SEC Filing | Dover Corporation

1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For six months ended June 30, 2000 Commission File No. 1-4018 DOVER CORPORATION (Exact name of registrant as specified in its charter) Delaware 53-0257888 (State of Incorporation) (I.R.S. Employer Identification No.) 280 Park Avenue, New York, NY 10017 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (212) 922-1640 Indicate by checkmark 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 X No --- --- The number of shares outstanding of the Registrant's common stock as of the close of the period covered by this report was 203,074,480.

2 Part I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS DOVER CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF EARNINGS THREE MONTHS ENDED JUNE 30, (000 OMITTED) UNAUDITED 2000 1999 ---------------- -------------------- Net sales $ 1,379,260 $ 1,077,850 Cost of sales 871,839 687,705 ---------------- -------------------- Gross profit 507,421 390,145 Selling & administrative expenses 280,898 241,615 ---------------- -------------------- Operating profit 226,523 148,530 ---------------- -------------------- Other deductions (income): Interest expense 23,673 12,329 Interest income (2,080) (4,097) Foreign exchange (3,447) (700) Loss on dispositions - - All other, net (1,035) (1,827) ---------------- -------------------- Total 17,111 5,705 ---------------- -------------------- Earnings before taxes on income 209,412 142,825 Federal & other taxes on income 72,679 49,515 ---------------- -------------------- Net earnings $ 136,733 $ 93,310 ================ ==================== Weighted average number of common shares outstanding during the period - Basic 202,895 213,796 ================ ==================== - Diluted 204,683 215,248 ================ ==================== Net earnings per share: - Basic $ 0.67 $ 0.44 ======================================= - Diluted $ 0.67 $ 0.44 ======================================= See Notes to Consolidated Financial Statements.

3 DOVER CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF COMPREHENSIVE EARNINGS THREE MONTHS ENDED JUNE 30, (000 OMITTED) UNAUDITED 2000 1999 ---------------- -------------------- Net earnings $ 136,733 $ 93,310 ---------------- -------------------- Other comprehensive earnings, net of tax: Foreign currency translation adjustments (48,288) (15,289) Less: reclassification adjustment for adjustments included in net earnings - - ---------------- -------------------- Total foreign currency translation adjustments (48,288) (15,289) ---------------- -------------------- Unrealized gains (losses) on securities: Unrealized holding gains (losses) arising during period 27,110 (5) Less: reclassification adjustment for gains (losses) included in net earnings - - ---------------- -------------------- Total unrealized gains on securities (tax $14,597 in 2000 and $0 in 1999) 27,110 (5) ---------------- -------------------- Other comprehensive earnings (21,178) (15,294) ---------------- -------------------- Comprehensive earnings $ 115,555 $ 78,016 ================ ==================== See Notes to Consolidated Financial Statements.

4 DOVER CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF EARNINGS SIX MONTHS ENDED JUNE 30, (000 OMITTED) UNAUDITED 2000 1999 ---------------- -------------------- Net sales $ 2,630,543 $ 2,047,605 Cost of sales 1,665,983 1,314,587 ---------------- -------------------- Gross profit 964,560 733,018 Selling & administrative expenses 544,977 475,334 ---------------- -------------------- Operating profit 419,583 257,684 ---------------- -------------------- Other deductions (income): Interest expense 41,438 25,952 Interest income (4,416) (13,301) Foreign exchange (2,633) (423) Loss on dispositions 1,400 3,675 All other, net (4,611) (5,808) ---------------- -------------------- Total 31,178 10,095 ---------------- -------------------- Earnings before taxes on earnings 388,405 247,589 Federal & other taxes on earnings 134,353 85,059 ---------------- -------------------- Net earnings from continuing operations 254,052 162,530 Earnings from discontinued operations, net of tax - 523,938 ---------------- -------------------- Net earnings $ 254,052 $ 686,468 ================ ==================== Weighted average number of common shares outstanding during the period - Basic 202,895 213,796 ================ ==================== - Diluted 204,683 215,248 ================ ==================== Net earnings per share: Basic - Continuing $ 1.25 $ 0.76 Gain on sale - 2.45 ---------------- -------------------- Net earnings $ 1.25 $ 3.21 ================ ==================== Basic - Continuing $ 1.24 $ 0.76 Gain on sale - 2.43 ---------------- -------------------- Net earnings $ 1.24 $ 3.19 ================ ==================== See Notes to Consolidated Financial Statements.

