UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2016

or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from to


Commission File Number: 1-4018

Dover Corporation
(Exact name of registrant as specified in its charter)

Delaware
53-0257888
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
 
 
3005 Highland Parkway
 
Downers Grove, Illinois
60515
(Address of principal executive offices)
(Zip Code)

(630) 541-1540
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes þ  No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes þ  No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12-b-2 of the Exchange Act.
Large accelerated filer þ
 
Accelerated filer o
Non-accelerated filer o
(Do not check if smaller reporting company)
Smaller reporting company o

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

The number of shares outstanding of the Registrant’s common stock as of April 14, 2016 was 155,148,745.



Dover Corporation
Form 10-Q
Table of Contents

Page
 
 
 
 
 
 
 
 
 
 
 





Table of Contents



Item 1. Financial Statements

DOVER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands, except per share data)
(unaudited)

 
Three Months Ended March 31,
 
2016
 
2015
Revenue
$
1,622,273

 
$
1,715,501

Cost of goods and services
1,033,009

 
1,088,342

Gross profit
589,264

 
627,159

Selling and administrative expenses
443,448

 
434,634

Operating earnings
145,816

 
192,525

Interest expense, net
31,714

 
32,037

Other income, net
(13,522
)
 
(4,187
)
Earnings before provision for income taxes and discontinued operations
127,624

 
164,675

Provision for income taxes
28,268

 
47,485

Earnings from continuing operations
99,356

 
117,190

Earnings from discontinued operations, net

 
92,320

Net earnings
$
99,356

 
$
209,510

 
 
 
 
Earnings per share from continuing operations:
 
 
 
Basic
$
0.64

 
$
0.72

Diluted
$
0.64

 
$
0.72

 
 
 
 
Earnings per share from discontinued operations:
 
 
 
Basic
$

 
$
0.57

Diluted
$

 
$
0.57

 
 
 
 
Net earnings per share:
 
 
 
Basic
$
0.64

 
$
1.30

Diluted
$
0.64

 
$
1.28

 
 
 
 
Weighted average shares outstanding:
 
 
 
Basic
155,064

 
161,650

Diluted
156,161

 
163,323

 
 
 
 
Dividends paid per common share
$
0.42

 
$
0.40

 

See Notes to Condensed Consolidated Financial Statements



1

Table of Contents


DOVER CORPORATION 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
(in thousands)
(unaudited)

 
Three Months Ended March 31,
 
2016
 
2015
 
 
 
 
Net earnings
$
99,356

 
$
209,510

 
 
 
 
Other comprehensive earnings (loss), net of tax
 
 
 
Foreign currency translation adjustments:
 
 
 
Foreign currency translation gains (losses) during period
8,769

 
(83,829
)
Reclassification of foreign currency translation gains to earnings upon sale of subsidiaries

 
(280
)
Total foreign currency translation
8,769

 
(84,109
)
 
 
 
 
Pension and other postretirement benefit plans:
 
 
 
Amortization of actuarial losses included in net periodic pension cost
1,409

 
2,598

Amortization of prior service costs included in net periodic pension cost
1,041

 
1,228

Total pension and other postretirement benefit plans
2,450

 
3,826

 
 
 
 
Changes in fair value of cash flow hedges:
 
 
 
Unrealized net (losses) gains arising during period
(49
)
 
1,158

Net gains reclassified into earnings
(47
)
 
(99
)
Total cash flow hedges
(96
)
 
1,059

 
 
 
 
Other
1,839

 
214

 
 
 
 
Other comprehensive earnings (loss)
12,962

 
(79,010
)
 
 
 
 
Comprehensive earnings
$
112,318

 
$
130,500


See Notes to Condensed Consolidated Financial Statements.


2

Table of Contents


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

 
March 31, 2016
 
December 31, 2015
Current assets:
 
 
 
Cash and cash equivalents
$
243,720

 
$
362,185

Receivables, net of allowances of $20,445 and $18,050
1,167,313

 
1,120,490

Inventories, net
849,830

 
802,895

Prepaid and other current assets
84,893

 
133,440

Total current assets
2,345,756

 
2,419,010

Property, plant and equipment, net
858,984

 
854,269

Goodwill
4,034,620

 
3,737,389

Intangible assets, net
1,543,397

 
1,413,223

Other assets and deferred charges
198,138

 
182,185

Total assets
$
8,980,895

 
$
8,606,076

 
 
 
 
Current liabilities:
 

 
 

Notes payable and current maturities of long-term debt
$
405,858

 
$
151,122

Accounts payable
706,191

 
650,880

Accrued compensation and employee benefits
178,784

 
223,039

Accrued insurance
101,584

 
99,642

Other accrued expenses
247,033

 
235,971

Federal and other taxes on income
9,359

 
6,528

Total current liabilities
1,648,809

 
1,367,182

Long-term debt, net
2,610,642

 
2,603,655

Deferred income taxes
603,496

 
575,709

Other liabilities
419,815

 
414,955

Stockholders' equity:
 

 
 

Total stockholders' equity
3,698,133

 
3,644,575

Total liabilities and stockholders' equity
$
8,980,895

 
$
8,606,076



See Notes to Condensed Consolidated Financial Statements


3

Table of Contents


DOVER CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
(in thousands, except share data)
(unaudited)

 
Common Stock $1 Par Value
 
Additional Paid-In Capital
 
Retained Earnings
 
Accumulated Other Comprehensive Earnings (Loss)
 
Treasury Stock
 
Total Stockholders' Equity
Balance at December 31, 2015
$
256,113

 
$
928,409

 
$
7,686,642

 
$
(254,573
)
 
$
(4,972,016
)
 
$
3,644,575

Net earnings

 

 
99,356

 

 

 
99,356

Dividends paid

 

 
(65,340
)
 

 

 
(65,340
)
Common stock issued for the exercise of share-based awards
138

 
(4,971
)
 

 

 

 
(4,833
)
Tax benefit from the exercise of share-based awards

 
26

 

 

 

 
26

Share-based compensation expense

 
11,387

 

 

 

 
11,387

Other comprehensive earnings, net of tax

 

 

 
12,962

 

 
12,962

Balance at March 31, 2016
$
256,251

 
$
934,851

 
$
7,720,658

 
$
(241,611
)
 
$
(4,972,016
)
 
$
3,698,133

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


See Notes to Condensed Consolidated Financial Statements


4

Table of Contents


DOVER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 
Three Months Ended March 31,
 
2016
 
2015
Operating Activities of Continuing Operations
 
 
 
Net earnings
$
99,356

 
$
209,510

 
 
 
 
Adjustments to reconcile net earnings to cash from operating activities:
 
 
 
Earnings from discontinued operations, net

 
(92,320
)
Depreciation and amortization
88,604

 
80,182

Share-based compensation
11,387

 
13,387

Gain on sale of business
(11,228
)
 

Cash effect of changes in assets and liabilities:
 
 
 
Accounts receivable
20,103

 
27,737

Inventories
(29,478
)
 
(18,861
)
Prepaid expenses and other assets
(1,522
)
 
(2,297
)
Accounts payable
(14,299
)
 
(18,876
)
Accrued compensation and employee benefits
(65,887
)
 
(98,493
)
Accrued expenses and other liabilities
3,202

 
(14,198
)
Accrued and deferred taxes, net
45,654

 
55,843

Other, net
(12,479
)
 
(10,282
)
Net cash provided by operating activities of continuing operations
133,413

 
131,332

 
 
 
 
Investing Activities of Continuing Operations
 

 
 

Additions to property, plant and equipment
(37,230
)
 
(27,956
)
Acquisitions (net of cash and cash equivalents acquired)
(436,058
)
 
(6,500
)
Proceeds from the sale of property, plant and equipment
619

 
6,041

Proceeds from the sale of businesses
47,300

 
185,000

Other
(488
)
 

Net cash (used in) provided by investing activities of continuing operations
(425,857
)
 
156,585

 
 
 
 
Financing Activities of Continuing Operations
 

 
 

Purchase of common stock

 
(200,055
)
Proceeds from exercise of share-based awards, including tax benefits
2,181

 
2,786

Change in commercial paper and notes payable, net
247,099

 
(152,500
)
Dividends paid to stockholders
(65,940
)
 
(64,442
)
Payments to settle employee tax obligations on exercise of share-based awards
(4,833
)
 
(2,361
)
Reduction of long-term debt

 
(31
)
Net cash provided by (used in) financing activities of continuing operations
178,507

 
(416,603
)
 
 
 
 
Cash Flows from Discontinued Operations
 

 
 

Net cash provided by operating activities of discontinued operations

 
2,717

Net cash provided by investing activities of discontinued operations

 
800

Net cash provided by discontinued operations

 
3,517

 
 
 
 
Effect of exchange rate changes on cash and cash equivalents
(4,528
)
 
(17,926
)
 
 
 
 
Net decrease in cash and cash equivalents
(118,465
)
 
(143,095
)
Cash and cash equivalents at beginning of period
362,185

 
681,581

Cash and cash equivalents at end of period
$
243,720

 
$
538,486


See Notes to Condensed Consolidated Financial Statements

5

Table of Contents
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)


1. Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements, in accordance with Securities and Exchange Commission ("SEC") rules for interim periods, do not include all of the information and notes for complete financial statements as required by accounting principles generally accepted in the United States of America. As such, the accompanying unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Dover Corporation ("Dover" or the "Company") Annual Report on Form 10-K for the year ended December 31, 2015, which provides a more complete understanding of the Company’s accounting policies, financial position, operating results, business, properties, and other matters. The year end Condensed Consolidated Balance Sheet was derived from audited financial statements. Certain amounts in the prior year have been reclassified to conform to the current year presentation.  

It is the opinion of management that these financial statements reflect all adjustments necessary for a fair statement of the interim results. The results of operations of any interim period are not necessarily indicative of the results of operations for the full year.

2. Acquisitions

On January 7, 2016, the Company acquired the dispenser and system businesses of Tokheim Group S.A.S. ("Tokheim") within the Fluids segment for net cash consideration of $436,058. The following presents the allocation of acquisition cost to the assets acquired and liabilities assumed, based on their estimated fair values:
Current assets, net of cash acquired
$
96,436

Property, plant and equipment
24,319

Goodwill
281,903

Intangible assets
176,693

Other non-current assets
5,429

Current liabilities
(102,317
)
Non-current liabilities
(46,405
)
Net assets acquired
$
436,058


The amounts assigned to goodwill and major intangible asset classifications for the 2016 acquisition are as follows:
 
Amount allocated
 
Useful life (in years)
Goodwill - Non deductible
$
281,903

 
na
Customer intangibles
93,227

 
10
Trademarks
23,691

 
10
Other intangibles
59,775

 
11
 
$
458,596

 
 

The goodwill identified by this acquisition reflects the benefits expected to be derived from product line expansion and operational synergies. Upon consummation of the acquisition, with the exception of a minor noncontrolling interest in the Tokheim China subsidiary, this business is now wholly-owned by Dover.

The Company has completed the preliminary purchase price allocation for the acquisition of Tokheim.  As additional information is obtained about these assets and liabilities within the measurement period (not to exceed one year from the date of acquisition), the Company will refine its estimates of fair value to allocate the purchase price more accurately. Purchase price allocation adjustments may arise through working capital adjustments, asset appraisals or to reflect additional facts and circumstances in existence as of the acquisition date. Identified measurement period adjustments will be recorded, including any related impacts to net earnings, in the reporting period in which the adjustments are determined and may be significant. See Note 6 Goodwill and Other Intangible Assets for purchase price adjustments.

The unaudited Condensed Consolidated Statements of Earnings include the results of this business from the date of acquisition.  


6

Table of Contents
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)

Pro Forma Information

The following unaudited pro forma information illustrates the impact of both 2016 and 2015 acquisitions on the Company’s revenue and earnings from continuing operations for the three months ended March 31, 2016 and 2015. In 2015, the Company acquired four businesses in separate transactions for net cash consideration of $567,843.
 
The 2016 and 2015 pro forma information assumes that the 2016 and 2015 acquisitions had taken place at the beginning of the prior year. As such, the 2016 pro forma earnings exclude one-time adjustments made in 2016 for 2015 acquisitions. Pro forma earnings are also adjusted to reflect the comparable impact of additional depreciation and amortization expense (net of tax) resulting from the fair value measurement of tangible and intangible assets relating to 2016 and 2015 acquisitions.
 
Three Months Ended March 31,
 
2016
 
2015
Revenue from continuing operations:
 
 
 
As reported
$
1,622,273

 
$
1,715,501

Pro forma
1,628,406

 
1,836,711

Earnings from continuing operations:
 
 
 
As reported
$
99,356

 
$
117,190

Pro forma
107,613

 
122,404

Basic earnings per share from continuing operations:
 
 
 
As reported
$
0.64

 
$
0.72

Pro forma
0.69

 
0.76

Diluted earnings per share from continuing operations:
 
 
 
As reported
$
0.64

 
$
0.72

Pro forma
0.69

 
0.75



3. Disposed and Discontinued Operations

Management evaluates Dover's businesses periodically for their strategic fit within its operations and may from time to time sell or discontinue certain operations for various reasons.

Disposed Businesses

On February 17, 2016, the company completed the sale of Texas Hydraulics. This disposal did not represent a strategic shift in operations and, therefore, did not qualify for presentation as a discontinued operation. Upon disposal of the business the Company recognized total proceeds of $47,300, which resulted in a gain on sale of $11,228 included within Other income, net within the Condensed Consolidated Statements of Earnings.

Discontinued Operations

The results of discontinued operations for the three months ended March 31, 2015 reflect the net earnings of businesses held for sale, Datamax O'Neil and Sargent Aerospace, prior to their respective sale dates. On March 2, 2015, the Company completed the sale of Datamax O'Neil for total proceeds of $185,000, which resulted in a net gain on sale of $87,781.

7

Table of Contents
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)

Summarized results of the Company’s discontinued operations are as follows:
 
Three Months Ended March 31,
 
2015
Revenue
$
64,495

 
 
Gain on sale, net of tax
87,354

 
 
Earnings from operations before taxes
8,980

Provision for income taxes
(4,014
)
Earnings from operations, net of tax
4,966

 
 
Earnings from discontinued operations, net of tax
$
92,320


The Company had no assets or liabilities classified as held for sale as of March 31, 2016 and December 31, 2015.

4. Inventories, net
 
March 31, 2016
 
December 31, 2015
Raw materials
$
347,674

 
$
333,551

Work in progress
145,952

 
135,624

Finished goods
467,199

 
443,032

Subtotal
960,825

 
912,207

Less reserves
(110,995
)
 
(109,312
)
Total
$
849,830

 
$
802,895


5. Property, Plant and Equipment, net
 
March 31, 2016
 
December 31, 2015
Land
$
56,376

 
$
55,567

Buildings and improvements
543,292

 
546,809

Machinery, equipment and other
1,764,139

 
1,772,031

Subtotal
2,363,807

 
2,374,407

Less accumulated depreciation
(1,504,823
)
 
(1,520,138
)
Total
$
858,984

 
$
854,269


Depreciation expense totaled $45,029 and $40,208 for the three months ended March 31, 2016 and 2015, respectively.

6. Goodwill and Other Intangible Assets

The following table provides the changes in carrying value of goodwill by segment for the three months ended March 31, 2016:
 
Energy
 
Engineered Systems
 
Fluids
 
Refrigeration & Food Equipment
 
Total
Balance at December 31, 2015
$
1,047,180

 
$
1,473,864

 
$
655,745

 
$
560,600

 
$
3,737,389

Acquisitions

 

 
281,903

 

 
281,903

Purchase price adjustments

 
363

 
4,781

 
580

 
5,724

Disposition of business

 
(9,615
)
 

 

 
(9,615
)
Foreign currency translation
1,580

 
6,916

 
9,968

 
755

 
19,219

Balance at March 31, 2016
$
1,048,760

 
$
1,471,528

 
$
952,397

 
$
561,935

 
$
4,034,620



8

Table of Contents
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)

As noted in Note 3 Disposed and Discontinued Operations, the Company completed the sale of its Texas Hydraulics business during the three months ended March 31, 2016. As a result of this sale, the Engineered Systems goodwill balance was reduced by $9,615.

During the three months ended March 31, 2016, the Company recorded adjustments totaling $5,724 to goodwill relating to the purchase price adjustments as a result of working capital adjustments and refinements of estimates to assets acquired and liabilities assumed for the 2015 acquisitions of Gemtron, JK Group, Gala Industries and Reduction Engineering Scheer.

In accordance with the applicable accounting standard, Dover performs its annual goodwill impairment testing in the fourth quarter of each year. In addition to the annual impairment test, the Company is required to regularly assess whether a triggering event has occurred which would require interim impairment testing. The Company has considered the economic environments in which its businesses operate, particularly within those reporting units exposed to the decline in oil and gas markets, and the long-term outlook for those businesses. The Company has determined that a triggering event has not occurred which would require impairment testing at this time.

The following table provides the gross carrying value and accumulated amortization for each major class of intangible asset:
 
March 31, 2016
 
December 31, 2015
 
Gross Carrying
Amount
 
Accumulated
Amortization
 
Gross Carrying
Amount
 
Accumulated
Amortization
Amortized intangible assets:
 
 
 
 
 
 
 
Trademarks
$
172,554

 
$
49,245

 
$
150,926

 
$
45,536

Patents
155,225

 
117,441

 
150,570

 
112,399

Customer Intangibles
1,663,762

 
628,709

 
1,567,048

 
595,635

Unpatented Technologies
133,362

 
55,971

 
137,919

 
56,495

Drawings & Manuals
34,701

 
16,757

 
34,232

 
15,760

Distributor Relationships
120,957

 
39,592

 
64,614

 
37,610

Other
23,390

 
18,497

 
23,923

 
18,168

Total
2,303,951

 
926,212

 
2,129,232

 
881,603

Unamortized intangible assets:
 
 
 
 
 
 
 
Trademarks
165,658

 
 
 
165,594

 
 
Total intangible assets, net
$
1,543,397

 
 
 
$
1,413,223

 
 

For the three months ended March 31, 2016 and 2015, amortization expense was $43,574 and $39,974, respectively.

7. Restructuring Activities

The following table details restructuring charges incurred by segment for the periods presented:
 
Three Months Ended March 31,
 
2016
 
2015
Energy
$
6,416

 
$
17,822

Engineered Systems
1,967

 
4,355

Fluids
5,226

 
2,097

Refrigeration & Food Equipment
21

 
(282
)
Corporate
757

 
111

Total
$
14,387

 
$
24,103

 
 
 
 
These amounts are classified in the unaudited Condensed Consolidated Statements of Earnings as follows:
 
 
 
 
Cost of goods and services
$
5,851

 
$
7,454

Selling and administrative expenses
8,536

 
16,649

Total
$
14,387

 
$
24,103


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Table of Contents
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)


The restructuring expenses of $14,387 incurred in the three months ended March 31, 2016 related to restructuring programs initiated during 2016 and 2015. These programs are designed to better align the Company's costs and operations with current market conditions through targeted facility consolidations, headcount reductions and other measures to further optimize operations. The Company expects the programs currently underway to be substantially completed in the next twelve to eighteen months.

The $14,387 of restructuring charges incurred during the first quarter of 2016 primarily included the following items:

The Energy segment incurred restructuring charges of $6,416 related to various programs across the segment focused on workforce reductions and field and service consolidations. These programs were initiated to better align cost base with the anticipated demand environment.

The Engineered Systems segment recorded $1,967 of restructuring charges relating to headcount reductions across various businesses primarily related to optimization of administrative functions within the Printing & Identification platform and U.S. manufacturing consolidation within the Industrial platform.

The Fluids segment recorded $5,226 of restructuring charges principally related to headcount reductions and facility consolidations at various businesses across the segment.

The Refrigeration and Food Equipment segment and corporate incurred restructuring charges related to headcount reductions.

The following table details the Company’s severance and other restructuring accrual activity:
 
Severance
 
Exit
 
Total
Balance at December 31, 2015
$
11,036

 
$
2,955

 
$
13,991

Restructuring charges
10,681

 
3,706

 
14,387

Payments
(8,234
)
 
(1,491
)
 
(9,725
)
Foreign currency translation
121

 
40

 
161

Other, including write-offs of fixed assets and acquired balances
2,458

 
(1,119
)
 
1,339

Balance at March 31, 2016
$
16,062

 
$
4,091

 
$
20,153


The accrual balance at March 31, 2016 primarily reflects restructuring plans initiated during the year, as well as ongoing lease commitment obligations for facilities closed in earlier periods.


10

Table of Contents
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)

8. Borrowings

Borrowings consist of the following:
 
March 31, 2016
 
December 31, 2015
Short-term
 
 
 
Current portion of long-term debt
$
4,558

 
$
122

Commercial paper
401,300

 
151,000

 
$
405,858

 
$
151,122


 
March 31, 2016
 
December 31, 2015
Long-term
 
 
 
5.45% 10-year notes due March 15, 2018
349,340

 
349,258

2.125% 7-year notes due December 1, 2020 (Euro-denominated)
334,783

 
328,592

4.30% 10-year notes due March 1, 2021
449,872

 
449,865

3.150% 10-year notes due November 15, 2025
397,028

 
396,951

6.65% 30-year debentures due June 1, 2028
199,560

 
199,552

5.375% 30-year debentures due October 15, 2035
296,884

 
296,844

6.60% 30-year notes due March 15, 2038
248,058

 
248,036

5.375% 30-year notes due March 1, 2041
346,029

 
345,989

Other, less current installments
2,233

 
2,255

Total long-term debt
2,623,787

 
2,617,342

Unamortized debt issuance costs
(13,145
)
 
(13,687
)
Long-term debt, net of debt issuance costs
$
2,610,642

 
$
2,603,655


The Company adopted new accounting guidance effective January 1, 2016 which requires debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct reduction of the carrying amount of the related debt. Upon adoption, the Company reclassified $13,687 from assets to long-term debt to reflect this guidance in the comparable balance as of December 31, 2015.
 
The Company maintains a $1.0 billion five-year unsecured revolving credit facility with a syndicate of banks (the "Credit Agreement") which expires on November 10, 2020The Company was in compliance with its revolving credit and other long-term debt covenants at March 31, 2016 and had a coverage ratio of 12.3 to 1. The Company primarily uses this facility as liquidity back-up for its commercial paper program and has not drawn down any loans under the facility and does not anticipate doing so. The Company generally uses commercial paper borrowings for general corporate purposes, funding of acquisitions, and the repurchases of its common stock.

Interest expense and interest income for the three months ended March 31, 2016 and 2015 were as follows:
 
Three Months Ended March 31,
 
2016
 
2015
Interest expense
$
33,318

 
$
33,005

Interest income
(1,604
)
 
(968
)
Interest expense, net
$
31,714

 
$
32,037

 
Letters of Credit

As of March 31, 2016, the Company had approximately $91,840 outstanding in letters of credit and guarantees with financial institutions which expire at various dates within 2016 through 2020. These letters of credit are primarily maintained as security for insurance, warranty, and other performance obligations.  


11

Table of Contents
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)

9. Financial Instruments

Derivatives

The Company is exposed to market risk for changes in foreign currency exchange rates due to the global nature of its operations and certain commodity risks. In order to manage these risks the Company has hedged portions of its forecasted sales and purchases to occur within the next twelve months that are denominated in non-functional currencies, with currency forward or collar contracts designated as cash flow hedges. At March 31, 2016 and December 31, 2015, the Company had contracts with U.S. dollar equivalent notional amounts of $30,859 and $37,735, respectively, to exchange foreign currencies, principally the U.S. dollar, Chinese Yuan, Euro, and pound sterling. The Company believes it is probable that all forecasted cash flow transactions will occur.

In addition, the Company had outstanding contracts with a total notional amount of $66,310 and $51,369 at March 31, 2016 and December 31, 2015, respectively, that are not designated as hedging instruments. These instruments are used to reduce the Company's exposure for operating receivables and payables that are denominated in non-functional currencies.

The following table sets forth the fair values of derivative instruments held by the Company as of March 31, 2016 and December 31, 2015 and the balance sheet lines in which they are recorded:
 
Fair Value Asset (Liability)
 
 
 
March 31, 2016
 
December 31, 2015
 
Balance Sheet Caption
Foreign currency forward / collar contracts
$
113

 
$
170

 
Prepaid / Other assets
Foreign currency forward / collar contracts
(416
)
 
(452
)
 
Other accrued expenses

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

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

Additionally, the Company has designated the €300.0 million of Euro-denominated notes issued December 4, 2013 as a hedge of a portion of its net investment in Euro-denominated operations. Due to the high degree of effectiveness between the hedging instruments and the exposure being hedged, fluctuations in the value of the Euro-denominated debt due to exchange rate changes are offset by changes in the net investment. Accordingly, changes in the value of the Euro-denominated debt are recognized in the cumulative translation adjustment section of other comprehensive income to offset changes in the value of the net investment in Euro-denominated operations.

