SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
________________
FORM 8-K/A
(AMENDMENT NO. 1)
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
September 4, 2001
Date of report (date of earliest event reported)
ROPER INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
1-12273 51-0263969
(Commission file number) (IRS Employer Identification No.)
160 Ben Burton Road
Bogart, Georgia 30622
(Address of principal executive offices) (Zip Code)
(706) 369-7170
(Registrant's telephone number, including area code)
NA
(Former name or former address if changed since last report)
Explanatory Note
This Amendment No. 1 on Form 8-K/A amends and restates the Registrant's
Current Report on Form 8-K filed with the Securities and Exchange Commission on
December 13, 2001. This Amendment No. 1 is being filed to restate the auditors'
report on the financial statements of Struers Holding A/S to state that their
audit was performed in accordance with generally accepted auditing standards in
the United States. The Struers Holding A/S financial statements, the auditors'
report thereon, and Item 7(a) have also been amended to comment on accounting
differences between Danish and U.S. standards with respect to the accounting and
reporting practices of Struers Holding A/S. The Struers Holding A/S balance
sheets have been reclassified and rearranged to conform more closely with a
Danish presentation.
Item 2. Acquisition or Disposition of Assets.
On September 4, 2001, the Registrant completed the acquisition of 100% of
the outstanding ownership interests in Struers Holding A/S for total arms-length
negotiated consideration of cash of approximately $151 million. Struers Holding
A/S was acquired from a group of direct investors and limited partnerships, for
whom EQT Scandinavia I acted as investment manager, and a group of management
shareholders. Registrant's financing of this acquisition was from its existing
credit facilities that are described in Registrant's Quarterly Report on Form
10-Q for the period ended July 31, 2001.
Struers Holding A/S has two primary businesses - Struers, based in Denmark,
and Logitech, based in Scotland. Struers designs, manufactures and markets
materialographic preparation equipment and consumables used in quality
inspection, failure analysis and research of solid materials. Logitech designs,
manufactures and markets high-precision material shaping equipment used
principally in the production of advanced materials for the semiconductor and
opto-electronics markets. Registrant intends to continue these businesses.
2
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial statements of business acquired (included in Annex A).
. Consolidated balance sheets at June 30, 2001(unaudited) and
December 31, 2000.
. Consolidated income statements for the six months ended June 30,
2001 and 2000(unaudited) and the year ended December 31, 2000.
. Consolidated cash flow statements for the six months ended June
30, 2001 and 2000(unaudited) and the year ended December 31,
2000.
. Independent auditors' report.
(b) Pro forma financial information (included in Annex A).
. Combined balance sheet at July 31, 2001.
. Combined income statement for the nine months ended July 31,
2001.
. Combined income statement for the year ended October 31, 2000.
(c) Exhibits.
23.1 Consent of independent auditors.
99.1 Acquisition agreement (incorporated by reference to Exhibit 99.1
to the Registrant's Current Report on Form 8-K filed with the
Commission on December 13, 2001 (Commission File No. 1-12273).
3
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 hereunto duly authorized.
ROPER INDUSTRIES, INC.
By: /s/ Martin S. Headley
-------------------------------------------
April 12, 2002 Martin S. Headley, Vice President and
Chief Financial Officer
4
Annex A
Item 7(a) Financial statements of business acquired
The historical financial information related to Struers Holding A/S addressed by
the following independent auditors' report and presented in the associated
financial statements were prepared using accounting standards in accordance with
the Danish Annual Accounts Act and Danish accounting standards ("Danish GAAP").
There are differences between Danish GAAP and generally accepted accounting
principles in the United States ("U.S. GAAP"). Regarding the Struers financial
statements and those items that may have been reported differently had Struers
been reported as a part of Registrant in earlier periods, the significant
differences are in the areas of revenue recognition, derivatives and other
financial instruments, software development costs, income taxes, valuation
reserves, and certain other liability accruals.
The applicable rules of the U.S. Securities and Exchange Commission pertaining
to this filing do not require the Registrant to provide a quantified
reconciliation between this financial information and what it would be if
reported under U.S. GAAP. See, however, Note 19 of the Notes to Consolidated
Financial Statements of Struers Holding A/S.
