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Any
Stock Award that does not contain forfeitability provisions shall be
granted only in lieu of salary or cash bonuses otherwise payable to a
Participant and may be granted at up to a 15% discount to the Fair Market
Value of the Stock as of the date of grant, but only if the Stock is
subject to material restrictions on
transferability.
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3.4A Terms and Conditions of
Deferred Stock Awards
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(a)
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A
Deferred Stock Award shall represent a contractual right to receive shares
of Stock that only will be issued to a Participant after a specified
deferral period or the satisfaction of specified conditions, or both, and
such an award may be made either alone, in addition to or in tandem with
other awards granted under the Plan and/or cash awards made outside of the
Plan. The Committee shall determine the Participants to whom and the time
or times at which a Deferred Stock Award shall be made, the number of
shares of Stock to be awarded to any person, the duration of the deferred
period (the “Deferral Period”) during which, and the conditions under
which, the issuance of the Stock will be deferred and the other terms and
conditions of the award in addition to those set forth in subsection (b).
The provisions of deferred Stock Awards need not be the same with respect
to each recipient.
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(b)
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(i)
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A
Deferred Stock Award shall be evidenced by an Stock Incentive
Agreement.
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(ii) At
the expiration of the Deferral Period, where applicable, share
certificates shall be issued to the Participant, or his legal
representative, in a number equal to the shares covered by the Deferred
Stock Award.
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(iii)
At the time the Deferred Stock Award is made, the Committee may in its own
discretion provide for the payment of amounts under a Deferred Stock Award
equal to any dividends paid on shares of Stock equal to the number of
shares of Stock covered by the Deferred Stock Award. Such amounts will be
paid to the Participant currently, or deferred and deemed to be reinvested
in additional share of Stock subject to the award, or otherwise
reinvested, all as determined at the time of the award by the Committee,
in its sole discretion. Unless otherwise provided in the applicable Stock
Incentive Agreement, Deferred Stock Awards will be entitled to full
dividend rights and any dividends paid thereon will be paid or distributed
to the holder no later than the end of the calendar year in which the
dividends are paid to shareholders or, if later, the 15th day of the third
month following the date the dividends are paid to
shareholders.
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(iv)
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Subject
to the provisions of the Stock Incentive Agreement and this Section 3.4A,
if the Participant incurs a Termination of Employment for any reason
during the Deferral Period for a Deferred Stock Award, the Participant’s
right to the issuance of the Stock subject to such award will vest, or be
forfeited, in accordance with the terms and conditions established by the
Committee at or after the award is
made.
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(v)
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Based
on service, performance and/or such other factors or criteria as the
Committee may determine, the Committee may, at or after making the
Deferred Stock Award, accelerate the vesting of all or any part of any
Deferred Stock Award and/or waive the deferral limitations for all or any
part of such award.
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3.5 Terms and Conditions of
Performance Unit Awards. A Performance Unit Award shall
entitle the Participant to receive, at a specified future date, payment of a
number of shares of Stock having Fair Market Value equal to the value of a
specified or determinable number of units (stated in terms of a designated or
determinable dollar amount per unit) granted by the Committee. At the time of
the grant, the Committee must determine the base value of each unit, the number
of units subject to a Performance Unit Award, the performance factors applicable
to the determination of the ultimate payment value of the Performance Unit Award
and the period over which Company performance shall be measured. The
Committee may provide for an alternate base value for each unit under certain
specified conditions.
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(a)
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Payment. Payment
in respect of Performance Unit Awards shall be in the form of shares of
Stock (valued at Fair Market Value as of the date payment is owed), all on
such terms and conditions as provided in the applicable Stock Incentive
Agreement or Stock Incentive Program or, in the absence of such provision,
as the Committee may determine.
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(b)
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Conditions to
Payment. Each Performance Unit Award granted under the
Plan shall be payable at such time or times, or upon the occurrence of
such event or events, and in such amounts, as the Committee shall specify
in the applicable Stock Incentive Agreement or Stock Incentive Program;
provided, however, that subsequent to the grant of a Performance Unit
Award, the Committee, at any time before complete termination of such
Performance Unit Award, may accelerate the time or times at which such
Performance Unit Award may be paid in whole or in
part.
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3.6 Treatment of Awards Upon
Termination of Employment. Except as otherwise provided by
Plan Section 3.2(e), any award under this Plan to a Participant who has
experienced a Termination of Employment may be cancelled, accelerated, paid or
continued, as provided in the applicable Stock Incentive Agreement or Stock
Incentive Program, or, in the absence of such provision, as the Committee may
determine. The portion of any award exercisable in the event of
continuation or the amount of any payment due under a continued award may be
adjusted by the Committee to reflect the Participant’s period of service from
the date of grant through the date of the Participant’s Termination of
Employment or such other factors as the Committee determines are relevant to its
decision to continue the award.
SECTION
4 RESTRICTIONS ON STOCK
4.1 Escrow of
Shares. Any certificates representing the shares of Stock
issued under the Plan will be issued in the Participant’s name, but, if the
applicable Stock Incentive Agreement or Stock Incentive Program so provides, the
shares of Stock will be held by a custodian designated by the Committee (the
“Custodian”). Each applicable Stock Incentive Agreement or Stock Incentive
Program providing for transfer of shares of Stock to the Custodian must appoint
the Custodian as the attorney-in-fact for the Participant for the term specified
in the applicable Stock Incentive Agreement or Stock Incentive Program, with
full power and authority in the Participant’s name, place and stead to transfer,
assign and convey to the Company any shares of Stock held by the Custodian for
such Participant, if the Participant forfeits the shares under the terms of the
applicable Stock Incentive Agreement or Stock Incentive Program. During the
period that the Custodian holds the shares subject to this Section, the
Participant is entitled to all rights, except as provided in the applicable
Stock Incentive Agreement or Stock Incentive Program, applicable to shares of
Stock not so held. Any dividends declared on shares of Stock held by the
Custodian must provide in the applicable Stock Incentive Agreement or Stock
Incentive Program, be paid directly to the Participant or, in the alternative,
be retained by the Custodian or by the Company until the expiration of the term
specified in the applicable Stock Incentive Agreement or Stock Incentive Program
and shall then be delivered, together with any proceeds, with the shares of
Stock to the Participant or to the Company, as applicable.
4.2 Restrictions on
Transfer. The Participant does not have the right to make or
permit to exist any disposition of the shares of Stock issued pursuant to the
Plan except as provided in the Plan or the applicable Stock Incentive Agreement
or Stock Incentive Program. Any disposition of the shares of Stock issued under
the Plan by the Participant not made in accordance with the Plan or the
applicable Stock Incentive Agreement or Stock Incentive Program will be void.
The Company will not recognize, or have the duty to recognize, any disposition
not made in accordance with the Plan and the applicable Stock Incentive
Agreement or Stock Incentive Program, and the shares so transferred will
continue to be bound by the Plan and the applicable Stock Incentive Agreement or
Stock Incentive Program.
SECTION
5 GENERAL PROVISIONS
5.1 Withholding. The
Company must deduct from all cash distributions under the Plan any taxes
required to be withheld by federal, state or local government. Whenever the
Company proposes or is required to issue or transfer shares of Stock under the
Plan or upon the vesting of any Stock Award or settlement of any Deferred Stock
Award, the Company has the right to require the recipient to remit to the
Company an amount sufficient to satisfy any federal, state and local withholding
tax requirements prior to the delivery of any certificate or certificates for
such shares or the vesting of such Stock Award or settlement of such Deferred
Stock Award. A Participant may pay the withholding tax in cash, or,
if the applicable Stock Incentive Agreement or Stock Incentive Program provides,
a Participant may elect to have the number of shares of Stock he is to receive
reduced by, or with respect to a Stock Award or Deferred Stock Award, tender
back to the Company, the smallest number of whole shares of Stock which, when
multiplied by the Fair Market Value of the shares of Stock determined as of the
Tax Date (defined below), is sufficient to satisfy the minimum required federal,
state and local, if any, withholding taxes arising from exercise or payment of a
Stock Incentive (a “Withholding Election”). A Participant may make a Withholding
Election only if both of the following conditions are met:
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(a)
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the
Withholding Election must be made on or prior to the date on which the
amount of tax required to be withheld is determined (the “Tax Date”) by
executing and delivering to the Company a properly completed notice of
Withholding Election as prescribed by the Committee;
and
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(b)
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any
Withholding Election made will be irrevocable except on six months advance
written notice delivered to the Company; however, the Committee may in its
sole discretion disapprove and give no effect to the Withholding
Election.
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5.2 Changes in Capitalization;
Merger; Liquidation.
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(a)
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Mandatory
Adjustments. In the event of a nonreciprocal transaction
between the Company and its shareholders that causes the per-share value
of the Stock to change (including, without limitation, any stock dividend,
stock split, spin-off, rights offering, or large nonrecurring cash
dividend), the authorization limits under Sections 2.2 and 3.1(a) shall be
adjusted proportionately, and the Committee shall make such adjustments to
the Plan and Stock Incentive Awards as it deems necessary, in its sole
discretion, to prevent dilution or enlargement of rights immediately
resulting from such transaction. Action by the Committee may
include: (i) adjustment of the number and kind of shares that may be
delivered under the Plan; (ii) adjustment of the number and kind of shares
subject to outstanding Stock Incentive Awards; (iii) adjustment of the
exercise price of outstanding Stock Incentive Awards or the measure to be
used to determine the amount of the benefit payable on a Stock Incentive
Award; and (iv) any other adjustments that the Committee determines to be
equitable. Notwithstanding the foregoing, the Committee shall
not make any adjustments to outstanding Options or SARs that would
constitute a modification or substitution of the stock right under Treas.
Reg. Sections 1.409A-1(b)(5)(v) that would be treated as the grant of a
new stock right or change in the form of payment for purposes of Code
Section 409A. Without limiting the foregoing, in the event of a
subdivision of the outstanding Stock (stock-split), a declaration of a
dividend payable in shares, or a combination or consolidation of the
outstanding Stock into a lesser number of shares, the authorization limits
under Sections 2.2 and 3.1(a) shall automatically be adjusted
proportionately, and the shares of Stock then subject to each Stock
Incentive Award shall automatically, without the necessity for any
additional action by the Committee, be adjusted proportionately without
any change in the aggregate purchase price
therefor.
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(b)
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Discretionary
Adjustments. Upon the occurrence or in anticipation of
any corporate event or transaction involving the Company (including,
without limitation, any merger, reorganization, recapitalization,
combination or exchange of shares, or any transaction described in Section
5.2(a)), the Committee may, in its sole discretion, provide (i) that Stock
Incentive Awards will be settled in cash rather than Stock, (ii) that
Stock Incentive Awards will become immediately vested and exercisable and
will expire after a designated period of time to the extent not then
exercised, (iii) that Stock Incentive Awards will be assumed by another
party to a transaction or otherwise be equitably converted or substituted
in connection with such transaction, (iv) that outstanding Stock Incentive
Awards may be settled by payment in cash or cash equivalents equal to the
excess of the Fair Market Value of the underlying Stock, as of a specified
date associated with the transaction, over the exercise price of the Stock
Incentive Award, (v) that performance targets and performance periods for
Performance Awards will be modified, or (vi) any combination of the
foregoing. The Committee’s determination need not be uniform
and may be different for different Participants whether or not such
Participants are similarly
situated.
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(c)
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Incentive Stock
Options. To the extent that any adjustments made
pursuant to this Section 5.2 cause Incentive Stock Options to cease to
qualify as Incentive Stock Options, such Options shall be deemed to be
Non-Qualified Stock Options.
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(d)
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General. The
existence of the Plan and the Stock Incentives granted pursuant to the
Plan must not affect in any way the right or power of the Company to make
or authorize any adjustment, reclassification, reorganization or other
change in its capital or business structure, any merger or consolidation
of the Company, any issue of debt or equity securities having preferences
or priorities as to the Stock or the rights thereof, the dissolution or
liquidation of the Company, any sale or transfer of all or any part of its
business or assets, or any other corporate act or
proceeding.
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5.3 Cash
Awards. The Committee may, at any time and in its discretion,
grant to any holder of a Stock Incentive the right to receive, at such times and
in such amounts as determined by the Committee in its discretion, a cash amount
which is intended to reimburse such person for all or a portion of the federal,
state and local income taxes imposed upon such person as a consequence of the
receipt of the Stock Incentive or the exercise of rights
thereunder.
5.4 Compliance with
Code. All Incentive Stock Options to be granted hereunder are
intended to comply with Code Section 422, and all provisions of the Plan and all
Incentive Stock Options granted hereunder must be construed in such manner as to
effectuate that intent.
5.5 Right to Terminate
Employment or Services. Nothing in the Plan or in any Stock
Incentive confers upon any Participant the right to continue as an employee or
officer of the Company or any of its affiliates or to continue to provide
services in any other respect or to affect the right of the Company or any of
its affiliates to terminate the Participant’s employment or other relationship
at any time.
5.6 Non-Alienation of
Benefits. Other than as specifically provided herein or
pursuant to the terms of the applicable Stock Incentive Agreement or Stock
Incentive Program, no benefit under the Plan may be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or
charge; and any attempt to do so shall be void. No such benefit may, prior to
receipt by the Participant, be in any manner liable for or subject to the debts,
contracts, liabilities, engagements or torts of the Participant.
5.7 Restrictions on Delivery and
Sale of Shares; Legends. Each Stock Incentive is subject to
the condition that if at any time the Committee, in its discretion, shall
determine that the listing, registration or qualification of the shares covered
by such Stock Incentive upon any securities exchange or under any state or
federal law is necessary or desirable as a condition of or in connection with
the granting of such Stock Incentive or the purchase or delivery of shares
thereunder, the delivery of any or all shares pursuant to such Stock Incentive
may be withheld unless and until such listing, registration or qualification
shall have been effected. If a registration statement is not in effect under the
Securities Act of 1933 or any applicable state securities laws with respect to
the shares of Stock purchasable or otherwise deliverable under Stock Incentives
then outstanding, the Committee may require, as a condition of exercise of any
Option or as a condition to any other delivery of Stock pursuant to a Stock
Incentive, that the Participant or other recipient of a Stock Incentive
represent, in writing, that the shares received pursuant to the Stock Incentive
are being acquired for investment and not with a view to distribution and agree
that the shares will not be disposed of except pursuant to an effective
registration statement, unless the Company shall have received an opinion of
counsel that such disposition is exempt from such requirement under the
Securities Act of 1933 and any applicable state securities laws. The Company may
include on certificates representing shares delivered pursuant to a Stock
Incentive such legends referring to the foregoing representations or
restrictions or any other applicable restrictions on resale as the Company, in
its discretion, shall deem appropriate.
5.8 Listing and Legal
Compliance. The Committee may suspend the exercise or payment
of any Stock Incentive so long as it determines that securities exchange listing
or registration or qualification under any securities laws is required in
connection therewith and has not been completed on terms acceptable to the
Committee.
5.9 Termination and Amendment of
the Plan. The Board of Directors at any time may amend or
terminate the Plan without stockholder approval; provided, however, that the
Board of Directors may condition any amendment on the approval of stockholders
of the Company if such approval is necessary or advisable with respect to tax,
securities or other applicable laws. Except as provided in Section
3.2(a), the Board of Directors at any time may amend or terminate the Plan
without shareholder approval; provided, however, that the Board of Directors may
condition any amendment on the approval of stockholders of the Company if the
Board of Directors in its discretion determines that such approval is necessary
or advisable with respect to tax, securities or other applicable
laws.
5.10 Stockholder
Approval. The Plan must be submitted to the stockholders of
the Company for their approval within twelve (12) months before or after the
adoption of the Plan by the Board of Directors. If such approval is not
obtained, any Stock Incentive granted hereunder will be void.
5.11 Choice of
Law. The laws of Delaware shall govern the Plan, to the extent
not preempted by federal law, without reference to the principles of conflict of
laws.
5.12 Effective Date of
Plan. This Plan was approved by the Board of Directors as of
December 24, 1999, and become effective upon its approval by the Company’s
shareholders on March 17, 2000.
5.13. Special Provisions related
to Section 409A of the Code.
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|
(a)
|
Notwithstanding
anything in the Plan or in any Stock Incentive Agreement to the contrary,
to the extent that any amount or benefit that would constitute non-exempt
“deferred compensation” for purposes of Section 409A of the Code would
otherwise be payable or distributable under the Plan or any Stock
Incentive Agreement by reason the occurrence of a change in control or the
Participant’s Disability or Termination of Employment, such amount or
benefit will not be payable or distributable to the Participant by reason
of such circumstance unless (i) the circumstances giving rise to such
change in control, Disability or Termination of Employment meet the
description or definition of “change in control event”, “disability” or
“separation from service”, as the case may be, in Section 409A of the Code
and applicable final regulations (without giving effect to any elective
provisions that may be available under such definitions), or (ii) the
payment or distribution of such amount or benefit would be exempt from the
application of Section 409A of the Code by reason of the short-term
deferral exemption or otherwise. This provision does not
prohibit the vesting of any Award upon a change in control, Disability or
Termination of Employment, however defined. If this provision
prevents the payment or distribution of any amount or benefit, such
payment or distribution shall be made on the next earliest payment or
distribution date or event specified in the Stock Incentive Agreement that
is permissible under Section 409A.
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(b)
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If
any one or more Awards granted under the Plan to a Participant could
qualify for any separation pay exemption described in Treas. Reg. Section
1.409A-1(b)(9), but such Awards in the aggregate exceed the dollar limit
permitted for the separation pay exemptions, the Company (acting through
the Committee or the Head of Human Resources) shall determine which Awards
or portions thereof will be subject to such
exemptions.
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(c)
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Notwithstanding
anything in the Plan or in any Stock Incentive Agreement to the contrary,
if any amount or benefit that would constitute non-exempt “deferred
compensation” for purposes of Section 409A of the Code would otherwise be
payable or distributable under this Plan or any Stock Incentive Agreement
by reason of a Participant’s separation from service during a period in
which the Participant is a Specified Employee (as defined below), then,
subject to any permissible acceleration of payment by the Committee under
Treas. Reg. Section 1.409A-3(j)(4)(ii) (domestic relations order),
(j)(4)(iii) (conflicts of interest), or (j)(4)(vi) (payment of employment
taxes):
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(i) if
the payment or distribution is payable in a lump sum, the Participant’s
right to receive payment or distribution of such non-exempt deferred
compensation will be delayed until the earlier of the Participant’s death
or the first day of the seventh month following the Participant’s
separation from service; and
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(ii) if
the payment or distribution is payable over time, the amount of such
non-exempt deferred compensation that would otherwise be payable during
the six-month period immediately following the Participant’s separation
from service will be accumulated and the Participant’s right to receive
payment or distribution of such accumulated amount will be delayed until
the earlier of the Participant’s death or the first day of the seventh
month following the Participant’s separation from service, whereupon the
accumulated amount will be paid or distributed to the Participant and the
normal payment or distribution schedule for any remaining payments or
distributions will resume.
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For
purposes of this Plan, the term “Specified Employee” has the meaning given such
term in Code Section 409A and the final regulations thereunder, provided, however, that, as
permitted in such final regulations, the Company’s Specified Employees and its
application of the six-month delay rule of Code Section 409A(a)(2)(B)(i) shall
be determined in accordance with rules adopted by the Board or any committee of
the Board, which shall be applied consistently with respect to all nonqualified
deferred compensation arrangements of the Company, including this
Plan.
The
foregoing is hereby acknowledged as being the Roper Industries, Inc. 2000 Stock
Incentive Plan, originally adopted by the shareholders on March 17, 2000, as
most recently amended and restated by the Board of Directors on December 29,
2008.
ROPER
INDUSTRIES, INC.
By: /s/ David B.
Liner
Its:
General Counsel and Corporate Secretary
Exhibit
10.06
Roper
Industries, Inc.
Non-Qualified
Retirement Plan
Amended
and Restated
Effective
january 1, 2009
Article
I
Establishment and
Purpose 1
Article
II
Definitions 1
Article
III
Eligibility and
Participation 8
Article
IV
Deferrals 8
Article
V
Company
Contributions 12
Article
VI
Benefits 13
Article
VII
Modifications to Payment
Schedules 16
Article
VIII
Valuation of Account Balances;
Investments 17
Article
IX
Administration 18
Article
X
Amendment and
Termination 19
Article
XI
Informal Funding 20
Article
XII
Claims 20
Article
XIII
General Provisions 24
Article
I
Establishment
and Purpose
Roper
Industries, Inc. (the “Company”) hereby amends and restates the Roper
Industries, Inc. Non-Qualified Retirement Plan, originally effective January 1,
1995, amended and restated effective March 1, 2002 (the “Plan”), effective
January 1, 2009 (but see Section 2.21). This amendment and restatement applies
to all amounts previously or hereafter deferred under the Plan, it being
expressly intended that this amendment and restatement shall constitute a
material modification of the Plan as in effect on October 3, 2004, such that all
amounts deferred under the Plan prior to January 1, 2005, shall be subject to
Code Section 409A. The Plan shall be effective for Non-Employee
Directors commencing January 1, 2009.
The
purpose of the Plan is to attract and retain key employees and non-employee
directors by providing each Participant with an opportunity to defer receipt of
a portion of their salary, bonus, and other specified
compensation. The Plan is not intended to meet the qualification
requirements of Code Section 401(a), but is intended to meet the requirements of
Code Section 409A, and shall be operated and interpreted consistent with that
intent.
The Plan
constitutes an unsecured promise by a Participating Employer to pay benefits in
the future. Participants in the Plan shall have the status of general unsecured
creditors of the Company or the Adopting Employer, as applicable. Each
Participating Employer shall be solely responsible for payment of the benefits
of its employees and their beneficiaries. The Plan is unfunded for Federal tax
purposes and is intended to be an unfunded arrangement for eligible employees
who are part of a select group of management or highly compensated employees of
the Employer within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of
ERISA. Any amounts set aside to defray the liabilities assumed by the Company or
an Adopting Employer will remain the general assets of the Company or the
Adopting Employer and shall remain subject to the claims of the Company’s or the
Adopting Employer's creditors until such amounts are distributed to the
Participants.
Article
II
Definitions
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2.1
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Account.
Account means a bookkeeping account maintained by the Committee to record
the payment obligation of a Participating Employer to a Participant as
determined under the terms of the Plan. The Committee may maintain an
Account to record the total obligation to a Participant and component
Accounts to reflect amounts payable at different times and in different
forms. Reference to an Account means any such Account established by the
Committee, as the context requires. Accounts are intended to constitute
unfunded obligations within the meaning of Sections 201(2), 301(a)(3) and
401(a)(1) of ERISA.
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2.2
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Account
Balance. Account Balance means, with respect to any Account, the
total payment obligation owed to a Participant from such Account as of the
most recent Valuation Date.