Amounts recognized in other comprehensive earnings (loss) for the gains (losses) on its net investment hedges were as follows:
 
Three Months Ended March 31,
 
2016
 
2015
(Loss) gain on Euro-denominated debt
$
(6,165
)
 
$
35,350

Loss on Swiss franc cross-currency swap

 
(1,333
)
Total (loss) gain on net investment hedges before tax
(6,165
)
 
34,017

Tax benefit (expense)
2,158

 
(11,906
)
Net (loss) gain on net investment hedges, net of tax
$
(4,007
)
 
$
22,111


Fair Value Measurements

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


12

Table of Contents
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)

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

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

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

The following table presents the Company’s assets and liabilities measured at fair value on a recurring basis as of March 31, 2016 and December 31, 2015:
 
March 31, 2016
 
December 31, 2015
 
Level 2
 
Level 2
Assets:
 
 
 
Foreign currency cash flow hedges
$
113

 
$
170

Liabilities:
 
 
 
Foreign currency cash flow hedges
416

 
452


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

The estimated fair value of long-term debt, net of unamortized debt issuance costs at March 31, 2016 and December 31, 2015 was $3,024,157 and $2,880,734, respectively, compared to the carrying value of $2,610,642 and $2,603,655, respectively. The estimated fair value of long-term debt is based on quoted market prices for similar instruments and is, therefore, classified as Level 2 within the fair value hierarchy.

The carrying values of cash and cash equivalents, trade receivables, accounts payable, and notes payable are reasonable estimates of their fair values as of March 31, 2016 and December 31, 2015 due to the short-term nature of these instruments.

10. Income Taxes

The effective tax rates for continuing operations for the three months ended March 31, 2016 and 2015 were 22.1% and 28.8%, respectively. Reflected in the effective tax rate for the three months ended March 31, 2016 and 2015 are favorable discrete items of $7,348 and $703, respectively. Excluding these discrete items, the effective tax rates for the three months ended March 31, 2016 and 2015 were 27.9% and 29.3%, respectively. The 2016 discrete items resulted primarily from the impact on deferred tax balances of a tax rate reduction in a non-US jurisdiction. The 2015 discrete items principally resulted from the conclusion of certain state tax audits and an adjustment of our tax accounts to the return filed. The reduction in the effective tax rate year over year is principally due to a change in the geographic mix of earnings as well as restructuring of foreign operations.

Dover and its subsidiaries file tax returns in the U.S., including various state and local returns, and in other foreign jurisdictions.  We believe adequate provision has been made for all income tax uncertainties. The Company is routinely audited by taxing authorities in its filing jurisdictions, and a number of these audits are currently underway. The Company believes that within the next twelve months uncertain tax positions may be resolved and statutes of limitations will expire, which could result in a decrease in the gross amount of unrecognized tax benefits of approximately zero to $19,649. A portion of these unrecognized tax benefits relate to companies previously reported as discontinued operations.

11. Equity Incentive Program

The Company typically grants equity awards annually at its regularly scheduled first quarter Compensation Committee meeting. In the first quarter of 2016, the Company issued stock-settled appreciation rights ("SARs") covering 1,346,354 shares, performance share awards of 79,561 and restricted stock units of 215,181.


13

Table of Contents
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)

The Company uses the Black-Scholes option pricing model to determine the fair value of each SAR on the date of grant. Expected volatilities are based on Dover's stock price history, including implied volatilities from traded options on Dover stock. The Company uses historical data to estimate SAR exercise and employee termination patterns within the valuation model. The expected life of SARs granted is derived from the output of the option valuation model and represents the average period of time that SARs granted are expected to be outstanding. The interest rate for periods within the contractual life of the SARs is based on the U.S. Treasury yield curve in effect at the time of grant.

The assumptions used in determining the fair value of the SARs awarded during the respective periods are as follows:
 
SARs
 
2016
 
2015
Risk-free interest rate
1.05
%
 
1.51
%
Dividend yield
3.09
%
 
2.24
%
Expected life (years)
4.6

 
5.1

Volatility
26.17
%
 
27.19
%
 
 
 
 
Grant price
$
57.25

 
$
73.28

Fair value per share at date of grant
$
9.25

 
$
14.55


The performance share awards granted in 2015 and 2016 are considered performance condition awards as attainment is based on Dover's performance relative to established internal metrics. The fair value of these awards was determined using Dover's closing stock price on the date of grant. The expected attainment of the internal metrics for these awards is analyzed each reporting period, and the related expense is adjusted based on expected attainment, if that attainment differs from previous estimates. The cumulative effect on current and prior periods of a change in attainment is recognized in compensation cost in the period of change.  

The fair value and average attainment used in determining compensation cost for the performance shares issued in 2015 and 2016 is as follows for the three months ended March 31, 2016:
 
Performance shares
 
2016
 
2015
Fair value per share at date of grant
$
57.25

 
$
73.28

Average attainment rate reflected in expense
87.75
%
 
43.83
%

Stock-based compensation is reported within selling and administrative expenses in the accompanying unaudited Condensed Consolidated Statements of Earnings. The following table summarizes the Company’s compensation expense relating to all stock-based incentive plans:
 
Three Months Ended March 31,
 
2016
 
2015
Pre-tax compensation expense
$
11,387

 
$
13,387

Tax benefit
(4,050
)
 
(4,764
)
Total stock-based compensation expense, net of tax
$
7,337

 
$
8,623

 
12. Commitments and Contingent Liabilities

Litigation

A few of the Company’s subsidiaries are involved in legal proceedings relating to the cleanup of waste disposal sites identified under federal and state statutes that provide for the allocation of such costs among "potentially responsible parties." In each instance, the extent of the Company’s liability appears to be very small in relation to the total projected expenditures and the number of other "potentially responsible parties" involved and is anticipated to be immaterial to the Company. In addition, a few of the Company’s subsidiaries are involved in ongoing remedial activities at certain current and former plant sites, in cooperation with regulatory agencies, and appropriate reserves have been established. At March 31, 2016 and December 31, 2015, the Company has reserves totaling $32,453 and $30,595, respectively, for environmental and other matters, including private party claims for exposure to hazardous substances, that are probable and estimable.


14

Table of Contents
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)

The Company and certain of its subsidiaries are also parties to a number of other legal proceedings incidental to their businesses. These proceedings primarily involve claims by private parties alleging injury arising out of use of the Company’s products, patent infringement, employment matters, and commercial disputes. Management and legal counsel, at least quarterly, review the probable outcome of such proceedings, the costs and expenses reasonably expected to be incurred and currently accrued to-date, and the availability and extent of insurance coverage. The Company has reserves for legal matters that are probable and estimable and not otherwise covered by insurance, and at March 31, 2016 and December 31, 2015, these reserves are not significant. While it is not possible at this time to predict the outcome of these legal actions, in the opinion of management, based on the aforementioned reviews, the Company is not currently involved in any legal proceedings which, individually or in the aggregate, could have a material effect on its financial position, results of operations, or cash flows.

Warranty Accruals

Estimated warranty program claims are provided for at the time of sale. Amounts provided for are based on historical costs and adjusted new claims. The changes in the carrying amount of product warranties through March 31, 2016 and 2015 are as follows:
 
2016
 
2015
Beginning Balance, January 1
$
44,466

 
$
49,388

Provision for warranties
14,031

 
11,075

Settlements made
(12,462
)
 
(13,395
)
Other adjustments, including acquisitions and currency translation
4,666

 
(630
)
Ending balance, March 31
$
50,701

 
$
46,438



13. Employee Benefit Plans

Retirement Plans

The Company offers defined contribution retirement plans which cover the majority of its U.S. employees, as well as employees in certain other countries. In addition, the Company sponsors qualified defined benefit pension plans covering certain employees of the Company and its subsidiaries. The plans’ benefits are generally based on years of service and employee compensation. The Company also provides to certain management employees, through non-qualified plans, supplemental retirement benefits in excess of qualified plan limits imposed by federal tax law.

The following tables set forth the components of the Company’s net periodic expense relating to retirement benefit plans:

Qualified Defined Benefits
 
Three Months Ended March 31,
 
U.S. Plan
 
Non-U.S. Plans
 
2016
 
2015
 
2016
 
2015
Service Cost
$
3,478

 
$
3,915

 
$
1,373

 
$
1,688

Interest Cost
5,762

 
5,791

 
1,375

 
1,486

Expected return on plan assets
(9,698
)
 
(10,393
)
 
(1,948
)
 
(2,019
)
Amortization:
 
 
 
 
 
 
 
Prior service cost
183

 
224

 
(99
)
 
23

Recognized actuarial loss
1,609

 
3,155

 
665

 
675

Transition obligation

 

 
1

 
9

Curtailments, special termination benefits, and settlements

 
810

 

 
2

Net periodic expense
$
1,334

 
$
3,502

 
$
1,367

 
$
1,864



15

Table of Contents
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)

Non-Qualified Supplemental Benefits
 
Three Months Ended March 31,
 
2016
 
2015
Service Cost
$
740

 
$
935

Interest Cost
1,317

 
1,266

Amortization:
 
 
 
   Prior service cost
1,567

 
1,732

   Recognized actuarial (gain) loss
(140
)
 
71

Net periodic expense
$
3,484

 
$
4,004


Post-Retirement Plans

The Company also maintains post retirement benefit plans, although these plans are effectively closed to new entrants. The supplemental and post retirement benefit plans are supported by the general assets of the Company. The following table sets forth the components of the Company’s net periodic expense relating to its post-retirement benefit plans:

 
Three Months Ended March 31,
 
2016
 
2015
Service Cost
$
13

 
$
41

Interest Cost
105

 
128

Amortization:
 
 
 
   Prior service cost
(36
)
 
(93
)
   Recognized actuarial gain
(59
)
 
(8
)
Net periodic expense
$
23

 
$
68


Defined Contribution Retirement Plans

The Company also offers defined contribution retirement plans which cover the majority of its U.S. employees, as well as employees in certain other countries. The Company’s expense relating to defined contribution plans was $9,808, and $9,006 for the three months ended March 31, 2016 and 2015, respectively.

14. Other Comprehensive Earnings (Loss)

The amounts recognized in other comprehensive earnings (loss) were as follows:
 
Three Months Ended
 
Three Months Ended
 
March 31, 2016
 
March 31, 2015
 
Pre-tax
 
Tax
 
Net of tax
 
Pre-tax
 
Tax
 
Net of tax
Foreign currency translation adjustments
$
6,611

 
$
2,158

 
$
8,769

 
$
(72,203
)
 
$
(11,906
)
 
$
(84,109
)
Pension and other postretirement benefit plans
3,691

 
(1,241
)
 
2,450

 
5,788

 
(1,962
)
 
3,826

Changes in fair value of cash flow hedges
(147
)
 
51

 
(96
)
 
1,629

 
(570
)
 
1,059

Other
2,090

 
(251
)
 
1,839

 
241

 
(27
)
 
214

Total other comprehensive earnings (loss)
$
12,245

 
$
717

 
$
12,962

 
$
(64,545
)
 
$
(14,465
)
 
$
(79,010
)

Total comprehensive earnings were as follows:
 
Three Months Ended March 31,
 
2016
 
2015
Net earnings
$
99,356

 
$
209,510

Other comprehensive earnings (loss)
12,962

 
(79,010
)
Comprehensive earnings
$
112,318

 
$
130,500



16

Table of Contents
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)

Amounts reclassified from accumulated other comprehensive earnings (loss) to earnings (loss) during the three months ended March 31, 2016 and 2015 were as follows:
 
Three Months Ended March 31,
 
2016

2015
Pension and postretirement benefit plans:
 
 
 
Amortization of actuarial losses
$
2,076

 
$
3,902

Amortization of prior service costs
1,615

 
1,886

Total before tax
3,691

 
5,788

Tax provision
(1,241
)
 
(1,962
)
Net of tax
$
2,450

 
$
3,826

 
 
 
 
Cash flow hedges:
 
 
 
Net gains reclassified into earnings
$
(72
)
 
$
(153
)
Tax benefit
25

 
54

Net of tax
$
(47
)
 
$
(99
)

The Company recognizes net periodic pension cost, which includes amortization of net actuarial losses and prior service costs, in both selling and administrative expenses and cost of goods and services, depending on the functional area of the underlying employees included in the plans.

Cash flow hedges consist mainly of foreign currency forward contracts. The Company recognizes the realized gains and losses on its cash flow hedges in the same line item as the hedged transaction, such as revenue, cost of goods and services, or selling & administrative expenses.


17

Table of Contents
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)

15. Segment Information

For management reporting and performance evaluation purposes, the Company categorizes its operating companies into four distinct reportable segments. Segment financial information and a reconciliation of segment results to consolidated results is as follows:
 
Three Months Ended March 31,
 
2016
 
2015
Revenue:
 
 
 
Energy
$
283,230

 
$
430,423

Engineered Systems
576,995

 
573,196

Fluids
399,062

 
340,236

Refrigeration & Food Equipment
363,252

 
372,097

Intra-segment eliminations
(266
)
 
(451
)
Total consolidated revenue
$
1,622,273

 
$
1,715,501

 
 
 
 
Earnings from continuing operations:
 
 
 
Segment earnings:
 
 
 
Energy
$
11,244

 
$
52,305

Engineered Systems
93,748

 
88,149

Fluids
46,047

 
54,634

Refrigeration & Food Equipment
38,161

 
36,150

Total segments
189,200

 
231,238

Corporate expense / other (1)
29,862

 
34,526

Net interest expense
31,714

 
32,037

Earnings before provision for income taxes and discontinued operations
127,624

 
164,675

Provision for taxes
28,268

 
47,485

Earnings from continuing operations
$
99,356

 
$
117,190

(1)  
Certain expenses are maintained at the corporate level and not allocated to the segments. These expenses include executive and functional compensation costs, non-service pension costs, non-operating insurance expenses, and various administrative expenses relating to the corporate headquarters.

16. Share Repurchases

In January 2015, the Board of Directors approved a standing share repurchase authorization, whereby the Company may repurchase up to 15,000,000 shares of its common stock over the following three years. This plan replaced all previously authorized repurchase programs. During the three months ended March 31, 2016, the Company repurchased no shares of common stock under the January 2015 authorization. As of March 31, 2016, there were 6,771,458 shares available for repurchase under this plan.

A summary of share repurchase activity during the three months ended March 31, 2015 is as follows:
Shares of common stock repurchased
2,753,165

Spending on share repurchases (in thousands)
$
200,055

Average price paid per share
$
72.66



18

Table of Contents
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)

17. Earnings per Share

The following table sets forth a reconciliation of the information used in computing basic and diluted earnings per share:
 
Three Months Ended March 31,
 
2016
 
2015
Earnings from continuing operations
$
99,356

 
$
117,190

Earnings from discontinued operations, net

 
92,320

Net earnings
$
99,356

 
$
209,510

 
 
 
 
Basic earnings per common share:
 
 
 
Earnings from continuing operations
$
0.64

 
$
0.72

Earnings from discontinued operations, net
$

 
$
0.57

Net earnings
$
0.64

 
$
1.30

 
 
 
 
Weighted average shares outstanding
155,064,000

 
161,650,000

 
 
 
 
Diluted earnings per common share:
 
 
 
Earnings from continuing operations
$
0.64

 
$
0.72

Earnings from discontinued operations, net
$

 
$
0.57

Net earnings
$
0.64

 
$
1.28

 
 
 
 
Weighted average shares outstanding
156,161,000

 
163,323,000

 
The following table is a reconciliation of the share amounts used in computing earnings per share:
 
Three Months Ended March 31,
 
2016
 
2015
Weighted average shares outstanding - Basic
155,064,000

 
161,650,000

Dilutive effect of assumed exercise of employee stock options and SARs and vesting of performance shares
1,097,000

 
1,673,000

Weighted average shares outstanding - Diluted
156,161,000

 
163,323,000


Diluted per share amounts are computed using the weighted-average number of common shares and, if dilutive, potential common shares outstanding during the period.  Potential common shares consist of the incremental common shares issuable upon the exercise of stock options and SARs, and vesting of performance shares and restricted shares, as determined using the treasury stock method.  

The weighted average number of anti-dilutive potential common shares excluded from the calculation above were approximately 27,000 and 56,000 for the three months ended March 31, 2016 and 2015, respectively.


19

Table of Contents
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands except share data and where otherwise indicated)

18. Recent Accounting Standards

Recently Issued Accounting Standards

In March 2016, the FASB issued Accounting Standards Update ("ASU") 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The updated guidance changes how companies account for certain aspects of share-based payment awards to employees, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as the classification of related matters in the statement of cash flows. The update is effective for the Company in the first quarter of 2017. The Company is currently evaluating this guidance and the impact it will have on its consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases, which amends existing guidance to require lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by long-term leases and to disclose additional quantitative and qualitative information about leasing arrangements. This ASU also provides clarifications surrounding the presentation of the effects of leases in the income statement and statement of cashflows. This guidance will be effective for the Company on January 1, 2019. The Company is currently evaluating this new guidance to determine the impact it will have on its consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, that introduces a new five-step revenue recognition model in which an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires disclosures sufficient to enable users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative disclosures about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. This guidance will be effective for the Company January 1, 2018. The Company is currently evaluating this guidance to determine the impact it will have on its consolidated financial statements.

Recently Adopted Accounting Standards

In April 2015, the FASB issued ASU 2015-03, Interest-Imputation of Interest (Subtopic 835-30):Simplifying the Presentation of Debt Issuance Costs. Under this guidance, debt issuance costs related to a recognized debt liability are required to be presented in the balance sheet as a direct reduction from the carrying amount of the related debt, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by this guidance. The Company adopted this guidance January 1, 2016. As a result of adoption, debt issuance costs of $13,687 were reclassified from assets to reduce long-term-debt as of December 31, 2015.

In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. Under this guidance the cumulative impact of purchase accounting adjustments arising during the one year measurement period from the date of acquisition will be recognized, in full, in the period identified. This guidance was effective for the Company January 1, 2016 and will be applied prospectively to adjustments arising after that date. There was no impact of adopting this standard in the current period.






20

Table of Contents


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

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

Throughout this Management’s Discussion and Analysis of Financial Condition and Results of Operations ("MD&A"), we refer to measures used by management to evaluate performance, including a number of financial measures that are not defined under accounting principles generally accepted in the United States of America ("GAAP"). These include organic revenue, organic revenue growth, free cash flow and adjusted working capital. Organic revenue and organic revenue growth refer to revenue and revenue growth excluding the impacts of foreign exchange, acquisitions and divestitures. Free cash flow is operating cash flow less capital spending, while adjusted working capital refers to accounts receivable, plus inventory, less accounts payable. We believe these measures provide investors with important information that is useful in understanding our business results and trends. Reconciliations within this MD&A provide more details on the use and derivation of these measures.

OVERVIEW AND OUTLOOK

Dover is a diversified global manufacturer delivering innovative equipment and components, specialty systems and support services through four major operating segments: Energy, Engineered Systems, Fluids, and Refrigeration & Food Equipment. The Company's entrepreneurial business model encourages, promotes, and fosters deep customer engagement and collaboration, which has led to Dover's well-established and valued reputation for providing superior customer service and industry-leading product innovation. Unless the context indicates otherwise, references herein to "Dover," "the Company," and words such as "we," "us," and "our" include Dover Corporation and its subsidiaries.

Dover's four segments are as follows:

Our Energy segment, serving the Drilling & Production, Bearings & Compression, and Automation end markets, is a provider of customer-driven solutions and services for safe and efficient production and processing of fuels worldwide and has a strong presence in the bearings and compression components and automation markets.

Our Engineered Systems segment is comprised of two platforms, Printing & Identification and Industrials, and is focused on the design, manufacture and service of critical equipment and components serving the fast-moving consumer goods, digital textile printing, vehicle service, environmental solutions and industrial end markets.

Our Fluids segment, serving the Fluid Transfer and Pumps end markets, is focused on the safe handling of critical fluids across the retail fueling, chemical, hygienic, oil and gas, and industrial end markets.

Our Refrigeration & Food Equipment segment is a provider of innovative and energy efficient equipment and systems serving the commercial refrigeration and food service end markets.

The following table shows the percentage of total revenue and segment earnings generated by each of our four segments for the three months ended March 31, 2016 and 2015:
 
Revenue
 
Segment Earnings
 
Three Months Ended March 31,
 
Three Months Ended March 31,
 
2016
 
2015
 
2016
 
2015
Energy
17.5
%
 
25.1
%
 
5.9
%
 
22.6
%
Engineered Systems
35.6
%
 
33.4
%
 
49.5
%
 
38.1
%
Fluids
24.5
%
 
19.8
%
 
24.4
%
 
23.7
%
Refrigeration & Food Equipment
22.4
%
 
21.7
%
 
20.2
%
 
15.6
%

First quarter 2016 consolidated revenue of $1.6 billion decreased $93.2 million, or 5.4%, as compared to the first quarter 2015, reflecting an organic decline of 7.4%, a 2.5% decline due to dispositions, and an unfavorable impact of 1.4% due to foreign currency translation, offset, in part, by growth from acquisitions of 5.9%.


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The organic revenue decline was primarily driven by our Energy, and to a lesser extent, Fluids segments as a result of severe weakness in U.S. oil and gas related end-markets. This decline in organic revenue was partially offset by organic revenue growth of 3% in both our Engineered Systems and Refrigeration & Food Equipment segments.

From a geographic perspective, North America results decreased largely driven by organic declines in the U.S. as a result of exposure to oil and gas markets. Excluding Energy, our U.S. industrial activity remained solid, growing organically by low single digits year-over-year. Asia and Europe both decreased on an organic basis.

We continue to adjust our cost structure to better align with the current economic environment. During the first quarter of 2016, we implemented previously announced restructuring plans and initiated new actions. These actions resulted in first quarter 2016 restructuring charges of $14.4 million. These actions were primarily within our Energy and Fluids segments with charges of $6.4 million and $5.2 million, respectively. We currently expect full year 2016 restructuring expenses of approximately $40.0 million, principally within our Energy and Fluids segments. We expect to realize cost savings of approximately $95.0 million to $105.0 million in 2016 as a result of programs previously initiated as well as those enacted in 2016.

During the first quarter of 2016, we completed the acquisition of the dispenser and system businesses of Tokheim Group S.A.S ("Tokheim") for an aggregate purchase price, net of cash acquired, of $436.1 million. Tokheim joins our Fluids Transfer platform within the Fluids segment and enables us to provide the most complete solutions available for our retail fueling customers.

In response to the weakness in the oil and gas markets, we have lowered our full year revenue growth expectations for our Energy and Fluids segments and have reduced our full year EPS guidance. We now expect full year revenue to decline 2% to 5%. Within this revenue forecast, organic growth is anticipated to decline 5% to 8%, acquisitions, net of dispositions, are expected to contribute 4% growth, and foreign currency is expected to result in an unfavorable impact of 1%. We anticipate full year EPS in the range of $3.51 to $3.66. This revised EPS range includes approximately $0.18 of restructuring charges, $0.05 of discrete tax benefits, and a $0.07 gain due to a disposition.

