Roper Technologies (ROP) 10-K risk factor changes: FY2014 vs FY2013

As of December 31, [removed: 2013,] [added: 2014,] we had [removed: $2.46] [added: $2.21] billion in total consolidated indebtedness.

In addition, we had [removed: $1.2] [added: $1.5] billion undrawn availability under our senior unsecured credit facility, as well as the ability to request additional term loans or revolving credit commitments under our credit facility not to exceed $350 million in aggregate.

| [removed: ·] | [added: ● |] place us at a competitive disadvantage relative to our competitors, some of which have lower debt service obligations and greater financial resources; |

| [removed: ·] | [added: ● |] limit our ability to borrow additional funds; |

| [removed: ·] | [added: ● |] limit our ability to complete future acquisitions; |

| [removed: ·] | [added: ● |] limit our ability to pay dividends; |

| [removed: ·] | [added: ● |] limit our ability to make capital expenditures; and |

| [removed: ·] | [added: ● |] increase our vulnerability to general adverse economic and industry conditions. |

Unfavorable changes in foreign exchange rates may [removed: significantly] harm our business.

Most of these transactions and balances are denominated in euros, Canadian dollars, British pounds or Danish [removed: krone.][added: kroner.]

Sales by our operating companies whose functional currency is not the U.S. dollar represented [removed: 24%] [added: 23%] of our total net sales for the year ended December 31, [removed: 2013] [added: 2014] compared to [removed: 25%] [added: 24%] for the year ended December 31, [removed: 2012.][added: 2013.]

These sales accounted for [added: 13% and] 15% of our net sales for [removed: each of] the years ended December 31, [removed: 2013] [added: 2014] and December 31, [removed: 2012.][added: 2013, respectively.]

| [removed: ·] | [added: ● |] unfavorable changes in or noncompliance with U.S. and other jurisdictions' export requirements; |

| [removed: ·] | [added: ● |] restrictions on the export of technology and related products; |

| [removed: ·] | [added: ● |] unfavorable changes in or noncompliance with U.S. and other jurisdictions' export policies to certain [removed: countries;] [added: countries, including Russia;] |

| [removed: ·] | [added: ● |] unfavorable changes in the import policies of our foreign markets; and |

| [removed: ·] | [added: ● |] a general economic downturn in our foreign markets. |

As of and for the year ended December 31, [removed: 2013, 26%] [added: 2014, 25%] of our net sales and [removed: 21%] [added: 19%] of our long-lived assets, excluding goodwill and intangibles, were attributable to operations outside the U.S. We expect our international operations to contribute materially to our business for the foreseeable future.

| | [removed: ·] [added: ●] | adverse changes in a specific country's or region's political or economic conditions, particularly in [added: Russia and] emerging markets; |

| | [removed: ·] [added: ●] | trade protection measures and import or export requirements; |

| | [removed: ·] [added: ●] | subsidies or increased access to capital for firms that are currently, or may emerge as, competitors in countries in which we have operations; |

| | [removed: ·] [added: ●] | partial or total expropriation; |

| | [removed: ·] [added: ●] | potentially negative consequences from changes in tax laws; |

| | [removed: ·] [added: ●] | difficulty in staffing and managing widespread operations; |

| | [removed: ·] [added: ●] | differing labor regulations; |

| | [removed: ·] [added: ●] | differing protection of intellectual property; and |

| | [removed: ·] [added: ●] | unexpected changes in regulatory requirements. |

At December 31, [removed: 2013,] [added: 2014,] goodwill totaled [removed: $4.55] [added: $4.71] billion compared to [removed: $4.21] [added: $4.76] billion of stockholders' equity, and represented 56% of our total assets of [removed: $8.18] [added: $8.41] billion.

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| | ● | oil price shocks; |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

In July 2014, Puerto Rico passed the Public Corporation Debt Enforcement and Recovery Act which may impact the future prospects of our customer, the Puerto Rico Highways & Transportation Authority.

At the present time, we believe that existing contracts and payable obligations will be honored.

| --- | --- |

ITEM 1B.

UNRESOLVED STAFF COMMENTS

None

Our acquisitions have represented both [removed: bolt-ons] [added: additions to existing businesses] and new strategic platforms.

A discussion of our significant accounting policies can also be found in the notes to our Consolidated Financial Statements for the year ended December 31, [removed: 2013] [added: 2014] included in this Annual Report.

At December 31, [removed: 2013,] [added: 2014,] our allowance for doubtful accounts receivable was [removed: $11.4] [added: $10.8] million and our allowance for sales returns and sales credits was [removed: $3.6] [added: $2.9] million, for a total of [removed: $15.0] [added: $13.7] million, or [removed: 2.8%] [added: 2.6%] of total gross accounts receivable.

The total allowance at December 31, [removed: 2013] [added: 2014] was [removed: $1.0] [added: $1.3] million lower than at December 31, [removed: 2012.][added: 2013.]

At December 31, [removed: 2013,] [added: 2014,] inventory reserves for excess and obsolete inventory were [removed: $43.5] [added: $38.9] million, or [removed: 17.5%] [added: 16.7%] of gross inventory cost, as compared to [removed: $42.0] [added: $43.5] million, or [removed: 18.0%] [added: 17.5%] of gross inventory cost, at December 31, [removed: 2012.][added: 2013.]

Most of our sales are covered by warranty provisions that generally provide for the repair or replacement of qualifying defective items for a specified period after the time of sale, typically 12 [added: to 24] months.

Our expense for warranty obligations was less than 1% of net sales for each of the years ended December 31, [added: 2014,] 2013, [removed: 2012,] and [removed: 2011.][added: 2012.]

[removed: During the year ended December 31, 2013, we recognized revenue of $205.0 million using this method,] [added: Percentage-of-completion is used] primarily for major turn-key, longer term toll and traffic and energy projects and installations of large software application [removed: products.][added: projects.]

[removed: We recognized $145.5 million and $151.5 million of revenue using this method during] [added: During] the years ended December 31, [added: 2014, 2013 and] 2012 [added: we recognized revenue of $266 million, $205 million] and [removed: December 31, 2011, respectively.][added: $146 million, respectively, using this method.]

At December 31, [removed: 2013, $222.1] [added: 2014, $225] million of revenue related to unfinished percentage-of-completion contracts had yet to be recognized.

During [removed: 2013,] [added: 2014,] our effective income tax rate was [removed: 28.6%,] [added: 29.9%,] which was [removed: slightly lower] [added: higher] than the [removed: 2012] [added: 2013] rate of [removed: 29.6%] [added: 28.6%] due [added: to an increase] in [added: revenues and resulting pretax income in higher tax jurisdictions as well as the non-recurrence of $6 million in tax benefits recognized in 2013 related in] part to the enactment of the American Taxpayer Relief Act of 2012 ("ATRA") on January 2, [removed: 2013 which retroactively reinstated and extended certain tax provisions to January 1, 2012.][added: 2013.]

We expect the effective tax rate to increase in [removed: 2014] [added: 2015] due to a continued increase in revenues and resulting pretax income in higher tax [removed: jurisdictions as well as the non-recurrence of] [added: jurisdictions, primarily] the [removed: $6 million tax benefit taken in 2013.][added: U.S.]

Goodwill, which is not amortized, is tested for impairment on an annual basis [added: in conjunction with our annual forecast process during the fourth quarter,] (or an interim basis if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value) using a two-step process.

We have [removed: 28] [added: 29] reporting units with individual goodwill amounts ranging from zero to [removed: $988] [added: $994] million.

We concluded that the fair value of each of our reporting units was in excess of its carrying value, with no impairment indicated as of December 31, [removed: 2013.][added: 2014.]

