Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

	Page
Consolidated Financial Statements:
Report of Independent Registered Public Accounting Firm (PricewaterhouseCoopers LLP)	29
Consolidated Balance Sheets as of December 31, 2017 and 2016	31
Consolidated Statements of Earnings for the Years ended December 31, 2017, 2016 and 2015	32
Consolidated Statements of Comprehensive Income for the Years ended December 31, 2017 , 2016 and 2015	33
Consolidated Statements of Stockholders' Equity for the Years ended December 31, 2017, 2016 and 2015	34
Consolidated Statements of Cash Flows for the Years ended December 31, 2017, 2016 and 2015	35
Notes to Consolidated Financial Statements	36
Supplementary Data:
Schedule II - Consolidated Valuation and Qualifying Accounts for the Years ended December 31, 2017, 2016 and 2015	58

Report of Independent Registered Public Accounting Firm

To the Stockholders of Roper Technologies, Inc.:

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).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 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, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. 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.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

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. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

As described in Management’s Report on Internal Control over Financial Reporting, management has excluded acquisitions completed in 2017 from its assessment of internal control over financial reporting as of December 31, 2017 because they were acquired by the Company in purchase business combinations during 2017. We have also excluded acquisitions completed in 2017 from our audit of internal control over financial reporting. These acquisitions are wholly-owned subsidiaries whose total assets and total revenues excluded from management’s assessment and our audit of 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, 2017.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A 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

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.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/S/ PricewaterhouseCoopers LLP

Certified Public Accountants

Tampa, Florida

February 23, 2018

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

ROPER TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December 31, 2017 and 2016

(in thousands, except per share data)

	2017				2016
Assets
Cash and cash equivalents	$	671,327			$	757,200
Accounts receivable, net	641,662				619,854
Inventories, net	204,933				181,952
Income taxes receivable	24,365				31,679
Unbilled receivables	143,634				129,965
Other current assets	73,481				55,851
Total current assets	1,759,402				1,776,501
Property, plant and equipment, net	142,535				141,318
Goodwill	8,820,313				8,647,142
Other intangible assets, net	3,475,218				3,655,843
Deferred taxes	30,726				30,620
Other assets	88,219				73,503
Total assets	$	14,316,413			$	14,324,927
Liabilities and Stockholders' Equity
Accounts payable	$	171,073			$	152,067
Accrued compensation	198,020				161,730
Deferred revenue	566,447				488,399
Other accrued liabilities	266,574				219,339
Income taxes payable	26,351				22,762
Current portion of long-term debt, net	800,944				400,975
Total current liabilities	2,029,409				1,445,272
Long-term debt, net of current portion	4,354,611				5,808,561
Deferred taxes	829,657				1,178,205
Other liabilities	239,172				104,024
Total liabilities	7,452,849				8,536,062
Commitments and contingencies (Note 12)
Stockholders' equity:
Preferred stock, $0.01 par value per share; 1,000 shares authorized; none outstanding	—				—
Common stock, $0.01 par value per share; 350,000 shares authorized; 104,379 shares issued and 102,493 outstanding at December 31, 2017 and 103,578 shares issued and 101,672 outstanding at December 31, 2016	1,044				1,036
Additional paid-in capital	1,602,869				1,489,067
Retained earnings	5,464,571				4,642,402
Accumulated other comprehensive loss	(186,214		)		(324,739		)
Treasury stock, 1,886 shares at December 31, 2017 and 1,906 shares at December 31, 2016	(18,706		)		(18,901		)
Total stockholders' equity	6,863,564				5,788,865
Total liabilities and stockholders' equity	$	14,316,413			$	14,324,927

See accompanying notes to consolidated financial statements.

ROPER TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

Years ended December 31, 2017, 2016 and 2015

(Dollar and share amounts in thousands, except per share data)

	Years ended December 31,
	2017				2016				2015
Net revenues	$	4,607,471			$	3,789,925			$	3,582,395
Cost of sales	1,742,675				1,457,515				1,417,749
Gross profit	2,864,796				2,332,410				2,164,646
Selling, general and administrative expenses	1,654,552				1,277,847				1,136,728
Income from operations	1,210,244				1,054,563				1,027,918
Interest expense, net	180,566				111,559				84,225
Loss on extinguishment of debt	—				871				—
Other income/(expense), net	5,045				(1,481		)		58,652
Earnings before income taxes	1,034,723				940,652				1,002,345
Income taxes	62,951				282,007				306,278
Net earnings	$	971,772			$	658,645			$	696,067
Earnings per share:
Basic	$	9.51			$	6.50			$	6.92
Diluted	$	9.39			$	6.43			$	6.85
Weighted-average common shares outstanding:
Basic	102,168				101,291				100,616
Diluted	103,522				102,464				101,597

See accompanying notes to consolidated financial statements.

ROPER TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Years ended December 31, 2017, 2016 and 2015

(in thousands)

	Years ended December 31,
	2017				2016				2015
Net earnings	$	971,772			$	658,645			$	696,067
Other comprehensive income, net of tax:
Foreign currency translation adjustments	138,525				(111,960		)		(139,789		)
Unrecognized pension gain	—				—				(1,063		)
Total other comprehensive income/(loss), net of tax	138,525				(111,960		)		(140,852		)
Comprehensive income	$	1,110,297			$	546,685			$	555,215

See accompanying notes to consolidated financial statements.

ROPER TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

Years ended December 31, 2017, 2016 and 2015

(in thousands, except per share data)

	Common Stock
	Shares			Amount				Additional paid-in capital				Retained earnings				Accumulated other comprehensive earnings				Treasury stock				Total stockholders' equity
Balances at December 31, 2014	100,126			$	1,021			$	1,325,338			$	3,520,201			$	(71,927	)		$	(19,273	)		$	4,755,360
Net earnings	—			—				—				696,067				—				—				696,067
Stock option exercises	402			4				33,002				—				—				—				33,006
Treasury stock sold	18			—				2,710				—				—				179				2,889
Currency translation adjustments, net of $6,658 tax	—			—				—				—				(139,789		)		—				(139,789		)
Stock based compensation	—			—				61,766				—				—				—				61,766
Restricted stock activity	324			3				(14,697		)		—				—				—				(14,694		)
Stock option tax benefit, net of shortfalls	—			—				22,175				—				—				—				22,175
Conversion of senior subordinated convertible notes	—			—				(11,032		)		—				—				—				(11,032		)
Post-retirement benefit plan adjustments	—			—				—				—				(1,063		)		—				(1,063		)
Dividends declared ($1.05 per share)	—			—				—				(105,738		)		—				—				(105,738		)
Balances at December 31, 2015	100,870			$	1,028			$	1,419,262			$	4,110,530			$	(212,779	)		$	(19,094	)		$	5,298,947
Net earnings	—			—				—				658,645				—				—				658,645
Stock option exercises	372			4				27,970				—				—				—				27,974
Treasury stock sold	19			—				3,147				—				—				193				3,340
Currency translation adjustments, net of $2,570 tax	—			—				—				—				(111,960		)		—				(111,960		)
Stock based compensation	—			—				77,860				—				—				—				77,860
Restricted stock activity	411			4				(17,980		)		—				—				—				(17,976		)
Stock option tax benefit, net of shortfalls	—			—				(8,081		)		—				—				—				(8,081		)
Conversion of senior subordinated convertible notes	—			—				(13,111		)		—				—				—				(13,111		)
Dividends declared ($1.25 per share)	—			—				—				(126,773		)		—				—				(126,773		)
Balances at December 31, 2016	101,672			$	1,036			$	1,489,067			$	4,642,402			$	(324,739	)		$	(18,901	)		$	5,788,865
Net earnings	—			—				—				971,772				—				—				971,772
Stock option exercises	645			6				61,317				—				—				—				61,323
Treasury stock sold	20			—				4,003				—				—				195				4,198
Currency translation adjustments, net of $4,899 tax	—			—				—				—				138,525				—				138,525
Stock based compensation	—			—				81,324				—				—				—				81,324
Restricted stock activity	156			2				(32,842		)		—				—				—				(32,840		)
Dividends declared ($1.4625 per share)	—			—				—				(149,603		)		—				—				(149,603		)
Balances at December 31, 2017	102,493			$	1,044			$	1,602,869			$	5,464,571			$	(186,214	)		$	(18,706	)		$	6,863,564

See accompanying notes to consolidated financial statements.

