Dover Earnings Set Record

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Dover Earnings Set Record

NEW YORK, Jan. 20 /PRNewswire/ -- In the fourth quarter ending December 31, 1999, Dover Corporation (NYSE: DOV) earned a record $.60 per share from continuing operations, before special items. This brought full year profits by this measure to $1.90 per share, also a record. Earnings per share from continuing operations in 1998 were $.36 in the fourth quarter and $1.45 for the full year. Sales in 1999 rose 12% to almost $4.5 billion with fourth quarter sales advancing 23% to $1.25 billion.

In the quarter just ended Dover recorded a $7 million pre-tax charge in connection with the sale of a business, reducing its gain for the year from such special items to $10.3 million. Both figures round to $.02 per share and are not included in the EPS numbers above.

In January, 1999 Dover completed the sale of its elevator business for $1.16 billion, reporting an after-tax gain of $524 million, which is now equal to $2.49 per average diluted share. This brought total earnings per share for 1999 to $4.41. Total earnings per share in 1998 were $1.69.

The largest single factor underlying the fourth quarter and full year growth in operating income was the electronics industry's recovery, especially as it impacted Dover's circuit board assembly and test operations (CBAT). Pre-tax profits for the CBAT companies rose $64 million for the year (70%) with fourth quarter profits more than triple the prior year.

Dover also set records for new investment by acquisition ($599 million in 18 transactions) and for share repurchases ($672 million for 18.5 million shares at an average price of $36). These actions fully redeployed the $1.16 billion received from the elevator sale. The resulting reduction in Dover's average shares outstanding and in financing costs added approximately $.23 per share to 1999 earnings from continuing operations. This was closer to the $.24 per share earned by Elevator in 1998 than originally expected when this business was sold. Further growth of Dover's operating income in 2000, and the "automatic" further reduction in average shares outstanding, will make the sale and asset redeployment additive to earnings per share in 2000.

The 18 acquisitions completed in 1999 added $239 million to sales in 1999 and $44 million to operating income for the varying lengths of their partial-year inclusion in Dover's results. Both numbers are expected to approximately double in 2000. After interest costs to fund the program and non-cash charges required by "purchase accounting rules" their contribution to earnings per share in 1999 was $.03. Total non-cash charges to earnings required by purchase accounting for these and for prior years' acquisitions rose to $.29 per share in 1999 from $ .23 in 1998.

Three of Dover's Business Segments achieved full year earnings gains. Technologies (+55%), Industries (+16%) and Diversified (+6%). Resources experienced a 14% decline.

As noted, the Dover Technologies Business Segment benefited from the CBAT market recovery, which began in May-June and has continued through the fourth quarter. The order downturn reported for September in Dover's earnings report for the third quarter now appears to have been an aberration, rather than the beginning of a trend. Universal Instruments, the largest Technologies company serving the CBAT market, achieved its highest quarterly shipments, earnings and bookings (1.07 book-to-bill) in the fourth quarter. Its orders in the fourth quarter, including a strong performance from newly acquired Alphasem, were almost double the year-earlier period. Specialty electronic components also achieved a record year with earnings up 53% on a 16% sales gain, reflecting a strong communications market and the success of internal profit improvement programs. Imaje (marking) also achieved record sales and earnings, up 6% and 3% respectively. Imaje is a "technology heavy" business but serves worldwide industrial markets where growth was slow in 1999. Technologies achieved record sales for the year of almost $1.5 billion (up 20%) and record sales in the fourth quarter of $435 million. Book-to-bill was 1.06 for the year and 1.03 for the quarter for Technologies as a whole (1.06 and 1.02, respectively, in the CBAT area).

The 16% earnings gain in the Industries Business Segment reflected broad-based internal growth by its companies as well as the full year effect of 1998 acquisitions (all of which improved earnings in 1999) and the partial year effect of 1999 acquisitions. The largest internal gains came from Heil Environmental, which is benefiting from pent-up demand in the domestic refuse vehicle market. Its sales and earnings set records by substantial amounts with a book-to-bill of 1.20 for the year and 1.41 for the fourth quarter. A strong recovery in the final quarter at Heil Trailer allowed it to match its 1998 records for sales and earnings. Its book-to-bill of 1.09 in the fourth quarter was the first quarter above 1.0 in two years. The two Heil companies accounted for about one-third of Industries' sales and a somewhat smaller percentage of earnings. Other strong internal growth performers were Rotary Lift, Texas Hydraulics, PDQ, and Somero. Industries operational profits (before corporate expense and acquisition write-offs) increased by $30 million (17%) in 1999. Approximately half of this came from internal growth of the businesses owned at the start of 1999. Book-to-bill was 1.02 for the year and 1.07 for the quarter, with year-end backlog up 16%. Most companies in Industries ship what they book within a quarter (the Heil companies are the major exceptions), making backlog and book-to-bill measures less indicative of near term activity than in Technologies.