[removed: However,] [added: In 2013, we reported that] the fair value of one of our reporting units in the RF Technology segment was less than 5% above its carrying value at December 31, 2013 using the discounted cash flow [removed: methodology.][added: methodology, but that we believed that the market value of the unit to be significantly in excess of its carrying value based upon observed market data.]

| | | Years ended December 31, | | | | | | | | | [added: | |]

| | | [removed: 2013] [added: 2014] | | | [removed: 2012] | [added: 2013] | | [removed: 2011] | | [added: 2012] | [added: | |]

| Net [removed: sales] [added: sales:] | | | | | | | | | | | [added: | |]

| Industrial Technology | | $ | [removed: 779,564] [added: 827,145] | | [added: |] $ | [removed: 795,240] [added: 779,564] | | [added: |] $ | [removed: 737,356] [added: 795,240] | |

| Energy Systems and Controls(1) | | | [removed: 651,920] [added: 691,813] | | | [removed: 646,116] | [added: 651,920] | | [removed: 597,802] | | [added: 646,116 | |]

| Medical and Scientific Imaging(2) | | | [removed: 902,281] [added: 1,080,309] | | | [removed: 703,835] | [added: 902,281] | | [removed: 610,617] | | [added: 703,835 | |]

| RF [removed: Technology] [added: Technology(3)] | | | [removed: 904,363] [added: 950,227] | | | [removed: 848,298] | [added: 904,363] | | [removed: 851,314] | | [added: 848,298 | |]

| Total | | $ | [removed: 3,238,128] [added: 3,549,494] | | [added: |] $ | [removed: 2,993,489] [added: 3,238,128] | | [added: |] $ | [removed: 2,797,089] [added: 2,993,489] | |

| Industrial Technology | | | [removed: 51.1] [added: 50.5] | % | | [removed: 51.6] | [added: 51.1 |] % | | [removed: 49.8] | [added: 51.6 |] % |

| Energy Systems and Controls | | | [removed: 57.4] [added: 58.3] | | | [removed: 56.3] | [added: 57.4] | | [removed: 55.5] | | [added: 56.3 | |]

| Medical and Scientific Imaging | | | [removed: 69.3] [added: 72.1] | | | [removed: 64.4] | [added: 69.3] | | [removed: 63.3] | | [added: 64.4 | |]

| RF Technology | | | [removed: 53.7] [added: 52.8] | | | [removed: 52.4] | [added: 53.7] | | [removed: 50.6] | | [added: 52.4 | |]

| Total | | | [removed: 58.1] [added: 59.2] | | | [removed: 55.8] | [added: 58.1] | | [removed: 54.2] | | [added: 55.8 | |]

| Industrial Technology | | | [removed: 28.6] [added: 29.9] | % | | [removed: 30.8] | [added: 28.6 |] % | | [removed: 28.2] | [added: 30.8 |] % |

| Energy Systems and Controls | | | [removed: 28.2] [added: 29.3] | | | [removed: 27.8] | [added: 28.2] | | [removed: 26.4] | | [added: 27.8 | |]

| Medical and Scientific Imaging | | | [removed: 29.7] [added: 34.8] | | | [removed: 26.6] | [added: 29.7] | | [removed: 24.3] | | [added: 26.6 | |]

| RF Technology | | | [removed: 28.0] [added: 28.5] | | | [removed: 26.3] | [added: 28.0] | | [removed: 23.8] | | [added: 26.3 | |]

| Total | | | [removed: 28.7] [added: 30.9] | | | [removed: 27.9] | [added: 28.7] | | [removed: 25.6] | | [added: 27.9 | |]

| Corporate administrative expenses | | | [removed: (2.7] [added: (2.8] | )% | | [removed: (2.6] | [added: (2.7 |] )% | | [removed: (2.0] | [added: (2.6 |] )% |

| Income from continuing operations | | | [removed: 26.0] [added: 28.2] | | | [removed: 25.3] | [added: 26.0] | | [removed: 23.6] | | [added: 25.3 | |]

| Interest expense, net | | | [removed: (2.7] [added: (2.2] | ) | | [removed: (2.3] | [added: (2.7 |] ) | | [added: |] (2.3 | ) |

| Other income/(expense) | | | \- | | | [removed: (0.1] | [removed: )] [added: \-] | | [removed: 0.3] | | [added: (0.1 | ) |]

| Income from continuing operations before taxes | | | [removed: 23.3] [added: 26.0] | | | [removed: 22.9] | [added: 23.3] | | [removed: 21.6] | | [added: 22.9 | |]

| Income taxes | | | [removed: (6.7] [added: (7.8] | ) | | [removed: (6.8] | [added: (6.7 |] ) | | [removed: (6.4] | [added: (6.8 |] ) |

We are a diversified technology company.

We operate businesses that design and develop software (both license and software-as-a-service) and engineered products and solutions for a variety of niche end markets; including healthcare, transportation, food, energy, water, education and academic research.

In the third quarter of 2014, we acquired the shares of Foodlink Holdings, Inc. ("Foodlink"), Innovative Product Achievements, LLC ("IPA") and Strategic Healthcare Programs Holdings, LLC ("SHP") which expand upon our existing supply chain and medical platforms.

The test performed in December, 2014 indicated that the fair value of this unit at December 31, 2014 exceeded the carrying value by more than 20%.

No impairment resulted from the annual reviews performed in 2014.

| | | | | | | | | | | | | |

| Gross margin: | | | | | | | | | | | | |

| | | | | | | | | | | | | |

| Segment operating margin: | | | | | | | | | | | | |

| | | | | | | | | | | | | |

| | | | | | | | | | | | | |

| --- | --- |

| (3) | Includes results from the acquisition of Foodlink from July 2, 2014. |

| --- | --- |

Operating margin was 28.5% in 2014 as compared to 28.0% in 2013.

Organic growth was 7%, and there was a negative 1% impact from foreign currency exchange.

The organic growth was due primarily to increased sales in our water meter, fluid handling and materials testing businesses.

Gross margin was 50.5% for the year ended December 31, 2014 as compared to 51.1% in the year ended December 31, 2013 due to product mix.

SG&A expenses as a percentage of net sales were 20.5%, as compared to 22.5% in the prior year, due primarily to the non-recurrence of a $9.1 million pretax charge for warranty expense in 2013.

Organic sales increased by 5% due to sales of new instruments for refinery applications and increased sales in the fluid properties testing equipment market.

Corporate expenses increased by $12.1 million to $98.2 million, or 2.8% of sales, in 2014 as compared to $86.1 million, or 2.7% of sales, in 2013.

The increase was due to higher compensation costs, including increased equity compensation (see Note 11 of the Notes to Consolidated Financial Statements included in this Annual Report).

Other income of $0.6 million for the year ended December 31, 2014 was composed of royalty income and foreign exchange gains at our non-U.S. based companies, offset in part by losses from asset disposals.

The increase was due to one-time discrete tax benefits in 2013 that did not recur in 2014 as well as increased revenues and resulting pretax income in higher tax jurisdictions, primarily the U.S. We expect the effective tax rate to increase in 2015 due to a continued increase in revenues and resulting pretax income in higher tax jurisdictions, primarily the U.S.

| | | 2014 | | | | 2013 | | | | change | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Industrial Technology | | $ | 808,921 | | | $ | 772,337 | | | | 4.7 | % |

| Energy Systems and Controls | | | 692,136 | | | | 673,569 | | | | 2.8 | |

| Medical and Scientific Imaging | | | 1,081,190 | | | | 958,830 | | | | 12.8 | |

| RF Technology | | | 955,831 | | | | 943,757 | | | | 1.3 | |

| Total | | $ | 3,538,078 | | | $ | 3,348,493 | | | | 5.7 | % |

| | | 2014 | | | | 2013 | | | | change | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Industrial Technology | | $ | 97,507 | | | $ | 121,943 | | | | (20.0 | )% |

| Energy Systems and Controls | | | 126,838 | | | | 131,799 | | | | (3.8 | ) |

| Medical and Scientific Imaging | | | 296,098 | | | | 290,435 | | | | 1.9 | |

| RF Technology | | | 520,727 | | | | 510,553 | | | | 2.0 | |

| Total | | $ | 1,041,170 | | | $ | 1,054,730 | | | | (1.3 | )% |

The increase was due primarily to growth in our toll and traffic, university card systems and security solutions businesses.

