Dover Reports Fourth Quarter And Full Year 2013 Results; Provides 2014 Guidance On A Pro Forma Basis - KMPH FOX 26 | Central San Joaquin Valley News Source

Dover Reports Fourth Quarter And Full Year 2013 Results; Provides 2014 Guidance On A Pro Forma Basis

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SOURCE Dover

-- Reports quarterly revenue of $2.2 billion, an increase of 10% over the prior year

-- Delivers quarterly diluted earnings per share from continuing operations of $1.22, an increase of 5% over last year

-- Achieves adjusted quarterly diluted earnings per share from continuing operations of $1.28, excluding Knowles spin-off costs of $0.09 and tax benefits of $0.03, up 17% from an adjusted prior year

-- Expects 2014 full year revenue growth of 5% to 6% and pro forma diluted earnings per share of $4.60 to $4.80, excluding Knowles and related spin-off costs

-- Remains on track to complete the spin-off of Knowles before the end of the first quarter 2014

DOWNERS GROVE, Ill., Jan. 30, 2014 /PRNewswire/ -- Dover (NYSE: DOV) today announced financial results for the fourth quarter and full year ended December 31, 2013.  In addition, the Company is providing pro forma unaudited financial data for Dover, excluding Knowles and related spin-off costs, for the full year ended December 31, 2013.  The planned spin-off of Knowles remains on track and is expected to be finalized before the end of the first quarter 2014.

Dover Results (including Knowles)

Revenue for the fourth quarter ended December 31, 2013 was $2.2 billion, an increase of 10% over the prior year period. The revenue increase was driven by organic growth of 5% and a 5% increase from acquisitions. Earnings from continuing operations were $210.8 million, or $1.22 diluted earnings per share ("EPS"), compared to $208.2 million, or $1.16 EPS, in the prior year period, representing increases of 1% and 5%, respectively. EPS from continuing operations includes Knowles spin-off costs of $0.09 EPS and discrete tax benefits of $0.03 recognized in the current quarter. Excluding these items and a $0.07 EPS tax benefit recognized in the prior year period, adjusted EPS from continuing operations for the fourth quarter of 2013 was $1.28, reflecting an increase of 17% over an adjusted EPS of $1.09 in the prior year period.

Revenue for the year ended December 31, 2013, was $8.7 billion, an increase of 8% over the prior year, reflecting organic growth of 3% and a 5% increase from acquisitions. Earnings from continuing operations for the year ended December 31, 2013, were $965.8 million, or $5.57 EPS, compared to $833.1 million, or $4.53 EPS in the prior year period, representing increases of 16% and 23%, respectively.  EPS from continuing operations for the year includes Knowles spin-off costs of $0.17 EPS, discrete tax benefits of $0.44 EPS, and other one-time gains of $0.02 compared to $0.09 EPS of discrete tax benefits in the prior year. Excluding these items, adjusted EPS from continuing operations for the year ended December 31, 2013 was $5.28, an increase of 19% over an adjusted EPS of $4.44 in the prior year.

Commenting on the fourth quarter results, Dover's President and Chief Executive Officer, Robert A. Livingston, said, "I am very pleased with our fourth quarter results as we achieved solid organic growth in all segments.  Our broad-based order and shipment activity was particularly strong at our businesses serving the refrigeration and food equipment, fast moving consumer goods, fluids, drilling and downstream energy markets. In the consumer electronics market, our strong position with a key OEM allowed us to grow nicely despite continuing headwinds at two other customers.  Additionally, we closed on several acquisitions in the quarter, notably in the fluids and downstream energy spaces, and raised €300 million in the debt market.  These actions have positioned us well as we move into 2014."

"For the year, we generated over $940 million in free cash flow. We continued to make significant internal and acquisition investments in our key growth spaces, increased the dividend for the 58th consecutive year, and progressed as planned on our $1 billion share repurchase program."

Net earnings for the fourth quarter of 2013 were $194.0 million or $1.13 EPS, including a loss from discontinued operations of $16.8 million, or $0.10 EPS, compared to net earnings of $159.9 million, or $0.89 EPS, for the same period of 2012, which included a loss from discontinued operations of $48.4 million, or $0.27 EPS. Reflected within discontinued operations were impairment charges of $14.0 million, or $0.08 EPS, in 2013 and $51.9 million, or $0.29 EPS, in 2012, connected with the anticipated sale of our electronic test and assembly businesses.

