2014

Dover Reports Fourth Quarter and Full Year 2012 Results; Reaffirms 2013 Guidance

DOWNERS GROVE, Ill., Jan. 24, 2013 /PRNewswire-FirstCall/ --

  • Reports quarterly revenue of $2.0 billion, an increase of 6% over the prior year
  • Delivers quarterly diluted earnings per share from continuing operations of $1.16, an increase of 10% over last year
  • Achieves adjusted quarterly diluted earnings per share from continuing operations of $1.09, excluding tax benefits of $0.07, up 7% from an adjusted prior year
  • Reaffirms 2013 full year revenue growth of 7% to 9% and diluted earnings per share from continuing operations in the range of $5.05 to $5.35

Dover (NYSE: DOV) announced today that for the fourth quarter ended December 31, 2012, revenue was $2.0 billion, an increase of 6% over the prior year period. The revenue increase was driven by organic growth of 2% and a 5% increase from acquisitions, offset in part by a 1% unfavorable impact from foreign exchange. Earnings from continuing operations were $208.2 million, or $1.16 diluted earnings per share ("EPS"), compared to $197.3 million, or $1.05 EPS, in the prior year period, representing increases in earnings from continuing operations and EPS of 6% and 10%, respectively.  Excluding the impact of tax benefits of $0.07 EPS recognized in the current quarter and $0.03 EPS recognized in the prior year period, adjusted EPS from continuing operations for the fourth quarter of 2012 was $1.09, reflecting an increase of 7% over an adjusted EPS of $1.02 in the prior year period.  

Revenue for the year ended December 31, 2012 was $8.1 billion, an increase of 10% over the prior year, reflecting organic growth of 5%, a 6% increase from acquisitions and a 1% unfavorable impact from foreign exchange. Earnings from continuing operations for the year ended December 31, 2012 were $833.1 million, or $4.53 EPS, compared to $773.2 million, or $4.09 EPS in the prior year period, representing an increase in earnings from continuing operations of 8% and an increase in EPS of 11%.  Excluding the impact of tax benefits of $0.09 EPS in the current year and $0.22 EPS in the prior year, adjusted EPS from continuing operations for the year ended December 31, 2012 was $4.44, an increase of 15% over an adjusted EPS of $3.87 in the prior year.

Commenting on the fourth quarter results, Dover's President and Chief Executive Officer, Robert A. Livingston, said, "I am pleased with our fourth quarter results as all our segments recorded organic growth, and the majority of our end-markets continued to show strength in orders, despite uncertain economic conditions.  Within Communication Technologies, we saw the continuation of a strong smart phone market and we achieved improved sequential performance at Sound Solutions.  Our Energy segment demonstrated its resiliency by posting modest organic growth despite a lower North American rig count.  Engineered Systems continued to see a very active refrigeration and food equipment market, while Printing & Identification's fast moving consumer goods market continued to expand.  We also closed several acquisitions in the quarter, most notably Anthony, which will strengthen our refrigeration product offering and expand our markets and channels."

"For the year, we generated nearly $1 billion in free cash flow, supported by strong cash conversion in the fourth quarter. Our solid cash flow is a key element in the continued execution of our capital allocation strategy. Specifically, we made significant internal and acquisition investments in our five key growth spaces, we returned cash in the form of expanded dividends and began execution on our $1 billion share repurchase program announced in November." 

"Looking ahead, our full year view of 2013 is unchanged from our December 10, 2012 investor day guidance.  We expect full year organic growth of 3% to 5% complemented by acquisition growth of 4%, resulting in revenue growth of 7% to 9%.  The benefits of leverage on volume coupled with a lower share count from our repurchase program will help us deliver solid earnings growth.  Accordingly, we are reaffirming full year diluted EPS from continuing operations in the range of $5.05 - $5.35."

