Dover (DOV) 10-Q 2007 Q1 Quarterly report

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2007

Commission File Number: 1-4018

Dover Corporation

(Exact name of registrant as specified in its charter)

Delaware	53-0257888
(State of Incorporation)	(I.R.S. Employer Identification No.)
280 Park Avenue, New York, NY	10017
(Address of principal executive offices)	(Zip Code)

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yesþ    Noo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definitions of “accelerated filer” and “large accelerated filer” in Rule 12-b-2 of the Securities and Exchange Act.

Large accelerated filerþ      Accelerated filero      Non-accelerated filero

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Securities Exchange Act). Yeso    Noþ

The number of shares outstanding of the Registrant’s common stock as of April 20, 2007 was 204,415,133.

Dover Corporation
Form 10-Q
Table of Contents

PART I – FINANCIAL INFORMATION
	Page		Item
			Item 1. Financial Statements (unaudited)
		1	Condensed Consolidated Statements of Operations (For the three months ended March 31, 2007 and 2006)
		2	Condensed Consolidated Balance Sheets (At March 31, 2007 and December 31, 2006)
		2	Condensed Consolidated Statement of Stockholders’ Equity (For the three months ended March 31, 2007)
		3	Condensed Consolidated Statements of Cash Flows (For the three months ended March 31, 2007 and 2006)
		4	Notes to Condensed Consolidated Financial Statements
		12	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
		19	Item 3. Quantitative and Qualitative Disclosures About Market Risk
		19	Item 4. Controls and Procedures
PART II – OTHER INFORMATION
		20	Item 1. Legal Proceedings
		20	Item 1A. Risk Factors
		20	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
		20	Item 3. Defaults Upon Senior Securities
		21	Item 4. Submission of Matters to a Vote of Security Holders
		21	Item 5. Other Information
		21	Item 6. Exhibits
		22	Signatures
		23	Exhibit Index
EX-31.1: CERTIFICATION
EX-31.2: CERTIFICATION
EX-32: CERTIFICATIONS

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

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

DOVER CORPORATION

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

	Three Months Ended March 31,
	2007			2006
Revenue	$	1,780,187		$	1,510,213
Cost of goods and services		1,144,276			962,304
Gross profit		635,911			547,909
Selling and administrative expenses		420,431			335,492
Operating earnings		215,480			212,417
Interest expense, net		21,840			21,485
Other expense (income), net		(284	)		2,830
Total interest/other expense, net		21,556			24,315
Earnings before provision for income taxes and discontinued operations		193,924			188,102
Provision for income taxes		55,080			56,812
Earnings from continuing operations		138,844			131,290
Earnings (loss) from discontinued operations, net of tax		(9,913	)		72,538
Net earnings	$	128,931		$	203,828
Basic earnings per common share:
Earnings from continuing operations	$	0.68		$	0.65
Earnings (loss) from discontinued operations		(0.05	)		0.36
Net earnings		0.63			1.00
Weighted average shares outstanding		204,457			203,316
Diluted earnings per common share:
Earnings from continuing operations	$	0.67		$	0.64
Earnings (loss) from discontinued operations		(0.05	)		0.35
Net earnings		0.63			0.99
Weighted average shares outstanding		206,182			204,960
Dividends paid per common share	$	0.19		$	0.17

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

	Three Months Ended March 31,
	2007		2006
Weighted average shares outstanding — Basic		204,457		203,316
Dilutive effect of assumed exercise of employee stock options and stock appreciation rights		1,725		1,644
Weighted average shares outstanding — Diluted		206,182		204,960
Anti-dilutive shares excluded from diluted EPS computation		3,400		6,193

See Notes to Condensed Consolidated Financial Statements

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DOVER CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited) (in thousands)

	At March 31 ,		At December 31 ,
	2007		2006
Current assets:
Cash and equivalents	$	444,354	$	373,616
Receivables, net of allowances of $30,264 and $28,632		1,106,140		1,056,828
Inventories, net		742,444		709,647
Prepaid and other current assets		85,879		65,646
Deferred tax asset		72,454		65,769
Total current assets		2,451,271		2,271,506
Property, plant and equipment, net		867,356		856,799
Goodwill		3,274,103		3,201,983
Intangible assets, net		1,071,048		1,065,382
Other assets and deferred charges		125,363		123,045
Assets of discontinued operations		58,195		107,943
Total assets	$	7,847,336	$	7,626,658
Current liabilities:
Notes payable and current maturities of long-term debt	$	468,661	$	290,549
Accounts payable		427,816		410,001
Accrued compensation and employee benefits		205,808		280,580
Accrued insurance		120,821		122,488
Other accrued expenses		187,685		183,642
Federal and other taxes on income		65,978		146,720
Total current liabilities		1,476,769		1,433,980
Long-term debt		1,480,914		1,480,491
Deferred income taxes		370,990		364,034
Other deferrals		533,602		405,845
Liabilities of discontinued operations		125,223		131,286
Commitments and contingent liabilities
Stockholders’ Equity:
Total stockholders’ equity		3,859,838		3,811,022
Total liabilities and stockholders’ equity	$	7,847,336	$	7,626,658

DOVER CORPORATION

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

					Accumulated
	Common		Additional		Other								Total
	Stock		Paid-In		Comprehensive		Retained			Treasury			Stockholders’
	$1 Par Value		Capital		Earnings		Earnings			Stock			Equity
Balance at December 31, 2006	$	242,293	$	241,455	$	48,852	$	4,421,927		$	(1,143,505	)	$	3,811,022
FIN 48 Adjustment (See Note 2)		—		—		—		(58,157	)		—			(58,157	)
Net earnings		—		—		—		128,931			—			128,931
Dividends paid		—		—		—		(37,887	)		—			(37,887	)
Common stock issued for options exercised		623		20,190		—		—			—			20,813
Stock-based compensation expense		—		8,249		—		—			—			8,249
Tax benefit from exercises of stock options		—		2,039		—		—			—			2,039
Common stock acquired		—		—		—		—			(26,084	)		(26,084	)
Translation of foreign financial statements		—		—		7,301		—			—			7,301
Pension amortization under SFAS No. 158, net of tax		—		—		3,053		—			—			3,053
Other, net of tax		—		—		558		—			—			558
Balance at March 31, 2007	$	242,916	$	271,933	$	59,764	$	4,454,814		$	(1,169,589	)	$	3,859,838

