SECURITIES AND EXCHANGE COMMISSION
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
February 18, 2004
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 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On February 18, 2004, Roper Industries, Inc. (“the Company”) issued the press release containing information about the Company’s results of operations for the fiscal-year ended December 31, 2003. A copy of the press release is furnished as Exhibit 99.1
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 the Company dated February 18, 2004. |
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: February 18, 2004 | ||||||
EXHIBIT INDEX
| Exhibit No. | Description | |
| 99.1 | Press Release of the Company dated February 18, 2004 |
Contact Information:
Chris Hix
Roper Industries, Inc.
Director of Investor Relations
+1 (770) 495-5100
investor-relations@roperind.com
FOR IMMEDIATE RELEASE
Roper Industries Reports Fourth Quarter and Full Year 2003 Results
Strong Fourth Quarter
Caps Year of Accomplishments;Company
Forecasting Record 2004 Performance
Duluth, Georgia, February 18, 2004 .... Roper Industries, Inc. (NYSE: ROP) reported full year diluted earnings per share (DEPS) from continuing operations, before debt extinguishment costs, of $2.01, compared with $1.95 in the prior year. The Company reported Net DEPS of $1.41, which includes $16 million of previously announced debt extinguishment costs (net of related income tax benefits) from recapitalization initiatives completed in December. Table 1 is a reconciliation of DEPS. In the fourth quarter, Roper reported DEPS, before debt extinguishment costs, of $0.56, and Net DEPS of $0.06 versus $0.53 in the prior year.
The Company also announced it generated a record $38 million of cash from operating activities in the fourth quarter, excluding the one-time debt extinguishment costs. Cash flow benefited from $4 million of working capital improvements. Table 2 provides a reconciliation of cash flow from operating activities. Roper Industries had $70 million of cash on hand at the end of the year and over $200 million of undrawn revolver capacity.
For the full year 2003, the Company reported record net sales of $657 million, 7% higher than the prior year. Net orders increased 11% in the fourth quarter. Fourth quarter net sales of $170 million were also 7% higher than the prior year quarter. The Company noted particular strength in its water/wastewater markets and in certain of its oil & gas and imaging markets during the fourth quarter. Table 3 contains more information about sales in the quarter. 2003 results do not include any contributions from Neptune Technology Group Holdings (NTGH), which the Company acquired on December 29, 2003 and which will contribute to 2004 results.
“We are pleased to complete 2003 with our fourth consecutive quarter of organic growth, continued strong earnings and record cash flow,” said Brian Jellison, Chairman, President and CEO of Roper Industries. “We achieved record full year results despite $30 million of lower sales to Gazprom and $6 million of costs from restructuring activities that will benefit our performance in 2004.”
“2003 was a very successful year at Roper,” said Mr. Jellison. “In addition to recapitalizing the business and acquiring NTGH, we implemented our new market-focused business structure, strengthened the leadership team, re-ignited our organic growth, completed several restructuring initiatives, and sold off a non-strategic business. With our strengthened financial resources, improving markets, growing cash flow and full pipeline of acquisition opportunities, Roper is well positioned for 2004.”
Outlook for Strong Results in 2004
In 2004, the Company plans to build on its 2003 successes by capturing the opportunities available from the NTGH acquisition, continuing its initiatives to drive organic growth, making strategic acquisitions, driving down net working capital and increasing organizational capabilities. The Company expects these activities to contribute to record 2004 results. The Company announced it is forecasting 2004 net sales of $875 — $925 million, DEPS of $2.45 — $2.70, and cash flow from operating activities of $140 — $160 million.
“With our primary markets stable and improving, we expect to post seasonally better results in the second quarter, largely from improving industrial and energy markets, higher shipments of large oil & gas and water/wastewater projects and benefits from our restructuring activities”, said Mr. Jellison. The Company is forecasting first quarter DEPS of $0.43 — $0.47, excluding NTGH inventory revaluation costs, on sales of $200 — $215 million, and second quarter DEPS of $0.57 — $0.63 on sales of $220 — $230 million.
