2012 Annual Report
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2013 INVESTOR FACT SHEET
Dover at a Glance
Company Overview
n Traded on the NYSE under “DOV”
Key Officers:
n Dover strives to achieve strong
operating margins and generate
free cash flow in excess of 10%
of revenue
n Dover has rewarded shareholders
with an annually increased
dividend for 57 consecutive years
(the fourth-longest record on
the NYSE).
Sales For Year Ended 12/31/12:
$8.1 B
EPS From Continuing
Operations For 2012:
$4.53
Headquarters:
Dover Corporation
3005 Highland Parkway
Downers Grove, Illinois 60515
www.dovercorporation.com
Investor Contact:
Paul Goldberg
Vice President
Investor Relations
(212) 922-1640
FAX (212) 922-0945
e-mail: peg@dovercorp.com
Bob Livingston
President &
Chief Executive Officer
Ivonne Cabrera
Senior Vice President,
General Counsel & Secretary
Brad Cerepak
Senior Vice President &
Chief Financial Officer
Tom Giacomini
President & Chief Executive Officer,
Dover Engineered Systems
John Hartner
President & Chief Executive Officer,
Dover Printing & Identification
Jay Kloosterboer
Senior Vice President,
Human Resources
Jeff Niew
President & Chief Executive Officer,
Dover Communication Technologies
Steve Sellhausen
Senior Vice President,
Corporate Development
Bill Spurgeon
President & Chief Executive Officer,
Dover Energy
3005 Highland Parkway
Downers Grove, IL 60515
www.dovercorporation.com
Dover is a diversified global manufacturer with annual revenues of over
$8 billion. For over 50 years, Dover has been delivering outstanding
products and services that reflect its market leadership and commitment
to operational and technical excellence. The Company’s entrepreneurial
business model encourages, promotes and fosters deep customer
engagement which has led to Dover’s well-established and valued
reputation for providing superior customer service and industry-
leading product innovation. Dover focuses on innovative equipment
and components, specialty systems and support services through its
four major operating segments: Communication Technologies, Energy,
Engineered Systems and Printing & Identification. Headquartered in
Downers Grove, Illinois, Dover employs 37,000 people worldwide.
Dover is traded on the New York Stock Exchange under “DOV.”
Additional information is available on the company’s website at
www.dovercorporation.com.
Financial Highlights 2012
(dollars in thousands, except per share figures)
Revenue
Earnings before taxes
Earnings from continuing operations
Earnings per diluted share
from continuing operations
Dividends per common share
Capital expenditures
Acquisitions (net assets acquired)
Cash flows from operations
Return on average equity
Number of employees
2012
2011
$ 8,104,339
$ 1,137,571
$ 833,119
$ 7,369,154
$ 1,010,262
$ 773,186
4.53
$
$
1.33
$ 297,012
$ 1,181,043
$ 1,261,160
16.5%
37,416
4.09
$
$
1.18
$ 262,676
$ 1,342,461
$ 948,864
18.9%
33,827
Credit Ratings:
Pillars of Success
Page 9 in Letter
Fact Sheet
2012 Revenue by Region
Moody’s:
Standard & Poor’s:
Fact Sheet
Fitch
Long Short
Term
Term
P-1
A2
A-1
A
F1
A
2012 Revenue by Segment 2012 Revenue by Region
2012 Revenue by Segment
2012 Revenue by Region
7%
12%
19%
15%
19%
59%
42%
■ North America
■ Asia
■ Europe
■ Rest of World
27%
■ Communication
Technologies
■ Energy
■ Engineered
Systems
■ Printing &
Identification
7%
8%
15%
15%
19%
18%
59%
59%
■ North America
■ Asia
■ Europe
■ Rest of World
Revenue vs. Continuing Earnings
($ in millions)
Free Cash Flow
($ in millions)
$8,000
$900
$1,000
20%
6,000
4,000
2,000
0
675
750
450
500
225
250
0
0
15
10
5
0
2008 2009 2010 2011 2012
Revenue
Earnings from Continuing Operations
2008 2009 2010 2011 2012
Free Cash Flow
Free Cash Flow as a % of Revenue
Strategic Asset Allocation
Dover grows its business by thoughtfully and strategically allocating
capital, primarily in our five growth spaces – Energy, Product ID, Fluid
Solutions, Communication Components and Refrigeration Equipment.
We then create value by quickly implementing an integration plan that
unlocks the earnings power of the acquired business in a timely manner.
Acquisitions are complimented by a consistent dividend policy and
strategic share repurchases.
Leveraging Our Scale
Dover creates value by leveraging the scale and expertise inherent in our
company. By aggregating volumes and streamlining systems, creating
commonality and standardized processes, and combining facilities and
eliminating duplication, we seek to do more with less. We create an
environment that maximizes the benefit of our size, while ensuring that
our companies remain nimble enough to deliver extraordinary service to
their customers.
Leadership Development
Dover supports its goals by providing resources and programs designed
to enhance and maximize employees’ leadership opportunities. By
promoting a positive environment that empowers future leaders to
interact and share experiences, encourages expression of ideas, inspires
creativity, and fosters opportunities for leadership development, we
develop and retain the people who will drive our future success.
Corporate Responsibility
Dover endeavors to live up to the highest standards of corporate
responsibility, in all aspects of our business, whether at home in the
United States, or elsewhere around the globe. We strive to achieve the
highest ethical standards and good corporate governance, and adhere to
all applicable laws, regulations and codes of conduct in the geographies
where we operate.
ABOUT DOVER
Revenue by End Markets
Revenue by End Markets
10%
16%
27%
47%
■ Consumer Electronics
■ Aerospace/Defense
■ Medical Technology
■ Telecom/Other
Revenue by End Markets
Geography
Revenue by Geography
Revenue by End Markets
Revenue by End Markets
2%
Geography
Revenue by End Markets
Revenue by End Markets
Revenue by End Markets
Revenue by End Markets
2%
10%
16%
19%
11%
10%
47%
58%
47%
27%
29%
16%
27%
27%
■ Consumer Electronics
■ Asia
■ Production
■ Aerospace/Industrial
■ Consumer Electronics
■ North America
■ Downstream
54%
■ Medical Technology
■ Aerospace/Industrial
■ Europe
■ Drilling
■ Telecom/Other
■ Medical Technology
■ Rest of World
■ Telecom/Other
11%
10%
19%
25%
16%
62%
47%
27%
27%
19%
■ Asia
■ Production
■ Consumer Electronics
■ North America
■ Downstream
54%
■ Aerospace/Industrial
■ Europe
■ Drilling
54%
■ Medical Technology
■ Rest of World
■ Telecom/Other
■ Production
■ Downstream
■ Drilling
27%
Revenue by Geography
Geography
Revenue by End Markets
6%
7%
7%
19%
27%
80%
54%
■ North America
■ Europe
■ Production
■ Rest of World
■ Downstream
■ Asia
■ Drilling
Printing & Identification
Geography
Communication Technologies
Energy
Revenue by End Markets
Revenue by End Markets
10%
16%
27%
47%
■ Consumer Electronics
■ Aerospace/Industrial
■ Medical Technology
■ Telecom/Other
19%
27%
54%
■ Production
■ Downstream
■ Drilling
Engineered Systems
Printing & Identification
Revenue by End Markets
Revenue by End Markets
24%
36%
40%
■ Refrigeration &
Food Equipment
■ Industrial
■ Fluid Solutions
41%
59%
■ Fast Moving
Consumer Goods
■ Industrial
COMMUNICATION TECHNOLOGIES
Communication Technologies
Communication Technologies
Energy
Communication Technologies
Communication Technologies
ENERGY
Energy
Communication Technologies
Communication Technologies
Energy
Energy
Energy
Revenue (in millions)
Engineered Systems
$ in millions
$ in millions
$ in millions
$1,500
$1,500
$1,500
Revenue by End Markets
Segment Earnings (in millions) Segment Margin
Engineered Systems
$ in millions
Printing & Identification
$ in millions
Engineered Systems
$225
$225
Revenue by End Markets
$ in millions
$225
Revenue by End Markets
Revenue by End Markets
18%
$1,000
$1,000
$1,000
24%
$500
36%
40%
$500
■ Refrigeration &
Food Equipment
$500
■ Industrial
■ Fluid Solutions
$0
$0
$0
$150
$150
24%
40%
41%
24%
$75
$75
36%
36%
$0
$0
$0
$150
■ Refrigeration &
Food Equipment
■ Fast Moving
■ Refrigeration &
Consumer Goods
6%
6%
Food Equipment
■ Industrial
59%
■ Industrial
40%
$75
■ Fluid Solutions
■ Industrial
■ Fluid Solutions
41%
24%
6%
36%
41%
$750
40%
■ Fast Moving
■ Refrigeration &
Consumer Goods
$750
Food Equipment
■ Industrial
59%
$750
■ Fast Moving
Consumer Goods
■ Industrial
59%
■ Industrial
■ Fluid Solutions
$0
2010 2011 2012
2010 2011 2012
2010 2011 2012
2010 2011 2012
2010 2011 2012
0%
0%
0%
2010 2011 2012
2010 2011 2012
2010 2011 2012
2010 2011 2012
$0
$0
Segment Earnings (in millions) Segment Margin
$ in millions
$ in millions
$ in millions
Printing & Identification
$600
$600
16%
$600
34%
Revenue by End Markets
20%
$400
$400
$400
■ Europe
■ North America
■ Asia
■ Rest of World
30%
30%
30%
30%
20%
20%
20%
$200
41%
$200
$200
59%
■ Fast Moving
10%
Consumer Goods
■ Industrial
10%
10%
$0
$0
$0
0%
0%
0%
Engineered Systems
Geography
Printing & Identification
Revenue (in millions)
7%
$ in millions
Printing & Identification
$2,250
8%
Engineered Systems
18%
18%
$2,250
Revenue by End Markets
$ in millions
$2,250
$ in millions
Revenue by End Markets
17%
■ North America
Revenue by End Markets
■ Europe
■ Asia
■ Rest of World
$1,500
$1,500
68%
$1,500
12%
12%
12%
2010 2011 2012
2010 2011 2012
2010 2011 2012
Key Brands
Communication Technologies
Revenue by End Markets
Communication Technologies
Geography
10%
2%
16%
11%
27%
25%
47%
62%
■ Consumer Electronics
■ Aerospace/Industrial
■ Medical Technology
SOUND
■ Asia
■ Telecom/Other
SOLUTIONS
■ North America
■ Europe
■ Rest of World
Key Products
n Micro-acoustic audio input and
output components
n Advanced miniaturized receivers and
electromechanical components
n Specialized components for use in
Energy
Communication Technologies
Revenue by End Markets
Communication Technologies
implantable devices and medical equipment
Revenue by End Markets
Energy
Geography
11%
n Control components, electromechanical
10%
Geography
7%
2%
47%
7%
11%
n Specialty hydraulics, fasteners, bearings,
Communication Technologies
switches and filters
Geography
19%
2%
6%
switches, multi-layered capacitors, filters
■ Consumer Electronics
■ Production
and quick disconnect couplings
■ Aerospace/Industrial
■ Downstream
54%
n Specialty mechanical and frequency control
■ Medical Technology
■ North America
■ Asia
■ Drilling
communication components
■ Telecom/Other
■ Europe
■ North America
■ Asia
n Medical and bio processing connectors
■ Rest of World
■ Europe
80%
■ North America
■ Asia
■ Rest of World
■ Europe
■ Rest of World
27%
62%
25%
62%
16%
27%
25%
Key Brands
Energy
Revenue by End Markets
Energy
Energy
Communication Technologies
Geography
2010 2011 2012
2010 2011 2012
2010 2011 2012
2010 2011 2012
2010 2011 2012
2010 2011 2012
Key Products
n Diamond cutters for down-hole drilling tools
n Quartz down-hole pressure tranducers
n Artificial lift systems and well site controls
n Compressor products and monitoring
solutions and related aftermarket services
n Winches and supporting electronic systems
n Fluid film and magnetic bearings, bearing
Energy
isolators, seals and monitoring systems
n Fueling nozzles and underground containment
Geography
19%
6%
7%
6%
54%
Geography
7%
2%
27%
7%
11%
7%
25%
62%
80%
■ Production
■ Downstream
■ North America
■ Drilling
■ Europe
■ Rest of World
■ Asia
■ Asia
■ North America
80%
■ Europe
■ Rest of World
■ North America
■ Europe
■ Rest of World
■ Asia
Geography
systems and fuel management systems
n Valves, gauges, interconnects, and loading
equipment for hazardous liquids and dry
7%
bulk materials
7%
6%
■ North America
■ Europe
■ Rest of World
■ Asia
80%
ENGINEERED SYSTEMS
Engineered Systems
Printing & Identification
Printing & Identification
Printing & Identification
PRINTING & IDENTIFICATION
Printing & Identification
Printing & Identification
Printing & Identification
Engineered Systems
Engineered Systems
Geography
Revenue by End Markets
Revenue by End Markets
8%
7%
Engineered Systems
Geography
Engineered Systems
Geography
Revenue by Geography
Geography
Revenue by End Markets
7%
8%
Revenue by End Markets
7%
16%
Engineered Systems
Geography
Revenue by End Markets
Geography
Revenue by End Markets
Geography
7%
16%
24%
17%
68%
40%
36%
■ North America
■ Europe
■ Refrigeration &
■ Asia
Food Equipment
■ Rest of World
■ Industrial
■ Fluid Solutions
8%
17%
24%
36%
20%
41%
68%
40%
17%
68%
8%
■ North America
■ Europe
34%
■ Europe
■ North America
■ North America
■ Refrigeration &
■ Fast Moving
■ Asia
■ Asia
■ Europe
Food Equipment
Consumer Goods
59%
■ Rest of World
■ Rest of World
■ Asia
■ Industrial
30%
■ Industrial
■ Rest of World
■ Fluid Solutions
17%
20%
41%
34%
16%
■ Europe
■ North America
■ Europe
■ North America
34%
■ Fast Moving
■ Asia
■ North America
■ Europe
Consumer Goods
■ Rest of World
■ Asia
■ Asia
■ Industrial
■ Rest of World
■ Rest of World
30%
68%
20%
30%
59%
Revenue by Geography
Geography
16%
20%
34%
30%
■ Europe
■ North America
■ Asia
■ Rest of World
Revenue (in millions)
$ in millions
$ in millions
$ in millions
Segment Earnings (in millions) Segment Margin
$ in millions
$ in millions
$ in millions
Revenue (in millions)
$ in millions
$ in millions
$ in millions
Segment Earnings (in millions) Segment Margin
$ in millions
$ in millions
$ in millions
$3,600
$3,600
$3,600
$525
$525
$525
18%
18%
18%
$1,200
$1,200
$1,200
$180
$180
$180
18%
18%
18%
Communication Technologies
$2,400
$2,400
$2,400
Communication Technologies
$350
$350
$350
Energy
12%
12%
Energy
12%
$800
$800
$800
$120
$120
$120
12%
12%
12%
Geography
Geography
Geography
2%
$1,200
$1,200
$1,200
$175
2%
$175
6%
$175
7%
6%
6%
11%
11%
7%
Geography
6%
7%
6%
$400
7%
$400
$400
$60
$60
$60
6%
6%
6%
2010 2011 2012
25%
2010 2011 2012
2010 2011 2012
$0
$0
62%
2010 2011 2012
2010 2011 2012
$0
25%
$0
62%
2010 2011 2012
$0
■ Asia
$0
■ North America
■ Europe
■ Rest of World
■ North America
■ Asia
■ Europe
■ North America
2010 2011 2012
2010 2011 2012
■ Rest of World
■ Europe
80%
■ Asia
■ Rest of World
0%
0%
2010 2011 2012
2010 2011 2012
0%
2010 2011 2012
2010 2011 2012
$0
$0
80%
■ North America
$0
■ Europe
■ Rest of World
■ Asia
2010 2011 2012
2010 2011 2012
2010 2011 2012
2010 2011 2012
2010 2011 2012
2010 2011 2012
$0
$0
$0
0%
0%
0%
Removable 2013 Dover Investor Fact Sheet u
Design: RWI www.rwidesign.com
Printing: Earth • Thebault
Printed in the USA on Recycled Paper
Key Brands
Engineered Systems
Geography
7%
8%
17%
68%
■ North America
■ Europe
■ Asia
■ Rest of World
Key Products
n Refrigeration cases and systems, specialty
Key Brands
Engineered Systems
Geography
cases and doors
Printing & Identification
Geography
n Specialty industrial pumps
n Brazed plate heat exchangers
n Automotive lifts and collision repair equipment
n Refuse collection vehicles, waste compacting
7%
and recycling equipment
n Workholding devices and factory
automation components
n Winches, hoists, powertrain components
68%
& accessories
■ Europe
■ North America
■ Asia
■ Rest of World
■ North America
34%
■ Europe
■ Asia
■ Rest of World
30%
16%
20%
8%
17%
Printing & Identification
Geography
16%
20%
34%
30%
■ Europe
■ North America
■ Asia
■ Rest of World
Key Products
n Product market and coding equipment and
related consumables and services
n Barcode printing equipment and related
consumables and services
n Soldering and fluid dispensing equipment
and related consumables and services
OUR ENTREPRENEURIAL BUSINESS MODEL
Our customer-focused business model encourages, promotes and fosters deep customer
engagement which has led to Dover’s well established and valued reputation as a global industrial
manufacturer that provides industry leading product innovation and superior customer service.
Our success is based on the core technological advantages of our businesses
which are leaders in the niche markets they serve. Our intense customer focus and
innovative products help our customers create value and win in their markets.
WE BUILD ON OUR STRENGTHS
Our deep bench of talent, core knowledge and industry leading expertise provides critical
insight that guides our product development, growth initiatives and focused acquisition targeting
that allows us to grow and expand the potential of our businesses.
WE LEVERAGE OUR SCALE
We share our expertise across all of Dover to achieve optimal productivity in manufacturing and operational
excellence. Our proven track record of successfully combining and utilizing all of Dover’s global resources helps
drive leverage across the entire company and enables us to continue our global growth and expansion.
FINANCIAL HIGHLIGHTS
(dollars in thousands, except per share figures)
Revenue
Earnings before taxes
Earnings from continuing operations
Earnings per diluted share from continuing operations
Dividends per common share
Capital expenditures
Acquisitions (net assets acquired)
Cash flows from operations
Return on average equity
Number of employees
2012
$ 8,104,339
$ 1,137,571
$
$
$
833,119
4.53
1.33
$
297,012
$ 1,181,043
$ 1,261,160
16.5%
37,416
2011
$ 7,369,154
$ 1,010,262
$ 773,186
$
$
4.09
1.18
$ 262,676
$ 1,342,461
$ 948,864
18.9%
33,827
2010
$6,109,507
$ 813,122
$ 619,497
$
$
3.27
1.07
$ 169,297
$ 104,418
$ 830,295
16.3%
31,962
Dover is a diversified global manufacturer with annual revenues of over $8 billion. For over 50 years, Dover has been delivering
outstanding products and services that reflect its market leadership and commitment to operational and technical excellence.
The Company’s entrepreneurial business model encourages, promotes and fosters deep customer engagement which has led to
Dover’s well-established and valued reputation for providing superior customer service and industry-leading product innovation.
Dover focuses on innovative equipment and components, specialty systems and support services through its four major operating
segments: Communication Technologies, Energy, Engineered Systems and Printing & Identification. Headquartered in Downers
Grove, Illinois, Dover employs 37,000 people worldwide. Dover is traded on the New York Stock Exchange under “DOV.” Additional
information is available on the company’s website at www.dovercorporation.com.
SHAREHOLDER INFORMATION
Computershare Shareowner Services can
be reached at the following address:
Via Regular Mail:
Computershare Investor Services
P.O. Box 43078
Providence, RI 02940-3078
(888) 567-8341
www.computershare.com/investor
Via Registered or Overnight Mail:
Computershare Investor Services
250 Royall Street
Canton, MA 02021
(888) 567-8341
www.computershare.com/investor
Investor Inquiries
and Corporate News:
For quarterly earnings releases, informa-
tion on conference calls and webcasts,
press releases, annual reports, SEC
filings including Form 10-K, acquisitions,
supplemental financial disclosure, and all
other corporate news releases, please visit
our website at:
www.dovercorporation.com
Dividends:
Quarterly dividends on Dover Corporation
common stock are typically paid on or
about the 15th of March, June, September
and December. Dover has paid an increased
dividend each year since 1955.
Dover’s Ticker Symbol:
Dover’s ticker symbol is DOV.
The stock trades on the New
York Stock Exchange and is
one of the corporations listed
in the S&P 500.
Annual Shareholders Meeting:
May 2, 2013 at 1:00 p.m. CT
Westin Lombard Yorktown Center
70 Yorktown Center
Lombard, IL 60148
Independent Accountants:
PricewaterhouseCoopers LLP
Chicago, IL
Executive Offices:
Dover Corporation
3005 Highland Parkway
Downers Grove, IL 60515
(630) 541-1540
Visit us on the web at:
www.dovercorporation.com
Shareholder Services:
For help with any of the
following, please contact:
Computershare Shareowner Services:
n Address changes
n Direct deposit of dividends
n Dividend reinvestment
n Lost dividend checks
n Lost stock certificates
n Name changes
n Shareholder records
n Stock transfers
n IRS Form 1099
n Direct Stock Purchase Plan
2012 HIGHLIGHTS
DOVER COMMUNICATION TECHNOLOGIES
Dover Communication Technologies, the leader in acoustics products to the handset market, continued to
benefit from multiple design wins across the OEM landscape, as the smart phone market once again posted
strong growth. Within this segment, consumer electronics, medical technology, aerospace /defense,
and telecom performed well and are a source of core strength, as we have begun to leverage products,
technology and operational capability across the entire segment. We are making significant investments
in new product development and global expansion that will continue to drive growth.
DOVER ENERGY
Key acquisitions throughout the year, most notably Production Control Services, enabled Dover Energy to
add multiple technologies to our artificial lift offerings, including gas lift and nitrogen generation, while
greatly improving our overall automation offering. In addition, the segment continued to make strong
progress in growing its global presence. Dover Energy‘s excellent results for the year were driven by solid
production markets that included constructive oil prices and continuing well completion activity, strong
international growth, and the continuing strength in downstream distribution and retail fueling.
DOVER ENGINEERED SYSTEMS
Innovation and an unwavering commitment to customer support is the lifeblood of Dover Engineered Systems,
as ongoing investments in engineering and product development are yielding a steady stream of opportunities.
Our focus on energy efficiency and the lowest total cost of ownership is helping our customers win in their mar-
kets, and helping us gain share, especially in the Refrigeration & Food Equipment market. During the year we
acquired Anthony, the world’s leading supplier of refrigeration door systems, specialty curved glass, LED lighting
and case reskinning for the retail grocery and convenience store markets. This business will allow us to gain
access to new markets and new geographies, and also capitalize on the emerging “close the case” trend.
DOVER PRINTING & IDENTIFICATION
Solid organic growth in our fast moving consumer goods market driven by a steady stream of new products
was a key for Dover Printing & Identification. We remain focused on continued product development in our
core markets for 2013, including the launch of the Smartlase C Series family of laser printers and our new
RL3 and RL4 thermal transfer mobile printers. These new products, coupled with aggressive investments
in developing economies and important cost actions taken earlier in 2012, position this segment well for
further growth.
Revenue vs. Continuing Earnings
($ in millions)
Free Cash Flow
($ in millions)
EPS Growth
$8,000
$900
$1,000
20%
$5.00
$120
6,000
4,000
2,000
0
2008 2009 2010 2011 2012
Revenue
Earnings from Continuing Operations
675
450
225
0
$900
675
450
225
0
750
500
250
0
15
10
5
0
3.75
2.50
1.25
0
90
60
30
0
2008 2009 2010 2011 2012
Free Cash Flow
Free Cash Flow as a % of Revenue
2008 2009 2010 2011 2012
Dover
S&P 500
1
1
EPS Growth
$5
3.75
2.50
1.25
0
$120
90
60
30
0
2008 2009 2010 2011 2012
Dover
S&P 500
a
COMMUNICATION TECHNOLOGIES
Dover Communication Technologies (DCT) provides acoustic components for the consumer electronics market, serving the top OEM’s.
In addition, DCT designs and manufactures products for the aerospace/defense, medical technology and telecom/other markets.
KEY BRANDS
SOUND
SOLUTIONS
KEY PRODUCTS
n Micro-acoustic audio input and
output components
n Advanced miniaturized receivers
and electromechanical components
n Specialized components for
use in implantable devices and
medical equipment
n Specialty hydraulics, fasteners,
bearings, switches and filters
n Control components,
electromechanical switches,
multi-layered capacitors, filters
and quick disconnect couplings
n Specialty mechanical and frequency
control communication components
n Medical and bio processing
connectors
Revenue by End Markets
Revenue by Geography
2%
11%
47%
29%
58%
10%
16%
27%
■ Consumer Electronics
■ Aerospace/Defense
■ Medical Technology
■ Telecom/Other
■ Asia
■ North America
■ Europe
■ Rest of World
Revenue
$ in millions
Segment Earnings
$ in millions
Segment Margin
$1,500
$1,000
$500
$0
$225
$150
$75
$0
18%
12%
6%
0%
2010 2011 2012
2010 2011 2012
2010 2011 2012
2
2
ENERGY
Dover Energy (DE) is focused on providing innovative products and solutions that serve the drilling, production
and downstream markets, including a significant presence in artificial lift technologies.
KEY BRANDS
KEY PRODUCTS
n Diamond cutters for down-hole
drilling tools
n Quartz down-hole pressure
tranducers
n Artificial lift systems and well
site controls
n Compressor products and
monitoring solutions and related
aftermarket services
n Winches and supporting
electronic systems
n Fluid film and magnetic bearings,
bearing isolators, seals and
monitoring systems
n Fueling nozzles and underground
containment systems and
fuel management systems
n Valves, gauges, interconnects, and
loading equipment for hazardous
liquids and dry bulk materials
Revenue by End Markets
Revenue by Geography
19%
27%
54%
■ Production
■ Downstream
■ Drilling
6%
7%
7%
80%
■ North America
■ Europe
■ Rest of World
■ Asia
Revenue
$ in millions
Segment Earnings
$ in millions
Segment Margin
$2,250
$1,500
$750
$0
$600
$400
$200
$0
30%
20%
10%
0%
2010 2011 2012
2010 2011 2012
2010 2011 2012
3
3
ENGINEERED SYSTEMS
Dover Engineered Systems (DES) is comprised of two platforms: Fluid Solutions concentrates on the global pump and fluid
handling markets, while Refrigeration & Industrial focuses on refrigeration systems and other industrial equipment and components.
KEY BRANDS
KEY PRODUCTS
n Refrigeration cases and systems,
specialty cases and doors
n Specialty industrial pumps
n Brazed plate heat exchangers
n Automotive lifts and collision
repair equipment
n Refuse collection vehicles, waste
compacting and recycling equipment
n Workholding devices and factory
automation components
n Winches, hoists, powertrain
components and accessories
Revenue by End Markets
Revenue by Geography
40%
24%
36%
■ Refrigeration &
Food Equipment
■ Industrial
■ Fluid Solutions
7%
8%
17%
68%
■ North America
■ Europe
■ Asia
■ Rest of World
Revenue
$ in millions
Segment Earnings
$ in millions
Segment Margin
$3,600
$2,400
$1,200
$0
$525
$350
$175
$0
18%
12%
6%
0%
2010 2011 2012
2010 2011 2012
2010 2011 2012
4
4
PRINTING & IDENTIFICATION
Dover Printing & Identification (DPI) provides integrated printing, coding and identification equipment
and related consumables in the fast-moving consumer goods and industrial markets.
KEY BRANDS
KEY PRODUCTS
n Product marking and coding
equipment and related
consumables and services
n Barcode printing equipment
and related consumables
and services
n Soldering and fluid dispensing
equipment and related
consumables and services
Revenue by End Markets
Revenue by Geography
Revenue
$ in millions
Segment Earnings
$ in millions
Segment Margin
41%
59%
■ Fast Moving
Consumer Goods
■ Industrial
16%
20%
34%
30%
■ Europe
■ North America
■ Asia
■ Rest of World
$1,200
$800
$400
$0
$180
$120
$60
$0
18%
12%
6%
0%
2010 2011 2012
2010 2011 2012
2010 2011 2012
5
5
DEAR SHAREHOLDERS:
Dover posted another very strong year
depth within the core markets of
in 2012 thanks to the dedicated efforts
chemicals and petrochemicals; and our
of our entire global team. Our financial
product and services offerings for the oil
performance was excellent in a difficult
and gas industry in the attractive energy
environment, and the continued execu-
space are greatly enhanced with the
tion on our strategy enabled us to make
addition of Production Control Services,
significant progress toward strengthen-
now allowing us to offer our customers
ing our Company.
All four of our segments again achieved
growth, as the energy, handset and
refrigeration & food equipment markets
a broader solution set. Our acquisitions
have us very well positioned in our key
markets and aligned even more closely
with our customers.
were particularly strong. The highlights
for us this year include:
Dover’s global growth also continues,
as we again expanded our presence
Robert A. Livingston
President and Chief Executive Officer
outside our traditional North American
and European markets in 2012. About
DCT to achieve a 12 percent increase in
18 percent of our revenue came from
sales to $1.5 billion.
n Revenue increasing 10 percent to $8.1
billion for the year reflecting growth
of 5 percent organically and 6 percent
from acquisitions.
n Earnings per share from continuing
operations increasing 11 percent
to $4.53.
n Full-year segment margin expanding
to 17.2 percent.
n Free Cash Flow approaching
$1 billion.
Asia in 2012, up two percentage points
from the prior year. We look for this
global growth trend to continue as we
leverage the strength of our expanded
product, technology and service offer-
ings to new customers in markets such
as the Middle East, Asia-Pacific and
South America.
n Our annual dividend increasing
In addition to our investments to
11 percent, marking the 57th
support organic growth and value
consecutive year of growth.
added strategic acquisitions, we have
The continued growth and opportunities
in the segment will be driven by two
primary factors. First, the demand for
better communications, especially au-
dio in handsets, surges on. Second, the
quest for enhanced communications is
now global in scope. In many cases we
are just scratching the surface on global
penetration. Communication Technolo-
gies’ unique capabilities will provide an
excellent opportunity to capitalize on
We were again quite active in acquiring
market-leading businesses by invest-
ing a total of $1.2 billion in 2012, and in
the process, we significantly enhanced
our Company’s position in our growth
spaces of energy, communication com-
ponents, refrigeration & food service
equipment, fluid solutions and product
identification. In particular, the addi-
tion of Anthony in our refrigeration and
food equipment space enabled us to
gain access to new markets and new
geographies, with an increased product
offering led by the exciting “close the
case” trend; the acquisition of Maag
Pump greatly improves our overall fluids
position through the expansion of our
product portfolio and technological
remained committed in our focus on
this tailwind.
returning capital to shareholders. We
continued our long history of dividend
increases by raising the annual dividend
11 percent to $1.40. Also, late in the year
we began execution on a new $1 billion
share repurchase program.
Our performance and accomplishments
are clearly an indication of the strength
and responsiveness of the leadership
across all of Dover. Let’s take a closer
look at the year’s highlights from each
of our Segments.
Dover Communication Technologies
At Communication Technologies, the
In the largest end-market in this seg-
ment, Consumer Electronics, our MEM’s
activity was again very strong reflecting
the breadth of our OEM coverage and
the benefits of multiple design wins.
The combination of our MEMS micro-
phone business, with our speaker and
receiver product offerings from Sound
Solutions, has made us the recognized
leader in acoustics products to the
handset market.
New multi microphone applications
using our technology continue to
emerge. OEM’s continue to focus on
consumer electronics market continued
noise reduction for clearer voice calls,
to be very strong, especially in the area
and noise cancellation to better hear
of smart phones. This activity helped
the person speaking. The key here is
6
7
“I am very pleased with our 2012 financial results and with the significant progress we
have made this year, and over the last several years, in strengthening our Company.”
Robert A. Livingston, President and CEO
that all these applications require more
world. We have grown at a 35 percent
As one of two segment platforms, Fluids
microphones. In the nearly 2 billion unit
CAGR over the last three years outside
delivered over $800 million in revenue
handset market we saw an increase
of North America and Europe, driven
through their focus on pumps, heat
in microphones per phone, and in the
by the increasing need for artificial lift
exchangers and dispensing equipment.
smart phone market some new phones
products and services in international
Fluids’ revenue grew 21 percent for the
are using three microphones. We believe
markets that didn’t traditionally deploy
full year driven by our continued acqui-
the consumer benefits of these added
such technologies. We expect this
sition investments in the pump space.
microphones will support strong growth
growth to continue as a result of the
We have also accelerated our invest-
well into the future.
significant investments we have made
ments in China, India and Brazil over
In the speaker and receiver product
category, we are introducing several new
to support demand in Latin America, the
Middle East and Australia.
the last few years with increased sales,
engineering and operating capabilities.
products this year, including launching
Through our growth initiatives, we be-
our N’Bass™ speaker with enhanced
lieve we have one of the most complete
audio performance. These new products
product sets around, and we’re proud
are the key to our success going forward.
our customers continually choose our
A key end-market in Medical Technol-
ogy is the hearing aid market, which
strong lineup of products to help them
win in their markets.
continues to benefit from an aging popu-
The macro trends continue to remain in
lation and growth of the consumer class
place: the continuing need for artificial
in emerging markets. In Aerospace/
lift due to the maturation of energy
Defense we continue to see strong sales
fields; the increasing demand for more
in commercial aerospace.
sustainable and efficient products
Communication Technologies clearly
offers a broad portfolio of products and
comprehensive spectrum of manufac-
turing technologies. This segment is
extremely well positioned in exciting
markets and poised for strong growth
in 2013.
Dover Energy
The Energy segment had another
excellent year in 2012 with sales now
representing 27 percent of our annual
revenue. For the year, Energy set records
in bookings, sales, earnings, and mar-
gins. Segment revenue grew 14 percent
over the prior year to $2.2 billion, with
9 percent organic growth and 5 percent
and solutions that meet the ever-
growing regulations; and the increasing
demand for upgraded infrastructure
worldwide, including fueling stations
and power plants.
We’re in attractive markets with solid
long term outlooks, and have the prod-
ucts and capabilities to capture the
multiple opportunities in front of us.
Our Energy segment is extremely well
positioned and will continue to outgrow
our markets and grow globally.
Dover Engineered Systems
Engineered Systems, at $3.4 billion of
sales, is our largest segment and rep-
resents 42 percent of our total revenue.
coming from acquisitions.
This segment also achieved record
Energy’s technologies and capabilities
have positioned us well not only in
North America, but also around the
financial results with year over year rev-
enue increasing 10 percent and earnings
exceeding half a billion dollars.
6
7
Going forward, our strategy for Fluids
remains the same. First, we intend to
expand our vertical end markets through
acquisitions and by driving
alliances with key multi-national cus-
tomers across their geographic locations
with our comprehensive portfolio of
products and global operating footprint.
Secondly, we will leverage our strong
North American and European technical
and product positions as energy, chemi-
cal, food and pharmaceutical industry
activity increases with the growth in
emerging markets.
The Refrigeration and Industrial platform
generated over $2.6 billion in revenue
and consists primarily of refrigeration
and food equipment, and other industri-
al businesses. We see the strong secular
trends in refrigeration continuing to
drive demand due to:
n Retailers continuing to focus
on profitability and cost savings.
Our technology, especially “close-the-
case,” offers significant energy
savings versus traditional open cases.
n The ongoing importance of sustain-
ability initiatives around the use of
refrigerants. We offer our customers a
broad spectrum of products that
reduce or eliminate the need for tradi-
tional refrigerants.
Rounded corners=0.01
Rounded corners=0.01
Rounded corners=0.01
n
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n Retailers looking to drive customer
While clearly impacted by the European
On the product side, numerous new re-
traffic in their stores through
economy, Printing & Identification
leases, including our new Laser offering,
innovative merchandising. We have
has been able to deliver solid organic
have enhanced our product portfolio. In
a leading position in customized
growth of over 6 percent over the last
addition to our new array of products,
traditional and specialty cases.
three years in the fast moving consumer
our enhanced customer facing resources
n The growth of the consumer class
goods market.
in developing economies where
better refrigeration products are
becoming increasingly critical to
ensure the safe storage of food.
Revenue vs. Continuing Earnings
In addition to refrigeration, look for
($ in millions)
Revenue vs. Continuing Earnings
($ in millions)
Revenue vs. Continuing Earnings
($ in millions)
Engineered Systems to launch many
Printing & Identification has a very
solid presence in the $4 billion marking
and coding market which features high
recurring revenues and strong margins.
Free Cash Flow
Free Cash Flow
Our customers in this market count on
($ in millions)
($ in millions)
us to provide a full range of printers,
Free Cash Flow
($ in millions)
new offerings in 2013 that will drive
$900
$900
strong growth. Our new products have
$8,000
$8,000
$8,000
$900
enhanced patented or proprietary ele-
675
ments that further secure our ability to
6,000
6,000
6,000
675
675
drive recurring revenue stemming from
450
4,000
4,000
4,000
450
450
consumables and service; a continuous
$5.00
$1,000
focus on solving their marking and cod-
$1,000
20%
20%
20%
$5.00
$1,000
ing challenges through the introduction
3.75
of world-class technologies; and a local
750
750
15
15
15
3.75
750
sales and service presence. Through
10
10
10
2.50
2.50
500
500
500
service and/or maintenance.
strong execution in each of these areas,
2,000
225
Overall Engineered Systems had a very
2,000
2,000
225
225
0
0
0
strong 2012 and we’re very excited
0
0
about their opportunities going forward.
2008 2009 2010 2011 2012
2008 2009 2010 2011 2012
2008 2009 2010 2011 2012
Revenue
Revenue
Revenue
Dover Printing & Identification
Earnings from Continuing Operations
Earnings from Continuing Operations
Earnings from Continuing Operations
The Printing & Identification segment
0
we have maintained a very strong recur-
1.25
250
250
5
5
5
1.25
250
ring revenue stream of approximately
0
60 percent of revenue which connects
0
0
0
0
0
0
2008 2009 2010 2011 2012
2008 2009 2010 2011 2012
2008 2009 2010 2011 2012
Free Cash Flow
Free Cash Flow as a % of Revenue
us closely with our customers. With
Free Cash Flow
Free Cash Flow
respect to Printing & Identification’s
Free Cash Flow as a % of Revenue
Free Cash Flow as a % of Revenue
and attention to customer needs will
serve us very well going forward.
As we exited the year we saw the begin-
ning of stabilizing markets in Europe,
which also bodes well. We’re excited
EPS Growth
EPS Growth
with Printing & Identification’s opportu-
EPS Growth
nities in 2013.
Our Strengthened Company
$120
$5.00
Through our ongoing development of
$120
$120
innovative products, focused growth ini-
90
3.75
tiatives, targeted acquisitions and deep
90
90
customer engagement, we continue to
2.50
build upon our strengths and enhance
60
60
60
our reputation as a global industrial
1.25
30
30
30
manufacturing leader. We have contin-
0
0
ued to execute on building our five key
2008 2009 2010 2011 2012
growth spaces, all of which have posi-
2008 2009 2010 2011 2012
2008 2009 2010 2011 2012
0
0
0
Dover
Dover
Dover S&P 500
Dover S&P 500
Dover
Dover S&P 500
tive secular trends and strong long-term
is highly focused on the broad
Revenue vs. Continuing Earnings
Revenue vs. Continuing Earnings
and global fast moving consumer
($ in millions)
($ in millions)
Revenue vs. Continuing Earnings
($ in millions)
goods and industrial markets. This
Free Cash Flow
Free Cash Flow
($ in millions)
($ in millions)
world’s growth in packaging in the next
Free Cash Flow
($ in millions)
three years will come from the emerg-
EPS Growth
EPS Growth
EPS Growth
spaces have now grown to nearly 80
percent of our total revenue, up from
ing economies. We have been investing
56 percent in 2009. The 28 companies
global presence, three-fourths of the
growth prospects. Our sales in these
$8,000
segment recorded nearly $1 billion of
$8,000
$1,000
sales and continued to improve margins
$8,000
$900
$900
$900
$1,000
in people and infrastructure in these
$5
20%
$1,000
regions to address this growth and late
20%
20%
$5
$5
last year expanded our production facil-
750
ity in China. By approximately doubling
3.75
3.75
15
15
15
3.75
that we’ve acquired since 2009, and
$120
their subsequent successful integration
$120
$120
within our operations, have played a
90
90
90
key role in helping Dover achieve the
2.50
our capacity in China, we will greatly
500
2.50
10
10
10
2.50
60
leadership position it has today. We see
60
60
improve our ability to meet the growing
5
250
demand in this region.
1.25
1.25
5
5
1.25
ample room for growth and will continue
30
to pursue opportunities to expand in
30
30
during the year. The businesses in this
750
6,000
6,000
675
675
675
6,000
segment are all leaders in their fields
and will deliver consistent growth and
4,000
4,000
4,000
450
450
450
500
750
500
improved profitability.
2,000
2,000
2,000
225
225
225
250
250
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
these spaces.
0
0
0
2008 2009 2010 2011 2012
2008 2009 2010 2011 2012
2008 2009 2010 2011 2012
Revenue
Earnings from Continuing Operations
Revenue
Earnings from Continuing Operations
Revenue
Earnings from Continuing Operations
Value Creation
Value Creation
($ in millions)
($ in millions)
Value Creation
($ in millions)
2008 2009 2010 2011 2012
2008 2009 2010 2011 2012
2008 2009 2010 2011 2012
Free Cash Flow
Free Cash Flow as a % of Revenue
Free Cash Flow
Free Cash Flow as a % of Revenue
Free Cash Flow
Free Cash Flow as a % of Revenue
2008 2009 2010 2011 2012
2008 2009 2010 2011 2012
2008 2009 2010 2011 2012
Dover
Dover
Dover S&P 500
Dover S&P 500
Dover
Dover S&P 500
Long-Term Investment
($ in millions)
Long-Term Investment
($ in millions)
Long-Term Investment
($ in millions)
Profitability Measures
Profitability Measures
Profitability Measures
$12,000
$12,000
$12,000
$5,000
$5,000
$5,000
$1,500
$1,500
$1,500
$300
$300
$300
20%
20%
20%
20%
20%
20%
9,000
9,000
9,000
3,750
3,750
3,750
1,125
1,125
1,125
225
225
225
15
15
15
6,000
6,000
6,000
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2008 2009 2010 2011 2012
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2008 2009 2010 2011 2012
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2008 2009 2010 2011 2012
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2008 2009 2010 2011 2012
2008 2009 2010 2011 2012
2012 Revenue by Region
2012 Revenue by Region
2012 Revenue by Region
Five Year Return*
Five Year Return*
Five Year Return*
8
Cash Dividends & Stock Price
Cash Dividends & Stock Price
Cash Dividends & Stock Price
$2,000
$2,000
$2,000
$1.60
$1.60
$1.60
$60
$60
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1,500
1,500
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2008 2009 2010 2011 2012
2008 2009 2010 2011 2012
2008 2009 2010 2011 2012
2008 2009 2010 2011 2012
2008 2009 2010 2011 2012
2008 2009 2010 2011 2012
■ North America
■ North America
■ North America
■ Europe
■ Europe
■ Europe
■ Other Americas
■ Other Americas
■ Other Americas
■ Total Asia
■ Total Asia
■ Total Asia
2012 Revenue by Segment
2012 Revenue by Segment
2012 Revenue by Segment
$100 invested on 12/31/07 in Dover Stock or the S&P 500 including
$100 invested on 12/31/07 in Dover Stock or the S&P 500 including
$100 invested on 12/31/07 in Dover Stock or the S&P 500 including
reinvestement of Dividends
reinvestement of Dividends
reinvestement of Dividends
2012 Revenue by Region for Fact Sheet
2012 Revenue by Region for Fact Sheet
2012 Revenue by Region for Fact Sheet
27%
27%
27%
42%
42%
42%
19%
19%
19%
12%
12%
12%
■ Communication
■ Communication
■ Communication
Technologies
Technologies
Technologies
■ Energy
■ Energy
■ Energy
■ Engineered
■ Engineered
■ Engineered
Systems
Systems
Systems
■ Printing &
■ Printing &
■ Printing &
Identification
Identification
Identification
■ North America
■ North America
■ North America
■ Europe
■ Europe
■ Europe
■ Other Americas
■ Other Americas
■ Other Americas
■ Total Asia
■ Total Asia
■ Total Asia
15
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9
Rounded corners=0.01
Revenue vs. Continuing Earnings
($ in millions)
Free Cash Flow
($ in millions)
EPS Growth
$8,000
$900
$1,000
20%
$5.00
$120
6,000
4,000
2,000
0
675
450
225
0
750
500
250
0
15
10
5
0
3.75
2.50
1.25
0
2008 2009 2010 2011 2012
2008 2009 2010 2011 2012
2008 2009 2010 2011 2012
Revenue
Free Cash Flow
Earnings from Continuing Operations
Free Cash Flow as a % of Revenue
Dover
Dover S&P 500
Revenue vs. Continuing Earnings
($ in millions)
Free Cash Flow
($ in millions)
EPS Growth
$8,000
$900
$1,000
20%
675
450
225
0
750
500
250
0
$5
3.75
2.50
1.25
0
15
10
5
0
90
60
30
0
$120
90
60
30
0
2008 2009 2010 2011 2012
2008 2009 2010 2011 2012
2008 2009 2010 2011 2012
Revenue
Free Cash Flow
Earnings from Continuing Operations
Free Cash Flow as a % of Revenue
Dover
Dover S&P 500
Value Creation
($ in millions)
Long-Term Investment
($ in millions)
Profitability Measures
$12,000
$5,000
$1,500
$300
20%
20%
3,750
2,500
1,250
0
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t
i
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150
75
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2008 2009 2010 2011 2012
2008 2009 2010 2011 2012
2008 2009 2010 2011 2012
Page 9 in Letter
2012 Revenue by Region
Five Year Return*
Cash Dividends & Stock Price
Cash Dividends & Stock Price
2012 Revenue by Region
$2,000
1,500
1,000
500
0
n
o
i
t
a
r
o
p
r
o
C
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$1.60
$1.60
1.20
1.20
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5
P
&
S
2012 Revenue by Segment
$100 invested on 12/31/07 in Dover Stock or the S&P 500 including
reinvestement of Dividends
2012 Revenue by Region for Fact Sheet
2008 2009 2010 2011 2012
2008 2009 2010 2011 2012
2008 2009 2010 2011 2012
$72
$60
54
45
36
18
0
15
30
e
c
i
r
P
k
c
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t
S
g
n
i
s
o
C
0
l
7%
8%
15%
15%
19%
18%
■ North America
■ Asia
■ Europe
■ Rest of World
59%
59%
e
c
i
r
P
k
c
o
t
S
g
n
i
s
o
C
l
6,000
4,000
2,000
0
9,000
6,000
3,000
0
n
o
i
t
a
z
i
l
a
t
i
p
a
C
t
e
k
r
a
M
■ North America
■ Europe
■ Other Americas
■ Total Asia
Fact Sheet
2012 Revenue by Region
7%
15%
19%
59%
■ North America
■ Asia
■ Europe
■ Rest of World
27%
19%
42%
12%
■ Communication
Technologies
■ Energy
■ Engineered
Systems
■ Printing &
Identification
To continue efforts to focus on our key
growth spaces, we announced our intent
■ North America
■ Europe
■ Other Americas
■ Total Asia
growth spaces and I am excited about
a new manufacturing plant in Oklahoma
the prospects in all four segments.
for our growing Heat Exchanger busi-
to divest our businesses serving the
electronic assembly and test markets.
