Roper Technologies (ROP) 10-K risk factor changes: FY2017 vs FY2016

As of December 31, [removed: 2016,] [added: 2017,] we had [removed: $6.2] [added: $5.2] billion in total consolidated indebtedness.

In addition, we had [removed: $535 million] [added: $1.2 billion] undrawn availability under our senior unsecured credit facility.

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

| [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; [removed: and] |

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

Sales by our operating companies whose functional currency is not the U.S. dollar represented [added: 17% and] 20% of our total net [removed: sales] [added: revenues] for [removed: each of] the years ended December 31, [removed: 2016] [added: 2017] and [removed: 2015.][added: 2016, respectively.]

Unfavorable changes in exchange rates between the U.S. dollar and those currencies could significantly reduce our reported [removed: sales] [added: revenues] and earnings.

Sales to customers outside the U.S. by our businesses located in the U.S. account for a significant portion of our net [removed: sales.][added: revenues.]

These sales accounted for [removed: 12%] [added: 11%] of our net [removed: sales] [added: revenues] for the year ended December 31, [removed: 2016] [added: 2017] and [removed: 13%] [added: 12%] for the year ended December 31, [removed: 2015.][added: 2016.]

| [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 countries; |

| [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: 2016, 21%] [added: 2017, 20%] of our net [removed: sales] [added: revenues] and [removed: 13%] [added: 18%] 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 emerging markets; |

| [removed: | ●] [added: •] | oil price [removed: shocks;] [added: volatility;] |

| [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: •] | [added: differing and] unexpected changes in regulatory requirements. |

The loss or reduction of any significant contracts with any of these customers could [removed: materially] reduce our [removed: revenue] [added: revenues] and cash flows.

These laws and regulations can result in the imposition of substantial fines and sanctions for violations and [removed: could] [added: could, in certain instances,] require the installation of pollution control equipment or operational changes to limit pollution emissions and/or decrease the likelihood of accidental hazardous substance releases.

We use and generate hazardous substances and wastes in [added: some of] our operations and, as a result, could be subject to potentially material liabilities relating to the investigation and clean-up of contaminated properties and to claims alleging personal injury.

In addition, new laws and regulations, stricter enforcement of existing laws and regulations, the discovery of previously unknown contamination or the imposition of new clean-up requirements could require us to incur costs or become [removed: the basis for new or increased liabilities that could have a material adverse effect on our business, financial condition and results of operations.]

Our goodwill and intangible assets are [removed: valued at an] [added: a significant] amount [removed: that is high relative to] [added: of] our total assets, and [removed: a] [added: any] write-off of our intangible assets would negatively affect our results of [removed: operations and total capitalization.][added: operations.]

At December 31, [removed: 2016,] [added: 2017,] goodwill totaled [removed: $8.6] [added: $8.8] billion compared to [removed: $5.8] [added: $6.9] billion of stockholders' equity, and represented [removed: 60%] [added: 62%] of our total assets of $14.3 billion.

Any determination requiring the write-off of a significant portion of goodwill or unamortized intangible assets would negatively affect our results of [removed: operations and total capitalization,] [added: operations,] the effect of which could be material.

The future success of our business will depend, in part, on our ability to design and manufacture new competitive products and to enhance existing products so that [added: we maintain] our [removed: products can be sold with high margins.][added: margin profile.]

Actions to enforce these rights may result in substantial costs and diversion of [removed: resources] [added: resources,] and we make no assurances that any such actions will be successful.

Computer viruses, [removed: cyberattacks,] [added: cyber-attacks,] other external hazards and human error could result in the misappropriation of assets or sensitive information, corruption of data or operational disruption.

If sustained or repeated, such a business interruption, system failure, service denial or data loss and damage could result in a deterioration of our ability to [removed: write and process business, provide customer service or] perform [removed: other] necessary business functions.

In addition, cyber-attacks and similar acts could lead to interruptions and delays in customer processing or a loss or breach of [removed: a customer's] [added: customers'] data.

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The occurrence of any of these events could materially harm our business.

With the types of licensing vehicles we use to deliver our products to market, including subscription and on-demand pricing for our software and services, the recognition of revenue for the products and services we sell could be delayed from one period to another.

As we continue to vary the ways in which we deliver our products to the market, including expanded use of subscription, term and SaaS offerings, we may be required under existing accounting rules to defer the recognition of revenue from one period to another.

The deferral of perpetual licenses revenue may result in significant timing differences between the completion of a sale and the actual recognition of the revenue related to that sale.

As a result, the revenue we recognize in a particular period may not be reflective of our actual success in selling our products and solutions in the market.

Offering our products on a SaaS basis presents execution risks.

We offer a number of our products in a SaaS-based environment, and we expect to expand those offerings in the future.

As more of our solutions are delivered as SaaS-based solutions, it is uncertain whether our strategies will generate the revenue required to be successful.

Any significant costs we incur may reduce the operating margins we have previously achieved.

Whether we are successful in this new business model depends on our execution in a number of areas, including ensuring that our SaaS-based offerings meet the performance, reliability and cost expectations of our customers and maintain the security of their data.

If we are unable to execute on this strategy, our revenue or financial results may be materially adversely affected.

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 [removed: markets; including healthcare, transportation, commercial construction, food, energy, water, education and academic research.][added: markets.]

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: 2016] [added: 2017] included in this Annual Report.

Our most significant accounting uncertainties are encountered in the areas of accounts receivable collectibility, inventory valuation, future warranty obligations, revenue recognition (percentage-of-completion), income taxes and goodwill and indefinite-lived [removed: asset] [added: impairment] analyses.

At December 31, [removed: 2016,] [added: 2017,] our allowance for doubtful accounts receivable was [removed: $12.2] [added: $10.3] million and our allowance for sales returns and sales credits was [removed: $2.3] [added: $2.4] million, for a total of [added: $12.7 million, or 1.9% of total gross accounts receivable, as compared to a total of] $14.5 million, or 2.3% of total gross accounts [removed: receivable.][added: receivable, at December 31, 2016.]

At December 31, [removed: 2016,] [added: 2017,] inventory reserves for excess and obsolete inventory were [removed: $37.2] [added: $38.1] million, or [removed: 17.0%] [added: 15.7%] of gross inventory cost, as compared to [removed: $34.0] [added: $37.2] million, or [removed: 15.2%] [added: 17.0%] of gross inventory cost, at December 31, [removed: 2015.]

Most of our [removed: sales] [added: product-based revenues] 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 to 24 months.

Our expense for warranty obligations was less than 1% of net [removed: sales] [added: revenues] for each of the years ended December 31, [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014.][added: 2015.]

During the years ended December 31, [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014] [added: 2015] we recognized revenue of [removed: $241] [added: $249] million, [removed: $253] [added: $241] million and [removed: $266] [added: $253] million, respectively, using this method.

At December 31, [removed: 2016, $260] [added: 2017, $253] million of revenue related to unfinished percentage-of-completion contracts had yet to be recognized.

[removed: During 2016, our effective income tax rate was 30.0%, which was 60 basis points lower than the 2015 rate of 30.6%,] The decrease was due to the recognition of $15.3 million in excess tax benefits in the current year in accordance with an [removed: accounting standards update] [added: ASU] related to stock compensation adopted in the first quarter of 2016 (see Note 1 of the Notes to Consolidated Financial [removed: Statements),] [added: Statements included in this Annual Report),] as well as the non-recurrence of the 2015 taxable gain on the divestiture of Abel Pumps which was partially offset by discrete tax benefits from settlements of tax matters in 2015.

We expect the effective tax rate for [removed: 2017] [added: 2018] to be [removed: approximately 30%.][added: between 21% and 23%.]

Goodwill, which is not amortized, is tested for impairment on an annual basis in conjunction with our annual forecast process during the fourth [removed: quarter,] [added: 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).

If we elect to perform a qualitative assessment and determine that an impairment is more likely than not, we are then required to perform the [removed: two-step] quantitative impairment test; otherwise, no further analysis is required.

We also may elect not to perform the qualitative assessment and, instead, proceed directly to the [removed: two-step] quantitative impairment test.

The [removed: first step] [added: quantitative assessment] utilizes both an income approach (discounted cash flows) and a market approach consisting of a comparable company earnings multiples methodology to estimate the fair value of a reporting unit.

We have 33 reporting units with individual goodwill amounts ranging from zero to [removed: $2.2] [added: $2.3] billion.

In [removed: 2016,] [added: 2017,] we performed our annual impairment test in the fourth quarter for all reporting [removed: units, excluding those acquired in the fourth quarter of 2016.][added: units.]

[removed: We determined that] impairment of goodwill was not likely in [removed: 28] [added: 31] of our reporting units and thus we were not required to perform a quantitative analysis for these reporting units.

For the remaining [removed: five] [added: two] reporting [removed: units we] [added: units, the Company] performed [removed: our] [added: its] quantitative analysis and concluded that the fair value of each of these [removed: five] [added: two] reporting units was substantially in excess of its carrying [removed: value] [added: value,] with no impairment indicated as of [removed: December 31, 2016.][added: October 1, 2017.]

Recently acquired reporting units generally represent [removed: the highest] [added: a higher inherent] risk of impairment, which typically decreases as the businesses are integrated into our enterprise.

