1
[DOVER LOGO]
TECHNOLOGIES DIVERSIFIED ELEVATOR
[GRAPHIC OF FIVE CIRCLES]
INDUSTRIES RESOURCES
DOVER
CORPORATION
1996
ANNUAL
REPORT
2
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, PLUS... A DECENTRALIZED MANAGEMENT STYLE
THAT GIVES THE GREATEST SCOPE TO THE TALENTED PEOPLE WHO MANAGE THESE
COMPANIES... HAVE COMBINED TO PRODUCE 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's Lines of Business ............................................. 8
Dover Technologies .................................................... 10
Dover Industries ...................................................... 12
Dover Diversified ..................................................... 14
Dover Resources ....................................................... 16
Dover Elevator International .......................................... 18
Financial Statements .................................................. 20
Management's Discussion
and Analysis of Financial Condition
and Results of Operations ........................................... 32
11-Year Consolidated Summary .......................................... 34
Quarterly Data ........................................................ 36
Common Stock Cash Dividends
and Market Prices ................................................... 36
Directors, Officers
and Stockholder Information ......................................... 37
3
1996 COMPARATIVE HIGHLIGHTS
(Dollars in thousands except per share figures)
Increase 1996
1996 1995 1994 versus 1995
---------- ---------- ---------- -------------
Net sales $4,076,284 $3,745,877 $3,085,276 9%
Earnings before taxes $ 588,725 $ 417,111 $ 306,859 41%
Net earnings $ 390,223 $ 278,311 $ 202,373 40%
Per common share:
Net earnings (3) $ 3.45 $ 2.45 $ 1.77 41%
Dividends $ .64 $ .56 $ .49 14%
Book value $ 13.24 $ 10.80 $ 8.78
Capital expenditures $ 125,111 $ 102,668 $ 84,473
Acquisitions (1) $ 281,711 $ 323,292 $ 187,704
Purchase of treasury stock $ 62,815 $ 7,601 $ 29,733
Cash flow (2) $ 515,307 $ 386,147 $ 298,162
Return on average equity 28.7% 25.0% 21.7%
Approximate number of stockholders 16,000 16,000 10,000
Number of employees 26,234 25,332 22,992
(1) See Notes to Consolidated Financial Statements, note 2.
(2) Represents net earnings plus depreciation and amortization.
(3) 1996 Includes 44 cents per share from sale of businesses.
Adjusted, where applicable, to give retroactive effect to the
2 for 1 stock split in 1995.
EARNINGS PER SHARE GROWTH (average annual rate)
FOR 10-YEAR PERIODS ENDING 12/31 OF EACH YEAR SHOWN
10 YEARS ENDING 12/31 DOVER S&P 500
- --------------------- ----- -------
1987 12 5
1988 13 7
1989 10 4.5
1990 11 3.5
1991 5 0.1
1992 6 4
1993 10 4.5
1994 10 6.5
1995 13 9.5
1996 17 11.5
TOTAL RETURN TO INVESTORS (average annual rate)
FOR 10-YEAR PERIODS ENDING 12/31 OF EACH YEAR SHOWN
10 YEARS ENDING 12/31 DOVER S&P 500
- --------------------- ----- -------
1987 22.1 15.3
1988 21.2 16.3
1989 18.9 17.5
1990 12.1 13.9
1991 12.1 17.6
1992 13.9 16.1
1993 17.7 14.9
1994 14.2 14.4
1995 16.4 14.9
1996 18.5 15.3
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[ EARNINGS PER SHARE - BAR GRAPH OMITTED]
[ PROFITABILITY MEASURES - BAR GRAPH OMITTED]
TO OUR STOCKHOLDERS
EARNINGS SET A NEW RECORD - UP OVER 20% FOR FOURTH CONSECUTIVE YEAR.
Dover Corporation's 1996 net income increased to a record $390 million, or $3.45
a share, including a one-time gain of $.44 per share from the sale of two
companies - Dieterich Standard and Measurement Systems, Inc. Sales exceeded $4
billion for the first time, rising 9% from 1995.
Excluding the one-time gain, Dover's earnings grew from $2.45 per share in 1995
to $3.01, a 23% increase, marking the fourth consecutive year of per-share
earnings gains of more than 20%. At $3.01 per share, Dover's earnings per share
(EPS) have grown at a compound annual rate of more than 16% thus far in the
'90s. This compares favorably with the 11% annual growth rate that Dover
achieved during the decade of the 1980s. Our "tilt toward growth" continues.
On the previous page are charts showing EPS growth and total Return to Investors
for past 10-year periods. In each 10-year period, Dover's EPS growth exceeded
that of the S&P 500 and in most of them, the total Return to Investors did the
same. For the 10-year period ending in 1996, long-term Dover stockholders who
reinvested their dividends enjoyed a compound average annual pretax return of
18.5%, exceeding the S&P 500 return by more than 300 basis points per year.
Individual investors would have been hard pressed to find a mutual fund with as
good a record. Most equity mutual funds fail to match the pretax return of the
S&P 500. Most funds also generate significant tax payment requirements (as a
result of portfolio turnover) while almost all of the return to Dover
stockholders has been in the form of tax-deferred capital gains.
During the most recent five years, 1991-1996, Dover's earnings per share have
grown by 23% per year. While we are proud of this accomplishment, Dover
stockholders should not expect 20% earnings growth to continue indefinitely. Our
goal is consistent, above-average, high quality earnings growth. We would be
pleased to maintain our 1990-96 growth rate of 16% for the balance of the
decade, recognizing that this will be difficult to achieve in the low-growth,
low inflation environment that most economists are predicting.
HIGHLIGHTS OF 1996
- - PROFIT IMPROVEMENT AT DOVER ELEVATOR INTERNATIONAL. DEI's reported profits
were up 179% from 1995, a year which was burdened by write-offs. On an
operating basis, profits gained 39%.
- - IMAJE'S RECORD RESULTS. Imaje, acquired in 1995, had a superb year -
improving sales, achieving pretax margins in excess of 30%, and earning
more than $50 million.
Earnings Per Share (in dollars)
After-Tax Operating Return on
Return On Investment Stockholder's Equity
(See definition in Note 14)
1991 1.07 16
1992 1.12 16
1993 1.39 19
1994 1.77 22
1995 2.45 25
1996* 3.01* 25*
*excludes sale of business
Profitability Measures (in percent)
After-Tax Operating Return on
Return On Investment Stockholder's Equity
(See definition in Note 14)
1991 25 16
1992 27 16
1993 29 19
1994 31 22
1995 33 25
1996* 35 25*
*excludes sale of business
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- - BELVAC EARNINGS GROWTH. Belvac achieved another earnings record with
profits more than triple the level achieved in 1993. Belvac has responded
extremely well to the surge in demand for its beverage can necking
machines.
- - A-C COMPRESSOR TURNAROUND. A renewed focus on its strengths in selected
niches in the huge, worldwide compressor market stimulated significant
profit improvement, with the possibility of more to come in 1997.
- - UNIVERSAL GSM-2. The successful design and launch of this new product
allowed Universal to remain "best in class" in the market for flexible,
fine pitch electronic component placement. This helped Universal achieve
its second best earnings level within an overall market that was sharply
down from 1995.
- - SALE OF COMPANIES. We regretfully sold Dieterich Standard and Measurement
Systems. While it is not our normal practice to sell businesses that are
performing well, in this case we responded to our perception, born of
experience, that these businesses had limited growth potential as Dover
companies, as well as to very attractive terms offered by synergistic
buyers. Most of the net proceeds were used to repurchase Dover common
stock.
- - INVESTMENTS FOR GROWTH. We invested $282 million in making acquisitions,
repurchased $63 million of our own stock, and spent $125 million on
capital expenditures for a combined record investment of $470 million.
[ PICTURE OF THOMAS L. REECE ]
Thomas L. Reece, President and CEO, with Dover's three previous CEOs in the
background picture. These four men have led Dover for almost 40 years,
maintaining its core values and strategies, while multiplying shareholder wealth
over 300-fold.
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[ PICTURE OF OPEN RAIL TANK CAR VALVES ]
Open rail tank car valve enclosure shows some of Midland's products.
ACQUISITIONS IN 1996
In November, Dover Technologies completed the second largest acquisition in
Dover's history - Everett Charles Technologies, of Pomona, California. This
company has established a leadership position in each of three niches within the
electronic test market. It is the leading producer of machines for the testing
of circuitry on printed circuit boards before these boards are populated with
components - that is, bare board testing. It is also the leader in design and
manufacture of test fixtures for populated boards, operating seven facilities
around the world. And it is the largest producer of spring-loaded test probes,
which are used in both bare-board and populated-board testing. As printed
circuit board design becomes increasingly complex, the need for sophisticated
testing will increase. We view Everett Charles as a platform for further growth,
both internally and through acquisitions.
Also in the fourth quarter, Dover Resources completed our other stand-alone
acquisition, Tulsa Winch, a long-established producer of winches and speed
reducers. Tulsa serves many industrial markets and has achieved a solid record
of growth and profitability.
During the year, we made eight more add-on acquisitions, involving the
investment of $91 million. These eight businesses will extend the geographic
markets of existing Dover companies. Each is described elsewhere in this report.
The companies acquired in 1996 had a (pro-forma) full-year sales volume of
approximately $175 million, only a portion of which has been included in our
1996 financial results. Because most of our acquisition investments came late in
the year and the level of full first-year acquisition premium write-offs will be
high, these businesses will contribute only a few cents per share to our
earnings in 1997 - but significantly more in later years.
The past four years have presented us with the opportunity to invest almost $1.2
billion in new acquisitions. Since we typically buy solid businesses with high
profitability, our purchase costs have substantially exceeded the book value of
the acquired companies. These premiums are charged to earnings over a period of
years. In 1996, the non-cash charge for amortization of these premiums amounted
to $.35 per Dover share, versus $.36 in 1995. Even if we make no further
acquisitions (an unlikely event), this charge will remain at $.35 in 1997. We
will continue to report this number, so long as it remains large in relation to
earnings, because of its relevance to valuation.
FINANCIAL POSITION
Despite record long-term investments, Dover maintained its net debt (total debt
less cash and marketable securities) at the same level with which we began the
year. A portion of our long-term commitments was funded by proceeds from
divestments - about $85 million after taxes. But the bulk of the funds came from
our strong free cash flow from operations of $259 million (after dividends and
capital expenditures), which represented approximately 6.3% of sales. The trend
of growing investment and strong free cash flow is captured in the charts on
pages 34-35. Our net debt as a percentage of total capital declined from 30%
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at the end of 1995 to only 26% a year later. The relationship of year-end net
debt to EBITA (earnings before interest, taxes and amortization) also declined
from 1.07 in 1995 to .9 in 1996. This is a conservative posture that leaves us
fully capable of seizing long-term growth opportunities that may present
themselves in 1997.
The charts on page 2 illustrate our very strong earnings growth over the past
five years, during which EPS has almost tripled - a compound annual growth rate
of 23%. Our return on stockholders' equity, computed on the basis of $3.01 EPS,
continued at 25%. After-tax operating return on investment also improved to a
record level of 36%. This statistic measures the ability of our company
presidents to generate profits from the operating assets under their control,
and is a key component of operating executive incentive compensation. The
calculation excludes acquisition premiums and their amortization, and assumes
100% equity financing.
DOVER TECHNOLOGIES
Dover Technologies' profits improved by 10%, despite a significant decline in
the electronic assembly equipment market. The three companies serving this
market - Universal, DEK and Soltec - experienced a decline in sales and a $40
million drop in profits from the record levels achieved in 1995. Nevertheless,
their sales and earnings were higher than in any year before 1995. The earnings
decline was more than offset by gains elsewhere: Novacap, K&L Microwave, TNI and
Quadrant had record profits. Imaje did also, and its results, included for only
one quarter of 1995, contributed for a full year in 1996. The add-on acquisition
of ATT Frequency Products by Quadrant in 1995 also added substantially to
year-over-year comparisons, as relocation of its manufacturing to a new facility
significantly reduced costs. Everett Charles, included only for December, 1996,
made a small contribution to sales and none to profits because of acquisition
premium write-offs.
During past cyclical market downturns at Universal (1985-86 and 1989-91), Dover
Technologies' overall profits have declined sharply. The addition of Imaje, the
growth of the components businesses, and the recent addition of Everett Charles
will, we believe, provide much greater earnings stability.
DOVER INDUSTRIES
Dover Industries' sales rose 6% in 1996 but operating profits were flat
(excluding the gain on the sale of Dieterich Standard). A decline in the solid
waste business at Heil Environmental and at Marathon offset strong gains at
Rotary Lift and DovaTech and modest increases at other companies. The divestment
of Dieterich in mid-1996 and American Metal Ware in mid-1995, coupled with a
non-recurring charge of more than $5 million at Groen, also affected
year-to-year comparisons.
On a "look-through basis," considering only the operating profits of the 11
ongoing Dover Industries companies, earnings improved at approximately the same
6% rate as sales.
[ PICTURE OF ROTARY LIFT ]
Rotary Lift is the largest manufacturer of automotive lifts in the world.
[ PICTURE OF PLATECOIL ]
Transfer set records for its heat transfer products, including the PLATECOIL
cross-section shown here.
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[ PICTURE OF IMAJE INK JET PRINTER ]
An Imaje ink jet printer marks food cans on a packaging line.
We continue to be extremely pleased with the internal growth of Rotary Lift and
Texas Hydraulics. Both companies have invested heavily in manufacturing
improvements, focused their marketing efforts, and passed improvements on to the
customer in order to achieve higher market share. Profits at both companies have
more than doubled in the past three years. Neither automotive lifts nor
hydraulic cylinders are new or "high tech" products, but these companies'
vigorous growth shows how much can be accomplished, even in mature markets, by
the right management with the right strategy.
DOVER DIVERSIFIED
Dover Diversified's profits improved 15% on a 9% sales gain, setting records for
the fifth consecutive year. Results in 1995 included an $11.6 million gain
relating to contract settlements. On a look-through basis, excluding this gain
and looking only at operating profits of ongoing companies, earnings were up
24%, with operating margins rising nearly 3 percentage points to 16.8%.
The three largest factors in Dover Diversified's success, each of which added
approximately $8 million to operating profits, were the record year at Belvac,
the turnaround at A-C Compressor, and a sharp improvement in sales and
profitability at Sargent Controls.