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

We are a diversified growth company that designs, manufactures and distributes medical and scientific imaging products and software, radio frequency ("RF") products, services and application software, industrial technology products and energy systems and controls products and solutions.

We market these products and services to a broad range of markets including RF applications, medical, water, energy, research, education, software-as-a-service ("SaaS")-based information networks, security and other niche markets.

On May 1, 2013, we purchased the shares of Managed Health Care Associates, Inc. ("MHA"), a leading provider of services and technologies to support the diverse and complex needs of alternate site health care providers who deliver services outside of an acute care hospital setting.

The acquisition of MHA complements and expands our medical software and services platform.

On October 4, 2013, we acquired the shares of Advanced Sensors, Ltd. ("Advanced Sensors"), which manufactures oil-in-water analyzers for the oil and gas industries.

As a result, our income tax provision for the first quarter of 2013 included discrete tax benefits totaling $6 million.

The decrease from the prior year's results was due to lower growth assumptions in the current year's testing.

The weighted average cost of capital utilized in 2013 was consistent with the prior year's testing.

We believe the market value of this unit to be significantly in excess of its carrying value based upon observed market data.

No impairment resulted from the annual reviews performed in 2013; however, the fair value of the trade names of one of our reporting units in the RF Technology segment could have fallen below the carrying value at December 31, 2013, had the assumed sales growth been less than that used in the assessment.

We do not believe that impairment is probable; however, it is possible that the trade name could become impaired in the future, at which point we would be required to record a non-cash impairment charge to reduce the carrying level of the trade name at the reporting unit.

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | |

| Gross profit: | | | | | | | | | | |

| Operating profit: | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

The impact from foreign exchange was a negative 1%.

Organic sales increased 7% while acquisitions added $19 million, or 3%.

The increase in organic sales was primarily due to increased demand in industrial process and nuclear plant inspection end markets.

The impact from foreign exchange was a negative 2%.

The increase was due to broad-based growth in nearly all businesses in the segment, with particular strength in our materials testing business and fluid handling businesses, offset in part by a negative 2% impact from foreign exchange.

Gross margin was 51.6% for the year ended December 31, 2012 as compared to 49.8% in the year ended December 31, 2011 due to operating leverage on higher sales volume as well as a $5.5 million one-time reduction to cost of goods sold at one of our businesses.

This reduction is due to the cumulative effect of an accounting system error which caused the cost of goods sold to be overstated for several years by quarterly and annually immaterial amounts.

Organic sales were flat as growth in toll and traffic systems was offset by a large installation project in gas network monitoring during 2011 that has since been completed.

SG&A expenses as a percentage of sales in the year ended December 31, 2012 were 26.1%, a decrease from 26.8% in the prior year due to lower spending, particularly in selling expense related to toll projects.

Operating profit margin was 26.3% in 2012 as compared to 23.8% in 2011.

Corporate expenses increased by $20.6 million to $77.5 million, or 2.6% of sales, in 2012 as compared to $56.9 million, or 2.0% of sales, in 2011.

The increase was due to $6.5 million of acquisition expense related to the Sunquest acquisition, higher equity compensation (as a result of higher stock prices) and other compensation related costs.

Other income for the year ended December 31, 2011 was $8.1 million, which was primarily due to a currency remeasurement gain on an intercompany note.

This increase was due to a decrease in R&D credits.

| Industrial Technology | $ | 783,362 | | $ | 767,020 | | 2.1 | % |

| Energy Systems and Controls | | 634,051 | | | 608,538 | | 4.2 | |

| Medical and Scientific Imaging | | 703,034 | | | 612,787 | | 14.7 | |

| RF Technology | | 871,225 | | | 834,903 | | 4.4 | |

| Total | $ | 2,991,672 | | $ | 2,823,248 | | 6.0 | % |

Our Industrial Technology, Energy Systems and Controls and RF Technology segments experienced strong internal growth throughout 2012.

Our Medical and Scientific Imaging segment experienced negative internal growth, offset by bookings from recent acquisitions.

| Industrial Technology | $ | 131,621 | | $ | 141,836 | | (7.2 | )% |

| Energy Systems and Controls | | 109,885 | | | 120,497 | | (8.8 | ) |

| Medical and Scientific Imaging | | 234,526 | | | 118,609 | | 97.7 | |

At December 31, [removed: 2013,] [added: 2014,] we had [removed: a combination] [added: $2.2 billion] of fixed [removed: and floating] rate borrowings.

Our credit facility contains a $1.5 billion variable-rate revolver with [added: no] outstanding borrowings [removed: of $250 million] at December 31, [removed: 2013.][added: 2014.]

Our $400 million senior notes due 2017, $800 million senior notes due 2018, $500 million senior notes due 2019 and $500 million senior notes due 2022 have fixed interest rates of 1.850%, 2.050%, 3.125% and 6.250%, respectively, and our $8 million senior [removed: unsecured] [added: subordinated] convertible notes have a fixed interest rate of 3.75%.

At December 31, [removed: 2013,] [added: 2014,] the prevailing market rates for our long-term notes were between [removed: 1.5%] [added: 0.8%] higher and [removed: 1.6%] [added: 2.8%] lower than the fixed rates on our debt instruments.

Most of these transactions or balances are denominated in euros, Canadian dollars, British pounds or Danish [removed: krone.][added: kroner.]

Sales by companies whose functional currency was not the U.S. dollar were [removed: 24%] [added: 23%] of our total sales in [removed: 2013] [added: 2014] and 61% of these sales were by companies with a European functional currency.

The U.S. dollar was stronger against most of our non-U.S. subsidiary currencies throughout most of [removed: 2013] [added: 2014] as compared to [removed: 2012,] [added: 2013,] which resulted in a decrease in sales of less than 1.0% due to foreign currency exchange.

If these currency exchange rates had been 10% different throughout [removed: 2013] [added: 2014] compared to currency exchange rates actually experienced, the impact on our net earnings would have been approximately [removed: 2.1%.][added: 1.7%.]

The changes in these currency exchange rates relative to the U.S. dollar at December 31, [removed: 2013] [added: 2014] compared to currency exchange rates at December 31, [removed: 2012] [added: 2013] resulted in a pre-tax decrease in net assets of [removed: $17.9] [added: $118.9] million that was reported as a component of comprehensive earnings, [removed: $9.5] [added: $50.5] million of which was attributed to goodwill.

| --- | --- |

At December 31, 2013, our outstanding variable-rate borrowings were $250 million of outstanding revolver borrowings; an increase in interest rates of 1% would increase our annualized interest costs by $2.5 million.

[removed: Roper Industries, Inc. ("Roper" or the "Company") was] [added: We were] incorporated on December 17, 1981 under the laws of the State of Delaware.

We pursue consistent and sustainable growth in [removed: sales,] earnings [removed: and cash flow] by emphasizing continuous improvement in the operating performance of our existing businesses and by acquiring other [removed: carefully selected] businesses that offer high value-added services, engineered products and solutions and are capable of achieving growth [removed: in sales, earnings] and [removed: cash flow.][added: maintaining high margins.]

We compete in many niche markets and believe we are the market leader or a competitive alternative to the market leader in [removed: the majority] [added: most] of these markets.

In addition, our operating units grow our customer base by expanding our [removed: distribution, selling other products through our existing channels] [added: access to customers] and entering adjacent markets.

Diversified End Markets and Geographic Reach \- We have a global presence, with sales of products to customers outside the U.S. totaling $1.3 billion in [removed: 2013.][added: 2014.]

Our research and development spending was [removed: $145.7] [added: $147.9] million in [removed: 2013] [added: 2014] as compared to [removed: $125.9] [added: $145.7 million] and [removed: $121.7] [added: $125.9] million in [removed: 2012] [added: 2013] and [removed: 2011,] [added: 2012,] respectively.

Financial information about our business segments is presented in Note 13 of the [removed: notes] [added: Notes] to Consolidated Financial [removed: Statements.][added: Statements included in this Annual Report.]

These products and solutions are provided through [removed: nine] [added: ten] reporting units.

