Delaware
(State of Incorporation) |
53-0257888
(I.R.S. Employer Identification No.) |
Title of Each Class
|
Name of Each Exchange on Which Registered
|
|||
Common Stock, par value $1 | New York Stock Exchange |
Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o |
1
2
16
Item 1.
Business
Material handling equipment such as industrial and recreational
winches, utility, construction and demolition machinery
attachments, hydraulic parts, industrial automation tools,
four-wheel-drive (4WD) and all-wheel drive
(AWD) power train systems, accessories for off-road
vehicles and operator cabs and rollover structures.
Mobile equipment related products, primarily refuse truck
bodies, tank trailers, compactors, balers, vehicle service lifts
and collision equipment, car wash systems, internal engine
components, fluid control assemblies and various aerospace
components.
Engineered products such as refrigeration systems, refrigeration
display cases, walk-in coolers, foodservice equipment,
commercial kitchen air and ventilation systems, heat transfer
equipment, and food and beverage packaging machines.
Product identification related products such as industrial
marking and coding systems used to code information (i.e. dates
and serial numbers) on consumer products, printing products for
cartons used in warehouse logistics operations, bar code
printers and portable printers.
Energy market production and distribution products such as
sucker rods, drill bit inserts for oil and gas exploration, gas
well production control devices, control valves, piston and seal
rings, control instrumentation, remote data collection and
transfer devices, and components for compressors, turbo
machinery, motors and generators.
Fluid solution products including nozzles, swivels and
breakaways used to deliver various types of fuel, suction system
equipment, unattended fuel management systems, integrated tank
monitoring, pumps used in fluid transfer applications, quick
disconnect couplings used in a wide variety of biomedical and
commercial applications, and chemical proportioning and
dispensing systems.
Electronic technology equipment and devices/components such as
advanced micro-component products for the hearing aid and
consumer electronics industries, high frequency capacitors,
microwave electromagnetic
3
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switches, radio frequency and microwave filters, electromagnetic
products, frequency control/select components and sophisticated
automated assembly and testing equipment.
4
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5
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Item 1A.
Risk
Factors
10
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The
Companys results for 2010 may continue to be impacted
by current domestic and international economic conditions and
uncertainties.
Increasing
price and product/service competition by international and
domestic competitors, including new entrants and the ability of
the Company to introduce new and competitive products could
cause the Companys businesses to generate lower revenue,
operating profits and cash flows.
Some
of Dovers companies may not anticipate, adapt to, or
capitalize on technological developments and are subject to the
cyclical nature of their industries. These factors could cause
these companies to become less competitive and lead to reduced
market share, revenue, operating profits and cash
flows.
Our companies could lose customers or generate lower
revenue, operating profits and cash flows if there are
significant increases in the cost of raw materials (including
energy) or if they are unable to obtain raw materials.
11
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The Companys growth strategy with respect to
expansion into new geographic markets could be adversely
affected if Dovers companies are unable to manage the
associated risks, particularly in markets outside the
U.S.
The Companys exposure to exchange rate fluctuations
on cross border transactions and the translation of local
currency results into U.S. dollars could negatively impact
the Companys results of operations.
The Companys operating profits and cash flows could
be adversely affected if the Company cannot achieve projected
savings and synergies.
Failure to attract, retain and develop personnel or to
provide adequate succession plans for key management could have
an adverse affect on the Companys operating
results.
The Companys businesses and their profitability and
reputation could be adversely affected by domestic and foreign
governmental and public policy changes (including environmental
and employment regulations and tax policies such as export
subsidy programs, research and experimentation credits, carbon
emission regulations, and other similar programs), risks
associated with emerging markets, changes in statutory tax rates
and unanticipated outcomes with respect to tax audits.
12
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Unforeseen developments in contingencies such as
litigation could adversely affect the Companys financial
condition.
The Companys revenue, operating profits and cash
flows could be adversely affected if Dovers companies are
unable to protect or obtain patent and other intellectual
property rights.
The Companys growth and results of operations may be
adversely affected if the Company is unsuccessful in its capital
allocation and acquisition program or is unable to divest
non-core assets and businesses as planned.
The Companys borrowing costs are impacted by its
credit ratings developed by various rating agencies.
Item 1B.
Unresolved
Staff Comments
13
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Item 2.
Properties
Number and Nature of Facilities
Square Footage (000s)
Mfg.
Warehouse
Sales/ Service
Owned
Leased
64
10
18
4,547
2,227
42
31
99
2,674
2,189
72
12
36
2,730
1,162
44
7
35
1,252
1,335
Locations
Leased Facilities
North
Expiration Dates (Years)
America
Europe
Asia
Other
Minimum
Maximum
54
12
7
4
1
5
52
53
45
7
1
9
82
12
4
3
1
15
34
16
29
1
1
11
Item 3.
Legal
Proceedings
Item 4.
Submission
of Matters to a Vote of Security Holders
14
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56
Chief Executive Officer and Director (since December 2008),
President (since June 2008) and Chief Operating Officer (from
June 2008 December 2008) of Dover; prior thereto
Vice President of Dover and President and Chief Executive
Officer of Dover Engineered Systems, Inc. (from July 2007 to May
2008); prior thereto Vice President of Dover and President and
Chief Executive Officer of Dover Electronics, Inc. (from October
1, 2004).
51
Vice President, Finance (since June 2009) and Chief Financial
Officer (since August 2009); prior thereto Vice President and
Controller, Trane, Inc. (August 2005 June 2008);
prior thereto Chief Financial Officer, Bath and Kitchen
division, American Standard Companies Inc. (since June 2003).
44
Vice President of Dover (since February 2008) and President
(since April 2009) and Chief Executive Officer of Dover
Industrial Products, Inc. (since July 2009); prior thereto
President of Material Handling Platform (since October 2007);
prior thereto President of Warn Industries, Inc. (from July
2005); prior thereto Chief Operating Officer of Warn Industries,
Inc. (from 2000 to July 2005).
46
Treasurer and Director of Investor Relations of Dover (since
February 2006); prior thereto Assistant Treasurer of Dover (from
July 2002).
59
Vice President of Dover and President and Chief Executive
Officer of Dover Engineered Systems, Inc. (since August 2008);
prior thereto President and Chief Executive Officer of Hill
Phoenix, Inc. (from February 2005).
49
Vice President, Human Resources (since January 2009); prior
thereto Executive Vice President Business Excellence
of AES Corporation (from May 2005); prior thereto Vice President
and Chief Human Resources Officer of AES Corporation (from May
2003).
56
Vice President of Dover (since February 2004), Controller of
Dover (since November 2002).
57
Vice President, Supply Chain and Global Sourcing (since April
2009); prior thereto Chief Financial Officer of Dover Fluid
Management, Inc. (since July 2007); prior thereto Vice President
and Chief Financial Officer of Dover Diversified, Inc. (since
November 2005); prior thereto Executive Vice President of
Knowles Electronics, Inc. (since September 2003).
63
Vice President, General Counsel and Secretary of Dover (since
January 2003).
51
Vice President, Corporate Development of Dover (since January
2009); prior thereto Vice President, Business Development of
Dover (from April 2008); prior thereto investment banker with
Citigroup Global Markets.
15
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44
Vice President of Dover (since January 2008); Executive Vice
President of Dover Fluid Management (since January 2010);
President of Fluid Solutions Platform (since January 2008);
prior thereto President of Gas Equipment Group (from May 2006);
prior thereto President of RPA Process Technologies (from March
2004); prior thereto Vice President of Dorr-Oliver Eimco
(supplier of solid/liquid separation equipment and wholly-owned
subsidiary of GLV Inc.) (from November 2002 through February
2004).
51
Vice President of Dover and President and Chief Executive
Officer of Dover Fluid Management, Inc. (since July 2007); prior
thereto Vice President of Dover and President and Chief
Executive Officer of Dover Diversified, Inc. (from October 1,
2004).
61
Vice President of Dover and President and Chief Executive
Officer of Dover Electronic Technologies, Inc. (since July
2007); prior thereto Vice President of Dover and President and
Chief Executive Officer of Dover Technologies International,
Inc. (from January 2006); prior thereto President of Dover
Technologies International, Inc. (from July 2005); prior thereto
for more than eight years, President and Chief Executive Officer
of Everett Charles Technologies, Inc.
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Item 5.
Market
for Registrants Common Equity, Related Shareholder Matters
and Issuer Purchases of Equity Securities
2009
2008
Market Prices
Dividends
Market Prices
Dividends
High
Low
Per Share
High
Low
Per Share
$
36.15
$
21.79
$
0.25
$
44.87
$
33.54
$
0.20
36.55
25.83
0.25
54.57
42.22
0.20
39.79
30.30
0.26
51.99
40.74
0.25
43.10
36.52
0.26
40.50
23.39
0.25
$
1.02
$
0.90
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Dover Corporation, S&P 500 Index & Peer Group
Index
*
Total return assumes reinvestment of dividends.
18
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Item 6.
Selected
Financial Data
2009
2008
2007
2006
2005
(In thousands, except per share figures)
$
5,775,689
$
7,568,888
$
7,317,270
$
6,419,528
$
5,234,355
371,894
694,758
669,750
595,680
432,516
$
2.00
$
3.69
$
3.33
$
2.92
$
2.13
(0.08
)
(0.55
)
(0.04
)
(0.17
)
0.38
1.91
3.13
3.28
2.76
2.51
186,136
188,481
201,330
203,773
202,979
$
1.99
$
3.67
$
3.30
$
2.90
$
2.12
(0.08
)
(0.55
)
(0.04
)
(0.16
)
0.38
1.91
3.12
3.26
2.73
2.50
186,736
189,269
202,918
205,497
204,177
$
1.02
$
0.90
$
0.77
$
0.71
$
0.66
$
120,009
$
175,795
$
173,653
$
191,937
$
127,578
258,223
261,154
243,776
195,840
151,788
7,882,403
7,883,238
8,068,407
7,626,657
6,580,492
1,860,884
2,085,673
2,090,652
1,771,040
1,538,335
19
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Item 7.
