<PAGE>
SEC Form 8-KSECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT
Pursuant To Section 13 Or 15(d)
Of The Securities Exchange Act Of 1934
Date of Report (Date of earliest event reported) August 12, 1996
ROPER INDUSTRIES, INC.
----------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-19818 51-0263969
- ---------------------------------------------------------------------------
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation or organization) File Number) Identification No.)
160 Ben Burton Road, Bogart, Georgia 30622
- ---------------------------------------------------------------------------
(Address of principal executive offices)
(706)369-7170
- ----------------------------------------------------------------------------
(Registrant's telephone number, including area code)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Following the execution of a Stock Purchase Agreement on May 16, 1996,
Roper Industries, Inc. (the "Company" or Roper) completed on May 31, 1996, the
acquisition of all of the outstanding capital stock of Gatan International, Inc.
(collectively with its subsidiaries, "Gatan"), a California corporation whose
principal offices are located in Pleasanton, California, and which is engaged in
the business of manufacturing and selling domestically and in international
markets instruments and software used to enhance and extend the operation and
performance of electron and scanning probe microscopes. The purchase price of
$50,342,632 was determined as a result of arms-length negotiations among the
Company and the sellers of the Gatan stock ("Gatan Sellers"). $16,681,334 and
$3,875,043 of the purchase price was paid at the closing, respectively, to
(i)retire Gatan's long-term debt (including redemption of the lender's
associated capital appreciation rights as a result of the acquisition) and
(ii)extinguish certain Gatan obligations to two of the Gatan Sellers and all
unexcercised Gatan stock options held by its employees. Approximately
$5,000,000 of the purchase price was delivered by the Gatan Sellers to an escrow
agent pursuant to an escrow agreement entered into for the purpose of securing
certain of their indemnification obligations contained in the Stock Purchase
Agreement. The purchase price was financed under a credit agreement dated May
8, 1996 between the Company and NationsBank, N.A. (South), as initial lender and
as agent.
The Gatan Sellers were as follows:
Morgenthaler Venture Partners III
G. Rex Swann
Peter R. Swann
Ondrej Krivanek
William E. Offenberg
Stuart M. Lindsey
Tianwei Jing
There were no material relationships between any of the Gatan Sellers and
the Company or any of its affiliates, directors, officers, or associates of any
such director or officer.
The Company intends that Gatan will continue in the business of
manufacturing and selling products which enhance and extend the operation and
performance of electron and scanning probe microscopes.
2
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
Financial statements of Gatan required to be reported because of its
acquisition by the Company are contained in a separate section. See "Index
to Consolidated Financial Statements" on Page F-1.
(B) PRO FORMA CONDENSED FINANCIAL INFORMATION
The accompanying unaudited pro forma condensed consolidated balance
sheet and statements of earnings reflect the combined financial position
and operations of Roper, Gatan and Fluid Metering, Inc. ("FMI"), acquired
on May 22, 1996. They also give effect to the acquisitions of Uson
Corporation (Uson) and Prex Corporation (Prex) on March 6, 1995, and Metrix
Instrument Co. (Metrix) on September 29, 1995. These acquisitions were
accounted for under the purchase method of accounting.
The pro forma condensed consolidated balance sheet at April 30, 1996
assumes that the acquisitions of Gatan and FMI occurred on that date. The
pro forma condensed consolidated statements of earnings assume that all
the acquisitions described above were completed November 1, 1994.
The financial information for FMI is based on its fiscal year ended
December 31, 1995. The pro forma condensed consolidated statement of
earnings for the year ended October 31, 1995 includes the operations of FMI
for the twelve month period ended December 31, 1995. Accordingly, net
sales and net earnings of $2,887,000 and $499,000 respectively, are
included in both the pro forma condensed consolidated statements of
earnings for the year ended October 31, 1995 and six month period ended
April 30, 1996.
The pro forma financial information should be read in conjunction with the
consolidated financial statements of Roper included in its 1995 Annual
Report on Form 10-K, Roper's quarterly report on Form 10-Q for the quarter
ended April 30, 1996, and the financial statements of FMI included herein.
The pro forma information is not necessarily indicative of the results
which actually would have occured had the transactions been in effect on
the dates and for the periods indicated or which may result in the future.
3
<PAGE>
(C) EXHIBITS:
*2. Stock Purchase Agreement dated May 16, 1996, by and among
Roper Industries, Inc. and all the shareholders of Gatan
International, Inc.
**4.1 Second Amended and Restated Credit Agreement dated May 8,
1996 by and between Roper Industries, Inc., and NationsBank, N.A.
(South) as initial lender and as agent.
***4.2 First Modification of Second Amended and Restated Agreement
dated May 8, 1996, by and between Roper Industries, Inc. and
NationsBank, N. A. (South) as initial lender and as agent.
23 Consent of independent auditors.
- --------------
* Incorporated herein by reference to Roper Industries, Inc. Report
on Form 8-K filed on June 13, 1996.
** Incorporated herein by reference to Roper Industries, Inc. Report
on Form 8-K filed on June 6, 1996.
*** Incorporated herein by reference to Roper Industries, Inc. Report
on Form 8-K/A filed on August 1, 1996.
4
<PAGE>
GATAN INTERNATIONAL INC.
AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PAGE
Independent Auditors' Report................................. F - 1
Consolidated Balance Sheets.................................. F - 2
Consolidated Statements of Operations........................ F - 3
Consolidated Statements of Shareholders' Equity (Deficit).... F - 4
Consolidated Statements of Cash Flows........................ F - 5
Notes to Consolidated Financial Statements................... F - 6 to F - 17
Schedule II - Consolidated Valuation and Qualifying Accounts. F - 18
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Gatan International Inc.:
We have audited the accompanying consolidated balance sheets of Gatan
International Inc. and subsidiaries as of May 31, 1996 and 1995, and the related
consolidated statements of operations, shareholders' equity (deficit) and cash
flows for the years then ended. In connection with our audits of the
consolidated financial statements, we have also audited the accompanying
financial statement schedule. These consolidated financial statements and
financial statement schedule are the responsibility of the Company's management.