A-1
Independent Auditors' Report
The Board of Directors and shareholder
Struers Holding A/S:
We have audited the accompanying consolidated balance sheet of Struers Holding
A/S and its subsidiaries as of December 31, 2000 and the related consolidated
income statement and cash flow statement for the year ended December 31, 2000.
These consolidated financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
in Denmark and in the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Struers Holding A/S
and its subsidiaries as of December 31, 2000, and the results of its operations
and its cash flows for the year ended December 31, 2000, in conformity with the
accounting provisions of Danish legislation.
KPMG C.Jespersen
Niels Erik Borgbo Soeren Christiansen
State-Authorized Public Accountants (Denmark)
Copenhagen, Denmark
March 20, 2001, except as to Note 19, which is as of April 12, 2002
A-2
Struers Holding A/S and Subsidiaries
Consolidated Income Statements
(in thousands)
Year ended
Six months ended June 30, December 31,
----------------------------------------
2001 2000 2000
------------------ ------------------ ------------------
(unaudited)
Net sales DKK 352,265 DKK 282,241 DKK 604,861
Cost of goods sold 132,994 109,301 236,148
------------------ ------------------ ------------------
Gross profit 219,271 172,940 368,713
Selling and distribution costs 96,762 88,325 183,283
Development costs 13,933 11,315 22,240
Administrative expenses 20,867 22,652 48,099
Goodwill amortization 15,178 15,173 30,347
------------------ ------------------ ------------------
Operating profit 72,531 35,475 84,744
Interest income 2,028 752 3,214
Interest expense 16,258 15,353 33,107
Extraordinary charges - 8,000 -
------------------ ------------------ ------------------
Earnings before income taxes 58,301 12,874 54,851
Income taxes 26,547 11,096 30,762
------------------ ------------------ ------------------
Net earnings DKK 31,754 DKK 1,778 DKK 24,089
================== ================== ==================
See accompanying notes to consolidated financial statements.
A-3
Struers Holding A/S and Subsidiaries
Consolidated Cash Flow Statements
(in thousands)
Year ended
Six months ended June 30, December 31,
----------------------------------------
2001 2000 2000
------------------ ------------------ ------------------
(unaudited)
Net sales DKK 352,265 DKK 282,241 DKK 604,861
Costs and expenses 267,018 236,624 489,500
------------------ ------------------ ------------------
Net cash provided from operating activities
before changes in working capital 85,247 45,617 115,361
Change in inventory (10,269) (8,053) (13,466)
Change in accounts receivable (23,528) (18,127) (21,022)
Change in accounts payable and other liabilities (12,417) (12,014) (1,211)
Interest paid (17,277) (14,790) (29,351)
Income taxes paid (13,836) (11,224) (22,719)
------------------ ------------------ ------------------
Net cash provided from (used by)
operating activities 7,920 (18,591) 27,592
------------------ ------------------ ------------------
Capital expenditures (8,385) (4,400) (10,386)
Proceeds from sales of assets 177 134 606
------------------ ------------------ ------------------
Net cash used by investing activities (8,208) (4,266) (9,780)
------------------ ------------------ ------------------
Debt borrowings (payments) (80) 25,470 20,845
------------------ ------------------ ------------------
Net cash provided from (used by)
financing activities (80) 25,470 20,845
------------------ ------------------ ------------------
Net cash provided from (used by) operating,
investing and financing activities (368) 2,613 38,657
Cash and cash equivalents at the beginning
of the period 68,571 29,358 29,358
Unrealized value adjustments of cash and
cash equivalents 1,798 282 556
------------------ ------------------ ------------------
Cash and cash equivalents at the end of the
period DKK 70,001 DKK 32,253 DKK 68,571
================== ================== ==================
See accompanying notes to consolidated financial statements.
