Document



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________________ 

FORM 8-K
________________________________
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 29, 2019 
________________________________
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12658912&doc=3
(Exact name of registrant as specified in its charter)
________________________________
 
State of Delaware 1-4018 53-0257888 
(State or other jurisdiction of incorporation)  (Commission File Number) (I.R.S. Employer Identification No.) 
      
3005 Highland Parkway     
Downers Grove, Illinois   60515 
(Address of principal executive offices)   (Zip Code) 
(630) 541-1540
(Registrant’s telephone number, including area code)
 ______________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
¨Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) 
¨Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) 
¨Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) 
¨Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) 
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨




Item 2.02 Results of Operations and Financial Condition.
 
On January 29, 2019, Dover Corporation ("Dover") issued the Press Release attached hereto as Exhibit 99.1 announcing its results of operations for the quarter and year ended December 31, 2018.
 
The information in this Current Report on Form 8-K, including the exhibit, is being furnished to the Securities and Exchange Commission (the “SEC”) and shall not be deemed to be incorporated by reference into any of Dover’s filings with the SEC under the Securities Act of 1933, as amended.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

The following exhibit is furnished as part of this report:
 
99.1 Press Release dated January 29, 2019. 





SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned hereunto duly authorized.
    
Date:January 29, 2019DOVER CORPORATION 
  (Registrant) 
      
  By: /s/ Ivonne M. Cabrera
    Ivonne M. Cabrera
    Senior Vice President, General Counsel & Secretary 
      



Document

Exhibit 99.1

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12658912&doc=4 

Investor Contact:Media Contact:
Andrey Galiuk Adrian Sakowicz
Vice President - Corporate Development Vice President - Communications
and Investor Relations (630) 743-5039
(630) 743-5131asakowicz@dovercorp.com 
agaliuk@dovercorp.com 

DOVER REPORTS FOURTH QUARTER ORGANIC REVENUE UP 6.2%; COST SAVING INITIATIVES ON TRACK TO DELIVER IN 2019

Reports fourth quarter and full year 2018 revenue of $1.8 billion and $7.0 billion, respectively, reflecting organic growth of 6.2% for the quarter and 3.7% for the year.
Generates fourth quarter and full year 2018 diluted earnings per share from continuing operations on a GAAP basis of $1.07 and $3.89, respectively.
Delivers fourth quarter and full year 2018 adjusted diluted earnings per share from continuing operations of $1.43 and $4.97, respectively, an increase of 25% for the quarter and 20% for the year.
Provides 2019 guidance, reflecting 2% to 4% organic revenue growth and adjusted diluted earnings per share from continuing operations of $5.65 to $5.85.

DOWNERS GROVE, Ill., January 29, 2019 — Dover (NYSE: DOV), a diversified global manufacturer, announced its financial results for the fourth quarter and full year ended December 31, 2018.

Fourth Quarter 2018 Financial Results:

For the fourth quarter ended December 31, 2018, Dover's revenue was $1.8 billion, which represents organic growth of 6.2%. Net earnings on a GAAP basis for the fourth quarter ended December 31, 2018, were $141.6 million, compared to net earnings of $296.4 million in the prior year period, including the results of discontinued operations.

Earnings from continuing operations were $158.0 million, a decrease of 45% as compared to $289.6 million for the prior year period, largely driven by a $110.0 million net benefit from a disposition (net of disposition costs) and a $54.9 million net benefit from the Tax Cuts and Jobs Act (the "Tax Reform Act"), both realized in the fourth quarter of 2017. Diluted earnings per share from continuing operations ("EPS") on a GAAP basis for the fourth quarter ended December 31, 2018, was $1.07, compared to $1.83 for the fourth quarter in the prior year.

For the fourth quarter ended December 31, 2018, earnings from continuing operations included acquisition-related amortization costs of $26.3 million and rightsizing and other costs of $29.6 million, representing $0.18 of EPS and $0.20 of EPS, respectively. In addition, the fourth quarter included a $2.8 million tax benefit ($0.02 of EPS) related to additional Tax Reform Act regulatory guidance covered by SAB 118. Excluding these items, adjusted earnings from continuing operations for the fourth quarter ended December 31, 2018, were $211.0 million (+17% over the comparable period in 2017), and adjusted EPS was $1.43 (+25% over the comparable period in 2017).

The adjusted EPS in the quarter was positively impacted by $0.08 due to a lower annualized effective tax rate (“ETR”) and discrete tax items.