Net earnings for the year ended December 31, 2013 were $1.0 billion, or $5.78 EPS, including net earnings from discontinued operations of $37.3 million, or $0.22 EPS, compared to net earnings of $811.1 million, or $4.41 EPS, for the same period of 2012, which included a net loss from discontinued operations of $22.0 million or $0.12 EPS. Reflected within discontinued operations were impairment charges connected with the anticipated sale of our electronic test and assembly businesses of $32.7 million, net of tax, or $0.19 EPS in 2013, and $51.9 million, net of tax, or $0.28 EPS in 2012, and discrete tax benefits of $54.8 million, or $0.32 EPS in 2013.

Dover Results (excluding Knowles) Pro Forma

In connection with the spin-off, certain pro forma unaudited financial data is being provided for Dover, excluding Knowles and related spin-off costs, for the year ending December 31, 2013.  Effective with the anticipated first quarter spin-off, it is expected that Knowles will be accounted for as a discontinued operation in the Company's financial statements.

Revenue for the year ended December 31, 2013 was $7.5 billion, an increase of 8% over the prior year. Earnings from continuing operations for the year ended December 31, 2013, were $832 million, or $4.79 EPS, increases of 21% and 28% over the prior year, respectively.  Adjusted EPS from continuing operations for the year ended December 31, 2013 was $4.31, representing an increase of 18% over an adjusted prior year period.

Dover Outlook (excluding Knowles) Pro Forma

Mr. Livingston continued, "We are very excited about the strength and positioning of Dover.  Our markets are improving and our team is executing at a high level, as evidenced by our second half growth rates.  Accordingly, we expect the strong performance we saw in the fast moving consumer goods and refrigeration markets to continue into 2014.  We also expect the solid market conditions for our fluids and downstream energy businesses to carryover from the fourth quarter.  Finally, within Energy we anticipate improved North American markets for our drilling and artificial lift businesses, along with continued geographic expansion. In all, excluding Knowles, we expect full year organic growth of 3% to 4% complemented by acquisition growth of 2%, resulting in revenue growth of 5% to 6%.  The benefits of our lean and productivity initiatives, leverage on volume, and a lower share count from our ongoing repurchase program will drive solid EPS growth.  As a result, we anticipate full year diluted EPS from continuing operations to be in the range of $4.60 - $4.80 on a pro forma basis excluding Knowles and related spin-off costs. At the mid-point, our guidance represents a 9% increase."

Dover will host a webcast of its fourth quarter 2013 conference call at 10:00 A.M. Eastern Time (9:00 A.M. Central Time) on Thursday, January 30, 2014. The webcast can be accessed on the Dover website at www.dovercorporation.com. The conference call will also be made available for replay on the website. Additional information on Dover's fourth quarter results and its operating segments can also be found on the Company's website.

About Dover:

Dover is a diversified global manufacturer with annual revenues approaching $8 billion.  For over 50 years, Dover has been delivering outstanding products and services that reflect its market leadership and commitment to operational and technical excellence. The Company's entrepreneurial business model encourages, promotes and fosters deep customer engagement which has led to Dover's well-established and valued reputation for providing superior customer service and industry-leading product innovation. Dover focuses on innovative equipment and components, specialty systems and support services through its four major operating segments: Communication Technologies, Energy, Engineered Systems and Printing & Identification. Headquartered in Downers Grove, Illinois, Dover is traded on the New York Stock Exchange under "DOV." Additional information is available on our website at www.dovercorporation.com.

Forward-Looking Statement:

This press release contains "forward-looking" statements within the meaning of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Such statements relate to, among other things, 2014 revenue growth and earnings per share, expected performance following the completion of the planned spin-off of Knowles, anticipated market conditions and our positioning, expected contributions from acquisitions, as well as productivity initiatives, leverage on increased sales and share repurchase activities, operating and strategic plans, cash flows, industries in which Dover businesses operate and the U.S. and global economies.  The forward-looking statements in this release may be indicated by words or phrases such as "anticipate," "expect," "believe," "indicate," "suggests," "will," "plans," "supports," "projects," "should," "would," "could," "forecast" and "management is of the opinion," or the use of the future tense. Forward-looking statements are subject to inherent risks and uncertainties that could cause actual results to differ materially from current expectations, including, but not limited to, the state of the worldwide economy and sovereign credit; political events; the impact of natural disasters and their effect on global supply chains and energy markets; current economic conditions and uncertainties in the credit and capital markets; instability in countries where we conduct business; our ability to expand into new geographic markets and to anticipate and meet customer demands for new products; increased competition and pricing pressures in our markets; the impact of the proposed spin-off and our ability to consummate it as anticipated; the terms and timing of the sale of any business in discontinued operations; the impact of loss of a single-source manufacturing facility; changes in customer demand or loss of a significant customer; the relative mix of products and services which impacts margins and operating efficiencies; short-term capacity constraints; increases in the cost of raw materials; domestic and foreign governmental and public policy changes including environmental regulations, conflict minerals disclosure requirements, and tax policies (including domestic and international export subsidy programs, R&E credits and other similar programs); protection and validity of patent and other intellectual property rights; our ability to identify and successfully consummate value-adding acquisition opportunities;  our ability to achieve expected savings from integration, synergy and other cost-control initiatives; unforeseen developments in contingencies such as litigation; international economic conditions including interest rate and currency exchange rate fluctuations; possible future terrorist threats and their effect on the worldwide economy; and a downgrade in our credit ratings. It also contains unaudited pro forma financial information for Dover excluding Knowles, which is not necessarily indicative of Dover's operating results for any future period. We refer you to the documents we file from time to time with the Securities and Exchange Commission, such as our reports on Form 10-K, Form 10-Q and Form 8-K, for a discussion of these and other risks and uncertainties that could cause our actual results to differ materially from our current expectations and from the forward-looking statements contained in this press release. We undertake no obligation to update any forward-looking statement, except as required by law.

 

INVESTOR SUPPLEMENT - FOURTH QUARTER AND FULL YEAR 2013





DOVER CORPORATION

CONSOLIDATED STATEMENTS OF EARNINGS

(unaudited)(in thousands, except per share data)






Three Months Ended

December 31,


Years Ended

December 31,


2013


2012


2013


2012

Revenue

$

2,209,128



$

2,013,831



$

8,729,813



$

8,104,339


Cost of goods and services

1,378,571



1,240,087



5,390,032



4,997,274


Gross profit

830,557



773,744



3,339,781



3,107,065


Selling and administrative expenses

513,516



469,668



1,985,849



1,841,688


Operating earnings

317,041



304,076



1,353,932



1,265,377


Interest expense, net

29,981



30,996



120,742



121,141


Other (income) expense, net

(3,016)



809



(4,222)



6,665


Earnings before provision for income taxes and discontinued operations

290,076



272,271



1,237,412



1,137,571


Provision for income taxes

79,264



64,047



271,607



304,452


Earnings from continuing operations

210,812



208,224



965,805



833,119


Earnings (loss) from discontinued operations, net

(16,849)



(48,364)



37,324



(22,049)


Net earnings

$

193,963



$

159,860



$

1,003,129



$

811,070










Basic earnings per common share:








Earnings from continuing operations

$

1.24



$

1.17



$

5.64



$

4.59


Earnings (loss) from discontinued operations, net

(0.10)



(0.27)



0.22



(0.12)


Net earnings

1.14



0.90



5.86



4.47










Weighted average shares outstanding

170,027



177,257



171,271



181,551










Diluted earnings per common share:








Earnings from continuing operations

$

1.22



$

1.16



$

5.57



$

4.53


Earnings (loss) from discontinued operations, net

(0.10)



(0.27)



0.22



(0.12)


Net earnings

1.13



0.89



5.78



4.41










Weighted average shares outstanding

172,265



179,365



173,547



183,993










Dividends paid per common share

$

0.375



$

0.350



$

1.450



$

1.330










 


DOVER CORPORATION

QUARTERLY SEGMENT INFORMATION

(unaudited)(in thousands)






2013


2012


Q1

Q2

Q3

Q4

FY 2013


Q1

Q2

Q3

Q4

FY 2012

REVENUE












Communication Technologies

$

372,790


$

401,477


$

413,608


$

428,392


$

1,616,267



$

357,575


$

361,689


$

396,470


$

400,851


$

1,516,585














Energy

561,198


573,471


577,350


584,435


2,296,454



531,570


538,786


562,263


539,985


2,172,604














Engineered Systems












Fluid Solutions

203,991


226,882


227,104


243,816


901,793



180,364


211,974


218,324


206,500


817,162


Refrigeration & Industrial

664,294


777,396


778,336


676,582


2,896,608



642,213


674,501


674,116


613,012


2,603,842


Eliminations

(352)


(383)


(485)


(472)


(1,692)



(453)


(352)


(319)


(336)


(1,460)



867,933


1,003,895


1,004,955


919,926


3,796,709



822,124


886,123


892,121


819,176


3,419,544














Printing & Identification

237,877


250,646


256,571


276,681


1,021,775



243,570


251,875


246,945


254,141


996,531














Intra-segment eliminations

(225)