Managements
Discussion and Analysis of Financial Condition and Results of
Operation
(1)
FINANCIAL
CONDITION
Years Ended December 31,
2009
2008
(In thousands)
$
802,060
$
1,010,416
(257,865
)
(452,994
)
(389,953
)
(560,904
)
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Years Ended December 31,
2009
2008
(In thousands)
$
802,060
$1,010,416
120,009
175,795
$
682,051
$834,621
11.8
%
11.0
%
21
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At December 31,
At December 31,
2009
2008
(In thousands)
$
35,624
$
32,194
192,750
1,825,260
1,860,729
1,860,884
2,085,673
938,174
826,869
922,710
1,258,804
4,083,608
3,792,866
$
5,006,318
$
5,051,670
18.4
%
24.9
%
22
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US Dollars Sold
Expiration From 12/31/09
Less Than 1
Average
Month
2-3 Months
4-6 Months
7-12 Months
Contract Rate
(In thousands)
$
1,796
$
299
$
$
91.495
$
$
3,012
$
$
91.030
$
$
680
$
$
0.670
Put
Call
US Dollar Value
1.420
1.470
$
4,000
Maturities from 3/29/10 12/31/10
Chinese Yuan Value
6.500
6.808
247,000
Maturities from 1/25/10 12/29/10
23
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2009
2008
Short term
Long term
Short term
Long term
P-1
A2
P-1
A2
A-1
A
A-1
A
F1
A
F1
A
Payments Due by Period
Less than 1
More than
Total
Year
1-3 Years
3-5 Years
5 Years
Other(A)
(In thousands)
$
1,860,884
$
35,624
$
436,191
$
190
$
1,388,879
$
1,399,359
105,625
162,500
159,250
971,984
240,127
49,943
75,722
44,116
70,346
29,006
27,399
1,165
442
5,461
1,140
2,022
1,311
988
140,196
15,657
29,920
17,921
76,698
245,563
15,363
230,200
386
386
$
3,920,982
$
251,137
$
707,520
$
223,230
$
2,508,895
$
230,200
(A)
Due to the uncertainty of the potential settlement of future
uncertain tax positions, management is unable to estimate the
timing of the related payments, if any, that will be made
subsequent to 2010. These amounts do not include the potential
indirect benefits resulting from deductions or credits for
payments made to other jurisdictions.
(2)
RESULTS
OF OPERATIONS:
Year Ended December 31,
2009
2008
$ Change
% Change
(In thousands)
$
5,775,689
$
7,568,888
$
(1,793,199
)
(24
)%
3,676,535
4,838,881
(1,162,346
)
(24
)%
2,099,154
2,730,007
(630,853
)
(23
)%
1,511,111
1,700,677
(189,566
)
(11
)%
588,043
1,029,330
(441,287
)
(43
)%
100,375
96,037
4,338
5
%
(3,950
)
(12,726
)
8,776
(69
)%
96,425
83,311
13,114
16
%
491,618
946,019
(454,401
)
(48
)%
119,724
251,261
(131,537
)
(52
)%
$
371,894
$
694,758
$
(322,864
)
(46
)%
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25
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26
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Twelve Months Ended December 31,
2009
2008
% Change
(In thousands)
$
660,353
$
1,136,869
(42
)%
962,177
1,323,422
(27
)%
(738
)
(786
)
$
1,621,792
$
2,459,505
(34
)%
$
139,757
$
299,740
(53
)%
8.6
%
12.2
%
$
32,048
$
32,283
(1
)%
$
587,676
$
1,109,028
(47
)%
901,164
1,177,880
(23
)%
(986
)
(1,134
)
$
1,487,854
$
2,285,774
(35
)%
$
116,658
$
188,591
(38
)%
329,774
387,329
(15
)%
(371
)
(220
)
$
446,061
$
575,700
(23
)%
*
Represents the pre-tax impact on earnings from the depreciation
and amortization of acquisition accounting
write-ups
to
reflect the fair value of inventory, property, plant and
equipment, and intangible assets.
27
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Twelve Months Ended December 31,
2009
2008
% Change
(In thousands)
$
1,059,660
$
1,085,881
(2
)%
802,276
924,469
(13
)%
$
1,861,936
$
2,010,350
(7
)%
$
227,268
$
278,553
(18
)%
12.2
%
13.9
%
$
26,666
$
24,394
9
%
$
1,018,067
$
1,043,873
(2
)%
817,359
920,712
(11
)%
$
1,835,426
$
1,964,585
(7
)%
$
218,520
$
183,821
19
%
74,700
61,195
22
%
$
293,220
$
245,016
20
%
*
Represents the pre-tax impact on earnings from the depreciation
and amortization of acquisition accounting
write-ups
to
reflect the fair value of inventory, property, plant and
equipment, and intangible assets.
28
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Twelve Months Ended December 31,
2009
2008
% Change
(In thousands)
$
624,211
$
935,414
(33
)%
646,849
778,812
(17
)%
(150
)
(180
)
$
1,270,910
$
1,714,046
(26
)%
$
259,269
$
385,317
(33
)%
20.4
%
22.5
%
$
18,389
$
19,550
(6
)%
$
610,045
$
964,517
(37
)%
645,098
771,359
(16
)%
(140
)
(178
)
$
1,255,003
$
1,735,698
(28
)%
$
77,173
$
95,532
(19
)%
60,540
64,471
(6
)%
(2
)
(12
)
$
137,711
$
159,991
(14
)%
*
Represents the pre-tax impact on earnings from the depreciation
and amortization of acquisition accounting
write-ups
to
reflect the fair value of inventory, property, plant and
equipment, and intangible assets.
29
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2009
2008
% Change
(In thousands)
$
1,026,954
$
1,396,131
(26
)%
$
83,694
$
193,641
(57
)%
8.1
%
13.9
%
$
33,203
$
36,481
(9
)%
1,055,282
1,342,382
(21
)%
206,893
175,317
18
%
*
Represents the pre-tax impact on earnings from the depreciation
and amortization of acquisition accounting
write-ups
to
reflect the fair value of inventory, property, plant and
equipment, and intangible assets.
Year Ended December 31,
2008
2007
$ Change
% Change
(In thousands)
$
7,568,888
$
7,317,270
$
251,618
3
%
4,838,881
4,697,768
141,113
3
%
2,730,007
2,619,502
110,505
4
%
1,700,677
1,614,005
86,672
5
%
1,029,330
1,005,497
23,833
2
%
96,037
89,589
6,448
7
%
(12,726
)
3,541
(16,267
)
(459
)%
83,311
93,130
(9,819
)
(11
)%
946,019
912,367
33,652
4
%
251,261
242,617
8,644
4
%
$
694,758
$
669,750
$
25,008
4
%
30
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31
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Twelve Months Ended December 31,
2008
2007
% Change
(In thousands)
$
1,136,869
$
1,145,253
(1
)%
1,323,422
1,262,984
5
%
(786
)
(977
)
$
2,459,505
$
2,407,260
2
%
$
299,740
$
312,486
(4
)%
12.2
%
13.0
%
$
32,283
$
27,830
16
%
$
1,109,028
$
1,141,955
(3
)%
1,177,880
1,364,340
(14
)%
(1,134
)
(1,556
)
$
2,285,774
$
2,504,739
(9
)%
$
188,591
$
213,653
(12
)%
387,329
543,776
(29
)%
(220
)
(195
)
$
575,700
$
757,234
(24
)%
*
Represents the pre-tax impact on earnings from the depreciation
and amortization of acquisition accounting
write-ups
to
reflect the fair value of inventory, property, plant and
equipment, and intangible assets.
32
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Twelve Months Ended December 31,
2008
2007
% Change
(In thousands)
$
1,085,881
$
1,139,478
(5
)%
924,469
912,580
1
%
$
2,010,350
$
2,052,058
(2
)%
$
278,553
$
291,727
(5
)%
13.9
%
14.2
%
$
24,394
$
29,262
(17
)%
$
1,043,873
$
1,116,638
(7
)%
920,712
919,216
0
%
$
1,964,585
$
2,035,854
(4
)%
$
183,821
$
227,523
(19
)%
61,195
68,938
(11
)%
$
245,016
$
296,461
(17
)%
*
Represents the pre-tax impact on earnings from the depreciation
and amortization of acquisition accounting
write-ups
to
reflect the fair value of inventory, property, plant and
equipment, and intangible assets.
33
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Twelve Months Ended December 31,
2008
2007
% Change
(In thousands)
$
935,414
$
775,024
21
%
778,812
707,113
10
%
(180
)
(129
)
$
1,714,046
$
1,482,008
16
%
$
385,317
$
304,576
27
%
22.5
%
20.6
%
$
19,550
$
15,569
26
%
$
964,517
$
785,065
23
%
771,359
716,644
8
%
(178
)
(110
)
$
1,735,698
$
1,501,599
16
%
$
95,532
$
88,245
8
%
64,471
73,713
(13
)%
(12
)
(14
)
$
159,991
$
161,944
(1
)%
*
Represents the pre-tax impact on earnings from the depreciation
and amortization of acquisition accounting
write-ups
to
reflect the fair value of inventory, property, plant and
equipment, and intangible assets.
34
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Twelve Months Ended December 31,
2008
2007
% Change
(In thousands)
$
1,396,131
$
1,390,103
0
%
$
193,641
$
180,337
7
%
13.9
%
13.0
%
$
36,481
$
38,296
(5
)%
1,342,382
1,378,551
(3
)%
175,317
232,704
(25
)%
*
Represents the pre-tax impact on earnings from the depreciation
and amortization of acquisition accounting
write-ups
to
reflect the fair value of inventory, property, plant and
equipment, and intangible assets.
Revenue is recognized when all of the following circumstances
are satisfied: a) persuasive evidence of an arrangement
exists, b) price is fixed or determinable,
c) collectibility is reasonably assured, and
d) delivery has occurred. In revenue transactions where
installation is required, revenue can be recognized when the
installation obligation is not essential to the functionality of
the delivered products. Revenue transactions involving
non-essential installation obligations are those which can
generally be completed in a short period of time at
insignificant cost and the skills required to complete these
installations are not unique to the Company and in many cases
can be provided by third parties or the customers. If the
installation obligation is essential to the functionality of the
delivered product, then revenue recognition is deferred until
installation is complete. In addition, when it is determined
that there are multiple deliverables to a sales arrangement, the
Company will allocate consideration received to the separate
deliverables based on their relative fair values and recognize
revenue based on the appropriate criteria for each deliverable
identified. In a limited number of revenue transactions, other
post shipment obligations such as training and customer
acceptance are required and, accordingly, revenue recognition is
deferred until the customer is obligated to pay, or acceptance
has been confirmed. Service revenue is recognized and earned
when services are performed. Revenues associated with
construction type contracts are recorded using the
percentage-of-completion
method. The Company recognizes contract revenue under percentage
of completion accounting using the cost to cost method measure
of progress. The application of percentage of completion
accounting requires estimates of future revenues and contract
costs over the full term of the contract. The Company updates
project cost estimates on a quarterly basis or more frequently
when changes in circumstances warrant.