Although these were very solid busi-
nesses and leaders in their respective
niches, the volatility of their end-mar-
kets had an impact on the consistency of
our results. We believe that by finding a
new owner for these businesses, as we
did with our construction businesses in
late 2011, we will greatly improve the
consistency of our future results.
During the year we also continued to
make significant progress on our pro-
ductivity and scale initiatives. Progress
on these initiatives was driven through
focus on our supply chain, shared
manufacturing and services, and lean
activities. We also continued to benefit
from our talent development initia-
tive, as several promotions of internal
candidates were made to key positions,
including company Presidents.
I am very pleased with our 2012 results
and with the significant progress
we have made this year, and over the
last several years, in strengthening
our Company.
Closing Thoughts
The continuing consumer demand for
better audio in mobile devices will help
drive growth at Communication
Technologies, as another strong year
for smart phones is predicted.
Global expansion opportunities in
production and downstream, along
with constructive oil prices, will fuel
Energy’s growth.
I expect a very strong year of growth
for both platforms within Engineered
Systems. In Fluids, we will leverage
our recent acquisitions and continue
to expand geographically, while in
Refrigeration and Industrial, growth will
be driven by customer wins, an active
remodel market, our expanded product
offerings, and recent acquisitions, such
as Anthony.
Printing & Identification will benefit and
grow from an expansion of core applica-
tions and the release of several exciting
new product launches.
To help facilitate our continued growth
in 2013, we will be investing to ensure
we deliver seamless support and service
to our customers. To this effect, our
ness; and a new facility in Houston to
serve the Energy market. These projects,
along with the ongoing innovation
investments, will help ensure that our
advancing technology positions us to
help our customers win in their markets.
Dover’s successes would not be pos-
sible without the outstanding efforts of
our employees around the world who
focus on serving our customers and
achieving results on a daily basis. You
all truly deserve a big thank you.
I am also grateful to our customers and
suppliers for their continuing support
and confidence in our products and
services. In addition, I thank the Board
of Directors for their continuing support
and guidance.
I continue to remain very excited
about Dover and am confident that
2013 will be another year of growth for
our Company.
Sincerely,
As I look to 2013, I remain very confident
in the positions we hold in our five key
investment plans include: a manufactur-
Robert A. Livingston
ing facility in the Philippines to support
President and CEO
Communication Technologies’ markets;
February 15, 2013
8
9
11–YEAR CONSOLIDATED SUMMARY OF FINANCIAL DATA
(dollars in thousands, except per share figures)
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
Dover Continuing Operations:
Revenue
$8,104,339
$7,369,154
$6,109,507
$5,055,796
$6,233,670
$5,911,051
$5,193,512
$4,308,820
$3,540,820
$2,974,272
$2,741,543
Cost of goods and services
4,997,274
4,524,351
3,686,861
3,123,655
3,883,173
3,695,613
3,274,215
2,759,698
2,255,023
1,877,918
1,749,460
Selling and administrative expenses
1,841,688
1,720,954
1,499,597
1,320,858
1,461,059
1,367,752
1,179,330
999,942
Interest expense, net
Other expense (income), net
Earnings before provision for taxes
and discontinued operations
Provision for income taxes
121,141
6,665
115,525
(1,938)
1,137,571
1,010,262
304,452
237,076
106,371
3,556
813,122
193,625
100,384
(4,382)
515,282
124,577
96,140
(9,830)
803,128
225,772
90,155
281
77,092
5,609
72,504
(9,518)
852,439
60,803
(10,505)
737,834
646,920
62,109
1,159
64,364
17,453
757,249
657,266
486,195
383,060
295,252
210,994
182,921
138,108
105,206
72,223
263,345
50,895
Earnings from continuing operations
$
833,119
$ 773,186
$ 619,497
$ 390,705
$ 579,376
$ 536,613
$ 463,208
$ 347,435
$ 273,605
$ 220,145
$ 209,884
% of revenue
10.3%
10.5%
10.1%
7.7%
9.3%
9.1%
8.9%
8.1%
7.7%
7.4%
7.7%
Diluted earnings per common share:
Earnings from continuing operations
$
4.53
$
4.09
$
3.27
$
2.09
$
3.06
$
2.64
$
2.25
$
1.70
$
1.34
$
1.08
$
1.03
Depreciation and amortization
Net property, plant and equipment
357,585
1,167,052
290,477
970,703
229,237
756,484
217,982
731,017
216,585
757,906
196,355
755,613
164,299
680,717
127,618
584,662
107,726
495,963
101,127
467,874
102,308
433,195
Total assets – continuing operations
10,046,398
9,013,692
7,397,544
6,747,537
6,682,074
6,600,353
6,017,540
4,959,769
3,980,752
3,398,958
2,871,541
Total debt
Capital expenditures
Adjusted working capital (1)
2,800,116
2,187,252
1,807,476
1,860,884
2,084,173
2,087,652
1,766,540
1,538,335
1,090,393
1,065,671
1,050,170
297,012
262,676
169,297
1,447,381
1,336,808
1,101,001
108,639
929,593
160,489
155,220
171,437
1,044,596
1,082,390
1,065,601
113,586
886,335
68,961
820,290
59,957
683,364
62,667
633,175
Total Dover:
Diluted earnings (loss) per common share (2)
Return on average equity (3)
Dividends per common share
Book value per common share
Acquisitions
Stockholders’ equity
Common shares outstanding
Weighted average shares outstanding - Diluted
$
$
$
4.41
16.5%
1.33
28.16
$
$
$
4.74
18.9%
1.18
26.86
$ 1,181,043
$ 1,342,461
$
$
$
$
3.70
16.3%
1.07
24.27
$
$
$
1.91
9.1%
1.02
21.85
104,418
$ 228,394
103,761
$ 273,610
$ 1,116,780
$ 1,089,650
$ 502,545
$ 362,062
99,710
$
$
$
$
3.12
15.3%
0.90
20.40
$
$
$
3.26
17.0%
0.77
20.34
$
$
$
2.73
15.7%
0.71
18.65
$
$
$
2.50
15.8%
0.66
16.41
$
$
$
2.02
14.1%
0.62
15.33
$
$
$
11.4%
0.57
13.52
1.44
$
(0.60)
7.0%
0.54
11.83
$
$
$
$ 4,919,230
$4,930,555
$ 4,526,562
$ 4,083,608
$ 3,792,866
$ 3,946,173
$ 3,811,022
$ 3,329,523
$ 3,118,682
$ 2,742,671
$ 2,394,834
174,718
183,993
183,591
188,887
186,488
189,170
186,876
186,736
185,967
189,269
194,039
202,918
204,305
205,497
202,849
204,177
203,497
204,786
202,913
203,614
202,402
203,346
Closing common stock price per share
$
65.71
$
58.05
$
58.45
$
41.61
$
32.92
$
46.09
$
49.02
$
40.49
$
41.94
$
39.75
$
29.16
Number of employees
37,416
33,827
31,962
29,318
32,586
34,561
34,153
32,465
28,102
25,729
24,934
(1) Adjusted working capital is a non-GAAP measure defined as accounts receivable plus inventory less accounts payable.
(2) 2002 EPS includes $293 million, net of tax, or $1.44 EPS, of goodwill impairment from the adoption of SFAS 142.
(3) 2002 has been adjusted by the item in footnote 2 above.
10
11
Dover Continuing Operations:
Revenue
Interest expense, net
Other expense (income), net
Earnings before provision for taxes
and discontinued operations
Provision for income taxes
Diluted earnings per common share:
Total Dover:
Diluted earnings (loss) per common share (2)
Return on average equity (3)
Dividends per common share
Book value per common share
Acquisitions
Stockholders’ equity
Common shares outstanding
(dollars in thousands, except per share figures)
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
Cost of goods and services
4,997,274
4,524,351
3,686,861
3,123,655
3,883,173
3,695,613
3,274,215
2,759,698
2,255,023
1,877,918
1,749,460
$8,104,339
$7,369,154
$6,109,507
$5,055,796
$6,233,670
$5,911,051
$5,193,512
$4,308,820
$3,540,820
$2,974,272
$2,741,543
Selling and administrative expenses
1,841,688
1,720,954
1,499,597
1,320,858
1,461,059
1,367,752
1,179,330
999,942
121,141
6,665
115,525
(1,938)
1,137,571
1,010,262
304,452
237,076
106,371
3,556
813,122
193,625
100,384
(4,382)
515,282
124,577
96,140
(9,830)
803,128
225,772
90,155
281
77,092
5,609
72,504
(9,518)
852,439
60,803
(10,505)
737,834
646,920
62,109
1,159
64,364
17,453
757,249
657,266
486,195
383,060
295,252
210,994
182,921
138,108
105,206
72,223
263,345
50,895
Earnings from continuing operations
$
833,119
$ 773,186
$ 619,497
$ 390,705
$ 579,376
$ 536,613
$ 463,208
$ 347,435
$ 273,605
$ 220,145
$ 209,884
% of revenue
10.3%
10.5%
10.1%
7.7%
9.3%
9.1%
8.9%
8.1%
7.7%
7.4%
7.7%
Earnings from continuing operations
$
4.53
$
4.09
$
3.27
$
2.09
$
3.06
$
2.64
$
2.25
$
1.70
$
1.34
$
1.08
$
1.03
Depreciation and amortization
Net property, plant and equipment
357,585
1,167,052
290,477
970,703
229,237
756,484
217,982
731,017
216,585
757,906
196,355
755,613
164,299
680,717
127,618
584,662
107,726
495,963
101,127
467,874
102,308
433,195
Total assets – continuing operations
10,046,398
9,013,692
7,397,544
6,747,537
6,682,074
6,600,353
6,017,540
4,959,769
3,980,752
3,398,958
2,871,541
Total debt
Capital expenditures
Adjusted working capital (1)
2,800,116
2,187,252
1,807,476
1,860,884
2,084,173
2,087,652
1,766,540
1,538,335
1,090,393
1,065,671
1,050,170
297,012
262,676
169,297
1,447,381
1,336,808
1,101,001
108,639
929,593
160,489
155,220
171,437
1,044,596
1,082,390
1,065,601
113,586
886,335
68,961
820,290
59,957
683,364
62,667
633,175
$
$
$
4.41
16.5%
1.33
28.16
$
$
$
4.74
18.9%
1.18
26.86
3.70
16.3%
1.07
24.27
$
$
$
$
$
$
$
1.91
9.1%
1.02
21.85
$ 1,181,043
$ 1,342,461
104,418
$ 228,394
$
$
$
$
3.12
15.3%
0.90
20.40
$
$
$
3.26
17.0%
0.77
20.34
$
$
$
2.73
15.7%
0.71
18.65
$
$
$
2.50
15.8%
0.66
16.41
$
$
$
2.02
14.1%
0.62
15.33
$
$
$
11.4%
0.57
13.52
103,761
$ 273,610
$ 1,116,780
$ 1,089,650
$ 502,545
$ 362,062
7.0%
0.54
11.83
99,710
$
$
$
1.44
$
(0.60)
Weighted average shares outstanding - Diluted
174,718
183,993
183,591
188,887
186,488
189,170
186,876
186,736
185,967
189,269
194,039
202,918
204,305
205,497
202,849
204,177
203,497
204,786
202,913
203,614
202,402
203,346
Closing common stock price per share
$
65.71
$
58.05
$
58.45
$
41.61
$
32.92
$
46.09
$
49.02
$
40.49
$
41.94
$
39.75
$
29.16
Number of employees
37,416
33,827
31,962
29,318
32,586
34,561
34,153
32,465
28,102
25,729
24,934
$ 4,919,230
$4,930,555
$ 4,526,562
$ 4,083,608
$ 3,792,866
$ 3,946,173
$ 3,811,022
$ 3,329,523
$ 3,118,682
$ 2,742,671
$ 2,394,834
10
11
BOARD OF DIRECTORS
Kristiane C. Graham 2, 3
Private Investor
Michael F. Johnston 1
Former Chairman &
Chief Executive Officer,
Visteon Corporation
Robert A. Livingston
President &
Chief Executive Officer,
Dover Corporation
Richard K. Lochridge 2
Former President,
Lochridge & Company, Inc.
Bernard G. Rethore 1
Chairman Emeritus &
Former President &
Chief Executive Officer,
Flowserve Corporation
Michael B. Stubbs 1
Private Investor
EXECUTIVE OFFICERS
Thomas W. Giacomini
President & Chief Executive Officer,
Dover Engineered Systems
John F. Hartner
President & Chief Executive Officer,
Dover Printing & Identification
Jeffrey S. Niew
President & Chief Executive Officer,
Dover Communication Technologies
William W. Spurgeon, Jr.
President & Chief Executive Officer,
Dover Energy
David H. Benson 3
Senior Advisor,
Fleming Family & Partners
Robert W. Cremin 2, 3
Former Chairman,
President & Chief
Executive Officer,
Esterline Technologies
Corporation
Jean-Pierre M. Ergas 2, 3
Former Chairman &
Chief Executive Officer,
BWAY Corporation
Peter T. Francis 2
Former Chairman,
President & Chief
Executive Officer,
J.M. Huber Corporation
Robert A. Livingston
President &
Chief Executive Officer
Ivonne M. Cabrera
Senior Vice President,
General Counsel & Secretary
Brad M. Cerepak
Senior Vice President &
Chief Financial Officer
Jay L. Kloosterboer
Senior Vice President,
Human Resources
Stephen R. Sellhausen
Senior Vice President,
Corporate Development
Niclas Ytterdahl
Senior Vice President,
Global Sourcing
Stephen M. Todd 1
Former Global Vice Chairman,
Assurance Professional
Practice of Ernst &
Young Global Limited
Stephen K. Wagner 1, 3
Former Senior Advisor, Center
for Corporate Governance,
Deloitte & Touche LLP
Mary A. Winston 1
Executive Vice President &
Chief Financial Officer,
Family Dollar Stores, Inc.
1 Members of Audit Committee
2 Members of Compensation Committee
3 Members of Governance &
Nominating Committee
Kevin P. Buchanan
Vice President, Tax
C. Anderson Fincher
Executive Vice President,
Dover Engineered Systems
Paul E. Goldberg
Vice President,
Investor Relations
Raymond T. McKay, Jr.
Vice President & Controller
Brian P. Moore
Vice President & Treasurer
James H. Moyle
Executive Vice President,
Dover Engineered Systems
Sivasankaran Somasundaram
Executive Vice President,
Dover Energy
Michael Y. Zhang
President, Asia
12
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, 2012
Commission File Number: 1-4018
Dover Corporation
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
53-0257888
(I.R.S. Employer
Identification No.)
3005 Highland Parkway
Downers Grove, Illinois 60515
(Address of principal executive offices)
Registrant's telephone number: (630) 541-1540
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Common Stock, par value $1
Name of Each Exchange on Which Registered
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
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
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
No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, 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
No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) 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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2
of the Exchange Act. (Check one):
Large accelerated filer
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 in Rule 12b-2 of the Exchange Act). Yes
No
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 on June 30, 2012 was $9,799,921,456. The registrant’s closing price as reported on the New York Stock Exchange-
Composite Transactions for June 30, 2012 was $53.61 per share. The number of outstanding shares of the registrant’s common
stock as of February 8, 2013 was 174,679,432.
Documents Incorporated by Reference: Part III — Certain Portions of the Proxy Statement for Annual Meeting of Shareholders
to be held on May 2, 2013 (the “2013 Proxy Statement”).
Special Note Regarding Forward-Looking Statements
This Annual Report on Form 10-K, especially “Management’s Discussion and Analysis of Financial Condition and Results of
Operations”, 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 businesses
operate and the U.S. and global economies. Statements in this Form 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,” “indicates,” “suggests,” “will,”
“plans,” “projects,” “expects,” “believes,” “should,” “would,” “could,” “hope,” “forecast,” “management is of the opinion,” or
the 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 materially from current expectations including, but not limited to, the state of the worldwide
economy and sovereign credit, especially in Europe; political events that could impact the worldwide economy; the impact of
natural disasters and their effect on global supply chains and energy markets; current economic conditions and uncertainties in
the credit and capital markets; instability in countries where Dover conducts business; possible future terrorist threats and their
effect on the worldwide economy; the ability of Dover’s businesses to expand into new geographic markets and to anticipate
and meet customer demands for new products and product enhancements; increased competition and pricing pressures in the
markets served by Dover’s businesses; the impact of loss of a single-source manufacturing facility; changes in customer demand
or loss of a significant customer; the relative mix of products and services which impacts margins and operating efficiencies;
short-term capacity constraints; increases in the cost of raw materials; domestic and foreign governmental and public policy
changes including environmental regulations, conflict mineral disclosure requirements, and tax policies (including domestic
and international export subsidy programs, R&E credits and other similar programs); protection and validity of patent and other
intellectual property rights; the ability to identify and successfully consummate value-adding acquisition opportunities; the
Company’s ability to achieve expected savings from integration, synergy and other cost-control initiatives; unforeseen
developments in contingencies such as litigation; international economic conditions including interest rate and currency exchange
rate fluctuations; and a downgrade in Dover’s credit ratings. 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.
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PART I
TABLE OF CONTENTS
Business
Item 1.
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 2.
Item 3.
Item 4.
Properties
Legal Proceedings
Mine Safety Disclosures
Executive Officers of the Registrant
PART II
Item 5.
Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of
Equity Securities
Selected Financial Data
Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 6.
Item 7.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Item 8.
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Directors and Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of certain Beneficial Owners and Management and Related Shareholder
Matters
Certain Relationships and Related Transactions and Director Independence
Principal Accountant Fees and Services
PART IV
Exhibits, Financial Statement Schedules
Item 15.
SIGNATURES
EXHIBIT INDEX
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ITEM 1. BUSINESS
Overview
PART I
Dover Corporation is a diversified global manufacturer focusing on innovative equipment and components, specialty systems,
and support services provided through its four major operating segments: Communication Technologies, Energy, Engineered
Systems, and Printing & Identification. The Company's entrepreneurial business model encourages, promotes, and fosters deep
customer engagement, which has lead to Dover's well-established and valued reputation for providing superior customer service
and industry-leading product innovation. Unless the context indicates otherwise, references herein to “Dover,” “the Company,”
and words such as “we,” “us,” and “our” include Dover Corporation and its subsidiaries. Dover was incorporated in 1947 in the
State of Delaware and became a publicly traded company in 1955. Dover is headquartered in Downers Grove, Illinois and
currently employs approximately 35,000 people worldwide within its continuing operations.
Our Communication Technologies segment is engaged in the design and manufacture of innovative products and components
in the consumer electronics, medical technology, aerospace/defense, and telecom/other markets. Our Energy segment provides
highly-engineered solutions for the safe and efficient extraction and handling of oil and gas in the drilling, production, and
downstream markets. Our Engineered Systems segment is comprised of two platforms, Fluid Solutions and Refrigeration &
Industrial, which are industry leaders in the fluids systems, refrigeration and food equipment, and certain other industrial markets.
Our Printing & Identification segment provides integrated printing, coding, and dispensing solutions for the consumer goods,
food, pharmaceutical, and industrial markets.
The following table shows the percentage of total revenue and segment earnings generated by each of our four segments for the
years ended December 31, 2012, 2011 and 2010:
Communication Technologies
Energy
Engineered Systems
Printing & Identification
Management Philosophy
2012
Revenue
2011
2010
19%
27%
42%
12%
18%
26%
42%
14%
18%
21%
46%
15%
Segment Earnings
2011
2012
2010
16%
39%
35%
10%
18%
36%
35%
11%
19%
30%
37%
14%
Our 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. Our operating structure of four business segments and two
platforms allows for focused acquisition activity, accelerates opportunities to identify and capture operating synergies, including
global sourcing and supply chain integration, and advances the development of our executive talent. Our segment and executive
management set strategic direction, initiatives and goals, provide oversight, allocate and manage capital, are responsible for
major acquisitions, and provide other services. We foster an operating culture with high ethical standards, trust, respect, and
open communication, to allow individual growth and operational effectiveness.
In addition, we are committed to creating value for our customers, employees, and shareholders through sustainable business
practices that protect the environment and developing products that help our customers meet their sustainability goals. Our
companies are increasing their focus on efficient energy usage, greenhouse gas reduction, and waste management as they strive
to meet the global environmental needs of today and tomorrow.
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Company Goals
We are committed to driving shareholder return through three key objectives. First, we are committed to achieving annual organic
sales growth over the next three years (2013 through 2015) of 4% to 6%, complemented by acquisition growth of 3% to 5%
over the same period. Secondly, we continue to focus on segment margin expansion through productivity initiatives, including
supply chain activities, strategic pricing, and portfolio shaping. We are targeting segment margins of approximately 19% by
2015, representing an increase of roughly 200 basis points over our 2012 segment margins. Lastly, we are committed to generating
free cash flow as a percentage of sales of approximately 10% through disciplined capital allocation, strong performance,
productivity improvements, and active working capital management. We support these goals through (1) alignment of
management compensation with financial objectives, (2) well-defined and actively managed merger and acquisition processes,
and (3) talent development programs.
Business Strategy
To achieve our goals, we are focused on execution of the following three key business strategies:
Positioning ourselves for growth
We have aligned our business segments to focus on key-end markets that are well-positioned for future growth. In particular,
our businesses are well-positioned to capitalize on growth trends in the areas of global energy demand, sustainability, consumer
product safety, communications, and emerging economies. For instance, our Communication Technologies segment is positioned
to capitalize on growth in hand-held communications (handsets), medical technology, and aerospace/defense, with its complement
of micro audio components and communication components serving those markets. Our Energy segment is driven by a growing
demand for innovative extraction technologies. The growing demand from emerging economies, plus expanding exploration
activity around the globe will provide significant opportunities for this segment. Our Engineered Systems segment combines
its engineering technology, unique product advantages, and applications expertise to address market needs and requirements
including sustainability, consumer product safety, and growth in emerging economies, while our Printing & Identification segment
is responding to the growing requirements for consumer product safety and traceability technologies by providing integrated
printing, coding, and identification solutions with a global reach, in the growing markets of fast moving consumer goods and
industrial applications.
Capturing the benefits of common ownership
We are committed to operational excellence, and have implemented various productivity initiatives, such as supply chain
management, lean manufacturing, and facility consolidations to maximize our efficiency, coupled with workplace safety
initiatives to help ensure the health and welfare of our employees. We foster the sharing of best practices throughout the
organization. To ensure success, our businesses place strong emphasis on continual quality improvement and new product
development to better serve customers and expand into new product and geographic markets. We have also developed regional
support centers and shared manufacturing centers in China, Brazil, and India. Further, we continue to make significant investments
in talent development, recognizing that the growth and development of our employees are essential for our continued success.
Disciplined capital allocation
Our businesses generate annual free cash flow of approximately 10% of revenue. We are focused on the most efficient allocation
of our capital to maximize investment returns. To do this, we grow and support our existing businesses, with annual investment
in capital spending approximating 3.5% of revenue with a focus on internal projects to expand markets, develop products, and
boost productivity. We continue to evaluate our portfolio for strategic fit and intend to make additional acquisitions focused on
our key growth spaces: consumer electronics, energy, product ID, refrigeration and food equipment, and fluid solutions. We
consistently provide shareholder returns by paying dividends, which have increased annually over each of the last 57 years. We
will also continue to repurchase our shares per our previously announced share repurchase programs.
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Portfolio Development
Acquisitions
Our acquisition program has two key elements. First, we seek to acquire value creating add-on businesses that enhance our
existing businesses either through their global reach and customers, or by broadening their product mix. Second, in the right
circumstances, we will strategically pursue larger, stand-alone businesses that have the potential to either complement our existing
businesses or allow us to pursue innovative technologies within our key growth spaces. Over the past three years (2010 – 2012),
we have spent over $2.6 billion to purchase 22 businesses that strategically fit within our business model. This included the
largest acquisition in our history, that of Sound Solutions in July of 2011 for net purchase consideration of approximately $790
million. By enhancing the product offerings serving the high growth handset market, the acquisition of Sound Solutions has
enabled our Communication Technologies segment to be a global leader in audio components serving this market. In the fourth
quarter of 2012, we spent approximately $600 million to acquire Anthony International, a leading manufacturer of specialty
glass, commercial glass refrigerator and freezer doors, lighting systems, and display equipment. The acquisition of Anthony
expands our portfolio of industry-leading technology in the refrigeration space and provides access to new geographies and new
markets, most notably the convenience store market. Recent significant acquisitions have also included Harbison-Fischer, which
we acquired for approximately $400 million at the beginning of 2011 in order to enhance our artificial lift portfolio within our
Energy segment, Maag Pump Systems, a European acquisition for our Fluid Solutions platform, which we acquired in the first
quarter of 2012 for approximately $266 million, and Production Control Services, acquired in the second quarter of 2012 for
consideration totaling $220 million, which added to our artificial lift technology in our Energy segment.
For more details regarding acquisitions completed over the past two years, see Note 2 to the Consolidated Financial Statements
in Item 8 of this Form 10-K. Our future growth depends in large part on finding and acquiring successful businesses, as a
substantial number of our current businesses operate in relatively mature markets. While we expect to generate annual organic
growth of 4% - 5% over a long-term business cycle absent extraordinary economic conditions, sustained organic growth at these
levels for individual businesses is difficult to achieve consistently each year. Our success is also dependent on the ability to
successfully integrate our acquired businesses within our existing structure. To track post-merger integration and accountability,
we utilize an internal tool kit and defined processes to help ensure synergies are realized and value is created, as had been planned
when the acquisition was made.
Dispositions
We continually review our portfolio to evaluate whether our businesses continue to be essential contributors to our long-term
strategy. Occasionally, we may also make an opportunistic sale of one of our businesses based on specific market conditions
and strategic considerations. Accordingly, in an effort to reduce our exposure to cyclical markets and focus on our higher margin
growth spaces, during the past three years (2010 – 2012) we have sold four businesses for aggregate consideration of
approximately $517 million. Over the same period, disposals of a few minor non-core divisions of our businesses generated
additional proceeds of approximately $5 million. Additionally, in the fourth quarter of 2012, we initiated the sale of two
businesses in our Printing & Identification segment that serve the electronic assembly and test markets to reduce our exposure
to these cyclical markets. The financial position and results of operations for these businesses have been presented as discontinued
operations for all periods presented. For more details, see Note 3 to the Consolidated Financial Statements in Item 8 of this Form
10-K.
Business Segments
As noted previously, we currently operate through four business segments that are aligned with the key end-markets they serve
and comprise our operating and reportable segments: Communication Technologies, Energy, Engineered Systems, and Printing
& Identification. For financial information about our segments and geographic areas, see Note 16 to the Consolidated Financial
Statements in Item 8 of this Form 10-K.
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Communication Technologies
Our Communication Technologies segment serves the following major markets: consumer electronics, medical technology,
aerospace/defense, and telecom/other.
• Consumer electronics – Our businesses serving the consumer electronics market design, manufacture, and assemble micro-
acoustic audio input and output components for use principally in personal mobile handsets.
• Medical technology – Our businesses serving the medical technology market manufacture advanced miniaturized receivers
and electromechanical components for use in hearing aids, connectors for use in a variety of medical devices and bio
processing applications, and specialized components for use in implantable devices and medical equipment.
• Aerospace/Defense – Our businesses serving the aerospace/defense markets manufacture precision engineered components
and aftermarket parts across a broad array of market applications. This includes the design and manufacture of specialty
hydraulics, fasteners, bearings, switches, and filters sold to both original equipment manufacturers ("OEMs") and as
aftermarket products, as well as mechanical and frequency control communication components serving shipboard
applications, strategic mission critical parts on key Airborne programs and Command and Control communications, and
frequency control components, electromechanical switches, multi-layered capacitors, filters, and quick disconnect
couplings. These businesses also support key space initiatives with critical communication components.
•
Telecom/Other - Our businesses serving these markets manufacture frequency control components for wired and wireless
network base station communications that ensure precise signal timing and filters for non-interrupted access across high
speed networks.
Communication Technologies’ products are manufactured primarily in North America, Europe, and Asia and are sold globally,
directly and through a network of distributors.
Energy
Our Energy segment serves the oil, gas, and power generation industries with products that promote efficient and cost-effective
drilling, extraction, storage, and movement of oil and gas products, or constitute critical components for power generation
equipment. This segment consists of the following lines of business:
• Drilling – Our businesses serving the drilling market design and manufacture products that promote efficient and cost-
effective drilling, including long-lasting polycrystalline diamond cutters (PDCs) for applications in down-hole drilling tools
and quartz pressure transducers and hybrid electronics used in down-hole tools and monitoring devices.
• Production – Our businesses serving the production market design and manufacture products and components that facilitate
the extraction and movement of fuel from the ground, including steel sucker rods, down-hole rod pumps, progressive cavity
pumps and drive systems, plunger lifts, and accessories used in 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 businesses manufacture various compressor parts that are
used in the natural gas production, distribution, and oil refining markets; and winches, hoists, gear drives, swing drives,
auger drives, slewing ring bearings, hydraulic pump, and electronic monitoring solutions for energy, infrastructure, and
recovery markets worldwide.
• Downstream – Our businesses serving the downstream market produce systems and products that support efficient, safe,
and environmentally-sensitive transportation and handling of fuel, hazardous liquids, and dry-bulk commodities. 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. In addition, we offer bearings, bearing
isolators, seals, 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.
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Our Energy segment’s sales are made directly to customers and through various distribution channels. We manufacture our
products primarily in North America, and our sales are concentrated in North America with an increasing level of international
sales directed largely to Europe, Central and South America, China, the Middle East, and Australia.
Engineered Systems
Our Engineered Systems segment combines its engineering technology, unique product advantages, and applications expertise
to address market needs and requirements including sustainability, consumer product safety needs, and growth in emerging
economies. To better serve its end-markets, the segment manages its products and services through two core business platforms,
Fluid Solutions and Refrigeration & Industrial, as described below.
Fluid Solutions
The Fluid Solutions platform designs and manufactures pumps, compressors, and chemical proportioning and dispensing
products. The 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. The pumps include centrifugal, reciprocating (double diaphragm), and rotary pumps that are used in demanding and
specialized fluid transfer process applications. 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. In addition, the platform manufactures copper-brazed compact heat exchangers and designs
software for heating and cooling substations. Fluid Solutions products are manufactured in the United States, South America,
Asia, and Europe and marketed globally through direct channels and a network of distributors.
Refrigeration & Industrial
The Refrigeration & Industrial platform manufactures products and systems serving the refrigeration and food equipment and
other industrial markets, as follows:
• Refrigeration and food equipment – Our businesses manufacture refrigeration systems, refrigeration display cases, walk-
in coolers and freezers, specialty glass, commercial glass refrigerator and freezer doors, 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. The platform’s refrigeration/food related manufacturing facilities
and distributing operations are principally in North America, Europe, and Asia.
The majority of the refrigeration/food systems and machinery that are manufactured or serviced by the Refrigeration &
Industrial platform are used by the supermarket industry, “big-box” retail and convenience stores, the commercial/industrial
refrigeration industry, institutional and commercial foodservice and food production 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.
• Other industrial – We also serve the vehicle service, industrial automation, and waste and recycling markets. Our businesses
serving the vehicle service markets provide a wide range of products and services that are utilized in vehicle services,
maintenance, washing, 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, governments, and directly to consumers via the Internet. The
businesses also produce 4WD and AWD powertrain systems and accessories for off-road vehicles, which are sold to OEMs
and through extensive dealer networks primarily in North America. These other industrial manufacturing operations are
located primarily in North and South America, Asia, and Europe.
The businesses 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, glove ports and
manipulators, 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. They are produced in North America, Europe, and Asia and are marketed globally on a direct basis to OEMs and
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through a global dealer and distribution network to industrial end users. We also provide highly engineered hydraulic
cylinders and swivels to the North American markets for use in mining and resource recovery, vehicle recovery, materials
handling, and various other OEM applications.
Our businesses serving waste and recycling markets 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 stationary compactors, wire processing and separation
machines, and balers that are manufactured and sold primarily in the United States to distribution centers, malls, stadiums,
arenas, office complexes, retail stores, and recycling centers.
Printing & Identification
Our Printing & Identification segment is a worldwide supplier of precision marking & coding, printing, dispensing, soldering
and coating equipment, and related consumables and services. The segment serves two broad global end-markets: fast moving
consumer goods and industrial.
• Fast Moving Consumer Goods (FMCG) – Our businesses serving this market primarily design and manufacture marking
& coding products used for printing variable information (such as date codes and serial numbers) on food, beverage, consumer
goods, and pharmaceutical products, capitalizing on expanding food and product safety requirements and growth in emerging
markets.
•
Industrial – Our products used by the industrial market are primarily marking & coding, bar code & portable printers, and
fluid dispensing related products serving a number of industrial end markets including aerospace, cable, military, material
packaging, industrial assembly, and medical devices capitalizing on growing industrial-related manufacturing in emerging
markets. Additional products include broad line marking solutions leveraged for secondary packaging, such as cartons and
pallets for use in warehouse logistics operations and bar code and portable printers used where on-demand labels/receipts
are required.
In the fourth quarter of 2012, we reclassified to discontinued operations our businesses serving the electronic assembly and test
markets, as we intend to divest these businesses in 2013.
Printing & Identification’s products are manufactured primarily in the United States, France, China, and India, and are sold
throughout the world directly and through a network of distributors.
Raw Materials
We 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 the required raw materials are generally available, commodity pricing has
trended upward over the past few years, particularly for various grades of steel, copper, aluminum, select other commodities,
and rare earth metals. Although some cost increases may be recovered through increased prices to customers, our operating
results are exposed to such fluctuations. We attempt to control such costs through fixed-price contracts with suppliers and various
other programs, such as our global supply chain activities.
Research and Development
Our businesses 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 2012, we spent $189,844 for research and development, including
qualified engineering costs. In 2011 and 2010, research and development spending totaled $175,532 and $159,338, respectively.
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Our Communication Technologies and Printing & Identification segments expend significant effort in research and development
because the rate of product development by their customers is often quite high. Our businesses that develop product identification
and printing equipment and specialty electronic components for the consumer electronics, medical technology, and datacom/
telecom markets believe that their customers expect a continuing rate of product innovation, 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.
Our 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 Communication Technologies and Printing & Identification
segments.
Intellectual Property and Intangible Assets
Our businesses 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 our businesses’
intellectual property consists of patents, unpatented technology, and proprietary information constituting trade secrets that we
seek to protect in various ways, including confidentiality agreements with employees and suppliers where appropriate. In addition,
a significant portion of our intangible assets relate to customer relationships. While our intellectual property and customer
relationships are important to our success, the loss or expiration of any of these rights or relationships, or any group of related
rights or relationships, is not likely to materially affect our results on a consolidated basis. We believe that our commitment to
continuous engineering improvements, new product development, and improved manufacturing techniques, as well as strong
sales, marketing, and service efforts, are significant to our general leadership positions in the niche markets we serve.
Seasonality
In general, our businesses, while not strongly seasonal, tend to have stronger revenue in the second and third quarters, particularly
those serving the consumer electronics, transportation, construction, waste and recycling, petroleum, commercial refrigeration,
and food service markets. Our businesses serving the major equipment markets, such as power generation, chemical, and
processing industries, have longer 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 that tend to moderate the aforementioned seasonality
patterns.
Customers
We serve thousands of customers, no one of which accounted for more than 10% of our consolidated revenue in 2012. Similarly,
within each of our four segments, no customer accounted for more than 10% of any individual segment’s revenue in 2012, except
in our Communication Technologies segment where there is some revenue concentration with OEM customers in the consumer
electronics market. Given our diversity of served markets, customer concentrations are quite varied. Businesses supplying the
waste and recycling, agricultural, defense, energy, automotive, commercial refrigeration, handset, and hearing aid industries
tend to deal with a few large customers that are significant within those industries. This also tends to be true for businesses
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 and services applicable
to a broad range of end-use applications.
Certain of our businesses, particularly within the Communication Technologies segment, serve the military, space, aerospace,
commercial, and telecom infrastructure markets. Their customers include some of the largest operators in these markets. In
addition, many of the OEM customers within the Communication Technologies segment outsource their manufacturing to
Electronic Manufacturing Services (“EMS”) companies. Other customers include global cell phone and hearing aid manufacturers
and many of the largest global EMS companies, particularly in China.
Backlog
Backlog is not a significant indicator of long-term performance, as our products generally have relatively short order-to-delivery
periods. It is more relevant to our businesses that produce larger and more sophisticated machines or have long-term government
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contracts, primarily in the aerospace and defense markets of our Communication Technologies segment. Our total backlog
relating to our continuing operations as of December 31, 2012 and 2011 was $1.5 billion and $1.4 billion, respectively.
Competition
Our competitive environment is complex because of the wide diversity of our products manufactured and the markets served.
In general, most of our businesses are market leaders that compete with only a few companies, and the key competitive factors
are customer service, product quality, price, and innovation. However, as we become increasingly global, we are exposed to
more competition. Certain businesses in the Communication Technologies and Printing & Identification segments compete
globally against a variety of companies, primarily operating in Europe and East Asia. A summary of our key competitors by
end market within each our segments follows:
Segment
Communication Technologies
Energy
End Market
Consumer electronics
Medical technology
Aerospace/Defense
Telecom/Other
Drilling
Production
Downstream
Engineered Systems
Refrigeration and food systems
Other industrial
Fluid solutions
Printing & Identification
Fast moving consumer goods
Industrial
International
Key Competitors
AAC Technologies, GoerTek Inc.
Sonion A/S
Smiths Interconnect, SPS Technologies
Rakon Ltd., NDK Ltd.
DeBeers Group (Element Six), Schlumberger Ltd.
(MegaDiamond)
Weatherford International Ltd., Lufkin Industries,
Paccar Inc.
Danaher Corp. (Gilbarco Veeder-Root), Franklin
Electric, Gardner Denver, Inc. (Emco Wheaton)
Hussman Corp., Heatcraft Worldwide
Refrigeration (Kysor/Warren), Manitowoc
Company, Illinois Tool Works
Oshkosh Corp. (McNeilus), Siemens AG (Weiss
GmbH), Challenger Lifts, Labrie Enviroquip
Group, and numerous others
IDEX Corp, Alfa Laval, Ingersoll Rand, Danfoss,
SPX Corp.
Danaher Corp. (Videojet), Domino Printing
Danaher Corp. (Videojet), Domino Printing,
Zebra Technologies
Consistent with our strategic focus on positioning our businesses for growth, we continue to increase our expansion into
international markets, particularly in developing economies in South America, Asia, and Eastern Europe.
Most of our non-U.S. subsidiaries and affiliates are currently based in France, Germany, the Netherlands, Sweden, Switzerland,
the United Kingdom and, with increasing emphasis, Canada, China, Malaysia, India, Mexico, Brazil, and Eastern Europe.
The following table shows annual revenue derived from customers outside the U.S. as a percentage of total annual revenue for
each of the last three years, by segment and in total:
% Non-U.S. Revenue by Segment
Years Ended December 31,
2011
2012
2010
Communication Technologies
Energy
Engineered Systems
Printing & Identification
Total percentage of revenue derived from customers outside of the U.S.
73%
31%
37%
72%
46%
71%
32%
36%
74%
47%
63%
33%
34%
74%
45%
Our percentage of revenue derived from customers outside of the U.S. declined slightly in 2012 as compared to 2011 as a result
of economic weakness in Europe and slower growth in Asia, which impacted certain of our businesses.
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Our international operations are subject to certain risks, such as price and exchange rate fluctuations and non-U.S. governmental
restrictions, which are discussed further in “Item 1A. Risk Factors.” For additional details regarding our non-U.S. revenue and
the geographic allocation of the assets of our continuing operations, see Note 16 to the Consolidated Financial Statements in
Item 8 of this Form 10-K.
Environmental Matters
Our operations are governed by a variety of international, national, state, and local environmental laws. We are committed to
continued compliance and believe our operations generally are in substantial compliance with these laws. 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.
In 2010, we developed and implemented a process to conduct an inventory of greenhouse gas emissions. Since then, we have
evaluated our climate change risks and opportunities and have developed an energy and climate change strategy that includes
clearly defined goals and objectives, along with prioritized programs and projects for achieving energy use and greenhouse gas
emissions reductions. We have committed to reducing our overall energy and greenhouse gas intensity indexed to net revenue
by 20% from 2010 to 2020. We also participated as a respondent in the 2012 Carbon Disclosure Project.
All of our segments are investigating the energy efficiencies related to their operations and the use of their products and services
by customers. In some instances, our businesses may be able to help customers reduce some of their energy needs. Increased
demand for energy-efficient products, based on a variety of drivers (including, but not limited to, reduction of greenhouse gas
emissions) could result in increased sales for a number of our businesses.
There have been no material effects upon our earnings and competitive position resulting from compliance with laws or regulations
enacted or adopted relating to the protection of the environment. We are aware of a number of existing or upcoming regulatory
initiatives intended to reduce emissions in geographies where our manufacturing and warehouse/distribution facilities are located
and have evaluated the potential impact of these regulations on our businesses. We anticipate that direct impacts from regulatory
actions will not be significant in the short- to medium-term. We expect the regulatory impacts associated with climate change
regulation would be primarily indirect and would result in “pass through” costs from energy suppliers, suppliers of raw materials,
and other services related to our operations.
Employees
We had approximately 35,000 employees in continuing operations as of December 31, 2012, which was an increase of 13%
from the prior year end. The increase is primarily the result of recent acquisitions, slightly offset by headcount reduction programs
in certain businesses.
