Dover Corporation - 10-Q quarterly report FY

 

(Exact name of registrant as specified in its charter)

(212) 922-1640
(Registrant’s telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes þ     No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes o      No þ

The number of shares outstanding of the Registrant’s common stock as of October 17, 2008 was 185,964,846.

See Notes to Condensed Consolidated Financial Statements

Preferred Stock, $100 par value per share. 100,000 shares authorized; none issued.

See Notes to Condensed Consolidated Financial Statements

See Notes to Condensed Consolidated Financial Statements

The accompanying unaudited condensed consolidated financial statements, in accordance with Securities and Exchange Commission (“SEC”) rules for interim periods, do not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements and should be read in conjunction with the Dover Corporation (“Dover” or the “Company”) Annual Report on Form 10-K for the year ended December 31, 2007, which provides a more complete understanding of Dover’s accounting policies, financial position, operating results, business properties and other matters. The year-end condensed consolidated balance sheet was derived from audited financial statements. It is the opinion of management that these financial statements reflect all adjustments necessary for a fair statement of the interim results. The results of operations of any interim period are not necessarily indicative of the results of operations for the full year.

Certain prior period amounts have been reclassified to conform to the current period presentation.

The 2008 acquisitions are wholly-owned and had an aggregate cost of $99.9 million, net of cash acquired, at the date of acquisition. The following table details acquisitions made during 2008:

For certain acquisitions, the Company is in the process of obtaining or finalizing appraisals of tangible and intangible assets and continuing to evaluate the initial purchase price allocations as of the acquisition date, which will be adjusted as additional information relative to the fair values of the assets and liabilities of the businesses becomes known. Accordingly, management has used its best estimate in the initial purchase price allocation as of the date of these financial statements.

The following table summarizes the estimated fair values of the assets and liabilities that were assumed as of the date of the 2008 acquisitions and the amounts assigned to goodwill and intangible asset classifications:

The following unaudited pro forma information illustrates the effect on Dover’s revenue and net earnings for the three and nine months ended September 30, 2008 and 2007, assuming that the 2008 and 2007 acquisitions had all taken place on January 1, 2007:

These pro forma results of operations have been prepared for comparative purposes only and include certain adjustments to actual financial results for the relevant periods, such as imputed financing costs, and estimated additional amortization and depreciation expense as a result of intangibles and fixed assets acquired. They do not purport to be indicative of the results of operations which actually would have resulted had the acquisitions occurred on the date indicated, or which may result in the future.

In connection with certain acquisitions, at September 30, 2008 and December 31, 2007, the Company had reserves related to severance and facility closings of $29.0 million and $26.8 million, respectively. The reserves were recorded as of the date of acquisition and in accordance with the provisions of Emerging Issues Task Force Issue No. 95-3, “Recognition of Liabilities in Connection with a Purchase Business Combination.” For the three and nine months ended September 30, 2008, the Company recorded reserves related to acquisitions of $5.8 million. During the nine months ended September 30, 2008, the Company recorded payments and write-downs of $3.6 million, of which $1.3 million was recorded in the third quarter.

The following table displays the components of inventory:

The following table displays the components of property, plant and equipment:

The following table provides the changes in carrying value of goodwill by segment through the nine months ended September 30, 2008 (see Note 2 for discussion of purchase price allocations):

The following table provides the gross carrying value and accumulated amortization for each major class of intangible asset:

During the third quarter of 2008, the Company completed the sale of a previously discontinued business and recorded other adjustments, resulting in a net loss of approximately $0.7 million.

During the second quarter of 2008, the Company discontinued Triton in the Engineered Systems segment and reclassified Crenlo, which had been included in discontinued operations since the third quarter of 2007, into the Industrial Products segment. In the second quarter of 2008, the Company recorded a $51.1 million write-down to the carrying value of Triton to its estimated fair market value and other adjustments.

During the first quarter of 2008, the Company recorded adjustments to the carrying value of a business still held for sale and other adjustments resulting in a net after-tax loss of approximately $2.0 million.

During the third quarter of 2007, the Company discontinued Graphics Microsystems and subsequently completed the sale on October 1, 2007. In addition, during the third quarter of 2007, the Company finalized the sale of two previously discontinued businesses and recorded other adjustments resulting in a net after-tax loss of $1.6 million.

