Table of Contents

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
For the quarterly period ended September 30, 2010
Commission File Number: 1-4018
Dover Corporation
(Exact name of registrant as specified in its charter)
 	 	 	
Delaware
(State of Incorporation)	 	53-0257888
(I.R.S. Employer Identification No.)	
 	 	 	
3005 Highland Parkway, Suite 200
Downers Grove, Illinois
(Address of principal executive offices)	 	 60515
(Zip Code)	
(630) 541-1540
(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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes  þ  No  o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
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 definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12-b-2 of the Exchange Act.

Large accelerated filer þ	 	Accelerated filer o	 	Non-accelerated filer o	 	Smaller reporting company o	
 	 	 	 	(Do not check if a smaller reporting company)	 	 	
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 October 15, 2010 was 186,790,017.

 

 
Dover Corporation
Form 10-Q
Table of Contents
 	 	 	 	 	 	 	 	 	
 	 	Page	 	 	 	 	 	
PART I — FINANCIAL INFORMATION	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Item 1. Financial Statements (unaudited)	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2010 and 2009	 	 	1	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Condensed Consolidated Balance Sheet at September 30, 2010 and December 31, 2009	 	 	2	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Condensed Consolidated Statement of Stockholders’ Equity for the nine months ended September 30, 2010	 	 	3	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2010 and 2009	 	 	4	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Notes to Condensed Consolidated Financial Statements	 	 	5	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	 	 	15	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Item 3. Quantitative and Qualitative Disclosures About Market Risk	 	 	25	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Item 4. Controls and Procedures	 	 	25	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
PART II — OTHER INFORMATION	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Item 1. Legal Proceedings	 	 	25	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Item 1A. Risk Factors	 	 	25	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	 	 	25	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Item 3. Defaults Upon Senior Securities	 	 	26	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Item 4. [Removed and Reserved]	 	 	26	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Item 5. Other Information	 	 	26	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Item 6. Exhibits	 	 	26	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
SIGNATURES	 	 	27	 	 	 	 	 	
 EX-31.1	
 EX-31.2	
 EX-32	
 EX-101 INSTANCE DOCUMENT	
 EX-101 SCHEMA DOCUMENT	
 EX-101 CALCULATION LINKBASE DOCUMENT	
 EX-101 LABELS LINKBASE DOCUMENT	
 EX-101 PRESENTATION LINKBASE DOCUMENT	
 EX-101 DEFINITION LINKBASE DOCUMENT	
(All other schedules are not required and have been omitted.)

Table of Contents
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
DOVER CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share figures)
(unaudited)
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Three Months Ended
September 30,	 	 	Nine Months Ended
September 30,	 	
 	 	2010	 	 	2009	 	 	2010	 	 	2009	 	
Revenue	 	$	1,887,141	 	 	$	1,499,611	 	 	$	5,257,107	 	 	$	4,269,028	 	
Cost of goods and services	 	 	1,175,456	 	 	 	941,345	 	 	 	3,244,567	 	 	 	2,735,308	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Gross profit	 	 	711,685	 	 	 	558,266	 	 	 	2,012,540	 	 	 	1,533,720	 	
Selling and administrative expenses	 	 	414,022	 	 	 	378,125	 	 	 	1,247,000	 	 	 	1,110,476	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating earnings	 	 	297,663	 	 	 	180,141	 	 	 	765,540	 	 	 	423,244	 	
Interest expense, net	 	 	26,335	 	 	 	26,299	 	 	 	80,446	 	 	 	73,537	 	
Other expense (income), net	 	 	9,837	 	 	 	(903	)	 	 	3,888	 	 	 	(1,124	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Earnings before provision for income taxes and discontinued operations	 	 	261,491	 	 	 	154,745	 	 	 	681,206	 	 	 	350,831	 	
Provision for income taxes	 	 	38,732	 	 	 	47,261	 	 	 	165,069	 	 	 	81,378	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Earnings from continuing operations	 	 	222,759	 	 	 	107,484	 	 	 	516,137	 	 	 	269,453	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Gain (loss) from discontinued operations, net	 	 	1,000	 	 	 	(600	)	 	 	(14,381	)	 	 	(12,063	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Net earnings	 	$	223,759	 	 	$	106,884	 	 	$	501,756	 	 	$	257,390	 	

Basic earnings (loss) per common share:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Earnings from continuing operations	 	$	1.19	 	 	$	0.58	 	 	$	2.76	 	 	$	1.45	 	
Gain (loss) from discontinued operations, net	 	 	0.01	 	 	 	—	 	 	 	(0.08	)	 	 	(0.06	)	
Net earnings	 	 	1.20	 	 	 	0.57	 	 	 	2.68	 	 	 	1.38	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Weighted average shares outstanding	 	 	186,721	 	 	 	186,148	 	 	 	186,917	 	 	 	186,077	 	

Diluted earnings (loss) per common share:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Earnings from continuing operations	 	$	1.18	 	 	$	0.58	 	 	$	2.73	 	 	$	1.45	 	
Gain (loss) from discontinued operations, net	 	 	0.01	 	 	 	—	 	 	 	(0.08	)	 	 	(0.06	)	
Net earnings	 	 	1.19	 	 	 	0.57	 	 	 	2.66	 	 	 	1.38	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Weighted average shares outstanding	 	 	188,565	 	 	 	186,358	 	 	 	188,898	 	 	 	186,321	 	

Dividends paid per common share	 	$	0.28	 	 	$	0.26	 	 	$	0.80	 	 	$	0.76	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
The following table is a reconciliation of the share amounts used in computing earnings per share:
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Three Months Ended
September 30,	 	 	Nine Months Ended
September 30,	 	
 	 	2010	 	 	2009	 	 	2010	 	 	2009	 	
Weighted average shares outstanding — Basic	 	 	186,721	 	 	 	186,148	 	 	 	186,917	 	 	 	186,077	 	
Dilutive effect of assumed exercise of employee stock options, SAR’s and performance shares	 	 	1,844	 	 	 	210	 	 	 	1,981	 	 	 	244	 	

Weighted average shares outstanding — Diluted	 	 	188,565	 	 	 	186,358	 	 	 	188,898	 	 	 	186,321	 	

Anti-dilutive options/SAR’s excluded from diluted EPS computation	 	 	3,709	 	 	 	12,404	 	 	 	1,432	 	 	 	9,721	 	
See Notes to Condensed Consolidated Financial Statements
1

Table of Contents
DOVER CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands)
(unaudited)
 	 	 	 	 	 	 	 	 	
 	 	September 30, 2010	 	 	December 31, 2009	 	
Current assets:	 	 	 	 	 	 	 	 	
Cash and equivalents	 	$	866,090	 	 	$	714,365	 	
Short-term investments	 	 	214,742	 	 	 	223,809	 	
Receivables, net of allowances of $38,652 and $41,832	 	 	1,181,599	 	 	 	878,754	 	
Inventories, net	 	 	725,312	 	 	 	570,858	 	
Prepaid and other current assets	 	 	58,092	 	 	 	64,922	 	
Deferred tax asset	 	 	57,006	 	 	 	69,999	 	
 	 	 	 	 	 	 	
Total current assets	 	 	3,102,841	 	 	 	2,522,707	 	
 	 	 	 	 	 	 	
Property, plant and equipment, net	 	 	840,374	 	 	 	828,922	 	
Goodwill	 	 	3,338,517	 	 	 	3,350,217	 	
Intangible assets, net	 	 	902,123	 	 	 	950,748	 	
Other assets and deferred charges	 	 	105,896	 	 	 	113,108	 	
Assets of discontinued operations	 	 	63,824	 	 	 	116,701	 	
 	 	 	 	 	 	 	
Total assets	 	$	8,353,575	 	 	$	7,882,403	 	

Current liabilities:	 	 	 	 	 	 	 	 	
Notes payable and current maturities of long-term debt	 	$	50,180	 	 	$	35,624	 	
Accounts payable	 	 	490,572	 	 	 	357,004	 	
Accrued compensation and employee benefits	 	 	260,189	 	 	 	210,804	 	
Accrued insurance	 	 	108,870	 	 	 	107,455	 	
Other accrued expenses	 	 	235,581	 	 	 	219,295	 	
Federal and other taxes on income	 	 	53,593	 	 	 	38,994	 	
 	 	 	 	 	 	 	
Total current liabilities	 	 	1,198,985	 	 	 	969,176	 	
 	 	 	 	 	 	 	
Long-term debt	 	 	1,789,660	 	 	 	1,825,260	 	
Deferred income taxes	 	 	348,854	 	 	 	292,344	 	
Other deferrals	 	 	529,446	 	 	 	573,137	 	
Liabilities of discontinued operations	 	 	111,366	 	 	 	138,878	 	
Commitments and contingent liabilities	 	 	 	 	 	 	 	 	
Stockholders’ Equity:	 	 	 	 	 	 	 	 	
Total stockholders’ equity	 	 	4,375,264	 	 	 	4,083,608	 	
 	 	 	 	 	 	 	
Total liabilities and stockholders’ equity	 	$	8,353,575	 	 	$	7,882,403	 	
 	 	 	 	 	 	 	
See Notes to Condensed Consolidated Financial Statements
2

Table of Contents
DOVER CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
(in thousands)
(unaudited)
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	Accumulated	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Common	 	 	Additional	 	 	Other	 	 	 	 	 	 	 	 	 	 	Total	 	
 	 	Stock	 	 	Paid-In	 	 	Comprehensive	 	 	Retained	 	 	Treasury	 	 	Stockholders’	 	
 	 	$1 Par Value	 	 	Capital	 	 	Earnings (Loss)	 	 	Earnings	 	 	Stock	 	 	Equity	 	
Balance at December 31, 2009	 	$	247,342	 	 	$	497,291	 	 	$	84,842	 	 	$	5,453,022	 	 	$	(2,198,889	)	 	$	4,083,608	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net earnings	 	 	—	 	 	 	—	 	 	 	—	 	 	 	501,756	 	 	 	—	 	 	 	501,756	 	
Dividends paid	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(148,636	)	 	 	—	 	 	 	(148,636	)	
Common stock issued for options exercised	 	 	1,354	 	 	 	47,060	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	48,414	 	
Tax benefit from the exercise of stock options	 	 	—	 	 	 	3,807	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	3,807	 	
Stock-based compensation expense	 	 	—	 	 	 	16,576	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	16,576	 	
Common stock acquired	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(70,198	)	 	 	(70,198	)	
Translation of foreign financial statements	 	 	—	 	 	 	—	 	 	 	(61,167	)	 	 	—	 	 	 	—	 	 	 	(61,167	)	
Unrealized holding gains, net of tax	 	 	—	 	 	 	—	 	 	 	272	 	 	 	—	 	 	 	—	 	 	 	272	 	
Defined benefit pension plans, net of tax	 	 	—	 	 	 	—	 	 	 	832	 	 	 	—	 	 	 	—	 	 	 	832	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance at September 30, 2010	 	$	248,696	 	 	$	564,734	 	 	$	24,779	 	 	$	5,806,142	 	 	$	(2,269,087	)	 	$	4,375,264	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Preferred Stock; $100 par value per share; 100,000 shares authorized; no shares issued.
See Notes to Condensed Consolidated Financial Statements
3