For [removed: 2013,] [added: 2014,] this segment had net sales of [removed: $902.3] [added: $827.1] million, representing [removed: 27.9%] [added: 23.3%] of our total net sales.

[removed: Medical Products and Software -] We [added: also] manufacture and sell patient positioning devices and related software for use in radiation oncology, 3-D measurement technology in computer-assisted surgery and supply diagnostic and therapeutic disposable products used in ultrasound imaging for minimally invasive medical procedures.

[added: Medical Products and Software -] We [removed: also] provide diagnostic and laboratory software solutions to healthcare providers and services and technologies to support the diverse and complex needs of alternate site health care providers who deliver services outside of an acute care hospital setting.

Our Medical and Scientific Imaging segment companies have lead times of up to several months on [removed: many] [added: some] of their product sales, although standard products are often shipped within two weeks of receipt of order.

This segment had sales of [removed: $904.4] [added: $950.2] million for the year ended December 31, [removed: 2013,] [added: 2014,] representing [removed: 27.9%] [added: 26.8%] of our total net sales.

Software-as-a-Service - We maintain electronic marketplaces that [removed: match] [added: connect] 1) available capacity of trucking units with the available loads of freight to be moved from location to location throughout North America and 2) food suppliers, distributors and vendors, primarily in the perishable food sector.

Our Industrial Technology segment produces fluid handling pumps, [added: materials analysis] equipment and [removed: consumables for materials analysis,] [added: consumables,] leak testing equipment, flow measurement and metering equipment and water meter and automatic meter reading ("AMR") products and systems.

For [removed: 2013,] [added: 2014,] this segment had net sales of [removed: $779.6] [added: $691.8] million, representing [removed: 24.1%] [added: 19.5%] of our total net sales.

Materials Analysis Equipment and Consumables - We manufacture and sell equipment and supply consumables necessary to prepare [removed: materials] [added: material] samples for testing and analysis.

For [removed: 2013,] [added: 2014,] this segment had net sales of [removed: $651.9 million,] [added: $1.1 billion,] representing [removed: 20.1%] [added: 30.4%] of our total net sales.

Control Systems - We manufacture control systems and provide related engineering and commissioning services for turbomachinery applications, [removed: predominately] [added: primarily] in energy markets.

[removed: Industrial Valves and Controls -] We [added: also] manufacture and distribute valves, sensors, switches and control products used on engines, compressors, turbines and other powered equipment for the oil and gas, pipeline, power generation, marine engine and general industrial markets.

[removed: Sensors and] [added: Sensors,] Controls [added: and Valves] - We manufacture sensors and control equipment including pressure sensors, temperature sensors, measurement instruments and control software for global rubber, plastics and process industries.

No customer accounted for 10% or more of net sales for [removed: 2013] [added: 2014] for any of our segments or for our company as a whole.

As of December 31, [removed: 2013,] [added: 2014,] we had [removed: 9,913] [added: 10,137] employees, with [removed: 6,959] [added: 7,110] located in the United States.

We have [removed: 205] [added: 206] employees who are subject to collective bargaining agreements.

We filed the certification with the NYSE on June [removed: 24, 2013] [added: 19, 2014] and our Chief Executive Officer indicated that he was not aware of any violations of the Listing Standards by us.

Roper Industries, Inc. ("Roper" or the "Company") is a diversified technology company.

We operate businesses that design and develop software (both license and software-as-a-service) and engineered products and solutions for a variety of niche end markets; including healthcare, transportation, food, energy, water, education and academic research.

Backlog was $1.04 billion at December 31, 2014, and $1.05 billion at December 31, 2013.

We are a diversified growth company that designs, manufactures and distributes medical and scientific imaging products and software, radio frequency ("RF") products, services and application software, industrial technology products and energy systems and controls products and solutions.

We market these products and services to a broad range of markets including RF applications, medical, water, energy, research, education, software-as-a-service ("SaaS")-based information networks, security and other niche markets.

Research and development expense as a percentage of sales increased to 4.5% in 2013 from 4.2% in 2012.

The percentage has increased as the mix of our businesses shifts to higher technology, medical and software platforms.

Backlog was $1.1 billion at December 31, 2013, and $0.9 billion at December 31, 2012.

[removed: þ] [added: | | ☑] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [added: |]

For the fiscal year ended December 31, [removed: 2013][added: 2014]

[removed: ¨] [added: | | ☐] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [added: |]

| (State or other jurisdiction of [added: incorporation or organization)] | | (I.R.S. Employer [added: Identification No.)] |

| [added: Title of Each Class] | | Name of Each Exchange [added: On Which Registered] |

[removed: þ] [added: ☑] Yes [removed: ¨] [added: ☐] No

[removed: ¨] [added: ☐] Yes [removed: þ] [added: ☑] No

[removed: þ] [added: ☑] Large accelerated filer [removed: ¨] [added: ☐] Accelerated filer [removed: ¨] [added: ☐] Non-accelerated filer [removed: ¨] [added: ☐] Smaller reporting company

Based on the closing sale price on the New York Stock Exchange on June [removed: 28, 2013,] [added: 30, 2014,] the aggregate market value of the voting and non-voting common stock held by non-affiliates of the registrant was: [removed: $12,365,836,908.][added: $14,653,055,923.]

Number of shares of registrant's Common Stock outstanding as of February [removed: 14, 2014: 99,547,874.][added: 13, 2015: 100,356,523.]

Portions of the registrant's Proxy Statement to be furnished to Stockholders in connection with its Annual Meeting of Stockholders to be held on May [removed: 21, 2014,] [added: 29, 2015,] are incorporated by reference into Part III of this Annual Report on Form 10-K.

FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, [removed: 2013][added: 2014]

Risk Factors [removed: 8][added: 7]

10-K 1 cy2014_10-k.htm

\--------------------------

| --- | --- |

| --- | --- |

☑ Yes ☐ No

☑ Yes ☐ No

☐ Yes ☑ No

| | | Page |

| | | |

Item 1B.

Unresolved Staff Comments 10

Item 2.

Properties 11

Item 3.

Legal Proceedings 11

10-K 1 cy2013_10-k.htm

\----------------

| incorporation or organization) | | Identification No.) |

| Title of Each Class | | On Which Registered |

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities [removed: 13][added: 12]

Selected Financial Data [removed: 15][added: 14]

Management's Discussion and Analysis of Financial Condition and Results of Operations [removed: 16][added: 14]

Quantitative and Qualitative Disclosures about Market Risk [removed: 26][added: 23]

Financial Statements and Supplementary Data [removed: 27][added: 24]

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure [removed: 55][added: 47]

Controls and Procedures [removed: 55][added: 47]

Other Information [removed: 55][added: 48]

Directors, Executive Officers and Corporate Governance [removed: 56][added: 48]

Executive Compensation [removed: 56][added: 48]

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters [removed: 56][added: 48]

Certain Relationships and Related Transactions and Director Independence [removed: 56][added: 48]

Principal Accountant Fees and Services [removed: 56][added: 48]