During the second quarter of 2007, the Company completed the sale of a previously discontinued business and recorded other adjustments for businesses still held for sale, resulting in a net loss of approximately $5.0 million ($8.3 million after-tax).

During the first quarter of 2007, the Company completed the sales of Kurz Kasch, discontinued in 2006, and SWF, discontinued in 2005, and recorded other adjustments for businesses still held for sale and to reserves related to completed sales, resulting in a net loss of approximately $9.6 million ($7.5 million after-tax).

Summarized results of the Company’s discontinued operations are as follows:

At September 30, 2008, the assets and liabilities of discontinued operations primarily represent amounts related to the Triton businesses. Additional detail related to the assets and liabilities of the Company’s discontinued operations is as follows:

In addition to the assets and liabilities of the entities currently held for sale in discontinued operations, the assets and liabilities of discontinued operations include residual amounts related to businesses previously sold. These residual amounts include property, plant and equipment, deferred tax assets, short and long-term reserves, and contingencies.

Dover’s long-term debt with a book value of $1,893.7 million, of which $32.6 million matures in less than one year, had a fair value of approximately $1,787.9 million at September 30, 2008. The estimated fair value of the long-term debt is based on quoted market prices for similar issues (Level 2).

During the second quarter ended June 30, 2008, the Company repaid its $150 million 6.25% Notes due June 1, 2008. In addition, on March 14, 2008, Dover issued $350 million of 5.45% notes due 2018 and $250 million of 6.60% notes due 2038. The net proceeds of $594.1 million from the notes were used to repay borrowings under Dover’s commercial paper program, and are reflected in long-term debt in the Company’s unaudited Condensed Consolidated Balance Sheet at September 30, 2008. The notes and debentures are redeemable at the option of Dover in whole or in part at any time at a redemption price that includes a make-whole premium, with accrued interest to the redemption date.

During the first quarter of 2008, Dover entered into several interest rate swaps in anticipation of the debt financing completed on March 14, 2008 which, upon settlement, resulted in a net gain of $1.2 million which was deferred and will be amortized over the life of the related notes.

There is presently one outstanding swap agreement for a total notional amount of $50.0 million, or CHF65.1 million, which swaps the US 6-month LIBOR rate and the Swiss Franc 6-month LIBOR rate.  This agreement hedges a portion of the Company’s net investment in non-U.S. operations and the fair value outstanding at September 30, 2008 was a loss of $8.9 million which was based on quoted market prices for similar instruments (Level 2). This hedge is effective.

During the third quarter of 2008, the Company entered into a foreign currency hedge which was subsequently settled within the quarter. As a result of terminating the hedge, the Company recorded a gain of $2.4 million in the third quarter ended September 30, 2008.

A few of the Company’s subsidiaries are involved in legal proceedings relating to the cleanup of waste disposal sites identified under federal and state statutes which provide for the allocation of such costs among “potentially responsible parties.” In each instance, the extent of the Company’s liability appears to be very small in relation to the total projected expenditures and the number of other “potentially responsible parties” involved and is anticipated to be immaterial to the Company. In addition, a few of the Company’s subsidiaries are involved in ongoing remedial activities at certain current and former plant sites, in cooperation with regulatory agencies, and appropriate reserves have been established.

The Company and certain of its subsidiaries are also parties to a number of other legal proceedings incidental to their businesses. These proceedings primarily involve claims by private parties alleging injury arising out of use of the Company’s products, exposure to hazardous substances, patent infringement, employment matters and commercial disputes. Management and legal counsel, at least quarterly, review the probable outcome of such proceedings, the costs and expenses reasonably expected to be incurred, the availability and extent of insurance coverage, and established reserves. While it is not possible at this time to predict the outcome of these legal actions or any need for additional reserves, in the opinion of management, based on these reviews, it is unlikely that the disposition of the lawsuits and the other matters mentioned above will have a material adverse effect on the financial position, results of operations, cash flows or competitive position of the Company.

