SECURITIES AND EXCHANGE COMMISSION
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
September 2, 2003
ROPER INDUSTRIES, INC.
DELAWARE
| 1-12273 | 51-0263969 | |
| (COMMISSION FILE NUMBER) | (IRS EMPLOYER IDENTIFICATION NO.) | |
| 2160 SATELLITE BLVD., SUITE 200, DULUTH, GEORGIA | 30097 | |
| (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) | (ZIP CODE) | |
(770) 495-5100
160 BEN BURTON ROAD, BOGART, GEORGIA 30622
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
| (a) | Financial Statements of Business Acquired | |
| Not Applicable | ||
| (b) | Pro Forma Financial Statements | |
| Not Applicable | ||
| (c) | Exhibits | |
| 99.1 Press Release of Roper Industries, Inc. (the “Company”) dated September 2, 2003. |
ITEM 9. REGULATION FD DISCLOSURE
The information contained in this Item 9 is being furnished to the Securities and Exchange Commission pursuant to Item 12 of Form 8-K, “Disclosure of Results of Operation and Financial Condition,” as directed in Release No. 34-47583.
On September 2, 2003, the Company issued a press release containing information about the Company’s results of operations for the quarter ended July 31, 2003. A copy of the press release is attached hereto as Exhibit 99.1.
The press release presented non-GAAP financial information that the Company believes is useful because it allows investors to perform meaningful comparisons of the Company’s results for 2002 and 2003.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Roper Industries, Inc. | |||||||
| (Registrant) | |||||||
| BY: /s/ Martin S. Headley | |||||||
| Martin S. Headley, Vice President, Chief Financial Officer |
Date: September 2, 2003 | ||||||
EXHIBIT INDEX
| Exhibit No. | Description | |
| 99.1 | Press Release of the Company dated September 2, 2003 |
Exhibit 99.1
Contact Information:
Chris Hix
Director of Investor Relations
+1 (770) 495-5100
investor-relations@roperind.com
FOR IMMEDIATE RELEASE
ROPER INDUSTRIES REPORTS RECORD THIRD QUARTER 2003 RESULTS
Earnings from
Continuing Operations Increase 10%;
Net Sales Grow 8%;
Cash Flow from Operating
Activities Up 23%
Duluth, Georgia, September 2, 2003 ... Roper Industries, Inc. (NYSE: ROP) today announced record third quarter results. Diluted earnings per share (DEPS) from continuing operations for the third quarter ended July 31, 2003 rose 10% to $0.53 from $0.48 in the third quarter of fiscal 2002. Net DEPS, including discontinued operations, were $0.48 in the fiscal 2003 third quarter compared with $0.47 in the year-ago quarter.
“Roper’s record third quarter performance was achieved in spite of over $2 million of restructuring costs incurred in the quarter, reflecting the success of initiatives undertaken over the past year to maximize the performance of our diversified portfolio of excellent businesses,” said Brian Jellison, President and CEO. “Among other important indicators, our operating margins continue to improve, expanding 130 basis points sequentially from our second quarter. We have now made substantial progress towards completing the restructuring activities we announced earlier this year, which could generate up to $15 million in annualized cost savings.”
Net sales rose 8% in the third quarter to $166 from $153 million in the third quarter of the previous year. Excluding acquisitions made in 2002 (see Table 1) and net sales to Gazprom, Roper’s net sales in the fiscal 2003 third quarter increased 6% (see Table 2 for a reconciliation of net sales).
“This is our second consecutive quarter of organic growth excluding Gazprom, with continued strong demand for our oil & gas project solutions and improvements in many of our imaging markets,” said Mr. Jellison. “In addition, we are beginning to see the results of the new market-focused structure we implemented earlier this year. Led by a strengthened management team, our businesses are better aligned and focused to develop and implement growth initiatives.”
Roper’s third quarter cash flow from operating activities grew 23% from the year-ago quarter to $22 million, including $3 million of net working capital improvements. The Company commented that it has reduced its net debt-to-net capital ratio from 46.0% at the beginning of the fiscal year to 39.7% at quarter end (see Table 3).
Change in Fiscal Year End
The Company announced that its Board of Directors approved a change in Roper’s fiscal year end from October 31 to December 31 to more closely align its reporting periods with its customers. The Company’s next quarterly reporting period will end on September 30, 2003. Historical financial data reflecting Roper’s new reporting periods will be made available in the Investor Information section of the Company’s web site at www.roperind.com.