Another record performance by Transfer and modest gains at other companies
balanced an earnings decline at Mark Andy, which made heavy investments in new
product development and information technology following a record financial
performance in 1995. Although the financial results at Hill Phoenix did not show
much improvement, manufacturing performance at Hill's facility in Richmond,
Virginia did make progress, as quality and timeliness improved. We hope this has
set the stage for significant financial gains in 1997.
DOVER RESOURCES
Profits at Dover Resources improved 16% on an 11% gain in sales. It was a solid
year for all Dover Resources companies, with earnings gains at most businesses
and only three modest profit declines. There was no single "driver" of
Resources' overall performance. All companies but one had pretax margins in
excess of 10%, averaging 17% on a look-through basis.
Earnings at the three companies serving the North American oil patch - Norris
Sucker Rod, Norriseal and Alberta Oil Tool - improved sharply, but still
accounted for only about 15% of Dover Resources' profits.
At the end of the year, De-Sta-Co was divided into two companies - De-Sta-Co
Industrial Products, which includes recently acquired Robohand, and De-Sta-Co
Manufacturing, which now also includes Stark. A majority of De-Sta-Co's valves,
and almost all of Stark's manifold and tubular assemblies, are sold to
automotive manufacturers. De-Sta-Co Industrial has a broad line of clamps and
related work-holding products, which are sold to a wide variety of industrial
customers. Bob Leisure became president of De-Sta-Co Manufacturing and Jon
Simpson became
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president of De-Sta-Co Industrial. Both will continue to report to Bill
Rogerson, who has been De-Sta-Co's President since 1982.
DOVER ELEVATOR INTERNATIONAL
After a change in top management and special charges of $32 million in the
second half of 1995, I wrote in last year's annual report that we "hope that
these efforts have established the base for a new era of prosperity for Dover
Elevator International." While the transformation of DEI from a loosely
affiliated group of companies into a unitary, though regionally decentralized,
business is continuing, the financial results of 1996 are even better than I had
hoped. Reported profits more than doubled, while operating profits - excluding
1995 special charges - rose 39%. Margins exceeded 10%, their highest level since
1990. Sales also set a record, with a modest 5% growth.
Dover Elevator now operates as a single business, with a factory operation and
three field organizations reporting to a single president. The company's senior
operating management - Nigel Davis as president, Gary and Steve Bailey as
co-vice presidents of the Eastern Marketing Group, Buzz Dana as vice president
of the Western Marketing Group, including Canada, and Bill Wilkinson, as vice
president of international (Europe, Australia, Asia and exports) - made an
extraordinary effort during the past year. Their leadership and the increasingly
enthusiastic cooperation of DEI's thousands of employees have revitalized this
enterprise - bringing it back, despite a difficult market, to where it should
be.
Profit improvement reflected a flatter organizational structure, reduced factory
operating costs, better construction management, firmer pricing, a weeding-out
of unprofitable service contracts, and a renewed field focus on selling to
improve hydraulic elevator market share.
OUTLOOK
I again attended almost all of our year-end review and planning meetings. Almost
all Dover companies are planning for improved profits in 1997. Significant
exceptions are Belvac and Midland, where current operating levels are
substantially below prior year as the unusual boom in demand for their products
has ebbed.
Continuous improvement - of products, processes, and skills - is the most
important factor underlying Dover's growth expectations for 1997 and future
years. Specific events affecting 1997 will be margin improvement at Hill
Phoenix, stronger orders at Belvac to limit its anticipated profit decline, and
the continued success of our newly acquired businesses. A moderately growing
economy is also important to each of our businesses. At this point, no single
market, opportunity or company stands out as the potential "driver" of Dover's
overall performance. Rather, we expect some growth in most businesses to result
in another record earnings year for your company.
/s/ Thomas L. Reece
Thomas L. Reece
President and Chief Executive Officer
[ PICTURE OF ELEVATOR ]
Dover manufactures and installs more elevators in North America than any other
company.
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DOVER'S LINES OF BUSINESS
DOVER TECHNOLOGIES p.10
[GRAPHIC]
1 Universal Instruments
Corporation
Gerhard D. Meese, President
Products: Automated assembly equipment for printed circuit boards
2 Imaje, S.A.
Albert Journo, President
Products: Continuous Ink Jet printers, consumables
Everett Charles Technologies, Inc.
David R. Van Loan, President
Products: Spring probes, test equipment, test fixtures; BSL flying probes
1 Quadrant Technologies
Terence W. Ede, President
Company/Products:
Vectron International, Inc.
Vectron Technologies, Inc.
Vectron Laboratories, Inc.:
Oscillatek, Inc.
KVG, GmbH
SAW devices, oscillators, crystals
Dielectric Laboratories, Inc.:
High frequency capacitors
Communication Techniques, Inc.:
Microwave synthesizers
1 K&L Microwave, Inc.
Charles J. Schaub, President
Products: Microwave/R.F. filters; Dow-Key coaxial switches
1 DEK Printing Machines Ltd (U.K.)
John B. Knowles, Managing Director
Products: Screen printers for surface mount printed circuit boards
2 TNI, Inc.
James M. Strathmeyer, President
Products: Ferrite transformers,
GFS transformers
Novacap, Inc.
Dr. Andre P. Galliath, President
Products: Multilayer ceramic capacitors
2 Soltec International, B.V. (Netherlands)
Michiel J. van Schaik, Managing Director
Products: Automated soldering equipment for printed circuit boards
Numbers indicate position in primary market served, generally North America
DOVER INDUSTRIES p.12
[GRAPHIC]
1 Rotary Lift
Timothy J. Sandker, President
Products: Automotive lifts and
alignment racks
1 Heil Trailer International
Robert A. Foster, President
Products: Trailerized tanks
1 Tipper Tie/Technopack
Charles M. Heard, President
Products: Clip closures, packaging
systems, netting, and wire products
1 H.E.I.L.
Glenn M. Chambers, President
Products: Refuse collection vehicles
and dump bodies
1 Marathon Equipment
Edward A. Furnari, President
Products: Solid waste compaction, balers, and recycling equipment
2 DovaTech
A. Patrick Cunningham, President
Products: Bernard MIG welding, Weldcraft TIG welding, PlazCraft plasma,
cutting, PRC laser equipment
1 Chief Automotive Systems
James E. Aylward, President
Products: Auto collision measuring and repair systems
1 Texas Hydraulics
Vernon E. Pontes, President
Products: Specialty hydraulic cylinders
1 Davenport
Donald L. Firm, President
Products: Multi-spindle screw machines, benchtop machine tools, and spare
parts and attachments
2 Randell
Lynn L. Bay, President
Products:Commercial refrigeration; Food service preparation and holding
equipment
1 Groen
Larry Gray, Acting President
Products: Commercial food service cooking equipment/industrial processing
equipment
Numbers indicate position in primary market served, generally North America
DOVER DIVERSIFIED p.14
[GRAPHIC]
1 Belvac*
Jim Schneiders, President
Products: Can necking, trimming and shaping equipment
1 Tranter
Kenneth L. Kaltz, President
Products: Plate/frame and compact brazed heat exchangers; transformer
radiators
1 Sargent Controls & Aerospace**
Donald C. Tarquin, President;
Products: Submarine fluid controls; aircraft hydraulic controls;
self-lubricating bearings
2 A-C Compressor
Thomas Bell, President
Products: Centrifugal, oil-free-screw, and rotary compressors
2 Waukesha Bearings
Donald A. Fancher, President
Products: Fluid film bearings;
Sweeney torquing tools; CRL manipulators and isolators
2 Hill Phoenix
Ralph Coppola, President
Products: Commercial refrigeration systems; refrigerated display cases
1 Mark Andy*
John Eulich, President
Products: Flexographic presses
1 Pathway Bellows
Robert Rabuck, President
Products: Metal and fabric expansion joints, autoclaves, industrial cleaning
equipment
Phoenix Diversified Products
Ken Stevens, President
Products: Electrical distribution systems
Numbers indicate position in primary market served, generally North America,
except as noted.
*Worldwide
**Position for submarine fluid controls
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DOVER RESOURCES p.16
[GRAPHIC]
1 De-Sta-Co*
William D. Rogerson, President
I De-Sta-Co Manufacturing*
Bob Leisure, President
Products: Reed valves for
compressors, stamped precision
components, and specialized
aluminum tubular products
I De-Sta-Co Industrial Products*
Jon H. Simpson, President
Products: Toggle clamps, cylinders, and workholding devices; Robohand robotic
and automation devices
1 OPW Fueling Components*
Robert Conner, President
Products: Gasoline nozzles, fittings, valves, and environmental products
1 Blackmer
Ray Pilch, President
Products: Rotary P.D. pumps for delivery of fuel oil, propane and industrial
products; industrial gas compressors; Tarby progressing cavity pumps;Hammond
Engineering rotary vane and screw compressors, vacuum pumps, and blowers
1 Midland Manufacturing
Jerry Portis, Chairman
Donald Rodda, President
Products: Tank car and barge valves, safety valves, and liquid level measuring
devices
1 C. Lee Cook
David Jackson, President
Products: Piston rings, packings for gas compressors and aerospace sealing
applications; Compressor Components compressor rods, pistons, and repair
services; Cook Manley compressor valves
1 Alberta Oil Tool (Canada)**
James R. Kosh, President
Products: Sucker rods, fittings, valves, and controls
1 Norris*
James L. Mitchell, President
Products: Sucker rods, couplings, well servicing equipment, polished rods
1 Ronningen-Petter*
Peter Scovic, President
Products: Filtration systems; RProducts bag filters and high efficiency media
1 OPW Engineered Systems
Tom Niehaus, President
Products: Loading arms, swivels, and sight flow indicators
1 Wittemann*
William Geiger, President
Products: CO2 gas generation and recovery systems, merchant CO2 and industrial
refrigeration systems
1 Civacon*
James Johnson, President
Products: Kamloks(R), Kamvaloks(R), and transport tank monitoring and control
systems; Knappco manhole/access covers and valves
Norriseal Controls
Wade Wnuk, President
Products: Process valves and instrumentation systems;
Ferguson-Beauregard/Logic Controls oil and gas production systems
Tulsa Winch
Ron Hoffman, President
Products: Worm and planetary gear
winches, speed reducers, and swing drives
1 Petro-Vend
Doug Stewart, President
Products: Commercial key/card fuel control systems, retail service station
systems, and tank level monitoring equipment
1 Duncan Parking Systems*
Richard Farrell, President
Products: Parking control products and systems
I.S.T. Molchtechnik GmbH (Germany)
Rainer van Essen, Managing Director
Products: Industrial pigging systems, manifolds, and blending systems
Numbers indicate position in primary market served, generally North America,
except as noted.
*Worldwide
**Canada
DOVER ELEVATOR
INTERNATIONAL, INC. p.18
[GRAPHIC]
Dover Elevator International
Nigel Davis, President
Gary Bailey, Steve Bailey, VPs, Eastern
Marketing Group
Buzz Dana, VP, Pacific/Canadian
Marketing Group
Bill Wilkinson, VP, International
Operations
Paul Nickel, VP, Finance
Dover is North America's largest new elevator company, and second in total
sales, including service.
%'s are of Dover's total segment operating profit
DOVER'S LINES OF BUSINESS
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[GRAPHIC] DOVER TECHNOLOGIES
[AFTER-TAX OPERATING RETURN ON INVESTMENT (%) - BAR GRAPH OMITTED]
DOVER TECHNOLOGIES (DTI) HAD RECORD SALES AND EARNINGS IN 1996, DESPITE A
CYCLICAL DOWNTURN IN THE MARKET FOR ELECTRONIC ASSEMBLY EQUIPMENT. DURING THE
PAST FIVE-YEARS, EARNINGS HAVE RISEN FIVE-FOLD.
DTI offset the assembly equipment downturn, which was similar to those of
1985-86 and 1990-91, by successful diversification into other markets. Imaje,
acquired in 1995, had record profits exceeding $50 million and provided about
one third of segment earnings. The four electronic component companies -
Quadrant, K&L Microwave, TNI and Novacap - were aided by add-on acquisitions
(ATT Frequency Control, GFS, Dow-Key and KVG) and all had record profits that
provided more than 20% of segment earnings.
Everett Charles Technologies, acquired in November, could produce more than 10%
of the segment's operating profits in 1997. Its circuit board testing business,
while related to the component assembly machine business, has somewhat different
market dynamics, and the company earned record profits in 1996.
GOOD YEAR AT UNIVERSAL INSTRUMENTS
Considering the decline in demand for both surface mount (SM) and thru-hole
assembly equipment from the cyclical peak of 1995, Universal Instruments had a
surprisingly good year. Profits, although down by $35 million on a sales decline
of nearly $90 million, were the second best in its history, and well above
previous cyclical peaks.
The successful introduction of its GSM-2 machine allowed Universal to retain its
"best in class" position for flexible, fine-pitch placement machines in the SM
market, and resulted in a modest increase in market share. Universal continues
to focus its machine development on leading-edge componentry in the SM area,
while continually improving the performance-to-price relationship of its
thru-hole assembly products.
The weak market for assembly equipment also impacted DEK Printing Machines and
Soltec. Successful new products are helping DEK gain ground in its two-year
leadership struggle with its major competitor. Soltec, a market leader in wave
soldering machines, will introduce a new product to boost its participation in
the market for reflow soldering, a key technology for surface mount assembly.
These strategies should improve 1997 results, but earnings are unlikely to
surpass the 1995 peak until the next major cyclical upturn.
IMAJE SETS RECORDS
Imaje, continuing to rebound from its turnaround position of 1990-91, achieved
sales and earnings records and margins of more than 30%. Although its business
was soft in Europe, where Imaje is a leader, the company achieved solid growth
in Asia, the fastest growing market, where it is the clear leader, and in the
huge U.S. market, where its share has been small. Asia and the U.S. thus
represent significant growth opportunities.
Imaje's ink jet technology provides high speed marking capability for a wide
range of industrial and consumer products (pictures, pages 6, 11), particularly
for food, beverage, cosmetic and drug packaging. Rising production of such
items, increased voluntary use of marking for quality control and traceability,
and growing regulatory requirements are key factors that continue to expand the
world market.
