Exhibit 99.1
[DOVER CORPORATION LOGO]
FOR IMMEDIATE RELEASE
CONTACT: READ IT ON THE WEB
Robert G. Kuhbach http://www.dovercorporation.com
Vice President Finance &
Chief Financial Officer
(212) 922-1640 APRIL 16, 2003
DOVER REPORTS IMPROVED FIRST QUARTER 2003 RESULTS
New York, New York (April 16, 2003). Dover Corporation (NYSE: DOV) earned $58.5
million or $.29 diluted earnings per share (DEPS) from continuing operations in
the first quarter ended March 31, 2003, compared to $48.4 million or $24 DEPS
from continuing operations in the comparable period last year, an increase of
21%. Net earnings for the first quarter of 2003 were $59.5 million or $.29 DEPS,
including $1.0 million of earnings from discontinued operations, compared to
$45.1 million or $ .22 DEPS, for the first quarter of 2002 which included $3.3
million or $.02 DEPS in losses from discontinued operations. Sales in the first
quarter of 2003 were $1,027.8 million, an increase of 3% (down 2% in constant
currency), as compared to $994.6 million for the first quarter last year.
In the first quarter of 2002, the impact of the adoption of the Statement of
Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets,
resulted in a net loss of $247.9 million. The adoption resulted in a goodwill
impairment charge of $345.1 million ($293.0 million, net of tax or $1.44 DEPS).
The adoption discontinued the amortization of goodwill effective January 1,2002.
Commenting on the results and the current outlook, Thomas L. Reece, Chairman and
CEO, said, "There were a number of positive signs in Dover's first quarter
results despite the fact that generally weak economic conditions continued to
have an impact on most of our companies. Dover Technologies, including its CBAT
and SEC groups, made money for the first time in two years. This is a direct
result of actions taken by CBAT and SEC company management to size their
operations to be profitable at the continuing low sales levels of the second
half of last year. While one quarter does not make a recovery, and while segment
operating margins of 4% are not satisfactory over the long-term, we are
encouraged by Technologies' return to profitability at these sales levels. We
are also hopeful, based on a positive book-to-bill, that the electronics markets
we serve are stabilizing.
"Dover Resources, which was our most profitable segment for the quarter, showed
continued operating strength with good operating leverage and strong margins of
14% in spite of challenging market conditions. Dover Diversified also showed
improvement over the prior year period, producing increased profits on
essentially flat sales. Dover Industries had a challenging quarter compared to
last year. Most markets, particularly those served by both Heil companies,
Rotary, DI Foodservice and Chief, remain depressed as customers, particularly
municipalities and other governmental agencies, lack funding for capital
projects."
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Mr. Reece concluded, "In light of the current political and economic
uncertainties, it is hard to be very optimistic about the rest of the year.
Nevertheless, our first quarter performance is encouraging, and it validates
Dover operating managements' initiatives to improve competitiveness, continue
product and market development efforts and improve operating margins. I'm
confident that any improvement in the global manufacturing economy will amplify
the positive momentum we have seen in our first quarter results."
SEGMENT RESULTS
DOVER DIVERSIFIED'S first quarter earnings were $31.7 million, an increase of
$1.7 million or 6% over the comparative period last year, and sales in the
quarter were $292.0 million, a $3.6 million or 1% increase compared to 2002.
Segment margins increased 1% over the prior year comparable period to 11% for
the quarter. Bookings in the quarter were $293.4 million, a decrease of 1% from
prior year, and the quarter book-to-bill ratio was 1.0. Backlog at the end of
the quarter was $362.5 million, 1% higher than the beginning of the year.
Diversified's results reflected a very strong performance at Belvac and higher
earnings at Hill Phoenix, Mark Andy and Tranter Radiator, offset by earnings
declines at other companies, primarily Waukesha Bearings, Sargent and SWF.
