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Section 1: 10-Q (10-Q)

rop-20200630
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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 June 30, 2020.
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 Pkwy. East, 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 July 31, 2020 was 104,710,813.
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ROPER TECHNOLOGIES, INC.

REPORT ON FORM 10-Q FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2020

TABLE OF CONTENTS

Page

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Table of Contents
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 June 30,Six months ended June 30,
2020201920202019
Net revenues$1,305.0  $1,330.3  $2,655.7  $2,617.5  
Cost of sales461.3  480.3  955.2  956.9  
Gross profit843.7  850.0  1,700.5  1,660.6  
Selling, general and administrative expenses510.1  481.6  1,017.7  945.8  
Income from operations333.6  368.4  682.8  714.8  
Interest expense, net47.5  45.1  92.9  88.8  
Other income (expense), net(2.0) (1.0) (1.2) (4.1) 
Gain on disposal of business      119.6  
Earnings before income taxes284.1  322.3  588.7  741.5  
Income taxes64.9  72.6  129.2  122.2  
Net earnings$219.2  $249.7  $459.5  $619.3  
Net earnings per share:
Basic$2.10  $2.40  $4.40  $5.97  
Diluted$2.08  $2.38  $4.36  $5.90  
Weighted average common shares outstanding:
Basic104.5  103.9  104.4  103.7  
Diluted105.5  105.1  105.4  104.9  

See accompanying notes to Condensed Consolidated Financial Statements.
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Table of Contents
Roper Technologies, Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income (unaudited)
(in millions)

Three months ended June 30,Six months ended June 30,
2020201920202019
Net earnings$219.2  $249.7  $459.5  $619.3  
Other comprehensive income, net of tax:
Foreign currency translation adjustments56.2  (28.6) (72.0) 0.1  
Total other comprehensive income (loss), net of tax56.2  (28.6) (72.0) 0.1  
Comprehensive income$275.4  $221.1  $387.5  $619.4  
 
See accompanying notes to Condensed Consolidated Financial Statements.
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Roper Technologies, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (unaudited)
(in millions)
 
June 30,
2020
December 31,
2019
ASSETS:
Cash and cash equivalents$1,870.8  $709.7  
Accounts receivable, net738.8  791.6  
Inventories, net216.6  198.6  
Income taxes receivable23.7  18.5  
Unbilled receivables225.1  183.5  
Other current assets104.2  97.6  
Total current assets3,179.2  1,999.5  
Property, plant and equipment, net129.6  139.9  
Goodwill10,846.6  10,815.4  
Other intangible assets, net4,511.8  4,667.7  
Deferred taxes92.6  95.6  
Other assets382.5  390.8  
Total assets$19,142.3  $18,108.9  
LIABILITIES AND STOCKHOLDERS’ EQUITY:
Accounts payable$185.4  $162.0  
Accrued compensation207.4  240.1  
Deferred revenue828.3  831.8  
Other accrued liabilities354.8  346.2  
Income taxes payable320.1  215.1  
Current portion of long-term debt, net602.6  602.2  
Total current liabilities2,498.6  2,397.4  
Long-term debt, net of current portion5,263.8  4,673.1  
Deferred taxes1,070.3  1,108.1  
Other liabilities429.9  438.4  
Total liabilities9,262.6  8,617.0  
Commitments and contingencies (Note 10)
Common stock1.1  1.1  
Additional paid-in capital2,012.9  1,903.9  
Retained earnings8,168.7  7,818.0  
Accumulated other comprehensive loss(284.8) (212.8) 
Treasury stock(18.2) (18.3) 
Total stockholders’ equity9,879.7  9,491.9  
Total liabilities and stockholders’ equity$19,142.3  $18,108.9  
 
See accompanying notes to Condensed Consolidated Financial Statements.
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Table of Contents
Roper Technologies, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (unaudited)
(in millions)
 