Operating Earnings ($ millions)
92 30
93 42
94 76
95 134
96 146
After-Tax Operating Return on Investment (%)
92 16
93 18
94 30
95 44
96 43
10
13
GROWTH IN COMPONENTS BUSINESSES
The four companies that produce electronic components all had record earnings,
as they expanded their markets through product development and strategic
acquisitions. Quadrant's 1995 purchase of ATT Frequency Controls - now called
Vectron Technologies - has been very successful. Vectron reduced costs by moving
to a new plant, kept Lucent as its biggest customer, and attracted the attention
of other telecommunications OEMs with its low-cost oscillator and surface
acoustical wave (SAW) filter technology. Quadrant further extended its
technological and market reach by acquiring KVG, a German maker of oscillators
and crystals.
K&L Microwave produced record profits while expanding its coaxial switch product
line by acquiring Dow-Key. TNI also set records, benefiting from the success of
its 1995 acquisition of GFS. Novacap continued its focus on developing high
voltage, specialty capacitors for new applications, achieving sales and earnings
records. In recent years, the end-use markets for component companies have
shifted from military to commercial applications, particularly for satellite and
wireless technologies. This was a contributing factor in Dover's sale of
Measurement Systems, whose end-market was primarily military.
EVERETT CHARLES TECHNOLOGIES LEADS TESTING MARKET
Everett Charles serves three niches within the very large market for circuit
board testing equipment. It is easily the world leader in spring-loaded probes,
which provide the physical contact in testing components and circuitry. The
probes are key components in test machines for unpopulated (bare) circuit
boards, and in fixtures for testing of assembled boards, two markets Everett
Charles also leads. The management team responsible for its success will
continue to direct Everett Charles. The company has assumed responsibility for
BSL, a maker of flying probe test equipment acquired by DTI in 1995, and is
expected to continue its growth through product development and acquisition.
OUTLOOK
Dover Technologies expects earnings to rise again in 1997, and probably by more
than in 1996. Everett Charles will add to earnings, although less than Imaje in
1996. The market for assembly equipment appears to have bottomed, and any upturn
would enhance 1997 earnings growth, as might further add-on acquisitions.
[PICTURE OF ALBERT JOURNO]
Albert Journo, President of Imaje, with an ink jet marking machine in a customer
plant in France. Quality control, regulation, and consumer product growth create
demand for Imaje products.
DOVER TECHNOLOGIES
11
14
[GRAPHIC] DOVER INDUSTRIES
DOVER INDUSTRIES' OPERATING PROFITS WERE ESSENTIALLY FLAT IN 1996, AS A STRONG
START TO THE YEAR AND RECORD FIRST-HALF PROFITS GAVE WAY TO MARKET DECLINES IN
SEVERAL KEY AREAS IN THE SECOND HALF.
The mid-year divestiture of Dieterich Standard, which provided a gain to Dover
Corporation of more than $.40 per share (which is not shown in the Dover
Industries numbers), also adversely affected Dover Industries' second-half
comparisons. The flat earnings in 1996 followed three years of very strong
progress, during which earnings more than tripled, including a 45% gain in 1995.
Rotary Lift (pictures, pages 5, 13) again achieved record profits, with an
increase of more than 30%, as the company continued to expand its market-leading
position in the North American automotive lift market. Rotary made further
manufacturing improvements to reduce costs and expand capacity. Its strategy has
been to invest heavily in manufacturing equipment and systems and then to use
its low-cost producer position and high levels of quality and service to
increase unit volume. This strategy has proven extremely successful, with
profits more than doubling in the past three years on a 50% sales increase. A
strong effort has been launched to expand Rotary's North American success to
Europe through focused export programs and acquisitions.
PROFIT GROWTH AT OTHER COMPANIES
DovaTech (MIG, TIG and laser welding) generated record profits in 1996, its
growth accelerated by its successful acquisition of PRC, which produces a power
source for laser welding and cutting equipment, during the first quarter.
Texas Hydraulics also set a profit record while expanding its capacity in
anticipation of further potential within the hydraulic cylinder market. Tipper
Tie established a new earnings record as well, with a strong performance in the
U.S. and continued good results at Technopack, a German subsidiary that assumed
responsibility for Tipper Tie's European operations after its purchase in 1994.
Chief Automotive increased its earnings substantially, although not to a record
level, maintaining its market-leading position for auto body repair pulling
equipment and expanding its capabilities in measurement equipment.
Heil Trailer International almost matched its record profit level of 1995,
despite a significantly weaker market. A capacity expansion in late 1995 and a
large backlog allowed strong shipments to continue during the first half of
1996, but the pace slackened in the second half. A pickup in orders in the
fourth quarter is supportive of Heil Trailer's goal of reversing this pattern in
1997 and setting a new earnings record.
A WEAK SOLID WASTE MARKET
After vigorous growth in 1995 that continued into early 1996, the market for
solid waste handling equipment fell sharply in the year's second half. Both Heil
Environmental (refuse trucks) and Marathon (compactors and balers) had sharply
lower profits compared to 1995. However, each company had its second best
earnings year. Heil introduced its new STAR-RTM waste-hauling system that
provides robotic arm loading with tandem trailers to reduce lost time driving to
dump sites. Consolidation and below-normal capital spending among waste haulers
should ease in 1997 and both Marathon and Heil Environmental anticipate
improving profits.
Operating Earnings ($ millions)
Industries Operating Income
---------- ----------------
1992 38
1993 60
1994 81
1995 118
1996 116
After-Tax Operating Return on Investment (%)
Industries After-Tax Operating Return
---------- --------------------------
1992 34
1993 34
1994 35
1995 38
1996 32
12
15
SETTING THE STAGE FOR RECOVERY
Randell and Groen both took steps to accelerate their performance in the food
service equipment market, which has been competitive and flat for several years.
Randell continued to upgrade its manufacturing equipment and reorganized its
business into three focused product areas. Profits improved from a weak 1995 on
slightly higher sales and are expected to accelerate in 1997. Groen addressed
obsolete and consigned inventory issues and restructured its manufacturing
activities to reduce costs. Groen's reported profits for the year were depressed
by a charge in the fourth quarter, which should lead to a substantial profit
increase in 1997.
Davenport invested heavily in new manufacturing equipment and in the development
of a new screw machine that will open additional markets because of higher
precision and easier changeover than its workhorse Model B. Customer interest in
the new product is high, leading Davenport to forecast substantial profit growth
in 1997.
OUTLOOK
Given continued moderate growth in the U.S. economy, Dover Industries expects
strong profit growth in 1997 after a comparatively weak first quarter. Each of
Dover Industries' 11 companies has the potential for higher profits in 1997. The
degree of improvement will hinge on the timing and strength of the recovery
expected in the solid waste equipment market, the extent to which Groen and
several other companies achieve the higher profits they expect, and the
continuation of strong growth in order rates at Heil Trailer International.
[ PICTURE OF TIM SANDKER, TOM PHILLIPS, HAROLD HUNT & GARY KENNON ]
Tim Sandker, President of Rotary Lift (center), with Tom Phillips and Harold
Hunt (left) and Gary Kennon (right), have led Rotary Lift to record sales and
earnings.
DOVER INDUSTRIES
13
16
[GRAPHIC] DOVER DIVERSIFIED
DOVER DIVERSIFIED ACHIEVED RECORD PROFITS FOR THE FIFTH STRAIGHT YEAR. ADJUSTED
FOR ONE-TIME CONTRACT SETTLEMENT GAINS IN 1995 AND ADJUSTED FOR ACQUISITIONS,
THE OPERATIONAL PROFITS OF DIVERSIFIED'S NINE BUSINESSES GREW BY 24%.
This reflected substantial gains at several companies, a few disappointments and
a few missed opportunities now targeted for accomplishment in 1997.
LARGE GAINS AT THREE COMPANIES
Belvac again set sales and earnings records as a result of higher shipments of
its can necking machines. Belvac had the right product at the right time when
can-makers launched a massive program to reduce their consumption of high-cost
aluminum, adding die-necking capability to existing can-making lines at a very
rapid pace. Belvac garnered by far the largest share of this market, more than
tripling its shipments of necking equipment between 1993 and 1996. The domestic
demand has now been largely met and Belvac's monthly orders have trailed
shipments for more than a year, as previously reported to stockholders. Orders
are expected to improve during the first half of 1997, but shipments for the
year will be down, with profits dipping by more than $10 million.
Notwithstanding this contraction, Belvac will remain one of Dover's larger and
most profitable companies.
Sargent Controls and Aerospace improved its profits significantly on a sales
gain of more than 20%. Strong shipments of hydraulic controls for aircraft and
increased billings on submarine projects fueled the gain. Work on the Navy's new
SSN23 submarine has proceeded much more smoothly than on its two predecessors.
This contract was appropriately priced, especially when compared to the original
two shipsets of this class, when development time and costs were underestimated
and a 30- to 40-ship building program was expected. Sargent Controls expects to
continue its current levels of profitability for the next several years, but
growth beyond this will depend on product diversification and government
decisions about future upgrading of the submarine fleet.
At A-C Compressor, the change in focus introduced by new management in the
latter part of 1995 was quickly rewarded by improved profitability. Margins
improved by 10 percentage points, although they have not yet recovered to A-C's
historical levels. A more conservative approach to quoting and a renewed
emphasis on A-C's niche strengths in the giant, worldwide compressor market
depressed bookings in the early part of the year, but these recovered sharply
during the second half. A-C began 1997 with a somewhat lower, but better priced,
backlog that contains less manufacturing/technical risk. Consequently, the
company expects further significant profit improvement on modestly higher
shipments.
MODEST GAINS AT THREE COMPANIES
Tranter again produced record earnings, as its collaboration with SWEP, a
European company acquired in 1994, continued to work well (pictures, pages 5,
15). Increased demand for SWEP's products in the U.S. and a strong year for
Tranter's own product lines (Superchangers, PlateCoil, and transformer
radiators) have required expansion of both European and U.S. production
facilities to support the further growth anticipated in 1997.
Operating Earnings ($ millions)
Diversified Operating Income
----------- ----------------
1992 37
1993 39
1994 67
1995 93
1996 107
After-Tax Operating Return on Investment (%)
Diversified After-Tax Operating Return
----------- --------------------------
1992 45
1993 47
1994 36
1995 34
1996 35
14
17
Waukesha Bearings also reported a modest profit increase, with higher sales for
most of its product line. Phoenix Diversified Products focused its efforts on
its electrical distribution systems, primarily for supermarkets, resulting in
increased profits on lower sales.
NOT YET
Hill Phoenix continued to struggle with its plan for a significant earnings
turnaround, as profits improved only slightly and sales declined. Manufacturing
problems were greatly reduced, however, improving the company's quality and
on-time performance. This should lead to a modest increase in shipments and a
much better profit year in 1997.
Pathway Bellows, which now includes the Thermal Equipment product lines, also
had a disappointing financial year, with unexpected expenditures to correct
field problems on several previously installed pieces of equipment.
Mark Andy, too, experienced a profit decline, as sales dropped from their record
level in 1995. Margins were further depressed by heavy product development
spending for a new generation of flexographic presses, and the cost of
implementing new information technology systems. Both investments are important
to Mark Andy's long-term outlook, which remains bright.
OUTLOOK
While Dover Diversified has the potential to achieve a new earnings record in
1997, first-half profits will trail prior year, particularly in the second
quarter, which was Belvac's record earnings quarter in 1996. Dover Diversified's
ability to recover in the second half will depend on stronger orders at Belvac
during the early part of the year, success on the part of the three "not yet"
companies in moving toward "now," and continued modest growth at companies that
performed well in 1996.
With the first half decline in profits at Belvac -- certain because of its
reduced backlog -- and the uncertainty inherent in planned turnarounds, Dover
Diversified faces the stiffest challenge of Dover's five market segments in
striving for earnings gains in 1997.
[ PICTURE KEN KALTZ & JORGEN LINDSTROM ]
Ken Kaltz, President of Tranter, with Jorgen Lindstrom, SWEP General Manager,
standing behind compact brazed heat exchangers (CBE's) produced in their
Landskrona, Sweden facility.
DOVER DIVERSIFIED
15
18
[GRAPHIC] DOVER RESOURCES
SOLID GAINS AT MOST OF ITS COMPANIES ALLOWED DOVER RESOURCES TO ACHIEVE ITS
FOURTH CONSECUTIVE YEAR OF EARNINGS GROWTH, WITH A 16% GAIN ON AN 11% SALES
INCREASE.
The average margin at the 17 Dover Resources companies, at nearly 18%, was the
highest of the five Dover market segments. No single company was responsible for
the major portion of the segment's $15 million profit increase, as all but three
businesses improved their results.
DE-STA-CO/STARK RECORDS AND REORGANIZATION
Both De-Sta-Co and Stark reported record profits, primarily as a result of
De-Sta-Co's strength in automotive air conditioning valves and its acquisition
of Robohand, and improved profitability at Stark, which also serves automotive
markets. At year-end, these companies were reorganized into two units. De-Sta-Co
Industrial Products includes the core toggle clamps and industrial work-holding
product lines, Robohand automation devices, and De-Sta-Co's German and Thai
manufacturing companies. De-Sta-Co Manufacturing comprises De-Sta-Co's
automotive and refrigeration compressor valves, and Stark's manifold and tubular
assemblies. The two companies will have combined sales of approximately $150
million in 1997, with De-Sta-Co Industrial Products somewhat the larger company.
RECORD YEAR AT FOUR COMPANIES
Midland continued to invest in manufacturing equipment and processes to meet a
cyclical spurt in demand for its valves and safety devices for railroad tank
cars (pictures, pages 4, 17). A surge in tank car production that doubled
customer demand over the past three years resulted in record earnings in 1996.
But a decline in the new-order rate as 1996 progressed will reduce Midland's
sales and income in 1997.
Blackmer's record year was driven by its domestic pump product lines, despite
sharply reduced shipments for Stage II vapor recovery applications. Blackmer's
Hammond Engineering (U.K.) business had a setback in 1996 but its recovery in
1997 should help Blackmer achieve another earnings record.
OPW Engineered Systems continued its string of profit records with a 40%
earnings gain on modestly higher sales. The company focused its selling efforts
on more profitable product lines and continued to reduce manufacturing costs,
resulting in the strong margin increase.
Wittemann also boosted its earnings by more than 40%, largely because of
increased sales volume and expansion of its product line. Its acquisition of
Wittcold enlarged Wittemann's product line to include "merchant" CO2 generation
systems.