Table of Contents
DOVER CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
(unaudited)
 	 	 	 	 	 	 	 	 	
 	 	Nine Months Ended September 30,	 	
 	 	2010	 	 	2009	 	
Operating Activities of Continuing Operations	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
Net earnings	 	$	501,756	 	 	$	257,390	 	
 	 	 	 	 	 	 	 	 	
Adjustments to reconcile net earnings to net cash from operating activities:	 	 	 	 	 	 	 	 	
Loss from discontinued operations	 	 	14,381	 	 	 	12,063	 	
Depreciation and amortization	 	 	199,146	 	 	 	191,900	 	
Stock-based compensation	 	 	17,068	 	 	 	14,926	 	
Loss on extinguishment of long-term debt	 	 	4,343	 	 	 	—	 	
Gain on sale of assets	 	 	(5,108	)	 	 	—	 	
Cash effect of changes in current assets and liabilities (excluding effects of acquisitions, dispositions and foreign exchange):	 	 	 	 	 	 	 	 	
Accounts receivable	 	 	(302,368	)	 	 	108,526	 	
Inventories	 	 	(148,719	)	 	 	92,799	 	
Prepaid expenses and other assets	 	 	7,310	 	 	 	3,156	 	
Accounts payable	 	 	131,175	 	 	 	(23,327	)	
Accrued expenses	 	 	71,665	 	 	 	(102,124	)	
Contributions to employee benefit plans	 	 	(30,000	)	 	 	(15,000	)	
Accrued and deferred taxes, net	 	 	66,451	 	 	 	10,135	 	
Other non-current, net	 	 	(7,988	)	 	 	3,669	 	
 	 	 	 	 	 	 	
Net cash provided by operating activities of continuing operations	 	 	519,112	 	 	 	554,113	 	

Investing Activities of Continuing Operations	 	 	 	 	 	 	 	 	
Proceeds from sale of short-term investments	 	 	457,063	 	 	 	304,103	 	
Purchase of short-term investments	 	 	(463,575	)	 	 	(348,439	)	
Proceeds from the sale of property, plant and equipment	 	 	12,266	 	 	 	12,995	 	
Additions to property, plant and equipment	 	 	(129,837	)	 	 	(83,250	)	
Proceeds from the sales of businesses	 	 	4,500	 	 	 	1,375	 	
Acquisitions (net of cash and cash equivalents acquired)	 	 	(45,198	)	 	 	(43,264	)	
 	 	 	 	 	 	 	
Net cash used in investing activities of continuing operations	 	 	(164,781	)	 	 	(156,480	)	

Financing Activities of Continuing Operations	 	 	 	 	 	 	 	 	
Change in notes payable, net	 	 	48,000	 	 	 	(192,557	)	
Reduction of long-term debt	 	 	(75,814	)	 	 	(34,135	)	
Purchase of common stock	 	 	(70,198	)	 	 	—	 	
Proceeds from exercise of stock options, including tax benefits	 	 	52,221	 	 	 	5,297	 	
Dividends to stockholders	 	 	(148,636	)	 	 	(141,431	)	
 	 	 	 	 	 	 	
Net cash used in financing activities of continuing operations	 	 	(194,427	)	 	 	(362,826	)	

Cash Flows from Discontinued Operations	 	 	 	 	 	 	 	 	
Net cash used in operating activities of discontinued operations	 	 	(1,244	) 	 	 	(15,863	)	
Net cash used in investing activities of discontinued operations	 	 	(140	)	 	 	(586	)	
 	 	 	 	 	 	 	
Net cash used in discontinued operations	 	 	(1,384	) 	 	 	(16,449	)	

Effect of exchange rate changes on cash and cash equivalents	 	 	(6,795	)	 	 	31,737	 	

Net increase in cash and cash equivalents	 	 	151,725	 	 	 	50,095	 	
Cash and cash equivalents at beginning of period	 	 	714,365	 	 	 	547,409	 	

Cash and cash equivalents at end of period	 	$	866,090	 	 	$	597,504	 	
 	 	 	 	 	 	 	
See Notes to Condensed Consolidated Financial Statements
4

Table of Contents
DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(in thousands, unless otherwise indicated)
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, 2009, which provides a more complete understanding of the Company’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.
2. Acquisitions
The following table details the acquisitions made during the nine months ended September 30, 2010.
2010 Acquisitions
 	 	 	 	 	 	 	 	 	 	 	 	 	
Date	 	Type	 	Company Acquired	 	Location (Near)	 	Segment	 	Platform	 	Company	
4-May	 	Stock	 	BSC Filters	 	York, UK	 	Electronic Technologies	 	N/A	 	Ceramic & Microwave	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Designer and manufacturer of microwave filters, diplexers, waveguide and coaxial passive components.	 	   Products Group	
 	 	 	 	 	 	 	 	 	 	 	 	 	
1-Jun	 	Asset	 	Chemilizer	 	Largo, FL	 	Fluid Management	 	Fluid Solutions	 	HydroSystems	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Manufacturer of non-electric, volumetric dosing equipment used in commercial animal raising, agriculture, horticulture and irrigation markets.	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
17-Aug	 	Asset	 	Intek Manufacturing	 	Fort Wayne, IN	 	Engineered Systems	 	Engineered Products	 	Unified Brands	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Manufacturer of electric and gas steam equipment (steamers, kettles, braising pans).	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
30-Sep	 	Asset/Stock	 	Diagnostic Product Line - Dynalco Controls	 	Ft. Lauderdale, FL	 	Fluid Management	 	Energy	 	Cook Compression	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Manufacturer and servicer of portable analyzers targeting the gas gathering and gas transmission markets.	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
30-Sep	 	Stock	 	Gear Products	 	Tulsa, OK	 	Industrial Products	 	Material Handling	 	Tulsa Winch Group	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Manufacturer of worm gear and planetary hoists, rotation drives, rotation bearings and hydraulic pump drives.	 	 	
The 2010 acquisitions are wholly-owned and had an aggregate cost of $45,198, net of cash and cash equivalents acquired, at the dates of acquisition. The Company is in the process of finalizing appraisals of tangible and intangible assets and continuing to evaluate the initial purchase price allocations for the 2010 acquisitions. Accordingly, management has used its best estimates in the preliminary purchase price allocations as of the date of these financial statements.
The following presents the allocation of the acquisition cost to the assets acquired and liabilities assumed, based on their estimated fair values:
 	 	 	 	 	
 	 	2010	 	
Current assets, net of cash acquired	 	$	8,944	 	
Property, plant and equipment	 	 	9,807	 	
Goodwill	 	 	13,903	 	
Intangible assets	 	 	17,098	 	
 	 	 	 	
Total assets acquired	 	 	49,752	 	
Total liabilities assumed	 	 	(4,554	)	
 	 	 	 	
Net assets acquired	 	$	45,198	 	
 	 	 	 	
Acquired intangible assets consist primarily of customer-related intangibles and trademarks, which are being amortized over weighted average lives of 10 years. The 2010 acquisitions resulted in the recognition of goodwill totaling $13,903, of which $8,706 is expected to be deductible for tax purposes. The goodwill identified by the acquisitions is attributed primarily to the benefits derived from product line expansion and operational synergies.
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DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(in thousands, unless otherwise indicated)
The following unaudited pro forma information illustrates the effect on the Company’s revenue and net earnings for the three and nine months ended September 30, 2010 and 2009, assuming that the 2010 acquisitions had taken place at the beginning of the periods presented.
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Three Months Ended September 30,	 	Nine Months Ended September 30,	
 	 	2010	 	2009	 	2010	 	2009	
Revenue from continuing operations:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
As reported	 	$	1,887,141	 	 	$	1,499,611	 	 	$	5,257,107	 	 	$	4,269,028	 	
Pro forma	 	 	1,892,979	 	 	 	1,508,658	 	 	 	5,279,011	 	 	 	4,295,875	 	
Net earnings from continuing operations:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
As reported	 	$	222,759	 	 	$	107,484	 	 	$	516,137	 	 	$	269,453	 	
Pro forma	 	 	223,069	 	 	 	107,905	 	 	 	516,943	 	 	 	270,240	 	
Basic earnings per share from continuing operations:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
As reported	 	$	1.19	 	 	$	0.58	 	 	$	2.76	 	 	$	1.45	 	
Pro forma	 	 	1.19	 	 	 	0.58	 	 	 	2.77	 	 	 	1.45	 	
Diluted earnings per share from continuing operations:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
As reported	 	$	1.18	 	 	$	0.58	 	 	$	2.73	 	 	$	1.45	 	
Pro forma	 	 	1.18	 	 	 	0.58	 	 	 	2.74	 	 	 	1.45	 	
These pro forma results of operations have been prepared for comparative purposes only and include certain adjustments to actual financial results for the periods presented, such as estimated additional amortization and depreciation expense as a result of intangibles and fixed assets acquired, measured at fair value. They do not purport to be indicative of the results of operations that actually would have resulted had the acquisitions occurred on the dates indicated or that may result in the future.
3. Inventories, net
The following table reflects the components of inventory:
 	 	 	 	 	 	 	 	 	
 	 	September 30, 2010	 	 	December 31, 2009	 	
Raw materials	 	$	353,218	 	 	$	291,340	 	
Work in progress	 	 	173,207	 	 	 	136,726	 	
Finished goods	 	 	250,454	 	 	 	191,853	 	
 	 	 	 	 	 	 	
Subtotal	 	 	776,879	 	 	 	619,919	 	
Less LIFO reserve	 	 	51,567	 	 	 	49,061	 	
 	 	 	 	 	 	 	
Total	 	$	725,312	 	 	$	570,858	 	
 	 	 	 	 	 	 	
4. Property, Plant and Equipment, net
The following table details the components of property, plant and equipment, net:
 	 	 	 	 	 	 	 	 	
 	 	September 30, 2010	 	 	December 31, 2009	 	
Land	 	$	50,783	 	 	$	48,010	 	
Buildings and improvements	 	 	571,090	 	 	 	555,262	 	
Machinery, equipment and other	 	 	1,919,423	 	 	 	1,840,638	 	
 	 	 	 	 	 	 	
 	 	 	2,541,296	 	 	 	2,443,910	 	
Accumulated depreciation	 	 	(1,700,922	)	 	 	(1,614,988	)	
 	 	 	 	 	 	 	