35
Table of Contents
Inventory for the majority of the Companys subsidiaries,
including all international subsidiaries, are stated at the
lower of cost, determined on the
first-in,
first-out (FIFO) basis, or market. Other domestic inventory is
stated at cost, determined on the
last-in,
first-out (LIFO) basis, which is less than market value. Under
certain market conditions, estimates and judgments regarding the
valuation of inventory are employed by the Company to properly
value inventory. The Electronic Technologies companies tend to
experience somewhat higher levels of inventory value
fluctuations, particularly given the relatively high rate of
product obsolescence over relatively short periods of time.
Occasionally, the Company will establish restructuring reserves
at an operation, in accordance with appropriate accounting
principles. These reserves, for both severance and exit costs,
require the use of estimates. Though the Company believes that
these estimates accurately reflect the anticipated costs, actual
results may be different than the estimated amounts.
The Company has significant tangible and intangible assets on
its balance sheet that include goodwill and other intangibles
related to acquisitions. The valuation and classification of
these assets and the assignment of useful depreciation and
amortization lives involve significant judgments and the use of
estimates. The testing of these intangibles under established
accounting guidelines for impairment also requires significant
use of judgment and assumptions, particularly as it relates to
the identification of reporting units and the determination of
fair market value. The Companys assets and reporting units
are tested and reviewed for impairment on an annual basis during
the fourth quarter or when indicators of impairment exist, such
as a significant sustained change in the business climate,
during the interim periods. The Company believes that its use of
estimates and assumptions are reasonable and comply with
generally accepted accounting principles. Changes in business
conditions could potentially require adjustments to the
valuations.
The valuation of the Companys pension and other
post-retirement plans requires the use of assumptions and
estimates that are used to develop actuarial valuations of
expenses and assets/liabilities. Inherent in these valuations
are key assumptions, including discount rates, investment
returns, projected salary increases and benefits, and mortality
rates. The actuarial assumptions used in the Companys
pension reporting are reviewed annually and are compared with
external benchmarks to ensure that they accurately account for
the Companys future pension obligations. Changes in
assumptions and future investment returns could potentially have
a material impact on the Companys pension expenses and
related funding requirements. The Companys expected
long-term rate of return on plan assets is reviewed annually
based on actual returns, economic trends and portfolio
allocation. The Companys discount rate assumption is
determined by developing a yield curve based on high quality
corporate bonds with maturities matching the plans
expected benefit payment streams. The plans expected cash
flows are then discounted by the resulting
year-by-year
spot rates.
The Company has significant amounts of deferred tax assets that
are reviewed for recoverability and valued accordingly. These
assets are evaluated by using estimates of future taxable income
streams and the impact of tax planning strategies. Reserves are
also estimated, using a more likely than not criteria, for
ongoing audits regarding federal, state and international issues
that are currently unresolved. The Company routinely monitors
the potential impact of these situations and believes that it is
properly reserved. Valuations related to tax accruals and assets
can be impacted by changes in accounting regulations, changes in
tax codes and rulings, changes in statutory tax rates, and the
Companys future taxable income levels. The provisions for
uncertain tax positions provides a recognition threshold and
measurement attribute for financial statement tax benefits taken
or expected to be taken in a tax return and disclosure
requirements regarding uncertainties in income tax positions.
The tax position is measured at the largest amount of benefit
that is greater than 50 percent likely of being realized
upon ultimate settlement. The Company records interest and
penalties related to unrecognized tax benefits as a component of
provision for income taxes.
The Company has significant accruals and reserves related to the
self-insured portion of its risk management program. These
accruals require the use of estimates and judgment with regard
to risk exposure and ultimate liability. The Company estimates
losses under these programs using actuarial assumptions, the
Companys experience and relevant industry data. The
Company reviews these factors quarterly and considers the
36
Table of Contents
current level of accruals and reserves adequate relative to
current market conditions and Company experience.
The Company has established reserves for environmental and legal
contingencies at both the operating company and corporate
levels. A significant amount of judgment and use of estimates is
required to quantify the Companys ultimate exposure in
these matters. The valuation of reserves for contingencies is
reviewed on a quarterly basis at the operating and corporate
levels to ensure that the Company is properly reserved. Reserve
balances are adjusted to account for changes in circumstances
for ongoing issues and the establishment of additional reserves
for emerging issues. While the Company believes that the current
level of reserves is adequate, future changes in circumstances
could impact these determinations.
The Company from time to time will discontinue certain
operations for various reasons. Estimates are used to adjust, if
necessary, the assets and liabilities of discontinued operations
to their estimated fair market value. These estimates include
assumptions relating to the proceeds anticipated as a result of
the sale. The adjustments to fair market value of these
operations provide the basis for the gain or loss when sold.
Changes in business conditions or the inability to sell an
operation could potentially require future adjustments to these
estimates.
The Company is required to recognize in its consolidated
statements of operations the expense associated with all share
based payment awards made to employees and directors, including
stock options, stock appreciation rights (SARs), restricted
stock and performance share awards. The Company uses the
Black-Scholes valuation model to estimate the fair value of its
SARs, and stock options that are granted to employees. The model
requires management to estimate the expected life of the SAR or
option, expected forfeitures and the volatility of the
Companys stock using historical data. The Company uses the
Monte Carlo simulation model to estimate fair value of
performance share awards which also requires management to
estimate the volatility of its stock and the volatility of
returns on the stock of its peer group as well as the
correlation of the returns between the companies in the peer
group. For additional information related to the assumptions
used, see Note 10 to the Consolidated Financial Statements
in Item 8 of this
Form 10-K.
37
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38
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39
Table of Contents
Item 7A.
Quantitative
and Qualitative Disclosures About Market Risk
A 54 basis point increase or decrease in interest rates
(10% of the Companys weighted average long-term debt
interest rate) would have an immaterial effect on the fair value
of the Companys long-term debt.
Commercial paper borrowings are at variable interest rates, and
have maturities of three months or less. A 25 basis point
increase or decrease in the interest rates (100% of the
Companys weighted average commercial paper interest rate)
on commercial paper borrowings would have an immaterial impact
on the Companys pre-tax earnings.
All highly liquid investments, including highly liquid debt
instruments purchased with an original maturity of three months
or less, are considered cash equivalents. The Company places its
investments in cash equivalents with high credit quality issuers
and limits the amount of exposure to any one issuer. It has been
determined that a 10% fluctuation of the Companys weighted
average interest rate would have an immaterial impact on the
Companys pre-tax earnings.
Short-term investments consist of bank term deposits that have
maturity dates that range from six to nine months. It has been
determined that a 10% fluctuation of the Companys weighted
average interest rate would have an immaterial impact on the
Companys pre-tax earnings.
As of December 31, 2009, the Company had two interest rate
swaps outstanding, as discussed in Note 9 to the
Consolidated Financial Statements. The Company does not enter
into derivative financial or derivative commodity instruments
for trading or speculative purposes.
40
Item 8.
Financial
Statements and Supplementary Data
FINANCIAL STATEMENT SCHEDULE
41
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42
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43
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44
Table of Contents
Years Ended December 31,
2009
2008
2007
(In thousands, except for per share figures)
$
5,775,689
$
7,568,888
$
7,317,270
3,676,535
4,838,881
4,697,768
2,099,154
2,730,007
2,619,502
1,511,111
1,700,677
1,614,005
588,043
1,029,330
1,005,497
100,375
96,037
89,589
(3,950
)
(12,726
)
3,541
96,425
83,311
93,130
491,618
946,019
912,367
119,724
251,261
242,617
371,894
694,758
669,750
(15,456
)
(103,927
)
(8,670
)
$
356,438
$
590,831
$
661,080
$
2.00
$
3.69
$
3.33
(0.08
)
(0.55
)
(0.04
)
1.91
3.13
3.28
186,136
188,481
201,330
$
1.99
$
3.67
$
3.30
(0.08
)
(0.55
)
(0.04
)
1.91
3.12
3.26
186,736
189,269
202,918
$
1.02
$
0.90
$
0.77
Years Ended December 31,
2009
2008
2007
186,136
188,481
201,330
600
788
1,588
186,736
189,269
202,918
9,176
5,103
3,241
45
Table of Contents
At December 31,
At December 31,
2009
2008
(In thousands)
$
714,365
$
547,409
223,809
279,460
878,754
1,013,174
570,858
636,121
64,922
80,268
69,999
73,687
2,522,707
2,630,119
828,922
872,134
3,350,217
3,255,566
950,748
952,409
113,108
103,904
116,701
69,106
$
7,882,403
$
7,883,238
$
35,624
$
224,944
357,004
373,436
210,804
305,572
107,455
104,938
219,295
209,619
38,994
35,005
969,176
1,253,514
1,825,260
1,860,729
292,344
314,405
573,137
582,601
138,878
79,123
247,342
246,615
497,291
455,228
84,842
10,816
5,453,022
5,286,458
(2,198,889
)
(2,206,251
)
4,083,608
3,792,866
$
7,882,403
$
7,883,238
46
Table of Contents
Accumulated
Common
Additional
Other
Total
Comprehensive
Stock
Paid-In
Comprehensive
Retained
Treasury
Stockholders
Earnings
$1 Par Value
Capital
Earnings (Loss)
Earnings
Stock
Equity
(Loss)
(In thousands)
$
242,293
$
241,455
$
48,852
$
4,421,927
$
(1,143,505
)
$
3,811,022
$
676,360
(58,157
)
(58,157
)
661,080
661,080
$
661,080
(154,390
)
(154,390
)
2,241
73,897
76,138
10,319
10,319
26,714
26,714
14
646
660
(596,009
)
(596,009
)
116,933
116,933
116,933
561
561
561
51,302
51,302
51,302
$
244,548
$
353,031
$
217,648
$
4,870,460
$
(1,739,514
)
$
3,946,173
$
829,876
1,960
(5,762
)
(3,802
)
590,831
590,831
$
590,831
(169,071
)
(169,071
)
2,038
68,549
70,587
8,449
8,449
24,367
24,367
29
832
861
(466,737
)
(466,737
)
(146,433
)
(146,433
)
(146,433
)
(1,081
)
(1,081
)
(1,081
)
(61,278
)
(61,278
)
(61,278
)
$
246,615
$
455,228
$
10,816
$
5,286,458
$
(2,206,251
)
$
3,792,866
$
382,039
356,438
356,438
$
356,438
(189,874
)
(189,874
)
712
24,807
25,519
425
425
17,176
17,176
15
617
632
(962
)
7,362
6,400
76,442
76,442
76,442
1,091
1,091
1,091
(3,507
)
(3,507
)
(3,507
)
$
247,342
$
497,291
$
84,842
$
5,453,022
$
(2,198,889
)
$
4,083,608
$
430,464
47
Table of Contents
For the Years Ended December 31,
2009
2008
2007
(In thousands,)
$
356,438
$
590,831
$
661,080
15,456
103,927
8,670
258,223
261,154
243,776
17,912
25,246
26,292
17,260
12,040
6,372
(23,062
)
33,459
(30,010
)
37,221
36,275
49,900
(7,518
)
26,609
(33,081
)
(70,012
)
163,054
36,427
(13,927
)
97,241
27,128
60,662
18,296
882
(16,203
)
(31,306
)
(19,273
)
(9,099
)
(95,647
)
26,161
2,905
23,319
(27,881
)
29,824
(78,954
)
(55,361
)
(22,537
)
802,060
1,010,416
927,693
406,033
(348,439
)
(279,460
)
22,973
13,248
24,195
(120,009
)
(175,795
)
(173,653
)
3,571
92,774
90,966
(221,994
)
(103,761
)
(273,610
)
(257,865
)
(452,994
)
(332,102
)
(192,749
)
(412,723
)
347,192
(33,908
)
(186,390
)
(33,478
)
594,120
3,895
(466,737
)
(596,009
)
26,578
79,897
87,117
(189,874
)
(169,071
)
(154,390
)
(389,953
)
(560,904
)
(345,673
)
(5,967
)
(7,592
)
(46,458
)
(888
)
(1,805
)
(4,251
)
(6,855
)
(9,397
)
(50,709
)
19,569
(45,817
)
34,175
166,956
(58,696
)
233,384
547,409
606,105
372,721
$
714,365
$
547,409
$
606,105
$
115,047
$
212,348
$
275,505
$
116,847
$
120,834
$
112,243
48
Table of Contents
1.
