1
1994 DOVER CORPORATION
[FIGURE 1]
2
1994 DOVER CORPORATION
DOVER'S BUSINESS GOAL IS TO BE THE LEADER IN ALL THE MARKETS WE
SERVE. WE EARN THAT STATUS BY APPLYING A SIMPLE PHILOSOPHY TO
THE MANAGEMENT OF OUR BUSINESSES. THIS REQUIRES US TO:
- Perceive our customers' real needs for products and
support.
- Provide better products and services than the
competition.
- Invest to maintain our competitive edge.
- Ask our customers to pay a fair price for the extra
value we add.
SERVICE TO OUR CUSTOMERS, PRODUCT QUALITY, INNOVATION AND A
LONG-TERM ORIENTATION ARE IMPLICIT IN THIS CREDO. PURSUIT OF
THIS MARKET LEADERSHIP PHILOSOPHY BY ALL OUR BUSINESSES,
PLUS... VALUE ORIENTED ACQUISITIONS OF COMPANIES THAT SHARE
THIS PHILOSOPHY, PLUSe A DECENTRALIZED MANAGEMENT STYLE THAT
GIVES THE GREATEST SCOPE TO THE TALENTED PEOPLE WHO MANAGE
THESE COMPANIES... HAVE COMBINED TO PRODUCE IMPRESSIVE
FINANCIAL RESULTS FEATURING:
- Long-term earnings growth.
- High cash flow.
- Superior returns on stockholders' equity.
TABLE OF CONTENTS
Comparative Highlights................ 1
To Our Stockholders................... 2
Dover Resources....................... 6
Dover Industries...................... 9
Dover Technologies.................... 12
Dover Diversified..................... 15
Dover Elevator International.......... 18
3
1994 COMPARATIVE HIGHLIGHTS
(Dollars in thousands except per share figures)
Increse 1994
1994 1993 1992 versus 1993
==============================================================================================================
Net sales $3,085,276 $2,483,928 $2,271,580 24%
Earnings before taxes $ 306,859 $ 245,542 $ 200,335 25%
Net Earnings $ 202,373 $ 158,254 $ 129,707(1) 28%
Per Common Share
Net Earnings $ 3.54 $ 2.77 $ 2.24 128%
Dividends $ .98 $ .90 $ .86 9%
Book value $ 17.55 $ 15.22 $ 14.10
Capital expenditures $ 84,473 $ 47,532 $ 42,441
Acquisitions(2) $ 187,704 $ 321,002 $ 111,243
Purchase of treasury stock $ 29,733 $ 2,329 $ 85,457
Cash flow(3) $ 298,162 $ 235,223 $ 207,164
Return on average equity 21.7% 18.9% 15.9%
Approximate number of stockholders 10,000 10,000 10,000
Number of employees 22,992 20,445 18,827
==============================================================================================================
(1)1992 net earnings and net earnings per common share include $565 and 1 cent
per share, respectively, applicable to the net cumulative effects of changes
in accounting principles for the adoption of SFAS 109, "Accounting for Income
Taxes" and SFAS 106 "Employers" Accounting for Postretirement Benefits Other
Than Pensions."
(2)See Notes to Consolidated Financial Statements, note 2.
(3)Represents net earnings plus depreciation and amortization.
PAGE 1
- ------
DOVER CORPORATION
10--YEAR EARNINGS PER SHARE GROWTH
Dover Corporation S&P 400 Industrials
1984 100 100
1985 100 85
1986 86 80
1987 117 113
1988 157 145
1989 162 146
1990 181 135
1991 152 94
1992 159 108
1993 196 122
1994 251 175
1984 = 100
EARNINGS GROWTH CONSISTENCY
(ten year E.P.S. growth for the periods ending 12/31)
(%)
Dover Corporation S&P 400 Industrials
1984 455 186
1985 414 178
1986 281 135
1987 317 175
1988 352 198
1989 285 162
1990 250 151
1991 160 --
1992 178 147
1993 254 149
1994 251 175
1
4
DOVER DEAR STOCKHOLDER,
[PHOTO]
As expected, Dover set a new earnings per share record in 1994, at $3.54, a gain
of 28% over the prior year's $2.77 per share. This was an even stronger increase
than the 24% gain achieved in 1993, and exceeded the expectation we communicated
at the beginning of the year.
Sales rose 24% to almost $3.1 billion, an increase of $601 million, reflecting
both internal growth at most Dover companies and the effect of our vigorous
acquisition activity in 1993 and 1994.
Last year, we noted that companies acquired in 1993 added $155 million to
Dover's 1993 sales. The internal growth of these businesses, and their inclusion
for a full year, led to a further sales contribution in 1994 of approximately
$260 million, representing about 10 percentage points of the 24% year-to-year
sales gain. Additionally, the companies acquired during 1994 added $151 million
to our 1994 sales, accounting for 6 percentage points of the sales gain. The
1994 sales growth of businesses Dover owned at the start of 1993 averaged
approximately 10% (adjusted for the effect of the spinoff of DOVatron in
mid-1993).
While these acquisitions provided the bulk of our sales growth, the major
portion of our earnings gain came from the internal growth of our existing
companies. Companies acquired in 1994 made no contributions to earnings per
share because of acquisition-related costs and interest income foregone.
Companies acquired in 1993 contributed about $.35 cents per share to our overall
reported gain, with a portion of this reflecting their internal growth after
acquisition.
In last year's annual report, we described the impact on reported earnings of
the purchase accounting treatment for acquisitions. In 1993, non-cash charges
for amortization of acquisition premiums amounted to $.56 per share. In 1994,
this number increased to $.58 per share as a result of the expenditure of $188
million during the year to acquire new businesses. Were Dover to make no further
acquisitions -- a most unlikely event -- this charge would drop to $.47 per
share in 1995.
1994 ACQUISITIONS
The $188 million Dover invested in acquiring new businesses in 1994 was a
decline from the record set in 1993, but still our third largest year for
acquisition investment. Unlike prior years, the majority of this investment
(approximately 65%) was spent on acquisitions that were additive to existing
Dover companies. The largest of these were Tipper Tie's acquisition of
Technopack in Germany, Tranter's acquisition of HTT and ReHeat in Europe, and
Phoenix Refrigeration's acquisition of the Hill Company in the United States. In
addition, De-Sta-Co, Blackmer and Dover Elevator Company made smaller add-on
acquisitions in the U.S.
Two stand-alone companies were also acquired: Midland Manufacturing, by Dover
Resources, and TNI, by Dover Technologies. These acquisitions are described more
fully in the relevant operating sections of this report.
In addition to the acquisition program, Dover invested a record $84 million in
capital expenditures to support internal growth and cost reduction. We also
repurchased $30 million of our common stock in the fourth quarter, buying
575,000 shares at an average price of $52 per share.
EMPHASIZING GROWTH
The record level of capital expenditures and of add-on acquisitions reflects
Dover's "tilt toward growth" in its operating and investment emphasis. The
excellent earnings performance of 1993 and 1994 was aided by the cyclical
recovery of the U.S. economy, but we believe our growth emphasis is now making a
significant contribution.
For the past three years, our company presidents have been more actively
encouraged to search out new growth opportunities for their businesses. We are
pleased to see so many of our management teams stepping up to this new
challenge.
Stockholders are being asked in our proxy materials this year to approve a new
executive compensation program, as Dover's previous stock option and performance
program has expired. During 1994, with the help of outside consultants, we
developed a program with two important characteristics: (1) maintenance of our
competitive level of annual cash compensation (salary and annual bonus),
consistent with good performance; and (2) significant expansion of long-term
gain opportunities for operating managers -- particularly company presidents --
who achieve growth that creates stockholder value.
In the culture of Dover Corporation, we believe that it is pride, rather than
bonuses, that primarily drives operating performance. However, the possibility
of achieving greater financial reward is
2
5
important, especially when we are asking our company presidents to grow faster
by taking on more challenges and managing additional risk.
FINANCIAL MATTERS
In August, 1994, Dover's Board of Directors increased the dividend on our common
stock to an annual rate of $1.04 per share, an increase of 13%. This was the
23rd consecutive increase in the annual dividend.
As indicated in the charts on page 4, our return on equity improved during the
year to 22%, while our operating return on operating investment increased to
30%, both expressed on an after-tax basis. These returns are quite high compared
to industrial averages and indicate the market and operational strength of
Dover's businesses.
Dover's solid profitability again generated substantial "free cash flow" in
1994, a total of $176 million. As a result of the $216 million spent on
acquisitions and stock repurchases, our net debt position changed only modestly
during the year, while our ratio of net debt to total capital decreased from 28%
to 27%. Our financial position remains very strong.
Early in 1995, Dover reached an agreement with the Internal Revenue Service
regarding 37 acquisitions made during the 1982-91 period. Dover had recorded as
non-tax-deductible goodwill about $100 million of the premium that was paid for
these companies above their book value, and a further $179 million as
tax-deductible intangible assets. The IRS sought to have all of these amounts
classified as non-deductible. While Dover's tax filings were supported by
authoritative, independent appraisals and we believe them to have been correct,
we have accepted the reclassification of $35 million of intangible assets to a
non-deductible status in order to avoid the costs, risk and delay of litigation.
The IRS agreed to our valuation of fixed assets and inventories. Because tax
reserves had previously been established, there was no charge to 1994 earnings.
The compromise permitted us to reduce tax reserves and goodwill by $26 million
each, which will modestly increase future reported profits.
DOVER RESOURCES
Profits at Dover Resources improved 19% on an 11% sales gain. Some of the sales
and earnings gains resulted from the acquisition of Midland Manufacturing at the
start of the year, but the largest portion came from internal growth.
De-Sta-Co reported record sales and earnings as a result of strength in its
domestic valve and clamp businesses and the beginning of recovery in its German
operation. De-Sta-Co undertook capacity additions at each of its three valve
plants to support continuing growth.
Contrary to our expectations at the beginning of the year, OPW Fueling
Components surpassed its excellent earnings level of 1993 with new earnings and
sales records again in 1994. The market for OPW's vapor recovery products
remained stronger than anticipated and the demand for its other gasoline station
product lines was solid as well. As the year ended, final regulatory approvals
were being secured for OPW's VaporEZ(TM) product, which we expect to be quite
successful in 1995. This should also benefit Blackmer, which again set new sales
and earnings records in 1994.
The outlook is positive for most Dover Resources companies, and this, together
with reduced acquisition costs relating to Midland and four add-on, product line
acquisitions during 1994, should lead to further earnings growth in 1995.
DOVER INDUSTRIES
Dover Industries achieved record sales of $691 million, up 38% from prior year,
and operating income of $81 million, up 35%, also a record level. These results
reflect both acquisitions and strong internal growth. Each of Dover Industries'
12 businesses achieved an earnings improvement in 1994, with particularly
impressive percentage increases at Rotary Lift, Texas Hydraulics, Tipper Tie and
Bernard.
Rotary Lift achieved its gain through successful implementation of an internal
growth strategy involving substantial manufacturing investment for cost
reduction, lower product selling prices, and increased market share and
business volume. Margins improved at Rotary despite these lower selling prices.
Tipper Tie's growth primarily reflects the acquisition of Technopack and the
successful integration of this company with Tipper Tie's European business.
The Heil Company, which was acquired in mid-1993 and is Dover Industries'
largest company, achieved record sales and profits in its first full year of
Dover ownership. Heil's tank trailer business was particularly strong, and the
company expanded its capacity through the J&L acquisition in late 1993 and a
major addition to the Athens, Tennessee plant in the course of 1994.
All of Dover Industries' companies are predicting further earnings improvements
in 1995 and we are anticipating another year of strong growth.
DOVER TECHNOLOGIES
Dover Technologies also had a record year, with an earnings gain of 82% on a
sales gain of 24%. Most of the gains in this segment were attributable to a
record performance by Universal Instruments. Strong sales gains and record
earnings were also achieved by DEK Printing Machines.
3
6
PAGE 4
- ------
DOVER CORPORATION
EARNINGS PER SHARE
(dollars)
1989 2.28
1990 2.55
1991 2.15
1992 2.24
1993 2.77
1994 3.54
PROFITABILITY MEASURES
(%)
After-Tax Operating Return
On Investment (Definition Return on Stockholders'
in Note 15) Equity
1989 29 19
1990 31 20
1991 25 16
1992 27 16
1993 29 19
1994 31 22
Universal benefited from the continuing upswing in demand for capital equipment
within the electronics industry, as well as from market share gains by its very
profitable thru-hole technology business and the success of new product
offerings in the surface mount technology sector. Surface mount sales, bookings
and margins improved steadily during the year, creating a good prospect that
this area will become profitable in 1995.
The combined results of the Dover Technologies companies serving the
communications and components markets were essentially flat. Improved earnings
at K&L Microwave, as well as the net gain provided by TNI, acquired at mid-year,
were offset by modest declines at other companies resulting from continuing
defense cutbacks and very competitive commercial markets.
Incoming orders for the capital equipment companies were strong throughout 1994
and ended the year on a high note, pushing Dover Technologies' year-end backlog
35% higher than at the end of 1993. This should provide a strong opening to the
1995 year, with prospects for another substantial earnings record.
DOVER DIVERSIFIED
Profits at Dover Diversified also set a record, rising 71% on a sales gain of
$228 million, or more than 90%. Acquisitions made during 1994 provided $93
million of this sales gain, but made no contribution to earnings, as
acquisition-related write-offs and the expected low operating margins at the
Hill Refrigeration company offset good profit results at Tranter's newly
acquired European companies. A further portion of the sales gain - approximately
$110 million - results from having several 1993 acquisitions, most notably
Belvac and Phoenix Refrigeration, for a full year, and from growth at those
companies. Most Dover Diversified companies showed sales and earnings growth in
1994, with particular strength at Belvac because of the widespread acceptance of
its die-necking technology within the can-making industry. This industry's rapid
conversion to soft drink and beer cans with smaller top diameters, in order to
save aluminum costs, accelerated Belvac to record sales, earnings and bookings.
Consolidation continued in defense/aerospace markets. Sargent Technologies'
ball-screw product line was sold and the remaining business was combined with
Sargent Controls as a single company in one facility.
Dover Diversified ended the year with a very strong sales, earnings and bookings
quarter that we hope will be representative of what can be achieved in 1995. We
anticipate an excellent growth year.
DOVER ELEVATOR INTERNATIONAL, INC.
Profits at Dover Elevator International fell a disappointing 18% on flat sales.
All of the decline was attributable to poor results
4
7
at General Elevator, which has been primarily a service and modernization
company serving the U.S. elevator aftermarket for non-Dover equipment. A modest
operating loss here was exacerbated by approximately $11.5 million in writeoffs
and unusual expenses incurred during the year. A change in management and an
action program to reduce costs and improve margins (along with the impact of the
reorganization of Dover Elevator International's North American operations
discussed below) are expected to return General to profitability in 1995. This
creates the opportunity for a substantial earnings improvement at Dover Elevator
International as a whole.
The problem at General Elevator obscured meaningful progress in the North
American market, as profits from our other businesses serving this market
improved. We enter 1995 with worldwide new elevator manufacturing and product
engineering unified under one management group - Dover Elevator Systems. North
American field activities, consisting of new elevator construction, service and
modernization, are organized geographically into seven field companies: Miami,
General, Sound, Lagerquist, Security, Dover Elevator Company and Dover
Elevator-Canada. This structure will allow Dover Elevator International to serve
its customers better while eliminating cost duplication, and provides a
structure for profit growth in North America.
Export activities continued to enjoy rapid growth, and while still a small part
of our total business, have the potential to add significantly to our
manufacturing volume and profit over the next several years.
