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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549
FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

     
For the quarterly period ended March 31, 2004
  Commission File No. 1-4018

DOVER CORPORATION

(Exact name of registrant as specified in its charter)
     
Delaware
(State of Incorporation)
  53-0257888
(I.R.S. Employer Identification No.)
     
280 Park Avenue, New York, NY
(Address of principal executive offices)
  10017
(Zip Code)

Registrant’s telephone number, including area code: (212) 922-1640

Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

Indicate by checkmark whether the registrant is an accelerated filer (as defined by Rule 12b-2 of the Securities Exchange Act). Yes [X] No [  ]

The number of shares outstanding of the Registrant’s common stock as April 26, 2004 was 203,253,378.

 


TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
CONDENSED CONSOLIDATED BALANCE SHEETS
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND COMPREHENSIVE INCOME
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
MARKET SEGMENT RESULTS
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item 4. CONTROLS AND PROCEDURES
PART II — OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
EXHIBIT INDEX
CERTIFICATION OF CFO
CERTIFICATION OF CEO
906 CERTIFICATION OF CFO AND CEO


Table of Contents

PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS

DOVER CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
(unaudited) (in thousands, except per share figures)

                 
    Three Months Ended March 31,
    2004
  2003
Net sales
  $ 1,242,380     $ 998,373  
Cost of sales
    806,515       650,755  
 
   
 
     
 
 
Gross profit
    435,865       347,618  
Selling and administrative expenses
    303,177       256,178  
 
   
 
     
 
 
Operating profit
    132,688       91,440  
 
   
 
     
 
 
Interest expense, net
    14,680       16,479  
All other (income) expense, net
    313       (620 )
 
   
 
     
 
 
Total
    14,993       15,859  
 
   
 
     
 
 
Earnings from continuing operations, before taxes on income
    117,695       75,581  
Federal and other taxes on income
    33,886       17,892  
 
   
 
     
 
 
Net earnings from continuing operations
    83,809       57,689  
 
   
 
     
 
 
Net (losses) earnings from discontinued operations
    (697 )     1,782  
 
   
 
     
 
 
Net earnings
  $ 83,112     $ 59,471  
 
   
 
     
 
 
Net earnings per common share:
               
Basic
               
- Continuing operations
  $ 0.41     $ 0.28  
- Discontinued operations
          0.01  
 
   
 
     
 
 
- Net earnings
  $ 0.41     $ 0.29  
 
   
 
     
 
 
Diluted
               
- Continuing operations
  $ 0.41     $ 0.28  
- Discontinued operations
          0.01  
 
   
 
     
 
 
- Net earnings
  $ 0.41     $ 0.29  
 
   
 
     
 
 
Weighted average number of common shares outstanding during the period:
               
Basic
    203,088       202,431  
Diluted
    204,763       202,949  

The computations of basic and diluted earnings per share from continuing operations were as follows:

                 
    Three Months Ended March 31,
    2004
  2003
Numerator:
               
Net earnings from continuing
               
operations available to common stockholders
  $ 83,809     $ 57,689  
 
   
 
     
 
 
Denominator:
               
Basic weighted average shares
    203,088       202,431  
Effect of dilutive securities Employee stock options
    1,675       518  
 
   
 
     
 
 
Denominator:
               
Diluted weighted average shares
    204,763       202,949  
 
   
 
     
 
 
Basic earnings per share from continuing operations
  $ 0.41     $ 0.28  
 
   
 
     
 
 
Diluted earnings per share from continuing operations
  $ 0.41     $ 0.28  
 
   
 
     
 
 
Shares excluded from dilutive effect due to exercise price exceeding average market price of Dover’s common stock
    2,777       6,506  
 
   
 
     
 
 
See Notes to Condensed Consolidated Financial Statements

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DOVER CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited) (in thousands)

                 
    March 31, 2004
  December 31, 2003
Assets:
               
Current assets:
               
Cash and equivalents
  $ 422,533     $ 370,379  
Receivables, net of allowance for doubtful accounts
    801,280       747,567  
Inventories, net
    666,938       639,339  
Deferred tax and other current assets
    102,951       92,355  
 
   
 
     
 
 
Total current assets
    1,993,702       1,849,640  
 
   
 
     
 
 
Property, plant and equipment, net
    701,476       717,875  
Goodwill
    1,836,150       1,844,701  
Intangible assets, net of amortization
    341,292       349,328  
Other assets and deferred charges
    212,308       208,069  
Assets of discontinued operations
    172,878       164,139  
 
   
 
     
 
 
Total assets
  $ 5,257,806     $ 5,133,752  
 
   
 
     
 
 
Liabilities:
               
Current liabilities:
               
Short-term debt and commercial paper
  $ 23,842     $ 63,669  
Accounts payable
    300,964       258,890  
Accrued compensation and employee benefits
    133,635       151,414  
Accrued insurance
    76,249       69,509  
Other accrued expenses
    232,148       225,888  
Federal and other taxes on income
    204,693       141,431  
 
   
 
     
 
 
Total current liabilities
    971,531       910,801  
 
   
 
     
 
 
Long-term debt
    1,006,051       1,003,915  
Deferred income taxes
    240,032       233,906  
Other deferrals (principally compensation)
    172,948       168,573  
Liabilities from discontinued operations
    87,445       73,886  
Stockholders’ equity:
               
Total stockholders’ equity
    2,779,799       2,742,671  
 
   
 
     
 
 
Total liabilities and stockholders’ equity
  $ 5,257,806     $ 5,133,752  
 
   
 
     
 
 

DOVER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND COMPREHENSIVE INCOME
(unaudited) (in thousands)

                                                         
                    Accumulated                        
    Common   Additional   Other                   Total    
    Stock   Paid-In   Comprehensive   Retained   Treasury   Stockholders’   Comprehensive
    $1 Par Value
  Capital
  Income (Loss)
  Earnings
  Stock
  Equity
  Income
Balance as of December 31, 2003
  $ 238,304     $ 80,746     $ 119,673     $ 3,342,020     $ (1,038,072 )   $ 2,742,671     $ 451,209  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Net earnings
                      83,112             83,112     $ 83,112  
Dividends paid
                      (30,479 )           (30,479 )      
Common stock issued for options exercised
    333       8,119                         8,452        
Stock acquired during the year
                            (1,466 )     (1,466 )      
Decrease from translation of foreign financial statements
                (22,406 )                 (22,406 )     (22,406 )
Unrealized holding gains (losses)
                (85 )                 (85 )     (85 )
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 
Balance as of March 31, 2004
  $ 238,637     $ 88,865     $ 97,182     $ 3,394,653     $ (1,039,538 )   $ 2,779,799     $ 60,621  
 
   
 
     
 
     
 
     
 
     
 
     
 
     
 
 

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

Dividends paid per share were $.15 and $.135 for the period ending March 31, 2004 and 2003, respectively.