Iran Related Activities
Pursuant to Section 13(r) of the Securities Exchange Act of 1934, we are required to provide disclosure if, during 2012, we or
any of our affiliates have engaged in transactions or dealings with the government of Iran that have not been specifically authorized
by a U.S. federal department or agency.
During the disclosure period, Automatik Plastics Machinery GmbH ("Automatik"), a German affiliate of Maag Pump Systems,
which we acquired on March 13, 2012, exported from Germany European-origin equipment used in the processing of polystyrene
pellets and PET chip to two entities in Iran, Tabriz Petrochemical (“Tabriz”) and Shahid Tondgoyan Petrochemical (“Shahid
Tondgoyan”), which we understand are owned or controlled by the Government of Iran. All of the exports except one were
made prior to August 10, 2012, the date of enactment of the Iran Threat Reduction and Syria Human Rights Act of 2012 (“ITRA”).
Automatik made two exports to Tabriz on February 24, 2012 and May 8, 2012, with total revenue and net profit values of €51,550
and €14,759, respectively. Automatik made three exports to Shahid Tondgoyan on March 6, 2012, July 19, 2012, and August
8, 2012 with total revenue and net profit values of €516,831 and €162,588, respectively. The only export made after the enactment
of the ITRA was made to Shahid Tondgoyan on October 4, 2012, with a revenue and net profit value of €20,388 and €7,411,
respectively. This last export was made prior to the October 9, 2012 date of the Presidential Executive Order that made it a
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violation of U.S. law for owned or controlled foreign subsidiaries after October 9, 2012 to knowingly engage in transactions
with the Government of Iran or any person subject to the jurisdiction of the Government of Iran. For most of these exports,
Automatik received official written confirmation from the German Government that it did not require a license under German
law and for the others it received oral confirmation no license was required. Automatik also received a payment in November
2012 for a prior order that was not shipped and will not be shipped in the future. Given the SEC guidance that issuers should
disclose all activities, including those taking place prior to ITRA's enactment on August 10, 2012, we are including all exports
by Automatik Germany to government entities in Iran during 2012. Management has instructed all of the Company's non-U.S.
affiliates not to engage in any trade transactions with Iran.
Other Information
We make available through the “Financial Reports” link on our Internet website, http://www.dovercorporation.com, our annual
reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to these reports. We
post 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 our Internet website is not incorporated into this Form 10-K.
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ITEM 1A. RISK FACTORS
Our 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. In general, we are 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 markets; possible future terrorist threats
and their effect on the worldwide economy; and changes in laws or accounting rules. The risk factors discussed in this section
should be considered together with information included elsewhere in this Form 10-K and should not be considered the only risks
to which we are exposed.
• Our results may be impacted by current domestic and international economic conditions and uncertainties.
Our businesses may be adversely affected by disruptions in the financial markets or declines in economic activity both
domestically and internationally in those countries in which we operate. These circumstances will also impact our suppliers
and customers in various ways which could have an impact on our business operations, particularly if global credit markets
are not operating efficiently and effectively to support industrial commerce.
Our Energy segment is subject to risk due to the volatility of global energy prices and regulations that impact production,
although overall demand is more directly related to depletion rates and global economic conditions and related energy
demands.
Negative changes in worldwide economic and capital market conditions are beyond our control, are highly unpredictable,
and can have an adverse effect on our revenue, earnings, cash flows, and cost of capital.
• We are subject to risks relating to our existing international operations and expansion into new geographical markets.
Approximately 46% of our revenues for 2012 and 47% of our revenues for 2011 were derived outside the United States. We
continue to focus on penetrating global markets as part of our overall growth strategy and expect sales from outside the
United States to continue to represent a significant portion of our revenues. In addition, many of our manufacturing operations
and suppliers are located outside the United States. Our international operations and our global expansion strategy are subject
to general risks related to such operations, including:
o political, social, and economic instability and disruptions;
o government embargoes or trade restrictions;
o the imposition of duties and tariffs and other trade barriers;
o import and export controls;
o limitations on ownership and on repatriation of earnings;
o transportation delays and interruptions;
o labor unrest and current and changing regulatory environments;
o increased compliance costs, including costs associated with disclosure requirements and related due diligence;
o the impact of loss of a single-source manufacturing facility;
o difficulties in staffing and managing multi-national operations; and
o limitations on our ability to enforce legal rights and remedies.
If we are unable to successfully manage the risks associated with expanding our global business or adequately manage
operational risks of our existing international operations, the risks could have a material adverse effect on our growth strategy
involving expansion into new geographical markets or our results of operations and financial position.
•
Increasing product/service and price competition by international and domestic competitors, including new entrants,
and our inability to introduce new and competitive products could cause our businesses to generate lower revenue,
operating profits, and cash flows.
Our competitive environment is complex because of the wide diversity of the products that our businesses manufacture and
the markets they serve. In general, most of our businesses compete with only a few companies. Our ability to compete
effectively depends on how successfully we anticipate and respond to various competitive factors, including new products
and services that may be introduced by competitors, changes in customer preferences, and pricing pressures. If our businesses
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are unable to anticipate their competitors’ development of new products and services, and/or identify customer needs and
preferences on a timely basis, or successfully introduce new products and services in response to such competitive factors,
they could lose customers to competitors. If our businesses do not compete effectively, we may experience lower revenue,
operating profits, and cash flows.
•
Some of our businesses may not anticipate, adapt to, or capitalize on technological developments and this could cause
these businesses to become less competitive and lead to reduced market share, revenue, operating profits, and cash flows.
Certain of our Communication Technologies businesses sell their products in electronic and technology-based industries that
are constantly experiencing change as new technologies are developed. In order to grow and remain competitive in these
industries, they must adapt to future changes in technology to enhance their existing products and introduce new products
to address their customers’ changing demands. If these businesses are unable to adapt to the rapid technological changes, it
could have a material impact on our consolidated results of operations, financial position, and cash flows.
• We could lose customers or generate lower revenue, operating profits, and cash flows if there are significant increases
in the cost of raw materials (including energy) or if we are unable to obtain raw materials.
We purchase raw materials, sub-assemblies, and components for use in our manufacturing operations, which expose us to
volatility in prices for certain commodities. Significant price increases for these commodities could adversely affect operating
profits for certain of our businesses. While we 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 we 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 our 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.
• Customer requirements and new regulations may increase our expenses and impact the availability of certain raw
materials, which could adversely affect our revenue and operating profits.
Our businesses use parts or materials that are impacted by the Dodd-Frank Wall Street Reform and Consumer Protection Act
(the “Dodd-Frank Act”) requirement for disclosure of the use of “conflict minerals” mined in the Democratic Republic of
the Congo and adjoining countries. It is possible that some of our businesses' customers will require “conflict free” metals
in products purchased from us. We have begun the process of determining the country of origin of certain metals used by
our businesses, as required by the Dodd-Frank Act. The supply chain due diligence and verification of sources may require
several years to complete based on the current availability of smelter origin information and the number of vendors. We
may not be able to complete the process in the time frame required because of the complexity of our supply chain. Other
governmental social responsibility regulations also may impact our suppliers, manufacturing operations, and operating profits.
The need to find alternative sources for certain raw materials or products because of customer requirements and regulations
may impact our ability to secure adequate supplies of raw materials or parts, lead to supply shortages, or adversely impact
the prices at which our businesses can procure compliant goods.
• Our businesses and their profitability and reputation could be adversely affected by domestic and foreign governmental
and public policy changes (including environmental and employment regulations and tax policies such as export subsidy
programs, research and experimentation credits, carbon emission regulations, and other similar programs), risks
associated with emerging markets, changes in statutory tax rates, and unanticipated outcomes with respect to tax audits.
Our businesses’ domestic and international sales and operations are subject to risks associated with changes in local
government laws (including environmental and export/import 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 our
reputation. In addition, we cannot provide assurance that our costs of complying with new and evolving regulatory reporting
requirements and current or future laws, including environmental protection, employment, and health and safety laws, will
not exceed our estimates. In addition, we have 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 our businesses and reputation.
Our 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, and changes in tax laws. The amount of income taxes and other taxes paid
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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, then our financial results
may be adversely affected by unfavorable tax adjustments.
• Our revenue, operating profits, and cash flows could be adversely affected if our businesses are unable to protect or obtain
patent and other intellectual property rights.
Our businesses own patents, trademarks, licenses, and other forms of intellectual property related to their products. Our
businesses employ various measures to maintain and protect their intellectual property. These measures may not prevent
their intellectual property 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 our businesses and have a negative impact on our revenue, operating profits, and cash
flows.
• Our growth and results of operations may be adversely affected if we are unsuccessful in our capital allocation and
acquisition program.
We expect to continue our strategy of seeking to acquire value creating add-on businesses that broaden our existing position
and global reach as well as, in the right circumstances, strategically pursue larger acquisitions that could have the potential
to either complement our existing businesses or allow us to pursue a new platform. However, there can be no assurance that
we will be able to continue to find suitable businesses to purchase, that we will be able to acquire such businesses on acceptable
terms, or that all closing conditions will be satisfied with respect to any pending acquisition. If we are unsuccessful in our
acquisition efforts, then our 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, may be unable to achieve synergies originally anticipated,
or may expose us to unexpected liabilities. Further, if we fail to allocate our capital appropriately, in respect of either our
acquisition program or organic growth in our operations, we could be overexposed in certain markets and geographies. These
factors could potentially have an adverse impact on our operating profits and cash flows.
• Our operating profits and cash flows could be adversely affected if we cannot achieve projected savings and synergies.
We are continually evaluating our cost structure and seeking ways to capture synergies across our operations. If we are unable
to reduce costs and expenses through our various programs, it could adversely affect our operating profits and cash flows.
• Unforeseen developments in contingencies such as litigation could adversely affect our financial condition.
We and certain of our 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 and divert management’s attention, and we may be required to pay damages that could adversely affect our financial
condition. In addition, any insurance or indemnification rights that we may have may be insufficient or unavailable to protect
us against potential loss exposures.
• The indemnification provisions of acquisition agreements by which we have acquired companies may not fully protect
us and may result in unexpected liabilities.
Certain of the acquisition agreements by which we have acquired companies require the former owners to indemnify us
against certain liabilities related to the operation of the company before we acquired it. In most of these agreements, however,
the liability of the former owners is limited and certain former owners may be unable to meet their indemnification
responsibilities. We cannot be assured that these indemnification provisions will fully protect us, and as a result we may face
unexpected liabilities that adversely affect our profitability and financial position.
• Failure to attract, retain, and develop personnel or to provide adequate succession plans for key management could have
an adverse effect on our operating results.
Our growth, profitability, and effectiveness in conducting our operations and executing our strategic plans depend in part on
our ability to attract, retain, and develop qualified personnel, align them with appropriate opportunities, and maintain adequate
succession plans for key management positions. If we are unsuccessful in these efforts, our operating results could be adversely
affected.
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• Our business operations may be adversely affected by information systems interruptions or intrusion.
Our businesses rely on a number of information technologies to manage, store, and support business activities. We have put
in place a number of systems, processes, and practices designed to protect against intentional or unintentional misappropriation
or corruption of our systems and information, disruption of our operations, or corruption of the software that supports our
products. Disruptions or cybersecurity attacks, such as unauthorized access, malicious software, or other violations may
lead to exposure of proprietary or confidential information as well as potential data corruption. Any intrusion may cause
operational stoppages, violations of applicable law, diminished competitive advantages or reputational damages, and increased
operational costs for remedial activities.
• Our reputation, ability to do business, and results of operations may be impaired by improper conduct by any of our
employees, agents, or business partners.
While we strive to maintain high standards, we cannot provide assurance that our internal controls and compliance systems
will always protect us from acts committed by our employees, agents, or business partners that would violate U.S. and/or
non-U.S. laws or fail to protect our confidential information, including the laws governing payments to government officials,
bribery, fraud, anti-kickback and false claims rules, competition, export and import compliance, money laundering, and data
privacy laws, as well as the improper use of proprietary information or social media. Any such violations of law or improper
actions could subject us to civil or criminal investigations in the U.S. and in other jurisdictions, could lead to substantial civil
or criminal, monetary and non-monetary penalties, and related shareholder lawsuits and could damage our reputation.
• Our exposure to exchange rate fluctuations on cross-border transactions and the translation of local currency results
into U.S. dollars could negatively impact our results of operations.
We conduct business through our subsidiaries in many different countries, and fluctuations in currency exchange rates could
have a significant impact on the reported results of operations, which are presented in U.S. dollars. A significant and growing
portion of our products are manufactured in lower-cost locations and sold in various countries. Cross-border transactions,
both with external parties and intercompany relationships, result in increased exposure to foreign exchange effects.
Accordingly, significant changes in currency exchange rates, particularly the Euro, Pound Sterling, Swiss franc, Chinese
RMB (Yuan), and the Canadian dollar, could cause fluctuations in the reported results of our businesses’ operations that could
negatively affect our results of operations. Additionally, the strengthening of certain currencies such as the Euro and
U.S. dollar potentially exposes us to competitive threats from lower cost producers in other countries such as China. Our
sales are translated into U.S. dollars for reporting purposes. The strengthening of the U.S. dollar could result in unfavorable
translation effects as the results of foreign locations are translated into U.S. dollars.
• Our borrowing costs may be impacted by our credit ratings developed by various rating agencies.
Three major ratings agencies (Moody’s, Standard and Poor’s, and Fitch Ratings) evaluate our credit profile on an ongoing
basis and have each assigned high ratings for our long-term debt as of December 31, 2012. Although we do not anticipate
a material change in our credit ratings, if our current credit ratings deteriorate, then our borrowing costs could increase,
including increased fees under our Five-Year Credit Facility, and our access to future sources of liquidity may be adversely
affected.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
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ITEM 2. PROPERTIES
The number, type, location and size of the properties used by our continuing operations as of December 31, 2012 are shown in
the following charts, by segment:
Communication Technologies
Energy
Engineered Systems
Printing & Identification
Number and nature of facilities
Manufacturing Warehouse
3
31
51
59
34
65
22
11
Sales / Service
12
47
46
68
Square footage (in 000s)
Leased
Owned
1,129
3,265
6,180
600
1,420
1,353
3,290
673
Communication Technologies
Energy
Engineered Systems
Printing & Identification
North
America
18
122
84
13
Locations
Europe
Asia
Other
9
5
41
27
9
3
26
41
Expiration dates
of leased facilities
(in years)
Minimum Maximum
15
13
12
7
1
1
1
1
1
10
3
2
We believe our owned and leased facilities are well-maintained and suitable for our operations.
ITEM 3. LEGAL PROCEEDINGS
A few of our 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 subsidiary’s liability appears to be very small in relation to the total projected expenditures and the number of other
“potentially responsible parties” involved and it is anticipated to be immaterial to us on a consolidated basis. In addition, a few
of our subsidiaries are involved in ongoing remedial activities at certain plant sites, in cooperation with regulatory agencies, and
appropriate reserves have been established. At December 31, 2012 and 2011, we have reserves totaling $28.9 million and $19.6
million, respectively, for environmental matters that are probable and estimable, with the 2012 increase primarily attributed to
environmental contingencies assumed in recent acquisitions.
We and certain of our subsidiaries are, and from time to time may become, parties to a number of other legal proceedings
incidental to our businesses. These proceedings primarily involve claims by private parties alleging injury arising out of the use
of our businesses' products, 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. At December 31,
2012 and 2011, we have reserves totaling $1.2 million for legal matters that are probable and estimable and not otherwise covered
by insurance. While it is not possible at this time to predict the outcome of these legal actions, in the opinion of management,
based on the aforementioned reviews, we are not currently involved in any legal proceedings which, individually or in the
aggregate, could have a material affect on our financial position, results of operations, or cash flows.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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EXECUTIVE OFFICERS OF THE REGISTRANT
All of our officers are elected annually at the first meeting of the Board of Directors following our annual meeting of shareholders,
and are subject to removal at any time by the Board of Directors. Our executive officers as of February 15, 2013, and their
positions with Dover (and, where relevant, prior business experience) for the past five years, are as follows:
Name
Robert A. Livingston
Age
59
Ivonne M. Cabrera
Brad M. Cerepak
Thomas W. Giacomini
John F. Hartner
Jay L. Kloosterboer
Jeffrey S. Niew
Stephen R. Sellhausen
William W. Spurgeon, Jr.
Niclas Ytterdahl
46
53
47
50
52
46
55
54
48
Positions Held and Prior Business Experience
Chief Executive Officer and Director (since December 2008), President (since
June 2008) and Chief Operating Officer (from June 2008 to December 2008) of
Dover; prior thereto Vice President of Dover and President and Chief Executive
Officer of Dover Engineered Systems (from July 2007 to May 2008); prior
thereto Vice President of Dover and President and Chief Executive Officer of
Dover Electronics (from October 2004 to June 2007).
Senior Vice President, General Counsel and Secretary of Dover (since January
2013); prior thereto Vice President, Deputy General Counsel, and Assistant
Secretary of Dover (from November 2012 to December 2012); prior thereto Vice
President, Business Affairs and General Counsel of Knowles Electronics, LLC
(from February 2011 to December 2012); prior thereto Vice President (from May
2010 to February 2011), Deputy General Counsel and Assistant Secretary (from
February 2004 to February 2011) of Dover.
Senior Vice President and Chief Financial Officer (since May 2011) of Dover;
prior thereto Vice President and Chief Financial Officer (from August 2009 to
May 2011) of Dover; prior thereto Vice President, Finance (from June 2009 to
August 2009) of Dover; prior thereto Vice President and Controller (from August
2005 to June 2008) of Trane, Inc.
Vice President (since February 2008) of Dover and President and Chief
Executive Officer (since November 2011) of Dover Engineered Systems; prior
thereto President (from April 2009 to November 2011) and Chief Executive
Officer (from July 2009 to November 2011) of Dover Industrial Products; prior
thereto President (from October 2007 to July 2009) of Dover's Material Handling
Platform.
Vice President (since May 2011) of Dover and President and Chief Executive
Officer (since November 2011) of Dover Printing & Identification; prior thereto
Executive Vice President (from April 20l1 to November 2011) of Dover
Engineered Systems; prior thereto Executive Vice President (from October 2007
to April 2011) of Dover Electronic Technologies.
Senior Vice President, Human Resources (since May 2011) of Dover; prior
thereto Vice President, Human Resources (from January 2009 to May 2011) of
Dover; prior thereto Executive Vice President - Business Excellence (from May
2005 to January 2009) of AES Corporation.
Vice President of Dover and President and Chief Executive Officer of Dover
Communication Technologies (since November 2011); prior thereto President
(from January 2008 to November 2011) and Chief Executive Officer (from
February 2010 to November 2011) of Knowles Electronics; prior thereto Chief
Operating Officer (from January 2007 to February 2010) of Knowles
Electronics.
Senior Vice President, Corporate Development (since May 2011) of Dover; prior
thereto Vice President, Corporate Development (from January 2009 to May
2011) of Dover; prior thereto Vice President, Business Development (from April
2008 to January 2009) of Dover; prior thereto investment banker with Citigroup
Global Markets.
Vice President (since October 2004) of Dover and President and Chief Executive
Officer (since November 2011) of Dover Energy; prior thereto President and
Chief Executive Officer (from July 2007 to November 2011) of Dover Fluid
Management.
Senior Vice President, Global Sourcing (since January 2012) of Dover; prior
thereto Vice President, Global Strategic Sourcing (from April 2006 to December
2011) of AES Corporation.
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Name
Kevin P. Buchanan
C. Anderson Fincher
Paul E. Goldberg
Raymond T. McKay, Jr.
Brian P. Moore
James H. Moyle
Sivasankaran Somasundaram
Michael Y. Zhang
Age
57
42
49
59
42
60
47
49
Positions Held and Prior Business Experience
Vice President, Tax (since July 2010) of Dover; prior thereto Deputy General
Counsel, Tax (from November 2009 to June 2010) and Vice President, Tax (from
May 2000 to October 2009) of Monsanto Company.
Vice President (since May 2011) of Dover and Executive Vice President (since
November 2011) of Dover Engineered Systems; prior thereto Executive Vice
President (from May 2009 to November 2011) of Dover Industrial Products;
prior thereto President (from January 2005 to May 2009) of Heil Trailer
International.
Vice President, Investor Relations (since November 2011) of Dover; prior
thereto Treasurer and Director of Investor Relations (from February 2006 to
November 2011) of Dover.
Vice President (since February 2004) and Controller (since November 2002) of
Dover.
Vice President, Treasurer (since November 2011) of Dover; prior thereto Senior
Director, Investor Relations (from April 2010 to October 2011) of USG
Corporation; prior thereto Director of Credit & Accounts Receivable (from
December 2008 to April 2010) of USG; prior thereto Director of Finance (from
December 2007 to December 2008) at USG; prior thereto Assistant Treasurer
(from October 2004 to December 2008) of USG.
Vice President (since 2009) of Dover and Executive Vice President (since
January 2012) of Dover Engineered Systems; prior thereto Senior Vice President,
Global Sourcing and Supply Chain (from April 2009 to December 2011) of
Dover; prior thereto Chief Financial Officer (from July 2007 to April 2009) of
Dover Fluid Management; prior thereto Vice President and Chief Financial
Officer (from November 2005 to July 2007) of Dover Diversified.
Vice President (since January 2008) of Dover and Executive Vice President
(since November 2011) of Dover Energy; prior thereto Executive Vice President
(from January 2010 to November 2011) of Dover Fluid Management; President
(from January 2008 to December 2009) of Dover's Fluid Solutions Platform;
prior thereto President (from May 2006 to January 2008) of Gas Equipment
Group.
Vice President (since May 2010) of Dover and President, Asia (since May 2011)
of Dover; prior thereto Managing Director (from January 2009 to May 2011) of
Dover Regional Headquarters, China; prior thereto various roles at ABB, Ltd.
including Vice President, ABB Control System and Product Business (from
September 2004 to March 2008).
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
Market Information and Dividends
The principal market in which Dover common stock is traded is the New York Stock Exchange. Information on the high and
low sales prices of our stock and the frequency and the amount of dividends paid during the last two years is as follows:
2012
Market Prices
High
Low
$
$
67.20
64.36
61.64
65.80
56.81
50.88
50.27
54.90
Dividends
per Share
0.315
$
0.315
0.350
0.350
1.330
$
2011
Market Prices
High
Low
$
$
68.07
69.25
70.15
59.27
56.51
60.57
45.42
43.64
Dividends
per Share
0.275
$
0.275
0.315
0.315
1.180
$
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Holders
The number of holders of record of Dover common stock as of February 1, 2013 was approximately 19,201. This figure includes
participants in our domestic 401(k) program.
Securities Authorized for Issuance Under Equity Compensation Plans
Information regarding securities authorized for issuance under our equity compensation plans is contained in Part III, Item 12
of this Form 10-K.
Recent Sales of Unregistered Securities
None.
20
Table of Contents
Issuer Purchases of Equity Securities
During the fourth quarter of 2012, we made the following purchases of Dover shares:
Period
October 1 to October 31
November 1 to November 30
December 1 to December 31
For the Fourth Quarter
Total Number
of Shares
Purchased (1)
1,798,907
2,237,527
1,729,037
5,765,471
Average
Price Paid
per Share
58.41
$
62.04
64.54
61.65
$
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs
1,798,907
2,235,978
1,727,106
5,761,991
Maximum Number (or
Approximate Dollar Value) of
Shares that May Yet Be
Purchased under the Plans or
Programs (2)
May 2012
Program
3,908,289
3,908,289
3,908,289
3,908,289
November
2012 Program
—
$
861,328
749,898
749,898
$
(1)
In May 2012, the Board of Directors renewed its standing authorization of the Company's share repurchase program, on
terms consistent with its prior five-year authorization which expired at that time. This renewal authorizes the repurchase
of up to 10,000,000 shares of the Company's common stock during the five-year period ending May 2017. We purchased
1,798,907 shares under this program during the fourth quarter. Additionally, in November 2012, the Board of Directors
approved a $1 billion share repurchase program authorizing repurchases of Dover’s common shares over the next 12 to
18 months. We purchased 3,963,084 shares under this new program during the fourth quarter. We also acquired 3,480
shares from holders of our employee stock options when they tendered those shares as full or partial payment of the
exercise price of such options. These shares were applied against the exercise price at the market price on the date of
exercise.
(2) As of December 31, 2012, the number of shares still available for repurchase under the May 2012 share repurchase
authorization was 3,908,289. The approximate dollar amount still available for repurchase under the November 2012
share repurchase authorization was $749,898.
21
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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 our filings under the Securities Act of 1933 or the Exchange Act of 1934, whether made before or after the
date of this Form 10-K and irrespective of any general incorporation language in any such filing, except to the extent we
specifically incorporate this performance graph by reference therein.
Comparison of Five-Year Cumulative Total Return *
Dover Corporation, S&P 500 Index & Peer Group Index
Total Shareholder Returns
$180
$160
$140
$120
$100
$80
$60
$40
$20
$0
12/07
12/08
12/09
12/10
12/11
12/12
Dover Corporation
S&P 500
Peer Group
Data Source: Research Data Group, Inc
_______________________
*Total return assumes reinvestment of dividends.
This graph assumes $100 invested on December 31, 2007 in Dover Corporation common stock, the S&P 500 index, and a peer
group index.
Thomas & Betts Corp. and Cooper Industries, two companies that were part of the peer index group in 2011, were acquired by
ABB Ltd and Eaton Corporation, respectively, during 2012 and have since been removed from the index. The 2012 peer index
consists of the following 37 public companies selected by the Company.
3M Company
Actuant Corp.
Ametek Inc.
Amphenol Corp.
Cameron International
Carlisle Companies
Corning Inc.
Crane Company
Danaher Corporation
Eaton Corporation
Emerson Electric Co.
Flowserve Corporation
FMC Technologies
Gardner Denver Inc.
Honeywell International
Hubbell Incorporated
IDEX Corporation
Illinois Tool Works
Ingersoll-Rand PLC
Lennox International Inc.
Nordson Corp.
Pall Corporation
Parker-Hannifin Corp.
Pentair Inc.
Precision Castparts Corp.
Regal Beloit Corp.
22
Rockwell Automation
Roper Industries
Snap-On Inc.
SPX Corporation
Teledyne Technologies Inc.
Textron Inc.
The Timken Company
Tyco International
United Technologies Corp.
Vishay Intertechnology Inc.
Weatherford International
Table of Contents
ITEM 6. SELECTED FINANCIAL DATA
dollars in thousands except share data
2012
2011
2010
2009
2008
Revenue
Earnings from continuing operations
Net earnings
Basic earnings (loss) per share:
Continuing operations
Discontinued operations
Net earnings
$
$
8,104,339
833,119
811,070
4.59
(0.12)
4.47
$
$
$
$
7,369,154
773,186
895,243
4.16
0.66
4.82
$
$
6,109,507
619,497
700,104
3.31
0.43
3.75
5,055,796
390,705
356,438
2.10
(0.18)
1.91
$
$
6,233,670
579,374
590,831
3.07
0.06
3.13
Weighted average shares outstanding
181,551,000
185,882,000
186,897,000
186,136,000
188,481,000
Diluted earnings (loss) per share:
Continuing operations
Discontinued operations
Net earnings
$
$
4.53
(0.12)
4.41
$
4.09
0.65
4.74
$
3.27
0.43
3.70
$
2.09
(0.18)
1.91
3.06
0.06
3.12
Weighted average shares outstanding
183,993,000
188,887,000
189,170,000
186,736,000
189,269,000
Dividends per common share
Capital expenditures
Depreciation and amortization
Total assets
Total debt
$
$
$
$
1.33
297,012
357,585
10,443,943
2,800,116
$
$
1.18
262,676
290,477
9,500,552
2,187,252
$
$
1.07
169,297
229,237
8,558,743
1,807,476
1.02
108,639
217,981
7,882,403
1,860,884
$
$
0.90
160,489
216,585
7,883,238
2,084,173
All results and data in the table above reflect continuing operations, unless otherwise noted. As a result, the data presented above
will not necessarily agree to previously issued financial statements. See Note 3 to the Consolidated Financial Statements in Item
8 of this Form 10-K for additional information on disposed and discontinued operations and Note 2 for additional information
regarding the impact of 2012 acquisitions.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended
to help the reader understand our results of operations and financial condition for the three years ended December 31, 2012. The
MD&A should be read in conjunction with our Consolidated Financial Statements and Notes included in Item 8 of this Form
10-K. This discussion contains forward-looking statements that involve risks and uncertainties. Our 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 Form 10-K, particularly in Item 1A. “Risk Factors” and in the “Special Note Regarding Forward-Looking
Statements” preceding Part I of this Form 10-K.
OVERVIEW AND OUTLOOK
Dover is a diversified global manufacturer focusing on innovative equipment and components, specialty systems, and support
services provided through its four major operating segments: Communication Technologies, Energy, Engineered Systems, and
Printing & Identification. The Company's entrepreneurial business model encourages, promotes, and fosters deep customer
engagement which has led to Dover's well-established and valued reputation for providing superior customer service and industry-
leading product innovation.
Overall, 2012 concluded as a solid performance year, with strong revenue, earnings, and cash flow growth, despite the backdrop
of a low-growth macro-economic environment. Our consolidated revenue increased $735 million or 10% to $8.1 billion, inclusive
of acquisitions, and our gross profit increased by $262 million or 9% to $3.1 billion. The 2012 results were led by our strong
positions in the energy, handset, refrigeration and food equipment, and other industrial markets.
In our Energy segment, expanding production activity and strong downstream investments in distribution and retail fueling are
among the trends that drove solid results during the year. The strong production and downstream performance was partially
offset by the softening North American rig count, which caused our year-over-year drilling end market comparisons to decline
as the year progressed. In all, the segment had solid performance, characterized by continuing growth and strong margins. We
expect this trend to continue in 2013.
Within our Communication Technologies segment, several OEM's launched new products in the handset market during the
second quarter and our microelectronic mechanical ("MEMs") microphone activity was very strong once the new OEM product
launches commenced. However, our 2012 performance at Sound Solutions was weaker than anticipated. The Sound Solutions
business continued to work through operational challenges which led to lower volumes than anticipated for the year; however,
they did experience sequential growth and margin improvement in the fourth quarter, relative to the earlier quarters, and we
expect their performance to continue to improve in 2013. Overall, we expect the handset market to be strong in 2013, supported
by numerous new product releases, coupled with the increased use of multiple microphones per handset. Our aerospace/defense
and medical technology markets were solid during the year, while our telecom market continued to be weak.
Within our Engineered Systems segment, the refrigeration and food equipment markets were solid, as were most of our U.S.
industrial end markets. The results of our Fluid Solutions platform continued to reflect good performance from our first quarter
Maag Pump Systems acquisition, which helped to mitigate the impact of a weakened market in Europe. We expect 2013 to be
another solid year for Engineered Systems, as we leverage our recent acquisitions and continue our geographic expansion within
our Fluid Solutions platform. We anticipate customer wins, an active remodel market, expanded product offerings and recent
acquisitions to drive 2013 growth within our Refrigeration & Industrial platform.
In our Printing & Identification segment, solid organic growth in our fast moving consumer goods market more than offset
uneven demand in our industrial markets, which was impacted by weak Europe and slowing China markets. We anticipate the
release of several new products in the first half of the year, traction of added sales and service resources in key regional markets,
along with stable fast moving consumer goods and industrial markets to contribute to our 2013 growth. Margin performance
in the segment steadily improved over the course of 2012, driven by productivity and restructuring activities. We expect
incremental benefit from these activities to carry over into 2013, enabling continued reinvestment in our product identification
growth space.
24
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In addition to our solid financial results, we continued to execute on our corporate strategy. During 2012, we continued to focus
on our five key growth spaces of communication components, energy, fluids, refrigeration and food equipment, and product
identification. We invested $1.2 billion on seven acquisitions that expanded our markets, enhanced our product offerings and
broadened our customer base. In advancing our strategy of focusing on our higher margin growth spaces, we have reclassified
to discontinued operations two non-core businesses serving the electronic assembly and test markets. We expect to divest these
businesses in 2013. Although solid performers, these businesses serve highly volatile end-markets, and their sale should improve
the consistency of our future results and enable management to focus on our key growth spaces. In 2012, we generated $964
million in free cash flow, which enabled us to continue to invest in higher growth economies and innovation, and to continue
our long tradition of raising our annual dividend, now standing at 57 consecutive years. Lastly, in November of 2012, we
announced and began to execute on a $1 billion share repurchase program, to continue to drive long-term shareholder value.
With respect to our expectations for 2013, we are targeting full year organic growth in the range of 3% to 5% (inclusive of a
negligible foreign exchange impact) and acquisition related growth of approximately 4% for acquisitions completed in
2012. Based on these revenue assumptions, our profitability expectations and anticipated additional share buy-backs, our diluted
earnings per share from continuing operations for 2013 is estimated to be in the range of $5.05 to $5.35, and we expect our
earnings to follow a traditional seasonal pattern of being higher in the second and third quarters. If global or domestic economic
conditions accelerate or deteriorate, our operating results for 2013 could be materially different than currently projected.
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Table of Contents
CONSOLIDATED RESULTS OF OPERATIONS
As discussed in Note 3 to the Consolidated Financial Statements in Item 8 of this Form 10-K, in the fourth quarter of 2012, we
reclassified certain businesses in the Printing & Identification segment to discontinued operations based on our decision to divest
these businesses. The results of operations of these businesses have been removed from the results of continuing operations
and are presented within results of discontinued operations for all periods presented.
Years Ended December 31,
(dollars in thousands, except per share figures)
Revenue
Cost of goods and services
Gross profit
Gross profit margin
2012
$ 8,104,339
4,997,274
3,107,065
2011
$ 7,369,154
4,524,351
2,844,803
2010
$ 6,109,507
3,686,861
2,422,646
38.3%
38.6%
39.7%
Selling and administrative expenses
1,841,688
1,720,954
1,499,597
Selling and administrative as a percent of revenue
22.7%
23.4%
24.5%
Interest expense, net
Other expense (income), net
Provision for income taxes
Effective tax rate
121,141
6,665
115,525
(1,938)
106,371
3,556
304,452
237,076
193,625
26.8%
23.5%
23.8%
% / Point Change
2011 vs.
2012 vs.
2010
2011
10.0%
10.5%
9.2%
(0.3)
7.0%
(0.7)
4.9%
nm
28.4%
3.3
20.6%
22.7%
17.4%
(1.1)
14.8%
(1.1)
8.6%
nm
22.4%
(0.3)
Earnings from continuing operations
833,119
773,186
619,497
7.8%
24.8%
Loss from discontinued operations, net
(22,049)
122,057
80,607
nm
51.4%
Earnings from continuing operations per common
share - diluted
$
4.53
$
4.09
3.27
10.8%
25.1%
Revenue
Our 2012 consolidated revenue increased 10% to $8.1 billion, reflecting organic growth of 5%, growth from acquisitions of 6%
and an unfavorable impact from currency translation of 1%. All four of our segments generated 2012 organic revenue growth,
with the majority attributed to volume increases driven by strength in the energy, handset, refrigeration and food equipment,
and many of the other industrial markets served by our Engineered Systems segment. Approximately 3% of our growth was
generated by new products, particularly in our Communication Technologies segment, and geographic market expansion in our
Energy segment. Pricing had a negligible impact to 2012 revenue, as price increases implemented to offset higher commodity
costs, were partly offset by lower strategic pricing initiatives. Revenues generated outside of the U.S. increased by 9% compared
with 2011, with growth in Canada and Asia offsetting weakness in Europe.
Over 80% of the 2012 revenue growth from acquisitions was generated by Sound Solutions, Maag Pump Systems, and Production
Control Services, three of our more significant recent acquisitions made in the second half of 2011 and first half of 2012.
Our 2011 consolidated revenue increased $1.3 billion or 21% compared with 2010, reflecting organic growth of 12%, growth
from acquisitions of 7% and a favorable impact from currency translation of 2%. The majority of our 2011 organic growth was
attributed to increased volumes across all four segments driven by strength in the energy and consumer handset markets and
solid growth in fluid solutions, refrigeration equipment and many of the industrial markets served by our Engineered Systems
segment. Additionally, approximately 2% of our growth was generated by new products, particularly in our Communication
Technologies and Printing & Identification segments. Pricing added about 1% to revenue principally driven by strategic pricing
initiatives and price increases implemented to offset higher commodity costs. Revenues generated outside of the U.S. increased
by 25% compared with 2010, with revenue generated in emerging economies of China and Latin America increasing 56%.
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Over 70% of the 2011 revenue growth from acquisitions was generated by Harbison-Fischer and Sound Solutions, two large
acquisitions that we made in 2011 to expand our operations serving the artificial lift and handset markets, respectively.
Gross Profit
Our gross profit increased $262.3 million or 9% in 2012 compared with 2011, reflecting the benefit of increased sales volumes,
favorable net material costs, and benefits from productivity initiatives. Gross profit margin as a percentage of revenue contracted
30 basis points in 2012 to 38.3% from 38.6% in 2011, with the reduction in large part due to the integration of Sound Solutions,
which generated lower than anticipated revenue in 2012, more than offsetting the operating leverage achieved by our other
businesses.
Our gross profit increased $422.2 million or 17% in 2011 compared with 2010, reflecting the benefit of increased sales volumes.
However, gross profit margin as a percentage of revenue contracted 110 basis points in 2011 to 38.6% from 39.7% in 2010 due
principally to the impact of product and customer mix, which more than offset operating leverage, as well as the impact of higher
depreciation from recent acquisitions.
Selling and Administrative Expenses
Selling and administrative expenses increased $120.7 million or 7% in 2012 compared with 2011 due primarily to general
increases across the segments in support of higher volumes. As a percentage of revenue, selling and administrative expenses
declined to 22.7% in 2012 compared with 23.4% in 2011. This 70 basis point improvement is largely a result of leverage from
the higher revenue levels, which more than offset higher acquisition-related amortization and increased restructuring charges.
Selling and administrative expenses increased $221.4 million or 15% in 2011 compared with 2010 due primarily to general
increases across the segments in support of higher volumes. As a percentage of revenue, selling and administrative expenses
declined to 23.4% in 2011 compared with 24.5% in 2010. This 110 basis point improvement was largely a result of leverage
from the higher revenue levels, which more than offset higher amortization and other nonrecurring expenses related to recent
acquisitions.
Non-Operating Items
Interest expense, net, increased $5.6 million or 5% to $121.1 million in 2012 primarily due to lower average levels of cash on
hand at reduced interest rates, leading to $4.4 million less of interest income in 2012 as compared with 2011.
In 2011, our interest expense, net, increased 9% to $115.6 million due primarily to higher average outstanding borrowings during
2011 as compared with 2010. As discussed in Note 9 to the Consolidated Financial Statements in Item 8 of this Form 10-K, in
February of 2011 we issued $800 million in new notes, receiving net proceeds of $789 million, approximately half of which
was used to repay outstanding commercial paper balances incurred to retire $400 million of notes which came due earlier that
month, with the remainder used to fund first quarter 2011 acquisitions. As a result, our total borrowings were $380 million higher
at the end of 2011 compared to the end of 2010.
Other expense (income), net in 2012, 2011, and 2010 includes $9.5 million, $7.5 million, and $6.9 million, respectively, of net
expense from foreign currency exchange fluctuations on assets and liabilities denominated in currencies other than the functional
currency, offset in each of these years by royalty income and other miscellaneous non-operating gains and losses, none of which
are individually significant. In 2010, other expense (income), net also includes a $4.3 million loss on extinguishment of debt
relating to early settlement of a non-interest bearing, structured loan arrangement.
Income Taxes
We operate globally, and 38%, 43%, and 47% of our pre-tax earnings in 2012, 2011, and 2010, respectively, were generated in
foreign jurisdictions, where such earnings are generally subject to local country tax rates that are well below the 35% U.S.
statutory rate. We also benefit from tax holidays and incentives in a number of the foreign jurisdictions in which we operate.
As a result, our blended effective tax rate is typically significantly lower than the U.S. statutory rate.
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The 2012 effective tax rate on continuing operations was 26.8% compared to the 2011 rate of 23.5%. The 2012 and 2011 rates
were favorably impacted by net discrete items, principally settlements with U.S. federal and state taxing authorities totaling
$16.1 million and $40.7 million, respectively. After adjusting for discrete items, the effective tax rates were 28.2% and 27.5%
for 2012 and 2011, respectively. The higher pre-discrete rate in 2012 reflects the impact of a higher proportion of U.S. earnings,
partly offset by lower effective tax rates on earnings generated in foreign jurisdictions.
The 2010 effective tax rate on continuing operations was 23.8%. The effective tax rate in 2010 was also favorably impacted by
net discrete and other items totaling $50.3 million, arising principally from settlements with the U.S. federal taxing authority,
coupled with the resolution of a foreign tax matter. After adjusting for discrete and other items, the effective tax rate for 2010
was 30%, which was higher than the adjusted effective tax rate for 2011 of 27.5% due primarily to the geographic mix of earnings,
with a greater proportion of our non-U.S. earnings generated in foreign jurisdictions having higher tax rates than in 2011, when
more of the non-U.S. earnings were generated in foreign jurisdictions having lower tax rates on average.
We believe it is reasonably possible during the next twelve months that uncertain tax positions may be settled, which could result
in a decrease in the gross amount of unrecognized tax benefits. This decrease may result in an income tax benefit. Due to the
potential for resolution of federal, state, and foreign examinations, and the expiration of various statutes of limitation, our gross
unrecognized tax benefits balance may change within the next twelve months by a range of zero to $140 million. Some portion
of such change may be reported as discontinued operations. We believe adequate provision has been made for all income tax
uncertainties.
Earnings from Continuing Operations
Earnings from continuing operations increased 8% to $833.1 million, or $4.53 diluted earnings per share ("EPS") in 2012,
compared with earnings from continuing operations of $773.2 million, or $4.09 EPS, in 2011. The increase in 2012 earnings
from continuing operations is primarily the result of higher revenues and benefits from productivity and cost containment
initiatives, offset in part by higher acquisition-related expenses and increased restructuring charges relative to 2011. The EPS
increase reflects the increase in earnings, as well as the impact of lower weighted average shares outstanding for the 2012 period
relative to 2011. As discussed in the "Financial Condition" section of this MD&A, we have repurchased incrementally more
common shares in 2012 as compared to 2011.
Earnings from continuing operations increased 25% to $773.2 million, or $4.09 EPS in 2011, compared with earnings from
continuing operations of $619.5 million, or $3.27 EPS, in 2010. The increase in 2011 dollar earnings and EPS from continuing
operations was primarily the result of higher revenues and the lower effective tax rate relative to 2010.
Discontinued Operations
We did not dispose of any businesses in 2012. However, in the fourth quarter, we announced our intent to divest Everett Charles
Technologies (including the Multitest business, collectively "ECT") and DEK International ("DEK"), two non-core businesses
serving the electronic assembly and test markets. The results of operations and cash flows of these businesses have been
reclassified to discontinued operations for all periods presented herein. In the fourth quarter of 2012, we recognized a goodwill
impairment charge of $63.8 million ($51.9 million, net of tax) in connection with the intended divestiture of ECT. As a result,
in 2012, we generated a net after-tax loss from discontinued operations of $22.0 million, or a loss of $0.12 EPS, reflecting $30.0
million of net earnings from the operations of these businesses along with minor adjustments to other discontinued assets and
liabilities, which were more than offset by the fourth quarter goodwill impairment charge.
We sold three businesses in the third and fourth quarters of 2011, and the operations of these businesses were reclassified to
discontinued operations in 2011. Our net earnings from discontinued operations for 2011 totaled $122.1 million, or $0.65 EPS,
and includes net earnings of $100.7 million from the operations of the businesses sold in 2011 and held for sale in 2012, coupled
with tax benefits of $18.0 million and adjustments to other discontinued assets and liabilities. Net earnings from discontinued
operations also includes a $4.7 million loss on the 2011 sale of the three businesses, inclusive of goodwill impairment.
For 2010, our net earnings from discontinued operations totaled $80.6 million, or $0.43 EPS, and includes net earnings of $80.7
million from the operations of the businesses sold in 2011 and held for sale in 2012, coupled with adjustments to other discontinued
assets and liabilities, offset in part by a net loss of $14.2 million relating to the sale of a business that had been reflected as a
discontinued operation in a previous year. Refer to Note 3 to the Consolidated Financial Statements in Item 8 of this Form 10-
K for additional information on disposed and discontinued operations.
