Company Quick10K Filing
Quick10K
Roper Technologies
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$313.47 103 $32,420
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
8-K 2019-02-01 Officers, Exhibits
8-K 2019-02-01 Earnings, Exhibits
8-K 2018-11-02 Other Events, Exhibits
8-K 2018-10-26 Earnings, Exhibits
8-K 2018-09-19 Officers
8-K 2018-08-28 Other Events, Exhibits
8-K 2018-08-24 Officers, Exhibits
8-K 2018-08-14 Other Events
8-K 2018-08-14 Other Events, Exhibits
8-K 2018-07-26 Earnings, Exhibits
8-K 2018-06-08 Amend Bylaw, Shareholder Vote, Exhibits
8-K 2018-04-20 Earnings, Exhibits
8-K 2018-04-05 Officers, Exhibits
8-K 2018-02-02 Officers, Exhibits
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CVV CVD Equipment
ROP 2018-09-30
Part I. Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 6. Exhibits
EX-10.1 a2018q3exhibit101formindem.htm
EX-31.1 a2018q3exhibit311.htm
EX-31.2 a2018q3exhibit312.htm
EX-32.1 a2018q3exhibit321.htm

Roper Technologies Earnings 2018-09-30

ROP 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 a2018q310-q.htm 10-Q Document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2018.
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                   to                 .

Commission File Number   1-12273
ROPER TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation or organization)
 
51-0263969
(I.R.S. Employer Identification No.)
 
 
 
6901 Professional Pkwy. East, Suite 200
Sarasota, Florida
(Address of principal executive offices)
 

34240
(Zip Code)
(941) 556-2601
(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. þ Yes   o No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
þ Yes   o No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
þ   Large accelerated filer
o   Accelerated filer
 
 
o   Non-accelerated filer (Do not check if a smaller reporting company)
o   Smaller reporting company
 
 
 
o   Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark if the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  oYes    þ No
The number of shares outstanding of the Registrant’s common stock as of October 26, 2018 was 103,430,854.

1


ROPER TECHNOLOGIES, INC.

REPORT ON FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2018

TABLE OF CONTENTS

 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


2


PART I.    FINANCIAL INFORMATION
 
ITEM 1.    FINANCIAL STATEMENTS
 
Roper Technologies, Inc. and Subsidiaries
Condensed Consolidated Statements of Earnings (unaudited)
(in millions, except per share data)
 
 
Three months ended September 30,

Nine months ended September 30,
 
2018

2017

2018

2017
Net revenues
$
1,318.7


$
1,159.9


$
3,814.9


$
3,380.9

Cost of sales
478.7


433.5


1,408.5


1,281.2

Gross profit
840.0


726.4


2,406.4


2,099.7













Selling, general and administrative expenses
462.5


415.6


1,374.4


1,236.4

Income from operations
377.5


310.8


1,032.0


863.3













Interest expense, net
48.4


45.5


134.8


137.2

Loss on debt extinguishment
15.9




15.9



Other income/(expense), net
(1.6
)

(0.7
)

(1.0
)

5.2













Earnings before income taxes
311.6


264.6


880.3


731.3













Income taxes
64.0


74.3


193.0


203.4













Net earnings
$
247.6


$
190.3


$
687.3


$
527.9













Net earnings per share:











Basic
$
2.39


$
1.86


$
6.66


$
5.17

Diluted
$
2.37


$
1.84


$
6.58


$
5.11













Weighted average common shares outstanding:











Basic
103.4


102.3


103.2


102.1

Diluted
104.6


103.7


104.4


103.4

 
 
 
 
 
 
 
 
Dividends declared per common share
$
0.4125

 
$
0.3500

 
$
1.2375

 
$
1.0500


See accompanying notes to condensed consolidated financial statements.


3


Roper Technologies, Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income (unaudited)
(in millions)

 
Three months ended September 30,
 
Nine months ended September 30,
 
2018
 
2017
 
2018
 
2017
Net earnings
$
247.6

 
$
190.3

 
$
687.3

 
$
527.9

 
 
 
 
 
 
 
 
Other comprehensive income/(loss), net of tax:
 
 
 
 
 
 
 
Foreign currency translation adjustments
5.0

 
67.5

 
(13.4
)
 
147.5

Total other comprehensive income/(loss), net of tax
5.0

 
67.5

 
(13.4
)
 
147.5

 
 
 
 
 
 
 
 
Comprehensive income
$
252.6

 
$
257.8

 
$
673.9

 
$
675.4

 
See accompanying notes to condensed consolidated financial statements.


4


Roper Technologies, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (unaudited)
(in millions)
 
 
September 30,
2018
 
December 31,
2017
ASSETS:
 
 
 
 
 
 
 
Cash and cash equivalents
$
363.4

 
$
671.3

Accounts receivable, net
671.7

 
641.7

Inventories, net
212.2

 
204.9

Income taxes receivable
48.8

 
24.4

Unbilled receivables
176.1

 
143.6

Other current assets
83.3

 
73.5

Current assets held for sale
52.5



Total current assets
1,608.0

 
1,759.4

 
 
 
 
Property, plant and equipment, net
130.2

 
142.5

Goodwill
9,401.3

 
8,820.3

Other intangible assets, net
3,887.0

 
3,475.2

Deferred taxes
27.4

 
30.7

Other assets
102.0

 
88.3

Assets held for sale
89.2



 
 
 
 
Total assets
$
15,245.1

 
$
14,316.4

 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY:
 
 
 
 
 
 
 
Accounts payable
$
163.7

 
$
171.1

Accrued compensation
203.3

 
198.0

Deferred revenue
613.8

 
566.4

Other accrued liabilities
259.7

 
266.6

Income taxes payable
45.0

 
26.4

Current portion of long-term debt, net
801.6

 
800.9

Current liabilities held for sale
32.2



Total current liabilities
2,119.3

 
2,029.4

 
 
 
 
Long-term debt, net of current portion
4,414.3

 
4,354.6

Deferred taxes
958.2

 
829.6

Other liabilities
196.8

 
239.2

Liabilities held for sale
1.6



Total liabilities
7,690.2

 
7,452.8

 
 
 
 
Commitments and contingencies (Note 10)


 


 
 
 
 
Common stock
1.1

 
1.0

Additional paid-in capital
1,733.6

 
1,602.9

Retained earnings
6,038.4

 
5,464.6

Accumulated other comprehensive loss
(199.6
)
 
(186.2
)
Treasury stock
(18.6
)
 
(18.7
)
Total stockholders’ equity
7,554.9

 
6,863.6

 
 
 
 
Total liabilities and stockholders’ equity
$
15,245.1

 
$
14,316.4

 
See accompanying notes to condensed consolidated financial statements.

5


Roper Technologies, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (unaudited)
(in millions)
 
 
Nine months ended September 30,
 
2018
 
2017
Cash flows from operating activities:
 
 
 
Net earnings
$
687.3

 
$
527.9

Adjustments to reconcile net earnings to cash flows from operating activities:
 
 
 
Depreciation and amortization of property, plant and equipment
37.3

 
36.8

Amortization of intangible assets
235.6

 
221.5

Amortization of deferred financing costs
4.6

 
5.4

Non-cash stock compensation
81.1

 
67.6

Loss on debt extinguishment
15.9

 

Gain on sale of assets

 
(9.4
)
Changes in operating assets and liabilities, net of acquired businesses:
 
 
 
Accounts receivable
(30.1
)
 
30.1

Unbilled receivables
(20.1
)
 
(27.2
)
Inventories
(30.4
)
 
(19.6
)
Accounts payable and accrued liabilities
17.6

 
48.3

Deferred revenue
32.4

 
50.6

Income taxes
(59.3
)
 
(48.4
)
Other, net
(5.9
)
 
(17.9
)
Cash provided by operating activities
966.0

 
865.7

 
 
 
 
Cash flows from investing activities:
 
 
 
Acquisitions of businesses, net of cash acquired
(1,188.3
)
 
(88.1
)
Capital expenditures
(34.2
)
 
(35.9
)
Capitalized software expenditures
(7.2
)
 
(8.0
)
Proceeds from sale of assets

 
10.6

Other, net
(0.7
)
 
(6.9
)
Cash used in investing activities
(1,230.4
)
 
(128.3
)
 
 
 
 
Cash flows from financing activities:
 
 
 
Proceeds from senior notes
1,500.0

 

Payment of senior notes
(500.0
)
 

Payments under revolving line of credit, net
(930.0
)
 
(880.0
)
Debt issuance costs
(12.8
)
 

Redemption premium for debt extinguishment
(15.5
)
 

Cash dividends to stockholders
(126.7
)
 
(106.5
)
Proceeds from stock-based compensation, net
46.6

 
32.9

Treasury stock sales
4.1

 
3.2

Other
(6.5
)
 
0.2

Cash used in financing activities
(40.8
)
 
(950.2
)
 
 
 
 
Effect of foreign currency exchange rate changes on cash
(2.7
)
 
61.2

 
 
 
 
Net decrease in cash and cash equivalents
(307.9
)
 
(151.6
)
 
 
 
 
Cash and cash equivalents, beginning of period
671.3

 
757.2

 
 
 
 
Cash and cash equivalents, end of period
$
363.4

 
$
605.6

 
See accompanying notes to condensed consolidated financial statements.