ROPER TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended December 31, 2017, 2016 and 2015

(in thousands)

	Years ended December 31,
	2017				2016				2015
Cash flows from operating activities:
Net earnings	$	971,772			$	658,645			$	696,067
Adjustments to reconcile net earnings to cash flows from operating activities:
Depreciation and amortization of property, plant and equipment	49,513				37,299				38,185
Amortization of intangible assets	295,452				203,154				166,076
Amortization of deferred financing costs	7,227				5,612				4,136
Non-cash stock compensation	83,075				78,827				61,766
Gain on disposal of a business	—				—				(70,860		)
Gain on sale of assets	(9,393		)		—				—
Changes in operating assets and liabilities, net of acquired businesses:
Accounts receivable	(6,673		)		(20,734		)		52,597
Unbilled receivables	(13,493		)		(1,202		)		(21,844		)
Inventories	(15,363		)		6,353				(1,150		)
Accounts payable and accrued liabilities	73,333				20,176				(8,392		)
Deferred revenue	74,881				25,190				8,239
Income taxes	(256,971		)		(47,589		)		3,069
Other, net	(18,878		)		(1,946		)		936
Cash provided by operating activities	1,234,482				963,785				928,825
Cash flows from investing activities:
Acquisitions of businesses, net of cash acquired	(153,736		)		(3,721,758		)		(1,762,883		)
Capital expenditures	(48,752		)		(37,305		)		(36,260		)
Capitalized software expenditures	(10,784		)		(2,801		)		(2,439		)
Proceeds from disposal of a business	—				—				105,624
Proceeds from sale of assets	10,628				870				1,126
Other, net	(6,932		)		8,138				(3,500		)
Cash used in investing activities	(209,576		)		(3,752,856		)		(1,698,332		)
Cash flows from financing activities:
Proceeds from senior notes	—				1,200,000				900,000
Payment of senior notes	(400,000		)		—				—
Borrowings/(payments) under revolving line of credit, net	(660,000		)		1,750,000				180,000
Principal payments on convertible notes	—				(4,284		)		(4,006		)
Debt issuance costs	—				(17,266		)		(8,044		)
Cash dividends to stockholders	(142,753		)		(121,130		)		(100,334		)
Treasury stock sales	4,198				3,340				2,889
Stock award tax excess windfall benefit	—				—				22,228
Proceeds from stock based compensation, net	28,487				9,998				18,312
Redemption premium on convertible debt	—				(14,166		)		(13,126		)
Other	51				(1,229		)		(1,677		)
Cash provided by/(used in) financing activities	(1,170,017		)		2,805,263				996,242
Effect of exchange rate changes on cash	59,238				(37,503		)		(58,654		)
Net increase/(decrease) in cash and cash equivalents	(85,873		)		(21,311		)		168,081
Cash and cash equivalents, beginning of year	757,200				778,511				610,430
Cash and cash equivalents, end of year	$	671,327			$	757,200			$	778,511
Supplemental disclosures:
Cash paid for:
Interest	$	175,021			$	104,928			$	79,225
Income taxes, net of refunds received	$	320,235			$	329,596			$	280,801
Noncash investing activities:
Net assets of businesses acquired:
Fair value of assets, including goodwill	$	177,276			$	4,433,085			$	1,876,984
Liabilities assumed	(23,540		)		(711,327		)		(114,101		)
Cash paid, net of cash acquired	$	153,736			$	3,721,758			$	1,762,883

See accompanying notes to consolidated financial statements.

ROPER TECHNOLOGIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years ended December 31, 2017, 2016 and 2015

(1) Summary of Accounting Policies

Basis of Presentation - These financial statements present consolidated information for Roper Technologies, Inc. and its subsidiaries ("Roper," the "Company," "we," "our" or "us"). All significant intercompany accounts and transactions have been eliminated.

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.

Recent Accounting Pronouncements - The Financial Accounting Standards Board ("FASB") establishes changes to accounting principles under GAAP in the form of accounting standards updates ("ASUs") to the FASB's Accounting Standards Codification. The Company considers the applicability and impact of all ASUs. Any ASUs not listed below were assessed and determined to be either not applicable or are expected to have an immaterial impact on the Company's results of operations, financial position or cash flows.

Recently Adopted Accounting Pronouncements

In January 2017, the FASB issued an update simplifying the test for goodwill impairment. This update, effective on a prospective basis for goodwill impairment tests performed in fiscal years beginning after December 15, 2019, eliminates Step 2 from the goodwill impairment test. Under the amendments in the update, an entity should perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. Early adoption is permitted for interim or annual impairment tests performed on testing dates after January 1, 2017. The Company elected to early adopt this standard for it's annual goodwill impairment testing during the fourth quarter of 2017. The update did not have an impact on the Company's results of operations, financial position or cash flows.

In July 2015, the FASB issued an update providing guidance to simplify the measurement of inventory. This update, effective for fiscal years beginning after December 15, 2016, requires that inventory within the scope of the update be measured at the lower of cost and net realizable value. The update did not have a material impact on the Company's results of operations, financial position or cash flows.

In March 2016, the FASB issued an update on stock compensation. 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. This standard is effective for annual reporting periods beginning after December 15, 2016. The Company elected to early adopt this standard on a prospective basis in the quarter ended March 31, 2016. The impact of the early adoption resulted in the following:

•	The Company recorded tax benefits of $15.3 million within income tax expense for the year ended December 31, 2016 related to the excess tax benefit on share-based awards. Prior to adoption this amount would have been recorded as a reduction of additional paid-in capital. This change adds volatility to the Company's effective tax rate.

•	The Company no longer reclassifies the excess tax benefit from operating activities to financing activities in the statement of cash flows. The Company elected to apply this change in presentation prospectively and thus prior periods have not been adjusted.

•	The Company elected not to change its policy on accounting for forfeitures and continued to estimate the total number of awards for which the requisite service period will not be rendered.

•	The Company excluded the excess tax benefits from the assumed proceeds available to repurchase shares in the computation of its diluted earnings per share since adoption. This resulted in an increase in diluted weighted average common shares outstanding of 278,829 shares for the year ended December 31, 2016.

In March 2016, the FASB issued an update amending the equity method of accounting, eliminating the requirement that an entity retroactively adopt the equity method of accounting if an investment qualifies for the equity method as a result of an increase in the level of ownership or degree of influence. The amendments in the update, to be applied prospectively, are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted. The

Company elected to early adopt on a prospective basis effective January 1, 2016. The update did not have a material impact on its results of operations, financial condition or cash flows.

In September 2015, the FASB issued an update providing guidance to simplify the accounting for measurement period adjustments. This update, effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years, requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The Company adopted the update effective January 1, 2016. The update did not have a material impact on its results of operations, financial condition or cash flows.

In April 2015, the FASB issued an update providing guidance to determine whether the fee paid by an entity for a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the software license element of the arrangement should be accounted for consistently with the acquisition of other software licenses. A cloud computing arrangement that does not include a software license should be accounted for as a service contract. The update is effective for annual periods beginning after December 15, 2015, and may be adopted prospectively or retrospectively. The Company adopted the update prospectively effective January 1, 2016. The update did not have a material impact on its results of operations, financial condition or cash flows.

In June 2014, the FASB issued an update to the accounting for stock compensation. This update, effective for fiscal years beginning after December 15, 2015, modifies the accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. The Company adopted the update prospectively effective January 1, 2016. The update did not have a material impact on its results of operations, financial condition or cash flows.

Recently Released Accounting Pronouncements

In August 2016, the FASB issued an update clarifying the classification of certain cash receipts and cash payments in the statement of cash flows. This update, effective for annual reporting periods after December 15, 2017, including interim periods within those annual periods, addresses the following eight specific cash flow issues: Debt prepayment or debt extinguishment costs; settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies (including bank-owned life insurance policies); distributions received from equity method investees; beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. The Company does not expect the update to have a material impact on its results of operations, financial condition or cash flows.

In February 2016, the FASB issued an update on lease accounting. The update, effective for annual reporting periods after December 15, 2018, including interim periods within those annual periods, provides amendments to current lease accounting. These amendments include the recognition of lease assets and lease liabilities on the balance sheet and disclosing other key information about leasing arrangements. The Company is evaluating the impact of the update on its results of operations, financial condition and cash flows.

In May 2014, the FASB issued updates on accounting and disclosures for revenue from contracts with customers. These updates, effective for annual reporting periods after December 15, 2017, create a single, comprehensive revenue recognition model for all contracts with customers. The model is based on changes in contract assets (rights to receive consideration) and liabilities (obligations to provide a good or service). Revenue will be recognized based on the satisfaction of performance obligations, which occurs when control of a good or service transfers to a customer and enhanced disclosures will be required regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity's contracts with customers. Either a retrospective or cumulative effect transition method is permitted. The Company has elected to adopt using the modified retrospective transition method. The Company has completed its assessment to identify differences between the existing standard and new standard on its customer contracts. Based on this assessment, the impact of the new standard is due primarily to the acceleration of recognition of revenues and associated costs for certain of our software license contracts. Under existing guidance, these contracts are recognized ratably over the contractual term of post-contract support services in the event vendor-specific objective evidence is unavailable. The new standard requires recognition at once upon the transfer of control of the software license. The opening balance sheet adjustment as of January 1, 2018 under the modified retrospective transition method will be less than 1% of the Company's 2017 annual revenues, prior to the effects of income taxes. The Company believes it is following an appropriate timeline to allow for proper recognition, presentation and disclosure upon adoption effective the beginning of fiscal year 2018.

Accounts Receivable - Accounts receivable are stated net of an allowance for doubtful accounts and sales allowances of $12.7 million and $14.5 million at December 31, 2017 and 2016, respectively. Outstanding accounts receivable balances are reviewed periodically, and allowances are provided at such time that management believes it is probable that an account receivable is

uncollectible. The returns and other sales credit allowance is an estimate of customer returns, exchanges, discounts or other forms of anticipated concessions and is treated as a reduction in revenue.

Cash and Cash Equivalents - Roper considers highly liquid financial instruments with remaining maturities at acquisition of three months or less to be cash equivalents. Roper had no cash equivalents at December 31, 2017 and December 31, 2016.

Contingencies - Management continually assesses the probability of any adverse judgments or outcomes to its potential contingencies. Disclosure of the contingency is made if there is at least a reasonable possibility that a loss or an additional loss may have been incurred. In the assessment of contingencies as of December 31, 2017, management concluded that there were no matters for which there was a reasonable possibility of a material loss.