Net earnings for the fourth quarter of 2012 were $159.9 million or $0.89 EPS, including a net loss from discontinued operations of $48.4 million, or $0.27 EPS, compared to net earnings of $278.3 million, or $1.49 EPS, for the same period of 2011, which included net income from discontinued operations of $81.0 million, or $0.43 EPS.  As previously announced, two non-core businesses serving the electronic assembly and test markets were reclassified to discontinued operations during the fourth quarter, with the intent to divest these businesses in 2013.  In connection with the plan to divest, a goodwill impairment charge of $51.9 million, net of tax, or $0.29 EPS was recognized, which is reflected within discontinued operations in the fourth quarter and full year periods.  Net earnings for the year ended December 31, 2012 were $811.1 million, or $4.41 EPS, including a net loss from discontinued operations of $22.0 million, or $0.12 EPS, compared to net earnings of $895.2 million, or $4.74 EPS for the same period of 2011, which included net income from discontinued operations of $122.1 million or $0.65 EPS.

Dover will host a webcast of its fourth quarter 2012 conference call at 10:00 A.M. Eastern Time (9:00 A.M. Central Time) on Thursday, January 24, 2013. 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 of over $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 employs 35,000 people worldwide. 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, operating and strategic plans, income, earnings, cash flows, changes in operations, operating improvements, industries in which Dover companies operate and the U.S. and global economies. Statements in this press release that are not historical may be indicated by words or phrases such as "anticipates," "expects," "believes," "indicates," "suggests," "will," "plans," "supports," "projects," "should," "would," "could," "hope," "forecast" and "management is of the opinion," use of future tense and similar words or phrases. 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, uncertainties in the credit and capital markets, interest rates, currency exchange rates, the world economy and sovereign credit, especially in Europe; political events and possible future terrorist threats that could impact countries where Dover does business or the worldwide economy; the impact of natural disasters and their effect on global supply chains and energy markets; increases in the cost of raw materials; the Company's ability to achieve expected savings from integration, synergy and other cost-control initiatives; the ability to identify and successfully consummate value-adding acquisition opportunities; increased competition and pricing pressures in the markets served by Dover's operating companies; the ability of Dover's companies to expand into new geographic markets and to anticipate and meet customer demands for new products and product enhancements; the impact of loss of a single-source manufacturing facility; changes in customer demand; a downgrade in Dover's credit ratings; the relative mix of products and services which impacts margins and operating efficiencies; short-term capacity constraints; domestic and foreign governmental and public policy changes including environmental regulations, tax policies, export subsidy programs, R&E credits and other similar programs; unforeseen developments in contingencies such as litigation; protection and validity of patent and other intellectual property rights; and the cyclical nature of some of Dover's companies. Dover refers you to the documents that it files from time to time with the Securities and Exchange Commission, such as its 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 its actual results to differ materially from its current expectations and from the forward-looking statements contained in this press release. Dover undertakes no obligation to update any forward-looking statement.

INVESTOR SUPPLEMENT - FOURTH QUARTER AND FULL YEAR 2012

DOVER CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)(in thousands, except per share data)


Three Months Ended

December 31,


Years Ended December 31,


2012


2011


2012


2011

Revenue

$

2,013,831



$

1,890,962



$

8,104,339



$

7,369,154


Cost of goods and services

1,240,087



1,172,629



4,997,274



4,524,351


Gross profit

773,744



718,333



3,107,065



2,844,803


Selling and administrative expenses

469,668



434,732



1,841,688



1,720,954


Operating earnings

304,076



283,601



1,265,377



1,123,849


Interest expense, net

30,996



29,057



121,141



115,525


Other expense (income), net

809



(3,265)



6,665



(1,938)


Earnings before provision for income taxes and

discontinued operations

272,271



257,809



1,137,571



1,010,262


Provision for income taxes

64,047



60,542



304,452



237,076


Earnings from continuing operations

208,224



197,267



833,119



773,186


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

(48,364)



81,022



(22,049)



122,057


Net earnings

$

159,860



$

278,289



$

811,070



$

895,243










Basic earnings per common share:








Earnings from continuing operations

$

1.17



$

1.07



$

4.59



$

4.16


Earnings (loss) from discontinued operations,

net (1)

(0.27)