See Notes to Condensed Consolidated Financial Statements

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

                 
    Three Months Ended March 31,
    2004
  2003
Cash flows from operating activities:
               
Net earnings
  $ 83,112     $ 59,471  
 
   
 
     
 
 
Adjustments to reconcile net earnings to net cash from operating activities:
               
Net (earnings) losses from discontinued operations
    697       (1,782 )
Depreciation and amortization
    38,201       36,901  
Changes in current assets and liabilities (excluding effects of acquisitions, dispositions and foreign exchange):
               
Decrease (increase) in accounts receivable
    (62,547 )     (19,744 )
Decrease (increase) in inventories
    (33,171 )     (13,621 )
Decrease (increase) in prepaid expenses & other assets
    (8,884 )     (3,230 )
Increase (decrease) in accounts payable
    46,892       28,069  
Increase (decrease) in accrued expenses
    (1,342 )     (25,747 )
Increase (decrease) in accrued federal and other taxes payable
    63,262       (15,227 )
Net change (increase) decrease in current assets and liabilities
    4,210       (49,500 )
Net change (increase) decrease in non-current assets & liabilities and other
    10,144       5,585  
 
   
 
     
 
 
Total adjustments
    53,252       (8,796 )
 
   
 
     
 
 
Net cash from operating activities
    136,364       50,675  
 
   
 
     
 
 
Cash flows from (used in) investing activities:
               
Additions to property, plant and equipment
    (20,931 )     (19,144 )
Acquisitions (net of cash and cash equivalents acquired)
          (15,196 )
 
   
 
     
 
 
Net cash used in investing activities
    (20,931 )     (34,340 )
 
   
 
     
 
 
Cash flows from (used in) financing activities:
               
Increase (decrease) in debt
    (37,691 )     1,328  
Purchase of treasury stock
    (1,466 )     (699 )
Proceeds from exercise of stock options
    4,363       1,173  
Cash dividends to stockholders
    (30,479 )     (27,339 )
 
   
 
     
 
 
Net cash used in financing activities
    (65,273 )     (25,537 )
 
   
 
     
 
 
Effect of exchange rate changes on cash
    (6,320 )     816  
 
   
 
     
 
 
Cash from (used in) discontinued operations
    8,314       7,401  
 
   
 
     
 
 
Net increase (decrease) in cash & cash equivalents
    52,154       (985 )
Cash & cash equivalents at beginning of period
    370,379       293,824  
 
   
 
     
 
 
Cash & cash equivalents at end of period
  $ 422,533     $ 292,839  
 
   
 
     
 
 

See Notes to Condensed Consolidated Financial Statements

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DOVER CORPORATION
MARKET SEGMENT RESULTS
(unaudited) (in thousands)

                 
    Three Months Ended March 31,
    2004
  2003
SALES
               
Diversified
  $ 293,559     $ 276,170  
Industries
    287,169       241,063  
Resources
    303,711       223,105  
Technologies
    360,110       260,042  
Intramarket eliminations
    (2,169 )     (2,007 )
 
   
 
     
 
 
Net sales
  $ 1,242,380     $ 998,373  
 
   
 
     
 
 
EARNINGS
               
Diversified
  $ 30,862     $ 31,238  
Industries
    32,717       26,362  
Resources
    49,389       32,487  
Technologies
    30,870       10,498  
 
   
 
     
 
 
Subtotal continuing operations
    143,838       100,585  
Corporate expense
    (11,463 )     (8,525 )
Net interest expense
    (14,680 )     (16,479 )
 
   
 
     
 
 
Earnings from continuing operations,
               
before taxes on income
    117,695       75,581  
Federal and other taxes on income
    33,886       17,892  
 
   
 
     
 
 
Net earnings from continuing operations
  $ 83,809     $ 57,689  
 
   
 
     
 
 

See Notes to Condensed Consolidated Financial Statements

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DOVER CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE A — Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and therefore do not include all information and footnotes necessary for a fair presentation of financial position, results of operations, and changes in financial position in conformity with accounting principles generally accepted in the United States of America. It is the opinion of the Company’s management that all adjustments necessary for a fair statement of the interim results presented have been reflected therein. All such adjustments were of a normal recurring nature. The results of operations of any interim period are not necessarily indicative of the results of operations for the fiscal year. Certain amounts in prior years have been reclassified to conform to the current quarter’s presentation.

For a more complete understanding of the Company’s financial position, operating results, business properties and other matters, reference is made to the Company’s Annual Report on Form 10-K which was filed with the Securities and Exchange Commission on February 27, 2004.

NOTE B — Stock-Based Compensation

SFAS No. 123 “Accounting for Stock-Based Compensation,” allows companies to measure compensation cost in connection with employee share option plans using a fair value based method or to continue to use an intrinsic value based method as defined by APB No. 25 “Accounting for Stock Issued to Employees,” which generally does not result in a compensation cost at time of grant. The Company accounts for stock-based compensation under APB 25, and does not recognize stock-based compensation expense upon the grant of its stock options because the option terms are fixed and the exercise price equals the market price of the underlying stock on the grant date.