6


Roper Technologies, Inc. and Subsidiaries
Condensed Consolidated Statement of Changes in Stockholders’ Equity (unaudited)
(in millions)

 
Common
stock
 
Additional
paid-in
capital
 
Retained
earnings
 
Accumulated
other
comprehensive
loss
 
Treasury
stock
 
Total stockholders’ equity
Balances at December 31, 2017
$
1.0

 
$
1,602.9

 
$
5,464.6

 
$
(186.2
)
 
$
(18.7
)
 
$
6,863.6

 
 
 
 
 
 
 
 
 
 
 
 
Adoption of ASC 606

 

 
14.3

 

 

 
14.3

Net earnings

 

 
687.3

 

 

 
687.3

Stock option exercises
0.1

 
53.8

 

 

 

 
53.9

Treasury stock sold

 
4.0

 

 

 
0.1

 
4.1

Currency translation adjustments

 

 

 
(13.4
)
 

 
(13.4
)
Stock-based compensation

 
80.2

 

 

 

 
80.2

Restricted stock activity

 
(7.3
)
 

 

 

 
(7.3
)
Dividends declared

 

 
(127.8
)
 

 

 
(127.8
)
Balances at September 30, 2018
$
1.1

 
$
1,733.6

 
$
6,038.4

 
$
(199.6
)
 
$
(18.6
)
 
$
7,554.9

 
See accompanying notes to condensed consolidated financial statements.


7


Roper Technologies, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
All currency and share amounts are in millions, except per share data

1.    Basis of Presentation

The accompanying condensed consolidated financial statements for the three and nine months ended September 30, 2018 and 2017 are unaudited. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, which include only normal recurring adjustments, necessary to state fairly the financial position, results of operations, comprehensive income and cash flows of Roper Technologies, Inc. and its subsidiaries (“Roper,” the “Company,” “we,” “our” or “us”) for all periods presented. The December 31, 2017 financial position data included herein was derived from the audited consolidated financial statements included in the Company’s 2017 Annual Report on Form 10-K (“Annual Report”) filed on February 23, 2018 with the Securities and Exchange Commission (“SEC”) but does not include all disclosures required by U.S. generally accepted accounting principles (“GAAP”).

Roper’s management has made estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these condensed consolidated financial statements in conformity with GAAP. Actual results could differ from those estimates.

The results of operations for the three and nine months ended September 30, 2018 are not necessarily indicative of the results to be expected for the full year. You should read these unaudited condensed consolidated financial statements in conjunction with Roper’s audited consolidated financial statements and the notes thereto included in its Annual Report. Certain prior period amounts have been reclassified to conform to current period presentation.

Accounting Policies Update

The Company adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”), as of January 1, 2018 using the modified retrospective transition method. We recorded a net increase to opening retained earnings of $14.3 due to the cumulative impact of adopting ASC 606. The impact of adopting ASC 606 was not material to the Company’s results of operations for the three and nine months ended September 30, 2018.

Our accounting policies are detailed in Note 1 of the Notes to Consolidated Financial Statements in our Annual Report. Changes to our accounting policies as a result of adopting ASC 606 are as follows:

Revenue Recognition - The Company adopted ASC 606 as of January 1, 2018 using the modified retrospective method for all contracts not substantially completed as of the date of adoption. The reported results for 2018 reflect the application of ASC 606 guidance, while the reported results for 2017 were prepared under the guidance of ASC Topic 605, Revenue Recognition. The adoption of ASC 606 represents a change in accounting principle that is intended to more closely align revenue recognition with the transfer of control of the Company’s products and services to the customer. The amount of revenue recognized reflects the consideration which the Company expects to be entitled to receive in exchange for these products and/or services. To achieve this principle, the Company applies the following five steps:

identify the contract with the customer;
identify the performance obligations in the contract;
determine the transaction price;
allocate the transaction price to performance obligations in the contract; and
recognize revenue when or as the Company satisfies a performance obligation.

Disaggregated Revenue - We disaggregate our revenues into two categories: (i) software and related services; and (ii) engineered products and related services. Software and related services revenues are primarily derived from our RF Technology and Medical & Scientific Imaging reportable segments. Engineered products and related services revenues are derived from all of our reportable segments and comprise substantially all of the revenues generated in our Energy Systems & Controls and Industrial Technology reportable segments. See details in the table below.

8


 
 
Three months ended September 30, 2018
 
Nine months ended September 30, 2018
 
 
 
Software and related services
 
$
561.1

 
$
1,586.8

Engineered products and related services
 
757.6

 
2,228.1

Net revenues
 
$
1,318.7

 
$
3,814.9


Software and related services

Software-as-a-Service (“SaaS”) - SaaS subscriptions and ongoing related support are generally accounted for as a single performance obligation and recognized ratably over the contractual term. In addition, SaaS arrangements may include implementation services which are accounted for as a separate performance obligation and recognized over time, using the input method. Payment is generally required within 30 days of the commencement of the SaaS subscription period, which is primarily offered to customers over a one-year timeframe.

Licensed Software - Performance obligations in our customer contracts may include:

Perpetual or time-based (“term”) software licenses
Post contract support (“PCS”)
Implementation/installation services

Software licenses may be combined with implementation/installation services as a single performance obligation if the implementation/installation significantly modifies or customizes the functionality of the software license.

We recognize revenue over time or at a point in time depending on our evaluation of when the customer obtains control over the promised products or services. For software arrangements that include multiple performance obligations, we allocate revenue to each performance obligation based on estimates of the price that we would charge the customer for each promised product or service if it were sold on a standalone basis.

Payment for software licenses is generally required within 30 to 60 days of the transfer of control. Payment for PCS is generally required within 30 to 60 days of the commencement of the service period, which is primarily offered to customers over a one-year timeframe. Payment terms do not contain a significant financing component. Payment for implementation/installation services that are recognized over time are typically commensurate with milestones defined in the contract, or billable hours incurred.

Engineered products and related services

Revenue from product sales is recognized when control transfers to the customer, which is generally when the product is shipped.

Non-project-based installation and repair services are performed by certain of our businesses for which revenue is recognized upon completion.

Payment terms are generally 30 to 60 days from the transfer of control. Payment terms do not contain a significant financing component.

Preventative maintenance service revenues are recognized over time using the input method. If we determine our efforts or inputs are expended evenly throughout the performance period, we generally recognize revenue on a straight-line basis. Payment for preventative maintenance services are typically commensurate with milestones defined in the contract.

We offer customers return rights and other credits subject to certain restrictions. We estimate variable consideration generally based on historical experience to arrive at the transaction price, or the amount to which we ultimately expect to be entitled from the customer.

Revenues from our project-based businesses, including toll and traffic systems and control systems, are generally recognized over time using the input method, primarily utilizing the ratio of costs incurred to total estimated costs, as the measure of performance. For these projects, payment is typically commensurate with certain performance milestones defined in the contract. Retention and down payments are also customary in these contracts. Estimated losses on any projects are recognized as soon as such losses become probable and reasonably estimable. The impact on revenues due to changes in estimates was immaterial for the three and nine months ended September 30, 2018.


9


Accounts receivable, net - Accounts receivable, net includes amounts billed and currently due from customers. The amounts due are stated at their net estimated realizable value. Accounts receivable are stated net of an allowance for doubtful accounts and sales allowances. 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.

