Edgar Filing: DOVER Corp

form10q-063011.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT

PURSUANT TO SECTION 13 or 15(d) OF

THE SECURTIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2011

Commission File Number: 1-4018

Dover Corporation

(Exact name of registrant as specified in its charter)

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

3005 Highland Parkway, Suite 200
Downers Grove, Illinois	60515
(Address of principal executive offices)	(Zip Code)

(630) 541-1540

(Registrant’s telephone number)

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

Yes R No £

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes R No £

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

Large accelerated filer R	Accelerated filer £	Non-accelerated filer £	Smaller reporting company£
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes £ No R

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

Dover Corporation

Form 10-Q

Table of Contents

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

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

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

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

DOVER CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(in thousands, except per share figures)

(unaudited)

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

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

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

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

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

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

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

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

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

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

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

See Notes to Condensed Consolidated Financial Statements

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DOVER CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEET

(in thousands)

(unaudited)

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

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

See Notes to Condensed Consolidated Financial Statements

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DOVER CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(in thousands)

(unaudited)

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

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

See Notes to Condensed Consolidated Financial Statements

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DOVER CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(in thousands)

(unaudited)

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

Net earnings	$	444,674		$	277,997

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

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

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

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

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

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

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

See Notes to Condensed Consolidated Financial Statements

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DOVER CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(in thousands, unless otherwise indicated)

1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements, in accordance with Securities and Exchange Commission (“SEC”) rules for interim periods, do not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements and should be read in conjunction with the Dover Corporation (“Dover” or the “Company”) Annual Report on Form 10-K for the year ended December 31, 2010, which provides a more complete understanding of the Company’s accounting policies, financial position, operating results, business properties and other matters. The year-end condensed consolidated balance sheet was derived from audited financial statements. It is the opinion of management that these financial statements reflect all adjustments necessary for a fair statement of the interim results. The results of operations of any interim period are not necessarily indicative of the results of operations for the full year.

2. Acquisitions

The following table details the acquisitions made during the six months ended June 30, 2011.

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

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

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

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

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

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

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

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

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DOVER CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(in thousands, unless otherwise indicated)

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

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

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

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

These pro forma results of operations have been prepared for comparative purposes only, and they do not purport to be indicative of the results of operations that actually would have resulted had the acquisitions occurred on the dates indicated or that may result in the future.

3. Inventories, net

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

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DOVER CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(in thousands, unless otherwise indicated)

4. Property, Plant and Equipment, net

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

5. Financial Instruments

Derivatives

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

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

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

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

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

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

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DOVER CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(in thousands, unless otherwise indicated)

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

Fair Value Measurements

ASC 820, “Fair Value Measurements and Disclosures,” establishes a fair value hierarchy that requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the hierarchy is based on the lowest level of input that is significant to the fair value measurement. ASC 820 establishes three levels of inputs that may be used to measure fair value.

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 inputs include inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of assets or liabilities.

Level 3 inputs are unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

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

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

Short-term investments consist of investment grade time deposits with original maturities between three months and one year and are included in current assets in the Unaudited Condensed Consolidated Balance Sheet. Short-term investments are measured at fair value using quoted market prices. The derivative contracts are measured at fair value using models based on observable market inputs such as foreign currency exchange rates and interest rates; therefore, they are classified within Level 2 of the valuation hierarchy.

In addition to fair value disclosure requirements related to financial instruments carried at fair value, accounting standards require interim disclosures regarding the fair value of all of the Company’s financial instruments.

The estimated fair value of long-term debt at June 30, 2011 and December 31, 2010 was $2,431,461 and $1,961,697, respectively, compared to the carrying value of $2,187,986 and $1,792,811. The carrying value includes the portion that is due and payable in less than one year of $1,748 and $1,925 at June 30, 2011 and December 31, 2010, respectively. The estimated fair value of the long-term debt is based on quoted market prices for similar instruments. The fair value of short-term loans, principally commercial paper at June 30, 2011 and December 31, 2010, approximates carrying value.

