DOVER Corp - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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8-K - FORM 8-K - DOVER Corp	form8k-012511.htm
EX-99.2 - EXHIBIT 99.2 - DOVER Corp	form8k-012511ex992.htm

Exhibit 99.1

CONTACT:	READ IT ON THE WEB
Paul Goldberg	www.dovercorporation.com
Vice President - Investor Relations
(212) 922-1640

DOVER CORPORATION REPORTS FOURTH QUARTER AND FULL YEAR 2011 RESULTS

●	Reports quarterly revenue of $2.0 billion, an increase of 15% over the prior year

●	Delivers quarterly diluted earnings per share from continuing operations of $1.12, up 15% over last year

●	Achieves adjusted quarterly diluted earnings per share from continuing operations of $1.07, excluding tax benefits of $0.05, up 19% from an adjusted prior year

●	Expects 2012 full year revenue growth of 7% - 10%, and diluted earnings per share from continuing operations in the range of $4.70 - $5.00

Downers Grove, Illinois, January 25, 2012 — Dover Corporation (NYSE: DOV) announced today that for the fourth quarter ended December 31, 2011, revenue was $2.0 billion, an increase of 15% over the prior-year period. The revenue increase was driven by organic growth of 6% and a 9% increase from acquisitions. Earnings from continuing operations for the fourth quarter of 2011 were $208.9 million, or diluted earnings per share (“EPS”) of $1.12, compared to $184.9 million, or $0.97 EPS, in the prior-year period, representing increases of 13% and 15%, respectively. Excluding the impact of tax benefits of $0.05 EPS recognized in the current quarter and $0.07 EPS recognized in the prior-year period, adjusted EPS from continuing operations for the fourth quarter of 2011 was $1.07, reflecting an increase of 19% over an adjusted EPS of $0.90 in the prior-year period.

Revenue for the year ended December 31, 2011 was $8.0 billion, an increase of 20% over the prior year, reflecting organic growth of 11%, a 7% increase from acquisitions and a 2% impact from foreign exchange. Earnings from continuing operations for the year ended December 31, 2011 were $846.4 million, or $4.48 EPS, compared to $690.8 million, or $3.65 EPS in the prior year, representing a 23% increase in both earnings and EPS. Excluding the impact of tax benefits of $0.22 EPS in the current year and $0.27 EPS in the prior year, adjusted EPS from continuing operations for the year ended December 31, 2011 was $4.26, an increase of 26% over an adjusted EPS of $3.38 in the prior year.

Commenting on the fourth quarter results, Dover’s President and Chief Executive Officer, Robert A. Livingston, said, “Capped off by a solid fourth quarter, Dover delivered a record setting 2011 in terms of revenue, earnings, EPS and bookings. Organic revenue growth in the fourth quarter of 6% was driven by broad-based strength in energy, handsets, fluids, and industrial end-markets. Our segment margin was 16.5%, where solid performances in our Energy, Communication Technologies and Engineered Systems segments partially offset weakness in Printing & Identification and acquisition-related costs. The majority of our businesses continued to book well as we ended the year with a seasonally normal book-to-bill of 1.00.”

“In addition to our strong financial results, we accomplished several important strategic initiatives in 2011. Importantly, we realigned our businesses into a new segment structure to more closely match our targeted growth markets. We also deployed $1.4 billion in 2011 on acquisitions and divested three businesses consistent with our strategy of focusing on our growth spaces. Lastly, we generated nearly $800 million in free cash flow, which enabled us to aggressively invest in higher growth economies and innovation, and to continue our long tradition of raising our annual dividend, now standing at 56 consecutive years.”

“Looking forward, we expect full year 2012 revenue growth of 7% - 10%, comprising organic revenue growth of 4% - 7%, plus growth from completed acquisitions of 3%. Based on this revenue assumption, we expect full-year diluted EPS from continuing operations to be in the range of $4.70 - $5.00.”