0.44



(0.12)



0.66


Net earnings

0.90



1.51



4.47



4.82










Weighted average shares outstanding

177,257



184,686



181,551



185,882










Diluted earnings per common share:








Earnings from continuing operations

$

1.16



$

1.05



$

4.53



$

4.09


Earnings (loss) from discontinued operations,

net (1)

(0.27)



0.43



(0.12)



0.65


Net earnings

0.89



1.49



4.41



4.74










Weighted average shares outstanding

179,365



187,208



183,993



188,887










Dividends paid per common share

$

0.35



$

0.315



$

1.33



$

1.18










(1)   For the three months and year ended December 31, 2012, the loss from discontinued operations, net reflects a goodwill impairment charge of approximately $64 million ($52 million, net of tax) recognized in connection with the reclassification of Everett Charles Technologies and DEK to discontinued operations. 


DOVER CORPORATION
QUARTERLY SEGMENT INFORMATION
(unaudited)(in thousands)


2012


2011


Q1

Q2

Q3

Q4

FY 2012


Q1

Q2

Q3

Q4

FY 2011

REVENUE












Communication Technologies

$

357,575


$

361,689


$

396,470


$

400,851


$

1,516,585



$

269,582


$

288,843


$

405,357


$

396,295


$

1,360,077














Energy

531,570


538,786


562,263


539,985


2,172,604



425,424


454,327


510,608


510,390


1,900,749














Engineered Systems












Fluid Solutions

180,364


211,974


218,324


206,500


817,162



163,196


178,031


173,804


162,590


677,621


Refrigeration &

Industrial

642,213


674,501


674,116


613,012


2,603,842



560,453


645,573


649,768


568,844


2,424,638


Eliminations

(453)


(352)


(319)


(336)


(1,460)



(382)


(424)


(431)


(287)


(1,524)



822,124


886,123


892,121


819,176


3,419,544



723,267


823,180


823,141


731,147


3,100,735














Printing & Identification

243,570


251,875


246,945


254,141


996,531



240,775


253,226


260,546


253,689


1,008,236














Intra-segment eliminations

(225)


(184)


(194)


(322)


(925)




18


(102)


(559)


(643)














Total consolidated revenue

$

1,954,614


$

2,038,289


$

2,097,605


$

2,013,831


$

8,104,339



$

1,659,048


$

1,819,594


$

1,999,550


$

1,890,962


$

7,369,154














NET EARNINGS












Segment Earnings:












Communication

Technologies

$

46,556


$

50,322


$

63,706


$

58,376


$

218,960



$

47,325


$

54,527


$

53,433


$

71,097


$

226,382


Energy

132,115


133,936


139,038


133,561


538,650



93,051


110,447


125,268


121,871


450,637


Engineered

Systems

122,092


133,808


144,245


101,807


501,952



98,235


128,570


125,529


92,852


445,186


Printing & Identification

26,089


28,918


39,502


40,650


135,159



31,985


35,294


40,843


33,439


141,561


Total Segments

326,852


346,984


386,491


334,394


1,394,721



270,596


328,838


345,073


319,259


1,263,766


Corporate expense / other

36,546


36,335


32,001


31,127


136,009



36,112


35,391


34,083


32,393


137,979


Net interest expense

30,031


29,715


30,399


30,996


121,141



28,319


28,093


30,056


29,057


115,525


Earnings from continuing operations before provision for income taxes

260,275


280,934


324,091


272,271


1,137,571



206,165


265,354


280,934


257,809


1,010,262


Provision for income taxes

73,866


75,778


90,761


64,047


304,452



51,020


52,095


73,419


60,542


237,076


Earnings from continuing operations

186,409


205,156


233,330


208,224


833,119



155,145


213,259


207,515


197,267


773,186


Earnings (loss) from discontinued operations, net

9,654


8,945


7,716


(48,364)


(22,049)



39,760


36,510


(35,235)