Earnings per Share - Basic earnings per share were calculated using net earnings and the weighted-average number of shares of common stock outstanding during the respective year. Diluted earnings per share were calculated using net earnings and the weighted-average number of shares of common stock and potential common stock outstanding during the respective year. Potentially dilutive common stock consisted of stock options and the premium over the conversion price on Roper's senior subordinated convertible notes based upon the trading price of the Company's common stock. Effective January 1, 2016, Roper adopted the provisions of an accounting standards update on a prospective basis which increased the number of potentially dilutive stock options as there is no longer a tax benefit in the calculation of dilutive stock options. See the caption "Recent Accounting Pronouncements" elsewhere in this Note for additional information regarding the ASU. The effects of potential common stock were determined using the treasury stock method (in thousands):

	Years ended December 31,
	2017			2016			2015
Basic weighted-average shares outstanding	102,168			101,291			100,616
Effect of potential common stock:
Common stock awards	1,354			1,126			887
Senior subordinated convertible notes	—			47			94
Diluted weighted-average shares outstanding	103,522			102,464			101,597

As of and for the years ended December 31, 2017, 2016 and 2015, there were 477,898, 1,144,350 and 618,220 outstanding stock options, respectively, that were not included in the determination of diluted earnings per share because doing so would have been antidilutive.

Estimates - The preparation of financial statements in conformity with generally accepted accounting principles in the United States ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities. Actual results could differ from those estimates.

Foreign Currency Translation and Transactions - Assets and liabilities of subsidiaries whose functional currency is not the U.S. dollar were translated at the exchange rate in effect at the balance sheet date, and revenues and expenses were translated at average exchange rates for the period in which those entities were included in Roper's financial results. Translation adjustments are reflected as a component of other comprehensive income. Foreign currency transaction gains and losses are recorded in the consolidated statement of earnings as other income/(expense). Foreign currency transaction losses were $1.4 million, $2.9 million and $0.7 million for the years ended December 31, 2017, 2016 and 2015.

Goodwill and Other Intangibles - Roper accounts for goodwill in a purchase business combination as the excess of the cost over the estimated fair value of net assets acquired. Business combinations can also result in other intangible assets being recognized. Amortization of intangible assets, if applicable, occurs over their estimated useful lives. Goodwill, which is not amortized, is tested for impairment on an annual basis (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). When testing goodwill for impairment, the Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the estimated fair value of a reporting unit is less than its carrying amount. If the Company elects to perform a qualitative assessment and determines that an impairment is more likely than not, then performance of the quantitative impairment test is required. The quantitative process utilizes both an income approach (discounted cash flows) and a market approach consisting of a comparable public company earnings multiples methodology to estimate the fair value of a reporting unit. To determine the reasonableness of the estimated fair values, the Company reviews the assumptions to ensure that neither the income approach nor the market approach provides significantly different valuations. If the estimated fair value exceeds the carrying value, no further work is required and no impairment loss is recognized. If the carrying value exceeds the estimated fair value, a non-cash impairment loss is recognized in the amount of that excess.

When performing the quantitative assessment, key assumptions used in the income and market methodologies are updated when the analysis is performed for each reporting unit. Various assumptions are utilized including forecasted operating results, strategic plans, economic projections, anticipated future cash flows, the weighted-average cost of capital, comparable transactions, market data and earnings multiples. The assumptions that have the most significant effect on the fair value calculations are the anticipated future cash flows, discount rates, and the earnings multiples. While the Company uses reasonable and timely information to prepare its cash flow and discount rate assumptions, actual future cash flows or market conditions could differ significantly resulting in future impairment charges related to recorded goodwill balances.

Roper has 33 reporting units with individual goodwill amounts ranging from zero to $2.3 billion. In 2017, the Company performed its annual impairment test in the fourth quarter for all reporting units. The Company conducted its analysis qualitatively and assessed whether it was more likely than not that the respective fair value of these reporting units was less than the carrying amount. The Company determined that impairment of goodwill was not likely in 31 of its reporting units and thus was not required to perform a quantitative analysis for these reporting units. For the remaining two reporting units, the Company performed its quantitative analysis and concluded that the fair value of each of these two reporting units was substantially in excess of its carrying value, with no impairment indicated as of October 1, 2017.

Recently acquired reporting units generally represent a higher inherent risk of impairment, which typically decreases as the businesses are integrated into the enterprise. Negative industry or economic trends, disruptions to its business, actual results significantly below expected results, unexpected significant changes or planned changes in the use of the assets, divestitures and market capitalization declines may have a negative effect on the fair value of Roper's reporting units.

The following events or circumstances, although not comprehensive, would be considered to determine whether interim testing of goodwill would be required:

•	a significant adverse change in legal factors or in the business climate;

•	an adverse action or assessment by a regulator;

•	unanticipated competition;

•	a loss of key personnel;

•	a more-likely-than-not expectation that a reporting unit or a significant portion of a reporting unit will be sold or otherwise disposed of;

•	the testing for recoverability under the Impairment or Disposal of Long-Lived Assets of a significant asset group within a reporting unit; and

•	recognition of a goodwill impairment loss in the financial statements of a subsidiary that is a component of a reporting unit.

Business combinations can also result in other intangible assets being recognized. Amortization of intangible assets, if applicable, occurs over their estimated useful lives. Trade names that are determined to have an indefinite useful economic life are not amortized, but separately tested for impairment during the fourth quarter of the fiscal year or on an interim basis if an event occurs that indicates the fair value is more likely than not below the carrying value. Roper first qualitatively assesses whether the existence of events or circumstances leads to a determination that it is more likely than not that the estimated fair value of an indefinite-lived trade name is less than its carrying amount. If necessary, Roper conducts a quantitative review using the relief-from-royalty method. This methodology assumes that, in lieu of ownership, a 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 revenues discounted using a risk adjusted rate of capital. Each royalty rate is determined based on the profitability of the trade name to which it relates and observed market royalty rates. 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. Trade names resulting from recent acquisitions generally represent the highest risk of impairment, which typically decreases as the businesses are integrated into Roper's enterprise.

The assessment of fair value for impairment purposes requires significant judgments to be made by management. Although forecasts are based on assumptions that are considered reasonable by management and consistent with the plans and estimates management uses to operate the underlying businesses, there is significant judgment in determining the expected results attributable to the reporting units. Changes in estimates or the application of alternative assumptions could produce significantly different results. No impairment resulted from the annual testing performed in 2017.

Roper evaluates whether there has been an impairment of identifiable intangible assets with definite useful economic lives, or of the remaining life of such assets, when certain indicators of impairment are present. In the event that facts and circumstances indicate that the cost or remaining period of amortization of any asset may be impaired, an evaluation of recoverability would be performed. If an evaluation is required, the estimated future gross, undiscounted cash flows associated with the asset would be

compared to the asset's carrying amount to determine if a write-down to fair value or a revision in the remaining amortization period is required.

Impairment of Long-Lived Assets - The Company determines whether there has been an impairment of long-lived assets, excluding goodwill and identifiable intangible assets that are determined to have indefinite useful economic lives, when certain indicators of impairment are present. In the event that facts and circumstances indicate that the cost or life of any long-lived assets may be impaired, an evaluation of recoverability would be performed. If an evaluation is required, the estimated future gross, undiscounted cash flows associated with the asset would be compared to the asset's carrying amount to determine if a write-down to fair value or revision to remaining life is required. Future adverse changes in market conditions or poor operating results of underlying long-lived assets could result in losses or an inability to recover the carrying value of the long-lived assets that may not be reflected in the assets' current carrying value, thereby possibly requiring an impairment charge or acceleration of depreciation or amortization expense in the future.

Income Taxes - The Company recognizes in the consolidated financial statements only those tax positions determined to be "more likely than not" of being sustained upon examination based on the technical merits of the positions. Interest and penalties related to unrecognized tax benefits are classified as a component of income tax expense.

The Company records a valuation allowance to reduce its deferred tax assets if, based on the weight of available evidence, both positive and negative, for each respective tax jurisdiction, it is more likely than not that some portion or all of such deferred tax assets will not be realized. Available evidence which is considered in determining the amount of valuation allowance required includes, but is not limited to, the Company’s estimate of future taxable income and any applicable tax-planning strategies.

Certain assets and liabilities have different bases for financial reporting and income tax purposes. Deferred income taxes have been provided for these differences at the enacted tax rates expected to be paid. See Note 7 for information regarding income taxes.

Interest Rate Risk - The Company manages interest rate risk by maintaining a combination of fixed- and variable-rate debt, which may include interest rate swaps to convert fixed-rate debt to variable-rate debt, or to convert variable-rate debt to fixed-rate debt. Interest rate swaps are recorded at fair value in the balance sheet as an asset or liability, and the changes in fair values of both the swap and the hedged item are recorded as interest expense in current earnings. There were no interest rate swaps outstanding at December 31, 2017 or December 31, 2016.

Inventories - Inventories are valued at the lower of cost and net realizable value. Cost is determined using the first-in, first-out method. The Company writes down its inventory for estimated obsolescence or excess inventory equal to the difference between the cost of inventory and the estimated net realizable value based upon assumptions about future demand and market conditions.

Other Comprehensive Income - Comprehensive income includes net earnings and all other non-owner sources of changes in a company's net assets.

Product Warranties - The Company sells certain of its products to customers with a product warranty that allows customers to return a defective product during a specified warranty period following the purchase in exchange for a replacement product, repair at no cost to the customer or the issuance of a credit to the customer. The Company accrues its estimated exposure to warranty claims based upon current and historical product sales data, warranty costs incurred and any other related information known to the Company.

Property, Plant and Equipment and Depreciation and Amortization - Property, plant and equipment is stated at cost less accumulated depreciation and amortization. Depreciation and amortization are provided for using principally the straight-line method over the estimated useful lives of the assets as follows:

Buildings	20-30 years
Machinery	8-12 years
Other equipment	3-5 years

Research and Development - Research and development ("R&D") costs include salaries and benefits, rents, supplies, and other costs related to products under development. Research and development costs are expensed in the period incurred and totaled $281.1 million, $195.4 million and $164.2 million for the years ended December 31, 2017, 2016 and 2015, respectively.