Roper expects continuously improving results after its typically soft first quarter, which will include approximately $2 million of costs from inventory revaluation following the acquisition of NTGH, and higher costs for Roper to meet requirements of the Sarbanes-Oxley Act. The Company also expects to incur total restructuring costs of $1 million in the first quarter as it completes its restructuring activities by uniting its two AMOT operations under a single global brand structure and reducing the cost structure of its Gazprom-related operations.
Q4 Results by Segment
All comparisons are made against the year-ago period unless otherwise stated.
The Industrial Technology segment reported net sales of $44 million in the fourth quarter, 14% higher due to strong water/wastewater project revenues, improved control system revenues and favorable currency effects. Fourth quarter net orders improved 11% to $41 million. Despite incurring $0.6 million of restructuring costs in the quarter, the segment produced higher operating profit of $9 million from higher sales. Excluding restructuring costs, fourth quarter margins were maintained at 21%.
The Instrumentation segment posted $51 million of net sales, a 14% increase as improvements in certain petroleum and materials testing markets were supplemented with favorable currency effects. Net orders improved 12%. Operating profits increased 25% on the strength of higher sales and benefits from the integration of the 2002 acquisition of Qualitek, offset somewhat from sales in US-denominated currency by European-based operations. Operating margins improved to 21%.
Scientific & Industrial Imaging segment net sales rose 6% to $42 million with volume increases across much of the product portfolio. Net orders decreased 3% due to the timing of orders placed by electron microscopy customers. Operating profits reached $7 million or 17% of net sales.
Energy Systems & Controls segment fourth quarter net sales of $34 million were 9% lower due to lower sales to Gazprom; however, net orders increased 34% to $38 million on significantly higher orders for other oil & gas customers. Lower sales to Gazprom reduced operating profit to $7 million and operating margins to 20%.
Conference Call to be Held at 10:00 AM (ET) Tomorrow
A conference call to discuss these results has been scheduled for 10:00 AM ET on Thursday, February 19, 2004. The call can be accessed via webcast or by dialing (800) 818-5264 (US/Canada) or +1 (913) 981-4910, using confirmation code 571298. Webcast information and conference call materials will be made available in the Investor Information section of Roper’s website (www.roperind.com) prior to the start of the call. Telephonic replays of the conference call will be available for up to two weeks by calling +1 (719) 457-0820 and using the passcode 571298.
Table 1: Reconciliation of DEPS
| Q4 2003 |
Q4 2002 |
Full Year 2003 |
Full Year 2002 |
|||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| DEPS from continuing operations and | $ | 0.56 | $ | 0.54 | $ | 2.01 | $ | 1.95 | ||||||
| before debt extinguishment costs | ||||||||||||||
| Debt extinguishment costs | (0.50 | ) | -- | (0.51 | ) | -- | ||||||||
| Losses from discontinued operations | -- | (0.01 | ) | (0.09 | ) | (0.02 | ) | |||||||
| Net DEPS | $ | 0.06 | $ | 0.53 | $ | 1.41 | $ | 1.93 | ||||||
Table 2: Reconciliation of Cash Flow from Operating Activities (Millions)
| Q4 2003 |
Q4 2002 |
||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash flow from operating activities before | $ | 38 | $ | 28 | +36% | ||||||
| debt extinguishment | |||||||||||
| Cash flow effect of debt extinguishment* | (24 | ) | -- | ||||||||
| Cash flow from operating activities as reported | $ | 14 | $ | 28 | -51% | ||||||
*In December, the Company completed a public offering of common stock, an offering of convertible notes, and a new senior secured credit facility. Roper used the proceeds generally to fund the acquisition of NTGH, repay its existing credit facility, redeem its outstanding senior notes, and pay fees and costs, including $16 million of previously announced debt extinguishment costs (net of related income tax benefits).
Table 3: Supplemental Net Sales Information (Millions)
| Q4 2003 |
Q4 2002 |
||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Net sales excluding net sales to Gazprom | $ | 165 | $ | 150 | +9% | ||||||
| Net sales to Gazprom | 5 | 9 | -39% | ||||||||
| Net sales as reported | $ | 170 | $ | 159 | +7% | ||||||
About Roper Industries
Roper Industries is a diversified industrial growth company providing engineered products and solutions for global niche markets. Additional information about Roper Industries, including a glossary for terms used by the Company and registration for Company’s press releases via email, is available on the Company’s website, www.roperind.com.