81,022


122,057


Net earnings

$

196,063


$

214,101


$

241,046


$

159,860


$

811,070



$

194,905


$

249,769


$

172,280


$      278,289


$

895,243














SEGMENT OPERATING MARGIN










Communication

Technologies

13.0%


13.9%


16.1%


14.6%


14.4%



17.6%


18.9%


13.2%


17.9%


16.6%


Energy

24.9%


24.9%


24.7%


24.7%


24.8%



21.9%


24.3%


24.5%


23.9%


23.7%


Engineered

Systems

14.9%


15.1%


16.2%


12.4%


14.7%



13.6%


15.6%


15.2%


12.7%


14.4%


Printing &

Identification

10.7%


11.5%


16.0%


16.0%


13.6%



13.3%


13.9%


15.7%


13.2%


14.0%


Total Segment

16.7%


17.0%


18.4%


16.6%


17.2%



16.3%


18.1%


17.3%


16.9%


17.1%














DEPRECIATION AND AMORTIZATION EXPENSE









Communication Technologies

$

31,513


$

32,828


$

32,997


$

35,281


$

132,619



$

18,685


$

18,533


$

34,360


$

30,261


$

101,839


Energy

21,184


23,533


24,639


25,721


95,077



18,573


18,765


19,399


21,082


77,819


Engineered Systems

19,582


23,913


23,060


27,066


93,621



18,415


18,816


18,332


19,213


74,776


Printing & Identification

8,331


8,496


8,777


7,998


33,602



8,163


8,476


8,364


8,479


33,482


Corporate

700


765


842


359


2,666



586


626


636


713


2,561



$

81,310


$

89,535


$

90,315


$

96,425


$

357,585



$

64,422


$

65,216


$

81,091


$

79,748


$

290,477



DOVER CORPORATION
QUARTERLY SEGMENT INFORMATION
(continued)
(unaudited)(in thousands)

 


2012


2011


Q1

Q2

Q3

Q4

FY 2012


Q1

Q2

Q3

Q4

FY 2011

BOOKINGS












Communication Technologies

$

356,386


$

383,135


$

412,092


$

352,629


$

1,504,242



$           274,611


$           309,734


$             410,616


$              349,579


$           1,344,540



















Energy

585,775


530,352


526,824


550,091



2,193,042



495,125


472,543


498,212


519,525


1,985,405



















Engineered Systems

















Fluid

Solutions

184,711


204,139


197,767


209,872


796,489



173,626


175,539


174,772


158,895


682,832


Refrigeration

& Industrial

711,911


666,223


600,065


606,931


2,585,130



660,449


623,929


602,488


625,840


2,512,706


Eliminations

(408)


(376)


(258)


(399)


(1,441)



(733)


(884)


179


(1,378)


(2,816)



896,214


869,986


797,574


816,404


3,380,178



833,342


798,584


777,439


783,357


3,192,722



















Printing & Identification

249,773


251,733


244,611


252,937


999,054



247,812


254,226


262,685


253,632


1,018,355



















Intra-segment eliminations

(609)


(222)


(760)


(1,017)


(2,608)



(2,736)


(3,370)


(2,453)


(3,153)


(11,712)



















Total consolidated bookings

$

2,087,539


$

2,034,984


$

1,980,341


$

1,971,044


$

8,073,908



$        1,848,154


$        1,831,717


$          1,946,499


$            1,902,940


$         7,529,310



















BACKLOG

















Communication Technologies

$

435,912


$

457,624


$

473,007


$

424,144




$           410,843


$           431,558


$             483,512


$               437,320





















Energy

296,360


282,364


248,233


256,093




240,198


255,889


243,401


246,351





















Engineered Systems

















Fluid

Solutions

191,327


172,300


156,191


160,890




57,357


54,945


55,230


54,194




Refrigeration

& Industrial

598,910


586,824


515,285


516,559




544,995


523,011


469,876


528,118




Eliminations

(132)


(155)


(94)


(157)




(339)


(526)


(94)


(177)





790,105


758,969


671,382


677,292




602,013


577,430


525,012


582,135





















Printing & Identification

102,117


98,216


98,356


97,857




100,231


101,426


97,405


94,557





















Intra-segment eliminations

(986)


