DOVER Corp - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - March 4, 2014

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EX-99.2 - EXHIBIT 99.2 - DOVER Corpa201403048-kexhibit992.htm


Exhibit 99.1
Dover Corporation
Unaudited Pro Forma Consolidated Financial Information

On February 28, 2014, Dover Corporation ("Dover") completed the previously announced distribution of 100% of the outstanding common stock of its previously wholly-owned subsidiary, Knowles Corporation ("Knowles"), to Dover shareholders as of close of trading on February 19, 2014 (the "Distribution").

The following unaudited pro forma consolidated statements of earnings of Dover for each of the years ended December 31, 2013, 2012, and 2011 give effect to the Distribution as if it occurred on January 1, 2011.  The following unaudited pro forma consolidated balance sheet of Dover as of December 31, 2013 gives effect to the Distribution as if it occurred on December 31, 2013.

The statements are presented based on information currently available and are intended for informational purposes only and do not purport to represent what Dover's results of operations and financial position actually would have been had the Distribution occurred on the dates indicated, or to project Dover's financial performance for any future period.  Beginning with Dover's quarterly report for first quarter of 2014, Knowles' historical financial results for periods prior to the Distribution will be reflected in Dover's consolidated financial statements within discontinued operations.

The information in the Knowles Separation column in the unaudited pro forma consolidated statements of earnings was derived from Dover's audited financial statements for the years ended December 31, 2013, 2012, and 2011, adjusted to include certain costs directly attributable to Knowles and to exclude corporate overhead costs that were previously allocated to Knowles for each period, as described in Knowles' Registration Statement on Form 10 (No. 001-36102). The information in the Knowles Separation column in the unaudited pro forma consolidated balance sheet was derived from Dover's audited financial statements as of December 31, 2013, adjusted to include certain liabilities that are directly attributable to Knowles.

The Pro Forma Adjustments column in the unaudited pro forma consolidated statements reflects additional pro forma adjustments which are described in the accompanying notes.

These unaudited pro forma consolidated financial statements should be read in conjunction with the related notes to these financial statements and with Dover's historical consolidated financial statements and the related notes included in Dover's previous filings with the Securities and Exchange Commission.






DOVER CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
YEAR ENDED DECEMBER 31, 2013
(In thousands, except per share amounts)

 
Dover Historical
 
Knowles Separation (A)
 
Pro Forma Adjustments
 
Notes
 
Pro Forma Dover Continuing Operations
Revenue
$
8,729,813

 
$
(1,215,719
)
 
$
1,559

 
(B)
 
$
7,515,653

Cost of goods and services
5,390,032

 
(781,525
)
 
1,559

 
(B)
 
4,610,066

Gross profit
3,339,781

 
(434,194
)
 
—

 
 
 
2,905,587

Selling and administrative expenses
1,985,849

 
(266,775
)
 
(30,093
)
 
(C)
 
1,688,981

Operating earnings
1,353,932

 
(167,419
)
 
30,093

 
 
 
1,216,606

Interest expense, net
120,742

 
(42,145
)
 
42,075

 
(D)
 
120,672

Other (income) expense, net
(4,222
)
 
(3,157
)
 
2,834

 
(E)
 
(4,545
)
Earnings before provision for income taxes
1,237,412

 
(122,117
)
 
(14,816
)
 
 
 
1,100,479

Provision for income taxes
271,607

 
5,985

 
(11,185
)
 
(F)
 
266,407

Earnings from continuing operations
$
965,805

 
$
(128,102
)
 
$
(3,631
)
 
 
 
$
834,072

 
 
 
 
 
 
 
 
 
 
Basic earnings per common share:
 
 
 
 
 
 
 
 
 
Earnings per share from continuing operations
$
5.64

 
 
 
 
 
 
 
$
4.87

Weighted average shares outstanding
171,271

 
 
 
 
 
 
 
171,271

 
 
 
 
 
 
 
 
 
 
Diluted earnings per common share:
 
 
 
 
 
 
 
 
 
Earnings per share from continuing operations
$
5.57

 
 
 
 
 
 
 
$
4.81

Weighted average shares outstanding
173,547

 
 
 
 
 
 
 
173,547





DOVER CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
YEAR ENDED DECEMBER 31, 2012
(In thousands, except per share amounts)

 
Dover Historical
 
Knowles Separation (A)
 
Pro Forma Adjustments
 
Notes
 
Pro Forma Dover Continuing Operations
Revenue
$
8,104,339

 
$
(1,124,757
)
 
$
1,873

 
(B)
 
$
6,981,455

Cost of goods and services
4,997,274

 
(719,968
)
 
1,873

 
(B)
 
4,279,179

Gross profit
3,107,065

 
(404,789
)
 
—

 
 