Our responsibility is to express an opinion on these consolidated financial
statements and financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Gatan International
Inc. and its subsidiaries as of May 31, 1996 and 1995, and the results of their
operations and their cash flows for the years then ended in conformity with
generally accepted accounting principles. Also in our opinion, the related
financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.
KPMG PEAT MARWICK LLP
July 29, 1996
F-1
<PAGE>
GATAN INTERNATIONAL INC. AND SUBSIDIARIES
Consolidated Balance Sheets
May 31, 1996 and 1995
<TABLE>
<CAPTION>
Assets 1996 1995
------ ------------ ----------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 983,698 319,600
Accounts receivable, less allowance for
doubtful accounts of $60,000 and
$54,690 in 1996 and 1995, respectively 3,652,382 3,402,943
Inventories 4,745,445 5,278,035
Prepaid expenses 110,143 142,028
Deferred income taxes 626,825 -
Other current assets 150,077 462,297
---------- ----------
Total current assets 10,268,570 9,604,903
Property, plant and equipment, net 2,343,145 2,678,238
Intangible assets, net 11,099,814 14,170,370
Other assets - 369,101
----------- ----------
$23,711,529 26,822,612
=========== ==========
Liabilities and Shareholders' Equity (Deficit)
---------------------------------------------
Current liabilities:
Current portion of long-term debt $ - 2,175,000
Accounts payable 468,056 369,543
Customer prepayments 379,271 38,795
Accrued expenses 2,514,957 2,220,544
---------- ----------
Total current liabilities 3,362,284 4,803,882
Estimated capital appreciation liability - 500,000
Notes payable to shareholders - 3,267,000
Long-term debt, excluding current portion - 14,670,762
Other noncurrent liabilities 316,762 564,201
Payable to Roper Industries, Inc. 20,986,336 -
---------- ----------
Total liabilities 24,665,382 23,805,845
----------- ----------
Commitments and contingencies
Shareholders' equity (deficit):
Common stock:
Class A, $.0001 par value 19,900,000 shares
authorized, 10,174,209
and 9,637,500 shares issued and
outstanding as of May 31,
1996 and 1995, respectively 1,017 964
Class B, $.0001 par value, 100,000 shares
authorized, issued and outstanding
at May 31, 1996 and 1995, respectively 10 10
Additional paid-in capital 5,643,529 4,255,831
Currency translation adjustment (12,578) (9,440)
Accumulated deficit (6,585,831) (1,230,598)
----------- ----------
Total shareholders' equity (deficit) (953,853) 3,016,767
----------- ----------
$23,711,529 26,822,612
=========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
F-2
<PAGE>
GATAN INTERNATIONAL INC. AND SUBSIDIARIES
Consolidated Statements of Operations
Years ended May 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
----------- ----------
<S> <C> <C>
Net sales $ 25,491,585 21,005,885
Cost of goods sold 10,387,363 8,313,554
----------- ----------
Gross profit 15,104,222 12,692,331
----------- ----------
Selling expenses 3,730,283 2,508,353
General and administrative expenses 2,654,168 1,783,475
Research and development expenses 4,012,084 3,035,958
----------- ----------
Total operating expenses 10,396,535 7,327,786
---------- ---------
Operating income 4,707,687 5,364,545
Other expenses:
Interest expense, net (2,130,094) (2,250,407)
Amortization of intangible assets (3,451,728) (3,099,076)
Acquisition expenses (1,196,376) (175,361)
Capital appreciation right expense (3,520,038) (200,000)
Other, net (250,005) -
------------ -----------
Loss before income taxes (5,840,554) (360,299)
Income tax benefit (expense) 485,321 (36,939)
------------ -----------
Net loss $ (5,355,233) (397,238)
============ ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
GATAN INTERNATIONAL INC. AND SUBSIDIARIES
Consolidated Statements of Shareholders' Equity (Deficit)
Years ended May 31, 1996 and 1995
<TABLE>
<CAPTION>
Total
Common Stock Additional Currency Accumu- share-
---------------------- paid-in translation lated holders'
Class A Class B capital adjustment deficit equity (deficit)
---------------------- ------------ ----------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Balances at May 31, 1994 $ 947 10 4,141,998 (35,956) (833,360) 3,273,639
Currency translation
adjustment - - - 26,516 - 26,516
Issuance of 172,500
shares of stock for
management bonus 17 - 113,833 - - 113,850
Net loss - - - - (397,238) (397,238)
-------- -------- --------- ---------- --------- -----------
Balances at May 31, 1995 964 10 4,255,831 (9,440) (1,230,598) 3,016,767
Currency translation
adjustment - - - ( 3,138) ( 3,138)
Issuance of 277,500
shares of stock for
management bonus 28 - 555,182 - - 555,210
Issuance of 13,708
shares for exercise
of stock options 1 - 9,046 - - 9,047
Cancellation of 56,499
shares to Molecular
Imaging Corporation (6) - (54) - - (60)
Issuance of 302,000
shares of stock for
CEO bonus 30 - 823,524 - - 823,554
Cancellation of
10,274,209 shares of
of Class A and Class B common
stock (1,017) (10) (5,643,529) - - (5,644,556)
Issuance of 10,274,209 shares
Class A and Class B common
stock to Roper Industries, Inc. 1,017 10 5,643,529 - - 5,644,556
Net loss - - - - (5,355,233) (5,355,233)
------- -------- --------- --------- --------- -----------
Balances at May 31, 1996 $ 1,017 10 5,643,529 (12,578) (6,585,831) (953,853)
======= ======== ========= ========= ========= ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
GATAN INTERNATIONAL INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years ended May 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (5,355,233) (397,238)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization 4,256,624 3,884,300
Compensation paid in stock 1,378,764 113,850
Loss on disposal of fixed assets 161,140 ---
Capital appreciation rights expense 3,520,038 ---
Purchase of options paid by Roper Industries, Inc. 608,043 ---
Deferred taxes (626,825) ---
Changes in operating assets and liabilities:
Accounts receivable, net (249,439) (191,869)
Inventories, net 532,590 (585,020)
Prepaid expenses and other current assets 344,105 (223,995)
Other assets (12,071) (469,466)
Accrued interest on non-compete covenants --- 297,000
Accounts payable, accrued expenses and customer
prepayments 705,008 (1,186,059)
Other noncurrent liabilities (247,439) 299,512
-------------- -------------
Net cash provided by operating activities 5,015,305 1,541,015
-------------- -------------
Cash flows from investing activities:
Proceeds from sale of fixed assets 188,894 ---