Belvac achieved the largest incremental earnings improvement in the segment
compared to the same period last year, mainly due to sizable planned can necking
and trimming equipment shipments to Russia. Current backlog and order entry
rates remain high at Belvac, supporting continued strong performance for the
remainder of the year. Hill Phoenix's cost management initiatives generated
higher margins in the first quarter, which produced double-digit earnings growth
despite a small sales decrease, due primarily to timing of shipments. Hill
Phoenix continues to gain market share and is benefiting from aggressive growth
plans with a number of its key supermarket customers. Mark Andy and Tranter
Radiator produced profit gains on modest sales growth, largely due to internal
improvements. Two of the heat exchanger companies increased first quarter
bookings over prior year, with Tranter PHE securing several large marine
projects in Korea and SWEP seeing increased orders in Europe. Several companies
had a challenging quarter operating in weak markets, including Sargent in
commercial aerospace and Waukesha in power generation. Other companies like
Crenlo and SWF were negatively impacted by the current economic climate, as
customers delayed capital investment decisions on new orders and requested
move-outs of delivery dates on current projects. PMI's results were negatively
impacted by market softness, acquisition integration matters, product mix and
some production issues.
DOVER INDUSTRIES' first quarter earnings decreased 31% or $12.0 million to $27.2
million and sales declined 5% or $13.6 million to $247.9 million from the
comparable period last year. Segment margins decreased 4% from the comparable
period last year to 11% for the quarter. Segment bookings in the quarter were
$267.2 million, an increase of 6% from last year, and the book-to-bill ratio was
1.08 for the current quarter. Backlog increased 17% from the beginning of the
current year to $142.8 million.
First quarter results continued the trend witnessed in 2002 as market conditions
once again unfavorably impacted the majority of the Dover Industries businesses.
Companies are reducing costs in line with the lower sales volumes, but continue
to invest in their businesses where warranted. As a result, market shares have
continued to increase, although in some cases margins have suffered due to
competitive pressures. The earnings decline was principally driven by Heil
Environmental which, in addition to weak market conditions, is facing
comparisons to a very strong first quarter of 2002. Other companies with
unfavorable earnings comparisons include Rotary Lift, Heil Trailer, Marathon and
Chief. Rotary's earnings declined on flat volume, driven primarily by new
product development costs for products scheduled to be
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released later this year. Heil Trailer remains in a cyclical downturn as
industry conditions continue to deteriorate. Marathon's volumes improved
although pricing pressures affected margins in the quarter. Chief's shift in how
the company goes to market, which was initiated in late 2002, has contributed to
short-term sales and earnings declines. Triton, DI Foodservice, Kurz-Kasch and
Dovatech all had positive earnings improvements. Triton's successful 2002 new
product introductions continue to contribute to share gains both domestically
and internationally. The recently formed DI Foodservice Group is beginning to
recognize the synergies derived from consolidating certain functions within
Groen, Randell and Avtec which have offset the effects of a soft foodservice
market. Kurz-Kasch and Dovatech are rebounding from a sub-par 2002 and at the
present time are seeing a slight pick-up in their respective markets.
DOVER RESOURCES' first quarter earnings increased $3.1 million or 10% to $32.7
million on a sales increase of 6% or $12.6 million to $229.8 million, as
compared to the same period last year. Segment margins improved modestly to more
than 14%. Bookings in the quarter of $239.7 million were up 8% from the prior
year and the book-to-bill ratio for the quarter was 1.04. Ending backlog was
$86.9 million, a 12% increase from the end of last year. Dover Resources'
results for all periods have been changed to reflect Texas Hydraulics, which was
transferred from Dover Industries at the beginning of the year.
Dover Resources' positive operating leverage for the quarter resulted from
favorable product mix, positive savings resulting from internal initiatives and
downsizing actions implemented over past months. Despite the very unsettled
world oil situation, the Energy Products Group continued to see solid Canadian
activity, coupled with improvement in the U.S. Permian Basin Region. C. Lee Cook
had improved earnings resulting from reduced operating expenses on a slight
decline in sales. The pump companies, Wilden and Blackmer, continue to perform
very well, gaining market share in a highly competitive marketplace and finding
success in international markets. Wilden opened its new Wei Li operation in
China during the quarter, which is already producing positive results. De-Sta-Co
Industries showed solid improvement with cost reduction efforts gaining traction
and improved volume in Europe. Sourcing initiatives from China and South America
should help boost its performance over the remainder of the year. OPW Fueling
had improved sales and earnings for the quarter but continued to see declines in
products related to new construction. Although OPW Fluid Transfer Group had flat
sales, bookings were the best they have been in three years, driven by
improvements in the rail tank car valve market. Texas Hydraulics' volume and
earnings declined due to decreases in the aerial lift market. Tulsa Winch's
first quarter was similar to last year with improved oil patch shipments but a
decline in mobile crane equipment. Hydro Systems had improved earnings led by
gains in Europe. RPA operated at a loss due to a decline in the European heavy
equipment market.