The following table illustrates the effect on net earnings and basic diluted earnings per share if the Company had recognized compensation expense upon grant of the options, based on the Black-Scholes option pricing model:

                 
    Three Months Ended March 31,
(in thousands, except per share figures)
  2004
  2003
Net earnings, as reported
  $ 83,112     $ 59,471  
Deduct:
               
Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects
    (4,649 )     (4,387 )
 
   
 
     
 
 
Pro forma net earnings
  $ 78,463     $ 55,084  
 
   
 
     
 
 
Earnings per share:
               
Basic-as reported
  $ 0.41     $ 0.29  
 
   
 
     
 
 
Basic-pro forma
    0.39       0.27  
 
   
 
     
 
 
Diluted-as reported
  $ 0.41     $ 0.29  
 
   
 
     
 
 
Diluted-pro forma
    0.38       0.27  
 
   
 
     
 
 

The fair value of each option grant was estimated on the date of grant using a Black-Scholes option-pricing model with the following assumptions:

                 
    Three Months Ended March 31,
    2004
  2003
Risk-free interest rates
    3.71 %     3.87 %
Dividend yield
    1.46 %     1.40 %
Expected life
    8       8  
Volatility
    31.54 %     30.64 %
Weighted average option grant price
  $ 41.25     $ 24.58  
Weighted average fair value of options granted
  $ 14.89     $ 8.90  
 
   
 
     
 
 

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NOTE C — Acquisitions

The Company completed six acquisitions during 2003. The following unaudited pro forma information presents the results of operations of the Company as if the 2003 acquisitions had taken place on January 1, 2003. There were no acquisitions during the first quarter of 2004.

                 
    For the three months ended March 31,
(in thousands except per share figures)
  2004
  2003
Net sales from continuing operations:
               
As reported
  $ 1,242,380     $ 998,373  
Pro forma
          1,050,329  
Net earnings from continuing operations:
               
As reported
  $ 83,809     $ 57,689  
Pro forma
          63,572  
Basic earnings per share from continuing operations:
               
As reported
  $ 0.41     $ 0.28  
Pro forma
          0.31  
Diluted earnings per share from continuing operations:
               
As reported
  $ 0.41     $ 0.28  
Pro forma
          0.31  

These pro forma results of operations have been prepared for comparative purposes only and include certain adjustments, such as additional amortization and depreciation expense as a result of intangibles and fixed assets acquired. They do not purport to be indicative of the results of operations which actually would have resulted had the acquisitions occurred on the date indicated, or which may result in the future.

NOTE D — Inventory

Summary by Components

                 
    March 31,   December 31,
(in thousands)
  2004
  2003
Raw materials
  $ 294,987     $ 288,858  
Work in progress
    184,175       169,134  
Finished goods
    217,945       210,989  
 
   
 
     
 
 
Total
    697,107       668,981  
Less LIFO reserve
    (30,169 )     (29,642 )
 
   
 
     
 
 
Net amount per balance sheet
  $ 666,938     $ 639,339  
 
   
 
     
 
 

NOTE E — Property, Plant and Equipment

Summary by Components

                 
    March 31,   December 31,
(in thousands)
  2004
  2003
Land
  $ 53,209     $ 53,705  
Buildings
    465,162       463,603  
Machinery and equipment
    1,378,701       1,393,098  
Less accumulated depreciation
    (1,195,596 )     (1,192,531 )
 
   
 
     
 
 
Net amount per balance sheet
  $ 701,476     $ 717,875  
 
   
 
     
 
 

The Company changed its method of depreciation for assets acquired on or after January 1, 2004 from an accelerated method to the straight-line method of depreciation. Management’s decision to change was based on the fact that straight-line depreciation has become a better method of matching revenue and expenses over the estimated useful life of capitalized assets given their characteristics and usage patterns. The Company has determined that the design and durability of these assets increasingly does not diminish to any significant degree over time and it is therefore preferable to recognize the related cost uniformly over their estimated useful lives. The effect of the change for the three month period ended March 31, 2004, was immaterial to the financial results of the Company.

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NOTE F — Goodwill

The following table provides the changes in carrying value of goodwill by market segment through the three months ended March 31, 2004:

                                         
(in thousands)
  Diversified
  Industries
  Resources
  Technologies
  Total
Balance as of December 31, 2003
  $ 402,969     $ 376,624     $ 509,881     $ 555,227     $ 1,844,701  
Other (primarily currency translation)
    336       (810 )     (1,035 )     (7,042 )     (8,551 )
 
   
 
     
 
     
 
     
 
     
 
 
Balance as of March 31, 2004
  $ 403,305     $ 375,814     $ 508,846     $ 548,185     $ 1,836,150  
 
   
 
     
 
     
 
     
 
     
 
 

NOTE G — Discontinued Operations

During the first quarter of 2004 Dover disposed of a small SEC business in the Technologies segment resulting in a gain on sale of $6.5 million, net of tax, which was offset by an adjustment to the fair value of two discontinued businesses from the Diversified segment, resulting in a charge of $6.9 million, net of tax. Comparatively, during the first quarter of 2003, Dover divested Wittemann from the Resources segment as well as small product line businesses at both OK International and Vectron International from the Technologies segment, all of which were previously classified as discontinued operations. The 2003 dispositions did not have a material impact on Dover’s financial results. Net earnings from discontinued operations during the first quarter of 2003 were primarily income from operations.

NOTE H — Debt

Dover’s long-term notes with a book value of $1,006.1 million at March 31, 2004, had a fair value of approximately $1,124.0 million at March 31, 2004. The estimated fair value of the Company’s long-term notes is based on quoted market prices for similar issues. As of March 31, 2004, Dover is in compliance with all debt covenants.

During 2003, the Company entered into three $50.0 million interest rate swap agreements terminating on June 1, 2008, for a total notional amount of $150.0 million, designated as fair value hedges of the $150.0 million 6.25% Notes, due on June 1, 2008, to exchange fixed rate interest for variable rate interest. During the first quarter of 2004, the Company terminated one of these interest rate swaps with a notional amount of $50.0 million with no material impact to the Company. The remaining two swaps, and the net interest payments or receipts from these agreements are recorded as adjustments to interest expense. There is no hedge ineffectiveness as of March 31, 2004, and the fair value of the interest rate swaps of $4.7 million was determined through market quotations and is reported in other assets and long-term debt.