(726)


(135)


(306)


(1,392)



(225)


(184)


(194)


(322)


(925)


Total consolidated revenue

$

2,039,573


$

2,228,763


$

2,252,349


$

2,209,128


$

8,729,813



$

1,954,614


$

2,038,289


$

2,097,605


$

2,013,831


$

8,104,339














NET EARNINGS












Segment Earnings:












Communication Technologies

$

44,208


$

51,789


$

76,076


$

65,626


$

237,699



$

46,556


$

50,322


$

63,706


$

58,376


$

218,960


Energy

139,545


132,926


145,494


134,835


552,800



132,115


133,936


139,038


133,561


538,650


Engineered Systems

117,178


165,440


172,223


121,057


575,898



122,092


133,808


144,245


101,807


501,952


Printing & Identification

29,752


35,967


42,881


44,018


152,618



26,089


28,918


39,502


40,650


135,159


Total Segments

330,683


386,122


436,674


365,536


1,519,015



326,852


346,984


386,491


334,394


1,394,721


Corporate expense / other

33,763


38,341


43,278


45,479


160,861



36,546


36,335


32,001


31,127


136,009


Net interest expense

30,244


30,280


30,237


29,981


120,742



30,031


29,715


30,399


30,996


121,141


Earnings from continuing operations before provision for income taxes

266,676


317,501


363,159


290,076


1,237,412



260,275


280,934


324,091


272,271


1,137,571


Provision for income taxes

69,687


23,149


99,507


79,264


271,607



73,866


75,778


90,761


64,047


304,452


Earnings from continuing operations

196,989


294,352


263,652


210,812


965,805



186,409


205,156


233,330


208,224


833,119


Earnings (loss) from discontinued operations, net

13,014


35,697


5,462


(16,849)


37,324



9,654


8,945


7,716


(48,364)


(22,049)


Net earnings

$

210,003


$

330,049


$

269,114


$

193,963


$

1,003,129



$

196,063


$

214,101


$

241,046


$

159,860


$

811,070














SEGMENT OPERATING MARGIN










Communication Technologies

11.9

%

12.9

%

18.4

%

15.3

%

14.7

%


13.0

%

13.9

%

16.1

%

14.6

%

14.4

%

Energy

24.9

%

23.2

%

25.2

%

23.1

%

24.1

%


24.9

%

24.9

%

24.7

%

24.7

%

24.8

%

Engineered Systems

13.5

%

16.5

%

17.1

%

13.2

%

15.2

%


14.9

%

15.1

%

16.2

%

12.4

%

14.7

%

Printing & Identification

12.5

%

14.3

%

16.7

%

15.9

%

14.9

%


10.7

%

11.5

%

16.0

%

16.0

%

13.6

%

Total Segment

16.2

%

17.3

%

19.4

%

16.5

%

17.4

%


16.7

%

17.0

%

18.4

%

16.6

%

17.2

%













DEPRECIATION AND AMORTIZATION EXPENSE










Communication Technologies

$

35,501


$

37,719


$

38,251


$

37,004


$

148,475



$

31,513


$

32,828


$

32,997


$

35,281


$

132,619


Energy

26,298


26,599


26,549


27,898


107,344



21,184


23,533


24,639


25,721


95,077


Engineered Systems

31,551


32,282


32,961


34,360


131,154



19,582


23,913


23,060


27,066


93,621


Printing & Identification

7,630


7,606


7,701


7,845


30,782



8,331


8,496


8,777


7,998


33,602


Corporate

859


1,026


1,032


944


3,861



700


765


842


359


2,666



$

101,839


$

105,232


$

106,494


$

108,051


$

421,616



$

81,310


$

89,535


$

90,315


$

96,425


$

357,585














 


DOVER CORPORATION

QUARTERLY SEGMENT INFORMATION

(continued)

(unaudited)(in thousands)






2013


2012


Q1

Q2

Q3

Q4

FY 2013


Q1

Q2

Q3

Q4

FY 2012

BOOKINGS












Communication Technologies

$

379,122


$

422,293


$

423,662


$

372,901


$

1,597,978



$

347,291


$

387,058


$

411,005


$

363,624


$

1,508,978














Energy

620,640


525,612


595,421


571,459


2,313,132



585,775


530,352


526,824


550,091


2,193,042














Engineered Systems












Fluid Solutions

223,764


213,359


222,402


248,079


907,604



184,711


204,139


197,767


209,872


796,489


Refrigeration & Industrial

755,026


784,904


662,464


701,928


2,904,322



711,911


666,223


600,065


606,931


2,585,130


Eliminations

(373)