ORGANIZATIONAL CHANGES
Thomas L. Reece, who was elected President of Dover in 1993, became Dover's
Chief Executive Officer as well in May, 1994. Gary L. Roubos will continue as
Chairman of the Board, but intends to take a much less active management role in
Dover in the future.
During the course of 1994, Jim Schneiders joined us as President of Belvac, and
Don Firm as President of Davenport. These men have extensive backgrounds in the
can-making and machine tool industries, respectively. James Harrison, previously
Vice President and General Manager, assumed the new role of President of Dover
Elevator Company. Bob Rogers became President of General Elevator, after serving
as Vice President and Chief Operating Officer of Miami Elevator. Vernon Pontes
became President of Texas Hydraulics, after serving that company in various
manufacturing and marketing capacities. At year-end, Tom Spangrud announced his
retirement as President of Blackmer, a post he held for 14 years. Ray Pilch,
previously Blackmer's Vice President of Sales & Marketing, will become President
in 1995 and will try to extend Blackmer's record of 10 straight years of
earnings increases.
At the corporate and independent subsidiary levels, Bob Tyre has joined our New
York headquarters as Vice President-Corporate Development. Phil Mock became
Chief Financial Officer of Dover Elevator International and Tom Bell Chief
Financial Officer of Dover Diversified, following 10 years as principal
financial officer at Dover Elevator Systems and Universal Instruments
respectively.
We were all saddened in November by the death in an airplane accident of Grant
Brown, President of Hill Phoenix and founder of Phoenix Refrigeration. Although
Grant had been part of the Dover organization for only a short time, he had
rapidly become an old friend to some of us and a respected colleague to
everyone. Jerry Yochum, the CEO of Dover Diversified, has assumed the
responsibility of acting President of Hill Phoenix pending the designation of a
successor.
Time passes, and so two of our longest serving Directors left the Board in 1994.
Michael Devas and George Ohrstrom, Jr. both served as Dover Directors for over
30 years, during which time they participated in an almost 50-fold growth in the
size of Dover's business. Our record is testament to their wise counsel.
Three new members have been nominated for the board: Jean-Pierre Ergas, David
Benson and Roderick Fleming. All three bring us extensive experience in
international business and will contribute to our growth initiatives in this
direction.
OUTLOOK
1994 was a record earnings year that ended on a high note. Operating results and
incoming orders in the fourth quarter were quite promising, with bookings up 35%
compared to the prior year and year-end backlog up 30% on a consolidated basis.
Improving markets were certainly responsible for part of our earnings growth.
Equally certainly, the initiatives launched by our company management teams also
contributed strongly. The "tilt toward growth" has begun to pay off and should
continue to do so.
Each of our five independent subsidiaries and almost all of our individual
operating businesses are planning earnings growth in 1995. This year I was able
to attend each of our more than 50 individual year-end plan reviews. The
enthusiasm for 1995 opportunities and the number of specific growth initiatives
discussed at these reviews were quite exciting. In the context of continuing
strength in the economy, we expect earnings comfortably to exceed $4 a share in
1995, with the possibility - barring unexpected setbacks - that 1995 could be
our third consecutive year of earnings growth in excess of 20%.
/s/ THOMAS L. REECE
- -------------------
Thomas L. Reece
President and Chief Executive Officer
5
8
DOVER RESOURCES
OPERATING EARNINGS
(in $ millions)
1990 66
1991 62
1992 59
1993 70
1994 84
AFTER-TAX OPERATING RETURN ON INVESTMENT
(%) Definition in Note 15
1990 34
1991 28
1992 26
1993 32
1994 36
Dover Resources achieved an earnings gain of $14 million, or 19%, on a sales
increase of $53 million, or 11%. Key factors in the improved financial
performance were strong growth and record earnings at De-Sta-Co, the acquisition
of Midland Manufacturing and growth at most of Dover Resources' other companies.
These positive developments offset weakness in the U.S. oil service industry
that squeezed profits at the Dover Resources companies serving this market. Its
name notwithstanding, Dover Resources serves a broad range of industrial markets
and the energy service industry contributes only about 15% of sales and a
smaller percentage of operating profits.
PROFITS RISE AT INDUSTRIAL COMPANIES
De-Sta-Co's strong growth and record earnings were driven by surging demand for
valves it makes for automotive air conditioning compressors, ride control
systems and refrigeration compressors. The market for De-Sta-Co's toggle and
power clamps remained strong, and orders in this segment of De-Sta-Co's business
increased 32% domestically, while rising modestly in De-Sta-Co's German-based
industrial clamp operation. The company acquired two new product lines through
add-on acquisitions during 1994. These will help De-Sta-Co achieve its projected
growth in the workholding business.
After nearly doubling earnings in 1993, OPW Fueling Components achieved a more
modest gain in 1994, setting a new record. The market for vapor recovery
products proved stronger than OPW had expected at the beginning of the year,
while the flow of competitive products to this market developed more slowly than
had been anticipated. In conjunction with Blackmer, OPW introduced its new
VaporEZ(TM) fueling system, which combines a Blackmer pump and an OPW nozzle
and hose design. Targeted for key segments of the Stage II vapor recovery
retrofit market, this product passed its California Air Resources Board tests in
the second half of 1994 and is expected to be available to customers by the
second quarter of 1995. Demand for all of OPW's gasoline service station
products was vigorous throughout the year and is expected to continue in 1995,
although fewer mandated clean air deadlines remain to be met.
Blackmer achieved its 10th straight earnings record, the result of growing
demand for its industrial pumps and compressors and the acquisition of Tarby at
midyear, which expanded Blackmer's pump line. Vapor recovery demand declined
modestly, but Blackmer remains the leader in this product market and expects
that acceptance of the VaporEZ(TM) products will lead to further earnings growth
in 1995.
6
9
[PHOTO]
FEATURED FROM LEFT TO RIGHT; (FRONT ROW) Jim Kosh, Rudy Herrmann (CEO), Loren
Armstrong (CFO), Tom Spangrud, Jerry Portis; (MIDDLE ROW) Bob Conner, Jim
Mitchell, Danny Kaiser, Larry Renaud, Tom Niehaus, Dick Dawson, Doug Stewart,
Bill Geiger (BACK ROW) Dave Jackson, Jim Johnson, Don Rodda, Dick Farrell, Bill
Rogerson, Ray Pilch Nico Visser (not pictured)
1 DE-STA-CO*
William D. Rogerson, President
Products: Reed valves for compressors; Toggle clamps; Workholding devices
1 OPW FUELING COMPONENTS*
Robert Conner, President
Products: Gasoline nozzles, fittings, valves, and environmental products
1 BLACKMER
Thomas S. Spangrud, President
Ray Pilch, Executive Vice President
Products: Rotary P.D. pumps for delivery of fuel oil, propane, and industrial
products; Industrial gas compressors; Tarby progressing cavity pumps
1 C. LEE COOK
David Jackson, President
Products: Piston rings, packings for gas compressors and aerospace
applications; Compressor Components compressor rods and pistons and repair
services; Cook Manley valves
1 MIDLAND MANUFACTURING
Jerry Portis, President
Donald Rodda, Executive Vice President
Products: Tank car and barge valves, safety valves, liquid level measuring
devices
1 ALBERTA OIL TOOL (CANADA)**
James R. Kosh, President
Products: Sucker rods, fittings, valves, controls
1 CIVACON*
James Johnson, President
Products: Kam-Loks(R), Kamvaloks(R) and transport tank monitoring and
control systems; Knappco manhole/access covers and valves
1 RONNINGEN-PETTER*
Danny K. Kaiser, President
Products: Liquid filtration systems; RP Products bag filters and media
1 NORRISEAL CONTROLS
Larry J. Renaud, President
Products: Process valves and instrumentation systems;
Ferguson-Beauregard/Logic Controls oil and gas production systems
1 OPW ENGINEERED SYSTEMS
Tom Niehaus, President
Products: Loading arms, swivels, sight flow indicators
1 WITTEMANN*
William Geiger, President
Products: CO2 gas generator and recovery systems
1 PETRO VEND
Doug Stewart, President
Products: Key/card control systems, tank monitors
1 STARK MANUFACTURING
Richard Dawson, President
Products: Specialized aluminum and copper tubing and manifold assemblies
1 NORRIS*
James L. Mitchell, President
Products: Sucker rods, couplings, well servicing equipment, polished rods
I.S.T. GMBH (GERMANY)
Nico Visser,
Managing Director
Products: Industrial pigging systems
1 DUNCAN PARKING SYSTEMS*
Richard Farrell, President
Products: Parking control products and systems
Numbers indicate position in primary market served, generally North America,
except as noted.
* worldwide
**Canada
7
10
Midland Manufacturing achieved near-record earnings in its first year as a Dover
company. As the market leader in safety valves and gauging devices for rail tank
cars, Midland benefited from increased tank car production and from several new
products that expanded its range of applications. The company is developing new
products designed for marine barges and is exploring international markets for
its tank car valves.
Two of Dover Resources' three companies in the oil service industry managed to
increase earnings in spite of difficult market conditions. Alberta Oil Tool
(Canada) had a record year, as drilling programs in Canada continued strong,
while Norriseal improved the profitability of its controls operation, more than
offsetting declines in its other product lines. Norris, however, had a profit
decline as a result of low volume and competitive pricing for sucker rods, along
with the cost of ending its participation in the downhole pump business.
Although the market for oilfield production equipment is expected to recover
only slowly in 1995, if at all, prospects for these companies are
stable-to-improving.
EIGHT OTHER COMPANIES GAIN
Eight of Dover Resources' nine other companies achieved earnings gains in 1994,
with profit records set at Civacon, OPW Engineered Systems, Stark Manufacturing
and I.S.T. GmbH (Germany). Duncan Industries reported declines in both sales and
earnings, as spending by municipalities on parking systems slowed because of
both fiscal constraints and uncertainties as to the direction of technology.
OUTLOOK
Dover Resources' outlook for 1995 is excellent, with the possibility of
achieving sales and earnings gains comparable to those of 1994. Most Dover
Resources companies are projecting growth, with further strong gains from
De-Sta-Co's valve business and from sales of VaporEZ(TM) products the two most
significant factors. Reduced acquisition charges will also make Midland a
stronger net contributor to earnings. In addition, the early-1995 acquisition of
Knappco Corporation, a Kansas City manufacturer of manhole/access covers and
valves for the tank truck industry, will help Civacon achieve its growth
targets.
8
11
Dover Industries' profits improved 35% as each of this segment's 12 businesses
had higher profits than in 1993. Sales gained $190 million, or 38%.
Approximately $150 million of the sales gain related to acquisitions made in
1993 and 1994, primarily Heil and Technopack. The nine companies that were part
of Dover Industries throughout 1993 and 1994 achieved increases of 10% in sales
and 24% in operating profits, reflecting a year of very strong internal growth.
Dover Industries' operating return on operating investment improved to 35%, as
indicated in the chart, a record level for Dover Industries.
MAJOR GAINS AT FOUR COMPANIES
Heil continued its very successful performance since its acquisition in
mid-1993, setting both sales and earnings records. Profit growth was driven by
Heil's tank trailer business, which benefited from the industry's cyclical
recovery, from dramatically improved market share, and from new applications in
the dry bulk area. Increasingly, producers of cement, fertilizers and plastics
are turning to shipment by tank truck. The addition of the J&L Manufacturing
facility in 1993, plant process re-engineering that improved throughputs, and a
major expansion of the Athens, Tennessee facility completed in the fourth
quarter of 1994, allowed Heil to increase production significantly during the
year. Orders, however, were so strong that Heil ended 1994 with a record
year-end backlog and extended delivery times that will require further
production improvements in 1995. Markets for Heil's refuse equipment remained
soft and earnings in this business declined, despite Heil's retention of its
market-leading position. A reorganization and cost reduction program completed
during the year creates the possibility of improved profits in this area, even
though substantial market growth is not anticipated.
Rotary Lift was Dover Industries' second largest profit producer in 1994. A $2.5
million capital investment in manufacturing improvements at the start of the
year had even more favorable results than planned. This allowed Rotary Lift to
reduce prices to its customers, improve its share of a vigorous lift market, and
increase profits as a result of the sharp increase in unit volume. Rotary Lift
plans to continue its cost reduction/customer value improvement strategy and
foresees further opportunities for market share and earnings gains in 1995.
Tipper Tie's profits grew significantly on the strength of a record year in
domestic operations plus the acquisition of Technopack of Hamburg, Germany, at
the end of the first quarter. Technopack and the existing Tipper Tie Europa were
successfully combined into one business and this has led to a very positive
result in the European market. Both the U.S. and European operations foresee
long-term benefits from sharing manufacturing process innovations and new
product designs.
PAGE 9
- ------
DOVER INDUSTRIES
OPERATING EARNINGS
(in $ millions)
1990 50
1991 38
1992 38
1993 60
1994 81
AFTER-TAX OPERATING RETURN ON INVESTMENT
(%) Definition in Note 15
1990 34
1991 27
1992 34
1993 34
1994 35
9
12
Marathon's broadened product position, which now includes horizontal and
vertical balers for the recycling market, and stronger penetration of the waste
compaction market were the keys to Marathon achieving its third successive
earnings increase on record sales. Marathon saw substantial business improvement
in the second half of the year, giving the company good momentum for the record
year it is planning for 1995.
OTHER COMPANIES SHOW IMPROVED RESULTS
Each of Dover Industries' eight other businesses reported increased earnings,
with Bernard, Texas Hydraulics and Davenport achieving gains in excess of 25%.
New earnings records were set by Groen, Bernard, Dieterich Standard and Texas
Hydraulics. Each of these companies reported stronger industrial markets and new
product successes, notably a new steamer product line at Groen, new measuring
equipment at Chief Automotive, stack emission testing equipment at Dieterich and
new custom restaurant equipment at Randell. Improved manufacturing performance
was also a factor at most companies, notably at Davenport, Texas Hydraulics,
Groen, and of course, Rotary Lift. B&S Ltd (U.K.) established a profit record
for its first full year of operations, although margins fell from those of the
partial year of 1993.
INVESTMENT IN CAPACITY AND INTERNATIONAL GROWTH
The surge in business at the Dover Industries companies increased year-end
backlog by 70%. The companies have responded to their opportunities in the
marketplace with sizable investments in manufacturing capacity to maintain
delivery integrity. Capital spending doubled over 1993, with new production
equipment at Rotary Lift, Randell and Texas Hydraulics, and plant additions at
Heil, Marathon, and B&S Ltd (U.K.).
Most companies significantly expanded their presence in international markets in
1994, and have planned continuing growth in the international arena. Heil
increased capacity at its plant in Europe and expects to complete a joint
venture agreement with the CP Group in Thailand in early 1995. Bernard has
nurtured a technology transfer program with a welding group in China, Davenport
has positioned itself for significant growth in Mexico, and Dieterich has
established contacts for large projects in China, Eastern Europe, and Russia.
OUTLOOK
All of the Dover Industries companies are anticipating continued strength in the
U.S. economy and growth in the markets for their industrial products. All are
forecasting sales gains, with an overall increase possibly in excess of 10%.
Earnings are expected to grow much more rapidly than sales because of margin
improvement and a reduction in acquisition-related costs.