Full Year 2018 Financial Results:

For the full year ended December 31, 2018, Dover's revenue was $7.0 billion, driven by organic growth of 3.7%. Net earnings on a GAAP basis for the full year ended December 31, 2018, were $570.3 million, compared to net earnings of $811.7 million in the prior year. Full year 2018 results include a loss from discontinued operations of $20.9 million and the full year 2017 results include earnings from discontinued operations of $65.0 million attributable to Apergy Corporation, which was spun off in the second quarter of 2018.

Earnings from continuing operations were $591.1 million, a decrease of 21% compared to $746.7 million for the prior year, largely driven by net benefits from dispositions and a net benefit from the Tax Reform Act realized in 2017. Diluted EPS on a GAAP basis for the full year ended December 31, 2018, was $3.89, compared to $4.73 in the prior year.

For the full year ended December 31, 2018, earnings from continuing operations included acquisition-related amortization costs of $109.3 million and rightsizing and other costs of $58.3 million, representing $0.72 of EPS and $0.38 of EPS, respectively. In addition, the year included a $2.8 million benefit ($0.02 of EPS) related to additional Tax Reform Act regulatory guidance covered by SAB 118. Excluding these items, adjusted earnings from continuing operations for the full year ended December 31, 2018, were $755.9 million (+15% over full year 2017), and adjusted EPS was $4.97 (+20% over full year 2017).

Free cash flow for the year was $618.2 million, representing 8.8% cash conversion of revenue. Excluding $52.0 million of cash costs from restructuring initiatives, cash conversion was 9.6% of revenue. Capital expenditures from continuing operations for 2018 were $171.0 million, an increase of 1% compared to $170.1 million for the prior year.

The ETR for full year 2018 was 21.4% when normalized for discrete tax benefits, excluding additional Tax Reform Act regulatory guidance covered by SAB 118. The estimate for 2019 ETR is between 21%-23%.

A reconciliation between GAAP and adjusted earnings and EPS from continuing operations for the fourth quarter and full year ended December 31, 2018 is included as an exhibit herein.

Full Year 2019 Guidance:

In 2019, Dover expects to generate adjusted EPS in the range of $5.65 to $5.85. This guidance is based on full year revenue growth of 2% to 3%, comprised of 2% to 4% organic growth and a 1% impact from completed acquisitions, partially offset by an estimated 2% unfavorable impact from foreign currency exchange. 2019 guidance does not include restructuring charges, including charges expected to be incurred as part of Dover’s footprint consolidation initiatives.

A full reconciliation between forecasted GAAP and forecasted adjusted measures is included as an exhibit herein.

Completion of Belanger Acquisition:

On January 25, 2019, Dover announced the completion of its acquisition of the Belanger, Inc. business, a leading full-line car wash equipment manufacturer. With 2018 sales of approximately $55 million, Belanger employs more than 150 people and is headquartered in Northville, Michigan. Belanger now joins OPW within Dover's Fluids segment, and together with PDQ Vehicle Wash Systems, the combined offering will provide customers with a full set of vehicle wash solutions. Dover expects the acquisition to be accretive to margins and adjusted EPS in 2019 and to achieve double-digit return on capital in three years, consistent with Dover’s capital deployment criteria. 

Management Commentary:

Dover’s President and Chief Executive Officer, Richard J. Tobin, said, “Dover's solid results for the quarter and the year reflect broad-based demand strength in Engineered Systems and Fluids, which posted 2018 annual organic growth of 5.8% and 8.7%, respectively, and more than offset weak demand in



Refrigeration & Food Equipment. Our $7.0 billion of revenue for the year reflects an organic growth rate of 3.7%, while adjusted net earnings and adjusted EPS improved 15% and 20%, respectively.

"Dover enters 2019 with solid momentum as represented by our Q4 organic growth rate, solid order backlogs across most of our portfolio, and margin expansion being driven by volume and cost initiatives. Our productivity and footprint initiatives are underway with several in the execution phase, and we have begun to reinvest a portion of our savings from rightsizing initiatives into our digital capabilities and customer-facing platforms.

“We believe we are well-positioned to deliver top-line growth and strong double-digit EPS accretion in 2019. Our guidance reflects a constructive demand environment, continued focus on our margin improvement and rightsizing programs, as well as disciplined deployment of capital, underscored by our recent acquisition of Belanger."

Conference Call Information:

Dover will host a webcast and conference call to discuss its fourth quarter and full year 2018 results and 2019 guidance at 10:00 A.M. Eastern Time (9:00 A.M. Central Time) on Tuesday, January 29, 2019. The webcast can be accessed on the Dover website at 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 results and its operating segments can be found on the Company’s website.

