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Exhibit (1)
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CONTACT: READ IT ON THE WEB
John F. McNiff http://www.dovercorporation.com
Vice President
(212) 922-1640
FOR IMMEDIATE RELEASE
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DOVER TO SPIN-OFF ELEVATOR BUSINESS
NEW YORK, NY (May 7, 1998)... Dover Corporation (DOV-NYSE) announced today that
it will pursue a plan to spin off its Elevator business to Dover stockholders as
an independent publicly traded company. Dover will not retain any ownership in
the Elevator business following the proposed spin-off.
Elevator is reported by Dover as a separate business segment with sales of $880
million and pretax operating profit of $93 million in 1997. The Elevator
business had $25 million of pretax operating profit on sales of $219 million in
the first quarter of 1998. Dover indicated in its first quarter report that it
anticipated record Elevator operating profits in the 1998 year.
Thomas L. Reece, Dover's President and CEO, indicated several reasons for the
spin-off.
"This is a situation where two companies can create more value over time for
Dover stockholders than one. Elevator has developed under Dover ownership from
an internal 'product idea' to a leadership position in the North American
market. The Dover corporate strategy is to acquire high market share,
niche-oriented, manufacturing business and support them as global 'platforms of
growth'. This strategy has worked well, and will continue to work well, for us
in the future. However, it is a strategy that is increasingly not relevant for
Elevator, whose enormously capable people rightly want to expand the scope of
their own business."
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"Frankly," Mr. Reece added, "Dover's business strategy has been limiting to
Elevator in recent years. Although we have supported meaningful internal
initiatives at Elevator, we have also invested almost $1.5 billion over the past
five years in acquiring and adding-on to "Dover-type" companies, only a small
portion of which was spent expanding Elevator's scope. Elevator is a different
sort of business from the industrial machinery and engineered products companies
that have long been Dover Corporation's principal focus. At Elevator,
manufacturing is important, but the majority of employees are spread widely
across North America, doing elevator installation and service where the
effective management of elevator work locally is critical to success. The center
of activities and opportunity for other Dover companies is their main factory
location where product engineering, manufacturing expertise, and supply chain
management are key elements of competitve advantage. These differences are
profound, which makes the fit increasingly more akward every day."
Dover Elevator will continue under its current management, led by Nigel Davis
who will be President and CEO. Mr. Davis noted, "This is very good news for
Dover Elevator.
* We are well positioned in North America with the largest market share
for hydraulic elevators, which is the fastest growing, least cyclical
portion off the elevator market.
* By the end of 1998 we will have largely completed a major capital
investment program ($65 million since the start of 1995) designed to
improve our already "world class" manufacturing capabilities.
* By year-end we will also be nearing completion of a new SAP
information system that will reduce administrative costs and make our
field operations even more effective for us and for our customers.
* As a public company we expect to be very profitable in relation to
other elevator companies and to have substantial free cash flow,
borrowing capacity and access to public capital markets."
In a letter to employees Mr. Davis said, "As an independent company we will be
able to focus our full resources on building our business - in size, scope, and
profitablility. "This growth may include strategic alliances in North America or
in foreign markets and acquisitions of related businesses, some of which may be
consummated using Elevator stock. "Our objective will be to make Dover Elevator
an even more exciting place to work and a more valuable company for our
shareholders".
Dover Corporation has provided additional information regarding the spin-off as
follows.
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Earnings: Assuming the spin-off is completed as planned Dover estimates its
"carve-out" earnings from continuing operations will become $1.44 per share for
1997 and $1.24 for 1996, excluding discontinued (Elevator) operations and
special items. The corresponding numbers actually reported by Dover were $1.68
in 1997 and $1.47 in 1996.
Dividends: At its August Board meeting, Dover's Board intends to consider
an increase in Dover's quarterly dividend from 9 1/2 cents per share to 10
cents per share, beginning with the dividend payable in September. Dover
Elevator is expected to adopt a cash dividend policy.
Conditions; Timing: Financial details on the spin-off will be released, as
they become available in accordance with securities regulations. The spin-off
and its timing are subject to a number of conditions, including receipt of a
favorable tax ruling, final approval by Dover's Board of Directors of a
definitive plan, and effectiveness of a Form 10 Registration Statement. Dover
will apply soon for a private tax ruling from the IRS confirming the tax-free
nature of the spin-off. The Form Registration Statment is expected to be filed
this summer with the Securities and Exchange Commission. It will contain
"carve-out" financial statements for Elevator for 1995-1997 and for the current
year-to-date. It will also show "pro-forma" results for Elevator for 1997 and
for the current year-to-date (assuming the spin had taken place at the start
of 1997). Completion of the spin-off is expected in the fourth quarter of 1998.
Financing: At the spin-off date it is expected that Elevator's spin-date
balance sheet will show little, or negative, net worth, but that its pro-forma
coverage of interest costs will be at least 6:1. Dover Corporation will use any
pre-spin cash received from Elevator to reduce short-term debt.
Certain statements contained in this release, including statements regarding
terms, structure, timing and expected effect of the spin-off, future results
and estimate of pro forma results, dividends, growth opportunities and cost
reductions, and the expected of the transaction on stockholder value as well as
other statements which are not historical facts, are forward-looking statements
and are based on Dover's current expectations. The accuracy of such statements
is subject to a number of risks, uncertainties and assumptions. Dover cautions
readers that actual results or achievements could differ materially from such
forward-
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looking statements and that there can be no assurance that the spin-off
transaction described herein will be consummated or that the terms of the
transaction or the timing or effects thereof will not differ materially from
those described herein.