You should read the following discussion in conjunction with Management's Discussion and Analysis of Financial Conditions and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2008 as filed on March 2, 2009 with the SEC and the notes to our 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 oral statements made to the press, potential investors or others. All statements that are not historical facts are "forward-looking statements." The words "estimate," "project," "intend," "expect," "should," "will," "plan," "believe," "anticipate," and similar expressions identify forward-looking statements. These forward-looking statements include statements regarding our expected financial position, business, financing plans, business strategy, business prospects, revenues, working capital, liquidity, capital needs, interest costs and income, in each case relating to our company as a whole, as well as statements regarding acquisitions, potential acquisitions and the benefits of acquisitions.

Forward-looking statements are estimates and projections reflecting our best judgment and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. These statements are based on our management's beliefs and assumptions, which in turn are based on currently available information. Examples of forward-looking statements in this report include but are not limited to our expectations regarding our ability to generate operating cash flows and reduce debt and associated interest expense 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, the timing and cost of expected capital expenditures, expected outcomes of pending litigation, competitive conditions, general economic conditions and expected synergies relating to acquisitions, joint ventures and alliances. 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:

· 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;

· increased directors and officers liability and other insurance costs;

· risk of 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, parts and components;

· environmental compliance costs and liabilities;

· risks and costs associated with asbestos-related litigation;

· potential write-offs of our substantial intangible assets;

· our ability to successfully develop new products;

· failure to protect our intellectual property;

· economic disruption caused by terrorist attacks, 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.

Overview

Roper Industries, Inc. ("Roper," "we" or "us") is a diversified growth company that designs, manufactures and distributes energy systems and controls, scientific and industrial imaging products and software, industrial technology products and radio frequency ("RF") products and services. We market these products and services to selected segments of a broad range of markets, including RF applications, water, energy, research and medical, education, security and other niche markets.

We pursue consistent and sustainable growth in sales and earnings by emphasizing continuous improvement in the operating performance of our existing businesses and by acquiring other carefully selected businesses that offer high value-added, engineered products and solutions and are capable of achieving growth and maintaining high margins. Our acquisitions have represented both financial bolt-ons and new strategic platforms. We strive for high cash and earnings returns from our investments.

Application of Critical Accounting Policies

Our consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States ("GAAP"). A discussion of our significant accounting policies can be found in the notes to our consolidated financial statements for the year ended December 31, 2008 included in our Annual Report.

GAAP offers acceptable alternative methods for accounting for certain issues affecting our financial results, such as determining inventory cost, depreciating long-lived assets and recognizing revenue. We have not changed the application of acceptable accounting methods or the significant estimates affecting the application of these principles in the last three years in a manner that had a material effect on our financial statements.

The preparation of financial statements in accordance with GAAP requires the use of estimates, assumptions, judgments and interpretations that can affect the reported amounts of assets, liabilities, revenues and expenses, the disclosure of contingent assets and liabilities and other supplemental disclosures.

The development of accounting estimates is the responsibility of our management. Our management discusses those areas that require significant judgments with the audit committee of our board of directors. The audit committee discusses critical estimates with our external auditors and reviews all financial disclosures to be included in our filings with the SEC. Although we believe the positions we have taken with regard to uncertainties are reasonable, others might reach different conclusions and our positions can change over time as more information becomes available. If an accounting estimate changes, its effects are accounted for prospectively.

Our most significant accounting uncertainties are encountered in the areas of accounts receivable collectibility, inventory valuation and utilization, future warranty obligations, revenue recognition (percent of completion), income taxes and goodwill and indefinite-lived asset analyses. These issues, except for income taxes (which are not allocated to our business segments), affect each of our business segments. These issues are evaluated primarily using a combination of historical experience, current conditions and relatively short-term forecasting.

Accounts receivable collectibility is based on the economic circumstances of customers and credits given to customers after shipment of products, including in certain cases, credits for returned products. Accounts receivable are regularly reviewed to determine customers who have not paid within agreed upon terms, whether these amounts are consistent with past experiences, what historical experience has been with amounts deemed uncollectible and the impact that current and near-term forecast economic conditions might have on collection efforts in general and with specific customers. The returns and other sales credit allowance is an estimate of customer returns, exchanges, discounts or other forms of anticipated concessions and is treated as a reduction in revenue. The return and other sales credit histories are analyzed to determine likely future rates for such credits. At March 31, 2009, our allowance for doubtful accounts receivable, sales returns and sales credits was $13.2 million, or 3.7% of total gross accounts receivable and has increased from 3.2% at December 31, 2008.

