10-Q 1 rop-20210930.htm 10-Q rop-20210930
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021.
 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)
Delaware51-0263969
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
6901 Professional Parkway, Suite 200
Sarasota,Florida34240
(Address of principal executive offices)(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)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of Each ClassTrading Symbol(s)Name of Each Exchange On Which Registered
Common Stock, $0.01 Par ValueROPNew York Stock Exchange

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.  Yes    No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).
 Yes    No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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.
Large accelerated filerAccelerated filer
Non-accelerated filer (Do not check if a smaller reporting company)Smaller reporting company
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.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  No
The number of shares outstanding of the registrant’s common stock as of October 29, 2021 was 105,484,900.
1


ROPER TECHNOLOGIES, INC.

REPORT ON FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2021

TABLE OF CONTENTS

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,
2021202020212020
Net revenues$1,462.8 $1,198.2 $4,265.5 $3,518.6 
Cost of sales466.7 388.3 1,366.1 1,148.7 
Gross profit996.1 809.9 2,899.4 2,369.9 
Selling, general and administrative expenses592.6 479.4 1,739.8 1,439.4 
Income from operations403.5 330.5 1,159.6 930.5 
Interest expense, net58.2 62.2 178.2 154.8 
Other income (expense), net(1.7)(2.1)24.9 (4.0)
Earnings before income taxes343.6 266.2 1,006.3 771.7 
Income taxes83.8 59.2 223.6 171.2 
Net earnings from continuing operations259.8 207.0 782.7 600.5 
Net earnings from discontinued operations29.7 27.4 82.1 93.4 
Net earnings$289.5 $234.4 $864.8 $693.9 
Net earnings per share from continuing operations:
Basic$2.47 $1.98 $7.44 $5.75 
Diluted$2.43 $1.95 $7.36 $5.69 
Net earnings per share from discontinued operations:
Basic$0.28 $0.26 $0.78 $0.89 
Diluted$0.28 $0.26 $0.77 $0.88 
Net earnings per share:
Basic$2.75 $2.24 $8.22 $6.64 
Diluted$2.71 $2.21 $8.13 $6.57 
Weighted average common shares outstanding:
Basic105.4 104.7 105.2 104.5 
Diluted106.7 105.9 106.4 105.6 

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,
2021202020212020
Net earnings$289.5 $234.4 $864.8 $693.9 
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments(35.4)43.4 (3.5)(28.6)
Total other comprehensive income (loss), net of tax(35.4)43.4 (3.5)(28.6)
Comprehensive income$254.1 $277.8 $861.3 $665.3 
 
See accompanying notes to Condensed Consolidated Financial Statements.
4


Roper Technologies, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (unaudited)
(in millions)
 
September 30,
2021
December 31,
2020
ASSETS:
Cash and cash equivalents$352.5 $308.3 
Accounts receivable, net749.4 745.7 
Inventories, net174.4 165.1 
Income taxes receivable26.6 21.9 
Unbilled receivables102.5 72.8 
Other current assets136.2 114.3 
Current assets held for sale833.6 324.2 
Total current assets2,375.2 1,752.3 
Property, plant and equipment, net105.6 127.3 
Goodwill13,989.2 13,966.0 
Other intangible assets, net6,745.9 7,168.2 
Deferred taxes103.6 103.2 
Other assets408.6 386.2 
Assets held for sale 521.6 
Total assets$23,728.1 $24,024.8 
LIABILITIES AND STOCKHOLDERS’ EQUITY:
Accounts payable$146.9 $127.1 
Accrued compensation283.1 262.6 
Deferred revenue995.5 990.2 
Other accrued liabilities411.9 418.6 
Income taxes payable55.9 25.7 
Current portion of long-term debt, net799.2 499.4 
Current liabilities held for sale168.6 120.8 
Total current liabilities2,861.1 2,444.4 
Long-term debt, net of current portion7,529.9 9,061.4 
Deferred taxes1,526.0 1,531.5 
Other liabilities468.8 443.6 
Liabilities held for sale 64.1 
Total liabilities12,385.8 13,545.0 
Commitments and contingencies (Note 10)
Common stock1.1 1.1 
Additional paid-in capital2,276.2 2,097.5 
Retained earnings9,233.2 8,546.2 
Accumulated other comprehensive loss(150.5)(147.0)
Treasury stock(17.7)(18.0)
Total stockholders’ equity11,342.3 10,479.8 
Total liabilities and stockholders’ equity$23,728.1 $24,024.8 
 
