NEW YORK, NY (January 20, 1999)…Dover Corporation (NYSE-DOV) earned $1.45 per share from continuing operations in 1998, compared to $1.43 in 1997. Sales grew 8% to $4 billion. The fourth quarter comparison was $.36 per share in 1998, down from the quarterly record of $.40 per share earned in 1997, on sales that were up slightly to $1 billion.

On January 5, 1999, Dover completed the previously announced sale of its elevator business to Thyssen Industrie for $1.1 billion in cash. This business is now shown as a "discontinued operation" for 1998 and prior years. Earnings for 1998, including discontinued operations, were $1.69 per share, compared to 1997’s $1.79 per share. The 1997 figure includes an $.11 per share gain on the sale of the European portion of the elevator business. The gain on the January 5,1999 sale, estimated at $2.35 per share, will be reported in 1999.

During the fourth quarter, Dover repurchased 2.2 million shares of its common stock at an average cost of $35. This brought total repurchases in 1998 to 3.2 million shares at an average cost of approximately $33 per share. Dover is continuing its repurchase program and plans to buy at least 2 million more shares in the first quarter of 1999.

Dover companies made two add-on acquisitions in the fourth quarter, investing $30 million and bringing total acquisition investment in 1998 to over $550 million – almost double the average of the previous three years. Dover also signed letters of intent on two other acquisitions that are expected to be completed in January, involving a combined investment of about $115 million.

The 1998 acquisition program added only $.03 per share to reported earnings due to inclusion of most new companies for only portions of the year, write-off of acquisition premiums, and financing costs. Total non-cash charges for write-off of acquisition premiums in 1998 were $73 million (pre-tax), which reduced earnings per share from continuing operations by $.23 per share. Dover’s 1998 EBITA (before these charges) from continuing operations equaled $2.80 per year-end outstanding share. After receiving the proceeds from the elevator sale, Cash and Investments exceeded Total Debt by approximately $200 million.

Three of Dover’s four continuing business segments achieved earnings gains in 1998, but these were offset by a 25% decline in the Technologies segment from its 1997 record earnings performance.

Dover Diversified achieved a 25% sales and earnings gain with internal gains and 1997-1998 acquisitions both contributing to growth. Companies owned throughout 1997 and 1998 combined for 1998 sales of $765 million with earnings up 7% from 1997. Hill Phoenix (supermarket display cases and refrigeration systems) had an exciting year with market share improvement helping them to 20% sales growth. Higher volume and improved internal processes raised operating profit margins to their highest level since the Phoenix Refrigeration, Hill, and Margaux acquisitions were completed and merged in early 1995. A-C Compressor also achieved significant internal earnings growth as well as strong contributions from after-market add-on acquisitions made in the latter part of 1997. Only Belvac had a major earnings decline, due to further contraction of capital spending by aluminum can makers. All of its year-over-year decline was recorded in Q4 (when Belvac had very strong profits in 1997) and this was the cause of Diversified’s unfavorable segment earnings comparison in the just-ended quarter. Acquisitions made in 1998, and a full year of inclusion for 1997 acquisitions, provided over $20 million (after acquisition premium write-offs) of Diversified’s $29 million growth in segment earnings. Conmec and Preco (added to A-C Compressor), Sonic (added to Sargent) and stand-alones SWF and Wiseco all had strong years with 1998 operating profit margins (before acquisition write-offs) averaging over 20%.

Dover Industries increased earnings 20% on a sales gain of 18% - both to record levels. Nine of the twelve individual companies posted gains, led by Heil Tank Trailer, Heil Environmental, Marathon, DovaTech, and Randell – all of which improved profits by more than 20%. The acquisition of PDQ (car wash equipment) in the second quarter and several small add-on acquisitions in 1997-98 provided half of the sales gain but a smaller portion of the earnings gain due to acquisition premium write-offs. Fourth quarter profits of $44.9 million set a new record and were 30% higher than prior year. Bookings in the quarter were 98% of shipments. Both Heil Trailer and Heil Environmental ended the year with strong backlogs. Most other Industries’ companies turn orders to shipments within 30 days, making backlog a less meaningful near-term sales indicator. The book-to-bill ratio for these ten companies in the fourth quarter was .97.