10
13
[PHOTO]
FEATURED FROM LEFT TO RIGHT; Don Firm, Chuck Heard, Tim Sandker, Louise
O'Sullivan, Pat Cunningham, Lew Burns (CEO), Lynn Bay, Larry Gray, Jon
Catterall, Bill Caton (CFO), Vernon Pontes, Jim Aylward, Gene Shanahan
1 HEIL CO.
Lawrence F. Gray, Sr., President
Products: Refuse collecting vehicles; trailerized tanks; dump bodies
1 ROTARY LIFT
Timothy J. Sandker, President
Products: Automotive lifts and alignment racks
1 TIPPERTIE/TECHNOPACK
Charles M. Heard, President
Products: Clip closures, packaging systems and wire products
1 MARATHON EQUIPMENT
Lew Burns, Acting President
Products: Solid waste compaction, transporting, and recycling equipment
1 CHIEF AUTOMOTIVE SYSTEMS
James E. Aylward, President
Products: Auto collision measuring and repair systems
1 GROEN
Louise E. O'Sullivan, President
Products: Commercial food service cooking equipment/industrial processing
equipment; American Metal Ware coffee brewing equipment
2 RANDELL
Lynn L. Bay, President
Products: Commercial refrigeration; Food service preparation and holding
equipment; Conveyorized pizza ovens
2 BERNARD/WELDCRAFT
A. Patrick Cunningham, President
Products: MIG and TIG welding torches, water circulators, and plasma cutting
products
1 TEXAS HYDRAULICS
Vernon Pontes, President
Products: Specialty hydraulic cylinders
1 DIETERICH STANDARD
Eugene M. Shanahan, President
Products: Annubar(R) flow sensors
1 DAVENPORT
Donald L. Firm, President
Products: Multi-spindle screw machines and attachments
1 B&S LTD (U.K.)
Jonathan D. Catterall, President
Products: Screw machine repair parts
Numbers indicate position in primary market served, generally North America,
except as noted.
11
14
Dover Technologies set records for sales, earnings and bookings, fueled by
dramatic improvement at Universal Instruments, the largest company in this
segment. Dover Technologies' profits advanced 82% on a 24% sales gain, as this
segment went from strength to strength as the year progressed. Profits rose
sequentially by quarter with fourth quarter income setting a record at nearly
$25 million. Bookings were also strongest in the fourth quarter, which pushed
year-end backlog 35% above the prior year's level. Operating return on operating
investment improved substantially to 30% after tax, as inventory turnover
improved and manufacturing process changes enabled Universal Instruments to
increase production substantially from existing facilities.
UNIVERSAL INSTRUMENTS' BUSINESSES GAIN
Universal Instruments' profits more than doubled on a 48% increase in shipments.
Incoming orders also rose 48%, raising Universal's backlog 50% at year-end,
despite record fourth quarter shipments. Universal achieved numerous successes
in both segments of its automatic placement equipment business - for thru-hole
components and for surface mount components.
Although thru-hole is properly regarded as a mature technology, Universal
achieved record shipments, profits and bookings in this area. Market share
increased as a result of product improvements and aggressive conversion of
former Dynapert customers to Universal's product line. Dynapert was acquired in
the fourth quarter of 1993. Contributing to this success was the continuance of
thru-hole as the preferred technology for such consumer products as television
sets and videotape recorders, the movement of production to the Pacific Rim and
Mexico, and a cyclical upturn in electronics industry capital spending.
Universal met the unexpectedly strong demand with expanded capacity, improved
machine performance and successful efforts to reduce manufacturing lead-times.
Universal will continue its product improvement and cost reduction efforts to
combat expected stiff competition from its two remaining large scale
international competitors.
Universal's surface mount business took a major step forward, driven by the
success of Universal's new "platform" technology. This concept, which involves
modular machine development based on common machine platforms, placement systems
and control software, has proved responsive to the electronics industry's needs
for flexibility and highly accurate, reliable component placement.
Shipments of surface mount machines and systems increased 62% in 1994, including
significant new orders for "platform" machines. Margins improved steadily during
the year as a result of cost reductions and the benefits of higher production
volume. Although margins in the highly competitive surface mount field are not
as good as in thru-hole products, the improvements made during the year create
the expectation that 1995 will be a profitable year for Universal in its surface
mount endeavors.
PAGE 12
- -------
DOVER TECHNOLOGIES
OPERATING EARNINGS
(in $ millions)
1990 28
1991 27
1992 30
1993 42
1994 76
AFTER-TAX OPERATING RETURN ON INVESTMENT
(%) Definition in Note 15
1990 15
1991 15
1992 16
1993 18
1994 30
12
15
[PHOTO]
FEATURED FROM LEFT TO RIGHT: Bob Livingston (CFO), Terry Ede, Jim Strathmeyer,
Andy Galliath, Gerhard Meese, Charlie Schaub, John Pomeroy (CEO), John Knowles,
Michiel van Schaik
1 UNIVERSAL INSTRUMENTS CORPORATION
Gerhard D. Meese, President
Products: Automated assembly equipment for printed circuit boards
1 DEK PRINTING MACHINES LTD (U.K.)*
John B. Knowles, Managing Director
Products: Screen printers for surface mount printed circuit boards
1 QUADRANT TECHNOLOGIES
Terence W. Ede, President
Company/Products:
Vectron Laboratories, Inc.:
Crystal oscillators
Oscillatek, Inc.:
Crystal oscillators
Dielectric Laboratories, Inc.:
High frequency capacitors
Measurement Systems, Inc.:
Manual positioning controls
Communication Techniques, Inc.:
Microwave synthesizers
1 K&L MICROWAVE, INC.
Charles J. Schaub, President
Products: Microwave/R.F. filters, coaxial switches
2 TNI, INC.
James M. Strathmeyer, President
Products: Ferrite transformers
2 SOLTEC INTERNATIONAL, B.V. (NETHERLANDS)*
Michiel J. van Schaik, Managing Director
Products: Automated soldering equipment for printed circuit boards
NOVACAP, INC.
Dr. Andre P. Galliath, President
Products: Multilayer ceramic capacitors
Numbers indicate position in primary market served, generally North America,
except as noted.
*world market
13
16
Universal continued to expand its technology base in surface mount, establishing
a research consortium of international electronics companies to fund research at
Universal on Ball Grid Arrays and Direct Chip Attach components. For Universal's
customers these components promise to reduce manufacturing costs and increase
product density, provided that appropriate production equipment and
manufacturing processes can be developed. Universal believes it is now a leading
participant in the surface mount area and is committed to supporting the future
manufacturing needs of its current key customers in the personal computer,
telecommunications, controls and consumer electronics markets.
MIXED RESULTS AT OTHER COMPANIES
Improved capital spending in the electronics industry and new products helped
Soltec and DEK achieve record sales for their soldering equipment and screen
printers. Profits also improved at both companies. Although margins declined at
DEK because of unanticipated new product introduction expenses, earnings set a
new record. Both companies expect continued volume growth and internal
improvements to increase profits in 1995.
Dover Technologies' components businesses encountered difficult market
conditions, as its commercial communications business did not develop as
expected and defense/aerospace programs continued to shrink. Sales and profits
fell at Quadrant Technologies, largely because of a downturn in Vectron's
oscillator business. Novacap's earnings also declined, as the company struggled
to overcome the impact of the California earthquake, which disrupted production
in January and February. A modest gain at K&L Microwave and a successful year at
newly acquired TNI were favorable elements that allowed profits in the
components/subsystems area to remain flat with prior year performance. All these
companies expect to benefit in 1995 from stronger markets and further
development of commercial communications applications.
OUTLOOK
Excellent fourth quarter earnings and a record backlog should help Dover
Technologies to a vigorous start in 1995, with particular strength at Universal
Instruments. The consensus of electronics industry forecasts for 1995 is for
increased capital spending worldwide. The industry has historically been
cyclical in its capital spending and a downturn is sure to occur at some point,
but we do not believe this will take place in 1995. When the downturn does
occur, we believe our companies will enter this part of the cycle with much
stronger market and product positions and higher earnings levels.
14
17
Dover Diversified established new sales and earnings records in 1994, reflecting
full-year results of companies acquired in 1993 and partial results of
acquisitions made during 1994. On a full-year basis, six of this segment's nine
companies achieved gains in operating earnings, most notably Belvac and A-C
Compressor.
The acquisition of Phoenix Refrigeration, Belvac, Thermal Equipment, Hill and
HTT/ReHeat has drastically changed the composition of Dover Diversified's
business. None of these companies was Dover-owned in the fourth quarter of 1992.
In the fourth quarter of 1994, they contributed almost $95 million of Dover
Diversified's $155 million in sales.
Belvac, acquired in mid-1993, had record sales, with profits growing more than
50% on surging orders for its can necker machines. Demand for this product has
been stimulated by the two-piece can industry's rapid shift to smaller diameter
can tops to reduce aluminum costs. Bookings, meanwhile, outpaced production by a
1.7 to 1 margin, leaving Belvac with a challenging year-end backlog.
Tranter set new sales and earnings records as a result of a recovery in its
U.S.-based heat transfer business and the expansion of its efforts
internationally through the acquisition of HTT/(SWEP) and ReHeat. Tranter's
Superchanger((a)) Plate/Frame heat exchangers and PlateCoil((a)) products showed
strong growth as did the brazed heat exchange product line acquired with SWEP.
After eight months of joint operations, both European and American managers
continue to be enthusiastic about the opportunities for marketing, product, and
manufacturing process exchanges among the companies.
A-C Compressor attained record sales and bookings and near-record profits. Sales
of after-market products and support services improved, offsetting margin
pressure on new compressor installations in a very competitive market. A-C's
bookings success was largely fueled by international growth, with orders from
China playing a major role. The shipment schedule is heavily skewed to the
second half of 1995, but the outlook is for new records.
Phoenix Refrigeration achieved record sales and earnings while also acquiring
Hill Refrigeration, the country's third largest producer of display cases and an
important producer of refrigeration systems. Hill and Phoenix are being
integrated into a single company, Hill Phoenix. Manufacturing of refrigeration
equipment has been consolidated at the Phoenix manufacturing facilities in
Conyers, Georgia. A new plant being constructed in Virginia will permit the
orderly phase-out of display case manufacturing at Hill's high-cost New Jersey
location. Sales will accelerate sharply in 1995, both from internal growth and
from the inclusion of Hill for the full year, but profits will remain relatively
static because of duplicate factory operations during much of the year. Hill
Phoenix has entered into an agreement to acquire the Margaux Company, a producer
of refrigeration equipment that will add production capability and engineering
strength and provide entre to several important new customers.
PAGE 15
- -------
DOVER DIVERSIFIED
OPERATING EARNINGS
(in $ millions)
1990 36
1991 36
1992 37
1993 39
1994 67
AFTER-TAX OPERATING RETURN ON INVESTMENT
(%) Definition in Note 15
1990 34
1991 32
1992 45
1993 47
1994 36
15
18
MIXED RESULTS AT OTHER COMPANIES
The four companies discussed above provided 80% of Dover Diversified's fourth
quarter sales and operating income. Full year results at the segment's five
other businesses were mixed. Waukesha Bearings improved earnings after a
downturn in 1993, as a result of strength in its industrial bearings and
torquing tool product lines. Pathway Bellows, after a slow start resulting from
cost-overruns on several major contracts, had record earnings in the second half
and nearly matched its 1993 record.
Thermal Equipment endured a greater-than-anticipated decline in aerospace demand
and recorded a small loss for the year on shipments that were less than half of
levels in prior years. The company devoted significant effort to exploiting its
strong temperature/pressure technology base for new applications, particularly
in cleaning and in medical waste disposal.
After a record 1993, Central Research Laboratories' profits declined because of
reduced demand for its remote manipulators from the nuclear industry. CRL
expects demand to continue slow in 1995, but is working closely with the
pharmaceutical industry on new technologies for manufacturing many products in a
"clean assembly" system rather than in the more costly "clean room" environment.
The Sargent companies serving the defense/aerospace market responded to further
shrinkage of their markets by selling the Ball Screw product line and combining
the Sargent Technologies and Sargent Controls businesses in a single facility.
The hoped-for award of valves for the third Seawolf submarine was again delayed
until later in 1995. A contract claim has been filed with Newport News
Shipbuilding, which, if settled in 1995, would allow Sargent Controls to recover
some of its excess costs on the Seawolf program. The future of the U.S.
submarine production industry remains in doubt, but the submarine valve
replacement and overhaul business, the Kahr bearing business, and Sargent's
aerospace components provide a solid base for the future of this operation.
OUTLOOK
Dover Diversified anticipates further profit gains in 1995. Key swing factors
include further growth at Belvac and at Tranter, a projected turnaround at
Thermal Equipment and a repeat of the strong second-half performance of Pathway
Bellows and Waukesha Bearings. Sales could exceed $600 million, but operating
margins are unlikely to reach 15% because of the large volume of low-margin Hill
display case business during a transition year for this product line.
16
19
[PHOTO]
FEATURED FROM LEFT TO RIGHT: (FRONT ROW) Keith Cole, Dave Davidson, Grant Brown,
Todd Taricco, Jerry Yochum (CEO), Jim Schneiders, Tom Bell (CFO), Ken Kaltz;
(BACK ROW) Don Tarquin, Don Fancher, Rudy Marohl . . . Paul Steffen (not
pictured)
1 BELVAC**
Jim Schneiders, President
Products: Can necking and trimming equipment
1 TRANTER
Kenneth L. Kaltz, President
Products: Plate/frame and compact brazed heat exchangers; Transformer
radiators
2 A-C COMPRESSOR
Paul W. Steffen, President
Products: Centrifugal, oil-free-screw, and rotary compressors
2 HILL PHOENIX
Jerry Yochum, Acting President
Products: Commercial refrigeration systems; Electrical distribution systems;
Refrigerated display cases
2 WAUKESHA BEARINGS
Donald A. Fancher, President
Products: Fluid film bearings; Sweeney torquing tools
1 PATHWAY BELLOWS
Keith Cole, President
Products: Metal and fabric expansion joints
1 SARGENT CONTROLS & AEROSPACE*
Donald C. Tarquin, President;
Products: Submarine fluid controls; aircraft hydraulic controls;
Self-lubricating bearings
1 CENTRAL RESEARCH LABS**
Rudolph O. Marohl, President
Products: Master-slave remote manipulators; Glove boxes; Pharmaceutical
isolators
1 THERMAL EQUIPMENT
Todd L. Taricco, President
Products: Autoclaves;
Industrial cleaning equipment; medical waste treatment
Numbers indicate position in primary market served, generally North America,
except as noted.
*position for submarine fluid controls
**Worldwide
17
20
Dover Elevator International reported an 18% decline in profits on sales that
were essentially flat. The decline in profits was entirely attributable to an
unfavorable outcome at General Elevator Company, which represents about 10% of
this segment's sales volume, and whose business is focused on service and
modernization of equipment not manufactured by Dover. General's operating
results slipped from a reported profit in 1993 to a loss of about $3 million in
1994. The company also incurred $11.5 million in special costs and asset
write-offs associated with a management change, reorganization of the business,
and settlement of litigation. Excluding General Elevator from 1993 and 1994,
Dover Elevator International's profits would have improved 18% on a 4% sales
increase.
NORTH AMERICAN OPERATING COMPANIES GAIN
All of Dover's other North American operating companies managed to increase
their earnings in 1994 despite slow and highly price-competitive new elevator
markets. Indicative of the continuing weak market, bookings for new elevators
declined 1%, although this reflected in part a conscious effort to be more
selective in pricing to raise new elevator margins. All of the U.S. companies
made progress in reducing elevator installation costs, while tightly controlling
SG&A expenditures. Further cost improvements were made in our Mississippi and
Tennessee manufacturing facilities. Service revenues in the U.S. continued to
grow, but by less than 5%, as efficiencies and cost reductions helped to
maintain service profits at a high level despite the competitive pricing
environment. Dover Elevator maintained its strong market leadership position in
low-rise (hydraulic) elevators and estimates only a modest reduction, if any, in
its overall share of the medium- and high-rise market (geared and gearless
elevators, respectively). Both of the latter markets remain extremely depressed,
with the high-rise segment being almost non-existent.
