<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended January 31, 1997.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to .
--------- -----------
Commission File Number 0-19818
ROPER INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 51-0263969
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
160 BEN BURTON ROAD
BOGART, GEORGIA 30622
(Address of principal executive offices) (Zip Code)
(706) 369-7170
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
----- -----
The number of shares outstanding of the Registrant's common stock as of February
27, 1997 was 15,205,145.
<PAGE>
ROPER INDUSTRIES, INC.
REPORT ON FORM 10-Q FOR THE QUARTER ENDED JANUARY 31, 1997
TABLE OF CONTENTS
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed Consolidated Statements of Earnings 1
Condensed Consolidated Balance Sheets 2
Condensed Consolidated Statements of Cash Flows 3
Notes to Condensed Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ROPER INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended
January 31,
1997 1996
- ----------------------------------------------------------------------------
<S> <C> <C>
Net sales $ 55,108 $ 52,896
Cost of sales 25,672 23,896
- ----------------------------------------------------------------------------
Gross profit 29,436 29,000
Selling, general and
administrative expenses 19,627 15,441
- ----------------------------------------------------------------------------
Income from operations 9,809 13,559
Interest expense 1,302 387
Other income 227 73
- ----------------------------------------------------------------------------
Earnings before income taxes 8,734 13,245
Income taxes 2,904 4,436
- ----------------------------------------------------------------------------
Net earnings $ 5,830 $ 8,809
============================================================================
Per share data:
Earnings per common share (note 2) $ 0.38 $ 0.58
============================================================================
Cash dividends per common share $ 0.09 $ 0.075
============================================================================
Weighted average common shares outstanding 15,503 15,296
============================================================================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
1
<PAGE>
ROPER INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
January 31, October 31,
1997 1996
ASSETS (Unaudited)
- ----------------------------------------------------------------------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 1,087 $ 423
Receivables (note 5) 51,716 50,659
Inventories (note 3) 32,294 31,133
Other current assets 1,485 2,298
- ----------------------------------------------------------------------------
Total current assets 86,582 84,513
- ----------------------------------------------------------------------------
PROPERTY, PLANT & EQUIPMENT
Property, plant and equipment 51,147 50,646
Less: accumulated depreciation (27,719) (26,687)
- ----------------------------------------------------------------------------
Property, plant and equipment, net 23,428 23,959
- ----------------------------------------------------------------------------
Intangibles and other assets, net 127,247 129,895
Deferred tax asset 5,212 4,586
- ----------------------------------------------------------------------------
TOTAL ASSETS $242,469 $242,953
============================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
- ----------------------------------------------------------------------------
CURRENT LIABILITIES
Accounts payable $ 9,251 $ 11,004
Other current liabilities 26,469 24,779
Income taxes payable 3,865 3,723
- ----------------------------------------------------------------------------
Total current liabilities 39,585 39,506
- ----------------------------------------------------------------------------
NON-CURRENT LIABILITIES
Long-term debt 58,233 63,373
Other liabilities 3,184 2,678
- ----------------------------------------------------------------------------
Total liabilities 101,002 105,557
- ----------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Preferred stock - -
Common stock 152 152
Additional paid-in capital 51,249 50,893
Retained earnings 90,066 86,351
- ----------------------------------------------------------------------------
Total stockholders' equity 141,467 137,396
- ----------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $242,469 $242,953
============================================================================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
2
<PAGE>
ROPER INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended
January 31,
1997 1996
- -------------------------------------------------------------------------------
<S> <C> <C>
Net cash provided by operating activities $ 2,618 $8,770
- -------------------------------------------------------------------------------
Net cash used in investing activities (878) (1,652)
- -------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from long-term debt 4,500 10,483
Principal payments on long-term debt (4,626) (16,530)
Dividends paid on common stock (1,365) (1,123)
Other, net 517 (658)
- -------------------------------------------------------------------------------
Net cash used in financing activities (974) (7,828)
- -------------------------------------------------------------------------------
Effect of exchange rate changes on cash (102) (94)
- -------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 664 (804)
Cash and cash equivalents, beginning of period 423 2,322
- -------------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 1,087 $1,518
===============================================================================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
ROPER INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements for the three-month
periods ended January 31, 1997 and 1996 are unaudited. In the opinion of
management, the accompanying unaudited condensed consolidated financial
statements reflect all adjustments, which include only normal recurring
adjustments, necessary to present fairly the financial position, results of
operations and cash flows of Roper Industries, Inc. and its wholly-owned
subsidiaries ("the Company") for all periods presented.