OIL PRODUCTION EQUIPMENT STRONGER
Alberta Oil Tool also had record profits, taking advantage of strong demand in
the Canadian "oil patch" while maintaining its commanding market share in
oilfield production equipment. In the U.S., Norris Sucker Rods set a post-oil
boom profit record with stronger domestic shipments and increased exports.
Norris's high quality and best-cost-producer status have made it competitive in
all world markets, despite the obvious high cost of transporting steel rods.
Norriseal also benefited from increased demand and improved its profits
substantially from a low 1995 level. All of these companies anticipate earnings
increases in 1997 if oilfield activity remains at current levels.
Operating Earnings ($ millions)
Resources Operating Income
--------- ----------------
1992 59
1993 70
1994 84
1995 91
1996 105
After-Tax Operating Return on Investment (%)
Resources After-Tax Operating Return
--------- --------------------------
1992 26
1993 32
1994 36
1995 32
1996 34
16
19
PROFITS IMPROVE AT OTHER COMPANIES
Duncan Parking Systems generated its best profits and second highest sales since
Dover acquired it in 1987. The company has established a reputation for reliable
performance for its electronic parking meters. Its Eagle 2000 meter won a large
contract from Los Angeles and is undergoing tests elsewhere that could result in
additional large orders.
Petro-Vend, which makes commercial key/card fuel control systems, had a strong
earnings recovery from a disappointing 1995. As a result of a major upgrade of
its manufacturing facilities in Louisville, C. Lee Cook managed a small earnings
increase that more than offset declines at its Manley and Compressor Components
subsidiaries.
All three companies expect to improve their performance further in 1997.
THREE MODEST DECLINES
After a record year in 1995, Ronningen-Petter experienced a slight dip in sales
and profits. New products and an upturn in fourth quarter orders offer potential
for improvement in 1997. Market softness and increased price competition
resulted in a slight decline at Civacon.
OPW Fueling Components remained Dover Resources' largest profit producer despite
its second yearly profit decline from its 1994 peak. Shipments of Stage II vapor
recovery nozzles continued to lag, as the EPA required fewer new areas to
mandate this system for reducing air pollution. This has resulted in flat sales
and a modest decline in margins. Safety and environmental problems are inherent
in the handling and dispensing of gasoline. OPW Fueling Components' efforts to
develop new markets and products, along with increasing environmental concerns
outside the U.S., will lead to future growth.
OUTLOOK
The pattern of business remained strong for most Dover Resources companies
throughout 1996, and all except Midland expect to improve profits in 1997. The
Tulsa Winch acquisition will also make a positive contribution. In the context
of a reasonably growing economy, Dover Resources has a good prospect of
continuing its double-digit earnings growth.
[ PICTURE OF DON RODDA, JOHN WHITE & JERRY PORTIS ]
Don Rodda, President of Midland (right), with John White (left) and Jerry Portis
(center) - two of Midland's founders - behind a new integrated machining/
turning center. Both John and Jerry remain active - helping Don to learn their
business and Midland to reach record sales and profits.
DOVER RESOURCES
17
20
[GRAPHIC] DOVER ELEVATOR INTERNATIONAL, INC.
DOVER ELEVATOR INTERNATIONAL (DEI) MORE THAN ACHIEVED THE FINANCIAL GOALS SET BY
THE NEW TOP MANAGEMENT GROUP THAT ASSUMED DIRECTION OF THIS BUSINESS IN THE
SECOND HALF OF 1995.
Profits were at their highest level since 1990, despite the soft market for new
elevators and tough service competition that has persisted since the real estate
crash of 1991.
Profits increased 178% over the prior year, which was burdened by $31.9 million
of non-recurring charges associated with the DEI reorganization. On an operating
basis, excluding these charges, profits rose an impressive 39% on a 5% sales
gain.
GAINS IN NORTH AMERICAN MARKET
Top management (picture page 19) focused on returning to the fundamental
strengths in Dover's elevator operations. The majority of the 1996 profit
improvement occurred in North America, where DEI's activities are centered. A
strengthened and better focused selling effort and better installation
efficiency supported gains in new elevator margins, particularly in the
Oildraulic(R) range, which is directed at the low-rise market segment. The
improvement in new elevator profitability was attributable in part to reductions
in central support overhead. Additionally, significant investment in new
machinery and the establishment of focused production units for both the
Oildraulic(R) and traction (mid- to high-rise) elevators led to reductions in
product cost and enabled DEI to increase factory throughput. The transfer of
work from the Canadian plant, which was closed in 1995, proceeded smoothly and
further enhanced profitability. New elevator operations -- sale, installation,
and manufacture of elevators for new buildings -- accounted for almost half of
DEI's sales, and were profitable in 1996 for the first time since 1990. (picture
page 7)
DEI made considerable progress in developing a program of improved customer
service. The foundation for this initiative was put in place during 1996 with
the establishment of SoundNet(R), a North American call center service that
provides a low-cost communications monitoring service for any type of elevator.
SoundNet call centers located in Seattle and Memphis cover the entire North
American continent, and are staffed by customer service representatives who are
specially trained to handle any type of elevator situation, as well as to
authorize service calls.
PROGRESS IN INTERNATIONAL OPERATIONS
At present, only about 10% of Dover Elevator's business activity takes place
outside of North America, primarily in the United Kingdom, where Hammond &
Champness Ltd, in spite of lower sales, improved its profits significantly
through cost reductions begun in late 1995.
DEI's export activities from the United States grew modestly despite
slower-than-anticipated bookings from China. The company placed particular
emphasis on establishing stronger relationships with its distributors and
customers, as well as setting higher performance expectations for international
distributors. In China, DEI made a substantial effort to consolidate the
marketing operations of its several joint ventures in the region, and to
establish assembly and subcontracting capabilities in order to participate more
broadly in the Chinese market. Dover Elevator has lagged other large elevator
companies in establishing a meaningful presence in China, but believes the
window of opportunity is still open.
Operating Earnings ($ millions)
Operating Income
Elevator Excluding special items As reported
-------- ----------------------- -----------
1992 59
1993 56
1994 58 46
1995 64 32
1996 88
After-Tax Operating Return on Investment (%)
Operating Income
Elevator Excluding special items As reported
-------- ----------------------- -----------
1992 26
1993 25
1994 26 21
1995 28 14
1996 34
18
21
BOOKINGS INCREASE
As noted, the new elevator market in North America remains depressed and highly
competitive, but with some renewed growth in the hydraulic segment. DEI's new
regional field operations structure, combined with an increase in the new
elevator sales force and a focused effort on the Oildraulic(plj) product line,
resulted in record bookings of these low-rise elevators. While the domestic
market for traction elevators remains depressed, particularly in the high-rise
commercial markets, Dover Elevator was able to take advantage of selective
growth in the hotel and resort industry. Overall bookings rose 6%, with new
elevator backlogs increasing 9% during the year.
OUTLOOK
The momentum generated in the field organization, which focused on improving
execution in construction, service and repairs, as well as on reducing lower
margin service contracts and improving pricing on repairs, will continue into
1997. The factory will continue its initiatives to reduce fixed and material
costs. Although the traction business is likely to remain depressed
domestically, particularly in the high-rise commercial markets, the company
anticipates continued growth in international traction markets -- particularly
in China, as the new joint ventures begin to have a more significant presence.
DEI will continue its focus on the growing North American hydraulic market.
These efforts should create further earnings growth in 1997, possibly to a
record level, with a small increase in sales and further improvement in margins.
[ PICTURE OF SENIOR MANAGERS OF DOVER ELEVATOR ]
The senior managers of Dover Elevator International standing near a jack being
machined in the hydraulic plant in Horn Lake. (clockwise from left): Buzz Dana,
Gary Bailey, Steve Bailey, Bill Wilkinson, and Nigel Davis, President. Dover
sold a record number of its OILDRAULIC elevators in 1996.
DOVER ELEVATOR
19
22
SALES AND OPERATING PROFIT BY MARKET SEGMENT DOVER CORPORATION AND SUBSIDIARIES
(in thousands)
For the Years Ended December 31, 1996 1995 1994 1993 1992 1991
- ----------------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Sales to unaffiliated customers:
Dover Technologies $ 993,326 $ 873,505 $ 603,068 $ 488,248 $ 458,603 $ 421,943
Dover Industries 846,866 798,173 691,342 501,364 357,054 339,255
Dover Diversified 730,074 672,503 472,706 244,597 225,771 196,464
Dover Resources 648,546 583,727 525,971 472,643 439,389 447,079
Dover Elevator International 862,139 822,833 793,559 777,720 791,099 791,400
Intramarket sales (4,667) (4,864) (1,370) (644) (336) (355)
----------- ----------- ----------- ----------- ----------- -----------
Consolidated total $ 4,076,284 $ 3,745,877 $ 3,085,276 $ 2,483,928 $ 2,271,580 $ 2,195,786
----------- ----------- ----------- ----------- ----------- -----------
Operating profit:
Dover Technologies $ 146,341 $ 133,641 $ 76,205 $ 41,797 $ 29,793 $ 27,439
Dover Industries 115,857 117,841 81,028 59,942 37,837 37,812
Dover Diversified 106,850 92,948 67,220 39,360 37,373 35,955
Dover Resources 105,394 90,745 83,979 70,290 58,594 62,323
Dover Elevator International 87,985 31,550 46,123 56,404 59,198 57,947
Gain on dispositions 75,065 -- -- -- -- --
Interest income, interest expense
and general corporate expenses, net (48,767) (49,614) (47,696) (22,251) (22,460) (17,388)
----------- ----------- ----------- ----------- ----------- -----------
Consolidated income before
income taxes $ 588,725 $ 417,111 $ 306,859 $ 245,542 $ 200,335 $ 204,088
----------- ----------- ----------- ----------- ----------- -----------
Profit margin (pretax):
Dover Technologies 14.7% 15.3% 12.6% 8.6% 6.5% 6.5%
Dover Industries 13.7 14.8 11.7 12.0 10.6 11.1
Dover Diversified 14.6 13.8 14.2 16.1 16.6 18.3
Dover Resources 16.3 15.5 16.0 14.9 13.3 13.9
Dover Elevator International 10.2 3.8 5.8 7.3 7.5 7.3
----------- ----------- ----------- ----------- ----------- -----------
Consolidated profit margin 14.4% 11.1% 9.9% 9.9% 8.8% 9.3%
----------- ----------- ----------- ----------- ----------- -----------
Identifiable assets at December 31:
Dover Technologies $ 924,745 $ 721,831 $ 330,661 $ 278,871 $ 285,749 $ 247,562
Dover Industries 613,512 591,228 541,109 485,419 302,821 314,037
Dover Diversified 547,341 570,269 452,074 340,072 183,262 116,432
Dover Resources 380,805 326,047 291,480 218,473 219,216 228,152
Dover Elevator International 390,757 380,889 362,924 381,587 376,508 378,385
Corporate (principally cash and
equivalents, and marketable
securities) 136,219 76,387 92,389 69,267 58,568 72,052
----------- ----------- ----------- ----------- ----------- -----------
Consolidated total $ 2,993,379 $ 2,666,651 $ 2,070,637 $ 1,773,689 $ 1,426,124 $ 1,356,620
----------- ----------- ----------- ----------- ----------- -----------
Depreciation and amortization:
Dover Technologies $ 34,071 $ 19,750 $ 13,904 $ 13,401 $ 19,755 $ 20,144
Dover Industries 27,918 26,783 25,453 20,520 17,840 26,112
Dover Diversified 26,857 27,141 21,948 14,837 10,756 9,623
Dover Resources 20,686 17,816 19,089 13,300 13,602 14,689
Dover Elevator International 14,058 14,953 13,744 13,319 13,683 14,366
Corporate 1,494 1,393 1,651 1,592 1,821 432
----------- ----------- ----------- ----------- ----------- -----------
Consolidated total $ 125,084 $ 107,836 $ 95,789 $ 76,969 $ 77,457 $ 85,366
----------- ----------- ----------- ----------- ----------- -----------
Capital expenditures:
Dover Technologies $ 36,001 $ 18,546 $ 13,425 $ 11,769 $ 11,665 $ 12,373
Dover Industries 28,495 20,675 23,299 11,146 8,225 5,675
Dover Diversified 26,274 31,299 19,419 4,802 5,767 6,243
Dover Resources 22,149 21,127 16,340 11,515 11,560 12,307
Dover Elevator International 11,432 10,949 11,764 8,112 5,137 9,947
Corporate 760 72 226 188 87 73
----------- ----------- ----------- ----------- ----------- -----------
Consolidated total $ 125,111 $ 102,668 $ 84,473 $ 47,532 $ 42,441 $ 46,618
----------- ----------- ----------- ----------- ----------- -----------
20
23
CONSOLIDATED STATEMENTS OF EARNINGS DOVER CORPORATION AND SUBSIDIARIES
(in thousands except per share figures)
Years ended December 31, 1996 1995 1994
----------- ----------- -----------
Net sales $ 4,076,284 $ 3,745,877 $ 3,085,276
Cost of sales 2,709,652 2,564,344 2,137,477
----------- ----------- -----------
Gross profit 1,366,632 1,181,533 947,799
Selling and administrative expenses 827,958 743,133 622,434
----------- ----------- -----------
Operating profit 538,674 438,400 325,365
----------- ----------- -----------
Other deductions (income):
Interest expense 41,977 40,113 36,461
Interest income (18,503) (20,060) (18,619)
All other, net (73,525) 1,236 664
----------- ----------- -----------
Total (50,051) 21,289 18,506
----------- ----------- -----------
Earnings before taxes on income 588,725 417,111 306,859
Federal and other taxes on income 198,502 138,800 104,486
----------- ----------- -----------
Net earnings (per common share
1996 $3.45; 1995 $2.45; 1994 $1.77) $ 390,223 $ 278,311 $ 202,373
----------- ----------- -----------
Earnings per share computed on the basis of the weighted average number of
common shares outstanding during the year (113,262 in 1996, 113,453 in 1995 and
114,370 in 1994).