Six months ended June 30,
20202019
Cash flows from operating activities:
Net earnings$459.5  $619.3  
Adjustments to reconcile net earnings to cash flows from operating activities:
Depreciation and amortization of property, plant and equipment25.1  23.4  
Amortization of intangible assets203.0  169.4  
Amortization of deferred financing costs4.3  3.3  
Non-cash stock compensation58.2  54.3  
Gain on disposal of business, net of associated income tax  (88.5) 
Changes in operating assets and liabilities, net of acquired businesses:
Accounts receivable49.6  38.5  
Unbilled receivables(42.3) (37.0) 
Inventories(19.1) (18.4) 
Accounts payable and accrued liabilities18.8  (94.0) 
Deferred revenue(4.3) 51.2  
Income taxes, excluding tax associated with gain on disposal of businesses76.7  (77.6) 
Cash tax paid for gain on disposal of businesses(10.0) (39.4) 
Other, net(6.5) (13.4) 
Cash provided by operating activities813.0  591.1  
Cash flows from (used in) investing activities:
Acquisitions of businesses, net of cash acquired(153.0) (539.2) 
Capital expenditures(15.5) (27.9) 
Capitalized software expenditures(5.2) (4.9) 
Proceeds from (used in) disposal of businesses(3.8) 220.5  
Other, net  (2.6) 
Cash used in investing activities(177.5) (354.1) 
Cash flows used in financing activities:
Proceeds from senior notes600.0    
Borrowings (payments) under revolving line of credit, net  (225.0) 
Debt issuance costs(12.0)   
Cash dividends to stockholders(106.6) (95.6) 
Proceeds from stock-based compensation, net47.7  33.0  
Treasury stock sales4.5  3.6  
Other(0.7) 1.1  
Cash flows from (used in) financing activities532.9  (282.9) 
Effect of foreign currency exchange rate changes on cash(7.3) 2.3  
Net increase in cash and cash equivalents1,161.1  (43.6) 
Cash and cash equivalents, beginning of period709.7  364.4  
Cash and cash equivalents, end of period$1,870.8  $320.8  
 
See accompanying notes to Condensed Consolidated Financial Statements.
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Table of Contents
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 March 31, 2020$1.1  $1,946.3  $8,003.1  $(341.0) $(18.2) $9,591.3  
Net earnings—  —  219.2  —  —  219.2  
Stock option exercises—  40.1  —  —  —  40.1  
Treasury stock sold—  1.7  —  —    1.7  
Currency translation adjustments—  —  —  56.2  —  56.2  
Stock-based compensation—  29.3  —  —  —  29.3  
Restricted stock activity—  (4.5) —  —  —  (4.5) 
Dividends declared ($0.5125 per share)
—  —  (53.6) —  —  (53.6) 
Balances at June 30, 2020$1.1  $2,012.9  $8,168.7  $(284.8) $(18.2) $9,879.7  
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—  —  459.5  —  —  459.5  
Stock option exercises—  63.0  —  —  —  63.0  
Treasury stock sold—  4.4  —  —  0.1  4.5  
Currency translation adjustments—  —  —  (72.0) —  (72.0) 
Stock-based compensation—  56.9  —  —  —  56.9  
Restricted stock activity—  (15.3) —  —  —  (15.3) 
Dividends declared ($1.0250 per share)
—  —  (107.1) —  —  (107.1) 
Balances at June 30, 2020$1.1  $2,012.9  $8,168.7  $(284.8) $(18.2) $9,879.7  
Balances at March 31, 2019$1.1  $1,799.9  $6,569.4  $(214.6) $(18.4) $8,137.4  
Net earnings—  —  249.7  —  —  249.7  
Stock option exercises—  12.3  —  —  —  12.3  
Treasury stock sold—  1.4  —  —  —  1.4  
Currency translation adjustments—  —  —  (28.6) —  (28.6) 
Stock-based compensation—  28.2  —  —  —  28.2  
Restricted stock activity—  (1.3) —  —  —  (1.3) 
Dividends declared ($0.4625 per share)
—  —  (48.1) —  —  (48.1) 
Balances at June 30, 2019$1.1  $1,840.5  $6,771.0  $(243.2) $(18.4) $8,351.0  
Balances at December 31, 2018$1.1  $1,751.5  $6,247.7  $(243.3) $(18.5) $7,738.5  
Net earnings—  —  619.3  —  —  619.3  
Stock option exercises—  49.1  —  —  —  49.1  
Treasury stock sold—  3.5  —  —  0.1  3.6  
Currency translation adjustments—  —  —  0.1  —  0.1  
Stock-based compensation—  52.5  —  —  —  52.5  
Restricted stock activity—  (16.1) —  —  —  (16.1) 
Dividends declared ($0.9250 per share)
—  —  (96.0) —  —  (96.0) 
Balances at June 30, 2019$1.1  $1,840.5  $6,771.0  $(243.2) $(18.4) $8,351.0  

