Dover Reports First Quarter Results

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Dover Reports First Quarter Results

NEW YORK, April 16 /PRNewswire/ -- Dover Corporation (NYSE: DOV) earned $.39 per diluted share in the first quarter ended March 31, 2001. This was a decrease of 32% from the $.57 per diluted share earned in the comparable quarter last year. Sales in the first quarter were $1.25 billion, equal to last year, and segment earnings for the quarter were $138.5 million, down 32% from $202.2 million last year. Net income from continuing operations for the first quarter was $79.1 million, down 33% from $117.3 million last year.

All four segments showed earnings declines compared to the same period last year. Dover Technologies' income decreased 43%, on a 7% sales decline. Dover Industries and Dover Diversified's earnings declined by 25% and 39% respectively, on essentially flat sales, and Dover Resources' earnings declined 5% on a 9% sales increase.

The margin decline at many Dover companies reflects the lower levels of demand in their served markets, and expenses incurred to reduce costs in response to this environment. These factors will also impact the second quarter.

Commenting on the results and the current outlook, Mr. Thomas L. Reece, Chairman and CEO said, "While the first quarter was disappointing after the strong growth experienced in 1999 and 2000, our operating company presidents are taking the right actions to manage their businesses in these challenging economic times, and are also making appropriate investments to grow their market shares. We are confident that this will have a positive impact on results when we get back into a growth mode. Meanwhile results should improve quarter over quarter in the second half but will not compare favorably with 2000 results."

Dover completed five add-on acquisitions during the quarter at a combined investment of $82.9 million. The profit impact of these acquisitions in 2001 was small due to acquisition write-offs, and imputed financing costs. Acquisitions completed in the last twelve months added $69 million in sales and $9 million in operating profit in the first quarter.


Dover Technologies' first quarter sales decreased 7% to $434.4 million, and earnings decreased 43% to $48.2 million compared to the same period last year, due to the broad-based contraction in the electronics industry. Technologies' disproportionate decline in earnings was due to the higher level of fixed costs added to respond as this market grew rapidly from second half of 1999 through most of 2000, and difficulty in adjusting variable costs in the rapidly declining market since late in 2000. Technologies continues to incur high levels of expenses for new product and market development. Acquisitions completed in the last year added approximately $31 million to sales in the quarter, with no material impact on segment earnings after acquisition write-offs.

In Technologies' Circuit Board Assembly and Test (CBAT) business, first quarter sales decreased 27% to $228.4 million, and earnings decreased 75% to $15.6 million. Bookings, at $187.6 million, were down 47% from the same period last year. The book-to-bill ratio was .82. All CBAT companies owned for a full year had lower results and demand for new CBAT machines is low in all customer segments. Recently acquired OK International consumables and workbench handtools for circuit board manufacturers are less impacted by the capital goods cycle in this industry. Long-term growth attributes of the CBAT business remain strong, and therefore new product and market development activities are being emphasized. However, because of these expenses and lower backlog, second quarter sales and earnings will be lower than the first quarter.

Technologies' Specialty Electronic Components (SEC) sales increased 57% from the same period last year to $162.4 million and earnings increased 85% to $32.6 million. Bookings in the first quarter of $91.5 million were down 42% from last year. The book-to-bill ratio was .56. The SEC companies entered the year with high backlogs, which allowed sales and earnings to remain at roughly the same level as last year's fourth quarter. However, the first quarter's low bookings, exacerbated by $40 million of order cancellations, means that sales and earnings will decline in the second quarter. SEC sales are concentrated in higher value applications. These are found disproportionately in the datacom/telecom/networking markets which have been particularly hard hit, a factor somewhat mitigated by the SEC's focus on "high-end" components that tend to be included in its customers' new product introductions.

Dover Industries' first quarter sales were flat at $299.7 million and segment income decreased 25% to $38.0 million compared to the same period last year. Sales and earnings were both lower than the fourth quarter of 2000. Segment bookings were up 9% to $319.7 million and the book-to-bill ratio was 1.07. Acquisitions completed in the last year added approximately $15 million to sales in the quarter, with almost no impact on segment earnings after acquisition write-offs.

Most of Industries' companies had lower earnings. This was most notable at Heil Environmental, where the earnings decline was caused by delayed chassis deliveries to Heil and customer delayed deliveries on major contracts. Though backlogs in this business have improved recently, the impact of capital constraints on the major waste haulage customers' spending makes a recovery to last year's record results unlikely. Heil Trailer's earnings comparisons continue to suffer despite continued cost reduction in a market for dry bulk trailers that has declined for more than a year. Tipper Tie has been adversely impacted by the effect of "Mad-Cow" and hoof-and-mouth disease scares on meat consumption, particularly in Europe. The markets served by both the automotive service companies (Rotary Lift and Chief) and the food service equipment companies (Groen and Randell) have also been weak.