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

See Notes to Condensed Consolidated Financial Statements

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DOVER CORPORATION

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

	Three Months Ended March 31,
	2007			2006
Operating Activities of Continuing Operations
Net earnings	$	128,931		$	203,828
Adjustments to reconcile net earnings to net cash from operating activities:					—
Loss (earnings) from discontinued operations		9,913			(72,538	)
Depreciation and amortization		59,807			47,564
Stock-based compensation		8,118			7,221
Changes in current assets and liabilities (excluding effects of acquisitions, dispositions and foreign exchange):
Increase in accounts receivable		(40,809	)		(55,254	)
Increase in inventories		(19,567	)		(20,704	)
Increase in prepaid expenses and other assets		(18,844	)		(4,226	)
Increase in accounts payable		13,816			23,481
Decrease in accrued expenses		(81,791	)		(43,946	)
Increase in accrued and deferred taxes		12,378			54,704
Other non-current, net		(10,875	)		(10,425	)
Net cash provided by operating activities of continuing operations		61,077			129,705
Proceeds from the sale of property and equipment		2,127			5,104
Additions to property, plant and equipment		(44,392	)		(36,721	)
Proceeds from sales of discontinued businesses		29,197			153,429
Acquisitions (net of cash and cash equivalents acquired)		(117,921	)		(13,860	)
Net cash provided by (used in) investing activities of continuing operations		(130,989	)		107,952
Financing Activities of Continuing Operations
Increase (decrease) in debt, net		178,378			(116,015	)
Purchase of treasury stock		(26,084	)		(9,413	)
Proceeds from exercise of stock options, including tax benefits		22,852			42,300
Dividends to stockholders		(37,887	)		(34,579	)
Net cash provided by (used in) financing activities of continuing operations		137,259			(117,707	)
Cash Flows From Discontinued Operations
Net cash provided by (used in) operating activities of discontinued operations		340			(23,833	)
Net cash used in investing activities of discontinued operations		(498	)		(2,807	)
Net cash used in discontinued operations		(158	)		(26,640	)
Effect of exchange rate changes on cash		3,549			904
Net increase in cash and cash equivalents		70,738			94,214
Cash and cash equivalents at beginning of period		373,616			185,833
Cash and cash equivalents at end of period	$	444,354		$	280,047

See Notes to Condensed Consolidated Financial Statements

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DOVER CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements, in accordance with Securities and Exchange Commission (“SEC”) rules for interim periods, do not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements and should be read in conjunction with the Dover Corporation (“Dover” or the “Company”) Annual Report on Form 10-K for the year ended December 31, 2006, which provides a more complete understanding of Dover’s accounting policies, financial position, operating results, business properties and other matters. It is the opinion of management that these financial statements reflect all adjustments necessary for a fair presentation of the interim results. The results of operations of any interim period are not necessarily indicative of the results of operations for the full year.

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

2. New Accounting Pronouncement

Effective January 1, 2007, the Company adopted Financial Accounting Standards Board Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 specifies the way public companies are to account for uncertainty in income tax reporting, and prescribes a methodology for recognizing, reversing, and measuring the tax benefits of a tax position taken, or expected to be taken, in a tax return. As a result of adopting the new standard, the Company recorded a $58.2 million increase to reserves as a “cumulative effect” decrease to opening retained earnings as of January 1, 2007, of which $53.4 million is included in continuing operations. Including this “cumulative effect” adjustment, the Company had unrecognized tax benefits (reserves) of $190.5 million at January 1, 2007, of which $35.4 million related to accrued interest and penalties. The portion of the unrecognized tax benefits included in continuing operations totaled $147.6 million, of which $28.0 million related to accrued interest and penalties. In 2007, the majority of these unrecognized tax benefits in continuing operations are classified as Other Deferrals in the condensed consolidated balance sheet and, if recognized, the entire amount, of $147.6 million would impact the Company’s effective tax rate.

In the first quarter of 2007, the Company accrued an additional $2.5 million of interest related to its uncertain tax positions, of which $2.0 million is recorded as a component of the Company’s provision for income taxes in the condensed consolidated statement of operations. At March 31, 2007 the Company had unrecognized tax benefits of $193.3 million. $149.7 million is included in continuing operations, of which the majority is in Other Deferrals in the condensed consolidated balance sheet. At December 31, 2006, the continuing unrecognized tax benefit of $94.2 million was included in Federal and Other Taxes on Income in the condensed consolidated balance sheet.

Dover files Federal income tax returns, as well as multiple state, local and foreign jurisdiction tax returns. The Company is no longer subject to examinations of its federal income tax returns by the Internal Revenue Service (“IRS”) for years through 2002. However,years 1998 through 2002 have federal income tax matters that are currently under litigation. The IRS is currently examining years 2003 and 2004. All significant state and local, and foreign matters have been concluded for years through 1994 and 1999, respectively. With the exception of matters in litigation, for which an estimate can not be made due to uncertainties, the Company does not believe it is reasonably possible that its unrecognized tax benefits will significantly change within the next twelve months.

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DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

3. Acquisitions

The 2007 acquisitions are wholly-owned and had an aggregate cost of $117.9 million, net of cash acquired, at the date of acquisition. The following table details acquisitions made during 2007:

						Operating
Date	Type	Acquired Companies	Location (Near)	Segment	Group	Company
31-Jan	Stock	Biode	Westbrook, ME	Electronics	Components	Vectron
Designer and manufacturer of fluid viscosity sensors and viscometer readers.
28-Feb	Asset	Pole/Zero Corporation	West Chester, OH	Electronics	Components	MPG
Designer and manufacturer of radio frequency filters that resolve interference issues.
31-Mar	Asset	Theta Oilfield Services	Brea, CA	Resources	Oil & Gas	EPG
Provider of oilwell optimization software.