Capital expenditures (842,409) (520,571)
-------------- -------------
Net cash used in investing activities (653,515) (520,571)
-------------- -------------
Cash flows from financing activities:
Proceeds from revolving line of credit 4,940,202 4,518,719
Repayments of debt (8,666,314) (5,873,880)
Proceeds from exercise of stock options 9,047 ---
-------------- -------------
Net cash used in financing activities (3,717,065) (1,355,161)
-------------- -------------
Effect of exchange rates on cash and cash equivalents 19,373 26,516
-------------- -------------
Net increase (decrease) in cash and cash equivalents 664,098 (308,201)
Cash and cash equivalents at beginning of period 319,600 627,801
-------------- -------------
Cash and cash equivalents at end of period $ 983,698 319,600
============== =============
Supplementary cash flow information:
Cash paid for interest $ 2,139,068 2,643,691
Cash paid for taxes 11,800 22,836
Supplementary schedule of non-cash financing activities:
Accrued interest included as notes payable to shareholders --- 297,000
Liabilities and debt repaid directly by Roper Industries, Inc. in exchange
for payable to Roper Industries, Inc. 20,406,687 ---
</TABLE>
See accompanying notes to consolidated financial statements
F-5
<PAGE>
GATAN INTERNATIONAL INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
May 31, 1996 and 1995
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Description of Business
Gatan International Inc. and subsidiaries (the Company) designs, manufactures,
exports and markets scientific instruments used in the field of electron
microscopy.
As of May 31, 1996 Roper Industries, Inc. (Roper) acquired all of the
outstanding stock of the Company (the Roper Acquisition) for approximately $51
million. The Company incurred $20,986,336 of debt to Roper in conjunction with
the Roper Acquisition. The terms of the debt had not been determined as of
May 31, 1996. However the intention of Roper is to either convert the debt to
equity or to a long-term obligation. The Company recorded charges of
approximately $2,318,000, of which approximately $1,121,000 was included in
operating expenses at May 31, 1996, for costs incurred associated with the Roper
Acquisition. The Company's results of operations will be included in Roper's
consolidated financial statements subsequent to May 31, 1996.
(b) Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities and disclosures of contingent
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reported periods. Actual results may
differ from those estimates.
(c) Principles of Consolidation
The consolidated financial statements include the accounts of all wholly owned
subsidiaries. All significant intercompany balances and transactions have been
eliminated in consolidation.
(d) Revenue Recognition
Product revenue is primarily derived from the sale of scientific instruments
used in the field of electron microscopy and is recognized upon shipment to the
customer.
(e) Cash Equivalents
Cash equivalents at May 31, 1996 and 1995 consist of overnight repurchase
agreements for which market price approximates cost.
(f) Inventories
Inventories are stated at the lower of cost or market. Cost is determined using
the first-in, first-out (FIFO) method.
F-6
<PAGE>
GATAN INTERNATIONAL INC. AND SUBSIDIARIES
Notes to Consolidated Statements of Financial Statements
(g) Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation on plant and
equipment is calculated using the straight-line method over the estimated useful
lives of the assets, ranging from 3 to 10 years.
(h) Intangible Assets
Intangible assets consist principally of values assigned to covenants not to
compete, employment agreements, patents, software, other intangible costs and
the excess of cost over the fair value of net assets acquired (goodwill). These
assets are being amortized using the straight-line method over the estimated
useful lives of the assets, ranging from 3 to 40 years.
(i) Accrued Warranty
The Company provides an accrual for future warranty costs based on the
relationship of prior years' sales to actual warranty costs. Warranty
obligations are for a one-year period for new products and are included in
accrued expenses.
(j) Foreign Currency Translation
The financial statements of the Company's foreign subsidiaries are translated
into U.S. dollars in accordance with Statement of Financial Accounting Standards
No. 52. Assets and liabilities of the subsidiaries are translated at the current
rate of exchange at the balance sheet date. Income and expense items are
translated at the average exchange rate for the period. The resulting
translation adjustments are recorded as a separate component of shareholders'
equity.
(k) Income Taxes
The Company accounts for income taxes according to Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes." SFAS No. 109
requires an asset and liability approach for the financial reporting of income
taxes. Under SFAS No. 109, deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases and operating loss and tax credit carryforwards.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
(l) Financial Instruments
The carrying amounts of financial instruments including cash and cash
equivalents, accounts receivable, accounts payable and accrued liabilities
approximated fair value as of May 31, 1996 because of the relatively short
maturity of these instruments. The payable to Roper Industries was established
at May 31, 1996 and thus the fair value of the debt approximates the carrying
value at May 31, 1996.
F-7
<PAGE>
GATAN INTERNATIONAL INC. AND SUBSIDIARIES
Notes to Consolidated Statements of Financial Statements
(m) Reclassifications
Certain 1995 amounts have been reclassified to conform to the 1996 presentation.
(n) New Accounting Pronouncement - SFAS No. 121
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 121, Accounting for Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of. SFAS No. 121 is
effective for financial statements for fiscal years beginning after December 31,
1995. SFAS No. 121 requires that long-lived assets and certain identifiable
intangibles to be held and used by the Company be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. Measurement of an impairment loss for
long-lived assets and identifiable intangibles that the Company expects to hold
and use should be based on the fair value of the asset. Adoption of this
statement in 1996 is not expected to effect the Company's accounting treatment
for long-lived assets.