5 DOVER CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF COMPREHENSIVE EARNINGS SIX MONTHS ENDED JUNE 30, (000 OMITTED) UNAUDITED 2000 1999 ---------------- -------------------- Net earnings $ 254,052 $ 686,468 ---------------- -------------------- Other comprehensive earnings, net of tax: Foreign currency translation adjustments (46,387) (40,379) Less: reclassification adjustment for adjustments included in net earnings - - ---------------- -------------------- Total foreign currency translation adjustments (46,387) (40,379) ---------------- -------------------- Unrealized gains (losses) on securities: Unrealized holding gains (losses) arising during period 27,110 (5) Less: reclassification adjustment for gains (losses) included in net earnings - - ---------------- -------------------- Total unrealized gains on securities (tax $14,597 in 2000 and $0 in 1999) 27,110 (5) ---------------- -------------------- Other comprehensive earnings (19,277) (40,384) ---------------- -------------------- Comprehensive earnings $ 234,775 $ 646,084 ================ ==================== DOVER CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF RETAINED EARNINGS SIX MONTHS ENDED JUNE 30, (000 OMITTED) UNAUDITED 2000 1999 ---------------- -------------------- Retained earnings at January 1 $ 2,830,175 $ 1,992,991 Net earnings 254,052 686,468 ---------------- -------------------- 3,084,227 2,679,459 Deduct: Common stock cash dividends $ 0.23 per share ($0.21 in 1999) 46,691 44,805 ---------------- -------------------- Retained earnings at end of period $ 3,037,536 $ 2,634,654 ================ ==================== See Notes to Consolidated Financial Statements.

6 DOVER CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (000 OMITTED) UNAUDITED June 30, 2000 December 31, 1999 ---------------- -------------------- Assets: - ------- Current assets: Cash & cash equivalents $ 135,711 $ 138,038 Marketable securities - - Receivables, net of allowance for doubtful accounts 901,596 750,917 Inventories 715,837 639,379 Prepaid expenses 94,835 83,228 ---------------- -------------------- Total current assets 1,847,979 1,611,562 ---------------- -------------------- Property, plant & equipment (at cost) 1,533,594 1,480,833 Accumulated depreciation (860,520) (834,358) ---------------- -------------------- Net property, plant & equipment 673,074 646,475 ---------------- -------------------- Intangible assets, net of amortization 1,919,558 1,813,359 Other intangible assets 7,358 7,358 Deferred charges & other assets 114,117 53,186 ---------------- -------------------- $ 4,562,086 $ 4,131,940 ================ ==================== Liabilities: - ------------ Current liabilities: Notes payable $ 793,257 $ 296,637 Current maturities of long-term debt 2,329 1,263 Accounts payable 276,258 253,650 Accrued compensation & employee benefits 147,837 157,392 Accrued insurance 46,756 50,274 Other accrued expenses 192,622 186,405 Income taxes 54,043 389,244 ---------------- -------------------- Total current liabilities 1,513,102 1,334,865 ---------------- -------------------- Long-term debt 630,018 608,025 Deferred taxes 64,397 42,061 Other deferrals (principally compensation) 119,622 108,233 Stockholders' equity: - --------------------- Preferred stock - - Common stock 236,784 236,246 Additional paid-in surplus 44,535 33,060 Cumulative translation adjustments (126,372) (79,985) Unrealized holding gains (losses) 27,156 46 ---------------- -------------------- Accumulated other comprehensive earnings (99,216) (79,939) ---------------- -------------------- Retained earnings 3,037,536 2,830,175 ---------------- -------------------- Subtotal 3,219,639 3,019,542 Less: treasury stock 984,692 980,786 ---------------- -------------------- 2,234,947 2,038,756 ---------------- -------------------- $ 4,562,086 $ 4,131,940 ================ ==================== See Notes to Consolidated Financial Statements.

