dover -Transcript-2005-04-20T13-00

FINAL TRANSCRIPT

DOV - Q1 2005 Dover Corporation Earnings Conference Call
Event Date/Time: Apr. 20. 2005 / 9:00AM ET
Event Duration: 1 hr

OVERVIEW
The company announced 1Q05 sales of $1.449b and EPS of $0.49. Q&A Focus: Segment
restructuring, market trends.

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© 2005 Thomson Financial. Republished with permission. No part of this publication may be reproduced or transmitted in any form or by any means without the
prior written consent of Thomson Financial.

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Apr. 20. 2005 / 9:00AM, DOV - Q1 2005 Dover Corporation Earnings Conference Call

CORPORATE PARTICIPANTS
Ron Hoffman
Dover Corporation - President, CEO
Rob Kuhbach
Dover Corporation - CFO, VP, Finance & Treasurer

CONFERENCE CALL PARTICIPANTS
Ned Armstrong
FBR - Analyst
Alex Blanton
Ingalls & Snyder - Analyst
Don MacDougall
Banc of America Securities - Analyst
Jack Kelly
Goldman Sachs - Analyst
Walter Liptak
Keybanc Capital Markets - Analyst
Dan Whang
Lehman Brothers - Analyst
Steve Tusa
JP Morgan - Analyst
Tony Gleason
Neuberger Berman, LLC - Analyst

PRESENTATION
Operator
Good morning and welcome to the First Quarter 2005 Dover Corporation Earnings Conference Call. With us today are Ron
Hoffman, President and Chief Executive Officer of Dover Corporation and Rob Kuhbach, Vice President of Finance and Chief
Financial Officer of Dover Corporation.

After the speakers opening remarks, there will be a question-and-answer period. (Operator Instructions) Thank you. I would
now like to turn the call over to Mr. Ron Hoffman. Mr. Hoffman, please go ahead sir.

Ron Hoffman - Dover Corporation - President, CEO
Thank you. Good morning, ladies and gentlemen. Thank you for joining our conference call this morning. It's a pleasure for Rob
Kuhbach and me to be with you this morning to discuss Dover Corporation's 2005 first quarter results. As previously announced,
Dover is now aligned into six subsidiaries with focus on 13 market groups. This new structure increases management capacity
to facilitate future growth opportunities, improves focus on our operational effectiveness and encourages a more strategic
management of our portfolio of companies.

This new alignment will facilitate the sharing of best practices and will maximize potential synergies among our operating
companies. We also believe the new structure will improve the transparency of Dover going forward. To assist you in following

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our commentary, we have added a slide in today's presentation and the table in our press release defining our new subsidiary
alignment.

Before we make our overview comments and open the call up for questions, I want to remind everyone that our comments
contain certain forward-looking statements that are inherently subject to uncertainties. We caution everyone to be guided in
our analysis of Dover Corporation by referring to our Form 10-K for a list of factors that could cause our results to differ from
those anticipated in any such forward-looking statements. I would also direct your attention to our Internet site
www.dovercorporation.com, where considerably more information can be found.

Last evening, Dover reported first quarter 2005 diluted earnings per share from continuing operations of $0.49, up from $0.41
in the comparable period of 2004, an increase of 20%. The year started slowly but improved sequentially throughout the quarter
and all six subsidiaries had a strong March with each posting its best earnings, sales and bookings month of the quarter.

For the quarter, earnings before tax from continuing operations were $134.4 million, up 14% from the prior year period and up
12% sequentially. The four industrial focused subsidiaries in aggregate generated close to 70% of Dover's total sales and over
80% of earnings with 13.7% margins. These subsidiaries posted double-digit earnings gains while the Electronics Components
and Circuit Assembly and Test groups faced very challenging markets. Backend semiconductor companies have been the most
impacted and the loss of their higher margin earnings impacted Technologies results. Earnings were up at four of the six
subsidiaries and up at 10 of the 13 market groups.

Dover Resources, our largest subsidiary, posted record sales, earnings and bookings with operating margins at 17.2% of sales.
Sales for the quarter were new a Dover record at $1.449 billion, up 17% from the prior year and up 2% sequentially. Sales were
up at five of six subsidiaries and up at 12 of the 13 market groups. All but Technology posted double-digit sales gains over the
comparable 2004 period. We were encouraged by March orders in Technologies and see early signs that we may have found
the bottom of the cycle.

Quarterly orders were $1.592 billion, up 11% from the year ago period and book-to-bill was 1.10. Our 17% sales growth consisted
of 7% organic growth, 8% from acquisitions and 2% currency gain. Even though high-energy prices continued to adversely
impact a number of our business, the companies that served the oil patch posted significant earnings gains during the period.
We are optimistic that the rapid pace of steel price increases which began a year ago may be slowing and that recent price
increases by our operating companies are capturing a significant portion of this increased material costs.

Our companies continued to improve their market position with a solid pipeline of new product developments and strong sales
initiatives. Global sourcing efforts and relocating resources to lower costs operating locations continue to be pursued by a
number of our companies, which provides the cost improvements needed to drive their future growth.

During the quarter, Dover completed four add-on acquisitions totaling $101 million. Avborne an add-on to Sargent in the
Diversified segment was the largest and increases its footprint in the service of aircraft components. Our balance sheet remains
very strong and we continue to be encouraged by the activity level of the acquisitions opportunities. We remain very disciplined
in our acquisition criteria and are currently evaluating a number of opportunities.

Looking at geographic results, North America showed continued strength. Asia was slower due to Chinese New Year and
customer inventory realignment. Western Europe slowed for many of our companies, but our business in Eastern Europe was
up. South America, Africa, and other regions were relatively unchanged from previous periods.

Overall, I was pleased with our first quarter performance and look forward to our leaders building on that success. I certainly
want to thank our employees worldwide for their dedicated efforts to drive improved performance at Dover. Coming off a
record first quarter sales pace, a couple of strong March order rates in all six subsidiaries, which produced record backlog levels,
we anticipate improved second quarter results.


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Dover looks forward to celebrating its 50th anniversary at our upcoming President's Meeting in May. Over those 50 years, Dover
has grown from the original four companies with $19 million in sales to today's more globally diverse 50-platform companies,
producing sales of $5.5 billion. We are extremely proud of our history but equally excited about the opportunities that lie ahead
for Dover.

With that, I'll turn it over to Rob Kuhbach to discuss our operations and financial highlights in more depth with you, before we
open the session for questions. Rob.

Rob Kuhbach - Dover Corporation - CFO, VP, Finance & Treasurer
Thanks Ron. Good morning, ladies and gentlemen. Since Ron has already given you a quick summary of our overall performance,
let me provide a brief review of the individual segment results for the first quarter of 2005.

At Dover Diversified, first quarter profits were $24.3 million, up 9% on a 21% increase in sales with operating margins declining
from 12% to 11%, all compared to the prior year quarter. Bookings and backlog were both up 25% or more and book-to-bill
was 1.2.

The story at Diversified was strong sales growth with modest earnings leverage in the Industrial Equipment group, which offset
good sales increases and better leverage in the Process Equipment group. Industrial Equipment benefited from strong sales in
the construction, commercial, aerospace and military markets but had reduced margins from acquisition and integration costs
and raw material costs pressure. Process equipment had positive leverage, largely as a result of very favorable color control
product sales to the printing industry. Diversified expects to have a better second quarter.

At Dover Electronics, first quarter profits were $10.3 million, down 9% despite a 23% increase in sales. Operating margins declined
from 10.1% to 7.6%, all compared with the prior year quarter. Bookings and backlog were both up, 20% or more and book-to-bill
was 1.09.

Components Group sales benefited from acquisitions but the restructuring and integration costs of those acquisitions will
continue to have the impact of causing higher sales to lower earnings and margins during 2005. The Commercial Equipment
group had sales growth but no earnings leverage, reflecting increased spending on business and product development and
other growth initiatives. Electronics anticipates modest improvements in the second quarter.

Industries quarterly profits were up $25.2 million, up 20% from the prior year quarter on a 12% sales increase. Operating margins
were 11.5% for the quarter compared to 10.8% in the prior year period. Bookings and backlog were flat to down slightly but
book-to- bill was 1 02. The Mobile Equipment group had nice leverage on higher sales, reflecting strength in its core waste
handling and bulk transport markets as well as product mix and productivity gains.

The Service Equipment group experienced lower sales growth and negative leverage reflecting higher steel costs, pricing
challenges and some market softness. Industries expect further improvements in sales, earnings and margins in the second
quarter. Dover Resources was the segment sales and earnings and bookings leader with earnings up 35% to $63.8 million on
a 28% sales increase. Margins remained strong and were up 100 basis points to 17.2% compared to prior year quarter. Bookings
and backlog were up 21% and 32% respectively and book-to-bill was 1.09.

All three groups within Resources had strong quarterly results and contributed relatively equally to this segment's earnings
performance. The Oil and Gas Equipment group had a very positive quarter and probably the strongest market in a decade or
more. With management focus on capacity issues, material availability and cost and pricing, along with the benefit of a significant
2004 acquisition, this group did very well and ended the quarter with positive bookings and backlog improvement.


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The Fluid Solution group also had favorable comparisons and operating leverage, reflecting strong global and domestic broad
based industrial market served, global sourcing, successful lean initiatives and the benefits of the late 2004 add-on acquisitions.
The Material Handling group faced the most challenges within Resources with modest earnings growth on a meaningful sales
improvement, largely because the pricing pressure from the automotive industry markets served. Resources expects the second
quarter to show further improvement, although current margins are not likely to increase significantly from these very positive
levels.

At Dover Systems, first quarter profits were $21.2 million, up 36% on a 12% growth in sales, with operating margins increasing
to 12.8%, all compared to the prior year quarter. Bookings were up 5%, backlog was up 24% and book-to-bill was 1 02. Both
groups, Food Equipment and Packaging Equipment, had very nice earnings leverage on the higher sales, which largely reflected
continuing strong demand in their market served. Some further improvements in operating performance are expected in the
second quarter.

Dover Technologies had a challenging quarter. Sales were up 7% over the prior year, but earnings declined 21% to $20.9 million,
and operating margins went down from 8.4% to 6.2%. Bookings and backlog were both up modestly for the quarter over the
prior year period, and book-to-bill was 1.13.

For the Circuit Assembly, or CAT group, performance essentially reflected the significant falloff in the backend semiconductor
industry. The sequential improvement in bookings and backlog give this group some cautious optimism regarding second
quarter results.

The Product Identification and Printing, or PIP group, had positive gains over prior periods, largely reflecting a late 2004 add-on
acquisition. The marking markets served were relatively strong domestically in Asia, offsetting weak conditions in Europe. Sales
of Packaged Printing Equipment were strong for the quarter, reflecting increased activity in Eastern Europe and specialty printing
applications. Results are expected to improve in the second quarter.

Having covered the operations let me comment briefly on some other corporate information. As expected, operating cash flow
was down $85 million because of meaningful first quarter compensation expenses, and $52 million of net tax expense funding
this year versus last year. Historically, Dover's first quarter produces the weakest cash flow because of post year end
performance-based compensation payments, final estimated federal tax payments, and working capital increases to support
our ramp-up in business.

For the full year 2005, we still expect to generate free cash flow in the historical range of 6 to 8% of revenue. Capital expenditures
were nearly $28 million, four add-on acquisitions used just over $100 million in cash, and dividends paid were $32.6 million.

We also completed disposition of a small business just after quarter-end, which was then classified as discontinued operations.
This transaction had no material impact on Dover's results. Dover did not repurchase any shares in the open market during the
quarter.

To cover our short-term cash flow needs, the net debt increased by about $124 million, resulting in a first quarter net debt to
capital of 21.5%, modestly higher than the yearend ratio of 19.1%.

Dover's effective tax rate was 25.4%, down slightly from last year's annual rate of 25.9%., but up from the fourth quarter rate of
17.7%. The first quarter rate reflects the benefit of the settlement of a favorable US tax court matter as well as continued, albeit,
reduced use of tax credit programs like R&D and Foreign Export Credit programs, as well as tax benefits from continuing tax
planning programs. For the full year, we still anticipate an overall tax rate of 28 to 30%, before further discrete items and the
impact of possible repatriation of foreign earnings. Corporate expenses were up about $5 million, which largely reflects increases
in accounting fees and higher compensation and benefit costs.

With that overview, let me turn this back over to Ron for questions.


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Thanks Rob. At this point we'll take questions.

QUESTIONS AND ANSWERS
Operator
(Operator Instructions). Your first question comes from Ed Armstrong with FBR.

Ned Armstrong - FBR - Analyst
Yes. Good morning.

Good morning, Ed.

Good morning, Ed.

To the turning orders in the CBAT business, can you elaborate on the increase in bookings as to what type of product it is or
the part of the market or the location of the customers; do you have that kind of detail?

To talk specifically about full location, I don't think we have that level of detail. In general, the nature of those orders, I think,
was a reflection of some of the backlog we had going into the year that impacted sales. The orders picked up in March a little
bit by the fact that, I think, finally the Chinese New Year was behind us, activity in China finally started to take-off for the year.

As we look at the whole CBAT core, we certainly continue to be encouraged by the business or Vitronics Soltecs there taking
the advantage of an initiative to have lead-free in Europe, that's generating a number of sales for new wave solder equipment
and reflow ovens. That activity has consistently gained quarter-to-quarter. That has continued some of the consumables business
and many of our companies has continued -- that is certainly one that has seen increase to business in that arena.

In general though, I think we just came off such a dismal January and a slight increase in February that some of the pent-up
demand has seemed to surface into March. So that's the nature of, let's say, our optimism relative to March. I think we're very
early to try to call any real turn in the market, but we do have some cautious feel that, perhaps, we've found at least the bottom
of the market.


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Okay. And then, in your press release you mentioned that there were some weak results at Vectron due to the CFC acquisition?
Was this something that was anticipated or did it catch you by surprise? What was the driver of that weakness?

It did not catch us by surprise. As we bought the CFC business, we knew that there would be some realignment with Vectron
and CFC by putting those businesses together. I think we were a little bit delayed in some of our kick-off because we also formed
the six subsidiary structure, and the gentleman that was running our Vectron business is now running Dover Electronics. So the
hand-off there took a little bit of time, and then the game plan is now in the process of being implemented, and we've properly
reserved for all of those expenses to consolidate the business and make the moves and the things that were necessary to make
that happen.

We think in the long-term this will be a very net positive, we'll more strategically align business, we'll increase the efficiency of
that operation and take advantage of the synergies that are available through that acquisition. So, it did not catch us by surprise;
we certainly intended for that to happen.

Were the weak results were more driven from expenses that you had to take as opposed to weaker sales or possibly missing
business during the transition?

I don't think there's any missing business because the transition at this point is really in its infant stage. In fact, we're doing some
expanding of a plant that's going to accept a lot of this move. So that has not affected shipments to customers or business in
general at this point at all. I think we, again, started out with a fairly weak January in the telecom arena. That's improved a little
bit sequentially through the quarter, but I think, at this point in time, we certainly wouldn't attribute any business issue to the
move itself.

Very good. Thank you.

Operator
Your next question comes from Alex Blanton with Ingalls & Snyder.

Alex Blanton - Ingalls & Snyder - Analyst
Good morning.

Good morning, Alex.


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Good morning, Alex.

I'm a little confused on where Universal fits in? It's in the CAT group now, right?

Right.

It is.

But you don't mention Universal per se in the press release.

That is correct.

And you are blaming the fall-off in CAT to the backend semiconductor industry.

The backend semiconductor industry is served primarily, Alex, by companies that are in that group like Everett Charles is the
principle player.

Right.

To some of agree there is a PC Universal, there is a piece of Alphasem and a little bit of DEK but the principle company that
really has played a role on the upside and now on the downside is Everett Charles.

Everett Charles.


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Everett Charles.

The main swing factor there.

Correct. Both on the top line and a bottom-line. Last year they had a significant uptick and they have some very positive margin
leverage when that sector is strong, and this year they -- as the year came to a close and into the first quarter they -- and the
whole industry as we commented suffered some down cycle.

And so how did Universal do?

Universal's business is continuing at level, that continue to -- with the rollout of new equipment and the start of issues that go
with that, Universal made money in the first quarter. I think we are encouraged by the fact that Universal continues to solve
issues with startup of its new equipment. Each month shows some improvement in those results. But I think at the business
level in general of Circuit Assembly equipment has been very down for the past few months.

From compared with what?

Well, Universal, generally speaking had positive -- their performance this quarter was better than a year ago, but they were
down this quarter compared to the fourth -- they were ahead of the fourth quarter and below some of the prior year quarters,
so they have shown some uptick -- slight uptick this quarter versus performance generally, last year but their principal market
strength last year as we talked about was the Chinese market heavily, and that hasn't come back this quarter as much as they
have been anticipated. Part of that is the Chinese New Year phenomenon and part of that is the Chinese market was very strong
last year and I think there was some feeling that the Chinese Assembly companies are taking a breath and trying to figure out
what their continued equipment needs are.

Okay. So it went up last year and then went down in the first quarter sequentially? Is that what you are saying?

No, actually it went down sequentially last year and came up this quarter over the end of last year.


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Oh, it was going down last year?

Ron Hoffman On a sales basis, correct.

Yeah. Okay. Now what do you expect for the rest of the year?

It is showing some improvement. We remain -- I would say,Alex,we have cautious optimism that Universal has a new group of
products as we talked about the midrange machine and a high-end machine. And they continue to have to work on getting
bugs out and commercializing those, and that story will continue this year. I mean, what we talked about last year in terms of
new product development and market opportunity is going to continue this year and a significant factor in that is, obviously
the overall technology and the assembly equipment market which was relatively strong in the first half of last year and then
slow down in the latter half of last year. And we don't frankly, have a lot of visibility that it seems is fairly going to get significantly
better this year over the way it ended last year.

Okay. Thank you.

Operator
Your next question comes from Don MacDougall from Banc of America Securities.

Don MacDougall - Banc of America Securities - Analyst
Good morning, everyone.

Good morning, Don.

Good morning, Don.

I was impressed with the top line that you were able to deliver really across most of your industrial businesses. I guess, I'm a
little underwhelmed with some of the margin performance that you have put up, I guess particularly in Diversified and Industries
where we've been hoping to see maybe a little more leverage. You mentioned steel and then pricing and I guess some optimism
on the latter. And could we talk about maybe what we expect that -- how we expect those margin dynamics to play out? Because


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Rob, going back to some previous comments, I think you kind of thought that we might see a little bit more margin expansion
as we got into 2005. Could just update us in your thoughts there?

I think we're still encouraged that we will see margin improvements through the course of the year, Don. You spoke specifically
about Diversified and Industries, and I can comment on that a little bit. In Diversified, I think as we announced in our release
the Avborne acquisition which is a great acquisition runs our footprint -- in the aftermarket service and parts of aircraft, which
is an area that we enjoyed flying in will be a good acquisition -- has been a good acquisition I should say.

However, there were up-front costs in the integration of that acquisition cost that impacted the margins in that group. There
was also a onetime payment for a union contract settlement Crenlo that impacted the quarter's performance. You also couple
that with the fact that SWEP, which is one of our heat exchanger companies in Europe, even though their business level is
decent, they have really bought these internal price increases and it have had impact on their margins, even though now with
our price increase, we think that will recover on a go forward basis. It has been significantly impacted to date.

In Industries, it is more a function of the product mix. We are encouraged again to hear though that companies such as Heil
Trailer, Marathon, Heil Environmental are getting more recovery of their material costs and surcharges and price increases. Heil
Environmental, their business was good in the quarter, but I think that some of their traditional customers that will drive more
volume improve their margins will probably kick in a little bit more as we go through the course of the year. And so it comes
down to a mix of companies that report in. But I think we are encouraged but what we're seeing in this signs of not only the
margin improvement but the price increases and the pass-on of the material cost increases that will continue to drive this
margin improvement.

I guess the real question Ron in my mind is, should we think about these as 15% margin businesses, which has been the traditional
overtime characteristic certainly through the '90s for those assets? Is this just an abnormal imbalance between some shorter-term
operating issues and I guess a little bit of an abnormal inflation on raws? Or should we think about sustainable margins maybe
below that 15% level?

I think in general 15% margins continues to be a metric that we watch inside of Dover. All of our company presidents and our
subsidiary leaders feel that those metrics are attainable. All those people are working hard to meet those kinds of metrics, so I
think we still have believed it's attainable. These companies are still working to make that come about, and I think, I'm encouraged
by what I'm hearing and seeing from the reports in the field .

Let me add, Don, that I think the trend in the quarter was decidedly positive on margin we have, as we often do a relatively slow
start for this quarter. So the month end, the March trend the March margins were at least a 100, almost 200 per basis points
higher than the average for the quarter, and we still have in at least in the case of Diversified, we still have one of the larger
companies with relatively low structural margin which is Crenlo, which I think, overtime we believe we can get that business
up to a higher levels. But that's going to take more time.

I think the steel impact is still being sorted out and to some degree, as you well know the pass-through basically penalizes
operating margins because you're basically getting -- you're getting sales increases with essentially no margin at all. So some


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of the current structural issue on margin isn't what I call a pure operating factor. It just, that when we get pass-through, and we
do get in some relatively significant cases like Crenlo and a few of these others, there is essentially no margin. So when you
blend that into the sales level, I would say at least for the next year there is probably some degradation, until either steel
moderates we can get more what I'll call pure price increases versus pass-throughs.

So it's a combination of things, but in Industries, again we have one large business, Trailer, that has historically had relatively
low margins. They've made some good progress over the last quarter. So, I think, just to elaborate on Ron's comment, we don't
think there is a structural change where these companies as groups can't achieve 15%. We're disappointed at the rate of change.
I think the steel factor has sort of thrown a bit of a slowdown in our progress to get to the 15% because we get no margin on
pass through, and there is a fair amount of that in both those groups. So I still think fundamentally, we don't see a reason why
they can't get to 15%.

One follow-up question on another line item in the model, corporate expenses was up a lot in the first quarter, and you did call
up some of factors there. How much of that is one time in nature? And I guess what they are really trying to get to is, should I
just take that 16.1, I think, it was and multiplied by four to get the full year number? Is it a kind of lumpy one-quarter situation?

I think that frankly, we would like to believe that SARBOX costs, which were one of the factors in that, are hopefully going to
moderate but I wouldn't, I'm not optimistic. I think compensation expense over the long-term is not necessarily going to stay
at this run rate, but if I were conservative, I wouldn't tell you not to assume that for the time being. Some of this is lumpiness.

We also frankly as business has improved, we do have a fairly important compensation scheme that we believe we're awarding
people for performance matters. So, when we do start showing significance uptick, we do get increases that one can argue a
little bit on the structural measures here. We do pay out on our cash performance on an annual basis, and that typically shows
up. I would say, we're in the $55 million to $60 million annualized rate, if you had to pick a number, it's in that ballpark.

Thank you.

Operator
Your next question comes from Jack Kelly with Goldman Sachs.

Jack Kelly - Goldman Sachs - Analyst
Good morning.

Good morning, Jack.


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Just coming back to CAT for a moment. Just using your break down, you can kind of work back to maybe what CAT earned in
the quarter. It looks to us like margins in CAT were about 3% in the first quarter versus close to sixth in the fourth quarter and
close to -- a roughly 9% a year ago. Assuming those margins are right, I guess, the question is the deterioration that we've seen,
let's say sequentially, and that so much year-over-year. Is that just a function of the volume being down by $25 million or so in
terms of sales? Or is there a mixed issue pricing? And, if you can just give us some color on may be the margin degradation.

And then secondly, looking ahead, assuming we bounce back a bit, let's say we can bring the run rate up 10% in terms of sales,
it doesn't seem might we get much above may be mid single-digit in terms of operating margin. So I just want to see kind of
what the leverage is, the other ways is -- is there cost-cutting going on or other elements, we might be not be aware of...

Jack, certainly, we are continuing to right size those businesses and do the things that we'll try to improve performance. However,
it does become a bit of a mix issue. I think, if you look back at a comparables a year ago, we had a much greater percentage of
the business in the CAT coming from the backend semiconductor side, which tends to be a little bit higher margin arena then
say our Circuit Assembly and test group. So, I think the change in that mix kind of worked against us a little bit in this quarter.
So, that's one of the over-- one of the overriding factors. I think that would come in to play.

I think Jack, just quickly looking at obviously the sales trend basically, we ramped up first quarter to second quarter on the sales
levels, peaked in the third quarter, came back down. So, our current cash sales rate is still below where we were a year ago and
on a sales basis. So, I think some of it is strictly volume and I think the other factor as what Ron, alluded to that on the margins
on the backend semiconductor companies, the Everett Charles, for example, are significantly higher when they're running at
a -- they get a big leveraged kick on a 30% to 40 percent revenue increase, they can get a significantly higher kick on their
earnings level. So I think that's a factor. They probably have structurally higher operating margin potential then some what I
would call the older line core assembly companies like Universal, DEK, Soltec, so it's a mix and a volume issue.

So you wouldn't single out pricing -- for a pressure on pricing that as a major consideration here?

No, I mean, pricing obviously, comes into play when volume -- when you get structural volumes that let's call it drop off by a
third in terms of our sales level and assuming the market that reflects overall market conditions. It does become a factor, I mean,
but I think, we're getting a little more disciplined in a number of these companies, but it still is a factor, and it was a factor last
year in China as volume dropped off. I think that comes into play, I mean we can't ignore it. And pricing pressure is always an
issue in the CAT Group and I don't think anything has changed in the first quarter that has radically changed between the pricing
pressure just continues to be in always present issue in the group.

If given what you see in terms of mix, looking out in the next couple of quarters. Is it conceivable that at some point in the
remaining quarters of the year, you can hit a double-digit margin in CAT?


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All right. Well, I think, we certainly last year as the year progressed we got to those kind of numbers for the group. But I think
it's going to take an improved volume level at this point even though we were encouraged by March. We're not ready to call a
term significantly in the CAT business. We would like to see more than a one point in the trend before we tried to get to you
for it over a change. So we're still very cautiously optimistic, but at this point in time we are hopeful for a second quarter
improvement.

You had mentioned steel costs as the alternative issue but maybe less so, in prior quarters you had given us some indication
of what maybe the drag was mainly up on the recovery of fuel cost. Do you have an estimate to that, Ron?

We didn't gather the numbers discreetly to give you a succinct number, but I would say by reading the reports, the companies
-- talking to our operating company presidents, certainly, we are recovering a higher percentage of it but I'm sorry Jack, I don't
have a discrete number to give you.

Okay. And then just finally, you referred a couple of times during the call to things improving as the quarter progressed, mainly
in Tech and Rob you said in margins. If we look at that 7% growth in revenues from existing businesses, how did that kind of
track generally January, February and March? And just as a clarification point Rob, when you mentioned 100 basis points better
in March, did you mean than January or March's 100 basis points better than the average for the quarter?

Average for the quarter, Jack.

Okay.

In both cases, we're talking that I think about Industries and Diversified but the March performance numbers in both cases were
on order meant to 100 basis points were more better than the average for the quarter.

Okay.


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Which was the trend that I was trying to get too when the question was asked how do we feel about the overall ability to achieve
50%. I mean the point is that in those two segments and particularly we saw a positive uptick over the quarter from January to
February to March, March being the strongest in terms of sales and margins for both.

And just in terms of the 7%, how was that roughly broken out of the trend issue into the quarter?

That's a little tricky to answer. I would say, if you're asking me is that -- most of our businesses trended across the board more
positively as the quarter went along, so I think as an internal growth metric it probably was relatively even across most of our
companies. I'm just thinking through all of the company reports that I have read, and I would say in general that sales that
internal growth metric would have been probably back ended, meaning it showed more strength as the quarter went along.

Okay good.

Yes. I was just kind of scanning back and I support Rob's comment. It seems to be pretty well distributed among our companies
the increase that we saw in March, I guess, it was not loaded into one subsidiary.

Okay good, all right. Thank you.

Operator
Your next question comes from Walter Liptak with Keybanc Capital Markets.

Walter Liptak - Keybanc Capital Markets - Analyst
Hi. Good morning Ron and Rob.

Good morning Walt.

Good morning


FINAL TRANSCRIPT

Just the first question I have is going back to the material pricing and I wonder if the 7% organic, if it's possible to talk about
price versus volume growth?

Well, again since we didn't accumulate that discreetly we do not have that number to break out, but I would say that there is
an impact of our pricing to recover the steel cost increase that's in there. But I would be guessing if I gave a numbers, I would
rather not that.

Rob Kuhbach; I would say that our general sentiment Walter, we received is that the pricing over the last couple of quarters has
probably stuck better than it would have talked about a year ago. I mean, I think we're seeing, our companies are seeing more
ability to raise pricing.

Obviously, it is variable in the Resource segment, and particularly I think given the strength in the Oil and Gas segments or
group. I think they have probably had a little more success, but I would say across the board most of our companies had
reasonable success and pricing. But they've also had reasonable progress on volume improvement. So I mean, it's a combination
and to Ron's point, I don't think I could tell you whether its, half of it's price and have of it's volume, we just don't get that kind
of data.

Okay. All right, that's fine. In the Electronics segment, the 23% revenue growth, I wonder if you could you break out what the
acquisition was and what the organic growth was? And what I'm trying to get you is what the geographic mix of that business
where you're seeing the strength and what pricing might be looking like for components?

Well, I think pricing for components is still pretty much like other Tech related businesses, very challenge to push price. I think
what we're trying to is be selective on the businesses that we accept. And those businesses that we don't think within long term
make the kind of margins that would drive our business forward. We will hopefully be more selective in what we accept. In
general, though I would say that pricing and all of our groups, as Rob alluded to, has been pushed I think to the max. I think
that we're continuing to evaluate in each of our companies kind of where the price point is as far as the opportunity to recover
material cost increases and in some cases it's very difficult to get there any kind of a markup. But that's the exception rather
than real.

Walter, your question about how much of the growth there was in Components -- was acquisitions versus internal growth? Was
that your question?

Yes. That's correct.


FINAL TRANSCRIPT

I would say, probably, of the growth 28% was acquisition related on the top line.

Okay, all right. Thank you.

Yes.

Operator
Your next question comes from Dan Whang with Lehman Brothers.

Unidentified Corporate Representative
Hi Dan.

Dan Whang - Lehman Brothers - Analyst
Yes. Good morning. The first question is regarding the soft start to the year. And was that related to any sort of pre-buyer issues
from the previous quarter or it had any sort of insight into that trend?

I think, as far as buyers related to things being shifted in December versus January, I would say already now had the very minor
incidence of that that might be the case. I think in general we historically have always had a slower first quarter than the other
quarters throughout the year. I think if you look at any of our historical trends first quarters are the slowest quarter, second and
third traditionally it showing improvements and fourth quarters is slight step aback.

I think what we really saw was a confused Electronics sector, by Electronics I'm really talking Technologies and total. The later
Chinese New Year deferred some decisions. I think people are trying to define what their true capacity needs were rolling into
'05. It seemed like they were slower to evaluate those needs. So just in general there is no one point to touch on, but I think we
saw traditionally a slower -- excuse me -- slow start that we've seen historically. But I think in electronics technology court, it
was probably slower than anticipated.

Okay. Going over to CAT, I think in the previous the last up cycle, last year that the man came from -- came over from the Asian
assembly companies and in the sequential sort of bookings increased that you're seeing, what type of customers is really driving
that improvement if you could say?


FINAL TRANSCRIPT

I don't think the mix of customers has changed to participate all, Dan. It's still the DMS companies still have great impacts there.
And in China and Asia in general we'll continue to be the region that will drive the growth and drive the business in that sector.
So I don't think we've really seen anything that will change the mix or customer base appreciably. I think we have just seen kind
of a deferment in terms of order activity, or activity in general.

Remember, we also had some acquisitions. You know that there are part of dealt there you're going to see, as we did some
acquisitions in the second and third quarters of last year that don't show up now because we've only had them for the last two
quarters.

All right.

Some of the increase in revenue, you know, actually we're companies that are in part of Everett Charles. So to some degree the
revenue increase is also reflection of acquisition activity.

And which grow top-line more so than in earnings.

Okay. And in terms of Universal right now, I mean, how would you say the overall mix and demand is from -- between the
high-end machines you sell verses the mid-range?

Well, the mid-range is certainly our focus now. And Dan, that being a new or expanded area of market for us, we have to earn
our way into that market. Universal's offerings are new in that particular market. And to have new offerings hitting a market we
are trying to prove yourself to build this at a time when the market is somewhat declining in nature, it makes that a very
challenging environment. But mid-range machines, I think that was driving the growth and driving to go forward at Universal
and I think we're pleased that we are continuing to see progress there.

And now the final question is regarding the -- your PIP segments and I have a data mix there adding to the capabilities that
emerge, I mean how is that overall part of identification. What areas would you consider adding on going forward?


FINAL TRANSCRIPT

Dan, that's a sector that given the acquisition of Datamax, shows our interests in this whole Product Identification Arena. Datamax
is off to a good start. We are thrilled to have Datamax as part of the product identification printing platform. So, I think in time
they'll help us kind of evaluate what are the other strategic places we need to have in that arena? But it's in the arena that we're
pleased to a part of. Datamax is a great company and is good go forward acquisition for Dover.

Okay. Great. Thank you very much.

Operator
Your next question comes from Steve Tusa with JP Morgan.

Steve Tusa - JP Morgan - Analyst
Good morning.

Good morning, Steve.

Just wanted to dig a little bit into Diversified and the Avborne deal. Roughly $20 million in revenue this quarter, is that correct?
From Avborne?

You're talking about the Diversified segment

Yes, contribution from revenue.

Well, this segment generated -- so you're taking about...

Avborne in particular. I'm just trying to, kind of, size in moving part in the segment here and my estimate is $20 million for
Avborne, which makes organic growth in that business roughly 9% for the quarter. Is that in the ballpark?


FINAL TRANSCRIPT

Avborne from the quarter is lower than that.

Okay. Is this business -- how far below segment margins is this business? I'm just -- I'm trying to dig into how much of the impact
it actually had on the margin in the quarter?

I would say that there was some degradation, partly, because you've got write offs. You know when we do an acquisition, there
you're going to see some write offs. They're probably in a 5% to 7% range lower operating margins but we expect that to
improve over time. I mean, they were not as strong as some parts of Sargent. The Avborne acquisition was an add-on to Sargent.
Sargent itself has a number of moving parts, which have variable margins depending on the subpart of that group that you're
talking about.

So I would say Avborne is, probably, at a somewhat lower end of their range of profitability on an operating basis, but we expect
to make improvements because we are going to integrate Avborne or we're going to integrate some parts of Sargents with
Avborne in the Miami areas that's going to give this some improved leverage. And we think in time that the overall margins of
Avborne will begin to come up to the solid level that Sargent typically operates at. So part of it's the early write offs in the
acquisition process that have impacted margin and part of it is integration time and effort that's going to take -- to get them
closer to where the Sargent level typically operates.

Steve, I might add that, if we think about that sector and thinking about lets say Sargent general, which is the acquire of Avborne.
They kind of have three segments they play in that is system and components, engine, items, and after market. And what the
Avborne does? It gives us a much stronger footprint in the after market side. And in this particular case it gives us more, let's
say, FAA chapters that we can have products and parts for. We think there is a growing trend of outsourcing in the aircraft
component industry that this will take advantage of, and as Rob said, we still had integration moves to make in Miami and
synergizing some of our businesses that will play through, as the year goes forward.

Okay. And a lot of, kind of, optimistic commentary on the industrial businesses, talking about the second quarter and I guess
suggesting that sequential trend should continue to improve. How much of that is basic seasonality and how much is a pickup
in the business?

I think the industrial world has been pretty robust for a period of time it continues. So, certainly we've mentioned that Oil and
Gas Equipment is certainly catching stride at this point in time. We see that continuing on a go forward basis. We think that the
companies that we have in that arena are not only gaining share but are driving the platform product they have to offer so we
view that is the a very positive sector for us. We think the same would apply at our material handling fluid solution sectors.
Those groups all tend to have strong businesses with strong product type line that will continue to build in that arena. So I think
our optimism is somewhat a little seasonal because our second quarter always being a bit up, and just a fact that we did have
a strong margin everybody continues to be very favorable in their comments as they're rolling forward.


FINAL TRANSCRIPT

I think the bookings and backlog trends and the book-to-bill ratios are all suggested that this will be as it normally is a better
second quarter than the first quarter, just because that's the way most of our companies tend to operate. But I also think that
we have some positive signals in specific cases in support of that but the cautious optimism is probably valid.

And then lastly, what's the likelihood that the margin in CAT gets worse gear to the rest of the year? You talked in your 10-K
about some pricing pressure in Imaje throughout the industry there is an un-disciplined player out there, and obviously, we
know we all follow the (inaudible). Are you concerned that this gets worse or do you really think that profitability has bottomed?

And then Ron, a question for you is you've been doing this for a few months now, and what process are you -- what in you view
and in your portfolio analysis with regards to Technologies in particular and with regards to CAT?

Just to...

Strategic perspective.

Just to clarify, Imaje is in our product ID and printing group it's not in the CAT group I think you're...

Well, that's not about the Tech segment internal?

Tech segment. You know, certainly there's pricing pressure in all of our business. Imaje was down slightly due to the fact that
things tended to cool a little bit in Western Europe. The pricing pressure certainly is evident and is there but we don't, since a
lot of concern that we're going to see a change in the structure of Imaje due to pricing. We think that volume was up a bit but
if they get back not only to a more normal volume level or consumables, get back to traditional levels, and the new products
that they've got that there in the process of rolling out, we are not overly worried about a module with CAT group in general.
You asked about overall margin deterioration in the tech group as a whole or in CAT?

Well, I mean, and then just moving on to CAT?


FINAL TRANSCRIPT

Well, I do not think, I mean, the quarter margins were in CAT -- were relatively low compared to prior year as we indicated. I do
not think we see them as necessary likely to go down much from where they were for the quarter. On the other hand we're not
suggesting that they are likely to go up significantly although, I think when we talked to someone earlier about the potential,
I think you know, we do think with any modest improvement in the top line. We should see some modest margin improvement
in that area. So we always commented that the visibility is limited. And so I would say that the overall CAT group margin are
not likely to change a whole lot unless margin does for our volume picks up, and we see some optimism that could happen.

Steve, you asked me to comment about strategy and kind of the new organizational structure a little bit?

And just with respect to CAT?

Okay. Well, I guess, I would say you know, as we think about this new organizational structure one of things I wanted to -- of
course, less the increase capacity so that we had the ability to analyze the companies and the markets that we were going to
play in and give our subsidiary leaders an opportunity to really think more strategically about the companies they own and the
markets they serve.

Certainly, after one quarter of that work is not done. Those leaders are still getting their head around their portfolios and deciding
really what markets are going to be the most fruitful for them on a go forward basis. But I think the same that what I'm encouraged
by it just that the fact that we are now strategically thinking of what we always thought strategically at the company level but
not as robustly at the subsidiary level. We now have a strategic focus on the subsidiary level.

I think also we are seeing some -- somewhat I would call nice consequences from this reorganization. Examples might be in the
electronics sector. The leader there is analyzing his businesses, and deciding whether there are some scales of synergy and
efficiency that -- and we are on the front end of those decisions.

But just an example of those as we've had a number of companies, I think three that we have typically talked about, that we
now think of as one footprint in the ceramic products group. We tended to use to have to companies that we thought of that
had microwave components. Those are now been handled by one leader, so this gives us the opportunity to really investigate
true synergies in the business and true strategies for driving cost reductions and ability to these companies to best practices
at a more robust level. Those are things that we feel are -- or maybe drive increased value.

So again, I'm encouraged what I'm hearing from the guys. We do not have any robust announcements to make today about
what we are going to focus on, but I think over the course of the year that's going to coming into much -- as much clearer vision.

Great. Thank you.


FINAL TRANSCRIPT

Let's take one more question.

Operator
Your final question comes from Tony Gleason with Neuberger Berman.

Tony Gleason - Neuberger Berman, LLC - Analyst
Good morning. Thanks for the call. I guess, I will follow-up with the -- from the last caller, if you could characterize this as the
frustrated shareholder call. But I appreciate the fact that you're accruing meaningful compensation expenses for management
based on if you look at the business. But I guess, I think is that shareholders haven't been paid here for quite a long time. And
actually I look back and was surprised to see that Dover is actually underperformed the S&P 500 for the last 1 year, for the last
5 years, and the last 10 years. And I guess my question to you folks is what do you think about that and what if anything needs
to be done to address that? Thanks.

I think typically the things that drive share price our earnings. Last year we had the second largest earnings in Dover's history.
We had significant earnings growth. We had improvements across the board in our businesses. So I -- and I think we are continuing
that as we go forward now. And with this new organization structure and maybe a greater focus on strategy hopefully we will
continue to build on that. What we have to do is we have to bring earnings power to bear to get rewarded in the marketplace.
And I think that's what our focus is that.

We can't make the day-to-day judgments what share price can be, but we can develop the earnings that will be the focus in
the field for that future share price, and I'm convinced that those things are being worked on. Those of the things we are putting
priority on, and I think we will serve our shareholders well in that respect. I will also draw attention to the fact that we continue
to look at our dividends. We're the fourth longest achiever of continually improving earnings -- excuse me, payout -- dividend
payouts in the New York Stock Exchange. So I think we do drive value, and we do think we drive earnings that hopefully get
recognized in the marketplace on a go forward basis.

And back in the late 1990's you actually tendered for about 10% of the outstanding shares. Could you talk about what would
be impediments doing something like that again?

I don't know if there are impediments. I think what we would do is say what's the right use of the cash that we have degenerate?
And from our standpoint we feel that certainly investing in our company's needs internally is the first use of our cash, doing
acquisitions that would grow the company, grow earnings certainly the next priority of our cash. So those few things will
continue to get emphasis in Dover and we are helpful that cash can be use to drive growth, the acquisitions and growth by
doing the right thing inside of our companies to allow them to be better performers. Buybacks of shares would be after we feel
we do not have opportunities in those areas.


FINAL TRANSCRIPT

I appreciate. Do you think the market is sending a signal that something is incorrect with the capital allocation if you
underperformed for 1 year, 5 year and 10 years? I mean, at what point is there to shareholders that say you're not doing the
right thing? And how do you respond to that?

I do not now that I could speak to the shareholders in that regard. I think that they will draw their own conclusions. But I think
the -- they looked to Dover as a nice industrial bellwether. I think we continue to do that, I think we -- as we says that we're
keeping up with all of our pears in the marketplace that to serve industrial American and outperforming many of those, and
those are things that we can bring the various from our companies and we're pleased with our record in that regard.

Thanks.

All right, that concludes our call today. Thank everyone for your attention and questions. And we look forward to chatting with
you again at the end of the second quarter.

Operator
Ladies and gentlemen, this does concludes the first quarter 2005 Dover Corporation earnings conference call. You may now
disconnect.

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