We regularly compare inventory quantities on hand against anticipated future usage, which we determine as a function of historical usage or forecasts related to specific items in order to evaluate obsolescence and excessive quantities. When we use historical usage, this information is also qualitatively compared to business trends to evaluate the reasonableness of using historical information as an estimate of future usage. Business trends can change rapidly and these events can affect the evaluation of inventory balances. At March 31, 2009, inventory reserves for excess and obsolete inventory were $29.7 million, or 13.7% of gross inventory cost, down slightly from 13.9% at December 31, 2008.

Most of our sales are covered by warranty provisions that generally provide for the repair or replacement of qualifying defective items for a specified period after the time of sale, typically 12 months. Future warranty obligations are evaluated using, among other factors, historical cost experience, product evolution and customer feedback. At March 31, 2009, the accrual for future warranty obligations was $9.4 million or 0.5% of annualized first quarter sales and is consistent with prior quarters.

Revenues related to the use of the percentage-of-completion method of accounting are dependent on a comparison of total costs incurred to date to total estimated costs for a project. During the first quarter of 2009, we recognized $37.2 million of net sales using this method. In addition, approximately $184.4 million of net sales related to unfinished percentage-of-completion contracts had yet to be recognized at March 31, 2009. Contracts accounted for under this method are generally not significantly different in profitability from revenues accounted for under other methods.

Income taxes can be affected by estimates of whether, and within which jurisdictions, future earnings will occur and if, how and when cash is repatriated to the United States, combined with other aspects of an overall income tax strategy. Additionally, taxing jurisdictions could retroactively disagree with our tax treatment of certain items, and some historical transactions have income tax effects going forward. Accounting rules require these future effects to be evaluated using current laws, rules and regulations, each of which can change at any time and in an unpredictable manner. Our first quarter effective income tax rate was 29.3%, which was lower than the prior year first quarter rate of 35.0%, due primarily to certain foreign tax planning initiatives and our decision to permanently reinvest prior earnings in certain foreign jurisdictions.

The evaluation of the carrying value of goodwill and indefinite-lived intangibles is required to be performed annually. We perform this analysis during our fourth quarter.

Results of Operations

General

The following tables set forth selected information for the periods indicated. Dollar amounts are in thousands and percentages are the particular line item shown as a percentage of net sales. Percentages may not foot due to rounding. Results of operations for the three month period ended March 31, 2008 have been adjusted to reflect the retrospective adoption of FASB Statement of Position APB 14-1 - see Note 2 of the notes to the Condensed Consolidated Financial Statements.

                                                   Three months ended March 31,
                                                     2009               2008
  Net sales
  Industrial Technology                         $      130,641    $        173,617
  Energy Systems & Controls                            106,611             128,387
  Scientific & Industrial Imaging                       84,120              96,443
  RF Technology                                        184,072             144,548
  Total                                         $      505,444    $        542,995
  Gross profit:
  Industrial Technology                                   48.0 %              48.8 %
  Energy Systems & Controls                               51.9 %              53.5 %
  Scientific & Industrial Imaging                         54.4 %              55.6 %
  RF Technology                                           47.4 %              48.1 %
  Total                                                   49.7 %              50.9 %
  Selling, general & administrative expenses:
  Industrial Technology                                   26.1 %              22.7 %
  Energy Systems & Controls                               35.5                31.5
  Scientific & Industrial Imaging                         35.3                34.8
  RF Technology                                           27.1                28.7
  Total                                                   30.0                28.5
  Segment operating profit:
  Industrial Technology                                   21.9 %              26.1 %
  Energy Systems & Controls                               16.4                22.0
  Scientific & Industrial Imaging                         19.1                20.8
  RF Technology                                           20.3                19.4
  Total                                                   19.7                22.4
  Corporate administrative expenses                       (2.5 )              (2.4 )
                                                          17.2                19.9
  Interest expense                                        (2.7 )              (2.6 )
  Other income/(expense)                                  (0.1 )               0.3
  Earnings before income taxes                            14.4                17.7
  Income taxes                                            (4.2 )              (6.2 )
  Net earnings                                            10.2 %              11.5 %

Three months ended March 31, 2009 compared to three months ended March 31, 2008

Net sales for the quarter ended March 31, 2009 were $505.4 million as compared to $543.0 million in the prior year quarter, a decrease of 6.9%. Our first quarter 2009 results included $35.2 million or a 6.8% increase in sales from 2008 acquisitions. We experienced a 10.5% decline in organic growth and a negative 3.2% impact from foreign currency.