Subsequent to the first quarter, the Company entered into one interest rate swap agreement terminating on June 1, 2008, with a total notional amount of $50.0 million designated in a foreign currency to exchange fixed rate interest for variable rate interest. This swap is designated as a fair value hedge of the 6.25% Notes, due June 1, 2008.

NOTE I — 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 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. Management and legal counsel periodically review the probable outcome of such proceedings, the costs and expenses reasonably expected to be incurred, the availability and extent of insurance coverage and established reserves. While it is not possible at this time to predict the outcome of these legal actions, in the opinion of management, based on these reviews, it is remote 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.

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Estimated warranty program claims are provided for at the time of sale. Amounts provided for are based on historical costs and adjusted new claims. A roll forward of the warranty provision through March 31, 2004, is as follows:

         
(in thousands)
Balance at December 31, 2003
  $ 42,124  
Provision for warranties
    6,160  
Settlements made
    (5,545 )
Other adjustments (primarily currency translation)
    (454 )
 
   
 
 
Balance at March 31, 2004
  $ 42,285  
 
   
 
 

NOTE J — Employee Benefit Plans

The following table sets forth the components of the Company’s net periodic expense for the three months ended March 31, 2004 and 2003:

                                 
    Pension Benefits   Post Retirement Benefits
(in thousands)
  2004
  2003
  2004
  2003
Expected return on plan assets
  $ 6,877     $ 5,883     $     $  
Benefits earned during period
    (3,358 )     (2,807 )     (229 )     (88 )
Interest accrued on benefit obligation
    (5,654 )     (4,884 )     (559 )     (398 )
Amortization
                               
Prior service cost
    (1,223 )     (1,016 )     (228 )     6  
Unrecognized actuarial gains (losses)
    (936 )     (186 )     (39 )     11  
Transition
    268       275              
 
   
 
     
 
     
 
     
 
 
Net periodic expense
  $ (4,026 )   $ (2,735 )   $ (1,055 )   $ (469 )
 
   
 
     
 
     
 
     
 
 

The Company anticipates that employer discretionary contributions to defined benefit plan assets during the year ending December 31, 2004, will range between $5.0 million and $15.0 million. As of March 31, 2004, no discretionary contributions have been made.

NOTE K — New Accounting Standards

In January 2004, the Financial Accounting Standards Board (“FASB”) issued FASB Staff Position No. FAS 106-1 (FSP 106-1), “Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, improvement and Modernization Act of 2003.” FSP 106-1 permits employers that sponsor post-retirement benefits plans that provide prescription drug benefits to retirees to make a one-time election to defer accounting for any effects of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the “Act”). The Company has elected to defer accounting for any effect of the Act until the third quarter of 2004 as permitted under the FSP. Therefore, the amounts included in the financial statements related to the Company’s postretirement benefits plans do not reflect the effects of the Act. The effect is not expected to be material to the Company’s results of operations, cash flow or financial position.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(1) MATERIAL CHANGES IN CONSOLIDATED FINANCIAL CONDITION:

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

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

                 
    Three Months Ended March 31,
Cash flows from Operations (in thousands, unaudited)
  2004
  2003
Cash flows provided by operating activities
  $ 136,364     $ 50,675  
Cash flows (used in) investing activities
    (20,931 )     (34,340 )
Cash flows (used in) financing activities
    (65,273 )     (25,537 )
 
   
 
     
 
 

Cash flow provided from operating activities for the first three months of 2004 increased $85.7 million compared to the first three months of 2003. Increases in cash flows from operations were primarily driven by increased net earnings of $26.1 million and tax refunds of $41.7 million. The proceeds from the tax refund will be used for general corporate purposes.

The level of cash used in investing activities for the first three months of 2004 decreased $13.4 million compared to the first three months of 2003, reflecting reduced acquisition activity from the comparable prior year period. There were no acquisition expenditures for the first three months of 2004 compared to $15.2 million in the comparable 2003 period. Capital expenditures made in the first three months of 2004 increased $1.8 million to $20.9 million, compared to $19.1 million in the comparable 2003 period. The Company currently anticipates that any additional acquisitions made during 2004, will be funded from available cash and internally generated funds and, if necessary, through established lines of credit or public debt markets.

Cash used in financing activities through March 31, 2004, increased $39.7 million compared to the first three months of 2003. Net cash used from financing activities during the first three months of 2004 primarily reflected a net $37.7 million decrease of debt and dividend payments of $30.5 million, compared with a prior year net increase in debt of $1.3 million and dividend payments of $27.3 million.

The Company’s cash and cash equivalents increased 14% during the first three months of 2004 to $422.5 million at March 31, 2004, compared to $370.4 million at December 31, 2003. Cash and cash equivalents were invested in highly liquid investment grade debt instruments with a maturity of 90 days or less.

Operational working capital (calculated as accounts receivable, plus inventory, less accounts payable) increased from December 31, 2003, by $39.2 million or 3% to $1,167.3 million, primarily driven by increases in receivables of $53.7 million and increases in inventory of $27.6 million, offset by increases in payables of $42.1 million. Excluding the impact of changes in foreign currency of $9.6 million, working capital would have increased $48.8 million or 4% from December 31, 2003. The increase in accounts receivables and inventory needed to support the Company’s increased sales was partially mitigated by an increase in accounts payable, as the Company continues to focus on working capital management.

In addition to measuring its cash flow generation and usage based upon the operating, investing and financing classifications included in the Consolidated Statement of Cash Flow, the Company also measures free cash flow. Management believes that free cash flow is an important measure of operating performance because it provides both management and investors a measurement of cash generated from operations that is available to fund acquisitions and repay debt. Dover’s free cash flow for the three months ended March 31, 2004, increased significantly as cash generated from operations improved $85.7 million from the comparable 2003 period.