Unbilled receivables - Our unbilled receivables include unbilled amounts typically resulting from sales under project-based contracts when the input method of revenue recognition is utilized and revenue recognized exceeds the amount billed to the customer, and right to payment is not solely due to the passage of time. Amounts may not exceed their net realizable value.

Deferred revenues - We record deferred revenues when cash payments are received or due in advance of our performance. Our deferred revenues relate primarily to software and related services. In most cases, we recognize these deferred revenues ratably over time as the SaaS or PCS performance obligation is satisfied. The non-current portion of deferred revenue is included in “Other liabilities” in our condensed consolidated balance sheets.

Our unbilled receivables and deferred revenues are reported in a net position on a contract-by-contract basis at the end of each reporting period. We classify these balances as current or non-current based on the timing of when we expect to recognize revenue.

Deferred commissions - Our incremental direct costs of obtaining a contract, which consist of sales commissions primarily for our software sales, are deferred and amortized on a straight-line basis over the period of contract performance or a longer period, depending on facts and circumstances. We classify deferred commissions as current or non-current based on the timing of when we expect to recognize the expense. The current and non-current portions of deferred commissions are included in “Other current assets” and “Other assets,” respectively, in our condensed consolidated balance sheets. At September 30, 2018 and January 1, 2018, we had $25.4 and $20.7 of deferred commissions, respectively. We recognized $6.4 and $17.7 of expense related to deferred commissions in the three and nine months ended September 30, 2018, respectively.

Remaining performance obligations - Remaining performance obligations represents the transaction price of firm orders for which work has not been performed and excludes unexercised contract options. As of September 30, 2018, the aggregate amount of the transaction price allocated to remaining performance obligations was $2,817.4. We expect to recognize revenue on approximately 60% of our remaining performance obligations over the next 12 months, with the remainder to be recognized thereafter.

Financial Statement Impact of Applying ASC 606

The Company adopted ASC 606 using the modified retrospective transition method for all contracts not substantially completed as of the date of adoption. The cumulative impact of the adoption of ASC 606 to the consolidated balance sheet as of January 1, 2018 was as follows:

 
As reported
 
 
 
Adjusted
 
December 31,
 
Impact of
 
January 1,
 
2017
 
ASC 606 Adoption
 
2018
ASSETS:
 
 
 
 
 
Unbilled receivables
$
143.6

 
$
2.8

 
$
146.4

Other current assets
73.5

 
(1.0
)
 
72.5

Other assets
88.3

 
3.2

 
91.5

 
 
 
 
 
 
LIABILITIES:
 
 
 
 
 
Deferred revenue
566.4

 
(13.5
)
 
552.9

Deferred taxes
829.6

 
4.6

 
834.2

Other liabilities
239.2

 
(0.4
)
 
238.8

 
 
 
 
 
 
STOCKHOLDERS’ EQUITY:
 
 
 
 
 
Retained earnings
5,464.6

 
14.3

 
5,478.9



10


Deferred Revenue & Unbilled Receivables
Certain of Roper’s businesses sell perpetual and term licenses of their software to customers in conjunction with other products and services, primarily PCS and implementation services. In some cases, under the previous revenue guidance, vendor-specific objective evidence (“VSOE”) was unavailable for perpetual and term licenses and associated implementation services, and revenue recognition was deferred until all elements were delivered, all services had been performed, or until fair value could be objectively determined. The revenues associated with these licenses and implementation was generally deferred over the contractual term of the PCS services. Under ASC 606, VSOE is no longer a requirement for a deliverable in a multiple-element software arrangement to be considered a separate performance obligation. The reduction in deferred revenues as well as the increase in unbilled receivables is due primarily to the acceleration of revenue recognition associated with certain perpetual and term licenses and associated implementation services as a result of the adoption of ASC 606.

Other Current Assets
The reduction in other current assets is due primarily to the recognition of previously deferred software licensing costs associated with the acceleration of revenue recognition associated with certain perpetual and term software licenses discussed above.

Other Assets
The increase in other assets is due primarily to the acceleration of revenue recognition for which we do not expect to bill customers within the next 12 months as well as deferred commissions previously expensed as incurred associated with our software sales. These deferred commissions are amortized on a straight-line basis over the period of contract performance or a longer period, generally the estimated life of the customer relationship, if renewals are expected and the renewal commission is not commensurate with the initial commission.

Income Taxes
The adoption of ASC 606 resulted in the acceleration of revenue recognition, which generated additional net deferred tax liabilities.

2.    Recent Accounting Pronouncements

The FASB establishes changes to accounting principles under GAAP in the form of accounting standards updates (“ASUs”) to the ASC. The Company considers the applicability and impact of all ASUs. Any recent 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 May 2014, the FASB issued ASC 606, which created a single, comprehensive revenue recognition model for all contracts with customers. The Company adopted ASC 606 as of January 1, 2018 using the modified retrospective transition method. See Note 1 of the Condensed Consolidated Financial Statements for details.

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 update for its 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 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 update did not have an impact on the Company’s results of operations, financial position or cash flows.


11


Recently Released Accounting Pronouncements

In August 2018, the FASB issued an update which clarifies the accounting for implementation costs in cloud computing arrangements. This update is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2019. Early adoption is permitted. The Company is evaluating the impact of the update on its results of operations and financial condition.

In February 2016, the FASB issued an update on lease accounting. This 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 right-of-use lease assets and lease liabilities on the balance sheet and disclosing other key information about leasing arrangements. We are currently designing and implementing processes, policies, and controls to comply with the update on lease accounting. While we have not yet completed our assessment, we currently believe the primary impact of adoption will be the recognition of a material right-of-use asset and an offsetting lease liability for our real estate leases. We intend to adopt this standard on January 1, 2019 using the modified retrospective transition approach with a cumulative effect adjustment to the opening balance of retained earnings as of the date of adoption.

3.    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 period. 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 period. Potentially dilutive common stock consisted of stock options based upon the trading price of Roper’s common stock. The effects of potential common stock were determined using the treasury stock method. Weighted average shares outstanding are shown below:
 
Three months ended September 30,
 
Nine months ended September 30,
 
2018
 
2017
 
2018
 
2017
Basic shares outstanding
103.4

 
102.3

 
103.2

 
102.1

Effect of potential common stock:
 
 
 
 
 
 
 
Common stock awards
1.2

 
1.4

 
1.2

 
1.3

Diluted shares outstanding
104.6

 
103.7

 
104.4

 
103.4


For the three and nine months ended September 30, 2018, there were 0.689 and 0.697 outstanding stock options, respectively, that were not included in the determination of diluted earnings per share because doing so would have been antidilutive, as compared to 0.475 and 0.487 outstanding stock options that would have been antidilutive in the respective 2017 periods.

4.    Business Acquisitions and Assets and Liabilities Held for Sale

Business Acquisitions

Roper completed six business acquisitions in the nine months ended September 30, 2018, with an aggregate purchase price of $1,188.3, net of cash acquired. The results of operations of the acquired businesses are included in Roper’s condensed consolidated results of operations 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 condensed consolidated results of operations individually or in aggregate.

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

Roper completed three business acquisitions which provide software solutions that support the development of cost estimates in the construction industry: Quote Software, PlanSwift Software, and Smartbid.

Acquisition of PowerPlan - On June 4, 2018, Roper acquired 100% of the shares of PowerPlan, Inc., a provider of financial and compliance management software and solutions to large complex companies in asset-intensive industries.

Acquisition of ConceptShare - On June 7, 2018, Roper acquired 100% of the shares of ConceptShare, Inc., a provider of cloud-based software for marketing agencies, marketing departments and other creative teams to streamline the review and approval of online work and content.


12


Acquisition of BillBlast - On July 10, 2018, Roper acquired 100% of the shares of BillBlast, a provider of software and ancillary services for the automation of invoicing and reporting for law firms.

The Company initially recorded $663.6 in goodwill and $660.7 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 customer relationships of $589.7 (19 year weighted average useful life) and technology of $44.1 (8 year weighted average useful life).

