Back to GetFilings.com
1
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, 2000
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
2
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 28, 2001 was $7,480,491,728.
Registrant's closing price as reported on the New York Stock Exchange-Composite
Transactions for February 28, 2001 was $38.36 per share.
The number of outstanding shares of the Registrant's common stock as of February
28, 2001 was 203,297,745.
DOCUMENTS INCORPORATED BY REFERENCE
Parts I and II - Certain portions of the Annual Report to Stockholders for
Fiscal Year Ended December 31, 2000 (the "2000 Annual
Report").
Part III - Certain portions of the Proxy Statement for Annual Meeting of
Stockholders to be held on April 24, 2001 (the "2001 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 "Chairman's Letter", "Outlook" or "Management's Discussion and
Analysis", contain forward-looking statements within the meaning of the
Securities Act of 1933, as amended, and 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.
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.
2
3
PART I
Item 1. BUSINESS
General
Dover Corporation ("Dover" or the "Company"), originally incorporated
in 1947 in the State of Delaware, is a diversified industrial manufacturing
corporation encompassing over 50 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, specialized bearings and compressors,
construction and agricultural cabs, 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 and packaging, welding, cash dispenser and construction
industries. Dover Resources manufactures products primarily for the automotive,
fluid handling, petroleum, winch and chemical equipment 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 a discontinued segment 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, which traditionally focused on
acquiring new or stand-alone businesses. However, since 1992, increased emphasis
has been placed on acquiring businesses that can be added on to existing
operations. From January 1, 1996 through December 31, 2000, the Company made 82
acquisitions at a total acquisition cost of $2,200,015,000. In 2000, the Company
completed 2 stand-alone and 21 add-on acquisitions at a total cost of about $506
million. For more detail regarding acquisitions over the past several years, see
pages 8, 12, 13, 14, 17 and 21 of the 2000 Annual Report as well as Note 2 to
the Consolidated Financial Statements on pages 29-31 of the 2000 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 1996.
The Company aims to acquire and develop "platform" businesses which are 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's role is to provide management oversight, allocate and manage
capital, assist in major acquisitions, evaluate, motivate and, as 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 Hill Phoenix
(refrigeration cases and systems for supermarkets), Tranter (process industry
heat exchangers), Crenlo (operator cabs for agricultural and construction
machinery and electronic enclosures), A-C Compressor (specialized centrifugal,
oil free screw and rotary compressors) and Mark Andy (specialty printing
presses). Other Dover Diversified businesses produce such products as fluid film
and self-lubricating bearings, color control systems for web sheet-fed,
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 2000,
Dover Diversified companies completed five "add-on" acquisitions: Yakima Wire
and Salwasser (SWF), C & H Mfg (Sargent), Vertex Piston (Performance
Motorsports) and National Cooler (Hill-Phoenix).
3
4
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 Trailer (trailerized tanks) and Heil Environmental
(refuse collecting vehicles), Rotary Lift (automotive lifts), and DovaTech
(welding, cutting and laser equipment and supplies). Other Dover Industries
operations produce auto collision measuring and repair systems, clip closures
for food packaging, solid waste compaction, transporting and recycling
equipment, touchless car washing equipment, hydraulic cylinders, food service
equipment, commercial refrigeration equipment and concrete spreading machines.
In 2000 Dover Industries made one stand-alone acquisition, Triton Systems, Inc.,
a producer of "off-premises" automated cash dispenser machines and related
systems, and acquired four "add-on" businesses: Hoegger Alpina (Tipper Tie),
Hydromotion (Texas Hydraulics), Kesseltronics (PDQ) and Kalyn/Siebert (Heil
Trailer). 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. The largest
operations are the Petroleum Equipment Group (Norris/AOT - oil and gas
production equipment), OPW Fueling Components (gasoline nozzles and related
service station equipment), and De-Sta-Co Industries (factory automation and
workholding devices). Other Dover Resources companies produce fluid transfer
valves, measuring devices and connectors, air operated double diaphragm, rotary
vein and progressive cavity pumps, gas compressors, high-pressure quartz
transducers, liquid monitoring, valve, filtration and control systems and
products, winch and speed reducers and cleaning chemical dispensing equipment.
During 2000, seven Dover Resources companies made eight "add-on" acquisitions:
SureSeal (Civacon), Greer Company and Pullmaster (Tulsa Winch), Provacon
(Midland), Groupe Aoustin (R-P), Chesterton (Blackmer), Hydro-Cam (De-Sta-Co
Mfg.) and RG Industries (PEG-AOT).
Dover Technologies International sells assembly and testing equipment,
screen printers, and soldering machines for the printed circuit board industry,
components for the consumer and commercial datacom and telecom communications
industry (including wireless) and industrial marking systems. The largest
business in this segment - and in the Company - is Universal Instruments, which
is one of the major worldwide manufacturers of surface mount printed circuit
board assembly equipment. Other significant businesses are Quadrant (precision
microwave, crystal and capacitor devices), Everett Charles Technologies, Inc.
(test equipment and systems for printed circuit boards and semiconductors), DEK
Printing Machines, Ltd. (screen printers) and Imaje (continuous inkjet marking
systems). Other Dover Technologies companies manufacture printed circuit board
soldering machines, and other specialty electronic components. In 2000, Dover
Technologies completed one "stand alone" acquisition, OK International
(specialized electronic assembly equipment), and four "add-on" acquisitions:
Prime Yield Systems and Vitech (ECT), Syfer Technology (Novacap) and Cinox
(Quadrant).
In general, Dover sells its products and services directly and through
various distributors, sales and commission agents and manufacturers
representatives, in all cases generally consistent with the custom of the
industry and market being served. However, the larger Dover companies, and those
companies selling more highly engineering products and services, or those
companies supplying products and services to markets characterized by a few
major customers, typically sell direct because of the specialized nature of the
equipment and products being sold. For more information on these segments and
their products, sales, markets served, earnings before tax and total assets for
the five years ended December 31, 2000, see inside front cover and pages 6-21,
24 and 38-39 of the 2000 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 focus on manufacturing a variety
of products based on sophisticated and developing technology. Dover Elevator's
4
5
business was conducted by service employees at thousands of construction sites
and buildings 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.
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. During 2000 temporary shortages and/or
increased delivery times occurred more frequently, but did not result in any
material business interruptions or major problems. To date, the cost of raw
materials while trending upward, 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 2000, approximately $175.3 million was spent on research and development,
compared with $139.3 million and $131.3 million in 1999 and 1998, respectively.
For the Dover Technologies companies, efforts in these areas tend to be
particularly significant because the rate of product development by their
customers is often quite high. In general, Dover Technologies companies which
provide electronic assembly equipment and services can anticipate that the
performance "metrics" of such equipment are expected to improve significantly
over time, with a concurrent expectation of lower operating costs and increasing
efficiency. Likewise, Dover Technologies companies developing specialty
electronic components for the datacom and telecom commercial markets anticipate
a continuing rate of product performance improvement and reduced cost, such that
product life cycles generally average less than five years with meaningful sales
price reductions over that time period.
Dover Industries, Dover Resources and Dover Diversified contain many
businesses that are also involved in important product improvement initiatives.
These businesses also concentrate on working closely with customers on specific
applications, expanding product lines and market applications, and continuously
improving manufacturing processes.
Intellectual Property
Dover owns over 1,100 patents and is also licensed to use a number of
patents covering a few of its product lines, primarily in the U.S. but also in
certain important non-U.S. markets 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 and, 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.
Dover also owns more than 1,000 registered trademarks and tradenames.
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,
5
6
De-Sta-Co, DEK, Dover, Duncan, Everett Charles, Groen, Heil, Hill Phoenix, Hydro
Systems, Imaje, Marathon, Midland, Norris, OK International, OPW, PDQ, Quadrant,
Rotary Lift, Sargent, Somero, SWEP, Tipper Tie, Tranter, Triton, Tulsa Winch,
Universal, Waukesha, Wiseco and Wilden.
Dover also owns over 100 copyrights, the majority of which relate to
machine software.
In connection with the sale of Dover Elevator, which closed on January
5, 1999, the Company transferred all the intellectual property used by Dover
Elevator to the buyers, 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 buyers were
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.
Seasonality
In general, Dover's operations are not seasonal. However, those
companies serving the transportation, construction, waste hauling, petroleum,
commercial refrigeration and food service markets tend to be strong during the
second and third quarters. Companies serving the major equipment markets, such
as power generation, chemical and processing industries, tend to have long lead
times geared to seasonal commercial or consumer demands, which tend to delay or
accelerate product ordering and delivery to coincide with those market trends.
Customers
Dover's businesses serve thousands of customers, no one of which
accounted for more than 10% of the Company's consolidated revenues in 2000.
Within each of the four segments, no customer accounted for more than 10% of
that segment's sales in 2000. However, Dover Technologies companies have
experienced increasing concentration of customer demand with the respective top
five customers in 2000 accounting for 39% of Universal Instrument's revenue, 25%
of CBAT revenue and 20% of the segment revenue.
In the Dover Technologies segment, the rapid growth in datacom/telecom
infastructure market development, involving both equipment providers and
software developers, such as Lucent, Motorola, Nortel, Cisco, Siemens, Phillips,
and Qualcomm, has tended to concentrate the new product development and demand
into a relatively few customers. At the same time, a number of these customers
have "outsourced" a significant amount of their manufacturing capability to
contract manufacturers ("CEM's") such as Jabil, Solectron, Celestica, and
Flextronics, which firms are now the direct customers of Dover Technologies
companies for a number of different OEM customers. This has tended to increase
the concentration of manufacturing with CEM's and hence machine and specialty
component demand is concentrated with a smaller number of "customers".
In the other Dover segments, customer concentrations are quite varied.
Companies supplying the automotive and commercial refrigeration industries tend
to deal with a few large customers which are significant within those
industries. This also tends to be true for companies supplying the power
generation, aerospace and chemical industries as well. In the other markets
served, there is usually much less concentration of customers, particularly
where the companies provide a substantial number of products and services,
applicable to a broad range of end use applications.
Backlog
Backlog generally is not a significant factor in most of 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. In
6
7
2000, backlog did become somewhat significant, particularly for the specialty
electronic component manufacturers, driven largely by significant increases in
demand, which could not be satisfied by then existing productive capacity.
During 2000, several of the Dover Technologies companies committed to
significant plant expansion in response to this large demand, including
Universal Instruments, some of the Quadrant companies, as well as Novacap, K & L
and DT Magnetics.
In the other segments, there were isolated cases of increasing backlog,
and as appropriate, plant expansion was undertaken in 2000 to address those
situations.
Total Company backlog as of December 31, 2000 and 1999 was $1,059
million and $928 million, respectively. Based on the steps taken during 2000,
the Company believes that this backlog may reasonably be filled during the
fiscal year 2001.
Competition
Dover's competitive environment is complex because of the wide
diversity of products manufactured and markets served. In general, most 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 and European
manufacturers like Philips and Siemens.
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, Central Research Labs, De-Sta-Co,
Duncan, L & E, Norris, OPW Fueling Components, Ronningen-Petter, Tipper
Tie-Technopak, Tranter, Triton, SWEP, Van Dam, Wilden and Wittemann.
During 2000, due to the generally unfavorable currency situation,
Dover's competitive situation became somewhat more difficult for two related
reasons. First, export sales and opportunities were hampered by the high value
of the dollar versus foreign currencies. Second, in select domestic markets,
sales were adversely impacted by competitive foreign products. So long as the
U.S. dollar continues generally strong compared to other foreign currencies,
this trend is likely to continue.
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 36 of the 2000 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.
The countries where most of Dover's foreign subsidiaries and affiliates
are based are, France, Germany, Great Britain, The Netherlands, Sweden and
Switzerland.
Environmental Matters
Dover believes its operations generally are in substantial compliance
with applicable regulations. In a few instances, particular plants and
businesses have been the subject of administrative and legal proceedings with
governmental agencies relating to the discharge or potential discharge of
regulated 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.
7
8
Employees
The Company had about 29,500 employees as of December 31, 2000.
Item 2. PROPERTIES
The number, type, location and size of the Company's properties as of December
31, 2000 are shown on the following charts, by segment.
Number and Nature of Facilities Square Footage (000's) Locations Leased Facilities
------------------------------- ---------------------- -------------------------- expiration dates (years)
Ware- Sales/ North ------------------------
Segment Mfg. house Service Owned Leased American Europe Other Minimum Maximum
- ------- ----- ----- ------- ----- ------ -------- ------ ----- ------- -------
Diversified 49 17 63 3,207 1,188 70 38 6 1 21
Industries 54 12 45 3,676 1,149 87 12 4 1 18
Resources 71 15 40 2,763 563 86 15 6 1 14
Technologies 108 17 140 1,679 1,568 83 68 69 1 18
The facilities are generally well maintained and suitable for the
operations conducted. While some capacity limitations arose during 2000 in the
Technologies segment, with current expansion programs the productive capacity of
the Company's 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 buyer 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 2000, the
IRS completed its examination of the Company's 1996 and 1997 Federal income tax
returns. The Company expects to resolve open years (1990-1995) in the near
future, all within the amounts paid and/or reserved for these liabilities. The
IRS is currently examining the Company's 1998 and 1999 Federal income tax
returns. Additionally, the Company routinely is involved in state and local
income tax audits, and on occasion, foreign jurisdiction tax audits.
Based on insurance availability, established reserves and periodic
reviews of these 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.
8
9
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 2000.
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 28, 2001, 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 58 Director, Chairman of the Board (since May 1999),
President and Chief Executive Officer.
Lewis E. Burns 62 Vice President and President of Dover Industries, Inc.
Charles R. Goulding 50 Vice President, Taxation (since August 1998); prior
thereto Director of Taxation.
Rudolf J. Herrmann 50 Vice President and President of Dover Resources, Inc.
Robert G. Kuhbach 53 Vice President, General Counsel and Secretary.
George F. Meserole 55 Vice President, Controller (since August 1998); prior
thereto Assistant Controller.
John E. Pomeroy 59 Vice President and President of Dover Technologies
International, Inc.
David S. Smith 43 Vice President, Finance and Chief Financial Officer
(since April 2000), prior thereto for more than five
years Vice President and Chief Financial Officer of
Crane Company, Inc. (industrial products).
Robert A. Tyre 56 Vice President-Corporate Development.
Jerry W. Yochum 62 Vice President and President of Dover Diversified, Inc.
9
10
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 42 of the 2000 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 28, 2001, as shown by the records of the Company's transfer agent was
approximately 15,138. This figure includes participants in the Company's 401(K)
program.
On December 15, 2000, pursuant to the 1996 Non-Employee Directors'
Stock Compensation Plan, the Company issued 1,400 shares of its Common Stock to
each of its six U.S. resident outside directors (after withholding 600
additional shares to satisfy tax obligations), and the Company issued 2,000
shares of its Common Stock to each of its two 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 2000.
Item 6. SELECTED FINANCIAL DATA
The information for the years 1990 through 2000 is set forth in the
table "11-Year Consolidated Summary of Selected Financial Data" in the 2000
Annual Report on pages 40 and 41 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 2000 Annual Report on pages 37-39 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 the fair value of long-term fixed interest rate debt,
commercial paper borrowings and investments in cash equivalents. Generally, the
fair market value of fixed-interest rate debt will increase as interest rates
fall and decrease as interest rates rise. A 65 basis point increase in interest
rates (10% of the Company's long-term debt interest rate) would have an
immaterial effect on the fair value of the Company's long-term debt. Commercial
paper borrowings under revolving credit facilities are at variable interest
rates, and have maturities of three months or less. 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) would have an immaterial impact on
the Company's pre-tax earnings. The Company does not enter into derivative
financial or derivative commodity instruments for trading or speculative
purposes.
10
11
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,
2000 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 operation of decentralized foreign 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 2000 Annual Report on pages 24 through
36 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
The information with respect to the directors of the Company required
to be included pursuant to this Item 10 is included under the caption "1.
Election of Directors" in the 2001 Proxy Statement relating to the 2001 Annual
Meeting of Stockholders filed with the Securities and Exchange Commission (the
"Commission") pursuant to Rule 14a-6 under the Securities Exchange Act of 1934,
as amended, 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
2001 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 2001 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 caption "Security Ownership" of certain beneficial owners
and management in the 2001 Proxy Statement and is incorporated in this Item 12
by reference.
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
11
12
under the caption "1. Election of Directors-Directors' Compensation" in the 2001
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 2000
Annual Report, which financial statements are incorporated
herein by reference:
(A) Report of Independent Accountants.
(B) Consolidated balance sheets as of December 31, 2000 and
1999.
(C) Consolidated statements of earnings, accumulated
comprehensive earnings and retained earnings for the
years ended December 31, 2000, 1999 and 1998.
(D) Consolidated statements of cash flows for the years
ended December 31, 2000, 1999 and 1998.
(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 filed with the Securities and Exchange Commission a
report on Form 8-K, dated November 13, 2000, furnishing
information under Item 9, regarding a Regulation FD Disclosure.
The Company filed with the Securities and Exchange Commission a
report on Form 8-K, dated December 1, 2000, furnishing
information under Item 9, regarding a Regulation FD Disclosure.
The Company filed with the Securities and Exchange Commission a
report on Form 8-K, dated January 18, 2000, furnishing
information under Item 9, regarding a Regulation FD Disclosure.
The Company filed with the Securities and Exchange Commission a
report on Form 8-K, dated January 22, 2000, under Item 5.
The Company filed with the Securities and Exchange Commission a
report on Form 8-K, dated February 7, 2000, under Items 5 and 7
regarding its registration statement on Form S-3.
The Company filed with the Securities and Exchange Commission a
report on Form 8-K, dated February 12, 2000, under Items 5 and 7
regarding the completion of its underwritten offering under its
registration statement on Form S-3.
(c) Exhibits:
(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
September 30, 2000, 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.
12
13
(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) Form of 6.50% Notes due February 15, 2011 ($400,000,000
aggregate principal amount), filed as exhibit 4.3 to
the Company's current report on Form 8-K filed February
12, 2001, is incorporated by reference
(4.7) Form of Indenture, dated as of February 8, 2001 between
the Company and BankOne Trust Company, N.A., as
trustee, relating to the 6.50% Notes due February 15,
2011 (including the form of the note), filed as Exhibit
4.1 to the Company's current report on Form 8-K filed
February 12, 2001, relating to the Company's
registration statement on Form S-3 (Reg. No. 333-47396)
filed under the Securities Act of 1933, is incorporated
by reference.
(4.8) Form of officers' certificate, dated February 12, 2001,
pursuant to Section 301 of the Indenture, filed as
Exhibit 4.2 to the Company's current report on Form 8-K
filed February 12, 2001, is incorporated by reference.
(4.9) 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, filed as Exhibit 10.3 to Annual
Report on Form 10-K for the year-ended December 31,
1999, is incorporated by reference.*
(10.4) 1996 Non-Employee Directors' Stock Compensation Plan,
included as Exhibit A to the Proxy Statement, dated
March 15, 1996 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.*
(10.7) 1995 Incentive Stock Option and Cash Performance
Program, as amended.*
(13) Incorporated portions of Dover's Annual Report to
Stockholders for its fiscal year Ended December 31,
2000 as filed with the Commission by EDGAR on March 14,
2001; are incorporated by reference.
(21) Subsidiaries of Dover.
(23.1) Consent of Independent Accountants.
(24) Form of Power of Attorney.
* Executive compensation plan or arrangement.
(d) Not applicable.
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 14, 2001
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 14, 2001
/s/David S. Smith
- ---------------------------
David S. Smith Vice President, Finance and Chief Financial
Officer (Principal Financial Officer) March 14, 2001
/s/George F. Meserole
- ---------------------------
George F. Meserole Vice President and Controller March 14, 2001
(Principal Accounting Officer)
- ---------------------------
David H. Benson Director* March 14, 2001
- ---------------------------
Jean-Pierre M. Ergas Director* March 14, 2001
- ---------------------------
Roderick J. Fleming Director* March 14, 2001
- ---------------------------
Kristiane C. Graham Director*
- ---------------------------
James L. Koley Director* March 14, 2001
- ---------------------------
Richard K. Lochridge Director* March 14, 2001
- ---------------------------
Gary L. Roubos Director* March 14, 2001
- ---------------------------
Michael B. Stubbs Director* March 14, 2001
* By: /s/Robert G, Kuhbach
---------------------------
Robert G. Kuhbach
Attorney-in-Fact
14
15
EXHIBIT INDEX
(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.
(4.7) Form of Indenture, dated as of February 8, 2001 between the Company
and BankOne Trust Company, N.A., as trustee, relating to the 6.50%
Notes due February 15, 2011 (including the form of the note), filed
as Exhibit 4.1 to the Company's current report on Form 8-K filed
February 12, 2001, relating to the Company's registration statement
on Form S-3 (Reg. No. 333-47396) filed under the Securities Act of
1933, is incorporated by reference.
(4.8) Form of officers' certificate, dated February 12, 2001, pursuant to
Section 301 of the Indenture, filed as Exhibit 4.2 to the Company's
current report on Form 8-K filed February 12, 2001, is incorporated
by reference.
(4.9) 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, filed as Exhibit 10.3 to Annual Report on Form 10-K for the
year-ended December 31, 1999, is incorporated by reference.*
(10.4) 1996 Non-Employee Directors' Stock Compensation Plan, included as
Exhibit A to the Proxy Statement, dated March 15, 1996 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.*
(10.7) 1995 Incentive Stock Option and Cash Performance Program, as amended.*
(13) Incorporated portions of Dover's Annual Report to Stockholders for
its fiscal year Ended December 31, 2000 as filed with the Commission
by EDGAR on March 14, 2001; are incorporated by reference.
15
16
(21) Subsidiaries of Dover.
(23.1) Consent of Independent Accountants.
(24) Form of Power of Attorney.
* Executive compensation plan or arrangement.
16
17
Schedule II
DOVER CORPORATION AND SUBSIDIARIES
Valuation and Qualifying Accounts
Years Ended December 31, 2000, 1999, 1998
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, 2000
Allowance for Doubtful Accounts $23,375 $8,045 $5,311 $26,109
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
Notes:
(1) Represents uncollectible accounts written off and reduction of prior years'
over-provision less recoveries of accounts previously written off, net of
$3,684, $2,377 and $540 related to acquisitions and divestitures in 2000,
1999 and 1998, respectively.
Charged,
Balance at (Credited) to Acquired by Balance at
Beginning of Cost and Merger or Close of
Year Expense Disposition Year
------------ ---------- ------------ ----------
(000's omitted)
Year Ended December 31, 2000
Lifo Reserve $ 39,581 $(394) $(3,320) $35,867
Year Ended December 31, 1999
Lifo Reserve $40,440 $(859) $ -- $39,581
Year Ended December 31, 1998
Lifo Reserve $40,629 $(189) $ -- $40,440
17
18
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE
To the Board of Directors and Shareholders of Dover Corporation:
Our audits of the consolidated financial statements referred to in our report
dated February 2, 2001 appearing in the 2000 Annual Report to Shareholders 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 2, 2001
18