We first qualitatively assess whether the existence of events or circumstances leads to a determination that it is more likely than not that the estimated fair value of [removed: a reporting unit] [added: the indefinite-lived trade name] is less than its carrying amount.

If necessary, we conduct a quantitative review using the relief-from-royalty method, which we believe to be an acceptable methodology due to its common use by [removed: valuations] [added: valuation] specialists in determining the fair value of intangible assets.

This methodology assumes that, in lieu of ownership, a [removed: third party] [added: third-party] would be willing to pay a royalty in order to exploit the related benefits of these assets.

The fair value of each trade name is determined by applying a royalty rate to a projection of net [removed: sales] [added: revenues] discounted using a risk-adjusted rate of capital.

Each royalty rate is determined based on the profitability of the [removed: reporting unit] [added: trade name] to which it relates and observed market royalty rates.

[removed: Sales] [added: Revenue] growth rates are determined after considering current and future economic conditions, recent sales trends, discussions with customers, planned timing of new product launches or other variables.

[removed: Reporting units] [added: Trade names] resulting from recent acquisitions generally represent the highest risk of impairment, which typically decreases as the businesses are integrated into our enterprise and positioned for improved future sales growth.

No impairment resulted from the annual reviews performed in [removed: 2016.][added: 2017.]

Dollar amounts are in thousands and percentages are of net [removed: sales.][added: revenues.]

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

| | [removed: | 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | |

| Medical & Scientific [removed: Imaging(1) |] [added: Imaging (2)] | [removed: $] [added: 1,410,349] | [removed: 1,362,813] | | | [removed: $] [added: 1,362,813] | [removed: 1,215,318] | | | [removed: $] [added: 1,215,318] | [removed: 1,080,309] | |

| RF [removed: Technology(2) |] [added: Technology (1)] | [added: $] | [removed: 1,210,264] [added: 1,862,126] | | | [added: $] | [removed: 1,033,951] [added: 1,210,264] | | | [added: $] | [removed: 950,227] [added: 1,033,951] | |

| Industrial [removed: Technology(3) |] [added: Technology (3)] | [added: 783,707] | [removed: 706,625] | | | [added: 706,625] | [removed: 745,381] | | | [added: 745,381] | [removed: 827,145] | |

| Energy Systems & Controls [removed: |] [added: (4)] | [added: 551,289] | [removed: 510,223] | | | [added: 510,223] | [removed: 587,745] | | | [added: 587,745] | [removed: 691,813] | |

| Total | [removed: |] $ | [removed: 3,789,925] [added: 4,607,471] | | | $ | [removed: 3,582,395] [added: 3,789,925] | | | $ | [removed: 3,549,494] [added: 3,582,395] | |

| Gross margin: | | | | | | | | | | | | [removed: |]

| Medical & Scientific Imaging | [removed: |] [added: 72.0] | [removed: 73.2] | [removed: %] | | [added: 73.2] | [removed: 74.0] | [removed: %] | | [added: 74.0] | [removed: 72.1] | [removed: %] |

| RF Technology | [removed: |] [added: 61.1] | [removed: 56.7] | [added: %] | | [added: 56.7] | [removed: 53.4] | [added: %] | | [added: 53.4] | [removed: 52.8] | [added: %] |

| Industrial Technology | [removed: | |] 50.6 | | | | [removed: 49.8] [added: 50.6] | | | | [removed: 50.5] [added: 49.8] | | [added: |]

2016.

During 2017, our effective income tax rate was 6.1%, as compared to the 2016 rate of 30.0%.

The decrease was due primarily to the recognition of a $215 million net income tax benefit related to the Tax Act as well as increased excess tax benefits related to equity compensation in 2017 as compared to 2016.

If the carrying value exceeds the estimated fair value, a non-cash impairment loss is recognized in the amount of that excess.

We determined that

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| (4) | Includes results from the acquisition of Phase Technology from June 21, 2017. |

Acquisitions accounted for 51% and organic revenues increased by 3%.

Selling, general and administrative ("SG&A") expenses as a percentage of revenues in the year ended December 31, 2017 increased to 35.3%, as compared to 25.9% in the year ended December 31, 2016, due primarily to an increased percentage of revenues from our software businesses, which have a higher SG&A structure, including amortization of acquired intangibles.

The resulting operating margin was 25.7% in 2017 as compared to 30.8% in 2016.

Gross margin decreased to 72.0% for the year ended December 31, 2017 from 73.2% for the year ended December 31, 2016, due primarily to an unfavorable sales mix at both our software and medical products businesses.

SG&A expenses as a percentage of net revenues decreased to 37.5% in the year ended December 31, 2017, as compared to 38.2% in the year ended December 31, 2016, due primarily to operating leverage on higher sales.

The growth in organic revenues was broad-based, due primarily to our fluid handling, water meter technology and materials testing businesses.

Gross margin was consistent at 50.6% for the years ended December 31, 2017 and 2016.

The growth in organic revenues was due primarily to increased sales in pressure sensors and valves businesses serving energy markets as well as businesses serving industrial end markets.

Gross margin increased to 57.4% in the year ended December 31, 2017 as compared to 57.1% in the year ended December 31, 2016 and SG&A expenses as a percentage of net revenues decreased to 30.0% in the year ended December 31, 2017, as compared to 31.7% in the year ended December 31, 2016, both of which were due to operating leverage on higher sales volume.

Corporate expenses increased by $14.3 million to $141.8 million, or 3.1% of revenues, in 2017 as compared to $127.5 million, or 3.4% of revenues, in 2016.

Other income, net, of $5.0 million for the year ended December 31, 2017 was composed primarily of a $9.4 million gain on sale of a product line in our Energy Systems & Controls segment, offset in part by a $1.8 million charge on a minority investment and foreign exchange losses at our non-U.S. based companies.

During 2017, our effective income tax rate was 6.1% as compared to our 2016 rate of 30.0%.

The decrease was due primarily to the recognition of a $215 million net income tax benefit related to the Tax Act as well as increased excess tax benefits related to equity compensation in 2017 as compared to 2016.

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| | 2017 | | | | 2016 | | | | change | |

| RF Technology | $ | 991,382 | | | $ | 991,212 | | | — | % |

| Medical & Scientific Imaging | 467,836 | | | | 423,616 | | | | 10.4 | |

| Industrial Technology | 110,841 | | | | 65,259 | | | | 69.8 | |

| Energy Systems & Controls | 102,293 | | | | 92,309 | | | | 10.8 | |

| Total | $ | 1,672,352 | | | $ | 1,572,396 | | | 6.4 | % |

In 2016, we acquired CliniSys Group Ltd. ("CliniSys"), PCI Medical Inc., GeneInsight Inc., iSqFt Holdings Inc. (d/b/a ConstructConnect) ("ConstructConnect"), UNIConnect LC, and Project Diamond Holdings Corp. (d/b/a Deltek Inc).

The acquisitions both expanded and complemented our existing technologies.

The total allowance at December 31, 2016 was $2.1 million higher than at December 31, 2015.

The allowance will continue to fluctuate as a percentage of sales based on specific identification of allowances needed due to changes in our business, the write-off of uncollectible receivables, and the addition of reserve balances at acquired businesses.

Contracts accounted for under this method are generally not significantly different in profitability from revenues accounted for under other methods.

If the carrying value exceeds the estimated fair value, the goodwill of the reporting unit is potentially impaired and then the second step would be completed to measure the impairment loss by calculating the implied fair value of goodwill by deducting the fair value of all tangible and intangible net assets (including unrecognized intangible assets) of the reporting unit from the fair value of the reporting unit.

If the implied fair value of goodwill is less than the carrying value of goodwill, an impairment loss would be recognized.

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Other income of $58.7 million for the year ended December 31, 2015 was composed primarily of the $70.9 million gain from the divestiture of Abel Pumps (see Note 2 of the Notes to Consolidated Financial Statements included in this Annual Report), offset in part by a $9.5 million impairment charge on a minority investment.

The decrease was due to the recognition of $15.3 million in excess tax benefits in the current year in accordance with an ASU related to stock compensation adopted in the first quarter of 2016 (see Note 1 of the Notes to Consolidated Financial Statements), as well as the non-recurrence of the 2015 taxable gain on the divestiture of Abel Pumps which was partially offset by discrete tax benefits from settlements of tax matters in 2015.

At December 31, 2016, the functional currencies of most of our non-U.S. subsidiaries were weaker, and the Canadian dollar was stronger, against the U.S. dollar compared to currency exchange rates at December 31, 2015.

The net result of these changes led to a pre-tax decrease in the foreign exchange component of comprehensive earnings of $115 million in the year ended December 31, 2016.

Approximately $52 million of this amount related to goodwill and is not expected to directly affect our projected future cash flows.

For the entire year of 2016, operating profit decreased by less than 1% due to fluctuations in non-U.S. currencies.

| Medical & Scientific Imaging | | $ | 1,399,007 | | | $ | 1,235,143 | | | | 13.3 | % |

| RF Technology | | | 1,278,246 | | | | 1,024,999 | | | | 24.7 | |

| Industrial Technology | | | 704,622 | | | | 731,810 | | | | (3.7 | ) |

| Energy Systems & Controls | | | 514,300 | | | | 555,672 | | | | (7.4 | ) |

| Total | | $ | 3,896,175 | | | $ | 3,547,624 | | | | 9.8 | % |

The increase in backlog was due to acquisitions which added 37% and internal growth of 10%.