Net earnings for the fourth quarter of 2011 were $278.3 million, or $1.49 EPS, including net income from discontinued operations of $69.4 million, or $0.37 EPS (inclusive of a $0.34 EPS gain on the sale of a business), compared to net earnings of $198.3 million, or $1.04 EPS, for the same period of 2010, which included net income from discontinued operations of $13.4 million, or $0.07 EPS. Net earnings for the year ended December 31, 2011 were $895.2 million, or $4.74 EPS, including net income from discontinued operations of $48.9 million, or $0.26 EPS (inclusive of a $0.02 EPS net loss, primarily reflecting the sale of three businesses), compared to net earnings of $700.1 million, or $3.70 EPS for the year ended December 31, 2010, which included net income from discontinued operations of $9.4 million, or $0.05 EPS.

Dover will host a webcast of its fourth quarter 2011 conference call at 10:00 A.M. Eastern Time (9:00 A.M. Central Time) on Wednesday, January 25, 2012. The webcast can be accessed at the Dover Corporation 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 and full year 2011 results and its operating companies can also be found on the company’s website.

About Dover:

Dover Corporation is a multi-billion dollar diversified global manufacturer. For over 50 years, Dover has been providing its customers with outstanding products and services that reflect the company’s commitment to operational excellence, innovation and market leadership. The company focuses on innovative equipment and components, specialty systems and support services through its four segments: Communication Technologies, Energy, Engineered Systems and Printing & Identification. Dover employs over 33,000 people worldwide. The company is headquartered in Downers Grove, Illinois. Additional information is available 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, 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, the state of the worldwide economy and sovereign credit, especially in Europe; political events that could impact 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; current economic conditions and uncertainties in the credit and capital markets; a downgrade in Dover’s credit ratings; international economic conditions including interest rate and currency exchange rate fluctuations; 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 and tax policies (including domestic and international 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; the cyclical nature of some of Dover’s companies; domestic housing industry weakness; instability in countries where Dover conducts business; and possible future terrorist threats and their effect on the worldwide economy. Dover Corporation 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 Corporation undertakes no obligation to update any forward-looking statement.

INVESTOR SUPPLEMENT - FOURTH QUARTER 2011

DOVER CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

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

	Three Months Ended December 31,						Year Ended Ended December 31,
	2011			2010			2011		2010
Revenue	$	2,004,486		$	1,737,436		$	7,950,140	$	6,640,191
Cost of goods and services		1,247,091			1,050,664			4,898,716		4,023,586
Gross profit		757,395			686,772			3,051,424		2,616,605
Selling and administrative expenses		462,143			427,198			1,840,609		1,607,327
Operating earnings		295,252			259,574			1,210,815		1,009,278
Interest expense, net		29,060			25,930			115,596		106,422
Other (income) expense, net		(2,658	)		(237	)		55		3,652
Earnings before provision for income taxes and discontinued operations		268,850			233,881			1,095,164		899,204
Provision for income taxes		59,912			48,975			248,799		208,453
Earnings from continuing operations		208,938			184,906			846,365		690,751
Earnings from discontinued operations, net		69,351			13,442			48,878		9,353
Net earnings	$	278,289		$	198,348		$	895,243	$	700,104


Basic earnings per common share:
Earnings from continuing operations	$	1.13		$	0.99		$	4.55	$	3.70
Earnings from discontinued operations, net		0.38			0.07			0.26		0.05
Net earnings		1.51			1.06			4.82		3.75

Weighted average shares outstanding		184,686			186,923			185,882		186,897


Diluted earnings per common share:
Earnings from continuing operations	$	1.12		$	0.97		$	4.48	$	3.65
Earnings from discontinued operations, net		0.37			0.07			0.26		0.05
Net earnings		1.49			1.04			4.74		3.70

Weighted average shares outstanding		187,208			189,863			188,887		189,170


Dividends paid per common share	$	0.315		$	0.275		$	1.18	$	1.07

DOVER CORPORATION

QUARTERLY SEGMENT INFORMATION

(unaudited)(in thousands)

