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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
/X/ Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the fiscal year ended December 31, 1999
OR
/ / Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to .
Commission File No. 1-4018
DOVER CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 53-0257888
(State or other jurisdiction of Incorporation (I.R.S. Employer Identification No.)
or organization)
280 Park Avenue, New York, NY 10017
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code
(212) 922-1640
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
------------------- -------------------
Common Stock, par value $1. New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
Title of class
None
Indicate by check mark 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 (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past ninety days. Yes X No
--- ---
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of Registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. ___
The aggregate market value of the voting stock held by non-affiliates of the
Registrant as of the close of business February 29, 2000 was $7,680,269,578.
Registrant's common stock closing price as reported on the New York Stock
Exchange-Composite Transactions for February 29, 2000 was $38.5625 per share.
The number of outstanding shares of the Registrant's common stock as of February
29, 2000 was 202,911,837.
DOCUMENTS INCORPORATED BY REFERENCE
Parts I and II - Certain portions of the Annual Report to
Stockholders for Fiscal Year Ended December 31,
1999 (the "1999 Annual Report").
Part III - Certain portions of the Proxy Statement for
Annual Meeting of Stockholders to be held on April
25, 2000 (the "2000 Proxy Statement").
Special Notes Regarding Forward Looking Statements
This Annual Report on Form 10-K and the documents that are
incorporated by reference, particularly sections of any Annual Report to
Stockholders under the headings "Outlook" or "Management's Discussion and
Analysis", contain forward-looking statements within the meaning of the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, and the Private Securities Litigation Reform Act of 1995. Such
statements relate to, among other things, industries in which the Company
operates, the U.S. and global economies, earnings, cash flow and operating
improvements and may be indicated by words or phrases such as "anticipates,"
"supports," "plans," "projects," "expects," "should," "hope," "forecast," "Dover
believes," "management is of the opinion" and similar words or phrases. Such
statements may also be made by management orally. Forward-looking statements are
subject to inherent uncertainties and risks, including among others: increasing
price and product/service competition by foreign and domestic competitors,
including new entrants; technological developments and changes; the ability to
continue to introduce competitive new products and services on a timely, cost
effective basis; the mix of products/services; the achievement of lower costs
and expenses; domestic and foreign governmental and public policy changes
including environmental regulations; protection and validity of patent and other
intellectual property rights; the continued success of the Company's acquisition
program; the cyclical nature of the Company's business; and the outcome of
pending and future litigation and governmental proceedings. In addition, such
statements could be affected by general industry and market conditions and
growth rates, and general domestic and international economic conditions
including interest rate and currency exchange rate fluctuations. In light of
these risks and uncertainties, actual events and results may vary significantly
from those included in or contemplated or implied by such statements. Readers
are cautioned not to place undue reliance on such forward-looking statements.
The Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
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PART I
Item 1. BUSINESS
General
Dover Corporation ("Dover" or the "Company"), incorporated in
1947 in the State of Delaware, is a diversified industrial manufacturing
corporation encompassing over 53 operating companies which manufacture a broad
range of specialized industrial products and sophisticated manufacturing
equipment.
The Company's businesses are divided into four business
segments. Dover Diversified builds packaging and printing machinery, heat
transfer equipment, food refrigeration and display cases, construction and
agricultural cabs and specialized bearings and compressors, as well as
sophisticated products for use in the defense, aerospace and automotive
industries. Dover Industries makes products for use in the waste handling, bulk
transport, automotive service, commercial food service, packaging, welding and
construction equipment industries. Dover Resources manufactures products
primarily for the automotive, fluid handling, petroleum and chemical industries.
Dover Technologies builds sophisticated automated assembly and testing equipment
for the electronics industry, industrial printers for coding and marking, and
specialized electronic components. Dover Elevator, which was the Company's fifth
business segment for all of 1998, was sold to Thyssen Industrie AG on January 5,
1999. Dover Elevator manufactured, installed and serviced elevators primarily in
North America and is accounted for as a discontinued operation in the Company's
Consolidated Financial Statements.
The Company emphasizes growth and strong internal cash flow.
It has a long-standing and successful acquisition program pursuant to which,
from January 1, 1995 through December 31, 1999, the Company made 68 acquisitions
at a total acquisition cost of $2,021,000,000. For more detail regarding
acquisitions over the past several years, see page 4 of the 1999 Annual Report
as well as Note 2 to the Consolidated Financial Statements on pages 25-27 of the
1999 Annual Report, which are hereby incorporated by reference. These
acquisitions have had a substantial impact on the Company's increase in sales
and earnings since 1995. The Company's acquisition program traditionally focused
on acquiring new or stand-alone businesses. However, since 1995, increased
emphasis has been placed on acquiring businesses that can be added on to
existing operations. In 1999, the Company completed 3 stand-alone and 15 add-on
acquisitions at a total cost of about $599 million. The Company aims to be in
businesses marked by growth, innovation and higher than average profit margins.
