DOV 10-Q Quarterly Report June 30, 2011

DOVER CORP

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10-Q 1 form10q-063011.htm FORM 10-Q form10q-063011.htm

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 June 30, 2011

Commission File Number: 1-4018

Dover Corporation

(Exact name of registrant as specified in its charter)

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

3005 Highland Parkway, Suite 200
Downers Grove, Illinois	60515
(Address of principal executive offices)	(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 R No £

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 R No £

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 R	Accelerated filer £	Non-accelerated filer £	Smaller reporting company £
		(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 £ No R

The number of shares outstanding of the Registrant’s common stock as of July 15, 2011 was 186,023,340.

Dover Corporation

Form 10-Q

Table of Contents

PART I — FINANCIAL INFORMATION			Page
Item 1.	Financial Statements (unaudited)
	Condensed Consolidated Statement of Operations for the three and six months ended June 30, 2011 and 2010		1
	Condensed Consolidated Balance Sheet at June 30, 2011 and December 31, 2010		2
	Condensed Consolidated Statement of Stockholders’ Equity for the six months ended June 30, 2011		3
	Condensed Consolidated Statement of Cash Flows for the six months ended June 30, 2011 and 2010		4
	Notes to Condensed Consolidated Financial Statements		5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		29
Item 4.	Controls and Procedures		29

PART II — OTHER INFORMATION
Item 1.		Legal Proceedings	29
Item 1A.		Risk Factors	29
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 3.		Defaults Upon Senior Securities	30
Item 4.		[Removed and Reserved]	30
Item 5.		Other Information	30
Item 6.		Exhibits	30
SIGNATURES			31

(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 June 30,					Six Months Ended June 30,
	2011		2010			2011		2010
Revenue	$	2,156,871	$	1,786,696		$	4,115,892	$	3,369,966
Cost of goods and services		1,341,014		1,097,998			2,551,210		2,069,111
Gross profit		815,857		688,698			1,564,682		1,300,855
Selling and administrative expenses		474,130		423,809			952,649		832,978
Operating earnings		341,727		264,889			612,033		467,877
Interest expense, net		28,134		26,942			56,420		54,111
Other expense (income), net		1,374		(4,708	)		2,594		(5,949	)
Earnings before provision for income taxes and discontinued operations		312,219		242,655			553,019		419,715
Provision for income taxes		63,125		70,762			120,619		126,337
Earnings from continuing operations		249,094		171,893			432,400		293,378
Gain (loss) from discontinued operations, net		675		(2,023	)		12,274		(15,381	)
Net earnings	$	249,769	$	169,870		$	444,674	$	277,997

Basis earnings (loss) per common share:
Earnings from continuing operations	$	1.34	$	0.92		$	2.32	$	1.57
Gain (loss) from discontinued operations, net		-		(0.01	)		0.07		(0.08	)
Net earnings		1.34		0.91			2.38		1.49

Weighted average shares outstanding		186,443		186,823			186,522		186,998

Diluted earnings (loss) per common share:
Earnings from continuing operations	$	1.31	$	0.91		$	2.28	$	1.55
Gain (loss) from discontinued operations, net		-		(0.01	)		0.06		(0.08	)
Net earnings		1.32		0.90			2.34		1.47

Weighted average shares outstanding		189,705		188,720			189,905		188,948

Dividends paid per common share	$	0.275	$	0.26		$	0.55	$	0.52

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

	Three Months Ended June 30,					Six Months Ended June 30,
		2011		2010			2011		2010
Weighted average shares outstanding - Basic		186,443		186,823			186,522		186,998

Dilutive effect of assumed exercise of employee stock options, SARs and performance shares		3,262		1,897			3,383		1,950

Weighted average shares outstanding - Diluted		189,705		188,720			189,905		188,948

Anti-dilutive options/SARs excluded from diluted EPS computation		1,513		3,790			1,184		1,501

See Notes to Condensed Consolidated Financial Statements

Table of Contents

DOVER CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEET

(in thousands)

(unaudited)

	June 30, 2011		December 31, 2010
Current assets:
Cash and cash equivalents	$	1,397,419	$	1,187,361
Short-term investments		-		121,734
Receivables, net of allowances of $32,775 and $34,151		1,323,470		1,087,704
Inventories, net		882,512		714,110
Prepaid and other current assets		71,509		61,242
Deferred tax assets		78,505		89,720
Total current assets		3,753,415		3,261,871
Property, plant and equipment, net		936,797		847,189
Goodwill		3,616,805		3,368,033
Intangible assets, net		1,038,658		907,523
Other assets and deferred charges		113,773		111,145
Assets of discontinued operations		22,590		67,133
Total assets	$	9,482,038	$	8,562,894

Current liabilities:
Notes payable and current maturities of long-term debt		47,748		16,925
Accounts payable		596,315		469,038
Accrued compensation and employee benefits		247,265		275,947
Accrued insurance		108,871		112,198
Other accrued expenses		223,449		240,786
Federal and other taxes on income		40,318		79,492
Total current liabilities		1,263,966		1,194,386
Long-term debt		2,186,238		1,790,886
Deferred income taxes		446,579		381,297
Other liabilities		594,313		564,121
Liabilities of discontinued operations		77,985		105,642
Stockholders' Equity:
Total stockholders' equity		4,912,957		4,526,562
Total liabilities and stockholders' equity	$	9,482,038	$	8,562,894

See Notes to Condensed Consolidated Financial Statements

Table of Contents

DOVER CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(in thousands)

(unaudited)

	Common Stock $1 Par Value		Additional Paid-In Capital		Accumulated Other Comprehensive Earnings		Retained Earnings			Treasury Stock			Total Stockholders' Equity
Balance at December 31, 2010	$	249,361	$	596,457	$	50,161	$	5,953,027		$	(2,322,444	)	$	4,526,562
Net earnings		-		-		-		444,674			-			444,674
Dividends paid		-		-		-		(102,606	)		-			(102,606	)
Common stock issued for options exercised		1,095		25,654		-		-			-			26,749
Tax benefit from the exercise of stock options		-		7,370		-		-			-			7,370
Stock-based compensation expense		-		14,448		-		-			-			14,448
Common stock acquired		-		-		-		-			(98,382	)		(98,382	)
Translation of foreign financial statements		-		-		90,944		-			-			90,944
Other, net of tax		-		2,846		352		-			-			3,198
Balance at June 30, 2011	$	250,456	$	646,775	$	141,457	$	6,295,095		$	(2,420,826	)	$	4,912,957

Preferred Stock; $100 par value per share; 100,000 shares authorized; no shares issued.

See Notes to Condensed Consolidated Financial Statements

Table of Contents

DOVER CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(in thousands)

(unaudited)

	Six Months Ended June 30,
	2011			2010
Operating Activities of Continuing Operations

Net earnings	$	444,674		$	277,997

Adjustments to reconcile net earnings to cash from operating activities:
(Gain) loss from discontinued operations		(12,274	)		15,381
Depreciation and amortization		148,205			132,013
Stock-based compensation		14,401			12,963
Gain on sale of assets		(942	)		(5,088	)
Cash effect of changes in current assets and liabilities (excluding effects of acquisitions, dispositions and foreign exchange):
Accounts receivable		(188,538	)		(228,007	)
Inventories		(102,035	)		(114,408	)
Prepaid expenses and other assets		(7,952	)		7,715
Accounts payable		109,380			151,731
Accrued expenses		(67,580	)		29,689
Accrued and deferred taxes, net		5,263			69,834
Other, net		(705	)		(31,555	)
Net cash provided by operating activities of continuing operations		341,897			318,265

Investing Activities of Continuing Operations
Proceeds from sale of short-term investments		124,410			304,278
Purchase of short-term investments		-			(350,583	)
Proceeds from the sale of property, plant and equipment		5,010			11,315
Additions to property, plant and equipment		(126,420	)		(86,281	)
Proceeds from the sale of businesses		4,816			4,500
Settlement of net investment hedge		(18,211	)		-
Acquisitions (net of cash acquired)		(424,624	)		(9,985	)
Net cash used in investing activities of continuing operations		(435,019	)		(126,756	)

Financing Activities of Continuing Operations
Change in notes payable, net		31,145			30,000
Reduction of long-term debt		(400,458	)		(16,537	)
Proceeds from long-term debt, net of discount and issuance costs		788,971			-
Purchase of common stock		(98,382	)		(64,454	)
Proceeds from exercise of stock options and SARs, including tax benefits		34,119			42,787
Dividends to stockholders		(102,606	)		(97,277	)
Net cash provided by (used in) financing activities of continuing operations		252,789			(105,481	)

Cash Flows from Discontinued Operations
Net cash used in operating activities of discontinued operations		(5,739	)		(1,434	)
Net cash used in investing activities of discontinued operations		-			(140	)
Net cash used in discontinued operations		(5,739	)		(1,574	)

Effect of exchange rate changes on cash and cash equivalents		56,130			(60,002	)

Net increase in cash and cash equivalents		210,058			24,452
Cash and cash equivalents at beginning of period		1,187,361			714,365

Cash and cash equivalents at end of period	$	1,397,419		$	738,817

See Notes to Condensed Consolidated Financial Statements

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, 2010, 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 six months ended June 30, 2011.