Revenue Recognition - The Company recognizes revenue when all of the following criteria are met:

•	persuasive evidence of an arrangement exists;

•	delivery has occurred or services have been rendered;

•	the seller's price to the buyer is fixed or determinable; and

•	collectibility is reasonably assured.

In addition, the Company recognizes revenue from the sale of product when title and risk of loss pass to the customer, which is generally when product is shipped. The Company recognizes revenue from services when such services are rendered or, if applicable, upon customer acceptance. Revenues under certain relatively long-term and relatively large-value construction and software projects are recognized under the percentage-of-completion method using the ratio of costs incurred to total estimated costs as the measure of performance. The Company recognized revenues of $249 million, $241 million and $253 million for the years ended December 31, 2017, 2016 and 2015, respectively, using this method. Estimated losses on any projects are recognized as soon as such losses become known.

Capitalized Software - The Company accounts for capitalized software under applicable accounting guidance which, among other provisions, requires capitalization of certain internal-use software costs once certain criteria are met. Overhead, general and administrative and training costs are not capitalized. Capitalized software balances, net of accumulated amortization, were $14.0 million and $4.4 million at December 31, 2017 and 2016, respectively.

Stock-Based Compensation - The Company recognizes expense for the grant date fair value of its employee stock awards on a straight-line basis (or, in the case of performance-based awards, on a graded basis) over the employee's requisite service period (generally the vesting period of the award). The fair value of option awards is estimated using the Black-Scholes option valuation model.

(2) Business Acquisitions and Divestitures

Roper completed four business acquisitions in the year ended December 31, 2017, with an aggregate purchase price of $152 million, net of cash acquired. The results of operations of the acquired businesses did not have a material impact on Roper's consolidated results of operations.

Acquisition of Phase Technology - On June 21, 2017, Roper acquired the assets of Phase Technology, a business engaged in the design, manufacture, marketing and sales of test instruments. Phase Technology is reported in the Energy Systems & Controls segment.

The results of the following acquisitions are reported in the RF Technology segment:

Acquisition of Handshake Software, Inc. - On August 4, 2017, Roper acquired 100% of the shares of Handshake Software, Inc., a provider of search products, portals and services for legal professionals.

Acquisition of Workbook Software A/S - On September 15, 2017, Roper acquired 100% of the shares of Workbook Software A/S, a provider of software solutions for customer relationship management, project management and finance/accounting.

Acquisition of Onvia, Inc. - On November 17, 2017, Roper acquired 100% of the outstanding shares of Onvia, Inc. ("Onvia") common stock for $9.00 per share in an all-cash tender offer. Onvia provides enterprise, mid-market and small business customers with sales lead generation technologies into federal, state and local government markets.

The Company recorded $83 million in goodwill and $85 million of other identifiable intangibles in connection with the acquisitions; however, purchase price allocations are preliminary pending final tax-related adjustments. The amortizable intangible assets include primarily customer relationships of $68 million (15 year weighted average useful life) and technology of $13 million (6 year weighted average useful life).

Sale of Product Line - On May 15, 2017, Roper completed the sale of a product line in our Energy Systems & Controls segment for $10.4 million. The pretax gain on the sale was $9.4 million, which is reported in Other income/(expense), net in the consolidated statements of earnings.

2016 Acquisitions – During the year ended December 31, 2016, Roper completed six business combinations. Roper acquired the businesses in order to both expand and complement its existing technologies. The results of operations of the acquired companies have been included in Roper's consolidated results since the date of each acquisition.

The largest of the 2016 acquisitions was Deltek Inc., a global provider of enterprise software and information solutions for government contractors, professional services firms and other project-based businesses. Roper acquired 100% of the shares of Project Diamond Holdings Corp. (the parent company of Deltek) on December 27, 2016, in a $2.8 billion all-cash transaction. Deltek is reported in the RF Technology segment.

The following table (in thousands) summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition.

Accounts receivable	$	94,506
Other current assets	37,558
Identifiable intangibles	972,000
Goodwill	2,234,549
Other assets	43,098
Total assets acquired	3,381,711
Deferred revenue	166,393
Other current liabilities	57,433
Long-term deferred tax liability	349,810
Other liabilities	7,935
Net assets acquired	$	2,800,140

The majority of the goodwill is not expected to be deductible for tax purposes. Of the $972 million of acquired intangible assets acquired, $145 million was assigned to trade names that are not subject to amortization and $62 million was assigned to in process research and development. The remaining $765 million of acquired intangible assets have a weighted-average useful life of 12 years. The intangible assets that make up that amount include customer relationships of $625 million (13 year weighted-average useful life) and unpatented technology of $140 million (6 year weighted-average useful life).

The Company expensed transaction costs of $4.3 million related to the Deltek acquisition as corporate general and adminstrative expenses, as incurred.

Roper's results for the year ended December 31, 2016 included results from Deltek between December 28, 2016 and December 31, 2016. In that period, Deltek contributed $7.9 million in revenue and $0.8 million of earnings to Roper's results. The following unaudited pro forma summary presents consolidated information as if the acquisition of Deltek had occurred on January 1, 2015 (amounts in millions, except per share data):

	Pro forma Year ended December 31,
	2016				2015
Net revenues	$	4,268,052			$	4,012,030
Net income	656,404				647,089
Earnings per share, basic	6.48				6.43
Earnings per share, diluted	6.41				6.37

Pro forma earnings were adjusted by $47.4 million for the year ended December 31, 2016 for non-recurring acquisition and other costs. Adjustments were also made for recurring changes in amortization, interest expense and taxes related to the acquisition.

During the year ended December 31, 2016, Roper completed five other acquisitions which were immaterial. The aggregate purchase price of these acquisitions totaled $920 million of cash. The Company recorded $372 million in other identifiable intangibles and $642 million in goodwill in connection with these acquisitions. Supplemental pro forma information has not been provided as the acquisitions did not have a material impact on Roper's consolidated results of operations individually or in aggregate.

The results of the following acquisitions are reported in the Medical & Scientific Imaging segment:

–	Clinisys - On January 7, 2016, Roper acquired 100% of the shares of CliniSys Group Ltd. ("CliniSys"), a provider of clinical laboratory software headquartered in the United Kingdom.

–	PCI Medical - On March 17, 2016, Roper acquired the assets of PCI Medical Inc., a provider of medical probe and scope disinfection products.

–	GeneInsight - On April 1, 2016, the Company acquired 100% of the shares of GeneInsight Inc., a provider of software for managing the analysis, interpretation and reporting of genetic tests.

–	UNIConnect - On November 10, 2016, Roper acquired the assets of UNIConnect LC, a provider of process management software for molecular laboratories.

ConstructConnect - On October 31, 2016, Roper acquired 100% of the shares of iSqFt Holdings Inc. (d/b/a ConstructConnect), a provider of cloud-based data, collaboration, and workflow automation solutions to the commercial construction industry. ConstructConnect is reported in the RF Technology segment.

The Company expensed transaction costs of $4.2 million related to the acquisitions as corporate general and adminstrative expenses, as incurred.

The majority of the goodwill recorded for these five companies is not expected to be deductible for tax purposes. Of the $372 million of intangible assets acquired, $34 million was assigned to trade names that are not subject to amortization. The remaining $338 million of acquired intangible assets have a weighted-average useful life of 12 years. The intangible assets that make up that amount include customer relationships of $242 million (14 year weighted-average useful life), unpatented technology of $66 million (6 year weighted-average useful life) and software of $30 million (9 year weighted-average useful life).

2015 Acquisitions – During the year ended December 31, 2015, Roper completed eight business combinations. The results of operations of the acquired companies have been included in Roper's consolidated results since the date of each acquisition. Supplemental pro forma information has not been provided as the acquisitions did not have a material impact on Roper's consolidated results of operations individually or in aggregate.

The results of the following acquisitions are reported in the Medical & Scientific Imaging segment:

–	Strata - On January 21, 2015, Roper acquired 100% of the shares of Strata Decision Technologies LLC ("Strata"), a provider of planning and budget software for health care providers.

–	Softwriters - On February 9, 2015, Roper acquired 100% of the shares of Softwriters Inc., a provider of long-term care pharmacy operating software.

–	Data Innovations - On March 4, 2015, Roper acquired 100% of the shares of Data Innovations LLC, a provider of clinical and blood laboratory middleware.

–	AHP - On September 4, 2015, Roper acquired the assets of Atlantic Health Partners LLC ("AHP"), a group purchasing organization specializing in vaccines for the physician marketplace.

–	Atlas - On October 26, 2015, Roper acquired 100% of the shares of Atlas Database Software Corp. ("Atlas"), a provider of clinical process integration to private and public health sectors.

The results of the following acquisitions are reported in the RF Technology segment:

–	On Center - On July 20, 2015, Roper acquired 100% of the shares of On Center Software LLC ("On Center"), a provider of construction automation technology.

–	RF IDeas - On September 1, 2015, Roper acquired 100% of the shares of RF IDeas, Inc., a provider of proprietary identification card technology solutions.

–	Aderant - On October 21, 2015, Roper acquired 100% of the shares of Aderant Holdings, Inc. ("Aderant"), a provider of comprehensive software solutions for law and other professional services firms.

The aggregate purchase price for the 2015 acquisitions was $1.8 billion, paid in cash. Roper purchased the businesses to expand upon existing software, supply chain and medical platforms.