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

                 
    Three Months Ended March 31,
Free Cash Flow (in thousands, unaudited)
  2004
  2003
Cash flow provided by operating activities
  $ 136,364     $ 50,675  
Less: Capital expenditures
    (20,931 )     (19,144 )
Dividends to stockholders
    (30,479 )     (27,339 )
 
   
 
     
 
 
Free cash flow
  $ 84,954     $ 4,192  
 
   
 
     
 
 

The Company utilizes the total debt and net debt to total capitalization calculations to assess its overall financial leverage and believes the calculations are useful to its stakeholders for the same reason. The following table provides a reconciliation of net debt to total capitalization with the GAAP information:

                 
    March 31,   December 31,
Net Debt to Total Capitalization Ratio (in thousands, unaudited)
  2004
  2003
Short-term debt and commercial paper
  $ 23,842     $ 63,669  
Long-term debt
    1,006,051       1,003,915  
Less: Cash, equivalents and marketable securities
    423,420       371,397  
 
   
 
     
 
 
Net debt
    606,473       696,187  
Add: Stockholders’ equity
    2,779,799       2,742,671  
 
   
 
     
 
 
Total capitalization
  $ 3,386,272     $ 3,438,858  
Net debt to total capitalization
    17.9 %     20.2 %
 
   
 
     
 
 

The total debt level of $1,029.9 million as of March 31, 2004, decreased from December 31, 2003, as a result of a decrease of approximately $40 million of short-term commercial paper during the quarter. Net debt as of March 31, 2004, decreased $89.7 million as a result of the decrease in commercial paper and an increase in cash and cash equivalents as a result of increased cash flow from operations. As of March 31, 2004, the Company was in compliance with all debt covenants.

During the first quarter of 2004, the Company terminated one interest rate swap with a notional amount of $50.0 million with no material impact to the Company. Subsequent to the first quarter, the Company entered into one interest rate swap agreement terminating on June 1, 2008, with a total notional amount of $50.0 million designated in a foreign currency to exchange fixed rate interest for variable rate interest. This swap is designated as a fair value hedge of the 6.25% Notes, due June 1, 2008.

(2) MATERIAL CHANGES IN RESULTS OF OPERATIONS:

Three Months Ended March 31, 2004, Compared with Three Months Ended March 31, 2003

Gross Profit

                         
    Three Months Ended March 31,  
(in thousands, unaudited)
  2004
  2003
  % Change
Net sales
  $ 1,242,380     $ 998,373       24 %
Cost of sales
    806,515       650,755       24 %
Gross profit
    435,865       347,618       25 %
Gross profit margin
    35.1 %     34.8 %        

Sales in the first quarter of 2004 increased $244.0 million from the comparable 2003 period, driven by increases of $100.1 million at Technologies, $80.6 million at Resources, $46.1 million at Industries and $17.4 million at Diversified. Sales would have increased 19% to $1,188.5 million if 2003 foreign currency translation rates were applied to 2004 results. Acquisitions completed subsequent to the first quarter of 2003 contributed $57.9 million to consolidated sales during the quarter ended March 31, 2004. Gross profit margin increased slightly from the comparable 2003 period as a result of improved operational efficiencies.

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Operating Profit

                         
    Three Months Ended March 31,
(in thousands, unaudited)
  2004
  2003
  % Change
Selling and administrative expenses
  $ 303,177     $ 256,178       18 %
S&A as a % of sales
    24 %     26 %        
Operating profit
    132,688       91,440       45 %
Operating profit as a % of sales
    10.7 %     9.2 %        

Selling and administrative expenses for the first quarter of 2004 increased $47.0 million from the comparable 2003 period, primarily due to increased business activity, while selling and administrative expenses as a percentage of sales decreased as a result of prior years’ restructuring programs which focused on cost reductions and business efficiencies. Operating profit and operating profit as a percentage of sales increased as a direct result of increased gross profit and a relative improvement in selling and administrative expenses.

Interest and Other (Income) Expense

                         
    Three Months Ended March 31,
(in thousands, unaudited)
  2004
  2003
  % Change
Interest expense, net
  $ 14,680     $ 16,479       -11 %
Other (income) expense
    313       (620 )     150 %

Net interest expense decreased $1.8 million from the comparable 2003 period, primarily as a result of lower effective interest rates on long term notes impacted by interest rate swaps entered into during the third quarter of 2003. Other net expenses for the first quarter of 2004 and the other net income for the comparable 2003 period were insignificant to the financial results of the Company.

The effective tax rate for continuing operations for the first quarter of 2004 was 28.8% compared to last year’s first quarter tax rate of 23.7%. The increase in the 2004 rate is primarily attributable to a decrease in the amounts of anticipated tax benefits from tax credit programs such as those for R&D, an increase in sales not qualifying for tax incentives relating to U.S. export sales and an increase in state income taxes. The prior year low effective tax rates were largely due to the continuing benefit from tax credit programs such as those for R&D combined with the benefit from U.S. export programs, low effective foreign tax rates, and the recognition of certain capital loss benefits.

Net earnings from continuing operations for the first quarter of 2004 were $83.8 million or $.41 per diluted share compared to $57.7 million or $.28 per diluted share from continuing operations in the comparable 2003 period. For the first quarter of 2004, net earnings were $83.1 million or $.41 per diluted share, including $0.7 million in losses from discontinued operations, compared to $59.5 million or $.29 per diluted share in the first quarter of 2003, which included $1.8 million or $.01 per diluted share in earnings from discontinued operations.

Losses from discontinued operations in the first quarter of 2004 were primarily attributable to the sale of a small SEC business in the Technologies segment resulting in a gain on sale of $6.5 million, net of tax, which was offset by an adjustment to the fair value of two discontinued businesses from the Diversified segment, resulting in a charge of $6.9 million, net of tax. Comparatively, earnings from discontinued operations during the first quarter of 2003 was primarily attributable to operations earnings.