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CONSOLIDATED RESULTS OF OPERATIONS

 
Three Months Ended March 31,
(dollars in thousands, except per share figures)
2016
 
2015
 
% Change
Revenue
$
1,622,273

 
$
1,715,501

 
(5.4
)%
Cost of goods and services
1,033,009

 
1,088,342

 
(5.1
)%
Gross profit
589,264

 
627,159

 
(6.0
)%
Gross profit margin
36.3
%
 
36.6
%
 
(0.3
)
 
 
 
 
 
 
Selling and administrative expenses
443,448

 
434,634

 
2.0
 %
Selling and administrative as a percent of revenue
27.3
%
 
25.3
%
 
2.0

 
 
 
 
 
 
Interest expense, net
31,714

 
32,037

 
(1.0
)%
Other income, net
(13,522
)
 
(4,187
)
 
nm*
 
 
 
 
 
 
Provision for income taxes
28,268

 
47,485

 
(40.5
)%
Effective tax rate
22.1
%
 
28.8
%
 
(6.7
)
 
 
 
 
 
 
Earnings from continuing operations
99,356

 
117,190

 
(15.2
)%
Earnings from discontinued operations, net

 
92,320

 
nm*
Earnings from continuing operations per common share - diluted
$
0.64

 
$
0.72

 
(11.1
)%
* nm - not meaningful 

Revenue

First quarter revenue decreased $93.2 million, or 5.4%, as compared to the first quarter of 2015. Results were driven by an organic revenue decline of 7.4%, a decrease due to disposed businesses of 2.5%, and an unfavorable impact from foreign currency translation of 1.4%. This decline was partially offset by acquisition-related revenue growth of 5.9%. The organic revenue decline was primarily the result of historic lows in Energy activity, most notably U.S. rig counts and capital spending within the oil and gas markets. Customer pricing was favorable to revenue by approximately 0.2% in the first quarter of 2016.

Gross Profit

Gross profit for the first quarter of 2016 decreased $37.9 million, or 6.0%, in connection with the declining revenues for the period. Gross profit margin declined 30 basis points primarily due to revenue declines in those businesses with historically higher margin contributions, due to an unfavorable product mix. In addition, reduced leverage on fixed overhead contributed to the decline in gross profit margin for the three months ended March 31, 2016 relative to the prior year.

Selling and Administrative Expenses

Selling and administrative expenses increased $8.8 million, or 2.0%, as compared to the prior year quarter, reflecting the impact of recent acquisitions, including the related depreciation and amortization expense, partially offset by lower restructuring charges, and the benefits of previously implemented cost reduction actions. As a percentage of revenue, selling and administrative expenses increased 200 basis points in 2016 to 27.3%, reflecting deleveraging of fixed administrative costs and acquisition-related costs.

Non-Operating Items

Interest expense, net

Net interest expense decreased $0.3 million, or 1.0%, as compared to the prior year quarter, primarily due to lower interest on the $400.0 million notes, issued during the fourth quarter of 2015, that replaced the $300.0 million notes with a higher interest rate. This was offset by higher interest on higher average balances of commercial paper for the first quarter of 2016 relative to the first quarter of 2015.

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Other income, net

Other income of $13.5 million for the three months ended March 31, 2016 primarily consists of the $11.2 million pre-tax gain on the sale of Texas Hydraulics, $1.2 million of foreign currency exchange gains resulting from the remeasurement of foreign currency denominated balances and earnings from minority investments of $0.8 million. The prior year income of $4.2 million primarily reflects a one-time favorable insurance settlement of $3.6 million.

Income Taxes

The effective tax rates for continuing operations for the three months ended March 31, 2016 and 2015 were 22.1% and 28.8%, respectively. Reflected in the effective tax rate for the three months ended March 31, 2016 and 2015 are favorable discrete items of $7.3 million and $0.7 million, respectively. Excluding these discrete items, the effective tax rates for the three months ended March 31, 2016 and 2015 were 27.9% and 29.3%, respectively. The 2016 discrete items principally resulted primarily from the impact on deferred tax balances of a tax rate reduction in a non-US jurisdiction. The 2015 discrete items principally resulted from the conclusion of certain state tax audits and an adjustment of our tax accounts to the return filed. The reduction in the effective tax rate year over year is primarily due to a change in the geographic mix of earnings as well as restructuring of foreign operations.

Dover and its subsidiaries file tax returns in the U.S., including various state and local returns, and in other foreign jurisdictions.  We believe adequate provision has been made for all income tax uncertainties. We are routinely audited by taxing authorities in our filing jurisdictions, and a number of these audits are currently underway. We believe that within the next twelve months uncertain tax positions may be resolved and statutes of limitations will expire, which could result in a decrease in the gross amount of unrecognized tax benefits of approximately zero to $19.6 million. A portion of these unrecognized tax benefits relate to companies previously reported as discontinued operations.

Earnings from Continuing Operations

Earnings from continuing operations for the three months ended March 31, 2016 decreased 15.2% to $99.4 million, or $0.64 diluted earnings per share. The decrease in earnings is primarily the result of the declines in the U.S. rig count and reduced capital spending within the energy market. The decrease in earnings per share reflects the decrease in earnings, offset by lower weighted average shares outstanding for the 2016 period relative to the prior year.

Discontinued Operations

The results of discontinued operations for the three months ended March 31, 2015 reflect the net earnings of businesses that were held for sale until their disposition date. We completed the sale of Datamax O'Neil in the first quarter of 2015 for a gain on sale of $87.8 million which is also included in earnings from discontinued operations for that period.

Restructuring Activities

The restructuring expenses of $14.4 million incurred in the three months ended March 31, 2016 relate to restructuring programs initiated during 2016 and 2015. These programs are designed to better align our costs and operations with current market conditions through targeted facility consolidations, headcount reductions and other measures. We currently expect full year 2016 restructuring expenses of approximately $40.0 million, inclusive of our actions taken to date, principally within our Energy and Fluids segments. We expect the programs currently underway to be substantially completed in the next twelve to eighteen months.

The $14.4 million of restructuring charges incurred during the first quarter of 2016 primarily included the following items:

The Energy segment incurred restructuring charges of $6.4 million related to various programs across the segment focused on workforce reductions and field and service consolidations. These programs were initiated to better align cost base with the anticipated demand environment.

The Engineered Systems segment recorded $2.0 million of restructuring charges relating to headcount reductions across various businesses primarily related to optimization of administrative functions within the Printing & Identification platform and U.S. manufacturing consolidation within the Industrial platform.

The Fluids segment recorded $5.2 million of restructuring charges principally related to headcount reductions and facility consolidations at various businesses across the segment.

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The Refrigeration and Food Equipment segment and corporate incurred restructuring charges related to headcount reductions.

For the three months ended March 31, 2015, we incurred restructuring charges of $24.1 million for programs at several targeted facilities to optimize cost structure, across several of the segments. See Note 7 Restructuring Activities in our Condensed Consolidated Financial Statements for additional information related to our restructuring programs.

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Table of Contents


SEGMENT RESULTS OF OPERATIONS

Energy
Our Energy segment, serving the Drilling & Production, Bearings & Compression, and Automation end markets, is a provider of customer-driven solutions and services for safe and efficient production and processing of fuels worldwide and has a strong presence in the bearings and compression components and automation markets.
 
Three Months Ended March 31,
(dollars in thousands)
2016
 
2015
 
% Change
Revenue:
 
 
 
 
 
Drilling & Production
$
188,360

 
$
299,158

 
(37.0
)%
Bearings & Compression
64,444

 
77,591

 
(16.9
)%
Automation
30,426

 
53,674

 
(43.3
)%
Total
$
283,230

 
$
430,423

 
(34.2
)%
 
 
 
 
 
 
Segment earnings
$
11,244

 
$
52,305

 
(78.5
)%
Operating margin
4.0
%
 
12.2
%
 
 
 
 
 
 
 
 
Segment EBITDA
$
45,404

 
$
86,732

 
(47.7
)%
Segment EBITDA margin
16.0
%
 
20.2
%
 
 
 
 
 
 
 
 
Other measures:
 
 
 
 
 
Depreciation and amortization
$
34,160

 
$
34,427

 
(0.8
)%
Bookings
273,445

 
416,628

 
(34.4
)%
Backlog
144,828

 
212,060

 
(31.7
)%
 
 
 
 
 
 
Components of revenue decline:
 
 
 
 
YTD 2016 vs. 2015
Organic decline
 
 
 
 
(32.9
)%
Acquisitions
 
 
 
 
 %
Foreign currency translation
 
 
 
 
(1.3
)%
 
 
 
 
 
(34.2
)%

First Quarter 2016 Compared to the First Quarter 2015

Energy revenue decreased $147.2 million, or 34.2%, in the first quarter of 2016 as compared to the first quarter of 2015, comprised of an organic revenue decline of 32.9% and an unfavorable impact from foreign currency translation of 1.3%. Within the Energy segment, market activity levels, which began in the fourth quarter of 2015, reached new lows on declines in the U.S. rig count and reduced capital spending. These reductions were seen broadly across our end markets. Customer pricing unfavorably impacted revenue by approximately 0.8% in the first quarter of 2016.

Drilling & Production end market revenue (representing 66.5% of segment revenue) decreased $110.8 million, or 37.0%, due to declines in U.S. rig count and capital spending in our North American markets. Our customers continue to delay and significantly limit their capital spending due to uncertainty within the oil and gas markets they serve and to conserve cash.

Bearings & Compression end market revenue (representing 22.8% of segment revenue) decreased $13.1 million, or 16.9%, as U.S. OEM end-user demand weakened within its end markets, especially with oil and gas customers.

Automation end market revenue (representing approximately 10.7% of segment revenue) decreased $23.2 million, or 43.3%. This decrease was driven by customer project delays, as low oil prices and market uncertainties continued to drive reduced capital spending by well service and exploration and production companies.



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Table of Contents



Segment earnings decreased $41.1 million, or 78.5%, for our Energy segment, as compared to the prior year quarter, primarily driven by lower volume across our Energy businesses, most significantly within the Drilling & Production and Automation end markets. These decreases were partially offset by restructuring charges of $6.4 million as the segment continued targeted workforce reductions and consolidation of field and service operations as compared to $17.8 million in the prior year.

Operating margin declined from 12.2% to 4.0%, as compared to the prior year quarter, mainly due to the aforementioned impact of weak market dynamics resulting in significantly decreased volumes.

Bookings for the first quarter decreased 34.4% from the prior year quarter, reflecting ongoing market weakness. Book-to-bill was 0.97.



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Table of Contents


Engineered Systems
Our Engineered Systems segment is comprised of two platforms, Printing & Identification and Industrials, and is focused on the design, manufacture and service of critical equipment and components serving the fast-moving consumer goods, digital textile printing, vehicle service, environmental solutions and industrial end markets.
 
Three Months Ended March 31,
(dollars in thousands)
2016
 
2015
 
% Change
Revenue:
 
 
 
 
 
Printing & Identification
$
239,681

 
$
230,181

 
4.1
 %
Industrials
337,314

 
343,015

 
(1.7
)%
Total
$
576,995

 
$
573,196

 
0.7
 %
 
 
 
 
 
 
Segment earnings
$
93,748

 
$
88,149

 
6.4
 %
Operating margin
16.2
%
 
15.4
%
 
 
 
 
 
 
 
 
Segment EBITDA
$
109,784

 
$
102,675

 
6.9
 %
Segment EBITDA margin
19.0
%
 
17.9
%
 
 
 
 
 
 
 
 
Other measures:
 
 
 
 
 
Depreciation and amortization
$
16,036

 
$
14,526

 
10.4
 %
 
 
 
 
 
 
Bookings:
 
 
 
 
 
Printing & Identification
$
242,569

 
$
235,617

 
3.0
 %
Industrials
329,957

 
337,070

 
(2.1
)%
 
$
572,526

 
$
572,687

 
 %
Backlog:
 
 
 
 
 
Printing & Identification
$
102,640

 
$
108,151

 
(5.1
)%
Industrials
235,384

 
276,598

 
(14.9
)%
 
$
338,024

 
$
384,749

 
(12.1
)%
 
 
 
 
 
 
Components of revenue decline:
 
 
 
 
YTD 2016 vs. 2015
Organic growth
 
 
 
 
2.7
 %
Acquisitions
 
 
 
 
3.0
 %
Dispositions
 
 
 
 
(2.8
)%
Foreign currency translation
 
 
 
 
(2.2
)%
 
 
 
 
 
0.7
 %

First Quarter 2016 Compared to the First Quarter 2015

Engineered Systems revenue for the first quarter of 2016 increased $3.8 million, or 0.7%, as compared to the first quarter of 2015 primarily driven by organic growth of 2.7%, and acquisition-related growth of 3.0%, offset by dispositions of 2.8% and an unfavorable impact from foreign currency of 2.2%. Customer pricing favorably impacted revenue by approximately 0.6% in the first quarter of 2016.

Revenue of our Printing & Identification platform (representing 41.5% of segment revenue) increased $9.5 million, or 4.1%, primarily driven by acquisition-related growth of 7.5% and organic growth of 1.4%, offset by the negative impact of foreign currency translation of 4.8%. Organic revenue growth was primarily driven by solid marking and coding sales.

Revenue of our Industrials platform (representing 58.5% of segment revenue), decreased $5.7 million, or 1.7%, as compared to the prior year quarter. Broad-based organic growth of 3.5% across the platform was led by strong results in our Environmental Solutions business. This organic growth was offset by the impact of the disposition of Texas Hydraulics of 4.8% and a minimal unfavorable foreign currency translation impact.

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Table of Contents



Engineered Systems segment earnings increased $5.6 million, or 6.4%, as compared to the prior year quarter, reflecting leverage of organic revenue growth and productivity improvements. The gain on sale of a business was more than offset by acquisition-related depreciation and amortization expense, facility consolidation costs, an insurance settlement gain in the prior period and a one-time charge related to an environmental matter in the current quarter. Operating margin primarily improved as a result of organic revenue growth and productivity gains.
 
Segment bookings were flat to the prior year period. Book-to-bill for Printing & Identification was 1.01, while Industrials was 0.98. Overall, book-to-bill was 0.99.


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Table of Contents


Fluids
Our Fluids segment, serving the Fluid Transfer and Pumps end markets, is focused on the safe handling of critical fluids across the retail fueling, chemical, hygienic, oil and gas, and industrial end markets.
 
Three Months Ended March 31,
(dollars in thousands)
2016
 
2015
 
% Change
Revenue:
 
 
 
 
 
Fluid Transfer
$
238,157

 
$
195,171

 
22.0
 %
Pumps
160,905

 
145,065

 
10.9
 %
 
$
399,062

 
$
340,236

 
17.3
 %
 
 
 
 
 
 
Segment earnings
$
46,047

 
$
54,634

 
(15.7
)%
Operating margin
11.5
%
 
16.1
%
 
 
 
 
 
 
 
 
Segment EBITDA
$
66,558

 
$
68,482

 
(2.8
)%
Segment EBITDA margin
16.7
%
 
20.1
%
 
 
 
 
 
 
 
 
Other measures:
 
 
 
 
 
Depreciation and amortization
$
20,511

 
$
13,848

 
48.1
 %
Bookings
418,345

 
339,310

 
23.3
 %
Backlog
286,457

 
259,504

 
10.4
 %
 
 
 
 
 
 
Components of revenue decline:
 
 
 
 
YTD 2016 vs. 2015
Organic decline
 
 
 
 
(3.4
)%
Acquisitions
 
 
 
 
22.4
 %
Foreign currency translation
 
 
 
 
(1.7
)%
 
 
 
 
 
17.3
 %

First Quarter 2016 Compared to the First Quarter 2015

Fluids revenue for the first quarter of 2016 increased $58.8 million, or 17.3%, comprised of acquisition-related growth of 22.4%, offset by an organic decline of 3.4% and an unfavorable impact from foreign currency translation of 1.7%. The decline in organic revenue impacted both the Fluid Transfer and Pumps end markets as a result of weak oil and gas markets and the associated effect of reduced capital spending by our customers. Customer pricing favorably impacted revenue by approximately 1.1% in the first quarter of 2016.

Fluid Transfer revenue (representing 59.7% of segment revenue) increased $43.0 million, or 22.0%, as compared to the prior year period. This revenue increase was primarily driven by our first quarter acquisition of Tokheim offset by the impact of lower customer demand driven by reduced capital spending by integrated energy customers.

Pumps revenue (representing 40.3% of segment revenue) increased $15.8 million, or 10.9%, as compared with the prior year period, primarily driven by our fourth quarter 2015 acquisitions offset by the impacts of lower activity in oil and gas-related pump end markets.

Earnings in our Fluids segment decreased $8.6 million, or 15.7%, over the prior year quarter, driven by organic revenue declines and increased acquisition-related depreciation and amortization expense, partially offset by focused controlled spending, productivity improvements, and the benefits of restructuring programs. Operating margin decreased 460 basis points as a result of lower organic volume, business mix, incremental restructuring costs of $3.1 million, and the previously mentioned costs of recent acquisitions.

Overall bookings increased 23.3% as compared to the prior year quarter, primarily reflecting the impact of acquisitions. Book to bill was 1.05.

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Table of Contents


Refrigeration & Food Equipment
Our Refrigeration & Food Equipment segment is a provider of innovative and energy efficient equipment and systems serving the commercial refrigeration and food service end markets.
 
Three Months Ended March 31,
(dollars in thousands)
2016
 
2015
 
% Change
Revenue:
 
 
 
 
 
Refrigeration
$
279,290

 
$
290,716

 
(3.9
)%
Food Equipment
83,962

 
81,381

 
3.2
 %
Total
$
363,252

 
$
372,097

 
(2.4
)%
 
 
 
 
 
 
Segment earnings
$
38,161

 
$
36,150

 
5.6
 %
Operating margin
10.5
%
 
9.7
%
 
 
 
 
 
 
 
 
Segment EBITDA
$
54,889

 
$
52,608

 
4.3
 %
Segment EBITDA margin
15.1
%
 
14.1
%
 
 
 
 
 
 
 
 
Other measures:
 
 
 
 
 
Depreciation and amortization
$
16,728

 
$
16,458

 
1.6
 %
Bookings
411,367

 
419,659

 
(2.0
)%
Backlog
303,479

 
337,084

 
(10.0
)%
 
 
 
 
 
 
Components of revenue decline:
 
 
 
 
YTD 2016 vs. 2015
Organic growth
 
 
 
 
3.0
 %
Acquisitions
 
 
 
 
 %
Dispositions
 
 
 
 
(4.8
)%
Foreign currency translation
 
 
 
 
(0.6
)%
 
 
 
 
 
(2.4
)%

First Quarter 2016 Compared to the First Quarter 2015

Refrigeration & Food Equipment segment revenue decreased $8.8 million, or 2.4%, as compared to the first quarter of 2015, comprised of organic revenue growth of 3.0% which was more than offset by disposition impact of 4.8% and an unfavorable impact from foreign currency translation of 0.6%. Customer pricing did not have a significant impact on revenue in the first quarter of 2016.

Refrigeration revenue (representing 76.9% of segment revenue) decreased $11.4 million, or 3.9%, quarter over quarter, primarily driven by the disposition of our walk-in coolers product line at the end of 2015. The impact of this disposition was partially offset by organic growth from several retail refrigeration customers.
Food Equipment revenue (representing 23.1% of segment revenue) increased $2.6 million, or 3.2%, compared with the prior year quarter, mainly driven by our can shaping equipment business.
Refrigeration & Food Equipment segment earnings increased $2.0 million, or 5.6%, as compared to the first quarter of 2015 primarily due to productivity gains and leverage from increased volumes in the can shaping and retail refrigeration businesses, partially offset by the disposition of our walk-in coolers product line at the end of 2015. Operating margin increased 80 basis points, reflecting the positive impact of the disposition of the walk-in coolers product line on Refrigeration margins, benefits of productivity improvement programs, and discretionary spend management.
First quarter 2016 bookings decreased 2.0% from the prior year comparable quarter, principally due to the previously mentioned divestiture of the walk-in coolers product line. Excluding the impact of this divestiture, bookings increased by 3.7%, driven by our core refrigeration customers. Book to bill for the first quarter of 2016 was 1.13, reflecting normal seasonality.


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Table of Contents


FINANCIAL CONDITION

We assess our liquidity in terms of our ability to generate cash to fund our operating, investing and financing activities. Significant factors affecting liquidity are: cash flows generated from operating activities, capital expenditures, acquisitions, dispositions, dividends, repurchase of outstanding shares, adequacy of available commercial paper and bank lines of credit, and the ability to attract long-term capital with satisfactory terms. We generate substantial cash from the operations of our businesses and remain in a strong financial position, with sufficient liquidity available for reinvestment in existing businesses and strategic acquisitions, while managing our capital structure on a short and long-term basis.

Cash Flow Summary

The following table is derived from our unaudited Condensed Consolidated Statement of Cash Flows:
 
Three Months Ended March 31,
Cash Flows from Continuing Operations (in thousands)
2016
 
2015
Net Cash Flows Provided By (Used In):
 
 
 
Operating activities
$
133,413

 
$
131,332

Investing activities
(425,857
)
 
156,585

Financing activities
178,507

 
(416,603
)

Operating Activities

Cash provided by operating activities for the three months ended March 31, 2016 increased approximately $2.1 million compared to the comparable period in 2015. This increase was primarily the result of decreases in employee bonus payments year over year and lower non-U.S. pension liabilities, largely offset by decreased earnings, lower collections on accounts receivable and higher inventory balances.

Adjusted Working Capital

We believe adjusted working capital (a non-GAAP measure calculated as accounts receivable, plus inventory, less accounts payable) provides a meaningful measure of our operational results by showing the changes caused solely by revenue. Adjusted working capital increased $38.4 million in 2016, or 3.0%, to $1.3 billion, which reflected an increase of $46.9 million in inventory and an increase in accounts payable of $55.3 million, offset by an increase of $46.8 million in accounts receivable.

Investing Activities

Cash provided by or used in investing activities generally results from cash outflows for capital expenditures and acquisitions, offset by proceeds from sales of businesses and property, plant and equipment. For the three months ended March 31, 2016, we used cash through investing activities of $425.9 million as compared to cash provided of $156.6 million for the same period of 2015, driven mainly by the following factors:

Proceeds from the sale of business: In 2016, we generated cash of $47.3 million from the sale of Texas Hydraulics.

Acquisitions: During 2016, we deployed approximately $436.1 million, net, to acquire Tokheim within the Fluids segment. In comparison, in 2015, we acquired one business for a net aggregate cash purchase price of approximately $6.5 million.

Capital spending: Our capital expenditures increased $9.3 million in 2016 as compared to the same period in 2015, primarily within the Fluids segment. We expect full year 2016 capital expenditures to approximate 2.3% of revenue.

We anticipate that capital expenditures and any acquisitions we make through the remainder of 2016 will be funded from available cash and internally generated funds and through the issuance of commercial paper, use of established lines of credit or public debt or equity markets, as necessary.


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Table of Contents


Financing Activities

Our cash flow from financing activities generally relates to the use of cash for the repurchase of our common stock and payments of dividends, offset by net borrowing activity and proceeds from the exercises of stock options. For the three months ended March 31, 2016 and 2015, we generated cash totaling $178.5 million and used cash totaling $416.6 million, respectively, for financing activities, with the activity primarily attributable to the following:

Share purchases: During the three months ended March 31, 2016, the Company repurchased no shares of common stock compared to repurchases of $200.1 million for the same period in 2015. As of March 31, 2016, the approximate number of shares still available for repurchase under the January 2015 share repurchase authorization was 6.8 million.
 
Commercial paper and notes payable: Commercial paper and notes payable, net increased in the 2016 period by $247.1 million, as we borrowed $316.4 million to fund the acquisition of Tokheim. We subsequently utilized proceeds from the sale of Texas Hydraulics and cash to pay down $61.1 million of commercial paper, net of interim period borrowings. We generally use commercial paper borrowings for general corporate purposes, as well as to fund acquisitions and repurchase common stock.

Dividend payments: Dividends paid to shareholders in 2016 was relatively flat as compared to 2015. Our dividends paid per common share increased 5% to $0.42 in 2016 compared to $0.40 in 2015; however, this higher dividend rate was partially offset by lower common shares outstanding for the 2016 period relative to 2015 due to approximately 5.5 million of share repurchases over the past twelve months.

Net proceeds from the exercise of share-based awards: Proceeds from the exercise of share-based awards were $0.6 million lower in 2016 as compared to the prior year. These proceeds have declined in recent periods as the number of stock options are diminishing and a larger number of cashless exercises of equity awards have occurred. Payments to settle tax obligations on these exercises increased $2.5 million in 2016.

Cash Flows from Discontinued Operations

Cash generated from discontinued operations of $3.5 million for the three months ended March 31, 2015 reflect the operating results of Sargent Aerospace and Datamax O'Neil prior to their sale.

Liquidity and Capital Resources

Free Cash Flow

In addition to measuring our cash flow generation and usage based upon the operating, investing and financing classifications included in the unaudited Condensed Consolidated Statement of Cash Flows, we also measure free cash flow (a non-GAAP measure).  We believe that free cash flow is an important measure of operating performance because it provides management and investors a measurement of cash generated from operations that is available to fund acquisitions, pay dividends, repay debt and repurchase our common stock.