Resources profits gained 10% on a 7% sales increase. The purchase of Wilden Pump and Quartzdyne, along with several smaller add-on acquisitions, accounted for all of the sales gain while adding $8 million to the segment earnings gain (after acquisition premium write-offs). Thirteen Resources’ companies achieved earnings close to, or above, prior year with OPW-Fueling Components, Ronninger-Petter, Hydro Systems and Duncan achieving gains of more than 20%. These 13 companies together provided over 75% of total 1998 sales and improved their earnings by 10%. However, profits declined by more than 50% (approximately $12 million) at three Resources companies that make oil field production equipment. Low oil prices severely impacted demand for these products, which are primarily used in lifting oil and liquids from existing wells. Sales were down 36% for the year, but more in the second half as fourth quarter revenues were off 60% from a year earlier. Profitability at these companies has been maintained through aggressive costs cutting, including combining the three businesses into a single company. Resources’ total bookings in the fourth quarter were 97% of shipments, with both sales and earnings very close to the average level for the year as a whole. Resources has the potential for earnings gains in 1999, largely due to a full year’s inclusion of Wilden Pump. Weak energy prices, and possible declines at OPW-FC and Ronninger-Petter from their very strong 1998 performances, will keep any gain modest.

Profits in the Technologies segment fell 25% following a 34% increase in 1997. The 1997 cyclical peak for electronic industry spending on assembly and test equipment turned into a cyclical low in 1998 from which recovery is not foreseen until late in 1999. Operating profits from this portion of Technologies’ business dropped by approximately $60 million on a sales decline (adjusted for acquisitions) of $135 million. Competitive pricing, and the reduction in volume of high-marginal-contribution equipment sales, reduced operating profit margins to a still respectable 12%. Combined profits also declined for the four electronic component companies, primarily due to weak demand for wireless communication related products at K&L Microwave and at Quadrant’s German operations. Imaje’s industrial marking business (ink-jet printers and supplies) balanced weakness in Asian economies with strength in Europe, and achieved small increases in sales and profits. Technologies’ segment sales and profits were lowest of the year in the fourth quarter with a book-to-bill of .94. Orders at Universal Instruments in the quarter equaled sales and remained close to the average order rate over the past 14 months since the capital spending boom abruptly ended during the 1997 fourth quarter. The Technologies’ segment enters 1999 with substantial operating earnings leverage potential but with both soft order rates and backlog 19% lower than at the start of 1998 (29% lower for circuit assembly/test). The timing of the expected recovery in electronic capital equipment spending provides uncertainty regarding short-term earnings for Technologies. Longer term, though, the ultimate sales recovery represents a substantial profit opportunity.

On balance, Dover expects earnings per share from continuing operations in 1999 to grow at least by its historical mid-teens rate. Depending on general economic conditions, the timing of the cyclical recovery for electronic capital spending, and the specific use of proceeds from the elevator sale, earnings in 1999 could grow at a faster rate.

 