It seeks to have each of its businesses be a leader in its market as measured by
market share, innovation, profitability and return on assets.
The Company practices a highly decentralized management style.
The presidents of operating companies are very autonomous and have a high level
of independent responsibility for their businesses and their performance. This
is in keeping with the Company's operating philosophy that small independent
operations are better able to serve customers by focusing closely on their
products and reacting quickly to customer needs. The Company's executive
management becomes involved only to guide and manage capital, assist in major
acquisitions, evaluate, motivate and, if necessary, replace operating
management, and provide selected other services.
Business Segments
Dover Diversified manufactures equipment and components for
industrial, commercial, and defense applications. The largest operations are
Crenlo, acquired in 1999 (operator cabs for agricultural and construction
machinery and electronic enclosures), Tranter (process industry heat
exchangers), A-C Compressor, acquired in 1992 (specialized centrifugal, oil
free screw and rotary compressors), and expanded in 1997 with the acquisitions
of Preco and Conmec (process industry compressors), and Hill Phoenix, acquired
in 1993-94 (refrigeration cases and systems for supermarkets). Other Dover
Diversified businesses produce such products as fluid film and self-lubricating
bearings, color control systems for web sheet-fed and specialty printing
presses, submarine and aircraft hydraulic controls, remote manipulators,
industrial cleaning equipment, can making equipment, environmental control
equipment, engineered high-performance racing products and packaging machinery.
In 1999, Dover Diversified
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companies completed four "add-ons": HAS Inc., JE Piston, Hydra-Tight, Ltd. and
Van Dam Machine, BV. In 1999 Dover Diversified sold Pathway Bellows, a
manufacturer of metal and fabric expansion joints.
Dover Industries manufactures a diverse mix of equipment and
components for use in the waste handling, bulk transport, automotive service,
commercial food service, packaging, welding and construction equipment
industries. The largest operations are Heil, acquired in 1993 (trailerized
tanks and refuse collecting vehicles), Rotary Lift (automotive lifts), Tipper
Tie (clip closures for food packaging), Marathon (solid waste compaction,
transporting and recycling equipment) and DovaTech (welding, cutting and laser
equipment and supplies). Other Dover Industries operations produce auto
collision measuring and repair systems, touchless car washing equipment,
hydraulic cylinders, food service equipment, commercial refrigeration equipment
and concrete spreading machines. In 1999 Dover Industries made one stand-alone
acquisition, Somero Enterprises, Inc., a producer of laser-controlled concrete
floor spreading equipment, and acquired five "add-on" businesses: Heil Asia,
Forward Manufacturing Company, Lee Laser, Inc., Advantage Lift Systems and
Parts, Inc. In January 2000, Dover Industries sold Davenport Machines, a
manufacturer of screw machines.
Dover Resources manufactures components and equipment
primarily for the automotive, fluid handling, petroleum and chemical industries.
Its largest businesses are De-Sta-Co (compressor valves and workholding
devices), OPW Fueling Components (gasoline nozzles and related service station
equipment), Wilden Pump (air operated double diaphragm pumps, acquired in 1998)
and Blackmer (rotary vein and progressive cavity pumps and gas compressors). In
addition to the Wilden purchase, in 1998 Dover Resources acquired Quartzdyne, a
manufacturer of high-pressure quartz transducers used in the petroleum industry.
Other Dover Resources companies produce liquid monitoring, filtration and
control systems, oil and gas production equipment, and other valve,
instrumentation and control systems and products, winch and speed reducers and
cleaning chemical dispensing equipment. During 1999, three Dover Resources
companies made three "add-on" acquisitions: Dp Manufacturing, Richards Industry,
Inc., and EMA Industia e Comercio, Ltda.
Dover Technologies sells assembly and testing equipment,
screen printers, and soldering machines for the printed circuit board industry,
as well as components for communications (including wireless) and military
applications. The most significant business in this segment is Universal
Instruments, which is the world's largest producer of thru-hole printed circuit
board assembly equipment, as well as a significant manufacturer of surface mount
printed circuit board assembly equipment. Other significant businesses are Imaje
(continuous inkjet marking systems), Quadrant (precision microwave, crystal and
capacitor devices), Everett Charles Technologies, Inc. (test equipment and
systems for printed circuit boards and semiconductors) and DEK Printing
Machines, Ltd. (screen printers). Other Dover Technologies companies
manufacture printed circuit board soldering machines, and other specialty
electronic components. In 1999, Dover Technologies companies made three "add-on"
acquisitions: ARCOM, Inc., TTI Testron Consolidated and Alphasem Holding, A.G.
Dover sells its products and services both directly and
through various distributors, sales and commission agents and manufacturers
representatives, in all cases consistent generally with the custom of the
industry and market being served. For more information on these segments and
their products, sales, markets served, earnings before tax and total assets for
the six years ended December 31, 1999, see pages 8-20 and 33-34 of the 1999
Annual Report, which are hereby incorporated by reference.