A-4
Struers Holding A/S and Subsidiaries
Consolidated Balance Sheets
(in thousands)
June 30, December 31,
2001 2000
------------------ ------------------
(unaudited)
ASSETS
Fixed assets
Goodwill DKK 503,359 DKK 518,381
Leasehold improvements 112 149
Deposits 10,116 9,463
------------------ ------------------
513,587 527,993
------------------ ------------------
Tangible fixed assets
Land and buildings 11,118 9,384
Technical plant and machinery 7,032 8,252
Fixtures and fittings, tools and equipment 12,667 9,878
------------------ ------------------
30,817 27,514
------------------ ------------------
Investments
Securities 687 728
------------------ ------------------
687 728
------------------ ------------------
Total fixed assets 545,091 556,235
------------------ ------------------
Current assets
Stocks
Raw materials and consumables 39,409 30,652
Work in process 2,950 3,720
Finished goods and goods for resale 61,567 56,832
------------------ ------------------
103,926 91,204
------------------ ------------------
Debtors
Trade debtors 152,275 122,566
Outstanding corporation tax - 4,536
Deferred tax asset 27,537 29,734
Other debtors 6,370 7,827
Prepayments and accrued income 2,966 2,192
------------------ ------------------
189,148 166,855
Own shares - 362
Cash at hand and in bank 77,073 75,551
------------------ ------------------
Total current assets 370,147 333,972
------------------ ------------------
TOTAL ASSETS DKK 915,238 DKK 890,207
================== ==================
A-5
Struers Holding A/S and Subsidiaries
Consolidated Balance Sheets - continued
(in thousands)
June 30, December 31,
2001 2000
------------------ ------------------
(unaudited)
LIABILITIES AND CAPITAL
Capital and reserves
Share capital DKK 50,343 DKK 50,343
Reserve for own shares - 362
Retained profit 239,240 206,749
------------------ ------------------
Total capital and reserves 289,583 257,454
------------------ ------------------
Convertible bond loan - 8,876
------------------ ------------------
Provisions
Deferred tax 457 517
Other provisions 13,696 13,967
------------------ ------------------
Total provisions for liabilities and charges 14,153 14,484
------------------ ------------------
Creditors
Long-term creditors
Mortgage debt 8,527 14
Bank loans and overdrafts 493,083 476,956
------------------ ------------------
501,610 476,970
------------------ ------------------
Short-term creditors
Short-term share of long-term creditors - 15,000
Bank loans and overdrafts 7,072 6,980
Prepayments from customers 2,401 5,641
Trade creditors 55,725 46,268
Corporation tax 18,130 10,706
Other creditors 26,564 25,655
Prepayments and deferred income - 22,173
------------------ ------------------
109,892 132,423
------------------ ------------------
Total creditors 611,502 609,393
------------------ ------------------
TOTAL LIABILITIES AND CAPITAL DKK 915,238 DKK 890,207
================== ==================
See accompanying notes to consolidated financial statements.
A-6
Struers Holding A/S and Subsidiaries
Notes to Consolidated Financial Statements
Accounting policies
The consolidated accounts for the six months ended June 30, 2001 and 2000
and the year ended December 31, 2000 have been prepared in accordance with
the Danish Annual Accounts Act and Danish accounting standards. There are
differences between Danish standards and standards in the United States.
These differences are in the areas of revenue recognition, derivatives and
other financial instruments, software development costs, income taxes,
valuation reserves, and certain other liability accruals and are described
in more detail in Note 19. These differences may also have different
effects on different periods. The consolidated accounts for the interim
six-month periods ended June 30, 2001 and 2000 are unaudited.
Consolidation policy
--------------------
The consolidated accounts comprise the parent company, Struers Holding A/S,
and subsidiary undertakings in which Struers Holding A/S controls more than
50% of the voting rights. Intercompany revenues and expenses, receivables
and payables and gains and losses are eliminated.
The profit and loss accounts of foreign subsidiaries whose functional
currency is not the Danish krone are translated into Danish krone at the
average currency exchange rate during the period and balance sheet accounts
are translated into Danish krone at the currency exchange rate at the
balance sheet date.
Revenue recognition
-------------------
Revenue from the sale of goods is recognized as invoiced.
Production costs
----------------
Production costs compose costs including depreciation and wages and
salaries incurred in order to obtain revenue. Costs of goods sold is
matched against the corresponding revenue.
Selling and distribution costs
------------------------------
Selling and distribution costs comprise costs regarding sales personnel,
advertising and exhibition expenses, depreciation and amortization, etc.
Development costs
-----------------
Development costs comprise costs for development, including depreciation.
Development costs are charged to expense as paid.
Administrative expenses
-----------------------
Administrative expenses comprise expenses regarding administrative staff
and management, etc., including depreciation and amortization.