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2.3
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Adopting
Employer. Adopting Employer means an Affiliate who, with the
consent of the Company, has adopted the Plan for the benefit of its
eligible employees.
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2.4
|
Affiliate.
Affiliate means a corporation, trade or business that, together with the
Company, is treated as a single employer under Code Section 414(b) or
(c).
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2.5
|
Beneficiary.
Beneficiary means a natural person, estate, or trust designated by a
Participant to receive payments to which a Beneficiary is entitled in
accordance with provisions of the Plan. The Participant’s spouse, if
living, otherwise the Participant’s estate, shall be the Beneficiary if:
(i)the Participant has failed to properly designate a Beneficiary, or (ii)
all designated Beneficiaries have predeceased the
Participant.
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A former
spouse shall have no interest under the Plan, as Beneficiary or otherwise,
unless the Participant designates such person as a Beneficiary after dissolution
of the marriage, except to the extent provided under the terms of a domestic
relations order as described in Code Section
414(p)(1)(B).
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2.6
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Business
Day. A
Business Day is each day on which the New York Stock Exchange is open for
business.
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2.7
|
Change in
Control. Change
in Control, with respect to a Participating Employer that is organized as
a corporation, occurs on the date on which any of the following events
occur (i) a change in the ownership of the Participating Employer; (ii) a
change in the effective control of the Participating Employer; (iii) a
change in the ownership of a substantial portion of the assets of the
Participating Employer.
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For
purposes of this Section, a change in the ownership of the Participating
Employer occurs on the date on which any one person, or more than one person
acting as a group, acquires ownership of stock of the Participating Employer
that, together with stock held by such person or group constitutes more than 50%
of the total fair market value or total voting power of the stock of the
Participating Employer. A change in the effective control of the Participating
Employer occurs on the date on which either (i) a person, or more than one
person acting as a group, acquires ownership of stock of the Participating
Employer possessing 30% or more of the total voting power of the stock of the
Participating Employer, taking into account all such stock acquired during the
12-month period ending on the date of the most recent acquisition, or (ii) a
majority of the members of the Participating Employer’s Board of Directors is
replaced during any 12-month period by directors whose appointment or election
is not endorsed by a majority of the members of such Board of Directors prior to
the date of the appointment or election, but only if no other corporation is a
majority shareholder of the Participating Employer . A change in the ownership
of a substantial portion of assets occurs on the date on which any one person,
or more than one person acting as a group, other than a person or group of
persons that is related to the Participating Employer, acquires assets from the
Participating Employer that have a total gross fair market value equal to or
more than 40% of the total gross fair market value of all of the assets of the
Participating Employer immediately prior to such acquisition or acquisitions,
taking into account all such assets acquired during the 12-month period ending
on the date of the most recent acquisition.
An event
constitutes a Change in Control with respect to a Participant only if the
Participant performs services for the Participating Employer that has
experienced the Change in Control, or the Participant’s relationship to the
affected Participating Employer otherwise satisfies the requirements of Treasury
Regulation Section 1.409A-3(i)(5)(ii).
The
determination as to the occurrence of a Change in Control shall be based on
objective facts and in accordance with the requirements of Code Section
409A.
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2.8
|
Claimant.
Claimant means a Participant or Beneficiary filing a claim under Article
XII of this Plan.
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2.9
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Code. Code
means the Internal Revenue Code of 1986, as amended from time to
time.
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2.10
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Code Section
409A. Code Section 409A means section 409A of the Code, and
regulations and other guidance issued by the Treasury Department and
Internal Revenue Service thereunder. References to such Section
or guidance in this Plan include references to such provisions as they may
be modified.
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2.11
|
Committee.
Committee means the committee appointed by the Board of Directors of the
Company (or the appropriate committee of such board) to administer the
Plan. If no designation is made, the Chief Executive Officer of the
Company or his delegate shall have and exercise the powers of the
Committee.
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2.12
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Company.
Company means Roper Industries,
Inc.
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2.13
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Company
Contribution. Company Contribution means a credit by a
Participating Employer to a Participant’s Account(s) in accordance with
the provisions of Article V of the Plan. Company Contributions are
credited at the sole discretion of the Participating Employer and the fact
that a Company Contribution is credited in one year shall not obligate the
Participating Employer to continue to make such Company Contribution in
subsequent years. Unless the context clearly indicates otherwise, a
reference to Company Contribution shall include Earnings attributable to
such contribution.
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2.14
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Compensation.
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(a)
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Eligible
Employee. Compensation means base salary,
bonus, commission, and such other cash or equity-based compensation (if
any) approved by the Committee as Compensation that may be deferred under
this Plan. Compensation shall not include any compensation that
has been previously deferred under this Plan or any other arrangement
subject to Code Section 409A.
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(b)
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Non-Employee
Director. Compensation means the Total Annual Retainer,
Meeting Fees and/or Cash Dividend Equivalents, as defined in the Roper
Industries, Inc. Director Compensation
Plan.
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2.15
|
Compensation Deferral
Agreement. Compensation Deferral Agreement means an agreement
between a Participant and a Participating Employer that specifies (i) the
amount of each component of Compensation that the Participant has elected
to defer to the Plan in accordance with the provisions of Article IV, and
(ii) the Payment Schedule applicable to one or more Accounts. The
Committee may permit different deferral amounts for each component of
Compensation and may establish a minimum or maximum deferral amount for
each such component. Unless otherwise specified by the Committee in the
Compensation Deferral Agreement, Participants may defer up to 100% of
their base salary and up to 100% of other types of Compensation for a Plan
Year. A Compensation Deferral Agreement may also specify the investment
allocation described in Section
8.4.
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2.16
|
Death Benefit.
Death Benefit means the benefit payable under the Plan to a Participant’s
Beneficiary(ies) upon the Participant’s death as provided in Section 6.1
of the Plan.
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2.17
|
Deferral.
Deferral means a credit to a Participant’s Account(s) that records that
portion of the Participant’s Compensation that the Participant has elected
to defer to the Plan in accordance with the provisions of Article IV.
Unless the context of the Plan clearly indicates otherwise, a reference to
Deferrals includes Earnings attributable to such
Deferrals.
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Deferrals
shall be calculated with respect to the gross cash Compensation payable to the
Participant prior to any deductions or withholdings, but shall be reduced by the
Committee as necessary so that it does not exceed 100% of the cash Compensation
of the Participant remaining after deduction of all required income and
employment taxes, other employee benefit deductions, and other deductions
required by law. Changes to payroll withholdings that affect the amount of
Compensation being deferred to the Plan shall be allowed only to the extent
permissible under Code Section 409A.
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2.18
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Disability
Benefit. Disability Benefit means the benefit payable under the
Plan to a Participant in the event such Participant is determined to be
Disabled. For the avoidance of doubt, Non-Employee Directors
are not eligible for Disability Benefits under the
Plan.
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2.19
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Disabled.
Disabled means that a Participant is, by reason of any
medically-determinable physical or mental impairment which can be expected
to result in death or can be expected to last for a continuous period of
not less than twelve months, (i) unable to engage in any substantial
gainful activity, or (ii) receiving income replacement benefits for a
period of not less than three months under an accident and health plan
covering employees of the Participant’s employer. The Committee shall
determine whether a Participant is Disabled in accordance with Code
Section 409A provided, however, that a Participant shall be deemed to be
Disabled if determined to be totally disabled by the Social Security
Administration or the Railroad Retirement
Board.
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2.20
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Earnings.
Earnings mean an adjustment to the value of an Account in accordance with
Article VIII.
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2.21
|
Effective Date.
Effective Date for this amendment and restatement generally means January
1, 2009. The foregoing notwithstanding, Sections 4.7 and 4.8
hereof are effective January 1, 2005 and Section 7.6 is effective January
1, 2008. The Plan was originally effective January 1, 1995 and
was previously amended and restated effective March 1,
2002.
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2.22
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Eligible
Employee. Eligible Employee means a member of a “select group of
management or highly compensated employees” of a Participating Employer
within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA,
as determined by the Committee from time to time in its sole
discretion.
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2.23
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Employee.
Employee means a common-law employee of an
Employer.
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2.24
|
Employer.
Employer means, with respect to Employees it employs, the Company and each
Affiliate.
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2.25
|
ERISA. ERISA
means the Employee Retirement Income Security Act of 1974, as amended from
time to time.
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2.26
|
Fiscal Year
Compensation. Fiscal Year Compensation means Compensation earned
during one or more consecutive fiscal years of a Participating Employer,
all of which is paid after the last day of such fiscal year or
years.
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2.27
|
Non-Employee
Director. Non-Employee Director means a director of the
Company who is not an employee of the Company or any of its
Affiliates.
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2.28
|
Participant.
Participant means an Eligible Employee who has received notification of
his or her eligibility to defer Compensation under the Plan under Section
3.1, a Non-Employee Director and any other person with an Account Balance
greater than zero, regardless of whether such individual continues to be
an Eligible Employee or a Non-Employee Director. A
Participant’s continued participation in the Plan shall be governed by
Section 3.2 of the Plan.
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2.29
|
Participating
Employer. Participating Employer means the Company and each
Adopting Employer.
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2.30
|
Payment Schedule.
Payment Schedule means the date as of which payment of an Account
under the Plan will commence and the form in which payment of such Account
will be made.
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2.31
|
Performance-Based
Compensation. Performance-Based Compensation means Compensation
where the amount of, or entitlement to, the Compensation is contingent on
the satisfaction of pre-established organizational or individual
performance criteria relating to a performance period of at least twelve
consecutive months. Organizational or individual performance criteria are
considered pre-established if established in writing by not later than
ninety (90) days after the commencement of the period of service to which
the criteria relate, provided that the outcome is substantially uncertain
at the time the criteria are established. The determination of whether
Compensation qualifies as “Performance-Based Compensation” will be made in
accordance with Treas. Reg. Section 1.409A-1(e) and subsequent
guidance.
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2.32
|
Plan.
Generally, the term Plan means the “Roper Industries, Inc. Non-Qualified
Retirement Plan” as amended and restated herein and as may be further
amended from time to time hereafter. However, to the extent permitted or
required under Code Section 409A, the term Plan may in the appropriate
context also mean a portion of the Plan that is treated as a single plan
under Treas. Reg. Section 1.409A-1(c), or the Plan or portion of the Plan
and any other nonqualified Non-Qualified Retirement Plan or portion
thereof that is treated as a single plan under such
section.
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2.33
|
Plan Year. Plan
Year means January 1 through December
31.
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2.34
|
Retirement. For
Participants other than Non-Employee Directors, Retirement means
Separation from Service after attainment of any age where the combination
of the Participant’s age and number of Years of Service equals or exceeds
65. For Participants who are Non-Employee Directors, Retirement
means Separation from Service for any
reason.
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2.35
|
Retirement
Benefit. Retirement Benefit means the benefit payable to a
Participant under the Plan following the Retirement of the
Participant.
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2.36
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Retirement/Termination
Account. Retirement/Termination Account means an Account
established by the Committee to record the amounts payable to a
Participant that have not been allocated to a Specified Date Account.
Unless the Participant has established a Specified Date Account, all
Deferrals and Company Contributions shall be allocated to a
Retirement/Termination Account on behalf of the
Participant.
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2.37
|
Separation from
Service. An Employee incurs a Separation from Service upon
termination of employment with the Employer other than due to death or
Disability. Whether a Separation from Service has occurred
shall be determined by the Committee in accordance with Code Section
409A.
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Except in
the case of an Employee on a bona fide leave of absence as provided below, an
Employee is deemed to have incurred a Separation from Service if the Employer
and the Employee reasonably anticipated that the level of services to be
performed by the Employee after a date certain would be reduced to 20% or less
of the average services rendered by the Employee during the immediately
preceding 36-month period (or the total period of employment, if less than 36
months) disregarding periods during which the Employee was on a bona fide leave
of absence.
An
Employee who is absent from work due to military leave, sick leave, or other
bona fide leave of absence shall incur a Separation from Service on the first
date immediately following the later of (i) the six-month anniversary of the
commencement of the leave or (ii) the expiration of the Employee’s right, if
any, to reemployment under statute or contract. Notwithstanding the preceding,
however, an Employee who is absent from work due to a physical or mental
impairment that is expected to result in death or last for a continuous period
of at least six months and that prevents the Employee from performing the duties
of his position of employment or a similar position shall incur a Separation
from Service on the first date immediately following the 29-month anniversary of
the commencement of the leave.
For
purposes of determining whether a Separation from Service has occurred, the
Employer means the Employer as defined in Section 2.26 of the Plan, except that
for purposes of determining whether another organization is an Affiliate of the
Company, common ownership of at least 50% shall be determinative.
A
Non-Employee Director is deemed to have incurred a Separation from
Service upon the ceasing of all services as a Director constituting a
“separation from service” (as that term is defined at Treas. Reg.
§ 1.409A-1(h)) from the Company and any of its Affiliates.
The
Committee specifically reserves the right to determine whether a sale or other
disposition of substantial assets to an unrelated party constitutes a Separation
from Service with respect to a Participant providing services to the seller
immediately prior to the transaction and providing services to the buyer after
the transaction. Such determination shall be made in accordance with
the requirements of Code Section 409A.
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2.38
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Specified Date
Account. A Specified Date Account means an Account established
pursuant to Section 4.3 that will be paid (or that will commence to be
paid) at a future date as specified in the Participant’s Compensation
Deferral Agreement. Unless otherwise determined by the Committee, a
Participant may maintain no more than five Specified Date Accounts. A
Specified Date Account may be identified in enrollment materials as an
“In-Service Account”.
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2.39
|
Specified Date
Benefit. Specified Date Benefit means the benefit payable to a
Participant under the Plan in accordance with Section
6.1(c).
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2.40
|
Specified
Employee. For purposes of this Plan, the term “Specified
Employee” has the meaning given such term in Code Section 409A, provided, however,
that, as permitted in the final Section 409A regulations, the Company’s
Specified Employees and its application of the six-month delay rule of
Code Section 409A(a)(2)(B)(i) shall be determined in accordance with rules
adopted by the Board of Directors or a committee thereof, which shall be
applied consistently with respect to all nonqualified deferred
compensation arrangements of the Company, including this
Plan.
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2.41
|
Substantial Risk of
Forfeiture. Substantial Risk of Forfeiture shall have the meaning
specified in Treas. Reg. Section
1.409A-1(d).
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2.42
|
Termination
Benefit. Termination Benefit means the benefit payable to a
Participant under the Plan following the Participant’s Separation from
Service prior to Retirement. For the avoidance of doubt,
Non-Employee Directors are not eligible for Termination Benefits under the
Plan, because Retirement for Non-Employee Directors means Separation from
Service for any reason.
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2.43
|
Unforeseeable
Emergency. An Unforeseeable Emergency means a severe financial
hardship to the Participant resulting from an illness or accident of the
Participant, the Participant’s spouse, the Participant’s dependent (as
defined in Code section 152(a)), or a Beneficiary; loss of the
Participant’s property due to casualty (including the need to rebuild a
home following damage to a home not otherwise covered by insurance, for
example, as a result of a natural disaster); or other similar
extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant. The types of events which
may qualify as an Unforeseeable Emergency may be limited by the
Committee.
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2.44
|
Valuation Date.
Valuation Date shall mean each Business
Day.
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2.45
|
Year of
Service. A Year of Service shall mean each 12-month period of
continuous service with the Employer or each 12-month period of continuous
service as a Non-Employee Director of the
Company.
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Article
III
Eligibility
and Participation
|
3.1
|
Eligibility and
Participation.
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(a)
|
An
Eligible Employee becomes a Participant upon the earlier to occur of (i) a
credit of Company Contributions under Article V or (ii) notification of
eligibility to participate.
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(b)
|
A
Non-Employee Director becomes a Participant on January 1, 2009 or when
such individual becomes a Non-Employee Director, if
later.
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3.2
|
Duration. A
Participant shall be eligible to defer Compensation and, where applicable,
receive allocations of Company Contributions, subject to the terms of the
Plan, for as long as such Participant remains an Eligible Employee or a
Non-Employee Director. A Participant who is no longer an
Eligible Employee or a Non-Employee Director but has not Separated from
Service may not defer Compensation under the Plan but may otherwise
exercise all of the rights of a Participant under the Plan with respect to
his or her Account(s). On and after a Separation from Service,
a Participant shall remain a Participant as long as his or her Account
Balance is greater than zero and during such time may continue to make
allocation elections as provided in Section 8.4. An individual shall cease
being a Participant in the Plan when all benefits under the Plan to which
he or she is entitled have been
paid
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Article
IV
|
Deferrals
|
4.1
|
Deferral Elections,
Generally.
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|
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(a)
|
A
Participant may elect to defer Compensation by submitting a Compensation
Deferral Agreement during the enrollment periods established by the
Committee and in the manner specified by the Committee, but in any event,
in accordance with Section 4.2. A Compensation Deferral Agreement that is
not timely filed with respect to a service period or component of
Compensation shall be considered void and shall have no effect with
respect to such service period or Compensation. The Committee may modify
any Compensation Deferral Agreement prior to the date the election becomes
irrevocable under the rules of Section
4.2.
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(b)
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The
Participant shall specify on his or her Compensation Deferral Agreement
the amount of Deferrals and whether to allocate Deferrals and associated
Company Contributions to a Retirement/Termination Account or to a
Specified Date Account. If no designation is made or if a designation is
invalid (for example, because it fails to defer Compensation for at least
one year or, if longer, for the minimum deferral period specified by the
Committee), Deferrals (or that portion of Deferrals allocated invalidly)
shall be allocated to the Retirement/Termination Account. A Participant
may also specify in his or her Compensation Deferral Agreement the Payment
Schedule applicable to his or her Plan Accounts. If the Payment Schedule
is not specified in a Compensation Deferral Agreement, the Payment
Schedule shall be the Payment Schedule specified in Section
6.2.
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4.2 Timing Requirements for
Compensation Deferral Agreements.
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(a)
|
First Year of
Eligibility. In the case of the first year in which an Eligible
Employee or a Non-Employee Director becomes eligible to participate in the
Plan, he or she has up to 30 days following his initial eligibility to
submit a Compensation Deferral Agreement with respect to Compensation to
be earned during such year. The Compensation Deferral Agreement
described in this paragraph becomes irrevocable upon the end of such
30-day period. The determination of whether an Eligible Employee may file
a Compensation Deferral Agreement under this paragraph shall be determined
in accordance with the rules of Code Section 409A, including the
provisions of Treas. Reg. Section
1.409A-2(a)(7).
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|
|
A
Compensation Deferral Agreement filed under this paragraph applies to
Compensation earned on and after the date the Compensation Deferral
Agreement becomes irrevocable.
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(b)
|
Prior Year Election.
Except as otherwise provided in this Section 4.2, Participants may defer
Compensation by filing a Compensation Deferral Agreement no later than
December 31 of the year prior to the year in which the Compensation to be
deferred is earned. A Compensation Deferral Agreement described in this
paragraph shall become irrevocable with respect to such Compensation as of
January 1 of the year in which such Compensation is
earned.
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(c)
|
Performance-Based
Compensation. Participants may file a Compensation Deferral
Agreement with respect to Performance-Based Compensation no later than the
date that is six months before the end of the performance period, provided
that:
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(i)
|
the
Participant performs services continuously from the later of the beginning
of the performance period or the date the criteria are established through
the date the Compensation Deferral Agreement is submitted;
and
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(ii)
|
the
Compensation is not readily ascertainable as of the date the Compensation
Deferral Agreement is filed.
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A
Compensation Deferral Agreement becomes irrevocable with respect to
Performance-Based Compensation as of the day immediately following the latest
date for filing such election. Any election to defer Performance-Based
Compensation that is made in accordance with this paragraph and that becomes
payable as a result of the Participant’s death or disability (as defined in
Treas. Reg. Section 1.409A-1(e)) or upon a Change in Control (as defined in
Treas. Reg. Section 1.409A-3(i)(5)) prior to the satisfaction of the performance
criteria, will be void.
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(d)
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Sales Commissions.
Sales commissions (as defined in Treas. Reg. Section 1.409A-2(a)(12)(i))
are considered to be earned in the taxable year of the Participant in
which the sale occurs. The Compensation Deferral Agreement must
be filed before the last day of the year preceding the year in which the
sales commissions are earned and becomes irrevocable after that
date.
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(e)
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Investment Commissions.
Investment commissions (as defined in Treas. Reg. Section
1.409A-2(a)(12)(ii)) are considered to be earned in the 12-month period
immediately preceding the date assets are valued for purposes of
calculating the commission. Investment Commissions must be deferred under
the timing rules set forth in this Section
4.2.
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(f)
|
Fiscal Year
Compensation. A Participant may defer Fiscal Year Compensation by
filing a Compensation Deferral Agreement prior to the first day of the
fiscal year or years in which such Fiscal Year Compensation is earned. The
Compensation Deferral Agreement described in this paragraph becomes
irrevocable on the first day of the fiscal year or years to which it
applies.
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(g)
|
Short-Term Deferrals.
Compensation that meets the definition of a “short-term deferral”
described in Treas. Reg. Section 1.409A-1(b)(4) may be deferred in
accordance with the rules of Article VII, applied as if the date the
Substantial Risk of Forfeiture lapses is the date payments were originally
scheduled to commence, provided, however, that the provisions of Section
7.3 shall not apply to payments attributable to a Change in Control (as
defined in Treas. Reg. Section
1.409A-3(i)(5)).
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(h)
|
Certain Forfeitable
Rights. With respect to a legally binding right to a payment in a
subsequent year that is subject to a forfeiture condition requiring the
Participant’s continued services for a period of at least twelve months
from the date the Participant obtains the legally binding right, an
election to defer such Compensation may be made on or before the 30th day
after the Participant obtains the legally binding right to the
Compensation, provided that the election is made at least twelve months in
advance of the earliest date at which the forfeiture condition could
lapse. The Compensation Deferral Agreement described in this paragraph
becomes irrevocable after such 30th day. If the forfeiture condition
applicable to the payment lapses before the end of the required service
period as a result of the Participant’s death or disability (as defined in
Treas. Reg. Section 1.409A-3(i)(4)) or upon a Change in Control (as
defined in Treas. Reg. Section 1.409A-3(i)(5)), the Compensation Deferral
Agreement will be void unless it would be considered timely under another
rule described in this Section.
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|
(i)
|
“Evergreen” Deferral
Elections. The Committee, in its discretion, may provide in the
Compensation Deferral Agreement that such Compensation Deferral Agreement
will continue in effect for each subsequent year or performance period.