Dover Elevator Division (Canada) showed improved profits, although still well
below the record levels of 1990-91, on flat shipments. In Canada, the new
elevator market remains, if anything, more depressed than in the U.S. However,
our Canadian elevator operations were helped by cost control, improved service
revenues and the beginning of what we hope will be a strong export program to
China.
In Europe, Hammond & Champness, Ltd. (U.K.) had a modest profit decline,
reflecting more competitive business conditions in the U.K. service market and
difficult pricing conditions for its new elevator operations in Europe. The
market outlook in both the U.K. and Germany remains weak.
PAGE 18
- -------
DOVER ELEVATOR INTERNATIONAL, INC.
OPERATING EARNINGS
(in $ millions)
1990 96
1991 58
1992 59
1993 56
1994 46
AFTER-TAX OPERATING RETURN ON INVESTMENT
(%) Definition in Note 15
1990 43
1991 26
1992 26
1993 25
1994 21
18
21
[PHOTO]
FEATURED FROM LEFT TO RIGHT; Phil Mock (CFO), Bill Wilkinson, Steve Bailey, Hap
Hamilton, Bob Rogers, John Apple (CEO), Buzz Dana, Paul Beisser, Gary Bailey,
Nigel Davis, James Harrison
1 DOVER ELEVATOR SYSTEMS
L.E. Hamilton, Jr., President
Products: Design and manufacture of hydraulic and traction elevators
DOVER ELEVATOR COMPANY
James G. Harrison, President
Products: Elevator sales, installation, service, repair and modernization
MIAMI ELEVATOR COMPANIES
Gary S. Bailey;
Stephen M. Bailey, Presidents
Products: Elevator sales, installation, service, repair and modernization
1 DOVER ELEVATOR DIVISION (CANADA)
William N. Wilkinson, President
Products: Sales, installation, service, repair and modernization
3 HAMMOND & CHAMPNESS, LTD (U.K.)*
Nigel P. Davis,
Managing Director
Products: Design and manufacture of elevators; Sales, installation, service,
repair and modernization
SOUND ELEVATOR COMPANY
Donald C. Dana, President
Products: Elevator sales, installation, service, repair and modernization
SECURITY ELEVATOR COMPANY
Paul T. Beisser, Jr., President
Products: Elevator sales, installation, service, repair and modernization
GENERAL ELEVATOR COMPANY
Robert C. Rogers, President
Products: Elevator sales, installation, service, repair and modernization
Numbers indicate position in primary market served, generally North America,
except as noted.
*U.K.
19
22
NORTH AMERICAN OPERATIONS REORGANIZED
Weak markets in North America since the real estate crash of 1991, combined with
Dover Elevator International's belief that these poor conditions are likely to
continue for the balance of this decade, have necessitated many changes within
Dover's elevator operating companies in the past three years. Broad strategy has
been to focus on continuing the growth of service profits, reducing losses in
the new elevator segment through better pricing and lower manufacturing and
installation costs, and developing new export markets for our elevator
components and systems.
In 1994, we took a further step along this path by reorganizing our North
American operation. Both Canadian and U.S. manufacturing and product engineering
activities were combined under a single management group, which also is
responsible for worldwide exports. Export shipments from North American
factories grew by more than 50% in 1994 and we hope that continued strong export
growth will significantly improve factory utilization over the next few years.
This would be preferable to the alternative of further shrinking our
manufacturing base.
In addition, all service, new elevator sales, and construction activity
(including integration of General Elevator's nationwide activities) have been
consolidated in seven North American field operations companies. We believe this
change will serve our customers, while helping to eliminate cost duplication. In
particular, the re-organization of General Elevator should result in this
company attaining an operating profit in 1995.
EXPORT ACTIVITIES EXPAND
As noted, the emphasis on expanding our export activities has begun to produce
results. One joint venture is now operating in China and combined bookings from
China for our manufacturing facilities in Canada and the U.S. exceeded $10
million in 1994. Dover Elevator Systems continues to work with its
Singapore-based distributor and with the Chinese Government toward establishing
further joint ventures. Dover Elevator Systems is targeting substantially
increased exports to this rapidly growing market and intends ultimately to
produce elevator components and systems within China.
OUTLOOK
Dover Elevator International is confident of improved profitability in 1995,
primarily from the turnaround of General Elevator and non-repetition of its
unusual write-offs. North American and U.K. markets will remain weak, with any
profit growth attributable to the success of the strategy described above and
the impact of the 1994 reorganization in North America. Export growth,
particularly in Asia, represents a substantial opportunity but one that is
difficult to quantify or precisely predict as to timing. Dover Elevator
International is continuing to invest in world class product technology. North
American field operations and service branch operations in the U.K. and Germany
continue to be a competitive strength that will serve Dover well when these
markets recover.
20
23
1994 FINANCIAL REVIEW
TABLE OF CONTENTS
Market Segment Information....................................................... 22
Consolidated Statements of Earnings.............................................. 23
Consolidated Statements of Retained Earnings..................................... 23
Consolidated Balance Sheets...................................................... 24
Consolidated Statements of Cash Flows............................................ 25
Notes to Consolidated Financial Statements....................................... 26
Independent Auditors' Report..................................................... 34
Quarterly Data................................................................... 35
Common Stock Cash Dividends and Market Prices.................................... 35
Management's Discussion and Analysis of Financial Condition
and Results of Operations...................................................... 36
11-Year Consolidated Summary of Selected Financial Data.......................... 38
Directors and Officers........................................................... 40
Stockholder Information.......................................................... 40
21
24
DOVER CORPORATION AND SUBSIDIARIES
SALES AND OPERATING PROFIT BY MARKET SEGMENT
(in thousands)
For the Years Ended December 31, 1994 1993 1992 1991 1990 1989
==================================================================================================================================
Sales to unaffiliated customers:
Dover Resources $ 525,971 $ 472,643 $ 439,389 $ 447,079 $ 420,163 $ 375,421
Dover Industries 691,342 501,364 357,054 339,255 324,967 325,678
Dover Technologies 603,068 488,248 458,603 421,943 424,704 448,668
Dover Diversified 472,706 244,597 225,771 196,464 209,961 206,997
Dover Elevator International 793,559 777,720 791,099 791,400 830,589 765,698
Intramarket sales (1,370) (644) (336) (355) (39) (2,028)
-------------------------------------------------------------------------------------------
Consolidated total $3,085,276 $2,483,928 $2,271,580 $2,195,786 $2,210,345 $2,120,434
-------------------------------------------------------------------------------------------
Operating profit:
Dover Resources $ 83,979 $ 70,290 $ 58,594 $ 62,323 $ 66,268 $ 57,144
Dover Industries 81,028 59,942 37,837 37,812 49,637 48,591
Dover Technologies 76,205 41,797 29,793 27,439 27,737 29,684
Dover Diversified 67,220 39,360 37,373 35,955 36,142 31,369
Dover Elevator International 46,123 56,404 59,198 57,947 95,936 88,772
Interest income, interest expense
and general corporate
expenses, net (47,696) (22,251) (22,460) (17,388) (31,602) (28,581)
-------------------------------------------------------------------------------------------
Consolidated income
before income taxes $ 306,859 $ 245,542 $ 200,335 $ 204,088 $ 244,118 $ 226,979
-------------------------------------------------------------------------------------------
Profit margin (pretax):
Dover Resources 16.0% 14.9% 13.3% 13.9% 15.8% 15.2%
Dover Industries 11.7 12.0 10.6 11.1 15.3 14.9
Dover Technologies 12.6 8.6 6.5 6.5 6.5 6.6
Dover Diversified 14.2 16.1 16.6 18.3 17.2 15.2
Dover Elevator International 5.8 7.3 7.5 7.3 11.6 11.6
-------------------------------------------------------------------------------------------
Consolidated profit margin 9.9% 9.9% 8.8% 9.3% 11.0% 10.7%
-------------------------------------------------------------------------------------------
Identifiable assets at December 31:
Dover Resources $ 291,480 $ 218,473 $ 219,216 $ 228,152 $ 221,900 $ 196,824
Dover Industries 541,109 485,419 302,821 314,037 257,645 270,896
Dover Technologies 330,661 278,871 285,749 247,562 271,959 302,450
Dover Diversified 452,074 340,072 183,262 116,432 148,108 158,923
Dover Elevator International 362,924 381,587 376,508 378,385 377,059 331,101
Corporate (principally cash
and equivalents) 92,389 69,267 58,568 72,052 191,695 146,182
-------------------------------------------------------------------------------------------
Consolidated total $2,070,637 $1,773,689 $1,426,124 $1,356,620 $1,468,366 $1,406,376
-------------------------------------------------------------------------------------------
Depreciation and amortization:
Dover Resources $ 19,089 $ 13,300 $ 13,602 $ 14,689 $ 13,930 $ 12,516
Dover Industries 25,453 20,520 17,840 26,112 17,050 18,356
Dover Technologies 13,904 13,401 19,755 20,144 23,628 22,781
Dover Diversified 21,948 14,837 10,756 9,623 10,008 11,153
Dover Elevator International 13,744 13,319 13,683 14,366 12,692 13,860
Corporate 1,651 1,592 1,821 432 222 148
-------------------------------------------------------------------------------------------
Consolidated total $ 95,789 $ 76,969 77,457 $ 85,366 $ 77,530 $ 78,814
-------------------------------------------------------------------------------------------
Capital expenditures:
Dover Resources $ 16,340 $ 11,515 $ 11,560 $ 12,307 $ 11,859 $ 10,928
Dover Industries 23,299 11,146 8,225 5,675 5,584 7,884
Dover Technologies 13,425 11,769 11,665 12,373 9,380 12,172
Dover Diversified 19,419 4,802 5,767 6,243 5,943 5,148
Dover Elevator International 11,764 8,112 5,137 9,947 12,049 25,668
Corporate 226 188 87 73 165 703
-------------------------------------------------------------------------------------------
Consolidated total $ 84,473 $ 47,532 $ 42,441 $ 46,618 $ 44,980 $ 62,503
==================================================================================================================================
22
25
DOVER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands except per share figures)
Years ended December 31, 1994 1993 1992
==============================================================================================================================
Net sales $3,085,276 $2,483,928 $2,271,580
Cost of sales 2,137,477 1,733,256 1,601,595
---------------------------------------
Gross profit 947,799 750,672 669,985
Selling and administrative expenses 622,434 496,799 466,777
---------------------------------------
Operating profit 325,365 253,873 203,208
---------------------------------------
Other deductions (income):
Interest expense 36,461 22,338 20,059
Interest income (18,619) (19,601) (19,376)
Loss (gain) on sale of property, plant and equipment, net (3,510) 2,435 1,366
Foreign exchange loss 709 883 131
All other, net 3,465 2,276 693
---------------------------------------
Total 18,506 8,331 2,873
---------------------------------------
Earnings before taxes on income and cumulative effects of
changes in accounting principles 306,859 245,542 200,335
Federal and other taxes on income 104,486 87,288 71,192
---------------------------------------
Earnings before cumulative effects of changes in accounting principles
(per common share 1994 $3.54; 1993 $2.77; 1992 $2.23) $ 202,373 $ 158,254 $ 129,143
Cumulative effects at January 1, 1992, of changes in accounting for:
Income Taxes -- -- 12,951
Postretirement benefits other than pensions (net of income tax benefits, $7,159) -- -- (12,387)
Net earnings (per common share ---------------------------------------
1994 $3.54; 1993 $2.77; 1992 $2.24) $ 202,373 $ 158,254 $ 129,707
==============================================================================================================================
Earnings per share computed on the basis of the weighted average number of
common shares outstanding during the year (57,185 in 1994, 57,110 in 1993 and
57,988 in 1992).
DOVER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(in thousands except per share figures)
Years ended December 31, 1994 1993 1992
==============================================================================================================================
Balance at beginning of year $1,121,817 $1,051,949 $ 972,033
Net earnings 202,373 158,254 129,707
---------------------------------------
1,324,190 1,210,203 1,101,740
Distribution of contract electronics manufacturing business -- 36,982 --
Common stock cash dividends of $.98 per share ($.90 in 1993; $.86 in 1992) 56,076 51,404 49,791
---------------------------------------
Balance at end of year $1,268,114 $1,121,817 $1,051,949
==============================================================================================================================
See Notes to Consolidated Financial Statements.
23
26
DOVER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands except per share figures)
December 31, 1994 1993 1992
==============================================================================================================================
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 90,304 $ 63,685 $ 71,632
Marketable securities at market (1993 and 1992
at cost, which approximates market) 54,583 32,592 29,581
Receivables (less allowance for doubtful
accounts of $14,326 in 1994, $10,198 in 1993
and $9,753 in 1992) 576,628 475,155 389,273
Inventories 364,604 294,319 250,156
Prepaid expenses 47,020 37,889 33,349
---------------------------------------
Total current assets 1,133,139 903,640 773,991
---------------------------------------
PROPERTY, PLANT AND EQUIPMENT, AT COST:
Land 26,546 24,134 20,222
Buildings 185,545 160,294 142,021
Machinery and equipment 600,084 530,209 515,905
---------------------------------------
812,175 714,637 678,148
Less accumulated depreciation (469,490) (431,274) (426,878)
---------------------------------------
Net property, plant and equipment 342,685 283,363 251,270
---------------------------------------
INTANGIBLE ASSETS, NET OF AMORTIZATION 564,420 535,136 348,680
OTHER INTANGIBLE ASSETS 10,258 10,258 10,258
OTHER ASSETS AND DEFERRED CHARGES 20,135 41,292 41,925
---------------------------------------
$2,070,637 $1,773,689 $1,426,124
==============================================================================================================================
LIABILITIES
CURRENT LIABILITIES:
Notes payable $ 263,605 $ 174,980 $ 220,780
Current maturities of long-term debt 455 312 3,946
Accounts payable 155,186 117,206 97,534
Accrued compensation and employee benefits 88,235 71,084 54,621
Accrued insurance expense 98,712 74,501 65,512
Other accrued expenses 147,585 116,915 82,485
Federal and other taxes on income 18,445 40,796 47,472
---------------------------------------
Total current liabilities 772,223 595,794 572,350
---------------------------------------
LONG-TERM DEBT 253,587 252,065 1,230
DEFERRED INCOME TAXES 2,545 20,409 21,500
OTHER DEFERRALS (PRINCIPALLY INCOME AND COMPENSATION) 46,423 35,419 26,107
STOCKHOLDERS' EQUITY
CAPITAL STOCK:
Preferred, $100 par value per share.
Authorized 100 shares; issued none
Common, $1 par value per share.
Authorized 200,000 shares; issued 66,441 shares
(66,298 shares in 1993 and 66,176 in 1992) 66,441 66,298 66,176
ADDITIONAL PAID-IN CAPITAL 17,676 12,531 9,508
CUMULATIVE TRANSLATION ADJUSTMENTS (8,206) (12,761) (7,142)
UNREALIZED HOLDING LOSSES (550) -- --
RETAINED EARNINGS 1,268,114 1,121,817 1,051,949
---------------------------------------
1,343,475 1,187,885 1,120,491
Less common stock in treasury, at cost, 9,711 shares
(9,136 shares in 1993 and 9,091 in 1992) 347,616 317,883 315,554
---------------------------------------
Net stockholders' equity 995,859 870,002 804,937
---------------------------------------
$2,070,637 $1,773,689 $1,426,124
==============================================================================================================================
See Notes to Consolidated Financial Statements.