The carrying values of cash and cash equivalents, trade receivables, accounts payable, notes payable, and accrued expenses are reasonable estimates of their fair values as of June 30, 2011 and December 31, 2010 due to the short-term nature of these instruments.

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DOVER CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(in thousands, unless otherwise indicated)

6. Goodwill and Other Intangible Assets

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

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

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

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

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

7. Borrowings

Borrowings consist of the following:

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

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DOVER CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(in thousands, unless otherwise indicated)

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

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

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

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

8. Income Taxes

The Company’s provision for income taxes for continuing operations in interim periods is computed by applying its estimated annual effective tax rate against earnings before income tax expense for the period. In addition, non-recurring or discrete items are recorded during the period in which they occur. The effective tax rates for the three and six months ended June 30, 2011 were 20.2% and 21.8% compared to the prior year rates of 29.2% and 30.1%. The effective tax rates for the three and six month periods of 2011 were favorably impacted by net discrete items totaling $30,354, including $22,338 arising in the second quarter principally from U.S. federal tax settlements and $8,016 arising in the first quarter principally from settlements with state taxing authorities. Excluding discrete items, the effective tax rates for the three and six month periods of 2011 were 27.4% and 27.3%, respectively, which are lower than the effective rates in the comparable 2010 periods primarily due to a more favorable mix of non-U.S. earnings in 2011. The Company believes additional uncertain tax positions will be settled within the next 12 months; however, an estimate cannot be made due to the uncertainties associated with the resolution of these matters.

9. Discontinued Operations

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

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

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

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

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

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DOVER CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(in thousands, unless otherwise indicated)

At June 30, 2011 and December 31, 2010, the assets and liabilities of discontinued operations primarily represent residual amounts for deferred tax assets, short and long-term reserves, and contingencies related to businesses previously sold.

Additional detail related to the assets and liabilities of the Company’s discontinued operations is as follows:

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

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

10. Commitments and Contingent Liabilities

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

The Company and certain of its subsidiaries are also parties to a number of other legal proceedings incidental to their businesses. These proceedings primarily involve claims by private parties alleging injury arising out of use of the Company’s products, exposure to hazardous substances, patent infringement, employment matters and commercial disputes. Management and legal counsel, at least quarterly, review the probable outcome of such proceedings, the costs and expenses reasonably expected to be incurred and currently accrued to-date, and the availability and extent of insurance coverage. While it is not possible at this time to predict the outcome of these legal actions, in the opinion of management, based on these reviews, it is unlikely that the disposition of the lawsuits and the other matters mentioned above will have a material adverse effect on the financial position, results of operations, or cash flows of the Company.

Estimated warranty program claims are provided for at the time of sale. Amounts provided for are based on historical costs and adjusted new claims. The changes in the carrying amount of product warranties through June 30, 2011 and 2010 are as follows:

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

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

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DOVER CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(in thousands, unless otherwise indicated)

From time to time, the Company will initiate various restructuring programs at its operating companies and incur severance and other restructuring costs. For the three months ended June 30, 2011, restructuring charges of $1,214 and $881 were recorded in cost of goods and services and selling and administrative expenses, respectively. For the three months ended June 30, 2010, restructuring charges of $197 were recorded in selling and administrative expenses. For the six months ended June 30, 2011, restructuring charges of $1,301 and $2,274 were recorded in cost of goods and services and selling and administrative expenses, respectively. For the six months ended June 30, 2010, restructuring charges of $713 and $1,535 and were recorded in cost of goods and services and selling and administrative expenses, respectively.