(o) Major Customers and Concentrations of Credit Risk
Financial instruments which potentially expose the Company to concentrations of
credit risk consist primarily of trade accounts receivable. Approximately 27% of
the recorded trade receivables were concentrated with two customers and 35% of
the recorded trade receivables were concentrated with three customers as of
May 31, 1996 and 1995, respectively. To reduce credit risk, the Company performs
ongoing credit evaluations of its customers' financial condition. The Company
does not generally require collateral on credit sales to its customers.
The Company earns revenues primarily through product sales directly to customers
or through distributors. Revenues from one distributor constituted 14% and 12%
of total revenues for the years ending May 31, 1996 and 1995, respectively.
Revenues from a second distributor constituted 10% of total revenues for the
year ending May 31, 1995.
(2) ACQUISITION OF MOLECULAR IMAGING CORPORATION
On December 19, 1994, the Company acquired all the common stock of Molecular
Imaging Corporation (MIC) in exchange for 565,000 shares of the Company's
Class A, $0.0001 par value, common stock. MIC is a microscope company currently
in the development stage located in Tempe, Arizona. The transaction has been
accounted for as a pooling of interests and, accordingly, the consolidated
financial statements and footnotes for all periods presented have been restated
to include the accounts of MIC. Prior period financial position and operating
results of MIC are not material.
F-8
<PAGE>
GATAN INTERNATIONAL INC. AND SUBSIDIARIES
Notes to Consolidated Statements of Financial Statements
<TABLE>
<CAPTION>
(3) INVENTORIES
Inventories at May 31 consist of:
1996 1995
----------- ----------
<S> <C> <C>
Finished goods $ 1,202,338 1,917,813
Work in process 3,376,344 3,296,271
Raw materials and supplies 231,263 122,951
----------- ----------
4,809,945 5,337,035
Inventory obsolescence reserve (64,500) (59,000)
----------- -----------
$ 4,745,445 5,278,035
=========== ===========
(4) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at
May 31 consist of:
1996 1995
----------- ----------
Buildings and improvements $ 85,923 404,864
Machinery and equipment 4,228,186 3,362,772
Furniture, fixtures and vehicles 134,943 351,726
Demonstration equipment 173,465 173,465
----------- ----------
4,622,517 4,292,827
Accumulated depreciation (2,279,372) (1,614,589)
----------- ----------
Property, plant and equipment, net $ 2,343,145 2,678,238
=========== ==========
(5) INTANGIBLE ASSETS
Intangible assets at May 31 consist of:
1996 1995
----------- ----------
Covenants not to compete and
employment agreements with former
shareholders $ 6,657,900 6,657,900
Goodwill 4,756,752 4,756,751
Patents and trademarks 5,586,516 5,205,345
Software 4,600,000 4,600,000
Organizational costs - 1,101,376
Other 900,000 900,000
----------- -----------
22,501,168 23,221,372
Accumulated amortization (11,401,354) (9,051,002)
----------- ----------
Intangible assets, net $11,099,814 14,170,370
=========== ==========
(Continued)
</TABLE>
F-9
<PAGE>
GATAN INTERNATIONAL INC. AND SUBSIDIARIES
Notes to Consolidated Statements of Financial Statements
<TABLE>
<CAPTION>
(6) ACCRUED EXPENSES
A summary of accrued expenses at May 31 follows:
1996 1995
---- ----
<S> <C> <C>
Payroll related $ 299,109 258,382
Deferred compensation 615 477,470
Vacation expense 207,590 185,952
Bonus expenses 710,379 319,561
Warranty liability 338,593 267,242
Other accrued expense 958,671 711,937
---------- ----------
$2,514,957 2,220,544
========== ==========
</TABLE>
(7) NOTES PAYABLE AND LONG-TERM DEBT
At May 31, 1996, Roper repaid all principal and accrued interest amounts
outstanding under the Company's term notes and line of credit. Notes
payable and long-term debt at May 31, 1995 consisted of the following:
<TABLE>
<CAPTION>
1995
----
<S> <C>
Term Note A payable to Heller Financial
(Heller) in quarterly installments ranging
from $125,000to $950,000, ending August 1,
1998. Interest payable monthly at prime $ 7,394,644
plus 1.75%
Term Note B, net of $300,000 unamortized
capital appreciation rights (note 14)
payable to Heller in quarterly installments
of $950,000 beginning November 1, 1998 with
a final payment of $5,150,000 on August 1,
1999. Interest payable monthly at 11.2% 7,700,000
Revolving line of credit of $4,500,000 with
Heller, payable in full on August 1, 1999.
Interest at prime plus 1.5% was payable
monthly 1,751,118
----------
Total long-term debt 16,845,762
Less current portion (2,175,000)
-----------
Long-term debt, excluding current $14,670,762
portion ===========
</TABLE>
All long-term debt in fiscal 1995 was secured by the Company's accounts
receivable, inventory, intangible assets, property and equipment, cash
accounts and other miscellaneous property owned by the Company. The long-
term debt agreements contained certain covenants including financial
ratios and minimum net worth requirements. The Company obtained waivers of
non-compliance from Heller for certain covenants in 1995.
F-10
<PAGE>
GATAN INTERNATIONAL INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(8) SHAREHOLDERS' EQUITY (DEFICIT)
The Company's authorized stock consists of Class A and Class B common
stock. Holders of Class A shares have voting rights in proportion to the
number of shares owned. Holders of Class B shares do not have voting
rights.
(9) STOCK OPTION AND BONUS PLANS
1994 Stock Option Plan
As of May 31, 1996, in connection with the Roper Acquisition, all
outstanding options under the 1994 Stock Option Plan (the Plan) were
purchased from the holders and the Plan was terminated. The Company
incurred an expense of approximately $608,000 related to the repurchase
of options; this amount was paid directly by Roper to the option holders.