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Table of Contents
Restructuring Activities
2012 Restructuring Activities
During the year, we initiated restructuring actions relating to ongoing cost reduction efforts, including targeted facility
consolidations and headcount reductions at certain businesses. As a result, in 2012, we incurred restructuring charges totaling
$19.4 million related to these programs, as follows:
• The Communication Technologies segment incurred restructuring charges of $5.5 million, primarily relating to a facility
consolidation and related headcount reductions within its operations that serve the telecom infrastructure market to better
reflect the current market dynamics, along with headcount reductions undertaken to facilitate management changes and
optimize the cost structure of its businesses serving the consumer electronics market.
• The Energy segment incurred restructuring charges of $0.7 million, primarily representing costs for the integration of recent
acquisitions and minor headcount reductions.
• The Engineered Systems segment incurred restructuring charges of $7.5 million, mainly relating to facility consolidations
and other headcount reduction programs undertaken to optimize its cost structure.
• The Printing & Identification segment incurred restructuring charges of $5.7 million, principally relating to rationalization
of global headcount within its marking and coding businesses to better align its footprint with present market conditions.
We expect to incur restructuring charges of approximately $20 to $30 million in 2013 in connection with the above-mentioned
projects, as well as certain other programs to be initiated during the year to rationalize headcount and optimize operations in a
few select businesses. We anticipate that a significant portion of the 2013 charges will be incurred in the first quarter, with
much of the benefit of the 2012 and 2013 programs being realized over the remainder of 2013 and into 2014. We also expect
to fund the remainder of the 2012 programs currently underway, as well those commenced in 2013, over the next 12 to 18
months. In light of the economic uncertainty in certain of our end markets and our continued focus on improving our operating
efficiency, it is possible that additional programs may be implemented throughout the remainder of 2013.
2011 and 2010 Restructuring Activities
Restructuring initiatives in 2011 and 2010 were limited to a few targeted facility consolidations. We incurred restructuring
charges of $5.6 million and $5.9 million, respectively, relating to such activities. See Note 8 to the Consolidated Financial
Statements in Item 8 of this Form 10-K for additional details regarding our recent restructuring activities.
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Table of Contents
SEGMENT RESULTS OF OPERATIONS
This summary that follows provides a discussion of the results of operations of each of our four reportable operating segments
(Communication Technologies, Energy, Engineered Systems, and Printing & Identification). Each of these segments is comprised
of various product and service offerings that serve multiple end markets. See Note 16 to the Consolidated Financial Statements
in Item 8 of this Form 10-K for a reconciliation of segment revenue, earnings, and operating margin to our consolidated revenue,
earnings from continuing operations, and operating margin. Segment EBITDA and segment EBITDA margin, which are presented
in the segment discussion that follows, are non-GAAP measures and do not purport to be alternatives to operating income as a
measure of operating performance. We believe that these measures are useful to investors and other users of our financial
information in evaluating ongoing operating profitability as they exclude the depreciation and amortization expense related
primarily to capital expenditures and acquisitions that occurred in prior years, as well as in evaluating operating performance
in relation to our competitors. For further information, see the Non-GAAP Disclosures at the end of this Item 7.
Communication Technologies
Our Communication Technologies segment is engaged in the design and manufacture of innovative products and components
which serve the following key markets: Consumer Electronics, Medical Technology, Aerospace/Defense, and Telecom/
Other. For the reporting within this Form 10-K, and on a go-forward basis, we have condensed our end market analysis into
the four above-mentioned markets, reduced from the analysis of five end markets in our prior annual and quarterly reporting.
Therefore, all prior year revenue information has been recast to be consistent with the current end-market designations.
(dollars in thousands)
Revenue:
Consumer Electronics
Medical Technology
Aerospace/Defense
Telecom/Other
Total
Segment earnings
Operating margin
Segment EBITDA
Segment EBITDA margin
Other measures:
Years Ended December 31,
2012
2011
2010
% Change
2012 vs.
2011
2011 vs.
2010
$
708,191
244,788
413,877
149,729
$ 1,516,585
$
542,389
233,820
400,179
183,689
$ 1,360,077
$
260,396
240,400
374,900
200,316
$ 1,076,012
30.6 %
4.7 %
3.4 %
(18.5)%
11.5 %
108.3 %
(2.7)%
6.7 %
(8.3)%
26.4 %
$
218,960
$
226,382
$
205,215
(3.3)%
10.3 %
14.4%
16.6%
19.1%
$
351,579
$
328,221
$
277,477
7.1 %
18.3 %
23.2%
24.1%
25.8%
Depreciation and amortization
Bookings
Backlog
$
132,619
1,504,242
424,144
$
101,839
1,344,540
437,320
$
72,262
1,128,265
404,374
30.2 %
11.9 %
(3.0)%
40.9 %
19.2 %
8.1 %
Components of segment revenue growth:
Organic growth
Acquisitions
Foreign currency translation
2012 vs.
2011
2011 vs.
2010
2.4 %
9.9 %
(0.8)%
11.5 %
7.2 %
18.0 %
1.2 %
26.4 %
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2012 Versus 2011
Revenue generated by our Communication Technologies segment in 2012 increased by $156.5 million or 12% compared to the
same period of 2011. The overall increase in revenue resulted primarily from increased microelectronic mechanical (“MEMs”)
microphone volumes stemming from new product introductions and overall smart phone market growth, combined with a full
year of revenue for Sound Solutions in 2012 compared to six months of revenue in 2011. Our MEMs revenue grew in excess
of 25% over the 2011 level. The 2012 revenue increase was partially offset by strategic pricing initiatives for our communications
and telecommunication products, corresponding to normal product life cycle maturities, and reduced volumes in certain end
markets.
• Our revenue in the consumer electronics market (representing 47% of 2012 segment revenue) increased $165.8 million
or 31% due to solid demand for components serving the handset market. This growth was tempered in part by delays
in the launches of certain OEM products and operational challenges in the Sound Solutions business impacting its
product rollouts which have led to lower volume for this portion of the business. As anticipated, our Sound Solutions
business experienced improvement in revenue and margin in the fourth quarter of 2012 relative to earlier quarters, and
we expect this trend to continue in 2013. Overall, our MEMs microphones remain well positioned to capitalize on this
market's growth as we have continued to invest in capacity to meet the growing market demands.
• Our medical technology revenue (16% of 2012 segment revenue) increased by $11.0 million or 5% due to increased
hearing aid demand. Revenue derived from other medical products was unfavorably impacted by weakened European
and Asian economic conditions.
• Revenue derived from our aerospace/defense market (27% of 2012 segment revenue) increased $13.7 million or 3%
mainly due to continued increase in build rates of commercial aircraft and the timing and funding of key defense
programs in which we participate. The defense market in Europe continues to be impacted by the weak macro-economic
environment.
• We continue to experience weakened demand in the global telecom markets, driven in part by continued deferred
industry investment. This contributed to a revenue decrease of $34.0 million or 18% from our telecom/other markets
(10% of 2012 segment revenue).
Communication Technologies earnings in 2012 decreased $7.4 million or 3% compared with 2011, with a decrease in operating
margin of 220 basis points. The earnings and margin decreases were mainly due to lower margins from the integration of Sound
Solutions including a full year of incremental depreciation and amortization compared to six months in 2011, new product ramp
up costs and restructuring charges related to cost reduction activities, offset in part by productivity initiatives, leverage on higher
MEMs volume, and the absence of one-time acquisition related costs associated with the Sound Solutions.
Bookings for the year ended December 31, 2012 and backlog at December 31, 2012 indicate continued strength across each of
our end markets, with the exception of our telecommunication/other market.
2011 Versus 2010
Revenue generated by our Communication Technologies segment increased $284.1 million or 26% compared with 2010, with
$190.2 million, or 18% of the growth, attributed principally to the 2011 acquisition of Sound Solutions, which supplemented
our product offerings in the growing handset market. Our organic revenue growth of 7% was largely due to continued strong
demand for smart phones serving the consumer electronics market which grew significantly year over year. Although there was
an incremental decrease in revenue due to strategic pricing initiatives for our communication and telecommunication products
corresponding to normal product life cycle maturities, this decrease was more than offset by revenue growth from market share
gains, new product introductions and product mix.
• Our revenue in the consumer electronics market (representing 40% of 2011 segment revenue) increased $91.8 million
or 35%, excluding Sound Solutions. Our MEMs microphones and SiSonic™ technologies were well positioned to
capitalize on this market's growth as we have continued to invest in capacity to meet the growing market demands.
• Our medical technology revenue (17% of segment revenue) declined by $6.6 million or 3% principally due to softer
hearing aid demand in the first half of 2011 and overall softer medical equipment demand.
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• Our aerospace/defense revenue (29% of 2011 segment revenue) increased $25.3 million or 7%. We experienced solid
demand in the commercial aerospace market due to increased build rates of commercial aircraft by leading aircraft
manufactures and increased demand for our aftermarket products globally. This increase was partially offset by revenue
derived from our defense market mainly due to timing and funding of certain programs in which we participate.
• Our telecom/other revenue (14% of 2011 segment revenue) decreased $16.6 million or 8% due to weakened demand
in the global telecom markets, driven in part by deferred industry investment due to service provider consolidation.
Communication Technologies 2011 earnings increased 10% compared with 2010, but operating margin declined 250 basis points.
The margin decline mainly resulted from higher acquisition related costs including incremental depreciation and amortization,
higher raw material costs, and lower margins from the integration of the Sound Solutions acquisition. Excluding the impact of
Sound Solutions, earnings would have increased by $36.6 million, or 18%, and operating margin would have increased by 160
basis points as compared with 2010.
Energy
Our Energy segment serves the oil, gas, and power generation industries with products that promote efficient and cost-effective
drilling, extraction, storage, and movement of oil and gas products, or constitute critical components for power generation
equipment. The Energy segment operates through the following business lines: Drilling, which comprises products supporting
the cost-effective drilling of oil and gas wells; Production, which comprises products and components facilitating the extraction
and movement of fuel from the ground; and Downstream, which comprises systems and products that support the efficient, safe,
and environmentally-sensitive handling of fuel, hazardous liquids, and dry-bulk commodities.
(dollars in thousands)
Revenue:
Drilling
Production
Downstream
Total
Segment earnings
Operating margin
Segment EBITDA
Segment EBITDA margin
Other measures:
Years Ended December 31,
2012
2011
2010
% Change
2012 vs.
2011
2011 vs.
2010
$
408,629
1,182,315
581,660
$ 2,172,604
$
400,280
969,271
531,198
$ 1,900,749
$
297,926
562,800
442,781
$ 1,303,507
2.1 %
22.0 %
9.5 %
14.3 %
34.4%
72.2%
20.0%
45.8%
$
538,650
$
450,637
$
316,113
19.5 %
42.6%
24.8%
23.7%
24.3%
$
633,727
$
528,456
$
364,955
19.9 %
44.8%
29.2%
27.8%
28.0%
Depreciation and amortization
Bookings
Backlog
$
95,077
2,193,042
256,093
$
77,819
1,985,405
246,351
$
48,842
1,319,015
152,183
22.2 %
10.5 %
4.0 %
59.3%
50.5%
61.9%
Components of revenue growth:
Organic growth
Acquisitions
Foreign currency translation
2012 vs.
2011
2011 vs.
2010
9.4 %
5.3 %
(0.4)%
14.3 %
26.2%
18.5%
1.1%
45.8%
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2012 Versus 2011
Our 2012 Energy segment revenue increased $271.9 million or 14% compared to 2011. The increase was driven by organic
revenue growth of 9%, growth from the acquisitions of Production Control Services (in April 2012) and Oil Lift (in September
2011) totaling 5%, and a negligible impact from foreign currency translation. Pricing actions, mainly in response to increased
raw material costs, represented approximately 2% of the revenue increase.
• Drilling revenue (representing 19% of 2012 segment revenue) increased by $8.3 million or 2% due to an essentially
flat level of drilling activity compared to 2011, which moderated demand for the segment's drilling products.
•
Production revenue (54% of 2012 segment revenue) increased by $213.0 million 22%, with 12% due to organic growth
and 10% from acquisitions. Organic growth was driven by an increased number of active U.S. oil wells and wells with
natural gas liquids driving demand for artificial lift products, higher international sales, and increased demand for
compressor related products and winch products serving the infrastructure and recovery markets.
• Our revenues in the drilling sector, and to a smaller extent in the production sector, are impacted by changes in the
number of active North American drilling rigs. In 2012, the average North American drilling rig count declined 1%
compared to the prior year. We expect the North American rig count growth to turn positive in the second half of 2013.
• Downstream revenue (27% of 2012 segment revenue) increased by $50.5 million or 10%, reflecting increased demand
for loading equipment for the rail, cargo tank and chemical/industrial markets, bearing products serving energy markets,
and fuel delivery systems.
Energy earnings in 2012 increased $88.0 million or 20% primarily resulting from higher volume in the production and downstream
sectors. Operating margin increased 110 basis points compared to the prior year due to improved operating leverage associated
with higher volumes, strategic pricing, and productivity gains, which more than offset the impact of unfavorable product mix
and higher acquisition-related depreciation and amortization.
Bookings for the year ended December 31, 2012 and backlog at December 31, 2012 increased 11% and 4%, respectively,
compared to the prior year periods. We expect market conditions in 2013 to moderate compared to 2012, with continued
geographic expansion and further penetration of new and acquired products and technologies are also expected to contribute to
our growth in 2013.
2011 Versus 2010
Our Energy segment posted record organic revenue, earnings, and bookings in 2011. Revenue and earnings were up 46% and
43%, respectively, due to continued strength in the drilling, production, and downstream energy markets served by the segment.
Recent acquisitions generated revenue growth of 19% and contributed to the segment’s record results. Sales outside of North
America grew 35% driven by significantly higher sales to Central and South America, the Middle East, and Russia. Pricing
actions, generally undertaken to offset commodity inflation, accounted for a marginal portion of the revenue increase.
• Drilling revenue (representing 21% of 2011 segment revenue) grew 34% due to increased exploration activity, pricing,
and market share increases.
•
Production revenue (51% of 2011 segment revenue) increased 72%, with 35% due to organic growth and 37% from
acquisitions. The organic growth was driven by higher drilling and well completion activity, increased international
sales, and higher demand for winch products serving the energy, infrastructure, and recovery markets.
• Our revenues in the drilling and production sectors are impacted by changes in the number of active North American
drilling rigs. The average North American drilling rig count in 2011 was up 21% over the prior year, driven by strong
oil prices.
• Downstream revenue (28% of 2011 segment revenue) was up 20%, with 14% from organic revenue growth and the
balance from recent acquisitions. The organic growth reflected continued strong demand for products in the power
generation, rail, cargo tank, and chemical/industrial markets, as well as nozzles and hanging hardware for retail fueling
stations.
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Table of Contents
Energy earnings increased $134.5 million, or 43%, from the higher organic and acquisition volumes. Energy operating margin
declined 60 basis points compared to the prior year, due to the impact of acquisition-related costs, including higher depreciation
and amortization, and higher material costs, partially offset by improved operating leverage associated with the higher volumes,
strategic pricing, and productivity gains.
Engineered Systems
Our Engineered Systems segment is comprised of two platforms, Fluid Solutions and Refrigeration & Industrial. The Fluid
Solutions platform designs and manufactures pumps, compressors, and chemical proportioning and dispensing products. The
Refrigeration & Industrial platform manufactures products and systems which serve two key end-markets: Refrigeration &
Food Equipment and Other Industrial.
(dollars in thousands)
Revenue:
Refrigeration & Industrial
Refrigeration & Food Equipment
Other Industrial
Years Ended December 31,
% Change
2012
2011
2010
2012 vs.
2011
2011 vs.
2010
$ 1,373,579
1,230,263
2,603,842
$ 1,240,938
1,183,700
2,424,638
$ 1,142,533
1,077,311
2,219,844
10.7 %
3.9 %
7.4 %
8.6%
9.9%
9.2%
Fluid Solutions Platform
Eliminations
817,162
(1,460)
$ 3,419,544
677,621
(1,524)
$ 3,100,735
567,914
(1,316)
$ 2,786,442
20.6 %
19.3%
10.3 %
11.3%
Segment earnings
Operating margin
$
501,952
$
445,186
$
382,644
12.8 %
16.3%
14.7%
14.4%
13.7%
Segment EBITDA
Segment EBITDA margin
Other measures:
Depreciation and amortization
Bookings
Refrigeration & Industrial
Fluid Solutions
Eliminations
Backlog
Refrigeration & Industrial
Fluid Solutions
Eliminations
Components of revenue growth:
Organic growth
Acquisitions
Foreign currency translation
$
595,573
$
519,962
$
455,170
14.5 %
14.2%
17.4%
16.8%
16.3%
$
93,621
$
74,776
$
72,526
25.2 %
3.1%
$ 2,585,130
796,489
(1,441)
$ 3,380,178
$ 2,512,706
682,832
(2,816)
$ 3,192,722
$ 2,291,896
573,886
(2,412)
$ 2,863,370
2.9 %
16.6 %
9.6%
19.0%
5.9 %
11.5%
$
$
516,559
160,890
(157)
677,292
$
$
528,118
54,194
(177)
582,135
$
$
446,267
47,123
(315)
493,075
(2.2)%
196.9 %
18.3%
15.0%
16.3 %
18.1%
2012 vs.
2011
2011 vs.
2010
5.6 %
6.1 %
(1.4)%
10.3 %
9.4%
0.6%
1.3%
11.3%
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2012 Versus 2011
Engineered Systems 2012 revenue increased $318.8 million or 10% driven by organic revenue growth of 6% and growth from
recent acquisitions of 6%, offset by a 2% unfavorable foreign currency impact.
• Revenue of our Refrigeration & Industrial platform, which serves our refrigeration and food equipment and other
industrial end-markets, increased $179.2 million or 7%.
• Revenue derived from refrigeration and food equipment markets (representing 40% of 2012 segment revenue)
increased $132.6 million or 11%, with 2% of the revenue growth generated by the Anthony and Advansor
acquisitions, and the remaining 9% of the growth reflecting solid demand for refrigeration systems fueled by
remodel activity at major retail chains, as well as increased demand for foodservice equipment through dealer
and direct channels and for beverage can-making equipment, especially in Asia.
• Revenue generated by our businesses serving other industrial markets (36% of 2012 segment revenue)
increased $46.6 million or 4%. The increase was driven by higher demand for waste and recycling equipment
and industrial automation machinery, along with increased demand for vehicle services in the important Asian
markets and strong first-half demand for hydraulic equipment serving the mining and utility sectors.
• Revenue of our Fluid Solutions platform (24% of 2012 segment revenue) increased by $139.5 million or 21% reflecting
the favorable impact of recent acquisitions, most notably Maag Pump Systems, which was acquired in the first quarter
of 2012, partly offset by a 1% decline in organic revenue, primarily resulting from weakness in our European markets.
Engineered Systems segment earnings in 2012 increased $56.8 million or 13% compared with 2011, due to the impact of recent
acquisitions, favorable net material cost, and productivity improvements, partially offset by weakened Europe markets and
unfavorable foreign currency impacts. Operating margin increased 30 basis points compared to 2011, as favorable pricing and
productivity benefits more than offset acquisition-related costs and unfavorable foreign currency impacts.
Segment bookings for 2012 and backlog at December 31, 2012 increased compared to 2011 levels, primarily from higher pump
equipment orders associated with Maag. Our 2012 Refrigeration & Industrial year-end backlog level declined slightly compared
to 2011, which included significant refrigeration bookings for Target's P-fresh remodeling project, which is nearing completion.
2011 Versus 2010
Engineered Systems 2011 revenue increased 11%, driven by organic revenue growth of 9%, favorable foreign currency of 1%
and a negligible impact from recent acquisitions.
• Revenue of our refrigeration & industrial platform, which serves our refrigeration and food equipment, waste and
recycling, and other industrial end-markets, increased $204.8 million or 9%.
• Revenue from refrigeration and food equipment (representing 40% of 2011 segment revenue) increased $98
million or 9% reflecting strong demand for refrigeration systems fueled by remodel activity at major retail
chains.
•
Performance by our businesses serving the waste and recycling and other industrial markets (38% of 2011
segment revenue) was driven by increased global demand for industrial automation machinery, improving
demand for vehicle services in the important Asian markets and a market rebound in hydraulic equipment due
in part to strength in the mining sector, partially offset by a double-digit decline in waste and recycling revenue
given continued constraints on municipal spending. These factors combined to increase other industrial revenue
by $106 million or 10%.
• Revenue of our fluid solutions platform (22% of 2011 segment revenue) increased by $110 million or 19% reflecting
strong demand for pumps in the chemical, transport, and hygienic markets and increasing demand for heat exchange
systems, coupled with the benefits from geographic expansion, particularly in Asia, and price increases necessary to
cover rising commodity costs.
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Engineered Systems segment earnings increased $62.5 million or 16% on the strength of increased volume. Operating margin
expanded by 70 basis points, as a result of positive pricing actions and productivity savings, which more than offset cost escalation
and unfavorable product mix.
Printing & Identification
Our Printing & Identification segment is a worldwide supplier of precision marking and coding, printing, dispensing, soldering
and coating equipment and related consumables and services. The segment serves two broad global end- markets: Fast Moving
Consumer Goods ("FMCG") and Industrial. As discussed previously, two businesses serving the electronic assembly and test
markets, namely ECT and DEK, were reclassified to discontinued operations in the fourth quarter of 2012, as we expect to divest
these businesses in 2013. The discussion that follows addresses only the remaining continuing operations of the segment.
(dollars in thousands)
Revenue:
Fast Moving Consumer Goods
Industrial
Total
Segment earnings
Operating margin
Segment EBITDA
Segment EBITDA margin
Other measures:
Years Ended December 31,
% Change
2012
2011
2010
2012 vs.
2011
2011 vs.
2010
$
$
$
588,856
407,675
996,531
$
581,158
427,078
$ 1,008,236
135,159
$
141,561
13.6%
14.0%
$
$
$
545,000
398,681
943,681
151,235
16.0%
1.3 %
(4.5)%
(1.2)%
6.6 %
7.1 %
6.8 %
(4.5)%
(6.4)%
$
168,761
$
175,043
$
184,805
(3.6)%
(5.3)%
16.9%
17.4%
19.6%
Depreciation and amortization
Bookings
Backlog
$
33,602
999,054
97,857
$
33,482
1,018,355
94,557
$
33,570
959,177
90,554
0.4 %
(1.9)%
3.5 %
(0.3)%
6.2 %
4.4 %
Components of revenue growth:
Organic growth
Acquisitions
Foreign currency translation
2012 Versus 2011
2012 vs.
2011
2011 vs.
2010
2.4 %
— %
(3.6)%
(1.2)%
3.3 %
— %
3.5 %
6.8 %
Printing & Identification segment revenue decreased $11.7 million or 1% compared to 2011, attributable to 2% organic revenue
growth, primarily driven by higher FMCG end market revenue, more than offset by a 3% unfavorable foreign currency impact.
•
•
FMCG revenue (representing 59% of 2012 segment revenue) grew $7.7 million or 5% year-over-year, excluding a 4%
unfavorable impact from foreign currency. Despite economic weakness in Europe, growth was driven by continued
market acceptance of our new products and added sales and service resources in key regional markets.
Industrial revenue (41% of 2012 segment revenue) contracted 1% compared with the prior year, excluding a 4%
unfavorable impact from foreign currency, reflecting weaker European and slowing Asia markets.
Printing & Identification segment earnings declined $6.4 million or 5% in 2012 compared to 2011, resulting in an operating
margin decline of 40 basis points. The margin decline is primarily attributed to lower industrial end market volumes, key strategic
investments for growth and restructuring expenses recognized in the first half of 2012, partially offset by ongoing productivity
improvements and a partial year of restructuring savings.
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Bookings for 2012 decreased 2% as compared to 2011, principally due to unfavorable currency, while backlog levels at December
31, 2012 increased 4% compared to the prior year end.
2011 Versus 2010
Printing & Identification segment 2011 revenue increased $64.6 million or 7% compared with 2010, with over 3% organic
revenue growth and 3.5% favorable foreign currency impact.
•
•
FMCG revenue (representing 58% of 2011 segment revenue) grew in excess of 3% year-over-year, excluding a 3.5%
favorable impact from foreign currency, as new product introductions gained traction as the year progressed, offset
partially by softening European markets at the end of the year.
Industrial revenue (42% of 2011 segment revenue) was up similarly in excess of 3% versus the prior year, excluding
a 3.5% favorable impact from foreign currency.
Printing & Identification segment earnings declined $9.7 million in 2011 compared to 2010, resulting in an operating margin
decline of 200 basis points. The margin decline is primarily attributed to unfavorable regional mix and new product introduction
costs. We also completed several small employee reduction in force programs across targeted businesses to streamline operations
and to align more closely with our growth in geographic end markets. Costs related to these programs were not significant.
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FINANCIAL CONDITION
We assess our liquidity in terms of our ability to generate cash to fund our 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 available commercial paper and bank lines of credit, and the ability
to attract long-term capital with satisfactory terms. We generate substantial cash from the operations of our businesses and
remain in a strong financial position, with sufficient liquidity available for reinvestment in existing businesses and strategic
acquisitions.
Cash Flow Summary
The following table is derived from our Consolidated Statement of Cash Flows:
Cash Flows from Continuing Operations (in thousands)
Net Cash Flows Provided By (Used In):
Operating activities
Investing activities
Financing activities
Operating Activities
Years Ended December 31,
2011
2010
2012
$ 1,261,160
(1,345,888)
(342,942)
$
948,864
(1,012,430)
(50,501)
$
830,295
(166,444)
(304,788)
Cash provided by operating activities in 2012 increased $312.3 million, primarily due to increased net earnings in 2012 and
reduced investment in working capital relative to 2011. Higher sales volume increased 2012 net earnings before depreciation
and amortization by $127 million as compared with 2011. Our net cash flow increased $129 million on the change in working
capital year-over-year, as we converted working capital of approximately $31 million to cash in 2012, while we invested $98
million in working capital in 2011. Additionally, 2012 cash flow increased $77 million from the year-over-year change in income
tax accruals. In 2012, our tax provision exceeded our payments leading to an increase in the accrued tax balance, while in 2011
we made tax payments in excess of the 2011 provision, in part due to 2011 settlement activity, which reduced the accrued tax
balance.
Cash provided by operating activities in 2011 increased $118.6 million, primarily due to increased earnings in 2011 and reduced
investment in working capital relative to 2010. Higher sales volume increased 2011 net earnings before depreciation and
amortization by $215 million as compared with 2010. Our investment in working capital was $59 million lower than in 2010,
at which time a working capital build-up was necessary to support revenue levels recovering from the 2009 declines. These
increases in cash flow were partially offset by $170 million of higher income tax payments resulting from our higher earnings
and 2011 tax settlement activity, as well as higher employee incentive compensation payments and reductions in deferred revenue.
Pension and Post-Retirement Activity. Post-retirement costs relating to pension and other employee-related defined benefit plans
affect results in all segments. We recorded net periodic benefit costs of $44 million, $40 million, and $33 million in 2012, 2011,
and 2010, respectively, relating to our benefit plans (including our defined benefit, supplemental, and post-retirement plans).
The main drivers of fluctuations in expense from year to year are assumptions in formulating our long-term estimates, including
discount rates used to value plan obligations, expected returns on plan assets, the service and interest costs, and the amortization
of actuarial gains and losses. In 2012, the actual return on plan assets increased consistent with increased returns within the
global equity markets. In 2011, the actual return on U.S. plan assets increased, while returns on our non-U.S. plans declined,
as a result of the different mix of investments in the plans. In 2013, we expect our net periodic benefit cost to be approximately
$60 million, with the increase compared to 2012 being attributed to the lower discount rates used to value the post-retirement
obligations, higher amortization relating to unrecognized asset losses, and an increase in participants in our supplemental
retirement plans.
The funded status of our qualified defined benefit pension plans is dependent upon many factors, including returns on invested
assets, the level of market interest rates, and the level of funding. We contribute cash to our plans at our discretion, subject to
applicable regulations and minimum contribution requirements. At December 31, 2012, the projected benefit obligations of our
qualified defined benefit plans reflected underfunding by $153 million, which includes $49 million relating to the U.S. Dover
Corporate Pension Plan and $103 million relating to our significant international pension plans, some in locations where it is
not economically advantageous to pre-fund the plans due to local regulations. The majority of the international obligations relate
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to defined pension plans operated by our businesses in Germany, the United Kingdom, and Switzerland. Cash contributions to
qualified defined benefit pension plans in 2012, 2011, and 2010 totaled $28 million, $49 million, and $38 million, respectively.
In 2013, we expect to contribute $20 to $40 million to our U.S. qualified defined benefit plan and approximately $14 million
to our non-U.S. plans. See Note 14 to the Consolidated Financial Statements in Item 8 of this Form 10-K for further discussion
regarding our post-retirement plans.
Adjusted Working Capital. In 2012, Adjusted Working Capital (a non-GAAP measure calculated as accounts receivable, plus
inventory, less accounts payable) increased from 2011 by $111 million, or 8%, to $1.4 billion, which reflected an increase in
receivables of $107 million, an increase in net inventory of $139 million, and an increase in accounts payable of $135 million,
generally due to the impact of 2012 acquisitions. Excluding acquisitions and the effects of foreign exchange translation of $11
million, Adjusted Working Capital would have decreased by $30 million, or 2%.
Investing Activities
Cash used in investing activities results from cash outflows for capital expenditures, acquisitions, and short-term investments,
partially offset by proceeds from sales of businesses, property, plant and equipment, and short-term investments. In 2012, we
used cash in investing activities of $1.3 billion compared to $1.0 billion in 2011, driven by the following factors:
• Acquisitions. In 2012, we used $1.0 billion to acquire seven businesses, including $266 million for Maag Pump Systems,
a European acquisition for our Fluid Solutions platform, $119 million for the cash portion of the purchase price paid
for PCS, a second quarter acquisition in our Energy segment, and $603 million for Anthony International, a fourth
quarter acquisition for our Refrigeration & Industrial platform. A portion of the PCS acquisition was also funded by
the issuance of Dover stock valued at $101 million at the date of acquisition. Cash paid for the 2012 acquisitions is
net of $45 million received as final payment for settlement of purchase price adjustments for post-acquisition
contingencies relating to the 2011 Sound Solutions acquisition by our Communication Technologies segment. In
comparison, in 2011, we used $1.4 billion to acquire nine businesses, including $401 million for the acquisition of
Harbison-Fischer by our Energy segment and $824 million for the acquisition of Sound Solutions. See Note 2 to the
Consolidated Financial Statements in Item 8 of this Form 10-K for additional information with respect to recent
acquisitions.
• Capital spending. Capital expenditures, primarily to support capacity expansion, innovation, and cost savings, were
$297 million in 2012 and $263 million in 2011. Our capital expenditures were approximately $34 million higher in the
2012 period as compared to 2011, reflecting continued investment in capacity expansion to support growth in the
handset market with significant investments to increase MEMs manufacturing capacity in our domestic and Asian
facilities, along with other investments supporting growth in our energy production end markets. We expect 2013
capital expenditures as a percentage of revenue to approximate 3.5%.
• Proceeds from sale of businesses. In 2011, we generated cash of $517 million, primarily from the sale of Paladin
Brands, Crenlo, and Heil Trailer, three businesses that had operated in our Engineered Systems segment.
•
Short-term investments. We typically invest cash in excess of near-term requirements in short-term investments. In
2011, we generated proceeds of $124 million from the sale of short-term investments, which were liquidated to provide
cash for 2011 acquisitions. We held no short-term investments during 2012.
We anticipate that capital expenditures and any acquisitions we make through the remainder of 2013 will be funded from available
cash and internally generated funds and, if necessary, through the issuance of commercial paper, the use of established lines of
credit, or accessing the public debt or equity markets.
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Table of Contents
Financing Activities
Our cash flow from financing activities generally relates to the use of cash for purchases of our common stock and payment of
dividends, offset by net borrowing activity and proceeds from exercise of stock options. For 2012, we used cash of $343 million
for financing activities compared to $51 million in 2011, with the activity attributed to the following:
•
Long-term debt. In the 2012 period, we had negligible reductions in long-term debt. However, in the 2011 period, we
received proceeds of $789 million from the issuance of 4.3% 10-year Notes due 2021 and 5.375% 30-year Notes due
2041. These proceeds were used to fund acquisitions made in the first quarter of 2011 and repay $400 million of other
borrowings which came due during the period.
• Notes payable. In December 2012, we received proceeds of $608 million from commercial paper issued principally
to fund the fourth quarter Anthony acquisition.
•
Treasury purchases. In November 2012, Dover's Board of Directors approved an additional $1 billion stock repurchase
program, to drive additional shareholder value. As a result, our 2012 activity includes incremental share buy-backs
under the above-mentioned program and the repurchase of shares to offset the dilutive impact of shares issued for the
second quarter acquisition of PCS, in addition to the typical repurchase of shares to offset the dilutive impact of shares
issued under our equity compensation plans. In total, we used $749 million in 2012 to purchase 12.3 million shares of
our common stock in the open market. In 2011, we purchased approximately 4.0 million shares for $242 million.
• Dividend payments. Total dividend payments to common shareholders were $241 million in 2012 and $219 million
in 2011. Our dividends per common share increased 13% to $1.33 per share in 2012 compared to $1.18 per share in
2011. This represents the 57th consecutive year that our dividend has increased.
• Proceeds from the exercise of stock options. We received $43 million from employee exercises of stock options in
2012, compared to $40 million in 2011, with the variance attributed to a greater number of options exercised in the
2012 period.
Cash Flows from Discontinued Operations
In 2012, 2011, and 2010 our businesses reported as discontinued operations generated cash flow of $5 million, $117 million,
and $100 million, respectively. The 2011 and 2010 amounts reflect cash flows from the three businesses sold in the third and
fourth quarters of 2011, as well as cash flows from the two businesses reclassified to discontinued operations in 2012. The
significant decrease in 2012 cash flows from discontinued operations, relative to the prior years, reflects a significant decrease
in 2012 earnings from the businesses reclassified in 2012, as well as the the absence of cash flows from the businesses sold in
2011.
Liquidity and Capital Resources
Free Cash Flow
In addition to measuring our cash flow generation and usage based upon the operating, investing, and financing classifications
included in the Consolidated Statements of Cash Flows, we also measure free cash flow (a non-GAAP measure). We believe
that free cash flow is an important measure of operating performance because it provides management and investors a
measurement of cash generated from operations that is available to repay debt, pay dividends, fund acquisitions, and repurchase
our common stock. For further information, see the Non-GAAP Disclosures at the end of this Item 7.
The following table reconciles our free cash flow to cash flow provided by operating activities:
Free Cash Flow (dollars in thousands)
Cash flow provided by operating activities
Less: Capital expenditures
Free cash flow
Free cash flow as a percentage of revenue
2012
$ 1,261,160
(297,012)
964,148
Years Ended December 31,
2011
948,864
(262,676)
686,188
$
$
$
$
$
2010
830,295
(169,297)
660,998
11.9%
9.3%
10.8%
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For 2012, we generated free cash flow of $964.1 million, representing 11.9% of revenue and 115.7% of earnings from continuing
operations, while continuing to make investments necessary to support our growth. Free cash flow in 2011 was $686.2 million
or 9.3% of revenue, compared to $661.0 million, or 10.8% of revenue in 2010. The increase in 2012 free cash flow reflects
higher earnings from continuing operations before depreciation and amortization and a $129 million positive change in working
capital year-over-year, offset in part by higher capital expenditures in 2012 necessary to fund expansion in the Company’s high-
growth businesses. We expect to generate free cash flow in 2013 of approximately 10% of revenue, consistent with our historical
performance.
The 2011 increase in free cash flow compared to 2010 reflects higher earnings from continuing operations and lower investment
in working capital, partially offset by higher tax payments and increased capital expenditures in 2011.
Net Debt to Net Capitalization
We utilize the net debt to net capitalization calculation (a non-GAAP measure) to assess our overall financial leverage and
capacity and believe 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 measures:
Net Debt to Net Capitalization Ratio
(dollars in thousands)
Current maturities of long-term debt
Commercial paper
Long-term debt
Total debt
Less: Cash, cash equivalents, and short-term
investments
Net debt
Add: Stockholders' equity
Net capitalization
Net debt to net capitalization
December 31, 2012 December 31, 2011 December 31, 2010
$
$
$
3,266
607,500
2,189,350
2,800,116
1,022
—
2,186,230
2,187,252
1,590
15,000
1,790,886
1,807,476
(800,076)
2,000,040
4,919,230
6,919,270
28.9%
$
(1,206,755)
980,497
4,930,555
5,911,052
16.6%
$
(1,309,095)
498,381
4,526,562
5,024,943
9.9%
$
Our net debt to net capitalization ratio increased at December 31, 2012 compared to the prior year-end, primarily due to the use
of cash and borrowings to fund acquisitions totaling $1.0 billion during the year. Total borrowings are higher by $613 million
at December 31, 2012, primarily due to commercial paper issued in the fourth quarter to fund acquisitions. We expect to replace
these commercial paper borrowings with long-term fixed rate notes in 2013.
Our net debt to net capitalization ratio increased at December 31, 2011 compared to the 2010 year end primarily due to the use
of cash and debt to fund acquisitions totaling $1.4 billion during the year. Total net borrowings increased by $380 million during
2011, primarily due to $789 million net proceeds received from the 4.3% 10-year Notes due 2021 and 5.375% 30-year Notes
due 2041 issued in February, approximately half of which was used to repay outstanding commercial paper balances incurred
to retire $400 million of notes which came due earlier in February 2011. In 2011, we also received cash proceeds of $517
million, primarily from the sale of three businesses.
We use commercial paper borrowings for general corporate purposes, including the funding of acquisitions and the repurchase
of our common stock. We currently maintain an unsecured revolving credit facility with a syndicate of banks which permits
borrowings up to $1 billion and expires on November 10, 2016. This facility is used primarily as liquidity back-up for our
commercial paper program. We have not drawn down any loans under this facility nor do we anticipate doing so. If we were to
draw down a loan, at our election, the loan would bear interest at a Eurodollar or Sterling rate based on LIBOR, plus an applicable
margin ranging from 0.565% to 1.225% (subject to adjustment based on the rating accorded our 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, we are required to maintain an
interest coverage ratio of EBITDA to consolidated net interest expense of not less than 3.0 to 1. We were in compliance with
this covenant and our other long-term debt covenants at December 31, 2012 and had a coverage ratio of 13.9 to 1. We are not
aware of any potential impairment to our liquidity and expect to remain in compliance with all of our debt covenants.
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We also have 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.
At December 31, 2012, our cash and cash equivalents totaled $800 million, of which approximately $700 million was held
outside the United States. Cash equivalents are invested in highly liquid investment grade money market instruments with
maturities of three months or less. We regularly invest 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. We held no short-term investments at December 31, 2012 or 2011.
If our cash held outside of the U.S. were to be repatriated, under current law, it would be subject to U.S. federal income taxes,
less applicable foreign tax credits. However, our intent is to permanently reinvest these funds outside of the U.S. The cash that
our foreign subsidiaries hold for indefinite reinvestment is generally used to finance foreign operations and investments, including
acquisitions. It is not practicable to estimate the amount of tax that might be payable if some or all of such earnings were to be
repatriated, and the amount of foreign tax credits that would be available to reduce or eliminate the resulting U.S. income tax
liability. Management believes that it has sufficient liquidity to satisfy its cash needs, including its cash needs in the United
States.
Our ability to obtain debt financing at comparable risk-based interest rates is partly a function of our existing cash-flow-to-debt
and debt-to-capitalization levels as well as our current credit standing. Our credit ratings, which are independently developed
by the respective rating agencies, were as follows as of December 31, 2012:
Moody's
Standard & Poor's
Fitch
Short Term
Rating
P-1
A-1
F1
Long Term
Rating
A2
A
A
Outlook
Stable
Stable
Stable
We believe 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 our debt. Operating
cash flow and access to capital markets are expected to satisfy our various cash flow requirements, including acquisitions and
capital expenditures.
Off-Balance Sheet Arrangements and Contractual Obligations
As of December 31, 2012, we had approximately $96.7 million outstanding in letters of credit with financial institutions, which
expire at various dates in 2013 through 2017. These letters of credit are primarily maintained as security for insurance, warranty
and other performance obligations. In general, we would only be liable for the amount of these guarantees in the event of default
in the performance of our obligations, the probability of which we believe is remote.
We have also provided typical indemnities in connection with sales of certain businesses and assets, including representations
and warranties and related indemnities for environmental, health and safety, tax, and employment matters. We do not have any
material liabilities recorded for these indemnifications and are not aware of any claims or other information that would give rise
to material payments under such indemnities.
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A summary of our consolidated contractual obligations and commitments as of December 31, 2012 and the years when these
obligations are expected to be due is as follows:
Payments Due by Period
(in thousands)
Long-term debt (1)
Interest expense (2)
Rental commitments
Purchase obligations (3)
Capital leases
Supplemental & post-retirement benefits (4)
Uncertain tax positions (5)
Total obligations
Total
$2,192,616
1,816,585
271,505
41,660
6,839
167,976
214,064
$4,711,245
_________
Less than
1 Year
$
3,266
117,788
63,228
35,245
2,552
21,045
1,214
$ 244,338
1-3 Years
$ 302,086
232,529
87,534
6,401
2,644
44,299
—
$ 675,493
More
than 5
Years
Other
(5)
3-5 Years
$
206,326
47,206
14
855
21,939
—
$ 276,340
— $1,887,264
1,259,942
73,537
—
788
80,693
$
—
—
—
—
—
—
— 212,850
$ 212,850
$3,302,224
(1) See Note 9 to the Consolidated Financial Statements. Amounts represent total long-term debt, including current maturities.
(2) Amounts represent estimate of future interest payments on long-term debt using the interest rates in effect at December
31, 2012.
(3) Amount includes purchase obligations totaling $36,473 relating to businesses reported within discontinued operations at
December 31, 2012.
(4) Amounts represent estimated benefit payments under our supplemental and post-retirement benefit plans. See Note 14 to
the Consolidated Financial Statements. We also expect to contribute approximately $20 to $40 million to our qualified
defined benefit plans in 2013, which amount is not reflected in the above table.
(5) Amount in "Other" column includes $63,059 reported within discontinued operations at December 31, 2012. Due to the
uncertainty of the potential settlement of future uncertain tax positions, we are unable to estimate the timing of the related
payments, if any, that will be made subsequent to 2013. These amounts do not include the potential indirect benefits
resulting from deductions or credits for payments made to other jurisdictions.
Financial Instruments and Risk Management
The diverse nature of our businesses’ activities necessitates the management of various financial and market risks, including
those related to changes in interest rates, foreign currency exchange rates, and commodity prices. We periodically use derivative
financial instruments to manage some of these risks. We do not hold or issue derivative instruments for trading or speculative
purposes. We are exposed to credit loss in the event of nonperformance by counterparties to our financial instrument contracts;
however, nonperformance by these counterparties is considered unlikely as our policy is to contract with highly-rated, diversified
counterparties.
Interest Rate Exposure
We may from time to time enter into interest rate swap agreements to manage our exposure to interest rate changes. As of
December 31, 2012, we did not have any open interest rate swap contracts. We issue commercial paper, which exposes us to
changes in variable interest rates; however, maturities are typically three months or less so a change in rates over this period
would have an immaterial impact on our pre-tax earnings.
We consider our current risk related to market fluctuations in interest rates to be minimal since our debt is largely long-term and
fixed-rate in nature. Generally, the fair market value of fixed-interest rate debt will increase as interest rates fall and decrease
as interest rates rise. A 100 basis point increase in market interest rates would decrease the 2012 year-end fair value of our long-
term debt by approximately $250 million. However, since we have no plans to repurchase our outstanding fixed-rate instruments
before their maturities, the impact of market interest rate fluctuations on our long-term debt does not affect our results of operations
or financial position.
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Foreign Currency Exposure
We conduct business in various non-U.S. countries, primarily in Canada, Mexico, substantially all of the European countries,
Brazil, Argentina, Malaysia, China, India, and other Asian countries. Therefore, we have foreign currency risk relating to
receipts from customers, payments to suppliers, and intercompany transactions denominated in foreign currencies. We will
occasionally use derivative financial instruments to offset such risks, when it is believed that the exposure will not be limited
by our normal operating and financing activities. We have formal policies to mitigate risk in this area by using fair value and/
or cash flow hedging programs. We have not had material foreign currency hedging activity in recent years.