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Diversified

                         
    Three Months Ended March 31,
(in thousands, unaudited)
  2004
  2003
  % Change
Net sales
  $ 293,559     $ 276,170       6 %
Earnings
    30,862       31,238       -1 %
Operating margins
    10.5 %     11.3 %        
Bookings
    349,479       278,884       25 %
Book-to-Bill
    1.19       1.01          
Backlog
    391,838       334,701       17 %

Diversified’s first quarter earnings were essentially flat compared to the prior year, as favorable year-over-year earnings posted by 7 of 11 operating companies were offset by a sizable unfavorable comparison at Belvac, which shipped two large can lines in the first quarter of 2003 that produced nearly half of the company’s annual earnings. Overall, the Diversified companies are beginning to see business conditions improve, evidenced by increased bookings at 10 of 11 operating companies. Crenlo achieved the largest incremental year-over-year earnings improvement as cost cutting initiatives and productivity improvements provided positive leverage on increased construction and agriculture equipment sales volume. SWEP reported a record quarter, benefiting from increased compact brazed heat exchanger volume and improved productivity. Bookings remain on a positive trend at SWEP, and the company is now focused on maintaining on-time delivery during this period of increased demand. Sargent’s earnings were the highest in 10 quarters, fueled by robust military business and improving commercial aerospace markets. PMI’s automotive and performance sports markets showed signs of improvement, and increased volume combined with productivity gains led to increased earnings. Hill Phoenix was again the largest contributor to Diversified’s earnings although its results fell short of its strong first quarter performance in 2003. Hill Phoenix was hindered by slow first quarter capital programs of two major customers but expects sales and earnings to improve in the second quarter.

Industries

                         
    Three Months Ended March 31,
(in thousands, unaudited)
  2004
  2003
  % Change
Net sales
  $ 287,169     $ 241,063       19 %
Earnings
    32,717       26,362       24 %
Operating margins
    11.4 %     10.9 %        
Bookings
    323,906       257,845       26 %
Book-to-Bill
    1.13       1.07          
Backlog
    239,335       137,826       74 %

Industries achieved its highest quarterly sales results to date, with favorable year-over-year earnings comparisons at 9 of its 12 operating companies. First quarter results were impacted by a rebound in market conditions that was partially offset by the impact of higher steel prices. While several companies increased their market share, competitive pressures continued to depress margins. Actions taken throughout 2003 to right-size businesses (including a number of plant consolidations) helped to mitigate margin deterioration. The primary earnings drivers were Heil Environmental, Heil Trailer and Chief Automotive. A revenue increase of over 20% driven by market growth in both the North American Refuse Vehicles and Dump Body markets contributed to Heil Environmental’s profitability, although its earnings were partially offset by rising steel prices and residual plant closing costs. Heil Trailer benefited from strong military sales and a pick-up in petroleum volume, and Chief’s sales of computerized measuring products more than offset weakness in collision repair equipment. Triton had the highest volume quarter in its history, driven by strong European sales. Tipper Tie’s European operations results led to improved sales and earnings compared to last year. Rotary Lift sales were also a record for the quarter, fueled by strong North American shipments and contributions from a recent German acquisition. North American bookings were at an all-time high, contributing to optimism about Rotary Lift’s performance going forward, even though rising steel costs continue to negatively impact margins. Marathon’s results were the highest in over a year, driven primarily by strong compactor sales. Earnings declined slightly at PDQ, DI Foodservice and Kurz-Kasch. DI Foodservice showed the only sales decline for the quarter due to weak chain store sales, although margins improved as consolidation efforts undertaken in 2003 are now contributing to the bottom line.

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Resources

                         
    Three Months Ended March 31,
(in thousands, unaudited)
  2004
  2003
  % Change
Net sales
  $ 303,711     $ 223,105       36 %
Earnings
    49,389       32,487       52 %
Operating margins
    16.3 %     14.6 %        
Bookings
    349,635       232,831       50 %
Book-to-Bill
    1.15       1.04          
Backlog
    149,809       80,068       87 %

Resources’ positive earnings are a result of the 2003 acquisition of Warn, the general strength in most of Resources’ businesses and the markets served by those businesses. Overall, there were favorable year-over-year earnings comparisons at 10 of its 12 operating companies. In particular, the energy businesses continued to benefit from strong energy demand, high energy prices and increased activity in exploration, production and transmission segments. Bookings for the energy businesses were up 35% compared to the prior year, resulting in a 1.14 book-to-bill ratio. Both OPW companies continued to benefit from new environmental regulations worldwide as well as an upswing related to petroleum retailing, refining and transportation. These companies also continue to benefit from global sourcing and the expansion of their global manufacturing and sales activities. The pump companies, Wilden and Blackmer, have seen stabilization of their end markets in the U.S. and strong international growth. Blackmer realized improved earnings as a result of steps previously taken to consolidate and restructure its business in late 2003, while Wilden recorded slightly lower earnings due to product mix. The material handling businesses, Warn, Tulsa Winch and Texas Hydraulics, benefited from renewed strength in the construction, crane, recovery vehicle and refuse markets. Warn, which was up sequentially in sales, earnings and margins, has also begun to realize the expected increase in demand for its new Integrated Wheel End technology on new truck programs. De-Sta-Co Industries also had a very solid first quarter, with strong results in all global segments offset by a reduction in new automotive projects.

Technologies

                         
    Three Months Ended March 31,
(in thousands, unaudited)
  2004
  2003
  % Change
Net sales
  $ 360,110     $ 260,042       38 %
Earnings
    30,870       10,498       194 %
Operating margins
    8.6 %     4.0 %        
Bookings
    407,561       276,498       47 %
Book-to-Bill
    1.13       1.06          
Backlog
    223,044       146,415       52 %

For the first quarter of 2004, Technologies reported significant growth in bookings, sales and earnings at all three of its platforms, with favorable year-over-year comparisons at 10 of its 13 operating companies. Sequentially, bookings, sales and earnings grew 15%, 7% and 30%, respectively. All but one of the Technologies companies were profitable during the first quarter, with 6 companies generating double-digit operating margins. Both sales and earnings were positively impacted by fluctuations in foreign currency exchange rates when compared to the first quarter of 2003. Imaje’s first quarter sales increased 28% over the same period last year with an earnings increase of 7%. The strength of the Euro against the dollar continued to negatively impact Imaje’s competitive pricing. Imaje continues to introduce new products, primarily in the non-continuous ink jet area for medium and large character printers and thermal transfer on line printers. Aggressive marketing has lead to an increase of 69% in backlog compared to last year.