(647)


(324)


$

(590)




(704)


(1,177)


(890)


(193)





















Total consolidated backlog

$

1,623,508


$

1,596,526


$

1,490,654


$

1,454,796




$        1,352,581


$          1,365,126


$         1,348,440


$        1,360,170




















































 

DOVER CORPORATION
QUARTERLY EARNINGS PER SHARE
(unaudited)(in thousands, except per share data*)



2012


2011


Q1

Q2

Q3

Q4

FY 2012


Q1

Q2

Q3

Q4

FY 2011

Basic earnings (loss) per common share:










Continuing operations

$

1.01


$

1.12


$

1.28


$

1.17


$

4.59



$

0.83


$

1.14


$

1.12


$

1.07


$

4.16


Discontinued operations

0.05


0.05


0.04


(0.27)


(0.12)



0.21


0.20


(0.19)


0.44


0.66


Net earnings

1.07


1.17


1.33


0.90


4.47



1.04


1.34


0.93


1.51


4.82














Diluted earnings (loss) per common share:










Continuing operations

$

1.00


$

1.10


$

1.27


$

1.16


$

4.53



$

0.82


$

1.12


$

1.10


$

1.05


$

4.09


Discontinued operations

0.05


0.05


0.04


(0.27)


(0.12)



0.21


0.19


(0.19)


0.43


0.65


Net earnings

1.05


1.15


1.31


0.89


4.41



1.03


1.32


0.91


1.49


4.74














Adjusted diluted earnings per common share (calculated below):

Continuing operations

$

1.01


$

1.10


$

1.25


$

1.09


$

4.44



$

0.78


$

0.99


$

1.08


$

1.02


$

3.87














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













Net earnings (loss):












Continuing operations

$

186,409


$

205,156


$

233,330


$

208,224


$

833,119



$

155,145


$

213,259


$

207,515


$

197,267


$

773,186


Discontinued operations

9,654


8,945


7,716


(48,364)


(22,049)



39,760


36,510


(35,235)


81,022


122,057


Net earnings

196,063


214,101


241,046


159,860


811,070



194,905


249,769


172,280


278,289


895,243














Average shares outstanding:










Basic

183,737


183,494


181,763


177,257


181,551



186,659


186,443


185,770


184,686


185,882


Diluted

186,706


185,780


183,932


179,365


183,993



190,090


189,705


188,436


187,208


188,887


Note:












Earnings from continuing operations are adjusted by discrete and other tax items to derive adjusted earnings from continuing operations and adjusted diluted earnings per common share as follows:














2012


2011


Q1

Q2

Q3

Q4

FY 2012


Q1

Q2

Q3

Q4

FY 2011

Adjusted earnings from continuing operations:









Earnings from continuing operations

$

186,409


$

205,156


$

233,330


$

208,224


$

833,119



$

155,145


$

213,259


$

207,515


$

197,267


$

773,186


Gains (losses) from discrete and other tax items

(1,610)


(372)


4,513


13,606


16,137



8,016


24,983


2,777


4,967


40,743


Adjusted earnings from continuing operations

$

188,019


$

205,528


$

228,817


$

194,618


$

816,982



$

147,129


$

188,276


$

204,738


$

192,300


$

732,443














Adjusted diluted earnings per common share:









Earnings from continuing operations

$

1.00


$

1.10


$

1.27


$

1.16


$

4.53



$

0.82


$

1.12


$

1.10


$

1.05


$

4.09


Gains (losses) from discrete and other tax items

(0.01)



0.02


0.07


0.09



0.04


0.13


0.02


0.03


0.22


Adjusted earnings from continuing operations

$

1.01


$

1.10


$

1.25


$

1.09


$

4.44



$

0.78


$

0.99


$

1.08


$

1.02


$

3.87














* Per share data may not add due to rounding.









