1. _________________________________________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________
FORM 10-K
_____________________________
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For fiscal year ended December 31, 2008
Commission File No. 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.)
280 Park Avenue New York, N.Y. 10017
(Address of principal executive offices)
Telephone: (212) 922-1640
___________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock, par value $1 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [X] No [ ]
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes [ ] No [X]
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 [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [ ]
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 definition of “accelerated filer” and “large accelerated filer” in Rule 12-b-2 of the Securities Exchange Act.
Large accelerated filer [X] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [ ]
Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Securities Exchange Act). Yes [ ] No [ X]
The aggregate market value of the voting and non-voting common stock held by non-affiliates of the registrant as of the close of business June
30, 2008 was $9,034,170,540. The registrant's closing price as reported on the New York Stock Exchange-Composite Transactions for June 30,
2008 was $48.37 per share. The number of outstanding shares of the registrant's common stock as of February 12, 2009 was 186,013,754.
Documents Incorporated by Reference: Part III - Certain Portions of the Proxy Statement for Annual Meeting of Shareholders to be Held on
May 7, 2009 (the quot;2009 Proxy Statement'').
_________________________________________
2. SPECIAL NOTES REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K, especially quot;Management's Discussion and Analysisquot;, 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-K 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,” quot;could,” “hope,” “forecast,” quot;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: current
economic conditions and uncertainties in the credit and capital markets; the Company’s ability to achieve expected
savings from integration, synergy and other cost-control initiatives; the ability to identify and successfully consummate
value-adding acquisition opportunities; increased competition and pricing pressures in the markets served by Dover’s
operating companies; the ability of Dover’s companies to expand into new geographic markets and to anticipate and
meet customer demands for new products and product enhancements; increases in the cost of raw materials;
changes in customer demand; political events that could impact the worldwide economy; the impact of natural
disasters and their effect on global energy markets; a downgrade in Dover’s credit ratings; international economic
conditions including interest rate and currency exchange rate fluctuations; the relative mix of products and services
which impacts margins and operating efficiencies; short-term capacity constraints; domestic and foreign governmental
and public policy changes including environmental regulations and tax policies (including domestic and international
export subsidy programs, R&E credits and other similar programs); unforeseen developments in contingencies such
as litigation; protection and validity of patent and other intellectual property rights; the cyclical nature of some of
Dover’s companies; domestic housing industry weakness; and continued events in the Middle East and possible
future terrorist threats and their effect on the worldwide economy. Readers are cautioned not to place undue reliance
on such forward-looking statements. These forward-looking statements speak only as of the date made. The
Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of
new information, future events or otherwise, except as required by law.
The Company may, from time to time, post financial or other information on its Internet website,
www.dovercorporation.com. The Internet address is for informational purposes only and is not intended for use as a
hyperlink. The Company is not incorporating any material on its website into this report.
2
3. PART I
Item 1. BUSINESS
Overview
Dover Corporation (quot;Doverquot; or the quot;Companyquot;), incorporated in 1947 in the State of Delaware, became a publicly
traded company in 1955. The Company owns and operates a global portfolio of manufacturing companies providing
innovative components and equipment, specialty systems and support services for a variety of applications in the
industrial products, engineered systems, fluid management and electronic technologies markets. Additional
information is contained in Items 7 and 8.
Operating Structure
The Company reports its results in four business segments – Industrial Products, Engineered Systems, Fluid
Management and Electronic Technologies. Dover discusses its operations at the platform level within the Industrial
Products, Engineered Systems, and Fluid Management segments, each of which contains two platforms. Electronic
Technologies’ results are discussed at the segment level. Dover companies within its business segments and
platforms design, manufacture, assemble and/or service the following:
• Material handling equipment such as industrial and recreational winches, utility, construction and demolition
machinery attachments, hydraulic parts, industrial automation tools, four-wheel-drive (“4WD”) and all-wheel
drive (“AWD”) power train systems, accessories for off-road vehicles and operator cabs and rollover
structures.
• Mobile equipment related products primarily refuse truck bodies, tank trailers, compactors, balers, vehicle
service lifts, car wash systems, internal engine components, fluid control assemblies and various aerospace
components.
• Engineered products such as 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 related products such as 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.
• Energy market production and distribution products such as sucker rods, 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 solution products including 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.
• Electronic technology equipment and devices/components such as advanced micro-component products for
the hearing aid and consumer electronics industries, high frequency capacitors, microwave electro-magnetic
switches, radio frequency and microwave filters, electromagnetic products, frequency control/select
components and sophisticated automated assembly and testing equipment.
Business Strategy
The Company operates with certain fundamental business strategies. First, it seeks to acquire and own businesses
that manufacture proprietary engineered industrial products and are leaders in four broad markets: Industrial
Products, Engineered Systems, Fluid Management and Electronic Technologies. To ensure success, Dover
companies place strong emphasis on new product development to better serve customers and expand into new
product and geographic markets. Second, the Company’s businesses are committed to operational excellence, and to
being market leaders as measured by market share, customer service, innovation, profitability and return on invested
capital. Third, the Company is committed to an operating culture with high ethical standards, trust, respect and open
communication, to allow individual growth and operational effectiveness. Fourth, the Company seeks to utilize its
strong free cash flow in a balanced manner to grow its businesses and to increase shareholder value.
3
4. Management Philosophy
The Company’s operating structure of four defined industry segments and six core business platforms drives focused
acquisition activity, accelerates opportunities to identify and capture operating synergies, including global sourcing
and supply chain integration, and advances the development of Dover’s executive talent. The presidents of Dover’s
operating companies and groups have responsibility for their businesses’ performance as they are able to serve
customers by focusing closely on their products and markets, and by reacting quickly to customer needs. The
Company's platform, segment and executive management sets strategic direction and initiatives, provides oversight,
allocates and manages capital, is responsible for major acquisitions and provides other services.
Portfolio Development
Acquisitions
Dover’s acquisition program has two elements. First, it seeks to acquire value creating add-on businesses that
broaden its existing companies and their global reach, manufacture innovative components and equipment, specialty
systems and/or support services, and sell to industrial or commercial users. Second, it will strategically pursue larger,
stand-alone businesses that have the potential to either complement its existing companies or allow Dover to pursue
a new platform. During the period from 2006 through 2008, the Company purchased 18 businesses with an aggregate
cost of $1,494.2 million.
In 2008, the Company acquired four businesses, all of which were add-on businesses, for an aggregate cost of
$103.8 million. In 2007, the Company acquired seven businesses, all of which were add-on businesses, for an
aggregate cost of $273.6 million. In 2006, Dover acquired seven companies (five add-ons) for an aggregate cost of
$1,116.8 million, the highest annual acquisition investment level in its history.
For more details regarding acquisitions completed over the past two years, see Note 3 to the Consolidated Financial
Statements in Item 8. The Company's future growth depends in large part on finding and acquiring successful
businesses, as a substantial number of the Company's current businesses operate in relatively mature markets. While
the Company expects to generate annual organic growth of 5 – 7% over a business cycle, sustained organic growth
at these levels for individual businesses is difficult to achieve consistently each year.
Divestitures
While the Company generally expects to hold businesses that it buys, it continually reviews its portfolio to verify that
those businesses continue to be essential contributors to Dover’s long-term growth strategy. In addition, occasionally
Dover might make an opportunistic sale of one of its companies based on specific market conditions and strategic
considerations. During the past three years (2006 – 2008), the Company decided to reduce its exposure to companies
that provide capital equipment, particularly electronic assembly equipment, as well as small, lower margin operations,
and, accordingly, it discontinued 18 operations and sold 17 operations for an aggregate consideration of
approximately $629.6 million, of which $445.9 million was in 2006. For more details, see the quot;Discontinued
Operationsquot; discussion below and Note 8 to the Consolidated Financial Statements in Item 8.