7 DOVER CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS SIX MONTHS ENDED JUNE 30, (000 OMITTED) UNAUDITED 2000 1999 ---------------- -------------------- Cash flows from operating activities: Net earnings $ 254,052 $ 686,468 ---------------- -------------------- Adjustments to reconcile net earnings to net cash from operating activities: Gain on sale of discontinued business - (523,938) Depreciation 68,462 60,286 Amortization 32,639 29,628 Net increase (decrease) in deferred taxes 4,768 239 Net increase (decrease) in LIFO reserves 1,192 928 Increase (decrease) in deferred compensation 13,888 (3,175) (Gain) loss on sale of business and certain assets 1,400 - Other, net (12,238) (10,364) Changes in assets & liabilities (excluding acquisitions): Decrease (increase) in accounts receivable (148,103) (60,296) Decrease (increase) in inventories, excluding LIFO reserve (60,344) 4,723 Decrease (increase) in prepaid expenses (11,812) (6,468) Increase (decrease) in accounts payable 14,963 (681) Increase (decrease) in accrued expenses (14,735) (21,314) Increase (decrease) in federal & other taxes on income (8,884) (28,243) ---------------- -------------------- Total adjustments (118,804) (558,675) ---------------- -------------------- Net cash from operating activities of continuing operations 135,248 127,793 ---------------- -------------------- Cash flows from (used in) investing activities: Additions to property, plant & equipment (77,347) (53,825) Acquisitions, net of cash & cash equivalents (224,606) (304,304) Proceeds from sale of business 14,923 1,169,599 Purchase of treasury stock (3,906) (437,448) ---------------- -------------------- Net cash from (used in) investing activities of continuing operations (290,936) 374,022 ---------------- -------------------- Cash flows from (used in) financing activities: Increase (decrease) in notes payable 485,097 (325,560) Increase (decrease) in long-term debt 16,309 (3,429) Proceeds from exercise of stock options 6,697 5,911 Cash dividends to stockholders (46,691) (44,805) ---------------- -------------------- Net cash from (used in) financing activities of continuing operations 461,412 (367,883) ---------------- -------------------- ---------------- -------------------- Discontinued operations tax payments (308,051) - ---------------- -------------------- Net increase (decrease) in cash & cash equivalents (2,327) 133,932 Cash & cash equivalents at beginning of period 138,038 96,774 ---------------- -------------------- Cash & cash equivalents at end of period $ 135,711 $ 230,706 ================ ==================== See Notes to Consolidated Financial Statements.

8 DOVER CORPORATION CONSOLIDATED MARKET SEGMENT RESULTS (unaudited) Second quarter ended June 30 ---------------------------- Percent SALES 2000 1999 Change ----- -------------------- ------------------- -------- Dover Technologies $ 527,352,000 $ 334,883,000 57% Dover Industries 326,289,000 293,826,000 11% Dover Diversified 310,412,000 260,715,000 19% Dover Resources 217,506,000 189,554,000 15% -------------------- ------------------- Total (after intramarket eliminations) $ 1,379,260,000 $ 1,077,850,000 28% ==================== =================== EARNINGS -------- Dover Technologies $ 110,344,000 $ 47,904,000 130% Dover Industries 51,502,000 48,709,000 6% Dover Diversified 44,214,000 34,808,000 27% Dover Resources 32,012,000 24,895,000 29% --------------------- ------------------- Subtotal (after intramarket eliminations) 238,072,000 156,316,000 Corporate expense (6,876,000) (5,158,000) 33% Net interest expense (21,784,000) (8,333,000) 161% --------------------- ------------------- Earnings before taxes on income 209,412,000 142,825,000 47% Taxes on income 72,679,000 49,515,000 47% --------------------- ------------------- Net earnings $ 136,733,000 $ 93,310,000 47% ===================== =================== Net earnings per share: Basic $ 0.67 $ 0.44 52% ===================== =================== Diluted $ 0.67 $ 0.44 52% ===================== ===================