(432)


(372)


(504)


(1,681)



(408)


(376)


(258)


(399)


(1,441)



978,417


997,831


884,494


949,503


3,810,245



896,214


869,986


797,574


816,404


3,380,178














Printing & Identification

237,217


259,282


256,211


270,680


1,023,390



249,773


251,733


244,611


252,937


999,054














Intra-segment eliminations

(720)


(137)


(109)


(393)


(1,359)



(609)


(221)


(759)


(1,020)


(2,609)














Total consolidated bookings

$

2,214,676


$

2,204,881


$

2,159,679


$

2,164,150


$

8,743,386



$

2,078,444


$

2,038,908


$

1,979,255


$

1,982,036


$

8,078,643














BACKLOG












Communication Technologies

$

458,765


$

480,426


$

492,583


$

436,437




$

451,110


$

476,745


$

491,041


$

453,172















Energy

311,793


255,544


274,243


254,898




296,360


282,364


248,233


256,093















Engineered Systems












Fluid Solutions

178,854


184,142


182,557


255,871




191,327


172,300


156,191


160,890



Refrigeration & Industrial

592,922


597,838


482,069


506,069




598,910


586,824


515,285


516,559



Eliminations

(178)


(227)


(113)


(147)




(132)


(155)


(94)


(157)




771,598


781,753


664,513


761,793




790,105


758,969


671,382


677,292















Printing & Identification

95,353


103,864


105,699


100,032




102,117


98,216


98,356


97,857















Intra-segment eliminations

(886)


(578)


(423)


(670)




(986)


(648)


(324)


(591)















Total consolidated backlog

$

1,636,623


$

1,621,009


$

1,536,615


$

1,552,490




$

1,638,706


$

1,615,646


$

1,508,688


$

1,483,823



 

DOVER CORPORATION

QUARTERLY EARNINGS PER SHARE

(unaudited)(in thousands, except per share data*)






2013


2012


Q1

Q2

Q3

Q4

FY 2013


Q1

Q2

Q3

Q4

FY 2012

Basic earnings (loss) per common share:










Continuing operations

$

1.14


$

1.72


$

1.55


$

1.24


$

5.64



$

1.01


$

1.12


$

1.28


$

1.17


$

4.59


Discontinued operations

0.08


0.21


0.03


(0.10)


0.22



0.05


0.05


0.04


(0.27)


(0.12)


Net earnings

1.21


1.93


1.58


1.14


5.86



1.07


1.17


1.33


0.90


4.47














Diluted earnings (loss) per common share:










Continuing operations

$

1.12


$

1.70


$

1.53


$

1.22


$

5.57



$

1.00


$

1.10


$

1.27


$

1.16


$

4.53


Discontinued operations

0.07


0.21


0.03


(0.10)


0.22



0.05


0.05


0.04


(0.27)


(0.12)


Net earnings

1.20


1.91


1.56


1.13


5.78



1.05


1.15


1.31


0.89


4.41














Adjusted diluted earnings per common share (calculated below):

Continuing operations

$

1.10


$

1.36


$

1.54


$

1.28


$

5.28



$

1.01


$

1.10


$

1.25


$

1.09


$

4.44














Net earnings (loss) and average shares used in calculated earnings (loss) per share amounts are as follows:













Net earnings (loss):












Continuing operations

$

196,989


$

294,352


$

263,652


$

210,812


$

965,805



$

186,409


$

205,156


$

233,330


$

208,224


$

833,119


Discontinued operations

13,014


35,697


5,462


(16,849)


37,324



9,654


8,945


7,716


(48,364)


(22,049)


Net earnings

210,003


330,049


269,114


193,963


1,003,129



196,063


214,101


241,046


159,860


811,070














Average shares outstanding:










Basic

173,448


171,111


170,544


170,027


171,271



183,737


183,494


181,763


177,257


181,551


Diluted

175,567


173,097


172,734


172,265


173,547



186,706


185,780


183,932


179,365


183,993


 


Note:







Earnings from continuing operations are adjusted by discrete tax items, incurred spin-off costs, and other one-time gains to derive adjusted earnings from continuing operations and adjusted diluted earnings per common share as follows:














2013


2012


Q1

Q2

Q3

Q4

FY 2013


Q1

Q2

Q3

Q4

FY 2012

Adjusted earnings from continuing operations:









Earnings from continuing operations

$

196,989


$

294,352


$

263,652


$

210,812


$

965,805



$

186,409


$

205,156


$

233,330


$

208,224


$

833,119


Gains (losses) from discrete and other tax items

4,525


61,477


4,878


6,085


76,965



(1,610)


(372)


4,513


13,606


16,137


Knowles spin-off costs

-


(3,322)


(10,637)


(16,134)


(30,093)



-


-


-


-


-


Other one-time gains, net of tax

-


-


2,866


-


2,866



-


-


-


-


-


Adjusted earnings from continuing operations

$

192,464


$

236,197


$

266,545


$

220,861


$

916,067



$

188,019


$

205,528


$

228,817


$

194,618


$

816,982














Adjusted diluted earnings per common share:









Earnings from continuing operations

$

1.12


$

1.70


$

1.53


$

1.22


$

5.57



$

1.00


$

1.10


$

1.27


$

1.16


$

4.53


Gains (losses) from discrete and other tax items

0.02


0.36


0.03


0.03


0.44



(0.01)


-


0.02


0.07


0.09


Knowles spin-off costs

-


(0.02)


(0.06)


(0.09)


(0.17)



-


-


-


-


-


Other one-time gains, net of tax

-


-


0.02


-


0.02



-


-


-


-


-


Adjusted earnings from continuing operations

$

1.10


$

1.36


$

1.54


$

1.28


$

5.28



$

1.01


$

1.10


$

1.25


$

1.09


$

4.44














* Per share data may not add due to rounding.









 


DOVER CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEET

(unaudited)(in thousands)






December 31, 2013


December 31, 2012

Assets:




Cash and cash equivalents

$

803,882



$

800,076


Receivables, net of allowances

1,359,101



1,225,898


Inventories, net

926,998



872,841


Deferred tax and other current assets

150,181



129,029


Property, plant and equipment, net

1,182,982



1,167,052


Goodwill

4,242,909



4,114,650


Intangible assets, net

1,612,487



1,625,420


Other assets

238,910



111,432


Assets of discontinued operations

244,279



397,545


Total assets

$

10,761,729



$

10,443,943






Liabilities and Stockholders' Equity:




Notes payable and current maturities of long-term debt

$

229,278



$

610,766


Payables and accrued expenses

1,386,302



1,375,862


Deferred taxes and other non-current liabilities

 

1,063,369



1,139,777


Long-term debt

2,599,201



2,189,350


Liabilities of discontinued operations

106,183



208,958


Stockholders' equity

5,377,396



4,919,230


Total liabilities and stockholders' equity

$

10,761,729



$

10,443,943


 


DOVER CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(unaudited)(in thousands)




Years Ended December 31,


2013


2012

Operating activities:




Net earnings

$

1,003,129



$

811,070


Loss (gain) from discontinued operations, net

(37,324)



22,049


Depreciation and amortization

421,616



357,585


Stock-based compensation

30,480



30,884


Contributions to employee benefit plans

(41,760)



(48,576)


Net change in assets and liabilities

(197,456)



88,148


Net cash provided by operating activities of continuing operations

1,178,685



1,261,160






Investing activities:




Additions to property, plant and equipment

(236,833)



(297,012)


Acquisitions (net of cash and cash equivalents acquired)

(322,838)



(1,035,433)


Proceeds from the sale of businesses

76,457



-


Other

20,163



(13,443)


Net cash used in investing activities of continuing operations

(463,051)



(1,345,888)






Financing activities:




Net increase in debt and notes payable

19,530



603,918


Purchase of common stock

(457,871)



(748,955)


Proceeds from exercise of stock options and SARs, including tax benefits

7,619



43,054


Dividends to stockholders

(247,820)



(240,959)


Net cash used in financing activities of continuing operations

(678,542)



(342,942)






Net cash (used in) provided by discontinued operations

(29,985)



4,879






Effect of exchange rate changes on cash

(3,301)



16,112






Net (decrease) increase in cash and cash equivalents

3,806



(406,679)


Cash and cash equivalents at beginning of period

800,076



1,206,755


Cash and cash equivalents at end of period

$

803,882



$

800,076


 

DOVER CORPORATION



QUARTERLY FREE CASH FLOW



(unaudited)(in thousands)








2013


2012


Q1

Q2

Q3

Q4

FY 2013


Q1

Q2

Q3

Q4

FY 2012

Cash flow from operating activities (1)