 
2,702,276

Selling and administrative expenses
1,841,688

 
(253,208
)
 
—

 
 
 
1,588,480

Operating earnings
1,265,377

 
(151,581
)
 
—

 
 
 
1,113,796

Interest expense, net
121,141

 
(56,667
)
 
56,794

 
(D)
 
121,268

Other expense (income), net
6,665

 
(3,686
)
 
4,044

 
(E)
 
7,023

Earnings before provision for income taxes
1,137,571

 
(91,228
)
 
(60,838
)
 
 
 
985,505

Provision for income taxes
304,452

 
9,962

 
(13,387
)
 
(F)
 
301,027

Earnings from continuing operations
$
833,119

 
$
(101,190
)
 
$
(47,451
)
 
 
 
$
684,478

 
 
 
 
 
 
 
 
 
 
Basic earnings per common share:
 
 
 
 
 
 
 
 
 
Earnings per share from continuing operations
$
4.59

 
 
 
 
 
 
 
$
3.77

Weighted average shares outstanding
181,551

 
 
 
 
 
 
 
181,551

 
 
 
 
 
 
 
 
 
 
Diluted earnings per common share:
 
 
 
 
 
 
 
 
 
Earnings per share from continuing operations
$
4.53

 
 
 
 
 
 
 
$
3.72

Weighted average shares outstanding
183,993

 
 
 
 
 
 
 
183,993





DOVER CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
YEAR ENDED DECEMBER 31, 2011
(In thousands, except per share amounts)

 
Dover Historical
 
Knowles Separation (A)
 
Pro Forma Adjustments
 
Notes
 
Pro Forma Dover Continuing Operations
Revenue
$
7,369,154

 
$
(983,223
)
 
$
672

 
(B)
 
$
6,386,603

Cost of goods and services
4,524,351

 
(604,153
)
 
672

 
(B)
 
3,920,870

Gross profit
2,844,803

 
(379,070
)
 
—

 
 
 
2,465,733

Selling and administrative expenses
1,720,954

 
(214,289
)
 
—

 
 
 
1,506,665

Operating earnings
1,123,849

 
(164,781
)
 
—

 
 
 
959,068

Interest expense, net
115,525

 
(39,934
)
 
39,894

 
(D)
 
115,485

Other (income) expense, net
(1,938
)
 
(5,772
)
 
6,051

 
(E)
 
(1,659
)
Earnings before provision for income taxes
1,010,262

 
(119,075
)
 
(45,945
)
 
 
 
845,242

Provision for income taxes
237,076

 
1,594

 
(8,884
)
 
(F)
 
229,786

Earnings from continuing operations
$
773,186

 
$
(120,669
)
 
$
(37,061
)
 
 
 
$
615,456

 
 
 
 
 
 
 
 
 
 
Basic earnings per common share:
 
 
 
 
 
 
 
 
 
Earnings per share from continuing operations
$
4.16

 
 
 
 
 
 
 
$
3.31

Weighted average shares outstanding
185,882

 
 
 
 
 
 
 
185,882

 
 
 
 
 
 
 
 
 
 
Diluted earnings per common share:
 
 
 
 
 
 
 
 
 
Earnings per share from continuing operations
$
4.09

 
 
 
 
 
 
 
$
3.26

Weighted average shares outstanding
188,887

 
 
 
 
 
 
 
188,887





DOVER CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 2013
(In thousands, except share and per share amounts)

 
Dover Historical
 
Knowles Separation (A)
 
Pro Forma Adjustments
 
Notes
 
Pro Forma Dover Continuing Operations
Current assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
803,882

 
$
(50,000
)
 
$
400,000

 
(G)
 
$
1,153,882

Receivables, net of allowances
1,359,101

 
(225,407
)
 
—

 
 
 
1,133,694

Inventories, net
926,998

 
(149,168
)
 
—

 
 
 
777,830

Prepaid and other current assets
75,550

 
(11,803
)
 
—

 
 
 
63,747

Deferred tax assets
74,631

 
—

 
(10,696
)
 
(H)
 
63,935

Total current assets
3,240,162

 
(436,378
)
 
389,304

 
 
 
3,193,088

Property, plant and equipment, net
1,182,982

 
(364,119
)
 
—

 
 
 
818,863

Goodwill
4,242,909

 
(961,916
)
 
—

 
 
 
3,280,993

Intangible assets, net
1,612,487

 
(318,310
)
 
—

 
 
 
1,294,177

Other assets and deferred charges
238,910

 
(22,925
)
 
(18,742
)
 
(H)
 
197,243

Assets of discontinued operations
320,722

 
—

 
—

 
 
 
320,722

Total assets
$
10,838,172

 
$
(2,103,648
)
 
$
370,562

 
 