Estimated warranty program claims are provided for at the time of sale. Amounts provided for are based on historical costs and adjusted new claims. The changes in the carrying amount of product warranties through September 30, 2008 and 2007 are as follows:

From time to time, the Company will initiate various restructuring programs at its operating companies or record severance and other restructuring costs in connection with purchase accounting for acquisitions (see Note 2 for additional detail). The following table details the Company’s severance and other restructuring reserve activity:

The following table sets forth the components of net periodic expense:

Comprehensive earnings were as follows:

Dover has four reportable segments which are based on management’s reporting structure used to evaluate performance. Segment financial information and a reconciliation of segment results to consolidated results follows:

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS No. 157”), which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. For financial assets and liabilities, this statement is effective for fiscal periods beginning after November 15, 2007 and does not require any new fair value measurements. In February 2008, the FASB Staff Position No. 157-2 was issued which delayed the effective date of FASB Statement No. 157 to fiscal years ending after November 15, 2008 for nonfinancial assets and liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). The adoption of SFAS No. 157 did not have a material effect on the consolidated financial statements.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities — including an amendment of FASB Statement No. 115.” This statement permits entities to choose to

measure many financial instruments and certain other items at fair value. This statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, including interim periods within that fiscal year. The Company did not elect the fair value option for any of its existing financial instruments as of September 30, 2008 and the Company has not determined whether or not it will elect this option for financial instruments it may acquire in the future.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51” (“SFAS 160”). SFAS 160 requires that a noncontrolling interest in a subsidiary be reported as equity and the amount of consolidated net income specifically attributable to the noncontrolling interest be identified in the consolidated financial statements. It also requires consistency in the manner of reporting changes in the parent’s ownership interest and requires fair value measurement of any noncontrolling equity investment retained in a deconsolidation. The Company will apply the provisions of this statement prospectively, as required, beginning on January 1, 2009 and does not expect the adoption of SFAS 160 to have a material effect on its consolidated financial statements.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS No. 141(R)”). SFAS No. 141(R) retains the fundamental requirements in Statement 141 that the acquisition method of accounting (which Statement 141 called the purchase method) be used for all business combinations and for an acquirer to be identified for each business combination. In general, the statement 1) broadens the guidance of SFAS No. 141, extending its applicability to all events where one entity obtains control over one or more other businesses, 2) broadens the use of fair value measurements used to recognize the assets acquired and liabilities assumed, 3) changes the accounting for acquisition related fees and restructuring costs incurred in connection with an acquisition, and 4) increases required disclosures. The Company will apply the provisions of this statement prospectively to business combinations for which the acquisition date is on or after January 1, 2009 and is currently assessing the impact of adoption of SFAS No. 141(R) on its consolidated financial statements.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133” (“SFAS No. 161”).  SFAS No. 161 amends and expands the disclosure requirements of SFAS No. 133 with the intent to provide users of financial statements with an enhanced understanding of: 1) How and why an entity uses derivative instruments; 2) How derivative instruments and related hedged items are accounted for under SFAS No. 133 and its related interpretations; and 3) How derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows.  This statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged.  The Company is currently assessing the impact of the adoption of SFAS No. 161 on its consolidated financial statements.

In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles.”  This statement identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles (GAAP) in the United States (the GAAP hierarchy).  This Statement is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles.”  The Company is currently assessing the impact of the adoption of this statement on its consolidated financial statements.

In April 2008, the FASB issued FASB Staff Position No. 142-3 “Determination of the Useful Life of Intangible Assets” (“FSP No. 142-3”) to improve the consistency between the useful life of a recognized intangible asset (under SFAS No. 142) and the period of expected cash flows used to measure the fair value of the intangible asset (under SFAS No. 141(R)). FSP No. 142-3 amends the factors to be considered when developing renewal or extension assumptions that are used to estimate an intangible asset’s useful life under SFAS No. 142. The guidance in the new staff position is to be applied prospectively to intangible assets acquired after December 31, 2008. In addition, FSP No. 142-3 increases the disclosure requirements related to renewal or extension assumptions. The Company is currently assessing the impact of the adoption of FSP No. 142-3 on its consolidated financial statements.

In the first quarter of 2008 and 2007, the Company issued stock appreciation rights (“SARs”) covering 2,239,707 and 1,731,882 shares, respectively. For the nine months ended September 30, 2008 and 2007, after-tax stock-based compensation expense totaled $14.2 million and $13.7 million, respectively. The fair value of each grant was estimated on the dates of the grant using the Black-Scholes option pricing model.

During the fourth quarter of 2007, the Board of Directors approved a $500 million share repurchase program authorizing repurchases of Dover’s common shares through the end of 2008. During the nine months ended September 30, 2008, the Company repurchased 10,000,000 shares of its common stock in the open market at an average price of $46.15 per share, of which 2,375,000 shares were purchased in the third quarter of 2008 at an average price of $48.11. As of September 30, 2008, all shares authorized by the program were purchased.