The following table reconciles our free cash flow to cash flow provided by operating activities:
 
Three Months Ended March 31,
Free Cash Flow (dollars in thousands)
2016
 
2015
Cash flow provided by operating activities
$
133,413

 
$
131,332

Less: Capital expenditures
(37,230
)
 
(27,956
)
Free cash flow
$
96,183

 
$
103,376

Free cash flow as a percentage of revenue
5.9
%
 
6.0
%
 
For the three months ended March 31, 2016, we generated free cash flow of $96.2 million, representing 5.9% of revenue and 96.8% of net earnings from continuing operations. Free cash flow in 2016 decreased $7.2 million over the prior year primarily due to an increase in capital expenditure spending of $9.2 million. We expect to generate free cash flow of approximately 11.0% of revenue for full year 2016.
 

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Net Debt to Net Capitalization

We utilize the net debt to net capitalization calculation (a non-GAAP measure) to assess our overall financial leverage and capacity and believe the calculation is useful to investors for the same reason. The following table provides a reconciliation of net debt to net capitalization to the most directly comparable GAAP measures:

Net Debt to Net Capitalization Ratio (dollars in thousands)
 
March 31, 2016
 
December 31, 2015
Current maturities of long-term debt
 
$
4,558

 
$
122

Commercial paper
 
401,300

 
151,000

Long-term debt
 
2,610,642

 
2,603,655

Total debt
 
3,016,500

 
2,754,777

Less:  Cash and cash equivalents
 
(243,720
)
 
(362,185
)
Net debt
 
2,772,780

 
2,392,592

Add:  Stockholders' equity
 
3,698,133

 
3,644,575

Net capitalization
 
$
6,470,913

 
$
6,037,167

Net debt to net capitalization
 
42.8
%
 
39.6
%

Our net debt to net capitalization ratio increased to 42.8% at March 31, 2016 from 39.6% at December 31, 2015. The increase in this ratio was driven primarily by the increase in our net capitalization of $433.7 million due to higher commercial paper of $250.3 million and lower cash and cash equivalents of $118.5 million during the current year.

We use commercial paper borrowings for general corporate purposes, including the funding of acquisitions and the repurchase of our common stock. In addition, we maintain a $1.0 billion unsecured revolving credit facility with a syndicate of banks which will expire on November 10, 2020. This facility is used primarily as liquidity back-up for our commercial paper program. We have not drawn down any loans under this facility nor do we anticipate doing so. We were in compliance with revolving credit facility and our other long-term debt covenants at March 31, 2016 and had a coverage ratio of 12.3 to 1.0. We are not aware of any potential impairment to our liquidity and expect to remain in compliance with all of our debt covenants.

We also have a current shelf registration statement filed with the Securities and Exchange Commission that allows for the issuance of additional debt securities that may be utilized in one or more offerings on terms to be determined at the time of the offering. Net proceeds of any offering would be used for general corporate purposes, including repayment of existing indebtedness, capital expenditures and acquisitions.

At March 31, 2016, our cash and cash equivalents totaled $243.7 million, of which $207.1 million was held outside the United States. Cash and cash equivalents are invested in highly liquid investment-grade money market instruments and bank deposits with maturities of three months or less. We regularly invest cash in excess of near-term requirements in money market instruments or short-term investments, which consist of investment grade time deposits with original maturity dates at the time of purchase of no greater than three months.  

Critical Accounting Policies and Estimates

Our Condensed Consolidated Financial Statements and related public financial information are based on the application of GAAP which requires the use of estimates, assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenue and expense amounts reported.  These estimates can also affect supplemental information contained in our public disclosures, including information regarding contingencies, risk and our financial condition. We believe our use of estimates and underlying accounting assumptions conform to GAAP and are consistently applied.  We review valuations based on estimates for reasonableness on a consistent basis.

Goodwill

In accordance with the applicable accounting standard, we perform our annual goodwill impairment testing in the fourth quarter of each year. In addition to the annual impairment test, we are required to regularly assess whether a triggering event has occurred which would require interim impairment testing. We have considered the economic environments in which our businesses operate, particularly within those reporting units exposed to the decline in oil and gas markets, and the long-term outlook for those businesses. We have determined that a triggering event has not occurred which would require impairment testing at this time.


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Recent Accounting Standards

See Part 1, Notes to Unaudited Condensed Consolidated Financial Statements, Note 18 Recent Accounting Standards.  The adoption of recent accounting standards as included in Note 18 Recent Accounting Standards in the unaudited Condensed Consolidated Financial Statements has not had and is not expected to have a significant impact on our revenue, earnings or liquidity.

Special Notes Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q, especially "Management’s Discussion and Analysis of Financial Condition and Results of Operations," contains "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Such statements relate to, among other things, operating and strategic plans, income, earnings, cash flows, foreign exchange, changes in operations, acquisitions, industries in which Dover businesses operate, anticipated market conditions and our positioning, global economies, and operating improvements. Forward-looking statements may be indicated by words or phrases such as "anticipates," "expects," "believes," "suggests," "will," "plans," "should," "would," "could," and "forecast," or the use of the future tense and similar words or phrases. Forward-looking statements are subject to inherent risks and uncertainties that could cause actual results to differ materially from current expectations, including, but not limited to, oil and natural gas demand, production growth, and prices; changes in exploration and production spending by Dover’s customers and changes in the level of oil and natural gas exploration and development; changes in customer demand and capital spending; economic conditions generally and changes in economic conditions globally and in markets served by Dover businesses, including well activity and U.S. industrials activity; Dover’s ability to achieve expected savings from integration and other cost-control initiatives, such as lean and productivity programs as well as efforts to reduce sourcing input costs; the impact of interest rate and currency exchange rate fluctuations; the ability of Dover's businesses to expand into new geographic markets; Dover's ability to identify and successfully consummate value-adding acquisition opportunities or planned divestitures; the impact of loss of a significant customer, or loss or non-renewal of significant contracts; the ability of Dover's businesses to develop and launch new products, timing of such launches and risks relating to market acceptance by customers; the relative mix of products and services which impacts margins and operating efficiencies; increased competition and pricing pressures; the impact of loss of a single-source manufacturing facility; short-term capacity constraints; increases in the cost of raw materials; domestic and foreign governmental and public policy changes or developments, including environmental regulations, conflict minerals disclosure requirements, tax policies, trade sanctions, and export/import laws; protection and validity of patent and other intellectual property rights; the impact of legal matters and legal compliance risks; conditions and events affecting domestic and global financial and capital markets; and a downgrade in Dover's credit ratings which, among other matters, could make obtaining financing more difficult and costly. Dover refers you to the documents that it files from time to time with the Securities and Exchange Commission, such as its reports on Form 10-K for a discussion of these and other risks and uncertainties that could cause its actual results to differ materially from its current expectations and from the forward-looking statements contained herein. Dover undertakes no obligation to update any forward-looking statement, except as required by law.

The Company may, from time to time, post financial or other information on its Internet website, www.dovercorporation.com. The Internet address is for informational purposes only and is not intended for use as a hyperlink. The Company is not incorporating any material on its website into this report.


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Table of Contents


Non-GAAP Disclosures
In an effort to provide investors with additional information regarding our results as determined by generally accepted accounting principles (GAAP), we also disclose non-GAAP information that we believe provides useful information to investors. Segment EBITDA, segment EBITDA margin, free cash flow, net debt, net capitalization, the net debt to net capitalization ratio, adjusted working capital, earnings adjusted for non-recurring items, effective tax rate adjusted for discrete and other items, revenue excluding the impact of changes in foreign currency exchange rates and organic revenue growth are not financial measures under GAAP and should not be considered as a substitute for cash flows from operating activities, debt or equity, earnings, revenue or working capital as determined in accordance with GAAP, and they may not be comparable to similarly titled measures reported by other companies.  We believe that segment EBITDA and segment EBITDA margin are useful to investors and other users of our financial information in evaluating ongoing operating profitability as they exclude the depreciation and amortization expense related primarily to capital expenditures and acquisitions that occurred in prior years, as well as in evaluating operating performance in relation to our competitors. Segment EBITDA is calculated by adding back depreciation and amortization expense to segment earnings. Segment EBITDA margin is calculated as segment EBITDA divided by segment revenue. We believe (1) the net debt to net capitalization ratio and (2) free cash flow are important measures of liquidity. Net debt to net capitalization is helpful in evaluating our capital structure and the amount of leverage we employ. Free cash flow provides both management and investors a measurement of cash generated from operations that is available to fund acquisitions, pay dividends, repay debt and repurchase our common stock.  Reconciliations of free cash flow, net debt, and net capitalization can be found above in this Item 2, "Management’s Discussion and Analysis of Financial Condition and Results of Operations." We believe that reporting our effective tax rate adjusted for discrete and other items is useful to management and investors as it facilitates comparisons of our ongoing tax rate to prior and future periods and our peers. We believe that reporting adjusted working capital (also sometimes called "working capital"), which is calculated as accounts receivable, plus inventory, less accounts payable, provides a meaningful measure of our operational results by showing the changes caused solely by revenue.  We believe that reporting adjusted working capital and revenues at constant currency, which excludes the positive or negative impact of fluctuations in foreign currency exchange rates, provides a meaningful measure of our operational changes, given the global nature of our businesses. We believe that reporting organic revenue growth, which excludes the impact of foreign currency exchange rates and the impact of acquisitions, provides a useful comparison of our revenue performance and trends between periods.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There has been no significant change in our exposure to market risk during the three months ended March 31, 2016. For a discussion of our exposure to market risk, refer to Item 7A, "Quantitative and Qualitative Disclosures about Market Risk," contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015 ("Form 10-K").

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 were effective as of March 31, 2016.

During the first quarter of 2016, 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.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

See Part I, Notes to unaudited Condensed Consolidated Financial Statements, Note 12 Commitments and Contingent Liabilities.

Item 1A. Risk Factors

There have been no material changes from the risk factors previously disclosed in our Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a)
Not applicable.

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Table of Contents


(b)
Not applicable.
(c)
In January 2015, the Board of Directors approved a new standing share repurchase authorization, whereby the Company may repurchase up to 15,000,000 shares of its common stock over the following three years. No repurchases were made in the first quarter of 2016. As of March 31, 2016, the number of shares still available for repurchase under the January 2015 share repurchase authorization was 6,771,458.
Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

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Table of Contents


Item 6. Exhibits
10.1
Form of 2016 award grant letter for SSAR grants made under the Dover Corporation 2012 Equity and Cash Incentive Plan.*
 
 
10.2
Form of 2016 award grant letter for cash performance grants made under the Dover Corporation 2012 Equity and Cash Incentive Plan.*
 
 
10.3
Form of 2016 award grant letter for performance share grants made under the Dover Corporation 2012 Equity and Cash Incentive Plan.*
 
 
10.4
Form of 2016 award grant letter for RSU grants made under the Dover Corporation 2012 Equity and Cash Incentive Plan.*
 
 
31.1
Certificate pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, signed and dated by Brad M. Cerepak.
 
 
31.2
Certificate pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, signed and dated by Robert A. Livingston.
 
 
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 A. Livingston and Brad M. Cerepak.
 
 
101
The following materials from Dover Corporation’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 formatted in XBRL (eXtensible Business Reporting Language):  (i) the Condensed Consolidated Statements of Earnings, (ii) the Condensed Consolidated Statements of Comprehensive Earnings, (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statement of Stockholders’ Equity, (v) the Condensed Consolidated Statements of Cash Flows, and (vi) Notes to the Condensed Consolidated Financial Statements.
* Executive compensation plan or arrangement



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Table of Contents


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 21, 2016
/s/ Brad M. Cerepak 
 
 
Brad M. Cerepak
 
 
Senior Vice President & Chief Financial Officer
 
 
(Principal Financial Officer)
 
 
 
Date:
April 21, 2016
/s/ Sandra A. Arkell
 
 
Sandra A. Arkell
 
 
Vice President, Controller
 
 
(Principal Accounting Officer)


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Table of Contents


EXHIBIT INDEX
10.1
Form of 2016 award grant letter for SSAR grants made under the Dover Corporation 2012 Equity and Cash Incentive Plan.*
 
 
10.2
Form of 2016 award grant letter for cash performance grants made under the Dover Corporation 2012 Equity and Cash Incentive Plan.*
 
 
10.3
Form of 2016 award grant letter for performance share grants made under the Dover Corporation 2012 Equity and Cash Incentive Plan.*
 
 
10.4
Form of 2016 award grant letter for RSU grants made under the Dover Corporation 2012 Equity and Cash Incentive Plan.*
 
 
31.1
Certificate pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, signed and dated by Brad M. Cerepak.
 
 
31.2
Certificate pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, signed and dated by Robert A. Livingston.
 
 
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 A. Livingston and Brad M. Cerepak.
 
 
101
The following materials from Dover Corporation’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 formatted in XBRL (eXtensible Business Reporting Language):  (i) the Condensed Consolidated Statements of Earnings, (ii) the Condensed Consolidated Statements of Comprehensive Earnings, (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statement of Stockholders’ Equity, (v) the Condensed Consolidated Statements of Cash Flows, and (vi) Notes to the Condensed Consolidated Financial Statements.
* Executive compensation plan or arrangement












40

Exhibit


Exhibit 10.1
SSAR Award

DATE:    February 11, 2016

TO:    <<Name>>
    
Here are the details for your SSAR grant:

Number of shares of Dover Common Stock -
<<# of Shares>>
SSAR Base Price Per Share -
$xx.xx
Date of Grant -
February 11, 2016
Expiration Date -
February 11, 2016

Your Stock Settled Appreciation Right (SSAR) Award is subject to all the terms and provisions of the Dover Corporation ("Dover") 2012 Equity and Cash Incentive Plan ("Plan"), which terms and provisions are expressly incorporated into and made a part of the Award as if set forth in full herein.  Capitalized terms used but not defined herein have the meanings ascribed to them in the Plan.  A copy of the Plan can be found at www.dovercorporation.com, in the Investor Information area, under SEC Filings, in the Proxy Statement filed on March 19, 2012, Appendix A.
 
In addition, your SSAR Award is subject to the following:
               
1.     The earliest date on which the SSAR Award may be exercised is the third anniversary of the Grant Date.  Earlier exercise may be permitted in the event of a Change of Control or death or disability as provided in the Plan.  No payment is required to exercise a SSAR Award.
2.      It is your responsibility to keep track of your SSAR Award and to ensure that you exercise your SSAR Award before it expires.  Dover will not remind or notify you that your SSAR Award is nearing its expiration date.
 
3.     Your SSAR Award is subject to earlier termination as provided in the Plan, for example, upon termination of employment (including retirement) prior to the expiration date.
 
      4.     Upon exercise of your SSAR Award, you will be entitled to receive from Dover that number of whole shares of Common Stock equal in value, on the date of exercise of the SSAR Award, to the excess of (A) the value of a share of Common Stock on the date of exercise of the SSAR Award multiplied by the number of SSARs being exercised over (B) the sum of (i) the per share base price of the SSAR Award being exercised multiplied by the number of SSARs being exercised, plus (ii) unless you elect to pay such tax in cash, any amount of tax that must be withheld in connection with such exercise.  Fractional shares shall be disregarded.
 
5.      As a condition of receiving your SSAR Award, you agree to be bound by the terms and conditions of the Dover Corporation Anti-hedging and Anti-pledging Policy and by any Clawback Policy to be adopted by Dover, as such policies may be in effect from time to time.  The Anti-hedging and Anti-pledging Policy prohibits hedging or pledging any Dover equity securities held by you or certain designees, whether such Dover securities are, or have been, acquired under the Plan, another compensation plan sponsored by Dover, or otherwise.  Please review the Anti-hedging and Anti-pledging Policy to make sure that you are in compliance.  You may obtain a copy of the current version of the Anti-hedging, Anti-pledging, and any Clawback Policy to be adopted by Dover, by contacting the Benefits Department at 630-541-1540.
6.     For Non-US Employees, your SSAR Award is subject to the terms and conditions of the Addendum for Non-US Employees attached to your SSAR Award letter.
 





      7.     Your SSAR Award is not transferrable by you other than by will or the laws of descent and distribution and in accordance with the applicable terms and conditions of the Plan.
 
8.      Dover reserves the right to amend, modify, or terminate the Plan at any time in its discretion without notice.




Exhibit

Exhibit 10.2
Cash Performance Award

DATE:    February 11, 2016    

TO:    «Name»

Here are the details for your Cash Performance Award:
Your business unit -
«Company»
The Performance Period is the three-year period -
2016 - 2018
Your target Performance Share Award at the 100% level -
«Tagetlocal» «Currency_Code»


The actual Cash Performance Award amount to be paid to you, if any, will be derived from the Cash Performance Payout Table included in this Award agreement.

Your Cash Performance Award is subject to all the terms and provisions of the Dover Corporation("Dover") 2012 Equity and Cash Incentive Plan ("Plan"), which terms and provisions are expressly incorporated into and made a part of the award as if set forth in full herein.  Capitalized terms used but not defined herein have the meanings ascribed to them in the Plan. A copy of the Plan can be found at www.dovercorporation.com in the Investor Information area, under the SEC Filings, in the Proxy Statement filed on March 19, 2012, Appendix A.
In addition, your Cash Performance Award is subject to the following:
1.       Within two and one-half months following the end of the Performance Period, your Dover Operating Company will pay you a Cash Performance Award payout if your business unit has reached certain levels of internal total shareholder return (“iTSR”), as set forth in the Cash Performance Payout Table, and the other conditions of your Cash Performance Award are satisfied. 
2.       A summary of the definition of iTSR, for your business unit is set forth in the Definition of iTSR.
3.       The aggregate maximum cash payout for each business unit (determined after applying the individual payout limitation noted in the next sentence, if applicable) in respect of all Cash Performance Awards for a specific Performance Period shall not exceed the product of (i) 1.75%, times (ii) the sum of the business unit’s change in entity value plus free cash flow (as such terms are defined in the Definition of iTSR) for that Performance Period.  In no event will the Cash Performance Award payout to any one individual exceed $10 million for the Performance Period. 

4.       As a condition of receiving your Cash Performance Award, you agree to be bound by the terms and conditions of the Dover Corporation Anti-hedging and Anti-pledging Policy and by any Clawback Policy to be adopted by Dover, as such policies may be in effect from time to time.  The Anti-hedging and Anti-pledging Policy prohibits hedging or pledging any Dover equity securities held by you or certain designees, whether such Dover securities are, or have been, acquired under the Plan, another compensation plan sponsored by Dover, or otherwise.  Please review the Anti-hedging and Anti-pledging Policy to make sure that you are in compliance.  You may obtain a copy of the current version of the Anti-hedging, Anti-pledging, and any Clawback Policy to be adopted by Dover, by contacting the Benefits Department at 630-541-1540. 

5.       For Non-US Employees, your Cash Performance Award is subject to the terms and conditions of the Addendum for Non-US Employees. 

6.       Your Cash Performance Award is not transferrable by you other than by will or the laws of descent and distribution and in accordance with the applicable terms and conditions of the Plan.

7.       Dover reserves the right to amend, modify, or terminate the Plan at any time in its discretion without notice.





Cash Performance Payout Table
iTSR for Performance Period
Payout (% of target)
<6%
0%
6%
25%
9%
100%
17%
300%
>50%
750%

The payout formula will be applied on a sliding scale between 0% and 750% based on the business unit’s iTSR for the Performance Period.


---------------------------------------------------------------------------------------------------------------------------------------


Definition of iTSR

Conceptual formula for iTSR calculation:



Explanation of iTSR formula:

Change in entity value is nine times the change in EBITDA values, comparing the full base year to the full final year of the performance period. The base year iTSR is the minimum value of an Operating Company, to which the 9X multiple is applied to calculate an EV. The base year iTSR is calculated using the highest of the following:

(i)
Base-Year EBITDA
(ii)
10% of Base-Year Sales
(iii)
90% of Prior-to-Base-Year iTSR Base

Free cash flow is the cash flow generated by your business unit, including your business unit’s operating profit plus depreciation, amortization and proceeds from dispositions, less taxes and investments made for future growth (capital spending, working capital and acquisitions) and adjusted for other non-recurring items.

EBITDA is pre-tax income adjusted for non-operating and non-recurring items plus depreciation and amortization.


Mathematical Formula for 3 Year iTSR Cash Performance Plan payout:








    






Rules for Transfers/Promotions


The following rules will apply to you if you are transferred from one Dover business unit to another Dover business unit. These rules apply to all Cash Performance payments you may be entitled to under this and any other Cash Performance Award under the Plan you may have, as if part of your original Award.


(i) For the first Cash Performance payment date that occurs after your transfer, any Cash Performance payment that may be due will be based on the performance of your old business unit.

(ii)For the second Cash Performance payment date that occurs after your transfer, any Cash Performance payment that may be due will be based on the performance of either your old business unit or your new business unit, whichever results in the higher payment to you.

(iii)For the third Cash Performance payment date that occurs after your transfer, any Cash Performance payment that may be due will be based on the performance of your new business unit.

(iv)Any Cash Performance payment under an award made at one business unit that becomes payable after you transfer to another business unit will still be based on that Award’s original dollar amount.


For purposes of these rules your old business unit is the business unit indicated on your Award. Your new business unit is the business unit where you are employed on the payment date.




Exhibit


Exhibit 10.3

Performance Share Award

DATE:    February 11, 2016

TO:    «Name»

Here are the details for your Performance Share Award:

Your business unit -
«Company»
The Performance Period is the three-year period -
2016 - 2018
Your target Performance Share Award at the 100% level -
« # of Shares» Shares

The actual Performance Shares to be paid to you, if any, will be derived from the Performance Share Payout Table included in this Award agreement.

Your Performance Share Award is subject to all the terms and provisions of the Dover Corporation ("Dover") 2012 Equity and Cash Incentive Plan ("Plan"), which terms and provisions are expressly incorporated into and made a part of the Award as if set forth in full herein.  Capitalized terms used but not defined herein have the meanings ascribed to them in the Plan.A copy of the Plan can be found at www.dovercorporation.com, in the Investor Information area, under SEC Filings, in the Proxy Statement filed on March 19, 2012, Appendix A. 
In addition, your Performance Share Award is subject to the following: 
1.      Within two and one-half months following the end of the Performance Period, Dover will issue you Common Stock if your business unit has reached certain levels of internal total shareholder return (“iTSR”), as set forth in the Performance Share Payout Table, and the other conditions of your Performance Share Award are satisfied. 

2.      A summary of the definition of  iTSR, for your business unit is set forth in the Definition of iTSR.
3.      The aggregate maximum payout for each business unit (determined after applying the individual payment limitation noted in the next sentence, if applicable) in respect of all Performance Share Awards for a specific performance period shall not exceed the product of (i) 1.75%, times (ii) the sum of the business unit’s change in entity value plus free cash flow (as such terms are defined in the Definition of iTSR) for that Performance Period.  In no event will the performance payout to any one individual exceed 500,000 shares of Common Stock for the Performance Period. 

4.      As a condition of receiving your Performance Share Award, you agree to be bound by the terms and conditions of the Dover Corporation Anti-hedging and Anti-pledging Policy and by any Clawback Policy to be adopted by Dover, as such policies may be in effect from time to time.  The Anti-hedging and Anti-pledging Policy prohibits hedging or pledging any Dover equity securities held by you or certain designees, whether such Dover securities are, or have been, acquired under the Plan, another compensation plan sponsored by Dover, or otherwise.  Please review the Anti-hedging and Anti-pledging Policy to make sure that you are in compliance.  You may obtain a copy of the current version of the Anti-hedging, Anti-pledging, and any Clawback Policy to be adopted by Dover, by contacting the Benefits Department at 630-541-1540. 

5.      For Non-US Employees, your Performance Share Award is subject to the terms and conditions of the Addendum for Non-US Employees.
 
6.      Your Performance Share Award is not transferrable by you other than by will or the laws of descent and distribution and in accordance with the applicable terms and conditions of the Plan.

7.       Dover reserves the right to amend, modify, or terminate the Plan at any time in their discretion without notice.





Performance Share Payout Table


iTSR for Performance Period
Payout (% of target)
<6%
0%
6%
25%
9%
100%
17%
300%
>24%
400%

The payout formula will be applied on a sliding scale between 0% and 400% based on the business unit’s iTSR for the Performance Period.