 

DOVER CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(unaudited)(in thousands)


December 31, 2012


December 31, 2011

Assets:




Cash and cash equivalents

$

800,076



$

1,206,755


Receivables, net of allowances

1,225,898



1,118,848


Inventories, net

872,841



733,807


Deferred tax and other current assets

129,029



188,768


Property, plant and equipment, net

1,167,052



970,703


Goodwill

4,094,650



3,506,975


Intangible assets, net

1,645,420



1,184,505


Other assets

111,432



103,331


Assets of discontinued operations

397,545



486,860


Total assets

$

10,443,943



$

9,500,552






Liabilities and Stockholders' Equity:




Notes payable and current maturities of long-term debt

$

610,766



$

1,022


Payables and accrued expenses

1,375,862



1,148,500


Deferred taxes and other noncurrent liabilities

 

1,139,777



958,341


Long-term debt

2,189,350



2,186,230


Liabilities of discontinued operations

208,958



275,904


Stockholders' equity

4,919,230



4,930,555


Total liabilities and stockholders' equity

$

10,443,943



$

9,500,552


 


DOVER CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)(in thousands)


Years Ended December 31,


2012


2011

Operating activities:




Net earnings

$

811,070



$

895,243


Loss (gain) from discontinued operations, net

22,049



(122,057)


Depreciation and amortization

357,585



290,477


Stock-based compensation

30,884



25,130


Contributions to employee benefit plans

(48,576)



(63,567)


Net change in assets and liabilities

88,148



(76,362)


Net cash provided by operating activities of continuing

operations

1,261,160



948,864






Investing activities:




Additions to property, plant and equipment

(297,012)



(262,676)


Acquisitions, including adjustment for prior year acquisition

purchase price (net of cash and cash equivalents acquired)

(1,035,433)



(1,382,217)


Proceeds from sale of short-term investments



124,410


Proceeds from the sale of businesses



516,901


Other

(13,443)



(8,848)


Net cash used in investing activities of continuing

operations

(1,345,888)



(1,012,430)






Financing activities:




Net increase in debt and notes payable

603,918



371,315


Purchase of common stock

(748,955)



(242,488)


Proceeds from exercise of stock options and SARs, including

tax benefits

43,054



39,826


Dividends to stockholders

(240,959)



(219,154)


Net cash used in financing activities of continuing

operations

(342,942)



(50,501)






Net cash provided by discontinued operations

 

4,879



117,311






Effect of exchange rate changes on cash

 

16,112



16,150






Net (decrease) increase in cash and cash equivalents

 

(406,679)



19,394


Cash and cash equivalents at beginning of period

 

1,206,755



1,187,361


Cash and cash equivalents at end of period

 

$

800,076



$

1,206,755


 


DOVER CORPORATION
QUARTERLY FREE CASH FLOW
(unaudited)(in thousands)

 


2012


2011


Q1

Q2

Q3

Q4

FY 2012


Q1

Q2

Q3

Q4

FY 2011

Cash flow from operating activities

$

161,327


$

243,363


$

285,811


$

570,659


$

1,261,160



$

100,153


$

195,250


$

323,355


$

330,106


$

948,864


Less: Additions to property, plant and equipment

(68,249)


(72,758)


(67,842)


(88,163)


(297,012)



(49,528)


(71,106)


(63,741)


(78,301)


(262,676)


Free cash flow

$

93,078


$

170,605


$

217,969


$

482,496


$

964,148



$

50,625


$

124,144


$

259,614


$

251,805


$

686,188














Free cash flow as a percentage of earnings from continuing operations

49.9%


83.2%


93.4%


231.7%


115.7%



32.6%


58.2%


125.1%


127.6%


88.7%














Free cash flow as a percentage of revenue

4.8%


8.4%


10.4%


24.0%


11.9%



3.1%


6.8%


13.0%


13.3%


9.3%


 

ADDITIONAL INFORMATION

FOURTH QUARTER AND FULL YEAR 2012

 

Acquisitions
During the fourth quarter of 2012, the Company completed four acquisitions, three in the Engineered Systems segment and one in the Energy segment.  The fourth quarter acquisitions were largely funded with commercial paper borrowings.  For the full year 2012, Dover made a total of seven acquisitions for consideration totaling $1.2 billion. This included the Engineered Systems' acquisitions of Maag Pump Systems in the first quarter and Anthony International in the fourth quarter.