Interest receivable and payable
-------------------------------
Interest receivable and payable as well as similar income and charges and
realized and unrealized exchange gains and losses regarding loans with
subsidiaries. Furthermore, interest receivable and payable comprise income
from sale of warrants.
Extraordinary income and charges
--------------------------------
Extraordinary income and charges comprise income and charges resulting from
activities other than ordinary ones.
A-7
Struers Holding A/S and Subsidiaries
Notes to Consolidated Financial Statements
Tax on profit/loss
------------------
The expected tax payable on taxable income for a period is charged to the
profit and loss account together with changes in the provision for deferred
taxation. Taxation in respect of extraordinary items is shown separately.
Deferred taxation is calculated as the difference between net book and tax
values. Provision for deferred taxation is made for accounts receivable,
inventory and tangible fixed assets. If the deferred taxation is an asset,
the amount is recorded at a value which is not higher than the anticipated
future applications. No provision has been made for deferred taxation of
undistributed ownership interests in subsidiary earnings as it is the
parent company's intention to hold interests for more than three years.
The company is comprised by a tax on account scheme. Additions, deductions
and compensations regarding tax payments are included in interest
receivable and payable.
Intangible fixed assets
-----------------------
At the acquisition of a subsidiary, the share of the acquired company's net
asset value is determined according to the Company's accounting policies.
Where the cost differs from the net asset value, the difference is to the
extent possible allocated to the assets and liabilities or provisions, the
value of which is higher or lower. Any remaining positive differences are
capitalized and amortized over a maximum period of 20 years.
Other intangible assets are valued at cost less accumulated amortization.
Amortization is provided on a straight-line basis over the expected useful
lives of the assets. The maximum amortization period is five years.
Tangible fixed assets
---------------------
Land and buildings are valued at cost less accumulated depreciation on
buildings, or utility value where this is lower for reasons not considered
temporary. Plant and machinery and fixtures and other equipment are valued
at purchase price less accumulated depreciation, or at a utility value
where this is lower for reasons not considered temporary.
Depreciation is provided on a straight-line basis over the expected useful
lives of the assets. The expected useful lives for buildings are 25 years
and 3-5 years for plant and machinery and fixtures and other equipment.
Assets with a cost of less than DKK 9,500 per unit are charged to expense
when acquired. Public contributions are set off against the cost of the
additions during the period.
Inventory
---------
Raw materials and consumables are valued at cost. Work in process and
finished goods are valued at cost consisting of the cost of raw materials
and consumables with the addition of production costs and other costs
directly or indirectly related to the individual goods.
Cost is determined using the first-in first-out method.
Provision is made for obsolescence on slow-moving goods.
Accounts receivable
-------------------
Accounts receivable are valued at nominal value less provisions for
anticipated losses.
A-8
Struers Holding A/S and Subsidiaries
Notes to Consolidated Financial Statements
Provisions for liabilities and charges
--------------------------------------
Provision for pension obligations are computed at sum of pension
obligations at the balance sheet date.
Foreign currency translation
----------------------------
The Company enters into forward exchange contracts transactions to hedge
turnover and purchases of goods according to which foreign currency
transactions during the period are translated at the hedged exchange rate.
Hedge contracts relating to future turnover are not revalued to current
exchange rates. The difference between current exchange rates and forward
exchange rates and the valuation of this difference related to these
contracts is disclosed.
Receivables, payables and other items denominated in a currency other than
the functional currency which have not been settled at the balance sheet
date are translated into the functional currency at the exchange rate for
the balance sheet date. Resulting gains and losses are recognized on the
income statement.
To the extent that the value of receivables, payables and other items
denominated in a currency other than the functional currency are hedged
toward forward exchange transactions, the items are translated at the
hedged rates.
Statements of cash flows
------------------------
The cash flow statements show inflows and outflows of cash during a period
as well as the cash and cash equivalents at the beginning and the end of
the period.
Cash flows from operating activities are presented indirectly and are
calculated as revenues less operating charges and adjusted for non-cash
operating items, changes to the operating capital, financial and
extraordinary items paid and corporate taxes paid.
Cash flows from investing activities include payments in connection with
the acquisition and sale of fixed assets and securities included in
investing activities.