24
27
DOVER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents (in thousands)
Years ended December 31, 1994 1993 1992
=============================================================================================================================
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 202,373 $ 158,254 $ 129,707
--------------------------------------
Cumulative effect of accounting changes -- -- (564)
--------------------------------------
Net earnings before changes 202,373 158,254 129,143
--------------------------------------
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 95,789 76,969 77,457
Provision for losses on accounts receivable 898 5,546 5,316
Net decrease in LIFO reserve (2,079) (7,714) (2,931)
Deferred income taxes (18,958) 505 (3,540)
Loss on sale of property and equipment (3,510) 2,435 1,366
Decrease (increase) in deferred compensation 11,431 (367) (4,302)
Other, net (98) (3,064) (1,314)
Changes in assets and liabilities
(excluding effects of acquisitions and dispositions):
Decrease (increase) in accounts receivable (56,834) (52,913) (23,908)
Decrease (increase) in inventories excluding LIFO reserve (22,509) 14,272 (28)
Decrease (increase) in prepaid expenses (6,989) (2,150) 494
Decrease in other assets 21,161 5,460 9,976
Increase in accounts payable 19,595 6,739 4,016
Increase (decrease) in accrued expenses 57,118 35,915 (8,919)
Increase (decrease) in federal and other taxes on
income (cash payments: $106,717 in 1994,
$101,574 in 1993 and $65,402 in 1992) 16,680 (13,583) (103)
--------------------------------------
Total adjustments 111,695 68,050 53,580
--------------------------------------
Net cash provided by operating activities 314,068 226,304 182,723
--------------------------------------
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
Net sale (purchase) of marketable securities (21,991) (3,012) 16,010
Proceeds from sale of property and equipment 6,733 4,108 5,914
Additions to property, plant and equipment (includes rental equipment:
$455 in 1994, $1,217 in 1993 and $5,384 in 1992) (84,928) (48,749) (47,825)
Acquisitions (net of cash and cash equivalents: $5,682 in 1994,
$2,034 in 1993 and $2,370 in 1992) (186,436) (318,968) (108,873)
Proceeds from sale of businesses -- 1,557 500
Purchase of treasury stock (575 shares in 1994,
45 shares in 1993 and 2,071 shares in 1992) (29,733) (2,329) (85,457)
--------------------------------------
Net cash used in investing activities (316,355) (367,393) (219,731)
--------------------------------------
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
Increase (decrease) in notes payable (total interest cash payments:
$40,076 in 1994, $17,057 in 1993 and $14,964 in 1992) 88,594 (45,741) 95,120
Reduction of long-term debt (7,603) (15,700) (9,900)
Proceeds from long-term debt -- 250,000 --
Proceeds from exercise of stock options 5,288 3,145 3,652
Proceeds from sale (repurchases) of lease receivables 1,863 (6,450) (5,550)
Cash dividends to stockholders (56,075) (51,404) (49,791)
--------------------------------------
Net cash from financing activities 26,385 133,850 33,531
--------------------------------------
*Effect of exchange rates on cash (3,161) (708) (6,661)
Net increase (decrease) in cash and cash equivalents 26,619 (7,947) (10,138)
Cash and cash equivalents at beginning of year 63,685 71,632 81,770
--------------------------------------
Cash and cash equivalents at end of year 90,304 $ 63,685 $ 71,632
=============================================================================================================================
* Consistent with 1994 presentations, 1993 and 1992 cashflows have been restated
to show the effect of exchange rate changes on cash.
See Notes to Consolidated Financial Statements.
25
28
DECEMBER 31, 1994, 1993 AND 1992
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES:
The accounting policies that affect the more significant elements of the
Company's financial statements are described briefly below:
A. CONSOLIDATION: The consolidated financial statements include the accounts of
the Company and its subsidiaries after elimination of all significant
intercompany accounts and transactions, and include the results of operations of
purchased businesses from the dates of acquisition.
In conformity with F.A.S.B. Statement No. 52, the accounts of foreign
subsidiaries have been translated into U.S. dollars as follows: assets and
liabilities have been translated at year-end rates, profit and loss accounts
have been translated at average rates for the year, and the difference has been
reflected in the equity section of the balance sheet as cumulative translation
adjustments. An analysis of the changes during 1994, 1993 and 1992 in the
cumulative translation adjustments shown on the balance sheets follows:
(in thousands) 1994 1993 1992
================================================================
Balance at beginning
of year $(12,761) $ (7,142) $ 14,405
Aggregate adjustment
for year $ 4,555 (5,619) (21,547)
-----------------------------------
Balance at end of year $ (8,206) $(12,761) $ (7,142)
================================================================
B. INVENTORIES: The major portion of inventory is stated at cost, determined on
the last-in, first-out (LIFO) basis, which is less than market value.
Inventory of foreign subsidiaries and inventory of some recently acquired
domestic companies is stated at the lower of cost, first-in, first-out (FIFO) or
market.
The remaining inventory principally represents the sum of actual production and
erection costs incurred to date on uncompleted elevator installation contracts
plus a percentage of estimated profit (where applicable) reduced by progress
billings. The net amounts so reflected in the balance sheets are not considered
material.
C. PROPERTY, PLANT AND EQUIPMENT AND DEPRECIATION: Property, plant and equipment
includes the cost of land, buildings, equipment and significant improvements of
existing plant and equipment. Expenditures for maintenance, repairs and minor
renewals are expensed as incurred.
When property or equipment is sold or otherwise disposed of, the related cost
and accumulated depreciation are removed from the respective accounts and gain
or loss realized on disposition is reflected in earnings.
Plant and equipment acquired through December 31, 1980, is generally depreciated
based upon accelerated methods, utilizing estimated useful property lives, for
both accounting and tax purposes.
Plant and equipment acquired after December 31, 1980, is depreciated for
accounting purposes in the manner described above. However, for U.S. income tax
purposes the cost of these assets is deducted in accordance with certain
provisions of the Accelerated Cost Recovery System and the Modified Accelerated
Cost Recovery System under the Internal Revenue Code.
Depreciation expense in 1994 was $57,774,000 compared with $50,907,000 in 1993
and $53,708,000 in 1992.
D. INTANGIBLE ASSETS: Intangible assets subject to amortization include goodwill
purchased after 1970, and the cost of certain patents, drawings, trademarks,
work force, customer lists, service contracts and covenants not to compete.
Goodwill is being amortized on a straight-line basis over a period not in excess
of 40 years; the remaining amortization is based on estimated useful lives which
range from 6 to 17 years. The Company evaluates its amortization policies
regularly to determine whether later events and circumstances warrant revised
estimates of useful lives. The Company evaluates the recoverability of goodwill,
when warranted.
Other intangible assets represent principally goodwill attributable to
businesses purchased prior to 1970. These intangibles are also regularly
evaluated and in the opinion of management have not diminished in value, and
accordingly have not been amortized.
Goodwill, net of amortization, aggregated $465,518,000 at December 31, 1994,
$446,961,000 at December 31, 1993, and $278,218,000 at December 31, 1992.
E. RECOGNITION OF INCOME AND EXPENSE ON ELEVATOR INSTALLATION CONTRACTS:
Substantially all of the Company's income from elevator installation contracts
is recorded on the percentage-of-completion method. Under the percentage-of-
completion method, contract revenue is recognized as costs are incurred using
estimated gross profit percentages.
F. INCOME TAXES: The provision for income taxes includes Federal, state, local
and foreign taxes.
Tax credits, primarily for research and experimentation are recognized as a
reduction of the provision for income taxes in the year in which they are
available for tax purposes, and aggregated $4,982,000 in 1994, $1,514,000 in
1993, and $1,625,000 in 1992. Research and experimentation expenditures charged
to earnings amounted to $96,855,000 in 1994, $60,430,000 in 1993 and $67,822,000
in 1992.
Generally, no provision is made for U.S. income taxes on unremitted earnings of
foreign subsidiaries since any U.S. taxes payable would be offset by foreign tax
credits.
G. CASH FLOWS: For purposes of the statement of cash flows, the Company
considers all highly liquid investments, including highly liquid debt
instruments purchased with an original maturity of three months or less, to be
cash equivalents.
26
29
H. CHANGES IN ACCOUNTING PRINCIPLES: In February 1992, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes. Statement 109 requires a change from the deferred
method of accounting for income taxes of APB Opinion 11 to the asset and
liability method of accounting for income taxes. Under the asset and liability
method of Statement 109, deferred tax assets and liabilities are recognized for
the future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases and operating loss and tax credit carryforwards. Deferred
tax assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled. Under Statement 109, the effect on deferred
tax assets and liabilities of a change in tax rates is recognized in income in
the period that includes the enactment date.
Effective January 1, 1992, the Company adopted Statement 109 and it has reported
the cumulative effect of that change in the method of accounting for income
taxes in the 1992 consolidated statement of income.
Postretirement Plans - Certain of the Company's subsidiaries sponsor defined
benefit health care and life insurance plans for retirees. Effective January 1,
1992, the Company adopted Statement of Financial Accounting Standards No. 106
"Employers" Accounting for Postretirement Benefits Other than Pensions," which
established new accounting standards for the costs of retiree health care and
other postretirement benefits (also see note 10). Prior to 1992, the Company
recognized these benefits on the pay-as-you-go method (i.e., cash basis). The
cumulative after tax effect of the change in accounting for postretirement
benefits other than pensions is reported in the 1992 consolidated statement of
income.
Effective January 1, 1994, the Company adopted the Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities." As applicable here the statement requires that investments
in such securities be designated either as trading, or available-for-sale.
Trading securities are reported at fair value with unrealized gains and losses
recognized in earnings. Available-for-sale securities are also reported at fair
value but unrealized gains and losses are shown in the caption "unrealized
holding losses" included in stockholders' equity.
As of December 31, 1994, available-for-sale securities totaled $17,202,000 with
a related gross unrealized loss of $550,000 and consisted of investments in
certain mutual funds which invest primarily in equity securities. Trading
securities at December 31, 1994 totaled $37,381,000 with a gross unrealized loss
of $639,000 and consisted of an investment in a limited investment partnership
which invests primarily in equity securities. The net realized gain for the
years ended December 31, 1994, 1993 and 1992 were $4,047,000, $1,523,000, and
$3,190,000 respectively.
2. ACQUISITIONS AND DISPOSITIONS:
On March 27, 1992, the Company acquired all of the capital stock of A-C
Compressor Corporation. A-C Compressor, located in Elm Grove and Appleton,
Wisconsin, manufactures and sells single-stage centrifugal oil-free screw and
rotary vane compressors as well as multi-stage centrifugal compressors. On July
30, 1992, the Company acquired the operating assets of Vectron Laboratories,
Inc. Vectron, located in Norwalk, Connecticut, manufactures and sells precision
crystal oscillators (frequency sources, or clocks) used in computers,
instrumentation, telecommunication systems, radio communications and space
applications. On August 31, 1992, the Company acquired all of the capital stock
of Christian Hein GmbH, a regional elevator company located in Hanover, Germany.
On September 1, 1992, the Company acquired certain assets of Continental
Manufacturing, Inc., for the Company's subsidiary, Chief Automotive Systems. On
October 1, 1992, the Company acquired the elevator service business of Deya
Elevator Service, Inc., located in San Juan, Puerto Rico. The aggregate cost of
these 1992 acquisitions, including all direct costs was approximately
$111,243,000 cash, of which $68,115,000 represents goodwill and is being
amortized over a forty-year period.
On May 21, 1993, the Company spun-off its contract electronics manufacturing
business to its stockholders in a tax free distribution of stock of DOVatron
International, Inc., formerly Dover Electronics Manufacturing. The Company's
stockholders received one share of DOVatron for every ten shares of Company
stock owned on the record date, also May 21, 1993. No gain or loss was
recognized from the distribution and the net assets of DOVatron were eliminated
from the Company's retained earnings.
Effective January 1, 1993, the Company acquired all of the capital stock of Lift
Service and Montage, GmbH, a regional elevator company headquartered in
Saarbrucken, Germany. On April 1, 1993, the Company acquired certain assets of
Atlanta Elevator Company, a regional elevator service and repair company. On
April 14, 1993 the Company acquired from Brown & Sharpe Manufacturing Company
(U.S.) and Brown & Sharpe Ltd. (U.K.), all assets relating to their screw
machine repair business. Also on April 14, 1993, the Company acquired the assets
of Plyslade Screw Machine Services, Ltd., a U.K. manufacturer and distributor of
Brown & Sharpe repair parts. On July 1, 1993, the Company acquired all of the
capital stock of The Heil Co., the United State's largest manufacturer of refuse
trucks, trailerized tanks and construction dump bodies. On August 23, 1993, the
Company acquired 100% of the capital stock of BTD Holdings, Inc. (Belvac).
Belvac is a leading manufacturer of quality machinery used in the production of
two-piece beverage cans, principally can-trimming and necking machines. On
August 31, 1993, the Company acquired the assets of Richland, Inc., a regional
steel supplier as well as a provider of custom steel fabrication and plant
maintenance service. Effective September 1, 1993, the Company acquired the
assets of Viking Elevator Company, Inc., of Los Angeles County, a regional
elevator service and repair company. On September 1, 1993, the Company acquired
the assets of J&L Tank, Inc., a tank trailer manufacturer. On
27
30
October 12, 1993, the Company acquired certain assets of Dynapert (a subsidiary
of Emhart Industries, Inc.) and its subsidiaries; these assets were purchased
for the Company's Universal Instruments subsidiary and relate to through-hole
mounting for use in assembling electronic circuit boards. As of October 22,
1993, the Company acquired the stock of Thermal Equipment Corporation, and
related corporations. Thermal is the leading designer and producer of autoclaves
used in curing composite and bonded materials in high-stress, demanding
applications. On November 3, 1993, the Company acquired the stock of Phoenix
Refrigeration Systems, Inc., a producer of commercial refrigeration systems for
retail grocery stores and food markets, and its affiliate, Electrical
Distribution Systems, Inc., a designer and manufacturer of commercial electrical
distribution systems. On November 16, 1993, the Company acquired the oscillator
product line of the E G & G Frequency Products Division for the Company's
Oscillatek Division. On December 3, 1993, the Company acquired certain assets of
Global Equipment Co. for the Company's subsidiary, Marathon Equipment Company.
The aggregate cost of these 1993 acquisitions, including all direct costs, was
approximately $321,002,000 cash, of which $171,047,000 represents goodwill, and
is being amortized over a forty-year period.
On January 3, 1994, the Company acquired the assets of Midland Manufacturing
Corp., the leading manufacturer of valves, gauges, fittings and other fluid
handling and control devices for the rail tank car industry. Effective March 1,
1994, the Company acquired the assets of Rantom, Inc., a Michigan-based
manufacturer of hydraulic and pneumatic cylinders and nitrogen air springs. On
March 24, 1994, the Company acquired the stock of HTT Heat Transfer Technologies
S.A., a European based designer and manufacturer of brazed plate heat exchangers
and plate and frame gasketed heat exchangers. On March 30, 1994, the Company
acquired the assets of Technopack Ewald Hagenorn GmbH & Co., KG (Technopack)
located near Hamburg, Germany. Technopack, a former licensee of the Company's
U.S. subsidiary, Tipper Tie, is a manufacturer of clipping equipment and clip
closures operating primarily in the European market. On May 9, 1994, the Company
acquired the stock of Reheat AB, a Swedish manufacturer of heat transfer plates
for plate heat exchangers. On May 24, 1994, the Company acquired the assets of
Koolrad Design & Manufacturing Company of Ontario, Canada. Koolrad is a major
manufacturer of plate-type radiators for Canadian transformer manufacturers. On
June 10, 1994, the Company acquired the stock of Tarby, Inc., a progressing
cavity pump manufacturer. On June 29, 1994, the Company acquired the assets of
Transmission Networks International (TNI), of Knightdale, North Carolina. TNI is
a leading manufacturer of specialty transformers, primarily with ferrite cores.