$

78,326


$

304,729


$

340,005


$

455,625


$

1,178,685



$

161,327


$

243,363


$

285,811


$

570,659


$

1,261,160


Less: Additions to property, plant and equipment

(47,153)


(53,284)


(57,038)


(79,358)


(236,833)



(68,249)


(72,758)


(67,842)


(88,163)


(297,012)


Free cash flow

$

31,173


$

251,445


$

282,967


$

376,267


$

941,852



$

93,078


$

170,605


$

217,969


$

482,496


$

964,148














Free cash flow as a percentage of earnings from continuing operations

15.8

%

85.4

%

107.3

%

178.5

%

97.5

%


49.9

%

83.2

%

93.4

%

231.7

%

115.7

%













Free cash flow as a percentage of revenue

1.5

%

11.3

%

12.6

%

17.0

%

10.8

%


4.8

%

8.4

%

10.4

%

24.0

%

11.9

%























(1) Includes one-time spin-off costs of $3,322, $10,637, and $16,134 for the second, third, and fourth quarters of 2013, respectively, and $30,093 for the full year.

 

ADDITIONAL INFORMATION
FOURTH QUARTER AND FULL YEAR 2013

Acquisitions

During the fourth quarter of 2013, the Company completed four acquisitions, three in the Energy segment and one in the Engineered Systems segment.  For the full year 2013, Dover made a total of ten acquisitions for consideration totaling $323 million.

Discontinued Operations

In the fourth quarter of 2013, the Company completed the sale of Everett Charles Technologies ("ECT"), resulting in an after-tax loss of $0.02 diluted earnings per share ("EPS"). The fourth quarter net loss from discontinued operations was $0.10 EPS, which includes income from the operations of DEK and ECT prior to sale, as well as adjustments to other discontinued assets and liabilities, including an $0.11 EPS impact related to tax obligations in foreign jurisdictions. In addition, the Company recorded an impairment charge of $0.08 for DEK in connection with the planned divestiture of this business in 2014.

On a full-year basis, the Company generated net earnings of $0.22 EPS, which includes the $0.02 EPS loss on sale of ECT, as well as total impairment charges of $0.19 EPS connected with the anticipated sale of our electronic test and assembly businesses and net discrete tax benefits of $0.21 EPS.

Tax Rate

The effective tax rate on continuing operations was 27.3% and 23.5% for the fourth quarters of 2013 and 2012, respectively. On a full year basis, the effective tax rates on continuing operations for 2013 and 2012 were 21.9% and 26.8%, respectively.  The 2013 and 2012 rates were favorably impacted by discrete and other items, as shown in the reconciliation for quarterly earnings per share included herein.  After adjusting for discrete and other items, the fourth quarter effective tax rates were 29.4% and 28.5% for 2013 and 2012, respectively, and the full year rates were 28.2% for both 2013 and 2012.  The higher rates for the quarter reflect the impact of a higher proportion of U.S. earnings, partly offset by lower effective tax rates in foreign jurisdictions.

Revenue Growth Factors


2013



Q1


Q2


Q3


Q4


Full Year

Organic

(1)%



5

%


3

%


5

%


3

%

Acquisitions

6

%


4

%


4

%


5

%


5

%

Currency translation

(1)%



-

%


-

%


-

%


-

%


4

%


9

%


7

%


10

%


8

%

 

Free Cash Flow

The following table is a reconciliation of free cash flow (a non-GAAP measure) from cash flow provided by operating activities:


Three Months Ended

December 31,


Years Ended

December 31,


2013


2012


2013


2012

Free Cash Flow (dollars in thousands)








Cash flow provided by operating activities

$

455,625



$

570,659



$

1,178,685



$

1,261,160


Less: Capital expenditures

(79,358)



(88,163)



(236,833)



(297,012)


Free cash flow

$

376,267



$

482,496



$

941,852



$

964,148










Free cash flow as a percentage of revenue

17.0

%


24.0

%


10.8

%


11.9

%









Free cash flow as a percentage of earnings from continuing operations

 





97.5

%


115.7

%

 

The full year decrease in 2013 free cash flow reflects a higher investment in working capital year over year, offset by higher earnings from continuing operations before depreciation and amortization and lower capital expenditures.

Share Repurchases

During the year ended December 31, 2013, the Company purchased approximately 6.0 million shares of its common stock in the open market at an average price of $76.17 per share.  These repurchases were made pursuant to the share repurchase program approved in November 2012, which authorized $1 billion for share repurchases over the next 12 to 18 months.  At December 31, 2013, approximately $293 million remains available for repurchases under this program.