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 six months ended June 30, 2020 and 2019 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, 2019 financial position data included herein was derived from the audited consolidated financial statements included in the Company’s 2019 Annual Report on Form 10-K (“Annual Report”) filed on February 28, 2020 with the Securities and Exchange Commission (“SEC”) but does not include all disclosures required by U.S. generally accepted accounting principles (“GAAP”).

Roper’s management has made estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these Condensed Consolidated Financial Statements in conformity with GAAP. Actual results could differ from those estimates.

The results of operations for the three and six months ended June 30, 2020 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.

2. Recent Accounting Pronouncements

The Financial Accounting Standards Board FASB (“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 below were assessed and determined to be either not applicable or are expected to have an immaterial impact on the Company’s results of operations, financial position or cash flows.

Recently Adopted Accounting Pronouncements

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.

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 June 30,Six months ended June 30,
2020201920202019
Basic shares outstanding104.5  103.9  104.4  103.7  
Effect of potential common stock:
Common stock awards1.0  1.2  1.0  1.2  
Diluted shares outstanding105.5  105.1  105.4  104.9  
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For the three and six months ended June 30, 2020, there were 1.322 outstanding stock options, that were not included in the determination of diluted earnings per share because doing so would have been antidilutive, as compared to 0.596 and 0.644 outstanding stock options that would have been antidilutive in the respective 2019 periods.

4. Business Acquisitions

Roper completed two business acquisitions in the six months ended June 30, 2020, with an aggregate purchase price of $150.0, net of cash acquired and debt assumed. The results of operations of the acquired businesses are included in Roper’s Condensed Consolidated Financial Statements since the date of each acquisition. Supplemental pro forma information has not been provided as the acquisitions did not have a material impact on Roper’s Condensed Consolidated Results of Operations individually or in aggregate.

On June 9, 2020, Roper acquired substantially all of the assets of Freight Market Intelligence Consortium (“FMIC”), a leading provider of subscription-based freight transaction benchmarking and analysis service. FMIC is integrating into our DAT business and its results are reported in the Network Software & Systems reportable segment.

On June 15, 2020, Roper acquired substantially all of the assets of Team TSI Corporation (“Team TSI”), a leading provider of subscription-based data analytics serving long term health care facilities. Team TSI is integrating into our SHP business and its results are reported in the Network Software & Systems reportable segment.

The Company recorded $80.5 in goodwill and $70.2 of other identifiable intangibles in connection with the acquisitions; however, purchase price allocations remain preliminary. The amortizable intangible assets include customer relationships of $62.9 (15 year weighted average useful life) and technology of $7.3 (5 year weighted average useful life).

5. Stock Based Compensation

The Roper Technologies, Inc. 2016 Incentive Plan (“2016 Plan”) is a stock-based compensation plan used to grant incentive stock options, nonqualified stock options, restricted stock, stock appreciation rights or equivalent instruments to Roper’s employees, officers, directors and consultants.

The following table provides information regarding the Company’s stock-based compensation expense:
Three Months Ended June 30,Six Months Ended June 30,
2020201920202019
Stock-based compensation$30.5  $29.0  $58.2  $54.3  
Tax effect recognized in net earnings6.4  6.1  12.2  11.4  

Stock Options - In the six months ended June 30, 2020, 0.735 options were granted with a weighted average fair value of $62.30 per option. During the same period in 2019, 0.721 options were granted with a weighted average fair value of $67.87 per option. All options were issued with an exercise price equal to the closing price of Roper’s common stock on the date of grant, as required by the 2016 Plan.