A very strong fourth quarter allowed the Dover Diversified Business Segment to increase earnings 6% for the year on a 12% sales gain. All of the earnings gain, and half of the sales gain, came in the fourth quarter when earnings exceeded prior year by 35% and sales were ahead by 20%. The $50 million earned in the final quarter represented one-third of the year's profits due to unusual profit patterns at several companies. Belvac was profitable in the quarter, after losses for the prior nine months. A-C Compressor's customer schedules required heavy shipments toward the end of the year, resulting in half of its 1999 profits falling into the final quarter. Diversified does not expect to match the 1999 fourth quarter profit rate in 2000, although full year profits should continue to grow. Individual company results were quite mixed in 1999. Companies making factory or process equipment -- Tranter, A-C Compressor, Belvac, Van Dam -- faced poor markets and suffered earnings declines totaling about $30 million. Companies making more commercially oriented equipment -- Hill Phoenix (supermarket display cases and refrigeration systems), Mark Andy (presses used for label printing), SWF (packaging equipment), and Waukesha (bearings for power generation equipment) -- all had good earnings gains. Sargent Controls also had strong gains, particularly in its defense applications. Additionally, 1999 acquisitions were strongly additive to segment reporting. Diversified's book-to-bill ratio was .99 for the year and .91 for the fourth quarter (due to heavy billings). Year-end backlog is up 20% with good gains at A-C Compressor and Belvac.

The Dover Resources Business Segment's profit decline of 14% for the full year moderated to only a 1% decline in the fourth quarter. Earnings in the final quarter exceeded $30 million for the first time in 1999. The relative strength in the final quarter primarily reflected above average results at the Wilden and Blackmer pump companies where business had been adversely affected by slow sales for chemical and industrial process applications during most of the year. Additionally, earnings from petroleum drilling and production equipment continued to improve, with fourth quarter profits more than four times those of last year. Cook, both De-Sta-Co companies, Hydro-Systems, and Tulsa Winch also showed gains in the final quarter. For the year as a whole, however, only three of Resources' fourteen companies achieved meaningful earnings gains over 1998. Three others were essentially even for the year, and the others down by 13% or more. OPW-Fueling Components and OPW-Fluid Transfer had superb results in 1998 and struggled during 1999 with oversold distribution, declining markets, and a disruptive strike. Markets for Ronningen-Petter (filters primarily used in papermaking and petroleum refining) and for Duncan (parking meters) declined very sharply, reducing their combined income by about $13 million. Operating profits for these four businesses declined by almost one-half, more than accounting for the full year drop at Resources. Overall book-to-bill for Resources was .99 for the quarter and year. Backlog at year-end was down 2%, primarily at OPW which had enjoyed a year-end surge in orders in 1998 for equipment to meet EPA requirements. Even more than at Dover Industries, these measurements at Dover Resources are poor indicators of near term business activity.

Thomas L. Reece, Dover's Chairman and CEO, offered these comments. "This was a great way to end the 20th century. We have good momentum going into 2000 and expect very favorable earnings comparisons at least during the first part of the year. At this point, a reasonable guess is that earnings per share in 2000 will be about 20% higher than this year's $1.90. Doing substantially better will require that the electronics industry stay strong throughout 2000 and that we have no surprises in the rest of our businesses. We will grow more slowly if markets turn against us."

                            MARKET SEGMENT RESULTS

                               EARNINGS                       SALES
    Fourth quarter
    ended December 31,     1999         1998*           1999          1998*

    Dover Industries   $48,420,000  $44,925,000   $300,147,000  $264,105,000
    Dover Technologies  78,901,000   31,291,000    434,464,000   294,214,000
    Dover Diversified   49,970,000   37,091,000    311,949,000   259,217,000
    Dover Resources     30,786,000   31,105,000    203,007,000   202,717,000

    Subtotal (after
     eliminations)     208,077,000  144,412,000 $1,248,284,000$1,018,866,000

     on disposition    (7,000,000)      --

    Corporate expense  (8,769,000)  (7,565,000)

    Net interest
     expense          (12,972,000) (16,347,000)

    Earnings before
     taxes on income   179,336,000  120,500,000
    Taxes on income     58,347,000   38,435,000

    Net earnings -
     Operations        120,989,000   82,065,000

    Earnings from
     operations*           --        12,759,000

    Net earnings      $120,989,000  $94,824,000

    Net earnings per share:
    Basic - Continuing       $0.60        $0.37
            Discontinued       --          0.06
            Net earnings     $0.60        $0.43

    Diluted - Continuing     $0.58        $0.36
              Discontinued     --          0.06
              Net earnings   $0.58        $0.42

                                EARNINGS                      SALES
    Twelve months
     ended December 31,    1999         1998*           1999          1998*

    Dover Industries  $179,554,000 $154,500,000 $1,144,599,000$1,012,440,000
    Dover Technologies 226,761,000  146,612,000  1,457,792,000
    Dover Diversified  152,139,000  143,157,000  1,071,574,000   957,579,000
    Dover Resources    107,264,000  125,225,000    777,691,000   800,914,000

     eliminations)     665,718,000  569,494,000 $4,446,420,000$3,977,666,000

     on disposition     10,256,000      --
    Corporate expense (25,790,000) (24,241,000)