Discontinued Operation
Dover Elevator, which was the Company's fifth business segment
for all of 1998, was sold to Thyssen Industrie AG on January 5, 1999 for $1.1
billion plus the sharing of certain expenses arising out of the transaction.
Dover Elevator's business, principally the installation and
service of a product based on largely mature technology, was seen as
fundamentally different from Dover's other businesses which focused on
manufacturing a variety of products based on sophisticated and developing
technology. Dover Elevator's business was conducted by service employees at
thousands of construction sites and buildings
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around the country, while Dover's other businesses are conducted largely by
manufacturing employees centered in factories. As a result, Dover found that its
experience in managing its other businesses, while transferable among those
businesses, was not equally applicable to the elevator business, which
consequently required a disproportionate amount of management attention.
At the time of sale, Dover Elevator was the nation's largest
manufacturer and installer, and one of the largest servicers, of elevators for
low and mid-rise buildings. Dover Elevator also participated in the high-rise
market for new equipment and service and sold and serviced elevators in foreign
markets, principally in Canada and Asia. Somewhat less than half of Dover
Elevator's sales and almost all of its profits in 1998 were generated by the
service business. In 1997, Dover Elevator sold its German and U.K. operations
for a pre-tax gain of $32 million, based upon Dover Elevator's analysis that
they did not represent a sufficiently strong base for developing a meaningful
position in Europe.
Raw Materials
Dover's operating companies use a wide variety of raw
materials, primarily metals and semi-processed or finished components, which are
generally available from a number of sources. Temporary shortages may occur
occasionally, but have not resulted in business interruptions or major problems,
nor are any such problems anticipated. To date, fluctuations in the cost of raw
materials have not had a material impact on operating profits.
Research and Development
Dover's operating companies are encouraged to develop new
products as well as upgrade and improve existing products to satisfy customer
needs, expand sales opportunities, improve product reliability and reduce
production costs. During 1999, approximately $139.3 million was spent on
research and development, compared with $131.3 million and $106.7 million in
1998 and 1997, respectively.
Intellectual Property
Dover holds or is licensed to use a substantial number of U.S.
patents covering a number of its product lines and to a far lesser degree,
patents in certain foreign countries where it conducts business. Dover licenses
some of its patents to other companies for which it collects royalties which are
not significant. These patents have been obtained over a number of years and
expire at various times. Although patents in the aggregate are important to
Dover, the loss or expiration of any one patent or group of patents would not
materially affect Dover or any of its segments. Where patents have expired,
Dover believes that its commitment to leadership in continuous engineering
improvements, manufacturing techniques, and other sales, service and marketing
efforts are significant to maintaining its general market leadership position.
From time to time Dover has had disputes regarding its alleged use of other
patented technology. Dover expects to resolve any such matters without any
material impact on its businesses.
Many of the Company's products are sold under various
registered and unregistered trademarks and tradenames owned or licensed by the
Company. Among the most significant are: A-C Compressor, Belvac, Blackmer,
Crenlo, De-Sta-Co, DEK, Dover, Duncan, Everett Charles, Groen, Heil, Hill
Phoenix, Hydro Systems, Imaje, Marathon, Midland, Norris, OPW, PDQ, Quadrant,
Rotary Lift, Sargent, SWEP, Tipper Tie, Tranter, Tulsa Winch, Universal,
Waukesha, Wilden and Wiseco.
In connection with the sale of Dover Elevator, which closed on
January 5, 1999, the Company transferred all its intellectual property used by
Dover Elevator to the buyer, with the exception of the Dover name and logo and
certain patents in the United States, Australia, Canada and Great Britain which
were used by Dover Elevator and other Dover segments. The Company granted the
buyers a 3-1/2 year royalty-free license to use the Dover name and logo on Dover
Elevator products made in the ordinary course of business within the territories
in which Dover Elevator operated as of the sale. The buyer was granted an
exclusive, paid-up, irrevocable, worldwide license to use the 25 patents used by
Dover Elevator and other Dover segments within the conduct of Dover Elevator's
business after the sale, but only to the extent such business was conducted as
of the sale.
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Seasonality
Dover's operations are generally not seasonal, although
performance tends to be stronger in the second and fourth quarters of the year.
Customers
Dover's businesses serve thousands of customers, no one of
which accounted for more than 10% of the Company's consolidated revenues in
1999. Within each of the four segments, no customer accounted for more than 10%
of that segment's sales in 1999.
Backlog
Backlog generally is not a significant factor in Dover's
businesses, as most of Dover's products have relatively short delivery periods.
It is more relevant to those businesses in the segments which produce larger and
more sophisticated machines or have long-term government contracts, primarily
A-C Compressor, Belvac, Heil Environmental, Heil Trailer, Mark Andy, Sargent
Controls and Universal.