Somero, a 1999 acquisition and Industries' smallest company, experienced a dramatic earnings improvement from a very depressed prior year, the result of both market conditions and management's new marketing strategies for used equipment. Both PDQ and Texas Hydraulics had modest earnings improvements on higher sales as a result of product and market initiatives to combat difficult markets.

Dover Diversified's first quarter sales increased 2% from the prior year to $276.1 million, and segment income decreased 39% to $20.5 million compared to the same period last year. Sales and earnings were both lower than the fourth quarter of 2000. Segment bookings in the quarter were down 8% to $287.5 million and the book-to-bill ratio was 1.04. Acquisitions completed in the last year added approximately $8 million to sales in the quarter, with almost no impact on segment earnings after acquisition write-offs.

The primary reason for the decline in earnings at Diversified was the recognition in late March of $9.4 million of losses at Crenlo, primarily related to write-off of overstated costs in inventory, exacerbated by a decline in the market for its electronics enclosure products. A surprisingly weak market negatively impacted earnings at Mark Andy, and despite a favorable outlook in the repair and overhaul markets, A/C Compressors' sales and earnings were lower, compared to a very strong first quarter last year. Tranter was hurt, to a lesser degree, by weak demand and fierce competition in its radiator market.

Hill Phoenix's sales and earnings both showed double digit increases from the prior year, and while the full year is still anticipated to show favorable comparisons, much of this improvement is expected in the second half.

Sargent, Performance Motorsports, Waukesha, and SWF all had earnings improvements in generally more favorable market environments, with SWF further helped by the effective integration of its recent acquisitions.

Dover Resources' first quarter sales increased 9% to $238.7 million and segment earnings decreased 5% to $31.7 million compared to the same period last year. Sales and earnings were both higher than the fourth quarter, with earnings up 30%. Segment bookings in the quarter were up 11% to $255.1 million and the book-to-bill ratio was 1.07. Acquisitions completed in the last year added approximately $15 million to sales in the quarter, with almost no impact on segment earnings after acquisition write-offs.

Those Resources companies serving the energy production markets (Petroleum Equipment Group, Quartzdyne, and C. Lee Cook), together increased earnings by 40%, the result of a strong market and good operating leverage. Tulsa Winch, the result of multiple acquisitions in the winch industry, continued to perform extremely well. This was more than offset by very weak transportation markets served by OPW Fluid Transfer Group and Blackmer, and the impact of the automotive market slowdown on De-Sta-Co Manufacturing.

Dover Corporation also reports its pretax earnings on an EBITACQ basis (Earnings before Interest, Taxes, and non-cash charges arising from purchase accounting for Acquisitions). First quarter EBITACQ of $160 million was 27% lower than the prior year's first quarter.

The first quarter tax rate was 30.8%, down 1.7 points from a comparable full year 2000 rate of 32.5%. Dover does not reduce research and development spending when earnings decline, keeping related tax credits high, and export tax credits lag sales declines slightly. As a result, the tax rate declines when earnings are lower. Interest expense was lower than the fourth quarter due to lower interest rates and the favorable impact on interest income from a tax refund recognized in the first quarter.

During the first quarter, Dover issued $400.0 million of 6.50% notes due February 15, 2011. The proceeds were used to reduce short-term debt. Also during the quarter, Dover re-purchased 81,940 of its shares at a cost of $3.1 million at an average price of $37.45.

On April 10, after the end of the first fiscal quarter Dover announced the sale of its welding equipment business. The gain on sale, which will be reported in the second quarter is expected to be approximately $.20 per diluted share.

Additional information on Dover and its operating companies can be found on the company website. ( The Dover website will host a Webcast of the first quarter conference call at 9:00 AM Eastern Time on Tuesday, April 17. The conference call will also be made available for replay on the website.

Dover Corporation makes information available to the public, orally and in writing, which may use words like "expects" and "believes", which are "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. This press release contains forward-looking statements regarding future events and the performance of Dover Corporation that involve risks and uncertainties that could cause actual results to differ materially including, but not limited to, failure to achieve expected synergies, failure to successfully integrate acquisitions, failure to service debt, failure to sell non-core properties, including without limitation, as a result of the failure to obtain regulatory approvals or of conditions to closing to occur, economic conditions, customer demand, increased competition in the relevant market, and others. Dover Corporation refers you to the documents that it files from time to time with the Securities and Exchange Commission, such as the Form 10- K, Form 10-Q and Form 8-K, which contain additional important factors that could cause its actual results to differ from its current expectations and from the forward-looking statements contained in this press release.