The increase was the result of contributions from acquisitions of 4%, negative organic growth of 0.3% and a negative foreign exchange impact of 3%.

Selling, general and administrative ("SG&A") expenses as a percentage of net sales were relatively unchanged at 37.7% in the year ended December 31, 2015 as compared to 37.4% in the year ended December 31, 2014.

Organic sales increased by 6%, acquisitions net of the divestiture of the Black Diamond Advanced Technology business added 4% and the negative foreign exchange impact was 1%.

Gross margin was 53.4% in 2015 as compared to 52.8% in the prior year due to leverage on higher sales volume and product mix.

Operating margin was 30.2% in 2015 as compared to 28.5% in 2014.

Organic sales decreased by 4%, the negative foreign exhange impact was 4% and the divestiture of the Abel Pumps business accounted for a negative 2%.

The decrease in organic sales was due primarily to decreased sales in those fluid handling businesses that serve oil and gas markets.

Gross margin decreased to 49.8% for the year ended December 31, 2015 as compared to 50.5% in the year ended December 31, 2014 due to negative leverage on lower sales volume.

SG&A expenses as a percentage of net sales were 21.0%, as compared to 20.5% in the prior year, due primarily to negative leverage on lower sales volume.

Organic sales decreased by 10% due to decreased sales in oil and gas products, including safety systems and valves, and the negative foreign exchange impact was 5%.

Gross margin was relatively unchanged at 58.1% in the year ended December 31, 2015, compared to 58.3% in the year ended December 31, 2014.

SG&A expenses as a percentage of net sales were 30.5% as compared to 28.9% in the prior year due negative leverage on lower sales volume.

Corporate expenses increased by $4.6 million to $102.8 million, or 2.9% of sales, in 2015 as compared to $98.2 million, or 2.8% of sales, in 2014.

During 2015, our effective income tax rate was 30.6%, which was 70 basis points higher than the 2014 rate of 29.9%.

The taxable gain on the divestiture of Abel Pumps led to an increase of 130 basis points, and was offset in part by discrete tax benefits from settlements of tax matters.

At December 31, 2015, the functional currencies of most of our non-U.S. subsidiaries were weaker against the U.S. dollar compared to currency exchange rates at December 31, 2014.

The net result of these changes led to a pre-tax decrease in the foreign exchange component of comprehensive earnings of $146 million in the year ended December 31, 2015.

Approximately $62 million of this amount related to goodwill and is not expected to directly affect our projected future cash flows.

At December 31, [removed: 2016,] [added: 2017,] we had [removed: $4.3] [added: $3.9] billion of fixed rate borrowings with interest rates ranging from [removed: 1.85%] [added: 2.05%] to 6.25%.

At December 31, [removed: 2016,] [added: 2017,] the prevailing market rates for our long-term notes were between [removed: 0.9%] [added: 0.05%] higher and [removed: 2.9%] [added: 3.85%] lower than the fixed rates on our debt instruments.

Our credit facility contains a $2.5 billion variable-rate revolver with [removed: $1.93] [added: $1.27] billion of outstanding borrowings at December 31, [removed: 2016.][added: 2017.]

[removed: Sales] [added: Net revenues recognized] by companies whose functional currency was not the U.S. dollar were [removed: 20%] [added: 17%] of our total [removed: sales] [added: revenues] in [removed: 2016] [added: 2017] and [removed: 61%] [added: 68%] of these [removed: sales] [added: revenues] were [added: recognized] by companies with a European functional currency.

If these currency exchange rates had been 10% different throughout [removed: 2016] [added: 2017] compared to currency exchange rates actually experienced, the impact on our net earnings would have been approximately [removed: 2%.][added: 1%.]

The stock price also influences the computation of potentially dilutive common stock [removed: which includes both stock awards and the premium over the conversion price on senior subordinated convertible notes] to determine diluted earnings per share.

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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 [removed: markets; including healthcare, transportation, commercial construction, food, energy, water, education and academic research.][added: markets.]

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

Diversified End Markets and Geographic Reach [removed: \-] [added: -] We have a global presence, with sales to customers outside the U.S. totaling [removed: $1.2] [added: $1.3] billion in [removed: 2016.][added: 2017.]

Research and Development [removed: \-] [added: -] We conduct applied research and development to improve the quality and performance of our products and to develop new technologies and products.

Our research and development spending was [removed: $195] [added: $281] million in [removed: 2016] [added: 2017] as compared to [removed: $164] [added: $195] million and [removed: $148] [added: $164] million in [removed: 2015] [added: 2016] and [removed: 2014,] [added: 2015,] respectively.

The segments are: [added: RF Technology,] Medical & Scientific Imaging, [removed: RF Technology,] Industrial Technology and Energy Systems & Controls.

For [removed: 2016,] [added: 2017,] this segment had net [removed: sales] [added: revenues] of [removed: $1.36] [added: $1.41] billion, representing [removed: 36.0%] [added: 30.6%] of our total net [removed: sales.][added: revenues.]

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

We design and manufacture a non-invasive instrument for portable ultrasound bladder volume measurement and a video laryngoscope designed to enable rapid intubation [removed: even] in [removed: the most] difficult [removed: settings.][added: situations.]

This segment had [removed: sales] [added: net revenues] of [removed: $1.21] [added: $1.86] billion for the year ended December 31, [removed: 2016,] [added: 2017,] representing [removed: 31.9%] [added: 40.4%] of our total net [removed: sales.][added: revenues.]

Card Systems/Integrated Security Solutions - We provide [added: software,] card systems and integrated security solutions primarily to education and health care markets.

Comprehensive Application Management Software [removed: \-] [added: -] We provide 1) enterprise software and information solutions for government contractors, professional services firms and other project-based businesses, 2) comprehensive management software solutions for law and other professional services firms, including business development, calendar/docket matter management, time and billing and case management and 3) [removed: construction] [added: preconstruction] project management solutions for construction [removed: firms which encompass the end-to-end construction process.][added: industry professionals.]

The [removed: RF Technology] [added: Energy Systems & Controls] segment companies' [removed: product sales] [added: revenues] reflect a combination of standard [removed: products,] [added: products and] large engineered [removed: projects, and multi-year operations and maintenance contracts.][added: projects.]

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

For [removed: 2016,] [added: 2017,] this segment had net [removed: sales] [added: revenues] of [removed: $707] [added: $784] million, representing [removed: 18.6%] [added: 17.0%] of our total net [removed: sales.][added: revenues.]

Water Meter and [removed: AMR] [added: Automatic Meter Reading] Products and Systems - We manufacture and distribute water meter products serving the residential, commercial and industrial water management markets, and several lines of automatic meter reading products and systems serving these markets.

The Industrial Technology segment companies' [removed: sales] [added: revenues] reflect a combination of standard products and specially engineered, application-specific products.

For [removed: 2016,] [added: 2017,] this segment had net [removed: sales] [added: revenues] of [removed: $510] [added: $551] million, representing [removed: 13.5%] [added: 12.0%] of our total net [removed: sales.][added: revenues.]

Supply shortages have not had a material adverse effect on our [removed: sales] [added: revenues] although delays in shipments have occurred following such supply interruptions.

Backlog was [removed: $1.6] [added: $1.7] billion at December 31, [removed: 2016,] [added: 2017,] and [removed: $1.1] [added: $1.6] billion at December 31, [removed: 2015.][added: 2016.]

No customer accounted for 10% or more of net [removed: sales] [added: revenues] for [removed: 2016] [added: 2017] for any of our segments or for our company as a whole.

As of December 31, [removed: 2016,] [added: 2017,] we had [removed: 14,155] [added: 14,236] employees, with [removed: 10,751] [added: 9,425] located in the United States.

We have [removed: 172] [added: 187] employees who are subject to collective bargaining agreements.

Our Corporate Governance Guidelines; the charters of our Audit Committee, Compensation Committee, and Nominating and Governance Committee; and our [added: Business] Code of [removed: Business Conduct and] Ethics [added: and Standards of Conduct] are also available on our website.

Any amendment to the [added: Business] Code of [removed: Business Conduct and] Ethics and [added: Standards of Conduct and] any waiver applicable to our directors, executive officers or senior financial officers will be posted on our website within the time period required by the SEC and the New York Stock Exchange (the "NYSE").

We filed the certification with the NYSE on June [removed: 21, 2016] [added: 29, 2017] and our Chief Executive Officer indicated that he was not aware of any violations of the Listing Standards by us.

Our RF Technology segment provides radio frequency identification ("RFID") communication technology and software solutions.

The readers are used in numerous applications and OEM solutions including secure printing and single sign-on across several vertical markets including healthcare, manufacturing and government.

Our Energy Systems & Controls segment principally produces control systems, testing equipment, valves and sensors.

| | |

These products and solutions are provided through eleven reporting units.

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

Blanket purchase orders are placed by certain OEM and end-users, with continuing requirements for fulfillment over specified periods of time.

Our RF Technology segment provides radio frequency identification ("RFID") communication technology and software solutions that are used primarily in toll and traffic systems, security and access control, campus card systems, card readers, software-as-a-service in the freight matching, commercial construction and food industries, comprehensive application management software for legal and construction firms and metering and remote monitoring applications.