On July 29, 1994, the Company acquired certain assets of Midstate Elevator
Company, a New York regional elevator and escalator installation, service and
repair company. On August 5, 1994, the Company acquired the assets of Hill
Refrigeration, Inc., a manufacturer of refrigeration cases and refrigeration
systems for commercial use. On September 6, 1994, a subsidiary of the Company
purchased certain assets of its long-time supplier, Tie Net International. Tie
Net manufactures specialty netting products used primarily in the meat sector of
the food industry.
The aggregate cost of these 1994 acquisitions, including all direct costs, was
approximately $186,436,000 of which $91,087,000 represents goodwill and is being
amortized over a forty-year period. The $186,436,000 purchase price accounting
cost can be reconciled to the $187,704,000 "economic cost" amount shown
elsewhere in this report by considering long-term debt acquired, cash on date of
acquisition and reorganization costs assumed.
All of the above acquisitions have been accounted for by the purchase method of
accounting. Accordingly, the accounts of the acquired companies, after
adjustment to reflect fair market values assigned to assets and liabilities have
been included in the consolidated financial statements from their respective
dates of acquisition.
The pro-forma results of operations, after giving effect to purchase
adjustments, as if the 1994 acquisitions had taken place at the beginning of
1993, would not be materially different from those previously reported.
3. FOREIGN OPERATIONS:
The consolidated financial statements include the following assets, liabilities,
net sales and net earnings of foreign subsidiaries, all of which are wholly
owned:
(in thousands) 1994 1993 1992
================================================================
Assets $ 375,057 $ 265,260 $ 256,539
Liabilities 95,648 77,708 66,388
--------------------------------------
Net assets $ 279,409 $ 187,552 $ 190,151
======================================
Net sales $ 525,379 $ 390,574 $ 387,529
======================================
Net earnings $ 30,501 $ 28,244 $ 17,778
================================================================
4. ACCOUNTS RECEIVABLE:
Accounts receivable include retainage which has been billed, but which is not
due pursuant to retainage provisions in construction contracts until completion
of performance and acceptance by the customer. This retainage aggregated
$38,254,000 at December 31, 1994, $41,969,000 at December 31, 1993, and
$33,837,000 at December 31, 1992. Substantially all retained balances are
collectible within one year.
5. INVENTORIES:
The major portion of inventories is stated at cost determined on the LIFO basis.
Inventories, by components, are summarized as follows:
(in thousands) at December 31, 1994 1993 1992
========================================================================
Raw materials $ 116,829 $ 92,341 $ 89,776
Work in process 167,251 136,031 108,190
Finished goods 121,828 109,329 101,152
--------------------------------------
Total 405,908 337,701 299,118
Less LIFO reserve 41,304 43,382 48,962
--------------------------------------
$ 364,604 $ 294,319 $ 250,156
========================================================================
28
31
During each of the years in the three-year period ended December 31, 1994, some
inventory quantities were reduced. This reduction resulted in a liquidation of
certain LIFO inventory quantities carried at lower costs prevailing in prior
years as compared with costs at December 31 of each year. The effect of these
liquidations increased net earnings by 2 cents per share in 1994, by 3 cents per
share in 1993, and by 4 cents per share in 1992.
6. BANK LINES OF CREDIT:
The Company has open bank lines of credit and other bank credit agreements
totaling $411,000,000 which support its commercial paper. These lines are in
amounts requested by the Company and not the maximum that could be obtained.
Under the borrowing arrangements, the Company has generally agreed to either
maintain average collected bank compensating balances or pay fees, the total of
which is not material.
7. LONG-TERM DEBT:
A summary of long-term debt follows:
(in thousands) 1994 1993 1992
================================================================
Commercial paper $250,000 $250,000 --
Canadian mortgage
note bearing interest at
11.25%, matured in 1993 -- 672 $3,686
Other 4,042 1,705 1,490
-------------------------------
Total long-term debt 254,042 252,377 5,176
Less current installments 455 312 3,946
-------------------------------
Long-term debt excluding
current installments $253,587 $252,065 $1,230
================================================================
On December 10, 1993, the Company signed a three year $250 million credit
agreement with a group of 19 banks; this facility remains unused. The Company
has the intent to maintain, on a long--term basis, $250 million principal amount
of its commercial paper borrowings. Given this ability and intent, $250 million
of the Company's outstanding commercial paper has been classified as long-term
debt in the consolidated financial statements.
Annual repayments of long-term debt in the four years following 1995 (excluding
the $250 million credit agreement mentioned above, which matures in 1996) are
scheduled as follows: 1996-D$377,000, 1997-D$320,000, 1998-D$418,000,
1999-$694,000.
8. CAPITAL STOCK, ADDITIONAL PAID-IN CAPITAL AND TREASURY STOCK:
The Board of Directors has been authorized to issue preferred stock, in one or
more series up to 100,000 shares, with such designations, preferences and
relative rights and limitations as may be stated in the resolution relating to
each issue.
Changes in common stock, additional paid-in capital and treasury stock are
summarized below:
Treasury Stock
Common Stock Additional ------------------
(in thousands) $1 Par Value Paid-in Capital Shares Amount
======================================================================
Balance at
January 1, 1992 $65,998 $ 6,034 7,020 $230,097
Stock options
exercised 178 3,474 27* 1,188
Treasury stock
purchased -- -- 2,044 84,269
----------------------------------------------
Balance at
December 31, 1992 $66,176 $ 9,508 9,091 $315,554
Stock options
exercised 122 3,023 20* 1,087
Treasury stock
purchased -- -- 25 1,242
----------------------------------------------
Balance at
December 31, 1993 $66,298 $12,531 9,136 $317,883
Stock options
exercised 143 5,145 2* 133
Treasury stock
purchased -- -- 573 29,600
----------------------------------------------
Balance at
December 31, 1994 $66,441 $17,676 9,711 $347,616
======================================================================
*Shares given as consideration for exercise price.
During 1987 the Board of Directors adopted a Stockholders' Rights Plan that is
designed to protect stockholders from attempts to acquire control of the Company
at an inadequate price. In accordance with the Board's resolution, a dividend
distribution of one Preferred Stock Purchase Right for each outstanding share of
common stock was paid on November 23, 1987. Under certain circumstances,
including the acquisition of 20 percent of the Company's stock, all rights
holders except the acquiror may purchase the Company's common stock at a 50
percent discount. If the Company is acquired in a merger after the acquisition
of 20 percent of the Company's common stock, rights holders may purchase the
acquiror's shares at a similar discount.
9. STOCK OPTION AND PERFORMANCE INCENTIVE PROGRAM:
On April 24, 1984, the stockholders approved an incentive stock option plan and
cash performance program under which a maximum aggregate of 4,800,000 shares was
reserved for grant to key personnel until January 30, 1994. This plan expired on
January 30, 1995, but certain previous grants remain outstanding at December 31,
1994. On April 28, 1987, the stockholders
29
32
approved an amendment to permit the grant or exercise of nonqualified stock
options under this plan. The stockholders also approved a cash bonus covering a
portion of the option holder's income tax liability to compensate any optionee
who amends his option changing its exercise from qualified to nonqualified. A
nonqualified exercise reduces the Company's after-tax cost of the program.
During 1994, cash bonuses in connection with nonqualified exercises aggregated
$302,000 ($1,562,000 in 1993 and $2,064,000 in 1992).
The option price may not be less than the fair market value of the stock at the
time the options are granted. The period during which these options are
exercisable is fixed by the Company's Compensation Committee at the time of
grant but is not to exceed ten years plus one month with respect to nonqualified
options under the plans.
Transactions in stock options under this plan are summarized as follows:
Shares Under Option Price Range
============================================================================
Outstanding at Jan. 1, 1992 1,145,520 $14.00--$39.50
Granted 221,460 $39.75
Exercised (178,320) $14.00--$30.50
Canceled (2,350) $19.63--$39.75
-----------------------------
Outstanding at Dec. 31, 1992 1,186,310 $15.00--$39.75
=============================
Exercisable at Dec. 31, 1992
through March 28, 1999 558,850 $15.00--$31.25
=============================
Outstanding at Jan. 1, 1993 1,186,310 $15.00--$38.72
Granted 246,970 $45.69
Exercised (122,469) $15.00--$34.71
Spin-off adjustment 33,598 --
Canceled (70,720) $15.00--$45.69
-----------------------------
Outstanding at Dec. 31, 1993 1,273,689 $16.57--$45.69
=============================
Exercisable at Dec. 31, 1993
through Feb. 28, 2000 672,658 $16.57--$45.69
=============================
Outstanding at Jan. 1, 1994 1,273,689 $16.57--$45.69
Granted 195,805 $59.50
Exercised (142,100) $16.57--$38.72
Canceled (48,229) $26.37--$59.50
-----------------------------
Outstanding at Dec. 31, 1994 1,279,165 $18.27--$59.50
============================================================================
Exercisable at December 31, 1994 through:
January 20, 1995 12,668 shares@ $18.27--$45.69
January 30, 1996 29,359 shares @ $19.13--$45.69
February 28, 1997 84,391 shares @ $26.38--$45.69
March 3, 1998 117,065 shares @ $30.46--$45.69
March 28, 1999 141,665 shares @ $29.73--$45.69
February 28, 2000 162,918 shares @ $34.72--$45.69
February 28, 2001 174,223 shares @ $38.49--$45.69
- ----------------------------------------------------------------------------
10. PENSION PLANS:
The Company has many non-contributory defined benefit and defined contribution
pension plans covering substantially all employees of the company and its
domestic and foreign subsidiaries. Plan benefits are generally based on years of
service and employee compensation. The Company's funding policy is consistent
with the funding requirements of ERISA and applicable foreign law.
The financial statements and related disclosures reflect Statement of Financial
Accounting Standard No. 87 "Employers" Accounting for Pensions', for U.S.
defined benefit pension plans; foreign defined benefit pension plans are not
considered material. Pension cost and related disclosures for U.S. funded
defined benefit plans for 1994, 1993 and 1992 include the following components:
(in thousands) 1994 1993 1992
===================================================================
Actual return on plan assets $ 5,098 $26,898 $14,108
Add deferred loss (gain) 14,866 (7,914) 561
--------------------------------
Net return 19,964 18,984 14,669
Net amortization 1,612 1,387 1,741
Deduct:
Benefits earned during year (7,872) (6,251) (5,560)
Interest accrued on
projected benefit obligation (12,302) (11,978) (8,832)
--------------------------------
Net pension credit $ 1,402 $ 2,142 $ 2,018
===================================================================
The funded status and resulting prepaid pension cost of U.S. defined benefit
plans for the three years ended December 31, 1994, were as follows:
Funded Plans
--------------------------------
(in thousands) 1994 1993 1992
==================================================================
Plan assets at fair value $ 203,549 $214,542 $164,394
--------------------------------
Actuarial present value
of benefit obligation:
Vested 146,322 137,643 87,278
Nonvested 8,590 15,791 12,089
--------------------------------
Accumulated benefit obligation 154,912 153,434 99,367
Effect of projected future
salary increases 30,104 28,239 20,278
--------------------------------
Projected benefit obligation 185,016 181,673 119,645
--------------------------------
Plan assets in excess of
projected benefit obligation 18,533 32,869 44,749
Unrecognized net (gain) loss 20,489 4,199 (6,141)
Unrecognized FAS 87
transition (gain) (19,665) (21,345) (25,066)
Unrecognized prior service cost 3,749 5,298 5,092
--------------------------------
Prepaid pension cost
at December 31 $ 23,106 $ 21,021 $ 18,634
==================================================================
The assumptions used in determining the above were as follows: a weighted
average discount rate of 7% (7.1% for 1993 and 8% for 1992), an average wage
increase of 5% and an expected longterm rate of return on plan assets of 10%.
Approximately 68% (72% in 1993 and 71% in 1992) of defined benefit plan assets
were invested in equity securities with the remainder in fixed income and
short-term investments.
The Company also provides, through a nonqualified plan, supplemental pension
payments in excess of qualified plan limits imposed by Federal tax law. These
plans cover officers and certain key employees and serve to restore the combined
pension amount to original benefit levels. The plans are unfunded apart
30
33
from the general assets of the Company. The pension benefit obligation and
pension expense under these plans follow:
(in thousands) 1994 1993 1992
================================================================
Pension benefit obligation $13,902 $11,986 $7,927
Pension expense 3,599 1,679 1,086
- ----------------------------------------------------------------
For measurement purposes a discount rate of 7% was used together with an average
wage increase of 5%.
Pension cost for all plans was $33,474,000 for 1994, $25,546,000 for 1993 and
$26,350,000 for 1992.
In addition to the pension plans described above, certain of the Company's
subsidiaries sponsor twelve separate defined benefit health care plans for
retirees which provide medical coverage and/or life insurance. None of these
plans is funded.
The Company adopted Statement of Financial Accounting Standards No. 106
"Employers" Accounting for Postretirement Benefits Other Than Pensions," as of
January 1, 1992. The cumulative effect of such adoption at January 1, 1992 was a
charge of $19,546,000 before taxes ($12,387,000 after taxes). The net periodic
postretirement benefit cost before taxes for 1992 was increased $1,069,000.
The following table details the amounts recognized in the Company's Consolidated
Balance Sheet at December 31 of each year:
(in thousands) 1994 1993 1992
=================================================================
Accumulated postretirement
benefit obligation:
Retirees $16,637 $17,942 $ 9,895
Fully eligible active plans
participants 9,990 10,822 10,720
Unamortized gain (loss) 1,133 (1,513) --
------------------------------
Accrued postretirement
benefit cost included in
accrued liabilities $27,760 $27,251 $ 20,615
=================================================================
Net period postretirement benefit cost for 1994, 1993 and 1992 included the
following components:
(in thousands) 1994 1993 1992
================================================================
Service cost $ 504 $ 426 $ 475
Interest cost 1,907 1,545 1,521
Gain on settlement (410) (285) --
Amortization gain (72) (35) --
------------------------------
Net periodic postretirement
benefit cost $ 1,929 $1,651 $1,996
================================================================
For measurement purposes a discount rate of 7% was used for the plan liability
and rates from 5% to 16% annual rate of increase in the per capita cost covered
benefit (i.e., health care cost trend rates) was assumed for 1995; the rates
were assumed to decrease gradually to 5% by the year 2012 and remain at that
level thereafter. The health care cost trend rate assumption has a significant
effect on the amount reported. For example, increasing the assumed health care
cost trend rates by one percentage point in each year would increase the
accumulated postretirement benefit obligation as of December 31, 1994 by
$1,859,000 and the aggregate of the service and interest cost components of net
periodic postretirement benefit cost for 1994 by approximately $198,000.
11. TAXES ON INCOME:
As discussed in note 1H, the Company adopted Statement 109 as of January 1,
1992. The cumulative effect of this change of accounting has been reported
separately in the consolidated statement of earnings for the year ended December
31, 1992; prior years' financial statements have not been restated. The
cumulative effect of this accounting change was $12,951,000 as of January 1,
1992, and pretax income for the year ended December 31, 1992, was decreased
$3,297,000 due to effects of adjustments for prior purchase business
combinations.