About Dover:

Dover is a diversified global manufacturer with annual revenue of approximately $7 billion. We deliver innovative equipment and components, specialty systems, consumable supplies, software and digital solutions, and support services through three operating segments: Engineered Systems, Fluids and Refrigeration & Food Equipment. Dover combines global scale with operational agility to lead the markets we serve. Recognized for our entrepreneurial approach for over 60 years, our team of 24,000 employees takes an ownership mindset, collaborating with customers to redefine what’s possible. Headquartered in Downers Grove, Illinois, Dover trades on the New York Stock Exchange under “DOV.” Additional information is available at dovercorporation.com.

Forward-Looking Statements:

This press release contains "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. All statements in this document other than statements of historical fact are statements that are, or could be deemed, “forward-looking” statements. Forward-looking statements are subject to numerous important risks, uncertainties, assumptions and other factors, some of which are beyond the Company’s control. Factors that could cause actual results to differ materially from current expectations include, among other things, general economic conditions and conditions in the particular markets in which we operate, changes in customer demand and capital spending, competitive factors and pricing pressures, our ability to develop and launch new products in a cost-effective manner, and our ability to realize synergies from newly acquired businesses. For details on the risks and uncertainties that could cause our results to differ materially from the forward-looking statements contained herein, we refer you to the documents we file with the Securities and Exchange Commission, including our Annual Report on Form 10-K/A for the year ended December 31, 2017, and our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. These documents are available from the Securities and Exchange Commission, and on our website, dovercorporation.com. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.







INVESTOR SUPPLEMENT - FOURTH QUARTER AND FULL YEAR 2018 

DOVER CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)(in thousands, except per share data)
Three Months Ended December 31, Years Ended December 31,
2018201720182017
Revenue$1,808,950 $1,752,530 $6,992,118 $6,820,886 
Cost of goods and services1,163,979 1,102,637 4,432,562 4,291,839 
Gross profit644,971 649,893 2,559,556 2,529,047 
Selling, general, and administrative expenses426,198 465,134 1,716,444 1,722,161 
Operating earnings218,773 184,759 843,112 806,886 
Interest expense32,015 36,363 130,972 144,948 
Interest income(2,201)(1,822)(8,881)(8,491)
Gain on sale of businesses— (113,042)— (203,135)
Other expense (income), net2,284 (844)(4,357)(2,251)
Earnings before provision for income taxes186,675 264,104 725,378 875,815 
Provision (benefit) for income taxes28,700 (25,541)134,233 129,152 
Earnings from continuing operations157,975 289,645 591,145 746,663 
(Loss) earnings from discontinued operations, net(16,406)6,803 (20,878)65,002 
Net earnings$141,569 $296,448 $570,267 $811,665 
Basic earnings per share*:
Earnings from continuing operations$1.08 $1.86 $3.94 $4.80 
(Loss) earnings from discontinued operations, net(0.11)0.04 (0.14)0.42 
Net earnings$0.97 $1.90 $3.80 $5.21 
Weighted average shares outstanding146,007 155,734 149,874 155,685 
Diluted earnings per common share*:
Earnings from continuing operations$1.07 $1.83 $3.89 $4.73 
(Loss) earnings from discontinued operations, net(0.11)0.04 (0.14)0.41 
Net earnings
$0.96 $1.88 $3.75 $5.15 
Weighted average shares outstanding147,940 158,013 152,133 157,744 
Dividends paid per common share$0.48 $0.47 $1.90 $1.82 
* Per share data may be impacted by rounding.