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

The following table summarizes the estimated fair values of the assets and liabilities that were assumed as of the dates of the 2007 acquisitions and the amounts assigned to goodwill and intangible asset classifications:

(in thousands)	At March 31, 2007
Current assets, net of cash acquired		$	14,813
PP&E			2,007
Goodwill			75,495
Intangibles			27,680
Other assets			7,000
Total assets acquired			126,995
Total liabilities assumed			(9,074	)
Net assets acquired		$	117,921

The following unaudited pro forma information illustrates the effect on Dover’s revenue and net earnings for the three month periods ended March 31, 2007 and 2006, assuming that the 2007 and 2006 acquisitions had all taken place on January 1, 2006:

(in thousands, except per share figures)	Three Months Ended March 31,
	2007		2006
Revenue from continuing operations:
As reported	$	1,780,187	$	1,510,213
Pro forma		1,787,657		1,694,897
Net earnings from continuing operations:
As reported	$	138,844	$	131,290
Pro forma		139,763		135,828
Basic earnings per share from continuing operations:
As reported	$	0.68	$	0.65
Pro forma		0.68		0.67
Diluted earnings per share from continuing operations:
As reported	$	0.67	$	0.64
Pro forma		0.68		0.66

These pro forma results of operations have been prepared for comparative purposes only and include certain adjustments to actual financial results for the relevant periods, such as imputed financing costs, and estimated additional amortization and depreciation expense as a result of intangibles and fixed assets acquired. They do

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DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

not purport to be indicative of the results of operations which actually would have resulted had the acquisitions occurred on the date indicated, or which may result in the future.

In connection with certain 2006 acquisitions, the Company recorded $14.7 million of severance and facility closing costs at the date of acquisition in accordance with Emerging Issues Task Force Issue No. 95-3, “Recognition of Liabilities in Connection with a Purchase Business Combination.” Through the end of the first quarter of 2007, the Company has not paid any amounts related to these costs.

4. Inventory

The following table displays the components of inventory:

	At March 31,		At December 31,
(in thousands)	2007		2006
Raw materials	$	345,185	$	330,016
Work in progress		192,870		173,194
Finished goods		253,510		254,684
Subtotal		791,565		757,894
Less LIFO reserve		49,121		48,247
Total	$	742,444	$	709,647

5. Property, Plant and Equipment

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

	At March 31,			At December 31,
(in thousands)	2007			2006
Land	$	52,562		$	52,227
Buildings and improvements		513,337			503,464
Machinery, equipment and other		1,679,027			1,641,151
		2,244,926			2,196,842
Accumulated depreciation		(1,377,570	)		(1,340,043	)
Total	$	867,356		$	856,799

6. Goodwill and Other Intangible Assets

The following table provides the changes in carrying value of goodwill by market segment through the three months ended March 31, 2007 (see Note 3 for discussion of purchase price allocations):

					Other
					adjustments
			Goodwill from		including
	At December 31,		2007		currency			At March 31,
(in thousands)	2006		acquisitions		translations			2007
Diversified	$	261,821	$	—	$	75		$	261,896
Electronics		749,157		75,495		(1,900	)		822,752
Industries		234,683		—		142			234,825
Resources		788,988		—		747			789,735
Systems		108,877		—		195			109,072
Technologies		1,058,457		—		(2,634	)		1,055,823
Total	$	3,201,983	$	75,495	$	(3,375	)	$	3,274,103

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DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

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

	At March 31, 2007						At December 31, 2006
	Gross Carrying		Accumulated		Average		Gross Carrying		Accumulated
(in thousands)	Amount		Amortization		Life		Amount		Amortization
Amortized Intangible Assets:
Trademarks	$	30,910	$	12,299		29	$	29,865	$	11,848
Patents		130,486		66,776		13		116,128		64,833
Customer Intangibles		661,155		95,812		9		648,283		80,794
Unpatented Technologies		135,926		43,430		9		135,449		40,196
Non-Compete Agreements		6,758		5,173		5		6,746		5,021
Drawings & Manuals		15,809		4,817		5		15,765		4,479
Distributor Relationships		72,380		10,240		20		72,374		9,235
Other		29,154		9,159		14		29,217		8,038
Total		1,082,578		247,706		11		1,053,827		224,444
Unamortized Intangible Assets:
Trademarks		236,176						235,999
Total Intangible Assets	$	1,318,754	$	247,706			$	1,289,826	$	224,444

7. Discontinued Operations

2007

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

2006

During the first quarter of 2006, Dover completed the sale of Tranter PHE, a business discontinued from the Diversified segment in the fourth quarter of 2005, resulting in a pre-tax gain of approximately $109.0 million ($85.5 million after-tax). In addition, during the first quarter of 2006, the Company discontinued and sold a business in the Electronics segment for a loss of $2.5 million ($2.2 million after-tax). Also, during the first quarter of 2006, the Company discontinued an operating company, comprised of two businesses in the Resources segment, resulting in an impairment of approximately $15.4 million ($14.4 million after-tax).

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DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

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

	Three Months Ended March 31,
(in thousands)	2007			2006
Revenue	$	12,753		$	220,025
Gain (loss) on sale, net of taxes (1)	$	(7,498	)	$	68,949
Earnings (loss) from operations before taxes		(2,803	)		5,381
Benefit (provision) for income taxes related to operations		388			(1,792	)
Earnings (loss) from discontinued operations, net of tax	$	(9,913	)	$	72,538

(1) Includes impairments

At March 31, 2007, the assets and liabilities of discontinued operations primarily represent amounts related to three previously discontinued businesses in the Diversified segment and one previously discontinued business in the Resources segment. Additional detail related to the assets and liabilities of the Company’s discontinued operations is as follows:

	At March 31,		At December 31,
(in thousands)	2007		2006
Assets of Discontinued Operations
Current assets	$	36,433	$	69,769
Non-current assets		21,762		38,174
	$	58,195	$	107,943
Liabilities of Discontinued Operations
Current liabilities	$	76,386	$	107,239
Long-term liabilities		48,837		24,047
	$	125,223	$	131,286

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

8. Debt

Dover’s long-term notes with a book value of $1,480.9 million, of which $32.3 million matures in the current year, had a fair value of approximately $1,500.5 million at March 31, 2007. The estimated fair value of the long-term notes is based on quoted market prices for similar issues.