The Company expensed transaction costs of $5.9 million related to the acquisitions as corporate general and administrative expenses, as incurred.

The Company recorded $1.2 billion in goodwill and $731 million in other identifiable intangibles in connection with the acquisitions. The majority of the goodwill recorded is not expected to be deductible for tax purposes. Of the $731 million of intangible assets acquired, $51 million was assigned to trade names that are not subject to amortization. The remaining $680 million of acquired intangible assets have a weighted-average useful life of 17 years. The intangible assets that make up that amount include customer relationships of $541 million (19 year weighted-average useful life), unpatented technology of $100 million (8 year weighted-average useful life) and software of $39 million (6 year weighted-average useful life).

Divestiture of Abel - On October 2, 2015, Roper completed the sale of Abel Pumps ("Abel") for $106 million (€95 million), net of cash divested. The pretax gain on the divestiture was $70.9 million, which is reported as Other income/(expense), net on the consolidated statement of earnings. The gain resulted in tax expense of $46 million as well as a future tax benefit of $11 million.

The year to date pretax income of Abel was $5.9 million for the period ended October 2, 2015. Abel was reported in the Industrial Technology segment.

(3) Inventories

The components of inventories at December 31 were as follows (in thousands):

	2017				2016
Raw materials and supplies	$	132,949			$	113,632
Work in process	27,649				24,290
Finished products	82,445				81,263
Inventory reserves	(38,110		)		(37,233		)
	$	204,933			$	181,952

(4) Property, Plant and Equipment

The components of property, plant and equipment at December 31 were as follows (in thousands):

	2017				2016
Land	$	2,471			$	2,404
Buildings	90,683				88,201
Machinery and other equipment	226,320				221,325
Computer equipment	77,508				70,110
Software	62,387				54,451
	459,369				436,491
Accumulated depreciation	(316,834		)		(295,173		)
	$	142,535			$	141,318

Depreciation and amortization expense related to property, plant and equipment was $49,513, $37,299 and $38,185 for the years ended December 31, 2017, 2016 and 2015, respectively.

(5) Goodwill and Other Intangible Assets

The carrying value of goodwill by segment was as follows (in thousands):

	RF Technology				Medical & Scientific Imaging				Industrial Technology				Energy Systems & Controls				Total
Balances at December 31, 2015	$	1,993,299			$	3,039,197			$	374,033			$	418,197			$	5,824,726
Goodwill acquired	2,710,223				166,768				—				—				2,876,991
Currency translation adjustments	(15,118		)		(19,100		)		(10,055		)		(7,774		)		(52,047		)
Reclassifications and other	(734		)		(1,794		)		—				—				(2,528		)
Balances at December 31, 2016	$	4,687,670			$	3,185,071			$	363,978			$	410,423			$	8,647,142
Goodwill acquired	63,490				—				—				19,169				82,659
Currency translation adjustments	19,337				17,582				13,540				8,395				58,854
Reclassifications and other	28,394				3,264				—				—				31,658
Balances at December 31, 2017	$	4,798,891			$	3,205,917			$	377,518			$	437,987			$	8,820,313

Reclassifications and other during the year ended December 31, 2017 were due primarily to tax adjustments for 2016 acquisitions. See Note 2 for information regarding acquisitions.

Other intangible assets were comprised of (in thousands):

	Cost				Accum. amort.				Net book value
Assets subject to amortization:
Customer related intangibles	$	3,272,081			$	(712,718	)		$	2,559,363
Unpatented technology	462,152				(144,025		)		318,127
Software	184,761				(56,882		)		127,879
Patents and other protective rights	24,656				(20,399		)		4,257
Trade names	6,591				(653		)		5,938
Assets not subject to amortization:
Trade names	578,279				—				578,279
In process research and development	62,000				—				62,000
Balances at December 31, 2016	$	4,590,520			$	(934,677	)		$	3,655,843
Assets subject to amortization:
Customer related intangibles	$	3,355,232			$	(913,680	)		$	2,441,552
Unpatented technology	544,046				(207,678		)		336,368
Software	184,703				(84,825		)		99,878
Patents and other protective rights	26,090				(22,729		)		3,361
Trade names	6,635				(1,731		)		4,904
Assets not subject to amortization:
Trade names	587,737				—				587,737
In process research and development	1,418				—				1,418
Balances at December 31, 2017	$	4,705,861			$	(1,230,643	)		$	3,475,218

Amortization expense of other intangible assets was $294 million, $201 million, and $164 million during the years ended December 31, 2017, 2016 and 2015, respectively. Amortization expense is expected to be $294 million in 2018, $282 million in 2019, $276 million in 2020, $264 million in 2021 and $260 million in 2022.

(6) Accrued Liabilities

Accrued liabilities at December 31 were as follows (in thousands):

	2017				2016
Interest	$	20,060			$	21,742
Customer deposits	29,236				16,707
Commissions	8,341				9,144
Warranty	10,587				10,548
Accrued dividend	42,921				36,077
Rebates	29,996				19,414
Billings in excess of cost	23,284				12,381
Other	102,149				93,326
	$	266,574			$	219,339

(7) Income Taxes

Earnings before income taxes for the years ended December 31, 2017, 2016 and 2015 consisted of the following components (in thousands):

	2017				2016				2015
United States	$	783,654			$	721,000			$	710,614
Other	251,069				219,652				291,731
	$	1,034,723			$	940,652			$	1,002,345

Components of income tax expense for the years ended December 31, 2017, 2016 and 2015 were as follows (in thousands):

	2017				2016				2015
Current:
Federal	$	316,031			$	239,217			$	229,224
State	29,768				21,779				22,041
Foreign	89,894				54,937				71,507
Deferred:
Federal	(358,300		)		(26,760		)		6,710
State	(3,670		)		189				(16,844		)
Foreign	(10,772		)		(7,355		)		(6,360		)
	$	62,951			$	282,007			$	306,278

Reconciliations between the statutory federal income tax rate and the effective income tax rate for the years ended December 31, 2017, 2016 and 2015 were as follows:

	2017			2016			2015
Federal statutory rate	35.0	%		35.0	%		35.0	%
Foreign rate differential	(2.6	)		(3.2	)		(3.3	)
R&D tax credits	(0.8	)		(0.7	)		(0.5	)
State taxes, net of federal benefit	1.9			1.9			2.0
Section 199 deduction	(1.3	)		(1.5	)		(1.3	)
Stock-based compensation	(3.9	)		(1.6	)		—
Tax Cuts and Jobs Act of 2017	(20.8	)		—			—
Other, net	(1.4	)		0.1			(1.3	)
	6.1	%		30.0	%		30.6	%

The deferred income tax balance sheet accounts arise from temporary differences between the amount of assets and liabilities recognized for financial reporting and tax purposes.

Components of the deferred tax assets and liabilities at December 31 were as follows (in thousands):

	2017				2016
Deferred tax assets:
Reserves and accrued expenses	$	121,509			$	186,120
Inventories	5,094				8,967
Net operating loss carryforwards	71,774				87,010
R&D credits	9,570				7,933
Foreign tax credits	—				9,203
Valuation allowance	(25,690		)		(26,009		)
Total deferred tax assets	$	182,257			$	273,224
Deferred tax liabilities:
Reserves and accrued expenses	$	39,566			$	13,915
Amortizable intangible assets	935,874				1,400,792
Plant and equipment	5,748				6,102
Total deferred tax liabilities	$	981,188			$	1,420,809

As of December 31, 2017, the Company had approximately $29.2 million of tax-effected U.S. federal net operating loss carryforwards that if not utilized will expire in years 2021 through 2037. The U.S. federal net operating loss carryforwards decreased from 2016 to 2017 primarily due to reduction in U.S. federal corporate tax rate for tax years beginning after December 31, 2017. The Company has approximately $26.1 million of tax-effected state net operating loss carryforwards (without regard to federal benefit of state) that if not utilized will expire in years 2018 through 2037. The state net operating loss carryforwards are primarily related to Florida and New Jersey, but the Company has smaller net operating losses in various other states. The Company has approximately $22.0 million of tax-effected foreign net operating loss carryforwards. Some of these net operating loss carryforwards have an indefinite carryforward period and those that do not if not utilized will begin to expire in 2018. Additionally, the Company has $11.3 million of U.S. federal and state research and development tax credit carryforwards (without regard to federal benefit of state) that will expire in years 2018 through 2037.

As of December 31, 2017, the Company determined that a total valuation allowance of $25.7 million was necessary to reduce U.S. federal and state deferred tax assets by $9.5 million and foreign deferred tax assets by $16.2 million, where it was more likely than not that all of such deferred tax assets will not be realized. As of December 31, 2017, based on the Company's estimates of future taxable income and any applicable tax-planning strategies within various tax jurisdictions, the Company believes that it is more likely than not that the remaining net deferred tax assets will be realized.

The Company recognizes in the consolidated financial statements only those tax positions determined to be "more likely than not" of being sustained upon examination based on the technical merits of the positions. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

	2017				2016				2015
Beginning balance	$	38,678			$	26,140			$	28,567
Additions for tax positions of prior periods	24,804				3,450				3,525
Additions for tax positions of the current period	4,174				9,012				3,299
Additions due to acquisitions	—				5,049				6,177
Reductions for tax positions of prior periods	(11,162		)		(1,165		)		(12,206		)
Reductions attributable to settlements with taxing authorities	(1,536		)		(568		)		(142		)
Reductions attributable to lapses of applicable statute of limitations	(2,769		)		(3,240		)		(3,080		)
Ending balance	$	52,189			$	38,678			$	26,140

The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is $50.4 million. Interest and penalties related to unrecognized tax benefits are classified as a component of income tax expense and totaled an expense of $1.3 million in 2017. Accrued interest and penalties were $5.1 million at December 31, 2017 and $3.8 million at December 31, 2016. During the next twelve months, it is reasonably possible that the unrecognized tax benefits may decrease by a net $2.3 million, mainly due to anticipated statute of limitations lapses in various jurisdictions.