These products and solutions are provided through ten reporting units.

The readers are used in numerous applications and OEM solutions including: attendance management, multi-function printers, mobile, physical access, manufacturing, dispensing, kiosks, point-of-sale and computer logon.

Standard products generally ship within two weeks of receipt of order, and large engineered projects may have lead times of several months.

As such, backlog may fluctuate depending upon the timing of large project awards.

These products and solutions are provided through six reporting units.

Our Energy Systems & Controls segment principally produces control systems, fluid properties testing equipment, industrial valves and controls, vibration sensors and controls and non-destructive inspection and measurement products and solutions, which are provided through six reporting units.

The Energy Systems & Controls segment companies' sales reflect a combination of standard products and large engineered projects.

| | |

| --- | --- |

Item 4.

MINE SAFETY DISCLOSURES

None

PART II

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

For the fiscal year ended December 31, [removed: 2016][added: 2017]

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

| Delaware | [removed: |] 51-0263969 |

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

[removed: ☑] [added: þ] Yes ☐ No

☐ Yes [removed: ☑] [added: þ] No

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

Based on the closing sale price on the New York Stock Exchange on June 30, [removed: 2016,] [added: 2017,] the aggregate market value of the voting and non-voting common stock held by non-affiliates of the registrant was: [removed: $16,984,404,742.][added: $23,224,859,776.]

Number of shares of registrant's Common Stock outstanding as of February 16, [removed: 2017: 101,874,232.][added: 2018: 102,826,454.]

Portions of the registrant's Proxy Statement to be furnished to Stockholders in connection with its Annual Meeting of Stockholders [removed: to be held on June 8, 2017,] 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: 2016][added: 2017]

| [removed: PART I] [added: [PART I](#s08399E8292619FD9A6B18274D04EBEAC)] | | Page |

[removed: Item 1A.][added: | [Item 1A.](#s8F80B8BF5239E7FAD2158274D4644752) | [Risk Factors](#s8F80B8BF5239E7FAD2158274D4644752) | [8](#s8F80B8BF5239E7FAD2158274D4644752) |]

[removed: Unresolved] [added: | [Item 1B.](#s6BB6E2478D7744EC44B98274D668E5D5) | [Unresolved] Staff [removed: Comments 13][added: Comments](#s6BB6E2478D7744EC44B98274D668E5D5) | [12](#s6BB6E2478D7744EC44B98274D668E5D5) |]

[removed: Legal Proceedings 15][added: | [Item 3.](#sD8A9FED43E81B68AC90E8274DA5ED56E) | [Legal Proceedings](#sD8A9FED43E81B68AC90E8274DA5ED56E) | [14](#sD8A9FED43E81B68AC90E8274DA5ED56E) |]

10-K 1 a201710-kdoc.htm 10-K

| | |

| | |

| | | |

| | | |

þ Yes ☐ No

þ Yes ☐ No

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐ Yes þ No

| | | |

| | | |

| [Item 1.](#s5B045DC6598316D15BBE8274D250CBDC) | [Business](#s5B045DC6598316D15BBE8274D250CBDC) | [4](#s5B045DC6598316D15BBE8274D250CBDC) |

| [Item 2.](#s46FB6A9FF8F5FC0DD3AB8274D8601273) | [Properties](#s46FB6A9FF8F5FC0DD3AB8274D8601273) | [13](#s46FB6A9FF8F5FC0DD3AB8274D8601273) |

| [Item 4.](#s0E81167442785AA0E44F8274DC62194F) | [Mine Safety Disclosures](#s0E81167442785AA0E44F8274DC62194F) | [14](#s0E81167442785AA0E44F8274DC62194F) |

| | | |

| [PART II](#s17ACF57D8F93F2F109638274DE58B24B) | | |

| [Item 5.](#s643B5FD7C2FE28281EBA8274A13D56CD) | [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](#s643B5FD7C2FE28281EBA8274A13D56CD) | [15](#s643B5FD7C2FE28281EBA8274A13D56CD) |

| [Item 6.](#s610A5C8927BDB22781658274E26196A2) | [Selected Financial Data](#s610A5C8927BDB22781658274E26196A2) | [17](#s610A5C8927BDB22781658274E26196A2) |

| [Item 7.](#s85693EFBC6A221799C7C8274A557904E) | [Management's Discussion and Analysis of Financial Condition and Results of Operations](#s85693EFBC6A221799C7C8274A557904E) | [18](#s85693EFBC6A221799C7C8274A557904E) |

| [Item 7A.](#s1C5B9232943099D575098274E68E4FCA) | [Quantitative and Qualitative Disclosures about Market Risk](#s1C5B9232943099D575098274E68E4FCA) | [27](#s1C5B9232943099D575098274E68E4FCA) |

| [Item 8.](#sD7C338AB7F4ACE099CB28274EA8179A3) | [Financial Statements and Supplementary Data](#sD7C338AB7F4ACE099CB28274EA8179A3) | [29](#sD7C338AB7F4ACE099CB28274EA8179A3) |

| [Item 9.](#s1EF9B819A7381DEADDD882750283BAAD) | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](#s1EF9B819A7381DEADDD882750283BAAD) | [59](#s1EF9B819A7381DEADDD882750283BAAD) |

| [Item 9A.](#s14AD2DAC8DC20BDFFE14827502A55D63) | [Controls and Procedures](#s14AD2DAC8DC20BDFFE14827502A55D63) | [59](#s14AD2DAC8DC20BDFFE14827502A55D63) |

| [Item 9B.](#s3702119AEEFDC48F10A2827502D5504D) | [Other Information](#s3702119AEEFDC48F10A2827502D5504D) | [59](#s3702119AEEFDC48F10A2827502D5504D) |

| | | |

| [PART III](#sD1BF54A82771D5E7318C827502F9EA75) | | |

| [Item 10.](#s6EA67D011D4489B820588275032BA482) | [Directors, Executive Officers and Corporate Governance](#s6EA67D011D4489B820588275032BA482) | [60](#s6EA67D011D4489B820588275032BA482) |

| [Item 11.](#s0905ECA117EAED8FE48F8275034B4B13) | [Executive Compensation](#s0905ECA117EAED8FE48F8275034B4B13) | [60](#s0905ECA117EAED8FE48F8275034B4B13) |

| [Item 12.](#sCA33D2209900D0D27DA08274B7E7265B) | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](#sCA33D2209900D0D27DA08274B7E7265B) | [60](#sCA33D2209900D0D27DA08274B7E7265B) |

| [Item 13.](#s3CC42E697D540647F58B8275039E37D3) | [Certain Relationships and Related Transactions and Director Independence](#s3CC42E697D540647F58B8275039E37D3) | [60](#s3CC42E697D540647F58B8275039E37D3) |

| [Item 14.](#s8EDC8E68539213E4D9E0827503D1F2F5) | [Principal Accountant Fees and Services](#s8EDC8E68539213E4D9E0827503D1F2F5) | [60](#s8EDC8E68539213E4D9E0827503D1F2F5) |

| | | |

| [PART IV](#s6B2FFD9F8875427C9AC1827503F48B92) | | |

| [Item 15.](#s4EBAE264015C8C6EDE25827504242B09) | [Exhibits and Financial Statement Schedules](#s4EBAE264015C8C6EDE25827504242B09) | [61](#s4EBAE264015C8C6EDE25827504242B09) |

| [Item 16.](#s0DE2B30A7D9CE284CDE782750446D0BA) | [Form 10-K Summary](#s0DE2B30A7D9CE284CDE782750446D0BA) | [61](#s0DE2B30A7D9CE284CDE782750446D0BA) |

| | [Signatures](#sDF8B45375D811DCDCC1E827504776949) | [62](#sDF8B45375D811DCDCC1E827504776949) |

Information About Forward-Looking Statements

This Annual Report on Form 10-K ("Annual Report") includes and incorporates by reference "forward-looking statements" within the meaning of the federal securities laws.

In addition, we, or our executive officers on our behalf, may from time to time make forward-looking statements in reports and other documents we file with the U.S. Securities and Exchange Commission ("SEC") or in connection with oral statements made to the press, potential investors or others.

All statements that are not historical facts are "forward-looking statements." Forward-looking statements may be indicated by words or phrases such as "anticipate," "estimate," "plans," "expects," "projects," "should," "will," "believes" or "intends" and similar words and phrases.

10-K 1 cy2016_10-k.htm

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

Item 1.

Business 4

Risk Factors 8

Item 1B.

Item 2.

Properties 14

Item 3.

| | |

Our corporate offices, consisting of [removed: 24,000] [added: 29,000] square feet of leased space, are located at 6901 Professional Parkway East, Sarasota, Florida.

We have [removed: 120] [added: 128] principal locations around the world to support our operations, of which [removed: 51] [added: 49] are manufacturing, assembly and testing facilities, and the remaining [removed: 69] [added: 79] locations provide sales, programming, service and administrative support functions.