Cash flows from financing activities include payments to and from
shareholders and the raising of and repayments of mortgage loans and other
long-term creditors.
Cash and cash equivalents
-------------------------
Cash and cash equivalents include cash at bank and in hand and short term
bank loans and overdrafts.
A-9
Struers Holding A/S and Subsidiaries
Notes to Consolidated Financial Statements
Note 1 Revenues
The distribution of revenues on geographical markets has been excluded for
competitive reasons, cf. section 49, paragraph 2 of the Danish Annual
Accounts Act.
Note 2 Interest receivable and similar income
Year ended
Dec. 31,
2000
-----------
(000s)
Other interest receivable and exchange rate gains DKK 2,635
Net income from sale of warrants 579
-----------
DKK 3,214
===========
Note 3 Interest payable and similar charges
Year ended
Dec. 31,
2000
-----------
(000s)
Other interest payable and exchange rate loss DKK 33,107
===========
Note 4 Tax on profit for the year
Year ended
Dec. 31,
2000
-----------
(000s)
Tax on taxable income DKK 27,648
Adjustments regarding previous years 115
Adjustment of deferred taxation 2,999
-----------
DKK 30,762
===========
Corporate taxes paid DKK 22,719
===========
Note 5 Goodwill
Accumulated
Cost Amortization
----------- ------------
(in thousands)
Balance at December 31, 1999 DKK 608,855 DKK (60,257)
Exchange rate adjustments in foreign companies 152 (20)
Amortization - (30,349)
----------- -----------
Balance at December 31, 2000 DKK 609,007 DKK (90,626)
=========== ===========
A-10
Struers Holding A/S and Subsidiaries
Notes to Consolidated Financial Statements
Note 6 Property and equipment
Fixtures Leasehold
Land and Plant and and other improve-
buildings machinery equipment ments
--------------- --------------- --------------- ---------------
(in thousands)
Cost:
Balance at December 31, 1999 DKK 18,422 DKK 35,969 DKK 26,688 DKK 1,168
Exchange rate adjustments (321) 428 (63) (6)
Additions - 3,288 5,938 -
Dispositions - (84) (2,019) -
--------------- --------------- --------------- ---------------
Balance at December 31, 2000 DKK 18,101 DKK 39,601 DKK 30,544 DKK 1,162
=============== =============== =============== ===============
Depreciation and amortization:
Balance at December 31, 1999 DKK (8,192) DKK (26,817) DKK (17,665) DKK (962)
Exchange rate adjustments 139 (145) (656) 6
Additions (664) (4,471) (3,955) (57)
Dispositions - 84 1,610 -
--------------- --------------- --------------- ---------------
Balance at December 31, 2000 DKK (8,717) DKK (31,349) DKK (20,666) DKK (1,013)
=============== =============== =============== ===============
Year ended December 31, 2000
--------------------------------------------------------------------
Selling and
Production distribution Development Admin.
--------------- --------------- --------------- ---------------
Depreciation and amortization DKK 2,943 DKK 3,970 DKK 474 DKK 1,760
=============== =============== =============== ===============
Note 7 Deferred taxes
Asset Liability
--------------- ---------------
(in thousands)
Balance at December 31, 1999 DKK 30,847 DKK (609)
Exchange rate adjustments 174 93
Additions - (1)
Adjustments (1,287) -
--------------- ---------------
Balance at December 31, 2000 DKK 29,734 DKK (517)
=============== ===============
Note 8 Own shares
At December 31, 2000, Struers Holding A/S held 8,332 shares of its
outstanding shares, or 0.17% of total shares outstanding. The cost of these
shares was DKK 362,000 and was included in other current assets.
A-11
Struers Holding A/S and Subsidiaries
Notes to Consolidated Financial Statements
Note 9 Capital and reserves
Share Share Retained
capital premium profit Other
--------------- --------------- --------------- ---------------
(in thousands)
Balance at December 31, 1999 DKK 50,343 DKK 190,790 DKK (9,588) DKK 600
Exchange rate adjustments - - 1,220 -
Reclassifications - (190,790) 191,028 (238)
Profit for the year - - 24,089 -
--------------- --------------- --------------- ---------------
Balance at December 31, 2000 DKK 50,343 DKK - DKK 206,749 DKK 362
=============== =============== =============== ===============
Share capital consists of 5,034,328 shares of DKK 10 each.
