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Previous: DELAWARE GROUP DECATUR FUND INC, NSAR-A, 1994-07-27 |
Next: DUPONT E I DE NEMOURS & CO, 8-K, 1994-07-27 |
<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For six months ended June 30, 1994 Commission File No. 1-4018
DOVER CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 53-0257888
(State of Incorporation) (I.R.S. Employer Identification No.)
280 Park Avenue, New York, NY 10017
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 922-1640
Indicate by checkmark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes _X_ NO___
The number of shares outstanding of the Registrant's common stock as of the
close of the period covered by this report was 57,221,902.
<PAGE> 2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
DOVER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
Three months ended June 30, 1994 and 1993
('000 omitted)
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Net sales $761,225 $594,511
Cost of sales 523,329 417,337
------- -------
Gross profit 237,896 177,174
Selling and administrative expenses 151,009 117,417
------- -------
Operating profit 86,887 59,757
------- -------
Other deductions (income):
Interest expense 8,538 5,130
Interest income (3,068) (6,782)
Foreign exchange 308 225
All other (341) (801)
------- -------
5,437 (2,228)
------- --------
Earnings before taxes on income 81,450 61,985
Federal and other taxes on income 29,010 22,226
------- -------
Net earnings $ 52,440 $ 39,759
======= =======
Weighted average number of common shares
outstanding during the period 57,195 57,100
======= =======
Net earnings per common share $ .92 $ .70
======= =======
</TABLE>
<PAGE> 3
DOVER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
Six months ended June 30, 1994 and 1993
('000 omitted)
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Net sales $1,441,952 $1,161,291
Cost of sales 993,124 816,003
--------- ---------
Gross profit 448,828 345,288
Selling and administrative expenses 293,500 231,555
--------- ---------
Operating profit 155,328 113,733
--------- ---------
Other deductions (income):
Interest expense 15,118 9,376
Interest income (9,693) (10,059)
Foreign exchange 281 201
All other 181 (480)
--------- ---------
5,887 (962)
--------- ---------
Earnings before taxes on income 149,441 114,695
Federal and other taxes on income 54,428 41,172
--------- ---------
Net earnings $ 95,013 $ 73,523
========= ==========
Weighted average number of common shares
outstanding during the period 57,195 57,100
========= =========
Net earnings per common share $ 1.66 $ 1.29
========= =========
</TABLE>
CONSOLIDATED STATEMENT OF RETAINED EARNINGS
Six Months ended June 30, 1994 and 1993
('000 omitted)
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Balance at beginning of period $1,121,817 $1,051,949
Net earnings 95,013 73,523
--------- ---------
1,216,830 1,125,472
Deduct:
Common stock cash dividends of
$.46 per share ($.44 in 1993) 26,314 25,125
Deduct dividend in kind - 36,329
--------- ---------
Balance at end of period $1,190,516 $1,064,018
========= =========
</TABLE>
<PAGE> 4
DOVER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
('000 OMITTED)
<TABLE>
<CAPTION>
JUNE 30 DECEMBER 31
1994 1993
-------- -----------
<S> <C> <C>
Assets
------
Current Assets:
Cash and cash equivalents $84,147 $63,685
Marketable securities 52,073 32,592
Receivables, net of allowance for
doubtful accounts 515,679 475,155
Inventories at cost (determined
principally on the last-in,
first-out basis, which is less
than market value) 348,123 294,319
Prepaid expenses 41,352 37,889
--------- ---------
Total current assets 1,041,374 903,640
--------- ---------
Property, plant & equipment, at cost 765,887 714,637
Accumulated depreciation 455,960 (431,274)
--------- ---------
Net property, plant & equipment 309,927 283,363
--------- ---------
Intangible assets, net of amortization 600,614 535,136
Other intangible assets 10,258 10,258
Deferred charges and other assets 60,876 41,292
--------- ---------
$2,023,049 $1,773,689
========= =========
Liabilities
-----------
Current liabilities:
Notes Payable 284,257 174,980
Current maturities of long-term debt 1,040 311
Accounts payable 130,625 117,206
Accrued compensation & employee benefits 64,584 71,084
Accrued insurance 94,287 74,501
Other accrued expenses 139,460 116,916
Income taxes 46,035 40,796
--------- ---------
Total current liabilities 760,288 595,794
Long-term debt 258,705 252,065