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS DOVER CORPORATION AND SUBSIDIARIES
(in thousands except per share figures)
Years ended December 31, 1996 1995 1994
---------- ---------- ----------
Balance at beginning of year $1,152,187 $1,268,114 $1,121,817
Net earnings 390,223 278,311 202,373
---------- ---------- ----------
1,542,410 1,546,425 1,324,190
Deductions:
Stock split -- 56,793 --
Treasury stock retired -- 273,900 --
Common stock cash dividends of $.64 per share
($.56 in 1995; $.49 in 1994) 72,401 63,545 56,076
---------- ---------- ----------
Balance at end of year $1,470,009 $1,152,187 $1,268,114
---------- ---------- ----------
See Notes to Consolidated Financial Statements.
21
24
CONSOLIDATED BALANCE SHEETS DOVER CORPORATION AND SUBSIDIARIES
(in thousands except per share figures)
December 31, 1996 1995
----------- -----------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 199,956 $ 121,698
Marketable securities, at market 17,839 27,054
Receivables (less allowance for doubtful
accounts of $24,821 in 1996 and $22,325
in 1995) 715,495 706,889
Inventories 499,870 479,327
Prepaid expenses and other current assets 56,653 49,391
----------- -----------
Total current assets 1,489,813 1,384,359
----------- -----------
PROPERTY, PLANT AND EQUIPMENT, AT COST:
Land 28,625 26,565
Buildings 254,927 223,227
Machinery and equipment 823,429 725,335
----------- -----------
1,106,981 975,127
Less accumulated depreciation 612,048 (551,187)
----------- -----------
Net property, plant and equipment 494,933 423,940
----------- -----------
INTANGIBLE ASSETS, NET OF AMORTIZATION 963,182 811,182
OTHER INTANGIBLE ASSETS 10,258 10,258
OTHER ASSETS AND DEFERRED CHARGES 35,193 36,912
----------- -----------
$ 2,993,379 $ 2,666,651
----------- -----------
LIABILITIES
CURRENT LIABILITIES:
Notes payable $ 488,651 $ 417,478
Current maturities of long-term debt 3,754 2,502
Accounts payable 202,763 190,850
Accrued compensation and employee benefits 130,598 125,600
Accrued insurance 104,916 106,274
Other accrued expenses 206,993 209,455
Federal and other taxes on income 1,430 28,888
----------- -----------
Total current liabilities 1,139,105 1,081,047
----------- -----------
LONG-TERM DEBT 252,955 255,600
DEFERRED INCOME TAXES 54,068 46,328
OTHER DEFERRALS (PRINCIPALLY COMPENSATION) 57,548 55,970
COMMITMENTS AND CONTINGENCIES (NOTES 11 AND 12)
STOCKHOLDERS' EQUITY
CAPITAL STOCK:
Preferred, $100 par value per share
Authorized 100,000 shares; issued none -- --
Common, $1 par value per share
Authorized 500,000,000 shares (200,000,000
in 1995); issued 116,858,326 shares (116,562,662 in 1995) 116,858 116,563
ADDITIONAL PAID-IN CAPITAL 13,818 6,424
CUMULATIVE TRANSLATION ADJUSTMENTS 1,900 2,268
UNREALIZED HOLDING GAINS (LOSSES) 3,663 3,994
RETAINED EARNINGS 1,470,009 1,152,187
----------- -----------
1,606,248 1,281,436
Less common stock in treasury, at cost,
4,328,190 shares (2,892,592 shares in 1995) 116,545 53,730
----------- -----------
Net stockholders' equity 1,489,703 1,227,706
----------- -----------
$ 2,993,379 $ 2,666,651
----------- -----------
See Notes to Consolidated Financial Statements.
22
25
CONSOLIDATED STATEMENTS OF CASH FLOWS DOVER CORPORATION AND SUBSIDIARIES
increase (decrease) in cash and cash equivalents (in thousands):
Years ended December 31, 1996 1995 1994
--------- --------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 390,223 $ 278,311 $ 202,373
--------- --------- ---------
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization 125,084 107,836 95,789
Provision for losses on accounts receivable 9,491 9,616 898
Net increase (decrease) in LIFO reserve 356 4,647 (2,079)
Deferred income taxes 1,043 (13,688) (18,958)
Loss (gain) on sale of property and equipment 372 (219) (3,510)
Increase (decrease) in deferred compensation 2,048 7,538 11,431
Acquisition inventory premium write-off 4,065 11,656 7,254
Gain on sale of businesses and certain assets (79,245) (1,900) --
Other, net (3,048) (18,026) (5,780)
Changes in assets and liabilities (excluding effects of acquisitions and dispositions):
Decrease (increase) in accounts receivable (5,366) (84,212) (56,834)
Decrease (increase) in inventories excluding LIFO reserve 10,555 (69,454) (29,763)
Decrease (increase) in prepaid expenses (6,003) 54 (6,989)
Decrease (increase) in other assets 3,562 (13,150) 21,161
Increase (decrease) in accounts payable 3,133 25,939 19,595
Increase (decrease) in accrued expenses (14,618) 53,845 57,118
Increase (decrease) in federal and other taxes on income (30,202) 4,779 16,680
--------- --------- ---------
Total adjustments 21,227 25,261 106,013
--------- --------- ---------
Net cash provided by operating activities 411,450 303,572 308,386
--------- --------- ---------
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
Net sale (purchase) of marketable securities 8,884 31,524 (21,991)
Proceeds from sale of property and equipment 5,412 16,556 6,733
Additions to property, plant and equipment (includes rental equipment:
$406 in 1996, $1,149 in 1995 and $455 in 1994) (125,517) (103,817) (84,928)
Acquisitions (net of cash and cash equivalents: $2,090 in 1996, $32,840 in 1995
and $5,682 in 1994) (264,624) (297,427) (180,754)
Proceeds from sale of businesses 105,838 5,000 --
Purchase of treasury stock (1,436 shares in 1996, 249 shares in 1995
and 1,150 shares in 1994) (62,815) (7,601) (29,733)
--------- --------- ---------
Net cash used in investing activities (332,822) (355,765) (310,673)
--------- --------- ---------
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
Increase (decrease) in notes payable 66,703 153,853 88,594
Reduction of long-term debt (3,344) (266,447) (7,603)
Proceeds from long-term debt 268 250,211 --
Proceeds from exercise of stock options 7,446 9,944 5,288
Proceeds from sale (repurchases) of lease receivables (1,500) 750 1,863
Cash dividends to stockholders (72,401) (63,545) (56,075)
--------- --------- ---------
Net cash from financing activities (2,828) 84,766 32,067
--------- --------- ---------
Effect of exchange rates on cash 2,458 (1,179) (3,161)
--------- --------- ---------
Net increase (decrease) in cash and cash equivalents 78,258 31,394 26,619
Cash and cash equivalents at beginning of year 121,698 90,304 63,685
--------- --------- ---------
Cash and cash equivalents at end of year $ 199,956 $ 121,698 $ 90,304
--------- --------- ---------
SUPPLEMENTAL INFORMATION, CASH PAID DURING THE PERIOD FOR:
Income taxes $ 227,077 $ 147,439 $ 106,717
Interest 41,967 32,669 40,076
--------- --------- ---------
See Notes to Consolidated Financial Statements.
23
26
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1996, 1995 AND 1994
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The Company is a multinational, diversified manufacturing corporation comprised
of over 50 different operating companies which manufacture a broad range of
specialized industrial products and sophisticated manufacturing equipment. The
Company groups its products and services by industry into five segments as set
forth in the tables shown on page 20. A description of the products manufactured
and services performed by each of the five segments is given on pages 10 through
19.
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 the Financial Accounting Standards Board Statement No. 52,
"Foreign Currency Translation," 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 1996 and 1995 in the cumulative translation adjustments
shown on the balance sheets follows:
(in thousands) 1996 1995
------- --------
Balance at beginning
of year $ 2,268 $ (8,206)
Aggregate adjustment
for year (368) 10,474
------- --------
Balance at end of year $ 1,900 $ 2,268
------- --------
B. PERVASIVENESS OF ESTIMATES: The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
C. INVENTORIES: Approximately 46% of net 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, determined on the first-in,
first-out (FIFO) basis 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.
D. 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 is generally depreciated based upon accelerated methods,
utilizing estimated useful property lives, for both accounting and tax purposes.
Depreciation expense in 1996 was $86,909,000 compared with $70,125,000 in 1995
and $57,774,000 in 1994.
E. 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, generally,
of 40 years; the remaining amortization is based on estimated useful lives which
range from 6 to 20 years. The Company evaluates its amortization policies
regularly to determine whether later events and circumstances warrant revised
estimates of useful lives. The Company periodically evaluates the recoverability
of goodwill and makes adjustments 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 $749,592,000 at December 31, 1996 and
$591,543,000 at December 31, 1995.
F. 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.
G. 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 $3,542,000 from January 1 to June 30,
1995, (when the credit expired) and $4,982,000 in 1994. The credit was
reinstated during 1996 and aggregated $3,127,000 for the reinstated second half
of 1996. Research and experimentation expenditures, charged to earnings amounted
to $98,857,000 in 1996, $94,372,000 in 1995 and $96,855,000 in 1994.
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.
H. 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.
24
27
I. SELF INSURANCE: The Company is generally self-insured for losses and
liabilities related primarily to workers' compensation, health and welfare
claims, business interruption resulting from certain events and comprehensive
general, product and vehicle liability. Losses are accrued based upon the
Company's estimates of the aggregate liability for claims incurred using certain
actuarial assumptions followed in the insurance industry and based on Company
experience.
J. MARKETABLE SECURITIES: In accordance with Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities," trading securities are reported at fair value with unrealized gains
and losses recognized in earnings, and available-for-sale securities are also
reported at fair value but unrealized gains and losses are shown in the caption
"unrealized holding gains (losses)" included in stockholders' equity.
The Company did not hold any trading securities at December 31, 1996. The net
realized gains for the years ended December 31, 1996, 1995 and 1994 were
$5,600,000, $2,140,000 and $4,047,000, respectively. As of December 31, 1996,
available-for-sale securities totaled $17,839,000 with a related gross
unrealized gain of $3,663,000 and consisted of investments in certain mutual
funds which invest primarily in equity securities.
K. NEW ACCOUNTING PRONOUNCEMENT: During October 1995, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation." The disclosure requirements under
this Standard affects the Company for the first time this year for all of its
stock options granted after December 15, 1994. The Statement allows alternative
accounting methods and the Company has chosen to account for stock options as in
the past under Accounting Principles Board Opinion No. 25. In addition, the
Company has disclosed certain pro forma information required by the Statement.
2. ACQUISITIONS AND DISPOSITIONS:
1994 -- On January 3 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
the Company acquired the assets of Rantom, Inc., a Michigan based manufacturer
of hydraulic and pneumatic cylinders and nitrogen air springs. On March 24 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 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 the Company acquired the stock of
Reheat AB, a Swedish manufacturer of heat transfer plates for plate heat
exchangers. On May 24 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 the
Company acquired the stock of Tarby, Inc., a progressing cavity pump
manufacturer. On June 29 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
the Company acquired certain assets of Midstate Elevator Company, a New York
regional elevator and escalator installation, service and repair company. On
August 5 the Company acquired the assets of Hill Refrigeration, Inc., a
manufacturer of refrigeration cases and refrigeration systems for commercial
use. On September 6 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 acquired
on date of acquisition and reorganization costs assumed.
1995 -- On January 2 the Company acquired all of the capital stock of Knappco
Corporation. Knappco located in Kansas City, Missouri, manufactures
manhole/access covers and valves for petroleum, dry-bulk and chemical
transportation and storage. On March 6 the Company acquired certain assets of
Margaux Inc. Margaux, based in Conyers, Georgia, is a manufacturer of commercial
refrigeration systems for supermarkets. On April 11 the Company acquired all of
the capital stock of Hasstech, Inc. Hasstech, located in San Diego, California,
is a manufacturer of Stage II vapor recovery systems used at service stations.
On May 22 the Company acquired all of the capital stock of Mark Andy, Inc. Mark
Andy, located in St. Louis, Missouri, designs and manufactures printing presses
utilizing narrow web flexographic covering technology for the small container
market. On June 9 the Company sold 100% of the capital stock of its American
Metal Ware subsidiary. On June 30 the Company acquired certain assets of the
Frequency Control Products ("FCP") Division of AT&T, North Andover,
Massachusetts. FCP manufactures several high tech, high volume oscillators
utilizing unique technology. On September 29 the Company acquired 88% of the
capital stock of Imaje, S.A. ("Imaje") and has since then increased this
ownership to almost 100%. Imaje, based in Valance, France, is one of the world's
three largest manufacturers of industrial continuous ink jet printers and
specialized inks used for coding and marking products and consumables. On
October 3 the Company acquired all of the stock of Trailmaster Corporation,
located in Ft. Worth, Texas. Trailmaster manufactures aluminum and stainless
steel tank trailers, aircraft refuelers and hydraulic head disking machines. On
October 4 the Company acquired all of the stock of Hammond Engineering, Limited.
Hammond, located in Enfield, U.K., manufactures rotary vane and screw
compressors and hydraulic control units for the trucking industry. On November 8
the Company acquired all of the stock of GFS Manufacturing Co., Inc. GFS,
located in Dover, New Hampshire, manufactures custom transformers for the
industrial control and computer control industries.
The aggregate cost of these 1995 acquisitions, including all direct costs was
approximately $330,267,000 of which $224,414,000 represents goodwill and certain
other long lived intangible assets which are being
25
28
primarily amortized over a forty-year period. The $330,267,000 purchase price
accounting cost can be reconciled to the $323,292,000 "economic cost" amount
shown elsewhere in this report by considering long-term debt acquired and cash
acquired on date of acquisition.