DOVER TECHNOLOGIES' first quarter earnings increased $17.4 million, to $10.5
million compared to a loss of $6.9 million for the comparable period last year
on a sales increase of 14% or $31.2 million to $260.0 million from the same
period last year. Segment margins improved seven percentage points to 4% for the
quarter. Bookings in the quarter of $276.5 million were up 15% from the prior
year and the book-to-bill ratio for the quarter was 1.06. Ending backlog was
$146.4 million, a 15% increase from the end of last year.
Technologies companies serving the electronics industry successfully resized
their organizations in the fourth quarter of 2002 in order to operate profitably
at lower levels of demand. Bookings at both the Circuit Board Assembly and Test
(CBAT) companies and Specialized Electronic Components (SEC) companies were
close to the average rate in the last half of 2002 and indicate that the
industry is still operating at a depressed level. The outlook is
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quite unclear at the moment, particularly now that the SARS medical issue in
south China may have a disruptive effect on the electronics industry that has
migrated to this region of the world. However, for the first time since the
first quarter of 2001, both the SEC and CBAT segments were profitable.
Technologies' CBAT business recorded earnings of $1.6 million for the first
quarter compared to a loss of $13.3 million in the first quarter of 2002. First
quarter sales were $148.9 million, an increase of $24.1 million or 19% from last
year's comparable quarter and bookings from the fourth quarter of 2002, at
$160.5 million, were up 16% from prior year. The CBAT book-to-bill ratio was
1.08 for the first quarter with backlog at $85.0 million, 18% higher than at the
end of 2002. Margins were 1% for the quarter compared to negative margins of 11%
for the comparable period last year. Although not all of the CBAT companies were
profitable, these results were expected as all of the companies continue with
expansion into China and new product development. Universal Instruments
celebrated the opening of their new production facility in Shenzhen with the
introduction of two new models of their very successful GSM assembly machine.
Several other CBAT companies will share the facilities with Universal. One of
Everett Charles' companies introduced a new bare board tester during the quarter
that doubles the test speed of the machine it replaces.
In Technologies' SEC business, sales in the quarter were $50.3 million compared
to $53.8 million in last year's first quarter, representing a decline of 6%. SEC
reported earnings of $3.0 million, compared to a loss of $2.7 million in the
first quarter of 2002. Margins were 6% for the quarter compared to negative
margins of 5% for the comparable period last year. Bookings in the first quarter
of $53.9 million were 5% higher than the same period last year. The book-to-bill
ratio was 1.07 for the quarter with backlog at $46.4 million at the end of the
period (a 9% increase from the beginning of the current year). Most of the SEC
companies were profitable and have continued their focused product development
activities while simultaneously moving certain operations to China.
In the quarter, Imaje, the French-based industrial ink-jet printer and ink
manufacturer, had sales of $60.8 million, up 21% from the comparable period last
year. Earnings increased by 18% to $11.2 million from the comparable 2002
quarter and margins decreased slightly to 18%. Imaje's bookings were up 24% from
the prior year in the first quarter to $62.1 million and the book-to-bill ratio
was 1.02. The company's development of its global distribution network and
broadening of its product line are paying off in increased market share despite
a relatively soft industrial market. Since most of Imaje's products are made in
the European Union, the strength of the Euro has put pressure on its earnings
and margins.
OTHER INFORMATION:
Dover made one acquisition in the first quarter of 2003. On March 20, 2003 Dover
acquired the assets of the Airborne and Arell business units of Standard
Automotive, which manufacture precision aero engine components, landing gear and
aircraft structure components. This business, a strategic add on acquisition,
will be reported as part of Sargent Controls and Aerospace in the Diversified
segment. The acquisition had no material impact on segment earnings.
During the first quarter of 2003 Dover disposed of Wittemann from the Resources'
segment as well as small product line businesses at both OK International and
Vectron International from the Technologies segment, all of which were
previously classified as discontinued operations. These dispositions did not
have a material impact on Dover's financial results.