	2011															2010
		Q1			Q2			Q3			Q4		FY 2011				Q1			Q2			Q3			Q4		FY 2010
REVENUE
Communication Technologies	$	269,582		$	288,843		$	405,357		$	396,295		$	1,360,077		$	246,531		$	269,107		$	280,031		$	280,343		$	1,076,012

Energy		425,424			454,327			510,608			510,390			1,900,749			296,792			319,305			326,149			361,261			1,303,507

Engineered Systems
Fluid Solutions		163,196			178,031			173,804			162,590			677,621			134,542			139,218			150,302			143,852			567,914
Refrigeration & Industrial		560,453			645,573			649,768			568,844			2,424,638			487,588			581,187			620,030			531,039			2,219,844
Eliminations		(382	)		(424	)		(431	)		(287	)		(1,524	)		(252	)		(365	)		(354	)		(345	)		(1,316	)
		723,267			823,180			823,141			731,147			3,100,735			621,878			720,040			769,978			674,546			2,786,442

Printing & Identification		394,627			429,497			400,515			368,325			1,592,964			316,472			356,732			381,636			421,990			1,476,830

Intra-segment eliminations		(822	)		(877	)		(1,015	)		(1,671	)		(4,385	)		(618	)		(737	)		(541	)		(704	)		(2,600	)

Total consolidated revenue	$	1,812,078		$	1,994,970		$	2,138,606		$	2,004,486		$	7,950,140		$	1,481,055		$	1,664,447		$	1,757,253		$	1,737,436		$	6,640,191

NET EARNINGS
Segment Earnings:
Communication Technologies	$	47,325		$	54,527		$	53,433		$	71,097		$	226,382		$	46,125		$	52,593		$	55,852		$	50,645		$	205,215
Energy		93,051			110,447			125,268			121,871			450,637			68,277			81,552			78,959			87,325			316,113
Engineered Systems		98,235			128,570			125,529			92,852			445,186			81,038			106,590			115,878			79,138			382,644
Printing & Identification		54,637			67,967			59,447			44,483			226,534			42,043			54,759			62,471			78,095			237,368
Total Segments		293,248			361,511			363,677			330,303			1,348,739			237,483			295,494			313,160			295,203			1,141,340
Corporate expense / other		36,112			35,391			34,083			32,393			137,979			33,325			32,444			34,553			35,392			135,714
Net interest expense		28,318			28,157			30,061			29,060			115,596			27,188			26,955			26,349			25,930			106,422
Earnings from continuing operations before provision for income taxes		228,818			297,963			299,533			268,850			1,095,164			176,970			236,095			252,258			233,881			899,204
Provision for income taxes		54,027			58,765			76,095			59,912			248,799			54,682			68,869			35,927			48,975			208,453
Earnings from continuing operations		174,791			239,198			223,438			208,938			846,365			122,288			167,226			216,331			184,906			690,751
Earnings (loss) from discontinued operations, net		20,114			10,571			(51,158	)		69,351			48,878			(14,161	)		2,644			7,428			13,442			9,353
Net earnings	$	194,905		$	249,769		$	172,280		$	278,289		$	895,243		$	108,127		$	169,870		$	223,759		$	198,348		$	700,104

SEGMENT OPERATING MARGIN
Communication Technologies		17.6	%		18.9	%		13.2	%		17.9	%		16.6	%		18.7	%		19.5	%		19.9	%		18.1	%		19.1	%
Energy		21.9	%		24.3	%		24.5	%		23.9	%		23.7	%		23.0	%		25.5	%		24.2	%		24.2	%		24.3	%
Engineered Systems		13.6	%		15.6	%		15.2	%		12.7	%		14.4	%		13.0	%		14.8	%		15.0	%		11.7	%		13.7	%
Printing & Identification		13.8	%		15.8	%		14.8	%		12.1	%		14.2	%		13.3	%		15.4	%		16.4	%		18.5	%		16.1	%
Total Segment		16.2	%		18.1	%		17.0	%		16.5	%		17.0	%		16.0	%		17.8	%		17.8	%		17.0	%		17.2	%