Total	 	$	840,374	 	 	$	828,922	 	
 	 	 	 	 	 	 	
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DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(in thousands, unless otherwise indicated)
5. Financial Instruments
Derivatives
The Company periodically uses derivative financial instruments to hedge its exposures to various risks, including, but not limited to, interest rate and foreign exchange risk. The Company does not use derivative instruments for trading or speculative purposes and does not have a material portfolio of derivative financial instruments. The Company is exposed to credit loss in the event of nonperformance by counterparties to its derivative instruments. The Company enters into derivative and other financial instruments with major investment grade financial institutions and has policies to monitor the credit risk of its counterparties. The Company does not anticipate nonperformance by any of its counterparties.
In accordance with the provisions of Accounting Standards Codifications (“ASC”) 815, Derivatives and Hedging, the Company recognizes all derivatives as either assets or liabilities on the balance sheet and measures those instruments at fair value. For derivative instruments that are designated and qualifying cash flow hedges, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income and reclassified into earnings in the same period during which the hedged transaction affects earnings. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings. For derivative instruments that are designated and qualifying as fair value hedges, the gain or loss on the derivatives as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in current earnings.
The Company currently has an outstanding floating-to-floating cross currency swap agreement for a total notional amount of $50,000 in exchange for CHF 65,100. This transaction hedges a portion of the Company’s net investment in non-U.S. operations. The agreement qualifies as a net investment hedge and changes in the fair value are reported within the cumulative translation adjustment section of other comprehensive income, with any hedge ineffectiveness being recognized in current earnings. At September 30, 2010, the fair value of the swap was a net liability of $16,604, which is recorded in other accrued expenses, with the offset reflected in cumulative translation adjustment in the unaudited Condensed Consolidated Balance Sheet.
The Company’s other hedging activity is not significant; therefore, tabular disclosures are not presented. There are no credit-risk-related contingent features in the Company’s derivative instruments. The amount of gains or losses from hedging activity recorded in current earnings and the amount of unrealized gains or losses from cash flow hedges which are expected to be reclassified to earnings in the next twelve months are not significant to the Company.
Fair Value Measurements
ASC 820, Fair Value Measurements and Disclosures, establishes a fair value hierarchy that requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the hierarchy is based on the lowest level of input that is significant to the fair value measurement. ASC 820 establishes three levels of inputs that may be used to measure fair value.
•	 	Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.	
 	 	 	
•	 	Level 2 inputs include inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of assets or liabilities.	
 	 	 	
•	 	Level 3 inputs are unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.	
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DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(in thousands, unless otherwise indicated)
The following table presents the Company’s assets and liabilities measured at fair value on a recurring basis as of September 30, 2010 and December 31, 2009:
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	September 30, 2010	 	December 31, 2009	
 	 	Level 1	 	Level 2	 	Level 3	 	Level 1	 	Level 2	 	Level 3	
Assets:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Short-term investments	 	$	214,742	 	 	$	—	 	 	$	—	 	 	$	223,809	 	 	$	—	 	 	$	—	 	
Liabilities:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net investment hedge derivative	 	 	—	 	 	 	16,604	 	 	 	—	 	 	 	—	 	 	 	13,278	 	 	 	—	 	
Short-term investments generally consist of investment grade time deposits with original maturities between three months and one year and are included in current assets in the Unaudited Condensed Consolidated Balance Sheet. Short-term investments are measured at fair value using quoted market prices. The derivative liability is measured at fair value using models based on observable market inputs such as foreign currency exchange rates and interest rates; therefore, it is classified within Level 2 of the valuation hierarchy.
In addition to fair value disclosure requirements related to financial instruments carried at fair value, accounting standards require interim disclosures regarding the fair value of all of the Company’s financial instruments.
The estimated fair value of long-term debt at September 30, 2010 and December 31, 2009 was $2,089,106 and $1,954,569, respectively, compared to the carrying value of $1,791,205 and $1,860,884. The carrying value includes the portion that is due and payable in less than one year of $1,545 and $35,624 at September 30, 2010 and December 31, 2009, respectively. The estimated fair value of the long-term debt is based on quoted market prices for similar instruments.
The carrying values of cash and cash equivalents, trade receivables, accounts payable, notes payable, and accrued expenses are reasonable estimates of their fair values as of September 30, 2010 and December 31, 2009 due to the short-term nature of these instruments.
6. Goodwill and Other Intangible Assets
The following table provides the changes in carrying value of goodwill by segment for the nine months ended September 30, 2010:
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Balance at	
 	 	Balance at December 31, 2009	 	 	 	 	 	 	 	 	 	 	 	 	 	September 30,	
 	 	Gross Carrying	 	Accumulated	 	 	 	 	 	2010	 	Purchase Price	 	 	 	 	 	2010	
 	 	Amount	 	Impairment	 	Net Goodwill	 	Acquisitions	 	Adjustments	 	Other (A)	 	Net Goodwill	
 	 	 	
Electronic Technologies	 	$	979,506	 	 	$	—	 	 	$	979,506	 	 	$	5,197	 	 	$	—	 	 	$	(6,521	)	 	$	978,182	 	
Industrial Products	 	 	1,020,202	 	 	 	(99,751	)	 	 	920,451	 	 	 	1,031	 	 	 	2,525	 	 	 	(192	)	 	 	923,815	 	
Fluid Management	 	 	677,903	 	 	 	(59,971	)	 	 	617,932	 	 	 	1,863	 	 	 	(1,583	)	 	 	(1,644	)	 	 	616,568	 	
Engineered Systems	 	 	832,328	 	 	 	—	 	 	 	832,328	 	 	 	5,812	 	 	 	(14,184	)	 	 	(4,004	)	 	 	819,952	 	

Total	 	$	3,509,939	 	 	$	(159,722	)	 	$	3,350,217	 	 	$	13,903	 	 	$	(13,242	)	 	$	(12,361	)	 	$	3,338,517	 	

 	 	 	
(A)	 	Primarily currency translation adjustments	
Purchase price adjustments arose primarily from allocation to customer-related intangibles and property, plant and equipment resulting from revised valuations relating to prior year business acquisitions.
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DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(in thousands, unless otherwise indicated)
The following table provides the gross carrying value and accumulated amortization for each major class of intangible asset:
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	September 30, 2010	 	 	December 31, 2009	 	
 	 	Gross Carrying	 	 	Accumulated	 	 	Gross Carrying	 	 	Accumulated	 	
 	 	Amount	 	 	Amortization	 	 	Amount	 	 	Amortization	 	
Amortized Intangible Assets:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Trademarks	 	$	75,842	 	 	$	20,050	 	 	$	72,790	 	 	$	16,492	 	
Patents	 	 	130,370	 	 	 	92,445	 	 	 	128,041	 	 	 	84,092	 	
Customer Intangibles	 	 	777,546	 	 	 	316,540	 	 	 	764,865	 	 	 	267,558	 	
Unpatented Technologies	 	 	133,107	 	 	 	83,171	 	 	 	134,822	 	 	 	75,244	 	
Non-Compete Agreements	 	 	3,398	 	 	 	3,341	 	 	 	3,396	 	 	 	3,310	 	
Drawings & Manuals	 	 	15,142	 	 	 	7,330	 	 	 	11,922	 	 	 	6,523	 	
Distributor Relationships	 	 	73,180	 	 	 	23,772	 	 	 	73,230	 	 	 	20,974	 	
Other	 	 	27,250	 	 	 	14,248	 	 	 	20,344	 	 	 	12,722	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total	 	 	1,235,835	 	 	 	560,897	 	 	 	1,209,410	 	 	 	486,915	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Unamortized Intangible Assets:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Trademarks	 	 	227,185	 	 	 	 	 	 	 	228,253	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total Intangible Assets	 	$	1,463,020	 	 	$	560,897	 	 	$	1,437,663	 	 	$	486,915	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Amortization expense totaled $25,795 and $24,632 for the three months ended September 30, 2010 and 2009, respectively. For the nine months ended September 30, 2010 and 2009, amortization expense was $77,450 and $73,576, respectively.
7. Debt
During the quarter ended September 30, 2010, a lender of a structured five-year, non-interest bearing amortizing loan originally due July 2011 called the loan, as permitted per the terms of the agreement. As a result, the Company repaid the outstanding $51,214 balance and recognized a net loss on extinguishment of $4,343, recorded in other income.
As of September 30, 2010, the Company has debt outstanding with a carrying value of approximately $400,000 maturing within a twelve-month period which is classified as long-term within the Unaudited Condensed Consolidated Balance Sheet, as the Company has the ability and intends to refinance this debt on a long-term basis.
8. Income Taxes
The Company’s provision for income taxes for continuing operations in interim periods is computed by applying its estimated annual effective tax rate against earnings before income tax expense for the period. In addition, non-recurring or discrete items are recorded during the period in which they occur. The comparable three and nine month periods in both years presented were impacted by discrete items. During the third quarter of 2010, discrete items totaling $28,081, arising from settlements with U.S. taxing authorities and resolution of a foreign tax matter, favorably impacted the Company’s tax rates for the three and nine months ended September 30, 2010. A $28,363 tax settlement in the second quarter of 2009 favorably impacted the nine month period ended September 30, 2009. Excluding these items, the effective tax rates for the three and nine months ended September 30, 2010 were 25.5% and 28.3% compared to the prior year rates of 30.5% and 31.3%, respectively.
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DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(in thousands, unless otherwise indicated)
9. Discontinued Operations
During the first quarter of 2010, the Company sold a business for net consideration of $7,498, resulting in a net after-tax loss on sale of approximately $13,100. During the second and third quarters of 2010, the loss was increased by approximately $900, net of tax, upon settlement of a $1,500 working capital adjustment related to the sale. The gain from discontinued operations during the third quarter includes expenses and accrual adjustments of $3,502 which were more than offset by $4,502 of tax benefits driven primarily by discrete tax items settled or resolved during the quarter. During the nine months ended September 30, 2009, the Company recorded adjustments to the carrying value of a business held for sale and other adjustments resulting in a net after-tax loss of approximately $7,656.
Summarized results of the Company’s discontinued operations are as follows:
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Three Months Ended September 30,	 	 	Nine Months Ended September 30,	 	
 	 	2010	 	 	2009	 	 	2010	 	 	2009	 	
Revenue	 	$	—	 	 	$	14,046	 	 	$	9,380	 	 	$	40,379	 	

Loss on sale, net of taxes (1)	 	$	—	 	 	$	(203	)	 	$	(14,203	)	 	$	(7,656	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loss from operations before taxes	 	 	(3,502	)	 	 	1,199	 	 	 	(3,400	)	 	 	(1,685	)	
Benefit (provision) for income taxes	 	 	4,502	 	 	 	(1,596	)	 	 	3,222	 	 	 	(2,722	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Gain (loss) from discontinued operations, net of tax	 	$	1,000	 	 	$	(600	)	 	$	(14,381	)	 	$	(12,063	)	

 	 	 	
(1)	 	Includes impairments in 2009.	
The Company currently has no businesses held for sale in discontinued operations. At September 30, 2010, the assets and liabilities of discontinued operations primarily represent residual amounts for deferred tax assets, short and long-term reserves, and contingencies related to businesses previously sold. Additional detail related to the assets and liabilities of the Company’s discontinued operations is as follows:
 	 	 	 	 	 	 	 	 	
 	 	September 30, 2010	 	 	December 31, 2009	 	
Assets of Discontinued Operations	 	 	 	 	 	 	 	 	
Current assets	 	$	39,048	 	 	$	73,284	 	
Non-current assets	 	 	24,776	 	 	 	43,417	 	
 	 	 	 	 	 	 	