9 DOVER CORPORATION CONSOLIDATED MARKET SEGMENT RESULTS (UNAUDITED) Six months ended June 30, ------------------------- SALES 2000 1999 * ----- -------------------- ------------------- Dover Technologies $ 993,718,000 $ 623,003,000 60% Dover Industries 625,330,000 552,532,000 13% Dover Diversified 579,950,000 491,295,000 18% Dover Resources 435,662,000 383,311,000 14% -------------------- ------------------- Total (after intramarket eliminations) $ 2,630,543,000 $ 2,047,605,000 28% ==================== =================== EARNINGS -------- Dover Technologies $ 195,139,000 $ 73,818,000 164% Dover Industries 101,917,000 85,993,000 19% Dover Diversified 77,679,000 62,089,000 25% Dover Resources 65,553,000 51,828,000 26% --------------------- ------------------- Subtotal (after intramarket eliminations) 440,288,000 273,728,000 Gain (loss) on disposition (1,400,000) (3,675,000) Corporate expense (13,117,000) (9,661,000) 36% Net interest expense (37,366,000) (12,803,000) 192% --------------------- ------------------- Earnings before taxes on income 388,405,000 247,589,000 57% Taxes on Income 134,353,000 85,059,000 58% --------------------- ------------------- Net earnings - Continuing Operations 254,052,000 162,530,000 56% Gain on sale of discontinued operations * 523,938,000 --------------------- ------------------- Net earnings $ 254,052,000 $ 686,468,000 -63% ===================== =================== Net earnings per share: Basic - Continuing $ 1.25 $ 0.76 64% Gain on sale - 2.45 --------------------- ------------------- Net earnings $ 1.25 $ 3.21 ===================== =================== Diluted - Continuing $ 1.24 $ 0.76 63% Gain on sale - 2.43 --------------------- ------------------- Net earnings $ 1.24 $ 3.19 ===================== =================== Average number of shares outstanding - Basic 202,895,000 213,796,000 Average number of shares outstanding - Diluted 204,683,000 215,248,000 * On January 5, 1999, Dover completed the sale of its elevator business to Thyssen Industrie AG for $1.16 billion. DOVER CORPORATION AND SUBSIDIARIES MARKET SEGMENT IDENTIFIABLE ASSETS (000 OMITTED) UNAUDITED June 30, December 31, 2000 1999 -------------------- ------------------- Dover Technologies $ 1,325,340 $ 1,206,549 Dover Industries 1,072,908 894,452 Dover Diversified 1,149,670 1,128,239 Dover Resources 854,996 804,664 Corporate (1) 159,172 98,036 --------------------- ------------------- Consolidated Total $ 4,562,086 $ 4,131,940 ==================== =================== (1) - Principally cash, cash equivalents and marketable securities.

10 DOVER CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2000 NOTE A - Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and therefore do not include all information and footnotes necessary for a fair presentation of financial position, results of operations, and changes in financial position in conformity with generally accepted accounting principles. In the opinion of the Company, all adjustments, consisting only of normal recurring items necessary for a fair presentation of the operating results have been made. The results of operations of any interim period are subject to year-end audit and adjustments, and are not necessarily indicative of the results of operations for the fiscal year. NOTE B - Inventory Inventories, by components, are summarized as follows : (000 omitted) --------------------------------------- UNAUDITED June 30, December 31, 2000 1999 ---------------- -------------------- Raw materials $ 265,648 $ 239,498 Work in progress 228,290 205,792 Finished goods 259,246 233,671 ---------------- -------------------- Total 753,184 678,961 Less LIFO reserve 37,347 39,582 ---------------- -------------------- Net amount per balance sheet $ 715,837 $ 639,379 ================ ==================== NOTE C - Accumulated other Comprehensive Earnings Accumulated other comprehensive earnings, by components are summarized as follows: UNAUDITED (000 omitted) ------------------------------------------------------------------------- Accumulated Other Unrealized Comprehensive Cumulative Holding Earnings Translation Gains (losses) Adjustments (losses) ------------------------------ ---------------- -------------------- Beginning balance $ (79,939) $ (79,985) $ 46 Current-period change (19,277) (46,387) 27,110 ------------------------------ ---------------- -------------------- Ending balance $ (99,216) $ (126,372) $ 27,156 ============================== ================ ====================