Total Company backlog as of December 31, 1999 and 1998 was
$915 million and $726 million, respectively, excluding that backlog relating to
the elevator business. The Company believes that this backlog may reasonably be
filled during the fiscal year 2000.
Competition
Dover's competitive environment is complex because of the wide
diversity of products manufactured and markets served. In general, Dover
companies are market leaders which compete with only a few companies and the key
competitive factors are customer service, product quality and innovation. In
addition, since most of Dover's manufacturing operations are in the United
States, Dover usually is a more significant competitor domestically than in
foreign markets.
In the Technologies segment, Dover competes globally against a
few very large companies, primarily based in Japan or Europe. Its primary
competitors are Japanese producers, including Fuji Machine, Panasonic and TDK.
Within the other segments, competition is primarily domestic,
although an increasing number of Dover subsidiaries see more international
competitors and several serve markets which are predominantly international,
particularly A-C Compressor, Alberta Oil Tool, Belvac, Civacon, CRL, De-Sta-Co,
Duncan, L & E, Norris, OPW Fueling Components, Ronningen-Petter, Tipper Tie
Technopak, Tranter, Van Dam, Wilden and Wittemann.
International
For foreign sales, export sales and an allocation of the
assets of the Company's continuing operations, see Note 15 to the Consolidated
Financial Statements on page 31 of the 1999 Annual Report, which is incorporated
herein by reference.
Although international operations are subject to certain
risks, such as price and exchange rate fluctuations and foreign governmental
restrictions, Dover intends to increase its expansion into foreign markets as
domestic markets mature.
The countries where most of Dover's foreign subsidiaries and
affiliates are based are Canada, France, Great Britain, Germany, The
Netherlands, and Sweden.
Environmental Matters
Dover believes its operations generally are in substantial
compliance with applicable regulations. In some instances, particular plants and
businesses have been the subject of administrative
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and legal proceedings with governmental agencies relating to the discharge or
potential discharge of substances. Where necessary, these matters have been
addressed with specific consent orders to achieve compliance. Dover believes
that continued compliance will not have any material impact on the Company's
financial position going forward and will not require significant capital
expenditures.
Employees
The Company had about 26,600 employees as of December 31,
1999.
Item 2. PROPERTIES
The number, type, location and size of the Company's
properties as of December 31, 1999 are shown on the following charts, by
segment.
Number and Nature of Facilities Square Footage (000's)
------------------------------------- ------------------------
Ware- Sales/
Segment Mfg. house Service Owned Leased
------- ---------- ----- ------- ----- ------
Diversified 36 14 60 2,938 760
Industries 45 12 38 3,589 1,073
Resources 57 13 33 2,502 382
Technologies 67 9 123 1,469 1,270
Locations Leased Facilities
------------------------------------- ------------------------
expiration dates (years)
North
Segment America Europe Other Minimum Maximum
------- ------- ------ ----- ------- -------
Diversified 56 34 5 1 23
Industries 74 10 2 1 18
Resources 78 15 5 1 15
Technologies 77 56 64 1 20
The facilities are generally well maintained and suitable for
the operations conducted, and in substantially all cases where owned, free and
clear of any encumbrances. The productive capacity of its plants is generally
adequate for current needs.
Item 3. LEGAL PROCEEDINGS
Dover is party to a number of legal proceedings arising out of
the normal course of its businesses. In general, most claims arose in connection
with activities of its Elevator segment operations and certain of its other
businesses which make products used by the public. In connection with the sale
of Dover Elevator, which closed on January 5, 1999, all liabilities of Dover
Elevator were transferred to the buyers who has given the Company an appropriate
indemnity.
Dover is continuously involved with an examination by the
Internal Revenue Service (the "IRS") of the Company's Federal income tax
returns. The Company and the IRS have settled tax years through 1989, and during
1998, the IRS completed its examination of the Company's 1994 and 1995 Federal
income tax returns. The Company expects to resolve these open years in the near
future, all within the amounts paid and/or reserved for these liabilities. The
IRS is currently examining the Company's 1996 and 1997 Federal income tax
returns. In addition, matters have arisen under various environmental laws, as
well as under local regulatory compliance agencies. For a further description of
such matters, see Note 11 to the Consolidated Financial Statements on page 29-31
of the 1999 Annual Report, which is incorporated herein by reference.
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The Company has also reviewed its exposure with respect to
"Year 2000" issues, which is discussed in detail on page 33 of the 1999 Annual
Report, which is incorporated herein by reference.
Based on insurance availability, established reserves and
periodic reviews of those matters, management is of the opinion that the
ultimate resolution of current pending claims and known contingencies should not
have a material adverse effect on the financial position, results of operations
or cash flows of the Company and its subsidiaries, taken as a whole.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to the vote of the Company's security
holders in the last quarter of 1999.