Assets and Liabilities Held for Sale

During the second quarter of 2018, Roper and Thermo Fisher Scientific, Inc. (“Thermo Fisher”) entered into a definitive agreement under which Thermo Fisher will acquire 100% of the shares of Gatan, Inc. (“Gatan”), a wholly owned subsidiary of Roper, for approximately $925.0 in cash. The transaction, which is expected to be completed by the end of 2018, is subject to customary closing conditions, including regulatory approvals. Gatan is reported in the Medical & Scientific Imaging segment.

At September 30, 2018, the assets and liabilities of Gatan were reclassified as held for sale on Roper’s condensed consolidated balance sheet. The Company recognized a deferred tax liability of $10.0 associated with the excess of book basis over tax basis in the shares of Gatan during the second quarter of 2018.

5.    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, directors and consultants.

The following table provides information regarding the Company’s stock-based compensation expense:
 
Three months ended September 30,
 
Nine months ended September 30,
 
2018
 
2017
 
2018
 
2017
Stock-based compensation
$
27.1

 
$
23.7

 
$
81.1

 
$
67.6

Tax effect recognized in net earnings
5.7

 
8.3

 
17.0

 
23.7


Stock Options - In the nine months ended September 30, 2018, 0.694 options were granted with a weighted average fair value of $57.59 per option. During the same period in 2017, 0.593 options were granted with a weighted average fair value of $40.67 per option. All options were issued with an exercise price equal to the closing price of Roper’s common stock on the date of grant, as required by the 2016 Plan.

Roper records compensation expense for employee stock options based on the estimated fair value of the options on the date of grant using the Black-Scholes option-pricing model. Historical data is used to estimate the expected price volatility, the expected dividend yield, the expected option life and the expected forfeiture rate. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the estimated life of the option. The following weighted average assumptions were used to estimate the fair value of options granted during current and prior year periods using the Black-Scholes option-pricing model:
 
Nine months ended September 30,
 
2018
 
2017
Risk-free interest rate (%)
2.63
 
2.03
Expected option life (years)
5.32
 
5.26
Expected volatility (%)
18.04
 
18.76
Expected dividend yield (%)
0.59
 
0.67

Cash received from option exercises for the nine months ended September 30, 2018 and 2017 was $53.8 and $40.4, respectively.

Restricted Stock Awards - During the nine months ended September 30, 2018, 0.372 restricted stock awards were granted with a weighted average grant date fair value of $277.92 per restricted share. During the same period in 2017, 0.389 restricted stock awards were granted with a weighted average grant date fair value of $203.02 per restricted share. All grants were issued at grant date fair value.

13



During the nine months ended September 30, 2018, 0.118 restricted awards vested with a weighted average grant date fair value of $182.37 per restricted share and a weighted average vest date fair value of $279.48 per restricted share.

Employee Stock Purchase Plan - Roper’s stock purchase plan allows employees in the U.S. and Canada to designate up to 10% of eligible earnings to purchase Roper’s common stock at a 5% discount to the average closing price of the stock at the beginning and end of a quarterly offering period. Common stock sold to employees pursuant to the stock purchase plan may be either treasury stock, stock purchased on the open market, or newly issued shares.

During both the nine months ended September 30, 2018 and 2017, participants in the employee stock purchase plan purchased 0.016 shares of Roper’s common stock for total consideration of $4.1 and $3.2, respectively. All shares were purchased from Roper’s treasury shares.

6.    Inventories

The components of inventory were as follows:
 
September 30,
2018
 
December 31,
2017
Raw materials and supplies
$
136.7

 
$
132.9

Work in process
30.3

 
27.7

Finished products
81.1

 
82.4

Inventory reserves
(35.9
)
 
(38.1
)
 
$
212.2

 
$
204.9


7.    Goodwill and Other Intangible Assets

The carrying value of goodwill by segment was as follows:
 
RF Technology
 
Medical &
 Scientific Imaging
 
Industrial
Technology
 
Energy Systems
 & Controls
 
Total
Balances at December 31, 2017
$
4,798.9

 
$
3,205.9

 
$
377.5

 
$
438.0

 
$
8,820.3

Additions
663.6

 

 

 

 
663.6

Goodwill related to assets held for sale

 
(79.3
)
 

 

 
(79.3
)
Other
6.3

 

 

 

 
6.3

Currency translation adjustments
(3.2
)
 
(3.3
)
 
(1.5
)
 
(1.6
)
 
(9.6
)
Balances at September 30, 2018
$
5,465.6

 
$
3,123.3

 
$
376.0

 
$
436.4

 
$
9,401.3


Other relates primarily to tax purchase accounting and working capital adjustments for acquisitions.


14


Other intangible assets were comprised of:
 
Cost
 
Accumulated
amortization
 
Net book
value
Assets subject to amortization:
 
 
 
 
 
Customer related intangibles
$
3,355.2

 
$
(913.7
)
 
$
2,441.5

Unpatented technology
544.1

 
(207.7
)
 
336.4

Software
184.7

 
(84.8
)
 
99.9

Patents and other protective rights
26.1

 
(22.7
)
 
3.4

Trade names
6.6

 
(1.7
)
 
4.9

Assets not subject to amortization:
 
 
 
 
 
Trade names
587.7

 

 
587.7

In process research and development
1.4

 

 
1.4

Balances at December 31, 2017
$
4,705.8

 
$
(1,230.6
)
 
$
3,475.2

Assets subject to amortization:
 
 
 
 
 
Customer related intangibles
$
3,923.8

 
$
(1,060.0
)
 
$
2,863.8

Unpatented technology
500.7

 
(182.9
)
 
317.8

Software
174.7

 
(90.9
)
 
83.8

Patents and other protective rights
14.8

 
(12.1
)
 
2.7

Trade names
6.8

 
(2.7
)
 
4.1

Assets not subject to amortization:
 
 
 
 
 
Trade names
613.4

 

 
613.4

In process research and development
1.4

 

 
1.4

Balances at September 30, 2018
$
5,235.6

 
$
(1,348.6
)
 
$
3,887.0


Amortization expense of other intangible assets was $234.9 and $220.7 during the nine months ended September 30, 2018 and 2017, respectively.

An evaluation of the carrying value of goodwill and indefinite-lived intangibles is required to be performed on an annual basis and on 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. There have been no events or changes in circumstances which indicate an interim impairment review is required in 2018. The Company will perform the annual analysis during the fourth quarter of 2018.

8.    Debt

On August 28, 2018, the Company completed a public offering of $700.0 aggregate principal amount of 3.65% senior unsecured notes due September 15, 2023 (“2023 Notes”) and $800.0 aggregate principal amount of 4.20% senior unsecured notes due September 15, 2028 (“2028 Notes” and, together with the 2023 Notes, the “Notes”). The net proceeds were used to redeem all of the $500.0 of outstanding 6.25% senior notes due September 1, 2019 (the “2019 Notes”) and a portion of the outstanding amounts under the unsecured credit facility. The Company incurred a debt extinguishment charge in connection with the 2019 Notes redemption of $15.9, which represents the make-whole premium and unamortized deferred financing costs.

The 2023 Notes and 2028 Notes bear interest at a fixed rate of 3.65% and 4.20% per year, respectively, and are payable semi-annually in arrears on March 15 and September 15 of each year, beginning March 15, 2019.

Roper may redeem some or all of the 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 Notes are senior unsecured obligations of the Company and rank equally in right of payment with all of its existing and future senior unsecured indebtedness. The Notes are effectively subordinated to any of our existing and future secured indebtedness to the extent of the value of the collateral securing such indebtedness. The Notes are not, and will not be, guaranteed by any of our subsidiaries and are effectively subordinated to all existing and future indebtedness and other liabilities of our subsidiaries.

The Company had $800.0 of 2.05% senior notes mature on October 1, 2018. The Company used borrowings from its unsecured credit facility to repay these notes at maturity.

15



9.    Fair Value of Financial Instruments

Roper’s debt at September 30, 2018 included $4,900 of fixed-rate senior notes with the following fair values:
$800 2.050% senior notes due 2018
800

$600 3.000% senior notes due 2020
597

$500 2.800% senior notes due 2021
490

$500 3.125% senior notes due 2022
488

$700 3.650% senior notes due 2023
697

$300 3.850% senior notes due 2025
295

$700 3.800% senior notes due 2026
683

$800 4.200% senior notes due 2028
795


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.