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Dover's effective tax rate for continuing operations for the current quarter was
24.2% compared to last year's quarterly rate of 31.0% and the 2002 full year
rate of 21.7%. The low effective tax rate is largely due to the continuing
benefit from tax credit programs such as R&D, foreign tax and the U.S. export
programs combined with a lower foreign tax rate. Another contributor to the low
rate was the recognition of certain capital loss benefits associated with tax
planning strategies. Dover's operational tax rate, which excludes tax planning
strategies, was 29.3% for the first quarter of 2003 compared to last year's
operational quarterly rate of 31 .O% and the full year rate of 29.9%.
Dover's net debt levels increased slightly to $760.7 million during the quarter
and the debt to total capital ratio remained consistent with last year-end's
level of 24%. Dover's free cash flow, defined as net cash from (used in)
operations less capital expenditures and dividends for the first quarter
increased significantly as cash generated from operations was approximately $0.7
million as compared to last years first quarter, when operations consumed cash
of approximately $50.1 million. Historically, Dover's first quarter has produced
the weakest operating cash flows, as working capital increases, compensation
payouts occur and final estimated Federal tax payments are made during this
period. The 2003 improvement reflects modest increases in working capital, lower
compensation payments and no Federal estimated tax payment. Dover did not
repurchase shares of its common stock on the open market during the quarter.
Additional unaudited information on Dover and its operating companies can be
found on the company website, (http://www.dovercorporation.com). Dover makes no
representation about the utility of this data or the validity of any conclusions
that might be reached by referring to it. In addition, Dover will post to the
website supplemental financial information for the first quarter 2003.
The Dover website will host a Webcast of the first quarter conference call at
9:00 AM Eastern Time on Thursday, April 17, 2003. The conference call will also
be made available for replay on the website.
Dover Corporation makes information available to the public, orally and in
writing, which may use words like "expects" and "believes", which are
"forward-looking statements" under the Private Securities Litigation Reform Act
of 1995. This press release contains forward-looking statements regarding future
events and the performance of Dover Corporation that involve risks and
uncertainties that could cause actual results to differ materially including,
but not limited to, failure to achieve expected synergies, failure to
successfully integrate acquisitions, failure to service debt, continuing impacts
from the terrorist events of September 11, 2001 as well as the impact of
continued events in the Middle East on the worldwide economy, economic
conditions, customer demand, increased competition in the relevant market, and
others. Dover Corporation refers you to the documents that it files from time to
time with the Securities and Exchange Commission, such as the Form 10-K, Form
10-Q and Form 8-K, which contain additional important factors that could cause
its actual results to differ from its current expectations and from the
forward-looking statements contained in this press release.
In an effort to provide investors with additional information regarding the
company's results as determined by generally accepted accounting principles
(GAAP), the company also discloses the following non-GAAP information which
management believes provides useful information to investors.
Management refers to the net amount of cash generated from operating activities,
less capital expenditures and dividends, as reported in the cash flows
statement, as "free cash flow".
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Management believes operating cash flow and free cash flow are important
measures of operating performance. However, free cash flow as described is not a
measure of financial performance under GAAP, should not be considered as
substitute for cash flows from operating activities as determined in accordance
with GAAP as a measure of liquidity, and may not be comparable to similarly
titled measures reported by other companies.