 	 	$	63,824	 	 	$	116,701	 	

Liabilities of Discontinued Operations	 	 	 	 	 	 	 	 	
Current liabilities	 	$	14,899	 	 	$	25,919	 	
Non-current liabilities	 	 	96,467	 	 	 	112,959	 	
 	 	 	 	 	 	 	
 	 	$	111,366	 	 	$	138,878	 	
 	 	 	 	 	 	 	
10. 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.
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DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(in thousands, unless otherwise indicated)
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, or cash flows 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 September 30, 2010 and 2009 are as follows:
 	 	 	 	 	 	 	 	 	
 	 	2010	 	 	2009	 	
Beginning Balance, January 1	 	$	59,714	 	 	$	56,137	 	
Provision for warranties	 	 	29,952	 	 	 	23,715	 	
Increase from acquisitions/dispositions	 	 	106	 	 	 	3,081	 	
Settlements made	 	 	(29,814	)	 	 	(25,774	)	
Other adjustments, including currency translation	 	 	(999	)	 	 	383	 	
 	 	 	 	 	 	 	
Ending Balance, September 30	 	$	58,959	 	 	$	57,542	 	
 	 	 	 	 	 	 	
From time to time, the Company will initiate various restructuring programs at its operating companies and incur severance and other restructuring costs. For the three months ended September 30, 2010, restructuring charges of $1,993 and $1,361 were recorded in cost of goods and services and selling and administrative expenses, respectively. For the nine months ended September 30, 2010, $2,103 and $3,499 of restructuring charges were recorded in cost of goods and services and selling and administrative expenses, respectively.
The following table details the Company’s severance and other restructuring reserve activity:
 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Severance	 	 	Exit	 	 	Total	 	
At December 31, 2009	 	$	8,152	 	 	$	8,619	 	 	$	16,771	 	
Provision	 	 	2,403	 	 	 	3,199	 	 	 	5,602	 	
Payments	 	 	(9,000	)	 	 	(4,814	)	 	 	(13,814	)	
Other, including impairments	 	 	(231	)	 	 	55	 	 	 	(176	)	
 	 	 	 	 	 	 	 	 	 	
At September 30, 2010	 	$	1,324	 	 	$	7,059	 	 	$	8,383	 	
 	 	 	 	 	 	 	 	 	 	
The following table details restructuring charges incurred by segment for the periods presented:
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Three Months Ended September 30,	 	 	Nine Months Ended September 30,	 	
 	 	2010	 	 	2009	 	 	2010	 	 	2009	 	
Industrial Products	 	$	309	 	 	$	3,190	 	 	$	1,105	 	 	$	15,287	 	
Engineered Systems	 	 	2,034	 	 	 	3,210	 	 	 	2,460	 	 	 	14,846	 	
Fluid Management	 	 	719	 	 	 	3,545	 	 	 	1,487	 	 	 	7,849	 	
Electronic Technologies	 	 	292	 	 	 	(1,341	)	 	 	550	 	 	 	24,249	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total	 	$	3,354	 	 	$	8,604	 	 	$	5,602	 	 	$	62,231	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
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DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(in thousands, unless otherwise indicated)
11. Employee Benefit Plans
The following tables set forth the components of the Company’s net periodic expense relating to retirement and post-retirement benefit plans:
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Retirement Plan Benefits	 	
 	 	Three Months Ended September 30,	 	 	Nine Months Ended September 30,	 	
 	 	2010	 	 	2009	 	 	2010	 	 	2009	 	
Expected return on plan assets	 	$	(9,621	)	 	$	(8,547	)	 	$	(28,863	)	 	$	(25,641	)	
Benefits earned during period	 	 	4,850	 	 	 	5,003	 	 	 	14,550	 	 	 	15,009	 	
Interest accrued on benefit obligation	 	 	9,632	 	 	 	9,268	 	 	 	28,896	 	 	 	27,804	 	
Curtailment gain	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(337	)	
Amortization:	 	 	 	 	 	 	 	 	 	 	—	 	 	 	 	 	
Prior service cost	 	 	2,158	 	 	 	2,249	 	 	 	6,474	 	 	 	6,747	 	
Recognized actuarial loss	 	 	1,367	 	 	 	1,298	 	 	 	4,101	 	 	 	3,894	 	
Transition obligation	 	 	(11	)	 	 	(10	)	 	 	(33	)	 	 	(30	)	
Other	 	 	20	 	 	 	—	 	 	 	60	 	 	 	—	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Net periodic expense	 	$	8,395	 	 	$	9,261	 	 	$	25,185	 	 	$	27,446	 	

 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Post-Retirement Benefits	 	
 	 	Three Months Ended September 30,	 	 	Nine Months Ended September 30,	 	
 	 	2010	 	 	2009	 	 	2010	 	 	2009	 	
Expected return on plan assets	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	
Benefits earned during period	 	 	70	 	 	 	79	 	 	 	209	 	 	 	237	 	
Interest accrued on benefit obligation	 	 	209	 	 	 	240	 	 	 	629	 	 	 	720	 	
Amortization:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Prior service cost	 	 	(102	)	 	 	(43	)	 	 	(302	)	 	 	(129	)	
Recognized actuarial gain	 	 	(100	)	 	 	(107	)	 	 	(303	)	 	 	(321	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Net periodic expense	 	$	77	 	 	$	169	 	 	$	233	 	 	$	507	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
12. Comprehensive Earnings
Comprehensive earnings were as follows:
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Three Months Ended September 30,	 	 	Nine Months Ended September 30,	 	
 	 	2010	 	 	2009	 	 	2010	 	 	2009	 	
Net Earnings	 	$	223,759	 	 	$	106,884	 	 	$	501,756	 	 	$	257,390	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Foreign currency translation adjustment	 	 	110,298	 	 	 	70,511	 	 	 	(61,167	)	 	 	104,028	 	
Unrealized holding gains (losses), net of tax	 	 	105	 	 	 	19	 	 	 	138	 	 	 	118	 	
Derivative cash flow hedges, net of tax	 	 	(294	)	 	 	(112	)	 	 	134	 	 	 	913	 	
Defined benefit pension plans, net of tax	 	 	(656	)	 	 	2,673	 	 	 	832	 	 	 	7,289	 	

Comprehensive Earnings	 	$	333,212	 	 	$	179,975	 	 	$	441,693	 	 	$	369,738	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
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DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(in thousands, unless otherwise indicated)
13. Segment Information
For management reporting and performance evaluation purposes, the Company categorizes its operating companies into four distinct reportable segments. Segment financial information and a reconciliation of segment results to consolidated results follows:
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Three Months Ended
September 30	 	 	Nine Months Ended
September 30,	 	
 	 	2010	 	 	2009	 	 	2010	 	 	2009	 	
REVENUE	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Industrial Products	 	$	471,208	 	 	$	396,040	 	 	$	1,362,392	 	 	$	1,213,779	 	
Engineered Systems	 	 	620,362	 	 	 	520,693	 	 	 	1,681,756	 	 	 	1,388,894	 	
Fluid Management	 	 	416,428	 	 	 	309,247	 	 	 	1,200,902	 	 	 	935,289	 	
Electronic Technologies	 	 	381,386	 	 	 	275,266	 	 	 	1,017,982	 	 	 	735,254	 	
Intra-segment eliminations	 	 	(2,243	)	 	 	(1,635	)	 	 	(5,925	)	 	 	(4,188	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total consolidated revenue	 	$	1,887,141	 	 	$	1,499,611	 	 	$	5,257,107	 	 	$	4,269,028	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
EARNINGS FROM CONTINUING OPERATIONS	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Segment Earnings:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Industrial Products	 	$	59,473	 	 	$	38,119	 	 	$	172,147	 	 	$	98,084	 	
Engineered Systems	 	 	91,442	 	 	 	78,194	 	 	 	230,940	 	 	 	178,961	 	
Fluid Management	 	 	101,847	 	 	 	60,677	 	 	 	284,782	 	 	 	191,692	 	
Electronic Technologies	 	 	69,617	 	 	 	38,160	 	 	 	174,104	 	 	 	44,043	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total segments	 	 	322,379	 	 	 	215,150	 	 	 	861,973	 	 	 	512,780	 	
Corporate expense / other	 	 	(34,553	)	 	 	(34,106	)	 	 	(100,321	)	 	 	(88,412	)	
Net interest expense	 	 	(26,335	)	 	 	(26,299	)	 	 	(80,446	)	 	 	(73,537	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Earnings from continuing operations before provision for income taxes and discontinued operations	 	 	261,491	 	 	 	154,745	 	 	 	681,206	 	 	 	350,831	 	
Provision for taxes	 	 	38,732	 	 	 	47,261	 	 	 	165,069	 	 	 	81,378	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Earnings from continuing operations — total consolidated	 	$	222,759	 	 	$	107,484	 	 	$	516,137	 	 	$	269,453	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
14. Recent Accounting Standards
In January 2010, the FASB issued Accounting Standards Update (“ASU”) 2010-06 which is intended to improve disclosures about fair value measurements. The guidance requires entities to disclose significant transfers in and out of fair value hierarchy levels, the reasons for the transfers and to present information about purchases, sales, issuances and settlements separately in the reconciliation of fair value measurements using significant unobservable inputs (Level 3). Additionally, the guidance clarifies that a reporting entity should provide fair value measurements for each class of assets and liabilities and disclose the inputs and valuation techniques used for fair value measurements using significant other observable inputs (Level 2) and significant unobservable inputs (Level 3). The Company has applied the new disclosure requirements as of January 1, 2010, except for the disclosures about purchases, sales, issuances and settlements in the Level 3 reconciliation, which will be effective for interim and annual periods beginning after December 15, 2010. The adoption of this guidance has not had and is not expected to have a material impact on the Company’s consolidated financial statements.
In October 2009, the FASB issued ASU 2009-13 which amends existing guidance for identifying separate deliverables in a revenue-generating transaction where multiple deliverables exist, and provides guidance for allocating and recognizing revenue based on those separate deliverables. The guidance is expected to result in more multiple-deliverable arrangements being separable than under current guidance. This guidance is effective for the Company beginning on January 1, 2011 and is required to be applied prospectively to new or significantly modified revenue arrangements. The Company is currently assessing the impact this guidance may have on its consolidated financial statements.
In October 2009, the FASB issued ASU 2009-14 which eliminates tangible products containing both software and non-software components that operate together to deliver a product’s functionality from the scope of current generally accepted accounting principles for software. This guidance is effective for the Company beginning on January 1, 2011 and is required to be applied prospectively to new or significantly modified revenue arrangements. The Company is currently assessing the impact this guidance may have on its consolidated financial statements.
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DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(in thousands, unless otherwise indicated)
15. Equity Incentive Program
During the nine months ended September 30, 2010, the Company issued stock appreciation rights (“SARs”) covering 2,306,440 shares and 68,446 performance shares. During the nine months ended September 30, 2009, the Company issued SARs covering 2,796,124 shares and 75,892 performance shares.
The fair value of each SAR grant was estimated on the date of grant using the Black-Scholes option pricing model. The performance share awards are market condition awards and have been assessed at fair value on the date of grant using the Monte Carlo simulation model. The following assumptions were used in determining the fair value of the SARs and performance shares awarded during the respective periods:
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	SARs	 	Performance Shares	
 	 	Nine Months Ended September 30,	 	Nine Months Ended September 30,	
 	 	2010	 	2009	 	2010	 	2009	
Risk-free interest rate	 	 	2.77	%	 	 	2.06	%	 	 	1.37	%	 	 	1.23	%	
Dividend yield	 	 	2.33	%	 	 	3.23	%	 	 	2.38	%	 	 	3.23	%	
Expected life (years)	 	 	6.0	 	 	 	6.5	 	 	 	2.9	 	 	 	2.9	 	
Volatility	 	 	31.93	%	 	 	30.47	%	 	 	39.98	%	 	 	30.24	%	
Grant price	 	$	42.88	 	 	$	29.45	 	 	 	n/a	 	 	 	n/a	 	
Fair value at date of grant	 	$	11.66	 	 	$	6.58	 	 	$	57.49	 	 	$	32.80	 	
For the three months ended September 30, 2010 and 2009, after-tax stock-based compensation expense totaled $2,668 and $2,527, respectively. For the nine months ended September 30, 2010 and 2009, after-tax stock-based compensation expense totaled $11,094 and $9,702, respectively. Stock-based compensation is reported within selling and administrative expenses in the accompanying Unaudited Condensed Consolidated Statement of Operations.
16. Share Repurchases
In May 2007, the Board of Directors authorized the repurchase of up to 10,000,000 shares through May 2012. During the nine months ended September 30, 2010, the Company repurchased 1,450,000 shares of its common stock in the open market and 38,797 shares from the holders of its employee stock options/SARs when they tendered shares as full or partial payment of the exercise price of such options/SARs. A total of 1,488,797 shares were repurchased at an average price of $47.15 per share. Treasury shares increased to 61,956,190 at September 30, 2010 from a balance of 60,467,393 at December 31, 2009.
17. Subsequent Events
The Company assessed events occurring subsequent to September 30, 2010 for potential recognition and disclosure in the Unaudited Condensed Consolidated Financial Statements. No events have occurred that would require adjustment to or disclosure in the Unaudited Condensed Consolidated Financial Statements.
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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”) owns 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:
Liquidity and Capital Resources
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, repurchase of outstanding shares, 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 $866.1 million at September 30, 2010 increased $151.7 million from the December 31, 2009 balance of $714.4 million. Short-term investments of $214.7 million at September 30, 2010 decreased $9.1 million from the December 31, 2009 balance of $223.8 million. Cash equivalents are invested in highly liquid investment grade money market instruments with a maturity of less than three months. Short-term investments consist of investment grade time deposits with original maturity dates between three months and one year.
At September 30, 2010, the Company’s balance of cash, cash equivalents and short-term investments totaled $1,080.8 million, substantially all of which was held outside of the United States.
The following table is derived from the Condensed Consolidated Statement of Cash Flows:
 	 	 	 	 	 	 	 	 	