During the third quarter ended September 30, 2008 the Company purchased $219.4 million of bank term deposits. These investments have maturity dates that range from five to nine months and earn a weighted average interest rate of 5.14%.

Refer to the section below entitled “Special Notes Regarding Forward-Looking Statements” for a discussion of factors that could cause actual results to differ from the forward-looking statements contained below and throughout this quarterly report.

Dover Corporation (“Dover” or the “Company”) is a global portfolio of manufacturing companies providing innovative components and equipment, specialty systems and support services for a variety of applications in the industrial products, engineered systems, fluid management and electronic technologies markets. Dover discusses its operations at the platform level within the Industrial Products, Engineered Systems and Fluid Management segments, which contain two platforms each. Electronic Technologies’ results are discussed at the segment level.

Management assesses Dover’s liquidity in terms of its ability to generate cash and access capital markets to fund its operating, investing and financing activities. Significant factors affecting liquidity are: cash flows generated from operating activities, capital expenditures, acquisitions, dispositions, dividends, adequacy of commercial paper and available bank lines of credit, and the ability to attract long-term capital with satisfactory terms. The Company generates substantial cash from operations and remains in a strong financial position, maintaining enough liquidity for reinvestment in existing businesses and strategic acquisitions while managing its capital structure on a short and long-term basis.

The Company has maintained uninterrupted access to the commercial paper markets at historically competitive rates. If there were changes in the global markets or economy which were to negatively affect its access to commercial paper the Company would rely on available cash and/or the existing $1 billion credit facility which expires in 2012.

Cash and cash equivalents of $575.9 million at September 30, 2008 decreased 5% from the December 31, 2007 balance of $606.1 million. Cash and cash equivalents were invested in liquid investment grade money market instruments with a maturity of 90 days or less.

During the third quarter ended September 30, 2008 the Company purchased $219.4 million of bank term deposits. These investments have maturity dates that range from five to nine months and earn a weighted average interest rate of 5.14%.

The following table is derived from the Condensed Consolidated Statements of Cash Flows:

Cash flows provided by operating activities for the first nine months of 2008 increased $182.7 million from the prior year period, primarily reflecting higher earnings from continuing operations, working capital improvements and lower tax payments.

Cash used in investing activities in the first nine months of 2008 increased $178.8 million largely due to the purchase of short-term investments, lower proceeds received from dispositions of businesses, and property and equipment, partially offset by lower acquisition spending in the current period. Proceeds from the sales of businesses in the first nine months of 2008 were $12.8 million compared to $31.2 million in the 2007 period. Acquisition spending was $99.9 million during the first nine months of 2008 compared to $174.3 million in the prior year period. Capital expenditures during the first nine months of 2008 were up slightly from 2007 levels, increasing 3% to $133.3 million as compared to $129.8 million in the prior year period reflecting increases in

Energy, Electronic Technologies and Mobile Equipment platforms, offset by decreases in Material Handling, Product Identification, Fluid Management and Engineered Products platforms. The Company currently anticipates that any additional acquisitions made during 2008 will be funded from available cash and internally generated funds and, if necessary, through the issuance of commercial paper, use of established lines of credit or public debt markets.

Cash used in financing activities for the first nine months of 2008 increased 41% to $332.1 million as compared to $235.1 million in the prior year period. In the current nine-month period, increased purchases of common stock on the open market and higher repayments of commercial paper and long-term debt more than offset the $594.1 million in proceeds received from the issuance of debt. During the nine months ended September 30, 2008, the Company purchased 10,000,000 shares of common stock in the open market at an average price of $46.15 of which 2,375,000 shares were purchased in the third quarter at an average price of $48.11.

“Adjusted Working Capital” (a non-GAAP measure calculated as accounts receivable, plus inventory, less accounts payable) increased from the prior year end by $58.8 million or 4% to $1,420.6 million, which reflected increases in receivables of $90.4 million and increases in inventory of $22.0 million, partially offset by an increase in payables of $53.6 million. Excluding the impact of acquisitions and foreign currency, Adjusted Working Capital would have increased by $43.1 million or 3%. “Average Annual Adjusted Working Capital” as a percentage of revenue (a non-GAAP measure calculated as the five-quarter average balance of accounts receivable, plus inventory, less accounts payable divided by the trailing twelve months of revenue) was 18.4% at September 30, 2008 compared to 18.9% at December 31, 2007 and inventory turns were 7.0 at September 30, 2008 compared to 6.7 at December 31, 2007.