Capitalization

The following table provides a summary reconciliation of total debt and net debt to net capitalization to the most directly comparable GAAP measures:

Net Debt to Net Capitalization Ratio (in thousands)


December 31, 2013


December 31, 2012

Current maturities of long-term debt


$

2,778



$

3,266


Commercial paper


226,500



607,500


Long-term debt


2,599,201



2,189,350


Total debt


2,828,479



2,800,116


Less: Cash and cash equivalents


(803,882)



(800,076)


Net debt


2,024,597



2,000,040


Add: Stockholders' equity


5,377,396



4,919,230


Net capitalization


$

7,401,993



$

6,919,270


Net debt to net capitalization


27.4

%


28.9

%

 

Non-GAAP Information:

These Investor Supplement tables contain non-GAAP measures of adjusted earnings from continuing operations used in calculating adjusted diluted earnings per common share, as management believes this information is useful to investors to better understand the company's ongoing profitability and facilitates easier comparisons of the company's profitability to prior and future periods and to its peers. The company has also disclosed herein a number of non-GAAP measures related to free cash flow and the ratio of net debt to net capitalization.  Management believes these metrics are important measures of the company's operating performance and liquidity.  Free cash flow information provides both management and investors a measurement of cash generated from operations that is available to fund acquisitions, pay dividends, repay debt and repurchase common stock, while the net debt to net capitalization ratio is helpful in evaluating the company's capital structure and the amount of leverage employed.

Pro Forma Information:

The Investor Supplement tables contain pro forma financial information that reflects the operations of Knowles as a discontinued operation. Upon completion of the spin, Knowles' results will be reclassified to discontinued operations for reporting purposes in accordance with GAAP. The unaudited pro forma consolidated financial statements are presented for informational purposes only and are subject to a number of estimates, assumptions and uncertainties and does not purport to represent what our results of operations would have been if the spin-off of Knowles Corporation had occurred as of the dates indicated, what such results will be for any future periods, or what the historical results of Dover will be upon classifying Knowles as a discontinued operation as of the effective date of the spin-off of Knowles.

 

DOVER CORPORATION

PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS

(unaudited)(in thousands, except per share data)






Year Ended December 31, 2013


Year Ended December 31, 2012


As Reported


Pro forma


As Reported


Pro forma

Revenue

$

8,729,813



$

7,520,635



$

8,104,339



$

6,994,480


Cost of goods and services

5,390,032



4,612,769



4,997,274



4,291,602


Gross profit

3,339,781



2,907,866



3,107,065



2,702,878


Selling and administrative expenses

1,985,849



1,692,444



1,841,688



1,590,217


Operating earnings

1,353,932



1,215,422



1,265,377



1,112,661


Interest expense, net

120,742



120,672



121,141



121,263


Other (income) expense, net

(4,222)



(4,458)



6,665



7,127


Earnings before provision for income taxes and discontinued operations

1,237,412



1,099,208



1,137,571



984,271


Provision for income taxes

271,607



267,635



304,452



298,339


Earnings from continuing operations

965,805



831,573



833,119



685,932


Earnings (loss) from discontinued operations, net (1)

37,324



171,556



(22,049)



125,138


Net earnings

$

1,003,129



$

1,003,129



$

811,070



$

811,070










Basic earnings per common share:








Earnings from continuing operations

$

5.64



$

4.86



$

4.59



$

3.78


Earnings (loss) from discontinued operations, net (1)

0.22



1.00



(0.12)



0.69


Net earnings

5.86



5.86



4.47



4.47










Weighted average shares outstanding

171,271



171,271



181,551



181,551










Diluted earnings per common share:








Earnings from continuing operations

$

5.57



$

4.79



$

4.53



$

3.73


Earnings (loss) from discontinued operations, net (1)

0.22



0.99



(0.12)



0.68


Net earnings

5.78



5.78



4.41



4.41










Weighted average shares outstanding

173,547



173,547



183,993



183,993










Adjusted diluted earnings per share from continuing operations (2)

$

5.28



$

4.31



$

4.44



$

3.64


















(1) Reflects the impact of discontinuing Knowles upon spin-off, which results in a reclassification of $134.2 million, inclusive of $30 million of spin-off costs, or $0.78 diluted EPS in 2013 and $147.2 million or $0.80 diluted EPS in 2012 to earnings from discontinued operations.


















(2) Adjusted for gains from discrete and other tax items of $0.46 and $0.09 in 2013 and 2012, respectively, and other one-time gains, net of tax, of $0.02 in 2013.


 

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