Description
of Business
2.
Acquisitions
Date
Acquired Companies
Location (Near)
Segment
Platform
Company
Asset
Tyler Refrigeration
Niles, MI
Engineered Systems
Engineered Products
Hill PHOENIX
Asset
Mechanical Field Services
Gardendale, TX
Fluid Management
Energy
Cook Compression
Asset
Ala Cart, Inc.
Charlotte, NC
Engineered Systems
Engineered Products
Unified Brands
Asset/Stock
Barker Company
Keosaugua, IA
Engineered Systems
Engineered Products
Hill PHOENIX
Asset
Extech Instruments
Waltham, MA
Engineered Systems
Product Identification
Datamax ONeil
Asset
Inpro/Seal Company
Rock Island, IL
Fluid Management
Energy
Waukesha Bearings
49
Table of Contents
2009
(In thousands)
$
43,757
11,631
93,689
93,936
1,274
244,287
(15,893
)
$
228,394
50
Table of Contents
Average
Fluid
Engineered
Amortization
Management
Systems
Total
Period (Years)
(dollar amounts in thousands)
$
43,882
$
49,807
$
93,689
N/A
3,900
5,000
8,900
15
1,700
1,700
10-15
38,706
39,180
77,886
5-15
4,400
4,400
5-15
1,050
1,050
3-7
$
88,188
$
99,437
$
187,625
Type
Acquired Companies
Location (Near)
Segment
Platform
Company
Stock
LANTEC Winch and Gear, Inc.
Langley, B.C.
Industrial Products
Material Handling
Tulsa Winch
Asset
Bradys Mining & Construction Supply Co.
St. Louis, Missouri
Fluid Management
Energy
EPG
Asset
Neptune Chemical Pump Company
Lansdale, PA
Fluid Management
Fluid Solutions
Pump Solutions Group
Stock
Hiltap Fittings Ltd
Calgary, Alberta
Fluid Management
Fluid Solutions
OPW FTG
Years Ended December 31,
2009
2008
(In thousands, except per share figures)
$
5,775,689
$
7,568,888
$
5,952,091
$
7,954,788
$
371,894
$
694,758
$
379,120
$
708,468
$
2.00
$
3.69
$
2.04
$
3.76
$
1.99
$
3.67
$
2.03
$
3.74
186,136
188,481
186,736
189,269
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3.
Dispositions
At December 31,
At December 31,
2009
2008
(In thousands)
$
73,284
$
32,498
43,417
36,608
$
116,701
$
69,106
$
25,919
$
13,371
112,959
65,752
$
138,878
$
79,123
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Table of Contents
Years Ended Ended December 31,
2009
2008
2007
(In thousands)
$
55,275
$
84,065
$
169,924
$
(11,170
)
$
(101,692
)
$
(4,086
)
(2,062
)
(3,886
)
(14,619
)
(2,224
)
1,651
10,035
$
(15,456
)
$
(103,927
)
$
(8,670
)
(1)
Includes impairments and other adjustments to previously sold
discontinued operations.
During the fourth quarter of 2008, the Company recorded an
additional $21.3 million (after tax) write-down to the
carrying value of Triton, an operating company previously
included in the Engineered Systems segment, to its estimated
fair market value and recorded other gains of $0.6 million
after tax related to previously sold companies.
In addition, during the fourth quarter of 2008, the Company
reached final settlement on certain Federal tax matters related
to businesses previously discontinued and sold, resulting in a
charge of approximately $15.0 million in discontinued
operations. Also, consistent with ASC 740, Income Taxes
(ASC 740), the Company recognized certain state tax
assessments related to previously sold discontinued operations,
resulting in a charge of approximately $13.0 million and
other adjustments totaling a benefit of approximately
$0.8 million, after tax.
During the third quarter of 2008, the Company completed the sale
of a previously discontinued business and recorded other
adjustments, resulting in a net loss of approximately
$0.7 million, after tax.
During the second quarter of 2008, the Company discontinued
Triton and reclassified Crenlo, which had been included in
discontinued operations since the third quarter of 2007, into
the Industrial Products segment. In the second quarter of 2008,
the Company recorded a $51.1 million (after tax) write-down
to the carrying value of Triton to its estimated fair market
value.
During the first quarter of 2008, the Company recorded
adjustments to the carrying value of a business held for sale
and other adjustments resulting in a net after tax loss of
approximately $2.0 million.
During the fourth quarter of 2007, the Company completed the
sale of Graphics Microsystems and recorded other adjustments for
an after-tax gain of $13.3 million.
During the third quarter of 2007, the Company recorded as
discontinued businesses, Crenlo and Graphics Microsystems. In
addition, during the third quarter of 2007, the Company
finalized the sale of two previously discontinued businesses and
recorded other adjustments resulting in a net after-tax loss of
$1.6 million.
During the second quarter of 2007, the Company completed the
sale of a previously discontinued business and recorded other
adjustments for businesses still held for sale, resulting in a
net loss of approximately $5.0 million ($8.3 million
after-tax).
53
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4.
Summary
of Significant Accounting Policies
54
Table of Contents
Fair Value Measurements at December 31, 2009
Fair Value Measurements at December 31, 2008
Level 1
Level 2
Level 3
Level 1
Level 2
Level 3
(In millions)
(In millions)
$
223.8
$
$
$
279.5
$
$
55
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56
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57
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5.
Inventories
At December 31,
At December 31,
2009
2008
(In thousands)
$
291,340
$
319,407
136,726
144,017
191,853
231,507
619,919
694,931
49,061
58,810
$
570,858
$
636,121
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6.
Property,
Plant & Equipment
At December 31,
At December 31,
2009
2008
(In thousands)
$
48,010
$
49,015
555,262
547,223
1,840,638
1,792,615
2,443,910
2,388,853
(1,614,988
)
(1,516,719
)
$
828,922
$
872,134
7.
Goodwill
and Other Intangible Assets
Other
Other
Adjustments
Adjustments
Primarily
Primarily
2008
Currency
2009
Currency
12/31/07
Acquisitions
Translations
12/31/08
Acquisitions
Translations
12/31/09
(In thousands)
$
1,024,857
$
$
(48,151
)
(A)
$
976,706
$
$
2,800
$
979,506
905,497
12,521
1,197
919,215
1,236
920,451
536,163
43,872
(8,814
)
571,221
43,882
2,829
617,932
793,212
(4,788
)
788,424
49,807
(5,903
)
(B)
832,328
$
3,259,729
$
56,393
$
(60,556
)
$
3,255,566
$
93,689
$
962
$
3,350,217
(A)
Includes $38.0 million related to the sale of a line of
business in the Electronic Technologies segment.
(B)
Includes $10.8 million related to purchase accounting
adjustments in the Engineered Systems segment.
2009
2008
(In thousands)
$
3,415,288
$
3,419,451
159,722
159,722
3,255,566
3,259,729
93,689
56,393
11,752
(17,206
)
(43,350
)
(10,790
)
3,509,939
3,415,288
159,722
159,722
$
3,350,217
$
3,255,566
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At December 31, 2009
At December 31, 2008
Gross Carrying
Accumulated
Average
Gross Carrying
Accumulated
Amount
Amortization
Life (Years)
Amount
Amortization
(dollar amounts in thousands)
$
72,790
$
16,492
15
$
32,223
$
12,453
128,041
84,092
16
129,233
79,241
764,865
267,558
10
681,636
200,169
134,822
75,244
5
129,303
61,871
3,396
3,310
5
3,475
3,400
11,922
6,523
11
13,653
5,441
73,230
20,974
11
72,413
17,193
20,344
12,722
5
22,725
10,270
1,209,410
486,915
10
1,084,661
390,038
228,253
257,786
$
1,437,663
$
486,915
$
1,342,447
$
390,038
8.
Accrued
Expenses
At December 31,
At December 31,
2009
2008
(In thousands)
$
47,980
$
44,174
25,411
25,454
13,462
14,356
28,226
28,839
9,622
6,064
9,745
11,570
14,115
16,554
13,203
10,112
57,531
52,496
$
219,295
$
209,619
(A)
Includes other miscellaneous accrued expenses none of which are
considered individually significant.
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Severance
Exit
Total
(In thousands)
$
7,203
$
23,754
$
30,957
53,106
18,996
72,102
(16,074
)
(16,074
)
(53,009
)
(13,828
)
(66,837
)
852
(4,229
)
(3,377
)
$
8,152
$
8,619
$
16,771
(A)
Includes $27.9 million related to purchase accounting
accruals.
(B)
Includes $0.9 million related to purchase accounting accruals.
9.