 	 	Nine Months Ended September 30,	
Cash Flows from Continuing Operations (in thousands)	 	2010	 	2009	
Net Cash Flows Provided By (Used In):	 	 	 	 	 	 	 	 	
Operating activities	 	$	519,112	 	 	$	554,113	 	
Investing activities	 	 	(164,781	)	 	 	(156,480	)	
Financing activities	 	 	(194,427	)	 	 	(362,826	)	
Cash flows provided by operating activities for the nine months ended September 30, 2010 decreased $35.0 million from the prior year period. While net earnings increased $244.4 million in the 2010 period, this was more than offset by higher working capital investment necessary to fund the increase in 2010 order and revenue levels. Revenues increased across all of the Company’s segments through the first nine months of 2010, and this period of improved activity compares to a period of reduced activity in the first nine months of 2009 due to the global economic slowdown. The Company generated cash from working capital as activity declined in the 2009 period.
Cash used in investing activities for the nine months ended September 30, 2010 increased by $8.3 million, largely due to higher capital expenditures offset in part by reduced net purchases of short-term investments. Capital expenditures during the nine months ended September 30, 2010 were $46.6 million higher than expenditures made in the prior year period. The 2010 year-to-date capital spending relates primarily to capacity expansion requirements of the Company’s high-growth businesses. The Company expects full year 2010 capital expenditures to approximate $185.0 million. The Company currently anticipates that any additional acquisitions made during the remainder of the year 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.
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Cash used in financing activities for the nine months ended September 30, 2010 declined by $168.4 million from the amount used in the 2009 period. The reduced use of cash in the 2010 period is attributed primarily to $150.0 million less in debt repayments, the issuance of $48.0 million of commercial paper for general corporate purposes, and $46.9 million of higher proceeds from the exercise of employee stock options, offset by treasury stock purchases of $70.2 million.
Adjusted Working Capital (a non-GAAP measure calculated as accounts receivable, plus inventory, less accounts payable) increased from December 31, 2009 by $323.7 million, or 29.6%, to $1,416.3 million which reflected an increase in receivables of $302.8 million, an increase in inventory of $154.5 million and an increase in accounts payable of $133.6 million generally due to higher order and sales volume. Excluding acquisitions and the effects of foreign exchange translation, Adjusted Working Capital would have increased by $322.1 million, or 29.5%. “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) decreased to 18.0% at September 30, 2010 from 19.9% at December 31, 2009 and inventory turns were 6.6 at September 30, 2010 compared to 6.2 at December 31, 2009.
In addition to measuring its cash flow generation and usage based upon the operating, investing and financing classifications included in the Unaudited Condensed Consolidated Statement 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. The Company’s free cash flow for the nine months ended September 30, 2010 decreased $81.6 million compared to the prior year period, primarily due to the significant investment in working capital and increase in capital expenditures, partially offset by greater earnings on increased sales volume from continuing operations.
The following table is a reconciliation of free cash flow to cash flow provided by operating activities:
 	 	 	 	 	 	 	 	 	
 	 	Nine Months Ended September 30,	 	
Free Cash Flow (in thousands)	 	2010	 	 	2009	 	
Cash flow provided by operating activities	 	$	519,112	 	 	$	554,113	 	
Less: Capital expenditures	 	 	129,837	 	 	 	83,250	 	
 	 	 	 	 	 	 	
Free cash flow	 	$	389,275	 	 	$	470,863	 	

Free cash flow as a percentage of revenue	 	 	7.4	%	 	 	11.0	%	
 	 	 	 	 	 	 	
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:
 	 	 	 	 	 	 	 	 	
Net Debt to Total Capitalization Ratio (in thousands)	 	September 30, 2010	 	 	December 31, 2009	 	
Current maturities of long-term debt	 	$	1,545	 	 	$	35,624	 	
Commercial paper and other short-term debt	 	 	48,635	 	 	 	—	 	
Long-term debt	 	 	1,789,660	 	 	 	1,825,260	 	
 	 	 	 	 	 	 	
Total debt	 	 	1,839,840	 	 	 	1,860,884	 	
Less: Cash, cash equivalents and short-term investments	 	 	1,080,832	 	 	 	938,174	 	
 	 	 	 	 	 	 	