The following table summarizes the size, location and usage of our principal properties as of December 31, [removed: 2016] [added: 2017] (amounts in thousands of square feet).

| | Canada | [removed: \-] [added: 30] | [removed: 109] [added: —] | [removed: \-] [added: —] |

| | Europe | [removed: 32] [added: 82] | [removed: 64] [added: —] | [removed: \-] [added: 16] |

| | Asia-Pacific | 21 | [removed: \-] [added: —] | [removed: \-] [added: —] |

| | Mexico | [removed: \-] [added: —] | [removed: 44] [added: 43] | [removed: \-] [added: —] |

| | Canada | [removed: 27] [added: 36] | [removed: \-] [added: —] | [removed: \-] [added: —] |

| | Europe | [removed: 56] [added: 68] | [removed: \-] [added: 28] | [removed: 16] [added: —] |

| | Asia-Pacific | [removed: 111] [added: 21] | [removed: \-] [added: —] | [removed: \-] [added: —] |

| | Canada | [removed: 36] [added: —] | [removed: \-] [added: 56] | [removed: \-] [added: —] |

| | Asia-Pacific | [removed: 23] [added: —] | [removed: \-] [added: 28] | [removed: \-] [added: 33] |

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

| | Canada | [removed: \-] [added: —] | [removed: 56] [added: 140] | [removed: \-] [added: —] |

| | Europe | 29 | [removed: 28] [added: 20] | 128 |

| | Asia-Pacific | [removed: 6] [added: 116] | [removed: 30] [added: —] | [removed: 33] [added: —] |

| | U.S. | 1,163 | 108 | — |

| | U.S. | 325 | 275 | 120 |

| | U.S. | — | 322 | — |

| | |

| | U.S. | 309 | 298 | 127 |

| | U.S. | 1,164 | 92 | 16 |

| | U.S. | \- | 343 | \- |

[removed: |] PART II [removed: | | |]

None

| | |

| --- | --- |

| | | |

Item 5.

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 15

Item 6.

Selected Financial Data 17

Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations 18

Item 7A.

Quantitative and Qualitative Disclosures about Market Risk 29

Item 8.

Financial Statements and Supplementary Data 30

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 61

Item 9A.

Controls and Procedures 61

Item 9B.

Other Information 62

| PART III | | |

Item 10.

Directors, Executive Officers and Corporate Governance 62

Item 11.

Executive Compensation 62

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 63

Item 13.

Certain Relationships and Related Transactions and Director Independence 63

Item 14.

Principal Accountant Fees and Services 63

| PART IV | | |

Item 15.

Exhibits and Financial Statement Schedules 64

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: 2016] [added: 2017] and [removed: 2015] [added: 2016] quarters.

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

| 2016 | 4th Quarter | [removed: |] $ | 188.04 | | | $ | 167.91 | | | $ | 0.35 | |

| | 3rd Quarter | [removed: | |] 182.84 | | | | 163.33 | | | | 0.30 | | [added: |]

| | 2nd Quarter | [removed: | |] 184.66 | | | | 164.77 | | | | 0.30 | | [added: |]

| | 1st Quarter | [removed: | |] 187.56 | | | | 158.89 | | | | 0.30 | | [added: |]

Based on information available to us and our transfer agent, we believe that as of February 16, [removed: 2017] [added: 2018] there were [removed: 143] [added: 136] record holders of our common stock.

In [removed: November 2016,] [added: December 2017,] our Board of Directors increased the quarterly dividend paid January 23, [removed: 2017] [added: 2018] to [removed: $0.35] [added: $0.4125] per share from [removed: $0.30] [added: $0.35] per share, an increase of [removed: 17%.][added: 18%.]

Recent Sales of Unregistered Securities - In [removed: 2016,] [added: 2017,] there were no sales of unregistered securities.

The following graph compares, for the five year period ended December 31, [removed: 2016,] [added: 2017,] 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: 2011,] 2012, 2013, 2014, [removed: 2015] [added: 2015, 2016] and [removed: 2016.][added: 2017.]

The graph assumes that $100 was invested on December 31, [removed: 2011] [added: 2012] in our common stock, the S&P 500 and the S&P 500 Industrials and assumes reinvestment of any dividends.

[removed: ][added: ]

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

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

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

| 2017 | 4th Quarter | $ | 267.83 | | | $ | 243.45 | | | $ | 0.4125 | |

| | 3rd Quarter | 247.54 | | | | 226.81 | | | | 0.35 | | |

| | 2nd Quarter | 235.50 | | | | 204.62 | | | | 0.35 | | |

| | 1st Quarter | 214.44 | | | | 183.74 | | | | 0.35 | | |

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

This is the twenty-fifth consecutive year in which Roper has increased its dividend.

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

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

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

| | 12/31/2012 | | | | 12/31/2013 | | | | 12/31/2014 | | | | 12/31/2015 | | | | 12/31/2016 | | | | 12/31/2017 | | |

| Roper Technologies, Inc. | $ | 100.00 | | | $ | 124.89 | | | $ | 141.61 | | | $ | 172.94 | | | $ | 167.96 | | | $ | 239.15 | |

| S&P 500 | 100.00 | | | | 132.39 | | | | 150.51 | | | | 152.59 | | | | 170.84 | | | | 208.14 | | |

| S&P 500 Industrials | 100.00 | | | | 140.68 | | | | 154.50 | | | | 150.59 | | | | 178.99 | | | | 216.64 | | |

| | |

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

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

| 2015 | 4th Quarter | | $ | 194.83 | | | $ | 157.75 | | | $ | 0.30 | |

| | 3rd Quarter | | | 177.08 | | | | 152.93 | | | | 0.25 | |

| | 2nd Quarter | | | 177.79 | | | | 167.08 | | | | 0.25 | |

| | 1st Quarter | | | 174.02 | | | | 145.75 | | | | 0.25 | |

| | | | 12/31/11 | | | | 12/31/12 | | | | 12/31/13 | | | | 12/31/14 | | | | 12/31/15 | | | | 12/31/16 | | |

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

| Roper Technologies, Inc. | | | | 100.00 | | | | 129.26 | | | | 161.43 | | | | 183.03 | | | | 223.53 | | | | 217.09 | |

| S&P 500 | | | | 100.00 | | | | 116.00 | | | | 153.58 | | | | 174.60 | | | | 177.01 | | | | 198.18 | |

| S&P 500 Industrials | | | | 100.00 | | | | 115.35 | | | | 162.27 | | | | 178.21 | | | | 173.70 | | | | 206.46 | |

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

| | [removed: | 2016(1)] [added: 2017 (1)] | | | | [removed: 2015(2)] [added: 2016 (2)] | | | | [removed: 2014(3)] [added: 2015 (3)] | | | | [removed: 2013(4)] [added: 2014 (4)] | | | | [removed: 2012(5)] [added: 2013 (5)] | | |

| Operations data: | | | | | | | | | | | | | | | | | | | | [removed: |]

| Net [removed: sales |] [added: revenues] | $ | [removed: 3,789,925] [added: 4,607,471] | | | $ | [removed: 3,582,395] [added: 3,789,925] | | | $ | [removed: 3,549,494] [added: 3,582,395] | | | $ | [removed: 3,238,128] [added: 3,549,494] | | | $ | [removed: 2,993,489] [added: 3,238,128] | |

| Gross profit | [added: 2,864,796] | | [added: | |] 2,332,410 | | | | 2,164,646 | | | | 2,101,899 | | | | 1,882,928 | | | [removed: | 1,671,717 | |]

| Income from operations | [added: 1,210,244] | | [added: | |] 1,054,563 | | | | 1,027,918 | | | | 999,473 | | | | 842,361 | | | [removed: | 757,587 | |]

| Net earnings [added: (6)] | [added: 971,772] | | [added: | |] 658,645 | | | | 696,067 | | | | 646,033 | | | | 538,293 | | | [removed: | 483,360 | |]

| Per share data: | | | | | | | | | | | | | | | | | | | | [removed: |]

| Basic earnings per share | [removed: |] $ | [removed: 6.50] [added: 9.51] | | | $ | [removed: 6.92] [added: 6.50] | | | $ | [removed: 6.47] [added: 6.92] | | | $ | [removed: 5.43] [added: 6.47] | | | $ | [removed: 4.95] [added: 5.43] | |

| Diluted earnings per share | [added: $] | [added: 9.39] | [added: | | $ |] 6.43 | | | [added: $] | 6.85 | | | [added: $] | 6.40 | | | [added: $] | 5.37 | | [removed: | | 4.86 | |]

| Dividends declared per share | [removed: |] $ | [removed: 1.2500] [added: 1.4625] | | | $ | [removed: 1.0500] [added: 1.2500] | | | $ | [removed: 0.8500] [added: 1.0500] | | | [added: $] | [removed: 0.6950] [added: 0.8500] | | | $ | [removed: 0.5775] [added: 0.6950] | |

| Balance sheet data: | | | | | | | | | | | | | | | | | | | | [removed: |]

| Working capital [removed: (6) |] [added: (7)] | $ | [removed: 331,229] [added: (270,007] | [added: )] | | $ | [removed: 897,919] [added: 331,229] | | | $ | [removed: 884,158] [added: 897,919] | | | $ | [removed: 730,246] [added: 884,158] | | | $ | [removed: 159,887] [added: 730,246] | |

| Total [removed: assets(7)] [added: assets (8)] | [added: 14,316,413] | | [added: | |] 14,324,927 | | | | 10,168,365 | | | | 8,400,185 | | | | 8,169,120 | | | [removed: | 7,059,975 | |]