Outlook for Calendar 2003
Reflecting the new fiscal calendar, Roper expects DEPS from continuing operations of $2.00 to $2.11 for the year ended December 31, 2003, compared with $1.95 for the 2002 calendar year. This is in-line with previously issued guidance for the Company’s historic fiscal year reporting period. The Company also expects DEPS from continuing operations to be up sharply at $0.60 — $0.65 in its new third calendar-year quarter, ending September 30, 2003, compared with $0.49 in the comparative prior year period.
Mr. Jellison concluded, “ The changes we have made this year – our new market-focused business structure, strengthened management team and improvements to our cost structure – have created a solid foundation for Roper to deliver improved performance within our existing strategic platforms. Our strong cash flow supports our active, disciplined strategic investment program. Roper is well positioned to execute its strategy of creating shareholder value.”
Results by Segment for the Fiscal Quarter Ended July 31, 2003
Scientific & Industrial Imaging segment net sales rose 24% from the prior year to $43 million due to strong shipments for electron microscopy applications and the 2002 acquisition of QImaging. Operating profits increased 148% versus the prior year to $7 million. Excluding restructuring costs, operating profit tripled to $9 million on higher segment revenues and lower costs at the Company’s Redlake business unit. Net orders increased 3% in the third quarter.
The Industrial Technology segment reported another quarter of sequential growth, with net sales up 8% sequentially from the second quarter. Net sales were $44 million in the third quarter, 2% lower than in the year-ago period primarily as a result of the timing of water/wastewater projects. Third quarter operating margins were 23%. Operating profit of $10 million was lower than the prior year primarily as a result of restructuring costs and lower net sales in this year’s third quarter. Third quarter net orders improved 6% over the prior year to $43 million.
The Instrumentation segment posted a 43% sequential improvement in third quarter operating profit benefiting from the completion of restructuring activities in the second quarter. Third quarter net sales of $44 million were flat compared with the prior year period, as lower sales into semiconductor, telecom and refining markets were offset by revenues from the 2002 acquisition of Qualitek and stronger results at the Struers business unit. Operating profit decreased 7% as a result of revenue mix among the business units and lower margins from the Qualitek acquisition prior to its full integration into Uson, which was completed in the third quarter. Net orders increased 4% in the quarter.
Energy Systems & Controls segment third quarter net sales of $35 million were 19% higher than sales in the prior year period, principally as a result of the 2002 acquisition of Zetec and higher net sales for oil & gas applications, partially offset by a 61% reduction in net sales to Gazprom. Operating profit decreased from $8 million to $6 million on lower revenues to Gazprom and the expected seasonally low revenues at Zetec. Net orders of $38 million in the quarter were 45% higher than the prior year quarter.
Conference Call to be Held at 10:00 AM (EDT) Tomorrow
The Company will conduct a webcasted conference call at 10:00 AM EDT on Wednesday, September 3, 2003. To access the webcast, and to obtain copies of the slides, please visit the Investor Information section of the Company’s web site at www.roperind.com. Telephonic replays of the conference call will be available for two weeks by calling 1-888-203-1112 (+1-719-457-0820 outside of North America) and using the passcode 551787.
Table 1: Acquisitions
Qualitek, Instrumentation
Segment, July 2002
Zetec, Energy Systems & Controls Segment, August 2002
QImaging, Scientific & Industrial Imaging Segment, August 2002
Duncan Technologies, Scientific & Industrial Imaging Segment, August 2002
Definitive Imaging, Scientific & Industrial Imaging Segment, September 2002
Table 2: Reconciliation of Net Sales (Millions)
| Q3 2003 |
Q3 2002 |
||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Net sales excluding 2002 acquisitions | $ | 147 | $ | 139 | +6% | ||||||
| and excluding net sales to Gazprom | |||||||||||
| Net sales from 2002 acquisitions | 13 | -- | |||||||||
| Net sales to Gazprom | 6 | 14 | -61% | ||||||||
| Net sales as reported | $ | 166 | $ | 153 | +8% | ||||||
Table 3: Computation of Net Debt-to-Net Capital (Millions)
| July 31, 2003 |
October 31, 2002 |
|||||||
|---|---|---|---|---|---|---|---|---|
| Total debt | $ | 309 | $ | 332 | ||||
| Less: Cash | (24 | ) | (12 | ) | ||||
| Equals: Net debt | 285 | 320 | ||||||
| Add: Shareholders' equity | 433 | 376 | ||||||
| Equals: Net capital | $ | 718 | $ | 696 | ||||
| Net debt divided by Net capital | 39.7 | % | 46.0 | % | ||||
Additional information about Roper Industries, including a glossary for terms used by the Company, and registration for Company press releases via email, are also available on the Company’s website.