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,
20212020
Cash flows from operating activities:
Net earnings from continuing operations$782.7 $600.5 
Adjustments to reconcile net earnings from continuing operations to cash flows from operating activities:
Depreciation and amortization of property, plant and equipment38.2 33.1 
Amortization of intangible assets438.8 318.9 
Amortization of deferred financing costs10.1 7.4 
Non-cash stock compensation102.9 84.8 
Gain on sale of assets, net of tax(21.6) 
Income tax provision, excluding tax associated with gain on sale of assets218.1171.2
Changes in operating assets and liabilities, net of acquired businesses:
Accounts receivable(8.9)108.0 
Unbilled receivables(26.2)(9.3)
Inventories(11.0)(15.4)
Accounts payable and accrued liabilities36.8 46.8 
Deferred revenue31.5 (53.0)
Cash tax paid for gain on disposal of businesses (201.9)
Cash income taxes paid(240.9)(234.6)
Other, net(31.2)(13.8)
Cash provided by operating activities from continuing operations1,319.3 842.7 
Cash provided by operating activities from discontinued operations113.1 108.2 
Cash provided by operating activities1,432.4 950.9 
Cash flows from (used in) investing activities:
Acquisitions of businesses, net of cash acquired(19.4)(5,653.3)
Capital expenditures(22.5)(20.9)
Capitalized software expenditures(22.3)(9.8)
Proceeds used in disposal of businesses(0.1)(4.2)
Proceeds from sale of assets27.1  
Other, net(1.0)(2.7)
Cash used in investing activities from continuing operations(38.2)(5,690.9)
Cash used in investing activities from discontinued operations(4.2)(2.1)
Cash used in investing activities(42.4)(5,693.0)
Cash flows from (used in) financing activities:
Proceeds from senior notes 3,300.0 
Borrowings (payments) under revolving line of credit, net(1,240.0)1,160.0 
Debt issuance costs (42.0)
Cash dividends to stockholders(176.9)(160.0)
Proceeds from stock-based compensation, net63.9 72.5 
Treasury stock sales11.8 7.3 
Other (0.2)
Cash flows provided by (used in) financing activities from continuing operations(1,341.2)4,337.6 
Cash flows provided by (used in) financing activities from discontinued operations0.3 (1.2)
Cash flows provided by (used in) financing activities(1,340.9)4,336.4 
(Continued)
6


Roper Technologies, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (unaudited) - Continued
(in millions)

Nine months ended September 30,
20212020
Effect of foreign currency exchange rate changes on cash(4.9)(1.9)
Net increase (decrease) in cash and cash equivalents44.2 (407.6)
Cash and cash equivalents, beginning of period308.3 709.7 
Cash and cash equivalents, end of period$352.5 $302.1 


 
See accompanying notes to Condensed Consolidated Financial Statements.
7


Roper Technologies, Inc. and Subsidiaries
Condensed Consolidated Statements 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 June 30, 2021$1.1 $2,217.9 $9,003.1 $(115.1)$(17.8)$11,089.2 
Net earnings— — 289.5 — — 289.5 
Stock option exercises— 20.7 — — — 20.7 
Treasury stock sold— 3.5 — — 0.1 3.6 
Currency translation adjustments— — — (35.4)— (35.4)
Stock-based compensation— 36.1 — — — 36.1 
Restricted stock activity— (2.0)— — — (2.0)
Dividends declared ($0.5625 per share)
— — (59.4)— — (59.4)
Balances at September 30, 2021$1.1 $2,276.2 $9,233.2 $(150.5)$(17.7)$11,342.3 
Balances at December 31, 2020$1.1 $2,097.5 $8,546.2 $(147.0)$(18.0)$10,479.8 
Net earnings— — 864.8 — — 864.8 
Stock option exercises— 81.8 — — — 81.8 
Treasury stock sold— 11.5 — — 0.3 11.8 
Currency translation adjustments— — — (3.5)— (3.5)
Stock-based compensation— 103.3 — — — 103.3 
Restricted stock activity— (17.9)— — — (17.9)
Dividends declared ($1.6875 per share)
— — (177.8)— — (177.8)
Balances at September 30, 2021$1.1 $2,276.2 $9,233.2 $(150.5)$(17.7)$11,342.3 
Balances at June 30, 2020$1.1 $2,012.9 $8,168.7 $(284.8)$(18.2)$9,879.7 
Net earnings— — 234.4 — — 234.4 
Stock option exercises— 25.9 — —  25.9 
Treasury stock sold— 2.7 — — 0.1 2.8 
Currency translation adjustments— — — 43.4 — 43.4 
Stock-based compensation— 29.5 — — — 29.5 
Restricted stock activity— (1.1)— — — (1.1)
Dividends declared ($0.5125 per share)
— — (53.7)— — (53.7)
Balances at September 30, 2020$1.1 $2,069.9 $8,349.4 $(241.4)$(18.1)$10,160.9 
Balances at December 31, 2019$1.1 $1,903.9 $7,818.0 $(212.8)$(18.3)$9,491.9 
Adoption of ASC 326— — (1.7)— — (1.7)
Net earnings— — 693.9 — — 693.9 
Stock option exercises— 88.9 — — — 88.9 
Treasury stock sold— 7.1 — — 0.2 7.3 
Currency translation adjustments— — — (28.6)— (28.6)
Stock-based compensation— 86.4 — — — 86.4 
Restricted stock activity— (16.4)— — — (16.4)
Dividends declared ($1.5375 per share)
— — (160.8)— — (160.8)
Balances at September 30, 2020$1.1 $2,069.9 $8,349.4 $(241.4)$(18.1)$10,160.9 