Lines
of Credit, Debt and Hedging Activities
61
Table of Contents
US Dollars Sold
Expiration From 12/31/09
Less Than 1
Average
Month
2-3 Months
4-6 Months
7-12 Months
Contract Rate
(In thousands)
$
1,796
$
299
$
$
91.495
$
$
3,012
$
$
91.030
$
$
680
$
$
0.670
Put
Call
1.420
1.470
$
4,000
Maturities from 3/29/10 - 12/31/10
6.500
6.808
247,000
Maturities from 1/25/10 - 12/29/10
62
Table of Contents
Weighted
Weighted
Average
Average Effective
Maturities
Interest Rate
Interest Rate
2009
Fair Value
2008
Fair Value
(In thousands)
2010 to 2038
5.57%
5.68%
$
1,361,242
$
1,441,389
$
1,393,505
$
1,509,355
2028 to 2035
5.89%
5.95%
495,234
513,180
495,039
509,150
4,408
N/A
4,379
N/A
1,860,884
1,954,569
1,892,923
2,018,505
35,624
N/A
32,194
N/A
$
1,825,260
$
1,954,569
$
1,860,729
$
2,018,505
*
Includes unamortized discount of $6.2 million and
$7.1 million in 2009 and 2008, respectively.
**
Includes unamortized discount of $4.8 million and
$5.0 million in 2009 and 2008, respectively.
10.
Equity
and Cash Incentive Program
63
Table of Contents
Weighted-Average
Number of
Grant-Date
Shares
Fair Value
75,892
$
35.79
(886
)
35.79
75,006
$
35.79
Q2 2009
Grant
1.30
%
2.93
%
2.7
39.57
%
$
32.47
$
35.79
64
Table of Contents
Q2 2009
Q1 2009
2008
2007
Grant
Grant
Grant
Grant
3.44
%
2.06
%
3.21
%
4.84
%
2.82
%
3.23
%
1.86
%
1.43
%
6.5
6.5
6.5
6.5
32.20
%
30.47
%
26.09
%
28.25
%
$
35.50
$
29.45
$
42.30
$
50.60
$
9.82
$
6.58
$
10.97
$
16.65
65
Table of Contents
SARs
Stock Options
Weighted
Weighted
Average
Average
Weighted
Remaining
Weighted
Remaining
Average
Aggregate
Contractual
Average
Contractual
Exercise
Intrinsic
Term
Exercise
Aggregate
Term
Shares
Price
Value
(Years)
Shares
Price
Intrinsic Value
(Years)
1,715,510
$
46.00
10,777,295
$
35.38
1,731,882
50.60
(206,166
)
48.11
(276,125
)
37.02
$
(2,240,440
)
33.74
$
34,095,507
3,241,226
48.32
2,072,808
8.61
8,260,730
35.77
108,935,136
6,253,310
$
35.06
3,241,226
$
48.32
8,260,730
$
35.77
2,234,942
42.30
(373,193
)
45.90
(139,826
)
36.82
$
(2,040,458
)
34.29
$
15,806,826
5,102,975
45.82
8.23
6,080,446
36.22
35,359,392
4.29
6,080,466
$
36.22
5,102,975
$
45.82
6,080,446
$
36.22
2,825,701
29.51
(320,490
)
38.85
(174,386
)
31.06
$
(713,678
)
34.63
(A)
7,608,186
40.05
7.89
5,192,382
36.62
8,903,120
3.48
Exercisable at December 31, 2009 through:
227,834
$
39.09
$
550,740
41.00
695,451
37.92
952,801
24.57
8,903,120
1,162,736
41.25
1,602,820
38.00
1,477,658
46.00
1,477,658
$
46.00
6.09
5,192,382
$
36.62
8,903,120
3.41
(A)
Cash received by the Company for stock options exercised during
the year ended December 31, 2009 totaled $24.7 million.
66
Table of Contents
SARs Outstanding
SARs Exercisable
Weighted Average
Weighted Average
Weighted Average
Remaining Life
Weighted Average
Remaining Life
Number
Exercise Price
in Years
Number
Exercise Price
in Years
4,907,517
$
45.84
7.22
1,477,658
$
46.00
6.09
2,700,669
$
29.13
9.12
$
Options Outstanding
Options Exercisable
Weighted Average
Weighted Average
Weighted Average
Remaining Life
Weighted Average
Remaining Life
Number
Exercise Price
in Years
Number
Exercise Price
in Years
953,701
$
24.52
3.12
953,701
$
24.52
3.12
2,518,305
$
38.09
3.85
2,518,305
$
38.09
3.85
1,720,376
$
41.17
3.15
1,720,376
$
41.17
2.92
11.
Income
Taxes
For the Years Ended December 31,
2009
2008
2007
(In thousands)
$
258,313
$
527,509
$
543,024
233,305
418,510
369,343
$
491,618
$
946,019
$
912,367
For the Years Ended December 31,
2009
2008
2007
(In thousands)
$
119,724
$
251,261
$
242,617
(425
)
(8,449
)
(10,319
)
$
119,299
$
242,812
$
232,298
67
Table of Contents
For the Year Ended December 31,
2009
2008
2007
(In thousands)
$
71,269
$
124,193
$
180,595
5,191
24,060
14,006
68,065
69,549
78,026
144,525
217,802
272,627
(12,985
)
21,207
(30,066
)
116
301
10,410
(11,932
)
11,951
(10,354
)
(24,801
)
33,459
(30,010
)
$
119,724
$
251,261
$
242,617
For the Years Ended December 31,
2009
2008
2007
35.0
%
35.0
%
35.0
%
1.5
1.7
1.8
(5.2
)
(6.9
)
(6.8
)
(3.7
)
(5.2
)
(5.0
)
(0.4
)
(0.5
)
(0.4
)
(0.9
)
(0.7
)
(1.0
)
1.2
(0.1
)
(0.1
)
(1.1
)
(0.5
)
(0.3
)
(6.9
)
(1.9
)
(1.8
)
1.2
0.5
0.2
24.4
%
26.6
%
26.6
%
68
Table of Contents
At December 31,
2009
2008
(In thousands)
$
9,794
$
10,174
103,800
116,781
73,147
75,115
2,548
4,006
25,593
24,259
106,009
79,880
9,786
7,448
7,947
11,345
13,904
20,784
352,528
349,792
(43,171
)
(55,486
)
$
309,357
$
294,306
$
(9,098
)
$
(9,372
)
(46,831
)
(47,687
)
(475,773
)
(477,966
)
$
(531,702
)
$
(535,025
)
$
(222,345
)
$
(240,719
)
$
69,999
$
73,686
(292,344
)
(314,405
)
69
Table of Contents
Continuing
Discontinued
Total
(In thousands)
$
188,758
$
34,987
$
223,745
24,015
24,015
25,866
22,578
48,444
(19,267
)
(10,906
)
(30,173
)
(2,859
)
(2,859
)
(11,466
)
(11,466
)
205,047
46,659
251,706
46,133
39,480
85,613
5,622
2,741
8,363
(9,497
)
(2,014
)
(11,511
)
(41,869
)
(5,914
)
(47,783
)
(7,074
)
(2,748
)
(9,822
)
$
198,362
(A)
$
78,204
$
276,566
(A)
If recognized, the net amount of potential tax benefits that
would impact the Companys effective tax rate is
$159.9 million. During the years ended December 31,
2009, 2008 and 2007, the Company recorded potential interest and
penalty expense of $5.0 million, $(0.6) million and
$12.9 million, respectively, related to its unrecognized
tax benefits as a component of provision for income taxes. The
Company had accrued interest and penalties of $46.5 million
at December 31, 2009 and $45.9 million at
December 31, 2008.
12.
Commitments
and Contingent Liabilities
70
Table of Contents
Operating
Capital
(In thousands)
$
49,943
$
1,140
42,852
1,123
32,870
899
24,262
742
19,854
569
70,346
988
2009
2008
(In thousands)
$
56,137
$
55,446
34,342
43,153
3,838
102
(34,781
)
(38,420
)
177
(4,144
)
$
59,713
$
56,137
13.
Employee
Benefit Plans
71
Table of Contents
72
Table of Contents
Qualified
Non Qualified
Defined Benefits
Supplemental Benefits
Post-Retirement Benefits
2009
2008
2009
2008
2009
2008
(In thousands)
$
484,891
$
500,915
$
152,695
$
153,538
$
16,470
$
15,874
13,971
13,042
6,188
7,688
314
274
28,936
28,337
8,688
9,434
959
954
1,014
446
172
190
(27,699
)
(31,393
)
(26,828
)
(15,669
)
(1,597
)
(1,998
)
130
130
20,469
6,131
(13,388
)
(7,908
)
538
1,102
7,241
227
997
2,888
(1,657
)
(6,963
)
(445
)
(1,734
)
2,724
(56
)
10,322
(31,405
)
8,797
541,206
484,891
127,355
152,695
15,329
16,470
410,711
506,876
23,992
(76,299
)
50,701
35,400
26,828
15,669
1,425
1,808
1,014
446
172
190
(27,699
)
(31,393
)
(26,828
)
(15,669
)
(1,597
)
(1,998
)
6,361
(6,547
)
1,266
(713
)
7,191
(24,872
)
1,917
467,641
410,711
(73,565
)
(74,180
)
(127,355
)
(152,695
)
(15,329
)
(16,470
)
$
(73,565
)
$
(74,180
)
$
(127,355
)
$
(152,695
)
$
(15,329
)
$
(16,470
)
position consist of:
$
3,339
$
2,293
$
$
$
$
(1,527
)
(792
)
(14,468
)
(33,418
)
(1,189
)
(1,168
)
(75,377
)
(75,681
)
(112,887
)
(119,277
)
(14,140
)
(15,302
)
(73,565
)
(74,180
)
(127,355
)
(152,695
)
(15,329
)
(16,470
)
165,935
141,447
(15,045
)
(1,658
)
(2,881
)
(3,850
)
8,133
9,181
57,363
65,069
(2,671
)
(1,185
)
(198
)
(167
)
(58,426
)
(52,661
)
(14,812
)
(22,194
)
1,885
1,762
loss, net of tax
115,444
97,800
27,506
41,217
(3,667
)
(3,273
)
$
41,879
$
23,620
$
(99,849
)
$
(111,478
)
$
(18,996
)
$
(19,743
)
$
494,690
$
444,633
$
93,956
$
104,645
obligations in excess of plan assets:
$
120,278
$
345,853
$
93,956
$
104,645
127,928
377,122
127,356
152,696
71,003
305,936
73
Table of Contents
Non-Qualified
Qualified Defined Benefits
Supplemental Benefits
Post-Retirement Benefits
2009
2008
2007
2009
2008
2007
2009
2008
2007
(In thousands)
$
(34,612
)
$
(34,341
)
$
(32,760
)
$
$
$
$
$
13,971
13,042
15,215
6,188
7,688
8,156
314
274
358
28,936
28,337
27,482
8,688
9,434
9,146
959
954
1,102
1,292
1,343
1,506
7,706
7,463
7,086
(172
)
(172
)
(172
)
(43
)
(53
)
(237
)
5,216
3,933
10,144
586
(426
)
(478
)
(112
)
(795
)
(1,149
)
2,400
(1
)
$
13,965
$
11,112
$
23,750
$
22,581
$
24,585
$
24,974
$
675
$
578
$
1,176
Non-Qualified
Qualified Defined Benefits
Supplemental Benefits
Post-Retirement Benefits
2009
2008
2009
2008
2009
2008
5.95
%
6.10
%
5.95
%
6.10
%
5.50
%
6.00
%
4.26
%
4.33
%
4.50
%
6.00
%
5.00
%
5.00
%
Non-Qualified
Qualified
Supplemental
Post-Retirement
Defined Benefits
Benefits
Benefits
2009
2008
2007
2009
2008
2007
2009
2008
2007
6.10
%
6.10
%
5.60
%
6.10
%
6.25
%
5.75
%
6.00
%
6.00
%
5.75
%
4.26
%
4.20
%
4.30
%
6.00
%
6.00
%
6.00
%
7.37
%
6.40
%
7.40
%
5.00
%
5.00
%
5.00
%
December
December
Current
2009
2008
Target
39
%
29
%
35
%
21
%
20
%
22
%
34
%
41
%
35
%
6
%
10
%
8
%
100
%
100
%
100
%
74
Table of Contents
As of December 31, 2009
Total Fair
Level 1
Level 2
Level 3
Value
(In thousands)
$
110,729
$
6,948
$
$
117,677
11,073
133,706
144,779
79,464
114,298
193,762
11,423
11,423
$
212,689
$
254,952
$
$
467,641
Qualified
Non-Qualified
Defined
Supplemental
Post-Retirement
Benefits
Benefits
Benefits
(In thousands)
$
31,363
$
14,468
$
1,189
30,838
14,967
1,207
33,102
12,498
1,248
34,193
10,708
1,492
34,383
4,197
1,524
183,661
71,194
5,504
Qualified
Non-Qualified
Defined
Supplemental
Benefit
Benefits
(In thousands)
$
32,434
$
1,000
14,468
75
Table of Contents
Non-Qualified
Qualified
Supplemental
Defined Benefits
Benefits
Post-Retirement
(In thousands)
$
1,288
$
7,707
$
(409
)
(45
)
5,672
(209
)
(396
)
$
6,915
$
7,498
$
(805
)
14.