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TABLES TO FOLLOW
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DOVER CORPORATION CONSOLIDATED
(unaudited)
March 31, December 31,
CONDENSED BALANCE SHEET (`000) 2003 2002
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ASSETS:
Cash, equivalents and marketable securities $ 294,732 $ 294,959
Receivables, net of allowances for doubtful accounts 689,641 669,885
Inventories 613,236 595,071
Prepaid expenses & deferred tax asset 109,445 98,086
Net property, plant & equipment 695,896 704,922
Goodwill 1,661,198 1,654,883
Intangibles, net of amortization 201,375 202,836
Other assets 180,526 167,529
Assets of discontinued operations 34,551 49,214
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$4,480,600 $4,437,385
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LIABILITIES & STOCKHOLDERS' EQUITY:
Short term debt $ 24,302 $ 23,761
Payables and accrued expenses 604,850 598,198
Taxes payable (including deferred) 206,521 211,448
Other deferrals 158,336 151,225
Long-term debt 1,031,008 1,030,299
Liabilities of discontinued operations 20,571 27,831
Stockholders' equity 2,434,934 2,394,623
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$4,480,600 $4,437,385
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Three Months Ended March 31,
---------------------------
CONDENSED CASH FLOWS (`000) 2003 2002
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OPERATING ACTIVITIES:
Net Earnings (Loss) $ 59,471 $(247,933)
Cumulative effective of change in accounting principle -- 293,049
(Earnings) loss from discontinued operations, net of tax (1,019) 3,300
Depreciation 32,775 34,596
Amortization - other 5,048 5,000
Increase (decrease) in other deferrals (principally compensation) 6,974 (18,550)
Decrease (increase) in accounts receivable (17,977) (32,228)
Decrease (increase) in inventories, excluding LIFO reserve (17,026) 5,640
Decrease (increase) in prepaid expenses (3,091) (1,403)
Increase (decrease) in accounts payable 31,174 630
Increase (decrease) in accrued expenses (26,083) (21,755)
Increase (decrease) in federal & other taxes on income (13,569) (21,367)
Other, net (8,697) (9,126)
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Net cash from (used in) operating activities 47,980 (1,575)
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INVESTING ACTIVITIES:
Capital expenditures (19,914) (21,131)
Acquisitions, net of cash and cash equivalents (15,196) (45,824)
--------- ---------
Net cash from (used in) investing activities (35,110) (66,955)
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FINANCING ACTIVITIES:
Increase (decrease) in notes payable 489 133,083
Increase (decrease) in long-term debt 839 (838)
Cash dividends (27,339) (27,362)
Purchase of treasury stock (699) (802)
Proceeds from exercise of stock options 1,173 3,011
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Net cash from (used in) financing activities (25,537) 107,092
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Discontinued operations 12,412 (49,011)
Net increase (decrease) in cash & equivalents (255) (10,449)
Cash & cash equivalents at beginning of period 294,448 175,331
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Cash & cash equivalents at end of period $ 294,193 $ 164,882
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DOVER CORPORATION AND SUBSIDIARIES
MARKET SEGMENT RESULTS
(UNAUDITED) (IN THOUSANDS EXCEPT PER SHARE FIGURES)
Three months ended March 31,
-------------------------------
SALES 2003 2002
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Dover Industries $ 247,932 $ 261,486
Dover Diversified 292,033 288,437
Dover Resources 229,792 217,186
Dover Technologies 260,042 228,845
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Total Continuing (after intramarket eliminations) $ 1,027,792 $ 994,569
=========== ===========
EARNINGS (Loss)
Dover Industries $ 27,199 $ 39,198
Dover Diversified 31,719 30,047
Dover Resources 32,691 29,624
Dover Technologies 10,498 (6,933)
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Subtotal Continuing 102,107 91,936
Corporate expense (8,525) (4,475)
Net interest expense (16,478) (17,123)
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Earnings from Continuing Operations, before taxes on income 77,104 70,338
Taxes on Income 18,652 21,922
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Net Earnings from Continuing Operations 58,452 48,416
Net Earnings (Loss) from Discontinued Operations* 1,019 (3,300)
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Net Earnings before cumulative effect of change in accounting principle 59,471 45,116
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Cumulative effect of change in accounting principle, net of tax** -- (293,049)
Net Earnings (Loss) $ 59,471 $ (247,933)
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Net Earnings (Loss) per diluted common share:
Continuing Operations $ 0.29 $ 0.24
Discontinued Operations* -- (0.02)
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Net Earnings before cumulative effect of change in accounting principle 0.29 0.22
=========== ===========
Cumulative effect of change in accounting principle, net of tax** -- (1.44)
Net Earnings (Loss) $ 0.29 $ (1.22)
=========== ===========
Average number of diluted shares outstanding 202,949 203,818
*In accordance with the adoption of SFAS No. 144, the earnings (net of tax)
from discontinued operations were separately presented for all reported periods
in earnings from discontinued operations.
**Reflects the adoption of SFAS No. 142 "Goodwill and Other Intangible Assets"
(adopted l/1/02), which resulted in a $293 million write down (net of $52
million in tax) of impaired goodwill to fair value.