2011 Acquisitions
Date	Type	Company / Product Line Acquired	Location (Near)	Segment	Platform	Company
3-Jan	Stock	Harbison-Fischer, Inc.	Crowley, TX	Fluid Management	Energy	Norris Production Solutions
Designer and manufacturer of down-hole rod pumps and related products used in artificial lift applications around the world.

5-Jan	Asset/Stock	Dosmatic, Inc.	Carrollton, TX	Fluid Management	Fluid Solutions	Hydro Systems
Manufacturer of non-electric chemical metering equipment used in agricultural, horticulture and other industrial market segments.

26-Jan	Stock	TAGC Limited LLC	Muscat, Oman	Fluid Management	Energy	Norris Production Solutions
Oilfield services provider, servicing both conventional and coiled sucker rod wells in the Middle East.

28-Jan	Asset	EnviroGear Product Line	Franklin Park, IL	Fluid Management	Fluid Solutions	Pump Solutions Group
Manufacturer of magnetically coupled internal gear pumps used in a wide range of industrial manufacturing.

The Company acquired these businesses in four separate transactions for an aggregate purchase price of $424,624, net of cash acquired. The 2011 acquisitions are wholly-owned, with the exception of TAGC Limited LLC in which the Company acquired a 60% controlling interest. The non-controlling interest in TAGC Limited LLC is not material. The Unaudited Condensed Consolidated Statement of Operations includes the results of these businesses from the dates of acquisition. The aggregate revenue of the 2011 acquisitions included in the Company’s consolidated revenue totaled $46,111and $89,644 for the three and six months ended June 30, 2011, respectively.

The Company has allocated purchase price at the dates of acquisition based upon its understanding, obtained during due diligence and through other sources, of the fair value of the acquired assets and assumed liabilities. If additional information is obtained about these assets and liabilities within the measurement period (not to exceed one year from the date of acquisition), including through asset appraisals and learning more about the newly acquired business, the Company may refine its estimates of fair value to allocate the purchase price more accurately; however, any such revisions are not expected to be significant.

The following presents the allocation of the acquisition cost to the assets acquired and liabilities assumed, based on their estimated fair values:

Current assets, net of cash acquired	$	81,213
Property, plant and equipment		41,435
Goodwill		236,135
Intangible assets		190,132
Other		(1,118	)
Total liabilities		(123,173	)
Net assets acquired	$	424,624

Table of Contents

DOVER CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(in thousands, unless otherwise indicated)

As a result of these acquisitions, the Company recorded approximately $177,853 of customer-related intangible assets (weighted average lives of 12 years), $8,535 of trademarks (weighted average lives of 11 years), and $3,744 of other intangibles (weighted average lives of 7 years). The 2011 acquisitions resulted in the recognition of goodwill totaling $236,135, of which $3,856 is expected to be deductible for tax purposes

Each of the businesses acquired in 2011 manufacture products and/or provide services in the energy and fluid solutions markets, each growth areas for the Company. These businesses were acquired to complement and expand upon existing operations within the Fluid Management segment. As such, the goodwill identified by the acquisitions reflects the benefits expected to be derived from product line expansion and operational synergies.

In accordance with ASU 2010-29, “Disclosure of Supplementary Pro Forma Information for Business Combinations,” the following unaudited pro forma information illustrates the effect on the Company’s revenue and net earnings for the three and six months ended June 30, 2011 and 2010, assuming that the 2011 acquisitions had taken place at the beginning of 2010. As a result, the supplemental pro forma net earnings reflect adjustments to the net earnings as reported in the Unaudited Condensed Consolidated Statement of Operations for the three and six months ended June 30, 2011 to exclude $335 and $2,027, respectively, of nonrecurring expense (after-tax) related to the fair value adjustments to acquisition-date inventory. The supplemental pro forma earnings for the comparable 2010 period were adjusted to include these charges. The 2011 and 2010 supplemental pro forma earnings are also adjusted to reflect the comparable impact of additional depreciation and amortization expense (net of tax) resulting from the fair value measurement of tangible and intangible assets relating to 2011 and 2010 acquisitions.

	Three Months Ended June 30,				Six Months Ended June 30,
	2011		2010		2011		2010
Revenue from continuing operations:
As reported	$	2,156,871	$	1,786,696	$	4,115,892	$	3,369,966
Pro forma		2,156,871		1,841,346		4,117,317		3,479,945
Net earnings from continuing operations:
As reported	$	249,094	$	171,893	$	432,400	$	293,378
Pro forma		249,429		176,762		434,570		301,748
Basic earnings per share from continuing operations:
As reported	$	1.34	$	0.92	$	2.32	$	1.57
Pro forma		1.34		0.95		2.33		1.61
Diluted earnings per share from continuing operations:
As reported	$	1.31	$	0.91	$	2.28	$	1.55
Pro forma		1.31		0.94		2.29		1.60

These pro forma results of operations have been prepared for comparative purposes only, and 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

	June 30, 2011		December 31, 2010
Raw materials	$	402,166	$	349,628
Work in progress		212,387		161,597
Finished goods		323,931		253,910
Subtotal		938,484		765,135
Less LIFO reserve		55,972		51,025
Total	$	882,512	$	714,110

Table of Contents

DOVER CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(in thousands, unless otherwise indicated)

4. Property, Plant and Equipment, net

	June 30, 2011			December 31, 2010
Land	$	57,075		$	50,760
Buildings and improvements		601,808			567,941
Machinery, equipment and other		2,050,082			1,921,509
		2,708,965			2,540,210
Accumulated depreciation		(1,772,168	)		(1,693,021	)
Total	$	936,797		$	847,189

5. Financial Instruments

Derivatives

The Company is exposed to market risk for changes in foreign currency exchange rates due to the global nature of its operations. In order to manage this risk the Company has hedged portions of its forecasted sales and purchases, which occur within the next twelve months and are denominated in non-functional currencies, with currency forward or collar contracts designated as cash flow hedges. At June 30, 2011 and December 31, 2010, the Company had contracts with U.S. dollar equivalent notional amounts of $37,447 and $63,935, respectively, to exchange foreign currencies, principally the U.S. dollar, British pound, Singapore dollar, Chinese yuan and Malaysian ringgit. The Company believes it is probable that all forecasted cash flow transactions will occur.

The Company has an outstanding floating-to-floating cross currency swap agreement for a total notional amount of $50,000 in exchange for CHF 65,100. In February 2011, the Company amended and restated the terms of the arrangement to extend its maturity date to October 15, 2015. This transaction continues to hedge a portion of the Company’s net investment in CHF-denominated operations. The agreement qualifies as a net investment hedge and the effective portion of the change in fair value is reported within the cumulative translation adjustment section of other comprehensive income. The fair values at June 30, 2011 and December 31, 2010 reflected losses of $29,895 and $19,774, respectively, due to the strengthening of the Swiss franc relative to the U.S. dollar over the term of the arrangement.

In January 2011, the Company entered into foreign currency forward contracts to purchase $350,000 for €258,719, which were designated as hedging an equivalent amount of the Company’s euro denominated net investment. The agreements qualified as net investment hedges with the changes in fair value being reported within the cumulative translation adjustment section of other comprehensive income. These arrangements were settled on April 4, 2011, resulting in a loss of $18,211 being reflected within the cumulative translation adjustment.

The following table sets forth the fair values of derivative instruments held by the Company as of June 30, 2011 and December 31, 2010 and the balance sheet lines in which they are recorded:

	Fair Value - Asset (Liability)
	June 30, 2011			December 31, 2010			Balance Sheet Caption
Foreign currency forward / collar contracts	$	215		$	503		Prepaid / Other assets
Net investment hedge - cross currency swap		(29,895	)		(19,774	)	Other liabilities

The amount of gains or losses from hedging activity recorded in earnings is not significant and the amount of unrealized gains and losses from cash flow hedges which are expected to be reclassified to earnings in the next twelve months is not significant; therefore, additional tabular disclosures are not presented. There are no amounts excluded from the assessment of hedge effectiveness and there are no credit risk related contingent features in the Company’s derivative instruments.

Table of Contents

DOVER CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(in thousands, unless otherwise indicated)

The Company is exposed to credit loss in the event of nonperformance by counterparties to the financial instrument contracts held by the Company; however, nonperformance by these counterparties is considered unlikely as the Company’s policy is to contract with highly-rated, diversified counterparties.

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.