---------------------------------------------------------------------------------------------------------------------------------------


Definition of iTSR

Conceptual formula for iTSR calculation:


Explanation of iTSR formula:

Change in entity value is nine times the change in EBITDA values, comparing the full base year to the full final year of the performance period. The base year iTSR is the minimum value of an Operating Company, to which the 9X multiple is applied to calculate an EV. The base year iTSR is calculated using the highest of the following:

(i)
Base-Year EBITDA
(ii)
10% of Base-Year Sales
(iii)
90% of Prior-to-Base-Year iTSR Base

Free cash flow is the cash flow generated by your business unit, including your business unit’s operating profit plus depreciation, amortization and proceeds from dispositions, less taxes and investments made for future growth (capital spending, working capital and acquisitions) and adjusted for other non-recurring items.

EBITDA is pre-tax income adjusted for non-operating and non-recurring items plus depreciation and amortization.


Mathematical formula for Cash 3 Year iTSR Performance Plan payout:















for Transfers/Promotions


The following rules will apply to you if you are transferred from one Dover business unit to another Dover business unit. These rules apply to all Performance Share payments you may be entitled to under this and any other Performance Share Award under the Plan you may have, as if part of your original Award.

(i) For the first Performance Share payment date that occurs after your transfer, any Performance Share payment that may be due will be based on the performance of your old business unit.

(ii)For the second Performance Share payment date that occurs after your transfer, any Performance Share payment that may be due will be based on the performance of either your old business unit or your new business unit, whichever results in the higher payment to you.

(iii)For the third Performance Share payment date that occurs after your transfer, any Performance Share payment that may be due will be based on the performance of your new business unit.

(iv)Any Performance Share payment under an Award made at one business unit that becomes payable after you transfer to another business unit will still be based on that Award’s original share amount.

For purposes of these rules your old business unit is the business unit indicated on your Award. Your new business unit is the business unit where you are employed on the payment date.





Exhibit


    

Exhibit 10.4
Restricted Stock Unit Award

DATE:    February 11, 2016            Date of Grant: 02/11/2016

TO:    «Name»          xxxxx Restricted Stock Units
Your Restricted Stock Unit Award is subject to all the terms and provisions of the Dover Corporation ("Dover") 2012 Equity and Cash Incentive Plan ("Plan"), which terms and provisions are expressly incorporated into and made a part of the award as if set forth in full herein.  Capitalized terms used but not defined herein have the meanings ascribed to them in the Plan. A copy of the Plan can be found on www.dovercorporation.com/investorinformation.asp in SEC Filings, in the Proxy Statement filed on March 19, 2012 Appendix A.
 
In addition, your Restricted Stock Unit Award is subject to the following:
    
1.
A Restricted Stock Units is a bookkeeping entry on the books of Dover.  No shares of Dover common stock shall be issued to you in respect of the Restricted Stock Unit Award until the restrictions have lapsed at the end of a Restricted Period.  Within 30 days following the end of the Restricted Period, Dover shall issue shares of Common Stock in your name equal to the number of Restricted Stock Units that have vested during the Restricted Period less applicable tax withholding.  In the event that your employment shall terminate prior to your vesting in the Restricted Stock Units, the Restricted Stock Units shall be forfeited.

2.
You shall vest in the Restricted Stock Unit Award, and all restrictions thereon shall lapse, with respect to 33% of your Restricted Stock Units on March 15, 2017 (or the first trading thereafter if such date is not a trading day), with respect to 33% of your Restricted Stock Units on March 15, 2018 (or the first trading thereafter if such date is not a trading day) and with respect to 34% of your Restricted Stock Units on March 15, 2019 (or the first trading thereafter if such date is not a trading day), subject to the forfeiture provisions of the Plan.  You must be an active employee of Dover or an affiliate at the end of the Restricted Period in order for your Restricted Shares to vest, with certain exceptions as provided in the Plan.

3.
During the Restricted Period you shall not have any rights of a stockholder or the right to receive any dividends declared and other distributions paid with respect to the Restricted Stock Units.  Within 30 days after the end of the Restricted Period you shall be paid all Dividend Equivalents with respect to the Restricted Stock Units that have vested.

4.
You do not have any voting rights with respect to Restricted Stock Units.

5.
As a condition of receiving your Restricted Stock Unit Award, you agree to be bound by the terms and conditions of the Dover Corporation Anti-hedging and Anti-pledging Policy and by any Clawback Policy to be adopted by Dover, as such policies may be in effect from time to time.  The Anti-hedging and Anti-pledging Policy prohibits hedging or pledging any Dover equity securities held by you or certain designees, whether such Dover securities are, or have been, acquired under the Plan, another compensation plan sponsored by Dover, or otherwise.  Please review the Anti-hedging and Anti-pledging Policy to make sure that you are in compliance.  You may obtain a copy of the current version of the Anti-hedging, Anti-pledging, and any Clawback Policy to be adopted by Dover by contacting the Benefits Department at 630-541-1540.

6.
For Non-US Employees, your Restricted Stock Unit Award is subject to the conditions of the Addendum for Non-US Employees.

7.
Your Restricted Stock Unit Award is not transferable by you other than by will or the laws of descent and distribution and in accordance with the applicable terms and conditions of the Plan.

8.
Dover reserves the right to amend, modify, or terminate the Plan at any time in its discretion without notice.



Exhibit


Exhibit 31.1
Certification
I, Brad M. Cerepak, certify that:
1.
I have reviewed this Quarterly Report on Form 10-Q of Dover Corporation;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date:
April 21, 2016
/s/ Brad M. Cerepak
 
 
Brad M. Cerepak
 
 
Senior Vice President & Chief Financial Officer
 
 
(Principal Financial Officer)




Exhibit


Exhibit 31.2
Certification
I, Robert A. Livingston, certify that:
1.
I have reviewed this Quarterly Report on Form 10-Q of Dover Corporation;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date:
April 21, 2016
/s/ Robert A. Livingston 
 
 
Robert A. Livingston 
 
 
President and Chief Executive Officer
 
 
(Principal Executive Officer) 




Exhibit


Exhibit 32
Certification
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
with Respect to the Quarterly Report on Form 10-Q
for the Period ended March 31, 2016
of Dover Corporation

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), each of the undersigned officers of Dover Corporation, a Delaware corporation (the “Company”), does hereby certify, to such officer’s knowledge, that:
1.
The Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2016 (the “Form 10-Q) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended; and
2.
Information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated:
April 21, 2016
/s/ Robert A. Livingston 
 
 
Robert A. Livingston
 
 
President and Chief Executive Officer
 
 
(Principal Executive Officer)
 
 
 
Dated:
April 21, 2016
/s/ Brad M. Cerepak 
 
 
Brad M. Cerepak
 
 
Senior Vice President & Chief Financial Officer
 
 
(Principal Financial Officer)
The certification set forth above is being furnished as an exhibit solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and is not being filed as part of the Form 10-Q or as a separate disclosure document of the Company or the certifying officers.




dov-20160331.xml
Attachment: XBRL INSTANCE DOCUMENT


dov-20160331.xsd
Attachment: XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT


dov-20160331_cal.xml
Attachment: XBRL TAXONOMY EXTENSION CALCULATION LINKBASE DOCUMENT


dov-20160331_def.xml
Attachment: XBRL TAXONOMY EXTENSION DEFINITION LINKBASE DOCUMENT


dov-20160331_lab.xml
Attachment: XBRL TAXONOMY EXTENSION LABEL LINKBASE DOCUMENT


dov-20160331_pre.xml
Attachment: XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE DOCUMENT


v3.3.1.900
Document and Entity Information - USD ($)
3 Months Ended
Mar. 31, 2016
Apr. 14, 2016
Jun. 30, 2015
Document and Entity Information [Abstract]      
Entity Registrant Name DOVER Corp    
Entity Central Index Key 0000029905    
Current Fiscal Year End Date --12-31    
Entity Well-known Seasoned Issuer Yes    
Entity Voluntary Filers No    
Entity Current Reporting Status Yes    
Entity Filer Category Large Accelerated Filer    
Entity Public Float     $ 10,980,690,400
Entity Common Stock, Shares Outstanding   155,148,745  
Document Fiscal Year Focus 2016    
Document Fiscal Period Focus Q1    
Document Type 10-Q    
Amendment Flag false    
Document Period End Date Mar. 31, 2016    

v3.3.1.900
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (unaudited) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Income Statement [Abstract]    
Revenue $ 1,622,273 $ 1,715,501
Cost of goods and services 1,033,009 1,088,342
Gross profit 589,264 627,159
Selling and administrative expenses 443,448 434,634
Operating earnings 145,816 192,525
Interest expense, net 31,714 32,037
Other income, net (13,522) (4,187)
Earnings before provision for income taxes and discontinued operations 127,624 164,675
Provision for income taxes 28,268 47,485
Earnings from continuing operations 99,356 117,190
Earnings from discontinued operations, net 0 92,320
Net earnings $ 99,356 $ 209,510
Earnings per share from continuing operations [Abstract]    
Earnings from continuing operations (in dollars per basic share) $ 0.64 $ 0.72
Earnings from continuing operations (in dollars per diluted share) 0.64 0.72
Earnings per share from discontinued operations: [Abstract]    
Earnings from discontinued operations, net (in dollars per basic share) 0.00 0.57
Earnings from discontinued operations, net (in dollars per diluted share) 0.00 0.57
Net earnings per share: [Abstract]    
Net earnings (in dollars per basic share) 0.64 1.30
Net earnings (in dollars per diluted share) $ 0.64 $ 1.28
Weighted average shares outstanding: [Abstract]    
Weighted average shares outstanding - basic 155,064,000 161,650,000
Weighted average shares outstanding - diluted 156,161,000 163,323,000
Dividends paid per common share (in dollars per share) $ 0.42 $ 0.40

v3.3.1.900
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE EARNINGS (unaudited) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Statement of Comprehensive Income [Abstract]    
Net earnings $ 99,356 $ 209,510
Foreign currency translation adjustments [Abstract]    
Foreign currency translation gains (losses) during period 8,769 (83,829)
Reclassification of foreign currency translation losses to earnings upon sale of subsidiaries 0 (280)
Total foreign currency translation 8,769 (84,109)
Pension and other postretirement benefit plans [Abstract]    
Amortization of actuarial losses included in net periodic pension cost 1,409 2,598
Amortization of prior service cost included in net periodic pension cost 1,041 1,228
Total pension and other postretirement benefit plans 2,450 3,826
Changes in fair value of cash flow hedges [Abstract]    
Unrealized net (losses) gains arising during period (49) 1,158
Net gains reclassified into earnings (47) (99)
Total cash flow hedges (96) 1,059
Other comprehensive earnings other adjustment 1,839 214
Other comprehensive earnings (loss) 12,962 (79,010)
Comprehensive earnings $ 112,318 $ 130,500

v3.3.1.900
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) - USD ($)
$ in Thousands
Mar. 31, 2016
Dec. 31, 2015
Current assets:    
Cash and cash equivalents $ 243,720 $ 362,185
Receivables, net of allowances 1,167,313 1,120,490
Inventories, net 849,830 802,895
Prepaid and other current assets 84,893 133,440
Total current assets 2,345,756 2,419,010
Property, plant and equipment, net 858,984 854,269
Goodwill 4,034,620 3,737,389
Intangible assets, net 1,543,397 1,413,223
Other assets and deferred charges 198,138 182,185
Total assets 8,980,895 8,606,076
Current liabilities:    
Notes payable and current maturities of long-term debt 405,858 151,122
Accounts payable 706,191 650,880
Accrued compensation and employee benefits 178,784 223,039
Accrued insurance 101,584 99,642
Other accrued expenses 247,033 235,971
Federal and other taxes on income 9,359 6,528
Total current liabilities 1,648,809 1,367,182
Long-term debt 2,610,642 2,603,655
Deferred income taxes 603,496 575,709
Other liabilities 419,815 414,955
Stockholders' Equity:    
Total stockholders' equity 3,698,133 3,644,575
Total liabilities and stockholders' equity $ 8,980,895 $ 8,606,076

v3.3.1.900
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (Parenthetical) - USD ($)
$ in Thousands
Mar. 31, 2016
Dec. 31, 2015
Current assets:    
Allowance for doubtful accounts receivable $ 20,445 $ 18,050

v3.3.1.900
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (unaudited) - 3 months ended Mar. 31, 2016 - USD ($)
$ in Thousands
Total
Common Stock [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
Accumulated Other Comprehensive Earnings (Loss) [Member]
Treasury Stock [Member]
Balance at Dec. 31, 2015 $ 3,644,575 $ 256,113 $ 928,409 $ 7,686,642 $ (254,573) $ (4,972,016)
Net earnings 99,356 0 0 99,356 0 0
Dividends paid (65,340) 0 0 (65,340) 0 0
Common stock issued for the exercise of share-based awards (4,833) 138 (4,971) 0 0 0
Tax benefit from the exercise of share-based awards 26 0 26 0 0 0
Share-based compensation expense 11,387 0 11,387 0 0 0
Other comprehensive earnings, net of tax 12,962 0 0 0 12,962 0
Balance at Mar. 31, 2016 $ 3,698,133 $ 256,251 $ 934,851 $ 7,720,658 $ (241,611) $ (4,972,016)

v3.3.1.900
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (unaudited) (Parenthetical) - $ / shares
Mar. 31, 2016
Dec. 31, 2015
Statement of Stockholders' Equity [Abstract]    
Preferred stock, par value per share $ 100 $ 100
Preferred stock, shares authorized 100,000 100,000
Preferred stock, shares issued 0 0
Common stock, par value per share $ 1 $ 1

v3.3.1.900
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Operating Activities of Continuing Operations    
Net earnings $ 99,356 $ 209,510
Adjustments to reconcile net earnings to cash from operating activities:    
Earnings from discontinued operations, net 0 (92,320)
Depreciation and amortization 88,604 80,182
Stock-based compensation 11,387 13,387
Gain on Disposition of Business (11,228) 0
Cash effect of changes in current assets and liabilities (excluding effects of acquisitions, dispositions and foreign exchange):    
Accounts receivable 20,103 27,737
Inventories (29,478) (18,861)
Prepaid expenses and other assets (1,522) (2,297)
Accounts payable (14,299) (18,876)
Accrued compensation and employee benefits (65,887) (98,493)
Accrued expenses and other liabilities 3,202 (14,198)
Increase (Decrease) in Income Taxes Payable 45,654 55,843
Other, net (12,479) (10,282)
Net cash provided by operating activities of continuing operations 133,413 131,332
Investing Activities of Continuing Operations    
Additions to property, plant and equipment (37,230) (27,956)
Acquisitions (net of cash and cash equivalents acquired) (436,058) (6,500)
Proceeds from the sale of property, plant and equipment 619 6,041
Proceeds from the sale of businesses 47,300 185,000
Other (488) 0
Net cash (used in) provided by investing activities of continuing operations (425,857) 156,585
Financing Activities of Continuing Operations    
Purchase of common stock 0 (200,055)
Net proceeds from exercise of stock options and SARs, including tax benefits 2,181 2,786
Change in commercial paper and notes payable, net 247,099 (152,500)
Dividends paid to stockholders (65,940) (64,442)
Payments to settle employee tax obligations on exercise of share-based awards (4,833) (2,361)
Reduction of long-term debt 0 (31)
Net cash provided by (used in) financing activities 178,507 (416,603)
Cash Flows from Discontinued Operations    
Net cash provided by operating activities of discontinued operations 0 2,717
Net cash provided by investing activities of discontinued operations 0 800
Net cash provided by discontinued operations 0 3,517
Effect of exchange rate changes on cash and cash equivalents (4,528) (17,926)
Net decrease in cash and cash equivalents (118,465) (143,095)
Cash and cash equivalents at beginning of period 362,185 681,581
Cash and cash equivalents at end of period $ 243,720 $ 538,486

v3.3.1.900
Basis of Presentation
3 Months Ended
Mar. 31, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Basis of Presentation
1. Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements, in accordance with Securities and Exchange Commission ("SEC") rules for interim periods, do not include all of the information and notes for complete financial statements as required by accounting principles generally accepted in the United States of America. As such, the accompanying unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Dover Corporation ("Dover" or the "Company") Annual Report on Form 10-K for the year ended December 31, 2015, which provides a more complete understanding of the Company’s accounting policies, financial position, operating results, business, properties, and other matters. The year end Condensed Consolidated Balance Sheet was derived from audited financial statements. Certain amounts in the prior year have been reclassified to conform to the current year presentation.  

It is the opinion of management that these financial statements reflect all adjustments necessary for a fair statement of the interim results. The results of operations of any interim period are not necessarily indicative of the results of operations for the full year.

v3.3.1.900
Acquisitions
3 Months Ended
Mar. 31, 2016
Business Combinations [Abstract]  
Acquisitions
2. Acquisitions

On January 7, 2016, the Company acquired the dispenser and system businesses of Tokheim Group S.A.S. ("Tokheim") within the Fluids segment for net cash consideration of $436,058. The following presents the allocation of acquisition cost to the assets acquired and liabilities assumed, based on their estimated fair values:
Current assets, net of cash acquired
$
96,436

Property, plant and equipment
24,319

Goodwill
281,903

Intangible assets
176,693

Other non-current assets
5,429

Current liabilities
(102,317
)
Non-current liabilities
(46,405
)
Net assets acquired
$
436,058



The amounts assigned to goodwill and major intangible asset classifications for the 2016 acquisition are as follows:
 
Amount allocated
 
Useful life (in years)
Goodwill - Non deductible
$
281,903

 
na
Customer intangibles
93,227

 
10
Trademarks
23,691

 
10
Other intangibles
59,775

 
11
 
$
458,596

 
 


The goodwill identified by this acquisition reflects the benefits expected to be derived from product line expansion and operational synergies. Upon consummation of the acquisition, with the exception of a minor noncontrolling interest in the Tokheim China subsidiary, this business is now wholly-owned by Dover.

The Company has completed the preliminary purchase price allocation for the acquisition of Tokheim.  As additional information is obtained about these assets and liabilities within the measurement period (not to exceed one year from the date of acquisition), the Company will refine its estimates of fair value to allocate the purchase price more accurately. Purchase price allocation adjustments may arise through working capital adjustments, asset appraisals or to reflect additional facts and circumstances in existence as of the acquisition date. Identified measurement period adjustments will be recorded, including any related impacts to net earnings, in the reporting period in which the adjustments are determined and may be significant. See Note 6 Goodwill and Other Intangible Assets for purchase price adjustments.

The unaudited Condensed Consolidated Statements of Earnings include the results of this business from the date of acquisition.  

Pro Forma Information

The following unaudited pro forma information illustrates the impact of both 2016 and 2015 acquisitions on the Company’s revenue and earnings from continuing operations for the three months ended March 31, 2016 and 2015. In 2015, the Company acquired four businesses in separate transactions for net cash consideration of $567,843.
 
The 2016 and 2015 pro forma information assumes that the 2016 and 2015 acquisitions had taken place at the beginning of the prior year. As such, the 2016 pro forma earnings exclude one-time adjustments made in 2016 for 2015 acquisitions. Pro forma earnings are also adjusted to reflect the comparable impact of additional depreciation and amortization expense (net of tax) resulting from the fair value measurement of tangible and intangible assets relating to 2016 and 2015 acquisitions.
 
Three Months Ended March 31,
 
2016
 
2015
Revenue from continuing operations:
 
 
 
As reported
$
1,622,273

 
$
1,715,501

Pro forma
1,628,406

 
1,836,711

Earnings from continuing operations:
 
 
 
As reported
$
99,356

 
$
117,190

Pro forma
107,613

 
122,404

Basic earnings per share from continuing operations:
 
 
 
As reported
$
0.64

 
$
0.72

Pro forma
0.69

 
0.76

Diluted earnings per share from continuing operations:
 
 
 
As reported
$
0.64

 
$
0.72

Pro forma
0.69

 
0.75


v3.3.1.900
Discontinued Operations
3 Months Ended
Mar. 31, 2016
Discontinued Operations and Disposal Groups [Abstract]  
Discontinued Operations
3. Disposed and Discontinued Operations

Management evaluates Dover's businesses periodically for their strategic fit within its operations and may from time to time sell or discontinue certain operations for various reasons.

Disposed Businesses

On February 17, 2016, the company completed the sale of Texas Hydraulics. This disposal did not represent a strategic shift in operations and, therefore, did not qualify for presentation as a discontinued operation. Upon disposal of the business the Company recognized total proceeds of $47,300, which resulted in a gain on sale of $11,228 included within Other income, net within the Condensed Consolidated Statements of Earnings.

Discontinued Operations

The results of discontinued operations for the three months ended March 31, 2015 reflect the net earnings of businesses held for sale, Datamax O'Neil and Sargent Aerospace, prior to their respective sale dates. On March 2, 2015, the Company completed the sale of Datamax O'Neil for total proceeds of $185,000, which resulted in a net gain on sale of $87,781.
Summarized results of the Company’s discontinued operations are as follows:
 
Three Months Ended March 31,
 
2015
Revenue
$
64,495

 
 
Gain on sale, net of tax
87,354

 
 
Earnings from operations before taxes
8,980

Provision for income taxes
(4,014
)
Earnings from operations, net of tax
4,966

 
 
Earnings from discontinued operations, net of tax
$
92,320



The Company had no assets or liabilities classified as held for sale as of March 31, 2016 and December 31, 2015.

v3.3.1.900
Inventories
3 Months Ended
Mar. 31, 2016
Inventory, Net [Abstract]  
Inventory Disclosure
4. Inventories, net
 
March 31, 2016
 
December 31, 2015
Raw materials
$
347,674

 
$
333,551

Work in progress
145,952

 
135,624

Finished goods
467,199

 
443,032

Subtotal
960,825

 
912,207

Less reserves
(110,995
)
 
(109,312
)
Total
$
849,830

 
$
802,895


v3.3.1.900
Property, Plant and Equipment
3 Months Ended
Mar. 31, 2016
Property, Plant and Equipment [Abstract]  
Property, Plant and Equipment Disclosure
5. Property, Plant and Equipment, net
 
March 31, 2016
 
December 31, 2015
Land
$
56,376

 
$
55,567

Buildings and improvements
543,292

 
546,809

Machinery, equipment and other
1,764,139

 
1,772,031

Subtotal
2,363,807

 
2,374,407

Less accumulated depreciation
(1,504,823
)
 
(1,520,138
)
Total
$
858,984

 
$
854,269



Depreciation expense totaled $45,029 and $40,208 for the three months ended March 31, 2016 and 2015, respectively.

v3.3.1.900
Goodwill and Other Intangible Assets
3 Months Ended
Mar. 31, 2016
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Other Intangible Assets
6. Goodwill and Other Intangible Assets

The following table provides the changes in carrying value of goodwill by segment for the three months ended March 31, 2016:
 
Energy
 
Engineered Systems
 
Fluids
 
Refrigeration & Food Equipment
 
Total
Balance at December 31, 2015
$
1,047,180

 
$
1,473,864

 
$
655,745

 
$
560,600

 
$
3,737,389

Acquisitions

 

 
281,903

 

 
281,903

Purchase price adjustments

 
363

 
4,781

 
580

 
5,724

Disposition of business

 
(9,615
)
 

 

 
(9,615
)
Foreign currency translation
1,580

 
6,916

 
9,968

 
755

 
19,219

Balance at March 31, 2016
$
1,048,760

 
$
1,471,528

 
$
952,397

 
$
561,935

 
$
4,034,620



As noted in Note 3 Disposed and Discontinued Operations, the Company completed the sale of its Texas Hydraulics business during the three months ended March 31, 2016. As a result of this sale, the Engineered Systems goodwill balance was reduced by $9,615.

During the three months ended March 31, 2016, the Company recorded adjustments totaling $5,724 to goodwill relating to the purchase price adjustments as a result of working capital adjustments and refinements of estimates to assets acquired and liabilities assumed for the 2015 acquisitions of Gemtron, JK Group, Gala Industries and Reduction Engineering Scheer.

In accordance with the applicable accounting standard, Dover performs its annual goodwill impairment testing in the fourth quarter of each year. In addition to the annual impairment test, the Company is required to regularly assess whether a triggering event has occurred which would require interim impairment testing. The Company has considered the economic environments in which its businesses operate, particularly within those reporting units exposed to the decline in oil and gas markets, and the long-term outlook for those businesses. The Company has determined that a triggering event has not occurred which would require impairment testing at this time.