10.    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. In April 2018, a stockholder derivative complaint was filed in Sarasota County, Florida against the Company, nominally, and its directors and former chairman & chief executive officer (“CEO”), alleging the directors breached their fiduciary duties and were unjustly enriched by the compensation earned by the nonexecutive directors and the CEO in 2015 and 2016. A motion to dismiss the complaint is pending.

Roper’s consolidated financial statements include accruals for potential product liability and warranty claims based on its claims experience. Such costs are accrued at the time revenue is recognized. A summary of the warranty accrual activity for the nine months ended September 30, 2018 is presented below:

Balance at December 31, 2017
$
10.6

Additions charged to costs and expenses
6.7

Deductions
(7.0
)
Warranty related to liabilities held for sale
(1.0
)
Other
(0.1
)
Balance at September 30, 2018
$
9.2



16


11.    Business Segments

Net revenues and operating profit by segment are set forth in the following table:
 
Three months ended September 30,
 
 
 
Nine months ended September 30,
 
 
 
2018
 
2017
 
Change
 
2018
 
2017
 
Change
Net revenues
 
 
 
 
 
 
 
 
 
 
 
RF Technology
$
560.4

 
$
480.6

 
16.6
 %
 
$
1,579.4

 
$
1,370.7

 
15.2
%
Medical & Scientific Imaging
380.0

 
343.6

 
10.6
 %
 
1,120.0

 
1,042.6

 
7.4
%
Industrial Technology
229.5

 
200.4

 
14.5
 %
 
677.2

 
576.7

 
17.4
%
Energy Systems & Controls
148.8

 
135.3

 
10.0
 %
 
438.3

 
390.9

 
12.1
%
Total
$
1,318.7

 
$
1,159.9

 
13.7
 %
 
$
3,814.9

 
$
3,380.9

 
12.8
%
Gross profit:
 
 
 
 
 
 
 
 
 
 
 
RF Technology
$
363.5

 
$
298.9

 
21.6
 %
 
$
1,009.6

 
$
830.1

 
21.6
%
Medical & Scientific Imaging
273.2

 
247.1

 
10.6
 %
 
799.8

 
753.1

 
6.2
%
Industrial Technology
117.0

 
102.1

 
14.6
 %
 
344.4

 
293.4

 
17.4
%
Energy Systems & Controls
86.3

 
78.3

 
10.2
 %
 
252.6

 
223.1

 
13.2
%
Total
$
840.0

 
$
726.4

 
15.6
 %
 
$
2,406.4

 
$
2,099.7

 
14.6
%
Operating profit*:
 
 
 
 
 
 
 
 
 
 
 
RF Technology
$
165.6

 
$
134.2

 
23.4
 %
 
$
443.5

 
$
342.7

 
29.4
%
Medical & Scientific Imaging
132.8

 
115.5

 
15.0
 %
 
379.1

 
356.6

 
6.3
%
Industrial Technology
74.2

 
62.2

 
19.3
 %
 
214.0

 
174.1

 
22.9
%
Energy Systems & Controls
46.3

 
36.4

 
27.2
 %
 
123.4

 
99.5

 
24.0
%
Total
$
418.9

 
$
348.3

 
20.3
 %
 
$
1,160.0

 
$
972.9

 
19.2
%
Long-lived assets:
 
 
 
 
 
 
 
 
 
 
 
RF Technology
$
93.0

 
$
81.9

 
13.6
 %
 
 
 
 
 
 
Medical & Scientific Imaging
40.0

 
43.8

 
(8.7
)%
 
 
 
 
 
 
Industrial Technology
30.3

 
32.2

 
(5.9
)%
 
 
 
 
 
 
Energy Systems & Controls
9.8

 
9.5

 
3.2
 %
 
 
 
 
 
 
Total
$
173.1

 
$
167.4

 
3.4
 %
 
 
 
 
 
 
 
*Segment operating profit is before unallocated corporate general and administrative expenses; these expenses were $41.4 and $37.5 for the three months ended September 30, 2018 and 2017, respectively, and $128.0 and $109.6 for the nine months ended September 30, 2018 and 2017, respectively.


17


12.    Contract Balances

Contract balances are set forth in the following table:
 
 
 
 
 
 
Balance Sheet Account
September 30, 2018
 
January 1, 2018
 
Change
Unbilled receivables - current & non-current (1)
$
176.1

 
$
149.1

 
$
27.0

Contract liabilities - current (2)
(649.1
)
 
(605.5
)
 
(43.6
)
Deferred revenue - non-current
(30.8
)
 
(31.8
)
 
1.0

Net contract assets/(liabilities)
$
(503.8
)
 
$
(488.2
)
 
$
(15.6
)
(1) Non-current unbilled receivables are reported in “Other assets” in our condensed consolidated balance sheets.
(2) Consists of “Deferred revenue,” billings in-excess of revenues (“BIE”) and customer deposits. BIE and customer deposits are reported in “Other accrued liabilities” in our condensed consolidated balance sheets.

The change in our net contract assets/(liabilities) from January 1, 2018 to September 30, 2018 was due primarily to the timing of payments and invoicing relating to SaaS and PCS renewals, partially offset by revenues recognized in the three and nine months ended September 30, 2018 of $91.8 and $555.3, respectively, related to our contract liability balances at January 1, 2018. In addition, the impact of the 2018 business acquisitions increased net contract liabilities by $26.0, partially offset by the classification of Gatan as held for sale, which decreased net contract liabilities by $12.8.

In order to determine revenues recognized in the period from contract liabilities, we allocate revenue to the individual deferred revenue, BIE or customer deposit balance outstanding at the beginning of the year until the revenue exceeds that balance.

Impairment losses recognized on our accounts receivable and unbilled receivables were immaterial in the three and nine months ended September 30, 2018.

18



ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2017 (“Annual Report”) as filed on February 23, 2018 with the U.S. Securities and Exchange Commission (“SEC”) and the Notes to Condensed Consolidated Financial Statements included elsewhere in this report.

Information About Forward-Looking Statements

This report includes “forward-looking statements” within the meaning of the federal securities laws. In addition, we, or our executive officers on our behalf, may from time to time make forward-looking statements in reports and other documents we file with the SEC or in connection with oral statements made to the press, potential investors or others. All statements that are not historical facts are “forward-looking statements.”  Forward-looking statements may be indicated by words or phrases such as “anticipate,” “estimate,” “plans,” “expects,” “projects,” “should,” “will,” “believes” or “intends” and similar words and phrases. These statements reflect management’s current beliefs and are not guarantees of future performance. They involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied in any forward-looking statement.

Examples of forward-looking statements in this report include but are not limited to statements regarding operating results, the success of our internal operating plans, our expectations regarding our ability to generate cash and reduce debt and associated interest expense, profit and cash flow expectations, the prospects for newly acquired businesses to be integrated and contribute to future growth and our expectations regarding growth through acquisitions. Important assumptions relating to the forward-looking statements include, among others, assumptions regarding demand for our products, the cost, timing and success of product upgrades and new product introductions, raw materials costs, expected pricing levels, expected outcomes of pending litigation, competitive conditions and general economic conditions. These assumptions could prove inaccurate. Although we believe that the estimates and projections reflected in the forward-looking statements are reasonable, our expectations may prove to be incorrect. Important factors that could cause actual results to differ materially from estimates or projections contained in the forward-looking statements include but are not limited to:

general economic conditions;
difficulty making acquisitions and successfully integrating acquired businesses;
any unforeseen liabilities associated with future acquisitions;
limitations on our business imposed by our indebtedness;
unfavorable changes in foreign exchange rates;
difficulties associated with exports;
risks and costs associated with our international sales and operations;
rising interest rates;
product liability and insurance risks;
increased warranty exposure;
future competition;
the cyclical nature of some of our markets;
reduction of business with large customers;
risks associated with government contracts;
changes in the supply of, or price for, labor, raw materials, parts and components;
environmental compliance costs and liabilities;
risks and costs associated with asbestos-related litigation;
potential write-offs of our goodwill and other intangible assets;
our ability to successfully develop new products;
failure to protect our intellectual property;
the effect of, or change in, government regulations (including tax);
economic disruption caused by terrorist attacks, including cybersecurity threats, health crises or other unforeseen events; and
the factors discussed in other reports filed with the SEC.

We believe these forward-looking statements are reasonable; however, you should not place undue reliance on any forward-looking statements, which are based on current expectations. Further, forward-looking statements speak only as of the date they are made, and we undertake no obligation to publicly update any of these statements in light of new information or future events.