EXECUTIVE OFFICERS OF THE REGISTRANT
All officers are elected annually at the first meeting of the
Board of Directors following the annual meeting of stockholders and are subject
to removal at any time by the Board of Directors. The executive officers of
Dover as of February 29, 2000 and their positions with the Company (and, where
relevant, prior business experience) for the past five years are as follows:
Name Age Positions Held and Prior Business Experience
- ---- --- --------------------------------------------
Thomas L. Reece 57 Director, Chairman of the Board (since May 1999) President and (since
May 1994) Chief Executive Officer.
John F. McNiff 57 Director (since May 1996); Vice President-Finance and Treasurer.
Robert G. Kuhbach 52 Vice President, General Counsel and Secretary.
Robert A. Tyre 55 Vice President-Corporate Development (since February 1995); prior
thereto President, Rye Transaction Consultants, Inc. (acquisition
consultants), from February 1993 to January 1995.
George F. Meserole 54 Vice President, Controller (since August, 1998); prior thereto
Assistant Controller.
Charles R. Goulding 50 Vice President, Taxation (since August, 1998); prior thereto Director
of Taxation.
Lewis E. Burns 61 Vice President and President of Dover Industries, Inc.
Rudolf J. Herrmann 49 Vice President and President of Dover Resources, Inc.
John E. Pomeroy 58 Director (since May 1998); Vice President and President of Dover
Technologies International, Inc.
Jerry W. Yochum 61 Vice President and President of Dover Diversified, Inc.
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PART II
Item 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The principal market in which the Company's Common Stock is
traded is the New York Stock Exchange. Information on the high and low sales
prices of such stock, and the frequency and the amount of dividends paid during
the last two years is set forth on Page 32 of the 1999 Annual Report and
incorporated herein by reference. The Company's Common Stock is also listed on
the London Stock Exchange.
The number of holders of record of the Company's Common Stock
as of February 29, 2000, as shown by the records of the Company's transfer
agent was approximately 13,000. This figure includes participants in the
Company's 401(k) program.
On December 16, 1999, pursuant to the 1996 Non-Employee
Directors' Stock Compensation Plan, the Company issued 1,500 shares of its
Common Stock to each of its three U.S. resident outside directors, 1,050 shares
of its common stock to two U.S. resident outside directors elected in May and
700 to a U.S. resident outside director elected in August, as compensation for
serving as a director of the Company during 1999. At that time, the Company
issued 2,000 shares of its Common Stock to each of its three non-U.S. resident
outside directors who are not subject to U.S. withholding tax as compensation
for serving as a director of the Company during 1999. In addition, the Company
issued 350 shares of its Common Stock to Mrs. Magalen O. Bryant, a U.S. resident
outside director who retired from the Board in April, 1999.
Item 6. SELECTED FINANCIAL DATA
The information for the years 1989 through 1999 is set forth in
the table "11-Year Consolidated Summary of Selected Financial Data for
Continuing Operations" in the 1999 Annual Report on pages 36 and 37 and is
incorporated herein by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information set forth in the 1999 Annual Report on pages 33
and 34 is incorporated herein by reference.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
INTEREST RATES
The Company's exposure to market risk for changes in interest
rates relates primarily to commercial paper borrowings and investments in cash
equivalents. Commercial paper borrowings are at variable interest rates, and
have maturities of three months or less, except for $400 million of one-year
commercial paper sold in February 2000 which bears interest at LIBOR plus 2
basis points and resets quarterly. A 55 basis point increase in the interest
rates (10% of the Company's weighted average commercial paper interest rate) on
commercial paper borrowings would have an immaterial impact on the Company's
pre-tax earnings. All highly liquid investments, including highly liquid debt
instruments purchased with an original maturity of three months or less, are
considered cash equivalents. The Company places its investments in cash
equivalents with high credit quality issuers and limits the amount of exposure
to any one issuer. A 54 basis point decrease in interest rates (10% of the
Company's weighted average interest rate on its investments) would have an
immaterial impact on Company's pre-tax earnings. The Company does not enter into
derivative financial or derivative commodity instruments for trading or
speculative purposes.