Changes in the value of the currencies of the countries in which we operate affect our results of operations, financial position,
and cash flows when translated into U.S. dollars, our reporting currency. The strengthening of the U.S dollar could result in
unfavorable translation effects as the results of foreign operations are translated into U.S. dollars. We have generally accepted
the exposure to exchange rate movements relative to our investment in non-U.S. operations. We may, from time to time, for a
specific exposure, enter into fair value hedges, and at December 31, 2012, we had one outstanding floating-to-floating cross
currency swap agreement for a total notional amount of $50 million in exchange for CHF 65.1 million, which matures on October
15, 2015. This transaction hedges a portion of our net investment in non-U.S. operations. The agreement qualifies as a net
investment hedge and changes in the fair value are reported within the cumulative translation adjustment section of other
comprehensive earnings, with any hedge ineffectiveness being recognized in current earnings. The fair values at December 31,
2012 and 2011 reflected cumulative losses of $22.7 million and $21.7 million, respectively, due to the strengthening of the Swiss
franc relative to the U.S. dollar over the term of this arrangement.
Commodity Price Exposure
Certain of our businesses are exposed to volatility in the prices of certain commodities, such as aluminum, steel, copper, and
various precious metals, among others. Our primary exposure to commodity pricing volatility relates to the use of these materials
in purchased component parts or the purchase of raw materials. When possible, we maintain long-term fixed price contracts on
raw materials and component parts; however, we are prone to exposure as these contracts expire. We may, from time to time,
for a specific exposure, enter into cash flow hedges to mitigate our risk to commodity pricing; however, we had no such contracts
outstanding at December 31, 2012.
Critical Accounting Policies
Our 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
we report. These estimates can also affect supplemental information contained in our public disclosures, including information
regarding contingencies, risk, and our financial condition. The significant accounting policies used in the preparation of our
consolidated financial statements are discussed in Note 1. The accounting assumptions and estimates discussed in the section
below are those that we consider most critical to an understanding of our financial statements because they inherently involve
significant judgments and estimates. We believe our use of estimates and underlying accounting assumptions conforms to GAAP
and is consistently applied. We review valuations based on estimates for reasonableness on a consistent basis.
• Revenue is recognized when all of the following circumstances are satisfied: a) persuasive evidence of an arrangement
exists, b) price is fixed or determinable, c) collectability is reasonably assured, and d) delivery has occurred or services
have been rendered. The majority of our revenue is generated 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. Service revenue represents less than 10% of our total revenue and is recognized as the services are
performed. In limited cases, our revenue arrangements with customers require delivery, installation, testing, certification,
or other acceptance provisions to be satisfied before revenue is recognized. We do not have significant multiple
deliverable arrangements.
•
Inventories for the majority of our subsidiaries, including all international subsidiaries, are stated at the lower of cost,
determined on the first-in, first-out (FIFO) basis, or market. Other domestic inventories are stated at cost, determined
on the last-in, first-out (LIFO) basis, which is less than market value. Under certain market conditions, estimates and
judgments regarding the valuation of inventories are employed by us to properly value inventories. Businesses within
our Communication Technologies and Printing & Identification segments tend to experience somewhat higher levels
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of inventory value fluctuations, particularly given the relatively high rate of product obsolescence over relatively short
periods of time.
• We have significant tangible and intangible assets on our balance sheet that include goodwill and other intangibles
related to acquisitions. The valuation and classification of these assets and the assignment of useful depreciation and
amortization lives involve significant judgments and the use of estimates. The testing of these intangibles under
established accounting guidelines for impairment also requires significant use of judgment and assumptions, particularly
as it relates to the identification of reporting units and the determination of fair market value. Our assets and reporting
units are tested and reviewed for impairment on an annual basis during the fourth quarter or, when indicators of
impairment exist, such as a significant sustained change in the business climate, or when a significant portion of a
reporting unit is to be reclassified to discontinued operations, during the interim periods. We estimate fair value using
discounted cash flow analyses (i.e. an income approach) which incorporate management assumptions relating to future
growth and profitability. Changes in business or market conditions could impact the future cash flows used in such
analyses. We believe that our use of estimates and assumptions are reasonable and comply with generally accepted
accounting principles. We performed the annual impairment testing of our 17 identified reporting units in the fourth
quarter of 2012, and the fair value of 16 of the reporting units exceeded the carrying value by at least 20% and, in most
cases, significantly more. If the fair value of each of these reporting units was decreased by 10%, the resulting fair
value would still have exceeded the carrying value and no impairment would have been recognized. The testing of the
goodwill of our ECT business upon reclassification to discontinued operations in the fourth quarter resulted in a goodwill
impairment on the basis of the fair value assumptions predicated on an anticipated sale. As a result, we computed a
goodwill impairment of $63.8 million ($54.9 million, net of tax) that was recognized in the fourth quarter of 2012
within the results of discontinued operations.
• The valuation of our pension and other post-retirement plans requires the use of assumptions and estimates that are
used to develop actuarial valuations of expenses and assets/liabilities. Inherent in these valuations are key assumptions,
including discount rates, investment returns, projected salary increases and benefits, and mortality rates. Annually, we
review the actuarial assumptions used in our pension reporting and compare them with external benchmarks to ensure
that they accurately account for our future pension obligations. Changes in assumptions and future investment returns
could potentially have a material impact on our pension expense and related funding requirements. Our expected long-
term rate of return on plan assets is reviewed annually based on actual returns, economic trends and portfolio allocation.
Our discount rate assumption is determined by developing a yield curve based on high quality corporate bonds with
maturities matching the plans’ expected benefit payment streams. The plans’ expected cash flows are then discounted
by the resulting year-by-year spot rates. As disclosed in Note 14 to the Consolidated Financial Statements, the 2012
weighted-average discount rates used to measure our qualified defined benefit, supplemental, and other post-retirement
obligations ranged from 3.31% to 4.05%, reduced from the 2011 rates, which ranged from 4.45% to 4.85%. The reduced
discount rates are reflective of the decline in global market interest rates over these periods. A 25 basis point decrease
in the discount rates used for these plans would have increased the post retirement benefit obligations by approximately
$43.1 million from the amount recorded in the financial statements at December 31, 2012. Our pension expense is also
sensitive to changes in the expected long-term rate of return on plan assets. A decrease of 25 basis points in the expected
long-term rate of return on assets would have increased our defined benefit pension expense by approximately $1.7
million.
• We have significant amounts of deferred tax assets that are reviewed for recoverability and valued accordingly. These
assets are evaluated by using estimates of future taxable income streams and the impact of tax planning strategies.
Reserves are also estimated, using more likely than not criteria, for ongoing audits regarding federal, state, and
international issues that are currently unresolved. We routinely monitor the potential impact of these situations and
believe that we have established the proper reserves. Reserves related to tax accruals and valuations related to deferred
tax assets can be impacted by changes in tax codes and rulings, changes in statutory tax rates, and our future taxable
income levels. The provision for uncertain tax positions provides a recognition threshold and measurement attribute
for financial statement tax benefits taken or expected to be taken in a tax return and disclosure requirements regarding
uncertainties in income tax positions. The tax position is measured at the largest amount of benefit that is greater than
50 percent likely of being realized upon ultimate settlement. We record interest and penalties related to unrecognized
tax benefits as a component of our provision for income taxes.
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• We have significant accruals and reserves related to the self-insured portion of our risk management program. These
accruals require the use of estimates and judgment with regard to risk exposure and ultimate liability. We estimate
losses under these programs using actuarial assumptions, our experience, and relevant industry data. We review these
factors quarterly and consider the current level of accruals and reserves adequate relative to current market conditions
and experience.
• We have established liabilities for environmental and legal contingencies at both the business and corporate levels. A
significant amount of judgment and the use of estimates are required to quantify our ultimate exposure in these matters.
The valuation of liabilities for these contingencies is reviewed on a quarterly basis to ensure that we have accrued the
proper level of expense. The liability balances are adjusted to account for changes in circumstances for ongoing issues
and the establishment of additional liabilities for emerging issues. While we believe that the amount accrued to-date
is adequate, future changes in circumstances could impact these determinations.
• Occasionally, we will establish liabilities for restructuring activities at an operation, in accordance with appropriate
accounting principles. These liabilities, for both severance and exit costs, require the use of estimates. Though we
believe that these estimates accurately reflect the anticipated costs, actual results may be different than the estimated
amounts.
• We will from time to time discontinue certain operations for various reasons. Estimates are used to adjust, if necessary,
the assets and liabilities of discontinued operations, including goodwill, to their estimated fair market value. These
estimates include assumptions relating to the proceeds anticipated as a result of the sale. Fair value is established using
internal valuation calculations along with market analysis of similar-type entities. The adjustments to fair market value
of these operations provide the basis for the gain or loss when sold. Changes in business conditions or the inability to
sell an operation could potentially require future adjustments to these estimates. As noted above, we recognized a
goodwill impairment charge of $63.8 million in the fourth quarter of 2012, as determined at the time one of our reporting
units was reclassified to discontinued operations. We will continue to evaluate the businesses held for sale for impairment
at each reporting period.
• We are required to recognize in our consolidated statements of earnings the expense associated with all share-based
payment awards made to employees and directors, including stock options, stock appreciation rights (SARs), restricted
stock, and performance share awards. We use the Black-Scholes valuation model to estimate the fair value of SARs
and stock options granted to employees. The model requires that we estimate the expected life of the SAR or option,
expected forfeitures and the volatility of our stock using historical data. We use the Monte Carlo simulation model to
estimate fair value of performance share awards which also require us to estimate the volatility of our stock and the
volatility of returns on the stock of our peer group as well as the correlation of the returns between the companies in
the peer group. For additional information related to the assumptions used, see Note 12 to the Consolidated Financial
Statements in Item 8 of this Form 10-K.
Recently Adopted Accounting Standards
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.
The Company adopted this guidance on January 1, 2012 and its adoption did not 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 only requires a change in the format of the current presentation. The
Company adopted this guidance for its 2011 year-end reporting, presenting other comprehensive earnings in a separate statement
following the statement of earnings.
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In September 2011, the FASB issued ASU 2011-08 which provides an entity the option to first assess qualitative factors to
determine whether it is necessary to perform the current two-step test for goodwill impairment. If an entity believes, as a result
of its qualitative assessment, that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount,
the quantitative impairment test is required. Otherwise, no further testing is required. This standard became effective for the
Company on January 1, 2012. Its adoption did not impact the Company's consolidated financial statements.
In September 2011, the FASB issued ASU 2011-09 which requires enhanced disclosures around an employer’s participation in
multiemployer pension plans. The standard is intended to provide more information about an employer’s financial obligations
to a multiemployer pension plan to help financial statement users better understand the financial health of the significant plans
in which the employer participates. This guidance became effective for the Company for its fiscal 2011 year-end reporting. Its
adoption did not have a material impact on the Company’s consolidated financial statements.
In July 2012, the FASB issued ASU 2012-02, which allows an entity to first assess qualitative factors to determine whether it
is necessary to perform a quantitative impairment test of an indefinite-lived intangible asset. Per the terms of this ASU, an entity
would not be required to calculate the fair value of an indefinite-lived intangible asset unless the entity determines, based on
qualitative assessment, that it is not more likely than not, the indefinite-lived intangible asset is impaired. The revised standard
is effective for Dover for its annual and interim impairment tests performed for fiscal years beginning after September 15, 2012.
The Company does not expect adoption of this ASU to significantly impact its consolidated financial statements.
Non-GAAP Disclosures
In an effort to provide investors with additional information regarding our results as determined by generally accepted accounting
principles (GAAP), we also disclose non-GAAP information which we believe provides useful information to investors. Segment
EBITDA, segment EBITDA margin, free cash flow, net debt, total debt, net capitalization, the net debt to net capitalization ratio,
adjusted working capital, earnings adjusted for non-recurring items, effective tax rate adjusted for discrete and other 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, or working capital as determined in accordance with GAAP, and they may not be comparable to similarly
titled measures reported by other companies. We believe that segment EBITDA and segment EBITDA margin are useful to
investors and other users of our financial information in evaluating ongoing operating profitability as they exclude the depreciation
and amortization expense related primarily to capital expenditures and acquisitions that occurred in prior years, as well as in
evaluating operating performance in relation to our competitors. Segment EBITDA is calculated by adding back depreciation
and amortization expense to segment earnings. Segment margin is calculated as segment EBITDA divided by segment revenue.
We believe the net debt to net capitalization ratio and free cash flow are important measures of operating performance and
liquidity. Net debt to net capitalization is helpful in evaluating our capital structure and the amount of leverage we employ. 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 our common stock. Reconciliations of free cash flow, total debt, and
net debt can be found above in this Item 7, Management’s Discussion and Analysis of Financial Condition and Results of
Operation. We believe that reporting our effective tax rate adjusted for discrete and other items is useful to management and
investors as it facilitates comparisons of our ongoing tax rate to prior and future periods and our peers. We believe 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 our operational results by showing the changes caused solely by revenue.
We believe 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 our operational changes, given the
global nature of our businesses. We believe that reporting organic revenue and organic revenue growth, which exclude the impact
of foreign currency exchange rates and the impact of acquisitions and divestitures, provides a useful comparison of our revenue
performance and trends between periods.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information required by this section is incorporated by reference to the section, Financial Instruments and Risk Management,
included within the MD&A in Item 7.
47
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ITEM 8. FINANCIAL STATEMENT AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULE
Page
49 Management's Report on Internal Control Over Financial Reporting
50
51
52
53
54
55
56
90
Report of Independent Registered Public Accounting Firm
Consolidated Statements of Earnings
Consolidated Statements of Comprehensive Earnings
Consolidated Balance Sheets
Consolidated Statements of Stockholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Financial Statement Schedule - Schedule II, Valuation and Qualifying Accounts
(All other schedules are not required and have been omitted)
48
Table of Contents
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
The management of the Company is responsible for establishing and maintaining adequate internal control over financial
reporting, as such term is defined in Exchange Act Rule 13a-15(f).
The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of
December 31, 2012. In making this assessment, the Company’s management used the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework.
Based on its assessment under the criteria set forth in Internal Control — Integrated Framework, management concluded that,
as of December 31, 2012, the Company’s internal control over financial reporting was effective to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with U.S. GAAP.
In making its assessment of internal control over financial reporting as of December 31, 2012, management has excluded Maag
Pump Systems, Production Control Services, and Anthony International, three companies acquired in purchase business
combinations during 2012. These companies are wholly-owned by the Company and their revenue for the year ended December
31, 2012 represents approximately 2.8% of the Company’s consolidated total revenue for the same period and their excluded
assets represent approximately 3.2% of the Company’s consolidated assets as of December 31, 2012.
The effectiveness of the Company’s internal control over financial reporting as of December 31, 2012 has been audited by
PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein.
49
Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of Dover Corporation:
In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects,
the financial position of Dover Corporation and its subsidiaries at December 31, 2012 and 2011, and the results of their operations
and their cash flows for each of the three years in the period ended December 31, 2012 in conformity with accounting principles
generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the
accompanying index presents fairly, in all material respects, the information set forth therein when read in conjunction with the
related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective
internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control - Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's
management is responsible for these financial statements and financial statement schedule, for maintaining effective internal
control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included
in Management's Report on Internal Control Over Financial Reporting, appearing under Item 8. Our responsibility is to express
opinions on these financial statements, on the financial statement schedule, and on the Company's internal control over financial
reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable
assurance about whether the financial statements are free of material misstatement and whether effective internal control over
financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal
control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the
risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based
on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances.
We believe that our audits provide a reasonable basis for our opinions.
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures
that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions
of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation
of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the
company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
As described in Management's Report on Internal Control Over Financial Reporting, management has excluded from its
assessment of internal controls over financial reporting as of December 31, 2012 those companies acquired by the Company in
purchase business combinations during 2012. We have also excluded those companies from our audit of internal control over
financial reporting. These companies are wholly-owned by the Company and their excluded assets and revenue, comprised
primarily of Maag Pump Systems, Production Control Services and Anthony International, represent approximately 3.2% and
2.8%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2012.
/s/ PricewaterhouseCoopers LLP
Chicago, Illinois
February 15, 2013
50
Table of Contents
DOVER CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share figures)
Revenue
Cost of goods and services
Gross profit
Selling and administrative expenses
Operating earnings
Interest expense, net
Other expense (income), net
Earnings before provision for income taxes and discontinued operations
Provision for income taxes
Earnings from continuing operations
Earnings (loss) from discontinued operations, net
Net earnings
Earnings per share from continuing operations:
Basic
Diluted
Earnings (loss) per share from discontinued operations:
Basic
Diluted
Net earnings per share:
Basic
Diluted
Dividends paid per common share
Years Ended December 31,
2012
$ 8,104,339
4,997,274
3,107,065
1,841,688
1,265,377
121,141
6,665
1,137,571
304,452
833,119
(22,049)
811,070
$
2011
$ 7,369,154
4,524,351
2,844,803
1,720,954
1,123,849
115,525
(1,938)
1,010,262
237,076
773,186
122,057
895,243
$
2010
$ 6,109,507
3,686,861
2,422,646
1,499,597
923,049
106,371
3,556
813,122
193,625
619,497
80,607
700,104
$
$
$
$
$
$
$
$
4.59
4.53
$
$
(0.12) $
(0.12) $
4.47
4.41
1.33
$
$
$
4.16
4.09
0.66
0.65
4.82
4.74
1.18
$
$
$
$
$
$
$
3.31
3.27
0.43
0.43
3.75
3.70
1.07
See Notes to Consolidated Financial Statements
51
Table of Contents
DOVER CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
(In thousands)
Years Ended December 31,
2011
2010
2012
Net earnings
$
811,070
$
895,243
$
700,104
Other comprehensive earnings (loss), net of tax
Foreign currency translation adjustments:
Foreign currency translation gains (losses) during period
Reclassification of foreign currency translation losses to earnings upon
sale of subsidiaries
Total foreign currency translation
38,880
(71,612)
(34,667)
—
38,880
11,090
(60,522)
1,031
(33,636)
Pension and other postretirement benefit plans:
Actuarial losses arising during period
Prior service cost arising during period
Amortization of actuarial losses included in net periodic pension cost
Amortization of prior service costs included in net periodic pension cost
Total pension and other postretirement benefit plans
Changes in fair value of cash flow hedges:
Unrealized net gains (losses) arising during period
Net gains reclassified into earnings
Total cash flow hedges
Other
Other comprehensive loss
Comprehensive earnings
(56,159)
(4,685)
8,530
5,304
(47,010)
482
(357)
125
609
(46,284)
(1,067)
5,646
5,390
(36,315)
(948)
(124)
(1,072)
238
(7,342)
(1,848)
2,731
5,180
(1,279)
623
(389)
234
—
(7,396)
(97,671)
(34,681)
$
803,674
$
797,572
$
665,423
See Notes to Consolidated Financial Statements.
52
Table of Contents
DOVER CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
December 31, 2012 December 31, 2011
Current assets:
Cash and cash equivalents
Receivables, net of allowances of $20,392 and $21,238
Inventories, net
Prepaid and other current assets
Deferred tax assets
Total current assets
Property, plant and equipment, net
Goodwill
Intangible assets, net
Other assets and deferred charges
Assets of discontinued operations
Total assets
Current liabilities:
Notes payable and current maturities of long-term debt
Accounts payable
Accrued compensation and employee benefits
Accrued insurance
Other accrued expenses
Federal and other taxes on income
Total current liabilities
Long-term debt
Deferred income taxes
Other liabilities
Liabilities of discontinued operations
Stockholders' equity:
Preferred stock - $100 par value; 100,000 shares authorized; none issued
Common stock - $1 par value; 500,000,000 shares authorized;
254,119,478 and 250,591,610 shares issued at December 31, 2012 and
December 31, 2011, respectively
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Common stock in treasury
Total stockholders' equity
Total liabilities and stockholders' equity
$
$
$
$
$
$
$
800,076
1,225,898
872,841
79,094
49,935
3,027,844
1,167,052
4,114,650
1,625,420
111,432
397,545
10,443,943
610,766
651,358
334,634
103,318
255,632
30,920
1,986,628
2,189,350
462,244
677,533
208,958
1,206,755
1,118,848
733,807
148,392
40,376
3,248,178
970,703
3,506,975
1,184,505
103,331
486,860
9,500,552
1,022
515,847
269,824
103,955
218,957
30,399
1,140,004
2,186,230
348,522
619,337
275,904
—
—
254,119
834,677
7,199,227
(54,906)
(3,313,887)
4,919,230
10,443,943
$
250,592
663,289
6,629,116
(47,510)
(2,564,932)
4,930,555
9,500,552
See Notes to Condensed Consolidated Financial Statements
53
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DOVER CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands)
Common
Stock $1 Par
Value
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Earnings
(Loss)
Treasury
Stock
Total
Stockholders'
Equity
Balance at December 31, 2009
$
247,342
$
497,291
$
5,453,022
$
84,842
$
(2,198,889) $
4,083,608
Net earnings
Dividends paid
Common stock issued for the exercise of
stock options and SARs
Tax benefit from the exercise of stock options
and SARs
Stock-based compensation expense
Common stock issued, other
Common stock acquired
Other comprehensive loss, net of tax
—
—
1,983
—
—
36
—
—
—
—
69,465
6,466
21,464
1,771
—
—
700,104
(200,099)
—
—
—
—
—
—
—
—
—
—
—
—
—
(34,681)
—
—
—
—
—
—
700,104
(200,099)
71,448
6,466
21,464
1,807
(123,555)
—
(123,555)
(34,681)
Balance at December 31, 2010
$
249,361
$
596,457
$
5,953,027
$
50,161
$
(2,322,444) $
4,526,562
Net earnings
Dividends paid
Common stock issued for the exercise of
stock options and SARs
Tax benefit from the exercise of stock options
and SARs
Stock-based compensation expense
Common stock issued, other
Common stock acquired
Other comprehensive loss, net of tax
Other
—
—
1,155
—
—
76
—
—
—
—
—
25,063
8,752
25,391
4,780
—
—
2,846
895,243
(219,154)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(97,671)
—
—
—
—
—
—
—
(242,488)
—
—
895,243
(219,154)
26,218
8,752
25,391
4,856
(242,488)
(97,671)
2,846
Balance at December 31, 2011
$
250,592
$
663,289
$
6,629,116
$
(47,510) $
(2,564,932) $
4,930,555
Net earnings
Dividends paid
Common stock issued for acquisition
Common stock issued for the exercise of
stock options and SARs
Tax benefit from the exercise of stock options
and SARs
Stock-based compensation expense
Common stock issued, other
Common stock acquired
Other comprehensive loss, net of tax
—
—
1,636
1,871
—
—
20
—
—
—
—
98,974
17,210
22,771
31,251
1,182
—
—
811,070
(240,959)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
811,070
(240,959)
100,610
19,081
22,771
31,251
1,202
(748,955)
(748,955)
(7,396)
—
(7,396)
Balance at December 31, 2012
$
254,119
$
834,677
$
7,199,227
$
(54,906) $
(3,313,887) $
4,919,230
See Notes to Consolidated Financial Statements
54
DOVER CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Operating Activities of Continuing Operations
Net earnings
Adjustments to reconcile net earnings to cash from operating activities:
Loss (gain) from discontinued operations, net
Depreciation and amortization
Stock-based compensation
Provision for losses on accounts receivable (net of recoveries)
Deferred income taxes
Employee benefit plan expense
Contributions to employee benefit plans
Loss on extinguishment of long-term debt
Other, net
Cash effect of changes in assets and liabilities (excluding effects of acquisitions,
dispositions and foreign exchange):
Accounts receivable
Inventories
Prepaid expenses and other assets
Accounts payable
Accrued compensation and employee benefits
Accrued expenses and other liabilities
Accrued taxes
Net cash provided by operating activities of continuing operations
Investing Activities of Continuing Operations
Additions to property, plant and equipment
Acquisitions, including adjustment for prior year acquisition purchase price (net of
cash and cash equivalents acquired)
Purchase of short-term investments
Proceeds from sale of short-term investments
Proceeds from the sale of property, plant and equipment
Proceeds from the sale of businesses
Other
Net cash used in investing activities of continuing operations
Financing Activities of Continuing Operations
Purchase of common stock
Net proceeds from exercise of stock options and SARs, including tax benefits
Dividends to stockholders
Change in notes payable, net
Reduction of long-term debt
Proceeds from long-term debt, net of discount and issuance costs
Net cash used in financing activities of continuing operations
Cash Flows from Discontinued Operations
Net cash provided by operating activities of discontinued operations
Net cash used in investing activities of discontinued operations
Net cash provided by discontinued operations
Effect of exchange rate changes on cash and cash equivalents
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Supplemental information - cash paid during the year for:
Income Taxes
Interest
Years Ended December 31,
2011
2010
2012
$
811,070
$
895,243
$
700,104
22,049
357,585
30,884
5,162
(19,023)
43,912
(48,576)
—
(24,283)
(4,549)
(37,986)
9,066
73,460
45,475
(14,779)
11,693
1,261,160
(122,057)
290,477
25,130
5,694
3,354
39,954
(63,567)
—
18,313
(124,193)
(56,145)
2,143
82,624
34,745
(17,858)
(64,993)
948,864
(80,607)
229,237
20,407
(153)
63,913
32,914
(58,201)
4,343
(32,467)
(147,011)
(88,552)
8,205
79,183
80,335
32,428
(13,783)
830,295
(297,012)
(262,676)
(169,297)
(1,035,433)
—
—
13,843
—
(27,286)
(1,345,888)
(748,955)
43,054
(240,959)
607,500
(3,582)
—
(342,942)
12,013
(7,134)
4,879
16,112
(406,679)
1,206,755
800,076
281,331
125,770
$
$
$
(1,382,217)
—
124,410
9,363
516,901
(18,211)
(1,012,430)
(242,488)
39,826
(219,154)
(15,002)
(402,654)
788,971
(50,501)
(104,418)
(466,881)
553,466
16,186
4,500
—
(166,444)
(123,555)
79,721
(200,099)
15,000
(75,855)
—
(304,788)
130,638
(13,327)
117,311
112,597
(12,309)
100,288
16,150
9,822
19,394
1,187,361
1,206,755
269,895
121,715
$
$
$
469,173
718,188
1,187,361
100,163
115,871
$
$
$
See Notes to Consolidated Financial Statements
55
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)
1. Description of Business and Summary of Significant Accounting Policies
Description of Business - Dover Corporation (the “Company”) is a diversified global manufacturer offering innovative
equipment, components, and specialty systems. The Company also provides supporting engineering, testing, and other similar
services, which are not significant in relation to consolidated revenue. The Company’s businesses are based primarily in the
United States of America and Europe with manufacturing and other operations throughout the world. The Company operates
through four business segments that are aligned with the key end-markets they serve: Communication Technologies, Energy,
Engineered Systems, and Printing & Identification. For additional information on the Company’s segments, see Note 16.
Principles of Consolidation - The consolidated financial statements include the accounts of the Company and its wholly-owned
subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. The results of operations of
purchased businesses are included from the dates of acquisitions. As discussed in Note 3, the Company is reporting certain
businesses that are held for sale at December 31, 2012 as discontinued operations. The assets, liabilities, results of operations,
and cash flows of all discontinued operations have been separately reported as discontinued operations for all periods presented.
Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the
United States requires management to make estimates and assumptions that affect the amounts reported in the Consolidated
Financial Statements and accompanying disclosures. These estimates may be adjusted due to changes in future economic,
industry, or customer financial conditions, as well as changes in technology or demand. Estimates are used in accounting for,
among other items, allowances for doubtful accounts receivable, net realizable value of inventories, restructuring reserves,
warranty reserves, pension and post retirement plans, stock-based compensation, useful lives for depreciation and amortization
of long-lived assets, future cash flows associated with impairment testing for goodwill, indefinite-lived intangible assets and
other long-lived assets, deferred tax assets, uncertain income tax positions, and contingencies. Actual results may ultimately
differ from estimates, although management does not believe such differences would materially affect the financial statements
in any individual year. Estimates and assumptions are periodically reviewed and the effects of revisions are reflected in the
Consolidated Financial Statements in the period that they are determined.
Cash and Cash Equivalents - Cash and cash equivalents include cash on hand, demand deposits, and short-term investments
which are highly liquid in nature and have original maturities at the time of purchase of three months or less.
Short-Term Investments - Short-term investments consist of investment grade time deposits that have original maturity dates
at the time of purchase greater than three months, up to twelve months. The Company held no short-term investments at
December 31, 2012 or December 31, 2011.
Allowance for Doubtful Accounts – The Company maintains allowances for estimated losses as a result of customers' inability
to make required payments. Management evaluates the aging of the accounts receivable balances, the financial condition of its
customers, historical trends, and the time outstanding of specific balances to estimate the amount of accounts receivable that
may not be collected in the future and records the appropriate provision.
Inventories – Inventories for the majority of the Company’s subsidiaries, including all international subsidiaries, are stated at
the lower of cost, determined on the first-in, first-out (FIFO) basis, or market. Other domestic inventories are stated at cost,
determined on the last-in, first-out (LIFO) basis, which is less than market value.
Property, Plant and Equipment - Property, plant and equipment includes the historic cost of land, buildings, equipment, and
significant improvements to existing plant and equipment or, in the case of acquisitions, a fair market value appraisal of such
assets completed at the time of acquisition. Property, plant and equipment also includes the cost of purchased
software. Expenditures for maintenance, repairs, and minor renewals are expensed as incurred. When property or equipment
is sold or otherwise disposed of, the related cost and accumulated depreciation is removed from the respective accounts and the
gain or loss realized on disposition is reflected in earnings. The Company depreciates its assets on a straight-line basis over
their estimated useful lives as follows: buildings and improvements 5 to 31.5 years; machinery and equipment 3 to 7 years;
furniture and fixtures 3 to 7 years; vehicles 3 years; and software 3 to 5 years. Depreciation expense totaled $201,816 in 2012,
$168,024 in 2011, and $144,937 in 2010.
Derivative Instruments - The Company periodically uses derivative financial instruments to hedge its exposures to various risks,
including interest rate and foreign currency exchange rate risk. The Company does not enter into derivative financial instruments
56
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)
for speculative purposes and does not have a material portfolio of derivative financial instruments. Derivative financial
instruments used for hedging purposes must be designated and effective as a hedge of the identified risk exposure at inception
of the contract. The Company recognizes all derivatives as either assets or liabilities on the consolidated balance sheet and
measures those instruments at fair value. For derivatives designated as hedges of the fair value of assets or liabilities, the changes
in fair value of both the derivatives and of the hedged items are recorded in current earnings. For derivatives designated as cash
flow hedges, the effective portion of changes in the fair value of the derivatives is recorded as a component of other
comprehensive earnings and subsequently recognized in net earnings when the hedged items impact earnings.
Goodwill and Indefinite-Lived Intangible Assets - Goodwill represents the excess of purchase consideration over the fair value
of the net assets of businesses acquired. Goodwill and certain other intangible assets deemed to have indefinite lives (primarily
trademarks) are not amortized. Instead, goodwill and indefinite-lived intangible assets are tested for impairment at least annually
or more frequently if indicators of impairment exist, such as a significant sustained change in the business climate or a current
expectation of an impending disposal. The Company conducts its annual impairment evaluation in the fourth quarter of each
year. Recoverability of goodwill is measured at the reporting unit level and determined using a two-step process. For 2012, the
Company identified 17 reporting units for its annual goodwill impairment test. Step one of the test compares the fair value of
each reporting unit using a discounted cash flow method to its book value. This method uses the Company’s own market
assumptions including projections of future cash flows, determinations of appropriate discount rates, and other assumptions
which are considered reasonable and inherent in the discounted cash flow analysis. The projections are based on historical
performance and future estimated results. These assumptions require significant judgment and actual results may differ from
assumed and estimated amounts. Step two, which compares the book value of the goodwill to its implied fair value, was not
necessary since there were no indicators of potential impairment from step one. See Note 6 for additional details on goodwill
balances.
As discussed in Note 3, in the fourth quarter of 2012, in connection with impending sale of ECT, the Company tested the related
goodwill for impairment, using internal valuation calculations validated by market-based analysis of similar transactions, and
recognized an after-tax impairment loss of $51,854 within the results of discontinued operations. The fair value of businesses
held for sale at December 31, 2012 will continue to be evaluated at each subsequent reporting period until the time of sale, and
further adjustments to fair value are possible if business conditions should change. In 2011, an after-tax impairment loss of
$76,072 was recorded within discontinued operations in connection with the sale of Paladin Brands.
Similar to goodwill, in testing its other indefinite lived intangible assets for impairment, the Company uses a discounted cash
flow method to calculate and compare the fair value of the intangible asset to its book value. This method uses the Company’s
own market assumptions which are considered reasonable and inherent in the discounted cash flow analysis. Any excess of
carrying value over the estimated fair value is recognized as an impairment loss. No impairment of indefinite lived intangibles
was indicated for the years ended December 31, 2012, 2011, or 2010.
Other Intangible Assets - Other intangible assets with determinable lives consist primarily of customer lists, unpatented
technology, patents, and trademarks. These other intangibles are amortized over their estimated useful lives, ranging from 5 to
15 years.
Long-Lived Assets - Long-lived assets (including intangible assets with determinable lives) are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable, such as a
significant sustained change in the business climate. If an indicator of impairment exists for any grouping of assets, an estimate
of undiscounted future cash flows is produced and compared to its carrying value. If an asset is determined to be impaired, the
loss is measured by the excess of the carrying amount of the asset over its fair value as determined by an estimate of discounted
future cash flows.
Foreign Currency - Assets and liabilities of non-U.S. subsidiaries, where the functional currency is not the U.S. dollar, have
been translated at year-end exchange rates and profit and loss accounts have been translated using weighted-average yearly
exchange rates. Foreign currency translation gains and losses are included as a component of Accumulated Other
Comprehensive Earnings (Loss). Assets and liabilities of an entity that are denominated in currencies other than an entity’s
functional currency are re-measured into the functional currency using end of period exchange rates or historical rates where
applicable to certain balances. Gains and losses related to these re-measurements are recorded within the Statement of Earnings
as a component of Other Expense (Income), net.
Revenue Recognition - Revenue is recognized when all of the following conditions are satisfied: a) persuasive evidence of an
arrangement exists, b) price is fixed or determinable, c) collectability is reasonably assured, and d) delivery has occurred or
57
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)
services have been rendered. The majority of the Company’s revenue is generated 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. Service revenue represents less than 10% of total revenue and is recognized as the services are performed. In
limited cases, revenue arrangements with customers require delivery, installation, testing, certification, or other acceptance
provisions to be satisfied before revenue is recognized. The Company does not have significant multiple deliverable
arrangements.
Stock-Based Compensation – The principal awards issued under the Company’s stock-based compensation plans include non-
qualified stock-settled stock appreciation rights and performance share awards. The cost for such awards is measured at the
grant date based on the fair value of the award. The value of the portion of the award that is expected to ultimately vest is
recognized as expense on a straight-line basis, generally over the explicit service period of three years (except for retirement-
eligible employees and retirees) and is included in selling and administrative expense in the Consolidated Statements of
Earnings. Expense for awards granted to retirement-eligible employees is recorded over the period from the date of grant through
the date the employee first becomes eligible to retire and is no longer required to provide service. See Note 12 for additional
information related to the Company’s stock-based compensation. At the time of grant, the Company estimates forfeitures, based
on historical experience, in order to estimate the portion of the award that will ultimately vest.
Income Taxes - The provision for income taxes on continuing operations includes federal, state, local, and non-U.S. taxes. Tax
credits, primarily for research and experimentation, non-U.S. earnings, and U.S. manufacturer's tax deduction are recognized
as a reduction of the provision for income taxes on continuing operations in the year in which they are available for tax purposes.
Deferred taxes are provided using enacted rates on the future tax consequences of temporary differences. Temporary differences
include the differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases
and the tax benefit of carryforwards. A valuation allowance is established for deferred tax assets for which realization is not
assured. In assessing the need for a valuation allowance, management considers all available evidence, including the future
reversal of existing taxable temporary differences, taxable income in carryback periods, prudent and feasible tax planning
strategies, and estimated future taxable income. The valuation allowance can be affected by changes to tax regulations,
interpretations and rulings, changes to enacted statutory tax rates, and changes to future taxable income estimates.
Tax benefits are recognized from an uncertain tax position only if it is more likely than not that the tax position will be sustained
on examination by the taxing authorities, based on the technical merits of the position in consideration of applicable tax statutes
and related interpretations and precedents. Tax benefits recognized in the financial statements from such a position are measured
based on the largest benefit that has a greater than 50% likelihood of being realized on ultimate settlement.
The Company has not provided for any residual U.S. income taxes on unremitted earnings of non-U.S. subsidiaries as such
earnings are currently intended to be indefinitely reinvested outside of the U.S. It is not practicable to estimate the amount of
tax that might be payable if some or all of such earnings were to be repatriated, and the amount of foreign tax credits that would
be available to reduce or eliminate the resulting U.S. income tax liability.
Research and Development Costs – Research and development costs, including qualifying engineering costs, are expensed
when incurred and amounted to $189,844 in 2012, $175,532 in 2011, and $159,338 in 2010.
Advertising – Advertising costs are expensed when incurred and amounted to $39,560 in 2012, $39,214 in 2011, and $33,772
in 2010.
Risk, Retention, Insurance - The Company currently self-insures its product and commercial general liability claims up to $5.0
million per occurrence, its workers’ compensation claims up to $0.5 million per occurrence, and automobile liability claims up
to$1.0 million per occurrence. Third-party insurance provides primary level coverage in excess of these amounts up to certain
specified limits. In addition, the Company has excess liability insurance from third-party insurers on both an aggregate and an
individual occurrence basis well in excess of the limits of the primary coverage. A worldwide program of property insurance
covers the Company’s owned and leased property and any business interruptions that may occur due to an insured hazard affecting
those properties, subject to reasonable deductibles and aggregate limits. The Company’s property and casualty insurance programs
contain various deductibles that, based on the Company’s experience, are typical and customary for a company of its size and
risk profile. The Company does not consider any of the deductibles to represent a material risk to the Company. The Company
generally maintains deductibles for claims and liabilities related primarily to workers’ compensation, health and welfare claims,
general commercial, product and automobile liability and property damage, and business interruption resulting from certain
events. The Company accrues for claim exposures that are probable of occurrence and can be reasonably estimated. As part of
58
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)
the Company’s risk management program, insurance is maintained to transfer risk beyond the level of self-retention and provide
protection on both an individual claim and annual aggregate basis.
Reclassifications – Certain amounts in prior years have been reclassified to conform to the current year presentation.
Recently Adopted Accounting Pronouncements – 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. The Company adopted this guidance on January 1, 2012 and its adoption did
not 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 only requires a change in the format of the current presentation. The
Company adopted this guidance for its 2011 year-end reporting, presenting other comprehensive earnings in a separate statement
following the statement of earnings.
In September 2011, the FASB issued ASU 2011-08 which provides an entity the option to first assess qualitative factors to
determine whether it is necessary to perform the current two-step test for goodwill impairment. If an entity believes, as a result
of its qualitative assessment, that it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount,
the quantitative impairment test is required. Otherwise, no further testing is required. This standard became effective for the
Company on January 1, 2012. Its adoption did not impact the Company's consolidated financial statements.
In September 2011, the FASB issued ASU 2011-09 which requires enhanced disclosures around an employer’s participation in
multiemployer pension plans. The standard is intended to provide more information about an employer’s financial obligations
to a multiemployer pension plan to help financial statement users better understand the financial health of the significant plans
in which the employer participates. This guidance became effective for the Company for its fiscal 2011 year-end reporting. Its
adoption did not have a material impact on the Company’s consolidated financial statements.
In July 2012, the FASB issued ASU 2012-02, which allows an entity to first assess qualitative factors to determine whether it
is necessary to perform a quantitative impairment test of an indefinite-lived intangible asset. Per the terms of this ASU, an entity
would not be required to calculate the fair value of an indefinite-lived intangible asset unless the entity determines, based on
qualitative assessment, that it is not more likely than not, the indefinite-lived intangible asset is impaired. The revised standard
is effective for Dover for its annual and interim impairment tests performed for fiscal years beginning after September 15, 2012.
The Company does not expect adoption of this ASU to significantly impact its consolidated financial statements.
59
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)
2. Acquisitions
The following table details the acquisitions made during the year ended December 31, 2012.
2012 Acquisitions
Date
Jan 1
Manufacturer of positive displacement pumps primarily serving the pharmaceutical and biotech industries.
Company / Product Line Acquired
Quattroflow Fluid Systems
Location (Near)
Kamp-Lintfort, Germany Engineered Systems
Type
Asset
Segment
Mar 13 Stock
Manufacturer of gear pump technology, pelletizing systems, and engineered integrated solutions for the polymer, plastic,
chemical, and petrochemical industries.
Grossostheim, Germany Engineered Systems
Maag Pump Systems
Stock
Apr 25
Manufacturer of products in artificial lift and production optimization, including plunger lift, gas lift, nitrogen generation, and
well site automation.
Production Control Services (PCS)
Fredrick, Colorado
Energy
Nov 30 Stock
Manufacturer of specialty glass, commercial glass refrigerator and freezer doors, case lighting, and display and merchandising
systems.
Anthony International
Engineered Systems
Sylmar, California
Dec 6
Engineered Systems
Manufacturer of electrical equipment for the automotive workshop, specializing in welders and battery service machines.
Bremen, Germany
Elektron
Asset
Dec 20 Asset
Manufacturer of continuous motion, water jet propelled ware washing systems.
Power Soak
Kansas City, Missouri
Engineered Systems
Dec 28
Manufacturer of steel sucker rods and accessories used in the artificial lift segment of the oilfield services industry.
Claremore, Oklahoma
UPCO, Inc.
Energy
Stock
Anthony International Acquisition
On November 30, 2012, Dover completed the acquisition of Anthony International for a total purchase price of $603,190, net
of cash acquired. As a result of this acquisition, the Company recorded approximately $210,000 of customer-related intangibles
(weighted average life of 15 years), $35,000 of trademarks (weighted average life of 15 years), $7,900 of patents (weighted
average life of 7 years), and $34,000 of other intangibles (weighted average life of 7 years). This acquisition resulted in the
recognition of goodwill totaling $297,534, none of which is expected to be deductible for tax purposes. In addition, the Company
recognized a deferred tax asset of approximately $60,000 relating to net operating losses that the Company expects to be able
to utilize. Anthony, which manufactures commercial glass refrigerator and freezer doors, and related components, has been
incorporated into the Hill Phoenix business within the Refrigeration & Industrial platform of the Engineered Systems segment.
The acquisition of Anthony enables Hill Phoenix to expand its refrigeration portfolio with integrated solutions for global
customers. As such, the goodwill recorded through the acquisition reflects the value attributed to the vertical integration and
global revenue growth opportunities and net cost synergies that the combined business expects to achieve.
Other Acquisitions
During 2012, the Company acquired six other businesses in separate transactions for net cash consideration of $477,243.
Additionally, the acquisition of PCS was funded in part with common stock valued at $100,610 at the date of acquisition, so
aggregate consideration for these acquisitions totaled $577,853. As a result of these acquisitions, the Company recorded
approximately $219,821 of customer-related intangibles (weighted average life of 11 years), $18,944 of trademarks (weighted
average life of 10 years), $15,016 of patents (weighted average life of 8 years), and $29,066 of other intangibles (weighted
average life of 7 years). These acquisitions resulted in the recognition of goodwill totaling $304,564, of which $31,339 is expected
to be deductible for tax purposes.
These businesses predominantly manufacture products in the energy and fluid solutions markets, two key growth areas for the
Company. The businesses were acquired to complement and expand upon existing operations within the Energy segment and
the Fluid Solutions platform of the Engineered Systems segment. The goodwill identified by these acquisitions reflects the
60
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)
benefits expected to be derived from product line expansion and operational synergies. Upon consummation of the acquisitions,
each of these entities is now wholly-owned by Dover.
The following presents the allocation of acquisition cost to the assets acquired and liabilities assumed, based on their estimated
fair values:
Current assets, net of cash acquired
Property, plant and equipment
Goodwill
Intangible assets
Other non-current assets, principally deferred taxes
Current liabilities assumed
Non-current liabilities assumed, principally deferred taxes and pension
obligations
Net assets acquired
Anthony
International
85,009
$
40,703
297,534
286,900
67,605
(42,011)
Other
Acquisitions
118,637
$
57,313
304,564
282,847
—
(61,101)
$
Total
203,646
98,016
602,098
569,747
67,605
(103,112)
(132,550)
603,190
$
(124,407)
577,853
$
(256,957)
1,181,043
$
The amounts assigned to goodwill and major intangible asset classifications by applicable segment for the 2012 acquisitions
are as follows:
Goodwill - Tax deductible
Goodwill - Non deductible
Customer intangibles
Trademarks
Patents
Other intangibles
Energy
Engineered
Systems
10,366
125,540
105,500
7,520
11,140
—
260,066
$
$
20,973
445,219
324,321
46,424
11,776
63,066
911,779
$
$
Total
$
31,339
570,759
429,821
53,944
22,916
63,066
$ 1,171,845
Useful life
(in years)
na
na
13
13
8
7
The Company has substantially completed the purchase price allocations for the 2012 acquisitions. However, 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 finalization of asset appraisals, the Company will refine its estimates of fair value to allocate the
purchase price more accurately; however, any such revisions are not expected to be significant.