During fiscal 1996 and 1995, the Company had reserved 400,000 and 300,000
shares, respectively, for issuance under the Plan which provided for
incentive and non-qualified stock options to purchase shares of Class A
voting common stock to be granted to employees (including consultants,
officers, and directors). Options granted to each employee under the Plan
generally became exercisable at the rate of 20% of the total number of
shares subject to the options after one year from the date of grant, and
1/60 each month thereafter subject to continued service to the Company.
The exercise price of all incentive stock options granted under the Plan
had to be at least equal to the fair market value of the common stock of
the Company on the date of grant. The exercise price of any incentive
stock option granted to an optionee who owned stock possessing more than
10% of the voting power of all classes of stock of the Company's
outstanding capital stock had to equal at least 110% of the fair market
value of the common stock on the date of grant.
F-11
<PAGE>
GATAN INTERNATIONAL INC. AND SUBSIDIARIES
Notes to Consolidated Statements of Financial Statements
The following table summarizes option activity:
<TABLE>
<CAPTION>
Options Total
available options Price
for grant outstanding per share
---------- ------------ ---------
<S> <C> <C> <C>
Balances as of May 31, 1994 - - $ -
-------- -------- ---------
Options authorized 300,000 -
Options granted (255,000) 255,000 0.66
Options terminated 5,000 (5,000) 0.66
-------- --------
Balances as of May 31, 1995 50,000 250,000 0.66
-------- --------
Options authorized 100,000 - -
Options granted (101,500) 101,500 0.66
Options exercised - (13,708) 0.66
Options terminated 43,625 (43,625) 0.66
Options canceled (92,125) (294,167) 0.66
-------- --------
Balances as of May 31, 1996 - -
======== ========
</TABLE>
1994 Management Stock Bonus Plan
The Company had reserved for issuance 700,000 shares of Class A common stock
under a 1994 Management Stock Bonus Plan (the Bonus Plan) which provided the CEO
a stock bonus provided that he remained in the employ of the Company. As of
May 31, 1996, in conjunction with the Roper Acquisition, all outstanding shares
under the Bonus Plan were purchased by Roper and the Bonus Plan was terminated.
Prior to the termination, the CEO received 180,000 shares under the Bonus Plan
at May 31, 1996 in addition to 97,500 shares received during fiscal 1996. The
CEO received 172,500 shares under the Bonus Plan during fiscal 1995.
(Continued)
F-12
<PAGE>
GATAN INTERNATIONAL INC. AND SUBSIDIARIES
Notes to Consolidated Statements of Financial Statements
(10) LEASE COMMITMENTS
The Company has non-cancelable operating leases with PRB Company, formerly
affiliated with the Company through common ownership, for building space, that
expire on July 13, 1997. The Company also has other operating leases for
building space that expire from 1997 through 2000.
Future minimum lease payments for building space occupied under non-cancelable
operating leases as of May 31, 1996 are:
<TABLE>
<CAPTION>
Year ending May 31,
------------------
<S> <C>
1997 $ 789,997
1998 209,585
1999 97,585
2000 56,925
----------
$1,154,092
==========
</TABLE>
Total rental expense paid to PRB Company for the Company's operating leases was
$689,030 and $672,000 for the years ending May 31, 1996 and 1995, respectively.
Total rental expense for the CompanyOs remaining operating leases was $131,211
and $113,800 for the years ended May 31, 1996 and 1995, respectively.
Rental income to the Company under sub-leases was $108,480 and $63,400 for the
years ended May 31, 1996 and 1995, respectively. Future minimum rental income to
be received under sub-leases is $108,480 and $18,080 for the years ended May 31,
1997 and 1998, respectively.
F-13
<PAGE>
GATAN INTERNATIONAL INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(11) INCOME TAXES
Income tax benefit (expense) for the years ended May 31 consists of:
<TABLE>
<CAPTION>
1996 1995
------ ------
<S> <C> <C>
Current:
Federal income taxes $ (36,313) (6,478)
State income taxes (15,137) (1,450)
Foreign income taxes (90,054) (29,011)
-------- -------
(141,504) (36,939)
-------- -------
Deferred:
Federal income taxes 455,241 -
State income taxes 171,584 -
Foreign income taxes - -
-------- -------
626,825 -
-------- --------
Total:
Federal income taxes 418,928 (6,478)
State income taxes 156,447 (1,450)
Foreign income taxes (90,054) (29,011)
-------- -------
$ 485,321 (36,939)
======== ========
</TABLE>
Total income tax (expense) benefit differed from the amounts computed by
applying the U.S. federal income tax rate of 34% to loss before income taxes
primarily due to foreign taxes and permanent differences related to goodwill
amortization and payments under the capital appreciation rights agreement.
F-14
<PAGE>
GATAN INTERNATIONAL INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Income tax benefit (expense) differs from the amount computed by applying the
Federal statutory rate of 34 percent to the pretax book loss of $5,840,554 and
$360,299 for the years ended May 31 as follows:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Computed "expected" tax benefit (expense) $ 1,985,788 (122,502)
Increase (decrease) in income taxes resulting from:
Amortization of goodwill (40,432) 40,432
Capital appreciation rights expense (1,264,813) ---
Other permanent differences (82,497) 18,279
State and local tax benefit (expense), net of federal effect 103,255 (957)
Change in valuation allowance for deferred tax
assets allocated to income tax expense --- 102,515
Other adjustments (62,820) (11,124)
Foreign income taxes in excess of statutory rate (153,160) (63,582)
------------- -------------
Income tax benefit (expense) $ 485,321 (36,939)
============= =============
</TABLE>
The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities at May 31 are presented
below.