The following table presents the Company’s assets and liabilities measured at fair value on a recurring basis as of June 30, 2011 and December 31, 2010:

	June 30, 2011						December 31, 2010
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Assets:
Short-term investments	$	-	$	-	$	-	$	121,734	$	-	$	-
Foreign currency cash flow hedges		-		215		-		-		503		-
Liabilities:
Net investment hedge derivative		-		29,895		-		-		19,774		-

Short-term investments 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 contracts are measured at fair value using models based on observable market inputs such as foreign currency exchange rates and interest rates; therefore, they are 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 June 30, 2011 and December 31, 2010 was $2,431,461 and $1,961,697, respectively, compared to the carrying value of $2,187,986 and $1,792,811. The carrying value includes the portion that is due and payable in less than one year of $1,748 and $1,925 at June 30, 2011 and December 31, 2010, respectively. The estimated fair value of the long-term debt is based on quoted market prices for similar instruments. The fair value of short-term loans, principally commercial paper at June 30, 2011 and December 31, 2010, approximates carrying value.

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 June 30, 2011 and December 31, 2010 due to the short-term nature of these instruments.

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DOVER CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(in thousands, unless otherwise indicated)

6. Goodwill and Other Intangible Assets

The following table provides the changes in carrying value of goodwill by segment for the six months ended June 30, 2011:

	Industrial Products			Engineered Systems		Fluid Management			Electronic Technologies		Total
Goodwill	$	1,031,658		$	819,054	$	699,232		$	977,811	$	3,527,755
Accumulated impairment loss		(99,752	)		-		(59,970	)		-		(159,722	)
Balance at January 1, 2011		931,906			819,054		639,262			977,811		3,368,033
Acquisitions		-			-		236,135			-		236,135
Foreign currency translation		1,257			2,747		2,587			6,046		12,637
Balance at June 30, 2011	$	933,163		$	821,801	$	877,984		$	983,857	$	3,616,805

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

	June 30, 2011				December 31, 2010
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Amortized Intangible Assets:
Trademarks	$	86,012	$	24,241	$	74,053	$	21,330
Patents		136,114		99,900		131,975		94,632
Customer Intangibles		982,150		379,403		802,663		334,585
Unpatented Technologies		140,600		93,781		138,780		86,461
Drawings & Manuals		16,398		8,500		15,650		7,728
Distributor Relationships		73,227		26,667		73,183		24,724
Other		29,349		21,354		28,202		18,445
Total		1,463,850		653,846		1,264,506		587,905
Unamortized Intangible Assets:
Trademarks		228,654				230,922
Total Intangible Assets	$	1,692,504	$	653,846	$	1,495,428	$	587,905

Amortization expense totaled $30,751 and $25,891 for the three months ended June 30, 2011 and 2010, respectively. For the six months ended June 30, 2011 and 2010, amortization expense was $61,765 and $51,655, respectively.

7. Borrowings

Borrowings consist of the following:

	June 30, 2011			December 31, 2010
6.50% 10-year notes due February 15, 2011	$	-		$	399,986
4.875% 10-year notes due October 15, 2015		299,145			299,047
5.45% 10-year notes due March 15, 2018		347,773			347,608
4.30% 10-year notes due March 1, 2021		449,748			-
6.60% 30-year notes due March 15, 2038		247,639			247,595
5.375% 30-year notes due March 1, 2041		345,272			-
6.65% 30-year debentures due June 1, 2028		199,396			199,379
5.375% 30-year debentures due October 15, 2035		296,128			296,048
Other		2,885			3,148
Total long-term debt		2,187,986			1,792,811
Less current installments		(1,748	)		(1,925	)
	$	2,186,238		$	1,790,886

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DOVER CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(in thousands, unless otherwise indicated)

On February 22, 2011, the Company issued $450 million of 4.30% Notes due 2021 and $350 million of 5.375% Notes due 2041. The proceeds of $788,971 from the sale of the notes, net of discounts and issuance costs, were used to repay commercial paper, including commercial paper issued to repay the Company’s $400 million of 6.50% notes, which matured February 15, 2011, and for other general corporate purposes, including the acquisition of Harbison-Fischer. The new notes are redeemable at the option of Dover in whole or in part at any time at a redemption price that includes a make-whole premium, with accrued interest to the redemption date.

At June 30, 2011 and December 31, 2010, notes payable and current maturities of long-term debt within the Unaudited Condensed Consolidated Balance Sheet included commercial paper of $46,000 and $15,000, respectively.

The Company maintains a $1 billion unsecured revolving credit facility which expires on November 9, 2012. The Company primarily uses this facility as liquidity back-up for its commercial paper program and has not drawn down any loans under the $1 billion facility and does not anticipate doing so. The Company generally uses commercial paper borrowings for general corporate purposes, funding of acquisitions and the repurchases of its common stock.

Interest expense for the three months ended June 30, 2011 and 2010 was $31,120 and $28,996, respectively. For the six months ended June 30, 2011 and 2010, interest expense was $62,180 and $57,842, respectively. Interest income for the three months ended June 30, 2011 and 2010 was $2,986 and $2,054, respectively. For the six months ended June 30, 2011 and 2010, interest income was $5,760 and $3,731, respectively.

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 effective tax rates for the three and six months ended June 30, 2011 were 20.2% and 21.8% compared to the prior year rates of 29.2% and 30.1%. The effective tax rates for the three and six month periods of 2011 were favorably impacted by net discrete items totaling $30,354, including $22,338 arising in the second quarter principally from U.S. federal tax settlements and $8,016 arising in the first quarter principally from settlements with state taxing authorities. Excluding discrete items, the effective tax rates for the three and six month periods of 2011 were 27.4% and 27.3%, respectively, which are lower than the effective rates in the comparable 2010 periods primarily due to a more favorable mix of non-U.S. earnings in 2011. The Company believes additional uncertain tax positions will be settled within the next 12 months; however, an estimate cannot be made due to the uncertainties associated with the resolution of these matters.

9. Discontinued Operations

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

	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011		2010
Revenue	$	-		$	-		$	-	$	9,380

Loss on sale, net of taxes	$	-		$	(926	)	$	-	$	(14,203	)

(Loss) gain from operations before taxes		(490	)		(323	)		66		102
Benefit (provision) for income taxes		1,165			(774	)		12,208		(1,280	)
Gain (loss) from discontinued operations, net of tax	$	675		$	(2,023	)	$	12,274	$	(15,381	)

The Company currently has no businesses held for sale in discontinued operations. The gain from discontinued operations, net of tax, for the six months ended June 30, 2011 reflects the tax benefit resulting primarily from discrete tax items settled during the period. For the six months ended June 30, 2010, the loss from discontinued operations, net of tax reflects the sale of Triton, an operating company that had been reclassified from the Engineered Systems segment to discontinued operations in 2008.

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DOVER CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(in thousands, unless otherwise indicated)

At June 30, 2011 and December 31, 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:

	June 30, 2011		December 31, 2010
Assets of Discontinued Operations
Current assets	$	9,500	$	52,678
Non-current assets		13,090		14,455
	$	22,590	$	67,133

Liabilities of Discontinued Operations
Current liabilities	$	10,184	$	34,111
Non-current liabilities		67,801		71,531
	$	77,985	$	105,642

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.

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 and currently accrued to-date, and the availability and extent of insurance coverage. While it is not possible at this time to predict the outcome of these legal actions, 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 June 30, 2011 and 2010 are as follows:

	2011			2010
Beginning Balance, January 1	$	58,229		$	59,713
Provision for warranties		20,680			19,728
Settlements made		(20,539	)		(18,364	)
Other adjustments, including currency translation		725			(1,895	)
Ending Balance, June 30	$	59,095		$	59,182

As of June 30, 2011, the Company had approximately $77,561 outstanding in letters of credit with financial institutions, which expire at various dates in 2011 through 2016. These letters of credit are primarily maintained as security for insurance, warranty and other performance obligations.