See accompanying notes to Condensed Consolidated Financial Statements.
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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, 2021 and 2020 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, 2020 financial position data included herein was derived from the audited consolidated financial statements included in the Company’s 2020 Annual Report on Form 10-K (“Annual Report”) filed on February 22, 2021 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.

During and subsequent to the third quarter of 2021, the Company signed definitive agreements to divest its TransCore, Zetec and CIVCO Radiotherapy businesses which are presented as discontinued operations for all periods presented. Unless otherwise noted, discussion within these notes to the Condensed Consolidated Financial Statements relate to continuing operations. Refer to Note 5 for additional information on discontinued operations.

The results of operations for the three and nine months ended September 30, 2021 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.

2.    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 Accounting Standards Codification (“ASC”). The Company considers the applicability and impact of all ASUs. Any recent ASUs not listed 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

The Company adopted ASC Topic 326, Financial Instruments - Credit Losses (“ASC 326”), as of January 1, 2020 using the modified retrospective transition method. This ASU amends the impairment model to utilize an expected loss methodology in place of the incurred loss methodology for financial instruments, including trade receivables, and unbilled receivables. We recorded a noncash cumulative effect decrease to retained earnings of $1.7, net of income taxes, on our opening consolidated balance sheet as of January 1, 2020.

Recently Issued Accounting Pronouncements

In October 2021, the FASB issued an update to improve the accounting for acquired revenue contracts with customers in a business combination by promoting consistency in the recognition of an acquired contract liability and the subsequent revenue recognized by the acquirer. The update is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, with early adoption permitted. The Company expects to early adopt this update in the fourth quarter of 2021. This update will not impact the acquisitions completed in 2021 and the future impact of adoption, if any, will depend on the acquisitions made by the Company.
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3.    Weighted Average Shares Outstanding

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,
2021202020212020
Basic shares outstanding105.4 104.7 105.2 104.5 
Effect of potential common stock:
Common stock awards1.3 1.2 1.2 1.1 
Diluted shares outstanding106.7 105.9 106.4 105.6 

For the three and nine months ended September 30, 2021, there were 0.502 and 0.530 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 0.135 and 0.809 outstanding stock options that would have been antidilutive in the respective 2020 periods.

4.    Business Acquisitions and Disposition

Roper completed four business acquisitions in the nine months ended September 30, 2021, with an aggregate purchase price of $19.7, net of cash acquired. All four of these acquisitions have been integrated into our Deltek business and its results are reported in the Application Software reportable segment. The results of operations of the acquired businesses are included in Roper’s Condensed Consolidated Financial Statements since the date of each acquisition. Pro forma results of operations and the revenue and net income subsequent to the acquisition date for the acquisitions completed during the first nine months of fiscal 2021 have not been presented because the effects of the acquisitions, individually and in the aggregate, were not material to our financial results.

The Company recorded $13.6 in goodwill and $8.3 of other identifiable intangibles in connection with these four acquisitions. The amortizable intangible assets include customer relationships of $8.0 (13.6 year weighted average useful life) and technology of $0.3 (5.0 year weighted average useful life).