DEPRECIATION AND AMORTIZATION EXPENSE
Communication Technologies	$	18,685		$	18,533		$	34,360		$	30,261		$	101,839		$	17,345		$	17,494		$	18,081		$	19,342		$	72,262
Energy		18,573			18,765			19,399			21,082			77,819			11,511			12,349			11,942			13,040			48,842
Engineered Systems		18,415			18,816			18,332			19,213			74,776			18,194			17,775			18,434			18,123			72,526
Printing & Identification		11,372			11,685			11,548			11,543			46,148			11,857			11,556			11,322			11,567			46,302
Corporate		586			626			636			713			2,561			369			336			658			674			2,037
	$	67,631		$	68,425		$	84,275		$	82,812		$	303,143		$	59,276		$	59,510		$	60,437		$	62,746		$	241,969

DOVER CORPORATION

QUARTERLY SEGMENT INFORMATION

(continued)

(unaudited)(in thousands)

	2011															2010
		Q1			Q2			Q3			Q4		FY 2011				Q1			Q2			Q3			Q4		FY 2010
BOOKINGS
Communication Technologies	$	274,611		$	309,734		$	410,616		$	349,579		$	1,344,540		$	257,767		$	304,026		$	278,686		$	287,786		$	1,128,265

Energy		495,125			472,543			498,212			519,525			1,985,405			300,441			326,217			326,080			366,277			1,319,015

Engineered Systems
Fluids		173,626			175,539			174,772			158,895			682,832			136,459			147,215			145,823			144,389			573,886
Refrigeration & Industrial		660,449			623,929			602,488			625,840			2,512,706			596,293			605,034			527,269			563,300			2,291,896
Eliminations		(733	)		(884	)		179			(1,378	)		(2,816	)		(486	)		(638	)		(640	)		(648	)		(2,412	)
		833,342			798,584			777,439			783,357			3,192,722			732,266			751,611			672,452			707,041			2,863,370

Printing & Identification		438,526			386,259			384,085			353,849			1,562,719			370,598			404,088			399,788			398,570			1,573,044

Intra-segment eliminations		(2,736	)		(3,370	)		(2,452	)		(3,153	)		(11,711	)		(1,641	)		(2,317	)		(2,396	)		(2,689	)		(9,043	)

Total consolidated bookings	$	2,038,868		$	1,963,750		$	2,067,900		$	2,003,157		$	8,073,675		$	1,659,431		$	1,783,625		$	1,674,610		$	1,756,985		$	6,874,651

BACKLOG
Communication Technologies	$	410,843		$	431,558		$	483,512		$	437,320					$	347,980		$	381,828		$	396,581		$	404,374

Energy		240,198			255,889			243,401			246,351						123,456			128,058			136,374			152,183

Engineered Systems
Fluids		57,357			54,945			55,230			54,194						42,882			50,346			46,556			47,123
Refrigeration & Industrial		544,995			523,011			469,876			528,118						480,604			502,479			413,318			446,267
Eliminations		(339	)		(526	)		(94	)		(177	)					(189	)		(324	)		(267	)		(315	)
		602,013			577,430			525,012			582,135						523,297			552,501			459,607			493,075

Printing & Identification		262,629			220,619			197,792			180,871						166,439			209,178			235,360			213,589

Intra-segment eliminations		(704	)		(1,178	)		(891	)		(193	)					(362	)		(569	)		(483	)		(729	)

Total consolidated backlog	$	1,514,979		$	1,484,318		$	1,448,826		$	1,446,484					$	1,160,810		$	1,270,996		$	1,227,439		$	1,262,492

DOVER CORPORATION 

QUARTERLY EARNINGS PER SHARE

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

	2011											2010
		Q1		Q2		Q3			Q4	FY 2011			Q1			Q2		Q3		Q4	FY 2010

Basic earnings (loss) per common share:
Continuing operations	$	0.94	$	1.28	$	1.20		$	1.13	$	4.55	$	0.65		$	0.90	$	1.16	$	0.99	$	3.70
Discontinued operations		0.11		0.06		(0.28	)		0.38		0.26		(0.08	)		0.01		0.04		0.07		0.05
Net earnings		1.04		1.34		0.93			1.51		4.82		0.58			0.91		1.20		1.06		3.75