19


Overview

Roper Technologies, Inc. (“Roper,” “we,” “us” or “our”) is a diversified technology company. We operate businesses that design and develop software (both license and software-as-a-service) and engineered products and solutions for a variety of niche end markets.

We pursue consistent and sustainable growth in earnings and cash flow by emphasizing continuous improvement in the operating performance of our existing businesses and by acquiring other businesses that offer high value-added software, services, engineered products and solutions that we believe are capable of achieving growth and maintaining high margins. We compete in many niche markets and believe we are the market leader or a competitive alternative to the market leader in most of these markets.

Critical Accounting Policies

There were no material changes during the nine months ended September 30, 2018 to the items that we disclosed as our critical accounting policies and estimates in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report.

Recently Issued Accounting Standards

Information regarding new accounting pronouncements is included in Note 2 of the Notes to Condensed Consolidated Financial Statements.  


20


Results of Operations
All currency amounts are in millions

General

Percentages may not sum due to rounding.

The following table sets forth selected information for the periods indicated. Percentages are the particular line item shown as a percentage of net revenues.

 
Three months ended September 30,
 
Nine months ended September 30,
 
2018
 
2017
 
2018
 
2017
Net revenues:
 
 
 
 
 
 
 
RF Technology
$
560.4

 
$
480.6

 
$
1,579.4

 
$
1,370.7

Medical & Scientific Imaging
380.0

 
343.6

 
1,120.0

 
1,042.6

Industrial Technology
229.5

 
200.4

 
677.2

 
576.7

Energy Systems & Controls
148.8

 
135.3

 
438.3

 
390.9

Total
$
1,318.7

 
$
1,159.9

 
$
3,814.9

 
$
3,380.9

Gross margin:
 
 
 
 
 
 
 
RF Technology
64.9
 %
 
62.2
 %
 
63.9
 %
 
60.6
 %
Medical & Scientific Imaging
71.9

 
71.9

 
71.4

 
72.2

Industrial Technology
51.0

 
50.9

 
50.9

 
50.9

Energy Systems & Controls
58.0

 
57.9

 
57.6

 
57.1

Total
63.7

 
62.6

 
63.1

 
62.1

Selling, general and administrative expenses:
 
 
 
 
 
 
 
RF Technology
35.3
 %
 
34.3
 %
 
35.8
 %
 
35.6
 %
Medical & Scientific Imaging
36.9

 
38.3

 
37.6

 
38.0

Industrial Technology
18.6

 
19.9

 
19.3

 
20.7

Energy Systems & Controls
26.9

 
31.0

 
29.5

 
31.6

Total
31.9

 
32.6

 
32.7

 
33.3

Segment operating margin:
 
 
 
 
 
 
 
RF Technology
29.6
 %
 
27.9
 %
 
28.1
 %
 
25.0
 %
Medical & Scientific Imaging
34.9

 
33.6

 
33.8

 
34.2

Industrial Technology
32.3

 
31.0

 
31.6

 
30.2

Energy Systems & Controls
31.1

 
26.9

 
28.2

 
25.5

Total
31.8

 
30.0

 
30.4

 
28.8

Corporate administrative expenses
(3.1
)
 
(3.2
)
 
(3.4
)
 
(3.2
)
Income from operations
28.6

 
26.8

 
27.1

 
25.5

Interest expense, net
(3.7
)
 
(3.9
)
 
(3.5
)
 
(4.1
)
Loss on debt extinguishment
(1.2
)
 

 
(0.4
)
 

Other income, net
(0.1
)
 
(0.1
)
 

 
0.2

Earnings before income taxes
23.6

 
22.8

 
23.1

 
21.6

Income taxes
(4.9
)
 
(6.4
)
 
(5.1
)
 
(6.0
)
Net earnings
18.8
 %
 
16.4
 %
 
18.0
 %
 
15.6
 %

Three months ended September 30, 2018 compared to three months ended September 30, 2017

Net revenues for the three months ended September 30, 2018 increased by 13.7% as compared to the three months ended September 30, 2017. The increase was the result of organic growth of 9.7%, acquisition contribution of 4.4%, and a negative foreign exchange impact of 0.4%.


21


In our RF Technology segment, revenues were $560.4 in the third quarter of 2018 as compared to $480.6 in the third quarter of 2017, an increase of 17%. Organic revenues increased 6% and acquisitions accounted for 11% of our growth. The growth in organic revenues was due primarily to our software businesses, including the non-recurrence of purchase accounting adjustments to acquired deferred revenues in the third quarter of 2017 associated with our 2016 Deltek and ConstructConnect acquisitions. Gross margin increased to 64.9% in the third quarter of 2018 as compared to 62.2% in the third quarter of 2017 due to an increased percentage of revenues at our software businesses, which have higher gross margins, including a net reduction in purchase accounting adjustments. Selling, general and administrative (“SG&A”) expenses as a percentage of revenues increased to 35.3% in the third quarter of 2018 as compared to 34.3% in the third quarter of 2017 due primarily to an increased percentage of revenues at our software businesses, which have a higher SG&A expense structure, including amortization of acquired intangibles. The resulting operating margin was 29.6% in the third quarter of 2018 as compared to 27.9% in the third quarter of 2017.

Our Medical & Scientific Imaging segment revenues increased by 11% to $380.0 in the third quarter of 2018 as compared to $343.6 in the third quarter of 2017, all of which was attributable to organic growth. The growth in organic revenues was due primarily to broad-based growth in our medical products and imaging businesses. Gross margin remained unchanged at 71.9% in the third quarter of 2018 as compared to the third quarter of 2017, due primarily to operating leverage on higher revenues at our medical products businesses, offset primarily by growth in our lower margin imaging businesses. SG&A expenses as a percentage of revenues decreased to 36.9% in the third quarter of 2018 as compared to 38.3% in the third quarter of 2017 due primarily to operating leverage on higher revenues at our imaging businesses. As a result, operating margin was 34.9% in the third quarter of 2018 as compared to 33.6% in the third quarter of 2017.

Our Industrial Technology segment revenues increased by 15% to $229.5 in the third quarter of 2018 as compared to $200.4 in the third quarter of 2017, all of which was attributable to organic growth. The growth in organic revenues was due primarily to our water meter technology and fluid handling businesses. Gross margin increased to 51.0% in the third quarter of 2018 as compared to 50.9% in the third quarter of 2017 and SG&A expenses as a percentage of revenues decreased to 18.6% in the third quarter of 2018 as compared to 19.9% in the third quarter of 2017, both of which were due primarily to operating leverage on higher revenues. The resulting operating margin was 32.3% in the third quarter of 2018 as compared to 31.0% in the third quarter of 2017.

Our Energy Systems & Controls segment revenues increased by 10% to $148.8 in the third quarter of 2018 as compared to $135.3 in the third quarter of 2017. Organic revenues increased by 11% and the negative foreign exchange impact was 1%. The increase in organic revenues was due to broad-based growth in our businesses serving energy and industrial end markets. Gross margin increased to 58.0% in the third quarter of 2018 as compared to 57.9% in the third quarter of 2017 and SG&A expenses as a percentage of revenues decreased to 26.9% in the third quarter of 2018 as compared to 31.0% in the third quarter of 2017, both of which were due primarily to operating leverage on higher revenues. As a result, operating margin was 31.1% in the third quarter of 2018 as compared to 26.9% in the third quarter of 2017.

Corporate expenses increased to $41.4, or 3.1% of revenues, in the third quarter of 2018 as compared to $37.5, or 3.2% of revenues, in the third quarter of 2017. The dollar increase was due primarily to equity compensation as a result of increases in our common stock price.

Net interest expense was $48.4 for the third quarter of 2018 as compared to $45.5 for the third quarter of 2017 due to higher weighted average interest rates, partially offset by lower weighted average debt balances.

Loss on debt extinguishment of $15.9 for the third quarter of 2018, incurred in connection with the 2019 Notes redemption, was composed of the early redemption premium and the remaining unamortized deferred financing costs.

Other expense, net, of $1.6 and $0.7 for the third quarter of 2018 and 2017, respectively, was composed primarily of foreign exchange losses at our non-U.S. based subsidiaries.