In our Industrial Technology segment, net sales were down 24.8% to $130.6 million in the first quarter of 2009 as compared to $173.6 million in the first quarter of 2008. The decrease was due to a generally weak economy, fewer projects for automatic meter reading ("AMR") deployment at Neptune and the slowdown or temporary shutdowns of many manufacturing facilities which impacted our materials testing business. Gross margins decreased to 48.0% for the first quarter of 2009 as compared to 48.8% in the first quarter of 2008 due to negative operating leverage from lower sales volume offset by cost reductions. SG&A expenses as a percentage of net sales were 26.1%, up from 22.7% in the prior year quarter due to negative operating leverage from lower sales. The resulting operating profit margins were 21.9% in the first quarter of 2009 as compared to 26.1% in the first quarter of 2008.

Net sales in our Energy Systems & Controls segment decreased by 17.0% to $106.6 million during the first quarter of 2009 compared to $128.4 million in the first quarter of 2008. The decrease in sales was due to a decline in orders, significant capacity adjustments in the refining, petrochemical and process control industries resulting in reduced demand for our instruments and sensors sold into these markets and a negative 5.5% impact from foreign currency. Gross margins decreased to 51.9% in the first quarter of 2009 compared to 53.5% in the first quarter of 2008 due to negative operating leverage on lower sales volume. SG&A expenses as a percentage of net sales were 35.5% compared to 31.5% in the prior year quarter due to negative operating leverage from lower sales. As a result, operating margins were 16.4% in the first quarter of 2009 as compared to 22.0% in the first quarter of 2008.

Our Scientific & Industrial Imaging segment net sales decreased by 12.8% to $84.1 million in the first quarter of 2009 as compared to $96.4 million in the first quarter of 2008. The sales decrease was primarily due to lower shipments to research and imaging markets, reduced sales in our rugged mobile product lines and a negative 4.3% impact from foreign currency. Gross margins decreased to 54.4% in the first quarter of 2009 from 55.6% in the first quarter of 2008. SG&A as a percentage of net sales was 35.3% in the first quarter of 2009 as compared to 34.8% in the first quarter of 2008. As a result, operating margins were 19.1% in the first quarter of 2009 as compared to 20.8% in the first quarter of 2008.

In our RF Technology segment, net sales were $184.1 million in the first quarter of 2009 as compared to $144.5 million in the first quarter of 2008, an increase of 27.3%. Acquisitions completed in 2008 added 23% with the remaining 4% resulting from internal growth in domestic tolling and traffic management projects. Gross margins decreased to 47.4% as compared to 48.1% in the prior year quarter due to an unfavorable mix in tolling and traffic management products. SG&A as a percentage of sales in the first quarter of 2009 was 27.1% down from 28.7% in the prior year due to a lower SG&A structure in businesses acquired in 2008. As a result, operating profit margins were 20.3% as compared to 19.4% in 2008.

Corporate expenses decreased to $12.8 million, or 2.5% of sales, in the first quarter of 2009 as compared to $13.3 million, or 2.4% of sales, in the first quarter of 2008. The primary reason for the reduction was a decrease in acquisition-related costs in the first quarter of 2009 as compared to the first quarter of 2008.

Interest expense of $13.5 million for the first quarter of 2009 was $0.5 million lower as compared to the first quarter of 2008. This is due to a decrease in interest rates on the variable rate portion of our outstanding debt, partially offset by higher average debt balances over the prior year quarter.

Income taxes were 29.3% of pretax earnings in the current quarter, as compared to 35.0% in the first quarter of 2008, as a result of certain foreign tax planning initiatives and our decision to permanently reinvest prior earnings in certain foreign jurisdictions. Approximately $2.7 million of the first quarter 2009 benefit was a one-time item that will not recur in future quarters.

At March 31, 2009, the functional currencies of our European, Canadian and Asian subsidiaries were weaker against the U.S. dollar compared to currency exchange rates at March 31, 2008 and December 31, 2008. The currency changes resulted in a decrease of $20.5 million in the foreign exchange component of comprehensive earnings for the quarter. Approximately $11.9 million of the total adjustment is related to goodwill and do not directly affect our expected future cash flows. Operating results in the first quarter of 2009 decreased slightly due to the strengthening of the U.S. dollar as compared to a year ago. The difference between the operating results for these companies for the first quarter of 2009 compared to the prior year quarter, translated into U.S. dollars, was approximately 1%.