Diluted earnings (loss) per common share:
Continuing operations	$	0.92	$	1.26	$	1.19		$	1.12	$	4.48	$	0.65		$	0.89	$	1.15	$	0.97	$	3.65
Discontinued operations		0.11		0.06		(0.27	)		0.37		0.26		(0.08	)		0.01		0.04		0.07		0.05
Net earnings		1.03		1.32		0.91			1.49		4.74		0.58			0.90		1.19		1.04		3.70

Adjusted diluted earnings per common share (calculated below):
Continuing operations	$	0.88	$	1.14	$	1.18		$	1.07	$	4.26	$	0.65		$	0.89	$	0.95	$	0.90	$	3.38


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

Net earnings (loss) :
Continuing operations	$	174,791	$	239,198	$	223,438		$	208,938	$	846,365	$	122,288		$	167,226	$	216,331	$	184,906	$	690,751
Discontinued operations		20,114		10,571		(51,158	)		69,351		48,878		(14,161	)		2,644		7,428		13,442		9,353
Net earnings		194,905		249,769		172,280			278,289		895,243		108,127			169,870		223,759		198,348		700,104

Average shares outstanding:
Basic		186,659		186,443		185,770			184,686		185,882		187,093			186,823		186,721		186,923		186,897
Diluted		190,090		189,705		188,436			187,208		188,887		187,886			188,720		188,565		189,863		189,170

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:

	2011										2010
		Q1		Q2		Q3		Q4	FY 2011			Q1		Q2		Q3		Q4	FY 2010
Adjusted earnings from continuing operations:
Earnings from continuing operations	$	174,791	$	239,198	$	223,438	$	208,938	$	846,365	$	122,288	$	167,226	$	216,331	$	184,906	$	690,751
Gains from discrete and other tax items		8,016		22,338		2,390		8,590		41,334		-		-		36,956		13,296		50,252
Adjusted earnings from continuing operations	$	166,775	$	216,860	$	221,048	$	200,348	$	805,031	$	122,288	$	167,226	$	179,375	$	171,610	$	640,499

Adjusted diluted earnings per common share:
Earnings from continuing operations	$	0.92	$	1.26	$	1.19	$	1.12	$	4.48	$	0.65	$	0.89	$	1.15	$	0.97	$	3.65
Gains from discrete and other tax items		0.04		0.12		0.01		0.05		0.22		-		-		0.20		0.07		0.27
Adjusted earnings from continuing operations	$	0.88	$	1.14	$	1.18	$	1.07	$	4.26	$	0.65	$	0.89	$	0.95	$	0.90	$	3.38

DOVER CORPORATION 

QUARTERLY FREE CASH FLOW

(unaudited)(in thousands)

	2011															2010
		Q1			Q2			Q3			Q4		FY 2011				Q1			Q2			Q3			Q4		FY 2010

Cash from operations	$	117,503		$	205,260		$	376,614		$	358,852		$	1,058,229		$	77,127		$	221,561		$	183,444		$	419,730		$	901,862
Less: Additions to property, plant and equipment		(51,379	)		(72,338	)		(65,000	)		(83,092	)		(271,809	)		(38,467	)		(45,642	)		(39,718	)		(51,018	)		(174,845	)
Free cash flow	$	66,124		$	132,922		$	311,614		$	275,760		$	786,420		$	38,660		$	175,919		$	143,726		$	368,712		$	727,017

Free cash flow as a percentage of earnings from continuing operations		37.8	%		55.6	%		139.5	%		132.0	%		92.9	%		31.6	%		105.2	%		66.4	%		199.4	%		105.3	%

Free cash flow as a percentage of revenue		3.6	%		6.7	%		14.6	%		13.8	%		9.9	%		2.6	%		10.6	%		8.2	%		21.2	%		10.9	%