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Circuit Board Assembly and Test (CBAT)

                         
    Three Months Ended March 31,
(in thousands, unaudited)
  2004
  2003
  % Change
Net sales
  $ 223,348     $ 148,883       50 %
Earnings
    20,320       1,637       1141 %
Operating margins
    9.1 %     1.1 %        
Bookings
    259,353       160,495       62 %
Book-to-Bill
    1.16       1.08          
Backlog
    142,697       84,957       68 %

The CBAT businesses recorded earnings increases of $7.9 million compared to the fourth quarter of 2003 and $18.7 million compared to the first quarter of 2003. Sequential results showed significant improvement in operating leverage. The growth in the CBAT segment was experienced by all operating companies; however, the strongest growth was attributable to continued increased demand in the backend semiconductor products at Alphasem and Everett Charles Technologies, as sequential earnings increased 64%. Margins for these back-end semiconductor companies are nearing 2000 levels. The core circuit board assembly companies, Universal, DEK and Soltec, all had positive earnings gains over prior year and sequentially, strong bookings and positive book-to-bill ratios for the quarter. Universal’s bookings increased 29% sequentially, as demand for their new products have been strong.

Specialty Electronic Components (SEC)

                         
    Three Months Ended March 31,
(in thousands, unaudited)
  2004
  2003
  % Change
Net sales
  $ 58,971     $ 50,315       17 %
Earnings
    4,956       3,009       65 %
Operating margins
    8.4 %     6.0 %        
Bookings
    66,894       53,856       24 %
Book-to-Bill
    1.13       1.07          
Backlog
    55,006       46,422       18 %

The SEC businesses achieved sales increases of $1.8 million, an increase of 3% over last year’s fourth quarter. The SEC businesses reported a 139% improvement in earnings over the fourth quarter of 2003 and first quarter operating margins of 8.4%. Vectron, the largest of the SEC companies, reported a significant increase in sales and earnings of 31% and 178%, respectively, over the same quarter of 2003. Vectron, as did substantially all of the SEC companies, benefited from the strong increase in wireless infrastructure capital spending and improved opportunities in the military and space markets. Wireline capital spending remained relatively flat compared to the fourth quarter of 2003.

Outlook

Dover’s first quarter results reflect a continuation of the positive momentum building within all segments over the past several quarters. 36 of 48 operating companies realized favorable year-over-year earnings growth and 34 of those companies achieved favorable earnings comparisons over last year’s fourth quarter. The restructuring efforts of the past several years, coupled with operating companies’ focus on new product development, position Dover to capitalize on the increased demand experienced in the markets served.

Resources, the most profitable segment during the quarter, benefited from strong performances by Warn, Energy Products, the OPW companies and Texas Hydraulics, to deliver segment margins of over 16%. Diversified’s results were essentially flat on a modest increase in sales, reflecting positive improvements at Crenlo, SWEP and Sargent that were offset by expected lower results at Hill Phoenix and Belvac. Industries realized positive improvements in sales, earnings and margins that largely reflect gains made at Heil Environmental, Trailer, Chief, Marathon and Triton.

Technologies was the largest contributor to Dover’s first quarter earnings growth, with a strong February and an even stronger finish in March, and CBAT and SEC are now consistently maintaining high “single digit” earnings margins. The majority of Dover’s CBAT companies are in the process of introducing innovative new products to their customers, and the Company expects the costs associated with their development efforts to be complete by the third quarter. Everett Charles Technologies had a very strong quarter, while new product development costs at Universal resulted in modest earnings. All of the CBAT companies had exceptionally strong bookings, which bodes well for the remainder of the year. The SEC companies’ results were led by Vectron, which achieved its strongest earnings since the second quarter of

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2001. Imaje had another solid quarter on the strength of an increase in sales, and while its margins declined temporarily early in the quarter, it has now fully recovered. Looking ahead, solid bookings indicate that the markets served by our SEC companies continue to experience growth and we are optimistic that this trend will enable Dover to realize increased operating leverage as the year progresses.

New Accounting Standards

In January 2004, the Financial Accounting Standards Board (“FASB”) issued FASB Staff Position No. FAS 106-1 (FSP 106-1), “Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, improvement and Modernization Act of 2003.” FSP 106-1 permits employers that sponsor post-retirement benefits plans that provide prescription drug benefits to retirees to make a one-time election to defer accounting for any effects of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the “Act”). The Company has elected to defer accounting for any effect of the Act until the third quarter of 2004 as permitted under the FSP. Therefore, the amounts included in the financial statements related to the Company’s postretirement benefits plans do not reflect the effects of the Act. The effect is not expected to be material to the Company’s results of operations, cash flow or financial position.

Special Notes Regarding Forward Looking Statements

This Quarterly Report on Form 10-Q, particularly “Management’s Discussion and Analysis,” contains forward-looking statements within the meaning of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Such statements relate to, among other things, industries in which the Company operates, the U.S. and global economies, earnings, cash flow and operating improvements and may be indicated by words or phrases such as “anticipates,” “supports,” “plans,” “projects,” “expects,” “should,” “would,” “could,” “hope,” “forecast,” “Dover believes,” “management is of the opinion,” use of the future tense and similar words or phrases. Forward-looking statements are subject to inherent uncertainties and risks, including among others: continued unrest in the Middle East and possible future terrorist threats, and their effect on the worldwide economy; increasing price and product/service competition by foreign and domestic competitors including new entrants; technological developments and changes; the ability to continue to introduce competitive new products and services on a timely, cost-effective basis; the relative mix of products and services which impacts margins and operating efficiencies; the achievement of lower costs and expenses; domestic and foreign governmental and public policy changes including environmental regulations and tax policies (including domestic and foreign export subsidy programs, R&E credits and other similar programs); protection and validity of patent and other intellectual property rights; the success of the Company’s acquisition program; the cyclical nature of some of the Company’s businesses; and the outcome of pending and future litigation and governmental proceedings. In addition, such statements could be affected by general industry and market conditions and growth rates, and general domestic and international economic conditions including interest rate and currency exchange rate fluctuations. In light of these risks and uncertainties, actual events and results may vary significantly from those included in or contemplated or implied by such statements. Readers are cautioned not to place undue reliance on such forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

The Company may, from time to time, post financial or other information on its Internet website, www.dovercorporation.com. Such information will be found in the “What’s New” section of the website’s home page. It will be accessible from the home page for approximately one month after release, after which time it will be archived on the website for a period of time. The Internet address is for informational purposes only and is not intended for use as a hyperlink. The Company is not incorporating any material on its website into this report.