There are presently two interest rate swap agreements outstanding for a total notional amount of $100.0 million, designated as fair value hedges on part of the Company’s $150.0 million 6.25% Notes due on June 1, 2008. One $50.0 million interest rate swap exchanges fixed-rate interest for variable-rate interest. The other $50.0 million swap is designated in foreign currency and exchanges fixed-rate interest for variable-rate interest, and also hedges a portion of the Company’s net investment in foreign operations. The swap agreements have reduced the effective interest rate on the notes to 5.97%. There is no hedge ineffectiveness. The fair value of the interest rate swaps outstanding as of March 31, 2007 was determined through market quotation.

9. Commitments and Contingent Liabilities

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

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DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

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 periodically review the probable outcome of such proceedings, the costs and expenses reasonably expected to be incurred, the availability and extent of insurance coverage, and established reserves. While it is not possible at this time to predict the outcome of these legal actions or any need for additional reserves, in the opinion of management, based on these reviews, it is very unlikely that the disposition of the lawsuits and the other matters mentioned above will have a material adverse effect on the financial position, results of operations, cash flows or competitive position of the Company.

Estimated warranty program claims are provided for at the time of sale. Amounts provided for are based on historical costs and adjusted new claims. The changes in the carrying amount of product warranties through March 31, 2007 and 2006 are as follows:

(in thousands)	2007			2006
Beginning Balance January 1	$	48,976		$	37,749
Provision for warranties		6,079			5,770
Increase from acquisitions		143			—
Settlements made		(4,237	)		(4,454	)
Other adjustments		114			100
Ending Balance March 31	$	51,075		$	39,165

10. Employee Benefit Plans

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

	Retirement Plan Benefits						Post Retirement Benefits
	Three Months Ended March 31,						Three Months Ended March 31,
(in thousands)	2007			2006			2007			2006
Expected return on plan assets	$	(7,807	)	$	(7,900	)	$	—		$	—
Benefits earned during period		5,810			5,599			87			83
Interest accrued on benefit obligation		8,673			8,318			275			275
Amortization(A):
Prior service cost		2,128			1,972			(43	)		(70	)
Recognized actuarial (gain) loss		2,717			2,604			(56	)		23
Transition obligation		(39	)		(274	)		—			—
Settlement gain (Tranter PHE sale)(B)								—			(4,699	)
Net periodic expense (benefit)	$	11,482		$	10,319		$	263		$	(4,388	)

(A)	Current year amortization amounts are recorded as increases (decreases) to Accumulated Other Comprehensive Income, totaling $3.1 million, net of tax.
(B)	Included in earnings from discontinued operations.

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DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

11. Comprehensive Earnings

Comprehensive earnings were as follows:

	Comprehensive Earnings
	Three Months Ended March 31,
(in thousands)	2007			2006
Net Earnings	$	128,931		$	203,828
Foreign currency translation adjustment		7,301			10,107
Unrealized holding gains (losses), net of tax		605			(145	)
Derivative cash flow hedges		(47	)		(25	)
Pension amortization under SFAS No. 158, net of tax		3,053			—
Comprehensive Earnings	$	139,843		$	213,765

12. Segment Information

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

	Three Months Ended March 31,
(in thousands)	2007			2006
REVENUE
Diversified	$	215,004		$	193,676
Electronics		222,418			199,496
Industries		230,460			218,743
Resources		551,980			425,162
Systems		205,584			181,285
Technologies		358,538			294,942
Intramarket eliminations		(3,797	)		(3,091	)
Total consolidated revenue	$	1,780,187		$	1,510,213
EARNINGS FROM CONTINUING OPERATIONS
Segment Earnings:
Diversified	$	26,969		$	22,584
Electronics		23,838			20,754
Industries		30,837			27,328
Resources		93,812			82,797
Systems		26,576			26,972
Technologies		29,924			47,712
Total segments		231,956			228,147
Corporate expense / other		(16,192	)		(18,560	)
Net interest expense		(21,840	)		(21,485	)
Earnings from continuing operations before provision for income taxes and discontinued operations		193,924			188,102
Provision for income taxes		55,080			56,812
Earnings from continuing operations — total consolidated	$	138,844		$	131,290

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DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

13. Recent Accounting Standards

In September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 157, “Fair Value Measurements” (“SFAS No. 157”), which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. This statement is effective for fiscal periods beginning after November 15, 2007 and does not require any new fair value measurements. The Company is currently evaluating the impact of SFAS No. 157 on its overall results of operations and financial position.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities.” This Statement allows entities to choose to measure financial instruments and certain other items at fair value. This statement is effective for fiscal periods beginning after November 15, 2007. The Company is currently evaluating the impact of SFAS No. 159 on its overall results of operations and financial position.

14. Equity and Performance Incentive Program

In the first quarter of 2007 and 2006 the Company issued stock-settled stock appreciation rights (“SSARs”) totaling 1,736,383 and 1,886,989, respectively. For the quarters ended March 31, 2007 and 2006, after-tax stock-based compensation expense totaled $5.3 million and $5.1 million, respectively. The fair value of each grant was estimated on the dates of grant using the Black-Scholes option-pricing model with the following assumptions:

	2007 Grant			2006 Grant
	SSARs			Options
Risk-free interest rate		4.84	%		4.63	%
Dividend yield		1.43	%		1.52	%
Expected life (years)		6.5			8
Volatility		28.25	%		30.73	%
Option grant price	$	50.60		$	46.00
Fair value of options granted	$	16.65		$	17.01

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

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

OVERVIEW

Dover Corporation (“Dover” or the “Company”) is a diversified multinational manufacturing corporation comprised of operating companies that manufacture a broad range of specialized industrial products and components, as well as sophisticated manufacturing equipment, and seek to expand their range of related services, consumables and wear parts sales. Dover’s operating companies are based primarily in the United States of America and Europe with manufacturing and other operations throughout the world. Dover reports its operating companies’ results in six reportable segments and discusses its operations in 13 groups.

(1) FINANCIAL CONDITION:

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

Cash and cash equivalents of $444.4 million at March 31, 2007 increased from the December 31, 2006 balance of $373.6 million. Cash and cash equivalents were invested in highly liquid investment grade money market instruments with a maturity of 90 days or less.