DOVER CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEET

(unaudited)(in thousands)

	At December 31, 2011		At December 31, 2010
Assets:
Cash and cash equivalents	$	1,206,755	$	1,189,079
Short-term investments		-		121,734
Receivables, net of allowances		1,190,265		1,023,099
Inventories, net		803,346		657,962
Deferred tax and other current assets		196,764		139,751
Property, plant and equipment, net		1,000,870		785,624
Goodwill		3,787,117		3,107,478
Intangible assets, net		1,207,084		799,281
Other assets		104,808		107,642
Assets of discontinued operations		4,441		627,093
	$	9,501,450	$	8,558,743

Liabilities and Stockholders' Equity
Notes payable and current maturities of long-term debt	$	1,022	$	16,590
Payables and accrued expenses		1,201,959		1,128,458
Deferred taxes and other noncurrent liabilities		1,061,767		866,720
Long-term debt		2,186,230		1,790,886
Liabilities of discontinued operations		119,917		229,527
Stockholders' equity		4,930,555		4,526,562
	$	9,501,450	$	8,558,743

DOVER CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(unaudited)(in thousands)

	Year Ended December 31,
	2011			2010
Operating activities:
Net earnings	$	895,243		$	700,104
Gain from discontinued operations, net of tax		(48,878	)		(9,353	)
Depreciation and amortization		303,143			241,969
Stock-based compensation		25,991			21,207
Contributions to employee benefit plans		(63,567	)		(58,201	)
Net change in assets and liabilities		(53,703	)		6,136
Net cash provided by operating activities of continuing operations		1,058,229			901,862

Investing activities:
Proceeds from sale of short-term investments		124,410			553,466
Purchase of short-term investments		-			(466,881	)
Proceeds from the sale of property and equipment		9,986			16,660
Additions to property, plant and equipment		(271,809	)		(174,845	)
Proceeds from sale of businesses		516,901			4,500
Settlement of net investment hedge		(18,211	)		-
Acquisitions (net of cash acquired)		(1,382,217	)		(104,418	)
Net cash used in investing activities of continuing operations		(1,020,940	)		(171,518	)

Financing activities:
Increase (decrease) in debt, net		371,315			(60,855	)
Purchase of common stock		(242,488	)		(123,555	)
Proceeds from exercise of stock options, including tax benefits		39,826			79,721
Dividends to stockholders		(219,154	)		(200,099	)
Net cash used in financing activities of continuing operations		(50,501	)		(304,788	)

Net cash provided by discontinued operations		14,898			37,079

Effect of exchange rate changes on cash		15,990			10,008

Net increase in cash and cash equivalents		17,676			472,643
Cash and cash equivalents at beginning of period		1,189,079			716,436
Cash and cash equivalents at end of period	$	1,206,755		$	1,189,079

ADDITIONAL INFORMATION

FOURTH QUARTER AND FULL YEAR 2011

Acquisitions

During the fourth quarter of 2011, the Company completed two add-on acquisitions in the Engineered Systems segment. For the full year 2011, Dover made a total of nine acquisitions for consideration totaling $1.4 billion. This included the acquisition of Harbison-Fischer within the Energy segment in the first quarter and the acquisition of Sound Solutions within the Communication Technologies segment in the third quarter.

Dispositions

In the fourth quarter of 2011, the Company completed the sale of Heil Trailer International, resulting in an after-tax gain of $0.34 diluted earnings per share ("EPS"). Fourth quarter net earnings from discontinued operations was $0.37 EPS, which includes income from the operations of Heil prior to sale as well as adjustments to other discontinued assets and liabilities. On a full-year basis, the Company generated a net loss on sale of $0.02 EPS, which includes the $0.35 EPS loss on the sale of Paladin and Crenlo in the third quarter and other adjustments for prior year dispositions. For the full year, net earnings from discontinued operations was $0.26 EPS, which includes income from the operations of the businesses sold in 2011 as well as adjustments to other discontinued assets and liabilities.