Segment
Data
76
Table of Contents
77
Table of Contents
2009
2008
2007
$
1,874,242
$
2,069,743
$
2,142,969
1,818,750
1,729,331
1,839,670
1,267,388
1,231,391
1,156,089
1,751,826
1,820,173
2,006,882
1,053,496
963,494
770,040
7,765,702
7,814,132
7,915,650
116,701
69,106
152,757
$
7,882,403
$
7,883,238
$
8,068,407
For the Years Ended December 31,
2009
2008
2007
$
71,453
$
73,516
$
69,739
60,106
61,062
54,580
54,023
49,962
43,700
71,544
75,587
74,720
1,097
1,027
1,037
$
258,223
$
261,154
$
243,776
$
23,750
$
43,194
$
40,842
34,740
33,609
43,207
34,424
61,054
51,197
25,725
37,730
37,946
1,370
208
461
$
120,009
$
175,795
$
173,653
Revenue
Long-Lived Assets
For the Years Ended December 31,
At December 31,
2009
2008
2007
2009
2008
$
3,257,152
$
4,246,792
$
4,110,359
$
543,886
$
576,501
1,078,308
1,544,144
1,489,316
120,362
138,829
463,176
642,673
614,769
36,666
32,072
791,292
968,169
927,685
103,192
108,556
185,761
167,110
175,141
24,816
16,176
$
5,775,689
$
7,568,888
$
7,317,270
$
828,922
$
872,134
78
Table of Contents
15.
Shareholders
Equity
79
Table of Contents
16.
Quarterly
Data (Unaudited)
Continuing Operations
Net Earnings
Per Share -
Per Share -
Per Share -
Per Share -
Revenue
Gross Profit
Earnings
Basic
Diluted
Net Earnings
Basic
Diluted
(In thousands, except per share data)
$
1,379,086
$
482,144
$
61,096
$
0.33
$
0.33
$
53,428
$
0.29
$
0.29
1,390,331
493,310
100,874
0.54
0.54
97,080
0.52
0.52
1,499,611
558,266
107,484
0.58
0.58
106,884
0.57
0.57
1,506,661
565,434
102,440
0.55
0.55
99,046
0.53
0.53
$
5,775,689
$
2,099,154
$
371,894
2.00
1.99
$
356,438
1.91
1.91
$
1,865,486
$
679,545
$
147,930
$
0.77
$
0.77
$
147,176
$
0.76
$
0.76
2,010,978
739,620
186,911
0.99
0.98
135,277
0.72
0.71
1,965,776
704,343
190,335
1.02
1.01
187,651
1.01
1.00
1,726,648
606,499
169,582
0.91
0.91
120,727
0.65
0.65
$
7,568,888
$
2,730,007
$
694,758
3.69
3.67
$
590,831
3.13
3.12
80
Table of Contents
81
Table of Contents
82
Table of Contents
Balance at
|
Acquired by
|
Charged to
|
Balance at
|
|||||||||||||||||||||
Beginning of
|
Purchase or
|
Cost and
|
Accounts
|
End of
|
||||||||||||||||||||
Year | Merger | Expense | Written Off | Other | Year | |||||||||||||||||||
Year Ended December 31, 2009
|
||||||||||||||||||||||||
Allowance for Doubtful Accounts
|
$ | 32,647 | | 17,260 | (10,198 | ) | 2,123 | $ | 41,832 | |||||||||||||||
Year Ended December 31, 2008
|
||||||||||||||||||||||||
Allowance for Doubtful Accounts
|
$ | 32,211 | 40 | 12,040 | (10,650 | ) | (994 | ) | $ | 32,647 | ||||||||||||||
Year Ended December 31, 2007
|
||||||||||||||||||||||||
Allowance for Doubtful Accounts
|
$ | 27,531 | 805 | 6,372 | (4,683 | ) | 2,186 | $ | 32,211 |
Balance at
|
Acquired by
|
Balance at
|
||||||||||||||||||||||
Beginning of
|
Purchase or
|
End of
|
||||||||||||||||||||||
Year | Merger | Additions | Reductions | Other | Year | |||||||||||||||||||
Year Ended December 31, 2009
|
||||||||||||||||||||||||
Deferred Tax Valuation Allowance
|
$ | 55,486 | | 2,875 | (15,190 | ) | | $ | 43,171 | |||||||||||||||
Year Ended December 31, 2008
|
||||||||||||||||||||||||
Deferred Tax Valuation Allowance
|
$ | 64,534 | | 2,818 | (7,554 | ) | (4,312 | ) | $ | 55,486 | ||||||||||||||
Year Ended December 31, 2007
|
||||||||||||||||||||||||
Deferred Tax Valuation Allowance
|
$ | 63,842 | | 7,910 | (11,034 | ) | 3,816 | $ | 64,534 |
Balance at
|
Acquired by
|
Charged to
|
Balance at
|
|||||||||||||||||||||
Beginning of
|
Purchase or
|
Cost and
|
End of
|
|||||||||||||||||||||
Year | Merger | Expense | Reductions | Other | Year | |||||||||||||||||||
Year Ended December 31, 2009
|
||||||||||||||||||||||||
Inventory Reserves
|
$ | 100,471 | | 21,307 | (21,869 | ) | 1,386 | $ | 101,295 | |||||||||||||||
Year Ended December 31, 2008
|
||||||||||||||||||||||||
Inventory Reserves
|
$ | 100,081 | 1,033 | 24,113 | (22,920 | ) | (1,836 | ) | $ | 100,471 | ||||||||||||||
Year Ended December 31, 2007
|
||||||||||||||||||||||||
Inventory Reserves
|
$ | 91,515 | 7,904 | 23,605 | (25,000 | ) | 2,057 | $ | 100,081 |
Balance at
|
Acquired by
|
Charged to
|
Balance at
|
|||||||||||||||||||||
Beginning of
|
Purchase or
|
Cost and
|
End of
|
|||||||||||||||||||||
Year | Merger | Expense | Reductions | Other | Year | |||||||||||||||||||
Year Ended December 31, 2009
|
||||||||||||||||||||||||
LIFO Reserve
|
$ | 58,810 | | | (9,749 | ) | | $ | 49,061 | |||||||||||||||
Year Ended December 31, 2008
|
||||||||||||||||||||||||
LIFO Reserve
|
$ | 51,988 | | 6,822 | | | $ | 58,810 | ||||||||||||||||
Year Ended December 31, 2007
|
||||||||||||||||||||||||
LIFO Reserve
|
$ | 48,248 | | 3,740 | | | $ | 51,988 |
83
Item 9.
Changes
in and Disagreements With Accountants on Accounting and
Financial Disclosure
Item 9A.
Controls
and Procedures
Item 9B.
Other
Information
84
Table of Contents
87
88
Item 10.
Directors
and Executive Officers and Corporate Governance
Item 11.
Executive
Compensation
Item 12.
Security
Ownership of Certain Beneficial Owners and Management and
Related Shareholder Matters
(a)
(b)
(c)
Number of Securities
Remaining Available
Number of Securities
Weighted-Average
for Future Issuance
to be Issued Upon
Exercise Price of
Under Equity
Exercise of
Outstanding
Compensation Plans
Outstanding Options,
Options, Warrants
(Excluding Securities
Warrants and Rights
and Rights
Reflected in Column (a))
12,875,574
$
38.60
10,252,587
12,875,574
$
38.60
10,252,587
85
Table of Contents
Item 13.
Certain
Relationships and Related Transactions and Director
Independence
Item 14.
Principal
Accountant Fees and Services
Item 15.
Exhibits,
Financial Statement Schedules
Schedule II Valuation and Qualifying Accounts
(3
)(i)(a)
Restated Certificate of Incorporation, filed as Exhibit 3.1
to the Companys Quarterly Report on
Form 10-Q
for the Period Ended June 30, 1998 (SEC File
No. 001-04018),
is incorporated by reference.
(3
)(i)(b)
Certificate of Correction to the Restated Certificate of
Incorporation dated as of January 24, 2003, filed as
Exhibit 3(i) to the Companys Current Report on
Form 8-K
filed February 28, 2003 (SEC File
No. 001-04018),
is incorporated by reference.
(3
)(ii)
By-Laws of the Company as amended and restated as of
November 6, 2008, filed as Exhibit 3(ii) to the
Companys Current Report on
Form 8-K
filed November 12, 2008 (SEC File
No. 001-04018),
are incorporated by reference.