| Long-term debt, net of current [removed: portion(7)] [added: portion (8)] | [added: 4,354,611] | | [added: | |] 5,808,561 | | | | 3,264,417 | | | | 2,190,282 | | | | 2,437,975 | | | [removed: | 1,492,533 | |]

| Stockholders' equity | [added: 6,863,564] | | [added: | |] 5,788,865 | | | | 5,298,947 | | | | 4,755,360 | | | | 4,213,050 | | | [removed: | 3,687,726 | |]

| [removed: | (1)] [added: (2)] | Includes results from the acquisitions of CliniSys Group Ltd. from January 7, 2016, PCI Medical Inc. from March 17, 2016, GeneInsight Inc. from April 1, 2016, iSqFt Holdings Inc. (d/b/a ConstructConnect) from October 31, 2016, UNIConnect LC from November 10, 2016 and [removed: Deltek] [added: Deltek,] Inc. from December 28, 2016. |

| [removed: | (2)] [added: (3)] | Includes results from the acquisitions of Strata Decision Technologies LLC from January 21, 2015, SoftWriters Inc. from February 9, 2015, Data Innovations LLC from March 4, 2015, On Center Software LLC from July 20, 2015, RF IDeas Inc. from September 1, 2015, Atlantic Health Partners LLC from September 4, 2015, Aderant Holdings Inc. from October 21, 2015, Atlas Database Software Corp. from October 26, 2015, Black Diamond Advanced Technologies through March 20, 2015 and Abel Pumps through October 2, 2015. |

| [removed: | (3)] [added: (4)] | Includes results from the acquisitions of Foodlink Holdings Inc. from July 2, 2014, Innovative Product Achievements LLC from August 5, 2014, Strategic Healthcare Programs Holdings LLC from August 14, 2014. |

| [removed: | (4)] [added: (5)] | Includes results from the acquisitions of Managed Health Care Associates Inc. from May 1, 2013 and Advanced Sensors Ltd. from October 4, 2013. |

| [removed: | (6)] [added: (7)] | At December 31, [removed: 2016,] [added: 2017,] there were [removed: $399] [added: $799] million of senior notes, net of debt issuance costs, due [removed: November 15, 2017] [added: October 1, 2018,] and at December 31, [removed: 2012,] [added: 2016,] there were [removed: $499] [added: $399] million of senior notes, net of debt issuance [removed: costs (adjusted] [added: costs,] due [removed: to the retrospective adoption of an accounting standard update which requires that our senior notes be shown net of debt issuance costs), that matured on August] [added: November] 15, [removed: 2013,] [added: 2017,] thus requiring [removed: a] classification as short-term debt, included in working capital. |

| [removed: | (7)] [added: (8)] | Total assets and Long-term debt, net of current portion for [removed: 2012 through] [added: 2013 and] 2014 have been adjusted due to the retrospective adoption of an accounting standard update which requires that our senior notes be shown net of debt issuance costs. The adjustment amounts were [removed: $12,749, $15,861] [added: $12,749] and [removed: $10,574] [added: $15,861] for the years ended December 31, [removed: 2014, 2013] [added: 2014] and [removed: 2012,] [added: 2013,] respectively. |

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| (1) | Includes results from the acquisitions of Phase Technology from June 21, 2017, Handshake Software, Inc. from August 4, 2017, Workbook Software A/S from September 15, 2017 and Onvia, Inc. from November 17, 2017. |

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| (6) | The Tax Cuts and Jobs Act of 2017 (“the Tax Act”) was signed into U.S. law on December 22, 2017, which was prior to the end of the Company’s 2017 reporting period and resulted in a one-time net income tax benefit of $215.4 million. |

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| | (5) | Includes results from the acquisition of Sunquest Information Systems Inc. from August 22, 2012. |

| [removed: Report] [added: [Report] of Independent Registered [removed: Certified] Public Accounting Firm (PricewaterhouseCoopers [removed: LLP)] [added: LLP)](#sD7C338AB7F4ACE099CB28274EA8179A3)] | [removed: 31] [added: [29](#sD7C338AB7F4ACE099CB28274EA8179A3)] |

| [removed: Consolidated] [added: [Consolidated] Balance Sheets as of December 31, [removed: 2016] [added: 2017] and [removed: 2015] [added: 2016](#s21013735528005BEBFA5827493C6083D)] | [removed: 32] [added: [31](#s21013735528005BEBFA5827493C6083D)] |

| [removed: Consolidated] [added: [Consolidated] Statements of Earnings for the Years ended December 31, [added: 2017,] 2016 [removed: , 2015] and [removed: 2014] [added: 2015](#s6BB94A40FCC500E1433D82749421D692)] | [removed: 33] [added: [32](#s6BB94A40FCC500E1433D82749421D692)] |

| [removed: Consolidated] [added: [Consolidated] Statements of Comprehensive Income for the Years ended December 31, [removed: 2016] [added: 2017] , [removed: 2015] [added: 2016] and [removed: 2014] [added: 2015](#sB82535BA8F94D6BE7EA182749515C01F)] | [removed: 34] [added: [33](#sB82535BA8F94D6BE7EA182749515C01F)] |

| [removed: Consolidated] [added: [Consolidated] Statements of Stockholders' Equity for the Years ended December 31, [added: 2017,] 2016 [removed: , 2015] and [removed: 2014] [added: 2015](#sFE36ADF5711A06AC32CB82749579268E)] | [removed: 35] [added: [34](#sFE36ADF5711A06AC32CB82749579268E)] |

| [removed: Consolidated] [added: [Consolidated] Statements of Cash Flows for the Years ended December 31, [added: 2017,] 2016 [removed: , 2015] and [removed: 2014] [added: 2015](#s09ADEACE79B702735D218274939DEF30)] | [removed: 36] [added: [35](#s09ADEACE79B702735D218274939DEF30)] |

| [removed: Notes] [added: [Notes] to Consolidated Financial [removed: Statements] [added: Statements](#s22AF446B0F4D82C4059E8274FB2622C9)] | [removed: 38] [added: [36](#s22AF446B0F4D82C4059E8274FB2622C9)] |

| [removed: Schedule] [added: [Schedule] II - Consolidated Valuation and Qualifying Accounts for the Years ended December 31, [added: 2017,] 2016 [removed: , 2015] and [removed: 2014] [added: 2015](#sD894EECDF8C2F0394C938274942A9AC0)] | [removed: 61] [added: [58](#sD894EECDF8C2F0394C938274942A9AC0)] |

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

In our opinion, the [removed: accompanying] consolidated [removed: balance sheets and the related consolidated] [added: financial] statements [removed: of earnings, of comprehensive income, of stockholders' equity, and of cash flows,] [added: referred to above] present fairly, in all material respects, the financial position of [removed: Roper Technologies, Inc. and its subsidiaries (the "Company") at] [added: the Company as of] December 31, [removed: 2016] [added: 2017] and [removed: December 31, 2015,] [added: 2016,] and the results of their operations and their cash flows for each of the three years in the period ended December 31, [removed: 2016] [added: 2017] 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: 2016,] [added: 2017,] based on criteria established in Internal Control - Integrated Framework [removed: 2013] [added: (2013)] issued by the [removed: Committee of Sponsoring Organizations of the Treadway Commission (COSO).][added: COSO.]

The Company's management is responsible for these [removed: financial statements and] [added: consolidated] financial [removed: statement schedule,] [added: statements,] for maintaining effective internal control over financial [removed: reporting] [added: reporting,] and for its assessment of the effectiveness of internal control over financial reporting, included in [added: the accompanying] Management's Report on Internal Control over Financial [removed: Reporting appearing under Item 9A.][added: Reporting.]

Our responsibility is to express opinions on [removed: these financial statements, on] the [added: Company’s consolidated] financial [removed: statement schedule] [added: statements] and on the Company's internal control over financial reporting based on our [removed: integrated] audits.

We conducted our audits in accordance with the standards of the [removed: Public Company Accounting Oversight Board (United States).][added: PCAOB.]

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the [added: consolidated] financial statements are free of material [removed: misstatement] [added: misstatement, whether due to error or fraud,] and whether effective internal control over financial reporting was maintained in all material respects.

Our audits [removed: of the financial statements] [added: also] included [removed: examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing] [added: evaluating] the accounting principles used and significant estimates made by management, [removed: and] [added: as well as] evaluating the overall [added: presentation of the consolidated] financial [removed: statement presentation.][added: statements.]

A [removed: company's] [added: company’s] internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are [removed: being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.]

As described in [removed: Management's] [added: Management’s] Report on Internal Control over Financial Reporting, management has excluded acquisitions completed [removed: during 2016] [added: in 2017] from its assessment of internal control over financial reporting as of December 31, [removed: 2016] [added: 2017] because they were acquired by the Company in purchase business combinations during [removed: 2016.][added: 2017.]

We have also excluded acquisitions completed [removed: during 2016] [added: in 2017] from our audit of internal control over financial reporting.

These acquisitions are wholly-owned subsidiaries whose total assets and total revenues [removed: represent 2.1%] [added: excluded from management’s assessment] and [removed: 2.6%, respectively,] [added: our audit] of [added: internal control over financial reporting represent less than 1% of] the related consolidated financial statement amounts as of and for the year ended December 31, [removed: 2016.][added: 2017.]