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FOREIGN EXCHANGE
The Company conducts business in various foreign currencies,
primarily in Canada, Europe, Japan and other Asian countries. Therefore, changes
in the value of the currencies of these countries affect the Company's financial
position and cash flows when translated into U.S. Dollars. As of December 31,
1999 the Company had not established a foreign currency-hedging program. The
Company has mitigated and will continue to mitigate a portion of its currency
exposure through decentralized operating companies in which all costs are
local-currency based. A 10% change in the value of all foreign currencies would
have an immaterial effect on the Company's financial position and cash flows.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information set forth in the 1999 Annual Report on pages 20
through 32 is incorporated herein by reference.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not Applicable
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Mr. Gary Roubos, director of various other corporations,
Chairman of the Company (since August 1989), retired as Chairman in April 1999
but remains a director. Ms. Magalen O. Bryant, director of Carlisle Companies
Incorporated and O'Sullivan Corp. a director of the Company since 1979, retired
in April 1999. Mr. John F. Fort, a director of the Company from 1989 until his
resignation on January 29, 1999, was Consultant, Full Circle Investments;
Director of Tyco International Ltd. and formerly Chairman and Chief Executive
Officer; and Director, Roper Industries. The information with respect to the
continuing directors of the Company required to be included pursuant to this
Item 10 is included under the caption "1. Election of Directors" in the 2000
Proxy Statement as defined on page 2 and is incorporated in this Item 10 by
reference. The information with respect to the executive officers of the Company
required to be included pursuant to this Item 10 is included under the caption
"Executive Officers of the Registrant" in Part I of this Annual Report on Form
10-K and is incorporated in this Item 10 by reference. The information with
respect to Section 16(a) reporting compliance required to be included in this
Item 10 is included under the caption "Section 16(a) Beneficial Ownership
Reporting Compliance" in the 2000 Proxy Statement and is incorporated in this
Item 10 by reference.
Item 11. EXECUTIVE COMPENSATION
The information with respect to executive compensation required
to be included pursuant to this Item 11 is included under the caption "Executive
Compensation" in the 2000 Proxy Statement and is incorporated in this Item 11 by
reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The information regarding security ownership of certain
beneficial owners and management that is required to be included pursuant to
this Item 12 is included under the captions "General" and "Security Ownership of
Certain Beneficial Owners and Management" in the 2000 Proxy Statement and is
incorporated in this Item 12 by reference.
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Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information with respect to any reportable transaction,
business relationship or indebtedness between the Company and the beneficial
owners of more than 5% of the Common Stock, the directors or nominees for
director of the Company, the executive officers of the Company or the members of
the immediate families of such individuals that is required to be included
pursuant to this Item 13 is included under the caption "1. Election of
Directors-Directors' Compensation" in the 2000 Proxy Statement and is
incorporated in this Item 13 by reference.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) (1) Financial Statements
The following consolidated financial statements of Dover
Corporation and its subsidiaries are set forth in the 1999
Annual Report, which financial statements are incorporated
herein by reference:
(A) Report of Independent Accountants.
(B) Consolidated balance sheets as of December 31, 1999 and
1998.
(C) Consolidated statements of earnings, accumulated
comprehensive earnings and retained earnings for the
years ended December 31, 1999, 1998 and 1997.
(D) Consolidated statements of cash flows for the years ended
December 31, 1999, 1998 and 1997.
(E) Notes to consolidated financial statements.
(2) Financial Statement Schedule
The following financial statement schedule is attached to Part
IV of this report on form 10-K:
Schedule II--Valuation and Qualifying Accounts
Report of Independent Accountants.
All other schedules are not required and have been omitted.
(3) See (c) below.
(b) Current Reports on Form 8-K:
The Company did not file any reports on Form 8-K during the last
quarter of its fiscal year ended December 31, 1999.
(c) Exhibits:
(2) Purchase Agreement dated as of November 23, 1998 by and
among Thyssen Industrie AG, Thyssen Elevator Holding
Corporation, as buyers, and Dover Corporation, as
seller, filed as Exhibit 2.1 to the Company's Current
Report on Form 8-K filed December 8, 1998, is
incorporated by reference. Schedules relating to
Purchase Price Allocation, U.S. Federal Income Taxes,
Elevator Financial
11
12
Statements and Executive Employment Arrangements have
been omitted, but will be furnished supplementally to
the Securities and Exchange Commission upon request.
(3)(i) Restated Certificate of Incorporation, filed as Exhibit
3.1 to the Company's Quarterly Report on Form 10-Q for
the Period Ended June 30, 1998, is incorporated by
reference.
(3)(ii) By-Laws of the Company filed as Exhibit 3.1 to
Quarterly Report on Form 10-Q for Period Ended June 30,
1998, are incorporated by reference.
(4.1) Amended and Restated Rights Agreement, dated as of
November 15, 1996, between Dover Corporation and Harris
Trust Company of New York, filed as Exhibit 1 to Form
8-A/A dated November 15, 1996, is incorporated by
reference.
(4.2) Indenture, dated as of June 8, 1998 between Dover
Corporation and The First National Bank Chicago, as
Trustee, filed as Exhibit 4.1 to the Company's Current
Report on Form 8-K filed June 12, 1998, is incorporated
by reference.
(4.3) Form of 6.25% Note due June 1, 2008 ($150,000,000
aggregate principal amount), filed as Exhibit 4.3 to
the Company's Current Report on Form 8-K filed June 12,
1998, is incorporated by reference.
(4.4) Form of 6.65% Note due June 1, 2028 ($200,000,000
aggregate principal amount), filed as Exhibit 4.4 to
the Company's Current Report on Form 8-K filed June 12,
1998, is incorporated by reference.
(4.5) Form of Indenture, dated as of November 14, 1995
between the Company and The First National Bank of
Chicago, as Trustee, relating to the 6.45% Notes due
November 15, 2005 (including the form of the note),
filed as Exhibit 4 to the Company's Registration
Statement on Form S-3 (Reg. No. 33-63713) filed under
the Securities Act of 1933, is incorporated by
reference.
(4.6) The Company agrees to furnish to the Securities and
Exchange Commission. Upon request, a copy of any
instrument with respect to long-term debt under which
the total amount of securities authorized does not
exceed 10 percent of the total consolidated assets of
the Company.
(10.1) 1984 Incentive Stock Option and Cash Performance
Program, filed as Exhibit 10(a) to Annual Report on
Form 10-K for year ended December 31, 1984, is
incorporated by reference.*
(10.2) Employee Savings and Investment Plan, filed as Exhibit
99 to Registration Statement on Form S-8 filed under
Securities Act of 1933 (Reg. No.33-01419), is
incorporated by reference.*
(10.3) 1995 Incentive Stock Option and 1995 Cash Performance
Program, as amended.*
(10.4) 1996 Non-Employee Directors' Stock Compensation Plan,
included as Exhibit A to the Proxy Statement, dated
March 16, 1998 is incorporated by reference.*
(10.5) Executive Officer Annual Incentive Plan, included as
Exhibit A to the Proxy Statement, dated March 16, 1998,
is incorporated by reference.*
(10.6) Form of Executive Severance Agreement, filed as Exhibit
10.6 to Annual Report on Form 10-K for year ended
December 31, 1998, is incorporated by reference.*
12
13
(13) Incorporated portions of Dover's Annual Report to
Stockholders for its fiscal year ended December 31,
1999 as filed with the Commission by EDGAR on March 16,
2000; are incorporated by reference.
(21) Subsidiaries of Dover.
(23.1) Consent of PricewaterhouseCoopers LLP.
(24) Form of Power of Attorney.
(27) Financial Data Schedule (in EDGAR filing only).
* Executive compensation plan or arrangement.
13
14
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) 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
By:/s/Thomas L. Reece
----------------------------
Thomas L. Reece
Chairman, President
and Chief Executive Officer
Date: March 16, 2000
Pursuant to the requirements of the Securities Exchange Act of
1934, this Report has been signed below by the following persons on behalf of
the Registrant in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/Thomas L. Reece
- --------------------------------
Thomas L. Reece Chairman President and Chief
Executive Officer and Director
(Principal Executive Officer) March 16, 2000
/s/John F. McNiff
- --------------------------------
John F. McNiff Treasurer and Director
(Principal Financial Officer) March 16, 2000
/s/George F. Meserole
- --------------------------------
George F. Meserole Controller March 16, 2000
(Principal Accounting Officer)
/s/Gary L. Roubos
- --------------------------------
Gary L. Roubos Director* March 16, 2000
/s/David H. Benson
- --------------------------------
David H. Benson Director* March 16, 2000
/s/Jean-Pierre M. Ergas
- --------------------------------
Jean-Pierre M. Ergas Director* March 16, 2000
/s/Roderick J. Fleming
- --------------------------------
Roderick J. Fleming Director* March 16, 2000
/s/Kristiane C. Graham March 16, 2000
- --------------------------------
Kristiane C. Graham Director
/s/James L. Koley
- --------------------------------
James L. Koley Director* March 16, 2000
/s/Richard K. Lochridge
- --------------------------------
Richard K. Lochridge Director* March 16, 2000
/s/John E. Pomeroy
- --------------------------------
John E. Pomeroy Director* March 16, 2000
14
15
/s/Michael B. Stubbs
- --------------------------------
Michael B. Stubbs Director* March 16, 2000
* By: /s/Robert G, Kuhbach
--------------------------
Robert G. Kuhbach
Attorney-in-Fact
15
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EXHIBIT INDEX
(2) Purchase Agreement dated as of November 23, 1998 by and among Thyssen
Industrie AG, Thyssen Elevator Holding Corporation, as buyers, and
Dover Corporation, as seller, filed as Exhibit 2.1 to the Company's
Current Report on Form 8-K filed December 8, 1998, is incorporated by
reference. Schedules relating to Purchase Price Allocation, U.S.
Federal Income Taxes, Elevator Financial Statements and Executive
Employment Arrangements have been omitted, but will be furnished
supplementally to the Securities and Exchange Commission upon
request.
(3)(i) Restated Certificate of Incorporation, filed as Exhibit 3.1 to the
Company's Quarterly Report on Form 10-Q for the Period Ended June 30,
1998, is incorporated by reference.
(3)(ii) By-Laws of the Company filed as Exhibit 3.1 to Quarterly Report on
Form 10-Q for Period Ended June 30, 1998, are incorporated by
reference.
(4.1) Amended and Restated Rights Agreement, dated as of November 15, 1996,
between Dover Corporation and Harris Trust Company of New York, filed
as Exhibit 1 to Form 8-A/A dated November 15, 1996, is incorporated
by reference.
(4.2) Indenture, dated as of June 8, 1998 between Dover Corporation and The
First National Bank Chicago, as Trustee, filed as Exhibit 4.1 to the
Company's Current Report on Form 8-K filed June 12, 1998, is
incorporated by reference.
(4.3) Form of 6.25% Note due June 1, 2008 ($150,000,000 aggregate principal
amount), filed as Exhibit 4.3 to the Company's Current Report on Form
8-K filed June 12, 1998, is incorporated by reference.
(4.4) Form of 6.65% Note due June 1, 2028 ($200,000,000 aggregate principal
amount), filed as Exhibit 4.4 to the Company's Current Report on Form
8-K filed June 12, 1998, is incorporated by reference.
(4.5) Form of Indenture, dated as of November 14, 1995 between the Company
and The First National Bank of Chicago, as Trustee, relating to the
6.45% Notes due November 15, 2005 (including the form of the note),
filed as Exhibit 4 to the Company's Registration Statement on Form
S-3 (Reg. No. 33-63713) filed under the Securities Act of 1933, is
incorporated by reference.
(4.6) The Company agrees to furnish to the Securities and Exchange
Commission. Upon request, a copy of any instrument with respect to
long-term debt under which the total amount of securities authorized
does not exceed 10 percent of the total consolidated assets of the
Company.
(10.1) 1984 Incentive Stock Option and Cash Performance Program, filed as
Exhibit 10(a) to Annual Report on Form 10-K for year ended December
31, 1984, is incorporated by reference.*
(10.2) Employee Savings and Investment Plan, filed as Exhibit 99 to
Registration Statement on Form S-8 filed under Securities Act of 1933
(Reg. No.33-01419), is incorporated by reference.*
(10.3) 1995 Incentive Stock Option and 1995 Cash Performance Program, as
amended.*
(10.4) 1996 Non-Employee Directors' Stock Compensation Plan, included as
Exhibit A to the Proxy Statement, dated March 16, 1998 is
incorporated by reference.*
(10.5) Executive Officer Annual Incentive Plan, included as Exhibit A to the
Proxy Statement, dated March 16, 1998, is incorporated by reference.*
16
17
(10.6) Form of Executive Severance Agreement, filed as Exhibit 10.6 to
Annual Report on Form 10-K for year ended December 31, 1998, is
incorporated by reference.*
(13) Incorporated portions of Dover's Annual Report to Stockholders for
its fiscal year ended December 31, 1998 as filed with the Commission
by EDGAR on March 23, 1999; are incorporated by reference.
(21) Subsidiaries of Dover.
(23.1) Consent of PricewaterhouseCoopers LLP.
(24) Form of Power of Attorney.
(27) Financial Data Schedule (in EDGAR filing only).
* Executive compensation plan or arrangement.
17
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SCHEDULE II
DOVER CORPORATION AND SUBSIDIARIES
Valuation and Qualifying Accounts
Years Ended December 31, 1999, 1998, 1997
Additions
Balance at Charged to Balance at
Beginning of Cost and Deductions Close of
Year Expense (1) Year
---- ------- --- ----
(000's omitted)
Year Ended December 31, 1999
Allowance for Doubtful Accounts $20,955 $6,803 $4,383 $23,375
Year Ended December 31, 1998
Allowance for Doubtful Accounts $19,468 $6,542 $5,055 $20,955
Year Ended December 31, 1997
Allowance for Doubtful Accounts $16,569 $7,248 $4,349 $19,468
Notes:
(1) Represents uncollectible accounts written off and reduction of prior
years' over-provision less recoveries of accounts previously written
off, net $2,377, $540 and $1,499 related to acquisitions and
divestitures in 1999, 1998 and 1997, respectively.
Charged,
Balance at (Credited) to Balance at
Beginning of Cost and Acq. by Close of
Year Expense Merger Year
---- ------- ------ ----
(000's omitted)
Year Ended December 31, 1999
Lifo Reserve $40,440 $(859) $ - $39,581
Year Ended December 31, 1998
Lifo Reserve $40,629 $(189) $ - $40,440
Year Ended December 31, 1997
Lifo Reserve $39,787 $ 842 $ - $40,629
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REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE
To the Board of Directors and Stockholders of Dover Corporation:
Our audits of the consolidated financial statements referred to in our report
dated February 4, 2000 appearing in the 1999 Annual Report to Stockholders of
Dover Corporation, which report and consolidated financial statements are
incorporated by reference in this Annual Report on Form 10-K, also included an
audit of the financial statement schedule listed in item 14(a)(2) of this Form
10-K. In our opinion, this financial statement schedule presents fairly, in all
materials respects, the information set forth therein when read in conjunction
with the related consolidated financial statements.
PricewaterhouseCoopers LLP
New York, New York
February 4, 2000
19