                          DOVER CORPORATION CONSOLIDATED
                              MARKET SEGMENT RESULTS

                                              First quarter ended March 31,
                  SALES                         2001            2000    Change

    Dover Technologies                     $434,430,000    $466,366,000   -7%
    Dover Industries                        299,707,000     299,041,000
    Dover Diversified                       276,132,000     269,538,000    2%
    Dover Resources                         238,724,000     218,156,000    9%

       Total (after intramarket
        eliminations)                    $1,247,564,000  $1,251,283,000


    Dover Technologies                      $48,226,000     $84,795,000  -43%
    Dover Industries                         37,994,000      50,415,000  -25%
    Dover Diversified                        20,518,000      33,465,000  -39%
    Dover Resources                          31,718,000      33,541,000   -5%

       Subtotal (after intramarket
        eliminations)                       138,456,000     202,216,000  -32%

    Loss on disposition                              --      (1,400,000)
    Corporate expense                        (4,558,000)     (6,241,000) -27%
    Net interest expense                    (19,534,000)    (15,582,000)  25%
    Earnings before taxes on income         114,364,000     178,993,000  -36%
    Taxes on income                          35,278,000      61,674,000  -43%
    Net earnings                            $79,086,000    $117,319,000  -33%

    Net earnings per diluted common
     share:                                       $0.39           $0.57  -32%

    Average number of diluted shares
     outstanding                            204,468,000     204,440,000

    Impact of acquisition write-offs on
     diluted EPS:
      Diluted EPS                                 $0.39           $0.57  -32%
        Goodwill write-offs (net of tax)           0.05            0.05
      EPS before goodwill                          0.44            0.62  -29%
        Other acquisition write-offs (net
         of tax)                                   0.04            0.04
      EPS before all acquisition write-
       offs                                       $0.48           $0.66  -27%

                                 DOVER CORPORATION
                                OPERATIONAL INCOME
                              (in millions)  (unaudited)

                             2001 - Three     2000 - Three
                                Months           Months      2000 - Full Year
                            SALES  INCOME %  SALES  INCOME %  SALES  INCOME %
      Circuit board
       assembly / test        $228   $16  7    $315   $61 19  $1,369  $265 19
      Electronic components    162    33 20     103    18 17     531   104 20
      Marking                   44     9 20      48    14 29     200    60 30
    Dover Technologies         434    58 13     466    93 20   2,100   429 20
    Dover Industries           300    45 15     299    56 19   1,246   224 18
    Dover Diversified          276    25  9     270    41 15   1,176   194 17
    Dover Resources            239    39 16     218    42 19     887   149 17
    Operational subtotal
     (after elim.)          $1,248   167 13  $1,251   232 19  $5,401   996 18

    Corporates and other              (7)             (14)             (49)
    EBITACQ                          160              218              947
    Gain (loss) on
     dispositions &
    Sale of equity
     securities                       --               (1)              10
    Interest                         (20)             (16)             (89)
    Acquisition Write-offs           (26)             (22)             (96)
    Dover Pre-tax income            $114             $179             $772

"Operational Income" -- differs from segment operating profits because it excludes all non-cash write-offs relating to acquisitions, the expenses of each segment's corporate group, and foreign exchange gains or losses.

"EBITACQ" -- earnings before taxes, interest, acquisition write-offs and non-recurring gains.

                     Dover Corporation and Subsidiaries
       Analysis of Cash Flow: Depreciation, Amortization & Acquisition
                        write-offs, with tax effects
                         (unaudited)  (in millions)

                                                 2001 - Three Months
                                                    Tax Deductible
                                         Total         Yes        No     Tax

    EBIT                                  $134                           $42

    Acquisition related:
       Goodwill amortization                13           7         6       2

       Other Amortization                    4
       Depreciation                          4
       Inventory write-offs                  5
    Subtotal other write-offs               13          11         2       5

    Total acquisition write-offs            26          18         8       7

    EBITACQ                                160                           $49

       Other depreciation                   32
       Other amortization                   --

    EBITDAI                                192

       Inventory write-offs                 (5)

    EBITDA                                $187

                                                 2000 - Three Months
                                                    Tax Deductible
                                         Total         Yes        No     Tax

    EBIT                                  $196                           $68

    Acquisition related:
       Goodwill amortization                11           6         5       2

       Other Amortization                    5
       Depreciation                          4
       Inventory write-offs                  2
    Subtotal other write-offs               11           7         4       3

    Total acquisition write-offs            22          13         9       5

    EBITACQ                                218                           $73

       Other depreciation                   28
       Other amortization                   --