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

	Three Months Ended March 31,
Cash Flows from Continuing Operations(in thousands)	2007			2006
Net Cash Flows Provided By (Used In):
Operating activities	$	61,077		$	129,705
Investing activities		(130,989	)		107,952
Financing activities		137,259			(117,707	)

Cash flows provided by operating activities for the first three months of 2007 decreased $68.6 million over the prior year period, primarily reflecting higher incentive compensation and tax payments.

The cash used in investing activities in the first three months of 2007 was $131.0 million compared to cash provided of $108.0 million in the prior year period, largely reflecting higher acquisition spending in the 2007 period and higher proceeds received from sales of discontinued businesses in the 2006 period. Capital expenditures in the first three months of 2007 increased to $44.4 million as compared to $36.7 million in the prior year period primarily due to investments in plant expansions, plant machinery and information technology systems to support revenue growth and market demand. Acquisition spending was $117.9 million during the first three months of 2007 compared to $13.9 million in the prior year period. Proceeds from the sales of discontinued businesses in the first three months of 2007 were $29.2 million compared to $153.4 million in the 2006 period. The Company currently anticipates that any additional acquisitions made during 2007 will be funded from available cash and internally generated funds and, if necessary, through the issuance of commercial paper, use of established lines of credit or public debt markets.

Cash provided by financing activities for the first three months of 2007 totaled $137.3 million as compared to cash used of $117.7 million during the comparable period last year. The net change in financing activity during the first

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three months of 2007 primarily reflected increased borrowings in 2007 to fund acquisitions. Also, during the first quarter of 2007, the Company purchased 500,000 shares of common stock in the open market at an average price of $47.94.

“Adjusted Working Capital” (calculated as accounts receivable, plus inventory, less accounts payable) increased from the prior year end by $64.3 million or 4.7% to $1,420.8 million, which reflected increases in receivables of $49.3 million and increases in inventory of $32.8 million, partially offset by an increase in payables of $17.8 million. Excluding the impact of acquisitions and foreign currency, working capital would have increased by $46.6 million or 3.4%. Average Annual Adjusted Working Capital as a percentage of revenue (a non-GAAP measure; calculated as the five quarter average balance of accounts receivable, plus inventory, less accounts payable divided by the trailing twelve months of revenue) was 19.0% at March 31, 2007 compared to 18.8% at December 31, 2006 and inventory turns remained constant at 6.5 when compared to December 31, 2006.

In addition to measuring its cash flow generation and usage based upon the operating, investing and financing classifications included in the Condensed Consolidated Statements of Cash Flows, the Company also measures free cash flow (a non-GAAP measure). Management believes that free cash flow is an important measure of operating performance because it provides both management and investors a measurement of cash generated from operations that is available to fund acquisitions, pay dividends, repay debt and repurchase Dover’s common stock. Dover’s free cash flow for the three months ended March 31, 2007 decreased $76.3 million compared to the prior year period. The decrease reflected higher benefit, compensation and tax payments and an increase in capital expenditures.

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

	Three Months Ended March 31,
Free Cash Flow(in thousands)	2007			2006
Cash flow provided by operating activities	$	61,077		$	129,705
Less: Capital expenditures		(44,392	)		(36,721	)
Free cash flow	$	16,685		$	92,984
Free cash flow as a percentage of revenue		0.9	%		6.2	%

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

	At March 31,			At December 31,
Net Debt to Total Capitalization Ratio(in thousands)	2007			2006
Current maturities of long-term debt	$	32,284		$	32,267
Commercial paper and other short-term debt		436,377			258,282
Long-term debt		1,480,914			1,480,491
Total debt		1,949,575			1,771,040
Less: Cash and cash equivalents		444,354			373,616
Net debt		1,505,221			1,397,424
Add: Stockholders’ equity		3,859,838			3,811,022
Total capitalization	$	5,365,059		$	5,208,446
Net debt to total capitalization		28.1	%		26.8	%

The total debt level of $1,949.6 million at March 31, 2007 increased $178.5 million from December 31, 2006, due to increased commercial paper borrowings used to fund first quarter 2007 acquisitions. The net debt increase was due to the higher total debt level, partially offset by an increase in cash, in the first quarter of 2007 when compared to December 31, 2006.

Dover’s long-term notes with a book value of $1,480.9 million, of which $32.3 million matures in less than one year, had a fair value of approximately $1,500.5 million at March 31, 2007. The estimated fair value of the long-term notes is based on quoted market prices for similar issues.

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There are presently two interest rate swap agreements outstanding for a total notional amount of $100.0 million, designated as fair value hedges on part of the Company’s $150.0 million 6.25% Notes due on June 1, 2008. One $50 million interest rate swap exchanges fixed-rate interest for variable-rate interest. The other $50 million swap is designated in foreign currency and exchanges fixed-rate interest for variable-rate interest, and also hedges a portion of the Company’s net investment in foreign operations. The swap agreements have reduced the effective interest rate on the notes to 5.97%. There is no hedge ineffectiveness, and the fair value of the interest rate swaps outstanding as of March 31, 2007 was determined through market quotation.

(2) RESULTS OF OPERATIONS:

CONSOLIDATED RESULTS OF OPERATIONS

Revenue for the first quarter of 2007 increased 18% to $1,780.2 million from the comparable 2006 period, driven principally by increases at Resources and Technologies. Overall, Dover’s organic revenue growth was 4%, acquisition growth was 12%, with the remainder due to the impact of foreign exchange. Gross profit increased 16.1% to $635.9 million from the prior year quarter while the gross profit margin decreased 60 basis points to 35.7%.

Selling and administrative expenses of $420.4 million for the first quarter of 2007 increased $84.9 million over the comparable 2006 period, primarily due to increased revenue activity. Selling and administrative expenses as a percentage of revenue increased to 23.6% from 22.2% in the comparable 2006 period.

Interest expense, net, for the first quarter of 2007 remained essentially the same as the prior year. Other expense (income), net, of $(.3) million and $2.8 million for the three months ended March 31, 2007 and 2006, respectively, primarily related to the effects of foreign exchange fluctuations on assets and liabilities denominated in currencies other than the company’s functional currency.