 
$
9,105,086

 
 
 
 
 
 
 
 
 
 
Current liabilities:
 

 
 
 
 
 
 
 
 
Notes payable and current maturities of long-term debt
$
229,278

 
$
—

 
$
—

 
 
 
$
229,278

Accounts payable
692,565

 
(143,850
)
 
—

 
 
 
548,715

Accrued compensation and employee benefits
317,035

 
(43,631
)
 
—

 
 
 
273,404

Accrued insurance
93,000

 
(400
)
 
—

 
 
 
92,600

Other accrued expenses
260,911

 
(31,926
)
 
—

 
 
 
228,985

Federal and other taxes on income
22,791

 
9,858

 
17,012

 
(H)
 
49,661

Total current liabilities
1,615,580

 
(209,949
)
 
17,012

 
 
 
1,422,643

Long-term debt
2,599,201

 
—

 
—

 
 
 
2,599,201

Deferred income taxes
549,283

 
(49,836
)
 
(14,103
)
 
(H)
 
485,344

Other liabilities
514,086

 
(20,745
)
 
(15,593
)
 
(I)
 
477,748

Liabilities of discontinued operations
182,626

 
—

 
—

 
 
 
182,626

Stockholders' equity:
 

 
 
 


 
 
 
 
Preferred stock - $100 par value; 100,000 shares authorized; none issued
—

 
—

 
—

 
 
 
—

Common stock - $1 par value; 500,000,000 shares authorized; 255,320,345 and 254,119,478 shares issued at December 31, 2013 and December 31, 2012, respectively
255,320

 
—

 
—

 
 
 
255,320

Additional paid-in capital
871,575

 
—

 
—

 
 
 
871,575

Retained earnings
7,954,536

 
(1,787,774
)
 
383,246

 
(J)
 
6,550,008

Accumulated other comprehensive earnings
67,723

 
(35,344
)
 
—

 
 
 
32,379

Common stock in treasury
(3,771,758
)
 
—

 
—

 
 
 
(3,771,758
)
Total stockholders' equity
5,377,396

 
(1,823,118
)
 
383,246

 
 
 
3,937,524

Total liabilities and stockholders' equity
$
10,838,172

 
$
(2,103,648
)
 
$
370,562

 
 
 
$
9,105,086






DOVER CORPORATION
Notes to Unaudited Pro Forma Consolidated Financial Statements

(A)
The information in the Knowles Separation column in the unaudited pro forma consolidated statements of earnings was derived from Dover's audited financial statements for the years ended December 31, 2013, 2012, and 2011, adjusted to include certain costs directly attributable to Knowles and to exclude corporate overhead costs that were previously allocated to Knowles for each period. The information in the Knowles Separation column in the unaudited pro forma consolidated balance sheet was derived from Dover's audited financial statements as of December 31, 2013, adjusted to include certain liabilities that are directly attributable to Knowles. Knowles' cash balance is adjusted to reflect Knowles' expected cash balance on the date of Distribution.

(B)
Represents sales transactions, and related costs of goods and services, between Dover and Knowles that were previously eliminated in consolidation.

(C)
Represents one-time spin costs incurred by Dover through December 31, 2013. Dover expects to incur and pay total one-time costs associated with the separation from Knowles, including legal and advisory costs, in the range of $60.0 to $70.0 million.

(D)
Represents the pro forma adjustment to interest expense, net related to the intercompany net notes payable with Knowles that was settled prior to the date of Distribution.

(E)
Represents royalty income and management fees due to Dover from Knowles.

(F)
Represents the tax effect of pro forma adjustments to income before income taxes, resulting in pro forma Dover continuing operations effective tax rates of 24.2%, 30.5% and 27.2% for the years ended December 31, 2013, 2012 and 2011, respectively. Dover's effective tax rate following the Distribution could be either higher or lower than that used to calculate its pro forma provision for income taxes depending on activities subsequent to the separation of Knowles from Dover.

(G)
Represents the distribution of $400.0 million from Knowles to Dover immediately prior to the Distribution from proceeds of third-party debt incurred by Knowles on the date of Distribution.

(H)
Represents the tax impact of the separation of Knowles from Dover.

(I)
Represents liabilities assumed by Knowles upon the separation related to certain retirement benefits. Dover provides to certain management employees a deferred compensation plan and, through a non-qualified plan, supplemental retirement benefits in excess of qualified plan limits imposed by federal tax law. The benefit obligation attributable to Knowles' employees upon the Distribution for these plans will no longer be reflected on Dover’s consolidated balance sheet as of the date of Distribution.

(J)
Stockholders’ equity was adjusted for the pro forma adjustments specified in Notes (G), (H) and (I), including the distribution of $400.0 million from Knowles to Dover.


DOVER Corp Reports