December 31, [removed: 2016] [added: 2017] and [removed: 2015][added: 2016]

| | [removed: |] 2016 | | | | 2015 | | |

| Assets | | | | | | | | [removed: |]

| Cash and cash [removed: equivalents | | $] [added: equivalents, beginning of year] | 757,200 | | | [removed: $] | 778,511 | | [added: | | 610,430 | | |]

| Accounts receivable, net | [removed: |] [added: 641,662] | [removed: 619,854] | | | [added: 619,854] | [removed: 488,271] | |

| Inventories, net | [removed: |] [added: 204,933] | [removed: 181,952] | | | [added: 181,952] | [removed: 189,868] | |

| Income taxes receivable | [removed: |] [added: 24,365] | [removed: 31,679] | | | [added: 31,679] | [removed: \-] | |

| Unbilled receivables | [removed: |] [added: 143,634] | [removed: 129,965] | | | [added: 129,965] | [removed: 122,042] | |

| Other current assets | [removed: |] [added: 73,481] | [removed: 55,851] | | | [added: 55,851] | [removed: 39,355] | |

| Total current assets | [removed: |] [added: 1,759,402] | [removed: 1,776,501] | | | [added: 1,776,501] | [removed: 1,618,047] | |

| Property, plant and equipment, net | [removed: |] [added: 142,535] | [removed: 141,318] | | | [added: 141,318] | [removed: 105,510] | |

| Goodwill | [removed: |] [added: 8,820,313] | [removed: 8,647,142] | | | [added: 8,647,142] | [removed: 5,824,726] | |

| Other intangible assets, net | [removed: |] [added: 3,475,218] | [removed: 3,655,843] | | | [added: 3,655,843] | [removed: 2,528,996] | |

| Deferred taxes | [removed: |] [added: 30,726] | [removed: 30,620] | | | [added: 30,620] | [removed: 31,532] | |

| Other assets | [removed: |] [added: 88,219] | [removed: 73,503] | | | [added: 73,503] | [removed: 59,554] | |

| Total assets | [removed: |] $ | [removed: 14,324,927] [added: 14,316,413] | | | $ | [removed: 10,168,365] [added: 14,324,927] | |

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

| Accounts payable | [removed: |] $ | [removed: 152,067] [added: 171,073] | | | $ | [removed: 139,737] [added: 152,067] | |

| Accrued compensation | [removed: |] [added: 198,020] | [removed: 161,730] | | | [added: 161,730] | [removed: 119,511] | |

| Deferred revenue | [removed: |] [added: 566,447] | [removed: 488,399] | | | [added: 488,399] | [removed: 267,030] | |

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Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Roper Technologies, Inc. and its subsidiaries (the "Company") as of December 31, 2017, and 2016, and the related consolidated statements of earnings, of comprehensive income, of stockholders' equity, and of cash flows for each of the three years in the period ended December 31, 2017, including the related notes and financial statement schedule listed in the accompanying index (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Basis for Opinions

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Definition and Limitations of Internal Control over Financial Reporting

being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Certified Public Accountants

February 23, 2018

We have served as the Company’s auditor since 2002.

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| Cash and cash equivalents | $ | 671,327 | | | $ | 757,200 | |

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| Net earnings | $ | 971,772 | | | $ | 658,645 | | | $ | 696,067 | |

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Years ended December 31, 2017, 2016 and 2015

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In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 15(a)(2) presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.

February 27, 2017

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| Balances at December 31, 2013 | | | 99,312 | | | $ | 1,013 | | | $ | 1,229,233 | | | $ | 2,959,196 | | | $ | 43,083 | | | $ | (19,475 | ) | | $ | 4,213,050 | |

| 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 | ) |

| Stock option tax benefit, net of shortfalls | | | \- | | | | \- | | | | (8,081 | ) | | | \- | | | | \- | | | | \- | | | | (8,081 | ) |

| Cash and cash equivalents, beginning of year | | | 778,511 | | | | 610,430 | | | | 459,720 | |

The ASU simplifies several aspects of the accounting for employee share-based payment awards, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows.

Either a retrospective or cumulative effect transition method is permitted; the Company has not yet made an election regarding the transition method to be adopted.

The Company is still finalizing its analysis to quantify the adoption impact of the provisions of the new standard, but does not currently expect it to have a material impact on its results of operations, financial condition or cash flows.

Based on the evaluation of current contracts and revenue streams, most will be recorded consistently under both the current and new standard.

The FASB has issued, and may issue in the future, interpretive guidance which may cause the evaluation to change.

See the caption "Recent Accounting Pronouncements" elsewhere in this Note for additional information regarding the ASU.

| Senior subordinated convertible notes | | | 47 | | | | 94 | | | | 152 | |

The gain or loss included in pre-tax income was a net loss of $2.9 million for the year ended December 31, 2016, a net loss of $0.7 million for the year ended December 31, 2015 and a net gain of $0.2 million for the year ended December 31, 2014.

If the carrying value exceeds the estimated fair value, the goodwill of the reporting unit is potentially impaired and then the second quantitative step would be completed in order to measure the impairment loss by calculating the implied fair value of goodwill by deducting the fair value of all tangible and intangible net assets (including unrecognized intangible assets) of the reporting unit from the fair value of the reporting unit.

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If necessary, Roper conducts a quantitative review using the relief-from-royalty method, which management believes to be an acceptable methodology due to its common use by valuations specialists in determining the fair value of intangible assets.

Income Taxes - Roper is a U.S.-based multinational company and the calculation of its worldwide provision for income taxes requires analysis of many factors, including income tax systems that vary from country to country, and the United States' treatment of non-U.S. earnings.

The Company provides U.S. income taxes for unremitted earnings of foreign subsidiaries that are not considered permanently reinvested overseas.

As of December 31, 2016, the amount of earnings of foreign subsidiaries that the Company considers permanently reinvested and for which deferred taxes have not been provided was approximately $1.37 billion.

Because of the availability of U.S. foreign tax credits, it is not practicable to determine the U.S. federal income tax liability that would be payable if such earnings were not reinvested indefinitely.

Although it is the Company's intention to permanently reinvest these earnings indefinitely there are certain events that would cause these earnings to become taxable.

These events include, but are not limited to, changes in U.S. tax laws, dividends paid between foreign subsidiaries in the absence of Section 954(c)(6) of the Internal Revenue Code of 1986, as amended ("IRC"), foreign subsidiary guarantees of U.S. parent debt and the liquidation of foreign subsidiaries or actual distributions by foreign subsidiaries into a U.S. affiliate.

The Company early adopted the provisions of an ASU related to stock compensation on a prospective basis in the first quarter of 2016.

No prior periods were adjusted.

Due to the adoption of an ASU in 2016, cash flows resulting from the tax benefits arising from tax deductions in excess of the compensation cost recognized for stock award exercises (excess tax benefits) are no longer classified as financing cash flows.

Prior periods were not adjusted, as the ASU was adopted on a prospective basis.

See the the caption "Recent Accounting Prononcements" elsewhere in this Note for additional information regarding the ASU.

The results of operations of the acquired companies have been included in Roper's consolidated results since the date of each acquisition.

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The majority of the goodwill recorded is not expected to be deductible for tax purposes.

2014 Acquisitions – During the year ended December 31, 2014, Roper completed three business combinations.

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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: 2016.][added: 2017.]

Our internal control over financial reporting as of December 31, [removed: 2016] [added: 2017] has been audited by PricewaterhouseCoopers LLP, an independent registered [removed: certified] public accounting firm, as stated in their report which is included herein.

Our management excluded acquisitions completed during [removed: 2016] [added: 2017] from its assessment of internal control over financial reporting as of December 31, [removed: 2016.][added: 2017.]

These acquisitions are wholly-owned subsidiaries whose [removed: excluded aggregate] assets [removed: represent 2.1%,] and [removed: whose aggregate total] revenues [added: each] represent [removed: 2.6%,] [added: less than 1%] of the related consolidated financial statement amounts as of and for the year ended December 31, [removed: 2016.][added: 2017.]

There was no change in our internal control over financial reporting that occurred during the fourth quarter of [removed: 2016] [added: 2017] that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Based on this evaluation, we have concluded that our disclosure controls and procedures were effective as of December 31, 2017.

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Based on this evaluation, we have concluded that our disclosure controls and procedures were effective as of December 31, 2016; however, through an administrative oversight, we late filed a required Current Report on Form 8-K related to the closing of Deltek acquisition that was due on January 3, 2017 and have since taken appropriate steps to remediate the deficiency in our disclosure controls and procedures

There were no disclosures of any information required to be filed on Form 8-K during the fourth quarter of [removed: 2016] [added: 2017] 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 [removed: to be held on June 8, 2017 ("2017] [added: ("2018] Proxy Statement"), as specified below:

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We incorporate the information required by this item by reference to our [removed: 2017] [added: 2018] Proxy Statement.

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We incorporate the information required by this item by reference to our [removed: 2017] [added: 2018] Proxy Statement.

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Other than the information set forth below, we incorporate the information required by this item by reference to our [removed: 2017] [added: 2018] Proxy Statement.

The following table provides information as of December 31, [removed: 2016] [added: 2017] regarding compensation plans (including individual compensation arrangements) under which our equity securities are authorized for issuance.