Disposition

On March 17, 2021, Roper completed the sale of a minority investment in Sedaru, Inc. for $27.1. The pretax gain on the sale was $27.1, which is reported in Other income (expense), net in the Condensed Consolidated Statement of Earnings.

5.    Discontinued Operations

During and subsequent to the third quarter of 2021, the Company signed definitive agreements to divest its TransCore, Zetec and CIVCO Radiotherapy businesses as described below.

On August 10, 2021, Roper signed a definitive agreement to divest its Zetec business to Eddyfi NDT Inc. for approximately $350.0 in cash. The transaction, which is expected to close in the fourth quarter of 2021, is subject to customary closing conditions, including regulatory approvals. Zetec was previously included in the Process Technologies reportable segment.

On October 1, 2021, Roper signed a definitive agreement to divest its TransCore business to an affiliate of Singapore Technologies Engineering Ltd., for approximately $2,680.0 in cash. The transaction, which is expected to close in the first quarter of 2022, is subject to customary closing conditions, including regulatory approvals. TransCore was previously included in the Network Software & Systems reportable segment.

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On October 14, 2021, Roper signed a definitive agreement to divest its CIVCO Radiotherapy business to an affiliate of Blue Wolf Capital Partners LLC, for approximately $120.0 in cash. On November 1, 2021, the Company closed on its sale of its CIVCO Radiotherapy business. The Company is currently calculating the gain and associated tax expense on the sale, which will be disclosed within the Company’s 2021 Annual Report on Form 10-K. The CIVCO Radiotherapy business was previously included in the Measurement & Analytical Solutions reportable segment.

The Company concluded these disposal activities, in the aggregate, represented a strategic shift that will have a major effect on the Company’s operations and financial results. These divestitures significantly enhance our mix of high-margin, recurring revenue businesses and notably reduce our working capital requirements. Accordingly, the financial results of the TransCore, Zetec and CIVCO Radiotherapy businesses are presented in the Condensed Consolidated Financial Statements as discontinued operations for all periods presented. Current and non-current assets and liabilities of these businesses are presented in the Condensed Consolidated Balance Sheet as assets and liabilities of discontinued operations classified as held for sale for both periods presented.

The following tables summarize the major classes of assets and liabilities related to the discontinued operations of the TransCore, Zetec and CIVCO Radiotherapy businesses, as reported in the Condensed Consolidated Balance Sheets:

September 30, 2021 (1)
December 31, 2020
Accounts receivable, net$86.8 $117.3 
Inventories, net53.833.3 
Unbilled receivables154.6168.9 
Goodwill428.5 
Other intangible assets, net37.8 
Other current assets72.14.7 
Current assets held for sale833.6 324.2 
Goodwill 429.2 
Other intangible assets, net 38.7 
Other assets 53.7 
Assets held for sale$ $521.6 
Accounts payable$49.7 $50.7 
Accrued compensation30.223.5 
Deferred taxes25.2— 
Other current liabilities63.546.6 
Current liabilities held for sale168.6120.8 
Deferred taxes— 31.0 
Other liabilities 33.1 
Liabilities held for sale$ $64.1 
(1) All assets and liabilities held for sale were classified as current as it is probable the sale of TransCore, Zetec and CIVCO Radiotherapy will be completed within one year.
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The following table summarizes the major classes of revenue and expenses constituting net income from discontinued operations attributable to the TransCore, Zetec and CIVCO Radiotherapy businesses:

Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Net revenues$158.6 $167.9 $472.1 $503.2 
Cost of sales91.3101.9280.2296.7
Gross profit67.366.0191.9206.5
Selling, general and administrative expenses(1)
25.628.987.886.6
Income from operations41.737.1104.1119.9
Other income (expense), net0.2(0.2)1.40.2
Earnings before income taxes41.936.9105.5120.1
Income taxes12.29.523.426.7
Net earnings from discontinued operations$29.7 $27.4 $82.1 $93.4 
(1) Includes stock-based compensation expense of $1.4 and $1.2 for the three months ended September 30, 2021 and 2020, respectively, and $3.2 and $3.5 for the nine months ended September 30, 2021 and 2020, respectively. Stock-based compensation for discontinued operations was previously reported as a component of unallocated corporate general and administrative expenses.

6.    Stock Based Compensation

The Roper Technologies, Inc. 2021 Incentive Plan (“2021 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 2021 Plan was approved by shareholders at the Annual Meeting of Shareholders on June 14, 2021. The 2021 Plan replaces the Roper Technologies, Inc. 2016 Incentive Plan, as amended (“2016 Plan”), and no additional grants will be made under the 2016 Plan.