4
5. Reportable Segments
Below is a description of Dover’s reportable segments and related platforms. For additional financial information about
Dover’s reportable segments, see Note 14 to the Consolidated Financial Statements in Item 8 of this Form 10-K.
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 segment manages and sells its products and
services through two business platforms described below.
Material Handling
The Material Handling platform primarily serves two global markets—infrastructure and industrial automation. The
companies in this platform develop and manufacture branded customer productivity enhancing systems. These
products are produced in the United States, Mexico, Germany, Belgium, Thailand, India, China, Brazil and France and
are marketed globally on a direct basis to original equipment manufacturers (OEMs) and through a global dealer and
distribution network to industrial end users.
The Material Handling platform companies in the infrastructure market sell to broad segments of the construction,
utility, demolition, recycling, scrap processing, material handling, forestry, energy, military, marine, towing/recovery,
refuse and automotive OEM markets. Major products include mobile shears, concrete demolition tools, buckets,
backhoes, trenchers, augers, worm gear and planetary winches, and hydraulic lift and electronic control/monitoring
systems for mobile and structural cranes, 4WD and AWD power train systems, accessories for off-road vehicles and
operator cabs and rollover structures. These products are sold to OEMs and extensive dealer networks primarily in
North America. Components systems and services are also provided for aerospace, military vehicles, and marine
applications.
The Material Handling platform companies in the industrial automation market provide a wide range of modular
automation components including manual clamps, power clamps, rotary and linear mechanical indexers, conveyors,
pick and place units, as well as end-of-arm robotic grippers, slides and end effectors. These products serve a very
broad market including food processing, packaging, paper processing, medical, electronic, automotive, nuclear, and
general industrial products. These businesses generate almost half of their revenues outside the U.S.
Mobile Equipment
The Mobile Equipment platform serves three primary markets—transportation equipment, solid waste management
and vehicle service. The companies in this platform manufacture tank trailers, specialty trailers, refuse collection
bodies (garbage trucks), container lifts, on-site waste management and recycling systems, vehicle service lifts, touch-
free and friction vehicle wash systems, vehicle collision measuring and repair systems, aerospace and submarine
related fluid control assemblies, high strength fasteners and bearings, internal jet engine components and
accessories, precision components for commercial and military aerospace equipment and sophisticated control valves
for submarines. The businesses also provide components for off-road sports vehicles and high performance autos.
The platform has manufacturing operations in North and South America, Asia and Europe.
The businesses in the transportation equipment market manufacture and sell aluminum, stainless steel and steel tank
trailers that carry petroleum products, chemical, edible and dry bulk products, as well as specialty trailers focused on
the heavy haul, oil field and recovery markets. Trailers are marketed both directly and indirectly through distributors to
customers in the construction, trucking, railroad, oilfield and heavy haul industries. These products are also sold to
government agencies in the U.S. and globally.
The businesses in the solid waste management market provide products and services for the refuse collection
industry and for on-site processing and compaction of trash and recyclable materials. Products are sold to municipal
customers, national accounts and independent waste haulers through a network of distributors and directly in certain
geographic areas. The on-site waste management and recycling systems include a variety of stationery compactors,
wire processing and separation machines, and balers that are manufactured and sold primarily in the U.S. to
distribution centers, malls, stadiums, arenas, office complexes, retail stores and recycling centers.
5
6. The businesses in the vehicle service market provide a wide range of products and services that are utilized in vehicle
services, maintenance, repair and modification. Vehicle lifts and collision equipment are sold through equipment
distributors and directly to a wide variety of markets, including independent service and repair shops, collision repair
shops, national chains and franchised service facilities, new vehicle dealers, and governments. Car wash systems,
both quot;touch-freequot; and quot;frictionquot;, are sold primarily in the U.S. and Canada to major oil companies, convenience store
chains and individual investors. These products are sold through a distribution network that installs the equipment and
provides after sale service and support. High performance internal combustion engine components, including pistons,
connecting rods, crankshafts and accessories, are designed to meet customer specifications for the racing and
enthusiast markets in both the motor sports and automotive market segments. These products are sold directly and
through distribution networks on a global basis.
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 segment
serves its markets by managing these products and services through two business platforms which are described
below.
Product Identification
The Product Identification platform (“PI”) is a worldwide supplier of industrial marking and coding systems that serves
the food, beverage, cosmetic, pharmaceutical, electronic, automotive and other markets where variable marking is
required. Its primary printing products are used for marking variable information (such as date codes or serial
numbers) on consumer products. PI provides solutions for product marking on primary packaging, secondary
packaging such as cartons, and pallet marking for use in warehouse logistics operations. PI also manufactures bar
code printers and portable printers used where on demand labels/receipts are required. The PI principal
manufacturing facilities are in the United States, France and China with sales operations globally.
Engineered Products
The Engineered Products platform manufactures refrigeration systems, refrigeration display cases, walk-in coolers
and freezers, electrical distribution products and engineering services, commercial foodservice equipment, cook-chill
production systems, custom food storage and preparation products, kitchen ventilation systems, conveyer systems,
beverage can-making machinery, and packaging machines used for meat, poultry and other food products. In
addition, the platform manufactures copper-brazed compact heat exchangers, and designs software for heating and
cooling substations. The platform’s manufacturing facilities and distributing operations are in North America and
Europe with additional distribution facilities in South America and Asia.
The majority of the systems and machinery that are manufactured or serviced by the Engineered Products platform is
used by the supermarket industry, “big-box” retail and convenience stores, the commercial/industrial refrigeration
industry, institutional and commercial foodservice markets, and beverage can-making industries. The commercial
foodservice cooking equipment products serve their markets worldwide through a network of dealers, distributors,
national chain accounts, manufacturer representatives, and a direct sales force with the primary market being North
America. The heat exchangers are sold via a direct sales force throughout the world for various applications in a wide
variety of industries.
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. The
segment provides highly engineered, cost-saving technologies that help contain, control, move, measure and monitor
these critical fluids. To better serve its end-markets, these products and services are channeled through two business
platforms described below.
Energy
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. Major products manufactured by companies within this platform include polycrystalline
diamond cutters (PDCs) used in drill bits for oil and gas wells; steel sucker rods, plunger lifts, and accessories used in
6
7. artificial lift applications in oil and gas production; pressure, temperature and flow monitoring equipment used in oil
and gas exploration and production applications; and control valves and instrumentation for oil and gas production. In
addition, these companies manufacture various compressor parts that are used in the natural gas production,
distribution and oil refining markets, as well as bearings and remote condition monitoring systems that are used for
rotating machinery applications such as turbo machinery, motors, generators and compressors used in energy, utility,
marine and other industries. Sales are made directly to customers and through various distribution channels. Sales
are predominantly in North America with international sales directed largely to Europe and South America.
Fluid Solutions
The Fluid Solutions platform manufactures pumps, compressors, vehicle fuel dispensing products, and products for
the transfer, monitoring, measuring and protection of hazardous, liquid and dry bulk commodities. In addition, these
companies manufacture quick disconnect couplings and chemical proportioning and dispensing products. The
products are manufactured in the United States, South America, Asia and Europe and marketed globally through a
network of distributors or via direct channels.
Vehicle fuel dispensing products include conventional, vapor recovery, and clean energy (LPG, CNG, and Hydrogen)
nozzles, swivels and breakaways, as well as tank pressure management systems. Products manufactured for the
transportation, storage and processing of hazardous liquid and dry-bulk commodities include relief valves,
loading/unloading angle valves, rupture disc devices, actuator systems, level measurement gauges, swivel joints,
butterfly valves, lined ball valves, aeration systems, industrial access ports, manholes, hatches, collars, weld rings
and fill covers.