    EBITDAI                                246

       Inventory write-offs                 (2)

    EBITDA                                $244

                                                   2000 - Full Year
                                                     Tax Deductible
                                          Total          Yes      No     Tax

    EBIT                                    $851                         $267

    Acquisition related:
        Goodwill amortization                 49          24      25        9

        Other Amortization                    15
        Depreciation                          18
        Inventory write-offs                  14
    Subtotal other write-offs                 47          38       9       13

    Total acquisition write-offs              96          62      34       22

    EBITACQ                                  947                         $289

        Other depreciation                   118
        Other amortization                     3

    EBITDAI                                1,068

        Inventory write-offs                 (14)

    EBITDA                                $1,054

"EBIT" -- represents earnings before interest and taxes.

"EBITACQ" -- represents earnings before interest, taxes and acquisition


"EBITDAI" -- represents earnings before interest, taxes, depreciation,

amortization and inventory write-offs.

"EBITDA" -- represents earnings before interest, taxes, depreciation and


EBIT, EBITACQ, EBITDAI and EBITDA -- all exclude gains (losses) on sale of

                                         businesses and equity investment.

                          DOVER CORPORATION CONSOLIDATED

                                                 March 31,        December 31,
    BALANCE SHEET ('000)                            2001              2000

    Cash, equivalents and marketable
     securities                                   $171,580          $186,740
    Receivables, net of allowances for
     doubtful accounts                             864,052           903,177
    Inventories                                    794,056           783,200
    Prepaid expenses                               109,988           101,732
    Net property, plant & equipment                787,458           755,548
    Goodwill, net of amortization                1,915,823         1,896,715
    Other intangibles and assets, net              276,171           265,004
                                                $4,919,128        $4,892,116

    Liabilities & stockholders' equity:
    Short term debt                               $504,948          $842,537
    Payables and accrued expenses                  738,679           762,103
    Deferred credits                               184,359           214,055
    Long-term debt                               1,033,292           631,846
    Stockholders' equity                         2,457,850         2,441,575
                                                $4,919,128        $4,892,116

                                                          Three Months
    CASH FLOWS ('000)                                 2001              2000

    Operating activities:
    Net earnings                                   $79,086          $117,319
    Loss on sale of business                            --             1,400
    Depreciation                                    35,768            31,963
    Amortization of goodwill                        13,371            11,490
    Amortization - other                             4,051             4,558
    Working capital changes                         (8,354)         (155,123)
    Other, net                                     (27,820)            4,540
     Net cash from operating activities             96,102            16,147

    Investing activities:
    Capital expenditures                           (62,518)          (35,231)
    Acquisitions, net of cash and cash
     equivalents                                   (82,361)         (154,080)
    Proceeds from sale of businesses and
     equity investments                                 --            14,923
     Net cash from (used in) investing
      activities                                  (144,879)         (174,388)

    Financing activities:
    Increase (decrease) in notes payable          (337,410)          456,975
    Increase (decrease) in long-term debt          400,769            12,728
    Cash dividends                                 (25,412)          (23,339)
    Purchase of treasury stock                      (3,067)           (3,037)
    Proceeds from exercise of stock
     options                                         2,266             2,142
     Net cash from (used in) financing
      activities                                    37,146           448,506

    Discontinued operations - tax
     payments                                           --          (307,428)

    Net increase (decrease) in cash &
     equivalents                                   (11,631)          (17,163)
    Cash & cash equivalents at beginning
     of period                                     181,399           138,038
    Cash & cash equivalents at end of
     period                                       $169,768          $120,875

                              DOVER CORPORATION
                      ACQUISITIONS - FIRST QUARTER 2001

    DATE       TYPE      ACQUIRED       LOCATION (Near)     SEGMENT -
                         COMPANIES                     Operating Co.

    01-Jan     Asset     CPI Products   Plymouth, MI        DRI  De-Sta-Co

Manufactures a broad array of end-of-arm, transfer press, and assembly tooling products.

    04-Jan     Stock     Bayne Machine  Greenville, SC      DII  Heil
                         Works, Inc.                             Environmental

    Manufactures hydraulic lift systems utilized in the waste industry.

    31-Jan     Stock     Adhoc Logiciel Hautmont, France    DTI  Imaje

Develops software systems for traceability, identification and product flow management.

28-Feb Stock Schreiber Cerritos, Ca DII DovaTech


    Manufactures small and medium-sized chillers.

    31-Mar     Stock     Comco          Cincinnati, Oh      DDI  Mark Andy

Manufactures narrow and mid-web flexographic printing presses. SOURCE Dover Corporation

CONTACT: David S. Smith, Vice President Finance of Dover, 212-922-1640/