Deferred taxes 17,789 20,409
Deferred compensation 39,779 35,419
Stockholders' Equity:
Preferred stock - -
Common stock 66,359 66,299
Additional paid-in surplus 14,820 12,531
Cumulative translation adjustments (6,863) (12,761)
Unrealized holding gains (losses) (355) -
Retained earnings 1,190,516 1,121,817
--------- ---------
1,264,477 1,187,886
Less: treasury stock 317,989 317,884
--------- ---------
946,488 870,002
--------- ---------
$2,023,049 $1,773,689
========= =========
</TABLE>
<PAGE> 5
DOVER CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
Six Months ended June 30, 1994 and 1993
('000 omitted)
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 95,013 $ 73,523
------- --------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 44,957 35,714
Net increase (decrease) in deferred taxes (2,620) (1,709)
Net increase (decrease) in LIFO reserves 188 622
Increase (decrease) in deferred compensation 4,359 528
Other, net 2,744 (20,457)
Changes in assets and liabilities (excluding
acquisitions):
Decrease (increase) in accounts receivable (24,499) (11,713)
Decrease (increase) in inventories, excluding
LIFO reserve (37,846) (18,996)
Decrease (increase) in prepaid expenses (3,464) (2,170)
Increase (decrease) in accounts payable 13,418 20,138
Increase (decrease) in accrued expenses 35,831 5,431
Increase (decrease) in federal and other taxes
on income 5,239 (6,176)
------- -------
Total adjustments 38,307 1,212
------- --------
Net cash provided by operating
activities 133,320 74,735
------- --------
Cash flows from (used in) investing activities:
Increase in marketable securities (19,485) (998)
Additions to property, plant & equipment (34,221) (22,991)
Acquisitions* (149,781) (14,039)
Purchase of treasury stock (105) (119)
Net cash from (used in) investing
------- --------
activities (203,592) (38,147)
------- --------
Cash flows from (used in) financing activities:
Increase (decrease) in notes payable 109,277 41,741
Reduction of long-term debt 6,640 (128)
Proceeds from exercise of stock options 1,131 528
Cash dividends to stockholders (26,314) (25,125)
Net cash from (used in) finance
------- -------
activities 90,734 17,016
------- -------
Net increase (decrease) in cash and cash equivalents 20,462 53,604
Cash and cash equivalents at beginning of period 63,685 71,632
------- -------
Cash and cash equivalents at end of period $ 84,147 $125,236
======= =======
</TABLE>
* Above amount includes long-term debt assumed of $11,587, but
excludes cash acquired of $5,370.
<PAGE> 6
DOVER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1994
NOTE A - Basis of Presentation
The accompanying unaudited consolidated financial statements have
been prepared in accordance with the instructions to Form 10-Q and therefore do
not include all information and footnotes necessary for a fair presentation of
financial position, results of operations, and changes in financial position in
conformity with generally accepted accounting principles. In the opinion of
the Company, all adjustments, consisting only of normal recurring items
necessary for a fair presentation of the operating results have been made. The
results of operations of any interim period are subject to year-end audit and
adjustments, and are not necessarily indicative of the results of operations
for the fiscal year.
During June 1994 two acquisitions were completed at a costs of
$25.8 million. These acquisitions are reflected on the Company's June 30,
1994, balance sheet as "other assets" pending fair market allocations.
NOTE B - Inventory
Inventories, by components, are summarized as follows:
<TABLE>
<CAPTION>
JUNE 30 DECEMBER 31
1994 1993
------- -----------
<S> <C> <C>
Raw materials $117,508 $ 92,341
Work in progress 105,757 136,031
Finished goods 168,429 109,329
------- -------
Total 391,694 337,701
Less LIFO reserve 43,571 43,382
------- -------
Net amount per balance
sheet $348,123 $294,319
======= =======
</TABLE>
NOTE C - Additional Information
For a more adequate understanding of the company's financial
position, operating results, business properties and other matters, reference
is made to the Company's Annual Report on Form 10-K which was filed with the
Securities and Exchange Commission in March 1994.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
(1) MATERIAL CHANGES IN CONSOLIDATED FINANCIAL CONDITION:
The Company's liquidity decreased during the first half of 1994 as
compared with its position at December 31, 1993.