The following table provides the gross carrying value and accumulated amortization for each major class of intangible asset:
 
March 31, 2016
 
December 31, 2015
 
Gross Carrying
Amount
 
Accumulated
Amortization
 
Gross Carrying
Amount
 
Accumulated
Amortization
Amortized intangible assets:
 
 
 
 
 
 
 
Trademarks
$
172,554

 
$
49,245

 
$
150,926

 
$
45,536

Patents
155,225

 
117,441

 
150,570

 
112,399

Customer Intangibles
1,663,762

 
628,709

 
1,567,048

 
595,635

Unpatented Technologies
133,362

 
55,971

 
137,919

 
56,495

Drawings & Manuals
34,701

 
16,757

 
34,232

 
15,760

Distributor Relationships
120,957

 
39,592

 
64,614

 
37,610

Other
23,390

 
18,497

 
23,923

 
18,168

Total
2,303,951

 
926,212

 
2,129,232

 
881,603

Unamortized intangible assets:
 
 
 
 
 
 
 
Trademarks
165,658

 
 
 
165,594

 
 
Total intangible assets, net
$
1,543,397

 
 
 
$
1,413,223

 
 

For the three months ended March 31, 2016 and 2015, amortization expense was $43,574 and $39,974, respectively.

v3.3.1.900
Restructuring Activities
3 Months Ended
Mar. 31, 2016
Restructuring [Abstract]  
Restructuring and Related Activities Disclosure
7. Restructuring Activities

The following table details restructuring charges incurred by segment for the periods presented:
 
Three Months Ended March 31,
 
2016
 
2015
Energy
$
6,416

 
$
17,822

Engineered Systems
1,967

 
4,355

Fluids
5,226

 
2,097

Refrigeration & Food Equipment
21

 
(282
)
Corporate
757

 
111

Total
$
14,387

 
$
24,103

 
 
 
 
These amounts are classified in the unaudited Condensed Consolidated Statements of Earnings as follows:
 
 
 
 
Cost of goods and services
$
5,851

 
$
7,454

Selling and administrative expenses
8,536

 
16,649

Total
$
14,387

 
$
24,103



The restructuring expenses of $14,387 incurred in the three months ended March 31, 2016 related to restructuring programs initiated during 2016 and 2015. These programs are designed to better align the Company's costs and operations with current market conditions through targeted facility consolidations, headcount reductions and other measures to further optimize operations. The Company expects the programs currently underway to be substantially completed in the next twelve to eighteen months.

The $14,387 of restructuring charges incurred during the first quarter of 2016 primarily included the following items:

The Energy segment incurred restructuring charges of $6,416 related to various programs across the segment focused on workforce reductions and field and service consolidations. These programs were initiated to better align cost base with the anticipated demand environment.

The Engineered Systems segment recorded $1,967 of restructuring charges relating to headcount reductions across various businesses primarily related to optimization of administrative functions within the Printing & Identification platform and U.S. manufacturing consolidation within the Industrial platform.

The Fluids segment recorded $5,226 of restructuring charges principally related to headcount reductions and facility consolidations at various businesses across the segment.

The Refrigeration and Food Equipment segment and corporate incurred restructuring charges related to headcount reductions.

The following table details the Company’s severance and other restructuring accrual activity:
 
Severance
 
Exit
 
Total
Balance at December 31, 2015
$
11,036

 
$
2,955

 
$
13,991

Restructuring charges
10,681

 
3,706

 
14,387

Payments
(8,234
)
 
(1,491
)
 
(9,725
)
Foreign currency translation
121

 
40

 
161

Other, including write-offs of fixed assets and acquired balances
2,458

 
(1,119
)
 
1,339

Balance at March 31, 2016
$
16,062

 
$
4,091

 
$
20,153



The accrual balance at March 31, 2016 primarily reflects restructuring plans initiated during the year, as well as ongoing lease commitment obligations for facilities closed in earlier periods.

v3.3.1.900
Borrowings
3 Months Ended
Mar. 31, 2016
Debt Disclosure [Abstract]  
Borrowings
8. Borrowings

Borrowings consist of the following:
 
March 31, 2016
 
December 31, 2015
Short-term
 
 
 
Current portion of long-term debt
$
4,558

 
$
122

Commercial paper
401,300

 
151,000

 
$
405,858

 
$
151,122



 
March 31, 2016
 
December 31, 2015
Long-term
 
 
 
5.45% 10-year notes due March 15, 2018
349,340

 
349,258

2.125% 7-year notes due December 1, 2020 (Euro-denominated)
334,783

 
328,592

4.30% 10-year notes due March 1, 2021
449,872

 
449,865

3.150% 10-year notes due November 15, 2025
397,028

 
396,951

6.65% 30-year debentures due June 1, 2028
199,560

 
199,552

5.375% 30-year debentures due October 15, 2035
296,884

 
296,844

6.60% 30-year notes due March 15, 2038
248,058

 
248,036

5.375% 30-year notes due March 1, 2041
346,029

 
345,989

Other, less current installments
2,233

 
2,255

Total long-term debt
2,623,787

 
2,617,342

Unamortized debt issuance costs
(13,145
)
 
(13,687
)
Long-term debt, net of debt issuance costs
$
2,610,642

 
$
2,603,655



The Company adopted new accounting guidance effective January 1, 2016 which requires debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct reduction of the carrying amount of the related debt. Upon adoption, the Company reclassified $13,687 from assets to long-term debt to reflect this guidance in the comparable balance as of December 31, 2015.
 
The Company maintains a $1.0 billion five-year unsecured revolving credit facility with a syndicate of banks (the "Credit Agreement") which expires on November 10, 2020The Company was in compliance with its revolving credit and other long-term debt covenants at March 31, 2016 and had a coverage ratio of 12.3 to 1. The Company primarily uses this facility as liquidity back-up for its commercial paper program and has not drawn down any loans under the facility and does not anticipate doing so. The Company generally uses commercial paper borrowings for general corporate purposes, funding of acquisitions, and the repurchases of its common stock.

Interest expense and interest income for the three months ended March 31, 2016 and 2015 were as follows:
 
Three Months Ended March 31,
 
2016
 
2015
Interest expense
$
33,318

 
$
33,005

Interest income
(1,604
)
 
(968
)
Interest expense, net
$
31,714

 
$
32,037


 
Letters of Credit

As of March 31, 2016, the Company had approximately $91,840 outstanding in letters of credit and guarantees with financial institutions which expire at various dates within 2016 through 2020. These letters of credit are primarily maintained as security for insurance, warranty, and other performance obligations.

v3.3.1.900
Financial Instruments
3 Months Ended
Mar. 31, 2016
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments and Hedging Activities Disclosure
9. Financial Instruments

Derivatives

The Company is exposed to market risk for changes in foreign currency exchange rates due to the global nature of its operations and certain commodity risks. In order to manage these risks the Company has hedged portions of its forecasted sales and purchases to occur within the next twelve months that are denominated in non-functional currencies, with currency forward or collar contracts designated as cash flow hedges. At March 31, 2016 and December 31, 2015, the Company had contracts with U.S. dollar equivalent notional amounts of $30,859 and $37,735, respectively, to exchange foreign currencies, principally the U.S. dollar, Chinese Yuan, Euro, and pound sterling. The Company believes it is probable that all forecasted cash flow transactions will occur.

In addition, the Company had outstanding contracts with a total notional amount of $66,310 and $51,369 at March 31, 2016 and December 31, 2015, respectively, that are not designated as hedging instruments. These instruments are used to reduce the Company's exposure for operating receivables and payables that are denominated in non-functional currencies.

The following table sets forth the fair values of derivative instruments held by the Company as of March 31, 2016 and December 31, 2015 and the balance sheet lines in which they are recorded:
 
Fair Value Asset (Liability)
 
 
 
March 31, 2016
 
December 31, 2015
 
Balance Sheet Caption
Foreign currency forward / collar contracts
$
113

 
$
170

 
Prepaid / Other assets
Foreign currency forward / collar contracts
(416
)
 
(452
)
 
Other accrued expenses


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

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

Additionally, the Company has designated the €300.0 million of Euro-denominated notes issued December 4, 2013 as a hedge of a portion of its net investment in Euro-denominated operations. Due to the high degree of effectiveness between the hedging instruments and the exposure being hedged, fluctuations in the value of the Euro-denominated debt due to exchange rate changes are offset by changes in the net investment. Accordingly, changes in the value of the Euro-denominated debt are recognized in the cumulative translation adjustment section of other comprehensive income to offset changes in the value of the net investment in Euro-denominated operations.

Amounts recognized in other comprehensive earnings (loss) for the gains (losses) on its net investment hedges were as follows:
 
Three Months Ended March 31,
 
2016
 
2015
(Loss) gain on Euro-denominated debt
$
(6,165
)
 
$
35,350

Loss on Swiss franc cross-currency swap

 
(1,333
)
Total (loss) gain on net investment hedges before tax
(6,165
)
 
34,017

Tax benefit (expense)
2,158

 
(11,906
)
Net (loss) gain on net investment hedges, net of tax
$
(4,007
)
 
$
22,111



Fair Value Measurements

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

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

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

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

The following table presents the Company’s assets and liabilities measured at fair value on a recurring basis as of March 31, 2016 and December 31, 2015:
 
March 31, 2016
 
December 31, 2015
 
Level 2
 
Level 2
Assets:
 
 
 
Foreign currency cash flow hedges
$
113

 
$
170

Liabilities:
 
 
 
Foreign currency cash flow hedges
416

 
452



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

The estimated fair value of long-term debt, net of unamortized debt issuance costs at March 31, 2016 and December 31, 2015 was $3,024,157 and $2,880,734, respectively, compared to the carrying value of $2,610,642 and $2,603,655, respectively. The estimated fair value of long-term debt is based on quoted market prices for similar instruments and is, therefore, classified as Level 2 within the fair value hierarchy.

The carrying values of cash and cash equivalents, trade receivables, accounts payable, and notes payable are reasonable estimates of their fair values as of March 31, 2016 and December 31, 2015 due to the short-term nature of these instruments.

v3.3.1.900
Income Taxes
3 Months Ended
Mar. 31, 2016
Income Tax Disclosure [Abstract]  
Income Taxes
10. Income Taxes

The effective tax rates for continuing operations for the three months ended March 31, 2016 and 2015 were 22.1% and 28.8%, respectively. Reflected in the effective tax rate for the three months ended March 31, 2016 and 2015 are favorable discrete items of $7,348 and $703, respectively. Excluding these discrete items, the effective tax rates for the three months ended March 31, 2016 and 2015 were 27.9% and 29.3%, respectively. The 2016 discrete items resulted primarily from the impact on deferred tax balances of a tax rate reduction in a non-US jurisdiction. The 2015 discrete items principally resulted from the conclusion of certain state tax audits and an adjustment of our tax accounts to the return filed. The reduction in the effective tax rate year over year is principally due to a change in the geographic mix of earnings as well as restructuring of foreign operations.

Dover and its subsidiaries file tax returns in the U.S., including various state and local returns, and in other foreign jurisdictions.  We believe adequate provision has been made for all income tax uncertainties. The Company is routinely audited by taxing authorities in its filing jurisdictions, and a number of these audits are currently underway. The Company believes that within the next twelve months uncertain tax positions may be resolved and statutes of limitations will expire, which could result in a decrease in the gross amount of unrecognized tax benefits of approximately zero to $19,649. A portion of these unrecognized tax benefits relate to companies previously reported as discontinued operations.

v3.3.1.900
Equity Incentive Program
3 Months Ended
Mar. 31, 2016
Share-based Compensation [Abstract]  
Share-based Compensation
11. Equity Incentive Program

The Company typically grants equity awards annually at its regularly scheduled first quarter Compensation Committee meeting. In the first quarter of 2016, the Company issued stock-settled appreciation rights ("SARs") covering 1,346,354 shares, performance share awards of 79,561 and restricted stock units of 215,181.

The Company uses the Black-Scholes option pricing model to determine the fair value of each SAR on the date of grant. Expected volatilities are based on Dover's stock price history, including implied volatilities from traded options on Dover stock. The Company uses historical data to estimate SAR exercise and employee termination patterns within the valuation model. The expected life of SARs granted is derived from the output of the option valuation model and represents the average period of time that SARs granted are expected to be outstanding. The interest rate for periods within the contractual life of the SARs is based on the U.S. Treasury yield curve in effect at the time of grant.

The assumptions used in determining the fair value of the SARs awarded during the respective periods are as follows:
 
SARs
 
2016
 
2015
Risk-free interest rate
1.05
%
 
1.51
%
Dividend yield
3.09
%
 
2.24
%
Expected life (years)
4.6

 
5.1

Volatility
26.17
%
 
27.19
%
 
 
 
 
Grant price
$
57.25

 
$
73.28

Fair value per share at date of grant
$
9.25

 
$
14.55



The performance share awards granted in 2015 and 2016 are considered performance condition awards as attainment is based on Dover's performance relative to established internal metrics. The fair value of these awards was determined using Dover's closing stock price on the date of grant. The expected attainment of the internal metrics for these awards is analyzed each reporting period, and the related expense is adjusted based on expected attainment, if that attainment differs from previous estimates. The cumulative effect on current and prior periods of a change in attainment is recognized in compensation cost in the period of change.  

The fair value and average attainment used in determining compensation cost for the performance shares issued in 2015 and 2016 is as follows for the three months ended March 31, 2016:
 
Performance shares
 
2016
 
2015
Fair value per share at date of grant
$
57.25

 
$
73.28

Average attainment rate reflected in expense
87.75
%
 
43.83
%

Stock-based compensation is reported within selling and administrative expenses in the accompanying unaudited Condensed Consolidated Statements of Earnings. The following table summarizes the Company’s compensation expense relating to all stock-based incentive plans:
 
Three Months Ended March 31,
 
2016
 
2015
Pre-tax compensation expense
$
11,387

 
$
13,387

Tax benefit
(4,050
)
 
(4,764
)
Total stock-based compensation expense, net of tax
$
7,337

 
$
8,623


v3.3.1.900
Commitments and Contingent Liabilities
3 Months Ended
Mar. 31, 2016
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingent Liabilities
12. Commitments and Contingent Liabilities

Litigation

A few of the Company’s subsidiaries are involved in legal proceedings relating to the cleanup of waste disposal sites identified under federal and state statutes that provide for the allocation of such costs among "potentially responsible parties." In each instance, the extent of the Company’s liability appears to be very small in relation to the total projected expenditures and the number of other "potentially responsible parties" involved and is anticipated to be immaterial to the Company. In addition, a few of the Company’s subsidiaries are involved in ongoing remedial activities at certain current and former plant sites, in cooperation with regulatory agencies, and appropriate reserves have been established. At March 31, 2016 and December 31, 2015, the Company has reserves totaling $32,453 and $30,595, respectively, for environmental and other matters, including private party claims for exposure to hazardous substances, that are probable and estimable.

The Company and certain of its subsidiaries are also parties to a number of other legal proceedings incidental to their businesses. These proceedings primarily involve claims by private parties alleging injury arising out of use of the Company’s products, patent infringement, employment matters, and commercial disputes. Management and legal counsel, at least quarterly, review the probable outcome of such proceedings, the costs and expenses reasonably expected to be incurred and currently accrued to-date, and the availability and extent of insurance coverage. The Company has reserves for legal matters that are probable and estimable and not otherwise covered by insurance, and at March 31, 2016 and December 31, 2015, these reserves are not significant. While it is not possible at this time to predict the outcome of these legal actions, in the opinion of management, based on the aforementioned reviews, the Company is not currently involved in any legal proceedings which, individually or in the aggregate, could have a material effect on its financial position, results of operations, or cash flows.

Warranty Accruals

Estimated warranty program claims are provided for at the time of sale. Amounts provided for are based on historical costs and adjusted new claims. The changes in the carrying amount of product warranties through March 31, 2016 and 2015 are as follows:
 
2016
 
2015
Beginning Balance, January 1
$
44,466

 
$
49,388

Provision for warranties
14,031

 
11,075

Settlements made
(12,462
)
 
(13,395
)
Other adjustments, including acquisitions and currency translation
4,666

 
(630
)
Ending balance, March 31
$
50,701

 
$
46,438


v3.3.1.900
Employee Benefit Plans
3 Months Ended
Mar. 31, 2016
Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract]  
Employee Benefit Plans
13. Employee Benefit Plans

Retirement Plans

The Company offers defined contribution retirement plans which cover the majority of its U.S. employees, as well as employees in certain other countries. In addition, the Company sponsors qualified defined benefit pension plans covering certain employees of the Company and its subsidiaries. The plans’ benefits are generally based on years of service and employee compensation. The Company also provides to certain management employees, through non-qualified plans, supplemental retirement benefits in excess of qualified plan limits imposed by federal tax law.

The following tables set forth the components of the Company’s net periodic expense relating to retirement benefit plans:

Qualified Defined Benefits
 
Three Months Ended March 31,
 
U.S. Plan
 
Non-U.S. Plans
 
2016
 
2015
 
2016
 
2015
Service Cost
$
3,478

 
$
3,915

 
$
1,373

 
$
1,688

Interest Cost
5,762

 
5,791

 
1,375

 
1,486

Expected return on plan assets
(9,698
)
 
(10,393
)
 
(1,948
)
 
(2,019
)
Amortization:
 
 
 
 
 
 
 
Prior service cost
183

 
224

 
(99
)
 
23

Recognized actuarial loss
1,609

 
3,155

 
665

 
675

Transition obligation

 

 
1

 
9

Curtailments, special termination benefits, and settlements

 
810

 

 
2

Net periodic expense
$
1,334

 
$
3,502

 
$
1,367

 
$
1,864



Non-Qualified Supplemental Benefits
 
Three Months Ended March 31,
 
2016
 
2015
Service Cost
$
740

 
$
935

Interest Cost
1,317

 
1,266

Amortization:
 
 
 
   Prior service cost
1,567

 
1,732

   Recognized actuarial (gain) loss
(140
)
 
71

Net periodic expense
$
3,484

 
$
4,004



Post-Retirement Plans

The Company also maintains post retirement benefit plans, although these plans are effectively closed to new entrants. The supplemental and post retirement benefit plans are supported by the general assets of the Company. The following table sets forth the components of the Company’s net periodic expense relating to its post-retirement benefit plans:

 
Three Months Ended March 31,
 
2016
 
2015
Service Cost
$
13

 
$
41

Interest Cost
105

 
128

Amortization:
 
 
 
   Prior service cost
(36
)
 
(93
)
   Recognized actuarial gain
(59
)
 
(8
)
Net periodic expense
$
23

 
$
68



Defined Contribution Retirement Plans

The Company also offers defined contribution retirement plans which cover the majority of its U.S. employees, as well as employees in certain other countries. The Company’s expense relating to defined contribution plans was $9,808, and $9,006 for the three months ended March 31, 2016 and 2015, respectively.

v3.3.1.900
Other Comprehensive Earnings
3 Months Ended
Mar. 31, 2016
Other Comprehensive Income (Loss), Net of Tax [Abstract]  
Other Comprehensive Earnings
14. Other Comprehensive Earnings (Loss)

The amounts recognized in other comprehensive earnings (loss) were as follows:
 
Three Months Ended
 
Three Months Ended
 
March 31, 2016
 
March 31, 2015
 
Pre-tax
 
Tax
 
Net of tax
 
Pre-tax
 
Tax
 
Net of tax
Foreign currency translation adjustments
$
6,611

 
$
2,158

 
$
8,769

 
$
(72,203
)
 
$
(11,906
)
 
$
(84,109
)
Pension and other postretirement benefit plans
3,691

 
(1,241
)
 
2,450

 
5,788

 
(1,962
)
 
3,826

Changes in fair value of cash flow hedges
(147
)
 
51

 
(96
)
 
1,629

 
(570
)
 
1,059

Other
2,090

 
(251
)
 
1,839

 
241

 
(27
)
 
214

Total other comprehensive earnings (loss)
$
12,245

 
$
717

 
$
12,962

 
$
(64,545
)
 
$
(14,465
)
 
$
(79,010
)


Total comprehensive earnings were as follows:
 
Three Months Ended March 31,
 
2016
 
2015
Net earnings
$
99,356

 
$
209,510

Other comprehensive earnings (loss)
12,962

 
(79,010
)
Comprehensive earnings
$
112,318

 
$
130,500



Amounts reclassified from accumulated other comprehensive earnings (loss) to earnings (loss) during the three months ended March 31, 2016 and 2015 were as follows:
 
Three Months Ended March 31,
 
2016

2015
Pension and postretirement benefit plans:
 
 
 
Amortization of actuarial losses
$
2,076

 
$
3,902

Amortization of prior service costs
1,615

 
1,886

Total before tax
3,691

 
5,788

Tax provision
(1,241
)
 
(1,962
)
Net of tax
$
2,450

 
$
3,826

 
 
 
 
Cash flow hedges:
 
 
 
Net gains reclassified into earnings
$
(72
)
 
$
(153
)
Tax benefit
25

 
54

Net of tax
$
(47
)
 
$
(99
)

The Company recognizes net periodic pension cost, which includes amortization of net actuarial losses and prior service costs, in both selling and administrative expenses and cost of goods and services, depending on the functional area of the underlying employees included in the plans.

Cash flow hedges consist mainly of foreign currency forward contracts. The Company recognizes the realized gains and losses on its cash flow hedges in the same line item as the hedged transaction, such as revenue, cost of goods and services, or selling & administrative expenses.

v3.3.1.900
Segment Information
3 Months Ended
Mar. 31, 2016
Segment Reporting [Abstract]  
Segment Information
15. Segment Information

For management reporting and performance evaluation purposes, the Company categorizes its operating companies into four distinct reportable segments. Segment financial information and a reconciliation of segment results to consolidated results is as follows:
 
Three Months Ended March 31,
 
2016
 
2015
Revenue:
 
 
 
Energy
$
283,230

 
$
430,423

Engineered Systems
576,995

 
573,196

Fluids
399,062

 
340,236

Refrigeration & Food Equipment
363,252

 
372,097

Intra-segment eliminations
(266
)
 
(451
)
Total consolidated revenue
$
1,622,273

 
$
1,715,501

 
 
 
 
Earnings from continuing operations:
 
 
 
Segment earnings:
 
 
 
Energy
$
11,244

 
$
52,305

Engineered Systems
93,748

 
88,149

Fluids
46,047

 
54,634

Refrigeration & Food Equipment
38,161

 
36,150

Total segments
189,200

 
231,238

Corporate expense / other (1)
29,862

 
34,526

Net interest expense
31,714

 
32,037

Earnings before provision for income taxes and discontinued operations
127,624

 
164,675

Provision for taxes
28,268

 
47,485

Earnings from continuing operations
$
99,356

 
$
117,190

(1)  
Certain expenses are maintained at the corporate level and not allocated to the segments. These expenses include executive and functional compensation costs, non-service pension costs, non-operating insurance expenses, and various administrative expenses relating to the corporate headquarters.

v3.3.1.900
Share Repurchases
3 Months Ended
Mar. 31, 2016
Stockholders' Equity Note [Abstract]  
Share repurchases
16. Share Repurchases

In January 2015, the Board of Directors approved a standing share repurchase authorization, whereby the Company may repurchase up to 15,000,000 shares of its common stock over the following three years. This plan replaced all previously authorized repurchase programs. During the three months ended March 31, 2016, the Company repurchased no shares of common stock under the January 2015 authorization. As of March 31, 2016, there were 6,771,458 shares available for repurchase under this plan.

A summary of share repurchase activity during the three months ended March 31, 2015 is as follows:
Shares of common stock repurchased
2,753,165

Spending on share repurchases (in thousands)
$
200,055

Average price paid per share
$
72.66


v3.3.1.900
Earnings per Share
3 Months Ended
Mar. 31, 2016
Earnings Per Share [Abstract]  
Earnings Per Share
17. Earnings per Share

The following table sets forth a reconciliation of the information used in computing basic and diluted earnings per share:
 
Three Months Ended March 31,
 
2016
 
2015
Earnings from continuing operations
$
99,356

 
$
117,190

Earnings from discontinued operations, net

 
92,320

Net earnings
$
99,356

 
$
209,510

 
 
 
 
Basic earnings per common share:
 
 
 
Earnings from continuing operations
$
0.64

 
$
0.72

Earnings from discontinued operations, net
$

 
$
0.57

Net earnings
$
0.64

 
$
1.30

 
 
 
 
Weighted average shares outstanding
155,064,000

 
161,650,000

 
 
 
 
Diluted earnings per common share:
 
 
 
Earnings from continuing operations
$
0.64

 
$
0.72

Earnings from discontinued operations, net
$

 
$
0.57

Net earnings
$
0.64

 
$
1.28

 
 
 
 
Weighted average shares outstanding
156,161,000

 
163,323,000


 
The following table is a reconciliation of the share amounts used in computing earnings per share:
 
Three Months Ended March 31,
 
2016
 
2015
Weighted average shares outstanding - Basic
155,064,000

 
161,650,000

Dilutive effect of assumed exercise of employee stock options and SARs and vesting of performance shares
1,097,000

 
1,673,000

Weighted average shares outstanding - Diluted
156,161,000

 
163,323,000



Diluted per share amounts are computed using the weighted-average number of common shares and, if dilutive, potential common shares outstanding during the period.  Potential common shares consist of the incremental common shares issuable upon the exercise of stock options and SARs, and vesting of performance shares and restricted shares, as determined using the treasury stock method.  