The information provided in this press release contains forward looking statements within the meaning of the federal securities laws. These forward looking statements include, among others, statements regarding the benefits we hope to realize from the NTGH acquisition, our ability to make future strategic acquisitions, our ability to execute our growth program, and our ability to achieve improved financial performance. These statements reflect management’s current beliefs and 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 our ability to integrate the NTGH acquisition and realize expected synergies, any unforeseen liabilities associated with the NTGH acquisition, limitations on our business imposed by our indebtedness, reductions in our business with Gazprom, unfavorable changes in foreign exchange rates, difficulties associated with exports, risks and costs associated with our international sales and operations, difficulties in making and integrating acquisitions, product liability and insurance risks and costs, our ability to achieve anticipated benefits from the realignment of our operating structure, the cyclical nature of our business, future competition, changes in the supply of, or price for, parts and components, environmental compliance costs and liabilities, 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. You should not place undue reliance on any forward looking statements. These statements speak only as of the date they are made, and we undertake no obligation to update publicly any of them in light of new information or future events.
_________________
Roper Industries, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (unaudited)
(Amounts in thousands)
| December 31, 2003 |
December 31, 2002 |
|||||||
|---|---|---|---|---|---|---|---|---|
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 70,234 | $ | 15,270 | ||||
| Accounts receivable | 150,856 | 117,984 | ||||||
| Inventories | 107,082 | 92,681 | ||||||
| Deferred taxes | 33,314 | 12,066 | ||||||
| Other current assets | 19,706 | 4,451 | ||||||
| Assets held for sale | -- | 5,113 | ||||||
| Total current assets | 381,192 | 247,565 | ||||||
| PROPERTY, PLANT AND EQUIPMENT, NET | 78,461 | 50,410 | ||||||
| OTHER ASSETS: | ||||||||
| Goodwill | 715,158 | 464,664 | ||||||
| Other intangible assets, net | 298,669 | 37,253 | ||||||
| Deferred taxes | 2,034 | 6,252 | ||||||
| Other assets | 39,481 | 18,822 | ||||||
| Total other assets | 1,055,342 | 526,991 | ||||||
| TOTAL ASSETS | $ | 1,514,995 | $ | 824,966 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
|
| ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable | $ | 45,412 | $ | 28,380 | ||||
| Accrued liabilities | 93,523 | 60,924 | ||||||
| Liabilities related to assets held for sale | -- | 2,477 | ||||||
| Income taxes payable | -- | 7,563 | ||||||
| Deferred taxes | 1,639 | 1,083 | ||||||
| Current portion of long-term debt | 20,923 | 20,917 | ||||||
| Total current liabilities | 161,497 | 121,344 | ||||||
| NONCURRENT LIABILITIES: | ||||||||
| Long-term debt | 630,186 | 308,684 | ||||||
| Deferred taxes | 50,187 | 2,078 | ||||||
| Other liabilities | 17,344 | 11,879 | ||||||
| Total liabilities | 859,214 | 443,985 | ||||||
| STOCKHOLDERS' EQUITY: | ||||||||
| Common stock | 372 | 326 | ||||||
| Additional paid-in capital | 293,402 | 89,264 | ||||||
| Retained earnings | 336,520 | 303,101 | ||||||
| Accumulated other comprehensive earnings | 48,989 | 12,692 | ||||||