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DOVER CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(in thousands, unless otherwise indicated)

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 June 30, 2011, restructuring charges of $1,214 and $881 were recorded in cost of goods and services and selling and administrative expenses, respectively. For the three months ended June 30, 2010, restructuring charges of $197 were recorded in selling and administrative expenses. For the six months ended June 30, 2011, restructuring charges of $1,301 and $2,274 were recorded in cost of goods and services and selling and administrative expenses, respectively. For the six months ended June 30, 2010, restructuring charges of $713 and $1,535 and 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, 2010	$	1,143		$	6,751		$	7,894
Provision		2,722			853			3,575
Payments		(2,444	)		(2,437	)		(4,881	)
Other		19			(394	)		(375	)
At June 30, 2011	$	1,440		$	4,773		$	6,213

The following table details restructuring charges incurred by segment for the periods presented:

	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011		2010
Industrial Products	$	467		$	463		$	941	$	796
Engineered Systems		(2	)		310			4		426
Fluid Management		1,514			(489	)		2,382		768
Electronic Technologies		116			(87	)		248		258
Total	$	2,095		$	197		$	3,575	$	2,248

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DOVER CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(in thousands, unless otherwise indicated)

11. Employee Benefit Plans

The following table sets forth the components of the Company’s net periodic expense relating to retirement and post-retirement benefit plans:

	Retirement Plan Benefits
	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
Service Cost	$	5,316		$	4,850		$	10,609		$	9,700
Interest Cost		10,951			9,632			21,851			19,264
Expected return on plan assets		(11,681	)		(9,621	)		(23,313	)		(19,242	)
Amortization:
Prior service cost		2,175			2,158			4,347			4,316
Recognized actuarial loss		2,148			1,367			4,296			2,734
Transition obligation		(11	)		(11	)		(22	)		(22	)
Other		32			20			64			40
Net periodic expense	$	8,930		$	8,395		$	17,832		$	16,790

	Post-Retirement Benefits
	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
Service Cost	$	51		$	70		$	103		$	139
Interest Cost		181			212			362			420
Amortization:
Prior service cost		(103	)		(98	)		(205	)		(200	)
Recognized actuarial loss		(60	)		(103	)		(120	)		(203	)
Net periodic expense	$	69		$	81		$	140		$	156

12. Comprehensive Earnings

Comprehensive earnings were as follows:

	Three Months Ended June 30,					Six Months Ended June 30,
	2011		2010			2011		2010
Net earnings	$	249,769	$	169,870		$	444,674	$	277,997
Foreign currency translation adjustment, net of tax		18,760		(86,198	)		90,944		(171,465	)
Other, net of tax		875		609			352		1,949
Comprehensive earnings	$	269,404	$	84,281		$	535,970	$	108,481

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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 June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
REVENUE
Industrial Products	$	566,775		$	462,386		$	1,085,537		$	891,184
Engineered Systems		645,655			577,121			1,206,300			1,061,394
Fluid Management		534,538			403,674			1,043,478			784,474
Electronic Technologies		412,630			345,607			785,960			636,596
Intra-segment eliminations		(2,727	)		(2,092	)		(5,383	)		(3,682	)
Total consolidated revenue	$	2,156,871		$	1,786,696		$	4,115,892		$	3,369,966
EARNINGS FROM CONTINUING OPERATIONS
Segment earnings:
Industrial Products	$	73,316		$	61,635		$	137,729		$	112,674
Engineered Systems		94,116			84,655			161,429			139,498
Fluid Management		131,382			96,168			245,067			182,935
Electronic Technologies		76,917			59,582			136,692			104,487
Total segments		375,731			302,040			680,917			539,594
Corporate expense / other		35,378			32,443			71,478			65,768
Net interest expense		28,134			26,942			56,420			54,111
Earnings before provision for income taxes and discontinued operations		312,219			242,655			553,019			419,715
Provision for taxes		63,125			70,762			120,619			126,337
Earnings from continuing operations - total consolidated	$	249,094		$	171,893		$	432,400		$	293,378

14. Recent Accounting Standards

In October 2009, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2009-13, which amended existing guidance for identifying separate deliverables in a revenue-generating transaction where multiple deliverables exist and requires that arrangement consideration be allocated at the inception of an arrangement to all deliverables using the relative selling price method. The ASU also establishes a selling price hierarchy for determining the selling price of a deliverable, which includes: 1) vendor-specific objective evidence if available, 2) third-party evidence if vendor-specific objective evidence is not available, and 3) estimated selling price if neither vendor-specific nor third-party evidence is available.

The majority of the Company’s businesses generate revenue through the manufacture and sale of a broad range of specialized products and components, with revenue recognized upon transfer of title and risk of loss, which is generally upon shipment. When the Company has multiple deliverables in its sales arrangements, they are typically separate units of accounting with vendor-specific objective evidence of selling price. The Company adopted the requirements of ASU 2009-13 on a prospective basis, effective January 1, 2011. The requirements of ASU 2009-13 did not significantly change the Company’s units of accounting or how the Company allocates arrangement consideration to various units of accounting. Therefore, the adoption of ASU 2009-13 did not have a material effect on the Company’s statement of position or results of operations.

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 then-current generally accepted accounting principles for software. The Company adopted ASU 2009-14 on a prospective basis, effective January 1, 2011. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

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DOVER CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(in thousands, unless otherwise indicated)

In May 2011, the FASB issued ASU 2011-04 which was issued to provide a consistent definition of fair value and ensure that the fair value measurement and disclosure requirements are similar between U.S. GAAP and IFRS. ASU 2011-04 changes certain fair value measurement principles and enhances the disclosure requirements particularly for Level 3 fair value measurements. This guidance is effective for the Company beginning on January 1, 2012. Its adoption is not expected to significantly impact the Company’s consolidated financial statements.

In June 2011, the FASB issued ASU 2011-05 which provides new guidance on the presentation of comprehensive income. ASU 2011-05 eliminates the option to report other comprehensive income and its components in the statement of changes in stockholders’ equity and instead requires an entity to present the total of comprehensive income, the components of net income and the components of other comprehensive income either in a single continuous statement or in two separate but consecutive statements. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011, with early adoption permitted. The adoption of this ASU will not have a significant impact on the Company’s consolidated financial statements as it only requires a change in the format of the current presentation.

15. Equity Incentive Program

During the six months ended June 30, 2011, the Company issued stock appreciation rights (“SARs”) covering 1,524,329 shares and 44,751 performance shares. During the six months ended June 30, 2010, the Company issued SARs covering 2,306,440 shares and 68,446 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
	Six Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
Risk-free interest rate		2.68	%		2.77	%		1.34	%		1.37	%
Dividend yield		1.70	%		2.33	%		1.61	%		2.38	%
Expected life (years)		5.8			6.0			2.9			2.9
Volatility		33.56	%		31.93	%		40.48	%		39.98	%
Grant price	$	66.59		$	42.88			n/a			n/a
Fair value at date of grant	$	20.13		$	11.66		$	91.41		$	57.49

For the three months ended June 30, 2011 and 2010, after-tax stock-based compensation expense totaled $3,988 and $3,862, respectively. For the six months ended June 30, 2011 and 2010, after-tax stock-based compensation expense totaled $9,361 and $8,426, 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 three and six months ended June 30, 2011, the Company repurchased 1,000,000 and 1,450,000 shares of its common stock in the open market. During the six months ended June 30, 2011 the Company also repurchased 79,708 shares from the holders of its employee stock options when they tendered these shares as full or partial payment of the exercise price of such options. Therefore, during the three and six months ended June 30, 2011, a total of 1,079,708 and 1,529,708 shares were repurchased at an average price of $64.06 and $64.31 per share, respectively. Treasury shares increased to 64,415,056 at June 30, 2011 from a balance of 62,885,348 at December 31, 2010.

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DOVER CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(in thousands, unless otherwise indicated)

17. Subsequent Events

The Company assessed events occurring subsequent to June 30, 2011 for potential recognition and disclosure in the Unaudited Condensed Consolidated Financial Statements. No events have occurred that would require adjustment to the Unaudited Condensed Consolidated Financial Statements.

On July 4, 2011, the Company closed on the acquisition of the Sound Solutions business of NXP Semiconductors N.V. The acquisition purchase price of $855 million was funded by cash on hand and is subject to working capital and other contractual adjustments. Sound Solutions is one of the world’s leading manufacturers of dynamic speakers and receivers for cell phones and other consumer electronics. The business will be incorporated into the Knowles business within the Dover Electronic Technologies segment, which will enhance the segment’s product offerings serving the high growth handset market. The Company is in the process of finalizing its appraisals of tangible and intangible assets relating to this acquisition, and the allocation of the purchase price to the assets acquired and liabilities assumed will be completed once the appraisal process has been finalized. Over the last three quarters ended June 30, 2011, the Company has recognized transaction related expenses totaling $3.5 million, which are reflected within selling and administrative expenses, and expects to recognize approximately $11 million of additional transaction related closing costs in the third quarter of 2011 relating to this acquisition.

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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 AND OUTLOOK

Dover Corporation (“Dover” or the “Company”) is a global manufacturer of 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.

The Company continued to experience positive results during the second quarter of 2011 with all segments achieving double-digit revenue and earnings growth, driven by strong bookings from the first quarter. As a result, the Company generated revenue of $2.2 billion during the second quarter of 2011, an increase of 21% compared to the prior year. Gross profit grew $127.2 million or 18% on the strength of increased volume. Bookings remained solid in the second quarter, driven by continuing strong dynamics in the energy markets, consumer electronics, and global industrial production. The Company continues to anticipate strength in the majority of its end-markets through the remainder of the year. However, the strong trends experienced in the first half of the year are expected to be somewhat tempered by a cautious macro-economic environment. In particular, refrigeration case sales are expected to soften in the second half of the year as well as solar equipment sales. The Company continues to focus on the execution of its strategies around product innovation, global expansion, leveraging its scale and disciplined capital allocation.