1996 -- On January 2 the Company acquired all of the stock of PRC Corporation in
a stock for stock exchange. PRC, located in Landing, New Jersey, is a leading
manufacturer of fast axial flow lasers, components and kits. On January 16 the
Company acquired all of the stock of Light Machine Corporation. Light Machine,
located in Manchester, New Hampshire, manufactures computer-aided design (CAD),
computer - aided manufacturing (CAM) software and computer numerical control
(CNC) machines utilizing personal computers for educational, engineering
prototyping and industrial markets. On January 23 the Company acquired 100% of
the stock of Bath Scientific, Ltd. Bath, located in Melkslam, England,
manufactures a range of Flying Probe automatic test systems for testing high
density unpopulated circuit boards. On January 31 the Company acquired all of
the stock of Dow - Key Microwave Corporation. Dow - Key, located in Ventura,
California, manufactures a broad range of Coaxial, RF, Microwave and Waveguide
switch products for the electronics industry. On February 21 the Company
acquired the assets of Robohand, Inc. Robohand, located in Monroe, Connecticut,
manufactures automotion components and accessories (primarily grippers, slides,
and rotary actuators) for the robotics and automated assembly markets. On
February 27, the Company acquired all of the capital stock of Marte, s.r.l.,
located in Chiete, Italy. Marte manufactures scissor lifts used to service and
repair automobiles and light and heavy industrial vehicles. On July 23, the
Company acquired all of the stock of Realcold Systems, Inc. Realcold, located in
Cibolo, Texas, manufactures custom industrial refrigeration installations and
merchant carbon dioxide plants. On August 28, the Company acquired all of the
stock of KVG Kristall - Verarbeitung Neckararbischofsheim GmbH. KVG, located in
Heidelberg, Germany, manufactures high quality, high performance quartz crystal
oscillators, filters and discrete crystals. On November 25 the Company acquired
the assets of Everett Charles Technologies, Inc., located in Pomona, California.
Everett Charles manufactures circuit board testing equipment in three market
niches: spring loaded test probes, test fixtures for populated boards, and
testers for bare boards. On December 16, the Company acquired the assets of
Tulsa Winch, Inc. of Tulsa, Oklahoma. Tulsa Winch is a manufacturer of worm gear
and planetary gear winches and speed reducers.
On July 1, the Company sold the assets of its Dieterich Standard Division and on
July 26, the Company sold the assets of its subsidiary, Measurement Systems,
Inc. As a result of these transactions, the Company recorded a $75.1 million
before tax gain. The operating profits of these companies, separately or in the
aggregate, were not significant to the Company.
The aggregate cost of these 1996 acquisitions, including all direct costs was
approximately $266,714,000 of which $184,883,000 represents goodwill which is
being amortized over a forty-year period. The $266,714,000 purchase price
accounting cost can be reconciled to the $281,711,000 "economic cost" amount
shown elsewhere in this report by considering long-term debt assumed and cash
acquired on date of acquisition.
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 acquisitions.
3. 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
$35,663,000 at December 31, 1996, and $33,894,000 at December 31, 1995.
Substantially all retained balances are collectible within one year.
4. INVENTORIES:
Inventories, by components, are summarized as follows:
(in thousands) at December 31, 1996 1995
-------- --------
Raw materials $165,064 $153,094
Work in process 219,729 221,371
Finished goods 160,858 150,677
-------- --------
Total 545,651 525,142
Less LIFO reserve 45,781 45,815
-------- --------
$499,870 $479,327
-------- --------
During each of the years in the three year period ended December 31, 1996, 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 less than 1 cent per share in 1996 and by
1 cent per share in 1995 and 1994.
5. BANK LINES OF CREDIT:
The Company has open bank lines of credit and other bank credit agreements
totaling $512,000,000 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.
6. DEBT:
A summary of long-term debt follows:
(in thousands) 1996 1995
-------- --------
6.45% Notes due Nov. 15, 2005 (less unamortized
discount of $470) with an effective interest
rate of 6.51% $249,530 $249,492
Other 7,179 8,610
-------- --------
Total long-term debt 256,709 258,102
Less current installments 3,754 2,502
-------- --------
Long-term debt excluding current installments $252,955 $255,600
-------- --------
Annual repayments of long-term debt in the four years following 1997 are
scheduled as follows: 1998-$499,000; 1999-$224,000; 2000-$205,000, and
2001-$220,000.
The notes payable shown on the balance sheets for 1996 and 1995 represent
principally commercial paper. The weighted average interest rates at December
31, 1996 and 1995 were 5.4% and 5.8% respectively.
7. 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.
On September 15, 1995 the Company effected a 2 for 1 common stock split in the
form of a stock dividend, resulting in the issuance of 58,058,000 additional
shares of common stock and the transfer of $1,546,000 from additional paid-in
capital and $56,793,000 from retained
26
29
earnings. All references to per share amounts throughout this report have been
restated to reflect this stock split. Prior to the stock split, 8,389,000
treasury shares were retired resulting in a charge to paid-in capital of
$19,197,000 and a charge to retained earnings of $273,900,000.
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
December 31, 1994 $ 66,441 $ 17,676 9,711 $ 347,616
Stock options exercised 453 9,491 104* 3,768
Treasury stock purchased -- -- 145 3,833
Treasury stock retired (8,389) (19,197) (8,389) (301,487)
Stock split 58,058 (1,546) 1,322 --
--------- -------- ----- ---------
Balance at
December 31, 1995 $ 116,563 $ 6,424 2,893 $ 53,730
Stock options exercised 291 7,155 36* 1,607
Treasury stock purchased 1,400 61,208
Stock issued 4 239
--------- -------- ----- ---------
Balance at
December 31, 1996 $ 116,858 $ 13,818 4,329 $ 116,545
--------- -------- ----- ---------
*Shares received 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. On November 7, 1996, the Board of Directors amended the
original Plan by changing some of its features and extending the Plan to
November 2006.
8. STOCK OPTION AND PERFORMANCE INCENTIVE PROGRAM
(ADJUSTED FOR 2 FOR 1 STOCK SPLIT):
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
(unadjusted) 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, 1996. On April 28, 1987, the stockholders 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 1996, cash
bonuses in connection with nonqualified exercises aggregated $308,000 ($620,000
in 1995 and $302,000 in 1994). At December 31, 1996 all outstanding stock
options were non-qualified; accordingly, no further cash bonuses will be paid.
On April 25, 1995, the stockholders approved an incentive stock option plan and
a cash performance program to replace the expired 1984 plan and program. Under
the new plan a maximum aggregate of 10 million shares was reserved for grant to
key personnel until January 30, 2005.
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.
Transactions in stock options (all of which vest three years after grant) under
this plan are summarized as follows:
Shares Under Option Price Range
------------------- ----------------
Outstanding at Jan. 1, 1995 2,558,330 $ 9.14 - $29.75
Granted 638,672 $ 28.44
Exercised (453,066) $ 9.56 - $19.36
Canceled (63,687) $ 9.56 - $29.75
--------- ----------------
Outstanding at Dec. 31, 1995 2,680,249 $ 9.56 - $29.75
--------- ----------------
Exercisable at Dec. 31, 1995
through March 6, 2002 1,381,336 $ 9.56 - $22.85
--------- ----------------
Outstanding at Jan. 1, 1996 2,680,249 $ 9.56 - $29.75
Granted 451,672 $ 47.06
Exercised (290,764) $ 9.56 - $22.85
Canceled (134,833) $ 9.56 - $47.06
--------- ----------------
Outstanding at Dec. 31, 1996 2,706,324 $13.18 - $47.06
--------- ----------------
Exercisable at December 31, 1996 through:
February 28, 1997 35,014 shares @ $13.19 - $22.85
March 3, 1998 129,381 shares @ $15.23 - $22.85
March 28, 1999 177,121 shares @ $14.87 - $22.85
February 28, 2000 201,540 shares @ $17.36 - $22.85
February 28, 2001 222,514 shares @ $19.25 - $22.85
March 6, 2002 295,306 shares @ $19.36 - $22.85
March 4, 2003 295,623 shares @ $22.85
--------- ----------------
The Company applies APB Opinion 25 and related Interpretations in accounting for
stock options; accordingly, no compensation cost has been recognized. Had
compensation cost been determined based upon the fair value of the stock options
at grant date consistent with the method of FASB Statement 123, the Company's
net income and earnings per share would have been reduced to the pro forma
amounts indicated below:
1996 1995
---- ----
Net income As reported ('000) $390,223 $278,311
Pro forma ('000) $386,330 $275,789
Earnings per share As reported $ 3.45 $ 2.45
Pro forma $ 3.42 $ 2.43
The fair value of each option grant was estimated on the date of grant using a
Black-Scholes option-pricing model with the following assumptions for 1996 and
1995, respectively: risk-free interest rates of 6.0 and 5.8 percent; dividend
yield of 1.3 and 1.5 percent; expected lives of 6 years for both years; and
volatility of 25.9 and 21.1 percent. Additional adjustments are made for assumed
cancellations and expectations that shares acquired through exercise of options
are held during employment.
9. EMPLOYEE BENEFIT PLANS:
The Company has many 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
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pension plans are not considered material. Pension cost and related disclosures
for U.S. funded defined benefit plans for 1996, 1995 and 1994 include the
following components:
(in thousands) 1996 1995 1994
-------- -------- --------
Actual return on plan assets $ 15,441 $ 55,107 $ 5,098
Less deferred (gain) loss 6,476 (34,860) 14,866
-------- -------- --------
Net return 21,917 20,247 19,964
Net amortization 3,094 69 1,612
Deduct:
Benefits earned during year (8,189) (7,920) (7,872)
Interest accrued on projected
benefit obligation (23,363) (12,847) (12,302)
-------- -------- --------
Net pension (expense) credit $ 3,459 $ (451) $ 1,402
-------- -------- --------
The funded status and resulting prepaid pension cost of U.S. defined benefit
plans were as follows:
Funded Plans
----------------------------
(in thousands) 1996 1995
--------- ---------
Plan assets at fair value $ 247,501 $ 248,822
--------- ---------
Actuarial present value of
benefit obligation:
Vested 167,648 160,938
Nonvested 7,393 10,166
--------- ---------
Accumulated benefit obligation 175,041 171,104
Effect of projected future
salary increases 26,142 27,422
--------- ---------
Projected benefit obligation 201,183 198,526
--------- ---------
Plan assets in excess of projected
benefit obligation 46,318 50,296
Unrecognized net (gain) loss (6,436) (12,861)
Unrecognized FAS 87 transition (gain) (16,306) (17,986)
Unrecognized prior service cost 5,218 4,695
--------- ---------
Prepaid pension cost at December 31 $ 28,794 $ 24,144
--------- ---------
The assumptions used in determining the above were as follows: a weighted
average discount rate of 7%, an average wage increase of 5% and an expected
long-term rate of return on plan assets of 10%.
Approximately 70% (69% in 1995) 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 nonqualified plans, 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 from the
general assets of the Company. The pension benefit obligation and pension
expense under these plans follow:
(in thousands) 1996 1995 1994
- --------------------------------------------------------------------------------
Pension benefit obligation $14,509 $12,143 $13,902
Pension expense 2,089 2,404 3,599
- --------------------------------------------------------------------------------
For measurement purposes a discount rate of 7% was used together with an average
wage increase of 5%.
Pension cost for all plans was $37,044,000 for 1996, $36,719,000 for 1995 and
$33,474,000 for 1994.
In addition to the pension plans described above, certain of the Company's
subsidiaries sponsor twelve separate health care plans for retirees which
provide medical coverage and/or life insurance. None of these plans are funded.
The financial statements and related disclosures reflect Statement of Financial
Accounting Standards No. 106 "Employers Accounting for Postretirement Benefits
Other Than Pensions," for these plans.
The following table details the amounts recognized in the Company's Consolidated
Balance Sheet at December 31 of each year:
(in thousands) 1996 1995
------- -------
Accumulated postretirement benefit obligation:
Retirees $15,795 $16,055
Fully eligible active
plan participants 9,457 11,068
Unamortized gain (loss) 2,936 957
------- -------
Accrued postretirement
benefit cost included in
accrued liabilities $28,188 $28,080
------- -------
Net postretirement benefit cost for 1996, 1995 and 1994 included the following
components:
(in thousands) 1996 1995 1994
------- ------- -------
Service cost $ 448 $ 483 $ 504
Interest cost 1,634 1,773 1,907
Gain on settlement -- -- (410)
Amortization gain (277) (253) (72)
------- ------- -------
Net postretirement
benefit costs $ 1,805 $ 2,003 $ 1,929
------- ------- -------
For measurement purposes a discount rate of 7% was used for the plan liability
and rates from 3% to 13% annual rate of increase in the per capita cost covered
benefit (i.e., health care cost trend rates) was assumed for 1997; the rates
were assumed to decrease gradually to 5% by the year 2004 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, 1996 by
$1,590,000 and the net postretirement benefit cost for 1996 by approximately
$477,000.
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10. TAXES ON INCOME:
Total income taxes for the years ended December 31, 1996, 1995 and 1994 were
allocated as follows:
(in thousands) 1996 1995 1994
--------- --------- ---------
Income from continuing
operations $ 198,502 $ 138,800 $ 104,486
Stockholders' equity, for
compensation expense
for tax purposes in excess
of amounts recognized for
financial reporting purposes (3,009) (3,285) (1,491)
--------- --------- ---------
$ 195,493 $ 135,515 $ 102,995
--------- --------- ---------
Income taxes have been based on the following components of earnings before
taxes on income.