The results of operations are not necessarily indicative of the results to be
expected for the full fiscal year. It is recommended that these unaudited
condensed consolidated financial statements be read in conjunction with the
consolidated financial statements and the notes thereto included in the
Company's 1996 Annual Report on Form 10-K as filed with the Securities and
Exchange Commission.
2. EARNINGS PER COMMON SHARE
Earnings per common share is calculated by dividing net earnings by the weighted
average common and common equivalent shares outstanding during the period.
Common stock equivalents consist of stock options.
3. INVENTORIES
Inventories are summarized below (in thousands):
<TABLE>
<CAPTION>
January 31, October 31,
1997 1996
-------------------------------------------------------------
<S> <C> <C>
Raw materials and supplies $17,849 $19,226
Work in process 6,574 5,905
Finished products 9,455 7,548
Less LIFO Reserve (1,584) (1,546)
-------------------------------------------------------------
Total $32,294 $31,133
=============================================================
</TABLE>
4
<PAGE>
4. SUPPLEMENTAL CASH FLOW INFORMATION
Cash payments for the three months ended January 31, 1997 and 1996 included
interest of $1,704,000 and $322,000, respectively, and income taxes of
$1,339,000 and $2,700,000, respectively.
5. CONCENTRATION OF CREDIT RISK
At January 31,1997, the Company had $5.4 million of trade receivables due from
Russian Gazprom and $5.1 million was due from Ukrainian Gazprom. Both of these
are large natural gas companies.
6. STOCK OPTIONS
Statement of Financial Accounting Standards No. 123 - Accounting for Stock-Based
Compensation ("SFAS 123") modifies the accounting and reporting standards for
the Company's stock-based employee compensation plans and is effective for the
Company beginning with fiscal 1997. SFAS 123 provides that stock-based awards
be measured at their fair value at the grant date in accordance with a valuation
model. This measurement may either be recorded in the Company's basic financial
statements or the pro forma effect on earnings may be disclosed in its year end
financial statements. The Company has elected to provide the pro forma
disclosures, if necessary.
The Company expects that the pro forma disclosure requirements of SFAS 123 on
its year end financial statements will be immaterial for both fiscal 1997 and
1996.
5
<PAGE>
7. INDUSTRY SEGMENTS
Sales and operating profit by industry segment are set forth in the following
table (dollars in thousands):
<TABLE>
<CAPTION>
Three Months Ended
January 31,
1997 1996 % Chg
- ----------------------------------------------------------------------
<S> <C> <C> <C>
NET SALES:
Industrial Controls $16,975 $25,162 -32.5%
Fluid Handling 22,153 19,763 12.1%
Analytical Instrumentation 15,980 7,971 100.5%
- ----------------------------------------------------------------------
Total $55,108 $52,896 4.2%
======================================================================
GROSS PROFIT:
Industrial Controls $ 9,611 $14,458 -33.5%
Fluid Handling 10,208 9,672 5.5%
Analytical Instrumentation 9,617 4,870 97.5%
- ----------------------------------------------------------------------
Total $29,436 $29,000 1.5%
======================================================================
OPERATING PROFIT (a):
Industrial Controls $ 1,553 $ 6,981 -77.8%
Fluid Handling 6,107 6,303 -3.1%
Analytical Instrumentation 3,487 1,385 151.8%
- ----------------------------------------------------------------------
Total $11,147 $14,669 -24.0%
======================================================================
</TABLE>
(a) Operating profit is before any allocation of corporate general and
administrative expenses. Corporate general and administrative expenses
were $1,338 and $1,110 for the quarter ended January 31, 1997 and 1996,
respectively.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This discussion should be read in conjunction with Management's Discussion and
Analysis of Financial Condition and Results of Operations included in the
Company's Annual Report on Form 10-K for the year ended October 31, 1996.
RESULTS OF OPERATIONS
The following table sets forth certain information relating to the operations of
the Company expressed as a percentage of net sales:
<TABLE>
<CAPTION>
Three Months Ended
January 31,
1997 1996
- ---------------------------------------------------------------------------
<S> <C> <C>
Net sales 100.0% 100.0%
Cost of sales 46.6% 45.2%
- ---------------------------------------------------------------------------
Gross profit 53.4% 54.8%
Selling, general and
administrative expenses 35.6% 29.2%
- ---------------------------------------------------------------------------
Income from operations 17.8% 25.6%
Interest expense 2.4% 0.7%
Other income 0.4% 0.1%
- ---------------------------------------------------------------------------
Earnings before income taxes 15.8% 25.0%
- ---------------------------------------------------------------------------
Income taxes 5.2% 8.4%
- ---------------------------------------------------------------------------
Net earnings 10.6% 16.6%
===========================================================================
</TABLE>
Net sales increased $2.2 million, or 4.2%, during the three months ended January
31, 1997 compared to the three months ended January 31, 1996. The increase was
primarily due to the inclusion of Gatan International, Inc. ("Gatan") and Fluid
Metering, Inc. ("FMI") in the Company's results. Both of these companies were
acquired in May 1996 and have been accounted for as purchases. Sales growth was
tempered by reductions in sales to Russian Gazprom and a cyclical slowdown in
the semiconductor capital industry. Shipments to Russian Gazprom were down $8.6
million in the 1997 quarter compared to 1996. First quarter sales related to
customers in the semiconductor capital industry were also $3.0 million lower in
1997. Both of these period-over-period declines were of relatively high,
variable margin sales which accounts for the overall slight decrease in gross
profit percentage.