Working capital decreased from $307.8 million at the end of last year to $281.7
million at June 30, 1994. The $26.1 million decrease reflects positive cash
flow during the quarter net of $143.6 million paid for acquisitions.
<PAGE> 7
As a result of acquisition expenditures, Dover Corporation ended the quarter
with net debt (defined as long-term debt plus current maturities on long-term
debt plus notes payable less cash and equivalents) of $408 million representing
30% of total capital.
(2) MATERIAL CHANGES IN RESULTS OF OPERATIONS:
The Company earned $.92 per share in the Second Quarter ended June
30, a record level for any quarter and 31% higher than the $.70 earned in the
Second Quarter of 1993. Sales advanced 28% to $761,224,000 while net income
rose 32% to $52,440,000.
Following a First Quarter in which EPS advanced 25%, these results put Dover's
EPS for the First Half at $1.66, up 29% from prior year. Six months' earnings
were $95,013,000 on sales of $1,441,951,000. Net margin for the half was 6.6%
and annualized return on equity, based on average First Half equity, was 21%.
All five of Dover's market segments achieved sales and earnings gains in the
Second Quarter with increases ranging from modest to more than double.
DOVER RESOURCES
Dover Resources' profits increased 17% on a 9% sales gain. About 4 points of
the sales gain and 6 points of the earnings gain reflect the acquisition of
Midland Manufacturing, acquired earlier this year, with the balance coming from
internal growth. Strong performances by De-Sta-Co, Ronningen Petter, Petro
Vend and Midland offset several declines as only half of DRI's 16 companies
showed earnings gains for the quarter. Three businesses serving the oil
production industry had a combined profit decline of almost 50%, primarily due
to lower demand for sucker rods. OPW-Fueling Components, whose strong results
were key to DRI's success in 1993, continued to achieve sales and earnings
gains as demand for vapor recovery products has remained strong.
DOVER INDUSTRIES
Dover Industries' profits grew 51% on a 75% sales gain reflecting both strong
internal growth and acquisitions made in 1993. Ten of Industries' twelve
companies achieved earnings gains, with seven more than 25% ahead. Heil had a
record quarter with continued strength in its trailerized tank business and
improvement in its refuse truck line. Heil's bookings continued very strong
with a Second Quarter book-to-bill of 1.19 despite record shipments. Other
companies with operating gains exceeding 25% were Rotary Lift, Bernard,
Dieterich Standard, Texas Hydraulics and Davenport while Tipper Tie also
reached this level with the help of their acquisition of Technopak at the start
of the quarter. Integration of Technopak and Tipper-Tie Europa is proceeding
well. Bookings at every Industries' company exceeded last year in the Second
Quarter with the total up 21%, adjusted for acquisitions.
DOVER ELEVATOR INTERNATIONAL
Dover Elevator International achieved a 5% earnings gain on a 3% sales
increase. Profit comparisons were adversely affected by a disappointing
performance at General Elevator which specializes in maintenance of non-Dover
elevators and in modernization. A new company president has been appointed.
Most other DEI companies showed gains with particularly strong results at U.S.
Elevator, the largest company in the segment, reflecting continued success of
its margin improvement strategy. Bookings for DEI were 7% below last year's
Second Quarter in a depressed market. Backlog for new elevators is 11% below
last year but service revenues continue to show modest increases.
<PAGE> 8
DOVER TECHNOLOGIES
Dover Technologies' profit grew by 44% (by 56% if prior year is adjusted for
the spin-off of DOVatron) on a 20% sales gain (38% adjusted for the spin-off).
All of the earnings gain was achieved in production equipment for printed
circuit board assembly-- notably at Universal Instruments--as sales and
earnings of the three component companies were essentially flat with last year.