The effective tax rate for continuing operations for the three months ended March 31, 2007 was 28.4%, compared to the prior year rate of 30.2%. The rate for the first quarter of 2007 decreased from the comparable 2006 rate due to the extension of the U.S. Federal Research credit and a favorable mix of foreign earnings in low-taxed overseas jurisdictions.

Effective January 1, 2007, the Company adopted Financial Accounting Standards Board Interpretation No. 48 “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 specifies the way public companies are to account for uncertainty in income tax reporting, and prescribes a methodology for recognizing, reversing, and measuring the tax benefits of a tax position taken, or expected to be taken, in a tax return. As a result of adopting the new standard, the Company recorded a $58.2 million increase to reserves as a “cumulative effect” decrease to opening retained earnings as of January 1, 2007, of which $53.4 million is included in continuing operations. Including this “cumulative effect” adjustment, the Company had unrecognized tax benefits (reserves) of $190.5 million at January 1, 2007, of which $35.4 million related to accrued interest and penalties. The portion of the unrecognized tax benefits included in continuing operations totaled $147.6 million, of which $28.0 million related to accrued interest and penalties. In 2007, the majority of these unrecognized tax benefits in continuing operations are classified as Other Deferrals in the condensed consolidated balance sheet and, if recognized, the entire amount, of $147.6 million would impact the Company’s effective tax rate.

Earnings from continuing operations for the quarter increased 5.8% to $138.8 million or $0.67 EPS compared to $131.3 million or $0.64 EPS in the prior year first quarter. The increase was primarily a result of improvements at Resources, Diversified, Industries and Electronics.

Loss from discontinued operations for the first quarter 2007 was $9.9 million or $0.05 EPS compared to earnings of $72.5 million or $0.35 EPS in the comparable 2006 quarter. The 2007 loss included a $1.6 million loss, net of tax, from the sales of two previously discontinued businesses, Kurz-Kasch in the Electronics segment and SWF in the Systems segment. The 2006 earnings include a gain on the sale of Tranter PHE, partially offset by an impairment and loss on sale related to other discontinued businesses.

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SEGMENT RESULTS OF OPERATIONS

Diversified

	Three Months Ended March 31,
(in thousands)	2007			2006			% Change
Revenue	$	215,004		$	193,676			11	%
Segment earnings		26,969			22,584			19	%
Operating margin		12.5	%		11.7	%
Bookings		219,406			208,245			5	%
Book-to-Bill		1.02			1.08
Backlog		358,118			317,750			13	%

Diversified’s revenue and earnings increases over the prior year first quarter were primarily due to improvements in the Process Equipment group, partially offset by declines in the Industrial Equipment group. Operating margin increased 80 basis points over the prior year first quarter and 210 basis points sequentially.

The Process Equipment group experienced strength in the heat exchanger and energy markets which led to revenue and earnings increases of 38% and 54%, respectively, when compared to the prior year quarter. The strong leverage resulted from increased volume along with favorable pricing and improved productivity. Bookings and backlog increased 37% and 58%, respectively.

Industrial Equipment revenue and earnings decreased 2% and 12%, respectively, over the prior year quarter due to softness in the housing construction market and a decline in aerospace MRO revenue, as well as restructuring costs related to aerospace business. Sequentially, bookings increased 6% while, compared to the prior year period, bookings and backlog decreased 11% and 3%, respectively.

Electronics

	Three Months Ended March 31,
(in thousands)	2007			2006			% Change
Revenue	$	222,418		$	199,496			11	%
Segment earnings		23,838			20,754			15	%
Operating margin		10.7	%		10.4	%
Bookings		218,954			223,559			-2	%
Book-to-Bill		0.98			1.12
Backlog		184,260			165,253			12	%

Electronics’ increases in revenue and earnings over the prior year quarter reflect revenue improvements at all of the Components group businesses. The 11% increase in revenue was attributed to approximately 6% organic growth and 3% from acquisitions with the remainder from foreign exchange.

Components revenue increased 13% while the group’s earnings increased 22% compared to the prior year first quarter. The growth was led by demand for micro acoustic products as well as strength in military markets. Organic revenue growth was approximately 10% for the quarter, with the remainder primarily from the February 2007 acquisition of Pole/Zero by Microwave Products Group. Bookings increased slightly and backlog increased 18%.

Commercial equipment revenue increased 6% while earnings decreased 38% when compared to the prior year first quarter, primarily as a result of unfavorable product mix in both the ATM and chemical dispensing equipment business coupled with reduced gross margins and restructuring charges in the ATM business. Bookings decreased 10%, while backlog decreased 47%.

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Industries

	Three Months Ended March 31,
(in thousands)	2007			2006			% Change
Revenue	$	230,460		$	218,743			5	%
Segment earnings		30,837			27,328			13	%
Operating margin		13.4	%		12.5	%
Bookings		296,526			219,424			35	%
Book-to-Bill		1.29			1.00
Backlog		360,037			234,174			54	%

Industries’ revenue and earnings increases over the prior year first quarter were a result of the continued strength in markets served by the Mobile Equipment group, partially offset by decreases at the Service Equipment group. Operating margin increased 90 basis points primarily due to positive leverage in the refuse and trailer markets.

Mobile Equipment revenue increased 10% over the prior year first quarter, due to strong oil field demand, increased military sales and improved recycling product sales. Earnings increased 22% driven by volume and improved leverage due to productivity gains. Bookings and backlog increased 56% and 66%, respectively.

Continued weakness in the North American automotive service industry impacted the Service Equipment group which had revenue and earnings decreases of 5% and 3%, respectively, compared to the prior year first quarter. Bookings and backlog decreased 3% and 2%, respectively.

Resources

	Three Months Ended March 31,
(in thousands)	2007			2006			% Change
Revenue	$	551,980		$	425,162			30	%
Segment earnings		93,812			82,797			13	%
Operating margin		17.0	%		19.5	%
Bookings		577,533			454,669			27	%
Book-to-Bill		1.05			1.07
Backlog		262,845			196,379			34	%

Resources achieved record revenue, earnings and bookings in the first quarter of 2007. The revenue and earnings increases were primarily driven by the Oil and Gas Equipment group and the August 2006 acquisition of Paladin. Comparable year over year operating margin was impacted by decreased demand in construction markets and integration efforts related to the Paladin acquisition. The segment had organic revenue growth of 9% during the quarter, with the remainder primarily from acquisitions.