(4
.1)
Indenture, dated as of June 8, 1998 between the Company and
The First National Bank Chicago, as Trustee, filed as
Exhibit 4.1 to the Companys Current Report on
Form 8-K
filed June 12, 1998 (SEC File
No. 001-04018),
is incorporated by reference.
86
Table of Contents
(4
.2)
Form of 6.65% Debentures due June 1, 2028
($200,000,000 aggregate principal amount), filed as
Exhibit 4.4 to the Companys Current Report on
Form 8-K
filed June 12, 1998 (SEC File
No. 001-04018),
is incorporated by reference.
(4
.3)
Form of 6.50% Notes due February 15, 2011
($400,000,000 aggregate principal amount), filed as
Exhibit 4.3 to the Companys current report on
Form 8-K
filed February 12, 2001 (SEC File
No. 001-04018),
is incorporated by reference.
(4
.4)
Indenture, dated as of February 8, 2001 between the Company
and BankOne Trust Company, N.A., as trustee, filed as
Exhibit 4.1 to the Companys current report on
Form 8-K
filed February 12, 2001 (SEC File
No. 001-04018),
is incorporated by reference.
(4
.5)
First Supplemental Indenture among the Company, J.P. Morgan
Trust Company, National Association, as original trustee,
and The Bank of New York, as Trustee, filed as Exhibit 4.1
to the Companys Current Report on
Form 8-K
filed October 12, 2005 (SEC File
No. 001-04018)
is incorporated by reference.
(4
.6)
Form of 4.875% Notes due October 15, 2015
($300,000,000 aggregate principal amount), filed as
exhibit 4.2 to the Companys Current Report on
Form 8-K
filed October 12, 2005 (SEC File
No. 001-04018)
is incorporated by reference.
(4
.7)
Form of 5.375% Debentures due October 15, 2035
($300,000,000 aggregate principal amount), filed as
exhibit 4.3 to the Companys Current Report on
Form 8-K
filed October 12, 2005 (SEC File
No. 001-04018)
is incorporated by reference.
(4
.8)
Second Supplemental Indenture between the Company and The Bank
of New York, as trustee, filed as Exhibit 4.1 to the
Companys Current Report on
Form 8-K
filed March 14, 2008 (SEC File
No. 001-040018)
is incorporated by reference.
(4
.9)
Form of Global Note representing the 5.45% Notes due
March 15, 2018 ($350,000,000 aggregate principal amount),
filed as exhibit 4.2 to the Companys Current Report
on
Form 8-K
filed March 14, 2008 (SEC File
No. 001-04018)
is incorporated by reference.
(4
.10)
Form of Global Note representing 6.60% Notes due
March 15, 2038 ($250,000,000) aggregate principal amount)
filed as Exhibit 4.3 to the Companys Current Report
on
Form 8-K
filed March 14, 2008 (SEC File
No. 001-04018)
is incorporated by reference.
The Company agrees to furnish to the Securities and Exchange
Commission upon request, a copy of any instrument with respect
to long-term debt under which the total amount of securities
authorized does not exceed 10 percent of the total
consolidated assets of the Company.
(10
.1)
Employee Savings and Investment Plan, filed as Exhibit 99
to Registration Statement on
Form S-8
(SEC File
No. 33-01419),
is incorporated by reference.*
(10
.2)
Amended and Restated 1996 Non-Employee Directors Stock
Compensation Plan, filed as Exhibit 10.2 to the
Companys Annual Report on
Form 10-K
for the year ended December 31, 2004 (SEC File
No. 001-04018)
is incorporated by reference.
(10
.3)
Executive Officer Annual Incentive Plan, as amended and restated
as of January 1, 2009, filed as Exhibit 10.2 to the
Companys Current Report on Form 8-K filed May 13, 2009
(SEC File No. 001-04018) is incorporated by reference.*
(10
.4)
Executive Change in Control Agreement as amended and restated as
of January 1, 2009, filed as Exhibit 10.4 to the
Companys Annual Report on Form 10-K for the year ended
December 31, 2008 (SEC File No. 001-04018) is incorporated by
reference.*
(10
.5)
1995 Incentive Stock Option Plan and 1995 Cash Performance
Program, as amended as of May 4, 2006 with respect to all
awards then outstanding, filed as Exhibit 10.5 to the
Companys Annual Report on
Form 10-K
for the year ended December 31, 2006 (SEC File
No. 001-04018)
is incorporated by reference.*
(10
.6)
Deferred Compensation Plan, as amended and restated as of
January 1, 2009, filed as Exhibit 10.6 to the
Companys Annual Report on Form 10-K for the year ended
December 31, 2008 (SEC File No. 001-04018) is incorporated by
reference.*
(10
.7)
2005 Equity and Cash Incentive Plan, as amended as of
January 1, 2009, filed as Exhibit 10.1 to the
Companys Current Report on Form 8-K filed May 13, 2009
(SEC File No. 001-04018) is incorporated by reference.*
(10
.8)
Form of award grant letter for SSAR grants made under 2005
Equity and Cash Incentive Plan.*
(10
.9)
Form of award grant letter for cash performance awards made
under the 2005 Equity and Cash Incentive Plan.*
(10
.10)
Form of award grant letter for performance share awards made
under the 2005 Equity and Cash Incentive Plan.*
Table of Contents
(10
.11)
Pension Replacement Plan (formerly the Supplemental Executive
Retirement Plan), as amended and restated as of January 1,
2010.*
(10
.12)
Letter Agreement between Ronald L. Hoffman and the Company,
dated November 28, 2008, filed as Exhibit 99.1 to the
Companys Current Report on
Form 8-K
filed November 26, 2008 as incorporated by reference.*
(10
.13)
Letter Agreement between Robert G. Kuhbach and the Company,
dated November 13, 2009.*
(10
.14)
Five-year Credit Agreement dated as of November 9, 2007 by
and among Dover Corporation, the Lenders listed therein, the
Borrowing Subsidiaries party thereto, JPMorgan Chase Bank, N.A
as Administrative Agent, Deutsche Bank Securities Inc. as
Syndication Agent, and Bank of America, N.A., The Royal Bank of
Scotland plc and Wachovia Bank, National Association as
Documented Agents, filed as Exhibit 99.1 to the
Companys Current Report on
Form 8-K
filed November 14, 2007 (SEC File
No. 001-04018),
is incorporated by reference.
(10
.15)
Form of award grant letter for restricted stock awards made
under the 2005 Equity and Cash Incentive Plan.*
(14
)
Dover Corporation Code of Ethics for Chief Executive Officer and
Senior Financial Officers, filed as Exhibit 14 to the
Companys Annual Report on
Form 10-K
for the year ended December 31, 2003 (SEC File
No. 001-04018),
is incorporated by reference.
(21
)
Subsidiaries of Dover.
(23
)
Consent of Independent Registered Public Accounting Firm.
(24
)
Power of Attorney (included in signature page).
(31
.1)
Certification pursuant to
Rule 13a-14
of the Securities and Exchange Act of 1934, as amended, signed
and dated by Brad M. Cerepak.
(31
.2)
Certification pursuant to
Rule 13a-14
of the Securities and Exchange Act of 1934, as amended, signed
and dated by Robert A. Livingston.
(32
)
Certification pursuant to 18 U.S.C. Section 1350,
signed and dated by Brad M. Cerepak and Robert A. Livingston.
*
Executive compensation plan or arrangement.
(d)
Not applicable.
Table of Contents
By:
Chairman, Board of Directors
February 19, 2010
Chief Executive Officer,
President and Director
(Principal Executive Officer)
February 19, 2010
Vice President, Finance and
Chief Financial Officer
(Principal Financial Officer)
February 19, 2010
Vice President, Controller
(Principal Accounting Officer)
February 19, 2010
Director
February 19, 2010
Director
February 19, 2010
89
Table of Contents
Director
February 19, 2010
Director
February 19, 2010
Director
February 19, 2010
Director
February 19, 2010
Director
February 19, 2010
Director
February 19, 2010
Director
February 19, 2010
Director
February 19, 2010
90
|
||
Employee
|
Vice President | |
|
||
Date
|
||
|
||
|
|
|
|
|
||
Date
|
||
|
||
|
|
||
Employee
|
Vice President | |
|
||
Date
|
Dover 3- year TSR | ||||||
Performance Relative | ||||||
to TSR. of Peer Group | Payout Percentage of | |||||
Companies | Payout Level | Target Grant | ||||
>
75
th
Percentile
|
Maximum | 200 | % | |||
50
th
Percentile
|
Target | 100 | % | |||
35
th
Percentile
|
Threshold | 50 | % | |||
< 35
th
Percentile
|
Below Threshold | 0 | % |
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
Retirement Benefit prior to offsets | ||||||
Determined | ||||||
Under Section | Determined Under | |||||
Employee Group | Termination Date | 4.01(a)(A) | Section 4.01(a)(B) | |||
Actual Participants
on December 31, 2009
and Potential
Participants on
December 31, 2009 who
become an Actual
Participant as the
result of receiving
their fifth Award by
March 1, 2010
|
January 1, 2010 through December 31, 2010 | Appendix A1 | Appendix A1 | |||
|
||||||
Actual Participants
on December 31, 2009
or Potential
Participants on
December 31, 2009 who
become an Actual
Participant as the
result of receiving
their fifth Award by
March 1, 2010
|
January 1, 2011 and later | Appendix A1 | Appendix A2 | |||
|
||||||
All other participants
|
January 1, 2010 and later | N/A | Appendix A2 | |||
Appendix A1 | Appendix A2 | |||||||||
If the Actual | ||||||||||
If the Actual Participant | Participant retires | |||||||||
retires with less than | with 10 or More Years | |||||||||
Actual | 10 Years of Service 1 or | of Service 1 and the | ||||||||
Participants | the Actual Participants | Actual Participants | ||||||||
Age at his/her | Termination Date | Termination Date | ||||||||
Termination | occurred before | occurred after | ||||||||
Date: | January 1, 2003: | December 31, 2002: | ||||||||
Age 55 through
actual Termination
Date
|
100%, reduced by 5/12 of 1% for each month that retirement age precedes age 65 | 100%, reduced by 5/12 of 1% for each month that retirement age precedes age 62 | 100% reduced by 5/9 of 1% for each of the first 60 months and 5/18 of 1% for each of the next 60 months that the retirement age precedes age 65 | |||||||
|
||||||||||
Age 55 through age
45 |