This platform’s pumps and compressors are used to transfer liquid and bulk products and are sold to a wide variety of
markets, including the refined fuels, LPG, pulp and paper, wastewater, food/sanitary, military, transportation and
chemical process industries. These companies manufacture centrifugal, reciprocating (double diaphragm) and rotary
pumps that are used in demanding and specialized fluid transfer process applications.
The quick disconnect couplings provide fluid control solutions to the industrial, food handling, life sciences and
chemical handling markets. The chemical portioning and dispensing systems are used to dilute and dispense
concentrated cleaning chemicals and are sold to the food service, health care, supermarket, institutional, school,
building service contractor and industrial markets.
Electronic Technologies
The Electronic Technologies segment designs and manufactures electronic test, material deposition and manual
soldering equipment, advanced micro-acoustic components, and specialty electronic components. The products are
manufactured primarily in North America, Europe and Asia and are sold throughout the world directly and through a
network of distributors.
The test equipment products include machines, test fixtures and related products used in testing “bare” and “loaded”
electronic circuit boards and semiconductors. In addition, the segment manufactures high-speed precision material
deposition machines and other related tools used in the assembly process for printed circuit boards and other
specialty applications as well as precision manual soldering, de-soldering and other hand tools.
The micro-acoustic components manufactured include audio communications components, primarily miniaturized
microphones, receivers and electromechanical components for use in hearing aids as well as high performance
transducers for use in pro-audio devices, high-end headsets, medical devices and military headsets. The platform
also designs, manufactures and assembles microphones for use in the personal mobile device and communications
markets, including mobile phones, PDAs, Bluetooth® headsets and laptop computers.
The specialty electronic components include frequency control/select components and modules employing quartz
technologies, microwave electro-mechanical switches, radio frequency and microwave filters, integrated assemblies,
multi-layer ceramic capacitors and high frequency capacitors. These components are sold to communication, medical,
defense, aerospace and automotive manufacturers worldwide.
7
8. Discontinued Operations
Companies that are considered discontinued operations in accordance with Statement of Financial Accounting
Standards (quot;SFASquot;) No. 144, quot;Accounting for the Impairment or Disposal of Long-Lived Assets,” are presented
separately in the consolidated statements of operations, balance sheets and cash flows and are not included in
continuing operations. Earnings from discontinued operations include charges, when necessary, to reduce these
businesses to estimated fair value less costs to sell. Fair value is determined by either using directly observable
inputs, such as a negotiated selling price or other valuation techniques that use market assumptions that are
reasonable and supportable. All interim and full year reporting periods presented reflect the continuing operations on
a comparable basis. Please refer to Note 8 to the Consolidated Financial Statements in Item 8 of this Form 10-K for
additional information on discontinued operations.
Raw Materials
Dover's operating companies use a wide variety of raw materials, primarily metals and semi-processed or finished
components, which are generally available from a number of sources. As a result, shortages or the loss of any single
supplier have not had, and are not likely to have, a material impact on operating profits. While generally available,
commodity pricing, until recently, has trended upward over the past few years, particularly for various grades of steel,
copper, aluminum and select other commodities, the Company has generally kept pace, or exceeded raw material
cost increases, using effective pricing strategies. Over the second half of 2008, the Company has experienced, in
general, decreases in commodity prices.
Research and Development
Dover's operating companies are encouraged to develop new products as well as to upgrade and improve existing
products to satisfy customer needs, expand revenue opportunities domestically and internationally, maintain or extend
competitive advantages, improve product reliability and reduce production costs. During 2008, $189.2 million of
expense was incurred for research and development, including qualified engineering costs, compared with $193.2
million and $168.9 million in 2007 and 2006, respectively.
For the Product Identification and Electronic Technologies companies, efforts in these areas tend to be particularly
significant because the rate of product development by their customers is often quite high. The companies that
develop product identification equipment and specialty electronic components for the life sciences, datacom and
telecom commercial markets believe that their customers expect a continuing rate of product performance
improvement and reduced costs. The result has been that product life cycles in these markets generally average less
than five years with meaningful sales price reductions over that time period.
Dover’s other segments contain many businesses that are also involved in important product improvement initiatives.
These businesses also concentrate on working closely with customers on specific applications, expanding product
lines and market applications, and continuously improving manufacturing processes. Most of these businesses
experience a much more moderate rate of change in their markets and products than is generally experienced by the
Product Identification platform and the Electronic Technologies segment.
Intellectual Property and Intangible Assets
Dover companies own many patents, trademarks, licenses and other forms of intellectual property, which have been
acquired over a number of years and, to the extent relevant, expire at various times over a number of years. A large
portion of the Dover companies’ intellectual property consists of patents, unpatented technology and proprietary
information constituting trade secrets that the companies seek to protect in various ways, including confidentiality
agreements with employees and suppliers where appropriate. In addition, a significant portion of the Company’s
intangible assets relate to customer relationships. While the Dover companies’ intellectual property and customer
relationships are important to their success, the loss or expiration of any of these rights or relationships, or any groups
of related rights or relationships, is not likely to materially affect the Company on a consolidated basis. The Company
believes that its companies’ commitment to continuous engineering improvements, new product development and
improved manufacturing techniques, as well as strong sales, marketing and service efforts, are significant to their
general leadership position in the niche markets that they serve.
8
9. Seasonality
In general, Dover companies, while not seasonal, tend to have stronger revenue in the second and third quarters,
particularly companies serving the consumer electronics, transportation, construction, waste hauling, petroleum,
commercial refrigeration and food service markets. Companies serving the major equipment markets, such as power
generation, chemical and processing industries, have long lead times geared to seasonal, commercial or consumer
demands, and tend to delay or accelerate product ordering and delivery to coincide with those market trends.
Customers
Dover's companies serve thousands of customers, no one of which accounted for more than 10% of the Company's
consolidated revenue in 2008. Within each of the four segments, no customer accounted for more than 10% of that
segment's revenue in 2008.
With respect to the Engineered Systems, Fluid Management and Industrial Products segments, customer
concentrations are quite varied. Companies supplying the waste handling, construction, agricultural, defense, energy,
automotive and commercial refrigeration industries tend to deal with a few large customers that are significant within
those industries. This also tends to be true for companies supplying the power generation, aerospace and chemical
industries. In the other markets served, there is usually a much lower concentration of customers, particularly where
the companies provide a substantial number of products as well as services applicable to a broad range of end use
applications.
Certain companies within the Electronic Technologies segment serve the military, space, aerospace, commercial and
datacom/telecom infrastructure markets. Their customers include some of the largest operators in these markets. In
addition, many of the OEM customers of these companies within the Electronic Technologies segment outsource their
manufacturing to Electronic Manufacturing Services (“EMS”) companies. Other customers include global cell phone
and hearing aid manufacturers, many of the largest global EMS companies, particularly in China, and major printed
circuit board and semi-conductor manufacturers.
Backlog
Backlog generally is not a significant long-term success factor in most of Dover's businesses, as most of the products
of Dover companies have relatively short order-to-delivery periods. It is more relevant to those businesses that
produce larger and more sophisticated machines or have long-term government contracts, primarily in the Mobile
Equipment platform within the Industrial Products segment. Total Company backlog as of December 31, 2008 and
2007 was $1,156.0 million and $1,446.4 million, respectively, which reflected the meaningful decrease in global
economic activity experienced during the latter half of 2008, which is expected to continue into 2009.
Competition
Dover's competitive environment is complex because of the wide diversity of the products its companies manufacture
and the markets they serve. In general, most Dover companies are market leaders that compete with only a few
companies and the key competitive factors are customer service, product quality and innovation. Dover companies
usually have more significant competitors domestically, where their principal markets are, than in non-U.S. markets;
however, Dover companies are becoming increasingly global where more competitors exist.
Certain companies in the Electronic Technologies and Engineered Systems segments compete globally against a
variety of companies, primarily operating in Europe and the Far East.
International
For non-U.S. revenue and an allocation of the assets of the Company's continuing operations, see Note 14 to the
Consolidated Financial Statements in Item 8 of this Form 10-K.