11 NOTE D - Additional Information For a more adequate understanding of the Company's financial position, operating results, business properties and other matters, reference is made to the Company's Annual Report on Form 10-K which was filed with the Securities and Exchange Commission on March 16, 2000. Net earnings as reported was used in computing both basic EPS and diluted EPS without further adjustment. The Company does not have a complex capital structure. Accordingly, the entire difference between basic weighted average shares and diluted weighted average shares results from assumed stock option exercise. The diluted EPS computation was made using the treasury stock method. In accordance with Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities," marketable securities are classified as available-for-sale and are recorded at current market value. Net unrealized gains and losses on marketable securities available for sale are credited or charged to Other Comprehensive Income. At June 30, 2000 the fair value, cost basis and gross unrealized gains on available-for-sales securities are approximately $42.8 million, $1.1 million and $41.7 million, respectively. The Company held a small investment in Bookham Technology PLC, which went public in April resulting in the second quarter unrealized gain reported above. The Company is prohibited from selling the investment for six months from the date of the initial public offering. In March 2000, the FASB issued Interpretation No.44, "Accounting for Certain Transactions Involving Stock Compensation -- an interpretation of APB Opinion No. 25", effective for all fiscal quarters of all fiscal years beginning after July 1, 2000. The Company does not expect the Interpretation to have a significant impact on the consolidated results of operations or financial position and related disclosure requirements. In June 2000, the FASB issued statement of Financial Accounting Standards No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities -- an Amendments of FASB Statement No. 133", effective for all fiscal quarters of all fiscal years beginning after June 15, 2000. The Company does not expect the statement to have a significant impact on the consolidated results of operations or financial position and related disclosure requirements. In June 2000, the SEC staff issued SAB 101B "Second Amendment: Revenue Recognition in Financial Statements" to provide registrants with additional time to implement guidance contained in SAB 101, "Revenue Recognition in Financial Statements". SAB 101, as amended is effective no later than the fourth fiscal quarter of fiscal years beginning after December 15, 1999. The Company does not expect the SAB to have a impact on the consolidated results of operations or financial position and related disclosure requirements. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (1) MATERIAL CHANGES IN CONSOLIDATED FINANCIAL CONDITION: The Company's liquidity decreased slightly during the first half of 2000 as compared to the position at December 31, 1999. The taxes paid on the gain from sale of the elevator business ($308 million), plus amounts invested in acquisitions ($242 million) are the principle reasons for the decrease in liquidity. Working capital increased from $276.7 million at the end of last year to $334.9 million at June 30, 2000. Capital expenditures were $77.3 million for the first half 2000 compared to $53.8 million last year. The working capital increase and capital expenditures were funded by internal cash flow. At June 30, 2000, net debt (defined as long-term debt plus current maturities on long-term debt plus notes payable less cash and equivalents and marketable securities) of $1,290 million represented 36.6% of total capital. This compares with 27.4% at December 31, 1999. The Company continues to be rated A-1 by Standard & Poors and F-1 by Fitch IBCA. The Company believes its significant free cash

12 flow will enable it to fund internal growth and, together with modest debt utilization, fund its acquisition program. The Company also believes it will continue to maintain a solid credit profile. The Company completed seven add-on acquisitions during the quarter at a combined cost of $74 million bringing the total for the year to 12 acquisitions for a total of $242 million. ACQUISITIONS - SECOND QUARTER 2000 DATE TYPE ACQUIRED COMPANIES LOCATION (NEAR) SEGMENT - OPERATING CO. - ------------------------------------------------------------------------------------------------------------------------------------ 10-APR STOCK GREER COMPANY SANTA ANA, CA. DRI TULSA WINCH Manufactures systems that continuously monitor the load and configuration of mobile cranes. 12-APR ASSET HOEGGER ALPINA (HA) GOSSAU, SWITZERLAND DII TIPPER TIE Manufactures machinery, clips and loops primarily serving the food processing industry. 24-MAY STOCK HYDROMOTION, INC. SPRING CITY, PA. DII TEXAS HYDRAULICS Designs & manufactures hydraulic swivels, electric slip rings and telescopic waterway assemblies. 31-MAY STOCK SALWASSER MANUFACTURING COMPANY, INC. REEDLEY, CA. DDI SWF Manufactures packaging machinery in automation of case packing for paper, dry goods and toiletries markets. 08-JUN ASSET PROVACON, INC. GONZALES, LA. DRI MIDLAND Designs & manufactures specialty valves and fitting for the transfer of hazardous fluids in petro-chemical plants. 23-JUN STOCK C & H MANUFACTURING, INC. ONTARIO, CA. DDI SARGENT Manufactures specialty fasteners, primarily for use in aircraft landing gears. 30-JUN STOCK GROUPE AOUSTIN NANTERRE, FRANCE DRI RONNINGEN-PETTER Manufactures high volume, turnkey liquid filtration systems and specialty high-viscosity mixers-extruders. The profit impact in 2000 will be small due to acquisition write-offs, and imputed financing costs. Acquisitions completed in the last twelve months (7/1/99 - 6/30/00) added $105 million in sales and $19 million in operational profit in the second quarter. (2) MATERIAL CHANGES IN RESULTS OF OPERATIONS: The Company earned $.67 per diluted share from continuing operations in the second quarter ended June 30, 2000, an increase of 52% from the $.44 per diluted share earned in the comparable quarter last year. Net income from continuing operations for the second quarter was a record of $136.7 million, up 47% from $93.3 million in net income from continuing operations last year. Sales in the quarter were a record $1.38 billion, up 28% from $1.08 billion last year. The Company reports its pretax earnings in two ways -- on the GAAP/SEC required segment reporting described above, and on an EBITACQ basis (Earnings Before Interest, Taxes, and non-cash charges arising from purchase accounting for acquisitions). Second quarter EBITACQ of $252 million was 45% higher than prior year. Of this, about 11 percentage points reflect acquisitions and 34 percentage points reflect the growth of existing companies (notably electronics). The reduction in shares outstanding during the last 6 months of 1999 resulted in stronger growth for EBITACQ per outstanding share, as this measure increased 55% to $1.24 per share. The Company will report as part of its second quarter 10Q Statement of Comprehensive Income an Unrealized Gain of $41.7 million ($27.1 after tax). In 1997, Dover Technologies made a small 720,000 share investment in Bookham Technology PLC for strategic business reasons. Bookham (BKHM:NASDAQ) went public in April of this year resulting in the unrealized appreciation. The Company has no current plans to sell the investment and is in fact prohibited from doing so for six months from the date of the initial public offering. Strong performance in each of the Company's four business segments was led by Technologies where income more than doubled from the second quarter last year.