The following table details the Company’s severance and other restructuring reserve activity:

	Severance			Exit			Total
At December 31, 2010	$	1,143		$	6,751		$	7,894
Provision		2,722			853			3,575
Payments		(2,444	)		(2,437	)		(4,881	)
Other		19			(394	)		(375	)
At June 30, 2011	$	1,440		$	4,773		$	6,213

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

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

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DOVER CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(in thousands, unless otherwise indicated)

11. Employee Benefit Plans

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

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

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

12. Comprehensive Earnings

Comprehensive earnings were as follows:

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

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DOVER CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(in thousands, unless otherwise indicated)

13. Segment Information

For management reporting and performance evaluation purposes, the Company categorizes its operating companies into four distinct reportable segments. Segment financial information and a reconciliation of segment results to consolidated results follows:

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

14. Recent Accounting Standards

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

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

In October 2009, the FASB issued ASU 2009-14 which eliminates tangible products containing both software and non-software components that operate together to deliver a product’s functionality from the scope of then-current generally accepted accounting principles for software. The Company adopted ASU 2009-14 on a prospective basis, effective January 1, 2011. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

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DOVER CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(in thousands, unless otherwise indicated)

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

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

15. Equity Incentive Program

During the six months ended June 30, 2011, the Company issued stock appreciation rights (“SARs”) covering 1,524,329 shares and 44,751 performance shares. During the six months ended June 30, 2010, the Company issued SARs covering 2,306,440 shares and 68,446 performance shares.

The fair value of each SAR grant was estimated on the date of grant using the Black-Scholes option pricing model. The performance share awards are market condition awards and have been assessed at fair value on the date of grant using the Monte Carlo simulation model. The following assumptions were used in determining the fair value of the SARs and performance shares awarded during the respective periods:

	SARs						Performance Shares
	Six Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
Risk-free interest rate		2.68	%		2.77	%		1.34	%		1.37	%
Dividend yield		1.70	%		2.33	%		1.61	%		2.38	%
Expected life (years)		5.8			6.0			2.9			2.9
Volatility		33.56	%		31.93	%		40.48	%		39.98	%
Grant price	$	66.59		$	42.88			n/a			n/a
Fair value at date of grant	$	20.13		$	11.66		$	91.41		$	57.49

For the three months ended June 30, 2011 and 2010, after-tax stock-based compensation expense totaled $3,988 and $3,862, respectively. For the six months ended June 30, 2011 and 2010, after-tax stock-based compensation expense totaled $9,361 and $8,426, respectively. Stock-based compensation is reported within selling and administrative expenses in the accompanying Unaudited Condensed Consolidated Statement of Operations.

16. Share Repurchases

In May 2007, the Board of Directors authorized the repurchase of up to 10,000,000 shares through May 2012. During the three and six months ended June 30, 2011, the Company repurchased 1,000,000 and 1,450,000 shares of its common stock in the open market. During the six months ended June 30, 2011 the Company also repurchased 79,708 shares from the holders of its employee stock options when they tendered these shares as full or partial payment of the exercise price of such options. Therefore, during the three and six months ended June 30, 2011, a total of 1,079,708 and 1,529,708 shares were repurchased at an average price of $64.06 and $64.31 per share, respectively. Treasury shares increased to 64,415,056 at June 30, 2011 from a balance of 62,885,348 at December 31, 2010.

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DOVER CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(in thousands, unless otherwise indicated)

17. Subsequent Events

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

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

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

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

OVERVIEW AND OUTLOOK

Dover Corporation (“Dover” or the “Company”) is a global manufacturer of innovative components and equipment, specialty systems and support services for a variety of applications in the industrial products, engineered systems, fluid management and electronic technologies markets. Dover discusses its operations at the platform level within the Industrial Products, Engineered Systems and Fluid Management segments, which contain two platforms each. Electronic Technologies’ results are discussed at the segment level.

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

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

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

RESULTS OF OPERATIONS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Severance and Other Restructuring Reserves

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

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SEGMENT RESULTS OF OPERATIONS

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

Industrial Products

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

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

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

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

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

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

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

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

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

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

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

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

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Engineered Systems

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

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

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

	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2011		2010	% Change	2011	2010	% Change
Revenue
Engineered Products	$	406,620