How did Roper's sales and profits perform in 2006?

Net sales were $1,700,734 thousand, up 17.0% from $1,453,731 thousand in 2005. Net earnings were $193,324 thousand, compared with $153,175 thousand, and income from operations was $337,653 thousand, compared with $264,899 thousand.

What acquisitions did Roper complete in 2006, and how were they financed?

Roper acquired Sinmed (April 5), Intellitrans (April 26), Lumenera (July 25), AC Controls (August 8) and Dynisco (November 30). The filing states they were purchased for cash and financed through borrowings under the credit agreement and cash generated from operations. Dynisco's aggregate gross purchase price was approximately $247 million.

How much debt does Roper carry, and what are the main terms?

Total debt was $1.0 billion at December 31, 2006 (40.8% of total capital). It consisted of $230 million of 3.75% senior subordinated convertible notes due 2034, a $588.8 million term loan balance and a $202.0 million revolver balance, within a $1.055 billion senior secured credit facility. The filing says the company was in compliance with all debt covenants.

What risks does the filing highlight for investors?

The filing cites leverage and its restrictions on operating flexibility, foreign exchange rate changes (with the company not hedging foreign currency risk), exposure to acquisition integration, product liability, customer concentration with large government and other customers, competition, and goodwill impairment. It states that goodwill totaled approximately $1.65 billion, against stockholders' equity of approximately $1.49 billion.

What does the outlook and capital allocation look like?

The company expects its 2007 tax rate to rise to about 35.0% to 35.5% and capital expenditures in 2007 to be roughly comparable as a percentage of sales to 2006. It expects research and development spending to rise in 2007 because of the 2006 acquisitions, and it expects its cash flows to reduce outstanding debt. The Board raised the quarterly dividend to $0.06500 per share from $0.05875.

ROP 10-K FY2006 Annual Report — Revenue, Net Income, EPS

01—Abstract

Summary

Summary of the 10-K filed March 1, 2007. Cited figures are marked; the original filing is the authoritative source.

Roper Industries, Inc. reported net sales of $1,700,734 thousand^a ($1.70 billion) for the year ended December 31, 2006, up from $1,453,731 thousand in 2005, an increase of 17.0% that the filing attributes to both acquired companies and strong internal growth.

Net earnings rose to $193,324 thousand^b from $153,175 thousand, and diluted earnings per share were $2.13 versus $1.74. Income from operations was $337,653 thousand, and the company's four segments (Industrial Technology, Energy Systems and Controls, Scientific and Industrial Imaging, and RF Technology) all reported higher net sales. Cash provided by operating activities was $262.5 million, down from $281.3 million, which the filing says reflects higher tax payments in 2006.

The company made five acquisitions in 2006 (Sinmed, Intellitrans, Lumenera, AC Controls and Dynisco), with Dynisco at an approximate $247 million^c gross cash purchase price on November 30, 2006. Total debt rose to $1.0 billion at December 31, 2006 (40.8% of total capital), compared with $894.3 million a year earlier, largely due to borrowings for Dynisco. Goodwill reached $1.65 billion against stockholders' equity of $1.49 billion, and the filing notes that a write-off of intangible assets would affect results and total capitalization.

Backlog grew to $504.6 million^d from $380.4 million, and the Board raised the quarterly dividend to $0.06500 per share from $0.05875. The filing also flags risks including leverage under the $1.055 billion senior secured credit facility, foreign currency exposure (sales from non-U.S.-dollar functional currency companies were 29% of total sales), and the company's policy of not hedging foreign currency risk. The company expects its 2007 effective tax rate to rise to approximately 35.0% to 35.5%.

02—Key points

Key Highlights

Net sales rose 17.0% to $1,700,734 thousand in 2006, driven by acquisitions (about $101 million of the increase) and internal growth (about $146 million).
Net earnings increased to $193,324 thousand ($2.13 diluted EPS) from $153,175 thousand ($1.74 diluted EPS) in 2005.
Gross profit margin was 50.6% in 2006, up from 50.0% in 2005; SG&A fell to 30.8% of net sales from 31.8%.
Net sales order backlog reached $504.6 million at December 31, 2006, up 32.7% from $380.4 million, with RF Technology backlog at $261.2 million.
Total debt was $1.0 billion at December 31, 2006, up from $894.3 million, mainly from borrowings to fund the $247 million Dynisco acquisition.
Operating cash flow declined to $262.5 million from $281.3 million, which the company attributes to higher tax payments.
The Board raised the quarterly dividend to $0.06500 per share (an 11% increase), and the company expects its 2007 tax rate to be 35.0% to 35.5%.

03—Questions

Frequently Asked Questions

How did Roper's sales and profits perform in 2006?
Net sales were $1,700,734 thousand, up 17.0% from $1,453,731 thousand in 2005. Net earnings were $193,324 thousand, compared with $153,175 thousand, and income from operations was $337,653 thousand, compared with $264,899 thousand.
What acquisitions did Roper complete in 2006, and how were they financed?
Roper acquired Sinmed (April 5), Intellitrans (April 26), Lumenera (July 25), AC Controls (August 8) and Dynisco (November 30). The filing states they were purchased for cash and financed through borrowings under the credit agreement and cash generated from operations. Dynisco's aggregate gross purchase price was approximately $247 million.
How much debt does Roper carry, and what are the main terms?
Total debt was $1.0 billion at December 31, 2006 (40.8% of total capital). It consisted of $230 million of 3.75% senior subordinated convertible notes due 2034, a $588.8 million term loan balance and a $202.0 million revolver balance, within a $1.055 billion senior secured credit facility. The filing says the company was in compliance with all debt covenants.
What risks does the filing highlight for investors?
The filing cites leverage and its restrictions on operating flexibility, foreign exchange rate changes (with the company not hedging foreign currency risk), exposure to acquisition integration, product liability, customer concentration with large government and other customers, competition, and goodwill impairment. It states that goodwill totaled approximately $1.65 billion, against stockholders' equity of approximately $1.49 billion.
What does the outlook and capital allocation look like?
The company expects its 2007 tax rate to rise to about 35.0% to 35.5% and capital expenditures in 2007 to be roughly comparable as a percentage of sales to 2006. It expects research and development spending to rise in 2007 because of the 2006 acquisitions, and it expects its cash flows to reduce outstanding debt. The Board raised the quarterly dividend to $0.06500 per share from $0.05875.

04—Continue

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