Income taxes as a percent of pretax earnings were 20.5% in the third quarter of 2018 as compared to 28.1% in the third quarter of 2017. The rate was favorably impacted primarily due the reduction in U.S. federal corporate income tax rate from 35% to 21% resulting from the Tax Cuts and Jobs Act of 2017 (“the Tax Act”), partially offset by the elimination or limitation of various deductions, most notably the domestic manufacturing deduction.
 
As of December 31, 2017, the Company’s accounting under ASC 740, Income Taxes, was incomplete for certain income tax effects of the Tax Act. Accordingly, the Company reported provisional amounts where it was able to determine a reasonable estimate and reported no amount where it was unable to determine a reasonable estimate. Adjustments to these provisional amounts totaled a $3.3 benefit during the three months ended September 30, 2018. The benefit was due primarily to a reduction of the provisional liability associated with the one-time mandatory repatriation tax, partially offset by an increase of the provisional liability associated

22


with our indefinite reinvestment assertion on foreign earnings. All provisional estimates remain subject to adjustment until the end of the measurement period.

Order backlog is equal to our remaining performance obligations expected to be recognized within the next 12 months as discussed in Note 1 of the Notes to Condensed Consolidated Financial Statements. Order backlog increased 6% to $1,694.4 at September 30, 2018 as compared to $1,592.8 at September 30, 2017, 5% of which was attributable to acquisitions.

 
Order backlog as of
 
September 30,
 
2018
 
2017
 
 
RF Technology
$
997.0

 
$
956.3

Medical & Scientific Imaging
477.2

 
441.5

Industrial Technology
117.4

 
98.5

Energy Systems & Controls
102.8

 
96.5

Total
$
1,694.4

 
$
1,592.8



Nine months ended September 30, 2018 compared to nine months ended September 30, 2017

Net revenues for the nine months ended September 30, 2018 increased by 12.8% as compared to the nine months ended September 30, 2017. The increase was the result of organic growth of 9.4%, a net effect from acquisitions and divestitures of 2.6%, and foreign exchange benefit of 0.9%.

In our RF Technology segment, revenues were $1,579.4 in the nine months ended September 30, 2018 as compared to $1,370.7 in the nine months ended September 30, 2017, an increase of 15%. Organic revenues increased 9% and acquisitions accounted for 6% of our growth. The growth in organic revenues was due primarily to our software businesses, including the non-recurrence of purchase accounting adjustments to acquired deferred revenues in the nine months ended September 30, 2017 associated with our 2016 Deltek and ConstructConnect acquisitions. Gross margin increased to 63.9% in the nine months ended September 30, 2018 as compared to 60.6% in the nine months ended September 30, 2017, due to increased percentage of revenues at our software businesses, which have higher gross margins, including the net reduction of purchase accounting adjustments. SG&A expenses as a percentage of revenues in the nine months ended September 30, 2018 increased to 35.8% as compared to 35.6% in the nine months ended September 30, 2017 due primarily to an increased percentage of revenues at our software businesses, which have a higher SG&A expense structure, including amortization of acquired intangibles, largely offset by operating leverage on higher revenues. The resulting operating margin was 28.1% in the nine months ended September 30, 2018 as compared to 25.0% in the nine months ended September 30, 2017.

Our Medical & Scientific Imaging segment revenues increased by 7% to $1,120.0 in the nine months ended September 30, 2018 as compared to $1,042.6 in the nine months ended September 30, 2017. Organic revenues increased 7% and the foreign exchange benefit was 1%. Organic revenue growth was due primarily to broad-based growth in our imaging and medical products businesses. Gross margin decreased to 71.4% in the nine months ended September 30, 2018 as compared to 72.2% in the nine months ended September 30, 2017 due primarily to an unfavorable sales mix within our software businesses. SG&A expenses as a percentage of revenues decreased to 37.6% in the nine months ended September 30, 2018 as compared to 38.0% in the nine months ended September 30, 2017 due primarily to operating leverage on higher revenues at our imaging businesses, partially offset by increased software development and selling expenses at certain of our software businesses. As a result, operating margin was 33.8% in the nine months ended September 30, 2018 as compared to 34.2% in the nine months ended September 30, 2017.

Our Industrial Technology segment revenues increased by 17% to $677.2 in the nine months ended September 30, 2018 as compared to $576.7 in the nine months ended September 30, 2017. Organic revenues increased 16% and the foreign exchange benefit was 1%. The growth in organic revenues was due primarily to our fluid handling and water meter technology businesses. Gross margin remained unchanged in the nine months ended September 30, 2018 as compared to the nine months ended September 30, 2017 at 50.9%. SG&A expenses as a percentage of revenues decreased to 19.3% in the nine months ended September 30, 2018 as compared to 20.7% in the nine months ended September 30, 2017 due to operating leverage on higher revenues. The resulting operating margin was 31.6% in the nine months ended September 30, 2018 as compared to 30.2% in the nine months ended September 30, 2017.


23


Our Energy Systems & Controls segment revenues increased by 12% to $438.3 in the nine months ended September 30, 2018 as compared to $390.9 in the nine months ended September 30, 2017. Organic revenues increased by 9%, acquisitions, net of dispositions, accounted for 1% and the foreign exchange benefit was 2%. The increase in organic revenues was due to broad-based growth in our businesses serving energy and industrial end markets. Gross margin increased to 57.6% in the nine months ended September 30, 2018 as compared to 57.1% in the nine months ended September 30, 2017, and SG&A expenses as a percentage of revenues decreased to 29.5% in the nine months ended September 30, 2018 as compared to 31.6% in the nine months ended September 30, 2017, both of which were due to operating leverage on higher revenues. As a result, operating margin was 28.2% in the nine months ended September 30, 2018 as compared to 25.5% in the nine months ended September 30, 2017.

Corporate expenses increased to $128.0, or 3.4% of revenues, in the nine months ended September 30, 2018 as compared to $109.6, or 3.2% of revenues, in the nine months ended September 30, 2017. The increase was due primarily to (i) increased equity compensation as a result of increases in our common stock price and (ii) acquisition-related expenses.

Net interest expense was $134.8 for the nine months ended September 30, 2018 as compared to $137.2 for the nine months ended September 30, 2017 due to lower weighted average debt balances, partially offset by higher weighted average interest rates.

Other expense, net, of $1.0 for the nine months ended September 30, 2018 was composed primarily of foreign exchange losses at our non-U.S. based subsidiaries. Other income, net, of $5.2 for the nine months ended September 30, 2017 was composed primarily of a $9.4 gain on sale of a product line in our Energy Systems & Controls segment, partially offset by foreign exchange losses at our non-U.S. subsidiaries and a $1.8 impairment charge on a minority investment.

Income taxes as a percent of pretax earnings decreased to 21.9% in the nine months ended September 30, 2018 as compared to 27.8% in the nine months ended September 30, 2017. The rate was favorably impacted primarily due the reduction in U.S. federal corporate income tax rate from 35% to 21% resulting from the Tax Act, partially offset by the elimination or limitation of various deductions, most notably the domestic manufacturing deduction. In addition, the rate was favorably impacted due to the recognition of excess tax benefits associated with equity compensation of $28.7 in the nine months ended September 30, 2018 as compared to $17.0 in the nine months ended September 30, 2017, largely offset by the recognition of a deferred tax liability of $10.0 on the excess of Gatan’s book basis over our tax basis in the shares.

As of December 31, 2017, the Company’s accounting under ASC 740, Income Taxes, was incomplete for certain income tax effects of the Tax Act. Accordingly, the Company reported provisional amounts where it was able to determine a reasonable estimate, and reported no amount where it was unable to determine a reasonable estimate. Adjustments to these provisional amounts totaled a $2.4 benefit during the nine months ended September 30, 2018. The benefit was due primarily to a reduction of the provisional liability associated with the one-time mandatory repatriation tax, partially offset by an increase of the provisional liability associated with our indefinite reinvestment assertion on foreign earnings. All provisional estimates remain subject to adjustment until the end of the measurement period.