DOVER CORPORATION CONSOLIDATED
MARKET SEGMENT RESULTS
(unaudited)
		EARNINGS				SALES
Fourth quarter ended December 31, :		1998		1997		1998	1997
Dover Technologies		$ 31,291,000		$ 42,977,000		$ 294,214,000	$ 353,623,000
Dover Industries		44,925,000		34,614,000		264,105,000	221,780,000
Dover Diversified		37,091,000		42,626,000		259,217,000	230,470,000
Dover Resources		31,105,000 ----------------------		29,923,000 ----------------------		202,717,000 ----------------------	197,712,000 ----------------------
Subtotal (after intramarket eliminations)		144,412,000		150,140,000		$ 1,018,866,000 ===============	$ 1,002,748,000 ===============
Corporate expense & interest net		(23,912,000) ----------------------		(17,096,000) ----------------------
Earnings before taxes on income		120,500,000		133,044,000
Taxes on income		38,435,000 ----------------------		41,219,000 ----------------------
Net earnings - Continuing Operations		82,065,000		91,825,000
Discontinued operations		12,759,000 ----------------------		8,435,000 ----------------------
Net earnings		$ 94,824,000 ===============		$ 100,260,000 ===============
Earnings per share - from continuing operations:
Basic		$0.37		$0.42
Diluted		$0.36		$0.40
Earnings per share:
Basic		$0.43		$0.45
Diluted		$0.42		$0.45
		EARNINGS				SALES
Twelve months ended December 31, :		1998		1997		1998	1997
Dover Technologies		$ 146,612,000		$ 195,393,000		$ 1,211,416,000	$ 1,300,503,000
Dover Industries		154,500,000		128,945,000		1,012,440,000	859,778,000
Dover Diversified		143,157,000		114,902,000		957,579,000	767,194,000
Dover Resources		125,225,000 ----------------------		113,538,000 ----------------------		800,914,000 ----------------------	745,429,000 ----------------------
Subtotal (after intramarket eliminations)		569,494,000		552,778,000		$ 3,977,666,000 ===============	$ 3,669,568,000 ===============
Corporate expense & interest net		(80,848,000) ----------------------		(60,504,000) ----------------------
Earnings before taxes on income		488,646,000		492,274,000
Taxes on Income		162,249,000 ----------------------		167,360,000 ----------------------
Net earnings - Continuing Operations		326,397,000		324,914,000
Discontinued operations		52,448,000 ----------------------		80,517,000 ----------------------
Net earnings		$ 378,845,000 ===============		$ 405,431,000 ===============
Earnings per share - from continuing operations
Basic		$1.47		$1.46
Diluted		$1.45		$1.43
Earnings per share
Basic (1)		$1.70		$1.82
Diluted (1)		$1.69		$1.79
Average number of shares outstanding - Basic		222,793,000		223,181,000
Average number of shares outstanding - Diluted		224,386,000		226,815,000
(1) 1997 includes $.11 per share from divestiture of businesses.

 

DOVER CORPORATION CONSOLIDATED
FINANCIAL RESULTS
(unaudited)
					PERCENT
Fourth quarter ended December 31, :		1998		1997	CHANGE
Net sales		$ 1,018,866,000		$ 1,002,748,000	1.6%
Earnings before taxes		$ 120,500,000		$ 133,044,000	-9.4%
Net earnings from continuing operations		$ 82,065,000		$ 91,825,000	-10.6%
Net earnings		$ 94,824,000		$ 100,260,000	-5.4%
Earnings per share - from continuing operations
Basic		$0.37		$ 0.42	-11.9%
Diluted		$0.36		$ 0.40	-10.0%
Earnings per share
Basic		$0.43		$ 0.45	-4.4%
Diluted		$0.42		$ 0.45	-6.7%
Depreciation/amortization		$ 45,488,000		$ 58,404,000	-22.1%
Capital expenditures		$ 39,541,000		$ 41,233,000	-4.1%
					PERCENT
Twelve months ended December 31, :		1998		1997	CHANGE
Net sales		$ 3,977,666,000		$ 3,669,568,000	8.4%
Earnings before taxes		$ 488,646,000		$ 492,274,000	-.7%
Net earnings from continuing operations		$ 326,397,000		$ 324,914,000	.5%
Net earnings		$ 378,845,000		$ 405,431,000	-6.6%
Earnings per share - from continuing operations
Basic		$ 1.47		$ 1.46	.7%
Diluted		$ 1.45		$ 1.43	1.4%
Earnings per share
Basic   (1)		$ 1.70		$ 1.82	-6.6%
Diluted (1)		$ 1.69		$ 1.79	-5.6%
Depreciation/amortization		$ 167,687,000		$ 155,204,000	8.0%
Capital expenditures		$ 125,730,000		$ 122,082,000	3.0%
Cash and marketable securities		$ 96,774,000		$ 125,040,000	-22.6%
Short-term debt & current maturities of long-term debt		$ 433,589,000		$ 436,117,000	-.6%
Long-term debt		$ 610,090,000		$ 262,630,000	132.3%
Equity		$ 1,902,559,000		$ 1,703,584,000	11.7%
(1) 1997 includes $.11 per share from divestiture of businesses.

DOVER CORPORATION
CONTINUING OPERATIONS
DILUTED EARNINGS PER SHARE
(unaudited)
		Years:
1993		$0.54
1994		$0.78
1995		$1.13
1996 (1)		$1.24
1997		$1.43
1998		$1.45
Quarters:	1998	1997
First	$0.33	$0.28
Second	$0.38	$0.37
Third	$0.38	$0.38
Fourth	$0.36	$0.40
(1) Excludes $0.22 from gain on sale of businesses.