Given its strong performance in the first six months of 2011 and the addition of Knowles Sound Solutions (as described in Note 17 to the Unaudited Condensed Consolidated Financial Statements), the Company estimates that its 2011 full year organic revenue growth will be in the range of 12% to 14% (assuming a negligible impact from foreign currency) and acquisition related growth will be approximately 6%. Based on these revenue assumptions, as well as the impact of tax benefits received in the first half of the year, a slightly lower effective tax rate, and the net impact of Knowles Sound Solutions (which is expected to reduce 2011 diluted earnings per share by $0.03 to $0.05, subject to finalization of the purchase price allocation), the Company has projected that its continuing diluted earnings per share for 2011 will be in the range of $4.50 to $4.60. If the global or domestic economic conditions accelerate or deteriorate, Dover’s operating results for 2011 could be materially different than currently projected.

Furthermore, in connection with the Company’s strategic planning process, it is currently evaluating the potential sale of certain operating companies within the Material Handling platform of its Industrial Products segment. The decision regarding these entities is expected to be concluded before the end of the year.

RESULTS OF OPERATIONS

	Three Months Ended June 30,						% / Point			Six Months Ended June 30,						% / Point
(dollars in thousands, except per share figures)	2011			2010			Change			2011			2010			Change

Revenue	$	2,156,871		$	1,786,696			21	%	$	4,115,892		$	3,369,966			22	%
Cost of goods and services		1,341,014			1,097,998			22	%		2,551,210			2,069,111			23	%
Gross profit		815,857			688,698			18	%		1,564,682			1,300,855			20	%

Selling and administrative expenses		474,130			423,809			12	%		952,649			832,978			14	%
Interest expense, net		28,134			26,942			4	%		56,420			54,111			4	%
Other expense (income), net		1,374			(4,708	)		-			2,594			(5,949	)		-
Earnings from continuing operations		249,094			171,893			45	%		432,400			293,378			47	%
Net earnings		249,769			169,870			47	%		444,674			277,997			60	%

Net earnings per common share - diluted	$	1.32		$	0.90			46	%	$	2.34		$	1.47			59	%

Gross profit margin		37.8	%		38.5	%		(0.7	)		38.0	%		38.6	%		(0.6	)
Selling and administrative expenses as a percentage of revenue		22.0	%		23.7	%		(1.7	)		23.1	%		24.7	%		(1.6	)
Effective tax rate		20.2	%		29.2	%		(9.0	)		21.8	%		30.1	%		(8.3	)

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Revenue for the second quarter of 2011 increased $370.2 million or 21% from the comparable 2010 quarter reflecting organic revenue growth of 14%, growth of 4% related to acquisitions, and a 3% favorable impact from foreign exchange. The organic growth reflects volume increases across all of the Company’s segments, driven by continued higher demand in the majority of the Company’s end-markets, with particular strength in the energy market and end-markets served by material handling industrial products.

Revenue for the first six months of 2011 increased 22% to $4,115.9 million from the comparable 2010 period, with increases at all of the Company’s segments. The Company’s revenue increase was attributed to organic revenue growth of 16%, revenue growth of 4% related to acquisitions, and a 2% favorable impact from foreign exchange.

Gross profit increased $127.2 million or 18% compared to the 2010 second quarter reflecting the increased sales volumes and benefits from pricing actions and productivity initiatives, which more than offset increased material costs and unfavorable product mix at certain businesses. Gross profit margin decreased 70 basis points to 37.8% in the second quarter of 2011 as a result of higher raw material costs that have yet to be recovered by selling price increases and product mix. For the six month period, gross profit increased 20% to $1,564.7 million from the prior year period while gross profit margin decreased 60 basis points to 38.0%, due to the same drivers as noted in the quarter.

Selling and administrative expenses increased $50.3 million or 12% compared to the second quarter of 2010 primarily due to general increases across the segments in support of higher volumes and growth initiatives. As a percentage of revenue, selling and administrative expenses declined to 22.0% compared to 23.7% in the prior year quarter. This 170 basis point improvement reflects leverage from the higher revenue levels.

Selling and administrative expenses of $952.6 million for the first six months of 2011 increased by 14% or $119.7 million over the comparable 2010 period. As a percentage of revenue, these costs declined to 23.1% from 24.7% in the comparable 2010 period, reflecting leverage from the higher revenue levels.

Net interest expense for the second quarter of 2011 increased by $1.2 million or 4% compared to the same quarter last year, while net interest expense for the first six months of 2011 increased by $2.3 million or 4% compared to the respective prior year period. The increase in both the three and six month periods was primarily due to higher average outstanding debt balances in the 2011 period compared to the prior year. As discussed in Note 7 to the Unaudited Condensed Consolidated Financial Statements, the Company’s total debt increased approximately $400 million during the year, as the Company issued $800 million in new notes, approximately half of which repaid outstanding commercial paper balances.

Other expense (income), net for the quarter and year to date periods ending June 30, 2011 primarily reflects the impact of net losses from foreign exchange fluctuations on assets and liabilities denominated in currencies other than the functional currency, coupled with other miscellaneous non-operating gains and losses, none of which were individually, or in the aggregate, significant.

The effective tax rates for continuing operations for the three and six months ended June 30, 2011 were 20.2% and 21.8% compared to the prior period rates of 29.2% and 30.1%, respectively. The effective tax rates for the three and six month periods of 2011 were favorably impacted by net discrete items totaling $30.3 million, including $22.3 million arising in the second quarter principally from U.S. federal tax settlements and $8.0 million arising in the first quarter principally from settlements with state taxing authorities. Excluding discrete items, the effective tax rates for the three and six months ended June 30, 2011 were 27.4% and 27.3%, respectively, which are lower than the effective rates in the comparable 2010 periods primarily due to a more favorable mix of non-U.S. earnings in 2011. While the Company believes additional uncertain tax positions will be settled within the next 12 months, an estimate cannot be made due to the uncertainties associated with the resolution of these matters.

Earnings from continuing operations for the second quarter of 2011 increased 45% to $249.1 million, or $1.31 diluted earnings per share (“EPS”), compared to $171.9 million, or $0.91 diluted EPS, in the prior year second quarter. Net earnings for the second quarter were $249.8 million or $1.32 diluted EPS, compared to net earnings of $169.9 million or $0.90 diluted EPS for the 2010 second quarter, including a loss from discontinued operations of $2.0 million or $0.01 EPS. These increases were primarily a result of end-market improvements across all of the Company’s segments driving increased sales volume, coupled with the second quarter tax benefit noted above.

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Earnings from continuing operations for the first six months of 2011 increased 47% to $432.4 million, or $2.28 diluted EPS, compared to $293.4 million, or $1.55 diluted EPS. Net earnings for the first six months of 2011 increased 60% to $444.7 million, or $2.34 diluted EPS including a gain from discontinued operations of $12.3 million or $0.06 EPS, compared to net earnings of $278.0 million, or $1.47 diluted EPS including a loss from discontinued operations of $15.4 million, or $0.08 EPS. The increases in earnings from continuing operations and net earnings for the six month period were driven by the same factors as noted previously for the quarter, while net earnings also reflects the impact of discontinued operations as noted below.

The gain from discontinued operations, net of tax for the second quarter of 2011 reflects a tax benefit resulting primarily from discrete tax items settled during the period. For the second quarter of 2010, the loss from discontinued operations, net of tax related primarily to a working capital adjustment and other tax adjustments on previously sold businesses.

The gain from discontinued operations, net of tax of $12.3 million, or $0.06 EPS, for the six months ended June 30, 2011 reflects a tax benefit resulting primarily from discrete tax items settled during the first quarter. For the six months ended June 30, 2010, the loss from discontinued operations, net of $15.4 million, or $0.08 EPS, related primarily to the loss generated by the sale of a business that had been previously reflected as discontinued operations.

Severance and Other Restructuring Reserves

The Company does not have any significant restructuring activities underway, but in both 2011 and 2010 initiated a few targeted facility consolidations at its operating companies. As a result, the Company incurred restructuring charges totaling $3.6 million and $2.2 million for the six months ended June 30, 2011 and 2010, respectively. The Company does not expect to incur significant restructuring charges over the remainder of 2011, but will continue to monitor business activity across its end markets served and adjust capacity as necessary depending on the economic climate.

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SEGMENT RESULTS OF OPERATIONS

Starting with the first quarter of 2011, the Company changed its segment presentation of depreciation and amortization expense to show total depreciation and amortization expense relating to each respective segment’s operations. Prior to 2011, the Company had presented only the depreciation and amortization of acquisition-related accounting write-ups to reflect the fair value of inventory, property, plant and equipment, and intangible assets. The amounts of depreciation and amortization expense presented for 2010 herein have been conformed to the current year presentation.

