Roper Industries Reports Fiscal Third Quarter Record Results

“Roper’s record third quarter performance was achieved in spite of over $2 million of restructuring costs incurred in the quarter, reflecting the success of initiatives undertaken over the past year to maximize the performance of our diversified portfolio of excellent businesses,” said Brian Jellison, President and CEO. “Among other important indicators, our operating margins continue to improve, expanding 130 basis points sequentially from our second quarter. We have now made substantial progress towards completing the restructuring activities we announced earlier this year, which could generate up to $15 million in annualized cost savings.”

Net sales rose 8% in the third quarter to $166 from $153 million in the third quarter of the previous year. Excluding acquisitions made in 2002 (see Table 1) and net sales to Gazprom, Roper’s net sales in the fiscal 2003 third quarter increased 6% (see Table 2 for a reconciliation of net sales).

“This is our second consecutive quarter of organic growth excluding Gazprom, with continued strong demand for our oil & gas project solutions and improvements in many of our imaging markets,” said Mr. Jellison. “In addition, we are beginning to see the results of the new market-focused structure we implemented earlier this year. Led by a strengthened management team, our businesses are better aligned and focused to develop and implement growth initiatives.”

Roper’s third quarter cash flow from operating activities grew 23% from the year-ago quarter to $22 million, including $3 million of net working capital improvements. The Company commented that it has reduced its net debt-to-net capital ratio from 46.0% at the beginning of the fiscal year to 39.7% at quarter end (see Table 3).

Change in Fiscal Year End

The Company announced that its Board of Directors approved a change in Roper’s fiscal year end from October 31 to December 31 to more closely align its reporting periods with its customers. The Company’s next quarterly reporting period will end on September 30, 2003. Historical financial data reflecting Roper’s new reporting periods will be made available in the Investor Information section of the Company’s web site.

Outlook for Calendar 2003

Reflecting the new fiscal calendar, Roper expects DEPS from continuing operations of $2.00 to $2.11 for the year ended December 31, 2003, compared with $1.95 for the 2002 calendar year. This is in-line with previously issued guidance for the Company’s historic fiscal year reporting period. The Company also expects DEPS from continuing operations to be up sharply at $0.60 - $0.65 in its new third calendar-year quarter, ending September 30, 2003, compared with $0.49 in the comparative prior year period. Mr. Jellison concluded, “The changes we have made this year – our new market-focused business structure, strengthened management team and improvements to our cost structure – have created a solid foundation for Roper to deliver improved performance within our existing strategic platforms. Our strong cash flow supports our active, disciplined strategic investment program. Roper is well positioned to execute its strategy of creating shareholder value.”

Results by Segment for the Fiscal Quarter Ended July 31, 2003.

Scientific & Industrial Imaging segment net sales rose 24% from the prior year to $43 million due to strong shipments for electron microscopy applications and the 2002 acquisition of QImaging. Operating profits increased 148% versus the prior year to $7 million. Excluding restructuring costs, operating profit tripled to $9 million on higher segment revenues and lower costs at the Company’s Redlake business unit. Net orders increased 3% in the third quarter.

The Industrial Technology segment reported another quarter of sequential growth, with net sales up 8% sequentially from the second quarter. Net sales were $44 million in the third quarter, 2% lower than in the year-ago period primarily as a result of the timing of water/wastewater projects. Third quarter operating margins were 23%. Operating profit of $10 million was lower than the prior year primarily as a result of restructuring costs and lower net sales in this year’s third quarter. Third quarter net orders improved 6% over the prior year to $43 million.

The Instrumentation segment posted a 43% sequential improvement in third quarter operating profit benefiting from the completion of restructuring activities in the second quarter. Third quarter net sales of $44 million were flat compared with the prior year period, as lower sales into semiconductor, telecom and refining markets were offset by revenues from the 2002 acquisition of Qualitek and stronger results at the Struers business unit. Operating profit decreased 7% as a result of revenue mix among the business units and lower margins from the Qualitek acquisition prior to its full integration into Uson, which was completed in the third quarter. Net orders increased 4% in the quarter.

Energy Systems & Controls segment third quarter net sales of $35 million were 19% higher than sales in the prior year period, principally as a result of the 2002 acquisition of Zetec and higher net sales for oil & gas applications, partially offset by a 61% reduction in net sales to Gazprom. Operating profit decreased from $8 million to $6 million on lower revenues to Gazprom and the expected seasonally low revenues at Zetec. Net orders of $38 million in the quarter were 45% higher than the prior year quarter.

Acquisitions

• Qualitek, Instrumentation Segment, July 2002
• Zetec, Energy Systems & Controls Segment, August 2002
• QImaging, Scientific & Industrial Imaging Segment, August 2002
• Duncan Technologies, Scientific & Industrial Imaging Segment, August 2002
• Definitive Imaging, Scientific & Industrial Imaging Segment, September 2002

Reconciliation of Net Sales (Millions)

Computation of Net Debt-to-Net Capital (Millions)