In connection with the acquisitions of Anthony International and Maag Pump Systems, the Company provided restricted-use
cash collateral to secure the businesses' outstanding bank guarantees at the dates of acquisition. At December 31, 2012, the
outstanding amount of collateral totaled $7,727, which will decline as the guarantees expire or they are migrated to the Company's
credit facility.
In April 2012, the Company received approximately $45,000 as final payment for settlement of purchase price adjustments for
post-acquisition contingencies relating to the 2011 Sound Solutions acquisition. This amount is reported within cash paid for
acquisitions in the Consolidated Statement of Cash Flow for the year ended December 31, 2012 and had no impact to the
Company's earnings for the year ended December 31, 2012.
The Consolidated Statements of Earnings include the results of these businesses from the dates of acquisition. The aggregate
revenue of the 2012 acquisitions included in the Company’s 2012 consolidated revenue totaled $235,772.
61
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)
During 2011, the Company acquired nine businesses for an aggregate cost of $1,342,461, net of cash acquired. A summary of
the acquisitions made during 2011 is as follows:
2011 Acquisitions
Date
Type
Company / Product Line Acquired
Location (Near)
Segment
Stock
Jan 1
Designer and manufacturer of down-hole rod pumps and related products used in artificial lift applications around the
world.
Harbison-Fischer, Inc.
Crowley, TX
Energy
Jan 5
Asset/Stock Dosmatic, Inc.
Carrollton, TX
Engineered Systems
Manufacturer of non-electric chemical metering equipment used in agricultural, horticulture, and other industrial market
segments.
Stock
Jan 26
Oilfield services provider, servicing both conventional and coiled sucker rod wells in the Middle East.
TAGC Limited LLC
Muscat, Oman
Energy
Jan 28 Asset
Manufacturer of magnetically coupled internal gear pumps used in a wide range of industrial manufacturing.
EnviroGear Product Line
Franklin Park, IL
Engineered Systems
Stock
Jul 4
Manufacturer of dynamic speakers and receivers for cell phones and other consumer electronics.
Sound Solutions
Vienna, Austria and
Beijing, China
Communication
Technologies
Sep 1
Stock
Oil Lift
Calgary, Canada
Energy
Manufacturer of surface drive systems for progressive cavity pumps serving the artificial lift segment of the oil and gas
industry.
Asset
Sep 1
Manufacturer of progressive cavity pumps serving the artificial lift segment of the oil and gas industry.
Edmonton, Canada
Tierra Alta Canada
Energy
Nov 1
Stock
RedScrew Pump Manufacturing
Tianjin, China
Engineered Systems
Manufacturer of twin and triple screw pumps, as well as multiphase and specialty pumps, serving oil and gas,
petrochemical, and marine markets.
Nov 7
Stock
Advansor A/S
Arhus, Denmark
Engineered Systems
Designer and manufacturer of HFC-free, CO2 transcritical refrigeration and heat pump systems for supermarkets and light
industrial applications.
62
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)
Pro Forma Information
The following unaudited pro forma information illustrates the effect on the Company’s revenue and earnings from continuing
operations for years ended December 31, 2012 and 2011, assuming that the 2012 acquisitions had taken place at the beginning
of 2011. As a result, the supplemental pro forma earnings reflect adjustments to earnings from continuing operations as reported
in the Consolidated Statements of Earnings to exclude $11,335 of nonrecurring expense related to the fair value adjustments to
acquisition-date inventory (after-tax) and $5,256 of acquisition-related costs (after-tax) from the year ended December 31, 2012.
The supplemental pro forma earnings for the comparable 2011 period were adjusted to include these charges as if they were
incurred at the beginning of 2010. The 2012 and 2011 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 2012 and 2011 acquisitions.
Revenue from continuing operations:
As reported
Pro forma
Earnings from continuing operations:
As reported
Pro forma
Basic earnings per share from continuing operations:
As reported
Pro forma
Diluted earnings per share from continuing operations:
As reported
Pro forma
Years Ended December 31,
2012
2011
$
$
$
$
8,104,339
8,520,236
833,119
875,257
4.59
4.82
4.53
4.76
$
$
$
$
7,369,154
8,154,035
773,186
796,646
4.16
4.29
4.09
4.22
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. Disposed and Discontinued Operations
2012 - Management evaluates Dover's businesses periodically for their strategic fit within Dover's operations. Accordingly, in
the fourth quarter of 2012, the Company announced its intention to divest certain non-core businesses within the Printing &
Identification segment serving the electronic assembly and test markets, consistent with its long-term focus on strengthening its
portfolio and reducing its exposure to cyclical markets. Management expects to sell these businesses in 2013. As a result, the
Company has reclassified the operations, cash flows, and related assets and liabilities of these businesses, DEK International
and Everett Charles Technologies (including the Multitest business, collectively "ECT"), to discontinued operations for all
periods presented.
The net earnings from discontinued operations of $28,769 reflects net earnings from operations generated by these two businesses,
as well as various expense and accrual adjustments relating to other discontinued operations. This activity was more than offset
by a goodwill impairment charge determined in connection with the anticipated sale of ECT, at which time the Company
recognized an after-tax impairment charge of $51,854, representing a write-down of the reporting unit's carrying value of goodwill
to its fair value.
2011 - In 2011, the Company sold three businesses, Paladin Brands, Crenlo LLC, and Heil Trailer International, that had operated
within the Engineered Systems segment for total cash proceeds of $512,122. These businesses were reclassified to discontinued
operations in the third and fourth quarters of 2011. The 2011 net earnings from discontinued operations reflects net operating
earnings generated by the two businesses discontinued in 2012 and the three business sold in 2011, coupled with tax benefits
of $17,960 relating primarily to discrete tax items settled or resolved during the year.
63
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)
Net earnings from discontinued operations also includes a $4,743 loss on the 2011 sale of the three businesses, inclusive of a
after-tax goodwill impairment charge of $76,072, representing a write-down of the carrying value of the associated reporting
unit's goodwill to its fair value.
2010 – During the first quarter of 2010, the Company sold Triton, an operating company that had been reclassified from the
Engineered Systems segment to discontinued operations in 2008, for net consideration of $7,498, resulting in a net after-tax
current year loss on sale of approximately $13,100. During the second and third quarters of 2010, the loss was increased by
approximately $900, net of tax, upon settlement of a $1,500 working capital adjustment related to the sale.
The net earnings from discontinued operations of $94,810 reflects net operating earnings from the two businesses discontinued
in 2012 and the three businesses sold in 2011, as well as tax benefits of $11,597 driven primarily by discrete tax items settled
or resolved during the year, offset by expense adjustments related to other discontinued operations.
Summarized results of the Company’s discontinued operations are as follows:
Revenue
Loss on sale, including impairments, net of tax
Earnings from operations before taxes
Provision for income taxes
Earnings from operations, net of tax
Years Ended December 31,
2012
434,460
2011
$ 1,136,997
2010
$ 1,042,279
(50,818) $
(4,743) $
(14,203)
$
$
34,517
(5,748)
28,769
$
132,675
(5,875)
126,800
108,044
(13,234)
94,810
80,607
$
$
Earnings (loss) from discontinued operations, net of tax
$
(22,049) $
122,057
Assets and liabilities of discontinued operations are summarized below:
Assets of Discontinued Operations
Accounts receivable
Inventories, net
Prepaid and other current assets
Total current assets
Property, plant and equipment, net
Goodwill and intangible assets, net
Other assets and deferred charges
Total assets
Liabilities of Discontinued Operations
Accounts payable
Other current liabilities
Total current liabilities
Deferred income taxes
Other liabilities
Total liabilities
December 31, 2012 December 31, 2011
$
$
$
$
63,229
51,252
10,263
124,744
31,935
238,657
2,209
397,545
22,613
34,592
57,205
64,853
86,900
208,958
$
$
$
$
71,627
69,539
9,721
150,887
31,776
302,720
1,477
486,860
28,076
80,495
108,571
75,794
91,539
275,904
At December 31, 2012 and December 31, 2011, the assets and liabilities of discontinued operations relate primarily to the two
businesses reclassified to held for sale in the fourth quarter of 2012, coupled with tax-related accruals and unrecognized benefits,
as well as other accruals for compensation, legal, environmental, and warranty contingencies, none of which are individually
significant, relating to businesses that were sold in prior years.
64
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)
4. Inventories, net
Raw materials
Work in progress
Finished goods
Subtotal
Less LIFO reserve
Total
$
December 31, 2012 December 31, 2011
340,556
$
158,825
289,771
789,152
(55,345)
733,807
386,119
182,060
360,168
928,347
(55,506)
872,841
$
$
At December 31, 2012 and 2011, approximately 28% and 31%, respectively, of the Company's total inventories were accounted
for using the LIFO method.
5. Property, Plant and Equipment, net
Land
Buildings and improvements
Machinery, equipment and other
Less accumulated depreciation
Total
6. Goodwill and Other Intangible Assets
$
December 31, 2012 December 31, 2011
51,315
$
562,785
1,946,518
2,560,618
(1,589,915)
970,703
70,079
605,448
2,231,721
2,907,248
(1,740,196)
1,167,052
$
$
The changes in the carrying value of goodwill by segment for the years ended December 31, 2012 and 2011 are as follows:
Communication
Technologies
Energy
Engineered
Systems
Goodwill
Accumulated impairment loss
Balance at January 1, 2011
Acquisitions
Foreign currency translation
Balance at December 31, 2011
Acquisitions
Purchase price adjustments
Foreign currency translation
Balance at December 31, 2012
$
$
806,983
—
806,983
443,088
(45,489)
1,204,582
—
(6,998)
6,711
1,204,295
$
$
367,459
—
367,459
257,128
(2,252)
622,335
135,906
—
2,396
760,637
$
$
974,972
(70,560)
904,412
34,048
(3,040)
935,420
466,192
—
1,769
1,403,381
Printing &
Identification
745,609
$
—
745,609
—
(971)
744,638
—
—
1,699
746,337
$
$
$
Total
2,895,023
(70,560)
2,824,463
734,264
(51,752)
3,506,975
602,098
(6,998)
12,575
4,114,650
During the year ended December 31, 2012, the Company recorded adjustments totaling $6,998 to goodwill relating primarily
to finalization of the purchase price allocation to assets acquired and liabilities assumed for the 2011 Sound Solutions acquisition.
As discussed in Note 3, the Company recognized a goodwill impairment totaling $63,819 ($51,854 net of tax) in its Printing &
Identification segment relating to certain businesses to be sold, which were reclassified to discontinued operations in 2012. The
impairment and related goodwill balances are reflected in the results and assets of discontinued operations, respectively.
65
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)
The following table provides the gross carrying value and accumulated amortization for each major class of intangible asset:
Amortized Intangible Assets:
Trademarks
Patents
Customer Intangibles
Unpatented Technologies
Drawings & Manuals
Distributor Relationships
Other
Total
Unamortized Intangible Assets:
Trademarks
Total Intangible Assets
December 31, 2012
December 31, 2011
Gross
Carrying
Amount
Accumulated
Amortization
Gross
Carrying
Amount
Accumulated
Amortization
$
$
124,129
180,427
1,585,041
146,025
34,120
72,514
32,221
2,174,477
$
25,364
105,369
474,309
85,373
8,035
31,650
20,815
750,915
201,858
2,376,335
$
$
750,915
$
61,997
143,796
1,147,499
108,302
8,165
72,514
32,524
1,574,797
210,408
1,785,205
$
19,717
98,712
357,132
72,753
5,153
27,852
19,381
600,700
$
600,700
Total amortization expense for the years ended December 31, 2012, 2011, and 2010 was $155,770, $122,453, and $84,300,
respectively. Amortization expense for the next five years, based on current intangible balances, is estimated to be as follows:
$
153,823
146,820
145,757
141,829
135,382
$
December 31, 2012 December 31, 2011
33,661
$
33,782
24,371
30,747
17,243
10,648
4,573
1,920
62,012
218,957
41,069
39,941
32,099
30,972
24,114
13,550
7,665
1,873
64,349
255,632
$
$
2013
2014
2015
2016
2017
7. Accrued Expenses and Other Liabilities
The following table details the major components of other accrued expenses:
Warranty
Unearned/deferred revenue
Taxes other than income
Accrued interest
Accrued volume discounts
Accrued commissions (non-employee)
Restructuring and exit
Legal and environmental
Other (none of which are individually significant)
66
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)
The following table details the major components of other liabilities (non-current):
Deferred compensation
Unrecognized tax benefits
Unearned/deferred revenue
Legal and environmental
Warranty
Restructuring and exit
Other, including net investment hedge
Warranty
$
December 31, 2012 December 31, 2011
353,509
$
171,551
29,642
18,910
4,078
575
41,072
619,337
442,728
149,791
15,474
28,160
2,690
96
38,594
677,533
$
$
Estimated warranty program claims are provided for at the time of sale. Amounts provided for are based on historical costs and
adjusted for new claims. The changes in the carrying amount of product warranties through December 31, 2012 and 2011 are
as follows:
Beginning Balance, January 1
Provision for warranties
Settlements made
Other adjustments, including acquisitions and currency translation
Ending balance, December 31
8. Restructuring Activities
2012
2011
$
$
37,739
35,149
(34,609)
5,480
43,759
$
$
35,122
32,147
(32,515)
2,985
37,739
From time to time, the Company will initiate various restructuring programs and incur severance and other restructuring costs.
The following table details restructuring charges incurred by segment for the periods presented:
Years Ended December 31,
2011
2010
2012
Communication Technologies
Energy
Engineered Systems
Printing & Identification
Total
These amounts are classified in the Consolidated Statements of Earnings as follows:
Cost of goods and services
Selling and administrative expenses
Total
$
$
$
$
5,525
668
7,458
5,753
19,404
3,935
15,469
19,404
$
$
$
$
1,684
2,668
1,193
38
5,583
2,243
3,340
5,583
$
$
$
$
344
1,048
4,085
445
5,922
1,906
4,016
5,922
67
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)
The following table details the Company’s severance and other restructuring accrual activity:
Balance at December 31, 2009
Restructuring charges
Payments
Other, including foreign currency
Balance at December 31, 2010
Restructuring charges
Payments
Other, including foreign currency
Balance at December 31, 2011
Restructuring charges
Payments
Other, including foreign currency
Balance at December 31, 2012
Severance
Exit
Total
$
$
6,687
2,695
(8,255)
(140)
987
1,413
(313)
(68)
2,019
14,458
(11,376)
59
5,160
$
5,800
3,227
(4,167)
588
5,448
4,170
(5,871)
(618)
3,129
4,946
(5,547)
73
2,601
$
$
12,487
5,922
(12,422)
448
6,435
5,583
(6,184)
(686)
5,148
19,404
(16,923)
132
7,761
The restructuring charges incurred in 2012 relate primarily to a few targeted facility consolidations and headcount reduction
programs, undertaken to better align the Company's operations with current market conditions. The Company currently expects
to incur restructuring charges of approximately $20 to $30 million in 2013 relating to the conclusion of these programs, coupled
with new programs to be initiated during the year to rationalize headcount and optimize operations in a few select businesses.
A significant portion of the 2013 charges are expected to be incurred in the first quarter, with much of the benefit of the 2012
and 2013 programs being realized over the remainder of 2013 and into 2014. The remainder of the 2012 programs currently
underway, as well those commenced in 2013, are expected to be funded over the next 12 to 18 months.
Restructuring expenses incurred in 2011 and 2010 also included targeted facility consolidations at certain businesses. These
programs were substantially complete by the end of 2011 and the related expenses were not significant.
9. Borrowings and Lines of Credit
Borrowings consist of the following:
Short-term
Current portion of long-term debt
Commercial paper
Long-term
4.875% 10-year notes due October 15, 2015
5.45% 10-year notes due March 15, 2018
4.30% 10-year notes due March 1, 2021
6.60% 30-year notes due March 15, 2038
5.375% 30-year notes due March 1, 2041
6.65% 30-year debentures due June 1, 2028
5.375% 30-year debentures due October 15, 2035
Other
Total long-term debt
Less current portion
December 31, 2012
December 31, 2011
$
$
3,266
607,500
610,766
$
$
1,022
—
1,022
December 31, 2012 December 31, 2011
$
$
299,441
348,268
449,787
247,771
345,511
199,448
296,367
6,023
2,192,616
(3,266)
2,189,350
$
$
299,244
347,938
449,761
247,683
345,352
199,414
296,208
1,652
2,187,252
(1,022)
2,186,230
68
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)
The Company maintains a $1 billion unsecured revolving credit facility with a syndicate of banks (the "Credit Agreement")
which expires on November 10, 2016. At the Company's election, loans under the Credit Agreement will bear interest at a
Eurodollar or Sterling rate based on LIBOR, plus an applicable margin ranging from 0.565% to 1.225% (subject to adjustment
based on the credit 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 Credit Agreement. In addition, the Credit Agreement requires the Company to pay a facility fee and
imposes various restrictions on the Company such as, among other things, the requirement for the Company to maintain an
interest coverage ratio of EBITDA to consolidated net interest expense of not less than 3.0 to 1. The Company was in compliance
with this covenant and its other long-term debt covenants at December 31, 2012 and had a coverage ratio of 13.9 to 1. 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.
In the fourth quarter of 2012, the Company issued commercial paper in the amount of $607,500, used principally to fund the
Anthony acquisition.
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.
During the third quarter of 2010, the lender of a structured five-year, non-interest bearing amortizing loan originally due July
2011 called the loan, as permitted per the terms of the agreement. As a result, the Company repaid the outstanding $51,214
balance and recognized a net loss on extinguishment of $4,343, recorded in other income.
The long-term note borrowings presented above are net of unamortized discounts of $9,222 and $10,023 at December 31, 2012
and 2011, respectively. The debentures presented above include unamortized discounts of $4,185 and $4,379 at December 31,
2012 and 2011, respectively. The discounts are being amortized to interest expense using the effective interest rate method over
the life of the issuances. The notes and debentures are redeemable at the option of Dover in whole or in part at any time at a
redemption price that includes a make-whole premium, with accrued interest to the redemption date.
Interest expense and interest income for the years ended December 31, 2012, 2011 and 2010 were as follows:
Interest expense
Interest income
Interest expense, net
Years Ended December 31,
2012
$ 125,995
(4,854)
$ 121,141
2011
$ 124,783
(9,258)
$ 115,525
2010
$ 115,324
(8,953)
$ 106,371
The weighted average interest rate for short-term commercial paper borrowings was 0.2% for both 2012 and 2011.
Scheduled maturities of long-term debt for the years ending December 31 are as follows:
2013
2014
2015
2016
2017
2018 and thereafter
$
3,266
2,645
299,441
—
—
1,887,264
As of December 31, 2012, the Company had approximately $96,725 outstanding in letters of credit and guarantees with financial
institutions, which expire at various dates in 2013 through 2017. These letters of credit are primarily maintained as security for
insurance, warranty and other performance obligations.
69
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)
10. 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 December 31, 2012 and December 31, 2011, the Company had contracts with U.S. dollar equivalent notional
amounts of $9,090 and $83,541, respectively, to exchange foreign currencies, principally the U.S. dollar, euro, Japanese yen,
Chinese yuan, and Malaysian ringgit. The Company believes it is probable that all forecasted cash flow transactions will occur.
The Company also has an outstanding floating-to-floating cross currency swap agreement for a total notional amount of $50,000
in exchange for CHF 65,100, which expires on 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 December 31, 2012 and December 31, 2011 reflected cumulative losses of $22,681 and $21,656, respectively, due
to the strengthening of the Swiss franc relative to the U.S. dollar over the term of the arrangement.
The following table sets forth the fair values of derivative instruments held by the Company as of December 31, 2012 and
December 31, 2011 and the balance sheet lines in which they are recorded:
Fair Value Asset (Liability)
Foreign currency forward / collar contracts
Foreign currency forward / collar contracts
Net investment hedge - cross currency swap
December 31, 2012 December 31, 2011 Balance Sheet Caption
$
$
85
(799)
(22,681)
394 Prepaid / Other assets
(1,284) Other accrued expenses
(21,656) 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.
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
Accounting Standards Codification ("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 December 31,
2012 and December 31, 2011:
70
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)
December 31, 2012
December 31, 2011
Level 1
Level 2
Level 3
Level 1
Level 2
Level 3
Assets:
Foreign currency cash flow hedges
$
— $
85
$
— $
— $
394
$
Liabilities:
Foreign currency cash flow hedges
Net investment hedge derivative
—
—
799
22,681
—
—
—
—
1,284
21,656
—
—
—
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
disclosures regarding the fair value of all of the Company’s financial instruments. The estimated fair value of long-term debt
at December 31, 2012 and December 31, 2011 was $2,680,674 and $2,679,793, respectively, compared to the carrying value of
$2,192,616 and $2,187,252, respectively. The estimated fair value of long-term debt is based on quoted market prices for similar
instruments and is, therefore, classified as Level 2 within the valuation hierarchy. The carrying values of cash and cash equivalents,
trade receivables, accounts payable, and notes payable are reasonable estimates of their fair values as of December 31, 2012
and December 31, 2011 due to the short-term nature of these instruments.
11. Income Taxes
Income taxes have been based on the following components of “Earnings before provision for income taxes and discontinued
operations” in the Consolidated Statements of Earnings:
Domestic
Foreign
Years Ended December 31,
$
2012
700,745
436,826
$ 1,137,571
$
2011
577,142
433,120
$ 1,010,262
$
$
2010
434,349
378,773
813,122
Income tax expense (benefit) relating to continuing operations for the years ended December 31, 2012, 2011, and 2010 is
comprised of the following:
Years Ended December 31,
2011
2010
2012
Current:
U.S. Federal
State and local
Foreign
Total current
Deferred:
U.S. Federal
State and local
Foreign
Total deferred
Total expense
$
$
$
219,850
(304)
96,713
316,259
19,475
(2,584)
(28,698)
(11,807)
304,452
$
$
$
159,250
(12,058)
98,919
246,111
850
(2,535)
(7,350)
(9,035)
237,076
$
$
$
31,055
6,357
90,780
128,192
89,172
99
(23,838)
65,433
193,625
71
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)
Differences between the effective income tax rate and the U.S. federal income statutory rate are as follows:
Years Ended December 31,
2011
2010
2012
U.S. Federal income tax rate
State and local taxes, net of Federal income tax benefit
Foreign operations tax effect
R&E tax credits (1)
Domestic manufacturing deduction
Foreign tax credits
Branch losses
Release of valuation allowance
Resolution of tax contingencies
Other, principally non-tax deductible items
Effective rate from continuing operations
35.0%
1.1
(7.2)
—
(1.8)
0.2
—
—
(1.4)
0.9
26.8%
35.0%
1.1
(6.9)
(0.4)
(1.6)
0.3
—
(1.0)
(4.0)
1.0
23.5%
35.0%
1.4
(7.5)
(0.4)
(0.8)
(0.6)
(0.6)
—
(4.7)
2.0
23.8%
(1) On January 2, 2013, the American Taxpayer Relief Act of 2012 was signed into law, and this legislation retroactively
extended the R&E tax credit for two years, from January 1, 2012 through December 31, 2013. The Corporation expects
its income tax expense for the first quarter of 2013 to include the entire benefit of the R&E tax credit attributable to 2012,
which is estimated to be approximately $4.6 million.
The tax effects of temporary differences that give rise to future deferred tax assets and liabilities are as follows:
December 31, 2012 December 31, 2011
Deferred Tax Assets:
Accrued compensation, principally postretirement and other employee benefits $
Accrued expenses, principally for state income taxes, interest, and warranty
Net operating loss and other carryforwards
Inventories, principally due to reserves for financial reporting purposes and
capitalization for tax purposes
Accounts receivable, principally due to allowance for doubtful accounts
Accrued insurance
Long-term liabilities, principally warranty, environmental, and exit costs
Other assets
Total gross deferred tax assets
Valuation allowance
Total deferred tax assets
$
Deferred Tax Liabilities:
Intangible assets, principally due to different tax and financial reporting bases
and amortization lives
Plant and equipment, principally due to differences in depreciation
Accounts receivable
Total gross deferred tax liabilities
Net deferred tax liability
Classified as follows in the consolidated balance sheets:
Current deferred tax asset
Non-current deferred tax liability
$
$
$
$
$
197,253
46,739
107,959
23,239
5,479
5,002
2,781
9,235
397,687
(18,887)
378,800
$
(719,904) $
(65,480)
(5,725)
(791,109)
(412,309) $
$
49,935
(462,244)
(412,309) $
168,350
54,913
24,409
18,192
5,039
3,947
796
13,335
288,981
(20,855)
268,126
(512,585)
(57,245)
(6,442)
(576,272)
(308,146)
40,376
(348,522)
(308,146)
72
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)
As of December 31, 2012, the Company has loss carryforwards for U.S. Federal purposes totaling approximately $175.0 million
attributed to the recent Anthony acquisition, and loss carryforwards for non-U.S. purposes totaling $121.0 million. As of
December 31, 2011 the Company had non-U.S loss carryforwards of $71.2 million. The federal loss carryforwards are available
for use against the Company's consolidated federal taxable income and begin to expire in 2024. The entire balance of the non-
U.S. losses as of December 31, 2012 is available to be carried forward, with $51.5 million of these losses beginning to expire
during the years 2013 through 2032. The remaining $69.5 million of such losses can be carried forward indefinitely.
The Company has loss carryforwards for state purposes as of December 31, 2012 and 2011 of $133.8 million and $160.9 million,
respectively. The state loss carryforwards are available for use by the Company between 2013 and 2032.
As of December 31, 2012, the Company has research and development credits of $0.8 million, and alternative minimum tax
credits of $4.3 million. The research and development credits begin to expire in 2025 and the alternative minimum tax credits
can be carried forward indefinitely. The Company had no U.S. foreign tax credit carryforwards, research and development tax
credit carryforwards, or alternative minimum tax credits at December 31, 2011.
The Company maintains valuation allowances by jurisdiction against the deferred tax assets related to certain of these
carryforwards as utilization of these tax benefits is not assured for certain jurisdictions.
The Company has not provided for U.S. federal income taxes or tax benefits on the undistributed earnings of its international
subsidiaries, totaling approximately $1.8 billion at December 31, 2012, because such earnings are reinvested and it is currently
intended that they will continue to be reinvested indefinitely. It is not practicable to estimate the amount of tax that might be
payable if some or all of such earnings were to be repatriated, and the amount of foreign tax credits that would be available to
reduce or eliminate the resulting U.S. income tax liability.
Unrecognized Tax Benefits
The Company files U.S., state, local, and foreign tax returns. The Company is routinely audited by the tax authorities in these
jurisdictions, and a number of audits are currently underway. It is reasonably possible during the next twelve months that
uncertain tax positions may be settled, which could result in a decrease in the gross amount of unrecognized tax benefits. This
decrease may result in an income tax benefit. Due to the potential for resolution of federal, state, and foreign examinations, and
the expiration of various statutes of limitation, the Company's gross unrecognized tax benefits balance may change within the
next twelve months by a range of zero to $140 million. Some portion of any such change may be reported as discontinued
operations. The Company is no longer subject to examinations of its federal income tax returns for years through 2008. All
significant state, local, and international matters have been concluded for years through 2005 and 2007, respectively. The
Company believes adequate provision has been made for all income tax uncertainties.
73
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)
The following table is a reconciliation of the beginning and ending balances of the Company’s unrecognized tax benefits:
Unrecognized tax benefits at January 1, 2010
Additions based on tax positions related to the current year
Additions for tax positions of prior years
Reductions for tax positions of prior years
Settlements
Lapse of statutes
Unrecognized tax benefits at December 31, 2010
Additions based on tax positions related to the current year
Additions for tax positions of prior years
Reductions for tax positions of prior years
Settlements
Lapse of statutes
Unrecognized tax benefits at December 31, 2011
Additions based on tax positions related to the current year
Additions for tax positions of prior years
Reductions for tax positions of prior years
Settlements
Lapse of statutes
Unrecognized tax benefits at December 31, 2012
Continuing
184,896
$
22,324
15,183
(39,824)
(8,152)
(7,521)
166,906
10,835
14,636
(40,563)
(6,673)
(6,197)
138,944
10,188
4,128
(14,257)
(418)
(12,550)
126,035 (A) $
Discontinued
91,670
$
242
75
(6,775)
(17,804)
(133)
67,275
986
1,971
(12,302)
(3,469)
(216)
54,245
26
3,470
(25)
(85)
(3,429)
54,202
$
Total
276,566
22,566
15,258
(46,599)
(25,956)
(7,654)
234,181
11,821
16,607
(52,865)
(10,142)
(6,413)
193,189
10,214
7,598
(14,282)
(503)
(15,979)
180,237
$
$
_________
(A) If recognized, the net amount of potential tax benefits that would impact the Company’s effective tax rate is $104.9 million.
During the years ended December 31, 2012, 2011, and 2010, the Company recorded potential interest and penalty expense
(income) of $0.1 million, $(9.1) million and $1.5 million, respectively, related to its unrecognized tax benefits as a component
of provision for income taxes. The Company had accrued interest and penalties of $25.0 million at December 31, 2012 and
$34.2 million at December 31, 2011, which are not included in the above table.
12. Equity and Cash Incentive Program
2005 Equity and Cash Incentive Plan
The Company's share-based awards are typically granted annually at its regularly scheduled first quarter Compensation Committee
meeting. For the years presented herein, employee awards were made pursuant to the terms of the Company’s shareholder-
approved 2005 Equity and Cash Incentive Plan (the “2005 Plan”). Under the 2005 Plan, a maximum aggregate of 20,000,000 shares
was reserved for grants (non-qualified and incentive stock options, stock-settled stock appreciation rights (“SARs”), restricted
stock, and performance share awards) to key personnel between February 1, 2005 and January 31, 2015, provided that no incentive
stock options could be granted under the plan after February 11, 2014 and a maximum of 2,000,000 shares could be granted as
restricted stock or performance share awards.
On May 3, 2012, the shareholders approved the Dover Corporation 2012 Equity and Cash Incentive Plan (the "2012 Plan"), to
replace the 2005 Equity and Cash Incentive Plan, which otherwise would have terminated according to its terms on January 31,
2015, and the 1996 Non-Employee Directors Stock Compensation Plan (the "Directors Plan"), which would have otherwise
terminated according to its terms on December 31, 2012. Upon approval of the 2012 Plan, no additional awards may be granted
under the 2005 Plan. Officers and other key employees, as well as non-employee directors, are eligible to participate in the 2012
Plan, which has a ten year term and will terminate on May 3, 2022. The 2012 Plan provides for stock options and SARs grants,
restricted stock awards, restricted stock unit awards, performance share awards, cash performance awards, directors' shares, and
deferred stock units. Under the 2012 Plan, a total of 17,000,000 shares of common stock are reserved for issuance, subject to
adjustments resulting from stock dividends, stock splits, recapitalizations, reorganizations, and other similar changes.
The exercise price per share for stock options and SARs is equal to the closing price of the Company’s stock on the New York
Stock Exchange on the date of grant. New common shares are issued when options or SARs are exercised. The period during
which options and SARs are exercisable is fixed by the Company’s Compensation Committee at the time of grant. Generally, the
stock options or SARs vest after three years of service and expire at the end of ten years.
74
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)
Stock-based compensation costs are reported within selling and administrative expenses. The following table summarizes the
Company’s compensation expense relating to all stock-based incentive plans:
Pre-tax compensation expense
Tax benefit
Total stock-based compensation expense, net of tax
SARs and Stock Options
$
$
2012
Years Ended December 31,
2011
25,130
(8,795)
16,335
30,884
(10,904)
19,980
$
$
$
$
2010
20,407
(7,142)
13,265
In 2012, 2011, and 2010, the Company issued SARs covering 1,719,943, 1,524,329, and 2,304,574 shares, respectively, under the
2005 Plan. Since 2006, the Company has only issued SARs under the 2005 Plan and does not anticipate issuing stock options in
the future. The fair value of each SAR grant was estimated on the date of grant using a Black-Scholes option-pricing model with
the following assumptions:
Risk-free interest rate
Dividend yield
Expected life (years)
Volatility
Grant price
Fair value at date of grant
2012
2011
2010
1.05%
2.03%
5.7
36.41%
65.38
18.51
$
$
2.68%
1.70%
5.8
33.56%
66.59
20.13
$
$
2.77%
2.33%
6.0
31.93%
42.88
11.66
$
$
Expected volatilities are based on Dover's stock price history, including implied volatilities from traded options on Dover stock.
The Company uses historical data to estimate SAR exercise and employee termination patterns within the valuation model. The
expected life of SARs granted is derived from the output of the option valuation model and represents the average period of time
that SARs granted are expected to be outstanding. The interest rate for periods within the contractual life of the options is based
on the U.S. Treasury yield curve in effect at the time of grant.
A summary of activity relating to SARs and stock options granted under the 2005 Plan and the predecessor plan for the year ended
December 31, 2012 is as follows:
SARs
Stock Options
Weighted
Average
Exercise
Price
Aggregate
Intrinsic
Value
Number of
Shares
Weighted
Average
Remaining
Contractual
Term
(Years)
Outstanding at 1/1/2012
9,393,634
$
Granted
Forfeited / expired
Exercised
1,719,943
(194,943)
(2,367,026)
44.14
65.38
55.25
36.84
Outstanding at 12/31/2012
8,551,608
50.17
$ 134,097
6.4
724,406
Weighted
Average
Exercise
Price
Aggregate
Intrinsic
Value
Number of
Shares
1,943,094
$
36.96
—
—
Weighted
Average
Remaining
Contractual
Term
(Years)
(14,122)
(1,204,566)
37.93
36.21
38.18
$
$
19,941
19,941
1.5
1.5
Exercisable at 12/31/2012
3,431,600
$
40.29
$
87,227
4.3
724,406
$
38.18
75
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)
The following table summarizes information about SAR and option awards outstanding that are vested and exercisable at December
31, 2012:
SARs Outstanding
SARs Exercisable
Weighted
Average
Exercise
Price
$
29.60
43.32
62.91
Weighted
Average
Remaining
Life
in Years
5.7
5.5
7.5
Weighted
Average
Exercise
Price
$
29.60
43.95
50.64
Weighted
Average
Remaining
Life
in Years
5.7
3.7
3.2
Number of
Shares
1,229,923
1,439,583
762,094
Number of
Shares
1,229,923
3,468,269
3,853,416
Stock Options Outstanding
Stock Options Exercisable
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Life
in Years
Number of
Shares
Weighted
Average
Exercise
Price
Number of
Shares
476,683
247,723
$
36.60
41.23
1.8
1.1
476,683
247,723
$
36.60
41.23
Weighted
Average
Remaining
Life
in Years
1.8
1.1
Range of Exercise Prices
$29.45 - $35.50
$42.30 - $46.00
$50.60 - $66.59
Range of Exercise Prices
$24.50 - $38.00
$38.50 - $41.25
Unrecognized compensation expense related to SARs not yet exercisable was $27,722 at December 31, 2012. This cost is expected
to be recognized over a weighted average period of 1.7 years.
The fair value of SARs which became exercisable during 2012, 2011, and 2010 was $16,484, $21,202, and $23,593, respectively.
The aggregate intrinsic value of SARs exercised during 2012, 2011, and 2010 was $61,531, $24,322, and $1,083, respectively.
The aggregate intrinsic value of options exercised during 2012, 2011, and 2010 was $29,866, $24,726, and $28,699, respectively.
Cash received by the Company for the exercise of options during 2012, 2011, and 2010 totaled $38,029, $26,519, and $66,962,
respectively.
The company recognized tax benefits of $22,771, $8,752, and $6,466 during 2012, 2011, and 2010, respectively, for the exercise
of SARs and stock options. These benefits have been recorded as an increase to additional paid-in capital and are reflected as
financing cash inflows in the Consolidated Statements of Cash Flows.
Performance Share Awards
Performance share awards granted under the 2005 Plan, as amended in May of 2009, are being expensed over the three year period
that is the requisite performance and service period. Awards shall become vested if (1) the Company achieves certain specified
stock performance targets compared to a defined group of peer companies and (2) the employee remains continuously employed
by the company during the performance period. Partial vesting may occur after separation from service in the case of certain
terminations not for cause and for retirements.
In 2012, 2011, and 2010, the Company issued performance shares covering 50,416, 44,751, and 68,446 shares, respectively. The
performance share awards are market condition awards and have been fair valued on the date of grant using the Monte Carlo
simulation model (a binomial lattice-based valuation model) with the following assumptions:
Risk-free interest rate
Dividend yield
Expected life (years)
Volatility
Fair value of performance award
2012
2011
2010
0.37%
2.03%
2.9
34.10%
71.98
$
1.34%
1.61%
2.9
40.48%
91.41
$
1.37%
2.38%
2.9
39.98%
57.49
$
76
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)
Expected volatilities are based on historical volatilities of each of the defined peer companies. The interest rate is based on the
U.S. Treasury yield curve in effect at the time of grant.
A summary of activity for performance share awards for the year ended December 31, 2012 is as follows:
Unvested at December 31, 2011
Granted
Vested *
Unvested at December 31, 2012
Number of
Shares
113,197
50,416
(68,446)
95,167
Weighted-
Average
Grant-Date
Fair Value
57.23
$
71.98
57.49
81.12
$
* Under the terms of the performance share award, the actual number of shares awarded can range from zero to 200% of the
original target grant, depending on Dover's three-year performance relative to the peer group for the relevant performance
period. Awards vesting at the end of 2012, as shown above, are expected to be paid out at approximately 158% of their original
target.
Unrecognized compensation expense related to unvested performance shares as of December 31, 2012 was $3,525, which will be
recognized over a weighted average period of 1.6 years.
The Company also has restricted stock authorized for grant (as part of the 2005 Plan), under which common stock of the Company
may be granted at no cost to certain officers and key employees. In general, restrictions limit the sale or transfer of these shares
during a two or three year period, and restrictions lapse proportionately over the two or three year period. The Company granted
55,200 and 15,500 restricted shares in 2011 and 2010, respectively. No restricted shares were granted in 2012.
The Company issued the following shares to its non-employee directors during 2012 under the 2012 Plan and during 2011 and
2010 under the Directors' Plan as partial compensation for serving as directors of the Company:
Years ended December 31,
2011
2010
2012
Aggregate shares granted
Shares withheld to satisfy tax obligations
Net shares granted
13. Commitments and Contingent Liabilities
Lease Commitments
20,344
(544)
19,800
20,929
(562)
20,367
20,853
(574)
20,279
The Company leases certain facilities and equipment under operating leases, many of which contain renewal options. Total rental
expense, net of insignificant sublease rental income, for all operating leases was $80,350, $76,529, and $65,080 for the years
ended December 31, 2012, 2011, and 2010, respectively. Contingent rentals under the operating leases were not significant.
The aggregate future minimum lease payments for operating and capital leases as of December 31, 2012 are as follows:
2013
2014
2015
2016
2017
2018 and thereafter
$
Operating
63,228
$
51,064
36,470
25,369
21,837
73,537
Capital
2,552
1,809
835
618
237
788
77
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)
Guarantees
The Company has provided typical indemnities in connection with sales of certain businesses and assets, including representations
and warranties and related indemnities for environmental, health and safety, tax, and employment matters. The Company does
not have any material liabilities recorded for these indemnifications and is not aware of any claims or other information that
would give rise to material payments under such indemnities.
Litigation
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. At December 31, 2012 and 2011, the
Company has reserves totaling $28,875 and $19,584, respectively, for environmental matters that are probable and estimable,
with the 2012 increase primarily attributed to environmental contingencies assumed in recent acquisitions.
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. At December 31, 2012 and 2011,
the Company has reserves totaling $1,158 and $1,246, respectively, for legal matters that are probable and estimable and not
otherwise covered by insurance. While it is not possible at this time to predict the outcome of these legal actions, in the opinion
of management, based on the aforementioned reviews, the Company is not currently involved in any legal proceedings which,
individually or in the aggregate, could have a material affect on its financial position, results of operations, or cash flows.
14. Employee Benefit Plans
The Company offers defined contribution retirement plans which cover the majority of its U.S. employees, as well as employees
in certain other countries. The Company’s expense relating to defined contribution plans was $29,760, $25,169, and $21,343
for the years ended December 31, 2012, 2011, and 2010, respectively.
The Company sponsors qualified defined benefit pension plans covering certain employees of the Company and its subsidiaries.
The plans’ benefits are generally based on years of service and employee compensation. The Company also provides to certain
management employees, through non-qualified plans, supplemental retirement benefits in excess of qualified plan limits imposed
by federal tax law.
The Company also maintains post retirement benefit plans which cover approximately 1,075 participants, approximately 225
of whom are eligible for medical benefits. These plans are effectively closed to new entrants. The post-retirement benefit
obligation amounts at December 31, 2012 and 2011 include amounts totaling $3,173 and $3,790, respectively, that are recorded
in discontinued operations. The supplemental and post retirement benefit plans are supported by the general assets of the
Company.
78
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)
Obligations and Funded Status
The following tables summarize the balance sheet impact, including the benefit obligations, assets, and funded status associated
with the Company's significant defined benefit and other postretirement plans at December 31, 2012 and 2011.
Qualified Defined Benefits
U.S. Plan
Non-U.S. Plans
Non-Qualified
Supplemental
Benefits
Post-Retirement
Benefits
2012
2011
2012
2011
2012
2011
2012
2011
Change in benefit obligation
Benefit obligation at beginning of year
$ 526,760
$ 416,755
$ 185,010
$ 164,288
$ 169,903
$ 127,035
$ 15,353
$ 14,508
Benefits earned during the year
Interest cost
Plan participants' contributions
Benefits paid
Actuarial loss
Business acquisitions
Amendments
Settlement and curtailment gains
Currency translation and other
Benefit obligation at end of year
Change in plan assets
14,406
25,136
—
14,167
27,237
—
5,712
10,044
2,134
3,278
9,019
815
5,304
7,916
—
4,064
7,841
—
(38,297)
(50,142)
(7,065)
(7,012)
(19,434)
(12,726)
75,900
—
—
—
—
40,020
79,970
258
(1,628)
123
25,552
61,395
—
(6,776)
8,792
10,481
7,592
—
—
(3,451)
9,579
—
7,140
—
—
23,016
18,000
2,673
—
—
248
593
632
(1,531)
1,326
—
—
(2,050)
—
206
723
1,364
(2,865)
1,368
—
—
(207)
256
603,905
526,760
284,798
185,010
180,408
169,903
14,571
15,353
Fair value of plan assets at beginning of year
515,191
409,783
121,807
121,815
Actual return on plan assets
Company contributions
Plan participants' contributions
Benefits paid
Business acquisitions
Settlements and curtailments
Currency translation
59,754
18,000
—
47,307
42,000
—
(38,297)
(50,142)
—
—
—
66,243
—
—
16,023
10,243
2,134
(7,065)
38,939
(6,776)
6,111
452
7,275
815
—
—
(1,538)
Fair value of plan assets at end of year
554,648
515,191
181,416
121,807
—
—
—
—
19,434
12,726
—
—
—
—
2,949
632
—
—
1,566
1,364
(7,012)
(19,434)
(12,726)
(1,531)
(2,930)
—
—
—
—
—
—
—
—
—
(2,050)
—
—
—
—
—
—
Funded status
$ (49,257) $ (11,569) $(103,382) $ (63,203) $(180,408) $(169,903) $ (14,571) $ (15,353)
Amounts recognized in the balance sheets consist of:
Assets and Liabilities:
Other assets and deferred charges
$
— $
— $
2,749
$
2,052
$
— $
— $
— $
—
Accrued compensation and employee benefits
—
—
(3,190)
(1,293)
(19,701)
(18,913)
(953)
(1,079)
Other liabilities (deferred compensation)
(49,257)
(11,569)
(102,941)
(63,962)
(160,707)
(150,990)
(13,618)
(14,274)
Total Assets and Liabilities
$ (49,257) $ (11,569) $(103,382) $ (63,203) $(180,408) $(169,903) $ (14,571) $ (15,353)
Accumulated Other Comprehensive Loss (Earnings):
Net actuarial losses (gains)
Prior service cost (credit)
Net asset at transition, other
Deferred taxes
$ 223,753
$ 182,143
$ 41,125
$ 22,892
$ 22,296
12,857
$
996
3,771
—
4,819
—
1,260
3
1,377
(112)
46,567
46,852
(1,506)
—
—
(79,634)
(65,437)
(10,761)
(5,474)
(24,103)
(20,899)
(1,284)
(1,922)
—
1,063
—
119
Total Accumulated Other Comprehensive Loss
(Earnings), net of tax
147,890
121,525
31,627
18,683
44,760
38,810
(391)
(2,143)
Net amount recognized at December 31,
$ 98,633
$ 109,956
$ (71,755) $ (44,520) $(135,648) $(131,093) $ (14,962) $ (17,496)
Accumulated benefit obligations
$ 541,394
$ 478,561
$ 264,736
$ 166,853
$ 138,593
$ 126,417
The Company’s net unfunded status at December 31, 2012 includes $49,257 relating to the U.S. Dover Corporate Pension Plan
and $103,382 relating to the Company’s significant international plans, some in locations where it is not economically
advantageous to pre-fund the plans due to local regulations. The majority of the international obligations relate to defined pension
plans operated by the Company’s businesses in Germany, the United Kingdom, and Switzerland.