The following table provides information regarding the Company’s stock-based compensation expense:

Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Stock-based compensation$35.4 $28.9 $102.9 $84.8 
Tax effect recognized in net earnings from continuing operations7.4 6.1 21.6 17.8 

Stock Options - In the nine months ended September 30, 2021, 0.513 options were granted with a weighted average fair value of $95.04 per option. During the same period in 2020, 0.758 options were granted with a weighted average fair value of $63.01 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 2021 Plan and 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.

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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,
20212020
Risk-free interest rate (%)0.94 0.81 
Expected option life (years)5.615.64
Expected volatility (%)25.15 20.36 
Expected dividend yield (%)0.56 0.62 

Cash received from option exercises for the nine months ended September 30, 2021 and 2020 was $81.8 and $88.9, respectively.

Restricted Stock Grants - During the nine months ended September 30, 2021, the Company granted 0.225 shares with a weighted average grant date fair value of $408.07 per restricted share. During the same period in 2020, the Company granted 0.234 shares with a weighted average grant date fair value of $353.68 per restricted share. All grants were issued at grant date fair value.

During the nine months ended September 30, 2021, 0.146 restricted shares vested with a weighted average grant date fair value of $314.01 per restricted share and a weighted average vest date fair value of $406.74 per restricted share.

Employee Stock Purchase Plan - Roper’s employee stock purchase plan (“ESPP”) previously allowed 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.

We amended the ESPP effective July 1, 2020, which allows employees in the U.S. and Canada to designate up to 10% of eligible earnings to purchase Roper’s common stock at a 10% discount on the lower of the closing price of the stock on the first and last day of each quarterly offering period. Common stock sold to employees pursuant to the ESPP may be either treasury stock, stock purchased on the open market, or newly issued shares.

During the nine months ended September 30, 2021 and 2020, participants in the ESPP purchased 0.031 and 0.022 shares of Roper’s common stock for total consideration of $11.8 and $7.3, respectively. All shares were purchased from Roper’s treasury shares.

7.    Inventories

The components of inventory were as follows:

September 30,
2021
December 31,
2020
Raw materials and supplies$105.9 $104.0 
Work in process27.6 22.9 
Finished products77.1 74.4 
Inventory reserves(36.2)(36.2)
Inventories, net$174.4 $165.1 

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8.    Goodwill and Other Intangible Assets

The carrying value of goodwill by segment was as follows:
Application SoftwareNetwork Software & SystemsMeasurement & Analytical SolutionsProcess TechnologiesTotal
Balances at December 31, 2020$8,802.3 $3,746.2 $1,167.3 $250.2 $13,966.0 
Additions13.6    13.6 
Other3.1 0.9   4.0 
Currency translation adjustments1.1 6.8 (1.8)(0.5)5.6 
Balances at September 30, 2021$8,820.1 $3,753.9 $1,165.5 $249.7 $13,989.2 

Other relates primarily to purchase accounting adjustments for acquisitions.

Other intangible assets were comprised of:

CostAccumulated
amortization
Net book
value
Assets subject to amortization:
Customer related intangibles$7,473.7 $(1,688.2)$5,785.5 
Unpatented technology942.8 (363.9)578.9 
Software172.4 (127.4)45.0 
Patents and other protective rights12.0 (6.0)6.0 
Trade names7.3 (5.6)1.7 
Assets not subject to amortization:
Trade names751.1 — 751.1 
Balances at December 31, 2020$9,359.3 $(2,191.1)$7,168.2 
Assets subject to amortization:
Customer related intangibles$7,478.5 $(2,020.1)$5,458.4 
Unpatented technology907.0 (413.3)493.7 
Software172.4 (138.2)34.2 
Patents and other protective rights12.6 (5.0)7.6 
Trade names6.7 (5.7)1.0 
Assets not subject to amortization:
Trade names751.0 — 751.0 
Balances at September 30, 2021$9,328.2 $(2,582.3)$6,745.9 

Amortization expense of other intangible assets was $434.2 and $315.5 during the nine months ended September 30, 2021 and 2020, 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 2021. The Company will perform the annual analysis during the fourth quarter of 2021.