50%, reduced by 1 / 4 of 1% for each month that retirement precedes age 55 | 65%, reduced by 1 / 4 of 1% for each month that retirement precedes age 55 | 50%, actuarially reduced for each month that retirement precedes age 55. The actuarial reduction is determined under Program SI of the Dover Pension Program under the Dover Pension Plan as in effect on the participants benefit commencement date |
Appendix A1 | Appendix A2 | |||||||||
If the Actual | ||||||||||
If the Actual Participant | Participant retires | |||||||||
retires with less than | with 10 or More Years | |||||||||
Actual | 10 Years of Service 1 or | of Service 1 and the | ||||||||
Participants | the Actual Participants | Actual Participants | ||||||||
Age at his/her | Termination Date | Termination Date | ||||||||
Termination | occurred before | occurred after | ||||||||
Date: | January 1, 2003: | December 31, 2002: | ||||||||
Prior to Age 45
|
20%, reduced by 1/12 of 1% for each month that retirement precedes age 45 | 35%, reduced by 1/12 of 1% for each month that retirement precedes age 45 | ||||||||
|
||||||||||
Prior to Age 35
|
10% | 25% |
1 | Additional Years of Service (as described in Section 2.37) shall be disregarded with respect to any Actual Participant who was hired by an Affiliated Company on or after January 1, 2005 and any Actual Participant who became an Employee by reason of his employing entity or business being acquired by the Company or other Affiliated Company on or after January 1, 2005. |
APPENDIX A1 | APPENDIX A2 | ||||||||||
Less than 10 Years of Service (excluding PSC for employees hired after 1/1/05) at Termination Date | More than 10 Years of Service (excluding PSC for employees hired after 1/1/05) at Termination Date | ||||||||||
Age | Age | Age | |||||||||
at Termination | Applicable | at Termination | Applicable | at Termination | Applicable | ||||||
Date | Percentage | Date | Percentage | Date | Percentage | ||||||
65 | 100% | 65 | 100% | 65 | 100% | ||||||
64 | 95% | 64 | 100% | 64 | 93.33% | ||||||
63 | 90% | 63 | 100% | 63 | 86.67% | ||||||
62 | 85% | 62 | 100% | 62 | 80.00% | ||||||
61 | 80% | 61 | 95% | 61 | 73.33% | ||||||
60 | 75% | 60 | 90% | 60 | 66.67% | ||||||
59 | 70% | 59 | 85% | 59 | 63.33% | ||||||
58 | 65% | 58 | 80% | 58 | 60.00% | ||||||
57 | 60% | 57 | 75% | 57 | 56.67% | ||||||
56 | 55% | 56 | 70% | 56 | 53.33% | ||||||
55 | 50% | 55 | 65% | 55 | 50.00% | ||||||
50 | 35% | 50 | 50% | 50 | 31.34% | ||||||
45 | 20% | 45 | 35% | 45 | 20.21% | ||||||
40 | 15% | 40 | 30% | 40 | 13.32% | ||||||
35 | 10% | 35 | 25% | 35 | 8.91% |
|
280 Park Avenue
New York, NY 10017-1216 |
|
|
||
Jay L. Kloosterboer
|
Phone: (212) 849-4514 | |
Vice President, Human Resources
|
Fax: (212) 922-0945 | |
|
Email: jlk@dovercorp.com |
DOVER CORPORATION
|
||||
By: | /s/ Jay L. Kloosterboer | |||
Jay L. Kloosterboer | ||||
Vice President | ||||
Agreed:
|
||||
/s/ Robert G. Kuhbach | ||||
Robert G. Kuhbach | ||||
12/31/2004 Accrued | Post 1/1/2005 | |||||||||||
Benefit Payout Date | SERP Benefit 1 | SERP Benefit | Total | |||||||||
January 1, 2010
|
$ | 1,915,035 | $ | 0 | $ | 1,915,035 | ||||||
July 1, 2010
|
$ | 0 | $ | 2,769,838 | $ | 2,769,838 | ||||||
January 1, 2011
|
$ | 140,622 | $ | 200,105 | $ | 340,727 | ||||||
January 1, 2012
|
$ | 140,622 | $ | 200,105 | $ | 340,727 | ||||||
January 1, 2013
|
$ | 140,622 | $ | 200,105 | $ | 340,727 | ||||||
January 1, 2014
|
$ | 140,622 | $ | 200,105 | $ | 340,727 | ||||||
January 1, 2015
|
$ | 140,622 | $ | 200,105 | $ | 340,727 |
1 | Based on the IRS prescribed 417(e) applicable unisex mortality table and rates for 2010 lump sum distributions |
n | Based on a January 1, 2010 benefit commencement date, the present value of Mr. Kuhbachs SERP benefit of $6,186,852 is $927,531 higher than our May 19, 2009 estimate The reason for the benefit increase is attributable to an increase in the final average earnings, additional credited service through December 1, 2009 and the new 2010 lump sum basis, which is partially offset by an increase in Mr. Kuhbachs Dover Retirement Savings Plan account balance and additional Dover Pension Plan benefits. | |
n | Mr. Kuhbach is a specified employee so the value of his post 1/1/2005 SERP will be subject to a six month delay. In addition, Mr. Kuhbachs post January 1, 2005 SERP will be paid as an automatic 75% partial lump sum with the remaining amount paid in five annual installments since the amount is greater than $500,000. |
n | It is our understanding that Mr. Kuhbach has elected to receive his grandfathered 12/31/2004 accrued SERP benefit as a lump sum. This payment will be subject to the Pension Committee approval. Please note that in the past, the Pension Committee has required that certain specified employees receive their Dover SERP benefit as a partial lump sum (i.e. a 75% lump sum received at retirement with the remaining 25% payable over the following five calendar years) rather than a 100% lump sum. | |
n | Lump sums in 2010 will be based on PPA lump sum interest rates and require a 60% phase-in. Therefore the 2010 lumpsum rates are: |
| 3.31% for the first 5 years (1 st Segment rate) | ||
| 5.05% for the next 15 years (2 nd Segment rate) | ||
| 5.32% for the next 20 years (3 rd Segment rate) |
In addition the mortality table was based on the 2010 Applicable Mortality Table (or AMT). |
A) Value of SERP Benefit based on total SERP accruals at Retirement
|
$ | 6,186,852 | ||
B) Value of December 31, 1993 SERP Benefit
|
$ | 0.00 | ||
|
||||
C) Value of Benefit Subject to Medicare FICA Tax, A minus B
|
$ | 6,186,852 | ||
D) Amount of Medicare FICA tax, 1.45% times C
|
$ | 89,709 |
n | Mr. Kuhbach is eligible to receive credited service under the Dover SERP from his February 1, 1993 hire date. In addition, Mr. Kuhbach receives 5.1667 years of additional SERP service since he was hired as an executive over the age of 39 (i.e. received a long term incentive award within 24 months of hire). | |
n | We have determined Mr. Kuhbachs 2009 base pay as 11/12ths of his January 1, 2009 base pay rate of $610,000. It is our understanding that his SERP is contractually based on this pay rather than his actual 2009 base pay. | |
n | Mr. Kuhbachs gross SERP benefit is offset by the assumed portion of Social Security benefit he will receive attributable to Dover contributions plus the following qualified plan benefits: |
| Dover Pension Plan benefit | ||
| Annuitized value of company contributions from the Dover Retirement Savings Plan |
n | Wachovia provided us with Mr. Kuhbachs September 30, 2009 Dover Retirement Savings Plan information. We have projected Mr. Kuhbachs account balance to December 1, 2009 assuming Mr. Kuhbach receives no additional employer contributions and that his account will earn an annual investment return of 6.50% from September 30, 2009 to December 1, 2009. | |
n | We have based this calculation on the data and historical pay information confirmed by Dover on October 14. | |
n | Lump sum amounts are calculated based on the Prescribed 417(e) mortality table and segment interest rates for 2010. |
cc: |
Jay Kloosterboer Dover Corporation
Doug Wilson Dover Corporation Howard Markman Towers Perrin/New York Catherine Roy Towers Perrin/New York |
|
||
Employee
|
Vice President | |
|
||
|
||
Date
|
2
FOR VALUE RECEIVED,
|
||
|
hereby sells, assigns and transfers unto
|
|
Dated:
|
||||||
|
|
|||||
|
||||||
|
||||||
|
||||||
In presence of | ||||||
|
||||||
3
Company Name | Where Incorporated | |
Domestic
|
||
Attachment Technologies, Inc.
|
Delaware | |
Avborne Accessory Group, Inc.
|
Delaware | |
Barker Sales & Service, Inc.
|
Iowa | |
Barker Speciality Products, LLC
|
Delaware | |
Bayne Machine Works, Inc.
|
South Carolina | |
Belvac Production Machinery, Inc.
|
Virginia | |
Canada Organization & Development LLC
|
Delaware | |
CCI Field Services, Inc.
|
Delaware | |
Chief Automotive Technologies, Inc.
|
Delaware | |
Clove Park Insurance Company
|
New York | |
Colder Products Company
|
Minnesota | |
Cook-MFS, Inc.
|
Delaware | |
CP Formation LLC
|
Delaware | |
CPE Acquisition Co.
|
Delaware | |
CPI Products, Inc.
|
Delaware | |
Crenlo LLC
|
Delaware | |
Datamax-ONeil Corporation
|
Delaware | |
DD1, Inc
|
Delaware | |
DDI Properties, Inc.
|
California | |
DEK U.S.A., Inc.
|
Delaware | |
DEK USA Logistics, Inc.
|
Delaware | |
Delaware Capital Formation, Inc.
|
Delaware | |
Delaware Capital Holdings, Inc.
|
Delaware | |
De-Sta-Co Cylinders, Inc.
|
Delaware | |
De-Sta-Co Manufacturing Tubular Products
|
Delaware | |
DFH Corporation
|
Delaware | |
Dielectric Laboratories, Inc.
|
Delaware | |
Dover Acquisition Corporation
|
Delaware | |
Dover BMCS Acquisition Corp.
|
Delaware | |
Dover Corporation
|
Delaware | |
Dover DEI Services, Inc.
|
Delaware | |
Dover Diversified De, Inc.
|
Delaware | |
Dover Electronic Technologies, Inc.
|
Delaware | |
Dover Engineered Systems, Inc.
|
Delaware | |
Dover Europe, Inc.
|
Delaware | |
Dover Fluid Management, Inc.
|
Delaware | |
Dover Global Holdings, Inc.
|
Delaware | |
Dover Industrial Products, Inc.
|
Delaware | |
Dover Services LLC
|
Delaware | |
Dow-Key Microwave Corporation
|
Delaware |
Company Name
Where Incorporated
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Florida
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Florida
Texas
Texas
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Vermont
Delaware
New Hampshire
Delaware
Delaware
Delaware
Nevada
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
California
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Company Name
Where Incorporated
California
Illinois
Delaware
Delaware
Delaware
Delaware
Delaware
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