DOVER CORPORATION
QUARTERLY SEGMENT INFORMATION
(unaudited)(in thousands)
20182017
Q1 Q2 Q3Q4FY 2018Q1 Q2 Q3 Q4 FY 2017 
REVENUE 
Engineered Systems
Printing & Identification$282,522 $299,834 $283,232 $296,843 $1,162,431 $249,238 $278,220 $272,941 $293,616 $1,094,015 
Industrials389,104 403,155 388,302 399,956 1,580,517 379,634 400,065 398,058 396,212 1,573,969 
671,626 702,989 671,534 696,799 2,742,948 628,872 678,285 670,999 689,828 2,667,984 
Fluids628,098 693,666 690,065 785,509 2,797,338 597,645 633,252 638,068 686,100 2,555,065 
Refrigeration & Food Equipment338,235 401,766 386,214 326,878 1,453,093 356,834 426,304 438,788 377,179 1,599,105 
Intra-segment eliminations (288)(327)(410)(236)(1,261)(141)(470)(80)(577)(1,268)
Total consolidated revenue $1,637,671 $1,798,094 $1,747,403 $1,808,950 $6,992,118 $1,583,210 $1,737,371 $1,747,775 $1,752,530 $6,820,886 
NET EARNINGS 
Segment Earnings: 
Engineered Systems$102,066 $126,649 $108,714 $113,841 $451,270 $177,207 $110,103 $102,767 $214,407 $604,484 
Fluids67,348 93,028 101,207 128,221 389,804 67,172 91,465 103,052 106,941 368,630 
Refrigeration & Food Equipment29,182 51,372 42,434 13,131 136,119 33,562 65,829 65,413 29,018 193,822 
Total segments198,596 271,049 252,355 255,193 977,193 277,941 267,397 271,232 350,366 1,166,936 
Corporate expense / other30,763 30,050 30,207 38,704 129,724 37,282 34,818 30,843 51,721 154,664 
Interest expense35,640 32,125 31,192 32,015 130,972 36,359 36,854 35,372 36,363 144,948 
Interest income(2,057)(2,563)(2,060)(2,201)(8,881)(2,575)(2,335)(1,759)(1,822)(8,491)
Earnings before provision for income taxes134,250 211,437 193,016 186,675 725,378 206,875 198,060 206,776 264,104 875,815 
Provision for income taxes24,841 44,981 35,711 28,700 134,233 51,787 55,585 47,321 (25,541)129,152 
Earnings from continuing operations 109,409 166,456 157,305 157,975 591,145 155,088 142,475 159,455 289,645 746,663 
Earnings (loss) from discontinued operations, net22,025 (26,497)— (16,406)(20,878)17,159 21,583 19,457 6,803 65,002 
Net earnings $131,434 $139,959 $157,305 $141,569 $570,267 $172,247 $164,058 $178,912 $296,448 $811,665 
SEGMENT MARGIN
Engineered Systems15.2 %18.0 %16.2 %16.3 %16.5 %28.2 %16.2 %15.3 %31.1 %22.7 %
Fluids10.7 %13.4 %14.7 %16.3 %13.9 %11.2 %14.4 %16.2 %15.6 %14.4 %
Refrigeration & Food Equipment8.6 %12.8 %11.0 %4.0 %9.4 %9.4 %15.4 %14.9 %7.7 %12.1 %
Total segment operating margin12.1 %15.1 %14.4 %14.1 %14.0 %17.6 %15.4 %15.5 %20.0 %17.1 %
DEPRECIATION AND AMORTIZATION EXPENSE 
Engineered Systems$19,239 $19,203 $18,204 $19,233 $75,879 $20,598 $21,272 $23,150 $20,427 $85,447 
Fluids34,449 34,981 34,954 36,060 140,444 32,454 33,362 34,211 35,794 135,821 
Refrigeration & Food Equipment13,579 13,524 13,533 19,841 60,477 15,035 14,522 14,093 13,557 57,207 
Corporate 1,358 1,595 1,399 1,428 5,780 1,133 1,252 1,079 1,339 4,803 
Total depreciation and amortization expense$68,625 $69,303 $68,090 $76,562 $282,580 $69,220 $70,408 $72,533 $71,117 $283,278 




DOVER CORPORATION
QUARTERLY SEGMENT INFORMATION
(continued)
(unaudited)(in thousands)
20182017
Q1 Q2 Q3Q4FY 2018Q1 Q2 Q3 Q4 FY 2017 
BOOKINGS 
Engineered Systems
Printing & Identification$284,437 $306,770 $271,367 $295,963 $1,158,537 $256,664 $282,158 $268,700 $306,818 $1,114,340 
Industrials466,722 412,780 390,606 481,172 1,751,280 444,058 392,816 390,254 397,053 1,624,181 
751,159 719,550 661,973 777,135 2,909,817 700,722 674,974 658,954 703,871 2,738,521 
Fluids703,461 737,340 723,996 734,943 2,899,740 638,801 631,350 655,305 687,307 2,612,763 
Refrigeration & Food Equipment372,701 428,816 331,979 341,221 1,474,717 438,576 466,276 357,855 319,899 1,582,606 
Intra-segment eliminations (624)33 (549)(584)(1,724)(1,093)(397)(339)(502)(2,331)
Total consolidated bookings $1,826,697 $1,885,739 $1,717,399 $1,852,715 $7,282,550 $1,777,006 $1,772,203 $1,671,775 $1,710,575 $6,931,559 
BACKLOG 
Engineered Systems
Printing & Identification$135,915 $137,019 $126,609 $122,028 $109,347 $115,763 $116,359 $129,752 
Industrials376,474 372,525 367,963 438,546 327,180 321,315 316,835 329,575 
512,389 509,544 494,572 560,574 436,527 437,078 433,194 459,327 
Fluids544,250 564,959 588,632 523,791 434,274 438,445 462,471 459,746 
Refrigeration & Food Equipment283,250 309,440 255,783 268,991 341,530 382,598 302,574 244,972 
Intra-segment eliminations (389)(134)(58)(185)(725)(268)(174)(371)
Total consolidated backlog $1,339,500 $1,383,809 $1,338,929 $1,353,171 $1,211,606 $1,257,853 $1,198,065 $1,163,674 
 