Net orders were $471.7 million for the quarter, 15.5% lower than the first quarter 2008 net order intake of $558.0 million. Approximately $27.5 million of the current quarter orders was due to 2008 acquisitions. We experienced weak bookings in many of our businesses in the first quarter of 2009. Overall, our order backlog at March 31, 2009 was down 6.6% as compared to March 31, 2008.

                         Net orders booked for the
                             three months ended
                                 March 31,                 Order backlog as of March 31,
                           2009              2008             2009               2008
Industrial
Technology            $      139,393    $      185,011   $        67,082    $       106,121
Energy Systems &
Controls                      97,814           128,336            75,578             94,834
Scientific &
Industrial Imaging            76,599            97,700            69,141             77,492
RF Technology                157,783           146,956           338,717            311,113
                      $      471,589    $      558,003   $       550,518    $       589,560

Financial Condition, Liquidity and Capital Resources

Cash flows for the quarters ended March 31, 2009 and 2008 were as follows:

Operating - Net cash provided by operating activities decreased by 29.4% to $50.6 million in the first quarter of 2009 as compared to $71.6 million in the first quarter of 2008 due to higher income tax payments, higher cash interest payments and lower net income.

Investing - Cash used in investing activities during the first quarter of 2009 was primarily capital expenditures, and primarily business acquisitions in the first quarter of 2008.

Financing - Cash used in financing activities in the current quarter was for debt principal repayments and dividends. Cash provided by financing activities in the prior year quarter resulted from debt borrowings to finance acquisitions, offset by dividend and debt payments. Net debt payments were $32.9 million in the three months ended March 31, 2009 as compared to net borrowings of $154.4 million in the three months ended March 31, 2008.

Total debt at March 31, 2009 consisted of the following (amounts in thousands):

               $350 million term loan                   $   350,000
               $750 million revolving credit facility       230,000
               Senior Notes                                 500,000
               Senior Subordinated Convertible Notes        147,413
               Other                                          6,637
               Total debt                                 1,234,050
               Less current portion                         149,527
               Long-term debt                           $ 1,084,523

Our principal $1.1 billion credit facility, $500 million senior notes and senior subordinated convertible notes provide substantially all of our daily external financing requirements. The interest rate on the borrowings under the $1.1 billion credit facility is calculated based upon various recognized indices plus a margin as defined in the credit agreement. At March 31, 2009, the weighted average interest rate on the term and revolver loans was 1.88%. At March 31, 2009, we had $6.6 million of other debt in the form of capital leases, several smaller facilities that allow for borrowings or the issuance of letters of credit in various foreign locations to support our non-U.S. businesses and $50 million of outstanding letters of credit. We expect that our available additional borrowing capacity combined with the cash flows expected to be generated from existing business will be sufficient to fund normal operating requirements.

We were in compliance with all debt covenants related to our credit facilities throughout the quarter ended March 31, 2009.

Net working capital (total current assets, excluding cash, less total current liabilities, excluding debt) was $331.3 million at March 31, 2009 compared to $294.9 million at December 31, 2008, reflecting increases in working capital due primarily to the timing of the payment of accrued liabilities related to interest, income taxes and compensation. Total debt decreased to $1.23 billion at March 31, 2009 compared to $1.27 billion at December 31, 2008 due to the use of operating cash flows to reduce outstanding debt. Our leverage is shown in the following table:

                                            March 31,         December 31,
                                              2009                2008
            Total Debt                     $ 1,234,050       $    1,267,215
            Cash                              (177,509 )           (178,069 )
            Net Debt                         1,056,541            1,089,146
            Stockholders' Equity             2,039,841            2,003,934
            Total Net Capital              $ 3,096,382       $    3,093,080

            Net Debt / Total Net Capital          34.1 %               35.2 %

At March 31, 2009, 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.

Capital expenditures of $5.2 million and $6.4 million were incurred during the first quarters of 2009 and 2008 respectively. We expect capital expenditures for the balance of the year to be comparable to prior years as a percentage of sales.

Recently Issued Accounting Standards

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

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 will 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, the proceeds from the issuance of new debt or equity securities or some combination of these methods.

We anticipate that our recently acquired companies as well as our other companies will generate positive cash flows from operating activities, and that these cash flows will permit the reduction of currently outstanding debt at a pace consistent with that which has historically been experienced. However, the rate at which we can reduce our debt during 2009 (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; and none of these factors can be predicted with certainty.