Industrial Products

The Industrial Products segment provides material handling products and services that improve its customers’ productivity, as well as products used in various mobile equipment applications, primarily in the transportation equipment, vehicle service and solid waste management markets. The primary products and services provided by each of the segment’s two platforms are as follows:

Material Handling – I ndustrial and recreational winches, utility, construction and demolition machinery attachments, hydraulic parts, industrial automation tools, four-wheel-drive and all-wheel drive powertrain systems, accessories for off-road vehicles and operator cabs and rollover structures.

Mobile Equipment – Primarily refuse truck bodies, tank trailers, compactors, balers, vehicle service lifts and collision equipment, car wash systems, internal engine components, fluid control assemblies and various aerospace components.

	Three Months Ended June 30,									Six Months Ended June 30,
(in thousands)	2011			2010			% Change			2011			2010			% Change
Revenue
Material Handling	$	276,828		$	214,295			29	%	$	529,594		$	403,347			31	%
Mobile Equipment		290,668			248,523			17	%		557,343			488,662			14	%
Eliminations		(721	)		(432	)					(1,400	)		(825	)
	$	566,775		$	462,386			23	%	$	1,085,537		$	891,184			22	%

Segment earnings	$	73,316		$	61,635			19	%	$	137,729		$	112,674			22	%
Operating margin		12.9	%		13.3	%					12.7	%		12.6	%

Segment depreciation and amortization	$	16,589		$	17,118			-3	%	$	32,990		$	34,488			-4	%

Bookings
Material Handling	$	293,000		$	223,787			31	%	$	581,714		$	427,885			36	%
Mobile Equipment		336,212			288,887			16	%		673,485			520,015			30	%
Eliminations		(734	)		(303	)					(1,233	)		(710	)
	$	628,478		$	512,371			23	%	$	1,253,966		$	947,190			32	%

Backlog
Material Handling										$	217,518		$	140,452			55	%
Mobile Equipment											485,276			359,727			35	%
Eliminations											(654	)		(257	)
										$	702,140		$	499,922			40	%

Industrial Products revenue and earnings for the second quarter of 2011 increased by 23% and 19%, respectively, from the second quarter of the prior year primarily due to broad-based volume growth in most of the segment’s businesses. The revenue increase was attributed to growth in core business revenue of 20%, coupled with growth of 2% from Gear Products, a 2010 acquisition made by the Tulsa Winch business in its Material Handling platform, and a 1% favorable impact from foreign currency. Earnings in the second quarter of 2011 were favorably impacted by increased volume, particularly in infrastructure and energy markets. Operating margin decreased 40 basis points from the prior year quarter, as benefits from volume increases were offset in part by higher material costs, product mix, and additional selling and administrative investments necessary to support the segment’s product and business development activities.

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Material Handling revenue increased 29%, when compared to the prior year second quarter, while earnings increased 22%. Higher sales volumes drove organic revenue growth of 25%, coupled with 3% growth due to the acquisition of Gear Products noted above and a 1% favorable impact from foreign currency. Revenue improvements resulted from increased activity across most end-markets, including infrastructure and energy. Earnings improved due to increased sales volume, offset in part by additional selling and administrative investments necessary to support the platform’s growth initiatives. The platform’s second quarter operating margin declined 90 basis points compared to the prior year, reflecting the additional selling and administrative spending and the impact of a benefit in the second quarter of 2010 from a $3.4 million one-time gain on the sale of a property.

Mobile Equipment revenue increased 17% while earnings increased 15% compared to the prior year second quarter. The revenue growth was attributed to higher demand for crude oil and dry bulk commercial trailers and vehicle service offerings. Earnings increased as a result of the higher volumes, but operating margin decreased 30 basis points, primarily reflecting changes in product mix since a significant portion of the revenue growth was generated by lower margin commercial trailer business.

For the six months ended June 30, 2011, Industrial Products revenue and earnings increased 22%, as compared to the six months ended June 30, 2010. Revenue and earnings were favorably impacted by increased sales volume, offset in part by additional selling and administrative investments necessary to support the segment’s product and business development activities.

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Engineered Systems

The Engineered Systems segment provides products and services for the refrigeration, storage, packaging and preparation of food products, as well as industrial marking and coding systems for various markets. The primary products and services provided by each of the segment’s two platforms are as follows:

Engineered Products - Refrigeration systems, refrigeration display cases, walk-in coolers, foodservice equipment, commercial kitchen air and ventilation systems, heat transfer equipment, and food and beverage packaging machines.

Product Identification - Industrial marking and coding systems used to code information (i.e. dates and serial numbers) on consumer products, printing products for cartons used in warehouse logistics operations, bar code printers and portable printers.

	Three Months Ended June 30,									Six Months Ended June 30,
(in thousands)	2011			2010			% Change			2011			2010			% Change
Revenue
Engineered Products	$	406,620		$	357,570			14	%	$	740,935		$	629,343			18	%
Product Identification		239,035			219,551			9	%		465,365			432,051			8	%
	$	645,655		$	577,121			12	%	$	1,206,300		$	1,061,394			14	%

Segment earnings	$	94,116		$	84,655			11	%	$	161,429		$	139,498			16	%
Operating margin		14.6	%		14.7	%					13.4	%		13.1	%

Segment depreciation and amortization	$	16,350		$	15,273			7	%	$	32,176		$	31,023			4	%

Bookings
Engineered Products	$	400,604		$	379,048			6	%	$	800,361		$	747,182			7	%
Product Identification		239,234			223,203			7	%		472,168			443,613			6	%
	$	639,838		$	602,251			6	%	$	1,272,529		$	1,190,795			7	%

Backlog
Engineered Products										$	346,335		$	334,971			3	%
Product Identification											97,236			80,550			21	%
										$	443,571		$	415,521			7	%

Engineered Systems revenue and earnings for the second quarter of 2011 increased by 12% and 11%, respectively, from the second quarter of the prior year. The increase in revenue was supported by organic revenue growth of 7%, a 4% favorable foreign currency impact and a negligible increase from acquisitions. The revenue and earnings increase was substantially driven by volume growth in product ID, refrigeration and heat transfer systems and food and beverage packaging machines, coupled with the benefits from pricing actions, that more than offset material cost escalation and higher selling and administrative costs during the period.

Engineered Products second quarter revenue increased 14% while earnings increased by 24%. Core business revenue increased 11% driven by volume growth in refrigeration and heat transfer systems and food and beverage packaging machines. Growth from the Intek acquisition completed in 2010 and favorable foreign currency positively impacted revenues by 3%. The platform’s earnings were favorably impacted by the higher core sales volume and benefits from pricing actions which more than offset higher material costs, contributing to a 140 basis point improvement in operating margin.

Product Identification revenue increased 9%, driven by organic growth of 3% due to strength in the product ID markets, coupled with a 6% favorable foreign currency impact. Earnings remained flat compared to the second quarter of the prior year and operating margin declined 150 basis points, primarily due to new product launch costs and increased sales activities throughout the quarter.

For the six months ended June 30, 2011, Engineered Systems revenue and earnings increased 14% and 16%, respectively, as compared to the six months ended June 30, 2010. Revenue and earnings were favorably impacted by increased sales volume, offset in part by material cost escalation and higher selling and administrative costs during the period.

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Fluid Management

The Fluid Management segment provides products and services for end-to-end stewardship of its customers’critical fluids including liquids, gases, powders and other solutions that are hazardous, valuable or process-critical. Through its Fluid Solutions platform, the segment provides highly engineered, cost-saving technologies that help contain, control, move, measure and monitor these critical fluids. The Energy platform serves the oil, gas and power generation industries. Its products promote the efficient and cost-effective extraction, storage and movement of oil and gas products, or constitute critical components for power generation equipment. The primary products and services provided by each of the segment’s two platforms are as follows:

Energy - Market production and distribution products such as sucker rods, downhole rod pumps, drill bit inserts for oil and gas exploration, gas well production control devices, control valves, piston and seal rings, control instrumentation, remote data collection and transfer devices, and components for compressors, turbo machinery, motors and generators.

Fluid Solutions - Nozzles, swivels and breakaways used to deliver various types of fuel, suction system equipment, unattended fuel management systems, integrated tank monitoring, pumps used in fluid transfer applications, quick disconnect couplings used in a wide variety of biomedical and commercial applications, and chemical proportioning and dispensing systems.