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9.    Fair Value of Financial Instruments and Debt

Roper’s debt at September 30, 2021 included $8,000 of fixed-rate senior notes with the following fair values:

$500 2.800% senior notes due 2021
502 
$500 3.125% senior notes due 2022
512 
$300 0.450% senior notes due 2022
301 
$700 3.650% senior notes due 2023
742 
$500 2.350% senior notes due 2024
524 
$300 3.850% senior notes due 2025
330 
$700 1.000% senior notes due 2025
697 
$700 3.800% senior notes due 2026
779 
$700 1.400% senior notes due 2027
691 
$800 4.200% senior notes due 2028
915 
$700 2.950% senior notes due 2029
745 
$600 2.000% senior notes due 2030
591 
$1,000 1.750% senior notes due 2031
957 

The fair values of the senior notes are based on the trading prices of each series of notes, which the Company has determined to be Level 2 in the FASB fair value hierarchy.

Subsequent to the nine months ended September 30, 2021, on October 8, 2021, the Company elected to exercise its optional redemption rights to redeem all of its outstanding 2.800% Notes due December 15, 2021 (the “Notes”) in the original aggregate principal amount of $500, and Wells Fargo Bank, National Association, as trustee under the indenture governing the Notes (the “Indenture”), issued redemption notices to registered holders of the Notes. The date fixed for the redemption of the Notes is November 15, 2021 (the “Redemption Date”). The Notes will be redeemed at 100% of the aggregate principal amount of the Notes, plus accrued and unpaid interest thereon to the Redemption Date in accordance with the terms and conditions set forth in the Indenture. The foregoing does not constitute a notice of redemption with respect to any of the Notes.

10.    Contingencies

Roper, in the ordinary course of business, is party to various pending or threatened legal actions, including product liability, intellectual property, data privacy and employment practices that, in general, are of a nature consistent with those over the past several years. After analyzing the Company’s contingent liabilities on a gross basis and, based upon past experience with resolution of such legal claims and the availability and limits of the primary, excess, and umbrella liability insurance coverages 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’s subsidiary, Vertafore, Inc., was named in three putative class actions, two in the U.S. District Court for the Southern District of Texas (Allen, et al. v. Vertafore, Inc., Case 4:20-cv-4139, filed December 4, 2020 and Masciotra, et al. v. Vertafore, Inc., originally filed on December 8, 2020 as Case 1:20-cv-03603 in the U.S. District Court for the District of Colorado and subsequently transferred), and one in the U.S. District Court for the Northern District of Texas (Mulvey, et al. v. Vertafore, Inc., Case 3:21-cv-00213-E, filed January 31, 2021). In July 2021, the court granted Vertafore’s motion to dismiss the Allen Case. Plaintiff has appealed the dismissal to the U.S. Fifth Circuit Court of Appeals. In July 2021, the plaintiff in the Masciotra case voluntarily dismissed his action without prejudice. The Mulvey case purports to represent approximately 27.7 million individuals who held Texas driver’s licenses prior to February 2019. In November 2020, Vertafore announced that as a result of human error, three data files were inadvertently stored in an unsecured external storage service that appears to have been accessed without authorization. The files, which included driver information for licenses issued before February 2019, contained Texas driver license numbers, as well as names, dates of birth, addresses and vehicle registration histories. The files did not contain any Social Security numbers or financial account information. The case seeks recovery under the Driver’s Privacy Protection Act, 18 U.S.C. § 2721. Vertafore is vigorously defending the case. In addition, Roper has been advised that the Texas Attorney General is investigating the data event.

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
15


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.

11.    Business Segments

The following table presents selected financial information by reportable segment:

Three months ended September 30,Nine months ended September 30,
20212020Change %20212020Change %
Net revenues:
Application Software$603.4 $447.9 34.7 %$1,771.6 $1,251.4 41.6 %
Network Software & Systems343.4 288.1 19.2 %983.3 864.0 13.8 %
Measurement & Analytical Solutions392.4 356.9 9.9 %1,146.8 1,065.3 7.7 %
Process Technologies123.6 105.3 17.4 %363.8 337.9 7.7 %
Total$1,462.8 $1,198.2 22.1 %$4,265.5 $3,518.6 21.2 %
Gross profit:
Application Software$420.2 $307.6 36.6 %$1,228.2 $851.8 44.2 %
Network Software & Systems284.3 235.1 20.9 %807.9 701.1 15.2 %
Measurement & Analytical Solutions224.0 212.1 5.6 %665.7 636.5 4.6 %
Process Technologies67.6 55.1 22.7 %197.6