Although international operations are subject to certain risks, such as price and exchange rate fluctuations and non-
U.S. governmental restrictions, Dover continues to increase its expansion into international markets, including South
America, Asia and Eastern Europe.
Most of Dover's non-U.S. subsidiaries and affiliates are based in France, Germany, the United Kingdom, the
9
10. Netherlands, Sweden, Switzerland and, with increased emphasis, China, Malaysia, India, Mexico, Brazil and Eastern
Europe.
Environmental Matters
Dover believes its companies’ operations generally are in substantial compliance with applicable regulations. In a few
instances, particular plants and businesses have been the subject of administrative and legal proceedings with
governmental agencies or private parties relating to the discharge or potential discharge of regulated substances.
Where necessary, these matters have been addressed with specific consent orders to achieve compliance. Dover
believes that continued compliance will not have a material impact on the Company's financial position and will not
require significant expenditures or adjustments to reserves.
Employees
The Company had approximately 32,300 employees in continuing operations as of December 31, 2008, which was a
decline of approximately 6% from prior year end, reflecting the overall global economic slowdown.
Other Information
Dover makes available through the quot;Financial Reportsquot; link on its Internet website, http://www.dovercorporation.com,
the Company's annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any
amendments to these reports. Dover posts each of these reports on the website as soon as reasonably practicable
after the report is filed with the Securities and Exchange Commission. The information on the Company's Internet
website is not incorporated into this Form 10-K.
Item 1A. Risk Factors
Dover’s business, financial condition, operating results and cash flows can be impacted by a number of factors which
could cause our actual results to vary materially from recent results or from anticipated future results. The risk factors
discussed in this section should be considered together with information included elsewhere in this Annual Report on
Form 10-K and should not be considered the only risks facing the Company. The structure of Dover and the many
different markets its companies serve mitigate the possibility that any single risk factor will materially impact Dover’s
consolidated financial position.
In general, Dover is subject to the same general risks and uncertainties that impact many other industrial companies
such as general economic, industry and/or market conditions and growth rates; the impact of natural disasters and
their effect on global energy markets; continued events in the Middle East and possible future terrorist threats and
their effect on the worldwide economy; and changes in laws or accounting rules. The Company has identified the
following specific risks and uncertainties that it considers material:
• The Company’s results for 2009 will be impacted by current domestic and international economic
conditions and uncertainties.
In 2009 Dover’s businesses will be adversely affected by disruptions in financial markets or declines in
economic activity both domestically and internationally in those countries in which the Company operates.
These circumstances will also impact the Company’s suppliers and customers in various ways which could
have an impact on the Company’s business operations, particularly if global credit markets are not operating
efficiently and effectively to support industrial commerce. Such negative changes in worldwide economic and
capital market conditions are beyond the Company’s control, are highly unpredictable, and can have an adverse
effect on the Company’s revenue, earnings, cash flows and cost of capital.
• Increasing price and product/service competition by international and domestic competitors including
new entrants and the ability of Dover to introduce new and competitive products could cause Dover’s
businesses to generate lower revenue, operating profits and cash flows.
Dover's competitive environment is complex because of the wide diversity of the products that its companies
manufacture and the markets they serve. In general, most Dover companies are market leaders that compete
with only a few companies. The ability of Dover’s companies to compete effectively will depend on how
successfully they anticipate and respond to various competitive factors, including new products and services
that may be introduced by their competitors, changes in customer preferences, and pricing pressures. If Dover’s
companies are unable to anticipate their competitor’s development of new products and services and/or identify
customer needs and preferences on a timely basis, they could lose customers to competitors. If Dover’s
10
11. companies do not compete effectively or if new products and services fail to gain acceptance in the
marketplace, Dover companies may experience lower revenue, operating profits and cash flows.
• Some of Dover’s companies, may not anticipate , adapt or capitalize on technological developments and
are subject to the cyclical nature of their industries. These factors could cause these companies to
become less competitive and lead to reduced market share, revenue, operating profits and cash flows.
Certain Dover companies, particularly in the Electronic Technologies segment, sell their products in industries
that are constantly experiencing change as new technologies are developed. In order to grow and remain
competitive, the companies in these industries must adapt to future changes in technology to enhance their
existing products and introduce new products to address their customers’ changing demands. Also, a meaningful
portion of the Electronic Technologies segment’s revenue is derived from companies which are subject to
unpredictable short-term business cycles.
The Energy platform in the Fluid Management segment is subject to risk due to the volatility of energy prices,
although overall demand is more directly related to depletion rates and global economic conditions and related
energy demands. In addition, certain of Dover’s businesses manufacture products that are used in or related to
residential and commercial construction, which can be adversely affected by a prolonged downturn in new
housing starts and other construction markets.
As a result of all the above factors, the revenue and operating performance of these companies in any one
period are not necessarily predictive of their revenue and operating performance in other periods, and could
have a material impact on Dover’s consolidated results of operations, financial position and cash flows.
• Our companies could lose customers or generate lower revenue, operating profits and cash flows if
there are significant increases in the cost of energy or raw materials or if they are unable to obtain raw
materials.
Dover’s companies purchase raw materials, subassemblies and components for use in their manufacturing
operations, which exposes them to volatility in prices for certain commodities. Significant price increases for
these commodities could adversely affect operating profits for certain Dover companies. While Dover’s
businesses generally attempt to mitigate the impact of increased raw material prices by hedging or passing along
the increased costs to customers, there may be a time delay between the increased raw material prices and the
ability to increase the prices of products, or they may be unable to increase the prices of products due to a
competitor’s pricing pressure or other factors. In addition, while raw materials are generally available now, the
inability to obtain necessary raw materials could affect the ability to meet customer commitments and satisfy
market demand for certain products. Consequently, a significant price increase in raw materials, or their
unavailability, may result in a loss of customers and adversely impact revenue, operating profits and cash flows.
• The Company’s growth strategy with respect to expansion into new geographic markets could be
adversely affected if Dover’s companies are unable to manage the associated risks, particularly in
markets outside the U.S.
Approximately 45% of Dover’s revenue is derived outside of the United States and the Company continues to
focus on penetrating new global markets as part of its overall growth strategy. This global expansion strategy is
subject to, but not limited to, the following risks and uncertainties: political, social and economic instability and
disruptions; government embargoes or trade restrictions; the imposition of duties and tariffs and other trade
barriers; import and export controls; increased compliance costs; transportation delays and disruptions; and
difficulties in staffing and managing multi-national organizations. In addition, foreign currency fluctuations,
particularly the appreciation of the U.S. Dollar against European currencies, generally has an adverse affect on
exports and the related revenue and earnings. As a result, if the Company is unable to successfully mitigate
these risks, they could have an adverse affect on the Company’s growth strategy as it relates to expanding into
new geographic markets and its results of operations and financial position.
• The Company’s operating profits and cash flows could be adversely affected if the Company cannot
achieve projected savings and synergies.
Dover is continually evaluating its cost structure and seeking ways to capture synergies across its operations. If
the Company is unable to reduce costs and expenses through its various programs, it could adversely affect the
Company’s operating profits and cash flows.
11
12. • The Company’s businesses and their profitability and reputation could be adversely affected by
domestic and foreign governmental and public policy changes (including environmental regulations and
tax policies such as export subsidy programs, R&E credits and other similar programs), risks associated
with emerging markets, changes in statutory tax rates and unanticipated outcomes with respect to tax
audits.
Dover’s domestic and international sales and operations are subject to risks associated with changes in local
government laws (including environmental and export laws), regulations and policies. Failure to comply with any
of these laws could result in civil and criminal, monetary and non-monetary penalties as well as potential damage
to the Company’s reputation. In addition, the Company cannot provide assurance that its costs of complying with
current or future laws, including environmental protection and health and safety laws, will not exceed its
estimates. In addition, Dover has invested in certain countries, including Brazil, Russia, India and China that
carry high levels of currency, political, compliance and economic risk. While these risks or the impact of these
risks are difficult to predict, any one or more of them could adversely affect Dover’s businesses and reputation.