7
<PAGE>
Selling, general and administrative ("SG&A") expenses increased $4.2 million, or
27.1%, during the three months ended January 31, 1997 compared to prior-year
period. The acquisitions of Gatan and FMI accounted for $3.7 million of the
increase. As a percentage of sales, these companies' SG&A expenses in 1997
(31.2%) was only slightly higher than the Company's prior-year rate. Most of
the remaining increase was due to building additional infrastructure in Russia
over the past year to support future business with Russian Gazprom and other
customers in that region. The first quarter decline in sales to Russian Gazprom
combined with the greater level of expenses both contributed to SG&A expenses
rising as a percent of sales.
The increase in interest expense during the three months ended January 31, 1997
compared to the three months ended January 31, 1996 is due to additional debt in
1997 used to finance the acquisitions of Gatan and FMI.
The profit margins for each of the Company's business segments are listed below
as a percentage of net sales.
<TABLE>
<CAPTION>
Three Months Ended
January 31,
1997 1996
- --------------------------------------------------------------------------
<S> <C> <C>
Gross profit:
Industrial Controls 56.6% 57.5%
Fluid Handling 46.1% 48.9%
Analytical Instrumentation 60.2% 61.1%
- --------------------------------------------------------------------------
Operating profit (a):
Industrial Controls 9.1% 27.7%
Fluid Handling 27.6% 31.9%
Analytical Instrumentation 21.8% 17.4%
- --------------------------------------------------------------------------
</TABLE>
(a) Before allocation of corporate general and administrative expenses.
The Industrial Controls segment experienced a decrease in net sales of $8.2
million, or 32.5%, for the three months ended January 31, 1997 compared to the
three months ended January 31, 1996. The primary factor contributing to the
decline is the aforementioned $8.6 million decrease in shipments to Russian
Gazprom. This drop-off in sales volume significantly adversely affected the
operating profit percentage due to the costs of the additional infrastructure
put in place during 1996 to support future business.
Net sales for the Fluid Handling segment increased $2.4 million, or 12.1%,
during the three months ended January 31, 1997 compared to the prior-year
period. This segment includes FMI in the current-year quarter, its largest
factor for the increase. This segment also includes the semiconductor business
which dropped sharply (37%) in the 1997 first
8
<PAGE>
quarter. Other businesses in this segment posted a sales gain of 15.6% in 1997
compared to 1996.
The Analytical Instrumentation segment's net sales increased $8.0 million
(approximately doubling) during the three months ended January 31, 1997 compared
to the year-earlier period due largely to the inclusion of Gatan's operations in
the current-year quarter. Gatan's gross profit percentage is comparable to that
of the previously existing businesses in this segment.
For the three months ended January 31, 1997, consolidated bookings were $70.1
million, or an increase of 9.2% compared to the three months ended January 31,
1996. Industrial Controls were down 10.8% (due principally to less Russian
Gazprom activity), Fluid Handling was down 2.9% (the cyclical slow-down in the
semiconductor industry being partially offset by the addition of FMI), and
Analytical Instrumentation was up by 144% (principally the addition of Gatan).
If both Gazprom and the semiconductor business are excluded, pro forma bookings
(as if Gatan and FMI had previously been acquired) were up 6.8% in the 1997
first quarter compared to the 1996 first quarter.
Sales order backlog was $71.5 million and $46.7 million at January 31, 1997 and
1996, respectively. The 1996 acquisitions of Gatan and FMI represent $17.9
million of the increase in 1997.
The Company anticipates growth in fiscal 1997 of its significant business with
customers in the CIS/Eastern Europe region, particularly Russian Gazprom.
However, this business has been and likely will continue to be unpredictable,
uneven and subject to numerous and unpredictable credit, financing and other
commercial and political risks and cannot be assured.