The weighted average number of anti-dilutive potential common shares excluded from the calculation above were approximately 27,000 and 56,000 for the three months ended March 31, 2016 and 2015, respectively.

v3.3.1.900
Recent Accounting Standards
3 Months Ended
Mar. 31, 2016
New Accounting Pronouncements and Changes in Accounting Principles [Abstract]  
Recent Accounting Standards
18. Recent Accounting Standards

Recently Issued Accounting Standards

In March 2016, the FASB issued Accounting Standards Update ("ASU") 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The updated guidance changes how companies account for certain aspects of share-based payment awards to employees, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as the classification of related matters in the statement of cash flows. The update is effective for the Company in the first quarter of 2017. The Company is currently evaluating this guidance and the impact it will have on its consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases, which amends existing guidance to require lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by long-term leases and to disclose additional quantitative and qualitative information about leasing arrangements. This ASU also provides clarifications surrounding the presentation of the effects of leases in the income statement and statement of cashflows. This guidance will be effective for the Company on January 1, 2019. The Company is currently evaluating this new guidance to determine the impact it will have on its consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, that introduces a new five-step revenue recognition model in which an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires disclosures sufficient to enable users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative disclosures about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. This guidance will be effective for the Company January 1, 2018. The Company is currently evaluating this guidance to determine the impact it will have on its consolidated financial statements.

Recently Adopted Accounting Standards

In April 2015, the FASB issued ASU 2015-03, Interest-Imputation of Interest (Subtopic 835-30):Simplifying the Presentation of Debt Issuance Costs. Under this guidance, debt issuance costs related to a recognized debt liability are required to be presented in the balance sheet as a direct reduction from the carrying amount of the related debt, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by this guidance. The Company adopted this guidance January 1, 2016. As a result of adoption, debt issuance costs of $13,687 were reclassified from assets to reduce long-term-debt as of December 31, 2015.

In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. Under this guidance the cumulative impact of purchase accounting adjustments arising during the one year measurement period from the date of acquisition will be recognized, in full, in the period identified. This guidance was effective for the Company January 1, 2016 and will be applied prospectively to adjustments arising after that date. There was no impact of adopting this standard in the current period.

v3.3.1.900
Acquisitions (Tables)
3 Months Ended
Mar. 31, 2016
Business Combinations [Abstract]  
Schedule of Business Acquisitions, by Acquisition [Table Text Block]
The following presents the allocation of acquisition cost to the assets acquired and liabilities assumed, based on their estimated fair values:
Current assets, net of cash acquired
$
96,436

Property, plant and equipment
24,319

Goodwill
281,903

Intangible assets
176,693

Other non-current assets
5,429

Current liabilities
(102,317
)
Non-current liabilities
(46,405
)
Net assets acquired
$
436,058

Finite-Lived and Indefinite-Lived Intangible Assets Acquired as Part of Business Combination [Table Text Block]
The amounts assigned to goodwill and major intangible asset classifications for the 2016 acquisition are as follows:
 
Amount allocated
 
Useful life (in years)
Goodwill - Non deductible
$
281,903

 
na
Customer intangibles
93,227

 
10
Trademarks
23,691

 
10
Other intangibles
59,775

 
11
 
$
458,596

 
 
Pro forma results of operations
The following unaudited pro forma information illustrates the impact of both 2016 and 2015 acquisitions on the Company’s revenue and earnings from continuing operations for the three months ended March 31, 2016 and 2015. In 2015, the Company acquired four businesses in separate transactions for net cash consideration of $567,843.
 
The 2016 and 2015 pro forma information assumes that the 2016 and 2015 acquisitions had taken place at the beginning of the prior year. As such, the 2016 pro forma earnings exclude one-time adjustments made in 2016 for 2015 acquisitions. Pro forma earnings are also adjusted to reflect the comparable impact of additional depreciation and amortization expense (net of tax) resulting from the fair value measurement of tangible and intangible assets relating to 2016 and 2015 acquisitions.
 
Three Months Ended March 31,
 
2016
 
2015
Revenue from continuing operations:
 
 
 
As reported
$
1,622,273

 
$
1,715,501

Pro forma
1,628,406

 
1,836,711

Earnings from continuing operations:
 
 
 
As reported
$
99,356

 
$
117,190

Pro forma
107,613

 
122,404

Basic earnings per share from continuing operations:
 
 
 
As reported
$
0.64

 
$
0.72

Pro forma
0.69

 
0.76

Diluted earnings per share from continuing operations:
 
 
 
As reported
$
0.64

 
$
0.72

Pro forma
0.69

 
0.75


v3.3.1.900
Discontinued Operations (Tables)
3 Months Ended
Mar. 31, 2016
Discontinued Operations and Disposal Groups [Abstract]  
Results of discontinued operations
Summarized results of the Company’s discontinued operations are as follows:
 
Three Months Ended March 31,
 
2015
Revenue
$
64,495

 
 
Gain on sale, net of tax
87,354

 
 
Earnings from operations before taxes
8,980

Provision for income taxes
(4,014
)
Earnings from operations, net of tax
4,966

 
 
Earnings from discontinued operations, net of tax
$
92,320


v3.3.1.900
Inventories (Tables)
3 Months Ended
Mar. 31, 2016
Inventory, Net [Abstract]  
Components of Inventory
 
March 31, 2016
 
December 31, 2015
Raw materials
$
347,674

 
$
333,551

Work in progress
145,952

 
135,624

Finished goods
467,199

 
443,032

Subtotal
960,825

 
912,207

Less reserves
(110,995
)
 
(109,312
)
Total
$
849,830

 
$
802,895


v3.3.1.900
Property, Plant and Equipment (Tables)
3 Months Ended
Mar. 31, 2016
Property, Plant and Equipment [Abstract]  
Components of property, plant and equipment, net
 
March 31, 2016
 
December 31, 2015
Land
$
56,376

 
$
55,567

Buildings and improvements
543,292

 
546,809

Machinery, equipment and other
1,764,139

 
1,772,031

Subtotal
2,363,807

 
2,374,407

Less accumulated depreciation
(1,504,823
)
 
(1,520,138
)
Total
$
858,984

 
$
854,269


v3.3.1.900
Goodwill and Other Intangible Assets (Tables)
3 Months Ended
Mar. 31, 2016
Goodwill [Line Items]  
Goodwill
The following table provides the changes in carrying value of goodwill by segment for the three months ended March 31, 2016:
 
Energy
 
Engineered Systems
 
Fluids
 
Refrigeration & Food Equipment
 
Total
Balance at December 31, 2015
$
1,047,180

 
$
1,473,864

 
$
655,745

 
$
560,600

 
$
3,737,389

Acquisitions

 

 
281,903

 

 
281,903

Purchase price adjustments

 
363

 
4,781

 
580

 
5,724

Disposition of business

 
(9,615
)
 

 

 
(9,615
)
Foreign currency translation
1,580

 
6,916

 
9,968

 
755

 
19,219

Balance at March 31, 2016
$
1,048,760

 
$
1,471,528

 
$
952,397

 
$
561,935

 
$
4,034,620

Schedule of Intangible Assets
The following table provides the gross carrying value and accumulated amortization for each major class of intangible asset:
 
March 31, 2016
 
December 31, 2015
 
Gross Carrying
Amount
 
Accumulated
Amortization
 
Gross Carrying
Amount
 
Accumulated
Amortization
Amortized intangible assets:
 
 
 
 
 
 
 
Trademarks
$
172,554

 
$
49,245

 
$
150,926

 
$
45,536

Patents
155,225

 
117,441

 
150,570

 
112,399

Customer Intangibles
1,663,762

 
628,709

 
1,567,048

 
595,635

Unpatented Technologies
133,362

 
55,971

 
137,919

 
56,495

Drawings & Manuals
34,701

 
16,757

 
34,232

 
15,760

Distributor Relationships
120,957

 
39,592

 
64,614

 
37,610

Other
23,390

 
18,497

 
23,923

 
18,168

Total
2,303,951

 
926,212

 
2,129,232

 
881,603

Unamortized intangible assets:
 
 
 
 
 
 
 
Trademarks
165,658

 
 
 
165,594

 
 
Total intangible assets, net
$
1,543,397

 
 
 
$
1,413,223

 
 


v3.3.1.900
Restructuring Activities (Tables)
3 Months Ended
Mar. 31, 2016
Restructuring [Abstract]  
Schedule of Restructuring and Related Costs
The following table details restructuring charges incurred by segment for the periods presented:
 
Three Months Ended March 31,
 
2016
 
2015
Energy
$
6,416

 
$
17,822

Engineered Systems
1,967

 
4,355

Fluids
5,226

 
2,097

Refrigeration & Food Equipment
21

 
(282
)
Corporate
757

 
111

Total
$
14,387

 
$
24,103

 
 
 
 
These amounts are classified in the unaudited Condensed Consolidated Statements of Earnings as follows:
 
 
 
 
Cost of goods and services
$
5,851

 
$
7,454

Selling and administrative expenses
8,536

 
16,649

Total
$
14,387

 
$
24,103

Schedule of Restructuring Reserve by Type of Cost
The following table details the Company’s severance and other restructuring accrual activity:
 
Severance
 
Exit
 
Total
Balance at December 31, 2015
$
11,036

 
$
2,955

 
$
13,991

Restructuring charges
10,681

 
3,706

 
14,387

Payments
(8,234
)
 
(1,491
)
 
(9,725
)
Foreign currency translation
121

 
40

 
161

Other, including write-offs of fixed assets and acquired balances
2,458

 
(1,119
)
 
1,339

Balance at March 31, 2016
$
16,062

 
$
4,091

 
$
20,153


v3.3.1.900
Borrowings (Tables)
3 Months Ended
Mar. 31, 2016
Debt Disclosure [Abstract]  
Schedule of Short-term Debt
Borrowings consist of the following:
 
March 31, 2016
 
December 31, 2015
Short-term
 
 
 
Current portion of long-term debt
$
4,558

 
$
122

Commercial paper
401,300

 
151,000

 
$
405,858

 
$
151,122

Schedule of Long-term Debt Instruments
 
March 31, 2016
 
December 31, 2015
Long-term
 
 
 
5.45% 10-year notes due March 15, 2018
349,340

 
349,258

2.125% 7-year notes due December 1, 2020 (Euro-denominated)
334,783

 
328,592

4.30% 10-year notes due March 1, 2021
449,872

 
449,865

3.150% 10-year notes due November 15, 2025
397,028

 
396,951

6.65% 30-year debentures due June 1, 2028
199,560

 
199,552

5.375% 30-year debentures due October 15, 2035
296,884

 
296,844

6.60% 30-year notes due March 15, 2038
248,058

 
248,036

5.375% 30-year notes due March 1, 2041
346,029

 
345,989

Other, less current installments
2,233

 
2,255

Total long-term debt
2,623,787

 
2,617,342

Unamortized debt issuance costs
(13,145
)
 
(13,687
)
Long-term debt, net of debt issuance costs
$
2,610,642

 
$
2,603,655

Schedule of Interest expense and interest income
Interest expense and interest income for the three months ended March 31, 2016 and 2015 were as follows:
 
Three Months Ended March 31,
 
2016
 
2015
Interest expense
$
33,318

 
$
33,005

Interest income
(1,604
)
 
(968
)
Interest expense, net
$
31,714

 
$
32,037


v3.3.1.900
Financial Instruments (Tables)
3 Months Ended
Mar. 31, 2016
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Fair value of derivative instruments and the balance sheet lines in which they are recorded
The following table sets forth the fair values of derivative instruments held by the Company as of March 31, 2016 and December 31, 2015 and the balance sheet lines in which they are recorded:
 
Fair Value Asset (Liability)
 
 
 
March 31, 2016
 
December 31, 2015
 
Balance Sheet Caption
Foreign currency forward / collar contracts
$
113

 
$
170

 
Prepaid / Other assets
Foreign currency forward / collar contracts
(416
)
 
(452
)
 
Other accrued expenses
Schedule of net investment hedges in accumulated other comprehensive income (loss)
Amounts recognized in other comprehensive earnings (loss) for the gains (losses) on its net investment hedges were as follows:
 
Three Months Ended March 31,
 
2016
 
2015
(Loss) gain on Euro-denominated debt
$
(6,165
)
 
$
35,350

Loss on Swiss franc cross-currency swap

 
(1,333
)
Total (loss) gain on net investment hedges before tax
(6,165
)
 
34,017

Tax benefit (expense)
2,158

 
(11,906
)
Net (loss) gain on net investment hedges, net of tax
$
(4,007
)
 
$
22,111

Assets and liabilities measured at fair value on a recurring basis
The following table presents the Company’s assets and liabilities measured at fair value on a recurring basis as of March 31, 2016 and December 31, 2015:
 
March 31, 2016
 
December 31, 2015
 
Level 2
 
Level 2
Assets:
 
 
 
Foreign currency cash flow hedges
$
113

 
$
170

Liabilities:
 
 
 
Foreign currency cash flow hedges
416

 
452


v3.3.1.900
Equity Incentive Program (Tables)
3 Months Ended
Mar. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Stock-based incentive plans compensation expense
Stock-based compensation is reported within selling and administrative expenses in the accompanying unaudited Condensed Consolidated Statements of Earnings. The following table summarizes the Company’s compensation expense relating to all stock-based incentive plans:
 
Three Months Ended March 31,
 
2016
 
2015
Pre-tax compensation expense
$
11,387

 
$
13,387

Tax benefit
(4,050
)
 
(4,764
)
Total stock-based compensation expense, net of tax
$
7,337

 
$
8,623


Stock Appreciation Rights (SARs) [Member]  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Valuation assumptions
 
SARs
 
2016
 
2015
Risk-free interest rate
1.05
%
 
1.51
%
Dividend yield
3.09
%
 
2.24
%
Expected life (years)
4.6

 
5.1

Volatility
26.17
%
 
27.19
%
 
 
 
 
Grant price
$
57.25

 
$
73.28

Fair value per share at date of grant
$
9.25

 
$
14.55



Performance Shares [Member]  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Valuation assumptions
 
Performance shares
 
2016
 
2015
Fair value per share at date of grant
$
57.25

 
$
73.28

Average attainment rate reflected in expense
87.75
%
 
43.83
%


v3.3.1.900
Commitments and Contingent Liabilities (Tables)
3 Months Ended
Mar. 31, 2016
Commitments and Contingencies Disclosure [Abstract]  
Schedule of Product Warranty Liability
Estimated warranty program claims are provided for at the time of sale. Amounts provided for are based on historical costs and adjusted new claims. The changes in the carrying amount of product warranties through March 31, 2016 and 2015 are as follows:
 
2016
 
2015
Beginning Balance, January 1
$
44,466

 
$
49,388

Provision for warranties
14,031

 
11,075

Settlements made
(12,462
)
 
(13,395
)
Other adjustments, including acquisitions and currency translation
4,666

 
(630
)
Ending balance, March 31
$
50,701

 
$
46,438


v3.3.1.900
Employee Benefit Plans (Tables)
3 Months Ended
Mar. 31, 2016
Defined benefit pension plans  
Defined Benefit Plan Disclosure [Line Items]  
Schedule of Defined Benefit Plans Disclosures
 
Three Months Ended March 31,
 
U.S. Plan
 
Non-U.S. Plans
 
2016
 
2015
 
2016
 
2015
Service Cost
$
3,478

 
$
3,915

 
$
1,373

 
$
1,688

Interest Cost
5,762

 
5,791

 
1,375

 
1,486

Expected return on plan assets
(9,698
)
 
(10,393
)
 
(1,948
)
 
(2,019
)
Amortization:
 
 
 
 
 
 
 
Prior service cost
183

 
224

 
(99
)
 
23

Recognized actuarial loss
1,609

 
3,155

 
665

 
675

Transition obligation

 

 
1

 
9

Curtailments, special termination benefits, and settlements

 
810

 

 
2

Net periodic expense
$
1,334

 
$
3,502

 
$
1,367

 
$
1,864

Supplemental Employee Retirement Plans, Defined Benefit [Member]  
Defined Benefit Plan Disclosure [Line Items]  
Schedule of Defined Benefit Plans Disclosures
 
Three Months Ended March 31,
 
2016
 
2015
Service Cost
$
740

 
$
935

Interest Cost
1,317

 
1,266

Amortization:
 
 
 
   Prior service cost
1,567

 
1,732

   Recognized actuarial (gain) loss
(140
)
 
71

Net periodic expense
$
3,484

 
$
4,004

Post-Retirement Benefits [Member]  
Defined Benefit Plan Disclosure [Line Items]  
Schedule of Defined Benefit Plans Disclosures
 
Three Months Ended March 31,
 
2016
 
2015
Service Cost
$
13

 
$
41

Interest Cost
105

 
128

Amortization:
 
 
 
   Prior service cost
(36
)
 
(93
)
   Recognized actuarial gain
(59
)
 
(8
)
Net periodic expense
$
23

 
$
68


v3.3.1.900
Other Comprehensive Earnings (Tables)
3 Months Ended
Mar. 31, 2016
Other Comprehensive Income (Loss), Net of Tax [Abstract]  
Components of other comprehensive income
The amounts recognized in other comprehensive earnings (loss) were as follows:
 
Three Months Ended
 
Three Months Ended
 
March 31, 2016
 
March 31, 2015
 
Pre-tax
 
Tax
 
Net of tax
 
Pre-tax
 
Tax
 
Net of tax
Foreign currency translation adjustments
$
6,611

 
$
2,158

 
$
8,769

 
$
(72,203
)
 
$
(11,906
)
 
$
(84,109
)
Pension and other postretirement benefit plans
3,691

 
(1,241
)
 
2,450

 
5,788

 
(1,962
)
 
3,826

Changes in fair value of cash flow hedges
(147
)
 
51

 
(96
)
 
1,629

 
(570
)
 
1,059

Other
2,090

 
(251
)
 
1,839

 
241

 
(27
)
 
214

Total other comprehensive earnings (loss)
$
12,245

 
$
717

 
$
12,962

 
$
(64,545
)
 
$
(14,465
)
 
$
(79,010
)


Schedule of comprehensive income (loss)
Total comprehensive earnings were as follows:
 
Three Months Ended March 31,
 
2016
 
2015
Net earnings
$
99,356

 
$
209,510

Other comprehensive earnings (loss)
12,962

 
(79,010
)
Comprehensive earnings
$
112,318

 
$
130,500

Schedule of amounts reclassified from accumulated other comprehensive income (loss) to earnings
Amounts reclassified from accumulated other comprehensive earnings (loss) to earnings (loss) during the three months ended March 31, 2016 and 2015 were as follows:
 
Three Months Ended March 31,
 
2016

2015
Pension and postretirement benefit plans:
 
 
 
Amortization of actuarial losses
$
2,076

 
$
3,902

Amortization of prior service costs
1,615

 
1,886

Total before tax
3,691

 
5,788

Tax provision
(1,241
)
 
(1,962
)
Net of tax
$
2,450

 
$
3,826

 
 
 
 
Cash flow hedges:
 
 
 
Net gains reclassified into earnings
$
(72
)
 
$
(153
)
Tax benefit
25

 
54

Net of tax
$
(47
)
 
$
(99
)


v3.3.1.900
Segment Information (Tables)
3 Months Ended
Mar. 31, 2016
Segment Reporting [Abstract]  
Revenue and earnings from continuing operations by market segment
 
Three Months Ended March 31,
 
2016
 
2015
Revenue:
 
 
 
Energy
$
283,230

 
$
430,423

Engineered Systems
576,995

 
573,196

Fluids
399,062

 
340,236

Refrigeration & Food Equipment
363,252

 
372,097

Intra-segment eliminations
(266
)
 
(451
)
Total consolidated revenue
$
1,622,273

 
$
1,715,501

 
 
 
 
Earnings from continuing operations:
 
 
 
Segment earnings:
 
 
 
Energy
$
11,244

 
$
52,305

Engineered Systems
93,748

 
88,149

Fluids
46,047

 
54,634

Refrigeration & Food Equipment
38,161

 
36,150

Total segments
189,200

 
231,238

Corporate expense / other (1)
29,862

 
34,526

Net interest expense
31,714

 
32,037

Earnings before provision for income taxes and discontinued operations
127,624

 
164,675

Provision for taxes
28,268

 
47,485

Earnings from continuing operations
$
99,356

 
$
117,190

(1)  
Certain expenses are maintained at the corporate level and not allocated to the segments. These expenses include executive and functional compensation costs, non-service pension costs, non-operating insurance expenses, and various administrative expenses relating to the corporate headquarters.

v3.3.1.900
Share Repurchases (Tables)
3 Months Ended
Mar. 31, 2015
Share Repurchases [Line Items]  
Schedule of Share Repurchases
A summary of share repurchase activity during the three months ended March 31, 2015 is as follows:
Shares of common stock repurchased
2,753,165

Spending on share repurchases (in thousands)
$
200,055

Average price paid per share
$
72.66


v3.3.1.900
Earnings per Share (Tables)
3 Months Ended
Mar. 31, 2016
Earnings Per Share [Abstract]  
Reconciliation of information used in computing basic and diluted earnings per share
The following table sets forth a reconciliation of the information used in computing basic and diluted earnings per share:
 
Three Months Ended March 31,
 
2016
 
2015
Earnings from continuing operations
$
99,356

 
$
117,190

Earnings from discontinued operations, net

 
92,320

Net earnings
$
99,356

 
$
209,510

 
 
 
 
Basic earnings per common share:
 
 
 
Earnings from continuing operations
$
0.64

 
$
0.72

Earnings from discontinued operations, net
$

 
$
0.57

Net earnings
$
0.64

 
$
1.30

 
 
 
 
Weighted average shares outstanding
155,064,000

 
161,650,000

 
 
 
 
Diluted earnings per common share:
 
 
 
Earnings from continuing operations
$
0.64

 
$
0.72

Earnings from discontinued operations, net
$

 
$
0.57

Net earnings
$
0.64

 
$
1.28

 
 
 
 
Weighted average shares outstanding
156,161,000

 
163,323,000

Reconciliation of share amounts used in computing earnings per share
The following table is a reconciliation of the share amounts used in computing earnings per share:
 
Three Months Ended March 31,
 
2016
 
2015
Weighted average shares outstanding - Basic
155,064,000

 
161,650,000

Dilutive effect of assumed exercise of employee stock options and SARs and vesting of performance shares
1,097,000