Total income taxes for the years ended December 31, 1994, 1993 and 1992 were
allocated as follows:
(in thousands) 1994 1993 1992
================================================================
Income from continuing
operations $104,486 $87,288 $71,192
Change in accounting principles -- -- (7,159)
Stockholders' equity, for
compensation expense for
tax purposes in excess of
amounts recognized for
financial reporting purposes (1,491) (1,849) (1,431)
-------------------------------
$102,995 $85,439 $62,602
=================================================================
Income tax expense (benefit) is made up of the following components:
(in thousands) 1994 1993 1992
=================================================================
Domestic $267,427 $220,968 $167,911
Foreign 39,432 24,574 32,424
-------------------------------
$306,859 $245,542 $200,335
=================================================================
Income tax expense (benefit) is made up of the following components:
(in thousands) 1994 1993 1992
=================================================================
Current:
U.S. Federal $ 98,895 $74,651 $55,989
State and local 7,259 4,400 6,115
Foreign 17,290 7,732 12,628
-------------------------------
Total current 123,444 86,783 74,732
-------------------------------
Deferred:
U.S. Federal (15,922) (1,643) (3,810)
State and local (182) 1,700 (94)
Foreign (2,854) 448 364
-------------------------------
Total deferred (18,958) 505 (3,540)
-------------------------------
Total expense $104,486 $87,288 $71,192
===============================
Effective rate 34.1% 35.5% 35.5%
=================================================================
31
34
The reasons for the difference between the effective rate and the U.S. Federal
income statutory rate of 35% (34% for 1992) follows:
(in thousands) 1994 1993 1992
===============================================================
U.S. Federal income tax rate 35.0% 35.0% 34.0%
State and local taxes, net of
Federal income tax benefit 1.5 1.6 2.0
Foreign tax differential .2 -- 1.0
R&E tax credits (1.6) (.6) (.8)
FSC benefit (2.0) (1.9) (2.4)
Non tax deductible items 1.6 2.5 2.2
Miscellaneous items (.6) (1.1) (.5)
--------------------------
34.1% 35.5% 35.5%
===============================================================
The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities at December 31 of each
year are:
(in thousands) 1994 1993 1992
========================================================================
DEFERRED TAX ASSETS:
Accrued insurance principally
due to accrual for financial
reporting purposes $ 25,248 $ 17,994 $ 20,556
Accrued compensation principally
due to accrual of postretirement
benefits, compensated absences 21,226 17,768 14,576
Accrued expenses principally
due to accrual for disposition
of business, interest and warranty
for financial reporting purposes 16,519 13,087 9,610
Inventories, principally due to
reserves for financial reporting
purposes and capitalization
for tax purposes 6,365 5,505 3,400
Accounts receivable principally
due to allowance for
doubtful accounts 4,609 3,439 2,976
Other 2,072 6,505 1,700
----------------------------------
Total deferred tax assets 76,039 64,298 52,818
----------------------------------
DEFERRED TAX LIABILITIES:
Accounts receivable principally due
to retainage and accrual
acceptance on elevator contracts (40,330) (39,520) (29,727)
Plant and equipment, principally due
to differences in depreciation (18,823) (14,554) (16,917)
Intangible assets principally due
to different tax and financial
reporting bases (2,720) (25,040) (15,058)
Prepaid expenses principally due
to overfunded pensions plans (5,936) (7,103) (5,332)
Other (4,288) (5,217) (5,250)
----------------------------------
Total gross deferred liabilities (72,097) (91,434) (72,284)
----------------------------------
Net deferred tax (liability) asset 3,942 (27,136) (19,466)
==================================
Net current deferred
(liability) asset 6,487 (6,727) 2,034
==================================
Net non-current deferred
tax liability $ (2,545) $(20,409) $(21,500)
=========================================================================
There were no valuation allowances at January 1, 1992 through December 31, 1994.
12. RENTAL AND LEASE INFORMATION:
The Company leases certain facilities and equipment under operating leases, many
of which contain renewal options. Total rental expense, net of insignificant
sublease rental income, on all operating leases was $25,916,000, $24,923,000 and
$25,671,000 for 1994, 1993 and 1992, respectively. Contingent rentals under the
operating leases were not significant.
Minimum future rental commitments under operating leases having noncancelable
lease terms in excess of one year, aggregate $80 million as of December 31, 1994
and are payable as follows (in millions): 1995 - $17.7; 1996 - $13.5; 1997 -
$10.5; 1998 - $7.2; 1999 - $5.4; and after 1999 - $25.7.
13. CONTINGENCIES:
Several 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 small in relation to the total projected expenditures and the
number of other "potentially responsible parties" involved. In addition, several
of the Company's subsidiaries are involved in ongoing remedial activities at
certain plant sites, in cooperation with regulatory agencies.
In December 1991 a chromium leak was discovered in the vicinity of Texas
Hydraulics' Waco, Texas plant. Texas Hydraulics immediately began remedial
activities which continue to date. In addition, Texas Hydraulics paid the State
of Texas approximately $174,000 to settle all administrative compliance matters
and has settled several private claims relating to these events. The Company
monitors the status of these proceedings and has provided appropriate reserves.
As previously reported, the Internal Revenue Service (IRS) proposed significant
additional taxes plus interest as a result of its examination of the Company's
Federal income tax returns for the eight years ended December 31, 1989. The
underlying issues related primarily to allocations of purchase price of
acquisitions made during those years, plus acquisitions made in 1990 and 1991.
On January 13, 1995, the Company reached agreement with the Appeals Office of
IRS settling substantially all issues relating to such acquisitions. Under this
agreement, allocations to tangible assets have been accepted while allocations
to intangibles have been adjusted in accordance with the Intangible Settlement
Initiative introduced by the IRS National Office in March 1994. The Settlement
was recorded as of December 31, 1994, as a result of which excess tax reserves
in the amount of $26 million have been released with a corresponding reduction
in goodwill.
During 1994, the IRS completed its examination of the Company's 1990 and 1991
Federal income tax returns and has proposed additional taxes aggregating $36.2
million plus interest which
32
35
action is being vigorously contested by the Company. If ultimately the Company
must pay certain of these additional taxes, such taxes will be recovered in
future years.
The Company and certain of its subsidiaries are also parties to a number of
other legal proceedings incidental to their businesses. Management and legal
counsel periodically 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, in the opinion of
management, based on these reviews, the disposition of the lawsuits and the
other matters mentioned above will not have a material effect on financial
position.
Certain lease receivables entered into by the Company's finance divisions were
sold to a third party during 1992, 1993 and 1994, with limited recourse. The
leases cover machinery and equipment manufactured by the Company and involve
thousands of customers. There is no significant concentration of credit risk.
Generally, the lease period does not exceed five years. The leases are
collateralized by security deposits and Uniform Commercial Code filings;
equipment is subject to repossession in the event of lease default. The
outstanding balance on such receivables at December 31, 1994 was $41 million
($39 million in 1993 and $45 million in 1992) of which the Company has a
contingent liability of $7.2 million should all of the receivables become
uncollectible.
14. DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards 107, requires all entities to
disclose the fair value of certain financial instruments in their financial
statements. Accordingly, the Company reports that the carrying amount of cash
and cash equivalents, trade receivables, accounts payable, notes payable and
accrued expenses approximates fair value due to the short maturity of these
instruments, and that the carrying amount of marketable securities is stated at
fair value.
15. BUSINESS SEGMENT INFORMATION:
Dover groups its products and services by industry lines into five segments as
set forth in the tables shown on page 16. A description of the products
manufactured and services performed by each of the five segments is given on
pages 6 through 15.
OPERATING RETURN ON OPERATING INVESTMENT
When companies are acquired, Dover's purchase price generally exceeds the book
value of the acquired company. Increases in the book value of the assets,
including goodwill, arising in such instances, are assigned to the business
segments in which acquired companies are included. Similarly, the amortization
of these increased asset values is charged against the income of that business
segment.
These asset values and charges to income are also reflected in the computation
of Dover's net income and return on equity. However, to monitor the progress of
business operations on a continuous basis and in relation to industry norms,
Dover does not include these asset values or cost in the calculation of
"Operating Return on Investment" as shown in the unaudited charts on pages 4, 6,
9, 12, 15 and 18. Additionally, the "Investment" figure reflected in these
charts is reduced by applicable current liabilities for accounts payable and
accrued expenses and for certain deferred taxes.
INFORMATION ABOUT THE COMPANY'S OPERATIONS IN DIFFERENT GEOGRAPHIC AREAS
(in thousands)
For the Years Ended December 31, 1994 1993 1992 1991 1990 1989
=========================================================================================================================
Sales to unaffiliated customers:
United States $2,559,897 $2,093,354 $1,884,051 $1,805,133 $1,812,612 $1,782,675
Foreign 525,379 390,574 387,529 390,653 397,733 337,759
Transfers between geographic areas:
United States 129,690 82,772 75,226 85,514 98,929 89,121
Foreign 26,603 20,983 19,147 10,448 14,258 7,271
Eliminations (156,293) (103,755) (94,373) (95,962) (113,187) (96,392)
----------------------------------------------------------------------------------
Consolidated sales $3,085,276 $2,483,928 $2,271,580 $2,195,786 $2,210,345 $2,120,434
==================================================================================
Operating profit:
United States $ 306,881 $ 237,847 187,118 $ 170,265 $ 223,350 $ 216,115
Foreign 47,674 29,946 35,677 51,211 52,370 39,445
----------------------------------------------------------------------------------
Consolidated total
(excluding corporate) $ 354,555 $ 267,793 222,795 $ 221,476 $ 275,720 $ 255,560
==================================================================================
Identifiable assets at December 31:
United States $1,603,191 $1,454,198 $1,111,017 $1,017,003 $1,033,969 $1,053,700
Foreign 375,057 265,260 256,539 267,565 242,702 206,494
----------------------------------------------------------------------------------
Consolidated total
(excluding corporate) $1,978,248 $1,719,458 $1,367,556 $1,284,568 $1,276,671 $1,260,194
==================================================================================
Export sales as a percentage
of United States sales 22% 20% 22% 22% 20% 20%
=========================================================================================================================
33
36
DOVER CORPORATION AND SUBSIDIARIES
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of Dover Corporation:
We have audited the accompanying consolidated balance sheets of Dover
Corporation and subsidiaries as of December 31, 1994, 1993 and 1992 and the
related consolidated statements of earnings, retained earnings and cash flows
for the years then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Dover Corporation
and subsidiaries at December 31, 1994, 1993 and 1992, and the results of their
operations and their cash flows for the years then ended in conformity with
generally accepted accounting principles.
As discussed in the notes to the consolidated financial statements, in 1992 the
Company adopted the provisions of the Financial Accounting Standards Board's
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes," and the Financial Accounting Standards Board's Statement of Financial
Accounting Standards No. 106, "Employers" Accounting for Postretirement Benefits
Other Than Pensions."
345 Park Avenue
New York, N.Y. 10154
February 22, 1995 KPMG Peat Marwick LLP
34
37
DOVER CORPORATION AND SUBSIDIARIES
QUARTERLY DATA
(unaudited) (in thousands except per share figures)
Quarter Net Sales Gross Profit Net Earnings Per Share
==========================================================================================
1994 FIRST $ 680,727 $210,932 $ 42,573 $ .74
SECOND 761,224 237,896 52,440 .92
THIRD 804,460 245,228 51,870 .91
FOURTH 838,865 253,743 55,490 .97
-----------------------------------------------------------
$3,085,276 $947,799 $202,373 $3.54
==========================================================================================
1993 First $ 566,780 $168,114 $ 33,764 $ .59
Second 594,511 177,174 39,759 .70
Third 642,178 199,918 42,360 .74
Fourth 680,459 205,466 42,371 .74
$2,483,928 $750,672 $158,254 $2.77
==========================================================================================
DOVER CORPORATION AND SUBSIDIARIES
COMMON STOCK CASH DIVIDENDS AND MARKET PRICES
Market Prices**
------------------------ Dividends
Quarter High Low Per Share
==========================================================================================
1994 FIRST $66.88 $57.63 $.23
SECOND 62.88 50.88 .23
THIRD 60.63 54.63 .26
FOURTH 57.38 49.75 .26
--------------------------------------
$.98
==========================================================================================
1993 First $50.00 $45.00 $.22
Second 49.38 46.00 .22
Third 57.13 45.63 .23
Fourth 61.88 51.88 .23
--------------------------------------
$.90
==========================================================================================
**As reported in the Wall Street Journal.
35
38
1994 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
LIQUIDITY AND CAPITAL RESOURCES:
The Company continues to be in excellent financial condition. Liquidity measures
decreased only modestly despite 1994 acquisition expenditures of $188 million,
capital expenditures of $84 million and treasury stock purchases of $30 million.
The Company's current ratio (current assets divided by current liabilities)
decreased to 1.47 at December 31, 1994, compared with 1.52 at December 31, 1993,
and 1.36 at December 31, 1992. The quick ratio (current assets net of
inventories, divided by current liabilities) also decreased, to 1.00 at December
31, 1994, compared with 1.02 at December 31, 1993, and .91 at December 31, 1992.
Year-end working capital for the last three years expressed as a percentage of
sales was 11.7% in 1994, 12.4% in 1993 and 8.9% in 1992. Income taxes have been
based on the following components of earnings before taxes on income.
At December 31, 1994, the Company had bank lines of $411 million, all of which
were unused. Additional bank lines of credit are available at the Company's
request.
The Company enjoys the highest rating for its commercial paper. Notes payable at
December 31, 1994, aggregated $263.6 an increase of $88.6 million from the prior
year. This increase, together with internally generated excess cash flows,
financed the 1994 acquisition program, the stock repurchase program and the
capital expenditures mentioned above.
With respect to debt percentages, current debt to tangible net worth increased
to 47.7% at December 31, 1994 compared with 32.1% at December 31, 1993 and 53.3%
at December 31, 1992. Total debt to tangible net worth followed a similar
pattern, increasing in 1994 to 93.4% at year end compared with 78.4% at year end
1993 and 54.5% at year end 1992. The Company's net debt (total debt less cash,
cash equivalents and marketable securities) increased by $41.7 million, during
1994, but the net debt to equity ratio decreased to 37.4% compared with 38.1% at
December 31, 1993 and 15.5% at December 31, 1992. Long-term debt maturities for
the four years 1995 to 1998 aggregate $251.6 million. Management is not aware of
any potential impairment to the Company's liquidity, other than contingent
liabilities as discussed in Note 13 to the Consolidated Financial Statements.
Historically, capital expenditures have been financed with internally generated
funds. During 1994 the entire capital expenditure program was financed
internally. Internal financing is also expected to provide all of the funds for
capital expenditures in 1995, which the Company believes will aggregate
approximately $100 million. The Company plans to continue its acquisition
program, combining external financing, if necessary, with internally generated
cash.
RESULTS OF OPERATIONS 1994:
Results of operations are explained in detail in the stockholders' letter and
operations review, pages 2 through 20.
1993 COMPARED WITH 1992:
Earnings per share set a new record of $2.77, an increase of 24% over 1992.
Sales rose 9%, from $2.272 billion to $2.484 billion. It was an especially
successful year for our acquisition program; $321 million was invested in 13
separate transactions. The companies purchased in 1993 had full calendar year
sales of about $393 million. Because of the timing of these transactions during
the year, they added only $155 million to Dover's reported 1993 sales, and only
$.05 per share as a result of heavy first-year write-offs of acquisition
premiums and interest foregone.
A discussion of operations by industry segments follow:
DOVER RESOURCES:
Dover Resources became our largest independent subsidiary in 1993, from an
earnings point of view, as its profits expanded 20% on an 8% increase in sales.
These results reflect internal growth, as Dover Resources did not complete any
acquisitions in 1993.
Growth was unevenly spread among Dover Resources' companies, as many of these
businesses continued to face difficult markets during the year Successful new
products for the gasoline vapor recovery market helped Blackmer and OPW Fueling
Components to achieve record earnings. Strong earnings increases at Norris,
Norriseal and Alberta Oil Tool resulted primarily from a restructuring late in
1992, market share gains and expanded export activities.