Exhibits and Financial Statement Schedules [removed: 57][added: 49]

| | Signatures | [removed: 60] [added: 51] |

| [removed: ·] | [added: ● |] general economic conditions; |

| [removed: ·] | [added: ● |] difficulty making acquisitions and successfully integrating acquired businesses; |

| [removed: ·] | [added: ● |] any unforeseen liabilities associated with future acquisitions; |

| [removed: ·] | [added: ● |] limitations on our business imposed by our indebtedness; |

| [removed: ·] | [added: ● |] unfavorable changes in foreign exchange rates; |

| [removed: ·] | [added: ● |] difficulties associated with exports; |

| [removed: ·] | [added: ● |] risks and costs associated with our international sales and operations; |

| [removed: ·] | [removed: risk of] [added: ● |] rising interest rates; |

| [removed: ·] | [added: ● |] product liability and insurance risks; |

| [removed: ·] | [added: ● |] increased warranty exposure; |

| [removed: ·] | [added: ● |] future competition; |

| [removed: ·] | [added: ● |] the cyclical nature of some of our markets; |

| [removed: ·] | [added: ● |] reduction of business with large customers; |

| [removed: ·] | [added: ● |] risks associated with government contracts; |

| [removed: ·] | [added: ● |] changes in the supply of, or price for, raw materials, parts and components; |

| [removed: ·] | [added: ● |] environmental compliance costs and liabilities; |

| [removed: ·] | [added: ● |] risks and costs associated with asbestos-related litigation; |

| [removed: ·] | [added: ● |] potential write-offs of our substantial goodwill and other intangible assets; |

| [removed: ·] | [added: ● |] our ability to successfully develop new products; |

| [removed: ·] | [added: ● |] failure to protect our intellectual property; |

| [removed: ·] | [added: ● |] the effect of, or change in, government regulations (including tax); |

| [removed: ·] | [added: ● |] economic disruption caused by terrorist attacks, health crises or other unforeseen events; and |

| [removed: ·] | [added: ● |] the factors discussed in Item 1A to this Annual Report under the heading "Risk Factors." |

| | | |

| | | 48 |

| | | |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| | ● | increased insurance costs; |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- |

| · | increased directors' and officers' liability and other insurance costs; |

| --- | --- |

None

Item 2.

Properties 12

Item 3.

Legal Proceedings 12

We have established [removed: 112] [added: 122] principal locations around the world to support our operations, of which [removed: 51] [added: 52] are manufacturing, assembly and testing facilities, and the remaining [removed: 61] [added: 70] locations provide sales, service and administrative support functions.

The following table summarizes the size, location and usage of our principal properties as of December 31, [removed: 2013.][added: 2014 (amounts in thousands of square feet).]

| [removed: Segment] | [removed: Region] | Office | [removed: |] Office & Manufacturing | |

| [removed: Leased] [added: Segment] | [added: Region] | Leased | [removed: Owned |] [added: Leased] | [added: Owned] |

| Industrial Technology | | | | | [removed: |]

| | [removed: US] [added: U.S.] | 57 | [removed: |] 264 | 478 |

| | Canada | 36 | [removed: |] \- | \- |

| | Europe | [removed: 92 |] [added: 98] | [removed: 94] [added: 145] | 167 |

| | Asia | 23 | [removed: |] \- | \- |

| | Mexico | \- | [removed: |] 60 | \- |

| Energy Systems & Controls | | | | | [removed: |]

| | Canada | \- | [removed: |] 56 | \- |

| | Europe | [removed: 43 |] [added: 51] | 20 | 128 |

| | Asia | [removed: 14 |] [added: 10] | 61 | 33 |

| Medical & Scientific Imaging | | | | | [removed: |]

| | Canada | [removed: \- |] [added: 11] | [removed: 108] [added: \-] | \- |

| | Europe | [removed: 25 |] [added: 30] | 28 | \- |

| | Asia | [removed: 27 |] [added: 47] | \- | \- |

| RF Technology | | | | | [removed: |]

| | Canada | [removed: 11 | |] \- | [added: 102 |] \- |

| | Europe | 9 | [removed: |] 7 | 16 |

| --- | --- |

| --- | --- | --- | --- | --- |

| | U.S. | 56 | 355 | \- |

| | U.S. | 218 | 262 | 127 |

| | Mexico | \- | 44 | \- |

| | U.S. | 787 | 116 | \- |

| --- | --- | --- | --- | --- | --- |

| | | (amounts in thousands of square feet) | | | |

| | US | 51 | | 353 | \- |

| | US | 224 | | 234 | 127 |

| | US | 622 | | 94 | \- |

The table below sets forth the range of high and low sales prices for our common stock as reported by the NYSE as well as cash dividends declared during each of our [removed: 2013] [added: 2014] and [removed: 2012] [added: 2013] quarters.

| | | [added: |] High | [added: | | |] Low | [added: | | |] Cash Dividends Declared | [added: | |]

| 2013 | 4th Quarter | [added: |] $ [added: |] 138.68 | [added: | |] $ [added: |] 123.57 | [added: | |] $ [added: |] 0.200 | [added: |]

| | 3rd Quarter | [added: | |] 135.01 | [added: | | |] 123.15 | [added: | | |] 0.165 | [added: |]

| | 2nd Quarter | [added: | |] 126.33 | [added: | | |] 118.12 | [added: | | |] 0.165 | [added: |]

| | 1st Quarter | [added: | |] 127.31 | [added: | | |] 114.14 | [added: | | |] 0.165 | [added: |]

Based on information available to us and our transfer agent, we believe that as of February [removed: 14, 2014] [added: 13, 2015] there were [removed: 172] [added: 161] record holders of our common stock.

In December [removed: 2013,] [added: 2014,] our Board of Directors increased the quarterly dividend paid January [removed: 24, 2014] [added: 23, 2015] to [removed: $0.20] [added: $0.25] per share from [removed: $0.165] [added: $0.20] per share, an increase of [removed: 21%.][added: 25%.]

Recent Sales of Unregistered Securities - In [removed: 2013,] [added: 2014,] there were no sales of unregistered securities.

Performance Graph - This performance graph shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act") or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any of our filings under the Securities Act of 1933, as amended, or [added: under] the Exchange Act.

The following graph compares, for the five year period ended December 31, [removed: 2013,] [added: 2014,] the cumulative total stockholder return for our common stock, the Standard and Poor's 500 Stock Index (the "S&P 500") and the Standard and Poor's 500 Industrials Index (the "S&P 500 Industrials").

Measurement points are the last trading day of each of our fiscal years ended December 31, [removed: 2008,] 2009, 2010, 2011, [removed: 2012] [added: 2012, 2013] and [removed: 2013.][added: 2014.]

The graph assumes that $100 was invested on December 31, [removed: 2008] [added: 2009] in our common stock, the S&P 500 and the S&P 500 Industrials and assumes reinvestment of any dividends.

[removed: ][added: ]

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| 2014 | 4th Quarter | | $ | 160.48 | | | $ | 138.63 | | | $ | 0.25 | |

| | 3rd Quarter | | | 151.21 | | | | 142.50 | | | | 0.20 | |

| | 2nd Quarter | | | 148.94 | | | | 128.99 | | | | 0.20 | |

| | 1st Quarter | | | 141.92 | | | | 131.80 | | | | 0.20 | |

| | | | | | | | | | | | | | |

| | 12/31/09 | | 12/31/10 | | 12/31/11 | | 12/31/12 | | 12/31/13 | | 12/31/14 |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Roper Industries, Inc. | 100.00 | | 146.90 | | 167.89 | | 217.01 | | 271.02 | | 307.29 |

| S&P 500 | 100.00 | | 115.06 | | 117.49 | | 136.30 | | 180.44 | | 205.14 |

| S&P 500 Industrials | 100.00 | | 126.73 | | 125.98 | | 145.32 | | 204.43 | | 224.52 |

| --- | --- | --- | --- | --- |

| | | | | |

| 2012 | 4th Quarter | $ 113.14 | $ 106.31 | $ 0.1650 |

| | 3rd Quarter | 111.08 | 93.73 | 0.1375 |

| | 2nd Quarter | 102.99 | 95.24 | 0.1375 |

| | 1st Quarter | 100.71 | 88.02 | 0.1375 |

| | 12/31/08 | 12/31/09 | 12/31/10 | 12/31/11 | 12/31/12 | 12/31/13 |

| --- | --- | --- | --- | --- | --- | --- |

| Roper Industries, Inc. | 100.00 | 121.54 | 178.54 | 204.06 | 263.76 | 329.40 |

| S&P 500 | 100.00 | 126.46 | 145.51 | 148.59 | 172.37 | 228.19 |

| S&P 500 Industrials | 100.00 | 120.93 | 153.26 | 152.35 | 175.73 | 247.22 |

| | | As of and for the Years ended December 31, | | | | | | | | | | | | | | | [added: | | | |]