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Deferred tax assets:
Net operating loss $ 947,400 196,600
Warranty accrual, compensated absences and deferred
compensation not deductible until paid for tax
reporting purposes 252,400 402,300
Inventories, principally due to reserves 25,800 23,600
Accounts receivable, principally due to allowance
for doubtful accounts 24,000 21,850
Alternative minimum tax credits 26,800 ---
------------- -------------
Total gross deferred tax assets 1,276,400 644,350
Less valuation allowance (290,775) (290,775)
------------- -------------
Net deferred tax assets 985,625 353,575
------------- -------------
Deferred tax liabilities:
Plant and equipment, principally due to differences
in depreciation expense 358,800 353,375
------------- -------------
Total gross deferred tax liabilities 358,800 353,575
------------- -------------
Net deferred tax asset $ 626,825 ---
============= =============
</TABLE>
The net changes in the total valuation allowance were no change and an increase
of $102,515 for the years ended May 31, 1996 and 1995, respectively.
(Continued)
F-15
<PAGE>
GATAN INTERNATIONAL INC. AND SUBSIDIARIES
Notes to Consolidated Statements of Financial Statements
(12) PENSION PLAN
The Company has a defined contribution plan (the Plan) under which the Company
annually matches 1/2 of the first 8% of the employees' contributions. All
employees with at least one year of continuous service are eligible for the
Plan. Matching contributions by the Company were $183,341 and $145,253 for the
years ended May 31, 1996 and 1995, respectively.
(13) RELATED PARTY TRANSACTIONS
Notes payable for noncompete agreements were paid by Roper at May 31, 1996 in
conjunction with the Roper Acquisition. The noncompete agreements with
shareholders had related notes payable totaling $3,267,000 at May 31, 1995 with
interest payable at 10%. According to the agreements with shareholders, interest
accrued for the first two years beginning August 1, 1992 were added to the
principal balance, totaling $567,000. Beginning August 1, 1994, monthly accrued
interest payments of $27,225 were made based on the adjusted principal balance.
During 1996 and 1995, $326,700 was paid and $297,000 of accrued interest was
added to the notes payable to shareholders, respectively.
Professional fees paid to shareholders for consulting services were
approximately $30,000 and $80,000 for the years ended May 31, 1996 and May 31,
1995, respectively.
(14) COMMITMENTS AND CONTINGENCIES
In connection with the Term Note B payable to Heller, the Company entered into a
capital appreciation rights agreement which entitled Heller to additional
consideration to be paid by the Company. This obligation was based on the future
value of the Company at or near the repayment date. The obligation was satisfied
in full at May 31, 1996 by a payment of $3,720,038 by Roper to Heller in
conjunction with the Roper Acquisition.
In the ordinary course of business, the Company is involved in various legal
actions. In the opinion of management, the resolution of these legal actions
will not have a material effect on the Company or its financial condition or
results of operations.
The Company is currently undergoing an IRS audit which could result in certain
prior year deductions being disallowed.
F-16
<PAGE>
GATAN INTERNATIONAL INC. AND SUBSIDIARIES
Notes to Consolidated Statements of Financial Statements
(15) INDUSTRY AND GEOGRAPHIC INFORMATION
The Company markets its products in the United States and in foreign countries
through its sales personnel, dealers, and distributors. Export sales account for
a significant portion of the Company's product sales which are summarized by
geographic area as follows:
<TABLE>
<CAPTION>
Year ended May 31,
------------------------
1996 1995
----------- ---------
<S> <C> <C>
United States $8,625,634 6,955,000
Exports sales:
Europe 8,017,937 6,498,672
Japan 7,076,132 4,990,950
Other countries 1,771,882 2,561,263
---------- ---------
Total product sales $25,491,585 21,005,885
=========== ==========
</TABLE>
F-17
<PAGE>
Schedule II
GATAN INTERNATIONAL INC. AND SUBSIDIARIES
Consolidated Valuation and Qualifying Accounts
Years ended May 31, 1996 and 1995
<TABLE>
<CAPTION>
Balance at Charged to Deductions/ Balance
beginning costs and write-offs/ at end
of period expenses recoveries of period
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Allowance for doubtful accounts:
Year ended May 31, 1996 $ 54,690 5,310 - 60,000
Year ended May 31, 1995 39,000 15,690 - 54,690
Balance at Charged to Deductions/ Balance
beginning costs and write-offs/ at end
of period expenses recoveries of period
---------- ---------- ----------- ---------
Inventory reserves:
Year ended May 31, 1996 $ 59,000 5,500 - 64,500
Year ended May 31, 1995 59,000 - - 59,000
</TABLE>
See accompanying notes to consolidated financial statements and independent
auditors' report.
F-18
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
APRIL 30, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
Historical
-------------------------------
Roper FMI Gatan
--------- -------- --------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,955 2,524 1,408
Marketable securities - 1,255 -
Receivables 37,279 1,327 4,485
Inventories 25,462 2,015 5,709
Other current assets 1,357 15 1,351
--------- -------- --------
Total current assets 66,053 7,136 12,953
Property, plant and equipment, net 21,874 314 2,481
Intangible and other assets, net 66,949 13 11,956
--------- -------- --------
$ 154,876 7,463 27,390
========== ======== ========
LIABILITIES AND
STOCKHOLDERS' EQUITY
--------- -------- --------
Current liabilities:
Accounts payable $ 8,150 76 698
Other current liabilities 9,987 162 4,248
Income taxes payable 2,186 - -
Current portion of long-term debt 608 - 2,550
--------- -------- --------
Total current liabilities 20,931 238 7,496
Long-term debt 12,652 1,115 15,544
Other liabilities 2,436 - 487
Stockholders' equity:
Common stock 150 6 1
Additional paid-in capital 44,781 16 4,323
Retained earnings 73,926 6,088 (461)
--------- -------- --------
Total stockholders' equity 118,857 6,110 3,863
--------- -------- --------
$154,876 7,463 27,390
========= ======== ========
</TABLE>
<TABLE>
<CAPTION>
Pro forma Pro forma
Adjustments Combined
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents (2,524) (a) 3,363
Marketable securities (1,255) (a) -
Receivables - 43,091
Inventories 355 (e) 33,541
Other current assets (470) (a),(g) 2,253
----------- -----------
Total current assets (3,894) 82,248
Property, plant and equipment, net (162) (a) 24,507
Intangible and other assets, net 56,058 (a),(d),(f), 134,976
----------- (g),(h) -----------
52,002 241,731
=========== ===========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable - 8,924
Other current liabilities (509) (a),(g) 13,888
Income taxes payable - 2,186
Current portion of long-term debt (2,550) (b) 608
----------- -----------
Total current liabilities (3,059) 25,606
Long-term debt 59,173 (b),(c),(f) 88,484
Other liabilities 161 (b),(g) 3,084
Stockholders' equity:
Common stock (6) (a),(b),(i) 151
Additional paid-in capital 1,360 (a),(b),(i) 50,480
Retained earnings (5,627) (a),(i) 73,926
----------- -----------
Total stockholders' equity (4,273) 124,557
----------- -----------
52,002 241,731
=========== ===========
</TABLE>
See accompanying notes to unaudited pro forma condensed balance sheet
<PAGE>
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
a) To adjust for assets not acquired and liabilities not assumed in the purchase
of FMI.