(in thousands) 1996 1995 1994
-------- -------- --------
Domestic $498,156 $374,911 $267,427
Foreign 90,569 42,200 39,432
-------- -------- --------
$588,725 $417,111 $306,859
-------- -------- --------
Income tax expense (benefit) is made up of the following components:
(in thousands) 1996 1995 1994
--------- --------- ---------
Current:
U.S. Federal $ 159,229 $ 117,911 $ 98,895
State and local 11,852 10,331 7,259
Foreign 26,378 24,246 17,290
--------- --------- ---------
Total current 197,459 152,488 123,444
--------- --------- ---------
Deferred:
U.S. Federal (6,608) (1,609) (15,922)
State and local 3,220 (2,671) (182)
Foreign 4,431 (9,408) (2,854)
--------- --------- ---------
Total deferred 1,043 (13,688) (18,958)
--------- --------- ---------
Total expense $ 198,502 $ 138,800 $ 104,486
--------- --------- ---------
The reasons for the difference between the effective rate and the U.S. Federal
income statutory rate of 35% follow:
(in thousands) 1996 1995 1994
---- ---- ----
U.S. Federal income tax rate 35.0% 35.0% 35.0%
State and local taxes, net of
Federal income tax benefit 1.7 1.2 1.5
R&E tax credits (.9) (.3) (1.6)
FSC benefit (2.2) (3.4) (2.0)
Foreign tax credit (.1) (.4) --
Non tax deductible items 1.0 2.4 1.2
Miscellaneous items (.8) (1.2) --
---- ---- ----
Effective rate 33.7% 33.3% 34.1%
---- ---- ----
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) 1996 1995
--------- ---------
DEFERRED TAX ASSETS:
Accrued insurance $ 30,251 $ 27,636
Accrued compensation, principally
postretirement benefits,
and compensated absences 23,876 23,487
Accrued expenses, principally
for disposition of businesses,
interest and warranty 12,826 17,958
Inventories, principally due to
reserves for financial reporting
purposes and capitalization
for tax purposes 9,777 9,310
Accounts receivable, principally
due to allowance for
doubtful accounts 6,216 6,563
Other 790 2,234
-------- --------
Total deferred tax assets 83,736 87,188
-------- --------
Deferred tax liabilities:
Accounts receivable, principally
due to retainage and accrual
acceptance on elevator contracts (44,660) (42,813)
Plant and equipment, principally
due to differences in depreciation (22,317) (19,638)
Intangible assets, principally
due to different tax and
financial reporting bases (52,118) (48,433)
Prepaid expenses, principally
due to overfunded pension plans (7,718) (6,542)
Other -- (6,480)
-------- --------
Total gross deferred liabilities (126,813) (123,906)
-------- --------
Net deferred tax (liability) asset (43,077) (36,718)
-------- --------
Net current deferred (liability) asset 10,991 9,610
-------- --------
Net non-current deferred
tax liability $ (54,068) $ (46,328)
-------- --------
11. 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 $33,248,000, $27,353,000 and
$25,916,000 for 1996, 1995 and 1994, 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 $122 million as of December 31, 1996
and are payable as follows (in millions): 1997-$29.9; 1998-$22.8; 1999-$17.4;
2000-$12.8; 2001-$9.9; and after 2002-$29.2.
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12. 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 and is anticipated to
be immaterial to the Company. In addition, several of the Company's subsidiaries
are involved in ongoing remedial activities at certain plant sites, in
cooperation with regulatory agencies, and appropriate reserves have been
established.
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 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.
During 1996, the IRS completed its examination of the Company's 1992 and 1993
Federal income tax returns and has proposed additional taxes and penalties
aggregating $18.6 million plus interest which action is being vigorously
contested by the Company.
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 1994, 1995 and 1996, 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, 1996 was $20 million
($42 million in 1995) of which the Company has a contingent liability of $3.4
million should all of the receivables become uncollectible.
13. DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS:
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. In addition, the
Company believes the long-term debt approximates fair value.
14. OPERATING RETURN ON OPERATING INVESTMENT (UNAUDITED):
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 2,
10, 12, 14, 16 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.
15. INFORMATION ABOUT THE COMPANY'S OPERATIONS IN DIFFERENT GEOGRAPHIC AREAS
(in thousands) For the Years Ended December 31, 1996 1995 1994
----------- ----------- -----------
Sales to unaffiliated customers:
United States $ 3,258,497 $ 3,012,837 $ 2,561,107
Europe 530,421 508,826 342,320
Canada, Far East, Pacific, other 287,366 224,214 181,849
Transfers between geographic areas:
United States 175,185 203,953 131,463
Europe 93,938 53,008 28,648
Canada, Far East, Pacific, other 2,165 1,096 905
Eliminations (271,288) (258,057) (161,016)
----------- ----------- -----------
Consolidated Sales: $ 4,076,284 $ 3,745,877 $ 3,085,276
----------- ----------- -----------
Operating Profit:
United States $ 546,573 $ 412,506 $ 306,895
Europe 73,269 42,846 35,620
Canada, FarEast, Pacific, other 17,650 11,373 12,040
----------- ----------- -----------
Consolidated total (excluding corporate) $ 637,492 $ 466,725 $ 354,555
----------- ----------- -----------
Identifiable assets at December 31,
United States $ 2,176,500 $ 1,894,863 $ 1,604,380
Europe 610,088 585,128 280,720
Canada, Far East, Pacific, other 70,572 110,274 93,147
----------- ----------- -----------
Consolidated total (excluding corporate) $ 2,857,160 $ 2,590,265 $ 1,978,248
----------- ----------- -----------
Export sales as a percentage of United States sales 25% 26% 22%
----------- ----------- -----------
(in thousands) For the Years Ended December 31, 1993 1992 1991
----------- ----------- -----------
Sales to unaffiliated customers:
United States $ 2,093,354 $ 1,884,051 $ 1,805,133
Europe 252,297 264,546 246,365
Canada, Far East, Pacific, other 138,277 122,983 144,288
Transfers between geographic areas:
United States 82,623 74,416 85,205
Europe 20,266 16,993 8,977
Canada, Far East, Pacific, other 793 1,998 2,309
Eliminations (103,682) (93,407) (96,491)
----------- ----------- -----------
Consolidated Sales: $ 2,483,928 $ 2,271,580 $ 2,195,786
----------- ----------- -----------
Operating Profit:
United States $ 237,847 $ 187,118 $ 170,265
Europe 17,821 22,664 33,780
Canada, FarEast, Pacific, other 12,125 13,013 17,431
----------- ----------- -----------
Consolidated total (excluding corporate) $ 267,793 $ 222,795 $ 221,476
----------- ----------- -----------
Identifiable assets at December 31,
United States $ 1,462,253 $ 1,119,072 $ 1,024,642
Europe 154,488 154,247 160,933
Canada, Far East, Pacific, other 102,717 94,237 98,993
----------- ----------- -----------
Consolidated total (excluding corporate) $ 1,719,458 $ 1,367,556 $ 1,284,568
----------- ----------- -----------
Export sales as a percentage of United States sales 20% 22% 22%
----------- ----------- -----------
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INDEPENDENT ACCOUNTANTS REPORT DOVER CORPORATION AND SUBSIDIARIES
To the Board of Directors and Stockholders of
Dover Corporation:
We have audited the accompanying consolidated balance sheet of Dover Corporation
and subsidiaries as of December 31, 1996 and 1995, and the related consolidated
statements of earnings, retained earnings, and cash flows for each of the years
then ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on those financial
statements based on our audits. The consolidated financial statements of Dover
Corporation and subsidiaries as of December 31, 1994 were audited by other
auditors whose report dated February 22, 1995 expressed an unqualified opinion
on those statements.
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 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 1996 and 1995 consolidated financial statements referred to
above present fairly, in all material respects, the financial position of Dover
Corporation and subsidiaries at December 31, 1996 and 1995, and the results of
their operations and their cash flows for each of the years then ended, in
conformity with generally accepted accounting principles.
1301 Avenue of the Americas By: /s/ Coopers & Lybrand L.L.P.
-----------------------------
New York, N.Y. 10019-6013
February 14, 1997 COOPERS & LYBRAND L.L.P.
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34
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES:
The Company continues to be in excellent financial condition. Despite the amount
spent during 1996 on our acquisition program, $281.7 million, liquidity measures
increased modestly.
The Company's current ratio (current assets divided by current liabilities)
increased to 1.31 at December 31, 1996, compared with 1.28 at December 31, 1995.
The quick ratio (current assets net of inventories, divided by current
liabilities) also increased to .87 at December 31, 1996, compared with .84 at
December 31, 1995. Year-end working capital for the last two years expressed as
a percentage of sales shows a similar increase in this year: 8.6% in 1996 and
8.1% in 1995.
At December 31, 1996, the Company had bank lines of $512 million, which support
its commercial paper. Additional bank lines of credit are available at the
Company's request. The Company's commercial paper is rated A-1 by Standard &
Poors and F-1 by Fitch Investor services.
With respect to debt percentages, the substantial amounts spent in recent years
for acquisitions (particularly the record $323 million in 1995) has caused these
percentages to fluctuate. The net debt (notes payable plus long-term debt and
current maturities of long-term debt less cash and equivalents and marketable
securities) to total capital ratio decreased to 26.2% at December 31, 1996
compared with 30.0% at December 31, 1995. The Company's net debt (total debt
less cash, cash equivalents and marketable securities) increased slightly during
1996 to reach $527.6 million at December 31, 1996, up from $526.8 million at
December 31, 1995. The debt to equity ratio decreased from 43% at December 31,
1995 to 35% at year-end 1996. Long-term debt maturities for the four years 1997
to 2000 aggregate $4.7 million. Management is not aware of any potential
impairment to the Company's liquidity, other than contingent liabilities as
discussed in Note 12 to the Consolidated Financial Statements.
Historically, capital expenditures have been financed with internally generated
funds. During 1996 the entire capital expenditure program was financed
internally. Internal financing is also expected to provide all of the funds for
capital expenditures in 1997, which the Company believes will aggregate
approximately $150 million. The Company plans to continue its acquisition
program, combining external financing, if necessary, with internally generated
cash.
RESULTS OF OPERATIONS 1996:
Results of operations are explained in detail in the stockholders' letter and
operations review, pages 2 through 19.
1995 COMPARED WITH 1994:
Dover set a new earnings per share record in 1995, at $2.45, a gain of 38% over
the prior year's $1.77 per share. This was an even stronger increase than the
28% gain achieved in 1994.
Sales rose 21% to over $3.7 billion, an increase of $661 million, reflecting
both internal growth at most Dover companies and the effect of our vigorous
acquisition activity in 1994 and 1995.
First, Universal Instruments' transformation into a "major league" player in the
surface mount portion of the electronic circuit board assembly equipment
business is extremely important -- and even more gratifying than the record
earnings Universal contributed in 1995. The company's "platform" based
technology was well received by customers needing flexible and highly accurate
component placement. This segment of the world surface mount equipment market
exceeds $1 billion in a total assembly equipment market that was close to $3
billion. Most industry watchers predict that this total market will exceed $5
billion by the year 2000, with growth in all segments. Universal has
opportunities both to improve its share in the "flexible" placement segment and
to expand its competitive range through new offerings that build upon the proven
success of its platform products.
Second, our elevator business significantly changed its organizational structure
to refocus on its key strengths within the North American market.
Third, in a number of ways, Dover became a more international company in 1995.
Imaje became our first large scale acquisition of a non-U.S. manufacturing
business. Our companies opened many new foreign sales offices while expanding
their overseas distributor and representative networks. Dover's companies now
have hundreds of employees in China, Hong Kong, Singapore and Thailand, and
participate in a number of joint ventures in rapidly growing Asian countries.
Finally, we set a new record for acquisition activity, investing $323 million in
two stand-alone and seven add-on acquisitions. Our acquisition activity during
the three years 1993-95 has totaled $832 million, which is more than Dover was
able to invest in this fashion during the preceding 10 years.
A discussion of operations by industry segments follows:
DOVER RESOURCES:
Three add-on acquisitions were completed during the year by OPW Fueling
Components, Civacon and Blackmer. These acquired companies, with annualized
volume of approximately $20 million, added $14 million to Dover Resources'
reported sales for 1995, but contributed no profit because of acquisition
premium write-offs.
Profits declined modestly at OPW Fueling Components, Blackmer and De-Sta-Co,
which provide more than half of Dover Resources' total earnings, as none of
these companies was able to match its record 1994 results.
OPW and Blackmer experienced a slowdown in the gasoline vapor recovery market
and encountered extra costs and delays in introducing their jointly developed
VaporEZTM product. This offset gains at both companies in other product lines.
OPW purchased Hasstech, a maker of gasoline vapor recovery equipment. Blackmer
acquired Hammond Engineering, Ltd., broadening its mobile transfer pump line and
adding to its international presence.
At De-Sta-Co, sales hit a new high, but profits fell just short of the 1994
record. A record performance by the Valve Group was offset by reduced margins in
Industrial Products. Increasing manufacturing capacity for the Industrial
Products Group led to higher costs in the short term.
Sales and income advanced to record levels at Ronningen-Petter, which makes
liquid filtration systems; at Midland Manufacturing, which produces rail tank
car valve and safety devices, and at Wittemann, a producer of CO2 generation and
recovery systems. New sales and earnings records were also set by Stark, which
makes refrigeration tubing, and at OPW Engineered Systems, which manufactures
loading arms and swivels for petroleum transfer. Civacon, which produces valves
and other products used in transportation of chemicals and petroleum, purchased
Knappco during the year, thereby expanding its line of products for tank trucks.
Alberta Oil Tool, a Canadian producer of sucker rods and other equipment for oil
production, also reported record earnings, as the Canadian "oil patch" remained
strong.
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35
DOVER INDUSTRIES:
Approximately 65% of Dover Industries' sales and a slightly smaller percentage
of its profit derived from five businesses: Rotary Lift, Tipper Tie, Marathon
and Heil, now considered as two separate businesses -- Heil Environmental and
Heil Trailer International. All improved their profits in 1995 by amounts
ranging from modest, at Rotary Lift, to very large at both Heil companies and at
Marathon.
Heil reorganized itself during the year into two separate businesses, one
focusing on refuse trucks and dump bodies, the other on petroleum tanker and dry
bulk carriers. Both Heil companies had record sales and earnings. The
environmental business benefited from a stronger, more confident marketplace and
from cost reductions initiated in 1994.
Rotary Lift had a slight profit gain in a slowing market that reflected a drop
in activity by car dealers and mass merchandisers. Rotary continued its emphasis
on new products, factory investments to reduce cost, and aggressive management
of its multiple distribution channels for automotive lifts.
Marathon also set sales and income records, benefiting from the same market
strength that lifted Heil Environmental.
Tipper Tie's association with Technopak, acquired in 1994, continued to benefit
both companies, which set substantial earnings records in markets that were up
only modestly. Both have gained from each other's technology, introducing new
packaging products in Europe and the U.S.
DOVER TECHNOLOGIES:
Universal set a profit record in 1995 by a wide margin on record sales of more
than $500 million. The profit gain derived partly from improved sales and
margins in surface mount assembly equipment, but more from a surge in demand for
Universal's highly profitable thru-hole equipment. Thru-hole orders rose
sharply, beginning in the latter part of 1994 and continuing through the first
half of 1995, because of the development of new consumer electronic products
designed for thru-hole components (such as direct TV) and the movement of
manufacturing to low-cost environments, notably China, Malaysia and Mexico.
Bookings of thru-hole product dropped sharply in the second half of 1995.
DEK also set sales and profit records, although margins were below desired
levels because of new product development costs and a need for better
manufacturing performance on its basic Model 265 product line. In early 1996,
DEK began shipping two new models that are expected to add greater value for
customers and lead to further sales gains.