Roper Industries is a diversified provider of engineered products and solutions for global niche markets.
_________________
The information provided in this news release, in Company filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended October 31, 2002, and in other press releases and public disclosures, contains forward looking statements within the meaning of the federal securities laws, including statements regarding our expected business outlook, financial results, and strategies. These statements reflect management’s current beliefs, but are not guarantees of performance. They involve risks and uncertainties, which could cause actual results to differ materially from those contained in any forward looking statement. Such risks and uncertainties include reductions in our business with Gazprom, ability to realize cost savings from our restructuring initiatives, unfavorable changes in foreign exchange rates, difficulties associated with exports, risks associated with our international operations, difficulty making acquisitions and successfully integrating acquired businesses, increased product liability and insurance costs, increased warranty exposure, future competition, changes in the supply of, or price for, parts and components, environmental compliance costs and liabilities, risks and cost associated with asbestos related litigation and potential write-offs of our substantial intangible assets. Other important risk factors are discussed in our Annual Report on Form 10-K for the fiscal year ended October 31, 2002, and may be discussed in subsequent filings with the SEC. Readers should not place undue reliance on any forward looking statements. These statements speak only as of the date they are made, and we undertake no obligation to update publicly any of them in light of new information or future events.
Roper Industries, Inc.
and Subsidiaries
Condensed Consolidated Balance Sheets (unaudited)
(Amounts in thousands)
| July 31, 2003 |
|
October 31, 2002 |
| |||||
|---|---|---|---|---|---|---|---|---|
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 23,994 | $ | 12,422 | ||||
| Accounts receivable | 122,402 | 138,290 | ||||||
| Inventories | 95,579 | 88,313 | ||||||
| Other current assets | 5,205 | 5,224 | ||||||
| Assets held for sale | 5,311 | 4,578 | ||||||
| Total current assets | 252,491 | 248,827 | ||||||
| PROPERTY, PLANT AND EQUIPMENT, NET | 51,051 | 51,089 | ||||||
| OTHER ASSETS: | ||||||||
| Goodwill, net | 479,759 | 459,233 | ||||||
| Other intangible assets, net | 37,451 | 37,032 | ||||||
| Other assets | 34,831 | 32,792 | ||||||
| Total other assets | 552,041 | 529,057 | ||||||
| TOTAL ASSETS | $ | 855,583 | $ | 828,973 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable | $ | 34,195 | $ | 35,253 | ||||
| Accrued liabilities | 52,753 | 65,153 | ||||||
| Liabilities related to assets held for sale | 2,116 | 1,698 | ||||||
| Income taxes payable | 10,695 | 7,618 | ||||||
| Current portion of long-term debt | 5,838 | 20,515 | ||||||
| Total current liabilities | 105,597 | 130,237 | ||||||
| NONCURRENT LIABILITIES: | ||||||||
| Long-term debt | 303,435 | 311,590 | ||||||
| Other liabilities | 13,408 | 11,134 | ||||||
| Total liabilities | 422,440 | 452,961 | ||||||
| STOCKHOLDERS' EQUITY: | ||||||||
| Common stock | 328 | 326 | ||||||
| Additional paid-in capital | 92,683 | 89,153 | ||||||
| Retained earnings | 334,086 | 304,995 | ||||||
| Accumulated other comprehensive earnings | 30,290 | 5,940 | ||||||
| Treasury stock | (24,244 | ) | (24,402 | ) | ||||