Net debt	 	 	759,008	 	 	 	922,710	 	
 	 	 	 	 	 	 	
Add: Stockholders’ equity	 	 	4,375,264	 	 	 	4,083,608	 	
 	 	 	 	 	 	 	
Total capitalization	 	$	5,134,272	 	 	$	5,006,318	 	
 	 	 	 	 	 	 	
Net debt to total capitalization	 	 	14.8	%	 	 	18.4	%	
 	 	 	 	 	 	 	
The total debt level of $1,839.8 million at September 30, 2010 decreased $21.0 million from December 31, 2009, primarily due to repayment of $75.8 million of long-term debt, offset by the issuance of commercial paper. The net debt decrease was due to a larger cash balance generated from operations in the first nine months of 2010 as compared to the prior year period coupled with the lower total debt level.
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The Company’s long-term debt with a book value of $1,791.2 million, of which $1.5 million is current and payable within one year, had a fair value of approximately $2,089.1 million at September 30, 2010. The estimated fair value of the long-term debt is based on quoted market prices for similar issues.
As of September 30, 2010, the Company has debt with a carrying value of approximately $400.0 million that will be maturing within a twelve-month period. The Company classified this debt as long-term within the Unaudited Condensed Consolidated Balance Sheet as it has the ability and intends to refinance this debt on a long-term basis.
The Company currently has an outstanding floating-to-floating cross currency swap agreement for a total notional amount of $50.0 million in exchange for CHF 65.1 million. This transaction hedges a portion of the Company’s net investment in non-U.S. operations. The agreement qualifies as a net investment hedge and changes in the fair value are reported within the cumulative translation adjustment section of other comprehensive income, with any hedge ineffectiveness being recognized in current earnings. At September 30, 2010, the fair value of the swap, which was based on quoted market prices for similar instruments (using Level 2 inputs under the provisions of ASC 820), was a net liability of $16.6 million, which is recorded in other accrued expenses, with the offset reflected in cumulative translation adjustment in the Unaudited Condensed Consolidated Balance Sheet.
(2) RESULTS OF OPERATIONS:
CONSOLIDATED RESULTS OF OPERATIONS
Revenue for the third quarter of 2010 increased 25.8% to $1,887.1 million from the comparable 2009 period, with increases at all of the Company’s segments. The Company’s revenue increase was attributed to organic revenue growth of 24.7% and revenue growth of 2.7% related to acquisitions completed in 2010 and 2009, offset by a 1.6% unfavorable impact from foreign exchange. Gross profit increased 27.5% to $711.7 million from the prior year quarter while gross profit margin increased 50 basis points to 37.7%. The increase in gross profit reflects the higher sales volumes, coupled with the impacts of lower restructuring charges on a comparative basis and the benefits realized in the current period from restructuring initiatives executed in the prior year.
Revenue for the first nine months of 2010 increased 23.1% to $5,257.1 million from the comparable 2009 period, with increases at all of the Company’s segments. The Company’s revenue increase was attributed to organic revenue growth of 18.7%, revenue growth of 4.2% related to acquisitions completed in 2010 and 2009, and a 0.2% favorable impact from foreign exchange. Gross profit increased 31.2% to $2,012.5 million from the prior year period while gross profit margin increased 240 basis points to 38.3%, reflecting the higher sales volumes, coupled with the impacts of lower restructuring charges on a comparative basis and the benefits realized in the current period from restructuring initiatives executed in the prior year.
Selling and administrative expenses totaled $414.0 million for the third quarter of 2010, representing an increase of 9.5% or $35.9 million over the comparable 2009 period. As a percentage of revenue, these costs decreased to 21.9% from 25.2% in the comparable 2009 period, reflecting increased revenue levels, the benefit of cost containment efforts and productivity savings, and the absence of significant restructuring charges in the current period, which more than offset increased incentive compensation costs.
Selling and administrative expenses totaled $1,247.0 million for the first nine months of 2010, representing an increase of 12.3% or $136.5 million over the comparable 2009 period. As a percentage of revenue, these costs decreased to 23.7% from 26.0% in the comparable 2009 period, reflecting increased revenue levels, the absence of significant restructuring charges in the current period as compared to the prior period, and the benefit of cost containment efforts and productivity savings in the current period, which more than offset increased incentive compensation costs.
Interest expense, net, for the third quarter of 2010 was approximately the same as interest expense, net for the same quarter of last year, while interest expense, net, for the first nine months of 2010 increased by $6.9 million compared to the respective 2009 period. In the nine month period, the increase was primarily due to reduced interest income resulting from lower interest rates on short term investment balances. Interest income declined by $7.2 million in the nine months ended September 30, 2010 compared to the same period of 2009.
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Other expense (income), net for the quarter and year to date periods ending September 30, 2010 primarily reflects the impact of net losses from foreign exchange fluctuations on assets and liabilities denominated in currencies other than the Company’s functional currency, coupled with a $4.3 million loss on extinguishment of debt, offset in part by other miscellaneous non-operating gains. Other expense (income), net for the quarter and year to date periods ending September 30, 2009 also reflects the impact of net losses from foreign exchange fluctuations on assets and liabilities denominated in currencies other than the Company’s functional currency, while the nine month period includes a favorable insurance settlement realized in the first quarter of 2009.
The effective tax rates (“ETR”)for continuing operations for the three and nine months ended September 30, 2010 were 14.8% and 24.2%, compared to the prior period rates of 30.5% and 23.2%, respectively. The comparable three and nine month periods in both years were impacted by discrete items. During the third quarter of 2010, discrete items totaling $28.1 million, arising from settlements with U.S. taxing authorities and resolution of a foreign tax matter, favorably impacted the Company’s tax rates for the three and nine months ended September 30, 2010. A $28.4 million tax settlement in the second quarter of 2009 favorably impacted the ETR for the nine month year to date period ended September 30, 2009. Excluding these items, the effective tax rates for the three and nine months ended September 30, 2010 were 25.5% and 28.3% compared to the prior year rates of 30.5% and 31.3%, respectively, the variance of which is primarily attributed to the mix of non-U.S. earnings in low-tax jurisdictions. With the exception of contested matters, for which an estimate cannot be made due to uncertainties, the Company believes it is possible that additional uncertain tax positions will be settled in the fourth quarter of 2010.
Earnings from continuing operations for the third quarter increased 107.2% to $222.8 million, or $1.18 diluted EPS (“EPS”), compared to $107.5 million, or $0.58 diluted EPS, in the prior year third quarter. The increase was primarily a result of end-market improvements across all of the Company’s segments driving increased sales volume, coupled with the third quarter tax benefit noted above, the absence of significant restructuring charges in the current period and the benefits of restructuring initiatives from the prior year. Earnings from continuing operations for the first nine months of 2010 increased 91.5% to $516.1 million, or $2.73 diluted EPS, compared to $269.5 million, or $1.45 diluted EPS, in the prior year period primarily driven by the same factors.
Discontinued operations for the third quarter of 2010 generated a gain of $1.0 million, or $0.01 EPS, compared to a third quarter 2009 loss of $0.6 million. The 2010 gain related primarily to the benefit from a favorable tax settlement during the quarter, offset in part by other expense and accrual adjustments relating to previously sold businesses. The 2009 loss related primarily to a loss from operations of $0.4 million, net of tax, related to a business held for sale at the time.
Loss from discontinued operations for the first nine months of 2010 was $14.4 million, or $0.08 EPS, compared to a loss of $12.1 million, or $0.06 EPS, in the comparable 2009 period. The 2010 loss related primarily to the loss generated by the sale of a business that had been previously reflected as a discontinued operation. The 2009 loss related primarily to adjustments to the fair value of a business held for sale at that time.
Severance and Other Restructuring Reserves
From time to time, the Company will initiate various restructuring programs at its operating companies. During 2009, the Company substantially increased the amount of its restructuring efforts in response to the significant decline in global economic activity. The Company does not expect to incur significant restructuring costs during the remainder of 2010 and expects the restructuring activities taken during the prior year to yield incremental savings of approximately $30 to $40 million in 2010.
At September 30, 2010 and December 31, 2009 the Company had reserves related to severance and other restructuring activities of $8.4 million and $16.8 million, respectively. During the third quarter of 2010, the Company recorded $3.4 million in additional charges, primarily related to a facility closure in the Engineered Systems segment, and made $2.6 million in payments and other adjustments related to these reserves. For the quarter, $2.0 million and $1.4 million of the restructuring charges were recorded in cost of goods and services and selling and administrative expenses, respectively, in the Unaudited Condensed Consolidated Statement of Operations.
During the first nine months of 2010, the Company recorded $5.6 million in additional charges and made $14.0 million in payments and other adjustments related to these reserves. For the first nine months, $2.1 million and $3.5 million of
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restructuring charges were recorded in cost of goods and services and selling and administrative expenses, respectively, in the Unaudited Condensed Consolidated Statement of Operations.
The following table details the restructuring charges incurred by segment:
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Three Months Ended September 30,	 	 	Nine Months Ended September 30,	 	
 	 	2010	 	 	2009	 	 	2010	 	 	2009	 	
Industrial Products	 	$	309	 	 	$	3,190	 	 	$	1,105	 	 	$	15,287	 	
Engineered Systems	 	 	2,034	 	 	 	3,210	 	 	 	2,460	 	 	 	14,846	 	
Fluid Management	 	 	719	 	 	 	3,545	 	 	 	1,487	 	 	 	7,849	 	
Electronic Technologies	 	 	292	 	 	 	(1,341	)	 	 	550	 	 	 	24,249	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total	 	$	3,354	 	 	$	8,604	 	 	$	5,602	 	 	$	62,231	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Current Economic Environment
The indications of a global economic recovery were first seen in third quarter 2009 bookings. This trend continued through the fourth quarter and the first nine months of 2010 has continued to show improvements in bookings and backlog. The structural changes made over the last few years, including becoming less dependent on capital goods markets and having greater recurring revenue, together with improved working capital management, strong pricing discipline and general improvements across most end-markets, are expected to result in 2010 revenue, earnings and margin improvements as compared to 2009. As discussed in the Liquidity and Capital Resources section, the Company believes that existing sources of liquidity are adequate to meet anticipated funding needs.
2010 Outlook
Dover anticipates that 2010 revenue will increase 20% to 21% above 2009 levels. The Company anticipates full year organic growth to be in the range of 16.5% to 17.5% (inclusive of foreign currency impact) and acquisition related growth to be approximately 3.5% for transactions completed in 2009 and 2010. Based on these assumptions, Dover has projected that its continuing diluted earnings per share for 2010 will be in the range of $3.50 to $3.55, inclusive of the third quarter tax benefit. If the global or domestic economic conditions accelerate or deteriorate, Dover’s operating results for 2010 could be materially different than currently projected.
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SEGMENT RESULTS OF OPERATIONS
Industrial Products
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Three Months Ended September 30,	 	 	Nine Months Ended September 30,	
(in thousands)	 	2010	 	 	2009	 	 	% Change	 	 	2010	 	 	2009	 	 	% Change	 	
Revenue	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Material Handling	 	$	220,997	 	 	$	154,238	 	 	 	43	%	 	$	624,344	 	 	$	494,463	 	 	 	26	%	
Mobile Equipment	 	 	250,664	 	 	 	242,011	 	 	 	4	%	 	 	739,326	 	 	 	719,824	 	 	 	3	%	
Eliminations	 	 	(453	)	 	 	(209	)	 	 	 	 	 	 	(1,278	)	 	 	(508	)	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	$	471,208	 	 	$	396,040	 	 	 	19	%	 	$	1,362,392	 	 	$	1,213,779	 	 	 	12	%	

Segment earnings	 	$	59,473	 	 	$	38,119	 	 	 	56	%	 	$	172,147	 	 	$	98,084	 	 	 	76	%	
Operating margin	 	 	12.6	%	 	 	9.6	%	 	 	 	 	 	 	12.6	%	 	 	8.1	%	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Acquisition related depreciation and amortization expense*	 	$	7,774	 	 	$	7,770	 	 	 	0	%	 	$	22,969	 	 	$	23,866	 	 	 	-4	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Bookings	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Material Handling	 	$	222,961	 	 	$	162,759	 	 	 	37	%	 	$	650,846	 	 	$	407,326	 	 	 	60	%	
Mobile Equipment	 	 	233,731	 	 	 	191,539	 	 	 	22	%	 	 	753,746	 	 	 	648,034	 	 	 	16	%	
Eliminations	 	 	(444	)	 	 	(337	)	 	 	 	 	 	 	(1,154	)	 	 	(561	)	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	$	456,248	 	 	$	353,961	 	 	 	29	%	 	$	1,403,438	 	 	$	1,054,799	 	 	 	33	%	

Backlog	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Material Handling	 	 	 	 	 	 	 	 	 	 	 	 	 	$	142,959	 	 	$	102,146	 	 	 	40	%	
Mobile Equipment	 	 	 	 	 	 	 	 	 	 	 	 	 	 	344,160	 	 	 	318,496	 	 	 	8	%	
Eliminations	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(248	)	 	 	(170	)	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	486,871	 	 	$	420,472	 	 	 	16	%	

 	 	 	
*	 	Represents the pre-tax impact on earnings from the depreciation and amortization of acquisition accounting write-ups to reflect the fair value of inventory, property, plant and equipment, and intangible assets.	
Industrial Products’ revenue and earnings increased by 19% and 56%, respectively, from the third quarter of the prior year primarily due to broad-based revenue growth in material handling businesses, which more than offset the softness in bulk trailer and refuse vehicle markets. The segment’s increase in revenue was driven substantially by organic revenue growth with minimal impact due to foreign exchange. At the end of the third quarter, the segment completed the acquisition of Gear Products, a synergistic addition to its Tulsa Winch business in its Material Handling platform, which is expected to be accretive to earnings in 2011. Earnings and margin in the third quarter of 2010 were favorably impacted by increased volume in high margin businesses, the absence of restructuring charges and the benefits associated with prior year restructuring initiatives.
Material Handling revenue increased 43%, when compared to the prior year third quarter, while earnings increased by over 180%. Revenue improvements were experienced across the platform, including modest improvement in those businesses with construction exposure, driven by increased activity across most end-markets. Earnings and operating margin improved due to increased sales volume, coupled with the absence of restructuring charges in the current period and the benefits associated with prior year restructuring initiatives.
Mobile Equipment revenue increased 4% while earnings were flat compared to the prior year third quarter. The revenue improvement was generated primarily by the vehicle service business, offset in part by softness in bulk trailer and refuse vehicle markets. Earnings and operating margin at the platform level were favorably impacted by the benefits achieved from restructuring initiatives taken in the prior year and the absence of significant restructuring charges in the current period; however, this was substantially offset by the impact of unfavorable product mix in the period.
For the nine months ended September 30, 2010, Industrial Products’ revenue and earnings increased 12% and 76%, respectively, as compared to the nine months ended September 30, 2009. Revenue and earnings were favorably impacted by the increased sales volumes, as well as the absence of restructuring charges and the benefits of the restructuring initiatives from prior periods.
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Engineered Systems
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Three Months Ended September 30,	 	 	Nine Months Ended September 30,	
(in thousands)	 	2010	 	 	2009	 	 	% Change	 	 	2010	 	 	2009	 	 	% Change	 	
Revenue	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Engineered Products	 	$	398,685	 	 	$	308,741	 	 	 	29	%	 	$	1,028,028	 	 	$	806,565	 	 	 	27	%	
Product Identification	 	 	221,677	 	 	 	211,952	 	 	 	5	%	 	 	653,728	 	 	 	582,329	 	 	 	12	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	$	620,362	 	 	$	520,693	 	 	 	19	%	 	$	1,681,756	 	 	$	1,388,894	 	 	 	21	%	