Struers Holding A/S has issued warrants of a total nominal value of DKK
9,642,000. The issue price amounts to DKK 68 per share of nominal DKK 10
for half the warrants, while the price of the remaining part amounts to DKK
100 per share of nominal DKK 10.
The warrants can be exercised either entirely or partially at any given
time until January 30, 2004.
Note 10 Convertible bond loan
The convertible bond loans carry interest and have the status of
subordinated loan capital. The lenders are thus subordinated to all
creditors whose claims cannot be covered by the Company's funds in case of
a bankruptcy. However, the convertible bond loans are always paid before
the share capital.
The convertible bond loan can, according to the lender's choice, be
converted into shares in the Company until January 30, 2004. The warrants
can be exercised at a conversion price of DKK 48-57.
Note 11 Long-term creditors
Of total long-term indebtedness at December 31, 2000, DKK 327.0 million
falls due for payment after December 31, 2005.
Note 12 Contingent liabilities
Dec. 31,
2000
-------------
(000s)
Rent and leasing obligations DKK 40,284
Guarantee obligations 140
Other obligations 450
Struers Holding A/S and its subsidiaries have contracted with
sub-suppliers, etc. The obligation does not exceed DKK 3 million.
The Company has a repurchase obligation regarding the warrants issued.
A-12
Struers Holding A/S and Subsidiaries
Notes to Consolidated Financial Statements
Note 13 Financial instruments
The Company has entered into the following forward exchange transactions to
hedge turnover after the balance sheet date:
Contract Value at
amount exchange Unrealized
stated at rates at loss/gain at
agreed Dec. 31, Dec. 31,
prices 2000 2000
----------------- --------------- ---------------
(in thousands)
United States dollars DKK 128,820 DKK 142,604 DKK (13,784)
Deutsche marks 15,802 15,759 43
Japanese yen 111,749 106,796 4,953
British pounds 24,718 25,710 (992)
French francs 5,712 5,689 23
Euros 36,676 35,569 107
----------------- --------------- ---------------
DKK 323,477 DKK 332,127 DKK (9,650)
================= =============== ===============
Note 14 Net cash inflow from operating activities before any change in
working capital
The following data is for the year ended December 31, 2000 (in thousands).
Profit before interest, etc. DKK 85,944
Depreciation 40,228
Other (10,811)
-----------
DKK 115,361
===========
Note 15 Cash and cash equivalents
Cash and cash equivalents at December 31, 2000 included the following
components (in thousands).
Cash at bank and in hand DKK 75,551
Bank loans and overdrafts (6,980)
-----------
DKK 68,571
===========
A-13
Struers Holding A/S and Subsidiaries
Notes to Consolidated Financial Statements
Note 16 Management and employees
Compensation costs for the year ended December 31, 2000 are presented in
the following table (in thousands). Compensation for the management and
board of directors of the parent holding company were DKK 3.1 million.
Compensation costs by type:
Wages and salaries DKK 149,005
Pensions 4,263
Social security 14,325
------------
DKK 167,593
============
Compensation costs by function:
Production DKK 33,835
Selling and distribution 93,720
Development 13,234
Administration 26,804
------------
DKK 167,593
============
Average number of employees 383
============
Note 17 Transactions between Struers Holding A/S and its subsidiaries and
major shareholders, the board of directors and management
During the year ended December 31, 2000, Struers Holding A/S and its
subsidiaries have not entered into transactions with its board of
directors, management, major shareholders or with companies outside the
consolidated group of companies in which the persons in question hold
interests.
Note 18 Fee to the auditors appointed at the annual general meeting
Total fees charged by KPMG C.Jespersen in respect of the financial year
ended December 31, 2000 amount to DKK 26,000. Non-audit fees included
amount to DKK 5,000.
Note 19 Significant differences between Danish GAAP and U.S. GAAP
There are differences between Danish GAAP and generally accepted accounting
principles in the United States ("U.S. GAAP"). Regarding the Company's
financial statements and those items that may have been reported
differently had Struers complied with U.S. GAAP, the more significant
differences are described below.