| | | [removed: 2013(1)] [added: 2014(1)] | | | [removed: 2012(2)] | [added: 2013(2)] | | [removed: 2011(3)] | | [added: 2012(3)] | [removed: 2010(4)] | | | [removed: 2009(5)] [added: 2011(4)] | | | [added: | 2010(5) | | |]

| Operations data: | | | | | | | | | | | | | | | | | [added: | | | |]

| Net sales | | $ | [removed: 3,238,128] [added: 3,549,494] | | [added: |] $ | [removed: 2,993,489] [added: 3,238,128] | | [added: |] $ | [removed: 2,797,089] [added: 2,993,489] | | [added: |] $ | [removed: 2,386,112] [added: 2,797,089] | | [added: |] $ | [removed: 2,049,668] [added: 2,386,112] | |

| Gross profit | | | [added: 2,101,899 | | | |] 1,882,928 | | | [removed: 1,671,717] | [added: 1,671,717] | | [removed: 1,515,564] | | [added: 1,515,564] | [removed: 1,275,126] | | | [removed: 1,043,138] [added: 1,275,126] | |

| Income from operations | | | [added: 999,473 | | | |] 842,361 | | | [removed: 757,587] | [added: 757,587] | | [removed: 660,539] | | [added: 660,539] | [removed: 514,294] | | | [removed: 395,396] [added: 514,294] | |

| Net earnings | | | [added: 646,033 | | | |] 538,293 | | | [removed: 483,360] | [added: 483,360] | | [removed: 427,247] | | [added: 427,247] | [removed: 322,580] | | | [removed: 239,481] [added: 322,580] | |

| Per share data: | | | | | | | | | | | | | | | | | [added: | | | |]

| Basic earnings per share | | $ | [removed: 5.43] [added: 6.47] | | [added: |] $ | [removed: 4.95] [added: 5.43] | | [added: |] $ | [removed: 4.45] [added: 4.95] | | [added: |] $ | [removed: 3.42] [added: 4.45] | | [added: |] $ | [removed: 2.64] [added: 3.42] | |

| Diluted earnings per share | | | [added: 6.40 | | | |] 5.37 | | | [removed: 4.86] | [added: 4.86] | | [removed: 4.34] | | [added: 4.34] | [removed: 3.34] | | | [removed: 2.58] [added: 3.34] | |

| Dividends declared [added: per share] | | | [added: 0.8500 | | | |] 0.6950 | | | [removed: 0.5775] | [added: 0.5775] | | [removed: 0.4675] | | [added: 0.4675] | [removed: 0.3950] | | | [removed: 0.3425] [added: 0.3950] | |

| Balance sheet data: | | | | | | | | | | | | | | | | | [added: | | | |]

| Working capital (6) | | $ | [removed: 730,246] [added: 884,158] | | [added: |] $ | [removed: 159,332] [added: 730,246] | | [added: |] $ | [removed: 561,277] [added: 159,332] | | [added: |] $ | [removed: 458,446] [added: 561,277] | | [added: |] $ | [removed: 392,734] [added: 458,446] | |

| Total assets | | | [added: 8,412,934 | | | |] 8,184,981 | | | [removed: 7,071,104] | [added: 7,071,104] | | [removed: 5,319,417] | | [added: 5,319,417] | [removed: 5,069,524] | | | [removed: 4,327,736] [added: 5,069,524] | |

| Long-term debt, less current portion | | | [added: 2,203,031 | | | |] 2,453,836 | | | [removed: 1,503,107] | [added: 1,503,107] | | [removed: 1,015,110] | | [added: 1,015,110] | [removed: 1,247,703] | | | [removed: 1,040,962] [added: 1,247,703] | |

| Stockholders' equity | | | [added: 4,755,360 | | | |] 4,213,050 | | | [removed: 3,687,726] | [added: 3,687,726] | | [removed: 3,195,096] | | [added: 3,195,096] | [removed: 2,750,907] | | | [removed: 2,421,490] [added: 2,750,907] | |

| [removed: (1)] | [added: (2) |] Includes results from the acquisitions of Managed Health Care Associates, Inc. from May 1, 2013 and Advanced Sensors, Ltd. from October 4, 2013. |

| [removed: (2)] | [added: (3) |] Includes results from the acquisition of Sunquest Information Systems, Inc. from August 22, 2012. |

| [removed: (3)] | [added: (4) |] Includes results from the acquisitions of NDI Holding Corp. from June 3, 2011, United Controls Group, Inc. from September 26, 2011 and Trinity Integrated Systems Ltd. from December 1, 2011. |

| [removed: (4)] | [added: (5) |] Includes results from the acquisitions of Heartscape, Inc. from February 22, 2010 and iTradeNetwork, Inc. from July 27, 2010. |

| [added: |] (6) | At December 31, 2012, there were $500 million of senior notes outstanding that matured on August 15, 2013, thus requiring a classification as short-term debt, included in working capital. |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | |

| | (1) | Includes results from the acquisitions of Foodlink Holdings, Inc. from July 2, 2014, Innovative Product Achievements, LLC from August 5, 2014 and Strategic Healthcare Programs Holdings, LLC from August 14, 2014. |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | |

| --- | --- |

| (5) | Includes results from the acquisitions of United Toll Systems, LLC from October 30, 2009 and Verathon, Inc. from December 3, 2009. |

| Report of Independent Registered [added: Certified] Public Accounting Firm (PricewaterhouseCoopers LLP) | [removed: 28] [added: 25] |

| Consolidated Balance Sheets as of December 31, [removed: 2013] [added: 2014] and [removed: 2012] [added: 2013] | [removed: 29] [added: 26] |

| Consolidated Statements of Earnings for the Years ended December 31, [removed: 2013, 2012] [added: 2014, 2013] and [removed: 2011] [added: 2012] | [removed: 30] [added: 27] |

| Consolidated Statements of Comprehensive Income for the Years ended December 31, [removed: 2013, 2012] [added: 2014, 2013] and [removed: 2011] [added: 2012] | [removed: 31] [added: 28] |

| Consolidated Statements of Stockholders' Equity for the Years ended December 31, [removed: 2013, 2012] [added: 2014, 2013] and [removed: 2011] [added: 2012] | [removed: 32] [added: 29] |

| Consolidated Statements of Cash Flows for the Years ended December 31, [removed: 2013, 2012] [added: 2014, 2013] and [removed: 2011] [added: 2012] | [removed: 33] [added: 30] |

| Notes to Consolidated Financial Statements | [removed: 34] [added: 31] |

| Schedule II - Consolidated Valuation and Qualifying Accounts for the Years ended December 31, [removed: 2013, 2012] [added: 2014, 2013] and [removed: 2011] [added: 2012] | [removed: 54] [added: 47] |

Report of Independent [added: Registered] Certified Public [removed: Accountants][added: Accounting Firm]

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of earnings, of [removed: stockholders' equity and] comprehensive [removed: earnings] [added: income, of stockholders' equity,] and of cash flows, present fairly, in all material respects, the financial position of Roper Industries, Inc. and its subsidiaries at December 31, [removed: 2013] [added: 2014] and December 31, [removed: 2012,] [added: 2013,] and the results of their operations and their cash flows for each of the three years in the period ended December 31, [removed: 2013] [added: 2014] in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2013,] [added: 2014,] based on criteria established in Internal Control - Integrated Framework [removed: 1992] [added: 2013] issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

As described in Management's Report on Internal Control over Financial Reporting, management has excluded acquisitions completed during [removed: 2013] [added: 2014] from its assessment of internal control over financial reporting as of December 31, [removed: 2013] [added: 2014] because they were acquired by the Company in purchase business combinations during [removed: 2013.][added: 2014.]

We have also excluded acquisitions completed during [removed: 2013] [added: 2014] from our audit of internal control over financial reporting.

These acquisitions are wholly-owned subsidiaries whose total assets and total revenues represent [removed: 1.3%,] [added: 0.27%,] and [removed: 2.3%,] [added: 0.67%,] respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, [removed: 2013.][added: 2014.]