Such “evergreen” Compensation Deferral Agreements will become effective
with respect to an item of Compensation on the date such election becomes
irrevocable under this Section 4.2. An evergreen Compensation Deferral
Agreement may be terminated or modified prospectively with respect to
Compensation for which such election remains revocable under this Section
4.2. A Participant whose Compensation Deferral Agreement is cancelled in
accordance with Section 4.6 will be required to file a new Compensation
Deferral Agreement under this Article IV in order to recommence Deferrals
under the Plan.
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4.3
|
Allocation of
Deferrals and Company Contributions. A Compensation
Deferral Agreement may allocate Deferrals and Company Contributions to one
or more Specified Date Accounts and/or to the Retirement/Termination
Account. Company Contributions that are
made pursuant to Sections 5.1, 5.2, or 5.3 shall be allocated
to Specified Date Accounts and/or to the Retirement/Termination Account in
the same proportion as elected by the Participant with respect to base
salary for the Plan Year during which the Company Contribution is
made. The Committee may, in its discretion, establish a minimum
deferral period for Specified Date Accounts (for example, the third Plan
Year following the year Compensation subject to the Compensation Deferral
Agreement is earned).
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4.4
|
Deductions from
Pay. The Committee has the authority to determine the payroll
practices under which any component of Compensation subject to a
Compensation Deferral Agreement will be deducted from a Participant’s
Compensation.
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4.5
|
Vesting.
Participant Deferrals shall be 100% vested at all
times.
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4.6
|
Cancellation of
Deferrals. The Committee shall cancel a Participant’s Deferrals (i)
for the balance of the Plan Year in which an Unforeseeable Emergency
payment is made, (ii) if the Participant receives a hardship distribution
under the Employer’s qualified 401(k) plan, through the end of the Plan
Year in which the six-month anniversary of the hardship distribution
falls, and (iii) during periods in which the Participant is unable to
perform the duties of his or her position or any substantially similar
position due to a mental or physical impairment that can be expected to
result in death or last for a continuous period of at least six
months.
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4.7
|
Transition Relief;
Deferral Elections Filed by March 15, 2005. Notwithstanding the
foregoing and any other provisions in the Plan concerning timing of
initial deferral elections to the contrary, the Plan Administrator has the
authority, pursuant to transition relief provided in Q&A 21 of Notice
2005-1, to permit Participants to make or modify Deferral Elections with
respect to Deferrals subject to Code Section 409A that relate all or in
part to services performed on or before December 31, 2005, so long as: (i)
a Deferral Election with respect to such compensation is properly filed
with the Committee prior to March 15, 2005; and (ii) the amounts to which
the Deferral Election relate have not been paid or become payable prior to
the election.
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4.8
|
Transition Relief;
Revocation, Termination During 2005. Notwithstanding any
provisions in the Plan concerning the prohibition of payments to
Participants upon a termination of participation in the Plan or the
cancellation of a Deferral Election during a Plan Year to the contrary,
the Plan Administrator has the authority, pursuant to transition relief
provided in Q&A 20 of Notice 2005-1, to permit a Participant, pursuant
to procedures established by the Plan Administrator, to: (i) elect to
terminate, or partially terminate, participation in the Plan and receive
payment of that portion of his or her vested Account Balance payable under
the Plan corresponding to the portion of the Plan to which the termination
applies; or (ii) elect to cancel or reduce a Deferral Election with regard
to amounts subject to Code Section 409A. An election by a
Participant permitted in (i) or (ii) above, shall be made and shall result
in payment no later than December 31,
2005.
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Article
V
Company
Contributions
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5.1
|
Base
Contributions. Each Participating Employer that sponsors
the Roper Industries, Inc. Employees’ Retirement Savings 003 Plan (the
“003 plan”) shall credit a Company Contribution to the Account(s) of
Participants whose “employer base accounts” in the “003 Plan” are credited
with “base contributions” in an amount equal to 3% of such Participant’s
Compensation that is in excess of the Code Section 401(a)(17)
limit.
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|
5.2
|
Nonqualified Matching
Contributions.. Each Participating Employer shall credit
a Company “Matching” Contribution to the Account(s) of Participants who
participate in an Applicable Savings Plan (defined herein) in the amount
equal to (i) that portion of the Participant’s Compensation
that the Participant has elected to defer to the Plan multiplied by (ii)
the matching contribution formula in the Applicable Savings Plan (for
example, if a Participant elected to defer $50,000 to the Plan and the
matching contribution formula under the Applicable Savings Plan is 50% of
the first 6% of Compensation deferred, the Company Contribution under this
Section 5.2 would be calculated as $50,000 X 6% X 50% =
$1,500). “Applicable Saving Plan” shall mean the Participating
Employer’s qualified defined contribution 401(k)
plan.
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5.3
|
Discretionary Company
Contributions. The Participating Employer may, from time
to time in its sole and absolute discretion, credit Company Contributions
to any Participant in any amount determined by the Participating Employer.
Such contributions will be credited to a Participant’s
Retirement/Termination Account.
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|
5.4
|
Vesting.
Company Contributions described in Section 5.1, 5.2, and 5.3 above, and
the Earnings thereon, shall be 100% vested. Company
Contributions described in Section 5.4, above, (if any) and the Earnings
thereon, shall vest in accordance with the vesting scheduled established
by the Committee at the time that the Company Contribution is made. All
Company Contributions shall become 100% vested upon the occurrence of the
earliest of: (i) the death of the Participant while actively employed;
(ii) the Disability of the Participant while actively employed, (iii)
Retirement of the Participant, or (iv) a Change in Control. The
Participating Employer may, at any time, in its sole discretion, increase
a Participant’s vested interest in a Company Contribution. The portion of
a Participant’s Accounts that remains unvested upon his or her Separation
from Service after the application of the terms of this Section 5.2 shall
be forfeited.
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|
5.5
|
Non-Employee Directors
Not Eligible. For the avoidance of doubt, Non-Employee
Directors are not eligible for Company Contributions under the
Plan.
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Article
VI
Benefits
|
6.1
|
Benefits,
Generally. A Participant shall be entitled to the following
benefits under the Plan:
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(a)
|
Retirement Benefit.
Upon the Participant’s Separation from Service due to Retirement, he or
she shall be entitled to a Retirement Benefit. The Retirement Benefit
shall be equal to the vested portion of the Retirement/Termination
Account, based on the value of that Account as of the end of the month in
which Separation from Service occurs. Subject to Section 6.4 hereof, the
payment date for the Retirement Benefit will be the first day of the month
following the month in which Separation from Service occurs, provided,
however, that with respect to a Participant who is a Specified Employee as
of the date such Participant incurs a Separation from Service, the payment
date will be the first day of the seventh month following the
month in which such Separation from Service occurs. If the
Retirement Benefit is to be paid in the form of installments, any
subsequent installment payments to a Specified Employee will be paid on
the anniversary of the date the first payment was
made.
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(b)
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Termination Benefit.
Upon the Participant’s Separation from Service for reasons other than
death or Retirement, he or she shall be entitled to a Termination Benefit.
The Termination Benefit shall be equal to the vested portion of the
Retirement/Termination Account, based on the value of that Account as of
the end of the month in which Separation from Service
occurs. Subject to Section 6.4 hereof, the payment date for the
Termination Benefit will be the first day of the month following the month
in which Separation from Service occurs, provided, however, that with
respect to a Participant who is a Specified Employee as of the date such
Participant incurs a Separation from Service, payment will be made on the
first day of the seventh month following the month in which such
Separation from Service occurs. For the avoidance of doubt, Non-Employee
Directors are not eligible for Termination Benefits under the Plan,
because Retirement for Non-Employee Directors means Separation from
Service for any reason.
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(c)
|
Specified Date Benefit.
If the Participant has established one or more Specified Date Accounts, he
or she shall be entitled to a Specified Date Benefit with respect to each
such Specified Date Account. The Specified Date Benefit shall be equal to
the vested portion of the Specified Date Account, based on the value of
that Account as of the end of the month designated by the Participant at
the time the Account was established, regardless of whether the
Participant remains actively employed at the time of distribution of the
Specified Date Benefit. Subject to Section 6.4 hereof, the payment date
for the Specified Date Benefit will be the first day of the month
following the designated month.
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|
(d)
|
Death Benefit. In the event of the
Participant’s death, his or her designated Beneficiary(ies) shall be
entitled to a Death Benefit. The Death Benefit shall be equal
to the vested portion of the Retirement/Termination Account and the vested
portion of any unpaid balances in any Specified Date Accounts. The Death
Benefit shall be based on the value of the Accounts as of the end of the
month in which death occurred. Subject to Section 6.4 hereof,
the payment date for the Death Benefit will be the first day of the month
following the month in which death of the Participant
occurred.
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|
(e)
|
Disability Benefit.
Upon a determination by the Committee that a Participant is Disabled, he
or she shall be entitled to a Disability Benefit. The
Disability Benefit shall be equal to the vested portion of the
Retirement/Termination Account and the vested portion of any unpaid
balances in any Specified Date Accounts. The Disability Benefit shall be
based on the value of the Accounts as of the last day of the month in
which Disability occurs. Subject to Section 6.4 hereof, the
payment date for the Disability Benefit will be the first day of the month
following the month during which the Participant was judged by the
Committee to have incurred a Disability. For the avoidance of
doubt, Non-Employee Directors are not eligible for Disability Benefits
under the Plan.
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(f)
|
Unforeseeable Emergency
Payments. A Participant, other than a Non-Employee Director, who
experiences an Unforeseeable Emergency may submit a written request to the
Committee to receive payment of all or any portion of his or her vested
Accounts. Whether a Participant or Beneficiary is faced with an
Unforeseeable Emergency permitting an emergency payment shall be
determined by the Committee based on the relevant facts and circumstances
of each case, but, in any case, a distribution on account of Unforeseeable
Emergency may not be made to the extent that such emergency is or may be
reimbursed through insurance or otherwise, by liquidation of the
Participant’s assets, to the extent the liquidation of such assets would
not cause severe financial hardship, or by cessation of Deferrals under
this Plan. An approval of a payment due to an Unforeseeable Emergency is
subject to the discretion of the Committee. If an emergency
payment is approved by the Committee, the amount of the payment shall not
exceed the amount reasonably necessary to satisfy the need, taking into
account the additional compensation that is available to the Participant
as the result of cancellation of deferrals to the Plan, including amounts
necessary to pay any taxes or penalties that the Participant reasonably
anticipates will result from the payment. The amount of the emergency
payment shall be subtracted first from the vested portion of the
Participant's Retirement/Termination Account until depleted and then from
the vested Specified Date Accounts, beginning with the Specified Date
Account with the latest payment commencement date. Emergency payments
shall be paid in a single lump sum within the 90-day period following the
date the payment is approved by the
Committee.
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6.2
|
Form of
Payment.
|
|
(a)
|
Retirement Benefit. A
Participant who is entitled to receive a Retirement Benefit shall receive
payment of such benefit in a single lump sum, unless the Participant
elects on his or her initial Compensation Deferral Agreement to have such
benefit paid in one of the following alternative forms of payment (i)
substantially equal annual installments over a period of two to ten years,
as elected by the Participant; or (ii) a lump sum payment of a percentage
of the balance in the Retirement/Termination Account, with the balance
paid in substantially equal annual installments over a period of two to
ten years, as elected by the
Participant.
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(b)
|
Termination Benefit. A
Participant who is entitled to receive a Termination Benefit shall receive
payment of such benefit in a single lump sum. For the avoidance
of doubt, Non-Employee Directors are not eligible for Termination Benefits
under the Plan.
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|
(c)
|
Specified Date Benefit.
The Specified Date Benefit shall be paid in a single lump sum, unless the
Participant elects on the Compensation Deferral Agreement with which the
account was established to have the Specified Date Account paid in
substantially equal annual installments over a period of two to five
years, as elected by the
Participant.
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|
(d)
|
Death Benefit. A
designated Beneficiary who is entitled to receive a Death Benefit shall
receive payment of such benefit in a single lump
sum.
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|
(e)
|
Disability
Benefit. A Participant who is entitled to receive a
Disability Benefit shall receive payment of such benefit in a single lump
sum, unless the Participant elects on his or her initial Compensation
Deferral Agreement to have such benefit paid in accordance with the
Payment Schedule for his or her Retirement
Benefit.
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|
(f)
|
Small Account Balances.
The Committee may, in its sole discretion which shall be evidenced in
writing no later than the date of payment, elect to pay the value of the
Participant’s Accounts upon a Separation from Service in a single lump sum
if the balance of such Accounts is not greater than the applicable dollar
amount under Code Section 402(g)(1)(B), provided the payment represents
the complete liquidation of the Participant’s interest in the
Plan.
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|
(g)
|
Rules Applicable to
Installment Payments. If a Payment Schedule specifies installment
payments, annual payments will be made beginning as of the payment
commencement date for such installments and shall continue on each
anniversary thereof until the number of installment payments specified in
the Payment Schedule has been paid. The amount of each installment payment
shall be determined by dividing (a) by (b), where (a) equals the Account
Balance as of the Valuation Date and (b) equals the remaining number of
installment payments.
|
For
purposes of Article VII, installment payments will be treated as a single form
of payment. If a lump sum equal to less than 100% of the Retirement/Termination
Account is paid, the payment commencement date for the installment form of
payment will be the first anniversary of the payment of the lump
sum.
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6.3
|
Acceleration of or
Delay in Payments. The Committee, in its sole and absolute
discretion, may elect to accelerate the time or form of payment of a
benefit owed to the Participant hereunder, provided such acceleration is
permitted under Treas. Reg. Section 1.409A-3(j)(4). The Committee may
also, in its sole and absolute discretion, delay the time for payment of a
benefit owed to the Participant hereunder, to the extent permitted under
Treas. Reg. Section 1.409A-2(b)(7). If the Plan receives a domestic
relations order (within the meaning of Code Section 414(p)(1)(B))
directing that all or a portion of a Participant’s Accounts be paid to an
“alternate payee,” any amounts to be paid to the alternate payee(s) shall
be paid in a single lump sum.
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|
6.4
|
Payments Treated as
Made on the Designated Payment Date. Payments made on
the payment date specified in the Plan, or on a later date within the same
taxable year of the Participant or Beneficiary, or, if later, by the
fifteenth (15th)
day of the third calendar month following the payment date specified in
the Plan shall be treated as having been made on the payment date;
provided, however, that the Participant or Beneficiary is not permitted,
directly or indirectly, to designate the taxable year of the
payment. In addition, payments made no earlier than 30 days
before the designated payment date will likewise be treated as having been
made on the payment date so long as the Participant or Beneficiary is not
permitted, directly or indirectly, to designate the taxable year of the
payment. The foregoing shall be administered in compliance with
the provisions of Regulation 1.409A-3(d), which Regulation may authorize
other instances in which payments made after the payment date shall be
treated as having been made on the payment
date.
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Article
VII
Modifications
to Payment Schedules
|
7.1
|
Participant’s Right to
Modify. A Participant may modify any or all of the
alternative Payment Schedules with respect to an Account, consistent with
the permissible Payment Schedules available under the Plan, provided such
modification complies with the requirements of this Article
VII.
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|
7.2
|
Time of
Election. The date on which a modification election is submitted to
the Committee must be at least twelve months prior to the date on which
payment is scheduled to commence under the Payment Schedule in effect
prior to the modification.
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|
7.3
|
Date of Payment under
Modified Payment Schedule. Except with respect to modifications
that relate to the payment of a Death Benefit or a Disability Benefit, the
date payments are to commence under the modified Payment Schedule must be
no earlier than five years after the date payment would have commenced
under the original Payment Schedule. Under no circumstances may a
modification election result in an acceleration of payments in violation
of Code Section 409A.
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|
7.4
|
Effective Date.
A modification election submitted in accordance with this Article VII is
irrevocable upon receipt by the Committee and becomes effective 12 months
after such date.
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|
7.5
|
Effect on
Accounts. An election to modify a Payment Schedule is specific to
the Account or payment event to which it applies, and shall not be
construed to affect the Payment Schedules of any other
Accounts.
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|
7.6
|
Transition Relief
Modifications. Notwithstanding the foregoing, prior to
January 1, 2009, the Committee may permit a Participant to modify any or
all of the alternative Payment Schedules with respect to an Account,
consistent with the permissible Payment Schedules available under the
Plan, and without regard to Sections 7.2, 7.3 and 7.4 hereof, provided
such modification complies with the requirements of IRS Notice
2007-86.
|
Article
VIII
Valuation
of Account Balances; Investments
|
8.1
|
Valuation.
Deferrals shall be credited to appropriate Accounts on the date such
Compensation would have been paid to the Participant absent the
Compensation Deferral Agreement. Company Contributions shall be credited
to the Retirement/Termination Account at the times determined by the
Committee. Valuation of Accounts shall be performed under procedures
approved by the Committee.
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|
8.2
|
Earnings
Credit. Each Account will be credited with Earnings on each
Business Day, based upon the Participant’s investment allocation among a
menu of investment options selected in advance by the Committee, in
accordance with the provisions of this Article VIII (“investment
allocation”).
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|
8.3
|
Investment
Options. Investment options will be determined by the Committee.
The Committee, in its sole discretion, shall be permitted to add or remove
investment options from the Plan menu from time to time, provided that any
such additions or removals of investment options shall not be effective
with respect to any period prior to the effective date of such
change.
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|
8.4
|
Investment
Allocations. A Participant’s investment allocation constitutes a
deemed, not actual, investment among the investment options comprising the
investment menu. At no time shall a Participant have any real or
beneficial ownership in any investment option included in the investment
menu, nor shall the Participating Employer or any trustee acting on its
behalf have any obligation to purchase actual securities as a result of a
Participant’s investment allocation. A Participant’s investment allocation
shall be used solely for purposes of adjusting the value of a
Participant’s Account Balances.
|
A
Participant shall specify an investment allocation for each of his Accounts in
accordance with procedures established by the Committee. Except as
otherwise provided by the Committee, the following provisions of this Section
8.4 shall apply to allocations under the Plan. Allocation among the
investment options must be designated in increments of 1%. The
Participant’s investment allocation will become effective on the same Business
Day or, in the case of investment allocations received after a time specified by
the Committee, the next Business Day.
A
Participant may change an investment allocation on any Business Day, both with
respect to future credits to the Plan and with respect to existing Account
Balances, in accordance with procedures adopted by the Committee. Changes shall
become effective on the same Business Day or, in the case of investment
allocations received after a time specified by the Committee, the next Business
Day, and shall be applied prospectively.
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8.5
|
Unallocated Deferrals
and Accounts. If the Participant fails to make an investment
allocation with respect to an Account, such Account shall be invested in
an investment option, the primary objective of which is the preservation
of capital, as determined by the
Committee.
|
Article
IX
Administration
|
9.1
|
Plan
Administration. This Plan shall be administered by the Committee
which shall have discretionary authority to make, amend, interpret and
enforce all appropriate rules and regulations for the administration of
this Plan and to utilize its discretion to decide or resolve any and all
questions, including but not limited to eligibility for benefits and
interpretations of this Plan and its terms, as may arise in connection
with the Plan. Claims for benefits shall be filed with the Committee and
resolved in accordance with the claims procedures in Article
XII.
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|
9.2
|
Administration Upon
Change in Control. Upon a Change in Control of the
Company (not of a Participating Employer), the Committee, as constituted
immediately prior to such Change in Control, shall continue to act as the
Committee. The individual who was the Chief Executive Officer
of the Company (or if such person is unable or unwilling to act, the next
highest ranking officer) prior to the Change in Control shall have the
authority (but shall not be obligated) to appoint an independent third
party to act as the Committee.
|
Upon such
Change in Control, the Company may not remove the Committee, unless 2/3rds of
the members of the Board of Directors of the Company and a majority of
Participants and Beneficiaries with Account Balances consent to the removal and
replacement Committee. Notwithstanding the foregoing, neither the Committee nor
the officer described above shall have authority to direct investment of trust
assets under any rabbi trust described in Section 11.2.
The
Participating Employer shall, with respect to the Committee identified under
this Section, (i) pay all reasonable expenses and fees of the Committee, (ii)
indemnify the Committee (including individuals serving as Committee) against any
costs, expenses and liabilities including, without limitation, attorneys’ fees
and expenses arising in connection with the performance of the Committee
hereunder, except with respect to matters resulting from the Committee’s gross
negligence or willful misconduct and (iii) supply full and timely information to
the Committee on all matters related to the Plan, any rabbi trust, Participants,
Beneficiaries and Accounts as the Committee may reasonably require.
|
9.3
|
Withholding.
The Participating Employer shall have the right to withhold from any
payment due under the Plan (or with respect to any amounts credited to the
Plan) any taxes required by law to be withheld in respect of such payment
(or credit). Withholdings with respect to amounts credited to the Plan
shall be deducted from Compensation that has not been deferred to the
Plan.
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|
9.4
|
Indemnification.
The Participating Employers shall indemnify and hold harmless each
employee, officer, director, agent or organization, to whom or to which
are delegated duties, responsibilities, and authority under the Plan or
otherwise with respect to administration of the Plan, including, without
limitation, the Committee and its agents, against all claims, liabilities,
fines and penalties, and all expenses reasonably incurred by or imposed
upon him or it (including but not limited to reasonable attorney fees)
which arise as a result of his or its actions or failure to act in
connection with the operation and administration of the Plan to the extent
lawfully allowable and to the extent that such claim, liability, fine,
penalty, or expense is not paid for by liability insurance purchased or
paid for by the Participating Employer. Notwithstanding the foregoing, the
Participating Employer shall not indemnify any person or organization if
his or its actions or failure to act are due to gross negligence or
willful misconduct or for any such amount incurred through any settlement
or compromise of any action unless the Participating Employer consents in
writing to such settlement or
compromise.
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9.5
|
Delegation of
Authority. In the administration of this Plan, the Committee may,
from time to time, employ agents and delegate to them such administrative
duties as it sees fit, and may from time to time consult with legal
counsel who shall be legal counsel to the
Company.
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9.6
|
Binding Decisions or
Actions. The decision or action of the Committee in respect of any
question arising out of or in connection with the administration,
interpretation and application of the Plan and the rules and regulations
thereunder shall be final and conclusive and binding upon all persons
having any interest in the Plan.
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Article
X
Amendment
and Termination
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10.1
|
Amendment and
Termination. The Company may at any time and from time to time
amend the Plan or may terminate the Plan as provided in this Article X.
Each Participating Employer may also terminate its participation in the
Plan.
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10.2
|
Amendments. The
Company, by action taken by its Board of Directors, may amend the Plan at
any time and for any reason, provided that any such amendment shall not
reduce the vested Account Balances of any Participant accrued as of the
date of any such amendment or restatement (as if the Participant had
incurred a voluntary Separation from Service on such date) or reduce any
rights of a Participant under the Plan or other Plan features with respect
to Deferrals made prior to the date of any such amendment or restatement
without the consent of the Participant. The Board of Directors of the
Company may delegate to the Committee the authority to amend the Plan
without the consent of the Board of Directors for the purpose of (i)
conforming the Plan to the requirements of law, (ii) facilitating the
administration of the Plan, (iii) clarifying provisions based on the
Committee’s interpretation of the document and (iv) making such other
amendments as the Board of Directors may
authorize.