The Company and its subsidiaries are subject to U.S. federal income tax as well as income tax in multiple state, city and foreign jurisdictions. The Company's federal income tax returns for 2015 through the current period remain subject to examination and the relevant state, city and foreign statutes vary. The Company does not expect the assessment of any significant additional tax in excess of amounts reserved.

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. The Tax Act contains provisions which impact the Company’s current and future income taxes including a reduction in the US federal corporate income tax rate from 35% to 21%, a one-time deemed mandatory repatriation tax imposed on all undistributed foreign earnings, and the introduction of a modified territorial taxation system.

The SEC released Staff Accounting Bulletin No. 118 (“SAB 118”) on December 22, 2017 to provide guidance where the accounting under ASC 740, Income Taxes, is incomplete for certain income tax effects of the Tax Act upon issuance of financial statements for the reporting period in which the Tax Act was enacted. SAB 118 provides that if a Company can determine a reasonable estimate, it should be reported as a provisional amount and adjusted during a measurement period. If a Company is unable to determine a reasonable estimate, no related provisional amounts would be recorded until a reasonable estimate can be determined, within the measurement period. The measurement period extends until all necessary information has been obtained, prepared, and analyzed, but no longer than 12-months from the date of enactment of the Tax Act.

The reduction in the US federal corporate income tax rate from 35% to 21% and certain immaterial changes in tax basis resulted in a one-time estimated benefit of $379.0 million due to remeasurement of the Company’s deferred taxes. This estimate is a provisional amount that will be finalized during the measurement period once all information pertaining to the deferred tax assets and liabilities has been obtained and analyzed. The reduction in tax rate will also impact the Company’s current tax expense in future periods beginning in 2018.

The one-time deemed mandatory repatriation tax on all undistributed foreign earnings resulted in a one-time estimated charge of $110.7 million. The Company will elect to pay the liability over 8 years. This federal and state tax estimate is a provisional amount that will be finalized during the measurement period once all information pertaining to the historical foreign earnings and profits with available tax credits has been obtained and analyzed.

The introduction of a modified territorial taxation system resulted in a one-time estimated charge of $28.7 million due to the Company’s change in its indefinite reinvestment assertion on foreign earnings. The Company now intends to distribute all historical earnings subject to the deemed repatriation tax and has provided for deferred taxes related to the future state and foreign tax cost to repatriate. This estimate is a provisional amount that will be finalized during the measurement period once all information pertaining to the underlying calculation has been obtained and analyzed, and interpretations to the legislation have been decided. The Company also incurred a one-time estimated charge of $24.2 million resulting from the write-off of indirect benefits associated with uncertain tax positions. The Company is currently unable to estimate the amount of these indirect benefits which will be utilizable due to uncertainty surrounding interpretations to the legislations and timing of the related tax payments. This amount will be finalized during the measurement period as information becomes available.

In January 2018, the FASB released guidance on accounting for taxes on the global intangible low-taxed income (“GILTI”) provisions of the Tax Act. The Company is still evaluating its position whether to account for deferred taxes related to GILTI inclusions or to treat any taxes on GILTI inclusions as a period cost. The Company will perform an analysis during the measurement period and will disclose the policy election in its financial statements once its analysis has been finalized.

(8) Long-Term Debt

On September 23, 2016, Roper entered into a five-year $2.5 billion unsecured credit facility (the "2016 Facility") with JPMorgan Chase Bank, N.A., as administrative agent, and a syndicate of lenders, which replaced its previous $1.85 billion unsecured credit facility dated as of July 27, 2012, as amended as of October 28, 2015 (the "2012 Facility"). The 2016 Facility comprises a five year $2.5 billion revolving credit facility, which includes availability of up to $150 million for letters of credit. Roper may also, subject to compliance with specified conditions, request term loans or additional revolving credit commitments in an aggregate amount not to exceed $500 million. At December 31, 2017, there were $1.3 billion of outstanding borrowings under the 2016 Facility.

The 2016 Facility contains affirmative and negative covenants which, among other things, limit Roper's ability to incur new debt, enter into certain mergers and acquisitions, sell assets and grant liens, make restricted payments (including the payment of dividends on our common stock) and capital expenditures, or change its line of business. Roper is also subject to financial covenants which require the Company to limit its consolidated total leverage ratio and to maintain a consolidated interest coverage ratio. The most restrictive covenant is the consolidated total leverage ratio which is limited to 3.5 to 1.

On December 2, 2016, Roper amended the 2016 facility to allow the consolidated total leverage ratio be increased, no more than twice during the term of the 2016 facility, to 4.0 to 1 for a consecutive four quarter fiscal period per increase (or, for any portion of such four quarter fiscal period in which the maximum would be 4.25 to 1 pursuant to the 2016 facility amendment, 4.25 to 1). In conjunction with the Deltek acquistion (see Note 2), the Company increased the maximum consolidated total leverage ratio covenant to 4.25 to 1 through June 30, 2017 and 4.00 to 1 through December 31, 2017.

The Company was in compliance with its debt covenants throughout the years ended December 31, 2017 and 2016.

On November 15, 2017, $400 million of senior notes due 2017 matured and were repaid using cash on hand and revolver borrowings from the 2016 Facility.

On December 19, 2016, the Company completed a public offering of $500 million aggregate principal amount of 2.80% senior unsecured notes due December 15, 2021 and $700 million aggregate principal amount of 3.80% senior unsecured notes due December 15, 2026. The notes bear interest at a fixed rate of 2.80% and 3.80% per year, respectively, payable semi-annually in arrears on June 15 and December 15 of each year, beginning June 15, 2017.

On December 7, 2015, the Company completed a public offering of $600 million aggregate principal amount of 3.00% senior unsecured notes due December 15, 2020 and $300 million aggregate principal amount of 3.85% senior unsecured notes due December 15, 2025. The notes bear interest at a fixed rate of 3.00% and 3.85% per year, respectively, payable semi-annually in arrears on June 15 and December 15 of each year, beginning June 15, 2016.

On June 6, 2013, the Company completed a public offering of $800 million aggregate principal amount of 2.05% senior unsecured notes due October 1, 2018. The notes bear interest at a fixed rate of 2.05% per year, payable semi-annually in arrears on April 1 and October 1 of each year, beginning October 1, 2013.

On November 21, 2012, the Company completed a public offering of $500 million aggregate principal amount of 3.125% senior unsecured notes due November 15, 2022. The notes bear interest at a fixed rate of 3.125% per year, payable semi-annually in arrears on May 15 and November 15 of each year, beginning May 15, 2013.

In September 2009, the Company completed a public offering of $500 million aggregate principal amount of 6.25% senior unsecured notes due September 1, 2019. The notes bear interest at a fixed rate of 6.25% per year, payable semi-annually in arrears on March 1 and September 1 of each year, beginning March 1, 2010.

Roper may redeem some or all of these notes at any time or from time to time, at 100% of their principal amount, plus a make-whole premium based on a spread to U.S. Treasury securities.

The Company's senior notes are unsecured senior obligations of the Company and rank equally in right of payment with all of Roper's existing and future unsecured and unsubordinated indebtedness. The notes are effectively subordinated to any of its existing and future secured indebtedness to the extent of the value of the collateral securing such indebtedness. The notes are not guaranteed by any of Roper's subsidiaries and are effectively subordinated to all existing and future indebtedness and other liabilities of Roper's subsidiaries.

Total debt at December 31 consisted of the following (in thousands):

	2017				2016
2016 Facility	$	1,270,000			$	1,930,000
$400 million 1.850% senior notes due 2017	—				400,000
$800 million 2.050% senior notes due 2018	800,000				800,000
$500 million 6.250% senior notes due 2019	500,000				500,000
$600 million 3.000% senior notes due 2020	600,000				600,000
$500 million 2.800% senior notes due 2021	500,000				500,000
$500 million 3.125% senior notes due 2022	500,000				500,000
$300 million 3.850% senior notes due 2025	300,000				300,000
$700 million 3.800% senior notes due 2026	700,000				700,000
Other	3,149				2,989
Less unamortized debt issuance costs	(17,594		)		(23,453		)
Total debt	5,155,555				6,209,536
Less current portion, net of issuance costs	800,944				400,975
Long-term debt	$	4,354,611			$	5,808,561

The 2016 Facility and Roper's $3.9 billion senior notes provide substantially all of Roper's daily external financing requirements. The interest rate on the borrowings under the 2016 Facility is calculated based upon various recognized indices plus a margin as defined in the credit agreement. At December 31, 2017, Roper's fixed debt consisted of $3.9 billion of senior notes, $3.1 million of other debt in the form of capital leases, several smaller facilities that allow for borrowings or the issuance of letters of credit in foreign locations to support Roper's non-U.S. businesses and $75.9 million of outstanding letters of credit at December 31, 2017.