Segment earnings	 	$	91,442	 	 	$	78,194	 	 	 	17	%	 	$	230,940	 	 	$	178,961	 	 	 	29	%	
Operating margin	 	 	14.7	%	 	 	15.0	%	 	 	 	 	 	 	13.7	%	 	 	12.9	%	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Acquisition related depreciation and amortization expense*	 	$	6,838	 	 	$	6,580	 	 	 	4	%	 	$	21,810	 	 	$	19,087	 	 	 	14	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Bookings	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Engineered Products	 	$	329,119	 	 	$	258,634	 	 	 	27	%	 	$	1,076,301	 	 	$	754,855	 	 	 	43	%	
Product Identification	 	 	218,213	 	 	 	212,642	 	 	 	3	%	 	 	661,826	 	 	 	594,057	 	 	 	11	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	$	547,332	 	 	$	471,276	 	 	 	16	%	 	$	1,738,127	 	 	$	1,348,912	 	 	 	29	%	

Backlog	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Engineered Products	 	 	 	 	 	 	 	 	 	 	 	 	 	$	267,545	 	 	$	199,888	 	 	 	34	%	
Product Identification	 	 	 	 	 	 	 	 	 	 	 	 	 	 	80,986	 	 	 	72,523	 	 	 	12	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	348,531	 	 	$	272,411	 	 	 	28	%	

 	 	 	
*	 	Represents the pre-tax impact on earnings from the depreciation and amortization of acquisition accounting write-ups to reflect the fair value of inventory, property, plant and equipment, and intangible assets.	
Engineered Systems revenue and earnings increased by 19% and 17%, respectively, from the third quarter of the prior year. The increase in revenue was supported by 16% organic revenue growth and a 5% increase from acquisitions completed in 2010 and 2009, offset in part by unfavorable foreign currency of 2%. The revenue and earnings increase was substantially driven by strength in Hill Phoenix and Belvac volumes, including recent acquisitions, coupled with the benefits from prior year restructuring activities, which more than offset higher commodity costs.
Engineered Products third quarter revenue increased 29% while earnings increased by 33%. Core business revenue increased 23% driven by higher sales volume at Hill Phoenix and Belvac. Growth from acquisitions completed in 2010 and 2009 contributed 8% to revenue growth and was accretive to earnings in the period, while foreign currency negatively impacted revenues by 2%. The platform’s earnings were favorably impacted by the higher core sales volume and the contribution from 2009 restructuring activities, partly offset by higher material costs and unfavorable product and customer mix.
Product Identification revenue increased 5% while earnings were flat compared to the prior year third quarter. Organic sales volume growth and benefit from the 2009 acquisition of Extech Instruments generated an 8% revenue increase, offset by a 3% unfavorable foreign currency impact. The platform’s earnings reflect continued investment in research and development, as well as the impact of product and geographic revenue mix.
For the nine months ended September 30, 2010, Engineered Systems’ revenue and earnings increased 21% and 29%, respectively, as compared to the nine months ended September 30, 2009. Revenue and earnings were favorably impacted by increased sales volume, including acquisitions, coupled with the absence of significant restructuring charges in the current period and the benefits of the restructuring initiatives from prior periods.
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Fluid Management
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Three Months Ended September 30,	 	 	Nine Months Ended September 30,	
(in thousands)	 	2010	 	 	2009	 	 	% Change	 	 	2010	 	 	2009	 	 	% Change	 	
Revenue	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Energy	 	$	220,001	 	 	$	144,664	 	 	 	52	%	 	$	641,348	 	 	$	459,413	 	 	 	40	%	
Fluid Solutions	 	 	196,554	 	 	 	164,604	 	 	 	19	%	 	 	559,818	 	 	 	475,990	 	 	 	18	%	
Eliminations	 	 	(127	)	 	 	(21	)	 	 	 	 	 	 	(264	)	 	 	(114	)	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	$	416,428	 	 	$	309,247	 	 	 	35	%	 	$	1,200,902	 	 	$	935,289	 	 	 	28	%	

Segment earnings	 	$	101,847	 	 	$	60,677	 	 	 	68	%	 	$	284,782	 	 	$	191,692	 	 	 	49	%	
Operating margin	 	 	24.5	%	 	 	19.6	%	 	 	 	 	 	 	23.7	%	 	 	20.5	%	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Acquisition related depreciation and amortization expense*	 	$	5,222	 	 	$	4,432	 	 	 	18	%	 	$	16,242	 	 	$	13,852	 	 	 	17	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Bookings	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Energy	 	$	213,247	 	 	$	157,763	 	 	 	35	%	 	$	648,217	 	 	$	433,339	 	 	 	50	%	
Fluid Solutions	 	 	195,865	 	 	 	165,601	 	 	 	18	%	 	 	566,937	 	 	 	475,459	 	 	 	19	%	
Eliminations	 	 	(144	)	 	 	(41	)	 	 	 	 	 	 	(280	)	 	 	(122	)	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	$	408,968	 	 	$	323,323	 	 	 	26	%	 	$	1,214,874	 	 	$	908,676	 	 	 	34	%	

Backlog	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Energy	 	 	 	 	 	 	 	 	 	 	 	 	 	$	84,659	 	 	$	66,043	 	 	 	28	%	
Fluid Solutions	 	 	 	 	 	 	 	 	 	 	 	 	 	 	69,130	 	 	 	65,081	 	 	 	6	%	
Eliminations	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(17	)	 	 	(21	)	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	153,772	 	 	$	131,103	 	 	 	17	%	

 	 	 	
*	 	Represents the pre-tax impact on earnings from the depreciation and amortization of acquisition accounting write-ups to reflect the fair value of inventory, property, plant and equipment, and intangible assets.	
Fluid Management’s revenue and earnings increased over the prior year third quarter by 35% and 68%, respectively, due to recovery in the oil and gas industries served by the Energy platform as well as the industrial markets served by the Fluid Solutions group. Earnings reflect the benefit of higher sales volumes, productivity improvements and favorable product mix. The segment’s revenue increase represented organic revenue growth of 32% and a 3% increase from acquisitions completed in 2010 and 2009.
The Energy platform’s revenue and earnings increased over the prior year quarter by 52% and 80%, respectively. Organic revenue growth of 45% was driven by higher demand and market share gains in the oil and gas sector, while acquisitions contributed revenue growth of 7%. The earnings improvement was driven by the significantly higher volumes and productivity improvements.
Fluid Solutions revenue and earnings increased by 19% and 45%, respectively, from the third quarter of the prior year due to higher demand in substantially all end-markets. Earnings were favorably impacted by the increased volumes and productivity improvements.
For the nine months ended September 30, 2010, Fluid Management’s revenue and earnings increased over the prior year period by 28% and 49%, respectively, due to higher demand in substantially all end-markets, operating efficiencies and favorable product mix.
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Electronic Technology
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Three Months Ended September 30,	 	Nine Months Ended September 30,	
(in thousands)	 	2010	 	2009	 	% Change	 	2010	 	2009	 	% Change	
Revenue	 	$	381,386	 	 	$	275,266	 	 	 	39	%	 	$	1,017,982	 	 	$	735,254	 	 	 	38	%	
Segment earnings	 	 	69,617	 	 	 	38,160	 	 	 	82	%	 	 	174,104	 	 	 	44,043	 	 	 	295	%	
Operating margin	 	 	18.3	%	 	 	13.9	%	 	 	 	 	 	 	17.1	%	 	 	6.0	%	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Acquisition related depreciation and amortization expense*	 	$	8,480	 	 	$	8,268	 	 	 	3	%	 	$	25,390	 	 	$	24,771	 	 	 	2	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Bookings	 	$	402,332	 	 	$	283,035	 	 	 	42	%	 	$	1,155,250	 	 	$	750,016	 	 	 	54	%	
Backlog	 	 	 	 	 	 	 	 	 	 	 	 	 	 	357,800	 	 	 	194,414	 	 	 	84	%	