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10.3
|
Termination.
The Company, by action taken by its Board of Directors, may terminate the
Plan and pay Participants and Beneficiaries their Account Balances in a
single lump sum at any time, to the extent and in accordance with Treas.
Reg. Section 1.409A-3(j)(4)(ix). If a Participating Employer terminates
its participation in the Plan, the benefits of affected Employees shall be
paid at the time provided in Article
VI.
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10.4
|
Application of Code
Section 409A. The Plan is intended to constitute a plan of deferred
compensation that meets the requirements for deferral of income taxation
under Code Section 409A. The Committee, pursuant to its authority to
interpret the Plan, is to interpret the Plan in a manner so as to comply
with Section 409A.
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Article
XI
Informal
Funding
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11.1
|
General Assets.
Obligations established under the terms of the Plan may be satisfied from
the general funds of the Participating Employers, or a trust described in
this Article XI. No Participant, spouse or Beneficiary shall have any
right, title or interest whatever in assets of the Participating
Employers. Nothing contained in this Plan, and no action taken pursuant to
its provisions, shall create or be construed to create a trust of any
kind, or a fiduciary relationship, between the Participating Employers and
any Employee, spouse, or Beneficiary. To the extent that any person
acquires a right to receive payments hereunder, such rights are no greater
than the right of an unsecured general creditor of the Participating
Employer.
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11.2
|
Rabbi Trust. A
Participating Employer may, in its sole discretion, establish a grantor
trust, commonly known as a rabbi trust, as a vehicle for accumulating
assets to pay benefits under the Plan. Payments under the Plan may be paid
from the general assets of the Participating Employer or from the assets
of any such rabbi trust. Payment from any such source shall reduce the
obligation owed to the Participant or Beneficiary under the
Plan.
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Article
XII
Claims
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12.1
|
Filing a Claim.
Any controversy or claim arising out of or relating to the Plan shall be
filed in writing with the Committee which shall make all determinations
concerning such claim. Any claim filed with the Committee and any decision
by the Committee denying such claim shall be in writing and shall be
delivered to the Participant or Beneficiary filing the claim (the
“Claimant”).
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(a)
|
In General. Notice of a
denial of benefits (other than Disability benefits) will be provided
within ninety (90) days of the Committee’s receipt of the Claimant's claim
for benefits. If the Committee determines that it needs additional time to
review the claim, the Committee will provide the Claimant with a notice of
the extension before the end of the initial ninety (90) day period. The
extension will not be more than ninety (90) days from the end of the
initial ninety (90) day period and the notice of extension will explain
the special circumstances that require the extension and the date by which
the Committee expects to make a
decision.
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(b)
|
Disability Benefits.
Notice of denial of Disability benefits will be provided within forty-five
(45) days of the Committee’s receipt of the Claimant’s claim for
Disability benefits. If the Committee determines that it needs additional
time to review the Disability claim, the Committee will provide the
Claimant with a notice of the extension before the end of the initial
forty-five (45) day period. If the Committee determines that a decision
cannot be made within the first extension period due to matters beyond the
control of the Committee, the time period for making a determination may
be further extended for an additional thirty (30) days. If such an
additional extension is necessary, the Committee shall notify the Claimant
prior to the expiration of the initial thirty (30) day extension. Any
notice of extension shall indicate the circumstances necessitating the
extension of time, the date by which the Committee expects to furnish a
notice of decision, the specific standards on which such entitlement to a
benefit is based, the unresolved issues that prevent a decision on the
claim and any additional information needed to resolve those issues. A
Claimant will be provided a minimum of forty-five (45) days to submit any
necessary additional information to the Committee. In the event that a
thirty (30) day extension is necessary due to a Claimant’s failure to
submit information necessary to decide a claim, the period for furnishing
a notice of decision shall be tolled from the date on which the notice of
the extension is sent to the Claimant until the earlier of the date the
Claimant responds to the request for additional information or the
response deadline.
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(c)
|
Contents of Notice. If
a claim for benefits is completely or partially denied, notice of such
denial shall be in writing and shall set forth the reasons for denial in
plain language. The notice shall (i) cite the pertinent provisions of the
Plan document and (ii) explain, where appropriate, how the Claimant can
perfect the claim, including a description of any additional material or
information necessary to complete the claim and why such material or
information is necessary. The claim denial also shall include an
explanation of the claims review procedures and the time limits applicable
to such procedures, including a statement of the Claimant’s right to bring
a civil action under Section 502(a) of ERISA following an adverse decision
on review. In the case of a complete or partial denial of a Disability
benefit claim, the notice shall provide a statement that the Committee
will provide to the Claimant, upon request and free of charge, a copy of
any internal rule, guideline, protocol, or other similar criterion that
was relied upon in making the
decision.
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12.2
|
Appeal of Denied
Claims. A Claimant whose claim has been completely or partially
denied shall be entitled to appeal the claim denial by filing a written
appeal with a committee designated to hear such appeals (the “Appeals
Committee”). A Claimant who timely requests a review of the denied claim
(or his or her authorized representative) may review, upon request and
free of charge, copies of all documents, records and other information
relevant to the denial and may submit written comments, documents, records
and other information relevant to the claim to the Appeals Committee. All
written comments, documents, records, and other information shall be
considered “relevant” if the information (i) was relied upon in making a
benefits determination,(ii) was submitted, considered or generated in the
course of making a benefits decision regardless of whether it was relied
upon to make the decision, or (iii) demonstrates compliance with
administrative processes and safeguards established for making benefit
decisions. The Appeals Committee may, in its sole discretion
and if it deems appropriate or necessary, decide to hold a hearing with
respect to the claim appeal.
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(a)
|
In General. Appeal of a
denied benefits claim (other than a Disability benefits claim) must be
filed in writing with the Appeals Committee no later than sixty (60) days
after receipt of the written notification of such claim denial. The
Appeals Committee shall make its decision regarding the merits of the
denied claim within sixty (60) days following receipt of the appeal (or
within one hundred and twenty (120) days after such receipt, in a case
where there are special circumstances requiring extension of time for
reviewing the appealed claim). If an extension of time for reviewing the
appeal is required because of special circumstances, written notice of the
extension shall be furnished to the Claimant prior to the commencement of
the extension. The notice will indicate the special circumstances
requiring the extension of time and the date by which the Appeals
Committee expects to render the determination on review. The review will
take into account comments, documents, records and other information
submitted by the Claimant relating to the claim without regard to whether
such information was submitted or considered in the initial benefit
determination.
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(b)
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Disability Benefits.
Appeal of a denied Disability benefits claim must be filed in writing with
the Appeals Committee no later than one hundred eighty (180) days after
receipt of the written notification of such claim denial. The review shall
be conducted by the Appeals Committee (exclusive of the person who made
the initial adverse decision or such person’s subordinate). In reviewing
the appeal, the Appeals Committee shall (i) not afford deference to the
initial denial of the claim, (ii) consult a medical professional who has
appropriate training and experience in the field of medicine relating to
the Claimant’s disability and who was neither consulted as part of the
initial denial nor is the subordinate of such individual and (iii)
identify the medical or vocational experts whose advice was obtained with
respect to the initial benefit denial, without regard to whether the
advice was relied upon in making the decision. The Appeals Committee shall
make its decision regarding the merits of the denied claim within
forty-five (45) days following receipt of the appeal (or within ninety
(90) days after such receipt, in a case where there are special
circumstances requiring extension of time for reviewing the appealed
claim). If an extension of time for reviewing the appeal is required
because of special circumstances, written notice of the extension shall be
furnished to the Claimant prior to the commencement of the extension. The
notice will indicate the special circumstances requiring the extension of
time and the date by which the Appeals Committee expects to render the
determination on review. Following its review of any additional
information submitted by the Claimant, the Appeals Committee shall render
a decision on its review of the denied
claim.
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(c)
|
Contents of Notice. If
a benefits claim is completely or partially denied on review, notice of
such denial shall be in writing and shall set forth the reasons for denial
in plain language.
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The
decision on review shall set forth (i) the specific reason or reasons for the
denial, (ii) specific references to the pertinent Plan provisions on which the
denial is based, (iii) a statement that the Claimant is entitled to receive,
upon request and free of charge, reasonable access to and copies of all
documents, records, or other information relevant (as defined above) to the
Claimant’s claim, and (iv) a statement describing any voluntary appeal
procedures offered by the plan and a statement of the Claimant’s right to bring
an action under Section 502(a) of ERISA.
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(d)
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For
the denial of a Disability benefit, the notice will also include a
statement that the Appeals Committee will provide, upon request and free
of charge, (i) any internal rule, guideline, protocol or other similar
criterion relied upon in making the decision, (ii) any medical opinion
relied upon to make the decision and (iii) the required statement under
Section 2560.503-1(j)(5)(iii) of the Department of Labor
regulations.
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12.4
|
Legal Action. A
Claimant may not bring any legal action, including commencement of any
arbitration, relating to a claim for benefits under the Plan unless and
until the Claimant has followed the claims procedures under the Plan and
exhausted his or her administrative remedies under such claims
procedures.
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If a
Participant or Beneficiary prevails in a legal proceeding brought under the Plan
to enforce the rights of such Participant or any other similarly situated
Participant or Beneficiary, in whole or in part, the Participating Employer
shall reimburse such Participant or Beneficiary for all legal costs, expenses,
attorneys’ fees and such other liabilities incurred as a result of such
proceedings. If the legal proceeding is brought in connection with a Change in
Control, or a “change in control” as defined in a rabbi trust described in
Section 11.2, the Participant or Beneficiary may file a claim directly with the
trustee for reimbursement of such costs, expenses and fees. For purposes of the
preceding sentence, the amount of the claim shall be treated as if it were an
addition to the Participant’s or Beneficiary’s Account.
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12.5
|
Discretion of Appeals
Committee. All interpretations, determinations and decisions of the
Appeals Committee with respect to any claim shall be made in its sole
discretion, and shall be final and
conclusive.
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Article
XIII
General
Provisions
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13.1
|
Anti-assignment
Rule. No interest of any Participant, spouse or Beneficiary under
this Plan and no benefit payable hereunder shall be assigned as security
for a loan, and any such purported assignment shall be null, void and of
no effect, nor shall any such interest or any such benefit be subject in
any manner, either voluntarily or involuntarily, to anticipation, sale,
transfer, assignment or encumbrance by or through any Participant, spouse
or Beneficiary. Notwithstanding anything to the contrary herein, however,
the Committee has the discretion to make payments to an alternate payee in
accordance with the terms of a domestic relations order (as defined in
Code Section 414(p)(1)(B)).
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The
Company may assign any or all of its liabilities under this Plan in connection
with any restructuring, recapitalization, sale of assets or other similar
transactions affecting a Participating Employer without the consent of the
Participant.
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13.2
|
No Legal or Equitable
Rights or Interest. No Participant or other person shall have any
legal or equitable rights or interest in this Plan that are not expressly
granted in this Plan. Participation in this Plan does not give any person
any right to be retained in the service of the Participating Employer. The
right and power of a Participating Employer to dismiss or discharge an
Employee is expressly reserved. The Participating Employers make no
representations or warranties as to the tax consequences to a Participant
or a Participant’s beneficiaries resulting from a deferral of income
pursuant to the Plan.
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13.3
|
No Employment
Contract. Nothing contained herein shall be construed as
constituting a contract or agreement between an Employee and a
Participating Employer or a Non-Employee Director and the Company to the
effect that the Employee will be employed by the Employer or continue as a
Director of the Company for any specific
time..
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13.4
|
Notice. Any
notice or filing required or permitted to be delivered to the Committee
under this Plan shall be delivered in writing, in person, or through such
electronic means as is established by the Committee. Notice shall be
deemed given as of the date of delivery or, if delivery is made by mail,
as of the date shown on the postmark on the receipt for registration or
certification. Written transmission shall be sent by certified mail
to:
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ROPER
INDUSTRIES, INC.
ATTN:
DIRECTOR OF HUMAN RESOURCES
6901
PROFESSIONAL PARKWAY EAST, SUITE 200
SARASOTA,
FLORIDA 34240
Any
notice or filing required or permitted to be given to a Participant under this
Plan shall be sufficient if in writing or hand-delivered, or sent by mail to the
last known address of the Participant.
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13.5
|
Headings. The
headings of Sections are included solely for convenience of reference, and
if there is any conflict between such headings and the text of this Plan,
the text shall control.
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13.6
|
Invalid or
Unenforceable Provisions. If any provision of this Plan shall be
held invalid or unenforceable, such invalidity or unenforceability shall
not affect any other provisions hereof and the Committee may elect in its
sole discretion to construe such invalid or unenforceable provisions in a
manner that conforms to applicable law or as if such provisions, to the
extent invalid or unenforceable, had not been
included.
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13.7
|
Lost Participants or
Beneficiaries. Any Participant or Beneficiary who is entitled to a
benefit from the Plan has the duty to keep the Committee advised of his or
her current mailing address. If benefit payments are returned to the Plan
or are not presented for payment after a reasonable amount of time, the
Committee shall presume that the payee is missing. The Committee, after
making such efforts as in its discretion it deems reasonable and
appropriate to locate the payee, shall stop payment on any uncashed checks
and may discontinue making future payments until contact with the payee is
restored.
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13.8
|
Facility of Payment to
a Minor. If a distribution is to be made to a minor, or
to a person who is otherwise incompetent, then the Committee may, in its
discretion, make such distribution (i) to the legal guardian, or if none,
to a parent of a minor payee with whom the payee maintains his or her
residence, or (ii) to the conservator or committee or, if none, to the
person having custody of an incompetent payee. Any such distribution shall
fully discharge the Committee, the Company, and the Plan from further
liability on account thereof.
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13.9
|
Governing Law.
To the extent not preempted by ERISA, the laws of the State of Florida
shall govern the construction and administration of the
Plan.
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(Signature
Page Follows)
IN
WITNESS WHEREOF, the undersigned executed this Plan as of the _____ day of
_______________, 2008, to be effective as of the Effective Date.
Roper
Industries, Inc.
By:
_______________________________ (Print Name)
Its:
________________________________ (Title)
_____________________________________________
(Signature)
Exhibit 10.7
AMENDED
AND RESTATED EMPLOYMENT AGREEMENT
This
Amended and Restated Employment Agreement (this "Agreement") dated as of
December 29, 2008, is between Brian Jellison (the "Executive") and Roper
Industries, Inc., a Delaware corporation (the "Company"). This Agreement amends
and restates the Employment Agreement between the parties dated as of November
6, 2001 (the “Original Employment Agreement”).
W I T N E
S S E T H:
WHEREAS,
the Company employs the Executive as its President and Chief Executive Officer
under terms and conditions as set forth in the Original Employment Agreement;
and
WHEREAS,
the Company and the Executive desire to amend and restate the original
Employment Agreement for the purposes of complying with Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”) and the Treasury
Regulations and Internal Revenue Service guidance thereunder;
NOW,
THEREFORE, the parties agree as follows:
1. Employment. The
Company hereby employs the Executive, and the Executive hereby accepts
employment with the Company, upon the terms and subject to the conditions set
forth herein.
2. Term. This Agreement
commenced on November 1, 2001 (the "Effective Date") and shall continue during
the period in which the Executive remains employed by the Company (the "Term").
The Executive shall be considered an at-will employee and his employment may be
terminated by either party subject to the obligations of the parties upon such
termination as may be set forth hereinafter.
3. Position. During the
Term, the Executive shall serve as President and Chief Executive Officer of the
Company.
4. Duties and Reporting
Relationship. The Executive shall have duties and responsibilities
commensurate with his title and status as President and Chief Executive Officer.
He shall at all times be the highest-ranking officer of the Company, reporting
to the Board of Directors of the Company (the "Board"). During the Term, the
Executive shall, on a full time basis, use the Executive's skills and render
services to the best of the Executive's abilities in supervising and conducting
the operations of the Company and, except for his continuing to serve as a
member of the Board of Directors of Champion Enterprises, Inc and on any
committees thereof and as a member of the Board of Directors of Tavant, Inc.,
the Executive shall not engage in any other business activities except with the
prior written approval of the Board or its duly authorized designee. The
Executive agrees to be employed by the Company in such capacity for the Term,
subject to all the covenants and conditions hereinafter set forth.
5. Place of Performance.
The Executive shall perform his duties and conduct his business at the principal
executive offices of the Company, except for required travel on the Company's
business.
6. Salary and Annual
Bonus.
(a) Base Salary. The
Executive's base salary hereunder shall be $1,000,000 a year, payable no less
frequently than monthly and prorated for any partial year of employment. The
Board shall review such base salary at least annually and may increase, but not
decrease, such base salary as it may deem advisable.
(b) Annual Bonus. The
Company shall provide the Executive with an opportunity to earn upon achievement
of target performance goals established by the Compensation Committee of the
Board, an annual bonus of up to one hundred percent (100%) of the Executive's
base salary (the "Target Bonus").
7. Vacation, Holidays and Sick
Leave. During the Term, the Executive shall be entitled to paid vacation,
paid holidays and sick leave in accordance with the Company's standard policies
for its senior executive officers; provided however, that in no event shall the
Executive be entitled to less than four (4) weeks of vacation per
year.
8. Business Expenses.
The Executive shall be reimbursed for all ordinary and necessary business
expenses incurred by the Executive in connection with the Executive's employment
upon timely submission by the Executive of receipts and other documentation as
required by the Internal Revenue Code and in conformance with the Company's
normal procedures. Notwithstanding the foregoing, (i) the reimbursements
provided in any one calendar year shall not affect the amount of reimbursements
provided in any other calendar year; (ii) the reimbursement of an eligible
expense shall be made as soon as practicable but no later than December 31 of
the year following the year in which the expense was incurred; and (iii)
Executive’s rights pursuant to this Section 8 shall not be subject to
liquidation or exchange for another benefit.
9. Pension and Welfare
Benefits. During the Term, the Executive shall be eligible to participate
fully in all health benefits, insurance programs, pension and retirement plans
and other employee benefit and compensation arrangements available to senior
executive officers of the Company generally. In addition, the Executive shall be
entitled to use a new Company paid automobile and the Company will pay
initiation and monthly dues for the Executive at a country club of his choice
which is reasonably acceptable to the Board of Directors of the Company.
Notwithstanding the foregoing, (i) the Company’s payment or reimbursements for
the automobile and country club dues provided in any one calendar year shall not
affect the amount of such payments or reimbursements provided in any other
calendar year; (ii) the reimbursement of an eligible expense shall be made as
soon as practicable but no later than December 31 of the year following the year
in which the expense was incurred; and (iii) Executive’s rights pursuant to this
Section 9 shall not be subject to liquidation or exchange for another
benefit.
10. Relocation Benefits.
The Executive shall be entitled to relocation benefits in accordance with the
Company's relocation policy. In addition and notwithstanding the relocation
policy:
(a) The
Company shall gross-up any portion of such relocation benefits which are taxable
to the Executive for all state, federal and local income taxes based on the
Executive's highest marginal income tax rates, which amount shall be considered
additional relocation benefits;
(b) The
Company will pay for the Executive's temporary living expenses for up to six
months; and
(c) The
Executive will not be obligated to return all relocation benefits unless prior
to the first anniversary of the Effective Date, the Executive voluntarily
terminates his employment with the Company without Good Reason (as defined
below) or is terminated by the Company for Cause (as defined
below).
11. Stock Options. On the
Effective Date, the Company granted to the Executive, pursuant to the terms of
the Company's 2000 Stock Incentive Plan (the "Stock Incentive Plan") and the
Company's 1991 Stock Option Plan (the "Stock Option Plan"), options to purchase
in the aggregate 200,000 shares of common stock of the Company having an
exercise price equal to the fair market value of the Company's common stock as
of the Effective Date, all of which have since become vested. In the event the
Executive's employment is terminated by the Company without Cause (as defined
below) or the Executive resigns with Good Reason (as defined below), then that
portion of any option (including any additional options that may be granted to
the Executive after the Effective Date) that would have vested at the next
anniversary of the Effective Date following the Date of Termination shall be and
become fully vested on the Date of Termination and, notwithstanding any
provision to the contrary in the applicable Stock Option Agreement, any option
held by the Executive to the extent then vested, may be exercised and shall not
expire until the earlier of (A) the expiration of the option term as set forth
in the Stock Option Agreement or (B) the expiration of the severance period set
forth in Section 13(d)(ii). In addition to the grant set forth in this Section,
the Board or the Compensation Committee thereof may grant to the Executive such
other and additional awards under the Stock Incentive Plan (or any successor
plan) as may from time to time be deemed appropriate.
12. Termination of
Employment.
(a) General. The
Executive's employment hereunder may be terminated only under the circumstances
described in this Section 12.
(b) Death or
Disability.
(i) The
Executive's employment hereunder shall automatically terminate upon the death of
the Executive.
(ii) If
the Company determines in good faith that Executive has become Disabled (as
defined below), the Company may terminate the Executive's employment hereunder
for any such incapacity (a "Disability"). Executive shall be Disabled if either
of the following conditions is met: (i) Executive is unable to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment that can be expected to result in death or can be
expected to last for a continuous period of not less than 12 months; or
(ii) Executive is, by reason of any medically determinable physical or
mental impairment that can be expected to result in death or can be expected to
last for a continuous period of not less than 12 months, receiving income
replacement benefits for a period of not less than three months under an
accident and health plan covering employees of the Company.
(c) Termination by the
Company. The Company may terminate the Executive's employment hereunder
at any time, whether or not for Cause. For purposes of this Agreement, "Cause"
shall mean (i) the continuous and willful failure or refusal by the Executive to
perform the Executive's duties hereunder (other than any such failure resulting
from the Executive's incapacity due to physical or mental illness), which has
not ceased within ten (10) days after a written demand for substantial
performance is delivered to the Executive by the Company, which demand
identifies with particularity the manner in which the Company believes that the
Executive has not performed such duties, (ii) the engaging by the Executive in
willful misconduct which is materially injurious to the Company, monetarily or
otherwise (including, but not limited to, conduct which violates Section 16
hereof) or an act of moral turpitude which is materially injurious to the
Company, monetarily or otherwise (including, but not limited to, conduct which
violates Section 16 hereof) or (iii) the conviction of the Executive of, or the
entering of a plea of nolo contendere by, the Executive with respect to a
felony.