Roper records compensation expense for employee stock options based on the estimated fair value of the options on the date of grant using the Black-Scholes option-pricing model. Historical data is used to estimate the expected price volatility, the expected dividend yield, the expected option life and the expected forfeiture rate. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the estimated life of the option. The following weighted average assumptions were used to estimate the fair value of options granted during current and prior year periods using the Black-Scholes option-pricing model:
Six months ended June 30,
20202019
Risk-free interest rate (%)0.83  2.42  
Expected option life (years)5.645.41
Expected volatility (%)20.23  19.23  
Expected dividend yield (%)0.62  0.58  

Cash received from option exercises for the six months ended June 30, 2020 and 2019 was $63.0 and $49.1, respectively.

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Restricted Stock Grants - During the six months ended June 30, 2020, the Company granted 0.191 shares with a weighted average grant date fair value of $344.16 per restricted share. During the same period in 2019, the Company granted 0.294 shares with a weighted average grant date fair value of $315.00 per restricted share. All grants were issued at grant date fair value.

During the six months ended June 30, 2020, 0.138 restricted shares vested with a weighted average grant date fair value of $260.67 per restricted share and a weighted average vest date fair value of $351.53 per restricted share.

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

We amended the Roper stock purchase plan 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 stock purchase plan may be either treasury stock, stock purchased on the open market, or newly issued shares.

During the six months ended June 30, 2020 and 2019, participants in the employee stock purchase plan purchased 0.014 and 0.012 shares of Roper’s common stock for total consideration of $4.5 and $3.6, respectively. All shares were purchased from Roper’s treasury shares.

6. Inventories

The components of inventory were as follows:
June 30,
2020
December 31,
2019
Raw materials and supplies$137.4  $125.1  
Work in process29.5  30.9  
Finished products86.1  76.0  
Inventory reserves(36.4) (33.4) 
$216.6  $198.6  

7. 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, 2019$5,389.4  $3,933.5  $1,178.0  $314.5  $10,815.4  
Additions  80.5      80.5  
Other0.5  (0.6)     (0.1) 
Currency translation adjustments(12.8) (26.8) (6.3) (3.3) (49.2) 
Balances at June 30, 2020$5,377.1  $3,986.6  $1,171.7  $311.2  $10,846.6  

Other relates primarily to purchase accounting adjustments for acquisitions.

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Other intangible assets were comprised of:
CostAccumulated
amortization
Net book
value
Assets subject to amortization:
Customer related intangibles$4,955.4  $(1,349.4) $3,606.0  
Unpatented technology613.0  (279.6) 333.4  
Software172.2  (111.5) 60.7  
Patents and other protective rights12.0  (8.0) 4.0  
Trade names7.9  (4.1) 3.8  
Assets not subject to amortization:
Trade names659.8  —  659.8  
Balances at December 31, 2019$6,420.3  $(1,752.6) $4,667.7  
Assets subject to amortization:
Customer related intangibles$4,995.5  $(1,495.2) $3,500.3  
Unpatented technology616.1  (320.2) 295.9  
Software171.9  (119.5) 52.4  
Patents and other protective rights11.9  (8.1) 3.8  
Trade names7.9  (5.1) 2.8  
Assets not subject to amortization:
Trade names656.6  —  656.6  
Balances at June 30, 2020$6,459.9  $(1,948.1) $4,511.8  

Amortization expense of other intangible assets was $200.8 and $168.9 during the six months ended June 30, 2020 and 2019, 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.

In the first quarter of 2020, changes in facts and circumstances and general market declines from the coronavirus global pandemic (COVID-19) resulted in reduced expectations of near term future operating results. The Company considered these circumstances and the potential long-term impact on revenues and cash flows associated with its trade names and reporting units and determined that an indicator of possible impairment did not exist. While we have concluded that a triggering event did not occur during the first or second quarter of 2020, a prolonged COVID-19 pandemic could further impact the expectations of future operating results and assumptions that are significant enough to require an interim impairment review. In particular, the trade name associated with our lab software business, which had a fair value approximating its carrying value of $100.4 as of its most recent quantitative analysis performed on October 1, 2019, could become subject to an interim review in future periods. The Company will perform the annual analysis during the fourth quarter of 2020.