Some other companies also achieved gains during the year, including De-Sta-Co,
as a result of outstanding domestic performance in its clamp and valve products,
and Petro Vend, which benefited from new products and a stronger gasoline
retailing market.
Several companies whose sales are dependent on the long lead-time capital
expenditure programs of their customers had reduced earnings, notably
Ronningen-Petter and Wittemann.
36
39
DOVER CORPORATION AND SUBSIDIARIES
DOVER INDUSTRIES:
Dover Industries achieved record sales, up 40%, as well as record profits, up
58% from a prior year that had been burdened with a $9 million environmental
charge. The acquisition of The Heil Co. and of B&S Services contributed
substantially to the sales gain and modestly to the earnings gain. Heil, which
is the nation's leading manufacturer of refuse trucks and trailerized tanks,
became the largest company in Dover Industries and third largest in Dover
Corporation, as its own operations advanced strongly in 1993. Heil had record
sales exceeding $200 million, and record earnings as well.
In addition, eight of Dover Industries' ten other companies achieved earnings
gains, with impressive improvements at Tipper Tie, Groen and Chief Automotive.
In each of these three companies, the gains were primarily fueled by management
actions involving cost reduction, capital investment and product line expansion,
rather than by particularly vibrant market conditions.
DOVER ELEVATOR INTERNATIONAL:
Dover Elevator International continued to grapple with extremely weak
new-construction markets in North America as its sales declined by 2% from prior
year and profits slipped by 5%. This was a disappointment, as we had begun 1993
hoping that profits would continue the recovery trend that began in 1992.
Service revenue did continue to grow but at rates below historical norms because
of highly competitive market conditions and the reduced volume of new elevators
available for conversion to service contracts.
Most of this segment's profit decline came from Canada and, to a lesser extent,
the United Kingdom, and related to reduced volumes and profitability of new
elevator work, along with the cost of down-sizing these activities during the
year.
In the U.S., profits improved modestly, as some companies, notably Miami
Elevator and Dover Elevator Systems, achieved gains. The market for new elevator
work remained depressed, as it has been since the real estate contraction began
in early 1991. As a result, new elevator bookings have been flat across this
three-year period.
DOVER TECHNOLOGIES:
Dover Technologies' income advanced 40%, despite the mid-year spin-off of
DOVatron, which was this segment's second largest profit producer in 1992. All
Dover Technologies' companies showed improvement over the prior year, with
particularly strong gains at DEK, Universal Instruments and Quadrant
Technologies. At DEK, which specializes in printing equipment used in the
assembly of surface mount printed circuit boards, a 40% gain in revenues and a
substantially larger gain in profits were fueled by the continued success of its
state-of-the-art Model 265 printer.
Universal's gains primarily reflected strong bookings and shipments for
thru-hole assembly machines, stemming from a cyclical recovery in this segment
of the industry and increases in Universal's market share. Universal's GSM- 1
surface mount machine for flexible assembly received a positive acceptance from
the marketplace.
DOVER DIVERSIFIED:
Profits at Dover Diversified advanced 5%, primarily because of the favorable
settlement of a contract dispute involving Sargent Controls' work on the Seawolf
submarine during 1990-93. The settlement added $11 million to 1993 profits. The
settlement reflects customer delays in finalizing designs and shipment schedule,
which seriously impacted Sargent Controls' production and cost structure.
Most of the companies in this segment faced difficult conditions in 1993.
Tranter, A-C Compressor and Waukesha Bearings had profit declines. However,
Pathway Bellows and Central Research Laboratories achieved record profits.
Despite its profit decline, A-C Compressor was nonetheless a bright spot,
generating record orders for its long lead-time centrifugal compressors.
37
40
DOVER CORPORATION AND SUBSIDIARIES
11-YEAR CONSOLIDATED SUMMARY OF SELECTED FINANCIAL DATA
(in thousands except per share figures)
1994 1993 1992 1991
=======================================================================================================================
Summary of Operations
Net sales $3,085,276 2,483,928 2,271,580 2,195,786
Cost of sales 2,137,477 1,733,256 1,601,596 1,580,051
Selling and administrative expenses 622,434 496,798 466,777 452,394
Interest expense 36,461 22,339 20,059 23,161
Other income (deductions), net 17,955 14,007 17,187 63,908
Earnings before taxes 306,859 245,542 200,335 204,088
Income taxes 104,486 87,288 71,192 75,880
- -----------------------------------------------------------------------------------------------------------------------
Net earnings $ 202,373 158,254 129,707* 128,208
% of sales 6.6% 6.4% 5.7% 5.8%
Return on average equity 21.7% 18.9% 15.9% 15.9%
Net earnings per common share $ 3.54 2.77 2.24* 2.15
Dividends per common share $ .98 .90 .86 .82
- -----------------------------------------------------------------------------------------------------------------------
Book value per common share $ 16.23 15.22 14.10 14.05
Depreciation and amortization $ 95,789 76,969 77,457 85,366
Capital expenditures $ 84,473 47,532 42,441 46,618
Acquisitions $ 187,704 321,002 111,243 13,192
Cash flow** $ 298,162 235,223 207,164 213,575
Weighted average number of common shares outstanding 57,185 57,110 57,988 59,750
Number of employees 22,992 20,445 18,827 18,898
- -----------------------------------------------------------------------------------------------------------------------
Financial position at December 31
Working capital $ 360,916 307,846 201,641 280,902
Net property, plant and equipment $ 342,685 283,363 251,270 251,145
Total assets $2,070,637 1,773,689 1,426,124 1,356,620
Long-term debt $ 253,587 252,065 1,230 6,317
Common stockholders' equity $ 995,859 870,002 804,937 828,374
Common shares outstanding 56,730 57,163 57,085 58,978
=======================================================================================================================
* Net earnings and net earnings per common share include $565,000 and 1(cent)
per share, respectively, applicable to the cumulative effects of changes in
accounting principles for Adjusted to give retroactive effect to the 2 for 1
stock split in 1988.
FAS 109, "Accounting for Income Taxes" and FAS 106 "Employers' Accounting for
Postretirement Benefits Other Than Pensions."
**Represents net earnings plus depreciation and amortization.
PAGE 38
- -------
DOVER CORPORATION
DOVER LONG TERM INVESTMENT
(in $ millions)
Total Long
Capital Stock Term
Expenditures Repurchase Acquisitions Investment
1984 30 12 101 143
1985 35 10 29 74
1986 44 58 76 178
1987 40 47 58 145
1988 57 35 206 298
1989 63 94 -- 157
1990 45 80 103 228
1991 46 39 14 99
1992 42 85 112 238
1993 48 2 321 371
1994 85 30 188 303
DOVER RETURN ON AVERAGE EQUITY
(%)
1984 18.9
1985 16.9
1986 13.4
1987 17.2
1988 20.6
1989 19.4
1990 20.3
1991 15.9
1992 15.9
1993 18.9
1994 21.7
38
41
DOVER CORPORATION AND SUBSIDIARIES
11-YEAR CONSOLIDATED SUMMARY OF SELECTED FINANCIAL DATA
(in thousands except per share figures)
1990 1989 1988 1987
=======================================================================================================================
Summary of Operations
Net sales $2,210,345 $2,120,434 $1,953,754 $1,588,224
Cost of sales 1,516,753 1,480,880 1,363,852 1,096,612
Selling and administrative expenses 440,313 404,043 360,122 306,792
Interest expense 30,658 29,644 21,324 15,044
Other income (deductions), net 21,497 21,112 16,304 11,083
Earnings before taxes 244,118 226,979 224,760 180,859
Income taxes 88,439 82,999 78,988 69,158
- -----------------------------------------------------------------------------------------------------------------------
Net earnings 155,679 143,980 145,772 111,701
% of sales 7.0% 6.8% 7.5% 7.0%
Return on average equity 20.3% 19.4% 20.6% 17.2%
Net earnings per common share 2.55 2.28 2.22 1.65
Dividends per common share .76 .70 .62 .51
- -----------------------------------------------------------------------------------------------------------------------
Book value per common share 13.13 12.00 11.37 10.14
Depreciation and amortization 77,530 78,813 73,797 63,505
Capital expenditures 44,980 62,504 56,779 40,397
Acquisitions 102,834 -- 205,765 57,718
Cash flow** 233,210 222,793 219,569 175,205
Weighted average number of common shares outstanding 61,169 63,250 65,726 67,552
Number of employees 20,461 20,049 20,412 17,592
- -----------------------------------------------------------------------------------------------------------------------
Financial position at December 31
Working capital 206,748 245,755 198,038 316,116
Net property, plant and equipment 268,386 272,158 268,139 219,031
Total assets 1,468,366 1,406,376 1,365,630 1,155,226
Long-term debt 20,955 26,691 27,773 35,134
Common stockholders' equity 787,660 746,809 741,142 671,950
Common shares outstanding 59,971 62,243 65,208 66,252
=======================================================================================================================
1986 1985 1984
=======================================================================================================
Summary of Operations
Net sales $1,440,745 $1,439,548 $1,288,481
Cost of sales 1,028,394 1,028,530 896,589
Selling and administrative expenses 270,432 250,176 215,877
Interest expense 16,475 12,677 10,329
Other income (deductions), net 9,022 11,923 10,402
Earnings before taxes 134,466 160,088 176,088
Income taxes 50,637 60,060 75,631
- -------------------------------------------------------------------------------------------------------
Net earnings 83,829 100,028 100,457
% of sales 5.8% 6.9% 7.8%
Return on average equity 13.4% 16.9% 18.9%
Net earnings per common share 1.21 1.41 1.41
Dividends per common share .45 .43 .39
- -------------------------------------------------------------------------------------------------------
Book value per common share 9.25 8.88 7.89
Depreciation and amortization 57,008 53,096 46,889
Capital expenditures 44,416 35,196 30,362
Acquisitions 76,142 29,244 100,517
Cash flow** 140,836 153,124 147,346
Weighted average number of common shares outstanding 69,290 70,802 71,272
Number of employees 16,539 16,071 16,193
- -------------------------------------------------------------------------------------------------------
Financial position at December 31
Working capital 295,370 368,998 305,153
Net property, plant and equipment 210,908 186,114 183,435
Total assets 1,036,846 1,017,019 918,166
Long-term debt 41,711 73,523 73,126
Common stockholders' equity 627,674 625,541 559,088
Common shares outstanding 67,812 70,476 70,886
=======================================================================================================
PAGE 39
- -------
DOVER CORPORATION
CASH FLOW
(in $ millions)
Depreciation &
Net Income Amortization Total
1984 100 47 147
1985 100 53 153
1986 84 57 141
1987 112 63 175
1988 146 74 220
1989 144 79 223
1990 156 77 233
1991 128 85 213
1992 130 77 207
1993 158 77 235
1994 202 96 298
FREE CASH FLOW AS A PERCENT OF SALES
(%)
Annual 3-Year Moving Average
1984 -- 5.8
1985 10.3 6.3
1986 6.4 5.6
1987 6.8 7.9
1988 2.8 5.3
1989 7.2 5.6
1990 6.1 5.4
1991 9.3 7.5
1992 3.7 6.4
1993 5.1 6.0
1994 5.7 4.9
39
42
DOVER CORPORATION AND SUBSIDIARIES
DIRECTORS AND OFFICERS
BOARD OF DIRECTORS
David H. Benson (Nominee)
Non-Executive Director,
Kleinwort Benson Group, PLC.
Magalen O. Bryant**
Director of various corporations
Jean-Pierre M. Ergas
Senior Adviser to President/CEO
Alcan Aluminum Ltd.
Roderick J. Fleming (Nominee)
Director, Robert Fleming Holdings, Limited
John F. Fort**
Director of Tyco Laboratories, Inc.
James L. Koley
President, Koley, Jessen, Daubman & Rupiper, P.C.
Anthony J. Ormsby*
Director of various corporations
Thomas L. Reece*
Gary L. Roubos*
David G. Thomas*n
Director of various corporations
Jerry W. Yochum
President and Chief Executive Officer, Dover Diversified
OFFICERS
Headquarters:
Gary L. Roubos
Chairman
Thomas L. Reece
President and Chief Executive Officer
John F. McNiff
Vice President-Finance
Robert G. Kuhbach
Vice President, General Counsel and Secretary
Robert A. Tyre
Vice President-Corporate Development
Alfred Suesser
Controller
Dover Resources, Inc:
Rudolf J. Herrmann
President and Chief Executive Officer
Dover Industries, Inc:
Lewis E. Burns
President and Chief Executive Officer
Dover Technologies International, Inc:
John E. Pomeroy
President and Chief Executive Officer
Dover Diversified, Inc:
Jerry W. Yochum
President and Chief Executive Officer
Dover Elevator International, Inc:
John B. Apple
President and Chief Executive Officer
STOCKHOLDER INFORMATION
Transfer Agent/Registrar:
Harris Trust & Savings Bank
Chicago, Illinois
Requests concerning stockholder records, issuance of stock certificates, and
distribution of our dividends and the IRS Form 1099 are most efficiently
answered by corresponding directly with Harris Trust at the following address:
Harris Trust & Savings Bank
311 West Monroe Street
Post Office Box 755
Chicago, Illinois 60690
(312) 461-6832 (tel.)
(312) 461-1530 (fax)
Dover common stock is listed on the New York Stock Exchange with symbol DOV. The
common stock is also listed on The London Stock Exchange.
Auditors:
KPMG Peat Marwick LLP
New York, New York
Executive Offices:
Dover Corporation
280 Park Avenue,
New York, New York 10017-1292
(212) 922-1640
* Members of Executive Committee
* Members of Audit Committee
* Members of Compensation Committee
Design: Robert Webster Inc.
Copy: Holcomb Associates
Photographer: Richard Alcorn
Printed on recycled paper.
40
43
[DOVER LOGO]
Dover Corporation
280 Park Avenue
New York, New York 10017-1292
44
EXHIBIT 13
The electronic filing includes the folowing numeric tables which replace
graphical charts contained within the 1994 Annual Report of the Dover
Corporation:
Page 1: Dover Corporation's 10-year earnings per share growth for years
1984-1994.
Dover Corporation's earnings growth consistency for the years
1984-1994.
Page 4: Dover Corporation's earnings per share for years 1989-1994.
Dover Corporation's profitability measures for years 1989-1994.
Page 6: Dover Resources operating earnings for years 1990-1994.
Dover Resources after-tax operating return on investment for years
1990-1994.
Page 9: Dover Industries operating earnings for years 1990-1994.
Dover Industries after-tax operating return on investment for years
1990-1994.
Page 12: Dover Technologies operating earnings for years 1990-1994.
Dover Technologies after-tax operating return on investment for years
1990-1994.
Page 15: Dover Diversified operating earnings for years 1990-1994.
Dover Diversified after-tax operating return on investment for years
1990-1994.
Page 18: Dover Elevator International, Inc. operating earnings for years
1990-1994.
Dover Elevator International, Inc. after-tax operating return on
investment for years 1990-1994.
Page 38: Dover Corporation long term investment 1984-1994.
Dover Corporation return on average equity 1984-1994.
Page 39: Dover Corporation cash-flow 1984-1994.
Dover Corporation free cash-flow as a percent of sales 1984-1994.
Pages 7, 11, 13, 17, 19, of the Annual Report contain photographs that are not
in the Edgar filing. The Captions relating to these photographs provide
sufficient descriptive detail and have been retained in the filing. Page 2 of
the Annual Report contains a picture, also not included in the Edgar filing, of
Thomas L. Reece, the C.E.O. and President of the Dover Corporation.