Revenue recognition. Under Danish GAAP, the Company accounts for the
-------------------
revenue associated with service contracts (including preventative
maintenance) primarily in the period when service contract work is
performed. U.S. GAAP may require revenue recognition to be spread more
evenly over the period covered by the service contract.
Derivative financial instruments. Under Danish GAAP, as discussed in Note
--------------------------------
13, the Company does not recognize the gain or loss associated with open
forward exchange contracts at the balance sheet date. U.S. GAAP requires
such contracts to be marked to market at the balance sheet date and any
resulting gain or loss to be recognized in its results of operations.
Software development costs. Under Danish GAAP, the Company incurred costs
--------------------------
related to the installation of a new information system in 2000 and
expensed these costs. U.S. GAAP would have required evaluation of the
future benefits associated with these costs and would have capitalized
certain of those costs expected to benefit future periods. Capitalized
costs would be amortized over the future benefit period.
Income taxes. Under Danish GAAP, the Company accrues income taxes during
------------
interim periods based on the facts and circumstances that exist during
those periods. Under U.S. GAAP, interim income taxes are determined based
on the expected facts and circumstances that are expected to occur during
the entire fiscal year.
Own shares. Under Danish GAAP, the Company has reported own shares as an
----------
asset. Under U.S. GAAP, own shares would have been reported as a component
of capital accounts.
Warrants. Under Danish GAAP, the Company has reported the proceeds from the
--------
sale of warrants to purchase shares of the Company as other income. Under
U.S. GAAP, such proceeds would have been credited to capital accounts.
A-14
Item 7(b) Pro forma financial information
On September 4, 2001, Registrant completed the acquisition of all of the
outstanding ownership interests in Struers Holding A/S and its subsidiaries
("Struers"). Total consideration for this transaction was approximately $151
million of cash. Registrant's financing of this transaction was funded from its
existing credit facilities.
The accompanying pro forma financial statements include a balance sheet as of
July 31, 2001 (Registrant's most recent quarterly balance sheet prior to the
acquisition) and income statements for the nine months ended July 31, 2001
(interim period corresponding with the balance sheet) and year ended October 31,
2001 (Registrant's most recent fiscal year completed prior to the acquisition).
The dates for the Struers data correspond with those of the Registrant.
The pro forma information is intended to provide information about the
continuing impact of this acquisition by showing how it might have affected
Registrant's historical financial statements if the acquisition had been
consummated at an earlier time. The accompanying pro forma information presumes
this acquisition occurred at the beginning of each period presented. If this
acquisition had occurred at an earlier date, the Registrant's subsequent
consolidated results might have been different than presented in this pro forma
information, and this pro forma information is not necessarily indicative of
results that may be reported in the future.
Notes to combining pro forma balance sheet
A Total costs to complete the acquisition provided by credit facilities,
and the elimination of Registrant's pushed-down basis in the net
assets of Struers.
B Repayment of all previously existing indebtedness of Struers and
allocation of the remaining costs to the estimated fair values of the
net assets acquired.
Notes to combining pro forma income statements
A Elimination of goodwill amortization included in Struers' historical
results. Struers' historical goodwill gets replaced by goodwill
resulting from this transaction. This goodwill is not subject to
amortization based on the actual date of the acquisition. The
historical amortization has been eliminated to be most consistent with
what the prospective accounting treatment is for goodwill as reported
by Registrant.
B Amortization of other identified intangible assets reflected in
Registrant's allocation of purchase costs to the fair values of net
assets acquired.
C Incremental interest costs associated with Registrant's financing of
the acquisition costs at its incremental borrowing rates compared to
the historical interest expense reported by Struers that was
associated with indebtedness paid off concurrent with the acquisition.
D Income taxes have been provided at the U.S. statutory rate of 35% on
the other pro forma adjustments.