8. Debt

On June 22, 2020, the Company completed a public offering of $600.0 aggregate principal amount of 2.00% senior unsecured notes due June 30, 2030 (“2030 Notes”). The net proceeds from the sale of the Notes are intended for general corporate purposes, including acquisitions.

The 2030 Notes bear interest at a fixed rate of 2.00% per year, and are payable semi-annually in arrears on June 30 and December 30 of each year, beginning December 30, 2020.

Roper may redeem some or all of the Notes at any time or from time to time, at 100% of their principal amount, plus a make-whole premium based on a spread to U.S. Treasury securities.

The 2030 Notes are senior unsecured obligations of the Company and rank equally in right of payment with all of its existing and future senior unsecured indebtedness. The 2030 Notes are effectively subordinated to any of our existing and future secured indebtedness to the extent of the value of the collateral securing such indebtedness. The 2030 Notes are not, and will not be,
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guaranteed by any of our subsidiaries and are effectively subordinated to all existing and future indebtedness and other liabilities of our subsidiaries.

On April 23, 2020, the Company entered into Amendment No. 2 to Credit Agreement (the “Amendment”) to the Credit Agreement dated September 23, 2016 among the Company, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and the other agents and parties thereto, as previously amended December 2, 2016 (the “Credit Agreement”). The Amendment modified our gross debt to EBITDA covenant to allow for the benefit of our cash balance to be included in the calculation, changing the covenant to a net debt to EBITDA ratio.

The Amendment amends the definition of Consolidated Total Leverage Ratio (as defined in the Credit Agreement) to be the ratio of (a)(i) Consolidated Total Debt (as defined in the Credit Agreement) minus (ii) the aggregate amount of Unrestricted Cash (as defined in the Credit Agreement) to (b) Consolidated EBITDA (as defined in the Credit Agreement). The Amendment also adds a condition to each extension of credit through December 31, 2020, that after giving effect to any such borrowing and intended use of such borrowing, the aggregate amount of Unrestricted Cash may not be greater than $1,250.

9. Fair Value of Financial Instruments

Roper’s debt at June 30, 2020 included $5,900 of fixed-rate senior notes with the following fair values:
$600 3.000% senior notes due 2020
606  
$500 2.800% senior notes due 2021
515  
$500 3.125% senior notes due 2022
524  
$700 3.650% senior notes due 2023
761  
$500 2.350% senior notes due 2024
532  
$300 3.850% senior notes due 2025
341  
$700 3.800% senior notes due 2026
801  
$800 4.200% senior notes due 2028
938  
$700 2.950% senior notes due 2029
764  
$600 2.000% senior notes due 2030
601  

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

10. Contingencies

Roper, in the ordinary course of business, is the subject of, or a party to, various pending or threatened legal actions, including product liability and employment practices that, in general, are based upon claims of the kind that have been customary over the past several years and which the Company is vigorously defending. After analyzing the Company’s contingent liabilities on a gross basis and, based upon past experience with resolution of its product liability and employment practices claims and the limits of the primary, excess, and umbrella liability insurance coverages that are available with respect to pending claims, management believes that adequate provision has been made to cover any potential liability not covered by insurance, and that the ultimate liability, if any, arising from these actions should not have a material adverse effect on Roper’s consolidated financial position, results of operations or cash flows.

Roper or its subsidiaries have been named defendants along with numerous industrial companies in asbestos-related litigation claims in certain U.S. states. No significant resources have been required by Roper to respond to these cases and Roper believes it has valid defenses to such claims and, if required, intends to defend them vigorously. Given the state of these claims, it is not possible to determine the potential liability, if any.

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11. Business Segments

Net revenues and operating profit by segment are set forth in the following table:
Three months ended June 30,Six months ended June 30,
20202019Change %20202019Change %
Net revenues:
Application Software$398.4  $390.6  2.0 %$803.5  $771.8