In addition to measuring its cash flow generation and usage based upon the operating, investing and financing classifications included in the unaudited Condensed Consolidated Statements of Cash Flows, the Company also measures free cash flow (a non-GAAP measure). Management believes that free cash flow is an important measure of operating performance because it provides both management and investors a measurement of cash generated from operations that is available to fund acquisitions, pay dividends, repay debt and repurchase Dover’s common stock. Dover’s free cash flow for the nine months ended September 30, 2008 increased $179.2 million compared to the prior year period. The increase reflected higher earnings from continuing operations, lower tax payments and improved working capital.

The following table is a reconciliation of free cash flow with cash flows from operating activities:

The Company utilizes total debt and net debt to total capitalization calculations to assess its overall financial leverage and capacity and believes the calculations are useful to investors for the same reason. The following table provides a reconciliation of total debt and net debt to total capitalization to the most directly comparable GAAP measures:

The total debt level of $2,269.2 million at September 30, 2008 increased $178.6 million from December 31, 2007 due to higher long-term debt, partially offset by a decrease in commercial paper. The net debt decrease was due to higher cash, cash equivalents and short-term investments in the 2008 period due to the net cash generated from operations during the first nine months of 2008, partially offset by a higher total debt level. The increase in debt was used to fund acquisitions and share repurchases in excess of the Company’s available free cash flow.

Dover’s long-term debt with a book value of $1,893.7 million, of which $32.6 million matures in less than one year, had a fair value of approximately $1,787.9 million at September 30, 2008. The estimated fair value of the long-term debt is based on quoted market prices for similar issues (Level 2).

During the second quarter ended June 30, 2008, the Company repaid its $150 million 6.25% Notes due June 1, 2008. In addition, on March 14, 2008, Dover issued $350 million of 5.45% notes due 2018 and $250 million of 6.60% notes due 2038. The net proceeds of $594.1 million from the notes were used to repay borrowings under Dover’s commercial paper program. The Notes are reflected in long-term debt in the Company’s Unaudited Condensed Consolidated Balance Sheet at September 30, 2008. The notes are redeemable at the option of Dover in whole or in part at any time at a redemption price that includes a make-whole premium, with accrued interest to the redemption date.

During the first quarter of 2008, Dover entered into several interest rate swaps in anticipation of the debt financing completed on March 14, 2008 which, upon settlement, resulted in a gain of $1.2 million which was deferred and will be amortized over the life of the related notes.

There is presently one outstanding swap agreement for a total notional amount of $50.0 million, or CHF65.1 million, which swaps the US 6-month LIBOR rate and the Swiss Franc 6-month LIBOR rate.  This agreement hedges a portion of the Company’s net investment in non-U.S. operations and the fair value outstanding at September 30, 2008 was a loss of $8.9 million which was based on quoted market prices for similar instruments (Level 2). This hedge is effective.

During the third quarter of 2008, the Company entered into a foreign currency hedge which was subsequently settled within the quarter. As a result of terminating the hedge, the Company recorded a gain of $2.4 million in the third quarter ended September 30, 2008.

Revenue for the third quarter of 2008 increased 5% to $1,965.8 million from the comparable 2007 period, led by the results of the Fluid Management and Industrial Products segments. Overall, for the quarter, Dover achieved organic revenue growth of 3%, net acquisition growth of 1% with the remainder from the impact of foreign exchange. Gross profit increased 5% to $704.3 million from the prior year quarter while the gross profit margin was 35.8% in the current and prior year quarters.

Revenue for the first nine months of 2008 increased 8% to $5,842.2 million from the comparable 2007 period, led by Fluid Management, along with increases at all other segments. Gross profit increased 9% to $2,123.5 million from the prior year period while the gross profit margin increased 50 basis points to 36.3%. 

Selling and administrative expenses of $435.0 million for the third quarter of 2008 increased by $39.3 million over the comparable 2007 period, primarily due to increased revenue activity and increased professional fees and restructuring charges, partially offset by synergy savings. Selling and administrative expenses as a percentage of revenue increased to 22.1% from 21.2% in the comparable 2007 period. 