| Total stockholders' equity | 433,143 | 376,012 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 855,583 | $ | 828,973 | ||||
Roper Industries, Inc. and Subsidiaries
Condensed Consolidated
Statements of Earnings (unaudited)
(Amounts in thousands, except per share data)
| Three months ended July 31, |
|
Nine months ended July 31, |
|
|||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2003 |
|
2002 |
|
2003 |
|
2002 |
| |||||||
| Net sales | $ | 165,627 | $ | 152,830 | $ | 469,465 | $ | 450,174 | ||||||
| Cost of sales | 77,161 | 70,421 | 223,566 | 207,202 | ||||||||||
| Gross profit | 88,466 | 82,409 | 245,899 | 242,972 | ||||||||||
| Selling, general and administrative expenses | 60,488 | 54,190 | 176,198 | 159,577 | ||||||||||
| Income from operations* | 27,978 | 28,219 | 69,701 | 83,395 | ||||||||||
| Interest expense | 4,013 | 4,462 | 12,889 | 13,681 | ||||||||||
| Euro debt currency exchange loss | -- | 4,093 | -- | 4,093 | ||||||||||
| Other income | 116 | 274 | 271 | 2,818 | ||||||||||
| Earnings from continuing operations before income | ||||||||||||||
| taxes and change in accounting principle | 24,081 | 19,938 | 57,083 | 68,439 | ||||||||||
| Income taxes | 7,225 | 4,738 | 17,123 | 21,229 | ||||||||||
| Earnings from continuing operations before | ||||||||||||||
| change in accounting principle | 16,856 | 15,200 | 39,960 | 47,210 | ||||||||||
| Loss from discontinued operations, net | ||||||||||||||
| of tax | (1,623 | ) | (167 | ) | (2,608 | ) | (211 | ) | ||||||
| Earnings before change in accounting principle | 15,233 | 15,033 | 37,352 | 46,999 | ||||||||||
| Goodwill impairment, net of taxes of $11,130 | -- | -- | -- | 25,970 | ||||||||||
| Net earnings | 15,233 | 15,033 | 37,352 | 21,029 | ||||||||||
| Earnings per share: | ||||||||||||||
| Basic: | ||||||||||||||
| Earnings from continuing operations before | ||||||||||||||
| change in accounting principle | $ | 0.53 | $ | 0.49 | $ | 1.27 | $ | 1.51 | ||||||
| Loss from discontinued operations | ($ 0.05 | ) | ($ 0.01 | ) | ($ 0.08 | ) | ($ 0.01 | ) | ||||||
| Goodwill adjustment effective November 1, 2001 | ($ 0.83 | ) | ||||||||||||
| Net Earnings | $ | 0.48 | $ | 0.48 | $ | 1.19 | $ | 0.67 | ||||||
| Diluted: | ||||||||||||||
| Earnings from continuing operations before | ||||||||||||||
| change in accounting principle | 0.53 | 0.48 | 1.26 | 1.48 | ||||||||||
| Loss from discontinued operations | ($ 0.05 | ) | ($ 0.01 | ) | ($ 0.08 | ) | ($ 0.01 | ) | ||||||
| Goodwill adjustment effective November 1, 2001 | ($ 0.81 | ) | ||||||||||||
| Net Earnings | $ | 0.48 | $ | 0.47 | $ | 1.18 | $ | 0.66 | ||||||
| Weighted average common and common | ||||||||||||||
| equivalent shares outstanding: | ||||||||||||||
| Basic | 31,500 | 31,305 | 31,430 | 31,168 | ||||||||||
| Diluted | 31,863 | 31,801 | 31,786 | 31,867 | ||||||||||
| * | Income from operations reflects $2,096 and $4,629 of restructuring costs incurred during the three and nine months ended July 31, 2003, respectively. |
Roper Industries, Inc. and
Subsidiaries
Selected Segment
Financial Data (unaudited)
(Amounts in thousands and percents of net sales)
| Three months ended July 31, |
Nine months ended July 31, |
|||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2003 |
2002 |
2003 |
2002 |
|||||||||||||||||||||||
| |
Amount |
% |
Amount |
% |
Amount |
% |
Amount |
% | ||||||||||||||||||
| Net sales: | ||||||||||||||||||||||||||
| Instrumentation | $ | 44,178 | $ | 44,168 | $ | 131,097 | $ | 132,273 | ||||||||||||||||||
| Industrial Technology | 43,814 | 44,800 | 120,938 | 121,740 | ||||||||||||||||||||||