79
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)
The accumulated benefit obligation for all defined benefit pension plans was $944,723 and $771,831 at December 31, 2012 and
2011, respectively. Pension plans with accumulated benefit obligations in excess of plan assets consist of the following at
December 31, 2012 and 2011:
$
2012
425,080
367,736
140,514
$
2011
317,223
259,850
82,654
Non-Qualified
Supplemental Benefits
2011
$ 4,064
7,841
—
2012
$ 5,304
7,916
—
2010
$ 4,241
7,677
—
Projected benefit obligation (PBO)
Accumulated benefit obligation (ABO)
Fair value of plan assets
Net Periodic Benefit Cost
Components of the net periodic benefit cost were as follows:
Defined Benefit Plans
Qualified Defined Benefits
Service cost
Interest cost
Expected return on plan assets
Amortization of:
Prior service cost
Recognized actuarial loss
Transition obligation
Settlement & curtailment (gain) loss
Other
Total net periodic benefit cost
Post-Retirement Benefits
Service cost
Interest cost
Amortization of:
Prior service income
Recognized actuarial gain
Settlement & curtailment gain
Other
Total net periodic benefit cost
U.S. Plan
2011
$14,167
27,237
(38,472)
2012
$14,406
25,136
(38,978)
2010
$11,272
22,531
(31,912)
Non-U.S. Plans
2011
$ 3,278
9,019
(8,148)
2012
$ 5,712
10,044
(8,765)
2010
$ 3,415
8,043
(6,377)
1,048
13,515
—
—
—
$15,127
1,304
8,335
—
1,180
123
$13,874
1,303
5,082
—
—
—
$ 8,276
117
579
(47)
1,449
—
$ 9,089
122
254
(44)
2,030
—
$ 6,511
62
392
(42)
(347)
—
$ 5,146
7,425
138
—
—
—
$20,783
7,266
—
—
—
—
$19,171
7,266
—
—
—
—
$19,184
2012
2011
2010
$
$
248
593
$
206
723
279
837
(416)
(19)
(1,493)
—
$ (1,087) $
(409)
(241)
(137)
256
398
$
(409)
(398)
—
—
309
Amounts expected to be amortized from Accumulated Other Comprehensive Earnings (Loss) into net periodic benefit cost during
2013 are as follows:
Amortization of:
Prior service cost (income)
Transition obligation
Recognized actuarial loss
Total
Qualified Defined Benefits
U.S. Plan
Non-U.S.
Plans
Non-
Qualified
Supplemental
Benefits
Post-
Retirement
Benefits
$
$
1,026
—
21,940
22,966
$
$
118
(14)
1,520
1,624
$
$
7,989
—
169
8,158
$
$
(416)
—
135
(281)
80
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)
Assumptions
The Company determines actuarial assumptions on an annual basis.
The weighted-average assumptions used in determining the benefit obligations were as follows:
Qualified Defined Benefits
U.S. Plan
Non-U.S. Plans
Non-Qualified
Supplemental
Benefits
Post-Retirement
Benefits
2012
2011
2012
2011
2012
2011
2012
2011
Discount rate
Average wage increase
Ultimate medical trend rate
4.05%
4.00%
na
4.85%
4.00%
na
3.31%
2.74%
na
4.62%
3.43%
na
4.00%
4.50%
na
4.77%
4.50%
na
3.65%
na
5.00%
4.45%
na
5.00%
The weighted average assumptions used in determining the net periodic cost were as follows:
Qualified Defined Benefits
U.S. Plan
Non-U.S. Plans
Non- Qualified
Supplemental
Benefits
2011
Post-Retirement
Benefits
Discount rate
Average wage increase
Expected return on plan assets
2012
2011
2010
2012
4.85% 5.50% 5.95% 4.62% 5.04% 5.15% 4.77% 5.50% 5.95% 3.65% 5.10% 5.50%
4.00% 4.50% 4.50% 3.14% 3.73% 3.68% 4.50% 4.50% 4.50% na
na
7.75% 7.75% 7.75% 5.90% 6.45% 6.10% na
na
na
na
na
2010
2011
2012
2010
2011
2012
2010
na
na
The Company’s discount rate assumption is determined by developing a yield curve based on high quality corporate bonds with
maturities matching the plans’ expected benefit payment streams. The plans’ expected cash flows are then discounted by the
resulting year-by-year spot rates.
For post-retirement benefit measurement purposes, an 8.0% annual rate of increase in the per capita cost of covered benefits
(i.e., health care cost trend rates) was assumed for 2013. The rate was assumed to decrease gradually to 5.0% by the year 2018
and remain at that level thereafter. The health care cost trend rate assumption can have an effect on the amounts reported. For
example, increasing (decreasing) the assumed health care cost trend rates by one percentage point in each year would increase
(decrease) the accumulated post-retirement benefit obligation as of December 31, 2012 by $361 and $(345), respectively, and
would have a negligible impact on the net post-retirement benefit cost for 2012.
Plan Assets
The primary financial objective of the plans is to secure participant retirement benefits. Accordingly, the key objective in the
plans’ financial management is to promote stability and, to the extent appropriate, growth in the funded status. Related and
supporting financial objectives are established in conjunction with a review of current and projected plan financial requirements.
As it relates to the funded defined benefit pension plans, the Company’s funding policy is consistent with the funding requirements
of the Employment Retirement Income Security Act (“ERISA”) and applicable international laws. The Company is responsible
for overseeing the management of the investments of the plans’ assets and otherwise ensuring that the plans’ investment programs
are in compliance with ERISA, other relevant legislation, and related plan documents. Where relevant, the Company has retained
professional investment managers to manage the plans’ assets and implement the investment process. The investment managers,
in implementing their investment processes, have the authority and responsibility to select appropriate investments in the asset
classes specified by the terms of their applicable prospectus or investment manager agreements with the plans.
The assets of the plans are invested to achieve an appropriate return for the plans consistent with a prudent level of risk. The
asset return objective is to achieve, as a minimum over time, the passively managed return earned by market index funds,
weighted in the proportions outlined by the asset class exposures identified in the plans’ strategic allocation. The expected return
on assets assumption used for pension expense is developed through analysis of historical market returns, statistical analysis,
current market conditions, and the past experience of plan asset investments. Overall, it is projected that the investment of plan
assets within Dover’s U.S. Corporate Pension Plan will achieve a 7.75% net return over time from the asset allocation strategy.
81
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)
The Company’s actual and target weighted-average asset allocation for our U.S. Corporate Pension Plan was as follows:
Equity securities
Fixed income
Real estate and other
Total
2012
2011
Current
Target
57%
36%
7%
100%
56%
36%
8%
100%
58%
35%
7%
100%
While the non-U.S. investment policies are different for each country, the long-term objectives are generally the same as for the
U.S. pension assets. The Company's non-U.S. plans were expected to achieve rates of return on invested assets of 5.90% in
2012, 6.45% in 2011, and 6.10% in 2010.
The fair values of both U.S. and non-U.S. pension plan assets by asset category within the ASC 820 hierarchy (as defined in
Note 10) are as follows at December 31, 2012 and 2011:
December 31, 2012
December 31, 2011
Level 1
Level 2
Level 3
Total Fair
Value
Level 1
Level 2
Level 3
Total Fair
Value
U.S. Plan
Asset category:
Common stocks:
U.S. companies
Non-U.S. companies
Fixed income investments:
Corporate bonds
Private placements
Government securities
Common stock funds:
Mutual funds
Collective trusts
Real estate funds
Cash and equivalents
Other
$ 153,939
6,478
$
— $
—
— $ 153,939
6,478
—
$ 153,816
3,065
$
— $
—
— $ 153,816
3,065
—
—
—
19,888
59,293
7,238
112,716
—
—
—
59,293
7,238
132,604
—
—
9,268
55,716
3,791
115,873
—
—
—
55,716
3,791
125,141
45,376
—
—
11,317
—
$ 236,998
—
109,002
—
—
—
$ 288,249
—
—
29,401
—
—
29,401
45,376
109,002
29,401
11,317
—
$ 554,648
$
38,476
—
—
9,748
—
$ 214,373
—
94,396
—
—
—
$ 269,776
—
—
26,481
—
4,561
31,042
38,476
94,396
26,481
9,748
4,561
$ 515,191
$
Asset category:
Common stocks
Fixed income investments
Common stock funds
Real estate funds
Cash and equivalents
Other
December 31, 2012
December 31, 2011
Level 1
Level 2
Level 3
Total Fair
Value
Level 1
Level 2
Level 3
Total Fair
Value
Non-U.S. Plans
$
$
31,268
—
—
—
3,380
—
34,648
$
— $
57,049
75,729
—
—
2,418
$ 135,196
$
— $
—
—
10,116
—
1,456
11,572
31,268
57,049
75,729
10,116
3,380
3,874
$ 181,416
$
$
23,450
—
—
—
2,258
—
25,708
$
— $
36,629
49,680
—
—
2,737
89,046
$
$
— $
—
—
7,053
—
—
7,053
23,450
36,629
49,680
7,053
2,258
2,737
$ 121,807
Common stocks represent investments in domestic and foreign equities which are publicly traded on active exchanges and are
valued based on quoted market prices.
82
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)
Fixed income investments include U.S. treasury bonds and notes, which are valued based on quoted market prices, as well as
investments in other government and municipal securities and corporate bonds, which are valued based on yields currently
available on comparable securities of issuers with similar credit ratings.
Common stock funds consist of mutual funds and collective trusts. Mutual funds are valued by obtaining quoted prices from
nationally recognized securities exchanges. Collective trusts are valued using Net Asset Value (the “NAV”) as of the last business
day of the year. The NAV is based on the underlying value of the assets owned by the fund minus its liabilities, and then divided
by the number of shares outstanding. The value of the underlying assets is based on quoted prices in active markets.
The real estate funds are valued on an annual basis using third-party appraisals, with adjustments estimated on a quarterly basis
using discounted cash flow models which consider such inputs as revenue and expense growth rates, terminal capitalization
rates, and discount rates. The Company believes this is an appropriate methodology to obtain the fair value of these assets.
The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective
of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other
market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments
could result in a different fair value measurement at the reporting date.
The fair value measurement of plan assets using significant unobservable inputs (Level 3) changed during 2011 and 2012 due
to the following:
Balance at December 31, 2010
Actual return on plan assets:
Relating to assets sold during the period
Relating to assets still held at December 31, 2011
Business acquisitions
Purchases
Sales
Balance at December 31, 2011
Actual return on plan assets:
Relating to assets sold during the period
Relating to assets still held at December 31, 2012
Business acquisitions
Purchases
Sales
Balance at December 31, 2012
Real estate
funds
Other
Total
$
30,405
$
— $
30,405
(3)
2,348
—
1,987
(1,203)
33,534
16
2,123
3,103
1,409
(668)
39,517
$
108
(394)
5,908
—
(1,061)
4,561
(52)
—
1,456
—
(4,509)
1,456
$
105
1,954
5,908
1,987
(2,264)
38,095
(36)
2,123
4,559
1,409
(5,177)
40,973
$
There were no significant transfers between Level 1 and Level 2 investments during 2012 or 2011.
83
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)
Future Estimates
Benefit Payments
Estimated future benefit payments to retirees, which reflect expected future service, are as follows:
2013
2014
2015
2016
2017
2018 - 2022
Contributions
Qualified Defined Benefits
Non-U.S.
Plans
U.S. Plan
Non-
Qualified
Supplemental
Benefits
Post-
Retirement
Benefits
$
$
33,861
35,922
36,893
37,051
38,371
209,999
$
9,980
8,541
8,257
8,947
9,188
52,397
$
20,092
7,837
34,466
13,071
6,856
76,289
953
986
1,010
1,000
1,012
4,404
In 2013, the Company expects to contribute approximately $20 to $40 million to its U.S. plan and approximately $14 million
to its non-U.S. plans. Additionally, in 2013, the Company expects to fund benefit payments of approximately $20 million to
plan participants of its unfunded, non-qualified, supplemental benefit plans.
Multiemployer Pension Plans
The Company, through its subsidiaries, participates in a few multiemployer pension plans covering approximately 100 employees
working under U.S. collective bargaining agreements. None of these plans are considered individually significant to the
Company. Contributions to multiemployer plans totaled less than $2 million in each of the last three years.
15. Other Comprehensive Earnings
The amounts recognized in other comprehensive earnings were as follows:
Year Ended December 31, 2012
Foreign currency translation adjustments
Pension and other postretirement benefit plans
Changes in fair value of cash flow hedges
Other
Total other comprehensive earnings (loss)
Year Ended December 31, 2011
Foreign currency translation adjustments
Pension and other postretirement benefit plans
Changes in fair value of cash flow hedges
Other
$
$
$
Pre-tax
Tax
$
38,521
(70,642)
195
692
(31,234) $
359
23,632
(70)
(83)
23,838
Net of tax
38,880
$
(47,010)
125
609
(7,396)
$
Pre-tax
(74,476) $
(54,519)
(1,649)
270
Tax
13,954
18,204
577
(32)
32,703
Net of tax
$
(60,522)
(36,315)
(1,072)
238
(97,671)
Total other comprehensive earnings (loss)
$ (130,374) $
$
Year Ended December 31, 2010
Foreign currency translation adjustments
Pension and other postretirement benefit plans
Changes in fair value of cash flow hedges
Total other comprehensive earnings (loss)
Pre-tax
Tax
Net of tax
$
$
(33,636) $
(2,468)
360
(35,744) $
— $
1,189
(126)
1,063
$
(33,636)
(1,279)
234
(34,681)
84
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)
The components of accumulated other comprehensive earnings (loss) are as follows:
Cumulative foreign currency translation adjustments
Pension and other postretirement benefit plans
Changes in fair value of cash flow hedges
16. Segment Information
December 31, 2012 December 31, 2011
126,992
$
(176,877)
2,375
(47,510)
165,872
(223,887)
3,109
(54,906) $
$
$
The Company currently operates through four business segments that are aligned with the key end-markets they serve:
Communication Technologies, Energy, Engineered Systems, and Printing & Identification. Consistent with the requirements
of segment reporting, the Company's operating segments are aligned with its operating and management reporting structure. The
segment structure is intended to provide alignment and focus around its end-markets, allow for better leverage of its executive
leadership talent and expertise, help improve the sharing and leveraging of resources within and between the four segments,
enhance execution of business-specific strategies, and facilitate internal and external benchmarking against companies serving
similar markets.
The Communication Technologies segment is engaged in the design and manufacture of innovative products and components
in the consumer electronics, medical technology, aerospace/defense, and telecommunication/other markets. The Energy segment
provides highly-engineered solutions for the safe and efficient extraction and handling of oil and gas in the drilling, production,
and downstream markets. The Engineered Systems segment is comprised of two platforms, Fluid Solutions and Refrigeration
& Industrial, which are industry leaders in the fluids systems, refrigeration and food equipment, and industrial markets. The
Printing & Identification segment provides integrated printing, coding, and dispensing solutions for the fast moving consumer
goods and industrial markets.
85
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)
Segment financial information and a reconciliation of segment results to consolidated results follows:
REVENUE:
Communication Technologies
Energy
Engineered Systems
Printing & Identification
Intra-segment eliminations
Total consolidated revenue
EARNINGS FROM CONTINUING OPERATIONS:
Segment earnings:
Communication Technologies
Energy
Engineered Systems
Printing & Identification
Total segments
Corporate expense / other (1)
Net interest expense
Earnings from continuing operations before provision for income taxes
and discontinued operations
Provision for taxes
Earnings from continuing operations
OPERATING MARGINS:
Communication Technologies
Energy
Engineered Systems
Printing & Identification
Total Segments
Earnings from continuing operations
DEPRECIATION and AMORTIZATION:
Communication Technologies
Energy
Engineered Systems
Printing & Identification
Corporate
Consolidated total
CAPITAL EXPENDITURES:
Communication Technologies
Energy
Engineered Systems
Printing & Identification
Corporate
Consolidated total
Years Ended December 31,
2011
2010
2012
$ 1,516,585
2,172,604
3,419,544
996,531
(925)
$ 8,104,339
$ 1,360,077
1,900,749
3,100,735
1,008,236
(643)
$ 7,369,154
$ 1,076,012
1,303,507
2,786,442
943,681
(135)
$ 6,109,507
$
$
$
$
$
$
218,960
538,650
501,952
135,159
1,394,721
136,009
121,141
1,137,571
304,452
833,119
14.4%
24.8%
14.7%
13.6%
17.2%
14.0%
132,619
95,077
93,621
33,602
2,666
357,585
152,245
70,334
66,028
6,255
2,150
297,012
$
$
$
$
$
$
226,382
450,637
445,186
141,561
1,263,766
137,979
115,525
1,010,262
237,076
773,186
16.6%
23.7%
14.4%
14.0%
17.1%
13.7%
101,839
77,819
74,776
33,482
2,561
290,477
111,402
74,953
58,610
10,391
7,320
262,676
$
$
$
$
$
$
205,215
316,113
382,644
151,235
1,055,207
135,714
106,371
813,122
193,625
619,497
19.1%
24.3%
13.7%
16.0%
17.3%
13.3%
72,262
48,842
72,526
33,570
2,037
229,237
41,222
48,916
57,476
10,075
11,608
169,297
(1) Certain expenses are maintained at the corporate level and not allocated to the segments. These expenses include executive
and functional compensation costs, non-service pension costs, non-operating insurance expenses, and various administrative
expenses relating to the corporate headquarters.
86
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)
Selected financial information by market segment (continued):
TOTAL ASSETS AT DECEMBER 31:
Communication Technologies
Energy
Engineered Systems
Printing & Identification
Corporate (principally cash and cash equivalents)
Total assets - continuing operations
Assets from discontinued operations
Consolidated total
$
2012
2,538,644
2,020,349
3,378,005
1,301,521
807,879
10,046,398
397,545
$ 10,443,943
$
$
2011
2,471,918
1,699,395
2,247,532
1,310,272
1,284,575
9,013,692
486,860
9,500,552
$
$
2010
1,540,636
1,010,415
2,089,801
1,308,482
1,448,210
7,397,544
1,161,199
8,558,743
United States
Europe
Other Americas
Asia
Other
Consolidated total
Revenue
Years Ended December 31,
2011
$ 3,923,118
1,247,039
771,239
1,162,103
265,655
$ 7,369,154
2010
$ 3,355,649
1,116,641
624,716
836,875
175,626
$ 6,109,507
2012
$ 4,343,946
1,240,222
793,556
1,488,251
238,364
$ 8,104,339
Long-Lived Assets
At December 31,
$
2012
656,006
216,535
51,096
232,937
10,478
$ 1,167,052
$
$
2011
557,238
175,896
51,788
176,708
9,073
970,703
Revenue is attributed to regions based on the location of the Company’s customer, which in some instances is an intermediary
and not necessarily the end user. Long-lived assets are comprised of net property, plant and equipment. The Company’s businesses
are based primarily in the United States of America, Asia, and Europe. The Company’s businesses serve thousands of customers,
none of which accounted for more than 10% of consolidated revenue.
17. Earnings per Share
The following table sets forth a reconciliation of the information used in computing basic and diluted earnings per share:
Years Ended December 31,
2011
2010
2012
Earnings from continuing operations
Earnings (loss) from discontinued operations, net
Net earnings
Basic earnings per common share:
Earnings from continuing operations
Earnings (loss) from discontinued operations, net
Net earnings
Weighted average shares outstanding
Diluted earnings per common share:
Earnings from continuing operations
Earnings (loss) from discontinued operations, net
Net earnings
$
$
$
$
$
$
$
$
833,119
(22,049)
811,070
$
$
773,186
122,057
895,243
$
4.59
(0.12) $
$
4.47
4.16
0.66
4.82
$
$
$
$
$
619,497
80,607
700,104
3.31
0.43
3.75
181,551,000
185,882,000
186,897,000
$
4.53
(0.12) $
$
4.41
4.09
0.65
4.74
$
$
$
3.27
0.43
3.70
Weighted average shares outstanding
183,993,000
188,887,000
189,170,000
87
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)
The following table is a reconciliation of the share amounts used in computing earnings per share:
Weighted average shares outstanding - Basic
Dilutive effect of assumed exercise of employee stock options and SARs
and vesting of performance shares and restricted shares
Weighted average shares outstanding - Diluted
Years Ended December 31,
2011
185,882,000
2012
181,551,000
2010
186,897,000
2,442,000
183,993,000
3,005,000
188,887,000
2,273,000
189,170,000
Diluted per share amounts are computed using the weighted-average number of common shares and, if dilutive, potential common
shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the
exercise of stock options and SARs, and vesting of performance shares and restricted shares, as determined using the treasury
stock method. For the years ended December 31, 2012, 2011, and 2010, the weighted average number of anti-dilutive potential
common shares excluded from the calculation above totaled 2,950,000, 1,333,000, and 1,378,000, respectively.
18. Stockholders' Equity
The Company has the authority to issue up to 100,000 shares of $100 par preferred stock and up to 500,000,000 shares of $1
par common stock. None of the preferred stock has been issued. As of December 31, 2012 and 2011, 254,119,478 and 250,591,610
shares of common stock were issued, and the Company had 79,401,585 and 67,000,487 treasury shares, held at cost, respectively.
Share Repurchases
Share repurchases were as follows:
Shares repurchased in the open market
Shares repurchased from holders of employee stock options
Total shares repurchased
Average price paid per share
Years Ended December 31,
2012
12,314,795
86,303
12,401,098
2011
4,034,973
80,166
4,115,139
2010
2,335,500
82,455
2,417,955
$
60.38
$
58.93
$
51.10
In May 2012, the Board of Directors renewed its standing authorization of the Company's share repurchase program, on terms
consistent with its prior five-year authorization which expired at that time. This renewal authorized the repurchase of up to
10,000,000 shares of the Company's common stock during the five-year period ending May 2017. The Company repurchased
6,091,711 shares under this authorization during 2012. As of December 31, 2012, the number of shares still available for
repurchase under the May 2012 share repurchase authorization was 3,908,289.
In November 2012, the Board of Directors approved a $1 billion share repurchase program authorizing repurchases of the
Company's common shares over the next 12 to 18 months. The Company repurchased 3,963,084 shares under this new program
during 2012. As of December 31, 2012, the approximate dollar amount still available for repurchase under this share repurchase
program was $749,898.
88
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)
19. Quarterly Data (Unaudited)
Quarter
2012
First
Second
Third
Fourth
2011
First
Second
Third
Fourth
Revenue
Gross
Profit
$ 1,954,614
2,038,289
2,097,605
2,013,831
$ 8,104,339
$
746,080
777,102
810,139
773,744
$ 3,107,065
$ 1,659,048
1,819,594
1,999,550
1,890,962
$ 7,369,154
$
656,133
712,729
757,608
718,333
$ 2,844,803
Continuing Operations
Per
Share -
Basic
Per
Share -
Diluted
Earnings
Net Earnings
Per
Share -
Basic
Per
Share -
Diluted
Net
Earnings
$
$
$
$
$
$
186,409
205,156
233,330
208,224
833,119
155,145
213,259
207,515
197,267
773,186
$
$
1.01
1.12
1.28
1.17
4.59
0.83
1.14
1.12
1.07
4.16
$
$
1.00
1.10
1.27
1.16
4.53
0.82
1.12
1.10
1.05
4.09
$
$
$
$
196,063
214,101
241,046
159,860
811,070
194,905
249,769
172,280
278,289
895,243
$
$
1.07
1.17
1.33
0.90
4.47
1.04
1.34
0.93
1.51
4.82
1.05
1.15
1.31
0.89
4.41
1.03
1.32
0.91
1.49
4.74
89
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 2012, 2011 and 2010
(In thousands)
Allowance for Doubtful Accounts
Year Ended December 31, 2012
Balance at
Beginning
of Year
Acquired by
Purchase or
Merger
Charged
to Cost
and
Expense
(A)
Accounts
Written
Off
Balance at
End of
Year
Other
Allowance for Doubtful Accounts
Year Ended December 31, 2011
Allowance for Doubtful Accounts
$
$
21,238
26,815
Year Ended December 31, 2010
56
73
Allowance for Doubtful Accounts
—
(A) Net of recoveries on previously reserved or written-off balances.
31,746
$
5,162
(6,481)
417
$
20,392
5,693
(10,013)
(1,330) $
21,238
(153)
(4,204)
(574) $
26,815
Deferred Tax Valuation Allowance
Year Ended December 31, 2012
Balance at
Beginning
of Year
Acquired by
Purchase or
Merger
Additions Reductions
Other
Balance at
End of
Year
Deferred Tax Valuation Allowance
$
20,855
Year Ended December 31, 2011
Deferred Tax Valuation Allowance $
35,486
Year Ended December 31, 2010
Deferred Tax Valuation Allowance $
34,969
—
—
—
—
—
517
(1,968)
— $
18,887
(14,631)
— $
20,855
—
— $
35,486
LIFO Reserve
Year Ended December 31, 2012
LIFO Reserve
Year Ended December 31, 2011
LIFO Reserve
Year Ended December 31, 2010
LIFO Reserve
Balance at
Beginning
of Year
Acquired by
Purchase or
Merger
Charged
to Cost
and
Expense
Reductions
Other
Balance at
End of
Year
$
$
$
55,345
45,742
44,195
—
—
—
161
9,603
1,547
—
—
—
— $
55,506
— $
55,345
— $
45,742
90
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Based on an evaluation under the supervision and with the participation of the Company’s management, the Company’s Chief
Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures as defined
in Rule 13a-15(e) under the Exchange Act were effective as of December 31, 2012 to ensure that information required to be
disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized, and
reported within the time periods specified in the Securities and Exchange Commission rules and forms, and (ii) accumulated
and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as
appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Controls
During the fourth quarter of 2012, there were no changes in the Company’s internal control over financial reporting that have
materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Inherent Limitations Over Internal Controls
The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles. The Company’s internal control over financial reporting includes those policies and procedures that:
(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the Company’s assets;
(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements
in accordance with generally accepted accounting principles, and that the Company’s receipts and expenditures are
being made only in accordance with authorizations of the Company’s management and directors; and
(iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition
of the Company’s assets that could have a material effect on the financial statements.
Management’s report on the effectiveness of the Company’s internal control over financial reporting is included in Item 8 of
this Form 10-K. Management, including the Company’s Chief Executive Officer and Chief Financial Officer, does not expect
that the Company’s internal controls will prevent or detect all errors and all fraud. A control system, no matter how well designed
and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further,
the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be
considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of internal controls
can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Also, any evaluation of
the effectiveness of controls in future periods is subject to the risk that those internal controls may become inadequate because
of changes in business conditions, or that the degree of compliance with the policies or procedures may deteriorate.
ITEM 9B. OTHER INFORMATION
Not applicable.
91
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information with respect to the directors and the board committees of the Company required to be included pursuant to this
Item 10 will be included in the 2013 Proxy Statement that will be filed with the Securities and Exchange Commission pursuant
to Rule 14a-6 under the Exchange Act in accordance with applicable SEC deadlines, and is incorporated in this Item 10 by
reference.
The information with respect to the executive officers of the Company required to be included pursuant to this Item 10 is included
under the caption “Executive Officers of the Registrant” in Part I of this Form 10-K and is incorporated in this Item 10 by
reference.
The information with respect to Section 16(a) reporting compliance required to be included in this Item 10 will be included in
our 2013 Proxy Statement and is incorporated in this Item 10 by reference.
The Company has adopted a code of ethics that applies to its chief executive officer and senior financial officers. A copy of this
code of ethics can be found on our website at www.dovercorporation.com. In the event of any amendment to, or waiver from,
the code of ethics, we will publicly disclose the amendment or waiver by posting the information on our website.
ITEM 11. EXECUTIVE COMPENSATION
The information with respect to executive compensation and the compensation committee required to be included pursuant to
this Item 11 will be included in our 2013 Proxy Statement and is incorporated in this Item 11 by reference.
ITEM 12. SECURITY OWNERSHIP BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED SHAREHOLDER MATTERS
The information regarding security ownership of certain beneficial owners and management that is required to be included
pursuant to this Item 12 will be included in our 2013 Proxy Statement and is incorporated in this Item 12 by reference.
Equity Compensation Plans
The Equity Compensation Plan Table below presents information regarding the our equity compensation plans at December 31,
2012:
(a)
(b)
Number of
Securities to be
Issued Upon
Exercise of
Outstanding
Options,
Warrants and
Rights (1)
Weighted-
Average
Exercise Price
of Outstanding
Options,
Warrants and
Rights
9,439,627
—
9,439,627
$
$
49.23
—
49.23
(c)
Number of
Securities
Remaining
Available for
Future Issuance
Under Equity
Compensation
Plans (Excluding
Securities Reflected
in Column (a)) (2)
16,938,968
—
16,938,968
Plan Category
Equity compensation plans approved by stockholders
Equity compensation plans not approved by stockholders
Total
(1) Column (a) includes shares issuable pursuant to outstanding performance share awards under the Company's 2005 Equity
and Cash Incentive Plan (the "2005 Plan") subject to the satisfaction at the level of the applicable performance criteria over
a three-year performance period. Performance share awards are not reflected in the weighted exercise price in column (b).
92
(2) Column (c) consists of shares available for future issuance under the Company's 2012 Equity and Cash Incentive Plan (the
"2012 Plan"). Under the 2012 Plan, the Company may grant options, stock-settled stock appreciation rights ("SARs"),
restricted stock or restricted stock units, performance share awards, director shares, or deferred stock units. Under the 2012
Plan, the number of shares available for issuance will be reduced (i) by one share for each share issued pursuant to options
or SARs and (ii) by three shares for each share of stock issued pursuant to restricted stock, restricted stock unit, performance
share, director share, or deferred stock unit awards.
As of December 31, 2012, equity securities have been authorized for issuance to employees and/or non-employee directors
under the 2012 Plan and its predecessor plans, the 1995 Incentive Stock Options Plan and 1995 Cash Performance Program (the
"1995 Plan"), and the 2005 Plan. Although each of the 1995 Plan and the 2005 Plan have expired and no further awards may be
granted under the Plan, there remain outstanding options under the 1995 Plan and outstanding options, stock-settled appreciation
rights, and performance share awards under the 2005 Plan, which are reflected in Column (a) of the table.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
The information with respect to any director independence, related party transaction policies, and any reportable transaction,
business relationship, or indebtedness between the Company and the beneficial owners of more than 5% of the Common Stock,
the directors or nominees for director of the Company, the executive officers of the Company, or the members of the immediate
families of such individuals that are required to be included pursuant to this Item 13 is included in the 2013 Proxy Statement
and is incorporated in this Item 13 by reference.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information with respect to the Company’s relationship with its independent registered public accounting firm and fees paid
thereto required to be included pursuant to this Item 14 is included in the 2013 Proxy Statement and is incorporated in this Item
14 by reference.
The information with respect to audit committee pre-approval policies and procedures required to be included pursuant to this
Item 14 is included in the 2013 Proxy Statement and is incorporated in this Item 14 by reference.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
a) The following documents are filed as part of this report:
PART IV
(1) Financial Statements. The financial statements are set forth under “Item 8. Financial Statements and Supplementary
Data” of this Form 10-K.
(2) Schedules. The following financial statement schedule is set forth under “Item 8. Financial Statements and Supplementary
Data” of this Form 10-K. All other schedules have been omitted because they are not required, are not applicable or the
required information is included in the financial statements or the notes thereto.
•
Schedule II – Valuation and Qualifying Accounts
(3) Exhibits. The exhibits listed in the accompanying Exhibit Index are filed or incorporated by reference as part of this
Form 10-K. The exhibits will be filed with the SEC but will not be included in the printed version of the Annual Report
to Shareholders.
93
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly
caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned thereunto duly authorized.
Signatures
DOVER CORPORATION
/s/ Robert A. Livingston
Robert A. Livingston
President and Chief Executive Officer
Date: February 15, 2013
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Annual Report on Form 10-K has been
signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated. Each of the
undersigned, being a director or officer of Dover Corporation (the “Company”), hereby constitutes and appoints Robert A.
Livingston, Brad M. Cerepak and Ivonne M. Cabrera, and each of them (with full power to each of them to act alone), his or
her true and lawful attorney-in-fact and agent for him or her and in his or her name, place and stead in any and all capacities, to
sign the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012 under the Securities Exchange
Act of 1934, as amended, and any and all amendments thereto, and to file the same with all exhibits thereto and other documents
in connection therewith with the Securities and Exchange Commission and any other appropriate authority, granting unto such
attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing required
and necessary to be done in and about the premises in order to effectuate the same as fully to all intents and purposes as he or
she might or could do if personally present, hereby ratifying and confirming all that such attorneys-in-fact and agents, or any
of them, may lawfully do or cause to be done by virtue hereof.
Signature
Title
Date
/s/ Robert W. Cremin
Robert W. Cremin
/s/ Robert A. Livingston
Robert A. Livingston
/s/ Brad M. Cerepak
Brad M. Cerepak
/s/ Raymond T. McKay, Jr.
Raymond T. McKay, Jr.
/s/ David H. Benson
David H. Benson
/s/ Jean-Pierre M. Ergas
Jean-Pierre M. Ergas
/s/ Peter T. Francis
Peter T. Francis
Chairman, Board of Directors
February 15, 2013
Chief Executive Officer,
President and Director
(Principal Executive Officer)
February 15, 2013
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
February 15, 2013
Vice President, Controller
(Principal Accounting Officer)
February 15, 2013
February 15, 2013
February 15, 2013
February 15, 2013
Director
Director
Director
94
Signature
/s/ Kristiane C. Graham
Kristiane C. Graham
/s/ Michael F. Johnston
Michael F. Johnston
/s/ Richard K. Lochridge
Richard K. Lochridge
/s/ Bernard G. Rethore
Bernard G. Rethore
/s/ Michael B. Stubbs
Michael B. Stubbs
/s/ Stephen M. Todd
Stephen M. Todd
/s/ Stephen K. Wagner
Stephen K. Wagner
/s/ Mary A. Winston
Mary A. Winston
Date
February 15, 2013
February 15, 2013
February 15, 2013
February 15, 2013
February 15, 2013
February 15, 2013
February 15, 2013
February 15, 2013
Title
Director
Director
Director
Director
Director
Director
Director
Director
95
EXHIBIT INDEX
(2.1) Sale and Purchase Agreement, dated as of December 22, 2010, between the Company, NXP B.V., Knowles
Electronics, LLC, EFF Acht Beteiligungsverwaltung GmbH and NXP Semiconductors N.V., filed as Exhibit 2.1
to the Company's Annual Report on Form 10-K for the period ended December 31, 2010, is incorporated by
reference (confidential portions omitted and filed separately with the SEC).
(3)(i)(a) Restated Certificate of Incorporation, filed as Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for
the period ended June 30, 1998 (SEC File No. 001-04018), is incorporated by reference.
(3)(i)(b) Certificate of Correction to the Restated Certificate of Incorporation dated as of January 24, 2002, filed as
Exhibit 3(i) to the Company's Current Report on Form 8-K filed February 28, 2002 (SEC File No. 001-04018), is
incorporated by reference.
(3)(ii) By-Laws of the Company as amended and restated as of November 6, 2008, filed as Exhibit 3(ii) to the
Company's Current Report on Form 8-K filed November 12, 2008 (SEC File No. 001-04018), are incorporated
by reference.
(4.1) Indenture, dated as of June 8, 1998 between the Company and The First National Bank Chicago, as Trustee, filed
as Exhibit 4.1 to the Company's Current Report on Form 8-K filed June 12, 1998 (SEC File No. 001-04018), is
incorporated by reference.
(4.2) Form of 6.65% Debentures due June 1, 2028 ($200,000,000 aggregate principal amount), filed as Exhibit 4.4 to
the Company's Current Report on Form 8-K filed June 12, 1998 (SEC File No. 001-04018), is incorporated by
reference.
(4.3) Indenture, dated as of February 8, 2001 between the Company and BankOne Trust Company, N.A., as trustee,
filed as Exhibit 4.1 to the Company's current report on Form 8-K filed February 13, 2001 (SEC File
No. 001-04018), is incorporated by reference.
(4.4) First Supplemental Indenture among the Company, J.P. Morgan Trust Company, National Association, as original
trustee, and The Bank of New York, as Trustee, filed as Exhibit 4.1 to the Company's Current Report on Form 8-
K filed October 12, 2005 (SEC File No. 001-04018) is incorporated by reference.
(4.5) Form of 4.875% Notes due October 15, 2015 ($300,000,000 aggregate principal amount), filed as exhibit 4.2 to
the Company's Current Report on Form 8-K filed October 12, 2005 (SEC File No. 001-04018) is incorporated by
reference.
(4.6) Form of 5.375% Debentures due October 15, 2035 ($300,000,000 aggregate principal amount), filed as
exhibit 4.3 to the Company's Current Report on Form 8-K filed October 12, 2005 (SEC File No. 001-04018) is
incorporated by reference.
(4.7) Second Supplemental Indenture between the Company and The Bank of New York, as trustee, filed as
Exhibit 4.1 to the Company's Current Report on Form 8-K filed March 14, 2008 (SEC File No. 001-040018) is
incorporated by reference.
(4.8) Form of Global Note representing the 5.45% Notes due March 15, 2018 ($350,000,000 aggregate principal
amount), filed as exhibit 4.2 to the Company's Current Report on Form 8-K filed March 14, 2008 (SEC File
No. 001-04018) is incorporated by reference.
(4.9) Form of Global Note representing 6.60% Notes due March 15, 2038 ($250,000,000 aggregate principal amount)
filed as Exhibit 4.3 to the Company's Current Report on Form 8-K filed March 14, 2008 (SEC File
No. 001-04018) is incorporated by reference.
(4.10) Third Supplemental Indenture between the Company and The Bank of New York Mellon, as trustee, filed as
Exhibit 4.1 to the Company's Current Report on Form 8-K filed February 22, 2011 (SEC File No. 001-04018) is
incorporated by reference.
(4.11) Form of 4.300% Notes due March 1, 2021 ($450,000,000 aggregate principal amount), filed as Exhibit 4.2 to the
Company's Current Report on Form 8-K filed February 22, 2011 (SEC File No. 001-04018) is incorporated by
reference.
(4.12) Form of 5.375% Notes due March 1, 2041 ($350,000,000 aggregate principal amount), filed as Exhibit 4.3 to the
Company's Current Report on Form 8-K filed February 22, 2011 (SEC File No. 001-04018) is incorporated by
reference.
The Company agrees to furnish to the Securities and Exchange Commission upon request, a copy of any
instrument with respect to long-term debt under which the total amount of securities authorized does not exceed
10 percent of the total consolidated assets of the Company.
(10.1) Employee Savings and Investment Plan, filed as Exhibit 99 to Registration Statement on Form S-8 (SEC File
No. 33-01419), is incorporated by reference.*
(10.2) Executive Officer Annual Incentive Plan, as amended and restated as of January 1, 2009, filed as Exhibit 10.2 to
the Company's Current Report on Form 8-K filed May 13, 2009 (SEC File No. 001-04018) is incorporated by
reference.*
(10.3) Executive Change in Control Agreement as amended and restated as of January 1, 2009, filed as Exhibit 10.4 to
the Company's Annual Report on Form 10-K for the year ended December 31, 2008 (SEC File No. 001-04018) is
incorporated by reference.*
(10.4) 1995 Incentive Stock Option Plan and 1995 Cash Performance Program, as amended as of May 4, 2006 with
respect to all awards then outstanding, filed as Exhibit 10.5 to the Company's Annual Report on Form 10-K for
the year ended December 31, 2006 (SEC File No. 001-04018) is incorporated by reference.*
(10.5) Deferred Compensation Plan, as amended and restated as of January 1, 2009, filed as Exhibit 10.6 to the
Company's Annual Report on Form 10-K for the year ended December 31, 2008 (SEC File No. 001-04018) is
incorporated by reference.*
(10.6) 2005 Equity and Cash Incentive Plan, as amended as of January 1, 2009, filed as Exhibit 10.1 to the Company's
Current Report on Form 8-K filed May 13, 2009 (SEC File No. 001-04018) is incorporated by reference.*
(10.7) Form of award grant letter for SSAR grants made under the 2005 Equity and Cash Incentive Plan, filed as
Exhibit 10.8 to the Company's Annual Report on Form 10-K for the period ended December 31, 2011, is
incorporated by reference.*
(10.8) Form of award grant letter for cash performance awards made under the 2005 Equity and Cash Incentive Plan,
filed as Exhibit 10.9 to the Company's Annual Report on Form 10-K for the period ended December 31, 2011, is
incorporated by reference.*
(10.9) Form of award grant letter for performance share awards made under the 2005 Equity and Cash Incentive Plan,
filed as Exhibit 10.10 to the Company's Annual Report on Form 10-K for the period ended December 31, 2011, is
incorporated by reference.*
(10.10) Pension Replacement Plan (formerly the Supplemental Executive Retirement Plan), as amended and restated as
of January 1, 2010, filed as Exhibit 10.11 to the Company's Annual Report on Form 10-K for the year ended
December 31, 2009 (SEC File No. 001-04018) is incorporated by reference.*
(10.11) Amendment No. 1 to the Executive Severance Plan, filed as Exhibit 10.2 to the Company's Quarterly Report on
Form 10-Q for the period ended September 30, 2012 (SEC File No. 001-04018), is incorporated by reference. *
(10.12) Five-year Credit Agreement dated as of November 10, 2011 by and among Dover Corporation, the Borrowing
Subsidiaries party hereto, the Lenders party hereto, JPMorgan Chase Bank, N.A as Administrative Agent, Bank
of America, N.A., and Wells Fargo Bank National Association, as Syndication Agents, and J.P. Morgan Securities
LLC, and Merrill Lynch, Pierce, Fenner & Smith Incorporated and Wells Fargo Securities, LLC, as Joint Lead
Arrangers and Joint Bookrunners, filed as Exhibit 10.13 to the Company's Annual Report on Form 10-K for the
period ended December 31, 2011, is incorporated by reference.
(10.13) Form of award grant letter for restricted stock awards made under the 2005 Equity and Cash Incentive Plan, filed
as Exhibit 10.15 to the Company's Annual Report on Form 10-K for the period ended December 31, 2010, is
incorporated by reference.*
(10.14) Amendment No. 1 to the Executive Employee Supplemental Retirement Agreement with Robert A. Livingston,
Jr., filed as Exhibit 99.1 to the Company's Current Report on Form 8-K filed March 3, 2010 (SEC File No.
001-04018), is incorporated by reference.*
(10.15) Executive Severance Plan, filed as Exhibit 10.17 to the Company's Annual Report on Form 10-K for the period
ended December 31, 2010, is incorporated by reference.*
(10.16) Senior Executive Change-in-Control Severance Plan, filed as Exhibit 10.18 to the Company's Annual Report on
Form 10-K for the period ended December 31, 2010, is incorporated by reference.*
(10.17) Underwriting Agreement between the Company and Goldman Sachs & Co., J.P. Morgan Securities LLC, Merrill
Lynch, Pierce, Fenner & Smith, Deutsche Bank Securities Inc., RBS Securities Inc., Wells Fargo Securities, LLC,
Morgan Stanley & Co. Incorporated, Lazard Capital Markets LLC, and Scotia Capital (USA) Inc., filed as
Exhibit 1.2 to the Company's Current Report on Form 8-K filed February 22, 2011 (SEC File No. 001-04018) is
incorporated by reference.