Quadrant Technologies achieved strong gains, primarily from its acquisition of
AT&T Frequency Control Products (renamed Vectron Technologies, Inc.) at
mid-year. The movement of this business from AT&T to a new, focused
manufacturing site was completed in the first half of 1996. Quadrant's Vectron
Technologies, Vectron Labs and Oscillatek companies now occupy a leadership
position in the oscillator market, with product offerings covering a wide range
of technologies and annual sales of $100 million.
DOVER DIVERSIFIED:
Belvac increased its sales 41%, setting a new record for the fifteenth
consecutive year. Customer service and delivery time remained a challenge,
despite aggressive capital spending and facility expansion.
Waukesha Bearings set sales and profit records by narrow margins. The company's
focus on specially engineered bearing "solutions" enabled it to maintain its
leadership position in this industry.
Pathway Bellows recovered from a disappointing profit performance in 1994 to
achieve a new earnings record on a small sales gain through better control of
costs. Several poorly priced jobs and cost overruns adversely affected results
in 1994.
Besides an earnings gain from its contract settlements, Sargent Controls
improved its sales and operating margins, while further consolidating operations
in a single facility. At year-end, it won a new contract for valves on the third
Seawolf class submarine, improving the outlook for 1996-97.
Profit progress at Thermal Equipment proved elusive, as the aerospace market for
autoclaves remained depressed and price-competitive.
Dover Diversified's two major disappointments occurred at A-C Compressor and the
Refrigerated Display Case division of Hill Phoenix. New operating management was
appointed at both companies in the fourth quarter. A loss had been anticipated
at the Hill case business, acquired in August, 1994, because of the expected
costs associated with moving production facilities and introducing a new product
line, but the move from Trenton, New Jersey to Richmond, Virginia was more
disruptive and costly than expected.
At A-C Compressor, several large compressor jobs outside of the company's
traditional technology niche, taken at very competitive prices, plus a delivery
schedule that overloaded manufacturing capacities in the second half, led to a
sharp drop in margins from historic levels.
DOVER ELEVATOR INTERNATIONAL:
The continuing flat performance over the past five years, with no indication of
a near-term upturn in markets, created the need for a structural reorganization
of Dover Elevator International. In 1994, General Elevator, which was an
independent service company with a national network of offices, was integrated
into Dover Elevator operations. Responsibility for all elevator manufacturing
management was also concentrated around Horn Lake, Mississippi, as the Canadian
company was divided into separate factory and field operations.
In 1995, North America was restructured as a "wholly unitary" business. Field
operations (sales, service and construction) were divided into seven regions --
five covering areas east of the Rockies and one each for the Pacific Coast
region and Canada. Dover Elevator also closed its manufacturing operations in
Canada and consolidated production in the Horn Lake area. Additionally, it shut
down its separate companies for accessibility products and for elevator
components in Germany. The restructuring reduced Dover Elevator International's
salaried employment by approximately 300 people -- 12% -- between January, 1994
and December, 1995, with the largest cuts coming in the fourth quarter of 1995.
The special charges of $43 million reported over the past two years were largely
non-cash in nature. The largest elements were the write-down of facilities to
estimated market value, the write-off of fixed assets and inventories, and
severance pay. In addition, Dover Elevator adopted a new method of measuring the
percentage of completion in its new elevator operations that spreads revenue
more evenly over the project cycle. This resulted in a $7 million cost
adjustment in the fourth quarter of 1995, which was included in the special
charge for the year. This measurement change will even out somewhat the peaks
and valleys in reported income caused by changes in the level of activity in the
elevator business.
33
36
11-YEAR CONSOLIDATED SUMMARY OF SELECTED FINANCIAL DATA
(dollars in thousands except per share figures)
(dollars in thousands except per share figures) 1996 1995 1994 1993
---------- --------- --------- ---------
Summary of Operations
Net sales $4,076,284 3,745,877 3,085,276 2,483,928
Cost of sales 2,709,652 2,564,344 2,137,477 1,733,256
Selling and administrative expenses 827,958 743,133 622,434 496,798
Interest expense 41,977 40,113 36,461 22,339
Other income, net 92,028 18,824 17,955 14,007
Earnings before taxes 588,725 417,111 306,859 245,542
Income taxes 198,502 138,800 104,486 87,288
---------- --------- --------- ---------
Net earnings $ 390,223 278,311 202,373 158,254
% of sales 9.6% 7.4% 6.6% 6.4%
Return on average equity 25.1%* 25.0% 21.7% 18.9%
Net earnings per common share $ 3.01* 2.45 1.77 1.39
Dividends per common share $ .64 .56 .49 .45
---------- --------- --------- ---------
Book value per common share $ 13.24 10.80 8.78 7.61
Depreciation and amortization $ 125,084 107,836 95,789 76,969
Capital expenditures $ 125,111 102,668 84,473 47,532
Acquisitions $ 281,711 323,292 187,704 321,002
Cash flow*** $ 515,307 386,147 298,162 235,223
Weighted average number of
common shares outstanding ('000s) 113,262 113,453 114,370 114,220
Number of employees 26,234 25,332 22,992 20,445
---------- --------- --------- ---------
Financial position at December 31
Working capital $ 350,708 303,312 360,916 307,846
Net property, plant and equipment $ 494,933 423,940 342,685 283,363
Total assets $2,993,379 2,666,651 2,070,637 1,773,689
Long-term debt $ 252,955 255,600 253,587 252,065
Common stockholders' equity $1,489,703 1,227,706 995,859 870,002
Common shares outstanding ('000s) 112,530 113,670 113,460 114,326
---------- --------- --------- ---------
* 1996 "Return on average equity" and earnings per common share excludes
gain from sale of businesses which amounted to 44 cents per share.
** 1992 net earnings and net earnings per common share include $565,000
and 5 cents per share, respectively, applicable to the cumulative
effects of changes in accounting principles for FAS 109, "Accounting
for Income Taxes" and FAS 106 "Employers' Accounting for Postretirement
Benefits Other Than Pensions."
*** Represents net earnings plus depreciation and amortization.
Adjusted to give retroactive effect to the 2 for 1 stock split, in 1988
and 1995.
[DOVER RETURN ON AVERAGE EQUITY BAR CHART]
[DOVER LONG TERM INVESTMENT BAR CHART]
34
37
DOVER CORPORATION AND SUBSIDIARIES
1992 1991 1990 1989 1988 1987 1986
--------- --------- --------- --------- --------- --------- ---------
Summary of Operations
Net sales 2,271,580 2,195,786 2,210,345 2,120,434 1,953,754 1,588,224 1,440,745
Cost of sales 1,601,596 1,580,051 1,516,753 1,480,880 1,363,852 1,096,612 1,028,394
Selling and administrative expenses 466,777 452,394 440,313 404,043 360,122 306,792 270,432
Interest expense 20,059 23,161 30,658 29,644 21,324 15,044 16,475
Other income, net 17,187 63,908 21,497 21,112 16,304 11,083 9,022
Earnings before taxes 200,335 204,088 244,118 226,979 224,760 180,859 134,466
Income taxes 71,192 75,880 88,439 82,999 78,988 69,158 50,637
--------- --------- --------- --------- --------- --------- ---------
Net earnings 129,707** 128,208 155,679 143,980 145,772 111,701 83,829
% of sales 5.7% 5.8% 7.0% 6.8% 7.5% 7.0% 5.8%
Return on average equity 15.9% 15.9% 20.3% 19.4% 20.6% 17.2% 13.4%
Net earnings per common share 1.12** 1.07 1.27 1.14 1.11 .83 .61
Dividends per common share .43 .41 .38 .35 .31 .26 .23
--------- --------- --------- --------- --------- --------- ---------
Book value per common share 7.05 7.03 6.57 6.00 5.69 5.07 4.63
Depreciation and amortization 77,457 85,366 77,530 78,813 73,797 63,505 57,008
Capital expenditures 42,441 46,618 44,980 62,504 56,779 40,397 44,416
Acquisitions 111,243 13,192 102,834 -- 205,765 57,718 76,142
Cash flow*** 207,164 213,575 233,210 222,793 219,569 175,205 140,836
Weighted average number of
common shares outstanding ('000s) 115,976 119,500 122,338 126,500 131,452 135,104 138,580
Number of employees 18,827 18,898 20,461 20,049 20,412 17,592 16,539
--------- --------- --------- --------- --------- --------- ---------
Financial position at December 31
Working capital 201,641 280,902 206,748 245,755 198,038 316,116 295,370
Net property, plant and equipment 251,270 251,145 268,386 272,158 268,139 219,031 210,908
Total assets 1,426,124 1,356,620 1,468,366 1,406,376 1,365,630 1,155,226 1,036,846
Long-term debt 1,230 6,317 20,955 26,691 27,773 35,134 41,711
Common stockholders' equity 804,937 828,374 787,660 746,809 741,142 671,950 627,674
Common shares outstanding ('000s) 114,170 117,956 119,942 124,486 130,416 132,504 135,624
--------- --------- --------- --------- --------- --------- ---------
[CASH FLOW BAR CHART]
[FREE CASH FLOW AS A PERCENTAGE OF SALES BAR CHART]
35
38
QUARTERLY DATA DOVER CORPORATION AND SUBSIDIARIES
(unaudited) (in thousands except per share figures)
Quarter Net Sales Gross Profit Net Earnings Per Share
------- ----------- ----------- ----------- --------
1996 First $ 999,473 $ 335,197 $ 77,745 $ .68
Second 1,023,423 348,786 87,858 .78
Third 1,009,388 336,405 144,323** 1.27**
Fourth 1,044,000 346,244 80,297 .72
----------- ----------- ----------- --------
$ 4,076,284 $ 1,366,632 $ 390,223 $ 3.45
----------- ----------- ----------- --------
1995 First $ 854,129 $ 270,036 $ 59,799 $ .53
Second 948,164 303,036 78,892 .69
Third 934,543 289,619 71,148 .63
Fourth 1,009,041 318,842 68,472 .60
----------- ----------- ----------- --------
$ 3,745,877 $ 1,181,533 $ 278,311 $ 2.45
----------- ----------- ----------- --------
COMMON STOCK CASH DIVIDENDS DOVER CORPORATION AND SUBSIDIARIES
AND MARKET PRICES
Market Prices*
-------------------- Dividends
Quarter High Low Per Share
------- ------- ------ ---------
1996 First $49.50 $36.63 $.15
Second 53.13 43.88 .15
Third 48.50 41.00 .17
Fourth 55.13 47.25 .17
------ ------ ----
$.64
----
1995 First $32.82 $25.82 $.13
Second 36.57 31.50 .13
Third 41.69 36.00 .15
Fourth 40.75 35.13 .15
------ ------ ----
$.56
----
* As reported in the Wall Street Journal.
** Net earnings include $49.6 million, and per share earnings include 44
cents, respectively, representing gain from the sale of businesses.
Adjusted to give retroactive effect to the 2 for 1 stock split in 1995.
36
39
DIRECTORS AND OFFICERS DOVER CORPORATION AND SUBSIDIARIES
BOARD OF DIRECTORS
David H. Benson+
Non-Executive Director,
Kleinwort-Benson Group, Plc.
Magalen O. Bryant*#
Director of various corporations
Jean-Pierre M. Ergas#
Executive Vice President -- Europe
Alcan Aluminum Limited
Roderick J. Fleming+
Director, Robert Fleming Holdings, Limited
John F. Fort*#
Director of Tyco Laboratories, Inc.
James L. Koley+*
Chairman, Koley, Jessen, Daubman
& Rupiper, P.C.
John F. McNiff
Anthony J. Ormsby*+
Director of various corporations
Thomas L. Reece*
Gary L. Roubos*
* Members of Executive Committee
+ Members of Audit Committee
# Members of Compensation Committee
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 Technologies International, Inc:
John E. Pomeroy
President and Chief Executive Officer
Dover Industries, Inc:
Lewis E. Burns
President and Chief Executive Officer
Dover Diversified, Inc:
Jerry W. Yochum
President and Chief Executive Officer
Dover Resources, Inc:
Rudolf J. Herrmann
President and Chief Executive Officer
Dover Elevator International, Inc:
Nigel P. Davis
President
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.
INDEPENDENT ACCOUNTANTS:
Coopers & Lybrand L.L.P.
New York, New York
EXECUTIVE OFFICES:
Dover Corporation
280 Park Avenue,
New York, New York 10017-1292
(212) 922-1640
Design: Robert Webster Inc.
Copy: Holcomb Associates
Photographer: Enrico Ferorelli
Printed on recycled paper.
40
[DOVER LOGO]
DOVER CORPORATION
280 PARK AVENUE
NEW YORK, NEW YORK 10017-1292
41
EXHIBIT 13
The electronic filing includes the following numeric tables which replace
graphical charts contained within the 1996 Annual Report for the Dover
Corporation.
Page 1: Dover Corporation's earnings per share growth for years
1987-1996. Dover Corporation's total return to investors for
the years 1987-1996.
Page 2: Dover Corporation's earnings per share for years 1991-1996.
Dover Corporation's after tax return on investment and
stockholder's equity for the years 1991-1996.
Page 10: Dover Technologies' operating earnings for the years 1992 -
1996.
Dover Technologies' after-tax operating return on investment
for the years 1992-1996.
Page 12: Dover Industries' operating earnings for the years 1992 -
1996.
Dover Industries' after-tax operating return on investment for
the years 1991-1996.
Page 14: Dover Diversified's operating earnings for the years 1992 -
1996.
Dover Diversified's after-tax operating return on investment
for the years 1991-1996.
Page 16: Dover Resources' operating earnings for the years 1992 - 1996.
Dover Resources' after-tax operating return on investment for
the years 1991-1996.
Page 18: Dover Elevator International Inc.'s operating earnings for
the years 1992 - 1996. Dover Elevator International Inc.'s
after-tax operating return on investment for the years
1992-1996.
Page 34: Dover Corporation's long term investment for years 1986-1996.
Dover Corporation's return on average equity for the years
1986-1996.
Page 35: Dover Corporation's cash flow for years 1986-1996.
Dover Corporation's free cash flow as a percentage of sales
for the years 1986-1996.
Pages 3, 4, 5, 6, 7, 11, 13, 15, 17 and 19 of the Annual Report contain
photographs that are not included in the Edgar filing. The captions, relating
to these photographs, have been retained in the filing and provide sufficient
descriptive detail.