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

| Equity Compensation Plans Approved by Shareholders (1) | | | | | | | | | | [removed: | | |]

| Restricted stock [removed: awards(2) | | | 952,672] [added: awards (2)] | [added: 858,996] | | | [removed: \-] [added: —] | | | | | |

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

| [removed: |] (1) | Consists of the Amended and Restated 2006 Incentive Plan (no additional equity awards may be granted under this plan) and the 2016 Incentive Plan. |

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

| | | | | | | | | | |

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

| | | | | | | | | | |

| Stock options | 3,195,864 | | | $ | 140.68 | | | | |

| Subtotal | 4,054,860 | | | | | | | 7,802,395 | |

| Total | 4,054,860 | | | $ | — | | | 7,802,395 | |

| | |

| | |

| --- | --- |

| | |

| --- | --- |

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

| Stock options | | | 3,419,597 | | | $ | 121.31 | | | | | |

| Subtotal | | | 4,372,269 | | | | | | | | 9,190,273 | |

| Total | | | 4,372,269 | | | $ | \- | | | | 9,190,273 | |

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

We incorporate the information required by this item by reference to our [removed: 2017] [added: 2018] Proxy Statement.

| | |

We incorporate the information required by this item by reference to our [removed: 2017] [added: 2018] Proxy Statement.

| | |

| [removed: |] (1) | Consolidated Financial Statements: The following consolidated financial statements are included in Part II, Item 8 of this report. |

Consolidated Balance Sheets as of December 31, [removed: 2016] [added: 2017] and [removed: 2015][added: 2016]

Consolidated Statements of Earnings for the Years ended December 31, [added: 2017,] 2016 [removed: , 2015] and [removed: 2014][added: 2015]

Consolidated Statements of Comprehensive Income for the Years ended December 31, [added: 2017,] 2016 [removed: , 2015] and [removed: 2014][added: 2015]

Consolidated Statements of Stockholders' Equity for the Years ended December 31, [added: 2017,] 2016 [removed: , 2015] and [removed: 2014][added: 2015]

Consolidated Statements of Cash Flows for the Years ended December 31, [added: 2017,] 2016 [removed: , 2015] and [removed: 2014][added: 2015]

| [removed: |] (2) | Consolidated Valuation and Qualifying Accounts for the Years ended December 31, [added: 2017,] 2016 [removed: , 2015] and [removed: 2014] [added: 2015] |

| Exhibit No. | | [added: |] Description of Exhibit |

| [removed: (b)3.1] [added: (a)3.1] | | [removed: Restated] [added: | [Restated] Certificate of Incorporation as amended through April 24, [removed: 2015.] [added: 2015.](http://www.sec.gov/Archives/edgar/data/882835/000095010315003223/dp55541_ex0301.htm)] |

| [removed: (d)4.2] [added: (c)4.2] | | [removed: Indenture] [added: | [Indenture] between Registrant and SunTrust Bank, dated as of November 28, [removed: 2003.] [added: 2003.](http://www.sec.gov/Archives/edgar/data/882835/000095014403013310/g85607a1exv4w2.txt)] |

| 4.3 | | [removed: Form] [added: | [Form] of Debt Securities (included in Exhibit [removed: 4.2).] [added: 4.2).](http://www.sec.gov/Archives/edgar/data/882835/000095014403013310/g85607a1exv4w2.txt)] |

| [removed: (e)4.4] [added: (d)4.4] | | [removed: First] [added: | [First] Supplemental Indenture between Registrant and SunTrust Bank, dated as of December 29, [removed: 2003.] [added: 2003.](http://www.sec.gov/Archives/edgar/data/882835/000095014404000251/g86478exv4w1.txt)] |

| [removed: (f)4.5] [added: (e)4.5] | | [removed: Second] [added: | [Second] Supplemental Indenture between Registrant and SunTrust Bank, dated as of December 7, [removed: 2004.] [added: 2004.](http://www.sec.gov/Archives/edgar/data/882835/000119312504208810/dex41.htm)] |

| [removed: (g)4.6] [added: (f)4.6] | | [removed: Indenture] [added: | [Indenture] between Registrant and Wells Fargo Bank, dated as of August 4, [removed: 2008.] [added: 2008.](http://www.sec.gov/Archives/edgar/data/882835/000088283508000026/indenture.htm)] |

| [removed: (i)4.8] [added: (h)4.8] | | [removed: Form] [added: | [Form] of 2.05% Senior Notes due [removed: 2018.] [added: 2018.](http://www.sec.gov/Archives/edgar/data/882835/000088283513000031/ex_4-1.htm)] |

| [removed: (j)4.9] [added: (i)4.9] | | [removed: Form] [added: | [Form] of 6.25% Senior Notes due [removed: 2019.] [added: 2019.](http://www.sec.gov/Archives/edgar/data/882835/000095010309002178/dp14677_ex0401.htm)] |

| [removed: 4.13] [added: 4.12] | | [removed: Form] [added: | [Form] of 3.85% Senior Notes due 2025 (included in Exhibit [removed: 4.12).] [added: 4.11).](http://www.sec.gov/Archives/edgar/data/882835/000119312515396581/d79154dex41.htm)] |

| [removed: 4.15] [added: 4.14] | | [removed: Form] [added: | [Form] of 3.800% Senior Notes due 2026 (included in Exhibit [removed: 4.14)] [added: 4.13).](http://www.sec.gov/Archives/edgar/data/882835/000119312516797380/d276973dex41.htm)] |

| [removed: (n)10.01] [added: (m)10.01] | | [removed: Form] [added: | [Form] of Amended and Restated Indemnification Agreement. [removed: †] [added: †](http://www.sec.gov/Archives/edgar/data/882835/000093176399002509/0000931763-99-002509.txt)] |

| [removed: (o)10.02] [added: (n)10.02] | | [removed: Employee] [added: | [Employee] Stock Purchase Plan, as amended and restated. [removed: †] [added: †](http://www.sec.gov/Archives/edgar/data/882835/000088283517000017/ex10-1.htm)] |

| [removed: (r)10.06] [added: (q)10.05] | | [removed: Credit] [added: | [Credit] Agreement, dated as of September 23, 2016 among Registrant, the [removed: foreign subsidiary borrowers] [added: financial institutions] from time to time party thereto, [removed: the financial institutions party thereto,] JPMorgan Chase Bank, N.A., as administrative agent, Wells Fargo Bank, N.A. and Bank of America, N.A. as syndication agents, and The Bank of Tokyo-Mitsubishi UFJ, Ltd. and Mizuho Bank, Ltd., PNC Bank, National Association, SunTrust Bank and TD Bank, N.A. as co-documentation [removed: agents.] [added: agents.](http://www.sec.gov/Archives/edgar/data/882835/000095010316016520/dp68887_ex1001.htm)] |

| [removed: (s)10.07] [added: (r)10.06] | | [removed: Amendment] [added: | [Amendment] No. 1 to Credit Agreement dated December 2, 2016, to Credit Agreement dated as of September 23, 2016 by and among Registrant, the foreign subsidiary borrowers party thereto from time to time, the lenders party thereto from time to time, JP Morgan Chase Bank, N.A., as Administrative Agent, and the other agents and parties [removed: thereto.] [added: thereto.](http://www.sec.gov/Archives/edgar/data/882835/000119312516787533/d311609dex101.htm)] |

| [removed: (u)10.10] [added: (s)10.07] | | [removed: Offer] [added: | [Offer] letter for John Humphrey, dated March 31, 2006. [removed: †] [added: †](http://www.sec.gov/Archives/edgar/data/882835/000088283506000015/ex10-1cfo_offer.htm)] |

| [removed: (w)10.12] [added: (u)10.09] | | [removed: Form] [added: | [Form] of Restricted Stock Agreement for Non-Employee Directors. [removed: †] [added: †](http://www.sec.gov/Archives/edgar/data/882835/000119312506247846/dex102.htm)] |

| [removed: 10.21] [added: (aa)10.17] | | [removed: Form] [added: | [Form] of Cash Settled Restricted Stock Unit Award Agreement for Non-US Employees, under the 2016 [removed: Stock] Incentive [removed: Plan, filed herewith.†] [added: Plan.](http://www.sec.gov/Archives/edgar/data/882835/000088283517000006/ex10-22.htm)] |

| [removed: 10.22] [added: (bb)10.18] | | [removed: Form] [added: | [Form] of Non-Statutory Stock Option Agreement, under the 2016 [removed: Stock] Incentive [removed: Plan, filed herewith. †] [added: Plan.†](http://www.sec.gov/Archives/edgar/data/882835/000088283517000006/ex10-23.htm)] |

| [removed: 10.25] [added: 10.21] | | [removed: Form] [added: | [Form] of Restricted Stock Unit Award Agreement for Non-Employee Directors, under the 2016 [removed: Stock] Incentive Plan (included in Exhibit [removed: 10.24). †] [added: 10.20).](http://www.sec.gov/Archives/edgar/data/882835/000088283516000046/ex10-2.htm)] |

| 23.1 | | [removed: Consent] [added: | [Consent] of Independent Registered Public Accountants, filed [removed: herewith.] [added: herewith.](https://www.sec.gov/Archives/edgar/data/882835/000088283518000011/a201710-kex231.htm)] |