Dover’s effective tax rate is impacted by changes in the mix among earnings in countries with differing statutory
tax rates, changes in the valuation allowance of deferred tax assets or tax laws. The amount of income taxes
and other taxes paid can be adversely impacted by changes in statutory tax rates and laws and are subject to
ongoing audits by domestic and international authorities. If these audits result in assessments different from
amounts estimated, the Company’s financial results may be adversely affected by unfavorable tax adjustments.
• Unforeseen developments in contingencies such as litigation could adversely affect the Company’s
financial condition.
The Company and certain of its subsidiaries are, and from time to time may become, parties to a number of
legal proceedings incidental to their businesses involving alleged injuries arising out of the use of their products,
exposure to hazardous substances or patent infringement, employment matters and commercial disputes. The
defense of these lawsuits may require significant expenses, divert management’s attention, and the Company
may be required to pay damages that could adversely affect its financial condition. In addition, any insurance or
indemnification rights that the Company may have may be insufficient or unavailable to protect it against
potential loss exposures.
• The Company’s revenue, operating profits and cash flows could be adversely affected if Dover’s
companies are unable to protect or obtain patent and other intellectual property rights.
Dover companies own patents, trademarks, licenses and other forms of intellectual property related to their
products. The Company employs various measures to maintain and protect their intellectual property. These
measures may not prevent these items from being challenged, invalidated or circumvented, particularly in
countries where intellectual property rights are not highly developed or protected. Unauthorized use of these
intellectual property rights could adversely impact the competitive position of Dover’s companies and have a
negative impact on their revenue, operating profits and cash flows.
• The Company's growth may be adversely affected if the Company is unsuccessful in its acquisition
program.
The Company expects to continue its strategy of seeking to acquire value creating add-on businesses that
broaden its existing companies and their global reach as well as strategically pursuing larger, stand-alone
businesses that have the potential to either complement our existing companies or allow Dover to pursue a new
platform. However, there can be no assurance that the Company will find suitable businesses to purchase, as a
substantial number of the Company's current businesses operate in relatively mature markets, or that the
associated price would be acceptable. If the Company is unsuccessful in its acquisition efforts, its ability to
continue to grow at rates similar to prior years could be adversely affected. In addition, a completed acquisition
may underperform relative to expectations, be unable to achieve synergies originally anticipated, or require the
payment of additional expenses for assumed liabilities. These factors could potentially have an adverse impact
on Dover’s operating profits and cash flows.
• The Company’s borrowing costs are impacted by its credit ratings developed by various rating agencies.
Three major ratings agencies (Moody’s, Standard and Poor’s and Fitch) evaluate Dover’s credit profile on an
ongoing basis and have each assigned high ratings for Dover’s long-term debt as of December 31, 2008 (A2, A,
and A, respectively). In January 2009, Fitch reaffirmed its credit rating for Dover with a negative outlook, while
the ratings and outlooks from the other agencies remained unchanged. Although the Company does not
anticipate a material change in its credit ratings, if the Company’s current credit ratings deteriorate, its borrowing
costs and access to sources of liquidity may be adversely affected.
12
13. • 2009 Outlook
Dover currently anticipates that 2009 revenue will decline 11%-13%, below 2008 levels and currently does not
anticipate a recovery in the latter half of 2009 from these demand levels. Based on these assumptions, Dover
has projected that its continuing diluted earnings per share for 2009 will be in the range of $2.75 to $3.05, and
expects its earnings to follow a traditional seasonal pattern of being lower in the first and fourth quarters, and
higher in the second and third quarters. If global or domestic economic conditions deteriorate further, Dover’s
operating results for 2009 could be materially worse than projected.
Item 1B. Unresolved Staff Comments
Not applicable.
Item 2. PROPERTIES
The number, type, location and size of the Company's properties as of December 31, 2008 are shown on the
following charts, by segment:
Number and Nature of Facilities Square Footage (000's)
Segment Mfg. Warehouse Sales/ Service Owned Leased
82 11 25 4,900 2,500
Industrial Products
36 35 108 2,600 1,500
Engineered Systems
67 13 41 2,700 1,200
Fluid Management
51 10 60 1,200 1,700
Electronic Technologies
Locations Leased Facilities
North Expiration Dates (years)
America Europe Asia Other Minimum Maximum
93 15 6 4 1 8
Industrial Products
41 58 49 10 1 17
Engineered Systems
86 12 7 2 1 15
Fluid Management
32 24 45 1 1 12
Electronic Technologies
The facilities are generally well maintained and suitable for the operations conducted.
During 2008, the Company ceased operations in 19 locations, and has announced plans in 2009 to cease operations
in several additional locations, reflecting the current economic climate. These reductions and plant consolidations will
not restrict the Company’s ability to meet customer needs should economic conditions improve materially late in 2009
and in 2010.
Item 3. LEGAL PROCEEDINGS
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 quot;potentially
responsible parties.quot; In each instance, the extent of the subsidiary’s liability appears to be very small in relation to the
total projected expenditures and the number of other quot;potentially responsible partiesquot; 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 plant sites, in cooperation with regulatory agencies, and appropriate reserves have been
established.
The Company and certain of its subsidiaries are, and from time to time may become, 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 the use of products of Dover companies, exposure to hazardous substances or patent
infringement, employment matters and commercial disputes. Management and legal counsel periodically review the
probable outcome of such proceedings, the costs and expenses reasonably expected to be incurred, the availability
and extent of insurance coverage, and established reserves. While it is not possible to predict the outcome of these
13
14. legal actions or any need for additional reserves, in the opinion of management, based on these reviews, it is unlikely
that the disposition of the lawsuits and the other matters mentioned above will have a material adverse effect on the
Company's financial position, results of operations, cash flows or competitive position.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of the Company's security holders in the last quarter of 2008.
Executive Officers of the Registrant
All officers are elected annually at the first meeting of the Board of Directors and are subject to removal at any time by
the Board of Directors. The executive officers of Dover as of February 20, 2009, and their positions with the Company
(and, where relevant, prior business experience) for the past five years, are as follows:
NAME AGE POSITIONS HELD AND PRIOR BUSINESS EXPERIENCE
Robert A. Livingston ........................................... 55 Chief Executive Officer and Director (since December 2008),
President (since June 2008) and Chief Operating Officer (from
June 2008 – December 2008) of Dover; prior thereto Vice
President of Dover and President and Chief Executive Officer of
Dover Engineered Systems, Inc. (from July 2007 to May 2008);
prior thereto Vice President of Dover and President and Chief
Executive Officer of Dover Electronics, Inc. (from October 1,
2004).
Thomas W. Giacomini ........................................ 43 Vice President of Dover and President of Material Handling
Platform (since October 2007); prior thereto President of Warn
Industries, Inc. (from July 2005); prior thereto Chief Operating
Officer of Warn Industries, Inc. (from 2000 to July 2005).
Paul E. Goldberg……………………………….. 45 Treasurer and Director of Investor Relations of Dover (since
February 2006); prior thereto Assistant Treasurer of Dover
(from July 2002).
Raymond Hoglund………………………………. 58 Vice President of Dover and President and Chief Executive
Officer of Dover Engineered Systems, Inc. (since August 2008);
prior thereto President and Chief Executive Officer of Hill
Phoenix, Inc. (from February 2005); prior thereto Executive Vice
President of Hill Phoenix, Inc. (from July 2004); prior thereto
President and Chief Executive Officer of ESAB (a global
manufacturer of welding products).