| Treasury stock | (23,502 | ) | (24,402 | ) | ||||
| Total stockholders' equity | 655,781 | 380,981 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 1,514,995 | $ | 824,966 | ||||
Roper Industries, Inc. and Subsidiaries
Condensed Consolidated Statements of Earnings (unaudited)
(Amounts in thousands, except per share data)
| Three months ended December 31, |
Twelve Months ended December 31, |
|||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2003 |
2002 |
2003 |
2002 ** |
|||||||||||
| Net sales | $ | 169,794 | $ | 159,068 | $ | 657,356 | $ | 614,443 | ||||||
| Cost of sales | 80,714 | 74,012 | 311,218 | 284,460 | ||||||||||
| Gross profit | 89,080 | 85,056 | 346,138 | 329,983 | ||||||||||
| Selling, general and administrative expenses | 59,776 | 56,602 | 238,038 | 220,387 | ||||||||||
| Income from operations* | 29,304 | 28,454 | 108,100 | 109,596 | ||||||||||
| Interest expense | 3,731 | 4,561 | 16,384 | 18,264 | ||||||||||
| Euro debt currency exchange loss | -- | -- | -- | 4,093 | ||||||||||
| Loss on extinguishment of debt | 25,054 | -- | 25,054 | -- | ||||||||||
| Other income (expense) | (177 | ) | 798 | (372 | ) | 2,593 | ||||||||
| Earnings from continuing operations before | ||||||||||||||
| income taxes | 342 | 24,691 | 66,290 | 89,832 | ||||||||||
| Income taxes | (1,555 | ) | 7,655 | 18,229 | 27,851 | |||||||||
| Earnings from continuing operations | 1,897 | 17,036 | 48,061 | 61,981 | ||||||||||
| Loss from discontinued operations, net of tax | -- | (155 | ) | (2,822 | ) | (485 | ) | |||||||
| Net earnings | $ | 1,897 | $ | 16,881 | $ | 45,239 | $ | 61,496 | ||||||
| Earnings per share: | ||||||||||||||
| Basic: | ||||||||||||||
| Earnings from continuing operations | $ | 0.06 | $ | 0.54 | $ | 1.52 | $ | 1.98 | ||||||
| Loss from discontinued operations | -- | -- | (0.09 | ) | (0.02 | ) | ||||||||
| Net Earnings | $ | 0.06 | $ | 0.54 | $ | 1.43 | $ | 1.97 | ||||||
| Diluted: | ||||||||||||||
| Earnings from continuing operations | $ | 0.06 | $ | 0.54 | $ | 1.50 | $ | 1.95 | ||||||
| Loss from discontinued operations | -- | (0.01 | ) | (0.09 | ) | (0.02 | ) | |||||||
| Net Earnings | $ | 0.06 | $ | 0.53 | $ | 1.41 | $ | 1.93 | ||||||
| Weighted average common and common | ||||||||||||||
| equivalent shares outstanding: | ||||||||||||||
| Basic | 31,850 | 31,355 | 31,575 | 31,282 | ||||||||||
| Diluted | 32,510 | 31,816 | 31,992 | 31,844 | ||||||||||
| * | Income from operations reflects $723 and $5,908 of restructuring costs incurred during the three and twelve months ended December 31, 2003, respectively. |
| ** | On August 20, 2003, the Board of Directors of Roper Industries, Inc. voted to change the fiscal year end from October 31 to December 31. The twelve month period ending December 31, 2002 is presented on these statements for comparative purposes. |
Roper Industries, Inc. and Subsidiaries
Selected Segment Financial Data (unaudited)
(Amounts in thousands and percents of net sales)
| Three months ended December 31, |
Twelve months ended December 31, |
|||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2003 |
2002 |
2003 |
2002 |
|||||||||||||||||||||||
| Amount |
% |
Amount |
% |
Amount |
% |
Amount |
% |
|||||||||||||||||||
| Net sales: | ||||||||||||||||||||||||||
| Instrumentation | $ | 50,884 | $ | 44,593 | $ | 181,329 | $ | 173,290 | ||||||||||||||||||
| Industrial Technology | 43,508 | 38,173 | 170,324 | 164,293 | ||||||||||||||||||||||
| Energy Systems & Controls | 33,708 | 37,052 | 138,968 | 128,721 | ||||||||||||||||||||||