Selling and administrative expenses of $1,325.3 million for the first nine months of 2008 increased $130.9 million over the comparable 2007 period, mainly due to the same factors that impacted the quarter. Selling and administrative expenses as a percentage of revenue increased to 22.7% from 22.0% in the comparable 2007 period.

Interest expense, net for the third quarter and first nine months of 2008 increased by $3.5 million and $9.7 million, respectively, compared to the same quarter and first nine months last year primarily due to higher average outstanding commercial paper balances as well as higher long-term debt levels in the current periods.

Other expense (income), net, for the three and nine months ended September 30, 2008 and 2007 primarily related to the effects of foreign exchange fluctuations on assets and liabilities denominated in currencies other than the Company’s functional currency and other miscellaneous non-operational items. 

The effective tax rate for continuing operations for the three months ended September 30, 2008 was 25.7%, compared to the prior year rate of 26.6%. The 2008 rate was favorably impacted by benefits recognized for tax positions that were effectively settled, while the 2007 rate was favorably impacted by a reduction in the statutory tax rate in Germany. In addition, the third quarter of 2008 had more non-U.S. earnings in low-taxed overseas jurisdictions when compared to the prior year quarter.

The effective tax rate for continuing operations for the nine months ended September 30, 2008 was 28.1%, compared to the prior year rate of 27.3%. The rates were mainly a result of the same factors that impacted the quarter periods. In addition, the 2007 period was impacted by greater benefits recognized for tax positions that were effectively settled.

Earnings from continuing operations for the quarter increased 5% to $190.3 million or $1.01 diluted EPS (“EPS”) compared to $182.1 million or $0.90 EPS in the prior year third quarter. The increase was primarily a result of improvements at Fluid Management partially offset by higher corporate related professional fees, management transition costs, and higher net interest expense, with EPS also benefiting from share repurchases. Earnings from continuing operations for the nine months ended September 30, 2008 increased 6% to $525.2 million or $2.76 EPS compared to $494.6 million or $2.41 EPS in the prior year period.

Loss from discontinued operations for the third quarter of 2008 was $2.7 million, or $0.01 EPS, compared to a loss of $7.5 million or $0.04 EPS in the comparable 2007 quarter. The 2008 loss primarily represents losses from discontinued operations, while the 2007 loss included amounts related to the sale of previously discontinued businesses and other adjustments to the carrying value of previously discontinued businesses.

Loss from discontinued operations for the nine months ended September 30, 2008 was $55.1 million or $0.29 EPS compared to a loss of $18.9 million or $0.09 EPS in the comparable 2007 period. The 2008 loss from discontinued operations includes a $51.1 million write-down to the carrying value of Triton, which was discontinued from the Engineered Systems segment during the second quarter of 2008, to its estimated fair market value, the results of operations and other adjustments. The 2007 amount included losses from the sales of previously discontinued business operations and other adjustments.  

Industrial Products increase in revenue over the prior year third quarter was primarily due to strength in the military and solid waste management markets as well as the impact of the December 2007 acquisition of Industrial Motion Control LLC (“IMC”) and the March 2008 acquisition of Lantec Winch and Gear Inc. (“Lantec”). The segment’s 6% revenue growth reflected organic revenue growth of 6% and acquisition growth of 3%, partially offset by 3% related to the sale of a line of business. Earnings declined 4% when compared to the prior year quarter substantially due to weakness in construction and the North America auto service market and restructuring costs.
   

Material Handling revenue increased 4% while earnings decreased 4%, when compared to the prior year third quarter. The improved revenue was impacted by the IMC and Lantec acquisitions. Overall, the platform continued to experience weakness in the construction and North American automotive service markets as well as in the industrial automation business. In addition, the platform incurred additional expenses in the quarter related to its ongoing cost reduction activities.

Mobile Equipment revenue and earnings increased 9% and 2%, respectively, over the prior year third quarter. The revenue increase was primarily due to core business growth as the platform continued to experience strength in the aerospace, military and solid waste management markets. These improvements were partially offset by softness in the automotive service businesses. Earnings in the platform increased in the quarter due to the higher volume partially offset by steel prices and softness in the automotive service businesses.

For the nine months ended September 30, 2008, revenue increased 5% while earnings were flat. Mobile Equipment had revenue and earnings increases of 8% and 4%, respectively, while Material Handling had revenue and earnings increases of 1%.