Jay Kloosterboer………………………………… 48 Vice President Human Resources (since January 2009); prior
thereto Executive Vice President – Business Excellence of AES
Corporation (from May 2005); prior thereto Vice President and
Chief Human Resources Officer of AES Corporation (from May
2003).
Robert G. Kuhbach ............................................. 61 Vice President, Finance and Chief Financial Officer.
Raymond T. McKay, Jr ....................................... 55 Vice President of Dover (since February 2004), Controller of
Dover (since November 2002).
David J. Ropp ..................................................... 63 Vice President of Dover and President and Chief Executive
Officer of Dover Industrial Products, Inc. (since July 2007); prior
thereto Vice President of Dover and President and Chief
Executive Officer of Dover Resources, Inc. (from July 2003).
Joseph W. Schmidt............................................. 62 Vice President, General Counsel and Secretary of Dover (since
January 2003).
14
15. Stephen R. Sellhausen……………………………50 Vice President, Corporate Development of Dover (since
January 2009); prior thereto Vice President, Business
Development of Dover (from April 2008); prior thereto
investment banker with Citigroup Global Markets.
Sivasankaran Somasundaram………………... 43 Vice President of Dover and President of Fluid Solutions
Platform (since January 2008); prior thereto President of Gas
Equipment Group (from May 2006); prior thereto President of
RPA Process Technologies (from March 2004); prior thereto
Vice President of Dorr-Oliver Eimco (supplier of solid/liquid
separation equipment and wholly-owned subsidiary of GLV Inc.)
(from November 2002 through February 2004).
William W. Spurgeon .......................................... 50 Vice President of Dover and President and Chief Executive
Officer of Dover Fluid Management, Inc. (since July 2007); prior
thereto Vice President of Dover and President and Chief
Executive Officer of Dover Diversified, Inc. (from October 1,
2004); prior thereto Executive Vice President of Dover
Diversified, Inc. (from March 2004); prior thereto President of
Sargent Controls & Aerospace (from October 2001).
David Van Loan .................................................. 60 Vice President of Dover and President and Chief Executive
Officer of Dover Electronic Technologies, Inc. (since July 2007);
prior thereto Vice President of Dover and President and Chief
Executive Officer of Dover Technologies International, Inc.
(from January 2006); prior thereto President of Dover
Technologies International, Inc. (from July 2005); prior thereto
for more than eight years, President and Chief Executive Officer
of Everett Charles Technologies, Inc.
15
16. PART II
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
Market Information and Dividends
The principal market in which the Company's common stock is traded is the New York Stock Exchange. Information
on the high and low sales prices of such stock, and the frequency and the amount of dividends paid during the last
two years, is as follows:
2008 2007
Market Prices Dividends Market Prices Dividends
High Low Per Share High Low Per Share
First Quarter $ 44.87 $ 33.54 $ 0.20 $ 50.92 $ 46.07 $ 0.185
Second Quarter 54.57 42.22 0.20 53.75 47.41 0.185
Third Quarter 51.99 40.74 0.25 54.59 47.16 0.200
Fourth Quarter 40.50 23.39 0.25 51.58 44.34 0.200
$ 0.90 $ 0.770
Holders
The number of holders of record of the Company's Common Stock as of January 31, 2009 was approximately 16,060.
This figure includes participants in the Company’s 401(k) program.
Securities Authorized for Issuance Under Equity Compensation Plans
Information regarding securities authorized for issuance under the Company’s equity compensation plans is contained
in Part III, Item 12 of this Form 10-K.
Recent Sales of Unregistered Securities
None.
Issuer Purchases of Equity Securities
The Company did not purchase any shares of its stock during the fourth quarter of 2008.
16
17. Performance Graph
This performance graph does not constitute soliciting material, is not deemed filed with the SEC and is not incorporated
by reference in any of the Company’s filings under the Securities Act of 1933 or the Exchange Act of 1934, whether
made before or after the date of this Annual Report on Form 10-K and irrespective of any general incorporation language
in any such filing, except to the extent the Company specifically incorporates this performance graph by reference
therein.
Comparison of Five Year Cumulative Total Return*
Dover Corporation, S&P 500 Index & Peer Group Index
Total Stockholder Return s
250
225
200
S&P 500 Index
175
Old Peer Group
Dollars 150 Dover Corp.
125 New Peer Group
100
75
50
Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08
Years Ending
Data Source: Hemscott, Inc.
* Total return assumes reinvestment of dividends.
This graph assumes $100 invested on December 31, 2003 in Dover Corporation common stock, the S&P 500 index
and a peer group index. In 2008, the Company changed its peer group index to consist of 38 companies whose
relative mix of businesses is comparable to the Company’s portfolio of companies. In accordance with SEC rules, the
graph includes both the previous and new peer group indexes.
The peer index used in the Company’s Annual Report on Form 10-K for 2007 (labeled the “old peer group” in the
graph) consists of the following public companies selected by the Company based on its assessment of businesses
with similar industrial characteristics: 3M Company, Actuant Corporation, Ametek Inc., Carlisle Companies
Incorporated, Cooper Industries Ltd., Crane Co., Danaher Corporation, Eaton Corporation, Emerson Electric Co.,
Federal Signal Corp., Honeywell International, Inc., Hubbell Incorporated, Illinois Tool Works Inc., Ingersoll-Rand
Company Limited, ITT Corporation, Parker-Hannifin Corporation, Pentair Inc., Perkinelmer Inc., Tecumseh Products
CL A., Tyco International Ltd. and United Technologies Corporation.
The new peer index (labeled the “new peer group” in the graph) consists of the following public companies selected
by the Company: 3M Company, Actuant Corporation, Agco Corporation, Agilent Technologies Inc., Ametek Inc.,
Cameron International Corporation, Carlisle Companies Incorporated, Cooper Industries Ltd., Crane Co., Danaher
Corporation, Deere & Company, Eaton Corporation, Emerson Electric Co., Flowserve Corporation, FMC
Technologies Inc., Honeywell International, Inc., Hubbell Incorporated, IDEX Corporation, Illinois Tool Works Inc.,
Ingersoll-Rand Company Limited, ITT Corporation, Leggett & Platt Incorporated, Masco Corp., Oshkosh Corp.,
Paccar Inc., Pall Corporation, Parker-Hannifin Corporation, Pentair Inc., Precision Castparts Corp., Rockwell
Automation, Inc., Roper Industries Inc., SPX Corporation, Terex Corporation, The Manitowoc Co., The Timken
Company, Tyco International Ltd., United Technologies Corporation, and Weatherford International Ltd.
17
18. Item 6. SELECTED FINANCIAL DATA
Selected Dover Corporation financial information for the years 2004 through 2008 is set forth in the following 5-year
Consolidated Table.
(in thousands, except per share figures) 2008 2007 2006 2005 2004
Revenue $ 7,568,888 $ 7,317,270 $ 6,419,528 $ 5,234,355 $ 4,387,553
Earnings from continuing operations 694,758 669,750 595,680 432,516 346,476
Basic earnings (loss) per share:
Continuing operations $ 3.69 $ 3.33 $ 2.92 $ 2.13 $ 1.70
Discontinued operations (0.55) (0.04) (0.17) 0.38 0.33
Net earnings 3.13 3.28 2.76 2.51 2.03
Weighted average shares outstanding 188,481 201,330 203,773 202,979 203,275
Diluted earnings (loss) per share:
Continuing operations $ 3.67 $ 3.30 $ 2.90 $ 2.12 $ 1.69
Discontinued operations (0.55) (0.04) (0.16) 0.38 0.32
Net earnings 3.12 3.26 2.73 2.50 2.02
Weighted average shares outstanding 189,269 202,918 205,497 204,177 204,786
Dividends per common share $ 0.90 $ 0.77 $ 0.71 $ 0.66 $ 0.62
Capital expenditures $ 175,795 $ 173,653 $ 191,937 $ 127,578 $ 83,414
Depreciation and amortization 261,154 243,776 195,840 151,788 132,151
Total assets 7,867,304 8,068,407 7,626,657 6,580,492 5,777,853
Total debt 2,085,673 2,090,652 1,771,040 1,538,335 1,090,393
All results and data in the table above reflect continuing operations, unless otherwise noted. All periods reflect the
impact of certain operations that were discontinued. As a result, the data presented above will not necessarily agree
to previously issued financial statements. See Note 8 for additional information on discontinued operations.