13 DOVER TECHNOLOGIES: Sales in the second quarter increased 57% to $527.4 million, from $334.9 million last year, and segment profit increased 130% to $110.3 million, from $47.9 million last year. These strong results were a continuation of trends apparent in the second half of last year. Segment bookings set a quarterly record, and at $628 million were 19% greater than shipments. Technologies' companies which make production equipment for circuit board assembly and test (CBAT), used in a broad array of high volume electronics manufacturing applications, achieved their fifth consecutive quarterly improvement in orders, shipments, and earnings. CBAT bookings were up 66% from last year to $386 million, sales were up 71% to $ 356 million, and earnings were up 154% to $74 million. The book-to-bill ratio in the quarter was 1.08. The continuation of robust growth into the second quarter is the result of high customer demand in telecom, data com, and networking markets. Technologies' companies that make specialty electronic components (SEC) also experienced a continuing strong market, driven by telecommunications spending. SEC sales were $121 million, up 54% from the prior period, profits more than doubled to $24 million, and bookings were up 113% to $188 million on a 54% sales gain. The quarter's book-to-bill ratio was 1.56. In response to these strong trends, numerous capacity expansion projects have been undertaken at the SEC companies. The plans of the telecommunications companies to replace much of the infrastructure for wired and wireless communications, along with the robust demand growth for portable communication devices with broadband connection to the network makes the outlook for these businesses bright. The electronics industry recovery that began late in the second quarter of 1999 has continued. Comparisons for the balance of 2000 will be made to a period after the industry recover had begun. Technologies' industrial marking business, Imaje, also continues its steady growth, with earnings up over 21% on an 18% sales increase. DOVER INDUSTRIES: Sales in the second quarter increased 11% to $326.3 million from $293.8 million last year, and segment earnings increased 6% from $48.7 million to $51.5 million. Acquisitions made in the last year, including Triton, the manufacturer of cash dispenser systems acquired in the first quarter contributed all of the sales increase. Segment earnings were down 9% excluding acquisitions made in the last year. Segment bookings in the quarter were up 7% to $307 million and the book-to-bill ratio was .94. Sales and earnings at Heil Environmental and Dovatech set quarterly records. The automotive service equipment market remains strong, helping Rotary Lift and Chief achieve higher sales and earnings, but the impact of pending new product introductions on sales of existing products temporarily negatively impacted PDQ. Heil Trailer, the liquid and dry bulk tank trailer company, has experienced weakness in its markets since last year due to the impact of higher fuel costs on its customer base. DOVER DIVERSIFIED: Sales in the second quarter increased 19% to $310.4 million from $260.7 million, last year, and segment income increased 27% to $44.2 million from $34.8 million. Segment bookings in the quarter were down 1% to $294 million and the book-to-bill was 0.95. As in first quarter, acquisitions made in 1999 (especially Crenlo and JE Piston), contributed strongly to this result, as did the performances at AC Compressor, Mark Andy, Wiseco, and Sargent. Acquisitions, net of divestments, added about $37 million to Diversified's second quarter sales. The Belvac turnaround also boosted the second quarter. Hill Phoenix, which manufactures commercial refrigeration equipment and display cases, has been adversely impacted by consolidation in its customer base.