DOVER CORPORATION
QUARTERLY EARNINGS PER SHARE
(unaudited)(in thousands, except per share data*)
Earnings Per Share
20182017
Q1Q2Q3Q4FY 2018Q1 Q2 Q3 Q4 FY 2017 
Basic earnings (loss) per common share:
Continuing operations $0.71 $1.10 $1.07 $1.08 $3.94 $1.00 $0.92 $1.02 $1.86 $4.80 
Discontinued operations 0.14 (0.17)— (0.11)(0.14)0.11 0.14 0.12 0.04 0.42 
Net earnings $0.85 $0.92 $1.07 $0.97 $3.80 $1.11 $1.05 $1.15 $1.90 $5.21 
Diluted earnings (loss) per common share:
Continuing operations $0.70 $1.08 $1.05 $1.07 $3.89 $0.99 $0.90 $1.01 $1.83 $4.73 
Discontinued operations 0.14 (0.17)— (0.11)(0.14)0.11 0.14 0.12 0.04 0.41 
Net earnings $0.84 $0.91 $1.05 $0.96 $3.75 $1.09 $1.04 $1.14 $1.88 $5.15 
Net earnings (loss) and weighted average shares used in calculated earnings per share amounts are as follows:
Net earnings (loss):
Continuing operations $109,409 $166,456 $157,305 $157,975 $591,145 $155,088 $142,475 $159,455 $289,645 $746,663 
Discontinued operations 22,025 (26,497)— (16,406)(20,878)17,159 21,583 19,457 6,803 65,002 
Net earnings $131,434 $139,959 $157,305 $141,569 $570,267 $172,247 $164,058 $178,912 $296,448 $811,665 
Weighted average shares outstanding:
Basic 154,520 151,744 147,344 146,007 149,874 155,540 155,703 155,757 155,734 155,685 
Diluted 157,090 153,938 149,457 147,940 152,133 157,399 157,513 157,555 158,013 157,744 
* Per share data may be impacted by rounding.