Future maturities of total debt during each of the next five years ending December 31 and thereafter were as follows (in thousands):

2018	$	801,503
2019	501,061
2020	600,529
2021	1,770,047
2022	500,009
Thereafter	1,000,000
Total	$	5,173,149

(9) Fair Value

Roper's debt at December 31, 2017 included $3.9 billion of fixed-rate senior notes with the following fair values (in millions):

$800 million 2.050% senior notes due 2018	800
$500 million 6.250% senior notes due 2019	531
$600 million 3.000% senior notes due 2020	608
$500 million 2.800% senior notes due 2021	501
$500 million 3.125% senior notes due 2022	505
$300 million 3.850% senior notes due 2025	311
$700 million 3.800% senior notes due 2026	723

The fair values of the senior notes are based on the trading prices of the notes, which the Company has determined to be Level 2 in the FASB fair value hierarchy. Most of Roper's other borrowings at December 31, 2017 were at various interest rates that adjust relatively frequently under its credit facility. The estimated fair value for these borrowings at December 31, 2017 approximated the carrying value of these borrowings.

(10) Retirement and Other Benefit Plans

Roper maintains four defined contribution retirement plans under the provisions of Section 401(k) of the IRC covering substantially all U.S. employees. Roper partially matches employee contributions. Costs related to all such plans were $27.6 million, $23.7 million and $20.4 million for 2017, 2016 and 2015, respectively.

Roper also maintains various defined benefit retirement plans covering employees of non-U.S. and certain U.S. subsidiaries and a plan that supplements certain employees for the contribution ceiling applicable to the Section 401(k) plans. The costs and accumulated benefit obligations associated with each of these plans were not material.

(11) Stock-Based Compensation

The Roper Technologies, Inc. 2016 Incentive Plan ("2016 Plan") is a stock-based compensation plan used to grant incentive stock options, nonqualified stock options, restricted stock, stock appreciation rights or equivalent instruments to Roper's employees, officers and directors. At December 31, 2017, 7,802,395 shares were available to grant under the 2016 Plan.

Under the Roper Technologies, Inc., Employee Stock Purchase Plan ("ESPP"), all employees in the U.S. and Canada are eligible to designate up to 10% of eligible earnings to purchase Roper's common stock at a 5% discount to the average closing price of its common stock at the beginning and end of a quarterly offering period. Common stock sold to the employees may be either treasury stock, stock purchased on the open market, or newly issued shares.

Stock based compensation expense for the years ended December 31, 2017, 2016 and 2015 was as follows (in millions):

	2017				2016				2015
Stock based compensation	$	83.1			$	78.8			$	61.8
Tax benefit recognized in net earnings	29.1				27.6				21.6
Windfall tax benefit, net	—				—				22.2

Windfall tax benefits are no longer calculated due to the adoption of the ASU related to stock compensation (see Note 1), as all tax benefits are recognized in net income.

Stock Options – Stock options are typically granted at prices not less than 100% of market value of the underlying stock at the date of grant. Stock options typically vest over a period of three to five years from the grant date and expire ten years after the grant date. The Company recorded $18.3 million, $20.1 million, and $15.3 million of compensation expense relating to outstanding options during 2017, 2016 and 2015, respectively, as a component of general and administrative expenses, primarily at corporate.

The Company estimates the fair value of its option awards using the Black-Scholes option valuation model. The stock volatility for each grant is measured using the weighted-average of historical daily price changes of the Company's common stock over the most recent period equal to the expected life of the grant. The expected term of options granted is derived from historical data to estimate option exercises and employee forfeitures, and represents the period of time that options granted are expected to be outstanding. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The weighted-average fair value of options granted in 2017, 2016 and 2015 were calculated using the following weighted-average assumptions:

	2017			2016			2015
Weighted-average fair value ($)	40.87			34.57			33.98
Risk-free interest rate (%)	2.03			1.44			1.53
Average expected option life (years)	5.26			5.20			5.10
Expected volatility (%)	18.74			21.35			22.17
Expected dividend yield (%)	0.67			0.70			0.62

The following table summarizes the Company's activities with respect to its share-based compensation plans for the years ended December 31, 2017 and 2016:

	Number of shares			Weighted-average exercise price per share				Weighted-average contractual term		Aggregate intrinsic value
Outstanding at January 1, 2016	3,117,616			$	104.54
Granted	743,250			172.23
Exercised	(371,853	)		75.23
Canceled	(69,416	)		159.97
Outstanding at December 31, 2016	3,419,597			121.31				6.15		$	211,369,740
Granted	608,598			210.56
Exercised	(644,610	)		95.14
Canceled	(187,721	)		170.75
Outstanding at December 31, 2017	3,195,864			140.68				6.09		$	368,589,147
Exercisable at December 31, 2017	1,766,869			$	103.48			4.12		$	269,474,477

The following table summarizes information for stock options outstanding at December 31, 2017:

		Outstanding options									Exercisable options
Exercise price		Number			Average exercise price				Average remaining life (years)		Number			Average exercise price
$40.57 - 52.37		147,840			$	47.38			1.7		147,840			$	47.38
52.37 - 78.56		500,259			61.18				1.2		500,259			61.18
78.56 - 104.75		172,777			93.83				4.1		172,777			93.83
104.75 - 130.94		342,805			117.51				5.2		342,805			117.51
130.94 - 157.12		481,652			139.21				6.4		430,101			138.27
157.12 - 183.31		870,883			169.61				7.8		151,337			166.74
183.31 - 209.50		225,450			187.64				8.7		21,750			185.47
209.50 - 235.68		434,398			215.02				9.3		—			—
235.68 - 261.87		19,800			253.01				9.8		—			—
$40.57 - 261.87		3,195,864			$	140.68			6.1		1,766,869			$	103.48

At December 31, 2017, there was $29.6 million of total unrecognized compensation expense related to nonvested options granted under the Company's share-based compensation plans. That cost is expected to be recognized over a weighted-average period of 2.1 years. The total intrinsic value of options exercised in 2017, 2016 and 2015 was $90.6 million, $38.9 million and $36.9 million, respectively. Cash received from option exercises under all plans in 2017 and 2016 was $61.3 million and $28.0 million, respectively.

Restricted Stock Grants - During 2017 and 2016, the Company granted 410,267 and 555,730 shares, respectively, of restricted stock to certain employee and director participants under its share-based compensation plans. Restricted stock grants generally vest over a period of 1 to 3 years. The Company recorded $63.0 million, $57.8 million and $46.5 million of compensation expense related to outstanding shares of restricted stock held by employees and directors during 2017, 2016 and 2015, respectively. A summary of the Company's nonvested shares activity for 2017 and 2016 is as follows:

	Number of shares			Weighted-average grant date fair value
Nonvested at December 31, 2015	709,275			$	146.64
Granted	555,730			172.67
Vested	(287,233	)		141.27
Forfeited	(25,100	)		139.56
Nonvested at December 31, 2016	952,672			$	164.62
Granted	410,267			205.88
Vested	(387,452	)		155.95
Forfeited	(116,491	)		173.53
Nonvested at December 31, 2017	858,996			$	187.01

At December 31, 2017, there was $90.8 million of total unrecognized compensation expense related to nonvested awards granted to both employees and directors under the Company's share-based compensation plans. That cost is expected to be recognized over a weighted-average period of 2.2 years. Unrecognized compensation expense related to nonvested shares of restricted stock grants is recorded as a reduction to additional paid-in capital in stockholder's equity at December 31, 2017.

Employee Stock Purchase Plan - During 2017, 2016 and 2015, participants of the ESPP purchased 19,683, 19,448 and 18,132 shares, respectively, of Roper's common stock for total consideration of $4.2 million, $3.3 million, and $2.9 million, respectively. All of these shares were purchased from Roper's treasury shares.

(12) Contingencies

Roper, in the ordinary course of business, is the subject of, or a party to, various pending or threatened legal actions, including product liability and employment practices that, in general, are based upon claims of the kind that have been customary over the past several years and which the Company is vigorously defending. After analyzing the Company's contingent liabilities on a gross basis and, based upon past experience with resolution of its product liability and employment practices claims and the limits of the primary, excess, and umbrella liability insurance coverages that are available with respect to pending claims, management believes that adequate provision has been made to cover any potential liability not covered by insurance, and that the ultimate liability, if any, arising from these actions should not have a material adverse effect on Roper's consolidated financial position, results of operations or cash flows.

Roper or its subsidiaries have been named defendants along with numerous industrial companies in asbestos-related litigation claims in certain U.S. states. No significant resources have been required by Roper to respond to these cases and Roper believes it has valid defenses to such claims and, if required, intends to defend them vigorously. Given the state of these claims it is not possible to determine the potential liability, if any.

Roper's rent expense was $58.6 million, $44.9 million and $40.2 million for 2017, 2016 and 2015, respectively. Roper's future minimum property lease commitments are as follows (in millions):

2018	$	54.3
2019	44.7
2020	39.6
2021	34.6
2022	25.7
Thereafter	58.0
Total	$	256.9

A summary of the Company's warranty accrual activity is presented below (in thousands):

	2017				2016				2015
Balance, beginning of year	$	10,548			$	10,183			$	9,537
Additions charged to costs and expenses	10,820				15,950				14,284
Deductions	(11,170		)		(15,513		)		(13,059		)
Other	389				(72		)		(579		)
Balance, end of year	$	10,587			$	10,548			$	10,183

Other included warranty balances at acquired businesses at the dates of acquisition, the effects of foreign currency translation adjustments, reclassifications and other.

As of December 31, 2017, Roper had $75.9 million of letters of credit issued to guarantee its performance under certain services contracts or to support certain insurance programs and $573.4 million of outstanding surety bonds. Certain contracts, primarily those involving public sector customers, require Roper to provide a surety bond as a guarantee of its performance of contractual obligations.