For
purposes of this provision, no act or failure to act, on the part of Executive
shall be considered "willful" unless it is done, or omitted to be done, by
Executive in bad faith or without reasonable belief that the Executive's action
or omission was in the best interests of the Company. Any act, or failure to
act, based upon authority given pursuant to a resolution duly adopted by the
Board of Directors or based upon the advice of counsel for the Company shall be
conclusively presumed to be done, or omitted to be done, by the Executive in
good faith and in the best interests of the Company. The cessation of employment
of the Executive shall not be deemed to be for Cause unless prior to such
termination there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less than a majority of
the disinterested membership of the Board of Directors at a meeting of such
Board of Directors called and held for such purpose (after reasonable notice is
provided to the Executive and the Executive is given an opportunity to be heard
before such Board of Directors), finding, that, in the good faith opinion of the
Board of Directors, the Executive is guilty of the conduct described in clause
(i), (ii) or (iii) above.
(d) Termination by the Executive
for Good Reason. The Executive shall be entitled to terminate his
employment hereunder for Good Reason. For purposes of this Agreement, "Good
Reason" shall mean any one of the following acts by the Company, or failures by
the Company to act, unless, in the case of any act or failure to act described
below, such act or failure to act is corrected within the 30-day cure period
described below or unless Executive has otherwise consented thereto in
writing:
(i) any
material diminution in the Executive's authorities or responsibilities
(including reporting responsibilities) or from his status, title, position or
responsibilities (including reporting responsibilities) without the Executive's
express written consent to accept any such change; the assignment to him of any
duties or work responsibilities which are materially inconsistent with such
status, title, position or work responsibilities; or any removal of the
Executive from, or failure to reappoint or reelect him to any of such positions,
except if any such changes are because of Disability, retirement, death or
Cause;
(ii) a
more than 10% reduction by the Company in the Executive's base salary or Target
Bonus as in effect on the date hereof or as the same may be increased from time
to time;
(iii) the
relocation of the Executive's office at which the Executive is to perform the
Executive's duties, to a location more than fifty (50) miles from the location
at which the Executive previously performed the Executive's duties hereunder,
except for required travel on the Company's business;
(iv) the
failure by the Company to comply with any material provision of this Agreement,
which failure has not been cured within thirty (30) days after notice of such
noncompliance has been given by the Executive to the Company; or
(v) any
purported termination of the Executive's employment by the Company which is not
effected pursuant to a Notice of Termination satisfying the requirements of
Section 12(f) below.
Notwithstanding
the foregoing, none of the events described in clauses (i) through (v) of this
Section 12(d) will constitute Good Reason unless the Executive has notified the
Company in writing describing the events which constitute Good Reason (which
notice must be given no later than ninety (90) days after the initial occurrence
of such events) and the Company has failed to cure such events within thirty
(30) days after the Company’s receipt of such written notice. If an
event of Good Reason shall remain uncured within such 30-day cure period, the
Executive may resign for such event of Good Reason within a period of
twenty-three (23) months after the end of such cure period. Absent further
guidance to the contrary, the parties intend, believe and take the position that
a resignation by the Executive for Good Reason as defined above effectively
constitutes an involuntary separation from service within the meaning of Section
409A of the Code and Treas. Reg §1.409A-1(n)(2).
(e) Voluntary
Resignation. Should the Executive wish to resign from his position with
the Company or terminate his employment for other than Good Reason during the
Term, the Executive shall give sixty (60) days written notice to the Company
("Notice Period"), specifying the date as of which his resignation is to become
effective. During the Notice Period, the Executive shall cooperate fully with
the Company in an effort to achieve a smooth transition of the Executive's
duties and responsibilities to such person(s) as may be designated by the
Company. The Company reserves the right to accelerate the Date of Termination by
giving the Executive notice, but the Company shall in that case pay and provide
the Executive with all payments and benefits he would otherwise have been
entitled to (other than disability benefits) had he remained employed through
the end of the Notice Period, including payment of amounts due to the Executive
under Section 6(a) and, to the extent applicable, Section 6(b) for the balance
of the Notice Period. The Company's obligation to continue to employ the
Executive or to continue payment of the amounts described in the preceding
sentence shall cease immediately if: (1) the Executive has not satisfied his
obligations to cooperate fully with a smooth transition or (2) the Company has
grounds to terminate the Executive's employment immediately for Cause.
Conversely, if during the Notice Period the Executive comes to have grounds to
resign with Good Reason (other than the grounds described in Section 12(d)(i)
or, only to the extent related to the matters covered in Section 12(d)(i),
Section 12(d)(iv)), then Executive may, by notice, deem the resignation to be
with Good Reason, in which case the rights and obligations set forth herein for
a Good Reason termination shall govern.
(f) Notice of
Termination. Any purported termination of the Executive's employment by
the Company or by the Executive shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 19. "Notice of
Termination" shall mean a notice that shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated.
(g) Date of Termination.
"Date of Termination" shall mean (i) if the Executive's employment is terminated
because of death, the date of the Executive's death, (ii) if the Executive's
employment is terminated for Disability, the date Notice of Termination is
given, (iii) if the Executive's employment is terminated pursuant to Subsection
(c) or (e) hereof or for any other reason (other than death or Disability, Good
Reason or Cause), the date specified in the Notice of Termination which shall
not be less than sixty (60) days from the date such Notice of Termination is
given, (iv) if the Executive's employment is terminated pursuant to Subsection
(c) for reasons of Cause, immediately upon delivery the Notice of Termination,
and (v) if the Executive's employment is terminated pursuant to Subsection (d)
hereof, the date specified in the Notice of Termination which shall not be less
than thirty (30) days from the date such Notice of Termination is
given.
(h) Change in Control.
For purposes of this Agreement, a Change in Control of the Company shall have
occurred if:
(i) any
"Person" (as defined in Section 3(a)(9) of the Securities Exchange Act of 1934
(the "Exchange Act") as modified and used in Sections 13(d) and 14(d) of the
Exchange Act) other than (1) the Company or any of its subsidiaries, (2) any
trustee or other fiduciary holding securities under an employee benefit plan of
the Company or any of its subsidiaries, (3) an underwriter temporarily holding
securities pursuant to an offering of such securities, (4) any creditor of the
Company (but not any transferee of such creditor even if such transferee shall
also be a creditor) who is issued shares of the Company's common stock in
connection with the implementation of the Company's plan of reorganization which
shall be effective as of the Effective Date, or (5) any corporation owned,
directly or indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of the Company's common stock), is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing more
than 40% of the combined voting power of the Company's then outstanding voting
securities;
(ii) during
any period of not more than two (2) consecutive years, not including any period
prior to the Effective Date, individuals who at the beginning of such period
constitute the Board, and any new director (other than a director designated by
a person who has entered into an agreement with the Company to effect a
transaction described in clause (i), (iii), or (iv) of this Section 12(h)) whose
election by the Board or nomination for election by the Company's stockholders
was approved by a vote of at least two-thirds (2/3) of the directors then still
in office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease for any
reason to constitute at least a majority thereof;
(iii) the
stockholders of the Company approve a merger or consolidation of the Company
with any other corporation, other than (A) a merger or consolidation which would
result in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving or parent entity) 50% or more
of the combined voting power of the voting securities of the Company or such
surviving or parent entity outstanding immediately after such merger or
consolidation or (B) a merger or consolidation in which no person acquires 40%
or more of the combined voting power of the Company's or such surviving or
parent entity's then outstanding securities; or
(iv) the
stockholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets or all or substantially all of its and
its subsidiaries' assets, taken as a whole, (or any transaction having a similar
effect).
(i) Return of Property.
When the Executive ceases to be employed by the Company, the Executive will
promptly surrender to the Company all Company property, including without
limitation, all records and other documents belonging to the Company that were
obtained by him or entrusted to him during the course of his employment with the
Company provided, however, that the Executive may retain copies of such
documents as necessary for the Executive's personal records for federal income
tax purposes.
13. Compensation During
Disability, Death or Upon Termination.
(a) If
the Executive's employment is terminated by his death or Disability, the Company
shall pay (i) any base salary due to the Executive under Section 6(a) through
the date of such termination, (ii) any earned but unpaid bonus from any prior
fiscal year of the Company, (iii) all other unpaid amounts, if any, to which the
Executive is entitled as of the Date of Termination under any compensation plan
or program of the Company, at the time such payments are due, and (iv) an amount
equal to the Target Bonus he would have received for the fiscal year that ends
on or immediately after the Date of Termination, assuming the Company achieved
the target level for which a bonus is paid under the plan described in Section
6(b), prorated for the period beginning on the first day of the fiscal year in
which occurs the Date of Termination through the Date of
Termination.
(b) If
the Executive's employment is terminated by the Company for Cause or by the
Executive for other than Good Reason, the Company shall pay the Executive (i)
his base salary through the Date of Termination at the rate in effect at the
time Notice of Termination is given, (ii) any earned but unpaid bonus from any
prior fiscal year of the Company, and (iii) all other unpaid amounts, if any, to
which the Executive is entitled as of the Date of Termination under any
compensation plan or program of the Company, at the time such payments are due,
and the Company shall have no further obligations to the Executive under this
Agreement.
(c) If
within one (1) year following a Change in Control, either the Company terminates
the Executive's employment without Cause or the Executive terminates his
employment for Good Reason, then
(i) the
Company shall pay the Executive (I) his base salary through the Date of
Termination at the rate in effect at the time Notice of Termination is given,
(II) any earned but unpaid bonus from any prior fiscal year of the Company, and
(III) all other unpaid amounts, if any, to which the Executive is entitled as of
the Date of Termination under any compensation plan or program of the Company,
at the time such payments are due;
(ii) in
lieu of any further salary or other payments to the Executive for periods
subsequent to the Date of Termination, the Company shall pay as liquidated
damages to the Executive an aggregate lump sum amount (the “Change in Control
Severance Payment”) equal to the product of (A) the sum of (1) the Executive's
base salary at the rate in effect as of the date the Notice of Termination is
given and (2) the greater of (I) the average of the annual bonuses actually paid
to the Executive by the Company with respect to the two (2) fiscal years which
immediately precede the year in which the Date of Termination occurs (provided
if there was a bonus paid to the Executive with respect only to one fiscal year
that immediately precedes the year in which the Date of Termination occurs, then
such single year's bonus shall be utilized in the calculation pursuant to this
subclause (I)) and (II) the bonus the Executive would earn based on the Target
Bonus applicable for the year of termination and (B) the number two
(2.0);
(iii) the
Company shall pay the Executive an amount equal to the prorated Target Bonus
(prorated in the same manner set forth in Section 13(a) hereof) that would have
been paid for the period beginning on the first day of the fiscal year in which
the Date of Termination occurs;
(iv) the
Company shall continue coverage for the Executive, on the same terms and
conditions as would be applicable if the Executive were an active Employee,
under the Company's life insurance, medical, health and similar welfare benefit
plans (other than group disability benefits) for a period of twenty-four (24)
months after the date of Termination (the “Welfare Benefits Continuation
Period”); provided, however, that if the Executive would not be eligible for
continued coverage under the Company’s group medical plans beyond the applicable
period under Code Section 4980B (COBRA), then during the nineteenth (19th) month
after the Date of Termination, the Company shall pay to the Executive a lump sum
cash payment equal to the applicable monthly premium under COBRA (less the 2%
administrative fee and less the active-employee rate for such coverage),
multiplied by the number of months remaining in the Welfare Benefits
Continuation Period. Benefits otherwise receivable by the Executive pursuant to
this Section 13(c)(iv) shall be reduced to the extent comparable benefits are
actually received by the Executive from a subsequent employer during the Welfare
Benefits Continuation Period, and the Executive shall report to the Company any
such benefits actually received by him. During the Welfare Benefits
Continuation Period, (I) the benefits provided in any one calendar year shall
not affect the amount of benefits provided in any other calendar year (other
than the effect of any overall coverage benefits under the applicable plans);
(II) the reimbursement of an eligible taxable expense shall be made as soon as
practicable but not later than December 31 of the year following the year in
which the expense was incurred; and (III) the Executive’s rights pursuant to
this Section 13(c)(iv) shall not be subject to liquidation or exchange for
another benefit;
(v) all
options, shares of restricted stock, performance shares and any other equity
based awards shall be and become fully vested as of the Date of Termination and,
notwithstanding any provision to the contrary in the applicable Stock Option
Agreement, any such options may be exercised and shall not expire until the
earlier of (I) the expiration of the option term as set forth in the Stock
Option Agreement or (II) the second anniversary of the Date of Termination;
and
(vi) the
payments provided for in this Section 13(c) (other than Section 13(c)(iv)) shall
be made (I) on a date determined by the Company that is within thirty (30) days
following the Date of Termination or (II) if the Executive is a Specified
Employee (as defined in Section 27) on the Date of Termination, on any later
date required by Section 27(c) of this Agreement.
(d) If
either following the first anniversary of or prior to a Change of Control, the
Executive terminates his employment for Good Reason or the Company terminates
the Executive's employment without Cause, then
(i) the
Company shall pay the Executive (I) his base salary through the Date of
Termination at the rate in effect at the time Notice of Termination is given,
(II) any earned but unpaid bonus from any prior fiscal year of the Company, and
(III) all other unpaid amounts, if any, to which the Executive is entitled as of
the Date of Termination under any compensation plan or program of the Company,
at the time such payments are due;
(ii) if
the Date of Termination occurs after December 31, 2008, then in lieu of any
further salary or other payments to the Executive for periods subsequent to the
Date of Termination, the Company shall pay as liquidated damages to the
Executive an aggregate lump sum amount equal to 24 times the Executive’s monthly
base salary at the rate in effect as of the date the Notice of Termination is
given (the “Non-Change in Control Severance Payment”);
(iii) the
Company shall pay the Executive his Target Bonus prorated (in the manner set
forth in Section 13(a) hereof) for the period beginning on the first day of the
fiscal year in which occurs the Date of Termination through the Date of
Termination;
(iv) the
Company shall continue coverage for the Executive, on the same terms and
conditions as would be applicable if the Executive were an active employee,
under the Company's life insurance, medical, health, and similar welfare benefit
plans (other than group disability) for the Welfare Benefits Continuation Period
(as defined in Section 13(c)(iv) above); provided, however, that if the
Executive would not be eligible for continued coverage under the Company’s group
medical plans beyond the applicable period under COBRA, then during the
nineteenth (19th) month
after the Date of Termination, the Company shall pay to the Executive a lump sum
cash payment equal to the applicable monthly premium under COBRA (less the 2%
administrative fee and less the active-employee rate for such coverage),
multiplied by the number of months remaining in the Welfare Benefits
Continuation Period. Benefits otherwise receivable by the Executive
pursuant to this Section 13(d)(iv) shall be reduced to the extent comparable
benefits are actually received by the Executive from a subsequent employer
during the Welfare Benefits Continuation Period, and the Executive shall report
to the Company any such benefits actually received by him. During the
Welfare Benefits Continuation Period, (I) the benefits provided in any one
calendar year shall not affect the amount of benefits provided in any other
calendar year (other than the effect of any overall coverage benefits under the
applicable plans); (II) the reimbursement of an eligible taxable expense shall
be made as soon as practicable but not later than December 31 of the year
following the year in which the expense was incurred; and (III) the Executive’s
rights pursuant to this Section 13(d)(iv) shall not be subject to liquidation or
exchange for another benefit; and
(v) the
payments provided for in this Section 13(d) (other than Sections 13(d)(ii) and
(iv)) shall be made (I) on a date determined by the Company that is within
thirty (30) days following the Date of Termination, or (II) if the Executive is
a Specified Employee (as defined in Section 27 of this Agreement) on the Date of
Termination, on any later date required by Section 27(c).
(e) The
Executive shall not be required to mitigate the amount of any payment or benefit
provided for in this Section 13 by seeking other employment or otherwise, and,
except as provided in Sections 13(c)(iv) and 13(d)(iv) hereof, the amount of any
payment or benefit provided for in this Section 13 shall not be reduced by any
compensation or benefits earned by the Executive as the result of employment by
another employer or by retirement benefits or from any other
source.
(f) Release. Prior to
making any payment pursuant to Sections 13(d)(ii) and 13(d)(iii), the Company
shall have the right to require the Executive to sign, and the Executive hereby
agrees to sign, an agreement to be bound by the terms of Section 16 of this
Agreement and a waiver, in the form attached hereto as Exhibit A, of all claims
the Executive may have (including any claims under the Age Discrimination in
Employment Act). The Company shall have no obligation to make any
payments pursuant to Sections 13(d)(ii) or 13(d)(iii) if the release (if
requested by the Company) has not been signed and the revocation period for such
release has not expired on or before the time for commencement of such payment
as specified in this Agreement.
14. Representations and
Covenants.
(a) The
Company represents and warrants that this Agreement has been authorized by all
necessary corporate action of the Company and is a valid and binding agreement
of the Company enforceable against it in accordance with its terms.
(b) The
Executive represents and warrants that he is not a party to any agreement or
instrument that would prevent him from entering into or performing his duties in
any way under this Agreement. The Executive agrees and covenants that he will
obtain, and submit to, such physical examinations as may be necessary to
facilitate the Company obtaining an insurance policy for its benefit insuring
the life of the Executive.
15. Successors; Binding
Agreement.
(a) This
Agreement is not assignable by the Company except to a successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, provided that
such successor expressly assumes and agrees to perform this Agreement in the
same manner and to the same extent that the Company would be required to perform
it if no such succession had taken place.
(b) This
Agreement is a personal contract and the rights and interests of the Executive
hereunder may not be sold, transferred, assigned, pledged, encumbered, or
hypothecated by him, except as otherwise expressly permitted by the provisions
of this Agreement. This Agreement shall inure to the benefit of and be
enforceable by the Executive and his personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If the Executive should die while any amount would still be payable to
him hereunder had the Executive continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to his devisee, legatee or other designee or, if there is no such
designee, to his estate.
16. Confidentiality and
Non-Competition Covenants.
(a) The
Executive covenants and agrees that he will not at any time during or at any
time after the end of the Term, directly or indirectly, use for his own account,
or disclose to any person, firm or corporation, other than authorized officers,
directors and employees of the Company or its subsidiaries, Confidential
Information (as hereinafter defined) that is treated as trade secrets by the
Company and will not at any time during or for five years following the Date of
Termination, directly or indirectly, use for his own account, or disclose to any
person, firm or corporation, other than authorized officers, directors and
employees of the Company or its subsidiaries, any other Confidential
Information. As used herein, "Confidential Information" of the Company means
information of any kind, nature or description which is disclosed to or
otherwise known to the Executive as a direct or indirect consequence of his
association with the Company, which information is not generally known to the
public or in the business in which the Company is engaged or which information
relates to specific opportunities within the scope of the Company's business
which were considered by the Executive or the Company during the term of this
Agreement. Confidential Information that is treated as confidential trade
secrets by the Company shall include, but not be limited to, strategic operating
plans and budgets, policy and procedure manuals, computer programs, financial
forms and information, patient or resident lists and accounts, supplier
information, accounting forms and procedures, personnel policies, information
pertaining to the salaries, positions and performance reviews of the Company's
employees, information on the methods of the Company's operations, research and
data developed by or for the benefit of the Company and information relating to
revenues, costs, profits and the financial condition of the Company.
Confidential Information does not include any information that (i) is generally
known to the public or the business in which the Company engages other than as a
result of unauthorized disclosure by the Executive, (ii) can be discovered,
compiled or ascertained by a third party without substantial burden or expense,
or (iii) was known to the Executive prior to accepting employment with the
Company. During the Term and for a period of two (2) years following the
termination of the Executive's employment, the Executive shall not, directly or
indirectly, solicit or induce any person who is then an employee of the Company
or its subsidiaries to terminate his or her employment by the Company or its
subsidiaries in order to obtain employment by any person, firm or corporation
affiliated with the Executive and the Executive shall not or cause any other
person, firm or corporation affiliated with the Executive to hire any employee
of the Company or its subsidiaries or any other person who was an employee of
the Company or its subsidiaries within the twelve (12) month period prior to the
Executive's Date of Termination.
(b) The
Executive covenants and agrees that any information, materials, ideas,
discoveries, techniques or programs developed or discovered by the Executive in
connection with the performance of his duties hereunder shall remain the sole
and exclusive property of the Company and, to the extent it constitutes
Confidential Information, shall be subject to the covenants contained in the
preceding paragraph.
(c) The
Executive covenants and agrees that during the Term and for a period of one (1)
years following the termination of the Executive's employment, the Executive
shall not, directly or indirectly, own an interest in, operate, join, control,
or participate as a partner, director, principal, officer, or agent of, enter
into the employment of, or act as a consultant to, in any case in which he has
control or supervision over a significant portion of any entity which competes
with the Company and whose principal business is designing, manufacturing and
distributing specialty industrial controls, fluid handling and analytical
instrumentation products. Notwithstanding anything herein to the contrary, the
foregoing provisions of this Section 16(c) shall not prevent the Executive from
acquiring securities representing not more than 5% of the outstanding voting
securities of any publicly held corporation.
(d) Without
limiting the right of the Company to pursue all other legal and equitable
remedies available for violation by the Executive of the covenants contained in
this Section 16, it is expressly agreed by the Executive and the Company that
such other remedies cannot fully compensate the Company for any such violation
and that the Company shall be entitled to injunctive relief, without the
necessity of proving actual monetary loss, to prevent any such violation or any
continuing violation thereof. Each party intends and agrees that if in any
action before any court or agency legally empowered to enforce the covenants
contained in this Section 16, any term, restriction, covenant or promise
contained herein is found to be unreasonable and accordingly unenforceable, then
such term, restriction, covenant or promise shall be deemed modified to the
extent necessary to make it enforceable by such court or agency. The covenants
contained in Section 16 shall survive the conclusion of the Executive's
employment by the Company.
17. Entire Agreement.
This Agreement contains all the understandings between the parties hereto
pertaining to the matters referred to herein, and on the Effective Date shall
supersede all undertakings and agreements, whether oral or in writing,
previously entered into by them with respect thereto. The Executive represents
that, in executing this Agreement, he does not rely and has not relied upon any
representation or statement not set forth herein made by the Company with regard
to the subject matter, bases or effect of this Agreement or
otherwise.
18. Amendment or
Modification. Waiver. No provision of this Agreement may be amended or
waived unless such amendment or waiver is agreed to in writing, signed by the
Executive and by a duly authorized officer of the Company. No waiver by any
party hereto of any breach by another party hereto of any condition or provision
of this Agreement to be performed by such other party shall be deemed a waiver
of a similar or dissimilar condition or provision at the same time, any prior
time or any subsequent time.
19. Notices. Any notice
to be given hereunder shall be in writing and shall be deemed given when
delivered personally, sent by courier or telecopy or registered or certified
mail, postage prepaid, return receipt requested, addressed to the party
concerned at the address indicated below or to such other address as such party
may subsequently give notice of hereunder in writing:
To
Executive
at:
Brian Jellison
4085
Founders Club Drive
Sarasota,
FL 34240
To the
Company
at: Roper
Industries, Inc.