December 31, [removed: 2013] [added: 2014] and [removed: 2012][added: 2013]

| | | [added: 2014 | | | |] 2013 | | | [added: |] 2012 | | |

| Assets | | | | | | | | [added: |]

| Cash and cash [removed: equivalents] [added: equivalents, beginning of year] | | [removed: $] | 459,720 | | [removed: $] | [added: |] 370,590 | | [added: | | 338,101 | |]

| Accounts receivable, net | | | [removed: 519,075] [added: 511,538] | | | [removed: 526,408] | [added: 519,075] | [added: |]

| Inventories, net | | | [removed: 204,923] [added: 193,766] | | | [removed: 190,867] | [added: 204,923] | [added: |]

| Deferred taxes | | | [removed: 64,464] [added: 54,199] | | | [removed: 41,992] | [added: 64,464] | [added: |]

| Unbilled receivables | | | [removed: 86,945] [added: 96,409] | | | [removed: 72,193] | [added: 86,945] | [added: |]

| Other current assets | | | [removed: 38,210] [added: 45,763] | | | [removed: 43,492] | [added: 38,210] | [added: |]

| Total current assets | | | [removed: 1,373,337] [added: 1,512,105] | | | [removed: 1,245,542] | [added: 1,373,337] | [added: |]

| Property, plant and equipment, net | | | [removed: 117,310] [added: 110,876] | | | [removed: 110,397] | [added: 117,310] | [added: |]

| Goodwill | | | [removed: 4,549,998] [added: 4,710,691] | | | [removed: 3,868,857] | [added: 4,549,998] | [added: |]

| Other intangible assets, net | | | [removed: 2,039,136] [added: 1,978,729] | | | [removed: 1,698,867] | [added: 2,039,136] | [added: |]

| Deferred taxes | | | [removed: 28,773] [added: 27,496] | | | [removed: 78,644] | [added: 28,773] | [added: |]

| Other assets | | | [removed: 76,427] [added: 73,037] | | | [removed: 68,797] | [added: 76,427] | [added: |]

| Total assets | | $ | [removed: 8,184,981] [added: 8,412,934] | | [added: |] $ | [removed: 7,071,104] [added: 8,184,981] | |

| Liabilities and Stockholders' Equity | | | | | | | | [added: |]

| Accounts payable | | $ | [removed: 150,313] [added: 143,847] | | [added: |] $ | [removed: 138,340] [added: 150,313] | |

| Accrued compensation | | | [removed: 107,953] [added: 117,374] | | | [removed: 110,724] | [added: 107,953] | [added: |]

| Deferred revenue | | | [removed: 209,332] [added: 190,953] | | | [removed: 185,912] | [added: 209,332] | [added: |]

| Other accrued liabilities | | | [removed: 153,712] [added: 160,738] | | | [removed: 128,351] | [added: 153,712] | [added: |]

| Income taxes payable | | | [removed: 4,275] [added: \-] | | | [removed: \-] | [added: 4,275] | [added: |]

| Deferred taxes | | | [removed: 6,490] [added: 3,943] | | | [removed: 3,868] | [added: 6,490] | [added: |]

| Current portion of long-term debt, net | | | [removed: 11,016] [added: 11,092] | | | [removed: 519,015] | [added: 11,016] | [added: |]

| Total current liabilities | | | [removed: 643,091] [added: 627,947] | | | [removed: 1,086,210] | [added: 643,091] | [added: |]

| Long-term debt, net of current portion | | | [removed: 2,453,836] [added: 2,203,031] | | | [removed: 1,503,107] | [added: 2,453,836] | [added: |]

| | |

February 20, 2015

| Cash and cash equivalents | | $ | 610,430 | | | $ | 459,720 | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | | | | | |

| | | | | | | | | | | | | |

| | | | | | | | | | | | | |

| Net earnings | | $ | 646,033 | | | $ | 538,293 | | | $ | 483,360 | |

| | | | | | | | | | | | | |

| | | | | | | | | | | | | |

| | | | | | | | | | | | | |

Years ended December 31, 2014, 2013 and 2012

| | | Common Stock | | | | | | | | | | | | | | | | Accumulated other | | | | | | | | Total | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Net earnings | | | \- | | | | \- | | | | \- | | | | 646,033 | | | | \- | | | | \- | | | | 646,033 | |

| Stock option exercises | | | 581 | | | | 6 | | | | 32,517 | | | | \- | | | | \- | | | | \- | | | | 32,523 | |

| Treasury stock sold | | | 20 | | | | \- | | | | 2,549 | | | | \- | | | | \- | | | | 202 | | | | 2,751 | |

| Restricted stock activity | | | 213 | | | | 2 | | | | (22,064 | ) | | | \- | | | | \- | | | | \- | | | | (22,062 | ) |

| Balances at December 31, 2014 | | | 100,126 | | | $ | 1,021 | | | $ | 1,325,338 | | | $ | 3,520,201 | | | $ | (71,927 | ) | | $ | (19,273 | ) | | $ | 4,755,360 | |

Years ended December 31, 2014, 2013 and 2012

| | | Years ended December 31, | | | | | | | | | | |

| Net earnings | | $ | 646,033 | | | $ | 538,293 | | | $ | 483,360 | |

| | | | | | | | | | | | | |

| | | | | | | | | | | | | |

| | | | | | | | | | | | | |

Years ended December 31, 2014, 2013 and 2012

Nature of the Business - Roper is a diversified technology company.

The Company operates businesses that design and develop software (both license and software-as-a-service) and engineered products and solutions for a variety of niche end markets; including healthcare, transportation, food, energy, water, education and academic research.

| | Years ended December 31, | | | | | | | |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- | --- |

| --- | --- |

February 21, 2014

| --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | |

| Shares | | Amount | | | | | | | | | | | | | | | | | | |

| Balances at December 31, 2010 | 95,088 | | $ | 971 | | $ | 1,045,286 | | $ | 1,680,849 | | $ | 43,978 | | $ | (20,177 | ) | $ | 2,750,907 | |

| Net earnings | \- | | | \- | | | \- | | | 427,247 | | | \- | | | \- | | | 427,247 | |

| Stock option exercises | 838 | | | 8 | | | 28,159 | | | \- | | | \- | | | \- | | | 28,167 | |

| Treasury stock sold | 29 | | | \- | | | 1,821 | | | \- | | | \- | | | 283 | | | 2,104 | |

| Restricted stock activity | 268 | | | 3 | | | (6,008 | ) | | \- | | | \- | | | \- | | | (6,005 | ) |

| Cash and cash equivalents, beginning of year | | | 370,590 | | | 338,101 | | | 270,394 | |

Nature of the Business - Roper is a diversified growth company that designs, manufactures and distributes medical and scientific imaging products and software, radio frequency ("RF") products, services and application software, industrial technology products and energy systems and controls products and solutions.

Roper markets these products and services to a broad range of markets, including radio frequency applications, medical, water, energy, research, education, software-as-a-service ("SaaS")-based information networks, security and other niche markets.

| --- | --- | --- | --- | --- | --- | --- |

However, the fair value of one of the reporting units in the RF Technology segment was less than 5% above the carrying value at December 31, 2013 using the discounted cash flow methodology.

The Company believes the market value of this unit to be significantly in excess of its carrying value based upon observed market data.

In July 2012, the FASB issued an amendment to accounting rules related to the testing of indefinite-lived intangibles.

The new accounting rules permit an entity to first assess qualitative factors to determine if it is more likely than not that an indefinite-lived asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test prescribed under current accounting rules.

Roper adopted this guidance on January 1, 2013.

The allocation of the purchase price is considered preliminary pending tax-related adjustments.

The allocation of the purchase price is considered preliminary pending final intangible asset valuations and tax-related adjustments.

| Goodwill | | | 987,881 | |

The Company recorded $91 million in other identifiable intangibles and $149 million in goodwill in connection with these acquisitions.

On June 3, 2011, Roper acquired 100% of the shares of NDI Holding Corp. ("Northern Digital"), a provider of 3-D measurement technology for medical applications in computer-assisted surgery and computer-assisted therapy.