A major portion of anticipated business with Russian Gazprom yet in fiscal 1997
and for several years thereafter awaits availability of U.S. Export-Import Bank
guaranteed external financing Russian Gazprom is presently attempting to
conclude. Thus, the receipt and timing of any new orders from Russian Gazprom
for projects already scheduled, as well as others, will continue to depend on
the timing and availability of external and internal financing, and also will
continue to require the involvement and cooperation of numerous managers at
different authority levels within Russian Gazprom and its affiliates.
The Company understands that Russian Gazprom continues working with the Ex-Im
Bank to complete the guaranteed financing for the Company's supply of $151
million in turbomachinery control products and services over a five-year period.
However, the Company believes that funds from this guaranteed financing are not
likely to be available earlier than the middle of calendar-year 1997. Until all
financing documentation is executed and pre-funding conditions satisfied, this
financing cannot be assured to Russian Gazprom.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
9
<PAGE>
Working capital increased to $47.0 million at January 31,1997 from $45.0 million
at October 31, 1996. For the three months ended January 31, 1997, cash flows
provided by operating activities were $2.6 million compared to $8.8 million
during the first quarter of last year. The decrease in cash flows from
operating activities was primarily the result of lower earnings in 1997.
Total debt was $69.9 million at January 31, 1997 (33.1% of total capital)
compared to $70.2 million (33.8% of total capital) at October 31, 1996. The
Company expects cash flows from its existing business will be sufficient to fund
normal operating requirements, including capital expenditures. Capital
expenditures in fiscal 1997 are expected to be similar to fiscal 1996.
The Company has completed several acquisitions over the past several years and
maintains an active acquisition program. Management believes the current
capital structure and the availability of existing financing sources provides
the capability to continue this program and keep the Company's capital structure
at a prudent mix. Any future acquisitions will be dependent upon numerous
factors and it is not feasible to reasonably estimate if or when any such
acquisitions will occur and what the impact will be on the Company's activities,
financial condition and results of operations.
FORWARD-LOOKING INFORMATION
The information provided elsewhere in this report, in other Company filings with
the Securities and Exchange Commission, and in other press releases and public
disclosures contains forward-looking statements about the Company's businesses
and prospects as to which there are numerous risks and uncertainties which
generally are beyond the Company's control. There is no assurance that these
risks and uncertainties will not have an adverse impact on the Company's future
operations, financial condition, or financial results.
10
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
11 Statement re: Computation of Per Share Earnings
b. Reports on Form 8-K
None
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Derrick N. Key President and March 5, 1997
- ------------------
Derrick N. Key Chief Executive Officer
/s/ Martin S. Headley Vice President and March 5, 1997
- ----------------------
Martin S. Headley Chief Financial Officer
12
<PAGE>
EXHIBIT INDEX
TO REPORT ON FORM 10-Q
Number Exhibit
------ -------
11 Statement re: Computation of Per Share Earnings
27 Financial Data Schedule
a
<PAGE>
ROPER INDUSTRIES, INC. AND SUBSIDIARIES EXHIBIT 11
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended
January 31,
1997 1996
------------------------
<S> <C> <C>
Net earnings $ 5,830 $ 8,809
========================
Common and common equivalent shares
used to compute earnings per share:
Weighted average number of common
shares outstanding 15,170 14,970
Common stock equivalents-stock options (a)
Primary 333 326
------------------------
Fully diluted 339 348
------------------------
Weighted average common and common
equivalent shares outstanding
Primary 15,503 15,296
========================
Fully diluted 15,509 15,318
========================
Net earnings per common share
Primary $ 0.38 $ 0.58
========================
Fully diluted $ 0.38 $ 0.58
========================
</TABLE>
(a) Employee stock options outstanding are included in the calculation of
earnings per share by applying the "Treasury Stock" method. Such
calculations are made using the average daily market prices for the period
for primary earnings per share. Such calculations are made using the higher
of the average daily market prices or the market price at the end of the
quarter for fully diluted earnings per share.
b
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> JAN-31-1997
<CASH> 1,087
<SECURITIES> 0
<RECEIVABLES> 51,716
<ALLOWANCES> 0
<INVENTORY> 32,294
<CURRENT-ASSETS> 1,485
<PP&E> 51,147
<DEPRECIATION> 27,719
<TOTAL-ASSETS> 242,469
<CURRENT-LIABILITIES> 39,506
<BONDS> 0
0
0
<COMMON> 152
<OTHER-SE> 141,315
<TOTAL-LIABILITY-AND-EQUITY> 242,469
<SALES> 55,108
<TOTAL-REVENUES> 55,335
<CGS> 25,672
<TOTAL-COSTS> 25,672
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,302
<INCOME-PRETAX> 8,734
<INCOME-TAX> 2,904
<INCOME-CONTINUING> 5,830
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,830
<EPS-PRIMARY> 0.38
<EPS-DILUTED> 0.38
</TABLE>