6901
Professional Parkway East
Suite
200
Sarasota FL 34240
Attn:
Chairman of the Board of Directors
With a
copy
to: General
Counsel
Roper
Industries, Inc.
6901
Professional Parkway East
Suite
200
Sarasota FL 34240
Any
notice delivered personally or by courier under this Section 19 shall be deemed
given on the date delivered and any notice sent by telecopy or registered or
certified mail, postage prepaid, return receipt requested, shall be deemed given
on the date telecopied or mailed.
20. Severability. If any
provision of this Agreement or the application of any such provision to any
party or circumstances shall be determined by any court of competent
jurisdiction to be invalid and unenforceable to any extent, the remainder of
this Agreement or the application of such provision to such person or
circumstances other than those to which it is so determined to be invalid and
unenforceable, shall not be affected thereby, and each provision hereof shall be
validated and shall be enforced to the fullest extent permitted by
law.
21. Survivorship. The
respective rights and obligations of the parties hereunder shall survive any
termination of this Agreement to the extent necessary to the intended
preservation of such rights and obligations.
22. Governing Law: Attorney's
Fees.
(a) This
Agreement will be governed by and construed in accordance with the laws of the
State of Georgia, without regard to its conflicts of laws
principles.
(b) The
prevailing party in any dispute arising out of this Agreement shall be entitled
to be paid its reasonable attorney's fees and litigation expenses incurred in
connection with such dispute from the other party to such dispute. If
the Executive is awarded the right to recover fees and expenses under this
Section 22, the reimbursement of an eligible expense shall be made within ten
business days after delivery of Executive’s written request for payment
accompanied with such evidence of fees and expenses incurred as the Company
reasonably may require, but in no event later than March 15 of the year after
the year in which such rights are established.
23. Dispute Resolution.
The Executive and the Company shall not initiate legal proceedings relating in
any way to this Agreement or to the Executive's employment or termination from
employment with the Company until thirty (30) days after the party against whom
the claim is made ("respondent") receives written notice from the claiming party
of the specific nature of any purported claims and the amount of any purported
damages attributable to each such claim. The Executive and the Company further
agree that if respondent submits the claiming party's claim to the CPR Institute
for Dispute Resolution, JAMS/Endispute, or other local dispute resolution
service for nonbinding mediation prior to the expiration of such thirty (30) day
period, the claiming party may not institute legal proceedings against
respondent until the earlier of: (a) the completion of good-faith mediation
efforts or (b) 90 days after the date on which the respondent received written
notice of the claimant's claim(s); provided, however, that nothing in this
Section 23 shall prohibit either party from pursuing injunctive or other
equitable relief against the other party in circumstances in which such relief
is appropriate, prior to, contemporaneous with, or subsequent to invoking or
participating in these dispute resolution processes. In all events, the Company
shall pay the cost of the mediator, regardless of whether the dispute was or was
not resolved or settled through mediation.
24. Headings. All
descriptive headings of sections and paragraphs in this Agreement are intended
solely for convenience, and no provision of this Agreement is to be construed by
reference to the heading of any section or paragraph.
25. Withholdings. All
payments to the Executive under this Agreement shall be reduced by all
applicable withholding required by federal, state or local tax
laws.
26. Counterparts. This
Agreement may be executed in counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
27. Code Section
409A.
(a) This
Agreement shall be interpreted and administered in a manner so that any amount
or benefit payable hereunder shall be paid or provided in a manner that is
either exempt from or compliant with the requirements Section 409A of the Code
and applicable Internal Revenue Service guidance and Treasury Regulations issued
thereunder (and any applicable transition relief under Section 409A of the
Code).
(b) Notwithstanding
anything in this Agreement to the contrary, to the extent that any amount or
benefit that would constitute non-exempt “deferred compensation” for purposes of
Section 409A of the Code would otherwise be payable or distributable hereunder,
or a different form of payment would be effected, by reason of a Change in
Control or the Executive’s Disability or termination of employment, such amount
or benefit will not be payable or distributable to the Executive, and/or such
different form of payment will not be effected, by reason of such circumstance
unless (i) the circumstances giving rise to such Change in Control, Disability
or termination of employment, as the case, may be, meet any description or
definition of “change in control event”, “disability” or “separation from
service”, as the case may be, in Section 409A of the Code and applicable
regulations (without giving effect to any elective provisions that may be
available under such definition), or (ii) the payment or distribution of such
amount or benefit would be exempt from the application of Section 409A of the
Code by reason of the short-term deferral exemption or
otherwise. This provision does not prohibit the vesting of any amount upon a
Change in Control, Disability or termination of employment, however
defined. If this provision prevents the payment or distribution of
any amount or benefit, such payment or distribution shall be made on the date,
if any, on which an event occurs that constitutes a Section 409A-compliant
“change in control event”, “disability” or “separation from service,” as the
case, may be, or such later date as may be required by Section 27(c)
below.
(c) If
the Date of Termination occurs during a period in which the Executive is a
“Specified Employee” (as defined below), any portion of the Non-Change in
Control Severance Payment or the Change in Control Severance Payment, as the
case may be, or any portion of any other payment under Section 13 hereof, that
is not excluded from Section 409A of the Code by reason of the exemptions in
Treas. Reg. §1.409A-1(b)(4) (short-term deferrals), Treas. Reg. §1.409A-1(b)(9)
(separation pay exemptions) or any other applicable exemption or exclusion,
shall be delayed in order to comply with Section 409A(a)(2)(B)(i) of the Code,
and such payments or benefits shall be paid or distributed to the Executive
during the five-day period commencing on the earlier of: (i) the
expiration of the six-month period measured from the date of the Executive’s
“separation from service”, or (ii) the date of the Executive’s
death. Upon the expiration of the applicable six-month period under
Section 409A(a)(2)(B)(i) of the Code, all payments deferred pursuant to this
Section 27(c) shall be paid to the Executive (or the Executive’s estate, in the
event of the Executive’s death) in a lump sum payment. Any remaining
payments and benefits due under the Agreement shall be paid as otherwise
provided in the Agreement. If any amounts or benefits payable
hereunder could qualify for one or more separation pay exemptions described in
Treas. Reg. §1.409A-1(b)(9), but such payments in the aggregate exceed the
dollar limit permitted for the separation pay exemptions, the Company (acting
through its head of human resources or any other designated officer) shall
determine which portions thereof will be subject to such
exemptions.
For
purposes of this Agreement, the term “Specified Employee” has the meaning given
such term in Code Section 409A and in Treas. Reg. §1.409A-1(i), including Treas.
Reg. §1.409A-1(i)(6) in the case of a corporate transaction described therein),
provided, however, that, as permitted in such regulations, the Company’s
Specified Employees and its application of the six-month delay rule of Code
Section 409A(a)(2)(B)(i) shall be determined in accordance with rules adopted by
the Board or a committee thereof, which shall be applied consistently with
respect to all nonqualified deferred compensation arrangements of the Company,
including this Agreement.
(d) If
the parties hereto determine that any payments or benefits payable under this
Agreement intended to comply with Sections 409A(a)(2), (3) and (4) of the Code
do not comply with Section 409A of the Code, the Executive and the Company agree
to amend this Agreement, or take such other actions as the Executive and the
Company deem reasonably necessary or appropriate, to comply with the
requirements of Section 409A of the Code, the Treasury Regulations thereunder
(and any applicable transition relief) while preserving the economic agreement
of the parties. If any provision of the Agreement would cause such
payments or benefits to fail to so comply, such provision shall not be effective
and shall be null and void with respect to such payments or benefits, and such
provision shall otherwise remain in full force and effect.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first above written.
ROPER
INDUSTRIES, INC.
BY: /s/ John
Humphrey
NAME:
John Humphrey
TITLE:
Vice President and Chief Financial Officer
EXECUTIVE
/s/ Brian
Jellison
Brian
Jellison
Exhibit
10.19
ROPER
INDUSTRIES, INC.
DIRECTOR
COMPENSATION PLAN
ROPER
INDUSTRIES, INC.
DIRECTOR
COMPENSATION PLAN
TABLE
OF CONTENTS
|
ARTICLE
1 PURPOSE
|
1
|
|
1.1 Background
|
1
|
|
1.2 Purpose
|
1
|
|
1.3 Eligibility
|
1
|
|
ARTICLE
2 DEFINITIONS
|
1
|
|
2.1 Definitions
|
1
|
|
ARTICLE
3 ADMINISTRATION
|
3
|
|
3.1 Administration
|
3
|
|
3.2 Reliance
|
3
|
|
3.3 Indemnification
|
4
|
|
ARTICLE
4 SHARES
|
4
|
|
4.1 Source
of Shares for the Plan
|
4
|
|
ARTICLE
5 CASH COMPENSATION
|
4
|
|
5.1 Basic
Annual Cash Retainer
|
4
|
|
5.2 Supplemental
Annual Cash Retainer
|
4
|
|
5.3 Meeting
Fees
|
5
|
|
5.4 Travel
Expense Reimbursement
|
5
|
|
5.5 Deferral
of Cash Compensation
|
5
|
|
ARTICLE
6 EQUITY COMPENSATION
|
5
|
|
6.1 Equity
Awards
|
5
|
|
6.2 Restricted
Stock Units
|
5
|
|
6.3
Award Certificates
|
7
|
|
6.4 Adjustments
|
7
|
|
6.5 Tax
Matters
|
7
|
|
ARTICLE
7 AMENDMENT, MODIFICATION AND
TERMINATION
|
8
|
|
7.1 Amendment,
Modification and Termination
|
8
|
|
ARTICLE
8 GENERAL PROVISIONS
|
8
|
|
8.1 Adjustments
|
8
|
|
8.2 Duration
of the Plan
|
8
|
|
8.3 Expenses
of the Plan
|
8
|
|
8.4 Effective
Date
|
8
|
SCHEDULE I – DIRECTOR
COMPENSATION SCHEDULE
SCHEDULE II –RSU DEFERRAL
ELECTION FORM
SCHEDULE III – FORMS OF AWARD
CERTIFICATES
ROPER
INDUSTRIES, INC.
DIRECTOR
COMPENSATION PLAN
ARTICLE
1
PURPOSE
1.1. BACKGROUND. This plan is adopted to
formalize the compensation for non-employee directors of the
Company. The Committee initially adopted the Roper Industries, Inc.
Director Compensation Plan on December 11, 2006, which became effective on that
date, and was amended in August 2008 (the “Prior
Plan”). The Prior Plan is being amended and restated by the
adoption of this Director Compensation Plan (the “Plan”).
1.2. PURPOSE. The purpose of the Plan is
to attract, retain and compensate highly-qualified individuals who are not
employees of Roper Industries, Inc. or any of its subsidiaries or affiliates for
service as members of the Board by providing them with competitive compensation
and an ownership interest in the Stock of the Company. The Company intends that
the Plan will benefit the Company and its shareholders by allowing Non-Employee
Directors to have a personal financial stake in the Company through an ownership
interest in the Stock and will closely associate the interests of Non-Employee
Directors with that of the Company’s shareholders.
1.3. ELIGIBILITY. Non-Employee
Directors of the Company who are Eligible Participants, as defined below, shall
automatically be participants in the Plan.
ARTICLE
2
DEFINITIONS
2.1 DEFINITIONS. Capitalized
terms used herein and not otherwise defined shall have the meanings given such
terms in the Incentive Plan. Unless the context clearly indicates
otherwise, the following terms shall have the following meanings:
(a) “Base
Annual Cash Retainer” means the annual cash retainer (excluding Meeting Fees and
expenses) payable by the Company to a Non-Employee Director pursuant to Section
5.1 hereof for service as a director of the Company (i.e., excluding any
Supplemental Annual Cash Retainer), as such amount may be changed from time to
time.
(b) “Cash
Dividend Equivalents” has the meaning set forth in Section 6.2(e) of the
Plan.
(c) “Deferral
Election Deadline” has the meaning set forth in Section 6.2(d) of the
Plan.
(d) “Deferred
Compensation Plan” means the Roper Industries, Inc. Non-Qualified Retirement
Plan, as amended and restated as of January 1, 2009, or any subsequent
nonqualified deferred compensation plan in which Non-Employee Directors are
permitted to participate and that is designated by the Committee as the Deferred
Compensation Plan for purposes of this Plan.
(e) “Deferred
RSU Conversion Date” has the meaning set forth in Section 6.2(d) of the
Plan.
(f) "Effective
Date" of the Plan has the meaning set forth in Section 8.4 of the
Plan.
(g) “Eligible
Participant” means any person who is a Non-Employee Director on the Effective
Date or becomes a Non-Employee Director while this Plan is in effect; except
that during any period a director is prohibited from participating in the Plan
by his or her employer or otherwise waives participation in the Plan, such
director shall not be an Eligible Participant.
(h) “Equity
Award” means stock options, restricted stock, restricted stock units, stock
appreciation rights, or other awards based on or derived from the Stock which
are authorized under the Incentive Plan for award to Non-Employee
Directors.
(i) “Incentive
Plan” means the Roper Industries, Inc. 2006 Incentive Plan, or any subsequent
equity compensation plan approved by the shareholders of the Company and
designated by the Committee as the Incentive Plan for purposes of this
Plan.
(j) “Meeting
Fees” has the meaning set forth in Section 5.3 of the Plan.
(k) “Non-Employee
Director” means a director of the Company who is not an employee of the Company
or any of its subsidiaries.
(l) “Plan”
means this Roper Industries, Inc. Director Compensation Plan, as amended from
time to time.
(m) “Plan
Year(s)” means the approximate twelve-month periods between annual meetings of
the shareholders of the Company, which, for purposes of the Plan, are the
periods for which annual retainers are earned.
(n) “Restricted
Stock Unit” or “RSU” has the meaning assigned such term in the Incentive Plan.
The terms of Restricted Stock Unit awards granted under the Plan are described
in Article 6 of the Plan.
(o) “RSU
Conversion Date Election Form” has the meaning set forth in Section 6.2(d) of
the Plan.
(p) “Secretary”
means the Corporate Secretary of the Company.
(q) “Separation
from Service” means separation from service for the Company and its Affiliates
in all capacities, within the meaning of Section 409A of the Code and any
regulations, revenue procedures or revenue rulings applicable to such
law.
(r) “Supplemental
Annual Cash Retainer” means the annual cash retainer (excluding Meeting Fees and
expenses) payable by the Company to a Non-Employee Director pursuant to Section
5.2 hereof, as such amount may be changed from time to time.
(s) “Total
Annual Retainer” for any given Non-Employee Director means the Basic Annual Cash
Retainer and any Supplemental Annual Cash Retainer to which he or she is
entitled under the Plan.
(t) “Vesting
Date” has the meaning described in Section 6.2(b).
ARTICLE
3
ADMINISTRATION
3.1. ADMINISTRATION. The Plan shall
be administered by the Board or the Committee. Subject to the
provisions of the Plan, the Board or the Committee shall be authorized to
interpret the Plan, to establish, amend and rescind any rules and regulations
relating to the Plan, and to make all other determinations necessary or
advisable for the administration of the Plan. The Board’s or the
Committee’s interpretation of the Plan, and all actions taken and determinations
made by the Board or the Committee pursuant to the powers vested in it
hereunder, shall be conclusive and binding upon all parties concerned including
the Company, its shareholders and persons granted awards under the
Plan. The Board or the Committee may appoint a plan administrator to
carry out the ministerial functions of the Plan, but the administrator shall
have no other authority or powers of the Board or the Committee.
3.2. RELIANCE. In
administering the Plan, the Board or the Committee may rely upon any information
furnished by the Company, its public accountants and other
experts. No individual will have personal liability by reason of
anything done or omitted to be done by the Company or the Board or the Committee
in connection with the Plan. This limitation of liability shall not be exclusive
of any other limitation of liability to which any such person may be entitled
under the Company’s certificate of incorporation or otherwise.
3.3. INDEMNIFICATION. Each
person who is or has been a member of the Committee or who otherwise
participates in the administration or operation of the Plan shall be indemnified
by the Company against, and held harmless from, any loss, cost, liability or
expense that may be imposed upon or incurred by him or her in connection with or
resulting from any claim, action, suit or proceeding in which such person may be
involved by reason of any action taken or failure to act under the Plan and
shall be fully reimbursed by the Company for any and all amounts paid by such
person in satisfaction of judgment against him or her in any such action, suit
or proceeding, provided he or she will give the Company an opportunity, by
written notice to the Board, to defend the same at the Company’s own expense
before he or she undertakes to defend it on his or her own
behalf. This right of indemnification shall not be exclusive of any
other rights of indemnification to which any such person may be entitled under
the Company’s certificate of incorporation, bylaws, contract or Delaware
law.
ARTICLE
4
SHARES
4.1. SOURCE OF SHARES FOR THE
PLAN. Equity Awards that may be
issued pursuant to the Plan shall be issued under the Incentive Plan, subject to
all of the terms and conditions of the Incentive Plan. The terms
contained in the Incentive Plan are incorporated into and made a part of this
Plan with respect to Equity Awards granted pursuant hereto, and any such awards
shall be governed by and construed in accordance with the Incentive
Plan. In the event of any actual or alleged conflict between the
provisions of the Incentive Plan and the provisions of this Plan, the provisions
of the Incentive Plan shall be controlling and determinative. This
Plan does not constitute a separate source of shares for the grant of the equity
awards described herein.
ARTICLE
5
CASH
COMPENSATION
5.1. BASIC ANNUAL CASH
RETAINER. Each
Eligible Participant shall be paid a Base Annual Cash Retainer for service as a
director during each Plan Year. The amount of the Base Annual Cash
Retainer shall be established from time to time by the Board or the
Committee. The amount of the Basic Annual Cash Retainer is set forth
in Schedule I. Unless deferred pursuant to Section 5.5, the Base
Annual Cash Retainer shall be payable in approximately equal quarterly
installments in advance, beginning on the date of the annual shareholders
meeting.
A prorata
Base Annual Cash Retainer will be paid to any person who becomes an Eligible
Participant on a date other than the beginning of a Plan Year, based on the
number of full months he or she serves as a Non-Employee Director during the
Plan Year. Unless deferred pursuant to Section 5.5, payment of such
prorated Base Annual Cash Retainer shall begin on the date that the person first
becomes an Eligible Participant, and shall resume on a quarterly basis
thereafter.
5.2. SUPPLEMENTAL ANNUAL CASH
RETAINER.
Certain Eligible Participants shall be paid a Supplemental Annual Cash
Retainer for service as chair of a committee of the Board during a Plan Year,
payable at the same times as installments of the Base Annual Cash Retainer are
paid (including any deferred payment date pursuant to Section 5.5). The amount
and recipients of the Supplemental Annual Cash Retainer shall be established
from time to time by the Board or the Committee and shall be set forth in
Schedule I, as amended from time to time.
A prorata
Supplemental Annual Cash Retainer will be paid to any Eligible Participant who
is elected by the Board to a position eligible for a Supplemental Annual
Retainer, on a date other than the beginning of a Plan Year, based on the number
of full months he or she serves in such position during the Plan
Year.
5.3. MEETING FEES. Each Non-Employee Director
shall be paid meeting fees for attending meetings of the Board or its committees
(“Meeting
Fees”). The amount of the Meeting Fees shall be established from time to
time by the Board or the Committee and shall be set forth in Schedule I, as
amended from time to time. If a Non-Employee Director attends a Board
meeting and a committee meeting on a single day, he or she shall only receive a
Meeting Fee for the Board meeting attended. For purposes of this
provision, casual or unscheduled conferences among directors shall not
constitute an official meeting. Unless deferred pursuant to Section
5.5, Meeting Fees shall be payable on the date of the applicable meeting to
which they relate.
5.4. TRAVEL EXPENSE
REIMBURSEMENT. All Eligible
Participants shall be reimbursed for reasonable travel expenses (including
spouse’s expenses to attend events to which spouses are invited) in connection
with attendance at meetings of the Board and its committees, or other Company
functions at which the Chief Executive Officer or Chair of the Board requests
the Non-Employee Director to participate.
5.5 DEFERAL OF CASH
COMPENSATION. An Eligible Participant may elect to defer some
or all of his or her Total Annual Retainer, Meeting Fees and/or Cash Dividend
Equivalents pursuant to the terms of the Deferred Compensation
Plan. Any such deferrals shall be subject to the election timing and
distributions rules set forth in the Deferred Compensation Plan.
ARTICLE
6
EQUITY
COMPENSATION
6.1. EQUITY AWARDS. Under the Prior
Plan, Eligible Participants were granted annual awards of Restricted Stock
pursuant to the Incentive Plan. The Committee is authorized to amend
this Plan from time to award other types of Equity Awards. Beginning
with Plan Year 2009, until otherwise determined by the Committee, Equity Awards
shall be make hereunder in the form of Restricted Stock Units (“RSUs”) as provided
hereafter in this Article 6.
6.2 RESTRICTED STOCK
UNITS Subject to share availability under the Incentive Plan,
each Eligible Participant shall receive an award of RSUs on the day following
the Annual Meeting of Shareholders held in that year (beginning with the 2009
Annual Meeting of Shareholders); provided, however, the date of grant of any
prorata award shall be made on or as soon as practicable after the date that the
grantee first becomes an Eligible Participant (“Annual
RSUs”). Annual RSUs shall have the following terms and
conditions:
(a) Number of Annual
RSUs. The number of Annual RSUs to be granted shall be
established from time to time by the Board or the Committee and shall be set
forth in Schedule I, as amended from time to time. A prorata Annual
RSU award will be granted to any person who becomes an Eligible Participant on a
date other than the beginning of a Plan Year, based on the number of full months
he or she serves as an Eligible Participant during the Plan Year, rounded to the
next highest whole share.
(b) Vesting. The
Annual RSUs shall be credited to a bookkeeping account on behalf of the grantee
on the date of grant and shall vest on the applicable date provided below (the
“Vesting
Date”). Unless and until provided otherwise by the Board or
the Committee, the Annual RSUs shall vest as to fifty percent (50%) of the RSUs
on the six (6) month anniversary of the date of grant and as to the remaining
fifty percent (50%) on the day prior to the Annual Meeting of Shareholders held
in the year following the date of grant; provided, however, that any prorata
award of Annual RSUs granted to a person who becomes an Eligible Participant on
a date other than the beginning of a Plan Year shall vest as to fifty percent
(50%) of the RSUs on earlier of the six (6) month anniversary of the date of
grant or the day prior to the first Annual Meeting of Shareholders after the
date of grant, and as to the remaining fifty percent (50%) on the day prior to
the first Annual Meeting of Shareholders after the date of grant.