	Three Months Ended June 30,									Six Months Ended June 30,
(in thousands)	2011			2010			% Change			2011			2010			% Change
Revenue
Energy	$	321,076		$	216,020			49	%	$	624,616		$	421,347			48	%
Fluid Solutions		213,599			187,759			14	%		419,162			363,264			15	%
Eliminations		(137	)		(105	)					(300	)		(137	)
	$	534,538		$	403,674			32	%	$	1,043,478		$	784,474			33	%

Segment earnings	$	131,382		$	96,168			37	%	$	245,067		$	182,935			34	%
Operating margin		24.6	%		23.8	%					23.5	%		23.3	%

Segment depreciation and amortization	$	21,775		$	15,523			40	%	$	43,372		$	30,286			43	%

Bookings
Energy	$	335,748		$	226,301			48	%	$	690,522		$	434,970			59	%
Fluid Solutions		218,868			192,035			14	%		436,655			371,072			18	%
Eliminations		51			(51	)					(258	)		(136	)
	$	554,667		$	418,285			33	%	$	1,126,919		$	805,906			40	%

Backlog
Energy										$	177,129		$	84,800			109	%
Fluid Solutions											81,436			65,639			24	%
Eliminations											-			(1	)
										$	258,565		$	150,438			72	%

Fluid Management revenue and earnings for the second quarter of 2011 increased by 32% and 37%, respectively, over the prior year second quarter. The improvement in revenue was driven by a 16% increase in core business revenue, a 14% increase from recent acquisitions, and 2% favorable foreign currency impact. The increase in revenue is primarily attributed to continued strength in the oil and gas markets served by the Energy platform as well as in the industrial markets served by the Fluid Solutions platform, along with positive price recovery and market share gains at select operating companies. The increase in segment earnings and operating margin reflects the benefit of higher sales volumes in the 2011 quarter.

Energy revenue and earnings increased over the prior year quarter by 49% and 50%, respectively. Organic revenue growth of 22% was driven by higher demand in the oil and gas sector, while recent acquisitions contributed revenue growth of 25% and foreign currency had a favorable impact of 2%. The earnings improvement was driven by the significantly higher volumes and productivity improvements. Operating margin increased 40 basis points despite additional amortization expense associated with recent acquisitions.

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Fluid Solutions revenue and earnings increased over the prior year quarter by 14% and 12%, respectively. Organic revenue growth of 10% was driven by broad-based growth across many end-markets, including petrochemical and energy, while recent acquisitions contributed revenue growth of 1% and foreign currency favorably impacted revenue by 3%. Earnings were favorably impacted by the increased volumes; however, operating margin decreased 40 basis points due primarily to one-time costs associated with selective integration and restructuring activities.

For the six months ended June 30, 2011, Fluid Management’s revenue and earnings increased over the prior year period by 33% and 34%, respectively, due to higher demand in substantially all end-markets. On a year-to-date basis, earnings benefited from the higher volumes and operating efficiencies, while operating margin increased 20 basis points compared to the prior year period, despite the impact of additional acquisition-related amortization expense and certain one-time integration and restructuring costs noted above and other one-time acquisition related costs incurred in the first quarter.

Electronic Technologies

The Electronic Technologies segment designs and manufactures electronic technology equipment and devices/components such as advanced micro-component products for the hearing aid, mobile phone and consumer electronics industries, high frequency capacitors, microwave electromagnetic switches, radio frequency and microwave filters, electromagnetic products, frequency control/select components and sophisticated automated assembly and testing equipment.

	Three Months Ended June 30,									Six Months Ended June 30,
(in thousands)	2011			2010			% Change			2011			2010			% Change
Revenue	$	412,630		$	345,607			19	%	$	785,960		$	636,596			23	%
Segment earnings		76,917			59,582			29	%		136,692			104,487			31	%
Operating margin		18.6	%		17.2	%					17.4	%		16.4	%

Segment depreciation and amortization	$	19,178		$	17,823			8	%	$	38,457		$	35,511			8	%

Bookings	$	393,860		$	394,441			0	%	$	814,121		$	752,918			8	%
Backlog											374,139			318,450			17	%

Electronic Technologies revenue and earnings for the second quarter of 2011 increased 19% and 29%, respectively, over the prior year second quarter. The increase in revenue was supported by organic revenue growth of 17% and a 2% favorable impact from foreign currency exchange rates. The organic revenue growth was primarily driven by strong solar manufacturing equipment sales and continued strong demand for electronic assembly and test equipment and Micro Electronic Mechanical Systems (“MEMS”) microphones, while demand for telecom infrastructure related products moderated. Revenue from the electronic assembly and test equipment companies increased 39% compared to the prior year period due to increased demand for solar products; however, new bookings for solar products declined significantly during the quarter resulting from concerns over governmental actions to curtail subsidies supporting solar power. The decline in solar bookings experienced in the second quarter is expected to continue in the near-term. The communication components companies’ revenue increased 7% due to strong growth in MEMS microphones. Earnings for the quarter were favorably impacted by higher sales volume and productivity improvements, which more than offset negative impacts of competitive pricing actions and product mix.

The acquisition of the Sound Solutions business closed in the beginning of July, as discussed in Note 17 to the Unaudited Condensed Consolidated Financial Statements. Sound Solutions is one of the world’s leading manufacturers of dynamic speakers and receivers for cell phones and other consumer electronics. The business will be incorporated into the Knowles business, which will enhance the segment’s product offerings serving the high growth handset market. Knowles Sound Solutions is expected to add approximately $200 million to the segment’s second half revenue and be slightly dilutive to earnings for 2011, due to significant acquisition-related expenses.

For the six months ended June 30, 2011, segment revenue increased 23% driven by increases in electronic assembly and communication components businesses of 49% and 8%, respectively. Earnings improved by 31% due to higher sales volume, product mix and production leverage.

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FINANCIAL CONDITION

Management assesses Dover’s liquidity in terms of its ability to generate cash and access capital markets to fund its operating, investing and financing activities. Significant factors affecting liquidity are: cash flows generated from operating activities, capital expenditures, acquisitions, dispositions, dividends, 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 Flow Summary

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

	Six Months Ended June 30,
Cash Flows from Continuing Operations (in thousands)	2011			2010
Net Cash Flows Provided By (Used In):
Operating activities	$	341,897		$	318,265
Investing activities		(435,019	)		(126,756	)
Financing activities		252,789			(105,481	)

Cash flows provided by operating activities for the six months ended June 30, 2011 increased $24 million from the prior year period, primarily due to increased net earnings during the 2011 period, offset in part by higher income tax and employee incentive compensation payments and reductions in deferred revenue.

Cash used in investing activities for the six months ended June 30, 2011was $435 million compared to $127 million for the same period of 2010. In the 2011 period, the Company used $425 million to acquire four businesses in the Fluid Management segment, while the Company used $10 million to acquire two businesses in the second quarter of 2010. In addition, the Company’s capital expenditures were $40 million higher in the 2011 period, reflecting increased investment in capacity expansion within the Company’s high-growth businesses. Specifically, the Company's U.S. Synthetic business has expanded capacity to meet current demands in its energy markets, and its Knowles business has made significant investments to increase MEMS manufacturing capacity in its domestic and Asian facilities. The increased spending on acquisitions and capital expenditures in the 2011 period was offset in part by $171 million higher net proceeds from the sale and purchase of short-term investments. The Company expects full year 2011 capital expenditures to approximate 2.8% to 3.0% of revenue. The Company currently anticipates that additional capital expenditures and any 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. In the 2011 period, the Company also paid a net of $18 million on the settlement of foreign exchange forward contracts which had served as hedges of a portion of it euro-denominated net investment.

For the six months ended June 30, 2011, cash provided by financing activities totaled $253 million compared to cash used in financing activities of $105 million in the 2010 period. The cash provided in the 2011 period was primarily due to the $789 million of net proceeds realized from the 4.3% 10-year Notes due 2021 and 5.375% 30-year Notes due 2041 issued in February, partially offset by the net repayment of $400 million of other borrowings, principally commercial paper used to repay the 6.50% 10-year Notes which came due earlier in February 2011. Cash flows from financing activities also consist of net proceeds from commercial paper used to finance short-term liquidity needs, repurchases of common stock, proceeds from the issuance of common stock and payment of dividends to shareholders.

Adjusted Working Capital (a non-GAAP measure calculated as accounts receivable, plus inventory, less accounts payable) increased from December 31, 2010 by $277 million, or 21%, to $1.6 billion which reflected an increase in receivables of $236 million, an increase in inventory of $168 million and an increase in accounts payable of $127 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 $181 million, or 14%.

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Liquidity and Capital Resources

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 following table is a reconciliation of free cash flow to cash flow provided by operating activities:

	Six Months Ended June 30,
Free Cash Flow (in thousands)	2011			2010
Cash flow provided by operating activities	$	341,897		$	318,265
Less: Capital expenditures		(126,420	)		(86,281	)
Free cash flow	$	215,477		$	231,984

Free cash flow as a percentage of revenue		5.2	%		6.9	%

For the six months ended June 30, 2011, the Company generated free cash flow of $215.5 million, representing 5.2% of revenue and 49.8% of earnings from continuing operations, while continuing to make investments necessary to support the growing businesses. The free cash flow generated in the first six months of 2011 was $17 million lower than the amount generated in the prior year period, primarily due to the increase in capital expenditures during the period and higher tax and incentive compensation payments, partially offset by the higher earnings on increased sales volumes. Free cash flow generated during the period reflects typical seasonality. The Company expects that free cash flow levels will remain at historical levels exceeding 10% of revenue for the full year.