Oil and Gas Equipment continued to lead the group’s core business growth with revenue and earnings increases of 20% and 15%, respectively, over the prior year first quarter. Domestic drilling activities continued at a strong pace; however, Canadian gas drilling and production levels have moderated. The group has added capacity in order to meet the high levels of demand. Bookings increased by 18% and backlog increased 50%.

Fluid Solutions revenue increased 9% while earnings increased slightly compared to the prior year first quarter. The group experienced strength in all markets that it serves. However, margins were impacted by transition costs related to a 2006 acquisition and product mix. Bookings increased 10% and backlog increased 33%.

Material Handling revenue and earnings increased 57% and 32%, respectively, when compared to the prior year first quarter. Substantially all of the revenue increase was due to the August 2006 acquisition of Paladin and growth in the heavy winch business. Earnings were negatively impacted by the construction market slowdown, acquisition integration costs and the opening of a new facility in Mexico. Bookings increased 48% while the backlog grew 29%.

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Systems

	Three Months Ended March 31,
(in thousands)	2007			2006			% Change
Revenue	$	205,584		$	181,285			13	%
Segment earnings		26,576			26,972			-1	%
Operating margin		12.9	%		14.9	%
Bookings		235,079			231,036			2	%
Book-to-Bill		1.14			1.27
Backlog		210,850			223,843			-6	%

Systems’ increase in revenue over the prior year first quarter was due to improvements at both groups in the segment with earnings improvements in Packaging Equipment offset by declines at Food Equipment. Margin improved 110 basis points over the prior year fourth quarter.

Food Equipment revenue increased 8% over the prior year first quarter, as the supermarket equipment market continued its strong trend. However, earnings decreased 17% due to higher material and new product introduction costs and the timing of shipments. Bookings increased slightly with book-to-bill at 1.27 while backlog decreased 2%.

Packaging Equipment revenue increased 29% over the prior year first quarter due to increased beverage machinery equipment and package closure systems revenue. Earnings increased 40% and margins increased 180 basis points, with positive leverage primarily coming from the volume increase in beverage machinery equipment. Bookings increased 6%, while the backlog decreased 18%.

Technologies

	Three Months Ended March 31,
(in thousands)	2007			2006			% Change
Revenue	$	358,538		$	294,942			22	%
Segment earnings		29,924			47,712			-37	%
Operating margin		8.3	%		16.2	%
Bookings		361,759			339,124			7	%
Book-to-Bill		1.01			1.15
Backlog		130,062			147,984			-12	%

Technologies’ revenue increase over the prior year first quarter was primarily as a result of acquisitions, as the core companies in both groups experienced market softness. In addition, initial purchase accounting expenses related to the Markem acquisition in December 2006 contributed to the operating margin decline.

Automation and Measurement revenue and earnings decreased 16% and 44%, respectively, when compared to the prior year first quarter. The group was impacted by softness in the semi-conductor equipment market, relative to the unusually strong first quarter of 2006. Bookings and backlog decreased 33% and 40%, respectively.

Product Identification (“PI”) revenue increased 80% while earnings increased 37% over the prior year first quarter. The revenue increases were substantially a result of the December 2006 Markem and May 2006 O’Neil acquisitions. Excluding the acquisitions, earnings decreased due to additional costs related to a major software implementation project, as well as integration efforts and new product release costs related to the O’Neil acquisition. Bookings increased 76% and backlog increased 56% over the prior year first quarter.

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Critical Accounting Policies

The Company’s consolidated financial statements and related public financial information are based on the application of generally accepted accounting principles in the United States of America (“GAAP”). GAAP requires the use of estimates, assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenue and expense amounts reported. These estimates can also affect supplemental information contained in the public disclosures of the Company, including information regarding contingencies, risk and its financial condition. The Company believes its use of estimates and underlying accounting assumptions conform to GAAP and are consistently applied. Valuations based on estimates are reviewed for reasonableness on a consistent basis throughout the Company.

Recent Accounting Standards

See Note 13 – Recent Accounting Standards

Special Notes Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q, particularly “Management’s Discussion and Analysis,” contains forward-looking statements within the meaning of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Such statements relate to, among other things, income, earnings, cash flows, changes in operations, operating improvements, industries in which Dover Companies operate and the U.S. and global economies. Statements in this 10-Q that are not historical are hereby identified as “forward-looking statements” and may be indicated by words or phrases such as “anticipates,” “supports,” “plans,” “projects,” “expects,” “believes,” “should,” “would,” “could,” “hope,” “forecast,” “management is of the opinion,” use of the future tense and similar words or phrases. Forward-looking statements are subject to inherent uncertainties and risks, including among others: increasing price and product/service competition by foreign and domestic competitors including new entrants; the impact of technological developments and changes on Dover companies, particularly companies in the Electronics and Technologies segments; the ability to continue to introduce competitive new products and services on a timely, cost-effective basis; changes in the cost or availability of energy or raw materials, changes in customer demand; the extent to which Dover companies are successful in expanding into new geographic markets, particularly outside of North America; the relative mix of products and services which impacts margins and operating efficiencies; short-term capacity restraints; the achievement of lower costs and expenses; domestic and foreign governmental and public policy changes including environmental regulations and tax policies (including domestic and foreign export subsidy programs, R&E credits and other similar programs); unforeseen developments in contingencies such as litigation; protection and validity of patent and other intellectual property rights; the success of the Company’s acquisition program; the cyclical nature of some of Dover’s companies; the impact of natural disasters, such as hurricanes, and their effect on global energy markets; and continued events in the Middle East and possible future terrorist threats and their effect on the worldwide economy. In addition, such statements could be affected by general industry and market conditions and growth rates, and general domestic and international economic conditions including interest rate and currency exchange rate fluctuations. In light of these risks and uncertainties, actual events and results may vary significantly from those included in or contemplated or implied by such statements. 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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Non-GAAP Information