    Net interest
     expense          (35,180,000) (56,607,000)

    Earnings before
     taxes on income   615,004,000  488,646,000

    Taxes on Income    209,950,000  162,249,000

    Net earnings -
     Operations        405,054,000  326,397,000

    Earnings from
     operations*            --       52,448,000

    Gain on sale of
     operations*       523,938,000       --

    Net earnings      $928,992,000 $378,845,000

    Net earnings per share:
    Basic - Continuing       $1.94        $1.47
            Discontinued       --          0.23
            Gain on sale      2.50          --
            Net earnings     $4.44        $1.70

    Diluted - Continuing     $1.92        $1.45
              Discontinued     --          0.24
              Gain on sale    2.49          --
              Net earnings   $4.41        $1.69

    Average number
     of shares
     outstanding -
     Basic             209,063,000  222,793,000

    Average number
     of shares
     outstanding -
     Diluted           210,679,000  224,386,000

    * On January 5, 1999, Dover completed the sale of its elevator business to
      Thyssen Industrie AG for $1.16 billion.  Results for 1998 have been
      restated to classify the elevator business as discontinued.

                              FINANCIAL RESULTS

    Fourth quarter                                                 CHANGE
     ended December 31,         1999             1998*

    Net sales            $1,248,284,000  $1,018,866,000             22.5%
     before taxes          $179,336,000    $120,500,000             48.8%
    Net earnings
     from continuing
     operations            $120,989,000     $82,065,000             47.4%
    Net earnings*          $120,989,000     $94,824,000             27.6%

    Net earnings per share:
    Basic - Continuing            $0.60           $0.37             62.2%
            Discontinued            --             0.06
            Net earnings          $0.60           $0.43             39.5%

    Diluted - Continuing          $0.58           $0.36             61.1%
    Discontinued                    --             0.06
    Net earnings                  $0.58           $0.42             38.1%

     amortization           $42,081,000     $45,488,000             -7.5%

     expenditures           $43,201,000     $39,541,000              9.3%

    Twelve months                                                  CHANGE
     ended December 31,         1999             1998*

    Net sales            $4,446,420,000  $3,977,666,000             11.8%
     before taxes          $615,004,000    $488,646,000             25.9%
    Net earnings
     from continuing
     operations            $405,054,000    $326,397,000             24.1%
    Net earnings*          $928,992,000    $378,845,000            145.2%

    Net earnings per share:
    Basic - Continuing            $1.94           $1.47             32.0%
            Discontinued            --             0.23
            Gain on sale           2.50              --
            Net earnings          $4.44           $1.70            161.2%

    Diluted - Continuing          $1.92           $1.45             32.4%
              Discontinued          --             0.24
              Gain on sale         2.49              --
              Net earnings        $4.41           $1.69            160.9%

     amortization          $183,244,000    $167,687,000              9.3%
     expenditures          $130,112,000    $125,730,000              3.5%
    Cash and
     cash equivalents      $138,038,000     $96,774,000             42.6%

     debt & current
     maturities of
     long-term             $297,900,000    $433,589,000            -31.3%
    Long-term debt         $608,025,000    $610,090,000              -.3%
    Equity               $2,038,765,000  $1,910,884,000              6.7%

    * On January 5, 1999, Dover completed the sale of its elevator business to
      Thyssen Industrie AG for $1.16 billion.  Results for 1998 have been
      restated to classify the elevator business as discontinued.

                             OPERATIONAL PROFITS
                          (in millions) (unaudited)

                   1999 - FOURTH QUARTER          1999              1998

                       SALES EARNINGS  %  SALES  EARNINGS %  SALES EARNINGS  %

    Dover Industries    $300   $54    18  $1,145   $203  18  $1,012  $173   17
    Dover Technologies   435    88    20   1,458    261  18   1,211   178   15
    Dover Diversified    312    58    19   1,072    177  17     958   164   17
    Dover Resources      203    37    18     778    128  16     801   144   18
    Operational Profits
     (after elim.)(1) $1,248   237    19  $4,446    769  17  $3,978   659   17

     and other                 (15)                 (44)              (40)

    EBITACQ (2)                222                  725               619

     on dispositions            (7)                  10                --

    Interest                   (13)                 (35)              (57)
     Write-offs                (23)                 (85)              (73)
    Dover Pre-tax
     income                   $179                 $615              $489

    (1) Differs from segment operating profits in that all non-cash write-offs
        relating to acquisitions are excluded, along with the expenses of each
        segment's corporate group.
    (2) Earnings before taxes, interest, acquisition write-offs and
        non-recurring gains.

SOURCE  Dover Corporation
    CONTACT:  John F. McNiff, Vice President of Dover, 212-922-1640/
    /Web site: