UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT
PURSUANT TO SECTION 13 or 15(d) OF
THE SECURTIES EXCHANGE ACT OF 1934

Dover Corporation

(Exact name of registrant as specified in its charter)

Delaware (State of Incorporation)		53-0257888 (I.R.S. Employer Identification No.)

280 Park Avenue, New York, NY (Address of principal executive offices)		10017 (Zip Code)

(212) 922-1640
(Registrant’s telephone number)

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, and (2) has been subject to such filing requirements for the past 90 days. Yes þ     No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes o     No þ

The number of shares outstanding of the Registrant’s common stock as of July 18, 2008 was 187,846,968.

 

 

Dover Corporation
Form 10-Q
Table of Contents

PART I — FINANCIAL INFORMATION
	Page			Item
				Item 1. Financial Statements (unaudited)
		1		Condensed Consolidated Statements of Operations
				(For the three and six months ended June 30, 2008 and 2007)
		2		Condensed Consolidated Balance Sheets
				(At June 30, 2008 and December 31, 2007)
		2		Condensed Consolidated Statement of Stockholders’ Equity
				(For the six months ended June 30, 2008)
		3		Condensed Consolidated Statements of Cash Flows
				(For the six months ended June 30, 2008 and 2007)
		4		Notes to Condensed Consolidated Financial Statements
		13		Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
		21		Item 3. Quantitative and Qualitative Disclosures About Market Risk
		21		Item 4. Controls and Procedures
		21		Item 4T. Controls and Procedures
PART II — OTHER INFORMATION
	Page			Item
		21		Item 1. Legal Proceedings
		21		Item 1A. Risk Factors
		22		Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
		22		Item 3. Defaults Upon Senior Securities
		22		Item 4. Submission of Matters to a Vote of Security Holders
		23		Item 5. Other Information
		23		Item 6. Exhibits
		24		Signatures
		25		Exhibit Index
EX-31.1: CERTIFICATION
EX-31.2: CERTIFICATION
EX-32: CERTIFCATIONS

(All other schedules are not required and have been omitted)

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

DOVER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited) (in thousands, except per share figures)

		Three Months Ended June 30,								Six Months Ended June 30,
		2008				2007				2008				2007
Revenue		$	2,010,978			$	1,824,143			$	3,876,464			$	3,568,576
Cost of goods and services			1,271,359				1,170,526				2,457,299				2,293,526
Gross profit			739,619				653,617				1,419,165				1,275,050
Selling and administrative expenses			446,531				391,508				890,306				798,742
Operating earnings			293,088				262,109				528,859				476,308
Interest expense, net			27,388				22,684				50,819				44,585
Other expense (income), net			1,186				(45	)			3,719				(423	)
Total interest/other expense, net			28,574				22,639				54,538				44,162
Earnings before provision for income taxes and discontinued operations			264,514				239,470				474,321				432,146
Provision for income taxes			77,604				64,799				139,480				119,655
Earnings from continuing operations			186,910				174,671				334,841				312,491
Loss from discontinued operations, net of tax			(51,634	)			(2,476	)			(52,387	)			(11,365	)
Net earnings		$	135,276			$	172,195			$	282,454			$	301,126
Basic earnings (loss) per common share:
Earnings from continuing operations		$	0.99			$	0.85			$	1.76			$	1.53
Loss from discontinued operations			(0.27	)			(0.01	)			(0.27	)			(0.06	)
Net earnings			0.72				0.84				1.48				1.47
Weighted average shares outstanding			189,094				204,431				190,760				204,446
Diluted earnings (loss) per common share:
Earnings from continuing operations		$	0.98			$	0.85			$	1.74				1.52
Loss from discontinued operations			(0.27	)			(0.01	)			(0.27	)			(0.06	)
Net earnings			0.71				0.84				1.47				1.46
Weighted average shares outstanding			190,589				206,145				191,966				206,155
Dividends paid per common share		$	0.200			$	0.185			$	0.400			$	0.370

The following table is a reconciliation of the share amounts used in computing earnings per share:

		Three Months Ended June 30,								Six Months Ended June 30,
		2008				2007				2008				2007
Weighted average shares outstanding — Basic			189,094				204,431				190,760				204,446
Dilutive effect of assumed exercise of employee stock options			1,495				1,714				1,206				1,709
Weighted average shares outstanding — Diluted			190,589				206,145				191,966				206,155
Anti-dilutive shares excluded from diluted EPS computation			3,778				3,403				3,778				3,403

See Notes to Condensed Consolidated Financial Statements

DOVER CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)

		(unaudited)
		At June 30, 2008				At December 31, 2007
Current assets:
Cash and equivalents		$	742,613			$	606,105
Receivables, net of allowances of $32,751 and $32,211			1,237,237				1,104,090
Inventories, net			709,097				673,944
Prepaid and other current assets			79,827				84,377
Deferred tax asset			67,325				77,477
Total current assets			2,836,099				2,545,993
Property, plant and equipment, net			913,079				892,237
Goodwill			3,322,561				3,259,729
Intangible assets, net			1,045,247				1,051,650
Other assets and deferred charges			174,347				167,404
Assets of discontinued operations			95,428				152,757
Total assets		$	8,386,761			$	8,069,770
Current liabilities:
Notes payable and current maturities of long-term debt		$	462,890			$	638,649
Accounts payable			486,084				416,215
Accrued compensation and employee benefits			254,224				307,997
Accrued insurance			108,225				117,488
Other accrued expenses			209,402				185,397
Federal and other taxes on income			25,596				28,358
Total current liabilities			1,546,421				1,694,104
Long-term debt			1,879,492				1,452,003
Deferred income taxes			306,755				317,333
Other deferrals			632,075				604,622
Liabilities of discontinued operations			65,411				55,535
Commitments and contingent liabilities
Stockholders’ Equity:
Total stockholders’ equity			3,956,607				3,946,173
Total liabilities and stockholders’ equity		$	8,386,761			$	8,069,770

DOVER CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (unaudited) (in thousands)

										Accumulated
		Common				Additional				Other												Total
		Stock				Paid-In				Comprehensive				Retained				Treasury				Stockholders’
		$1 Par Value				Capital				Earnings				Earnings				Stock				Equity
Balance at 12/31/2007		$	244,548			$	353,031			$	217,648			$	4,870,460			$	(1,739,514	)		$	3,946,173
Net earnings			—				—				—				282,454				—				282,454
Dividends paid			—				—				—				(76,300	)			—				(76,300	)
Common stock issued for options exercised			1,542				53,981				—				—				—				55,523
Tax benefit from the exercise of stock options			—				6,026				—				—				—				6,026
Stock-based compensation expense			—				13,900				—				—				—				13,900
Common stock acquired			—				—				—				—				(352,393	)			(352,393	)
Translation of foreign financial statements			—				—				76,330				—				—				76,330
Unrealized holding gains, net of tax			—				—				912				—				—				912
SFAS No. 158 amortization, net of tax			—				—				3,982				—				—				3,982
Balance at 6/30/2008		$	246,090			$	426,938			$	298,872			$	5,076,614			$	(2,091,907	)		$	3,956,607

Preferred Stock, $100 par value per share. 100,000 shares authorized; none issued.

See Notes to Condensed Consolidated Financial Statements

DOVER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited) (in thousands)

		Six Months Ended June 30,
		2008				2007
Operating Activities of Continuing Operations
Net earnings		$	282,454			$	301,126
Adjustments to reconcile net earnings to net cash from operating activities:
Loss from discontinued operations			52,387				11,365
Depreciation and amortization			130,714				118,091
Stock-based compensation			14,033				14,447
Changes in current assets and liabilities (excluding effects of acquisitions, dispositions and foreign exchange):
Increase in accounts receivable			(91,411	)			(51,949	)
Increase in inventories			(9,600	)			(12,378	)
Decrease (Increase) in prepaid expenses and other assets			7,313				(3,542	)
Increase in accounts payable			47,779				21,040
Decrease in accrued expenses			(51,063	)			(49,183	)
Increase (decrease) in accrued and deferred taxes			(1,648	)			4,960
Other non-current, net			5,020				(29,865	)
Net cash provided by operating activities of continuing operations			385,978				324,112
Investing Activities of Continuing Operations
Proceeds from the sale of property and equipment			4,620				15,573
Additions to property, plant and equipment			(85,115	)			(91,045	)
Proceeds from sales of businesses			8,000				30,437
Acquisitions (net of cash and cash equivalents acquired)			(99,751	)			(117,976	)
Net cash used in investing activities of continuing operations			(172,246	)			(163,011	)
Financing Activities of Continuing Operations
Decrease in notes payable, net			(175,830	)			(888	)
Reduction of long-term debt			(166,606	)			(15,025	)
Proceeds from long-term debt			594,120				—
Purchase of treasury stock			(352,393	)			(76,772	)
Proceeds from exercise of stock options, including tax benefits			61,549				50,973
Dividends to stockholders			(76,300	)			(75,753	)
Net cash used in financing activities of continuing operations			(115,460	)			(117,465	)
Cash Flows From Discontinued Operations
Net cash provided by (used in) operating activities of discontinued operations			8,465				(10,019	)
Net cash used in investing activities of discontinued operations			(1,603	)			(4,510	)
Net cash provided by (used in) discontinued operations			6,862				(14,529	)
Effect of exchange rate changes on cash			31,374				5,198
Net increase in cash and cash equivalents			136,508				34,305
Cash and cash equivalents at beginning of period			606,105				372,721
Cash and cash equivalents at end of period		$	742,613			$	407,026

See Notes to Condensed Consolidated Financial Statements

DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements, in accordance with Securities and Exchange Commission (“SEC”) rules for interim periods, do not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements and should be read in conjunction with the Dover Corporation (“Dover” or the “Company”) Annual Report on Form 10-K for the year ended December 31, 2007, which provides a more complete understanding of Dover’s accounting policies, financial position, operating results, business properties and other matters. The year-end condensed consolidated balance sheet was derived from audited financial statements. It is the opinion of management that these financial statements reflect all adjustments necessary for a fair statement of the interim results. The results of operations of any interim period are not necessarily indicative of the results of operations for the full year.

Certain prior period amounts have been reclassified to conform to the current period presentation.

2. Acquisitions

The 2008 acquisitions are wholly-owned and had an aggregate cost of $99.8 million, net of cash acquired, at the date of acquisition. The following table details acquisitions made during 2008:

2008 Acquisitions

Date

Type

Acquired Companies

Location (Near)

Segment

Platform

Company

1-Mar

Stock

LANTEC Winch and Gear, Inc.

Langley, B.C.

Industrial Products

Material Handling

Tulsa Winch

Manufacturer of hydraulic winches, hoists and gear reducers, serving the oil and gas, infrastructure and marine markets.

1-Apr

Asset

Brady’s Mining & Construction Supply Co.

St. Louis, Missouri

Fluid Management

Energy

US Synthetic

Manufacturer of diamond roof drill bits and support products specifically designed for underground mining operations.

10-Apr

Asset

Neptune Chemical Pump Company

Lansdale, PA

Fluid Management

Fluid Solutions

Pump Solutions Group

Manufacturer of chemical metering pumps, chemical feed systems and peripheral products.

For certain acquisitions, the Company is in the process of obtaining or finalizing appraisals of tangible and intangible assets and continuing to evaluate the initial purchase price allocations as of the acquisition date, which will be adjusted as additional information relative to the fair values of the assets and liabilities of the businesses becomes known. Accordingly, management has used its best estimate in the initial purchase price allocation as of the date of these financial statements.

The following table summarizes the estimated fair values of the assets and liabilities that were assumed as of the date of the 2008 acquisitions and the amounts assigned to goodwill and intangible asset classifications:

(in thousands)		2008 Acquisitions
Current assets, net of cash acquired		$	18,347
PP&E			3,582
Goodwill			54,099
Intangibles			33,369
Total assets acquired			109,397
Total liabilities assumed			(9,646	)
Net assets acquired		$	99,751

DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

The following unaudited pro forma information illustrates the effect on Dover’s revenue and net earnings for the three and six months ended June 30, 2008 and 2007, assuming that the 2008 and 2007 acquisitions had all taken place on January 1, 2007:

		Three Months Ended June 30,								Six Months Ended June 30,
(in thousands, except per share figures)		2008				2007				2008				2007
Revenue from continuing operations:
As reported		$	2,010,978			$	1,824,143			$	3,876,464			$	3,568,576
Pro forma			2,022,278				1,865,905				3,889,458				3,659,111
Net earnings from continuing operations:
As reported		$	186,910			$	174,671			$	334,841			$	312,491
Pro forma			187,500				178,628				335,512				319,167
Basic earnings per share from continuing operations:
As reported		$	0.99			$	0.85			$	1.76			$	1.53
Pro forma			0.99				0.87				1.76				1.56
Diluted earnings per share from continuing operations:
As reported		$	0.98			$	0.85			$	1.74			$	1.52
Pro forma			0.98				0.87				1.75				1.55

These pro forma results of operations have been prepared for comparative purposes only and include certain adjustments to actual financial results for the relevant periods, such as imputed financing costs, and estimated additional amortization and depreciation expense as a result of intangibles and fixed assets acquired. They do not purport to be indicative of the results of operations which actually would have resulted had the acquisitions occurred on the date indicated, or which may result in the future.

In connection with certain acquisitions, at June 30, 2008 and December 31, 2007, the Company had reserves related to severance and facility closings of $24.4 million and $26.8 million, respectively. The reserves were recorded as of the date of acquisition and in accordance with the provisions of Emerging Issues Task Force Issue No. 95-3, “Recognition of Liabilities in Connection with a Purchase Business Combination.” During the second quarter of 2008, the reserves were reduced by payments and write-downs of $2.4 million.

3. Inventory

The following table displays the components of inventory:

		At June 30,				At December 31,
(in thousands)		2008				2007
Raw materials		$	330,434			$	314,504
Work in progress			163,825				161,750
Finished goods			268,277				249,678
Subtotal			762,536				725,932
Less LIFO reserve			53,439				51,988
Total		$	709,097			$	673,944

4. Property, Plant and Equipment

The following table displays the components of property, plant and equipment:

		At June 30,				At December 31,
(in thousands)		2008				2007
Land		$	56,429			$	54,579
Buildings and improvements			547,347				527,429
Machinery, equipment and other			1,848,298				1,777,028
			2,452,074				2,359,036
Accumulated depreciation			(1,538,995	)			(1,466,799	)
Total		$	913,079			$	892,237

DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

5. Goodwill and Other Intangible Assets

The following table provides the changes in carrying value of goodwill by segment through the six months ended June 30, 2008 (see Note 2 for discussion of purchase price allocations):

										Other
										adjustments,
										primarily
						2008				currency
(in thousands)		12/31/2007				acquisitions				translations				6/30/2008
Industrial Products		$	905,497			$	11,898			$	(4,909)	(A)		$	912,486
Engineered Systems			793,212				—				4,400				797,612
Fluid Management			536,163				42,201				173				578,537
Electronic Technologies			1,024,857				—				9,069				1,033,926
Total		$	3,259,729			$	54,099			$	8,733			$	3,322,561

The following table provides the gross carrying value and accumulated amortization for each major class of intangible asset:

		At June 30, 2008												At December 31, 2007
										Average
		Gross Carrying				Accumulated				Life				Gross Carrying				Accumulated
(dollar amounts in thousands)		Amount				Amortization				(Years)				Amount				Amortization
Amortized Intangible Assets:
Trademarks		$	40,486			$	12,654				29			$	40,943			$	13,684
Patents			136,980				78,723				13				131,106				74,153
Customer Intangibles			704,741				174,440				9				678,970				141,203
Unpatented Technologies			157,605				64,816				9				153,364				55,984
Non-Compete Agreements			3,490				3,398				5				4,348				4,315
Drawings & Manuals			13,719				4,969				5				13,597				4,368
Distributor Relationships			72,493				15,349				20				72,444				13,302
Other			23,511				11,974				14				18,839				8,443
Total			1,153,025				366,323				11				1,113,611				315,452
Unamortized Intangible Assets:
Trademarks			258,545												253,491
Total Intangible Assets		$	1,411,570			$	366,323							$	1,367,102			$	315,452

6. Discontinued Operations

2008

During the second quarter of 2008, the Company discontinued Triton in the Engineered Systems segment and reclassified Crenlo, which had been included in discontinued operations, into the Industrial Products segment. In the second quarter of 2008, the Company recorded a $51.1 million write-down to the carrying value of Triton to its estimated fair market value and other adjustments.

During the first quarter of 2008, the Company recorded adjustments to the carrying value of a business still held for sale and other adjustments resulting in a net after-tax loss of approximately $2.0 million.

DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

2007

During the second quarter of 2007, the Company completed the sale of a previously discontinued business and recorded other adjustments for businesses still held for sale, resulting in a net loss of approximately $5.0 million ($8.3 million after-tax).

During the first quarter of 2007, the Company completed the sales of Kurz Kasch, discontinued in 2006, and SWF, discontinued in 2005, and recorded other adjustments for businesses still held for sale and to reserves related to completed sales, resulting in a net loss of approximately $9.6 million ($7.5 million after-tax).

Summarized results of the Company’s discontinued operations are as follows:

		Three Months Ended June 30,								Six Months Ended June 30,
(in thousands)		2008				2007				2008				2007
Revenue		$	26,354			$	47,839			$	53,119			$	109,378
Loss on sale, net of taxes (1)			(50,993	)			(8,334	)		$	(52,972	)		$	(15,832	)
Earnings from operations before taxes		$	(823	)		$	(819	)			(18	)			(2,374	)
Provision for income taxes related to operations			182				6,677				603				6,841
Earnings (loss) from discontinued operations, net of tax		$	(51,634	)		$	(2,476	)		$	(52,387	)		$	(11,365	)

At June 30, 2008, the assets and liabilities of discontinued operations primarily represent amounts related to two remaining unsold businesses. Additional detail related to the assets and liabilities of the Company’s discontinued operations is as follows:

		At June 30,				At December 31,
(in thousands)		2008				2007
Assets of Discontinued Operations
Current assets		$	36,691			$	38,360
Non-current assets			58,737				114,397
		$	95,428			$	152,757
Liabilities of Discontinued Operations
Current liabilities		$	9,646			$	25,987
Non-current liabilities			55,765				29,548
		$	65,411			$	55,535

In addition to the assets and liabilities of the entities currently held for sale in discontinued operations, the assets and liabilities of discontinued operations include residual amounts related to businesses previously sold. These residual amounts include property, plant and equipment, deferred tax assets, short and long-term reserves, and contingencies.

7. Debt

Dover’s long-term debt with a book value of $1,912.2 million, of which $32.7 million matures in less than one year, had a fair value of approximately $1,892.3 million at June 30, 2008. The estimated fair value of the long-term debt is based on quoted market prices for similar issues (Level 2).

During the second quarter ended June 30, 2008, the Company repaid its $150 million 6.25% Notes due June 1, 2008. In addition, on March 14, 2008, Dover issued $350 million of 5.45% notes due 2018 and $250 million of 6.60% notes due 2038. The net proceeds of $594.1 million from the notes were used to repay borrowings under Dover’s commercial paper program, and are reflected in long-term debt in the Company’s unaudited Condensed Consolidated Balance Sheet at June 30, 2008. The notes and debentures are redeemable at the option of Dover in whole or in part at any time at a redemption price that includes a make-whole premium, with accrued interest to the redemption date.

DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

During the first quarter of 2008, Dover entered into several interest rate swaps in anticipation of the debt financing completed on March 14, 2008 which, upon settlement, resulted in a net gain of $1.2 million which will be deferred and amortized over the life of the related notes.

There are presently two interest rate swap agreements outstanding for a total notional amount of $100.0 million, designated as fair value hedges on part of the Company’s $400.0 million 6.50% Notes due February 15, 2011. One $50 million interest rate swap exchanges fixed-rate interest for variable-rate interest. The other $50 million swap is designated in foreign currency and exchanges fixed-rate interest for variable-rate interest, and also hedges a portion of the Company’s net investment in non-U.S. operations. The swap agreements have increased the effective interest rate on the notes to 6.57%. There is no hedge ineffectiveness. The fair value of the interest rate swaps outstanding as of June 30, 2008 was a loss of $14.7 million which was based on quoted market prices for similar instruments (Level 2).

8. Commitments and Contingent Liabilities

A few of the Company’s subsidiaries are involved in legal proceedings relating to the cleanup of waste disposal sites identified under federal and state statutes which provide for the allocation of such costs among “potentially responsible parties.” In each instance, the extent of the Company’s liability appears to be very small in relation to the total projected expenditures and the number of other “potentially responsible parties” involved and is anticipated to be immaterial to the Company. In addition, a few of the Company’s subsidiaries are involved in ongoing remedial activities at certain current and former plant sites, in cooperation with regulatory agencies, and appropriate reserves have been established.

The Company and certain of its subsidiaries are also parties to a number of other legal proceedings incidental to their businesses. These proceedings primarily involve claims by private parties alleging injury arising out of use of the Company’s products, exposure to hazardous substances, patent infringement, employment matters and commercial disputes. Management and legal counsel, at least quarterly, review the probable outcome of such proceedings, the costs and expenses reasonably expected to be incurred, the availability and extent of insurance coverage, and established reserves. While it is not possible at this time to predict the outcome of these legal actions or any need for additional reserves, in the opinion of management, based on these reviews, it is unlikely that the disposition of the lawsuits and the other matters mentioned above will have a material adverse effect on the financial position, results of operations, cash flows or competitive position of the Company.

Estimated warranty program claims are provided for at the time of sale. Amounts provided for are based on historical costs and adjusted new claims. The changes in the carrying amount of product warranties through June 30, 2008 and 2007 are as follows:

(in thousands)		2008				2007
Beginning Balance January 1		$	55,437			$	47,897
Provision for warranties			21,608				17,220
Increase from acquisitions			100				143
Settlements made			(18,712	)			(14,799	)
Other adjustments			649				197
Ending Balance June 30		$	59,082			$	50,658

DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

From time to time, the Company will initiate various restructuring programs at its operating companies or record severance and other restructuring costs in connection with purchase accounting for acquisitions (see Note 2 for additional detail). The following table details the Company’s severance and other restructuring reserve activity:

						Other
(in thousands)		Severance				Restructuring				Total
At December 31, 2007 (A)		$	5,762			$	22,668			$	28,430
Provision, net			3,264				3,585				6,849
Payments			(3,484	)			(3,345	)			(6,829	)
Other, including asset impairments			41				(2,364	)			(2,323	)
At June 30, 2008 (B)		$	5,583			$	20,544			$	26,127

9. Employee Benefit Plans

The following table sets forth the components of net periodic expense:

		Retirement Plan Benefits								Post Retirement Benefits
		Three Months Ended June 30,								Three Months Ended June 30,
(in thousands)		2008				2007				2008				2007
Expected return on plan assets		$	(8,662	)		$	(7,807	)		$	—			$	—
Benefits earned during period			5,501				5,810				64				90
Interest accrued on benefit obligation			9,759				8,673				240				279
Amortization (A):
Prior service cost			2,159				2,128				(43	)			(43	)
Recognized actuarial (gain) loss			1,188				2,717				(116	)			(19	)
Transition obligation			(18	)			(39	)			—				—
Net periodic expense		$	9,927			$	11,482			$	145			$	307

		Retirement Plan Benefits								Post Retirement Benefits
		Six Months Ended June 30,								Six Months Ended June 30,
(in thousands)		2008				2007				2008				2007
Expected return on plan assets		$	(17,324	)		$	(15,614	)		$	—			$	—
Benefits earned during period			11,002				11,620				145				177
Interest accrued on benefit obligation			19,518				17,346				474				554
Amortization (A):							—
Prior service cost			4,318				4,256				(86	)			(86	)
Recognized actuarial (gain) loss			2,376				5,434				(248	)			(75	)
Transition obligation			(36	)			(78	)			—				—
Net periodic expense		$	19,854			$	22,964			$	285			$	570

DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

10. Comprehensive Earnings

Comprehensive earnings were as follows:

		Three months Ended June 30,								Six Months Ended June 30,
(in thousands)		2008				2007				2008				2007
Net Earnings		$	135,276			$	172,195			$	282,454			$	301,126
Foreign currency translation adjustment			12,796				18,159				76,330				25,480
Unrealized holding gains (losses), net of tax			9				(1,813	)			(206	)			(1,208	)
Derivative cash flow hedges, net of tax			(6	)			(47	)			1,118				(94	)
SFAS 158 amortization, net of tax			2,013				3,194				3,982				6,388
Comprehensive Earnings		$	150,088			$	191,688			$	363,678			$	331,692

11. Segment Information

Dover has four reportable segments which are based on management’s reporting structure used to evaluate performance. Segment financial information and a reconciliation of segment results to consolidated results follows:

(in thousands)		Three months ended June 30								Six Months Ended June 30,
		2008				2007				2008				2007
REVENUE
Industrial Products		$	649,006			$	614,762			$	1,265,780			$	1,215,767
Engineered Systems			538,729				508,810				1,037,951				975,437
Fluid Management			446,630				363,245				847,929				722,241
Electronic Technologies			379,958				340,717				731,715				661,890
Intra — segment eliminations			(3,345	)			(3,391	)			(6,911	)			(6,759	)
Total consolidated revenue		$	2,010,978			$	1,824,143			$	3,876,464			$	3,568,576
EARNINGS FROM CONTINUING OPERATIONS
Segment Earnings:
Industrial Products		$	87,925			$	88,796			$	166,763			$	163,317
Engineered Systems			80,045				77,828				143,041				129,485
Fluid Management			97,878				73,283				183,017				147,125
Electronic Technologies			51,029				45,354				87,263				82,303
Total segments			316,877				285,261				580,084				522,230
Corporate expense / other			(24,975	)			(23,107	)			(54,944	)			(45,499	)
Net interest expense			(27,388	)			(22,684	)			(50,819	)			(44,585	)
Earnings from continuing operations before provision for income taxes and discontinued operations			264,514				239,470				474,321				432,146
Provision for taxes			77,604				64,799				139,480				119,655
Earnings from continuing operations — total consolidated		$	186,910			$	174,671			$	334,841			$	312,491

12. Recent Accounting Standards

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS No. 157”), which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. For financial assets and liabilities, this statement is effective for fiscal periods beginning after November 15, 2007 and does not require any new fair value measurements. In February 2008, the FASB Staff Position No. 157-2 was issued which delayed the effective date of FASB Statement No. 157 to fiscal years ending after November 15, 2008 for nonfinancial assets and liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). The adoption of SFAS No. 157 did not have a material effect on the consolidated financial statements.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities — including an amendment of FASB Statement No. 115.” This statement permits entities to choose to

DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

measure many financial instruments and certain other items at fair value. This statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, including interim periods within that fiscal year. The Company did not elect the fair value option for any of its existing financial instruments as of June 30, 2008 and the Company has not determined whether or not it will elect this option for financial instruments it may acquire in the future.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51” (“SFAS 160”). SFAS 160 requires that a noncontrolling interest in a subsidiary be reported as equity and the amount of consolidated net income specifically attributable to the noncontrolling interest be identified in the consolidated financial statements. It also requires consistency in the manner of reporting changes in the parent’s ownership interest and requires fair value measurement of any noncontrolling equity investment retained in a deconsolidation. The Company will apply the provisions of this statement prospectively, as required, beginning on January 1, 2009 and does not expect the adoption of SFAS 160 to have a material effect on its consolidated financial statements.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS No. 141(R)”). SFAS No. 141(R) retains the fundamental requirements in Statement 141 that the acquisition method of accounting (which Statement 141 called the purchase method) be used for all business combinations and for an acquirer to be identified for each business combination. In general, the statement 1) broadens the guidance of SFAS No. 141, extending its applicability to all events where one entity obtains control over one or more other businesses, 2) broadens the use of fair value measurements used to recognize the assets acquired and liabilities assumed, 3) changes the accounting for acquisition related fees and restructuring costs incurred in connection with an acquisition, and 4) increases required disclosures. The Company will apply the provisions of this statement prospectively to business combinations for which the acquisition date is on or after January 1, 2009 and is currently assessing the impact of adoption of SFAS No. 141(R) on its consolidated financial statements.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133” (“SFAS No. 161”). SFAS No. 161 amends and expands the disclosure requirements of SFAS No. 133 with the intent to provide users of financial statements with an enhanced understanding of: 1) How and why an entity uses derivative instruments; 2) How derivative instruments and related hedged items are accounted for under SFAS No. 133 and its related interpretations; and 3) How derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows. This statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The Company is currently assessing the impact of the adoption of SFAS No. 161 on its consolidated financial statements.

In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles.” This statement identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles (GAAP) in the United States (the GAAP hierarchy). This Statement is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles.” The Company is currently assessing the impact of the adoption of this statement on its consolidated financial statements.

In May 2008, the FASB issued SFAS No. 163, “Accounting for Financial Guarantee Insurance Contracts—an interpretation of FASB Statement No. 60.” This statement requires that an insurance enterprise recognize a claim liability prior to an event of default (insured event) when there is evidence that credit deterioration has occurred in an insured financial obligation. This Statement also clarifies how Statement 60 applies to financial guarantee insurance contracts, including the recognition and measurement to be used to account for premium revenue and claim liabilities. This statement is effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2008. The Company is currently assessing the impact of the adoption of this statement on its consolidated financial statements.

In April 2008, the FASB issued FASB Staff Position No. 142-3 “Determination of the Useful Life of Intangible Assets” (“FSP No. 142-3”) to improve the consistency between the useful life of a recognized intangible asset

DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

(under SFAS No. 142) and the period of expected cash flows used to measure the fair value of the intangible asset (under SFAS No. 141(R)). FSP No. 142-3 amends the factors to be considered when developing renewal or extension assumptions that are used to estimate an intangible asset’s useful life under SFAS No. 142. The guidance in the new staff position is to be applied prospectively to intangible assets acquired after December 31, 2008. In addition, FSP No. 142-3 increases the disclosure requirements related to renewal or extension assumptions. The Company is currently assessing the impact of the adoption of FSP No. 142-3 on its consolidated financial statements.

13. Equity and Cash Incentive Program

In the first quarter of 2008 and 2007, the Company issued stock appreciation rights (“SARs”) covering 2,239,707 and 1,731,882 shares, respectively. For the six months ended June 30, 2008 and 2007, after-tax stock-based compensation expense totaled $9.1 million and $9.4 million, respectively. The fair value of each grant was estimated on the dates of the grant using the Black-Scholes option pricing model.

14. Share Repurchases

During the fourth quarter of 2007, the Board of Directors approved a $500 million share repurchase program authorizing repurchases of Dover’s common shares through the end of 2008. During the six months ended June 30, 2008, the Company repurchased 7,625,000 shares of its common stock in the open market at an average price of $45.54 per share, of which 4,000,000 were purchased in the second quarter of 2008 at $49.37. As of June 30, 2008, the approximate dollar amount still available for repurchase under this share repurchase program was $114.2 million.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Refer to the section below entitled “Special Notes Regarding Forward-Looking Statements” for a discussion of factors that could cause actual results to differ from the forward-looking statements contained below and throughout this quarterly report.

OVERVIEW

Dover Corporation (“Dover” or the “Company”) is a global portfolio of manufacturing companies providing innovative components and equipment, specialty systems and support services for a variety of applications in the industrial products, engineered systems, fluid management and electronic technologies markets. Dover discusses its operations at the platform level within the Industrial Products, Engineered Systems and Fluid Management segments, which contain two platforms each. Electronic Technologies’ results are discussed at the segment level.

(1) FINANCIAL CONDITION:

Management assesses Dover’s liquidity in terms of its ability to generate cash and access capital markets to fund its operating, investing and financing activities. Significant factors affecting liquidity are: cash flows generated from operating activities, capital expenditures, acquisitions, dispositions, dividends, adequacy of commercial paper and available bank lines of credit, and the ability to attract long-term capital with satisfactory terms. The Company generates substantial cash from operations and remains in a strong financial position, maintaining enough liquidity for reinvestment in existing businesses and strategic acquisitions while managing its capital structure on a short and long-term basis.

Cash and cash equivalents of $742.6 million at June 30, 2008 increased from the December 31, 2007 balance of $606.1 million. Cash and cash equivalents were invested in highly liquid investment grade money market instruments with a maturity of 90 days or less.

The following table is derived from the Condensed Consolidated Statements of Cash Flows:

		Six Months Ended June 30,
Cash Flows from Continuing Operations (in thousands)		2008				2007
Net Cash Flows Provided By (Used In):
Operating activities		$	385,978			$	324,112
Investing activities			(172,246	)			(163,011	)
Financing activities			(115,460	)			(117,465	)

Cash flows provided by operating activities for the first six months of 2008 increased $61.9 million from the prior year period, primarily reflecting higher earnings from continuing operations.

Cash used in investing activities in the first six months of 2008 increased $9.2 million largely reflecting lower proceeds received from dispositions in the current period, partially offset by lower acquisition spending and capital expenditures. Proceeds from the sales of businesses in the first six months of 2008 were $8.0 million compared to $30.4 million in the 2007 period. Acquisition spending was $99.8 million during the first six months of 2008 compared to $118.0 million in the prior year period. Capital expenditures during the first six months of 2008 decreased 7% to $85.1 million as compared to $91.0 million in the prior year period. The Company currently anticipates that any additional acquisitions made during 2008 will be funded from available cash and internally generated funds and, if necessary, through the issuance of commercial paper, use of established lines of credit or public debt markets.

Cash used in financing activities for the first six months of 2008 decreased 2% to $115.5 million as compared to $117.5 million in the prior year period. In the current period, increased purchases of common stock on the open market and higher repayments of commercial paper and long-term debt more than offset the $594.1 million in proceeds received from the issuance of debt. During the six months ended June 30, 2008, the Company purchased 7,625,000 shares of common stock in the open market at an average price of $45.54 of which 4,000,000 shares were purchased in the second quarter at an average price of $49.37.

“Adjusted Working Capital” (a non-GAAP measure calculated as accounts receivable, plus inventory, less accounts payable) increased from the prior year end by $98.4 million or 7% to $1,460.3 million, which reflected increases in receivables of $133.1 million and increases in inventory of $35.2 million, partially offset by an increase in payables of $69.9 million. Excluding the impact of acquisitions and foreign currency, Adjusted Working Capital would have increased by $53.2 million or 4%. “Average Annual Adjusted Working Capital” as a percentage of revenue (a non-GAAP measure calculated as the five-quarter average balance of accounts receivable, plus inventory, less accounts payable divided by the trailing twelve months of revenue) was 18.5% at June 30, 2008 compared to 18.9% at December 31, 2007 and inventory turns were 6.9 at June 30, 2008 compared to 6.7 at December 31, 2007.

In addition to measuring its cash flow generation and usage based upon the operating, investing and financing classifications included in the unaudited Condensed Consolidated Statements of Cash Flows, the Company also measures free cash flow (a non-GAAP measure). Management believes that free cash flow is an important measure of operating performance because it provides both management and investors a measurement of cash generated from operations that is available to fund acquisitions, pay dividends, repay debt and repurchase Dover’s common stock. Dover’s free cash flow for the six months ended June 30, 2008 increased $67.8 million compared to the prior year period. The increase reflected higher earnings from continuing operations and lower capital expenditures.

The following table is a reconciliation of free cash flow with cash flows from operating activities:

		Six Months Ended June 30,
Free Cash Flow (in thousands)		2008				2007
Cash flow provided by operating activities		$	385,978			$	324,112
Less: Capital expenditures			85,115				91,045
Free cash flow		$	300,863			$	233,067
Free cash flow as a percentage of revenue			7.8	%			6.5	%

The Company utilizes total debt and net debt-to-total-capitalization calculations to assess its overall financial leverage and capacity and believes the calculations are useful to investors for the same reason. The following table provides a reconciliation of total debt and net debt to total capitalization to the most directly comparable GAAP measures:

		At June 30,				At December 31,
Net Debt to Total Capitalization Ratio (in thousands)		2008				2007
Current maturities of long-term debt		$	32,690			$	33,175
Commercial paper and other short-term debt			430,200				605,474
Long-term debt			1,879,492				1,452,003
Total debt			2,342,382				2,090,652
Less: Cash and cash equivalents			742,613				606,105
Net debt			1,599,769				1,484,547
Add: Stockholders’ equity			3,956,607				3,946,173
Total capitalization		$	5,556,376			$	5,430,720
Net debt to total capitalization			28.8	%			27.3	%

The total debt level of $2,342.4 million at June 30, 2008 increased $251.7 million from December 31, 2007 due to higher long-term debt, partially offset by a decrease in commercial paper. The net debt increase was due to the higher total debt level, partially offset by an increase in cash generated from operations in the first six months of 2008 when compared to December 31, 2007. The increase in net debt was used to fund acquisitions and share repurchases in excess of the Company’s free cash flow.

Dover’s long-term debt with a book value of $1,912.2 million, of which $32.7 million matures in less than one year, had a fair value of approximately $1,892.3 million at June 30, 2008. The estimated fair value of the long-term debt is based on quoted market prices for similar issues (Level 2).

During the second quarter ended June 30, 2008, the Company repaid its $150 million 6.25% Notes due June 1, 2008. In addition, on March 14, 2008, Dover issued $350 million of 5.45% notes due 2018 and $250 million of 6.60% notes due 2038. The net proceeds of $594.1 million from the notes was used to repay borrowings under

Dover’s commercial paper program, and are reflected in long-term debt in the Company’s Unaudited Condensed Consolidated Balance Sheet at June 30, 2008. The notes and debentures are redeemable at the option of Dover in whole or in part at any time at a redemption price that includes a make-whole premium, with accrued interest to the redemption date.

During the first quarter of 2008, Dover entered into several interest rate swaps in anticipation of the debt financing completed on March 14, 2008 which, upon settlement, resulted in a gain of $1.2 million which will be deferred and amortized over the life of the related notes.

There are presently two interest rate swap agreements outstanding for a total notional amount of $100.0 million, designated as fair value hedges on part of the Company’s $400.0 million 6.50% Notes due February 15, 2011. One $50 million interest rate swap exchanges fixed-rate interest for variable-rate interest. The other $50 million swap is designated in foreign currency and exchanges fixed-rate interest for variable-rate interest and also hedges a portion of the Company’s net investment in non-U.S. operations. The swap agreements have increased the effective interest rate on the notes to 6.57%. There is no hedge ineffectiveness. The fair value of the interest rate swaps outstanding as of June 30, 2008 was a loss of $14.7 million which was based on quoted market prices for similar instruments (Level 2).

Severance and Other Restructuring Reserves

From time to time, the Company will initiate various restructuring programs at its operating companies or record severance and other restructuring costs in connection with purchase accounting for acquisitions. At June 30, 2008 and December 31, 2007, the Company had reserves related to severance and other restructuring activities of $26.1 million and $28.4 million, respectively. During the first six months of 2008, the Company recorded $6.8 million in additional charges and made $6.8 million in payments related to these reserves.

(2) RESULTS OF OPERATIONS:

CONSOLIDATED RESULTS OF OPERATIONS

Revenue for the second quarter of 2008 increased 10% to $2,011.0 million from the comparable 2007 period, led by the results of the Fluid Management segment, along with increases at the other three Dover segments as well. Overall, Dover achieved organic revenue growth of 5% in the quarter while acquisition growth was 1%. Dover’s quarterly revenue also benefited from the movement in foreign exchange rates which accounted for 4% of the growth. Gross profit increased 13% to $739.6 million from the prior year quarter while the gross profit margin increased 100 basis points to 36.8%.

Revenue for the first six months of 2008 increased 9% to $3,876.5 million from the comparable 2007 period, led by Fluid Management, along with increases at all other segments. Gross profit increased 11% to $1,419.2 million from the prior year period while the gross profit margin increased 90 basis points to 36.6%.

Selling and administrative expenses of $446.5 million for the second quarter of 2008 increased by $55.0 million over the comparable 2007 period, primarily due to increased revenue activity and increased professional fees and restructuring charges, partially offset by synergy savings. Selling and administrative expenses as a percentage of revenue increased to 22.2% from 21.5% in the comparable 2007 period.

Selling and administrative expenses of $890.3 million for the first six months of 2008 increased $91.6 million over the comparable 2007 period, mainly due to the same factors that impacted the quarter. Selling and administrative expenses as a percentage of revenue increased to 23.0% from 22.4% in the comparable 2007 period.

Interest expense, net for the second quarter and first six months of 2008 increased by $4.7 million and $6.2 million, respectively, compared to the same quarter and first six months last year primarily due to higher average outstanding commercial paper balances as well as higher long-term debt levels in the current periods.

Other expense (income), net, for the three and six months ended June 30, 2008 and 2007 primarily related to the effects of foreign exchange fluctuations on assets and liabilities denominated in currencies other than the Company’s functional currency and other miscellaneous non-operational items.

The effective tax rate for continuing operations for the three months ended June 30, 2008 was 29.3%, compared to the prior year rate of 27.1%. The effective tax rate for continuing operations for the six months ended June 30, 2008 was 29.4%, compared to the prior year rate of 27.7%. All periods were favorably impacted by the mix of non-U.S. earnings in low-taxed jurisdictions. In addition, the prior year rates were favorably impacted by benefits recognized for tax positions that were effectively settled.

Earnings from continuing operations for the quarter increased 7% to $186.9 million or $0.98 diluted EPS (“EPS”) compared to $174.7 million or $0.85 EPS in the prior year second quarter. The increase was primarily a result of improvements at Fluid Management, Electronic Technologies and Engineered Systems, with EPS also benefiting from share repurchases. Earnings from continuing operations for the six months ended June 30, 2008 increased 7% to $334.8 million or $1.74 EPS compared to $312.5 million or $1.52 EPS in the prior year period.

Loss from discontinued operations for the second quarter of 2008 was $51.6 million, or $0.27 EPS, compared to a loss of $2.5 million or $0.01 EPS in the comparable 2007 quarter. During the second quarter of 2008, the Company discontinued Triton in the Engineered Systems segment and reclassified Crenlo, which had been included in discontinued operations, into the Industrial Products segment. The 2008 loss from discontinued operations includes a $51.1 million write-down to the carrying value of Triton to its estimated fair market value and other adjustments. The 2007 loss included losses from the sale of a previously discontinued business, net of tax, of $8.3 million.

Loss from discontinued operations for the six months ended June 30, 2008 was $52.4 million or $0.27 EPS compared to a loss of $11.4 million or $0.06 EPS in the comparable 2007 period. The 2008 loss includes the second quarter events mentioned above as well as first quarter losses from adjustments to the carrying value of certain businesses still held for sale. The 2007 year to date loss included the second quarter event mentioned above as well as first quarter 2007 losses from the sales of Kurz-Kasch, SWF and other adjustments.

SEGMENT RESULTS OF OPERATIONS

Industrial Products

		Three Months Ended June 30,												Six Months Ended June 30,
(in thousands)		2008				2007				% Change				2008				2007				% Change
Revenue
Material Handling		$	306,988			$	299,588				2	%		$	594,196			$	593,054				0	%
Mobile Equipment			342,228				315,394				9	%			671,951				623,152				8	%
Eliminations			(210	)			(220	)							(367	)			(439	)
		$	649,006			$	614,762				6	%		$	1,265,780			$	1,215,767				4	%
Segment earnings		$	87,925			$	88,796				-1	%		$	166,763			$	163,317				2	%
Operating margin			13.5	%			14.4	%							13.2	%			13.4	%
Acquisition related depreciation and amortization expense*		$	8,070			$	6,697				20	%		$	17,285			$	13,438				29	%
Bookings
Material Handling		$	313,199			$	286,875				9	%		$	609,477			$	590,925				3	%
Mobile Equipment			318,059				353,122				-10	%			678,383			$	727,966				-7	%
Eliminations			(385	)			(445	)							(681	)			(883	)
		$	630,873			$	639,552				-1	%		$	1,287,179			$	1,318,008				-2	%
Backlog
Material Handling														$	235,284			$	240,977				-2	%
Mobile Equipment															549,430				541,683				1	%
Eliminations															(186	)			(236	)
														$	784,528			$	782,424				0	%