14 DOVER RESOURCES: Sales in the second quarter increased to $217.5 million from $189.6 million last year, or 15%, and segment income increased 29%, from $24.9 million to $32.0 million. Segment bookings in the quarter were up 18% to $221 million and the book-to-bill ratio was 1.01. The Petroleum Equipment Group, which is heavily influenced by North American oil production activity and particularly existing wells, continued its very strong performance in the quarter, compared to the lower oil price environment last year. Quartzdyne and C. Lee Cook, more heavily influenced by new production and development, have also begun to improve compared to the prior year. Companies serving the process industries (Wilden, Blackmer, Ronningen-Petter) were about flat to the prior year. OPW Fueling Components, which serves the retail petroleum distribution market, has been hurt by the current pressure on customers' retail margins, and industry consolidation. OUTLOOK: The Dover Technologies results, which while they may not continue to strengthen, certainly appear unlikely to deteriorate soon. Together with the admirable profit improvements at Industries, Diversified and Resources, which also appear, in aggregate, sustainable, the Company may well finish the year with earnings per share growth approaching 35%. Special Notes Regarding Forward Looking Statements This Quarterly Report on Form 10-Q, the Annual Report on Form 10-K and the documents that are incorporated by reference, particularly sections of any report to Stockholders under the headings "Outlook" or "Management's Discussion and Analysis", contain forward-looking statements within the meaning of the Securities Act of 1933, as amended, and the Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Such statements relate to, among other things, industries in which the Company operates, the U.S. and global economies, earnings, cash flow and operating improvements and may be indicated by words or phrases such as "anticipates," "supports," "plans," "projects," "expects," "should," "hope," "forecast," "Dover believes," "management is of the opinion" and similar words or phrases. Such statements may also be made by management orally. Forward-looking statements are subject to inherent uncertainties and risks, including among others: increasing price and product/service competition by foreign and domestic competitors, including new entrants; technological developments and changes; the ability to continue to introduce competitive new products and services on a timely, cost effective basis; the mix of products/services; the achievement of lower costs and expenses; domestic and foreign governmental and public policy changes including environmental regulations; protection and validity of patent and other intellectual property rights; the continued success of the Company's acquisition program; the cyclical nature of the Company's business; and the outcome of pending and future litigation and governmental proceedings. In addition, such statements could be affected by general industry and market conditions and growth rates, and general domestic and international economic conditions including interest rate and currency exchange rate fluctuations. In light of these risks and uncertainties, actual events and results may vary significantly from those included in or contemplated or implied by such statements. Readers are cautioned not to place undue reliance on such forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. PART II OTHER INFORMATION Item 4. Submission of Matter to Vote of Security Holders The Annual Meeting of Stockholders was held in Wilmington, Delaware on April 25, 2000. Stockholders representing 171,687,002 shares of common stock, or approximately 85% of the outstanding stock, were present in person or by proxy. All of the nominees for director, namely David H. Benson, Kristiane C. Graham, Jean-Pierre M. Ergas, Roderick J. Fleming, James J. Koley, Richard K. Lochridge, Thomas L. Reece, Gary L. Roubos,

15 and Michael B. Stubbs were elected directors for a one year term, each receiving at least 163,530,317 votes. Item 6. Exhibits and Reports on Form 8-K Exhibits (a) Exhibit 27 - Financial Data Schedule. (b) No reports on Form 8-K were filed this quarter.

16 Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. DOVER CORPORATION Date: July 18, 2000 /s/ David S. Smith ---------------------- ----------------------------------------- David S, Smith, Chief Financial Officer, Vice President, Finance Date: July 18, 2000 /s/ George F. Meserole ---------------------- ----------------------------------------- George F. Meserole, Chief Accounting Officer, Vice President and Controller

5 This schedule contains summary financial information extracted from the Dover Corporation Quarterly Report to stockholders for the three months ended June 30, 2000 and is qualified in its entirety by reference to such financial statements. 1,000 6-MOS DEC-31-2000 JAN-01-2000 JUN-30-2000 135,711 0 928,486 26,890 715,837 1,847,979 1,533,594 (860,520) 4,562,086 1,513,102 630,018 0 0 236,784 1,998,163 4,562,086 2,630,543 2,630,543 1,665,983 2,210,960 (5,844) 0 41,438 388,405 134,353 254,052 0 0 0 254,052 1.25 1.24