Tax Rate

The effective tax rate on continuing operations for the fourth quarter of 2011 was 22.3%, compared to the prior-year fourth quarter rate of 20.9%. On a full year basis, the effective tax rates on continuing operations for 2011 and 2010 were 22.7% and 23.2%, respectively. The 2011 and 2010 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 full year rates of 26.5% for 2011 and 28.8% for 2010 primarily reflect the impact of changes in the geographic mix of earnings.

Revenue Growth Factors

	2011
	Q1	Q2	Q3	Q4	Full Year
Organic	17.5%	13.2%	9.7%	5.9%	11.3%
Acquisitions	4.1%	3.9%	9.2%	9.4%	6.8%
Currency translation	0.8%	2.8%	2.8%	0.1%	1.6%
	22.4%	19.9%	21.7%	15.4%	19.7%

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,						Year Ended December 31,
Free Cash Flow (in thousands)	2011			2010			2011			2010
Cash flow provided by operating activities	$	358,852		$	419,730		$	1,058,229		$	901,862
Less: Additions to property, plant and equipment		(83,092	)		(51,018	)		(271,809	)		(174,845	)
Free cash flow	$	275,760		$	368,712		$	786,420		$	727,017

Free cash flow as a percentage of revenue		13.8	%		21.2	%		9.9	%		10.9	%

Free cash flow as a percentage of earnings from continuing operations								92.9	%		105.3	%

The full year increase in 2011 free cash flow reflects higher earnings from continuing operations before depreciation and amortization and lower investment in working capital, partially offset by higher tax payments in 2011. In 2011, the Company made tax payments of approximately $280 million compared to $103 million in the prior year. Free cash flow is also impacted by higher capital expenditures in 2011 necessary to fund expansion in the Company’s high-growth businesses.

Share Repurchases

During the year ended December 31, 2011, pursuant to a five-year 10,000,000 share repurchase program authorized by the Board of Directors in May 2007, the Company purchased approximately 4.0 million shares of its common stock in the open market at an average price of $58.78 per share. Approximately 2.5 million shares remain authorized for repurchase under this five-year authorization as of December 31, 2011.

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)		At December 31, 2011	At December 31, 2010
Current maturities of long-term debt	$	1,022	$ 1,590
Commercial paper		-	15,000
Long-term debt		2,186,230	1,790,886
Total debt		2,187,252	1,807,476
Less: Cash, cash equivalents and short-term investments		(1,206,755)	(1,310,813)
Net debt		980,497	496,663
Add: Stockholders' equity		4,930,555	4,526,562
Net capitalization	$	5,911,052	$ 5,023,225
Net debt to net capitalization		16.6%	9.9%

The Company’s net debt to net capitalization ratio increased at December 31, 2011 primarily due to the use of cash and debt to fund acquisitions totaling $1.4 billion during the year. Total debt increased by $380 million during 2011, primarily due to net borrowings of $789 million under the 4.3% 10-year Notes due 2021 and 5.375% 30-year Notes due 2041 issued in February, part of which were used to repay $400 million of other borrowings, principally commercial paper used to repay the 6.50% 10-year Notes which came due earlier in February 2011. In 2011, the Company also received cash proceeds of $517 million primarily from the sale of three businesses.

Non-GAAP Information:

These Investor Supplement tables contain historical financial information presented under Dover’s new segment structure, as discussed within this release. These segment level disclosures are considered “Non-GAAP” financial information until such time that the new segment reporting structure is included within a periodic filing with the Securities and Exchange Commission. Management believes this non-GAAP financial information is useful to investors to better understand historical trends under the revised segment structure, which the company will be reporting under in its Form 10-K for the year ending December 31, 2011. Dover has disclosed herein 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 the non-GAAP measure of free cash flow. Management believes free cash flow is an important measure of the company's operating performance and liquidity that provides both management and investors a measurement of cash generated from operations that is available to fund acquisitions, pay dividends, repay debt and repurchase its common stock.

Attached files

DOVER Corp Reports

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