Notwithstanding
the foregoing, the Annual RSUs shall become fully vested on the earlier
occurrence of (i) the termination of grantee’s service as a director of the
Company due to death or Disability; or (ii) the occurrence of a Change in
Control. If the grantee’s service as a director of the Company
(whether or not in a Non-Employee Director capacity) terminates other than as
described in clause (i) of the foregoing sentence, then the grantee shall
forfeit all of his or her right, title and interest in and to any unvested RSUs
as of the date of such termination from the Board, such RSUs shall be reconveyed
to the Company without further consideration or any act or action by the
grantee, and such RSUs shall not be converted to Stock.
(c) Conversion to
Stock. Each Annual RSU represents the right to receive one
share of Stock on a date that is on or after the Vesting Date (the “Conversion
Date”). Unless the grantee has made a timely deferral election
in accordance with Section 6.2(d), the Conversion Date for the Annual RSUs shall
be the Vesting Date.
(d) Deferral of Conversion of
RSUs. On or before December 31 of each year, or in the case of
a Non-Employee Director becoming an Eligible Participant for the first time,
within thirty (30) days after he or she first becomes an Eligible Participant
(as applicable, the “Deferral Election
Deadline”), each Eligible Participant may, by filing with the Secretary
an election form in such form as the Secretary shall prescribe which shall be
set forth in Schedule II hereto (the “RSU Conversion
Date Election
Form”), elect to defer the conversion of his Annual RSUs to be granted in
the next Plan Year to any of the following dates; provided such date is after
the Vesting Date for the RSUs (the “Deferred RSU Conversion
Date”): (i) the date that the Non-Employee Director incurs a Separation
from Service for any reason, (iii) the earlier of (A) a date certain specified
by the Non-Employee Director, or (B) the date that the Non-Employee Director
incurs a Separation from Service for any reason, or (iii) the earlier of (A) a
date certain specified by the Non-Employee Director, or (B) the fifth
anniversary of the date that the Non-Employee Director incurs a Separation from
Service for any reason. If an Eligible Participant makes a deferral
election under this Section 6.2(d) for any Plan Year and does not revoke such
election before the Deferral Election Deadline for a subsequent Plan Year, such
election shall remain in effect for each such subsequent Plan Year unless and
until the Eligible Participant shall timely file a new RSU Conversion Date
Election Form with the Secretary for a subsequent Plan Year or shall indicate to
the Secretary in writing before the next Deferral Election Deadline that he or
she desires to revoke any outstanding RSU deferral election with respect to
future Plan Years. Shares of Stock will be registered on the books of
the Company in the Non-Employee Director’s name as of the Conversion
Date. Such Shares of Stock will remain in uncertificated, book-entry
form unless the Non-Employee Director requests a stock certificate or
certificates for the Shares.
(e) Dividend
Equivalents. If and when cash dividends or other cash
distributions are paid with respect to the Stock while the RSUs are outstanding,
the dollar amount such dividends or distributions with respect to the number of
shares of Stock then underlying the RSUs shall be payable to the holder of the
RSUs (“Cash Dividend
Equivalents”). Unless deferred pursuant to Section 5.5, Cash
Dividend Equivalents will be payable to the holder of the RSUs as of the date
such dividends or distributions were payable to shareholders. If and
when any such dividends or distributions are paid in shares of Stock, the Fair
Market Value of such shares of Stock shall be converted into additional RSUs,
which shall be subject to the same forfeiture restrictions, restrictions on
transferability, and conversion terms as apply to the RSUs with respect to which
they were paid.
(f) Other Shareholder
Rights. Non-Employee Directors shall not have voting or any
other rights as a shareholder of the Company with respect to the
RSUs. Upon conversion of the RSUs into shares of Stock at the
Conversion Date or any applicable Deferred RSU Conversion Date, the Non-Employee
Director will obtain full voting and other rights as a shareholder of the
Company.
(g) Other Plan
Conditions. To the extent not specified herein, the Annual
RSUs granted hereunder shall be subject to the terms and conditions of the
Incentive Plan.
6.3. AWARD
CERTIFICATES. All Equity
Awards granted pursuant to this Plan shall be evidenced by a written award
certificate, which shall include such provisions, not inconsistent with the Plan
or the Incentive Plan, as may be specified by the Committee. The form
of award certificates shall be set forth on Schedule III hereof, as amended from
time to time.
6.4. ADJUSTMENTS. The adjustment provisions
of the Incentive Plan shall apply with respect to awards of Equity Awards
granted pursuant to this Plan.
6.5. TAX MATTERS. Article 6 of the
Plan is intended to be a nonqualified, unfunded plan of deferred compensation
under the Code. A participant shall have the status of a general
unsecured creditor of the Company with respect to his or her right to receive
Stock or other payment upon settlement of the Equity Award granted under the
Plan. None of the benefits, payments, proceeds or distributions under
Article 6 of the Plan shall be subject to the claim of any creditor of any
participant or beneficiary, or to any legal process by any creditor of such
participant or beneficiary, and none of them shall have any right to alienate,
commute, anticipate or assign any of the benefits, payments, proceeds or
distributions under Article 6 of the Plan except to the extent expressly
provided herein to the contrary.
ARTICLE
7
AMENDMENT,
MODIFICATION AND TERMINATION
7.1. AMENDMENT, MODIFICATION AND
TERMINATION. The
Board or the Committee may, at any time and from time to time, amend, modify or
terminate the Plan without shareholder approval; provided, however, that if an
amendment to the Plan would, in the reasonable opinion of the Board or the
Committee, require shareholder approval under applicable laws, policies or
regulations or the applicable listing or other requirements of a securities
exchange on which the Stock is listed or traded, then such amendment shall be
subject to shareholder approval; and provided further, that the Board or the
Committee may condition any other amendment or modification on the approval of
shareholders of the Company for any reason. Modification of Equity Awards
granted under this Plan shall be subject to the provisions of the Incentive
Plan.
ARTICLE
8
GENERAL
PROVISIONS
8.1 ADJUSTMENTS.. The adjustment
provisions of the Incentive Plan shall apply with respect to awards of
Restricted Stock or other equity awards outstanding or to be granted pursuant to
this Plan.
8.2 DURATION OF THE
PLAN.. The Plan shall
remain in effect until terminated by the Board or the Committee.
8.3 EXPENSES OF THE
PLAN. The expenses of administering the Plan shall be borne by
the Company.
8.4 EFFECTIVE
DATE. The Plan was originally adopted by the Committee on
December 11, 2006, and became effective on that date (the “Effective
Date”).
The
foregoing is hereby acknowledged as being the Roper Industries, Inc. Amended and
Restated Director Compensation Plan adopted by the Committee on December
29, 2008.
ROPER
INDUSTRIES, INC.
/s/ Brian D.
Jellison
By: Brian
D. Jellison
Chairman
of the Board, President and Chief Executive Officer
SCHEDULE
I
DIRECTOR
COMPENSATION SCHEDULE
The
following shall become effective as of January 1, 2009
Basic Annual Cash Retainer (all
Directors): $42,000
Supplemental
Annual Cash Retainers:
Chair of
Audit Committee: $5,000
Chair of
Compensation Committee: $5,000
Chair of
Nominating and Corporate Governance Committee: $5,000
Meeting
Fees:
Board
meeting, attendance in person: $2,000
Board
meeting at which minutes are kept, attendance by telephone: $1,000
Annual
Award of Restricted Stock Units:
4,000
shares
SI-
SCHEDULE
II
Director
Election
as
to Conversion Date for Annual Restricted Stock Units (“RSUs”)
The
following constitutes the irrevocable election of the undersigned under the
Roper Industries, Inc. Director Compensation Plan (the “Plan”) with respect to
the undersigned’s Annual RSUs to be received at the annual shareholders meeting
in 2009 and in any future Plan Year for which I have not, before the Deferral
Election Deadline for such Plan Year, either (i) revoked this RSU Conversion
Date Election Form, or (ii) filed a different RSU Conversion Date Election
Form. Capitalized terms used herein and not otherwise defined have
the meanings assigned such terms in the Plan.
I hereby
elect the following as the Conversion Date for the RSUs that may become vested
[the
Conversion Date is the date upon which the Restricted Stock Units will be
converted to shares of Stock and become taxable to you]:
Indicate a percentage after one or more
of the following (not to exceed 100% in the aggregate):
_____ The
Vesting Date.
_____ The
date of my Separation from Service from the Company for any reason.
_____ The
earlier of (i) the following date: ______________ [insert any
specific future date, but not earlier than one year from the date of
grant], or (ii) the date of my Separation from Service from the Company
for any reason.
_____ The
earlier of (i) the following date: ______________ [insert any
specific future date, but not earlier than one year from the date of
grant], or (ii) the fifth anniversary of the date of my Separation from
Service from the Company for any reason.
Executed this _____ day of December,
2008.
[NAME OF
DIRECTOR]
SII-
SCHEDULE
III
Form
of RSU Certificate
RESTRICTED STOCK UNIT AWARD CERTIFICATE
for
Non-Employee Directors
Non-transferable
GRANT
TO
_____________________________
(“Grantee”)
by Roper
Industries, Inc. (the “Company”) of
[_______]
restricted
stock units convertible into shares of its common stock, par value $0.01 (the
“Units")
pursuant
to and subject to the provisions of the Roper Industries, Inc. Director
Compensation Plan (the “Director Compensation Plan”), which is operated as a
subplan of the Roper Industries, Inc. Amended and Restated 2006 Incentive Plan
(the “Incentive Plan” and, together with the Directors Compensation Plan, the
“Plans”), and to the terms and conditions set forth on the following
page. Unless vesting is accelerated in accordance with the Plans, the
Units shall vest (become non-forfeitable) in accordance with the following
schedule:
|
Continuous Service as a Director from Grant Date
to:
|
Percent of Units Vested
|
|
|
6-month
anniversary of the Grant Date
|
50%
|
|
|
1
day prior to the next annual meeting
of
shareholders of the Company
|
100%
|
IN
WITNESS WHEREOF, Roper Industries, Inc. has caused this Certificate to be
executed as of the Grant Date, as indicated below.
ROPER
INDUSTRIES, INC.
By: _________________________________________
Its: Authorized
Officer
Grant
Date: ________________________________
TERMS
AND CONDITIONS
1. Grant of Units. The
Company hereby grants to the Grantee named on page 1 hereof, subject to the
restrictions and the terms and conditions set forth in the Plans and in this
award certificate (this “Certificate”), the number of restricted stock units
indicated on page 1 hereof (the “Units”) which represent the right to receive an
equal number of Shares of the Company’s Stock on the terms set forth in this
Certificate. Capitalized terms used herein and not otherwise defined shall have
the meanings assigned to such terms in the Plans.
2. Vesting of Units. The
Units have been credited to a bookkeeping account on behalf of Grantee. The
Units will vest and become non-forfeitable on the earliest to occur of the
following (the “Vesting Date”):
|
(a)
|
as
to the percentages of the Units specified on page 1 hereof, on the dates
specified on page 1 hereof; provided Grantee is then still a director of
the Company on such date, or
|
|
(b)
|
as
to all of the Units, upon Grantee’s Separation from Service due to death
or Disability, or
|
|
(c)
|
as
to all of the Units, upon the occurrence of a Change in
Control.
|
If
Grantee’s service as a director terminates prior to the Vesting Date for any
reason other than as described in (b) above, Grantee shall forfeit all right,
title and interest in and to the unvested Units as of the date of such
termination, the Units will be reconveyed to the Company without further
consideration or any act or action by Grantee, and the Units will not be
converted to Stock for Grantee.
3. Conversion to Stock.
Unless the Units are forfeited prior to the Vesting Date as provided in
Paragraph 2, the vested Units will be converted to actual shares of Stock on
SELECT ONE BASED ON THE PRE-GRANT ELECTION OF THE DIRECTOR: [the Vesting Date]
[the date of Grantee’s Separation from Service for any reason] [the earlier of
_________, 20__ or the date of Grantee’s Separation from Service for any reason]
[the earlier of _________, 20__ or the fifth anniversary of the date of
Grantee’s Separation from Service for any reason] (the “Conversion Date”).
Shares of Stock will be registered on the books of the Company in Grantee’s name
as of the Conversion Date and will remain in uncertificated, book-entry form
unless Grantee requests a stock certificate or certificates for the
Shares.
4. Dividend Equivalents.
Grantee shall be entitled to receive cash payments with respect to each Unit
equal to any cash dividends and other distributions paid with respect to a share
of Stock, provided that if any such dividends or distributions are paid in
shares of Stock, the Fair Market Value of such shares of Stock shall be
converted into additional restricted stock units, which shall be subject to the
same forfeiture restrictions, restrictions on transferability, and conversion
terms as apply to the Units with respect to which they were paid.
5. Rights as
Shareholder. The Units do not confer to Grantee any rights of a
shareholder of the Company unless and until shares of Stock are in fact
registered in connection with the Units. Grantee shall not have voting or any
other rights as a shareholder of the Company with respect to the Units. Upon
conversion of the Units into shares of Stock, Grantee will obtain full voting
and other rights as a shareholder of the Company.
6. Changes in Capital
Structure. The provisions of Article 15 of the Incentive Plan shall apply
to this award and are incorporated herein by reference. Without limiting the
foregoing, in the event the Stock shall be changed into or exchanged for a
different number or class of shares of stock or securities of the Company or of
another company, whether through reorganization, recapitalization, statutory
share exchange, reclassification, stock split-up, combination of shares, merger
or consolidation, or otherwise, there shall be substituted for each share of
Stock then underlying a Unit subject to this Certificate the number and class of
shares into which each outstanding share of Stock shall be so
exchanged.
7. Restrictions on Transfer and
Pledge. No right or interest of Grantee in the Units may be pledged,
hypothecated or otherwise encumbered to or in favor of any party other than the
Company or an Affiliate, or be subjected to any lien, obligation or liability of
Grantee to any other party other than the Company or an Affiliate. Units are not
assignable or transferable by Grantee other than by will or the laws of descent
and distribution.
8. No Right to Continued
Service. Nothing in this Certificate shall interfere with or limit in any
way the right of the Company to terminate Grantee’s service as a director at any
time, nor confer upon Grantee any right to continue as a director of the
Company.
9. Amendment. The
Committee may amend, modify or terminate this Certificate without approval of
Grantee; provided, however, that such amendment, modification or termination
shall not, without Grantee’s consent, reduce or diminish the value of this Award
determined as if it had been fully vested and settled on the date of such
amendment or termination.
10. Plans Control. The
terms contained in the Plans are incorporated into and made a part of this
Certificate and this Certificate shall be governed by and construed in
accordance with the Plans. In the event of any actual or alleged conflict
between the provisions of the Plans and the provisions of this Certificate, the
provisions of the Plans shall be controlling and determinative. In the event of
any actual or alleged conflict between the provisions of the two Plans, the
provisions of the Incentive Plan shall be controlling and
determinative.
11. Notice. Notices and
communications under this Certificate must be in writing and either personally
delivered or sent by registered or certified United States mail, return receipt
requested, postage prepaid. Notices to the Company must be addressed to Roper
Industries, Inc., 6901 Professional Parkway East, Suite 200, Sarasota, Florida
34240; Attention: Corporate Secretary, or any other address designated by the
Company in a written notice to Grantee. Notices to Grantee will be directed to
the address of Grantee then currently on file with the Company, or at any other
address given by Grantee in a written notice to the Company.
SIII-
Exhibit 10.20
2160
Satellite Blvd., Suite 200
Duluth,
GA 30097
July 21,
2005
Mr. David
B. Liner
2221
Bloomfield Woods Ct.
West
Bloomfield, MI 48323
Re: Offer
Letter of Employment
Dear
David:
This
letter is to confirm our offer of employment to join Roper Industries Inc.
("Roper" or the "Company") as Vice President, General Counsel and
Secretary. You will report to the undersigned. We have
agreed that you will join the Company on August 1, 2005.
Compensation:
|
·
|
Your
annual base salary will be $300,000. Your performance will be
measured and reviewed as of December 31 of each year starting December 31,
2005, at which time you will be eligible for a salary
review.
|
|
·
|
You
will be eligible for a 2005 incentive bonus of up to 100% of your annual
base salary, pro-rated for the time you were with the Company in
2005.
|
|
·
|
You
will be eligible to participate in the Roper Stock Option
program. You will receive 6,000 options at time of hire. Such
options will vest in equal installments over three
years.
|
|
·
|
You
will be eligible to receive restricted stock awards. You will
receive 4,000 restricted shares at time of hire. The shares
will vest on a 3-year cliff vesting
schedule.
|
|
·
|
You
will receive an amount equal to one month’s base salary within 30 days of
your start date.
|
|
·
|
If
your employment is terminated by Roper without “cause” (as hereinafter
defined) or due to your death or permanent disability prior to the 3rd
anniversary of your start date, these options and shares will immediately
vest on the termination date.
|
Employee
Benefits:
|
·
|
You
will be eligible for all Company employee benefits available to Roper’s
corporate officers including disability, health, dental, vision, life
insurance, a 401-K Plan (subject to its six-month waiting period) under
which the Company would make base and matching contributions of up to
7-1/2% of your salary and a non-qualified deferred compensation plan (no
waiting period). Details of these and other benefits will be
provided in materials that will be sent to you. Coverage will
commence on your start date with Roper to the extent permitted under the
applicable plans.
|
|
·
|
Customary
vacation, holidays and sick leave and business expense reimbursement,
including expenses relating to bar association memberships and the cost of
continuing legal education.
|
|
·
|
An
Executive Financial Planning allowance will be provided for an advisor of
your choice with accreditations: CPA, CFA or
JD.
|
|
|
Auto
Car Allowance:
|
|
·
|
Roper
will lease an automobile of your choice for your use under its corporate
officer program.
|
|
|
Relocation:
|
|
·
|
Roper
will reimburse (and gross up) the customary moving and relocation expenses
you incur at the time of your relocation and will provide reasonable
temporary accommodations per Roper’s policy for corporate officers until
your relocation. If you decide to keep your current home in
Michigan, the Company will consider, at my sole discretion, making a cash
payment to you to help defray the cost of setting up a new residence near
our corporate office, provided, however, that such payment, if any, will
not exceed the amount that you otherwise would have received if you had
sold your home in Michigan and moved your
belongings.
|
|
|
Severance:
|
|
·
|
If
Roper terminates your employment without cause (as used herein, “cause”
shall mean your commission of any crime involving the funds or the assets
of the Company, your willful breach of the Company’s ethical and other
policies and guidelines of conduct applicable to you, your personal
conduct or misbehavior which is substantially detrimental or threatening
to the reputation, prospects, welfare or security of the Company, or your
continued non-performance of duties in the manner requested by the Chief
Executive Officer after written notice thereof), you will be entitled to
receive one year’s severance (monthly installments) equal to your
then-current monthly base salary and annual bonus, plus 1 year of medical
benefit coverage.
|
Change of
Control:
|
·
|
If
a “change of control” occurs, all stock options, shares of restricted
stock, and any other equity-based awards held by you which are described
in this letter will become fully vested on the date of such change of
control. As used herein, “change of control” shall mean that
the control of the majority interest in Roper’s common stock passes to a
single individual or entity (including related parties) or that Roper
merges with another unrelated company and the shareholders of that other
company control more than 50% of the common stock of the merged
entity.
|
David, we
look forward to you joining the Roper team.
Sincerely
yours, Accepted
by:
/s/ Brian D.
Jellison
Brian D.
Jellison /s/ David B.
Liner
Chairman,
President &
CEO David
B. Liner
Date: __________________________
Exhibit 10.21
ROPER
INDUSTRIES, INC.
409A
Amendments to the Offer Letter of Employment with
John Humphrey
This Amendment to the Offer Letter of
Employment Agreement dated as of March 31, 2006 (the “Offer Letter”) between
Roper Industries, Inc. (the “Company”) and John Humphrey (“Executive”) is made
this 30th day of
December 2008.
The Company and Executive have
determined that it is in their best interests to amend the Offer Letter to
include special provisions intended to ensure compliance with Internal Revenue
Code Section 409A relating to deferred compensation. In consideration
of the mutual covenants contained herein and the continued employment of
Executive by the Company, the parties agree as follows:
1. The
paragraph entitled “Severance” in the Offer Letter is hereby amended by deleting
the words “you will be entitled to receive one year’s severance (monthly
installments) equal to your then-current monthly base salary plus 1 year of
medical benefit coverage” and replacing the same with the
following:
“you will
be entitled to receive one year’s severance equal to your then-current annual
base salary plus 1 year of medical benefit coverage. Unless a delayed payment
date is required under “Section 409A Compliance” below, such severance payment
shall be paid in a lump sum no later than March 15 of the year after the year in
which your employment is terminated without cause.”
2. The Offer
Letter is hereby amended by adding the following paragraphs:
“Section
409A Compliance:
|
o
|
This
Offer Letter shall be interpreted and administered in a manner so that any
amount or benefit payable hereunder shall be paid or provided in a manner
that is either exempt from or compliant with the requirements Section 409A
of the Internal Revenue Code (the “Code”) and applicable Internal Revenue
Service guidance and Treasury Regulations issued thereunder (and any
applicable transition relief under Section 409A of the
Code).
|
|
o
|
Notwithstanding
anything in this Offer Letter to the contrary, to the extent that any
amount or benefit that would constitute non-exempt “deferred compensation”
for purposes of Section 409A of the Code would otherwise be payable or
distributable hereunder by reason of a change of control or your
termination of employment, such amount or benefit will not be payable or
distributable to you by reason of such circumstance unless (i) the
circumstances giving rise to such change of control or termination of
employment, as the case, may be, meet any description or definition of
“change in control event” or “separation from service”, as the case may
be, in Section 409A of the Code and applicable regulations (without giving
effect to any elective provisions that may be available under such
definitions), or (ii) the payment or distribution of such amount or
benefit would be exempt from the application of Section 409A of the Code
by reason of the short-term deferral exemption or
otherwise. This provision does not prohibit the vesting of any amount
upon a change of control or termination of employment, however
defined. If this provision prevents the payment or distribution
of any amount or benefit, such payment or distribution shall be made on
the date, if any, on which an event occurs that constitutes a Section
409A-compliant “change in control event” or “separation from service,” as
the case, may be, or such later date as may be required by the following
paragraph.
|
|
o
|
If
any amount or benefit that would constitute non-exempt “deferred
compensation” for purposes of Section 409A of the Code would otherwise be
payable or distributable under this Offer Letter by reason of your
separation from service during a period in which you are a “specified
employee” (as defined in Code Section 409A and applicable regulations),
then payment or commencement of such non-exempt amounts or benefits shall
be delayed until the earlier of your death or the first day of the seventh
month following your separation from
service.”
|
|
o
|
To
the extent that your are entitled to be paid or reimbursed for any
expenses under this Offer Letter (i.e., reimbursement of business
expenses, provision of automobile or allowance, club dues and expenses,
financial planning services and similar reimbursements) the amount
reimbursable in any one calendar year shall not affect the amount
reimbursable in any other calendar year, and the reimbursement of an
eligible expense shall be made within thirty (30) days after delivery of
your respective written requests for payment accompanied with such
evidence of fees and expenses incurred as the Company reasonably may
require, but in any event no later than December 31 of the year after the
year in which the expense was incurred. Your rights to payment
or reimbursement of any expenses incurred during your employment pursuant
to this Offer Letter shall expire no later than December 31 of the year in
which you terminate employment and shall not be subject to liquidation or
exchange for another benefit.”
|
3. Except
as expressly amended hereby, the terms of the Offer Letter shall be and remain
unchanged and the Offer Letter as amended hereby shall remain in full force and
effect.