b) Reflects the purchase price for FMI consisting of: (i) $23.0 million paid in
cash at closing, (ii) 124,026 shares of Roper common stock issued, with a
market value of $45.96 per share, (iii) assumption of debentures outstanding,
with a principal balance of $1.1 million, and (iv) $.4 million in cash to be
paid in equal installments on May 22, 1997 and 1998. In addition, direct
acquisition costs related to the FMI purchase are assumed to be $.5 million.
FMI's debentures are assumed to have been redeemed using borrowings under
Roper's credit agreement. In addition, reflects the purchase price for Gatan
totaling $50.3 million plus $.6 million in direct acquisition costs. A
portion of the consideration was paid at closing to retire Gatan's long-term
debt. The cash portion for these acquisitions plus the direct acquisition
costs are assumed to be financed under Roper's amended and restated credit
agreement.
c) Upon final determination of post-closing adjustments, Roper additionally
expects to pay approximately $125,000 to the FMI shareholders, which payment
is assumed to have been made from its credit agreement.
d) Adjustment to reflect the difference between the purchase price and the fair
value of assets acquired as goodwill which totals $27.2 million (FMI) and
$36.9 million (Gatan).
e) Adjustment to reflect the change in FMI's valuation method for inventories
from last-in, first-out (LIFO) to first-in, first-out (FIFO).
f) To record additional deferred loan costs, totaling $148,000, related to the
amended and restated credit agreement dated May 8, 1996 by and between Roper
and NationsBank, N.A. (South), as initial lender and agent. The cash portion
of the purchase price was financed under this credit agreement.
g) To reverse the effects of a deferred compensation agreement with an executive
officer of Gatan.
h) To write-off the unamortized goodwill and certain other intangible assets of
Gatan.
i) To eliminate the stockholders' equity of Gatan.
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (UNAUDITED)
YEAR ENDED OCTOBER 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Historical
------------------------
1995 Pro forma
Roper Acquisitions Adjustments
------------------------ ------------
<S> <C> <C> <C>
Net sales $175,421 11,356 -
Cost of sales 81,618 5,295 -
------------------------ ------------
Gross profit 93,803 6,061 -
S,G&A expenses 56,392 3,324 581 (a), (d)
------------------------ ------------
Operating income 37,411 2,737 (581)
Interest expense 1,952 - 1,284 (e)
Other income 542 (17) 17 (d)
------------------------ ------------
Earnings before taxes 36,001 2,720 (1,848)
Income taxes 12,730 - 311 (h),(i)
------------------------ ------------
Net earnings $23,271 2,720 (2,159)
======================= ===========
Net earnings per common share $1.54 - -
======================= ===========
Weighted average common shares
outstanding 15,130 - 24 (j)
======================= ===========
</TABLE>
<TABLE>
<CAPTION>
Historical
Pro forma --------------------------------- Pro forma Pro forma
Combined FMI Gatan Adjustments Combined
------------ ---------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Net sales 186,777 13,700 20,643 - 221,120
Cost of sales 86,913 5,757 $7,918 - 100,588
------------ ---------- --------- ------------- ----------
Gross profit 99,864 7,943 12,725 - 120,532
S,G&A expenses 60,297 5,386 $11,233 $ (3,233) (a),(b),(c), 73,683
------------ ---------- --------- ------------ (d),(e) ---------
Operating income 39,567 2,557 1,492 3,233 46,849
Interest expense 3,236 111 $2,265 $3,721 (f),(g) 9,333
Other income 542 116 $11 (127) (d) 542
------------ ---------- ---------- ------------ -----------
Earnings before taxes 36,873 2,562 (762) (615) 38,058
Income taxes 13,041 - $ (316) $1,210 (h),(i) 13,935
------------ ---------- ----------------------- -----------
Net earnings 23,832 2,562 (446) (1,825) 24,123
=========== ========= ========= ============ ==========
Net earnings per common share 1.57 - - - 1.58
=========== ========= ========= ============ ==========
Weighted average common shares
outstanding 15,154 - - 124 (j) 15,278
=========== ========= ========= ============ ==========
See accompanying notes to unaudited pro forma condensed consolidated statements of earnings
</TABLE>
<PAGE>
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
a) Reflects the amortization of goodwill ($2.8 million in 1995 and $1.1 million
in 1996) resulting from the excess of the purchase prices over the fair
values of the net assets acquired. Goodwill will be amortized on a straight-
line basis over periods ranging from 15 to 30 years.
b) Compensation expense attributable to the former owners and executive officers
of FMI has been reduced to reflect expected post acquisition levels as
defined within their respective employment agreements with Roper. Historical
amounts for S,G&A expenses are reduced by $1.7 million for 1995 and $.3
million for 1996.
c) Reflects cancellation of a royalty agreement between FMI and a related party,
whereby royalties were paid at a rate of 3% of net sales. In conjunction with
the acquisition by Roper, this royalty agreement was terminated. Historical
amounts for S,G&A expenses are reduced by $.4 million in 1995 and $.2
million in 1996.
d) Adjustments for non-recurring items, principally interest and investment
income, as all excess funds will be employed for debt service purposes,
elimination of commissions paid by Uson to an unconsolidated subsidiary
(Foreign Sales Corporation), and certain expenses incurred by Gatan. The
unconsolidated subsidiary was not acquired in the purchase of assets of Uson.