Financial Condition, Liquidity and Capital Resources
All currency amounts are in millions

Selected cash flows for the nine months ended September 30, 2018 and 2017 were as follows:
 
Nine months ended September 30,
Cash provided by/(used in):
2018
 
2017
Operating activities
$
966.0

 
$
865.7

Investing activities
(1,230.4
)
 
(128.3
)
Financing activities
(40.8
)
 
(950.2
)

Operating activities - Net cash provided by operating activities increased by 11.6% to $966.0 in the nine months ended September 30, 2018 as compared to $865.7 in the nine months ended September 30, 2017 due primarily to higher net income net of non-cash charges, partially offset by a higher investment in working capital.

Investing activities - Cash used in investing activities during the nine months ended September 30, 2018 was primarily for business acquisitions, most notably PowerPlan, and to a much lesser extent capital expenditures. Cash used in investing activities during the nine months ended September 30, 2017 was primarily for business acquisitions and capital expenditures.

Financing activities - Cash used in financing activities for the nine months ended September 30, 2018 was primarily due to the redemption of our 2019 Notes and net repayments on our unsecured credit facility, as well as dividend payments, largely offset

24


by net proceeds from the issuance of the 2023 Notes and the 2028 Notes as well as proceeds from stock option exercises. Cash used in financing activities during the nine months ended September 30, 2017 was primarily due to net repayments on our unsecured credit facility and dividend payments, partially offset by proceeds from stock option exercises.

Effect of foreign currency exchange rate changes on cash - Cash and cash equivalents decreased during the nine months ended September 30, 2018 by $2.7 due primarily to the strengthening of the U.S. dollar against the Canadian dollar. Cash and cash equivalents increased during the nine months ended September 30, 2017 by $61.2 due primarily to the strengthening of functional currencies of our European and Canadian subsidiaries against the U.S. dollar.

Total debt at September 30, 2018 consisted of the following:

$800 2.050% senior notes due 2018
800.0

$600 3.000% senior notes due 2020
600.0

$500 2.800% senior notes due 2021
500.0

$500 3.125% senior notes due 2022
500.0

$700 3.650% senior notes due 2023
700.0

$300 3.850% senior notes due 2025
300.0

$700 3.800% senior notes due 2026
700.0

$800 4.200% senior notes due 2028
800.0

Unsecured credit facility
340.0

Deferred finance costs
(27.6
)
Other
3.5

Total debt, net of deferred finance costs
5,215.9

Less current portion
801.6

Long-term debt, net of deferred finance costs
$
4,414.3


The interest rate on borrowings under our $2,500.0 unsecured credit facility is calculated based upon various recognized indices plus a margin as defined in the credit agreement. At September 30, 2018, there were $340.0 outstanding borrowings under our unsecured credit facility. At September 30, 2018, we had $3.5 of other debt in the form of capital leases and several smaller facilities that allow for borrowings in various foreign locations to support our non-U.S. businesses and $78.5 of outstanding letters of credit.

Cash at our foreign subsidiaries at September 30, 2018 decreased to $328.2 as compared to $591.5 at December 31, 2017 primarily due to the repatriation of historical foreign earnings subject to the deemed repatriation tax under the Tax Act. We intend to repatriate the remainder of these historical earnings and substantially all future foreign earnings, subject to any change in U.S. tax law.

We expect existing cash and cash equivalents, cash generated by our operations and availability under our unsecured credit facility, as well as our expected ability to access the capital markets, will be sufficient to fund operating requirements for the foreseeable future.

We were in compliance with all debt covenants related to our unsecured credit facility throughout the nine months ended September 30, 2018.

Net working capital (total current assets, excluding cash, less total current liabilities, excluding debt) was negative $73.1 at September 30, 2018 as compared to negative $140.4 at December 31, 2017, reflecting an increase in working capital due primarily to increases in unbilled receivables and accounts receivable, partially offset primarily due to increased deferred revenue. Total debt was $5,215.9 at September 30, 2018 as compared to $5,155.5 at December 31, 2017 due to the issuance of the 2023 Notes and the 2028 Notes, largely offset by the redemption of the 2019 Notes and net repayments on our unsecured credit facility. Our leverage is shown in the following table:

25


 
September 30,
2018
 
December 31,
2017
Total debt
$
5,215.9

 
$
5,155.5

Cash
(363.4
)
 
(671.3
)
Net debt
4,852.5

 
4,484.2

Stockholders’ equity
7,554.9

 
6,863.6

Total net capital
$
12,407.4

 
$
11,347.8

 
 
 
 
Net debt / total net capital
39.1
%
 
39.5
%

Capital expenditures were $34.2 for the nine months ended September 30, 2018 as compared to $35.9 for the nine months ended September 30, 2017. Capitalized software expenditures were $7.2 for the nine months ended September 30, 2018 as compared to $8.0 for the nine months ended September 30, 2017. We expect the aggregate of capital expenditures and capitalized software expenditures for the balance of the year to be comparable to prior years as a percentage of revenues.

There have been no significant changes to our contractual obligations from those disclosed in our Annual Report.

Off-Balance Sheet Arrangements

At September 30, 2018, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

Outlook

Current geopolitical uncertainties could adversely affect our business prospects. A significant terrorist attack or other global conflict could cause changes in world economies that would adversely affect us. It is impossible to isolate each of these factor’s effects on current economic conditions. It is also impossible to predict with any reasonable degree of certainty what or when any additional events may occur that also would similarly disrupt the economy.

We maintain an active acquisition program; however, future acquisitions will be dependent on numerous factors and it is not feasible to reasonably estimate if or when any such acquisitions will occur and what the impact will be on our business, financial condition and results of operations. Such acquisitions may be financed by the use of existing credit lines, future cash flows from operations, future divestitures, the proceeds from the issuance of new debt or equity securities or any combination of these methods.

We anticipate that our businesses will generate positive cash flows from operating activities, and that these cash flows will permit the reduction of currently outstanding debt in accordance with the repayment schedule. However, the rate at which we can reduce our debt during 2018 (and reduce the associated interest expense) will be affected by, among other things, the financing and operating requirements of any new acquisitions and the financial performance of our existing companies. None of these factors can be predicted with certainty.



26


ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See “Item 7A. Quantitative and Qualitative Disclosures about Market Risk” in our Annual Report. There were no material changes during the nine months ended September 30, 2018.

ITEM 4.    CONTROLS AND PROCEDURES

As required by SEC rules, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q (“Evaluation Date”). This evaluation was carried out under the supervision and with the participation of our management, including our principal executive officer and principal financial officer. Based on this evaluation as of the Evaluation Date, these officers have concluded that the design and operation of our disclosure controls and procedures are effective.

Our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act are accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

There were no changes to our internal controls during the period covered by this Quarterly Report on Form 10-Q that materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

27



PART II.    OTHER INFORMATION
 
ITEM 1.    LEGAL PROCEEDINGS

Information pertaining to legal proceedings can be found in Note 10 of the Notes to Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q and is incorporated by reference herein.

ITEM 1A.    RISK FACTORS

For information regarding factors that could affect our business, financial condition and results of operations, see the risk factors discussion in Item 1A of our Annual Report. See also “Information About Forward-Looking Statements” included in Part I, Item 2 of this Quarterly Report on Form 10-Q.

ITEM 6.                  EXHIBITS

4.1

 
 
 
 
4.2

 
 
 
 
10.1

 
 
 
 
31.1

 
 
 
 
31.2

 
 
 
 
32.1

 
 
 
 
101.INS

 
XBRL Instance Document, filed herewith.
 
 
 
101.SCH

 
XBRL Taxonomy Extension Schema Document, filed herewith.
 
 
 
101.CAL

 
XBRL Taxonomy Extension Calculation Linkbase Document, filed herewith.
 
 
 
101.DEF

 
XBRL Taxonomy Extension Definition Linkbase Document, filed herewith.
 
 
 
101.LAB

 
XBRL Taxonomy Extension Label Linkbase Document, filed herewith.
 
 
 
101.PRE

 
XBRL Taxonomy Extension Presentation Linkbase Document, filed herewith.


28


Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Roper Technologies, Inc.

/S/ L. Neil Hunn
 
President and Chief Executive Officer
November 5, 2018
L. Neil Hunn
 
(Principal Executive Officer)
 

/S/ Robert C. Crisci
 
Executive Vice President and Chief Financial Officer
November 5, 2018
Robert C. Crisci
 
(Principal Financial Officer)
 

/S/ Jason Conley
 
Vice President and Controller
November 5, 2018
Jason Conley
 
(Principal Accounting Officer)
 


29