Non-GAAP Reconciliations
Adjusted Earnings Per Share (Non-GAAP)
Earnings from continuing operations are adjusted by the effect of acquisition-related amortization, the Tax Cuts and Jobs Act, gains on disposition of businesses, disposition costs, rightsizing and other costs, and a product recall reversal to derive adjusted earnings from continuing operations and adjusted diluted earnings per common share as follows:
20182017
Q1Q2Q3Q4FY 2018Q1Q2Q3Q4FY 2017 
Adjusted earnings:
Earnings from continuing operations$109,409 $166,456 $157,305 $157,975 $591,145 $155,088 $142,475 $159,455 $289,645 $746,663 
Acquisition-related amortization, pre-tax 1
38,150 38,072 34,997 35,078 146,297 38,996 37,620 37,553 37,108 151,277 
Acquisition-related amortization, tax impact 2
(9,716)(9,683)(8,785)(8,817)(37,001)(12,777)(12,027)(12,171)(11,906)(48,881)
Tax Cuts and Jobs Act 3
— — — (2,832)(2,832)— — — (54,908)(54,908)
Gain on dispositions, pre-tax 4
— — — — — (88,402)— — (116,932)(205,334)
Gain on dispositions, tax impact 2
— — — — — 26,682 — — 6,071 32,753 
Disposition costs, pre-tax 5
— — — — — — — 3,314 1,931 5,245 
Disposition costs, tax impact 2
— — — — — — — (964)(1,051)(2,015)
Rightsizing and other costs, pre-tax 6
4,371 6,808 24,201 37,448 72,828 — — — 49,379 49,379 
Rightsizing and other costs, tax impact 2
(797)(1,448)(4,477)(7,809)(14,531)— — — (14,746)(14,746)
Product recall reversal, pre-tax
— — — — — — — — (7,200)(7,200)
Product recall reversal, tax impact 2
— — — — — — — — 2,614 2,614 
Adjusted earnings from continuing operations
$141,417 $200,205 $203,241 $211,043 $755,906 $119,587 $168,068 $187,187 $180,005 $654,847 
Adjusted diluted earnings per common share*:
Diluted earnings per share from continuing operations$0.70 $1.08 $1.05 $1.07 $3.89 $0.99 $0.90 $1.01 $1.83 $4.73 
Acquisition-related amortization, pre-tax 1
0.24 0.25 0.23 0.24 0.96 0.25 0.24 0.24 0.23 0.96 
Acquisition-related amortization, tax impact 2
(0.06)(0.06)(0.06)(0.06)(0.24)(0.08)(0.08)(0.08)(0.08)(0.31)
Tax Cuts and Jobs Act 3
— — — (0.02)(0.02)— — — (0.35)(0.35)
Gain on dispositions, pre-tax 4
— — — — — (0.56)— — (0.74)(1.30)
Gain on dispositions, tax impact 2
— — — — — 0.17 — — 0.04 0.21 
Disposition costs, pre-tax 5
— — — — — — — 0.02 0.01 0.03 
Disposition costs, tax impact 2
— — — — — — — (0.01)(0.01)(0.02)
Rightsizing and other costs, pre-tax 6
0.03 0.04 0.16 0.25 0.48 — — — 0.31 0.31 
Rightsizing and other costs, tax impact 2
(0.01)(0.01)(0.03)(0.05)(0.10)— — — (0.09)(0.09)
Product recall reversal, pre-tax— — — — — — — — (0.05)(0.05)
Product recall reversal, tax impact 2
— — — — — — — — 0.02 0.02 
Adjusted diluted earnings per share from continuing operations
$0.90 $1.30 $1.36 $1.43 $4.97 $0.76 $1.07 $1.19 $1.14 $4.15 
1 Includes amortization on acquisition-related intangible assets and inventory step-up.
2 Adjustments were tax effected using the statutory tax rates in the applicable jurisdictions or the effective tax rate, where applicable, for each period.
3 2017 Tax impact primarily related to the enactment of the Tax Cuts and Jobs Act ("Tax Reform Act"). This benefit also includes decreases in statutory tax rates of foreign jurisdictions. 2018 adjustment represents tax benefits related to additional Tax Act regulatory guidance covered by SAB 118.
4 Includes a gains from the sales of Performance Motorsports International and Warn Industries, Inc. in the first and fourth quarters of 2017, respectively.
5 Disposition costs include costs related to the sale of Warn Industries, Inc. in the fourth quarter of 2017.
6 Rightsizing and other costs include actions taken on employee reductions, facility consolidations and site closures, product line exits and other associated asset charges.
* Per share data and totals may be impacted by rounding.




Non-GAAP Reconciliations (continued)

Adjusted Guidance Reconciliation
2018 Actual2019 Guidance
Adjusted net earnings per share*:
Net earnings (GAAP)$3.89 $ 4.81 - 5.01
Acquisition-related amortization, net0.72 0.76 
Tax Cuts and Jobs Act(0.02)— 
Rightsizing and other costs, net 0.38 0.08 
Adjusted net earnings (Non-GAAP)$4.97 $ 5.65 - 5.85
* Per share data and totals may be impacted by rounding. 






DOVER CORPORATION
CONSOLIDATED BALANCE SHEETS
(unaudited)(in thousands)

December 31, 2018December 31, 2017
Assets:
Cash and cash equivalents$396,221 $753,964 
Receivables, net of allowances1,231,859 1,183,514 
Inventories, net748,796 677,043 
Prepaid and other current assets126,878 175,626 
Property, plant and equipment, net806,497 787,940 
Goodwill3,677,328 3,686,372 
Intangible assets, net1,134,256 1,282,624 
Other assets and deferred charges243,936 245,723 
Assets of discontinued operations— 1,865,553 
Total assets$8,365,771 $10,658,359 
Liabilities and Stockholders' Equity:
Notes payable and current maturities of long-term debt$220,318 $581,102 
Payables and accrued expenses1,607,103 1,560,876 
Deferred taxes and other non-current liabilities 826,024 882,246 
Long-term debt2,943,660 2,986,702 
Liabilities of discontinued operations— 264,253 
Stockholders' equity2,768,666 4,383,180 
Total liabilities and stockholders' equity$8,365,771 $10,658,359 