Discontinued Operations
The Company did not dispose of any businesses in 2012. However, in the fourth quarter, the Company announced its intent to divest  Everett Charles Technologies and DEK, two non-core businesses serving the electronic assembly and test markets. The results of operations and cash flows of these businesses have been reclassified to discontinued operations and the assets and liabilities of these businesses have been segregated within assets and liabilities of discontinued operations for all periods presented herein.  In the fourth quarter of 2012, the Company recognized a goodwill impairment charge of $63.8 million ($51.9 million, net of tax) in connection with the intended divestiture.  As a result, for the fourth quarter and full year periods of 2012, the Company generated  net after-tax losses from discontinued operations of $0.27 diluted earnings per share ("EPS") and $0.12 EPS, respectively, reflecting the earnings from discontinued operations, offset by the fourth quarter goodwill impairment charge. 

Tax Rate
The effective tax rate on continuing operations was 23.5% for the fourth quarters of 2012 and 2011.   On a full year basis, the effective tax rates on continuing operations for 2012 and 2011 were 26.8% and 23.5%, respectively.  The 2012 and 2011 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 28.5% and 25.4% for 2012 for 2011, respectively, and the full year rates were 28.2% and 27.5% for 2012 and 2011, respectively.  The higher rates for the quarter and full year of 2012 reflect the impact of a higher proportion of U.S. earnings, partly offset by lower effective tax rates in foreign jurisdictions.

Revenue Growth Factors


2012



Q1


Q2


Q3


Q4


Full Year

Organic

12.6

%


6.1

%


2.3

%


2.1

%


5.5

%

Acquisitions

5.9

%


7.8

%


4.8

%


4.8

%


5.8

%

Currency translation

(0.7)

%


(1.9)

%


(2.2)

%


(0.4)

%


(1.3)

%


17.8

%


12.0

%


4.9

%


6.5

%


10.0

%

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,


2012


2011


2012


2011

Free Cash Flow (dollars in thousands)








Cash flow provided by operating activities

$

570,659



$

330,106



$

1,261,160



$

948,864


Less: Capital expenditures

(88,163)



(78,301)



(297,012)



(262,676)


Free cash flow

$

482,496



$

251,805



$

964,148



$

686,188










Free cash flow as a percentage of revenue

24.0

%


13.3

%


11.9

%


9.3

%









Free cash flow as a percentage of earnings from continuing operations





115.7

%


88.7

%

 

The full year increase in 2012 free cash flow reflects higher earnings from continuing operations before depreciation and amortization and a $129 million positive change in working capital year-over-year, offset in part by higher capital expenditures in 2012 necessary to fund expansion in the Company's high-growth businesses.

Share Repurchases
During the year ended December 31, 2012, the Company purchased approximately 12.3 million shares of its common stock in the open market at an average price of $60.36 per share.  The repurchases through November 1 were made pursuant to the Company's standing five-year authorization, which was renewed in May of 2012.  At December 31, 2012, approximately 3.9 million shares remain authorized for repurchase under the current authorization, which expires in May of 2017.  Repurchases subsequent to November 1 were made pursuant to an additional share repurchase program approved in November 2012, which authorized $1 billion for share repurchases over the next 12 to 18 months.  At December 31, 2012, approximately $750 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, 2012


December 31, 2011

Current maturities of long-term debt


$

3,266



$

1,022


Commercial paper


607,500




Long-term debt


2,189,350



2,186,230


Total debt


2,800,116



2,187,252


Less: Cash and cash equivalents


(800,076)



(1,206,755)


Net debt


2,000,040



980,497


Add: Stockholders' equity


4,919,230



4,930,555


Net capitalization


$

6,919,270



$

5,911,052


Net debt to net capitalization


28.9

%


16.6

%

 

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.

SOURCE Dover



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