(10.18) Letter Agreement between Raymond Hoglund and the Company, dated as of May 31, 2011, filed as Exhibit 10.19
to the Company's Annual Report on Form 10-K for the period ended December 31, 2011, is incorporated by
reference.*
(10.19) 2012 Equity and Cash Incentive Plan, effective as of May 3, 2012, filed as Exhibit 10.1 to the Company's
Quarterly Report on Form 10-Q for the period ended June 30, 2012 (SEC File No. 001-04018), is incorporated
by reference.*
(10.20) Form of award grant letter for SSAR grants made under the 2012 Equity and Cash Incentive Plan. * (1)
(10.21) Form of award grant letter for cash performance awards made under the 2012 Equity and Cash Incentive Plan. *
(1)
(10.22) Form of award grant letter for performance share awards made under the 2012 Equity and Cash Incentive Plan. *
(1)
(10.23) Amendment No. 1 to the Senior Executive Change-in-Control Severance Plan, filed as Exhibit 10.1 to the
Company's Quarterly Report on Form 10-Q for the period ended September 30, 2012 (SEC File No. 001-04018),
is incorporated by reference. *
(21) Subsidiaries of Dover. (1)
(23) Consent of Independent Registered Public Accounting Firm. (1)
(24) Power of Attorney (included in signature page). (1)
(31.1) Certification pursuant to Rule 13a-14 of the Securities and Exchange Act of 1934, as amended, signed and dated
by Brad M. Cerepak. (1)
(31.2) Certification pursuant to Rule 13a-14 of the Securities and Exchange Act of 1934, as amended, signed and dated
by Robert A. Livingston. (1)
(32) Certification pursuant to 18 U.S.C. Section 1350, signed and dated by Brad M. Cerepak and Robert A.
Livingston. (1)
(101) The following materials from Dover Corporation's Annual Report on Form 10-K for the year ended December
31, 2012 formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Statements of
Earnings, (ii) Consolidated Statements of Comprehensive Earnings (iii) Consolidated Balance Sheets, (iv)
Consolidated Statements of Stockholders' Equity, (v) Consolidated Statement of Cash Flows, and (vi) Notes to
the Consolidated Financial Statements. (1)
* Executive compensation plan or arrangement.
(1) Filed herewith.
ABOUT DOVER
Revenue by End Markets
Revenue by End Markets
10%
16%
27%
47%
■ Consumer Electronics
■ Aerospace/Defense
■ Medical Technology
■ Telecom/Other
Revenue by End Markets
Geography
Revenue by Geography
Revenue by End Markets
Revenue by End Markets
2%
Geography
Revenue by End Markets
Revenue by End Markets
Revenue by End Markets
Revenue by End Markets
2%
10%
16%
19%
11%
10%
47%
58%
47%
27%
29%
16%
27%
27%
■ Consumer Electronics
■ Asia
■ Production
■ Aerospace/Industrial
■ Consumer Electronics
■ North America
■ Downstream
54%
■ Medical Technology
■ Aerospace/Industrial
■ Europe
■ Drilling
■ Telecom/Other
■ Medical Technology
■ Rest of World
■ Telecom/Other
11%
10%
19%
25%
16%
62%
47%
27%
27%
19%
■ Asia
■ Production
■ Consumer Electronics
■ North America
■ Downstream
54%
■ Aerospace/Industrial
■ Europe
■ Drilling
54%
■ Medical Technology
■ Rest of World
■ Telecom/Other
■ Production
■ Downstream
■ Drilling
27%
Revenue by Geography
Geography
Revenue by End Markets
6%
7%
7%
19%
27%
80%
54%
■ North America
■ Europe
■ Production
■ Rest of World
■ Downstream
■ Asia
■ Drilling
Printing & Identification
Geography
Communication Technologies
Energy
Revenue by End Markets
Revenue by End Markets
10%
16%
27%
47%
■ Consumer Electronics
■ Aerospace/Industrial
■ Medical Technology
■ Telecom/Other
19%
27%
54%
■ Production
■ Downstream
■ Drilling
Engineered Systems
Printing & Identification
Revenue by End Markets
Revenue by End Markets
24%
36%
40%
■ Refrigeration &
Food Equipment
■ Industrial
■ Fluid Solutions
41%
59%
■ Fast Moving
Consumer Goods
■ Industrial
COMMUNICATION TECHNOLOGIES
Communication Technologies
Communication Technologies
Energy
Communication Technologies
Communication Technologies
ENERGY
Energy
Communication Technologies
Communication Technologies
Energy
Energy
Energy
Revenue (in millions)
Engineered Systems
$ in millions
$ in millions
$ in millions
$1,500
$1,500
$1,500
Revenue by End Markets
Segment Earnings (in millions) Segment Margin
Engineered Systems
$ in millions
Printing & Identification
$ in millions
Engineered Systems
$225
$225
Revenue by End Markets
$ in millions
$225
Revenue by End Markets
Revenue by End Markets
18%
$1,000
$1,000
$1,000
24%
$500
36%
40%
$500
■ Refrigeration &
Food Equipment
$500
■ Industrial
■ Fluid Solutions
$0
$0
$0
$150
$150
24%
40%
41%
24%
$75
$75
36%
36%
$0
$0
$0
$150
■ Refrigeration &
Food Equipment
■ Fast Moving
■ Refrigeration &
Consumer Goods
6%
6%
Food Equipment
■ Industrial
59%
■ Industrial
40%
$75
■ Fluid Solutions
■ Industrial
■ Fluid Solutions
41%
24%
6%
36%
41%
$750
40%
■ Fast Moving
■ Refrigeration &
Consumer Goods
$750
Food Equipment
■ Industrial
59%
$750
■ Fast Moving
Consumer Goods
■ Industrial
59%
■ Industrial
■ Fluid Solutions
$0
2010 2011 2012
2010 2011 2012
2010 2011 2012
2010 2011 2012
2010 2011 2012
0%
0%
0%
2010 2011 2012
2010 2011 2012
2010 2011 2012
2010 2011 2012
$0
$0
Segment Earnings (in millions) Segment Margin
$ in millions
$ in millions
$ in millions
Printing & Identification
$600
$600
16%
$600
34%
Revenue by End Markets
20%
$400
$400
$400
■ Europe
■ North America
■ Asia
■ Rest of World
30%
30%
30%
30%
20%
20%
20%
$200
41%
$200
$200
59%
■ Fast Moving
10%
Consumer Goods
■ Industrial
10%
10%
$0
$0
$0
0%
0%
0%
Engineered Systems
Geography
Printing & Identification
Revenue (in millions)
7%
$ in millions
Printing & Identification
$2,250
8%
Engineered Systems
18%
18%
$2,250
Revenue by End Markets
$ in millions
$2,250
$ in millions
Revenue by End Markets
17%
■ North America
Revenue by End Markets
■ Europe
■ Asia
■ Rest of World
$1,500
$1,500
68%
$1,500
12%
12%
12%
2010 2011 2012
2010 2011 2012
2010 2011 2012
Key Brands
Communication Technologies
Revenue by End Markets
Communication Technologies
Geography
10%
2%
16%
11%
27%
25%
47%
62%
■ Consumer Electronics
■ Aerospace/Industrial
■ Medical Technology
SOUND
■ Asia
■ Telecom/Other
SOLUTIONS
■ North America
■ Europe
■ Rest of World
Key Products
n Micro-acoustic audio input and
output components
n Advanced miniaturized receivers and
electromechanical components
n Specialized components for use in
Energy
Communication Technologies
Revenue by End Markets
Communication Technologies
implantable devices and medical equipment
Revenue by End Markets
Energy
Geography
11%
n Control components, electromechanical
10%
Geography
7%
2%
47%
7%
11%
n Specialty hydraulics, fasteners, bearings,
Communication Technologies
switches and filters
Geography
19%
2%
6%
switches, multi-layered capacitors, filters
■ Consumer Electronics
■ Production
and quick disconnect couplings
■ Aerospace/Industrial
■ Downstream
54%
n Specialty mechanical and frequency control
■ Medical Technology
■ North America
■ Asia
■ Drilling
communication components
■ Telecom/Other
■ Europe
■ North America
■ Asia
n Medical and bio processing connectors
■ Rest of World
■ Europe
80%
■ North America
■ Asia
■ Rest of World
■ Europe
■ Rest of World
62%
62%
25%
27%
16%
27%
25%
Key Brands
Energy
Revenue by End Markets
Energy
Energy
Communication Technologies
Geography
2010 2011 2012
2010 2011 2012
2010 2011 2012
2010 2011 2012
2010 2011 2012
2010 2011 2012
Key Products
n Diamond cutters for down-hole drilling tools
n Quartz down-hole pressure tranducers
n Artificial lift systems and well site controls
n Compressor products and monitoring
solutions and related aftermarket services
n Winches and supporting electronic systems
n Fluid film and magnetic bearings, bearing
Energy
isolators, seals and monitoring systems
n Fueling nozzles and underground containment
Geography
19%
6%
7%
6%
54%
Geography
7%
2%
27%
7%
11%
7%
25%
62%
80%
■ Production
■ Downstream
■ North America
■ Drilling
■ Europe
■ Rest of World
■ Asia
■ Asia
■ North America
80%
■ Europe
■ Rest of World
■ North America
■ Europe
■ Rest of World
■ Asia
Geography
systems and fuel management systems
n Valves, gauges, interconnects, and loading
equipment for hazardous liquids and dry
7%
bulk materials
6%
7%
■ North America
■ Europe
■ Rest of World
■ Asia
80%
ENGINEERED SYSTEMS
Engineered Systems
Printing & Identification
Printing & Identification
Printing & Identification
PRINTING & IDENTIFICATION
Printing & Identification
Printing & Identification
Printing & Identification
Engineered Systems
Engineered Systems
Geography
Revenue by End Markets
Revenue by End Markets
8%
7%
Engineered Systems
Geography
Engineered Systems
Geography
Revenue by Geography
Geography
Revenue by End Markets
7%
8%
Revenue by End Markets
7%
16%
Engineered Systems
Geography
Revenue by End Markets
Geography
Revenue by End Markets
Geography
7%
16%
24%
17%
68%
40%
36%
■ North America
■ Europe
■ Refrigeration &
■ Asia
Food Equipment
■ Rest of World
■ Industrial
■ Fluid Solutions
8%
17%
24%
36%
20%
41%
68%
40%
17%
68%
8%
■ North America
■ Europe
34%
■ Europe
■ North America
■ North America
■ Refrigeration &
■ Fast Moving
■ Asia
■ Asia
■ Europe
Food Equipment
Consumer Goods
59%
■ Rest of World
■ Rest of World
■ Asia
■ Industrial
30%
■ Industrial
■ Rest of World
■ Fluid Solutions
17%
20%
41%
34%
16%
■ Europe
■ North America
■ Europe
■ North America
34%
■ Fast Moving
■ Asia
■ North America
■ Europe
Consumer Goods
■ Rest of World
■ Asia
■ Asia
■ Industrial
■ Rest of World
■ Rest of World
30%
68%
20%
30%
59%
Revenue by Geography
Geography
16%
20%
34%
30%
■ Europe
■ North America
■ Asia
■ Rest of World
Revenue (in millions)
$ in millions
$ in millions
$ in millions
Segment Earnings (in millions) Segment Margin
$ in millions
$ in millions
$ in millions
Revenue (in millions)
$ in millions
$ in millions
$ in millions
Segment Earnings (in millions) Segment Margin
$ in millions
$ in millions
$ in millions
$3,600
$3,600
$3,600
$525
$525
$525
18%
18%
18%
$1,200
$1,200
$1,200
$180
$180
$180
18%
18%
18%
Communication Technologies
$2,400
$2,400
$2,400
Communication Technologies
$350
$350
$350
Energy
12%
12%
Energy
12%
$800
$800
$800
$120
$120
$120
12%
12%
12%
Geography
Geography
Geography
2%
$1,200
$1,200
$1,200
$175
2%
$175
6%
$175
7%
6%
6%
11%
11%
7%
Geography
6%
7%
6%
$400
7%
$400
$400
$60
$60
$60
6%
6%
6%
2010 2011 2012
25%
2010 2011 2012
2010 2011 2012
$0
$0
62%
2010 2011 2012
2010 2011 2012
$0
25%
$0
62%
2010 2011 2012
$0
■ Asia
$0
■ North America
■ Europe
■ Rest of World
■ North America
■ Asia
■ Europe
■ North America
2010 2011 2012
2010 2011 2012
■ Rest of World
■ Europe
80%
■ Asia
■ Rest of World
0%
0%
2010 2011 2012
2010 2011 2012
0%
2010 2011 2012
2010 2011 2012
$0
$0
80%
■ North America
$0
■ Europe
■ Rest of World
■ Asia
2010 2011 2012
2010 2011 2012
2010 2011 2012
2010 2011 2012
2010 2011 2012
2010 2011 2012
$0
$0
$0
0%
0%
0%
Removable 2013 Dover Investor Fact Sheet u
Design: RWI www.rwidesign.com
Printing: Earth • Thebault
Printed in the USA on Recycled Paper
Key Brands
Engineered Systems
Geography
7%
8%
17%
68%
■ North America
■ Europe
■ Asia
■ Rest of World
Key Products
n Refrigeration cases and systems, specialty
Key Brands
Engineered Systems
Geography
cases and doors
Printing & Identification
Geography
n Specialty industrial pumps
n Brazed plate heat exchangers
n Automotive lifts and collision repair equipment
n Refuse collection vehicles, waste compacting
7%
and recycling equipment
n Workholding devices and factory
automation components
n Winches, hoists, powertrain components
68%
& accessories
■ Europe
■ North America
■ Asia
■ Rest of World
■ North America
34%
■ Europe
■ Asia
■ Rest of World
30%
20%
16%
8%
17%
Printing & Identification
Geography
16%
20%
34%
30%
■ Europe
■ North America
■ Asia
■ Rest of World
Key Products
n Product market and coding equipment and
related consumables and services
n Barcode printing equipment and related
consumables and services
n Soldering and fluid dispensing equipment
and related consumables and services
OUR ENTREPRENEURIAL BUSINESS MODEL
Our customer-focused business model encourages, promotes and fosters deep customer
engagement which has led to Dover’s well established and valued reputation as a global industrial
manufacturer that provides industry leading product innovation and superior customer service.
Our success is based on the core technological advantages of our businesses
which are leaders in the niche markets they serve. Our intense customer focus and
innovative products help our customers create value and win in their markets.
WE BUILD ON OUR STRENGTHS
Our deep bench of talent, core knowledge and industry leading expertise provides critical
insight that guides our product development, growth initiatives and focused acquisition targeting
that allows us to grow and expand the potential of our businesses.
WE LEVERAGE OUR SCALE
We share our expertise across all of Dover to achieve optimal productivity in manufacturing and operational
excellence. Our proven track record of successfully combining and utilizing all of Dover’s global resources helps
drive leverage across the entire company and enables us to continue our global growth and expansion.
FINANCIAL HIGHLIGHTS
(dollars in thousands, except per share figures)
Revenue
Earnings before taxes
Earnings from continuing operations
Earnings per diluted share from continuing operations
Dividends per common share
Capital expenditures
Acquisitions (net assets acquired)
Cash flows from operations
Return on average equity
Number of employees
2012
$ 8,104,339
$ 1,137,571
$
$
$
833,119
4.53
1.33
$
297,012
$ 1,181,043
$ 1,261,160
16.5%
37,416
2011
$ 7,369,154
$ 1,010,262
$ 773,186
$
$
4.09
1.18
$ 262,676
$ 1,342,461
$ 948,864
18.9%
33,827
2010
$6,109,507
$ 813,122
$ 619,497
$
$
3.27
1.07
$ 169,297
$ 104,418
$ 830,295
16.3%
31,962
Dover is a diversified global manufacturer with annual revenues of over $8 billion. For over 50 years, Dover has been delivering
outstanding products and services that reflect its market leadership and commitment to operational and technical excellence.
The Company’s entrepreneurial business model encourages, promotes and fosters deep customer engagement which has led to
Dover’s well-established and valued reputation for providing superior customer service and industry-leading product innovation.
Dover focuses on innovative equipment and components, specialty systems and support services through its four major operating
segments: Communication Technologies, Energy, Engineered Systems and Printing & Identification. Headquartered in Downers
Grove, Illinois, Dover employs 37,000 people worldwide. Dover is traded on the New York Stock Exchange under “DOV.” Additional
information is available on the company’s website at www.dovercorporation.com.
SHAREHOLDER INFORMATION
Computershare Shareowner Services can
be reached at the following address:
Via Regular Mail:
Computershare Investor Services
P.O. Box 43078
Providence, RI 02940-3078
(888) 567-8341
www.computershare.com/investor
Via Registered or Overnight Mail:
Computershare Investor Services
250 Royall Street
Canton, MA 02021
(888) 567-8341
www.computershare.com/investor
Investor Inquiries
and Corporate News:
For quarterly earnings releases, informa-
tion on conference calls and webcasts,
press releases, annual reports, SEC
filings including Form 10-K, acquisitions,
supplemental financial disclosure, and all
other corporate news releases, please visit
our website at:
www.dovercorporation.com
Dividends:
Quarterly dividends on Dover Corporation
common stock are typically paid on or
about the 15th of March, June, September
and December. Dover has paid an increased
dividend each year since 1955.
Dover’s Ticker Symbol:
Dover’s ticker symbol is DOV.
The stock trades on the New
York Stock Exchange and is
one of the corporations listed
in the S&P 500.
Annual Shareholders Meeting:
May 2, 2013 at 1:00 p.m. CT
Westin Lombard Yorktown Center
70 Yorktown Center
Lombard, IL 60148
Independent Accountants:
PricewaterhouseCoopers LLP
Chicago, IL
Executive Offices:
Dover Corporation
3005 Highland Parkway
Downers Grove, IL 60515
(630) 541-1540
Visit us on the web at:
www.dovercorporation.com
Shareholder Services:
For help with any of the
following, please contact:
Computershare Shareowner Services:
n Address changes
n Direct deposit of dividends
n Dividend reinvestment
n Lost dividend checks
n Lost stock certificates
n Name changes
n Shareholder records
n Stock transfers
n IRS Form 1099
n Direct Stock Purchase Plan
2012 Annual Report
D
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2013 INVESTOR FACT SHEET
Dover at a Glance
Company Overview
n Traded on the NYSE under “DOV”
Key Officers:
n Dover strives to achieve strong
operating margins and generate
free cash flow in excess of 10%
of revenue
n Dover has rewarded shareholders
with an annually increased
dividend for 57 consecutive years
(the fourth-longest record on
the NYSE).
Sales For Year Ended 12/31/12:
$8.1 B
EPS From Continuing
Operations For 2012:
$4.53
Headquarters:
Dover Corporation
3005 Highland Parkway
Downers Grove, Illinois 60515
www.dovercorporation.com
Investor Contact:
Paul Goldberg
Vice President
Investor Relations
(212) 922-1640
FAX (212) 922-0945
e-mail: peg@dovercorp.com
Bob Livingston
President &
Chief Executive Officer
Ivonne Cabrera
Senior Vice President,
General Counsel & Secretary
Brad Cerepak
Senior Vice President &
Chief Financial Officer
Tom Giacomini
President & Chief Executive Officer,
Dover Engineered Systems
John Hartner
President & Chief Executive Officer,
Dover Printing & Identification
Jay Kloosterboer
Senior Vice President,
Human Resources
Jeff Niew
President & Chief Executive Officer,
Dover Communication Technologies
Steve Sellhausen
Senior Vice President,
Corporate Development
Bill Spurgeon
President & Chief Executive Officer,
Dover Energy
3005 Highland Parkway
Downers Grove, IL 60515
www.dovercorporation.com
Dover is a diversified global manufacturer with annual revenues of over
$8 billion. For over 50 years, Dover has been delivering outstanding
products and services that reflect its market leadership and commitment
to operational and technical excellence. The Company’s entrepreneurial
business model encourages, promotes and fosters deep customer
engagement which has led to Dover’s well-established and valued
reputation for providing superior customer service and industry-
leading product innovation. Dover focuses on innovative equipment
and components, specialty systems and support services through its
four major operating segments: Communication Technologies, Energy,
Engineered Systems and Printing & Identification. Headquartered in
Downers Grove, Illinois, Dover employs 37,000 people worldwide.
Dover is traded on the New York Stock Exchange under “DOV.”
Additional information is available on the company’s website at
www.dovercorporation.com.
Financial Highlights 2012
(dollars in thousands, except per share figures)
Revenue
Earnings before taxes
Earnings from continuing operations
Earnings per diluted share
from continuing operations
Dividends per common share
Capital expenditures
Acquisitions (net assets acquired)
Cash flows from operations
Return on average equity
Number of employees
2012
2011
$ 8,104,339
$ 1,137,571
$ 833,119
$ 7,369,154
$ 1,010,262
$ 773,186
4.53
$
$
1.33
$ 297,012
$ 1,181,043
$ 1,261,160
16.5%
37,416
4.09
$
$
1.18
$ 262,676
$ 1,342,461
$ 948,864
18.9%
33,827
Credit Ratings:
Pillars of Success
Page 9 in Letter
Fact Sheet
2012 Revenue by Region
Moody’s:
Standard & Poor’s:
Fact Sheet
Fitch
Long Short
Term
Term
P-1
A2
A-1
A
F1
A
2012 Revenue by Segment 2012 Revenue by Region
2012 Revenue by Segment
2012 Revenue by Region
7%
12%
19%
15%
19%
59%
42%
■ North America
■ Asia
■ Europe
■ Rest of World
27%
■ Communication
Technologies
■ Energy
■ Engineered
Systems
■ Printing &
Identification
7%
8%
15%
15%
19%
18%
59%
59%
■ North America
■ Asia
■ Europe
■ Rest of World
Revenue vs. Continuing Earnings
($ in millions)
Free Cash Flow
($ in millions)
$8,000
$900
$1,000
20%
6,000
4,000
2,000
0
675
750
450
500
225
250
0
0
15
10
5
0
2008 2009 2010 2011 2012
Revenue
Earnings from Continuing Operations
2008 2009 2010 2011 2012
Free Cash Flow
Free Cash Flow as a % of Revenue
Strategic Asset Allocation
Dover grows its business by thoughtfully and strategically allocating
capital, primarily in our five growth spaces – Energy, Product ID, Fluid
Solutions, Communication Components and Refrigeration Equipment.
We then create value by quickly implementing an integration plan that
unlocks the earnings power of the acquired business in a timely manner.
Acquisitions are complimented by a consistent dividend policy and
strategic share repurchases.
Leveraging Our Scale
Dover creates value by leveraging the scale and expertise inherent in our
company. By aggregating volumes and streamlining systems, creating
commonality and standardized processes, and combining facilities and
eliminating duplication, we seek to do more with less. We create an
environment that maximizes the benefit of our size, while ensuring that
our companies remain nimble enough to deliver extraordinary service to
their customers.
Leadership Development
Dover supports its goals by providing resources and programs designed
to enhance and maximize employees’ leadership opportunities. By
promoting a positive environment that empowers future leaders to
interact and share experiences, encourages expression of ideas, inspires
creativity, and fosters opportunities for leadership development, we
develop and retain the people who will drive our future success.
Corporate Responsibility
Dover endeavors to live up to the highest standards of corporate
responsibility, in all aspects of our business, whether at home in the
United States, or elsewhere around the globe. We strive to achieve the
highest ethical standards and good corporate governance, and adhere to
all applicable laws, regulations and codes of conduct in the geographies
where we operate.
ABOUT DOVER
Revenue by End Markets
Revenue by End Markets
10%
16%
27%
47%
■ Consumer Electronics
■ Aerospace/Defense
■ Medical Technology
■ Telecom/Other
Revenue by End Markets
Geography
Revenue by Geography
Revenue by End Markets
Revenue by End Markets
2%
Geography
Revenue by End Markets
Revenue by End Markets
Revenue by End Markets
Revenue by End Markets
2%
10%
16%
19%
11%
10%
47%
58%
47%
27%
29%
16%
27%
27%
■ Consumer Electronics
■ Asia
■ Production
■ Aerospace/Industrial
■ Consumer Electronics
■ North America
■ Downstream
54%
■ Medical Technology
■ Aerospace/Industrial
■ Europe
■ Drilling
■ Telecom/Other
■ Medical Technology
■ Rest of World
■ Telecom/Other
11%
10%
19%
25%
16%
62%
47%
27%
27%
19%
■ Asia
■ Production
■ Consumer Electronics
■ North America
■ Downstream
54%
■ Aerospace/Industrial
■ Europe
■ Drilling
54%
■ Medical Technology
■ Rest of World
■ Telecom/Other
■ Production
■ Downstream
■ Drilling
27%
Revenue by Geography
Geography
Revenue by End Markets
6%
7%
7%
19%
27%
80%
54%
■ North America
■ Europe
■ Production
■ Rest of World
■ Downstream
■ Asia
■ Drilling
Printing & Identification
Geography
Communication Technologies
Energy
Revenue by End Markets
Revenue by End Markets
10%
16%
27%
47%
■ Consumer Electronics
■ Aerospace/Industrial
■ Medical Technology
■ Telecom/Other
19%
27%
54%
■ Production
■ Downstream
■ Drilling
Engineered Systems
Printing & Identification
Revenue by End Markets
Revenue by End Markets
24%
36%
40%
■ Refrigeration &
Food Equipment
■ Industrial
■ Fluid Solutions
41%
59%
■ Fast Moving
Consumer Goods
■ Industrial
COMMUNICATION TECHNOLOGIES
Communication Technologies
Communication Technologies
Energy
Communication Technologies
Communication Technologies
ENERGY
Energy
Communication Technologies
Communication Technologies
Energy
Energy
Energy
Revenue (in millions)
Engineered Systems
$ in millions
$ in millions
$ in millions
$1,500
$1,500
$1,500
Revenue by End Markets
Segment Earnings (in millions) Segment Margin
Engineered Systems
$ in millions
Printing & Identification
$ in millions
Engineered Systems
$225
$225
Revenue by End Markets
$ in millions
$225
Revenue by End Markets
Revenue by End Markets
18%
$1,000
$1,000
$1,000
24%
$500
36%
40%
$500
■ Refrigeration &
Food Equipment
$500
■ Industrial
■ Fluid Solutions
$0
$0
$0
$150
$150
24%
40%
41%
24%
$75
$75
36%
36%
$0
$0
$0
$150
■ Refrigeration &
Food Equipment
■ Fast Moving
■ Refrigeration &
Consumer Goods
6%
6%
Food Equipment
■ Industrial
59%
■ Industrial
40%
$75
■ Fluid Solutions
■ Industrial
■ Fluid Solutions
41%
24%
6%
36%
41%
$750
40%
■ Fast Moving
■ Refrigeration &
Consumer Goods
$750
Food Equipment
■ Industrial
59%
$750
■ Fast Moving
Consumer Goods
■ Industrial
59%
■ Industrial
■ Fluid Solutions
$0
2010 2011 2012
2010 2011 2012
2010 2011 2012
2010 2011 2012
2010 2011 2012
0%
0%
0%
2010 2011 2012
2010 2011 2012
2010 2011 2012
2010 2011 2012
$0
$0
Segment Earnings (in millions) Segment Margin
$ in millions
$ in millions
$ in millions
Printing & Identification
$600
$600
16%
$600
34%
Revenue by End Markets
20%
$400
$400
$400
■ Europe
■ North America
■ Asia
■ Rest of World
30%
30%
30%
30%
20%
20%
20%
$200
41%
$200
$200
59%
■ Fast Moving
10%
Consumer Goods
■ Industrial
10%
10%
$0
$0
$0
0%
0%
0%
Engineered Systems
Geography
Printing & Identification
Revenue (in millions)
7%
$ in millions
Printing & Identification
$2,250
8%
Engineered Systems
18%
18%
$2,250
Revenue by End Markets
$ in millions
$2,250
$ in millions
Revenue by End Markets
17%
■ North America
Revenue by End Markets
■ Europe
■ Asia
■ Rest of World
$1,500
$1,500
68%
$1,500
12%
12%
12%
2010 2011 2012
2010 2011 2012
2010 2011 2012
Key Brands
Communication Technologies
Revenue by End Markets
Communication Technologies
Geography
10%
2%
16%
11%
27%
25%
47%
62%
■ Consumer Electronics
■ Aerospace/Industrial
■ Medical Technology
SOUND
■ Asia
■ Telecom/Other
SOLUTIONS
■ North America
■ Europe
■ Rest of World
Key Products
n Micro-acoustic audio input and
output components
n Advanced miniaturized receivers and
electromechanical components
n Specialized components for use in
Energy
Communication Technologies
Revenue by End Markets
Communication Technologies
implantable devices and medical equipment
Revenue by End Markets
Energy
Geography
11%
n Control components, electromechanical
10%
Geography
7%
2%
47%
7%
11%
n Specialty hydraulics, fasteners, bearings,
Communication Technologies
switches and filters
Geography
19%
2%
6%
switches, multi-layered capacitors, filters
■ Consumer Electronics
■ Production
and quick disconnect couplings
■ Aerospace/Industrial
■ Downstream
54%
n Specialty mechanical and frequency control
■ Medical Technology
■ North America
■ Asia
■ Drilling
communication components
■ Telecom/Other
■ Europe
■ North America
■ Asia
n Medical and bio processing connectors
■ Rest of World
■ Europe
80%
■ North America
■ Asia
■ Rest of World
■ Europe
■ Rest of World
62%
25%
62%
27%
16%
27%
25%
Key Brands
Energy
Revenue by End Markets
Energy
Energy
Communication Technologies
Geography
2010 2011 2012
2010 2011 2012
2010 2011 2012
2010 2011 2012
2010 2011 2012
2010 2011 2012
Key Products
n Diamond cutters for down-hole drilling tools
n Quartz down-hole pressure tranducers
n Artificial lift systems and well site controls
n Compressor products and monitoring
solutions and related aftermarket services
n Winches and supporting electronic systems
n Fluid film and magnetic bearings, bearing
Energy
isolators, seals and monitoring systems
n Fueling nozzles and underground containment
Geography
19%
6%
7%
6%
54%
Geography
7%
2%
27%
7%
11%
7%
25%
62%
80%
■ Production
■ Downstream
■ North America
■ Drilling
■ Europe
■ Rest of World
■ Asia
■ Asia
■ North America
80%
■ Europe
■ Rest of World
■ North America
■ Europe
■ Rest of World
■ Asia
Geography
systems and fuel management systems
n Valves, gauges, interconnects, and loading
equipment for hazardous liquids and dry
7%
bulk materials
6%
7%
■ North America
■ Europe
■ Rest of World
■ Asia
80%
ENGINEERED SYSTEMS
Engineered Systems
Printing & Identification
Printing & Identification
Printing & Identification
PRINTING & IDENTIFICATION
Printing & Identification
Printing & Identification
Printing & Identification
Engineered Systems
Engineered Systems
Geography
Revenue by End Markets
Revenue by End Markets
8%
7%
Engineered Systems
Geography
Engineered Systems
Geography
Revenue by Geography
Geography
Revenue by End Markets
7%
8%
Revenue by End Markets
7%
16%
Engineered Systems
Geography
Revenue by End Markets
Geography
Revenue by End Markets
Geography
7%
16%
24%
17%
68%
40%
36%
■ North America
■ Europe
■ Refrigeration &
■ Asia
Food Equipment
■ Rest of World
■ Industrial
■ Fluid Solutions
8%
17%
24%
36%
20%
41%
68%
40%
17%
68%
8%
■ North America
■ Europe
34%
■ Europe
■ North America
■ North America
■ Refrigeration &
■ Fast Moving
■ Asia
■ Asia
■ Europe
Food Equipment
Consumer Goods
59%
■ Rest of World
■ Rest of World
■ Asia
■ Industrial
30%
■ Industrial
■ Rest of World
■ Fluid Solutions
17%
20%
41%
34%
16%
■ Europe
■ North America
■ Europe
■ North America
34%
■ Fast Moving
■ Asia
■ North America
■ Europe
Consumer Goods
■ Rest of World
■ Asia
■ Asia
■ Industrial
■ Rest of World
■ Rest of World
30%
68%
20%
30%
59%
Revenue by Geography
Geography
16%
20%
34%
30%
■ Europe
■ North America
■ Asia
■ Rest of World
Revenue (in millions)
$ in millions
$ in millions
$ in millions
Segment Earnings (in millions) Segment Margin
$ in millions
$ in millions
$ in millions
Revenue (in millions)
$ in millions
$ in millions
$ in millions
Segment Earnings (in millions) Segment Margin
$ in millions
$ in millions
$ in millions
$3,600
$3,600
$3,600
$525
$525
$525
18%
18%
18%
$1,200
$1,200
$1,200
$180
$180
$180
18%
18%
18%
Communication Technologies
$2,400
$2,400
$2,400
Communication Technologies
$350
$350
$350
Energy
12%
12%
Energy
12%
$800
$800
$800
$120
$120
$120
12%
12%
12%
Geography
Geography
Geography
2%
$1,200
$1,200
$1,200
$175
2%
$175
6%
$175
7%
6%
6%
11%
11%
7%
Geography
6%
7%
6%
$400
7%
$400
$400
$60
$60
$60
6%
6%
6%
2010 2011 2012
25%
2010 2011 2012
2010 2011 2012
$0
$0
62%
2010 2011 2012
2010 2011 2012
$0
25%
$0
62%
2010 2011 2012
$0
■ Asia
$0
■ North America
■ Europe
■ Rest of World
■ North America
■ Asia
■ Europe
■ North America
2010 2011 2012
2010 2011 2012
■ Rest of World
■ Europe
80%
■ Asia
■ Rest of World
0%
0%
2010 2011 2012
2010 2011 2012
0%
2010 2011 2012
2010 2011 2012
$0
$0
80%
■ North America
$0
■ Europe
■ Rest of World
■ Asia
2010 2011 2012
2010 2011 2012
2010 2011 2012
2010 2011 2012
2010 2011 2012
2010 2011 2012
$0
$0
$0
0%
0%
0%
Removable 2013 Dover Investor Fact Sheet u
Design: RWI www.rwidesign.com
Printing: Earth • Thebault
Printed in the USA on Recycled Paper
Key Brands
Engineered Systems
Geography
7%
8%
17%
68%
■ North America
■ Europe
■ Asia
■ Rest of World
Key Products
n Refrigeration cases and systems, specialty
Key Brands
Engineered Systems
Geography
cases and doors
Printing & Identification
Geography
n Specialty industrial pumps
n Brazed plate heat exchangers
n Automotive lifts and collision repair equipment
n Refuse collection vehicles, waste compacting
7%
and recycling equipment
n Workholding devices and factory
automation components
n Winches, hoists, powertrain components
68%
& accessories
■ Europe
■ North America
■ Asia
■ Rest of World
■ North America
34%
■ Europe
■ Asia
■ Rest of World
30%
16%
20%
8%
17%
Printing & Identification
Geography
16%
20%
34%
30%
■ Europe
■ North America
■ Asia
■ Rest of World
Key Products
n Product market and coding equipment and
related consumables and services
n Barcode printing equipment and related
consumables and services
n Soldering and fluid dispensing equipment
and related consumables and services
OUR ENTREPRENEURIAL BUSINESS MODEL
Our customer-focused business model encourages, promotes and fosters deep customer
engagement which has led to Dover’s well established and valued reputation as a global industrial
manufacturer that provides industry leading product innovation and superior customer service.
Our success is based on the core technological advantages of our businesses
which are leaders in the niche markets they serve. Our intense customer focus and
innovative products help our customers create value and win in their markets.
WE BUILD ON OUR STRENGTHS
Our deep bench of talent, core knowledge and industry leading expertise provides critical
insight that guides our product development, growth initiatives and focused acquisition targeting
that allows us to grow and expand the potential of our businesses.
WE LEVERAGE OUR SCALE
We share our expertise across all of Dover to achieve optimal productivity in manufacturing and operational
excellence. Our proven track record of successfully combining and utilizing all of Dover’s global resources helps
drive leverage across the entire company and enables us to continue our global growth and expansion.
FINANCIAL HIGHLIGHTS
(dollars in thousands, except per share figures)
Revenue
Earnings before taxes
Earnings from continuing operations
Earnings per diluted share from continuing operations
Dividends per common share
Capital expenditures
Acquisitions (net assets acquired)
Cash flows from operations
Return on average equity
Number of employees
2012
$ 8,104,339
$ 1,137,571
$
$
$
833,119
4.53
1.33
$
297,012
$ 1,181,043
$ 1,261,160
16.5%
37,416
2011
$ 7,369,154
$ 1,010,262
$ 773,186
$
$
4.09
1.18
$ 262,676
$ 1,342,461
$ 948,864
18.9%
33,827
2010
$6,109,507
$ 813,122
$ 619,497
$
$
3.27
1.07
$ 169,297
$ 104,418
$ 830,295
16.3%
31,962
Dover is a diversified global manufacturer with annual revenues of over $8 billion. For over 50 years, Dover has been delivering
outstanding products and services that reflect its market leadership and commitment to operational and technical excellence.
The Company’s entrepreneurial business model encourages, promotes and fosters deep customer engagement which has led to
Dover’s well-established and valued reputation for providing superior customer service and industry-leading product innovation.
Dover focuses on innovative equipment and components, specialty systems and support services through its four major operating
segments: Communication Technologies, Energy, Engineered Systems and Printing & Identification. Headquartered in Downers
Grove, Illinois, Dover employs 37,000 people worldwide. Dover is traded on the New York Stock Exchange under “DOV.” Additional
information is available on the company’s website at www.dovercorporation.com.
SHAREHOLDER INFORMATION
Computershare Shareowner Services can
be reached at the following address:
Via Regular Mail:
Computershare Investor Services
P.O. Box 43078
Providence, RI 02940-3078
(888) 567-8341
www.computershare.com/investor
Via Registered or Overnight Mail:
Computershare Investor Services
250 Royall Street
Canton, MA 02021
(888) 567-8341
www.computershare.com/investor
Investor Inquiries
and Corporate News:
For quarterly earnings releases, informa-
tion on conference calls and webcasts,
press releases, annual reports, SEC
filings including Form 10-K, acquisitions,
supplemental financial disclosure, and all
other corporate news releases, please visit
our website at:
www.dovercorporation.com
Dividends:
Quarterly dividends on Dover Corporation
common stock are typically paid on or
about the 15th of March, June, September
and December. Dover has paid an increased
dividend each year since 1955.
Dover’s Ticker Symbol:
Dover’s ticker symbol is DOV.
The stock trades on the New
York Stock Exchange and is
one of the corporations listed
in the S&P 500.
Annual Shareholders Meeting:
May 2, 2013 at 1:00 p.m. CT
Westin Lombard Yorktown Center
70 Yorktown Center
Lombard, IL 60148
Independent Accountants:
PricewaterhouseCoopers LLP
Chicago, IL
Executive Offices:
Dover Corporation
3005 Highland Parkway
Downers Grove, IL 60515
(630) 541-1540
Visit us on the web at:
www.dovercorporation.com
Shareholder Services:
For help with any of the
following, please contact:
Computershare Shareowner Services:
n Address changes
n Direct deposit of dividends
n Dividend reinvestment
n Lost dividend checks
n Lost stock certificates
n Name changes
n Shareholder records
n Stock transfers
n IRS Form 1099
n Direct Stock Purchase Plan
2012 Annual Report
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2013 INVESTOR FACT SHEET
Dover at a Glance
Company Overview
n Traded on the NYSE under “DOV”
Key Officers:
n Dover strives to achieve strong
operating margins and generate
free cash flow in excess of 10%
of revenue
n Dover has rewarded shareholders
with an annually increased
dividend for 57 consecutive years
(the fourth-longest record on
the NYSE).
Sales For Year Ended 12/31/12:
$8.1 B
EPS From Continuing
Operations For 2012:
$4.53
Headquarters:
Dover Corporation
3005 Highland Parkway
Downers Grove, Illinois 60515
www.dovercorporation.com
Investor Contact:
Paul Goldberg
Vice President
Investor Relations
(212) 922-1640
FAX (212) 922-0945
e-mail: peg@dovercorp.com
Bob Livingston
President &
Chief Executive Officer
Ivonne Cabrera
Senior Vice President,
General Counsel & Secretary
Brad Cerepak
Senior Vice President &
Chief Financial Officer
Tom Giacomini
President & Chief Executive Officer,
Dover Engineered Systems
John Hartner
President & Chief Executive Officer,
Dover Printing & Identification
Jay Kloosterboer
Senior Vice President,
Human Resources
Jeff Niew
President & Chief Executive Officer,
Dover Communication Technologies
Steve Sellhausen
Senior Vice President,
Corporate Development
Bill Spurgeon
President & Chief Executive Officer,
Dover Energy
3005 Highland Parkway
Downers Grove, IL 60515
www.dovercorporation.com
Dover is a diversified global manufacturer with annual revenues of over
$8 billion. For over 50 years, Dover has been delivering outstanding
products and services that reflect its market leadership and commitment
to operational and technical excellence. The Company’s entrepreneurial
business model encourages, promotes and fosters deep customer
engagement which has led to Dover’s well-established and valued
reputation for providing superior customer service and industry-
leading product innovation. Dover focuses on innovative equipment
and components, specialty systems and support services through its
four major operating segments: Communication Technologies, Energy,
Engineered Systems and Printing & Identification. Headquartered in
Downers Grove, Illinois, Dover employs 37,000 people worldwide.
Dover is traded on the New York Stock Exchange under “DOV.”
Additional information is available on the company’s website at
www.dovercorporation.com.
Financial Highlights 2012
(dollars in thousands, except per share figures)
Revenue
Earnings before taxes
Earnings from continuing operations
Earnings per diluted share
from continuing operations
Dividends per common share
Capital expenditures
Acquisitions (net assets acquired)
Cash flows from operations
Return on average equity
Number of employees
2012
2011
$ 8,104,339
$ 1,137,571
$ 833,119
$ 7,369,154
$ 1,010,262
$ 773,186
4.53
$
$
1.33
$ 297,012
$ 1,181,043
$ 1,261,160
16.5%
37,416
4.09
$
$
1.18
$ 262,676
$ 1,342,461
$ 948,864
18.9%
33,827
Credit Ratings:
Pillars of Success
Page 9 in Letter
Fact Sheet
2012 Revenue by Region
Moody’s:
Standard & Poor’s:
Fact Sheet
Fitch
Long Short
Term
Term
P-1
A2
A-1
A
F1
A
2012 Revenue by Segment 2012 Revenue by Region
2012 Revenue by Segment
2012 Revenue by Region
7%
12%
19%
15%
19%
59%
42%
■ North America
■ Asia
■ Europe
■ Rest of World
27%
■ Communication
Technologies
■ Energy
■ Engineered
Systems
■ Printing &
Identification
7%
8%
15%
15%
19%
18%
59%
59%
■ North America
■ Asia
■ Europe
■ Rest of World
Revenue vs. Continuing Earnings
($ in millions)
Free Cash Flow
($ in millions)
$8,000
$900
$1,000
20%
6,000
4,000
2,000
0
675
750
450
500
225
250
0
0
15
10
5
0
2008 2009 2010 2011 2012
Revenue
Earnings from Continuing Operations
2008 2009 2010 2011 2012
Free Cash Flow
Free Cash Flow as a % of Revenue
Strategic Asset Allocation
Dover grows its business by thoughtfully and strategically allocating
capital, primarily in our five growth spaces – Energy, Product ID, Fluid
Solutions, Communication Components and Refrigeration Equipment.
We then create value by quickly implementing an integration plan that
unlocks the earnings power of the acquired business in a timely manner.
Acquisitions are complimented by a consistent dividend policy and
strategic share repurchases.
Leveraging Our Scale
Dover creates value by leveraging the scale and expertise inherent in our
company. By aggregating volumes and streamlining systems, creating
commonality and standardized processes, and combining facilities and
eliminating duplication, we seek to do more with less. We create an
environment that maximizes the benefit of our size, while ensuring that
our companies remain nimble enough to deliver extraordinary service to
their customers.
Leadership Development
Dover supports its goals by providing resources and programs designed
to enhance and maximize employees’ leadership opportunities. By
promoting a positive environment that empowers future leaders to
interact and share experiences, encourages expression of ideas, inspires
creativity, and fosters opportunities for leadership development, we
develop and retain the people who will drive our future success.
Corporate Responsibility
Dover endeavors to live up to the highest standards of corporate
responsibility, in all aspects of our business, whether at home in the
United States, or elsewhere around the globe. We strive to achieve the
highest ethical standards and good corporate governance, and adhere to
all applicable laws, regulations and codes of conduct in the geographies
where we operate.