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

Years Ended December 31,
20182017
Operating activities:
Net earnings$570,267 $811,665 
Loss (earnings) from discontinued operations, net20,878 (65,002)
Depreciation and amortization282,580 283,278 
Stock-based compensation23,698 24,073 
Contributions to employee benefit plans(25,933)(18,588)
Gain on sale of businesses— (203,135)
Net change in assets and liabilities(82,297)(92,882)
Net cash provided by operating activities789,193 739,409 
Investing activities:
Additions to property, plant and equipment(170,994)(170,068)
Acquisitions (net of cash and cash equivalents acquired)(68,556)(27,188)
Proceeds from the sale of property, plant and equipment5,908 11,774 
Proceeds from the sale of businesses3,937 372,666 
Other(15,775)21,151 
Net cash (used in) provided by investing activities(245,480)208,335 
Financing activities:
Cash received from Apergy, net of cash distributed689,643 — 
Change in commercial paper and notes payable, net(10,722)(182,596)
Reduction of long-term debt(350,000)— 
Dividends to stockholders(283,573)(283,959)
Purchase of common stock(894,977)(105,023)
Payments to settle employee tax obligations on exercise(46,257)(18,443)
Other(1,952)(2,912)
Net cash used in financing activities(897,838)(592,933)
Net cash (used in) provided by discontinued operations(14,263)48,533 
Effect of exchange rate changes on cash10,645 1,474 
Net (decrease) increase in cash and cash equivalents(357,743)404,818 
Cash and cash equivalents at beginning of period753,964 349,146 
Cash and cash equivalents at end of period$396,221 $753,964 














ADDITIONAL INFORMATION
FOURTH QUARTER AND FULL YEAR 2018
(Amounts in thousands except share data and where otherwise indicated)

Acquisitions

The Company did not complete any acquisitions during the fourth quarter of 2018. For the full year 2018, the Company acquired two businesses in separate transactions for total consideration of $68.6 million, net of cash acquired. The businesses were acquired to complement and expand upon existing operations within the Fluids and Refrigeration & Food Equipment segments.

Discontinued and Disposed Businesses

The Company did not dispose of any significant businesses during the fourth quarter of 2018. For the full year 2018, the Company completed the separation of Apergy Corporation ("Apergy") from Dover through the pro rata distribution of 100% of the common stock of Apergy to Dover's shareholders. The historical results of Apergy, including the results of operations, cash flows, and related assets and liabilities, have been reclassified to discontinued operations for all periods presented.

Rightsizing and Other Costs

During the year ended December 31, 2018, the Company executed several programs in order to further optimize operations. Rightsizing programs in 2018 included 1) alignment of our cost structure in preparation for the Apergy separation, 2) broad-based selling, general and administrative expense reduction and 3) initiation of footprint consolidation actions. During the fourth quarter of 2018, the Company recorded rightsizing and other related costs of $37.4 million which is comprised of $22.1 million of restructuring costs and $15.3 million of other charges. During the full year 2018, the Company recorded rightsizing and other related costs of $72.8 million which is comprised of $56.1 million of restructuring costs and $16.7 million of other chargesThese costs primarily relate to actions taken on employee reductions, facility consolidations and site closures, product line exits and other associated asset charges. During the fourth quarter and full year 2018, rightsizing and other charges were broad based across all segments as well as corporate, with costs incurred by segment as follows: 

($ in millions) 2018 
Q4 FY 
Engineered Systems $7.1 $19.9 
Fluids 12.8 28.7 
Refrigeration & Food Equipment 9.5 10.0 
Corporate 8.0 14.2 
Total  $37.4 $72.8 

Tax Rate

The effective tax rate was a provision of 15.4% and a benefit of 9.7% for the fourth quarters of 2018 and 2017, respectively. On a full year basis, the effective tax rates for 2018 and 2017 were 18.5% and 14.7%, respectively. The tax rates were significantly impacted by the Tax Reform Act which decreased the U.S. statutory rate from 35% to 21% effective January 1, 2018. The 2018 US tax rate was impacted by the lower 21% rate, in addition to the tax deduction for share-based awards and other favorable discrete items. The 2017 tax rate was significantly impacted by revaluing the U.S. deferred income tax liabilities to 21%, offset by the U.S. tax charge for the deemed repatriation of foreign earnings.

Share Repurchases

During the year ended December 31, 2018, the Company purchased approximately 10.7 million shares of its common stock for a total cost of $895.0 million, or $83.35 per share. Together with other repurchases in December 2017 and over the course of 2018, the Company has completed the $1 billion of share repurchases announced in November 2017. As of December 31, 2018, 9,703,666 shares remain authorized for repurchase under the February 2018 share repurchase authorization.