In an effort to provide investors with additional information regarding the Company’s results as determined by generally accepted accounting principles (GAAP), the Company also discloses non-GAAP information which management believes provides useful information to investors. Free cash flow, net debt, total capitalization, adjusted working capital, average annual adjusted working capital, revenues 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, revenue and working capital as determined in accordance with GAAP, and they may not be comparable to similarly titled measures reported by other companies. Management believes the (1) net debt to total capitalization ratio and (2) free cash flow are important measures of operating performance and liquidity. Net debt to total capitalization is helpful in evaluating the Company’s capital structure and the amount of leverage it employs. Free cash flow provides both management and investors a measurement of cash generated from operations that is available to fund acquisitions, pay dividends, repay debt and repurchase the Company’s common stock. Reconciliations of free cash flow, total debt and net debt can be found in Part (1) of Item 2-Management’s Discussion and Analysis. Management believes that reporting adjusted working capital (also sometimes called “working capital”), which is calculated as accounts receivable, plus inventory, less accounts payable, provides a meaningful measure of the Company’s operational results by showing the changes caused solely by revenue. Management believes that reporting adjusted working capital and revenues at constant currency, which excludes the positive or negative impact of fluctuations in foreign currency exchange rates, provides a meaningful measure of the Company’s operational changes, given the global nature of Dover’s businesses. Management believes that reporting organic revenue growth, which excludes the impact of foreign currency exchange rates and the impact of acquisitions, provides a useful comparison of the Company’s revenue performance and trends between periods.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There has been no significant change in the Company’s exposure to market risk during the first three months of 2007. For a discussion of the Company’s exposure to market risk, refer to Item 7A, Quantitative and Qualitative Disclosures about Market Risk, contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006.

Item 4.Controls and Procedures

At the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(e). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective as of March 31, 2007.

During the first quarter of 2007, there were no changes in the Company’s internal control over financial reporting that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. In making its assessment of changes in internal control over financial reporting as of March 31, 2007, management has excluded those companies acquired in purchase business combinations during the twelve months ended March 31, 2007. The Company is currently assessing the control environments of these acquisitions. These companies are wholly-owned by the Company and their total revenue for the three month period ended March 31, 2007 represents approximately 10% of the Company’s consolidated revenue for the same period. Their assets represent approximately 19% of the Company’s consolidated assets at March 31, 2007.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings

See Part I, Notes to Condensed Consolidated Financial Statements, Note 9.

Item 1A. Risk Factors

There have been no material changes with respect to risk factors as previously disclosed in Dover’s Annual Report on Form 10-K for its fiscal year ended December 31, 2006.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) Not applicable.
(b) Not applicable.
(c) The table below presents shares of the Company’s stock which were acquired by the Company during the quarter:

							Maximum Number (or
						Total Number of	Approximate Dollar
	Total					Shares Purchased as	Value) of Shares that
	Number of					Part of Publicly	May Yet Be Purchased
	Shares			Average Price		Announced Plans or	under the Plans or
Period	Purchased			Paid per Share		Programs	Programs
January 1 to January 31, 2007		10,475	(1)	$	48.20	Not applicable	Not applicable
February 1 to February 28, 2007		281,626	(2)		48.23	Not applicable	Not applicable
March 1 to March 31, 2007		250,000	(3)		47.93	Not applicable	Not applicable
For the First Quarter 2007		542,101			48.09	Not applicable	Not applicable

(1)	All of these shares were acquired by the Company from the holders of its employee stock options when they tendered shares as full or partial payment of the exercise price of such options. These shares are applied against the exercise price at the market price on the date of exercise.
(2)	31,626 of these shares were acquired by the Company from the holders of its employee stock options as described in note (1) above. The remainder of the shares were purchased in open-market transactions.
(3)	These shares were purchased in open-market transactions.

Item 3. Defaults Upon Senior Securities

Not applicable.

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Item 4. Submission of Matters to a Vote of Security Holders

There were no matters submitted to a vote of security holders during the quarter ended March 31, 2007. At the Annual Meeting of Stockholders of Dover Corporation held on April 17, 2007, the following matters set forth in the Company’s Proxy statement dated March 6, 2007, which was filed with the Securities and Exchange Commission pursuant to Regulation 14A under the Securities Exchange Act of 1934, were voted upon with the results indicated below.

1. The nominees listed below were elected directors for a one-year term ending at the 2008 Annual Meeting with the respective votes set forth opposite their names:

Name	For		Withheld
David H. Benson		170,174,207		6,217,266
Robert W. Cremin		173,622,711		2,768,762
Jean-Pierre M. Ergas		170,146,750		6,244,723
Kristiane C. Graham		173,685,036		2,706,437
Ronald L. Hoffman		170,502,573		5,888,900
James L. Koley		170,024,326		6,367,147
Richard K. Lochridge		173,372,598		3,018,875
Thomas L. Reece		170,153,370		6,238,103
Bernard G. Rethore		169,787,207		6,604,266
Michael B. Stubbs		157,465,018		18,926,455
Mary A. Winston		170,158,261		6,233,212

2. A shareholder proposal regarding a sustainability report:

	Votes		% of Outstanding Shares		% of Votes Cast
FOR		46,750,517		22.83		26.50
AGAINST		88,526,035		43.23		50.19
ABSTAIN		21,816,774		10.65		12.37
BROKER NON-VOTE		19,298,148		9.42		10.94

Item 5. Other Information

(a) None.
(b) None.

Item 6. Exhibits

31.1	Certificate pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, signed and dated by Robert G. Kuhbach.
31.2	Certificate pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, signed and dated by Ronald L. Hoffman.
32	Certificate pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed and dated by Ronald L. Hoffman and Robert G. Kuhbach.

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Signatures

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report on Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized.

	DOVER CORPORATION
Date: April 25, 2007	/s/ Robert G. KuhbachRobert G. Kuhbach, Vice President, Finance & Chief Financial Officer (Principal Financial Officer)
Date: April 25, 2007	/s/ Raymond T. McKay, Jr.
	Raymond T. McKay, Jr., Vice President, Controller
	(Principal Accounting Officer)

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EXHIBIT INDEX

31.1	Certificate pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, signed and dated by Robert G. Kuhbach.
31.2	Certificate pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 as amended, signed and dated by Ronald L. Hoffman.
32	Certificate pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed and dated by Ronald L. Hoffman and Robert G. Kuhbach.

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