*	 	Represents the pre-tax impact on earnings from the depreciation and amortization of acquisition accounting write-ups to reflect the fair value of inventory, property, plant and equipment, and intangible assets.	
Electronic Technologies’ revenue and earnings increased 39% and 82%, respectively, over the prior year third quarter. The increase in revenue was supported by organic revenue growth of 41%, growth from acquisitions of 1% and a 3% unfavorable impact from foreign exchange rates. The organic revenue growth was primarily driven by continued strong demand for electronic assembly and solar manufacturing equipment, Micro Electronic Mechanical Systems (“MEMS”) microphones, hearing aid components and telecom infrastructure related products. Revenue from the electronic assembly equipment companies increased 65% compared to prior year period while the communication components companies’ revenue increased 24%. Earnings for the quarter were favorably impacted by higher sales volume and production leverage, product mix, the absence of restructuring charges in the current period and the benefit of prior year restructuring programs.
For the nine months ended September 30, 2010, revenue increased 38% and earnings increased almost 300% over the same prior year period. Revenue from the electronic assembly equipment companies increased 77% compared to the prior year period while the communication components companies’ revenue increased 21%. The increase in revenue and earnings for the nine month period was also driven primarily by higher sales volume and product mix, production leverage, the absence of restructuring charges in the current period and the benefit of prior year restructuring programs.
Critical Accounting Policies
The Company’s consolidated financial statements and related public financial information are based on the application of generally accepted accounting principles in the United States of America (“GAAP”). GAAP requires the use of estimates, assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenue and expense amounts reported. These estimates can also affect supplemental information contained in the public disclosures of the Company, including information regarding contingencies, risk and its financial condition. The Company believes its use of estimates and underlying accounting assumptions conform to GAAP and are consistently applied. Valuations based on estimates are reviewed for reasonableness on a consistent basis throughout the Company.
Recent Accounting Standards
See Note 14 — Recent Accounting Standards. The adoption of recent accounting standards as included in Note 14 to the unaudited Condensed Consolidated Financial Statements has not had and is not expected to have a significant impact on the Company’s revenue, earnings or liquidity.
Special Notes Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q, especially “Management’s Discussion and Analysis,” contains “forward-looking” statements within the meaning of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Such statements relate to, among other things, income, earnings, cash flows, changes in operations, operating improvements, industries in which Dover companies operate and the U.S. and global economies. Statements in this 10-Q that are not historical are hereby identified as “forward-looking statements” and may be indicated by words or phrases such as “anticipates,” “supports,” “plans,” “projects,” “expects,” “believes,” “should,” “would,” “could,” “hope,” “forecast,” “management is of the opinion,” use of the future tense and similar words or phrases.
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Forward-looking statements are subject to inherent risks and uncertainties that could cause actual results to differ from current expectations including, but not limited to: current economic conditions and uncertainties in the credit and capital markets; the Company’s ability to achieve expected savings from integration, synergy and other cost-control initiatives; the ability to identify and successfully consummate value-adding acquisition opportunities; increased competition and pricing pressures in the markets served by Dover’s operating companies; the ability of Dover’s companies to expand into new geographic markets and to anticipate and meet customer demands for new products and product enhancements; increases in the cost of raw materials; changes in customer demand; political events that could impact the worldwide economy; the impact of natural disasters and their effect on global energy markets; a downgrade in Dover’s credit ratings; international economic conditions including interest rate and currency exchange rate fluctuations; the relative mix of products and services which impacts margins and operating efficiencies; short-term capacity constraints; domestic and foreign governmental and public policy changes including environmental regulations and tax policies (including domestic and international export subsidy programs, R&E credits and other similar programs); unforeseen developments in contingencies such as litigation; protection and validity of patent and other intellectual property rights; the cyclical nature of some of Dover’s companies; domestic housing industry weakness; and continued events in the Middle East and possible future terrorist threats and their effect on the worldwide economy. Readers are cautioned not to place undue reliance on such forward-looking statements. These forward-looking statements speak only as of the date made. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
The Company may, from time to time, post financial or other information on its Internet website, www.dovercorporation.com. The Internet address is for informational purposes only and is not intended for use as a hyperlink. The Company is not incorporating any material on its website into this report.
Non-GAAP Information
In an effort to provide investors with information regarding the Company’s results in addition to that as determined by generally accepted accounting principles (GAAP), the Company also discloses non-GAAP information which management believes provides useful information to investors. Free cash flow, net debt, total debt, total capitalization, Adjusted Working Capital, Average Annual Adjusted Working Capital, earnings adjusted for non-recurring items, revenue excluding the impact of changes in foreign currency exchange rates and organic revenue growth are not financial measures under GAAP and should not be considered as a substitute for cash flows from operating activities, debt or equity, earnings, revenue and working capital as determined in accordance with GAAP, and they may not be comparable to similarly titled measures reported by other companies. Management believes the (1) net debt to total capitalization ratio and (2) free cash flow are important measures of operating performance and liquidity. Net debt to total capitalization is helpful in evaluating the Company’s capital structure and the amount of leverage it employs. Free cash flow provides both management and investors a measurement of cash generated from operations that is available to fund acquisitions, pay dividends, repay debt and repurchase the Company’s common stock. Reconciliations of free cash flow, total debt and net debt can be found in Part (1) of Item 2-Management’s Discussion and Analysis. Management believes that reporting adjusted working capital (also sometimes called “working capital”), which is calculated as accounts receivable, plus inventory, less accounts payable, provides a meaningful measure of the Company’s operational results by showing the changes caused solely by revenue. Management believes that reporting adjusted working capital and revenues at constant currency, which excludes the positive or negative impact of fluctuations in foreign currency exchange rates, provides a meaningful measure of the Company’s operational changes, given the global nature of Dover’s businesses. Management believes that reporting organic or core revenue growth, which excludes the impact of foreign currency exchange rates and the impact of acquisitions, provides a useful comparison of the Company’s revenue performance and trends between periods.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
There has been no significant change in the Company’s exposure to market risk during the first nine months of 2010. For a discussion of the Company’s exposure to market risk, refer to Item 7A, Quantitative and Qualitative Disclosures about Market Risk, contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009.
Item 4. Controls and Procedures
At the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(e). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2010.
During the third quarter of 2010, there were no changes in the Company’s internal control over financial reporting that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. In making its assessment of changes in internal control over financial reporting as of September 30, 2010, management has excluded those companies acquired in purchase business combinations during the twelve months ended September 30, 2010. The Company is currently assessing the control environments of these acquisitions. These companies are wholly-owned by the Company and their total revenue for the nine month period ended September 30, 2010 represents approximately 4.9% of the Company’s consolidated revenue for the same period. Their assets represent approximately 4.1% of the Company’s consolidated assets at September 30, 2010.
PART II — OTHER INFORMATION
Item 1. Legal Proceedings
See Part I, Notes to Condensed Consolidated Financial Statements, Note 10.
Item 1A. Risk Factors
There have been no material changes with respect to risk factors as previously disclosed in Dover’s Annual Report on Form 10-K for its fiscal year ended December 31, 2009.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
(a)	 	Not applicable.	

(b)	 	Not applicable.	

(c)	 	The table below presents shares of the Company’s stock which were acquired by the Company during the quarter:	

 	 	 	 	 	 	 	 	 	 	 	 	 	 	Maximum Number (or	 	
 	 	 	 	 	 	 	 	 	 	Total Number of	 	 	Approximate Dollar	 	
 	 	 	 	 	 	 	 	 	 	Shares Purchased	 	 	Value) of Shares that	 	
 	 	Total Number	 	 	 	 	 	 	as Part of Publicly	 	 	May Yet Be Purchased	 	
 	 	of Shares	 	 	Average Price	 	 	Announced Plans	 	 	under the Plans or	 	
Period	 	Purchased (1)	 	 	Paid per Share	 	 	or Programs	 	 	Programs (2)	 	
July 1 to July 31	 	 	—	 	 	$	—	 	 	 	—	 	 	 	7,563,968	 	
August 1 to August 31	 	 	—	 	 	 	—	 	 	 	—	 	 	 	7,563,968	 	
September 1 to September 30	 	 	112,871	 	 	 	50.90	 	 	 	110,000	 	 	 	7,453,968	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
For the Third Quarter	 	 	112,871	 	 	$	50.90	 	 	 	110,000	 	 	 	7,453,968	 	

 	 	 	
(1)	 	2,871 of these shares were acquired by the Company in September from the holders of its employee stock options when they tendered shares as full of partial payment of the exercise price of such options. These shares are applied against the exercise price at the market price on the date of exercise. During the month of September 2010, the Company purchased 110,000 shares under the five-year, 10,000,000 share repurchase authorized by the Board of Directors in May 2007.	
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(2)	 	As of September 30, 2010, the approximate number of shares still available for repurchase under the May 2007 share repurchase authorization was 7,453,968.	
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. [Removed and Reserved]
Item 5. Other Information
(a)	 	None.	

(b)	 	None.	
Item 6. Exhibits
31.1	 	Certificate pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, signed and dated by Brad M. Cerepak.	
 	 	 	
31.2	 	Certificate pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, signed and dated by Robert A. Livingston.	
 	 	 	
32	 	Certificate pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002, signed and dated by Robert A. Livingston and Brad M. Cerepak.	
 	 	 	
101	 	The following materials from Dover Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2010 formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Statement of Operations, (ii) the Condensed Consolidated Balance Sheet, (iii) the Condensed Consolidated Statement of Stockholders’ Equity, (iv) the Condensed Consolidated Statement of Cash Flows, and (v) Notes to the Condensed Consolidated Financial Statements.	
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report on Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized.
 	 	 	 	 	
 	DOVER CORPORATION
 	 	
Date: October 22, 2010 	/s/ Brad M. Cerepak  	 	
 	Brad M. Cerepak, 	 	
 	Vice President & Chief Financial Officer
(Principal Financial Officer) 	 	

Date: October 22, 2010 	/s/ Raymond T. McKay Jr.  	 	
 	Raymond T. McKay, Jr., 	 	
 	Vice President, Controller
(Principal Accounting Officer) 	 	
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EXHIBIT INDEX
31.1	 	Certificate pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, signed and dated by Brad M. Cerepak.	
 	 	 	
31.2	 	Certificate pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, signed and dated by Robert A. Livingston.	
 	 	 	
32	 	Certificate pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed and dated by Robert A. Livingston and Brad M. Cerepak.	
 	 	 	
101	 	The following materials from Dover Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2010 formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Statement of Operations, (ii) the Condensed Consolidated Balance Sheet, (iii) the Condensed Consolidated Statement of Stockholders’ Equity, (iv) the Condensed Consolidated Statement of Cash Flows, and (v) Notes to the Condensed Consolidated Financial Statements.	
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Exhibit 31.1
Certification
I, Brad M. Cerepak, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Dover Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 	(a)	 	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;	
 	 	 	 	
 	(b)	 	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;	
 	 	 	 	
 	(c)	 	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and	
 	 	 	 	
 	(d)	 	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and	
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 	(a)	 	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and	
 	 	 	 	
 	(b)	 	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.	

Date: October 22, 2010 	/s/ Brad M. Cerepak  	 	
 	Brad M. Cerepak 	 	
 	Vice President & Chief Financial Officer
(Principal Financial Officer) 	 	

 	 	 	 	 	
Exhibit 31.2
Certification
I, Robert A. Livingston, certify that:
1.	 	I have reviewed this Quarterly Report on Form 10-Q of Dover Corporation;	
 	 	 	
2.	 	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;	
 	 	 	
3.	 	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;	
 	 	 	
4.	 	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:	

 	(a)	 	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;	
 	 	 	 	
 	(b)	 	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;	
 	 	 	 	
 	(c)	 	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and	
 	 	 	 	
 	(d)	 	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and	

5.	 	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):	

 	(a)	 	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and	
 	 	 	 	
 	(b)	 	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.	

Date: October 22, 2010 	/s/ Robert A. Livingston  	 	
 	Robert A. Livingston 	 	
 	President and Chief Executive Officer 	 	

 	 	 	 	 	
Exhibit 32
Certification
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
with Respect to the Quarterly Report on Form 10-Q
for the Period ended September 30, 2010
of Dover Corporation
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), each of the undersigned officers of Dover Corporation, a Delaware corporation (the “Company”), does hereby certify, to such officer’s knowledge, that:
 	1.	 	The Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2010 (the “ Form 10-Q” ) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended; and	
 	 	 	 	
 	2.	 	Information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.	

Dated: October 22, 2010 	/s/ Robert A. Livingston  	 	
 	Robert A. Livingston 	 	
 	President and Chief Executive Officer 	 	

Dated: October 22, 2010 	/s/ Brad M. Cerepak  	 	
 	Brad M. Cerepak 	 	
 	Vice President & Chief Financial Officer
(Principal Financial Officer) 	 	
 	
The certification set forth above is being furnished as an exhibit solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and is not being filed as part of the Form 10-Q or as a separate disclosure document of the Company or the certifying officers.