Capitalization 

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

Net Debt to Net Capitalization Ratio (Non-GAAP)December 31, 2018December 31, 2017
Current maturities of long-term debt$— $350,402 
Commercial paper220,318 230,700 
Notes payable and current maturities of long-term debt220,318 581,102 
Long-term debt2,943,660 2,986,702 
Total debt3,163,978 3,567,804 
Less: Cash and cash equivalents(396,221)(753,964)
Net debt2,767,757 2,813,840 
Add: Stockholders' equity2,768,666 4,383,180 
Net capitalization$5,536,423 $7,197,020 
Net debt to net capitalization50.0 %39.1 %

Quarterly Cash Flow
20182017
Q1Q2Q3Q4FY 2018 Q1Q2Q3Q4FY 2017 
Net Cash Flows Provided By (Used In):
Operating activities$15,535 $159,205 $243,944 $370,509 $789,193 $45,726 $152,506 $255,765 $285,412 $739,409 
Investing activities(122,597)(51,606)(35,922)(35,355)(245,480)86,429 (46,460)(47,584)215,950 208,335 
Financing activities(289,103)(227,734)(232,476)(148,525)(897,838)(93,293)(216,273)(197,635)(85,732)(592,933)

Quarterly Free Cash Flow (Non-GAAP)
20182017
Q1Q2Q3Q4FY 2018 Q1Q2Q3Q4FY 2017 
Cash flow from operating activities$15,535 $159,205 $243,944 $370,509 $789,193 $45,726 $152,506 $255,765 $285,412 $739,409 
Less: Capital expenditures(44,678)(51,686)(38,192)(36,438)(170,994)(36,931)(42,035)(51,396)(39,706)(170,068)
Free cash flow *$(29,143)$107,519 $205,752 $334,071 $618,199 $8,795 $110,471 $204,369 $245,706 $569,341 
Free cash flow as a percentage of revenue(1.8)%6.0 %11.8 %18.5 %8.8 %0.6 %6.4 %11.7 %14.0 %8.3 %
*  FY 2018 and 2017 free cash flow includes cash payments related to restructuring initiatives of $52.0 million and $22.6 million, respectively.

Revenue Growth Factors
2018
Q1Q2Q3Q4Full Year
Organic1.7 %3.5 %3.1 %6.2 %3.7 %
Acquisitions0.6 %0.4 %0.3 %0.6 %0.5 %
Dispositions(3.1)%(2.6)%(2.8)%(1.5)%(2.5)%
Currency translation4.2 %2.2 %(0.6)%(2.1)%0.8 %
3.4 %3.5 %%3.2 %2.5 %




Non-GAAP Disclosures

In an effort to provide investors with additional information regarding our results as determined by GAAP, Management also discloses non-GAAP information that Management believes provides useful information to investors. Adjusted net earnings, adjusted diluted earnings per common share, net debt, net capitalization, net debt to net capitalization ratio, free cash flow, and organic revenue growth are not financial measures under GAAP and should not be considered as a substitute for net earnings, diluted earnings per common share, debt or equity, cash flows from operating activities, or revenue as determined in accordance with GAAP, and they may not be comparable to similarly titled measures reported by other companies. 

Adjusted earnings from continuing operations represents earnings from continuing operations adjusted for the effect of acquisition-related amortization, the Tax Cuts and Jobs Act, gains on disposition of businesses, disposition costs, rightsizing and other costs and a product recall reserve reversal. We exclude after-tax acquisition-related amortization because the amount and timing of such charges are significantly impacted by the timing, size, number and nature of the acquisitions the Company consummates. We exclude the other items because they occur for reasons that may be unrelated to the Company's commercial performance during the period and/or Management believes they are not indicative of the Company's ongoing operating costs or gains in a given period. Management believes this information is useful to investors to better understand the Company’s ongoing profitability as it will better reflect the Company's core operating results, offer more transparency and facilitate easier comparability to prior and future periods and to its peers. Adjusted diluted earnings per common share represents adjusted net earnings divided by average diluted shares.

Net debt represents total debt minus cash and cash equivalents. Net capitalization represents net debt plus stockholders' equity. Management believes the net debt to net capitalization ratio is useful to assess our overall financial leverage and capacity. 

Free cash flow represents net cash provided by operating activities minus capital expenditures. Management believes that free cash flow is an important measure of operating performance because it provides management and investors a measurement of cash generated from operations that is available for mandatory payment obligations and investment opportunities, such as funding acquisitions, paying dividends, repaying debt and repurchasing our common stock.

Management believes that reporting organic revenue growth, which excludes the impact of foreign currency exchange rates and the impact of acquisitions and dispositions, provides a useful comparison of our revenue performance and trends between periods.