IN WITNESS WHEREOF, the Company and
Executive have caused this Amendment to be duly executed.
ROPER
INDUSTRIES, INC.
By: /s/
Brian D. Jellison
Brian D. Jellison, Chairman, President
and CEO
/s/ John
Humphrey
John
Humphrey
Exhibit
10.22
ROPER
INDUSTRIES, INC.
409A
Amendments to the Offer Letter of Employment with
Timothy Winfrey
This Amendment to the Offer Letter of
Employment Agreement dated as of May 20, 2002 (the “Offer Letter”) between Roper
Industries, Inc. (the “Company”) and Timothy Winfrey (“Executive”) is made this
30th
day of December 2008.
The Company and Executive have
determined that it is in their best interests to amend the Offer Letter to
include special provisions intended to ensure compliance with Internal Revenue
Code Section 409A relating to deferred compensation. In consideration
of the mutual covenants contained herein and the continued employment of
Executive by the Company, the parties agree as follows:
1. The Offer
Letter is hereby amended by adding the following sentences at the end of
paragraph 3 under “Salary and Benefits”:
“For
purposes of this paragraph, the “bonus” portion of your severance payment is the
amount of annual bonus, if any, that you earned with respect to the last year
before your termination occurred. Unless a delayed payment date is
required under “Section 409A Compliance” below, such severance payment shall be
paid in a lump sum no later than March 15 of the year after the year in which
your employment is terminated.”
2. The Offer
Letter is hereby amended by adding the following paragraphs:
“Section 409A
Compliance
|
1.
|
This
Offer Letter shall be interpreted and administered in a manner so that any
amount or benefit payable hereunder shall be paid or provided in a manner
that is either exempt from or compliant with the requirements Section 409A
of the Internal Revenue Code (the “Code”) and applicable Internal Revenue
Service guidance and Treasury Regulations issued thereunder (and any
applicable transition relief under Section 409A of the
Code).
|
|
2.
|
Notwithstanding
anything in this Offer Letter to the contrary, to the extent that any
amount or benefit that would constitute non-exempt “deferred compensation”
for purposes of Section 409A of the Code would otherwise be payable or
distributable hereunder by reason of a change of control or your
termination of employment, such amount or benefit will not be payable or
distributable to you by reason of such circumstance unless (i) the
circumstances giving rise to such change of control or termination of
employment, as the case, may be, meet any description or definition of
“change in control event” or “separation from service”, as the case may
be, in Section 409A of the Code and applicable regulations (without giving
effect to any elective provisions that may be available under such
definitions), or (ii) the payment or distribution of such amount or
benefit would be exempt from the application of Section 409A of the Code
by reason of the short-term deferral exemption or
otherwise. This provision does not prohibit the vesting of any amount
upon a change of control or termination of employment, however
defined. If this provision prevents the payment or distribution
of any amount or benefit, such payment or distribution shall be made on
the date, if any, on which an event occurs that constitutes a Section
409A-compliant “change in control event” or “separation from service,” as
the case, may be, or such later date as may be required by the following
paragraph.
|
|
3.
|
If
any amount or benefit that would constitute non-exempt “deferred
compensation” for purposes of Section 409A of the Code would otherwise be
payable or distributable under this Offer Letter by reason of your
separation from service during a period in which your are a “specified
employee” (as defined in Code Section 409A and applicable regulations),
then payment or commencement of such non-exempt amounts or benefits shall
be delayed until the earlier of your death or the first day of the seventh
month following your separation from
service.”
|
|
4.
|
To
the extent that you are entitled to be paid or reimbursed for any expenses
under this Offer Letter (i.e., reimbursement of business expenses,
provision of automobile or allowance, club dues and expenses, financial
planning services, Executive Reimbursement Insurance Plan and similar
reimbursements) the amount reimbursable in any one calendar year shall not
affect the amount reimbursable in any other calendar year, and the
reimbursement of an eligible expense shall be made within thirty (30) days
after delivery of your respective written requests for payment accompanied
with such evidence of fees and expenses incurred as the Company reasonably
may require, but in any event no later than December 31 of the year after
the year in which the expense was incurred. Your rights to
payment or reimbursement of any expenses incurred during your employment
pursuant to this Offer Letter shall expire no later than December 31 of
the year in which you terminate employment and shall not be subject to
liquidation or exchange for another
benefit.”
|
3. Except
as expressly amended hereby, the terms of the Offer Letter shall be and remain
unchanged and the Offer Letter as amended hereby shall remain in full force and
effect.
IN WITNESS WHEREOF, the Company and
Executive have caused this Amendment to be duly executed.
ROPER
INDUSTRIES, INC.
By: /s/ Brian D.
Jellison
Brian D. Jellison, Chairman, President
and CEO
/s/ Timothy
Winfrey
Timothy
Winfrey
Exhibit
10.23
ROPER
INDUSTRIES, INC.
409A
Amendments to the Offer Letter of Employment with
David B. Liner
This Amendment to the Offer Letter of
Employment Agreement dated as of July 21, 2005 (the “Offer Letter”) between
Roper Industries, Inc. (the “Company”) and David B. Liner (“Executive”) is made
this 30th day of
December 2008.
The Company and Executive have
determined that it is in their best interests to amend the Offer Letter to
include special provisions intended to ensure compliance with Internal Revenue
Code Section 409A relating to deferred compensation. In consideration
of the mutual covenants contained herein and the continued employment of
Executive by the Company, the parties agree as follows:
1. The
paragraph entitled “Severance” in the Offer Letter is hereby amended by deleting
the words “you will be entitled to receive one year’s severance (monthly
installments) equal to your then-current monthly base salary and annual bonus,
plus 1 year of medical benefit coverage” and replacing the same with the
following:
“you will
be entitled to receive one year of medical benefit coverage and a severance
payment equal to the sum of your then-current annual base salary and annual
bonus, if any, that you earned with respect to the last year before your
termination occurred. Unless a delayed payment date is required under
“Section 409A Compliance” below, such severance payment shall be paid in a lump
sum no later than March 15 of the year after the year in which your employment
is terminated.”
2. The Offer
Letter is hereby amended by adding the following paragraphs:
“Section
409A Compliance:
|
o
|
This
Offer Letter shall be interpreted and administered in a manner so that any
amount or benefit payable hereunder shall be paid or provided in a manner
that is either exempt from or compliant with the requirements Section 409A
of the Internal Revenue Code (the “Code”) and applicable Internal Revenue
Service guidance and Treasury Regulations issued thereunder (and any
applicable transition relief under Section 409A of the
Code).
|
|
o
|
Notwithstanding
anything in this Offer Letter to the contrary, to the extent that any
amount or benefit that would constitute non-exempt “deferred compensation”
for purposes of Section 409A of the Code would otherwise be payable or
distributable hereunder by reason of a change of control or your
termination of employment, such amount or benefit will not be payable or
distributable to you by reason of such circumstance unless (i) the
circumstances giving rise to such change of control or termination of
employment, as the case, may be, meet any description or definition of
“change in control event” or “separation from service”, as the case may
be, in Section 409A of the Code and applicable regulations (without giving
effect to any elective provisions that may be available under such
definitions), or (ii) the payment or distribution of such amount or
benefit would be exempt from the application of Section 409A of the Code
by reason of the short-term deferral exemption or
otherwise. This provision does not prohibit the vesting of any amount
upon a change of control or termination of employment, however
defined. If this provision prevents the payment or distribution
of any amount or benefit, such payment or distribution shall be made on
the date, if any, on which an event occurs that constitutes a Section
409A-compliant “change in control event” or “separation from service,” as
the case, may be, or such later date as may be required by the following
paragraph.
|
|
o
|
If
any amount or benefit that would constitute non-exempt “deferred
compensation” for purposes of Section 409A of the Code would otherwise be
payable or distributable under this Offer Letter by reason of your
separation from service during a period in which you are a “specified
employee” (as defined in Code Section 409A and applicable regulations),
then payment or commencement of such non-exempt amounts or benefits shall
be delayed until the earlier of your death or the first day of the seventh
month following your separation from
service.”
|
|
o
|
To
the extent that you are entitled to be paid or reimbursed for any expenses
under this Offer Letter (i.e., reimbursement of business expenses,
provision of automobile or allowance, club dues and expenses, financial
planning services and similar reimbursements) the amount reimbursable in
any one calendar year shall not affect the amount reimbursable in any
other calendar year, and the reimbursement of an eligible expense shall be
made within thirty (30) days after delivery of your respective written
requests for payment accompanied with such evidence of fees and expenses
incurred as the Company reasonably may require, but in any event no later
than December 31 of the year after the year in which the expense was
incurred. Your rights to payment or reimbursement of any
expenses incurred during your employment pursuant to this Offer Letter
shall expire no later than December 31 of the year in which you terminate
employment and shall not be subject to liquidation or exchange for another
benefit.”
|
3. Except
as expressly amended hereby, the terms of the Offer Letter shall be and remain
unchanged and the Offer Letter as amended hereby shall remain in full force and
effect.
IN WITNESS WHEREOF, the Company and
Executive have caused this Amendment to be duly executed.
ROPER
INDUSTRIES, INC.
By: /s/ Brian D.
Jellison
Brian D. Jellison, Chairman, President
and CEO
/s/ David B.
Liner
David B.
Liner
Exhibit
21.1
Roper
Industries, Inc.
Subsidiary
List
|
Name
of Subsidiary
|
Jurisdiction
of Incorporation/Organization
|
|
3089554
Nova Scotia Inc.
|
Canada
|
|
4370007
Canada, Inc.
|
Canada
|
|
Abel
Equipos, S.A.
|
Spain
|
|
Abel
GmbH & Co KG
|
Germany
|
|
Abel
Pumpen GmbH
|
Germany
|
|
Abel
Pumps, L.P.
|
Delaware
|
|
AC
Analytical Control Services B.V
|
Netherlands
|
|
AC
Analytical Controls Asia Pacific PTE Ltd.
|
Shanghai
|
|
AC
Analytical Controls B.V.
|
Netherlands
|
|
AC
Analytical Controls Holding
|
Korea
|
|
AC
Analytical Controls Holding B.V.
|
Netherlands
|
|
Acton
Research Corporation
|
Delaware
|
|
Alpha
Holdings of Delaware 1, LLC
|
Delaware
|
|
Alpha
Holdings of Delaware 11, LLC
|
Delaware
|
|
Alpha
Technologies B.V.
|
Netherlands
|
|
Alpha
Technologies Japan LLC
|
Delaware
|
|
Alpha
Technologies S.R.O.
|
Czech
Republic
|
|
Alpha
Technologies Services, LLC
|
Delaware
|
|
Alpha
Technologies UK Ltd.
|
United
Kingdom
|
|
Alpha
UK Holdings LLC
|
Delaware
|
|
Amot
Controls Corporation
|
Delaware
|
|
Amot
Controls GmbH
|
Germany
|
|
Amot/Metrix
Investment Company
|
Delaware
|
|
Amtech
Systems (Hong Kong), Limited
|
Hong
Kong
|
|
Amtech
Systems LLC
|
Delaware
|
|
Amtech
World Corporation
|
Delaware
|
|
CBORD
Group, Inc.
|
Delaware
|
|
CBORD
Holding Corp.
|
Delaware
|
|
CCC
Services, Inc.
|
Delaware
|
|
Chalwyn
Ltd.
|
United
Kingdom
|
|
Civco
Holding, Inc.
|
Delaware
|
|
Civco
Medical Instruments Co., Inc.
|
Iowa
|
|
Colorado
MEDTEC LLC
|
Colorado
|
|
Compressor
Controls (Beijing) Corporation Ltd.
|
Beijing
|
|
Compressor
Controls B.V.
|
Netherlands
|
|
Compressor
Controls Corporation (a Delaware
Corporation)
d/b/a in Iowa as Compressor
Controls
- CIS/EE)
|
Delaware
|
|
Compressor
Controls Corporation (an Iowa Corp)
|
Iowa
|
|
Compressor
Controls Corporation Middle East
|
Delaware
|
|
Compressor
Controls Corporation S.r.l.
|
Italy
|
|
Compressor
Corporation Corporation Mauritius Ltd.
|
Mauritius
|
|
Cornell
Pump Company
|
Delaware
|
|
Cornell
Pump Europe GmbH
|
Germany
|
|
Cruden
Bay Limited
|
United
Kingdom
|
|
DAP
Technologies Corp.
|
Delaware
|
|
DAP
Technologies Limited
|
United
Kingdom
|
|
DAP
Technologies SARL
|
France
|
|
DAP
Technologies, Ltd.
|
Canada
|
|
Dynamic
Instruments, Inc.
|
California
|
|
Dynisco
(UK) Ltd.
|
United
Kingdom
|
|
Dynisco
B.V.
|
Netherlands
|
|
Dynisco
Enterprises GmbH
|
Germany
|
|
Dynisco
Enterprises LLC
|
Delaware
|
|
Dynisco
Europe GmbH
|
Germany
|
|
Dynisco
Europe Holdings 11, B.V.
|
Netherlands
|
|
Dynisco
Instruments LLC
|
Delaware
|
|
Dynisco
Instruments SARL
|
France
|
|
Dynisco
LLC
|
Delaware
|
|
Dynisco
Parent, Inc.
|
Delaware
|
|
Dynisco
Polymer Test, Inc.
|
Pennsylvania
|
|
Dynisco
S.R.L.
|
Italy
|
|
Dynisco
SPOL, SRO
|
Czech
Republic
|
|
Dynisco
–Viatran (M) Sdn Bhd
|
Malaysia
|
|
Dynisco
Viatran LLC
|
Delaware
|
|
Dynisco-Viatran
Instruments Sdn Bhd
|
Malaysia
|
|
Eclipse
Laboratory Automation BV
|
Holland
|
|
Fluid
Metering, Inc.
|
Delaware
|
|
FTI
Flow Technology, Inc.
|
Delaware
|
|
Gatan
GmbH
|
Germany
|
|
Gatan
Service Corporation
|
Pennsylvania
|
|
Gatan,
Inc.
|
Pennsylvania
|
|
Getloaded
Acquisition Corp.
|
Delaware
|
|
Hansen
Technologies Corporation
|
Illinois
|
|
Hansen
Technologies Europe GmbH.
|
Germany
|
|
Harbour
Holding Corp.
|
Delaware
|
|
Hardy
Instruments, Inc.
|
California
|
|
Horizon
Software International, LLC
|
Georgia
|
|
Imager
Labs
|
California
|
|
Inovonics
Corporation
|
Colorado
|
|
Integrated
Designs L.P.
|
Delaware
|
|
IntelliTrans
Canada Ltd.
|
Canada
|
|
IntelliTrans
Limited
|
United
Kingdom
|
|
IntelliTrans,
LLC
|
Delaware
|
|
ISL
Holdings, S.A.S.
|
France
|
|
ISL
Investissement SARL
|
France
|
|
ISL
Scientifique de Laboratoire - ISL, S.A.S.
|
France
|
|
IT
Canada Holdings LLC
|
Delaware
|
|
K/S
Roper Finance
|
Denmark
|
|
Law
1059 Limited
|
United
Kingdom
|
|
Logitech
Limited
|
United
Kingdom
|
|
Lumenera
Corporation
|
Canada
|
|
Lumenera,
Inc.
|
Delaware
|
|
Marumoto
Struers KK
|
Japan
|
|
Media
Cybernetics Inc.
|
Delaware
|
|
MEDTEC
S.A.R.L.
|
France
|
|
MEDTEC,
Inc.
|
Iowa
|
|
Metrix
Instrument Co., L.P.
|
Delaware
|
|
Neptune
Technology Group (Canada) Ltd.
|
Canada
|
|
Neptune
Technology Group Inc.
|
Delaware
|
|
Neptune
Technology Group Mexico S.de R.L. de C.V.
|
Mexico
|
|
Neptune
Technology Group Servicios S.de R.L. de C.V.
|
Mexico
|
|
Nippon
Roper K.K.
|
Japan
|
|
Northwest
Medical Physics Equipment, Inc.
|
Iowa
|
|
Off-Campus
Advantage, LLC
|
Delaware
|
|
PAC
Denmark ApS
|
Denmark
|
|
PAC
GmbH
|
Germany
|
|
Petroleum
Analyzer Company LP
|
Delaware
|
|
Petrotech
International, Inc.
|
Louisiana
|
|
Quantitative
Imaging Corp.
|
Canada
|
|
Redlake
MASD, LLC.
|
Delaware
|
|
RI
Insurance Limited
|
Bermuda
|
|
RMT,
Inc
|
Arizona
|
|
Roda
Deaco Valve, Inc.
|
Canada
|
|
Roper
Canada Holdings, Inc.
|
Canada
|
|
Roper
Canada Partners Inc.
|
Canada
|
|
Roper
Capital Deutschland GmbH
|
Germany
|
|
Roper
Engineering s.r.o.
|
Czech
Republic
|
|
Roper
Europe GmbH
|
Germany
|
|
Roper
Fundings Deutschland GmbH & Co. KG
|
Germany
|
|
Roper
Georgia, Inc.
|
Delaware
|
|
Roper
Germany GmbH
|
Germany
|
|
Roper
Germany GmbH & Co., KG
|
Germany
|
|
Roper
Holdings, Inc.
|
Delaware
|
|
Roper
Holdings, Limited
|
United
Kingdom
|
|
Roper
Hong Kong Holdings, Limited
|
Hong
Kong
|
|
Roper
Industrial Products Investment Company
|
Iowa
|
|
Roper
Industries UK Limited
|
United
Kingdom
|
|
Roper
Industries B.V.
|
Netherlands
|
|
Roper
Industries Denmark ApS
|
Denmark
|
|
Roper
Industries Deutschland GmbH
|
Germany
|
|
Roper
Industries Limited
|
United
Kingdom
|
|
Roper
Industries Manufacturing (Shanghai) Co. Ltd.
|
Shanghai
|
|
Roper
Industries Mauritius Ltd.
|
Mauritius
|
|
Roper
International Products Ltd.
|
Virgin
Islands
|
|
Roper
LLC
|
Russia
|
|
Roper
Luxembourg Holdings S.a.r.l.
|
Luxembourg
|
|
Roper
Luxembourg S.a.r.l.
|
Luxembourg
|
|
Roper
Marketing India Private Ltd.
|
India
|
|
Roper
Mex, L.P.
|
Delaware
|
|
Roper
Pump Company
|
Delaware
|
|
Roper
Scientific B.V.
|
Netherlands
|
|
Roper
Scientific GmbH
|
Germany
|
|
Roper
Scientific SAS
|
France
|
|
Roper
Scientific, Inc.
|
Delaware
|
|
Roper
Southeast Asia LLC
|
Delaware
|
|
Ropintassco
1, LLC
|
Delaware
|
|
Ropintassco
2, LLC
|
Delaware
|
|
Ropintassco
3, LLC
|
Delaware
|
|
Ropintassco
4, LLC
|
Delaware
|
|
Ropintassco
5, LLC
|
Delaware
|
|
Ropintassco
6, LLC
|
Delaware
|
|
Ropintassco
7, LLC
|
Delaware
|
|
Ropintassco
Holdings, L.P.
|
Delaware
|
|
Shanghai
Roper Industries Trading Co., Ltd.
|
China
|
|
Sinmed
B.V.
|
Netherlands
|
|
Sinmed
Holding International B.V.
|
Netherlands
|
|
Struers
(Shanghai) Trading Co., Ltd.
|
China
|
|
Struers
A/S
|
Denmark
|
|
Struers
GmbH
|
Germany
|
|
Struers
Inc.
|
Delaware
|
|
Struers
Limited
|
United
Kingdom
|
|
Struers
S.A.S.
|
France
|
|
Student
Advantage, LLC
|
Delaware
|
|
TC
License Ltd.
|
Bermuda
|
|
Technolog
Group Limited
|
United
Kingdom
|
|
Technolog
Holdings Ltd.
|
United
Kingdom
|
|
Technolog
Limited
|
United
Kingdom
|
|
TLP
Holdings, LLC
|
Delaware
|
|
TransCore
Atlantic, LLC
|
Delaware
|
|
TransCore
CNUS, LLC
|
Delaware
|
|
TransCore
Commercial Services, LLC
|
Delaware
|
|
TransCore
Holdings, Inc.
|
Delaware
|
|
TransCore
ITS, LLC
|
Delaware
|
|
TransCore
Link Logistics Corporation
|
Canada
|
|
TransCore
Nova Scotia Corporation
|
Canada
|
|
TransCore
Partners, LLC
|
Delaware
|
|
Transcore
Quebec Corporation Inc.
|
Canada
|
|
TransCore,
LP
|
Delaware
|
|
Uson
GmbH
|
Germany
|
|
Uson
L.P.
|
Delaware
|
|
Uson
Limited
|
United
Kingdom
|
|
Utilitec
Limited
|
United
Kingdom
|
|
Utilitec
Services Limited
|
United
Kingdom
|
|
Utility
Data Services Limited
|
United
Kingdom
|
|
Viastar
Properties, Inc.
|
Texas
|
|
Viastar
Services, LP
|
Texas
|
|
Viatran
Corporation
|
New
York
|
|
Walter
Herzog GmbH
|
Germany
|
|
Zetec
Korea, Inc.
|
Delaware
|
|
Zetec
Rental Corp.
|
Delaware
|
|
Zetec
Services, Inc.
|
Delaware
|
|
Zetec,
Inc.
|
Washington
|
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 27, 2009
relating to the financial statements, financial statement schedule and the
effectiveness of internal control over financial reporting, which appears in
this Form 10-K. We also consent to the reference to us under the
heading "Selected Financial Data" in this Form 10-K.
PricewaterhouseCoopers
LLP
Atlanta,
GA
February
27, 2009
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 27, 2009
/s/ Brian D.
Jellison
Brian D.
Jellison
Chairman
of the Board, President and
Chief
Executive Officer
(Principal
Executive Officer)
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 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 27,
2009
/s/ John
Humphrey
John
Humphrey
Vice
President,
Chief
Financial Officer
(Principal
Financial Officer)
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, 2008, 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, both 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 27,
2009
/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.