| Energy Systems & Controls | 34,612 | 29,185 | 97,273 | 85,626 | ||||||||||||||||||||||
| Scientific & Industrial Imaging | 43,023 | 34,677 | 120,157 | 110,535 | ||||||||||||||||||||||
| Total | $ | 165,627 | $ | 152,830 | $ | 469,465 | $ | 450,174 | ||||||||||||||||||
| Gross profit: | ||||||||||||||||||||||||||
| Instrumentation | $ | 26,292 | 59.5 | $ | 24,880 | 56.3 | $ | 76,497 | 58.4 | $ | 77,237 | 58 | .4 | |||||||||||||
| Industrial Technology | 20,646 | 47.1 | 21,069 | 47.0 | 55,695 | 46.1 | 56,197 | 46 | .2 | |||||||||||||||||
| Energy Systems & Controls | 18,090 | 52.3 | 18,720 | 64.1 | 50,299 | 51.7 | 52,088 | 60 | .8 | |||||||||||||||||
| Scientific & Industrial Imaging | 23,438 | 54.5 | 17,740 | 51.2 | 63,408 | 52.8 | 57,450 | 52 | .0 | |||||||||||||||||
| Total | $ | 88,466 | 53.4 | $ | 82,409 | 53.9 | $ | 245,899 | 52.4 | $ | 242,972 | 54 | .0 | |||||||||||||
| Operating profit*: | ||||||||||||||||||||||||||
| Instrumentation | $ | 7,979 | 18.1 | $ | 8,578 | 19.4 | $ | 21,176 | 16.2 | $ | 26,541 | 20 | .1 | |||||||||||||
| Industrial Technology | 9,870 | 22.5 | 10,921 | 24.4 | 25,395 | 21.0 | 27,399 | 22 | .5 | |||||||||||||||||
| Energy Systems & Controls | 6,091 | 17.6 | 8,349 | 28.6 | 14,631 | 15.0 | 21,007 | 24 | .5 | |||||||||||||||||
| Scientific & Industrial Imaging | 7,334 | 17.0 | 2,954 | 8.5 | 17,927 | 14.9 | 17,575 | 15 | .9 | |||||||||||||||||
| Total | $ | 31,274 | 18.9 | $ | 30,802 | 20.2 | $ | 79,129 | 16.9 | $ | 92,522 | 20 | .6 | |||||||||||||
| Bookings: | ||||||||||||||||||||||||||
| Instrumentation | $ | 43,382 | $ | 41,612 | $ | 128,230 | $ | 124,293 | ||||||||||||||||||
| Industrial Technology | 42,928 | 40,376 | 124,262 | 123,100 | ||||||||||||||||||||||
| Energy Systems & Controls | 38,411 | 26,463 | 101,535 | 85,663 | ||||||||||||||||||||||
| Scientific & Industrial Imaging | 38,513 | 37,315 | 115,237 | 113,173 | ||||||||||||||||||||||
| Total | $ | 163,234 | $ | 145,766 | $ | 469,264 | $ | 446,229 | ||||||||||||||||||
| * | Operating profit is before unallocated corporate general and administrative expenses. Such expenses were $3,296 and $2,583 for the three months ended July 31, 2003 and 2002, respectively, and $9,428 and $9,127 for the nine months ended July 31, 2003 and 2002, respectively. |
Roper Industries, Inc.
and Subsidiaries
Condensed Consolidated Statements of Cash Flows (unaudited)
(Amounts in thousands)
| Nine months ended July 31, |
||||||||
|---|---|---|---|---|---|---|---|---|
| 2003 |
2002 | |||||||
| Net earnings | $ | 37,352 | $ | 21,029 | ||||
| Depreciation | 8,693 | 8,423 | ||||||
| Amortization | 3,388 | 2,711 | ||||||
| Goodwill transitional impairment, net of tax | -- | 25,970 | ||||||
| Other, net | 2,417 | (7,832 | ) | |||||
| Cash provided by operating activities | 51,850 | 50,301 | ||||||
| Business acquisitions, net of cash acquired | (241 | ) | (69,870 | ) | ||||
| Capital expenditures | (6,247 | ) | (5,479 | ) | ||||
| Other, net | (2,300 | ) | (933 | ) | ||||
| Cash used by investing activities | (8,788 | ) | (76,282 | ) | ||||
| Debt borrowings (payments), net | (29,142 | ) | 24,474 | |||||
| Dividends | (8,261 | ) | (7,730 | ) | ||||
| Other, net | 3,411 | 7,605 | ||||||
| Cash used by financing activities | (33,992 | ) | 24,349 | |||||
| Effect of exchange rate changes on cash | 2,502 | 901 | ||||||
| Net increase in cash and equivalents | 11,572 | (731 | ) | |||||
| Cash and equivalents, beginning of period | 12,422 | 16,419 | ||||||
| Cash and equivalents, end of period | $ | 23,994 | $ | 15,688 | ||||