Universal improved its profits by 80% on a 51% sales gain as it continued to
benefit from a cyclical recovery in its industry and from market share gains
for both thru-hole and surface mount equipment. Customer feed back on the new
GSM-1 surface mount machine continued favorable and margins on this important
product line improved due to cost reduction. Universal's bookings, though 40%
ahead of last year, were even with Second Quarter shipments which set a record.
Dover Technologies' overall bookings were up 32% for the quarter (adjusted for
the spin-off) and flat with sales.
DOVER DIVERSIFIED
Dover Diversified's earnings were more than double the prior year's on sales
94% higher, primarily reflecting the impact of 3 acquisitions made in the
Second Half of 1993. These companies--Belvac, Phoenix Refrigeration and
Thermal Equipment-- added $6.8 million to segment profits or 86 points of the
122% profit gain. Their own operating results were somewhat lower than last
year as a major gain at Belvac (can-making machinery) could not offset
disappointing results at Thermal Equipment (autoclaves and cleaning equipment).
Tranter, A-C Compressor, Waukesha and the Sargent Controls/Aerospace companies
all showed operating earnings gains in excess of 20%, with Tranter's reported
gain larger due to the acquisition of HTT in the First Quarter and of Re-Heat
and Koolrad during this quarter. Dover Diversified's bookings were up 20% from
last year (adjusted for acquisitions) and represented a book-to- bill of 1.16.
Bookings were extremely strong at Belvac. A-C Compressor showed the only
meaningful bookings decline from 1993 which A-C expects to make up in the
Second Half of the year.
OTHER MATTERS
During the Second Quarter, Dover purchased four companies for an investment of
$35 million bringing six-month 1994 acquisition investment to $150 million
(considering cash and debt acquired). ReHeat and Koolrad were added by Tranter
(Dover Diversified) and Tarby by Blackmer (Dover Resources) while TNI (a
leading manufacturer of speciality transformers) became a "stand alone" company
within Dover Technologies. Due to acquisition-related write-offs and financing
costs, all 1994 acquisitions combined added less than $.01 to Dover's reported
1994 earnings per share despite average operating margins in excess of 20%
achieved so far this year by the acquired companies. The substantial ($321
million investment) acquisition program of 1993 made a significant contribution
to Dover's First Half profit adding an estimated $.20 per share (after
acquisition write-offs and financing costs), of which $.11 was in the Second
Quarter.
OUTLOOK
Dover believes that in the current business climate it is reasonable to expect
that Second Half earnings will be higher than in the First Half, leading to
record 1994 earnings by a substantial margin. However, the Second Quarter is
normally a seasonally strong one and it is possible this could prove to be
Dover's best quarter in 1994. Barring an economic downturn, Dover's growth
should continue in 1995.
<PAGE> 9
PART II. OTHER INFORMATION
Item 4. Submission of Matters to Vote of Security Holders
The annual meeting of shareholders was held on April
26, 1994. The only business at the meeting was the election of directors. All
of the nominees for directors were elected.
The number of votes for and withheld for each of the
directors were as follows:
<TABLE>
<CAPTION>
NUMBER OF VOTES
---------------------------------
NAME FOR WITHHELD
------------------ ---------- --------
<S> <C> <C>
Magalen O. Bryant 48,884,878 31,857
Michael C. Devas 48,883,471 33,264
John F. Fort 48,886,863 29,872
James L. Koley 48,883,903 32,832
George L. Ohrstrom 48,882,638 34,097
Anthony J. Ormsby 48,884,973 31,762
Thomas L. Reece 48,885,638 31,097
Gary L. Roubos 48,885,734 31,001
David G. Thomas 48,881,599 35,136
Jerry W. Yochum 48,875,583 41,152
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
No report on Form 8-K was filed during the quarter for which this
report is filed.
<PAGE> 10
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
DOVER CORPORATION
Date: 7/26/94 /s/ JOHN F. MCNIFF
------------------------- ------------------------------
John F. McNiff, Vice President
and Treasurer
Date: 7/26/94 /s/ ALFRED SUESSER
------------------------- ------------------------------
Alfred Suesser, Controller and
Assistant Treasurer
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