(13) Segment and Geographic Area Information

Roper's operations are reported in four segments around common customers, markets, sales channels, technologies and common cost opportunities. The segments are: RF Technology, Medical & Scientific Imaging, Industrial Technology and Energy Systems & Controls. The RF Technology segment provides comprehensive application management software, software-as-a-service applications and products and systems that utilize RFID communication technology. The Medical & Scientific Imaging segment offers medical products and software and high performance digital imaging products and software. Products included within the Industrial Technology segment are water and fluid handling pumps, flow measurement and metering equipment, industrial valves and controls, materials analysis equipment and consumables and industrial leak testing. The Energy Systems & Controls segment's products include control systems, equipment and consumables for fluid properties testing, vibration sensors and other non-destructive inspection and measurement products and services. Roper's management structure and internal reporting are aligned consistently with these four segments.

There were no material transactions between Roper's business segments during 2017, 2016 and 2015. Sales between geographic areas are primarily of finished products and are accounted for at prices intended to represent third-party prices. Operating profit by business segment and by geographic area is defined as net revenues less operating costs and expenses. These costs and expenses do not include unallocated corporate administrative expenses. Items below income from operations on Roper's statement of earnings are not allocated to business segments.

Identifiable assets are those assets used primarily in the operations of each business segment or geographic area. Corporate assets are principally comprised of cash and cash equivalents, deferred tax assets, recoverable insurance claims, deferred compensation assets and property and equipment.

Selected financial information by business segment for 2017, 2016 and 2015 follows (in thousands):

	RF Technology				Medical & Scientific Imaging				Industrial Technology				Energy Systems & Controls				Corporate				Total
2017
Net revenues	$	1,862,126			$	1,410,349			$	783,707			$	551,289			$	—			$	4,607,471
Operating profit	479,295				486,575				235,018				151,163				(141,807		)		1,210,244
Assets:
Operating assets	518,423				309,235				195,413				175,775				7,399				1,206,245
Intangible assets, net	6,660,898				4,590,768				499,490				544,375				—				12,295,531
Other	192,041				131,078				76,193				196,528				218,797				814,637
Total																					14,316,413
Capital expenditures	20,079				18,791				5,707				3,155				1,020				48,752
Capitalized software expenditures	9,989				792				3				—				—				10,784
Depreciation and other amortization	191,876				118,643				17,109				16,747				590				344,965
2016
Net revenues	$	1,210,264			$	1,362,813			$	706,625			$	510,223			$	—			$	3,789,925
Operating profit	372,467				477,548				202,451				129,602				(127,505		)		1,054,563
Assets:
Operating assets	487,936				282,437				182,430				164,349				11,788				1,128,940
Intangible assets, net	6,634,964				4,660,298				493,924				513,799				—				12,302,985
Other	156,413				154,838				88,130				134,976				358,645				893,002
Total																					14,324,927
Capital expenditures	11,536				16,098				6,590				2,218				863				37,305
Capitalized software expenditures	6				2,749				15				31				—				2,801
Depreciation and other amortization	82,653				119,248				18,573				19,701				278				240,453
2015
Net revenues	$	1,033,951			$	1,215,318			$	745,381			$	587,745			$	—			$	3,582,395
Operating profit	312,112				441,931				214,538				162,128				(102,791		)		1,027,918
Assets:
Operating assets	293,004				265,520				182,544				194,898				9,080				945,046
Intangible assets, net	2,848,911				4,451,028				513,155				540,628				—				8,353,722
Other	117,596				121,461				67,832				113,014				449,694				869,597
Total																					10,168,365
Capital expenditures	10,758				12,642				9,179				3,276				405				36,260
Capitalized software expenditures	—				2,368				48				23				—				2,439
Depreciation and other amortization	56,877				105,928				19,912				21,254				290				204,261

Summarized data for Roper's U.S. and foreign operations (principally in Canada, Europe and Asia) for 2017, 2016 and 2015, based upon the country of origin of the Roper entity making the sale, was as follows (in thousands):

	United States				Non-U.S.				Eliminations				Total
2017
Sales to unaffiliated customers	$	3,679,133			$	928,338			$	—			$	4,607,471
Sales between geographic areas	133,193				187,765				(320,958		)		—
Net revenues	$	3,812,326			$	1,116,103			$	(320,958	)		$	4,607,471
Long-lived assets	$	144,013			$	31,431			$	—			$	175,444
2016
Sales to unaffiliated customers	$	2,978,496			$	811,429			$	—			$	3,789,925
Sales between geographic areas	137,276				109,370				(246,646		)		—
Net revenues	$	3,115,772			$	920,799			$	(246,646	)		$	3,789,925
Long-lived assets	$	145,996			$	21,020			$	—			$	167,016
2015
Sales to unaffiliated customers	$	2,829,752			$	752,643			$	—			$	3,582,395
Sales between geographic areas	135,363				119,006				(254,369		)		—
Net revenues	$	2,965,115			$	871,649			$	(254,369	)		$	3,582,395
Long-lived assets	$	133,522			$	21,960			$	—			$	155,482

Export sales from the U.S. during the years ended December 31, 2017, 2016 and 2015 were $513 million, $460 million and $481 million, respectively. In the year ended December 31, 2017, these exports were shipped primarily to Asia (34%), Europe (21%), Canada (17%), Middle East (16%) and other (12%).

Sales to customers outside the U.S. accounted for a significant portion of Roper's revenues. Sales are attributed to geographic areas based upon the location where the product is ultimately shipped. Roper's net revenues for the years ended December 31, 2017, 2016 and 2015 are shown below by region, except for Canada, which is presented separately as it is the only country in which Roper has had greater than 4% of total revenues for any of the three years presented (in thousands):

	RF Technology				Medical & Scientific Imaging				Industrial Technology				Energy Systems & Controls				Total
2017
Canada	$	73,356			$	23,501			$	64,079			$	26,171			$	187,107
Europe	140,348				244,031				92,427				119,434				596,240
Asia	10,180				119,150				58,286				137,693				325,309
Middle East	61,356				11,051				4,833				35,238				112,478
Rest of the world	26,243				22,708				21,485				49,592				120,028
Total	$	311,483			$	420,441			$	241,110			$	368,128			$	1,341,162
2016
Canada	$	52,703			$	21,993			$	60,551			$	22,360			$	157,607
Europe	71,673				228,058				89,229				119,032				507,992
Asia	11,988				111,843				52,087				126,769				302,687
Middle East	50,605				10,107				2,997				37,491				101,200
Rest of the world	17,067				21,549				20,675				46,202				105,493
Total	$	204,036			$	393,550			$	225,539			$	351,854			$	1,174,979
2015
Canada	$	45,506			$	23,737			$	65,826			$	23,883			$	158,952
Europe	57,581				167,698				97,938				129,021				452,238
Asia	10,019				112,732				60,817				132,088				315,656
Middle East	54,165				15,877				4,220				50,227				124,489
Rest of the world	10,761				20,417				24,471				55,074				110,723
Total	$	178,032			$	340,461			$	253,272			$	390,293			$	1,162,058

(14) Concentration of Risk

Financial instruments which potentially subject the Company to credit risk consist primarily of cash, trade receivables and unbilled receivables.

The Company maintains cash with various major financial institutions around the world. The Company limits the amount of credit exposure with any one financial institution and believes that no significant concentration of credit risk exists with respect to cash balances.

Trade and unbilled receivables subject the Company to the potential for credit risk with customers. To reduce credit risk, the Company performs ongoing evaluations of its customers' financial condition.

(15) Quarterly Financial Data (unaudited)

	First Quarter				Second Quarter				Third Quarter				Fourth Quarter
	(in thousands, except per share data)
2017
Net revenues	$	1,086,305			$	1,134,671			$	1,159,912			$	1,226,583
Gross profit	667,614				705,650				726,420				765,112
Income from operations	258,256				294,258				310,747				346,983
Net earnings	158,071				179,556				190,273				443,872
Earnings per share:
Basic	$	1.55			$	1.76			$	1.86			4.33
Diluted	$	1.53			$	1.74			$	1.84			4.27
2016
Net revenues	$	902,423			$	931,558			$	945,144			$	1,010,800
Gross profit	559,519				567,520				578,493				626,878
Income from operations	244,991				253,078				267,390				289,104
Net earnings	151,416				158,069				167,079				182,081
Earnings per share:
Basic	$	1.50			$	1.56			$	1.65			$	1.79
Diluted	$	1.48			$	1.54			$	1.63			$	1.78

The sum of the four quarters may not agree with the total for the year due to rounding.

ROPER TECHNOLOGIES, INC. AND SUBSIDIARIES

Schedule II – Consolidated Valuation and Qualifying Accounts

Years ended December 31, 2017, 2016 and 2015

	Balance at beginning of year				Additions charged to costs and expenses				Deductions				Other				Balance at end of year
	(in thousands)
Allowance for doubtful accounts and sales allowances
2017	$	14,489			$	4,262			$	(5,919	)		$	(144	)		$	12,688
2016	12,404				1,791				(2,794		)		3,088				14,489
2015	13,694				1,536				(4,128		)		1,302				12,404
Reserve for inventory obsolescence
2017	$	37,233			$	5,291			$	(6,331	)		$	1,917			$	38,110
2016	34,040				10,071				(6,540		)		(338		)		37,233
2015	38,879				8,616				(9,049		)		(4,406		)		34,040

Deductions from the allowance for doubtful accounts represented the net write-off of uncollectible accounts receivable. Deductions from the inventory obsolescence reserve represented the disposal of obsolete items.

Other included the allowance for doubtful accounts and reserve for inventory obsolescence of acquired businesses at the dates of acquisition, the effects of foreign currency translation adjustments for those companies whose functional currency was not the U.S. dollar, reclassifications and other.