The Company utilizes the net debt to net capitalization calculation (a non-GAAP measure) to assess its overall financial leverage and capacity and believes the calculation is useful to investors for the same reason. The following table provides a reconciliation of net debt to net capitalization to the most directly comparable GAAP measure:

Net Debt to Net Capitalization Ratio (in thousands)	June 30, 2011			December 31, 2010
Current maturities of long-term debt	$	1,748		$	1,925
Commercial paper		46,000			15,000
Long-term debt		2,186,238			1,790,886
Total debt		2,233,986			1,807,811
Less: Cash, cash equivalents and short-term investments		(1,397,419	)		(1,309,095	)
Net debt		836,567			498,716
Add: Stockholders' equity		4,912,957			4,526,562
Net capitalization	$	5,749,524		$	5,025,278
Net debt to net capitalization		14.6	%		9.9	%

The Company’s net debt to net capitalization ratio increased to 14.6% at June 30, 2011 from 9.9% at December 31, 2010, primarily due to the use of $425 million of cash to fund acquisitions during the year. Total debt increased by $426 million during the six months of 2011, primarily due to $789 million of net proceeds from the 4.3% 10-year Notes due 2021 and 5.375% 30-year Notes due 2041 issued in February, partially offset by the net repayment of $400 million of other borrowings, principally commercial paper used to repay the 6.50% 10-year Notes which came due earlier in February 2011.

At June 30, 2011, the Company’s cash, cash equivalents and short-term investments totaled $1.4 billion, compared to $1.3 billion at December 31, 2010. Cash and equivalents are invested in highly liquid investment grade money market instruments with maturities of three months or less. The Company regularly invests cash in excess of near-term requirements in short-term investments, which consist of investment grade time deposits with original maturity dates at the time of purchase greater than three months, up to twelve months.

At June 30, 2011, substantially all of the Company’s total cash and cash equivalents was held outside of the United States. As described in Note 17 to the Unaudited Condensed Consolidated Financial Statements, on July 4, 2011 the Company used $855.0 million of this cash on hand to acquire Sound Solutions.

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The Company uses commercial paper borrowings for general corporate purposes, including the funding of acquisitions and the repurchase of its common stock. The Company currently maintains an unsecured revolving credit facility with a syndicate of banks which permits borrowings up to $1 billion, which expires on November 9, 2012. This facility is used primarily as liquidity back-up for the Company’s commercial paper program. The Company has not drawn down any loans under this facility nor does it anticipate doing so. If the Company were to draw down a loan, at the Company’s election, the loan would bear interest at a Eurodollar or Sterling rate based on LIBOR, plus an applicable margin ranging from 0.13% to 0.35% (subject to adjustment based on the rating accorded the Company’s senior unsecured debt by S&P and Moody’s) or at a base rate pursuant to a formula defined in the facility. Under this facility, the Company is required to maintain an interest coverage ratio of EBITDA to consolidated net interest expense of not less than 3.5 to 1. The Company was in compliance with this covenant and its other long-term debt covenants at June 30, 2011 and had a coverage ratio of 13.4 to 1.

The Company also has a current shelf registration statement filed with the SEC, with remaining capacity of $1 billion that allows for the issuance of additional debt securities that may be utilized in one or more offerings on terms to be determined at the time of the offering. Net proceeds of any offering would be used for general corporate purposes, including repayment of existing indebtedness, capital expenditures and acquisitions.

The Company has an outstanding floating-to-floating cross currency swap agreement for a total notional amount of $50 million in exchange for CHF 65.1 million. In February 2011, the Company amended and restated the terms of the arrangement to extend its maturity date to October 15, 2015. This transaction continues to hedge a portion of the Company’s net investment in CHF-denominated operations. The agreement qualifies as a net investment hedge and the effective portion of the change in fair value is reported within the cumulative translation adjustment section of other comprehensive income. The fair value at June 30, 2011 reflected a loss of $29.9 million due to the strengthening of the Swiss franc relative to the U.S. dollar over the term of this arrangement.

In January 2011, the Company entered into foreign currency forward contracts to purchase $350 million for €258.7 million, which were designated as hedging an equivalent amount of the Company’s euro denominated net investment. The agreements qualified as net investment hedges with the changes in fair value being reported within the cumulative translation adjustment section of other comprehensive income. These arrangements were settled on April 4, 2011, at which time the Company recognized a loss of $18.2 million, which was reported within the cumulative translation adjustment.

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.

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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. 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: political events that could impact the worldwide economy; the impact of natural disasters and their effect on global supply chains and energy markets; increases in the cost of raw materials; 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; the impact of loss of a single-source manufacturing facility; changes in customer demand; current economic conditions and uncertainties in the credit and capital 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; instability in the countries where Dover conducts business; 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, net capitalization, 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 net capitalization ratio and (2) free cash flow are important measures of operating performance and liquidity. Net debt to net 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 the Liquidity and Capital Resources section within 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 six months of 2011. 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, 2010.

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 June 30, 2011.

During the second quarter of 2011, 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 June 30, 2011, management has excluded those companies acquired in purchase business combinations during the twelve months ended June 30, 2011. The Company is currently assessing the control environments of these acquisitions. With the exception of TAGC Limited LLC, in which the Company has a 60% controlling interest, these companies are wholly-owned by the Company and their total revenue for the six month period ended June 30, 2011 represents approximately 2.9% of the Company’s consolidated revenue for the same period. Their assets, including goodwill, represent approximately 6.9% of the Company’s consolidated assets at June 30, 2011.

PART II — OTHER INFORMATION

Item 1 . Legal Proceedings

See Part I, Notes to Unaudited 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, 2010.

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.

Period	Total Number of Shares Purchased (1)		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased under the Plans or Programs (2)
April 1 to April 30		379,708	$	65.52		300,000		5,818,468
May 1 to May 31		245,000		64.00		245,000		5,573,468
June 1 to June 30		455,000		62.88		455,000		5,118,468
For the Second Quarter		1,079,708	$	64.06		1,000,000		5,118,468

(1)

79,708 of these shares were acquired by the Company in April from the holders of its employee stock options when they tendered shares as full or 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 second quarter, the Company purchased 1,000,000 shares on the open market under the five-year, 10,000,000 share repurchase authorized by the Board of Directors in May 2007.

(2)	As of June 30, 2011, the approximate number of shares still available for repurchase under the May 2007 share repurchase authorization was 5,118,468.

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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 June 30, 2011formatted in XBRL (eXtensible Business Reporting Language): (i) the Unaudited Condensed Consolidated Statement of Operations, (ii) the Unaudited Condensed Consolidated Balance Sheet, (iii) the Unaudited Condensed Consolidated Statement of Stockholders’ Equity, (iv) the Unaudited Condensed Consolidated Statement of Cash Flows, and (v) Notes to the Unaudited Condensed Consolidated Financial Statements. In accordance with Rule 406T of Regulation S-T, the XBRL related information shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be part of any registration statement or other document filed under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

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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: July 22, 2011	/s/ Brad M. Cerepak
	Brad M. Cerepak,
	Senior Vice President & Chief Financial Officer
	(Principal Financial Officer)

Date: July 22, 2011	/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 June 30, 2011formatted in XBRL (eXtensible Business Reporting Language): (i) the Unaudited Condensed Consolidated Statement of Operations, (ii) the Unaudited Condensed Consolidated Balance Sheet, (iii) the Unaudited Condensed Consolidated Statement of Stockholders’ Equity, (iv) the Unaudited Condensed Consolidated Statement of Cash Flows, and (v) Notes to the Unaudited Condensed Consolidated Financial Statements. In accordance with Rule 406T of Regulation S-T, the XBRL related information shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be part of any registration statement or other document filed under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

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Part I Financial Informationprint Item 1. Financial Statementsprint Item 2. Management S Discussion and Analysis Of Financial Condition and Results Of Operationsprint Item 2. Management S Discussion and Analysis Of Financial Condition and Resultsprint Item 3. Quantitative and Qualitative Disclosures About Market Riskprint Item 4. Controls and Proceduresprint Part II Other Informationprint Item 1. Legal Proceedingsprint Item 1A. Risk Factorsprint Item 2. Unregistered Sales Of Equity Securities and Use Of Proceedsprint Item 3. Defaults Upon Senior Securitiesprint Item 4. [removed and Reserved]print Item 5. Other Informationprint Item 6. Exhibitsprint

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DOV 10-Q Quarter ended June 30, 2011