Roper acquired Northern Digital as an addition to its medical platform, and it is reported in the Medical and Scientific Imaging segment.

On September 26, 2011, Roper acquired 100% of the shares of United Controls Group, Inc. ("UCG"), a manufacturer of control systems in the oil and gas industry.

UCG was acquired as an addition to our existing process control systems businesses, and is reported in the Energy Systems and Controls segment.

On December 1, 2011, Roper acquired 100% of the shares of Trinity Integrated Systems Ltd. ("Trinity"), a specialist provider of requirements capture, safety lifecycle management and engineering software tools, and safety and control system solutions to the oil and gas, industrial process and control markets.

Trinity was acquired as an addition to our existing process control systems businesses, and is reported in the Energy Systems and Controls segment.

| | | $ | 204,923 | | $ | 190,867 | |

| | | | 394,341 | | | 369,921 | |

| Balances at December 31, 2011 | | $ | 419,053 | | $ | 393,967 | | $ | 768,228 | | $ | 1,285,178 | | $ | 2,866,426 | |

| Goodwill acquired | | | \- | | | 8,670 | | | 999,030 | | | \- | | | 1,007,700 | |

| Currency translation adjustments | | | 2,702 | | | 1,420 | | | 5,144 | | | 3,395 | | | 12,661 | |

| Goodwill acquired | | | \- | | | 27,944 | | | 680,732 | | | \- | | | 708,676 | |

Goodwill acquired during the years ended December 31, 2013 and 2012 was due primarily to the acquisitions of MHA and Sunquest, respectively.

| Customer related intangibles | | $ | 1,509,339 | | $ | (379,535 | ) | $ | 1,129,804 | |

| Unpatented technology | | | 198,609 | | | (97,487 | ) | | 101,122 | |

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control-Integrated Framework [removed: (1992)] [added: (2013)] issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on our evaluation under the framework in Internal Control-Integrated Framework, our management concluded that our internal control over financial reporting was effective as of December 31, [removed: 2013.][added: 2014.]

Our internal control over financial reporting as of December 31, [removed: 2013] [added: 2014] has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which is included herein.

Our management excluded acquisitions completed during [removed: 2013] [added: 2014] from its assessment of internal control over financial reporting as of December 31, [removed: 2013.][added: 2014.]

These acquisitions are wholly-owned subsidiaries whose excluded aggregate assets represent [removed: 1.3%,] [added: 0.3%,] and whose aggregate total revenues represent [removed: 2.3%,] [added: 0.7%,] of the related consolidated financial statement amounts as of and for the year ended December 31, [removed: 2013.][added: 2014.]

Based on this evaluation, we have concluded that our disclosure controls and procedures are effective as of December 31, [removed: 2013.][added: 2014.]

There was no change in our internal control over financial reporting that occurred during the fourth quarter of [removed: 2013] [added: 2014] that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

| --- | --- |

There were no disclosures of any information required to be filed on Form 8-K during the fourth quarter of [removed: 2013] [added: 2014] that were not filed.

Except as otherwise indicated, the following information required by the Instructions to Form 10-K is incorporated herein by reference from the sections of the Roper Proxy Statement for the annual meeting of shareholders to be held on May [removed: 21, 2014 ("2014] [added: 29, 2015 ("2015] Proxy Statement"), as specified below:

We incorporate the information required by this item by reference to our [removed: 2014] [added: 2015] Proxy Statement.

We incorporate the information required by this item by reference to our [removed: 2014] [added: 2015] Proxy Statement.

Other than the information set forth below, we incorporate the information required by this item by reference to our [removed: 2014] [added: 2015] Proxy Statement.

The following table provides information as of December 31, [removed: 2013] [added: 2014] regarding compensation plans (including individual compensation arrangements) under which our equity securities are authorized for issuance.

| Plan Category | [added: |] (a) Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | [added: | | |] (b) Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | [added: | | |] (c) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) | [added: | |]

| Equity Compensation Plans Approved by Shareholders (1) | [removed: 3,562,286] | [removed: $ 78.75] | [removed: 5,714,062] | [added: | | | | | | | | |]

| Equity Compensation Plans Not Approved by Shareholders | [added: | |] \- | [added: | | |] \- | [added: | | |] \- | [added: |]

| [added: |] (1) | Consists of the Amended and Restated 2000 Stock Incentive Plan (no additional equity awards may be granted under this plan) and the Amended and Restated 2006 Incentive Plan. |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Stock options | | | 2,981,111 | | | $ | 90.48 | | | | | |

| Restricted stock awards(2) | | | 542,555 | | | | \- | | | | | |

| Subtotal | | | 3,523,666 | | | | | | | | 4,494,756 | |

| Total | | | 3,523,666 | | | $ | \- | | | | 4,494,756 | |

| --- | --- | --- |

| | (2) | The weighted-average exercise price is not applicable to restricted stock awards. |

| --- | --- | --- |

| --- | --- |

| --- | --- | --- | --- |

| Total | 3,562,286 | $ 78.75 | 5,714,062 |

We incorporate the information required by this item by reference to our [removed: 2014] [added: 2015] Proxy Statement.

We incorporate the information required by this item by reference to our [removed: 2014] [added: 2015] Proxy Statement.

Consolidated Balance Sheets as of December 31, [removed: 2013] [added: 2014] and [removed: 2012][added: 2013]

Consolidated Statements of Earnings for the [removed: years] [added: Years] ended December 31, [removed: 2013, 2012] [added: 2014, 2013] and [removed: 2011][added: 2012]

Consolidated Statements of Stockholders' Equity [removed: and Comprehensive Earnings] for the [removed: years] [added: Years] ended December 31, [removed: 2013, 2012] [added: 2014, 2013] and [removed: 2011][added: 2012]

Consolidated Statements of Cash Flows for the [removed: years] [added: Years] ended December 31, [removed: 2013, 2012] [added: 2014, 2013] and [removed: 2011][added: 2012]

| | (2) | Consolidated Valuation and Qualifying Accounts for the [removed: years] [added: Years] ended December 31, [removed: 2013, 2012] [added: 2014, 2013] and [removed: 2011] [added: 2012] |

| | (b) | Incorporated herein by reference to Exhibit 3.1 to the Roper Industries, Inc. [removed: Quarterly Report on Form 10-Q filed March 17, 2003 (file no. 1-12273), as amended by the Certificate Eliminating References to the Company's Series A Preferred Stock from the Certificate of Incorporation of Roper Industries, Inc. dated November 16, 2006, incorporated herein by reference to Exhibit 3.1 to the Roper Industries, Inc. Current] [added: Annual] Report on Form [removed: 8-K] [added: 10-K/A] filed [removed: November 17, 2006] [added: April 28, 2014] (file no. 1-12273). |

| By: | /S/ BRIAN D. JELLISON | [added: |] February [removed: 21, 2014] [added: 20, 2015] |

| | Brian D. Jellison, President and Chief Executive Officer | | [added: |]

| Brian D. Jellison | | Chairman of the Board of Directors | February [removed: 21, 2014] [added: 20, 2015] |

| John Humphrey | | (Principal Financial Officer) | February [removed: 21, 2014] [added: 20, 2015] |

| Paul J. Soni | | (Principal Accounting Officer) | February [removed: 21, 2014] [added: 20, 2015] |

| David W. Devonshire | | Director | February [removed: 21, 2014] [added: 20, 2015] |

| John F. Fort, III | | Director | February [removed: 21, 2014] [added: 20, 2015] |

| Robert D. Johnson | | Director | February [removed: 21, 2014] [added: 20, 2015] |

| Robert E. Knowling | | Director | February [removed: 21, 2014] [added: 20, 2015] |

| Wilbur J. Prezzano | | Director | February [removed: 21, 2014] [added: 20, 2015] |

| Richard F. Wallman | | Director | February [removed: 21, 2014] [added: 20, 2015] |

| Christopher Wright | | Director | February [removed: 21, 2014] [added: 20, 2015] |

Consolidated Statements of Comprehensive Income for the Years ended December 31, 2014, 2013 and 2012

| --- | --- | --- | --- |