Non-GAAP Information

In an effort to provide investors with additional information regarding the Company’s results as determined by generally accepted accounting principles (GAAP), the Company also discloses non-GAAP information which management believes provides useful information to investors. Free cash flow, net debt, total capitalization, operational working capital and operational working capital and revenues excluding the impact of changes in foreign currency exchange rates are not financial measures under GAAP and should not be considered as a substitute for cash flows from operating activities, debt or equity, sales and working capital as determined in accordance with GAAP and may not be comparable to similarly titled measures reported by other companies. Management believes the net debt to capitalization ratio and free cash flow are important measures of liquidity and operating performance because they provide both management and investors a measurement of cash generated from operations that is available to fund

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acquisitions and repay debt. Management believes that reporting operational working capital, which is calculated as accounts receivable, plus inventory, less accounts payable, provides a meaningful measure of the Company’s operational changes in working capital. Management believes that reporting operational working capital and revenues at constant currency, which excludes the positive or negative impact of fluctuations in foreign currency exchange rates, provides a meaningful measure of the Company’s operational changes, given the global nature of Dover’s businesses.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There has been no significant change in the Company’s exposure to market risk during the first three months of 2004. For discussion of the Company’s exposure to market risk, refer to Item 7A, Quantitative and Qualitative Disclosures about Market Risk, contained in the Company’s Annual Report incorporated by reference in Form 10-K for the fiscal year ended December 31, 2003.

Item 4. CONTROLS AND PROCEDURES

At the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(e). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective. During the first quarter of 2004, there were no changes in the Company’s internal control over financial reporting that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings

Not applicable.

Item 2. Changes in Securities and Use of Proceeds

  (a)   Not applicable.
 
  (b)   Not applicable.
 
  (c)   Not applicable.
 
  (d)   Not applicable.
 
  (e)   Dover did not purchase any shares of its stock in the open market in the first quarter of 2004. The shares listed below were acquired by Dover from the holders of its employee stock options when they tendered previously owned shares as full or partial payment of the exercise price of such stock options. These shares are applied against the exercise price at market price on the date of exercise. The following table depicts the purchase of these shares:

                                 
                            (d) Maximum Number
                    (c) Total Number of   (or Approximate Dollar
                    Shares Purchased as   Value) of Shares that
    (a) Total Number           Part of Publicly   May Yet Be Purchased
    of Shares   (b) Average Price   Announced Plans or   under the Plans or
Period
  Purchased
  Paid per Share
  Programs
  Programs
January 1 to January 31, 2004
    2,614       41.83     Not applicable   Not applicable
February 1 to February 29, 2004
    24,036       40.45     Not applicable   Not applicable
March 1 to March 31, 2004
    10,062       38.24     Not applicable   Not applicable

Item 3. Defaults Upon Senior Securities

Not applicable.

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

There were no matters submitted to a vote of security holders during the quarter ended March 31, 2004. At the Annual Meeting of Stockholders of Dover Corporation held on April 20, 2004, the following matters set forth in the Company’s Proxy Statement dated March 10, 2004, which was filed with the Securities and Exchange Commission pursuant to Regulation 14A under the Securities Exchange Act of 1934, were voted upon with the results indicated below.

  (1)   The nominees listed below were elected directors for a one-year term ending at the 2005 Annual Meeting with the respective votes set forth opposite their names:

                         
    For
  Against
  Withheld
David H. Benson
    155,860,022       4,876,075       3,897,486  
Jean-Pierre Ergas
    160,674,361       61,736       3,897,486  
Kristiane C. Graham
    160,677,725       68,372       3,897,486  
Ronald L. Hoffman
    160,245,983       490,114       3,897,486  
James L. Koley
    155,860,281       4,875,816       3,897,486  
Richard K. Lochridge
    160,592,806       143,291       3,897,486  
Thomas L. Reece
    160,181,114       554,983       3,897,486  
Bernard G. Rethore
    155,895,675       4,840,422       3,897,486  
Gary L. Roubos
    106,967,957       53,768,140       3,897,486  
Michael B. Stubbs
    155,980,945       4,755,152       3,897,486  

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  (2)   A proposal seeking approval of the Dover Corporation 2005 Equity and Cash Incentive Plan was approved, with 113,094,074 votes cast FOR, 31,975,026 votes cast AGAINST, 1,285,761 abstentions and 18,278,722 broker non-votes.

Item 5. Other Information

  (a)   Not applicable.
 
  (b)   There have been no material changes to the procedures by which stockholders can recommend nominees to the Company’s Board of Directors since our Proxy Statement dated March 10, 2004.

Item 6. Exhibits and Reports on Form 8-K

  (a)   Exhibits:

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

  (b)   Reports on Form 8-K:
 
      The Company filed with the Securities and Exchange Commission a report on Form 8-K, filed on January 27, 2004, covering information reported under Item 12. Results of Operations and Financial Condition.

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Signatures

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

     
  DOVER CORPORATION
 
   
Date: April 30, 2004
  /s/ Robert G. Kuhbach
 
 
  Robert G. Kuhbach, Vice
  President, Finance, Chief
  Financial Officer & Treasurer
  (Principal Financial Officer)
 
   
Date: April 30, 2004
  /s/ Raymond T. McKay, Jr.
 
 
  Raymond T. McKay, Jr., Vice President,
  Controller
  (Principal Accounting Officer)

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EXHIBIT INDEX

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

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