18
19. Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION
Special Note Regarding Forward-Looking Statements
The following discussion and analysis should be read in conjunction with our Consolidated Financial Statements and
Notes which appear elsewhere in the Form 10-K. This discussion contains forward-looking statements that involve
risks and uncertainties. The Company’s actual results could differ materially from those anticipated in these forward-
looking statements as a result of various factors, including those discussed elsewhere in this Annual Report on Form
10-K, particularly in Item 1A. “Risk Factors” and in “SPECIAL NOTES REGARDING FORWARD-LOOKING
STATEMENTS” inside the front cover of this Annual Report on Form 10-K.
(1) FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES
Management assesses the Company’s liquidity in terms of its ability to generate cash to fund its operating, investing
and financing activities. Significant factors affecting liquidity are: cash flows generated from operating activities, capital
expenditures, acquisitions, dispositions, dividends, repurchases of outstanding shares, adequacy of available
commercial paper and 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, with sufficient
liquidity available for reinvestment in existing businesses and strategic acquisitions while managing its capital
structure on a short and long-term basis.
The following table is derived from the Consolidated Statements of Cash Flows:
Years Ended December 31,
Cash Flows from Continuing Operations (in thousands) 2008 2007
Net Cash Flows Provided By (Used In):
Operating activities $ 1,010,416 $ 927,693
Investing activities (452,994) (332,102)
Financing activities (560,904) (345,673)
Cash flows provided by operating activities during 2008 increased $82.7 million over the prior year primarily reflecting
higher earnings from continuing operations before depreciation and amortization, lower tax payments in 2008 and
lower receivables, partially offset by higher pension contributions.
Cash used in investing activities during 2008 increased $120.9 million compared to 2007, largely due to the purchase
of short-term investments, partially offset by lower spending on acquisitions in 2008. Acquisition expenditures in 2008
were $103.8 million compared to $273.6 million in 2007, while proceeds from the disposition of businesses were
essentially flat at $92.8 million, up $1.8 million from $91.0 million in 2007. Capital expenditures of $175.8 million were
generally consistent with the prior year level of $173.7 million. The Company currently anticipates that any
acquisitions made during 2009 will be funded from available cash and internally generated funds and, if necessary,
through the issuance of commercial paper, established lines of credit or public debt markets. Capital expenditures for
2009 are expected to be approximately 30% to 40% below 2008 levels.
Cash used in financing activities during 2008 increased $215.2 million compared to 2007 reflecting higher repayments
of commercial paper and long-term debt, partially offset by $594.1 million in proceeds received from the issuance of
long-term debt and lower cash spent on share repurchases in the 2008 period.
Share Repurchases
During the twelve months ended December 31, 2008, the Company repurchased 10,000,000 shares of its common
stock in the open market at an average price of $46.15 per share. As of December 31, 2008, the Company had
completed the purchases of all shares authorized under its $500 million share repurchase program, which was
approved by the Board of Directors in the fourth quarter of 2007.
During the third and fourth quarters of 2007, the Board of Directors approved two separate share repurchase
19
20. programs authorizing repurchases of approximately 20,000,000 common shares through the end of 2008. The
Company entered into an accelerated share repurchase agreement on August 2, 2007 (“ASR”) under which it
purchased 6,000,000 shares of its common stock at an initial purchase price of $51.64 per share. Upon final
settlement of this ASR in the fourth quarter of 2007, the final economic purchase price was $48.36 per share,
representing an average of the volume weighted average price of the Company’s common stock during the
outstanding period less a negotiated discount amount. In addition, during 2007, the Company made other open
market purchases of its common stock totaling 6.4 million shares at an average price of $46.78 per share.
Adjusted Working Capital
Adjusted Working Capital (a non-GAAP measure calculated as accounts receivable, plus inventory, less accounts
payable) decreased from the prior year end by $86.0 million, or 6%, to $1,275.9 million which reflected a decrease in
receivables of $91.0 million, a decrease in inventory of $37.8 million and a decrease in accounts payable of $42.8
million. Excluding acquisitions of $18.4 million, dispositions of ($9.6) million and the effects of foreign exchange
translation of ($38.5) million, Adjusted Working Capital would have decreased by $56.3 million, or 4%. “Average
Annual Adjusted Working Capital” as a percentage of revenue (a non-GAAP measure calculated as the five-quarter
average balance of accounts receivable, plus inventory, less accounts payable divided by the trailing twelve months of
revenue) decreased to 18.3% at December 31, 2008 from 18.9% at December 31, 2007 and inventory turns were 7.1
at December 31, 2008 compared to 6.7 at December 31, 2007.
In addition to measuring its cash flow generation and usage based upon the operating, investing and financing
classifications included in the Consolidated Statements of Cash Flows, the Company also measures free cash flow (a
non-GAAP measure). Management believes that free cash flow is an important measure of operating performance
because it provides both management and investors a measurement of cash generated from operations that is
available to fund acquisitions, pay dividends, repay debt and repurchase Dover’s common stock. For further
information, see Non-GAAP Disclosures at the end of this Item 7.
Free cash flow for the year ended December 31, 2008 was $834.6 million or 11.0% of revenue compared to $754.0
million or 10.3% of revenue in the prior year. The 2008 increase in free cash flow reflected higher earnings from
continuing operations before depreciation and amortization and lower tax payments in 2008 and lower receivables
and inventory, partially offset by higher pension contributions.
The following table is a reconciliation of free cash flow to cash flows from operating activities:
Years Ended December 31,
Free Cash Flow (in thousands) 2008 2007
Cash flow provided by operating activities $ 1,010,416 $ 927,693
Less: Capital expenditures 175,795 173,653
Free cash flow $ 834,621 $ 754,040
Free cash flow as a percentage of revenue 11.0% 10.3%
At December 31, 2008, the Company’s net property, plant, and equipment totaled $872.1 million compared to $892.2
million at the end of 2007. The decrease in net property, plant and equipment reflected depreciation and disposals,
partially offset by capital expenditures of $175.8 million, acquisitions of $5.0 million and $17.0 million related to foreign
currency fluctuations.
The aggregate of current and deferred income tax assets and liabilities decreased from a $241.2 million net liability at
the beginning of the year to a net liability of $240.7 million at year-end 2008. This resulted primarily from a decrease in
deferred tax liabilities related to intangible assets and pension assets, partially offset by a decrease in deferred tax
assets related to net operating loss carryforwards and accrued expenses.
Dover’s consolidated benefit obligation related to defined and supplemental retirement benefits decreased by $16.9
million in 2008. The decrease was due primarily to currency rate changes partially offset by actuarial losses. In 2008,
plan assets decreased by $94.7 million primarily due to losses on plan investments and currency fluctuations during
the year, partially offset by Company and employee contributions. It is estimated that the Company’s defined and
supplemental retirement benefits expense will increase from $35.7 million in 2008 to approximately $36.4 million in
2009.