The expenses at Gatan represent lease payments in excess of market rates made
to former shareholders, compensation expense associated with a management
stock bonus plan, management/consulting fees paid to former shareholders, and
costs incurred in selling the company.
e) Reflects a reduction in amortization expense related to the write-off of the
unamortized goodwill and other certain intangible assets of Gatan. Historical
amounts for S,G&A have been reduced by $2.9 million in 1995 and $1.4 million
in 1996.
f) The interest expense increase of $7.4 million for 1995 and $3.1 million for
1996 results from increased borrowings totaling $100.5 million related to the
acquisitions of Uson in February 1995, Metrix in September 1995, and FMI and
Gatan in May 1996, respectively. The credit agreement provides for, at the
option of the Company, a variable interest rate based upon the London
Interbank Offered Rate (LIBOR) plus a variable factor based upon the
performance of the Company as measured against certain specified ratios, or
the prime interest rate. The interest rate assumed in these pro forma
statements is 8% for both 1995 and 1996.
g) Reflects elimination of interest expense on FMI's debentures and Gatan's
long-term debt, as both are assumed redeemed using proceeds from Roper's
credit agreement. The reduction in interest expense was $2.4 million in
1995 and $1.1 million in 1996.
h) The provision for income taxes has been adjusted to reflect the income tax
effect of the above adjustments. The goodwill resulting from the acquisitions
of Uson, Metrix and FMI will be deductible for income tax purposes.
i) To record income taxes on earnings of Uson, Prex, Metrix, and FMI. These
companies were Subchapter S Corporations for Federal income tax purposes.
j) Additional shares of Roper common stock issued in connection with the
acquisitions of Prex and FMI.
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (UNAUDITED)
SIX MONTHS ENDED APRIL 30, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Historical
-------------------------------
Roper FMI Gatan
-------------------- ---------
<S> <C> <C> <C>
Net sales $100,001 8,027 14,676
Cost of sales 48,501 3,439 5,922
-------------------- ---------
Gross profit 51,500 4,588 8,754
S,G&A expenses 29,167 2,351 6,468
-------------------- ---------
Operating income 22,333 2,237 2,286
Interest expense 679 55 1,042
Other income (expense) 92 113 11
-------------------- ---------
Earnings before taxes 21,746 2,295 1,255
Income taxes 7,284 - 521
-------------------- ---------
Net earnings $ 14,462 2,295 734
==================== =========
Net earnings per common share $ 0.94 - -
=================== =========
Weighted average common shares
outstanding 15,364 - -
=================== =========
</TABLE>
<TABLE>
<CAPTION>
Pro forma Pro forma
Adjustments Combined
------------ -----------
<S> <C> <C>
Net sales - 122,704
Cost of sales - 57,862
------------ -----------
Gross profit - 64,842
S,G&A expenses $( 1,281)(a),(b),(c), 36,705
------------ (d),(e) -----------
Operating income 1,281 28,137
Interest expense 1,984 (f),(g) 3,760
Other income (expense) (124)(d) 92
------------ -----------
Earnings before taxes (827) 24,469
Income taxes 794 (h),(i) 8,599
------------ -----------
Net earnings (1,621) 15,870
============ ==========
Net earnings per common share - 1.02
============ ==========
Weighted average common shares
outstanding 124 (j) 15,488
============ ==========
</TABLE>
See accompanying notes to unaudited pro forma condensed consolidated statements
of earnings
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
reporting person has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ROPER INDUSTRIES, INC.
-----------------------
(Registrant)
Date August 12,1996 By /s/ Martin S. Headley
---------------------- -----------------------------------
Vice President and
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Number Exhibit
- ------ -------
2 Stock Purchase Agreement dated May 16, 1996, by and among
Roper Industries, Inc. and the stockholders of Gatan
International, Inc., contained in Exhibit 2 to the Roper
Industries, Inc. Report on Form 8-K filed June 13, 1996, and
incorporated herein by this reference.
4.1 Second and Amended and Restated Credit Agreement dated May 8,
1996, by and between Roper Industries, Inc. and NationsBank, N.A.
(South) as initial lender and as agent, included as Exhibit 4 in
the June 5, 1996 Roper Industries, Inc. Report on Form 8-K filed
June 6, 1996, and incorporated herein by this reference.
4.2 First Modification of Second Amended and Restated Credit
Agreement dated May 8, 1996 by and between Roper Industries, Inc.
and NationsBank, N.A. (South) as initial lender and as agent,
included as Exhibit 4.2 in the August 1, 1996 Roper Industries,
Inc. Report on Form 8-K/A filed August 2, 1996, and incorporated
herein by this reference.
23 Consent of independent auditors.
1
<PAGE>
Consent of Independent Public Accountants
The Board of Directors
Roper Industries Inc.
We consent to incorporation by reference in the registration statements on Form
S-8 of Roper Industries, Inc. of our report dated July 29, 1996, relating to
the consolidated balance sheets of Gatan International, Inc. and subsidiaries
as of May 31, 1996 and 1995 and the related consolidated statements of
operations, shareholders' equity (deficit) and cash flows for each of the years
in the two-year period ended May 31, 1996, and related schedule, which report
appears on Form 8-K of Roper Industries, Inc. dated August 12, 1996.
KPMG PEAT MARWICK LLP
San Francisco, California
August 9, 1996