| Scientific & Industrial Imaging | 41,694 | 39,250 | 166,735 | 148,139 | ||||||||||||||||||||||
| Total | $ | 169,794 | $ | 159,068 | $ | 657,356 | $ | 614,443 | ||||||||||||||||||
| Gross profit: | ||||||||||||||||||||||||||
| Instrumentation | $ | 29,556 | 58.1 | $ | 26,507 | 59.4 | $ | 105,779 | 58.3 | $ | 100,426 | 58.0 | ||||||||||||||
| Industrial Technology | 19,024 | 43.7 | 17,438 | 45.7 | 77,600 | 45.6 | 75,733 | 46.1 | ||||||||||||||||||
| Energy Systems & Controls | 18,102 | 53.7 | 20,381 | 55.0 | 73,355 | 52.8 | 76,402 | 59.4 | ||||||||||||||||||
| Scientific & Industrial Imaging | 22,398 | 53.7 | 20,730 | 52.8 | 89,404 | 53.6 | 77,422 | 52.3 | ||||||||||||||||||
| Total | $ | 89,080 | 52.5 | $ | 85,056 | 53.5 | $ | 346,138 | 52.7 | $ | 329,983 | 53.7 | ||||||||||||||
| Operating profit*: | ||||||||||||||||||||||||||
| Instrumentation | $ | 10,715 | 21.1 | $ | 8,574 | 19.2 | $ | 31,757 | 17.5 | $ | 30,470 | 17.6 | ||||||||||||||
| Industrial Technology | 8,561 | 19.7 | 8,174 | 21.4 | 36,147 | 21.2 | 37,461 | 22.8 | ||||||||||||||||||
| Energy Systems & Controls | 6,868 | 20.4 | 9,013 | 24.3 | 26,459 | 19.0 | 31,164 | 24.2 | ||||||||||||||||||
| Scientific & Industrial Imaging | 7,158 | 17.2 | 7,114 | 18.1 | 27,954 | 16.8 | 23,134 | 15.6 | ||||||||||||||||||
| Total | $ | 33,302 | 19.6 | $ | 32,875 | 20.7 | $ | 122,317 | 18.6 | $ | 122,229 | 19.9 | ||||||||||||||
| Bookings: | ||||||||||||||||||||||||||
| Instrumentation | $ | 51,325 | $ | 45,914 | $ | 178,255 | $ | 169,539 | ||||||||||||||||||
| Industrial Technology | 40,906 | 37,011 | 168,798 | 157,839 | ||||||||||||||||||||||
| Energy Systems & Controls | 38,422 | 28,672 | 143,933 | 130,468 | ||||||||||||||||||||||
| Scientific & Industrial Imaging | 42,474 | 43,909 | 154,538 | 155,758 | ||||||||||||||||||||||
| Total | $ | 173,127 | $ | 155,506 | $ | 645,524 | $ | 613,604 | ||||||||||||||||||
| * | Operating profit is before unallocated corporate general and administrative expenses. Such expenses were $3,998 and $4,421 for the three months ended December 31, 2003 and 2002, respectively, and $14,217 and $12,633 for the year ended December 31, 2003 and 2002, respectively. |
Roper Industries, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (unaudited)
(Amounts in thousands)
| Twelve Months ended December 31, |
||||||||
|---|---|---|---|---|---|---|---|---|
| 2003 |
2002 |
|||||||
| Net earnings | $ | 45,239 | $ | 61,496 | ||||
| Depreciation | 11,540 | 11,013 | ||||||
| Amortization | 4,838 | 3,514 | ||||||
| Other, net | 9,676 | 17,283 | ||||||
| Cash provided by operating activities | 71,293 | 93,306 | ||||||
| Business acquisitions, net of cash acquired | (492,510 | ) | (76,106 | ) | ||||
| Capital expenditures | (10,422 | ) | (6,380 | ) | ||||
| Other, net | (4,664 | ) | (1,797 | ) | ||||
| Cash used by investing activities | (507,596 | ) | (84,283 | ) | ||||
| Debt borrowings (payments), net | 298,837 | (11,003 | ) | |||||
| Dividends | (11,738 | ) | (10,496 | ) | ||||
| Common stock proceeds | 191,560 | -- | ||||||
| Other, net | 9,360 | 6,398 | ||||||
| Cash used by (provided by) financing activities | 488,019 | (15,101 | ) | |||||
| Effect of exchange rate changes on cash | 3,248 | 1,877 | ||||||
| Net increase (decrease) in cash and equivalents | 54,964 | (4,201 | ) | |||||
| Cash and equivalents, beginning of period | 15,270 | 19,471 | ||||||
| Cash and equivalents, end of period | $ | 70,234 | $ | 15,270 | ||||