The Company utilizes the net debt to total 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
20
21. table provides a reconciliation of net debt to total capitalization to the most directly comparable GAAP measures:
At December 31, At December 31,
Net Debt to Total Capitalization Ratio (in thousands) 2008 2007
Current maturities of long-term debt $ 32,194 $ 33,175
Commercial paper and other short-term debt 192,750 605,474
Long-term debt 1,860,729 1,452,003
Total debt 2,085,673 2,090,652
Less: Cash, cash equivalents and short-term investments 826,869 606,105
Net debt 1,258,804 1,484,547
Add: Stockholders' equity 3,792,866 3,946,173
Total capitalization $ 5,051,670 $ 5,430,720
Net debt to total capitalization 24.9% 27.3%
The total debt level of $2,085.7 million at December 31, 2008 decreased $5.0 million from December 31, 2007 due to
a decrease in commercial paper borrowings partially offset by an increase in long-term debt. Net debt at December
31, 2008 decreased $225.7 million as a result of higher cash generated from operations. The percentage decrease in
net debt to total capital, after $462 million of share repurchases, reflects strong free cash flow and proceeds from
dispositions of $92.8 million.
Dover’s long-term debt instruments had a book value of $1,892.9 million on December 31, 2008 and a fair value of
approximately $2,018.5 million. On December 31, 2007, the Company’s long-term debt instruments had a book value
of $1,485.2 million and a fair value of approximately $1,496.0 million.
The Company believes that existing sources of liquidity are adequate to meet anticipated funding needs at
comparable risk-based interest rates for the foreseeable future. Acquisition spending and/or share repurchases could
potentially increase the Company’s debt. However, management anticipates that the net debt to total capitalization
ratio will remain generally consistent with historical levels. Operating cash flow and access to capital markets are
expected to satisfy the Company’s various cash flow requirements, including acquisitions and capital expenditures.
Management is not aware of any potential impairment to the Company’s liquidity. Under the Company’s $1 billion 5-
year unsecured revolving credit facility with a syndicate of banks, which expires in November of 2012, 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 December 31, 2008
and had a coverage ratio of 13.5 to 1. It is anticipated that in 2009 any funding requirements above cash generated
from operations will be met through the issuance of commercial paper. Given the current economic conditions, the
Company fully expects to remain in compliance with all of its debt covenants.
The Company periodically enters into financial transactions specifically to hedge its exposures to various items,
including, but not limited to, interest rate and foreign exchange rate risk. Through various programs, the Company
hedges its cash flow exposures to foreign exchange rate risk by entering into foreign exchange forward contracts and
collars. The Company does not enter into derivative financial instruments for speculative purposes and does not have
a material portfolio of derivative financial instruments.
During the first quarter of 2008, Dover entered into several interest rate swaps in anticipation of the debt financing
completed on March 14, 2008 which, upon settlement, resulted in a net gain of $1.2 million which was deferred and is
being amortized over the lives of the related notes.
There is presently one outstanding swap agreement for a total notional amount of $50.0 million, or CHF65.1 million,
which swaps the U.S. 6-month LIBOR rate and the Swiss Franc 6-month LIBOR rate. This agreement hedges a
portion of the Company’s net investment in non-U.S. operations and the fair value outstanding at December 31, 2008
was a loss of $12.0 million which was based on quoted market prices for similar instruments (uses Level 2 inputs
under the SFAS No. 157 hierarchy). This hedge is effective.
During the third quarter of 2008, the Company entered into a foreign currency hedge which was subsequently settled
within the quarter in anticipation of a potential acquisition, which did not occur. As a result of terminating the hedge,
the Company recorded a gain of $2.4 million in the third quarter ended September 30, 2008.
At December 31, 2008, the Company had open foreign exchange forward purchase contracts expiring through
December 2009 related to fair value hedges of foreign currency exposures. The fair values of these contracts were
based on quoted market prices for identical instruments as of December 31, 2008 (uses Level 1 inputs under the
SFAS No. 157 hierarchy).
21
22. The details of the open contracts as of December 31, 2008 are as follows:
(in thousands) US Dollars Sold
Expiration From 12/31/08
Less Than 1 Average
Forward Currencies Purchased Month 2-3 Months 4-6 Months 7-12 Months Contract Rate
Great Britain Pounds $ - $ 35,107 $ - $ - 1.4867
Euros 85,558 - - - 1.3885
Singapore Dollars 566 - - - 1.5015
Chinese Yuan 2,320 5,200 9,840 21,520 6.6915
Collar Put Call US Dollar Value
US Dollar to Euro 1.460 1.526 $ 3,000 Maturities from 3/2009 - 12/2009
The Company’s credit ratings, which are independently developed by the respective rating agencies, are as follows
for the years ended December 31:
2008 2007
Short term Long term Short term Long term
Moody's P-1 A2 P-1 A2
Standard & Poor's A-1 A A-1 A
Fitch F1 A F1 A
A summary of the Company’s undiscounted long-term debt, commitments and obligations as of December 31, 2008
and the years when these obligations are expected to be due is as follows:
Payments Due by Period
Less Than 1 More than
(in thousands) Total Year 1-3 Years 3-5 Years 5 Years Other (A)
Long-term debt $ 1,892,923 $ 32,194 $ 472,281 $ 271 $ 1,388,177 $ -
Interest expense 1,504,984 105,625 188,500 159,250 1,051,609 -
Rental commitments 189,665 46,144 64,009 37,788 41,724 -
Purchase obligations 28,023 27,381 57 - 585 -
Capital leases 16,017 2,429 4,666 3,706 5,216 -
Supplemental & post- -
retirement benefits 127,000 34,000 21,000 20,000 52,000 -
Uncertain tax positions (A) 249,553 22,171 - - - 227,382
Other long-term
obligations 1,234 165 267 218 584 -
$ 4,009,399 $ 270,109 $ 750,780 $ 221,233 $ 2,539,895 $ 227,382
Total obligations
(A) Due to the uncertainty of the potential settlement of future uncertain tax positions, management is unable to
estimate the timing of the related payments, if any, that will be made subsequent to 2009. These amounts do not
include the potential indirect benefits resulting from deductions or credits for payments made to other jurisdictions.
Severance and Exit Reserves
From time to time, the Company will initiate various restructuring programs at its operating companies or record
severance and exit costs in connection with purchase accounting for acquisitions. During the latter half of 2008, the
Company announced plans to increase the amount of restructuring efforts in response to the significant decline in
global economic activity. At December 31, 2008 and 2007, the Company had reserves related to severance and exit
activities of $31.0 million and $28.4 million, respectively. During 2008, the Company recorded $27.4 million in
additional charges and $5.6 million in purchase accounting reserves related to acquisitions, partially offset by other
non-cash write-downs of $2.3 million and payments of $28.1 million. These costs yielded a savings of approximately
$35.0 million in 2008. The Company expects further restructuring plans to occur in 2009 resulting in costs of
approximately $40.0 million that the Company expects will yield savings of approximately $75.0 million in 2009.
Restructuring charges are recorded primarily in Selling and administrative expenses in the Consolidated Statement of
Operations.
22
![_________________________________________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________
FORM 10-K
_____________________________
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For fiscal year ended December 31, 2008
Commission File No. 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.)
280 Park Avenue New York, N.Y. 10017
(Address of principal executive offices)
Telephone: (212) 922-1640
___________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock, par value $1 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [X] No [ ]
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes [ ] No [X]
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 [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [ ]
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 definition of “accelerated filer” and “large accelerated filer” in Rule 12-b-2 of the Securities Exchange Act.
Large accelerated filer [X] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [ ]
Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Securities Exchange Act). Yes [ ] No [ X]
The aggregate market value of the voting and non-voting common stock held by non-affiliates of the registrant as of the close of business June
30, 2008 was $9,034,170,540. The registrant's closing price as reported on the New York Stock Exchange-Composite Transactions for June 30,
2008 was $48.37 per share. The number of outstanding shares of the registrant's common stock as of February 12, 2009 was 186,013,754.
Documents Incorporated by Reference: Part III - Certain Portions of the Proxy Statement for Annual Meeting of Shareholders to be Held on
May 7, 2009 (the quot;2009 Proxy Statement'').
_________________________________________](https://image.slidesharecdn.com/1166847/85/dover10k2008final-1-320.jpg)