 
1,673,000

Weighted average shares outstanding - Diluted
156,161,000

 
163,323,000


v3.3.1.900
Acquisitions (Details) - USD ($)
$ / shares in Units, $ in Thousands
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Business Acquisition [Line Items]    
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net $ 436,058 $ 567,843
Goodwill and intangibles acquired 458,596  
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net [Abstract]    
Current assets, net of cash acquired 96,436  
Property, Plant, and Equipment 24,319  
Goodwill 281,903  
Intangibles 176,693  
Other Non-current Assets 5,429  
Current Liabilities 102,317  
Non-current Liabilities 46,405  
Revenue from continuing operations [Abstract]    
As reported 1,622,273 1,715,501
Pro forma 1,628,406 1,836,711
Net earnings from continuing operations [Abstract]    
As reported 99,356 117,190
Pro forma $ 107,613 $ 122,404
Basic earnings per share from continuing operations [Abstract]    
As reported (in dollars per share) $ 0.64 $ 0.72
Pro forma (in dollars per share) 0.69 0.76
Diluted earnings per share from continuing operations [Abstract]    
As reported (in dollars per share) 0.64 0.72
Pro forma (in dollars per share) $ 0.69 $ 0.75
Customer Relationships [Member]    
Business Acquisition [Line Items]    
Acquired finite-lived intangible asset, amount $ 93,227  
Acquired finite-lived intangible assets, weighted average useful life 10 years  
Trademarks [Member]    
Business Acquisition [Line Items]    
Acquired finite-lived intangible asset, amount $ 23,691  
Acquired finite-lived intangible assets, weighted average useful life 10 years  
Other Intangible Assets [Member]    
Business Acquisition [Line Items]    
Acquired finite-lived intangible asset, amount $ 59,775  
Acquired finite-lived intangible assets, weighted average useful life 11 years  

v3.3.1.900
Discontinued Operations (Details) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]    
Proceeds from the sale of businesses $ 47,300 $ 185,000
Gain on Disposition of Business 11,228 0
Gain on sale and impairments, net of tax   87,354
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract]    
Revenue   64,495
Earnings from operations before taxes   8,980
Provision for income taxes   (4,014)
Earnings from operations, net of tax   4,966
Earnings from discontinued operations, net of tax 0 92,320
Texas Hydraulics [Member]    
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]    
Proceeds from the sale of businesses 47,300  
Gain on Disposition of Business $ 11,228  
Datamax ONeil [Member]    
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]    
Proceeds from the sale of businesses   185,000
Gain on sale and impairments, net of tax   $ 87,781

v3.3.1.900
Inventories (Details) - USD ($)
$ in Thousands
Mar. 31, 2016
Dec. 31, 2015
Inventory, Net [Abstract]    
Raw materials $ 347,674 $ 333,551
Work in progress 145,952 135,624
Finished Goods 467,199 443,032
Subtotal 960,825 912,207
Inventory reserves (110,995) (109,312)
Total $ 849,830 $ 802,895

v3.3.1.900
Property, Plant and Equipment (Details) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Dec. 31, 2015
Property, Plant and Equipment [Line Items]      
Cost $ 2,363,807   $ 2,374,407
Accumulated depreciation (1,504,823)   (1,520,138)
Total 858,984   854,269
Depreciation expense 45,029 $ 40,208  
Land [Member]      
Property, Plant and Equipment [Line Items]      
Cost 56,376   55,567
Buildings and improvements [Member]      
Property, Plant and Equipment [Line Items]      
Cost 543,292   546,809
Machinery, equipment and other [Member]      
Property, Plant and Equipment [Line Items]      
Cost $ 1,764,139   $ 1,772,031

v3.3.1.900
Goodwill and Other Intangible Assets - Goodwill (Details) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2016
Dec. 31, 2015
Goodwill [Roll Forward]    
Balance $ 4,034,620 $ 3,737,389
Acquisitions 281,903  
Purchase price adjustments 5,724  
Business disposition (9,615)  
Foreign currency translation 19,219  
Balance 4,034,620  
Energy Segment [Member]    
Goodwill [Roll Forward]    
Balance 1,048,760 1,047,180
Acquisitions 0  
Purchase price adjustments 0  
Business disposition 0  
Foreign currency translation 1,580  
Balance 1,048,760  
Engineered Systems Segment [Member]    
Goodwill [Roll Forward]    
Balance 1,471,528 1,473,864
Acquisitions 0  
Purchase price adjustments 363  
Business disposition (9,615)  
Foreign currency translation 6,916  
Balance 1,471,528  
Fluids Segment [Member]    
Goodwill [Roll Forward]    
Balance 952,397 655,745
Acquisitions 281,903  
Purchase price adjustments 4,781  
Business disposition 0  
Foreign currency translation 9,968  
Balance 952,397  
Refrigeration and Food Equipment Segment [Member]    
Goodwill [Roll Forward]    
Balance 561,935 $ 560,600
Acquisitions 0  
Purchase price adjustments 580  
Business disposition 0  
Foreign currency translation 755  
Balance $ 561,935  

v3.3.1.900
Goodwill and Other Intangible Assets - Intangible Assets and Amortization Expense (Details) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Dec. 31, 2015
Finite-Lived Intangible Assets [Line Items]      
Gross carrying amount $ 2,303,951   $ 2,129,232
Accumulated amortization 926,212   881,603
Amortization expense 43,574 $ 39,974  
Intangible assets, net 1,543,397   1,413,223
Trademarks [Member]      
Finite-Lived Intangible Assets [Line Items]      
Gross carrying amount 172,554   150,926
Accumulated amortization 49,245   45,536
Patents [Member]      
Finite-Lived Intangible Assets [Line Items]      
Gross carrying amount 155,225   150,570
Accumulated amortization 117,441   112,399
Customer Intangibles [Member]      
Finite-Lived Intangible Assets [Line Items]      
Gross carrying amount 1,663,762   1,567,048
Accumulated amortization 628,709   595,635
Unpatented Technologies [Member]      
Finite-Lived Intangible Assets [Line Items]      
Gross carrying amount 133,362   137,919
Accumulated amortization 55,971   56,495
Drawings and Manuals [Member]      
Finite-Lived Intangible Assets [Line Items]      
Gross carrying amount 34,701   34,232
Accumulated amortization 16,757   15,760
Distributor Relationships [Member]      
Finite-Lived Intangible Assets [Line Items]      
Gross carrying amount 120,957   64,614
Accumulated amortization 39,592   37,610
Other Intangible Assets [Member]      
Finite-Lived Intangible Assets [Line Items]      
Gross carrying amount 23,390   23,923
Accumulated amortization $ 18,497   $ 18,168

v3.3.1.900
Goodwill and Other Intangible Assets - Indefinite-lived Intangibles (Details) - USD ($)
$ in Thousands
Mar. 31, 2016
Dec. 31, 2015
Trademarks [Member]    
Unamortized Intangible Assets [Abstract]    
Gross carrying amount $ 165,658 $ 165,594

v3.3.1.900
Restructuring Activities (Details) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Restructuring Cost and Reserve [Line Items]    
Restructuring charges $ 14,387 $ 24,103
Restructuring Reserve [Roll Forward]    
Severance and other restructuring reserve, beginning balance 13,991  
Provision 14,387  
Payments (9,725)  
Restructuring Reserve, Translation Adjustment 161  
Other, including write-offs of fixed assets and acquired balances 1,339  
Severance and other restructuring reserve, ending balance 20,153  
Energy Segment [Member]    
Restructuring Cost and Reserve [Line Items]    
Restructuring charges 6,416 17,822
Engineered Systems Segment [Member]    
Restructuring Cost and Reserve [Line Items]    
Restructuring charges 1,967 4,355
Fluids Segment [Member]    
Restructuring Cost and Reserve [Line Items]    
Restructuring charges 5,226 2,097
Refrigeration and Food Equipment Segment [Member]    
Restructuring Cost and Reserve [Line Items]    
Restructuring charges 21 (282)
Corporate, Non-Segment [Member]    
Restructuring Cost and Reserve [Line Items]    
Restructuring charges 757 111
Employee Severance [Member]    
Restructuring Reserve [Roll Forward]    
Severance and other restructuring reserve, beginning balance 11,036  
Provision 10,681  
Payments (8,234)  
Restructuring Reserve, Translation Adjustment 121  
Other, including write-offs of fixed assets and acquired balances 2,458  
Severance and other restructuring reserve, ending balance 16,062  
Facility Closing [Member]    
Restructuring Reserve [Roll Forward]    
Severance and other restructuring reserve, beginning balance 2,955  
Provision 3,706  
Payments (1,491)  
Restructuring Reserve, Translation Adjustment 40  
Other, including write-offs of fixed assets and acquired balances (1,119)  
Severance and other restructuring reserve, ending balance 4,091  
Cost of Sales [Member]    
Restructuring Cost and Reserve [Line Items]    
Restructuring charges 5,851 7,454
Selling, General and Administrative Expenses [Member]    
Restructuring Cost and Reserve [Line Items]    
Restructuring charges $ 8,536 $ 16,649

v3.3.1.900
Borrowings (Details) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Dec. 31, 2015
Debt Disclosure [Abstract]      
Interest expense $ 33,318 $ 33,005  
Interest income (1,604) (968)  
Interest expense, net 31,714 $ 32,037  
Debt Instrument [Line Items]      
Long-term Debt, Current Maturities 4,558   $ 122
Letters of Credit Outstanding, Amount 91,840    
Short-term borrowings [Abstract]      
Commercial Paper 401,300   151,000
Debt, Current 405,858   151,122
Deferred Finance Costs, Own-share Lending Arrangement, Issuance Costs, Net (13,145)   (13,687)
Long-term borrowings [Abstract]      
Carrying amount of long-term debt 2,623,787   2,617,342
Long-term debt 2,610,642   2,603,655
Line of Credit Facility [Abstract]      
Unsecured revolving credit facility, maximum borrowing capacity $ 1,000,000    
Line of Credit Facility, Covenant Compliance The Company was in compliance with its revolving credit and other long-term debt covenants at March 31, 2016 and had a coverage ratio of 12.3 to 1    
Credit Agreement [Member]      
Line of Credit Facility [Abstract]      
Line of Credit Facility, Expiration Date Nov. 10, 2020    
Note due 2018 [Member]      
Long-term borrowings [Abstract]      
Long-term debt $ 349,340   349,258
Debt instruments, maturity date Mar. 15, 2018    
Debt instrument, stated interest rate (in hundredths) 5.45%    
Term of debt instrument (in years) 10 years    
Note due 2020 [Member]      
Long-term borrowings [Abstract]      
Long-term debt $ 334,783   328,592
Debt instruments, maturity date Dec. 01, 2020    
Debt instrument, stated interest rate (in hundredths) 2.125%    
Term of debt instrument (in years) 7 years    
Note due 2021 [Member]      
Long-term borrowings [Abstract]      
Long-term debt $ 449,872   449,865
Debt instruments, maturity date Mar. 01, 2021    
Debt instrument, stated interest rate (in hundredths) 4.30%    
Term of debt instrument (in years) 10 years    
Note due 2025 [Member]      
Long-term borrowings [Abstract]      
Long-term debt $ 397,028   396,951
Debt instruments, maturity date Nov. 15, 2025    
Debt instrument, stated interest rate (in hundredths) 3.15%    
Term of debt instrument (in years) 10 years    
Debentures due 2028 [Member]      
Long-term borrowings [Abstract]      
Long-term debt $ 199,560   199,552
Debt instruments, maturity date Jun. 01, 2028    
Debt instrument, stated interest rate (in hundredths) 6.65%    
Term of debt instrument (in years) 30 years    
Debenture due 2035 [Member]      
Long-term borrowings [Abstract]      
Long-term debt $ 296,884   296,844
Debt instruments, maturity date Oct. 15, 2035    
Debt instrument, stated interest rate (in hundredths) 5.375%    
Term of debt instrument (in years) 30 years    
Note due 2038 [Member]      
Long-term borrowings [Abstract]      
Long-term debt $ 248,058   248,036
Debt instruments, maturity date Mar. 15, 2038    
Debt instrument, stated interest rate (in hundredths) 6.60%    
Term of debt instrument (in years) 30 years    
Note due 2041 [Member]      
Long-term borrowings [Abstract]      
Long-term debt $ 346,029   345,989
Debt instruments, maturity date Mar. 01, 2041    
Debt instrument, stated interest rate (in hundredths) 5.375%    
Term of debt instrument (in years) 30 years    
Other long term debt instruments [Member]      
Long-term borrowings [Abstract]      
Long-term debt $ 2,233   $ 2,255
Minimum [Member]      
Line of Credit Facility [Abstract]      
Line of Credit Facility, Expiration Date Dec. 31, 2016    
Maximum [Member]      
Line of Credit Facility [Abstract]      
Line of Credit Facility, Expiration Date Dec. 31, 2020    

v3.3.1.900
Financial Instruments (Details)
$ in Thousands, € in Millions
3 Months Ended
Mar. 31, 2016
USD ($)
Mar. 31, 2015
USD ($)
Mar. 31, 2016
EUR (€)
Dec. 31, 2015
USD ($)
Derivatives, Fair Value [Line Items]        
Long-term debt $ 2,610,642     $ 2,603,655
Gain (loss) on euro net investment hedge, gross (6,165) $ 34,017    
Foreign currency translation adjustments, tax 2,158 (11,906)    
Gain (Loss) on euro net investment hedge, net of tax (4,007) 22,111    
Designated as Hedging Instrument [Member]        
Derivatives, Fair Value [Line Items]        
Derivative, Notional Amount 30,859     37,735
Not Designated as Hedging Instrument [Member]        
Derivatives, Fair Value [Line Items]        
Derivative, Notional Amount 66,310     51,369
Cross Currency Interest Rate Contract [Member]        
Derivatives, Fair Value [Line Items]        
Gain (loss) on euro net investment hedge, gross 0 (1,333)    
Foreign Exchange Forward [Member] | Designated as Hedging Instrument [Member] | Prepaid Expenses and Other Current Assets [Member]        
Derivatives, Fair Value [Line Items]        
Fair Value - Asset 113     170
Foreign Exchange Forward [Member] | Designated as Hedging Instrument [Member] | Other Accrued Expenses [Member]        
Derivatives, Fair Value [Line Items]        
Fair Value - Liability 416     $ 452
Note due 2020 [Member]        
Derivatives, Fair Value [Line Items]        
Gain (loss) on euro net investment hedge, gross $ (6,165) $ 35,350    
Note due 2020 [Member] | Designated as Hedging Instrument [Member]        
Derivatives, Fair Value [Line Items]        
Debt Instrument, Face Amount | €     € 300.0  

v3.3.1.900
Financial Instruments - Balance Sheet Location (Details) - Fair Value, Measurements, Recurring [Member] - Fair Value, Inputs, Level 2 [Member] - USD ($)
$ in Thousands
Mar. 31, 2016
Dec. 31, 2015
Assets [Abstract]    
Foreign currency cash flow hedges - asset $ 113 $ 170
Liabilities [Abstract]    
Foreign currency cash flow hedges - liability $ 416 $ 452

v3.3.1.900
Financial Instruments - Fair Value Measurements (Details) - USD ($)
$ in Thousands
Mar. 31, 2016
Dec. 31, 2015
Estimate of Fair Value Measurement [Member]    
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]    
Long-term debt $ 3,024,157 $ 2,880,734

v3.3.1.900
Income Taxes (Details) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Effective tax rate (in hundredths) 22.10% 28.80%
Discrete tax benefits $ 7,348 $ 703
Pre-discrete tax rate 27.90% 29.30%
Minimum [Member]    
Significant change in unrecognized tax benefits is reasonably possible, estimated range of change, lower bound $ 0  
Maximum [Member]    
Significant change in unrecognized tax benefits is reasonably possible, estimated range of change, lower bound $ 19,649  

v3.3.1.900
Equity Incentive Program (Details) - USD ($)
$ / shares in Units, $ in Thousands
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Stock-based compensation expense [Abstract]    
Pre-tax compensation expense $ 11,387 $ 13,387
Tax benefit (4,050) (4,764)
Total stock-based compensation expense, net of tax $ 7,337 $ 8,623
Stock Appreciation Rights (SARs) [Member]    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Shares issued during period (in shares) 1,346,354  
Risk-free interest rate (in hundredths) 1.05% 1.51%
Dividend yield (in hundredths) 3.09% 2.24%
Expected life (in years) 4 years 6 months 30 days 5 years 1 month
Volatility (in hundredths) 26.17% 27.19%
Grant price (in dollars per share) $ 57.25 $ 73.28
Fair value at date of grant (in dollars per share) $ 9.25 14.55
Performance Shares [Member]    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Shares issued during period (in shares) 79,561  
Fair value at date of grant (in dollars per share) $ 57.25 $ 73.28
Performance share attainment 87.75% 43.83%
Restricted Stock [Member]    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Shares issued during period (in shares) 215,181  

v3.3.1.900
Commitments and Contingent Liabilities (Details) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Dec. 31, 2015
Commitments and Contingencies Disclosure [Abstract]      
Accrual for environmental loss contingencies $ 32,453   $ 30,595
Movement in Standard and Extended Product Warranty, Increase (Decrease) [Roll Forward]      
Beginning balance 44,466 $ 49,388  
Provision for warranties 14,031 11,075  
Settlements made (12,462) (13,395)  
Other adjustments, including acquisitions and currency translation 4,666 (630)  
Ending balance $ 50,701 $ 46,438  

v3.3.1.900
Employee Benefit Plans (Details) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Net periodic benefit cost [Abstract]    
Total amount amortized out of accumulated other comprehensive income $ 3,691 $ 5,788
Defined contribution plan expense 9,808 9,006
U.S. Pension Plans, Defined Benefit [Member]    
Net periodic benefit cost [Abstract]    
Service cost 3,478 3,915
Interest cost 5,762 5,791
Expected return on plan assets (9,698) (10,393)
Prior service cost (income) 183 224
Recognized actuarial (gain) loss 1,609 3,155
Transition obligation 0 0
Other 0 810
Net periodic benefit cost 1,334 3,502
Foreign Pension Plans, Defined Benefit [Member]    
Net periodic benefit cost [Abstract]    
Service cost 1,373 1,688
Interest cost 1,375 1,486
Expected return on plan assets (1,948) (2,019)
Prior service cost (income) (99) 23
Recognized actuarial (gain) loss 665 675
Transition obligation 1 9
Other 0 2
Net periodic benefit cost 1,367 1,864
Supplemental Employee Retirement Plans, Defined Benefit [Member]    
Net periodic benefit cost [Abstract]    
Service cost 740 935
Interest cost 1,317 1,266
Prior service cost (income) 1,567 1,732
Recognized actuarial (gain) loss (140) 71
Net periodic benefit cost 3,484 4,004
Post-Retirement Benefits [Member]    
Net periodic benefit cost [Abstract]    
Service cost 13 41
Interest cost 105 128
Prior service cost (income) (36) (93)
Recognized actuarial (gain) loss (59) (8)
Net periodic benefit cost $ 23 $ 68

v3.3.1.900
Other Comprehensive Earnings (Details) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Foreign currency translation adjustments [Abstract]    
Foreign currency translation adjustments, before tax $ 6,611 $ (72,203)
Foreign currency translation adjustments, tax 2,158 (11,906)
Total foreign currency translation 8,769 (84,109)
Pension and other postretirement benefit plans [Abstract]    
Pension and other postretirement benefit plans, before tax 3,691 5,788
Pension and other postretirement benefit plans, tax (1,241) (1,962)
Total pension and other postretirement benefit plans 2,450 3,826
Changes in fair value of cash flow hedges [Abstract]    
Changes in fair value of cash flow hedges, before tax (147) 1,629
Changes in fair value of cash flow hedges, tax 51 (570)
Total cash flow hedges (96) 1,059
Other comprehensive earnings other adjustment, net of tax [Abstract]    
Other, before tax 2,090 241
Other, tax (251) (27)
Other comprehensive earnings other adjustment 1,839 214
Total other comprehensive earnings [Abstract]    
Other comprehensive earnings (loss), before Tax 12,245 (64,545)
Other comprehensive earnings (loss), tax 717 (14,465)
Other comprehensive earnings (loss) 12,962 (79,010)
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract]    
Net earnings 99,356 209,510
Other comprehensive earnings (loss) 12,962 (79,010)
Comprehensive earnings 112,318 130,500
Other Comprehensive Income Loss Reclassification Adjustment From AOCI Pension And Other Postretirement Benefit Plans Net Of Tax Abstract [Abstract]    
Amortization of actuarial losses 2,076 3,902
Amortization of prior service costs 1,615 1,886
Total before tax 3,691 5,788
Tax provision (1,241) (1,962)
Net of tax 2,450 3,826
Other Comprehensive Income Loss Reclassification Adjustment From AOCI Derivatives Net of Tax [Abstract]    
Cash flow hedges (72) (153)
Tax benefit 25 54
Net of tax $ (47) $ (99)

v3.3.1.900
Segment Information (Details)
$ in Thousands
3 Months Ended
Mar. 31, 2016
USD ($)
segments
Mar. 31, 2015
USD ($)
Segment Reporting Information [Line Items]    
Number of reportable segments | segments 4  
Reconciliation from Segment Totals to Consolidated [Abstract]    
Revenue $ 1,622,273 $ 1,715,501
Reconciliation of Earnings from Continuing Operations from Segments to Consolidated [Abstract]    
Interest expense, net 31,714 32,037
Earnings before provision for income taxes and discontinued operations 127,624 164,675
Provision for income taxes 28,268 47,485
Earnings from continuing operations 99,356 117,190
Energy Segment [Member]    
Reconciliation from Segment Totals to Consolidated [Abstract]    
Revenue 283,230 430,423
Reconciliation of Earnings from Continuing Operations from Segments to Consolidated [Abstract]    
Earnings before provision for income taxes and discontinued operations 11,244 52,305
Engineered Systems Segment [Member]    
Reconciliation from Segment Totals to Consolidated [Abstract]    
Revenue 576,995 573,196
Reconciliation of Earnings from Continuing Operations from Segments to Consolidated [Abstract]    
Earnings before provision for income taxes and discontinued operations 93,748 88,149
Fluids Segment [Member]    
Reconciliation from Segment Totals to Consolidated [Abstract]    
Revenue 399,062 340,236
Reconciliation of Earnings from Continuing Operations from Segments to Consolidated [Abstract]    
Earnings before provision for income taxes and discontinued operations 46,047 54,634
Refrigeration and Food Equipment Segment [Member]    
Reconciliation from Segment Totals to Consolidated [Abstract]    
Revenue 363,252 372,097
Reconciliation of Earnings from Continuing Operations from Segments to Consolidated [Abstract]    
Earnings before provision for income taxes and discontinued operations 38,161 36,150
Intersegment Elimination [Member]    
Reconciliation from Segment Totals to Consolidated [Abstract]    
Revenue (266) (451)
Total segments [Member]    
Reconciliation of Earnings from Continuing Operations from Segments to Consolidated [Abstract]    
Earnings before provision for income taxes and discontinued operations 189,200 231,238
Corporate expense / other [Member]    
Reconciliation of Earnings from Continuing Operations from Segments to Consolidated [Abstract]    
Earnings before provision for income taxes and discontinued operations $ 29,862 $ 34,526

v3.3.1.900
Share Repurchases (Details) - USD ($)
$ / shares in Units, $ in Thousands
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Share Repurchases [Line Items]    
Purchase of common stock $ 0 $ 200,055
January 2015 Authorization [Member]    
Share Repurchases [Line Items]    
Number of shares authorized to be repurchased 15,000,000  
Shares repurchased 0 2,753,165
Average price per share for repurchased shares (in dollars per share)   $ 72.66
Remaining number of shares authorized to be repurchased 6,771,458  
Purchase of common stock   $ 200,055

v3.3.1.900
Earnings per Share (Details) - USD ($)
$ / shares in Units, $ in Thousands
3 Months Ended
Mar. 31, 2016
Mar. 31, 2015
Reconciliation of information used in computing basic and diluted earnings per share [Abstract]    
Earnings from continuing operations $ 99,356 $ 117,190
Earnings from discontinued operations, net 0 92,320
Net earnings $ 99,356 $ 209,510
Basic earnings (loss) per common share:    
Earnings from continuing operations (in dollars per basic share) $ 0.64 $ 0.72
Earnings from discontinued operations, net (in dollars per basic share) 0.00 0.57
Net earnings (in dollars per basic share) $ 0.64 $ 1.30
Weighted average shares outstanding - basic (in shares) 155,064,000 161,650,000
Diluted earnings (loss) per common share:    
Earnings from continuing operations (in dollars per diluted share) $ 0.64 $ 0.72
Earnings from discontinued operations, net (in dollars per diluted share) 0.00 0.57
Net earnings (in dollars per diluted share) $ 0.64 $ 1.28
Weighted average shares outstanding - diluted (in shares) 156,161,000 163,323,000
Reconciliation Of Share Amounts Used In Computing Earnings Per Share [Abstract]    
Weighted average shares outstanding - basic (in shares) 155,064,000 161,650,000
Dilutive effect of assumed exercise of employee stock options, SAR's and performance shares (in shares) 1,097,000 1,673,000
Weighted average shares outstanding - diluted (in shares) 156,161,000 163,323,000
Antidilutive securities excluded from computation of earnings per share 27,000 56,000

v3.3.1.900
Recent Accounting Standards Recent Accounting Standards (Details) - USD ($)
$ in Thousands
Mar. 31, 2016
Dec. 31, 2015
Recent Accounting Policies [Abstract]    
Deferred Finance Costs, Own-share Lending Arrangement, Issuance Costs, Net $ 13,145 $ 13,687

IDEA: XBRL DOCUMENT
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