A-15
Struers Holding A/S and Subsidiaries
Combining Pro Forma Balance Sheets (unaudited)
July 31, 2001
(in thousands)
Pro forma
Roper Struers entries Combined
------------- -------------- ------------- --------------
Cash and cash equivalents $ 28,319 9,166 $ - $ 37,485
Accounts receivable 102,153 16,753 - 118,906
Inventory 88,366 12,122 - 100,488
Other 4,539 3,491 - 8,030
------------- -------------- ------------- --------------
Total current assets 223,377 41,532 - 264,909
Property and equipment 46,392 3,750 - 50,142
Intangible assets 335,838 58,866 61,269 B 455,973
Other 10,596 1,367 - 11,963
------------- -------------- ------------- --------------
Total assets $ 616,203 $ 105,515 $ 61,269 $ 782,987
============= ============== ============= ==============
Notes payable and current portion
of long-term debt $ 6,999 $ 802 $ (802) B $ 6,999
Accounts payable 25,692 3,079 - 28,771
Accrued liabilities 50,024 6,233 - 56,257
Income taxes 6,040 2,082 - 8,122
------------- -------------- ------------- --------------
Total current liabilities 88,755 12,196 (802) 100,149
Long-term debt 212,148 57,341 153,809 A 365,957
(57,341) B
Other 8,045 1,581 - 9,626
------------- -------------- ------------- --------------
Total liabilities 308,948 71,118 95,666 475,732
------------- -------------- ------------- --------------
Total equity 307,255 34,397 (153,809) A 307,255
119,412 B
------------- -------------- ------------- --------------
Total liabilities and equity $ 616,203 $ 105,515 $ 61,269 $ 782,987
============= ============== ============= ==============
See accompanying notes to combining pro forma balance sheet.
A-16
Roper Industries, Inc. and Subsidiaries
Combining Pro Forma Income Statements (unaudited)
Year Ended October 31, 2000
(in thousands)
Pro forma
Roper Struers entries Combined
------------- -------------- ------------- --------------
Net sales $ 503,813 $ 74,463 $ - $ 578,276
Cost of goods sold 244,989 29,781 - 274,770
------------- -------------- ------------- --------------
Gross profit 258,824 44,682 - 303,506
Selling, general and administrative costs 170,628 35,774 (3,865) A 203,887
1,350 B
------------- -------------- ------------- --------------
Operating profit 88,196 8,908 2,515 99,619
Other income 1,218 222 - 1,440
Interest expense 13,483 3,931 3,189 C 20,603
------------- -------------- ------------- --------------
Earnings before income taxes 75,931 5,199 (674) 80,456
Income taxes 26,653 3,059 (236) D 29,476
------------- -------------- ------------- --------------
Net earnings $ 49,278 $ 2,140 $ (438) $ 50,980
============= ============== ============= ==============
Net earnings per share:
Basic $ 1.62 1.67
Diluted 1.58 1.63
Average shares outstanding:
Basic 30,457 30,457
Diluted 31,182 31,182
See accompanying notes to combining pro forma income statements.
A-17
Roper Industries, Inc. and Subsidiaries
Combining Pro Forma Income Statements (unaudited)
Nine Months Ended July 31, 2001
(in thousands)
Pro forma
Roper Struers entries Combined
------------- -------------- ------------- --------------
Net sales $ 422,463 $ 61,290 $ - $ 483,753
Cost of goods sold 203,245 23,069 - 226,314
------------- -------------- ------------- --------------
Gross profit 219,218 38,221 - 257,439
Selling, general and administrative costs 149,925 26,797 (2,732) A 175,003
1,013 B
------------- -------------- ------------- --------------
Operating profit 69,293 11,424 1,719 82,436
Other income 1,595 473 - 2,068
Interest expense 10,933 3,124 2,016 C 16,073
------------- -------------- ------------- --------------
Earnings before income taxes 59,955 8,773 (297) 68,431
Income taxes 21,200 4,017 (104) D 25,113
------------- -------------- ------------- --------------
Net earnings $ 38,755 $ 4,756 $ (193) $ 43,318
============= ============== ============= ==============
Net earnings per share:
Basic $ 1.26 1.41
Diluted 1.23 1.37
Average shares outstanding:
Basic 30,722 30,722
Diluted 31,594 31,594
See accompanying notes to combining pro forma income statements.
A-18
Exhibits
Exhibit No. Description of Exhibit
---------- ----------------------
23.1 Consent of independent auditors.
99.1 Acquisition agreements (incorporated by reference to Exhibit 99.1
to the Registrant's Current Report on Form 8-K filed with the
Commission on December 13, 2001 (Commission File No. 1-12273)).
E-1